Radio Shack 2010 Annual Report Download - page 39

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to 2.75% for standby letters of credit or 1.125% to 1.375%
for commercial letters of credit.
We pay commitment fees to the lenders at an annual rate
of 0.50% of the unused amount of the facility. No
borrowings, other than the issuance of letters of credit
totaling $32.8 million as of February 15, 2011, have been
made under the 2016 Credit Facility.
The 2016 Credit Facility contains affirmative and negative
covenants that, among other things, restrict certain
payments, including dividends and share repurchases.
Also, we will be subject to a minimum consolidated fixed
charge coverage ratio if our unused amount under the
facility is less than the greater of 12.5% of the maximum
borrowing amount and $45.0 million.
We are generally free to pay dividends and repurchase
shares as long as the current and projected unused amount
under the facility is greater than 17.5% of the maximum
borrowing amount and the minimum consolidated fixed
charge coverage ratio is maintained. We may pay dividends
and repurchase shares without regard to the Company's
consolidated fixed charge coverage ratio as long as the
current and projected unused amount under the facility is
greater than 75% of the maximum borrowing amount and
cash on hand is used for the dividends or share
repurchases.
CASH REQUIREMENTS
Capital Expenditures: We anticipate that our capital
expenditure requirements for 2011 will range from $100
million to $125 million. The nature of our capital
expenditures is comprised of a base level of investment
required to support our current operations and a
discretionary amount related to our strategic initiatives. The
base level of capital expenditures required to support our
operations ranges from $40 million to $60 million. The
remaining amount of anticipated capital expenditures
relates to strategic initiatives as reflected in our annual
plan. These capital expenditures are discretionary and,
therefore, may not be spent if we decide not to pursue one
or more of our strategic initiatives. U.S. RadioShack
company-operated store remodels and relocations, Target
kiosks, and information systems projects will account for
the majority of our anticipated 2011 capital expenditures.
Cash and cash equivalents and cash generated from
operating activities will be used to fund future capital
expenditure needs.
Seasonal Inventory Buildup: Typically, our annual cash
requirements for pre-seasonal inventory buildup range
between $150 million and $250 million. The funding
required for this buildup comes primarily from cash on hand
and cash generated from net sales and operating revenues.
Additionally, our 2016 Credit Facility could be utilized to
fund the inventory buildup.
Contractual Obligations
The table below contains our known contractual commitments as of December 31, 2010.
(In millions) Payments Due by Period
Contractual Obligations
Total Amounts
Committed
Less Than
1 Year 1-3 Years 3-5 Years
Over
5 Years
Long-term debt obligations
(1)
$ 682.8
$ 306.8
$ 375.0
$ 1.0
$ --
Interest obligations 32.7
17.8
14.9
--
--
Operating lease obligations
(
2
)
562.9
196.7
233.8
99.2
33.2
Purchase obligations
(
3
)
291.8
268.4
19.4
4.0
--
Other long-term liabilities reflected on the balance sheet
(
4
)
93.0
27.6
6.5
22.3
Total $ 1,663.2
$ 789.7
$ 670.7
$ 110.7
$ 55.5
(1) For more information regarding long-term debt, refer to Note 5 – “Indebtedness and Borrowing Facilities” of our Notes to Consolidated Financial Statements
included elsewhere in this Annual Report on Form 10-K.
(2) For more information regarding lease commitments, refer to Note 13 – “Commitments and Contingencies” of our Notes to Consolidated Financial Statements
included elsewhere in this Annual Report on Form 10-K.
(3) Purchase obligations include our product commitments, marketing agreements and freight commitments.
(4) Includes a $36.6 million liability for unrecognized tax benefits. We are not able to reasonably estimate the timing of the payments or the amount by which the
liability will increase or decrease over time; therefore, the related balances have not been reflected in the ‘‘Payments Due by Period’’ section of the table.