GUITAR CENTER HOLDINGS, INC.

CIK:0001427553|SEC Filings

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Guitar Center Holdings, Inc.) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Net sales	$ 520,683	$ 496,231	$ 1,557,354	$ 1,510,980
Cost of goods sold, buying and occupancy	373,150	348,869	1,105,975	1,053,581
Gross profit	147,533	147,362	451,379	457,399
Selling, general and administrative expenses	146,370	131,378	423,617	402,998
Impairment of intangible assets			2,300
Impairment of goodwill	360,100		360,100
Operating income (loss)	(358,937)	15,984	(334,638)	54,401
Interest expense, net of interest income of $7, $3, $27 and $30, respectively	39,264	41,208	119,298	123,726
Loss before income taxes	(398,201)	(25,224)	(453,936)	(69,325)
Income tax expense (benefit)	466	434	(903)	1,306
Net loss	(398,667)	(25,658)	(453,033)	(70,631)
Other comprehensive income, net of income tax				173
Comprehensive loss	$ (398,667)	$ (25,658)	$ (453,033)	$ (70,458)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	Sep. 30, 2013	Sep. 30, 2012
Operating activities:
Net loss	$ (453,033,000)	$ (70,631,000)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	65,197,000	67,404,000
Impairment of property and equipment	1,731,000	559,000
Impairment of intangible assets	2,300,000
Impairment of goodwill	360,100,000
Net gain on disposal of property and equipment	(38,000)	(2,000)
Amortization of deferred financing fees	2,664,000	2,388,000
Non-cash interest expense		18,637,000
Stock-based compensation	681,000	704,000
Deferred income taxes	(470,000)	(103,000)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	977,000	(1,381,000)
Merchandise inventories	(46,072,000)	(99,370,000)
Prepaid expenses and other current assets	(4,882,000)	(3,741,000)
Other assets, net	(17,000)	(100,000)
Accounts payable	35,181,000	36,389,000
Accrued expenses and other current liabilities	7,880,000	1,869,000
Merchandise advances	(4,662,000)	(2,874,000)
Other long-term liabilities	997,000	1,340,000
Net cash provided by (used in) operating activities	(161,250,000)	(48,912,000)
Investing activities:
Purchase of property and equipment	(44,080,000)	(48,781,000)
Net proceeds from disposal of property and equipment	44,000	2,909,000
Acquisition of businesses	(1,143,000)
Net cash used in investing activities	(45,179,000)	(45,872,000)
Financing activities:
Borrowings on asset-based revolving credit facility	354,000,000	57,000,000
Repayment of asset-based revolving credit facility	(189,000,000)	(57,000,000)
Repayment of long-term debt	(4,453,000)	(484,000)
Financing fees	(2,928,000)	(742,000)
Net cash provided by (used in) financing activities	157,619,000	(1,265,000)
Net decrease in cash	(48,810,000)	(96,049,000)
Cash at beginning of period	74,836,000	106,036,000
Cash at end of period	26,026,000	9,987,000
Cash paid during the period for:
Interest	223,706,000	90,264,000
Income taxes	921,000	2,189,000
Non-cash investing and financing activities:
Assets acquired under capital lease	470,000
GUITAR CENTER, INC.
Operating activities:
Net loss	(410,975,000)	(4,308,000)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	65,197,000	67,404,000
Impairment of property and equipment	1,731,000	559,000
Impairment of intangible assets	2,300,000
Impairment of goodwill	360,100,000
Net gain on disposal of property and equipment	(38,000)	(2,000)
Amortization of deferred financing fees	2,356,000	2,079,000
Non-cash interest expense		404,000
Stock-based compensation	681,000	704,000
Deferred income taxes	5,195,000	(13,803,000)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	977,000	(1,381,000)
Merchandise inventories	(46,072,000)	(99,370,000)
Prepaid expenses and other current assets	(4,882,000)	(4,632,000)
Other assets, net	(17,000)	(100,000)
Accounts payable	35,181,000	36,389,000
Accrued expenses and other current liabilities	246,000	8,460,000
Merchandise advances	(4,662,000)	(2,874,000)
Other long-term liabilities	997,000	1,340,000
Net cash provided by (used in) operating activities	8,315,000	(9,131,000)
Investing activities:
Purchase of property and equipment	(44,080,000)	(48,781,000)
Net proceeds from disposal of property and equipment	44,000	2,909,000
Acquisition of businesses	(1,143,000)
Net cash used in investing activities	(45,179,000)	(45,872,000)
Financing activities:
Borrowings on asset-based revolving credit facility	354,000,000	57,000,000
Repayment of asset-based revolving credit facility	(189,000,000)	(57,000,000)
Repayment of long-term debt	(4,453,000)	(484,000)
Financing fees	(2,928,000)	(742,000)
Repayment to Guitar Center Holdings, Inc.	(169,565,000)	(39,820,000)
Net cash provided by (used in) financing activities	(11,946,000)	(41,046,000)
Net decrease in cash	(48,810,000)	(96,049,000)
Cash at beginning of period	74,836,000	106,036,000
Cash at end of period	26,026,000	9,987,000
Cash paid during the period for:
Interest	54,140,000	50,483,000
Income taxes	921,000	2,189,000
Non-cash investing and financing activities:
Assets acquired under capital lease	$ 470,000

CONDENSED CONSOLIDATED BALANCE SHEETS (Guitar Center Holdings, Inc.) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Current assets:
Cash	$ 26,026	$ 74,836
Accounts receivable, net of allowance for doubtful accounts of $2,829 and $2,849, respectively	43,041	44,015
Merchandise inventories	611,720	564,959
Prepaid expenses and other current assets	28,175	23,285
Deferred income taxes	3,164	3,165
Total current assets	712,126	710,260
Property and equipment, net of accumulated depreciation and amortization of $294,049 and $250,835, respectively	206,598	213,969
Goodwill	222,517	582,378
Intangible assets, net of accumulated amortization of $182,016 and $200,040, respectively	272,610	291,269
Other assets, net	18,963	18,682
Total assets	1,432,814	1,816,558
Current liabilities:
Accounts payable	152,183	116,973
Accrued expenses and other current liabilities	138,420	132,119
Merchandise advances	30,239	34,901
Current portion of long-term debt	6,764	135,725
Total current liabilities	327,606	419,718
Other long-term liabilities	21,666	20,669
Deferred income taxes	79,066	79,537
Long-term debt	1,605,848	1,445,654
Total liabilities	2,034,186	1,965,578
Commitments and contingencies
Stockholders' deficit:
Preferred stock, $0.01 par value, 5,000 shares authorized, none issued and outstanding
Common stock, $0.01 par value, 20,000 shares authorized, 9,740 issued and outstanding	97	97
Additional paid-in capital	634,481	633,800
Accumulated deficit	(1,235,950)	(782,917)
Total stockholders' equity (deficit)	(601,372)	(149,020)
Total liabilities and stockholders' equity (deficit)	$ 1,432,814	$ 1,816,558