Guitar Center 8-K Entry into a Material Definitive Agreement

Exhibit 99.2

GUITAR CENTER, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

	December 31, 2005		December 31, 2004
Assets
Current assets:
Cash and cash equivalents	$	14,529	$	60,453
Investments in marketable securities	—		3,810
Accounts receivable, net	40,844		27,627
Merchandise inventories	445,771		314,961
Prepaid expenses and deposits	15,533		13,367
Deferred income taxes	13,492		5,552
Total current assets	530,169		425,770
Property and equipment, net	149,209		97,349
Investments in marketable securities	—		16,997
Goodwill	85,929		26,474
Deposits and other assets, net	14,883		8,003
	$	780,190	$	574,593
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	79,497	$	49,771
Accrued expenses and other current liabilities	106,181		83,606
Merchandise advances	25,127		22,534
Revolving line of credit	32,266		—
Total current liabilities	243,071		155,911
Other long-term liabilities	11,995		6,943
Deferred income taxes	20,307		5,057
Long-term debt	100,000		100,000
Total liabilities	375,373		267,911
Stockholders’ equity:
Preferred stock; 5,000 authorized, none issued and outstanding	—		—
Common stock, $0.01 par value, authorized 55,000 shares, issued and outstanding 26,092 at December 31, 2005 and 25,359 at December 31, 2004	261		254
Additional paid in capital	326,755		305,305
Retained earnings	77,801		1,123
Stockholders’ equity	404,817		306,682
	$	780,190	$	574,593

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Guitar Center, Inc. and subsidiaries

Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

	Three months ended December 31,
	2005		2004
Net sales	$	562,756	$	468,938
Cost of goods sold, buying and occupancy	392,684		330,502
Gross profit	170,072		138,436
Selling, general and administrative expenses	113,114		93,439
Operating income	56,958		44,997
Interest expense, net	2,528		1,308
Income before income taxes	54,430		43,689
Income taxes	20,956		16,599
Net income	$	33,474	$	27,090
Net income per share
Basic	$	1.29	$	1.07
Diluted	$	1.14	$	0.95
Weighted average shares outstanding
Basic	26,034		25,326
Diluted	29,876		29,400

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	Year Ended December 31,
	2005		2004
Net sales	$	1,782,499	$	1,513,172
Cost of goods sold, buying and occupancy	1,262,097		1,087,899
Gross profit	520,402		425,273
Selling, general and administrative expenses	388,380		317,585
Operating income	132,022		107,688
Interest expense, net	7,339		5,390
Income before income taxes	124,683		102,298
Income taxes	48,005		38,873
Net income	$	76,678	$	63,425
Net income per share
Basic	$	2.96	$	2.55
Diluted	$	2.67	$	2.29
Weighted average shares outstanding
Basic	25,873		24,856
Diluted	29,846		28,976

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