Radio Shack 2008 Annual Report Download - page 11

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PART I
ITEM 1. BUSINESS.
GENERAL
RadioShack Corporation was incorporated in Delaware in 1967. We primarily engage in the retail sale of
consumer electronics goods and services through our RadioShack store chain and non-RadioShack branded
kiosk operations. Our strategy is to provide cost-effective solutions to meet the routine electronics needs and
distinct electronics wants of our customers. Throughout this report, the terms “our,” “we,” “us” and
“RadioShack” refer to RadioShack Corporation, including its subsidiaries.
Our day-to-day focus is concentrated in four major areas:
• Provide our customers a positive in-store experience
• Grow gross profit dollars by increasing the overall value of each ticket
• Control costs continuously throughout the organization
• Utilize the funds generated from operations appropriately and invest only in projects that have an
adequate return or are operationally necessary
Additional information regarding our business segments is presented below and in Management’s Discussion
and Analysis of Financial Condition and Results of Operations (“MD&A”) elsewhere in this Annual Report on
Form 10-K. For information regarding the net sales and operating revenues and operating income for each
of our business segments for fiscal years ended December 31, 2008, 2007 and 2006, please see Note 16
– “Segment Reporting” in the Notes to Consolidated Financial Statements.
U.S. RADIOSHACK COMPANY-OPERATED STORES
At December 31, 2008, we operated 4,453 U.S. company-operated stores under the RadioShack brand
located throughout the United States, as well as in Puerto Rico and the U.S. Virgin Islands. These stores are
located in major shopping malls and strip centers, as well as individual storefronts. Each location carries a
broad assortment of both name brand and private brand consumer electronics products. Our product lines
include wireless telephones and communication devices such as scanners and global positioning satellite
navigation units (“GPS”); flat panel televisions, residential telephones, DVD players, computers and direct-to-
home (“DTH”) satellite systems; home entertainment, wireless, imaging and computer accessories; general
and special purpose batteries; wire, cable and connectivity products; and digital cameras, radio-controlled
cars and other toys, satellite radios and memory players. We also provide consumers access to third-party
services such as wireless telephone and DTH satellite activation, satellite radio service, prepaid wireless
airtime and extended service plans.
KIOSKS
At December 31, 2008, we operated 688 kiosks located throughout the United States and Puerto Rico.
These kiosks are primarily inside Sam’s Club locations, as well as stand-alone Sprint Nextel kiosks in
shopping malls. These locations, which are not RadioShack-branded, offer primarily wireless handsets and
their associated accessories. We also provide consumers access to third-party wireless telephone services.
Our contract to operate Sprint Nextel kiosks expires in June of 2009. We are currently in discussion with
Sprint Nextel to renew this contract, but the ultimate resolution is unknown at this time. The possible
outcomes include renewing the contract under the same terms and conditions, modifying the contract, or
ceasing operations.
In February 2009, we signed a contract extension through March 31, 2011, with a transition period ending
June 30, 2011, with Sam’s Club to continue operating kiosks in certain Sam’s Club locations. As part of the
terms of the contract extension, we will assign the operation of 66 kiosk locations to Sam’s Club by July
2009. Upon the execution of this agreement, Sam’s Club had the right to assume the operation of
approximately 25 kiosk locations. Based on certain performance metrics, Sam’s Club could acquire the right
to assume approximately 25 additional kiosk locations in 2010. The total number of locations assumed by
Sam’s Club, for any reason, may not exceed 51 kiosk locations during term of the contract.
OTHER
In addition to the reportable segments discussed above, we have other sales channels and support
operations described as follows:
4