Exhibit 12.1
Ratio of Earnings to Fixed Charges
GUITAR CENTER HOLDINGS, INC.
GUITAR CENTER, INC.
(dollars in thousands)
The following tables set forth, for each of the periods shown, the ratio of earnings to fixed charges with respect to Guitar Center Holdings, Inc. and Guitar Center, Inc.
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| October |
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| January 1, |
| 10, 2007 |
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| Year ended |
| 2007 to |
| to |
| Year ended |
| Year ended |
| Year ended |
| Six months ended | |||||||||||
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| December |
| October 9, |
| December |
| December |
| December |
| December |
| June 30, |
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| 31, 2006 |
| 2007 |
| 31, 2007 |
| 31, 2008 |
| 31, 2009 |
| 31, 2010 |
| 2010 |
| 2011 |
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Holdings |
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Loss Before Income Taxes |
| n/a |
| n/a |
| $ | (12,234 | ) | $ | (350,218 | ) | $ | (224,920 | ) | $ | (85,517 | ) | $ | (47,682 | ) | $ | (56,703 | ) | ||
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Add: Fixed Charges |
| n/a |
| n/a |
| 43,861 |
| 171,527 |
| 160,428 |
| 168,296 |
| 82,974 |
| 90,732 |
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Earnings |
| n/a |
| n/a |
| 31,627 |
| (178,691 | ) | (64,492 | ) | 82,779 |
| 35,292 |
| 34,029 |
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Fixed Charges |
| n/a |
| n/a |
| 43,861 |
| 171,527 |
| 160,428 |
| 168,296 |
| 82,974 |
| 90,732 |
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Ratio of Earnings to Fixed Charges |
| n/a |
| n/a |
| — |
| — |
| — |
| — |
| — |
| — |
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Guitar Center |
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Income (Loss) Before Income Taxes |
| $ | 40,955 |
| $ | 17,292 |
| $ | 82 |
| $ | (293,479 | ) | $ | (159,948 | ) | $ | (11,126 | ) | $ | (11,745 | ) | $ | (16,440 | ) |
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Add: Fixed Charges |
| 26,387 |
| 24,076 |
| 31,545 |
| 114,789 |
| 95,456 |
| 93,905 |
| 47,037 |
| 50,746 |
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Earnings |
| 67,342 |
| 41,368 |
| 31,627 |
| (178,690 | ) | (64,492 | ) | 82,779 |
| 35,292 |
| 34,306 |
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Fixed Charges |
| 26,387 |
| 24,076 |
| 31,545 |
| 114,789 |
| 95,456 |
| 93,905 |
| 47,037 |
| 50,746 |
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Ratio of Earnings to Fixed Charges |
| 2.6x |
| 1.7x |
| 1.0x |
| — |
| — |
| — |
| — |
| — |
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These ratios are computed by dividing total earnings by the total fixed charges. Earnings are defined a as income (loss) before income taxes plus fixed charges less noncontrolling interest in pre-tax income of subsidiaries that have not incurred fixed charges. Fixed charges are defined as total interest expense, which includes amortization of capitalized debt issuance costs, plus an estimate of the interest component within rent expense.
Holdings’ earnings were insufficient to cover fixed charges by $12.2 million for the period October 10, 2007 to December 31, 2007, $350.2 million in 2008, $224.9 million in 2009, and $85.5 million in 2010.
Holdings’ earnings were insufficient to cover fixed charges by $47.7 million for the six months ended June 30, 2010 and $56.7 million for the same period in 2011.
Guitar Center’s earnings were insufficient to cover fixed charges by $293.5 million in 2008, $159.9 million in 2009, and $11.1 million in 2010.
Guitar Center’s earnings were insufficient to cover fixed charges by $11.7 million for the six months ended June 30, 2010 and $16.4 million for the same period in 2011.
n/a: Guitar Center Holdings, Inc. did not exist during these periods.
