Guitar Center, Inc. Announces Fourth Quarter and Full Year 2005 Results.WESTLAKE Westlake, city (1990 pop. 27,018), Cuyahoga co., NE Ohio, a suburb of Cleveland; inc. as a city 1956. A growing city, its various manufactures include ink and plastics. VILLAGE, Calif. -- Guitar Center, Inc. (Nasdaq:GTRC GTRC Grid Technology Research Center (Japan) GTRC Greensboro Truth and Reconciliation Commission (North Carolina) ): --Fourth quarter consolidated net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight increased 20% and full year net sales rose 18% --Fourth quarter net income increased 24% to $33.5 million; excluding special items net income would have been $34.3 million --Diluted EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. for fourth quarter were $1.14; excluding special items diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS would have been $1.17 --Full year net income increased 21% to $76.7 million; excluding special items net income would have been $80.5 million --Diluted earnings per share for full year were $2.67; excluding special items diluted EPS would have been $2.80 Guitar Center, Inc. (Nasdaq:GTRC) today announced financial results for the fourth quarter and full year ended December December: see month. 31, 2005. Consolidated net sales increased 20.0% to $562.8 million in the fourth quarter from $468.9 million in the prior year period. Consolidated net sales for the full year increased 17.8% to $1.782 billion from $1.513 billion in 2004. Net income increased 23.6% in the fourth quarter to $33.5 million, or $1.14 per diluted share, from $27.1 million, or $0.95 per diluted share, in the prior year period. Fourth quarter 2005 net income includes an after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. charge of $1.7 million, or $0.06 per diluted share, resulting from the previously announced settlement of two class action lawsuits class action lawsuit A lawsuit in which one party or a limited number of parties sue on behalf of a larger group to which the parties belong. For example, investors may bring a class action lawsuit against a brokerage firm that has actively promoted a tax as well as a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. after-tax gain of $883,000, or $0.03 per diluted share, due to a reversal of the stock-based compensation expense recorded in the third quarter of 2005. Under the terms of the Company's long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. incentive plan, a stock-based compensation expense is only recorded if the Company expects to meet or exceed specified earnings targets. The Company's fourth quarter 2004 net income included a one-time after-tax charge of approximately $1.2 million, or $0.04 per diluted share, recorded in connection with the termination of an employment agreement. Excluding the credit and charges in both years, fourth quarter 2005 net income would have been $34.3 million, or $1.17 per diluted share, compared to net income of $28.3 million, or $0.99 per diluted share, in the fourth quarter of 2004. Net income for the full year increased 20.9% to $76.7 million, or $2.67 per diluted share, from net income of $63.4 million, or $2.29 per diluted share, in 2004. In addition to the charge described above which was recorded in the fourth quarter, 2005 net income includes an after-tax charge of $2.1 million, or $0.07 per diluted share, recorded principally in the second quarter in relation to the acquisition of Music & Arts Center, Inc. Full year 2004 net income included the fourth quarter charge due to the termination of an employment agreement described above. Excluding the charges in both years, net income in 2005 would have been $80.5 million, or $2.80 per diluted share, compared to net income of $64.6 million, or $2.33 per diluted share in the prior year. Marty Albertson, Chairman and Chief Executive Officer stated, "On a consolidated basis we ended the year with sales in line with expectations and earnings at the low end of our anticipated range. We generated solid sales growth across all our divisions for the fourth quarter and the year. We were particularly pleased with the operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: performance in our Guitar Center division for both the quarterly and annual periods. Our Guitar Center stores have benefited from a more favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. product mix and efficiencies in our stores and at the distribution center. We successfully opened five new stores in the fourth quarter, including our first tertiary tertiary (tûr`shēârē), in the Roman Catholic Church, member of a third order. The third orders are chiefly supplements of the friars—Franciscans (the most numerous), Dominicans, and Carmelites. market store in Pueblo, Colorado The City of Pueblo (IPA: /'sɪti əv 'pwɛbloʊ/) is a Home Rule Municipality that is the county seat of Pueblo County, Colorado, USA. , which brought our new store openings in 2005 to 25. At Musician's Friend ''' Musician's Friend is America's largest direct response retailer of musical instruments and related gear. Musician's Friend was founded in 1983 by Robert and Deanna Eastman, eventually relocating its headquarters from San Diego to a dairy barn in Southern Oregon. , fourth quarter and 2005 operating margin reflects our increased spending on Internet advertising Delivering ads to Internet users via Web sites, e-mail, ad-supported software and Internet-enabled cellphones. Also called an "ad network," Internet advertising organizations act as a middleman between the advertiser and the Web sites and software publishers that display the ads. and promotional expenses Noun 1. promotional expense - the cost of promoting a product business expense, trade expense - ordinary and necessary expenses incurred in a taxpayer's business or trade , due to an ongoing competitive environment. Music & Arts' sales met our expectations for the year." Guitar Center Stores During the quarter, the Company opened three large format stores, one small format store and the first tertiary market store. Net sales from Guitar Center stores increased 13.0% to $409.9 million from $362.8 million in the fourth quarter of 2004, with sales from new stores contributing $30.6 million, or 65.0% of the increase. Comparable store sales for the Guitar Center stores increased 4.6%. Gross margin, after buying and occupancy costs Occupancy costs are the whole life costs of buildings and their associated land from occupancy until disposal. These costs may be incurred on a regular or irregular basis. Occupancy costs are those costs related to occupying a space including; rent, real estate taxes, personal , grew to 29.6% from 28.6% in the fourth quarter last year. The increase is primarily due to a higher selling margin. Selling, general and administrative expenses for the Guitar Center stores, inclusive of inclusive of prep. Taking into consideration or account; including. corporate general and administrative expenses and a credit from the reversal of the third quarter stock-based compensation expense, were 18.4% of net sales in the fourth quarter compared to 19.4% in the prior year period. Musician's Friend Direct response net sales for the quarter increased 21.6% to $114.8 million from $94.4 million in last year's fourth quarter. Gross margin for the quarter was 28.8% compared to 32.2% in the prior year period, reflecting a lower selling margin due to reduced shipping and handling revenue which is a result of the competitive environment. Selling, general and administrative expenses for the fourth quarter were 19.9% of net sales versus 19.1% in the comparable period last year. The increase primarily reflects higher advertising costs primarily related to Internet advertising and affiliate fees. Music & Arts The Company completed its acquisition of Music & Arts Center, Inc. on April 15, 2005, and the acquired business and the Company's former American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Music business were combined into a new division that operates under the Music & Arts name. Fourth quarter 2005 consolidated results reflect contributions from the combined operations For the department of the British War Office during World War II, see . In the military, combined operations are operations conducted by forces of two or more allied nations acting together for the accomplishment of a single mission. See also
Net sales from our Music & Arts division were $38.1 million in the fourth quarter compared to $11.7 million in the fourth quarter of 2004. Comparable sales for the Music & Arts division increased 2.9% in the quarter. Fourth quarter gross margin for Music & Arts increased to 41.1% versus 36.1% in the same period last year. Selling, general and administrative expenses for Music & Arts were 39.2% of net sales compared to 43.4% in the fourth quarter of 2004. Business Outlook In 2006, the Company plans to open 35 to 40 Guitar Center stores, consisting of 8 to 10 large format, 27 to 30 small format and 2 tertiary market format stores. To date in the first quarter we have opened large format Guitar Center stores in El Paso El Paso (ĕl pă`sō), city (1990 pop. 515,342), seat of El Paso co., extreme W Tex., on the Rio Grande opposite Juárez, Mex.; inc. 1873. , Texas and Allen Park, Michigan Allen Park is a city in Wayne County of the U.S. state of Michigan. As of the 2000 census, the city population was 29,376. It is part of the collection of communities known as Downriver. , a small format store in Madison, Wisconsin Madison is the capital of the U.S. state of Wisconsin and the county seat of Dane County. It is also home to the University of Wisconsin–Madison. The 2006 population estimate of Madison was 223,389, making it the second largest city in Wisconsin, after Milwaukee, and and our second tertiary market store in Terre Haute, Indiana Terre Haute (IPA: [ˌtɛ·ɹə ˈhoʊt]) is a city in Vigo County, Indiana near the state's western border with Illinois. . Based on current business and economic conditions, we currently anticipate consolidated net sales in 2006 will range between $2.059 billion and $2.106 billion and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of will range between $2.72 and $2.98, inclusive of stock option expense in the range of $0.26 to $0.28. More detailed guidance for 2006 is provided in a Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. filed today by the Company. The comments regarding future financial performance in the immediately preceding paragraphs constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. and are made in express reliance on the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions contained in Section 21E of the Securities Exchange Act of 1934. This information, as well as other forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information provided, should be read in conjunction with the information under the caption "Business Risks and Forward Looking Statements" below and the information provided in the Form 8-K. Teleconference and Webcast Guitar Center will host a conference call and webcast today, February February: see month. 15th, at 2 p.m. PT (5:00 p.m. ET) to discuss fourth quarter financial results. Certain financial and other statistical information expected to be presented on the conference call, along with information required under SEC Regulation G, may be accessed on the investor relations Investor relations The process by which the corporation communicates with its investors. section of our corporate web site at www.guitarcenter.com. To access the call, please dial 800-627-7250 (domestic) or 706-645-9246 (international). The webcast will be available on the Company's web site at www.guitarcenter.com or at www.earnings.com. A replay of the call will be available through February 22, 2005 and can be accessed by dialing 800-642-1687 (domestic) or 706-645-9291 (international); pin number 5053671. A replay of the webcast will be available at www.guitarcenter.com. About Guitar Center Guitar Center is the nation's leading retailer of guitars, amplifiers, percussion instruments This is a list of percussion instruments. Tuned percussion
A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , Musician's Friend, Inc., and its catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. and web site, www.musiciansfriend.com. More information on Guitar Center can be found by visiting the Company's web site at www.guitarcenter.com. Business Risks and Forward Looking Statements This press release contains forward-looking statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc , among other things, results deemed to be achievable by management in 2006, and store opening plans. Sales and earnings trends are also affected by many other factors including, among others, world and national political events, including general economic conditions, the effectiveness of our promotion and merchandising merchandising Element of marketing concerned especially with the sale of goods and services to customers. One aspect of merchandising is advertising, which aims to capture the interest of the segment of the population most likely to buy the product. strategies, our ability to integrate and profitably operate acquired businesses, the efficient operation of our supply chain, including the continued support of our key vendors, our effective management of business risks, including litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , and competitive factors applicable to our retail and direct response markets. In light of these risks, the forward-looking statements contained in this press release are not guarantees of future performance and in fact may not be realized. Our actual results could differ materially and adversely from those expressed in this press release. Further, the statements made by us above represent our views only as of the date of this press release, and it should not be assumed that the statements made herein remain accurate as of any future date. We do not presently intend to update these statements prior to our next quarterly earnings release and undertake no duty to any person to effect any such update under any circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . Investors are also urged to review carefully the discussion under the caption "Risk Factors" in our Current Report on Form 8-K dated February 15, 2006, which has been filed with the Securities and Exchange Commission and may be accessed through the EDGAR Edgar or Eadgar (both: ĕd`gər), 943?–975, king of the English (959–75), son of Edmund, king of Wessex. In 957 the Mercians and Northumbrians rebelled against Edgar's brother Edwy and chose Edgar as their king. database maintained by the SEC at www.sec.gov.
GUITAR CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
December December
31, 31,
2005 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
======== ========
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
======== ========
Guitar Center, Inc. and subsidiaries
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
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
========== ==========
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion