Radio Shack 2003 Annual Report Download - page 54

RADIOSHACK 2003 Annual Report
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to Plan participants, compensation expense was recorded
and unearned compensation was reduced. Interest expense
on the Refinanced Notes was also recognized as a cost of
the Plan.The compensation component of the Plan
expense was reduced by the amount of dividends accrued
on the TESOP Preferred Stock, with any dividends in excess
of the compensation expense reflected as a reduction of
interest expense.
Contributions made by us to the Plan for the years ended
December 31, 2002 and 2001, totaled $4.0 million and
$8.6 million, respectively, including dividends paid on the
TESOP Preferred Stock of $4.5 million and $4.9 million,
respectively.
As of December 31, 2002, all of the original 100,000 shares
of TESOP Preferred Stock were converted into 5.1 million
shares of our common stock and allocated to participants’
accounts in the Plan.
Note 23 Treasury Stock Repurchase Program
On February 20, 2003, our Board of Directors authorized a
new repurchase program for 15.0 million shares, which was
in addition to our 25.0 million share repurchase program
that was completed during the second quarter of 2003.The
15.0 million share repurchase program has no expiration
date and allows shares to be repurchased in the open
market.We repurchased 9.9 million shares of our common
stock for $251.0 million for the year ended December 31,
2003, under our combined 40.0 million share repurchase
programs.The funding required for these share repurchase
programs will come from cash generated from net sales
and operating revenues and cash and cash equivalents.
Under our programs described above, we will also repur-
chase shares in the open market to offset the sales of
shares to our employee benefit plans. At February 20, 2004,
there were 8.9 million shares available to be repurchased
under the 15.0 million share repurchase program.
The purchases under the share repurchase program
described above are in addition to the shares required for
employee benefit plans, which are repurchased from our
treasury stock throughout the year.
directly to the Plan for investment in our common stock.
Effective April 1, 2002, a participant becomes fully vested in
the Plan contributions we made on his on her behalf on the
third anniversary of the participant’s employment date.
At January 1, 2004, the Plan year was changed to a calendar
year basis.
TESOP Portion of the Plan: On July 31, 1990, the trustee of the
Plan borrowed $100.0 million at an interest rate of 9.34%;
this amount was paid off on June 30, 2000 (“TESOP Notes”).
The Plan trustee used the proceeds from the 1990 issuance
of the TESOP Notes to purchase from us 100,000 shares
of TESOP Preferred Stock at a price of $1,000 per share. In
December 1994, the Plan entered into an agreement
with an unrelated third-party to refinance up to $16.7 mil-
lion of the TESOP Notes in a series of six annual notes
(the “Refinanced Notes”), beginning December 30, 1994. As
of December 31, 1999, the Plan had borrowed all of the
$16.7 million for the refinancing of the TESOP Notes. As of
December 31, 2002, the Plan had repaid all of the
Refinanced Notes. Dividend payments and contributions
received by the Plan from us were used to repay the
indebtedness.
Each share of TESOP Preferred Stock was convertible into
87.072 shares of our common stock.The annual cumulative
dividend on TESOP Preferred Stock was $75.00 per share,
payable semiannually. Because we had guaranteed the
repayment of the Refinanced Notes, the indebtedness of
the Plan was recognized as a liability in the accompanying
Consolidated Balance Sheets. An offsetting charge was
made in the stockholders’ equity section of the 2001
Consolidated Balance Sheet to reflect unearned compensa-
tion related to the Plan.On December 31, 2002, all shares of
TESOP Preferred Stock were converted into our common
stock and all unearned compensation related to the Plan
was recognized as of that date.
Compensation and interest expense related to the Plan
before the reduction for the allocation of dividends are pre-
sented below for each year ended December 31:
(In millions) 2003 2002 2001
Compensation expense $— $ 4.3 $ 6.4
Accrued additional contribution —4.1 —
Interest expense —0.2 0.8
The last allocation of TESOP Preferred Stock to participants
was made as of the Plan year ended March 31, 2003, and
was based on the total debt service made on the indebted-
ness. As shares of the TESOP Preferred Stock were allocated