Radio Shack 2013 Annual Report Download - page 58

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stock-based compensation plans for 2013 and 2012 was
$2.0 million and $2.7 million; however, such benefit was
offset by the valuation allowance against our deferred tax
assets. At December 31, 2013, there was $7.0 million of
unrecognized compensation expense related to the
unvested portion of our stock-based awards that is
expected to be recognized over a weighted-average period
of 3.61 years.
Deferred Stock Units: In 2004, the stockholders approved
the RadioShack 2004 Deferred Stock Unit Plan for Non-
Employee Directors (“Deferred Plan”), which was amended
in 2008. Under the plan, each non-employee director
received a one-time initial grant of units equal to the
number of shares of our common stock that represent a fair
market value of $150,000 on the grant date, and an annual
grant of units equal to the number of shares of our common
stock that represent a fair market value of $105,000 on the
grant date.
This plan was terminated in 2013 upon the shareholder
approval of the 2013 Omnibus Incentive Plan and no further
grants may be made under this plan. We granted
approximately 156,000, and 53,000 units in 2012 and 2011,
respectively. The weighted-average grant-date fair value
per unit granted was $5.00 and $14.80 in 2012 and 2011,
respectively. There were approximately 382,000 units
outstanding at December 31, 2013.
In 2013, under the Omnibus Incentive Plan, non–employee
directors were granted deferred stock units under the same
terms as the previous Deferred Plan as described above.
We granted approximately 230,000 units in 2013 with a
weighted average grant-date fair value per unit of $3.65.
There were approximately 202,000 units outstanding at
December 31, 2013.
NOTE 9 – EMPLOYEE BENEFIT PLANS
The following benefit plans were in place during the periods
covered by the financial statements.
RadioShack 401(k) Plan: The RadioShack 401(k) Plan
(“401(k) Plan”), a defined contribution plan, allows a
participant to defer, by payroll deductions, from 1% to 75%
of the participant’s annual compensation, limited to certain
annual maximums set by the Internal Revenue Code. The
401(k) Plan also presently provides that our contribution to
each participant’s account maintained under the 401(k)
Plan be an amount equal to 100% of the participant’s
contributions up to 4% of the participant’s annual
compensation. This percentage contribution made by us is
discretionary and may change in the future. Our
contributions go directly to the 401(k) Plan and are made in
cash and invested according to the investment elections
made by the participant for the participant’s own
contributions. Company contributions to the 401(k) Plan
were $5.5 million, $5.7 million and $5.6 million for 2013,
2012 and 2011, respectively.
Supplemental Executive Retirement Plan: The Company
adopted an unfunded Supplemental Executive Retirement
Plan (“SERP”) effective January 1, 2006, for selected
officers of the Company. Upon retirement at age 55 years
or older, participants in the SERP are eligible to receive, for
ten years, an annual amount equal to a percentage of the
average of their five highest consecutive years of
compensation (base salary and bonus), to be paid in 120
monthly installments. The amount of the percentage
increases by 2 ½% for each year of participation in the
SERP, up to a maximum of 50%. At December 31, 2013,
there were three participants in the plan. This plan has
been closed to new officers since 2007.
The net periodic benefit cost of the SERP defined benefit
plan was $1.0 million, $1.3 million and $1.7 million for 2013,
2012 and 2011, respectively. The benefit obligation was
$13.1 million and $16.6 million at December 31, 2013 and
2012, respectively.
NOTE 10 – INCOME TAXES
The following is a reconciliation of the federal statutory
income tax rate to our income tax expense:
Year Ended December 31,
(In millions) 2013 2012
2011
Components of (loss) income
from continuing operations:
United States $ (357.8) $ (75.4) $ 135.9
Foreign (47.2) (2.8) (9.7)
(Loss) income from
continuing operations
before income taxes (405.0) (78.2) 126.2
Statutory tax rate x
35.0% x 35.0% x 35.0%
Federal income tax (benefit)
expense at statutory rate (141.7) (27.4) 44.2
Change in valuation
allowance 145.3 67.7 3.2
Foreign tax branch benefit (6.8) (5.0) (3.2)
Mexico goodwill impairment 8.3 -- --
State income taxes,
net of federal effect (13.0) (3.8) 2.8
Stock-based compensation
tax shortfall 3.8 1.7 0.9
Income tax credits (1.4) (0.5) (3.3)
Unrecognized tax benefits
and accrued interest,
net of indirect effect (13.0) (0.9) 2.5
Other, net 5.5 0.8 0.4
Total income tax
(benefit)expense $ (13.0) $ 32.6 $ 47.5
Effective tax rate 3.2 % (41.7)% 37.6 %