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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) FOR
THE TRANSITION PERIOD
Commission file number 1-5571
TANDY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 75-1047710
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1800 One Tandy Center, Fort Worth, Texas 76102
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code
(817) 390-3700
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Name of each exchange
Title of each class on which registered
Common Stock, par value $1 per share New York Stock Exchange
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 19, 1996, the aggregate market value of the
voting stock held by non-affiliates of the registrant was
$2,359,073,020 based on the New York Stock Exchange closing
price.
As of March 19, 1996, there were 60,907,447 shares of the
registrant's Common Stock outstanding.
Documents Incorporated by Reference
Portions of the Proxy Statement for the 1996 Annual Meeting
of Stockholders are incorporated by reference into Part III.
The Index to Exhibits is on Sequential Page No. 57.
Total Pages 159.
(This page intentionally left blank.)
PART I
ITEM 1. BUSINESS.
GENERAL
Tandy Corporation, a Delaware corporation, was incorporated
in 1967 ("Tandy" or the "Company"). The Company engages in
the retail sale of consumer electronics including personal
computers primarily in the United States. The Company's
retail operations include the RadioShack(SM), McDuff
Electronics(R), The Edge in Electronics(R), Computer City(R)
and Incredible Universe(R) store chains. See Item 7
"Management's Discussion and Analysis of Results of
Operations and Financial Condition" for a discussion of
divisional sales data.
RadioShack. RadioShack is the Company's largest
operating division. At December 31, 1995, the RadioShack
division operated 4,831 company-owned stores, including
73 stores in the Specialty Retail Group, located
throughout the United States. These stores average
approximately 2,450 square feet in area and are located
in major malls, strip centers and individual store
fronts, primarily in metropolitan markets. To provide
RadioShack products to smaller communities, RadioShack
had on the same date a network of 2,005 dealer/franchise
stores. The dealers are generally engaged in other
retail operations and augment their sales with RadioShack
products. This network included 69 international dealers
at December 31, 1995.
The company-owned RadioShack(SM) stores carry a broad
assortment of primarily private label electronic parts
and accessories, audio/video equipment, digital satellite
systems, personal computers and cellular and conventional
telephones, as well as specialized products such as
scanners, electronic toys and hard to find batteries.
Personal computers, which account for approximately 10.6%
of the RadioShack division's sales, primarily target
entry level users seeking computers for home, individual
and small business use. RadioShack also provides access
to third party services such as cellular phone, direct
satellite programming, pager service and programming from
other wireless communication providers. RadioShack plans
to expand its company-owned store base to 5,000 locations
by the year 2000. RadioShack is also focusing on
Alternative Channels of Distribution ("ACD"), which are
geared to enhance its "service oriented" approach. A few
ACDs include RadioShack Gift Express(SM) and RadioShack
Unlimited(SM).
On December 30, 1994, the Company adopted a business
restructuring plan to close or convert 233 stores which
included VideoConcepts(R) stores, McDuff Electronics mall
stores and a small number of McDuff Electronics and
Appliance Supercenters. The stores were closed during the
first quarter of 1995. Of the 233 stores, 151
VideoConcepts, 30 McDuff mall stores and 19 McDuff
Supercenters were closed and 33 sites were converted to
RadioShack or Computer City Express(SM) stores. On
January 3, 1995, the Company announced that the Tandy
Name Brand Retail Group would be dissolved and the 73
continuing stores would become part of the Tandy
Specialty Retail Group. See Item 7 "Management's
Discussion and Analysis of Results of Operations and
Financial Condition" and Note 4 of the Notes to
Consolidated Financial Statements for more information on
the plan.
The Company also closed 110 Tandy Name Brand stores in
the first quarter of 1993. See Item 7 "Management's
Discussion and Analysis of Results of Operations and
Financial Condition" and Note 4 of the Notes to
Consolidated Financial Statements for more information.
Computer City. As of December 31, 1995, the Company
and its subsidiaries had 99 Computer City stores open,
including five in Europe and six in Canada. The Computer
City chain operates primarily as a supercenter format
featuring many name brand computers, software and related
products, including IBM, Apple, Sony, Lotus, Borland,
Microsoft, Packard Bell, Compaq, AST and Hewlett-Packard.
The eighty-eight Computer City SuperCenters average about
22,700 square feet and carry approximately 5,000
products. At December 31, 1995, there were 11 Computer
City Express stores which are approximately 12,300 square
feet and serve smaller markets. The Company plans to
open less than 20 additional stores in 1996, which may
include three Computer City Express stores.
Incredible Universe. At December 31, 1995, Tandy and
its subsidiaries operated 17 Incredible Universe stores.
These stores are approximately 184,000 square feet and
offer a broad selection of consumer electronics and
appliances. The Company plans to open at least three
stores in 1996, including a store in Atlanta which will
open in the first quarter.
Supporting the retail operations is an extensive
infrastructure that includes:
A&A International, Inc. - This wholly-owned subsidiary
of the Company serves the wide-ranging international
import/export, sourcing, evaluation, logistics and
quality control needs of the Company. A&A also provides
services for outside customers, such as InterTAN Inc.
("InterTAN"). Most of A&A's activity for InterTAN
involves sourcing of goods from manufacturers in the Far
East. For more discussion on InterTAN see Note 22 of the
Notes to Consolidated Financial Statements.
Tandy Service Centers - The Company maintains a large
service and support network in the consumer electronics
retail industry. These centers repair name brand and
private label products sold through all of the Company's
retail distribution channels. These centers are also the
primary support for The Repair Shop at RadioShack
program. At December 31, 1995 there were 139 service
centers in the U.S. and Canada; however, the Company
plans to close twelve of these centers in the first
quarter of 1996. The Tandy Service division stocks over
one million parts.
Regional Distribution Centers - The 14 distribution
centers operated by the Company ship over 900,000 cartons
each month to the Company's retail outlets. This group
also supports the RadioShack Gift Express and RadioShack
Unlimited services and Tandy's new cross-docking
facility.
Tandy Information Services ("TIS") - TIS collects
information from the retail stores nationwide and updates
large databases with sales and other information. These
databases are sophisticated marketing tools benefiting
every phase of the Company's operations. TIS also
processes inventory, accounting, payroll,
telecommunications and other operating information for
all of the Company's operations. In addition,
specialized information is tracked for the Company's
distribution and corporate activities.
Tandy Credit Corporation - This operation was a wholly
owned subsidiary of the Company that helped to support
sales of the Company's retail operations and provided the
retail divisions with additional marketing flexibility
through the utilization of credit promotions. In the
past, this group maintained and managed Tandy's various
private label credit cards.
In December 1994, the Company sold the Computer City
and Incredible Universe credit card portfolios to SPS
Transaction Services, Inc. ("SPS"), a majority-owned
subsidiary of Dean Witter, Discover & Co. Effective
March 30, 1995, the Company also completed the sale of
the RadioShack and Tandy Name Brand private label credit
card accounts and substantially all related accounts
receivable to SPS. As part of the completed sales
transaction, Tandy Credit Corporation was merged into
Hurley Receivables Corporation, a wholly-owned subsidiary
of SPS, and no longer exists. See Item 7 "Management's
Discussion and Analysis of Results of Operations and
Financial Condition" and Note 3 of the Notes to
Consolidated Financial Statements for more information.
Tandy Transportation, Inc. - A large fleet of tractors
and trailers transports merchandise from manufacturers or
ports of entry to the Company's regional distribution
centers and local distribution facilities and also
delivers to the Company's retail outlets.
Consumer Electronics Manufacturing - Although the
Company sold most of its manufacturing operations in 1993
and 1994, the Company still operates nine manufacturing
facilities in the United States and one overseas
manufacturing operation in China, which is a joint
venture. These 10 manufacturing facilities cover a total
of 1,330,000 square feet and employed approximately 3,000
workers and professionals as of December 31, 1995. The
Company manufactures a variety of products for use in its
consumer electronics retailing operations. These
products include audio, video, telephony, antennas, wire
and cable products and a wide variety of hard to find
parts for consumer electronic products. Most of the
Company's manufacturing output is sold through the
RadioShack store chain. The Taiwan manufacturing plant
was closed in the first half of 1995 and its products are
now being manufactured by the China operations.
SEASONALITY
As is the case with other retail businesses, the Company's
net sales and other revenues are greater during the Christmas
season than during other periods of the year. There is a
corresponding pre-seasonal inventory build-up requiring
working capital associated with the anticipated increased
sales volume. For additional information, see Note 23 of the
Notes to Consolidated Financial Statements.
PATENTS AND TRADEMARKS
Tandy owns or is licensed to use many trademarks related to
its business in the United States and in foreign countries.
Radio Shack, RadioShack, Computer City, Incredible Universe,
McDuff Electronics, Famous Brand Electronics and Optimus are
some of the registered marks most widely used by the Company.
Tandy believes that the RadioShack, Computer City and
Incredible Universe names and marks are well-recognized by
consumers, and that these names and marks are associated with
high-quality service providers. The Company's products are
sold primarily under the RadioShack, Optimus and U.S. Logic
trademarks which are registered in the U.S. and many foreign
countries. The Company believes that the loss of the Radio
Shack name or mark would be material to its business, but
does not believe that the loss of any one trademark
registration would be material.
Tandy also owns various patents relating to retail and
support functions and various products which Tandy has
previously designed and continues to manufacture.
SUPPLIERS
The Company obtains merchandise from a large number of
suppliers from various parts of the world. Alternative
sources of supply exist for most merchandise and raw
materials purchased by the Company. As the Company's product
line is diverse, the Company would not expect a lack of
availability of any single product or raw material to have a
material impact on its operations. During 1995, the Company
sold approximately $185,000,000 of IBM computer products
which accounted for approximately 17% of total computer
hardware product sales within the Company. The increase in
sales of IBM computer hardware products is mainly due to a
contract between IBM and the RadioShack division regarding
sales of IBM Aptiva products. The exclusive IBM Aptiva
agreement terminated on December 1, 1995. Management does
not believe that the loss of this one supplier would have a
material impact on its operations.
BACKLOG ORDERS
The Company has no material backlog of orders for the
products it sells.
COMPETITION
The consumer electronics retail business is highly
competitive. The Company competes in the sale of its
products and services with department stores, mail order
houses, discount stores, general merchants, home appliance
stores and gift stores which sell comparable products
manufactured by others. Competitors range in size from local
drug and hardware stores to large chains and department
stores. Computer store chains and franchise groups, as well
as independent computer stores and several major retailers,
compete with the Company in the retail personal computer
marketplace. Consumer electronics and computer mail-order
companies also compete with the Company. The products which
compete with those sold by the Company are manufactured by
numerous domestic and foreign manufacturers. Many of these
products carry nationally recognized brand names or private
labels and are sold in markets common to the Company. Some
of the Company's competitors have financial resources equal
to or greater than the Company's resources.
Management believes that the many factors important to its
competitive position are price, quality, service and the
broad selection of electronic products and computers carried
at conveniently located retail outlets. The Company's
utilization of trained personnel and its ability to use
national and local advertising media are important to the
Company's ability to compete in the consumer electronics
marketplace. Management of the Company believes it is a
strong competitor with respect to each of the factors
referenced above. Given the highly competitive nature of the
consumer electronics retail business, no assurance can be
given that the Company will continue to compete successfully
with respect to each of the factors referenced above. Also,
the Company would be adversely affected if its competitors
were to offer their products at significantly lower prices,
introduce innovative or technologically superior products not
yet available to the Company or if the Company were unable to
obtain products in a timely manner for an extended period of
time.
The Company focuses on various types of store formats to
address the marketplace. Each of the Company's retailing
formats uses a distinct but complementary path to the
marketplace, based on its unique customer appeal, marketing
strengths and margin structure.
RadioShack. RadioShack stores offer the shopping
convenience of approximately 6,800 dealer and
company-owned stores, primarily private label
high-quality products, unique selection,
knowledgeable personnel and excellent customer
service, including its "service-oriented" approach.
RadioShack has formed strategic alliances with key
vendors in computers, home security and wireless
communications to augment the strong position that it
has historically maintained in core product
categories such as batteries, communications
equipment, antennas and electronic components and
accessories.
The Specialty Retail Group of RadioShack is comprised
of 94 retail outlets, including 73 units that have
been integrated from the now closed Tandy Name Brand
division. The Tandy Specialty Retail Group carries
name brand consumer electronics and appliances
through four distinctly different types of store
formats.
Computer City. Computer City stores offer
approximately 5,000 different name brand items, great
prices and world-class customer service on computers,
computer software and accessories. While the
SuperCenters average approximately 22,700 square
feet, Computer City Express stores average 12,300
square feet, serve smaller markets and also
supplement SuperCenters in larger markets.
Incredible Universe. Incredible Universe gigastores
provide the customer with a "universe" of choices
with approximately 184,000 square feet of over 85,000
different stock-keeping units, including name brand
consumer electronics and appliances.
The Company has faced intense competition in its consumer
electronics retailing businesses. Competition is driven by
technology and product cycles, as well as the economy. In
the consumer electronics retailing business, competitive
factors include price, product quality, product features,
consumer services, manufacturing and distribution capability
and brand reputation.
RESEARCH AND DEVELOPMENT
Research and development expenditures are not significant.
EMPLOYEES
As of December 31, 1995, the Company had approximately
49,300 employees. The preceding number includes
approximately 4,000 temporary retail employees which were
hired for the Christmas selling season. Management of the
Company considers the relationship between the Company and
its employees to be good. It does not anticipate any work
stoppage due to labor difficulties.
ITEM 2. PROPERTIES.
Information on the Company's properties is in "Management's
Discussion and Analysis of Results of Operations and
Financial Condition" and the financial statements included in
this Form 10-K and is incorporated herein by reference. The
following items are discussed further on the referenced
pages:
Page
Retail Outlets 15
Property, Plant and Equipment 43
Leases 45
The Company leases rather than owns most of its retail
facilities. However, the buildings of five Incredible
Universe stores are owned rather than leased. The land and
building of one Computer City store are owned by the Company.
The RadioShack and Computer City stores are located primarily
in major shopping malls, stand-alone buildings or shopping
centers owned by other companies. The Company owns most of
the property on which its executive offices are located in
Fort Worth, Texas, as well as six distribution facilities and
most of its manufacturing facilities and land located
throughout the United States. Existing warehouse and office
facilities are deemed adequate to meet the Company's needs in
the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS.
The Company is a defendant in a consolidated action titled
O'Sullivan Industries Holdings, Inc. Securities Litigation,
----------------------------------------------------------
which was commenced in 1994 and is currently pending before
the United States District Court for the Western District of
Missouri. The plaintiffs seek damages in an unspecified
amount alleging that the initial public offering of
O'Sullivan, which was formerly a subsidiary of the Company,
as well as certain press releases and other materials,
contained material misrepresentations and omissions. The
parties have recently entered into a Memorandum of
Understanding which anticipates the settlement of this
litigation in the near future. The complete resolution of
the matter is dependent upon the satisfaction of several
conditions including the parties entering a binding agreement
and the Court approving the terms of such an agreement.
There can be no assurance that such an agreement will be
reached or that Court approval will be obtained. Under the
terms of the Memorandum of Understanding, the Company's
contributions to the proposed settlement will not have a
material adverse affect on its results of operations or
financial condition. Tandy believes that the lawsuit is
totally without merit and in the event this matter is not
resolved, as is presently anticipated, the Company intends to
resume its vigorous defense of this lawsuit.
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, securities
matters, tax deficiencies, violations of permits or licenses,
and breach of contract and other matters against the Company
and its subsidiaries incident to the operation of its
business. The liability, if any, associated with these
matters was not determinable at December 31, 1995. While
certain of these matters involve substantial amounts, and
although occasional adverse settlements or resolutions may
occur and negatively impact earnings in the year of
settlement, it is the opinion of management that their
ultimate resolution will not have a materially adverse effect
on Tandy's financial position.
EXECUTIVE OFFICERS OF THE REGISTRANT (SEE ITEM 10 OF PART
III).
The following is a list of the Company's executive officers
during 1995 and their ages, positions and length of service
with the Company as of March 28, 1996.
Position
(Date Elected Years with
Name to Current Position) Age Company
---- -------------------- --- -------
John V. Roach Chairman of the Board 57 28
and Chief Executive Officer
(July 1982)
Leonard H. Roberts President of Tandy
Corporation 47 2 (1)
(January 1996)
and President of RadioShack
(July 1993)
Robert M. McClure Senior Vice President - 60 23 (2)
Tandy Retail Services
(January 1994)
Herschel C. Winn Senior Vice President and 64 27
Secretary (November 1979)
Dwain H. Hughes Senior Vice President and 48 16 (3)
Chief Financial Officer
(January 1995)
Mark W. Barfield Vice President - Tax 38 8 (4)
(May 1994)
Lou Ann Blaylock Vice President - 57 25 (5)
Corporate Relations
(January 1993)
Loren K. Jensen Vice President and Treasurer 35 (7)
(May 1995)
Frederick W. Padden Vice President - Law 63 5 (6)
and Assistant Secretary
(January 1994)
Ronald L. Parrish Vice President - 53 9
Corporate Development
(April 1987)
Richard L. Ramsey Vice President and 50 29
Controller (January 1986)
William C. Bousquette
Executive Vice President 59 4 (8)
(January 1994-January 22,
1995)
There are no family relationships among the executive
officers listed and there are no arrangements or
understandings pursuant to which any of them were appointed
as executive officers. All executive officers of Tandy
Corporation are elected by the Board of Directors annually to
serve for the ensuing year, or until their successors are
elected. All of the executive officers listed above have
served the Company in various capacities over the past five
years, except for Messrs. Bousquette, Roberts and Jensen.
(1)Mr. Roberts was elected President of Tandy Corporation
effective January 1, 1996. He has been President of the
RadioShack division since July 7, 1993. Prior to joining
Tandy he served as the Chairman and Chief Executive
Officer of Shoney's, Inc. from 1990 to 1993.
(2)Mr. McClure served as President of the Tandy Electronics
division from August 1987 until January 1993 when he was
elected as Chief Operating Officer and President of TE
Electronics Inc. On January 1, 1994, Mr. McClure was
named Senior Vice President - Tandy Retail Services.
(3)Mr. Hughes was elected Senior Vice President and Chief
Financial Officer of the Company effective January 1,
1995. Mr. Hughes served as Vice President and Treasurer of
the Company from June 1991 until December 1994. From June
1989 until June 1991, Mr. Hughes was Assistant Treasurer
of the Company.
(4)Mr. Barfield served as Director of Federal and
International Taxes from April 1991 through
May 1994 when he was named Vice President - Tax.
(5)Mrs. Blaylock was Director of Corporate Relations from
January 1986 until she was named Vice President -
Corporate Relations in January 1993.
(6)Mr. Padden has been the Vice President - Law of the
Company since January 1994 and has been Vice President and
Secretary of TE Electronics Inc. since January 1993. From
January 1991 to January 1993 he was the Deputy General
Counsel - Intellectual Property for Tandy Corporation.
(7)Mr. Jensen became Vice President and Treasurer on May 18,
1995. Prior to joining Tandy, he served as Senior Vice
President of Texas Commerce Bank where he was employed for
almost 10 years.
(8)Mr. Bousquette served as Executive Vice President and
Chief Financial Officer of the Company from November 1990
to January 1993 and from January 1994 to December 1994.
He served as Executive Vice President only from January 1,
1995 to January 22, 1995 when he resigned as an employee
of the Company. He served as Chief Executive Officer of
TE Electronics Inc. from January 1993 to January 22, 1995.
Prior to joining Tandy, he served as Executive Vice
President and Chief Financial Officer of Emerson Electric
Company from March 1984 until November 1990.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
MARKET FOR COMMON STOCK
The Company's common stock is listed on the New York Stock
Exchange and trades under the symbol "TAN". The following
table presents the high and low sale prices for the Company's
common stock, 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, 1995.
Dividends
Quarter Ended: High Low Close Declared
---- ---- ----- --------
December 31, 1995 $61 1/2 $36 1/2 $41 1/2 $.20
September 30,1995 64 3/8 50 7/8 60 3/4 .18
June 30, 1995 53 45 5/8 51 7/8 .18
March 31, 1995 52 3/8 44 47 3/4 .18
December 31, 1994 50 5/8 41 50 1/8 .18
September 30,1994 43 7/8 33 3/8 43 .15
June 30, 1994 38 5/8 30 3/4 34 1/2 .15
March 31, 1994 49 7/8 35 1/4 36 1/4 .15
HOLDERS OF RECORD
At March 19, 1996 there were 28,220 holders of record of
the Company's common stock.
DIVIDENDS
The Board of Directors periodically reviews the Company's
dividend policy. On December 18, 1995, the Board of
Directors approved an increase in the quarterly dividend to
$0.20 per common share, which represents an 11% increase over
the prior quarterly dividend rate of $0.18 per share.
ITEM 6. SELECTED FINANCIAL DATA
SELECTED SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
TANDY CORPORATION AND SUBSIDIARIES
(Dollars and shares in Six Months Ended (1)
thousands, except per Year Ended December 31, December 31, Year Ended June 30,
------------------------------------ ----------------------- -----------------------
share amounts) 1995 1994 1993 1992 1991 1992 1991
----------------------------------------------------------------------------------------------------------------------
Operations
Net sales and
operating revenues $5,839,067 $4,943,679 $4,102,551 $2,161,149 $2,031,763 $3,649,284 $3,573,699
========== ========== ========== ========== ========== ========== ==========
Income before income
taxes, discontinued
operations and cumulative
effect of change in
accounting principle $ 343,273 $ 359,540 $ 311,155 $ 102,917 $ 201,856 $ 330,498 $ 343,277
Provision for income taxes 131,299 135,205 115,523 35,236 73,153 119,785 123,342
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from
continuing operations 211,974 224,335 195,632 67,681 128,703 210,713 219,935
Loss from
discontinued operations -- -- (111,797) (63,875) (8,060) (26,866) (13,872)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before cumulative
effect of change in
accounting principle 211,974 224,335 83,835 3,806 120,643 183,847 206,063
Cumulative effect of change
in accounting principle (2) -- -- 13,014 -- -- -- (10,619)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income $ 211,974 $ 224,335 $ 96,849 $ 3,806 $ 120,643 $ 183,847 $ 195,444
========== ========== ========== ========== ========== ========== ==========
Net income available per
average common and
common equivalent share:
Income from
continuing operations $ 3.12 $ 2.91 $ 2.50 $ 0.87 $ 1.61 $ 2.61 $ 2.75
Loss from
discontinued operations -- -- (1.48) (0.85) (0.10) (0.34) (0.17)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before cumulative
effect of change in
accounting principle 3.12 2.91 1.02 0.02 1.51 2.27 2.58
Cumulative effect of change
in accounting principle -- -- 0.17 -- -- -- (0.14)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income available per
average common and
common equivalent share $ 3.12 $ 2.91 $ 1.19 $ 0.02 $ 1.51 $ 2.27 $ 2.44
========== ========== ========== ========== ========== ========== ==========
Average common and
common equivalent
shares outstanding 65,928 74,874 75,543 74,918 78,149 78,788 78,258
Dividends declared per
common share $ 0.74 $ 0.63 $ 0.60 $ 0.30 $ 0.30 $ 0.60 $ 0.60
Ratio of earnings to
fixed charges (3) 4.22 4.56 3.89 2.83 N/A 3.95 3.55
SELECTED SUPPLEMENTAL FINANCIAL DATA (UNAUDITED) Continued
TANDY CORPORATION AND SUBSIDIARIES
Six Months
(Dollars and shares in Ended (1)
thousands, except per Year Ended December 31, December 31, Year Ended June 30,
------------------------------------ ------------- -----------------------
share amounts) 1995 1994 1993 1992 1992 1991
----------------------------------------------------------------------------------------------------------------------
Year End Financial Position
Inventories $1,511,984 $1,504,324 $1,276,302 $1,472,365 $1,391,295 $1,301,854
Total assets (4) $2,722,063 $3,243,774 $3,219,099 $3,381,428 $3,165,164 $3,078,145
Working capital $1,088,336 $1,350,110 $1,128,343 $1,478,041 $1,556,435 $1,550,848
Current ratio 2.13 to 1 2.12 to 1 2.09 to 1 2.39 to 1 2.99 to 1 3.18 to 1
Capital structure:
Current debt (6) $ 189,861 $ 229,135 $ 387,953 $ 385,706 $ 231,097 $ 179,818
Long-term debt(6) $ 140,813 $ 153,318 $ 186,638 $ 322,778 $ 357,525 $ 427,867
Total debt $ 330,674 $ 382,453 $ 574,591 $ 708,484 $ 588,622 $ 607,685
Total debt, net of cash and
short-term investments $ 187,176 $ 176,820 $ 361,356 $ 595,858 $ 482,168 $ 421,392
Stockholders' equity (4) $1,601,335 $1,850,211 $1,950,750 $1,888,351 $1,930,740 $1,846,762
Total capitalization $1,932,009 $2,232,664 $2,525,341 $2,596,835 $2,519,362 $2,454,447
Long-term debt as a % of
total capitalization 7.3% 6.9% 7.4% 12.4% 14.2% 17.4%
Total debt as a % of total
capitalization 17.1% 17.1% 22.8% 27.3% 23.4% 24.8%
Stockholders' equity per
common share (5) $ 25.44 $ 26.02 $ 25.46 $ 24.95 $ 25.57 $ 23.48
Financial Ratios
Return on average
stockholders' equity (3) 12.3% 11.8% 10.2% 3.5% 11.2% 12.3%
Percent of sales:
Income before income taxes,
discontinued operations and
cumulative effect of change
in accounting principle 5.9% 7.3% 7.6% 4.8% 9.0% 9.6%
Income from continuing
operations 3.6% 4.6% 4.8% 3.2% 5.7% 6.2%
(1) The Company changed its fiscal year end from June 30 to December 31 effective
with the six-month transition period ended December 31, 1992.
(2) See Note 2 of the Notes to Consolidated Financial Statements for a discussion
of the 1993 change in accounting principle. The change in fiscal 1991 reflected
the Company's change in accounting for extended service contracts to comply with
FASB Technical Bulletin 90-1.
(3) Computed using income from continuing operations.
(4) Includes investment in discontinued operations.
(5) December 31, 1994, 1993 and 1992 and June 30, 1992, computed giving effect to
the Series C PERCS conversion into approximately 11,816,000 shares of common
stock.
(6) Includes capital leases.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION.
With the exception of historical information, the matters
discussed herein are forward-looking statements that involve
risks and uncertainties including, but not limited to,
economic conditions, interest rate fluctuations, product
demand, competitive products and pricing, availability of
products, inventory risks due to shifts in market demand, the
regulatory and trade environment, real estate market
fluctuations and other risks indicated in filings with the
Securities and Exchange Commission.
NET SALES AND OPERATING REVENUES
Year Ended
December 31,
---------------------------------------
(In thousands) 1995 1994 1993
-------------- ---------- ---------- ----------
RadioShack $3,219,330 $3,022,846 (1) $2,863,842 (1)
Incredible Universe 741,966 381,682 136,119
Computer City 1,763,883 1,184,152 626,222
---------- ---------- ----------
5,725,179 4,588,680 3,626,183
Tandy Name Brand (closed) 28,041 271,504 335,389
Other Sales 85,847 83,495 140,979
---------- ---------- ----------
$5,839,067 $4,943,679 $4,102,551
========== ========== ==========
(1) Reclassified to include the remaining 73 Tandy Name Brand retail units.
For the year ended December 31, 1995, Tandy Corporation's
("Tandy" or the "Company") sales increased 18% to
$5,839,067,000 from $4,943,679,000 for the year ended
December 31, 1994. The increase in sales was primarily
attributable to the addition of 160 RadioShack(SM) stores
(net of closures), eight Incredible Universe(R) stores and 30
Computer City(R) stores during 1995. Due to the closure of
233 Tandy Name Brand Retail Group ("Tandy Name Brand") stores
during the first quarter of 1995, sales for that division
decreased from $271,504,000 to $28,041,000. This division is
now closed and sales of the remaining Tandy Name Brand stores
are included in the RadioShack total for each period
presented in the table above.
For the year ended December 31, 1995, the Company showed
approximately 5% same store sales growth, with all divisions
showing same store sales increases during the year. The
RadioShack division achieved 6% same store sales growth,
while Incredible Universe and Computer City each had same
store sales increases of 2%.
Same store sales increases (decreases) for the quarter
ended December 31, 1995 for RadioShack, Computer City and
Incredible Universe were 5%, (6%) and less than 1%,
respectively. RadioShack's increased sales for the year and
the quarter reflected the increasing demand for cellular
phones. Cellular phone commissions increased in 1995 by
approximately $150,000,000 as compared to 1994. In addition,
sales of its core products also increased, reflecting the
results of new advertising campaigns. Same store sales at
Computer City for the fourth quarter declined primarily
because of lower than anticipated demand for personal
computers at its stores. Computer City and Incredible
Universe are reevaluating their advertising plans, customer
service and other marketing strategies in an effort to
increase same store sales in 1996. For example, new programs
being instituted at Computer City include a commissioned
sales program, a 110% price guarantee, increased emphasis on
being adequately stocked in advertised and fast-moving
merchandise, strengthened infrastructure and support for
corporate sales and the development and training of store
personnel. At Incredible Universe a number of volume and
traffic building programs have been introduced for 1996.
These include new advertising programs that better represent
the broad scope of Incredible Universe and increase focus on
our differentiating strengths such as demonstrations, vendor
seminars, clinics and community events. Also, increased
utilization of space is being planned to increase sales per
square foot.
RadioShack sales in 1995 of consumer electronics and
cellular commissions, as a percentage of overall sales, rose
modestly while the percentage of overall sales attributable
to personal computers and electronic parts, accessories and
specialty equipment decreased. The decrease in RadioShack's
computer business reflected the impact of sharply lower
pricing in response to competitive pressures in the
marketplace. The changing dynamics of the personal computer
business had a significant impact on RadioShack's sales
performance during 1993, and to a lesser extent in 1994 and
1995. A combination of shifts in retail distribution to
computer superstores, large consumer electronics store
formats and telemarketing combined with rapidly declining
prices has taken the computer category from approximately
14.2% of RadioShack's sales and a gross profit of
approximately 15.2% for the year ended December 31, 1993 to
approximately 10.6% of sales and a gross profit of
approximately 11.8% for the year ended December 31, 1995. It
is anticipated that personal computer sales should be between
10% and 12% of RadioShack's business in 1996. The table
below shows the breakdown by major category of RadioShack
sales.
RADIOSHACK SALES TO CUSTOMERS
Percent of Total Sales
Year Ended
December 31,
--------------------------
1995 1994 1993
------ ------ ------
Consumer electronics 46.1% 45.4% 44.6%
Electronic parts, accessories
and specialty equipment 32.9 36.0 36.1
Personal computers, peripherals,
software and accessories 10.6 12.0 14.2
Repair services, cellular
commissions and other 10.4 6.6 5.1
------ ------ ------
100.0% 100.0% 100.0%
====== ====== ======
During 1994, Tandy and InterTAN Inc. ("InterTAN") entered
into a new import/export agreement under which Tandy's A&A
International ("A&A") operations would act as InterTAN's
agent in importing consumer electronics from the Far East.
Commencing in March 1994, only the purchasing agent
commission and sales made by Tandy manufacturing plants to
InterTAN were recorded as sales. InterTAN purchases from
third parties through A&A are no longer recorded as sales,
reflecting the arrangement under the new merchandise
agreement; however, commission income is reported as
operating revenue. Accordingly, reported sales by Tandy to
InterTAN in 1995 and 1994, reflected in Other Sales, were
considerably lower than in 1993; however, the earned income
relating thereto was not materially different. See the
discussion in the "InterTAN Update" found below.
Tandy's sales increased 21% to $4,943,679,000 in 1994 from
$4,102,551,000 in 1993. The increase in sales was primarily
attributable to the addition of six Incredible Universe and
29 Computer City stores during 1994. A net increase of 45
RadioShack stores also contributed to the sales increase.
Partially offsetting these upward trends in sales was an
overall decline in sales for Tandy Name Brand. This decline
can be partially attributed to the fact that 110 McDuff(R)
and VideoConcepts(R) stores were closed during February 1993.
See "Provision for Business Restructuring" below for further
discussion of Tandy Name Brand.
During 1994, Tandy posted a 5% same store sales increase.
RadioShack and Computer City achieved same store sales
increases of 5% while the Tandy Name Brand group was up only
slightly. Incredible Universe, with three old stores,
experienced a 20% comparable stores sales gain during
calendar 1994. Same store sales increases reflected growing
demand for consumer electronics and a strong economy.
RETAIL OUTLETS
Average
Store
Size Dec. 31, Dec. 31, Dec. 31,
(Sq. Ft.) 1995 1994 1993
-------------------------------------------------------------
RadioShack Division
Company Owned 2,450 4,831 (1) 4,598 4,553
Dealer/Franchise N.A. 2,005 2,005 2,002
----- ----- -----
6,836 6,603 6,555
Computer City 21,550 99 69 40
Incredible Universe 184,000 17 9 3
Tandy Name Brand
Retail Group (2)
McDuff Supercenters -- 71 75
McDuff/VideoConcepts
Mall Stores -- 219 231
The Edge in Electronics -- 16 16
----- ----- -----
6,952 6,987 6,920
===== ===== =====
(1) As of January 1, 1995, the Specialty Retail Group of the
RadioShack division included 73 Tandy Name Brand units.
(2) In the first quarter of 1995, 151 VideoConcepts, 30
McDuff mall stores and 19 McDuff Supercenters were closed.
In addition, 33 other mall stores or Supercenters were
converted into RadioShack or Computer City Express(SM)
stores. See "Provision for Business Restructuring".
GROSS PROFIT
Gross profit as a percentage of sales declined from 39.0%
in 1994 to 35.5% in 1995. This decrease reflects the
continued expansion of Tandy's lower gross margin retail
formats. During calendar year 1995, Computer City and
Incredible Universe represented 42.9% of total sales and
operating revenues compared to 31.7% of the 1994 total.
Management anticipates that Tandy's consolidated gross profit
percentage will continue to decline as the effects of the
Computer City and Incredible Universe expansions are
increasingly reflected in the revenue and gross profit mix.
During 1995 RadioShack's gross margin decreased when
compared to 1994 due to the rapid growth of cellular phone
and digital satellite system sales. It is anticipated that
RadioShack's gross margin as a percentage of sales in 1996
could be equal to or slightly exceed the comparable 1995
figure due to emphasis on higher margin categories. Computer
City's gross margin remained relatively flat in 1995 when
compared to 1994. Competitive forces have continued to play
a major factor in keeping margins flat in 1995. Margins are
not expected to vary much in 1996 as these competitive forces
in the marketplace remain in place and may even increase in
some quarters. Incredible Universe's gross margins decreased
slightly in 1995 compared to 1994 reflecting the fact that
personal computers and related equipment, which inherently
have lower margins, contributed a larger portion to the
overall sales mix in 1995 versus 1994. This trend is
expected to continue in 1996.
Gross profit as a percentage of sales declined in 1994 to
39.0% from the 1993 level of 41.9%. Expansion of the
Computer City and Incredible Universe store formats impacted
gross margin during these years. During 1994, Computer City
and Incredible Universe represented 31.7% of total sales and
operating revenues compared to 18.6% of the 1993 total.
Offsetting the mix of business shift within Tandy were the
increasing gross margins at RadioShack in 1994, which
continued to benefit from a lower percentage of sales related
to low margin computer equipment and a higher percentage
associated with the sale of higher gross margin categories
including parts, accessories and consumer electronics.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses ("SG&A") as a
percentage of sales and operating revenues for the year ended
December 31, 1995 declined from the years ended December 31,
1994 and 1993. The accompanying table summarizes the
breakdown of various components of SG&A and their related
percentage of sales and operating revenues. The lower SG&A
percentage reflects the lower costs, relative to net sales
and operating revenues, of the Company's newer retail formats
(Computer City and Incredible Universe), as well as the lower
operating costs achieved through cost reduction programs.
In comparison with the prior year, payroll and commissions
expense for 1995 decreased as a percentage of total sales and
operating revenues while the dollar amounts increased from
year to year. The decrease as a percentage of sales is due
to the increase in combined Computer City and Incredible
Universe sales as a percentage of total sales and operating
revenues from 31.7% in 1994 to 42.9% in 1995. These
divisions have an inherently lower salary structure when
compared to the total company.
Advertising costs for 1995 have decreased slightly as a
percentage of sales, while the dollar amounts have increased
since 1994. The increase in advertising costs relates to the
addition of 30 new Computer City and eight Incredible
Universe stores during 1995 and, therefore, increased
marketing efforts in these new markets. Additionally,
RadioShack incurred minor advertising expense increases
primarily relating to inflation.
Rent expense in 1995 decreased as a percentage of sales in
comparison with the prior year, while the dollar amounts
remained relatively stable. This decrease as a percentage of
sales directly relates to the closing of Tandy Name Brand
stores and the increase in the number of Computer City and
Incredible Universe stores, as they have lower rent expense
as a percentage of sales than the Company as a whole. The
relatively stable dollar amount is the result of the
reduction in rent expenses related to the 233 closed Tandy
Name Brand units offset by the rent of the additional
RadioShack, Computer City and Incredible Universe stores.
The expenses of the credit operations have significantly
declined as a result of the sale of the private label credit
card portfolios which was completed by March 31, 1995.
The sale of the credit card portfolio balance has
eliminated most of the risk of uncollectible accounts
receivable, thereby significantly reducing the bad debt
provision during 1995 as compared to prior years. In
addition, servicing costs associated with the portfolio have
also been eliminated with the sale. These factors were the
primary contributors to the decrease in the expenses of the
credit operations. Offsetting these reductions are decreased
interest income (see discussion below) resulting from the
credit card portfolio sale. Commencing in 1995, the Company
receives fees from an unrelated third party financier of its
private label credit card portfolio balance for the
generation of normal interest bearing accounts, and pays a
fee for the generation of special purpose promotional
accounts, such as "zero percent interest for twelve months".
These fees are classified in Credit card fees in the
accompanying SG&A table and are the primary reason for the
increase in this category in 1995 versus 1994. Credit card
fees expense also includes fees associated with third party
bank credit cards.
Other SG&A expenses increased $22,728,000 in 1995 to
$178,636,000, primarily relating to store growth.
Although payroll and commissions expense for 1994 increased
in dollars in comparison with 1993, this cost decreased as a
percentage of sales and operating revenues. This was due to
the increase in Computer City and Incredible Universe sales
as a percentage of total sales and operating revenues from
18.6% in 1993 to 31.7% in 1994; these divisions have an
inherently lower salary structure when compared to
RadioShack. In addition, Computer City payroll expense as a
percentage of Computer City sales decreased from 1993 to
1994, while that of the other retail divisions has remained
approximately the same from year to year.
Advertising costs decreased as a percentage of sales and
operating revenues in the year ended December 31, 1994 as
compared to the year ended December 31, 1993. Management
focused its efforts on more efficient advertising methods for
RadioShack, utilizing the Company's database of customer
activity to reduce costs while maintaining market awareness.
Advertising costs increased in dollars compared to the prior
year as new Computer City and Incredible Universe stores
opened and RadioShack shifted its marketing program to
electronic media. The Company spent approximately 30% of its
advertising funds for television and radio commercials,
compared to 20% in previous years. RadioShack's advertising
spots were shifted from sports-related events to prime-time
shows in order to reach a broader audience.
Rent expense increased slightly in dollars but decreased as
a percentage of sales during the year ended December 31, 1994
as compared to the year ended December 31, 1993. The
increase in rent expense was due to a net increase of 45
RadioShack stores and the addition of 29 Computer City stores
and six Incredible Universe stores. Incredible Universe and
Computer City formats typically have lower rent, as a
percentage of sales, than Tandy overall.
The Company's credit operations were successful in
supporting sales of the retail operations during 1994 and
1993. Private label credit cards represented 35% of credit
sales for the year ended December 31, 1994 and 34% for the
year ended December 31, 1993. Expenses associated with the
credit card operations, which are included in SG&A expense,
decreased as a percentage of sales during this period because
of a decrease in credit losses which reflected a stronger
economy. As discussed above, the Company sold its Computer
City and Incredible Universe private label credit card
portfolios in 1994 and in the first quarter of 1995 sold its
RadioShack and McDuff private label credit card portfolios.
Credit card fees in 1994 increased over that in 1993
primarily due to an increase in discount fees paid to third
party bank cards because of both increased sales in the
Computer City and Incredible Universe formats and an increase
in credit card sales as a percentage of sales.
Other SG&A expenses increased $45,774,000 from 1993 to
1994. RadioShack merchandise repair expenses increased
$8,261,000 in 1994 primarily reflecting an increase in
extended service plan sales. The change in other SG&A also
reflects the $6,047,000 gain on the 1993 sale of the
Company's interests in two cellular telephone manufacturing
joint ventures, the $1,796,000 realized loss on the sale of
the cellular joint ventures included in the 1993 foreign
currency transactions and an increase in attorney fees of
$4,671,000 in 1994.
SUMMARY OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Year Ended
December 31,
------------------------------------------------------------------
1995 1994 1993
% of % of % of
Sales & Sales & Sales &
(In thousands) Dollars Revenues Dollars Revenues Dollars Revenues
---------------------------------------------------------------------------------------------
Payroll and commissions $ 698,893 12.0% $ 627,307 12.7% $ 554,728 13.5%
Advertising 257,299 4.4 224,212 4.5 205,831 5.0
Rent 217,601 3.7 212,422 4.3 202,401 4.9
Other taxes 96,698 1.7 89,488 1.8 79,508 1.9
Utilities and telephone 71,273 1.2 67,398 1.4 62,437 1.5
Insurance 48,341 0.8 51,090 1.0 45,373 1.1
Stock purchase
and savings plans 19,704 0.3 21,031 0.4 17,562 0.4
Foreign currency
transaction gains (1,097) -- (1,495) -- (762) --
Credit operations 6,342 0.1 56,828 1.1 55,914 1.4
Credit card fees 52,746 0.9 28,484 0.6 21,550 0.5
Other 178,636 3.1 155,908 3.2 110,134 2.8
------------------------------------------------------------------
$1,646,436 28.2% $1,532,673 31.0% $1,354,676 33.0%
==================================================================
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense as a percentage of
sales and operating revenues decreased slightly in the year
ended December 31, 1995 as compared with the years ended
December 31, 1994 and 1993. The dollar amount of
depreciation and amortization expense for the year ended
December 31, 1995 increased 8.5% over the dollar amount for
the year ended December 31, 1994 and 15.1% over the dollar
amount in 1993. The increase was due to additional capital
expenditures related to new stores added in the past two
years. This increase was partially offset by the closure of
the Tandy Name Brand stores previously discussed. In 1995
the Company added 160 RadioShack stores (net of closings),
eight Incredible Universe stores and 30 Computer City stores.
Six Incredible Universe stores, 29 Computer City stores and
45 RadioShack stores (net of closings) were added during
1994, thereby increasing depreciation and amortization from
1993 to 1994.
NET INTEREST INCOME
Year Ended
December 31,
-----------------------------
(In thousands) 1995 1994 1993
-------------- ------- ------- -------
Interest income:
Credit operations $18,540 $46,868 $57,401
InterTAN notes receivable,
including accretion
of discount 8,248 8,280 3,085
AST note receivable,
including accretion
of discount 4,922 5,724 1,679
IRS settlements 6,183 9,582 4
Other interest income 4,429 8,158 3,369
------- ------- -------
Total interest income 42,322 78,612 65,538
Interest expense (33,706) (30,047) (39,707)
------- ------- -------
Net interest income $ 8,616 $48,565 $25,831
======= ======= =======
Net interest income was $8,616,000 for the year ended
December 31, 1995, $48,565,000 for the year ended
December 31, 1994 and $25,831,000 for the year ended
December 31, 1993. The decrease in interest income is
directly attributable to the sale of the Company's private
label credit card portfolios in the December quarter of 1994
and the March quarter of 1995.
Interest income in 1994 and 1993 was primarily attributable
to the Company's credit card operations. Increased short-
term investments in 1994 resulted from proceeds received from
the divestiture of discontinued manufacturing and marketing
operations, as well as from cash provided by operating
activities.
Interest income from the credit card operations decreased
in 1995 due to the sale of the Company's credit card
portfolios. As a result of the sale of the Computer City and
Incredible Universe credit card portfolios in 1994 and the
RadioShack and McDuff credit card portfolios in 1995, the
Company will no longer earn interest income from these
portfolios. Interest income for 1995 includes the amount of
interest received prior to the sale of the RadioShack and
McDuff portfolios. The decrease in interest income from the
credit card operations from 1993 to 1994 was a result of
increased use of certain special sales promotions and
marketing initiatives, some of which provided for no interest
charges for specified initial periods. The decline in
average credit card receivables in 1994 resulted from
increased payments from credit customers reflecting the
overall improvement in the economy and a desire by consumers
to shift debt to lower interest rate instruments.
Other interest income relates primarily to short-term
investments of the Company. The AST Research, Inc. ("AST")
note will mature in July 1996 and, therefore, interest income
derived therefrom will be less in 1996 than in previous
years. Interest income relating to the InterTAN notes will
continue in 1996. The Company does not anticipate interest
income relating to settlements with the IRS in 1996.
The increase in interest expense for the year ended
December 31, 1995 as compared to the year ended December 31,
1994 is due to an increase in the use of short-term borrowing
facilities. The use of these facilities was significantly
higher during the year ended December 31, 1995 as the Company
retired long-term debt, funded store expansion and funded the
share repurchase program. Even though short-term debt
outstanding at the end of the year decreased 17.1%, the
weighted average of seasonal bank loans outstanding during
the year increased from $16,358,000 in 1994 to $106,963,000
in 1995, and the weighted average interest rate rose from
5.2% in 1994 to 6.2% in 1995. Assuming interest rates do not
change significantly, it is anticipated that the weighted
average of short-term debt used during 1996 will increase as
compared to that used in 1995 due to a greater need for funds
for the share repurchase and store expansion programs.
Although a portion of the funds will be met with cash flows
from operations, proceeds from the AST note due in July 1996
and continuing principal payments from the InterTAN notes
receivable, the Company still anticipates that a portion will
be met through increased debt borrowings. As a result , the
Company expects to incur net interest expense in 1996. Long-
term debt decreased 8.2% from December 31, 1994 due to the
repayment of debt such as medium-term notes and senior notes.
During 1995, a significant portion of the cash proceeds
received from the sale of the credit operations was applied
to the funding of store expansion and repurchase of the final
7,500,000 shares under the completed 12,500,000 share
repurchase program.
PROVISION FOR BUSINESS RESTRUCTURING
In December 1994, the Company adopted a business
restructuring plan to close or convert 233 of the 306 Tandy
Name Brand stores. At March 31, 1995 all 233 stores had been
closed or converted. The remaining stores have become part
of the Tandy Specialty Retail Group of RadioShack. A pre-tax
charge of $89,071,000 was taken in the fourth quarter of
fiscal 1994 related to the closing and conversion of these
stores. The components of the restructuring charge and an
analysis of the amounts charged against the reserve are
outlined in a table in Note 4 of the Notes to Consolidated
Financial Statements.
Sales and operating revenues and operating losses
associated with the closed Tandy Name Brand stores in 1995
approximated $28,041,000 and $3,064,000 respectively. Sales
and operating revenues associated with the closed Tandy Name
Brand stores approximated $261,990,000 and $271,914,000 for
1994 and 1993, respectively, and operating losses
approximated $18,125,000 and $15,342,000 for 1994 and 1993,
respectively. In conjunction with this restructuring, 1,425
employees were terminated, most of whom were store employees.
GAIN ON SALE OF CREDIT OPERATIONS AND EXTENDED SERVICE
CONTRACTS
In December 1994, the Company entered into an agreement
with SPS Transaction Services, Inc., a majority-owned
subsidiary of Dean Witter, Discover & Company ("SPS") to sell
its Computer City and Incredible Universe private label
credit card portfolios without recourse. As a result of the
agreement, Tandy received cash of $85,764,000 and received a
deferred payment of $179,777,000. The Company recognized a
gain of $35,708,000 in the accompanying 1994 Consolidated
Statements of Income. The deferred payment amount did not
bear interest. The total principal amount of $179,777,000
was paid in full during 1995. The Company discounted the
deferred payment by $3,477,000 to yield interest income of
approximately 5% over the twelve month payout period.
On March 30, 1995, the Company completed the sale, at net
book value, of the RadioShack and Tandy Name Brand private
label credit card accounts and substantially all related
accounts receivable to Hurley State Bank, a subsidiary of
SPS. As a result of the transaction, Tandy received
$342,822,000 in cash and a deferred payment amount of
$49,444,000. The deferred payment does not bear interest and
principal is paid monthly with final payment due February 29,
1996. The remaining discounted deferred payment balance of
$2,098,000 is classified as a current receivable in the
accompanying Consolidated Balance Sheet at December 31, 1995.
Effective December 1994, the Company transferred all of its
existing obligations with respect to extended service
contracts in force at December 31, 1994, with the exception
of certain contracts aggregating approximately $7,734,000, to
an unrelated third party. The unrelated third party
contractually assumed all of the Company's legal obligations
and risk of future loss pursuant to the extended service
contracts in exchange for $75,059,000. As a result, the
Company recognized a gain of $55,729,000 associated with this
transaction in its accompanying 1994 Consolidated Statements
of Income. The Company continues to provide repair services
to customers who tender products pursuant to the extended
service contracts on a non-exclusive basis. The unrelated
third party pays the Company competitive market rates for
repairs on products tendered pursuant to the extended service
contracts.
PROVISION FOR INCOME TAXES
The effective tax rate was 38.25% for the year ended
December 31, 1995, 37.6% for the year ended December 31,1994
and 37.1% for the year ended December 31, 1993. The increase
in the effective tax rates for these years reflects shifts of
income into states with higher income tax rates such as
California, New York and Ohio.
The IRS Dallas field office is reviewing the Company's
1987-1989 tax returns and has referred certain issues to the
IRS National office. The resolution of this matter, which
raises questions about the private letter rulings issued by
the IRS regarding the spin-off of InterTAN and certain other
tax matters, could result in additional taxes and interest to
the Company. Although aggregate additional taxes involved in
these transactions could potentially range from $0 to $27
million, based on the advice of the Company's independent tax
advisors, the Company believes it would prevail if any tax
litigation was instituted. Any ultimate tax assessment would
also include interest expense. In any event, the Company
believes the ultimate resolution would have no material
impact on the Company's financial condition.
DISCONTINUED OPERATIONS
On June 25, 1993, the Board of Directors of Tandy adopted a
formal plan of divestiture under which the Company would sell
its computer manufacturing and marketing businesses, the
O'Sullivan Industries, Inc. ("O'Sullivan") ready-to-assemble
furniture manufacturing and related marketing business, the
Memtek Products division and the Lika printed circuit board
business.
Computer Manufacturing. The Company closed the sale
of the computer manufacturing and marketing
businesses to AST on July 13, 1993. In accordance
with the terms of the definitive agreement between
Tandy and AST, Tandy received $15,000,000 upon
closing of the sale. The balance of the purchase
price of $96,720,000 was payable by a promissory
note. The Company has discounted this note by
$2,000,000 and the discount continues to be
recognized as interest income using the effective
interest rate method over the life of the note.
During the quarter ended September 30, 1995, the
Company received $6,720,000 from AST as a prepayment
on its promissory note. The original promissory note
was supported by a standby letter of credit in the
amount of the lesser of $100,000,000 or 70% of the
outstanding principal amount of the promissory note.
This letter of credit has been replaced by a
$75,000,000 Letter of Guarantee dated August 22,
1995, from Samsung Electronics Co., Ltd., a Korean
corporation, or, alternatively, Samsung Electronics
America, Inc., a New York corporation. As of
December 31, 1995, Samsung owned approximately 40% of
AST's outstanding stock. Samsung's current credit
ratings by S&P and Moody's are A- and Baa1,
respectively.
As a result of the prepayment, the note has been
amended and the principal amount reduced to
$90,000,000. The terms of the original promissory
note stipulated that the outstanding principal
balance could be paid on July 11, 1996 at AST's
option in cash or the common stock of AST, provided
that not more than 50% of the original principal
amount of the note could be paid in common stock of
AST. The amended promissory note provides that AST
may repay the note in AST common stock, provided that
not more than the lesser of (a) $30,000,000, or (b)
33% of the outstanding principal amount of the note
at the time of payment may be payable by AST in
common stock of AST. The interest rate on the
promissory note is currently 5% per annum and is
adjusted annually, not to exceed 5% per annum.
Interest is accrued and paid annually.
Memtek Products. On November 10, 1993, the Company
executed a definitive agreement with Hanny Magnetics
(B.V.I.) Limited, a British Virgin Islands
corporation ("Hanny"), to sell certain assets of the
Company's Memtek Products operations, including the
license agreement with Memorex Telex, N.V. for the
use of the Memorex trademark on licensed consumer
electronics products. This sale closed on
December 16, 1993. Proceeds from this sale
aggregated $69,602,000.
O'Sullivan Industries. On January 27, 1994, the
Company announced that it had reached an agreement
with the underwriters to sell all the common stock of
O'Sullivan Industries Holdings, Inc., the parent
company of O'Sullivan, to the public at $22 per
share. The net proceeds realized by Tandy in the
initial public offering, together with a $40,000,000
cash dividend from O'Sullivan, approximated
$350,000,000. The initial public offering closed on
February 2, 1994.
Tandy has recognized income of approximately
$1,335,000 and $4,399,000, net of tax, during the
years ended December 31, 1995 and 1994, respectively,
pursuant to a Tax Sharing and Tax Benefit
Reimbursement Agreement (the "Agreement") between
Tandy and O'Sullivan. Under the Agreement 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. The higher tax basis
increases O'Sullivan's tax deductions and,
accordingly, reduces income taxes payable by
O'Sullivan. These payments will be made over a 15-
year time period and are contingent upon O'Sullivan's
taxable income each year. The Company is recognizing
these payments as additional sale proceeds and gain
in the year in which the payments become due and
payable to the Company pursuant to the Agreement.
The additional gain is recorded as a reduction of
SG&A expense in the accompanying Consolidated
Statements of Income.
Lika. On October 11, 1994, Tandy sold the assets
used in its Lika(R) printed circuit board division to
Viktron Limited Partnership, an Illinois limited
partnership. The proceeds from the sale and
liquidation of assets approximated $16,380,000 which
included $7,754,000 in cash, proceeds from
liquidation of retained assets of $5,594,000 and
secured promissory notes for $3,032,000. At December
31, 1995, $1,400,000 remained as a receivable from
Viktron.
CASH FLOW AND LIQUIDITY
Year Ended
December 31,
-----------------------------------
(In thousands) 1995 1994 1993
-------------- --------- --------- ---------
Operating activities $ 672,994 $ 268,938 $ 322,294
Investing activities (180,347) 236,620 (57,464)
Financing activities (554,782) (513,160) (164,221)
Tandy's cash flow and liquidity, in management's opinion,
remains strong. During the year ended December 31, 1995,
cash provided by operations was $672,994,000 as compared to
$268,938,000 for the year ended December 31, 1994.
The increased cash flow from operations was due mainly to
the cash received from the sale of the credit card
portfolios, which approximated $342,822,000, collection of
the deferred payment amount from SPS of $179,777,000 and
liquidation of remaining unsold private label credit card
balances. Inventory required less cash in 1995 than in 1994
due to liquidation of Tandy Name Brand inventory related to
closing stores and a net reduction in Computer City inventory
which was partially offset by increases in inventory to
support Incredible Universe and RadioShack store expansion,
while accounts payable and accrued expenses and income taxes
required $376,349,000 more cash in 1995 than in 1994.
During the year ended December 31, 1994, cash provided by
operations decreased from $322,294,000 in 1993 to
$268,938,000. The decreased cash flow from operations was
due partially to the financing of receivables and inventories
related to the expansion of Computer City and Incredible
Universe store chains. The increase of $261,071,000 in cash
used to fund accounts receivable was due primarily to the
increase in Tandy Credit receivables related to increased
retail sales by Computer City and Incredible Universe and the
use of certain special sales promotions and marketing
initiatives, some of which provided for no interest charges
for specified initial periods. Inventory required
$156,129,000 more cash in 1994 than in 1993, relating to new
store openings and increases in average inventory to ensure
in-stock positions throughout the Christmas selling season.
Partially offsetting the cash used to finance receivables and
inventory were the sale of the Computer City and Incredible
Universe private label credit card portfolios which provided
cash of $85,764,000 as well as increases in accounts payable,
accrued expenses and income taxes which provided $184,017,000
more cash in 1994 than in 1993. The 1994 increase in
accounts payable, accrued expenses and income taxes is net of
the cash expended of approximately $70,702,000 associated
with the transfer of the legal obligation and risk of loss
for existing extended service contracts to an unrelated third
party.
Investing activities involved capital expenditures
primarily for retail expansion totaling $226,511,000 for the
year ended December 31, 1995, $180,559,000 for the year ended
December 31, 1994, and $129,287,000 for the year ended
December 31, 1993. Proceeds from the sale of property, plant
and equipment in 1995 and 1994 resulted primarily from sale-
leaseback transactions involving certain Incredible Universe
stores which netted the Company $37,550,000 and $52,719,000,
respectively, in cash. Prepayment of a portion of the note
receivable from AST amounted to $6,720,000 in 1995. Proceeds
received from the sale of divested operations totaled
$359,004,000 and $111,988,000 during the years ended
December 31, 1994 and 1993, respectively. See "Discontinued
Operations". Investing activities in 1993 also included
$31,663,000 for the purchase of InterTAN's bank debt and the
extension and funding of a working capital line of credit.
See "InterTAN Update" for further information. Future store
expansions and refurbishments and other capital expenditures
such as updated POS and information systems are expected to
approximate $150,000,000 to $160,000,000 per year over the
next two years and will be funded primarily from available
cash and cash flow from operations. The Company's cash flow
from investing activities will be impacted in 1996 by the
maturity of the AST note and note payments from InterTAN. It
is not anticipated that additional stores in 1996 will
materially impact inventory levels.
Purchases of treasury stock used cash of $502,239,000,
$275,415,000 and $27,650,000 in 1995, 1994 and 1993,
respectively. Increases in treasury stock purchases in 1995
and 1994 related primarily to the share repurchase program.
See "Capital Structure and Financial Condition" for further
discussion. Sales of treasury stock to the Company's Stock
Purchase Program generated cash of $44,623,000, $41,579,000
and $42,067,000 in 1995, 1994 and 1993, respectively.
Dividends paid, net of tax, in 1995, 1994 and 1993 amounted
to $62,991,000, $74,512,000 and $74,873,000, respectively. As
a result of the Company calling for the redemption of its
$2.14 Depositary Shares of the Company's Series C Preferred
Equity Redemption Convertible Stock ("PERCS") in March 1995,
the Company eliminated its annual dividend payment to the
PERCS shareholders of approximately $32,000,000. However, it
paid upon conversion a cash dividend to the PERCS
shareholders of approximately $0.321 for each depositary
share, representing the accrued dividend from January 16,
1995 through the redemption date of March 10, 1995. The
Company plans to fund common stock dividends with available
cash and cash flow from operations.
At December 31, 1995, 1994 and 1993, the Company decreased
short-term borrowings by $1,778,000, $110,393,000 and
$46,885,000, respectively. Even though short-term debt
outstanding at the end of the year has decreased 17.1% from
1994, the weighted average of seasonal bank loans outstanding
during the year increased from $16,358,000 in 1994 to
$106,963,000 in 1995. Assuming interest rates do not change
significantly, it is anticipated that the weighted average of
short-term debt used during 1996 will increase as compared to
that used in 1995 due to a greater need for funds for the
share repurchase program and store expansion. Although a
portion of the funds will be met with cash flow from
operations, proceeds from the AST note due in July 1996 and
continuing principal payments from the InterTAN notes
receivable, the Company still anticipates that a portion will
be met through increased debt borrowings. The reduction in
short-term borrowings has been funded primarily by proceeds
from the sale of divested operations and cash provided by
operations. The Company's primary source of short-term debt,
for which borrowings and repayments have been presented net
in the Consolidated Statements of Cash Flows, consists of
short-term seasonal bank debt and commercial paper. The
commercial paper matures within 90 days as does the short-
term seasonal bank debt.
In January 1995, the $45,000,000 of 8.69% senior notes
which were outstanding at December 31, 1994 were paid in
full. These senior notes had been outstanding since February
7, 1990. In February 1995, the $6,000,000 of Tandy Credit's
medium-term notes, which were outstanding at December 31,
1994 and were to mature in May and August of 1995, were paid
in full.
Following are the current credit ratings for Tandy, which
are generally considered investment grade:
Standard Duff &
Category Moody's and Poor's Phelps
-------- ------- ---------- ------
Medium Term Notes Baa2 A- A-
ESOP Senior Notes Baa2 A- N/A
Commercial Paper P-2 A-2 D-1-
CAPITAL STRUCTURE AND FINANCIAL CONDITION
The Company's balance sheet and financial condition
continue to be strong. The Company's available borrowing
facilities as of December 31, 1995 are detailed in Note 9 of
the Notes to Consolidated Financial Statements.
In the fiscal year ended June 30, 1992, the Company issued
150,000 PERCS shares and used the proceeds of this offering
to purchase $430,000,000 of the Company's common stock for
treasury. The PERCS are discussed further in Note 18 of the
Notes to Consolidated Financial Statements. On January 23,
1995, Tandy announced that it had exercised its right to call
the issued and outstanding PERCS for conversion on March 10,
1995 prior to the mandatory conversion date of April 15,
1995. For each depositary share redeemed, 0.787757 Tandy
common shares were issued for an aggregate of approximately
11,816,000 shares.
On December 18, 1995, the Company announced that its Board
of Directors authorized management to purchase up to
5,000,000 shares of its common stock in addition to shares
required for employee plans. This authorization to purchase
additional shares follows the 12,500,000 share repurchase
program which began in August 1994 and concluded in December
1995. Purchases will be made from time to time in the open
market, and it is expected that funding of the program will
come from operating cash flow and existing bank facilities.
As of December 31, 1995, the Company had not repurchased any
shares under this new program.
The Company's issue of 10% subordinated debentures due June
30, 1994 was called by the Company on February 23, 1994 for
redemption on April 1, 1994. The redemption was at 100% of
face value or $32,431,000.
The revolving credit backup facilities to Tandy's
commercial paper program were renewed in May 1994. These
facilities are to be used only if maturing commercial paper
cannot be repaid due to an inability to sell new commercial
paper. This agreement is composed of two facilities--one for
$200,000,000 expiring May 1996 and another $200,000,000
facility expiring in May 1997. Annual commitment fees for
the facilities are 2/25 of 1% per annum and 1/8 of 1% per
annum, respectively, whether used or unused.
In fiscal 1991, the Company filed a shelf registration for
$500,000,000, of which $400,000,000 was designated for
medium-term notes. During fiscal 1991, short-term debt was
refinanced by the issuance of $155,500,000 in medium-term
notes. Tandy's medium-term notes outstanding at December 31,
1995 totaled $67,104,000 compared to $73,044,000 and
$125,479,000 at December 31, 1994 and 1993, respectively.
Availability under the program at December 31, 1995
approximated $312,800,000. In February 1995, the $6,000,000
of Tandy Credit's medium-term notes, which were outstanding
at December 31, 1994 and were to mature in May and August of
1995, were paid in full.
The total debt-to-capitalization ratio was 17.1% at
December 31, 1995 and 1994 and 22.8% at December 31, 1993.
This debt-to-capitalization ratio could increase as Tandy
continues to repurchase shares under the existing
authorization and fund new store openings and other capital
expenditures such as updating its POS and other information
systems.
The Company also has agreements with unaffiliated groups to
lease certain stores and these groups are committed to make
available up to $317,426,000 for development or acquisition
of stores leased by the Company. At December 31, 1995, the
Company had used $208,178,000 of that availability.
Agreements with these groups mature over the next five years,
and the Company is continuously monitoring financial markets
to optimize renewal terms. In connection with the financing
of 16 locations by these groups, the Company has guaranteed
the residual value of the properties at approximately
$160,671,000 at the end of the lease terms.
Management believes that the Company's present borrowing
capacity is greater than the established credit lines and
long-term debt in place. Management also believes that the
Company's cash flow from operations, cash and short-term
investments and its available borrowing facilities are more
than adequate to fund planned store expansion, to meet debt
service and dividend requirements and to fund its share
repurchase program.
INFLATION
Inflation has not significantly impacted the Company over
the past three years. Management does not expect inflation
to have a significant impact on operations in the foreseeable
future unless global situations substantially affect the
world economy.
NEW ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board
(the "FASB") issued Statement of Financial Accounting
Standards ("FAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of" ("FAS 121"), which is effective for fiscal years
beginning after December 15, 1995. Effective January 1,
1996, the Company will adopt FAS 121 which requires that
long-lived assets (i.e. property, plant and equipment and
goodwill) held and used by an entity be 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 will be 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 will generally be measured as the difference between the
net book value of the assets and the estimated fair value of
the related assets. Upon adoption in the first quarter of
fiscal 1996, it is anticipated that the Company may record an
initial pre-tax impairment loss of approximately $15,000,000
to $25,000,000 to conform with this statement since it
requires grouping of assets at the lowest level of cash flows
to determine impairment.
In October 1995, the FASB issued FAS No. 123, "Accounting
for Stock-Based Compensation" ("FAS 123"), which is effective
for fiscal years beginning after December 15, 1995.
Effective January 1, 1996, the Company will adopt FAS 123
which establishes financial accounting and reporting
standards for stock-based employee compensation plans. The
pronouncement defines a fair value based method of accounting
for an employee stock option or similar equity instrument and
encourages all entities to adopt that method of accounting
for all of their employee stock option compensation plans.
However, it also allows an entity to continue to measure
compensation cost for those plans using the intrinsic value
based method of accounting as prescribed by Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees" ("APB 25"). Entities electing to remain with
the accounting in APB 25 must make pro forma disclosures of
net income and earnings per share as if the fair value based
method of accounting defined in FAS 123 had been applied.
The Company will continue to account for stock-based employee
compensation plans under the intrinsic method pursuant to APB
25 and will make the disclosures in its footnotes as required
by FAS 123.
SALE OF JOINT VENTURE INTEREST
During the quarter ended September 30, 1993, the Company
entered into definitive agreements with Nokia Corporation
("Nokia") to sell the Company's interests in two cellular
telephone manufacturing joint ventures with Nokia. Pursuant
to the terms of the definitive agreements, the Company
received an aggregate of approximately $31,700,000 for its
interests in these joint ventures. The Company also entered
into a three-year Preferred Supplier Agreement pursuant to
which it has agreed to purchase from Nokia substantially all
of RadioShack's requirements for cellular telephones at
prevailing competitive market prices at the time of the
purchase. These operations were not part of the overall
divestment plan adopted in June 1993 by the Company's Board
of Directors; therefore, the gain on the sale and their
results of operations were not included in discontinued
operations.
INTERTAN UPDATE
Summarized in the tables below are the amounts recognized
by the Company at December 31, 1995 and 1994, and for each of
the three years ended December 31, 1995, in relation to its
agreements with InterTAN. The Company purchased the notes at
a discount and InterTAN has an obligation to pay the gross
amount of the notes.
Balance at December 31,
-----------------------
(In thousands) 1995 1994
-------------- -------- --------
Gross amount of notes $ 44,903 $ 51,861
Discount 12,161 16,343
-------- --------
Net amount of notes $ 32,742 $ 35,518
======== ========
Current portion of notes $ 14,639 $ 4,260
Non-current portion
of notes 18,103 31,258
Other current receivables 6,707 4,447
-------- --------
$ 39,449 $ 39,965
======== ========
Year Ended December 31,
----------------------------------
(In thousands) 1995 1994 1993
-------------- -------- -------- --------
Sales and commission
income $ 10,904 $ 19,764 $ 93,315
======== ======== ========
Interest income $ 4,066 $ 4,426 $ 3,085
Accretion of discount 4,182 3,854 --
-------- -------- --------
$ 8,248 $ 8,280 $ 3,085
======== ======== ========
Royalty income $ 758 -- --
======== ======== ========
InterTAN, the former foreign retail operations of Tandy,
was spun off to Tandy stockholders as a tax-free dividend in
fiscal 1987. Under the merchandise purchase terms of the
original distribution agreement, InterTAN could purchase on
payment terms products sold or secured by Tandy. A&A, a
subsidiary of Tandy, was the exclusive purchasing agent for
products originating in the Far East for InterTAN.
On July 16, 1993, InterTAN had an account payable to Tandy
of approximately $17,000,000, of which $7,600,000 was in
default. InterTAN's outstanding purchase orders for
merchandise placed under the distribution agreement with
Tandy, but not yet shipped, totaled approximately
$44,000,000. Since InterTAN defaulted, on July 16 Tandy
terminated the merchandise purchase terms of the distribution
agreement and the license agreements. Tandy offered InterTAN
interim license agreements which expired July 22, 1993,
unless extended. The agreements were extended on July 23,
1993.
On July 30, 1993, Trans World Electronics, Inc. ("Trans
World"), a subsidiary of Tandy, reached agreement with
InterTAN's banking syndicate to buy approximately $42,000,000
of InterTAN's debt at a negotiated, discounted price. The
closing of this purchase occurred on August 5, 1993, at which
time Tandy resumed limited shipments to InterTAN and granted
a series of short-term, interim licenses pending the
execution of new license and merchandise agreements. The
debt purchased from the banks was restructured into a seven-
year note with interest of 8.64% due semiannually beginning
February 25, 1994 and semiannual principal payments beginning
February 25, 1995 (the "Series A" note). Trans World
provided approximately $10,000,000 in working capital and
trade credit to InterTAN. Interest on the working capital
loan (the "Series B" note) of 8.11% is due semiannually
beginning February 25, 1994 with the principal due in full on
August 25, 1996. Trans World also has received warrants with
a five-year term exercisable for approximately 1,450,000
shares of InterTAN common stock at an exercise price of
$6.618 per share. As required by an agreement with Tandy,
InterTAN has registered the warrants under the Securities Act
of 1933. At December 31, 1995, InterTAN's common stock
price, as quoted in the Wall Street Journal, was $7.25 per
-------------------
share. At February 29, 1996, InterTAN's common stock price
was $5.00 per share.
In addition to the bank debt purchased by Trans World and
the working capital loan, InterTAN's obligations to Trans
World included two additional notes for approximately
$23,665,000 (the "Series C" note) and $24,037,000 (the
"Series D" note) with interest rates of 7.5% and 8%,
respectively. All principal and interest on these two notes
have been paid in full. Subject to certain conditions
described below, all of Tandy's debt from InterTAN is secured
by a first priority lien on substantially all of InterTAN's
assets in Canada and the U.K.
A new merchandise agreement was reached with InterTAN in
October 1993, and amended in 1995, which requires a
percentage of future purchase orders to be backed by letters
of credit posted by InterTAN. New license agreements provide
a royalty payable to Tandy, which began in the September 1995
quarter. InterTAN had obligations for purchase orders
outstanding for merchandise ordered by A&A for InterTAN but
not yet shipped totaling approximately $25,447,000 at
December 31, 1995.
InterTAN increased its bank revolving credit facility with
its new banking syndicate to Canadian $60,000,000 (U.S.
$43,975,000 equivalent at December 31, 1995) in 1994. In the
event of InterTAN's default on the bank credit line, Tandy
will, at the option of InterTAN's new banking syndicate,
purchase InterTAN's inventory and related accounts receivable
at 50% of their net book value, up to the amount of
outstanding bank loans, but not to exceed Canadian
$60,000,000. In that event, Tandy could foreclose on its
first priority lien on InterTAN's assets in Canada and the
U.K. If Tandy fails to purchase the inventory and related
accounts receivable of InterTAN from the banking syndicate,
the syndicate, upon notice to Tandy and expiration of time,
can foreclose upon InterTAN's assets in Canada and the U.K.
ahead of Tandy. The inventory repurchase agreement between
InterTAN's banking syndicate and Tandy has been amended and
restated to reflect the foregoing.
A&A will continue as the exclusive purchasing agent for
InterTAN in the Far East on a commission basis. Effective
March 1994, only the purchasing agent commission and sales by
Tandy manufacturing plants to InterTAN were recorded as sales
and operating revenues. InterTAN purchases from third
parties through A&A are no longer recorded as sales,
reflecting the arrangement under the new merchandise
agreement. Accordingly, sales by Tandy to InterTAN in 1994
and 1995 were considerably lower than in prior years;
however, the earned income relating thereto was not
materially different.
Through February 1996, InterTAN has met all of its payment
obligations to Tandy. Published income before taxes for the
six months ended December 31, 1995 approximated $13,151,000
compared to $15,329,000 for the six months ended December 31,
1994. The reduction in InterTAN's earnings per fully diluted
share from $1.11 in the six months ended December 31, 1994 to
$0.52 in the current six months is primarily attributable to
a tax credit taken in fiscal 1995, and to a lesser extent, an
economic downtrend in its primary market of Canada. Nothing
has come to the attention of management which would indicate
that InterTAN would not be able to continue to meet its
payment obligations pursuant to the debt agreements with
Tandy.
Canadian tax authorities are reviewing InterTAN's Canadian
subsidiary's 1987-89 tax returns. The Company cannot
determine whether the ultimate resolution of that review will
have an effect on InterTAN's ability to meet its obligations
to Tandy, but at present, nothing has come to the attention
of the Company which would lead it to believe that the
ultimate resolution of this review would impair InterTAN's
ability to meet its obligations to Tandy.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Index to Consolidated Financial Statements is found on
page 30. The Company'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 fiscal year covered by this Form 10-K
pursuant to Regulation 14A. The information called for by
this Item with respect to directors has been omitted pursuant
to General Instruction G(3). This information is
incorporated by reference from the Proxy Statement for the
1996 Annual Meeting. For information relating to the
Executive Officers of the Company, see Part I of this report.
The Section 16(A) reporting information is incorporated by
reference from the Proxy Statement for the 1996 Annual
Meeting.
ITEM 11. EXECUTIVE COMPENSATION
Tandy will file a definitive proxy statement with the
Securities and Exchange Commission not later than 120 days
after the end of the fiscal year covered by this Form 10-K
pursuant to Regulation 14A. The information called for by
this Item with respect to executive compensation has been
omitted pursuant to General Instruction G(3). This
information is incorporated by reference from the Proxy
Statement for the 1996 Annual Meeting.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Tandy will file a definitive proxy statement with the
Securities and Exchange Commission not later than 120 days
after the end of the fiscal year covered by this Form 10-K
pursuant to Regulation 14A. The information called for by
this Item with respect to security ownership of certain
beneficial owners and management has been omitted pursuant to
General Instruction G(3). This information is incorporated
by reference from the Proxy Statement for the 1996 Annual
Meeting.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Tandy will file a definitive proxy statement with the
Securities and Exchange Commission not later than 120 days
after the end of the fiscal year covered by this Form 10-K
pursuant to Regulation 14A. The information called for by
this Item with respect to certain relationships and
transactions with management and others has been omitted
pursuant to General Instruction G(3). This information is
incorporated by reference from the Proxy Statement for the
1996 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 30. The index and statements are incorporated herein by
reference.
3. Exhibits required by Item 601 of Regulation S-K
A list of the exhibits required by Item 601 of Regulation
S-K and filed as part of this report is set forth in the
Index to Exhibits on page 57, which immediately precedes such
exhibits.
Certain instruments defining the rights of holders of long-
term debt of the Company and its consolidated subsidiaries
are not filed as exhibits to this report because the total
amount of securities authorized thereunder does not exceed
ten percent of the total assets of the Company on a
consolidated basis. The Company hereby agrees to furnish the
Securities and Exchange Commission copies of such instruments
upon request.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed for the three months
ended December 31, 1995.
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 28, 1996 /s/ John V. Roach
------------------------
John V. Roach
Chairman of the Board and
Chief Executive Officer
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
28th day of March, 1996.
Signature Title
/s/ John V. Roach Chairman of the Board, Director
------------------------- and Chief Executive Officer
John V. Roach (Chief Executive Officer)
/s/ Dwain H. Hughes Senior Vice President and Chief
------------------------- Financial Officer
Dwain H. Hughes (Principal Financial Officer)
/s/ Richard L. Ramsey Vice President and Controller
-------------------------
Richard L. Ramsey (Principal Accounting Officer)
/s/ James I. Cash, Jr. Director
-------------------------
James I. Cash, Jr.
/s/ Donna R. Ecton Director
-------------------------
Donna R. Ecton
/s/ Lewis F. Kornfeld, Jr. Director
--------------------------
Lewis F. Kornfeld, Jr.
/s/ Jack L. Messman Director
--------------------------
Jack L. Messman
/s/ William G. Morton Director
--------------------------
William G. Morton
/s/ Thomas G. Plaskett Director
-------------------------
Thomas G. Plaskett
/s/ Alfred J. Stein Director
-------------------------
Alfred J. Stein
/s/ William E. Tucker Director
--------------------------
William E. Tucker
/s/ Jessee L. Upchurch Director
--------------------------
Jesse L. Upchurch
/s/ John A. Wilson Director
--------------------------
John A. Wilson
TANDY CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Accountants .............. 31
Consolidated Statements of Income for each
of the three years ended December 31, 1995.... 32
Consolidated Balance Sheets at December 31,
1995 and December 31, 1994.................... 33
Consolidated Statements of Cash Flows for each
of the three years ended December 31, 1995.... 34
Consolidated Statements of Stockholders'
Equity for the three years ended
December 31, 1995 ............................ 35-36
Notes to Consolidated Financial Statements...... 37-56
Separate financial statements of Tandy Corporation have
been omitted because Tandy is primarily an operating company
and the amount of restricted net assets of consolidated and
unconsolidated subsidiaries and Tandy's equity in
undistributed earnings of 50% or less-owned companies
accounted for by the equity method are not significant. All
subsidiaries of Tandy Corporation are included in the
consolidated financial statements. Financial statements of
50% or less-owned companies have been omitted because they do
not, considered individually or in the aggregate, constitute
a significant subsidiary.
The financial statement schedules should be read in
conjunction with the consolidated financial statements. All
other schedules have been omitted because they are not
applicable, not required or the information is included in
the consolidated financial statements or notes thereto.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Tandy Corporation
In our opinion, the consolidated financial statements listed
in the accompanying index on page 30 present fairly, in all
material respects, the financial position of Tandy
Corporation and its subsidiaries (the "Company") at December
31, 1995 and 1994, and the results of their operations and
their cash flows for each of the three years in the period
ended December 31, 1995 in conformity with generally accepted
accounting principles. These financial statements are the
responsibility of the Company's management; our
responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted
auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 2 to the consolidated financial
statements, the Company changed its method of accounting for
income taxes in 1993.
/s/ Price Waterhouse LLP
--------------------------------
PRICE WATERHOUSE LLP
Fort Worth, Texas
February 20, 1996
CONSOLIDATED STATEMENTS OF INCOME
Tandy Corporation and Subsidiaries
Year Ended
December 31,
----------------------------------------------------------------
1995 1994 1993
% of % of % of
(In thousands, except per share amounts) Dollars Revenues Dollars Revenues Dollars Revenues
-----------------------------------------------------------------------------------------------------------
Net sales and operating revenues $5,839,067 100.0% $4,943,679 100.0% $4,102,551 100.0%
Cost of products sold 3,764,884 64.5 3,017,615 61.0 2,382,607 58.1
---------- ---------- ----------
Gross profit 2,074,183 35.5 1,926,064 39.0 1,719,944 41.9
Expenses/(income):
Selling, general and administrative 1,646,436 28.2 1,532,673 31.0 1,354,676 33.0
Depreciation and amortization 91,990 1.6 84,782 1.7 79,944 1.9
Interest income (42,322) (0.7) (78,612) (1.6) (65,538) (1.6)
Interest expense 33,706 0.6 30,047 0.6 39,707 1.0
Provision for restructuring costs 1,100 89,071 1.8 --
Gain from sale of credit accounts
and extended service contracts -- (91,437) (1.8) --
---------- ---------- ----------
1,730,910 29.7 1,566,524 31.7 1,408,789 34.3
---------- ---------- ----------
Income before income taxes, discontinued
operations and cumulative effect
of change in accounting principle 343,273 5.8 359,540 7.3 311,155 7.6
Provision for income taxes 131,299 2.2 135,205 2.7 115,523 2.8
---------- ---------- ----------
Income from continuing operations 211,974 3.6 224,335 4.6 195,632 4.8
---------- ---------- ----------
Loss from discontinued operations:
Operating loss, net of tax -- -- (57,619) (1.4)
Loss on disposal, net of tax -- -- (54,178) (1.3)
---------- ---------- ----------
-- -- (111,797) (2.7)
---------- ---------- ----------
Income before cumulative effect
of change in accounting principle 211,974 3.6 224,335 4.6 83,835 2.1
---------- ---------- ----------
Cumulative effect of
change in accounting principle -- -- 13,014 0.3
---------- ---------- ----------
Net income 211,974 3.6 224,335 4.6 96,849 2.4
Preferred dividends 6,537 0.1 6,777 0.1 7,136 0.2
---------- ---------- ----------
Net income available to common
shareholders $ 205,437 3.5% $ 217,558 4.5% $ 89,713 2.2%
========== ========== ==========
Net income available per average common
and common equivalent share:
Income from continuing operations $ 3.12 $ 2.91 $ 2.50
Loss from discontinued operations -- -- (1.48)
---------- ---------- ----------
Income before cumulative effect
of change in accounting principle 3.12 2.91 1.02
Cumulative effect of change
in accounting principle -- -- 0.17
---------- ---------- ----------
Net income available per average
common and common equivalent share $ 3.12 $ 2.91 $ 1.19
========== ========== ==========
Average common and common
equivalent shares outstanding 65,928 74,874 75,543
========== ========== ==========
Dividends declared per common share $ 0.74 $ 0.63 $ 0.60
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED BALANCE SHEETS
Tandy Corporation and Subsidiaries
December 31,
-----------------------------
(In thousands) 1995 1994
-------------- ---------- -----------
Assets
Current assets:
Cash and short-term investments $ 143,498 $ 205,633
Accounts and notes receivable, less
allowance for doubtful accounts 320,588 769,101
Inventories, at lower of cost or market 1,511,984 1,504,324
Other current assets 72,175 77,202
---------- ----------
Total current assets 2,048,245 2,556,260
Property, plant and equipment, at cost,
less accumulated depreciation 577,720 504,587
Other assets, net of accumulated amortization 96,098 182,927
---------- ----------
$2,722,063 $3,243,774
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Short-term debt, including current
maturities of long-term debt $ 189,861 $ 229,135
Accounts payable 365,131 582,194
Accrued expenses 321,939 376,795
Income taxes payable 82,978 18,026
---------- ----------
Total current liabilities 959,909 1,206,150
---------- ----------
Long-term debt and capital leases,
excluding current maturities 140,813 153,318
Other non-current liabilities 20,006 34,095
---------- ----------
Total other liabilities 160,819 187,413
---------- ----------
Stockholders' Equity
Preferred stock, no par value,
1,000,000 shares authorized
Series A junior participating, 100,000
shares authorized and none issued -- --
Series B convertible, 100,000
shares authorized and issued 100,000 100,000
Series C PERCS, 150,000 shares
authorized and issued -- 429,982
Common stock, $1 par value,
250,000,000 shares authorized
with 85,645,000 shares issued 85,645 85,645
Additional paid-in-capital 102,819 93,357
Retained earnings 2,332,120 2,176,971
Foreign currency translation effects (1,094) (1,799)
Common stock in treasury, at cost,
23,918,000 and 27,388,000 shares,
respectively (963,301) (971,611)
Unearned deferred compensation related
to TESOP (54,854) (62,334)
---------- ----------
Total stockholders' equity 1,601,335 1,850,211
Commitments and contingent liabilities
---------- ----------
$2,722,063 $3,243,774
========== ==========
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Tandy Corporation and Subsidiaries
Year Ended
December 31,
----------------------------------------
(In thousands) 1995 1994 1993
-----------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 211,974 $ 224,335 $ 96,849
Adjustments to reconcile net income to net cash
provided by operating activities:
Loss reserve on disposal of discontinued operations -- -- 54,178
Provision for restructuring cost 1,100 89,071 --
Gain on sale of extended service contracts -- (55,729) --
Gain on sale of credit card portfolios -- (35,708) --
Cumulative effect of change in accounting principle -- -- (13,014)
Depreciation and amortization 91,990 84,782 98,571
Deferred income taxes and other items 20,129 68,257 11,552
Provision for credit losses and bad debts 15,736 49,344 57,491
Changes in operating assets and liabilities:
Sale of credit card portfolios 342,822 85,764 --
Receivables 167,358 (230,938) 30,133
Inventories (23,342) (220,094) (63,965)
Other current assets 3,218 (8,504) 16,158
Accounts payable, accrued expenses and income taxes (157,991) 218,358 34,341
--------- --------- ---------
Net cash provided by operating activities 672,994 268,938 322,294
--------- --------- ---------
Investing activities:
Additions to property, plant and equipment (226,511) (180,559) (129,287)
Proceeds from sale of property, plant and equipment 42,002 56,437 3,011
Proceeds from sale of divested operations -- 359,004 111,988
Purchase of InterTAN bank debt and
restructuring of working capital loans -- -- (31,663)
Prepayment of portion of AST note 6,720 -- --
Other investing activities (2,558) 1,738 (11,513)
--------- --------- ---------
Net cash provided (used) by investing activities (180,347) 236,620 (57,464)
--------- --------- ---------
Financing activities:
Purchase of treasury stock (502,239) (275,415) (27,650)
Sale of treasury stock to employee
stock purchase program 44,623 41,579 42,067
Proceeds from exercise of stock options 18,188 2,465 5,315
Dividends paid, net of taxes (62,991) (74,512) (74,873)
Changes in short-term borrowings, net (1,778) (110,393) (46,885)
Additions to long-term borrowings 10,307 28,936 --
Repayments of long-term borrowings (60,892) (125,820) (62,195)
--------- --------- ---------
Net cash used by financing activities (554,782) (513,160) (164,221)
--------- --------- ---------
Increase (decrease) in cash and short-term investments (62,135) (7,602) 100,609
Cash and short-term investments, beginning of period 205,633 213,235 112,626
--------- --------- ---------
Cash and short-term investments, end of period $ 143,498 $ 205,633 $ 213,235
========= ========= =========
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Tandy Corporation and Subsidiaries
Preferred Common Stock
-------------------
(In thousands) Stock Shares Dollars
--------------------------------------------------------------------------------------
Balance at December 31, 1992 $ 529,982 85,645 $ 85,645
Purchase of treasury stock -- -- --
Foreign currency translation adjustments, net of taxes -- -- --
Sale of treasury stock to SPP -- -- --
Exercise of stock options -- -- --
Series B convertible stock dividends,
net of taxes of $2,497,000 -- -- --
TESOP deferred compensation earned -- -- --
Series C PERCS dividends -- -- --
Repurchase of preferred stock -- -- --
Common stock dividends declared -- -- --
Net income -- -- --
------------------------------
Balance at December 31, 1993 529,982 85,645 85,645
Purchase of treasury stock -- -- --
Foreign currency translation adjustments, net of taxes -- -- --
Sale of treasury stock to SPP -- -- --
Exercise of stock options -- -- --
Series B convertible stock dividends,
net of taxes of $2,372,000 -- -- --
TESOP deferred compensation earned -- -- --
Series C PERCS dividends -- -- --
Repurchase of preferred stock -- -- --
Common stock dividends declared -- -- --
Net income -- -- --
------------------------------
Balance at December 31, 1994 529,982 85,645 85,645
Purchase of treasury stock -- -- --
Foreign currency translation adjustments, net of taxes -- -- --
Sale of treasury stock to SPP -- -- --
Exercise of stock options -- -- --
Series B convertible stock dividends,
net of taxes of $2,288,000 -- -- --
TESOP deferred compensation earned -- -- --
Series C PERCS dividends -- -- --
Repurchase of preferred stock -- -- --
Common stock dividends declared -- -- --
Directors' stock compensation plan -- -- --
Redemption of PERCS (429,982) -- --
Net income -- -- --
------------------------------
Balance at December 31, 1995 $ 100,000 85,645 $ 85,645
==============================
The accompanying notes are an integral part of these financial statements.
Foreign
Additional Currency Unearned
Treasury Stock Paid-In Retained Translation Deferred
--------------------------
Shares Dollars Capital Earnings Effects Compensation Total
--------------------------------------------------------------------------------------------
(22,419) $ (726,861) $ 86,414 $2,006,174 $ (11,056) $ (81,947) $1,888,351
(763) (24,749) -- -- -- -- (24,749)
-- -- -- -- 12,059 -- 12,059
1,311 42,292 (225) -- -- -- 42,067
182 5,882 (437) -- -- -- 5,445
-- -- -- (4,638) -- -- (4,638)
-- -- -- -- -- 9,605 9,605
-- -- -- (32,100) -- -- (32,100)
-- (3,895) -- -- -- -- (3,895)
-- -- -- (38,244) -- -- (38,244)
-- -- -- 96,849 -- -- 96,849
--------------------------------------------------------------------------------------------
(21,689) (707,331) 85,752 2,028,041 1,003 (72,342) 1,950,750
(6,798) (296,419) -- -- -- -- (296,419)
-- -- -- -- (2,802) -- (2,802)
1,023 33,958 7,621 -- -- -- 41,579
76 2,481 (16) -- -- -- 2,465
-- -- -- (4,405) -- -- (4,405)
-- -- -- -- -- 10,008 10,008
-- -- -- (32,100) -- -- (32,100)
-- (4,300) -- -- -- -- (4,300)
-- -- -- (38,900) -- -- (38,900)
-- -- -- 224,335 -- -- 224,335
--------------------------------------------------------------------------------------------
(27,388) (971,611) 93,357 2,176,971 (1,799) (62,334) 1,850,211
(9,737) (473,059) -- -- -- -- (473,059)
-- -- -- -- 705 -- 705
896 33,779 10,844 -- -- -- 44,623
493 18,064 1,950 -- -- -- 20,014
-- -- -- (4,249) -- -- (4,249)
-- -- -- -- -- 7,480 7,480
-- -- -- (4,824) -- -- (4,824)
-- (3,876) -- -- -- -- (3,876)
-- -- -- (47,752) -- -- (47,752)
2 56 32 -- -- -- 88
11,816 433,346 (3,364) -- -- -- --
-- -- -- 211,974 -- -- 211,974
--------------------------------------------------------------------------------------------
(23,918) $ (963,301) $ 102,819 $2,332,120 $ (1,094) $ (54,854) $1,601,335
============================================================================================
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Tandy Corporation and Subsidiaries
NOTE 1-DESCRIPTION OF BUSINESS
Tandy Corporation ("Tandy" or the "Company") is engaged in
consumer electronics retailing including the retail sale of
personal computers. RadioShack(SM) is the largest of Tandy's
retail store systems with company-owned stores and
dealer/franchise outlets. RadioShack's sales are primarily
related to private label consumer electronics and brand name
personal computers. Tandy also operates the Computer City(R)
and Incredible Universe(R) store chains. Computer City sales
relate to personal computers, printers, peripheral equipment
and software. Incredible Universe sales relate primarily to
brand name appliances and consumer electronics including
personal computers and related software.
On December 30, 1994, the Company adopted a formal plan to
close 233 Tandy Name Brand stores, and as a result of the
closings, the Tandy Name Brand Retail Group ("Tandy Name
Brand") was dissolved in 1995. The remaining 73 Tandy Name
Brand stores have been transferred to the Tandy Specialty
Retail Group of the RadioShack division. Additionally, Tandy
continues to operate certain related retail support groups
and consumer electronics manufacturing businesses.
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial
statements include the accounts of Tandy and its wholly owned
subsidiaries. Investments in 20% to 50% owned companies are
accounted for on the equity method. The fiscal periods of
certain foreign operations end one month earlier than the
Company's year end to facilitate their inclusion in the
consolidated financial statements. The manufacturing and
marketing operations included in the divestment plan have
been accounted for as discontinued operations. See Note 21
for further information relating to discontinued operations.
Significant intercompany transactions are eliminated in
consolidation.
FOREIGN CURRENCY TRANSLATION: In accordance with the
Financial Accounting Standards Board (the "FASB") Statement
No. 52, "Foreign Currency Translation," balance sheet
accounts of the Company's foreign operations are translated
from foreign currencies into U.S. dollars at year end or
historical rates while income and expenses are translated at
the weighted average sales exchange rates for the year.
Translation gains or losses related to net assets located
outside the United States are shown as a separate component
of stockholders' equity. Losses aggregating $19,803,000, net
of tax, relating to discontinued operations were transferred
from equity and charged to loss on disposal of discontinued
operations during 1993. Gains and losses resulting from
foreign currency transactions (transactions denominated in a
currency other than the entity's functional currency) are
included in net income. Such foreign currency transaction
gains approximated $1,097,000, $1,495,000 and $762,000 for
the years ended December 31, 1995, 1994 and 1993,respectively.
CHANGE IN ACCOUNTING PRINCIPLE-PROVISION FOR INCOME TAXES:
In January 1993, the Company adopted Statement of Financial
Accounting Standards ("FAS") No. 109, "Accounting for Income
Taxes" ("FAS 109") and applied the provisions prospectively.
The adoption of FAS 109 changes the Company's method of
accounting for income taxes from the deferred method ("APB
11") to an asset and liability approach. The asset and
liability approach requires the recognition of deferred tax
liabilities and assets for the expected future tax
consequences of temporary differences between the carrying
amounts and the tax bases of assets and liabilities.
The adjustments to the January 1, 1993 balance sheet to
adopt FAS 109 totaled $13,014,000. Approximately $9,786,000
of this adjustment related to continuing operations and the
remaining $3,228,000 was from discontinued operations. The
aggregate amount of $13,014,000 is reflected in the
accompanying 1993 Consolidated Statements of Income as the
cumulative effect of change in accounting principle. It
primarily represents the impact of adjusting deferred taxes
to reflect the then current tax rate of 34% as opposed to the
higher tax rates that were in effect when the deferred taxes
originated. See Note 12 for further discussion of income
taxes.
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 48 months. During 1995, the Company sold
extended service contracts on behalf of an unrelated third
party and, to a much lesser extent, sold its own extended
service contracts. Contracts sold prior to January 1, 1995
were offered directly by the Company. The Company accounts
for sales of its own contracts in accordance with FASB
Technical Bulletin No. 90-1, "Accounting for Separately
Priced Extended Warranty and Product Maintenance Contracts"
which requires that revenues from sales of extended service
contracts be 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 under the contracts exceeds related
unearned revenue. Commission revenue for the unrelated third
party extended service contracts is recognized at the time of
sale.
As described in Note 3, the Company transferred all
obligations with respect to contracts in force at December
31, 1994 to an unrelated party, except certain contracts
aggregating approximately $7,734,000.
CASH AND SHORT-TERM INVESTMENTS: Cash on hand in stores,
deposits in banks and short-term investments with original
maturities of three months or less are considered cash and
cash equivalents. Short-term investments are carried at
cost, which approximates market value.
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS:
CREDIT OPERATIONS-As described in Note 3, the Company's
Computer City and Incredible Universe private label credit
card portfolios were sold in December 1994, and the Company's
RadioShack and McDuff private label credit card portfolios
were sold in the first half of 1995. Subsequent to the sale
of the portfolios, consumer sales made pursuant to the
private label credit card programs are being financed by an
unrelated third party.
Prior to the sale, the customer receivables of the credit
operations were classified as current assets, including
amounts which were contractually due after one year. This is
consistent with retail industry practices.
Finance charges, late charges and returned check fees
arising from the Company's private label credit cards were
recognized when earned as interest income. The Company's
policy was to write off accounts when they became 180 days
past due or whenever deemed uncollectible by management,
whichever was sooner. Collection efforts continued
subsequent to write-off.
The Company was charged a fee by an outside accounts
receivable processing service for establishing new accounts.
These initial direct costs were capitalized and amortized on
a straight-line basis over a period of 84 months, the
estimated life over which the account would be used by a
customer. These costs are shown in the accompanying 1994
Consolidated Balance Sheet as a part of the related accounts
receivable. Amortization of these loan origination costs
were included as a reduction of interest income in the
accompanying 1994 and 1993 Consolidated Statements of Income.
Costs to process accounts on an ongoing basis were expensed
as incurred. These initial direct costs were sold along with
the portfolios.
OTHER CUSTOMER RECEIVABLES-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 the Company's customer base and their location in
many different geographic areas of the country; however, see
Note 8 for a discussion of a concentration of credit risk of
long-term receivables.
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: 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.
The ranges of estimated useful lives are:
_____________________________________________________________
Buildings ....................... 10-40 years
Buildings under capital lease.... over the life of the lease
Equipment ....................... 2-15 years
Leasehold improvements........... primarily, the shorter of
the life of the improvements or the
term of the related lease and certain renewal periods
_____________________________________________________________
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 expenses. 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 lease is
included in depreciation and amortization in the Consolidated
Statements of Income.
AMORTIZATION OF EXCESS PURCHASE PRICE OVER NET TANGIBLE
ASSETS OF BUSINESSES ACQUIRED: The excess purchase price is
generally amortized over a 40-year period using the straight-
line method and the net balance is classified as a non-
current asset.
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.
HEDGING AND DERIVATIVE ACTIVITY: The Company enters into
interest rate swap agreements to manage its interest rate
exposure by effectively trading floating interest rates for
fixed interest rates. As the Company has used the swaps to
hedge certain obligations with floating rates, the difference
between the floating and fixed interest rate amounts, based
on these swap agreements, is recorded as income or expense.
Through December 31, 1995, the Company had entered into five
swaps with regard to notional amounts totaling $90,000,000.
The swap agreements all expire during the third quarter of
1999. Prior to 1995 the Company was not a party to any
interest rate swaps. The Board of Directors has authorized
management to enter into interest rate swaps up to notional
amounts not exceeding $250,000,000. At December 31, 1995,
the Company would have had to pay approximately $7,000,000 to
terminate the interest rate swaps in place. This amount was
obtained from the counterparties and represents the fair
value of the swap agreements; the amount is not recognized in
the consolidated financial statements since the swaps are not
held for trading purposes. At December 31, 1995, the
weighted average interest rate of the floating rate
obligations being hedged was 6.4%, and the weighted average
interest rate of the fixed rate obligations imposed by the
swap agreements was 7.7%. The interest rate swap agreements
have been entered into with major financial institutions
which are expected to fully perform under the terms of the
swap agreements.
The Company has not historically utilized derivatives to
manage foreign currency risks and exposure except for an
immaterial amount of foreign exchange forward contracts used
to hedge a portion of its foreign purchases. As of December
31, 1995, the Company had no outstanding purchase orders for
which a foreign exchange contract was used as a hedge. The
few contracts that were used did not involve leverage and did
not have other high risk characteristics. Moody's has
assigned a counterparty rating to Tandy Corporation of Baa2.
This rating is an opinion of the financial capacity of Tandy
to honor its senior obligations under financial contracts.
Financial contracts entered into by Tandy include the limited
use of foreign currency forwards to hedge foreign exchange
risk arising from the purchase of inventory.
REVENUES: Retail sales are recorded on the accrual basis.
STORE PRE-OPENING COSTS: Direct incremental expenses
associated with the openings of new Computer City and
Incredible Universe stores, comprised primarily of payroll
and payroll-related costs, are deferred and amortized over a
twelve-month period from the date of the store opening.
Deferred store pre-opening expenses for Computer City and
Incredible Universe approximated $6,795,000, $4,538,000 and
$1,845,000 at December 31, 1995, 1994 and 1993, respectively.
NET INCOME PER AVERAGE COMMON AND COMMON EQUIVALENT SHARE:
Net income per average common and common equivalent share is
computed by dividing net income less the Series B convertible
stock dividends (before tax benefit) by the weighted average
common and common equivalent shares outstanding during the
period. As the Preferred Equity Redemption Convertible Stock
("PERCS") mandatorily converted into common stock, they were
considered outstanding common stock and the dividends have
not been deducted from net income for purposes of calculating
net income per average common and common equivalent share.
On January 23, 1995, the Company announced that the PERCS and
the underlying depositary shares would be converted on March
10, 1995. For each depositary share redeemed, 0.787757 Tandy
common shares were issued for an aggregate of approximately
11,816,000 shares. Current year weighted average share
calculations include approximately 11,816,000 common shares
relating to the PERCS. Per share amounts and the weighted
average number of shares outstanding for the years ended
December 31, 1994 and 1993 also reflected the PERCS
conversion into approximately 11,816,000 common shares.
Fully diluted earnings available per common and common
equivalent share are not presented since dilution is less
than 3%.
Earnings available per common and common equivalent share
for each period presented, assuming the PERCS converted to
common stock under the "if converted" method and only if
dilutive, would have been presented as in the table which
follows.
Year Ended
December 31, 1993
-----------------
Primary EPS, as adjusted:
Income from continuing operations $ 2.45
Loss from discontinued operations (1.75)
Cumulative effect of
change in accounting principle 0.20
-------
Net income available per average
common and common equivalent share $ 0.90
=======
TREASURY STOCK REPURCHASE PROGRAM: On December 18, 1995,
the Company announced that its Board of Directors authorized
management to purchase up to 5,000,000 shares of its common
stock in addition to shares required for employee plans.
These purchases are in addition to the share repurchase
program which began in August 1994 and concluded in December
1995, under which the Company repurchased 12,500,000 shares.
Purchases will be made from time to time in the open market,
and it is expected that funding of the program will come from
operating cash flow and existing bank facilities. As of
December 31, 1995, the Company had not repurchased any shares
under this new program.
ADVERTISING COSTS: All advertising costs of the Company
are expensed the first time the advertising takes place.
Advertising expense was $257,299,000, $224,212,000 and
$205,831,000 for the years ended December 31, 1995, 1994 and
1993, respectively.
NEW ACCOUNTING STANDARDS: In March 1995, the FASB issued
FAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of" ("FAS
121"), which is effective for fiscal years beginning after
December 15, 1995. Effective January 1, 1996, the Company
will adopt FAS 121 which requires that long-lived assets
(i.e. property, plant and equipment and goodwill) held and
used by an entity be 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 will
be 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 will generally be measured as the
difference between the net book value of the assets and the
estimated fair value of the related assets. Upon adoption in
the first quarter of fiscal 1996, it is anticipated that the
Company may record an initial pre-tax impairment loss of
approximately $15,000,000 to $25,000,000 (unaudited) to
conform with this statement since it requires grouping of
assets at the lowest level of cash flows to determine
impairment.
In October 1995, the FASB issued FAS No. 123, "Accounting
for Stock-Based Compensation" ("FAS 123"), which is effective
for fiscal years beginning after December 15, 1995.
Effective January 1, 1996, the Company will adopt FAS 123
which establishes financial accounting and reporting
standards for stock-based employee compensation plans. The
pronouncement defines a fair value based method of accounting
for an employee stock option or similar equity instrument and
encourages all entities to adopt that method of accounting
for all of their employee stock option compensation plans.
However, it also allows an entity to continue to measure
compensation cost for those plans using the intrinsic value
based method of accounting as prescribed by Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees" ("APB 25"). Entities electing to remain with
the accounting in APB 25 must make pro forma disclosures of
net income and earnings per share as if the fair value based
method of accounting defined in FAS 123 had been applied.
The Company will continue to account for stock-based employee
compensation plans under the intrinsic method pursuant to APB
25 and will make the disclosures in its footnotes as required
by FAS 123.
PERVASIVENESS OF ESTIMATES: The preparation of financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities, and related revenues and expenses, and
disclosure of gain and loss contingencies at the date of the
financial statements. Actual results could differ from those
estimates.
RECLASSIFICATION: Certain amounts in prior years have been
reclassified to conform to classifications adopted in 1995.
NOTE 3-GAIN ON SALE OF CREDIT OPERATIONS AND EXTENDED SERVICE
CONTRACTS
In December 1994, the Company entered into an agreement
with SPS Transaction Services, Inc., a majority-owned
subsidiary of Dean Witter, Discover & Company ("SPS") to sell
its Computer City and Incredible Universe private label
credit card portfolios without recourse. As a result of the
agreement, Tandy received cash of $85,764,000 and received a
deferred payment of $179,777,000. The Company recognized a
gain of $35,708,000 in the accompanying 1994 Consolidated
Statements of Income. The deferred payment amount did not
bear interest. The total principal amount of $179,777,000
was paid in full during 1995. The Company discounted the
deferred payment by $3,477,000 to yield interest income of
approximately 5% over the twelve month payout period.
On March 30, 1995, the Company completed the sale, at net
book value, of the RadioShack and Tandy Name Brand private
label credit card accounts and substantially all related
accounts receivable to Hurley State Bank, a subsidiary of
SPS. As a result of the transaction, Tandy received
$342,822,000 in cash and a deferred payment amount of
$49,444,000. The deferred payment does not bear interest,
and principal is paid monthly with final payment due February
29, 1996. The remaining discounted deferred payment balance
of $2,098,000 is classified as a current receivable in the
accompanying Consolidated Balance Sheet at December 31, 1995.
Effective December 1994, the Company transferred all of its
existing obligations with respect to extended service
contracts in force at December 31, 1994, with the exception
of certain contracts aggregating approximately $7,734,000, to
an unrelated third party. The unrelated third party
contractually assumed all of the Company's legal obligations
and risk of future loss pursuant to the extended service
contracts in exchange for $75,059,000. As a result, the
Company recognized a gain of $55,729,000 associated with this
transaction in its accompanying 1994 Consolidated Statements
of Income. The Company continues to provide repair services
to customers who tender products pursuant to the extended
service contracts on a non-exclusive basis. The unrelated
third party pays the Company competitive market rates for
repairs on products tendered pursuant to the extended service
contracts.
NOTE 4-RESTRUCTURING CHARGES
In December 1994, the Company adopted a business
restructuring plan to close or convert 233 of the 306 Tandy
Name Brand stores. At March 31, 1995, all 233 stores had
been closed or converted. The remaining stores have become
part of the Tandy Specialty Retail Group of the RadioShack
division. A pre-tax charge of $89,071,000 was taken in the
fourth quarter of fiscal 1994 related to the closing and
conversion of these stores. The components of the
restructuring charge and an analysis of the amounts charged
against the reserve are outlined in the following table:
Charges Charges
Original Through Balance 1/1/95- Balance
(In thousands) Reserve 12/31/94 12/31/94 12/31/95 12/31/95
-------------- -------- -------- -------- -------- --------
Lease obligations $ 46,682 $ (1,466) $ 45,216 $(32,998) $ 12,218
Impairment of fixed assets 17,991 -- 17,991 (17,991) --
Inventory impairment 16,600 -- 16,600 (16,600) --
Goodwill impairment 4,222 (4,222) -- -- --
Termination benefits 1,218 -- 1,218 (1,218) --
Other 2,358 -- 2,358 (2,358) --
-------- -------- -------- -------- --------
Total $ 89,071 $ (5,688) $ 83,383 $(71,165) $ 12,218
======== ======== ======== ======== ========
The lease obligation charges for 1995 were net of an
additional reserve of $1,100,000. The remaining reserve at
December 31, 1995 relates to estimated future payments to
landlords to terminate store lease agreements for which the
lease term has not yet expired, been subleased or terminated
pursuant to a settlement agreement.
Sales and operating revenues associated with the closed
Tandy Name Brand stores approximated $28,041,000 (unaudited)
and operating losses approximated $3,064,000 (unaudited) for
the year ended December 31, 1995. Sales and operating
revenues associated with the closed Tandy Name Brand stores
approximated $261,990,000 (unaudited) and $271,914,000
(unaudited) for 1994 and 1993, respectively, and operating
losses approximated $18,125,000 (unaudited) and $15,342,000
(unaudited) for 1994 and 1993, respectively. In conjunction
with this restructuring, 1,425 (unaudited) employees were
terminated, most of whom were store employees and managers.
NOTE 5-SHORT-TERM INVESTMENTS
The weighted average interest rates were 4.8% and 5.2% at
December 31, 1995 and 1994, respectively, for short-term
investments totaling $20,797,000 and $80,373,000,
respectively.
NOTE 6-ACCOUNTS AND NOTES RECEIVABLE
Accounts and Notes Receivable
December 31,
------------------------
(In thousands) 1995 1994
-------------- ---------- ---------
Gross customer receivable balances of credit operations $ 21,278 $ 705,691
Less securitized customer receivables -- (300,990)
---------- ---------
Customer receivable balances of credit operations 21,278 404,701
Plus initial direct costs, net of amortization of
$6,736,000 in 1994 -- 10,649
---------- ---------
Net customer receivable balances of credit operations 21,278 415,350
Deferred payment due on sale of credit operations, net
of discount of $11,000 and $3,477,000, respectively 2,098 176,300
---------- ---------
Net receivables related to credit operations 23,376 591,650
Trade accounts receivable 167,097 134,161
Receivable and current portion of notes due from InterTAN 21,346 8,707
AST note, net of discount of $151,000 89,849 --
Other receivables 24,805 55,957
Less allowance for doubtful accounts (5,885) (21,374)
---------- ---------
$ 320,588 $ 769,101
========== =========
Allowance for Doubtful Accounts
Year Ended
December 31,
-----------------------------------
(In thousands) 1995 1994 1993
-------------- --------- --------- ---------
Balance at the beginning of the year $ 21,374 $ 22,340 $ 21,945
Provision for credit losses and bad debt
included in selling, general and
administrative expense 15,736 49,344 55,043
Reserve allocated to securitized receivables -- 1,748 (1,203)
Reserve on credit accounts sold (18,830) (6,387) --
Uncollected receivables written off,
net of recoveries (12,395) (45,671) (53,445)
--------- --------- ---------
Balance at the end of the year $ 5,885 $ 21,374 $ 22,340
========= ========= =========
During 1991 the Company executed an asset securitization
for its private label credit card portfolio for approximately
$350,000,000 of which $300,990,000 was remaining at December
31, 1994. The Company no longer services, has an interest in
or any obligation relating to these securitized receivables
since they were included in the sale of the private label
credit card portfolio to SPS (see Note 3).
Interest income related to the Company's credit card
operations totaled $18,540,000, $46,868,000 and $57,401,000
for the years ended December 31, 1995, 1994 and 1993,
respectively. During 1995 the Company recorded interest
income earned, including accretion of discount, on notes
receivable from AST Research, Inc. ("AST") and InterTAN, Inc.
("InterTAN") approximating $4,922,000 and $8,248,000,
respectively. In 1995 and 1994 the Company recognized
interest income from the IRS reflecting the settlement of
outstanding tax issues of approximately $6,183,000 and
$9,582,000, respectively. The Company also recorded in 1994
interest income earned, including accretion of discount, on
notes receivable from AST and InterTAN approximating
$5,724,000 and $8,280,000, respectively.
NOTE 7-PROPERTY, PLANT AND EQUIPMENT
December 31,
------------------------
(In thousands) 1995 1994
-------------- ---------- ----------
Land $ 18,909 $ 22,670
Buildings 181,398 155,334
Buildings under capital lease 29,876 23,873
Furniture, fixtures and
equipment 475,744 430,006
Leasehold improvements 361,033 345,812
---------- ----------
1,066,960 977,695
Less accumulated depreciation
and amortization of capital
leases 489,240 473,108
---------- ----------
$ 577,720 $ 504,587
========== ==========
NOTE 8-OTHER ASSETS
Other assets include the excess purchase price over net
tangible assets of businesses acquired of $13,615,000 at
December 31, 1995 and $13,747,000 at December 31, 1994.
These amounts are net of accumulated amortization of
$4,183,000 and $5,035,000, respectively. The balance of
other assets at December 31, 1995 also includes long-term
receivables relating to InterTAN and Lika of $18,903,000, net
of discount of $12,161,000. The balance at December 31, 1994
includes long-term receivables relating to InterTAN, AST and
Lika of $128,926,000, net of discount of $16,796,000. See
Notes 21 and 22 for a further description of the terms of the
AST and InterTAN notes receivable.
NOTE 9-INDEBTEDNESS AND BORROWING FACILITIES
Borrowings payable within one year are summarized in the
accompanying short-term debt table on page 44. The short-
term debt caption includes primarily domestic seasonal
borrowings. The current portion of long-term debt at
December 31, 1995 includes $12,904,000 of medium-term notes
and other loans. The current portion of long-term debt at
December 31, 1994 includes $45,000,000 of senior notes and
$6,208,000 of medium-term notes and other loans.
Tandy's short-term credit facilities, including revolving
credit lines, are summarized in the accompanying short-term
borrowing facilities table found on page 45. 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. The Company's
primary source of short-term debt, for which borrowings and
repayments have been presented net in the Consolidated
Statements of Cash Flows, consists of short-term seasonal
bank debt and commercial paper. The commercial paper matures
within 90 days, as does the short-term seasonal bank debt.
A commercial paper program was established during fiscal
1991 for Tandy and was renewed in May 1994. The Company has
$400,000,000 in committed facilities in place for the
commercial paper program. These facilities are to be used
only if maturing commercial paper cannot be repaid due to an
inability to sell new paper. This agreement is composed of
two facilities--one for $200,000,000 expiring in May 1996 and
another facility for $200,000,000 expiring in May 1997.
Annual commitment fees for the facilities are 2/25 of 1% per
annum and 1/8 of 1% per annum, respectively, whether used or
unused. The commercial paper facilities limit the amount of
commercial paper that may be outstanding to a maximum of
$400,000,000. At December 31, 1995, there were no amounts
outstanding under the facilities.
Tandy completed a $500,000,000 shelf registration in
January 1991 of which $400,000,000 was designated for medium-
term notes. At December 31, 1995, available borrowing
capacity under Tandy's medium-term note programs aggregated
$312,800,000. Medium-term notes outstanding at December 31,
1995 totaled $67,104,000 compared to $73,044,000 at December
31, 1994. The weighted average coupon rates of medium-term
notes outstanding at December 31, 1995 and 1994 were 8.4% and
8.5%, respectively. The $6,000,000 of Tandy Credit's medium-
term notes which were to mature in May and August of 1995
were paid in full in February 1995.
The Company 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 Employees Stock
Ownership Plan in Note 14.
Long-term borrowings and capital lease obligations
outstanding at December 31, 1995 mature as follows:
(In thousands)
---------------------------------------------
1996 ............................. $23,664
1997 ............................. 41,396
1998 ............................. 37,934
1999 ............................. 11,971
2000 ............................. 10,766
2001 and thereafter .............. 38,746
---------------------------------------------
The fair value of the Company's long-term debt of
$135,716,000 (including current portion, but excluding
capital leases) is approximately $143,794,000 at December 31,
1995.
Short-Term Debt
December 31,
--------------------------
(In thousands) 1995 1994
-------------- ---------- -----------
Short-term bank debt $ 64,900 $ 78,677
Current portion of long-term debt 12,904 51,208
Commercial paper, less unamortized discount 101,297 88,775
---------- ----------
179,101 218,660
Current portion of capitalized lease obligations 363 675
Current portion of guarantee of TESOP indebtedness 10,397 9,800
---------- ----------
Total short-term debt $ 189,861 $ 229,135
========== ==========
Long-Term Debt
December 31,
--------------------------
(In thousands) 1995 1994
-------------- ---------- -----------
Notes payable with interest rates at December 31,
1995 ranging from 5.10% to 6.63% $ 9,519 $ 54,726
Medium-term notes payable, net of issuance cost,
with interest rates at December 31, 1995
ranging from 7.25% to 8.63% 67,104 73,044
---------- -----------
76,623 127,770
Less portion due within one year included in
current notes payable (12,904) (51,208)
---------- -----------
63,719 76,562
---------- -----------
Capital lease obligations 28,761 23,238
Less current portion (363) (675)
---------- -----------
28,398 22,563
---------- -----------
Guarantee of TESOP indebtedness (See Note 14) 59,093 63,993
Less current portion (10,397) (9,800)
---------- -----------
48,696 54,193
---------- -----------
Total long-term debt $ 140,813 $ 153,318
========== ===========
Short-Term Borrowing Facilities
Year ended December 31,
----------------------------------------------------------------------------------------
(In thousands) 1995 1994 1993
-------------- ---------- ----------- -----------
Domestic seasonal bank credit lines and
bank money market lines:
Lines available at period end $ 940,000 $1,025,000 $1,050,000
Loans outstanding at period end $ 64,900 $ 77,300 $ 90,000
Weighted average interest rate at period end 6.0% 6.4% 3.6%
Weighted average of loans outstanding
during period $ 106,963 $ 16,358 $ 168,901
Weighted average interest rate during period 6.2% 5.2% 3.6%
Short-term foreign credit lines:
Lines available at period end $ 139,091 $ 149,084 $ 143,685
Loans outstanding at period end None $ 1,377 $ 612
Weighted average interest rate at period end N/A 7.4% 6.7%
Weighted average of loans outstanding
during period $ 256 $ 3,563 $ 1,956
Weighted average interest rate during period 3.8% 5.5% 4.0%
Letters of credit and banker's acceptance lines
of credit:
Lines available at period end $ 417,500 $ 475,000 $ 526,000
Acceptances outstanding at period end None None None
Letters of credit open against outstanding
purchase orders at period end $ 79,900 $ 91,645 $ 124,701
Commercial paper credit facilities:
Commercial paper outstanding at period end $ 101,297 $ 88,775 $ 172,851
Weighted average interest rate at period end 6.0% 6.2% 3.5%
Weighted average of commercial paper
outstanding during period $ 198,068 $ 37,878 $ 174,494
Weighted average interest rate during period 6.2% 4.8% 3.5%
NOTE 10-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 and Computer City stores
are located primarily in major shopping malls, shopping
centers or freestanding facilities owned by other companies.
Store leases are generally 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 1995, under sale and leaseback agreements
with an unrelated third party, the Company sold certain
Incredible Universe stores for approximately $37,550,000 and
leased the properties back under a lease agreement which
matures on September 11, 2000. No gain was recorded on the
transactions. In 1994, the Company sold certain Incredible
Universe stores for approximately $52,719,000 and leased the
properties back under a lease agreement which matures on
September 11, 2000. The 1994 transactions produced a gain of
approximately $1,664,000 which was deferred and is being
amortized over the life of the lease periods. The Company
does not have any continuing involvement under the sale-
leaseback transactions.
Future minimum rent commitments at December 31, 1995 for
all long-term noncancelable leases (net of immaterial amounts
of sublease rent income) are included in the following table.
(In thousands) Operating Leases Capital Leases
-----------------------------------------------------------
1996 ................ $178,373 $ 5,889
1997 ................ 170,865 5,927
1998 ................ 150,878 6,033
1999 ................ 128,262 6,260
2000 ................ 106,220 6,501
2001 and thereafter 306,162 57,495
-------
Total minimum lease payments 88,105
Less: Amount representing interest (59,344)
-------
Present value of net minimum lease payments $28,761
=======
Rent Expense
Year ended December 31,
-------------------------------------
(In thousands) 1995 1994 1993
-------------- --------- --------- ---------
Minimum rents $ 216,587 $ 210,443 $ 200,183
Contingent rents 2,896 2,947 2,644
Sublease rent income (1,882) (968) (426)
--------- --------- ---------
Total rent expense $ 217,601 $ 212,422 $ 202,401
========= ========= =========
Space Owned and Leased (Unaudited)
Approximate Square Footage
at December 31,
1995 1994
---------------------------- ----------------------------
(In thousands) Owned Leased Total Owned Leased Total
------------------------------------------------------------------------------------
Retail
RadioShack -- 11,836 11,836 -- 10,806 10,806
Incredible Universe 503 1,221 1,724 300 609 909
Computer City 26 2,089 2,115 -- 1,567 1,567
Tandy Name Brand -- -- -- -- 1,509 1,509
Other 269 -- 269 269 -- 269
------ ------ ------ ------ ------ ------
798 15,146 15,944 569 14,491 15,060
Manufacturing 536 209 745 641 212 853
Warehouse and office 4,089 2,430 6,519 3,357 2,310 5,667
------ ------ ------ ------ ------ ------
5,423 17,785 23,208 4,567 17,013 21,580
====== ====== ====== ====== ====== ======
The Company also has agreements with unaffiliated groups to
lease certain stores and these groups are committed to make
available up to $317,426,000 for development or acquisition
of stores leased by the Company. At December 31, 1995, the
Company had used $208,178,000 of that availability.
Agreements with these groups mature over the next five years,
and the Company is continuously monitoring financial markets
to optimize renewal terms. In connection with the financing
of 16 locations by these groups, the Company has guaranteed
the residual value of the properties at approximately
$160,671,000 at the end of the lease terms.
NOTE 11-ACCRUED EXPENSES
December 31,
-----------------------
(In thousands) 1995 1994
-------------- --------- ---------
Payroll and bonuses $ 69,726 $ 68,974
Sales and payroll taxes 52,454 58,168
Insurance 59,089 52,394
Deferred service contract income 9,101 7,734
Rent 25,433 25,203
Advertising 52,733 38,301
Interest expense 4,861 5,914
Restructuring reserve 12,218 83,383
Other 36,324 36,724
--------- ---------
$ 321,939 $ 376,795
========= =========
NOTE 12-INCOME TAXES
The components of the provision for income taxes and a
reconciliation of the U.S. statutory tax rate to the
Company's effective income tax rate are given in the
accompanying tables.
Income Tax Expense
Year ended December 31,
----------------------------------
(In thousands) 1995 1994 1993
-------------- --------- --------- ---------
Current
Federal $ 105,119 $ 109,325 $ 109,543
State 11,407 8,949 8,543
Foreign 3,069 3,292 1,781
--------- --------- ---------
119,595 121,566 119,867
--------- --------- ---------
Deferred
Federal 11,704 12,127 (4,344)
Foreign -- 1,512 --
--------- --------- ---------
11,704 13,639 (4,344)
--------- --------- ---------
$ 131,299 $ 135,205 $ 115,523
========= ========= =========
Statutory vs. Effective Tax Rate
Year ended December 31,
-----------------------------------
(In thousands) 1995 1994 1993
-------------- -------- --------- ---------
Components of pretax income from
continuing operations:
United States $ 341,228 $ 357,325 $ 298,506
Foreign 2,045 2,215 12,649
--------- --------- ---------
Income before income taxes 343,273 359,540 311,155
Statutory tax rate x 35% x 35% x 35%
--------- --------- ---------
Federal income tax at statutory rate 120,146 125,839 108,904
State income taxes, less federal income
tax benefit 7,415 5,817 5,553
Other, net 3,738 3,549 1,066
--------- --------- ---------
Total income tax expense $ 131,299 $ 135,205 $ 115,523
========= ========= =========
Effective tax rate 38.25% 37.60% 37.13%
========= ========= =========
The effective tax rate increased in 1995 due primarily to
an increase in the effective state tax rate resulting from a
higher percentage of income being earned in states with
higher tax rates.
The IRS Dallas field office is reviewing the Company's
1987-1989 tax returns and has referred certain issues to the
IRS National office. The resolution of this matter, which
raises questions about the private letter rulings issued by
the IRS regarding the spin-off of InterTAN and certain other
tax matters, could result in additional taxes and interest to
the Company. Although aggregate additional taxes involved in
these transactions could potentially range from $0 to $27
million, based on the advice of the Company's independent tax
advisors, the Company believes it would prevail if any tax
litigation were instituted. Any ultimate tax assessment
would also include interest expense. In any event, the
Company believes the ultimate resolution would have no
material impact on the Company's financial condition.
Deferred tax assets and liabilities as of December 31, 1995
and December 31, 1994 were comprised of the following:
December 31,
-------------------
(In thousands) 1995 1994
-------------- -------- --------
Deferred Tax Assets
Bad debt reserve $ 2,429 $ 13,268
Intercompany profit elimination 6,129 4,849
Deferred service contract income 3,757 3,333
Restructuring reserves 5,176 24,680
Insurance reserves 13,715 8,484
Depreciation 1,993 --
Foreign tax credits 4,396 4,396
Other -- 4,564
-------- --------
37,595 63,574
Valuation allowance (4,396) (4,396)
-------- --------
Total deferred tax assets 33,199 59,178
-------- --------
Deferred Tax Liabilities
Inventory adjustments, net 4,270 6,963
Depreciation and amortization -- 5,886
Credit card origination costs -- 4,410
Deferred taxes on foreign operations 4,191 7,783
Other 2,752 --
-------- --------
Total deferred tax liabilities 11,213 25,042
-------- --------
Net Deferred Tax Assets $ 21,986 $ 34,136
======== ========
NOTE 13-STOCK PURCHASE AND SAVINGS PLANS
TANDY CORPORATION STOCK PURCHASE PROGRAM ("SPP"). Eligible
employees may contribute 1% to 10% (1% to 7% for U.S.
eligible employees, effective January 1,1996) of annual
compensation to purchase Company common stock at fair market
value. The Company matches 40%, 60% or 80% of the employee's
contribution depending on the length of the employee's
participation in the SPP. Tandy's contributions to the SPP
were $17,975,000, $16,881,000 and $18,955,000 for the years
ended December 31, 1995, 1994 and 1993, respectively.
TANDY EMPLOYEES DEFERRED SALARY AND INVESTMENT PLAN
("DIP"). Prior to January 1, 1996, an eligible employee
electing to participate in the DIP could defer 5% of annual
compensation, subject to certain limitations established by
the Tax Reform Act of 1986. The Company makes contributions
to the employee stock ownership plan described in Note 14 in
lieu of matching contributions to the DIP. An administrative
committee appointed by the Board of Directors invests the
DIP's assets primarily in Tandy securities. Effective
January 1, 1996, the DIP and TESOP were merged to form a new
plan called the Tandy Fund. Under the Tandy Fund,
participants may contribute from 1% to 8% of annual
compensation. Employees participating in the Tandy Fund may
elect to allocate their deferred salary contributions among a
group of investment choices. The Tandy Fund accepts
rollovers from other qualified 401(k) plans and has a profit
sharing provision.
NOTE 14-TANDY EMPLOYEES STOCK OWNERSHIP PLAN ("TESOP")
On July 31, 1990, the TESOP trustee borrowed $100,000,000
at an interest rate of 9.34% with varying semi-annual
principal payments through June 30, 2000. On December 15,
1994, the TESOP entered into an agreement with an unrelated
third party to refinance a portion of the TESOP's
indebtedness by borrowing $5,063,000 at an interest rate of
8.76% to retire a portion of the original $100,000,000
indebtedness. The maturity date of this borrowing is
December 30, 2000. On December 28, 1995, the TESOP borrowed
an additional $4,303,000 from the unrelated third party to
refinance a portion of the TESOP's indebtedness. This amount
was borrowed at an interest rate of 6.47% and matures on
December 31, 2001. Dividend payments and contributions from
Tandy will be used to repay the indebtedness. Tandy is
obligated to make semi-annual contributions to the TESOP to
enable it to pay principal and interest on the securities.
Because Tandy has guaranteed the repayment of these notes,
the indebtedness of the TESOP 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 compensation related to the TESOP.
The TESOP trustee used the proceeds from the issuance of
the 1990 notes to purchase 100,000 shares of Series B TESOP
Convertible Preferred Stock (the "TESOP Preferred Stock")
from Tandy at a price of $1,000 per share. Each share of
such stock is convertible into 21.768 shares of Tandy common
stock. The annual cumulative dividend on TESOP Preferred
Stock is $75.00 per share, payable semi-annually. This
series of stock has certain liquidation preferences and may
be redeemed by Tandy after July 1, 1994 at specified
premiums.
During the term of the TESOP, the TESOP Preferred Stock
will be allocated to the participants annually based on the
total debt service made on the indebtedness. As vested
participants withdraw from the TESOP, payments are made in
cash or Tandy common stock. The preferred stock has a face
value of $1,000 per share and the Company is obligated to
redeem the preferred stock at the higher of the appraised
value or $1,000 per share in the event of a participant's
withdrawal. The Company has the option to redeem the
preferred stock in either cash or common stock.
As shares of the TESOP Preferred Stock are allocated to the
TESOP participants, compensation expense is recorded and
unearned compensation is reduced. Interest expense on the
TESOP notes is also recognized as a cost of the TESOP. The
compensation component of the TESOP 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. During the year ended
December 31, 1995, the compensation and interest costs
related to the TESOP before the reduction for the allocation
of dividends were $7,480,000 and $5,719,000, respectively.
During the year ended December 31, 1994, the compensation and
interest costs related to the TESOP before the reduction for
the allocation of dividends were $10,008,000 and $6,202,000,
respectively. The compensation and interest costs related to
the TESOP before the reduction for the allocation of
dividends were $9,605,000 and $7,195,000, respectively,
during the year ended December 31, 1993. Contributions from
Tandy to the TESOP for the years ended December 31, 1995,
1994 and 1993 totaled $11,216,000, $11,189,000 and
$17,895,000, respectively, including the $6,537,000,
$6,777,000 and $7,135,000 of dividends paid on the TESOP
Preferred Stock.
At December 31, 1995, 39,162 shares of TESOP Preferred
Stock had been released and allocated to participants'
accounts in the TESOP (including 13,619 shares which had been
withdrawn by participants). At December 31, 1995, 8,071
shares of TESOP Preferred Stock were released for allocation
to participants on the March 31, 1996 annual allocation date.
At December 31, 1995, 52,767 shares of TESOP Preferred Stock
were available for later release and allocation to
participants over the remaining life of the TESOP.
The TESOP fiscal year ends on March 31. At March 31, 1995,
the TESOP held as assets $95,946,000 of TESOP Preferred Stock
and $3,937,000 of receivables and had liabilities comprised
of the remaining principal on the notes of $63,993,000 and
accrued interest payable on the notes of $1,487,000,
resulting in net assets of $34,403,000.
NOTE 15-STOCK OPTIONS AND PERFORMANCE AWARDS
1985 Stock Option Plan ("SOP")
------------------------------
Under the 1985 SOP, as amended, options to acquire up to
2,000,000 fully registered shares of Tandy's common stock may
be granted to officers and key management employees of the
Company. The Organization and Compensation Committee (the
"Committee") has sole discretion in determining whether to
grant options, who shall receive them, the number of options
granted to any individual and whether an option will be an
incentive stock option or a nonstatutory stock option. The
term of incentive stock options may not exceed 10 years and
the term of nonstatutory stock options may not exceed a term
of 10 years plus one month.
The maximum amount that may be exercised at the expiration
of each of the first through fifth anniversaries of the
nonstatutory stock options is 20%. On each of the first
three anniversaries of the date of grant of the incentive
stock options, one-third of each individual's options become
exercisable. In the event of a change in control, all
outstanding options become immediately exercisable for the
full number of shares subject to options. The option price
is determined by the Committee at the time the option is
granted, but the option price will not be less than 100% of
the fair market value of the stock on the date of grant.
Since the option prices have been fixed at the market price
on the date of grant, no compensation has been charged
against earnings by the Company. Authorized and unissued
shares or treasury stock may be issued to participants when
options are exercised.
Under the SOP there were 978,204 vested options which could
have been exercised for a total price of $33,644,772 at
December 31, 1995. Shares available for additional grants
under the SOP were 242,626 at December 31, 1995.
1993 Incentive Stock Plan ("ISP")
---------------------------------
During March 1993, the Board adopted the ISP, as amended.
The ISP is administered by the Committee. A total of
3,000,000 shares of the Company's common stock were reserved
for issuance under the ISP and have been registered with the
Securities and Exchange Commission. In May 1995, the ISP was
amended to provide for an initial option grant of 5,000
shares to each non-employee director, to increase the annual
September option grant from 3,000 to 4,000 shares and to
provide for payment of director retainer fees all or one-half
in Company common stock.
The ISP permits the grant of incentive stock options
("ISOs"), nonstatutory stock options (options which are not
ISOs) ("NSOs"), stock appreciation rights ("SARs"),
restricted stock, performance units or performance shares.
Grants of options under the ISP shall be for terms
specified by the Committee, except that the term generally
shall not exceed 10 years. Provisions of the ISP generally
provide that in the event of a change in control all options
become immediately and fully exercisable and all restrictions
on restricted stock lapse.
As part of the ISP, as amended in May 1995, each non-
employee director of the Company receives a grant of NSOs for
4,000 shares of the Company's common stock on the first
business day of September of each year ("Director Options").
Director Options have an exercise price of 100% of the fair
market value of the Company's common stock on the trading day
prior to the date of grant, vest as to one-third of the
shares annually on the first three anniversary dates of the
date of grant and expire 10 years after the date of grant.
The first grant of the Director Options was made on September
1, 1993.
The exercise price of an option (other than a Director
Option) is determined by the Committee, provided that the
exercise price shall not be less than 100% of the fair market
value of a share of the Company's common stock on the date of
grant.
On January 2, 1996, the Committee awarded a total of 26,500
shares of restricted stock to the five highly compensated
executive officers named in the proxy statement. At December
31, 1995 there were 274,788 vested options which could have
been exercised for a total exercise price of $10,807,673 and
1,741,226 shares available for additional grants under the
ISP. The ISP shall terminate on the tenth anniversary of the
day preceding the date of its adoption by the Board and no
option or award shall be granted under the ISP thereafter.
Stock option activity from December 31, 1992 through
December 31, 1995 is summarized in the accompanying chart.
Stock Option Activity
(In thousands, Aggregate
except per Number Option Price Exercised
share amounts) of Shares Per Share Value
---------------------------------------------------------
December 31, 1992 1,940 $ 5.94--$47.50 $65,326
Options granted 368 $30.00--$37.25 13,343
Options exercised (182) $ 5.94--$47.50 (5,341)
Options cancelled (162) $ 5.94--$47.50 (5,533)
----- ------
December 31, 1993 1,964 $25.06--$46.13 67,795
Options granted 398 $37.00--$44.19 17,401
Options exercised (76) $25.06--$41.94 (2,465)
Options cancelled (110) $25.06--$46.13 (4,068)
----- ------
December 31, 1994 2,176 $25.06--$45.88 78,663
Options granted 522 $47.00--$62.63 28,819
Options exercised (493) $25.06--$45.88 (16,980)
Options cancelled (6) $37.25--$44.19 (269)
----- ------
December 31, 1995 2,199 $25.06--$62.63 $90,233
===== =======
NOTE 16-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. The
rights, as amended, which will expire on June 22, 2000, are
currently represented by the common stock certificates and
when they become exercisable will entitle holders to purchase
one one-thousandth of a share of Tandy Series A Junior
Participating Preferred Stock for an exercise price of $140
(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 prior 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 prior 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, the Company 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 prior
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 $.05 per right prior to any person becoming an
Acquiring Person or, under certain circumstances, after the
expiration of the 60-day period described above, but the
rights may not be redeemed or the rights plan amended for 180
days following a change in a majority of the members of the
Board (or if certain agreements are entered into during such
180-day period).
NOTE 17-TERMINATION PROTECTION PLANS
In August 1990, the Board of Directors of the Company
approved termination protection plans and amendments to
various other benefit plans described in Note 13. These
plans provide for defined termination benefits to be paid to
eligible employees of the Company 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, the Company, 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, the Company may not
terminate or change existing employee benefit plans in any
way which will affect accrued benefits or decrease the rate
of the Company's contribution to the plans.
NOTE 18-ISSUANCE OF SERIES C PERCS AND TENDER OFFER
In February 1992, the Company issued 15,000,000 depositary
shares of Series C Conversion Preferred Stock ("Series C
PERCS") at $29.50 per depositary share (equivalent to
$2,950.00 for each Series C PERCS). Each of the depositary
shares represented ownership of 1/100th of a share of Series
C PERCS. The annual dividend for each depositary share was
$2.14 (based on the annual dividend rate for each Series C
PERCS of $214.00).
Tandy announced on January 23, 1995 that it had exercised
its right to call all the issued and outstanding Series C
PERCS for conversion on March 10, 1995, prior to its
mandatory conversion date of April 15, 1995. For each Series
C PERCS depositary share redeemed, 0.787757 Tandy common
shares were issued for an aggregate of approximately
11,816,000 shares. In addition, each Series C PERCS
depositary share received a dividend in cash of $0.321
representing the accrued dividend from January 16, 1995
through the redemption date of March 10, 1995.
NOTE 19-SUPPLEMENTAL CASH FLOW INFORMATION
The effects of changes in foreign exchange rates on cash
balances have not been material. Cash flows from operating
activities included cash payments as follows:
Year ended December 31,
----------------------------------
(In thousands) 1995 1994 1993
-------------- -------- -------- --------
Interest paid $ 34,759 $ 31,440 $ 47,223
Income taxes paid $ 68,361 $ 84,516 $105,313
Capital lease obligations of $6,003,000 and $23,873,000
were recorded during the years ended December 31, 1995 and
1994, respectively, for the lease of certain retail stores.
NOTE 20-LITIGATION
The Company is a defendant in a consolidated action titled
O'Sullivan Industries Holdings, Inc. Securities Litigation,
----------------------------------------------------------
which was commenced in 1994 and is currently pending before
the United States District Court for the Western District of
Missouri. The plaintiffs seek damages in an unspecified
amount alleging that the initial public offering of
O'Sullivan, which was formerly a subsidiary of the Company,
as well as certain press releases and other materials,
contained material misrepresentations and omissions. The
parties have recently entered into a Memorandum of
Understanding which anticipates the settlement of this
litigation in the near future. The complete resolution of
the matter is dependent upon the satisfaction of several
conditions including the parties entering a binding agreement
and the Court approving the terms of such an agreement.
There can be no assurance that such an agreement will be
reached or that Court approval will be obtained. Under the
terms of the Memorandum of Understanding, the Company's
contributions to the proposed settlement will not have a
material adverse affect on its results of operations or
financial condition. Tandy believes that the lawsuit is
totally without merit and in the event this matter is not
resolved, as is presently anticipated, the Company intends to
resume its vigorous defense of this lawsuit.
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, securities
matters, tax deficiencies, violations of permits or licenses,
and breach of contract and other matters against the Company
and its subsidiaries incident to the operation of its
business. The liability, if any, associated with these
matters was not determinable at December 31, 1995. While
certain of these matters involve substantial amounts, and
although occasional adverse settlements or resolutions may
occur and negatively impact earnings in the year of
settlement, it is the opinion of management that their
ultimate resolution will not have a materially adverse effect
on Tandy's financial position.
NOTE 21-DISCONTINUED OPERATIONS
On June 25, 1993, the Board of Directors of Tandy adopted a
formal plan of divestiture under which the Company would sell
its computer manufacturing and marketing businesses, the
O'Sullivan Industries, Inc. ("O'Sullivan") ready-to-assemble
furniture manufacturing and related marketing business, the
Memtek Products division and the Lika printed circuit board
business.
Computer Manufacturing. The Company closed the sale
of the computer manufacturing and marketing
businesses to AST on July 13, 1993. In accordance
with the terms of the definitive agreement between
Tandy and AST, Tandy received $15,000,000 upon
closing of the sale. The balance of the purchase
price of $96,720,000 was payable by a promissory
note. The Company has discounted this note by
$2,000,000 and the discount continues to be
recognized as interest income using the effective
interest rate method over the life of the note.
During the quarter ended September 30, 1995, the
Company received $6,720,000 from AST as a prepayment
on its promissory note. The original promissory note
was supported by a standby letter of credit in the
amount of the lesser of $100,000,000 or 70% of the
outstanding principal amount of the promissory note.
This letter of credit has been replaced by a
$75,000,000 Letter of Guarantee dated August 22,
1995, from Samsung Electronics Co., Ltd., a Korean
corporation, or, alternatively, Samsung Electronics
America, Inc., a New York corporation. As of
December 31, 1995, Samsung owned approximately 40% of
AST's outstanding stock. Samsung's current credit
ratings by S&P and Moody's are A- and Baa1,
respectively.
As a result of the prepayment, the note has been
amended and the principal amount reduced to
$90,000,000. The terms of the original promissory
note stipulated that the outstanding principal
balance could be paid on July 11, 1996 at AST's
option in cash or the common stock of AST, provided
that not more than 50% of the original principal
amount of the note could be paid in common stock of
AST. The amended promissory note provides that AST
may repay the note in AST common stock, provided that
not more than the lesser of (a) $30,000,000, or (b)
33% of the outstanding principal amount of the note
at the time of payment may be payable by AST in
common stock of AST. The interest rate on the
promissory note is currently 5% per annum and is
adjusted annually, not to exceed 5% per annum.
Interest is accrued and paid annually. The fair
market value of the note approximates $89,754,000 at
December 31, 1995.
Memtek Products. On November 10, 1993, the Company
executed a definitive agreement with Hanny Magnetics
(B.V.I.) Limited, a British Virgin Islands
corporation ("Hanny"), to sell certain assets of the
Company's Memtek Products operations, including the
license agreement with Memorex Telex, N.V. for the
use of the Memorex trademark on licensed consumer
electronics products. This sale closed on
December 16, 1993. Proceeds from this sale
aggregated $69,602,000.
O'Sullivan Industries. On January 27, 1994 the
Company announced that it had reached an agreement
with the underwriters to sell all the common stock of
O'Sullivan Industries Holdings, Inc., the parent
company of O'Sullivan, to the public at $22 per
share. The net proceeds realized by Tandy in the
initial public offering, together with a $40,000,000
cash dividend from O'Sullivan Industries, Inc.,
approximated $350,000,000. The initial public
offering closed on February 2, 1994.
Tandy has recognized income of approximately
$1,335,000 and $4,399,000, net of tax, during the
years ended December 31, 1995 and 1994, respectively,
pursuant to a Tax Sharing and Tax Benefit
Reimbursement Agreement (the "Agreement") between
Tandy and O'Sullivan. Under the Agreement 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. The higher tax basis
increases O'Sullivan's tax deductions and,
accordingly, reduces income taxes payable by
O'Sullivan. These payments will be made over a 15-
year time period and are contingent upon O'Sullivan's
taxable income each year. The Company is recognizing
these payments as additional sale proceeds and gain
in the year in which the payments become due and
payable to the Company pursuant to the Agreement.
The additional gain is recorded as a reduction of
SG&A expense in the accompanying Consolidated
Statements of Income.
Lika. On October 11, 1994, Tandy sold the assets
used in its Lika(R) printed circuit board division to
Viktron Limited Partnership, an Illinois limited
partnership. The proceeds from the sale and
liquidation of assets approximated $16,380,000 which
included $7,754,000 in cash, proceeds from
liquidation of retained assets of $5,594,000 and
secured promissory notes for $3,032,000. At December
31, 1995, $1,400,000 remained as a receivable from
Viktron.
The losses from discontinued operations prior to the
measurement date are outlined in the table below.
Year ended
(In thousands) December 31, 1993
-------------- -----------------
Net sales and operating revenues $ 368,137
=========
Loss from discontinued operations:
Operating loss before income tax $ (59,549)
Income tax benefit 1,930
---------
Operating loss (57,619)
---------
Estimated loss on disposal (63,778)
Estimated operating loss during
phase out period (7,000)
Income tax benefit 16,600
---------
Loss on disposal (54,178)
---------
Total loss from discontinued operations $(111,797)
=========
Interest expense of $4,608,000 allocated through the
measurement date of June 30, 1993, has been allocated to
discontinued operations based on the percentage of the net
assets of discontinued operations to total net assets.
NOTE 22-RELATIONS WITH INTERTAN
Summarized in the tables below are the amounts recognized
by the Company at December 31, 1995 and 1994, and for each of
the three years ended December 31, 1995 in relation to its
agreements with InterTAN. The fair market value of the notes
receivable approximates $45,893,000 at December 31, 1995.
The Company purchased the notes at a discount and InterTAN
has an obligation to pay the gross amount of the notes.
Balance at December 31,
-----------------------
(In thousands) 1995 1994
-------------- -------- --------
Gross amount of notes $ 44,903 $ 51,861
Discount 12,161 16,343
-------- --------
Net amount of notes $ 32,742 $ 35,518
======== ========
Current portion of notes $ 14,639 $ 4,260
Non-current portion
of notes 18,103 31,258
Other current receivables 6,707 4,447
-------- --------
$ 39,449 $ 39,965
======== ========
Year Ended December 31,
----------------------------------
(In thousands) 1995 1994 1993
-------------- -------- -------- --------
Sales and commission
income $ 10,904 $ 19,764 $ 93,315
======== ======== ========
Interest income $ 4,066 $ 4,426 $ 3,085
Accretion of discount 4,182 3,854 --
-------- -------- --------
$ 8,248 $ 8,280 $ 3,085
======== ======== ========
Royalty income $ 758 -- --
======== ======== ========
InterTAN, the former foreign retail operations of Tandy,
was spun off to Tandy stockholders as a tax-free dividend in
fiscal 1987. Under the merchandise purchase terms of the
original distribution agreement, InterTAN could purchase on
payment terms products sold or secured by Tandy. A&A
International ("A&A"), a subsidiary of Tandy, was the
exclusive purchasing agent for products originating in the
Far East for InterTAN.
On July 16, 1993, InterTAN had an account payable to Tandy
of approximately $17,000,000 of which $7,600,000 was in
default. InterTAN's outstanding purchase orders for
merchandise placed under the distribution agreement with
Tandy, but not yet shipped, totaled approximately
$44,000,000. Because InterTAN had defaulted, on July 16
Tandy terminated the merchandise purchase terms of the
distribution agreement and the license agreements. Tandy
offered InterTAN interim license agreements which expired
July 22, 1993, unless extended. The agreements were extended
on July 23, 1993.
On July 30, 1993, Trans World Electronics, Inc. ("Trans
World"), a subsidiary of Tandy, reached agreement with
InterTAN's banking syndicate to buy approximately $42,000,000
of InterTAN's debt at a negotiated, discounted price. The
closing of this purchase occurred on August 5, 1993, at which
time Tandy resumed limited shipments to InterTAN and granted
a series of short-term, interim licenses pending the
execution of new license and merchandise agreements. The
debt purchased from the banks was restructured into a seven-
year note with interest of 8.64% due semiannually beginning
February 25, 1994 and semiannual principal payments beginning
February 25, 1995 (the "Series A" note). Trans World
provided approximately $10,000,000 in working capital and
trade credit to InterTAN. Interest on the working capital
loan (the "Series B" note) of 8.11% is due semiannually
beginning February 25, 1994 with the principal due in full on
August 25, 1996. Trans World also has received warrants with
a five-year term exercisable for approximately 1,450,000
shares of InterTAN common stock at an exercise price of
$6.618 per share. As required by an agreement with Tandy,
InterTAN has registered the warrants under the Securities Act
of 1933. At December 31, 1995, InterTAN's common stock
price, as quoted in the Wall Street Journal, was $7.25 per
-------------------
share. The fair market value of these warrants at December
31, 1995 approximates $1,000,000. At February 29, 1996,
InterTAN's common stock price had declined to $5.00 and,
therefore, the fair market value of the warrants declined as
well.
In addition to the bank debt purchased by Trans World and
the working capital loan, InterTAN's obligations to Trans
World included two additional notes for approximately
$23,665,000 (the "Series C" note) and $24,037,000 (the
"Series D" note) with interest rates of 7.5% and 8%,
respectively. All principal and interest on these two notes
have been paid in full. Subject to certain conditions
described below, all of Tandy's debt from InterTAN is secured
by a first priority lien on substantially all of InterTAN's
assets in Canada and the U.K.
A new merchandise agreement was reached with InterTAN in
October 1993, and amended in 1995, which requires a
percentage of future purchase orders to be backed by letters
of credit posted by InterTAN. New license agreements provide
a royalty payable to Tandy, which began in the September 1995
quarter. InterTAN had obligations for purchase orders
outstanding for merchandise ordered by A&A for InterTAN but
not yet shipped totaling approximately $25,447,000 at
December 31, 1995.
InterTAN increased its bank revolving credit facility with
its new banking syndicate to Canadian $60,000,000 (U.S.
$43,975,000 equivalent at December 31, 1995) in 1994. In the
event of InterTAN's default on the bank credit line, Tandy
will, at the option of InterTAN's new banking syndicate,
purchase InterTAN's inventory and related accounts receivable
at 50% of their net book value, up to the amount of
outstanding bank loans, but not to exceed Canadian
$60,000,000. In that event, Tandy could foreclose on its
first priority lien on InterTAN's assets in Canada and the
U.K. If Tandy fails to purchase the inventory and related
accounts receivable of InterTAN from the banking syndicate,
the syndicate, upon notice to Tandy and expiration of time,
can foreclose upon InterTAN's assets in Canada and the U.K.
ahead of Tandy. The inventory repurchase agreement between
InterTAN's banking syndicate and Tandy has been amended and
restated to reflect the foregoing.
A&A will continue as the exclusive purchasing agent for
InterTAN in the Far East on a commission basis. Effective
March 1994, only the purchasing agent commission and sales by
Tandy manufacturing plants to InterTAN were recorded as sales
and operating revenues. InterTAN purchases from third
parties through A&A are no longer recorded as sales,
reflecting the arrangement under the new merchandise
agreement. Accordingly, sales by Tandy to InterTAN in 1995
and 1994 were considerably lower than in prior years;
however, the earned income relating thereto was not
materially different.
Through February 1996, InterTAN has met all of its payment
obligations to Tandy. Published income before taxes for the
six months ended December 31, 1995 approximated $13,151,000
compared to $15,329,000 for the six months ended December 31,
1994. The reduction in InterTAN's earnings per fully diluted
share from $1.11 in the six months ended December 31, 1994 to
$0.52 in the current six months is primarily attributable to
a tax credit taken in fiscal 1995, and to a lesser extent, an
economic downtrend in its primary market of Canada. Nothing
has come to the attention of management which would indicate
that InterTAN would not be able to continue to meet its
payment obligations pursuant to the debt agreements with
Tandy.
Canadian tax authorities are reviewing InterTAN's Canadian
subsidiary's 1987-89 tax returns. The Company cannot
determine whether the ultimate resolution of that review will
have an effect on InterTAN's ability to meet its obligations
to Tandy, but at present, nothing has come to the attention
of the Company which would lead it to believe that the
ultimate resolution of this review would impair InterTAN's
ability to meet its obligations to Tandy.
NOTE 23-QUARTERLY DATA (UNAUDITED)
As the Company'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.
During the quarter ended December 31, 1994, the Company
recognized a restructuring charge of $89,071,000 for business
restructuring relating to the closing of certain retail
stores. The Company also recognized a gain of $91,437,000
relating to the sale of Computer City and Incredible Universe
private label credit card portfolios and the transfer of the
Company's legal obligations pursuant to extended service
contracts. See Notes 3 and 4 for further information.
QUARTERLY DATA (Unaudited)
(In thousands, except Three Months Ended
----------------------------------------------------
per share amounts) March 31 June 30 Sept. 30 Dec. 31
--------------------------------------------------------------------------------------------
Year ended December 31, 1995
Net sales and operating revenues $1,226,622 $1,185,047 $1,339,930 $2,087,468
Gross profit $ 446,579 $ 445,769 $ 478,537 $ 703,298
Net income $ 38,935 $ 37,964 $ 44,901 $ 90,174
Net income available per average
common and common equivalent share $ 0.55 $ 0.55 $ 0.66 $ 1.39
Dividends declared per common share $ 0.18 $ 0.18 $ 0.18 $ 0.20
Average common and common
equivalent shares outstanding 68,174 66,240 65,719 63,717
Year ended December 31, 1994
Net sales and operating revenues $ 992,135 $1,009,277 $1,119,155 $1,823,112
Gross profit $ 407,354 $ 407,174 $ 447,656 $ 663,880
Net income $ 41,795 $ 34,415 $ 46,191 $ 101,934
Net income available per average
common and common equivalent share $ 0.53 $ 0.44 $ 0.59 $ 1.37
Dividends declared per common share $ 0.15 $ 0.15 $ 0.15 $ 0.18
Average common and common
equivalent shares outstanding 75,802 75,417 75,023 73,262
TANDY CORPORATION
INDEX TO EXHIBITS
Exhibit Sequential
Number Description Page No.
2a Agreement for Purchase and Sale of Assets
dated as of June 30, 1993 between AST
Research, Inc., as Purchaser and Tandy
Corporation, TE Electronics Inc., and
GRiD Systems Corporation, as Sellers
(without exhibits) (filed as Exhibit 2 to
Tandy's July 13, 1993 Form 8-K filed on
July 27, 1993, Accession No. 0000096289-
93-000004 and incorporated herein by
reference).
2b 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, Accession No. 0000096289-
94-000029 and incorporated herein by
reference).
2c 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, Accession No.
0000096289-94-000029 and incorporated
herein by reference).
2d 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, Accession No. 0000096289-94-
000029 and incorporated herein by
reference).
2e Acquisition Agreement dated January 18,
1995 between Hurley State Bank, as
purchaser and Tandy Credit Corporation as
seller (without exhibits) (filed as
Exhibit (c) to Tandy's January 18, 1995
Form 8-K filed on February 2, 1995,
Accession No. 0000096289-95-000008 and
incorporated herein by reference).
2e(i) Amendment No. 1 to Acquisition Agreement
dated January 18, 1995 between Tandy
Credit Corporation, Tandy National Bank
and Hurley State Bank (filed as Exhibit 2
to Tandy's March 30, 1995 Form 8-K filed
on April 12, 1995, Accession No.
0000096289-95-000012 and incorporated
herein by reference).
2f Agreement Plan of Merger dated March 30,
1995 by and among Tandy Corporation,
Tandy Credit Corporation, Hurley State
Bank and Hurley Receivables Corporation
(filed as Exhibit 3 to Tandy's March 30,
1995 Form 8-K filed on April 12, 1995,
Accession No. 0000096289-95-000012 and
incorporated herein by reference).
3a(i) Restated Certificate of Incorporation of
Tandy dated December 10, 1982 (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, Accession No.
0000096289-93-000017 and incorporated
herein by reference).
3a(ii) Certificate of Amendment of Certificate
of Incorporation of Tandy Corporation
dated November 13, 1986 (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,
Accession No. 0000096289-93-000017 and
incorporated herein by reference).
3a(iii) Certificate of Amendment of Certificate
of Incorporation, amending and restating
the Certificate of Designation,
Preferences and Rights of Series A Junior
Participating Preferred Stock dated June
22, 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, Accession No.
0000096289-93-000017 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, Accession No.
0000096289-93-000017 and incorporated
herein by reference).
3a(v) Certificate of Designation, Series C
Conversion Preferred Stock dated February
13, 1992 (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, Accession No.
0000096289-93-000017 and incorporated
herein by reference).
3b Tandy Corporation Bylaws, restated as of
January 1, 1996. 60
4a Amended and restated Rights Agreement
with the First National Bank of Boston
dated June 22, 1990 for Preferred Share
Purchase Rights (filed as Exhibit 4b to
Tandy's Form 10-K filed on March 30,
1994, Accession No. 0000096289-94-000029
and incorporated herein by reference).
4b Revolving Credit Agreement between Tandy
Corporation and Texas Commerce Bank,
individually and as Agent for sixteen
other banks, dated as of May 27, 1994
(without exhibits) (filed as Exhibit 4c
to Tandy's Form 10Q filed on August 15,
1994, Accession No. 0000096289-94-000039
and incorporated herein by reference).
4c First Amendment to the Revolving Credit
Agreement between Tandy Corporation and
Texas Commerce Bank as Agent for sixteen
other banks, dated as of May 26, 1995
(Facility A). 70
4d First Amendment to the Revolving Credit
Agreement between Tandy Corporation and
Texas Commerce Bank as Agent for sixteen
other banks, dated as of May 26, 1995
(Facility B). 94
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, Accession No.
0000096289-94-000029 and incorporated
herein by reference).
10b* Form of Executive Pay Plan Letters. 117
10c* 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, Accession No. 0000096289-94-000029
and incorporated herein by reference).
10d* 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,
Accession No. 0000096289-94-000029 and
incorporated herein by reference).
10e* Special Compensation Plan No. 1 for Tandy
Corporation Executive Officers, adopted
in 1993 (filed as Exhibit 10e to Tandy's
Form 10-K filed on March 30, 1994,
Accession No. 0000096289-94-000029 and
incorporated herein by reference).
10f* Special Compensation Plan No. 2 for Tandy
Corporation Executive Officers, adopted
in 1993 (filed as Exhibit 10f to Tandy's
Form 10-K filed on March 30, 1994,
Accession No. 0000096289-94-000029 and
incorporated herein by reference).
10g* 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,
Accession No. 0000096289-94-000029 and
incorporated herein by reference).
10h* Director Fee Resolution (filed as Exhibit
10h to Tandy's Form 10-K filed on March
30, 1994, Accession No. 0000096289-94-
000029 and incorporated herein by
reference).
10i* 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, Accession No.
0000096289-94-000029 and incorporated
herein by reference).
10j* 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, Accession No. 0000096289-
95-000016 and incorporated herein by
reference).
10k* 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, Accession No. 0000096289-94-000029
and incorporated herein by reference).
10l* First Restated Trust Agreement Tandy
Employees Supplemental Stock Program
through Amendment No. IV dated January 1,
1996. 129
10m* 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, Accession No. 0000096289-95-
000016 and incorporated herein by
reference).
10n* 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 filed on August 14, 1995,
Accession No. 0000096289-95-000016 to
and incorporated herein by reference).
10o* 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, Accession No.
0000096289-94-000029 and incorporated
herein by reference).
10p* Form of Indemnity Agreement with
Directors, Corporate Officers and two
Division Officers of Tandy Corporation. 148
11 Statement of Computation of Earnings per
Share 156
12 Statement of Computation of Ratios of
Earnings to Fixed Charges 157
21 Subsidiaries 158
23 Consent of Independent Accountants 159
27 Financial Data Schedule
_______________________
* Each of these exhibits is a "management contract
or compensatory plan, contract, or
arrangement".
EXHIBIT 3b
TANDY CORPORATION BYLAWS
RESTATED AS OF
JANUARY 1, 1996
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 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, 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.
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 unexpired portion of the term by the Board of
Directors at any regular or special meeting.
SECTION 3. Chief Executive Officer The Chief Executive
-----------------------
Officer shall be the chief executive officer (CEO) of the
Corporation. Subject to the direction of the Board of
Directors, he shall have and exercise direct charge of and
general supervision over the business and affairs of the
Corporation and shall perform such other duties as may be
assigned to him from time to time by the Board of Directors.
SECTION 4. President. The President shall perform such
---------
duties as the Board of Directors may prescribe. In the
absence or disability of the CEO, the President shall perform
and exercise the powers of the CEO. In addition, the
President shall perform such duties as from time to time may
be delegated to him by the CEO.
SECTION 5. Executive Vice Presidents. The Executive
-------------------------
Vice Presidents shall perform such duties as the Board of
Directors may prescribe. In the absence or disability of the
CEO and President, the Executive Vice Presidents in the order
of their seniority or in such order as may be specified by
the Board of Directors, shall perform such duties as from
time to time may 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 fifty (50) 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
fifty (50) 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 fifty (50) 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
fifty (50) 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 4c
AGREEMENT AND FIRST AMENDMENT
-----------------------------
TO
--
REVOLVING CREDIT AGREEMENT (FACILITY A)
---------------------------------------
THIS AGREEMENT AND FIRST AMENDMENT TO REVOLVING CREDIT
AGREEMENT (FACILITY A) (this "Amendment") dated as of May
---------
26,1995 is among TANDY CORPORATION, a Delaware corporation
(the "Company"), the banks and other financial institutions
-------
listed on the signature pages under the heading Continuing
Banks (the "Continuing Banks"), BARCLAYS BANK PLC, as the
----------------
retiring bank (the "Retiring Bank"), CITICORP USA, INC.
-------------
("Citicorp"), and COMMERZBANK AKTIENGESELLSCHAFT, ATLANTA
--------
AGENCY ("Commerzbank" and together with Citicorp collectively
-----------
the "New Banks"), and TEXAS COMMERCE BANK NATIONAL
---------
ASSOCIATION, as agent (in such capacity, the "Agent").
-----
PRELIMINARY STATEMENT
---------------------
(a) The Company, the Continuing Banks, the Retiring
Bank and the Agent entered into a Revolving Credit Agreement
(Facility A) (the "Credit Agreement") dated as of May 27,
----------------
1994.
(b) There are no outstanding loan balances or any
advances owed by the Company to any of the Banks pursuant to
the Credit Agreement.
(c) The Company has requested that the definition of
the term "Maturity Date" be amended, that the reference to
$750,000 in the first sentence of Section 9.03(b) be amended,
---------------
that the New Banks be made parties to the Credit Agreement
and that each of the Continuing Banks and the New Banks have
a Commitment equal to the amount shown opposite its signature
on the signature pages hereof.
(d) All capitalized terms defined in the Credit
Agreement and not otherwise defined herein shall have the
same meanings herein as in the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties
hereto, the Company, the Continuing Banks, the New Banks, the
Retiring Bank and the Agent hereby agree as follows:
SECTION 1. Amendment to the Credit Agreement. (a) The
---------------------------------
definition of the term "Maturity Date" contained in Section
1.01 of the Credit Agreement is hereby amended in its
entirety to read as follows:
"`Maturity Date' means May 24, 1996, or
the earlier termination of the Commitments
pursuant to Section 7.01.".
------------
(b) The amount, "$750,000," contained in the first
sentence of Section 9.03(b) is hereby deleted and the amount,
---------------
"$1,000,000," inserted in lieu thereof.
SECTION 2. Commitment of Banks. Effective as of the
-------------------
date hereof, each of the Continuing Banks and the New Banks
will be a Bank under the Credit Agreement with a Commitment
equal to the amount shown opposite its signature on the
signature pages hereof (such Bank's "New Commitment").
--------------
SECTION 3. Retiring Bank. (a) The Retiring Bank is
-------------
executing this Amendment solely for the purpose of consenting
to the amendment of the Credit Agreement. Upon the
effectiveness of this Amendment, the Retiring Bank shall have
no commitment or obligation to the Company under the Credit
Agreement and the Company shall have no obligation to the
Retiring Bank under the Credit Agreement, except for the
payment of Commitment Fees for the period from April 1, 1995
to the date hereof.
(b) The Retiring Bank agrees to promptly return its
Note to the Company.
SECTION 4. Conditions to Effectiveness. This Amendment
---------------------------
shall become effective when, and only when, the following
conditions have been fulfilled:
(a) the Company, the Continuing Banks, the New Banks
and the Retiring Bank shall have executed a counterpart of
this Amendment;
(b) the Agent shall have executed a counterpart of this
Amendment and shall have received counterparts of this
Amendment executed by the Company, the Continuing Banks, the
New Banks and the Retiring Bank;
(c) the Company shall have delivered a Note to each New
Bank dated the date of this Amendment and payable to the
order of such New Bank in the amount of such New Bank's New
Commitment; and
(d) the Agent shall have received from the Company a
certificate of the Secretary or Assistant Secretary of the
Company certifying that attached thereto is (i) a true and
complete copy of the general borrowing resolutions of the
Board of Directors of the Company authorizing the execution,
delivery and performance of the Credit Agreement, as amended
hereby, and (ii) the incumbency and specimen signature of
each officer of the Company executing this Amendment.
SECTION 5. Representations and Warranties True; No
---------------------------------------
Default or Event of Default. The Company hereby represents
---------------------------
and warrants to the Agent, the Continuing Banks, the New
Banks and the Retiring Bank that after giving effect to the
execution and delivery of this Amendment (a) the
representations and warranties set forth in the Credit
Agreement are true and correct on the date hereof as though
made on and as of such date and (b) no Default or Event of
Default has occurred and is continuing.
SECTION 6. Reference to the Credit Agreement and Effect
-------------------------------------------
on the Notes.
------------
(a) Upon the effectiveness of this Amendment, each
reference in the Credit Agreement to "this Agreement,"
"hereunder," "herein" or words of like import shall mean and
be a reference to the Credit Agreement, as amended and
affected hereby.
(b) Upon the effectiveness of this Amendment, each
reference in the Notes to "the Credit Agreement" shall mean
and be a reference to the Credit Agreement, as amended and
affected hereby.
(c) Upon the effectiveness of this Amendment, (i) each
reference in the Credit Agreement and the Notes to "a Bank"
or to "the Banks" shall mean and include respectively a
reference to a "Continuing Bank" and to a "New Bank" or to
the "Continuing Banks" and to the "New Banks" and their
respective successors and assigns, (ii) each reference in the
Credit Agreement and the Notes to a Bank's "Commitment" shall
mean and be a reference to such Bank's "New Commitment,"
(iii) each reference in the Credit Agreement and the Notes to
"a Note" or "the Notes" shall mean and be a reference
respectively to the Notes issued by the Company under the
Credit Agreement and the Notes dated the date hereof and
delivered to the New Banks pursuant to this Amendment.
(d) The Credit Agreement and the Notes, as amended and
affected hereby, shall remain in full force and effect and
are hereby ratified and confirmed.
SECTION 7. GOVERNING LAW. THIS AMENDMENT SHALL BE
-------------
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL
LAW AND SHALL BE BINDING UPON THE COMPANY, THE CONTINUING
BANKS, THE NEW BANKS, THE RETIRING BANK AND THE AGENT AND
THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.
SECTION 8. Descriptive Headings. The section headings
--------------------
appearing in this Amendment have been inserted for
convenience only and shall be given no substantive meaning or
significance whatever in construing the terms and provisions
of this Amendment.
SECTION 9. FINAL AGREEMENT OF THE PARTIES. THE CREDIT
------------------------------
AGREEMENT (INCLUDING THE EXHIBITS AND SCHEDULE THERETO), AS
AMENDED HEREBY, THE NOTES, THE AGENT'S LETTER AND THE OTHER
LOAN DOCUMENTS, CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN
SECTION 26.02(a) OF THE TEXAS BUSINESS AND COMMERCE CODE, AND
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES RESPECTING
THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES RESPECTING THE
SUBJECT MATTER HEREOF AND THEREOF.
SECTION 10. Execution in Counterparts. This Amendment
-------------------------
may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and
all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed effective as of the date first
stated herein, by their respective officers thereunto duly
authorized.
TANDY CORPORATION
By: /s/ Dwain H. Hughes
--------------------------
Name: Dwain H. Hughes
Title: Senior Vice President
and Chief Financial
Officer
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as Agent
By: /s/ B. B. Wuthrich
--------------------------
Name: B. B Wuthrich
Title: Vice President
Commitment: Continuing Banks
---------- ----------------
$15,000,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ W. Thomas Barnett
--------------------------
Name: W. Thomas Barnett
Title: Vice President
Commitment: Continuing Banks
---------- ----------------
$15,000,000 THE BANK OF NEW YORK
By: /s/ Ian K. Stewart
--------------------------
Name: Ian K. Stewart
Title: Vice President
Commitment: Continuing Banks
---------- ----------------
$7,500,000 BANK ONE, TEXAS, N.A.
By: /s/ John D. Hudgens
--------------------------
Name: John D. Hudgens
Title: Vice President
Commitment: Continuing Banks
---------- ----------------
$10,000,000 THE BANK OF TOKYO TRUST COMPANY
By: /s/ Victor Bulzacchelli
--------------------------
Name: Victor Bulzacchelli
Title: Vice President &
Manager
Commitment: Continuing Banks
---------- ----------------
$7,500,000 THE CHASE MANHATTAN BANK, N.A.
By: /s/ Ellen Gertzog
--------------------------
Name: Ellen Gertzog
Title: Vice President
Commitment: Continuing Banks
---------- ----------------
$15,000,000 BANK OF AMERICA ILLINOIS
(formerly Continental Bank
N.A.)
By: /s/ W. Thomas Barnett
--------------------------
Name: W. Thomas Barnett
Title: Vice President
Commitment: Continuing Banks
---------- ----------------
$15,000,000 CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Robert Ivosevich
--------------------------
Name: Robert Ivosevich
Title: Senior Vice President
Commitment: Continuing Banks
---------- ----------------
$10,000,000 THE FIRST NATIONAL BANK OF
BOSTON
By: /s/ Bethann R. Halligan
--------------------------
Name: Bethann R. Halligan
Title: Managing Director
Commitment: Continuing Banks
---------- ----------------
$7,500,000 FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By: /s/ Alan P. Spurgin
--------------------------
Name: Alan P. Spurgin
Title: Vice President
Commitment: Continuing Banks
---------- ----------------
$10,000,000 MELLON BANK, N.A.
By: /s/ Mark T. Kennedy
--------------------------
Name: Mark T. Kennedy
Title: Assistant Vice
President
Commitment: Continuing Banks
---------- ----------------
$15,000,000 NATIONAL WESTMINSTER BANK, Plc
New York Branch
By: /s/ Stephen R. Parker
---------------------------
Name: Stephen R. Parker
Title: Vice President
NATIONAL WESTMINSTER BANK, Plc
Nassau Branch
By: /s/ Stephen R. Parker
--------------------------
Name: Stephen R. Parker
Title: Vice President
Commitment: Continuing Banks
---------- ----------------
$15,000,000 NATIONSBANK OF TEXAS, N.A.
By: /s/ Vincent A. Liberio
--------------------------
Name: Vincent A. Liberio
Title: Senior Vice President
Commitment: Continuing Banks
---------- ----------------
$10,000,000 SOCIETE GENERALE, SOUTHWEST
AGENCY
By: /s/ Louis P. Laville, III
--------------------------
Name: Louis P. Laville, III
Title: Vice President
Commitment: Continuing Banks
---------- ----------------
$7,500,000 THE SUMITOMO BANK, LIMITED
HOUSTON AGENCY
By: /s/ Tatsuo Ueda
--------------------------
Name: Tatsuo Ueda
Title: General Manager
Commitment: Continuing Banks
---------- ----------------
$20,000,000 TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By: /s/ B. B. Wuthrich
--------------------------
Name: B. B. Wuthrich
Title: Vice President
Commitment: Continuing Banks
---------- ----------------
$10,000,000 TORONTO DOMINION (TEXAS), INC.
By: /s/ Diane Bailey
--------------------------
Name: Diane Bailey
Title: Vice President
Commitment: New Banks
---------- ---------
$5,000,000 CITICORP USA, INC.
By: /s/ Barbara A. Cohen
--------------------------
Name: Barbara A. Cohen
Title: Vice President
Commitment: New Banks
---------- ---------
$5,000,000 COMMERZBANK, AKTIENGESELLSCHAFT,
ATLANTA AGENCY
By: /s/ E. Kagerer /s/ C. Rost
-----------------------------
Name: E. Kagerer C. Rost
Title: Asst. Vice President/
Asst. Treasurer
Commitment: Retiring Bank
---------- -------------
$0 BARCLAYS BANK PLC
By: /s/ John Giannone
--------------------------
Name: John Giannone
Title: Director
EXHIBIT 4d
AGREEMENT AND FIRST AMENDMENT
-----------------------------
TO
--
REVOLVING CREDIT AGREEMENT (FACILITY B)
---------------------------------------
THIS AGREEMENT AND FIRST AMENDMENT TO REVOLVING CREDIT
AGREEMENT (FACILITY B) (this "Amendment") dated as of May
---------
26,1995 is among TANDY CORPORATION, a Delaware corporation
(the "Company"), the banks and other financial institutions
-------
financial institutions listed on the signature pages under
the heading Continuing Banks (the "Continuing Banks"),
----------------
BARCLAYS BANK PLC, as the retiring bank (the
"Retiring Bank"), CITICORP USA, INC. ("Citicorp"), and
-------------- --------
COMMERZBANK AKTIENGESELLSCHAFT, ATLANTA AGENCY ("Commerzbank"
-----------
and together with Citicorp collectively the "New Banks"), and
---------
TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as agent (in such
capacity, the "Agent").
-----
PRELIMINARY STATEMENT
---------------------
(a) The Company, the Continuing Banks, the Retiring
Bank and the Agent entered into a Revolving Credit Agreement
(Facility B) (the "Credit Agreement") dated as of May 27,
----------------
1994.
(b) There are no outstanding loan balances or any
advances owed by the Company to any of the Banks pursuant to
the Credit Agreement.
(c) The Company has requested that the reference to
$750,000 in the first sentence of Section 9.03(b) be amended,
---------------
that the New Banks be made parties to the Credit Agreement
and that each of the Continuing Banks and the New Banks have
a Commitment equal to the amount shown opposite its signature
on the signature pages hereof.
(d) All capitalized terms defined in the Credit
Agreement and not otherwise defined herein shall have the
same meanings herein as in the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties
hereto, the Company, the Continuing Banks, the New Banks, the
Retiring Bank and the Agent hereby agree as follows:
SECTION 1. Amendment to Section 9.03(b) of the Credit
-------------------------------------------
Agreement. The amount, "$750,000," contained in the first
---------
sentence of Section 9.03(b) is hereby deleted and the amount,
---------------
"$1,000,000,"inserted in lieu thereof.
SECTION 2. Commitment of Banks. Effective as of the
-------------------
date hereof, each of the Continuing Banks and the New Banks
will be a Bank under the Credit Agreement with a Commitment
equal to the amount shown opposite its signature on the
signature pages hereof (such Bank's "New Commitment").
--------------
SECTION 3. Retiring Bank. (a) The Retiring Bank is
-------------
executing this Amendment solely for the purpose of consenting
to the amendment of the Credit Agreement. Upon the
effectiveness of this Amendment, the Retiring Bank shall have
no commitment or obligation to the Company under the Credit
Agreement and the Company shall have no obligation to the
Retiring Bank under the Credit Agreement (except for the
payment of Commitment Fees due to the Retiring Bank for the
period from April 1, 1995 to the date hereof).
(b) The Retiring Bank agrees to promptly return its
Note to the Company.
SECTION 4. Conditions to Effectiveness. This Amendment
---------------------------
shall become effective when, and only when, the following
conditions have been fulfilled:
(a) the Company, the Continuing Banks, the New Banks
and the Retiring Bank shall have executed a counterpart of
this Amendment;
(b) the Agent shall have executed a counterpart of this
Amendment and shall have received counterparts of this
Amendment executed by the Company, the Continuing Banks, the
New Banks and the Retiring Bank; and
(c) the Company shall have delivered a Note to each New
Bank dated the date of this Amendment and payable to the
order of such New Bank in the amount of such New Bank's New
Commitment.
SECTION 5. Representations and Warranties True; No
---------------------------------------
Default or Event of Default. The Company hereby represents
---------------------------
and warrants to the Agent, the Continuing Banks, the New
Banks and the Retiring Bank that after giving effect to the
execution and delivery of this Amendment (a) the
representations and warranties set forth in the Credit
Agreement are true and correct on the date hereof as though
made on and as of such date and (b) no Default or Event of
Default has occurred and is continuing.
SECTION 6. Reference to the Credit Agreement and Effect
--------------------------------------------
on the Notes.
------------
(a) Upon the effectiveness of this Amendment, each
reference in the Credit Agreement to "this Agreement,"
"hereunder," "herein" or words of like import shall mean and
be a reference to the Credit Agreement, as amended and
affected hereby.
(b) Upon the effectiveness of this Amendment, each
reference in the Notes to "the Credit Agreement" shall mean
and be a reference to the Credit Agreement, as amended and
affected hereby.
(c) Upon the effectiveness of this Amendment, (i) each
reference in the Credit Agreement and the Notes to "a Bank"
or to "the Banks" shall mean and include respectively a
reference to a "Continuing Bank" and to a "New Bank" or to
the "Continuing Banks" and to the "New Banks" and their
respective successors and assigns, (ii) each reference in the
Credit Agreement and the Notes to a Bank's "Commitment" shall
mean and be a reference to such Bank's "New Commitment,"
(iii) each reference in the Credit Agreement and the Notes to
"a Note" or "the Notes" shall mean and be a reference
respectively to the Notes issued by the Company under the
Credit Agreement and the Notes dated the date hereof and
delivered to the New Banks pursuant to this Amendment.
(d) The Credit Agreement and the Notes, as amended and
affected hereby, shall remain in full force and effect and
are hereby ratified and confirmed.
SECTION 7. GOVERNING LAW. THIS AMENDMENT SHALL BE
-------------
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL
LAW AND SHALL BE BINDING UPON THE COMPANY, THE CONTINUING
BANKS, THE NEW BANKS, THE RETIRING BANK AND THE AGENT AND
THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.
SECTION 8. Descriptive Headings. The section headings
--------------------
appearing in this Amendment have been inserted for
convenience only and shall be given no substantive meaning or
significance whatever in construing the terms and provisions
of this Amendment.
SECTION 9. FINAL AGREEMENT OF THE PARTIES. THE CREDIT
------------------------------
AGREEMENT (INCLUDING THE EXHIBITS AND SCHEDULE THERETO), AS
AMENDED HEREBY, THE NOTES, THE AGENT'S LETTER AND THE OTHER
LOAN DOCUMENTS, CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN
SECTION 26.02(a) OF THE TEXAS BUSINESS AND COMMERCE CODE, AND
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES RESPECTING
THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES RESPECTING THE
SUBJECT MATTER HEREOF AND THEREOF.
SECTION 10. Execution in Counterparts. This Amendment
-------------------------
may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and
all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed effective as of the date first
stated herein, by their respective officers thereunto duly
authorized.
TANDY CORPORATION
By: /s/ Dwain H. Hughes
--------------------------
Name: Dwain H. Hughes
Title: Senior Vice President
and Chief Financial
Officer
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as Agent
By: /s/ B. B. Wuthrich
---------------------------
Name: B. B. Wuthrich
Title: Vice President
Commitment: Continuing Banks
---------- ----------------
$15,000,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ W. Thomas Barnett
------------------------
Name: W. Thomas Barnett
Title: Vice President
Commitment: Continuing Banks
---------- ----------------
$15,000,000 THE BANK OF NEW YORK
By: /s/ Ian K. Stewart
------------------------
Name: Ian K. Stewart
Title: Vice President
Commitment: Continuing Banks
---------- ----------------
$7,500,000 BANK ONE, TEXAS, N.A.
By: /s/ John D. Hudgens
------------------------
Name: John D. Hudgens
Title: Vice President
Commitment: Continuing Banks
---------- ----------------
$10,000,000 THE BANK OF TOKYO TRUST COMPANY
By: /s/ Victor Bulzacchelli
--------------------------
Name: Victor Bulzacchelli
Title: Vice President &
Manager
Commitment: Continuing Banks
---------- ----------------
$7,500,000 THE CHASE MANHATTAN BANK, N.A.
By: /s/ Ellen Gertzog
------------------------
Name: Ellen Gertzog
Title: Vice President
Commitment: Continuing Banks
---------- ----------------
$15,000,000 BANK OF AMERICA ILLINOIS
(formerly Continental Bank
N.A.)
By: /s/ W. Thomas Barnett
------------------------
Name: W. Thomas Barnett
Title: Vice President
Commitment: Continuing Banks
---------- ----------------
$15,000,000 CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Robert Ivosevich
--------------------------
Name: Robert Ivosevich
Title: Senior Vice President
Commitment: Continuing Banks
---------- ----------------
$10,000,000 THE FIRST NATIONAL BANK OF
BOSTON
By: /s/ Bethann R. Halligan
------------------------
Name: Bethann R. Halligan
Title: Managing Director
Commitment: Continuing Banks
---------- ----------------
$7,500,000 FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By: /s/ Alan P. Spurgin
--------------------------
Name: Alan P. Spurgin
Title: Vice President
Commitment: Continuing Banks
---------- ----------------
$10,000,000 MELLON BANK, N.A.
By: /s/ Mark T. Kennedy
--------------------------
Name: Mark T. Kennedy
Title: Assistant Vice
President
Commitment: Continuing Banks
---------- ----------------
$15,000,000 NATIONAL WESTMINSTER BANK, Plc
New York Branch
By: /s/ Stephen R. Parker
--------------------------
Name: Stephen R. Parker
Title: Vice President
NATIONAL WESTMINSTER BANK, Plc
Nassau Branch
By: /s/ Stephen R. Parker
------------------------
Name: Stephen R. Parker
Title: Vice President
Commitment: Continuing Banks
---------- ----------------
$15,000,000 NATIONSBANK OF TEXAS, N.A.
By: /s/ Vincent A. Liberio
------------------------
Name: Vincent A. Liberio
Title: Senior Vice President
Commitment: Continuing Banks
---------- ----------------
$10,000,000 SOCIETE GENERALE, SOUTHWEST
AGENCY
By: /s/ Louis P. Laville III
--------------------------
Name: Louis P. Laville III
Title: Vice President
Commitment: Continuing Banks
---------- ----------------
$7,500,000 THE SUMITOMO BANK, LIMITED
HOUSTON AGENCY
By: /s/ Tatsuo Ueda
------------------------
Name: Tatsuo Ueda
Title: General Manager
Commitment: Continuing Banks
---------- ----------------
$20,000,000 TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By: /s/ B. B. Wuthrich
------------------------
Name: B. B. Wuthrich
Title: Vice President
Commitment: Continuing Banks
---------- ----------------
$10,000,000 TORONTO DOMINION (TEXAS), INC.
By: /s/ Diane Bailey
------------------------
Name: Diane Bailey
Title: Vice President
Commitment: New Banks
---------- ---------
$5,000,000 CITICORP USA, INC.
By: /s/ Barbara A. Cohen
--------------------------
Name: Barbara A. Cohen
Title: Vice President
Commitment: New Banks
---------- ---------
$5,000,000 COMMERZBANK, AKTIENGESELLSCHAFT,
ATLANTA AGENCY
By: /s/ E. Kagerer /s/ C. Rost
-------------------------------
Name: E. Kagerer C. Rost
Title: Asst. Vice President/
Asst. Treasurer
Commitment: Retiring Bank
---------- -------------
$0 BARCLAYS BANK PLC
By: /s/ John Giannone
------------------------
Name: John Giannone
Title: Director
EXHIBIT 10b
January 1, 1996
TO:
FROM: Richard Ramsey
SUBJECT: Compensation Plan, Fiscal Year 1996
Your compensation plan for fiscal year 1996 is outlined
below.
I. FY 1996 Base Salary
-------
Your Base Salary for FY96 shall be $
II. Your bonus for FY96 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 the prior year.
2. EARNINGS PER SHARE
Each percentage point of positive change that
the Tandy Corporation earnings per share
increases from the prior year.
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 1995 and 1996.
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: $
Page 2
January 1, 1996
Compensation Plan, FY96
INCOME - TE, ETC.
Each percentage point of positive change that
the TE-US, TE-Asia, RSU and Tandy
Transportation net income (Pre Admin)
increases from the prior year times a factor
of $.
INCOME - REPAIR, ETC.
Each percentage point of positive change that
the Repair Operations, TPA Consolidated and
the Central Operating Distribution net income
(Pre Admin) increases from the prior year
times a factor of $.
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
2. Earnings per share 3
3. Stock price
a. Tandy Stock Increase 5
b. Peer Group N/A
4. Net Income - TE, etc. 5
5. Net Income - Repair, etc. 4
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 9% 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 $.
Page 3
January 1, 1996
Compensation Plan, FY96
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, you forfeit your
rights to receive a bonus except 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 for the current year-
to-date will be calculated to the nearest end
of the month preceding or succeeding such
event, using the formula above and adjusting
for the partial 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.
January 1, 1996
TO:
FROM: Richard Ramsey
SUBJECT: Compensation Plan, Fiscal Year 1996
Your compensation plan for fiscal year 1996 is outlined
below.
I. FY 1996 Base Salary
-------
Your Base Salary for FY96 shall be $.
II. Your bonus for FY96 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 the prior year.
2. EARNINGS PER SHARE
Each percentage point of positive change that
the Tandy Corporation earnings per share
increases from the prior year.
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 1995 and 1996.
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. FAS 121. 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: $
Page 2
January 1, 1996
Compensation Plan, FY96
III. Minimum Bonus
Minimum Threshold Increase Percent for Each Target
--------------------------------------------------
Incentive Goal
--------------
Minimum Increase %
------------------
1. Income 2
2. Earnings per share 3
3. Stock price
a. Tandy Stock Increase 5
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 12% 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, you forfeit your
rights to receive a bonus except 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 for the current year-
to-date will be calculated to the nearest end
of the month preceding or succeeding such
event, using the formula above and adjusting
for the partial 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.
January 1, 1996
TO:
FROM: Richard Ramsey
SUBJECT: Compensation Plan, Fiscal Year 1996
Your compensation plan for fiscal year 1996 is outlined
below.
I. FY 1996 Base Salary
-------
Your Base Salary for FY96 shall be $.
II. Your bonus for FY96 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
-----------------
1. INCOME
Each percentage point of positive change that
the Tandy Corporation and subsidiaries income
from operations (before income taxes)
increases from the prior year.
2. EARNINGS PER SHARE
Each percentage point of positive change that
the Tandy Corporation earnings per share
increases from the prior year.
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 1994 and 1995.
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: $
Page 2
January 1, 1996
Compensation Plan, FY96
REAL ESTATE
-----------
An additional bonus will be paid equal to the
amounts paid to Mr. R. Evans and Mr. A.
Zeinfeld for their Real Estate elements ie
paragraphs 2 and 3 on Evans and Zeinfeld's
pay plans. If either leave the company their
calculation will become discretionary based
on performance of the objectives incorporated
in their plan.
III. Minimum Bonus
Minimum Threshold Increase Percent for Each Target
--------------------------------------------------
Incentive Goal
--------------
Minimum
-------
1. Income 2% Increase
2. Earnings per share 3% Increase
3. Stock price
a. Tandy Stock Increase 5% 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 12% 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, you forfeit your
rights to receive a bonus except 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 for the current year-
to-date will be calculated to the nearest end
of the month preceding or succeeding such
event, using the formula above and adjusting
for the partial 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.
December 31, 1995
TO:
FROM: Richard Ramsey
SUBJECT: Compensation Plan, Fiscal Year 1996
Your compensation plan for fiscal year 1996, as
approved by the Organization and Compensation
Committee of the Board of Directors, is outlined
below.
I. FY 1996 Base Salary
-------
Your Base Salary for FY96 shall be $.
II. Your bonus for FY96 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 the prior year.
2. EARNINGS PER SHARE
Each percentage point of positive change that
the Tandy Corporation earnings per share
increases from the prior year.
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 1995 and 1996.
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: $
Page 2
December 31, 1995
Compensation Plan, FY96
III. Minimum Bonus
Minimum Threshold Increase Percent for Each Target
--------------------------------------------------
Incentive Goal
--------------
Minimum Increase %
------------------
1. Income 2
2. Earnings per share 3
3. Stock price
a. Tandy Stock Increase 5
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 12% 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, you forfeit your
rights to receive a bonus except 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 for the current year-
to-date will be calculated to the nearest end
of the month preceding or succeeding such
event, using the formula above and adjusting
for the partial 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.
January 1, 1996
TO:
FROM: Richard Ramsey
SUBJECT: Compensation Plan, Fiscal Year 1996
Your compensation plan for fiscal year 1996 is outlined
below.
I. FY 1996 Base Salary
-------
Your Base Salary for FY96 shall be $.
II. Your bonus for FY96 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 the prior year.
b. EARNINGS PER SHARE
Each percentage point of positive change
that the Tandy Corporation earnings per
share increases from the prior year.
c. STOCK PRICE
Each percentage point of positive change
that the Tandy Corporation stock price
increases, based on the average daily
closing price for 1995 and 1996.
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.
Page 2
January 1, 1996
Compensation Plan, FY96
RADIO SHACK
INCOME
Each percentage point of positive change
that the Radio Shack Division net income
(before income taxes) increase from the
prior year.
Radio Shack results will be adjusted to
reflect TE Manufacturing and distribution
operations for 1995 and 1996.
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. Eanings per share increase: $
c. Stock price increase: $
RADIO SHACK
Income: $
III. Minimum Bonus
Minimum Threshold Increase Percent for Each Target
--------------------------------------------------
Incentive Goal
--------------
Minimum Increase %
------------------
TANDY
a. Income 2
b. Earnings per share 3
c. Stock price
a. Tandy Stock Increase 5
b. Peer Group N/A
RADIO SHACK
Income 2
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 12% of your
base salary.
Bonus will only be paid on each goal which
----
exceeds the Minimum Increase % set forth above.
Page 3
January 1, 1996
Compensation Plan, FY96
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, you forfeit your
rights to receive a bonus except 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 for the current year-
to-date will be calculated to the nearest end
of the month preceding or succeeding such
event, using the formula above and adjusting
for the partial 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.
EXHIBIT 10l
FIRST RESTATED
TRUST AGREEMENT
TANDY EMPLOYEES
SUPPLEMENTAL STOCK PROGRAM
DATED JANUARY 1, 1996
(THROUGH AMENDMENT IV)
AGREEMENT made as of this 1st day of January, 1996,
between Tandy Corporation, a corporation duly organized and
existing under the laws of the State of Delaware, with its
principal place of business at Fort Worth, Tarrant County,
Texas, hereinafter called "Tandy", and Bank One Texas, NA,
hereinafter called "Trustee";
WITNESSETH
THAT WHEREAS, Tandy desires to establish, on behalf of
its eligible employees, a Trust for the purposes of receiving
and holding Tandy Corporation Common Stock ("Tandy Stock")
and other property and the paying of certain benefits, as set
out hereinafter, on behalf of its eligible employees who due
to benefit limitations in applicable tax laws under the
Internal Revenue Code are unable to have further
contributions made on their behalf under the Tandy Fund,
formerly the Tandy Employees Deferred Salary and Investment
Plan or DIP;
WHEREAS, the program provides for employee payroll
deductions at a rate up to 8% of a Participant's Earnings
after the Participant has reached the maximum Tandy Fund,
formerly DIP, contribution and a Company matching
contribution equal to 80% of the Participant's payroll
deduction being paid over to Tandy and the crediting of these
funds to a Participant's account, the balance of which will
be used to purchase Tandy Stock, at regular intervals at
current market prices, which Tandy Stock will be held by the
Trustee until such time as a Participant meets the withdrawal
or distribution requirements set out in the Program; and
WHEREAS, Tandy desires to designate the Trustee to hold,
manage and disburse Trust Funds.
NOW, THEREFORE, in consideration of the premises and of
the promises and covenants hereinafter contained and for the
purposes herein stated, the parties hereto do hereby agree as
follows:
I
NAME, EFFECTIVE DATE AND PROGRAM YEAR
A. NAME OF TRUST: The Trust herein created, and
sometimes for convenience referred to herein as the
"Program", shall be known as the "Tandy Employees
Supplemental Stock Program".
B. EFFECTIVE DATE: This Agreement shall be effective
as of the 1st day of September, 1989.
C. PROGRAM YEAR: The Program Year shall end on
December 31 of each year.
II
ADMINISTRATION
A. APPOINTMENT OF ADMINISTRATIVE COMMITTEE: The
Tandy Board of Directors shall appoint a committee to be
known as the "Administrative Committee", hereinafter referred
to as the "Committee", to administer the Program. This
Committee shall consist of three or more members who shall
not necessarily be employees of Tandy. Tandy shall advise
the Trustee of the names of the members of the Committee, and
the Trustee shall be entitled to rely thereon until similarly
advised of a change in the membership of the Committee.
B. TERM OF OFFICE OF COMMITTEE MEMBERS: Each member
of the Committee shall hold office until his death,
disability, resignation or removal from office. Any member
of the Committee may be removed by the Tandy Board of
Directors at its pleasure. Any Committee member may resign
by delivering his written resignation to Tandy and to the
Committee. Vacancies in the Committee arising from any cause
whatsoever shall be filled by the Tandy Board of Directors.
C. POWERS AND DUTIES: The Committee shall administer
the Program in accordance with its terms and shall have all
powers necessary to carry out the provisions of the Program.
Without limiting the generality of the foregoing, the
Committee shall have the following powers:
(1) To make and publish such rules and regulations
as it may deem necessary to carry out the provisions of the
Program;
(2) To determine all questions arising in the
administration, interpretation and application of the
Program, including questions of eligibility of employees and
the status and rights of Participants, Beneficiaries and any
other person hereunder;
(3) To deliver funds or purchase Tandy Stock for
delivery to the Trustee, as more particularly specified
hereinafter;
(4) To authorize all disbursements by the Trustee
from the Trust Fund;
(5) To direct the Trustee to sell Tandy Stock to
Tandy or on the open market for the purpose of funding
Financial Hardship withdrawals under the Program;
(6) To decide any dispute arising hereunder;
(7) To construe the provisions of the Program and
to correct any defects therein; and
(8) To provide procedures for the determination
of claims for benefits.
The determination of the Committee as to any
questions arising hereunder shall be conclusive and binding
on all persons.
D. ORGANIZATION AND OPERATION OF THE COMMITTEE: The
Committee shall act by a majority of its members at the time
in office, and such action may be taken either by a vote at a
meeting or in writing without a meeting; however, a Committee
member shall not vote on any question relating specifically
to himself, but any necessary action regarding such Committee
member shall be decided by the remaining members of the
Committee. In the event the remaining members of the
Committee are unable to agree upon the disposition of any
question, the Tandy Board of Directors shall appoint another
person eligible for membership on the Committee to serve as a
temporary member for the purpose of reaching a decision on
the matter in issue. Such matters shall then be determined
by a majority of the Committee, including said temporary
member.
The Committee may authorize any one or more of its
members to execute any document or documents on behalf of the
Committee, in which event the Committee shall notify the
Trustee in writing of such action and the name and names of
its members so designated. The Trustee thereafter shall
accept and rely upon any document executed by such member or
members as representing action by the Committee until the
Committee shall file with the Trustee a written revocation of
such designation.
The Committee may adopt such bylaws and regulations as
it deems desirable for the conduct of its affairs, and may
appoint such accountants, counsel, specialists, and other
persons as it deems necessary or desirable in connection with
the administration of the Program. Such accountants and
counsel may, but need not be accountants and counsel for
Tandy. The Committee shall be entitled to rely conclusively
upon, and shall be fully protected in any action taken by it
in good faith in relying upon any opinions or reports which
shall be furnished to it by any such accountant, counsel, or
other specialist.
The Committee and the Trustee may by agreement in
writing arrange for the Committee and/or Tandy to perform any
of the Trustee's ministerial functions, including but not
limited to the maintenance of records of accounts of each
Participant, preparation and distribution of Internal Revenue
Service, Securities and Exchange Act, or Labor Department
forms or documents required to be provided to each
Participant, and delivery of Tandy Stock or cash to the
Trustee.
Tandy may furnish the Committee with such clerical
assistance on a full or part time basis as shall from time to
time be reasonable or desirable to assist in the
administration of the Program, and shall pay all costs and
expenses, including Trustee's fees and expenses, incurred in
the administration of the Program, save and except those
specified in Section III E; and save and except those costs
and expenses, including attorneys' fees, which are charged to
the accounts of Participant's by a court of competent
jurisdiction in any litigation in which the Program or any of
its fiduciaries are a party.
E. RECORDS AND REPORTS: The Committee shall keep a
record of all its proceedings and acts, and shall keep all
such books of account, records, and other data as may be
necessary for the proper administration of the Program. The
Committee shall notify the Trustee and the Tandy Board of
Directors of any action taken by the Committee, and, when
required, shall notify any other interested person or
persons. The Committee will specifically maintain separate
records as to each Participant's account. Within a reasonable
period of time after the end of each calendar quarter the
Committee shall notify each Participant of the total number
of shares credited to his account which will include the
employee's contributions, other contributions and Company
contributions and the cost basis of said shares.
F. IMMUNITY FROM LIABILITY: No member of the
Committee shall incur any liability for any action or failure
to act, excepting liability for his own gross negligence or
willful misconduct. Tandy shall indemnify each member of the
Committee against any and all claims, losses, damages,
expenses and liabilities, including any amounts paid in
settlement with the Committee's approval, arising from any
action or failure to act, except when the same is judicially
determined to be due to the gross negligence or willful
misconduct of such member. The Committee may, at its
discretion, require the written approval or disapproval of
Tandy prior to taking action in any particular matter made
the subject of its responsibility hereunder.
G. CONCLUSIVENESS OF DETERMINATION OF COMPANY
CONTRIBUTIONS: Neither the Trustee, Tandy nor the Committee
shall be under any duty to inquire into the correctness of
the amounts contributed and paid over to Tandy by a Company
in accordance with the applicable section hereof; nor shall
the Trustee, Tandy or the Committee or any other person be
under any duty to enforce the payment of the contributions to
be made under the applicable sections hereof; and the
determination by the Company of its contributions hereunder
shall be final and conclusive upon all persons.
H. REVERSION AND DIVERSION:
(1) REVERSION: Under no circumstances can a
Company recover any part of the contributions made to this
Program and credited to a Participant's account.
(2) DIVERSION: No part of the Trust Fund created
by this Program except as required to pay taxes and
administrative expenses, shall be used or diverted to
purposes other than for the exclusive benefit of the
Participants or their beneficiaries or estates.
III
TRUST AND TRUSTEE
A. ESTABLISHMENT AND ACCEPTANCE OF TRUST: The
Trustee shall receive any contributions paid to it in cash or
Tandy Stock. All contributions so received, and Tandy Stock
purchased therefrom, shall be known for purposes of this
Agreement as the "Trust Fund", and shall be held, managed and
administered in Trust at the request of and for the benefit
of Participants pursuant to the terms of this Agreement. The
Trustee hereby accepts the Trust created hereunder and agrees
to perform the duties provided for under this Agreement.
B. POWERS OF THE TRUSTEE: The Trustee shall have all
the powers granted by the terms of Title 9 of the Property
Code of the State of Texas as it now exists, or as it may be
amended, and in addition thereto and not in modification or
limitation thereof, the Trustee shall have the following
powers:
(1) To invest the contributions and earnings
thereon of Tandy or Company in Tandy Stock as soon as
practicable after receipt thereof, but to hold cash
temporarily uninvested without liability for interest thereon
when the investment of such cash is impracticable;
(2) To keep the Trust Fund in Tandy Stock, to meet
contemplated withdrawals, as the Committee shall specify in
written requests;
(3) To hold Tandy Stock purchased as investments
for the Trust Fund in its name or in the name of its
nominees;
(4) To sell, exchange, convey, transfer, or
otherwise dispose of any Tandy Stock held by it, by private
contract or at public auction, to fund Financial Hardship
withdrawals on behalf of and for the benefit of the affected
Participant;
(5) Subject to Section XII hereof, to vote upon
any stocks, bonds, or other securities; to give general or
special proxies or powers of attorney with or without power
of substitution; to exercise any conversion privileges,
subscription rights or other options; and to make any
payments incidental thereto; to oppose or consent to or
otherwise participate in, corporate reorganization or other
change affecting corporate securities and to delegate
discretionary powers, and to pay any assessments or charges
in connection therewith; and generally to exercise any of the
powers of an owner with respect to stocks, bonds, securities
or other properties held as a part of the Trust Fund;
(6) To settle, compromise or submit to arbitration
any claims, debts or damages due or owing to or from the
Trust Fund, to commence or defend suits or legal or
administrative proceedings; or
(7) To delegate to Tandy and/or the Committee by
agreement in writing, such ministerial, record keeping and
discretionary duties as may be agreed upon, including but not
limited to the maintenance of records of account of
Participants, the quarterly determination of each
Participant's account, and the number of shares of Tandy
Stock purchased, delivered, or distributed by it.
The powers granted to the Trustee under this
Section III B shall be exercised by the Trustee in its
discretion; however, the Committee may at any time and from
time to time, by written direction to the Trustee, require
the Trustee to obtain the written approval of the Committee
before exercising such powers, as may be specified in such
direction. Any such direction may be of a continuing nature
or otherwise, and may be revoked in writing by the Committee
at any time. Neither the Trustee nor any other person shall
be under any duty to question any such direction of the
Committee and the Trustee shall as promptly as possible
comply with any directions given by the Committee hereunder.
The Trustee shall not be responsible for any loss which may
result from the failure or refusal of the Committee to give
any such required approval.
C. INVESTMENT OF THE TRUST FUND: The Trustee shall
at regular intervals at current market prices invest all of
the assets of the Trust Fund in Tandy Stock.
D. PAYMENTS FROM THE FUND: The Trustee shall from
time to time, on the written direction of the Committee, make
distributions out of the Trust Fund to the Participants or
the Participants' Beneficiaries, estates or Alternate Payees,
in such manner, in such Tandy Stock, and for such purposes as
may be specified in written directives of the Committee and
upon any such distribution being made, the amount thereof
shall no longer constitute a part of the Trust Fund. The
Trustee shall not be responsible in any way for the
application of such distributions or for the adequacy of the
Trust Fund to meet and discharge any and all liabilities
under the Program.
E. FEES AND EXPENSES OF THE TRUSTEE: The Trustee
shall be paid such reasonable compensation as shall from time
to time be agreed upon in writing by Tandy and the Trustee.
In addition, the Trustee shall be reimbursed for any
reasonable expenses, including reasonable counsel fees,
incurred by it in the administration of the Trust Fund,
except as hereinafter provided. Such compensation and
expenses incurred shall be paid by Tandy, but until paid
shall constitute a charge upon the Trust Fund; provided,
however, that Tandy shall have no obligation to pay such
compensation and expenses, including counsel fees, as are
charged to the accounts of Participants by a court of
competent jurisdiction in any litigation in which the Program
or any of its fiduciaries are a party. All costs and
expenses incurred in connection with the purchase, sale and
transfer of securities, and all taxes of any and all kinds
whatsoever that may be levied or assessed under existing or
future laws upon, or in respect of, the Trust Fund, or the
income thereof, shall be paid by the Trustee from the Trust
Fund.
F. ACCOUNTING: The Trustee, or Tandy or the
Committee by written agreement with the Trustee, shall keep
accurate and detailed accounts of all receipts, disbursements
and other transactions hereunder.
Within a reasonable time after the close of the Program
Year and within one hundred twenty (120) days following the
resignation or removal of the Trustee or termination of the
Program, the Trustee shall render a complete accounting for
the Program Year preceding or then ended, as the case may be,
to a firm of independent public accountants to be selected by
Tandy. Such accountants shall have full authority to examine
the Trustee's records and accounts relating to the Program
and to submit written reports thereon to Tandy.
Within a reasonable time after the close of the taxable
year of the Trust, which is hereby established to end on
December 31 of each year, and within one hundred twenty (120)
days following the resignation or removal of the Trustee or
termination of the Trust, the Trustee shall render a complete
accounting for the taxable year preceding or then ended, as
the case may be, to Tandy or to a firm of independent public
accountants to be selected by Tandy. Such accountants shall
have full authority to examine the Trustee's records and
accounts relating to the Trust and to submit written reports
thereon to Tandy.
Within a reasonable time after the close of the Program
Year, the Trustee shall transmit to each Participant, in such
form as the Trustee shall determine, a statement setting
forth the interest of each such Participant in the Program.
Such statement shall be deemed correct unless written notice
to the contrary shall be delivered to the Trustee by a
Participant within thirty (30) days following the mailing or
delivery of such statement to the Participant.
Reports relating to the Trustee's accounts prepared by
independent accountants selected by Tandy shall be maintained
at the principal office of Tandy and shall be available for
inspection by interested persons hereunder. Subject to the
right of a Participant to challenge the correctness of an
annual statement submitted to him by the Trustee, the
approval by the independent accountants of the Trustee's
account shall constitute a complete release and discharge of
the Trustee from any liability in respect to any act or
transaction reflected in the Trustee's accounts. The
foregoing provisions notwithstanding, no person other than
Tandy or the Committee may require an accounting or the
furnishing of a statement or bring an action against the
Trustee with respect to the Trust created hereby or its
actions as Trustee.
Notwithstanding any of the foregoing provisions, the
Trustee shall not be liable for any failure to submit an
account or statement in a timely fashion where its failure to
act is based on the omission of Tandy to name a firm of
independent accountants to whom such accounting is to be
rendered or is based on the failure of either Tandy or the
Committee to supply information to the Trustee necessary for
the completion of the accounting or of the statement.
G. AUTHORIZATION TO PROTECT THE TRUSTEE: Any action
by Tandy pursuant to any of the provisions of this Agreement
shall be evidenced by a certified resolution of its Board of
Directors delivered to the Trustee over the signature of any
person authorized by the said Board of Directors to make such
written instrument or resolution so certified to it. All
orders, requests and instructions of the Committee shall be
in writing, signed by those members or that member of the
Committee so designated by the Committee, and the Trustee may
act and shall be fully protected in so acting in accordance
with such orders, requests and instructions. The Trustee
shall not be liable for any loss to or diminution of the
Trust Fund except when the same may be due to its willful
misconduct or bad faith and the Trustee shall in no event
have any responsibility for the properties except those
actually received by it.
H. REMOVAL AND RESIGNATION; SUCCESSOR TRUSTEE: The
Trustee may be removed by Tandy at any time upon thirty (30)
days notice in writing to Trustee and the Committee. The
Trustee may resign at any time upon thirty (30) days notice
in writing to Tandy and to the Committee. Upon such removal
or resignation of the Trustee, Tandy shall appoint a
successor trustee, which shall be a bank or trust company
having combined capital and surplus of not less than Twenty-
Five Million Dollars ($25,000,000.), which shall have the
same powers and duties conferred upon the Trustee hereunder.
Upon acceptance of such appointment by the successor trustee,
the Trustee shall assign, transfer and pay over to such
successor trustee the funds and properties then constituting
the Trust Fund. The Trustee is authorized, however, to
reserve such sum of money, as it may deem advisable, for
payment of its fees and expenses in connection with the
settlement of its account or otherwise, and any balance of
such reserve remaining after the payment of such fees and
expenses shall be paid over to the successor trustee.
IV
PARTICIPATION IN THE PROGRAM
A. ADOPTION OF PROGRAM. Tandy and each of its
affiliates and associates may adopt the Program for all or
part of its employees as its Board of Directors may in its
discretion approve. Tandy and each of its affiliates and
associates adopting the Program are hereinafter collectively
referred to as "Company".
B. ELIGIBILITY. Subject to the provisions of Section
XX with respect to union-represented employees, all employees
are eligible to participate in the Program if their
contributions are limited in any Tandy Fund, formerly DIP,
plan year ("Tandy Fund Plan Year") as a result of Internal
Revenue Code Sections 402(g), 415(c), 401(a)(17) and/or
401(k)(3) and following an election to participate being
received in the Program's administrative office, may make
contributions to the Program as a Participant for the
remainder of any Tandy Fund Plan Year after the date on which
the contribution limit is reached. Participation in the
Program is entirely voluntary and the election to participate
may be made through Employee Payroll Deductions under Section
V. To remain as a Participant in the Program, an employee
must continue to be an "Employee" engaged in Continuous Full
Time Service for Tandy or a Company, or in employment which
contemplates continued Qualifying Service.
C. APPLICATION FOR PARTICIPATION. In order to become
a Participant hereunder, each eligible employee shall execute
a written application wherein he shall evidence:
1. His intent to participate in the Program;
2. His joinder of this Trust Agreement executed
by Tandy on his behalf;
3. His consent for Employee Payroll Deductions in
accordance with Section V below; and
4. His acknowledgment and consent to the
withholding of taxes resulting from the Company Contribution
during the Taxable Year in which the Company Contribution is
made.
Once an employee has completed the necessary eligibility
requirements for participation in the Program, contributions
under Section V shall begin automatically, but shall be held
in a suspense account subject to receipt of a payroll
deduction form by the Program Administration office. The
employee shall have thirty (30) days from the automatic
commencement of participation in the Program to file a
written application for participation. His participation in
the Program shall not become effective, however, until the
start of the next pay period after the application is
received by the Company or after he has reached the
contribution limit in any Tandy Fund Plan Year following the
year of his initial enrollment in the Program.
In the event that an eligible employee making
contribution during the thirty (30) day period elects not to
participate in the Program or fails to file a written
application for participation during the period, payroll
deductions made by the employee during the period shall be
returned to the employee and any Company or Other
Contributions will be canceled.
V
INVESTMENT OPTION
A. RATE OF PAYROLL DEDUCTION.
1. After receipt of a payroll deduction form by
the Program Administration office, Participants shall have
Employee Payroll Deductions withheld at the rate of 1%, 2%,
3%, 4%, 5%, 6%, 7% or 8% of Earnings, in excess of the
maximum amount of Earnings needed to reach one of the
contribution limits to the Tandy Fund, formerly DIP, as set
out in the Internal Revenue Code of 1986. Participation in
the Program is for the remainder of the Tandy Fund Plan Year.
2. Participants shall designate their
participation and desire to participate through payroll
deductions by means of a signed payroll deduction
authorization form. The initial authorization shall
continue in effect, notwithstanding any change in
Participant's Earnings, until the Participant becomes
ineligible for the Program. Deductions made subject to such
authorization are called "Employee Payroll Deductions".
B. COLLECTION AND PAYMENT OF EMPLOYEE PAYROLL
DEDUCTIONS: The Company shall withhold and deduct on each
regular pay day from each Participant's Earnings the
contribution specified. The Company shall pay the Employee
Payroll Deductions over to Tandy and Tandy will use the
Employee Payroll Deductions to either deliver cash to the
Trustee to purchase Tandy Stock or purchase and deliver
shares of Tandy Stock to the Trustee within thirty (30) days
following the end of the calendar quarter in which such
contributions shall have been deducted and withheld. In the
event a Participant withdraws from the Program and his
contribution for the calendar quarter preceding the time of
his withdrawal has been withheld from his Earnings, but has
not been used for the purchase of Tandy Stock, then the
Company shall refund to such withdrawing Participant the
amount of his contribution so withheld.
VI
CREDITS TO PARTICIPANTS
As soon as practicable after the end of each calendar
quarter the following credits shall be made to each
Participant's account as of the end of each calendar quarter:
A. EMPLOYEE PAYROLL DEDUCTION. The amount of
Employee Payroll Deductions withheld during each month of
such quarter;
B. COMPANY CONTRIBUTION. A monthly amount (the
"Company Contribution") calculated in accordance with Section
VI. B. 1. below:
1. The Company Contribution shall be determined
on the basis of each payroll period by multiplying the
Employee Payroll Deduction by Eighty Percent (80%); and
2. Within thirty (30) days following the end of
each calendar quarter, the Company shall contribute out of
its earnings and profits to Tandy and this amount, calculated
in accordance with Section VI B. 1, shall be delivered to the
Trustee for the purchase of Tandy Stock or used to purchase
and deliver Tandy Stock to the Trustee. Except for excess
contributions made because of fraud or mistake of fact and
returned within one (1) year after payment to Tandy under
this Program, no part of the contributions of the Company
shall be recoverable by it under any circumstances. In the
event the Company should not have sufficient current earnings
or profits and be operating at a loss currently and thus be
unable to pay its full contributions to this Program, then
such contributions, if any, that it shall be able to make
shall be allocated among all Participants on the basis of the
relative amounts of contributions made by each during the
quarter.
C. OTHER CONTRIBUTION-DIVIDEND INCOME ON STOCK. All
cash dividends paid on shares credited to the Participant's
account on the record date designated by Tandy for such
dividend shall be allocated when paid to each Participant's
account as other contributions ("Other Contributions") and
delivered to the Trustee or applied to the purchase of Tandy
Stock in accordance with Section VI. D. below, for delivery
to the Trustee. These Other Contributions will not be
subject to matching contributions by the Company or Tandy.
D. APPLICATION OF CREDITS. The Employee Payroll
Deductions, Other Contributions, and Company Contributions
are to be applied to the acquisition of Tandy Stock quarterly
and shall be credited to the Participant's account as soon as
practicable after the end of the calendar quarter as Tandy
Stock and any Fractional Share (as defined in Section XIX)
based upon the number of shares of Tandy Stock purchasable at
a price equal to the average closing price of Tandy Stock as
reported for the New York Stock Exchange composite
transactions for each trading day of the calendar month (the
"Stock Price") for which the deductions or contributions are
made.
E. DIVIDENDS OTHER THAN CASH AND TANDY STOCK. All
dividends with respect to Tandy Stock held in a Participant's
account under the Program that are not payable in cash or
Tandy Stock shall be distributed to the Participant as soon
as possible. All whole units of any security (other than
Tandy Stock), any rights and warrants for a whole unit of any
security and whole units of any other asset shall be
distributed in kind. All fractional units of any security
(other than Tandy Stock), any rights and warrants for less
than a whole unit of any security and fractional units of any
other asset shall be sold and the net proceeds paid to the
Participant.
F. STOCK DIVIDEND OR SPLIT-UP. Any Tandy Stock
issuable by Tandy as a stock dividend or split-up on the
Tandy Stock and any Fractional Share to the credit of the
Participant on the record date designated by Tandy for such
stock dividend or split-up shall be credited to each
Participant's account (in an amount per share equivalent to
any stock dividend or split-up actually paid by Tandy on its
Tandy Stock then outstanding) and delivered to the Trustee as
soon as practicable after the distribution date of such stock
dividend or split-up.
VII
TRANSFERS TO TRUSTEE
A. EMPLOYEE PAYROLL DEDUCTION. The Company shall pay
over to Tandy the Employee Payroll Deductions of each
Participant as soon as practicable after the payroll period
nearest the end of the calendar month in which such Employee
Payroll Deduction is withheld. The Employee Payroll
Deductions will be credited to the Participant's account
quarterly and delivered to the Trustee for the purchase of
Tandy Stock and/or used to purchase Tandy Stock which will be
delivered to the Trustee as soon as practicable after the end
of the calendar quarter.
B. COMPANY CONTRIBUTIONS. The Company shall account
for the Company Contributions payable to Tandy on each
Participant's account as soon as practicable after the
payroll period nearest the end of the calendar month in which
such Employee Payroll Deductions are withheld. The Company
Contributions shall be paid over to Tandy and credited to the
Participant's account quarterly. Said contributions shall
then be delivered to the Trustee for the purchase of Tandy
Stock and/or used to purchase Tandy Stock which will be
delivered to the Trustee as soon as practicable after the end
of the calendar quarter.
VIII
INVESTMENT
A. TANDY STOCK.
1. The Trustee will invest all or substantially
all of the Trust Fund in Tandy Stock.
2. Any Tandy Stock required for the Program may
be treasury shares or original issue shares.
3. Tandy Stock may be held by the Trustee, as
custodian, at its discretion either in its name or in the
name of one or more nominees. Tandy Stock shall be purchased
and/or delivered to the Trustee as of the end of each
calendar quarter with respect to which the Tandy Stock is
acquired by the Program or Trustee and sold by Tandy, at the
Stock Price determined for each month of the quarter.
B. OTHER INTEREST AND INCOME. Except as herein
expressly provided, no interest or other income will be paid
or credited on account of Employee Payroll Deductions,
Company Contributions, or any other amount payable or
credited to Participants.
IX
HOLDING PERIOD
A. DURATION. The Trustee shall retain for the
Holding Period, Tandy Stock credited to the Participant's
account under the Program. The Holding Period with respect
to any Tandy Stock shall commence on the date as of which the
Tandy Stock is credited to the Participant's account and
shall end when the Participant has complied with one of the
provisions for withdrawal under the Program.
B. DISTRIBUTION. As promptly as practicable after
the Holding Period, the Trustee shall distribute the full and
any Fractional Share of Tandy Stock then held which was
credited to the Participant's account under the Program since
the Holding Period began in accordance with the rules for
withdrawals and payment (as defined in Section X).
X
WITHDRAWALS AND PAYMENTS
A. WITHDRAWALS.
1. During employment the Program only provides
for the full withdrawal of a Participant's account upon
receipt of a written request and Notice of Financial Hardship
including all supporting documentation at the Program
Administration office (1800 One Tandy Center, Fort Worth,
Texas 76102) prior to Program participation termination. A
Financial Hardship withdrawal can only be made if the
withdrawal is to satisfy an immediate and heavy financial
need of the employee and is necessary to meet such financial
need and where other sources of payment are not reasonably
available to the Participant. A withdrawal will be deemed to
be necessary as a Financial Hardship withdrawal if both of
the following requirements are met: (1) the withdrawal is
not in excess of the amount needed to satisfy the Financial
Hardship plus any amounts necessary to pay any federal, state
or local taxes or penalties reasonably anticipated to result
from such payment; and (2) the Participant has obtained all
distributions, under all plans of the Company except for
hardship distributions from the Participant's Deferred Salary
Account in the Tandy Fund, formerly the Tandy Employees
Deferred Salary and Investment Plan, and the ESOP account in
the Tandy Fund, formerly the Tandy Employees Stock Ownership
Plan.
2. The Program also provides for the full
withdrawal of a Participant's account upon receipt of a
written Notice of Withdrawal at the Program Administration
Office upon the Participant's (a) death or (b) termination of
Employment, either voluntarily, involuntarily or by
retirement at age 65 or older.
B. PAYMENT IN CASH OR TANDY STOCK.
1. The Participant will be paid in Tandy Stock if
the Participant delivers a written Notice of Withdrawal to
the Program Administration office or if the Company's records
indicate that one of the above two events of withdrawal (as
defined in X. A. 2.) has occurred. All Financial Hardship
withdrawals will be paid in cash as provided for below.
2. Employee Payroll Deductions, Company
Contributions and Other Contributions not yet paid over or
delivered as Tandy Stock to the Trustee will be paid over to
the withdrawing Participant by the Company or Tandy in cash.
3. Upon withdrawal no Fractional Share will be
distributed by the Trustee. In lieu of distribution of such
Fractional Share of Tandy Stock the Trustee will pay a
Participant the Stock Price for the month preceding the
distribution date.
C. DETERMINATION OF AMOUNT OF PAYMENT. The amount of
payment in Tandy Stock will be determined by the number of
shares credited to a Participant's account:
1. at the end of the calendar quarter preceding
the receipt of the written Notice of Withdrawal by the
Program Administration office; or
2. in the absence of receipt by the Program
Administration office of a Notice of Withdrawal from the
Participant, Alternate Payee(s), or the Participant's
Beneficiary, at the end of the calendar quarter preceding the
month in which one of the two withdrawal events is recorded
in the records of the Program Administration office,
regardless of the month in which such event occurred.
In the event of a Financial Hardship withdrawal, when the
Participant delivers a written Notice of Financial Hardship
Withdrawal to the Program Administration office, then the
Trustee shall take the number of shares of Tandy Stock
credited to the Participant's account at the end of the
preceding calendar quarter, value it at the Stock Price for
the calendar month preceding the date of receipt of the
notice of withdrawal, sell such Tandy Stock and then
distribute cash to the Participant.
D. REENTERING THE PROGRAM. In the event of a
Financial Hardship withdrawal under this Program a
Participant may not renew participation for a period of
twelve (12) months from the date of distribution of the
withdrawal.
E. RECIPIENT OF DISTRIBUTION. All withdrawal
distributions will be made to the Participant except
withdrawal distributions resulting from death or divorce of
the Participant. In the event of death, payment will be made
to the Beneficiary designated by the Participant or as
otherwise provided by the Program and the Participant's
Beneficiary may act in behalf of the Participant. In the
event of a Participant's divorce, a certified copy of the
divorce decree or Qualified Domestic Relations Order
(collectively referred to hereinafter as "Court Order") must
be submitted to the Program Administration office together
with any other identifying information as required by the
Program Administration office. The Participant's account
will then be divided as specifically ordered in the Court
Order and the shares awarded to the Alternate Payee(s) will
be withdrawn. Distribution to the Participant, the Alternate
Payee(s), or Beneficiary shall be made as soon as practicable
after the event permitting withdrawal.
F. SUSPENSION FROM THE PROGRAM. In the event of a
Participant's withdrawal from the Tandy Fund, formerly DIP,
the Participant will be suspended from participation in the
Program as set out below:
1. Partial Withdrawal. If a Participant elects
to withdraw all or any portion of the value of his Voluntary
account under the Tandy Fund, formerly DIP, if any, his
participation in the Program does not terminate, but his
Employee Payroll Deductions and Company Contributions shall
automatically be suspended for a period of six months.
2. Total Withdrawal. If a Participant elects to
withdraw the full value of his Company account under the
Tandy Fund, formerly DIP, while employed by Company, his
participation under the Program is suspended for a period of
12 months, during which no Employee Payroll Deductions or
Company Contributions will be made.
3. Tandy Fund, formerly DIP, Hardship Withdrawal.
If a participant makes a financial hardship withdrawal under
the Tandy Fund, formerly DIP, his participation under the
Program is suspended for a period of 12 months from the date
of distribution of the withdrawal, during which period no
Employee Payroll Deductions or Company Contributions will be
made.
XI
BENEFICIARY
A. DESIGNATION OF BENEFICIARY. Participants shall
file with the Company a written designation of Beneficiary
designating who is to receive any Tandy Stock, Fractional
Share payment, and any cash to the Participant's credit under
the Program in the event of his death prior to delivery to
him of such Tandy Stock, Fractional Share payment or cash.
B. CHANGE OF BENEFICIARY. A Participant may change
his Beneficiary designation at any time by written notice
being delivered to the Program Administration office. Such
change shall take effect as of the date the Participant
signed such written notice, whether or not Participant is
living at the time of receipt of such notice by the Program
Administration office, except that the change of Beneficiary
shall not be effective if the Program has distributed the
Participant's account prior to receipt of the change of
Beneficiary form.
C. DISTRIBUTIONS TO BENEFICIARY. Upon the death of a
Participant and upon receipt of proof deemed adequate by the
Program Administration office of the identity and existence
at the Participant's death of a Beneficiary or Beneficiaries
validly designated by him under the Program, distribution
will be made to the Beneficiary or Beneficiaries in the
manner and form as set forth in Section X hereof.
D. ABSENCE OF BENEFICIARY. In the absence of a
Beneficiary designated under the Program who is living at the
time of Participant's death, distribution shall be made to
the executor or administrator of the estate of the
Participant. If no executor or administrator has been
appointed to the knowledge of the Program Administration
office (or in the event such executor or administrator has
been disqualified), distribution may be made to such person
or persons as the Program Administration office shall be
satisfied is or are legally entitled thereto.
E. INTEREST OF BENEFICIARY IN PROGRAM. No designated
Beneficiary shall, prior to the death of the Participant by
whom he has been designated, acquire any interest in the
Tandy Stock, Fractional Share, or cash credited to the
Participant under the Program or in the assets of the Trust.
XII
VOTING AND TENDERING OF TANDY STOCK
A. VOTING OF TANDY STOCK BY PARTICIPANTS AND
BENEFICIARIES. Notwithstanding any provision contained in
the Program to the contrary, or:
1. The Trustee shall have the power to vote all
Tandy Stock held by it on matters which may be voted by
Member Organizations of the New York Stock Exchange, Inc.
without customer instructions as provided in Rule 452 of the
Rules of the Board of Directors of the New York Stock
Exchange, Inc. (Supplementary Material Item .11).
2. With respect to matters other than those
described in Subsection 1 of this Section A of this Article
("Pass Through Matters"), each Participant or Beneficiary who
timely provides instructions to the Trustee shall be entitled
to direct the Trustee how to vote Tandy Stock allocated to
such Participant's or Beneficiary's accounts in accordance
with this Section. In order to implement these voting
directions, Tandy or the Trustee shall provide each
Participant or Beneficiary with proxy solicitation materials
or other notices or an information statement which are
distributed to Tandy shareholders, together with a form
requesting confidential instructions as to the manner in
which Tandy Stock allocated to the Participant's or
Beneficiary's account are to be voted. Each Participant or
Beneficiary shall, as a named fiduciary described in Section
403(a)(1) of ERISA, direct the Trustee with respect to the
vote of such Tandy Stock allocated to the account of the
Participant or Beneficiary. Reasonable means shall be
employed by the Trustee to provide confidentiality with
respect to the voting by such Participant or Beneficiary and
the Trustee shall hold such directions in confidence and
shall not divulge or release such directions to any person,
including Tandy or any director, officer, employee or agent
of Tandy, it being the intent of this provision of this
Section to ensure that Tandy (and its directors, officers,
employees and agents) cannot determine the direction given by
any Participant or Beneficiary. Such instructions shall be
in such form and shall be filed in such manner and at such
time as the Trustee may prescribe.
3. On Pass-Through Matters, the Trustee shall
vote all Tandy Stock which is allocated to Participants' and
Beneficiaries' accounts for which it does not receive timely
or valid voting instructions in the same proportion as Tandy
Stock which is allocated to Participants' and Beneficiaries'
accounts for which it does receive timely and valid voting
instructions.
B. TENDER OFFERS. The provisions of this Section
shall apply in the event any "Person" (as the term person is
used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended), either alone or in
conjunction with others, makes a tender offer, or exchange
offer, or otherwise offers to purchase, or solicits an offer
to sell to such Person, one percent or more of the
outstanding Company securities (hereinafter referred to as a
"Tender Offer").
1. The Trustee may not take any action in
response to a Tender Offer except as otherwise provided in
this Section B of this Article XII. Upon commencement of a
Tender Offer, Tandy or the Trustee shall notify each
Participant or Beneficiary for whom an account is maintained
of such Tender Offer and use its best efforts to timely
distribute or cause to be distributed to each Participant or
Beneficiary all information, documents and other materials as
are distributed to shareholders of the Tandy with the Tender
Offer. Each Participant or Beneficiary shall be entitled to
direct the Trustee to sell, offer to sell, exchange or
otherwise dispose of the Tandy Stock allocated to such
Participant's or Beneficiary's accounts in accordance with
the provisions, conditions and terms of such Tender Offer and
the provisions of this Section. Such a Participant or
Beneficiary shall direct the Trustee with respect to the
tender of such shares of Tandy Stock which are allocated to
the accounts of the Participant or Beneficiary. Reasonable
means shall be employed by the Trustee to provide
confidentiality with respect to the tendering directions by
each Participant or Beneficiary and the Trustee shall hold
such directions in confidence and shall not divulge or
release such directions to any person, including Tandy or any
director, officer, employee or agent of Tandy, it being the
intent of this provision of this Section to ensure that Tandy
(and its directors, officers, employees and agents) cannot
determine the tendering directions given by any Participant
or Beneficiary. Such instructions shall be in such form and
shall be filed in such manner and at such time as the Trustee
may prescribe.
2. A Participant or Beneficiary who has directed
the Trustee to tender or exchange Tandy Stock may, at any
time prior to the tender or exchange offer withdrawal date,
or such earlier date as established by the Trustee, instruct
the Trustee to withdraw, and the Trustee shall withdraw, such
Tandy Stock from the tender or exchange offer prior to the
withdrawal deadline. The Trustee may impose reasonable
limits on the number of instructions to tender or exchange or
withdraw which a Participant or Beneficiary may give to the
Trustee.
3. The Trustee shall sell, offer to sell,
exchange or otherwise dispose of the Tandy Stock allocated to
a Participant's or Beneficiary's account with respect to
which it has received directions to do so under this Section
and which have not been withdrawn. The proceeds of a
disposition directed by a Participant or Beneficiary shall be
allocated to such Participant's or Beneficiary's account.
4. To the extent to which Participants or
Beneficiaries do not instruct the Trustee, or do not issue
valid directions to the Trustee, to sell, offer to sell,
exchange or otherwise dispose of the Tandy Stock allocated to
their accounts, such Participants or Beneficiaries shall be
deemed to have directed the Trustee that their respective
accounts remain invested in Tandy Stock subject to all
provisions of the Program.
5. Following the completion of a Tender Offer,
the Committee may direct the substitution of new "qualified
employer securities" as such term is defined in Internal
Revenue Code Section 409(1) for Tandy Stock or for the
proceeds of any disposition of Tandy Stock to the extent
provided in the Program; provided, however, that any
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such substitute employer securities must be publicly traded
securities. In lieu of the substitution of new qualified
employer securities, the Committee may direct that the Trust
Fund be invested in other securities, properties or
investment vehicles. Pending the reinvestment of any
disposition of Tandy Stock, the Trust Fund may be invested in
such securities, property or investment vehicles as the
Committee may from time to time direct; provided, however,
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in the absence of any direction from the Committee, the
Trustee may invest the cash proceeds in short-term securities
issued by the United States of America or any agency or
instrumentality thereof or any other investment of a
short-term nature, including corporate obligations or
participations therein and collective or common investment
funds.
XIII
PARTICIPATION BY AFFILIATED COMPANIES
This Program shall apply to any corporation a portion of
whose voting stock is owned directly or indirectly by Tandy,
and any of its affiliates, if such company or corporation
shall elect to participate and if, and so long as, such
participation shall be approved by Tandy. Each participating
Company shall be bound by the terms of this document.
XIV
NO WARRANTY OF SECURITY VALUES
Neither the Trustee or Company, their officers,
directors, agents or servants, warrants or represents in any
way that the value of Tandy Stock in which the Participant
may have an interest will increase or will not decrease.
Each Participant assumes all risk in connection with any
changes in the value of Tandy Stock to the extent he may have
an interest therein.
XV
GENERAL PROVISIONS
A. EXTENT OF CERTAIN RIGHTS OF PARTICIPANTS.
Participation in the Program shall not entitle any employee
to be retained in the service of Company. The at-will
employment right and power of Company to dismiss or discharge
any employee is specifically reserved.
B. LIMITATION OF PARTICIPANT'S RIGHTS. No
Participant nor any person claiming under or through them
shall have any right or interest under the Program that is
not herein expressly granted.
C. ASSIGNMENT. No interest in any Tandy Stock or
cash held under the Program prior to delivery to the
Participant as hereinabove provided, shall be assigned,
alienated, pledged, or otherwise encumbered in whole or in
part, either directly by operation of law, or otherwise. If
any attempt is made by a Participant to assign, alienate,
pledge, or otherwise encumber his interest in such Tandy
Stock or cash, prior to such delivery, for his debts,
liabilities in tort or contract, or otherwise, then the
Committee (in its absolute discretion) may treat such attempt
as an election by the Participant to withdraw from the
Program permanently and submit to any loss of rights as
provided in the Program in the case of a withdrawal at the
time of such attempt, except that a Court Order, to pay an
Alternate Payee(s), issued upon a Participant's divorce shall
not be a violation under this paragraph which requires a
Participant's withdrawal.
D. QUARTERLY STATEMENT OF ACCOUNTS. As soon as
practicable after the end of each calendar quarter, each
Participant shall be furnished with a statement of Tandy
Stock credited to his account under the Program.
E. REGISTRATION OF STOCK. Each Participant,
Beneficiary or Alternate Payee shall, at such time as the
Program Administration office or Tandy may reasonably
request, furnish written instructions for the registration of
the Tandy Stock to be delivered under the Program upon
completion of the Holding Period. Such Tandy Stock will be
registered in the name of the Participant, Beneficiary or
Alternate Payee (or if a minor, in the name of another person
as custodian under the Uniform Gifts to Minors Act, or if
incompetent, in the name of the guardian or such other
person(s) as the Program Administrative Committee or Tandy
may determine) alone or in his name and that of one such
other adult person as he may designate as joint tenants with
right of survivorship, and not as tenants in common. Such
instructions shall remain in effect until receipt by the
Program Administration office or Tandy of written
instructions to change the registration previously
authorized. In the absence of such written instructions,
Tandy Stock to be delivered to a Participant will be
registered in his name or the Alternate Payee's name alone
or in the event of his death prior to such delivery will be
registered in the name of the person or persons entitled
thereto.
F. MISCELLANEOUS.
1. The Trustee may rely upon the authenticity of
any information supplied to it by the Company in connection
with the operation of the Program, and shall be fully
protected in relying upon such information.
2. No individual administering, or aiding in the
administration of the Program or the Trust shall have any
liability, except as provided in Section XV.F.3. below. As a
condition precedent to participation in the Program or the
receipt of benefits thereunder, such liability if any, is
expressly waived and released by each Participant and by any
and all persons claiming under or through any Participant
such waiver and release to be conclusively evidenced by the
act of participation or the acceptance of benefits
thereunder.
3. No individual administering, or aiding in the
administration of, the Program shall be liable except for his
own acts or omissions and then only for willful misfeasance,
bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office. As used
herein, "individual administering, or aiding in the
administration of the Program" shall include any share owner,
director, officer, employee or agent of the Company or
Trustee.
4. Tandy or the Program Administration office may
require compliance with any legal requirements which it deems
necessary as a condition for delivery of, or payment for, any
Tandy Stock or cash to the credit of a Participant under the
Program.
5. By a Participant's act of participating in the
Program or by the acceptance of any of the benefits
thereunder, such Participant and any and all persons claiming
under or through any such Participant, shall thereby be
conclusively deemed to have indicated his acceptance and
ratification of, and consent to, the application of the
provisions of the Program.
6. Tandy Stock purchased, sold or transferred
under the Program by Tandy or the Trustee may be either
treasury shares or newly issued shares.
7. No Participant, beneficiary of a Participant,
or any other person shall have any right or claim to the
Trust Fund except as specified in the Program and this Trust
Agreement. Any disputes as to the amount of benefits payable
or distributable under this Trust shall be resolved by the
Committee, whose decision shall be final. No Participant or
any other person shall have any right or claim with respect
to disputed benefits against the Trust, the Trustee or
Company.
8. The determination of any question relating to
the construction, interpretation, administration or
application of the Program and its rules and regulations is
vested solely in the Committee and all Participant's and
other persons shall be bound thereby.
9. For the purposes of the Program, unless the
contrary is clearly indicated by the context, the use of the
masculine gender shall also include within its meaning the
feminine, and the use of the singular shall also include
within its meaning the plural, and vice versa.
XVI
NOTICES AND COMMUNICATIONS
A. TO PARTICIPANTS. All notices, reports and other
communications to a Participant under or in connection with
the Program shall be deemed to have been duly given, made or
delivered when received by the Participant, or (if mailed)
when mailed with postage prepaid and addressed to the
Participant at his address last appearing on the records of
the Company.
B. BY PARTICIPANTS. All notices, instructions or
other communications by a Participant to Tandy under or in
connection with the Program shall be duly given, made or
delivered when received by the Corporate Secretary of Tandy
(1800 One Tandy Center, Fort Worth, Texas 76102) or when
received in the form specified in writing by Tandy and at the
location, or by the person, designated for receipt of such
notice, instruction or other communication by Tandy.
XVII
AMENDMENT, SUSPENSION OR TERMINATION
A. AUTHORITY TO AMEND, SUSPEND OR TERMINATE. The
Tandy Board of Directors, without notice to a Participant,
may amend, suspend or terminate the Program at any time, or
from time to time. Without limitation, such amendment may
change (a) the rates of Employee Payroll Deductions which may
be designated by all Participants or (b) the rate of Company
Contributions, or (c) any other provisions of the Program,
except a Participant's percentage rate of Employee Payroll
Deductions may not be increased without his consent.
B. DELEGATION OF AUTHORITY. The Tandy Board of
Directors may delegate to the Chairman of the Board, Vice
Chairman of the Board, or President the authority to amend
any provision of this Program, provided such amendment is
(a) of an administrative nature or (b) does not result in any
material increase in costs to a Company.
C. AMENDMENTS. No amendment, suspension or
termination shall adversely affect any rights of a
Participant to Tandy Stock, Fractional Share payment or cash
to his credit under the Program as of the date of amendment,
suspension or termination. Upon such termination, all Tandy
Stock, Fractional Share payment or cash to the credit of each
Participant under the Program shall be promptly paid over to
him.
XVIII
APPLICABLE LAW
Any question concerning or in respect of the validity,
construction, interpretation, administration and effect of
the Program, and of its rules and regulations, and the rights
of any or all persons having or claiming to have an interest
therein or thereunder, shall be governed exclusively and
solely in accordance with the laws of the State of Texas,
with Jurisdiction for any action being expressly agreed as
being in Tarrant County, Texas where all contributions to the
Trust are deemed to take place.
XIX
DEFINITIONS
For the purposes of the Program, unless some other
meaning is clearly indicated by the context, the following
definitions shall be applicable:
"Alternate Payee" shall have the same meaning as defined
in Internal Revenue Code section 414 (p) and in the Employee
Retirement Income Security Act at 29 U.S.C.S. section 105, as
it may be amended from time to time.
"Beneficiary" is defined in Section XI.
"Company" is defined in Section IV as "Tandy and each of
its affiliates and associates adopting the Program".
"Company Contribution" is defined in Section VI
"Continuous Full Time Service" means the most recent
period of uninterrupted employment as an employee of the
Company when such employment consists of more than
thirty-five (35) hours per week for more than five (5) months
per year. The continuity of an employee's service shall not
be deemed to be broken during such period as the employee
shall be:
(a) on military leave; or
(b) on other leave of absence authorized
by the Company for sickness, disability, or
other circumstances, granted in accordance
with an established and uniformly applied
Company policy; or
(c) laid off in order to effect a
temporary reduction in personnel, provided
such employee shall be reemployed within three
hundred sixty-five (365) days after such
lay-off.
"Court Order" is defined in paragraph X. E.
"Earnings" means the amount which an employee is
receiving as salary or wages from the Company, including
(a) payment for overtime, vacation pay, night shift bonus,
and any cost of living adjustment, including Incentive
Compensation, other variable compensation or Bonds, but
excluding (b) living allowance, retainers, any special
payments made for services performed outside his regular
duties and any other special payments, (c) except to the
extent that the inclusion of any item in (b) above is
specifically approved by the Chief Executive Officer of Tandy
or by such employee or employees of the Company as he may
authorize in writing. Commissions shall be included as
Earnings only to the extent determined by the Chief Executive
Officer of Tandy or by such employee or employees of the
Company as he may authorize in writing. Earnings shall not
include Company Contributions to the Tandy Stock Purchase
Program.
"Employee" means a regular employee of the Company
receiving wages or salary, but shall not include any person
compensated pursuant to a contract other than an employment
contract with the Company under the terms of which
compensation is paid on a regular fixed salary or wage basis.
As used above, "Employee" shall also include, without
limitation, any salesman who is a bona fide employee of the
Company and recognized as such for Social Security purposes.
"Employee Payroll Deduction" is defined in Section V.
"Financial Hardship" as used in Section X is defined as
(1) expenses for "medical care" (as described in Section
213(d) of the Internal Revenue Code) which are either: (a)
previously incurred by the Participant, the Participant's
spouse, children or any dependents (as defined in Section 152
of the Internal Revenue Code) of the Participant, or (b)
necessary for the foregoing persons to obtain medical care;
(2) the need for funds for the purchase of a principal
residence of the Participant (excluding mortgage payments);
(3) payment of tuition and related educational fees for the
next 12 months of post-secondary education for the
Participant or the Participant's spouse, children or
dependents (as defined in Section 152 of the Internal Revenue
Code); or (4) the need for funds to prevent the eviction of
the Participant from his principal residence or to prevent
foreclosure on the mortgage of the Participant's principal
residence.
"Fractional Share" means an interest equivalent to and
expressed as a fraction of a share of Tandy Stock determined
by dividing that amount credited to the Participant to be
applied to the purchase of Tandy Stock (but which is
insufficient to acquire a full share of Tandy Stock) by the
applicable Stock Price for the applicable month with respect
to such credit.
"Holding Period" is defined in Section IX.
"Officers" means the Chairman of the Board, President,
any Executive Vice President, Senior Vice President, Vice
President, Treasurer, Secretary, Assistant Treasurer or
Assistant Secretary and such other employees as the Tandy
Board of Directors may designate as "Officers" for this
purpose.
"Other Contribution" is defined in Section VI.C.
"Participant" is defined in Section IV.
"Program" is defined in Section I.
"Qualifying Service" means the most recent period of
uninterrupted employment consisting of 1,000 hours of
employment in any twelve (12) month period.
"Stock Price" is defined in Section VI.D. as "a price
equal to the average closing price of Tandy Stock as reported
for the New York Stock Exchange composite transactions for
each trading day of the calendar month".
"Tandy" is defined as Tandy Corporation, a Delaware
corporation.
"Tandy Stock" is defined as Tandy Corporation Common
Stock.
"Trustee" is defined as Bank One, Texas, NA, formerly
Team Bank.
"Trust Fund" is defined in Section III as cash or Tandy
Stock held for the benefit of Participants.
XX
TRUST TAX STATUS
A. The Program is intended to be established as a
grantor trust under sections 671-677 of the Internal Revenue
Code of 1986, as amended, with each Participant considered to
be a grantor subject to tax on his share of Trust income as
the owner of his respective portion of the Trust as
represented by his Participant account.
B. Tandy shall report to the Trustee within 60 days
and the Trustee, or Tandy, shall report to each Participant
within 75 days of the end of each Program Year the amount of
dividends paid on Tandy Stock held in his account.
XXI
EFFECTIVE DATE
A. The Program shall become effective as of the date
set forth in Section I.B. but only upon approvals, rulings
and orders (satisfactory to Tandy and, to the extent deemed
by Tandy to be necessary or desirable) by the appropriate
State and Federal or other government authorities with
respect to the Program and any action contemplated under the
Program.
B. Notwithstanding the provisions of Section IV, and
Paragraph A of this Section, employees who are represented by
a union (pursuant to a certification by the National Labor
Relations Board or otherwise in accordance with the
provisions of Section 9 of the National Labor Relations Act)
shall become eligible to participate in the Program (a) only
after the Company and such union shall have entered into a
written agreement to the effect that the Program shall be
offered to the employees so represented and (b) only in
accordance with any conditions or requirements contained in
such agreement.
XXII
CHANGE IN CONTROL
A. Notwithstanding any provision contained in the Plan
to the contrary, for a period of one (1) year following a
Change in Control (as hereinafter defined), the Program may
not be terminated or amended in any way that would adversely
affect the computation or amount of, or entitlement to,
benefits hereunder, including, but not limited to, (a) any
reduction in the right to make Employee Payroll Deductions by
any individual who was an eligible employee on the date
immediately prior to a Change in Control, (b) a reduction in
the level of Company Contributions with respect to such
individuals or (c) any change in the distribution or
withdrawal provisions. Any amendment or termination of the
Program that (i) was at the request of a third party who has
indicated an intention or taken steps reasonably calculated
to effect a Change in Control or (ii) otherwise arose in
connection with, or in anticipation of, a Change in Control
shall be null and void, and shall have no effect whatsoever.
B. For purposes of the Program, a "Change in Control"
shall mean any of the following events:
1. An acquisition (other than directly from
Tandy) of any voting securities of Tandy (the "Voting
Securities") by any "Person" (as the term person is used for
purposes of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the "1934 Act")) immediately after
which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the 1934 Act) of
fifteen percent (15%) or more of the combined voting power of
Tandy's then outstanding Voting Securities;
provided, however, in determining whether a Change in Control
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has occurred, Voting Securities which are acquired in a "Non-
Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in
Control. A "Non-Control Acquisition" shall mean an
acquisition by (1) an employee benefit plan ( or a trust
forming a part thereof) maintained by (i) the Company or (ii)
any corporation or other Person of which a majority of its
voting power or its voting equity securities or equity
interest is owned, directly or indirectly, by Tandy
(a "Subsidiary"), (2) Tandy or its Subsidiaries, or (3) any
Person in connection with a "Non-Control Transaction" (as
hereinafter defined);
2. The individuals who, as of August 22, 1990 are
members of the Board (the "Incumbent Board") cease for any
reason to constitute at least two-thirds of the Board;
provided, however, that if the election, or nomination for
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election by Tandy's stockholders, of any new director was
approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of the Program,
be considered as a member of the Incumbent Board;
provided further, however, that no individual shall
-------- ------- -------
be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an
actual or threatened "Election Contest" (as described in Rule
14a-11 promulgated under the 1934 Act) or other actual or
threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board (a "Proxy Contest")
including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest; or
3. Approval by stockholders of Tandy of:
(i) A merger, consolidation or reorganization
involving Tandy, unless
(I) the stockholders of Tandy,
immediately before such merger, consolidation
or reorganization, own, directly or indirectly
immediately following such merger,
consolidation or reorganization, at least
sixty percent (60%) of the combined voting
power of the outstanding voting securities of
the corporation resulting from such merger or
consolidation or reorganization (the
"Surviving Corporation") in substantially the
same proportion as their ownership of the
Voting Securities immediately before such
merger, consolidation or reorganization,
(II) the individuals who were
members of the Incumbent Board immediately
prior to the execution of the agreement
providing for such merger, consolidation or
reorganization constitute at least two-thirds
of the members of the board of directors of
the Surviving Corporation,
(III) no Person (other than any
Tandy Subsidiary, any employee benefit plan
(or any trust forming a part thereof)
maintained by Tandy, the Surviving
Corporation, or any Tandy Subsidiary, or any
Person who, immediately prior to such merger,
consolidation or reorganization had Beneficial
Ownership of fifteen percent (15%) or more of
the then outstanding Voting Securities) has
Beneficial Ownership of fifteen percent (15%)
or more of the combined voting power of the
Surviving Corporation's then outstanding
voting securities, and
(IV) a transaction described in
clauses (I) through (III) shall herein be
referred to as a "Non-Control Transaction";
(ii) A complete liquidation or dissolution of
Tandy; or
(iii) An agreement for the sale or other
disposition of all or substantially all of the
assets of Tandy to any Person (other than a
transfer to a Tandy Subsidiary).
Notwithstanding the foregoing, a Change in Control shall
not be deemed to occur solely because any Person (the
"Subject Person") acquired Beneficial Ownership of more than
the permitted amount of the outstanding Voting Securities as
a result of the acquisition of Voting Securities by Tandy
which, by reducing the number of Voting Securities
outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Person, provided that if a
--------
Change in Control would occur (but for the operation of this
sentence) as a result of acquisition of Voting Securities by
Tandy, and after such share acquisition by Tandy, the Subject
Person becomes the Beneficial Owner of any additional Voting
Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall occur.
C. Notwithstanding any provision contained in the
Program to the contrary, no provision of this Article XXII
may be amended at any time.
D. Notwithstanding any provision contained in the
Program to the contrary, the provisions of this Article XXII
shall be binding upon Tandy and its successors and assigns.
E. Notwithstanding any provision contained in the
Program to the contrary, the provisions of this Article XXII
shall be deemed severable and the validity or
unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.
F. The provisions of this Article XXII shall govern
notwithstanding anything contained in the Program to the
contrary.
IN WITNESS WHEREOF, Tandy and the Trustee have caused
this Agreement to be executed by their duly appointed
officers and their corporate seals to be hereunto affixed as
of the date first written above.
ATTEST: TANDY CORPORATION
/s/ Jana Freundlich By /s/ Richard L. Ramsey
----------------------- -----------------------
Jana Freundlich Richard L. Ramsey
Assistant Secretary Vice President and
Controller
(SEAL)
ATTEST: BANK ONE, TEXAS, NA
/s/ Konnie Darrow By /s/ J. C. White
------------------ --------------------
Name: Konnie Darrow Name: J. C. White
-------------- --------------
Vice President and Vice President
and Trust Officer and Trust
Officer
(SEAL)
EXHIBIT 10p
INDEMNITY AGREEMENT
AGREEMENT, as of December 1, 1995, (the "Agreement"),
between Tandy Corporation, a Delaware corporation (the
"Company"), and
_______________ (the "Indemnitee").
WHEREAS, it is essential to the Company to retain and
attract as directors, officers and employees the most capable
persons available;
WHEREAS, both the Company and Indemnitee recognize the
increased risk of litigation and other claims being asserted
against directors, officers and employees of public companies
in today's environment;
WHEREAS, the Bylaws of the Company require the Company to
indemnify its directors, officers and employees to the
fullest extent permitted by law;
WHEREAS, the Bylaws of the Company require the Company to
advance expenses to its directors and officers to the fullest
extent permitted by law, and permit the Company to advance
expenses to employees and others by agreement;
WHEREAS, the Indemnitee has been serving and continues to
serve as a director, officer or employee of the Company in
part in reliance on such Bylaws;
WHEREAS, in recognition of Indemnitee's need for
substantial protection against personal liability in order to
enhance Indemnitee's continued service to the Company in an
effective manner and Indemnitee's reliance on the aforesaid
Bylaws, and in part to provide Indemnitee with specific
contractual assurance that the protection promised by such
Bylaws will be available to Indemnitee (regardless of, among
other things, any amendment to or revocation of such Bylaws
or any change in the composition of the Company's Board of
Directors or acquisition transaction relating to the
Company), the Company wishes to provide in this Agreement for
the indemnification of and the advancing of expenses to
Indemnitee to the fullest extent permitted by law and as set
forth in this Agreement, and, to the extent insurance is
maintained, for the continued coverage of Indemnitee under
the Company's directors' and officers' liability insurance
policies;
NOW, THEREFORE, in consideration of the premises and of
Indemnitee continuing to serve the Company directly or, at
its request, with another enterprise, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Certain Definitions:
-------------------
(a) Change in Control: For purposes of this
-----------------
Agreement, a"Change in Control" shall mean any
of the following events:
(i) An acquisition (other than directly
from the Company) of any voting
securities of the Company (the "Voting
Securities") by any "Person" [as the
term person is used for purposes of
Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the
"1934 Act")] immediately after which such
Person has "Beneficial Ownership" (within
the meaning of Rule 13d-3 promulgated
under the 1934 Act) of fifteen percent
(15%) or more of the combined voting
power of the Company's then outstanding
Voting Securities; provided, however,
------------------
that in determining whether a Change in
Control has occurred, Voting Securities
which are acquired in a "Non-Control
Acquisition" (as hereinafter defined)
shall not constitute an acquisition
which would cause a Change in Control.
A "Non- Control Acquisition" shall mean
an acquisition by (1) an employee benefit
plan (or a trust forming a part thereof)
maintained by (x) the Company or (y) any
corporation or other person of which a
majority of its voting power or its
equity securities or equity interest is
owned directly or indirectly by the
Company (a "Subsidiary"), (2) the Company
or any Subsidiary, or (3) any Person in
connection with a "Non-Control
Transaction" (as hereinafter defined).
(ii) The individuals who, as of November
20, 1995, are members of the Board (the
"Incumbent Board") cease for any reason
to constitute at least two-thirds of the
Board; provided, however, that if the
--------- -------
election, or nomination for election by
the Company's stockholders, of any new
director was approved by a vote of at
least two-thirds of the Incumbent Board,
such new director shall, for purposes of
this Agreement, be considered as a member
of the Incumbent Board; provided further,
however, that no individual shall be
considered a member of the Incumbent
Board if such individual initially
assumed office as a result of either an
actual or threatened "Election Contest"
(as described in Rule 14a-11 promulgated
under the 1934 Act) or other actual or
threatened solicitation of proxies or
consents by or on behalf of a Person
other than the Board (a "Proxy Contest")
including by reason of any agreement
intended to avoid or settle any Election
Contest or Proxy Contest; or
(iii) Approval by stockholders of the Company
of:
(A) a merger or consolidation
involving the Company unless
(1) the stockholders of the
Company, immediately before
such merger, consolidation or
reorganization, own, directly
or indirectly immediately
following such merger,
consolidation or
reorganization, at least sixty
percent (60%) of the combined
voting power of the outstanding
voting securities of the
corporation resulting from such
merger or consolidation or
reorganization (the "Surviving
Corporation") in substantially
the same proportion as their
ownership of the Voting
Securities immediately before
such merger, consolidation or
reorganization,
(2) The individuals who were
members of the Incumbent Board
immediately prior to the
execution of the agreement
providing for such merger,
consolidation or reorganization
constitute at least two-thirds
of the members of the board of
directors of the Surviving
Corporation,
(3) no Person (other than the
Company, any Subsidiary, any
employee benefit plan (or any
trust forming a part thereof)
maintained by the Company, the
Surviving Corporation or any
Subsidiary, or any Person who,
immediately prior to such
merger, consolidation or
reorganization had Beneficial
Ownership of fifteen percent
(15%) or more of the then
outstanding Voting Securities)
has Beneficial Ownership of
fifteen percent (15%) or more
of the combined voting power of
the Surviving Corporation's
then outstanding voting
securities, and
(4) a transaction described in
clauses (1) through (3) shall
herein be referred to as a
"Non-Control Transaction;"
(B) A complete liquidation or
dissolution of the Company; or
(C) An agreement for the sale or
other disposition of all or
substantially all of the assets of
the Company to any Person (other
than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in
Control shall not be deemed to occur solely
because any Person (the "Subject Person")
acquired Beneficial Ownership of more than the
permitted amount of the outstanding Voting
Securities as a result of the acquisition of
Voting Securities by the Company which, by
reducing the number of Voting Securities
outstanding, increases the proportional number
of shares Beneficially Owned by the Subject
Person, provided that is a Change in Control
would occur (but for the operation of this
sentence) as a result of the acquisition of
Voting Securities by the Company, and after
such share acquisition by the Company, the
Subject Person becomes the Beneficial Owner of
any additional Voting Securities which
increases the percentage of the then
outstanding Voting Securities Beneficially
Owned by the Subject Person, then
a Change in Control shall occur.
(b) Claim: any threatened, pending or
-----
completed action, suit or proceeding, whether
civil, criminal, administrative or investigative
or other, including, without limitation, an
action by or in the right of any other
corporation of any type or kind, domestic or
foreign, or any partnership, joint venture,
trust, employee benefit plan or other
enterprise, whether predicated on foreign,
federal, state or local law and whether formal
or informal.
(c) Expenses: include attorney's fees and
--------
all other costs, charges and expenses paid or
incurred in connection with investigating,
defending, being a witness in or participating
in (including on appeal), or preparing to
defend, be a witness in or participate in any
Claim relating to any Indemnifiable Event.
(d) Indemnifiable Event: any event or
-------------------
occurrence related to the fact that Indemnitee
is or was or has agreed to become a director,
officer, employee, agent or fiduciary of the
Company, or is or was serving or has agreed to
serve in any capacity, at the request of the
Company, in any other corporation, partnership,
joint venture, employee benefit plan, trust or
other enterprise, or by reason of anything done
or not done by Indemnitee in any such capacity.
(e) Potential Change of Control: shall be
---------------------------
deemed to have occurred if (i) the Company
enters into an agreement or arrangement, the
consummation of which would result in the
occurrence of a Change in control; or (ii) the
Board adopts a resolution to the effect that,
for purposes of this Agreement, a Potential
Change in control has occurred.
(f) Voting Securities: any securities of
-----------------
the Company which vote generally in the election
of directors.
2. Basic Indemnification Arrangement:
---------------------------------
(a) In the event Indemnitee was, is or
becomes a party to or witness or other
participant in, or is threatened to be made a
party to or witness or other participant in, a
Claim by reason of (or arising in part out of)
an Indemnifiable Event, the Company shall
indemnify Indemnitee (without regard to the
negligence or other fault of the Indemnitee) to
the fullest extent permitted by applicable law,
as soon as practicable but in no event later
than thirty days after written demand is
presented to the Company, against any and all
Expenses, judgments, fines, penalties, excise
taxes and amounts paid or to be paid in
settlement (including all interest, assessments
and other charges paid or payable in connection
with or in respect of such Expenses, judgments,
fines, penalties, excise taxes or amounts paid
or to be paid in settlement) of such Claim. If
Indemnitee makes a request to be indemnified
under this Agreement, the Board of Directors
(acting by a quorum consisting of directors who
are not parties to the Claim with respect to an
Indemnifiable Event or, if such a quorum is not
obtainable, acting upon an opinion in writing of
independent legal counsel ("Board Action")
shall, as soon as practicable but in no event
later than thirty days after such request,
authorize such indemnification. Notwithstanding
anything in the Restated Certificate of
Incorporation of the Company (the "Certificate
of Incorporation"), the Bylaws of the Company or
this Agreement to the contrary, following a
Change in Control, Indemnitee shall, unless
prohibited by law, be entitled to
indemnification pursuant to this Agreement in
connection with any Claim initiated by
Indemnitee.
(b) Notwithstanding anything in the
Certificate of Incorporation, the Bylaws or this
Agreement to the contrary, if so requested by
Indemnitee, the Company shall advance (within
two business days of such request) any and all
Expenses relating to a Claim to Indemnitee (an
"Expense Advance"), upon the receipt of a
written undertaking by or on behalf of
Indemnitee to repay such Expense Advance if a
judgment or other final adjudication adverse to
Indemnitee (as to which all rights or appeal
therefrom have been exhausted or lapsed)
establishes that Indemnitee, with respect to
such Claim, is not eligible for indemnification.
(c) Notwithstanding anything in the
Certificate of Incorporation, the Bylaws or this
Agreement to the contrary, if Indemnitee has
commenced legal proceedings in a court of
competent jurisdiction to secure a determination
that Indemnitee should be indemnified under this
Agreement, the Bylaws of the Company or
applicable law, any Board Action or Arbitration
(as defined in Section 3) that Indemnitee would
not be permitted to be indemnified in accordance
with Section 2(a) of this Agreement shall not be
binding. If there has been no Board Action or
Arbitration, or if Board Action or Arbitration
determines that Indemnitee would not be
permitted to be indemnified, in any respect, in
whole or in part, in accordance with Section
2(a) of this Agreement, Indemnitee shall have
the right to commence litigation in the court
which is hearing the action or proceeding
relating to the Claim for which indemnification
is sought or in any court in the States of
Delaware or Texas having subject matter
jurisdiction thereof and in which venue is
proper seeking an initial determination by the
court or challenging any such Board Action or
Arbitration or any aspect thereof, and the
Company thereby consents to service of process
and to appear in any such proceeding. Any Board
Action not followed by Arbitration or such
litigation, and any Arbitration not followed by
such litigation, shall be conclusive and binding
on the Company and Indemnitee.
3. Change in Control. The Company agrees that if
-----------------
there is a Change in Control, Indemnitee, by giving
written notice to the Company and the American
Arbitration Association (the "Notice"), may require
that any controversy or claim arising out of or
relating to this Agreement, or the breach thereof,
shall be settled by arbitration (the "Arbitration"),
in Fort Worth, Texas, in accordance with the Rules of
the American Arbitration Association (the "Rules").
The Arbitration shall be conducted by a panel of
three arbitrators selected in accordance with the
Rules within thirty days of delivery of the Notice.
The decision of the panel shall be made as soon as
practicable after the panel has been selected, and
the parties agree to use their reasonable efforts to
cause the panel to deliver its decision within ninety
days of its selection. The Company shall pay all
fees and expenses of the Arbitration. The
Arbitration shall be conclusive and binding on the
Company and Indemnitee, and Indemnitee may cause
judgment upon the award rendered by the arbitrators
to be entered in any court having jurisdiction
thereof; provided, however, that any Arbitration
shall have no effect on Indemnitee's right to
commence litigation pursuant to Section 2(c) of this
Agreement, in which case, such Arbitration shall not
be conclusive and binding on Indemnitee or the
Company.
4. Establishment of Trust. In the event of a
----------------------
Potential Change in Control or a Change in Control,
the Company shall, promptly upon written request by
Indemnitee, create a Trust for the benefit of
Indemnitee and from time to time, upon written
request of Indemnitee to the Company, shall fund such
Trust in an amount, as set forth in such request,
sufficient to satisfy any and all Expenses reasonably
anticipated at the time of each such request to be
incurred in connection with investigating, preparing
for and defending any claim relating to an
Indemnifiable Event, and any and all judgements,
fines, penalties and settlement amounts of any and
all claims relating to an Indemnifiable Event from
time to time actually paid or claimed, reasonably
anticipated or proposed to be paid. The terms of the
Trust shall provide that upon a Change in Control (i)
the Trust shall not be revoked or the principal
thereof invaded, without the written consent of
Indemnitee; (ii) the Trustee shall advance, within
two business days of a request by Indemnitee, any and
all Expenses to Indemnitee, not advanced directly by
the Company to Indemnitee (and Indemnitee hereby
agrees to reimburse the Trust under the circumstances
under which Indemnitee would be required to reimburse
the Company under Section 2(b) of this Agreement);
(iii) the Trust shall continue be to funded by the
Company in accordance with the funding obligation set
forth above; (iv) the Trustee shall promptly pay to
Indemnitee all amounts for which Indemnitee shall be
entitled to indemnification pursuant to this
Agreement or otherwise; and (v) all unexpended funds
in such Trust shall revert to the Company upon a
final determination by Board Action or Arbitration or
a court of competent jurisdiction, as the case may
be, that Indemnitee has been fully indemnified under
the terms of this Agreement. The Trustee shall be
chosen by Indemnitee. Nothing in this Section 4
shall relieve the Company of any of its obligations
under this Agreement.
5. Indemnification for Additional Expenses. The
---------------------------------------
Company shall indemnify Indemnitee against any and
all expenses (including attorney's fees) and, if
requested by Indemnitee, shall (within two business
days of such request) advance such expenses to
Indemnitee, which are incurred by Indemnitee in
connection with any claim asserted by or action
brought by Indemnitee for (i) indemnification or
advance payment of Expenses by the Company under this
Agreement or any other agreement or Company Bylaw now
or hereafter in effect relating to Claims for
Indemnifiable Events and/or (ii) recovery under any
directors' and officers' liability insurance policies
maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to
such indemnification, advance expense payment or
insurance recovery, as the case may be.
6. Partial Indemnity, Etc. If Indemnitee is
----------------------
entitled, under any provisions of this Agreement to
indemnification by the Company for some or a portion
of the Expenses, judgements, fines, penalties, excise
taxes and amounts paid or to be paid in settlement of
a Claim but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify
Indemnitee for the portion thereof to which
Indemnitee is entitled. Moreover, notwithstanding
any other provision of this Agreement, to the extent
that Indemnitee has been successful on the merits or
otherwise in defense of any or all Claims relating in
whole or in part to an Indemnifiable Event or in
defense of any issue or matter therein, including,
without limitation, dismissal without prejudice,
Indemnitee shall be indemnified against any and all
Expenses, judgments, fines, penalties, excise taxes
and amounts paid or to be paid in settlement of such
Claim. In connection with any determination by Board
Action, Arbitration or a court of competent
jurisdiction that Indemnitee is not entitled to be
indemnified hereunder, the burden of proof shall be
on the Company to establish that Indemnitee is not so
entitled.
7. No Presumption. For purposes of this Agreement,
--------------
the termination of any claim, action, suit or
proceeding, by judgment, order, settlement (whether
with or without court approval) or conviction, or
upon a plea of nolo contendere, or its equivalent,
shall not create a presumption that Indemnitee did
not meet any particular standard of conduct or have
any particular belief or that a court has determined
that indemnification is not permitted by applicable
law or this Agreement.
8. Contribution. In the event that the
------------
indemnification provided for in this Agreement is
unavailable to Indemnitee for any reason whatsoever,
the Company, in lieu of indemnifying Indemnitee,
shall contribute to the amount incurred by
Indemnitee, whether for judgments, fines, penalties,
excise taxes, amounts paid or to be paid in
settlement and/or for Expenses, in connection
with any Claim relating to an Indemnifiable Event, in
such proportion as is deemed fair and reasonable in
light of all of the circumstances of such action by
Board Action or Arbitration or by the court before
which such action was brought in order to reflect (i)
the relative benefits received by the Company and
Indemnitee as a result of the event(s) and/or
transactions(s) giving cause to such action; and/or
(ii) the relative fault of the Company (and its other
directors, officers, employees and agents) and
Indemnitee in connection with such event(s) and/or
transaction(s). Indemnitee's right to contribution
under this Paragraph 8 shall be determined in
accordance with, pursuant to and in the same manner
as, the provisions in Paragraphs 2 and 3 hereof
relating to Indemnitee's right to indemnification
under this Agreement.
9. Notice to the Company by Indemnitee. Indemnitee
-----------------------------------
agrees to promptly notify the Company in writing upon
being served with or having actual knowledge of any
citation, summons, complaint, indictment or any other
similar document relating to any action which may
result in a claim of indemnification or contribution
hereunder.
10. Non-exclusivity, Etc. The rights of the
--------------------
Indemnitee hereunder shall be in addition to any
other rights Indemnitee may have under the Company's
Certificate of Incorporation or Bylaws or the
Delaware General Corporation Law or otherwise, and
nothing herein shall be deemed to diminish or
otherwise restrict Indemnitee's right to
indemnification under any such other provision. To
the extent applicable law or the Certificate of
Incorporation or the Bylaws of Company, as in effect
on the date hereof or at any time in the future,
permit greater indemnification than as provided for
in this Agreement, the parties hereto agree that
Indemnitee shall enjoy by this Agreement the greater
benefits so afforded by such law or provision of the
Certificate of Incorporation or Bylaws and this
Agreement shall be deemed amended without any further
action by the Company or Indemnitee to grant such
greater benefits. Indemnitee may elect to have
Indemnitee's rights hereunder interpreted on the
basis of applicable law in effect at the time of
execution of this Agreement, at the time of the
occurrence of the Indemnifiable Event giving rise to
a Claim or at the time indemnification is sought.
11. Liability Insurance. To the extent the Company
-------------------
maintains at any time an insurance policy or policies
providing directors' and officers' liability
insurance, Indemnitee shall be covered by such policy
or policies, in accordance with its or their terms,
to the maximum extent of the coverage available for
any other Company director or officer under such
insurance policy. The purchase and maintenance of
such insurance shall not in any way limit or affect
the rights and obligations of the parties hereto, and
the execution and delivery of this Agreement shall
not in any way be construed to limit or affect the
rights and obligations of the Company and/or of the
other parties under any such insurance policy.
12. Period of Limitations. No legal action shall be
---------------------
brought and no cause of action shall be asserted by
or on behalf of the Company or any affiliate of the
Company against Indemnitee, Indemnitee's spouse,
heirs, executors or personal or legal representatives
after the expiration of two years from the date of
accrual of such cause of action, and any claim or
cause of action of the Company or its affiliate shall
be extinguished and deemed released unless asserted
by the timely filing of a legal action within such
two-year period; provided, however, that if any
-------- -------
shorter period of limitations is otherwise applicable
to any such cause of action such shorter period shall
govern.
13. Amendments, Etc. No supplement, modification or
----------------
amendment of this Agreement shall be binding unless
executed in writing by both of the parties hereto.
No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any
other provisions hereof (whether or not similar) nor
shall such waiver constitute a continuing waiver.
14. Subrogation. In the event of payment under this
-----------
Agreement, the Company shall be subrogated to the
extent of such payment to all of the rights of
recovery with respect to such payment of Indemnitee,
who shall execute all papers required and shall do
everything that may be necessary to secure such
rights, including the execution of such documents
necessary to enable the Company effectively to bring
suit to enforce such rights.
15. No-Duplication of Payments. The Company shall
--------------------------
not be liable under this Agreement to make any
payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise
actually received payment (under any insurance
policy, Bylaw or otherwise) of the amounts otherwise
indemnifiable hereunder.
16. Binding Effect, Etc. This Agreement shall be
--------------------
binding upon and inure to the benefit of and be
enforceable against and by the parties hereto and
their respective successors, assigns (including any
direct or indirect successor by purchase, merger,
consolidation or otherwise to all of substantially
all of the business and/or assets of the Company),
spouses, heirs and personal and legal
representatives. The Company shall require and cause
any successor (whether direct or indirect by
purchase, merger, consolidation or otherwise) to all,
substantially all, or a substantial part of the
business and/or assets of the Company, by written
agreement in form and substance satisfactory to
Indemnitee, expressly to assume and agree to perform
this Agreement in the same manner and to the same
extent that the Company would be required to perform
if no such succession had taken place. This
Agreement shall continue in effect regardless of
whether Indemnitee continues to serve as a director
and/or officer of the Company or of any other
enterprise at the Company's request.
17. Severability. The provisions of this Agreement
------------
shall be severable in the event that any of the
provisions thereof (including any provision within a
single section, paragraph or sentence) are held by a
court of competent jurisdiction to be invalid, void
or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest
extent permitted by law.
18. Notices. All notices, requests, demands and
-------
other communications required or permitted hereunder
shall be in writing and shall be deemed to have been
duly given when delivered by hand or when mailed by
certified registered mail, return receipt requested,
with postage prepaid:
A. If to Indemnitee, to:
_______________
_____________________
________________________
or to such other person or address which
Indemnitee shall furnish to the Company in
writing pursuant to the above.
B. If to the Company, to:
Tandy Corporation
1900 One Tandy Center
Fort Worth, Texas 76102
Attention: Corporate Secretary
or to such person or address as the
Company shall furnish to Indemnitee in
writing pursuant to the above.
19. Governing Law. This Agreement shall be governed
-------------
by and construed and enforced in accordance with the
laws of the State of Delaware applicable to contracts
made and to be performed in such State without giving
effect to the principles of conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have duly executed
and delivered this Agreement as of the 1st day of December,
1995.
TANDY CORPORATION
By:
-----------------------
John V. Roach
Chairman of the Board
and Chief Executive
Officer
-------------------------
[ Name], Indemnitee
TANDY CORPORATION EXHIBIT 11
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
Year Ended
December 31,
-------------------------------------
(In thousands, except per share amounts) 1995 1994 1993
--------------------------------------------------------------------------------------------------
Primary Earnings Per Share
Reconciliation of net income per statements of income to
amounts used in computation of primary earnings per share:
Net income, as reported $ 211,974 $ 224,335 $ 96,849
Less dividends on preferred stock:
Series B (6,537) (6,777) (7,136)
--------- --------- ---------
Net income available to common
shareholders for primary earnings per share $ 205,437 $ 217,558 $ 89,713
========= ========= =========
Weighted average number of common shares outstanding 63,214 62,769 63,582
Weighted average number of $2.14 depositary shares,
representing Series C preferred stock, treated as
common stock due to mandatory conversion (b) 2,201 11,816 11,816
Weighted average number of common shares issuable
under stock option plans, net of assumed treasury stock
repurchases at average market prices 513 289 145
--------- --------- ---------
Weighted average number of common and common
equivalent shares outstanding 65,928 74,874 75,543
========= ========= =========
Net income available per average
common and common equivalent share $ 3.12 $ 2.91 $ 1.19
========= ========= =========
Fully Diluted Earnings Per Share (a)
Reconciliation of net income per statements of income to
amounts used in computation of fully diluted earnings per share:
Net income available to common shareholders $ 205,437 $ 217,558 $ 89,713
Adjustments for assumed conversion of Series B
preferred stock to common stock as of the
beginning of the period:
Plus dividends on Series B preferred stock 6,537 6,777 (c)
Less additional contribution that would have been
required for the TESOP if Series B preferred
stock had been converted (3,732) (3,874) (c)
--------- --------- ---------
Net income available per common and
common equivalent share, as adjusted $ 208,242 $ 220,461 $ 89,713
========= ========= =========
Reconciliation of weighted average number of shares outstanding
to amount used in computation of fully diluted earnings per share:
Weighted average number of shares outstanding 65,928 74,874 75,543
Adjusted to reflect assumed exercise of stock
options as of the beginning of the period (c) 95 223
Adjustment to reflect assumed conversion of Series B
preferred stock to common stock as of the beginning
of the period 1,907 1,990 (c)
--------- --------- ---------
Weighted average number of common and common
equivalent shares outstanding, as adjusted 67,835 76,959 75,766
========= ========= =========
Fully diluted net income available per average
common and common equivalent share $ 3.07 $ 2.86 $ 1.18
========= ========= =========
(a) This calculation is submitted in accordance with Regulation S-K, Item 601(b)(11) although not required by
footnote 2 to paragraph 14 of APB Opinion No. 15 because it results in dilution of less than 3%.
(b) The amount in 1995 represents the pro rata portion of the Series C preferred stock outstanding prior to their
conversion effective March 10, 1995.
(c) For the years ended December 31, 1995 and 1993, these items are antidilutive and thus are omitted from the calculation.
EXHIBIT 12
TANDY CORPORATION
STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS (1)
Six Months
Ended (1)
(In thousands, except per Year Ended December 31, December 31, Year Ended June 30,
--------------------------------- --------- ---------------------
share amounts) 1995 1994 1993 1992 1992 1991
--------------------------------------------------------------------------------------------------------------
Ratio of Earnings to Fixed Charges:
Income from continuing operations $ 211,974 $ 224,335 $ 195,632 $ 67,681 $ 210,713 $ 219,935
Plus provision for income taxes 131,299 135,205 115,523 35,236 119,785 123,342
--------- --------- --------- --------- --------- ---------
Income before income taxes 343,273 359,540 311,155 102,917 330,498 343,277
--------- --------- --------- --------- --------- ---------
Fixed charges:
Interest expense and amortization
of debt discount 33,706 30,047 39,707 20,532 43,154 70,313
Amortization of issuance expense 259 261 409 591 563 400
Appropriate portion (33 1/3%) of rentals 72,527 70,800 67,467 35,109 68,224 63,980
--------- --------- --------- --------- --------- ---------
Total fixed charges 106,492 101,108 107,583 56,232 111,941 134,693
--------- --------- --------- --------- --------- ---------
Earnings before income taxes and
fixed charges $ 449,765 $ 460,648 $ 418,738 $ 159,149 $ 442,439 $ 477,970
========= ========= ========= ========= ========= =========
Ratio of earnings to fixed charges 4.22 4.56 3.89 2.83 3.95 3.55
========= ========= ========= ========= ========= =========
Ratio of Earnings to Fixed Charges
and Preferred Dividends:
Total fixed charges, as above $ 106,492 $ 101,108 $ 107,583 $ 56,232 $ 111,941 $ 134,693
Preferred dividends 11,361 38,877 36,738 18,469 20,014 6,875
--------- --------- --------- --------- --------- ---------
Total fixed charges and preferred
dividends $ 117,853 $ 139,985 $ 144,321 $ 74,701 $ 131,955 $ 141,568
========= ========= ========= ========= ========= =========
Earnings before income taxes, fixed
charges and preferred dividends $ 449,765 $ 460,648 $ 418,738 $ 159,149 $ 442,439 $ 477,970
========= ========= ========= ========= ========= =========
Ratio of earnings to fixed charges and
preferred dividends 3.82 3.29 2.90 2.13 3.35 3.38
========= ========= ========= ========= ========= =========
(1) The computation of Ratio of Earnings to Fixed Charges and Ratio
of Earnings to Fixed Charges and Preferred Dividends excludes
results of operations from discontinued operations and fixed
charges relating to these same operations.
TANDY CORPORATION
EXHIBIT 21
SUBSIDIARIES
The largest subsidiaries of the Company are:
State of Incorporation
----------------------
Technology Properties, Inc. Delaware
Trans World Electronics, Inc. Texas
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 Prospectuses constituting part of the
Registration Statements on Form S-3 (Registration
No. 33-37970) of Tandy Corporation and to the
incorporation by reference in the Registration
Statements on Form S-8 (Registration Nos. 33-23178,
33-41523, 33-51019, 33-51599 and 33-51603) of our
report dated February 20, 1996, appearing on page
31 in this Annual Report on Form 10-K.
/s/ Price Waterhouse LLP
--------------------------
PRICE WATERHOUSE LLP
Fort Worth, Texas
March 28, 1996