Guitar Center 8-K Results of Operations and Financial Condition

Exhibit 99.2

Guitar Center, Inc. and subsidiaries

Consolidated Balance Sheets

(In thousands, except per share amounts)

(Unaudited)

	September 30, 2004			December 31, 2003
Assets
Current assets:
Cash and cash equivalents	$	11,804		$	5,350
Accounts receivable, net	23,592			23,814
Merchandise inventories	321,943			288,873
Prepaid expenses and deposits	20,561			11,543
Deferred income taxes	5,631			5,631
Total current assets	383,531			335,211
Property and equipment, net	95,143			93,347
Goodwill	26,399			25,995
Deposits and other assets, net	8,259			6,318
	$	513,332		$	460,871
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	50,082		$	47,778
Accrued expenses and other current liabilities	57,418			71,616
Merchandise advances	16,773			17,104
Total current liabilities	124,273			136,498
Other long-term liabilities	6,605			5,982
Deferred income taxes	4,220			4,220
Long-term debt	100,000			100,000
Total liabilities	235,098			246,700
Stockholders’ equity:
Preferred Stock; 5,000 authorized, none issued and outstanding	—			—
Common stock, $0.01 par value, authorized 55,000 shares, issued and outstanding 25,312 at September 30, 2004 and 23,998 at December 31, 2003	253			240
Additional paid in capital	303,948			276,233
Accumulated deficit	(25,967		)	(62,302		)
Net stockholders’ equity	278,234			214,171
	$	513,332		$	460,871

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Guitar Center, Inc. and subsidiaries

Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

	Three months ended September 30,
	2004		2003
Net sales	$	354,909	$	300,112
Cost of goods sold, buying and occupancy	256,968		220,261
Gross profit	97,941		79,851
Selling, general and administrative expenses	76,628		66,182
Operating income	21,313		13,669
Interest expense, net	1,294		4,335
Income before income taxes	20,019		9,334
Income taxes	7,608		3,553
Net income	$	12,411	$	5,781
Net income per share
Basic	$	0.49	$	0.25
Diluted	$	0.45	$	0.23
Weighted average shares outstanding
Basic	25,211		23,430
Diluted	29,235		24,944

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Guitar Center, Inc. and subsidiaries

Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

	Nine months ended September 30,
	2004		2003
Net sales	$	1,044,234	$	879,254
Cost of goods sold, buying and occupancy	757,397		649,197
Gross profit	286,837		230,057
Selling, general and administrative expenses	224,146		191,846
Operating income	62,691		38,211
Interest expense, net	4,082		10,430
Income before income taxes	58,609		27,781
Income taxes	22,274		10,573
Net income	$	36,335	$	17,208
Net income per share
Basic	$	1.47	$	0.75
Diluted	$	1.38	$	0.71
Weighted average shares outstanding
Basic	24,698		23,075
Diluted	26,905		24,329

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