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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) FOR
THE TRANSITION PERIOD
Commission file number 1-5571
TANDY 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.)
1800 One Tandy Center, Fort Worth, Texas 76102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(817) 390-3700
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Name of each exchange
Title of each class on which registered
Common Stock, par value $1 per share New York Stock Exchange
10% Subordinated Debentures due 1994 New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
$2.14 Depositary Shares New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
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 ___
As of March 22, 1994, the aggregate market value of the
voting stock held by non-affiliates of the registrant was
$3,001,535,742 based on the New York Stock Exchange closing
price.
As of March 22, 1994, there were 63,812,277 shares of
the registrant's Common Stock outstanding.
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. ___
Documents Incorporated by Reference
Portions of the Proxy Statement for the 1994 Annual Meeting
of Stockholders are incorporated by reference into Part III.
The Index to Exhibits is on Sequential Page No. 63.
Total Pages 422.
(This page intentionally left blank.)
PART I
ITEM 1. BUSINESS.
GENERAL
The Company engages in the retail sale of consumer
electronics including personal computers primarily in the
United States. The Company's retail operations include the
Radio Shack, McDuff Electronics, VideoConcepts, The Edge in
Electronics, Computer City and Incredible Universe store
chains as well as some new concepts which it is testing.
These new test concepts are Famous Brand Electronics
Warehouse, Energy Express Plus and Audio Video & Computers.
Radio Shack. Radio Shack is the Company's largest
operating division. At December 31, 1993, Radio Shack
had 4,553 company-owned stores located throughout the
United States. These stores average approximately
2,370 square feet in area and are located in major
malls, strip centers and individual store fronts,
primarily in metropolitan markets. To provide service
to smaller communities, Radio Shack had on the same date
a network of 2,002 dealer/franchise stores. The dealers
are generally engaged in other retail operations and
augment their sales with Radio Shack products. In
addition, Radio Shack had 65 international dealers at
December 31, 1993.
The 4,553 company-owned stores carry a broad
assortment of electronic parts and accessories,
audio/video equipment, cellular and conventional
telephones as well as specialized products such as
scanners, electronic toys and personal computers. The
personal computers offered through these consumer stores
primarily target entry level users seeking computers for
home, individual and small business use.
Tandy Name Brand Retail Group. The Tandy Name
Brand Retail Group is comprised of VideoConcepts, McDuff
Electronics and The Edge in Electronics retail outlets.
At December 31, 1993, this group operated a total of 322
stores which sell name brand televisions, audio
equipment, personal computers and other electronic
products and appliances.
The Tandy Name Brand Retail Group operates two
distinctly different types of store formats -- mall
stores and supercenters. The 231 mall stores average
3,100 square feet in size while the 75 supercenters,
which are located in stand-alone or strip center
locations, average 12,200 square feet. Mall stores sell
primarily electronic, audio and video products. The
supercenter product offerings also include major
appliances.
The Company closed approximately 110 Tandy Name
Brand Retail Group stores in the first quarter of 1993.
See "Management's Discussion and Analysis of Results of
Operations and Financial Condition" found in Item 7 and
Note 4 of the Notes to Consolidated Financial Statements
for more information.
"The Edge in Electronics" began operating in 1990.
This chain of electronic boutique stores is designed for
mall customers interested in fashionable personal and
portable name brand electronics. As of December 31,
1993, these 16 stores were located in major malls and
averaged approximately 1,100 square feet.
Computer City. As of December 31, 1993, the
Company had 40 Computer City stores open, three of which
were in Europe. The Computer City chain operates as a
supercenter format featuring many name brand computers,
software and related products, including U. S. Logic,
Tandy, IBM, Apple, Sony, Lotus, Borland, Microsoft,
Packard-Bell, Compaq, AST and Hewlett-Packard. These
stores average about 23,500 square feet and carry more
than 5,000 products. The Company has opened two new
stores since December 31, 1993 and plans to open an
additional 22 stores later in 1994.
Incredible Universe. In August 1993 Incredible
Universe became a separate division of Tandy. At
December 31, 1993, Tandy operated three Incredible
Universe stores: one in Portland, Oregon; a second in
Arlington, Texas; and a third store located in northeast
Dallas, Texas. These 160,000 to 200,000 square foot
stores offer a broad selection of consumer electronics
and appliances. The Company recently opened its fourth
store in Miami, Florida, and announced plans to open
stores in Tempe, Arizona; Columbus, Ohio; Sacramento,
California and Hollywood, Florida. In addition, more
Incredible Universe stores are currently planned for
1994 and 1995.
Supporting the retail operations is an extensive
infrastructure that includes:
A&A International, Inc. - This wholly owned
subsidiary of the Company serves the wide-ranging
international import/export, sourcing, evaluation,
logistics and quality control needs of the Company.
InterTAN Inc. is the largest outside customer of the
Company. Most of A&A's activity for InterTAN originates
from manufacturers in the Far East. For more discussion
on InterTAN see Note 21 of the Notes to Consolidated
Financial Statements.
Tandy Service Centers - The Company maintains a
large service and support network in the consumer
electronics retail industry. These centers repair name
brand and private label products sold through all of the
Company's retail distribution channels. Over one
million parts are stocked in the Tandy Service division
which includes 116 service centers throughout the
nation.
Regional Distribution Centers - The 14 distribution
centers ship over one million cartons each month to both
Radio Shack and the Tandy Name Brand Retail Group
operations. This group will also be instrumental in
supporting the new Radio Shack Gift Express service.
Tandy Information Services - TIS collects
information from the retail stores nationwide and
updates a large database with sales information. This
database is a sophisticated marketing tool benefiting
every phase of the Company's operations. TIS also
processes the inventory, accounting, payroll,
telecommunications and operating information for all of
the Company's operations. In addition, specialized
information is tracked for the Company's distribution
and corporate activities.
Tandy Credit Corporation - This operation, a wholly
owned subsidiary of the Company, helps support sales of
the Company's retail operations and provides retail
divisions additional marketing flexibility through the
utilization of credit promotions. This group maintains
and manages Tandy's various private label credit
cards.
Tandy Transportation, Inc. - A large fleet of
tractors and trailers transports much of the merchandise
from the ports of entry to the Company's regional
distribution centers and local distribution facilities
for delivery to Radio Shack and Tandy Name Brand Retail
Group stores.
Consumer Electronics Manufacturing - The Company
also engages in the manufacturing business with 11
manufacturing facilities in the United States and
three overseas manufacturing operations in China, Hong
Kong and Taiwan. The China operation is a joint
venture. These 14 manufacturing facilities cover a
total of 1,674,000 square feet and employ over 4,700
workers and professionals as of December 31, 1993,
excluding those persons working at facilities included
in discontinued operations. The Company continues to
manufacture a variety of products for use in its
consumer electronics retailing operations. The products
include audio, video, telephony, antennas, wire and
cable products and a wide variety of hard to find parts
for consumer electronic products. Most of the Company's
manufacturing output is sold through the Radio Shack
store chain. In addition, the Company has previously
operated several related marketing businesses that
manufacture and sell consumer electronics and computers
to retailers and end users, see "Discontinued
Operations" below for further information.
DISCONTINUED OPERATIONS
On June 25, 1993, the Board of Directors of Tandy
adopted a formal plan of divestiture under which it would
sell its computer manufacturing and marketing businesses, the
O'Sullivan Industries, Inc. ready-to-assemble furniture
manufacturing and related marketing business, the Memtek
Products division and the Lika printed circuit board
business. The divestiture plan replaced the Company's plan
to spin off all of the Company's manufacturing and marketing
businesses as described in Tandy's Transition Report on Form
10-K/A-4 for the six-month period ended December 31, 1992.
In connection with the plan of divestiture the Company
accounted for the divestiture of these businesses as
discontinued operations. Prior year results of operations
have been reclassified to reflect the discontinued operations
treatment.
Computer Manufacturing. In furtherance of the
divestiture plan, the Company closed the sale of the
computer manufacturing and marketing businesses
to AST Research, Inc. ("AST") on July 13, 1993. In
accordance with the terms of the definitive agreement
between Tandy and AST, Tandy received $15,000,000 upon
closing of the sale. The balance of the purchase price
of $90,000,000 (as adjusted post-closing based on the
results of an audit of the assets and liabilities
conveyed) is payable by a promissory note. The
promissory note is payable in three years and interest
is accrued and paid annually. The interest rate on the
promissory note is currently 3.75% per annum and is
adjusted annually, not to exceed 5% per annum. The
terms of the promissory note stipulate that the
outstanding principal balance may be paid at maturity at
AST's option in cash or the common stock of AST.
However, at Tandy's option not more than 50% of the
initial principal balance may be paid in common stock of
AST. The promissory note is supported by a standby
letter of credit in the amount of the lesser of
$100,000,000 or 70% of the outstanding principal amount
of the promissory note. At December 31, 1993, the
standby letter of credit approximated $67,704,000.
Accounts receivable relating to the computer operations,
approximating $83,000,000 at June 30, 1993, inured to
the benefit of Tandy upon collection. At December 31,
1993, the balance of the remaining accounts receivable,
net of allowance for doubtful accounts, was $7,700,000.
Tandy also retained certain inventory which it intends
to liquidate before June 30, 1994. At December 31,
1993, this inventory amounted to approximately
$3,700,000.
In October 1993, the Company sold its computer
marketing operations in France to AST, together with
certain other multimedia assets and additional Swedish
inventory, for an aggregate of approximately $6,700,000,
which was evidenced by an increase in the amount of the
promissory note described above to $96,700,000. The
Company has discounted this note by $2,000,000 and the
discount will be recognized as interest using the
effective interest rate method over the life of the
note.
Memtek Products. On November 10, 1993, the Company
executed a definitive agreement with Hanny Magnetics
(B.V.I.) Limited, a British Virgin Islands corporation
("Hanny") to purchase certain assets of the Company's
Memtek Products operations, including the license
agreement with Memorex Telex, N.V. for the use of the
Memorex trademark on licensed consumer electronics
products. This sale closed on December 16, 1993. As of
December 31, 1993, Tandy has received payments of
$62,500,000, recorded a $7,102,000 receivable from Hanny
for the remaining purchase price and retained
approximately $61,000,000 in accounts receivable and
certain other assets for liquidation. Hanny is a
subsidiary of Hanny Magnetics (Holdings) Limited, a
Bermuda corporation, listed on the Hong Kong Stock
Exchange. At December 31, 1993, accounts receivable,
net of related allowance for doubtful accounts, retained
by Tandy approximated $40,100,000.
O'Sullivan Industries. On November 23, 1993, the
Company announced that it would sell the common stock of
O'Sullivan Industries, Inc. ("O'Sullivan") in an initial
public offering. On January 27, 1994 the Company
announced that it had reached an agreement with the
underwriters to sell O'Sullivan Industries Holdings,
Inc., the parent company of O'Sullivan, common stock to
the public at $22 per share. The net proceeds realized
by Tandy in the initial public offering, together with
the $40,000,000 cash dividend from O'Sullivan
Industries, Inc., approximated $350,000,000. The
initial public offering closed on February 2, 1994.
Pursuant to a Tax Sharing and Tax Benefit
Reimbursement Agreement between Tandy and O'Sullivan
Industries Holdings, Inc. the Company will receive
payments from O'Sullivan resulting from an increased tax
basis of O'Sullivan's assets thereby increasing tax
deductions and accordingly, reducing income taxes
payable by O'Sullivan. The amount to be received by the
Company each year will approximate the federal tax
benefit expected to be realized with respect to the
increased tax basis. These payments will be made over a
15-year time period. The Company will recognize these
payments as additional sale proceeds and gain in the
year in which the payments become due and payable to the
Company.
Lika. On January 24, 1994, the Company announced
that it had signed a definitive agreement to sell its
manufacturing facilities which make Lika printed circuit
boards. This divestiture is expected to close by June
1994 and is expected to yield approximately $17,000,000
in proceeds, including cash, a note and the liquidation
of certain retained assets.
In connection with the computer manufacturing sale and
the Memtek Products sale, the Company agreed to retain
certain liabilities primarily relating to warranty
obligations on products sold prior to the sale. Management
believes that accrued reserves, as reflected on its December
31, 1993 balance sheet, are adequate to cover estimated
future warranty obligations for the products and for any
remaining costs to dispose of these operations.
With the closing of the Lika transaction, the
divestiture program announced in June 1993 will be complete.
The proceeds from the divestitures are being used to reduce
short-term debt and for the expansion of the Incredible
Universe and Computer City store operations. See
"Management's Discussion and Analysis of Results of
Operations and Financial Condition" and Note 3 of the Notes
to Consolidated Financial Statements for further information.
SALE OF JOINT VENTURE INTEREST
During the quarter ended September 30, 1993, the Company
entered into definitive agreements with Nokia Corporation
("Nokia") to sell the Company's interests in two cellular
telephone manufacturing joint ventures with Nokia, TMC
Company Ltd. located in Masan, Korea, and TNC Company located
in Fort Worth, Texas. Pursuant to the terms of the
definitive agreements, the Company received an aggregate of
approximately $31,700,000 for its interests in these joint
ventures. The Company also entered into a three-year
Preferred Supplier Agreement pursuant to which it has agreed
to purchase from Nokia substantially all of Radio Shack's
requirements for cellular telephones at prevailing
competitive market prices at the time of the purchase. These
operations were not part of the overall divestment plan
adopted in June 1993 by the Company's Board of Directors;
therefore, the gain from the sale and their results of
operations are not included in discontinued operations.
SEASONALITY
As is the case with other retail businesses, the
Company's net sales and other revenues are greater during the
Christmas season than during other periods of the year.
There is a corresponding pre-seasonal inventory build-up
requiring working capital associated with this increased
sales volume. For additional information, see Note 22 of the
Notes to Consolidated Financial Statements.
PATENTS AND TRADEMARKS
Tandy owns or is licensed to use many trademarks related
to its business in the United States and in foreign
countries. Radio Shack, Computer City, Incredible Universe,
McDuff Electronics, VideoConcepts, Realistic, Tandy and
Optimus are some of the registered marks most widely used by
the Company. Tandy believes that the Radio Shack, Computer
City and Incredible Universe names and marks are
well-recognized and associated with a high-quality service
provider by consumers. The Company's products are sold
primarily under the Radio Shack, Optimus, Tandy and Realistic
trademarks which are registered in the U.S. and many foreign
countries. The Company believes that the loss of the Radio
Shack name or mark would be material to its business, but
does not believe that the loss of any one trademark
registration would be material.
Tandy also owns, and is in the process of applying for,
various patents relating to retail and support functions.
SUPPLIERS
The Company obtains merchandise from a large number of
suppliers from various parts of the world. Alternative
sources of supply exist for most merchandise purchased by the
Company. As the Company's product line is diverse, the
Company would not expect a lack of availability of any single
product to have a material impact on its operations.
BACKLOG ORDERS
The Company has no material backlog of orders for the
products it sells.
COMPETITION
The consumer electronics retail business is highly
competitive. The Company competes in the sale of its
products with department stores, mail order houses, discount
stores, general merchants, home appliance stores and gift
stores which sell comparable products manufactured by others.
Competitors range in size from local drug and hardware stores
to large chains and department stores. Computer store chains
and franchise groups as well as independent computer stores
and several major retailers compete with the Company in the
retail personal computer marketplace. Consumer electronic
and computer mail-order companies also compete with the
Company. The products which compete with those sold by the
Company are manufactured by numerous domestic and foreign
manufacturers. Many of these products carry nationally
recognized brand names or private labels and are sold in
markets common to the Company. Some of the Company's
competitors have financial resources equal to or greater than
the Company's resources.
Management believes that among the factors that are
important to its competitive position are price, quality,
service and the broad selection of electronic products and
computers carried at conveniently located retail outlets. The
Company's utilization of trained personnel and its ability to
use national and local advertising media are important to the
Company's ability to compete in the consumer electronics
marketplace. Management of the Company believes it is a
strong competitor in each of the factors referenced above.
Given the highly competitive nature of the consumer
electronics retail business, no assurance can be given that
the Company will continue to compete successfully in all of
the factors referenced above. However, the Company would be
adversely affected if its competitors were to offer their
products at significantly lower prices, introduce innovative
or technologically superior products not yet available to the
Company or if the Company were unable to obtain products in a
timely manner for an extended period of time.
The Company focuses on various types of store formats to
address the marketplace. Each of the Company's retailing
formats uses a distinct but complementary path to the
marketplace, based on its unique customer appeal, marketing
strengths and margin structure.
Radio Shack. Radio Shack stores offer the
shopping convenience of approximately 6,555 outlets,
high-quality private label products, unique selection,
knowledgeable personnel and excellent customer service.
Radio Shack has strong sales in approximately 3,200
different items in such consumer-demand product
categories as speakers, batteries, communications
equipment, tape decks, antennas, electronic components
and accessories.
Computer City. Computer City stores offer
approximately 5,000 different name-brand items,
competitive prices and excellent customer service on
computers, computer software and accessories.
Tandy Name Brand Retail Group. This group sells
name brand consumer electronics and appliances in three
distinctly different types of store formats.
VideoConcepts and McDuff Electronics mall stores average
approximately 3,100 square feet in size. McDuff
SuperCenters average approximately 12,200 square
feet and are located in many secondary markets. The
Edge in Electronics stores average approximately 1,100
square feet in size, carry approximately 1,000 different
name brand personal and portable consumer electronics
products and are located in major markets.
Incredible Universe. A new concept in the
retailing of name brand consumer electronics are 160,000
to 200,000 square foot stores which provide the customer
with a "universe" of choices. These stores carry over
85,000 different stock-keeping units.
The Company has faced intense competition in its
consumer electronics retailing businesses. Competition is
driven by technology and product cycles, as well as the
economy. In the consumer electronics retailing business,
competitive factors include price, product quality,
manufacturing and distribution capability and brand
reputation. The Company believes that its retailing formats
compete effectively in their respective marketplaces.
RESEARCH AND DEVELOPMENT
Research and development expenditures are not
significant.
EMPLOYEES
As of December 31, 1993, the Company had approximately
42,000 employees, excluding 2,000 full time employees
associated with discontinued operations at O'Sullivan and
Lika. The number also excludes temporary retail employees
remaining from the Christmas selling season. Management of
the Company considers the relationship between the Company
and its employees to be good. It does not anticipate any
work stoppage due to labor difficulties.
ITEM 2. PROPERTIES.
Information on the Company's properties is in
"Management's Discussion and Analysis of Results of
Operations and Financial Condition" and the financial
statements included in this Form 10-K and is incorporated
herein by reference. The following items are discussed
further on the following pages:
Page
Retail Outlets . . . . . . . . . 16
Property, Plant and Equipment. . 43
Leases . . . . . . . . . . . . . 47
The Company leases rather than owns most of its retail
facilities. However, the land and buildings of most of the
Incredible Universe stores are owned rather than leased. The
Radio Shack, Tandy Name Brand Retail Group and Computer City
stores are located primarily in major shopping malls,
stand-alone buildings or shopping centers owned by other
companies. The Company owns most of the property on which
its executive offices are located in Fort Worth, Texas as
well as five distribution facilities and most of its
manufacturing facilities and land located throughout the
United States. Existing warehouse and office facilities are
deemed adequate to meet the Company's needs in the
foreseeable future.
ITEM 3. LEGAL PROCEEDINGS.
In July 1985, Pan American Electronics, Inc., a Radio
Shack dealer in Mission, Texas ("Pan Am"), filed suit against
the Company in the 92nd Judicial District Court in Hidalgo
County, Texas. The Plaintiff's complaint alleged breach of
contract and fraud based upon the allegations that the
Company made certain misrepresentations and acted beyond the
scope of its authority under the dealer agreement, with the
alleged result that the plaintiff was forced out of the
computer mail order business in 1984. In November 1993, Pan
Am and Tandy resolved the pending litigation and the lawsuit
was dismissed in December 1993. Although the terms of the
settlement are confidential, the resolution of this legal
action did not have a materially adverse impact on the
Company's financial position or results of operation.
There are various other claims, lawsuits, disputes with
third parties, investigations and pending actions involving
allegations of negligence, product defects, discrimination,
patent infringement, tax deficiencies and breach of contract
against the Company and its subsidiaries incident to the
operation of its business. The liability, if any, associated
with these matters was not determinable at December 31, 1993.
While certain of these matters involve substantial amounts,
and although occasional adverse settlements or resolutions
may occur and negatively impact earnings in the year of
settlement, it is the opinion of management that their
ultimate resolution will not have a materially adverse effect
on Tandy's financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the Annual Meeting of Stockholders held October 15,
1993, the Company elected directors to serve for the ensuing
year and voted to adopt the Tandy Corporation 1993 Incentive
Stock Plan. Out of the 80,915,627 eligible votes, 63,361,775
votes were cast at the meeting either by proxies solicited in
accordance with Schedule 14A or by security holders voting in
person. There were 9,890,351 broker non-votes which are not
included in the following table as they were not treated as
being present at the meeting. In the case of directors,
abstentions are treated as votes withheld and are included in
the table. No other matters were voted on at the meeting.
The tabulation of votes for each nominee is set forth below
under Item No. 1 and the vote on the Tandy Corporation 1993
Incentive Stock Plan is set forth under Item No. 2 below:
Nominees for Directors
______________________
Item No. 1
__________
VOTES VOTES
DIRECTORS FOR WITHHELD
_________ _____ ________
James I. Cash, Jr. 62,626,072 735,703
Caroline R. Hunt 62,588,534 773,241
Lewis F. Kornfeld, Jr. 62,507,688 854,087
Jack L. Messman 62,848,102 513,673
William G. Morton, Jr. 62,606,784 754,991
Thomas G. Plaskett 62,216,712 1,145,063
John V. Roach 62,391,582 970,193
William T. Smith 62,598,399 763,376
Alfred J. Stein 62,569,000 792,775
William E. Tucker 62,627,905 733,870
Jesse L. Upchurch 62,792,385 569,390
John A. Wilson 62,679,493 682,282
1993 Incentive Stock Plan
_________________________
Item No. 2
__________
FOR AGAINST ABSTAIN
___ _______ _______
52,196,098 10,338,869 826,808
EXECUTIVE OFFICERS OF THE REGISTRANT (SEE ITEM 10 OF PART
III).
The following is a list of Tandy Corporation's executive
officers, their ages, positions and length of service with
the Company as of March 30, 1994
Position
(Date Elected Years with
Name to Current Position) Age Company
____ ____________________ ___ __________
John V. Roach Chairman of the Board, 55 26
Chief Executive Officer
and President (July 1982)
William C. Bousquette Executive Vice President 57 3 (1)
and Chief Financial Officer
(January 1994)
Herschel C. Winn Senior Vice President and 62 25
Secretary (November 1979)
Robert M. McClure Senior Vice President 58 21 (2)
(January 1994)
Lou Ann Blaylock Vice President - 55 23 (3)
Corporate Relations
(January 1993)
Dwain H. Hughes Vice President and 46 14 (4)
Treasurer (June 1991)
Ronald L. Parrish Vice President - 51 7
Corporate Development
(April 1987)
Richard L. Ramsey Vice President and 48 27
Controller (January 1986)
Frederick W. Padden Vice President - Law 61 3 (5)
and Assistant Secretary
(January 1994)
Leonard H. Roberts President of Radio Shack 45 (6)
(July 1993)
David M. Thirion Vice President - 46 17 (7)
Retail Services
(January 1993-August 1993)
James B. Sheets Vice President - Legal 42 17 (8)
(January 1993-December 1993)
and Assistant Secretary
(November 1986-December 1993)
Bernie S. Appel Senior Vice President, 61 33 (9)
Tandy Corporation and
Chairman, Radio Shack
Division (January 1992-
March 1993)
There are no family relationships among the executive
officers listed and there are no arrangements or
understandings pursuant to which any of them were appointed
as executive officers. All executive officers of Tandy
Corporation are elected by the Board of Directors annually to
serve for the ensuing year, or until their successors are
elected. All of the executive officers listed above have
served the Company in various capacities over the past five
years, except for Mr. Bousquette, Mr. Padden and Mr. Roberts.
(1) Mr. Bousquette previously served as Executive Vice
President and Chief Financial Officer of the Company
from November 1990 until January 1993 when he was
elected as Chief Executive Officer of TE Electronics
Inc. Prior to joining Tandy, he served as Executive
Vice President and Chief Financial Officer of Emerson
Electric Company from March 1984 until November 1990.
(2) Mr. McClure served as President of the Tandy Electronics
Division from August 1987 until January 1993 when he was
elected as Chief Operating Officer and President of TE
Electronics Inc.
(3) Mrs. Blaylock was Director of Corporate Relations from
January 1986 until she was elected Vice President -
Corporate Relations in January 1993.
(4) Mr. Hughes was elected Vice President and Treasurer of
the Company in June 1991. From June 1989 until June
1991, Mr. Hughes was Assistant Treasurer of the Company;
and, from 1984 until June 1989, he was Director of the
Company's Internal Audit Department.
(5) Mr. Padden has been Vice President, General Counsel and
Secretary of TE Electronics Inc. since January 1993.
From January 1991 to January 1993 he was the Deputy
General Counsel - Intellectual Property for Tandy
Corporation. Prior to joining Tandy he was a General
Attorney at AT&T-Bell Laboratories from 1984 to January
1991.
(6) Mr. Roberts became President of the Radio Shack Division
on July 7, 1993. Prior to joining Tandy he served as
the Chairman and Chief Executive Officer of Shoney's
Inc. from 1990 to 1993 and as President and Chief
Executive Officer of Arby's, Inc. from 1985 to 1990.
(7) Mr. Thirion resigned as the Vice President - Retail
Services in August 1993 to become the Senior Vice
President and General Manager of the Tandy Name Brand
Retail Group Division. Mr. Thirion was Vice President
of the Radio Shack Division from January 1989 until
January 1993.
(8) Mr. Sheets served as Assistant Secretary of the Company,
a position he was elected to in November 1986. Mr.
Sheets also served as Deputy General Counsel - Corporate
from November 1986 until he was elected Vice President -
Legal in January 1993. Mr. Sheets resigned effective
December 31, 1993.
(9) Mr. Appel was President of the Radio Shack Division from
June 1984 until January 1992. In January 1992 Mr Appel
was appointed as the Senior Vice President of Tandy
Corporation and Chairman of the Radio Shack division.
Mr. Appel resigned as an executive officer of the
Company on March 1, 1993 and retired as an employee of
Tandy on June 30, 1993.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
MARKET FOR COMMON STOCK
The Company's common stock is listed on the New York
Stock Exchange and trades under the symbol "TAN". The
following table presents the high and low sale prices for the
Company's common stock for each quarter of the two and
one-half years ended December 31, 1993.
Dividends
Quarter Ended: High Low Close Declared
____ ___ _____ _________
December 31, 1993 $50 3/4 $35 3/8 $49 1/2 $.15
September 30,1993 37 3/8 28 1/8 36 7/8 .15
June 30, 1993 32 3/8 28 3/8 30 .15
March 31, 1993 32 1/8 24 5/8 29 5/8 .15
December 31, 1992 31 3/4 24 5/8 29 3/4 .15
September 30,1992 27 3/4 22 1/4 27 1/8 .15
June 30, 1992 29 5/8 23 7/8 24 1/2 .15
March 31, 1992 31 1/4 23 7/8 29 3/4 .15
December 31, 1991 30 1/8 24 3/8 28 7/8 .15
September 30, 1991 28 3/4 23 3/8 28 3/8 .15
HOLDERS OF RECORD
At March 22, 1994 there were 35,227 holders of record of
the Company's common stock.
DIVIDENDS
The Board of Directors periodically reviews the
Company's dividend policy. The quarterly dividend rate is
currently $.15.
ITEM 6. SELECTED FINANCIAL DATA
SELECTED SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
TANDY CORPORATION AND SUBSIDIARIES
Six Months (1)
(Dollars and shares in Year Ended Ended
thousands, except per December 31, December 31, Year Ended June 30,
share amounts) ____________ __________________ __________________________________________
1993 1992 1991 1992 1991 1990 1989
______________________________________________________________________________________________________________________________
Operations
Net sales and operating
revenues. . . . . . . . . . . . . . . . $4,102,551 $2,161,149 $2,031,763 $3,649,284 $3,573,699 $3,648,946 $3,559,692
__________ __________ __________ __________ __________ __________ __________
__________ __________ __________ __________ __________ __________ __________
Income before income taxes,
discontinued operations and
cumulative effect of change in
accounting principle. . . . . . . . . . $ 311,155 $ 102,917 $ 201,856 $ 330,498 $ 343,277 $ 445,048 $ 494,576
Provision for income taxes . . . . . . . 115,523 35,236 73,153 119,785 123,342 167,926 190,754
__________ __________ __________ __________ __________ __________ __________
Income from continuing operations . . . 195,632 67,681 128,703 210,713 219,935 277,122 303,822
Income (loss) from discontinued
operations . . . . . . . . . . . . . . (111,797) (63,875) (8,060) (26,866) (13,872) 13,225 19,682
__________ __________ __________ __________ __________ __________ __________
Income before cumulative effect of
change in accounting principle . . . . 83,835 3,806 120,643 183,847 206,063 290,347 323,504
Cumulative effect on prior years of change
in accounting principle, net of taxes (2) 13,014 -- -- -- (10,619) -- --
__________ __________ __________ __________ __________ __________ __________
Net income . . . . . . . . . . . . . . . $ 96,849 $ 3,806 $ 120,643 $ 183,847 $ 195,444 $ 290,347 $ 323,504
__________ __________ __________ __________ __________ __________ __________
__________ __________ __________ __________ __________ __________ __________
Net income per average common and
common equivalent share:
Income from continuing operations . . . $ 2.48 $ 0.86 $ 1.61 $ 2.60 $ 2.75 $ 3.38 $ 3.42
Income (loss) from discontinued
operations. . . . . . . . . . . . . . . (1.47) (0.84) (0.10) (0.34) (0.17) 0.16 0.22
__________ __________ __________ __________ __________ __________ __________
Income before cumulative effect of
change in accounting principle . . . . 1.01 0.02 1.51 2.26 2.58 3.54 3.64
Cumulative effect on prior years of change
in accounting principle, net of taxes . 0.17 -- -- -- (0.14) -- --
__________ __________ __________ __________ __________ __________ __________
Net income per average common and
common equivalent share (3) . . . . . . $ 1.18 $ 0.02 $ 1.51 $ 2.26 $ 2.44 $ 3.54 $ 3.64
__________ __________ __________ __________ __________ __________ __________
__________ __________ __________ __________ __________ __________ __________
Average common and common equivalent
shares outstanding (3) . . . . . . . . 76,184 75,559 78,149 79,011 78,258 81,943 88,849
Dividends declared per
common share. . . . . . . . . . . . . . $ .60 $ .30 $ .30 $ .60 $ .60 $ .60 $ .60
Ratio of earnings to fixed
charges (4) . . . . . . . . . . . . . . 3.89 2.83 N/A 3.95 3.55 4.77 6.06
SELECTED SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
TANDY CORPORATION AND SUBSIDIARIES
Six Months (1)
(Dollars and shares in Year Ended Ended
thousands, except per December 31, December 31, Year Ended June 30,
share amounts) ____________ _______________ _______________________________________
1993 1992 1992 1991 1990 1989
_________________________________________________________________________________________________________________________
Year-End Financial
Position
Inventories. . . . . . . . . . . . . . . $1,276,302 $1,472,365 $1,391,295 $1,301,854 $1,452,065 $1,285,373
Total assets (5) . . . . . . . . . . . . $3,219,099 $3,381,428 $3,165,164 $3,078,145 $3,239,980 $2,574,310
Working capital. . . . . . . . . . . . . $1,128,343 $1,478,041 $1,556,435 $1,550,848 $1,312,517 $1,373,311
Current ratio. . . . . . . . . . . . . . 2.09 to 1 2.39 to 1 2.99 to 1 3.18 to 1 2.12 to 1 3.41 to 1
Capital structure:
Current debt . . . . . . . . . . . . . . $ 387,953 $ 385,706 $ 231,097 $ 179,818 $ 695,871 $ 192,096
Long-term debt . . . . . . . . . . . . . $ 186,638 $ 322,778 $ 357,525 $ 427,867 $ 252,540 $ 141,124
Total debt . . . . . . . . . . . . . . . $ 574,591 $ 708,484 $ 588,622 $ 607,685 $ 948,411 $ 333,220
Total debt, net of cash
and short-term
investments . . . . . . . . . . . . . . $ 361,356 $ 595,858 $ 482,168 $ 421,392 $ 813,214 $ 274,822
Stockholders' equity (5) . . . . . . . . $1,950,750 $1,888,351 $1,930,740 $1,846,762 $1,723,496 $1,782,838
Total capitalization (5) . . . . . . . . $2,525,341 $2,596,835 $2,519,362 $2,454,447 $2,671,907 $2,116,058
Long-term debt as a % of
total capitalization. . . . . . . . . 7.4% 12.4% 14.2% 17.4% 9.5% 6.7%
Total debt as a % of total
capitalization. . . . . . . . . . . . . 22.8% 27.3% 23.4% 24.8% 35.5% 15.7%
Stockholders' equity per
common share (6). . . . . . . . . . . . $ 25.24 $ 24.74 $ 25.35 $ 23.48 $ 21.78 $ 20.65
Financial Ratios
Return on average
stockholders' equity (4) . . . . . . . 10.2% 3.5% 11.2% 12.3% 15.8% 17.9%
Percent of sales:
Income before income taxes, discontinued
operations and cumulative effect of
change in accounting principle . . . 7.6% 4.8% 9.0% 9.6% 12.2% 13.9%
Income from continuing operations . . . 4.8% 3.2% 5.7% 6.2% 7.6% 8.5%
(1) The Company changed its fiscal year end from a June 30
to a December 31 year end effective with the six month
transition period ended December 31, 1992.
(2) See Note 2 of the Notes to Consolidated Financial
Statements for a discussion of the change in accounting
principles.
(3) Income (loss) per share amounts and average common and
common equivalent share amounts for the six months
ending December 31, 1992 and fiscal 1992 have been
retroactively restated to reflect the assumption that
the Series C PERCS would convert into 12,457,100 common
shares in lieu of the previously used conversion amount
of 15,000,000 common shares based upon the Company's
December 31, 1993 closing price of its common stock of
$49.50 per share. See Note 2 of the Notes to
Consolidated Financial Statements.
(4) Computed using income from continuing operations.
(5) Includes investment in discontinued operations.
(6) At December 31, 1993, December 31, 1992 and June 30,
1992, computed assuming the Series C PERCS will
convertinto 12,457,100 shares of common stock.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION.
Tandy Corporation ("Tandy" or the "Company") changed its
fiscal year end from June 30 to December 31 effective
December 31, 1992.
The following Management's Discussion and Analysis of
Results of Operations and Financial Condition compares the
full calendar year ended December 31, 1993 with the full
fiscal years ended June 30, 1992 and 1991. Although these
twelve-month periods end at different times, management
believes that the seasonality of the retail business relating
to Christmas is so significant that it would distort trends
and related percentage comparisons to sales for the readers
if a full year's results were compared to the six-month
transition period ended December 31, 1992.
NET SALES AND OPERATING REVENUES
For the year ending December 31, 1993, overall sales
grew 12% to $4,102,551,000 as compared to $3,649,284,000 for
the fiscal year ending June 30, 1992. This increase was
primarily due to the opening of three Incredible Universe
stores and the expansion of the Computer City chain. On a
comparable store basis, Radio Shack's sales increased
slightly during the year ended December 31, 1993 as compared
to the fiscal year ended June 30, 1992. A moderate increase
in sales of Radio Shack's core business (i.e., consumer
electronics and accessories) was offset by a decline in sales
of personal computers through the Radio Shack division.
The decrease in Radio Shack's computer business reflects
the impact of sharply lower pricing in response to
competitive pressures in the marketplace. The changing
dynamics of the personal computer business has had a
significant impact on Radio Shack's performance during fiscal
years 1993, 1992 and 1991. A combination of shifts in retail
distribution to super stores and telemarketing combined with
rapidly declining prices has taken the computer category from
approximately 17.0% of Radio Shack's sales with a gross
profit of 29.0% in the year ended June 30, 1992 to
approximately 14.2% of sales and a gross profit of 15.2% for
the year ended December 31, 1993. Radio Shack's extensive
assortment of electronic parts, accessories and specialty
items differentiates it from other consumer electronics
retailers in the marketplace. The table below shows the
breakdown by major category of Radio Shack sales.
RADIO SHACK SALES TO CUSTOMERS
Percent of Total Sales
________________________________________________
Year Ended Six Months Ended Year Ended
December 31, December 31, June 30,
____________ ________________ ______________
Class of Products 1993 1992 1992 1991
_________________________________________________________________________________
Consumer electronics . . . . . 44.6% 46.1% 43.9% 44.3%
Electronic parts, accessories
and specialty equipment . . . 36.1 35.4 34.4 33.5
Personal computers, peripherals,
software and accessories * . 14.2 14.3 17.0 17.7
Other. . . . . . . . . . . . . 5.1 4.2 4.7 4.5
_____ _____ _____ _____
. . . . . . . . . . . . . . . 100.0% 100.0% 100.0% 100.0%
_____ _____ _____ _____
_____ _____ _____ _____
* Excludes Radio Shack Computer Centers closed at June 30, 1991.
The decline in Radio Shack's computer sales has been
offset by sales of the Computer City chain. The Computer
City chain opened its 40th supercenter in December 1993,
approximately two years after its initial launching of eight
stores. Computer City's sales increases were the result of
25 additional stores since June 30, 1992 and comparable store
sales gains at old stores in excess of 30% for the year ended
December 31, 1993.
The Name Brand Retail Group experienced a sales decrease
in calendar 1993 as compared to the June 1992 fiscal year.
This decrease was primarily a result of the closing of 110
McDuff and VideoConcepts stores in February 1993. This
decline was offset in part by the addition of three
Incredible Universe stores. The first two Incredible
Universe stores were opened in the fall of 1992 with the
third having been added in the fall of 1993.
Shipments to InterTAN Inc. decreased for calendar year
1993 as compared to the fiscal year ended June 30, 1992. See
the discussion in the "InterTAN Update" found on page 23.
RETAIL OUTLETS
Average
Store
Size Dec. 31, Dec. 31, June 30, Dec. 31, June 30,
(Sq. Ft.) 1993 1992 1992 1991 1991
____________________________________________________________________________________________
Radio Shack
Company-owned*. . . . . . . . 2,370 4,553 4,558 4,553 4,604 4,595
Dealer/Franchise. . . . . . . N.A. 2,002 2,122 2,203 2,238 2,241
_____ _____ _____ _____ _____
6,555 6,680 6,756 6,842 6,836
_____ _____ _____ _____ _____
_____ _____ _____ _____ _____
Tandy Name Brand Retail Group
McDuff Supercenters . . . . . 12,198 75 150 151 147 138
McDuff/VideoConcepts
Mall Stores. . . . . . . . . 3,081 231 266 266 270 245
The Edge in Electronics . . . 1,107 16 16 16 15 9
Computer City . . . . . . . . 23,487 40 20 15 8 --
Incredible Universe. . . . . . 183,667 3 2 -- -- --
_____ _____ _____ _____ _____
365 454 448 440 392
_____ _____ _____ _____ _____
Total Stores 6,920 7,134 7,204 7,282 7,228
_____ _____ _____ _____ _____
_____ _____ _____ _____ _____
* Excludes Radio Shack Computer Centers closed at June 30, 1991.
For the six-month period ending December 31, 1992, net
sales and operating revenues increased 6.4% to
$2,161,149,000. This increase was primarily due to the
opening of two Incredible Universe stores and expansion of
the Computer City chain. Comparable store sales were
essentially even with the six-month period ended December 31,
1991.
The change in the Company's sales in the fiscal years
ended June 30, 1992 and 1991 reflected a continued adverse
product cycle in consumer electronics, a weak economy and
widespread price cutting in the personal computer market.
Sales through all retail stores increased 3.2% in the fiscal
year ended June 30, 1992 as compared with fiscal 1991.
The increase in sales in the fiscal year ended June 30,
1992 was primarily due to new store expansions. During
fiscal 1992, 15 Computer City stores, 34 McDuff and
VideoConcepts stores and seven of The Edge in Electronics
stores were opened. On a company-wide basis, comparable
store sales declined 1% in fiscal 1992 following a similar
decline in the prior year. Comparable store sales increased
slightly at Radio Shack in fiscal 1992 due to the continued
strengthening of its electronics parts, accessories and
specialty items business. This increase more than offset a
decline in Radio Shack's computer business which was impacted
significantly by extensive price cutting in the marketplace.
Comparable store sales of the McDuff and VideoConcepts stores
were down 10% in fiscal 1992 as compared to fiscal 1991,
reflecting intense competitive pressures in name brand
electronics retailing.
To address the pricing and distribution shifts in
computer retailing, the Computer City chain of super stores
was launched in October 1991 (fiscal year ended June 30,
1992). The Computer City format is designed to sell high
volumes of well known name brand personal computers and
related products at discount prices.
Though in operation for only the last seven months of
fiscal 1992, Computer City's sales more than offset the
decline in the Company's U.S. computer sales through Radio
Shack and direct sales. As of June 30, 1992, 15 Computer
City stores were in operation, 13 in the U.S. and two in
Europe.
GROSS PROFIT
Gross profit as a percent of sales and operating
revenues for the year ended December 31, 1993 was 41.9% as
compared to 43.5% for the six months ended December 31, 1992,
47.2% for the fiscal year ended June 30, 1992 and 48.7% for
the fiscal year ended June 30, 1991. The decline, in part,
reflects the faster growth of new high-volume formats such as
Computer City and Incredible Universe with inherently lower
gross margins than Radio Shack stores. The Company expects
this trend to continue as sales at Incredible Universe and
Computer City increase. Combined Computer City and
Incredible Universe sales contributed 18.6%, 8.9% and 2.6% to
consolidated sales in the fiscal year ended December 31,
1993, the six months ended December 31, 1992 and the fiscal
year ended June 30, 1992, respectively. The 5.3% decline in
gross profit percent from fiscal 1992 reflects the growth of
the newer retail businesses. Management expects the
long-term impact of accelerated growth for its new businesses
to result in a lower consolidated gross margin as a percent
of sales and operating revenues.
In addition to the increasing effect of the lower gross
margin businesses, Radio Shack's gross margin has trended
down during the fiscal years ended December 31, 1993 and June
30, 1992 and 1991 because of a decline in computer margins
resulting from more competitive pricing. In the absence of
any additional major decreases in computer retail prices in
the industry, management believes this decline in Radio
Shack's gross margin will diminish during 1994. Partially
offsetting the decline were increased sales of high-margin
electronic parts, accessories and specialty items sold
through Radio Shack. In management's opinion, new concepts
which could increase Radio Shack gross margins include
introducing the Radio Shack Gift Express program, creating
new store formats and the launching of The Repair Shop at
Radio Shack, a name brand out-of-warranty repair program.
Competitive pressures in name brand electronics retailing
decreased McDuff's and VideoConcepts' gross margins in each
of the three fiscal years ended December 31, 1993 and June
30, 1992 and 1991. Additionally, gross margins were impacted
in the McDuff and VideoConcepts units by the increasing
percentage of sales related to the lower margin computer
category.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses ("SG&A") as
a percent of sales and operating revenues for the year ended
December 31, 1993 declined from the year ended June 30, 1992
and declined for the six months ended December 31, 1992 from
the six months ended December 31, 1991. The accompanying
table summarizes the breakdown of various components of SG&A
and their related percentage of sales and operating revenues.
The lower SG&A percent reflects the lower costs, relative to
net sales and operating revenues associated with the
Company's newer retail formats, as well as the lower
operating costs achieved through cost reduction programs and
the further streamlining of operations in the new retail
formats.
SG&A expenses as a percent of sales and operating
revenues declined in the fiscal year ended June 30, 1992 as
compared with fiscal 1991. The benefits of actions taken to
streamline operations and reduce costs are reflected in most
expense categories in fiscal 1992.
Year-to-year comparisons are impacted by the $18,987,000
gain which includes a foreign currency gain of $6,894,000 in
fiscal year 1992 from the sale of a Japanese subsidiary, the
assets of which were primarily real estate, and the remaining
foreign currency gain of $3,748,000 recognized in 1992 as
opposed to a foreign currency gain of only $762,000 in 1993.
The Company's exposure to foreign currency fluctuations has
decreased significantly with the disposal of the Company's
computer manufacturing and marketing operations as well as
the disposal of Memtek Products. Both of these operations
had significant European operations.
Advertising costs have decreased in dollars and as a
percent of sales and operating revenues in the fiscal year
ended December 31, 1993 as compared to the fiscal years ended
June 30, 1992 and 1991. Management has focused its efforts
on more efficient advertising methods in Radio Shack
utilizing the Company's data base of customer activity to
reduce costs while maintaining market awareness.
Rent expense has declined slightly in dollars and more
significantly as a percent of sales during the year ended
December 31, 1993 as compared to fiscal 1992. This
percentage decrease results primarily from the fact that the
Company owns most of the Incredible Universe locations and is
additionally impacted by Computer City's low rent to sales
ratio.
The Company's credit operations have been successful in
supporting sales of the retail operations. Private label
credit cards represented 34% of credit sales for the year
ended December 31, 1993, 36% for the six months ended
December 31, 1992, 43% in fiscal 1992 and 44% in fiscal 1991.
This decline in the percentage results from increased sales
through the Computer City and Incredible Universe stores
which have a lower percentage of private label card usage. A
decrease in bad debt expense relates to tighter credit
controls and a 4% decline from fiscal 1992 in overall private
label credit card sales. Expenses associated with the credit
card operations which are included in SG&A expense have
decreased.
SUMMARY OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Year Ended Six Months Ended Year Ended
December 31, December 31, June 30,
________________ ________________ ________________ ___________________________________
1993 1992 1991 1992 1991
% of % of % of % of % of
Sales & Sales & Sales & Sales & Sales &
(In thousands) Dollars Revenues Dollars Revenues Dollars Revenues Dollars Revenues Dollars Revenues
______________________________________________________________________________________________________________________________
Payroll and commissions $ 554,728 13.5% $288,057 13.3% $282,544 13.9% $ 534,779 14.7% $ 512,823 14.4%
Advertising 205,831 5.0 150,374 7.0 154,025 7.6 239,352 6.6 251,903 7.0
Rent 202,401 4.9 105,328 4.9 101,184 5.0 204,673 5.6 191,941 5.4
Other taxes 79,508 1.9 38,198 1.8 36,593 1.8 73,701 2.0 66,427 1.9
Utilities and telephone 62,4371 .5 31,197 1.4 30,990 1.5 61,468 1.7 59,675 1.7
Insurance 45,373 1.1 26,301 1.2 19,936 1.0 44,427 1.2 46,653 1.3
Stock purchase and savings plans 17,562 .4 7,749 .3 6,852 .3 15,396 .4 15,933 .4
Foreign currency transaction gains (762) -- (3,065) (.1) (1,941) (.1) (10,642) (.3) (13,051) (.4)
Other 131,684 3.3 78,845 3.6 70,472 3.5 119,893 3.3 163,534 4.6
__________ ____ ________ ____ ________ ____ __________ ____ __________ ____
Subtotal 1,298,762 31.6 722,984 33.4 700,655 34.5 1,283,047 35.2 1,295,838 36.3
Credit operations 55,914 1.4 38,815 1.8 30,089 1.5 59,073 1.6 51,702 1.4
__________ ____ ________ ____ ________ ____ __________ ____ __________ ____
$1,354,676 33.0% $761,799 35.2% $730,744 36.0% $1,342,120 36.8% $1,347,540 37.7%
__________ ____ ________ ____ ________ ____ __________ ____ __________ ____
__________ ____ ________ ____ ________ ____ __________ ____ __________ ____
PROVISION FOR BUSINESS RESTRUCTURING
The Company adopted a plan resulting in business
restructuring charges during the six months ended December
31, 1992 designed to improve the Company's competitiveness
and future profitability. The pre-tax charge of $48,000,000
related primarily to the closing of approximately 110 of the
432 Tandy Name Brand Retail Group stores, mainly McDuff
Supercenters in major market areas and, to a lesser extent,
the elimination of certain product lines. Some product lines
were reduced or eliminated after consideration of competitive
factors and market trends.
In the fourth quarter of fiscal year 1991, the Company
recorded a business restructuring charge of $8,531,000. The
charge covered anticipated costs associated with Radio Shack
computer centers which were being closed, relocated or
converted to other store formats or sales offices. These
costs included the estimated lease obligations for store
closings and relocations as well as estimated fixed asset
write-offs for all affected stores.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense as a percentage of
sales and operating revenues decreased slightly in the year
ended December 31, 1993 as compared with the year ended June
30, 1992. The dollar amount of depreciation and amortization
expense for the year ended December 31, 1993 increased 7%
over the dollar amount for the year ended June 30, 1992, due
to additional capital expenditures related to the three
Incredible Universe stores and the addition of 25 new
Computer City stores. The dollar amount of depreciation and
amortization expense for the year ended June 30, 1992
increased 5% over the prior fiscal year due to increased
capital expenditures related to the new Tandy Name Brand
Retail Group and Computer City super stores and the
remodeling of Radio Shack stores.
NET INTEREST (INCOME)/EXPENSE
Year Ended Six Months Ended Year Ended
December 31, December 31, June 30,
____________ _________________ _________________
(In thousands) 1993 1992 1991 1992 1991
__________________________________________________________________________________________
Interest expense . . . . . . $ 39,707 $ 20,532 $ 23,948 $ 43,154 $ 70,313
Less:
Interest income. . . . . . . (8,137) (1,982) (2,606) (5,092) (5,042)
Interest income of credit operations (57,401) (31,308) (27,950) (62,307) (93,830)
_________ _________ _________ _________ _________
Net interest income. . . . . $(25,831) $(12,758) $ (6,608) $(24,245) $(28,559)
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
Net interest income of $25,831,000 for the year ended
December 31, 1993 and $24,245,000 for the fiscal year ended
June 30, 1992 was attributable primarily to interest income
earned by the credit operations. The decrease in interest
income of the credit company in the year ended December 31,
1993 as compared to the fiscal year ended June 30, 1992
resulted from a decrease in the average credit card
receivables outstanding during the period. This decline
results from increased payments from credit customers
reflecting the overall improvement in the economy and a
desire by consumers to shift debt to lower interest rate
instruments. The increase in interest income of the credit
company in the six months ended December 31, 1992 as compared
to December 31, 1991 resulted from growth of consumer credit
card receivables. The decrease in interest income of the
credit company in the fiscal year ended June 30, 1992 as
compared with fiscal year 1991 resulted from the
securitization of private label receivables in June 1991.
Interest income, exclusive of Tandy Credit Corporation's
income, represented primarily interest on short-term
investments. The increase in interest income for the year
ended December 31, 1993 compared to the fiscal year ended
June 30, 1992 was due to the increase in short-term
investments as proceeds from the divestiture of discontinued
operations were received and to the recognition of interest
income on the AST and InterTAN notes receivable. Interest
income as it relates to InterTAN notes receivable will
increase in fiscal 1994 as the Company will commence
recording the accretion of discount relating thereto. See
further discussion on notes receivable in the "InterTAN
Update".
The decrease in interest expense for the year ended
December 31, 1993 as compared to the year ended June 30, 1992
is due to the decrease of total debt and lower U.S. interest
rates. Overall interest expense should decline in fiscal
1994 as the Company receives cash proceeds from the disposal
of its discontinued operations and applies a significant
portion of such proceeds against short-term debt and toward
the retirement of its 10% subordinated debentures. Partially
offsetting the decline in expected interest expense in 1994
will be higher interest rates resulting from the Federal
Reserve Bank's move to keep inflation low in the overall U.S.
economy. The decrease in interest expense in the fiscal year
ended June 30, 1992 reflected the reduced debt attributable
to the securitization of private label credit card
receivables and lower interest rates.
PROVISION FOR INCOME TAXES
The effective tax rate for the year ended December 31,
1993 was 37.1%. The higher effective tax rate for the year
ended December 31, 1993 as compared to 36.2% for the year
ended June 30, 1992 and 36.0% for the year ended June 30,
1991 reflects the impact of the increase of the federal tax
rate to 35% from 34%. The effective tax rate for the
six-month period ended December 31, 1992 was 34.2%. This
lower effective rate reflects the successful resolution of
certain IRS examinations during the period.
The requirements of Financial Accounting Standard No.
109, "Accounting for Income Taxes", which the Company adopted
January 1, 1993, are discussed in Note 12 of the Notes to
Consolidated Financial Statements.
DISCONTINUED OPERATIONS
On June 25, 1993, the Board of Directors of Tandy
adopted a formal plan of divestiture under which it would
sell its computer manufacturing and marketing businesses, the
O'Sullivan Industries, Inc. ready-to-assemble furniture
manufacturing and related marketing business, the Memtek
Products division and the Lika printed circuit board
business. The divestiture plan replaced the Company's plan
to spin off all of the Company's manufacturing and marketing
businesses as described in Tandy's Transition Report on Form
10-K/A-4 for the six-month period ended December 31, 1992.
In connection with the plan of divestiture the Company
accounted for the divestiture of these businesses as
discontinued operations and recognized an after-tax charge of
$70,000,000 in its quarter ended June 30, 1993. This charge
was subsequently reduced by approximately $15,822,000 in the
quarter ended December 31, 1993. The reduction of the
reserve previously taken resulted from the better than
anticipated sales price received for O'Sullivan Industries
Holdings, Inc. partially offset by additional foreign
currency translation losses and below plan operating results
of the divested companies during the divestment period, net
of related income tax adjustments. Prior year results of
operations have been reclassified to reflect the discontinued
operations treatment.
Computer Manufacturing. In furtherance of the
divestiture plan, the Company closed the sale of the computer
manufacturing and marketing businesses to AST Research, Inc.
("AST") on July 13, 1993. In accordance with the terms of
the definitive agreement between Tandy and AST, Tandy
received $15,000,000 upon closing of the sale. The balance
of the purchase price of $90,000,000 (as adjusted
post-closing based on the results of an audit of the assets
and liabilities conveyed) is payable by a promissory note.
The promissory note is payable in three years and interest is
accrued and paid annually. The interest rate on the
promissory note is currently 3.75% per annum and is adjusted
annually, not to exceed 5% per annum. The terms of the
promissory note stipulate that the outstanding principal
balance may be paid at maturity at AST's option in cash or
the common stock of AST. However, at Tandy's option not more
than 50% of the initial principal balance may be paid in
common stock of AST. The promissory note is supported by a
standby letter of credit in the amount of the lesser of
$100,000,000 or 70% of the outstanding principal amount of
the promissory note. At December 31, 1993, the standby
letter of credit approximated $67,704,000. Accounts
receivable relating to the computer operations, approximating
$83,000,000 at June 30, 1993, inured to the benefit of Tandy
upon collection. At December 31, 1993, the balance of the
remaining accounts receivable, net of allowance for doubtful
accounts, was $7,700,000. Tandy also retained certain
inventory which it intends to liquidate before June 30, 1994.
At December 31, 1993, this inventory amounted to
approximately $3,700,000.
In October 1993, the Company sold its computer marketing
operations in France to AST, together with certain other
multimedia assets and additional Swedish inventory, for an
aggregate of approximately $6,700,000, which was evidenced by
an increase in the amount of the promissory note described
above to $96,700,000. The Company has discounted this note
by $2,000,000 and the discount will be recognized as income
using the effective interest rate method over the life of the
note.
Memtek Products. On November 10, 1993, the Company
executed a definitive agreement with Hanny Magnetics (B.V.I.)
Limited, a British Virgin Islands corporation ("Hanny") to
purchase certain assets of the Company's Memtek Products
operations, including the license agreement with Memorex
Telex, N.V. for the use of the Memorex trademark on licensed
consumer electronics products. This sale closed on December
16, 1993. As of December 31, 1993, Tandy has received
payments of $62,500,000, recorded a $7,102,000 receivable
from Hanny for the remaining purchase price and retained
approximately $61,000,000 in accounts receivable and certain
other assets for liquidation. Hanny is a subsidiary of Hanny
Magnetics (Holdings) Limited, a Bermuda corporation, listed
on the Hong Kong Stock Exchange. At December 31, 1993,
accounts receivable, net of related allowance for doubtful
accounts, retained by Tandy approximated $40,100,000.
O'Sullivan Industries. On November 23, 1993, the
Company announced that it would sell the common stock of
O'Sullivan Industries, Inc. ("O'Sullivan") in an initial
public offering. On January 27, 1994 the Company announced
that it had reached an agreement with the underwriters to
sell O'Sullivan Industries Holdings, Inc., the parent company
of O'Sullivan, common stock to the public at $22 per share.
The net proceeds realized by Tandy in the initial public
offering, together with the $40,000,000 cash dividend from
O'Sullivan, approximated $350,000,000. The initial public
offering closed on February 2, 1994.
Pursuant to a Tax Sharing and Tax Benefit Reimbursement
Agreement between Tandy and O'Sullivan Industries Holdings,
Inc., the Company will receive payments from O'Sullivan
resulting from an increased tax basis of O'Sullivan's assets
thereby increasing tax deductions and accordingly, reducing
income taxes payable by O'Sullivan. The amount to be
received by the Company each year will approximate the
federal tax benefit expected to be realized with respect to
the increased tax basis. These payments will be made over a
15-year time period. The Company will recognize these
payments as additional sale proceeds and gain in the year in
which the payments become due and payable to the Company.
Lika. On January 24, 1994, the Company announced that
it had signed a definitive agreement to sell its
manufacturing facilities which make Lika printed circuit
boards. This divestiture is expected to close by June 1994
and is expected to yield approximately $17,000,000 in
proceeds, including cash, a note and the liquidation of
certain retained assets.
In connection with the computer manufacturing sale and
the Memtek Products sale, the Company agreed to retain
certain liabilities primarily relating to warranty
obligations on products sold prior to the sale. Management
believes that accrued reserves, as reflected on its December
31, 1993 balance sheet, are adequate to cover estimated
future warranty obligations for the products and for any
remaining costs to dispose of these operations.
With the closing of the Lika transaction, the
divestiture program announced in June 1993 will be complete.
Proceeds from the formal divestiture plan should total
approximately $715,000,000 including net income tax benefits
of $16,600,000 and notes receivable of approximately
$100,000,000 that mature by the end of 1996. The proceeds
from the divestitures are being used to reduce short-term
debt and for the expansion of the Incredible Universe and
Computer City store operations.
CASH FLOW AND LIQUIDITY
Year Ended Six Months Ended Year Ended
December 31, December 31, June 30,
____________ ________________ ________________________
(In thousands) 1993 1992 1992 1991*
_________________________________________________________________________________________
Operating activities . . . . $ 322,294 $ 13,680 $ 146,782 $ 617,353
Investing activities . . . . (52,149) (90,171) (102,190) (140,499)
Financing activities . . . . (169,536) 82,663 (124,431) (425,758)
*Includes $350 million asset securitization
Tandy's cash flow and liquidity, in management's
opinion, remains strong. During the year ended December 31,
1993, cash provided by operations was $322,294,000 as
compared to $146,782,000 for the fiscal year ended June 30,
1992. The increased cash flow from operations in calendar
1993 compared to fiscal year ended June 30, 1992 was due
partially to receivables which provided $30,133,000 in cash
in 1993 but used $121,719,000 in 1992. The decline in
accounts receivable in 1993 versus 1992 is due to the
liquidation of receivables related to the divested operations
and lower consumer receivables related to the Company's
private label credit card portfolio. The latter reason
reflects consumers' desires to liquidate debt with higher
interest rates and the overall improved economy. Inventory
required less cash in calendar 1993 than in fiscal 1992. The
increase in inventory during 1993 related to new store
openings and the expansion of Radio Shack's core product lines.
Investing activities involved capital expenditures, net
of retirements, primarily for retail expansion of
$129,287,000 for the year ended December 31, 1993 compared to
$127,495,000 for the fiscal year ended June 30, 1992.
Proceeds received from the sale of divested operations
totaled $111,988,000 during the year ended December 31, 1993.
Investing activities in 1993 also included $31,663,000 for
the purchase of InterTAN's bank debt and the
extension/funding of a working capital line of credit. See
"InterTAN Update" for further information. Short-term debt
of $46,885,000 and long-term debt of $62,195,000 were retired
during 1993. Future store expansions and refurbishments and
other capital expenditures are expected to approximate
$150,000,000 to $180,000,000 per year over the next two years
and will be funded primarily from available cash, proceeds
from divestiture of discontinued operations, cash flow from
operations and proceeds from possible sale/leaseback
arrangements of Incredible Universe stores.
Operating cash flow in the fiscal year ended June 30,
1992 was $146,782,000 compared to $617,353,000 for the fiscal
year ended June 30, 1991. This decreased cash flow was
partially due to the $89,441,000 increase in inventories for
the Tandy Name Brand Retail Group and Computer City store
expansions in fiscal 1992 compared to a $151,339,000 decrease
in inventories in 1991. Operating cash flow was also higher
in 1991 due to the cash proceeds from the securitization of
$350,000,000 of credit card receivables.
The Company's investing activities were generally for
capital expenditures in fiscal 1992 which totaled
$127,495,000. The capital expenditures were used principally
for Radio Shack's store remodeling program, expansion of the
Computer City store chain and initial construction of two
Incredible Universe stores.
Financing activities in the fiscal year ended June 30,
1992 included the sale of Depositary Shares of PERCS for
$430,000,000 and the subsequent purchase of common stock with
the proceeds of this preferred stock issue. Long-term and
short-term debt of $20,098,000 was retired in the year ended
June 30, 1992 compared to fiscal 1991 retirements of $441,577,000.
Following are the current credit ratings for Tandy
Corporation:
Standard
Category Moody's and Poor's
________ _______ __________
Senior Unsecured Baa2 A-
Subordinated Baa3 BBB
Medium Term Notes Baa2 A-
Preferred Stock Baa3 BBB
ESOP Senior Notes Baa2 A-
Commercial Paper P-2 A-2
The above ratings are investment grade ratings.
Management does not believe that a downgrade in 1993 by
Moody's has had or will have a materially adverse effect on
the Company's ability to borrow funds although the borrowings
may be slightly more costly.
CAPITAL STRUCTURE AND FINANCIAL CONDITION
The Company's balance sheet and financial condition
continue to be strong. The Company's available borrowing
facilities as of December 31, 1993 are detailed in Note 9 of
the Notes to Consolidated Financial Statements and are
incorporated herein by reference.
Proceeds from the sale of divested operations totaled
$111,988,000 through December 31, 1993. The net assets
associated with discontinued operations remaining to be
divested were $405,664,000 at December 31, 1993 and related
primarily to O'Sullivan which was disposed of in February
1994 and Lika whose sale is pending. Other information
related to discontinued operations are discussed in
"Discontinued Operations".
In the fiscal year ended June 30, 1992, the Company
issued 150,000 PERCS shares and used the proceeds of this
offering to purchase $430,000,000 of the Company's common
stock for treasury. Each PERCS share has an annual dividend
rate of $214.00 and is automatically convertible on April 15,
1995 into 100 shares of common stock, par value $1 per share,
subject to possible adjustment based upon the market value of
the common stock on the conversion date or the occurrence of
certain other events. Based upon the market price of the
Company's common stock at December 31, 1993, each PERCS share
would have converted into 83 shares. At any time prior to
April 15, 1995, the Company may call the PERCS. The PERCS
are discussed further in Note 18 of the Notes to Consolidated
Financial Statements.
The Company's issue of 10% subordinated debentures due
June 30, 1994 was called by the Company on February 23, 1994
for redemption on April 1, 1994. The redemption will be at
the price of 100% of face value or approximately $32,000,000.
In fiscal 1991, the Company filed a shelf registration
for $500,000,000, of which $400,000,000 was designated for
medium-term notes, and Tandy Credit Corporation increased its
medium-term note program by $200,000,000. During fiscal
1991, short-term debt was refinanced by the issuance of
$155,500,000 in medium-term notes. In the fourth quarter of
fiscal 1991, Tandy Credit Corporation completed an asset
securitization to increase financial flexibility. Credit
card receivables were sold to the Tandy Master Trust which
issued $350,000,000 of participating 8.25% Class A Asset
Backed Certificates, Series A. Proceeds were primarily used
to retire short-term debt.
Tandy established an employee stock ownership plan
("TESOP") in 1990. This plan issued $100,000,000 of debt in
July 1990 to purchase preferred stock from the Company for
funding of the plan. The Company has guaranteed the
repayment of the TESOP notes and, as a result, the
indebtedness of the TESOP has been recognized as a long-term
obligation on the Company's consolidated balance sheet.
Dividend payments and contributions by the Company will be
used to repay the indebtedness.
The debt-to-capitalization ratio was 22.8%, 27.3%, 23.4%
and 24.8% at December 31, 1993, December 31, 1992, June 30,
1992 and June 30, 1991, respectively. This
debt-to-capitalization ratio should improve further in fiscal
1994 due to the cash proceeds from divestitures being used to
retire debt.
The Company's available borrowing facilities as of
December 31, 1993 are detailed in Note 9 of the Notes to
Consolidated Financial Statements. Management believes that
the Company's present borrowing capacity is greater than the
established credit lines and long-term debt in place.
Management believes that the Company's cash flow from
operations, cash and short-term investments, expected
proceeds from divestitures and its available borrowing
facilities are more than adequate to fund planned store
expansion, growth in the Company's private label credit
accounts, retirement of the 10% subordinated debentures and
to meet debt service and preferred dividend requirements.
Inflation has not significantly impacted the Company
over the past three years. Management does not expect
inflation to have a significant impact on operations in the
foreseeable future unless global situations substantially
affect the world economy.
The American Institute of Certified Public Accountants
issued Statement of Position 93-7, "Reporting on Advertising
Costs" in December 1993. The statement generally requires
all advertising costs to be expensed in the period in which
the costs are incurred or the first time the advertising
takes place and is effective for years beginning after June
15, 1994. The statement is not anticipated to have any
material effect on the results of operation or financial
condition of the Company.
SALE OF JOINT VENTURE INTEREST
During the quarter ended September 30, 1993, the Company
entered into definitive agreements with Nokia Corporation
("Nokia") to sell the Company's interests in two cellular
telephone manufacturing joint ventures with Nokia, TMC
Company Ltd. located in Masan, Korea, and TNC Company located
in Fort Worth, Texas. Pursuant to the terms of the
definitive agreements, the Company received an aggregate of
approximately $31,700,000 for its interests in these joint
ventures. The Company also entered into a three-year
Preferred Supplier Agreement pursuant to which it has agreed
to purchase from Nokia substantially all of Radio Shack's
requirements for cellular telephones at prevailing
competitive market prices at the time of the purchase. These
operations were not part of the overall divestment plan
adopted in June 1993 by the Company's Board of Directors;
therefore, the gain on the sale and their results of
operations are not included in discontinued operations.
INTERTAN UPDATE
InterTAN Inc. ("InterTAN"), the former foreign retail
operations of Tandy, was spun off to Tandy stockholders as a
tax-free dividend in fiscal 1987. Under the merchandise
purchase terms of the original distribution agreement,
InterTAN could purchase on payment terms from Tandy, at
negotiated prices, new and replacement models of products
that Tandy had in its Radio Shack U.S. catalog or which Tandy
may reasonably secure. A&A International ("A&A"), a
subsidiary of Tandy, was the exclusive purchasing agent for
products originating in the Far East for InterTAN.
On July 16, 1993 InterTAN had an account payable to
Tandy of approximately $17,000,000 of which $7,600,000 was in
default. InterTAN's outstanding purchase orders for
merchandise placed under the distribution agreement with
Tandy, but not yet shipped, totaled approximately
$44,000,000. Because InterTAN had defaulted, on July 16
Tandy terminated the merchandise purchase terms of the
distribution agreement and the license agreements. Tandy
offered InterTAN interim license agreements which expired
July 22, 1993, unless extended. These were extended on July
23, 1993.
On July 30, 1993 Trans World Electronics, Inc. ("Trans
World"), a subsidiary of Tandy, reached agreement with
InterTAN's banking syndicate to buy approximately $42,000,000
of InterTAN's debt at a negotiated, discounted price. The
closing of this purchase occurred on August 5, 1993, at which
time Tandy resumed limited shipments to InterTAN and granted
a series of short-term, interim licenses pending the
execution of new license and merchandise agreements. The
debt purchased from the banks has been restructured into a
seven-year note with interest of 8.64% due semiannually
beginning February 25, 1994 and semiannual principal payments
beginning February 25, 1995 (the "Series A" note). Trans
World also provided approximately $10,000,000 in working
capital and trade credit to InterTAN. Interest on the
working capital loan (the "Series B" note) of 8.11% is due
semiannually beginning February 25, 1994 with the principal
due in full on August 25, 1996. Trans World also has
received warrants with a five-year term exercisable for
approximately 1,450,000 shares of InterTAN common stock at an
exercise price of $6.62 per share. As required by an
agreement with Trans World, InterTAN filed a registration
statement on January 21, 1994 seeking to register the
warrants under the Securities Act of 1933.
In addition to the bank debt purchased by Trans World
and the working capital loan, InterTAN's obligations to Trans
World included two additional notes for approximately
$23,665,000 (the "Series C" note) and $24,037,000 (the
"Series D" note) with interest rates of 7.5% and 8%,
respectively. The notes represent the restructuring of
InterTAN accounts payable for merchandise already shipped and
require monthly interest payments. Also, InterTAN had
obligations for purchase orders outstanding for merchandise
ordered by A&A for InterTAN but not yet shipped totaling
approximately $31,262,000 at December 31, 1993. All
principal and interest on the Series C note was paid in full
by December 31, 1993. As merchandise under existing
outstanding purchase orders is shipped, A&A will invoice
InterTAN and amounts owed will be assigned to Trans World and
will increase the amount of the Series D note. The balance
of the Series D note as of December 31, 1993 was
approximately $7,500,000. All of Tandy's debt from InterTAN
is secured by a first priority lien on substantially all of
InterTAN's assets.
A new merchandise agreement was reached with InterTAN in
October 1993 which requires future purchase orders be backed
by letters of credit posted by InterTAN. New license
agreements have been negotiated which provide for a future
royalty to Tandy.
As required by the various agreements now existing
between Tandy and InterTAN, InterTAN has obtained a bank
revolving credit facility for Canadian $30,000,000 (U.S.
$22,662,000 equivalent at December 31, 1993). Tandy has
agreed with InterTAN's new banking agent, that in case of
InterTAN's default on the bank credit line, Tandy will, at
the option of the bank, purchase InterTAN's inventory and
related accounts receivable at 50% of their net book value,
up to the amount of outstanding bank loans, but not to exceed
Canadian $60,000,000 (U.S. $45,324,000 equivalent at December
31, 1993). In that event, Tandy could foreclose on its first
priority lien on InterTAN's assets. If Tandy fails to
purchase the inventory and related accounts receivable of
InterTAN from the bank, InterTAN's banking agent, upon notice
to Tandy and expiration of time, can foreclose upon
InterTAN's assets ahead of Tandy. At December 31, 1993,
InterTAN had no borrowings under this revolving credit
facility.
As of December 31,1993 InterTAN owed Tandy an aggregate
of $63,511,000. The current portion of the obligation
approximates $11,650,000 and the non-current portion
approximates $51,861,000. In 1993 Tandy has not recognized
any accretion of discount on the note receivable from
InterTAN resulting from the purchase of the bank debt at a
discounted price but will commence accretion of such discount
in 1994 due to InterTAN's financial results and payment
history as of December 31, 1993. Accretion of this discount
will be based on the effective interest rate method and will
approximate $3,856,000 in 1994. During the year ended
December 31, 1993, Tandy recognized approximately $93,315,000
of sales to InterTAN and interest income of $3,085,000.
Tandy's sales to InterTAN totaled $90,130,000 during the six
months ended December 31, 1992, $171,126,000 during fiscal
1992, and $160,024,000 during fiscal 1991.
A&A will continue as the exclusive purchasing agent for
InterTAN in the Far East on a commission basis. Commencing
in March 1994 only the purchasing agent commission and sales
by Tandy manufacturing plants to InterTAN will be recorded as
sales. InterTAN purchases from third parties through A&A
will no longer be recorded as sales reflecting the
arrangement under the new merchandise agreement.
Accordingly, management expects that reported sales by Tandy
to InterTAN in 1994 will be considerably lower than in prior
years, however, the earned income relating thereto will not
be materially different.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Index to Consolidated Financial Statements and
Financial Statement Schedules is found on page 29. The
Company's Financial Statements, Notes to Consolidated
Financial Statements and Financial Statement Schedules follow
the index.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Tandy will file a definitive proxy statement with the
Securities and Exchange Commission not later than 120 days
after the end of the fiscal year covered by this Form 10-K
pursuant to Regulation 14A. The information called for by
this Item with respect to directors has been omitted pursuant
to General Instruction G(3). This information is
incorporated by reference from the Proxy Statement for the 1994
Annual Meeting. For information relating to the Executive Officers
of the Company, see Part I of this report. The Section 16(A)
reporting information is incorporated by reference from the
Proxy Statement for the 1994 Annual Meeting.
ITEM 11. EXECUTIVE COMPENSATION
Tandy will file a definitive proxy statement with the
Securities and Exchange Commission not later than 120 days
after the end of the fiscal year covered by this Form 10-K
pursuant to Regulation 14A. The information called for by
this Item with respect to executive compensation has been
omitted pursuant to General Instruction G(3). This
information is incorporated by reference from the Proxy
Statement for the 1994 Annual Meeting.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Tandy will file a definitive proxy statement with the
Securities and Exchange Commission not later than 120 days
after the end of the fiscal year covered by this Form 10-K
pursuant to Regulation 14A. The information called for by
this Item with respect to security ownership of certain
beneficial owners and management has been omitted pursuant to
General Instruction G(3). This information is incorporated
by reference from the Proxy Statement for the 1994 Annual
Meeting.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Tandy will file a definitive proxy statement with the
Securities and Exchange Commission not later than 120 days
after the end of the fiscal year covered by this Form 10-K
pursuant to Regulation 14A. The information called for by
this Item with respect to certain relationships and
transactions with management and others has been omitted
pursuant to General Instruction G(3). This information is
incorporated by reference from the Proxy Statement for the
1994 Annual Meeting.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K.
(a) Documents filed as part of this report.
1. Financial Statements
2. Financial Statement Schedules
The financial statements and financial statement
schedules filed as a part of this report are listed in the
"Index to Consolidated Financial Statements and Financial
Statement Schedules" on page 29. The index, statements and
schedules are incorporated herein by reference.
3. 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 63, which immediately
precedes such exhibits.
Certain instruments defining the rights of holders of
long-term debt of the Company and its consolidated
subsidiaries are not filed as exhibits to this report because
the total amount of securities authorized thereunder does not
exceed ten percent of the total assets of the Company on a
consolidated basis. The Company hereby agrees to furnish the
Securities and Exchange Commission copies of such instruments
upon request.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed for the three months
ended December 31, 1993.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Tandy Corporation has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TANDY CORPORATION
March 30, 1994 /s/ John V. Roach
______________________
John V. Roach
Chairman of the Board, Chief
Executive Officer and President
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Tandy Corporation has duly
caused this report to be signed on its behalf by the
following persons in the capacities indicated on this 30th
day of March, 1994.
Signature Title
/s/ John V. Roach Chairman of the Board, Chief
___________________________
John V. Roach Executive Officer and President
(Chief Executive Officer)
/s/ William C. Bousquette Executive Vice President and
___________________________
William C. Bousquette Chief Financial Officer
(Principal Financial Officer)
/s/ Richard L. Ramsey Vice President and Controller
___________________________
Richard L. Ramsey (Principal Accounting Officer)
/s/ James I. Cash, Jr. Director
___________________________
James I. Cash, Jr.
/s/ Caroline R. Hunt Director
___________________________
Caroline R. Hunt
/s/ Lewis F. Kornfeld, Jr. Director
___________________________
Lewis F. Kornfeld, Jr.
/s/ Jack L. Messman Director
___________________________
Jack L. Messman
/s/ William G. Morton Director
___________________________
William G. Morton
/s/ Thomas G. Plaskett Director
___________________________
Thomas G. Plaskett
/s/ William T. Smith Director
___________________________
William T. Smith
/s/ Alfred J. Stein Director
___________________________
Alfred J. Stein
/s/ William E.Tucker Director
___________________________
William E. Tucker
/s/ Jesse L. Upchurch Director
___________________________
Jesse L. Upchurch
/s/ John A. Wilson Director
___________________________
John A. Wilson
TANDY CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
Page
Report of Independent Accountants. . . . . . . . . . 30
Consolidated Statements of Income for the year
ended December 31, 1993, the six months ended
December 31, 1992 and each of the two years ended
June 30, 1992. . . . . . . . . . . . . . . . . . . 31
Consolidated Balance Sheets at December 31, 1993
and December 31, 1992. . . . . . . . . . . . . . . 32
Consolidated Statements of Cash Flows for the year
ended December 31, 1993, the six months ended
December 31, 1992 and each of the two years ended
June 30, 1992. . . . . . . . . . . . . . . . . . . 33
Consolidated Statements of Stockholders' Equity for
the year ended December 31, 1993, the six months
ended December 31, 1992 and the two years ended
June 30, 1992 . . . . . . . . . . . . . . . . . . 34-35
Notes to Consolidated Financial Statements . . . . . 36-60
Financial Statement Schedules:
V-Property, Plant and Equipment. . . . . . . . . . 61
VI-Accumulated Depreciation and Amortization of
Property, Plant and Equipment . . . . . . . . . . 62
X-Supplementary Income Statement Information . . . 62
Separate financial statements of Tandy Corporation have
been omitted because Tandy is primarily an operating company
and the amount of restricted net assets of consolidated and
unconsolidated subsidiaries and Tandy's equity in
undistributed earnings of 50% or less-owned companies
accounted for by the equity method are not significant. All
subsidiaries of Tandy Corporation are included in the
consolidated financial statements. Financial statements of
50% or less-owned companies have been omitted because they do
not, considered individually or in the aggregate, constitute
a significant subsidiary.
The financial statement schedules should be read in
conjunction with the consolidated financial statements. All
other schedules have been omitted because they are not
applicable, not required or the information is included in
the consolidated financial statements or notes thereto.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Tandy Corporation
In our opinion, the consolidated financial statements listed
in the accompanying index on page 29 present fairly, in all
material respects, the financial position of Tandy
Corporation and its subsidiaries (the "Company") at December
31, 1993 and 1992, and the results of their operations and
their cash flows for the year ended December 31, 1993, the
six months ended December 31, 1992, and for each of the two
years in the period ended June 30, 1992 in conformity with
generally accepted accounting principles. These financial
statements are the responsibility of the Company's
management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted
our audits of these statements in accordance with generally
accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles
used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the
opinion expressed above.
As discussed in Note 2 to the consolidated financial
statements, the Company changed its method of accounting for
income taxes in 1993 and for extended warranty and service
contracts in fiscal 1991.
/s/ Price Waterhouse____________________
PRICE WATERHOUSE
Fort Worth, Texas
February 22, 1994
CONSOLIDATED STATEMENTS OF INCOME
Tandy Corporation
and Subsidiaries
Year Ended Six Months Ended
December 31, December 31, Year Ended June 30,
__________________ __________________ _______________________________________
1993 1992 1992 1991
Reclassified for discontinued operations. % of % of % of % of
(In thousands, except per share amounts) Dollars Revenues Dollars Revenues Dollars Revenues Dollars Revenues
________________________________________________________________________________________________________________________
Net sales and operating
revenues . . . . . . . . . . . . . . $4,102,551 100.0% $2,161,149 100.0% $3,649,284 100.0% $3,573,699 100.0%
Cost of products sold. . . . . . . . . 2,382,607 58.1 1,221,231 56.5 1,926,390 52.8 1,831,702 51.3
__________ _____ __________ _____ __________ _____ __________ _____
Gross profit . . . . . . . . . . . . . 1,719,944 41.9 939,918 43.5 1,722,894 47.2 1,741,997 48.7
__________ _____ __________ _____ __________ _____ __________ _____
Expenses:
Selling, general and
administrative . . . . . . . . . . . 1,354,676 33.0 761,799 35.2 1,342,120 36.8 1,347,540 37.7
Depreciation and
amortization . . . . . . . . . . . . 79,944 1.9 39,960 1.9 74,521 2.0 71,208 2.0
Net interest income. . . . . . . . . . (25,831) (0.6) (12,758) (0.6) (24,245) (0.6) (28,559) (0.8)
Provision for restructuring costs . . -- -- 48,000 2.2 -- -- 8,531 0.2
__________ _____ __________ _____ __________ _____ __________ _____
1,408,789 34.3 837,001 38.7 1,392,396 38.2 1,398,720 39.1
__________ _____ __________ _____ __________ _____ __________ _____
Income before income taxes,
discontinued operations and
cumulative effect of change in
accounting principle . . . . . . . . 311,155 7.6 102,917 4.8 330,498 9.0 343,277 9.6
Provision for income taxes . . . . . . 115,523 2.8 35,236 1.6 119,785 3.3 123,342 3.4
__________ _____ __________ _____ __________ _____ __________ _____
Income from continuing operations . . 195,632 4.8 67,681 3.2 210,713 5.7 219,935 6.2
__________ _____ __________ _____ __________ _____ __________ _____
Loss from discontinued operations:
Operating loss, net of tax . . . . . (57,619) (1.4) (63,875) (3.0) (26,866) (0.7) (13,872) (0.4)
Loss on disposal, net of tax . . . . (54,178) (1.3) -- -- -- -- -- --
__________ _____ __________ _____ __________ _____ __________ _____
(111,797) (2.7) (63,875) (3.0) (26,866) (0.7) (13,872) (0.4)
__________ _____ __________ _____ __________ _____ __________ _____
Income before cumulative
effect of change in
accounting principle . . . . . . . . 83,835 2.1 3,806 0.2 183,847 5.0 206,063 5.8
Cumulative effect on prior years
of change in accounting principle,
net of taxes . . . . . . . . . . . . 13,014 0.3 -- -- -- -- (10,619) (0.3)
__________ _____ __________ _____ __________ _____ __________ _____
Net income . . . . . . . . . . . . . . $ 96,849 2.4% $ 3,806 0.2% $ 183,847 5.0% $ 195,444 5.5%
__________ _____ __________ _____ __________ _____ __________ _____
__________ _____ __________ _____ __________ _____ __________ _____
Net income per average common
and common equivalent share:
Income from continuing operations . . $ 2.48 $ 0.86 $ 2.60 $ 2.75
Loss from discontinued operations . . (1.47) (0.84) (0.34) (0.17)
__________ __________ __________ __________
Income before cumulative effect of
change in accounting principle . . . 1.01 0.02 2.26 2.58
Cumulative effect on prior years of
change in accounting principle,
net of taxes . . . . . . . . . . . . 0.17 -- -- (0.14)