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RadioShack Corp. Reports Operating Results (10-Q)

July 25, 2012 | About:
Gordon Pape

10qk

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RadioShack Corp. (RSH) filed Quarterly Report for the period ended 2012-07-10.

Radioshack Corporation has a market cap of $369.4 million; its shares were traded at around $3.66 with a P/E ratio of 7.6 and P/S ratio of 0.1. The dividend yield of Radioshack Corporation stocks is 13.5%. Radioshack Corporation had an annual average earning growth of 0.1% over the past 5 years.

Highlight of Business Operations:

We incurred no significant gain or loss associated with the transition of these kiosks to Sam s Club. We redeployed substantially all of our Sam s Club kiosk employees to nearby RadioShack stores or Target Mobile centers, and we redistributed our Sam s Club kiosk inventory to our remaining retail channels. Net sales and operating revenues related to these discontinued operations were zero for the second quarter of 2012 and the first six months of 2012, compared with $17.0 million and $62.9 million, respectively, for the same periods last year. Income before income taxes for these discontinued operations was zero for the second quarter of 2012 and the first six months of 2012, compared with $2.4 million and $8.4 million, respectively, for the same periods last year.

For the three months ended June 30, 2012, long-lived assets held and used in certain locations of our U.S. RadioShack company-operated stores segment with a total carrying value of $1.4 million were written down to their fair value of $0.4 million, resulting in an impairment charge of $1.0 million that was included in earnings for the period. The inputs used to calculate the fair value of these long-lived assets included the projected cash flows and a risk-adjusted rate of return that we estimated would be used by a market participant in valuing these assets. The projected cash flows for a particular store are based on average historical cash flows for that store and are projected through the remainder of its lease. The risk-adjusted rate of return used to discount these cash flows ranges from 15% to 20%.

U.S. RadioShack company-operated store sales for the second quarter decreased $25.4 million, or 3.2%, and decreased $87.0 million, or 5.1%, for the first six months of 2012 when compared with the same periods last year. Increased sales in our mobility platform were more than offset by decreased sales in our consumer electronics platform.

Consolidated gross profit decreased $71.8 million, or 16.6%, for the second quarter and decreased $131.7 million, or 14.9% for the first six months of 2012, when compared with the same periods last year. These decreases were primarily driven by decreased gross profit for our postpaid wireless business in our U.S. RadioShack company-operated stores.

Operating Activities: Cash provided by operating activities for the first six months of 2012 was $22.9 million, compared with $101.5 million for the same period last year. Cash flows from operating activities are comprised of net income plus non-cash adjustments to net income and changes in working capital components. Net income plus non-cash adjustments to net income was $30.3 million for the first six months of 2012, compared with $118.1 million for the same period last year. Cash used in working capital components was $7.4 million for the first six months of 2012, compared with $16.6 million for the same period last year. The decrease in net income plus non-cash adjustments was primarily driven by decreased earnings for the first six months of 2012.

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