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Guitar Center, Inc. Announces Second Quarter 2005 Results Consolidated Net Sales Up 18.5%; Consolidated Net Income Up 6.3%; Diluted EPS of $0.46 Includes Acquisition Charges of $0.07 Related to Music & Arts Center Transaction.

Article Excerpt
WESTLAKE VILLAGE, Calif. -- Guitar Center, Inc. (Nasdaq:GTRC) today announced financial results for the second quarter ended June 30, 2005.

Consolidated net sales increased 18.5% to $402.3 million from $339.6 in the second quarter of last year. Consolidated net income increased 6.3% to $12.9 million, or $0.46 per diluted share, from $12.1 million, or $0.45 per diluted share. The Company's second quarter net income includes charges of $2.1 million after-tax, or $0.07 per diluted share, related to the acquisition of Music & Arts Center, Inc. Excluding those acquisition charges, second quarter net income increased 24% to $15.0 million, or $0.53 per diluted share. Second quarter weighted average number of diluted shares outstanding was 29.8 million compared to 28.9 million in the same period of 2004.

Commenting on first quarter results, Bruce Ross, Chief Financial Officer of Guitar Center, stated, "Our bottom line results for the quarter were better than anticipated as we continued to leverage operating efficiencies in our Guitar Center and direct response divisions. Our Guitar Center stores outperformed both our sales and operating income expectations. Five new store openings and our continuing focus on merchandise planning and generating store traffic contributed to a 14.0% net sales increase for the quarter. Despite competitive factors, Musician's Friend achieved better than expected operating income. Finally, we are pleased to have successfully completed the acquisition and integration of Music & Arts, which generated results in line with our expectations for the quarter."

Guitar Center Stores

During the quarter, we opened large format Guitar Center stores in Jacksonville, Florida and Syracuse, New York and small format stores in Youngstown, Ohio, Tallahassee, Florida and Jackson, Mississippi. Net sales from Guitar Center stores increased 14.0% to $299.6 million from $262.9 million in the second quarter of 2004, with sales from new stores contributing $18.5 million and representing 50.3% of the total increase. Comparable store sales for the Guitar Center stores increased 7%. Gross...

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