Radio Shack 2010 Annual Report Download - page 65

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As of December 31, 2010, we had $292.3 million in
borrowing capacity available under the facility. We did not
borrow under the facility during 2010, but we did arrange for
the issuance of standby letters of credit totaling $32.7
million under the facility.
This credit facility was scheduled to expire in May of 2011.
On January 4, 2011, we terminated the facility and replaced
it with a new $450 million five-year asset-based revolving
credit facility. See Note 15 - “Subsequent Events” for more
information.
NOTE 6 – STOCKHOLDERS’ EQUITY
2005 Share Repurchase Program: In February 2005, our
Board of Directors approved a share repurchase program
with no expiration date authorizing management to
repurchase up to $250 million of our common stock in open
market purchases. During 2008, we repurchased
approximately 0.1 million shares or $1.4 million of our
common stock under this program. As of December 31,
2008, there were no further share repurchases authorized
under this program.
2008 Share Repurchase Program: 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, there was $90.0 million 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 in November 2010, 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.
Accelerated Share Repurchase Program: As mentioned
above, in August 2010, we entered into an accelerated
share repurchase program with two investment banks to
repurchase shares of our common stock under our
approved share repurchase program. On August 24, 2010,
we paid $300 million to the investment banks in exchange
for an initial delivery of 11.7 million shares to us. At the
conclusion of the ASR program, we received an additional
3.2 million shares. The 14.9 million shares delivered to us
was based on the average daily volume weighted average
price of our common stock over a period beginning
immediately after the effective date of the ASR agreements
and ending on November 2, 2010.
Dividends Declared: We declared an annual dividend of
$0.25 per share in November of 2010, 2009 and 2008. The
dividends were paid in December of each year.
Call Spread Transactions: In connection with the
issuance of the 2013 Convertible Notes (see Note 5 –
“Indebtedness and Borrowing Facilities”), we entered into
separate convertible note hedge transactions and separate
warrant transactions related to our common stock with
Citigroup and Bank of America to reduce the potential
dilution upon conversion of the 2013 Convertible Notes.
Under the terms of the convertible note hedge
arrangements (the “Convertible Note Hedges”), we paid
$86.3 million for a forward purchase option contract under
which we are entitled to purchase a fixed number of shares
of our common stock at a price per share of $24.25. In the
event of the conversion of the 2013 Convertible Notes, this
forward purchase option contract allows us to purchase, at
a fixed price equal to the implicit conversion price of
common shares issued under the 2013 Convertible Notes,
a number of common shares equal to the common shares
that we issue to a note holder upon conversion. Settlement
terms of this forward purchase option allow us to elect cash
or share settlement based on the settlement option we
choose in settling the conversion feature of the 2013
Convertible Notes. The Convertible Note Hedges expire on
August 1, 2013.
Also concurrent with the issuance of the 2013 Convertible
Notes, we sold warrants (the “Warrants”) permitting the
purchasers to acquire shares of our common stock. The
Warrants are currently exercisable for 15.5 million shares of
RadioShack common stock at a current exercise price of
$36.60 per share. We received $39.9 million in proceeds for
the sale of the Warrants. The Warrants may be settled at
various dates beginning in November 2013 and ending in
March 2014. The Warrants provide for net share
settlement. In no event will we be required to deliver a
number of shares in connection with the transaction in
excess of twice the aggregate number of Warrants.
We determined that the Convertible Note Hedges and
Warrants meet the requirements of the FASB’s accounting
guidance for accounting for derivative financial instruments
indexed to, and potentially settled in, a company's own