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  • Topic: Revenue, Radio shack, Chief financial officer
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RadioShack Corporation

Driving value
2003 Annual Report

RadioShack Corporation is truly unique among consumer
electronics retailers. With nearly 7,000 locations nationwide, a team of knowledgeable and relied-upon store associates, and a re-energized focus on innovation, RadioShack is perfectly positioned to pursue its strategy:

To dominate
cost-effective solutions

to meet everyone’s
routine electronics needs

and families’
distinct electronics wants.

Statements made in this annual report, which are forward-looking statements, involve risks and uncertainties about the financial condition and prospects of RadioShack Corporation. For more information, please see page 18, Factors That May Affect Future Results.

RadioShack excels at demystifying innovative technology and creating one-stop shopping convenience with products like distinctly-designed digital cameras, routine accessories, image libraries and digital picture frames.

You’ve got questions. We’ve got answers.®

Dear fellow

Shareholders:

The main reason why we delivered on our financial promises in 2003 is that we stayed true to our strategy. In my letter to you last year, I described several merchandising and operational initiatives, including improved supply chain and store processes, that we believed would help deliver 2003 earnings per share (EPS) growth of 13-15%. I am pleased to be able to report to you that not only did we meet those goals in 2003 – we exceeded them. Our sales grew 2%, in line with our expectations. Our gross margin increased by 91 basis points — ahead of our expectations — due primarily to strong results from our supply chain initiative. Our selling, general and administrative expenses rose just 1%, also exceeding our expectations, as a result of many company-wide initiatives to reduce costs and exiting several businesses that did not deliver shareholder value. Overall, in 2003 we delivered EPS growth of 22%, which in turn helped drive a 64% increase in the value of RadioShack stock. Coupled with a 14% dividend increase in 2003, your stock saw a total return in 2003 of 65%.

2

R A D I O S H A C K 2003 Annual Report

In addition to our outstanding stock performance in 2003, we delivered $422 million of free cash flow*, well ahead of the $375 million of free cash flow in 2002, which was also an excellent year. As a result of our strong operating and free cash flow performance, our cash position at year end was up 42% to $635 million. *Reconciliation of Net Cash Provided by Operating Activities (a GAAP Financial Measure) to Free Cash Flow (a Non-GAAP Financial Measure) Year Ended December 31, 2003 Net cash provided by operating activities Less: Additions to property, plant and equipment Dividends paid Free cash flow 189.6 40.8 $421.5 106.8 39.8 $375.0 82.8 1.0 $46.5 $651.9 2002 $521.6 Increase 2003 vs 2002 $130.3

Staying On Strategy
I am convinced that the main, over-arching reason why we delivered on our financial promises in 2003 (and what we believe will make us successful in the future) is that we stayed true to our strategy “to dominate cost-effective solutions to meet everyone’s routine electronics needs and families’ distinct electronics wants.”

In 2003, we did make significant moves to fulfill the “cost-effective solutions” element of our strategy. This is the long-term direction of our organization, and we know we have a long way to go until we literally fulfill our strategy. While we didn’t expect to dominate any consumer electronics categories by year’s end, our merchandising, marketing and store operations decisions were all reasonably well-aligned with this strategy statement. We put more time and financial resources into driving the categories for which customers give us credit… which are most profitable… which we want to be famous for… and in which we are highly competent. We clearly met customers’ routine needs for wireless communications, for example, and posted 14% annual sales...
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