RadioShack Corporation today announced fourth quarter net income of $127 million or $0.77 per diluted share for the quarter ended December 31, 2003. This compares to net income of $109 million or $0.63 per diluted share for the quarter ended December 31, 2002. Last year the company also reported adjusted fourth quarter 2002 net income* of $102 million or $0.59 per diluted share, due primarily to an unusual gain from a contract termination.
Comparable store sales for the fourth quarter 2003 were flat compared to the prior year. Total sales in the fourth quarter 2003 were also flat at $1,490.4 million, compared to total sales of $1,497.7 million for the previous year.
"Improved management of product mix, supply chain initiatives, markdowns, along with other factors related to gross margin, favorably impacted our quarterly earnings beyond our expectations," said Leonard Roberts, chairman and chief executive officer of RadioShack Corporation. "Our organizational disciplines in buying, pricing, staffing and other areas are driving higher profit and better returns for our shareholders. These disciplines will bode well for us in 2004 and beyond."
Inventory turnover for the full year of 2003 was 2.7 times versus 2.5 times a year ago. Free cash flow* was $422 million for the 12 months ended December 31, 2003, compared to $375 million in the prior year.
RadioShack reported full year 2003 net income of $298 million, or $1.77 per diluted share, versus net income of $263 million, or $1.45 per diluted share the previous year. Excluding unusual items, 2002 net income* was $258 million, or $1.42 per diluted share. Sales for 2003 were $4,649 million, up 2% versus $4,577 million the previous year.
As for financial guidance, RadioShack anticipates generating first quarter 2004 earnings per share of $0.36 to $0.38. Earnings per diluted share for fiscal year 2004 are anticipated to grow 13% to 15% year-over-year to at least $1.99. This annual earnings per share growth is predicated upon sales growth of three to four percent, gross margin gains of 50 to 70 basis points, and SG&A growth of 1.5 to 2.5 percent.
Today at 9:00 a.m. ET, management will host a conference call for interested investors followed by a question and answer period. The public is invited to listen to the call live on the Internet at http://www.radioshackcorporation.com/ on the Investor Relations page. The call will be replayed on the Web site until April 16, 2004 at 11:59 p.m. ET.
Statements made in this news release which are forward-looking statements involve risks and uncertainties and are indicated by words such as "anticipates" and other similar words or phrases. These uncertainties include, but are not limited to, economic conditions, product demand, competitive products and pricing, availability of products, the regulatory environment and other risks indicated in filings with the S.E.C. such as RadioShack's most recent Forms 10-K and 10-Q.
Fort Worth, Texas-based RadioShack Corporation is the nation's most trusted consumer electronics specialty retailer of wireless communications, electronic parts, batteries and accessories, as well as other digital technology products and services. With 7,042 outlets nationwide at year's end, it is estimated that 94 percent of all Americans live or work within five minutes of a RadioShack store or dealer. The company's knowledgeable sales associates and brand position -- "You've got questions. We've got answers.(R)" -- support RadioShack's mission to demystify technology in every neighborhood in America. For more information on the company, visit the RadioShack Corporation Web site at http://www.radioshackcorporation.com/ . For more information on RadioShack products and services, visit its e-commerce Web site at http://www.radioshack.com/ .
* See page 4 for a reconciliation of adjusted net income and free cash flow, both of which are non-GAAP financial measures, to consolidated net income and net cash provided by operating activities, respectively, which are both GAAP financial measures. RADIOSHACK CORPORATION AND SUBSIDIARIES Consolidated Income Statement (Unaudited) (In millions, except per share amounts) Three Months Ended Increase/ December 31, (Decrease) 2003 vs 2003 2002 2002 Net sales and operating revenues $1,490.4 $1,497.7 $(7.3) Cost of products sold 756.0 810.6 (54.6) Gross profit 734.4 687.1 47.3 Operating expenses: Selling, general and administrative (A) 504.2 494.1 10.1 Depreciation and amortization 23.2 22.8 0.4 Impairment of long-lived assets (B) --- 8.1 (8.1) Gain on contract termination (C) --- (18.5) 18.5 Total operating expenses 527.4 506.5 20.9 Operating income 207.0 180.6 26.4 Interest income 1.4 2.9 (1.5) Interest expense (7.6) (10.6) 3.0 Other income, net (D) --- 3.1 (3.1) Income before income taxes 200.8 176.0 24.8 Provision for income taxes 73.5 66.9 6.6 Net income $127.3 $109.1 $18.2 Net income per common share: Basic $0.77 $0.64 $0.13 Diluted $0.77 $0.63 $0.14 Avg shares used to compute earnings per share: Basic 164.5 168.7 (4.2) Diluted 166.3 174.2 (7.9) Shares outstanding 162.5 171.7 (9.2) Twelve Months Ended Increase/ December 31, (Decrease) 2003 vs 2003 2002 2002 Net sales and operating revenues $4,649.3 $4,577.2 $72.1 Cost of products sold 2,333.6 2,338.9 (5.3) Gross profit 2,315.7 2,238.3 77.4 Operating expenses: Selling, general and administrative (A) 1,740.0 1,728.6 11.4 Depreciation and amortization 92.0 94.7 (2.7) Impairment of long-lived assets (B) --- 8.1 (8.1) Gain on contract termination (C) --- (18.5) 18.5 Total operating expenses 1,832.0 1,812.9 19.1 Operating income 483.7 425.4 58.3 Interest income 12.8 9.0 3.8 Interest expense (35.7) (43.4) 7.7 Other income, net (D) 12.0 33.9 (21.9) Income before income taxes 472.8 424.9 47.9 Provision for income taxes 174.3 161.5 12.8 Net income $298.5 $263.4 $35.1 Net income per common share: Basic $1.78 $1.50 $0.28 Diluted $1.77 $1.45 $0.32 Avg shares used to compute earnings per share: Basic 167.7 173.0 (5.3) Diluted 168.9 179.3 (10.4) Shares outstanding (A) - SG&A includes a $0.9 million credit in Q4 2002 and $29.0 million charge in year 2002 for settlement of a class action lawsuit. (B) - Impairment of long-lived assets includes an $8.1 million charge in both Q4 2002 and year 2002 from the write-off of goodwill related to the 1999 acquisition of AmeriLink. (C) - Gain on contract termination reflects the effect in both Q4 2002 and year 2002 of a gain from the termination of a Microsoft contract. (D) - Other income, net includes $27.7 million in year 2002 from a favorable litigation settlement. RADIOSHACK CORPORATION AND SUBSIDIARIES Reconciliation Tables of Non-GAAP Financial Measures to GAAP Financial Measures (Unaudited) (In millions) NET INCOME Three Months Twelve Months Ended Increase/ Ended Increase/ December 31 (Decrease) December 31 (Decrease) 2003 vs 2003 vs 2003 2002 2002 2003 2002 2002 Net income - consolidated $127.3 $109.1 $18.2 $298.5 $263.4 $35.1 Adjustments: SG&A - settlement of class action lawsuit --- (0.9) 0.9 --- 29.0 (29.0) Impairment of long-lived asset --- 8.1 (8.1) --- 8.1 (8.1) Gain on contract termination --- (18.5) 18.5 --- (18.5) 18.5 Other income, net --- --- --- --- (27.7) 27.7 Total adjustments before tax --- (11.3) 11.3 --- (9.1) 9.1 Provision for income taxes --- 4.3 (4.3) --- 3.5 (3.5) Total adjustments --- (7.0) 7.0 --- (5.6) 5.6 Net income - adjusted $127.3 $102.1 $25.2 $298.5 $257.8 $40.7 FREE CASH FLOW Twelve Months Ended Increase/ December 31 (Decrease) 2003 2002 2003 vs 2002 Net cash provided by operating activities $651.9 $521.6 $130.3 Less: Additions to property, plant and equipment 189.6 106.8 82.8 Dividends paid 40.8 39.8 1.0 Free cash flow $421.5 $375.0 $46.5 RADIOSHACK CORPORATION AND SUBSIDIARIES Adjusted Income Statement (Unaudited) (In millions, except per share amounts) Three Months Ended Increase/ December 31, (Decrease) 2003 vs 2003 2002 2002 Net sales and operating revenues $1,490.4 $1,497.7 $(7.3) Cost of products sold 756.0 810.6 (54.6) Gross profit 734.4 687.1 47.3 Operating expenses: Selling, general and administrative 504.2 495.0 9.2 Depreciation and amortization 23.2 22.8 0.4 Total operating expenses 527.4 517.8 9.6 Operating income 207.0 169.3 37.7 Interest income 1.4 2.9 (1.5) Interest expense (7.6) (10.6) 3.0 Other income, net --- 3.1 (3.1) Income before income taxes 200.8 164.7 36.1 Provision for income taxes 73.5 62.6 10.9 Net income $127.3 $102.1 $25.2 Net income per common share: Basic $0.77 $0.60 $0.17 Diluted $0.77 $0.59 $0.18 Avg shares used to compute earnings per share: Basic 164.5 168.7 (4.2) Diluted 166.3 174.2 (7.9) Shares outstanding 162.5 171.7 (9.2) Twelve Months Ended Increase/ December 31, (Decrease) 2003 vs 2003 2002 2002 Net sales and operating revenues $4,649.3 $4,577.2 $72.1 Cost of products sold 2,333.6 2,338.9 (5.3) Gross profit 2,315.7 2,238.3 77.4 Operating expenses: Selling, general and administrative 1,740.0 1,699.6 40.4 Depreciation and amortization 92.0 94.7 (2.7) Total operating expenses 1,832.0 1,794.3 37.7 Operating income 483.7 444.0 39.7 Interest income 12.8 9.0 3.8 Interest expense (35.7) (43.4) 7.7 Other income, net 12.0 6.2 5.8 Income before income taxes 472.8 415.8 57.0 Provision for income taxes 174.3 158.0 16.3 Net income $298.5 $257.8 $40.7 Net income per common share: Basic $1.78 $1.46 $0.32 Diluted $1.77 $1.42 $0.35 Avg shares used to compute earnings per share: Basic 167.7 173.0 (5.3) Diluted 168.9 179.3 (10.4) Shares outstanding RADIOSHACK CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) (In millions) Dec. 31, 2003 Dec. 31, 2002 Assets Cash and cash equivalents $634.7 $446.5 Accounts and notes receivable, net 182.4 206.1 Inventories 766.5 971.2 Other current assets 83.0 83.1 Total current assets 1,666.6 1,706.9 Property, plant and equipment, net 513.1 421.6 Other assets 64.2 99.4 Total assets $2,243.9 $2,227.9 Liabilities and Stockholders' Equity Notes payable $77.4 $36.0 Accounts payable 300.2 312.6 Accrued expenses 343.0 318.7 Income taxes payable 137.5 160.9 Total current liabilities 858.1 828.2 Long-term debt, excluding current maturities 541.3 591.3 Other non-current liabilities 75.2 80.3 Total liabilities 1,474.6 1,499.8 Stockholders' equity 769.3 728.1 Total liabilities and stockholders' equity $2,243.9 $2,227.9 RADIOSHACK CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) (In millions) Year Ended December 31, 2003 2002 Cash flows from operating activities: Net income $298.5 $263.4 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 92.0 94.7 Provision for credit losses and bad debts 0.4 4.7 Deferred income taxes and other items 51.7 30.6 Impairment of long-lived assets --- 8.1 Changes in operating assets and liabilities: Receivables 17.2 68.2 Inventories 202.3 (21.4) Other current assets (5.2) 1.9 Accounts payable, accrued expenses and income taxes payable (5.0) 71.4 Net cash provided by operating activities 651.9 521.6 Cash flows from investing activities: Additions to property, plant and equipment (189.6) (106.8) Proceeds from sale of property, plant and equipment 2.0 8.6 Proceeds from sale of installation subsidiary 4.7 --- Other investing activities (6.0) (0.8) Net cash used in investing activities (188.9) (99.0) Cash flows from financing activities: Purchases of treasury stock (286.2) (329.9) Sales of treasury stock to employee stock plans 35.8 40.6 Proceeds from exercise of stock options 15.7 9.0 Dividends paid (40.8) (39.8) Proceeds from financing obligation --- 32.3 Changes in short-term borrowings, net 20.7 (2.0) Repayments of long-term borrowings (20.0) (87.7) Net cash used in investing activities (274.8) (377.5) Net increase in cash and cash equivalents 188.2 45.1 Cash and cash equivalents, beginning of period 446.5 401.4 Cash and cash equivalents, end of period $634.7 $446.5
CONTACT: James M. Grant, Senior Director, Investor Relations, +1-817-415-7833, or Leah M. King, Director, Investor Relations, +1-817-415-2909, or investor.relations@radioshack.com , or Laura Moore, Senior Vice President, Chief Communications Officer, +1-817-415-3300, or Media.relations@radioshack.com , all of RadioShack Corporation
Web site: http://www.radioshackcorporation.com/
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