Radio Shack 2012 Annual Report Download - page 21

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19
(1) For 2012, this amount includes the recognition of a valuation allowance against deferred tax assets in the amount of $68.8 million.
(2) Total capitalization is defined as total debt plus total stockholders' equity.
(3) This ratio is calculated by dividing our cost of products sold by our average inventory balance. For comparative purposes, we have included the cost of
products sold by and the inventory balances of our discontinued operations in this ratio for all periods presented.
(4) Adjusted EBITDA from continuing operations (“Adjusted EBITDA”), a non-GAAP financial measure, is defined as earnings from continuing operations
before interest, taxes, depreciation, and amortization. Our calculation of Adjusted EBITDA is also adjusted for other income or loss. The comparable
financial measure to Adjusted EBITDA under GAAP is income from continuing operations. Adjusted EBITDA is used by management to evaluate the
operating performance of our business for comparable periods. Adjusted EBITDA should not be used by investors or others as the sole basis for
formulating investment decisions, as it excludes a number of important items. We compensate for this limitation by using GAAP financial measures as well
in managing our business. In the view of management, Adjusted EBITDA is an important indicator of operating performance because Adjusted EBITDA
excludes the effects of financing and investing activities by eliminating the effects of interest and depreciation costs.
(5) On July 25, 2012, we announced that we were suspending our dividend.
(6) In October 2012, we exercised our contractual right to notify Target of our intention to stop operating the Target Mobile centers if we could not amend the
current arrangement. An acceptable arrangement was not negotiated; therefore, we will exit this business by April 8, 2013.
(7) Comparable store sales include the sales of U.S. and Mexico RadioShack company-operated stores as well as Target Mobile centers and kiosks with more
than 12 full months of recorded sales. Following their closure as Sprint-branded kiosks in August 2009, certain former Sprint-branded kiosk locations
became multiple wireless carrier RadioShack-branded locations. At December 31, 2009, we managed and reported 111 of these locations as extensions of
existing RadioShack company-operated stores located in the same shopping malls. For purposes of calculating our comparable store sales, we include
sales from these locations for periods after they became extensions of existing RadioShack company-operated stores, but we do not include sales from
these locations for periods while they were operated as Sprint-branded kiosks.
The following table is a reconciliation of adjusted EBITDA from continuing operations to income from continuing operations.
Year Ended December 31,
(In millions) 2012 2011 2010 2009 2008
Reconciliation of adjusted EBITDA from continuing
operations to income from continuing operations
Adjusted EBITDA from continuing operations $ 19.8
$ 237.8
$ 433.6
$ 445.8
$ 405.3
Interest expense, net of interest income (52.6)
(43.7)
(39.3)
(39.3)
(20.3)
Income tax expense (25.3)
(40.2)
(120.2)
(118.1)
(105.2)
Depreciation and amortization (80.7)
(82.7)
(83.4)
(90.3)
(94.2)
Other loss (0.6)
(4.1)
--
(1.6)
(2.4)
(Loss) income from continuing operations $ (139.4)
$ 67.1
$ 190.7
$ 196.5
$ 183.2