/raid1/www/Hosts/bankrupt/TCR_Public/960731.MBX BANKRUPTCY CREDITORS' SERVICE, INC.


Bankruptcy and Troubled Company News


July 31, 1996



  1. Aerospace Creditors Liquidating Trust announces affirmation of ruling in Thomson litigation
  2. Caldor receives extension of exclusivity period
  3. New World Coffee reports results
  4. House of Fabrics Emerges From Chapter 11...
  5. PLATINUM SOFTWARE CORPORATION ANNOUNCES RESULTS
  6. BROTHERS GOURMET COFFEES ANNOUNCES EARNINGS
  7. DOW CORNING ANNOUNCES FINANCIAL RESULTS
  8. MUSICLAND REPORTS SECOND QUARTER RESULTS





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Aerospace Creditors Liquidating Trust announces affirmation of ruling in Thomson litigation


        


            NEW YORK  --  July 31, 1996  --  The Trustees of the
        Aerospace Creditors Liquidating Trust (PSE:ARO.TT) announced today
        that the United States District Court for the Southern District of
        New York affirmed the Bankrupcy Court's ruling in favor of the LTV
        Corp.
  ("LTV") in the action entitled LTV Aerospace and Defense Co.
        v.  Thomson-CSF S.A., Adv. Proc. No. 92-9531A (Bankr. S.D.N.Y.) (the
        "Thomson Litigation").  
        


            The Trust is entitled to the first $10 million in proceeds, plus
        a pro rata portion of any interest received by LTV under any
        judgement or settlement, actually received pursuant to the claims of
        LTV Aerospace and Defense Co. in the Thomson Litigation.  
        


            The Bankruptcy Court's ruling ordered Thomson to pay LTV, Vought
        Industries Inc. and Vought International Inc. the sum of $20
        million, with interest thereon at the rate of nine percent from Aug.
        1, 1992.  The decision by the District Court is subject to appeal by
        Thomson.
        


        CONTACT: Aerospace Creditors Liquidating Trust
                 212/808-0539



Caldor receives extension of exclusivity period


        


            NORWALK, Conn.  --  July 31, 1996  --  The Caldor
        Corporation
(NYSE: CLD) announced today that the U.S. Bankruptcy
        Court for the Southern District of New York has granted the Company
        an extension of the period under which it has the exclusive right to
        file a plan of reorganization with the court.  
        


            The exclusivity period, which had been scheduled to expire on
        July 31, 1996, has now been extended through February 28, 1997.
        Likewise, the period in which the Company can solicit acceptances
        for the reorganization plan has been extended through April 30,
        1997.  In addition, the Company has committed to provide a five-year
        business plan by November 28, 1996 to its creditors, equity and bank
        committees, each of which supported the extension of the Company's
        exclusivity periods.  
        


            The Caldor Corporation is the fourth largest discount department
        store chain in the U.S., with annual sales of approximately $2.8
        billion.  It operates 160 stores in ten East Coast states.  With a
        strong consumer franchise in high-density urban/suburban markets,
        Caldor offers a diverse merchandise selection, including both
        softline and hardline products.  
        


        CONTACT:  Wendi Kopsick/Jim Fingeroth
                  Kekst and Company
                  (212) 593-2655



New World Coffee reports results for the
second quarter and six months ended June 30, 1996


        


            NEW YORK  --  July 31, 1996  --  New World Coffee Inc. (NASDAQ:NWCI),
        which operates 30 espresso bars in the Northeast, today announced
        results for the second quarter and six months ended June 30, 1996
        compared to the equivalent period last year, ended July 2, 1995.
        The company successfully completed its initial public offering on
        February 1, 1996.
        


            Revenues for the quarter were $2,629,000 compared with
        $2,417,000 for the equivalent 1995 quarter.  Pro forma for an
        acquisition and store closings, revenues were $2,691,000.  The
        number of stores open at the end of each period was 30 and 27,
        respectively.
        


            Store operating income for the quarter was $213,000, or 8.1% of
        sales, as compared with $141,000, or 5.8% of sales, last year.  Pro
        forma store operating income was $339,000 or 12.6% of sales.  The
        improvement in store level margins reflects the company's progress
        in increasing store level profitability through the implementation
        of its new POS system as well as improved vendor pricing.
        


            The loss from operations for the 1996 quarter was $828,000, or
        $0.18 per share, as compared with a loss of $401,000, or $0.27 per
        share, in the 1995 quarter.  Pro forma loss from operations was
        $703,000, or $0.16 per share.  General and administrative costs
        increased significantly due to management additions to support the
        company's planned expansion, including the additions of a vice
        president of real estate and development, directors of construction,
        human resources, and training, and a new marketing program begun in
        the second quarter.  The company had a nonrecurring charge of
        $1,800,000 which included a $1.5 million non-cash charge to provide
        for the closing of five unprofitable, primarily commercial stores in
        accordance with the company's strategy of concentrating its business
        in residential areas.  The quarter also included $300,000 in
        restructuring charges related to the reorganization of senior
        management.  This resulted in a net loss of $2,597,000, or $0.57 per
        share, compared to a loss of $458,000, or $0.31 per share, for the
        equivalent period last year.  Pro forma net loss for the period was
        $984,000, or $0.22 per share.
        


            On June 13th, the company acquired three Coopers Coffee Bars in
        Manhattan.  Pro forma results assume the Coopers stores had been
        acquired and the five stores closed at the beginning of the periods.
        


            For the six months, the company had revenues $4,907,000,
        compared to $4,469,000 last year.  Store operating income was
        $316,000, or 6.4% of sales, versus a loss of $103,000, or -2.3% of
        sales, for the first six months of 1995.  Pro forma revenues were
        $5,113,000 and operating income was $585,000, or 11.4% of sales.
        


            The loss from operations for the first half of 1996 was
        $1,511,000 compared to a loss of $1,425,000 last year.  The net loss
        for the period was $4,341,000 compared to a loss of $1,517,000 last
        year.  The six months results for 1996 includes one-time, non-cash
        charges for pre-IPO bridge financing of $1,000,000, and a provision
        for store closings of $1,500,000.  Pro forma loss from operations
        was $1,246,000 and net loss was $2,588,000.
        


            Commenting on the results, R. Ramin Kamfar, president and chief
        executive officer of New World Coffee, said, "We are pleased to
        demonstrate concrete improvement in our results.  Our profitability
        programs are starting to show results.  Store operating margins have
        improved to 12.6% of sales from 5.8% for the same period last year
        and should improve to 17% by year end.  Our marketing programs are
        working and same store sales have improved to -2.8% in the second
        quarter from -12.8% for the first quarter, and turned positive in
        the month of June.  We have a new store prototype which is built at
        approximately half the per square foot cost of our previous stores
        and should raise our average store sales to $700,000 from $550,000
        for our current residential stores.  We have strengthened the
        management team with additions from Starbucks, Boston Market and
        Blockbuster.  The major part of G&A growth is behind us, and we
        should see these improvements flow through to the bottom line over
        the next two quarters."
        


            "Having completed a $3.75 million private placement equity
        financing on July first, we are strongly positioned to aggressively
        pursue further acquisitions and new store growth.  The addition of
        the Coopers stores, the opening of two new stores in Manhattan and
        continued expansion of the chain, with six leases in hand and
        approximately twenty under negotiation, testify to the ongoing
        progress of the Company," Kamfar added.
        


            New World Coffee Inc., the largest coffee bar retailer based in
        the Northeastern United States, currently owns and operates 30
        espresso bars in the New York City, New Jersey and Pennsylvania
        areas and has six leases for upcoming locations.


        
                           NEW WORLD COFFEE, INC.
                            FINANCIAL HIGHLIGHTS

        
                             (In thousands, except per share data)
        
                                        Quarter Ended       Proforma
                                      6/30/96    7/2/95      6/30/96
        
        Revenues                        $  2,629    $ 2,417      $ 2,691
        Store Operating Income               213        141          339
        Loss from Operations(a)             (828)      (401)        (703)
        Net Loss(b)                       (2,597)      (458)        (984)
        Per Share Information:
         Loss from Operations(a)           (0.18)     (0.27)       (0.16)
         Net loss(b)                    $  (0.57)   $ (0.31)     $ (0.22)
        Weighted Average Number of
         Common Shares Outstanding     4,522,716  1,460,642    4,522,716
        
                                      Six Months Ended      Proforma
                                      6/30/96    7/2/95      6/30/96
        
        Revenues                        $  4,907    $ 4,469      $ 5,113
        Store Operating Income               316       (103)         585
        Loss from Operations(a)           (1,511)    (1,425)      (1,246)
        Net Loss(b)                       (4,341)    (1,517)      (2,588)
        Per Share Information:
         Loss from Operations(a)           (0.37)     (0.98)       (0.30)
         Net loss(b)                    $  (1.06)   $ (1.04)     $ (0.63)
        Weighted Average Number of
         Common Shares Outstanding     4,086,523  1,460,642    4,086,523
        
        (a) Excludes store closing and other non-recurring charges.
        (b) Includes one-time non-cash charges of $1,500,000 for store
        closings in the second quarter, and $1,000,000 related to pre-IPO
        bridge financing in the first quarter.
        

        CONTACT: New World Coffee Inc.
                 R. Ramin Kamfar
                 212/343-0552 ext. 21
                     or
                 KCSA
                 Adam Friedman/Paul Holm
                 212/682-6300  ext. 215/201



HOUSE OF FABRICS EMERGES FROM CHAPTER 11; STOCK TO TRADE ON NASDAQ NATIONAL MARKET; NEW FINANCING IN PLACE


        


            SHERMAN OAKS, CA --  July 31, 1996  --  House of Fabrics,
        Inc.
said today that it has completed all legal and financial
        conditions required in connection with its emergence from Chapter
        11, and that the newly reorganized company's common stock will begin
        post-bankruptcy trading tomorrow on the Nasdaq National Market under
        the symbol "HFAB." At the same time, the company's warrants will
        trade on the Nasdaq Small Cap Market under the symbol "HFABW."
        


            Additionally, the company said that its financing arrangement
        with The CIT Group has been completed and funded.  This agreement
        provides the company with $60 million in new financing for an
        initial period of three years.
        


            "When House of Fabrics decided to complete its financial
        reorganization by filing under Chapter 11, we told our customers,
        employees, vendors and shareholders that we intended to complete
        this process as quickly as possible. Despite some difficult
        challenges, I believe that we have lived up to that promise," said
        Gary L. Larkins, president and chief executive officer.
        


            "After two years of revamping our organization and our financial
        base, we have expectations that House of Fabrics can move forward as
        a smaller, but financially stronger company that can achieve a level
        of financial performance from which we can build for the future."
        


            Earlier this week, House of Fabrics announced that three new
        members have been appointed to its board of directors and that the
        Board had elected R.N. Hankin chairman.
        


            The company's plan of reorganization was confirmed by the
        Bankruptcy Court July 10.
        


        Since filing to reorganize, House of Fabrics has:
        


            House of Fabrics operates 269 company-owned House of Fabrics,
        Sofro Fabrics, Fabricland and Fabric King retail fabric and craft
        stores in 34 states and employs approximately 7,000 people.
        


CONTACT:  Sandra Sternberg, Sitrick and Company, 310-788-2850



PLATINUM SOFTWARE CORPORATION ANNOUNCES FOURTH QUARTER AND FULL YEAR FISCAL 1996 RESULTS


        


            IRVINE, Calif.,  July 31, 1996 - Platinum Software
        Corporation (Nasdaq: PSQL) today reported its financial results for
        the fourth quarter and full year fiscal 1996.  Revenues for the
        fourth quarter of fiscal 1996, ended June 30, 1996, were $9.4
        million as compared to revenues of $14.9 million for the fourth
        quarter of 1995. Revenues for the fiscal year ended June 30, 1996
        were $40.6 million as compared to revenues of $56.2 million for the
        fiscal year 1995.
        


            A net loss of $3.0 million or $.18 per share was reported for
        the fourth quarter of fiscal 1996, as compared to a loss of $1.0
        million or $.08 per share for the same quarter a year ago.  For the
        full year, the company reported a loss of $32.9 million or $2.23 per
        share for fiscal 1996, as compared to a loss of $5.7 million or $.44
        per share for fiscal 1995.
        


            The company's balance sheet as of June 30, 1996, shows cash has
        increased to $15.5 million from $14.3 million the prior quarter.
        The Company also reported accounts receivable of $7.9 million and
        deferred revenue of $10.9 million at June 30, 1996.
        


            During the fourth quarter of fiscal 1996, Platinum Software
        announced the appointment of Ken Lally as senior vice president of
        worldwide field operations.  The company also announced that during
        the quarter the redemption of the debenture issued in a settlement
        of a class action securities litigation.  The company issued
        1,528,988 shares of common stock to retire the $15.0 million
        debenture and approximately $2.0 million of accrued interest.
        


            L. George Klaus, president and chief executive officer, said "I
        am very pleased with the status of the Platinum turnaround as of
        June 30, 1996.  In February 1996, when I joined the company and
        looked forward at the challenge ahead, I did not expect we would be
        this far ahead of my original turnaround plan.  Revenues in the
        fourth quarter increased from the March 31, 1996 quarter, rising to
        $9.4 million from the $8.4 million reported earlier.  I anticipated
        that the company's turnaround would start in late fiscal 1996 and
        the quarter certainly had the finishing momentum that I expected.  I
        am especially pleased that our cash balance increased to $15.5
        million from the March level of $14.3 million.  We are positioned to
        move Platinum forward."
        


            More information about Platinum Software Corporation and its
        products and services is available at the Platinum World Wide Web
        site http://www.platsoft.com" target=_new>http://www.platsoft.com">http://www.platsoft.com
        


            Platinum Software, the financial software company, develops and
        markets leading client/server software products for corporations
        worldwide.  The company's products enable organizations to scale
        their technology investments to meet the changing needs of their
        businesses- Founded in 1984, Platinum Software is headquartered in
        Irvine, California.
        


        Platinum is a registered trademark of Platinum Software Corporation.
        



                         PLATINUM SOFTWARE CORPORATION
                     CONDENSED CONSOLIDATED BALANCE SHEETS

                                 (in thousands)
                                                   June 30,       June 30,
           ASSETS                                          1996
        1995
        
           Current assets:
        Cash and cash equivalents                   $15,500        $26,276
        Restricted cash                               1,006            476
        Accounts receivable, net                      7,893         14,205
        Notes receivable from divestitures, net         825            957
        Inventories                                     460            672
        Prepaid expenses and other                    1,638          1,785
         Total current assets                        27,322         44,371
           Property and equipment, net                    8,896
        11,961
           Notes receivable from divestitures, net
        -          3,534
           Software development costs, net                2,250
        3,000
           Acquired intangible assets, net                1,088
        2,403
           Other assets                                     446
        564
                                                    $40,002        $65,833

           LIABILITIES AND STOCKHOLDERS' EQUITY
        
           Current liabilities:
        Accounts payable                             $3,436         $3,920
        Accrued expenses                              7,522          5,964
        Accrued restructuring costs                   1,921          1,192
        Deferred revenue                             10,912          8,980
         Total current liabilities                   23,791         20,056
        
           Long-term portion of class action settlement
        -         15,812
        
           Stockholders' equity:
        Preferred stock                              31,996         31,996
        Common stock                                     18             13
        Additional paid-in capital                  111,194         80,391
        Less: notes receivable from officers       (11,563)              -
        Accumulated foreign currency
         translation adjustments                        249            304
        Accumulated deficit                       (115,683)       (82,739)
         Total stockholders' equity                  16,211         29,965
                                                    $40,002        $65,833

        
                         PLATINUM SOFTWARE CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)
        
                                    Three Months Ended   Twelve Months Ended
                                           June 30,            June 30,
                                        1996      1995      1996      1995
           Revenues:
        License fees                  $4,422    $9,993   $19,018   $35,723
        Consulting and professional
         services                      1,695     2,499     9,949    11,520
        Support services               3,168     2,250    10,969     8,384
        Royalty income                   114       132       619       526
                                       9,399    14,874    40,555    56,153
           Cost of revenues                4,522     4,874    20,179
        19,846
        Gross profit                   4,877    10,000    20,376    36,307
        
           Operating expenses:
        Sales and Marketing            3,969     5,996    19,322    19,884
        General and administrative     1,767       981    14,959     4,924
        Software development           2,211     3,967    13,403    17,308
        Charge for restructuring           -         -     5,568         -
                                       7,947    10,944    53,252    42,116
         Loss from operations        (3,070)     (944)  (32,876)   (5,809)
           Other income (expense), net        78      (37)      (68)
        122
         Loss before provision for
          income taxes               (2,992)     (981)  (32,944)   (5,687)
           Provision for income taxes
        -         -         -        20
         Net loss                   $(2,992)    $(981) $(32,944)  $(5,707)
        
           Net loss per share            $(0.18)   $(0.08)   $(2.23)
        $(0.44)
        
           Shares used in computing
        net loss per share            16,803    13,058    14,766    12,835
        

CONTACT:  Geri L. Schanz, APR, Director of Corporate Communications
        of Platinum Software, 714-450-4578, or gschanzplatsoft.com


BROTHERS GOURMET COFFEES ANNOUNCES SECOND QUARTER EARNINGS


        


            BOCA RATON, Fla., July 31, 1996 - Brothers Gourmet
        Coffees, Inc. (Nasdaq: Bean), today announced significantly improved
        results from continuing operations.  Second quarter net loss was
        reduced to $1.9 million or $.17 per share as compared to $7.9
        million or $.70 per share a year ago.  Total loss for the second
        quarter last year was $46.5 million or $4.14 per share after the
        Company accrued a $38.6 million charge to discontinue its retail
        operations.
        


             Donald D. Breen, President and CEO, said, "This is a dramatic
        improvement from the prior year.  Wholesale operating results
        improved by almost $6.0 million or 75% vs. last year. The reduced
        loss from continuing operations was primarily attributable to
        improved gross margins, due to lower green coffee costs and reduced
        manufacturing costs resulting from the company's restructuring
        efforts.  Lower selling, general and administrative expenses have
        also contributed to the improved operating results."
        


            Mr. Breen went on to say, "With long term financing now in
        place, we have improved our liquidity and strengthened our balance
        sheet.  Our cost cutting steps have continued to meet target and
        will help us to achieve our objective - A Return To Profitability.
        We are now concentrating  our energies on increasing sales volume."
        


            Brothers Gourmet Coffees, Inc. is the nation's leading branded
        roaster of wholesale gourmet coffees, offering a variety of unique
        gourmet coffees and packages to grocery, military, mass and
        specialty merchandisers, food service and warehouse club classes of
        trade.
        



                  BROTHERS GOURMET COFFEES, INC.
              CONSOLIDATED STATEMENT OF OPERATIONS

             (In thousands, except per share amounts)
        
                                Three Months Ended    Six Months Ended
                               June 28,   June 30,   June 28,   June 30,
                                1996        1995       1996       1995
        
        Net Sales             $15,413     $23,345    $34,523    $49,246
        Cost of goods sold      8,711      14,469     18,719     29,534
        Gross profit            6,702       8,876     15,804     19,712
        Operating Expenses
          Selling, general and
            administrative      7,315      13,700     15,389     25,750
          Restructuring           124       1,500        221        500
          Amortization of
            intangibles           672         885      1,446      1,783
        Total operating
          expenses              8,111      16,085     17,056     28,033
        Operating income loss
          continuing operations(1,409)     (7,209)    (1,252)    (8,321)
        Interest expense, net     540         664      1,119      1,084
        Other (income) expense    (13)        (27)       (23)       (18)
        Loss from continuing
          operations           (1,936)     (7,900)    (2,348)    (9,387)
        Discontinued Operations:
          Loss from discontinued
          retail operations       ---     (38,550)       ---    (40,594)
        Net loss              $(1,936)   $(46,450)   $(2,348)  $(49,981)
        EBITDA                $ 1,726    $ (1,067)   $ 5,491    $ 1,177
        
        Loss per common share:
          Loss per common share
            from continuing
            operations        $ (0.17)     $(0.70)    $(0.21)    $(0.84)
          Loss per common share
            from discontinued
            operations            ---       (3.44)       ---      (3.62)
        Loss per common
          share               $ (0.17)     $(4.14)    $(0.21)    $(4.46)
        Weighted average common
          shares outstanding   11,202      11,212     11,184     11,205
        

CONTACT:  Barry Bilmes, Brothers Gourmet Coffees, Inc., 407-995-2600


DOW CORNING ANNOUNCES SECOND-QUARTER FINANCIAL RESULTS


        


            MIDLAND, Mich., July 31, 1996 - Dow Corning Corp. today
        reported global sales for the second-quarter of 1996 of $631.2
        million, down 1.7 percent from $641.8 million reported for the same
        period in 1995.  For the first half of 1996, sales are $1.248
        billion, down 0.4 percent from the $1.253 billion reported for the
        first half of 1995.
        


            Global Profit After Tax (PAT) is $52.0 million for the second
        quarter, up 3.6 percent over an adjusted PAT of $50.2 million for
        the same period in 1995.  For the first six months of 1996, PAT is
        $103.9 million, up 4.2 percent over an adjusted PAT of $99.7 million
        for the first half of 1995.  Adjusted PAT for prior periods excluded
        the impact of a special charge and accounting adjustments related to
        Dow Corning's Chapter 11 status.
        


            "Profits are up in 1996 when compared with the same period last
        year, despite a slight decline in sales revenue,"  said John
        Churchfield, vice president for planning and finance and chief
        financial officer.  "Soft sales have continued in Europe and Japan.
        Growth has accelerated recently in Mexico and Canada.  Sales
        performance remains solid in the U.S., but the recent strengthening
        of the U.S. dollar relative to foreign currencies has had a negative
        effect on our reported sales revenue."
        


            Churchfield added that profit margins continue to reflect tight
        control over operating expenses.  Lower interest expenses due to
        suspension of interest payments during the company's Chapter 11
        case, coupled with higher interest income due to cash received from
        insurance settlements, continue to favorably influence profit
        growth.
        


        
        Dow Corning Corporation
        Consolidated Statements of Operations and Retained Earnings

           (in millions of dollars except share data)
        
                                     Six months             Three months
                                    ended June 30,          ended June 30,
                                  1996         1995        1996      1995
        
        NET SALES               $1,248.4     $1,253.6     $631.2     $641.8
        
        OPERATING COSTS AND
         EXPENSES:
         Manufacturing cost
          of sales                 817.7        810.7      418.8      414.3
         Marketing and
          administrative expenses  217.6        216.5      111.5      116.1
         Implant costs                 -        351.1          -      351.1
                                 1,035.3      1,378.3      530.3      881.5
        
         OPERATING INCOME (LOSS)   213.1       (124.7)     100.9     (239.7)
        
        OTHER INCOME (EXPENSE):
         Interest income            22.6         15.0       12.3        7.1
         Interest expense           (3.8)       (36.4)      (1.7)     (15.5)
         Other, net                (12.0)       (18.2)      (5.6)      (5.6)
        
         INCOME (LOSS) BEFORE
          REORGANIZATION COSTS
          AND INCOME TAXES         219.9       (164.3)     105.9     (253.7)
        
         Reorganization costs       19.9          0.5        9.9        0.5
        
        INCOME (LOSS)
         BEFORE INCOME TAXES       200.0       (164.8)      96.0     (254.2)
        
         Income tax provision
          (benefit)                 87.7        (55.5)      40.9      (91.7)
        
         Minority interests' share
          in income                  8.4          8.2        3.1        4.5
        
        NET INCOME (LOSS)          103.9       (117.5)      52.0     (167.0)
        
         Retained earnings at
          beginning of period      566.9        597.5      618.8      647.0
        
         Retained earnings at
          end of period           $670.8       $480.0     $670.8     $480.0

        
        Dow Corning Corporation
        Condensed Consolidated Balance Sheets

        (in millions of dollars)
        
                     ASSETS            June 30, 1996  December 31, 1995
        
        CURRENT ASSETS:
         Cash and cash equivalents         $335.0           $387.3
         Receivables, net                   488.7            474.4
         Anticipated implant insurance
          receivable                         56.8            265.0
         Implant deposit                    275.0            275.0
         Inventories                        320.2            329.0
         Other current assets               148.0            105.0
            Total current assets          1,623.7          1,835.7
        
         Property, plant and equipment,
          net                             1,207.1          1,207.6
        
         Anticipated implant insurance
          receivable                      1,026.0          1,126.0
        
         Restricted insurance proceeds      418.6            108.3
        
         Other assets                       748.4            680.8
        
                                         $5,023.8         $4,958.4
        
           LIABILITIES AND STOCKHOLDERS' EQUITY
        CURRENT LIABILITIES:
         Short-term borrowings              $24.1            $23.4
         Accounts payable                   145.7            148.5
         Other current liabilities          357.0            287.6
            Total current liabilities       526.8            459.5
        
         Long-term debt                      63.1            110.8
        
        Other liabilities                   116.7            110.3
        
        LIABILITIES SUBJECT TO COMPROMISE:
         Accounts payable                    66.4             46.6
         Implant reserves                 2,433.1          2,471.5
         Notes payable and long-term debt   646.3            648.4
         Other                              317.3            337.6
         Total liabilities subject
          to compromise                   3,463.1          3,504.1
        
         Minority interest in
          consolidated subsidiaries         124.3            126.8
        
         Stockholders' equity               729.8            646.9
        
                                         $5,023.8         $4,958.4


CONTACT:  Barbara J. Muessig of Dow Corning, 517-496-8841


MUSICLAND REPORTS SECOND QUARTER RESULTS


        


            MINNEAPOLIS, July 31, 1996 - Musicland Stores Corporation
        (NYSE: MLG) today reported that revenues for the second quarter
        ended June 30, 1996, rose 12.3 percent to $372.4 million from $331.7
        million for the same period a year ago.  Second-quarter sales
        reflected the closing of eight Media Play superstores and a weaker
        1996 video release schedule than in 1995, which included the video
        introduction of "Forrest Gump."  Gross margin was restrained by
        promotional pressures at Suncoast Motion Picture Company and a book
        sale at Media Play.   As previously indicated, the net loss for the
        quarter exceeded last year, totaling $18.6 million, or $.56 per
        share, compared to a loss of $7.5 million, or $.22 per share, in the
        same period a year ago.  A lower tax rate versus last year increased
        the net loss but will benefit earnings in the fourth quarter.
        


            Jack Eugster, chairman and chief executive officer, said, "Our
        mall-based businesses exceeded expectations for the quarter.
        However, at Media Play, successful sales building efforts were
        offset by lower gross margins."
        


            The corporation's superstore divisions (Media Play and On Cue)
        led second-quarter sales growth with a 4.7 increase in comparable-
        store sales.  Superstore sales for the quarter totaled $133.3
        million, up 43.3 percent from $93.1 million a year earlier.  The
        mall divisions (Sam Goody/Musicland and Suncoast Motion Picture
        Company) recorded a 0.6 percent rise in comparable-store sales from
        the 1995 period.  Company- wide comparable-store sales for the
        second quarter were up 1.8 percent from a year ago.
        


            For the six months ended June 30, 1996, sales rose to $756.0
        million, an 11.5 percent increase from the $678.1 million reported a
        year earlier.  Comparable-store sales for the superstore divisions
        were 0.1 percent behind the 1995 level while the mall divisions
        declined 0.9 percent.  Company-wide comparable-store sales for the
        six months declined 0.6 percent.  The net loss in the first half was
        $59.1 million, or $1.77 per share, compared to a net loss of $13.8
        million, or $.40 per share, last year.  The year-to-date net loss
        included a $35 million restructuring charge taken in the first
        quarter for the closure of underperforming stores.
        


            Square footage for Musicland Stores Corporation totaled 9.5
        million at June 30, 1996, a 15.3 percent increase from the 8.2
        million in the same period a year earlier.
        


            The corporation opened two Media Play stores during the second
        quarter.  It also opened two On Cue stores, one Suncoast Motion
        Picture Company stores and one Sam Goody store in the United
        Kingdom.   The corporation freed up additional working capital by
        closing 21 stores in the second quarter, including 11 music stores,
        eight Media Play stores, one On Cue store and the Readwell's
        bookstore.  This brought the year- to-date store closings to 34.  At
        the end of the quarter, the corporation operated a total of 1,479
        stores (84 Media Play stores, 159 On Cue stores, 414 Suncoast
        stores, and 800 Sam Goody stores and 22 United Kingdom stores) in 49
        states, the United Kingdom, Puerto Rico and the Virgin Islands.
        


            Based in Minneapolis, Musicland Stores Corporation is the
        leading specialty retailer of (more)Musicland Stores Corporation /
        Page 3home- entertainment products, including prerecorded music and
        videos, books and computer software.  It is traded on the New York
        Stock Exchange under the symbol MLG.
        


        
                  MUSICLAND STORES CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)

                     (In thousands, except per share amounts)
        
                                      Three Months Ended   Six Months Ended
                                            June 30,           June 30,
                                         1996      1995      1996      1995
        Sales                       $ 372,410 $ 331,720 $ 755,980 $ 678,080
        Cost of sales                 245,828   208,348   499,565   432,464
        Selling, general and
         administrative expenses      135,814   119,475   275,303   238,420
        Operating income (loss)
         before depreciation,
         amortization and
         restructuring charge          (9,232)    3,897   (18,888)    7,196
        Depreciation and
         amortization                  11,175    11,396    22,734    22,162
        Restructuring charge                -              35,000
        Operating income (loss)       (20,407)   (7,499)  (76,622) (14,966)
        Interest expense                8,362     7,124    15,034   11,917
        Earnings (loss) before
         income taxes                 (28,769)  (14,623)  (91,656) (26,883)
        Income taxes                  (10,150)   (7,092)  (32,550) (13,038)
        Net earnings (loss)          $(18,619)  $(7,531) $(59,106)$(13,845)
        Earnings (loss) per
         common share                  $(0.56)   $(0.22)   $(1.77)  $(0.40)
        Weighted average number
         of shares outstanding         33,402    34,264    33,387    34,258
        

                    MUSICLAND STORES CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS (UNAUDITED)

                                    (In thousands)
        
                                        ASSETS
                                                          June 30,
                                                      1996        1995
        Current assets:
         Cash and cash equivalents                  $5,485      $1,246
        Inventories                                529,699     487,128
        Deferred income taxes                       30,900      14,470
         Other current assets                       33,705      19,945
        Total current assets                       599,789     522,789
        Property, net                              287,625     304,676
        Goodwill                                    96,755     238,457
        Deferred income taxes                            -         630
         Other assets                                6,353       6,187
        Total Assets                              $990,522  $1,072,739
        
                       LIABILITIES AND STOCKHOLDERS' EQUITY
        
        Current liabilities:
        Short-term notes payable                       $--        $
          Other current liabilities                 78,847      52,279
        Total current liabilities                  682,374     590,280
        Long-term debt                             110,000     110,000
        Other liabilities                           55,582      45,903
        Deferred income taxes                        5,800          --
        Stockholders' equity:
        Common stock                                   343         343
        Additional paid-in capital                 254,411     254,192
         Retained earnings
          (accumulated deficit)                   (104,017)     76,994
         Deferred compensation                      (8,998)          --
        Common stock subscriptions                  (4,973)     (4,973)
        Total stockholders' equity                 136,766     326,556
        Total Liabilities and
         Stockholders' Equity                     $990,522  $1,072,739
        

                  MUSICLAND STORES CORPORATION AND SUBSIDIARIES
                         SALES AND STORE DATA (UNAUDITED)

                     (Dollars and Square Footage in Millions)
        
                                  Three Months Ended June 30,
                                                     Percent of Total
                          1996    1995   %Change      1996     1995
        Sales:
        Superstores      $133.3  $93.1     43.3%      35.8%    28.1%
        Mall stores       235.6  235.0      0.2       63.3     70.8
        Total (1)         372.4  331.7     12.3      100.0    100.0
        Comparable store
         sales % change (2):
         Superstores        4.7%  19.1%     N/A        N/A      N/A
         Mall stores        0.6   (3.4)     N/A        N/A      N/A
         Total (1)          1.8   (0.5)     N/A        N/A      N/A
        
                                      Six Months Ended June 30,
                                                     Percent of Total
                           1996   1995    %Change     1996     1995
        Sales:
        Superstores      $267.2 $184.4      44.9%     35.3%    27.2%
        Mall stores       481.9  486.7      (1.0)     63.7     71.8
        Total (1)         756.0  678.1      11.5     100.0    100.0
        Comparable store
         sales %  change (2):
         Superstores       (0.1)% 22.5%      N/A       N/A       N/A
         Mall stores       (0.9)  (1.4)      N/A       N/A       N/A
         Total (1)         (0.6)   1.5       N/A       N/A       N/A
         Ending store count

            CONTACT:  Marcia Appel, Media, 612-931-8742  or Jim Nermyr,
        Investors, 612-931-8007