RadioShack Corporation announced a net loss of U.S. $16 million or $0.12 per diluted share for the quarter ended Sept. 30, 2006 versus net income of $108.5 million or $0.75 per diluted share for the quarter ended Sept. 30, 2005. Third quarter 2005 net income was favorably impacted by a non-cash gain of $56.5 million or $0.39 per diluted share due to the reversal of a tax contingency reserve. Third quarter 2006 pre-tax earnings were adversely affected by the non-cash write-down of $29 million of assets associated with RadioShack’s wireless kiosk operations; $18 million in costs associated with the company’s turnaround plan; and lower wireless sales. RadioShack’s cash position increased $229 million at the end of the third quarter of 2006 to $276 million versus $47 million at the end of the third quarter of 2005. The cash position was driven by improved working capital management.
Third quarter 2006 comparable store sales were down 9.6 percent versus the third quarter of 2005. An income statement reclassification relating to the sale of prepaid wireless airtime, due primarily to contract changes, reduced total sales and comparable store sales by approximately 300 basis points but did not impact operating profit. Comparable store sales adjusted for prepaid wireless airtime were down 6.8 percent. This decline was mainly driven by lower post-paid wireless sales partially offset by increases in personal electronics and accessories.
Total sales in the third quarter of 2006 were down 11 percent to $1.06 billion versus total sales of $1.19 billion for the same period last year. RadioShack had 4,460 U.S. stores at the end of the third quarter of 2006, down 530 from the previous year. The impact on total sales from the lower store base was 5.66 percent.
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