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MUSICLAND STORES CORPORATION ANNOUNCES THIRD QUARTER RESULTS

 MUSICLAND STORES CORPORATION ANNOUNCES THIRD QUARTER RESULTS
 MINNEAPOLIS, Oct. 13 /PRNewswire/ -- Musicland Stores Corporation (NYSE: MLG) today reported net income of $0.1 million for the third quarter ended Sept. 25, 1992, an improvement of $2.7 million over the third quarter of 1991. For the nine months ended Sept. 25, 1992, the company reported a loss (after preferred dividends and before extraordinary charge) of $5.6 million, or $.20 per share, which was an earnings improvement of $6.8 million over the same period in 1991.
 Revenues for the 1,077 store music and video retailer rose 5.8 percent to $213.5 million in the third quarter from $201.9 million in the comparable 1991 period. For the first nine months of 1992, revenues were $599.5 million compared to $544.2 million for the 1991 period.
 Net income (after preferred dividends and before extraordinary charge) for the 12 months ended Sept. 25, 1992, was $14.5 million on revenues of $987.6 million, versus net income of $2.5 million on revenues of $885.0 million for the 12 months ended Sept. 25, 1991.
 Commenting on the financial performance, Musicland Stores Corporation Chairman Jack W. Eugster said, "We are pleased with our third quarter results in which earnings were in line with analyst estimates. While comparable store sales for the third quarter were marginally above last year (up 0.1 percent), this represents a slowdown from the comparable store sales growth of the first half. Sales in the third quarter were impacted by sluggish economic conditions and lower sales volume on new audio releases versus strong new releases last year. We continue to see significant sales growth in compact discs and sell- through videos. Earnings improvements came from fewer promotional markdowns and a reduction in inventory shrinkage, as well as the interest savings from the redemption in April of subordinated notes and lower bank interest rates."
 In the first quarter of 1992, Musicland Stores Corporation and certain institutional shareholders completed an initial public offering which raised $137 million for the company and resulted in the redemption of $110 million of 13-3/4 percent senior subordinated notes and $12.6 million of preferred stock, including all accumulated dividends. An extraordinary charge of $8.4 million, net of income tax benefit was recorded in the first quarter of 1992 in connection with the redemption of debt. The redemption of preferred stock occurred on June 26, 1992 and is expected to increase future earnings on common stock by approximately $.04 per share on an annualized basis.
 Headquartered in Minneapolis, the company is the largest specialty retailer of prerecorded music and video home entertainment products in the United States. As of Sept. 25, 1992, the Company operated 1,077 stores in 49 states, Puerto Rico and the United Kingdom. The company has opened 49 stores in the first nine months of 1992, and expects to open over 50 new stores in the fourth quarter, bringing the total new store openings to over 100 in 1992.
 MUSICLAND STORES CORPORATION
 Consolidated Statements of Operations
 (Unaudited)
 (In thousands, except per share amounts)
 Three Months Ended Percent
 9/25/92 9/25/91 Increase
 (Decrease)
 Sales $213,533 $201,902 5.8
 Gross profit 88,894 81,504 --
 Income from operations before
 amortization and depreciation 11,742 11,714 0.2
 Income from operations 5,628 5,998 (6.2)
 Income (loss) before income tax
 provision (benefit) 243 (5,053) --
 Income tax provision (benefit) 121 (2,779) --
 Net income (loss) $122 $(2,274) --
 Preferred dividends -- 336 --
 Net income (loss)
 applicable to common stock $122 $(2,610) --
 Net income (loss) per share $0.00 $(0.13) --
 Average shares outstanding (a) 30,120 20,060 --
 Nine Months Ended Percent
 9/25/92 9/25/91 Increase
 Sales $599,507 $544,157 10.2
 Gross profit 247,975 222,576 --
 Income from operations before
 amortization and depreciation 27,357 23,207 17.9
 Income from operations 9,071 6,095 48.8
 Income (loss) before income tax
 provision (benefit)
 and extraordinary charge (9,817) (25,304) --
 Income tax provision (benefit) (4,909) (13,917) --
 Income (loss) before
 extraordinary charge (4,908) (11,387) --
 Extraordinary charge (8,440) -- --
 Net income (loss) $(13,348) $(11,387) --
 Preferred dividends 703 980 --
 Net income (loss)
 applicable to common stock (14,051) (12,367) --
 Income (loss) per share
 after preferred dividends,
 before extraordinary charge $(0.20) $(0.62) --
 Net income (loss) per share $(0.51) $(0.62) --
 Average shares outstanding (a) 27,774 20,040 --
 (a) Total outstanding shares increased by 10 million shares upon
 completion of the initial public offering on March 4, 1992.
 MUSICLAND STORES CORPORATION
 Consolidated Statements of Operations
 (Unaudited)
 (In thousands except per share amounts)
 Twelve Months Ended Percent
 9/25/92 9/25/91 Increase
 Sales $987,581 $885,049 11.6
 Gross profit 397,990 360,685 --
 Income from operations before
 amortization and depreciation $89,731 $77,873 15.2
 Income from operations 65,264 55,744 17.1
 Net income after preferred
 dividends, before extraordinary
 charge 14,468 2,483 482.7
 Net income applicable to common stock $6,028 $2,483 142.8
 -0- 10/13/92
 /CONTACT: Ruth Levine of Musicland, 612-931-7700/
 (MLG) CO: Musicland Stores Corporation ST: Minnesota IN: REA SU: ERN


AL -- MN019 -- 9585 10/13/92 17:46 EDT
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