UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- - - ---
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
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 No. 1-5571
TANDY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-047710
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1800 One Tandy Center, Fort Worth, Texas 76102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(817) 390-3700
N/A
(Former name, former address and former fiscal year,
if changed since last report.)
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
--- ---
The number of shares outstanding of the issuer's Common
Stock, $1 par value, on October 31, 1995 was 63,515,657.
Index to Exhibits is on Sequential Page No. 15.
Total pages 19.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
TANDY CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
<CAPTIONS>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
(In thousands, except per share amounts) 1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales and operating revenues $ 1,339,930 $ 1,119,155 $ 3,751,599 $ 3,120,567
Cost of products sold 861,393 671,499 2,380,714 1,858,383
------------ ------------ ------------ ------------
Gross profit 478,537 447,656 1,370,885 1,262,184
------------ ------------ ------------ ------------
Expenses:
Selling, general and administrative 381,947 365,497 1,120,783 1,043,548
Depreciation and amortization 22,600 20,473 67,055 62,269
Interest income (5,872) (16,866) (37,704) (61,967)
Interest expense 6,853 4,234 22,703 20,599
------------ ------------ ------------ ------------
405,528 373,338 1,172,837 1,064,449
------------ ------------ ------------- ------------
Income before income taxes 73,009 74,318 198,048 197,735
Provision for income taxes 28,108 28,127 76,248 75,334
------------ ------------ ------------ ------------
Net income 44,901 46,191 121,800 122,401
Preferred dividends 1,633 1,707 4,931 5,120
------------ ------------ ------------ ------------
Net income available to common shareholders $ 43,268 $ 44,484 $ 116,869 $ 117,281
============ ============ ============ ============
Net income available per average common
and common equivalent share $ 0.66 $ 0.59 $ 1.75 $ 1.56
============ ============ ============ ============
Average common and common
equivalent shares outstanding 65,719 75,023 66,693 75,415
============ ============ ============ ============
Dividends declared per common share $ 0.18 $ 0.15 $ 0.54 $ 0.45
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
TANDY CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
<CAPTIONS>
September 30, December 31, September 30,
(In thousands, except share amounts) 1995 1994 1994
- - - ------------------------------------ ------------ ------------ ------------
<S> <C> <C> <C>
Assets
Current assets:
Cash and short-term investments $ 102,534 $ 205,633 $ 221,024
Accounts and notes receivable, less
allowance for doubtful accounts 372,312 769,101 557,411
Inventories, at lower of cost or market 1,763,308 1,504,324 1,401,904
Other current assets 86,018 77,202 125,125
------------ ------------ ------------
Total current assets 2,324,172 2,556,260 2,305,464
Property, plant and equipment, at cost,
less accumulated depreciation 570,259 504,587 480,446
Other assets, net of accumulated
amortization 63,564 182,927 193,683
------------ ------------ ------------
$ 2,957,995 $ 3,243,774 $ 2,979,593
============ ============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Short-term debt, including
current maturities of long-term debt $ 360,115 $ 229,135 $ 107,144
Accounts payable 515,593 582,194 385,849
Accrued expenses 234,298 376,795 312,359
Income taxes payable 36,640 18,026 38,245
------------ ------------ ------------
Total current liabilities 1,146,646 1,206,150 843,597
------------ ------------ ------------
Long-term debt and capital leases,
excluding current maturities 138,175 153,318 130,753
Other non-current liabilities 20,243 34,095 50,972
------------ ------------ ------------
Total other liabilities 158,418 187,413 181,725
------------ ------------ ------------
Stockholders' Equity
Preferred stock, no par value, 1,000,000
shares authorized
Series A junior participating, 100,000
shares authorized and none issued - - -
Series B convertible, 100,000
shares authorized and issued 100,000 100,000 100,000
Series C PERCS, 150,000 shares
authorized and issued - 429,982 429,982
Common stock, $1 par value,
250,000,000 shares authorized
with 85,645,000 shares issued 85,645 85,645 85,645
Additional paid-in-capital 98,758 93,357 91,016
Retained earnings 2,255,350 2,176,971 2,094,640
Foreign currency translation effects (564) (1,799) 1,695
Common stock in treasury, at cost,
21,107,000, 27,388,000 and
23,349,000 shares, respectively (829,409) (971,611) (784,351)
Unearned deferred compensation
related to TESOP (56,849) (62,334) (64,356)
------------ ------------ ------------
Total stockholders' equity 1,652,931 1,850,211 1,954,271
Commitments and contingent liabilities
------------ ------------ ------------
$ 2,957,995 $ 3,243,774 $ 2,979,593
============ ============ ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
TANDY CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows(Unaudited)
<CAPTIONS>
Nine Months Ended
September 30,
--------------------------
(In thousands) 1995 1994
- - - -------------- ----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 121,800 $ 122,401
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 67,055 62,269
Provision for credit losses and bad debts 11,343 25,642
Other items 4,490 6,004
Changes in operating assets and liabilities:
Sale of credit card portfolios 342,822 -
Receivables 143,005 68,623
Inventories (274,466) (121,769)
Other current assets (8,816) (5,356)
Accounts payable, accrued expenses and income taxes (123,030) 51,318
----------- -----------
Net cash provided by operating activities 284,203 209,132
----------- -----------
Investing activities:
Additions to property, plant and equipment (174,166) (136,662)
Proceeds from sale of property, plant and equipment 17,672 59,477
Proceeds from sale of divested operations - 351,250
Prepayment of portion of AST note 6,720 -
Other investing activities 1,450 (1,533)
----------- -----------
Net cash provided (used) by investing activities (148,324) 272,532
----------- -----------
Financing activities:
Purchase of treasury stock (355,924) (100,990)
Sale of treasury stock to employee stock purchase program 34,486 31,586
Proceeds from exercise of stock options 17,982 2,299
Dividends paid, net of taxes (50,315) (54,941)
Redemption of subordinated debentures - (32,431)
Changes in short-term borrowings, net 168,600 (267,719)
Additions to long-term borrowings 2,298 -
Repayments of long-term borrowings (56,105) (51,679)
----------- -----------
Net cash used by financing activities (238,978) (473,875)
----------- -----------
Increase (decrease) in cash and short-term investments (103,099) 7,789
Cash and short-term investments, beginning of period 205,633 213,235
----------- -----------
Cash and short-term investments, end of period $ 102,534 $ 221,024
=========== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-BASIS OF FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements
have been prepared in accordance with the instructions to
Form 10-Q and do not include all of the information and
footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the
nine months ended September 30, 1995 are not necessarily
indicative of the results that may be expected for the year
ending December 31, 1995. For further information, refer to
the consolidated financial statements and management's
discussion and analysis of results of operations and
financial condition included in Tandy Corporation's ("Tandy"
or the "Company") Form 10-K for the year ended December 31,
1994.
NOTE 2-RELATIONS WITH INTERTAN
Noted in the tables below are the amounts recognized by the
Company at September 30, 1995 and 1994, respectively, in
relation to its agreements with InterTAN Inc. ("InterTAN").
The Company purchased the notes at a discount and InterTAN
has an obligation to pay the gross amount of the notes.
Balance at September 30,
-------------------------
(In thousands) 1995 1994
- - - -------------- ---------- ----------
Gross amount of notes $ 44,903 $ 51,861
Discount 13,195 17,431
---------- ----------
Net amount of notes $ 31,708 $ 34,430
========== ==========
Current portion of notes $ 14,432 $ 4,077
Non-current portion of notes 17,276 30,353
Other current receivables 2,966 3,691
---------- ----------
$ 34,674 $ 38,121
========== ==========
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
(In thousands) 1995 1994 1995 1994
- - - -------------- ------- ------- ------- -------
Sales and
commission income $ 3,751 $ 3,066 $ 8,216 $17,109
======= ======= ======= =======
Interest income $ 1,083 $ 1,088 $ 3,111 $ 3,318
Accretion of
discount 996 984 3,147 2,768
------- ------- ------- -------
$ 2,079 $ 2,072 $ 6,258 $ 6,086
======= ======= ======= =======
Royalty income $ 250 -- $ 250 --
======= ======= ======= =======
Through October 1995 InterTAN has met all of its payment
obligations to Tandy. As a result, Tandy management believes
that InterTAN should be able to continue to meet its payment
obligations pursuant to its debt agreements with Tandy. See
the Company's Annual Report on Form 10-K for the year ended
December 31, 1994 for further information.
Canadian tax authorities are reviewing InterTAN's Canadian
subsidiary's 1987-89 tax returns. The Company cannot
determine whether the ultimate resolution of that review will
have an effect on InterTAN's ability to meet its obligations
to Tandy, but at present, nothing has come to the attention
of the Company which would lead them to believe that the
ultimate resolution of this review would impair InterTAN's
ability to meet its obligations to Tandy.
NOTE 3-SALE OF CREDIT OPERATIONS
Effective March 30, 1995 the Company completed the sale, at
net book value, of the Radio Shack and Tandy Name Brand
Retail Group ("Tandy Name Brand") (McDuff, VideoConcepts and
The Edge in Electronics) private label credit card accounts
and substantially all accounts receivable to Hurley State
Bank, a subsidiary of SPS Transaction Services, Inc. ("SPS"),
a majority-owned subsidiary of Dean Witter, Discover & Co.
As a result of the transaction, Tandy received $342,822,000
in cash and a deferred payment amount of $49,444,000. The
deferred payment does not bear interest. Principal is paid
monthly with final payment due February 29, 1996. The
Company has discounted the deferred payment by $773,000 and,
accordingly, the discounted deferred payment balance of
$7,482,000 is classified as a current receivable in the
accompanying Consolidated Balance Sheet at September 30,
1995.
As part of the completed sales transaction, Tandy Credit
Corporation ("Tandy Credit") was merged into Hurley
Receivables Corporation ("HRC"), a wholly-owned subsidiary of
SPS, and no longer exists. The merger was necessary in order
to transfer an asset securitization program and approximately
$230,000,000 in customer receivables which backed the
program. HRC assumed the ongoing obligations of the Company
and its affiliates under the asset securitization program. On
March 31, 1995, Tandy Credit filed Post Effective Amendment
No. 2 to its Registration Statement on Form S-3 regarding the
termination of the registration of all remaining unsold
medium term notes. The termination was declared effective as
of April 5, 1995. On March 31, 1995, Tandy Credit also filed
Form 15 to de-register Tandy Credit's common stock and
terminate its reporting obligations under Section 12g-4(a)
(1) (i) of the Securities Exchange Act of 1934.
NOTE 4-RESTRUCTURING CHARGES
In December 1994, the Company adopted a business
restructuring plan to close or convert 233 of the 306 Tandy
Name Brand stores. Closed stores included 151
VideoConcepts(R), 30 McDuff(R) mall stores and 19 McDuff
Supercenters. At March 31, 1995 all 233 stores had been
closed. Twenty-four mall stores and McDuff Supercenters have
been converted to RadioShack(SM) or Computer City Express(R)
stores as of September 30, 1995. Approximately 57 McDuff
stores and 16 The Edge in Electronics(R) stores remained open
and as of January 1, 1995 became part of the Specialty Retail
Group of Radio Shack. A pre-tax charge of $89,071,000 taken
in the fourth quarter of fiscal 1994 related to the closing
and conversion of these stores. The components of the
restructuring charge and an analysis of the amounts charged
against the reserve are outlined in the following table:
<TABLE>
<CAPTIONS>
Charges Charges
Original Through Balance 1/1/95- Balance
(In thousands) Reserve 12/31/94 12/31/94 9/30/95 9/30/95
- - - -------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Lease obligations $ 46,682 $ (1,466) $ 45,216 $ (28,104) $ 17,112
Impairment of fixed assets 17,991 - 17,991 (17,852) 139
Inventory impairment 16,600 - 16,600 (15,482) 1,118
Goodwill impairment 4,222 (4,222) - - -
Termination benefits 1,218 - 1,218 (1,218) -
Other 2,358 - 2,358 (1,945) 413
--------- --------- --------- --------- ---------
Total $ 89,071 $ (5,688) $ 83,383 $ (64,601) $ 18,782
========= ========= ========= ========= =========
</TABLE>
Sales and operating revenues associated with the 233 closed
Tandy Name Brand stores were approximately $27,995,000 and
$183,280,000 for the nine months ended September 30, 1995 and
1994, respectively. In conjunction with this restructuring,
Tandy terminated 1,425 employees, most of whom were store
employees and managers.
NOTE 5-SHARE REPURCHASE PROGRAM
On August 1, 1994, the Company announced that its Board of
Directors authorized management to purchase up to 7,500,000
shares of its common stock in addition to shares required for
employee plans. On December 30, 1994, the Board of Directors
authorized management to increase the share repurchase
program to 12,500,000 shares. At September 30, 1995,
approximately 10,429,700 shares had been repurchased since
this program's inception, and approximately 5,455,400 shares
had been repurchased in the nine-month period ended September
30, 1995. Future purchases will be made from time to time in
the open market, and it is expected that funding for the
remainder of the program will come from existing cash and
short-term debt.
NOTE 6-RETIREMENT OF DEBT
In January 1995, the $45,000,000 of 8.69% senior notes which
were outstanding at December 31, 1994 were paid in full.
These senior notes had been outstanding since February 7,
1990. In February 1995, the $6,000,000 of Tandy Credit's
medium-term notes, which were outstanding at December 31,
1994 and were to mature in May and August of 1995, were paid
in full.
NOTE 7-CONTINGENCY
The IRS Dallas field office is reviewing the Company's 1987
1989 tax returns and has referred certain issues to the IRS
National office. The resolution of this matter, which raises
questions about the private letter rulings issued by the IRS
regarding the spin-off of InterTAN and certain other tax
matters, could result in additional taxes and interest to the
Company. Although aggregate additional taxes involved in
these transactions could potentially range from $0 to $27
million, based on the advice of the Company's independent tax
advisors, the Company believes it would prevail if any tax
litigation had to be instituted. Any ultimate tax assessment
would also involve interest expense. In any event, the
Company believes the ultimate resolution would have no
material impact on the Company's financial condition.
The Company is a defendant in a consolidated action titled
O'Sullivan Industries Holdings, Inc. Securities Litigation,
- - - ----------------------------------------------------------
which was commenced in 1994 and is currently pending before
the United States District Court for the Western District of
Missouri. The plaintiffs seek damages in an unspecified
amount alleging that the initial public offering prospectus
of O'Sullivan, which was formerly a subsidiary of the
Company, as well as certain press releases and other
materials, contained material misrepresentations and
omissions. The parties have recently entered into a
Memorandum of Understanding which anticipates the settlement
of this litigation in the near future. The complete
resolution of the matter is dependent upon the satisfaction
of several conditions including the parties entering a
binding agreement and the Court approving the terms of such
an agreement. There can be no assurance that such an
agreement will be reached or that Court approval will be
obtained. Under the terms of its memorandum, the Company's
contributions to the proposed settlement will not have a
material adverse affect on its results of operations or
financial condition. Tandy believes that the lawsuit is
totally without merit and in the event this matter is not
resolved, as is presently anticipated, the Company intends
to resume its vigorous defense of this lawsuit.
The Company charged approximately $6,700,000 for legal and
plant closing costs, with the majority of the charges
affecting the quarter ended September 30, 1995.
NOTE 8-HEDGING AND DERIVATIVE ACTIVITY
The Company enters into interest rate swap agreements to
manage its interest rate exposure by effectively trading
floating interest rates for fixed interest rates. As the
Company has used the swaps to hedge certain obligations with
floating rates, the difference between the floating and fixed
interest rate amounts, based on these swap agreements, is
recorded as income or expense. Through September 30, 1995,
the Company has entered into five swaps with regard to
notional amounts totaling $90,000,000. The swap agreements
all expire during the third quarter of 1999. Prior to 1995
the Company was not a party to any interest rate swaps. The
Board of Directors has authorized management to enter into
interest rate swaps up to notional amounts not exceeding
$250,000,000. At September 30, 1995, the Company would have
to pay approximately $5,254,000 to terminate the interest
rate swaps in place. This amount was obtained from the
counterparties and represents the fair value of the swap
agreements; the amount is not recognized in the consolidated
financial statements. The Company has no intention of
terminating the interest rate swap agreements at this time.
At September 30, 1995, the weighted average interest rate of
the floating rate obligations being hedged was 6.4%, and the
weighted average interest rate of the fixed rate obligations
imposed by the swap agreements was 7.7%. The interest rate
swap agreements have been entered into with major financial
institutions which are expected to fully perform under the
terms of the swap agreements.
NOTE 9-PERCS CONVERSION
Tandy announced on January 23, 1995 that it had exercised its
right to call all the issued and outstanding Preferred Equity
Redemption Convertible Stock ("PERCS") for conversion on
March 10, 1995, prior to its mandatory conversion date of
April 15, 1995. For each PERCS depositary share redeemed,
0.787757 Tandy common shares were issued for an aggregate of
approximately 11,816,000 shares. In addition, each PERCS
depositary share received a dividend in cash of $0.321
representing the accrued dividend from January 16, 1995
through the redemption date of March 10, 1995.
NOTE 10-PREPAYMENT OF AST NOTE
During the quarter ended September 30, 1995, the Company
received $6,720,000 from AST Research, Inc. ("AST") as a
prepayment on its promissory note. The promissory note was
supported by a standby letter of credit in the amount of the
lesser of $100,000,000 or 70% of the outstanding principal
amount of the promissory note. This letter of credit has
been replaced by a $75,000,000 Letter of Guarantee dated
August 22, 1995, from Samsung Electronics Co., Ltd., a Korean
corporation, or, alternatively, Samsung Electronics America,
Inc., a New York corporation. As a result of the prepayment,
the note has been amended and the principal amount reduced to
$90,000,000. The terms of the original promissory note
stipulated that the outstanding principal balance could be
paid on July 11, 1996 at AST's option in cash or the common
stock of AST; provided that not more than 50% of the original
principal amount of the note could be paid in common stock of
AST. The amended promissory note stipulates that AST may
repay the note in AST common stock; provided that not more
than the lesser of (a) $30,000,000, or (b) 33% of the
outstanding principal amount of the note at the time of
payment may be payable by AST in common stock of AST.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Net Sales and Operating Revenues
Net sales and operating revenues for the periods ended
September 30 were:
<TABLE>
<CAPTIONS>
Three Months Ended Nine Months Ended
September 30, % Increase September 30, % Increase
------------------------- -------------------------
(In thousands) 1995 1994 (Decrease) 1995 1994 (Decrease)
- - - -------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Radio Shack $ 724,090 $ 674,444 (1) 7.4% $ 2,068,044 $ 1,943,436 (1) 6.4%
Incredible Universe 163,931 87,102 88.2 430,014 197,291 118.0
Computer City 430,475 278,478 54.6 1,161,116 731,958 58.6
----------- ----------- ----------- -----------
1,318,496 1,040,024 26.8 3,659,174 2,872,685 27.4
Tandy Name Brand (closed) (136) 59,770 - 27,995 183,280 (84.7)
Other sales 21,570 19,361 11.4 64,430 64,602 (0.3)
----------- ----------- ----------- -----------
$ 1,339,930 $ 1,119,155 19.7% $ 3,751,599 $ 3,120,567 20.2%
=========== =========== =========== ===========
(1) Restated to include the remaining 73 Tandy Name Brand retail units.
</TABLE>
Continuing retail operations had 26.8% and 27.4% sales gains
for the three and nine-month periods ended September 30,
1995. Tandy Corporation's overall comparable store sales
gains for U.S. and Canadian operations approximated 6.9% for
the quarter and 6.4% for the nine-month period.
Radio Shack comparable store sales gains for the three and
nine-month periods were 7.6% and 6.4%, respectively. Digital
satellite systems sales were strong during the quarter and
cellular phone sales have continued to be strong throughout
the year. As of January 1, 1995, Radio Shack sales include
the sales for Tandy Name Brand Retail Group ("Tandy Name
Brand") stores which were not closed and are now included in
the Specialty Retail Group of Radio Shack. At September 30,
1995, Radio Shack had 4,787 company-owned stores, including
94 in the Specialty Retail Group. The division has had a net
increase of 116 RadioShack(SM) stores since December 31,
1994, and it is anticipated that approximately 45 RadioShack
stores will be added in the fourth quarter of 1995.
Computer City had comparable store sales gains of 9.1% and
6.8% for the three and nine-month periods for U.S. and
Canadian retail sales. Thirty stores have been added to the
Computer City chain since September 30, 1994, including eight
stores which were added in the third quarter of 1995. As of
September 30, 1995, there were 86 stores open and it is
anticipated that Computer City will add 13 new stores in the
fourth quarter of 1995. During the September quarter sales
of Pentium(R) processor-based computers and multimedia
products were strong at Computer City, as well as Windows(R)
95 related software, memory and hard drive upgrades.
Same-store sales results for the quarter and nine months at
Incredible Universe were (5.2)% and 4.1%, respectively. Late
delivery of Windows(R) 95 equipped CPUs and reduced
advertising in older markets negatively impacted sales for
the quarter. Appliance sales were soft during the quarter due
to a year-long industry trend. Inventory levels and the
advertising program have been repositioned for the fourth
quarter. Since September 30, 1994, Incredible Universe has
added eight stores, including four which were added in the
September 1995 quarter. Incredible Universe operated
fourteen stores as of September 30, 1995 and plans to open
three additional stores in the last quarter of 1995.
<TABLE>
<CAPTIONS>
September 30, June 30, March 31, December 31, September 30,
1995 1995 1995 1994 1994
- - - -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RadioShack
Company owned (1) 4,787 4,709 4,671 4,598 4,572
Dealer Franchise 2,017 2,017 2,015 2,005 2,015
Computer City 86 78 73 69 56
Incredible Universe 14 10 9 9 6
Tandy Name Brand n/a n/a n/a 306 306
----- ----- ----- ----- -----
Total Number of Stores 6,904 6,814 6,768 6,987 6,955
===== ===== ===== ===== =====
(1) As of January 1, 1995, the Specialty Retail Group of the Radio Shack
division included 73 Tandy Name Brand units.
</TABLE>
Gross Profit
Gross profit as a percent of net sales was 35.7% during the
three months ended September 30, 1995 as compared to 40.0%
during the corresponding 1994 period. For the nine months
ended September 30, 1995 and 1994, the gross profit
percentages were 36.5% and 40.4%, respectively. This trend
toward lower gross margins is expected to continue as
Computer City(R) and Incredible Universe(R) stores contribute
a larger proportion of sales, because they operate on lower
margins. In the third quarter of 1995, Computer City and
Incredible Universe accounted for approximately 44.4% of
consolidated sales, compared to 32.7% in the third quarter of
1994. For the nine months ended September 30, 1995 and 1994,
Computer City and Incredible Universe accounted for
approximately 42.4% and 29.8% of consolidated sales,
respectively. The decrease in Radio Shack's gross margin from
the prior year quarter has also affected the Company's gross
margin. This decrease in gross margin is a result of a
larger percentage of Radio Shack's sales relating to items
such as digital satellite systems and cellular phones, which
have generally lower gross margins than Radio Shack's overall
average.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses as a
percent of sales and operating revenues declined 4.2
percentage points in comparison with the third quarter of
1994 and declined 3.5 percentage points in comparison with
the nine months ended September 30, 1994. Most expense
categories, including advertising, rent, payroll and
utilities, were lower as a percent of sales during the three
and nine months ended September 30, 1995 as compared with the
same prior year periods. The lower rent and payroll costs as
a percent of sales reflect the lower relative costs
associated with the Company's newer retail formats. As a
result of Computer City and Incredible Universe expansion
into new markets and Radio Shack's new promotional programs,
consolidated advertising costs increased $5,224,000, or
10.9%, and $13,083,000, or 9.6%, during the three and nine
months, respectively, in comparison with the prior year
periods. Payroll expenses increased $19,276,000, or 12.8%,
in the quarter and $53,472,000, or 12.4%, for the nine
months, in comparison with the prior year periods, as a
result of retail store expansions. As a result of the
Company selling the private label credit card portfolios
earlier this year, bad debt expense decreased significantly
in the third quarter as compared to that of the prior year.
The restructuring of the Tandy Name Brand group has reduced
costs in all expense areas this year. The Company expects
SG&A expenses as a percent of sales to continue to decrease
over the remainder of the fiscal year as Computer City and
Incredible Universe, which operate at lower relative costs
than consolidated Tandy Corporation, become more significant
portions of the Company's total business. SG&A expenses were
impacted by legal and plant closing charges approximating
$6,700,000, with the majority of the charges affecting the
third quarter of 1995.
Net Interest Income
Interest income for the quarter ending September 30, 1995
decreased $10,994,000 from $16,866,000 in the third quarter
of 1994. This decrease is due to the sale of the Company's
credit card portfolios and increased utilization of cash for
the ongoing share repurchase program and capital expenditures
related to new stores. Interest expense increased $2,619,000
for the quarter ending September 30, 1995 and remained
relatively stable for the nine months in comparison with the
same prior year period.
Sale of Credit Operations
In a transaction completed on March 30, 1995, the Company
sold the Radio Shack and Tandy Name Brand (McDuff,
VideoConcepts and The Edge in Electronics) private label
credit card accounts and substantially all accounts
receivable to Hurley State Bank, a subsidiary of SPS
Transaction Services, Inc., a majority-owned subsidiary of
Dean Witter, Discover & Co., resulting in no material gain or
loss. The transaction has impacted the current period and
should impact future periods as follows: (1) SG&A costs
incurred in processing the private label credit card accounts
and bad debt expense will be eliminated, (2) no interest
income associated with the credit card accounts will be
recorded and (3) customer service fees earned on the credit
card accounts will decline as the Company's remaining
consumer credit balances decrease during 1995 and 1996.
Restructuring Charges
Sales and operating revenues associated with the 233 closed
Tandy Name Brand stores were approximately $27,995,000 and
$183,280,000 for the nine months ended September 30, 1995 and
1994, respectively. In conjunction with this restructuring,
Tandy terminated 1,425 employees, most of whom were store
employees and managers.
Provision for Income Taxes
Provision for income taxes for each quarterly period is based
on the estimate of the annual effective tax rate for the
fiscal year as evaluated at the end of each quarter. The
effective tax rates for the third quarters of 1995 and 1994
were 38.5% and 37.85%, respectively. The increase reflects
shifts of income into states with higher income tax rates
such as California, New York and Ohio.
The IRS Dallas field office is reviewing the Company's 1987
1989 tax returns and has referred certain issues to the IRS
National office. The resolution of this matter, which raises
questions about the private letter rulings issued by the IRS
regarding the spin-off of InterTAN and certain other tax
matters, could result in additional taxes and interest to the
Company. Although aggregate additional taxes involved in
these transactions could potentially range from $0 to $27
million, based on the advice of the Company's independent tax
advisors, the Company believes it would prevail if any tax
litigation had to be instituted. Any ultimate tax assessment
would also involve interest expense. In any event, the
Company believes the ultimate resolution would have no
material impact on the Company's financial condition.
Earnings Per Share
Net income per average common and common equivalent share is
computed by dividing net income less the Series B convertible
stock dividends by the weighted average common and common
equivalent shares outstanding during the period. As the
Preferred Equity Redemption Convertible Stock ("PERCS")
mandatorily converted into common stock, they were considered
outstanding common stock and the dividends were not deducted
from net income for purposes of calculating net income per
average common and common equivalent share. Current quarter
and year-to-date weighted average share calculations include
approximately 11,816,000 common shares relating to the
conversion of the PERCS into common shares on March 10, 1995.
Per share amounts and the weighted average number of shares
outstanding for the first, second and third quarters of 1994
also reflect the PERCS conversion into approximately
11,816,000 common shares. Fully diluted earnings available
per common and common equivalent share are not presented
since dilution is less than 3%.
Cash Flow and Financial Condition
Cash flow from operating activities increased in the nine-
month period ended September 30, 1995 as compared with the
same period of the prior year. This increase relates
primarily to the sale of the credit card portfolios and the
collection of receivables, partially offset by a net decrease
in accounts payable, accrued expenses and income taxes and an
increase in seasonal inventories.
Cash used by investing activities for the nine-month period
ended September 30, 1995 includes property, plant and
equipment additions related to additional fixtures required
for new RadioShack stores and the Company's expansion of its
Computer City and Incredible Universe store formats.
Management anticipates that capital expenditure requirements
will approximate $30,000,000 to $40,000,000 for the remainder
of 1995, primarily to support retail expansion.
During the quarter ended September 30, 1995, the Company
received $6,720,000 from AST Research, Inc. ("AST") as a
prepayment on its promissory note. The promissory note was
supported by a standby letter of credit in the amount of the
lesser of $100,000,000 or 70% of the outstanding principal
amount of the promissory note. This letter of credit has
been replaced by a $75,000,000 Letter of Guarantee dated
August 22, 1995, from Samsung Electronics Co., Ltd., a Korean
corporation, or, alternatively, Samsung Electronics America,
Inc., a New York corporation. As a result of the prepayment,
the note has been amended and the principal amount reduced to
$90,000,000. The terms of the original promissory note
stipulated that the outstanding principal balance could be
paid on July 11, 1996 at AST's option in cash or the common
stock of AST; provided that not more than 50% of the original
principal amount of the note could be paid in common stock of
AST. The amended promissory note stipulates that AST may
repay the note in AST common stock; provided that not more
than the lesser of (a) $30,000,000, or (b) 33% of the
outstanding principal amount of the note at the time of
payment may be payable by AST in common stock of AST.
Cash used for financing activities for the nine-month period
ended September 30, 1995 includes continued purchases of
treasury stock under the share repurchase program. Repayments
of long-term borrowings includes the $45,000,000 of 8.69%
senior notes and Tandy Credit's medium-term notes of
$6,000,000. The Company believes that its cash flow from
operations, cash on hand and availability under its existing
debt facilities are adequate to fund the planned expansion of
its store formats and share repurchase program. In addition,
most of the Company's new store expenditures are being funded
through operating leases.
Cash and short-term investments at September 30, 1995 were
$102,534,000 as compared to $205,633,000 at December 31, 1994
and $221,024,000 at September 30, 1994. Total debt as a
percentage of total capitalization was 23.2% at September 30,
1995, compared to 17.1% at December 31, 1994 and 10.9% at
September 30, 1994. Long-term debt as a percentage of total
capitalization was 6.4% at September 30, 1995 compared to
6.9% at December 31, 1994 and 6.0% at September 30, 1994. The
increases in debt ratios resulted primarily from the
Company's share repurchase program described below and
inventory additions in preparation for the upcoming Christmas
selling season.
On August 1, 1994, the Company announced that its Board of
Directors authorized management to purchase up to 7,500,000
shares of its common stock in addition to shares required for
employee plans. On December 30, 1994, the Board of Directors
authorized management to increase the share repurchase
program to 12,500,000 shares. At September 30, 1995,
approximately 10,429,700 shares had been repurchased since
this program's inception, and approximately 5,455,400 shares
had been repurchased in the nine-month period ended September
30, 1995. Future purchases will be made from time to time in
the open market, and it is expected that funding for the
remainder of the program will come from existing cash and
short-term debt.
Inventory
Compared to September 30, 1994, total inventories at
September 30, 1995 have increased $361,404,000 or 25.8%. The
increase in total inventory levels included additional
inventory to support new RadioShack, Computer City and
Incredible Universe stores and to support the sales growth in
certain categories at Radio Shack. A portion of this
increase was offset by decreased inventory levels at Tandy
Name Brand due to the closure of 233 stores in the quarter
ended March 31, 1995. Inventory levels have increased 17.2%
from the amounts at December 31, 1994 primarily due to
seasonal fluctuations and additional store openings.
Inventory is primarily comprised of finished goods.
<TABLE>
Changes in Stockholders' Equity
<CAPTIONS>
Outstanding
(In thousands) Common Shares Dollars
- - - -------------- ------------- -----------
<S> <C> <C>
Balance at December 31, 1994 58,257 $ 1,850,211
Foreign currency translation
adjustments, net of deferred taxes - 1,235
Sale of treasury stock to employee plans 696 34,486
Purchase of treasury stock (6,718) (331,899)
Exercise of stock options 487 17,982
Repurchase of preferred stock - (2,948)
Preferred stock dividends, net of tax - (3,205)
PERCS dividend - (4,824)
Redemption of PERCS 11,816 -
TESOP deferred compensation earned - 5,485
Common stock dividends - (35,392)
Net income - 121,800
------------- -----------
Balance at September 30, 1995 64,538 $ 1,652,931
============= ===========
</TABLE>
InterTAN Update
Noted in the tables below are the amounts recognized by the
Company at September 30, 1995 and 1994, respectively, in
relation to its agreements with InterTAN, Inc. ("InterTAN").
The Company purchased the notes at a discount and InterTAN
has an obligation to pay the gross amount of the notes.
Balance at September 30,
-------------------------
(In thousands) 1995 1994
- - - -------------- ---------- ----------
Gross amount of notes $ 44,903 $ 51,861
Discount 13,195 17,431
---------- ----------
Net amount of notes $ 31,708 $ 34,430
========== ==========
Current portion of notes $ 14,432 $ 4,077
Non-current portion of notes 17,276 30,353
Other current receivables 2,966 3,691
---------- ----------
$ 34,674 $ 38,121
========== ==========
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
(In thousands) 1995 1994 1995 1994
- - - -------------- ------- ------- ------- -------
Sales and
commission income $ 3,751 $ 3,066 $ 8,216 $17,109
======= ======= ======= =======
Interest income $ 1,083 $ 1,088 $ 3,111 $ 3,318
Accretion of
discount 996 984 3,147 2,768
------- ------- ------- -------
$ 2,079 $ 2,072 $ 6,258 $ 6,086
======= ======= ======= =======
Royalty income $ 250 -- $ 250 --
======= ======= ======= =======
Through October 1995 InterTAN has met all of its payment
obligations to Tandy. As a result, Tandy management believes
that InterTAN should be able to continue to meet its payment
obligations pursuant to its debt agreements with Tandy. See
the Company's Annual Report on Form 10-K for the year ended
December 31, 1994 for further information.
Canadian tax authorities are reviewing InterTAN's Canadian
subsidiary's 1987-89 tax returns. The Company cannot
determine whether the ultimate resolution of that review will
have an effect on InterTAN's ability to meet its obligations
to Tandy, but at present, nothing has come to the attention
of the Company which would lead them to believe that the
ultimate resolution of this review would impair InterTAN's
ability to meet its obligations to Tandy.
Windows is a registered trademark of Microsoft Corporation.
Pentium is a registered trademark of Intel Corporation.
Preferred Equity Redemption Convertible Stock and PERCS are
trademarks of Morgan Stanley & Co., Incorporated, in
connection with their investment banking services. All other
trademarks identified herein are owned or used by Tandy
Corporation.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is a defendant in a consolidated action titled
O'Sullivan Industries Holdings, Inc. Securities Litigation,
- - - ----------------------------------------------------------
which was commenced in 1994 and is currently pending before
the United States District Court for the Western District of
Missouri. The plaintiffs seek damages in an unspecified
amount alleging that the initial public offering prospectus
of O'Sullivan, which was formerly a subsidiary of the
Company, as well as certain press releases and other
materials, contained material misrepresentations and
omissions. The parties have recently entered into a
Memorandum of Understanding which anticipates the settlement
of this litigation in the near future. The complete
resolution of the matter is dependent upon the satisfaction
of several conditions including the parties entering a
binding agreement and the Court approving the terms of such
an agreement. There can be no assurance that such an
agreement will be reached or that Court approval will be
obtained. Under the terms of its memorandum, the Company's
contributions to the proposed settlement will not have a
material adverse affect on its results of operations or
financial condition. Tandy believes that the lawsuit is
totally without merit and in the event this matter is not
resolved, as is presently anticipated, the Company intends
to resume its vigorous defense of this lawsuit.
Tandy has various claims, lawsuits, disputes with third
parties, investigations and pending actions involving
allegations of negligence, product defects, discrimination,
infringement of intellectual property rights, securities
matters, tax deficiencies, violations of permits or licenses,
and breach of contract and other matters against the Company
and its subsidiaries incident to the operation of its
business. The liability, if any, associated with these
matters was not determinable at September 30, 1995. While
certain of these matters involve substantial amounts, and
although occasional adverse settlements or resolutions might
occur and negatively impact earnings in the year of
settlement, it is the opinion of management that their
ultimate resolution will not have a materially adverse effect
on Tandy's financial position.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits Required by Item 601 of Regulation
S-K.
A list of the exhibits required by Item 601 of
Regulation S-K and filed as part of this
report is set forth in the Index to Exhibits on
page 15, which immediately precedes such
exhibits.
b) Reports on Form 8-K.
There were no Form 8-K reports filed during
the quarter ended September 30, 1995.
<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.
Tandy Corporation
(Registrant)
Date: November 13, 1995 By /s/ Richard L. Ramsey
-----------------------
Richard L. Ramsey
Vice President and
Controller
(Authorized Officer)
Date: November 13, 1995 /s/ Dwain H. Hughes
--------------------
Dwain H. Hughes
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
<PAGE>
TANDY CORPORATION
INDEX TO EXHIBITS
Exhibit Sequential
Number Description Page No.
2a Agreement for Purchase and Sale of
Assets dated as of June 30, 1993 between
AST Research, Inc., as Purchaser and Tandy
Corporation, TE Electronics Inc., and GRiD
Systems Corporation, as Sellers (without
exhibits) (filed as Exhibit 2 to Tandy's
July 13, 1993 Form 8-K filed on July 27,
1993, Accession No. 0000096289-93-000004 and
incorporated herein by reference).
2b Amended and Restated Stock Exchange
Agreement dated February 1, 1994 by and
among O'Sullivan Industries Holdings, Inc.,
and TE Electronics Inc. (filed as Exhibit 2b
to Tandy's Form 10-K filed on March 30,
1994, Accession No. 000009628994-000029 and
incorporated herein by reference).
2c U.S. Purchase Agreement dated January
26, 1994 by and among O'Sullivan Industries
Holdings, Inc., TE Electronics Inc. and the
U.S. Underwriters which included Merrill
Lynch & Co., Wheat First Butcher & Singer,
The Chicago Dearborn Company and Rauscher
Pierce Refsnes, Inc. (filed as Exhibit 2c to
Tandy's Form 10-K filed on March 30, 1994,
Accession No. 000009628994-000029 and
incorporated herein by reference).
2d International Purchase Agreement dated
January 26, 1994 by and among O'Sullivan
Industries Holdings, Inc., TE Electronics
Inc. and the U.S. Underwriters which
included Merrill Lynch International Limited
and UBS Limited (filed as Exhibit 2d to
Tandy's Form 10-K filed on March 30, 1994,
Accession No. 0000096289-94-000029 and
incorporated herein by reference).
2e Acquisition Agreement dated January 18,
1995 between Hurley State Bank, as purchaser
and Tandy Credit Corporation as seller
(without exhibits) (filed as Exhibit (c) to
Tandy's January 18, 1995 Form 8-K filed on
February 2, 1995, Accession No. 0000096289-
95-000008 and incorporated herein by
reference).
2e(i) Amendment No. 1 to Acquisition Agreement
dated January 18, 1995 between Tandy Credit
Corporation, Tandy National Bank and Hurley
State Bank (filed as Exhibit 2 to Tandy's
March 30, 1995 Form 8-K filed on April 12,
1995, Accession No. 0000096289-95-000012 and
incorporated herein by reference).
2f Agreement and Plan of Merger dated March
30, 1995 by and among, Tandy Corporation,
Tandy Credit Corporation, Hurley State Bank
and Hurley Receivables Corporation (filed as
Exhibit 3 to Tandy's March 30, 1995 Form 8-K
filed on April 12, 1995, Accession No.
000009628995-000012 and incorporated herein
by reference).
3a(i) Restated Certificate of Incorporation of
Tandy dated December 10, 1982 (filed as
Exhibit 4A to Tandy's 1993 Form S-8 for the
Tandy Corporation 1993 Incentive Stock Plan,
Reg. No. 33-51603, filed on November 12,
1993, Accession No. 0000096289-93-000017 and
incorporated herein by reference).
3a(ii) Certificate of Amendment of Certificate
of Incorporation of Tandy Corporation dated
November 13, 1986 (filed as Exhibit 4A to
Tandy's 1993 Form S-8 for the Tandy
Corporation 1993 Incentive Stock Plan, Reg.
No. 33-51603, filed on November 12, 1993,
Accession No. 0000096289-93-000017 and
incorporated herein by reference).
3a(iii) Certificate of Amendment of Certificate
of Incorporation, amending and restating the
Certificate of Designation, Preferences and
Rights of Series A Junior Participating
Preferred Stock dated June 22, 1990 (filed
as Exhibit 4A to Tandy's 1993 Form S-8 for
the Tandy Corporation 1993 Incentive Stock
Plan, Reg. No. 33-51603, filed on November
12, 1993, Accession No. 0000096289-93-000017
and incorporated herein by reference).
3a(iv) Certificate of Designations of Series B
TESOP Convertible Preferred dated June 29,
1990 (filed as Exhibit 4A to Tandy's 1993
Form S-8 for the Tandy Corporation 1993
Incentive Stock Plan, Reg. No. 3351603,
filed on November 12, 1993, Accession No.
0000096289-93-000017 and incorporated herein
by reference).
3a(v) Certificate of Designation, Series C
Conversion Preferred Stock dated February
13, 1992 (filed as Exhibit 4A to Tandy's
1993 Form S-8 for the Tandy Corporation
1993 Incentive Stock Plan, Reg. No. 33-
51603, filed on November 12, 1993, Accession
No. 0000096289-93-000017 and incorporated
herein by reference).
3b Tandy Corporation Bylaws, restated as of
August 4, 1993 (filed as Exhibit 4B to
Tandy's Form S-8 for the Tandy
Corporation 1993 Incentive Stock Plan, Reg.
No. 33-51603, filed on November 12, 1993,
Accession No. 0000096289-93-000017 and
incorporated herein by reference).
4a Amended and restated Rights Agreement
with the First National Bank of Boston dated
June 22, 1990 for Preferred Share Purchase
Rights (filed as Exhibit 4b to Tandy's Form
10-K filed on March 30, 1994, Accession No.
0000096289-94-000029 and incorporated herein
by reference).
4b Revolving Credit Agreement between Tandy
Corporation and Texas Commerce Bank,
individually and as Agent for sixteen other
banks, dated as of May 27, 1994 (without
exhibits) (filed as Exhibit 4c to Tandy's
Form 10Q filed on August 15, 1994, Accession
No. 0000096289-94-000039 and incorporated
herein by reference).
10a* Salary Continuation Plan for Executive
Employees of Tandy Corporation and
Subsidiaries including amendment dated June
14, 1984 with respect to participation by
certain executive employees, as restated
October 4, 1990 (filed as Exhibit 10a to
Tandy's Form 10K filed on March 30, 1994,
Accession No. 0000096289-94-000029 and
incorporated herein by reference).
10b* Form of Executive Pay Plan Letters
(filed as Exhibit 10b to Tandy's Form 10K
filed on March 30, 1995, Accession No.
0000096289-95-000010 and incorporated herein
by reference).
10c* Post Retirement Death Benefit Plan for
Selected Executive Employees of Tandy
Corporation and Subsidiaries as restated
June 10, 1991 (filed as Exhibit 10c to
Tandy's Form 10-K filed on March 30, 1994,
Accession No. 0000096289-94-000029 and
incorporated herein by reference).
10d* Tandy Corporation Officers Deferred
Compensation Plan as restated July 10, 1992
(filed as Exhibit 10d to Tandy's Form 10-K
filed on March 30, 1994, Accession No.
0000096289-94-000029 and incorporated herein
by reference).
10e* Special Compensation Plan No. 1 for
Tandy Corporation Executive Officers,
adopted in 1993 (filed as Exhibit 10e to
Tandy's Form 10-K filed on March 30, 1994,
Accession No. 0000096289-94-000029 and
incorporated herein by reference).
10f* Special Compensation Plan No. 2 for
Tandy Corporation Executive Officers,
adopted in 1993 (filed as Exhibit 10f to
Tandy's Form 10-K filed on March 30, 1994,
Accession No. 0000096289-94-000029 and
incorporated herein by reference).
10g* Special Compensation Plan for Directors
of Tandy Corporation dated November 13, 1986
(filed as Exhibit 10g to Tandy's Form 10-K
filed on March 30, 1994, Accession No.
0000096289-94-000029 and incorporated herein
by reference).
10h* Director Fee Resolution (filed as
Exhibit 10h to Tandy's Form 10-K filed on
March 30, 1994, Accession No. 0000096289-94-
000029 and incorporated herein by
reference).
10i* Tandy Corporation 1985 Stock Option Plan
as restated effective August 1990 (filed as
Exhibit 10i to Tandy's Form 10-K filed on
March 30, 1994, Accession No. 0000096289-94-
000029 and incorporated herein by
reference).
10j* Tandy Corporation 1993 Incentive Stock
Plan as restated May 18, 1995 (filed as
Exhibit 10j to Tandy's Form 10-Q filed on
August 14, 1995, Accession No. 0000096289-95-
000016 and incorporated herein be
reference).
10k* Tandy Corporation Officers Life
Insurance Plan as amended and restated
effective August 22, 1990 (filed as Exhibit
10k to Tandy's Form 10-K filed on March 30,
1994, Accession No. 0000096289-94-000029 and
incorporated herein by reference).
10l* Restated Trust Agreement Tandy Employees
Supplemental Stock Program through Amendment
No. III dated March 29, 1993
(filed as Exhibit 10H to Tandy's Form 10K/A-
4 filed on September 3, 1993, Accession No.
0000096289-93-000011 and incorporated herein
by reference).
10m* Forms of Termination Protection
Agreements for (i) Corporate Executives,
(ii) Division Executives, and (iii)
Subsidiary Executives (filed as Exhibit 10m
to Tandy's Form 10-Q filed on August 14,
1995, Accession No. 0000096289-95000016 and
incorporated herein be reference).
10n* Tandy Corporation Termination Protection
Plans for Executive Employees of Tandy
Corporation and its Subsidiaries (i) the
Level I and (ii) Level II Plans. (filed as
Exhibit 10n to Tandy's Form 10-Q filed on
August 14, 1995, Accession No. 0000096289-95-
000016 and incorporated herein be
reference).
10o* Forms of Bonus Guarantee Letter
Agreements with certain Executive Employees
of Tandy Corporation and its Subsidiaries
(i) Formula, (ii) Discretionary, and (iii)
Pay Plan (filed as Exhibit 10o to Tandy's
Form 10-K filed on March 30, 1994, Accession
No. 0000096289-94-000029 and incorporated
herein by reference).
10p* Form of Indemnity Agreement with
Directors, Corporate Officers and two
Division Officers of Tandy Corporation
(filed as Exhibit 10p to Tandy's Form 10K
filed on March 30, 1994, Accession No.
0000096289-94-000029 and incorporated herein
by reference).
11 Statement of Computation of Earnings per
Share 18
12 Statement of Computation of Ratio of
Earnings to Fixed Charges 19
27 Financial Data Schedule
_______________________
* Each of these exhibits is a "management contract or
compensatory plan, contract, or arrangement".
<PAGE>
<TABLE>
TANDY CORPORATION EXHIBIT 11
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
<CAPTIONS>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
(In thousands, except per share amounts) 1995 1994 1995 1994
- - - ---------------------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Primary Earnings Per Share
Reconciliation of net income per statements of income to
amounts used in computation of primary earnings per share:
Net income, as reported $ 44,901 $ 46,191 $121,800 $122,401
Less dividends on preferred stock:
Series B (1,633) (1,707) 4,931 (5,120)
-------- -------- -------- --------
Net income available to common
shareholders for primary earnings per share $ 43,268 $ 44,484 $116,869 $117,281
======== ======== ======== ========
Weighted average number of common shares outstanding 65,011 62,965 63,158 63,352
Weighted average number of $2.14 depositary shares,
representing Series C preferred stock, treated as
common stock due to mandatory conversion (b) - 11,816 2,987 11,816
Weighted average number of common shares issuable
under stock option plans, net of assumed treasury
stock repurchases at average market prices 708 242 548 247
-------- -------- -------- --------
Weighted average number of common and common
equivalent shares outstanding 65,719 75,023 66,693 75,415
======== ======== ======== ========
Net income available per average
common and common equivalent share $ 0.66 $ 0.59 $ 1.75 $ 1.56
======== ======== ======== ========
Fully Diluted Earnings Per Share (a)
Reconciliation of net income per statements of income to
amounts used in computation of fully diluted earnings per share:
Net income available to common shareholders $ 43,268 $ 44,484 $116,869 $117,281
Adjustments for assumed conversion of Series B preferred
stock to common stock as of the beginning of the period:
Plus dividends on Series B preferred stock 1,633 1,707 4,931 5,120
Less additional contribution that would have
been required for the TESOP if Series B
preferred stock had been converted (938) (991) (2,808) (2,946)
-------- -------- -------- --------
Net income available per common and
common equivalent share, as adjusted $ 43,963 $ 45,200 $118,992 $119,455
======== ======== ======== ========
Reconciliation of weighted average number of shares outstanding
to amount used in computation of fully diluted earnings per share:
Weighted average number of shares outstanding 65,719 75,023 66,693 75,415
Adjusted to reflect assumed exercise of stock
options as of the beginning of the period 106 116 249 49
Adjustment to reflect assumed conversion of Series B
preferred stock to common stock as of the beginning
of the period 1,895 1,981 1,915 2,002
-------- -------- -------- --------
Weighted average number of common and common
equivalent shares outstanding, as adjusted 67,720 77,120 68,857 77,466
======== ======== ======== ========
Fully diluted net income available per average
common and common equivalent share $ 0.65 $ 0.59 $ 1.73 $ 1.54
======== ======== ======== ========
(a) This calculation is submitted in accordance with Regulation S-K, Item
601(b)(11) although not required by footnote 2 to paragraph 14 of APB
Opinion No. 15 because it results in dilution of less than 3%.
(b) Prior year has been restated to reflect the conversion of Series C
preferred stock to common stock.
</TABLE>
<PAGE>
<TABLE>
EXHIBIT 12
TANDY CORPORATION
STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
<CAPTIONS>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------------------
(In thousands, except ratios) 1995 1994 1995 1994
- - - ----------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Net income $ 44,901 $ 46,191 $121,800 $122,401
Plus provision for income taxes 28,108 28,127 76,248 75,334
-------- -------- -------- --------
Income before income taxes 73,009 74,318 198,048 197,735
-------- -------- -------- --------
Fixed charges:
Interest expense and amortization of
debt discount 6,853 4,234 22,703 20,599
Amortization of issuance expense 3 59 206 209
Appropriate portion (33 1/3%) of rentals 18,293 17,594 53,268 52,927
-------- -------- -------- --------
Total fixed charge 25,149 21,887 76,177 73,735
-------- -------- -------- --------
Earnings before income taxes and
fixed charges $ 98,158 $ 96,205 $274,225 $271,470
======== ======== ======== ========
Ratio of earnings to fixed charges 3.90 4.40 3.60 3.68
======== ======== ======== ========
Ratio of Earnings to Fixed Charges and
Preferred Dividends:
Total fixed charges, as above $ 25,149 $ 21,887 $ 76,177 $ 73,735
Preferred dividends 1,633 9,732 9,755 29,195
-------- -------- -------- --------
Total fixed charges and preferred
dividends $ 26,782 $ 31,619 $ 85,932 $102,930
======== ======== ======== ========
Earnings before income taxes, fixed
charges and preferred dividends $ 98,158 $ 96,205 $274,225 $271,470
======== ======== ======== ========
Ratio of earnings to fixed charges and
preferred dividends 3.67 3.04 3.19 2.64
======== ======== ======== ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets and consolidated statements of income contained in
Tandy Corporation's third quarter report on Form 10-Q and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 102,534
<SECURITIES> 0
<RECEIVABLES> 372,312
<ALLOWANCES> 0
<INVENTORY> 1,763,308
<CURRENT-ASSETS> 2,324,172
<PP&E> 570,259
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,957,995
<CURRENT-LIABILITIES> 1,146,646
<BONDS> 138,175
<COMMON> 85,645
0
100,000
<OTHER-SE> 1,467,286
<TOTAL-LIABILITY-AND-EQUITY> 2,957,995
<SALES> 3,751,599
<TOTAL-REVENUES> 3,751,599
<CGS> 2,380,714
<TOTAL-COSTS> 2,380,714
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (15,001)
<INCOME-PRETAX> 198,048
<INCOME-TAX> 76,248
<INCOME-CONTINUING> 121,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 121,800
<EPS-PRIMARY> 1.75
<EPS-DILUTED> 1.75
</TABLE>
