Radio Shack 2009 Annual Report Download - page 83

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of the corporate headquarters for a shorter time period. The amended and restated lease agreement
provides for us to occupy approximately 40% of the corporate headquarters complex for a primary term of
three years with no rental payments required during the term The agreement also provides for one two-
year option to renew approximately half of the space at market-based rents.
This agreement resulted in a non-cash net charge to selling, general and administrative expense of $12.1
million for the second quarter of 2008. This net amount consisted of a net loss of $2.8 million related to the
assets conveyed to TCC and a $9.3 million charge to reduce a receivable for economic development
incentives associated with the corporate headquarters to its net realizable value. As a result of the
amended and restated lease agreement, the future minimum lease payments required by the corporate
headquarters lease have decreased from $289.7 million at December 31, 2007, to zero.
Rent Expense:
Year Ended December 31,
(In millions) 2009 2008 2007
Minimum rents $ 228.7 $ 228.8 $ 237.1
Occupancy cost 39.4 38.2 43.3
Contingent rents 23.7 27.8 24.2
Total rent expense $ 291.8 $ 294.8 $ 304.6
Litigation: On October 10, 2008, the Los Angeles County Superior Court granted RadioShack's second
Motion for Class Decertification in the class action lawsuit of Brookler v. RadioShack Corporation.
Plaintiffs’ claims that RadioShack violated California's wage and hour laws relating to meal periods was
originally certified as a class action on February 8, 2006. RadioShack's first Motion for Decertification of
the class was denied on August 29, 2007. However, after the California Appellate Court's favorable
decision on similar facts in Brinker Restaurant Corporation v. Superior Court, RadioShack again sought
class decertification. Based on the California Appellate Court’s decision in Brinker, the trial court granted
RadioShack’s second motion. The plaintiffs in Brookler have appealed this ruling. Due to the unsettled
nature of California state law regarding the standard of liability for meal period violations, RadioShack and
the Brookler plaintiffs agreed to a stay with respect to the plaintiffs’ appeal of the class decertification
ruling, pending the California Appellate court’s decision in Brinker. The outcome of this action is uncertain
and the ultimate resolution of this matter could have a material adverse effect on RadioShack’s financial
position, results of operations, and cash flows in the period in which any such resolution is recorded.
However, management believes the outcome of this case will not have such an effect.
On June 7, 2007, a purported class action lawsuit, Richard Stuart v. RadioShack Corporation, et al, was
filed against RadioShack in the U.S. District Court for the Northern District of California, based on
allegations that RadioShack failed to properly reimburse employees in California for mileage expenses
associated with their use of personal vehicles to make transfers of merchandise between Company
stores. On February 9, 2009, the court granted the plaintiffs’ Motion for Class Certification. Following a
mediation held on October 5, 2009, the parties reached a tentative settlement of the lawsuit subject to
court approval. The parties reached agreement on all terms of the proposed settlement agreement in
January 2010, and the plaintiffs will be filing a Motion for Preliminary Approval. Until the settlement is
approved by the court, the outcome of this action remains uncertain, although it is unlikely that the
ultimate resolution of this matter will have a material adverse effect on RadioShack’s financial position,
results of operations, and cash flows in the period in which any such resolution is recorded.
We have various other pending claims, lawsuits, disputes with third parties, investigations and actions
incidental to the operation of our business, including certain cases discussed generally below under
“Continuing Lease Obligations”. Although occasional adverse settlements or resolutions may occur and
negatively affect earnings in the period or year of settlement, it is our belief that their ultimate resolution
will not have a material adverse effect on our financial condition or liquidity.