Radio Shack 2011 Annual Report Download - page 61

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2016 Credit Facility: On January 4, 2011, we terminated
our 2011 Credit Facility and entered into a five-year, $450
million revolving credit agreement (“2016 Credit Facility”)
with a group of lenders with Bank of America, N.A., as
administrative and collateral agent. The 2016 Credit Facility
expires on January 4, 2016. The 2016 Credit Facility may
be used for general corporate purposes and the issuance of
letters of credit. This facility is collateralized by substantially
all of the Company’s inventory, accounts receivable, cash
and cash equivalents, and certain other personal property,
and is guaranteed by certain of our domestic subsidiaries.
Borrowings under the 2016 Credit Facility are subject to a
borrowing base of certain collateralized assets and bear
interest at a bank’s prime rate plus 1.25% to 1.75% or
LIBOR plus 2.25% to 2.75%. The applicable rates in these
ranges are based on the aggregate average availability
under the facility.
The 2016 Credit Facility also contains a $150 million sub-
limit for the issuance of standby and commercial letters of
credit. The issuance of letters of credit reduces the amount
available under the facility. Letter of credit fees are 2.25%
to 2.75% for standby letters of credit and 1.125% to 1.375%
for commercial letters of credit.
We pay commitment fees to the lenders at an annual rate
of 0.50% of the unused amount of the facility. As of
December 31, 2011, no borrowings had been made under
the facility, and letters of credit totaling $28.1 million had
been issued.
The 2016 Credit Facility contains affirmative and negative
covenants that, among other things, restrict certain
payments, including dividends and share repurchases.
Also, if we do not meet a consolidated fixed charge
coverage ratio during a trailing twelve-month period, the
availability under our credit facility will be reduced by the
greater of 12.5% of the borrowing base or $45 million. We
currently anticipate that we will be in compliance with the
consolidated fixed charge coverage ratio during 2012.
We are generally free to pay dividends and repurchase
shares as long as the current and projected unused amount
under the facility is greater than 17.5% of the maximum
borrowing amount and the minimum consolidated fixed
charge coverage ratio is maintained. We may pay dividends
and repurchase shares without regard to the Company's
consolidated fixed charge coverage ratio as long as the
current and projected unused amount under the facility is
greater than 75% of the maximum borrowing amount and
cash on hand is used for the dividends or share
repurchases.
NOTE 5 – STOCKHOLDERS’ EQUITY
2011 Share Repurchase Program: In October 2011, 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 to be
executed through open market or private transactions.
During the fourth quarter of 2011, we paid $11.9 million to
purchase approximately 0.9 million shares of our common
stock in open market purchases. As of December 31, 2011,
there was $188.1 million available for share repurchases
under this program. We announced on January 30, 2012,
that we have suspended further share repurchases 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.
During the second quarter of 2011, we paid $101.4 million
to purchase 6.3 million shares of our common stock in open
market purchases. These purchases completed our $610
million share repurchase authorization.
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