-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RFwAf3GkLdPI0tVUXlO1uHGC0UVLLZYBHrAfatli2/JbN3LHG9GS7AwUwvs34p5j NrBGyn2K0Yr+SKYHfMO79g== 0000096289-00-000005.txt : 20000327 0000096289-00-000005.hdr.sgml : 20000327 ACCESSION NUMBER: 0000096289-00-000005 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000324 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TANDY CORP /DE/ CENTRAL INDEX KEY: 0000096289 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RADIO TV & CONSUMER ELECTRONICS STORES [5731] IRS NUMBER: 751047710 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-05571 FILM NUMBER: 577607 BUSINESS ADDRESS: STREET 1: 100 THROCKMORTON ST STREET 2: STE 1800 CITY: FORT WORTH STATE: TX ZIP: 76102 BUSINESS PHONE: 8173903700 MAIL ADDRESS: STREET 1: 100 THROCKMORTON SUITE 1800 CITY: FORTH WORTH STATE: TX ZIP: 76102 FORMER COMPANY: FORMER CONFORMED NAME: TANDY LEATHER CO DATE OF NAME CHANGE: 19681216 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN HIDE & LEATHER CO DATE OF NAME CHANGE: 19660825 10-K 1 FORM 10-K 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( NO FEE REQUIRED) For the fiscal year ended December 31, 1999 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.) 100 Throckmorton Street, Suite 1800, Fort Worth, Texas 76102 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (817) 415-3700 ------------------------ 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 Preferred Share Purchase Rights New York Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None 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. ____ 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 21, 2000, the aggregate market value of the voting stock held by non-affiliates of the registrant was $8,576,164,809 based on the New York Stock Exchange closing price. As of March 21, 2000, there were 186,872,515 shares of the registrant's Common Stock outstanding. Documents Incorporated by Reference Portions of the Proxy Statement for the 2000 Annual Meeting of Stockholders are incorporated by reference into Part III. The Index to Exhibits is on Sequential Page No. 56. Total Pages 79. PART I ITEM 1. BUSINESS. GENERAL Tandy Corporation, a Delaware corporation, was incorporated in 1967 ("Tandy" or the "Company"). Tandy primarily engages in the retail sale of consumer electronics through the RadioShack(R) store chain. Sales derived outside of the United States are not material. RadioShack. At December 31, 1999, RadioShack operated 5,087 company-owned stores located throughout the United States. These stores average approximately 2,300 square feet in gross area and are located in major malls and strip centers, as well as individual store fronts. RadioShack had, on the same date, a network of 2,099 dealer/franchise stores. These stores provide RadioShack products to smaller communities. The dealers are generally engaged in other retail operations and augment their sales with RadioShack products. This network included 58 international dealers at December 31, 1999. The company-owned RadioShack stores carry a broad assortment of both private label and third party products, including electronic parts and accessories, cellular, PCS and conventional telephones, audio and video equipment, digital satellite systems, personal computers and related products, as well as specialized products such as scanners and weather radios. RadioShack also provides consumers access to third party services such as cellular phone, PCS and pager activation, direct satellite programming, Internet access and prepaid wireless airtime. RadioShack.com, LLC. In October 1999, Tandy launched its RadioShack.com website to increase its online and store level retail sales. As of March 1, 2000, there were over 20,000 products on the website. Online customers can purchase, return or exchange products available on the RadioShack website at their local RadioShack stores and participating dealer/franchise outlets. Strategic Alliances. Tandy has formed strategic alliances with well-recognized partners. Through its telecommunications alliances with Sprint Communications Company and Sprint PCS ("Sprint"), RadioShack customers have access to wireless and residential telephones and related telephony products and services at the "Sprint Store at RadioShack." Compaq Computer Corporation ("Compaq") is the sole supplier of personal computers sold through RadioShack retail outlets and DIRECTV provides direct-to-home satellite programming. On May 13, 1999, Tandy entered into a multi-year retail sales and service agreement with Thomson Multimedia ("Thomson"), which owns the RCA brand. Under this agreement, Thomson will supply RadioShack with various RCA-branded audio and video components such as televisions, VCRs, camcorders, digital video disc (DVD) players, digital cameras, CD shelf systems and other digital entertainment products beginning in 2000. Some of these items are currently available in stores. RCA products will be sold through the RCA Digital Entertainment Center at RadioShack via a "store-within-a-store" concept similar to the Sprint Store at RadioShack. Tandy entered into two additional agreements during 1999 which it believes are significant steps towards achieving Tandy's strategic plan for RadioShack to become "America's Connectivity Store," similar to its existing concept of "America's Telephone Store." Connectivity will provide solutions for connecting to and utilizing high-speed bandwidth. Bandwidth refers to volume at which data can be transmitted and, depending on the volume delivered, may enable consumers to have such capabilities as instant and/or high speed Internet, movies on demand and multiple phone/fax connections through a single phone or cable line. On November 11, 1999, Tandy Corporation announced a five-year strategic alliance with Microsoft Corporation ("Microsoft") that encompasses broadband and narrowband technology, as well as in-store and online efforts. In the third quarter of 2000, RadioShack and Microsoft are expected to launch The Microsoft Internet Center @ RadioShack via a "store-within-a-store" concept in as many as 5,000 company-owned RadioShack stores and participating dealer/franchise outlets nationwide. The Microsoft Internet Center @ RadioShack will allow customers to view demonstrations of narrowband and broadband technology and subscribe to MSN(TM) dial-up or broadband Internet access, as well as view a broad range of existing and future products, solutions and services based on Microsoft technologies. Also, on April 21, 1999, Tandy announced it had entered into a strategic agreement with NorthPoint Communications, Inc. ("NorthPoint"), a provider of Digital Subscriber Line ("DSL") technology. DSL technology transports data at speeds up to 25 times faster than common dial-up modems, allowing for high-speed Internet access and other data-intensive applications. Management anticipates this alliance will accelerate the adoption rate of these services at an affordable price to the mass market. Additionally, NorthPoint will provide RadioShack with DSL services for consumer display purposes in many of its retail stores, as well as for internal use. NorthPoint currently operates in 33 markets in the U.S. and expects to expand its service territory to 60 markets by the end of 2000. Retail Support Operations. AmeriLink Corporation ("AmeriLink") - On July 30, 1999, Tandy acquired AmeriLink. Through its 76 field offices located in 26 states, AmeriLink designs, installs and maintains cabling systems for the transmission of video, voice and data, primarily for home use. AmeriLink will continue to provide these services to outside parties and, also, to RadioShack through AmeriLink's RadioShack Installation Services Division. Services for RadioShack in 2000 will consist primarily of customer DIRECTV installations; however, new services such as home theater and broadband Internet access, among others, will be added as RadioShack's needs dictate. A&A International Limited Partnership ("A&A") - This limited partnership, which is 100% owned by Tandy and its subsidiaries, serves the wide-ranging international import/export, sourcing, evaluation, logistics and quality control needs of Tandy. A&A also provides services for outside customers, primarily InterTAN, Inc. ("InterTAN"). Most of A&A's activity for InterTAN involves sourcing of goods from manufacturers in Asia. Consumer Electronics Manufacturing - Tandy operates seven manufacturing facilities in the United States and one overseas manufacturing operation in China, which is a joint venture. These eight manufacturing facilities employed approximately 3,200 employees as of December 31, 1999. Tandy manufactures a variety of products, primarily sold through RadioShack, including audio, video, telephony, antennas, wire and cable products and a wide variety of "hard to find" parts for consumer electronic products. Tandy Service Centers - Tandy maintains a service and support network to service the consumer electronics and personal computer retail industry in the U.S. At December 31, 1999, there were 55 Tandy Service Centers in the U.S. which repair name-brand and private label products sold at RadioShack. Tandy is also a vendor-authorized service provider for such leading manufacturers as Compaq, Sony, Panasonic, Hitachi, Hewlett-Packard, RCA/ Thomson and Nokia, among others, and also performs repairs for third-party service centers and extended service plan providers under national service agreements. Regional Distribution Centers - The 11 distribution centers operated by Tandy ship over one million cartons each month to RadioShack stores. A few distribution centers also serve as fulfillment centers for RadioShack.com. Tandy Customer Support - Using state-of-the-art telephone and data networks, Tandy Customer Support responds to more than five million calls annually for answers to technical questions, customer service inquiries, and direct sales requests related to RadioShack's catalog operations, its website and "hard to find" products offered through the RadioShack Unlimited program. Computer City. On August 31, 1998, Tandy completed the sale of 100% of the outstanding common stock of its Computer City, Inc. subsidiary ("CCI" or "Computer City") to CompUSA Inc. ("CompUSA"). (See "Sale of Computer City, Inc." in Item 7 "Management's Discussion and Analysis of Results of Operations and Financial Condition" ("MD&A")). Prior to the sale, there were 101 Computer City stores open, including seven in Canada. Operating primarily as a supercenter format, the average store size approximated 21,050 square feet in gross area and offered approximately 4,000 products in its merchandising assortment, including personal computer hardware and software and related products and accessories. SEASONALITY As is the case with other retail businesses, Tandy'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 the anticipated increased sales volume. See Note 26 of the "Notes to Consolidated Financial Statements" for quarterly data. PATENTS AND TRADEMARKS Tandy owns or is licensed to use many trademarks and service marks related to its business in the United States and in foreign countries. Radio Shack, RadioShack, RadioShack.com, You've got questions. We've got answers., America's Home Connectivity Store, and Around The Corner and Around The Clock are some of the marks most widely used by the Company. Tandy believes that the RadioShack name and marks are well-recognized by consumers, and that the name and marks are associated with high-quality service. Tandy's manufactured products are sold primarily under the RadioShack trademark. Tandy also owns various patents relating to electronic products designed and manufactured by Tandy. Tandy believes that the loss of the RadioShack name and RadioShack marks would be material to its business. SUPPLIERS Tandy's marketing strategy for RadioShack depends, in part, upon its ability to offer both private label and name brand products, as well as third party services, to its customers. Tandy utilizes a large number of suppliers located in various parts of the world to obtain its raw materials and private label merchandise. Management does not expect a lack of availability of raw material or any single private label product to have a material impact on its operations. In terms of name brand products sold by RadioShack, no single vendor provided in excess of 10% of Tandy's aggregate product purchases in 1999. However, certain vendors, strategic partners and service providers are considered important to RadioShack's business and the loss of or disruption in supply from one of these could have a material adverse effect on RadioShack's sales. Additionally, certain suppliers have, at times, limited their supply of products to Tandy. BACKLOG ORDERS Tandy has no material backlog of orders for the products it sells. COMPETITION Consumer electronics retailers realized increased sales in 1999, driven by strong consumer spending and a continued demand for wireless communications products, personal computers and satellite systems, as well as a rapid consumer acceptance of new digital technology products. Despite these factors, the consumer electronics retail business still remains highly competitive, driven by technology and product cycles, as well as the overall state of the economy. In the consumer electronics retailing business, competitive factors include price, availability, product quality and features, consumer services, manufacturing and distribution capability and brand reputation. RadioShack competes in the sale of its products and services with large format consumer electronics retailers such as Circuit City and Best Buy, department and specialty stores such as Sears and The Home Depot, mass merchants such as Wal-Mart and Target, and alternative channels of distribution such as mail-order and e-commerce. With respect to the products sold by RadioShack, numerous domestic and foreign companies manufacture some of the same products which are sold under nationally recognized brand names or private labels in markets common to RadioShack. Management believes that RadioShack's primary differentiating factors in relation to its competitive position are its extensive physical retail presence with over 7,100 conveniently located company-owned and dealer/franchise outlets nationwide, as well as its specially trained sales staff, who are able to provide enhanced product explanation, assist customers with service activation, where applicable, and assist with the selection of appropriate products and accessories. Another differentiating factor is RadioShack's strategic alliances with well-recognized partners including Sprint for telecommunications and wireless communications, Compaq for personal computers, Thomson for RCA-branded audio and video products, Microsoft for broadband and narrowband technology, and DIRECTV for "direct-to-home" satellite systems and services, among others. These alliances augment the strong position that RadioShack has historically maintained in its core product categories such as batteries, communications equipment, telephony, antennas and parts and accessories. Additionally, RadioShack is able to leverage name brand recognition, marketing efforts and advertising campaigns with its partners and also create cross-revenue opportunities for repair service income, customer residuals and cellular commissions. Given the highly competitive nature of the consumer electronics retail business, no assurance can be given that RadioShack will continue to compete successfully with respect to each of the factors referenced above. Also, in light of the ever-changing nature of the electronics retail industry, RadioShack would be adversely affected if its competitors were able to offer their products at significantly lower prices, introduce innovative or technologically superior products not yet available to RadioShack or if RadioShack was unable to obtain certain products in a timely manner for an extended period of time. With respect to the expansion of the Internet, management does not believe e-commerce retailers currently provide significant competition to RadioShack. This, however, could change and become significant over time. Management further believes that Tandy to well positioned to meet the increased competition from Internet retailers with its recently launched RadioShack.com initiative, coupled with RadioShack's extensive physical retail presence, services capabilities and wide assortment of consumer electronics products. EMPLOYEES As of December 31, 1999, Tandy had approximately 40,800 employees. That number included approximately 8,800 temporary retail employees who were hired for the Christmas selling season. None of Tandy's employees are covered by collective bargaining agreements nor are they members of labor unions. Tandy's management considers its relationship with its employees to be good. ITEM 2. PROPERTIES. Information on Tandy's properties is in Management's Discussion and Analysis and the financial statements included in this Form 10-K and is incorporated into this Item 2 by reference. The following items are discussed further on the referenced pages: Page Retail Outlets............................... 13 Property, Plant and Equipment................ 42 Leases....................................... 45 Tandy leases, rather than owns, most of its retail and service center facilities. RadioShack stores are located primarily in major shopping malls, stand-alone buildings or shopping centers owned by other entities. Tandy owns most of the property on which its executive offices are located in downtown Fort Worth, Texas, all distribution centers, except for two which are leased, and most of its manufacturing facilities located throughout the United States. A&A leases six administrative offices in the Asia Pacific region. AmeriLink's headquarters and field offices are also leased. Existing warehouse and office facilities are deemed adequate to meet Tandy's needs in the foreseeable future. ITEM 3. LEGAL PROCEEDINGS. Tandy has various claims, lawsuits, disputes with third parties, investigations and pending actions involving allegations of negligence, product defects, discrimination, infringement of intellectual property rights, tax deficiencies, violations of permits or licenses, and breach of contract and other matters against Tandy and its subsidiaries incident to the operation of its business. The liability, if any, associated with these matters was not determinable at December 31, 1999. 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. No matters were submitted to a vote of security holders during the fourth quarter of 1999. EXECUTIVE OFFICERS OF THE REGISTRANT (SEE ITEM 10 OF PART III). The following is a list of Tandy Corporation's executive officers and their ages, positions and length of service with the Company as of February 29, 2000.
Position Years with Name (Date Elected to Current Position) Age Company ---- --------------------------------- --- ------- Leonard H. Roberts Chairman of the Board, Tandy Corporation (May 1999) 51 6 (1) Chief Executive Officer (January 1999) and President (December 1995), Tandy Corporation President, RadioShack (July 1993) David Christopher Executive Vice President, Tandy Corporation 57 33 (2) (October 1998) President, A&A International (July 1990) David J. Edmondson Senior Vice President, Tandy Corporation 40 5 (3) Executive Vice President and Chief Operating Officer, RadioShack (October 1998) Dwain H. Hughes Senior Vice President and 52 20 (4) Chief Financial Officer, Tandy Corporation (January 1995) Mark C. Hill Senior Vice President (October 1998), 48 3 (5) Corporate Secretary and General Counsel (July 1997), Tandy Corporation Evelyn V. Follit Senior Vice President and Chief Information Officer, 53 3 (6) Tandy Corporation (May 1999) Francesca M. Spinelli Senior Vice President of People, Tandy Corporation 46 2 (7) (December 1999) Robert M. McClure Senior Vice President, Tandy Corporation 64 27 (8) (January 1994) Mark W. Barfield Vice President-Tax, Tandy Corporation 42 12 (9) (May 1994) Richard J. Borinstein Senior Vice President-Merchandising, 56 10 (10) RadioShack (December 1996) Henry G. Chiarelli President, RadioShack.com, LLC 45 29 (11) (November 1999) Loren K. Jensen Vice President-Finance, Tandy Corporation 39 4 (12) (February 2000) David P. Johnson Senior Vice President and Controller, RadioShack 47 27 (13) (February 1998) Martin O. Moad Vice President and Treasurer, Tandy Corporation 43 14 (14) (February 2000) Laura K. Moore Vice President-Public Relations and Corporate 38 1 (15) Communications, Tandy Corporation (October 1998) Louis W. Provost Senior Vice President-Retail Operations, RadioShack 43 25 (16) (August 1998) Richard L. Ramsey Vice President and Controller, Tandy Corporation 54 33 (January 1986)
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 Tandy in various capacities over the past five years, except for Messrs. Hill, Jensen and Mmes. Follit, Moore and Spinelli. (1) Mr. Roberts was elected Chairman of the Board of Tandy Corporation effective May 1999 and was elected Chief Executive Officer effective January 1999. Mr. Roberts has been President of Tandy Corporation since December 1995 and has been President of the RadioShack division since July 1993. (2) Mr. Christopher served as Executive Vice President, RadioShack from January 1992 until October 1998, when he was named Executive Vice President, Tandy Corporation. Mr. Christopher has also served as President of A&A International since July 1990. (3) Mr. Edmondson was elected Senior Vice President, Tandy Corporation and Executive Vice President and Chief Operating Officer, RadioShack effective October 1998. Mr. Edmondson served as Senior Vice President of Marketing and Advertising, RadioShack from November 1995 to October 1998. He served as Vice President-Marketing, RadioShack from December 1994 until November 1995. (4) Mr. Hughes was elected Senior Vice President and Chief Financial Officer, Tandy Corporation effective January 1995. Mr. Hughes served as Vice President and Treasurer, Tandy Corporation from June 1991 until December 1994. (5) Mr. Hill served as Vice President, Corporate Secretary and General Counsel, Tandy Corporation from July 1997 to October 1998, when he was named Senior Vice President, Tandy Corporation. He continues to serve as Corporate Secretary and General Counsel of the Company. Prior to joining Tandy, Mr. Hill practiced law for 21 years and was a partner with the law firm of Haynes and Boone LLP for the last 13 years. (6) Ms. Follit served as Vice President and Chief Information Officer, Tandy Corporation from October 1997 to May 1999, when she was elected Senior Vice President and Chief Information Officer, Tandy Corporation. Prior to joining Tandy Corporation, she was Vice President-Operations and Engineering for A.C. Nielsen Corporation from October 1996 to March 1997. Ms. Follit held various management positions at Dun & Bradstreet Corporation, ITT and IBM from 1970 to October 1996. (7) Ms. Spinelli served as Vice President of People, Tandy Corporation from July 1998 to December 1999, when she was elected Senior Vice President of People, Tandy Corporation. Prior to joining Tandy Corporation, she was employed by Wal-Mart Stores, Inc. from March 1993 to July 1998. She served as Corporate Vice President of Organizational Development of Wal-Mart Stores, Inc. from February 1997 to July 1998. (8) 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. Mr. McClure was named Senior Vice President, Tandy Corporation in January 1994. (9) Mr. Barfield served as Director of Federal and International Taxes, Tandy Corporation from April 1991 to May 1994, when he was named Vice President-Tax, Tandy Corporation. (10) Mr. Borinstein served as Vice President-Merchandise Marketing, RadioShack from December 1993 to December 1998, when he was elected Senior Vice President-Merchandising, RadioShack. Mr. Borinstein served as Director- Merchandising, RadioShack from September 1991 through December 1993. (11) Mr. Chiarelli served as Senior Vice President-New Ventures, RadioShack until November 1999 when he was elected President of RadioShack.com, LLC. He served as Senior Vice President-Merchandising and Marketing, Computer City from January to December 1997. Mr. Chiarelli served as Vice President and General Manager, Incredible Universe from October 1995 to January 1997. He served as Vice President-New Venture Group, RadioShack from September 1994 until October 1995. (12) Mr. Jensen served as Vice President and Treasurer, Tandy Corporation from May 1995 to February 2000. Prior to joining Tandy Corporation, he served as Senior Vice President of Texas Commerce Bank where he was employed for almost 10 years. (13) Mr. Johnson served as Vice President and Controller, RadioShack from June 1994 to February 1998, when he was named Senior Vice President and Controller, RadioShack. Mr. Johnson served as Vice President/Controller- Retail, RadioShack from August 1993 until June 1994. (14) Mr. Moad served as Vice President-Investor Relations, Tandy Corporation from December 1996 to February 2000 and as Director of Investor Relations from February 1993 until December 1996. (15) Ms. Moore has served as Vice President-Corporate Communications and Public Relations since joining Tandy in October 1998. Prior to joining Tandy, she was employed by Zale Corporation where she served as Vice President, Corporate Communications from 1995 to 1998 and as Corporate Communications Manager from 1993 to 1995. (16) Mr. Provost was elected Senior Vice President-Retail Operations, RadioShack effective August 1998. Mr. Provost served as Vice President and General Manager, Tandy TechAmerica from April 1996 to August 1998. He served as Vice President-Southeast Division, RadioShack from April 1993 to March 1996. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. PRICE RANGE OF COMMON STOCK (Restated for two-for-one stock split payable in June 1999) Tandy'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 trading prices for Tandy's common stock, as reported in the composite transactions quotations of consolidated trading for issues on the New York Stock Exchange, for each quarter of the two years ended December 31, 1999. Dividends Quarter Ended High Low Declared - ------------- ---- --- -------- December 31, 1999 $ 79 1/2 $ 41 3/8 $ 0.055 September 30, 1999 56 3/4 37 3/8 0.050 June 30, 1999 51 30 3/32 0.050 March 31, 1999 32 1/16 20 19/32 0.050 December 31, 1998 $ 26 5/8 $ 18 1/2 $ 0.050 September 30, 1998 31 15/16 25 13/32 0.050 June 30, 1998 27 5/16 20 17/32 0.050 March 31, 1998 24 7/16 15 3/16 0.050 HOLDERS OF RECORD At March 21, 2000 there were 30,214 holders of record of Tandy's common stock. DIVIDENDS The Board of Directors reviews Tandy's dividend policy annually. On October 25, 1999, Tandy announced a 10% increase in the quarterly cash dividend from $0.050 per share to $0.055 per share for shareholders of record on January 3, 2000. ITEM 6. SELECTED FINANCIAL DATA. SELECTED FINANCIAL DATA (UNAUDITED) TANDY CORPORATION AND SUBSIDIARIES
Year Ended December 31, (In millions, except per share -------------------------------------------------------- amounts and ratios) 1999 1998(1) 1997 1996 1995 ================================================================================================ Operations Net sales and operating revenues $4,126.2 $4,787.9 $5,372.2 $6,285.5 $5,839.1 ======== ======== ======== ======== ======== Income (loss) before income taxes $ 480.5 $ 99.7 $ 303.9 $ (145.6) $ 343.2 Provision (benefit) for income taxes 182.6 38.4 117.0 ( 54.0) 131.3 -------- -------- -------- -------- -------- Net income (loss) $ 297.9 $ 61.3 $ 186.9 $ (91.6) $ 211.9 ======== ======== ======== ======== ======== Net income (loss) available per common share: Basic $ 1.51 $ 0.28 $ 0.84 $ (0.41)(3)$ 0.81 ======== ======== ======== ======== ======== Diluted $ 1.43 $ 0.27 $ 0.82 $ (0.41)(3)$ 0.79 ======== ======== ======== ======== ======== Shares used in computing earnings (loss) per common share: Basic 194.2 201.2 214.4 239.3 252.9 ======== ======== ======== ======== ======== Diluted 205.0 211.4 224.5 239.3 262.8 ======== ======== ======== ======== ======== Dividends declared per common share $ 0.205 $ 0.200 $ 0.200 $ 0.200 $ 0.185 ======== ======== ======== ======== ======== Ratio of earnings to fixed charges (2) 5.51 1.84 3.52 N/A 4.22
SELECTED FINANCIAL DATA (UNAUDITED) Continued TANDY CORPORATION AND SUBSIDIARIES
Year Ended December 31, (In millions, except per --------------------------------------------------------- share amounts and ratios) 1999 1998(1) 1997 1996 1995 - ------------------------------------------------------------------------------------------------- Financial Position Inventories $ 861.4 $ 912.1 $1,205.2 $1,420.5 $1,512.0 Total assets $2,142.0 $1,993.6 $2,317.5 $2,583.4 $2,722.1 Working capital $ 478.1 $ 419.1 $ 739.1 $ 746.3 $1,088.3 Current ratio 1.52 to 1 1.48 to 1 1.76 to 1 1.63 to 1 2.13 to 1 Capital structure: Current debt (3) $ 188.9 $ 233.2 $ 299.5 $ 258.0 $ 189.9 Long-term debt (3) $ 319.4 $ 235.1 $ 236.1 $ 104.3 $ 140.8 Total debt $ 508.3 $ 468.3 $ 535.6 $ 362.3 $ 330.7 Total debt, net of cash and cash equivalents $ 343.7 $ 403.8 $ 429.7 $ 240.8 $ 187.2 Stockholders' equity $ 830.7 $ 848.2 $1,058.6 $1,264.8 $1,601.3 Total capitalization $1,339.0 $1,316.5 $1,594.2 $1,627.1 $1,932.0 Long-term debt as a % of total capitalization 23.9% 17.9% 14.8% 6.4% 7.3% Total debt as a % of total capitalization (4) 38.0% 35.6% 33.6% 22.3% 17.1% Stockholders' equity per common share $ 4.07 $ 4.13 $ 4.98 $ 5.37 $ 6.36 Financial Ratios Return on average stockholders' equity 35.5%(5) 6.4%(6) 16.1% N/A(7) 12.3% Percent of sales: Income (loss) before income 11.7% 2.1% 5.7% (2.3)% 5.9% taxes Net income (loss) 7.2% 1.3% 3.5% (1.5)% 3.6% This table should be read in conjunction with MD&A and the Consolidated Financial Statements and Notes thereto. (1) Includes operations of Computer City, Inc. for only eight months, due to sale to CompUSA Inc. on August 31, 1998. (2) Earnings used in computing the ratio of earnings to fixed charges consist of pre-tax earnings and fixed charges. Fixed charges are defined as interest expense related to debt, amortization expense related to deferred financing costs and a portion of rental charges. Pre-tax earnings were not sufficient to cover fixed charges during 1996 by approximately $145.6 million. Excluding $230.3 million (net of taxes) in restructuring and other charges, the 1996 ratio of earnings to fixed charges would have been 2.57. (3) Includes capital leases and TESOP indebtedness. (4) Total debt includes capital leases and TESOP indebtedness. Capitalization is defined as total debt plus total stockholders' equity. (5) Excluding $5.9 million (net of taxes) provision related to restricted stock awards in 1999, return on average stockholders' equity would have been 33.1%. (6) Excluding $183.9 million (net of taxes) for provisions related to restricted stock awards and loss on sale of Computer City, as well as Computer City operating losses and other business writedowns in 1998, return on average stockholders' equity would have been 23.6%. (7) Excluding $230.3 million (net of taxes) in restructuring and other charges in 1996, return on average stockholders' equity would have been 8.9%.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION ("MD&A"). FACTORS THAT MAY AFFECT FUTURE RESULTS With the exception of historical information, the matters discussed in MD&A contain forward-looking statements that involve various risks and uncertainties and are indicated by words such as "anticipates," "expects," "believes," "will," "should," "could," and similar words and phrases. Factors that could cause Tandy Corporation's ("Tandy" or the "Company") actual results to differ materially from management's projections, forecasts, estimates and expectations include, but are not limited to, the following: o changes in the amount and degree of promotional intensity exerted by current competitors and potential new competition from both retail stores and alternative methods or channels of distribution, such as e-commerce and telephone shopping services and mail order; o changes in general U.S. or regional U.S. economic conditions including, but not limited to, consumer credit availability, interest rates, inflation, personal discretionary spending levels and consumer sentiment about the economy in general; o the inability to successfully implement, market and execute the RadioShack.comSM website and its coordination with RadioShack retail outlets; o the presence or absence of new services or products and product features in the merchandise categories RadioShack sells and changes in RadioShack's actual merchandise sales mix; o the inability to negotiate profitable contracts or execute business plans with providers of such services as cellular and PCS telephones, direct-to-home satellite, Internet access and high-speed bandwidth; o the inability to collect the level of anticipated residual revenues, commissions and bounties for products and services sold by RadioShack; o the inability to successfully implement and execute Tandy's strategic alliances with Thomson Multimedia and/or Microsoft Corporation; o lack of availability or access to sources of supply inventory (as a large importer of consumer electronic products from Asia, unfavorable trade imbalances could negatively affect Tandy); o the inability to retain and grow an effective management team in a dynamic environment or changes in the cost or availability of a suitable work force to manage and support Tandy's service-driven operating strategies; o the imposition of new restrictions or regulations regarding the sale of products and/or services Tandy sells or changes in tax rules and regulations applicable to Tandy; o the inability to successfully coordinate AmeriLink Corporation and its operations with RadioShack; or o the adoption rate and market demand for high speed Internet and other Internet-related services. The United States retail industry and the specialty retail industry in particular are dynamic by nature and have undergone significant changes over the past several years. Tandy's ability to anticipate and successfully respond to continuing challenges is key to achieving its expectations. STOCK SPLIT On May 20, 1999, Tandy's Board of Directors declared a two-for-one split of Tandy common stock, payable on June 21, 1999. All references to the number of shares (other than common stock issued or outstanding on the 1998 Consolidated Balance Sheet and the 1997 and 1998 Consolidated Statements of Stockholders' Equity), per share amounts, cash dividends and any other reference to shares, unless otherwise noted, have been adjusted to reflect the split on a retroactive basis. Previously awarded stock options, restricted stock awards and all other agreements payable in Tandy's common stock have also been adjusted or amended to reflect the split. RETAIL OUTLETS Average December 31, Store Size ------------------------------------- (Sq. Ft.) 1999 1998 1997 - -------------------------------------------------------------------------------- RadioShack Company-Owned 2,300 5,087 5,039 4,972 Dealer/Franchise N/A 2,099 1,991 1,934 -------- -------- -------- 7,186 7,030 6,906 Computer City, Inc. (1) 21,050 -- -- 96 -------- -------- -------- 7,186 7,030 7,002 ======== ======== ======== (1)Computer City, Inc. was sold to CompUSA Inc. on August 31, 1998. Space Owned and Leased
Approximate Square Footage at December 31, ------------------------------------------------------------------------- 1999 1998 ------------------------------------ --------------------------------- (In thousands) Owned Leased Total Owned Leased Total - ----------------------------------------------------------------------------------------------- Retail RadioShack -- 11,990 11,990 -- 11,839 11,839 Other 162 -- 162 162 -- 162 -------- -------- -------- -------- -------- -------- 162 11,990 12,152 162 11,839 12,001 Support Operations Manufacturing 505 201 707 472 201 673 Warehouse and office 3,496 1,512 5,007 3,573 1,298 4,871 -------- -------- -------- -------- -------- -------- 4,163 13,703 17,866 4,207 13,338 17,545 ======== ======== ======== ======== ======== ========
SEGMENT REPORTING DISCLOSURES All references to RadioShack and Computer City in MD&A refer to Tandy's reportable segments, unless otherwise noted. The RadioShack segment consists of the RadioShack retail division, including RadioShack.com, and the retail division's support operations, including its manufacturing facilities, repair centers and AmeriLink Corporation ("AmeriLink"). The Computer City segment consists of Computer City, Inc. ("CCI" or "Computer City"), which was sold to CompUSA Inc. ("CompUSA") on August 31, 1998. The closed units segment includes all Tandy stores and non-retail units which were part of the store closure plan announced in December 1996 (see "1996 Business Restructuring" below). Corporate administration and other includes corporate units which serve all areas of Tandy and also income or expenses which were not allocated to RadioShack or Computer City. The following table summarizes net sales and operating revenues, operating profit (loss) and assets for Tandy's reportable segments. Consolidated operating profit is reconciled to Tandy's income before income taxes. Year Ended December 31, -------------------------------- (In millions) 1999 1998 1997 - ------------- -------- -------- -------- Net sales and operating revenues: RadioShack (1) $4,126.2 $3,591.2 $3,303.9 Computer City (2) -- 1,196.7 1,903.7 Closed units -- -- 164.6 -------- -------- -------- $4,126.2 $4,787.9 $5,372.2 ======== ======== ======== Operating profit (loss): RadioShack (3) $ 539.8 $ 377.7 $ 398.4 Computer City (2) -- (95.6) (14.9) Closed units -- (120.8)(4) (30.1) -------- -------- -------- 539.8 161.3 353.4 Corporate administration and other (42.5) (27.0) (16.6) Interest income (5) 20.4 10.8 13.2 Interest expense (5) (37.2) (45.4) (46.1) -------- -------- -------- Income before income taxes $ 480.5 $ 99.7 $ 303.9 ======== ======== ======== At December 31, -------------------- 1999 1998 -------- -------- Assets: RadioShack $1,476.2 $1,437.1 Computer City (2) -- -- Corporate administration and other 665.8 556.5 -------- -------- $2,142.0 $1,993.6 ======== ======== (1) Includes outside sales related to retail support operations of $104.3 million, $77.4 million and $88.2 million for the years ended December 31, 1999, 1998 and 1997, respectively. (2) Computer City was sold to CompUSA on August 31, 1998. (3) Includes $9.6 million and $82.6 million of compensation expense for store manager restricted stock awards for the years ended December 31, 1999 and 1998, respectively. (4) Includes provision for loss on sale of Computer City of $108.2 million and charges associated with the 1996 restructuring program. (5) Tandy does not allocate interest income or expense to its operating segments. RESULTS OF OPERATIONS 1999 COMPARED WITH 1998 - ----------------------- NET SALES AND OPERATING REVENUES Consolidated net sales and operating revenues decreased 13.8% from $4,787.9 million in 1998 to $4,126.2 million in 1999; this decrease was attributable primarily to the sale of Computer City to CompUSA on August 31, 1998. Consolidated comparable store sales for 1999 are not meaningful, due to this sale. RadioShack Segment RadioShack had an outstanding year with RadioShack's overall sales increasing 14.9% to $4,126.2 million in 1999 from $3,591.2 million in 1998, due primarily to a 12.2% comparable company-owned store sales gain and the opening of 48 new stores, net of store closures. Additionally, sales to RadioShack's dealers experienced strong growth throughout the year. RadioShack's comparable store sales increase was driven primarily by increased sales of communications products, prepaid wireless airtime and sales of audio and video equipment, which includes "direct-to-home" satellite systems and services ("DTH"). A continued healthy economy and a strong retail consumer electronics industry are expected to result in a positive comparable store sales gain for 2000. The following table summarizes RadioShack's retail sales breakdown by class of products and each class as a percent of total RadioShack retail sales (excluding outside sales from retail support operations): Percent of RadioShack Retail Sales Year Ended December 31, --------------------------------------------- Class of Products 1999 1998 1997 1996 - ----------------- -------- -------- -------- -------- Communications 29.3% 28.5% 27.5% 24.4% Electronic parts, accessories 27.2 30.0 31.5 32.3 and specialty equipment Audio and video 17.1 15.5 16.8 18.0 Personal electronics and seasonal 9.4 10.4 11.6 12.4 Personal computers and peripherals 8.7 9.1 9.4 10.4 Services and other 8.3 6.5 3.2 2.5 -------- -------- -------- -------- 100.0% 100.0% 100.0% 100.0% ======== ======== ======== ======== For the first time, the communications category, which includes wireless communications such as cellular and PCS telephones, as well as residential telephones, answering machines, pagers and other related telephony and communication products, surpassed the electronic parts, accessories and specialty equipment category as RadioShack's largest product category. The communications category increased, as a percentage of total retail sales in 1999, primarily due to a 50% increase in unit sales of PCS and cellular telephones. Both unit and dollar sales of PCS and cellular telephones are expected to continue to increase in 2000. Through The Sprint Store at RadioShack, customers are provided with access to a full service communications center that offers, where available, Sprint local and long-distance telephone service, Spree(SM) prepaid phone cards and Sprint branded residential telephones. On October 5, 1999, Sprint announced it would be merging with MCI WorldCom, Inc., subject to stockholder and regulatory approvals. The merger is expected to close in the second half of 2000. Tandy's management anticipates no significant changes to its existing agreements as a result of the pending merger. Sales of electronic parts, accessories and specialty equipment decreased as a percentage of total retail sales in 1999 when compared to 1998, despite a 4% sales gain. The category was 27.2% of RadioShack's retail sales mix in 1999, down from 30.0% in 1998, primarily due to the communications category and the services and other category becoming a higher percent of the product mix in 1999. This category is expected to increase in sales, but decrease as a percentage of RadioShack's retail sales mix in 2000 as the communications, audio and video, and services and other categories increase. The audio and video category experienced a sales increase of approximately 27% during 1999 when compared to 1998, due primarily to a strong increase in sales of DTH. Sales of DTH are expected to continue to increase in 2000. On May 13, 1999, Tandy entered into a multi-year retail sales and service agreement with Thomson Multimedia ("Thomson"), which owns the RCA brand. Under this agreement, Thomson will supply RadioShack with various RCA-branded audio and video components such as televisions, VCRs, camcorders, digital video disc (DVD) players, digital cameras, CD shelf systems and other digital entertainment products beginning in 2000. Some of these items are currently available in stores. The expanded assortment will be sold through The RCA Digital Entertainment Center at RadioShack via a "store-within-a-store" concept with an expected rollout date in mid-2000. Store fixture costs for this "store-within-a-store" will be borne by Thomson. Management believes that this alliance will allow RadioShack to be more competitive in the evolution of digital technology, which should enhance sales in the audio and video category in 2000 and beyond. Personal electronics and seasonal products decreased to 9.4% of RadioShack's retail sales mix in 1999 from 10.4% in 1998, due primarily to an overall shift in the product mix as mentioned above. This category experienced a 4% sales increase over the prior year as a result of increased sales of toys, portable CD players and radios. Sales of personal computers and peripherals were 8.7% of RadioShack's retail sales in 1999, compared to 9.1% in 1998, despite a large unit gain and a 10% sales gain for the year. The average selling price of CPU's decreased 16%, in line with the general market decline. The average selling price of CPU's is expected to decrease slightly in 2000. Despite this downward trend, management believes that the higher unit sales volumes of personal computers and peripherals will contribute to increased sales of this category, as well as to sales of higher gross margin products and services, such as accessories and extended service plans. Sales in the services and other category, which includes residuals and income from prepaid wireless airtime, repair services and extended service contracts, increased in 1999 in dollars and as a percent of RadioShack retail sales, due to an increase in sales of prepaid wireless airtime as well as to an increase in residual income received from RadioShack's third party providers of communications and DTH. Residual income is also earned on sales of Sprint long distance and PCS services as well as sales of other wireless products and services. Residuals vary by service provider, but are typically a portion of the continuing service revenue paid by the consumer throughout the ensuing months and/or years of that customer's subscription. In 1999, RadioShack earned approximately $63.0 million of residual income, compared to $34.2 million in 1998. Residual income is expected to continue to increase in 2000; however, increases are dependent upon such factors as customers' continued usage of certain services and stability of average revenue per subscriber, among other factors. Prepaid wireless airtime sales are expected to decrease in 2000. RadioShack installation service revenue is expected to increase in 2000 due to the AmeriLink acquisition. Connectivity Strategy Update: Tandy entered into two agreements during 1999 which management believes are significant steps towards achieving Tandy's strategic plan for RadioShack to become "America's Home Connectivity Store," similar to its existing concept of "America's Telephone Store." Connectivity will provide solutions for connecting to and utilizing high-speed bandwidth. Bandwidth refers to volume at which data can be transmitted and, depending on the volume delivered, may enable consumers to have such capabilities as instant and/or high speed Internet access, movies on demand and multiple phone/fax connections through a single phone or cable line. On November 11, 1999, Tandy Corporation announced a five-year strategic alliance with Microsoft Corporation ("Microsoft") that encompasses broadband and narrowband technology, as well as in-store and online efforts. In the third quarter of 2000, RadioShack and Microsoft are expected to launch The Microsoft Internet Center @ RadioShack via a "store-within-a-store" concept in as many as 5,000 company-owned RadioShack stores and participating dealer/franchise outlets nationwide. Store fixture costs for this "store-within-a-store" will be borne by Microsoft. The Microsoft Internet Center @ RadioShack will allow customers to view demonstrations of narrowband and broadband technology and subscribe to MSN(TM) dial-up or broadband Internet access service, as well as view a broad range of existing and future products, solutions and services based on Microsoft technologies. RadioShack will receive a "bounty" on certain sales of Microsoft's MSN broadband and narrowband Internet access service sold through its retail outlets or through its RadioShack.com website. Additionally, RadioShack will earn a residual based on a portion of the continuing service revenue paid by the consumer throughout the ensuing months and/or years of the customer's subscription to MSN. The timing of the commencement of the residuals is dependent upon the marketing program under which new customers' subscriptions are acquired. See also "RadioShack.com, LLC" below for information on Microsoft's investment in RadioShack.com. On April 21, 1999, Tandy announced it had entered into a strategic agreement with NorthPoint Communications, Inc. ("NorthPoint"), a provider of Digital Subscriber Line ("DSL") technology. DSL technology transports data at speeds up to 25 times faster than common dial-up modems, allowing for high-speed Internet access and other data-intensive applications. Management anticipates this alliance will accelerate the adoption rate of these services at an affordable price to the mass market. Additionally, NorthPoint will provide RadioShack with DSL services for consumer display purposes in many of its retail stores, as well as for internal use. NorthPoint currently operates in 33 markets in the U.S. and expects to expand its service territory to 60 markets by the end of 2000. Also, on July 30, 1999, Tandy acquired AmeriLink, one of America's leading installers of cable, telephony and high-bandwidth products. See "AmeriLink Acquisition" below for further information. GROSS PROFIT Gross profit for Tandy was $2,083.5 million or 50.5% of net sales and operating revenues, compared with $2,004.4 million or 41.9% of net sales and operating revenues in 1998. This increase in gross profit as a percentage of net sales and operating revenues was primarily the result of RadioShack sales accounting for all of the Company's consolidated net sales and operating revenues in 1999, when compared to 1998 due to the sale of Computer City to CompUSA on August 31, 1998. Computer City had an inherently lower gross margin percentage than consolidated Tandy Corporation. Without Computer City and other closed units, Tandy's consolidated gross profit as a percent of net sales and operating revenues would have been 52.1% for 1998. RadioShack's gross profit increased 11.4% in dollars for the year ended December 31, 1999 versus 1998, but decreased as a percentage of RadioShack's total sales from 52.1% of sales in 1998 to 50.5% in 1999. This 1.6 percentage point decrease was due primarily to mix shifts within RadioShack's product offerings as sales of lower margin categories increased as a portion of the overall sales volume. To a lesser extent, the decrease in the gross margin percentage was also due to promotional markdowns of private label audio and video products as RadioShack began transitioning to RCA-branded products in the fourth quarter of 1999, as well as to markdowns taken throughout the year on residential telephones. The decrease in gross margin was partially offset by an increase in residual income which has 100% gross margin. Gross profit as a percentage of RadioShack's sales is expected to decrease in 2000, although not to the extent it decreased in 1999, due to continuing mix shifts within RadioShack's product offerings. An expected increase in residual income should partially offset this decrease. In addition, management expects to increase gross margin dollars and gain operating leverage in selling, general and administrative ("SG&A") expenses. SELLING, GENERAL AND ADMINISTRATIVE EXPENSE The table below summarizes the breakdown of various components of Tandy's consolidated SG&A expense and its related percentage of total sales and operating revenues.
Year Ended December 31, ---------------------------------------------------------------------- 1999 1998 1997 ---------------------- ---------------------- -------------------- % of % of % of Sales & Sales & Sales & (In millions) Dollars Revenues Dollars (2) Revenues Dollars Revenues - ------------------------------------------------- ----------------------- ------------------- Payroll and commissions $ 741.8(1) 18.0% $ 734.1(1) 15.3% $ 734.1 13.7% Rent 205.5 5.0 217.4 4.5 222.6 4.1 Advertising 199.9 4.8 208.7 4.4 195.4 3.6 Other taxes 91.2 2.2 96.1 2.0 102.0 1.9 Utilities and telephone 62.2 1.5 71.5 1.5 72.2 1.3 Insurance 47.6 1.2 50.6 1.1 50.5 0.9 Credit card fees 27.5 0.7 38.6 0.8 43.1 0.8 Stock purchase and savings plans 21.0 0.5 20.4 0.4 17.8 0.3 Other 89.7 2.1 142.9 3.0 142.6 2.8 ---------------------- ------------------------ ------------------- $1,486.4 36.0% $1,580.3 33.0% $1,580.3 29.4% ====================== ======================== =================== (1) Does not include $9.6 million and $82.6 million of compensation expense for store manager restricted stock awards for 1999 and 1998, respectively. (2) Includes expenses related to Computer City before its sale to CompUSA on August 31, 1998.
Tandy's SG&A expense decreased slightly in dollars, but increased as a percent of net sales and operating revenues to 36.0% for the year ended December 31, 1999 versus 33.0% for the year ended December 31, 1998. The higher SG&A percentage in 1999 was due primarily to the 1998 sale of Computer City which operated at lower relative SG&A expense levels than consolidated Tandy Corporation. Excluding Computer City and other closed units, Tandy's SG&A expense as a percentage of sales would have approximated 37.7% in 1998. This decrease of 1.7 percentage points from 1998 was due primarily to the favorable effect of increased sales at RadioShack during 1999. Despite the sale of Computer City in 1998, payroll expense for consolidated Tandy Corporation increased in dollars and as a percent of Tandy's net sales and operating revenues to 18.0% in 1999, compared to 15.3% in 1998. Payroll expense for RadioShack increased to $99.1 million in 1999 compared to 1998. This increase was due primarily to RadioShack retail store expansions, changes in compensation plans and increases in personnel, commissions, bonuses and other incentives resulting from RadioShack's strong comparable store sales and profits. The increase as a percentage of RadioShack's net sales and operating revenues to 16.2% in 1999, compared to 15.8% in 1998, was also due to changes in compensation plans, increases in personnel and other incentives. Rent expense for consolidated Tandy Corporation decreased in dollars in 1999, but increased as a percent of Tandy's net sales and operating revenues to 5.0% in 1999 from 4.5% in 1998. The decrease in dollars was due to the sale of Computer City in 1998. The percentage increase also related to the sale of Computer City, which had lower rent expense as a percentage of sales than consolidated Tandy Corporation. Rent expense for RadioShack increased in dollars, but decreased as a percentage of RadioShack's net sales and operating revenues in 1999 compared to 1998. Rent expense increased $20.5 million in 1999, compared to 1998, due primarily to 48 new RadioShack store openings, net of store closures, throughout the year, as well as lease renewals at slightly higher rates. The decrease as a percentage of RadioShack's net sales and operating revenues to 5.2% in 1999, compared to 5.4% in 1998 was due primarily to the favorable effect of increased comparable RadioShack stores sales on the expense rate structure. Advertising expense for consolidated Tandy Corporation decreased in dollars, but increased as a percent of Tandy's net sales and operating revenues to 4.8% in 1999, compared to 4.4% in 1998, due to the sale of Computer City in August 1998. Advertising expense for RadioShack decreased in both dollars and as a percentage of RadioShack's net sales and operating revenues to $198.1 million and 4.8% of sales in 1999, compared to $200.2 million and 5.6% of sales in 1998. The dollar decrease was due primarily to increased marketing development funds received from service providers. In addition, the decrease as a percentage of sales and operating revenues reflects the sales leverage gained from RadioShack's sales increase. Credit card fees expense, which includes fees associated with third party bank credit cards and fees paid for promotional accounts such as "zero interest for six months," and the "other" expense category both decreased primarily as a result of the sale of Computer City. In 2000, Tandy's SG&A expense is expected to increase in dollars due to additional sales volume, but decrease as a percentage of net sales and operating revenues as a result of the sales leverage gained from a comparable store sales increase and, to a lesser extent, an increase in new stores. RESTRICTED STOCK AWARDS On February 1, 1998, Tandy granted, under the 1997 Incentive Stock Plan, approximately 649,500 restricted stock awards consisting of 500 shares each to 1,299 RadioShack store managers not included in the February 1, 1997 restricted stock grant. The February 1998 restricted stock awards had a weighted average fair market value of $19.61 per share when granted. This restricted stock grant was to vest on February 2, 2003, if managers receiving the grants were employed by Tandy at a store manager or higher position, at that time. However, the grants provided that the restricted shares would vest early if Tandy common stock closed at $29.0625 or more for any 20 consecutive trading days beginning February 1, 2000. At December 31, 1999, it was probable that the 348,000 shares that remained outstanding under this grant would vest under the early vesting provisions. The resulting charge to compensation expense of $14.7 million, including related payroll taxes, was recorded in the fourth quarter of 1999. Vesting of these restricted stock awards occurred when Tandy's common stock closed above the targeted amount for the twentieth consecutive trading day on February 29, 2000. Vesting resulted in the issuance of 336,000 shares of Tandy's common stock at a fair market value of $37.53 per share. In the fourth quarter of 1998, Tandy recorded estimated compensation expense of $82.6 million related to the early vesting of restricted stock awards that had been granted to 4,907 store managers on February 1, 1997. These awards vested on March 1, 1999 and the actual price of the stock and the number of shares vested differed from the estimated accrual at December 31, 1998. The amount of this difference, $5.1 million, was recorded as a credit to expense in the first quarter of 1999. The restricted stock program for store managers was replaced in 1999 and 2000 by a stock option program for store managers. See Note 19 - "Stock Options and Performance Awards" of the Notes to Consolidated Financial Statements ("Notes"). Management does not anticipate any future use of restricted stock for store managers. NET INTEREST EXPENSE Interest expense, net of interest income, was $16.8 million for 1999 versus $34.6 million for 1998. Interest expense decreased 18.1% to $37.2 million in 1999, from $45.4 million in 1998. This decrease was a result of Tandy no longer having to incur interest expense on Computer City capital lease obligations, as well as to a corresponding decrease in Tandy's average debt outstanding during 1999. Interest income increased almost 90% in 1999 to $20.4 million in 1999 from $10.8 million in 1998, due primarily to interest from the $136.0 million CompUSA note receivable which was outstanding a full year (see "Sale of Computer City, Inc." below for further information). Interest expense, net of interest income, is expected to increase during 2000, primarily due to anticipated higher short-term interest rates and increased debt from additional share repurchases. PROVISION FOR INCOME TAXES The provision for income taxes reflects an effective tax rate of 38.0% for 1999 compared with 38.5% for 1998. This decrease resulted primarily from improved utilization of foreign tax credits and implementation of certain state income tax initiatives. 1998 COMPARED WITH 1997 - ----------------------- NET SALES AND OPERATING REVENUES Consolidated net sales and operating revenues decreased 10.9% from $5,372.2 million in 1997 to $4,787.9 million in 1998; this decrease was attributable primarily to the sale of Computer City to CompUSA on August 31, 1998. Consolidated comparable store sales for 1998 were not meaningful, due to this sale. RadioShack Segment - ------------------ Sales for the RadioShack segment in 1998 increased 8.7% to $3,591.2 million from $3,303.9 million in 1997, due primarily to a 7.4% comparable store sales gain and the opening of 48 new stores, net of store closures. RadioShack's comparable store sales increase was driven primarily by increased sales of wireless communication and telephony products and services. Electronic parts, accessories and specialty equipment, the largest product category of RadioShack's retail sales mix in 1998, decreased 1.5 percentage points in 1998 when compared to 1997, despite a 4.1% increase in dollar sales. This decrease as a percent of retail sales was primarily due to the communications and the services and other categories becoming a higher percent of the product mix in 1998. The communications category increased to 28.5% of retail sales in 1998 from 27.5% in 1997. Dollar sales in this category increased 13.2% over 1997 as the category continued to benefit from The Sprint Store at RadioShack launched in September 1997. Sales of audio and video products declined to 15.5% of retail sales in 1998 from 16.8% of retail sales in 1997, primarily due to the overall shift in the product mix to communications and services. Sales dollars in the audio and video category were flat from the prior year, due in part to RadioShack's limited selection of name brand products. The audio and video category also included DTH sales, which included digital satellite systems (DSS) and Primestar satellite television services in 1998. Sales of these systems and services increased significantly over 1997. Personal electronics and seasonal products decreased to 10.4% of RadioShack retail sales in 1998 from 11.6% in 1997, due primarily to an overall shift in the product mix to communications and services. The sales decrease in this category was also attributable to sales declines in such items as boomboxes, cassette products and toys, other than remote control cars, due to lower general consumer demand for these products. The personal computer category decreased to 9.1% of RadioShack retail sales in 1998 from 9.4% in 1997, despite a large unit gain and a 5.8% sales gain for this category for 1998. RadioShack computers experienced a 32% decline in the average 1998 selling price of desktop computers from the 1997 annual average selling price. Aggressive pricing strategies put into place as RadioShack transitioned from IBM to Compaq branded computers and products during the first six months of 1998 and general selling price declines in the personal computer industry contributed to this decline. Sales in the services and other category increased in 1998 in dollars and as a percent of RadioShack retail sales, due to an increase in residual income received from RadioShack's third party providers of communication and DTH, as well as to a large increase in sales of prepaid wireless airtime. In 1998, RadioShack earned approximately $34.2 million of residual income, compared to $7.9 million in 1997. Computer City Segment - --------------------- Computer City's overall sales decreased 37.1% to $1,196.7 million in 1998 from 1997, due to the sale of this subsidiary to CompUSA on August 31, 1998. For the eight months ended August 31, 1998, sales of personal computers decreased in dollars due to a reduction of approximately 25% in the average selling price of desktop and notebook computers from the same period in 1997. Additionally, both overall and comparable stores sales were negatively impacted by the announced sale of Computer City to CompUSA on June 22, 1998, at which time Computer City took promotional mark-downs to sell both its third-party and private-label inventory in preparation for the sale to CompUSA. (See "Sale of Computer City, Inc." below.) GROSS PROFIT Gross profit for Tandy was $2,004.4 million or 41.9% of net sales and operating revenues in 1998, compared with $2,014.3 million or 37.5%, in 1997. This increase in gross profit as a percentage of net sales and operating revenues was primarily the result of RadioShack sales accounting for a larger portion of Tandy's consolidated net sales and operating revenues in 1998, when compared to 1997, due to the sale of Computer City to CompUSA in August 1998. Computer City had an inherently lower gross margin than consolidated Tandy Corporation. RadioShack's gross profit increased in dollars in 1998 versus 1997, but decreased as a percentage of RadioShack's total sales by 0.6 percentage points over the same period. This percentage decrease was primarily due to a shift within RadioShack's product offerings to increased sales of prepaid wireless airtime, which has a significantly lower gross margin than the overall RadioShack average gross margin. This decrease was partially offset by an increase in residual income, which has close to 100% gross margin. Computer City's gross profit as a percent of Computer City net sales and operating revenues decreased 2.3 percentage points in 1998 when compared to 1997. This decrease was primarily due to aggressive marketing of inventory, especially private-label branded inventory, in preparation for the sale of the subsidiary. SELLING, GENERAL AND ADMINISTRATIVE EXPENSE Tandy's SG&A expense was flat in dollars, but increased as a percent of net sales and operating revenues to 33.0% in 1998 versus 29.4% in 1997. The higher SG&A percentage was due primarily to RadioShack becoming a larger percentage of Tandy's consolidated operations during 1998 (see "Gross Profit" above). RadioShack operates at higher relative SG&A expense levels than consolidated Tandy Corporation. Excluding Computer City and closed units associated with the 1996 restructuring plan, SG&A expense as a percentage of sales would have been 37.7% in 1998 versus 38.9% in 1997. Although payroll and commissions expense for 1998 remained flat in dollars in comparison with 1997, this cost increased as a percentage of net sales and operating revenues from 13.7% in 1997 to 15.3% in 1998, due in part to the increase in RadioShack sales as a percentage of total Company sales and operating revenues, as described above. RadioShack has inherently higher salary expense as a percentage of sales, when compared to consolidated Tandy Corporation. To a lesser extent, payroll expense was negatively impacted by higher payroll costs associated with infrastructure-building at CCI, prior to its announced sale in June 1998. Advertising expense increased both in dollars and as a percentage of net sales and operating revenues in 1998, as compared to 1997. This increase over the prior year is primarily attributable to increased advertising expense at Computer City in 1998, compared to 1997. Somewhat offsetting this increase was a dollar decrease in advertising expense at RadioShack in 1998 from 1997. In 1997, however, the marketing launch of the Sprint Store at RadioShack resulted in increased advertising expense for that year. Rent expense decreased in dollars in comparison with 1997 and increased slightly as a percentage of net sales and operating revenues to 4.5% in 1998 from 4.1% in 1997. This increase was related to the sale of Computer City, which had lower rent expense as a percentage of sales than consolidated Tandy Corporation. Rent expense in dollars for RadioShack increased in 1998 compared to the prior year, but decreased slightly as a percent of sales. RESTRICTED STOCK AWARDS On February 1, 1997, in an effort to reduce the turnover rate among its store managers and to align the store managers' interests and goals with those of the shareholders, Tandy granted, under the 1993 ISP, approximately 4,082,400 restricted stock awards consisting of 800 shares each to 4,907 RadioShack store managers and 1,600 shares each to 98 Computer City store managers. The restricted stock awards had a weighted average fair market value of $11.30 per share when granted. This restricted stock was to vest at the end of five years on February 2, 2002, if managers receiving the grants were employed by Tandy at a store manager or higher position, at that time. However, the grants provided that the restricted shares would vest early if Tandy's common stock closed at $16.90625 or more for any 20 consecutive trading days beginning February 1, 1999. At December 31, 1998, it was probable that the 2,579,200 shares that remained outstanding under this grant would vest under the early vesting provisions. The resulting charge to compensation expense of $82.6 million, including related payroll taxes, was recorded in the December 31, 1998 financial statements. The awards vested on March 1, 1999 and the actual price of the stock and the number of shares vested differed slightly from estimated accrual at December 31, 1998. NET INTEREST EXPENSE Interest expense, net of interest income, was $34.6 million for 1998 versus $32.9 million for 1997. Interest expense decreased slightly during 1998, due to a corresponding decrease in Tandy's average debt outstanding during 1998 as well as to a small decrease in short-term interest rates for the year. Interest income decreased in 1998 due to the repayment of the InterTAN, Inc. ("InterTAN") note receivable on December 31, 1997, offset by interest received on the note receivable from CompUSA for $136.0 million. Interest income relating to Fry's Electronics, Inc. and its affiliates ("Fry's) notes receivables resulted from the 1997 sale of assets and real estate of six Incredible Universe stores. PROVISION FOR INCOME TAXES The provision for income taxes reflected an effective tax rate of 38.5% for both 1998 and 1997. AMERILINK ACQUISITION On July 30, 1999, Tandy acquired AmeriLink in an all stock transaction valued at approximately $75.8 million. Tandy exchanged approximately 1.8 million shares of Tandy common stock for all of the outstanding common stock of AmeriLink. The transaction was accounted for under the purchase method of accounting. The purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of the acquisition, which resulted in approximately $50.7 million of goodwill being recorded in other assets in the accompanying 1999 Consolidated Balance Sheet. The associated goodwill will be amortized over 20 years. AmeriLink designs, installs and maintains cabling systems for the transmission of video, voice and data, primarily for home use. AmeriLink will continue to provide these services to outside parties and also to RadioShack, through AmeriLink's RadioShack Installation Services Division. Services for RadioShack in 2000 will consist primarily of customer DIRECTV installations; however, new services such as home theater and broadband Internet access, among others, will be added as RadioShack's needs dictate. At February 25, 2000, AmeriLink had 76 field offices located in 26 states. RADIOSHACK.COM, LLC In October 1999, Tandy launched its e-commerce enabled website, www.RadioShack.com. On November 10, 1999, Tandy and Microsoft formed a limited liability company, RadioShack.com, LLC ("RS.com"), for the purpose of marketing and selling electronics products on the Internet. Tandy contributed assets and also extended a royalty-free license for certain trademarks and service marks to RS.com, and Microsoft contributed cash of $100.0 million on January 4, 2000. Tandy owns 100% of the common units of RS.com, while Microsoft owns 100% of the preferred units and Tandy will include RS.com in its consolidated financial statements. Tandy is entitled to receive 75% of the profits and losses of RS.com, while Microsoft will receive 25%; however, the preferred units have liquidation rights which could impact the allocation of profits and losses between the unit holders. The preferred units are convertible into common units at any time and must be converted in the event of certain capital transactions. In certain circumstances, Microsoft has the option to require Tandy to purchase its units and Tandy has the right to purchase Microsoft's units. Also, in the event of liquidation, the preferred units have preferential rights to recover their initial investment. During 2000, RadioShack and Microsoft will jointly redesign and reengineer the www.RadioShack.com website, incorporating current Microsoft technology. The planned result will be a full-featured online e-commerce site where customers can go for a wide range of electronics products, parts and services. Among other features, customers will have the ability to obtain answers to frequently asked questions on electronics through www.RadioShack.com's "Ask the Shack" feature, as well as the ability to download instruction manuals and service documents relating to electronics products. Management anticipates that the newly designed website will be relaunched during the third quarter of 2000, and it believes that www.RadioShack.com will become a premier destination site for electronics products, services, information, answers and solutions for consumer and commercial customers. As of March 1, 2000, there were over 20,000 different products on the website. Additionally, Microsoft will provide www.RadioShack.com premier placement across the MSN(TM) network, Microsoft's Internet access service, and its online properties, including the newly-launched MSN eShop(TM) online shopping service site (http://eshop.msn.com/). Through its presence on eShop, www.RadioShack.com will be able to take advantage of the portal leadership of MSN to reach a broad audience of customers on the Internet. SALE OF COMPUTER CITY, INC. On August 31, 1998, Tandy completed the sale of 100% of the outstanding common stock of its Computer City, Inc. subsidiary to CompUSA Inc. In the third quarter of 1998, Tandy received approximately $75.0 million in cash and an unsecured subordinated note for $136.0 million as consideration for the sale. The amount of cash to be retained was subject to adjustment and in the fourth quarter of 1998 the amount of cash consideration was reduced to $36.5 million. The note bears interest at 9.48% per annum and is payable over a ten year period. Interest is payable on June 30 and December 31 of each year; the first payment was made on December 31, 1998. Beginning on December 31, 2001, principal payments will be due semiannually until the note matures on June 30, 2008. Tandy recognized a loss of $108.2 million from the sale of Computer City, which included certain liabilities and contractual obligations incurred by Tandy. Computer City's results from operations through August 31, 1998 are included in the accompanying Consolidated Financial Statements. Below is a summary of net sales and operating revenues and net losses (unaudited) for Computer City for each year ended December 31: (In millions) 1999 1998(1) 1997 - ------------- ------ ------ ------ Net sales and operating revenues $ -- $1,196.7 $1,903.7 Operating loss -- (95.6) (14.9) (1) Includes operations for only eight months, due to sale to CompUSA on August 31, 1998. On March 1, 2000, Grupo Sanborns, S.A. de C.V. ("Sanborns") and TPC Acquisition Corporation, a wholly owned subsidiary of Sanborns, acquired CompUSA. Tandy's management does not believe that this acquisition will have a negative impact on CompUSA's ability to repay its obligation to Tandy. 1996 BUSINESS RESTRUCTURING In the fourth quarter of 1996, Tandy initiated certain restructuring programs resulting from the highly competitive environment in the electronics industry at the time. In conjunction with these programs, in January 1997, Tandy closed 53 McDuff stores and 21 unprofitable Computer City stores. Additionally, Tandy either closed or sold all of its Incredible Universe stores during 1997. The components of the restructuring charge and an analysis of the reserves are outlined in a table in Note 7 - "1996 Business Restructuring" of the Notes. Below is a summary of net sales and operating revenues and operating losses (unaudited) of the stores closed pursuant to the restructuring plans for each year ended December 31: (In millions) 1999 1998 1997 - ------------- ---- ---- ---- Net sales and operating revenues $ -- $ -- $ 164.6 Operating loss -- -- (30.1)(1) (1) Excludes business restructuring charges. TAX SHARING AND TAX BENEFIT REIMBURSEMENT AGREEMENT Under Tandy's Tax Sharing and Tax Benefit Reimbursement Agreement (the "Agreement") with O'Sullivan Industries ("O'Sullivan"), a former subsidiary of Tandy, Tandy receives payments from O'Sullivan approximating the federal tax benefit that O'Sullivan realizes from the increased tax basis of its assets resulting from the initial public offering completed in February 1994. The higher tax basis increases O'Sullivan's tax deductions and, accordingly, reduces income taxes payable by O'Sullivan. For the years ended December 31, 1999, 1998 and 1997, Tandy recognized income of $5.1 million, $6.0 million and $5.8 million, net of tax, respectively, under this Agreement. The Agreement calls for payments to continue to be made over a 15-year time period and are contingent upon O'Sullivan's level of earnings from year to year. In November 1999, members of O'Sullivan's senior management team, in conjunction with a financial buyer, acquired all of O'Sullivan's outstanding common stock. The effect of this change of control on the payments Tandy will receive is currently the subject of an arbitration proceeding between Tandy and O'Sullivan. Depending on the outcome of such arbitration, the amount of payments received under the Agreement could be significantly less than in prior years and/or the timing of such payments could be delayed. NEW PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." In June 1999, the FASB issued SFAS No. 137 which delayed the effective date of SFAS No. 133 to quarters beginning after June 15, 2000. SFAS No. 133 requires a company to record all derivative instruments at fair value on the balance sheet. Tandy does not use derivatives for speculative purposes. As such, its market risk was not material in 1999 and is not expected to be material in 2000. CASH FLOW AND LIQUIDITY Year Ended December 31, -------------------------------- (In millions) 1999 1998 1997 - ------------- -------- -------- -------- Operating activities $ 561.6 $ 414.8 $ 320.3 Investing activities (121.0) (93.0) (63.9) Financing activities (340.5) (363.2) (272.0) In 1999, cash flow provided by operating activities was $561.6 million, compared to $414.8 million and $320.3 million in 1998 and 1997, respectively. Cash flow from net income, adjusted for non-cash items, increased $97.0 million from 1998 to 1999. This increase was primarily due to increased operating profit at RadioShack. The increase in cash flow from operating activities was also positively affected by a $49.8 million increase in cash flow generated from working capital improvements primarily attributable to a $73.0 million increase in accrued income taxes. During 1998, changes in working capital generated $55.2 million of cash flow compared to a use of cash of $72.4 million in 1997. The increase in 1998 was caused primarily by the liquidation of CCI's inventories prior to its sale in August 1998. Investing activities used $121.0 million in cash in 1999, compared to $93.0 million in 1998 and $63.9 million in 1997. Capital expenditures approximated $102.4 million in 1999, compared to $131.5 million in 1998 and $118.4 million in 1997. Capital expenditures for 1999 consisted primarily of RadioShack store expansions and remodels, upgrades of machinery and expansion in selected distribution centers and manufacturing facilities, updated information systems, including Year 2000 ("Y2K") initiatives, and web development for RadioShack.com. Capital expenditures for 1998 and 1997 were used primarily for retail expansion, upgrading information systems and Computer City infrastructure enhancements prior to the announced sale of CCI in June 1998. Management anticipates that capital expenditure requirements for 2000 will approximate $120.0 million to $125.0 million and will consist primarily of RadioShack future store expansions and remodels, updated information systems and, to a lesser extent, expansions and additions relating to Tandy's distribution and manufacturing facilities, web development for RadioShack.com and the purchase of vehicles for AmeriLink's RadioShack Installation Services Division. In April 1999, Tandy made a $20.0 million dollar investment in NorthPoint. Cash proceeds from the sale of CCI generated $36.5 million in cash in 1998. Cash proceeds in 1997 totaled $57.4 million and related to the sale of various corporate assets and certain Incredible Universe locations, final repayment of the note receivable from InterTAN and the sale of Tandy's remaining shares of AST Research, Inc. common stock. Cash used by financing activities was $340.5 million in 1999, compared to $363.2 million and $272.0 million in 1998 and 1997, respectively. Purchases of treasury stock required cash of $422.2 million, $337.4 million and $425.6 million in 1999, 1998 and 1997, respectively. (See "Capital Structure and Financial Condition" below for further information on Tandy's stock repurchase programs.) The 1999, 1998 and 1997 stock repurchases were partially funded by $81.5 million, $57.8 million and $50.7 million, respectively, received from the sale of treasury stock to Tandy's employee stock purchase plans and employee stock option exercises. Dividends paid, net of tax, in 1999, 1998 and 1997 amounted to $42.5 million, $44.8 million and $48.2 million, respectively. The decrease in dividends paid in 1999 and 1998 resulted from fewer outstanding shares in those years. On October 25, 1999, Tandy announced a 10% increase in the quarterly cash dividend from $0.050 per share to $0.055 per share, for shareholders of record on January 3, 2000. Medium-term notes issued by Tandy under its 1997 Debt Shelf Registration Statement provided approximately $101.0 and $45.0 million in cash in 1999 and 1998, respectively, the majority of which was used to repay current maturities of long-term debt. In 1999, Tandy used excess cash flow to decrease short-term debt from the prior year by $42.3 million and in 1998, Tandy used excess cash flow to decrease its short-term debt from the prior year by $44.9 million. Tandy ended 1999 with approximately $100.0 million in additional cash as part of its Y2K readiness planning. It is anticipated that cash balances in the future will be less than $100.0 million. The current credit ratings for Tandy, which are generally considered investment grade, follow: Standard Duff & Category Moody's and Poor's Phelps - -------- ------- ---------- ------ Medium-Term Notes Baa1 A- A- ESOP Senior Notes Baa1 A- N/A Commercial Paper P-2 A-2 D-1- CAPITAL STRUCTURE AND FINANCIAL CONDITION Tandy's balance sheet and financial condition continue to be strong. Tandy's available borrowing facilities as of December 31, 1999 are detailed in Note 12 - "Indebtedness and Borrowing Facilities" of the Notes. On March 3, 1997, Tandy announced that its Board of Directors authorized management to purchase up to 20.0 million additional shares of its common stock through Tandy's existing share repurchase program. The share repurchase program was initially authorized in December 1995 and increased in October 1996 and was undertaken as a result of management's view of the economic value of Tandy's stock. The share increase for 1997 brought the total authorization since inception to 60.0 million shares, of which approximately 56.7 million shares totaling $949.2 million were repurchased as of December 31, 1999. Approximately 4.8 million shares were repurchased in 1999 for $203.4 million under the program. An additional 1.6 million shares have been repurchased from January 1, 2000 to February 29, 2000 for $70.5 million. Additionally, on October 26, 1998, Tandy announced that its Board of Directors authorized the repurchase of up to 10.0 million shares of Tandy's common stock for an indefinite period of time to be used to offset the dilution of grants under Tandy's incentive stock plans (see Note 19 - "Stock Options and Performance Awards" of the Notes). Approximately 4.2 million shares were repurchased in 1999 for $190.7 million, bringing the total share repurchase at December 31, 1999 under this program to 7.0 million shares totaling $254.5 million. An additional 1.9 million shares were repurchased for $93.7 million from January 1, 2000 to February 29, 2000. These purchases under the two share repurchase programs described above are in addition to the shares required for employee stock purchase plans, which are purchased throughout the year. Purchases will continue to be made in 2000 in the open market with funding of the programs coming from excess free cash flow and short-term borrowings, if needed. In connection with the share repurchase program, the Board of Directors, at their October 23, 1998 meeting, authorized management to sell up to 2.0 million put options on Tandy common stock. Such put options grant the purchaser the right to sell shares of Tandy's common stock to Tandy at specified prices upon exercise of the put options. These put options are exercisable only at maturity and can be settled in cash at Tandy's option, in lieu of repurchasing the stock. The issued put options have a maturity of up to six months. Tandy has sold approximately 1.4 million put options since the inception of the program and 0.4 million put options remained outstanding at December 31, 1999. The put options expire on various dates through April 2000. At December 31, 1999 and 1998, the full redemption value of the put options was classified as common stock put options in the accompanying Consolidated Balance Sheets. The related offset was recorded in common stock in treasury, net of premiums received. Additionally, at their February 23, 2000 meeting, the Board of Directors authorized management to supplement the put option program with equity forwards and increased the number of shares subject to put options and equity forwards to 4.6 million shares. The Board of Directors also extended the expiration date for the program to no later than December 31, 2002. Put options and equity forwards will continue to be executed from time to time in order to take advantage of attractive share price levels, as determined by management. The timing and terms of the transactions, including maturities, depend on market conditions, Tandy's liquidity and other considerations. Tandy's primary source of short-term debt consists of short-term seasonal bank debt and commercial paper, which have maturities of less than 90 days. In the second quarter of 1999, Tandy extended the maturity date of its $200.0 million 364-day revolving credit facility to June 2000. Tandy also has a $300.0 million five-year revolving credit facility maturing June 2003. The revolving credit facilities are used as backup for the commercial paper program and may also be utilized for general corporate purposes. Annual commitment fees for the facilities are 0.07% of the $200.0 million facility per annum and 0.085% of the $300.0 million facility per annum, whether used or unused. During the second quarter of 2000, Tandy plans to extend the $200.0 million facility to June 2001. The total debt-to-capitalization ratio was 38.0% at December 31, 1999, 35.6% at December 31, 1998 and 33.6% at December 31, 1997. These increases in the debt-to-capitalization ratios result primarily from a reduction in Tandy's stockholders' equity due to the share repurchase program and the impact of divested businesses. In May 1997, Tandy filed a $300.0 million Debt Shelf Registration Statement ("Shelf Registration") with the Securities and Exchange Commission, which was declared effective in August 1997. In August 1997, Tandy issued $150.0 million of 10 year unsecured notes under the Shelf Registration. The interest rate on the notes is 6.95% per annum with interest payable on September 1 and March 1 of each year, commencing March 1, 1998. The notes are due September 1, 2007. In December 1997 and January 1998, Tandy issued $4.0 million and $45.0 million, respectively, in medium-term notes under the remaining $150.0 million Shelf Registration. An additional $32.0 million, $37.0 million and $32.0 million of medium-term notes were issued in January 1999, August 1999 and September 1999, respectively, completing the remaining 1997 Shelf Registration. Tandy's medium and long-term notes outstanding at December 31, 1999 under the 1997 Shelf Registration totaled $300.0 million, compared to $199.0 million outstanding at December 31, 1998. The interest rates at December 31, 1999 for the outstanding $150.0 million in medium-term notes ranged from 6.09% to 7.35% with a weighted average coupon rate of 6.6%. Tandy's management believes that its present borrowing capacity is greater than the established credit lines and long-term debt in place. Management also believes that Tandy's cash flow from operations, cash and cash equivalents and its available borrowing facilities are more than adequate to fund planned store and business expansion, to meet debt service and dividend requirements and to fund its share repurchase programs. INFLATION Inflation has not significantly impacted Tandy 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. YEAR 2000 READINESS DISCLOSURE Tandy's management recognized the importance of taking necessary action to ensure that its operation and relationships with key vendors, service providers, customers and other third parties would not be adversely impacted by software processing errors arising from calculations using the year 2000 and beyond. Like many companies, a significant number of Tandy's computer applications and systems required modifications in order for these systems to be ready for the year 2000. With its transition plans and teams in place, Tandy successfully completed its Y2K rollover without any major problems or disruptions. All of Tandy's stores, manufacturing facilities, logistics operations, service centers and support areas were fully functional subsequent to the Y2K rollover. Tandy is not aware that any of its major business partners experienced material Y2K issues. Additionally, to date, product returns and repairs at its retail stores have not been significant and management does not anticipate any further activity or disruptions to occur on its part with respect to the Y2K rollover. Tandy's total Y2K readiness costs were approximately $11.5 million, including $1.1 million paid to external parties for consulting and professional fees. Of the total costs, approximately $4.4 million were incurred in 1999. Tandy funded both the capital and expensed elements of resolving Y2K issues through funds generated from operations. Tandy does not expect to incur any additional significant costs in 2000. All statements concerning Y2K issues other than historical statements constitute "forward-looking statements," as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements should be read in conjunction with Tandy's disclosures under the heading "Factors That May Affect Future Results." ITEM 7a. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK. In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". In June 1999, the FASB issued SFAS No. 137 which delayed the effective date of SFAS No. 133 to quarters beginning after June 15, 2000. SFAS No. 133 requires a company to record all derivative instruments at fair value on the balance sheet. Tandy does not use derivatives for speculative purposes. As such, its market risk was not material in 1999. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The Index to Consolidated Financial Statements is found on page 29. Tandy Corporation's Financial Statements and Notes to Consolidated Financial Statements 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 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 2000 Annual Meeting. For information relating to the Executive Officers of Tandy, see Part I of this report. The Section 16(a) reporting information is incorporated by reference from the Proxy Statement for the 2000 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 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 2000 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 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 2000 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 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 2000 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 The financial statements filed as a part of this report are listed in the "Index to Consolidated Financial Statements" on page 29. 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 56, which immediately precedes such exhibits. Certain instruments defining the rights of holders of long-term debt of Tandy Corporation 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. Tandy hereby agrees to furnish the Securities and Exchange Commission copies of such instruments upon request. 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 21, 2000 /s/ Leonard H. Roberts ---------------------- Leonard H. Roberts Chairman, President and Chief Executive Officer, Tandy Corporation President, RadioShack 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 21st day of March, 2000. Signature Title /s/ Leonard H. Roberts Chairman, President and Chief Executive Officer, - ------------------------ Tandy Corporation, President, RadioShack, Director Leonard H. Roberts (Chief Executive Officer) /s/ Dwain H. Hughes Senior Vice President and Chief Financial Officer - ------------------------ (Principal Financial Officer) Dwain H. Hughes /s/ Richard L. Ramsey Vice President and Controller - ------------------------ (Principal Accounting Officer) Richard L. Ramsey /s/ Frank J. Belatti Director /s/ William G. Morton Director - ------------------------ ------------------------ Frank J. Belatti William G. Morton /s/ Ronald E. Elmquist Director /s/ Thomas G. Plaskett Director - ------------------------ ------------------------ Ronald E. Elmquist Thomas G. Plaskett /s/ Robert J. Kamerschen Director /s/ Alfred J. Stein Director - ------------------------ ------------------------ Robert J. Kamerschen Alfred J. Stein /s/ Lewis F. Kornfeld, Jr. Director /s/ William E. Tucker Director - ------------------------ ------------------------ Lewis F. Kornfeld, Jr. William E. Tucker /s/ Jack L. Messman Director /s/ Edwina D. Woodbury Director - ------------------------ ------------------------ Jack L. Messman Edwina D. Woodbury TANDY CORPORATION INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Accountants............................... 30 Consolidated Statements of Income for each of the three years in the period ended December 31, 1999................... 31 Consolidated Balance Sheets at December 31, 1999 and December 31, 1998......................................... 32 Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 1999................... 33 Consolidated Statements of Stockholders' Equity for each of the three years in the period ended December 31, 1999......... 34-35 Notes to Consolidated Financial Statements...................... 36-54 All schedules have been omitted because they are not applicable, not required or the information is included in the consolidated financial statements or notes thereto. 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. 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, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999 in conformity with accounting principles generally accepted in the United States. 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 auditing standards generally accepted in the United States, 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. /s/ PricewaterhouseCoopers LLP - ------------------------------- PRICEWATERHOUSECOOPERS LLP Fort Worth, Texas February 23, 2000 CONSOLIDATED STATEMENTS OF INCOME Tandy Corporation and Subsidiaries
Year Ended December 31, ------------------------------------------------------------------- 1999 1998 1997 % of % of % of (In millions, except per share amounts) Dollars Revenues Dollars Revenues Dollars Revenues - ------------------------------------------------------------------------------------------------------------- Net sales and operating revenues $4,126.2 100.0% $4,787.9 100.0% $5,372.2 100.0% Cost of products sold 2,042.7 49.5 2,783.5 58.1 3,357.9 62.5 -------- -------- -------- -------- -------- -------- Gross profit 2,083.5 50.5 2,004.4 41.9 2,014.3 37.5 -------- -------- -------- -------- -------- -------- Expenses (income): Selling, general and administrative 1,486.4 36.0 1,580.3 33.0 1,580.3 29.4 Depreciation and amortization 90.2 2.2 99.0 2.1 97.2 1.8 Interest income (20.4) (0.5) (10.8) (0.2) (13.2) (0.2) Interest expense 37.2 0.9 45.4 0.9 46.1 0.9 Restricted stock awards 9.6 0.2 82.6 1.7 -- -- Provision for loss on sale of Computer City -- -- 108.2 2.3 -- -- -------- -------- -------- -------- -------- -------- 1,603.0 38.8 1,904.7 39.8 1,710.4 31.9 -------- -------- -------- -------- -------- -------- Income before income taxes 480.5 11.7 99.7 2.1 303.9 5.7 Provision for income taxes 182.6 4.5 38.4 0.8 117.0 2.2 -------- -------- -------- -------- -------- -------- Net income 297.9 7.2 61.3 1.3 186.9 3.5 Preferred dividends 5.5 0.1 5.8 0.1 6.1 0.1 -------- -------- -------- -------- -------- -------- Net income available to common shareholders $ 292.4 7.1% $ 55.5 1.2% $ 180.8 3.4% ======== ======== ======== ======== ======== ======== Net income available per common share: Basic $ 1.51 $ 0.28 $ 0.84 ======== ======== ======== Diluted $ 1.43 $ 0.27 $ 0.82 ======== ======== ======== Shares used in computing earnings per common share: Basic 194.2 201.2 214.4 ======== ======== ======== Diluted 205.0 211.4 224.5 ======== ======== ======== Dividends declared per common share $ 0.205 $ 0.200 $ 0.200 ======== ======== ======== The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED BALANCE SHEETS Tandy Corporation and Subsidiaries December 31, -------------------- (In millions, except for share amounts) 1999 1998 - ------------------------------------------------------------- -------- Assets Current assets: Cash and cash equivalents $ 164.6 $ 64.5 Accounts and notes receivable, less allowance for doubtful accounts 286.1 215.2 Inventories, at lower of cost or market 861.4 912.1 Other current assets 91.2 106.8 -------- -------- Total current assets 1,403.3 1,298.6 -------- -------- Property, plant and equipment, at cost, less accumulated depreciation 446.8 433.8 Other assets, net of accumulated amortization 291.9 261.2 -------- -------- Total assets $2,142.0 $1,993.6 ======== ======== Liabilities and Stockholders' Equity Current liabilities: Short-term debt, including current maturities $ 188.9 $ 233.2 of long-term debt Accounts payable 234.8 206.4 Accrued expenses 350.8 334.4 Income taxes payable 150.7 105.5 -------- -------- Total current liabilities 925.2 879.5 -------- -------- Long-term debt, excluding current maturities 319.4 235.1 Other non-current liabilities 45.7 27.5 -------- -------- Total other liabilities 365.1 262.6 -------- -------- Common stock put options 21.0 3.3 Stockholders' Equity Preferred stock, no par value, 1,000,000 shares authorized Series A junior participating, 300,000 and 100,000 shares designated in 1999 and 1998, respectively, and none issued -- -- Series B convertible (TESOP), 100,000 shares authorized; 72,800 and 77,000 shares issued, respectively 72.8 100.0 Common stock, $1 par value, 250,000,000 shares authorized; 235,840,000 and 139,184,000 shares issued, respectively 235.8 139.2 Additional paid-in capital 82.4 109.7 Retained earnings 1,353.3 1,693.4 Treasury stock, at cost; 45,113,000 and 41,747,000 shares, respectively (892.3) (1,161.6) Unearned deferred compensation (20.5) (31.5) Accumulated other comprehensive loss (0.8) (1.0) -------- -------- Total stockholders' equity 830.7 848.2 -------- -------- Commitments and contingent liabilities Total liabilities and stockholders' equity $2,142.0 $1,993.6 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS Tandy Corporation and Subsidiaries
Year Ended December 31, -------------------------------- (In millions) 1999 1998 1997 - ------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 297.9 $ 61.3 $ 186.9 Adjustments to reconcile net income to net cash provided by operating activities: Restricted stock awards 9.6 82.6 -- Provision for loss on sale of Computer City -- 108.2 -- Depreciation and amortization 90.2 99.0 97.2 Deferred income taxes and other items 49.0 (4.0) 106.0 Provision for credit losses and bad debts 9.9 12.5 2.6 Changes in operating assets and liabilities: Receivables (38.3) (36.7) (5.9) Inventories 52.6 85.6 163.8 Other current assets 15.1 17.7 (20.7) Accounts payable, accrued expenses and income taxes 75.6 (11.4) (209.6) -------- -------- -------- Net cash provided by operating activities 561.6 414.8 320.3 -------- -------- -------- Investing activities: Additions to property, plant and equipment (102.4) (131.5) (118.4) Proceeds from sale of property, plant and equipment 5.6 6.7 12.7 Proceeds from sale of Computer City -- 36.5 -- Proceeds from sale of AST common stock -- -- 23.8 Investment in NorthPoint Communications (20.0) -- -- Payment received on InterTAN note -- -- 20.9 Other investing activities (4.2) (4.7) (2.9) -------- -------- -------- Net cash used by investing activities (121.0) (93.0) (63.9) -------- -------- -------- Financing activities: Purchases of treasury stock (422.2) (337.4) (425.6) Proceeds from sale of common stock put options 4.4 0.3 -- Sale of treasury stock to employee stock plans 39.5 35.4 35.2 Proceeds from exercise of stock options 42.0 22.4 15.5 Dividends paid (42.5) (44.8) (48.2) Changes in short-term borrowings, net (42.3) (44.9) 43.6 Additions to long-term borrowings 100.6 45.7 149.8 Repayments of long-term borrowings (20.0) (39.9) (42.3) -------- -------- -------- Net cash used by financing activities (340.5) (363.2) (272.0) -------- -------- -------- Increase/(decrease) in cash and cash equivalents 100.1 (41.4) (15.6) Cash and cash equivalents, beginning of period 64.5 105.9 121.5 -------- -------- -------- Cash and cash equivalents, end of period $ 164.6 $ 64.5 $ 105.9 ======== ======== ======== The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Tandy Corporation and Subsidiaries
Common Stock Treasury Stock Preferred ------------------- --------------------- (In millions) Stock Shares Dollars Shares Dollars - ----------------------------------------------------------------------------------------------------------------- Balance at December 31, 1996 $ 100.0 85.6 $ 85.6 (28.4) $(1,164.5) Comprehensive income: Net income -- -- -- -- -- Other comprehensive income, net of tax: Foreign currency translation adjustments Reclassification for losses included in net income Net unrealized loss on foreign currency translation Unrealized gain on securities Reclassification for gains included in net income Net unrealized gain on securities Other comprehensive income -- -- -- -- -- Comprehensive income Purchase of treasury stock -- -- -- (9.1) (412.1) Sale of treasury stock to employee stock plans -- -- -- 0.8 26.5 Exercise of stock options and grant of stock awards -- -- -- 0.7 23.9 Series B convertible stock dividends, net of taxes of $2.1 -- -- -- -- -- Deferred compensation earned -- -- -- -- -- Repurchase of preferred stock -- -- -- -- (4.5) Common stock cash dividends declared -- -- -- -- -- Two-for-one common stock split -- 52.7 52.7 -- 694.6 ----------------------------------------------------------------- Balance at December 31, 1997 100.0 138.3 138.3 (36.0) (836.1) Comprehensive income: Net income -- -- -- -- -- Other comprehensive income, net of tax: Foreign currency translation adjustments Reclassification for losses included in net income Net unrealized gain on foreign currency translation Other comprehensive income -- -- -- -- -- Comprehensive income Purchase of treasury stock -- -- -- (7.5) (339.3) Sale of treasury stock to employee stock plans -- -- -- 0.8 19.3 Restricted stock awards -- 0.9 0.9 (0.3) (29.1) Exercise of stock options and grant of stock awards -- -- -- 1.2 29.9 Series B convertible stock dividends, net of taxes of $2.1 -- -- -- -- -- Deferred compensation earned -- -- -- -- -- Repurchase of preferred stock -- -- -- -- (6.3) Common stock cash dividends declared -- -- -- -- -- ----------------------------------------------------------------- Balance at December 31, 1998 100.0 139.2 139.2 (41.8) (1,161.6) Comprehensive income: Net income -- -- -- -- -- Other comprehensive income, net of tax: Foreign currency translation adjustments Other comprehensive income -- -- -- -- -- Comprehensive income Purchase of treasury stock -- -- -- (8.5) (435.9) Common stock put options -- -- -- -- (16.1) Sale of treasury stock to employee stock plans -- -- -- 0.4 9.3 Restricted stock awards -- -- -- -- 1.5 Purchase of AmeriLink Corporation -- -- -- 1.8 25.5 Dealer/Franchisee Rewards Program -- -- -- -- 0.8 Exercise of stock options and grant of stock awards -- -- -- 3.0 51.6 Series B convertible stock dividends, net of taxes of $1.9 -- -- -- -- -- Deferred compensation earned -- -- -- -- -- Cancellation of preferred stock, net of repurchases (27.2) -- -- -- 28.8 Common stock cash dividends declared -- -- -- -- -- Two-for-one common stock split -- 96.6 96.6 -- 603.8 ----------------------------------------------------------------- Balance at December 31, 1999 $ 72.8 235.8 $235.8 (45.1) $ (892.3) ================================================================= The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - continued Tandy Corporation and Subsidiaries
Unearned Accumulated Additional Deferred Other Paid-In Retained Compen- Comprehensive Comprehensive (In millions) Capital Earnings sation Loss Total Income - ----------------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1996 $ 105.3 $2,188.9 $ (46.9) $ (3.6) $1,264.8 Comprehensive income: Net income -- 186.9 -- -- 186.9 $ 186.9 --------- Other comprehensive income, net of tax: Foreign currency translation adjustments (1.8) Reclassification for losses included in net income 1.1 --------- Net unrealized loss on foreign currency translation (0.7) --------- Unrealized gain on securities 3.4 Reclassification for gains included in net income (0.8) --------- Net unrealized gain on securities 2.6 --------- Other comprehensive income -- -- -- 1.9 1.9 1.9 Comprehensive income $ 188.8 ========= Purchase of treasury stock -- -- -- -- (412.1) Sale of treasury stock to employee stock plans 8.7 -- -- -- 35.2 Exercise of stock options and grant of 0.5 -- -- -- 24.4 stock awards Series B convertible stock dividends, net of taxes of $2.1 -- (4.0) -- -- (4.0) Deferred compensation earned -- -- 9.5 -- 9.5 Repurchase of preferred stock -- -- -- -- (4.5) Common stock cash dividends declared -- (43.2) -- -- (43.2) Two-for-one common stock split (95.3) (652.3) -- -- (0.3) ------------------------------------------------------------- Balance at December 31, 1997 19.2 1,676.3 (37.4) (1.7) 1,058.6 Comprehensive income: Net income -- 61.3 -- -- 61.3 $ 61.3 --------- Other comprehensive income, net of tax: Foreign currency translation adjustments (0.7) Reclassification for losses included in net income 1.4 --------- Net unrealized gain on foreign currency translation 0.7 --------- Other comprehensive income -- -- -- 0.7 0.7 0.7 --------- Comprehensive income $ 62.0 ========= Purchase of treasury stock -- -- -- -- (339.3) Sale of treasury stock to employee stock plans 16.0 -- -- -- 35.3 Restricted stock awards 68.8 -- (4.2) -- 36.4 Exercise of stock options and grant of stock awards 5.7 -- -- -- 35.6 Series B convertible stock dividends, net of taxes of $2.1 -- (3.7) -- -- (3.7) Deferred compensation earned -- -- 10.1 -- 10.1 Repurchase of preferred stock -- -- -- -- (6.3) Common stock cash dividends declared -- (40.5) -- -- (40.5) ------------------------------------------------------------- Balance at December 31, 1998 109.7 1,693.4 (31.5) (1.0) 848.2 Comprehensive income: Net income -- 297.9 -- -- 297.9 $ 297.9 --------- Other comprehensive income, net of tax: Foreign currency translation adjustments 0.2 --------- Other comprehensive income -- -- -- 0.2 0.2 0.2 --------- Comprehensive income $ 298.1 ========= Purchase of treasury stock -- -- -- -- (435.9) Common stock put options 2.8 -- -- -- (13.3) Sale of treasury stock to employee stock plans 30.3 -- -- -- 39.6 Restricted stock awards (10.6) -- (0.5) -- (9.6) Purchase of AmeriLink Corporation 43.7 -- -- -- 69.2 Dealer/Franchisee Rewards Program 0.9 -- -- -- 1.7 Exercise of stock options and grant of stock awards 28.6 -- -- -- 80.2 Series B convertible stock dividends, net of taxes of $1.9 -- (3.6) -- -- (3.6) Deferred compensation earned -- -- 11.5 -- 11.5 Cancellation of preferred stock, net of repurchases -- (18.0) -- -- (16.4) Common stock cash dividends declared -- (38.6) -- -- (38.6) Two-for-one common stock split (123.0) (577.8) -- -- (0.4) ------------------------------------------------------------- Balance at December 31, 1999 $ 82.4 $1,353.3 $ (20.5) $ (0.8) $ 830.7 ============================================================= The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Tandy Corporation and Subsidiaries NOTE 1 - DESCRIPTION OF BUSINESS Tandy Corporation ("Tandy" or the "Company"), through its 7,100 plus RadioShack company-owned and dealer/franchise outlets, is the nation's largest consumer electronics chain. RadioShack's sales and operating revenues relate to private label and branded consumer electronics, brand name personal computers, wireless communication products and services, telephony and "direct-to-home" satellite systems. Additionally, Tandy operates certain related retail support groups and consumer electronics manufacturing businesses. Another retail concept, Computer City, Inc. ("CCI" or "Computer City"), was sold effective August 31, 1998. Computer City sales related to personal computer hardware and software, printers, peripheral equipment and accessories sold through retail locations and direct sales to corporate, government and education customers. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation: The Consolidated Financial Statements include the accounts of Tandy and its majority owned subsidiaries. CCI was included in Consolidated Financial Statements through August 31, 1998, the date of its sale. Investments in 20% to 50% owned companies are accounted for on the equity method. Significant intercompany transactions are eliminated in consolidation. Pervasiveness of Estimates: The preparation of financial statements, in conformity with accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related revenues and expenses and the disclosure of gain and loss contingencies at the date of the financial statements. Actual results could differ from those estimates. Foreign Currency Translation: The functional currency of substantially all operations outside the U.S. is the respective local currency. Translation gains or losses related to net assets located outside the United States are shown as a component of accumulated other comprehensive loss and are classified in the equity section of the balance sheet. Cash and Cash Equivalents: Cash on hand in stores, deposits in banks and all highly liquid investments with an original maturity of three months or less at the time of purchase are considered cash and cash equivalents. Cash equivalents are carried at cost, which approximates fair value. Marketable Securities: Marketable securities are marked to market based upon market value fluctuations and resulting adjustments, net of deferred taxes, are reported as a component of stockholders' equity until realized. Declines in fair market value that are considered to be other than temporary are recognized in earnings and establish a new cost basis for the security. Realized gains and losses are included in earnings and are determined on the specific identification method. In April 1999, Tandy made an investment in NorthPoint Communications, Inc. ("NorthPoint") common stock. This investment is included in other current assets in the accompanying Consolidated Balance Sheet at December 31, 1999 and is designated as "securities available for sale." At December 31, 1999, the fair value of Tandy's investment in NorthPoint was equal to its cost. Accounts Receivable and Allowance For Doubtful Accounts: An allowance for doubtful accounts is provided when accounts are determined to be uncollectible. Concentrations of credit risk with respect to customer receivables are limited due to the large number of customers comprising Tandy's customer base and their location in many different geographic areas of the country. However, Tandy does have some concentration of credit risk in the wireless telephone and direct-to-home satellite services industries due to increased sales and outstanding balances as of December 31, 1999 from these service providers. Inventories: Inventories are stated at the lower of cost (principally based on average cost) or market value and are comprised primarily of finished goods. Property, Plant and Equipment: Property and equipment are stated at cost. For financial reporting purposes, depreciation and amortization are primarily calculated using the straight-line method, which amortizes the cost of the assets over their estimated useful lives. When depreciable assets are sold or retired, the related cost and accumulated depreciation are removed from the accounts. Any gains or losses are included in selling, general and administrative ("SG&A") expense. Major additions and betterments are capitalized. Maintenance and repairs which do not materially improve or extend the lives of the respective assets are charged to operating expenses as incurred. Amortization of buildings under capital leases is included in depreciation and amortization in the Consolidated Statements of Income. Capitalized Software Costs: Tandy capitalizes qualifying costs relating to developing or obtaining internal-use software. Capitalization of costs begins after the conceptual formulation stage has been completed. Capitalized costs are amortized over the estimated useful life of the software, which ranges from three to five years. Goodwill: Goodwill, which represents the excess of the purchase price over the fair value of net assets acquired, is amortized on a straight-line basis over the expected life of the underlying assets. Goodwill was $52.9 million and $3.2 million, net of accumulated amortization of $0.9 million and $0.4 million at December 31, 1999 and 1998, respectively. Goodwill and amortization expense for 1999 related primarily to the acquisition of AmeriLink Corporation ("AmeriLink") in July 1999 (see Note 5 - "AmeriLink Acquisition"). Impairment of Long-Lived Assets: Long-lived assets (primarily property, plant and equipment and goodwill) held and used by Tandy or to be disposed of are reviewed for impairment whenever events or changes in circumstances indicate that the net book value of the asset may not be recoverable. An impairment loss is recognized if the sum of the expected future cash flows (undiscounted and before interest) from the use of the asset is less than the net book value of the asset. The amount of the impairment loss is measured as the difference between the net book value of the assets and the estimated fair value of the related assets. Fair Value of Financial Instruments: The fair value of financial instruments is determined by reference to various market data and other valuation techniques as appropriate. Unless otherwise disclosed, the fair values of financial instruments approximate their recorded values due primarily to the short-term nature of their maturities or their varying interest rate. Revenues: Retail sales are recorded on the accrual basis. Residual income is recognized based upon the contractual percentage of each customer's monthly bill. Extended Service Contracts: Tandy's retail operations offer extended service contracts on products sold. These contracts generally provide extended service coverage for periods of 12 to 60 months. Tandy offers these contracts on behalf of an unrelated third party, who is named as obligor on these contracts. Tandy is not named as an obligor on these contracts. In these circumstances, Tandy's share of commission revenue is recognized as income at the time of sale. During 1997, Tandy sold its own extended service contracts in one state. Revenues from the sale of these contracts are recognized ratably over the lives of the contracts. Costs directly related to sales of such contracts are deferred and charged to expense proportionately as the revenues are recognized. A loss is recognized on extended service contracts if the sum of the expected costs of providing services pursuant to the contracts exceeds related unearned revenue. Income Taxes: Income taxes are accounted for using the asset and liability method. Deferred taxes are recognized for the tax consequences of "temporary differences" by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. In addition, Tandy recognizes future tax benefits to the extent that realization of such benefits are more likely than not. Earnings Per Share: Basic earnings per share is computed based only on the weighted average number of common shares outstanding for each period presented. Dilutive earnings per share reflects the potential dilution that would have occurred if securities or other contracts to issue common stock were exercised, converted, or resulted in the issuance of common stock that would have then shared in the earnings of the entity. The following table reconciles the numerator and denominator used in the basic and diluted earnings per share calculation for the years ended December 31, 1999, 1998 and 1997:
1999 1998 1997 ---------------------------------- ---------------------------------- ----------------------------------- (In millions, except Income Shares Per Share Income Shares Per Share Income Shares Per Share per share amounts) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount ------------------ ----------- ------------- --------- ----------- ------------- -------- ----------- ------------- --------- Net income $ 297.9 $ 61.3 $ 186.9 Less: Preferred stock dividends (5.5) (5.8) (6.1) --------- --------- --------- Basic EPS Net income available to common shareholders 292.4 194.2 $ 1.51 55.5 201.2 $ 0.28 180.8 214.4 $ 0.84 ========= ========= ========= Effect of dilutive securities: Plus dividends on Series B preferred stock 5.5 5.8 6.1 Additional contribution required for TESOP if preferred stock had been converted (4.1) 6.5 (4.1) 6.8 (3.9) 7.1 Stock options 4.3 3.4 3.0 --------- --------- --------- --------- --------- --------- Diluted EPS Net income available to common shareholders plus assumed conversions $ 293.8 205.0 $ 1.43 $ 57.2 211.4 $ 0.27 $ 183.0 224.5 $ 0.82 ========= ========= ========= ========= ========= ========= ========= ========= =========
Options to purchase 3.3 million, 3.4 million and 1.4 million shares of common stock in 1999, 1998 and 1997, respectively, were not included in the computation of diluted earnings per common share because the option exercise price was greater than the average market price of the common stock during the year. Stock-Based Compensation: Tandy has adopted SFAS No. 123, "Accounting for Stock-Based Compensation" ("FAS 123"), on a disclosure basis only. Tandy measures compensation costs under Accounting Principles Board Opinion 25, "Accounting for Stock Issued to Employees" ("APB 25") and its related interpretations. Advertising Costs: All advertising costs of Tandy are expensed the first time the advertising takes place. Advertising expense was $199.9 million, $208.7 million and $195.4 million for the years ended December 31, 1999, 1998 and 1997, respectively. Comprehensive Income (Loss): Effective January 1, 1998, Tandy adopted SFAS No. 130, "Reporting Comprehen-sive Income." Comprehensive income is defined as the change in equity (net assets) of a business enterprise during a period, except those changes resulting from investments by owners and distributions to owners. The following tables summarize the tax effects of other comprehensive income and the cumulative amount of the separate components of other comprehensive loss for the years ended December 31, 1999, 1998 and 1997: Tax Effects of Other Comprehensive Income
1999 1998 1997 --------------------------- -------------------------- --------------------------- Pre-Tax Tax After Tax Pre-Tax Tax After Tax Pre-Tax Tax After Tax (In millions) Amount Expense Amount Amount Expense Amount Amount Benefit Amount ----------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Foreign currency translation adjustments $ 0.3 $ 0.1 $ 0.2 $ (1.2) $ (0.5) $ (0.7) $ (2.9) $ (1.1) $ (1.8) Less: Reclassification adjustment for losses included in net income -- -- -- 2.3 0.9 1.4 1.8 0.7 1.1 --------------------------- -------------------------- --------------------------- Net unrealized gain (loss) 0.3 0.1 0.2 1.1 0.4 0.7 (1.1) (0.4) (0.7) --------------------------- -------------------------- --------------------------- Unrealized gain on securities -- -- -- -- -- -- 5.3 1.9 3.4 Less: Reclassification adjustment for gains included in net income -- -- -- -- -- -- (1.3) (0.5) (0.8) --------------------------- -------------------------- --------------------------- Net unrealized gain -- -- -- -- -- -- 4.0 1.4 2.6 --------------------------- -------------------------- --------------------------- Other comprehensive income $ 0.3 $ 0.1 $ 0.2 $ 1.1 $ 0.4 $ 0.7 $ 2.9 $ 1.0 $ 1.9 =========================== ========================== ===========================
Cumulative Amount of Separate Components of Other Comprehensive Loss Current Beginning Period Ending (In millions) Balance Change Balance - ------------- -------- -------- -------- 1999 - ---- Foreign currency translation adjustment $ (1.0) $ 0.2 $ (0.8) Unrealized gain on securities -- -- -- -------- -------- -------- Accumulated other comprehensive loss $ (1.0) $ 0.2 $ (0.8) ======== ======== ======== 1998 - ---- Foreign currency translation adjustment $ (1.7) $ 0.7 $ (1.0) Unrealized gain on securities -- -- -- -------- -------- -------- Accumulated other comprehensive loss $ (1.7) $ 0.7 $ (1.0) ======== ======== ======== 1997 - ---- Foreign currency translation adjustment $ (1.0) $ (0.7) $ (1.7) Unrealized gain on securities (2.6) 2.6 -- -------- -------- -------- Accumulated other comprehensive loss $ (3.6) $ 1.9 $ (1.7) ======== ======== ======== New Pronouncements: In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." In June 1999, the FASB issued SFAS No. 137, which delayed the effective date of SFAS No. 133 to quarters beginning after June 15, 2000. SFAS No. 133 requires a company to record all derivative instruments at fair value on the balance sheet. Tandy does not use derivatives for speculative purposes. As such, its market risk was not material in 1999. NOTE 3 - STOCK SPLIT On May 20, 1999, Tandy's Board of Directors declared a two-for-one split of Tandy common stock, payable on June 21, 1999. This resulted in the issuance of 96.6 million shares of common stock along with a corresponding decrease of $96.6 million in additional paid-in capital. Treasury shares were not split. However, an adjustment was made to Tandy's stockholders' equity section of the balance sheet to split the cost of treasury stock (in effect a cancellation of treasury shares by reducing paid-in capital and retained earnings). All references to the number of shares (other than common stock issued or outstanding on the 1998 Consolidated Balance Sheet and 1997 and 1998 Consolidated Statements of Stockholders' Equity), per share amounts, cash dividends, and any other reference to shares in the Consolidated Financial Statements, the accompanying Notes to Consolidated Financial Statements ("Notes"), unless otherwise noted, have been adjusted to reflect the split on a retroactive basis. Previously awarded stock options, restricted stock awards, and all other agreements payable in Tandy's common stock have also been adjusted or amended to reflect the split. NOTE 4 - SALE OF COMPUTER CITY, INC. On August 31, 1998, Tandy completed the sale of 100% of the outstanding common stock of its Computer City, Inc. subsidiary to CompUSA Inc. ("CompUSA"). In the third quarter of 1998, Tandy received approximately $75.0 million in cash and an unsecured subordinated note for $136.0 million as consideration for the sale. The amount of cash to be retained was subject to adjustment and in the fourth quarter of 1998 the amount of cash consideration was reduced to $36.5 million. Tandy recognized a loss of $108.2 million in 1998 from the sale of Computer City, which included certain liabilities and contractual obligations incurred by Tandy. The note bears interest at 9.48% per annum and is payable over a ten year period. Interest is payable on June 30 and December 31 of each year, with the first payment made on December 31, 1998. Beginning on December 31, 2001, principal payments will be due semiannually until the note matures on June 30, 2008. Tandy intends to hold the subordinated note until maturity. The note had an estimated fair value of $133.0 million at December 31, 1999. Computer City's results from operations through August 31, 1998 are included in the accompanying Consolidated Financial Statements. Below is a summary of net sales and operating revenues and net losses, for Computer City: (In millions) 1999 1998(1) 1997 ----------- ------ ------ ------ Net sales and operating revenues $ -- $1,196.7 $1,903.7 Operating loss -- (95.6) (14.9) (1) Includes operations for only eight months, due to sale to CompUSA on August 31, 1998. NOTE 5 - AMERILINK ACQUISITION On July 30, 1999, Tandy acquired AmeriLink in an all stock transaction valued at approximately $75.8 million. Tandy exchanged approximately 1.8 million shares of Tandy common stock for all of the outstanding common stock of AmeriLink. The transaction was accounted for under the purchase method of accounting. The purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of the acquisition, which resulted in approximately $50.7 million of goodwill being recorded in other assets on the accompanying 1999 Consolidated Balance Sheet. The associated goodwill will be amortized over 20 years. NOTE 6 - RADIOSHACK.COM, LLC In October 1999, Tandy launched its e-commerce enabled website, www.RadioShack.com. On November 10, 1999, Tandy and Microsoft formed a limited liability company, RadioShack.com, LLC ("RS.com"), for the purpose of marketing and selling electronics products on the Internet. Tandy contributed assets and also extended a royalty-free license for certain trademarks and service marks to RS.com and Microsoft contributed cash of $100.0 million on January 4, 2000. Tandy owns 100% of the common units of RS.com, while Microsoft owns 100% of the preferred units and Tandy will include RS.com in its consolidated financial statements. Tandy is entitled to receive 75% of the profits and losses of RS.com, while Microsoft will receive 25%; however, the preferred units have liquidation rights which could impact the allocation of profits and losses between the unit holders. The preferred units are convertible into common units at any time and must be converted in the event of certain capital transactions. In certain circumstances, Microsoft has the option to require Tandy to purchase its units and Tandy has the right to purchase Microsoft's units. Also, in the event of liquidation, the preferred units have preferential rights to recover their initial investment. NOTE 7 - 1996 BUSINESS RESTRUCTURING In the fourth quarter of 1996, Tandy initiated certain restructuring programs resulting from the highly competitive environment in the electronics industry at the time. In conjunction with these programs, Tandy closed 53 McDuff stores and 21 unprofitable Computer City stores in January 1997. Additionally, Tandy either closed or sold all of its Incredible Universe stores during 1997. During 1997, Tandy sold the assets related to several closed stores, including the sale of the real estate, related fixed assets and inventory of six Incredible Universe stores, to Fry's Electronics, Inc. and its affiliates ("Fry's). These six stores were sold for approximately $21.5 million in cash and $97.4 million in notes receivable with no material gain or loss recognized upon the sale. At December 31, 1999, the notes receivable balance was $26.3 million with interest rates ranging from 6.57% to 6.70% and maturity dates in 2001 and 2002. Tandy intends to hold the notes until maturity. The notes had an estimated fair value of $25.0 million at December 31, 1999. Net sales and operating revenues and operating losses of the stores closed pursuant to the restructuring plans are shown below for each year ended December 31 (unaudited): (In millions) 1999 1998 1997 - ------------- ---- ---- ---- Net sales and operating revenues $ -- $ -- $ 164.6 Operating loss -- -- (30.1)(1) (1) Excludes business restructuring charges. The following schedule is an analysis of additional reserves and charges related to future lease obligations, real estate costs, disposition of fixed assets, employee termination expenses and contract cancellation costs pertaining to these restructuring programs for the periods ending December 31, 1997, 1998 and 1999. 1996 Business Restructuring
Charges Charges Charges Balance Addition 1/1/97- Balance Addition 1/1/98- Balance Addition 1/1/99- Balance (In millions) 12/31/96 Reserves 12/31/97 12/31/97 Reserves 12/31/98 12/31/98 Reserves 12/31/99 12/31/99 - ------------- -------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Real estate obligations 93.5 11.6 (78.1) 27.0 6.5 (14.1) $ 19.4 -- (5.6) $ 13.8 Disposal of fixed assets -- -- -- -- -- -- -- -- -- -- Inventory impairment -- -- -- -- -- -- -- -- -- -- Termination benefits 4.6 -- (4.6) -- -- -- -- -- -- -- Contract termination costs 13.2 -- (13.2) -- -- -- -- -- -- -- Other 26.4 -- (24.8) 1.6 -- (0.8) 0.8 -- (0.1) 0.7 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Total 137.7 11.6 (120.7) 28.6 6.5 (14.9) $ 20.2 -- (5.7) $ 14.5 ======= ======= ======= ======= ======= ======= ======= ======= ======= =======
NOTE 8 - CASH EQUIVALENTS The weighted average interest rates were 5.3% and 6.0% at December 31, 1999 and 1998, respectively, for cash equivalents totaling $31.2 million and $16.2 million, respectively. NOTE 9 - ACCOUNTS AND NOTES RECEIVABLE As of December 31, 1999 and 1998, Tandy had the following accounts and notes receivable outstanding on the Consolidated Balance Sheets: Accounts and Notes Receivable December 31, -------------------- (In millions) 1999 1998 - ------------- -------- -------- Trade accounts receivable $ 85.0 $ 68.2 Receivables from InterTAN, Inc. (see Note 24) 2.9 4.2 Current portion of Fry's notes receivable (see Note 7) 1.0 1.0 Receivables from vendors and service providers(1) 184.1 133.2 Other receivables 36.9 27.4 Less allowance for doubtful accounts (23.8) (18.8) -------- -------- Accounts and notes receivable, net $ 286.1 $ 215.2 ======== ======== (1) Includes marketing development funds, residuals and commissions from wireless telephone carriers and residuals from long distance, digital satellite service and pager activation providers. Notes Receivable December 31, -------------------- (In millions) 1999 1998 - ------------- -------- -------- CompUSA (see Note 4) $ 136.0 $ 136.0 Fry's (see Note 7) 26.3 47.6 Other notes 7.0 4.7 -------- -------- Total notes receivable 169.3 188.3 Less amount classified as current receivable (1.7) (2.2) -------- -------- Total amount classified as other assets $ 167.6 $ 186.1 ======== ======== Interest income earned, including accretion of discount if applicable, on the amounts outstanding during the three years ended December 31, 1999, 1998 and 1997 was as follows: Year Ended December 31, -------------------------------- (In millions) 1999 1998 1997 - ------------- -------- -------- -------- CompUSA (1) $ 12.9 $ 4.3 $ -- InterTAN, Inc. (2) -- -- 5.4 Fry's 2.9 3.5 3.3 Other 4.6 3.0 4.5 -------- -------- -------- Total interest income $ 20.4 $ 10.8 $ 13.2 ======== ======== ======== (1) The note receivable from CompUSA originated August 31, 1998. (2) The note receivable from InterTAN, Inc. was paid in full on December 31, 1997. Allowance for Doubtful Accounts December 31, -------------------------------- (In millions) 1999 1998 1997 - ------------- -------- -------- -------- Balance at the beginning of the year $ 18.8 $ 8.8 $ 7.9 Provision for credit losses and bad debt included in SG&A expense 9.9 12.5 2.6 Uncollected receivables written off, net of recoveries (4.9) (2.5) (1.7) -------- -------- -------- Balance at the end of the year $ 23.8 $ 18.8 $ 8.8 ======== ======== ======== NOTE 10 - PROPERTY, PLANT AND EQUIPMENT ("PP&E") The following table outlines the ranges of estimated useful lives and balances of each major fixed asset category:
December 31, Range of -------------------- (In millions) Estimated Useful Life 1999 1998 - ------------- --------------------- -------- -------- Land -- $ 18.2 $ 16.6 Buildings 10 - 40 years 183.6 183.1 Furniture, fixtures and equipment(1) 2 - 15 years 500.3 451.9 Leasehold improvements Primarily, the shorter of the life of the improvements or the term of the related lease and certain renewal periods 333.5 323.1 -------- -------- Total PP&E 1,035.6 974.7 Less accumulated depreciation and amortization of capital leases (588.8) (540.9) -------- -------- PPE, net of accumulated depreciation $ 446.8 $ 433.8 ======== ======== (1)Includes $22.1 million of assets under capital leases at both December 31, 1999 and December 31, 1998, respectively.
NOTE 11 - TREASURY STOCK REPURCHASE PROGRAM On March 3, 1997, Tandy announced that its Board of Directors authorized management to purchase up to 20.0 million additional shares of its common stock through Tandy's existing share repurchase program. The share repurchase program was initially authorized in December 1995 and increased in October 1996 and was undertaken as a result of management's view of the economic value of Tandy's stock. The share increase for 1997 brought the total authorization since inception to 60.0 million shares, of which approximately 56.7 million shares totaling $949.2 million had been repurchased as of December 31, 1999. Approximately 4.8 million shares were repurchased in 1999 for $203.4 million under the program. Additionally, on October 26, 1998, Tandy announced that its Board of Directors authorized the repurchase of up to 10.0 million shares of Tandy's common stock for an indefinite period of time to be used to offset the dilution of grants under Tandy's incentive stock plans (see Note 19 - "Stock Options and Performance Awards"). Approximately 4.2 million shares were repurchased in 1999 for $190.7 million, bringing the total share repurchase at December 31, 1999 under this program to 7.0 million shares totaling $254.5 million. These purchases under the two share repurchase programs described above are in addition to the shares required for employee stock plans, which are purchased throughout the year. In connection with the share repurchase program, the Board of Directors, at their October 23, 1998 meeting, authorized management to sell up to 2.0 million put options on Tandy common stock. Such put options grant the purchaser the right to sell shares of Tandy's common stock to Tandy at specified prices upon exercise of the put options. These put options are exercisable only at maturity and can be settled in cash at Tandy's option, in lieu of repurchasing the stock. The issued put options have a maturity of up to six months. Tandy has sold approximately 1.4 million put options since the inception of the program and 0.4 million put options remained outstanding at December 31, 1999. The put options expire on various dates through April 2000. At December 31, 1999 and 1998, the full redemption value of the put options was classified as common stock put options in the accompanying Consolidated Balance Sheets. The related offset was recorded in common stock in treasury, net of premiums received. NOTE 12 - INDEBTEDNESS AND BORROWING FACILITIES Tandy's short-term credit facilities, including revolving credit lines, are summarized in the accompanying short-term borrowing facilities table below. The method used to compute averages in the short-term borrowing facilities table is based on a daily weighted average computation which takes into consideration the time period such debt was outstanding as well as the amount outstanding. Tandy's primary source of short-term debt, for which borrowings and repayments are presented net of each other in the accompanying Consolidated Statements of Cash Flows, consists of short-term seasonal bank debt and commercial paper. The commercial paper has a typical maturity of 90 days or less, as does the short-term seasonal bank debt. The amount of commercial paper that may be outstanding is limited to a maximum of $500.0 million. In the second quarter of 1999, Tandy extended the maturity date of its $200.0 million 364-day revolving credit facility to June 2000. Tandy also has a $300.0 million five-year revolving credit facility maturing June 2003. The revolving credit facilities are used as backup for the commercial paper program and may also be utilized for general corporate purposes. Annual commitment fees for the facilities are 0.07% of the $200.0 million facility per annum and 0.085% of the $300.0 million facility per annum, whether used or unused. Tandy plans to extend the $200.0 million facility to June 2001 during the second quarter of 2000. In May 1997, Tandy filed a $300.0 million Debt Shelf Registration Statement ("Shelf Registration") with the Securities and Exchange Commission, which was declared effective in August 1997. In August 1997, Tandy issued $150.0 million of 10 year unsecured notes under the Shelf Registration. The interest rate on the notes is 6.95% per annum with interest payable on September 1 and March 1 of each year, commencing March 1, 1998. The notes are due September 1, 2007. In December 1997 and January 1998, Tandy issued $4.0 million and $45.0 million, respectively, in medium-term notes under the remaining $150.0 million Shelf Registration. An additional $32.0 million, $37.0 million and $32.0 million of medium-term notes were issued in January 1999, August 1999 and September 1999, respectively, completing the remaining 1997 Shelf Registration. Tandy's medium and long-term notes outstanding at December 31, 1999 under the 1997 Shelf Registration totaled $300.0 million, compared to $199.0 million outstanding at December 31, 1998. The interest rates at December 31, 1999 for the outstanding $150.0 million in medium-term notes ranged from 6.09% to 7.35% with a weighted average coupon rate of 6.6%. Tandy established an employee stock ownership trust in June 1990. Further information on the trust and its related indebtedness, which is guaranteed by the Company, is detailed in the discussion of the Tandy Fund in Note 17. Long-term borrowings and capital lease obligations outstanding at December 31, 1999 mature as follows: (In millions) - ----------------------------------------------------------------- 2000.................................................. $ 14.6 2001.................................................. 17.1 2002.................................................. 87.5 2003.................................................. 19.9 2004.................................................. 39.3 2005 and thereafter................................... 155.6 ------ Total................................................. $334.0 ====== The fair value of Tandy's long-term debt of $321.2 million (including current portion, but excluding capital leases) was approximately $317.0 million at December 31, 1999. The fair value was computed using interest rates which were in effect at December 31, 1999 for similar debt instruments. Borrowings payable within one year are summarized in the accompanying short-term debt table below. Short-term debt at December 31, 1999 and 1998 consisted primarily of domestic seasonal borrowings. Short-Term Debt December 31, -------------------- (In millions) 1999 1998 - ------------- -------- -------- Short-term bank debt $ 27.5 $ 36.5 Current portion of long-term debt -- 1.0 Commercial paper, less unamortized discount 146.8 179.0 Current portion of capitalized lease obligations 5.1 6.6 Current portion of guarantee on TESOP indebtedness (see Note 17) 9.5 10.1 -------- -------- Total short-term debt $ 188.9 $ 233.2 ======== ======== Long-Term Debt December 31, -------------------- (In millions) 1999 1998 - ------------- -------- -------- Notes payable with interest rates at December 31, 1999 ranging from 5.1% to 6.5% $ 6.1 $ 9.1 Notes payable issued under the Shelf Registration with an interest rate of 6.95%, net of unamortized issuance costs of $5.5 million and $6.0 million, respectively 144.5 144.0 Medium-term notes payable issued under the Shelf Registration, net of issuance cost, with interest rates at December 31, 1999 ranging from 6.09% to 7.35% 149.5 49.8 -------- -------- 300.1 202.9 Less portion due within one year included in current notes payable -- (1.0) -------- -------- 300.1 201.9 -------- -------- Capital lease obligations (see Note 22) 12.8 19.1 Less current portion (5.1) (6.6) -------- -------- 7.7 12.5 -------- -------- Guarantee of TESOP indebtedness (see Note 17) 21.1 30.8 Less current portion (9.5) (10.1) -------- -------- 11.6 20.7 -------- -------- Total long-term debt $ 319.4 $ 235.1 ======== ======== Short-Term Borrowing Facilities Year Ended December 31, -------------------------------- (In millions) 1999 1998 1997 - ------------- -------- -------- -------- Domestic seasonal bank credit lines and bank money market lines: Lines available at year end $ 955.0 $ 895.0 $1,190.0 Loans outstanding at year end $ 20.0 $ 33.9 $ 225.2 Weighted average interest rate at year end 6.5% 5.9% 6.5% Weighted average of loans outstanding during year $ 57.1 $ 49.8 $ 216.9 Weighted average interest rate during year 5.5% 5.7% 5.9% Short-term foreign credit lines: Lines available at year end $ 156.4 $ 156.4 $ 132.3 Loans outstanding at year end 7.5 2.6 None Weighted average interest rate at year end 7.1% 6.3% N/A Weighted average of loans outstanding during year $ 8.0 $ 5.3 $ 0.8 Weighted average interest rate during year 6.0% 6.1% 6.0% Letters of credit and banker's acceptance lines of credit: Lines available at year end $ 232.3 $ 212.3 $ 237.3 Acceptances outstanding at year end None None None Letters of credit open against outstanding purchase orders at year end $ 86.6 $ 52.1 $ 65.9 Commercial paper credit facilities: Commercial paper outstanding at year end $ 146.8 $ 179.0 $ 35.0 Weighted average interest rate at year end 6.5% 6.0% 7.1% Weighted average of commercial paper outstanding during year $ 179.9 $ 120.6 $ 189.7 Weighted average interest rate during period 5.5% 5.7% 5.9% NOTE 13 - ACCRUED EXPENSES December 31, -------------------- (In millions) 1999 1998 - ------------- -------- -------- Payroll and bonuses $ 96.1 $ 67.3 Sales and payroll taxes 38.5 74.6 Insurance 64.5 70.2 Other 151.7 122.3 -------- -------- Total accrued expenses $ 350.8 $ 334.4 ======== ======== NOTE 14 - LEASES AND COMMITMENTS Tandy leases rather than owns most of its facilities. The RadioShack stores comprise the largest portion of Tandy's leased facilities. The RadioShack stores are located primarily in major shopping malls and shopping centers owned by other companies. Some leases are based on a minimum rental plus a percentage of the store's sales in excess of a stipulated base figure. Tandy also leases distribution centers and office space. In addition, Tandy has capital leases related to its computer and operating systems. Future minimum rent commitments at December 31, 1999 for all long-term noncancelable leases (net of immaterial amounts of sublease rent income) are included in the following table. (In millions) Operating Leases Capital Leases - ------------- ---------------- -------------- 2000................................ 148.7 6.1 2001................................ 132.7 6.1 2002................................ 93.4 1.7 2003................................ 67.5 -- 2004................................ 44.1 -- 2005 and thereafter................. 67.1 -- ------- Total minimum lease payments............................ 13.9 Less: Amount representing interest..................... (1.1) ------- Present value of net minimum lease payments............. $ 12.8 ======= Future minimum rent commitments in the table above exclude future rent obligations associated with stores closed pursuant to the restructuring plan. Estimated payments to settle future rent obligations associated with these stores have been accrued in the restructuring reserve (see Note 7). Rent Expense Year Ended December 31, -------------------------------- (In millions) 1999 1998 1997 - ------------- -------- -------- -------- Minimum rents $ 201.7 $ 216.5 $ 221.9 Contingent rents 3.8 3.0 2.8 Sublease rent income -- (2.1) (2.1) -------- -------- -------- Total rent expense $ 205.5 $ 217.4 $ 222.6 ======== ======== ======== NOTE 15 - INCOME TAXES Deferred tax assets and liabilities as of December 31, 1999 and 1998 were comprised of the following: December 31, -------------------- (In millions) 1999 1998 - ------------- -------- -------- Deferred tax assets Bad debt reserve $ 9.0 $ 7.2 Restructuring reserves 5.5 12.8 Restricted stock 5.1 28.9 Insurance reserves 21.4 19.7 Depreciation and amortization 16.9 20.1 Other 41.9 33.2 -------- -------- Total deferred tax assets 99.8 121.9 -------- -------- Deferred tax liabilities Inventory adjustments, net 5.4 6.1 Deferred taxes on foreign operations 8.2 7.1 Other 3.0 2.9 -------- -------- Total deferred tax liabilities 16.6 16.1 -------- -------- Net deferred tax assets $ 83.2 $ 105.8 ======== ======== The net deferred tax asset is classified as follows: Other current assets $ 34.6 $ 55.7 Noncurrent assets 48.6 50.1 -------- -------- Net deferred tax assets $ 83.2 $ 105.8 ======== ======== The components of the provision for income taxes and a reconciliation of the U.S. statutory tax rate to Tandy's effective income tax rate are given in the accompanying tables. Income Tax Expense Year Ended December 31, -------------------------------- (In millions) 1999 1998 1997 - ------------- -------- -------- -------- Current Federal $ 139.3 $ 87.5 $ 12.4 State 17.1 14.5 2.6 Foreign 3.6 2.4 2.3 -------- -------- -------- 160.0 104.4 17.3 -------- -------- -------- Deferred Federal 18.5 (55.0) 92.3 State 4.1 (11.0) 7.4 Foreign -- -- -- -------- -------- -------- 22.6 (66.0) 99.7 -------- -------- -------- Provision for income taxes $ 182.6 $ 38.4 $ 117.0 ======== ======== ======== Statutory vs. Effective Tax Rate Year Ended December 31, -------------------------------- (In millions) 1999 1998 1997 - ------------- -------- -------- -------- Components of income from Continuing operations: United States $ 458.8 $ 85.4 $ 295.0 Foreign 21.7 14.3 8.9 -------- -------- -------- Income before income taxes 480.5 99.7 303.9 Statutory tax rate x 35.0% x 35.0% x 35.0% -------- -------- -------- Federal income tax expense at statutory rate 168.2 34.9 106.4 State income taxes, less federal income tax effect 13.8 2.2 6.5 Other, net 0.6 1.3 4.1 -------- -------- -------- Total income tax expense $ 182.6 $ 38.4 $ 117.0 ======== ======== ======== Effective tax rate 38.0% 38.5% 38.5% ======== ======== ======== Management anticipates generating enough pre-tax income in the future to realize the full benefit of U.S. deferred tax assets related to future deductible amounts. Accordingly, a valuation allowance is not required at December 31, 1999 or 1998. NOTE 16 - TANDY STOCK PLAN Eligible employees may contribute 1% to 7% of annual compensation to purchase Tandy common stock at the monthly average daily closing price. Tandy matches 40%, 60% or 80% of the employee's contribution, depending on the length of the employee's continuous participation in the Tandy Stock Plan. The Company match is also for the purchase of Tandy common stock. Tandy's contributions to the Stock Plan were $15.6 million, $14.5 million and $13.7 million for the years ended December 31, 1999, 1998 and 1997, respectively. NOTE 17 - TANDY FUND The Tandy Fund ("Plan") is a defined contribution plan. Eligible employees may direct their contributions into various investment options, including investing in Tandy common stock. Participants may defer, via payroll reductions, 1% to 8% of annual compensation. Contributions per participant are limited to certain annual maximums permitted by the Internal Revenue Code. Company contributions are made directly to the Plan through the Tandy Employees Stock Ownership Plan ("TESOP") portion of the Plan. The TESOP is a leveraged employee stock ownership plan. Participants become fully vested in Company contributions upon the earlier to occur of five years of service with Tandy or three years of participation in the Plan. TESOP Portion of the Plan: On July 31, 1990, the trustee of the Plan borrowed $100.0 million at an interest rate of 9.34% with varying semiannual principal payments due through June 30, 2000 ("TESOP Notes"). The Plan trustee used the proceeds from the issuance of the TESOP Notes to purchase 100,000 shares of TESOP Preferred Stock from Tandy at a price of $1,000 per share. In December 1994, the Plan entered into an agreement with an unrelated third party to refinance up to $16.7 million of the TESOP Notes in a series of up to six annual notes, beginning December 30, 1994. As of December 31, 1999, the Plan had borrowed all of the $16.7 million (the "Refinanced Notes") in a series of six notes at interest rates ranging from 5.84% to 8.76% to refinance the TESOP Notes. The maturity dates of these six notes range from December 2000 to December 2002. Dividend payments and contributions received by the Plan from Tandy will be used to repay the indebtedness. Each share of TESOP Preferred Stock is convertible into 87.072 shares of Tandy common stock. The annual cumulative dividend on TESOP Preferred Stock is $75.00 per share, payable semiannually. Because Tandy has guaranteed the repayment of the TESOP Notes and the Refinanced Notes, the indebtedness of the Plan is recognized as a long-term obligation in the accompanying Consolidated Balance Sheets. An offsetting charge has been made in the stockholders' equity section of the accompanying Consolidated Balance Sheets to reflect unearned deferred compensation related to the Plan. Compensation and interest expenses related to the Plan before the reduction for the allocation of dividends are presented below for each year ended December 31: (In millions) 1999 1998 1997 - ------------- ---- ---- ---- Compensation expense $ 8.7 $ 10.2 $ 9.5 Interest expense 2.3 3.4 4.4 During the terms of the TESOP Notes and Refinanced Notes, the TESOP Preferred Stock will be allocated to the participants annually, based on the total debt service made on the indebtedness. As shares of the TESOP Preferred Stock are allocated to Plan participants, compensation expense is recorded and unearned deferred compensation is reduced. Interest expense on the TESOP Notes and Refinanced Notes is also recognized as a cost of the Plan. The compensation component of the Plan expense is reduced by the amount of dividends accrued on the TESOP Preferred Stock, with any dividends in excess of the compensation expense reflected as a reduction of interest expense. Contributions from Tandy to the Plan for the years ended December 31, 1999, 1998 and 1997 totaled $12.0 million, $14.7 million and $14.5 million, respectively, including dividends paid on the TESOP Preferred Stock of $5.5 million, $5.8 million and $6.1 million, respectively. As of December 31, 1999, 83,686 shares of TESOP Preferred Stock had been released to participants' accounts in the Plan, including 27,243 shares previously withdrawn by participants. A total of 75,442 of these shares had also been allocated to participants' accounts as of year end and the remaining 8,244 shares will be allocated to participants' accounts on the March 31, 2000 annual allocation date. At December 31, 1999, 16,314 shares of TESOP Preferred Stock were available for later release and allocation to participants' accounts over the remaining life of the TESOP Notes and Refinanced Notes. The appraised value of these remaining shares was $70.5 million at December 31, 1999. The TESOP Preferred Stock has certain liquidation preferences and may be redeemed after July 1, 1994, at specified premiums. NOTE 18 - DEFERRED COMPENSATION PLANS In October 1997, the Board of Directors approved the Tandy Corporation Executive Deferred Compensation Plan and the Tandy Corporation Executive Deferred Stock Plan ("Compensation Plans"), which became effective on April 1, 1998. These plans permit employees who are corporate or division officers to defer up to 80% of their base salary and/or bonuses. Certain executive officers may defer up to 100% of their base salary and/or bonuses. In addition, officers are permitted to defer any restricted stock or nonstatutory stock option gains that would otherwise vest. Cash deferrals may be invested in Tandy common stock or mutual funds; however, restricted stock and nonstatutory stock option gains may only be invested in Tandy common stock. Tandy matches 12% of salary and bonus deferrals in the form of Tandy common stock. Tandy will match an additional 25% of salary and bonus deferrals if the deferral period exceeds five years and the deferrals are invested in Tandy common stock. Payment of deferrals will be made in cash and Tandy common stock in accordance with the employee's specifications at the time of the deferral; payments may be received in a lump sum or in annual installments not to exceed 20 years. Contributions from Tandy to the Compensation Plans for the years ended December 31, 1999 and 1998 totaled $1.0 million and $0.6 million, respectively. NOTE 19 - STOCK OPTIONS AND PERFORMANCE AWARDS Tandy applies APB 25 and related interpretations in accounting for its stock option plans, which are described below. Historically, the exercise price of options has been equal to or greater than the fair market value on the date of grant. The 1993, 1997 and 1999 Incentive Stock Plans ("ISP"s) described below each terminate on the tenth anniversary of the day preceding its adoption date by the Board; no option or award may be granted under each plan after the termination date. The terms for grants of options under each ISP are specified by the Organization and Compensation Committee (the "Committee"); terms of these options may not exceed 10 years. Option agreements issued under the ISPs generally provide that, in the event of a change in control, all options become immediately and fully exercisable. Tandy's three ISPs specify that each non-employee director of Tandy will receive a grant of nonstatutory stock options (options which are not incentive stock options ) ("NSOs") for 16,000 shares of Tandy common stock on the first business day of September of each year ("Director Options"). New directors upon election or appointment will receive a one-time grant of 20,000 shares. Director Options under the 1993 and 1997 ISPs have an exercise price of 100% of the fair market value of Tandy common stock on the trading day prior to the date of grant. Director Options under the 1999 ISP have an exercise price of 100% of the fair market value of a share of Tandy common stock on the date of grant. If a grant is made under the 1999 ISP on a non-trading date, the closest previous trading date is used. For Director Options under the three ISPs, one-third of the shares vest annually on the first three anniversary dates of the date of grant and shares expire 10 years after the date of grant. The exercise price of shares under an option (other than a Director Option) is determined by the Committee, provided that the exercise price is not less than 100% of the fair market value of a share of Tandy's common stock on the grant date. Tandy Corporation 1985 Stock Option Plan ("1985 SOP"): Under the 1985 SOP, as amended, options to acquire up to 8.0 million shares of Tandy's common stock were authorized to be granted to officers and key management employees of Tandy. The 1985 SOP expired in 1995 and no further grants may be made under this plan. Under the 1985 SOP, there were 38,298 and 529,342 vested options which could have been exercised for a total price of $0.3 million and $4.0 million at December 31, 1999 and 1998, respectively. Tandy Corporation 1993 Incentive Stock Plan ("1993 ISP"): The 1993 ISP permits the grant of up to 12.0 million shares in the form of incentive stock options ("ISOs"), NSOs, stock appreciation rights ("SARs"), restricted stock, performance units or performance shares. Under the 1993 ISP, there were 2,489,569 and 4,116,852 vested options which could have been exercised for a total exercise price of $32.0 million and $51.2 million at December 31, 1999 and 1998, respectively. In addition, there were 693,650 and 665,652 shares available at December 31, 1999 and 1998, respectively, for additional grants under the 1993 ISP. On February 1, 1997, in an effort to reduce the turnover rate among its store managers and to align the store managers' interests and goals with those of the shareholders, Tandy granted, under the 1993 ISP, approximately 4,082,400 restricted stock awards consisting of 800 shares each to 4,907 RadioShack store managers and 1,600 shares each to 98 Computer City store managers. The February 1997 restricted stock awards had a weighted average fair market value of $11.30 per share when granted. This restricted stock was to vest at the end of five years on February 2, 2002, if managers receiving the grants were employed by Tandy at a store manager or higher position, at that time. However, the grants provided that the restricted shares would vest early if Tandy's common stock closed at $16.90625 or more for any 20 consecutive trading days beginning February 1, 1999. At December 31, 1998, it was probable that the 2,579,200 shares that remained outstanding under this grant would vest under the early vesting provisions. The resulting charge to compensation expense of $82.6 million, including related payroll taxes, was recorded in the December 31, 1998 financial statements. The awards vested on March 1, 1999 and the actual price of the stock and the number of shares vested differed slightly from the estimated accrual at December 31, 1998. The amount of this difference, $5.1 million, was recorded as a credit to expense in the first quarter of 1999. Tandy Corporation 1997 Incentive Stock Plan ("1997 ISP"): The 1997 ISP permits the grant of up to 11.0 million shares in the form of ISOs, NSOs, SARs, restricted stock, performance units or performance shares. The 1997 ISP provides that the maximum number of shares of Tandy common stock that an eligible employee may receive in any calendar year in respect to options and performance awards may not exceed 1.0 million shares. The maximum dollar amount of cash or the fair market value of shares in any calendar year in respect of performance units may not exceed $1.5 million. Under the 1997 ISP, there were 916,811 vested options which could have been exercised for a total exercise price of $22.9 million at December 31, 1999; there were 2,000 vested options at December 31, 1998. In addition, there were 4,591,568 and 6,760,000 shares available on December 31, 1999 and 1998, respectively, for grants under the 1997 ISP. On February 1, 1998, Tandy granted, under the 1997 ISP, approximately 649,500 restricted stock awards consisting of 500 shares each to 1,299 RadioShack store managers not included in the February 1, 1997 grant described above. The February 1998 restricted stock awards had a weighted average fair market value of $19.61 per share when granted. This restricted stock grant was to vest at the end of five years on February 2, 2003, if managers receiving the grants were employed by Tandy at a store manager or higher position, at that time. However, the grants provided that the restricted shares would vest early if the Tandy common stock closed at $29.0625 or more for any 20 consecutive trading days beginning February 1, 2000. At December 31, 1999, it was probable that 348,000 restricted stock awards that remained outstanding under this grant would vest under early vesting provisions. The resulting charge to compensation expense of $14.7 million, including related payroll taxes, was recorded in the December 31, 1999 financial statements. Also during 1998, the Committee granted a total of 172,000 shares of restricted stock awards to three executive officers; 60,000 shares granted under the 1997 ISP and 40,000 shares granted under the 1993 ISP vest ratably over a three year period. The remaining 72,000 shares, which were granted under the 1997 ISP to one executive officer, were to vest on October 23, 2005; however, shares in blocks of 24,000 would vest earlier if Tandy's common stock price exceeded certain levels for 15 consecutive trading days. All of these 72,000 shares vested in 1999. Tandy Corporation 1999 Incentive Stock Plan ("1999 ISP"): In February 1999, the Board of Directors authorized the adoption of the 1999 ISP. The 1999 ISP permits the grant of up to 9.5 million shares in the form of NSOs and stock appreciation rights to broad based employee groups, primarily RadioShack's 5,000 plus store managers, and to other eligible employees and non-employee directors. Grants of restricted stock, performance awards and options intended to qualify as incentive stock options under the Internal Revenue Code are not authorized under the 1999 ISP. In addition, repricing of outstanding options is not permitted under the 1999 ISP. The 1999 ISP provides that the maximum number of shares of Tandy common stock that an eligible employee may receive in any calendar year in respect to options and SARs may not exceed 1.0 million shares. Under the 1999 ISP, there were 4,600 vested options which could have been exercised for a total exercise price of $0.2 million at December 31, 1999. In addition, there were 5,856,900 shares available on December 31, 1999 for grants under the 1999 ISP. Stock Option Activity: A summary of stock option transactions under the Company's stock option plans and information about fixed price stock options follows: Summary of Stock Option Transactions
(Share amounts in thousands) 1999 1998 1997 -------------------------- -------------------- -------------------- -------------------- Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price -------- -------- -------- -------- -------- -------- Outstanding at beginning of year 10,154 $ 17.07 8,892 $ 11.68 9,136 $ 10.34 Grants.......................... 6,240 40.41 3,882 24.97 2,088 15.15 Exercised....................... (3,316) 12.61 (2,480) 10.00 (2,172) 9.33 Forfeited....................... (331) 31.14 (140) 19.01 (160) 11.98 -------- -------- -------- Outstanding at end of year...... 12,747 $ 29.29 10,154 $ 17.07 8,892 $ 11.68 ======== ======== ======== Exercisable at end of year...... 3,449 $ 16.05 4,648 $ 11.88 4,890 $ 10.32 ======== ======== ======== Weighted average fair value of options granted during the year $ 13.94 $ 6.74 $ 4.82 ======== ======== ========
Fixed Price Stock Options
(Share amounts in thousands) Options Outstanding Options Exercisable ------------ --------------------------------------------- ---------------------------- Weighted Shares Average Weighted Shares Weighted Range of Outstanding Remaining Average Exercisable Average Exercise Prices at 12/31/99 Contractual Life Exercise Price at 12/31/99 Exercise Price --------------- ----------- ---------------- -------------- ----------- -------------- $ 7.05 - 17.56 3,291 6.39 yrs $ 13.02 2,487 $12.59 19.61 - 25.00 2,997 8.63 yrs 24.32 833 24.29 27.13 - 28.02 2,746 9.12 yrs 27.98 38 27.45 28.03 - 48.69 2,701 9.47 yrs 46.11 88 29.49 51.81 - 69.34 1,012 9.70 yrs 55.62 3 57.06 -------- -------- $ 7.05 - 69.34 12,747 8.42 yrs $ 29.29 3,449 $16.05 ======== ========
Pro Forma Information: Pro forma information regarding net income and earnings per share as required by FAS 123 has been determined as if Tandy had accounted for its employee stock options and restricted stock awards under the fair value method of that statement. The fair value of each option or restricted stock award is estimated on the date of grant using the Black-Scholes option pricing model. The weighted average assumptions used for stock option grants in 1999, 1998 and 1997 were, respectively: expected dividend yields of 1.7%, 1.6% and 1.7%; expected volatilities of 30.9%, 24.3% and 25.5%; risk free interest rates of 5.5%, 4.5% and 6.1% and expected lives of six years. The weighted average assumptions used for restricted stock grants in 1998 and 1997 were: expected dividend yields of 1.6% and 1.7%; expected volatilities of 24.8% and 25.9%; risk free interest rates of 5.4% and 6.3% and expected lives of five years. For purposes of pro forma disclosures, the estimated fair value of the options and restricted stock awards is amortized to expense over the vesting period. Tandy's pro forma information follows:
(In millions, except per share amounts) 1999 1998 1997 - ----------------- ---------------------- ---------------------- ---------------------- As Reported Pro Forma As Reported Pro Forma As Reported Pro Forma ----------- --------- ----------- --------- ----------- --------- Net income available to common shareholders $ 292.4 $ 269.0 $ 55.5 $ 80.4 $ 180.8 $ 171.5 Net income available per common share: Basic $ 1.51 $ 1.38 $ 0.28 $ 0.40 $ 0.85 $ 0.80 Diluted $ 1.43 $ 1.32 $ 0.27 $ 0.39 $ 0.82 $ 0.78
NOTE 20 - PREFERRED SHARE PURCHASE RIGHTS In August 1986, the Board of Directors adopted a stockholder rights plan and declared a dividend of one right for each outstanding share of Tandy common stock. This plan was amended and restated on July 24, 1999. The rights plan, as amended and restated, will expire on July 26, 2009. The rights are currently represented by the common stock certificates. When the rights become exercisable, they will entitle each holder to purchase 1/10,000th of a share of Tandy Series A Junior Participating Preferred Stock for an exercise price of $250 (subject to adjustment). The rights will become exercisable and will trade separately from the common stock only upon the date of public announcement that a person, entity or group ("Person") has acquired 15% or more of Tandy's outstanding common stock without the consent or approval of the disinterested directors ("Acquiring Person") or ten days after the commencement or public announcement of a tender or exchange offer which would result in any Person becoming an Acquiring Person. In the event that any Person becomes an Acquiring Person, the rights will be exercisable for 60 days thereafter for Tandy common stock with a market value (as determined under the rights plan) equal to twice the exercise price. In the event that, after any Person becomes an Acquiring Person, Tandy engages in certain mergers, consolidations, or sales of assets representing 50% or more of its assets or earning power with an Acquiring Person (or Persons acting on behalf of or in concert with an Acquiring Person) or in which all holders of common stock are not treated alike, the rights will be exercisable for common stock of the acquiring or surviving company with a market value (as determined under the rights plan) equal to twice the exercise price. The rights will not be exercisable by any Acquiring Person. The rights are redeemable at a price of $0.01 per right prior to any Person becoming an Acquiring Person or, under certain circumstances, after a Person becomes an Acquiring Person. NOTE 21 - TERMINATION PROTECTION PLANS In August 1990 and in May 1995, Tandy's Board of Directors approved termination protection plans and amendments to the termination protection plans, respectively. These plans provide for defined termination benefits to be paid to eligible employees of Tandy who have been terminated, without cause, following a change in control of the Company (as defined). In addition, for a certain period of time following employee termination, Tandy, at its expense, must continue to provide on behalf of the terminated employee certain employment benefits. In general, during the twelve months following a change in control, Tandy may not terminate or change existing employee benefit plans in any way which will affect accrued benefits or decrease the rate of the Tandy's contribution to the plans. NOTE 22 - SUPPLEMENTAL CASH FLOW INFORMATION Cash flows from operating activities included cash payments as follows: Year Ended December 31, ------------------------------- (In millions) 1999 1998 1997 - ------------- -------- -------- -------- Interest paid $ 35.2 $ 46.9 $ 42.8 Income taxes paid 81.8 84.2 51.9 Tandy received a subordinated unsecured note for $136.0 million in 1998 as partial payment on the sale of CCI to CompUSA. In 1998 and 1997, Tandy received notes receivable of $3.0 million and $98.3 million, respectively, as partial payment on the sales of Incredible Universe assets. No capital lease obligations were recorded in 1999 or 1998. Capital lease obligations of $22.1 million were recorded during 1997 for the lease of equipment and certain retail stores. NOTE 23 - CONTINGENCIES Tandy has various claims, lawsuits, disputes with third parties, investigations and pending actions involving allegations of negligence, product defects, discrimination, infringement of intellectual property rights, tax deficiencies, violations of permits or licenses, and breach of contract and other matters against Tandy and its subsidiaries incident to the operation of its business. The liability, if any, associated with these matters was not determinable at December 31, 1999. 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. NOTE 24 - RELATIONS WITH INTERTAN 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 terms of a merchandise agreement reached with InterTAN in October 1993, as amended, InterTAN may purchase, on payment terms, certain products sold or secured by Tandy. A&A International Limited Partnership ("A&A"), which is 100% owned by Tandy and its subsidiaries, is and will continue to be the exclusive purchasing agent for products originating in Asia for InterTAN. A&A receives commission income for this service. License agreements, as amended, also provide a royalty payable to Tandy. The table below summarizes the income components generated from operations relative to InterTAN: Year Ended December 31, -------------------------------- (In millions) 1999 1998 1997 - ------------- -------- -------- -------- Sales and commission income $ 5.7 $ 7.5 $ 8.4 Interest income -- -- 2.0 Accretion of discount -- -- 3.4 Royalty income 7.2 5.5 3.3 -------- -------- -------- Total income $ 12.9 $ 13.0 $ 17.1 ======== ======== ======== NOTE 25 - SEGMENT REPORTING DISCLOSURES Effective January 1, 1998, the Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." All references to RadioShack and Computer City in the Notes refer to Tandy's reportable segments, unless otherwise noted. The RadioShack segment consists of the RadioShack retail division, including RadioShack.com, and the retail division's support operations, including its manufacturing facilities, repair centers and AmeriLink. The Computer City segment consists of Computer City, which was sold to CompUSA on August 31, 1998. The closed units segment includes all Tandy stores and non-retail units which were part of the store closure plan announced in December 1996 (see Note 7). Corporate administration and other includes corporate units which serve all areas of Tandy and also income or expenses which were not allocated to RadioShack or Computer City. The following table summarizes the net sales and operating revenues, depreciation and amortization expense, operating profit (loss), capital expenditures and assets for Tandy's reportable segments. Consolidated operating profit is reconciled to Tandy's income before income taxes: Year Ended December 31, ----------------------------------- (In millions) 1999 1998 1997 - ------------- -------- -------- -------- Net sales and operating revenues: RadioShack (1) $4,126.2 $3,591.2 $3,303.9 Computer City (2) -- 1,196.7(2) 1,903.7 Closed units -- -- 164.6 -------- -------- -------- $4,126.2 $4,787.9 $5,372.2 ======== ======== ======== Depreciation and amortization: RadioShack $ 70.6 $ 65.7 $ 58.4 Computer City -- 16.6 20.5 Closed units -- -- 0.6 Corporate administration and other 19.6 16.7 17.7 -------- -------- -------- $ 90.2 $ 99.0 $ 97.2 ======== ======== ======== Operating profit (loss): RadioShack $ 539.8(3) $ 377.7 (3) $ 398.4 Computer City (2) -- (95.6)(2) (14.9) Closed units -- (120.8)(4) (30.1) -------- -------- -------- 539.8 161.3 353.4 Corporate administration and other (42.5) (27.0) (16.6) Interest income (5) 20.4 10.8 13.2 Interest expense (5) (37.2) (45.4) (46.1) -------- -------- -------- Income before income taxes $ 480.5 $ 99.7 $ 303.9 ======== ======== ======== Capital expenditures: RadioShack $ 95.1 $ 72.3 $ 95.9 Computer City -- 33.6 22.4 Corporate administration and other 14.3 25.6 22.1 -------- -------- -------- $ 109.4 $ 131.5 $ 140.4 ======== ======== ======== At December 31, --------------------- 1999 1998 -------- -------- Assets: RadioShack $1,476.2 $1,437.1 Computer City -- -- Closed units -- -- Corporate administration and other 665.8 556.5 -------- -------- $2,142.0 $1,993.6 ======== ======== (1) Includes outside sales, related to retail support operations of $104.3 million, $77.4 million and $88.2 million for the years ended December 31, 1999, 1998 and 1997, respectively. (2) Computer City was sold to CompUSA on August 31, 1998. (3) Includes $9.6 million and $82.6 million of compensation expense for store manager restricted stock awards for the years ended December 31, 1999 and 1998, respectively. (4) Includes provision for loss on sale of Computer City of $108.2 million. (5) Tandy does not allocate interest income or expense to its operating segments. NOTE 26 - QUARTERLY DATA (UNAUDITED) As Tandy's operations are predominantly retail oriented, its business is subject to seasonal fluctuations with the December 31 quarter being the most significant in terms of sales and profits because of the Christmas selling season. As a result of the sale of Computer City (see Note 4), Tandy recorded a loss provision of $108.2 million in 1998. Tandy recorded $73.2 million of the loss provision during the second quarter upon announcing the sale, $30.0 million in the third quarter and $5.0 million in the fourth quarter upon completion of due diligence. Additionally, Tandy recorded provisions of $14.7 million and $82.6 million related to restricted stock awards for RadioShack store managers (see Note 19) in the fourth quarters of 1999 and 1998, respectively. Quarterly Data (Unaudited)
Three Months Ended -------------------------------------------- (In millions, except per share amounts) March 31 June 30 Sept. 30 Dec. 31 - ------------------------------------------------------------------------------------- Year ended December 31, 1999: Net sales and operating revenues $ 890.2 $ 886.7 $ 960.3 $1,389.0 Gross profit $ 450.7 $ 468.0 $ 486.4 $ 678.4 Net income $ 55.9 $ 61.6 $ 59.8 $ 120.6 Preferred dividends $ 1.4 $ 1.4 $ 1.4 $ 1.3 Net income available to common shareholders $ 54.5 $ 60.2 $ 58.4 $ 119.3 Net income available per common share: Basic $ 0.28 $ 0.31 $ 0.30 $ 0.61 Diluted $ 0.27 $ 0.30 $ 0.29 $ 0.58 Shares used in computing earnings per common share: Basic 194.4 194.0 194.3 194.1 Diluted 203.8 204.7 205.4 205.6 Dividends declared per common share $ 0.050 $ 0.050 $ 0.050 $ 0.055 Year ended December 31, 1998: Net sales and operating revenues $1,258.3 $1,192.8 $1,128.6 $1,208.2 Gross profit $ 474.3 $ 465.7 $ 452.3 $ 612.1 Net income (loss) $ 37.1 $ (20.1) $ (4.1) $ 48.4 Preferred dividends $ 1.5 $ 1.4 $ 1.5 $ 1.4 Net income (loss) available to common shareholders $ 35.6 $ (21.5) $ (5.6) $ 47.0 Net income (loss) available per common share: Basic $ 0.17 $ (0.11) $ (0.03) $ 0.24 Diluted $ 0.17 $ (0.11) $ (0.03) $ 0.23 Shares used in computing earnings (loss) per common share: Basic 203.7 202.0 200.6 198.5 Diluted 213.7 202.0 200.6 208.0 Dividends declared per common share $ 0.050 $ 0.050 $ 0.050 $ 0.050
TANDY CORPORATION INDEX TO EXHIBITS
Exhibit Sequential Number Description Page No. 2a Amended and Restated Stock Exchange Agreement dated February 1, 1994 by and among O'Sullivan Industries Holdings, Inc., and TE Electronics Inc. (filed as Exhibit 2b to Tandy's Form 10-K filed on March 30, 1994 and incorporated herein by reference). 2b U.S. Purchase Agreement dated January 26, 1994 by and among O'Sullivan Industries Holdings, Inc., TE Electronics Inc. and the U.S. Underwriters which included Merrill Lynch & Co., Wheat First Butcher & Singer, The Chicago Dearborn Company and Rauscher Pierce Refsnes, Inc. (filed as Exhibit 2c to Tandy's Form 10-K filed on March 30, 1994 and incorporated herein by reference). 2c International Purchase Agreement dated January 26, 1994 by and among O'Sullivan Industries Holdings, Inc., TE Electronics Inc. and the U.S. Underwriters which included Merrill Lynch International Limited and UBS Limited (filed as Exhibit 2d to Tandy's Form 10-K filed on March 30, 1994 and incorporated herein by reference). 2d Stock Purchase Agreement as of July 17, 1997 by and among Tandy Corporation as Seller, EVP Colonial, Inc. as Company and Eureka Venture Partners III LLP as Purchaser (without exhibits), (filed as Exhibit 2g to Tandy's Form 10-Q filed on August 8, 1997 and incorporated herein by reference). 2e Agreement and Plan of Reorganization dated as of May 20, 1999 by and among Tandy Corporation, LWT, Inc. and AmeriLink Corporation, without schedules, (filed as Exhibit 2.01 to the Company's Form S-4 filed on June 8, 1999). 3a(i) Restated Certificate of Incorporation of Tandy Corporation dated July 26, 1999 (filed as Exhibit 3a(i) to Tandy's Form 10-Q filed on August 11, 1999 and incorporated herein by reference). 3a(ii) Certificate of Elimination of Series C Conversion Preferred Stock of Tandy Corporation dated July 26, 1999 (filed as Exhibit 3a(ii) to Tandy's Form 10-Q filed on August 11, 1999 and incorporated herein by reference). 3a(iii) Amended Certificate of Designations, Preferences and Rights of Series A Junior Participating Preferred Stock of Tandy Corporation dated July 26, 1999 (filed as Exhibit 3a(iii) to Tandy's Form 10-Q filed on August 11, 1999 and incorporated herein by reference). 3a(iv) Certificate of Designations of Series B TESOP Convertible Preferred dated June 29, 1990 (filed as Exhibit 4A to Tandy's 1993 Form S-8 for the Tandy Corporation Incentive Stock Plan, Reg. No. 33-51603, filed on November 12, 1993 and incorporated herein by reference). 3b Tandy Corporation Bylaws, restated as of October 22, 1999. 60 4a Amended and Restated Rights Agreement dated as of July 26, 1999 (filed as Exhibit 4a to Tandy's Form 10-Q filed on August 11, 1999 and incorporated herein by reference). 4b Revolving Credit Agreement (Facility A) dated as of June 25, 1998 among Tandy Corporation, NationsBank, N.A., as Agent and Lender, Citibank, N.A., as Syndication Agent and Lender, Bank of America National Trust & Savings Association, as Documentation Agent and Lender, BankBoston, N.A., Co-Agent and Lender, The Bank of New York, Co-Agent and Lender, First Union National Bank, Co-Agent and Lender, Fleet National Bank, Co-Agent and Lender, and twelve other banks as Lenders (filed as Exhibit 4b to Tandy's Form 10-Q filed on August 13, 1998 and incorporated herein by reference). 4c First Amendment to Revolving Credit Agreement (Facility A) dated as of June 24, 1999 among Tandy Corporation, NationsBank, N.A. as Agent and Lender, Citibank, N.A. as Syndication Agent and Lender, The Bank of New York, as Documentation Agent, and BankBoston, N.A., First Union National Bank, Fleet National Bank and The First National Bank of Chicago as Co-Agents and certain other lenders, which renewed and extended the maturity date of the Revolving Credit Agreement (Facility A) dated as of June 25,1998 (filed as Exhibit 4c to Tandy's Form 10-Q filed on August 11, 1999 and incorporated herein by reference). 4d Revolving Credit Agreement (Facility B) dated as of June 25, 1998 among Tandy Corporation, NationsBank, N.A., as Agent and Lender, Citibank, N.A., as Syndication Agent and Lender, Bank of America National Trust & Savings Association, as Documentation Agent and Lender, BankBoston, N.A., Co-Agent and Lender, The Bank of New York, Co-Agent and Lender, First Union National Bank, Co-Agent and Lender, Fleet National Bank, Co-Agent and Lender, and twelve other banks as Lenders (filed as Exhibit 4o to Tandy's Form 10-Q filed on August 13, 1998 and incorporated herein by reference). 4e First Amendment to Revolving Credit Agreement (Facility B) dated as of June 24, 1999 among Tandy Corporation, NationsBank, N.A. as Agent and Lender, Citibank, N.A. as Syndication Agent and Lender, The Bank of New York, as Documentation Agent, and BankBoston, N.A., First Union National Bank, Fleet National Bank and The First National Bank of Chicago as Co-Agents and certain other lenders, which renewed and extended the maturity date of the Revolving Credit Agreement (Facility B) dated as of June 25,1998 (filed as Exhibit 4e to Tandy's Form 10-Q filed on August 11, 1999 and incorporated herein by reference). 10a* Salary Continuation Plan for Executive Employees of Tandy Corporation and Subsidiaries including amendment dated June 14, 1984 with respect to participation by certain executive employees, as restated October 4, 1990 (filed as Exhibit 10a to Tandy's Form 10-K filed on March 30, 1994 and incorporated herein by reference). 10b* Post Retirement Death Benefit Plan for Selected Executive Employees of Tandy Corporation and Subsidiaries as restated June 10, 1991 (filed as Exhibit 10c to Tandy's Form 10-K filed on March 30, 1994 and incorporated herein by reference). 10c* Tandy Corporation Officers Deferred Compensation Plan as restated July 10, 1992 (filed as Exhibit 10d to Tandy's Form 10-K filed on March 30, 1994 and incorporated herein by reference). 10d* Special Compensation Plan for Directors of Tandy Corporation dated November 13, 1986 (filed as Exhibit 10g to Tandy's Form 10-K filed on March 30, 1994 and incorporated herein by reference). 10e* Director Fee Resolution (filed as Exhibit 10h to Tandy's Form 10-K filed on March 30, 1994 and incorporated herein by reference). 10f* Tandy Corporation 1985 Stock Option Plan as restated effective August 1990 (filed as Exhibit 10i to Tandy's Form 10-K filed on March 30, 1994 and incorporated herein by reference). 10g* Tandy Corporation 1993 Incentive Stock Plan as restated May 18, 1995 (filed as Exhibit 10j to Tandy's Form 10-Q filed on August 14, 1995 and incorporated herein by reference). 10h* Tandy Corporation Officers Life Insurance Plan as amended and restated effective August 22, 1990 (filed as Exhibit 10k to Tandy's Form 10-K filed on March 30, 1994 and incorporated herein by reference). 10i* Third Restated Trust Agreement Tandy Employees Supplemental Stock Program through Amendment No. VI dated August 31, 1999 (filed as Exhibit 10h to Tandy's Form 10-Q filed on November 12, 1999 and incorporated herein by reference). 10j* Forms of Termination Protection Agreements for (i) Corporate Executives, (ii) Division Executives, and (iii) Subsidiary Executives (filed as Exhibit 10m to Tandy's Form 10-Q filed on August 14, 1995 and incorporated herein by reference). 10k* Tandy Corporation Termination Protection Plans for Executive Employees of Tandy Corporation and its Subsidiaries (i) the Level I and (ii) Level II Plans (filed as Exhibit 10n to Tandy's Form 10-Q filed on August 14, 1995 and incorporated herein by reference). 10l* Forms of Bonus Guarantee Letter Agreements with certain Executive Employees of Tandy Corporation and its Subsidiaries (i) Formula, (ii) Discretionary, and (iii) Pay Plan (filed as Exhibit 10o to Tandy's Form 10-K filed on March 30, 1994 and incorporated herein by reference). 10m* Form of Indemnity Agreement with Directors, Corporate Officers and two Division Officers of Tandy Corporation (filed as Exhibit 10p to Tandy's Form 10-K filed on March 28, 1996 and incorporated herein by reference). 10n* Tandy Corporation 1997 Incentive Stock Plan, (filed as Exhibit 10q to Tandy's Form 10-Q filed on August 8, 1997 and incorporated herein by reference). 10o* Management Agreement, dated July 17, 1997, by and among Eureka Venture Partners, III LLP, EVP Colonial, Inc., Nathan Morton, Avery More and Robert Boutin, (filed as Exhibit 10r to Tandy's Form 10-Q filed on August 8, 1997 and incorporated herein by reference). 10p* Form of Deferred Compensation Agreement dated October 2, 1997 with selected Executive Employees of Tandy Corporation (filed as 10s to Tandy's Form 10-K filed on March 26, 1998 and incorporated herein by reference). 10q* Form of Deferred Compensation Agreement dated October 2, 1997 with selected Executive Employees of Tandy Corporation (filed as 10t to Tandy's Form 10-K filed on March 26, 1998 and incorporated herein by reference). 10r* Form of December 1997 Deferred Salary and Bonus Agreement (Stock Investment) with selected Executive Employees of Tandy Corporation (filed as 10u to Tandy's Form 10-K filed on March 26, 1998 and incorporated herein by reference). 10s* Form of 1999 Executive Pay Plan Letters 69 10t* Tandy Corporation Executive Deferred Compensation Plan, effective April 1, 1998 (filed as 10s to Tandy's Form 10-K filed on March 26, 1998 and incorporated herein by reference). 10u* Tandy Corporation Executive Deferred Stock Plan, effective April 1, 1998 (filed as 10x to Tandy's Form 10-K filed on March 26, 1998 and incorporated herein by reference). 10v* Tandy Corporation Unfunded Deferred Compensation Plan for Directors as amended and restated June 1, 1999 (filed as Exhibit 10x to Tandy's Form 10-Q filed on August 11, 1999 and incorporated herein by reference). 10w* Tandy Corporation 1999 Incentive Stock Plan dated February 24, 1999 (filed as Exhibit 10y to Tandy's Form 10-Q filed on August 11, 1999 and incorporated herein by reference). 10x* Form of September 30, 1997 Deferred Compensation Agreement between Tandy Corporation and Leonard H. Roberts (filed as 10aa to Tandy's Form 10-Q filed on May 13, 1998 and incorporated herein by reference). 10y* Severance Agreement dated October 23, 1998 between Leonard H. Roberts and Tandy Corporation (filed as Exhibit 10z to Tandy's Form 10-K filed on March 29, 1998 and incorporated herein by reference). 11 Statement of Computation of Ratios of Earnings to Fixed Charges. 77 21 Subsidiaries. 78 23 Consent of Independent Accountants. 79 27.1 Financial Data Schedule. - ----------------------- o Each of these exhibits is a "management contract or compensatory plan, contract, or arrangement".
EXHIBIT 3b TANDY CORPORATION BYLAWS RESTATED AS OF OCTOBER 22, 1999 ARTICLE I OFFICES SECTION 1. Registered Office. The Registered office of the Corporation in the State of Delaware shall be located in the City of Wilmington, County of New Castle, State of Delaware, and the name of the resident agent in charge thereof shall be The Corporation Trust Company. SECTION 2. Other Offices. The principal office shall be at 1800 One Tandy Center, Fort Worth, Texas. The Corporation may also have offices at other places as the Board of Directors may from time to time appoint or the business of the Corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS SECTION 1. Place of Meeting. All meetings of the stockholders for the election of directors shall be held at such place within or without the State of Delaware as the Board of Directors may designate, provided that at least ten (10) days' notice must be given to the stockholders entitled to vote thereat of the place so fixed. Until the Board of Directors shall designate otherwise the annual meeting of stockholders and the election of directors shall take place at the office of the Corporation at 1800 One Tandy Center, Fort Worth, Texas. Meetings of stockholders for any other purpose may be held at such place and time as shall be stated in the notice of the meeting. SECTION 2. Annual Meetings. The annual meeting of the stockholders for the year 1993 shall be held on October 7, 1993, at 10:00 A.M., or on such other date and at such other time as shall be designated by the Board of Directors and stated in the notice of the meeting. The annual meeting of the stockholders shall be held on the Third Thursday in May of each year beginning with the year 1994, if not a legal holiday, and if a legal holiday, then on the next business day following, at 10:00 A.M., or on such other date and at such other time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. At such annual meetings the stockholders shall elect a Board of Directors by a plurality vote and shall transact such other business as may properly be brought before the meeting. SECTION 3. Special Meetings. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or the Certificate of InCorporation, may be called by the Chairman of the Board or the President, and shall be called by the Secretary at the request in writing of a majority of the Board of Directors. Such request shall state the purpose or purposes of the proposed meeting. SECTION 4. Notice. Written or printed notice of every meeting of stockholders, annual or special, stating the time and place thereof, and, if a special meeting, the purpose or purposes in general terms for which the meeting is called, shall not be less than ten (10) days before such meeting be served upon or mailed to each stockholder entitled to vote thereat, at his address as it appears upon the books of the Corporation or, if such stockholder shall have filed with the Secretary of the Corporation a written request that notices intended for him be mailed to some other address, then to the address designated in such request. SECTION 5. Quorum. Except as otherwise provided by law or by the Certificate of Incorporation, the presence in person or by proxy at any meeting of stockholders of the holders of a majority of the shares of the capital stock of the Corporation issued and outstanding and entitled to vote thereat shall be requisite and shall constitute a quorum. If, however, such majority shall not be represented at any meeting of the stockholders regularly called, the holders of a majority of the shares present in person or by proxy and entitled to vote thereat shall have power to adjourn the meeting to another time, or to another time and place, without notice other than announcement of adjournment at the meeting, and there may be successive adjournments for like cause and in like manner until the requisite amount of shares entitled to vote at such meeting shall be represented. At such adjourned meeting at which the requisite amount of shares entitled to vote thereat shall be represented, any business may be transacted which might have been transacted at the meeting as originally notified. SECTION 6. Votes. Proxies. At each meeting of stockholders every stockholder shall have one vote for each share of capital stock entitled to vote which is registered in his name on the books of the Corporation on the date on which the transfer books were closed, if closed, or on the date set by the Board of Directors for the determination of stockholders entitled to vote at such meeting. At each such meeting every stockholder shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such stockholder and bearing a date not more than three years prior to the meeting in question, unless said instrument provides for a longer period during which it is to remain in force. At all meetings of the stockholders, a quorum being present, all matters shall be decided by majority vote of the shares of stock entitled to vote held by stockholders present in person or by proxy, except as otherwise required by the Certificate of Incorporation or the laws of the State of Delaware. Unless so directed by the chairman of the meeting, or required by the laws of the State of Delaware, the vote thereat on any question need not be by ballot. On a vote by ballot, each ballot shall be signed by the stockholder voting, or in his name by his proxy, if there be such proxy, and shall state the number of shares voted by him and the number of votes to which each share is entitled. On a vote by ballot, the chairman shall appoint two inspectors of election, who shall first take and subscribe an oath or affirmation faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of their ability and who shall take charge of the polls and after the balloting shall make a certificate of the result of the vote taken; but no director or candidate for the office of director shall be appointed as such inspector. SECTION 7. Stock List. At least ten (10) days before every election of directors, a complete list of stockholders entitled to vote at such election, arranged in alphabetical order, with the residence of each and the number of voting shares held by each shall be prepared by the Secretary. Such list shall be open at the place where the election is to be held for said ten (10) days, to the examination of any stockholder entitled to vote at that election and shall be produced and kept at the time and place of election during the whole time thereof, and subject to the inspection of any stockholder who may be present. SECTION 8. Notice of Stockholder Proposals. (a) At an annual meeting of the stockholders, only such business shall be conducted, and only such proposals shall be acted upon, as shall have been brought before the annual meeting (i) by, or at the direction of, the Board of Directors or (ii) by any stockholder of record of the Corporation who complies with the notice procedures set forth in this Section 8 of these Bylaws. For a proposal to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder's notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the scheduled annual meeting, regardless of any postponements, deferrals or adjournments of that meeting to a later date; provided, however, that if less than seventy (70) days' notice or prior public disclosure of the date of the scheduled annual meeting is given or made, notice by the stockholder to be timely must be so delivered or received not later than the close of business on the tenth (10th) day following the earlier of the day on which such notice of the date of the scheduled annual meeting was mailed or the day on which such public disclosure was made. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the proposal desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business and any other stockholders known by such stockholder to be supporting such proposal, (iii) the class and number of shares of the Corporation's stock which are beneficially owned by the stockholder on the date of such stockholder notice and by any other stockholders known by such stockholder to be supporting such proposal on the date of such stockholder notice, and (iv) any financial interest of the stockholder in such proposal. (b) If the presiding officer of the annual meeting determines that a stockholder proposal was not made in accordance with the terms of this Section 8, he shall so declare at the annual meeting and any such proposal shall not be acted upon at the annual meeting. (c) This provision shall not prevent the consideration and approval or disapproval at the annual meeting of reports of officers, directors and committees of the Board of Directors, but, in connection with such reports, no business shall be acted upon at such annual meeting unless stated, filed and received as herein provided. (d) Any stockholder seeking to bring a proposal before an annual meeting of the Corporation shall continue to be subject, to the extent applicable, to the requirements of Section 14(a) of the Securities Act of 1934, as amended, and the regulations thereunder, as well as the requirements of this Section 8. ARTICLE III DIRECTORS SECTION 1. Number. The business and property of the Corporation shall be conducted and managed by a Board of Directors consisting of not less than three (3) or more than fourteen (14) members, none of whom need be a stockholder. The Board of Directors of the Corporation shall initially be composed of three (3) directors, but the Board may at any time by resolution increase or decrease the number of directors to not more than fourteen (14) or less than three (3). The vacancies resulting from any such increase in the Board of Directors, or an increase resulting from an amendment of this Section, shall be filled as provided in Section 3 of this ARTICLE III. SECTION 2. Term of Office. Except as otherwise provided by law such director shall hold office until the next annual meeting of stockholders, and until his successor is duly elected and qualified or until his earlier death or resignation. SECTION 3. Vacancies. If any vacancy shall occur among the directors, or if the number of directors shall at any time be increased, the directors in office, although less than a quorum, by a majority vote may fill the vacancies or newly created directorships, or any such vacancies or newly created directorships may be filled by the stockholders at any meeting. When one or more directors shall resign from the Board of Directors, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as herein provided in the filling of other vacancies. SECTION 4. Meetings. Meetings of the Board of Directors shall be held at such place within or without the State of Delaware as may from time to time be fixed by resolution of the Board of Directors or by the Chairman of the Board, or the CEO as may be specified in the notice or waiver of notice of any meeting. A regular meeting of the Board of Directors may be held without notice immediately following the annual meeting of stockholders at the place where such annual meeting is held. Regular meetings of the Board may also be held without notice at such time and place as shall from time to time be determined by resolution of the Board of Directors. Special meetings of the Board of Directors may be called by the Chairman of the Board, the CEO or the Secretary and shall be called by the Secretary on the written request of two members of the Board of Directors. Notice of any special meeting shall be given to each director at least (a) twelve (12) hours before the meeting by telephone or by being personally delivered or sent by telex, telecopy, telegraph, or similar means or (b) three (3) days before the meeting if delivered by mail to the director's residence or usual place of business. Such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage prepaid, or when transmitted if sent by telex, telecopy, telegraph or similar means. Neither the business to be transacted at, nor the purpose of, any special meeting of the Board of Directors needs to be specified in the notice or waiver of notice of such meeting. Members of the Board of Directors may participate in a meeting of such Board by means of conference telephone or similar communication equipment by means of which all persons participating in the meeting can hear each other, and participation in the meeting pursuant hereto shall constitute presence in person at such meeting. Any director may waive notice of any meeting by a writing signed by the director entitled to the notice and filed with the minutes or corporate records. The attendance at or participation of the director at a meeting shall constitute waiver of notice of such meeting, unless the director at the beginning of the meeting or promptly upon his arrival objects to holding the meeting or transacting business at the meeting. SECTION 5. Quorum. A majority, but not less than two (2), of the directors shall constitute a quorum for the transaction of business. If at any meeting of the Board of Directors there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time without notice other than announcement of the adjournment at the meeting, and at such adjourned meeting at which a quorum is present any business may be transacted which might have been transacted at the meeting as originally notified. SECTION 6. Compensation. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors, a fixed sum for attendance at each meeting of the Board of Directors and/or a stated fee as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of the Executive Committee and/or of other committees may be allowed like compensation and reimbursement of expenses for attending committee meetings. SECTION 7. Chairman. From its members, the Board of Directors will elect a chairman to preside over meetings of the shareholders and of the Board. The Chairman may simultaneously serve as any Officer of the Corporation set forth in Article V. The Board may elect one or more Vice Chairmen. In the absence of the Chairman or a Vice Chairman, if any, the Board shall designate a person to preside at such meetings. The director's fee of the Chairman and the Vice Chairman, if any, will be set by the Board. SECTION 8. Director Nominations. Nominations for the election of directors may be made by the Board of Directors or a nominating committee appointed by the Board of Directors or by any stockholder entitled to vote in the election of directors generally. However, any stockholder entitled to vote in the election of directors generally may nominate one or more persons for election as directors at a meeting only if written notice of such stockholder's intent to make such nomination or nominations has been given, either by personal delivery or by United States mail, postage prepaid, to the Secretary of the Corporation not later than (i) with respect to an election to be held at an annual meeting of stockholders, ninety (90) days prior to the first anniversary date of the immediately preceding annual meeting, and (ii) with respect to an election to be held at a special meeting of stockholders for the election of directors, the close of business on the tenth (10th) day following the date on which notice of such meeting is first given to stockholders. Each such notice shall set forth: (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated: (b) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (d) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission as then in effect; and (e) the consent of each nominee to serve as a director of the Corporation if so elected. The presiding officer of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure. SECTION 9. Director Stock Ownership in the Corporation. Each director elected or appointed to the Board of Directors shall own shares of common stock of the Corporation. On and after the third annual anniversary of a director's election or appointment to the Board of Directors, each director shall own shares of common stock of the Corporation having a fair market value of not less than 200% of the amount of the Board of Directors' annual retainer as then in effect. ARTICLE IV EXECUTIVE COMMITTEE AND OTHER COMMITTEES SECTION 1. Executive Committee. The Board of Directors may, by resolution passed by a majority of the whole Board, appoint an Executive Committee of two (2) or more members, to serve during the pleasure of the Board of Directors, to consist of such directors as the Board of Directors may from time to time designate. The Chairman of the Executive Committee shall be designated by the Board of Directors. SECTION 2. Procedure. The Executive Committee, by a vote of a majority of its members, shall fix its own times and places of meeting, shall determine the number of its members constituting a quorum for the transaction of business, and shall prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. Members of the Executive Committee or any other committee may participate in a meeting of such Committee by means of conference telephone or similar communication equipment by means of which all persons participating in the meeting can hear each other, and participation in the meeting pursuant hereto shall constitute presence in person at such meeting. SECTION 3. Powers. During the intervals between the meetings of the Board of Directors, the Executive Committee shall possess and may exercise all the powers of the Board of Directors in the management and direction of the business and affairs of the Corporation, to the extent permitted by law. SECTION 4. Minutes. The Executive Committee shall keep regular minutes of its proceedings and all action by the Executive Committee shall be reported to the Board of Directors at its next meeting. Such action shall be subject to review by the Board of Directors, provided that no rights of third parties shall be affected by such review. SECTION 5. Other Committees. From time to time the Board of Directors, by the affirmative vote of a majority of the whole Board of Directors, may appoint other committees for any purpose or purposes, and such committees shall have such powers as shall be conferred by the resolution of appointment, and as shall be permitted by law. ARTICLE V OFFICERS SECTION 1. Officers. The Board of Directors shall elect, as officers, a Chief Executive Officer ("CEO"), a President, a Treasurer and a Secretary, and in their discretion one or more of the following officers: Executive Vice Presidents, Senior Vice Presidents, Vice Presidents, Assistant Secretaries, and Assistant Treasurers. Such officers shall be elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders, and each shall hold office until the corresponding meeting of the Board of Directors in the next year and until his successor shall have been duly elected and qualified, or until he shall have died or resigned or shall have been removed in the manner provided herein. The powers and duties of two or more offices may be exercised and performed by the same person, except the offices of CEO and Secretary. SECTION 2. Vacancies. Any vacancy in any office may be filled for the unexpire portion of the term by the Board of Directors at any regular or special meeting. SECTION 3. Chief Executive Officer The Chief Executive Officer shall be the chief executive officer (CEO) of the Corporation. Subject to the direction of the Board of Directors, he shall have and exercise direct charge of and general supervision over the business and affairs of the Corporation and shall perform such other duties as may be assigned to him from time to time by the Board of Directors. SECTION 4. President. The President shall perform such duties as the Board of Directors may prescribe. In the absence or disability of the CEO, the President shall perform and exercise the powers of the CEO. In addition, the President shall perform such duties as from time to time may be delegated to him by the CEO. SECTION 5. Executive Vice Presidents. The Executive Vice Presidents shall perform such duties as the Board of Directors may prescribe. In the absence or disability of the CEO and President, the Executive Vice Presidents in the order of their seniority or in such order as may be specified by the Board of Directors, shall perform the duties of CEO. In addition, the Executive Vice Presidents shall perform such duties as may from time to time be delegated to them by the CEO. SECTION 6. Senior Vice Presidents. The Senior Vice Presidents shall perform such duties as the Board of Directors may prescribe. In the absence or disability of the CEO, President, and the Executive Vice Presidents, the Senior Vice Presidents in the order of their seniority or in such other order as may be specified by the Board of Directors, shall perform the duties and exercise the powers of the President. In addition, the Senior Vice Presidents shall perform such duties as from time to time may be delegated to them by the CEO. SECTION 7. Vice Presidents. The Vice Presidents shall perform such duties as the Board of Directors may prescribe. In the absence or disability of the CEO, President, the Executive Vice Presidents and the Senior Vice Presidents, the Vice Presidents in the order of their seniority or in such other order as may be specified by the Board of Directors, shall perform the duties and exercise the powers of the President. In addition, the Vice Presidents shall perform such duties as may from time to time be delegated to them by the CEO. SECTION 8. Treasurer. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited, in the name of the Corporation, all moneys or other valuable effects in such banks, trust companies or other depositaries as shall, from time to time, be selected by the Board of Directors; he may endorse for collection on behalf of the Corporation, checks, notes and other obligations; he may sign receipts and vouchers for payments made to the Corporation; singly or jointly with another person as the Board of Directors may authorize, he may sign checks of the Corporation and pay out and dispose of the proceeds under the direction of the Board of Directors; he shall cause to be kept correct books of account of all the business and transactions of the Corporation, shall see that adequate audits thereof are currently and regularly made, and shall examine and certify the accounts of the Corporation; he shall render to the Board of Directors, the Executive Committee, the Chairman of the Board, the Vice Chairman, the CEO or to the President, whenever requested, an account of the financial condition of the Corporation; he may sign with the Chairman of the Board, the Vice Chairman of the Board, the CEO, the President or a Vice President, certificates of stock of the Corporation; and, in general, shall perform all the duties incident to the office of a treasurer of a Corporation, and such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 9. Assistant Treasurers. The Assistant Treasurers in order of their seniority shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties as the CEO, or the Board of Directors shall prescribe. SECTION 10. Secretary. The Secretary shall keep the minutes of all meetings of the stockholders and of the Board of Directors in books provided for the purpose; he shall see that all notices are duly given in accordance with the provisions of law and these Bylaws; he shall be custodian of the records and of the corporate seal or seals of the Corporation; he shall see that the corporate seal is affixed to all documents, the execution of which, on behalf of the Corporation, under its seal, is duly authorized and when the seal is so affixed he may attest the same; he may sign, with the Chairman of the Board, the Vice Chairman, the CEO, the President or a Vice President, certificates of stock of the Corporation; and in general he shall perform all duties incident to the office of a secretary of a corporation, and such other duties as from time to time may be assigned to him by the Board of Directors or the CEO. SECTION 11. Assistant Secretaries. The Assistant Secretaries in order of their seniority shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties as the CEO, or the Board of Directors shall prescribe. SECTION 12. Subordinate Officers. The Board of Directors may appoint such subordinate officers as it may deem desirable. Each such officer shall hold office for such period, have such authority and perform such duties as the Board of Directors may prescribe. The Board of Directors may, from time to time, authorize any officer to appoint and remove subordinate officers and to prescribe the powers and duties thereof. SECTION 13. Compensation. The Board of Directors shall have power to fix the compensation of all officers of the Corporation. It may authorize any officer, upon whom the power of appointing subordinate officers may have been conferred, to fix the compensation of such subordinate officers. SECTION 14. Removal. Any officer of the Corporation may be removed, with or without cause, by a majority vote of the Board of Directors at a meeting called for that purpose. SECTION 15. Bonds. The Board of Directors may require any officer of the Corporation to give a bond to the Corporation, conditional upon the faithful performance of his duties, with one or more sureties and in such amounts as may be satisfactory to the Board of Directors. ARTICLE VI CERTIFICATES OF STOCK SECTION 1. Form and Execution of Certificates. The interest of each stockholder of the Corporation shall be evidenced by a certificate or certificates for shares of stock in such form as may be prescribed from time to time by law and by the Board of Directors. The certificates of stock of each class and series now authorized or which may hereafter be authorized by the Certificate of Incorporation shall be consecutively numbered and signed by either the Chairman of the Board or the CEO or the President or a Vice President together either with the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer of the Corporation, and may be countersigned and registered in such manner as the Board of Directors may prescribe, and shall bear the corporate seal or a printed or engraved facsimile thereof. Where any such certificate is signed by a transfer agent or transfer clerk and by a registrar, the signatures of any such Chairman of the Board, CEO, President, Vice President, Treasurer, Assistant Treasurer, Secretary or Assistant Secretary upon such certificate may be facsimiles engraved or printed. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been placed upon, such certificate or certificates shall have ceased to be such, whether because of death, resignation or otherwise, before such certificate or certificates shall have been issued and delivered, such certificate or certificates may nevertheless be issued and delivered with the same effect as if such officer or officers had not ceased to be such at the date of its issue and delivery. SECTION 2. Transfer of Shares. The shares of the stock of the Corporation shall be transferred on the books of the Corporation by the holder thereof in person or by his attorney lawfully constituted, upon surrender for cancellation of certificates for the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof or guaranty of the authenticity of the signature as the Corporation or its agents may reasonably require. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, except as otherwise expressly provided by law. SECTION 3. Closing of Transfer Books and Record Dates. The Board of Directors may in its discretion prescribe in advance a period not exceeding sixty (60) days prior to the date of any meeting of the stockholders or prior to the last day on which the consent or dissent of stockholders may be effectively expressed for any purpose without a meeting, during which no transfer of stock on the books of the Corporation may be made; or in lieu of prohibiting the transfer of stock, may fix in advance a time not more than sixty (60) days prior to the date of any meeting of stockholders or prior to the last day on which the consent or dissent of stockholders may be effectively expressed for any purpose without a meeting, as the time as of which stockholders entitled to notice of and to vote at such a meeting or whose consent or dissent is required or may be expressed for any purpose, as the case may be, shall be determined; and all persons who were holders of record of voting stock at such time and no others shall be entitled to notice of and to vote at such meeting or to express their consent or dissent, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any record date fixed as aforesaid. The Board of Directors may also, in its discretion, fix in advance a date not exceeding sixty (60) days preceding the date fixed for the payment of any dividend or the making of any distribution, or for the delivery of evidence of rights, or evidences of interests arising out of any issuance, change, conversion or exchange of capital stock, as a record date for the determination of the stockholders entitled to receive or participate in any such dividend, distribution, rights or interests, notwithstanding any transfer of any stock on the books of the Corporation after any record date fixed as aforesaid, or, at its option, in lieu of so fixing a record date, may prescribe in advance a period not exceeding sixty (60) days prior to the date for such payment, distribution or delivery during which no transfer of stock on the books of the Corporation may be made. SECTION 4. Lost or Destroyed Certificates. In case of the loss or destruction of any outstanding certificate of stock, a new certificate may be issued upon the following conditions: The owner of said certificate shall file with the Secretary of the Corporation an affidavit giving the facts in relation to the ownership, and in relation to the loss or destruction of said certificate, stating its number and the number of shares represented thereby; such affidavit to be in such form and contain such statements as shall satisfy the Chairman of the Board and Secretary that said certificate has been accidentally destroyed or lost, and that a new certificate ought to be issued in lieu thereof. Upon being so satisfied, the Chairman of the Board and Secretary shall require such owner to file with the Secretary a bond in such penal sum and in such form as they may deem advisable, and with a surety or sureties approved by them, to indemnify and save harmless the Corporation from any claim, loss, damage or liability which may be occasioned by the issuance of a new certificate in lieu thereof, or if they deem it appropriate, to waive the requirement to secure a bond with a surety. Upon such bond being so filed, a new certificate for the same number of shares shall be issued to the owner of the certificate so lost or destroyed; and the transfer agent and registrar of stock, if any, shall countersign and register such new certificate upon receipt of a written order signed by the said Chairman of the Board and Secretary, and thereupon the Corporation will save harmless said transfer agent and registrar in the premises. The CEO or the President or any Vice President may act hereunder in the stead of the Chairman of the Board, and an Assistant Secretary in the stead of the Secretary. In case of the surrender of the original certificate, in lieu of which a new certificate has been issued, or the surrender of such new certificate, for cancellation, the bond of indemnity given as a condition of the issue of such new certificate may be surrendered. A new certificate may be issued without requiring any bond when in the judgment of the Board of Directors it is proper to do so. ARTICLE VII CHECKS, NOTES, ETC. SECTION 1. Execution of Checks, Notes, etc. All checks and drafts on the Corporation's bank accounts and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money, shall be signed by such officer or officers, agent or agents, as shall be thereunto authorized from time to time by the Board of Directors. SECTION 2. Execution of Contracts, Assignments, etc. All contracts, agreements, endorsements, assignments, transfers, stock powers, or other instruments (except as provided in Sections 1 and 3 of this Article VII) shall be signed by the CEO, the President, any Executive Vice President, Senior Vice President, or Vice President and by the Secretary or any Assistant Secretary or the Treasurer or any Assistant Treasurer, or by such other officer or officers, agent or agents, as shall be thereunto authorized from time to time by the Board of Directors. SECTION 3. Execution of Proxies. The Chairman of the Board, the CEO, President, or a Vice President of the Corporation may authorize from time to time the signature and issuance of proxies to vote upon shares of stock of other companies standing in the name of the Corporation. All such proxies shall be signed in the name of the Corporation by the Chairman of the Board, the CEO, President or a Vice President and by the Secretary or an Assistant Secretary. ARTICLE VIII WAIVERS AND CONSENTS SECTION 1. Waivers. Whenever under the provisions of any law or under the provisions of the Certificate of InCorporation of the Corporation or these Bylaws, the Corporation, or the Board of Directors or any committee thereof, is authorized to take any action after notice to stockholders or the directors or the members of such committee, or after the lapse of a prescribed period of time, such action may be taken without notice and without the lapse of any period of time if, at any time before or after such action be completed, such requirements be waived in writing by the person or persons entitled to said notice or entitled to participate in the action to be taken, or, in the case of a stockholder, by his attorney thereunto authorized. SECTION 2. Consents. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee of the Board of Directors may be taken without a meeting, if prior to such action a written consent thereto is signed by all members of the Board of Directors or of such committee as the case may be, and such written consent is filed with the minutes of proceedings of the Board of Directors or of such committee. ARTICLE IX DIVIDENDS AND RESERVE FUNDS SECTION 1. Dividends. Except as otherwise provided by law or by the Certificate of InCorporation, the Board of Directors may declare dividends out of the surplus of the Corporation at such times and in such amounts as it may from time to time designate. SECTION 2. Reserve Funds. Before crediting net profits to the surplus in any year, there may be set aside out of the net profits of the Corporation for that year such sum or sums as the Board of Directors from time to time in its absolute discretion may deem proper as a reserve fund or funds to meet contingencies or for equalizing dividends or for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall deem conducive to the interests of the Corporation. ARTICLE X INSPECTION OF BOOKS The Board of Directors shall determine from time to time whether, and if allowed when and under what conditions and regulations, the accounts and books of the Corporation (except such as may by statute be specifically open to inspection) or any of them shall be open to the inspection of the stockholders; and the stockholders' rights in this respect are and shall be restricted and limited accordingly. ARTICLE XI FISCAL YEAR The fiscal year of the Corporation shall end on the thirty first day of December each year commencing with December 31, 1992, unless another date shall be fixed by resolution of the Board of Directors. After such date is fixed, it may be changed for future fiscal years at any time or from time to time by further resolution of the Board of Directors. ARTICLE XII SEAL The corporate seal shall be circular in form and shall contain the name of the Corporation, the state of incorporation, and the words "Corporate Seal". ARTICLE XIII AMENDMENTS SECTION 1. By Stockholders. These Bylaws may be amended by a majority vote of the stock entitled to vote and present or represented at any annual or special meeting of the stockholders at which a quorum is present or represented, if notice of the proposed amendment shall have been contained in the notice of the meeting. SECTION 2. By Directors. Except as otherwise specifically provided in the Bylaws, if any, adopted by the stockholders, these Bylaws may be amended by the affirmative vote of a majority of the Board of Directors, at any regular meeting or special meeting thereof, if notice of the proposed amendment shall have been contained in the notice of such meeting. If any Bylaw regulating an impending election of directors is adopted or amended or repealed by the Board of Directors, there shall be set forth in the notice of the next meeting of the stockholders for the election of directors the Bylaws so adopted or amended or repealed together with a concise statement of the changes made. ARTICLE XIV INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS The Corporation shall indemnify and reimburse each person, and his heirs, executors or administrators, who is made or is threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he was or is a director, officer, employee or agent of the Corporation or was or is serving at the request of the Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust, or other enterprise, against expenses (including attorney's fees), judgments, fines and amounts paid in settlement, actually or reasonably incurred by him in connection with such action, suit or proceeding and shall advance the expenses incurred by any officer or director in defending any such action, suit or proceeding to the full extent permitted by Section 145 of the General Corporation Law of the State of Delaware as it may be amended or supplemented from time to time. Such right of indemnification or advancement of expenses of any such person shall not be deemed exclusive of any other rights to which he may be entitled under any statute, bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. The foregoing provisions of this Article XIV shall be deemed to be a contract between the Corporation and each person who serves in any capacity specified therein at any time while this bylaw is in effect, and any repeal or modification thereof shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought based in whole or in part upon any such state of facts. EXHIBIT 10s January 1, 1999 TO: FROM: Richard Ramsey SUBJECT: Compensation Plan, Fiscal Year 1999 Your compensation plan for fiscal year 1999 is outlined below. I. FY 1999 Base Salary Your Base Salary for FY99 shall be $. II. Your bonus for FY99 shall be determined by multiplying the percent determined in the following TARGET INCENTIVE GOALS times the FACTORS set forth below. The bonus amounts payable are subject to limitations set forth in Paragraph III and IV. TARGET INCENTIVE GOALS: 1. INCOME Each percentage point of positive change that the Tandy Corporation and subsidiaries income from operations (before income taxes) increases from $. 2. EARNINGS PER SHARE Each percentage point of positive change that the Tandy Corporation diluted earnings per share increases from $ per share. 3. STOCK PRICE a. Each percentage point of positive change that the Tandy Corporation stock price increases, based on the average daily closing price for 1998 and 1999. b. If Tandy's average daily closing stock price outperforms the "Peer Group's" average daily closing stock price, you will receive an additional bonus of $. Income and Earnings Per Share will be calculated excluding the effect of Financial Accounting Standards requirements i.e. FAS121. Your factors to be used for each of the calculations above are as follows: 1. Income increase: $ 2. Earnings per share increase: $ 3. Stock price increase: $ INCOME - TE, ETC. You will receive a bonus of .% for each dollar of income (Pre Admin) from the TE-US and TE-Asia divisions net income (Pre Admin). INCOME - REPAIR, ETC. You will receive a bonus of .% for each dollar of income (Pre Admin) for the Tandy Retail Services (Repair, Parts Departments), the Distribution Operating Units, and Tandy Transportation. Percentages shall be calculated to two decimal points. III. Minimum Bonus Minimum Threshold Increase Percent for Each Target Incentive Goal Minimum Increase % ------------------ 1. Tandy Corp Income 2. Earnings per share 3. Stock price a. Tandy Stock Increase b. Peer Group N/A 4. Net Income - TE, etc. Income 5. Net Income - Repair, etc. Income Bonus amounts earned from each of the factors which exceed the Minimum Increase above will be accumulated. No bonus will be paid unless the accumulated bonus exceeds % of your base salary. Bonus will only be paid on each goal which exceeds the Minimum Increase % set forth above. IV. Maximum Bonus: The bonus paid will be limited to an amount not to exceed $. V. This compensation plan is not an employment contract, but a method of calculating your total earnings. You forfeit your rights to receive a bonus if you resign before the end of the current fiscal year. If you are terminated by the Company, your rights to receive a bonus will be at the sole discretion of the Company and in such amount as the Company might decide. If you retire at age 55 or over, provided the Company has given its consent to your early retirement, or die before the end of the then current fiscal year, your bonus will be calculated using actual results to the nearest end of the month preceding or succeeding such event, which will then be adjusted using the latest budget to include the remaining months of the year. Example: Retirement date is August 10. Bonus calculations would include actual results thru July 31 and the latest budgeted numbers from August thru December. The bonus calculated, which will be an annual bonus, will then be prorated for the partial year worked i.e. 7/12 times annual bonus calculated in this example. The Stock Price percentage will be calculated using only actual results to the nearest end of the month for this year and last year. The amount will be paid to you or the legal representative of your estate. VI. If at any time during your continued employment, your responsibility, duties or title changes, this plan is subject to revision or termination by the Company at the time of the foregoing change. A partial year bonus will be calculated using the methodology set forth in paragraph V. January 1, 1999 TO: FROM: Richard Ramsey SUBJECT: Compensation Plan, Fiscal Year 1999 Your compensation plan for fiscal year 1999 is outlined below. I. FY 1999 Base Salary Your Base Salary for FY98 shall be $. II. Your bonus for FY99 shall be determined by multiplying the percent determined in the following TARGET INCENTIVE GOALS times the FACTORS set forth below. The bonus amounts payable are subject to limitations set forth in Paragraph III and IV. TARGET INCENTIVE GOALS: TANDY CORPORATION a. INCOME Each percentage point of positive change that the Tandy Corporation and subsidiaries income from operations (before income taxes) increases from $. b. EARNINGS PER SHARE Each percentage point of positive change that the Tandy Corporation diluted earnings per share increases from $ per share. c. STOCK PRICE Each percentage point of positive change that the Tandy Corporation stock price increases, based on the average daily closing price for 1998 and 1999. If Tandy's average daily closing stock price outperforms the "Peer Group's" average daily closing stock price, you will receive an additional bonus of $. Income and Earnings Per Share will be calculated excluding the effect of Financial Accounting Standards requirements i.e. FAS121. RADIO SHACK INCOME Each percentage point of positive change that the Radio Shack Division net income (before income taxes) increase from $. Radio Shack results will be adjusted to reflect TE Manufacturing, distribution operations, A&A and Tandy Retail Services for 1998 and 1999. Percentages shall be calculated to two decimal points. Your factors to be used for each of the calculations above are as follows: TANDY a. Income increase: $ b. Earnings per share increase: $ c. Stock price increase: $ RADIO SHACK Income increase: $ III. Minimum Bonus Minimum Threshold Increase Percent for Each Target Incentive Goal Minimum Increase % ------------------ TANDY a. Income b. Earnings per share c. Stock price a. Tandy Stock Increase b. Peer Group N/A RADIO SHACK Income Bonus amounts earned from each of the factors which exceed the Minimum Increase above will be accumulated. No bonus will be paid unless the accumulated bonus exceeds % of your base salary. Bonus will only be paid on each goal which exceeds the Minimum Increase % set forth above. IV. Maximum Bonus: The bonus paid will be limited to an amount not to exceed $. V. This compensation plan is not an employment contract, but a method of calculating your total earnings. You forfeit your rights to receive a bonus if you resign before the end of the current fiscal year. If you are terminated by the Company, your rights to receive a bonus will be at the sole discretion of the Company and in such amount as the Company might decide. If you retire at age 55 or over, provided the Company has given its consent to your early retirement, or die before the end of the then current fiscal year, your bonus will be calculated using actual results to the nearest end of the month preceding or succeeding such event, which will then be adjusted using the latest budget to include the remaining months of the year. Example: Retirement date is August 10. Bonus calculations would include actual results thru July 31 and the latest budgeted numbers from August thru December. The bonus calculated, which will be an annual bonus, will then be prorated for the partial year worked i.e. 7/12 times annual bonus calculated in this example. The Stock Price percentage will be calculated using only actual results to the nearest end of the month for this year and last year. The amount will be paid to you or the legal representative of your estate. VI. If at any time during your continued employment, your responsibility, duties or title changes, this plan is subject to revision or termination by the Company at the time of the foregoing change. A partial year bonus will be calculated using the methodology set forth in paragraph V. December 31, 1998 TO: FROM: Richard Ramsey SUBJECT: Compensation Plan, Fiscal Year 1999 Your compensation plan for fiscal year 1999, as approved by the Organization and Compensation Committee of the Board of Directors, is outlined below. Your compensation plan for fiscal year 1999 is outlined below. I. FY 1999 Base Salary Your Base Salary for FY98 shall be $. II. Your bonus for FY99 shall be determined by multiplying the percent determined in the following TARGET INCENTIVE GOALS times the FACTORS set forth below. The bonus amounts payable are subject to limitations set forth in Paragraph III and IV. TARGET INCENTIVE GOALS: 1. INCOME Each percentage point of positive change that the Tandy Corporation and subsidiaries income from operations (before income taxes) increases from $. 2. EARNINGS PER SHARE Each percentage point of positive change that the Tandy Corporation diluted earnings per share increases from the $ per share. 3. STOCK PRICE a. Each percentage point of positive change that the Tandy Corporation stock price increases, based on the average daily closing price for 1998 and 1999. b. If Tandy's average daily closing stock price outperforms the "Peer Group's" average daily closing stock price, you will receive an additional bonus of $. Income and Earnings Per Share will be calculated excluding the effect of Financial Accounting Standards requirements i.e. FAS121. Percentages shall be calculated to two decimal points. Your factors to be used for each of the calculations above are as follows: 1. Income increase: $ 2. Earnings per share increase: $ 3. Stock price increase: $ III. Minimum Bonus Minimum Threshold Increase Percent for Each Target Incentive Goal Minimum Increase % ------------------ 1. Income 2. Earnings per share 3. Stock price a. Tandy Stock Increase b. Peer Group N/A Bonus amounts earned from each of the factors which exceed the Minimum Increase above will be accumulated. No bonus will be paid unless the accumulated bonus exceeds % of your base salary. Bonus will only be paid on each goal which exceeds the Minimum Increase % set forth above. IV. Maximum Bonus: The bonus paid will be limited to an amount not to exceed $. V. This compensation plan is not an employment contract, but a method of calculating your total earnings. You forfeit your rights to receive a bonus if you resign before the end of the current fiscal year. If you are terminated by the Company, your rights to receive a bonus will be at the sole discretion of the Company and in such amount as the Company might decide. If you retire at age 55 or over, provided the Company has given its consent to your early retirement, or die before the end of the then current fiscal year, your bonus will be calculated using actual results to the nearest end of the month preceding or succeeding such event, which will then be adjusted using the latest budget to include the remaining months of the year. Example: Retirement date is August 10. Bonus calculations would include actual results thru July 31 and the latest budgeted numbers from August thru December. The bonus calculated, which will be an annual bonus, will then be prorated for the partial year worked i.e. 7/12 times annual bonus calculated in this example. The Stock Price percentage will be calculated using only actual results to the nearest end of the month for this year and last year. The amount will be paid to you or the legal representative of your estate. VI. If at any time during your continued employment, your responsibility, duties or title changes, this plan is subject to revision or termination by the Company at the time of the foregoing change. A partial year bonus will be calculated using the methodology set forth in paragraph V. January 1, 1999 TO: FROM: Richard Ramsey SUBJECT: Compensation Plan, Fiscal Year 1999 Your compensation plan for fiscal year 1999 is outlined below. I. FY 1999 Base Salary Your Base Salary for FY99 shall be $. II. Your bonus for FY99 shall be determined by multiplying the percent determined in the following TARGET INCENTIVE GOALS times the FACTORS set forth below. The bonus amounts payable are subject to limitations set forth in Paragraph III and IV. TARGET INCENTIVE GOALS: 1. INCOME Each percentage point of positive change that the Tandy Corporation and subsidiaries income from operations (before income taxes) increases from $. 2. EARNINGS PER SHARE Each percentage point of positive change that the Tandy Corporation diluted earnings per share increases from $ per share. 3. STOCK PRICE a. Each percentage point of positive change that the Tandy Corporation stock price increases, based on the average daily closing price for 1998 and 1999. b. If Tandy's average daily closing stock price outperforms the "Peer Group's" average daily closing stock price, you will receive an additional bonus of $. Income and Earnings Per Share will be calculated excluding the effect of Financial Accounting Standards requirements i.e. FAS121. Percentages shall be calculated to two decimal points. Your factors to be used for each of the calculations above are as follows: 1. Income increase: $ 2. Earnings per share increase: $ 3. Stock price increase: $ III. Minimum Bonus Minimum Threshold Increase Percent for Each Target Incentive Goal Minimum Increase % ------------------ 1. Income 2. Earnings per share 3. Stock price a. Tandy Stock Increase b. Peer Group N/A Bonus amounts earned from each of the factors which exceed the Minimum Increase above will be accumulated. No bonus will be paid unless the accumulated bonus exceeds % of your base salary. Bonus will only be paid on each goal which exceeds the Minimum Increase % set forth above. IV. Maximum Bonus: The bonus paid will be limited to an amount not to exceed $. V. This compensation plan is not an employment contract, but a method of calculating your total earnings. You forfeit your rights to receive a bonus if you resign before the end of the current Fiscal year. If you are terminated by the Company, your rights to receive a bonus will be at the sole discretion of the Company and in such amount as the Company might decide. If you retire at age 55 or over, provided the Company has given its consent to your early retirement, or die before the end of the then current fiscal year, your bonus will be calculated using actual results to the nearest end of the month preceding or succeeding such event, which will then be adjusted using the latest budget to include the remaining months of the year. Example: Retirement date is August 10. Bonus calculations would include actual results thru July 31 and the latest budgeted numbers from August thru December. The bonus calculated, which will be an annual bonus, will then be prorated for the partial year worked i.e. 7/12 times annual bonus calculated in this example. The Stock Price percentage will be calculated using only actual results to the nearest end of the month for this year and last year. The amount will be paid to you or the legal representative of your estate. VI. If at any time during your continued employment, your responsibility, duties or title changes, this plan is subject to revision or termination by the Company at the time of the foregoing change. A partial year bonus will be calculated using the methodology set forth in paragraph V. EXHIBIT 11 TANDY CORPORATION STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
Year Ended December 31, (In millions, except per -------------------------------------------------------- share amounts) 1999 1998 1997 1996 1995 - ----------------------------------------------------------------------------------------------------- Ratio of Earnings to Fixed Charges: Income (loss) from continuing operations $ 297.9 $ 61.3 $ 186.9 $ (91.6) $ 211.9 Plus provision (benefit)for income taxes 182.6 38.4 117.0 (54.0) 131.3 -------- -------- -------- -------- -------- Income (loss) before income taxes 480.5 99.7 303.9 (145.6) 343.2 -------- -------- -------- -------- -------- Fixed charges: Interest expense and amortization of debt discount 37.2 45.4 46.1 36.4 33.7 Amortization of issuance expense 0.8 0.7 0.4 0.2 0.3 Appropriate portion (33 1/3%) of rentals 68.5 72.5 74.2 80.0 72.5 -------- -------- -------- -------- -------- Total fixed charges 106.5 118.6 120.7 116.6 106.5 -------- -------- -------- -------- -------- Earnings (loss) before income taxes and fixed charges $ 587.0 $ 218.3 $ 424.6 $ (29.0) $ 449.7 ======== ======== ======== ======== ======== Ratio of earnings to fixed charges 5.51 1.84 3.52 (a) 4.22 ======== ======== ======== ======== ======== Ratio of Earnings to Fixed Charges and Preferred Dividends: Total fixed charges, as above $ 106.5 $ 118.6 $ 120.7 $ 116.6 $ 106.5 Preferred dividends 5.5 5.8 6.1 6.3 11.3 -------- -------- -------- -------- -------- Total fixed charges and preferred dividends $ 112.0 $ 124.4 $ 126.8 $ 122.9 $ 117.8 ======== ======== ======== ======== ======== Earnings (loss) before income taxes and fixed charges $ 587.0 $ 218.3 $ 424.6 $ (29.0) $ 449.7 ======== ======== ======== ======== ======== Ratio of earnings to fixed charges and preferred dividends 5.24 1.75 3.35 (b) 3.82 ======== ======== ======== ======== ======== (a) Earnings were not sufficient to cover fixed charges during 1996 by approximately $145.6 million. (b) Earnings were not sufficient to cover fixed charges and preferred dividends during 1996 by approximately $151.9 million.
TANDY CORPORATION EXHIBIT 21 SUBSIDIARIES The Company's only significant subsidiary is: State of Incorporation ---------------------- Technology Properties, Inc. (1) Delaware (1) On January 1, 2000, Technology Properties, Inc. was merged into Tandy Finance Corporation, a subsidiary of Tandy Corporation. All of the subsidiaries of Tandy Corporation are included in the Company's consolidated financial statements. All other subsidiaries, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary. TANDY CORPORATION EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 33-37970, 333-27297, 333-44125 and 333-60803) and to the incorporation by reference in the Registration Statements on Form S-8 (Registration Nos. 33-23178, 33-41523, 33-51019, 33-51599, 33-51603, 333-27437, 333-47893, 333-48331, 333-63659, 333-63661, 333-81405 and 333-84057) of Tandy Corporation of our report dated February 23, 2000, relating to the consolidated financial statements, which appear in this Form 10-K. \s\ PricewaterhouseCoopers LLP - ------------------------------- PRICEWATERHOUSECOOPERS LLP Fort Worth, Texas March 24, 2000 EX-27 2 FDS --
5 This schedule contains summary financial information extracted from the consolidated balance sheet and consolidated statements of income contained in Tandy Corporation's 10-K and is qualified in its entirety by reference to such financial statements. 0000096289 TANDY CORPORATION 1,000 USD 12-MOS DEC-31-1999 JAN-1-1999 DEC-31-1999 1 164,600 0 309,900 23,800 861,400 1,403,300 1,035,600 588,800 2,142,000 925,200 319,400 0 72,800 235,800 522,100 2,142,000 4,126,200 4,126,200 2,042,700 2,042,700 9,600 0 16,800 480,500 182,600 297,900 0 0 0 297,900 1.51 1.43
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