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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 1-5571
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RADIOSHACK CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-1047710
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No __
The number of shares outstanding of the issuer's Common Stock, $1 par value, on
July 31, 2002 was 171,536,880.
Index to Exhibits is on Sequential Page No. 14. Total pages 139.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
(In millions, except per share amounts) 2002 2001 2002 2001
- --------------------------------------- --------- --------- --------- ---------
Net sales and operating revenues $ 998.1 $ 1,039.5 $ 2,032.5 $ 2,179.0
Cost of products sold 488.0 527.1 1,002.7 1,120.1
--------- --------- --------- ---------
Gross profit 510.1 512.4 1,029.8 1,058.9
--------- --------- --------- ---------
Operating expenses:
Selling, general and administrative 421.3 398.0 814.5 803.2
Depreciation and amortization 24.3 27.5 48.9 55.2
Loss on sale of assets -- 12.4 -- 12.4
--------- --------- --------- ---------
Total operating expenses 445.6 437.9 863.4 870.8
--------- --------- --------- ---------
Operating income 64.5 74.5 166.4 188.1
Interest income 2.1 4.2 3.9 8.6
Interest expense (10.7) (12.2) (21.5) (25.2)
Other income 27.7 -- 27.7 --
Provision for loss on Internet-related investment -- -- -- (30.0)
--------- --------- --------- ---------
Income before income taxes 83.6 66.5 176.5 141.5
Provision for income taxes 31.8 25.3 67.1 53.8
--------- --------- --------- ---------
Net income 51.8 41.2 109.4 87.7
Preferred dividends 1.1 1.2 2.3 2.5
--------- --------- --------- ---------
Net income available to common stockholders $ 50.7 $ 40.0 $ 107.1 $ 85.2
========= ========= ========= =========
Net income available per common share:
Basic $ 0.29 $ 0.22 $ 0.61 $ 0.46
========= ========= ========= =========
Diluted $ 0.28 $ 0.21 $ 0.59 $ 0.44
========= ========= ========= =========
Shares used in computing earnings per common share:
Basic 174.4 185.9 175.6 186.3
========= ========= ========= =========
Diluted 181.5 193.1 182.5 194.3
========= ========= ========= =========
The accompanying notes are an integral part of these consolidated financial statements.
RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, December 31, June 30,
2002 2001 2001
(In millions, except for share amounts) (Unaudited) (Unaudited)
- -------------------------------------- ----------- ----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 529.1 $ 401.4 $ 336.1
Accounts and notes receivable, net 151.8 276.3 294.6
Inventories, at lower of cost or market 830.6 949.8 974.1
Other current assets 86.6 86.8 68.6
----------- ----------- -----------
Total current assets 1,598.1 1,714.3 1,673.4
Property, plant and equipment, net 398.0 417.7 461.3
Other assets, net of accumulated amortization 115.4 113.1 146.5
----------- ----------- -----------
Total assets $ 2,111.5 $ 2,245.1 $ 2,281.2
=========== =========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Short-term debt, including current maturities of
long-term debt $ 71.3 $ 105.5 $ 68.9
Accounts payable 225.7 206.7 183.5
Accrued expenses 279.6 336.1 252.9
Income taxes payable 126.8 178.1 116.9
----------- ----------- -----------
Total current liabilities 703.4 826.4 622.2
Long-term debt, excluding current maturities 582.3 565.4 595.5
Other non-current liabilities 71.4 75.2 68.0
----------- ----------- -----------
Total liabilities 1,357.1 1,467.0 1,285.7
----------- ----------- -----------
Minority interest in consolidated subsidiary -- -- 100.0
Commitments and contingent liabilities
Stockholders' equity:
Preferred stock, no par value, 1,000,000 shares authorized
Series A junior participating, 300,000 shares designated
and none issued -- -- --
Series B convertible (TESOP), 100,000 shares authorized;
61,500, 64,500 and 67,100 shares issued, respectively 61.5 64.5 67.1
Common stock, $1 par value, 650,000,000 shares authorized;
236,033,000 shares issued 236.0 236.0 236.0
Additional paid-in capital 140.4 138.8 129.7
Retained earnings 1,889.8 1,787.3 1,723.2
Treasury stock, at cost; 63,337,000, 59,233,000 and
52,090,000 shares, respectively (1,570.9) (1,443.5) (1,252.4)
Unearned deferred compensation (1.9) (4.3) (7.5)
Accumulated other comprehensive loss (0.5) (0.7) (0.6)
----------- ----------- -----------
Total stockholders' equity 754.4 778.1 895.5
----------- ----------- -----------
Total liabilities and stockholders' equity $ 2,111.5 $ 2,245.1 $ 2,281.2
=========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended
June 30,
(In millions) 2002 2001
------------ -------- ---------
Cash flows from operating activities:
Net income $ 109.4 $ 87.7
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loss on Internet-related investment -- 30.0
Loss on sale of assets -- 12.4
Depreciation and amortization 48.9 55.2
Provision for credit losses and bad debts 2.3 9.1
Other items 4.2 9.0
Changes in operating assets and liabilities:
Receivables 123.9 152.7
Inventories 119.2 190.2
Other current assets 0.8 (11.4)
Accounts payable, accrued expenses and income taxes payable (93.3) (196.0)
-------- ---------
Net cash provided by operating activities 315.4 338.9
-------- ---------
Cash flows from investing activities:
Additions to property, plant and equipment (34.0) (62.1)
Proceeds from sale of property, plant and equipment 4.1 3.1
Proceeds from early retirement of CompUSA note -- 123.6
Other investing activities (0.8) (4.2)
-------- ---------
Net cash (used in) provided by investing activities (30.7) 60.4
-------- ---------
Cash flows from financing activities:
Purchases of treasury stock (163.4) (87.6)
Proceeds from sale of common stock put options -- 0.3
Sales of treasury stock to employee stock plans 22.7 28.6
Proceeds from exercise of stock options 7.5 4.4
Dividends paid (1.5) (22.1)
Changes in short-term borrowings, net -- (461.3)
Increase in long-term borrowings 32.1 346.4
Repayments of long-term borrowings (54.4) (2.6)
-------- ---------
Net cash used in financing activities (157.0) (193.9)
-------- ---------
Net increase in cash and cash equivalents 127.7 205.4
Cash and cash equivalents, beginning of period 401.4 130.7
-------- ---------
Cash and cash equivalents, end of period $ 529.1 $ 336.1
======== =========
The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - BASIS OF FINANCIAL STATEMENTS
We prepared the accompanying unaudited consolidated financial statements in
accordance with the rules of the Securities and Exchange Commission and we did
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In management's
opinion, all adjustments (consisting only of normal recurring accruals)
considered necessary for a fair presentation are included. However, operating
results for the six months ended June 30, 2002 do not necessarily indicate the
results you might expect for the year ending December 31, 2002. If you desire
further information, you should refer to our consolidated financial statements
and management's discussion and analysis of financial condition and results of
operations included in our 2001 Annual Report on Form 10-K for the year ended
December 31, 2001.
NOTE 2 - BASIC AND DILUTED EARNINGS PER SHARE
The following schedule is a reconciliation of the numerators and denominators
used in computing our basic and diluted earnings per share ("EPS") calculations
for the three and six months ended June 30, 2002 and 2001, respectively. Basic
EPS excludes the effect of potentially dilutive securities, while diluted EPS
reflects the potential dilution that would have occurred if our securities or
other contracts to issue common stock were exercised, converted, or resulted in
the issuance of our common stock that would have then shared in our earnings.
Three Months Ended Three Months Ended
June 30, 2002 June 30, 2001
------------------------------------- -------------------------------------
Income Shares Per Share Income Shares Per Share
(In millions, except per share amounts) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Net income $ 51.8 $ 41.2
Less: Preferred stock dividends (1.1) (1.2)
----------- -----------
Basic EPS
Net income available to common
shareholders 50.7 174.4 $ 0.29 40.0 185.9 $ 0.22
=========== ===========
Effect of dilutive securities:
Dividends on Series B preferred stock 1.1 1.2
Additional contribution required for TESOP
if preferred stock had been converted (1.1) 5.4 (0.8) 5.8
Stock options 1.7 1.4
----------- ----------- ------------ -----------
Diluted EPS
Net income available to common
shareholders plus assumed conversions $ 50.7 181.5 $ 0.28 $ 40.4 193.1 $ 0.21
=========== =========== =========== =========== =========== ===========
Six Months Ended Six Months Ended
June 30, 2002 June 30, 2001
------------------------------------- -------------------------------------
Income Shares Per Share Income Shares Per Share
(In millions, except per share amounts) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Net income $ 109.4 $ 87.7
Less: Preferred stock dividends (2.3) (2.5)
----------- -----------
Basic EPS
Net income available to common
shareholders 107.1 175.6 $ 0.61 85.2 186.3 $ 0.46
=========== ===========
Effect of dilutive securities:
Dividends on Series B preferred stock 2.3 2.5
Additional contribution required for TESOP
if preferred stock had been converted (2.3) 5.4 (1.7) 5.9
Stock options 1.5 2.1
----------- ----------- ----------- -----------
Diluted EPS
Net income available to common
shareholders plus assumed conversions $ 107.1 182.5 $ 0.59 $ 86.0 194.3 $ 0.44
=========== =========== =========== =========== =========== ===========
Options to purchase 11.9 million shares of common stock for both the three and
six month periods ended June 30, 2002, as compared to options to purchase 13.1
million and 12.8 million shares of common stock for the comparable periods in
the prior year, were not included in the computation of diluted earnings per
common share because the exercise prices of the options were greater than the
average market price of the common stock during the periods and the effect of
their inclusion in the computation would have been antidilutive.
NOTE 3 - REVOLVING CREDIT FACILITY
In the second quarter of 2002, we replaced our existing $600.0 million credit
facilities with new credit facilities, also totaling $600.0 million. A syndicate
of 16 banks granted the new facilities. These facilities are comprised of a
$300.0 million 364-day revolving credit facility maturing in June 2003 and a
$300.0 million five-year revolving credit facility maturing in June 2007. The
terms of these revolving credit facilities are substantially similar to the
previous facilities. The new revolving credit facilities will support any future
commercial paper borrowings and are otherwise available for general corporate
purposes.
NOTE 4 - COMPREHENSIVE INCOME
Comprehensive income for the three months ended June 30, 2002 and 2001 was $52.0
million and $41.8 million, respectively, and comprehensive income for the six
months ended June 30, 2002 and 2001 was $109.6 million and $88.1 million,
respectively.
NOTE 5 - BUSINESS RESTRUCTURING
In 1996 and 1997, we initiated certain restructuring programs 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. At December 31, 2001, the balance in the restructuring reserve was $11.8
million and consisted of the remaining estimated real estate obligations to be
paid. During the three and six months ended June 30, 2002, approximately $0.6
million and $1.6 million, respectively, was charged against the reserve. An
additional $1.2 million relating to real estate obligations was added to the
reserve during the first quarter of 2002, leaving a balance in the reserve of
$11.4 million at June 30, 2002.
NOTE 6 - RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment of Long-Lived
Assets" ("SFAS 144"), in October 2001, which establishes accounting and
reporting standards for the impairment and disposition of long-lived assets
(except unidentifiable intangibles), including discontinued operations. SFAS 144
became effective for all financial statements issued for fiscal years beginning
after December 15, 2001 and, generally, its provisions are to be applied
prospectively. We adopted SFAS 144 effective January 1, 2002, and there were no
material adjustments as a result of this adoption.
NOTE 7 - COMMITMENTS AND CONTINGENT LIABILITIES
We have various pending claims, lawsuits, disputes with third parties,
investigations and actions incidental to the operation of our business. Although
occasional adverse settlements or resolutions may occur and negatively impact
earnings in the year of settlement, it is our opinion that their ultimate
resolution will not have a materially adverse effect on our financial condition
or liquidity.
We lease rather than own most of our facilities. Our retail stores comprise the
largest portion of our leased facilities. These stores are located primarily in
major shopping malls and shopping centers owned by other companies. Some leases
are based on a minimum rental plus a percentage of the store's sales in excess
of a stipulated base figure. We also lease distribution centers, office space
and our corporate headquarters.
NOTE 8 - LITIGATION
Subject to court approval, we have reached agreement on a tentative settlement
of $29.9 million in a class action lawsuit originally filed in March 2000 in
Orange County, California. The lawsuit, styled Omar Belazi, et al vs. Tandy
Corporation, et al, related to the alleged miscalculation of overtime wages for
certain of our former and current employees in that state. We denied liability.
Additionally, in the second quarter of 2002, we received payments of $27.7
million in partial settlement of amounts owed to us under a tax sharing
agreement that was the subject of an arbitration styled Tandy Corporation and
T.E. Electronics, Inc. vs. O'Sullivan Industries Holdings, Inc. This partial
settlement followed a ruling in RadioShack's favor by the arbitration panel.
This arbitration was commenced in July 1999 and the settlement also requires
O'Sullivan to make ongoing payments under this tax sharing agreement that
was entered into by the parties at the time of O'Sullivan's initial public
offering.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION ("MD&A")
FACTORS THAT MAY AFFECT FUTURE RESULTS
Matters discussed in MD&A include forward-looking statements within the meaning
of the federal securities laws. This includes statements concerning management's
plans and objectives relating to our operations or economic performance and
related assumptions. Forward-looking statements are made based on management's
expectations and beliefs concerning future events and, therefore, involve a
number of risks and uncertainties. Management cautions that forward-looking
statements are not guarantees and actual results could differ materially from
those expressed or implied in the forward-looking statements. Important factors
that could cause our actual results of operations or financial condition to
differ include, but are not necessarily limited to:
o changes in national or regional U.S. economic conditions, including, but
not limited to, recessionary trends, level of the equity markets, consumer
credit availability, interest rates, inflation, consumers' disposable
income and spending levels, job security and unemployment, and overall
consumer confidence;
o continuing terrorist activities in the U.S., as well as the resulting
international war on terrorism;
o the disruption of international, national or regional transportation
systems;
o changes in the amount and degree of promotional intensity exerted by
current competitors and potential new competition from both retail stores
and alternative methods or channels of distribution, such as e-commerce,
telephone shopping services and mail order;
o the inability to successfully execute our strategic initiatives, including
our Anchor, Participatory and Opportunistic ("APOS") business model and our
strategic business units ("SBU") and emerging sales channels strategies, as
well as new alliances which may be formed with other retailers and third
party service providers;
o the presence or absence of new services or products and product features in
the merchandise categories we sell and unexpected changes in our actual
merchandise sales mix;
o the inability to maintain profitable contracts or execute business plans
with providers of third party branded products and with service providers
relating to cellular and PCS telephones and direct-to-home ("DTH")
satellite programming;
o the inability to collect the level of anticipated residual income, consumer
acquisition fees and rebates for products and third party services offered
by us;
o the inability to successfully maintain our strategic alliances, including
those with Compaq, DIRECTV, DISH Network, Thomson/RCA, Sprint, and/or
Verizon Wireless;
o the lack of availability or access to sources of inventory;
o the inability to successfully implement our Retrofest strategy of
reallocating a portion of our retail stores' display space, which will
permit us to enhance the display of other product lines;
o the inability to establish and implement our internal and external supply
chain initiatives;
o changes in the financial markets that would reduce or eliminate access to
longer term capital or short-term credit availability;
o the inability to attract, retain and grow an effective management team in a
dynamic environment or changes in the cost or availability of a suitable
work force to manage and support our service-driven operating strategies;
o the imposition of new restrictions or regulations regarding the sale of
products and/or services we sell or changes in tax rules and regulations
applicable to us;
o the adoption rate and market demand for new electronic products such as
high-speed Internet or other Internet-related services; or
o the occurrence of severe weather events which prohibit consumers from
travelling to our retail locations, especially during the peak winter
holiday season.
RESULTS OF OPERATIONS
Net Sales and Operating Revenues
Our sales decreased 4.0% to $998.1 million for the quarter ended June 30, 2002,
compared to $1,039.5 million in the corresponding prior year period. For the six
months ended June 30, 2002, our overall sales decreased 6.7% to $2,032.5
million, compared to $2,179.0 million for the same period in 2001. Comparable
store sales were flat for the second quarter, with a decrease of 4% for the
six-month period ended June 30, 2002, respectively, when compared to the prior
year second quarter and six-month periods. Sales from our dealer/franchise
channel decreased 42% or $30.0 million and 38% or $58.8 million, respectively,
for the quarter and six months ended June 30, 2002. Our sales decreases for both
the three and six-month periods were driven primarily by decreased sales of DTH
satellite systems and services as a result of the loss of DIRECTV as a service
provider in National Rural Telecommunications Coalition markets, as well as the
lack of a full complement of DISH Network offerings for most of the 2002 second
quarter. To a lesser extent, these sales decreases were due to lower home
computer and monitor sales. Increased sales of wireless handsets partially
offset our sales decrease. Increased sales of wireless and home entertainment
accessories, batteries and portable computers also helped offset this decrease.
We expect to see comparable store sales improvement for the second half of the
year, compared to 2001.
During 2001, we reorganized our marketing and merchandising departments into
three product groups, which we call Strategic Business Units ("SBU"). These SBUs
relate to our position of "Connecting People," "Connecting Places" and
"Connecting Things" in the consumer electronics marketplace. An explanation of
each unit is provided below. Each SBU is responsible for specific products and
third party relationships. These SBUs work with our brand management, sales
channels and support groups, which together allow RadioShack to target the right
customer through the right sales channel with the appropriate products and
support.
Each SBU is designed to focus on more efficient and convenient ways to serve our
sales channels. In addition to our 5,144 company-owned stores and 2,094
dealer/franchise outlets, our existing and emerging sales channels include the
www.radioshack.com e-commerce site and online catalog operations, as well as an
outbound and inbound telephone call center.
The Connecting People SBU consists of the wireless communication, wired
communication and radio communication departments. The wireless communication
department includes products such as wireless handsets and related accessories,
in addition to prepaid wireless refill services and related residuals. The wired
communication department includes products such as cordless phones and phone
cords, plus prepaid long distance cards. Products including two-way radios and
scanners are part of the radio communication department. Our strategic alliances
for the Connecting People SBU include both Sprint and Verizon Wireless.
The Connecting Places SBU has two departments, home entertainment and computers.
The home entertainment department includes audio and video products and services
such as DTH satellite systems and related residuals, installation services, DVD
players and accessories. The computer department includes personal computers and
accessories, hand-held computers, and Internet devices and services, as well as
digital cameras. This SBU is responsible for our strategic alliances with
Compaq, DIRECTV, DISH Network and Thomson/RCA.
The Connecting Things SBU includes the accessories, batteries and technical
departments, as well as the personal electronics, seasonal and portable audio
departments. Products include AC and DC power adapters, general and special
purpose batteries, wire and connectors, toys and radio control cars, giftables
and personal portable audio products.
Connecting People Strategic Business Unit: Sales in the Connecting People SBU
increased approximately 10% for both the quarter and six months ended June 30,
2002, respectively, when compared to the corresponding prior year periods. Sales
in the wireless communication department, which includes cellular and PCS
handsets, accessories, related residuals and prepaid airtime services, increased
approximately 14% for the quarter, when compared to the second quarter last
year. This sales increase was due primarily to an increase in sales of wireless
handsets and accessories. Sales for the wired communication department, which
includes land-line telephones, answering machines and other related telephony
products, increased slightly for the quarter, when compared to the second
quarter last year. The increase in this department was primarily the result of
increased sales of telephone accessories, cordless phones and answering
machines. Sales for the radio communication department increased slightly for
the quarter, when compared to the second quarter last year. The increase in this
department was primarily the result of increased sales of both two-way and
short-wave radios. The Connecting People SBU expects to maintain a sales
increase for 2002, primarily driven by increases in the wireless communication
department.
Connecting Places Strategic Business Unit: Sales in the Connecting Places SBU
decreased approximately 20% for the quarter and decreased approximately 25% for
the six month period ended June 30, 2002, respectively, when compared to the
corresponding prior year periods. The home entertainment department, which
consists of home audio and video products, including DTH satellites,
installation services and related residuals, decreased approximately 30% for the
quarter, when compared to the second quarter last year. This decrease was
primarily attributable to a decrease in sales of satellite systems and
associated installations and was partially offset by increased sales of DVD
players and home entertainment accessories. The computer department, which
includes computers, related accessories and home networking products, increased
approximately 13% for the quarter, when compared to the second quarter last
year. This increase was primarily attributable to an increase in sales of laptop
computers, as well as an increase in sales of computer accessories, home
networking products and digital cameras. The Connecting Places SBU expects to
continue to experience a sales decrease for 2002, primarily due to a lower
blended average selling price from our two providers of DTH satellite systems.
Connecting Things Strategic Business Unit: Sales in the Connecting Things SBU
increased approximately 3% for the quarter and increased approximately 2% for
the six months ended June 30, 2002, respectively, when compared to the
corresponding prior year periods. Sales for the accessories, batteries and
technical departments increased 7% for the quarter, when compared to the second
quarter last year. This increase was primarily due to increased sales of general
and special purpose batteries. Sales for the personal electronics, seasonal and
portable audio departments decreased 4% for the quarter, when compared to the
second quarter last year, due primarily to decreased sales of music-related
products, portable audio, and toys. These sales decreases were due in part to a
strategic move made to narrow existing inventories for certain products to
prepare for the introduction of new product lines. The Connecting Things SBU
expects to experience a sales increase in 2002, primarily driven by accessories,
batteries and digital audio product sales.
RadioShack Retail Outlets
June 30, March 31, December 31, September 30, June 30,
2002 2002 2001 2001 2001
--------- --------- --------- --------- ---------
Company-owned 5,144 5,125 5,127 5,133 5,105
Cool Things @ Blockbuster --- --- 127 123 96
Dealer/franchise 2,094 2,086 2,119 2,101 2,079
--------- --------- --------- --------- ---------
Total number of retail outlets 7,238 7,211 7,373 7,357 7,280
========= ========= ========= ========= =========
Gross Profit
During the second quarter of 2002, gross profit dollars decreased slightly to
$510.1 million, but gross profit as a percent of net sales and operating
revenues increased 1.8 percentage points to 51.1%, compared to 49.3% for the
corresponding 2001 period. For the six months ended June 30, 2002, gross profit
dollars decreased 2.7% to $1,029.8 million, but gross profit as a percent of net
sales and operating revenues increased 2.1 percentage points to 50.7%, compared
to 48.6% for the corresponding period in 2001. The percentage point increases
for the three and six months ended June 30, 2002, were primarily attributable to
a decline in sales from the home entertainment department, which has a lower
gross profit margin than our overall average gross profit margin. In addition,
an increase in the computer department gross profit margin, which is
significantly lower than our average gross profit margin, combined with a
decrease in computer department sales for the first half of 2002, also
contributed to the 2.1 percentage point increase in our gross profit margin for
the six months ended June 30, 2002. Additionally, an increase in the gross
profit margin associated with sales within the accessories, battery and
technical departments, combined with an increase in sales, had a positive effect
on both gross profit dollars and gross profit margin in the three and six months
ended June 30, 2002. For the three months ended June 30, 2002, the decline in
dealer/franchise sales also had a positive effect on our overall gross profit
margin, since the gross profit margin for our dealer/franchise stores is lower
than our overall average gross profit margin. We anticipate that gross profit as
a percentage of net sales and operating revenues for 2002 will remain above the
2001 annual level, due primarily to the positive effect of sales mix changes.
Selling, General and Administrative Expense
Our SG&A expense increased 5.9% or $23.3 million and 1.4% or $11.3 million for
the quarter and six months ended June 30, 2002, respectively, when compared to
the same periods in the prior year. This represents 3.9 and 3.2 percentage point
increases to 42.2% and 40.1% of net sales and operating revenues for the quarter
and six months ended June 30, 2002, respectively, when compared to the same
periods the prior year. These dollar increases were primarily due to a $29.9
million litigation charge related to the tentative settlement of a class action
lawsuit in the state of California during the second quarter of 2002. Lower
overall sales in the current three and six month periods also contributed to
higher SG&A expense as a percentage of net sales and operating revenues.
Excluding the $29.9 million charge related to the California lawsuit, SG&A
expense decreased 1.7% or $6.6 million and 2.3% or $18.6 million for the quarter
and six months ended June 30, 2002, respectively, when compared to the same
periods in the prior year. Payroll expense decreased primarily due to decreases
in commission, bonuses and other incentives resulting from lower store sales in
2002. The decrease in dollars was also a result of a reduction in headcount
during the second half of 2001. Advertising expense decreased in dollars for the
three and six months ended June 30, 2002, and decreased for the three month
period as a percentage of net sales when compared to the prior year periods.
Rent expense increased in both dollars and as a percentage of net sales when
compared to the same three and six month periods in the prior year. We expect
SG&A expense to grow slightly in dollars for 2002, when compared to 2001.
Net Interest Expense
Interest expense, net of interest income, for the three and six months ended
June 30, 2002 was $8.6 million and $17.6 million, respectively, versus $8.0
million and $16.6 million for the comparable three and six months in 2001.
Interest expense decreased $1.5 million and $3.7 million for the three and six
months ended June 30, 2002, respectively. The decrease in interest expense was
due to lower average debt outstanding during these periods compared to the prior
year. Interest income decreased $2.1 million and $4.7 million for the three and
six months ended June 30, 2002, respectively. The decrease in interest income
was due primarily to the pay-off of the CompUSA note receivable on June 22,
2001, which eliminated the associated interest income. We expect interest
expense, net of interest income, to be flat for calendar year 2002, when
compared to calendar year 2001.
Other Income
In the second quarter of 2002, we received payments and recorded income of $27.7
million in partial settlement of amounts owed to us under a tax sharing
agreement that was the subject of an arbitration styled Tandy Corporation and
T.E. Electronics, Inc. vs. O'Sullivan Industries Holdings, Inc. This partial
settlement followed a ruling in RadioShack's favor by the arbitration panel.
This arbitration was commenced in July 1999 and the settlement also requires
O'Sullivan to make ongoing payments under this tax sharing agreement that was
entered into by the parties at the time of O'Sullivan's initial public offering.
Provision for Income Taxes
Provision for income taxes for each quarterly period is based on the estimate of
the annual effective tax rate for the year, which we evaluate quarterly. The
effective tax rate for the quarter and six months ended June 30 of both 2002 and
2001 was 38.0%.
Impact of Recent Accounting Pronouncements
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment of Long-Lived
Assets" ("SFAS 144"), in October 2001, which establishes accounting and
reporting standards for the impairment and disposition of long-lived assets
(except unidentifiable intangibles), including discontinued operations. SFAS 144
became effective for all financial statements issued for fiscal years beginning
after December 15, 2001 and, generally, its provisions are to be applied
prospectively. We adopted SFAS 144 effective January 1, 2002, and there were no
material adjustments as a result of this adoption.
FINANCIAL CONDITION
Cash flow provided by operating activities approximated $315.4 million for the
six month period ended June 30, 2002, compared to $338.9 million in the prior
year comparable period. Cash flow from net income, adjusted for non-cash items,
decreased $38.6 million for the six months ended June 30, 2002, when compared to
the same period in the prior year. This decrease was due primarily to a decline
in sales in 2002. At June 30, 2002, changes in accounts receivable had provided
$123.9 million in cash since December 31, 2001, compared to $152.7 million in
cash provided for the six months ended June 30, 2001. This $28.8 million
difference in cash provided by accounts receivable was due to an increase in
collections of dealer/franchise receivables and vendor and service provider
receivables during the first half of 2001, as the 2000 year-end accounts
receivable balance was significantly higher than the 2001 year-end balance. At
June 30, 2002, changes in inventory had provided $119.2 million in cash since
December 31, 2001, compared to $190.2 million in cash provided for the six
months ended June 30, 2001. The reduction in inventory since December 31, 2001
was primarily the result of a decrease in cellular handset inventory.
Additionally, inventory reductions in the wired communication department, as
well as the personal electronics, seasonal and portable audio departments,
offset slightly by increases in both the computer and home entertainment
departments, added to the overall inventory reduction. The continued reduction
in inventory levels is the result of ongoing improvements in inventory
management. Additionally, during the first half of 2002, $68.7 million more in
cash was provided by accounts payable, when compared to the first half of 2001,
due primarily to more favorable vendor terms.
Cash used in investing activities for the six months ended June 30, 2002 was
$30.7 million, compared to cash provided of $60.4 million in the previous year.
During the second quarter of 2001, we received $123.6 million for the settlement
of the purchase price of Computer City, Inc. and settlement of the $136.0
million CompUSA note. Investing activities for the six months ended June 30,
2002 included capital expenditures totaling $34.0 million, compared to $62.1
million in 2001, primarily for our retail store expansions and remodels and
upgrades of information systems. We anticipate that the capital expenditure
requirements for 2002 will approximate $125.0 million to $130.0 million,
primarily relating to our continued store expansions and remodels and continuous
improvement of our information systems.
Cash used in financing activities for the six months ended June 30, 2002 was
$157.0 million, compared to a $193.9 million cash usage in the previous year. We
repurchased $163.4 million of common stock during the six months ended June 30,
2002, compared to $87.6 million during the same period of 2001. Stock
repurchases during the first six months of 2002 and 2001 were partially funded
by $30.2 million and $33.0 million, respectively, received from the sale of
treasury stock to employee stock plans and from stock option exercises.
Dividends paid, net of tax, in the first six months of 2002 and 2001 amounted to
$1.5 million and $22.1 million, respectively. The decrease in dividends paid in
2002 resulted from a change in our dividend payment frequency from quarterly to
annually during the third quarter of 2001. The net decrease in short-term debt
of $461.3 million for the six-month period ended June 30, 2001 was due to the
repayment of short-term debt with funds received from the 10-year notes issued
on May 11, 2001.
Free cash flow, defined as cash flow from operations less capital expenditures
and dividends paid, was $279.9 million for the six months ended June 30, 2002,
compared to $254.7 million for the corresponding period in 2001. This 2002
increase in free cash flow was due primarily to lower capital expenditures and
dividends paid in the first half of 2002. We expect free cash flow to be
approximately $300.0 million to $350.0 million in 2002.
At June 30, 2002, total capitalization was $1,408.0 million, which consisted of
$653.6 million of debt and $754.4 million of stockholders' equity, resulting in
a total debt to total capitalization ratio of 46.4%. The total debt to total
capitalization ratio was 46.3% at December 31, 2001 and 42.6% at June 30, 2001.
Long-term debt as a percentage of total capitalization was 41.4% and 39.0% at
June 30, 2002 and December 31, 2001, respectively, compared to 38.2% at June 30,
2001. The percentage increases since both June 30, 2001, and December 31, 2001,
were primarily the result of a reduction in equity due to increased 2002 share
repurchases.
In the second quarter of 2002, we replaced our existing $600.0 million credit
facilities with new credit facilities, also totaling $600.0 million. A syndicate
of 16 banks granted the new facilities. These facilities are comprised of a
$300.0 million 364-day revolving credit facility maturing in June 2003 and a
$300.0 million five-year revolving credit facility maturing in June 2007. The
terms of these revolving credit facilities are substantially similar to the
previous facilities. The new revolving credit facilities will support any future
commercial paper borrowings and are otherwise available for general corporate
purposes.
We repurchased 2.6 million and 4.5 million shares of our common stock for $80.2
million and $136.2 million for the three and six months ended June 30, 2002,
respectively, under our share repurchase program. In connection with our share
repurchase program, our Board of Directors has authorized us to sell up to 4.0
million shares of our common stock, through both equity forwards and put
options, with an expiration date no later than December 31, 2002. There are no
outstanding equity forward instruments or put options at June 30, 2002.
We may continue to execute share repurchases from time to time in order to take
advantage of attractive share price levels, as determined by management. The
timing and terms of the transactions depend on market conditions, our liquidity
and other considerations. We anticipate that we will repurchase between $250.0
million and $300.0 million of our common stock in total for the year 2002 under
our existing share repurchase program.
In the fourth quarter of 2001, we announced the sale of our corporate
headquarters building and our plans to construct a new headquarters in Fort
Worth, Texas. We entered into sale-leaseback agreements in 2001, whereby our
existing corporate headquarters land and buildings were sold and leased back to
us. These agreements provide us with the time necessary to arrange for the
construction of our new facility. We plan to finance the new corporate campus
with an off-balance sheet operating lease arrangement. We believe that this type
of structure, when used as designed and in moderation, enables us to maintain
financial flexibility and is appropriate. Management recognizes that the
accounting rules addressing this type of financing are currently under review
and that the structure may change, potentially making it uneconomical to execute
and requiring us to record the new corporate campus and related debt on our
balance sheet. We have explored alternatives in the event that such changes
occur and believe that we have a number of viable options available to finance
our corporate headquarters facility.
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK.
At June 30, 2002, we did not have derivative instruments that materially
increased our exposure to market risks for interest rates, foreign currency
rates, commodity prices or other market price risks other than the interest rate
swaps noted below. We do not use derivative instruments for speculative
purposes.
Our exposure to market risk is principally the result of changes in short-term
interest rates. Interest rate risk exists principally with respect to $150.0
million of indebtedness, which, because of our interest rate swaps, effectively
bears interest at short-term floating rates. An unfavorable change of 100 basis
points in the interest rate applicable to this floating-rate indebtedness could
result in additional interest expense of $0.4 million quarterly. This assumes no
change in the principal or the incurrence of additional indebtedness.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Subject to court approval, we have reached agreement on a tentative settlement
of $29.9 million in a class action lawsuit originally filed in March 2000 in
Orange County, California. The lawsuit, captioned Omar Belazi, et al vs. Tandy
Corporation, et al, related to the alleged miscalculation of overtime wages for
certain of our former and current employees in that state. We denied liability.
Additionally, in the second quarter of 2002, we received payments of $27.7
million in partial settlement of amounts owed to us under a tax sharing
agreement that was the subject of an arbitration styled Tandy Corporation and
T.E. Electronics, Inc. vs. O'Sullivan Industries Holdings, Inc. This partial
settlement followed a ruling in RadioShack's favor by the arbitration panel.
This arbitration was commenced in July 1999 and the settlement also requires
O'Sullivan to make ongoing payments under this tax sharing agreement that was
entered into by the parties at the time of O'Sullivan's initial public offering.
We have various pending claims, lawsuits, disputes with third parties,
investigations and actions incidental to the operation of our business. Although
occasional adverse settlements or resolutions may occur and negatively impact
earnings in the year of settlement, it is our opinion that their ultimate
resolution will not have a materially adverse effect on our financial condition
or liquidity.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
a) RadioShack held its Annual Meeting of Stockholders on May 16, 2002.
b) (1) RadioShack elected directors to serve for the ensuing year. Out of
the 179,926,493 eligible votes, 147,900,203 votes were cast at the
meeting either by proxies solicited in accordance with Regulation 14A
under the Securities Act of 1934, or by security holders voting in
person. In the case of directors, abstentions are treated as votes
withheld and are included in the table. The tabulation of votes of the
matters submitted to a vote of security holders is set forth below:
VOTES VOTES
NAME OF DIRECTOR FOR WITHHELD
--------------------------- ----------------- -----------------
Frank J. Belatti 142,477,413 5,422,789
Ronald E. Elmquist 145,857,951 2,042,252
Richard J. Hernandez 145,808,545 2,091,657
Lawrence V. Jackson 145,214,049 2,686,153
Robert J. Kamerschen 145,899,953 2,000,249
Lewis F. Kornfeld, Jr. 144,853,714 3,046,489
Jack L. Messman 145,874,629 2,025,574
William G. Morton, Jr. 145,942,814 1,957,388
Thomas G. Plaskett 145,560,045 2,340,157
Leonard H. Roberts 145,844,667 2,055,535
Alfred J. Stein 145,878,824 2,021,378
William E. Tucker 145,567,678 2,332,525
Edwina D. Woodbury 145,879,295 2,020,907
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits Required by Item 601 of Regulation S-K.
A list of the exhibits required by Item 601 of Regulation S-K and
filed as part of this report is set forth in the Index to Exhibits
on page 14, which immediately precedes such exhibits.
b) Reports on Form 8-K.
On July 16, 2002, we announced a proposed tentative settlement of a
class action lawsuit in the state of California. Additionally, we
announced in an unrelated matter that we had negotiated a favorable
settlement regarding a contractual dispute of a tax sharing
agreement. The Form 8-K was filed on July 16, 2002.
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.
RadioShack Corporation
(Registrant)
Date: August 12, 2002 By /s/ David Johnson
-----------------------------------
David Johnson
Senior Vice President and Controller
(Authorized Officer)
Date: August 12, 2002 /s/ Michael D. Newman
------------------------------------
Michael D. Newman
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
RADIOSHACK CORPORATION
INDEX TO EXHIBITS
Exhibit
Number Description Page
3a Certificate of Amendment of Restated Certificate of
Incorporation dated May 18, 2000 (filed as Exhibit 3a to
RadioShack's Form 10-Q filed on August 11, 2000 for the
fiscal quarter ended June 30, 2000).
3a(i) Restated Certificate of Incorporation of RadioShack
Corporation dated July 26, 1999 (filed as Exhibit 3a(i) to
RadioShack's Form 10-Q filed on August 11, 1999 for the
fiscal quarter ended June 30, 1999).
3b* RadioShack Corporation Bylaws, amended and restated as
of May 16, 2002. 15
10a* Revolving Credit Agreement (Facility A) dated as of
June 19, 2002 among RadioShack Corporation, Citibank, N.A.,
as Administrative Agent, Paying Agent and Lender, Bank of
America, N.A. as Administrative Agent and Lender, Fleet
National Bank as Syndication Agent and Lender, Wachovia Bank,
National Association as Documentation Agent and Lender,
Salomon Smith Barney, Inc. as Joint Lead Arranger and
Bookrunner, Bank of America Securities, Inc. as Joint Lead
Arranger and Bookrunner and twelve other banks as Lenders. 24
10b* Revolving Credit Agreement (Facility B) dated as of
June 19, 2002 among RadioShack Corporation, Citibank, N.A.,
as Administrative Agent, Paying Agent and Lender, Bank of
America, N.A. as Administrative Agent, Initial Issuing
Bank and Lender, Fleet National Bank as Syndication Agent,
Initial Issuing Bank and Lender, Wachovia Bank,
National Association as Documentation Agent and Lender,
Salomon Smith Barney, Inc. as Joint Lead Arranger and
Bookrunner, Bank of America Securities, Inc. as Joint Lead
Arranger and Bookrunner and twelve other banks as Lenders. 79
11* Statements of Computation of Ratio of Earnings to Fixed
Charges. 137
99(a)* Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes - Oxley
Act of 2002. 138
99(b)* Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes - Oxley
Act of 2002. 139
- ----------------------------
* filed with this report
EXHIBIT 3b
RADIOSHACK CORPORATION BYLAWS
AMENDED AND RESTATED AS OF
May 16, 2002
ARTICLE I
OFFICES
SECTION 1. Registered Office. The Registered office of the Corporation
in the State of Delaware shall be located in the City of Wilmington, County of
New Castle, State of Delaware, and the name of the resident agent in charge
thereof shall be The Corporation Trust Company.
SECTION 2. Other Offices. The principal office shall be at 100
Throckmorton Street, Suite 1800, Fort Worth, Texas. The Corporation may also
have offices at other places as the Board of Directors may from time to time
appoint or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. Place of Meeting. All meetings of the stockholders for the
election of directors shall be held at such place within or without the State of
Delaware as the Board of Directors may designate, provided that at least ten
(10) days' notice must be given to the stockholders entitled to vote thereat of
the place so fixed. Until the Board of Directors shall designate otherwise the
annual meeting of stockholders and the election of directors shall take place at
the office of the Corporation at 100 Throckmorton Street, Suite 1800, Fort
Worth, Texas. Meetings of stockholders for any other purpose may be held at such
place and time as shall be stated in the notice of the meeting.
SECTION 2. Annual Meetings. The annual meeting of the stockholders
shall be held on the Third Thursday in May of each year, if not a legal holiday,
and if a legal holiday, then on the next business day following, at 10:00 A.M.,
or on such other date and at such other time as shall be designated from time to
time by the Board of Directors and stated in the notice of the meeting. At such
annual meetings the stockholders shall elect a Board of Directors by a plurality
vote and shall transact such other business as may properly be brought before
the meeting.
SECTION 3. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or the
Certificate of Incorporation, may be called by the Chairman of the Board or the
President, and shall be called by the Secretary at the request in writing of a
majority of the Board of Directors. Such request shall state the purpose or
purposes of the proposed meeting.
SECTION 4. Notice. Written or printed notice of every meeting of
stockholders, annual or special, stating the time and place thereof, and, if a
special meeting, the purpose or purposes in general terms for which the meeting
is called, shall not be less than ten (10) days before such meeting and shall be
served upon or mailed to each stockholder entitled to vote thereat, at his
address as it appears upon the books of the Corporation or, if such stockholder
shall have filed with the Secretary of the Corporation a written request that
notices intended for him be mailed to some other address, then to the address
designated in such request. Additionally, any notice to stockholders given by
the Corporation shall be effective if given by a form of electronic transmission
consented to by the stockholder to whom the notice is given. Any such consent
shall be revocable by the stockholder by written notice to the Secretary of the
Corporation.
SECTION 5. Quorum. Except as otherwise provided by law or by the
Certificate of Incorporation, the presence in person or by proxy at any meeting
of stockholders of the holders of a majority of the shares of the capital stock
of the Corporation issued and outstanding and entitled to vote thereat shall be
requisite and shall constitute a quorum. If, however, such majority shall not be
represented at any meeting of the stockholders regularly called, the holders of
a majority of the shares present in person or by proxy and entitled to vote
thereat shall have power to adjourn the meeting to another time, or to another
time and place, without notice other than announcement of adjournment at the
meeting, and there may be successive adjournments for like cause and in like
manner until the requisite amount of shares entitled to vote at such meeting
shall be represented. At such adjourned meeting at which the requisite amount of
shares entitled to vote thereat shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
SECTION 6. Votes. Proxies. At each meeting of stockholders every
stockholder shall have one vote for each share of capital stock entitled to vote
which is registered in his name on the books of the Corporation on the date on
which the transfer books were closed, if closed, or on the date set by the Board
of Directors for the determination of stockholders entitled to vote at such
meeting. At each such meeting every stockholder shall be entitled to vote in
person, or may authorize another person or persons to act for him by a proxy
which is in writing or transmitted as permitted by law, including without
limitation, electronically, via telegram, internet, interactive voice response
system, or other means of electronic transmission executed or authorized by such
stockholder or his attorney-in-fact, but no proxy shall be voted after three
years from its date, unless the proxy provides for a longer period. Any proxy
transmitted electronically shall set forth such information from which it can be
determined that such electronic transmission was authorized by the stockholder.
At all meetings of the stockholders, a quorum being present, all
matters shall be decided by majority vote of the shares of stock entitled to
vote held by stockholders present in person or by proxy, except as otherwise
required by the Certificate of Incorporation or the laws of the State of
Delaware. Unless so directed by the chairman of the meeting, or required by the
laws of the State of Delaware, the vote thereat on any question need not be by
ballot.
On a vote by ballot, each ballot shall be signed by the stockholder
voting, or in his name by his proxy, if there be such proxy, and shall state the
number of shares voted by him and the number of votes to which each share is
entitled. On a vote by ballot, the chairman shall appoint two inspectors of
election, who shall first take and subscribe an oath or affirmation faithfully
to execute the duties of inspector at such meeting with strict impartiality and
according to the best of their ability and who shall take charge of the polls
and after the balloting shall make a certificate of the result of the vote
taken; but no director or candidate for the office of director shall be
appointed as such inspector.
SECTION 7. Stock List. At least ten (10) days before every election of
directors, a complete list of stockholders entitled to vote at such election,
arranged in alphabetical order, with the residence of each and the number of
voting shares held by each shall be prepared by the Secretary. Such list shall
be open at the place where the election is to be held for said ten (10) days, to
the examination of any stockholder entitled to vote at that election and shall
be produced and kept at the time and place of election during the whole time
thereof, and subject to the inspection of any stockholder who may be present.
SECTION 8. Notice of Stockholder Proposals.
8. Notice of Stockholder Business; Nomination of Director Candidates.
(a) At annual meetings of the stockholders, only such
business shall be conducted as shall have been brought before the
meetings (i) pursuant to the Corporation's notice of meeting, (ii) by or
at the direction of the Board of Directors, or (iii) by any stockholder
of the Corporation who is a stockholder of record at the time of giving
of notice provided for in this Section 8, who shall be entitled to vote
at such meeting, and who complies with the notice procedures set forth
in this Section 8.
(b) Only persons who are nominated in accordance with the
procedures set forth in these Bylaws shall be eligible to serve as
directors. Nominations of persons for election to the Board of
Directors may be made at a meeting of stockholders (i) by or at the
direction of the Board of Directors or a committee thereof or (ii) by
any stockholder of the Corporation who is a stockholder of record at
the time of giving of notice provided for in this Section 8 who shall
be entitled to vote for the election of directors at the meeting, and
who complies with the notice procedures set forth in this Section 8.
(c) A stockholder must give timely, written notice to the
Secretary of the Corporation to nominate directors at an annual meeting
pursuant to Section 8 hereof or to propose business to be brought
before an annual or special meeting pursuant to clause (iii) of Section
8(a) hereof. To be timely in the case of an annual meeting, a
stockholder's notice must be received at the principal executive
offices of the Corporation not less than 120 days before the date of
the Corporation's proxy statement release to shareholders in connection
with the Corporation's previous year's annual meeting of stockholders.
To be timely in the case of a special meeting or in the event that the
date of the annual meeting is changed by more than 30 days from such
anniversary date, a stockholder's notice must be received at the
principal executive offices of the Corporation no later than the close
of business on the tenth day following the earlier of the day on which
notice of the meeting date was mailed or public disclosure of the
meeting date was made. For purposes of this Section 8, public
disclosure shall mean disclosure in a press release reported by the Dow
Jones News Service, Associated Press or comparable national news
service or in a document publicly filed by the Corporation with the
Securities and Exchange Commission pursuant to Section 13, 14 or 15(d)
of the Securities Exchange Act of 1934. Such stockholder's notice shall
set forth (i) with respect to each matter, if any, that the stockholder
proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting and the reasons for
conducting such business at the meeting, (ii) with respect to each
person, if any, whom the stockholder proposes to nominate for election
as a director, all information relating to such person (including such
person(s) written consent to being named in the proxy statement as a
nominee and to serving as a director) that is required under the
Securities Exchange Act of 1934, as amended, (iii) the name and
address, as they appear on the Corporation's records, of the
stockholder proposing such business or nominating such persons (as the
case may be), and the name and address of the beneficial owner, if any,
on whose behalf the proposal or nomination is made, (iv) the class and
number of shares of capital stock of the Corporation that are owned
beneficially and of record by such stockholder of record and by the
beneficial owner, if any, on whose behalf the proposal or nomination is
made, and (v) any material interest or relationship that such
stockholder of record and/or the beneficial owner, if any, on whose
behalf the proposal or nomination is made may respectively have in such
business or with such nominee. At the request of the Board of
Directors, any person nominated for election as a director shall
furnish to the Secretary of the Corporation the information required to
be set forth in a stockholder(s) notice of nomination which pertains to
the nominee.
(d) Notwithstanding anything in these Bylaws to the
contrary, no business shall be conducted, and no person shall be
nominated to serve as a director, at an annual or special meeting of
stockholders, except in accordance with the procedures set forth in this
Section 8. The Chairman of the meeting shall, if the facts warrant,
determine that business was not properly brought before the meeting, or
that a nomination was not made, in accordance with the procedures
prescribed by these Bylaws and, if he shall so determine, he shall so
declare to the meeting, and any such business not properly brought
before the meeting shall not be transacted and any defective nomination
shall be disregarded. A stockholder shall also comply with all
applicable requirements of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder with respect to the
matters set forth in this Section 8.
(e) This Section 8 shall not prevent the consideration and
approval or disapproval at the annual meeting of reports of officers,
directors and committees of the Board of Directors, but, in connection
with such reports, no business shall be acted upon at such annual
meeting unless stated, filed and received as herein provided.
ARTICLE III
DIRECTORS
SECTION 1. Number. The business and property of the Corporation shall
be conducted and managed by a Board of Directors consisting of not less than
three (3) or more than fourteen (14) members.
The Board of Directors of the Corporation shall initially be composed
of three (3) directors, but the Board may at any time by resolution increase or
decrease the number of directors to not more than fourteen (14) or less than
three (3). The vacancies resulting from any such increase in the Board of
Directors, or an increase resulting from an amendment of this Section, shall be
filled as provided in Section 3 of this ARTICLE III.
SECTION 2. Term of Office. Except as otherwise provided by law such
director shall hold office until the next annual meeting of stockholders, and
until his successor is duly elected and qualified or until his earlier death or
resignation.
SECTION 3. Vacancies. If any vacancy shall occur among the directors,
or if the number of directors shall at any time be increased, the directors in
office, although less than a quorum, by a majority vote may fill the vacancies
or newly created directorships, or any such vacancies or newly created
directorships may be filled by the stockholders at any meeting. When one or more
directors shall resign from the Board of Directors, effective at a future date,
a majority of the directors then in office, including those who have so
resigned, shall have power to fill such vacancy or vacancies, the vote thereon
to take effect when such resignation or resignations shall become effective, and
each director so chosen shall hold office as herein provided in the filling of
other vacancies.
SECTION 4. Meetings. Meetings of the Board of Directors shall be held
at such place within or without the State of Delaware as may from time to time
be fixed by resolution of the Board of Directors or by the Chairman of the
Board, or the CEO as may be specified in the notice or waiver of notice of any
meeting. A regular meeting of the Board of Directors may be held without notice
immediately following the annual meeting of stockholders at the place where such
annual meeting is held. Regular meetings of the Board may also be held without
notice at such time and place as shall from time to time be determined by
resolution of the Board of Directors.
Special meetings of the Board of Directors may be called by the
Chairman of the Board, the CEO or the Secretary and shall be called by the
Secretary on the written request of two members of the Board of Directors.
Notice of any special meeting shall be given to each director at least (a)
twelve (12) hours before the meeting by telephone or by being personally
delivered or transmitted electronically, via telegram, facsimile, internet or
other means of electronic transmission or (b) three (3) days before the meeting
if delivered by mail to the director's residence or usual place of business.
Such notice shall be deemed to be delivered when deposited in the United States
mail so addressed, with postage prepaid, or when transmitted if sent
electronically, via telegram, facsimile, internet or other means of electronic
transmission. Neither the business to be transacted at, nor the purpose of, any
special meeting of the Board of Directors needs to be specified in the notice or
waiver of notice of such meeting.
Members of the Board of Directors may participate in a meeting of such
Board by means of conference telephone or similar communication equipment or by
other means provided all persons participating in the meeting can hear each
other, and participation in the meeting pursuant hereto shall constitute
presence in person at such meeting.
Any director may waive notice of any meeting by a writing signed by the
director entitled to the notice and filed with the minutes or corporate records.
The attendance at or participation of the director at a meeting shall constitute
waiver of notice of such meeting, unless the director at the beginning of the
meeting or promptly upon his arrival objects to holding the meeting or
transacting business at the meeting.
SECTION 5. Quorum. A majority, but not less than two (2), of the
directors shall constitute a quorum for the transaction of business. If at any
meeting of the Board of Directors there shall be less than a quorum present, a
majority of those present may adjourn the meeting from time to time without
notice other than announcement of the adjournment at the meeting, and at such
adjourned meeting at which a quorum is present any business may be transacted
which might have been transacted at the meeting as originally notified.
SECTION 6. Compensation. The directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors, a fixed sum for
attendance at each meeting of the Board of Directors and/or a stated fee as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of the Executive Committee and/or of other committees may be allowed like
compensation and reimbursement of expenses for attending committee meetings.
SECTION 7. Chairman. From its members, the Board of Directors will
elect a chairman to preside over meetings of the shareholders and of the Board.
The Chairman may simultaneously serve as any Officer of the Corporation set
forth in Article V. The Board may elect one or more Vice Chairmen. In the
absence of the Chairman or a Vice Chairman, if any, the Board shall designate a
person to preside at such meetings. The director's fee of the Chairman and the
Vice Chairman, if any, will be set by the Board.
SECTION 8. Director Stock Ownership in the Corporation. Each director
elected or appointed to the Board of Directors shall own shares of common stock
of the Corporation. On and after the third annual anniversary of a director's
election or appointment to the Board of Directors, each director shall own
shares of common stock of the Corporation having a fair market value of not less
than 200% of the amount of the Board of Directors' annual retainer as then in
effect.
ARTICLE IV
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
SECTION 1. Executive Committee. The Board of Directors may, by
resolution passed by a majority of the whole Board, appoint an Executive
Committee of two (2) or more members, to serve during the pleasure of the Board
of Directors, to consist of such directors as the Board of Directors may from
time to time designate. The Chairman of the Executive Committee shall be
designated by the Board of Directors.
SECTION 2. Procedure. The Executive Committee, by a vote of a majority
of its members, shall fix its own times and places of meeting, shall determine
the number of its members constituting a quorum for the transaction of business,
and shall prescribe its own rules of procedure, no change in which shall be made
save by a majority vote of its members. Members of the Executive Committee or
any other committee may participate in a meeting of such Committee by means of
conference telephone or similar communication equipment or by other means
provided all persons participating in the meeting can hear each other, and
participation in the meeting pursuant hereto shall constitute presence in person
at such meeting.
SECTION 3. Powers. During the intervals between the meetings of the
Board of Directors, the Executive Committee shall possess and may exercise all
the powers of the Board of Directors in the management and direction of the
business and affairs of the Corporation, to the extent permitted by law.
SECTION 4. Minutes. The Executive Committee shall keep regular minutes
of its proceedings and all action by the Executive Committee shall be reported
to the Board of Directors at its next meeting. Such action shall be subject to
review by the Board of Directors, provided that no rights of third parties shall
be affected by such review.
SECTION 5. Other Committees. From time to time the Board of Directors,
by the affirmative vote of a majority of the whole Board of Directors, may
appoint other committees for any purpose or purposes, and such committees shall
have such powers as shall be conferred by the resolution of appointment, and as
shall be permitted by law.
ARTICLE V
OFFICERS
SECTION 1. Officers. The Board of Directors shall elect, as officers, a
Chief Executive Officer ("CEO"), a President, a Treasurer and a Secretary, and
in their discretion one or more of the following officers: Executive Vice
Presidents, Senior Vice Presidents, Vice Presidents, Assistant Secretaries, and
Assistant Treasurers. Such officers shall be elected annually by the Board of
Directors at its first meeting following the annual meeting of stockholders, and
each shall hold office until the corresponding meeting of the Board of Directors
in the next year and until his successor shall have been duly elected and
qualified, or until he shall have died or resigned or shall have been removed in
the manner provided herein. The powers and duties of two or more offices may be
exercised and performed by the same person, except the offices of CEO and
Secretary.
SECTION 2. Vacancies. Any vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors at any regular or
special meeting.
SECTION 3. Chief Executive Officer The Chief Executive Officer shall be
the chief executive officer (CEO) of the Corporation. Subject to the direction
of the Board of Directors, he shall have and exercise direct charge of and
general supervision over the business and affairs of the Corporation and shall
perform such other duties as may be assigned to him from time to time by the
Board of Directors.
SECTION 4. President. The President shall perform such duties as the
Board of Directors may prescribe. In the absence or disability of the CEO, the
President shall perform and exercise the powers of the CEO. In addition, the
President shall perform such duties as from time to time may be delegated to him
by the CEO.
SECTION 5. Executive Vice Presidents. The Executive Vice Presidents
shall perform such duties as the Board of Directors may prescribe. In the
absence or disability of the CEO and President, the Executive Vice Presidents in
the order of their seniority or in such order as may be specified by the Board
of Directors, shall perform the duties of CEO. In addition, the Executive Vice
Presidents shall perform such duties as may from time to time be delegated to
them by the CEO.
SECTION 6. Senior Vice Presidents. The Senior Vice Presidents shall
perform such duties as the Board of Directors may prescribe. In the absence or
disability of the CEO, President, and the Executive Vice Presidents, the Senior
Vice Presidents in the order of their seniority or in such other order as may be
specified by the Board of Directors, shall perform the duties and exercise the
powers of the President. In addition, the Senior Vice Presidents shall perform
such duties as from time to time may be delegated to them by the CEO.
SECTION 7. Vice Presidents. The Vice Presidents shall perform such
duties as the Board of Directors may prescribe. In the absence or disability of
the CEO, President, the Executive Vice Presidents and the Senior Vice
Presidents, the Vice Presidents in the order of their seniority or in such other
order as may be specified by the Board of Directors, shall perform the duties
and exercise the powers of the President. In addition, the Vice Presidents shall
perform such duties as may from time to time be delegated to them by the CEO.
SECTION 8. Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit, or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust companies
or other depositaries as shall, from time to time, be selected by the Board of
Directors; he may endorse for collection on behalf of the Corporation, checks,
notes and other obligations; he may sign receipts and vouchers for payments made
to the Corporation; singly or jointly with another person as the Board of
Directors may authorize, he may sign checks of the Corporation and pay out and
dispose of the proceeds under the direction of the Board of Directors; he shall
cause to be kept correct books of account of all the business and transactions
of the Corporation, shall see that adequate audits thereof are currently and
regularly made, and shall examine and certify the accounts of the Corporation;
he shall render to the Board of Directors, the Executive Committee, the Chairman
of the Board, the Vice Chairman, the CEO or to the President, whenever
requested, an account of the financial condition of the Corporation; he may sign
with the Chairman of the Board, the Vice Chairman of the Board, the CEO, the
President or a Vice President, certificates of stock of the Corporation; and, in
general, shall perform all the duties incident to the office of a treasurer of a
Corporation, and such other duties as from time to time may be assigned to him
by the Board of Directors.
SECTION 9. Assistant Treasurers. The Assistant Treasurers in order of
their seniority shall, in the absence or disability of the Treasurer, perform
the duties and exercise the powers of the Treasurer and shall perform such other
duties as the CEO, or the Board of Directors shall prescribe.
SECTION 10. Secretary. The Secretary shall keep the minutes of all
meetings of the stockholders and of the Board of Directors in books provided for
the purpose; he shall see that all notices are duly given in accordance with the
provisions of law and these Bylaws; he shall be custodian of the records and of
the corporate seal or seals of the Corporation; he shall see that the corporate
seal is affixed to all documents, the execution of which, on behalf of the
Corporation, under its seal, is duly authorized and when the seal is so affixed
he may attest the same; he may sign, with the Chairman of the Board, the Vice
Chairman, the CEO, the President or a Vice President, certificates of stock of
the Corporation; and in general he shall perform all duties incident to the
office of a secretary of a corporation, and such other duties as from time to
time may be assigned to him by the Board of Directors or the CEO.
SECTION 11. Assistant Secretaries. The Assistant Secretaries in order
of their seniority shall, in the absence or disability of the Secretary, perform
the duties and exercise the powers of the Secretary and shall perform such other
duties as the CEO, or the Board of Directors shall prescribe.
SECTION 12. Subordinate Officers. The Board of Directors may appoint
such subordinate officers as it may deem desirable. Each such officer shall hold
office for such period, have such authority and perform such duties as the Board
of Directors may prescribe. The Board of Directors may, from time to time,
authorize any officer to appoint and remove subordinate officers and to
prescribe the powers and duties thereof.
SECTION 13. Compensation. The Board of Directors shall have power to
fix the compensation of all officers of the Corporation. It may authorize any
officer, upon whom the power of appointing subordinate officers may have been
conferred, to fix the compensation of such subordinate officers.
SECTION 14. Removal. Any officer of the Corporation may be
removed, with or without cause, by a majority vote of the Board of Directors at
a meeting called for that purpose.
SECTION 15. Bonds. The Board of Directors may require any officer of
the Corporation to give a bond to the Corporation, conditional upon the faithful
performance of his duties, with one or more sureties and in such amounts as may
be satisfactory to the Board of Directors.
ARTICLE VI
CERTIFICATES OF STOCK
SECTION 1. Form and Execution of Certificates. The interest of each
stockholder of the Corporation shall be evidenced by a certificate or
certificates for shares of stock in such form as may be prescribed from time to
time by law and by the Board of Directors. The certificates of stock of each
class and series now authorized or which may hereafter be authorized by the
Certificate of Incorporation shall be consecutively numbered and signed by
either the Chairman of the Board or the CEO or the President or a Vice President
together either with the Secretary or an Assistant Secretary or the Treasurer or
an Assistant Treasurer of the Corporation, and may be countersigned and
registered in such manner as the Board of Directors may prescribe, and shall
bear the corporate seal or a printed or engraved facsimile thereof. Where any
such certificate is signed by a transfer agent or transfer clerk and by a
registrar, the signatures of any such Chairman of the Board, CEO, President,
Vice President, Treasurer, Assistant Treasurer, Secretary or Assistant Secretary
upon such certificate may be facsimiles engraved or printed. The signatures by a
transfer agent or transfer clerk and by a registrar may be either in facsimile
form or manual form. In case any officer or officers who shall have signed, or
whose facsimile signature or signatures shall have been placed upon, such
certificate or certificates shall have ceased to be such, whether because of
death, resignation or otherwise, before such certificate or certificates shall
have been issued and delivered, such certificate or certificates may
nevertheless be issued and delivered with the same effect as if such officer or
officers had not ceased to be such at the date of its issue and delivery.
SECTION 2. Transfer of Shares. The shares of the stock of the
Corporation shall be transferred on the books of the Corporation by the holder
thereof in person or by his attorney lawfully constituted, upon surrender for
cancellation of certificates for the same number of shares, with an assignment
and power of transfer endorsed thereon or attached thereto, duly executed, with
such proof or guaranty of the authenticity of the signature as the Corporation
or its agents may reasonably require. The Corporation shall be entitled to treat
the holder of record of any share or shares of stock as the holder in fact
thereof and accordingly shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person
whether or not it shall have express or other notice thereof, except as
otherwise expressly provided by law.
SECTION 3. Closing of Transfer Books and Record Dates. The Board of
Directors may in its discretion prescribe in advance a period not exceeding
sixty (60) days prior to the date of any meeting of the stockholders or prior to
the last day on which the consent or dissent of stockholders may be effectively
expressed for any purpose without a meeting, during which no transfer of stock
on the books of the Corporation may be made; or in lieu of prohibiting the
transfer of stock, may fix in advance a time not more than sixty (60) days prior
to the date of any meeting of stockholders or prior to the last day on which the
consent or dissent of stockholders may be effectively expressed for any purpose
without a meeting, as the time as of which stockholders entitled to notice of
and to vote at such a meeting or whose consent or dissent is required or may be
expressed for any purpose, as the case may be, shall be determined; and all
persons who were holders of record of voting stock at such time and no others
shall be entitled to notice of and to vote at such meeting or to express their
consent or dissent, as the case may be, notwithstanding any transfer of any
stock on the books of the Corporation after any record date fixed as aforesaid.
The Board of Directors may also, in its discretion, fix in advance a date not
exceeding sixty (60) days preceding the date fixed for the payment of any
dividend or the making of any distribution, or for the delivery of evidence of
rights, or evidences of interests arising out of any issuance, change,
conversion or exchange of capital stock, as a record date for the determination
of the stockholders entitled to receive or participate in any such dividend,
distribution, rights or interests, notwithstanding any transfer of any stock on
the books of the Corporation after any record date fixed as aforesaid, or, at
its option, in lieu of so fixing a record date, may prescribe in advance a
period not exceeding sixty (60) days prior to the date for such payment,
distribution or delivery during which no transfer of stock on the books of the
Corporation may be made.
SECTION 4. Lost or Destroyed Certificates. In case of the loss or
destruction of any outstanding certificate of stock, a new certificate may be
issued upon the following conditions:
The owner of said certificate shall file with the Secretary of the
Corporation an affidavit giving the facts in relation to the ownership, and in
relation to the loss or destruction of said certificate, stating its number and
the number of shares represented thereby; such affidavit to be in such form and
contain such statements as shall satisfy the Chairman of the Board and Secretary
that said certificate has been accidentally destroyed or lost, and that a new
certificate ought to be issued in lieu thereof. Upon being so satisfied, the
Chairman of the Board and Secretary shall require such owner to file with the
Secretary a bond in such penal sum and in such form as they may deem advisable,
and with a surety or sureties approved by them, to indemnify and save harmless
the Corporation from any claim, loss, damage or liability which may be
occasioned by the issuance of a new certificate in lieu thereof, or if they deem
it appropriate, to waive the requirement to secure a bond with a surety. Upon
such bond being so filed, a new certificate for the same number of shares shall
be issued to the owner of the certificate so lost or destroyed; and the transfer
agent and registrar of stock, if any, shall countersign and register such new
certificate upon receipt of a written order signed by the said Chairman of the
Board and Secretary, and thereupon the Corporation will save harmless said
transfer agent and registrar in the premises. The CEO or the President or any
Vice President may act hereunder in the stead of the Chairman of the Board, and
an Assistant Secretary in the stead of the Secretary. In case of the surrender
of the original certificate, in lieu of which a new certificate has been issued,
or the surrender of such new certificate, for cancellation, the bond of
indemnity given as a condition of the issue of such new certificate may be
surrendered. A new certificate may be issued without requiring any bond when in
the judgment of the Board of Directors it is proper to do so.
ARTICLE VII
CHECKS, NOTES, ETC.
SECTION 1. Execution of Checks, Notes, etc. All checks and drafts on
the Corporation's bank accounts and all bills of exchange and promissory notes,
and all acceptances, obligations and other instruments for the payment of money,
shall be signed by such officer or officers, agent or agents, as shall be
thereunto authorized from time to time by the Board of Directors.
SECTION 2. Execution of Contracts, Assignments, etc. All contracts,
agreements, endorsements, assignments, transfers, stock powers, or other
instruments (except as provided in Sections 1 and 3 of this Article VII) shall
be signed by the CEO, the President, any Executive Vice President, Senior Vice
President, or Vice President and by the Secretary or any Assistant Secretary or
the Treasurer or any Assistant Treasurer, or by such other officer or officers,
agent or agents, as shall be thereunto authorized from time to time by the Board
of Directors.
SECTION 3. Execution of Proxies. The Chairman of the Board, the CEO,
President, any Executive Vice President, or Senior Vice President or Vice
President of the Corporation may authorize from time to time the signature and
issuance of proxies to vote upon shares of stock of other companies standing in
the name of the Corporation. All such proxies shall be signed in the name of the
Corporation by the Chairman of the Board, the CEO, President, any Executive Vice
President, Senior Vice President or Vice President and by the Secretary or an
Assistant Secretary.
ARTICLE VIII
WAIVERS AND CONSENTS
SECTION 1. Waivers. Whenever under the provisions of any law or under
the provisions of the Certificate of Incorporation of the Corporation or these
Bylaws, the Corporation, or the Board of Directors or any committee thereof, is
authorized to take any action after notice to stockholders or the directors or
the members of such committee, or after the lapse of a prescribed period of
time, such action may be taken without notice and without the lapse of any
period of time if, at any time before or after such action be completed, such
requirements be waived in writing by the person or persons entitled to said
notice or entitled to participate in the action to be taken, or, in the case of
a stockholder, by his attorney thereunto authorized.
SECTION 2. Consents. Any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee of the Board of
Directors may be taken without a meeting, if prior to such action a written
consent thereto is signed by all members of the Board of Directors or of such
committee as the case may be, and such written consent is filed with the minutes
of proceedings of the Board of Directors or of such committee.
ARTICLE IX
DIVIDENDS AND RESERVE FUNDS
SECTION 1. Dividends. Except as otherwise provided by law or by the
Certificate of Incorporation, the Board of Directors may declare dividends out
of the surplus of the Corporation at such times and in such amounts as it may
from time to time designate.
SECTION 2. Reserve Funds. Before crediting net profits to the surplus
in any year, there may be set aside out of the net profits of the Corporation
for that year such sum or sums as the Board of Directors from time to time in
its absolute discretion may deem proper as a reserve fund or funds to meet
contingencies or for equalizing dividends or for repairing or maintaining any
property of the Corporation or for such other purpose as the Board of Directors
shall deem conducive to the interests of the Corporation.
ARTICLE X
INSPECTION OF BOOKS
The Board of Directors shall determine from time to time whether, and
if allowed when and under what conditions and regulations, the accounts and
books of the Corporation (except such as may by statute be specifically open to
inspection) or any of them shall be open to the inspection of the stockholders;
and the stockholders' rights in this respect are and shall be restricted and
limited accordingly.
ARTICLE XI
FISCAL YEAR
The fiscal year of the Corporation shall end on the thirty first day of
December each year, unless another date shall be fixed by resolution of the
Board of Directors. After such date is fixed, it may be changed for future
fiscal years at any time or from time to time by further resolution of the Board
of Directors.
ARTICLE XII
SEAL
The corporate seal shall be circular in form and shall contain the name
of the Corporation, the state of incorporation, and the words "Corporate Seal".
ARTICLE XIII
AMENDMENTS
SECTION 1. By Stockholders. These Bylaws may be amended by a majority
vote of the stock entitled to vote and present or represented at any annual or
special meeting of the stockholders at which a quorum is present or represented,
if notice of the proposed amendment shall have been contained in the notice of
the meeting.
SECTION 2. By Directors. Except as otherwise specifically provided in
the Bylaws, if any, adopted by the stockholders, these Bylaws may be amended by
the affirmative vote of a majority of the Board of Directors, at any regular
meeting or special meeting thereof, if notice of the proposed amendment shall
have been contained in the notice of such meeting. If any Bylaw regulating an
impending election of directors is adopted or amended or repealed by the Board
of Directors, there shall be set forth in the notice of the next meeting of the
stockholders for the election of directors the Bylaws so adopted or amended or
repealed together with a concise statement of the changes made.
ARTICLE XIV
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS
The Corporation shall indemnify and reimburse each person, and his
heirs, executors or administrators, who is made or is threatened to be made a
party to any action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he was or is a director, officer,
employee or agent of the Corporation or was or is serving at the request of the
Corporation as a director, officer, employee or agent of another Corporation,
partnership, joint venture, trust, or other enterprise, against expenses
(including attorney's fees), judgments, fines and amounts paid in settlement,
actually or reasonably incurred by him in connection with such action, suit or
proceeding and shall advance the expenses incurred by any officer or director in
defending any such action, suit or proceeding to the full extent permitted by
Section 145 of the General Corporation Law of the State of Delaware as it may be
amended or supplemented from time to time. Such right of indemnification or
advancement of expenses of any such person shall not be deemed exclusive of any
other rights to which he may be entitled under any statute, bylaw, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office.
The foregoing provisions of this Article XIV shall be deemed to be a
contract between the Corporation and each person who serves in any capacity
specified therein at any time while this bylaw is in effect, and any repeal or
modification thereof shall not affect any rights or obligations then existing
with respect to any state of facts then or theretofor existing or any action,
suit or proceeding theretofor or thereafter brought based in whole or in part
upon any such state of facts.
EXHIBIT 10a
364-DAY CREDIT AGREEMENT
Dated as of June 19, 2002
RADIOSHACK CORPORATION, a Delaware corporation (the "Borrower"),
the banks, financial institutions and other institutional lenders (the "Initial
Lenders")listed on the signature pages hereof, BANK OF AMERICA, N.A., as
administrative agent, FLEET NATIONAL BANK, as syndication agent, WACHOVIA BANK,
NATIONAL ASSOCIATION, as documentation agent, SALOMON SMITH BARNEY INC. and BANC
OF AMERICA SECURITIES INC., as joint lead arrangers and bookrunners, and
CITIBANK, N.A. ("Citibank"), as administrative agent and as paying agent (the
"Agent") for the Lenders (as hereinafter defined), agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):
"Advance" means a Revolving Credit Advance or a Competitive Bid
Advance.
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common
control with such Person or is a director or officer of such
Person. For purposes of this definition, the term "control"
(including the terms "controlling", "controlled by" and "under common
control with") of a Person means the possession, direct or indirect, of
the power to vote 5% or more of the Voting Stock of such Person or
to direct or cause the direction of the management and policies of such
Person, whether through the ownership of Voting Stock, by contract or
otherwise.
"Agent's Account" means the account of the Agent maintained by
the Agent at Citibank at its office at 388 Greenwich Street, New
York, New York 10013, Account No. 36852248, Attention: Bank Loan
Syndications.
"Applicable Lending Office" means, with respect to each Lender,
such Lender's Domestic Lending Office in the case of a Base Rate
Advance and such Lender's Eurodollar Lending Office in the case of a
Eurodollar Rate Advance and, in the case of a Competitive Bid Advance,
the office of such Lender notified by such Lender to the Agent as its
Applicable Lending Office with respect to such Competitive Bid Advance.
"Applicable Margin" means (a) for Base Rate Advances, 0% per
annum and (b)for Eurodollar Rate Advances, as of any date, a
percentage per annum determined by reference to the Borrower's Rating
Level in effect on such date as set forth below:
- -------------------------- -------------------------- --------------------------
Rating Level Applicable Margin for Applicable Margin for
Eurodollar Rate Advances Eurodollar Rate Advances
Prior to the Term Loan On and After to the Term
Conversion Date Loan Conversion Date
- -------------------------- -------------------------- --------------------------
Level 1
- -------
A/A2/A or above 0.210% 0.500%
- ---------------------------- ------------------------ --------------------------
Level 2
- -------
A-/A3/A- 0.320% 0.750%
- ---------------------------- ------------------------ --------------------------
Level 3
- -------
BBB+/Baa1/BBB+ 0.525% 1.000%
- ---------------------------- ------------------------ --------------------------
Level 4
- -------
BBB/Baa2/BBB 0.625% 1.125%
- ---------------------------- ------------------------ --------------------------
Level 5
- -------
Lower than Level 4 0.825% 1.500%
- ---------------------------- ------------------------ --------------------------
"Applicable Percentage" means, as of any date a percentage per
annum determined by reference to the Borrower's Rating Level in effect
on such date as set forth below:
---------------------------- --------------------------------
Rating Level Applicable
Percentage
---------------------------- --------------------------------
Level 1
-------
A/A2/A or above 0.065%
---------------------------- --------------------------------
Level 2
-------
A-/A3/A- 0.080%
---------------------------- --------------------------------
Level 3
-------
BBB+/Baa1/BBB+ 0.100%
---------------------------- --------------------------------
Level 4
-------
BBB/Baa2/BBB 0.125%
---------------------------- --------------------------------
Level 5
-------
Lower than Level 4 0.175%
---------------------------- --------------------------------
"Applicable Utilization Fee" means, as of any date prior to the
Term Loan Conversion Date that the aggregate Advances exceed 33 1/3% of
the aggregate Commitments, a percentage per annum determined by
reference to the Borrower's Rating Level in effect on such date as set
forth below:
---------------------------- --------------------------------
Rating Level Applicable
Utilization Fee
---------------------------- --------------------------------
Level 1
-------
A/A2/A or above 0.050%
---------------------------- --------------------------------
Level 2
-------
A-/A3/A- 0.100%
---------------------------- --------------------------------
Level 3
-------
BBB+/Baa1/BBB+ 0.125%
---------------------------- --------------------------------
Level 4
-------
BBB/Baa2/BBB 0.125%
---------------------------- --------------------------------
Level 5
-------
Lower than Level 4 0.250%
---------------------------- --------------------------------
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by
the Agent, in substantially the form of Exhibit C hereto.
"Assuming Lender" has the meaning specified in Section 2.18(c).
"Assumption Agreement" has the meaning specified in Section
2.18(c).
"Base Rate" means a fluctuating interest rate per annum in
effect from time to time, which rate per annum shall at all times be
equal to the highest of:
(a) the rate of interest announced publicly by Citibank
in New York, New York, from time to time, as Citibank's base
rate;
(b) the sum (adjusted to the nearest 1/4 of 1% or, if
there is no nearest 1/4 of 1%, to the next higher 1/4 of 1%) of
(i) 1/2 of 1% per annum, plus (ii) the rate obtained by dividing
(A) the latest three-week moving average of secondary market
morning offering rates in the United States for three-month
certificates of deposit of major United States money market
banks, such three-week moving average (adjusted to the basis of
a year of 360 days) being determined weekly on each Monday (or,
if such day is not a Business Day, on the next succeeding
Business Day) for the three-week period ending on the previous
Friday by Citibank on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal
Reserve Bank of New York or, if such publication shall be
suspended or terminated, on the basis of quotations for such
rates received by Citibank from three New York certificate of
deposit dealers of recognized standing selected by Citibank, by
(B) a percentage equal to 100% minus the average of the daily
percentages specified during such three-week period by the Board
of Governors of the Federal Reserve System (or any successor)
for determining the maximum reserve requirement (including, but
not limited to, any emergency, supplemental or other marginal
reserve requirement) for Citibank with respect to liabilities
consisting of or including (among other liabilities) three-month
U.S. dollar non-personal time deposits in the United States,
plus (iii) the average during such three-week period of the
annual assessment rates estimated by Citibank for determining
the then current annual assessment payable by Citibank to the
Federal Deposit Insurance Corporation (or any successor) for
insuring U.S. dollar deposits of Citibank in the United States;
and
(c) 1/2 of one percent per annum above the Federal Funds
Rate.
"Base Rate Advance" means a Revolving Credit Advance that bears
interest as provided in Section 2.07(a)(i).
"Borrowing" means a Revolving Credit Borrowing or a Competitive
Bid Borrowing.
"Business Day" means a day of the year on which banks are not
required or authorized by law to close in New York City and, if the
applicable Business Day relates to any Eurodollar Rate Advances or
LIBO Rate Advances, on wh