Skullcandy booked a net loss of $635,000 for the second quarter ended June 30, compared with a net profit of $6.8 million in the period a year ago, as its sales fell by 29.9 percent to $50.8 million. Excluding the effect of a change in accounting for foreign clients, sales went down by 33.9 percent in North America and by 15.9 percent elsewhere. The declines were partly due to an ongoing clean-up of the sales network, the reorganization of a major customer and the termination of a relationship with a former Canadian distributor. The loss was partly due to higher expenses including charges of $1.1 million related to the shutdown of the company's head office in San Clemente, California and its move to Park City, Utah. The management says the move will dramatically improve operations and help develop a better company culture.

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