<PAGE>
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
Washington, D.C. 20549
FORM 10-Q
- - --------------------------------------------------------------------------------
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended March 31, 1999 or
--------------
[ ] 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
-------
InterTAN, Inc.
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 75-2130875
-------------------------------- --------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3300 Highway #7, Suite 904
Concord, Ontario, Canada L4K 4M3
----------------------------------------- ---------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (905) 760-9701
--------------------
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
----- -----
At April 30, 1999, 16,971,052 shares of the registrant's common stock, par value
$1.00 per share, were outstanding.
<PAGE>
TABLE OF CONTENTS
PART 1
Page
----
Introductory note regarding forward-looking information 3
Item 1 - Financial Statements and Supplementary Data
Consolidated Statements of Operations 4
Consolidated Balance Sheets 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
PART II
Item 1 - Legal Proceedings 28
Item 4 - Submission of Matters to a Vote of Security Holders 28
Item 6 - Exhibits and Reports on Form 8-K 28
OTHER
Signatures 31
<PAGE>
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, certain aspects of Year 2000 compliance 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.
<PAGE>
Consolidated Statements Of Operations
InterTAN, Inc.
- - --------------------------------------------------------------------------------
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
March 31 March 31
----------------------------------- -----------------------------------
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net sales and operating revenues........... $ 88,066 $117,117 $408,289 $431,385
Other income............................... 73 66 202 417
88,139 117,183 408,491 431,802
--------------- --------------- --------------- ---------------
Operating costs and expenses:
Cost of products sold................... 49,266 68,510 230,775 246,915
Selling, general and administrative
expenses.............................. 32,817 49,425 140,971 163,486
Depreciation and amortization........... 1,388 1,789 5,008 5,581
Loss on disposal of United Kingdom
subsidiary and other restructuring
charges............................... 34,712 12,712 35,088 12,712
--------------- --------------- --------------- ---------------
118,183 132,436 411,842 428,694
--------------- --------------- --------------- ---------------
Operating income (loss).................... (30,044) (15,253) (3,351) 3,108
Foreign currency transaction (gains)
losses................................... 80 158 (375) (580)
Interest expense, net...................... 550 923 3,296 4,459
--------------- --------------- --------------- ---------------
Loss before income taxes................... (30,674) (16,334) (6,272) (771)
Provision for income taxes................. 10,548 1,438 21,481 8,563
--------------- --------------- --------------- ---------------
Net loss................................... $(41,222) $(17,772) $(27,753) $ (9,334)
=============== =============== =============== ===============
Basic and diluted net loss per
average common share.................. $(3.13) $(1.46) $(2.17) $(0.77)
Average common shares outstanding.......... 13,190 12,208 12,818 12,065
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Consolidated Balance Sheets
InterTAN, Inc.
- - --------------------------------------------------------------------------------
(In thousands, except share data)
<TABLE>
<CAPTION>
March 31 June 30 March 31
1999 1998 1998
------------------------------------------------------------------
Assets
Current Assets:
<S> <C> <C> <C> <C>
Cash and short-term investments................... $ 44,095 $ 32,811 $ 25,990
Accounts receivable, less allowance
for............................................... 7,582 8,539 10,606
doubtful accounts
Inventories....................................... 111,081 148,198 159,820
Other current assets.............................. 3,829 6,690 7,277
Deferred income taxes............................. 378 369 -
------------------------------------------------------------------
Total current assets.............................. 166,965 196,607 203,693
Property and equipment, less accumulated
depreciation and amortization..................... 19,094 26,228 26,524
Other assets........................................... 287 712 1,078
------------------------------------------------------------------
$186,346 $223,547 $231,295
==================================================================
Liabilities and Stockholders' Equity
Current Liabilities:
Short-term bank borrowings........................ $ - $ 9,172 $ 7,521
Accounts payable.................................. 19,398 24,274 26,448
Accrued expenses.................................. 26,451 38,505 39,945
Income taxes payable.............................. 31,999 20,955 19,650
------------------------------------------------------------------
Total current liabilities......................... 77,848 92,906 93,564
9% convertible subordinated debentures................. 24,431 38,706 40,024
Other liabilities...................................... 6,371 5,945 6,150
------------------------------------------------------------------
108,650 137,557 139,738
------------------------------------------------------------------
Stockholders' Equity:
Preferred stock, no par value, 1,000,000
shares authorized, none issued or
outstanding....................................... - - -
Common stock, $1 par value, 40,000,000............ 15,250 12,474 12,296
shares authorized, 15,250,140, 12,474,077
and 12,296,059 issued and outstanding.............
Additional paid-in capital........................ 128,451 115,980 115,145
Deficit........................................... (38,003) (10,250) (6,811)
Foreign currency translation effects.............. (28,002) (32,214) (29,073)
------------------------------------------------------------------
Total stockholders' equity........................ 77,696 85,990 91,557
------------------------------------------------------------------
Commitments and contingent liabilities.................
$186,346 $223,547 $231,295
==================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Consolidated Statements of Cash Flows
InterTAN, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(In thousands) Nine months ended
March 31
---------------------------------------
1999 1998
---------------------------------------
Cash flows from operating activities:
<S> <C> <C>
Net loss......................................................... $(27,753) $ (9,334)
Adjustments to reconcile net loss to
cash provided by operating activities:
Depreciation and amortization................................. 5,008 5,581
Deferred income taxes......................................... - 584
Foreign currency transaction gains, unrealized................ (292) (1,332)
Loss on disposal of United Kingdom subsidiary................. 35,088 12,712
and other restructuring charges........
Other......................................................... 1,399 1,644
Cash provided by (used in) current assets and liabilities:
Accounts receivable........................................... (3,897) (1,315)
Inventories................................................... (13,830) 4,465
Other current assets.......................................... (2,353) (833)
Accounts payable.............................................. 14,759 (691)
Accrued expenses.............................................. 3,015 1,141
Income taxes payable.......................................... 11,462 7,328
---------------------------------------
Net cash provided by operating................................ 22,606 19,950
activities
---------------------------------------
Cash flows from investing activities:
Additions to property and equipment............................... (5,412) (4,654)
Proceeds from sales of property and equipment..................... 103 28
Effect of sale of United Kingdom subsidiary on cash............... (10,971) -
Other investing activities........................................ 1,489 2,092
---------------------------------------
Net cash used in investing activities..................... (14,791) (2,534)
---------------------------------------
Cash flows from financing activities:
Changes in short-term bank borrowings, net........................ 2,411 (2,308)
Proceeds from issuance of common stock to......................... 1,236 1,244
employee plans
Principal repayments on long-term borrowings...................... - (24,353)
---------------------------------------
Net cash provided by (used in) financing activities............. 3,647 (25,417)
---------------------------------------
Effect of exchange rate changes on cash............................. (178) (735)
---------------------------------------
Net increase (decrease) in cash and short-term investments.......... 11,284 (8,736)
Cash and short-term investments, beginning of period................ 32,811 34,726
---------------------------------------
Cash and short-term investments, end of period...................... $ 44,095 $ 25,990
=======================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements. Notes to Consolidated Financial Statements
<PAGE>
Notes to Consolidated Financial Statements
Note 1 Basis of Financial Statements
The accompanying unaudited financial statements have been prepared in accordance
with Rule 10-01 of Regulation S-X, "Interim Financial Statements", and do not
include all information and footnotes required by generally accepted accounting
principles for complete financial statements. The financial statements have been
prepared in conformity with accounting principles and practices (including
consolidation practices) as reflected in InterTAN, Inc.'s ("InterTAN" or the
"Company") annual report on Form 10-K for the fiscal year ended June 30, 1998,
and, in the opinion of the Company, include all adjustments necessary for fair
presentation of the Company's financial position as of March 31, 1999 and 1998
and the results of its operations for the three and nine months ended March 31,
1999 and 1998 and its cash flows for the nine months ended March 31, 1999 and
1998. Such adjustments are of a normal and recurring nature. Operating results
for the three and nine months ended March 31, 1999 are not necessarily
indicative of the results that can be expected for the fiscal year ended June
30, 1999. For further information, refer to the consolidated financial
statements and notes thereto included in the Company's annual report on Form 10-
K for the fiscal year ended June 30, 1998.
Note 2 Loss on Sale of United Kingdom Subsidiary and Other Restructuring
Plans
For some time, the Company had been considering a variety of plans and had
undertaken a number of initiatives intended to restore its loss-making
subsidiary in the United Kingdom to profitability, including a restructuring
plan to close 69 under-performing stores implemented in the third quarter of
fiscal year 1998.
While this restructuring plan, together with other initiatives taken in the
United Kingdom, were contributing to improved operating results in that country,
an overall loss for fiscal year 1999 was still anticipated. In January, 1999 the
Company's Board of Directors approved a plan to sell the Company's investment in
InterTAN U.K. Limited for proceeds of $2,582,000, net of estimated selling
costs. The sale included all assets, liabilities and other obligations of the
United Kingdom subsidiary, including approximately $11,600,000 of bank debt
outstanding under InterTAN U.K. Limited's portion of the Company's syndicated
loan agreement, which was repaid by the purchaser on closing. Coincident with
the sale, the Company's syndicated loan facility was reduced from $75,000,000 to
$50,000,000. See Note 7, Segment Reporting, for revenue and operating income
(loss) associated with InterTAN U.K. Limited.
In addition, the purchaser assumed the rights to claim tax loss carryforwards
and deferred capital allowances having a potential tax benefit of approximately
$33,000,000. To the extent the purchaser is able to utilize all or a portion of
these loss carryforwards and deferred tax allowances, the Company is entitled to
cash payments equal to 30% of the tax savings realized by the purchaser (a
maximum of approximately $10,000,000). The Company will recognize such proceeds,
if any, as received.
<PAGE>
Also under the terms of the sale agreement, the Company has indemnified the
purchaser for certain contingencies primarily relating to real estate matters
associated with store leases and working capital adjustments. Management
believes that adequate provision has been made for such liabilities and
allowances; however, such balances are based on estimates and the actual results
could differ from those estimates, subjecting the Company to the indemnification
provisions. Costs, if any, resulting from these contingencies will be recorded
as incurred, or become probable and estimable.
A loss of $34,712,000 on the sale of InterTAN U.K. Limited was recorded in the
third quarter when the plan to sell was approved by the Board of Directors. The
initial costs of this transaction totaling approximately $376,000 were expensed
as incurred in the three-month period ended December 31, 1998.
As previously indicated, as part of the Company's ongoing efforts to improve the
financial performance of its United Kingdom operation, in January 1998 a plan to
close 69 consistently under-performing stores was approved. In connection with
this restructuring plan, a provision of $12,712,000 was recorded during the
third quarter of fiscal year 1998, reflecting lease disposal costs, severance
costs and other closure costs, including fixture removal and contract
termination costs. The following is a summary of the activity within this
reserve during the nine-month period ended March 31, 1999 (in thousands):
<TABLE>
<CAPTION>
Balance Adjustment on
June 30 Foreign Currency Balance Disposal of Balance
1998 Paid Rate Effects December 31 1998 InterTAN U.K. March 31 1998
------------- ------------ ---------------------- ---------------- -------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lease disposal costs $8,639 $(2,995) $(33) $5,611 $(5,611) $ -
Severance costs 250 (105) (1) 144 (144) -
Other exit costs 527 (268) (2) 257 (257) -
------ ------- ---- ------ -------
$9,416 $(3,368) $(36) $6,012 $(6,012) $ -
====== ======= ==== ====== ======= =============
</TABLE>
Note 3 9% Subordinated Convertible Debentures
During fiscal year 1994, the Company closed a private placement of
Cdn$60,000,000 of 9% subordinated convertible debentures (the "Debentures")
maturing August 30, 2000. At March 31, 1999, Cdn$36,861,000 of Debentures
($24,431,000 at March 31, 1999 exchange rates) were outstanding. The Debentures
are convertible at any time at a conversion rate of 118.7648 common shares for
each Cdn$1,000 face amount of Debentures, equivalent to a conversion price of
Cdn$8.42 per share ($5.58 per share at March 31, 1999 exchange rates).
The Debentures are redeemable upon giving at least 30 business days' notice at a
redemption price equal to the principal amount thereof, plus accrued and unpaid
interest provided that the current market price of the Company's common shares
during a specified period preceding the date of such notice is not less than
125% of the conversion price. On April 16, 1999, the Company served notice on
all remaining Debenture holders calling for the redemption of all issued and
outstanding Debentures on June 8, 1999. Debenture holders may exercise their
right of conversion until June 7, 1999, after which all outstanding Debentures
must be surrendered for cash. Should all outstanding Debenture holders as of
April 16, 1999 exercise their right of conversion, approximately 4,007,000
additional common shares would be issued. Approximately 371,000 shares had
previously been issued as a result of Debenture conversions between March 31,
1999 and April 16, 1999.
<PAGE>
Note 4 Net Loss per Average Common Share
Basic earnings per share ("EPS") is calculated by dividing the net income or
loss for a period by the weighted average number of common shares outstanding
for the period. Diluted EPS reflects the potential dilution which would occur if
securities or other contracts to issue common stock were exercised or converted.
For the three and nine-month periods ended March 31, 1999 and 1998, basic and
diluted losses per average common share were each $3.13 and $1.46 and $2.17 and
$0.77, respectively, as the effects of the Company's potentially dilutive
instruments were anti-dilutive in all periods.
The Company's potentially dilutive instruments include the Debentures. Under
their terms of issuance, the Debentures are convertible into common stock at the
rate of 118.7648 shares for each Cdn.$1,000 face amount of Debentures held,
equivalent to 4,378,000 and 6,747,000 shares at March 31, 1999 and 1998,
respectively. However, 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 fair market value of the Company's common stock at the time of
redemption were less than the conversion price, resulting in a greater number of
shares being issued on assumed conversion.
Between March 31 and April 16, 1999, Cdn.$3,124,000 of Debentures were
converted, resulting in the issuance of approximately 371,000 common shares. On
April 16, 1999, the Company called for the redemption of the remaining
Debentures on June 8, 1999. Should all remaining Debenture holders exercise
their right of conversion prior to the redemption date, approximately 4,007,000
additional common shares would be issued. In addition, at March 31, 1999 and
1998, the Company's directors and employees held options to purchase 1,221,502
and 1,015,500 common shares, respectively, at prices ranging from $3.50 to
$8.3125 and $3.50 to $8.1875 per shares, respectively.
Note 5 Comprehensive Income (Loss)
Effective July 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("FAS 130"). Comprehensive
income is defined as the change in equity (net assets) of a business enterprise
during a period from transactions and other events and circumstances from non-
owner sources. For the Company, comprehensive income includes net income and the
net change in foreign currency translation effects. The comprehensive loss for
the three-month periods ended March 31, 1999 and 1998 was $35,419,000 and
$16,736,000, respectively. For the nine-month periods ended March 31, 1999 and
1998, the comprehensive loss was $23,541,000 and $15,895,000, respectively.
Note 6 Income Taxes
The provisions for domestic and foreign income taxes for the three-month periods
ended March 31, 1999 and 1998 were $10,548,000 and $1,438,000, respectively. The
Company's income tax expense primarily represents Canadian and Australian income
tax on the profits earned by its subsidiaries in those countries. The provision
for income taxes for the three-month period ended March 31, 1999 also included a
charge of $8,039,000 related to the settlement of a dispute with the Canadian
tax authorities relating to the 1990 to 1993 taxation years which is discussed
more
<PAGE>
fully below. For the nine-month period ended March 31, 1999, an income tax
provision of $21,481,000 was recorded, compared with $8,563,000 in the first
nine months of the prior year.
An audit of the Canadian income tax returns of the Company's Canadian subsidiary
for the 1990 to 1993 taxation years was commenced during the 1995 fiscal year.
The Company was advised that Revenue Canada was challenging certain interest
deductions relating to the Canadian subsidiary's former operations in
continental Europe and was proposing to tax certain foreign exchange gains
related to such operations. Depending on the ultimate resolution of these
issues, the Company estimated that it could potentially have an additional
liability of up to $21,000,000. In March 1999, the Company and Revenue Canada
agreed to a resolution of this matter which will result in a liability to the
Company of approximately $14,000,000 resulting in a charge of $8,039,000 during
the third quarter, reflecting a settlement which exceeded management's
expectations, but was substantially less than the maximum exposure of
$21,000,000.
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 Corporation in fiscal year 1987. The
Company had previously disclosed that these issues represented a potential loss
in the range of $0 to $21,000,000. Management disagreed with Revenue Canada's
views on these issues and vigorously defended the Company's position. The
Company has been advised that Revenue Canada no longer intends to pursue these
matters and that no related assessment will be issued.
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 carryback 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 $11,700,000. 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. It is not practical for management to make any reasonable
determination of when this remaining outstanding Canadian tax issue will
ultimately be resolved.
Audits of the Company's Canadian income tax return by Revenue Canada for the
1994 taxation year and of the Company's United States income tax returns by the
Internal Revenue Service for the 1990-1994 taxation years are in process.
<PAGE>
Note 7 Segment Reporting
Effective July 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("FAS 131"). The table below summarizes net sales and operating
revenues, operating income (loss) and identifiable assets for the Company's
segments. Consolidated operating income (loss) is reconciled to the Company's
loss before income taxes (in thousands):
<TABLE>
<CAPTION>
Three months ended Nine months ended
March 31 March 31
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net sales and operating revenues
Canada 63,613 $ 56,831 $ 232,120 $ 215,720
Australia 24,453 22,300 79,028 75,989
United Kingdom* - 37,986 97,141 139,676
---------------------------------------------------------------
$ 88,066 $ 117,117 $ 408,289 $ 431,385
===============================================================
Operating income (loss)
Canada $ 4,957 $ 3,161 $ 27,367 $ 19,447
Australia 1,422 1,017 5,750 4,726
United Kingdom* - (5,597) 3,365 (5,023)
---------------------------------------------------------------
6,379 (1,419) 36,482 19,150
Loss on sale of United Kingdom
subsidiary and other restructuring charges (34,712) (12,712) (35,088) (12,712)
General corporate expenses (1,711) (1,122) (4,745) (3,330)
---------------------------------------------------------------
Operating income (loss) (30,044) (15,253) (3,351) 3,108
Foreign currency transaction (gains) losses 80 158 (375) (580)
Interest expense, net 550 923 3,296 4,459
---------------------------------------------------------------
Loss before income taxes $ (30,674) $ (16,334) $ (6,272) $ (771)
===============================================================
</TABLE>
March 31 June 30 March 31
1999 1998 1998
Canada $ 127,886 $ 111,496 $ 112,255
Australia 54,477 45,675 46,127
United Kingdom - 64,246 70,531
Corporate assets 3,983 2,130 2,382
---------------------------------------------------
$ 186,346 $ 223,547 $ 231,295
===================================================
*As discussed in Note 2, the Company sold its United Kingdom operations during
the three months ended March 31, 1999. Additionally 69 under-performing stores
in the United Kingdom were closed during fiscal year 1998.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
---------------------
InterTAN is engaged in the sale of consumer electronics products primarily
through company-operated retail stores and dealer outlets in Canada and
Australia. The Company's retail operations are conducted through two
wholly-owned subsidiaries: InterTAN Australia Ltd., which operates in Australia
under the trade name "Tandy Electronics"; and InterTAN Canada Ltd., which
operates in Canada under the trade name "RadioShack". The Company previously
also had retail and dealer outlets in the United Kingdom. Theses operations were
conducted through a wholly-owned subsidiary, InterTAN U.K. Limited, which
operated under the "Tandy" name. Effective January 1999, the Company's
subsidiary in the United Kingdom was sold. See Note 2 to the Consolidated
Financial Statements and "Loss on Sale of United Kingdom Subsidiary and Other
Restructuring Plans". All of these trade names are used under license from Tandy
Corporation ("Tandy") of Fort Worth, Texas. In addition, the Company has entered
into an agreement in Canada with Rogers Cantel Inc. ("Cantel") to operate
telecommunications stores ("Cantel stores") on its behalf. At March 31, 1999, 45
Cantel stores were in operation.
Effective July 1, 1998, the Company adopted Financial Accounting Standards No.
131, "Disclosure about Segments of an Enterprise and Related Information" ("FAS
131"). All references to "Canada" or "RadioShack Canada", "Australia" or "Tandy
Electronics Australia", the "United Kingdom" or "Tandy U.K." or "Corporate
Headquarters" refer to the Company's segments, unless otherwise noted. The
RadioShack Canada segment includes the results of the Cantel stores described
above.
Overview
There were a number of special factors and charges in both the current and the
prior year that significantly impacted the Company's results of operations and
affected the comparability of the reported results. As previously discussed, in
January 1999 the Company sold its under-performing subsidiary, InterTAN UK
Limited, and recorded a total charge of $35,088,000. See "Loss on Sale of Former
United Kingdom Subsidiary and Other Restructuring Plans." Also in the current
year, the Company settled one of its long-standing disputes with the Canadian
tax authorities and recorded a related tax charge of $8,039,000. See Note 6,
"Income Taxes."
During the three-month period ending March 31, 1998, the Company announced its
plan to close 69 stores in the United Kingdom and recorded a charge of
$12,712,000 plus another $2,325,000 in related inventory write downs. See "Loss
on Sale of Former United Kingdom Subsidiary and Other Restructuring Plans."
The tables below reflect the Company's sales, net income (loss), and net income
(loss) per share for the three and nine-month periods ending March 31, 1999 and
1998, adjusted to eliminate the following: sales and operating results of
InterTAN UK Limited, including the charge relating to the closure of 69 stores
in fiscal 1998; the loss on sale of InterTAN UK Limited; and the special tax
charge relating to the dispute settled with the Canadian tax authorities.
<PAGE>
<TABLE>
<CAPTION>
Three months ended Nine months ended
March 31 March 31
1999 1998 1999 1998
-------------------------------- ------------------------------------
<S> <C> <C> <C> <C>
Net sales and operating revenues as
reported $ 88,066 $117,117 $408,289 $ 431,385
Less sales of former United Kingdom
subsidiary - (37,986) (97,141) (139,676)
---------------- -------------- --------------- ------------------
Net sales and operating revenues as
adjusted $ 88,066 $ 79,131 $311,148 $ 291,709
================ ============== =============== ==================
Net loss as reported $(41,222) $(17,772) $(27,753) $ (9,334)
Loss on sale of former United
Kingdom subsidiary and
other restructuring charges 34,712 12,712 35,088 12,712
Net (income) loss of former
United Kingdom subsidiary
before restructuring charges * - 5,753 (2,447) 5,761
Special provision for income taxes 8,039 - 8,039 -
---------------- -------------- --------------- ------------------
Net income as adjusted $ 1,529 $ 693 $ 12,927 $ 9,139
================ ============== =============== ==================
Basic and diluted net loss per average
common share as reported $(3.13) $(1.46) $(2.17) $(0.77)
================ ============== =============== ==================
Basic net income per average common share
as adjusted $0.12 $0.06 $1.01 $0.76
================ ============== =============== ==================
Diluted net income per average common
share as adjusted $0.12 $0.06 $0.80 $0.58
================ ============== =============== ==================
</TABLE>
*Includes inventory writedowns of $2,325,000 associated with the restructuring
which were recorded in the third quarter of fiscal year 1998.
<PAGE>
Loss on Sale of United Kingdom Subsidiary and Other Restructuring Plans
For some time, the Company had been considering a variety of plans and had
undertaken a number of initiatives intended to restore its loss-making
subsidiary in the United Kingdom to profitability, including a restructuring
plan to close 69 under-performing stores implemented in the third quarter of
fiscal year 1998.
While this restructuring plan, together with other initiatives taken in the
United Kingdom, were contributing to improved operating results in that country,
an overall loss for fiscal year 1999 was still anticipated. The additional cash
injection needed in the United Kingdom to sustain and accelerate the pace of
recovery could only have come from diverting cash otherwise needed in the
Company's profitable Canadian and Australian subsidiaries. Consequently,
management explored the possibility of finding a suitable business partner or
buyer for its United Kingdom subsidiary. In January, 1999 the Company's Board of
Directors approved a plan to sell the Company's investment in InterTAN U.K.
Limited for proceeds of $2,582,000, net of estimated selling costs. The sale
included all assets, liabilities and other obligations of the United Kingdom
subsidiary, including approximately $11,600,000 of bank debt outstanding under
InterTAN U.K. Limited's portion of the Company's syndicated loan agreement which
was repaid by the purchaser at closing. Coincident with the sale, the Company's
syndicated loan facility was reduced from $75,000,000 to $50,000,000. See Note
7, Segment Reporting, for revenue and operating income (loss) associated with
InterTAN U.K. Limited.
In addition, the purchaser assumed the rights to claim tax loss carryforwards
and deferred capital allowances having a potential tax benefit of approximately
$33,000,000. To the extent the purchaser is able to utilize all or a portion of
these loss carryforwards and deferred tax allowances, the Company is entitled to
cash payments equal to 30% of the tax savings realized by the purchaser (a
maximum of approximately $10,000,000). The Company will recognize such proceeds,
if any, as received.
Also under the terms of the sale agreement, the Company has indemnified the
purchaser for certain contingencies, primarily relating to real estate matters
associated with store leases and working capital adjustments. Management
believes that adequate provision has been made for such liabilities and
allowances; however, such balances are based on estimates and the actual results
could differ from those estimates, subjecting the Company to the indemnification
provisions. Costs, if any, resulting from these commitments will be recorded as
incurred, or become probable and estimable.
A loss of $34,712,000 on the sale of InterTAN U.K. Limited was recorded in the
third quarter when the plan to sell was approved by the Board of Directors. The
initial costs of this transaction totaling approximately $376,000 were expensed
as incurred in the three-month period ended December 31, 1998.
As previously indicated, as part of the Company's ongoing efforts to improve the
financial performance of its United Kingdom operation, in January 1998 a plan to
close 69 consistently under-performing stores was approved. In connection with
this restructuring plan, a provision of $12,712,000 was recorded during the
third quarter of fiscal year 1998, reflecting lease disposal costs, severance
costs and other closure costs, including fixture removal and contract
termination costs.
<PAGE>
The following is a summary of the activity within this reserve during the
nine-month period ended March 31, 1999 (in thousands):
<TABLE>
<CAPTION>
Balance Balance Adjustment on Balance
June 30 Foreign Currency December 31 Disposal of March 31
1998 Paid Rate Effects 1998 InterTAN U.K. 1998
---- ---- ------------ ---- ------------- ----
<S> <C> <C> <C> <C> <C> <C>
Lease disposal costs $8,639 $(2,995) $(33) $5,611 $(5,611) $ -
Severance costs 250 (105) (1) 144 (144) -
Other exit costs 527 (268) (2) 257 (257) -
-------- ---------- ------ ------- --------- --------
$9,416 $(3,368) $(36) $6,012 $(6,012) $ -
====== ======== ===== ====== ======== ========
</TABLE>
Foreign Exchange Effects
Profit and loss accounts, including sales, are translated from local currency
values to U.S. dollars at monthly average exchange rates. During the third
quarter of fiscal year 1999, the U.S. dollar strengthened against the Canadian
and Australian dollars relative to the comparable values during the third
quarter of the prior year. As a result, the same local currency amounts
translate into fewer U.S. dollars as compared with the prior year. For example,
if local currency sales in Australia in the third quarter of fiscal year 1999
were the same as those in the third quarter of the prior year, the fiscal year
1999 income statement would reflect a 4.7% decrease in sales when reported in
U.S. dollars.
The following table outlines, for the three-month period ending March 31, 1999,
the percentage change in the weighted average exchange rates of the currencies
of the countries in which the company operates as compared to the same
three-month period in the prior year:
-----------------------------------
Canada (5.4)%
Australia (4.7)%
-----------------------------------
<PAGE>
Sales Outlets
The number of company-operated stores and dealers at March 31, 1999 and 1998, as
well as the number of locations opened and closed during the three-month periods
then ended, is presented in the table below:
<TABLE>
<CAPTION>
Sales Outlets
Three months ended Three months ended
March 31, 1999 March 31, 1998
------------------------------------- ------------------------------------
Ending Opened Closed Ending Opened Closed
<S> <C> <C> <C> <C> <C> <C>
Canada
Company-operated 449* 1 4 458* 1 4
Dealers 332 4 4 385 2 3
------------------------------------ ------------------------------------
781 5 8 843 3 7
==================================== ====================================
Australia
Company-operated 225 3 - 217 1 1
Dealers 126 4 3 124 1 19
------------------------------------ ------------------------------------
351 7 3 341 2 20
==================================== ====================================
United Kingdom**
Company-operated 0 0 0 286 - 52
Dealers 0 0 0 109 4 25
------------------------------------ ------------------------------------
0 0 0 395 4 77
==================================== ====================================
Total
Company-operated 674 4 4 961 2 57
Dealers 458 8 7 618 7 47
------------------------------------ ------------------------------------
1,132 12 11 1,579 9 104
==================================== ====================================
</TABLE>
*At March 31, 1999 and 1998, the Company operated 45 and 55 stores,
respectively, on behalf of Cantel. At March 31, 1999, the Company was also
testing "store in store" formats in seven locations of The Hudsons Bay Company.
Since these locations are not company-owned, they are not included in the above
table.
** The Company's United Kingdom subsidiary was sold in January, 1999. See "Loss
on Sale of United Kingdom Subsidiary and Other Restructuring Plans".
The decline in the number of dealers in Canada over the prior year results from
the closure of a number of smaller dealers whose level of purchases was not
sufficient to sustain profitability. The closure of these dealers will not have
a material effect on future sales.
Net Sales
Consolidated sales in U.S. dollars for the three-month period ended March 31,
1999 were $88,066,000, down from $117,117,000 in the same period a year ago.
This decline is more than attributable to the sale of the Company's United
Kingdom subsidiary and the effects of weaker currencies in Canada and Australia.
When these factors are eliminated, consolidated sales in Canada and Australia,
measured at the same exchange rates increased by $13,061,000 or 17.4%.
Comparable-store sales, also measured at the same exchange rates, increased by
17.8%. Year-to-date, with the sales of the former United Kingdom subsidiary
removed from both periods, sales have increased by 6.7% and 16.5% in U.S.
dollars and local currency, respectively. Comparative store sales for the
nine-month period ended March 31, 1999, also excluding the former United Kingdom
subsidiary, have increased 16.9% over the same period a year ago.
<PAGE>
The table which follows shows the percentage changes in net sales for Canada and
Australia for the quarter and nine months ended March 31, 1999, compared to the
corresponding period in the prior year. Changes are presented in both U.S.
dollars and local currencies to illustrate the effects of exchange rate
fluctuations. The change in comparative store sales, measured at the same
exchange rates, is also shown:
<TABLE>
<CAPTION>
Net Sales
---------
Percentage Increase
-------------------
Three Months Ended Nine Months Ended
March 31, 1999 March 31, 1999
Local Comparative Local Comparative
Currency US$ Store Currency US$ Store
<S> <C> <C> <C> <C> <C> <C>
Canada 18.3 % 11.9 % 20.4 % 16.5 % 7.6 % 17.6 %
Australia 15.1 % 9.7 % 12.3 % 16.4 % 4.0 % 15.3 %
----------------------------------- ------------------------------------
Combined 17.4 % 11.3 % 17.8 % 16.5 % 6.7 % 16.9 %
==================================== ====================================
</TABLE>
The sales growth in both Canada and Australia was broadly-based, with gains
experienced in almost all core categories. In Canada, sales of wireless products
and computers were key factors leading to a comparable-store sales gain of
20.4%. The sale of direct-to-home satellite systems was also an important part
in the strong sales performance in Canada during the third quarter of fiscal
year 1999. The sale of computers was another significant factor driving overall
sales growth in Australia. Strong performances from the wireless and battery
categories also contributed to a comparable-store sales increase of 12.3% over
the same quarter in the prior year. At quarter end, the Company had eight more
stores open in Australia than a year ago. Sales from these new stores lifted the
overall sales gain in local currency to 15.1%.
In January, 1999, the Company announced the sale of its subsidiary in the United
Kingdom. This sale will have a significant effect on overall sales comparisons
for the coming year. Sales for the prior four quarters in the United Kingdom
were as follows:
Three months ended March 31, 1998 $ 37,986
==================
Three months ended June 30, 1998 $ 32,852
==================
Three months ended September 30, 1998 $ 33,425
==================
Three months ended December 31, 1998 $ 63,716
==================
Management does not believe that inflation or price changes have had a material
effect on sales during the three and nine-month periods ended March 31, 1999 and
1998.
Gross Margin and Cost of Products Sold
The gross margin percentage for the three-month period ended March 31, 1999 was
44.1% compared to 41.5% in the same period of the prior year. This increase was,
however, more than attributable to the low margins experienced in the Company's
former United Kingdom
<PAGE>
subsidiary last year. Margins in the United Kingdom had been particularly low in
that quarter, in part as a result of the writedown of inventories associated
with a program to close 69 unprofitable stores. See "Loss on Sale of United
Kingdom Subsidiary and Other Restructuring Plans".
The combined gross margin percentage in Canada and Australia declined from 45.5%
to 44.1%, as sales growth has come primarily from product categories, such as
wireless and computers, carrying margins that are below the Company's average.
Management expects that modest reductions in the gross margin percentage will
continue as customers continue to demand these classes of products. This
downward pressure on margin continues to be partially mitigated by post sale
revenues, including residuals and volume rebates, primarily on wireless products
and direct-to-home satellite systems. It is management's objective that any
future reductions in the gross margin percentage will be offset by a lower
selling, general and administrative percentage. The following is a summary of
the gross margin percentages experienced in each of the Company's operating
units during the three and nine-month periods ended March 31, 1999 and 1998.
Three months ended Nine months ended
March 31 March 31
1999 1998 1999 1998
- - ------------------------------------------------------------------------------
Canada 42.8% 44.6% 43.4% 43.3%
Australia 47.3% 47.5% 46.4% 47.4%
- - ------------------------------------------------------------------------------
44.1% 45.5% 44.2% 44.4%
United Kingdom -- 33.3% 41.2% 39.4%
- - ------------------------------------------------------------------------------
Consolidated 44.1% 41.5% 43.5% 42.8%
==============================================================================
While gross margin dollars for the quarter declined by $9,807,000, this
reduction was more than attributable to the sale of the Company's former
subsidiary in the United Kingdom. Gross margin dollars generated in Canada and
Australia during the three-month period ended March 31, 1999 increased by
$2,826,000 as the effects of increased sales was partially offset by the impact
of a lower gross margin percentage and weaker foreign currencies. The following
table contains an analysis of the change in gross margin dollars for the
quarter.
In Canada and Australia
Increase in sales $ 5,939,000
Decrease in margin percentage (1,244,000)
Foreign exchange rate effects (1,869,000)
---------------------
$ 2,826,000
Effect of sale of United Kingdom subsidiary (12,633,000)
---------------------
$ (9,807,000)
=====================
<PAGE>
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses for the three-month period
ended March 31, 1999 were $32,817,000 compared to $49,425,000 in the same period
a year ago. The following table illustrates that this apparent reduction is more
than attributable to the sale of the Company's former subsidiary in the United
Kingdom and weaker currencies in Canada and Australia (in thousands):
<TABLE>
<CAPTION>
Three-Months Foreign Increase (Decrease) Three-Months Ended
Ended Currency Measured at Ended
March 31, 1998 Effects Same Exchange Rates March 31, 1999
-------------- ------- ------------------- --------------
<S> <C> <C> <C> <C>
Canada $21,051 $(1,141) $ 1,341 $21,251
Australia 9,392 (441) 930 9,881
Corporate Headquarters
1,111 - 574 1,685
------------------- ------------- --------------------------- ---------------------
31,554 (1,582) 2,845 32,817
United Kingdom 17,871 - (17,871) -
------------------- ------------- --------------------------- ---------------------
$49,425 $(1,582) $(15,026) $32,817
=================== ============= =========================== =====================
</TABLE>
Measured at the same exchange rates, SG&A expenses for the quarter in Canada,
Australia and the Corporate Headquarters increased by $2,845,000, or 9.5%,
primarily in support of, or in response to, higher sales. Increases were seen in
rent, payroll costs, and in the sales-based royalty payable to Tandy
Corporation. SG&A expenses at the Company's corporate headquarters increased by
$574,000, primarily as a result of costs related to the relocation of that
office from Forth Worth, Texas to Toronto, Canada. Management believes that this
step will result in future savings as a result of both reductions in staff
levels and lower operating costs and will also result in more effective
management by being closer to the Company's most significant operating
subsidiary.
When the Company's former subsidiary in the United Kingdom is removed from the
previous year, combined SG&A percentage of 37.3% is indicated for the
three-month period ended March 31, 1999 compared with 39.9% a year ago. This
reduction of 2.6 percentage points was 1.2 percentage points higher than the
decline in the gross margin percentage. Management will continue to control SG&A
expense in an effort to maintain this operating leverage.
<PAGE>
The following table compares the SG&A percentage for the quarter and
year-to-date for Canada and Australia with the corresponding amount for the
prior year. A combined percentage is also shown which includes SG&A expenses at
Corporate Headquarters.
Three months ended Nine months ended
March 31 March 31
1999 1998 1999 1998
- - -------------------------------------------------------------------------------
Canada 33.4% 37.0% 30.3% 32.7%
Australia 40.4% 42.1% 38.2% 40.2%
- - ------------------------------------------------------------------------------
Combined 37.3% 39.9% 33.8% 35.8%
- - ------------------------------------------------------------------------------
Net Interest Expense
Net interest expense for the three-month period ended March 31, 1999 was
$550,000 compared with $923,000 in the comparable quarter a year ago. This
reduction primarily relates to lower debt loads resulting from the sale of the
Company's former subsidiary in the United Kingdom. This factor will continue to
result in reduced interest costs in the fourth quarter of fiscal year 1999 and
the first two quarters of fiscal year 2000. In addition, the Company has called
for the redemption of its remaining 9% subordinated convertible debentures on
June 8, 1999. Management estimates that the redemption of this instrument will
lower net interest expense by approximately $550,000 per quarter.
Provision for Income Taxes
An income tax provision of $10,548,000 was recorded during the quarter compared
with a provision of $1,438,000 recorded in the third quarter of fiscal year
1998. This increase results primarily from a charge of $8,039,000 related to the
settlement of a dispute with the Canadian tax authorities relating to a prior
year. See Note 6 to the Consolidated Financial Statements. Higher profits in
Canada and Australia also contributed to the increase in the provision for
income taxes.
<PAGE>
FINANCIAL CONDITION
-------------------
Most balance sheet accounts are translated from their values in local currency
to U.S. dollars at the respective month end rates. The table below outlines the
percentage change, to March 31, 1999, in exchange rates as measured against the
U.S. dollar for Canada and Australia:
Foreign Exchange Rate Fluctuations
----------------------------------
% Increase % Increase
(Decrease) (Decrease)
from March 31, 1998 from June 30, 1998
------------------- ------------------
Canada (5.9) (2.7)
Australia (4.2) 2.4
Inventories
Inventories at March 31, 1999 were $111,081,000 compared to $159,820,000 at
March 31, 1998, a reduction of $48,739,000. This decrease is more than
attributable to the sale of the Company's former subsidiary in the United
Kingdom and foreign currency effects. Measured at the same exchange rates,
inventories have increased year-on-year in Canada and Australia by about 11% in
support of higher sales.
For the same reasons, inventories have declined from $148,198,000 at June 30,
1998.
Accounts Receivable
Accounts receivable were $7,582,000 at March 31, 1999, down from $8,539,000 and
$10,606,000 at June 30, 1998 and March 31, 1998, respectively. These reductions
are primarily due to the sale of the Company's former subsidiary in the United
Kingdom and foreign currency effects. Accounts receivable balances in Canada and
Australia, measured in local currency, have not changed significantly.
Property and Equipment
Property and equipment was $19,094,000 at March 31, 1999, down from $26,228,000
and $26,524,000 at June 30, 1998 and March 31, 1998, respectively. These
reductions are attributable to the sale of the Company's former subsidiary in
the United Kingdom and in part to reductions in Canada, where depreciation
expense has exceeded spending on routine capital additions.
<PAGE>
Accounts Payable
Accounts payable at March 31, 1999 were $19,398,000, compared to $24,274,000 and
$26,448,000 at June 30, 1998 and March 31, 1998 respectively. These reductions
are attributable to the effects of the sale of the Company's former subsidiary
in the United Kingdom, partially offset by the increase in inventory levels in
Canada and Australia.
Accrued Expenses
Accrued expenses at March 31, 1999 were $26,451,000, down from $38,505,000 and
$39,945,000 at June 30, 1998 and March 31, 1998 respectively, as the effects of
the sale of the Company's former subsidiary in the United Kingdom were partially
offset by higher accrual levels in Canada and Australia. These increases relate
to a variety of factors in response to higher sales, including salaries and
bonuses, sales taxes and the royalty payable to Tandy Corporation. Increased
deferred revenues related to the sale of extended warranty contracts was also a
contributing factor.
Income Taxes Payable
Income taxes payable were $31,999,000 at March 31, 1999 compared to balances at
June 30, 1998 and March 31, 1998 of $20,955,000 and $19,650,000, respectively,
reflecting higher profitability in Canada and Australia as well as a special
provision of $8,039,000 in Canada relating to the settlement of a dispute with
the Canadian tax authorities. See Note 6 to the Consolidated Financial
Statements.
The Company's Canadian subsidiary has a number of issues in dispute with the
Canadian tax authorities relating to reassessments arising from an audit of
RadioShack Canada's income tax returns for the 1987 to 1989 taxation years.
Depending on the ultimate outcome of these matters, the Company could have an
additional liability in the range of $0 to $11,700,000. The Company believes it
has meritorious arguments in support of its position on each of these issues
and, accordingly, no additional provision has been recorded, pending the outcome
of these reassessments. It is not possible for management to make any reasonable
determination of when the above issues will ultimately be resolved. See Note 6
to the Company's Consolidated Financial Statements which appears in Item 1 to
this Form 10-Q and is incorporated herein by reference.
An audit of the Company's United States income tax returns by the Internal
Revenue Service for the 1990-1994 taxation years is in process.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Cash flow from operating activities generated $22,606,000 in cash during the
nine-month period ended March 31, 1999, compared with $19,950,000 during the
same period a year ago. Net income, adjusted to reconcile net income to cash,
generated $13,450,000 in cash compared to $9,855,000 in the prior year. The
build-up of inventories in response to higher sales in Canada and Australia
consumed $13,830,000 in cash, which has been financed through a similar increase
in accounts payable. The deferral of the payment of income taxes preserved
$11,462,000 in cash in the nine-month period ended March 31, 1999, compared with
$7,328,000 a year ago. This year the Company recorded a special provision of
$8,039,000, reflecting the settlement of an outstanding dispute with the
Canadian tax authorities. The Company has not yet paid its liability under this
settlement. The positive impact of the deferral of the payment of this liability
was partially offset by increases in regular income tax installments.
Investing activities consumed $14,791,000 in cash during the nine-month period
ended March 31, 1999 compared with $2,534,000 a year ago. The sale of the
Company's former subsidiary in the United Kingdom consumed $10,971,000 in cash,
representing the cash balances of that subsidiary at the time of sale less the
net proceeds of disposition. However, the subsidiary also had approximately
$11,600,000 of short-term bank debt which was assumed and repaid by the
purchaser.
Financing activities generated $3,647,000 in cash during the first nine months
of fiscal year 1999 while consuming $25,417,000 in cash in the same period in
the prior year, reflecting the repayment a year ago of the Company's long-term
indebtedness to Tandy Corporation.
The Company's principal sources of liquidity during fiscal year 1999 are its
cash and short-term investments, its cash flow from operations and its banking
facilities.
In December, 1997, the Company entered into a three-year revolving credit
facility with a syndicate of three lenders (the "Syndicated Loan Agreement") in
an amount not to exceed $75,000,000 in the aggregate. With the sale of InterTAN
U.K. Limited in January, 1999, the facility has been reduced to $50,000,000. The
amount of credit actually available at any particular time is dependent on a
variety of factors, including the level of eligible inventories and accounts
receivable of InterTAN Canada Ltd. (the "Borrower"). The amount of available
credit is then reduced by the amount of trade accounts payable of the Borrower
then outstanding as well as certain other reserves.
The Syndicated Loan Agreement is used primarily to provide letters of credit in
support of purchase orders and, from time to time, to finance inventory
purchases. At March 31, 1999, there were no borrowings against the Syndicated
Loan Agreement and $1,699,000 was committed in support of letters of credit.
There was $15,250,000 of credit available for use at March 31, 1999. As part of
the transaction involving the sale of InterTAN U.K. Limited, the purchaser
repaid the amount owing under the facility at December 31, 1998 ($11,617,000)
and arranged for replacement of the letters of credit relating to the United
Kingdom ($1,430,000 at December 31, 1998). The Company's Merchandise Agreement
with Tandy permits the Company to support purchase orders with a surety bond or
bonds as well as letters of credit. The Company has entered into an agreement
with a major insurer to provide surety bond coverage (the "Bond") in an amount
not to exceed $18,000,000. Use of the Bond will give the Company greater
flexibility
<PAGE>
in placing orders with Far Eastern suppliers by releasing a portion of the
credit available under the Syndicated Loan Agreement for other purposes.
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 ($7,612,000 at March 31, 1999 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 ($3,172,000 at March 31, 1999 exchange rates) may
be used in support of short-term borrowings. At March 31, 1999, there were no
borrowings outstanding against the Australian Facility, nor was any amount
committed in support of letters of credit.
The Company's primary uses of liquidity during the balance of fiscal year 1999
will include the funding of capital expenditures, the servicing of debt and,
possibly, the payments in settlement of tax reassessments. The Company
anticipates that capital additions will approximate $3,500,000 during the
balance of fiscal year 1999, mainly related to store expansion, remodeling and
upgrading. The Company's debt servicing requirements during the same period will
consist primarily of interest payments on the Debentures. The Company has called
for the redemption of the Debentures on June 8, 1999. The amount of interest
payable on the debentures will depend on whether debenture holders exercise
their right of conversion prior to the redemption date. Management estimates
that the amount of interest payable on the Debentures should not exceed
$500,000. In addition, management expects to receive additional reassessments
during fiscal year 1999 relating to the settlement of its dispute with Revenue
Canada in respect of the 1990-1993 taxation years. See "Income Taxes Payable"
and Note 6 to the Company's Consolidated Financial Statements which is included
in Item 1 of this Report on Form 10-Q and is incorporated herein by reference.
Management estimates the amount of such reassessments will be approximately
$14,000,000.
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 the 1999 Christmas selling
season, including the tax reassessments relating to the 1990-1993 taxation
years.
<PAGE>
YEAR 2000 ISSUES
Management recognizes that many of the Company's information systems and related
hardware were designed and developed without considering the impact of the
upcoming change in the century ("Year 2000") and that a significant number of
InterTAN's computer applications, systems and hardware are requiring
modification or replacement to make them compliant with the Year 2000.
The Company's critical systems include the following:
o Its store operating systems;
o Its so-called "back end" merchandising and inventory systems, including
purchasing, receiving and warehousing, perpetual inventories and store
replenishment; and,
o Its primary accounting systems, including general ledger, accounts
receivable, accounts payable and payroll.
The Company's information systems include both internally developed systems and
systems purchased from third-party vendors. In Canada, with the exception of the
primary accounting system, the Company employs primarily internally developed
systems. In Australia, the Company has gradually shifted from internally
developed systems to third-party systems. The primary accounting system and the
warehouse distribution system are the only significant internally developed
systems remaining in Australia.
The Company is employing a variety of internal and external resources to assess
and make changes necessitated by Year 2000 issues to its many different systems
and equipment. Many of these changes were contemplated in any event as upgrades
or replacement of outdated systems and hardware. The Company has determined that
its mainframe hardware is Year 2000 compliant.
In Canada, during fiscal years 1996 and 1997, point-of-sale hardware was
replaced with equipment that is Year 2000 compliant. The store operating system
was replaced in the third and fourth quarters of fiscal year 1998. Year
2000-related upgrades to back end inventory and warehouse systems have been
completed. The Company's third-party-sourced accounting and payroll systems in
Canada have been certified as being Year 2000 compliant. Testing of both of
these systems is now complete. The Company was recently advised that the
operating system which supports its point of sale and certain of its warehousing
systems in Canada may not be Year 2000 compliant in certain environments.
Rollout of the installation of an upgrade to remedy this situation should be
complete by the end of September, 1999.
In Australia, the store hardware and operating system were replaced with systems
that are Year 2000 compliant during the fourth quarter of fiscal year 1998. The
Company is currently implementing a fully integrated, enterprise-wide retail
solution supplied by an outside vendor to replace its existing back end
inventory and accounting systems in Australia. This new system is certified as
being Year 2000 compliant and implementation is currently on schedule. The
Company will evaluate progress towards full implementation in September. At that
time, unless there is reasonable assurance that implementation and testing can
be completed on a timely basis, work on this project will be halted and all
efforts will be directed at the immediate remediation
<PAGE>
of the existing legacy systems. It is anticipated that this remediation could be
completed in a four to six week period, in time for the November-December
Christmas selling system. After this peak, work will resume on the enterprise-
wide solution.
The Company's current projection is that Year 2000 compliance costs will not
exceed $1,500,000.
In the most reasonably likely worst case scenario, the Company's store operating
and back end inventory management systems could fail. The consequence of such
failure could include the inability to electronically record sales transactions
in the Company's stores and a breakdown in the supply chain. Such an occurrence
would likely result in a loss of revenue; it is not possible to quantify the
possible range of such loss. This would necessitate reverting to a number of
manual systems for recording sales, ordering product and replenishing the
Company's stores. Management does not currently have a formal documented
contingency plan to deal with this scenario. Management anticipates that such a
contingency plan will be in place by September 30, 1999.
The Company has communicated with its suppliers and other organizations with
which it does business to coordinate Year 2000 issues and to ensure the
continuity of supply of product and services. While the Company is not aware
that any of its major vendors will experience difficulties in supplying product,
in a most reasonably likely worst case scenario, one or more significant
suppliers could be unable to continue to adequately supply the Company after
1999. The Company's fallback position would be to seek an alternative source of
supply. However, there can be no assurance that such alternative sources of
supply would be available. The Company does not yet have a list of alternative
suppliers should some suppliers be unable to continue to provide product or
services beyond the end of calendar year 1999. Such a contingency plan will be
in place by September 30, 1999. It is not practical for management to estimate
the range of financial loss, if any, which could result from the negative effect
that a disruption in supply would have on the Company's business.
The Company's warehouse and distribution systems are centralized in a single
location in both Canada and Australia. In a most reasonably likely worst case
scenario, service from one or both of these locations could be disrupted, caused
by a number of factors beyond the Company's control including, for example, the
failure of local power suppliers to supply electricity. Such a disruption could
result in out-of-stock situations of varying severity at some or all of the
Company's retail locations. The Company is currently evaluating alternative
means of supplying its stores and reasonably anticipates that contingency plans
will be in place by September 30, 1999. It is not practical for management to
estimate the range of financial loss, if any, which could result from a
disruption in the supply of product to the Company's stores.
The Company is currently in the process of assessing its obligations, if any,
arising from the sale of warranted product which proves not to be Year 2000
compliant in one or more aspects. It is not possible at this time to reasonably
estimate the range of loss, if any, which could arise from such obligation.
Management is closely monitoring the Company's advancements towards Year 2000
conversion and progress reports are presented periodically to the Company's
Board of Directors. Although there can be no assurance that the Company will be
able to complete all of the modifications in the required time frame, or that
the Company will be able to identify all Year 2000 issues before problems
manifest themselves, in management's opinion, the Company is taking adequate
action
<PAGE>
to address Year 2000 issues and does not expect the financial impact of being
Year 2000 compliant to be material to the Company's consolidated financial
position, results of operations or cash flows.
CONTINGENCIES
Apart from the matters and those described under "Loss on Sale of United Kingdom
Subsidiary and Other Restructuring Plans", "Income Taxes Payable" and "Year 2000
Issues", there are no material pending proceedings or claims, other than routine
matters incidental to the Company's business, to which the Company or any of its
subsidiaries is a party, or to which any of its property is subject.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
With the exception of "Year 2000 Issues", the various matters
discussed under the heading "Contingencies" on page 27 of this
Form 10-Q are incorporated herein by reference.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the stockholders during
the three-month period ended March 31, 1999.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits Required by Item 601 of Regulation S-K:
Exhibit No. Description
2(a) Share Sale Agreement between InterTAN, Inc. and
Beheer-En Beleggingsmaatschappij Antika B.V. dated
January 23, 1999 (filed as Exhibit No. 2.1 to
InterTAN's Current Report on Form 8-K dated January
25, 1999 and incorporated herein by reference).
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).
<PAGE>
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).
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).
*10(a) Amended and Restated InterTAN Advertising Agreement
among InterTAN, Inc., InterTAN Canada Ltd.,
InterTAN Australia Ltd. and Tandy Corporation
effective as of January 1, 1999.
*10(b) Second Amendment to Loan Agreement dated as of
January, 1999 among InterTAN, Inc., InterTAN Canada
Ltd., InterTAN UK Limited, Bank of America Canada,
Bank of America National Trust and Savings
Association, BankBoston Retail Finance Inc.,
Congress Financial Corporation, BankBoston, N.A.
and Burdale Financial Limited.
<PAGE>
*10(c) Confidential General Release and Separation
Agreement between InterTAN, Inc. and David S.
Goldberg dated March 1, 1999.
*10(d) Employment Agreement between InterTAN, Inc. and
Jeffrey A. Losch dated February 23, 1999.
10(e) Deed of Indemnity between InterTAN, Inc., Tandy
Corporation, InterTAN Canada Ltd., The Carphone
Warehouse Limited and Worldwide Telecommunications
Ltd. dated January 23, 1999 (filed as Exhibit No.
10.1 to InterTAN's Current Report on Form 8-K dated
January 25, 1999 and Incorporated herein by
reference).
10(f) Tax Deed between InterTAN, Inc. and Beheer-En
Beleggingsmaatschappij Antika B.V. dated January
23, 1999. (filed as Exhibit No. 10.2 to InterTAN's
Current Report on Form 8-K dated January 25, 1999
and incorporated herein by reference).
*27 Article 5, Financial Data Schedule.
*99 Historical sales performance statistics
- - --------------
* Filed herewith
b) Reports on Form 8-K:
During the quarter ended March 31, 1999, the company filed one
Report on Form 8-K dated January 25, 1999 in respect of the
Company's disposition of its U.K. subsidiary.
No other Reports on Form 8-K were filed during the quarter ended
March 31, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
InterTAN, Inc.
(Registrant)
Date: May 14, 1999 By: /s/ Brian E. Levy
-----------------------------
Brian E. Levy
President and
Chief Executive Officer
(Authorized Officer)
By: /s/ Douglas C. Saunders
----------------------------
Douglas C. Saunders
Vice President and Corporate Controller
(Principal Accounting Officer)
<PAGE>
Index to Exhibits
InterTAN, Inc. Form 10-Q
<TABLE>
<CAPTION>
Exhibit No. Description
- - ----------- -----------
<S> <C>
2(a) Share Sale Agreement between InterTAN, Inc. and Beheer-En
Beleggingsmaatschappij Antika B.V. dated January 23, 1999
[Filed as Exhibit No. 2.1 to InterTAN's Current Report on Form 8-K dated
January 25, 1999 and incorporated herein by reference].
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 10K 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 10K 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 10K 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 10K 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].
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].
*10(a) Amended and Restated InterTAN Advertising Agreement among InterTAN,
Inc., InterTAN Canada Ltd., InterTAN Australia Ltd. and Tandy
Corporation effective as of January 1, 1999.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
*10(b) Second Amendment to Loan Agreement dated as of January, 1999 among
InterTAN, Inc., InterTAN Canada Ltd., InterTAN UK Limited, Bank of
American Canada, Bank of America National Trust and Savings Association,
BankBoston Retail Finance Inc., Congress Financial Corporation,
BankBoston, N.A. and Burdale Financial Limited.
*10(c) Confidential General Release and Separation Agreement between InterTAN,
Inc. and David S. Goldberg dated March 1, 1999.
*10(d) Employment Agreement between InterTAN, Inc. and Jeffrey A. Losch dated
February 23, 1999.
10(e) Deed of Indemnity between InterTAN, Inc., Tandy Corporation, InterTAN
Canada Ltd., The Carphone Warehouse Limited and Worldwide
Telecommunications Ltd. dated January 23, 1999.
[Filed as Exhibit No. 10.1 to InterTAN's Current Report on Form 8-K
dated January 25, 1999 and Incorporated herein by reference].
10(f) Tax Deed between InterTAN, Inc., and Beheer-En Beleggingsmaatschappij
Antika B.V. dated January 23, 1999.
[Filed as Exhibit No. 10.2 to InterTAN's Current Report on Form 8-K
dated January 25, 1999 and incorporated herein by reference].
*27 Article 5, Financial Data Schedule.
*99 Historical sales performance statistics.
</TABLE>
*Filed herewith
<PAGE>
EXHIBIT 10(a)
AMENDED AND RESTATED
INTERTAN ADVERTISING AGREEMENT
This Agreement ("Agreement") is by and between InterTAN, Inc., a Delaware
corporation, ("InterTAN") and its subsidiaries, InterTAN Canada Ltd. and
InterTAN Australia Ltd. (InterTAN and such subsidiaries being collectively
referred to herein as "INTERTAN GROUP"), and Tandy Corporation, a Delaware
corporation:
WHEREAS, INTERTAN GROUP has requested TANDY to authorize the limited use of
certain Materials (as hereinafter defined) and Marks (as hereinafter
defined) developed by or for TANDY's Radio Shack Division during the term
of this Agreement, and
WHEREAS, INTERTAN GROUP hereby acknowledges TANDY's ownership of the
trademarks and service marks (as the case may be) and all variations
thereof: "Radio Shack Gift Express", "The Repair Shop at Radio Shack",
"You've Got Questions! We've Got Answers!" "Radio Shack Unlimited", "Radio
Shack Express" and "RadioShack Select" (hereinafter called "Marks"); and
WHEREAS, INTERTAN GROUP also hereby acknowledges TANDY's ownership
1
<PAGE>
of certain advertising and marketing concepts, strategies and materials
related to the repositioning of TANDY as a service provider under the
Marks; and
WHEREAS, on November 4, 1993 TANDY and INTERTAN GROUP entered into license
agreements for INTERTAN GROUP to use (as provided therein) various marks
described therein in Canada and in Australia and New Zealand (hereinafter
each country listed under each license agreement is referred to as a
"Licensed Country" or "Licensed Countries" when referred to as a group and
such agreements are referred to herein as the "License Agreements").
Now, therefore the parties hereto agree as follows:
1. LICENSE.
-------
a) License of Materials.
--------------------
(i) Subject to all payments required hereunder being timely made by
INTERTAN GROUP and to INTERTAN GROUP's compliance with all the
terms of this Agreement, TANDY agrees to provide InterTAN with
the following information related to operation of Tandy's U.S.
RadioShack stores and outlets (which are collectively referred to
in this Agreement as "Materials") during the term of this
Agreement:
(a) Copies of all POP materials, visual merchandising, and
model
2
<PAGE>
store information.
(b) Advance copies of flyers and annual catalogs. Preferably, INTERTAN
GROUP could receive these in both finished as well as at any early
proof stage, to assist in planning.
(c) Monthly breakdown of percentage of sales by series, increase or
decrease in each series as a percentage of last year's sales, and
gross margin percentage this year and last year by series.
(d) Forecast list of blockbuster and/or major promotional products for
next six months or whatever the appropriate planning horizon may
be.
(e) All training materials, preferably in hard copy and on diskette or
other magnetic media, to assist customizing language or content as
appropriate.
(f) Copies of all market and in-store research (e.g. Envirosell).
(g) Data on a monthly basis on average sales per ticket and average
tickets per store.
(h) CDs or other media with all appropriate product packaging
information and formats, designs, etc.
(i) Copies of television commercials.
(j) Advance copies of and details regarding all programs
3
<PAGE>
involving customer credit (i.e. Answers Plus program), home
connectivity, online strategy, and other service initiatives (TSP
RSU, etc.).
(k) Summary information regarding effectiveness of mailing lists
(number of flyers mailed per store, impact of direct marketing
efforts, etc.).
(l) Regular updates on thought processes leading to strategic programs
such as those intended to enhance customer loyalty, customer
service and those pertaining to the reformatting of RadioShack
stores.
(ii) TANDY grants a non-assignable, non-exclusive license to INTERTAN GROUP to
use the Materials in the Licensed Countries in the limited manner
specified in this Agreement.
(iii) INTERTAN GROUP shall have no right to sublicense or disclose any of the
Materials to any third party other than contract managers, dealers and
franchisees duly granted a sublicense by INTERTAN GROUP in accordance
with the terms and conditions of the applicable License Agreement.
INTERTAN GROUP agrees to use the Materials provided only as a source for
concepts and ideas and will not use the actual Materials provided in any
other way.
4
<PAGE>
(iv) INTERTAN GROUP will use only photography, talent, props and
backdrops which it currently owns, or which it purchases or
licenses for its own use, in any advertisements produced by the
INTERTAN GROUP arising from the Materials.
(v) Except as expressly provided in this Agreement, INTERTAN GROUP
agrees to keep all information specified above confidential and
not to provide this information to any third party until five
days after an item has been published or broadcast to the general
public anywhere in the United States. INTERTAN agrees to return
to TANDY or destroy all copies and originals of confidential
information within 30 days after expiration or other termination
of this Agreement.
b) License of Marks; New Marks.
---------------------------
(i) Subject to the terms and conditions of this Agreement and to the
provisions of the License Agreements, TANDY grants a non-
assignable, non-exclusive license to INTERTAN GROUP to use the
Marks as service marks in the Licensed Countries; except that the
INTERTAN GROUP is not authorized by this Agreement to use "Radio
Shack" as a trade name in Australia, and the proper licensed
trade name as stated in the License Agreement for Australia (the
proper licensed trade name being "Tandy Electronics") is hereby
5
<PAGE>
substituted for "Radio Shack" with respect to the foregoing grant
of license to use the Marks .
(ii) The Marks in Exhibit A attached hereto are hereby acknowledged to
be permitted under the License Agreements and shall be governed
by the terms and conditions thereof for all purposes, including
but not limited to the quality control and enforcement provisions
thereof, except as otherwise set forth in this Agreement.
(iii) Where required by applicable law, INTERTAN GROUP agrees, at
its expense, to register with the appropriate governmental entity
as , or to cause the appropriate governmental entity to appoint
it as, a registered user of the Marks or any related new marks
subsequently developed (as hereinafter described) after the
effective date hereof.
(iv) The parties recognize that TANDY or INTERTAN GROUP may develop
new marks in the future arising out of or based upon the
Materials. Any such new mark developed by or for INTERTAN GROUP
shall belong to, and be owned by, TANDY exclusively. Before
INTERTAN GROUP uses any new marks arising out of or based on the
Materials, INTERTAN GROUP shall request TANDY's approval of same
in writing and such approval shall not be unreasonably withheld
or delayed by TANDY. If TANDY approves the use of a new mark by
INTERTAN GROUP, such new mark shall
6
<PAGE>
be listed on an exhibit to this Agreement, and listed on an
exhibit to the License Agreements, and shall be governed by the
terms and conditions of the License Agreements, except as
otherwise set forth in this Agreement.
(v) This Agreement shall prevail over the License Agreements with
regard to the matters set out in this paragraph 1.b), with regard
to the duty of the INTERTAN GROUP to provide TANDY advance notice
of use of Marks as provided in paragraph 2 hereof and with regard
to consideration to be paid therefor as set out in paragraph 3.
If this Agreement expires by its terms, INTERTAN GROUP shall
continue to have rights to use the Marks developed prior to such
expiration or termination subject to the terms of this paragraph
1.b) and the License Agreements until such time as the License
Agreements terminate, provided that neither InterTAN nor INTERTAN
GROUP are then in default hereunder and that no event or
combination of events will have occurred which, if known or with
the passage of time, would constitute an event of default
hereunder, and such event is noncurable or has become noncurable
due to passage of time.
2. NOTICE OF USE.
-------------
7
<PAGE>
TANDY acknowledges that InterTAN has disclosed that certain of the Marks
are currently being used by the INTERTAN GROUP. From and after the date
hereof, in the event INTERTAN GROUP decides to use any of the Marks, or any
related new marks subsequently added to this Agreement, in any form in any
of the Licensed Countries, INTERTAN GROUP agrees to notify TANDY in writing
at least 30 days in advance of INTERTAN GROUP's first advertisement or
announcement so that TANDY can apply for registration of its marks and
protect its rights in the appropriate countries, or request INTERTAN GROUP
to do so, in accordance with the terms of the applicable License Agreement.
In any case, such registration shall be at INTERTAN GROUP's expense, and
INTERTAN GROUP shall reimburse TANDY for all expenses incurred by TANDY in
that regard, if any.
3. CONSIDERATION BY INTERTAN GROUP. As consideration for this Agreement,
-------------------------------
InterTAN agrees to pay the following sum:
a) Annual Payments. During the term of this Agreement, InterTAN or
---------------
the INTERTAN GROUP shall pay to Tandy in readily available funds
U.S. $125,000.00 per year, payable each successive December 31.
b) Guaranty of Payment. InterTAN irrevocably and unconditionally
--------------------
guarantees to TANDY the timely payment of all amounts due
hereunder, as well as the observance and performance of all of the
obligations, terms, conditions and covenants of each of the other
members of the INTERTAN GROUP
8
<PAGE>
pursuant to this Agreement. This Guarantee is a continuing
guarantee and shall be binding upon InterTAN, its successors and
assigns, and shall inure to the benefit of, and be enforceable by
TANDY and its successors, transferees and assigns.
4. ADDITIONAL CONSIDERATION.
------------------------
In the event INTERTAN GROUP's use of the Marks or Materials requires or
results in a payment for such use to third parties (including but not
limited to, payments under applicable union codes or applicable production,
talent or other contracts by TANDY relating to the production of
commercials or advertisements), INTERTAN GROUP, as additional consideration
for this Agreement, shall pay the same and bear all expense with respect
thereto. TANDY may separately invoice InterTAN or the INTERTAN GROUP for
such amounts when and as incurred by Tandy. Otherwise, InterTAN will pay
such amounts directly to such third parties.
5. PAYMENT TERMS.
-------------
All invoices by TANDY to InterTAN or the INTERTAN GROUP shall be due and
payable on each successive December 31 (the "Due Date") and shall be
considered past due and in default of payment after that time. Payments
shall be made to: RadioShack, Attention: Vice President and Controller, 100
Throckmorton Street, Suite 1600, Fort Worth, Texas 76102; or to such other
9
<PAGE>
address as TANDY may designate in writing. Any amount not paid on the Due
Date shall accrue interest on a per annum basis at the prime rate published
in the Money Rates section of the Wall Street Journal on the date of first
publication of the Wall Street Journal following the Due Date, plus four
(4) percentage points per annum, until paid in full.
6. INDEMNITY.
---------
INTERTAN GROUP agrees to indemnify, defend and hold harmless TANDY and its
divisions, subsidiaries and affiliates, and its and their respective
shareholders, directors, officers and agents of and from any and all claims
by third parties that any advertisement, or representation by INTERTAN
GROUP is false, misleading, deceptive or infringes on any rights the third
party may have; or resulting from INTERTAN GROUP's breach of this Agreement
(including, but not limited to, any failure to pay third parties).
7. DEFAULT BY INTERTAN.
-------------------
a) Noncurable Events. The following are events of default for which
-----------------
no time to cure is provided:
(i) nonpayment or late payment of any amounts due hereunder; and
(ii) failure to keep information confidential as required by this
Agreement.
10
<PAGE>
b) Curable Events. In the event INTERTAN GROUP or InterTAN defaults
--------------
under any other provision of this Agreement the INTERTAN GROUP
shall cure the default within 30 days from the date of written
notice sent by TANDY.
8. DEFAULT BY TANDY.
----------------
In the event TANDY fails to provide Materials to INTERTAN GROUP as set out
in this Agreement, TANDY shall cure the default within 30 days from the
date of written notice sent by InterTAN, provided that INTERTAN GROUP is
then in compliance with all material terms and conditions hereof.
9. REMEDIES.
--------
In the event of a noncurable event of default, or if a curable event of
default is not cured within 30 days, the non-defaulting party shall be
entitled to proceed with its legal remedies under this Agreement (including
but not limited to, suit for damages, injunction, for specific performance,
or other special relief). The non-defaulting party also shall have the
right to terminate this Agreement by written notice to the defaulting
party, such termination to be effective immediately on receipt or such
other date as the non-defaulting party may designate. Should this Agreement
be terminated due to an uncured or noncurable event of default by
11
<PAGE>
INTERTAN GROUP, such event of default shall be a deemed breach of the
License Agreements and the Merchandise Agreement and shall be cause for
immediate termination of all other agreements between the parties. If it
becomes necessary for either party to place this Agreement in the hands of
an attorney for enforcement, the prevailing party shall be entitled to
recover, in addition to its damages and all sums due and payable to it
hereunder, its reasonable attorney fees and court costs, including
prejudgment and postjudgment interest thereon at the highest rate allowed
by law.
10. TERM.
----
The term of this Agreement is from January 1, 1999 through such date that
the License Agreements expire or terminate.
11. EXPIRATION AND TERMINATION.
--------------------------
a) Expiration. Unless the term is extended by written contract of the
----------
parties, and unless earlier terminated as hereinabove provided, this
Agreement shall automatically expire and terminate at the expiration
of the term provided in paragraph 10.
b) Automatic Termination. This Agreement also shall automatically
---------------------
terminate in the event of INTERTAN GROUP's default under the
Merchandise Agreement or the License Agreements between the parties
if such default
12
<PAGE>
results in the termination of the agreement under which default
occurred.
12. ASSIGNABILITY.
-------------
This Agreement is not assignable by INTERTAN GROUP. TANDY, in its sole
discretion, may assign this Agreement at any time to any person affiliated
with TANDY.
13. MISCELLANEOUS.
-------------
a) Severability. In the event that any provision of this Agreement
------------
shall be determined to be invalid or prohibited by law, such provision
shall be ineffective to the extent of such invalidity or prohibition
without invalidating the remainder of this Agreement.
b) Waiver. No failure or delay in exercising any right, power or
------
remedy under any provision of this Agreement shall operate as a waiver
of or otherwise shall prejudice any of the rights, powers or remedies
of TANDY. No right, power or remedy herein conferred upon TANDY is
intended to be exclusive of any other right, power or remedy, and each
and every such right, power or remedy shall be cumulative of every
other right, power or remedy given hereunder or now or hereafter
existing at law or in equity or by statute or otherwise.
c) Amendment. This Agreement may be amended only by a written
---------
document
13
<PAGE>
signed by a duly authorized corporate officer of each of the parties
hereto.
d) Notices. All notices pursuant to this Agreement shall be in
-------
writing and shall be deemed given when personally delivered, or when
received (or on the third day after mailing if delivery is refused by
the addressee) if mailed by certified or registered mail, return
receipt requested, postage prepaid and properly addressed, or when
sent by legible facsimile transmission (with transmission
verification), and properly addressed as set out below, or to such
other address as is designated in writing by a party as the address
for notice under this Agreement:
If to InterTAN InterTAN, Inc.
or INTERTAN GROUP: 201 Main Street, Suite 1805
Fort Worth, Texas 76102
Attention: General Counsel Fax No. (817) 332-3071
If to TANDY: Tandy Corporation
100 Throckmorton Street, Suite 1800 P. O. Box 17180
Fort Worth, Texas 76102
Attention: Mark C. Hill
General Counsel Fax No. (817) 415-6593
14
<PAGE>
e) Counterparts. This Agreement may be executed in counterparts, any
------------
or all of which shall constitute one and the same document.
f) Further Assurances. TANDY and INTERTAN GROUP agree that they will
------------------
at any time and from time to time, upon request of the other,
execute, acknowledge and deliver all such further instruments and
documents and to do, or cause to be done, all such further acts as
may be required to carry out the intents and purposes of this
Agreement.
g) Merger of Prior Negotiations. All prior negotiations and
----------------------------
agreements between the parties hereto with the respect to the
subject matter of this Agreement are merged herein and all such
prior negotiations and agreements are superseded hereby.
h) Binding effect. This Agreement shall be binding on the parties
--------------
hereto and their respective permitted successors and permitted
assigns.
i) Headings. The article and section headings in this Agreement are
--------
for convenience and reference only, and shall not be utilized in
any way to explain, modify, amplify or add to the interpretation,
construction or meaning of this Agreement.
15
<PAGE>
j) Provisions Surviving Termination. Paragraphs 1.b), 2, 4, 6 and 9
--------------------------------
survive expiration or termination of this Agreement. In any event,
termination shall not extinguish or affect any monetary obligation
owing by either party under this Agreement which arose prior to
termination hereof.
14. GOVERNING LAW AND SUBMISSION TO JURISDICTION.
--------------------------------------------
THIS AGREEMENT AND ALL AMENDMENTS HERETO, AND ANY AND ALL CLAIMS, DEMANDS
OR ACTIONS OR IN ANY WAY RELATING HERETO OR INVOLVING ANY DISPUTE BETWEEN
OR AMONG ANY OF THE PARTIES HERETO, WHETHER ARISING IN CONTRACT OR TORT, AT
LAW, IN EQUITY OR STATUTORILY, SHALL BE GOVERNED, CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO
THE PRINCIPLES OF CHOICE OF LAWS OF SUCH STATE. EACH PARTY HERETO
IRREVOCABLY SUBMITS ITSELF TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL
COURTS OF THE UNITED STATES, NORTHERN DISTRICT OF TEXAS, FORT WORTH
DIVISION, AND TO THE COURTS OF THE STATE OF TEXAS LOCATED IN TARRANT
COUNTY, TEXAS, AS TO ANY LEGAL PROCEEDING DIRECTLY
16
<PAGE>
OR INDIRECTLY RELATING TO THIS AGREEMENT, AS IT MAY BE AMENDED FROM TIME TO
TIME, AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE HAD UPON IT IN
ANY SUCH DISPUTES. EACH SUBSIDIARY OF INTERTAN WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS ON IT AND IRREVOCABLY APPOINTS INTERTAN INC. AS THE
DESIGNATED REGISTERED AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS
WITHIN THE STATE OF TEXAS. INTERTAN AND ITS SUBSIDIARIES ALSO CONSENT TO
SERVICE OF PROCESS BY REGISTERED MAIL DIRECTED TO INTERTAN, INC.'S
PRINCIPAL OFFICE IN FORT WORTH, TEXAS AND SERVICE SO MADE SHALL BE DEEMED
TO BE COMPLETED TEN (10) DAYS AFTER THE SAME SHALL HAVE BEEN POSTED.
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
dates shown beneath their respective signatures hereto, to be effective as of
January 1, 1999.
InterTAN, Inc.
By: /s/ Brian E. Levy
-----------------------------
Title: President and C.E.O.
--------------------------
Date Signed: 1/22/99
--------------------
InterTAN Canada Ltd.
By: /s/ Brian E. Levy
-----------------------------
Title: President & Director
--------------------------
Date Signed: 1/22/99
--------------------
InterTAN Australia Ltd.
By: /s/ Brian E. Levy
-----------------------------
Title: Director
--------------------------
Date Signed: 1/22/99
--------------------
Tandy Corporation
By: /s/ Dwain H. Hughes
-------------------------------
Title: Senior Vice President & CEO
----------------------------
Date Signed: 1/22/99
----------------------
18
<PAGE>
Exhibit A
---------
Canada
Radio Shack Unlimited(R)*
Radio Shack Gift Express(R)
The Repair Shop at Radio Shack(R)*
You've Got Questions! We've Got Answers(R)!
Radio Shack Express(R)*
RadioShack Select (common law)
* Including the unregistered, one-word "RadioShack" variation.
Australian Variations
Tandy Electronics Unlimited
Tandy Electronics Gift Express
Tandy Electronics Express
The Repair Shop at Tandy Electronics
You've Got Questions! We've Got Answers!
Tandy Electronics Select
19
<PAGE>
EXHIBIT 10(b)
INTERTAN CANADA LTD.
INTERTAN UK LIMITED
INTERTAN, INC.
SECOND AMENDMENT TO LOAN AGREEMENT
The Second Amendment to Loan Agreement (this "Amendment") is dated as
of January 1999 and entered into by and among InterTAN Canada Ltd., as
Canadian Borrower, InterTAN UK Limited, as UK Borrower, InterTAN, Inc., as the
Parent, the financial institutions listed on the signature pages hereof (the
"Lenders"), Bank of America Canada, a Canadian chartered bank, as agent for the
Lenders (the "Agent") and Bank of America National Trust and Savings Association
(London Bank), as a Lender and as Security Trustee, and is made with reference
to that certain Loan Agreement dated as of December 22, 1997 (as amended and in
effect the "Loan Agreement"), by and among the Borrower, the Lenders and the
Agent, as amended by the Rectification and Amendment No. 1 dated as of February
24, 1998. Capitalized terms used herein without definition shall have the same
meanings herein as set forth in the Loan Agreement.
RECITALS
WHEREAS the Borrowers have requested that the Agent, Security Trustee
and Lenders (i) consent to the sale by the Parent of all of the issued and
outstanding shares of the UK Borrower, (ii) release the Liens of the Agent,
Lenders and Security Trustee in respect of such shares and the UK Collateral,
(iii) terminate the UK Revolving Credit Facility and all Commitments in respect
thereof;
AND WHEREAS the Agent, Security Trustee and Lenders have agreed to
provide such consents and releases upon and subject to the terms hereof;
AND WHEREAS the Borrowers, the Parent and the Agent and Lenders desire
to amend the Loan Agreement to make certain amendments as set forth below;
NOW, THEREFORE, in consideration of the mutual covenants and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Agent, the Security Trustee, the Lenders and the Parent and
the Borrowers have agreed as follows:
<PAGE>
Section 1 RELEASES
1.1 Agent's, Security Trustee's and Lenders' Releases
-------------------------------------------------
Each of the Agent, Security Trustee and Lenders hereby releases and
discharges any and all claims, charges, Liens (including pursuant to the UK
Security Documents) and rights which it or they may have in and to the shares in
the capital stock of the UK Borrower and/or the property and assets of the UK
Borrower, including the UK Collateral, but excluding the supporting letters of
credit referred to in Section 3.1.3 herein, and agrees at the sole expense of
the Canadian Borrower and Parent, jointly and severally, to register and file
such discharges of Liens as may be required in order to give effect to the
foregoing release.
1.1.2 Each of the Agent, Security Trustee and Lenders hereby releases
and discharges the Parent from its guarantee pursuant to Article 13 of the Loan
Agreement of the obligations of the UK Borrower.
1.1.3 The Parent hereby releases and discharges any and all claims,
charges, Liens (including pursuant to the UK Note and the UK Intercorporate
Security) which it may have in the property and assets of the UK Borrower and
agrees at its sole expense to register and file such discharges of Liens as may
be required in order to give effect to the foregoing release.
1.2 Parent's and Borrower's Releases
--------------------------------
Each of the Parent and Borrowers hereby releases the Agent, Security
Trustee and Lender and their affiliates, officers, directors, employees,
advisors or agents from any obligations which any of them may have (and each of
the Parent and the Borrowers forever waives any and all rights, claims, causes
of actions or proceedings which each of them has, may claim to have or may in
the future have), in each case arising in respect of the UK Borrower, the UK
Revolving Credit Facility, the UK Security Documents, the UK Collateral or any
other matter, act or thing which has occurred or not occurred on or prior to the
Second Amendment Effective Date in regard to the UK Borrower, the UK Revolving
Credit Facility (and any Loans made or Letters of Credit issued thereunder), the
UK Security Documents or the UK Collateral, against or in respect of the Agent,
Lenders, the Security Trustee or any of their affiliates, officers, directors,
employees, advisors or agents.
1.3 Authorization/Power of Attorney
-------------------------------
Each of the Lenders authorizes and directs BAUK, the Agent and/or the
Security Trustee to execute, deliver, do and perform such further instruments,
documents and things as it or they may consider appropriate in their discretion
to give effect to the foregoing releases and the other terms hereof, including,
without limitation, by signing, registering or filing discharges and by
releasing interests in insurance policies to the extent applicable to the UK
Borrower or its property. Each of the Lenders hereby irrevocably constitutes
and appoints BAUK its true and lawful attorney, with full power of substitution,
in order to give effect to the foregoing.
<PAGE>
Section 2 AMENDMENTS TO THE LOAN AGREEMENT
2.1 Termination of UK Revolving Credit Facility
-------------------------------------------
The Loan Agreement shall be read and construed in accordance with the
following amendments:
2.1.1 The UK Revolving Credit Facility and all Commitments of the UK
Lenders in respect thereof are hereby terminated and for greater certainty, none
of the Agent or Lenders have any further obligations under Sections 2.1(b),
2.2(a)(ii) or 2.3 to make any extensions of credit available to the UK Borrower
provided, however, that no UK Lender is released from any obligations,
liabilities or responsibilities it may have to any Issuing Lender, BAUK or
Agent, including pursuant to Section 2.3 (d) and Article 14 of the Loan
Agreement.
2.1.2 The UK Lenders are hereby released as "UK Lenders" and
"Lenders" under the Loan Agreement and, for greater certainty, "Lenders" in
Section 1.1 of the Loan Agreement will not include any UK Lenders provided,
however, that no UK Lender is released from any obligations, liabilities or
responsibilities it may have to any Issuing Lender, BAUK or Agent, including
pursuant to Section 2.3 (d) and Article 14 of the Loan Agreement.
2.1.3 Each of the Agent, BAUK and Security Trustee are hereby
released of and from any further obligation or responsibility whatsoever in
respect of the UK Borrower, the UK Security Documents, the UK Collateral or the
UK Revolving Credit Facility, including under Article 14 and including in
respect of any matter, act or thing which has been done or not done or whether
may have occurred on or prior to the Second Amendment Effective Date provided,
however, that none of the Lenders, BAUK, the Issuing Lenders, nor the Agent is
hereby releasing any claims it may have against another of the Lenders in
respect of any payment or repayment of any Obligations under the UK Revolving
Credit Facility and, for greater certainty, all provisions of the Loan
Agreement, and in particular Sections 2.3 (d), 4.3(b), 4.4 and 4.9 and Article
14, shall continue to govern as between the Agent and each of the Lenders in
respect of such payments and repayments.
2.1.4 The term "Borrowers" in the Loan Agreement shall not include
the UK Borrower provided that this shall not affect any of the continuing
obligations of the Parent and specifically, for the avoidance of doubt, the
Parent shall be responsible for the provision of such information as the Agent
may from time to time request in regard to any contingent obligations of the
Canadian Borrower or Parent in regard to InterTAN UK Limited, any leases in the
UK or any tax obligations in the UK.
2.1.5 The Parent and Canadian Borrower shall, jointly and severally,
at their own expense and the Agent and Lenders shall, at the joint expense of
the Parent and the Canadian Borrower, forthwith do, execute, deliver and perform
such
<PAGE>
further acts, things and documents requested by the Agent to give effect to the
terms hereof, including if requested by the Agent by executing and delivering an
amended and restated Loan Agreement together with all evidences of corporate
approvals, certified copies of articles and by-laws, certificates of incumbency
and legal opinions, all in form satisfactory to the Agent.
2.1.6 The designation of BAUK as Agent and as Security Trustee,
including pursuant to Article 14 of the Loan Agreement, are hereby terminated
but without limitation to the rights and remedies of BAUK and the Security
Trustee pursuant to the Loan Agreement and the other Loan Documents and, in
particular, the provision of Article 14 and Sections 2.3(d), 14.5, 14.16 and
16.9 with regard to any actions taken or not taken while BAUK was Agent or
Security Trustee.
2.1.7 The definition of "Tangible Net Worth" shall be amended so as
to read as follows:
"Tangible Net Worth" means, at any date: (a) book net worth as at the
Canadian Borrower's date of determination (but excluding for the purposes of
calculating such book net worth any reduction in the amount thereof resulting
directly from the sale of the whole of the issued share capital of the UK
Borrower to an entity under common ownership and control with The Carphone
Warehouse Limited substantially on the terms of the draft share sale agreement
dated [4] January 1999) plus (b) the translation adjustment in the equity
----
section of the Canadian Borrower's balance sheet as at such date less (c)
----
(without duplication) all amounts, to the extent not repaid after the Closing
Date, which have been paid, whether by loans, repayments, Distributions or
otherwise, to any Affiliate after the Closing Date."
3 CONDITIONS TO EFFECTIVENESS
3.1 Conditions Precedent
--------------------
The Provisions of Sections 1 and 2 of this Amendment shall become
effective only upon the satisfaction of all of the following conditions
precedent (the date of satisfaction of such conditions being referred to herein
as the "Second Amendment Effective Date"):
3.1.1 Each Borrower and the Parent shall deliver to the Agent (for
the Lenders) two originally executed copies of the following, each, unless
otherwise noted, dated the Second Amendment Effective Date:
A. Resolutions of its Board of Directors or, in the case of
the Canadian Borrower, its sole shareholder, approving and
authorizing the execution, delivery and performance of the
transactions contemplated by this Amendment, certified as
of the Second Amendment Effective Date by its corporate
secretary or an assistant secretary as being
<PAGE>
in full force and effect without modification or amendment;
B. Executed copies of this Amendment;
C. Indemnity by the Parent in favour of BAUK, and in form and
substance satisfactory to BAUK, in respect of any sums due
and payable (but unpaid) or to become due and payable from
the UK Borrower to the UK Inland Revenue as tax withheld by
the UK Borrower on interest paid or payable to BAUK or the
Agent for the account of Burdale Financial Limited (formerly
Burdale Acceptances Limited) on that portion of the UK
Revolving Loans as are repayable to Burdale Financial
Limited whether on or before the Second Amendment Effective
Date;
D. Executed copy of the share sale agreement, in form and
substance reasonably satisfactory to BAUK, to be entered
into between the Parent and the identified Buyer (as defined
therein) providing for the sale of the whole of the equity
share capital of the UK Borrower to the Buyer.
3.1.2 The UK Borrower shall pay to BAUK:
A. (Pounds)2,500,000 in respect of the LIBOR Loan,
(Pounds)14,020.42 in respect of interest outstanding under
the Loan Agreement, (Pounds)6,093 representing amounts due
under and pursuant to Section 4.5 of the Loan Agreement,
(Pounds)2,199.79 in respect of U.K. Unused Line Fee,
(Pounds)958.52 in respect of the LC Fee, (Pounds)944.53 in
respect of fees and charges due under and pursuant to
Section 3.7 of the Loan Agreement and (Pounds)4,450.04 in
respect of the fees and charges due under and pursuant to
Section 2.3(g)(ii) of the Loan Agreement, for distribution
to the Agent and the UK Lenders in accordance with the
provisions of the Loan Agreement; and
B. a prepayment fee to compensate the UK Lenders for their time
and expense and loss of expected bargain in the amount of
U.S.$60,000, for distribution pro rata in accordance with
the Commitments (calculated immediately prior to the Second
Amendment Effective Date) of the UK Lenders.
3.1.3 The UK Borrower shall deliver to BAUK, in support of such of
BAUK's contingent liabilities under or pursuant to the Loan Agreement as are
<PAGE>
subsisting on or after the Second Amendment Effective Date, standby documentary
letters of credit, each issued by Lloyds Bank plc and otherwise on terms and
conditions satisfactory to BAUK as follows:
A. a letter of credit for the sum of (Pounds)86,585 expiring on
22 May 1999 in respect of BAUK's contingent liabilities as
Issuing Lender in relation to any BPS denominated Letters of
Credit in issue as at the Second Amendment Effective Date;
B. a letter of credit for the sum of $372,460 expiring on 26
March 1999 in respect of BAUK's contingent liabilities as
Issuing Lender in relation to any US$ denominated Letters of
Credit in issue as at the Second Amendment Effective Date;
and
C. a letter of credit for the sum of (Pounds)646,007 expiring
on 30 June 1999 in respect of the BAUK's contingent
liabilities under any VAT deferment guarantee issued by it
to HM Customs & Excise in the United Kingdom which is in
effect on or after the Second Amendment Effective Date,
each such letter of credit to provide, inter alia, for BAUK to be entitled on
simple demand, and on any one or more occasions, to require payment to it of an
amount equal to any of BAUK's contingent liabilities thereunder (together with
any associated costs, fees and expenses) as shall have become, or in the opinion
of BAUK, shall be about to become, actual liabilities.
Section 4 BORROWERS' AND PARENT'S REPRESENTATIONS AND WARRANTIES
In order to induce the Agent, Security Trustee and Lenders to enter
into this Amendment and to amend the Loan Agreement in the manner provided
herein, each of the Borrowers and Parent represents and warrants to the Agent
and each Lender that the following statements are true, correct and complete:
4.1 Authorization, Validity, and Enforceability of this Amendment.
--------------------------------------------------------------
Such Borrower or the Parent, as applicable, has the corporate power and
authority to execute and deliver this Amendment and to perform the Loan
Agreement as amended by this Amendment (the "Amended Agreement"). Such Borrower
or the Parent, as applicable, has taken all necessary corporate action
(including, without limitation, obtaining approval of its stockholders if
necessary) to authorize its execution and delivery of this Amendment and the
performance of the Amended Agreement. This Amendment has been duly executed and
delivered by such Borrower or the Parent, as applicable, and this Amendment and
the Amended Agreement constitute the legal, valid and binding obligations of
such Borrower or the Parent, as applicable, enforceable against it in accordance
with their respective terms
<PAGE>
without defence, setoff or counterclaim. Such Borrower's or the Parent's, as
applicable, execution and delivery of this Amendment and the performance by such
Borrower or the Parent, as applicable, of the Amended Agreement do not and will
not conflict with, or constitute a violation or breach of, or constitute a
default under, or result in the creation or imposition of any Lien upon the
property of such Borrower or the Parent, as applicable, or any of its
Subsidiaries by reason of the terms of (a) any contract, mortgage, Lien, lease,
agreement, indenture, or instrument to which such Borrower or the Parent, as
applicable, is a party or which is binding on it, (b) any Requirement of Law
applicable to such Borrower or the Parent, as applicable, or any of its
Subsidiaries, or (c) the certificate or articles of incorporation or
amalgamation or bylaws of such Borrower or the Parent, as applicable, or any of
its Subsidiaries.
4.2 Governmental Authorization. No approval, consent, exemption,
---------------------------
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other person is necessary or required in connection
with the execution, delivery or performance by, or enforcement against, such
Borrower or the Parent, as applicable, or any of its Subsidiaries of this
Amendment or the Amended Agreement except for such as have been obtained or made
and filings required in order to perfect the Agent's security interests.
4.3 Incorporation of Representations and Warranties From Loan
---------------------------------------------------------
Agreement. The representations and warranties contained in Section 8 (except to
- - ----------
the extent applicable to be UK Borrower or the UK Collateral) of the Loan
Agreement are and will be true, correct and complete in all material respects on
and as of the Second Amendment Effective Date to the same extent as though made
on and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.
4.4 Absence of Default. No event has occurred and is continuing or
-------------------
will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event or an Event of Default.
Section 5 MISCELLANEOUS
5.1 Reference to and Effect on the Loan Agreement and the Other Loan
----------------------------------------------------------------
Documents.
- - ----------
(1) On and after the Second Amendment Effective Date, each
reference in the Loan Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Loan
Agreement, and each reference in the other Loan Documents to the "Loan
Agreement", "thereunder", "thereof" or words of like import referring
to the Loan Agreement shall mean and be a reference to the Amended
Agreement.
(2) Except as specifically amended by this Amendment, the Loan
Agreement and the other Loan Documents and in, particular, the
<PAGE>
guarantee by the Parent of the Obligation of the Canadian Borrower as
provided in Article 13 of the Loan Agreement, shall remain in full
force and effect and are hereby ratified and confirmed.
(3) Until such time as BAUK has released the Parent from its
obligations under its guarantee referred to in Section 3.1.1C (which
it shall do when it is satisfied that all sums due and payable (but
unpaid) from the UK Borrower to the UK Inland Revenue as referred to
in that Section have been unconditionally paid in full and
acknowledged as received by the UK Inland Revenue), there shall be
included in the reserves which the Agent is entitled to maintain in
its Permitted Discretion with respect to the Canadian Availability an
amount equal to the maximum contingent liability of the Parent under
such guarantee.
(4) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of
any provision of, or operate as a waiver of any right, power or remedy
of the Agent or any Lender under, the Loan Agreement or any of the
other Loan Documents.
5.2 Fees and Expenses. Each of the Parent and the Canadian Borrower
------------------
acknowledges that all costs, fees and expenses as described in Section 15.7 of
the Loan Agreement incurred by the Agent, Security Trustee and their Canadian
and UK counsel with respect to this Amendment and the documents and transactions
contemplated hereby shall be for the account of the Canadian Borrower and the
Parent provided however that if any amount of such costs, fees and expenses is
not paid by the Canadian Borrower or the Parent within 15 business days of any
request by BAUK or the Agent, such amount of costs, fees and expenses may be
charged to the Canadian Revolving Credit Facility.
5.3 Prepayment Fee. In addition to any early termination fee payable
---------------
by the Canadian Borrower pursuant to Clause 12 of the Loan Agreement on any
termination of the Canadian Revolving Credit Facility at any time during the
Term, the Canadian Borrower shall pay to the Agent for distribution pro rata in
accordance with the Commitments of the Canadian Lenders a further prepayment fee
of US$10,000, such fee to be payable either (i) on termination of the Loan
Agreement before the expiry of the Term or (ii) if a Lender ceases (following a
request in that respect from the Canadian Borrower) to be a Lender before the
expiry of the Term (in which case such terminated Lender shall immediately
become entitled to its pro rata share of the US$10,000 prepayment fee), such pro
rata distribution to be calculated by reference to the Commitments of the
Lenders (calculated immediately prior to the date upon which such termination or
cessation shall take effect) provided that Bank of America Canada's pro rata
share of such prepayment fee shall be waived in the event that the Revolving
Credit Facilities are refinanced by Bank of America NT & SA or any of its
affiliates.
<PAGE>
5.4 Captions. The captions contained in this Amendment are for
---------
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge or restrict any provision.
5.5 Governing Law. THIS AMENDMENT SHALL BE INTERPRETED AND THE
--------------
RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE PROVINCE OF ONTARIO AND THE FEDERAL LAWS OF CANADA APPLICABLE
THEREIN.
5.6 Counterparts; Effectiveness. This Amendment may be executed in
----------------------------
any number of counterparts, and by the Agent, Security Trustee, each Lender, the
Parent and the Borrowers in separate counterparts, each of which shall be an
original, but all of which shall together constitute one and the same amendment;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. This Amendment (other than the provisions of Sections 1 and
2 hereof, the effectiveness of which is governed by Section 3 hereof) shall
become effective upon the execution of a counterpart hereof by the Borrowers,
the Parent, the Agent, Security Trustee and the Lenders and receipt by the
Borrowers and the Agent of written or telephonic notification of such execution
and authorization of delivery thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to Loan Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date first written
above.
<PAGE>
SECOND AMENDMENT TO LOAN AGREEMENT
SIGNATURE PAGE
INTERTAN CANADA LTD. BANKBOSTON RETAIL FINANCE INC.
By: /s/ David S. Goldberg By: /s/ Francis D. O'Connor
------------------------------- ----------------------------
Name: David S. Goldberg Name: Francis D. O'Connor
Title: Title: Director
INTERTAN UK LIMITED CONGRESS FINANCIAL CORPORATION
By: /s/ Daniel H. Laven
By: /s/ James G. Gingerich ---------------------------
------------------------------- Name: Daniel H. Laven
Name: James G. Gingerich Title: Vice-President
Title:
INTERTAN, INC. BANKBOSTON, N.A.
By: /s/ David S. Goldberg By: /s/ Francis D. O'Connor
------------------------------- ----------------------------
Name: David S. Goldberg Name: Francis D. O'Connor
Title: Vice President, Secretary Title: Director
and General Counsel
BANK OF AMERICA CANADA, as Agent and as BURDALE FINANCIAL LIMITED
Canadian Lender
By: /s/ Robert Kizell By: /s/ Morton Z. Schwartz
------------------------------- ----------------------------
Name: Robert Kizell Name: Morton Z. Schwartz
Title: Vice-President Title: Director
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (London, England branch), as
Security Trustee and a UK Lender
By: /s/ Thomas F. Wells
-------------------------------
Name: Thomas F. Wells
Title: Vice President
<PAGE>
SECOND AMENDMENT TO LOAN AGREEMENT
SIGNATURE PAGE
INTERTAN CANADA LTD. BANKBOSTON RETAIL FINANCE INC.
By: By:
------------------------------- ----------------------------
Name: Name:
Title: Title:
INTERTAN UK LIMITED CONGRESS FINANCIAL CORPORATION
By:
By: Name:
------------------------------- --------------------------
Name: Title:
Title:
INTERTAN, INC. BANKBOSTON, N.A.
By: By:
------------------------------- ----------------------------
Name: Name:
Title: Title:
BANK OF AMERICA CANADA, as Agent and as BURDALE FINANCIAL LIMITED
Canadian Lender
By: By:
------------------------------- ----------------------------
Name: Robert Kizell Name:
Title: Vice-President Title:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (London, England branch), as
Security Trustee and a UK Lender
By:
-------------------------------
Name:
Title:
<PAGE>
EXHIBIT 10(c)
CONFIDENTIAL GENERAL RELEASE AND SEPARATION AGREEMENT
-----------------------------------------------------
("AGREEMENT")
---------
1. This Agreement is entered into on this 1st day of March, 1999, by and
between David S. Goldberg, his or her heirs, successors, administrators,
assigns, agents and representatives (collectively and singularly referred to as
"Employee") and InterTAN, Inc., and its affiliates, subsidiaries, shareholders,
officers, directors, agents, employees and assigns (collectively and singularly
"Employer").
2. Employer is relocating its corporate offices from Fort Worth, Texas to
Toronto, Ontario at some time between February 20, 1999 and May 30, 1999.
Employee and Employer agree that Employee's employment with Employer will
terminate effective on the earlier of April 9, 1999 or the date on which
Employee is released from duty by the Employer (the "Termination Date"). In
order to provide for an orderly termination of employment and to fully and
finally settle all differences or claims which may have arisen between them,
including, but not limited to, any and all claims or obligations arising out of
the employment relationship between Employer and Employee, the parties agree to
the following terms and conditions:
(a) Employee agrees to remain in Employer's employ to continue to perform
Employee's duties in a diligent manner until the Termination Date.
Additionally, Employee agrees to the following terms and conditions of his
continuing employment until the Termination Date:
(i) Employee agrees to work on a full time basis on assignments at
the Employer's Fort Worth and Toronto offices and locations at the
direction of Brian E. Levy;
(ii) Employer will reimburse Employee for travel to and from Toronto,
paying for return trips to Fort Worth every two weeks, which may be for
non-business purposes, provided Employer will only pay a maximum of three
hundred fifty United States Dollars (U.S.$ 350.00) per trip and that the
Employee will make advance reservations of commercial air travel;
(iii) Employee will receive a per diem of thirty United States Dollars
(US$ 30.00) per day while working in Canada;
(iv) Employee may rent a car at Employer's expense while working in
Canada, provided that any car rental is expressly agreed upon by Brian Levy
prior to renting the vehicle; and,
<PAGE>
(v) Employee agrees that all confidential and proprietary
information the Employee has learned or gained during his past and future
employment with the Employer will be maintained in strictest confidence as
attorney-client privileged information, confidential and/or proprietary
information, and that Employee will not waive the Employer's attorney
client privilege without prior notification and the express opportunity for
Employer to assert such privilege.
(b) On or before March 8, 1999, Employer agrees to pay to the Employee a
full and final severance payment equivalent to One hundred thousand and one
United States dollars (US$ 100,001.00) less applicable deductions for tax and
FICA contributions. Employee agrees that none of the severance payment is
eligible for Employer matching under the Employer's stock purchase plan.
(c) On the Termination Date, the Employee shall receive all remaining
unpaid salary, plus accrued but unused vacation through January 1, 1999, which
is due and payable to Employee as a result of Employee's employment through the
Termination Date. Provided, however, vacation schedules will be suspended by
the Employer until the Termination Date, and vacation can only be scheduled and
taken with the prior written approval of Brian E. Levy. And further provided
that based on the Employee's current vacation days remaining and future
scheduling items, the parties agree that the amount of vacation pay due and
payable on the Termination Date shall not exceed two weeks.
(d) On or before March 8, 1999, Employer further agrees to pay Employee a
share of his fiscal 1999 incentive bonus prorated to the Termination Date. Such
bonus will be calculated pursuant to the Employer's policies based on the
Employer's profits through January 31, 1999. Employer further agrees that if
Employee participates or contributes to the Employer's stock purchase plan,
and/or 401(k) Plan to the extent eligible under the law, then Employer will
match Employee's contribution at the normal matching rate for purposes of this
bonus.
(e) InterTAN agrees that with the exception of options granted or awarded
to Employee in November, 1998, all incentive stock option granted to Employee
from InterTAN shall immediately vest upon the Termination Date. Further
InterTAN agrees that Employee will be granted an extension of the exercise date
of such option and that such options shall be exercisable at any time within
twelve (12) months of the Termination Date provided that Employee notifies
Employer in writing by termination date of his desire to accept the offered
extension.
(f) InterTAN agrees that its Vice President/Controller will calculate
Employee's Canadian income tax liability for calendar year 1999s and prepare a
Canadian tax return for Employee for calendar year 1999. Such return shall be
delivered to Employee in a timely fashion, but Employee shall be responsible for
submitting the return to Canadian Authorities and for payment of any Canadian
income taxes due on such income.
2
<PAGE>
(g) Until the Termination Date, Employee shall be eligible to continue
under Employer's health plan, and Employer will continue its contribution
thereto. Thereafter, Employee shall be eligible to continue health benefits to
the extent required by the healthcare continuation provision of the
Comprehensive Omnibus Budget Reconciliation Act of 1986 (COBRA) provided
Employee makes the required election and pays the premiums for such coverage.
Provided, however, if the Employer's health plan is terminated there shall be no
further continuation coverage under COBRA. To the extent required, any HIPPA
certificates will be provided by the Employer or its plan administrator upon
request.
(h) In exchange for the considerations described in paragraph b and c
above, Employee does hereby irrevocably and unconditionally release, acquit and
forever discharge Employer from any and all claims, obligations, actions,
liabilities, claims, actions and causes of action of whatever kind and
character, arising out of or in any way related to Employee's employment,
association or contact with Employer, including but not limited to claims based
upon express or implied contract, wages or benefits owed, covenants of fair
dealing and good faith, option grants, wrongful discharge, the Texas Commission
on Human Rights Act, the Texas Payday Act, Title VII of the Civil Rights Act of
1964, as amended, the Civil Rights Act of 1991, the Civil Rights Acts of 1868
and 1873, the Age Discrimination in Employment Act, the Family Medical Leave Act
of 1993, the Americans with Disabilities Act, the Employee Retirement Income
Security Act, the Fair Labor Standards Act of 1938, and any local, state or
federal law, regulation or ordinance whatsoever. It is the express intent of
Employee to enter into this full and final settlement and compromise of any and
all claims against Employer whatsoever. Employee will not permit any such claim
to be filed on Employee's behalf. This Agreement and Release does not, however,
waive any rights Employee may have to worker's compensation benefits on account
of occupational injury, or vested benefits under the Employer's 401(k) plan.
(i) Employee agrees that Employer has no obligation, contractual, statutory
or otherwise to reemploy or hire Employee in the future.
(j) On or before the Termination Date, Employee shall return to Employer
all tangible and intangible forms of confidential and/or proprietary information
of Employer and other property (collectively, the "Employer Property"), that
Employee may have had in Employee's possession at any time during the term of,
or before, his or her employment by Employer, including without limitation, all
confidential information, whether oral or written, relating to the business of
Employer that is not generally known to others in Employer's area of business,
including without limitation (to the extent confidential), (i) any trade
secrets, work product, processes, analysis, or know-how of Employer; (ii)
Employer's advertising, product development, strategic and business plans and
information; (iii) the company's financial statements or other financial
information (collectively, the "Confidential Information"). In the event that
the Employee has destroyed any Employer Property, including Confidential
Information, Employee certifies that such Employer Property has been so
destroyed in an irretrievable manner and that the Employee will make no attempts
or allow any third parties to make any attempts to retrieve or recover any such
destroyed Employer Property. Employee further acknowledges and agrees that the
Confidential Information is and will be the sole and
3
<PAGE>
exclusive property of Employer. Employee will not use any Confidential
Information for Employee's own benefit or disclose any Confidential Information
to any third party, subsequent to Employee's employment with Employer. Employee
understands and agrees that Employee's agreement to preserve Confidential
Information is a material inducement for Employer to enter into this Agreement,
that Employer shall suffer irreparable harm in the event of a breach of this
paragraph, and that Employer shall be entitled to an injunction or other
equitable relief to enforce the provisions of this paragraph.
3. Employee agrees that for at least two years following the Termination
Date he will not directly act as in-house counsel, as outside counsel or in any
other manner, for any company, firm, client, person or entity, on any matter in
which InterTAN is an actual or prospective party or target. Employee agrees
that in whatever capacity he is employed in the next two years, that he will
voluntarily remove himself from any discussion, research, comments, or
negotiations which in involve InterTAN operations, practices or methods, or
otherwise would potentially cause Employee to reveal knowledge he has gained of
InterTAN through his provision of services as its General Counsel. Employee
further agrees that any Confidential Information disclosed to him in his
capacity as an officer and General Counsel of Employer shall continue to be
treated as confidential attorney client communications or client confidences and
shall never be disclosed by Employee to any party without Employer's express
written consent.
4. Employee stipulates and agrees not to initiate, join in, continue
and/or institute any legal proceedings or process based upon the released claims
or causes of action before any administrative, judicial or other form against
Employer. Employee further agrees that Employee will not file nor permit to be
filed on his or her behalf and will not agree to be a member of any potential or
existing class seeking relief against Employer for any claim or cause of action
covered by this Agreement.
5. Employer, by virtue of this Agreement, does not admit any liability to
any person or any violation of federal, state or local law, regulation or
ordinance. Employer specifically disclaims any wrongdoing whatsoever against,
or liability to, Employee.
6. Employee warrants and represents:
a. He is fully entitled to give this release and discharge;
b. There are no prior assignments or transfers of any portion of or
interest in any of his or her claims or causes of action;
c. There are no liens or assignments in law or equity against the
claim or cause of action; and
d. Employee is fully aware of all facts and rights with regard to
Employee's claims and/or causes of action.
4
<PAGE>
7. Should any provision of this Agreement be declared or be determined by
any Court to be illegal or invalid, the validity of the remaining terms or
provisions shall not be affected thereby, and said illegal or invalid provisions
shall be deemed not to be a part of this Agreement.
8. In the event Employee should revoke this Agreement or contend in any
proceeding that this Agreement or any portion of it is invalid or unenforceable,
then as a precondition to making such allegation, Employee agrees to refund in
full to Employer all severance amounts received by Employee under this
Agreement.
9. This Agreement contains the entire agreement and understanding between
the parties. It supersedes any and all prior negotiations, promises,
agreements, understandings or contracts between the parties hereto, or their
agents, pertaining to the subject matter of this Agreement. The terms of this
Agreement are contractual, not a mere recital. Employee understands that
Employee can consult with an attorney about this Agreement and has either done
so or waives the opportunity to do so.
10. This Agreement is made and signed in the state of Texas and it shall
be interpreted, enforced and governed under the laws of Texas.
11. In the event of any breach of this Agreement, the parties agree to
final, binding, confidential and enforceable arbitration. Any controversy or
claim between Employee and Employer arising out of or related to this Agreement
shall be resolved and settled in accordance with the rules and procedures of the
American Arbitration Association for the Resolution of Employment Disputes at
the complaining party's written request filed within 180 days of the act or
occurrence upon which the claim is based.
12. Employee has read and understands this Agreement and enters into it
voluntarily.
5
<PAGE>
13. This Agreement hereby terminates and revokes Employee's participation in or
rights to any sums or entitlements associated with the Company's deferred
compension plan and related agreement.
WITNESS our signatures this 1st day of March, 1999.
For EMPLOYEE:
/s/ David S. Goldberg
_______________________________________
David S. Goldberg
For InterTAN, Inc.:
/s/ Brian E. Levy
_______________________________________
Chief Executive Officer
6
<PAGE>
EXHIBIT 10(d)
James G. Gingerich
Executive Vice-President
Chief Financial Officer
(905) 760-9707
Via Facsimile 905/821-6500
- - --------------------------
February 23, 1999
Mr. Jeffrey A. Losch
250 Willowridge Court
Oakville, Ontario L6L 5J2
Dear Jeff:
On behalf of InterTAN, Inc. (the "Company"), I am hereby offering to you the
full-time position of Vice-President, Secretary and General Counsel of the
Company. Your compensation and benefits will be as described below. Please
note that your base salary and bonus will not be subject to adjustment until
July 1, 2000 at the earliest. You agree to devote your primary working time,
skill, attention and best efforts to the business of the Company at the
Company's Concord, Ontario office or in such other similar executive position or
office as the Company's Chief Executive Officer and/or Executive Vice-President
may designate. All annual amounts are subject to pro rata adjustment to your
start date, which is expected to be between March 22 and 29, 1999. All dollar
amounts are in Canadian dollars.
Base Salary: During the term hereof, $122,000 per year, payable in 26 equal
bi-weekly amounts in accordance with the Company's normal payroll
procedures.
Bonus: Your bonus base will be $35,000. Your bonus base in FY1999 is
subject to change, either up or down, based upon a formula
reflecting the weighted average of the operating performance of
each of the Company's operating subsidiaries except in the U.K.
in Fiscal 1999. The bonus payable for fiscal 2001 and beyond will
vary reflecting a predetermined formula approved by the Board of
Directors annually, in advance. You will also be entitled to such
other bonuses, if any, as the Board of Directors of the Company
may determine to pay at its sole discretion.
<PAGE>
Stock Options: As of the start date of your employment with the Company,
you will be granted an option to purchase 5,000 shares of
the Company's stock under the InterTAN, Inc 1996 Stock
Option Plan. The exercise price will be the fair market
value of the stock (i.e., NYSE closing price) on the date
of the grant. You will be entitled to future grants of
stock options as determined from time to time by the Board
of Directors.
Severance Benefits: If your employment with the Company is terminated for any
reason other than your voluntary resignation from the
Company, for "cause", or your death or disability, you
shall be entitled to receive severance benefits from the
Company in an amount equal to six (6) months of your then
current base salary and the bonus base which would actually
be payable under your then current bonus formula. "Cause"
shall, for purpose of this letter, have such meaning as
commonly recognized under the employment laws of the
Province of Ontario.
Deferred
Compensation
Plan: Based upon your performance, and at the discretion of the
Board, after one year of full-time employment with the
Company you will be eligible to be designated as a
"Participant" in the Company's DCP. Provided your
performance is, in my discretion, acceptable, I will submit
your name to the Board of Directors for approval as a DCP
Participant and your "Plan Benefit Amount" will be set at
such amount as the Board shall approve and will be subject
to and payable in accordance with the terms of the DCP.
Car Allowance: $8,000 per year, payable in 26 equal bi-weekly amounts as
part of your regular paycheck.
Stock Purchase
Plan: Voluntary contributions up to 10% of Base Salary; Company
will match employee contributions pursuant to existing SPP
formula (initially 40%). Existing SPP terms will apply if
you elect to participate (see enclosed booklet).
Group RRSP: You will be entitled to participate in this plan to the
same extent as the other members of the Company's executive
management in accordance with the plan's terms, once it is
established.
<PAGE>
Insurance: You will be entitled to participate in the Company's various
insurance plans in accordance with their respective terms. You
will be provided life insurance (3x annual base salary) and long-
term disability insurance. The Company will pay the same
proportion of your total premium for each type of insurance as
provided to other members of executive management.
Vacation: Three weeks paid vacation per calendar year. No carry over of
unused vacation time.
If the foregoing accurately sets forth our understanding, please acknowledge
below and indicate your acceptance via FAX to (817) 348-0038 by the close of
business today.
Sincerely,
INTERTAN, INC.
/s/ James G. Gingerich
________________________
James G. Gingerich
Executive Vice-President and
Chief Financial Officer
Acknowledged and Accepted
February 23, 1999
/s/ Jeffrey A. Losch
_________________________
Jeffrey A. Losch
c.c. ZSA
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-30-1998
<PERIOD-END> MAR-31-1999
<CASH> 44095
<SECURITIES> 0
<RECEIVABLES> 7582
<ALLOWANCES> 0
<INVENTORY> 111081
<CURRENT-ASSETS> 166965
<PP&E> 19094
<DEPRECIATION> 0
<TOTAL-ASSETS> 186346
<CURRENT-LIABILITIES> 77848
<BONDS> 24431
0
0
<COMMON> 15250
<OTHER-SE> 62446
<TOTAL-LIABILITY-AND-EQUITY> 186346
<SALES> 408289
<TOTAL-REVENUES> 408491
<CGS> 230775
<TOTAL-COSTS> 230775
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3296
<INCOME-PRETAX> (6272)
<INCOME-TAX> 21481
<INCOME-CONTINUING> 27753
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27753
<EPS-PRIMARY> (2.17)
<EPS-DILUTED> (2.17)
</TABLE>
<PAGE>
EXHIBIT 99
<TABLE>
<CAPTION>
InterTAN, Inc.
Comparable Store Sales Summary
United
Month Canada Australia Combined Kingdom Consolidated
- - ---------------- ------------ ------------ ------------ ------------- --------------
<S> <C> <C> <C> <C>
March, 1999 24.7% 11.5% 20.7% N/A 20.7%
February, 1999 19.1% 11.2% 16.5% N/A 16.5%
January, 1999 17.1% 14.0% 16.2% N/A 16.2%
December, 1998 16.4% 12.8% 15.6% 17.1% 16.1%
November, 1998 17.7% 19.0% 18.0% 71.0% 14.2%
October, 1998 16.9% 17.7% 17.1% 11.6% 15.2%
September, 1998 10.8% 17.8% 12.6% 14.0% 13.0%
August, 1998 15.9% 21.3% 17.4% 8.1% 14.6%
July, 1998 21.7% 16.2% 20.0% 18.7% 19.6%
June, 1998 22.1% 17.7% 20.8% 27.4% 22.8%
May, 1998 3.2% 14.2% 6.7% 15.2% 9.1%
April, 1998 4.9% 10.8% 6.7% 25.1% 12.2%
March, 1998 8.3% 18.4% 11.3% 14.0% 12.1%
February, 1998 12.1% 13.6% 12.6% 19.8% 14.9%
January, 1998 16.3% 8.2% 13.8% 16.2% 14.6%
</TABLE>
