Radio Shack 2009 Annual Report Download - page 13

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Consumer Electronics Manufacturing - We operate two manufacturing facilities in the United States
and one in China. These three manufacturing facilities employed approximately 2,100 employees as of
December 31, 2009. We manufacture a variety of products, primarily sold through our retail outlets,
including telephones, antennas, wire and cable products, and a variety of “hard-to-find” parts and
accessories for consumer electronics products.
SEASONALITY
As with most other specialty retailers, our net sales and operating revenues, operating income and cash
flows are greater during the fourth quarter, which includes the majority of the holiday shopping season in the
U.S., than during other periods of the year. There is a corresponding pre-seasonal inventory build-up, which
requires working capital related to the anticipated increased sales volume. This is described in “Cash
Requirements” under MD&A. Also, refer to Note 16 – “Quarterly Data (Unaudited)” in the Notes to
Consolidated Financial Statements for data showing seasonality trends. We expect this seasonality to
continue.
PATENTS AND TRADEMARKS
We own or are licensed to use many trademarks and service marks related to our RadioShack stores in
the United States and in foreign countries. We believe the RadioShack name and marks are well
recognized by consumers, and that the name and marks are associated with high-quality products and
services. We also believe the loss of the RadioShack name and RadioShack marks would materially
adversely affect our business. Our private brand manufactured products are sold primarily under the
RadioShack, AUVIO, Accurian, Enercell or Gigaware trademarks. We also own various patents and
patent applications relating to consumer electronics products.
We do not own any material patents or trademarks associated with our kiosk operations.
SUPPLIERS AND NAME BRAND RELATIONSHIPS
Our business strategy depends, in part, upon our ability to offer name brand and private brand products,
as well as to provide our customers access to third-party services. We utilize a large number of suppliers
located in various parts of the world to obtain raw materials and private brand merchandise. We do not
expect a lack of availability of raw materials or any single private brand product to have a material effect
on our operations overall or on any of our operating segments. We have formed vendor and third-party
service provider relationships with well-recognized companies such as Sprint Nextel, AT&T, T-Mobile,
Apple, Casio, Garmin, Hewlett-Packard, Microsoft, Research In Motion, Samsung, and SanDisk. In the
aggregate, these relationships have or are expected to have a significant effect on both our operations and
financial strategy. Certain of these relationships are important to our business; the loss of or disruption in
supply from these relationships could materially adversely affect our net sales and operating revenues.
Additionally, we have been limited from time to time by various vendors and suppliers on an economic
basis where demand has exceeded supply.
ORDER BACKLOG
We have no material backlog of orders in any of our operating segments for the products or services we
sell.
COMPETITION
Due to consumer demand for wireless products and services, as well as rapid consumer acceptance of
new digital technology products, the consumer electronics retail business continues to be highly
competitive, driven primarily by technology and product cycles.
In the consumer electronics retailing business, competitive factors include price, quality, features, product
availability, consumer services, manufacturing and distribution capability, brand reputation and the
number of competitors. We compete in the sale of our products and services with several retail formats
including national, regional, and independent consumer electronics retailers. We compete with
department and specialty retail stores in more select product categories. We compete with wireless
providers in the wireless telephone category through their own retail and online presence. We compete
with mass merchandisers and other alternative channels of distribution, such as mail order and e-
commerce retailers, on a more widespread basis. Numerous domestic and foreign companies also