GTRC Guitar Center (MM)

Guitar Center, Inc. (Nasdaq:GTRC) today announced that it has signed a definitive agreement to acquire certain of the assets of Hermes Trading Company, Inc., a Texas-based musical instruments distributor and retailer. The acquisition includes four retail locations in Texas, in San Antonio, McAllen, Laredo and Brownsville. As part of the transaction, Guitar Center will purchase the existing inventory of musical instruments and equipment for the four locations. The stores will be remodeled and rebranded into Guitar Center format stores. The transaction will be funded through Guitar Center's available cash and credit facility. The acquisition is subject to customary terms and conditions and may be adjusted based on the final determined inventory value. The closing is expected to occur in the second quarter. It is expected that the stores acquired in this acquisition will offset other Guitar Center store openings for 2006. Commenting on the acquisition, Marty Albertson, Chairman and Chief Executive Officer of Guitar Center, said, "We are excited about the acquisition of these four Hermes Music stores, which cater largely to the Hispanic market. This transaction will enable us to strengthen our service to this important customer base. We currently have 12 Guitar Center stores in Texas, including our El Paso store which we opened last year, and the conversion of these stores to the Guitar Center brand will expand our presence across the state. In particular, we will introduce the Guitar Center brand in San Antonio, one of the top retail markets in Texas." Hermes Music has been a musical instruments distributor and retailer since 1982, with sales in the United States, Mexico and South America. Following the transaction, Hermes Music will continue to operate its distribution business and sales to customers outside the United States. Alberto Kreimerman, founder of Hermes Music, will focus his time and efforts helping support underprivileged children in the United States Hispanic and Republic of Mexico communities through the Hermes Music Foundation, Proyecto de Amor, and the television program that supports both projects. Guitar Center anticipates assisting Mr. Kreimerman in these efforts. About Guitar Center Guitar Center is the leading United States retailer of guitars, amplifiers, percussion instruments, keyboards and pro-audio and recording equipment. Our retail store subsidiary presently operates 176 Guitar Center stores across the United States, with 131 stores in primary markets, 43 stores in secondary markets and 2 stores in tertiary markets. In addition, our Music & Arts division operates 89 stores specializing in band instruments for sale and rental, serving teachers, band directors, college professors and students. We are also the largest direct response retailer of musical instruments in the United States through our wholly owned subsidiary, Musician's Friend, Inc., and its catalog 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 the effect of the acquisition of Hermes Trading Company on our future financial results. These statements are based on the historical results of Hermes Trading Company provided to us and assumptions regarding the future performance of that business after we acquire it, the costs or savings of combining the acquired business with our existing business, and the accounting treatment of the transactions, each of which could be materially different than that which we have assumed. 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. Investors are also urged to review carefully the discussion under the caption "Risks Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, and our Annual Report on Form 10-K for the year ended December 31, 2005, each of which has been filed with the Securities and Exchange Commission and may be accessed through the EDGAR database maintained by the SEC at www.sec.gov.