SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 19, 2004
RADIOSHACK CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-5571 75-1047710
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
100 Throckmorton Street, Suite 1800, Fort Worth, Texas 76102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (817) 415-3700
Item 12. Results of Operations and Financial Condition
On February 19, 2004, RadioShack Corporation (the "Company") issued a press
release containing certain information with respect to its fourth quarter and
year-end 2003 financial results. A copy of the press release is attached as
Exhibit 99.1.
In the press release, the Company utilized non-GAAP financial measures to
describe the Company's adjusted net income for the fourth quarter of 2002 and
for the 2002 fiscal year and to present the Company's free cash flow. Management
does not intend the presentation of these non-GAAP financial measures to be
considered in isolation or as a substitute for measures prepared in accordance
with GAAP.
In the press release, the Company adjusted its net income for the fourth
quarter of 2002 to eliminate a litigation settlement credit, an impairment
charge, and a gain on a contract termination. The Company also adjusted its 2002
net income to eliminate the foregoing items, along with other income from a
favorable litigation settlement. Management believes that the presentation of
adjusted net income for these periods is useful to investors because it provides
a useful means of evaluating the Company's operating performance and results on
a comparable basis through the adjustment of amounts that, while they may
possibly recur from time to time, do not typically recur on a quarterly basis.
Furthermore, in preparing operating plans and forecasts, management relies, in
part, on trends in the Company's historical results, exclusive of these items,
and provides its forecasts to investors on this basis.
The Company utilized a non-GAAP financial measure in the press release to
present the Company's free cash flow. The Company's management believes that
free cash flow is an appropriate indication of the Company's ability to fund
share repurchases, repay maturing debt, change dividend payments or fund other
uses of capital that management believes will enhance stockholder value.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized this 19th day of February, 2004.
RADIOSHACK CORPORATION
/s/ Mark C. Hill
------------------------------------------
Mark C. Hill
Senior Vice President - Chief
Administrative Officer,
Secretary and General Counsel
EXHIBIT INDEX
Exhibit No.
99.1 Press Release, dated February 19, 2004.
Exhibit 99.1
February 19, 2004
RSH-2004-008
For further information contact:
James M. Grant, Laura Moore,
Senior Director, Investor Relations Senior Vice President,
(817) 415-7833 Chief Communications Officer
Or (817) 415-3300
Leah M. King Media.relations@radioshack.com
Director, Investor Relations ------------------------------
(817) 415-2909
investor.relations@radioshack.com
---------------------------------
RadioShack Corporation Announces Fourth Quarter and
Year-End 2003 Financial Results
Fourth Quarter Net Income up 17%, E.P.S. up 22%
Fort Worth, Texas - RadioShack Corporation (NYSE: RSH) today announced fourth
quarter net income of $127 million or $0.77 per diluted share for the quarter
ended December 31, 2003. This compares to net income of $109 million or $0.63
per diluted share for the quarter ended December 31, 2002. Last year the company
also reported adjusted fourth quarter 2002 net income(1) of $102 million or
$0.59 per diluted share, due primarily to an unusual gain from a contract
termination.
Comparable store sales for the fourth quarter 2003 were flat compared to the
prior year. Total sales in the fourth quarter 2003 were also flat at $1,490.4
million, compared to total sales of $1,497.7 million for the previous year.
"Improved management of product mix, supply chain initiatives, markdowns, along
with other factors related to gross margin, favorably impacted our quarterly
earnings beyond our expectations," said Leonard Roberts, chairman and chief
executive officer of RadioShack Corporation. "Our organizational disciplines in
buying, pricing, staffing and other areas are driving higher profit and better
returns for our shareholders. These disciplines will bode well for us in 2004
and beyond."
Inventory turnover for the full year of 2003 was 2.7 times versus 2.5 times a
year ago. Free cash flow(1) was $422 million for the 12 months ended December
31, 2003, compared to $375 million in the prior year.
RadioShack reported full year 2003 net income of $298 million, or $1.77 per
diluted share, versus net income of $263 million, or $1.45 per diluted share the
previous year. Excluding unusual items, 2002 net income(1) was $258 million, or
$1.42 per diluted share. Sales for 2003 were $4,649 million, up 2% versus $4,577
million the previous year.
As for financial guidance, RadioShack anticipates generating first quarter 2004
earnings per share of $0.36 to $0.38. Earnings per diluted share for fiscal year
2004 are anticipated to grow 13% to 15% year-over-year to at least $1.99. This
annual earnings per share growth is predicated upon sales growth of three to
four percent, gross margin gains of 50 to 70 basis points, and SG&A growth of
1.5 to 2.5 percent.
Today at 9:00 a.m. ET, management will host a conference call for interested
investors followed by a question and answer period. The public is invited to
listen to the call live on the Internet at www.radioshackcorporation.com on the
Investor Relations page. The call will be replayed on the Web site until April
16, 2004 at 11:59 p.m. ET.
Statements made in this news release which are forward-looking statements
involve risks and uncertainties and are indicated by words such as "anticipates"
and other similar words or phrases. These uncertainties include, but are not
limited to, economic conditions, product demand, competitive products and
pricing, availability of products, the regulatory environment and other risks
indicated in filings with the S.E.C. such as RadioShack's most recent Forms 10-K
and 10-Q.
Fort Worth, Texas-based RadioShack Corporation (NYSE: RSH) is the nation's most
trusted consumer electronics specialty retailer of wireless communications,
electronic parts, batteries and accessories, as well as other digital technology
products and services. With 7,042 outlets nationwide at year's end, it is
estimated that 94 percent of all Americans live or work within five minutes of a
RadioShack store or dealer. The company's knowledgeable sales associates and
brand position - "You've got questions. We've got answers.(R)" - support
RadioShack's mission to demystify technology in every neighborhood in America.
For more information on the company, visit the RadioShack Corporation Web site
at www.radioshackcorporation.com. For more information on RadioShack products
and services, visit its e-commerce Web site at www.radioshack.com.
--------
(1)See page 4 for a reconciliation of adjusted net income and free cash flow,
both of which are non-GAAP financial measures, to consolidated net income and
net cash provided by operating activities, respectively, which are both GAAP
financial measures.
RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Income Statement (Unaudited)
(In millions, except per share amounts)
Three Months Ended Increase/ Twelve Months Ended Increase/
December 31, (Decrease) December 31, (Decrease)
----------------------- ------------ ----------------------- ------------
2003 2002 2003 vs 2002 2003 2002 2003 vs 2002
---------- ---------- ------------ ---------- ---------- ------------
Net sales and operating revenues $1,490.4 $1,497.7 $ (7.3) $4,649.3 $4,577.2 $ 72.1
Cost of products sold 756.0 810.6 (54.6) 2,333.6 2,338.9 (5.3)
---------- ---------- ------------ ---------- ---------- ------------
Gross profit 734.4 687.1 47.3 2,315.7 2,238.3 77.4
---------- ---------- ------------ ---------- ---------- ------------
Operating expenses:
Selling, general and
administrative(1) 504.2 494.1 10.1 1,740.0 1,728.6 11.4
Depreciation and amortization 23.2 22.8 0.4 92.0 94.7 (2.7)
Impairment of long-lived assets(2) - 8.1 (8.1) - 8.1 (8.1)
Gain on contract termination(3) - (18.5) 18.5 - (18.5) 18.5
---------- ---------- ------------ ---------- ---------- ------------
Total operating expenses 527.4 506.5 20.9 1,832.0 1,812.9 19.1
---------- ---------- ------------ ---------- ---------- ------------
Operating income 207.0 180.6 26.4 483.7 425.4 58.3
Interest income 1.4 2.9 (1.5) 12.8 9.0 3.8
Interest expense (7.6) (10.6) 3.0 (35.7) (43.4) 7.7
Other income, net(4) - 3.1 (3.1) 12.0 33.9 (21.9)
---------- ---------- ------------ ---------- ---------- ------------
Income before income taxes 200.8 176.0 24.8 472.8 424.9 47.9
Provision for income taxes 73.5 66.9 6.6 174.3 161.5 12.8
---------- ---------- ------------ ---------- ---------- ------------
Net income $ 127.3 $ 109.1 $ 18.2 $ 298.5 $ 263.4 $ 35.1
========== ========== ============ ========== ========== ============
Net income per common share:
Basic $ 0.77 $ 0.64 $ 0.13 $ 1.78 $ 1.50 $ 0.28
========== ========== ============ ========== ========== ============
Diluted $ 0.77 $ 0.63 $ 0.14 $ 1.77 $ 1.45 $ 0.32
========== ========== ============ ========== ========== ============
Avg shares used to compute earnings per share:
Basic 164.5 168.7 (4.2) 167.7 173.0 (5.3)
========== ========== ============ ========== ========== ============
Diluted 166.3 174.2 (7.9) 168.9 179.3 (10.4)
========== ========== ============ ========== ========== ============
Shares outstanding 162.5 171.7 (9.2)
========== ========== ============
(1) - SG&A includes a $0.9 million credit in Q4 2002 and $29.0 million charge in
year 2002 for settlement of a class action lawsuit.
(2) - Impairment of long-lived assets includes an $8.1 million charge in both
Q4 2002 and year 2002 from the write-off of goodwill related to the 1999
acquisition of AmeriLink.
(3) - Gain on contract termination reflects the effect in both Q4 2002 and year
2002 of a gain from the termination of a Microsoft contract.
(4) - Other income includes $27.7 million in year 2002 from a favorable
litigation settlement.
RADIOSHACK CORPORATION AND SUBSIDIARIES
Reconciliation Tables of Non-GAAP Financial Measures to GAAP Financial Measures (Unaudited)
(In millions)
NET INCOME
Three Months Ended Increase/ Twelve Months Ended Increase/
December 31 (Decrease) December 31 (Decrease)
---------------------- ------------ ---------------------- ------------
2003 2002 2003 vs 2002 2003 2002 2003 vs 2002
---------------------- ------------ ---------------------- ------------
Net income - consolidated $127.3 $109.1 $18.2 $298.5 $263.4 $35.1
Adjustments:
SG&A - settlement of class action lawsuit - (0.9) 0.9 - 29.0 (29.0)
Impairment of long-lived asset - 8.1 (8.1) - 8.1 (8.1)
Gain on contract termination - (18.5) 18.5 - (18.5) 18.5
Other income, net - - - - (27.7) 27.7
---------------------- ------------ ---------------------- ------------
Total adjustments before tax - (11.3) 11.3 - (9.1) 9.1
Provision for income taxes - 4.3 (4.3) - 3.5 (3.5)
---------------------- ------------ ---------------------- ------------
Total adjustments - (7.0) 7.0 - (5.6) 5.6
---------------------- ------------ ---------- ---------- ------------
Net income - adjusted $127.3 $102.1 $25.2 $298.5 $257.8 $40.7
====================== ============ ====================== ============
FREE CASH FLOW
Twelve Months Ended Increase/
December 31 (Decrease)
---------------------- ------------
2003 2002 2003 vs 2002
---------- ---------- ------------
Net cash provided by operating activities $651.9 $521.6 $130.3
Less:
Additions to property, plant and equipment 189.6 106.8 82.8
Dividends paid 40.8 39.8 1.0
---------------------- ------------
Free cash flow $421.5 $375.0 $ 46.5
====================== ============
RADIOSHACK CORPORATION AND SUBSIDIARIES
Adjusted Income Statement (Unaudited)
(In millions, except per share amounts)
Three Months Ended Increase/ Twelve Months Ended Increase/
December 31, (Decrease) December 31, (Decrease)
---------------------- ------------ ---------------------- ------------
2003 2002 2003 vs 2002 2003 2002 2003 vs 2002
---------- ---------- ------------ ---------- ---------- ------------
Net sales and operating revenues $1,490.4 $1,497.7 $ (7.3) $4,649.3 $4,577.2 $ 72.1
Cost of products sold 756.0 810.6 (54.6) 2,333.6 2,338.9 (5.3)
---------- ---------- ------------ ---------- ---------- ------------
Gross profit 734.4 687.1 47.3 2,315.7 2,238.3 77.4
---------- ---------- ------------ ---------- ---------- ------------
Operating expenses:
Selling, general and administrative 504.2 495.0 9.2 1,740.0 1,699.6 40.4
Depreciation and amortization 23.2 22.8 0.4 92.0 94.7 (2.7)
---------- ---------- ------------ ---------- ---------- ------------
Total operating expenses 527.4 517.8 9.6 1,832.0 1,794.3 37.7
---------- ---------- ------------ ---------- ---------- ------------
Operating income 207.0 169.3 37.7 483.7 444.0 39.7
Interest Income 1.4 2.9 (1.5) 12.8 9.0 3.8
Interest expense (7.6) (10.6) 3.0 (35.7) (43.4) 7.7
Other income, net - 3.1 (3.1) 12.0 6.2 5.8
---------- ---------- ------------ ---------- ---------- ------------
Income before income taxes 200.8 164.7 36.1 472.8 415.8 57.0
Provision for income taxes 73.5 62.6 10.9 174.3 158.0 16.3
---------- ---------- ------------ ---------- ---------- ------------
Net income $ 127.3 $ 102.1 $ 25.2 $ 298.5 $ 257.8 40.7
========== ========== ============ ========== ========== ============
Net income per common share:
Basic $ 0.77 $ 0.60 $ 0.17 $ 1.78 $ 1.46 $ 0.32
========== ========== ============ ========== ========== ============
Diluted $ 0.77 $ 0.59 $ 0.18 $ 1.77 $ 1.42 $ 0.35
========== ========== ============ ========== ========== ============
Avg shares used to compute earnings per share:
Basic 164.5 168.7 (4.2) 167.7 173.0 (5.3)
========== ========== ============ ========== ========== ============
Diluted 166.3 174.2 (7.9) 168.9 179.3 (10.4)
========== ========== ============ ========== ========== ============
Shares outstanding 162.5 171.7 (9.2)
========== ========== ============
RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
(In millions)
Dec. 31, 2003 Dec. 31, 2002
------------- -------------
Assets
Cash and cash equivalents $ 634.7 $ 446.5
Accounts and notes receivable, net 182.4 206.1
Inventories 766.5 971.2
Other current assets 83.0 83.1
------------- -------------
Total current assets 1,666.6 1,706.9
Property, plant and equipment, net 513.1 421.6
Other assets 64.2 99.4
------------- -------------
Total assets $ 2,243.9 $ 2,227.9
============= =============
Liabilities and Stockholders' Equity
Notes payable $ 77.4 $ 36.0
Accounts payable 300.2 312.6
Accrued expenses 343.0 318.7
Income taxes payable 137.5 160.9
------------- -------------
Total current liabilities 858.1 828.2
Long-term debt, excluding current maturities 541.3 591.3
Other non-current liabilities 75.2 80.3
------------- -------------
Total liabilities 1,474.6 1,499.8
------------- -------------
Stockholders' equity 769.3 728.1
------------- -------------
Total liabilities and stockholders' equity $ 2,243.9 $ 2,227.9
============= =============
RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(In millions)
Year Ended December 31,
-----------------------
2003 2002
---------- ----------
Cash flows from operating activities:
Net income $ 298.5 $ 263.4
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 92.0 94.7
Provision for credit losses and bad debts 0.4 4.7
Deferred income taxes and other items 51.7 30.6
Impairment of long-lived assets - 8.1
Changes in operating assets and liabilities:
Receivables 17.2 68.2
Inventories 202.3 (21.4)
Other current assets (5.2) 1.9
Accounts payable, accrued expenses and income taxes payable (5.0) 71.4
---------- ----------
Net cash provided by operating activities 651.9 521.6
---------- ----------
Cash flows from investing activities:
Additions to property, plant and equipment (189.6) (106.8)
Proceeds from sale of property, plant and equipment 2.0 8.6
Proceeds from sale of installation subsidiary 4.7 -
Other investing activities (6.0) (0.8)
---------- ----------
Net cash used in investing activities (188.9) (99.0)
---------- ----------
Cash flows from financing activities:
Purchases of treasury stock (286.2) (329.9)
Sales of treasury stock to employee stock plans 35.8 40.6
Proceeds from exercise of stock options 15.7 9.0
Dividends paid (40.8) (39.8)
Proceeds from financing obligation - 32.3
Changes in short-term borrowings, net 20.7 (2.0)
Repayments of long-term borrowings (20.0) (87.7)
---------- ----------
Net cash used in investing activities (274.8) (377.5)
---------- ----------
Net increase in cash and cash equivalents 188.2 45.1
Cash and cash equivalents, beginning of period 446.5 401.4
---------- ----------
Cash and cash equivalents, end of period $ 634.7 $ 446.5
========== ==========