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MUSICLAND STORES CORPORATION REPORTS THIRD QUARTER RESULTS; COMP STORES SALES, REVENUES AND OPERATING EARNINGS GROW

 MINNEAPOLIS, Oct. 18 /PRNewswire/ -- Musicland Stores Corporation (NYSE: MLG) today said comparable store sales of six percent contributed to increased revenues and operating earnings for the third quarter ended September 30, 1993.
 Revenues for the third quarter rose 18 percent to $251.3 million from the $213.5 million reported for the same quarter last year. Operating earnings before depreciation and amortization increased 17 percent to $13.7 million from $11.7 million last year. Income before the extraordinary charge (related to debt redemption) for the quarter was $0.1 million, which was the same as last year's third quarter net income. Income in the quarter just ended was affected by a $0.02 per share cost from temporarily carrying additional higher-cost debt.
 Revenues for the first nine months of 1993 climbed to $697.1 million, a 16 percent increase from the $599.5 million reported for the same period in 1992. The loss (before extraordinary charge) for the 1993 nine-month period narrowed to $3.4 million, or $0.11 per share, from the loss (after preferred dividends and before extraordinary charge) of $5.6 million, or $0.20 per share, last year.
 Jack W. Eugster, chairman and chief executive officer, said, "The video business posted double-digit sales increases for the ninth consecutive quarter. That performance, combined with solid single-digit increases in the music business, pushed company-wide comparable store sales growth in the third quarter," Eugster continued. "Our business is meeting growth expectations, and we continue to be encouraged by the performance of our new Media Play stores. We ended the third quarter with four stores and have since opened our fifth and sixth stores in Toledo, Ohio, and Colorado Springs, Colorado, respectively. We are on track to have 13 Media Play stores opened by yearend."
 The company also recorded an extraordinary charge of $3.9 million after taxes, or $0.13 per share, in the third quarter in connection with the redemption on September 30, 1993, of $53.5 million of 14 3/4 percent junior subordinated debentures.
 Keith Benson, vice chairman and chief financial officer, said, "Third quarter income met expectations even though the company incurred additional interest cost of $0.02 per share from carrying both junior and new senior subordinated debentures for the period. Beginning in the fourth quarter, the company will realize a positive impact per share from the reduction of its debt load with the redemption of subordinated debentures." The company now has retired all of the high-yield debt incurred in its leveraged buyout from Primerica Corporation in 1988.
 Other highlights from the third quarter were:
 -- The company opened 32 stores and closed two others, and operated 1,188 stores at September 30, 1993, (873 Musicland and Sam Goody stores, 292 Suncoast Motion Picture Company stores, four Media Play stores, and 19 On Cue stores). At the same time a year ago, it operated 1,077 stores (848 Musicland and Sam Goody, 226 Suncoast Motion Picture Company, and three On Cue).
 -- Total square footage at the end of the quarter was 4.2 million, a 19 percent increase from the 3.5 million square feet at Sept. 25, 1992.
 -- Adjusting for seasonality, the company reported revenues of $1.1 billion for the 12 months ended September 30, 1993, a 13 percent increase from the $988 million reported for the 12-month period ended September 25, 1992. Income (before extraordinary charge) for the 12-month period rose 78 percent to $25.7 million compared with $14.5 million (after preferred dividends and before extraordinary charge) last year.
 Musicland Stores Corporation is the leading specialty retailer of prerecorded home entertainment products in the United States.
 MUSICLAND STORES CORPORATION AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 (In thousands, except per share amounts)
 Three Months Ended Percent
 9/30/93 9/25/92 Inc.
 Sales $251,263 $213,533 17.7
 Cost of sales 149,201 124,639 --
 Selling, general and
 administrative expenses 88,355 77,152 --
 Income from operations before
 depreciation/amortization 13,707 11,742 16.7
 Depreciation and amortization 7,426 6,114 --
 Income from operations 6,281 5,628 11.6
 Interest expense 6,124 5,385 --
 Pretax income before extra-
 ordinary charge 157 243 --
 Income tax provision 73 121 --
 Income before ext. charge 84 122 --
 Extraordinary charge (a) 3,900 -- --
 Net income (loss) applicable
 to common $(3,816) $122 --
 Weighted average # of shares 30,226 30,120 --
 Earnings (loss) per common share:
 Income before ext. chg. $0.00 $0.00 --
 Extraordinary charge (a) (0.13) -- --
 Net income (loss) per common
 share $(0.13) $0.00 --
 Nine Months Ended Percent
 9/30/93 9/25/92 Inc.
 Sales $697,143 $599,507 16.3
 Cost of sales 412,711 351,532 --
 Selling, general and
 administrative expenses 254,162 220,618 --
 Income from operations before
 depreciation/amortization 30,270 27,357 10.6
 Depreciation and amortization 21,242 18,286 --
 Income from operations 9,028 9,071 --
 Interest expense 15,395 18,888 --
 Pretax income (loss) before
 extraordinary charge (6,367) (9,817) --
 Income tax provision (benefit) (2,961) (4,909) --
 Preferred dividends -- 703 --
 Income (loss) after preferred
 dividends, before ext. chg. (3,406) (5,611) --
 Extraordinary charge (a) 3,900 8,440 --
 Net income (loss) applicable
 to common (7,306) (14,051) --
 Weighted average # of shares 30,202 27,774 --
 Earnings (loss) per common share:
 Income (loss) after preferred
 div., before ext. chg. $(0.11) $(0.20) --
 Extraordinary charge (a) (0.13) (0.31) --
 Net income (loss) per common
 share $(0.24) $(0.51) --
 Twelve Months Ended Percent
 9/30/93 9/25/92 Inc.
 Sales $1,118,144 $987,581 13.2
 Income from operations before
 depreciation/amortization 97,367 89,731 8.5
 Income from operations 69,696 65,264 6.8
 Income after preferred
 div., before ext. chg. 25,723 14,468 77.8
 (a) Extraordinary charges, net of income tax benefit, related to early redemption of 14 3/4 percent Junior Subordinated Debentures in 1993 and 13 3/4 percent Senior Subordinated Notes in 1992.
 -0- 10/15/93
 /CONTACT: Marcia Appel, 612-932-7742, or Keith Benson, 612-932-7790, both of Musicland/
 (MLG)


CO: Musicland Stores Corporation ST: Minnesota IN: REA ENT SU: ERN

DB-DB -- MN003 -- 3152 10/18/93 07:57 EDT
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Date:Oct 18, 1993
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