Radio Shack 2004 Annual Report Download - page 34

Factors That May Affect Future Results
Matters discussed in MD&A and in other parts of this report
include forward-looking statements within the meaning of
the federal securities laws. These matters include statements
concerning management’s plans and objectives relating to
our operations or economic performance and related assump-
tions. We specifically disclaim any duty to update any of the
information set forth in this report, including any forward-look-
ing statements. Forward-looking statements are made based on
management’s current expectations and beliefs concerning
future events and, therefore, involve a number of risks and
uncertainties. Management cautions that forward-looking state-
ments are not guarantees, and our actual results could differ
materially from those expressed or implied in the forward-look-
ing statements. Important factors that could cause our actual
results of operations or financial condition to differ materially
include, but are not necessarily limited to, the following factors.
General Business Factors
>Changes in national or regional U.S. economic conditions,
including, but not limited to, recessionary or inflationary
trends, equity market levels, consumer credit availability,
interest rates, consumers’ disposable income and spending
levels, continued rise of oil prices, job security and unem-
ployment, and overall consumer confidence;
>changes in the amount and degree of promotional intensity
exerted by current competitors and potential new competi-
tion from both retail stores and alternative methods or
channels of distribution, such as e-commerce, telephone
shopping services and mail order;
>any potential tariffs imposed on products that we import
from China, as well as the potential strengthening of
China’s currency against the U.S. dollar;
>continuing terrorist activities in the U.S., as well as the
international war on terrorism;
>the disruption of international, national or regional trans-
portation systems;
>the lack of availability or access to sources of inventory;
>changes in the financial markets that would reduce or
eliminate our access to longer term capital or short-term
credit availability;
>the imposition of new restrictions or regulations regarding
the products and/or services we sell or changes in tax rules
and regulations applicable to us; and
>the occurrence of severe weather events or natural disasters
which could significantly damage or destroy outlets or
prohibit consumers from traveling to our retail locations,
especially during the peak holiday shopping season.
RadioShack Specific Factors
>The inability to successfully execute our solutions strategy to
dominate cost-effective solutions to meet everyone’s routine
electronics needs and families’ distinct electronics wants;
>the failure to differentiate ourselves as an electronics
specialty retailer in the U.S. marketplace;
>the failure to maintain or increase the level of sales in our
non-wireless business categories;
>any reductions or changes in the growth rate of the wireless
industry and changes in the wireless communications indus-
try dynamics, including the effects of industry consolidation;
>the inability to create, maintain or renew profitable contracts
or execute business plans with providers of third-party brand-
ed products and with service providers relating to cellular
and PCS telephones which could cause the reduction or
elimination of our commissions as well as residual income;
>the presence or absence of new services or products and
product features in the merchandise categories we sell and
unexpected changes in our actual merchandise sales mix;
>the inability to effectively manage our inventory levels in a
rapidly changing marketplace;
>the inability to attract, retain and grow an effective man-
agement team in a dynamic environment or changes in
the cost or availability of a suitable workforce to manage
and support our operating strategies;
>the inability to optimize and execute our strategic
plans, including our retail services operations and
other sales channels;
>the existence of contingent lease obligations related to our
discontinued retail operations arising from an assignee’s or a
sub-lessee’s failure to fulfill its lease commitments, or from
our inability to identify suitable sub-lessees for vacant facilities;
>the inability to successfully identify and analyze emerging
growth opportunities in the areas of strategic business
alliances, acquisitions, licensing opportunities, new markets,
non-store sales channels, and innovative products; and
>the inability to successfully identify and enter into relation-
ships with developers of new technologies or the failure
of these new technologies to be adopted by the market.
Management’s Report on Internal Control over
Financial Reporting
Our management is responsible for establishing and maintain-
ing adequate internal control over financial reporting, as such
term is defined in Exchange Act Rule 13a-15(f). Under the
supervision and with the participation of our management,
including our CEO and Acting CFO, we conducted an evaluation
of the effectiveness of our internal control over financial report-
ing based on the framework in “Internal Control – Integrated
Framework” issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on our eval-
uation under the framework in “Internal Control – Integrated
Framework,” our management concluded that our internal
control over financial reporting was effective as of December
31, 2004. Our management’s assessment of the effectiveness
of our internal control over financial reporting as of December
31, 2004, has been audited by PricewaterhouseCoopers LLP,
an independent registered public accounting firm, as stated in
their report which is included herein.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
RadioShack Corporation and Subsidiaries
32 AR2004