Radio Shack 2012 Annual Report Download - page 53

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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 and are classified in the stockholders’
equity section of the accompanying Consolidated Balance
Sheets.
Discontinued Operations: We account for closed retail
locations as discontinued operations when the operations
and cash flows of a retail location 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 retail location 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,
2011 and 2010, financial statements have been reclassified
to conform to the December 31, 2012, presentation. These
reclassifications had no effect on net income, total assets,
total liabilities, or total stockholders’ equity as previously
reported. The most significant reclassification was a change
to our presentation of certain deferred rent in the amount of
$27.5 million from a current liability to a non-current liability
in our 2011 Consolidated Balance Sheet to be more
consistent with retail industry practice.
New Accounting Standards: In June 2011 the Financial
Accounting Standards Board (“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 in its annual financial statements.
This guidance is effective for fiscal years beginning after
December 15, 2011. We adopted this guidance effective
January 1, 2012. See our Consolidated Statements of
Comprehensive Income for the required disclosure. In
addition to net income, the other components of our
comprehensive income were foreign currency translation
adjustments and defined benefit pension plan adjustments.
NOTE 3 – SUPPLEMENTAL BALANCE SHEET
DISCLOSURES
Accounts and Notes Receivable, Net: As of December
31, 2012 and 2011, we had the following accounts and
notes receivable outstanding in the accompanying
Consolidated Balance Sheets:
December 31,
(In millions) 2012 2011
Receivables from vendors
and service providers, net $ 315.3 $ 273.8
Income tax receivable 64.4 6.9
Trade accounts receivable 49.9 53.5
Other receivables 24.1 27.8
Allowance for doubtful accounts (1.2) (1.4)
Accounts and notes receivable, net $ 452.5 $ 360.6
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) 2012 2011 2010
Balance at the beginning
of the year $ 1.4 $ 1.4 $ 1.8
Provision for bad debts
included in selling,
general and
administrative expense
0.1
0.1
0.1
Uncollected receivables
written off, net (0.3)
(0.1) (0.5)
Balance at the end of the year $ 1.2 $ 1.4 $ 1.4
Other Current Assets, Net:
December 31,
(In millions) 2012 2011
Restricted cash $ 26.5 $ --
Deferred income taxes 23.9 54.4
Prepaid income taxes -- 26.8
Other 35.0 34.9
Total other current assets, net $ 85.4 $ 116.1