Radio Shack 2011 Annual Report Download - page 12

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that ships store fixtures to our U.S. and Mexico
company-operated stores and kiosks.
RadioShack Technology Services (“RSTS”) - Our
management information system architecture is
composed of a distributed, online network of
computers that links all stores, kiosks, customer
channels, delivery locations, service centers, credit
providers, distribution facilities and our home office into
a fully integrated system. Each retail location has its
own server to support the point-of-sale (“POS”)
system. The majority of our U.S. company-operated
stores and kiosks communicate through a broadband
network, which provides efficient access to customer
support data. This design also allows store
management to track daily sales and inventory at the
product or sales associate level. RSTS provides the
majority of our programming and systems analysis
needs.
RadioShack Global Sourcing (“RSGS”) - RSGS
serves our wide-ranging international import/export,
sourcing, evaluation, logistics and quality control
needs. RSGS’s activities support our name brand and
private brand businesses.
DISCONTINUED OPERATIONS
In February 2009, we signed a contract extension with
Sam’s Club through March 31, 2011, with a transition
period that ended on June 30, 2011, to continue operating
kiosks in certain Sam’s Club locations. As of December 31,
2010, we operated 417 of these kiosks. All of these kiosks
were transitioned to Sam’s Club by June 30, 2011. We
determined that the cash flows from these kiosks have
been eliminated from our ongoing operations. Therefore,
these operations were classified as discontinued operations
and the operating results of these kiosks are presented in
the consolidated statements of income as discontinued
operations, net of income taxes, for all periods presented.
SEASONALITY
As with most other specialty retailers, our net sales and
operating revenues and operating cash flows are greater
during the fourth calendar quarter, which includes the
majority of the holiday shopping season in the U.S., than
during other periods of the year. There is a corresponding
pre-seasonal inventory build-up, which requires working
capital related to the anticipated increased sales volume.
This is described in “Cash Requirements” in our MD&A.
Also, refer to Note 16 – “Quarterly Data (Unaudited)” in the
Notes to Consolidated Financial Statements for data
showing seasonality trends. We expect this seasonality to
continue.
PATENTS AND TRADEMARKS
We own or are licensed to use many trademarks and
service marks related to our RadioShack stores in the
United States and in foreign countries. We believe the
RadioShack name and marks are well recognized by
consumers, and that the name and marks are associated
with high-quality products and services. We also believe the
loss of the RadioShack name and RadioShack marks
would materially adversely affect our business. Our private
brands include brands such as RadioShack, AUVIO,
Enercell and Gigaware. We also own various patents and
patent applications relating to consumer electronics
products.
SUPPLIERS AND NAME BRAND RELATIONSHIPS
Our business strategy depends, in part, upon our ability to
offer name brand and private brand products, as well as to
provide our customers access to third-party services. We
utilize a large number of suppliers located in various parts
of the world to obtain name brand and private brand
merchandise. We have formed vendor and third-party
service provider relationships with well-recognized
companies such as Sprint, AT&T, Verizon Wireless
(“Verizon”), T-Mobile, Apple, Casio, Garmin, Hewlett-
Packard, HTC, Microsoft, Research In Motion, Samsung and
SanDisk. In the aggregate, these relationships have or are
expected to have a significant effect on both our operations
and financial strategy.
ORDER BACKLOG
We have no material backlog of orders in any of our
operating segments for the products or services we sell.
COMPETITION
Due to consumer demand for wireless products and
services, as well as rapid consumer acceptance of new
digital technology products, the consumer electronics retail
business continues to be highly competitive, driven
primarily by technology and product cycles.
In the consumer electronics retail business, competitive
factors include convenient retail locations, price, quality,
features, product availability, consumer services,
distribution capability, brand reputation and the number of
competitors. We compete in the sale of our products and
services with several retail formats, including national,
regional, and independent consumer electronics retailers.
We compete with department and specialty retail stores in
more select product categories. We compete with wireless
providers in the wireless handset category through their
own retail and online presence. We compete with big-box
retailers, discount and warehouse retailers, and Internet
retailers on a more widespread basis. Numerous domestic
and foreign companies manufacture products similar to our
privately-branded products for other retailers, which are