RadioShack Corporation Announces Third Quarter 2005 Financial Results; Total Sales Up 8%; Earnings Accelerate Due to Non-Recurring Gain

RadioShack Corporation today announced net income of $108.5 million or $0.75 per diluted share for the quarter ended September 30, 2005 versus net income of $69.7 million or $0.43 per diluted share for the quarter ended September 30, 2004. Third quarter 2005 net income was favorably impacted by a non-cash, non-recurring gain of $56.5 million or $0.39 per diluted share due to the reversal of a tax contingency reserve.
Total sales in the third quarter of 2005 were up 8% to $1,194.7 million, compared to total sales of $1,101.5 million for the previous year. Third quarter 2005 comparable store sales were up 1% versus the prior year. Year- over-year changes in total sales, comparable store sales, and wireless sales all improved from July through September. Gross margin declined 300 basis points primarily due to an aggressive inventory clearance sale.
"We made important progress during the third quarter to better position ourselves for the holiday selling season and the long term," said David Edmondson, president and chief executive officer. "We made aggressive moves on inventory and finished deploying operating procedures which will improve the customer experience in our stores. We also finalized long-term wireless agreements and returned value to shareholders through an overnight share
repurchase transaction which better positions us as a corporation."
In the third quarter of 2005, total wireless sales were up 15% due to growth in RadioShack's kiosk channel offset by a decline in wireless sales in its company stores. Non-wireless sales were up 5% due to gains in personal electronics and services. The company leveraged selling, general and administrative expenses (SG&A) as a percent of sales by 24 basis points.
RadioShack announced fiscal year 2005 diluted earnings per share guidance of $2.14 to $2.24. The new annual guidance includes the $0.38 impact of the non-recurring tax gain, as well as other factors which impacted the third quarter. The guidance is predicated upon a number of year-over-year assumptions.
"Our outlook for the fourth quarter reflects accelerated comparable store sales driven primarily by rapidly growing categories which tend to carry lower gross margins than the company average," Edmondson said.
The company also anticipates decelerating SG&A growth due to fewer year- over-year kiosk additions in the fourth quarter versus last year when RadioShack launched over 500 kiosks.
In addition, RadioShack anticipates 2005 free cash flow(1) of approximately $80 million to $100 million. The figures are lower than those projected earlier this year due primarily to new expectations for changes in inventory.
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 December 31, 2005 at 11:59 p.m. ET.

Statements made in this news release which are forward-looking involve risks and uncertainties and are indicated by words such as "expectations," "anticipates" and other similar words or phrases. These uncertainties include, but are not limited to, our wireless carrier transition, economic conditions, product demand, competitive products and pricing, availability of products, the regulatory environment and other risks indicated in filings with
the SEC such as RadioShack's most recent Forms 10-K and 10-Q.

Fort Worth, Texas-based RadioShack Corporation is one of the nation's most trusted consumer electronics specialty retailers and a growing provider of a variety of retail support services. The company operates through a vast network of sales channels, including: nearly 7,000 company and dealer stores; over 100 RadioShack locations in Mexico; and more than 700 wireless kiosks. RadioShack's knowledgeable and helpful sales associates deliver convenient product and service solutions within an estimated five minutes of where 94 percent of all Americans either live or work. For more information on RadioShack Corporation, visit http://www.RadioShackCorporation.com . To learn more about RadioShack products and services or to purchase items online, visit http://www.RadioShack.com .

(1) Free cash flow, a non-GAAP measure, is defined as net cash from
operating activities minus additions to property, plant and equipment
(a.k.a. capital expenditures) minus dividends paid.



RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
(In millions, except per share amounts)

Three Months Ended Increase/
September 30, (Decrease)
2005 vs
2005 2004 2004
Net sales and operating revenues $1,194.7 $1,101.5 $93.2
Cost of products sold 626.6 544.7 81.9
Gross profit 568.1 556.8 11.3
Operating expenses:
Selling, general and administrative 447.5 415.2 32.3
Depreciation and amortization 31.7 24.4 7.3
Total operating expenses 479.2 439.6 39.6
Operating income 88.9 117.2 (28.3)
Interest income 1.2 1.7 (0.5)
Interest expense 11.7 6.5 5.2
Other income, net --- --- ---
Income before income taxes 78.4 112.4 (34.0)
Provision / (benefit) for income taxes (30.1) 42.7 (72.8)
Net income $108.5 $69.7 $38.8
Net income per share:
Basic $0.76 $0.44 $0.32
Diluted $0.75 $0.43 $0.32
Shares used in computing net income
per share:
Basic 143.4 160.0 (16.6)
Diluted 143.9 161.0 (17.1)
Shares outstanding 134.6 158.8 (24.2)



RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited) (Continued)
(In millions, except per share amounts)

Nine Months Ended Increase/
September 30, (Decrease)
2005 vs
2005 2004 2004
Net sales and operating revenues $3,409.8 $3,247.9 $161.9
Cost of products sold 1,721.3 1,598.5 122.8
Gross profit 1,688.5 1,649.4 39.1
Operating expenses:
Selling, general and administrative 1,329.4 1,230.3 99.1
Depreciation and amortization 91.6 73.3 18.3
Total operating expenses 1,421.0 1,303.6 117.4
Operating income 267.5 345.8 (78.3)
Interest income 4.8 5.9 (1.1)
Interest expense 30.4 21.0 9.4
Other income, net 10.2 2.0 8.2
Income before income taxes 252.1 332.7 (80.6)
Provision / (benefit) for income taxes 36.3 126.4 (90.1)
Net income $215.8 $206.3 $9.5
Net income per share:
Basic $1.42 $1.28 $0.14
Diluted $1.41 $1.26 $0.15
Shares used in computing net income
per share:
Basic 152.5 161.6 (9.1)
Diluted 153.2 163.1 (9.9)
Shares outstanding



RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
(In millions)

Sept. 30, Dec. 31, Sept. 30,
2005 2004 2004
Assets
Cash and cash equivalents $47.4 $437.9 $384.8
Accounts and notes receivable, net 227.8 241.0 158.0
Inventories, net 1,162.5 1,003.7 1,032.0
Other current assets 101.7 92.5 92.0
Total current assets 1,539.4 1,775.1 1,666.8
Property, plant and equipment, net 674.7 652.0 599.0
Other assets, net 95.2 89.6 75.0
Total assets $2,309.3 $2,516.7 $2,340.8

Liabilities and Stockholders' Equity
Short-term debt, including current
maturities of long-term debt $381.7 $55.6 $85.3
Accounts payable 484.9 442.2 466.2
Accrued expenses 281.1 342.1 270.1
Income taxes payable 21.8 117.5 115.9
Total current liabilities 1,169.5 957.4 937.5
Long-term debt, excluding current
maturities 501.6 506.9 508.9
Other non-current liabilities 136.7 130.3 80.9
Total liabilities 1,807.8 1,594.6 1,527.3
Stockholders' equity 501.5 922.1 813.5
Total liabilities and stockholders'
equity $2,309.3 $2,516.7 $2,340.8



RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(In millions)

Nine months ended September 30,
2005 2004
Cash flows from operating activities:
Net income $215.8 $206.3
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 91.6 73.3
Other items 3.3 11.3
Changes in operating assets and
liabilities:
Receivables 13.2 24.7
Inventories (158.8) (265.5)
Other current assets (8.0) (9.7)
Accounts payable, accrued expenses
and income taxes payable (134.3) 43.6
Net cash provided by operating
activities 22.8 84.0
Cash flows from investing activities:
Additions to property, plant and
equipment (124.5) (164.1)
Proceeds from sale of property, plant
and equipment 2.8 2.4
Other investing activities (9.9) (11.4)
Net cash used in investing activities (131.6) (173.1)
Cash flows from financing activities:
Purchases of treasury stock (647.9) (206.3)
Sales of treasury stock to employee
stock plans 22.9 27.3
Proceeds from exercise of stock options 17.0 41.7
Changes in short-term borrowings, net 326.4 16.1
Repayments of long-term borrowings (0.1) (39.6)
Net cash used in financing activities (281.7) (160.8)
Net decrease in cash and cash equivalents (390.5) (249.9)
Cash and cash equivalents, beginning of period 437.9 634.7
Cash and cash equivalents, end of period $47.4 $384.8

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