Radio Shack 2013 Annual Report Download - page 55

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Accumulated Other Comprehensive Loss: The components of accumulated other comprehensive loss were as follows at
December 31, 2013, 2012 and 2011:
Foreign
Currency
Pension
(In millions) Translation Adjustments
Total
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)
Foreign currency translation adjustments 0.6 -- 0.6
Defined benefit pension plan adjustments -- 0.8 0.8
Balances at December 31, 2013 $ (6.6) $ 0.5 $ (6.1)
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 classified as selling, general and
administrative expense 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 Plans: Under the Incentive Stock Plans (“ISPs”)
and 2013 Omnibus Incentive Plan 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 plans; terms of these options may not exceed ten
years. Grants of options generally vest over three years
and grants typically have a term of seven or ten years.
Option agreements issued under these plans generally
provide that, in the event of a change in control, all options
become immediately and fully exercisable. Repricing or
exchanging options for lower priced options is not permitted
under the plans without shareholder approval. A brief
description of each of our incentive plans with awards still
outstanding is included below:
1997 Incentive Stock Plan (“1997 ISP”): The 1997
ISP permitted the grant of up to 11.0 million shares in
the form of incentive stock options (“ISOs”), non-
qualified stock options (options which are not ISOs)
(“NQs”) and restricted stock. The 1997 ISP expired on
February 27, 2007, and no further grants may be made
under this plan. At December 31, 2013, zero stock
options were outstanding under this plan.
1999 Incentive Stock Plan (“1999 ISP”): The 1999
ISP permitted the grant of up to 9.5 million shares in
the form of NQs. Grants of restricted stock,
performance awards and options intended to qualify as
ISO’s under the Internal Revenue Code were not
authorized under this plan. The 1999 ISP also
permitted directors to elect to receive shares in lieu of
cash payments for their annual retainer fees and board
and committee meeting fees. The 1999 ISP expired on
February 23, 2009, and no further grants may be made