Radio Shack 2010 Annual Report Download - page 63

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combinations. The purchase price allocation resulted in an
excess of purchase price over net tangible assets acquired
of $35.5 million, all of which was attributed to goodwill. The
goodwill is not subject to amortization for book purposes
but rather an annual test for impairment. The premium we
paid in excess of the fair value of the net assets acquired
was based on the established business in Mexico and our
ability to expand our business in Mexico and possibly other
countries. The goodwill is not deductible for tax purposes.
Results of the acquired business have been included in our
operations since December 1, 2008.
NOTE 5 – INDEBTEDNESS AND BORROWING
FACILITIES
Long-Term Debt:
December 31,
(In millions) 2010 2009
Five year 2.5% unsecured
convertible notes due in 2013 $ 375.0 $ 375.0
Ten-year 7.375% unsecured
note payable due in 2011 306.8 306.8
Other 1.0 1.0
682.8 682.8
Unamortized debt discounts and
other costs (44.2) (59.4)
Basis adjustment due to interest
rate swaps
1.2 4.4
639.8 627.8
Less current portion of:
Notes payable 306.8 --
Unamortized basis adjustment
and other costs 1.2 --
308.0 --
Total long-term debt $ 331.8 $ 627.8
Long-term borrowings outstanding at December 31, 2010,
mature as follows:
Long-Term
Borrowings
(In millions)
2011 $ 306.8
2012 --
2013 375.0
2014 1.0
2015 --
2016 and thereafter --
Total $ 682.8
2013 Convertible Notes: In August 2008, we issued $375
million principal amount of convertible senior notes due
August 1, 2013, (the “2013 Convertible Notes”) in a private
offering to qualified institutional buyers under Securities and
Exchange Commission (“SEC”) Rule 144A. The 2013
Convertible Notes were issued at par and bear interest at a
rate of 2.50% per annum. Interest is payable semiannually,
in arrears, on February 1 and August 1.
Each $1,000 of principal of the 2013 Convertible Notes is
initially convertible, under certain circumstances, into
41.2414 shares of our common stock (or a total of
approximately 15.5 million shares), which is the equivalent
of $24.25 per share, subject to adjustment upon the
occurrence of specified events set forth under terms of the
2013 Convertible Notes. Upon conversion, we would pay
the holder the cash value of the applicable number of
shares of our common stock, up to the principal amount of
the note. Amounts in excess of the principal amount, if any
(the “excess conversion value”), may be paid in cash or in
stock, at our option. Holders may convert their 2013
Convertible Notes into common stock on the net settlement
basis described above at any time from May 1, 2013, until
the close of business on July 29, 2013, or if, and only if,
one of the following conditions has been met:
• During any calendar quarter, and only during such
calendar quarter, in which the closing price of our
common stock for at least 20 trading days in the
period of 30 consecutive trading days ending on the
last trading day of the preceding calendar quarter
exceeds 130% of the conversion price per share of
common stock in effect on the last day of such
preceding calendar quarter
• During the five consecutive business days
immediately after any 10 consecutive trading day
period in which the average trading price per $1,000
principal amount of 2013 Convertible Notes was less
than 98% of the product of the closing price of the
common stock on such date and the conversion rate
on such date
• We make specified distributions to holders of our
common stock or specified corporate transactions
occur
The 2013 Convertible Notes were not convertible at the
holders' option at any time during 2010 or 2009.
Holders who convert their 2013 Convertible Notes in
connection with a change in control may be entitled to a
make-whole premium in the form of an increase in the
conversion rate. In addition, upon a change in control,
liquidation, dissolution or delisting, the holders of the 2013
Convertible Notes may require us to repurchase for cash all
or any portion of their 2013 Convertible Notes for 100% of
the principal amount of the notes plus accrued and unpaid
interest, if any. As of December 31, 2010, none of the
conditions allowing holders of the 2013 Convertible Notes
to convert or requiring us to repurchase the 2013
Convertible Notes had been met.
In connection with the issuance of the 2013 Convertible
Notes, we entered into separate convertible note hedge
transactions and separate warrant transactions with respect
to our common stock to reduce the potential dilution upon