INTERTAN INC, 10-K, 1997-09-26

INTERTAN INC
10-K, 1997-09-26
RADIO, TV & CONSUMER ELECTRONICS STORES

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 30, 1997
-------------

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from _______________to ___________________

Commission file number 1-10062
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InterTAN, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Delaware 75-2130875
- ----------------------------------------- ----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

201 Main Street, Suite 1805
Fort Worth, Texas 76102
- ----------------------------------------- ----------------------------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: 817-348-9701
----------------------------
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 $1.00 per share* New York Stock Exchange
(*Includes related preferred stock purchase rights)

Securities registered pursuant of Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---

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 the 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. ( X )

The aggregate market value of the voting stock held by non-affiliates
of the registrant as of September 15, 1997 was $68,302,370 based on the New York
Stock Exchange closing price on such date.

As of September 15, 1997 there were 12,009,208 shares of the
registrant's Common Stock outstanding.

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DOCUMENTS INCORPORATED BY REFERENCE

Portions of the 1997 Annual Report to Stockholders are attached as
Exhibit 13 to this Annual Report on Form 10-K and are incorporated by reference
into Parts I, II and IV. Portions of the definitive Proxy Statement for the
1997 Annual Meeting of Stockholders are incorporated by reference into Part III.
With the exception of those portions which are incorporated by reference in this
Annual Report on Form 10-K, the 1997 Annual Report to Stockholders and the
definitive 1997 Proxy Statement are not to be deemed incorporated into or filed
as part of this Report.

PART I
Item 1. BUSINESS.

InterTAN, Inc. ("InterTAN" or the "Company") was incorporated in the
State of Delaware in June 1986 in order to receive from Tandy Corporation
("Tandy") the assets and businesses of its foreign retail operations, conducted
in Canada under the "RadioShack" trade name, in Australia under the "Tandy
Electronics" trade name and in the United Kingdom and Europe under the "Tandy"
trade name. Following the transfer of assets, on January 16, 1987 Tandy
distributed shares of InterTAN common stock to the Tandy stockholders in a tax-
free distribution on the basis of one InterTAN share for every ten Tandy shares
held. Thus Tandy effected a spin-off and divestiture of these foreign retail
operations and its then ownership interest in InterTAN and its operations,
thereby constituting InterTAN as an independent public corporation. The
Company's operations in continental Europe were closed during fiscal year 1994.

FACTORS THAT COULD AFFECT FUTURE PERFORMANCE

This report contains certain forward-looking statements about the
business and financial condition of InterTAN, including various statements
contained in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" herein below. The forward-looking statements are
reasonably based on current assumptions regarding important risk factors.
Accordingly, actual results may vary significantly from those expressed in the
forward-looking statements, and the inclusion of such statements should not be
regarded as a representation by the Company or any other person that the
anticipated results expressed therein will be achieved. The following
information sets forth certain factors that could cause the actual results to
differ materially from those contained in the forward-looking statements.

RELIANCE ON TANDY RELATIONSHIP. Tandy, including certain of its
affiliates, is the Company's principal supplier, is the licensor of the
Company's principal trade names, and is a secured creditor of the Company.
Maintaining its contractual relationships, particularly the supply and license
arrangements, with Tandy is critical to the Company. The loss of such
relationships with Tandy would have a material adverse effect on the Company.
See "Business - Suppliers", "- Merchandise, License and Advertising Agreements"
and Note 3 to the Notes to Consolidated Financial Statements contained in
InterTAN's 1997 Annual Report to Stockholders.

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QUARTERLY VARIATIONS; SEASONALITY. The Company's quarterly results of
operations may fluctuate significantly as the result of the timing of the
opening of, and the amount of net sales contributed by, new stores and the
timing of costs associated with the selection, leasing, construction and opening
of new stores, as well as seasonal factors, product introductions and changes in
product mix. In addition, sales can be affected as a result of store closures.
The Company's business is seasonal, with sales and earnings being relatively
lower during the fiscal quarters other than the second fiscal quarter which
includes the Christmas selling season. Adverse business and economic conditions
during this period may adversely affect results of operations. In addition,
excluding the effects of new store openings, the Company's inventories and
related short-term financing needs are seasonal, with the greatest requirements
occurring during its second fiscal quarter. The Company's financial results for
a particular quarter may not be indicative of results for an entire year and the
Company's revenues and/or expenses will vary from quarter to quarter. The
Company's operating results may also be affected by changes in global economic
conditions in the markets where its stores are located, as well as by weather
and other natural conditions. See "Business -Other - Seasonality" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

COMPETITION. The retailing industry in which the Company operates is
highly competitive. Products substantially similar to those sold through the
Company's retail outlets are sold by many other retail stores, including
department and discount stores, consumer electronics chains and computer
outlets. The nature and extent of competition differs from store to store and
also from product line to product line. Certain of the Company's competitors
are larger, have a higher degree of market recognition and have greater
resources, financial or otherwise, than the Company.

The Company believes that the major competitive factors in its
businesses include customer service, store location, product availability and
selection, price, technical support, and marketing and sales capabilities. The
Company's utilization of trained personnel and the ability to use national and
local advertising media in each country in which it operates are important to
the Company's ability to compete in its businesses. Given the highly
competitive nature of the retail industry, no assurances can be given that the
Company will continue to compete successfully with respect to the above-
referenced factors. See "Business - Geographic Analysis."

PRODUCT SUPPLY. The Company's merchandise strategy places heavy
emphasis on private label products. These products are typically sourced for
the Company in the Far East and manufactured to the Company's order and
specification. Consequently, private label products require larger minimum
order quantities and longer lead times than nationally branded product which is
generally available locally on reasonably short notice. There can be no
assurance that the Company will be able to arrange for the production of private
label goods to the level required to meet its merchandising objectives. The
private label goods being sourced by the Company in the Far East are also
typically purchased by Tandy and are therefore manufactured to North American
standards. These products are, with minor, and in many cases no, modifications,
suitable for sale in Canada. However, the Company's Australian and U.K.
operations require products using voltage and other specifications which differ
from North American standards. There can be no assurance that vendors will
agree to manufacture products to these specifications in quantities that are
affordable to the Company. Delays in the timing of arrival of goods from the
Far East could also have an adverse impact on the Company's business,
particularly delays during the Christmas selling season. See "Business -
Business Strategy" and "- Products."

DEPENDENCE ON PRODUCT DEVELOPMENT. The Company's operating results
are, and will continue to be, subject in part to the introduction and acceptance
of new products in the consumer electronics industry. Fluctuations in consumer
demand, which could be caused by lack of successful product development, delays
in product introductions, product related difficulties or lack of consumer

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acceptance, could adversely affect the growth rate of sales of products and
services and could adversely affect the Company's operating results. The
Company's operating results are also affected by its ability to anticipate and
quickly respond to the changes taking place in its markets as consumers' needs,
interests and preferences alter with time. There can be no assurance that the
Company will be successful in this regard. See "Business - Products and
Distribution" and "- Business Strategy - Strategic Alliances."

OFFERING ADDITIONAL PRODUCTS AND SERVICES. The Company's strategy,
particularly through certain of its strategic alliances, includes offering
additional communications products and services, which may include, among
others, paging, cable television, home security monitoring and communication,
cellular phone service, local phone service, and Internet access. Entry into
new markets entails risks associated with the state of development of the
market, intense competition from companies already operating in those markets,
potential competition from companies that may have greater financial resources
and experience than the Company, and increased selling and marketing expenses.
There can be no assurance that the Company's products or services will receive
market acceptance in a timely manner, or at all, or that prices and demand in
new markets will be at a level sufficient to provide profitable operations. See
"Business - Products and Distribution" and "- Business Strategy - Strategic
Alliances."

RELIANCE ON STORE LOCATIONS. The Company's success is dependent in
part upon its ability to open and operate new stores on a profitable basis and
to increase sales at existing stores. The Company's performance is also
dependent to a significant degree upon its ability to hire, train and integrate
qualified employees into its operations. The Company plans to open
approximately 10-15 new stores in fiscal 1998. There can be no assurances that
the Company will be able to locate and obtain favorable store sites to meet its
goals, attract and retain competent personnel, open new stores on a timely and
cost-efficient basis or operate the new and existing stores on a profitable
basis. The Company plans to open new stores in existing markets, which may
result in the diversion of sales from existing stores and thus some reduction in
comparable store sales. See "Business" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Net Sales and
Operating Revenues."

NEED FOR ADDITIONAL FINANCING. The Company requires substantial
capital to fund its inventory purchases and store openings and renovations.
Consequently, the Company's ability to grow sales and the future of its
operations will be affected by the availability of financing and the terms
thereof. There can be no assurance that the Company will have access to the
financing necessary to meet its sales growth plans or that such financing will
be available to the Company on favorable terms. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."

POSSIBLE INCOME TAX REASSESSMENTS. The Company is in discussion with
Revenue Canada regarding several issues relating to the Company's spin-off from
Tandy and the Company's former operations in continental Europe. If Revenue
Canada were to prevail in its stated position on these matters, after the
Company had unsuccessfully pursued all rights of appeal, the Company would
likely need to seek additional financing. Depending on the level of
reassessments, the Company may also need to seek additional financing to post
deposits necessary to pursue its rights of appeal. There can be no assurance
that such additional financing would be available. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Income Taxes"
and "- Liquidity and Capital Resources."

MANAGEMENT INFORMATION SYSTEMS. The Company's success is dependent to
a significant degree upon the accuracy and proper utilization of its management
information systems. For example, the

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Company's ability to manage its inventories, accounts receivable, accounts
payable and to price its products appropriately, depends upon the quality and
utilization of the information generated by its management information systems.
In addition, the success of the Company's operations is dependent to a
significant degree upon its management information systems. The failure of the
Company's management information systems to adapt to business needs resulting
from, among other things, expansion of its store base and the further
development of its various businesses, could have a material adverse effect on
the Company. See "Business--Management Information Systems."

VOLATILITY OF STOCK PRICE. The price of the Common Stock may be
subject to significant fluctuations in response to the Company's operating
results, developments in the consumer electronics industry, general market
movements, economic conditions, and other factors. For example, announcements
of fluctuations in the Company's, its vendors' or its competitors' operating
results, and market conditions for growth stocks or retail industry stocks in
general, could have a significant impact on the price of the Common Stock. In
addition, the U.S. stock market in recent years has experienced price and volume
fluctuations in general that may have been unrelated or disproportionate to the
operating performance of individual companies. These fluctuations, as well as
general economic and market conditions, may adversely affect the market price of
the Common Stock and the ability of the Company to access the capital markets,
if necessary, to finance its future operations. See "Market for the
Registrant's Common Equity and Related Stockholder Matters" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources."

CURRENCY FLUCTUATION AND GLOBAL ECONOMIC RISKS. The Company's
financial results are reported in U.S. Dollars. Due to the structure of the
Company's operations, possible periodic fluctuation of local currencies against
the U.S. dollar will have an impact on the Company's financial results. The
Company's subsidiaries conduct business in several foreign currencies;
accordingly, depreciation in the value of those currencies against the U.S.
dollar reduces earnings as reported by the Company in its financial statements.
The Company and its subsidiaries purchased approximately 30% of their inventory
through Tandy in fiscal 1997. These purchases were all made in U.S. dollars and
the products purchased were sold in Canada, the United Kingdom and Australia in
local currencies. Accordingly, exchange rate fluctuations could have a
significant effect on the Company's gross margins. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Results of
Operations." Additionally, certain of the Company's debt instruments are not
denominated in the functional currency of the borrower. "See Management
Discussion & Analysis of Financial Condition and Results of Operations Foreign
Currency Transaction (Gains) Losses".

Currency exchange rates may fluctuate significantly over short periods
of time. Such rates generally are determined by the forces of supply and demand
in the foreign exchange markets and the relative merits of investments in
different countries, actual or perceived changes in interest rates, and other
complex factors, as seen from an international perspective. Currency exchange
rates also can be affected unpredictably by intervention by U.S. or foreign
governments or central banks, or the failure to intervene, or by currency
controls or political developments in the United States or abroad.

Furthermore, due to the nature of the Company's operations, the
operating results of the Company may, from time to time, be generally affected
by global economic and political conditions and such conditions in each
particular country in which the Company operates.

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DESCRIPTION OF BUSINESS

InterTAN is engaged principally in the sale of consumer electronics
products and services through company-operated retail stores and dealer outlets
in Canada, the United Kingdom and Australia. In Canada, the Company also
operates cellular telecommunications stores (the "Cantel Stores") on behalf of
Rogers Cantel Inc. ("Cantel"). See "Geographic Analysis - Canada". The Company
also sells product to direct resellers and end users in certain European
countries where the Company has no company-operated stores or licensed dealers.
InterTAN's ongoing retail operations are conducted through three wholly-owned
subsidiaries; InterTAN Australia Ltd. ("InterTAN Australia"), a New South Wales
corporation which operates in Australia under the trade name "Tandy
Electronics", InterTAN Canada Ltd. ("InterTAN Canada"), an Alberta corporation
which operates in Canada under the trade name "RadioShack", and InterTAN U.K.
Limited ("InterTAN U.K."), an England/Wales corporation which operates in the
United Kingdom under the "Tandy" trade name. As used herein, "InterTAN" or
"Company" sometimes collectively refers to InterTAN, InterTAN Australia,
InterTAN Canada and InterTAN U.K., according to the context.

As at June 30, 1997, InterTAN's company-operated retail stores and
dealers totaled 1,683 consisting of 452 company-operated and 401 dealer stores
in Canada, 341 company-operated and 130 dealer stores in the U.K., and 215
company-operated and 144 dealer stores in Australia. In addition, at June 30,
1997, the Company operated 56 Cantel Stores in Canada. InterTAN's company-
operated retail stores are located primarily in leased premises. The "dealers"
included in the above totals are independent retail businesses which operate
under their own trade names but are permitted, under dealer agreements, to
purchase any of the products sold by company-operated stores. The dealer
agreements contain a sub-license permitting such dealer to designate its
consumer electronics department or business as a "RadioShack Dealer", a "Tandy
Dealer", or a "Tandy Electronics Dealer", as applicable.

EMPLOYEES

As at June 30, 1997 InterTAN employed approximately 4,400 persons.
Approximately 130 of InterTAN Canada's employees are represented by unions.
Those employees are engaged in InterTAN Canada's warehousing and distribution
operations and in the Company's stores in the province of Manitoba.
Approximately 55 of InterTAN Australia's employees are represented by three
separate unions. Approximately 30 of those individuals are employed in
warehousing operations while the balance, who are repair technicians and
security monitoring staff, are represented by separate unions.

PRODUCTS AND DISTRIBUTION

InterTAN's stores carry a broad range of private label and brand name,
moderately priced, quality consumer electronics products. The Company's private
label products are similar, and in many instances identical, to those sold
through Tandy's RadioShack retail stores in the United States. The selection of
products offered for sale is comprehensive ranging from, among other things,
small parts and accessories to large ticket items such as stereo systems and
computers. Types of product include: telephony products, including both
traditional and cellular telephones, pagers, answering machines and fax
machines, personal electronics products, personal computer hardware and
software, batteries, parts and accessories, communications products, audio and
video products and other small electronic items. It is management's view that
the range of products offered by InterTAN is broader than that typically offered
by others in the retail consumer electronics industry. The product line in
InterTAN stores varies from country to country due to product availability,
local laws, regulations and consumer preferences. The trade-marks

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RadioShack, Optimus and Tandy, among others, are used under license from Tandy;
the Company's trade-marked brands include, among others, Genexxa and
Techcessories. See "Merchandise, License and Advertising Agreements - License
Agreements." InterTAN also offers its customers a selection of brand name
products including, among others, Panasonic, AT&T, Compaq, IBM, Sony, Lexmark
and Sanyo (the lack of a /R/, TM or SM is not intended, regarding all of the
names referred to herein above, to indicate a lack of registration therefor).
These brand name products have been selected to complement InterTAN's own
private label lines either as extensions or to offer consumers a choice against
which they may compare the relative capability and value of InterTAN's private
label products. Brand name goods are also used to test new products. Products
substantially similar to those sold through InterTAN's retail outlets are sold
by many other retail stores, including department stores, consumer electronics
chains and computer outlets.

Management believes InterTAN is recognized as the leading retailer of
certain categories of products (e.g., scanners and multi-testers), as being a
primary source for other specific products (e.g., parts and accessories and
telephony) and as having the widest selection in a given category (e.g.,
batteries). These areas of specialty and market leadership typically generate
higher gross margin returns relative to certain of the Company's other product
lines.

1997 SALES BY PRODUCT GROUP
(Rounded to nearest 1%)

Product Group Total
--------------------------------
Parts & Accessories 23%
Audio/Video 18%
Telephony 15%
Computers 13%
Personal Electronics 9%
Communications 5%
Other 17%
--------------------------------
100%
====

InterTAN believes that it has an efficient product distribution system
and efficient store operations systems and procedures. InterTAN has
traditionally focused on effective store operations and has developed
information systems to monitor and control store performance.

The store format typically incorporates the concept of small,
strategically located stores mostly in primary and secondary retailing centers,
and provides the customer with convenience and readily available products to
meet a wide range of consumer electronic needs. InterTAN emphasizes product
knowledge and customer service. Management believes that many customers
perceive store personnel as having superior product knowledge and are,
accordingly, a trusted information resource for consumers. InterTAN also
provides after-sale service for all the products it sells during warranty
periods and beyond. The Company has adapted RadioShack USA's "Repair Shop at
RadioShack" program in each of its three markets. Under this program, the
Company offers out-of-warranty repair service to customers for a wide range of
nationally branded electronic products. The Company's service centers provide
repair capability within a satisfactory turnaround period. The Company has also
introduced RadioShack USA's "RadioShack Unlimited" program in each of its
markets. Through an in-store catalog, customers are offered thousands of unusual
and hard to find items.

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MANAGEMENT INFORMATION SYSTEMS

The Company has a network of point-of-sale terminals in every company-
operated store in each of the three countries in which it operates. Each of the
Company's stores has at least one or more computers which serve as point-of-sale
terminals and are linked to operations headquarters in the particular country.
This information network, referred to as EPOS, provides detailed sales and
margin information on a daily basis, updates InterTAN's customer database and
provides improved financial controls, as well as acting as a monitor of
individual store performance. In Canada and the United Kingdom, EPOS is also
linked directly to a system used to automatically replenish a store's stock as
inventory is sold. These programs are generally store specific and not only
help ensure that stores are stocked with inventory in adequate and appropriate
quantities but also relieve store managers of time consuming stock ordering
duties, leaving them more time to spend with customers and staff. Although not
store specific, a form of automatic replenishment is also used in Australia.

SUPPLIERS

InterTAN acquires approximately 30% of its inventory pursuant to a
merchandise agreement with Tandy and acquires the balance from numerous other
manufacturers located in the United States and in the countries in which
InterTAN has operations. InterTAN uses Tandy's purchasing and export agent, A&A
International, Inc. ("A&A"), a wholly-owned subsidiary of Tandy, as its
exclusive purchasing agent and exporter in the Far East. See "Merchandise,
License and Advertising Agreements - Merchandise Agreement."

InterTAN purchased approximately $93,000,000 of products through Tandy
in fiscal 1997. This amount is exclusive of certain costs normally associated
with cost of goods such as duties, freight and certain taxes. Under its
merchandise arrangements with Tandy, InterTAN may purchase any products which
Tandy has available for sale in its then current RadioShack catalog, or those
products which may otherwise be reasonably available from Tandy or through A&A.
Through its ongoing relationship with Tandy, InterTAN is able to take advantage
of Tandy's sourcing strength to obtain products which management believes
generate gross margins which are higher than industry averages and which offer
enhanced customer value. While the Company from time to time enters into
exclusivity arrangements with certain suppliers (see "Business Strategy -
Strategic Alliances"), InterTAN is not materially dependent on any one supplier
other than Tandy. See "Merchandise, License and Advertising Agreements."

GEOGRAPHIC ANALYSIS

The principal geographic areas of operations for InterTAN are Canada,
Australia and the United Kingdom. InterTAN closed all company-operated outlets
in continental Europe during fiscal year 1994. InterTAN has broader market
coverage than most of its competitors due to the large number of stores in each
country in which it operates. Market coverage is further enhanced by the dealer
networks.

A table appears in Note 13 to the Consolidated Financial Statements
contained in InterTAN's 1997 Annual Report to Stockholders which appears on page
35 of Exhibit 13 to this Annual Report on Form 10-K which shows net sales,
operating profit and identifiable assets of the Company by geographic area for
the three years ended June 30, 1997. This table is incorporated herein by
reference.

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CANADA. As at June 30, 1997, InterTAN Canada operated a total of 452
RadioShack stores in Canada. In addition, a network of dealers accounts for a
further 401 Canadian RadioShack locations. InterTAN Canada uses a form of
contract management program similar to that used in Australia in a small number
of its company-operated stores. See "Geographic Analysis - Australia". The
Company also operated 56 Cantel Stores at June 30, 1997. See "Business Strategy
- -- Strategic Alliances".

The consumer electronics industry in Canada is highly competitive.
The influx of "big box" retailers into the Canadian market, some of them with
origins in the United States, has added additional pressure to an already
competitive marketplace. These conditions were made even more difficult during
fiscal year 1997 by the consumer's resistance to the price levels of the most
recent generation of personal computers and delays in the introduction of
digital cellular products. Further, digital satellite systems, which have made
a positive contribution to retailing results in the United States, were only
introduced in Canada in late fiscal year 1997 due to regulatory restrictions and
supplier constraints. Management believes that InterTAN Canada's range of
products and service orientation differentiate the Company from other consumer
electronics retailers in Canada.

Based on publicly available material, InterTAN believes that the
largest retailers in Canada in fiscal 1997 (other than department stores) which
have a product line similar to, or competitive with, products offered for sale
by InterTAN Canada were:

Approximate No. of Stores:
--------------------------

Future Shop 76
Adventure Electronique 153

InterTAN's other main competitors in Canada are department stores, general
retailers and other consumer electronics retailers.

InterTAN Canada's RadioShack stores are very similar to those operated
by Tandy in the United States. Because of its geographic proximity to the
United States, InterTAN Canada enjoys the benefit of name recognition, and
advertising in general, as many of Tandy's advertising programs penetrate the
border through media such as cable television and print media.

The Company is the market leader in Canada in the number of retail
locations and offers the broadest geographic coverage. InterTAN Canada also
maintains a strong presence in secondary retail markets through its dealer
network.

InterTAN Canada has a broad customer base. Management believes that
the Company is considered the primary place to shop for products and advice in
selected niches such as parts and accessories, telephony and personal
electronics.

UNITED KINGDOM. As at June 30, 1997, InterTAN had 341 company-
operated stores and 130 dealer stores in the United Kingdom, all operating under
the Tandy name. Management has identified InterTAN U.K.'s primary competitors
as:

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Approximate No. of Stores:
--------------------------

Dixons Group* 709
Comet (Kingfisher Group) 356
Argos 394

* Includes stores trading under the banners Dixons, Currys, PC World and The
Link.

Unlike Canada and Australia, the Company's competitors in the United Kingdom
have a broad market share which results in aggressive price and promotion
competition.

Consumer electronics retailing continues to undergo significant changes in
the United Kingdom. More out-of-town superstores are being built, attracting
shoppers from the more traditional downtown or "High Street" locations. While
many of these stores offer a full range of electrical goods, their major
attraction to consumers appears to be for larger purchases such as white goods,
computers and home entertainment. There has also been a continued
rationalization in the High Street with the closure of 200 Powerhouse locations
and the failure of Escom, a computer retailer, and Colourvision, a television
and video retailer. Another competitor, Norweb, sold approximately 70 stores to
Comet. The shift to out-of-town locations, combined with the rationalization
described above, has left basically four competitors in the High Street -
InterTAN U.K., Dixons, Argos and independents. It is management's view that
Dixons is InterTAN's most direct competitor in the United Kingdom.

Management believes that the shift towards out-of-town retailing will
provide the Company with several strategic opportunities to fill the retail gap
left in the High Street. Management believes that certain customer profiles
will continue to shop in High Street locations and there will be continuing
customer demand for products such as portable electronics and accessories from
recognized retailers in those locations.

AUSTRALIA. As at June 30, 1997 InterTAN Australia had 215 company-
operated stores and 144 dealer stores. Of the 215 company-operated retail
stores, 142 are operated under "contract management" arrangements. Under the
contract management arrangement, the store manager is not employed by InterTAN
Australia. InterTAN Australia supplies the store inventory. The store manager
is generally obliged to build up a cash deposit to InterTAN Australia amounting
to up to 50% of the average stock value at the store. The gross profit attained
by the store is split between InterTAN Australia and the contract manager, who
is responsible for paying normal operating expenses such as labor and utility
costs out of his/her share of the gross profits. Out of its share of the gross
profits, InterTAN Australia is responsible for all occupancy related payments
under the relevant store lease and other fixed operating expenses. InterTAN
Australia is committed to providing warranty and service back-up, including
advertising and training. Management believes that the contract management
program is successful in improving margins and reducing costs by better aligning
Company and contract managers profit goals.

While the retailing of household goods in Australia is showing signs
of improvement, performance in this category is still weak in comparison with
other retail sectors, such as recreational goods and food. While many economic
indicators are positive, including interest rates, continued concerns over job
security have caused consumer confidence to remain weak. Further, the entrance
into Australia of category-killer chains has put pressure on both sales and
margins. In prior years, further turmoil was created in the

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marketplace as several of the Company's competitors went through periods of
financial reorganization which resulted in downward pressure on pricing of
certain products.

As the economy in Australia begins to improve, management believes the
Company is positioned to take advantage of the opportunity to increase sales by
building on its market strengths - a large number of convenient sales outlets, a
broad product offering, including many unusual and hard to find items, and a
well-trained, service-oriented sales staff. With 359 company-operated and
dealer locations, InterTAN Australia is Australia's largest consumer electronics
retail chain in number of locations.

Management believes that InterTAN's primary competitors in Australia
are:

Approximate No. of Stores:
--------------------------

Vox 205
Brash 127
Dick Smith 77
Harvey Norman 68

There are few fully independent consumer electronics retailers in Australia
since many of the independently owned electronics retailers are members of large
buying groups such as Betta and Retravision, each having several hundred
members.

BUSINESS STRATEGY

In the early 1990's, the Company had experienced gradually eroding
margins in all three of its markets. Management believes that one of the
factors which contributed to this decline in margins was a shift in the product
mix from higher margin private label products, sourced primarily through Tandy,
to lower margin nationally branded products. In response to this and other
concerns, InterTAN adopted a business strategy to refocus the Company in its
unique market niche and to incorporate many of the new service initiatives
created by Tandy's RadioShack division. As a first step in implementing this
strategy, the Company appointed new management at corporate headquarters and in
the Canadian and United Kingdom subsidiaries. A marketing director was also
added to the Australian subsidiary. These individuals were recruited not only
for their broad-based business skills, but more importantly for their extensive
retail experience. Another early step in the strategy was the relocation of the
Company's corporate headquarters from Canada to Fort Worth, Texas. This action
has better enabled InterTAN to strengthen its strategic relationship with Tandy.

The Company has an agreement with Tandy to enable it to take advantage
of certain marketing and service initiatives introduced by RadioShack USA.
These include the positioning statement "You've got questions. We've got
answers." and the service initiatives: "The Repair Shop at RadioShack";
"RadioShack Express"; and "RadioShack Unlimited". See "Merchandise, License and
Advertising Agreements - Advertising Agreement." Being located in Fort Worth
has better enabled the Company to maximize the benefits of these new
initiatives. The key elements of InterTAN's business strategy are discussed
more fully below.

PRODUCTS. InterTAN's strategy focuses on a product plan dedicated to
profitable sales growth by improving operating margins while at the same time
increasing sales. Cornerstones of this plan are a product offering which
includes a high concentration of private label goods, emphasis on

11
<PAGE>

core categories, reducing the number of trade marks used on private label goods,
and managing the percentage of lower margin product in the overall sales mix.
This strategy has been complemented by the introduction of certain of Tandy's
service initiatives designed not only to produce revenue in their own right, but
also to increase traffic in the Company's stores.

During fiscal year 1997, the Company's sales consisted of the
following:

Private label goods 57%
Name brand goods 30%
Computers 13%
----
100%
====

The Company's objective is to gradually increase the percentage in the
product mix of higher margin private label goods from the present level. In
order to achieve this objective, the Company is working more closely with A&A,
which should enable the Company to expand the range of private label products
available to its customers and to leverage Tandy's sourcing capabilities to
negotiate favorable prices and product offerings with Far East vendors.
Increasing the level of private label products in the merchandise mix will be a
gradual process as these products require longer lead times. The benefits of
this strategy may be offset by the effect of other initiatives taken to
emphasize certain product lines, such as cellular, in particular products sold
through the Cantel stores, other telephony products, computers and direct to
home satellite systems. While these products have sales growth potential, they
also typically carry margins which are below the Company's average.

InterTAN has identified six categories which yield attractive margins
and in which management believes the Company has a strong position in all of its
markets. These include parts and accessories, telephones (including answering
machines and fax machines), cellular phones, personal electronics products,
communications equipment and batteries. These categories are emphasized in the
Company's merchandising and marketing programs. InterTAN believes that regular
promotion of these items and displaying them in a prominent place in its stores
will result in higher sales and margins.

In prior periods the Company utilized several brand names on its
private label goods which were used under license from Tandy. In addition,
InterTAN had developed many of its own brand names. Management believes that
the numerous private label names then in use not only resulted in customer
confusion but also increased the Company's product sourcing and marketing costs.
In response to these concerns, the number of private label brand names has been
reduced to five, three of which - RadioShack, Optimus and Tandy - are used under
license from Tandy. The remaining two - Genexxa and Techcessories - were
developed and are owned by InterTAN and are typically used on private label
goods sourced from a supplier other than Tandy.

The final cornerstone of InterTAN's product strategy is managing the
impact of lower margin product categories. These categories currently include
computers and, previously, video games. While computers yield relatively low
margins, the Company believes it is necessary to stock and display them to meet
customer expectations and to stimulate sales of higher margin accessories and
components. To minimize the impact on overall margins, the Company carefully
monitors the level of computer inventories and sales.

12
<PAGE>

STRATEGIC ALLIANCES. InterTAN has the largest number of sales outlets
among consumer electronics retailers in both Canada and Australia and is among
the top four in the United Kingdom. The Company has over twenty years of retail
experience in all of its markets and is known for its knowledgeable and friendly
sales associates. Management believes that there are opportunities to leverage
on this strength by forming strategic alliances with other businesses which are
also leaders in their respective fields.

An example of such an alliance is the retail association announced in
the fourth quarter of fiscal year 1996 between RadioShack Canada and Cantel,
Canada's only nationally-licensed wireless communications company. At June 30,
1997 the Company operated 56 Cantel Stores in major malls across Canada. These
stores predominantly carry Cantel's cellular communications products and
accessories. However, approximately one-quarter of the selling space is devoted
to complementary end products and accessories offered by the Company.
Additionally, most of RadioShack Canada's 452 company-operated stores
exclusively feature Cantel wireless communications products and services.
Cantel funded the fixturing of "Cantel Express" sections in those stores for the
exclusive offering of Cantel cellular products (including digital), paging and
other services. This relationship aligns the Company's consumer electronics
retail expertise with Cantel's technological strength. In addition to the
Cantel alliance, the Company recently announced an agreement with AT&T Long
Distance Services Company ("AT&T Canada") under which the Company will market
AT&T Canada telecommunications services in all of its company-operated stores.
AT&T Canada will also fund the construction of AT&T Canada store-in-store
facilities in selected Company retail locations.

In Australia, the Company has entered into an arrangement with Optus
Communications Pty Limited ("Optus") to offer its cellular products exclusively
in Tandy Electronics' 215 company-operated stores. As a part of this
arrangement, the Company receives training programs, marketing support and a
share of future air time revenues. In addition, new products and end services
to be released by Optus, such as fiber optic television cable services and video
communication, should become marketable in the future.

In the United Kingdom, the Company has also established a non-
exclusive alliance with a major cellular provider, Vodafone Limited. Financial
support from this relationship as well as from certain handset vendors enabled
the Company to construct Communications Centers in all of its 341 company-
operated stores in the United Kingdom. In addition to cellular products, these
Centers feature the full range of the Company's communications products
including, traditional telephones, answering machines, scanners, CB radios and
accessories for these products. During fiscal year 1997, the Company had also
entered into an agreement with Vobis Microcomputer AG to market that company's
personal computer line exclusively in its United Kingdom stores. However, that
relationship was terminated, by mutual agreement, in June, 1997.

The Company will continue to pursue additional alliance opportunities,
to the extent practical, in other areas of its business in all three countries.

RETAIL OPERATIONS. InterTAN will maintain its current strategy of
leasing conveniently located stores in malls in Canada, malls and High Street
locations in the United Kingdom and malls and street locations in Australia.
The Company also operates a limited number of express stores in Canada and the
United Kingdom. These express stores feature a targeted range of merchandise in
a more compact floor plan and are established in high traffic areas that do not
presently have a company-operated store or which

13
<PAGE>

could support a second location. A selected number of clearance stores are also
operated in both Canada and the United Kingdom.

ADVERTISING. Traditionally, InterTAN's advertising approach has been
strongly product and price-oriented and skewed heavily toward the utilization of
print media, with broadcast media support only occurring during the Christmas
selling season. The Company has recently added informative image advertising to
promote its strength of having knowledgeable and service-oriented sales
associates whom consumers can trust to take the "technological mystery" out of
their electronics purchases. Also, specific advertising with an emphasis on
service was created as The Repair Shop program and other service initiatives
were launched in each of the countries, thereby giving consumers additional
reasons to buy, other than promotional prices alone. This strategy was
supported by additional television image advertising outside of the Christmas
period. In addition, InterTAN's flyer, catalog, newspaper insert and other
newspaper advertising programs each carry the "You've got questions. We've got
answers." positioning statement. The Repair Shop program and additional service
initiatives are also being featured. The Company continues to rely on a strong
flyer program, newspaper inserts and other forms of distribution of its
advertising material. Additionally, more focused direct mail promotions were
made to encourage repeat business in the Company's core categories where it has
strong market positions and attractive margins. As well, credit promotions and
extended product warranties are offered and featured in the Company's
advertising.

INVENTORY AND DISTRIBUTION. The additional inventory requirements
needed to implement a strategy intended to increase sales of private label goods
(see "Business Strategy - Products") as well as the introduction of the Cantel
Stores, have made it difficult to maintain inventory turns at fiscal year 1995
levels. Consequently, inventory turns decreased to 1.83 and 1.72 for fiscal
years 1996 and 1997, respectively. The larger minimum order size and longer
lead time associated with private label purchases resulted in expected holding
cost increases which are more than offset by enhanced anticipated margins.
Management believes that initiatives taken in the Management Information Systems
area, including the installation of EPOS systems in all three countries and the
use of automatic stock replenishment in Canada and the United Kingdom, combined
with increased management attention focused on inventory flow, have helped
mitigate the impact of these strategies on inventory levels.

Management believes that InterTAN's warehouse facilities are generally
well located and efficient in each country. Late in fiscal year 1995, the parts
warehouse in Canada was consolidated with the central warehouse to take
advantage of excess capacity. This action has resulted in lower costs and
improved effectiveness. A number of changes were made to the warehouse in the
United Kingdom, including recruitment of new management, changes to the physical
layout and improved security, all intended to improve performance, productivity
and cost control.

During fiscal year 1995, InterTAN U.K. commenced a major enhancement of its
computer hardware and software. The roll out of this new system was completed
in fiscal year 1996 and has produced improved warehousing and distribution
efficiencies. Early in fiscal year 1996, a new carrier was engaged in the
United Kingdom to distribute inventory from the warehouse to the stores. One of
the benefits of this new arrangement is the more frequent inventory
replenishment of the InterTAN U.K. stores. In Australia, an electronic material
picking system similar to that previously installed in Canada will be introduced
early in fiscal year 1998. The Canadian system has also been expanded and
upgraded since its introduction.

14
<PAGE>

MERCHANDISE, LICENSE AND ADVERTISING AGREEMENTS

MERCHANDISE AGREEMENT. The Company and Tandy are parties to a
Merchandise Agreement which requires the Company to use A&A as its exclusive
exporter of products from the Far East during the term thereof. Consequently,
the Company must pay A&A an annual purchasing agent/exporter fee equal to $1
million plus 0.2% of the Company's consolidated sales in excess of $500 million
less certain credits the Company earns by purchasing products from A&A.

The Merchandise Agreement originally required the Company to provide
irrevocable letters of credit to A&A in support of 100% of outstanding inventory
purchase orders. In May 1994, this provision was amended to lower the level of
letter of credit coverage to a minimum of 60% during the December to April
period gradually rising to 90% in August. In October, 1995, agreement was
reached to further lower the letter of credit requirements on certain Canadian
purchases. Subsequently, the same reduced letter of credit requirements were
extended to the Company's other subsidiaries. In September, 1997 the
Merchandise Agreement was further amended to permit purchase orders to be
supported by a surety bond, as well as by letters of credit.

The terms of the various commissions and fees payable by InterTAN to
Tandy under the Merchandise Agreement are to be reviewed by the parties during
the six-month periods ending June 30, 2000 and June 30, 2005. In the event that
satisfactory agreement regarding such terms is not reached, following such
reviews, the Merchandise Agreement may be canceled by either party following 180
days' prior written notice.

LICENSE AGREEMENTS. In October and November, 1993, the Company
entered into a series of license agreements with Tandy. These agreements permit
InterTAN to use the "RadioShack" trade name in Canada, the "Tandy" trade name in
the United Kingdom and the "Tandy Electronics" trade name in Australia and New
Zealand. Effective July 1, 1996, the expiry dates of these license agreements
were extended from June 30, 2000 to June 30, 2006, with automatic annual
extensions to June 30, 2010. The license agreements may be terminated with five
years' prior written notice by either party. Each of the license agreements
also provides for a license to use certain of Tandy's trademarks. In addition,
InterTAN has the right to sub-license to its dealers and franchisees.

In consideration for these rights, the Company was obliged to pay a
sales-based royalty of 0.25% beginning in fiscal year 1996. This royalty
increases by up to 0.25% each fiscal year until it reaches a maximum of up to
1.0% in fiscal year 1999.

Both the Merchandise Agreement and the license agreements may be
revoked by Tandy in the event of a change in control of InterTAN, the default by
the Company in payment of certain indebtedness owing to Tandy or a breach of
the terms of these agreements.

The rights to use the trade names licensed by Tandy are currently, and
in varying degrees (depending on the country of business), an integral part of
InterTAN's marketing strategy. The loss of the licenses would have a material
adverse impact on the business of InterTAN.

ADVERTISING AGREEMENT. In June 1995, the Company announced an
advertising agreement with Tandy. Under the terms of the agreement, the Company
is entitled to the limited use of certain marketing materials, research and
marks developed by or for Tandy since January 1, 1994, including the service
marks "The Repair Shop at RadioShack", "RadioShack Unlimited" and "You've got
questions.

15
<PAGE>

We've got answers." The right to use any marks covered by the agreement are
vested in the Company by being added to the license agreements described above.
In consideration for use of the materials and marks developed during calendar
year 1994, the Company paid to Tandy a one-time license fee of $100,000. With
respect to materials and marks developed during the term of the agreement, the
Company has agreed to pay to Tandy 6% of Tandy's cost, as defined, of developing
such materials and marks. Under the current agreement, the Company's share of
these costs is capped at the 1996 level. The agreement currently expires
December 31, 1997 but may, at the Company's request and at Tandy's option, be
extended.

OTHER

SEASONALITY. InterTAN's business is seasonal, with sales peaking in
the November - December Christmas selling season. The United Kingdom and
Australian operations were historically reported with a one month lag.
Effective with fiscal year 1995, these subsidiaries changed their fiscal year
end from May 31 to June 30 to coincide with that of the parent company. This
change in reporting did not have a material effect on the annual consolidated
financial statements. Cash flow requirements are also seasonal since
inventories build prior to the Christmas selling season. Significant inventory
growth for all operations typically begins to build in late summer and peaks in
mid November.

COMPETITION. InterTAN is a specialty consumer electronics retailer
and management is not aware of any direct competitors in the niche market in
which the Company operates in most of InterTAN's markets. However, products
substantially similar to many of those sold through InterTAN's retail outlets
are sold by many other retail stores, including department and discount stores,
consumer electronics chains and computer outlets. See "Geographic Analysis."
Some of these competitors have greater resources, financial or otherwise, than
InterTAN.

ITEM 2. PROPERTIES.

InterTAN owns three facilities consisting of a 412,000 square-foot
building (owned by InterTAN Canada) containing office and warehouse space in
Barrie, Ontario, Canada, where the headquarters of InterTAN Canada are located,
two buildings aggregating 152,000 square-feet (owned by InterTAN Australia)
containing office and warehouse space in Mount Druitt, New South Wales,
Australia, where the headquarters of InterTAN Australia are located, and a
43,000 square-foot building (owned by InterTAN U.K.) located near Birmingham,
England, where the headquarters for InterTAN U.K. and a properties warehouse are
located.

InterTAN U.K. leases three facilities totaling 136,000 square feet
near Birmingham, England in which the Company's distribution center and repair
facilities are located.

InterTAN's head office is located in a leased 6,675 square-foot
facility in Fort Worth, Texas.

With the exception of a retail store being located in each of
InterTAN's three owned properties discussed above, InterTAN's retailing
operations are primarily conducted in leased facilities. The average store size
is between 1,200 and 1,800 square feet.

16
<PAGE>

For additional information concerning InterTAN's properties, the
following sections of Exhibit 13 attached hereto are hereby incorporated by
reference:
Pages
-----

Rent Expense 16-17
Retail Square Feet 1
Sales Outlets 13

ITEM 3. LEGAL PROCEEDINGS.

With the exception of the matters discussed in Notes 6 and 8 of the
Notes to Consolidated Financial Statements contained in InterTAN's 1997 Annual
Report to Stockholders which appear on pages 30 and 32, respectively, of Exhibit
13 attached hereto, such Notes being incorporated herein by reference, there are
no material pending legal proceedings, other than ordinary routine litigation
incidental to InterTAN's business, to which InterTAN or any of its subsidiaries
is a party or to which any of their property is subject.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.

The principal United States market in which InterTAN's common stock
trades is the New York Stock Exchange. The common stock also trades in Canada
on the Toronto Stock Exchange.

The high and low closing sales prices (in U.S. dollars), as reported
by the New York Stock Exchange, of InterTAN's common stock for each full
quarterly period within the two most recent fiscal years are set out below:

Quarter Ended High Low
------------- ------- ------
June, 1997 $ 4 $3 3/8
March, 1997 4 3/4 3 7/8
December, 1996 6 3/8 4 5/8
September, 1996 6 5/8 5 5/8
June, 1996 6 7/8 5 1/4
March, 1996 6 1/2 4 5/8
December, 1995 9 3/8 7 1/8
September, 1995 10 7 1/4

As of September 15, 1997, there were approximately 11,400 recordholders of
InterTAN's common stock.

InterTAN has never declared cash dividends. Based upon InterTAN's
long-term growth opportunities, in the opinion of management, the stockholders
are best served by InterTAN pursuing a

17
<PAGE>

strategy of reinvesting all profits. Further, InterTAN is currently precluded
from paying dividends under its various loan agreements.

ITEM 6. SELECTED FINANCIAL DATA.

"Financial Highlights" contained in InterTAN's 1997 Annual Report to
Stockholders which appears on page 1 of Exhibit 13 attached hereto is
incorporated herein by reference.

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

"Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained in InterTAN's 1997 Annual Report to
Stockholders which appears on pages 13 through 21 of Exhibit 13 attached hereto
is incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The following reports, statements and notes contained in InterTAN's
1997 Annual Report to Stockholders which appear on the indicated pages of
Exhibit 13 attached hereto are incorporated herein by reference:

Report of Independent Accountants - page 38
Consolidated Statements of Operations - Three years ended
June 30, 1997 - page 22
Consolidated Balance Sheets - Two years ended June 30, 1997 - page 23
Consolidated Statements of Cash Flows - Three years ended
June 30, 1997 - page 24
Consolidated Statements of Stockholders' Equity - Three years ended
June 30, 1997 - page 25
Notes to Consolidated Financial Statements - pages 26 - 37

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

There has been no change in independent accountants and no
disagreement with any independent accountant on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure during the period since the end of fiscal 1996.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The information called for by this Item with respect to directors and
executive officers has been omitted pursuant to General Instruction G(3) to Form
10-K. This information is incorporated by reference from the 1997 definitive
proxy statement filed with the Securities and Exchange Commission pursuant to
Regulation 14A.

18
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION.

The information called for by this Item with respect to executive
compensation has been omitted pursuant to General Instruction G(3) to Form 10-K.
The information is incorporated herein by reference from the 1997 definitive
proxy statement filed with the Securities and Exchange Commission pursuant to
Regulation 14A.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

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) to Form 10-K. This information is incorporated by
reference from the 1997 definitive proxy statement filed with the Securities and
Exchange Commission pursuant to Regulation 14A.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

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) to Form 10-K. This information is
incorporated by reference from the 1997 definitive proxy statement filed with
the Securities and Exchange Commission pursuant to Regulation 14A.

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 consolidated financial statements of InterTAN incorporated
by reference in this Form 10-K are listed in the index given
in Item 8.

(2) Financial Statement Schedules:

Financial Statement Schedule II is filed herewith.

All other financial statement schedules are omitted because
they are not applicable or the required information is
included in the consolidated financial statements or
Management's Discussion and Analysis of Financial Condition
and Results of Operations in the Company's 1997 Annual Report
to Stockholders and included in Exhibit 13 attached hereto.

19
<PAGE>

(3) Exhibits required by Item 601 of Regulation S-K:

Exhibit No. Description
----------- -----------

3(a) Restated Certificate of Incorporation (Filed as
Exhibit 3(a) to InterTAN's Registration Statement
on Form 10 and incorporated herein by reference).

3(a)(i) Certificate of Amendment of Restated Certificate
of Incorporation (Filed as Exhibit 3(a)(i) to
InterTAN's Annual Report on Form 10-K for fiscal
year ended June 30, 1995 and incorporated herein
by reference).

3(a)(ii) Certificate of Designation, Preferences and Rights
of Series A Junior Participating Preferred Stock
(Filed as Exhibit 3(a)(i) to InterTAN's
Registration Statement on Form 10 and incorporated
herein by reference).

3(b) Bylaws (Filed as Exhibit 3(b) to InterTAN's
Registration Statement on Form 10 and incorporated
herein by reference).

3(b)(i) Amendments to Bylaws through August 3, 1990 (Filed
as Exhibit 3(b)(i) to InterTAN's Annual Report on
Form 10-K for fiscal year ended June 30, 1990 and
incorporated herein by reference).

3(b)(ii) Amendments to Bylaws through May 15, 1995 (Filed
as Exhibit 3(b)(ii) to InterTAN's Annual Report on
Form 10-K for fiscal year ended June 30, 1995 and
incorporated herein by reference).

3(b)(iii) Amended and Restated Bylaws (Filed as Exhibit
3(b)(iii) to InterTAN's Annual Report on Form
10-K for fiscal year ended June 30, 1996 and
incorporated herein by reference).

4(a) Articles Fifth and Tenth of the Restated
Certificate of Incorporation (included in Exhibit
3(a)).

4(b) Amended and Restated Rights Agreement between
InterTAN, Inc. and The First National Bank of
Boston (Filed as Exhibit 4(b) to InterTAN's Report
on Form 8-K dated September 25, 1989 and
incorporated herein by reference).

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<PAGE>

4(c) Trust Indenture securing the issue of 9%
Convertible Subordinated Debentures due August 30,
2000 (Filed as Exhibit 4(c) to InterTAN's Annual
Report on Form 10-K for fiscal year ended June 30,
1993 and incorporated herein by reference).

4(d) Warrant Agreement dated August 5, 1993 between
InterTAN, Inc. and Trans World Electronics, Inc.
(Filed as Exhibit 10(h) to InterTAN's Annual
Report on Form 10-K for fiscal year ended June 30,
1993 and incorporated herein by reference).

10(a) InterTAN, Inc. Restated 1986 Stock Option Plan (as
amended as of February 22, 1994 and April 18,
1995) (Filed as exhibit 10(a) to InterTAN's Annual
Report on Form 10-K for fiscal year ended June 30,
1995 and incorporated herein by reference).

10(b) InterTAN, Inc. Restated 1991 Non-Employee Director
Stock Option Plan (as amended through February 21,
1994) (Filed as Exhibit 10(b) to InterTAN's Annual
Report on Form 10-K for fiscal year ended June 30,
1995 and incorporated herein by reference).

10(c) Secured Loan Agreement with Trans World
Electronics, Inc. (Filed as Exhibit 10(g) to
InterTAN's Annual Report on Form 10-K for fiscal
year ended June 30, 1993 and incorporated herein
by reference).

10(c)(i) First Amendment to Secured Loan Agreement with
Trans World Electronics, Inc. dated January 4,
1994 (Filed as Exhibit 10(e)(i) to InterTAN's
Annual Report on Form 10-K for fiscal year ended
June 30, 1994 and incorporated herein by
reference).

10(c)(ii) Second Amendment to Secured Loan Agreement with
Trans World Electronics, Inc. dated as of May 6,
1994 (Filed as Exhibit 10(g)(i) to InterTAN's
Quarterly Report on Form 10-Q for quarter ended
March 31, 1994 and incorporated herein by
reference).

10(c)(iii) Third Amendment to Secured Loan Agreement with
Trans World Electronics, Inc. dated July 1, 1996
(Filed as Exhibit 10(c) to InterTAN's Quarterly
Report on Form 10-Q for quarter ended September
30, 1996 and incorporated herein by reference).

21
<PAGE>

10(d) Retirement Agreement dated March 3, 1997 between
InterTAN, Inc. and James Michael Wood (Filed as
Exhibit 10(c) to InterTAN's Quarterly Report on
Form 10-Q for quarter ended March 31, 1997 and
incorporated herein by reference).

10(e) Registration Rights Agreement between InterTAN,
Inc. and Trans World Electronics, Inc. (Filed as
Exhibit 10(i) to InterTAN's Annual Report on Form
10-K for fiscal year ended June 30, 1993 and
incorporated herein by reference).

10(f) Employment Agreement between InterTAN, Inc. and
James T. Nichols dated January 1, 1995 (Filed as
Exhibit 10(ii) to InterTAN's Quarterly Report on
Form 10-Q for quarter ended March 31, 1995 and
incorporated herein by reference).

10(g) Employment Agreement between InterTAN, Inc. and
David S. Goldberg dated February 3, 1995 (Filed as
Exhibit 10(iii) to InterTAN's Quarterly Report on
Form 10-Q for quarter ended March 31, 1995 and
incorporated herein by reference).

10(h) Employment Agreement between InterTAN, Inc. and
John A. Capstick dated February 20, 1995 (Filed as
Exhibit 10(iv) to InterTAN's Quarterly Report on
Form 10-Q for quarter ended March 31, 1995 and
incorporated herein by reference).

10(h)(i) Letter dated December 6, 1995 extending term of
employment agreement for John A. Capstick (Filed
as Exhibit 10(b) to InterTAN's Quarterly Report on
Form 10-Q for quarter ended December 31, 1995 and
incorporated herein by reference).

10(i) Employment Agreement between InterTAN, Inc. and
James G. Gingerich dated March 1, 1995 (Filed as
Exhibit 10(v) to InterTAN's Quarterly Report on
Form 10-Q for quarter ended March 31, 1995 and
incorporated herein by reference).

10(j) Employment Agreement between InterTAN, Inc. and
Douglas C. Saunders dated March 10, 1995 (Filed as
Exhibit 10(vi) to InterTAN's Quarterly Report on
Form 10-Q for quarter ended March 31, 1995 and
incorporated herein by reference).

22
<PAGE>

10(k) Minutes of Settlement dated April 13, 1995 between
InterTAN, Inc. and James B. Williams (Filed as
Exhibit 10(k) to InterTAN's Annual Report on Form
10-K for fiscal year ended June 30, 1995 and
incorporated herein by reference).

10(l) Retirement and Severance Agreement dated July 31,
1994 between InterTAN, Inc. and Louis G. Neumann
(Filed as Exhibit 10(l) to InterTAN's Annual
Report on Form 10-K for fiscal year ended June 30,
1995 and incorporated herein by reference).

10(m) Merchandise Agreement dated October 15, 1993
between InterTAN, Inc., InterTAN Canada Ltd.,
InterTAN U.K. Limited, InterTAN Australia Ltd.,
Technotron Sales Corp. Pty. Limited, Tandy
Corporation and A&A International, Inc. (Filed as
Exhibit 10(m) to InterTAN's Quarterly Report on
Form 10-Q for quarter ended December 31, 1993 and
incorporated herein by reference).

10(m)(i) First Amendment to Merchandise Agreement dated
November 1, 1993 (Filed as Exhibit 10(m)(i) to
InterTAN's Quarterly Report on Form 10-Q for
quarter ended March 31, 1994 and incorporated
herein by reference).

10(m)(ii) Second Amendment to Merchandise Agreement dated
October 2, 1995 (Filed as Exhibit 10 to InterTAN's
Quarterly Report on Form 10-Q for quarter ended
September 30, 1995 and incorporated herein by
reference).

10(m)(iii) Third Amendment to Merchandise Agreement dated
February 1, 1996 (Filed as Exhibit 10(b) to
InterTAN's Quarterly Report on Form 10-Q for
quarter ended March 31, 1996 and incorporated
herein by reference).

10(m)(iv) Fourth Amendment to Merchandise Agreement dated
July 1, 1996 (Filed as Exhibit 10(b) to InterTAN's
Quarterly Report on Form 10-Q for quarter ended
September 30, 1996 and incorporated herein by
reference).

10(n) License Agreement dated November 4, 1993 between
Tandy Corporation and InterTAN Australia Ltd.
(Filed as Exhibit 10(n) to InterTAN's Quarterly
Report on Form 10-Q for quarter ended December 31,
1993 and incorporated herein by reference).

23
<PAGE>

10(o) License Agreement dated November 4, 1993 between
Tandy Corporation and InterTAN U.K. Limited (Filed
as Exhibit 10(o) to InterTAN's Quarterly Report on
Form 10-Q for quarter ended December 31, 1993 and
incorporated herein by reference).

10(o)(i) First Amendment to License Agreement (United
Kingdom) between InterTAN U.K. Limited and Tandy
Corporation dated April 21, 1995 (Filed as Exhibit
10(o)(i) to InterTAN's Annual Report on Form 10-K
for fiscal year ended June 30, 1995 and
incorporated herein by reference).

10(p) License Agreement dated November 4, 1993 between
Tandy Corporation and InterTAN Canada Ltd. (Filed
as Exhibit 10(p) to InterTAN's Quarterly Report on
Form 10-Q for quarter ended December 31, 1993 and
incorporated herein by reference).

10(p)(i) First Amendment to License Agreement (Canada)
between InterTAN Canada Ltd. and Tandy Corporation
dated March 24, 1995 (Filed as Exhibit 10(i) to
InterTAN's Quarterly Report on Form 10-Q for
quarter ended March 31, 1995 and incorporated
herein by reference).

10(p)(ii) Second Amendment to License Agreement (Canada),
Second Amendment to License Agreement (United
Kingdom), and First Amendment to License Agreement
(Australia and New Zealand), each dated November
9, 1995 (Filed as Exhibit 10(a) to InterTAN's
Quarterly Report on Form 10-Q for quarter ended
December 31, 1995 and incorporated herein by
reference).

10(p)(iii) Third Amendment to License Agreement (Canada),
Third Amendment to License Agreement (United
Kingdom), and Second Amendment to License
Agreement (Australia and New Zealand), each dated
June 26, 1996 (Filed as Exhibit 10(p)(iii) to
InterTAN's Annual Report on Form 10-K for fiscal
year ended June 30, 1996 and incorporated herein
by reference).

10(q) Credit Agreement dated as of May 6, 1994 (Filed as
Exhibit 10(q) to InterTAN's Quarterly Report on
Form 10-Q for quarter ended March 31, 1994 and
incorporated herein by reference) .

10(q)(i) Amending Agreement and Extension Agreement, each
dated as of April 25, 1995, amending and extending
Credit Agreement (Filed as Exhibit 10(q)(i) to
InterTAN's Annual Report on Form 10-K for fiscal
year ended June 30, 1995 and incorporated herein
by reference).

24
<PAGE>

10(q)(ii) Amending Agreement dated March 1, 1996, amending
and extending Credit Agreement (Filed as Exhibit
10(c) to InterTAN's Quarterly Report on Form 10-Q
for quarter ended March 31, 1996 and incorporated
herein by reference).

10(q)(iii) Amending Agreement dated June 25, 1996, amending
and extending Credit Agreement (Filed as Exhibit
10(q)(iii) to InterTAN's Annual Report on Form 10-
K for fiscal year ended June 30, 1996 and
incorporated herein by reference).

10(q)(iv) Amending Agreement dated September 11, 1996
amending the Credit Agreement (Filed as Exhibit
10(a) to InterTAN's Quarterly Report on Form 10-Q
for quarter ended September 30, 1996 and
incorporated herein by reference).

10(q)(v) Amending Agreement dated February 11, 1997
amending the Credit Agreement (Filed as exhibit
10(a) to InterTAN's Quarterly Report on Form 10-Q
for quarter ended March 31, 1997 and incorporated
herein by reference).

10(r) Inventory Repurchase Agreement dated as of May 6,
1994 (Filed as Exhibit 10(r) to InterTAN's
Quarterly Report on Form 10-Q for quarter ended
December 31, 1994 and incorporated herein by
reference).

10(s) InterTAN Advertising Agreement and first amendment
thereto (Filed as Exhibit 10(s) to InterTAN's
Annual Report on Form 10-K for fiscal year ended
June 30, 1995 and incorporated herein by
reference).

10(s)(i) Second Amendment to InterTAN Advertising Agreement
dated to be effective as of January 1, 1996 (Filed
as Exhibit 10(a) to InterTAN's Quarterly Report on
Form 10-Q for quarter ended March 31, 1996 and
incorporated herein by reference).

10(s)(ii) Third Amendment to InterTAN Advertising Agreement
dated to be effective as of January 1, 1997 (Filed
as Exhibit 10(b) to InterTAN's Quarterly Report on
Form 10-Q for quarter ended March 31, 1997 and
incorporated herein by reference).

10(t) Master Sales Agreement (United Kingdom) dated to
be effective as of December 31, 1995, among
InterTAN, Inc., InterTAN U.K. Limited, and Tandy
Corporation (Filed as

25
<PAGE>

Exhibit 10(c) to InterTAN's Quarterly Report on
Form 10-Q for quarter ended December 31, 1995 and
incorporated herein by reference).

10(u) InterTAN, Inc. 1996 Stock Option Plan and Forms of
Stock Option Agreement (Filed as Exhibits 4.6 and
4.7, respectively, to InterTAN's Registration
Statement on Form S-8, SEC file number 333-16105,
filed on November 14, 1996 and incorporated herein
by reference).

* 13 1997 Annual Report to Stockholders page 1
("Financial Highlights" only) and pages 13 through
38.

21 Subsidiaries of InterTAN, Inc. (Filed as Exhibit
21 to InterTAN's Annual Report on Form 10-K for
fiscal year ended June 30, 1995 and incorporated
herein by reference).

* 23 Consent of Independent Accountants.

* 27 Article 5 Financial Data Schedule.

99 Form of Multi-Option Switch Facility Agreement
between InterTAN Australia Ltd. and Westpac
Banking Corporation (Filed as Exhibit 99 to
InterTAN's Quarterly Report on Form 10-Q for
quarter ended December 31, 1996 and incorporated
herein by reference).

- -----------------
* Filed herewith

(b) No reports on Form 8-K were filed during the fourth quarter of the
fiscal year ended June 30, 1997.

26
<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

InterTAN, Inc.

September 26, 1997 /s/James T. Nichols
-------------------------------------
James T. Nichols,
President and Chief Executive Officer
(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on the 26th day of September 1997 by the following
persons on behalf of InterTAN, Inc. and in the capacities indicated.

Signature Title
- --------- -----

/s/James G. Gingerich Senior Vice President and
- ----------------------------- Chief Financial Officer
James G. Gingerich (Principal Financial Officer)

/s/Douglas C. Saunders Vice President and
- ----------------------------- Corporate Controller
Douglas C. Saunders (Principal Accounting Officer)

/s/Ron G. Stegall Director and
- ----------------------------- Chairman of the Board
Ron G. Stegall

/s/William C. Bousquette Director
- -----------------------------
William C. Bousquette

/s/John A. Capstick Director
- -----------------------------
John A. Capstick

/s/Clark A. Johnson Director
- -----------------------------
Clark A. Johnson

/s/Walter F. Loeb Director
- -----------------------------
Walter F. Loeb

/s/John H. McDaniel Director
- -----------------------------
John H. McDaniel

/s/W. Darcy McKeough Director
- -----------------------------
W. Darcy McKeough

/s/James T. Nichols
- -----------------------------
James T. Nichols Director

27
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES

To the Board of Directors of
InterTAN, Inc.

Our audits of the consolidated financial statements referred to in our report
dated September 11, 1997, appearing on Page 38 of the 1997 Annual Report to
Shareholders of InterTAN, Inc. (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K),
also included an audit of the Financial Statement Schedule listed in Item 14(a)
of this Form 10-K. In our opinion, this Financial Statement Schedule presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.

/s/Price Waterhouse LLP

Fort Worth, Texas
September 11, 1997

28
<PAGE>
Schedule II

INTERTAN, INC.
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

(In thousands)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
--------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS

Balance, beginning of year $ 1,746 $ 1,175 $ 1,259

Additions charged to profit and loss 52 599 126

Accounts receivable charged off,
net of recoveries (259) (28) (210)
-------- -------- --------

Balance, end of year $ 1,539 $ 1,746 $ 1,175
======== ======== ========

BUSINESS RESTRUCTURING RESERVE

Balance, beginning of year $ 2,630 $ 2,610 $ 6,380

Credited to cost and expense -- -- (1,600)

Payments and other dispositions, net (1,181) 20 (2,170)
-------- -------- --------

Balance, end of year $ 1,449 $ 2,630 $ 2,610
======== ======== ========

DEFERRED TAX VALUATION ALLOWANCE

Balance, beginning of year $ 30,461 $ 28,107 $ 37,578

Additions to valuation allowance 8,828 3,610 3,427

Adjustments to valuation allowance (1,656) (329) (9,100)

Reduction in deferred tax assets -- (749) (3,690)

Foreign exchange rate effects 1,705 (178) (108)
-------- -------- --------

Balance, end of year $ 39,338 $ 30,461 $ 28,107
======== ======== ========

</TABLE>
<PAGE>

INDEX TO EXHIBITS
-----------------

Exhibit No. Description
----------- -----------

3(a) Restated Certificate of Incorporation (Filed as Exhibit 3(a)
to InterTAN's Registration Statement on Form 10 and
incorporated herein by reference).

3(a)(i) Certificate of Amendment of Restated Certificate of
Incorporation (Filed as Exhibit 3(a)(i) to InterTAN's Annual
Report on Form 10-K for fiscal year ended June 30, 1995 and
incorporated herein by reference).

3(a)(ii) Certificate of Designation, Preferences and Rights of Series
A Junior Participating Preferred Stock (Filed as Exhibit
3(a)(i) to InterTAN's Registration Statement on Form 10 and
incorporated herein by reference).

3(b) Bylaws (Filed as Exhibit 3(b) to InterTAN's Registration
Statement on Form 10 and incorporated herein by reference).

3(b)(i) Amendments to Bylaws through August 3, 1990 (Filed as Exhibit
3(b)(i) to InterTAN's Annual Report on Form 10-K for fiscal
year ended June 30, 1990 and incorporated herein by
reference).

3(b)(ii) Amendments to Bylaws through May 15, 1995 (Filed as Exhibit
3(b)(ii) to InterTAN's Annual Report on Form 10-K for fiscal
year ended June 30, 1995 and incorporated herein by
reference).

3(b)(iii) Amended and Restated Bylaws (Filed as Exhibit 3(b)(iii) to
InterTAN's Annual Report on Form 10-K for fiscal year ended
June 30, 1996 and incorporated herein by reference).

4(a) Articles Fifth and Tenth of the Restated Certificate of
Incorporation (included in Exhibit 3(a)).

4(b) Amended and Restated Rights Agreement between InterTAN, Inc.
and The First National Bank of Boston (Filed as Exhibit 4(b)
to InterTAN's Report on Form 8-K dated September 25, 1989 and
incorporated herein by reference).

E-1
<PAGE>

Exhibit No. Description
----------- -----------

4(c) Trust Indenture securing the issue of 9% Convertible
Subordinated Debentures due August 30, 2000 (Filed as Exhibit
4(c) to InterTAN's Annual Report on Form 10-K for fiscal year
ended June 30, 1993 and incorporated herein by reference).

4(d) Warrant Agreement dated August 5, 1993 between InterTAN, Inc.
and Trans World Electronics, Inc. (Filed as Exhibit 10(h) to
InterTAN's Annual Report on Form 10-K for fiscal year ended
June 30, 1993 and incorporated herein by reference).

10(a) InterTAN, Inc. Restated 1986 Stock Option Plan (as amended as
of February 22, 1994 and April 18, 1995) (Filed as exhibit
10(a) to InterTAN's Annual Report on Form 10-K for fiscal
year ended June 30, 1995 and incorporated herein by
reference).

10(b) InterTAN, Inc. Restated 1991 Non-Employee Director Stock
Option Plan (as amended through February 21, 1994) (Filed as
Exhibit 10(b) to InterTAN's Annual Report on Form 10-K for
fiscal year ended June 30, 1995 and incorporated herein by
reference).

10(c) Secured Loan Agreement with Trans World Electronics, Inc.
(Filed as Exhibit 10(g) to InterTAN's Annual Report on Form
10-K for fiscal year ended June 30, 1993 and incorporated
herein by reference).

10(c)(i) First Amendment to Secured Loan Agreement with Trans World
Electronics, Inc. dated January 4, 1994 (Filed as Exhibit
10(e)(i) to InterTAN's Annual Report on Form 10-K for fiscal
year ended June 30, 1994 and incorporated herein by
reference).

10(c)(ii) Second Amendment to Secured Loan Agreement with Trans World
Electronics, Inc. dated as of May 6, 1994 (Filed as Exhibit
10(g)(i) to InterTAN's Quarterly Report on Form 10-Q for
quarter ended March 31, 1994 and incorporated herein by
reference).

E-2
<PAGE>

Exhibit No. Description
----------- -----------

10(c) (iii) Third Amendment to Secured Loan Agreement with Trans World
Electronics, Inc. dated July 1, 1996 (Filed as Exhibit 10(c)
to InterTAN's Quarterly Report on Form 10-Q for quarter ended
September 30, 1996 and incorporated herein by reference).

10(d) Retirement Agreement dated March 3, 1997 between InterTAN,
Inc. and James Michael Wood (Filed as Exhibit 10(c) to
InterTAN's Quarterly Report on Form 10-Q for quarter ended
March 31, 1997 and incorporated herein by reference).

10(e) Registration Rights Agreement between InterTAN, Inc. and
Trans World Electronics, Inc. (Filed as Exhibit 10(i) to
InterTAN's Annual Report on Form 10-K for fiscal year ended
June 30, 1993 and incorporated herein by reference).

10(f) Employment Agreement between InterTAN, Inc. and James T.
Nichols dated January 1, 1995 (Filed as Exhibit 10(ii) to
InterTAN's Quarterly Report on Form 10-Q for quarter ended
March 31, 1995 and incorporated herein by reference).

10(g) Employment Agreement between InterTAN, Inc. and David S.
Goldberg dated February 3, 1995 (Filed as Exhibit 10(iii) to
InterTAN's Quarterly Report on Form 10-Q for quarter ended
March 31, 1995 and incorporated herein by reference).

10(h) Employment Agreement between InterTAN, Inc. and John A.
Capstick dated February 20, 1995 (Filed as Exhibit 10(iv) to
InterTAN's Quarterly Report on Form 10-Q for quarter ended
March 31, 1995 and incorporated herein by reference).

10(h)(i) Letter dated December 6, 1995 extending term of employment
agreement for John A. Capstick (Filed as Exhibit 10(b) to
InterTAN's Quarterly Report on Form 10-Q for quarter ended
December 31, 1995 and incorporated herein by reference).

E-3
<PAGE>

Exhibit No. Description
----------- -----------

10(i) Employment Agreement between InterTAN, Inc. and James G.
Gingerich dated March 1, 1995 (Filed as Exhibit 10(v) to
InterTAN's Quarterly Report on Form 10-Q for quarter ended
March 31, 1995 and incorporated herein by reference).

10(j) Employment Agreement between InterTAN, Inc. and Douglas C.
Saunders dated March 10, 1995 (Filed as Exhibit 10(vi) to
InterTAN's Quarterly Report on Form 10-Q for quarter ended
March 31, 1995 and incorporated herein by reference).

10(k) Minutes of Settlement dated April 13, 1995 between InterTAN,
Inc. and James B. Williams (Filed as Exhibit 10(k) to
InterTAN's Annual Report on Form 10-K for fiscal year ended
June 30, 1995 and incorporated herein by reference).

10(l) Retirement and Severance Agreement dated July 31, 1994
between InterTAN, Inc. and Louis G. Neumann (Filed as Exhibit
10(l) to InterTAN's Annual Report on Form 10-K for fiscal
year ended June 30, 1995 and incorporated herein by
reference).

10(m) Merchandise Agreement dated October 15, 1993 between
InterTAN, Inc., InterTAN Canada Ltd., InterTAN U.K. Limited,
InterTAN Australia Ltd., Technotron Sales Corp. Pty. Limited,
Tandy Corporation and A&A International, Inc. (Filed as
Exhibit 10(m) to InterTAN's Quarterly Report on Form 10-Q for
quarter ended December 31, 1993 and incorporated herein by
reference).

10(m)(i) First Amendment to Merchandise Agreement dated November 1,
1993 (Filed as Exhibit 10(m)(i) to InterTAN's Quarterly
Report on Form 10-Q for quarter ended March 31, 1994 and
incorporated herein by reference).

10(m)(ii) Second Amendment to Merchandise Agreement dated October 2,
1995 (Filed as Exhibit 10 to InterTAN's Quarterly Report on
Form 10-Q for quarter ended September 30, 1995 and
incorporated herein by reference).

E-4
<PAGE>

Exhibit No. Description
----------- -----------

10(m)(iii) Third Amendment to Merchandise Agreement dated February 1,
1996 (Filed as Exhibit 10(b) to InterTAN's Quarterly Report
on Form 10-Q for quarter ended March 31, 1996 and
incorporated herein by reference).

10(m)(iv) Fourth Amendment to Merchandise Agreement dated July 1, 1996
(Filed as Exhibit 10(b) to InterTAN's Quarterly Report on
Form 10-Q for quarter ended September 30, 1996 and
incorporated herein by reference).

10(n) License Agreement dated November 4, 1993 between Tandy
Corporation and InterTAN Australia Ltd. (Filed as Exhibit
10(n) to InterTAN's Quarterly Report on Form 10-Q for quarter
ended December 31, 1993 and incorporated herein by
reference).

10(o) License Agreement dated November 4, 1993 between Tandy
Corporation and InterTAN U.K. Limited (Filed as Exhibit 10(o)
to InterTAN's Quarterly Report on Form 10-Q for quarter ended
December 31, 1993 and incorporated herein by reference).

10(o)(i) First Amendment to License Agreement (United Kingdom) between
InterTAN U.K. Limited and Tandy Corporation dated April 21,
1995 (Filed as Exhibit 10(o)(i) to InterTAN's Annual Report
on Form 10-K for fiscal year ended June 30, 1995 and
incorporated herein by reference).

10(p) License Agreement dated November 4, 1993 between Tandy
Corporation and InterTAN Canada Ltd. (Filed as Exhibit 10(p)
to InterTAN's Quarterly Report on Form 10-Q for quarter ended
December 31, 1993 and incorporated herein by reference).

10(p)(i) First Amendment to License Agreement (Canada) between
InterTAN Canada Ltd. and Tandy Corporation dated March 24,
1995 (Filed as Exhibit 10(i) to InterTAN's Quarterly Report
on Form 10-Q for quarter ended March 31, 1995 and
incorporated herein by reference).

E-5
<PAGE>

Exhibit No. Description
----------- -----------

10(p)(ii) Second Amendment to License Agreement (Canada), Second
Amendment to License Agreement (United Kingdom), and First
Amendment to License Agreement (Australia and New Zealand),
each dated November 9, 1995 (Filed as Exhibit 10(a) to
InterTAN's Quarterly Report on Form 10-Q for quarter ended
December 31, 1995 and incorporated herein by reference).

10(p)(iii) Third Amendment to License Agreement (Canada), Third
Amendment to License Agreement (United Kingdom), and Second
Amendment to License Agreement (Australia and New Zealand),
each dated June 26, 1996 (Filed as Exhibit 10(p)(iii) to
InterTAN's Annual Report on Form 10-K for fiscal year ended
June 30, 1996 and incorporated herein by reference).

10(q) Credit Agreement dated as of May 6, 1994 (Filed as Exhibit
10(q) to InterTAN's Quarterly Report on Form 10-Q for quarter
ended March 31, 1994 and incorporated herein by reference).

10(q)(i) Amending Agreement and Extension Agreement, each dated as of
April 25, 1995, amending and extending Credit Agreement
(Filed as Exhibit 10(q)(i) to InterTAN's Annual Report on
Form 10-K for fiscal year ended June 30, 1995 and
incorporated herein by reference).

10(q)(ii) Amending Agreement dated March 1, 1996, amending and
extending Credit Agreement (Filed as Exhibit 10(c) to
InterTAN's Quarterly Report on Form 10-Q for quarter ended
March 31, 1996 and incorporated herein by reference).

10(q)(iii) Amending Agreement dated June 25, 1996, amending and
extending Credit Agreement (Filed as Exhibit 10(q)(iii) to
InterTAN's Annual Report on Form 10-K for fiscal year ended
June 30, 1996 and incorporated herein by reference).

10(q)(iv) Amending Agreement dated September 11, 1996 amending the
Credit Agreement (Filed as Exhibit 10(a) to InterTAN's
Quarterly Report on Form 10-Q for quarter ended September 30,
1996 and incorporated herein by reference).

E-6
<PAGE>

Exhibit No. Description
----------- -----------

10(q)(v) Amending Agreement dated February 11, 1997 amending the
Credit Agreement (Filed as exhibit 10(a) to InterTAN's
Quarterly Report on Form 10-Q for quarter ended March 31,
1997 and incorporated herein by reference).

10(r) Inventory Repurchase Agreement dated as of May 6, 1994 (Filed
as Exhibit 10(r) to InterTAN's Quarterly Report on Form 10-Q
for quarter ended December 31, 1994 and incorporated herein
by reference).

10(s) Second Amendment to InterTAN Advertising Agreement and first
amendment thereto (Filed as Exhibit 10(s) to InterTAN's
Annual Report on Form 10-K for fiscal year ended June 30,
1995 and incorporated herein by reference).

10(s)(i) Second Amendment to InterTAN Advertising Agreement dated to
be effective as of January 1, 1996 (Filed as Exhibit 10(a) to
InterTAN's Quarterly Report on Form 10-Q for quarter ended
March 31, 1996 and incorporated herein by reference).

10(s)(ii) Third Amendment to InterTAN Advertising Agreement dated to be
effective as of January 1, 1997 (Filed as Exhibit 10(b) to
InterTAN's Quarterly Report on Form 10-Q for quarter ended
March 31, 1997 and incorporated herein by reference).

10(t) Master Sales Agreement (United Kingdom) dated to be effective
as of December 31, 1995, among InterTAN, Inc., InterTAN U.K.
Limited, and Tandy Corporation (Filed as Exhibit 10(c) to
InterTAN's Quarterly Report on Form 10-Q for quarter ended
December 31, 1995 and incorporated herein by reference).

10(u) InterTAN, Inc. 1996 Stock Option Plan and Forms of Stock
Option Agreement (Filed as Exhibits 4.6 and 4.7,
respectively, to InterTAN's Registration Statement on
Form S-8, SEC file number 333-16105, filed on November 14,
1996 and incorporated herein by reference).

*13 1997 Annual Report to Stockholders page 1 ("Financial
Highlights" only) and pages 13 through 38.

E-7
<PAGE>

Exhibit No. Description
----------- -----------

21 Subsidiaries of InterTAN, Inc. (Filed as Exhibit 21 to
InterTAN's Annual Report on Form 10-K for fiscal year ended
June 30, 1995 and incorporated herein by reference).

*23 Consent of Independent Accountants.

*27 Article 5 Financial Data Schedule.

99 Form of Multi-Option Switch Facility Agreement between
InterTAN Australia Ltd. and Westpac Banking Corporation
(Filed as Exhibit 99 to InterTAN's Quarterly Report on Form
10-Q for quarter ended December 31, 1996 and incorporated
herein by reference).

_________________
* Filed herewith

E-8

<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------

EXHIBIT 13

Company Profile

InterTAN, Inc., headquartered in Fort Worth, Texas, is an international consumer
electronics retailer with approximately 1,700 company-operated retail stores and
dealer outlets in Canada, the United Kingdom and Australia. InterTAN's retail
operations are conducted under trade names licensed from Tandy Corporation:
"RadioShack" in Canada, "Tandy" in the United Kingdom and "Tandy Electronics" in
Australia.

InterTAN carries a broad range of private label and brand name consumer
electronics products, including telephony products such as telephones and
cellular equipment, personal electronics, computers, batteries, parts and
accessories, communication products, and audio and video. InterTAN is committed
to providing consumers with high quality merchandise, convenient locations and
excellent service from friendly, knowledgeable sales associates.

InterTAN's common shares are traded on the New York Stock Exchange under the
symbol "ITN" and the Toronto Stock Exchange under the symbol "ITA."

[Three images, each being a graphic depiction of a flag from the countries of
Canada, the United Kingdom and Australia appear in the background of the
foregoing text. In the upper right-hand corner above the foregoing text appears
the Company's logo followed by the words "InterTAN, Inc.".]

================================================================================

FINANCIAL HIGHLIGHTS

(In thousands, except percent, per share data, Year ended June 30
number of sales outlets and number of employees) 1997 1996 1995 1994 1993/4/
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Net sales $519,318 $506,445 $491,751 $465,766 $641,966
Gross profit percent 44.8 44.3 43.2 44.3 43.0
Operating income (loss) (3,801)/1/ 11,629 13,861/2/ 16,851/2/ (93,155)/2/
Net income (loss) (16,609) (2,241) 8,123 9,649 (109,060)
Primary net income (loss) per average common share (1.45) (0.21) 0.81 2.09 (12.20)
Fully diluted net income (loss) per average common
share (1.45) (0.21) 0.65 1.50 (12.20)
.............................................................................................................................

FINANCIAL POSITION AT YEAR END:
Total assets 254,307 261,633 262,039 258,591 240,534
Net working capital 138,532 145,471 157,582 148,108 40,989
Long-term debt 57,558 64,730 83,555 89,831 40,000/3/
Stockholders' equity 106,234 119,512 113,326 101,513 82,179
.............................................................................................................................

OTHER INFORMATION AT YEAR END:
Number of sales outlets 1,683/5/ 1,780 1,839 1,817 2,136
Retail square feet (company-operated stores) 1,479 1,424 1,468 1,508 1,950
Number of employees 4,366 4,343 4,217 4,220 5,662

- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

/1/ Fiscal year 1997 includes an asset impairment charge of $10,042,000.

/2/ Fiscal years 1995, 1994 and 1993 include provisions (credits) of
($1,600,000), ($3,612,000) and $77,400,000, respectively, relating to
business restructuring.

/3/ Classified as current in 1993 and included in debt to be refinanced on the
balance sheet. If the long-term debt had not been reclassified, net working
capital would have been $80,989,000.

/4/ Amounts for 1993 include results for the Company's former operations in
continental Europe which have been closed.

/5/ This decrease is solely attributable to a planned decline in the number of
low volume dealers.

1
<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTORY NOTE REGARDING FORWARD LOOKING INFORMATION

WITH THE EXCEPTION OF HISTORICAL INFORMATION, THE MATTERS DISCUSSED HEREIN ARE
FORWARD LOOKING STATEMENTS ABOUT THE BUSINESS, FINANCIAL CONDITION AND PROSPECTS
OF INTERTAN, INC. (THE "COMPANY" OR "INTERTAN"). THE ACTUAL RESULTS OF THE
COMPANY COULD DIFFER MATERIALLY FROM THOSE INDICATED BY THE FORWARD LOOKING
STATEMENTS BECAUSE OF VARIOUS RISKS AND UNCERTAINTIES INCLUDING, BUT NOT LIMITED
TO, INTERNATIONAL ECONOMIC CONDITIONS, INTEREST AND FOREIGN EXCHANGE RATE
FLUCTUATIONS, VARIOUS TAX ISSUES, INCLUDING POSSIBLE REASSESSMENTS, CHANGES IN
PRODUCT DEMAND, COMPETITIVE PRODUCTS AND PRICING, AVAILABILITY OF PRODUCTS,
INVENTORY RISKS DUE TO SHIFTS IN MARKET CONDITIONS, DEPENDENCE ON MANUFACTURERS'
PRODUCT DEVELOPMENT, THE REGULATORY AND TRADE ENVIRONMENT, REAL ESTATE MARKET
FLUCTUATIONS AND OTHER RISKS INDICATED IN THE COMPANY'S PREVIOUS FILINGS WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE RISKS AND UNCERTAINTIES ARE
BEYOND THE ABILITY OF THE COMPANY TO CONTROL, AND IN MANY CASES THE COMPANY
CANNOT PREDICT THE RISKS AND UNCERTAINTIES THAT COULD CAUSE ITS ACTUAL RESULTS
TO DIFFER MATERIALLY FROM THOSE INDICATED BY THE FORWARD LOOKING STATEMENTS.

RESULTS OF OPERATIONS

OVERVIEW

InterTAN is engaged in the sale of consumer electronics products primarily
through company-operated retail stores and dealer outlets in Canada, the United
Kingdom and Australia. The Company's retail operations are conducted through
three wholly-owned subsidiaries: InterTAN Australia Ltd., which operates in
Australia under the trade name "Tandy Electronics"; InterTAN Canada Ltd., which
operates in Canada under the trade name "RadioShack"; and InterTAN U.K. Limited,
which operates in the United Kingdom under the "Tandy" trade name. All of these
trade names are used under license from Tandy Corporation ("Tandy") of Fort
Worth, Texas.

The geographic distribution of the Company's sales outlets is summarized in the
following table:

SALES OUTLETS
<TABLE>
<CAPTION>
FISCAL YEAR 1997 June 30
ENDING OPENED CLOSED 1996 1995
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CANADA
Company-operated 452* 9 7 450 446
Dealer 401 44 45 402 429
.........................................................................
853 53 52 852 875
- -------------------------------------------------------------------------

AUSTRALIA
Company-operated 215 7 2 210 205
Dealer 144 16 74 202 260
.........................................................................
359 23 76 412 465
- -------------------------------------------------------------------------

UNITED KINGDOM
Company-operated 341 7 11 345 335
Dealer 130 7 48 171 164
.........................................................................
471 14 59 516 499
- -------------------------------------------------------------------------

TOTAL
Company-operated 1,008 23 20 1,005 986
Dealer 675 67 167 775 853
.........................................................................
1,683 90 187 1,780 1,839
- -------------------------------------------------------------------------
</TABLE>

* In addition, the Company operated 56 stores on behalf of Rogers Cantel Inc.

13
<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------
The dealers included in the preceding table are independent retail businesses
which operate under their own trade names but are permitted, under dealer
agreements, to purchase any of the products sold by InterTAN company stores.
The dealer agreements contain a license permitting the dealer to designate the
consumer electronics department of the dealer's business as a "RadioShack
Dealer," a "Tandy Dealer," or a "Tandy Electronics Dealer," as applicable.
Sales to dealers accounted for approximately 9% of total sales during fiscal
year 1997.

During fiscal year 1996, the Company entered into an agreement with Rogers
Cantel Inc. ("Cantel") to operate telecommunications stores ("Cantel
stores") on its behalf. The first of these stores was opened in August, 1996
and at June 30, 1997, 56 stores were in operation. Under the terms of this
agreement, Cantel leases the store and is responsible for fixed costs, including
rent and realty taxes. The Company purchases inventory from Cantel and receives
a commission on certain sales. In addition to Cantel products, a portion of
each store displays complementary products offered by the Company. Since these
locations are not company-owned, they are not included in the above table.

InterTAN's business is seasonal; sales peak in the November-December Christmas
selling season. The Company's cash flow requirements are also seasonal since
inventories build prior to the Christmas selling season. Significant inventory
growth for all operations typically begins to build in late summer and peaks in
November.

Since the impact of the fluctuations of local country currencies against the
U.S. dollar can be significant, the following analysis of the income and expense
categories is based both on amounts expressed in U.S. dollars and as a percent
of sales. Profit and loss accounts, including sales, are translated from local
currency values to U.S. dollars at the monthly average exchange rates.

During fiscal year 1997, the U.S. dollar was weaker against the Australian
dollar and U.K. pound sterling than in fiscal year 1996. As a result, the same
local currency amounts translate into more U.S. dollars as compared with the
prior year. For example, if local currency sales of the Australian operation in
fiscal 1997 were equal to those in fiscal 1996, the fiscal 1997 income statement
would reflect a 3.5% increase in sales when reported in U.S. dollars. On the
other hand, during fiscal year 1997 the U.S. dollar strengthened against the
Canadian dollar. Consequently, in Canada, the same local currency amounts
translated into less U.S. dollars in fiscal year 1997 as compared with fiscal
year 1996.

The table below outlines the percentage change in the weighted average exchange
rates as compared to the prior year:

<TABLE>
<CAPTION>
1997 1996 1995
- --------------------------------------
<S> <C> <C> <C>
Canada (0.3) 1.4 (3.1)
Australia 3.5 2.1 8.3
United Kingdom 4.8 (1.9) 5.6
- --------------------------------------
</TABLE>

NET SALES AND OPERATING REVENUES

Net sales and operating revenues ("sales") in U.S. dollars increased by
$12,873,000 in fiscal year 1997, an increase of 2.5% over fiscal year 1996. The
impact on sales of a stronger Australian dollar and pound sterling was
partially offset by a weaker Canadian dollar. On a net basis, foreign exchange
effects accounted for $10,727,000 of the increase. Measured at the same
exchange rates, therefore, sales increased by $2,146,000, or 0.4%. This
increase in sales, measured at comparable exchange rates, was more than
attributable to an increase in the number of company-operated stores. During
fiscal year 1997, the Company opened 23 new company-operated stores while
closing 20 stores for a net increase of 3 company-operated stores. The new
stores had a more pronounced impact on sales, as new store openings tend to take
place in the earlier part of the fiscal year, prior to the Christmas selling
season. Store closures, on the other hand, had a less pronounced impact on
sales, as closures tend to occur during the latter part of the fiscal year so
that their results include Christmas sales. In fiscal year 1996, the Company
increased the net number of stores by 19, while reducing the number of stores in
fiscal year 1995 by 9. In Canada, during fiscal year 1997, the Company also
operated Cantel stores. At June 30, 1997, 56 Cantel stores were open. No such
stores were open in either fiscal year 1996 or 1995. While the Company is
always seeking viable new and replacement locations, focus during fiscal 1998
will continue to be on improving existing locations and reviewing and
rationalizing selected marginal locations, particularly in the United Kingdom.
Management currently anticipates that the number of stores closed during fiscal
1998 will approximate the number of new store openings; however, this strategy
could change. Should this occur, the effect on sales is not expected to be
material.

The decrease in the number of dealers in all three countries is primarily
attributable to programs designed to eliminate dealers that were not purchasing
product in sufficient quantities to make them profitable to the Company. The
reduction in the number of dealers is not expected to have a material effect on
sales. The Company intends to continue to explore opportunities to expand its
dealer base to produce sales from communities too small to support company-
operated stores.
14
<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------

The following table illustrates the total percentage sales increase (decrease)
by geographic area as measured in U.S. dollars and local currencies:
<TABLE>
<CAPTION>

SALES INCREASE (DECREASE)
U.S. dollars
Year ended June 30
(Percent change) 1997 1996 1995
- --------------------------------------------------------------
<S> <C> <C> <C>
Canada 1.0 2.2 2.0
Australia 9.3 12.1 7.8
United Kingdom 1.0 (0.6) 8.8
- --------------------------------------------------------------

Local Currencies
Year ended June 30
1997 1996 1995
- --------------------------------------------------------------
Canada 1.3 1.0 5.3
Australia 5.6 10.3 (0.1)
United Kingdom (3.7) 1.3 3.2
- --------------------------------------------------------------
</TABLE>

The following table illustrates comparative company-operated store sales
measured at comparable exchange rates:

COMPARATIVE COMPANY-OPERATED STORE SALES/1/

Year ended June 30
(Percent change) 1997 1996 1995
- --------------------------------------------------------------
<S> <C> <C> <C>
Canada (1.8) 0.6 6.5
Australia 2.9 10.7 2.5
United Kingdom (4.1) (0.7) 4.1
..............................................................
Consolidated (1.6) 1.9 4.9
</TABLE>

/1/ Derived from the accumulation of each store's monthly sales in local
currency for those months in which it was open both in the current and
preceding year.

Comparative stores sales declined during fiscal year 1997 as a whole by 1.6%,
with reductions being experienced in all four quarters. There were a number of
factors which adversely influenced the Company's sales performance during fiscal
year 1997. Consumer resistance to pricing had a negative effect on computer
sales in the first quarter in Canada. In addition, cellular sales were soft in
all three countries in the third quarter. In Canada, management believes
consumers were delaying purchases in anticipation of the arrival of digital
wireless technology, while in Australia and the United Kingdom there was
resistance to pricing, as the market moved to digital from the more traditional
analog product. A generally weak consumer electronics market in the United
Kingdom, in particular during the important Christmas quarter, also was a
factor. Management believes that certain steps taken to refocus the Company
into its market niche, including the decision to de-emphasize the video game
business, had an unfavorable impact on sales. For example, reduced video game
sales depressed overall sales for the year by about 1%, requiring improvements
in other product categories just to stay even with the prior year. The impact
of these transitional effects on revenues should not be material in future
periods. Although sales were generally disappointing throughout the year, the
fourth quarter finished strongly, with comparative store gains in both Canada
and Australia.

Management believes the steps taken to refocus the Company into its niche market
together with the introduction of a number of new service initiatives and
advertising programs made available to it under an advertising agreement with
Tandy, including the positioning statement, "You've got questions. We've got
answers." and the service initiatives, "The Repair Shop at RadioShack" and
"RadioShack Unlimited" had an overall positive impact on sales during fiscal
year 1997 and management believes that sales will continue to benefit from these
and other service initiatives during fiscal year 1998.

Sales in U.S. dollars increased by $14,694,000 in fiscal year 1996, an increase
of 3.0% over fiscal year 1995. The impact on sales of stronger Australian and
Canadian dollars was partially offset by a weaker pound sterling. Measured at
the same exchange rates, sales increased by $13,244,000, or 2.7%. An increase
of 19 company-operated stores was an important factor in this improved
performance. Comparative store sales increased by 1.9% during fiscal year 1996.

Sales increased by $24,122,000 in fiscal year 1995. A stronger Australian
dollar and pound sterling accounted for $7,034,000 of the increase. Sales at
comparable exchange rates increased by 3.6% in fiscal year 1995. This increase
in sales was achieved despite a net reduction of nine company-operated stores.
Comparative store sales increased by 4.9% during fiscal year 1995.

GROSS PROFIT

An increase in the gross margin percentage, higher sales and foreign currency
rate effects all contributed to an increase in gross margin of $8,090,000 during
fiscal year 1997. The following analysis summarizes the components of the
increase in gross profit over that experienced in fiscal year 1996 (in
thousands):

- -------------------------------------------
<S> <C>
Higher gross margin percentage $2,615
Higher sales 950
Foreign currency rate effects 4,525
...........................................
$8,090
- -------------------------------------------
</TABLE>

15
<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------

The following table illustrates gross profit as a percentage of sales, by
geographic area:

GROSS PROFIT BY GEOGRAPHIC AREA

Year ended June 30
(As a percent of sales) 1997 1996 1995
- --------------------------------------------------------------
<S> <C> <C> <C>
Canada 45.3 45.6 45.1
Australia 47.7 45.5 43.8
United Kingdom 42.1 41.6 39.9
..............................................................
Consolidated 44.8 44.3 43.2
- --------------------------------------------------------------
</TABLE>

The gross profit percentage for fiscal year 1997 rose from 44.3% a year ago to
44.8%, an increase of 50 basis points. This improvement results primarily from
further development of the merchandising strategy, initially implemented two
years ago, which places greater emphasis on the Company's higher margin core
categories, including parts and accessories and private label goods. Emphasis
on the sale of extended warranty contracts and tighter controls over inventories
also had a positive effect on margins.

Management believes that the steps taken to refocus the Company in its niche
market as well as the benefits of current and planned service and other
initiatives will continue to make a positive contribution to margins in fiscal
year 1998. However, the benefits of this strategy may be offset by the effect
of initiatives taken to emphasize certain product lines, such as cellular, in
particular products sold through the Cantel stores, other telephony products and
direct to home satellite systems, which have sales growth potential but carry
below average margins.

Gross profit in fiscal year 1996 was $12,078,000 higher than in fiscal 1995,
primarily due to an increase in sales and an improvement in the gross margin
percentage, which increased by 1.1 percentage points to 44.3% of sales. This
increase resulted primarily from the implementation of the new merchandising
strategy described above.

In fiscal year 1995, the gross margin percentage declined by 0.9 percentage
points. Much of this decline occurred in Canada and was due to a swing in the
sales mix away from private label goods towards branded product, in particular
computers. Management addressed this issue by better managing the percentage of
computers in the product mix. The effect of the decline in Canadian margins was
partially offset by an improvement in the gross margin percentage in Australia
following the installation of an electronic point-of-sale system in that
operation.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses ("SG&A"), increased during the
fiscal year 1997 by $11,517,000 or 5.6%.

The following chart illustrates SG&A expense as a percentage of sales by
geographic area:

SG&A EXPENSE BY GEOGRAPHIC AREA

Year ended June 30
(As a percent of sales) 1997 1996 1995
- --------------------------------------------------------------
<S> <C> <C> <C>
Canada 35.9 35.6 34.5
Australia 42.1 41.6 41.9
United Kingdom 48.2 45.0 42.1
..............................................................
Consolidated 41.8 40.6 39.4
- --------------------------------------------------------------
</TABLE>

The following table provides a breakdown of SG&A expense by major category (in
thousands):

SG&A EXPENSE BY CATEGORY
1997 1996 1995

DOLLARS % OF SALES Dollars % of Sales Dollars % of Sales
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Payroll $87,774 16.9 $83,507 16.5 $78,359 15.9
Advertising 27,792 5.4 26,045 5.1 24,638 5.0
Rent 43,578 8.4 40,918 8.1 39,423 8.0
Taxes (other than income taxes) 18,105 3.5 16,942 3.3 16,160 3.3
Telephone and utilities 7,333 1.4 6,865 1.4 6,669 1.4
Other 32,629 6.2 31,417 6.2 28,518 5.8
..................................................................................................
$217,211 41.8 $205,694 40.6 $193,767 39.4
- --------------------------------------------------------------------------------------------------
</TABLE>

16
<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------

Foreign exchange rate effects and the scheduled increase in the royalty payable
to Tandy explain almost one-half of the increase in SG&A spending during fiscal
year 1997. The profitable growth of the business in Australia as well as the
new Cantel stores in Canada contributed to higher payroll costs. Advertising
was increased both in Australia and the United Kingdom in an attempt to build
brand awareness and grow sales. A greater store count, increases following rent
reviews and higher tax rates resulted in increased rents and property taxes in
all three jurisdictions.

Management's objective for fiscal year 1997 had been to achieve a one percentage
point increase in the operating margin (i.e., an increase in the gross margin
percentage combined with a reduction in the SG&A percentage). While the gross
margin percentage improved, this improvement was more than offset by an increase
in the SG&A percentage. As actual SG&A spending was within planned levels, this
increase resulted from a sales performance which fell short of expectations.
Following a disappointing Christmas quarter, management took further steps to
more closely control costs in all jurisdictions, but with particular emphasis on
Canada and the United Kingdom. This strategy showed results in the fourth
quarter, as SG&A declined modestly as a percentage of sales and SG&A spending in
the United Kingdom, measured at constant exchange rates, showed a year-on-year
decline for the quarter. Management will continue to focus its attention on
controlling costs in future periods in an effort to keep increases in SG&A
spending more in line with realized sales gains.

In fiscal year 1996, SG&A expense was $205,694,000, an increase of $11,927,000.
Implementing a strategy of growing the business by refocusing the Company in its
niche market, introducing new service and other initiatives and expanding in
selected markets of necessity required some increase in SG&A spending. The
increase in the number of stores resulted in higher rent and increased store
payroll costs. Payroll costs also increased as a result of the "Repair Shop at
RadioShack" initiative as well as the strengthening of the management teams in
all three countries. Management information systems were also improved,
particularly in the United Kingdom.

In fiscal year 1995, SG&A expense increased by $7,546,000. The effects of
foreign exchange rate fluctuations accounted for more than one-half of this
increase. SG&A spending in fiscal year 1995 was heavily affected by the
decision to refocus the Company in its niche market. This action resulted in
one-time costs incurred in the process of restructuring the business, as well as
the relocation of the corporate headquarters from Toronto to Fort Worth.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization increased by $1,699,000 during fiscal year 1997,
rising to $9,671,000 from $7,972,000 in fiscal year 1996. This increase results
from a full year's depreciation charge on capital expenditures, primarily on new
stores and store renovations made in fiscal year 1996. Investment in enhanced
management information systems was also a factor. The level of capital spending
in fiscal year 1996 had been higher than in each of the preceding two years,
primarily because of an increase in new store openings. As a consequence of the
impairment charge of $10,042,000 recorded in the United Kingdom in fiscal year
1997, management anticipates that depreciation expense in each of the next two
years will be approximately $1,500,000 lower than would have been the case,
absent the impairment charge. Thereafter, the effect on depreciation expense of
the impairment charge is not expected to be material.

Depreciation and amortization expense increased modestly in fiscal year 1996 by
$468,000, primarily as a result of increased capital spending on store
renovations, new stores and investments in management information systems.
Depreciation and amortization expense had decreased by $477,000 during fiscal
year 1995, primarily as a result of reduced capital spending during the
Company's financial restructuring in fiscal year 1994.

IMPAIRMENT OF LONG-LIVED ASSETS

Because of the continued and higher than expected operating losses in the United
Kingdom, the Company conducted an impairment evaluation of its fixed assets in
the United Kingdom in accordance with the provisions of Financial Accounting
Standard No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of". As a result of this evaluation, during
the fourth quarter of fiscal year 1997, the Company recognized a non-cash
impairment charge of $10,042,000 which represents the difference between the
estimated market value and the book value of the Company's investment in
property and equipment in the United Kingdom, primarily in its retail store
locations, including, lease premiums, leasehold improvements and store fittings
and fixtures. Fair market value was principally determined based upon estimated
future discounted cash flows (before interest).

PROVISION FOR BUSINESS RESTRUCTURING

In May, 1993 the Company recorded a pre-tax charge in the amount of $77,400,000
in connection with the shutdown of it former continental European retail
operations. During fiscal 1995, certain claims and contingencies were settled
for amounts less than originally estimated. As a result of these settlements
and certain other developments, management reduced

17
<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------

the accrual by $1,600,000. Management believes the remaining restructuring
reserve at June 30, 1997 of $1,449,000 is adequate to provide for the Company's
remaining obligations in Europe including those arising from legal actions
brought against the Company by former employees, dealers and franchisees.

FOREIGN CURRENCY TRANSACTION (GAINS)/LOSSES

Foreign currency transaction gains of $610,000 and $338,000 arose during fiscal
years 1997 and 1996, respectively, compared to a foreign currency loss of
$314,000 in fiscal year 1995. These gains and losses resulted from a variety of
factors, including the effect of fluctuating foreign currency values on inter-
company debt and trade payables denominated in currencies other than the
functional currency of the debtor as well as on the carrying value of the
Company's remaining assets in continental Europe. The Company's major exposure
to foreign currency risks are the Canadian dollar denominated subordinated
convertible debentures (the "Debentures") carried on the books of the Company
and the U.S. dollar denominated note due to Tandy which is recorded in the
Canadian subsidiary. Historically, these two debts provided a natural hedge, as
the related foreign currency risks were largely offsetting. The foreign
exchange risk with respect to these two debts is increasing with time as the
note payable to Tandy is repaid.

NET INTEREST EXPENSE

Interest expense, net of interest income, was $6,663,000, $6,709,000 and
$7,462,000 for fiscal years 1997, 1996 and 1995, respectively. The reduction in
net interest expense in fiscal year 1997 results from lower interest bearing
debt as a consequence of principal repayments on the note payable to Tandy. The
effect of this reduction was partially offset by an increase in short-term
borrowings in the United Kingdom. Principal repayments to Tandy, as well as the
voluntary conversion of a portion of the Debentures by the holders thereof,
contributed to lower net interest expense in fiscal year 1996. In addition,
the amortization of a significant portion of the Company's bank financing costs
had been completed in fiscal 1995.

INCOME TAXES

The Company's unusually high effective tax rate is primarily due to the fact
that the Company recognizes income tax expense on the profits generated by
InterTAN Canada, but does not recognize income tax benefits on the losses
incurred by InterTAN U.K. Limited. The Company expects its tax rate to continue
to be unusually high until the losses in the United Kingdom are substantially
reduced. The Company has regularly assessed the future benefit, if any, which
might be derived from the Company's deferred tax assets. Based on the operating
performance of the Canadian subsidiary in fiscal 1995, management concluded that
the valuation allowance should be reduced by $9,100,000 and the Company
recognized a deferred tax benefit of that amount. The Company also recorded a
current deferred tax benefit of $1,000,000 relating to the parent Company during
fiscal year 1995. No further reductions were made to the valuation allowance
during fiscal 1996. During fiscal year 1997, based on the improved operating
performance of the Australian subsidiary during the last two fiscal years,
management concluded that the valuation allowance against the deferred tax
assets of that subsidiary should be reduced by $634,000 and the Company recorded
a deferred tax benefit of that amount. With the exception of the deferred tax
benefits described above, the provision for taxes in fiscal years 1996 and 1997
of $7,499,000 and $6,755,000, respectively, primarily represents a provision for
Canadian federal and provincial taxes on the profits of the Canadian subsidiary.

At June 30, 1997, the Company had deferred tax assets in all three countries
aggregating $39,972,000 against which a valuation allowance has been recorded in
the amount of $39,338,000. Approximately $32,053,000 of the valuation allowance
relates to loss carry forwards and other timing differences in Australia and the
United Kingdom. The potential realization of the deferred tax assets will be
reviewed on a regular basis.

An audit of the Canadian income tax returns of the Canadian subsidiary for the
1987 to 1989 taxation years was completed during fiscal year 1994, resulting in
additional tax being levied against the Canadian subsidiary. The Company has
appealed these reassessments and, pending the outcome of these matters, the
Company, by Canadian law, was required to pay one-half of the tax in dispute.
The tax levied by Revenue Canada in reassessing those years was offset by
refunds arising from the carry-back of losses incurred in subsequent years.
Depending on the ultimate resolution of these issues, the Company could
potentially have an additional liability in the range of $0 to $11,600,000. The
Company believes it has meritorious arguments in defense of the issues raised by
Revenue Canada and it is in the process of vigorously defending its position.
It is management's determination that no additional provision need be recorded
for these reassessments. In order for the Company to succeed in appealing
certain aspects of these reassessments, it must succeed in defending the
possible reassessments discussed in the paragraph immediately below.

18
<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------

these issues, the Company could potentially have an additional liability in the
range of $0 to $20,000,000. As required by Canadian law, the Company would
likely be required to post a deposit of one-half of the tax in dispute,
including interest, in order to appeal any reassessment.

An audit of the Canadian income tax returns of the Canadian subsidiary for the
1990 to 1993 taxation years was commenced during the 1995 fiscal year. The
Company has been advised that Revenue Canada is challenging certain interest
deductions relating to the Canadian subsidiary's former operations in
continental Europe and is proposing to tax certain foreign exchange gains
related to such operations. Depending on the ultimate resolution of these
issues, the Company could potentially have an additional liability in the range
of $0 to $25,000,000. Assuming Revenue Canada pursues these issues, in order
for the Company to proceed with such appeals, the Company would likely be
required to post a cash deposit or letters of credit equal to one-half of the
1990-1993 tax in dispute, together with interest. Notwithstanding that the
Company is still in discussions with Revenue Canada regarding these issues,
Revenue Canada was required to issue a protective reassessment for one of the
years because the time period during which such reassessment could legally be
issued was about to expire. The amount of the reassessment, including interest,
is approximately $13,800,000. This amount relates to the 1992 taxation year
only and is reflected in the range described immediately above. The Company has
appealed this reassessment and, as indicated above, would normally be required
to post a cash deposit equal to one-half of the reassessment, pending the
outcome of such appeal. However, Revenue Canada has agreed to defer the posting
of such deposit pending the outcome of on-going discussions on this particular
issue. Revenue Canada has further agreed to accept a letter of credit in lieu
of a cash deposit should it be necessary for the Company to actively proceed
with its appeal. Management believes it has meritorious arguments in support of
the deductibility of such interest and in support of its treatment of the
foreign exchange gains and is prepared to vigorously defend its position should
the Canadian tax authorities proceed with such a challenge following the
conclusion of discussions with the Company and its advisors. Accordingly, it is
management's assessment that no provision need be recorded for these possible
claims.

NET INCOME PER AVERAGE COMMON SHARE

The primary net loss and fully diluted loss per average common share were $1.45
and $0.21 for fiscal years 1997 and 1996, respectively, as the effect of the
Debentures was anti-dilutive. For fiscal year 1995, primary net income per
average common share and fully diluted net income per average common share were
$0.81 and $0.65, respectively. In that period, the difference between primary
and fully diluted net income per average common share was due primarily to the
dilutive effect of the Debentures, which were convertible into 7,123,860 common
shares at that time. Because the Debentures were anti-dilutive during one or
more quarters during each of fiscal years 1997, 1996 and 1995, fully diluted net
income (loss) per average common share during the four quarters of those fiscal
years do not equal fully diluted net income per average common share for those
fiscal years as a whole. The dilutive effect of this instrument will likely
continue in future periods and exchange rate impacts on the Debentures may
increase or decrease their dilutive effects. If the Company were to redeem the
Debentures after February 28, 2000 by issuing common shares to the holders
thereof in accordance with the terms of the Debentures, the dilutive effect of
the Debentures would be increased if the market value of the Company's common
stock at the time of redemption were less than the conversion price ($6.10 at
June 30, 1997 exchange rates).

The Company has outstanding warrants exercisable for 1,449,007 common shares at
an exercise price of $6.618 per share. These warrants expire on August 5, 1998.
Also, in fiscal years 1997, 1996 and 1995, the Company's directors and employees
held options to purchase 785,500, 650,833 and 650,000 common shares,
respectively, at exercise prices ranging from $3.50 to $8.1875, $5.31 to $8.125
and $5.31 to $7.125, respectively. The outstanding warrants and options, when
dilutive, were also considered in determining primary and fully diluted net
income per average common share.

In February 1997, the Financial Accounting Standards Board issued Financial
Accounting Standard No. 128, "Earnings per Share" ("FAS 128"), which is
effective for financial statements issued for periods ending after December 15,
1997, including interim periods. Effective December 31, 1997, the Company will
adopt FAS 128, which established new standards for computing and presenting
earnings per share ("EPS"). The statement requires dual presentation of basic
and diluted EPS on the face of the income statement for entities with complex
capital structures and requires a reconciliation of the numerator and
denominator of the basic EPS computation, to the numerator and denominator of
the diluted EPS computation. Basic EPS excludes the effect of potentially
dilutive securities while diluted EPS reflects the potential dilution that could
occur if securities or other contracts to issue common stock were exercised,
converted, or resulted in the issuance of common stock that would then share in
the earnings of the entity. For the year ended June 30, 1997, pro forma basic
and diluted loss per common share computed pursuant to FAS 128 would not have
differed from that presented on the face of the Consolidated Statement of
Operations.

19
<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------

LIQUIDITY AND CAPITAL RESOURCES

Operating activities generated $5,570,000 in cash during fiscal year 1997. Net
income, adjusted to reconcile net income to cash, generated $10,566,000 in cash,
which was partially offset by $7,592,000 in cash consumed in building
inventories. The increase in inventories in fiscal 1997 was due primarily to
the requirements of the 56 Cantel stores in Canada and the need to build
inventories in response to higher sales in Australia. Operating activities had
generated $12,185,000 in cash during fiscal year 1996. Net income, adjusted to
reconcile net income to cash, generated $15,418,000 in cash, while increases in
inventories consumed $13,698,000 in cash during that year. The increase in the
Company's inventory levels in fiscal year 1996 resulted from implementing a
merchandising strategy which places greater emphasis on higher margin private
label goods. These products require larger order sizes and longer lead times.
An improvement in the Company's in-stock position and a wider product assortment
also contributed to the increase. The effect of this reduction in cash was
partially offset by an increase in accounts payable which preserved $9,960,000
in cash during fiscal 1996. Operating activities resulted in an inflow of cash
of $8,030,000 during fiscal year 1995. Net income in fiscal year 1995, adjusted
to reconcile net income to cash, generated $13,784,000 in cash which was
partially offset by a reduction in accrued expenses and higher levels of
accounts receivable and other current assets, primarily cash on deposit with
Tandy.

Investing activities consumed $7,981,000 in cash during fiscal year 1997
compared with $9,961,000 and $5,773,000 in cash in fiscal years 1996 and 1995,
respectively. These cash outflows primarily result from additions to property
and equipment as the Company proceeds with a plan to open new stores and
renovate existing stores. These capital expenditures were higher in fiscal year
1996, primarily because of the large number of new stores opened in that period.
During fiscal year 1996, the Company opened 32 new stores, while in fiscal years
1997 and 1995, 23 and 10 new stores, respectively, were opened.

In fiscal year 1997, financing activities generated $3,555,000 in cash. The
effects of an increase in short-term borrowings in the United Kingdom combined
with proceeds from the issuance of stock to employee plans were partially offset
by scheduled repayments on a note payable under the Company's Secured Loan
Agreement with Tandy. In fiscal year 1996, financing activities consumed
$13,895,000 in cash. In that year, the amount of cash consumed by scheduled
repayments on one of the notes payable to Tandy was augmented by effect of the
early retirement of another note payable to Tandy. The effect on cash of these
repayments was partially offset by short-term borrowings and cash generated from
the sale of stock to employee plans. In fiscal year 1995, financing activities
consumed $1,658,000 in cash. Cash consumed by the principal payment of debt to
Tandy was partially offset by the proceeds from the sale of common stock to
employee plans.

The Company's principal sources of liquidity during fiscal year 1998 will be its
cash and short-term investments, its cash flow from operations and its banking
facilities.

In May, 1994, InterTAN Canada Ltd., InterTAN, Inc., and InterTAN U.K. Limited
entered into a one-year credit agreement ("Syndicated Loan Agreement") with a
syndicate of banks. This agreement established a one-year revolving facility in
an amount which is determined using an inventory level calculation not to exceed
Cdn$60,000,000 ($43,446,000 at June 30, 1997 exchange rates). This agreement
has been renewed and now extends through mid-August, 1998. The Company intends
to request a further extension of the facility prior to August, 1998 and
reasonably believes that the banking syndicate will agree to such renewal;
however, there can be no guarantee of such renewal.

This facility is used primarily to provide letters of credit in support of
purchase orders and, from time to time, to finance inventory purchases. At
June 30, 1997, there were borrowings against the credit facility aggregating
$9,821,000 and $13,985,000 was committed in support of letters of credit. There
was $19,640,000 of credit available for use at June 30, 1997. In September
1997, the Company's Merchandise Agreement with Tandy was amended to permit the
Company to support purchase orders with a surety bond or bonds as well as
letters of credit. The Company has recently concluded an agreement with a major
insurer to provide such a surety bond (the "Bond") in an amount not to exceed
$15,000,000. Use of the Bond will give the Company greater flexibility in
placing orders with Far Eastern suppliers by releasing a portion of the credit
facility for other purposes.

20
<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------

The Company's Australian subsidiaries, InterTAN Australia Ltd. and Technotron
Sales Corp. Pty. Ltd., have entered into a credit agreement with an Australian
bank (the "Australian Facility"). This agreement established a credit facility
in the amount of A$12,000,000 ($9,046,000 at June 30, 1997 exchange rates). The
Australian Facility has no fixed term and may be terminated at any time upon
five days' prior written notice by the lender. All or any part of the facility
may be used to provide letters of credit in support of purchase orders. A
maximum amount of A$5,000,000 ($3,769,000 at June 30, 1997 exchange rates) may
be used in support of short-term borrowings. Interest is charged on such
borrowings at the Australian Indicator Lending Rate plus 1.25 percentage points.
At June 30, 1997, while there were no borrowings outstanding against the
Australian Facility, $4,000,000 was committed in support letters of credit as
described above and $5,046,000 of credit was available for use.

In addition to the credit facilities described above, the Company's principal
sources of outside financing have been from the borrowings from Tandy and from
the Debentures. Both the Secured Loan Agreement and the Syndicated Loan
Agreement preclude the Company from paying dividends on its common stock.
Accordingly, any such payment would require the refinancing of any amounts
outstanding under these loan agreements or the consent of the Company's banking
syndicate and Tandy; there can be no assurance that either event would occur.
In addition, the Secured Loan Agreement and the Syndicated Loan Agreement
contain covenants which require the Company to maintain tangible net worth at a
specified minimum level and which limit the level of debt due both to Tandy as
well as other parties, annual capital spending and lease commitments and require
the Company to maintain debt to equity and working capital ratios at agreed
levels. These loan agreements also require the Company to meet certain interest
coverage ratios. During fiscal year 1997, the Company was in compliance with
all of these requirements, except for the cash interest coverage ratios under
the Syndicated Loan Agreement and the Secured Loan Agreement at December 31,
1996 and June 30, 1997, respectively. The banking syndicate and Tandy have
waived the non-compliance with these covenants. Management expects that the
Company will meet all covenant requirements during fiscal year 1998.

The Company's primary uses of liquidity during fiscal year 1998 will include the
building of inventories for the 1997 Christmas selling season, the funding of
capital expenditures and the servicing of debt. The Company anticipates that
capital additions will approximate $8,000,000 during fiscal year 1998, mainly
related to store expansion, remodeling and upgrading. The Company's debt
servicing requirements in fiscal year 1998 are estimated to be $12,600,000 and
include principal payments under the Secured Loan Agreement of $6,958,000. As
previously described, the Company believes that it may be required to post
additional tax deposits or letters of credit with Revenue Canada in order to
appeal existing, and, possibly, additional reassessments of tax. See "Income
Taxes".

Management believes that the Company's cash and short-term investments on hand
and its cash flow from operations combined with the Syndicated Loan Agreement,
the Australian Facility and the Bond will provide the Company with sufficient
liquidity to meet its planned requirements through fiscal year 1998, provided
the amount of any additional tax deposits was not at the upper end of the ranges
described above under "Income Taxes". If this were the case, the Company would
be required to seek additional sources of liquidity. Management is currently in
the process of studying additional funding alternatives. However, there can be
no assurance that additional funding would be available, if required, on terms
acceptable to the Company.

21
<PAGE>
INTERTAN, INC.
- --------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF OPERATIONS

Year ended June 30
(In thousands, except per share data) 1997 1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales and operating revenues $519,318 $506,445 $491,751
Other income 640 902 1,217
.....................................................................................................
519,958 507,347 492,968

Operating costs and expenses:
Cost of products sold (including purchases from Tandy
Corporation of $91,945, $86,366, and $69,091, respectively) 286,835 282,052 279,436
Selling, general and administrative expenses 217,211 205,694 193,767
Depreciation and amortization 9,671 7,972 7,504
Impairment of long-lived assets 10,042 -- --
Provision for business restructuring -- -- (1,600)
.....................................................................................................
523,759 495,718 479,107
.....................................................................................................

Operating income (loss) (3,801) 11,629 13,861

Foreign currency transaction (gains) losses (610) (338) 314
Interest expense, net 6,663 6,709 7,462
.....................................................................................................

Income (loss) before income taxes (9,854) 5,258 6,085
Provision (benefit) for income taxes 6,755 7,499 (2,038)
.....................................................................................................

Net income (loss) $(16,609) $ (2,241) $ 8,123
- -----------------------------------------------------------------------------------------------------

Primary net income (loss) per average common share $ (1.45) $ (0.21) $ 0.81
.....................................................................................................

Fully diluted net income (loss) per average common share $ (1.45) $ (0.21) $ 0.65
.....................................................................................................

Average common shares outstanding 11,459 10,901 10,043
.....................................................................................................

Average common shares outstanding assuming full dilution 11,459 10,901 17,186
.....................................................................................................
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

22
<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------

CONSOLIDATED BALANCE SHEETS

June 30, June 30,
(In thousands, except share amounts) 1997 1996
- ------------------------------------------------------------------------------------------------------------
ASSETS

Current Assets:
<S> <C> <C>
Cash and short-term investments $ 34,726 $ 34,096
Accounts receivable, less allowance for doubtful accounts 9,655 9,422
Inventories 170,594 162,207
Other current assets 7,271 7,628
Deferred income taxes 634 3,831
............................................................................................................
Total current assets 222,880 217,184

Property and equipment, less accumulated depreciation and amortization 28,812 39,129
Other assets 2,615 2,928
Deferred income taxes -- 2,392
............................................................................................................
$254,307 $261,633
- ------------------------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Short-term bank borrowings $ 9,821 $ 975
Current maturities of note payable to Tandy Corporation 6,958 6,958
Accounts payable 25,215 24,082
Accounts payable to Tandy Corporation 2,589 894
Accrued expenses 27,031 25,833
Income taxes payable 12,734 12,971
............................................................................................................
Total current liabilities 84,348 71,713

Long-term note payable to Tandy Corporation, less current maturities 16,420 23,070
9% convertible subordinated debentures 41,138 41,660
Other liabilities 6,167 5,678
............................................................................................................
148,073 142,121
............................................................................................................
Stockholders' Equity:
Preferred stock, no par value, 1,000,000 shares authorized,
none issued or outstanding -- --
Common stock, $1 par value, 40,000,000 shares authorized,
11,873,437 and 11,172,506 issued and outstanding 11,873 11,173
Additional paid-in capital 114,350 111,678
Retained earnings 2,523 19,132
Foreign currency translation effects (22,512) (22,471)
............................................................................................................
Total stockholders' equity 106,234 119,512
............................................................................................................
Commitments and contingent liabilities
$254,307 $261,633
- ------------------------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended June 30
(In thousands) 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income (loss) $ (16,609) $ (2,241) $ 8,123
Adjustments to reconcile net income (loss) to cash
provided by operating activities:
Results from the Australia and the U.K. transitional
month (see Note 13) -- -- (1,740)
Depreciation and amortization 9,671 7,972 9,444
Deferred income taxes 5,589 7,172 (1,392)
Foreign currency transaction gains, unrealized (612) (100) (170)
Impairment of long-lived assets 10,042 -- --
Provision for business restructuring -- -- (1,600)
Other 2,485 2,615 1,119

Cash provided by (used for) current assets and liabilities:
Receivables (164) (674) (1,517)
Inventories (7,592) (13,698) 1,687
Other current assets (126) 1,298 (1,480)
Accounts payable 263 9,960 834
Accounts payable to Tandy Corporation 1,721 449 (851)
Accrued expenses 970 452 (3,667)
Income taxes payable (68) (1,020) (760)
..................................................................................................................
Net cash provided by operating activities 5,570 12,185 8,030
..................................................................................................................

Cash flows from investing activities:
Additions to property and equipment (9,244) (12,119) (7,530)
Proceeds from sales of property and equipment 271 331 1,538
Other investment activities 992 1,827 219
..................................................................................................................
Net cash used in investing activities (7,981) (9,961) (5,773)
..................................................................................................................

CASH FLOWS FROM FINANCING ACTIVITIES:
Changes in short-term borrowings, net 8,554 972 --
Proceeds from issuance of common stock to employee plans 1,959 1,484 1,809
Proceeds from exercise of stock options -- 760 12
Principal repayments on long-term borrowings (6,958) (17,111) (3,479)
..................................................................................................................
Net cash provided by (used in) financing activities 3,555 (13,895) (1,658)
..................................................................................................................
Effect of exchange rate changes on cash (514) 507 395
..................................................................................................................

NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS 630 (11,164) 994
Cash and short-term investments, beginning of year 34,096 45,260 44,266
..................................................................................................................
Cash and short-term investments, end of year $ 34,726 $ 34,096 $ 45,260
- ------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 7,213 $ 7,976 $ 8,616
Income taxes $ 1,299 $ 967 $ 271
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

24
<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Foreign
Currency
Common Stock Additional Retained Translation
(In thousands) Shares Amount Paid-In Capital Earnings Effects Total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1994 9,715 $ 9,715 $103,599 $ 14,990 $(26,791) $101,513
Net foreign currency translation adjustments -- -- -- -- 2,175 2,175
Issuance of common stock to employee plans 476 476 2,767 -- -- 3,243
Issuance of common stock under stock option plans 2 2 10 -- -- 12
Results from the Australia and the U.K.
transitional month (see Note 13) -- -- -- (1,740) -- (1,740)
Net income -- -- -- 8,123 -- 8,123
............................................................................................................................

Balance at June 30, 1995 10,193 10,193 106,376 21,373 (24,616) 113,326
Net foreign currency translation adjustments -- -- -- -- 2,145 2,145
Issuance of common stock to employee plans 483 483 2,805 -- -- 3,288
Issuance of common stock under stock option plans 118 118 642 -- -- 760
Conversion of subordinated debentures to
common stock 379 379 1,855 -- -- 2,234
Net loss -- -- -- (2,241) -- (2,241)
............................................................................................................................

Balance at June 30, 1996 11,173 11,173 111,678 19,132 (22,471) 119,512
Net foreign currency translation adjustments -- -- -- -- (41) (41)
Issuance of common stock to employee plans 700 700 2,672 -- -- 3,372
Net loss -- -- -- (16,609) -- (16,609)
............................................................................................................................
BALANCE AT JUNE 30, 1997 11,873 $11,873 $114,350 $ 2,523 $(22,512) $106,234

</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

25
<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The Company operates consumer electronics retail stores in Canada, Australia,
and the United Kingdom. The consolidated financial statements include the
accounts of the Company and its subsidiaries. All material intercompany
transactions, balances and profits have been eliminated. The Company's fiscal
year ends June 30.

CASH AND SHORT-TERM INVESTMENTS

Cash in stores, deposits in banks and short-term investments with original
maturities of three months or less are considered as cash and cash equivalents.

INVENTORY

Inventories are comprised primarily of finished merchandise and are stated at
the lower of cost, based on the average cost method, or market value.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost and depreciated over the estimated
useful lives of the assets using the straight-line method. Estimated useful
lives range from 25 to 40 years for buildings, 3 to 8 years for fixtures and
equipment and 25 years for lease premiums. Leasehold improvements are amortized
over the life of the lease or the useful life of the asset, whichever is
shorter.

Maintenance and repairs are charged to expense as incurred. Renewals and
betterments which materially prolong the useful lives of the assets are
capitalized. The cost and related accumulated depreciation of property retired
or sold are removed from the accounts, and gains or losses are recognized in the
income statement.

In March 1995, the Financial Accounting Standards Board ("FASB") issued
Financial Accounting Standard No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of" ("FAS 121").
Effective July 1, 1996, the Company adopted 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, or group of
assets, 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.
See Note 5 for a discussion of an impairment charge recorded in fiscal year
1997.

NET SALES AND OPERATING REVENUES

Net sales and operating revenues include items related to normal business
operations, including service contract and repair income. Service contract
revenue, net of direct selling expenses, is recognized over the life of the
contract.

TRANSLATION OF FOREIGN CURRENCIES

The local currencies of the Company's foreign entities are the functional
currencies of those entities. For reporting purposes, assets and liabilities
are translated to U.S. dollars using the exchange rates in effect at the balance
sheet date; income and expense items are translated using monthly average
exchange rates. The effects of exchange rate changes on net assets located
outside the United States are recorded in a separate account in equity. Gains
and losses from foreign currency transactions are included in the operations of
each period.

CONTRACT MANAGEMENT

At June 30, 1997, InterTAN Australia had 215 company-operated stores, of which
142 were operated under "contract management" arrangements. Under the typical
contract management arrangement, the store manager is not employed by InterTAN
Australia, but is under contract to operate the store on behalf of the Company.
InterTAN Australia selects and supplies the store location (including lease
payments and other fixed location charges) and also supplies leasehold
improvements, fixtures and store inventory. InterTAN Australia is also
committed to provide supporting services, including advertising and training.
The contract manager is responsible for the labor and overhead necessary to
operate the store (i.e., the contract manager is responsible for paying the
employees and store utility and other operating costs). The contract manager is
also required to provide a cash deposit. In return for the service of operating
the store, the contract manager receives compensation equal to approximately one
half of the store's gross profit. InterTAN Canada has 19 stores which operate
under similar arrangements.

The revenue, as well as the expenses paid by the Company, related to contract
management stores are included in the consolidated statement of operations. The
contract manager's compensation is included in selling, general and
administrative expenses. Contract managers' deposits are included in the "Other
liabilities" section of the consolidated balance sheet and amounted to
$4,579,000 and $4,014,000 at June 30, 1997 and June 30, 1996, respectively.

CAPITALIZED FINANCING COSTS

Costs incurred in connection with the issuance of debt and renewal fees are
capitalized and are amortized over the term of the respective debt.
Amortization of these costs, which include underwriting, bank, legal and
accounting fees, for fiscal years 1997, 1996 and 1995 was $684,000, $608,000
and $1,199,000, respectively. Unamortized balances at June 30, 1997 and June
30, 1996 were $1,317,000 and $1,805,000, respectively.

26
<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ADVERTISING COSTS

Advertising costs are expensed the first time the related advertising occurs.
During fiscal years 1997, 1996 and 1995, advertising expense was $27,792,000,
$26,045,000 and $24,638,000, respectively.

INCOME TAXES

Income taxes are accounted for using the asset and liability method pursuant to
Financial Accounting Standard No. 109 ("FAS 109"), "Accounting for Income
Taxes". 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 book amounts and tax basis of assets and liabilities.
However, FAS 109 allows the recognition of a deferred tax asset only to the
extent that it is more likely than not that the Company will realize the
benefits of that deferred tax asset.

InterTAN considers the earnings of its foreign subsidiaries to be permanently
reinvested for use in those operations and, consequently, deferred federal
income taxes, net of applicable foreign tax credits, are not provided on the
undistributed earnings of foreign subsidiaries. If the earnings of those
subsidiaries as of June 30, 1997 were remitted to the parent, approximately
$42,000,000, subject to adjustment for deemed foreign taxes paid, would be
included in the taxable income of the parent. By operations of tax statutes
currently in effect, the Company would incur certain U.S. income taxes,
including alternative minimum tax. Such remittances may also be subject to
certain foreign withholding taxes (presently rates range from 0% to 15%) for
which there would likely be no U.S. tax relief.

FORWARD EXCHANGE CONTRACTS

Gains and losses on contracts entered to hedge open inventory purchase orders
are included in the cost of the merchandise purchased. Gains and losses on
contracts intended to mitigate the effects of exchange rate fluctuations on
payables and debt denominated in currencies other than the functional currency
of the debtor are included in income in the periods the exchange rates change.

EARNINGS PER SHARE

The Company computes primary net income (loss) per average common share by
dividing net income by the sum of the weighted average number of common shares
outstanding and dilutive common stock equivalents as determined using the
treasury stock method. Dilutive common stock equivalents consist of outstanding
stock options and warrants. Fully diluted net income per average common share
reflects the assumed conversion of the 9% subordinated convertible debentures
("Debentures") into common stock, whereby the related interest expense and
foreign currency transaction (gains) losses, net of tax, are added back to net
income.

In February 1997, the FASB issued Financial Accounting Standard No. 128,
"Earnings per Share" ("FAS 128"), which is effective for financial statements
issued for periods ending after December 15, 1997, including interim periods.
Effective December 31, 1997, the Company will adopt FAS 128, which established
new standards for computing and presenting earnings per share ("EPS"). The
statement requires dual presentation of basic and diluted EPS on the face of the
income statement for entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS computation. Basic EPS
excludes the effect of potentially dilutive securities while diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised, converted, or resulted in the
issuance of common stock that would then share in the earnings of the entity.
For the year ended June 30, 1997, pro forma basic and diluted loss per common
share computed pursuant to FAS 128 would not have differed from that presented
on the face of the Consolidated Statement of Operations.

ACCOUNTING FOR STOCK-BASED COMPENSATION

In October 1995, the FASB issued Financial Accounting Standard No. 123,
"Accounting for Stock-Based Compensation" ("FAS 123"). Effective July 1, 1996,
the Company adopted 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,
as provided in FAS 123, the Company has elected 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"). See Note 11.

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.

NOTE 2 BANK DEBT

In May, 1994, InterTAN Canada Ltd., InterTAN, Inc., and InterTAN U.K. Limited
entered into a one-year credit agreement ("Syndicated Loan Agreement") with a
syndicate of banks (the "Bank Syndicate"). This agreement established a one
year revolving facility in an amount which is determined using an inventory
level calculation not to exceed Cdn$60,000,000 ($43,446,000 at June 30, 1997
exchange rates). The interest

<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

rate under the credit facility is the Canadian prime rate plus 1% on loans to
InterTAN Canada Ltd. and the U.K. base rate plus 2% for loans to InterTAN U.K.
Limited. In addition, a standby fee of 0.25% per annum is payable on the unused
portion of the credit facility. The credit agreement is secured principally by
an inventory repurchase agreement among the Bank Syndicate agent, the Company
and Tandy Corporation ("Tandy"), the Company's principal supplier. The
Syndicated Loan Agreement has been renewed, and now extends through mid-August,
1998.

The Syndicated Loan Agreement requires the Company to maintain tangible net
worth greater than $80,000,000 before considering the effects of foreign
currency translation. The Company is also required to maintain capital
expenditures at or below $13,000,000 per annum, maintain a consolidated working
capital ratio above 2.0:1 and a debt to equity ratio, as defined, below 0.75:1.
For fiscal year 1997, the Syndicated Loan Agreement also required the Company to
maintain earnings before depreciation, extraordinary non-cash charges, interest
and taxes less capital expenditures of at least 0.9 times net finance charges
for the twelve months ending September 30, 1996 and 1.50 times net finance
charges for the twelve month periods ending December, 1996 and March 31 and June
30, 1997. The Company has met all covenant tests under the Syndicated Loan
Agreement throughout fiscal year 1997, except for the cash interest coverage
ratio for the twelve months ended December 31, 1996. However, each member of
the Bank Syndicate waived such non-compliance and agreed to modify the cash
interest coverage ratios for the third and fourth quarters of fiscal year 1997
to 1.0 and 1.05, respectively. The Company was in compliance with these ratios,
as revised. For fiscal year 1998, the cash interest coverage ratios have been
set at 1.25 for the twelve months ending September 30 and December 31, 1997 and
1.50 for the twelve months ending March 31 and June 30, 1998. Management
expects that the Company will meet these requirements during the fiscal year
1998. The Syndicated Loan Agreement also precludes the Company from paying
dividends.

At June 30, 1997, there were borrowings against the credit facility aggregating
$9,821,000, at an interest rate of 8.5%. In addition, $13,985,000, was
committed in support of letters of credit issued primarily to secure product
purchases from Far Eastern suppliers. There was $19,640,000 of credit available
for use at June 30, 1997.

One of the Company's directors also serves as a director of the agent bank of
the Bank Syndicate. Such director abstains from voting on any matters requiring
Board action which involve the Company and the Bank Syndicate.

In November, 1996, the Company's Australian subsidiaries, InterTAN Australia
Ltd. and Technotron Sales Corp. Pty. Ltd., entered into a credit agreement with
an Australian bank (the "Australian Facility"). This agreement established a
credit facility in the amount of A$12,000,000 ($9,046,000 at June 30, 1997
exchange rates). The Australian Facility has no fixed term and may be
terminated at any time upon five days' prior written notice by the lender. All
or any part of the facility may be used to provide letters of credit in support
of purchase orders. A maximum amount of A$5,000,000 ($3,769,000 at June 30,
1997 exchange rates) may be used in support of short-term borrowings. Interest
is charged on such borrowings at the Australian Indicator Lending Rate plus 1.25
percentage points. At June 30, 1997, while there were no borrowings outstanding
against the Australian Facility, $4,000,000 was committed in support of letters
of credit issued primarily to secure product purchases from Far Eastern
suppliers. There was $5,046,000 of credit available for use at June 30, 1997.

NOTE 3 DEBT AND MERCHANDISE AGREEMENT
WITH TANDY

On August 5, 1993, Tandy, through its wholly-owned subsidiary, Trans World
Electronics, Inc., provided the Company with a term loan facility ("Series A
Note") in the amount of $41,748,000 bearing interest at 8.64%. It is payable
semi-annually over a six year period commencing February 25, 1995. In addition,
Tandy provided the Company with a $10,113,000 three year loan ("Series B Note")
which bore interest at 8.11% and was due on August 25, 1996. The Series B Note
was repaid in May, 1996.

Under the terms of the agreement concerning the Series A and B Notes ("Secured
Loan Agreement"), the Company has granted Tandy a first priority lien over all
of the assets of the Company and its subsidiaries. In addition, InterTAN, Inc.
has pledged the shares of each of its subsidiaries to Tandy. The Secured Loan
Agreement allows new revolving credit facility lenders to participate in the
security granted to Tandy. The Series A Note can be repaid at any time without
penalty.

The Secured Loan Agreement requires the Company to maintain tangible net worth
greater than $80,000,000 before considering the effects of foreign currency
translation. Total debt due to Tandy, including long-term notes payable under
the Secured Loan Agreement, accounts payable, and open inventory purchase orders
placed with Tandy which are not supported by letters of credit, is limited to
$60,000,000. In addition, total debt due to parties other than Tandy, excluding
the Debentures and trade payables, is limited to $50,000,000. The Secured Loan
Agreement also requires the Company to maintain earnings before interest, taxes
and unrealized foreign currency transaction gains or losses of at least 2.0
times finance charges for each six and twelve month period ending December 31
and June 30, respectively. In addition, the Company is required to maintain
capital expenditures below agreed levels during each six month period throughout
the term of the loan. The Company has met all of these covenants during fiscal
year 1997 except for the financial charge ratio which was 0.94 at June 30, 1997,
excluding the impairment charge discussed in Note 5. Tandy has waived such non-
compliance. Management anticipates that it will meet these covenants during
fiscal year 1998. The Secured Loan Agreement also precludes the Company from
paying dividends.

28
<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Series A Note matures as follows (in thousands):
<TABLE>
<CAPTION>

For years ending June 30

- -------------------------------------
<S> <C>
1998 $ 6,958
1999 6,958
2000 6,958
2001 3,479
.....................................
$24,353
Less unamortized discount 975
.....................................
$23,378

- -------------------------------------
</TABLE>

In consideration for Tandy's extension of credit, InterTAN issued to Tandy five-
year warrants to purchase 1,449,007 shares of the Company's common stock
exercisable beginning August 5, 1993 at an exercise price of $6.618 which was
the market price of the Company's common stock at the date of issuance. These
warrants were valued at $2,155,000 and this amount was recorded as a discount
against the Series A and B Notes. The discount is being amortized over the
term of the Series A Note. Amortization during each of fiscal years 1997, 1996
and 1995 was $308,000.

The Company and Tandy have entered into a Merchandise Agreement and a series of
license agreements. These agreements permit InterTAN to use, in designated
countries, the "Tandy", "Tandy Electronics" and "RadioShack" trade names until
June 30, 2006, with automatic annual extensions to June 30, 2010. The license
agreements may be terminated with five years' prior written notice by either
party. In the event a change in control of InterTAN, Inc. or any of its
subsidiaries occurs, Tandy may revoke the Merchandise Agreement and the license
agreements. In consideration for these rights, the Company was obliged to pay a
royalty of 0.25% of consolidated sales beginning in fiscal year 1996. This
royalty increases by 0.25 percentage points each fiscal year until it reaches a
maximum of up to 1.0% in fiscal 1999. During fiscal years 1997 and 1996, the
Company paid Tandy royalties totaling $2,538,000 and $1,260,000, respectively.
The Company is obliged to use Tandy's export unit, A &A International, Inc. ("A
& A"), as its exclusive exporter of products from the Far East through the term
of the Merchandise Agreement. In such connection, the Company must pay a
purchasing agent/exporter fee to A & A calculated by adding 0.2% of consolidated
sales in excess of $500,000,000 to the base amount of $1,000,000 and deducting
from this certain credits the Company earns by purchasing products from Tandy
and A & A. The Company paid Tandy fees totaling $815,000, $785,000 and $810,000
in fiscal years 1997, 1996 and 1995, respectively, under this arrangement. The
Company's purchase orders with Tandy are supported, based on a formula agreed
with Tandy, by letters of credit issued by banks on behalf of InterTAN or backed
by cash deposits. In September, 1997, the Merchandise Agreement was amended to
permit the Company to support purchase orders with a surety bond or bonds as
well as letters of credit. The Company has recently concluded an agreement with
a major insurer to provide such a surety bond in an amount not to exceed
$15,000,000.

The Company has also entered into an advertising agreement with Tandy giving the
Company rights to advertising initiatives developed by Tandy for its RadioShack
stores in the United States. During fiscal years 1997 and 1996, the Company
incurred expenses of $211,000 and $410,000, respectively, under this agreement.

NOTE 4 DEBENTURES

During fiscal year 1994, the Company closed a private placement of
Cdn$60,000,000 ($43,446,000 at June 30, 1997 exchange rates) of 9% subordinated
convertible debentures which will mature on August 30, 2000. At June 30, 1997,
Cdn$56,812,000 of Debentures ($41,138,000 at June 30, 1997 exchange rates) were
outstanding. The Debentures are convertible at any time at a conversion rate of
118.7310 common shares for each Cdn$1,000 face amount of Debentures, equivalent
to a conversion price of approximately Cdn$8.42, or $6.10 per share at the June
30, 1997 exchange rate. The Debentures are subordinated to all senior
indebtedness of the Company, including the Syndicated Loan Agreement, the
Australian Facility and the Secured Loan Agreement.

The Debentures are redeemable, in whole or in part, on a pro rata basis, upon 30
business days' notice at a redemption price equal to the principal amount
thereof, plus accrued and unpaid interest, if any, provided that the current
market price of the Company's common shares as of the date of such notice is not
less than 125% of the conversion price. After August 30, 1999, the Debentures
will be redeemable upon 30 trading days notice at a redemption price equal to
the principal amount thereof plus accrued and unpaid interest, if any,
regardless of the current market price of the Company's common shares. After
February 28, 2000, the Company may redeem the Debentures by issuing and
delivering to the holders that number of the Company's common shares obtained by
dividing the principal amount of the Debentures by 95% of the market price of
the Company's common stock at the date of redemption.

NOTE 5 PROPERTY AND EQUIPMENT

Property and equipment at June 30, 1997 and June 30, 1996 are summarized as
follows (in thousands):
<TABLE>
<CAPTION>

1997 1996

- --------------------------------------------------------
<S> <C> <C>
Land $ 1,134 $ 1,137
Buildings 10,072 10,218
Equipment, furniture and fixtures 44,143 40,477
Leasehold improvements 42,638 40,189
Leasehold premiums 9,139 8,664
........................................................
107,126 100,685

Less accumulated depreciation
and amortization 78,314 61,556
........................................................
Property and equipment, net $ 28,812 $ 39,129

- --------------------------------------------------------
</TABLE>

29
<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Because of the continued and higher than expected operating losses in the United
Kingdom, the Company conducted an impairment evaluation of its property and
equipment in the United Kingdom in accordance with the provisions of FAS 121.
As a result of this evaluation, during the fourth quarter of fiscal year 1997,
the Company recognized a non-cash impairment loss of $10,042,000 which
represents the difference between the estimated market value and the book value
of the Company's investment in property and equipment in the United Kingdom,
primarily in its retail store locations, including lease premiums, leasehold
improvements and store fittings and fixtures. Fair market value was principally
determined based upon estimated future discounted cash flows (before interest).
The amount of this adjustment was credited to accumulated depreciation.

NOTE 6 ACCRUED EXPENSES

The following is a summary of accrued expenses at June 30, 1997 and June 30,
1996 (in thousands):
<TABLE>
<CAPTION>
1997 1996
- ------------------------------------------------------
<S> <C> <C>

Payroll and bonuses $ 7,383 $ 7,227
Taxes (other than income taxes) 2,832 2,554
Deferred service contract income 6,156 4,121
European restructuring costs 1,449 2,630
Other 9,211 9,301
......................................................
$27,031 $25,833
- ------------------------------------------------------
</TABLE>

In May, 1993, the Company recorded a pre-tax charge in the amount of $77,400,000
in connection with the shut down of its former continental European retail
operations. During fiscal year 1995, certain claims and contingencies were
settled for amounts less than originally estimated. As a result of these
settlements and certain other developments, management reduced the accrual by
$1,600,000. Management believes the remaining restructuring reserve at June 30,
1997 of $1,449,000 is adequate to provide for the Company's remaining
obligations in Europe including those arising from legal actions brought against
the Company by former employees, dealers and franchisees.

NOTE 7 INCOME TAXES

The components of the provisions for domestic and foreign income taxes are shown
below (in thousands):
<TABLE>
<CAPTION>
Year ended June 30
1997 1996 1995
- ----------------------------------------------------------------
<S> <C> <C> <C>

Current
United States $ 148 $ (374) $(1,178)
Foreign 1,018 701 532
................................................................
1,166 327 (646)
Deferred Foreign 5,589 7,172 (1,392)
................................................................
Total income tax
expense (benefit) $ 6,755 $ 7,499 $(2,038)
- ----------------------------------------------------------------
</TABLE>

Components of the difference between income tax expense and the amount
calculated by applying the U.S. statutory rate of 35% to income before income
taxes are as follows (in thousands):
<TABLE>
<CAPTION>

Year ended June 30
1997 1996 1995
- ----------------------------------------------------------------
<S> <C> <C> <C>

Components of
pre-tax income (loss):
United States $ (901) $(1,872) $(3,578)
Foreign (8,953) 7,130 9,663

................................................................
Income (loss) before
income taxes (9,854) 5,258 6,085
Statutory U.S. tax rate 35% 35% 35%
................................................................

Federal income tax
expense (benefit) at
statutory rate (3,449) 1,840 2,130
Foreign tax rate
differentials 1,177 887 927
Provincial income taxes,
less foreign federal
income tax benefit 1,202 1,433 900
Book losses for which
no tax benefit was
recognized 9,367 3,610 3,427
Adjustment to valuation
allowance for deferred
tax assets (1,656) (329) (9,100)
Other, net 114 58 (322)
................................................................
Total income tax
expense (benefit) $ 6,755 $7,499 $(2,038)
- ----------------------------------------------------------------
</TABLE>

Deferred tax assets are comprised of the following at June 30
(in thousands):
<TABLE>
<CAPTION>

JUNE 30, June 30,
1997 1996
- ----------------------------------------------------------------
<S> <C> <C>

DEFERRED TAX ASSETS
Depreciation $ 5,410 $ 2,045
Deferred service contracts 2,029 1,454
Reserves for business
restructuring 633 835
Loss carryforwards 26,363 28,157
Other 5,537 4,193
................................................................
39,972 36,684
Valuation allowance (39,338) (30,461)
................................................................
DEFERRED TAX ASSET $ 634 $ 6,223
</TABLE>

Since the adoption of FAS 109 in July, 1993, the Company has regularly assessed
the future benefit, if any, which might be derived from the Company's deferred
tax assets. In assessing the future benefit, if any, which might be derived
from these deferred tax assets, the Company considers its recent operating
history and financial condition.

<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Based on the operating performance of the Canadian subsidiary in fiscal 1995,
management concluded that the valuation allowance should be reduced by
$9,100,000 and the Company recognized a deferred tax benefit of that amount. No
further reductions were made to the valuation allowance during fiscal 1996.
During fiscal year 1997, based on the improved operating performance of the
Australian subsidiary during the last two fiscal years, management concluded
that the valuation allowance against the deferred tax assets of that subsidiary
should be reduced by $634,000 and the Company recorded a deferred tax benefit of
that amount.

For Canadian tax purposes, the Company has net operating loss carryforwards of
approximately $2,600,000 which can be used to offset future taxable income in
Canada. These loss carry-forwards will expire in 2001. The Company also has
net operating loss carry-forwards for tax purposes of approximately $72,100,000
and $1,900,000 in the United Kingdom and Australia, respectively. These losses
can be carried forward indefinitely in both jurisdictions. Certain restrictions
may apply to the use of these loss carry-forwards in the event of a change in
control of the Company.

An audit of the Canadian income tax returns of the Canadian subsidiary for the
1987 to 1989 taxation years was completed during fiscal year 1994, resulting
in additional tax being levied against the Canadian subsidiary. The Company
has appealed these reassessments and, pending the outcome of these matters, the
Company, by Canadian law, was required to pay one-half of the tax in dispute.
The tax levied by Revenue Canada in reassessing those years was offset by
refunds arising from the carry-back of losses incurred in subsequent years.
Depending on the ultimate resolution of these issues, the Company could
potentially have an additional liability in the range of $0 to $11,600,000. The
Company believes it has meritorious arguments in defense of the issues raised by
Revenue Canada and it is in the process of vigorously defending its position.
It is management's determination that no additional provision need be recorded
for these reassessments. In order for the Company to succeed in appealing
certain aspects of these reassessments, it must succeed in defending the
possible reassessments discussed in the paragraph immediately below.

The Company was advised in August 1995 that Revenue Canada intended to extend
the scope of its 1987 to 1989 reassessments to raise certain issues flowing from
the spin-off of the Company from Tandy in fiscal year 1987. Management
disagrees with Revenue Canada's views on these issues and will vigorously defend
the Company's position should Revenue Canada pursue these issues. Management
believes it has meritorious arguments supporting its stance and, accordingly,
no additional provision has been recorded for these possible reassessments.
Depending on the ultimate resolution of these issues, the Company could
potentially have an additional liability in the range of $0 to $20,000,000. As
required by Canadian law, the Company would likely be required to post a deposit
of one-half of the tax in dispute, including interest, in order to appeal any
reassessment.

An audit of the Canadian income tax returns of the Canadian subsidiary for the
1990 to 1993 taxation years was commenced during the 1995 fiscal year. The
Company has been advised that Revenue Canada is challenging certain interest
deductions relating to the Canadian subsidiary's former operations in
continental Europe and is proposing to tax certain foreign exchange gains
related to such operations. Depending on the ultimate resolution of these
issues, the Company could potentially have an additional liability in the range
of $0 to $25,000,000. Assuming Revenue Canada pursues these issues, in order
for the Company to proceed with such appeals, the Company would likely be
required to post a cash deposit or letters of credit equal to one-half of the
1990-1993 tax in dispute. Notwithstanding that the Company is still in
discussions with Revenue Canada regarding these issues, Revenue Canada was
required to issue a protective reassessment for one of the years because the
time period during which such reassessment could legally be issued was about to
expire. The amount of the reassessment, including interest, is approximately
$13,800,000. This amount relates to the 1992 taxation year only and is
reflected in the range described immediately above. The Company has appealed
this reassessment and, as indicated above, would normally be required to post a
cash deposit equal to one-half of the reassessment, pending the outcome of such
appeal. However, Revenue Canada has agreed to defer the posting of such deposit
pending the outcome of on-going discussions on this particular issue. Revenue
Canada has further agreed to accept a letter of credit in lieu of a cash deposit
should it be necessary for the Company to actively proceed with its appeal.
Management believes it has meritorious arguments in support of the deductibility
of such interest and in support of its treatment of the foreign exchange gains
and is prepared to vigorously defend its position should the Canadian tax
authorities proceed with such a challenge following the conclusion of
discussions with the Company and its advisors. Accordingly, it is management's
assessment that no provision need be recorded for these possible claims.

An audit of the French branch of the Canadian subsidiary was also completed by
the French tax authorities for the 1988 through 1990 taxation years. An
assessment of approximately $2,000,000 has been issued. The Company has
appealed this assessment. It is management's view that the position of the
French tax authorities on this matter is without merit and that the Company will
be successful in its appeal process. Accordingly, no provision has been made in
the accounts for this assessment. In order to avoid having to pay this tax
while the appeal proceeds, the Company has provided the French tax authorities
with a letter of guarantee for the amount in dispute.

31
<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 COMMITMENTS AND CONTINGENCIES

The Company leases virtually all of its retail space under operating leases with
terms ranging from three to twenty-five years. Canadian leases are normally
based on a minimum rental plus a percentage of store sales in excess of a
stipulated base. The remainder of InterTAN's store leases generally provide for
fixed monthly rent adjusted periodically using inflation indices and rent
reviews.

In fiscal years 1997, 1996 and 1995 minimum rents, including immaterial
contingent rents and sublease rental income, were $36,365,000, $34,033,000 and
$32,585,000, respectively. Future minimum rent commitments at June 30, 1997 for
all long-term non-cancelable leases (net of immaterial sublease rent income) are
as follows (in thousands):
<TABLE>
<CAPTION>

<S> <C> <C> <C>
1998 $33,591 2001 $22,080
1999 31,106 2002 17,354
2000 26,670 2003 and thereafter 95,125
- -----------------------------------------------------------------
</TABLE>

A claim which had been made by a former employee for damages for wrongful
dismissal totaling $880,000 was settled in July, 1997 for an amount
substantially less than the amount claimed by this former employee and within
the amount the Company had recorded as a provision representing its best
estimate of the possible range of loss on this matter.

Apart from this matter and those described in Notes 6 and 7, there are no
material pending legal proceedings or claims other than routine litigation
incidental to the Company's business to which the Company or any of its
subsidiaries is a party or to which any of their property is subject.

NOTE 9 FINANCIAL INSTRUMENTS

Other than debt instruments, management believes that the book value of the
Company's financial instruments recorded on the balance sheet approximates their
estimated fair value based on their nature and generally short maturity; such
instruments include cash and short-term investments, accounts receivable, short-
term bank borrowings, accounts payable and accrued expenses. The estimated fair
values of the Company's long-term debt instruments are shown in the table below
(in thousands):
<TABLE>
<CAPTION>

JUNE 30, 1997 June 30, 1996
BOOK ESTIMATED Book Estimated
VALUE FAIR VALUE value fair value
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>

Note payable
to Tandy $24,353 $24,274 $31,311 $31,397
Discount on
Tandy note (975) -- (1,283) --

- -----------------------------------------------------------------

Carrying value of
note payable
to Tandy $23,378 $24,274 $30,028 $31,397

- -----------------------------------------------------------------

9% convertible
subordinated
debentures $41,138 $39,492 $41,660 $44,785
- -----------------------------------------------------------------
</TABLE>

The estimated fair value of the note payable to Tandy has been determined by
discounting the related cash flows using management's estimate of the Company's
incremental borrowing rate for similar issues. The estimated fair value of the
Debentures is based on market price.

The Company enters into foreign exchange contracts to hedge against exchange
rate fluctuations on certain debts, payables and open inventory purchase orders
denominated in currencies other than the functional currency of the issuing
entity. All foreign exchange contracts are written with major international
financial institutions. The Company's risk in those transactions is limited to
the cost of replacing the contracts at current market rates in the event of
nonperformance by the counterparties. The Company believes its risk of
counterparty nonperformance is remote, and any losses incurred would not be
material. At June 30, 1997 and 1996, the Company had approximately $10,280,000
and $25,795,000, respectively, of foreign exchange contracts outstanding with a
market value of approximately $190,000 and $17,000, respectively. Maturity on
these contracts outstanding at June 30, 1997 ranged from one to six months from
fiscal year-end.

NOTE 10 STOCK PURCHASE AND SAVINGS PLANS

The Company's Stock Purchase Program is available to most employees. Each
participant may contribute from 1% to 10% of annual compensation. The Company
matches from 40% to 80% of the employee's contribution depending on the length
of the employee's participation in the program. Shares are provided to the plan
either by periodic purchases on the open market or by the Company issuing new
shares.

Under the InterTAN Canada Ltd. Employee Savings Plan (the "Savings Plan"), a
participating employee may contribute 5% of annual compensation into the plan.
The Company matches 80% of the employee's contribution. The Savings Plan is
available to most Canadian employees who have been employed at least two years.
An employee may also elect to contribute an additional 5% of annual compensation
to the plan which is not matched by the employer. The Company's contributions
are fully vested at the end of each calendar quarter. An Administrative
Committee appointed by the Company's Board of Directors directs the investment
of the plan's assets, a significant portion of which are invested in InterTAN,
Inc. common stock.

Effective October 1, 1995, the InterTAN Employee Deferred Salary and Investment
Plan was amended and restated as the InterTAN, Inc. 401(k) Plan. This plan is
available to all U.S. employees who have completed at least two months service
with the Company. Eligible employees may contribute, subject to statutory
limits, up to 14% of their salary to the plan. The Company matches the employee
contributions to a maximum of 4% of salary. Fifty percent of the Company's
contributions vest in the first year with full vesting after an employee has
completed two years of service with the Company. Employees have a number of
investment options available to them within the plan, one of which is InterTAN,
Inc. common stock.

32
<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The aggregate cost of these plans included in other selling, general and
administration expense totaled $1,701,000, $1,811,000 and $1,563,000 in 1997,
1996 and 1995, respectively.

NOTE 11 STOCK OPTION PLANS

In 1986 and 1996 the Company adopted employee stock option plans (the"1986 Stock
Option Plan" and the "1996 Stock Option Plan") under which the Organization and
Compensation Committee of the Board of Directors may grant options to key
management employees to purchase up to an aggregate of 800,000 and 1,500,000
shares, respectively, of the Company's common stock. Incentive options granted
under these plans are exercisable on a cumulative basis equal to one-third for
each year outstanding; unless otherwise specified by the Committee, nonstatutory
options issued under the plans are exercisable on a cumulative basis equal to
20% for each year outstanding. Upon death or disability of an optionee, all
options then held become immediately exercisable for one year, and upon
retirement, at age 50 or older, the Committee may accelerate the dates at which
the outstanding options may be exercised. Options under these plans generally
expire ten years after the date of grant. The exercise price of the options
granted is determined by the Committee, but cannot be less than 100% of the
market price of the common stock at the date of grant.

At June 30, 1997, options to purchase 427,500 shares were outstanding under the
1986 Stock Option Plan. While options outstanding under this plan will remain in
force until they are exercised, canceled or expire, no further options may be
granted. At June 30, 1997, options to purchase 183,000 shares were outstanding
under the 1996 Stock Option Plan and 1,317,000 options were available for future
grant.

In 1991, the Company adopted the Non-Employee Director Stock Option Plan
("Director Plan") under which each non-employee director was granted an option,
exercisable immediately, to purchase 25,000 shares of the Company's common
stock. Upon election, all new non-employee directors are granted an option to
purchase 25,000 shares of the Company's common stock. Options granted under the
Director Plan are exercisable at a price equal to 100% of the market price of
the common stock at the date of grant. The options generally expire ten years
after the date of grant unless the optionee ceases to be a non-employee
director, in which case the options expire one year after the date of cessation.
Common stock issued under the Director Plan cannot exceed 200,000 shares. At
June 30, 1997, options to purchase 175,000 shares were outstanding under the
Director Plan and 25,000 options were available for future grant.

A summary of transactions relating to these stock option plans is as follows:

SUMMARY OF STOCK OPTION TRANSACTIONS

<TABLE>
<CAPTION>
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------
WEIGHTED- Weighted- Weighted-
AVERAGE Average Average
EXERCISE Exercise Exercise
OPTIONS PRICE Options Price Options Price
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 650,833 $7.27 650,000 $6.97 707,499 $6.65
Grants 209,500 $5.94 210,000 $7.55 150,500 $7.98
Exercised -- -- (118,000) $6.44 (2,333) $5.14
Forfeited (74,833) $7.01 (91,167) $6.83 (205,666) $6.64
- -------------------------------------------------------------------------------------------------------------------
Outstanding at end of year 785,500 $6.94 650,833 $7.27 650,000 $6.97
- -------------------------------------------------------------------------------------------------------------------

Exercisable at end of year 439,331 $7.10 303,167 $7.01 355,834 $6.76
- -------------------------------------------------------------------------------------------------------------------

Weighted-average fair value of
options granted during the year $ 3.71 $ 4.67
</TABLE>

FIXED PRICE STOCK OPTIONS

<TABLE>
<CAPTION>
WEIGHTED- WEIGHTED- WEIGHTED-
OPTIONS AVERAGE AVERAGE OPTIONS AVERAGE
OUTSTANDING EXERCISE EXERCISE EXERCISABLE EXERCISE
RANGE OF EXERCISE PRICES AT 6/30/97 PRICE PRICE AT 6/30/97 PRICE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$3.50 - $5.94 52,000 8.11 $ 5.44 47,000 $ 5.65
$6.00 - $8.19 733,500 8.13 $ 7.06 392,331 $ 7.28
- ---------------------------------------------------------------------------------------------------------
785,500 8.13 $ 6.94 439,331 $ 7.10
- ---------------------------------------------------------------------------------------------------------
</TABLE>

33
<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As discussed in Note 1, the Company adopted the disclosure-only provision of FAS
123. Accordingly, because the exercise price of the stock options granted is
equal to the market price of the common stock on the date of grant, no
compensation expense has been recognized with respect to stock options granted
during fiscal 1997, 1996 or 1995. Had the Company fully adopted FAS 123, the
estimated fair value of the options granted would have been amortized to
compensation expense over the vesting period. Pro forma information is
presented below as if the Company had fully adopted the fair value method
described in FAS 123.

<TABLE>
<CAPTION>
1997 1996
- ---------------------------------------------------------------------------------------------------------
AS PRO As Pro
(in thousands except per share amounts) REPORTED FORMA Reported Forma
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net loss $(16,609) $(17,172) $(2,241) $(2,417)

Primary net loss per average common share $ (1.45) $ (1.50) $ (0.21) $ (0.22)

Fully diluted net loss per average common share $ (1.45) $ (1.50) $ (0.21) $ (0.22)
</TABLE>

For purposes of the pro forma information above, the fair value of each option
granted for each year was estimated as of the date of grant using the Black-
Scholes option pricing model with the following weighted-average assumptions for
fiscal year 1997 and 1996, respectively: expected volatility of 53.9% and
54.1%, risk free interest rates of 6.2% and 5.6%, expected lives of seven years
for both years and expected dividend yields of 0.0% for both years.

The effects of applying FAS 123 in this pro forma disclosure are not indicative
of future amounts as the pro forma amounts above do not include the impact of
stock options granted prior to fiscal 1996 and additional awards are anticipated
in the future.

NOTE 12 PREFERRED STOCK PURCHASE RIGHTS

In December, 1986, the Board of Directors adopted a shareholder rights plan,
which expires in September, 1999, and declared a dividend of one right for each
outstanding share of InterTAN common stock. The plan was amended in October,
1987 and September, 1989. The rights are represented by the Company's common
stock certificates; and if they become exercisable, will entitle holders to
purchase one one-hundredth of a share of InterTAN Series A Junior Participating
Preferred Stock for a purchase price of $175 (subject to adjustment). The
rights become exercisable and will trade separately from the common stock only
upon the date of a public announcement that a person, entity or group ("person")
has acquired 20% or more of InterTAN's outstanding common stock without the
prior approval of the Company ("Acquiring Person"), or, 10 days after the
commencement or the public announcement of an offer which would result in any
person becoming an Acquiring Person. In the event that an Acquiring Person
becomes the beneficial owner of 20% or more of the common stock of the Company,
the rights will be exercisable for InterTAN equity securities with a fair market
value (as determined under the rights plan) equal to $350. In accordance with
the terms of the rights plan, the rights are redeemable at a price of $0.03 per
right.

NOTE 13 GEOGRAPHIC AREAS

The Company operates in one industry segment: consumer electronics retailing.
The principal geographic areas of InterTAN's operations are Canada, Australia,
the United Kingdom and, previously, continental Europe. Prior to fiscal year
1995, units operating outside North America reported on a May 31 fiscal year
end. Effective with fiscal year 1995, the Company's subsidiaries in Australia
and the United Kingdom changed their fiscal year end to June 30 to coincide with
that of the parent Company. As a consequence of this change, losses for the
month of June, 1994, in Australia and the United Kingdom, which totaled
$1,740,000, were charged directly to retained earnings.

As previously discussed in Note 5, the operating loss in the United Kingdom for
fiscal year 1997 includes a non-cash impairment charge of $10,042,000. In
addition, as discussed in Note 6, the Company has closed all company-operated
outlets in continental Europe. A credit provision of $1,600,000 was recorded in
continental European income for 1995.

<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table shows net sales, operating profit and identifiable assets by
geographic area for fiscal years 1997, 1996 and 1995 (in thousands). Transfers
between geographic areas were immaterial:
<TABLE>
<CAPTION>

United Continental
Canada Australia Kingdom Europe Total
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JUNE 30, 1997
Net sales and operating revenues $251,907 $102,628 $164,783 $ -- $519,318
Other income 9 363 268 -- 640
...............................................................................................
Net sales and other income $251,916 $102,991 $165,051 $ -- $519,958

- -----------------------------------------------------------------------------------------------
Operating profit (loss) $ 18,826 $ 4,721 $(23,147) $ -- $ 400
General corporate expenses (4,201)
Foreign currency transaction gains 610
Interest expense, net (6,663)
...............................................................................................
Loss before income taxes $ (9,854)

- -----------------------------------------------------------------------------------------------
Identifiable assets $121,564 $ 51,640 $ 69,959 $ 1,680 $244,843
Corporate assets 9,464
...............................................................................................
Total assets $254,307

- -----------------------------------------------------------------------------------------------
JUNE 30, 1996
Net sales and operating revenues $249,413 $ 93,896 $163,136 $ -- $506,445
Other income 41 426 435 -- 902
...............................................................................................
Net sales and other income $249,454 $ 94,322 $163,571 -- $507,347

- -----------------------------------------------------------------------------------------------
Operating profit (loss) $ 21,274 $ 2,777 $ (7,807) $ -- $ 16,244
General corporate expenses (4,615)
Foreign currency transaction gains 338
Interest expense, net (6,709)
...............................................................................................
Income before income taxes $ 5,258

- -----------------------------------------------------------------------------------------------
Identifiable assets $124,404 $ 48,839 $ 75,948 $ 2,111 $251,302
Corporate assets 10,331
...............................................................................................
Total assets $261,633

- -----------------------------------------------------------------------------------------------
JUNE 30, 1995
Net sales and operating revenues $243,949 $ 83,724 $164,078 $ -- $491,751
Other income 413 362 442 -- 1,217
...............................................................................................
Net sales and other income $244,362 $ 84,086 $164,520 $ -- $492,968

- -----------------------------------------------------------------------------------------------
Operating profit (loss) $ 22,820 $ 534 $ (5,954) $ 1,600 $ 19,000
General corporate expenses (5,139)
Foreign currency transaction losses (314)
Interest expense, net (7,462)
...............................................................................................
Income before income taxes $ 6,085

- -----------------------------------------------------------------------------------------------
Identifiable assets $128,214 $ 41,837 $ 67,105 $ 2,427 $239,583
Corporate assets 22,456
...............................................................................................
Total assets $262,039
- -----------------------------------------------------------------------------------------------
</TABLE>

35
<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 QUARTERLY DATA (UNAUDITED)

<TABLE>
<CAPTION>
Quarter Ended
September 30
(In thousands, except per share data) 1996 1995
- --------------------------------------------------------------------------
<S> <C> <C>
Net sales and operating revenues $112,287 $113,672
Other income 141 203
..........................................................................
112,428 113,875
Operating costs and expenses:
Cost of products sold 61,557 63,463
Selling, general and administrative expenses 50,847 48,247
Depreciation and amortization 2,217 1,832
Impairment of long-lived assets
..........................................................................
114,621 113,542
..........................................................................

Operating income (loss) (2,193) 333

Foreign currency transaction (gains) losses (195) (148)
Interest expense, net 1,597 1,738
..........................................................................

Income (loss) before income taxes (3,595) (1,257)
Provision for income taxes 1,012 948
..........................................................................

Net income (loss) $ (4,607) $ (2,205)

- --------------------------------------------------------------------------

Primary net income (loss) per average
common share $ (0.41) $ (0.21)
Fully diluted net income (loss) per average
common share/(1)/ $ (0.41) $ (0.21)
..........................................................................

AVERAGE COMMON SHARES OUTSTANDING 11,231 10,453

AVERAGE COMMON SHARES OUTSTANDING
ASSUMING FULL DILUTION 11,231 10,453
- --------------------------------------------------------------------------
</TABLE>

(1) THE SUM OF FULLY DILUTED EARNINGS PER SHARE FOR THE FOUR QUARTERS ENDING
JUNE 30, 1997 AND 1996 DOES NOT EQUAL THE FULLY DILUTED EARNINGS PER SHARE
AS REPORTED FOR THE RESPECTIVE YEARS PRIMARILY BECAUSE THE COMPANY'S
CONVERTIBLE DEBENTURES WERE DILUTIVE IN THE SECOND QUARTER, BUT ANTI-
DILUTIVE IN ALL OTHER QUARTERS AND FOR EACH YEAR AS A WHOLE.

36
<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

QUARTER ENDED QUARTER ENDED QUARTER ENDED
DECEMBER 31 MARCH 31 JUNE 30
1996 1995 1997 1996 1997 1996
- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$190,934 $181,411 $109,555 $108,757 $106,542 $102,605
115 298 289 196 95 205

...............................................................
191,049 181,709 109,844 108,953 106,637 102,810

108,976 103,788 58,802 59,410 57,500 55,391
64,895 59,667 50,766 48,840 50,703 48,940
2,379 1,981 2,566 2,014 2,509 2,145
-- -- -- -- 10,042 --
...............................................................

176,250 165,436 112,134 110,264 120,754 106,476
...............................................................

14,799 16,273 (2,290) (1,311) (14,117) (3,666)

(731) (44) 124 (69) 192 (77)
1,908 1,909 1,503 1,516 1,655 1,546
...............................................................

13,622 14,408 (3,917) (2,758) (15,964) (5,135)
4,145 4,071 1,216 1,350 382 1,130
...............................................................

$ 9,477 $ 10,337 $ (5,133) $ (4,108) $(16,346) $ (6,265)

- ---------------------------------------------------------------

$ 0.83 $ 0.93 $ (0.45) $ (0.38) $ (1.40) $ (0.57)
$ 0.57 $ 0.58 $ (0.45) $ (0.38) $ (1.40) $ (0.57)

...............................................................

11,366 11,148 11,527 10,943 11,706 11,069

18,111 17,893 11,527 10,943 11,706 11,069
- ---------------------------------------------------------------
</TABLE>

37
<PAGE>

INTERTAN, INC.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

REPORT OF INDEPENDENT ACCOUNTANTS

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
of InterTAN, Inc.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of InterTAN,
Inc. and its subsidiaries at June 30, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
June 30, 1997, 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 required that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.

/s/Price Waterhouse LLP

Fort Worth, Texas
September 11, 1997

MARKET PRICE AND RELATED MATTERS

The high and low closing prices in U.S. dollars of InterTAN's common stock on
the New York Stock exchange for each full quarterly period within the two most
recent fiscal years is as set out below:

QUARTER ENDED HIGH LOW

- -------------------------------------
<S> <C> <C>
June 1997 $ 4 $ 3 3/8
March 1997 4 3/4 3 7/8
December 1996 6 3/8 4 5/8
September 1996 6 5/8 5 5/8
June 1996 6 7/8 5 1/4
March 1996 6 1/2 4 5/8
December 1995 9 3/8 7 1/8
September 1995 10 7 1/4

- -------------------------------------
</TABLE>

As of August 31, 1997 there were approximately 11,400 record shareholders
of InterTAN's common stock.

InterTAN has never declared cash dividends. Based upon InterTAN's long-term
growth opportunities, in the opinion of management, the stockholders are best
served by reinvesting all profits. Further, InterTAN is currently precluded from
paying dividends under the Secured Loan Agreement and Syndicated Loan Agreement.

<PAGE>

EXHIBIT 23

INTERTAN, INC.

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 33-74314) and
in the Registration Statements on Form S-8 (Nos. 33-63090, 33-92286, 33-29055,
333-4344, 333-16105 and 333-22011) of InterTAN, Inc. of our report dated
September 11, 1997 appearing on page 38 of the Annual Report to shareholders,
which is incorporated in this Annual Report on Form 10-K for the year ended June
30, 1997. We also consent to the incorporation by reference of our report on
the Financial Statement Schedules, which is also included in this Form 10-K.

/s/Price Waterhouse LLP

Fort Worth, Texas
September 26, 1997

<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 34,726
<SECURITIES> 0
<RECEIVABLES> 9,655
<ALLOWANCES> 0
<INVENTORY> 170,594
<CURRENT-ASSETS> 222,880
<PP&E> 28,812
<DEPRECIATION> 0
<TOTAL-ASSETS> 254,307
<CURRENT-LIABILITIES> 84,348
<BONDS> 57,558
0
0
<COMMON> 11,873
<OTHER-SE> 94,361
<TOTAL-LIABILITY-AND-EQUITY> 254,307
<SALES> 519,318
<TOTAL-REVENUES> 519,958
<CGS> 286,835
<TOTAL-COSTS> 286,835
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,663
<INCOME-PRETAX> (9,854)
<INCOME-TAX> 6,755
<INCOME-CONTINUING> (16,609)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,609)
<EPS-PRIMARY> (1.45)
<EPS-DILUTED> (1.45)

</TABLE>