Radio Shack 2004 Annual Report Download - page 48

NOTE 8 Treasury Stock Retirement
In December 2003, our Board of Directors approved the
retirement of 45.0 million shares of our common stock held
as treasury stock. These shares returned to the status of
authorized and unissued. Additional details of the transaction
may be seen in our 2003 Consolidated Statement of
Stockholders’ Equity.
NOTE 9 Accrued Expenses and Other Current Liabilities
December 31,
(In millions) 2004 2003
Payroll and bonuses $ 86.0 $ 76.7
Insurance 74.8 70.0
Sales and payroll taxes 39.5 45.5
Rent 22.7 17.4
Gift card deferred revenue 18.8 14.3
Other 100.3 119.1
Total accrued expenses and
other current liabilities $342.1 $343.0
NOTE 10 Other Non-Current Liabilities
December 31,
(In millions) 2004 2003
Deferred compensation $ 78.2 $75.2
Deferred revenue 30.6 –
Deferred taxes 13.5 –
Other 8.0 –
Total other non-current liabilities $130.3 $75.2
Deferred revenue at December 31, 2004 was the result of
us receiving funds from wireless vendors in conjunction with
the acquisition of the SAM’S CLUB kiosk business.
NOTE 11 Business Restructurings
At December 31, 2004, the balance in the restructuring
reserve related to the closure in 1996 and 1997 of various
McDuff, Computer City and Incredible Universe retail stores
was $5.1 million. This reserve represents the expected costs
to be paid in connection with the remaining real estate lease
obligations. If these facilities’ sublease income declines in
their respective markets or if it takes longer than expected
to sublease or dispose of these facilities, the actual losses
could exceed this reserve estimate. Costs will continue to
be incurred over the remaining terms of the related leases.
During the year ended December 31, 2004, costs of $11.9
million were charged against this reserve, principally relating
to the settlement of one location in Miami, Florida.
NOTE 12 Gain on Contract Termination
RadioShack and Microsoft Corporation mutually agreed dur-
ing 2002 to terminate their agreement and settle the remain-
ing commitments each had to one another. The termination
of this agreement took effect at the start of the fourth quarter
of 2002, upon satisfaction of several contractual obligations.
The net financial result was an $18.5 million gain (principally
cash received), driven primarily by the settlement of a
multi-year obligation Microsoft had to connect our stores
with broadband capabilities.
NOTE 13 Income Taxes
Deferred tax assets and liabilities as of December 31, 2004
and 2003, were comprised of the following:
December 31,
(In millions) 2004 2003
Deferred tax assets:
Insurance reserves $24.3 $ 22.4
Deferred compensation 25.5 23.8
Inventory adjustments, net 1.6 6.5
Restructuring reserves 2.6 6.5
Bad debt reserve 0.5 1.6
Other 12.9 29.0
Total deferred tax assets 67.4 89.8
Deferred tax liabilities:
Deferred taxes on foreign operations 16.2 14.5
Depreciation and amortization 24.1 10.3
Other 3.8 3.1
Total deferred tax liabilities 44.1 27.9
Net deferred tax assets $23.3 $ 61.9
The net deferred tax asset is classified as follows:
Other current assets $36.8 $ 39.7
Other (non-current liabilities) assets (13.5) 22.2
Net deferred tax assets $23.3 $ 61.9
Notes to Consolidated Financial Statements
RadioShack Corporation and Subsidiaries
46 AR2004