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RadioShack Reports Financial Results for Fourth Quarter and Full Year 2012



  RadioShack Reports Financial Results for Fourth Quarter and Full Year 2012

PR Newswire

FORT WORTH, Texas, Feb. 26, 2013

FORT WORTH, Texas, Feb. 26, 2013 /PRNewswire/ -- RadioShack Corporation (NYSE:
RSH) reports results for the fourth quarter and full year ended December 31,
2012.  All comparisons are versus the same comparable period of the prior
fiscal year unless otherwise noted.

FOURTH QUARTER SUMMARY

  o Total net sales and operating revenue were $1.3 billion, compared to $1.4
    billion last year.  Comparable store sales were down 7% driven by a
    decline in the mobility and consumer electronics platforms.
  o Consolidated gross profit was $447 million, or 34% of net sales, compared
    with $482 million last year, or 35% of net sales. 
  o Consolidated selling, general and administrative (SG&A) expenses were $409
    million, or 32% of net sales, compared with $431 million last year, or 31%
    of net sales.  
  o Operating income was $17 million compared to $31 million last year.
  o Income tax expense was $66 million including a $67 million one-time
    non-cash charge which increased the valuation allowance against our U.S.
    federal and state net deferred tax assets. 
  o Net loss of $63 million, or $0.63 per diluted share, including the
    non-cash valuation allowance for deferred tax assets, compared to net
    income of $12 million last year. The company generated income before tax
    of $3 million in the fourth quarter of 2012.
  o The company continues to have a strong balance sheet and total liquidity
    of $926 million at year end.
  o On February 8, the company announced the appointment of Joseph C. Magnacca
    as its new CEO.

Dorvin D. Lively, executive vice president, chief financial officer and chief
administrative officer of RadioShack Corp., said, "Overall, the fourth quarter
continued to be impacted by challenges similar to those of the first three
quarters of the year. The most significant contributing factor to the decline
in our performance was the postpaid wireless business which saw a decline in
transaction volume across the year, combined with a lower margin rate. 
However, I am pleased with the progress we have made in improving other
aspects of our business. The gross margin rate for all of our business,
excluding mobility, was flat with 2011 with significant improvement in our
consumer electronics business.  We have improved and strengthened our
high-margin signature platform, which generated sales growth in each quarter
of 2012. Additionally, our no-contract phone and tablet businesses generated
sales and gross profit improvement."

FULL YEAR SUMMARY

  o Total net sales and operating revenue were $4.3 billion, compared to $4.4
    billion last year.  Comparable store sales were down 3.5%.
  o Consolidated gross profit was $1.6 billion, or 37% of net sales, compared
    with $1.8 billion last year, or 41% of net sales.  Gross profit dollar
    performance was negatively impacted by both a decline in postpaid units
    sold versus last year and a decrease in the gross margin rate due to a
    higher mix of smart phones.
  o Consolidated selling, general and administrative (SG&A) expenses were $1.5
    billion, or 36% of net sales, compared with $1.6 billion last year, or 36%
    of net sales. Excluding one-time charges in 2011 relating to a contract
    termination and plant closure and from 2012 relating to severance costs,
    SG&A declined $24 million versus last year. 
  o Operating loss was $61 million compared to operating income of $155
    million last year.
  o Income tax expense was $25 million including a $69 million one-time
    non-cash valuation allowance against our U.S. federal and state net
    deferred tax assets. 
  o Net loss of $139 million, or $1.39 per diluted share, including the
    non-cash valuation allowance for deferred tax assets, compared to net
    income of $72 million last year.

Mr. Lively added, "Importantly, we have taken a number of significant steps to
better position the company for the transformation of our business.  We
increased our liquidity by issuing $175 million of new financing which will
refinance nearly half of the 2013 debt maturity, and we repurchased a
significant portion of this maturity at a discount in 2012. We are terminating
our agreement to operate the Target Mobile locations, a business that
generated losses since inception. We reduced our overall SG&A expenses and
implemented a reduction in force during the third quarter. Our financial
position and balance sheet are strong, and we had liquidity of $926 million at
year end.

"Looking ahead, we will be focused on stabilizing the profitability of our
business as well as our growth initiatives.  Our new CEO, Joe Magnacca, joined
RadioShack on February 11.  With the addition of Joe and other new senior
executives, we now have a strong management team in place focused on
rebuilding the business and leading the company into the future." 

CASH, LIQUIDITY AND CAPITAL SPENDING

The company ended the year with total liquidity of $926 million, including
cash and cash equivalents of $536 million and $391 million of availability
under the $450 million asset-based revolving credit facility that expires in
January 2016.

The company's total debt was $778 million on December 31, 2012.  The
Convertible Notes due August 1, 2013 had a remaining aggregate principal
amount of $287 million on December 31, 2012. The balance of the company's debt
comes due in 2016 or later.

Capital expenditures totaled $68 million for the full year compared to $82
million last year.  The company expects capital expenditures will be between
$70 million to $90 million in 2013.

TARGET MOBILE SEGMENT

The company announced in January 2013 that it will exit the Target Mobile
business no later than April 8, 2013. This business has generated losses since
inception. RadioShack began operating the postpaid wireless mobility kiosk in
Target retail locations beginning in 2009 and operated 1,522 locations on
December 31, 2012. 

CONFERENCE CALL

RadioShack will host a live webcast of its investor conference call at 9 a.m.
EST today.  The Internet broadcast may be accessed from the investor relations
home page of the RadioShack corporate website at
http://IR.RadioShackCorporation.com. 

An archived replay of the conference call will be available in the investor
relations section of the corporate website, radioshackcorporation.com.  A
telephone replay will be available beginning at approximately 11 a.m. EST
today and will remain available until midnight EDT on March 12, 2013. The
telephone replay can be accessed by calling toll-free at (888) 286-8010, or
for callers outside the United States at (617) 801-6888. The replay pass code
will be 48338361.

For more information about the company, refer to the RadioShack Corporation
Annual Report on Form 10-K filed with the Securities and Exchange Commission
on February 26, 2013.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements, as referenced in the
Private Securities Litigation Reform Act of 1995.  These forward-looking
statements reflect management's current views and projections regarding
economic conditions, the retail industry environment and company performance. 
These statements can be identified by the fact that they include words like
"anticipate," "believe," "estimate," "expect," "intend," "project,"
"guidance," "plan," "outlook" and other words with similar meaning.  We
specifically disclaim any duty to update any of the information set forth in
this press release, including any forward-looking statements.  These
statements involve a number of risks and uncertainties that could cause our
actual results to differ materially from the results discussed in our
forward-looking statements.  Factors that could cause our actual results to
differ materially from the results discussed in our forward-looking statements
include, but are not limited to, our ability to execute and the effectiveness
of our 2012 initiatives; the underperformance or loss of certain of our
important vendors, such as our wireless carrier providers, or breaches by them
of our agreements with them; difficulties associated with our transition to an
outsourced arrangement for the production of products we previously
manufactured at our Chinese manufacturing plant; an adverse impact on our
sales or profitability due to our transition to such an outsourced
arrangement; an adverse impact on our sales or profitability due to changes
wireless carrier providers make to their customer credit requirements,
frequency of upgrade eligibility, or other operational matters, and the
timing, completeness, and accuracy of information we receive about such
changes;  a decline in our gross margin due to customer demand for lower
margin mobile devices, such as smartphones and tablets; difficulties
associated with profitably operating our Target Mobile centers; overall sales
performance; economic conditions; product demand; expense levels; competitive
activity; interest rates; changes in the company's financial condition;
availability of products and services and other risks associated with the
company's vendors and service providers; the regulatory environment; and other
factors affecting the retail category in general.  Additional information
regarding these and other factors is included in the company's filings with
the SEC, including its most recent Annual Report on Form 10-K for the year
ended Dec. 31, 2012.

ABOUT RADIOSHACK CORPORATION

RadioShack (NYSE: RSH) is a leading national retailer of innovative mobile
technology products and services, as well as products related to personal and
home technology and power supply needs.  RadioShack^® offers consumers a
targeted assortment of wireless phones and other electronic products and
services from leading national brands, exclusive private brands and major
wireless carriers, all within a comfortable and convenient shopping
environment.  RadioShack employs more than 34,000 knowledgeable and helpful
sales experts globally.  RadioShack's retail network includes more than 4,600
company-operated stores in the United States and Mexico, 1,500 wireless phone
centers in the United States, and more than 1,000 dealer and other outlets
worldwide.  For more information on RadioShack Corporation, please visit
www.radioshackcorporation.com; to purchase items online, please
visit www.radioshack.com. RadioShack^® is a registered trademark licensed by
RadioShack Corporation.

Analyst and Investor Contact: News Media Contact:
Bruce Bishop                  Media Relations   
(817) 415-3400                (817) 415-3300
Bruce.Bishop@RadioShack.com   Media.Relations@RadioShack.com  

 

RADIOSHACK CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (unaudited)
                              Three Months Ended      Twelve Months Ended
                              December 31,            December 31,
(In millions, except per      2012        2011        2012          2011
share amounts)
Net sales and operating       $  1,296.1  $  1,386.9  $  4,257.8    $  4,378.0
revenues
Cost of products sold         849.0       904.5       2,696.0       2,567.2
Gross profit                  447.1       482.4       1,561.8       1,810.8
Operating expenses:
   Selling, general and       408.6       431.1       1,529.0       1,577.4
administrative
   Depreciation and           17.8        19.4        72.3          75.2
amortization
   Impairment of long-lived   3.4         1.4         21.4          3.1
assets and goodwill
Total operating expenses      429.8       451.9       1,622.7       1,655.7
Operating income (loss)       17.3        30.5        (60.9)        155.1
Interest income               0.6         0.9         1.9           3.1
Interest expense              (15.3)      (13.6)      (54.5)        (46.8)
Other loss                    --          --          (0.6)         (4.1)
Income (loss) from continuing
operations before income      2.6         17.8        (114.1)       107.3
taxes
Income tax expense            65.9        5.9         25.3          40.2
(Loss) income from continuing (63.3)      11.9        (139.4)       67.1
operations
Discontinued operations, net  --          --          --            5.1
of income taxes
Net (loss) income             $           $           $    (139.4)  $      
                               (63.3)      11.9                      72.2
Basic and diluted net (loss)
income per share:
   (Loss) income per share    $           $           $             $        
from continuing operations    (0.63)       0.12       (1.39)        0.65
   Income per share from      --          --          --            0.05
discontinued operations
   Net (loss) income per      $           $           $             $        
share                         (0.63)       0.12       (1.39)        0.70
Shares used in computing net
(loss) income per share:
   Basic                      100.2       100.0       100.1         102.5
   Diluted                    100.2       100.4       100.1         103.3
Comprehensive (loss) income   $           $           $             $        
                               (64.1)      11.1       (135.0)       64.6

 

RADIOSHACK CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (unaudited)
                                         December 31,      December 31,
(In millions)
                                         2012              2011
Assets
Current assets:
   Cash and cash equivalents             $          535.7  $          591.7
   Accounts and notes receivable, net    452.5             360.6
   Inventories                           908.3             744.4
   Other current assets                  85.4              116.1
      Total current assets               1,981.9           1,812.8
Property, plant and equipment, net       239.0             270.2
Goodwill, net                            36.6              37.0
Other assets, net                        41.6              55.1
Total assets                             $       2,299.1   $       2,175.1
Liabilities and Stockholders' Equity
Current liabilities:
   Current maturities of long-term debt  $          278.7  $               --
   Accounts payable                      435.6             348.2
   Accrued expenses and other current    263.9             287.9
liabilities
     Total current liabilities           978.2             636.1
Long-term debt, excluding current        499.0             670.6
maturities
Other non-current liabilities            223.2             115.1
      Total liabilities                  1,700.4           1,421.8
      Stockholders' equity               598.7             753.3
Total liabilities and stockholders'      $       2,299.1   $       2,175.1
equity

 

RADIOSHACK CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows (unaudited)
                                                Year Ended
                                                December 31,
(In millions)                                   2012            2011
Cash flows from operating activities:
   Net (loss) income                            $      (139.4)  $         72.2
   Adjustments to reconcile net (loss) income
to net cash (used in) provided by operating
activities:
        Depreciation and amortization           80.7            83.1
        Amortization of discounts on long-term  16.3            16.3
debt
        Impairment of long-lived assets and     21.4            3.1
goodwill
        Stock-based compensation                7.1             5.4
        Deferred income taxes                   68.9            35.2
        Other non-cash items                    4.9             0.1
   Changes in assets and liabilities:
     Accounts and notes receivable              (93.9)          15.6
     Inventories                                (161.6)         (24.1)
     Other current assets                       29.2            (11.4)
     Accounts payable                           58.5            46.2
     Accrued expenses and other liabilities     (23.8)          (23.2)
     Liability for unrecognized tax benefits    101.2           3.8
     Other                                      (12.5)          (4.4)
Net cash (used in) provided by operating        (43.0)          217.9
activities
Cash flows from investing activities:
   Additions to property, plant and equipment   (67.8)          (82.1)
   Changes in restricted cash                   (26.5)          --
   Other investing activities                   0.1             2.0
Net cash used in investing activities           (94.2)          (80.1)
Cash flows from financing activities:
   Net proceeds from issuance of long-term debt 175.0           322.5
   Payments of debt issuance costs              (7.3)           (7.1)
   Principal amount of long-term debt           (88.1)          (306.8)
repayments
   Payments of dividends                        (24.9)          (49.6)
   Changes in cash overdrafts                   26.5            32.8
   Purchases of treasury stock                  --              (113.3)
   Proceeds from exercise of stock options      --              6.0
Net cash provided by (used in) financing        81.2            (115.5)
activities
Net (decrease) increase in cash and cash        (56.0)          22.3
equivalents
Cash and cash equivalents, beginning of period  591.7           569.4
Cash and cash equivalents, end of period        $       535.7   $       591.7

 

RADIOSHACK CORPORATION AND SUBSIDIARIES

Segment Reporting (unaudited)
                            Three Months Ended        Twelve Months Ended

                            December 31,              December 31,
(In millions)               2012         2011         2012         2011
Net sales and operating
revenues:
U.S. RadioShack             $  1,036.1   $  1,124.0   $  3,456.5   $  3,663.3
company-operated stores
Target Mobile centers       124.7        142.7        426.5        342.4
Other                       135.3        120.2        374.8        372.3
                            $  1,296.1   $  1,386.9   $  4,257.8   $  4,378.0
Operating income (loss):
U.S. RadioShack             $     112.3  $     145.5  $     337.7  $     530.2
company-operated stores
Target Mobile centers       0.7          (6.9)        (37.5)       (21.0)
Other                       12.0         10.4         36.3         20.9
                            125.0        149.0        336.5        530.1
Unallocated                 (107.7)      (118.5)      (397.4)      (375.0)
Operating income (loss)     17.3         30.5         (60.9)       155.1
Interest income             0.6          0.9          1.9          3.1
Interest expense            (15.3)       (13.6)       (54.5)       (46.8)
Other loss                  --           --           (0.6)        (4.1)
Income (loss) from          $            $            $  
continuing operations        2.6          17.8         (114.1)     $     107.3
before income taxes

 

 

SOURCE RadioShack Corporation

Website: http://www.radioshack.com
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