Radio Shack 2012 Annual Report Download - page 11

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Our inability to identify and enter into relationships
with developers of new technologies successfully or
the failure of these new technologies to be adopted by
the market could materially adversely affect our ability
to increase or maintain our sales and profitability.
Additionally, the absence of new services or products
and product features in the categories we sell could
materially adversely affect our results of operations
and financial condition.
Our ability to maintain and increase our revenue depends,
to a large extent, on the periodic introduction and
availability of new products, services and technologies. If
we fail to identify these new products, services and
technologies, or if we fail to enter into relationships with
their developers prior to widespread distribution within the
market, our results of operations and financial condition
could be materially adversely affected. Any new products,
services or technologies we identify may have a limited
sales life.
Furthermore, it is possible that new products, services or
technologies will never achieve widespread consumer
acceptance, also materially adversely affecting our results
of operations and financial condition. Finally, the lack of
innovative consumer electronics products, features or
services that can be effectively featured in our retail
locations could also materially adversely affect our ability to
increase or maintain our sales and profitability.
The occurrence of severe weather events or natural
disasters could significantly damage or destroy our
retail locations, prohibit consumers from traveling to
them, or prevent us from resupplying them or our
distribution centers, especially during the peak winter
holiday shopping season.
If severe weather or a catastrophic natural event, such as a
hurricane or earthquake, occurs in a particular region and
damages or destroys a significant number of our retail
locations in that area, our sales could be materially
adversely affected. In addition, if severe weather, such as
heavy snowfall or extreme temperatures, discourages or
restricts customers in a particular region from traveling to
our retail locations, our sales could be materially adversely
affected. If severe weather occurs during the fourth quarter
holiday season, the adverse effect on our sales could be
even greater than at other times during the year because
we generate a disproportionate amount of our sales during
this period.
Failure to comply with laws, rules, and regulations
regarding our business, or the additional costs of
implementing new laws, rules, and regulations, could
materially adversely affect our results of operations
and financial condition.
We are subject to various foreign, federal, state and local
laws, rules and regulations, including without limitation, the
Fair Labor Standards Act, the Foreign Corrupt Practices
Act, and ERISA, each as amended, and regulations
promulgated by the Federal Trade Commission, SEC,
Internal Revenue Service, Department of Labor,
Occupational Safety and Health Administration, and
Environmental Protection Agency. Failure to comply with
these and other applicable laws, rules and regulations
could result in the imposition of penalties or adverse legal
judgments and could materially adversely affect our results
of operations and financial condition. Similarly, the cost of
complying with newly-implemented laws, rules, and
regulations could materially adversely affect our results of
operations and financial condition.
For example, the Patient Protection and Affordable Care
Act, as amended by the Health Care and Education
Reconciliation Act of 2010, which we will refer to together
as the “Health Care Reform Law,” may cause us to incur
significant additional costs. A significant proportion of the
Company’s employees are covered by its health program,
which is administered by a third party but is self-funded
except for insurance we carry to cover catastrophic losses
with respect to individual employees. The Health Care
Reform Law will impose numerous new mandatory types of
coverage and reporting and other requirements on our
health program, but many of the regulations have not been
finalized or, in some cases, even proposed. We believe
these additional types of coverage and requirements will
increase our costs, but we are not yet able to estimate the
increases accurately due to the lack of finality in the
requirements that will ultimately be imposed by the new
regulations. Any significant increases in our costs could
materially adversely affect our results of operations and
financial condition.
In addition, last year the SEC, as directed in The Dodd-
Frank Wall Street Reform and Consumer Protection Act,
adopted new disclosure and reporting requirements for
companies regarding the use of “conflict minerals” from the
Democratic Republic of the Congo and adjoining countries.
The new requirements could affect the sourcing, availability
and cost of minerals used in the manufacture of certain of
the products we sell, including some that we manufacture.
We will also incur costs to comply with the related supply
chain due diligence requirements, which could prove to be
significant. Because our supply chain is complex, we may
also face reputation challenges with our customers and
other stakeholders if we are unable to verify sufficiently