Radio Shack 2012 Annual Report Download - page 59

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NOTE 6 – STOCKHOLDERS’ EQUITY
Dividends: We paid $0.125 per share dividends in the first
and second quarters of 2012. On July 25, 2012, we
announced that we were suspending our dividend. We paid
per share annual dividends of $0.50 and $0.25 in 2011 and
2010, respectively.
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 had suspended further share repurchases under
this program.
2008 Share Repurchase 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. 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. This completed our purchases under our 2008
share repurchase program.
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
3.2 million shares. The 14.9 million shares delivered to us
was based on the average daily volume weighted-average
price of our common stock over a period beginning
immediately after the effective date of the ASR agreements
and ending on November 2, 2010.
Call Spread Transactions: In connection with the
issuance of the 2013 Convertible Notes (see Note 5 –
“Indebtedness and Borrowing Facilities”), we entered into
separate convertible note hedge transactions and separate
warrant transactions related to our common stock with
Citigroup and Bank of America to reduce the potential
dilution upon conversion of the 2013 Convertible Notes.
Under the terms of the convertible note hedge
arrangements (the “Convertible Note Hedges”), we paid
$86.3 million for a forward purchase option contract under
which we are entitled to purchase a fixed number of shares
(initially 15.5 million shares) of our common stock at an
initial price per share of $24.25. In the event of the
conversion of the 2013 Convertible Notes, this forward
purchase option contract allows us to purchase, at a fixed
price equal to the implicit conversion price of common
shares issued under the 2013 Convertible Notes, a number
of common shares equal to the common shares that we
issue to a note holder upon conversion. Settlement terms of
this forward purchase option allow us to elect cash or share
settlement based on the settlement option we choose in
settling the conversion feature of the 2013 Convertible
Notes. The Convertible Note Hedges expire on August 1,
2013.
The exercise price of the Convertible Note Hedges is linked
to our 2013 Convertible Notes. In 2011 the Convertible
Note Anti-Dilutive Provision was triggered. See Note 5 -
“Indebtedness and Borrowing Facilities,” for more
information on the Convertible Note Anti-Dilutive Provision.
As a result, at December 31, 2012, the Convertible Note
Hedges entitled us to purchase 15.8 million shares of our
common stock at a price per share of $23.77.
Also concurrent with the issuance of the 2013 Convertible
Notes, we sold warrants (the “Warrants”) permitting the
purchasers to acquire shares of our common stock. The
Warrants were initially exercisable for 15.5 million shares of
our common stock at an initial exercise price of $36.60 per
share. We received $39.9 million in proceeds for the sale of
the Warrants. The Warrants may be settled at various dates
beginning in November 2013 and ending in March 2014.
The Warrants provide for net share settlement. In no event
will we be required to deliver a number of shares in
connection with the transaction in excess of twice the
aggregate number of Warrants.
The exercise price of the Warrants is linked to our 2013
Convertible Notes. In 2011 a Convertible Note Anti-Dilutive
Provision was triggered. As a result, at December 31, 2012,
the Warrants were exercisable for 15.8 million shares of our
common stock at an exercise price of $35.88 per share.
We determined that the Convertible Note Hedges and
Warrants meet the requirements of the FASB’s accounting
guidance for accounting for derivative financial instruments
indexed to, and potentially settled in, a company's own
stock and other relevant guidance and, therefore, are
classified as equity transactions. As a result, we recorded
the purchase of the Convertible Note Hedges as a
reduction in additional paid-in capital and the proceeds of
the Warrants as an increase to additional paid-in capital in
the Consolidated Balance Sheets, and we will not