Radio Shack 2004 Annual Report Download - page 54

Compensation and interest expense related to the 401(k)
Plan before the reduction for the allocation of dividends are
presented below for each year ended December 31:
(In millions) 2004 2003 2002
Compensation expense $– $– $4.3
Accrued additional contribution –– 4.1
Interest expense –– 0.2
The last allocation of TESOP Preferred Stock to participants
was made as of the 401(k) Plan year ended March 31, 2003,
and was based on the total debt service made on the indebt-
edness. As shares of the TESOP Preferred Stock were
allocated to 401(k) Plan participants, compensation expense
was recorded and unearned compensation was reduced.
Interest expense on the Refinanced Notes was also recog-
nized as a cost of the 401(k) Plan. The compensation
component of the 401(k) Plan expense was reduced by
the amount of dividends accrued on the TESOP Preferred
Stock, with any dividends in excess of the compensation
expense reflected as a reduction of interest expense.
Contributions made by us to the 401(k) Plan for the year
ended December 31, 2002, totaled $4.0 million. Dividends
paid on the TESOP Preferred Stock were $4.5 million.
As of December 31, 2002, all of the original 100,000 shares
of TESOP Preferred Stock were converted into 5.1 million
shares of our common stock and allocated to participants’
accounts in the 401(k) Plan.
NOTE 21 Treasury Stock Repurchase Program
In February 2003, our Board of Directors authorized a repur-
chase program for 15.0 million shares, which was in addition
to our 25.0 million share repurchase program that was com-
pleted during the second quarter of 2003. The 15.0 million
share repurchase program has no expiration date and allows
shares to be repurchased in the open market. We repur-
chased 6.9 million shares of our common stock for $210.9
million for the year ended December 31, 2004, under the
15.0 million share repurchase program. The funding required
for these repurchases came from cash generated from net
sales and operating revenues and cash and cash equivalents.
We also repurchase shares in the open market to offset the
sales of shares to our employee benefit plans. At February
18, 2005, there were 2.5 million shares available to be
repurchased under the 15.0 million share repurchase program.
On February 25, 2005, our Board of Directors approved a
new share repurchase program. This new program authorizes
management to repurchase up to $250 million in open market
purchases and has no expiration date.
NOTE 22 Preferred Share Purchase Rights
In July 1999, we amended and restated a stockholder rights
plan which declared a dividend of one right for each out-
standing share of our common stock. The rights plan, as
amended and restated, will expire on July 26, 2009. The
rights are currently represented by our common stock cer-
tificates. When the rights become exercisable, they will
entitle each holder to purchase 1/10,000th of a share of our
Series A Junior Participating Preferred Stock for an exercise
price of $250 (subject to adjustment). The rights will
become exercisable and will trade separately from the com-
mon stock only upon the date of public announcement that
a person, entity or group (“Person”) has acquired 15% or
more of our outstanding common stock without the con-
sent or approval of the disinterested directors (“Acquiring
Person”) or ten days after the commencement or public
announcement of a tender or exchange offer which would
result in any Person becoming an Acquiring Person. In the
event that any Person becomes an Acquiring Person, the
rights will be exercisable for 60 days thereafter for our com-
mon stock with a market value (as determined under the
rights plan) equal to twice the exercise price. In the event
that, after any Person becomes an Acquiring Person, we
engage in certain mergers, consolidations, or sales of assets
representing 50% or more of our assets or earning power
with an Acquiring Person (or Persons acting on behalf of or
in concert with an Acquiring Person) or in which all holders
of common stock are not treated alike, the rights will be
exercisable for common stock of the acquiring or surviving
company with a market value (as determined under the
rights plan) equal to twice the exercise price. The rights will
not be exercisable by any Acquiring Person. The rights are
redeemable at a price of $0.01 per right prior to any Person
becoming an Acquiring Person or, under certain circum-
stances, after a Person becomes an Acquiring Person.
NOTE 23 Dividends Declared
We declared dividends of $0.25, $0.25 and $0.22 for the
years 2004, 2003 and 2002, respectively. Dividends declared
in 2002 and thereafter have been paid annually in December.
Notes to Consolidated Financial Statements
RadioShack Corporation and Subsidiaries
52 AR2004