Radio Shack 2013 Annual Report Download - page 45

43
NOTE 1 – DESCRIPTION OF BUSINESS
RadioShack Corporation was incorporated in Delaware in
1967. Throughout the Notes to these Consolidated
Financial Statements, the terms “our,” “we,” “us” and
“RadioShack” refer to RadioShack Corporation, including its
subsidiaries. We primarily engage in the retail sale of
consumer electronics goods and services through our
RadioShack store chain.
U.S. RADIOSHACK COMPANY-OPERATED
STORES
At December 31, 2013, we operated 4,297 U.S. company-
operated stores under the RadioShack brand located
throughout the United States, as well as in Puerto Rico and
the U.S. Virgin Islands. These stores are located in strip
centers and major shopping malls, as well as individual
storefronts. Each location carries a broad assortment of
both name brand and private brand consumer electronics
products.
To reflect more closely how we manage our merchandise
and product assortment, we have consolidated our product
platform reporting structure into two platforms: mobility and
retail.
These platforms include the following product categories:
Mobility: The mobility platform includes postpaid and
prepaid wireless handsets, commissions, residual income,
prepaid wireless airtime, e-readers, and tablet devices. Our
wireless accessories and tablet accessories, which were
previously included in our signature platform, are now also
included in this platform.
Retail: Our retail platform includes our remaining
consumer electronics product categories and related
accessories; batteries and power products; and technical
products. This platform now also consists of products that
were previously included in our signature and consumer
electronics platforms, except wireless accessories and
tablet accessories.
OTHER SALES CHANNELS
In addition to the reportable segment discussed above, we
have the following additional sales channels and support
operations:
Dealer Outlets: At December 31, 2013, we had a network
of 943 RadioShack dealer outlets, including 42 located
outside North America. Our North American outlets provide
name brand and private brand products and services,
typically to smaller communities. These independent
dealers are often engaged in other retail operations and
augment their businesses with our products and service
offerings. Our dealer sales derived outside the United
States are not significant.
RadioShack de Mexico: At December 31, 2013, there
were 274 company-operated stores under the RadioShack
brand, 5 dealers, and one distribution center in Mexico.
RadioShack.com: Products and information are available
through our website: http://www.radioshack.com. Online
customers can purchase, return or exchange various
products available through this website. Additionally, certain
products ordered online may be picked up, exchanged or
returned at RadioShack stores.
SUPPORT OPERATIONS
Our retail stores, along with our dealer outlets, are
supported by an established infrastructure. Below are the
major components of this support structure:
Distribution Centers - At December 31, 2013, we had
three U.S. distribution centers shipping products to our U.S.
retail locations and dealer outlets. One of these distribution
centers also serves as a fulfillment center for our online
customers and as a distribution center that ships store
fixtures to our U.S. and Mexico company-operated stores.
RadioShack Technology Services (“RSTS”) - Our
management information system architecture is composed
of a distributed, online network of computers that links all
stores, customer channels, delivery locations, service
centers, credit providers, distribution facilities and our home
office into a fully integrated system. Each retail location has
its own server to support the point-of-sale (“POS”) system.
Our U.S. company-operated stores communicate through a
broadband network, which provides efficient access to
customer support data. This design also allows store
management to track daily sales and inventory at the
product or sales associate level. RSTS provides the
majority of our programming and systems analysis needs.
RadioShack Global Sourcing (“RSGS”) - RSGS serves
our wide-ranging international import/export, sourcing,
evaluation, logistics and quality control needs. RSGS’s
activities support our name brand and private brand
businesses.
DISCONTINUED OPERATIONS
In the third quarter of 2010, we signed a multi-year
agreement to operate retail locations in Target stores
(“Target Mobile”) throughout most of the United States.
These retail locations, which were not RadioShack-
branded, offered wireless handsets with activation of third-
party postpaid wireless services. At December 31, 2012,
we operated 1,522 Target Mobile centers.
We ceased operating all of our Target Mobile centers prior
to March 31, 2013. Upon ceasing these operations, we
transitioned substantially all of our Target Mobile center
employees to a third-party service provider that will
continue to operate these locations on Target Corporation’s
behalf. We concluded that the cash flows from these
centers were eliminated from our ongoing operations.
Therefore, the results of these operations, net of income
taxes, have been presented as discontinued operations in
the Consolidated Statements of Income for all periods
presented.
In February 2009 we signed a contract extension with
Sam’s Club through March 31, 2011, with a transition
period that ended on June 30, 2011, to continue operating
wireless kiosks in certain Sam’s Club locations. All of these