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): July 22, 2003
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 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit No.
99.1 Press Release, dated July 22, 2003.
Item 9. Regulation FD Disclosure
In accordance with SEC Release No. 33-8216, the following information,
intended to be furnished under "Item 12. Results of Operations and Financial
Condition," is instead furnished under "Item 9. Regulation FD Disclosure."
On July 22, 2003, RadioShack Corporation (the "Company") issued a press
release reporting its results of operations for the second quarter of 2003. A
copy of the press release is attached hereto as Exhibit 99.1.
In the press release, the Company utilized non-GAAP financial measures that
adjusted the Company's net income for the second quarter of 2002 prepared in
accordance with generally accepted accounting principles (GAAP) and also
presented 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 second
quarter of 2002 to eliminate the effect of two litigation settlements in that
quarter. Management believes that the presentation of adjusted net income for
this quarter is useful to investors because it provides a 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 also utilized a non-GAAP financial measure in the press release
to describe 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 22nd day of July, 2003.
RADIOSHACK CORPORATION
/s/ Mark C. Hill
------------------------------------------
Mark C. Hill
Senior Vice President, Corporate Secretary
and General Counsel
EXHIBIT INDEX
Exhibit No.
99.1 Press Release, dated July 22, 2003.
Exhibit 99.1
July 22,2003
RSH-2003-031
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 Second Quarter 2003 Net Income of
$57.5 Million, up 11%
Fort Worth, Texas - RadioShack Corporation (NYSE: RSH) today announced second
quarter net income of $57.5 million or $0.34 per diluted share for the quarter
ended June 30, 2003, compared to net income of $51.8 million or $0.28 per
diluted share for the quarter ended June 30, 2002. In 2002, the company also
reported adjusted second quarter net income of $53.2 million or $0.29 per
diluted share due to the effect of two litigation settlements.
Comparable store sales for the second quarter 2003 were up 3% compared to the
prior year. Total sales in the second quarter 2003 were also up 3% to $1,025
million, compared to total sales of $998 million for the previous year. Wireless
communications department sales for the second quarter of 2003 were up 14%.
"RadioShack's second quarter financials were primarily the result of striking a
prudent balance between sales and profitability, as executed by our merchants
and field associates," said Leonard Roberts, chairman and chief executive
officer of RadioShack Corporation. "Strong sales in the wireless and toy
departments combined with excellent profitability improvement in the computer
and power-technical departments, made for very respectable financial results."
Inventory turnover through the second quarter of 2003 was 2.6 times versus 2.5 a
year ago. Free cash flow(1) was $221 million for the six-months ended June 30,
2003.
Financial Guidance
o For the third quarter of 2003, RadioShack anticipates generating diluted
earnings per share of $0.27 - $0.29.
o For the full year 2003, RadioShack anticipates earnings per share to be at
least $1.63, representing a 15% increase over its full year adjusted 2002
earnings per share. The new 2003 forecast is $0.03 higher than previously
anticipated and represents similar operating income assumptions with a
slightly more favorable outlook for lines below operating income. The
full year assumptions include:
o Approximately 3.5% to 4.0% growth in sales
o Wireless communications department growth will be notably higher
than earlier estimates of 3% to 4%
o Collectively, the decline in the home entertainment, wired
communications, and radio communications departments will be more
pronounced than earlier expectations of "down slightly to flat."
o Gross margin improvement of 0 to 20 basis points
o SG&A growth of 3.5% to 4.0%
o Average year-end diluted shares of approximately 168 million.
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 October
19, 2003 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," "approximately," 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 Form 10-K and 10-Q.
Fort Worth-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 more than 7,000 outlets nationwide, 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," 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 Free cash flow is defined as net cash from operating activities minus
additions to property, plant and equipment (a.k.a. capital expenditures) minus
dividends paid.
RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Income Statement (Unaudited)
Three Months Ended Increase/ Six Months Ended Increase/
June 30, (Decrease) June 30, (Decrease)
----------------------- ------------- ----------------------- -------------
(In millions, except per share amounts) 2003 2002 2003 vs 2002 2003 2002 2003 vs 2002
--------------------------------------- ---------- ---------- ------------- ---------- ---------- -------------
Net sales and operating revenues $1,025.0 $998.1 $26.9 $2,095.3 $2,032.5 $62.8
Cost of products sold 503.8 488.0 15.8 1,046.7 1,002.7 44.0
---------- ---------- ------------- ---------- ---------- -------------
Gross profit 521.2 510.1 11.1 1,048.6 1,029.8 18.8
---------- ---------- ------------- ---------- ---------- -------------
Operating expenses:
Selling, general and
administrative (1) 406.6 421.3 (14.7) 814.4 814.5 (0.1)
Depreciation and amortization 22.9 24.3 (1.4) 45.5 48.9 (3.4)
---------- ---------- ------------- ---------- ---------- -------------
Total operating expenses 429.5 445.6 (16.1) 859.9 863.4 (3.5)
---------- ---------- ------------- ---------- ---------- -------------
Operating income 91.7 64.5 27.2 188.7 166.4 22.3
Interest income 8.0 2.1 5.9 9.5 3.9 5.6
Interest expense (9.8) (10.7) 0.9 (19.4) (21.5) 2.1
Other income (2) 0.7 27.7 (27.0) 3.1 27.7 (24.6)
---------- ---------- ------------- ---------- ---------- -------------
Income before income taxes 90.6 83.6 7.0 181.9 176.5 5.4
Provision for income taxes 33.1 31.8 1.3 67.8 67.1 0.7
---------- ---------- ------------- ---------- ---------- -------------
Net income 57.5 51.8 5.7 114.1 109.4 4.7
========== ========== ============= ========== ========== =============
Net income per common share:
Basic $0.34 $0.29 $0.05 $0.67 $0.61 $0.06
========== ========== ============= ========== ========== =============
Diluted $0.34 $0.28 $0.06 $0.67 $0.59 $0.08
========== ========== ============= ========== ========== =============
Shares used in computing earnings per common
share:
Basic 168.9 174.4 (5.5) 170.1 175.6 (5.5)
========== ========== ============= ========== ========== =============
Diluted 169.8 181.5 (11.7) 170.8 182.5 (11.7)
========== ========== ============= ========== ========== =============
(1) - Q2 2002 SG&A includes $29.9 million for settlement
of class action lawsuit.
(2) - Q2 2002 Other income includes $27.7 million from
favorable litigation settlement.
RADIOSHACK CORPORATION AND SUBSIDIARIES
Net Income Reconciliation (Unaudited)
Three Months Ended Increase/ Six Months Ended Increase/
June 30, (Decrease) June 30, (Decrease)
----------------------- ------------- ----------------------- -------------
(In millions, except per share amounts) 2003 2002 2003 vs 2002 2003 2002 2003 vs 2002
---------- ---------- ------------- ---------- ---------- -------------
Net income - consolidated $57.5 $51.8 $5.7 $114.1 $109.4 $4.7
---------- ---------- ------------- ---------- ---------- -------------
Adjustments:
Settlement of class action lawsuit - 29.9 (29.9) - 29.9 (29.9)
Favorable litigation settlement - (27.7) 27.7 - (27.7) 27.7
--------- --------- ------------- ---------- ---------- -------------
Total adjustments before tax - 2.2 (2.2) - 2.2 (2.2)
Provision for income taxes - (0.8) 0.8 - (0.8) 0.8
---------- ---------- ------------- ---------- ---------- -------------
Total adjustments - 1.4 (1.4) - 1.4 (1.4)
---------- ---------- ------------- ---------- ---------- -------------
Net income - adjusted $57.5 $53.2 $4.3 $114.1 $110.8 $3.3
========== ========== ============= ========== ========== =============
RADIOSHACK CORPORATION AND SUBSIDIARIES
Adjusted Income Statement (Unaudited)
Three Months Ended Increase/ Six Months Ended Increase/
June 30, (Decrease) June 30, (Decrease)
----------------------- ------------- ----------------------- -------------
(In millions, except per share amounts) 2003 2002 2003 vs 2002 2003 2002 2003 vs 2002
---------- ---------- ------------- ---------- ---------- -------------
Net sales and operating revenues $1,025.0 $998.1 $26.9 $2,095.3 $2,032.5 $62.8
Cost of products sold 503.8 448.0 15.8 1,046.7 1,002.7 44.0
---------- ---------- ------------- ---------- ---------- -------------
Gross profit 521.2 510.1 11.1 1,048.6 1,029.8 18.8
---------- ---------- ------------- ---------- ---------- -------------
Operating expenses:
Adjusted selling, general and
administrative 406.6 391.4 15.2 814.4 784.6 29.8
Depreciation and amortization 22.9 24.3 (1.4) 45.5 48.9 (3.4)
---------- ---------- ------------- ---------- ---------- -------------
Total adjusted operating expenses 429.5 415.7 13.8 859.9 833.5 26.4
---------- ---------- ------------- ---------- ---------- -------------
Adjusted operating income 91.7 94.4 (2.7) 188.7 196.3 (7.6)
Interest income 8.0 2.1 5.9 9.5 3.9 5.6
Interest expense (9.8) (10.7) 0.9 (19.4) (21.5) 2.1
Adjusted other income 0.7 - 0.7 3.1 - 3.1
---------- ---------- ------------- ---------- ---------- -------------
Adjusted income before income taxes 90.6 85.8 4.8 181.9 178.7 3.2
Provision for income taxes 33.1 32.6 0.5 67.8 67.9 (0.1)
---------- ---------- ------------- ---------- ---------- -------------
Adjusted net income $ 57.5 $ 53.2 $ 4.3 $ 114.1 $ 108.5 $ 3.3
========== ========== ============= ========== ========== =============
Adjusted net income per common share:
Basic $ 0.34 $ 0.30 $ 0.04 $ 0.67 $ 0.62 $ 0.05
========== ========== ============= ========== ========== =============
Diluted $ 0.34 $ 0.29 $ 0.05 $ 0.67 $ 0.59 $ 0.08
========== ========== ============= ========== ========== =============
Shares used in computing adjusted earnings
per common share:
Basic 168.9 174.4 (5.5) 170.1 175.6 (5.5)
========== ========== ============= ========== ========== =============
Diluted 169.8 181.5 (11.7) 170.8 182.5 (11.7)
========== ========== ============= ========== ========== =============
RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
June 30, December 31, June 30,
(In millions) 2003 2002 2002
------------- ------------ -------------
Assets
Cash and cash equivalents $ 524.3 $ 446.5 $ 529.1
Accounts and notes receivable, net 137.5 206.1 151.8
Inventories 811.1 971.2 830.6
Other current assets 88.0 83.1 86.6
------------- ------------ -------------
Total current assets 1,560.9 1,706.9 1,598.1
Property, plant and equipment, net 422.0 421.6 398.0
Other assets 98.4 99.4 115.4
------------- ------------ -------------
Total assets $2,081.3 $2,227.9 $2,111.5
============= ============ =============
Liabilities and Stockholders' Equity
Short-term debt $ - $ 36.0 $ 71.3
Accounts payable 284.1 312.6 225.7
Accrued expenses 253.6 318.7 279.6
Income taxes payable 140.8 160.9 126.8
------------- ------------ -------------
Total current liabilities 678.5 828.2 703.4
Long-term debt, excluding current
maturities 590.5 591.3 582.3
Other non-current liabilities 80.3 80.3 71.4
------------- ------------ -------------
Total liabilities 1,349.3 1,499.8 1,357.1
------------- ------------ -------------
Stockholders' equity 732.0 728.1 754.4
------------- ------------ -------------
Total liabilities and stockholders'
equity $2,081.3 $2,227.9 $2,111.5
============= ============ =============
RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended
June 30,
(In millions) 2003 2002
---------- ----------
Cash flows from operating activities:
Net income $114.1 $109.4
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 45.5 48.9
Provision for credit losses and bad debts - 2.3
Other items 9.4 4.2
Changes in operating assets and liabilities:
Receivables 68.7 123.9
Inventories 160.1 119.2
Other current assets (7.9) 0.8
Accounts payable, accrued expenses and income
taxes payable (121.3) (93.3)
---------- ----------
Net cash provided by operating activities 268.6 315.4
---------- ----------
Cash flows from investing activities:
Additions to property, plant and equipment (47.7) (34.0)
Proceeds from sale of property, plant and equipment 0.1 4.1
Other investing activities (0.2) (0.8)
---------- ----------
Net cash used in investing activities (47.8) (30.7)
---------- ----------
Cash flows from financing activities:
Purchases of treasury stock (127.1) (163.4)
Sales of treasury stock to employee stock plans 18.8 22.7
Proceeds from exercise of stock options 1.3 7.5
Dividends paid - (1.5)
Proceeds from financing obligations - 32.1
Changes in short-term borrowings, net (16.0) -
Repayments of long-term borrowings (20.0) (54.4)
---------- ----------
Net cash used in investing activities (143.0) (157.0)
---------- ----------
Net increase in cash and cash equivalents 77.8 127.7
Cash and cash equivalents, beginning of period 446.5 401.4
---------- ----------
Cash and cash equivalents, end of period $524.3 $529.1
========== ==========