On Feb. 26, Guitar Center (NASDAQ:GTRC) released fourth-quarter earnings for the period ended Dec. 31.

  • The company's top line grew 11.7%, thanks to an increase in sales from Guitar Center stores, the Musician's Friend segment, and its Music & Arts division.
  • The company had a net loss of $40 million, including a non-cash impairment charge related to its Music & Arts division, as well as stock-based compensation expenses.
  • Management anticipates fiscal 2007 net sales between $2.29 billion and $2.35 billion, and EPS between $2.41 and $2.65.

(Figures in millions, except per-share data)

Income Statement Highlights

Q4 2006

Q4 2005

Change

Sales

$628.5

$562.8

11.7%

Net Profit

($40.0)

$33.5

N/A

EPS

($1.36)

$1.14

N/A

Diluted Shares

29.4

29.9

(1.7%)



Get back to basics with a look at the income statement.

Margin Checkup

Q4 2006

Q4 2005

Change**

Gross Margin*

30.7%

30.2%

0.5

Operating Margin

(3.6%)

10.1%

(13.7)

Net Margin

(6.4%)

6.0%

(12.3)

*Cost of goods sold includes buying and occupancy
**Expressed in percentage points.


Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q4 2006

Q4 2005

Change

Cash + ST Invest.

$15.2

$14.5

4.3%

Accounts Rec.

$53.9

$40.8

32.0%

Inventory

$578.1

$445.8

29.7%



Liabilities

Q4 2006

Q4 2005

Change

Accounts Payable

$93.7

$61.0

53.6%

Long-Term Debt

$1.4

$100.0

(98.6%)



Learn the ways of the balance sheet.

Cash Flow Highlights

No cash flow statement? That most definitely does not rock, dude.

Find out why Fools always follow the money.

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