Guitar Center 8-K Results of Operations and Financial Condition

Exhibit 99.2

GUITAR CENTER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 (In thousands)

 (Unaudited)

	June 30,		December 31,
	2007		2006
Assets
Current assets:
Cash and cash equivalents	$	13,624	$	15,153
Accounts receivable, net		44,920		53,916
Merchandise inventories		627,084		578,082
Prepaid expenses and other current assets		20,909		16,178
Deferred income taxes		26,974		22,739
Total current assets		733,511		686,068
Property and equipment, net		219,998		201,986
Goodwill		20,330		18,507
Intangible assets, net		8,179		7,612
Other assets, net		13,525		13,305
Total assets	$	995,543	$	927,478
Liabilities and stockholders’ equity
Current liabilities:
Cash overdraft	$	22,267	$	20,243
Accounts payable		100,850		93,717
Accrued expenses and other current liabilities		71,432		117,595
Merchandise advances		23,329		26,830
Borrowings under revolving line of credit		169,611		101,144
Total current liabilities		387,489		359,529
Other long-term liabilities		19,753		17,292
Deferred income taxes		5,195		5,165
Long-term debt		887		1,416
Total liabilities		413,324		383,402
Minority interest		1,077		1,339
Commitments and contingencies
Stockholders’ equity:
Preferred stock		—		—
Common stock		296		295
Additional paid-in capital		475,841		464,217
Retained earnings		105,005		78,225
Total stockholders’ equity		581,142		542,737
Total liabilities and stockholders’ equity	$	995,543	$	927,478

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GUITAR CENTER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

 (Unaudited)

		Three months ended June 30,
		2007			2006
Net sales	$	518,902		$	457,978
Cost of goods sold, buying and occupancy		372,254			326,621
Gross profit		146,648			131,357
Selling, general and administrative expenses		128,345			107,984
Operating income		18,303			23,373
Interest expense, net		2,375			2,374
Income before income taxes and minority interest		15,928			20,999
Income taxes		6,505			7,570
Minority interest in loss		(132	)		—
Net income	$	9,555		$	13,429
Net income per share:
Basic	$	0.32		$	0.51
Diluted	$	0.32		$	0.47
Weighted average shares outstanding:
Basic		29,557			26,278
Diluted		30,276			30,012

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GUITAR CENTER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

		Six months ended June 30,
		2007			2006
Net Sales	$	1,053,385		$	928,725
Cost of goods sold, buying and occupancy		752,361			660,862
Gross profit		301,024			267,863
Selling, general and administrative expenses		252,382			217,098
Operating income		48,642			50,765
Interest expense, net		4,168			4,226
Income before income taxes and minority interest		44,474			46,539
Income taxes		17,924			17,403
Minority interest in loss		(230	)		—
Net income	$	26,780		$	29,136
Net income per share:
Basic	$	0.91		$	1.11
Diluted	$	0.89		$	1.03
Weighted average shares outstanding:
Basic		29,532			26,227
Diluted		30,223			29,849

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