Radio Shack 2008 Annual Report Download - page 60

NOTE 1 - DESCRIPTION OF BUSINESS
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. We seek to differentiate
ourselves from our various competitors by providing 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.
U.S. RADIOSHACK COMPANY-OPERATED STORES
At December 31, 2008, we operated 4,453 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 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:
Dealer Outlets: At December 31, 2008, we had a network of 1,394 RadioShack dealer outlets, including 36
located outside of North America. Our North American outlets provide name brand and private brand
products and services, typically to smaller communities. These independent dealers are often engaged in
other retail operations and augment their businesses with our products and service offerings. Our dealer
sales derived outside of the United States are not material.
RadioShack.com: Products and information are available through our commercial Web site
www.radioshack.com. Online customers can purchase, return or exchange various products available
through this Web site. Additionally, certain products ordered online may be picked up, exchanged or
returned at RadioShack stores.
RadioShack Service Centers: We maintain a service and support network to service the consumer
electronics and personal computer retail industry in the U.S. We are a vendor-authorized service provider for
many top tier manufacturers, such as Hewlett-Packard, LG Electronics, Motorola, Nokia, and Sony, among
others. In addition, we perform repairs for third-party extended service plan providers. At December 31, 2008,
we had eight RadioShack service centers in the U.S. and one in Puerto Rico that repair certain name brand
and private brand products sold through our various sales channels.
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