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 WARREN, Mich., Nov. 23 /PRNewswire/ -- F & M Distributors, Inc. (NASDAQ-NMS: FMDD) announced today its earnings for the third quarter and nine months ended Oct. 30, 1993.
 Earnings for the third quarter of fiscal 1994 were $1.3 million or $.14 per share, as projected in analysts' consensus estimates tracked by Zack's Investment Research, Inc. Third quarter earnings are equal to results of $.14 per share posted for each of the first two quarters of the current fiscal year and represent a decease from the $2.2 million or $.23 per share earned in the comparable quarter of the prior year. Sales for the third quarter were $181.6 million as compared to $187.6 million in the prior year.
 For the nine months ended Oct. 30, 1993, earnings were $4.0 million or $.42 per share as compared to $5.7 million or $.60 per share during the comparable period in the prior year. Sales during the nine month period were $534.9 million as compared to $546.9 million in the prior year.
 Earnings and earnings per share for the comparable periods in the prior year are stated on a pro forma basis reflecting the public offering of the Company's common stock on Sept. 24, 1992, and its conversion from an S corporation to a C corporation at the date for federal income tax purposes.
 The Company's year to date sales decline of 2 percent from the prior year is being addressed with an aggressive long-term program of sales initiatives to increase customer traffic, related Earl Weissert, chief executive officer. During the coming months, the Company will be adding services and product categories such as additional pharmacies, beer and wine and lottery in many of its stores and has started to accept credit cards. In addition, F & M's marketing program is under review by two prominent advertising agencies for changes in the coming fiscal year.
 Weissert indicated that he does not see a change in sales trends for the upcoming fourth quarter ending Jan. 29, 1994, since implementation of these new sales initiatives will be completed during the first six months of next year.
 Weissert commented that third quarter operating income at 3.4 percent of sales compares favorably with 3.1 percent in the prior year. Gross margins continued to show strength at 18.9 percent of sales for the quarter and year to date, which is an improvement over gross margins of 18.1 percent and 18.2 percent, respectively, in the third quarter and first nine months of the prior year. In addition, F & M continued its cost containment programs with operating and administrative expenses declining 5 percent on an average per store basis.
 Interest expense at 2.3 percent of sales has increased significantly over prior year's interest expense of 1.3 percent of sales due to the recent issuance of unsecured senior subordinated debt in August 1993 and higher inventory levels. Weissert noted that inventory levels on a per store basis have stabilized and lower inventory levels are expected after the holiday season.
 F & M Distributors currently operates 121 F & M deep discount superstores in 11 states, offering a wide selection of branded health and beauty aids, cosmetics and fragrances and household supplies at everyday low prices. In addition, the Company operates five PartiGiant deep discount party supply superstores in Michigan.
 (Dollars in thousands, except share and per share amounts)
 Third quarter ended, Nine months ended,
 Oct. 30, Oct. 31, Oct. 30, Oct. 31,
 Financial data: 1993 1992 1993 1992
 Net sales $181,632 $187,638 $534,933 $546,903
 Cost of sales and
 occupancy expenses 147,278 153,595 434,026 447,216
 Gross profit 34,354 34,043 100,907 99,687
 Percentage of
 net sales 18.9 pct 18.1 pct 18.9 pct 18.2 pct
 Selling, general and
 expenses 28,165 28,250 85,325 83,959
 Percentage of
 net sales 15.5 pct 15.0 pct 16.0 pct 15.3 pct
 Operating income 6,189 5,793 15,582 15,728
 Percentage of
 net sales 3.4 pct 3.1 pct 2.9 pct 2.9 pct
 Interest expense, net (4,110) (2,459) (9,212) (7,003)
 Percentage of
 net sales (2.3 pct) (1.3 pct) (1.7 pct) (1.3 pct)
 Earnings before
 provision for
 income taxes 2,079 3,334 6,370 8,725
 Percentage of
 net sales 1.1 pct 1.8 pct 1.2 pct 1.6 pct
 Pro forma
 adjustments(A) --- 127 --- 380
 Earnings before
 provision for
 income taxes(A) 2,079 3,461 6,370 9,105
 Percentage of
 net sales 1.1 pct 1.8 pct 1.2 pct 1.7 pct
 Provision for
 income taxes(A) 771 1,281 2,358 3,369
 Net income $1,308 $2,180 $4,012 $5,736
 Net income per
 common share(A) $0.14 $0.23 $0.42 $0.60
 Weighted average
 common shares
 outstanding(A) 9,612,232 --- 9,615,447 ---
 Selected Data:
 Beginning store count 119 113 118 108
 New store openings 3 4 5 9
 Store closings 0 0 (1) 0
 Total 122 117 122 117
 Total selling square
 footage 2,472,804 2,313,178 --- ---
 Capital expenditures,
 net $3,900 $2,013 $7,070 $7,038
 Depreciation and
 amortization $1,908 $1,765 $5,392 $5,265
 (A) The quarter and nine months ended Oct. 31, 1992, reflect pro forma adjustments for a reduction in interest income and interest expense as a result of the company's initial public offering, income taxes at 37 percent and 9,619,310 shares of common stock outstanding.
 -0- 11/23/93
 /CONTACT: Laura Kendall, CFO/Sr. Vice President of F & M Distributors, 313-758-1400, Ext. 251/

CO: F & M Distributors, Inc. ST: Michigan IN: REA SU: ERN

ML-RD -- DE002 -- 7107 11/23/93 08:05 EST
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Publication:PR Newswire
Date:Nov 23, 1993

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