Guitar Center Inc. said today it lost $40 million or $1.36 per diluted share for the fourth quarter ended Dec. 31 while net sales increased 11.7 percent to $628.5 million. For the fourth quarter of 2005, Guitar Center reported net income of $33.5 million or $1.14 per diluted share on revenues of $562.8 million. Officials at Westlake Village-based Guitar Center noted that the current financial results were due in part to a write down of goodwill of $73.2 million after taxes associated with the Music & Arts division. “Our results also include a significant non-cash impairment charge related to our Music & Arts division,” said Erick Mason, CFO at Guitar Center. “Although we continue to be committed to the Music & Arts business and the band and orchestra segment of our industry, the competitive landscape for this division has changed, and we have decided to focus our attention on improving operating efficiencies and reducing working capital needs of the business. As a result we plan to moderate the growth of this division which resulted in an impairment of the goodwill from Music & Arts.” Shares in Guitar Center fell 65 cents to $47.38 in late trading following the report.
