Radio Shack 2012 Annual Report Download - page 60

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recognize subsequent changes in the fair value of the
agreements in the financial statements.
In accordance with the FASB’s accounting guidance in
calculating earnings per share, the Warrants will have no
effect on diluted net income per share until our common
stock price exceeds the per share strike price of $35.88 for
the Warrants. We will include the effect of additional shares
that may be issued upon exercise of the Warrants using the
treasury stock method. The Convertible Note Hedges are
antidilutive and, therefore, will have no effect on diluted net
income per share.
Treasury Stock Retirement: In December 2010 our Board
of Directors approved the retirement of 45.0 million shares
of our common stock held as treasury stock. These shares
returned to the status of authorized and unissued.
Accumulated Other Comprehensive Loss: The components of accumulated other comprehensive loss were as follows at
December 31, 2012, 2011 and 2010:
(In millions)
Foreign
Currency
Translation
Pension
Adjustments Total
Balances at December 31, 2010 $ (3.8) $ (0.5) $ (4.3)
Foreign currency translation adjustments (8.5) -- (8.5)
Reclassification of realized foreign currency translation
loss included in net income 1.0 -- 1.0
Defined benefit pension plan adjustments -- (0.1) (0.1)
Balances at December 31, 2011 (11.3) (0.6) (11.9)
Foreign currency translation adjustments 4.1 -- 4.1
Defined benefit pension plan adjustments -- 0.3 0.3
Balances at December 31, 2012 $ (7.2) $ (0.3) $ (7.5)
NOTE 7 – SEVERANCE COSTS AND EXIT
ACTIVITIES
Executive Severance: We announced on September 25,
2012, that our Board of Directors and Mr. James F. Gooch
had agreed that Mr. Gooch would step down from his
position as Chief Executive Officer and as a director of the
Company, effective immediately. Under Mr. Gooch’s
employment agreement, he was entitled to a specified cash
payment and the accelerated vesting of certain stock
awards. During the third quarter ended September 30,
2012, we recorded $5.6 million of employee separation
charges classified as selling, general and administrative
expense in connection with Mr. Gooch’s departure. This
included a cash charge of $4.0 million that was paid in the
fourth quarter of 2012 and a non-cash charge of $1.6
million related to the accelerated vesting of stock awards.
Headcount Reduction: During the third quarter ended
September 30, 2012, we recorded $2.9 million of employee
separation charges in connection with the termination of the
employment of approximately 150 employees, who worked
primarily at our corporate headquarters.
Plant Closure: During the second quarter of 2011, we
ceased production operations in our Chinese manufacturing
plant. Since production operations ceased, we have
continued to acquire inventory similar to that previously
produced by this facility from alternative product sourcing
channels. In conjunction with the plant closing, we incurred
total costs of $11.4 million in 2011. We incurred $7.7 million
in compensation expense for severance packages for the
termination of the employment of approximately 1,500
employees. We recorded a foreign currency exchange loss
of $1.5 million related to the reversal of our foreign currency
cumulative translation adjustment, which is classified as a
selling, general and administrative expense. The remaining
$2.2 million related to an inventory valuation loss,
accelerated depreciation, and other general and
administrative costs. Substantially all of these costs were
incurred in the second quarter of 2011.
NOTE 8 – STOCK-BASED INCENTIVE PLANS
We have implemented several plans to award employees
with stock-based compensation, which are described
below.
Incentive Stock Plans: Under the Incentive Stock Plans
(“ISPs”) described below, the exercise price of options must
be equal to or greater than the fair market value of a share
of our common stock on the date of grant. The
Management Development and Compensation Committee
of our Board of Directors (“MD&C”) specifies the terms for
grants of options under these ISPs; terms of these options