Radio Shack 2004 Annual Report Download - page 30

other considerations. In February 2003, our Board of Directors
authorized a repurchase program for 15.0 million shares, which
was in addition to our 25.0 million share repurchase program
that was completed during the second quarter of 2003. At
February 18, 2005, there were 2.5 million shares available to be
repurchased under this 15.0 million share repurchase program.
The 15.0 million share repurchase program has no expiration
date and allows shares to be repurchased in the open market.
On February 25, 2005, our Board of Directors approved a new
share repurchase program. This new program allows manage-
ment to repurchase up to $250 million in open market purchas-
es and has no expiration date. We anticipate that we will repur-
chase, under our authorized repurchase programs, between
$200.0 million and $250.0 million of our common stock during
2005. The funding required for these share repurchase pro-
grams will come from cash generated from net sales and oper-
ating revenues and cash and cash equivalents. We will also
repurchase shares in the open market to offset the sales of
shares to our employee benefit plans.
Construction of Corporate Headquarters
In the fourth quarter of 2001 and the second quarter of 2002,
we sold our former corporate headquarters buildings. We
entered into sale-leaseback agreements in which our former
corporate headquarters’ land and buildings were sold and
leased back to us. These arrangements provided us with the
necessary time to construct our new headquarters, which we
began partially occupying during the fourth quarter of 2004.
Our total campus costs are estimated to be $261.5 million,
with completion expected during the first quarter of 2005.
Capitalization
The following table sets forth information about our
capitalization at the dates indicated.
December 31,
2004 2003
% of Total % of Total
(In millions) Dollars Capitalization Dollars Capitalization
Current debt $ 55.6 3.7% $ 77.4 5.6%
Long-term debt 506.9 34.2% 541.3 39.0%
Total debt $ 562.5 37.9% $ 618.7 44.6%
Stockholders’ equity 922.1 62.1% 769.3 55.4%
Total capitalization $1,484.6 100.0% $1,388.0 100.0%
Our debt-to-total capitalization ratio decreased in 2004 from
2003, due primarily to an increase in equity of $152.8 million
from 2003. Long-term debt as a percentage of total capitaliza-
tion decreased in 2004 due to a decrease in long-term debt,
as current maturities of our outstanding notes moved to the
short-term debt classification, as well as the increase in equity
of $152.8 million from 2003.
maturity of 90 days or less. The amount of commercial
paper that can be outstanding is limited to a maximum of
the unused portion of our $600 million revolving credit facili-
ties described in more detail below. We currently have no
commercial paper outstanding.
Credit Facilities: In the second quarter of 2004, we replaced
our existing $300.0 million 364-day revolving credit facility
with a new five-year credit facility maturing in June 2009.
The terms of this revolving credit facility are substantially
similar to the previous facility. This credit facility, in addition
to our existing $300.0 million five-year credit facility, which
expires in June 2007, will support our commercial paper
borrowings and is otherwise available for general corporate
purposes. As of December 31, 2004, there were no out-
standing borrowings under these credit facilities. Our out-
standing debt and bank syndicated credit facilities have cus-
tomary covenants, and we were in compliance with these
covenants as of December 31, 2004.
Management believes that our present ability to borrow is
greater than our established credit lines and long-term debt in
place. However, if market conditions change and sales were to
dramatically decline or we could not control operating costs,
our cash flows and liquidity could be reduced. Additionally, if a
scenario as described above occurred, it could cause the rat-
ing agencies to lower our credit ratings, thereby increasing our
borrowing costs, or even causing a reduction in or elimination
of our access to debt and/or equity markets.
Dividends
We have paid common stock cash dividends for 18 years. On
September 24, 2004, our Board of Directors declared an
annual dividend of $0.25 per common share. The dividend
was paid on December 20, 2004, to shareholders of record on
December 1, 2004. The dividend payment of $39.7 million
was funded from cash on hand.
Operating Leases
We use operating leases, primarily for our retail locations and
two distribution centers, to lower our capital requirements.
Share Repurchases
We repurchased 6.9 million shares of our common stock for
$210.9 million during the year ended December 31, 2004,
under our share repurchase program.
We intend to execute share repurchases from time to time in
order to take advantage of attractive share price levels, as
determined by management. The timing and terms of these
transactions depend on market conditions, our liquidity and
Management’s Discussion and Analysis of Financial Condition and Results of Operations
RadioShack Corporation and Subsidiaries
28 AR2004