Exhibit 99.2
Guitar Center, Inc. and subsidiaries
(Unaudited)
(In thousands, except per share amounts)
|
| June 30, |
| December 31, |
| ||
Assets |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 72,909 |
| $ | 5,931 |
|
Accounts receivable, net |
| 15,155 |
| 19,762 |
| ||
Merchandise inventories |
| 283,582 |
| 292,075 |
| ||
Prepaid expenses and deposits |
| 7,842 |
| 8,626 |
| ||
Deferred income taxes |
| 6,077 |
| 6,077 |
| ||
Total current assets |
| 385,565 |
| 332,471 |
| ||
|
|
|
|
|
| ||
Property and equipment, net |
| 91,022 |
| 89,702 |
| ||
Goodwill |
| 25,995 |
| 25,995 |
| ||
Deposits and other assets, net |
| 7,179 |
| 4,231 |
| ||
|
| $ | 509,761 |
| $ | 452,399 |
|
|
|
|
|
|
| ||
Liabilities and stockholders’ equity |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Accounts payable |
| $ | 47,534 |
| $ | 70,745 |
|
Accrued expenses and other current liabilities |
| 45,520 |
| 54,211 |
| ||
Merchandise advances |
| 13,176 |
| 13,882 |
| ||
Borrowings under line of credit |
| 55,584 |
| 82,690 |
| ||
Current portion of long-term debt |
| 66,667 |
| 118 |
| ||
Total current liabilities |
| 228,481 |
| 221,646 |
| ||
|
|
|
|
|
| ||
Other long-term liabilities |
| 5,715 |
| 5,691 |
| ||
Deferred income taxes |
| 3,352 |
| 3,352 |
| ||
Long-term debt |
| 100,000 |
| 66,782 |
| ||
Total liabilities |
| 337,548 |
| 297,471 |
| ||
|
|
|
|
|
| ||
Stockholders’ equity: |
|
|
|
|
| ||
Preferred Stock; authorized 5,000 shares, none issued and outstanding |
| — |
| — |
| ||
Common Stock, $0.01 par value, authorized 55,000 shares, issued and outstanding 23,174 at June 30, 2003 and 22,746 at December 31, 2002 |
| 232 |
| 227 |
| ||
Additional paid in capital |
| 259,716 |
| 253,863 |
| ||
Accumulated deficit |
| (87,735 | ) | (99,162 | ) | ||
Net stockholders’ equity |
| 172,213 |
| 154,928 |
| ||
|
|
|
|
|
| ||
|
| $ | 509,761 |
| $ | 452,399 |
|
Guitar Center, Inc. and subsidiaries
Consolidated Balance Sheet with Pro Forma as Adjusted Data
(Unaudited)
(In thousands)
|
| June 30, |
| Pro Forma |
| ||
Assets |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 72,909 |
| $ | 5,020 | (1) |
Accounts receivable, net |
| 15,155 |
| 15,155 |
| ||
Merchandise inventories |
| 283,582 |
| 283,582 |
| ||
Prepaid expenses and deposits |
| 7,842 |
| 7,842 |
| ||
Deferred income taxes |
| 6,077 |
| 6,077 |
| ||
Total current assets |
| 385,565 |
| 317,676 |
| ||
|
|
|
|
|
| ||
Property and equipment, net |
| 91,022 |
| 91,022 |
| ||
Goodwill |
| 25,995 |
| 25,995 |
| ||
Deposits and other assets, net |
| 7,179 |
| 6,457 | (2) | ||
|
| $ | 509,761 |
| $ | 441,150 |
|
|
|
|
|
|
| ||
Liabilities and stockholders’ equity |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Accounts payable |
| $ | 47,534 |
| $ | 47,534 |
|
Accrued expenses and other current liabilities |
| 45,520 |
| 44,781 | (3) | ||
Merchandise advances |
| 13,176 |
| 13,176 |
| ||
Borrowings under line of credit |
| 55,584 |
| 55,584 |
| ||
Current portion of long-term debt |
| 66,667 |
| — | (1) | ||
Total current liabilities |
| 228,481 |
| 161,075 |
| ||
|
|
|
|
|
| ||
Other long-term liabilities |
| 5,715 |
| 5,715 |
| ||
Deferred income taxes |
| 3,352 |
| 3,352 |
| ||
Long-term debt |
| 100,000 |
| 100,000 |
| ||
Total liabilities |
| 337,548 |
| 270,142 |
| ||
|
|
|
|
|
| ||
Net stockholders’ equity |
| 172,213 |
| 171,008 | (1,2,3) | ||
|
|
|
|
|
| ||
|
| $ | 509,761 |
| $ | 441,150 |
|
General: The pro forma as adjusted data assumes that all 11% Senior Notes were repaid in full on June 30, 2003.
(1) | In July 2003, we used cash of $67,889 to payoff our 11% Senior Notes of $66,667 and the associated redemption premium of $1,222. The redemption premium will be charged to our income statement for the quarter ending September 30, 2003. |
(2) | In July 2003, we wrote-off $722 of deferred financing costs attributed to the 11% Senior Notes and the amount will be charged to our income statement for the quarter ending September 30, 2003. |
(3) | The tax effected charge for the redemption premium and deferred financing costs is $1,205, using an income tax rate of 38%. |
2
Guitar Center, Inc. and subsidiaries
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)
|
| Three months ended June 30, |
| ||||
|
| 2003 |
| 2002 |
| ||
|
|
|
|
|
| ||
Net sales |
| $ | 291,600 |
| $ | 253,887 |
|
Cost of goods sold, buying and occupancy |
| 216,050 |
| 188,512 |
| ||
Gross profit |
| 75,550 |
| 65,375 |
| ||
|
|
|
|
|
| ||
Selling, general and administrative expenses |
| 62,666 |
| 55,757 |
| ||
Operating income |
| 12,884 |
| 9,618 |
| ||
|
|
|
|
|
| ||
Interest expense, net |
| 2,956 |
| 2,998 |
| ||
|
|
|
|
|
| ||
Income before income taxes |
| 9,928 |
| 6,620 |
| ||
|
|
|
|
|
| ||
Income taxes |
| 3,778 |
| 2,520 |
| ||
|
|
|
|
|
| ||
Net income |
| $ | 6,150 |
| $ | 4,100 |
|
|
|
|
|
|
| ||
Net income per share |
|
|
|
|
| ||
Basic |
| $ | 0.27 |
| $ | 0.18 |
|
Diluted |
| $ | 0.25 |
| $ | 0.18 |
|
|
|
|
|
|
| ||
Weighted average shares outstanding |
|
|
|
|
| ||
Basic |
| 22,995 |
| 22,430 |
| ||
Diluted |
| 24,173 |
| 23,169 |
| ||
3
|
| Six months ended June 30, |
| ||||
|
| 2003 |
| 2002 |
| ||
|
|
|
|
|
| ||
Net sales |
| $ | 579,142 |
| $ | 508,710 |
|
Cost of goods sold, buying and occupancy |
| 428,936 |
| 379,174 |
| ||
Gross profit |
| 150,206 |
| 129,536 |
| ||
|
|
|
|
|
| ||
Selling, general and administrative expenses |
| 125,664 |
| 111,219 |
| ||
Operating income |
| 24,542 |
| 18,317 |
| ||
|
|
|
|
|
| ||
Interest expense, net |
| 6,095 |
| 6,150 |
| ||
|
|
|
|
|
| ||
Income before income taxes |
| 18,447 |
| 12,167 |
| ||
|
|
|
|
|
| ||
Income taxes |
| 7,020 |
| 4,631 |
| ||
|
|
|
|
|
| ||
Net income |
| $ | 11,427 |
| $ | 7,536 |
|
|
|
|
|
|
| ||
Net income per share |
|
|
|
|
| ||
Basic |
| $ | 0.50 |
| $ | 0.34 |
|
Diluted |
| $ | 0.48 |
| $ | 0.33 |
|
|
|
|
|
|
| ||
Weighted average shares outstanding |
|
|
|
|
| ||
Basic |
| 22,894 |
| 22,393 |
| ||
Diluted |
| 23,928 |
| 23,020 |
| ||
4
