And for the nine months, Toys reported net earnings of $8 million, or 4¢ a share, compared to a net loss of $83 million, or 39¢ a share for the first nine months of 2003. Certain pre-tax charges and credits included in the results affected the comparability of these amounts, according to company officials.

Total net sales for Q3 2004, meanwhile, were $2.21 billion, down 1.4% from $2.25 billion a year earlier. And for the nine months, total net sales were $6.29 billion, down 2.6% from last year's $6.46 billion.

Total net sales actually increased 2% for Q3 vs. last year, however, if you exclude the impact of currency conversion, which increased sales by $42 million. The numbers also take into account a $117 million drop in sales relating to the shuttering of the Kids "R" Us stores.

Finally, operating losses for the latest period narrowed considerably to $11 million from last year's Q3 deficit of $43 million. For the nine months, however, operating losses were $218 million compared to last year's $41 million.

By division, US toy store sales declined by 1.7% for Q3 and by 5% for the nine months. The international division did better, with comparable toy store sales in local currencies up by 4.3% for the quarter and 1.1% for the nine months.

And the Babies "R" Us business posted a 5.6% increase in total sales to $473 million. For the nine months, total sales increased to $1.4 billion from $1.3 billion a year earlier.

The sale of Kids "R" Us real estate is a continuing process, company officials pointed out during a conference call yesterday morning. So far this year, that process has contributed more than $130 million to Toys' cash proceeds.

"Despite a difficult industry, there were some notable bright spots for us during the quarter," John Eyler, Toys' chairman/CEO said during the conference call. "We were encouraged by the relative improvement in the sales trends in our global business during the quarter, with the international business and toysrus.com achieving solid sales gains and the video business in the US improving significantly.

"We were also pleased with the operating performance of our international business, and Babies "R" Us," he continued. "We have maintained discipline in inventory management across all of our businesses this year. With the holidays upon us, everyone in our organization is focused on maximizing our performance during this season."

Asked about the company's ongoing strategic review of its operations, Eyler responded, "the process is continuing. We will not comment further on this subject until our board of directors reaches a decision on the specific steps that will be taken to separate the ownership of Babies "R" Us and the toy business. We still believe the separation will occur, and that it will happen during the first half of 2005."