Radio Shack 2008 Annual Report Download - page 5

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On the topic of the balance sheet, as it became clear last summer that a major
economic dislocation was in the offing, your Board and management initiated a
renewed focus on strengthening the balance sheet of the company. Accordingly,
in August of 2008 we issued $375 million of convertible notes due 2013, the
proceeds of which went to bolster our cash position.
I should also mention that we increased capital expenditure levels in 2008.
Approximately half of the $86 million we spent during the year was directed
to upgrading our company-operated stores. Among other things, this upgrade
established a more compelling display of our wireless offering and makes it easier
for our customers to compare and contrast product attributes. We believe that
the upgrades, combined with better operating disciplines within the stores, led to
the strong performance of our wireless business during the fourth quarter.
In addition to our capital expenditures, we acquired 200 stores in Mexico for
approximately $45 million in December. The stores were previously operated as
a joint venture that we had established with Grupo Gigante, S.A.B. de C.V. in 1992.
We also spent approximately $110 million on share repurchases during the first
nine months of the year. This is one area in which the benefit of hindsight would
have been significant. Nonetheless, over the year we saw our cash balance grow
from $510 million to $815 million, placing us in a strong position to enter 2009.
Looking forward to 2009, we plan to continue the work on which we progressed
in 2008. At the same time, in so challenging an economic environment, control of
our business economics will be critical. We will husband our resources and seek
further to strengthen our balance sheet. At the same time we are acutely aware
that—in a period of economic turmoil, opportunities for beneficial changes often
present themselves. As the effects of rising economic pressures roll rapidly through
our economy, we intend to be vigilant in identifying and acting on both risks to our
business and possibilities offered by the unfolding economic situation.
In closing, I want to thank the more than 34,000 RadioShack employees who are
helping us build a more efficient and productive company that is better positioned
to serve the technology needs of our customers in an increasingly competitive
environment. We have made a lot of progress on improving the quality of
our operations, the stature of our brand and the skills of our people. There is
more work to be done this next year while we also manage through the economic
challenges that 2009 is certain to bring.
Sincerely,
Julian C. Day
Chairman and Chief Executive Officer
RadioShack Corporation—page 3
Cash & Cash Equivalents and
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2006 2007 2008
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Cash & Cash Equivalents
Cash Flows from Operations
Capital Expenditures
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2006 2007 2008
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