Radio Shack 2003 Annual Report Download - page 48

while costs of $5.8 million were charged against this reserve
during the corresponding period.In the accompanying 2003
Consolidated Balance Sheet, the balance in the restructuring
reserve is classified in other current liabilities.This reserve
represents the revised expected costs for these real estate
lease obligations. If these facilities’ sublease income
declines in their respective markets or if it takes longer
than expected to sublease or dispose of these facilities, the
actual losses could exceed this reserve estimate. Costs
will continue to be incurred over the remaining terms of
the related leases, the longest of which is 16 years.
In 2001, we initiated an additional restructuring program
related primarily to a general reduction of our corporate
management and administrative labor force, mainly for
early retirement and involuntary and voluntary employee
severance, closure of our national commercial installation
business, and closure of 35 underperforming RadioShack
stores. During the first quarter of 2002, we completed a sig-
nificant portion of the remaining restructuring program,
utilizing the reserves established in 2001. As of December
31, 2002, $3.8 million of the remaining restructuring reserve
was classified in accrued expenses and the remaining
balance of $2.8 million was classified in other non-current
liabilities in the accompanying 2002 Consolidated Balance
Sheet, to be used principally for the remaining cash
commitments associated with the long-term compensation
and lease commitment obligations.
Note 11 Loss on Sale of Assets
On August 31, 1998, we completed the sale of our wholly
owned subsidiary, Computer City, Inc., to CompUSA Inc. for
cash and an unsecured note of $136.0 million. On June 22,
2001, we received $123.6 million for the final determination
of the purchase price and settlement of the $136.0 million
note,resulting in an additional loss of $12.4 million from the
sale of Computer City, Inc. Additionally, in the fourth
quarter of 2001, we sold and leased back most of our corpo-
rate headquarters at a loss of $44.8 million in anticipation
of the building of our new corporate headquarters.These
losses were recorded in 2001 and are included in the
accompanying Consolidated Statements of Income as a
loss on sale of assets.
Note 12 Gain on Contract Termination
RadioShack and Microsoft Corporation mutually agreed
during 2002 to terminate their agreement and settle
the remaining commitments each had to one another.
In the second quarter of 2003, we replaced our existing
$300.0 million 364-day revolving credit facility and
amended our $300.0 million five-year credit facility. These
facilities’maturity dates are June 2004 for the $300.0 mil-
lion 364-day revolving credit facility and June 2007 for the
$300.0 million five-year revolving credit facility.The terms
of these revolving credit facilities are substantially similar to
the previous facilities.These revolving credit facilities will
support any future commercial paper borrowings and are
otherwise available for our general corporate purposes.
As of December 31, 2003, there were no outstanding borrow-
ings under these credit facilities.
We established an employee stock ownership trust in June
1990. Further information on the trust and its related
indebtedness,which we guaranteed, is detailed in the discus-
sion of the RadioShack 401(k) Plan in Note 22.
Note 8 Treasury Stock Retirement
On December 11, 2003, 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. Additional details of the trans-
action may be seen on our 2003 Consolidated Statement
of Stockholders’ Equity.
Note 9 Accrued Expenses
December 31,
(In millions) 2003 2002
Payroll and bonuses $ 76.7 $ 56.4
Insurance 70.0 65.6
Sales and payroll taxes 45.5 49.0
Other 150.8 147.7
Total accrued expenses $343.0 $318.7
Note 10 Business Restructurings
In 1996 and 1997, we initiated certain restructuring pro-
grams in which a number of our former McDuff, Computer
City and Incredible Universe retail stores were closed.We
still have certain real estate obligations related to some of
these stores and, at December 31, 2003, the balance in the
restructuring reserve was $17.0 million, consisting of the
remaining estimated real estate obligations to be paid. An
additional provision of $6.5 million was added during 2003,
RADIOSHACK 2003 Annual Report
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