RadioShack Will Pay $200M Tab With Cash

FORT WORTH-RadioShack Corp. has decided to pay the construction tab for a $200-million corporate campus in cash rather than ink a synthetic lease. Construction begins in the first quarter, with an eye on a late 2004 delivery.

According to a press release, the financing decision “will have an immaterial impact upon RadioShack’s income statement in 2003 and beyond” although it’s acknowledged that it will eat into the company’s free cash flow projections. The coffer of available funds is now projected to be $215 million in 2003 and $235 million in 2004, minus the estimated $100-million increase per year in capital expenditures.

RadioShack’s Michael Newman, senior vice president and CFO, said the strategy will improve free cash flow by $30 million to $50 million over the next 20 years. The corporation says it is missing out on benefits of higher depreciation and lower maintenance costs that it can glean for the ledger and ones not available through its current sale/leaseback arrangements.