Radio Shack 2011 Annual Report Download - page 57

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nonperformance. We do not hold or issue derivative
financial instruments for trading or speculative purposes. To
qualify for hedge accounting, derivatives must meet defined
correlation and effectiveness criteria, be designated as a
hedge and result in cash flows and financial statement
effects that substantially offset those of the position being
hedged.
Foreign Currency Translation: The functional currency of
substantially all operations outside the U.S. is the
applicable local currency. Translation gains or losses
related to net assets located outside the United States are
included as a component of accumulated other
comprehensive (loss) income and are classified in the
stockholders’ equity section of the accompanying
Consolidated Balance Sheets.
Discontinued Operations: We account for closed stores
or kiosks as discontinued operations when the operations
and cash flows of a store or kiosk being disposed of are
eliminated from ongoing operations and we do not have
any significant continuing involvement in its operations. In
reaching the determination as to whether the cash flows of
a store or kiosk will be eliminated from our ongoing
operations, we consider whether it is likely that customers
will migrate to our other retail locations in the same
geographic market.
Reclassifications: Certain amounts in the December 31,
2010 and 2009, financial statements have been reclassified
to conform to the December 31, 2011, presentation. These
reclassifications had no effect on net income or total
stockholders’ equity as previously reported.
New Accounting Standards: In June 2011, the FASB
issued new accounting guidance to update the presentation
of comprehensive income in consolidated financial
statements. Under this new guidance, an entity has the
option to present the total of comprehensive income, the
components of net income, and the components of other
comprehensive income either in a single continuous
statement of comprehensive income or in two separate but
consecutive statements. This guidance is effective for fiscal
years beginning after December 15, 2011. We adopted this
guidance effective January 1, 2012, and the adoption will
be reflected in our consolidated financial statements as of
March 31, 2012.
In September 2011, the FASB issued new accounting
guidance to simplify how entities test goodwill for
impairment. Under this new guidance, an entity is permitted
to first assess qualitative factors to determine whether the
fair value of a reporting unit is less than its carrying amount
as a basis for determining whether it is necessary to
perform a goodwill impairment test. This guidance is
effective for fiscal years beginning after December 15,
2011. We adopted this guidance effective January 1, 2012,
and we expect the adoption to have no effect on our
consolidated financial statements.
NOTE 3 – SUPPLEMENTAL BALANCE SHEET
DISCLOSURES
Accounts and Notes Receivable, Net: As of December
31, 2011 and 2010, we had the following accounts and
notes receivable outstanding in the accompanying
Consolidated Balance Sheets:
December 31,
(In millions) 2011 2010
Receivables from vendors
and service providers, net $ 273.8 $ 291.0
Trade accounts receivable 53.5 57.6
Other receivables 34.7 30.3
Allowance for doubtful accounts
(1.4) (1.4)
Accounts and notes receivable, net
$ 360.6 $ 377.5
Receivables from vendors and service providers relate to
earned wireless activation commissions, rebates, residual
income, promotions, marketing development funds and
other payments from our third-party service providers and
product vendors, after taking into account estimates for
service providers’ customer deactivations and non-
activations, which are factors in determining the amount of
wireless activation commissions and residual income
earned.
The change in the allowance for doubtful accounts is as
follows:
December 31,
(In millions) 2011 2010
2009
Balance at the beginning
of the year $ 1.4 $ 1.8 $ 1.5
Provision for bad debts
included in selling,
general and
administrative expense
0.1
0.1
0.4
Uncollected receivables
written off, net (0.1)
(0.5)
(0.1)
Balance at the end of the year $ 1.4 $ 1.4 $ 1.8
Other Current Assets, Net:
December 31,
(In millions) 2011 2010
Deferred income taxes $ 54.4 $ 61.4
Prepaid income taxes 26.8 --
Other 34.9 46.7
Total other current assets, net $ 116.1 $ 108.1