Radio Shack 2010 Annual Report Download - page 28

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18
(1) Total capitalization is defined as total debt plus total stockholders' equity.
(2)
Adjusted
EBITDA, a non-GAAP financial measure, is defined as earnings before interest, taxes, depreciation and amortization. Our calculation of adjusted
EBITDA is also adjusted for other income or loss. The comparable financial measure to adjusted EBITDA under GAAP is net income. Adjusted EBITDA is
used by management to evaluate the operating performance of our business for comparable periods and is a metric used in the computation of annual
cash bonuses and long-term cash incentives. Adjusted EBITDA should not be used by investors or others as the sole basis for formulating investment
decisions as it excludes a number of important items. We compensate for this limitation by using GAAP financial measures as well in managing our
business. In the view of management, adjusted EBITDA is an important indicator of operating performance because adjusted EBITDA excludes the effects
of financing and investing activities by eliminating the effects of interest and depreciation costs.
(3) Comparable store sales include the sales of U.S. and Mexico RadioShack company-operated stores and kiosks with more than 12 full months of recorded
sales. Following their closure as Sprint-branded kiosks in August 2009, certain former Sprint-branded kiosk locations became multiple wireless carrier
RadioShack-branded locations. At December 31, 2009, we managed and reported 111 of these locations as extensions of existing RadioShack company-
operated stores located in the same shopping malls. For purposes of calculating our comparable store sales, we include sales from these locations for
periods after they became extensions of existing RadioShack company-operated stores, but we do not include sales from these locations for periods while
they were operated as Sprint-branded kiosks.
(4) These amounts were affected by our 2006 restructuring program. For more information, please refer to our Consolidated Financial Statements and related
Notes included in our 2006 Annual Report on Form 10-K.
The following table is a reconciliation of adjusted EBITDA to net income.
Year Ended December 31,
(In millions) 2010 2009 2008 2007 2006
(
4
)
Reconciliation of Adjusted EBITDA to Net Income
Adjusted EBITDA
$ 459.6
$ 462.3
$ 421.3
$ 494.6
$ 285.1
Interest expense, net of interest income (39.3)
(39.3)
(20.3)
(16.2)
(36.9)
Income tax expense (130.0)
(123.5)
(110.1)
(129.8)
(38.0)
Depreciation and amortization (84.2)
(92.9)
(99.1)
(112.7)
(128.2)
Other (loss) income --
(1.6)
(2.4)
0.9
(8.6)
Net income $ 206.1
$ 205.0
$ 189.4
$ 236.8
$ 73.4