RadioShack Corporation Announces Improved Profitability for 2007 Fourth Quarter

February 29, 2008 // Franchising.com // Fort Worth, Texas, - RadioShack Corporation (NYSE: RSH) today announced an increase in reported net income to $101.0 million, or $0.77 per diluted share, for the quarter ended December 31, 2007. Net income for the quarter ended December 31, 2006, was $84.5 million, or $0.62 per diluted share. Fourth quarter 2007 net income was favorably impacted by improved gross margin, a reduction in SG&A, and reduced interest expense when compared to the prior year.

"I am delighted to announce that our team here at RadioShack once again produced strong improvement in our operating profit for the fourth quarter, and for the year as a whole," said Julian Day, Chairman and Chief Executive Officer. "It is a testament to the hard work and devotion of everyone concerned, that this result was achieved against a background of difficult and uncertain economic conditions."

Fourth Quarter Results

Revenue

Fourth quarter 2007 comparable store sales were down 6.7% versus the fourth quarter of 2006. The decline in comparable sales was mainly driven by lower sales in postpaid wireless and satellite radio partially offset by increases in GPS units, pre-paid wireless sales, video gaming and media storage.

Total sales in the fourth quarter of 2007 were down $94 million to $1.364 billion versus total sales of $1.458 billion for the same period last year, driven by the decline in comparable store sales.

Operating Income

Fourth quarter 2007 operating income was $165.2 million as compared to $145.8 million in the prior year. This increase was driven by lower operating expenses, which were partially offset by fewer gross profit dollars. The decline in gross profit dollars versus the prior year was due to the decrease in comparable store sales, partially offset by a 90 basis point improvement in gross margin rate. This favorability in gross margin rate versus prior year was driven by improved inventory management and more effective promotional activities, partially offset by an unfavorable merchandise sales mix. The unfavorable sales mix was a result of the strong sales performance of lower margin categories such as GPS, media storage and video gaming combined with continuing soft sales in postpaid wireless, particularly Sprint.

SG&A expenses were $421.2 million in the fourth quarter of 2007, down $39.8 million versus the prior year. The decrease in SG&A was driven by payroll, both from headcount reductions at headquarters and efficiencies in labor scheduling at store level.

Full-Year Sales and Net Income

Full year 2007 comparable store sales were down 8.2% versus calendar year 2006.

Total sales for 2007 were down $526 million to $4.252 billion versus total sales of $4.778 billion for 2006. The reduction in sales was primarily the result of the comparable store sales decline and to a lesser extent a reduction of stores when compared to 2006.

Net income for the full year ended December 31, 2007 was $236.8 million or $1.74 per diluted share versus net income of $73.4 million or $0.54 per diluted share for the comparable prior year period.

Cash Position at Year End and Full-Year Cash Flow

RadioShack's cash balance increased $38 million at the end of the fourth quarter of 2007 to $510 million. The increase in cash was driven by improved working capital management and cash generated from net income partially offset by the $150 million repayment of bonds in September, 2007, and the $209 million of share repurchases during 2007.

RadioShack generated $300.9 million in free cash flow through the twelve months of 2007 versus free cash flow of $189.9 million for the same period in 2006. Compared to 2006, the increased cash generated in 2007 was driven by increased net income, and improved inventory position, combined with more prudent capital expenditures.

Revision of Expense Classification

We have revised the classification of certain expenses relating to merchandise acquisition and operation of our distribution centers which impacts cost of goods sold, selling, general and administrative ("SG&A") expenses and depreciation. This revision had no impact on previously reported operating income, net income, earnings per share, financial position, stockholders' equity, comprehensive income or cash flows from operating activities. The Company's policy is, and historically has been, to capitalize such amounts into inventory. However, historically upon capitalization of these expenses into inventory, cost of goods sold was decreased rather than decreasing SG&A expense where these expenses were originally recorded. We have determined that this was a misstatement that understated costs of products sold and overstated SG&A expense with no impact to earnings. Accordingly, in consultation with our independent accountants, we have revised prior period comparative information affected in order to present such information on a consistent basis. More information on this revision is included in the company's audited financials in our Form 10-K under Note 2 to the consolidated financial statements.

Today starting at 9:00 a.m. ET, management will host a conference call to discuss these results and its current approach to the business. We invite the public to listen to the event live on the Internet at www.radioshackcorporation.com on the Investor Relations page. Additionally, RadioShack announced that it has filed with the SEC its Form 10-K for the year ended December 31, 2007.

Forward-Looking Statements

This press release contains or may contain forward-looking statements, as referenced in the Private Securities Litigation Reform Act of 1995 ("the Act"). These forward-looking statements reflect management's current views and projections regarding economic conditions, retail industry environments and company performance. Factors that could significantly change results include, but are not limited to, sales performance, economic conditions, product demand, expense levels, competitive activity, interest rates, changes in the company's financial condition, availability of products, the regulatory environment and factors affecting the retail category in general. Additional information regarding these and other factors is described in the company's filings with the SEC, including its most recent annual report on Form 10-K and quarterly report on Form 10-Q.

About RadioShack Corporation

RadioShack Corporation (NYSE: RSH) is one of the nation's most experienced and trusted consumer electronics specialty retailers. Operating from convenient and comfortable neighborhood and mall locations, RadioShack stores deliver personalized product and service solutions within a few short minutes of where most Americans either live or work. The company has a presence through almost 6,000 company-operated stores and dealer outlets in the United States, over 150 RadioShack locations in Mexico and nearly 800 wireless phone kiosks. RadioShack's dedicated force of knowledgeable and helpful sales associates has been consistently recognized by several independent groups as providing the best customer service in the consumer electronics and wireless industries. For more information on RadioShack Corporation, or to purchase items online, visit www.radioshack.com.

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