Radio Shack 2010 Annual Report Download - page 41

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In September 2009, we completed a tender offer to
purchase for cash any and all of these notes. Upon
expiration of the offer, $43.2 million of the aggregate
outstanding principal amount of the notes was validly
tendered and accepted. We paid a total of $46.6 million,
which consisted of the purchase price of $45.4 million for
the tendered notes plus $1.2 million in accrued and unpaid
interest, to the holders of the tendered notes.
On January 4, 2011, we announced our intention to redeem
any and all outstanding 2011 Notes on March 4, 2011. See
Note 15 - “Subsequent Events” in the Notes to
Consolidated Financial Statements for more information.
Operating Leases: We use operating leases, primarily for
our retail locations and our corporate campus, to lower our
capital requirements.
Continuing Lease Obligations: We have obligations
under retail leases for locations that we assigned to other
businesses. The majority of these lease obligations arose
from leases for which CompUSA Inc. (“CompUSA”)
assumed responsibility as part of its purchase of our
Computer City, Inc. subsidiary in August 1998. Because the
company that assumed responsibility for these leases has
ceased operations, we may be responsible for rent due
under the leases.
Following an announcement by CompUSA in February
2007 of its intention to close as many as 126 stores and an
announcement in December 2007 that it had been acquired
by Gordon Brothers Group, CompUSA’s stores ceased
operations in January 2008. We may be responsible for
rent due on a portion of the leases that relate to the closed
stores. As of February 3, 2011, we had been named as a
defendant in a total of 13 lawsuits from lessors seeking
payment from us, 12 of which have been resolved.
Based on all available information pertaining to the status of
these lawsuits, and after applying the Financial Accounting
Standards Board’s (“FASB”) guidance on accounting for
contingencies, the balance of our accrual for these
obligations was $2.4 million and $6.2 million at December
31, 2010 and 2009, respectively. We will continue to
monitor this situation for new information on outstanding
litigation and settlements, but we do not consider the
amounts of these obligations, both individually and in the
aggregate, to be material to our results of operations or
financial position.
Capitalization
The following table sets forth information about our
capitalization on the dates indicated.
December 31,
2010 2009
(Dollars in millions)
Dollars
% of Total
Capitalization
Dollars
% of Total
Capitalization
Short-term debt $ 308.0
20.8% $ -- -- %
Long-term debt 331.8
22.4 627.8
37.5
Total debt 639.8
43.2 627.8
37.5
Stockholders’
equity 842.5
56.8 1,048.3
62.5
Total capitalization
$1,482.3
100.0% $1,676.1
100.0%
Our debt-to-total capitalization ratio increased in 2010 from
2009, primarily due to the repurchase of $398.8 million of
our common stock in 2010.
Dividends: We have paid common stock cash dividends
for 24 consecutive years. On November 4, 2010, our Board
of Directors declared an annual dividend of $0.25 per
share. The dividend was paid on December 16, 2010, to
stockholders of record on November 26, 2010. The
dividend payment of $26.5 million was funded from cash on
hand.
Share Repurchases: In July 2008, our Board of Directors
approved a share repurchase program with no expiration
date authorizing management to repurchase up to $200
million of our common stock. During the third quarter of
2008, we repurchased 6.0 million shares or $110.0 million
of our common stock under this program. As of December
31, 2008, $90.0 million was available for share repurchases
under this program.
In August 2009, our Board of Directors approved a $200
million increase in this share repurchase program. As of
December 31, 2009, $290 million of the total authorized
amount was available for share repurchases under this
program.
In August 2010, our Board of Directors approved an
increase in this share repurchase program from $400
million to $610 million, with $500 million available for share
repurchases under this program. In November 2010, we
completed a $300 million accelerated share repurchase
(“ASR”) program that we entered into in August 2010,
which is further discussed below. We repurchased 14.9
million shares under the ASR program. In addition, after the
conclusion of the ASR program, we repurchased $98.6
million worth of shares in the open market, representing 4.9
million shares. As of December 31, 2010, $101.4 million of
the total authorized amount was available for share
repurchases under this program.