SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: April 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________ to _____________________
Commission File number: 0-028176
Whitehall Jewellers, Inc.
(Exact name of registrant as specified in its charter)
Delaware 36-1433610
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
155 N. Wacker Drive, Suite 500, Chicago, IL 60606
(Address of principal executive offices)
312/782-6800
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal
year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes___ No___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
The number of shares of the Registrant's common stock, $.001 par value per
share, outstanding as of June 11, 2002 was 14,756,544 and the number of shares
of the Registrant's Class B common stock, $1.00 par value per share, outstanding
as of April 30, 2002 was 142.
WHITEHALL JEWELLERS, INC.
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED APRIL 30, 2002
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Operations (unaudited) for the three months ended April
30, 2002 and 2001
Balance Sheets - (unaudited) as of April 30, 2002, January 31, 2002
and April 30, 2001
Statements of Cash Flows (unaudited) for the three months ended April
30, 2002 and 2001
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3. Quantitative and Qualitative Disclosure About Market Risk
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(b) Reports on Form 8-K
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Whitehall Jewellers, Inc.
Statements of Operations
for the three months ended April 30, 2002 and 2001
(unaudited)
(in thousands, except for per share data)
Three months ended
------------------
April 30, 2002 April 30, 2001
-------------- --------------
Net sales $ 74,588 $ 68,931
Cost of sales (including buying and occupancy expenses) 47,573 43,317
-------- --------
Gross profit 27,015 25,614
Selling, general and administrative expenses 25,627 26,482
-------- --------
Income(loss)from operations 1,388 (868)
Interest expense 1,012 1,739
-------- --------
Income (loss) before income taxes 376 (2,607)
Income tax expense (benefit) 134 (985)
-------- --------
Net income (loss) $ 242 $ (1,622)
======== ========
Basic earnings per share:
Net income (loss) $ 0.02 $ (0.11)
======== ========
Weighted average common shares and common share equivalents 14,667 14,574
======== ========
Diluted earnings per share:
Net income (loss) $ 0.02 $ (0.11)
======== ========
Weighted average common shares and common share equivalents 15,382 14,574
======== ========
The accompanying notes are an integral part of the financial statements.
3
Whitehall Jewellers, Inc.
Balance Sheets
As of April 30, 2002, January 31, 2002 and April 30, 2001
(unaudited, in thousands, except share data)
April 30, January 31, April 30,
2002 2002 2001
--------- --------- ---------
ASSETS
Current Assets:
Cash $ 2,131 $ 2,741 $ 4,025
Accounts receivable, net 1,811 1,189 2,294
Merchandise inventories 176,203 173,931 186,698
Prepaid income taxes 508 -- 1,674
Other current assets 799 973 1,302
Deferred financing costs 511 511 498
Deferred income taxes 2,370 2,704 2,817
---------------------------------------------
Total current assets 184,333 182,049 199,308
Property and equipment, net 64,097 63,914 64,716
Goodwill 5,662 5,662 5,859
Deferred financing costs 595 723 1,080
Deferred income tax -- -- 527
---------------------------------------------
Total assets $ 254,687 $ 252,348 $ 271,490
=============================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Revolver loan $ 52,627 $ 35,277 $ 75,250
Current portion of long-term debt 5,500 5,250 4,500
Accounts payable 50,769 56,695 51,390
Customer deposits 4,077 3,963 4,531
Accrued payroll 4,313 6,270 3,677
Income taxes -- 3,226 --
Other accrued expenses 14,254 18,171 19,004
---------------------------------------------
Total current liabilities 131,540 128,852 158,352
Long term debt 3,000 4,500 8,500
Subordinated debt 640 640 640
Deferred income taxes, net 1,901 2,012 --
Other long-term liabilities 2,784 2,660 2,250
---------------------------------------------
Total liabilities 139,865 138,664 169,742
Commitments and contingencies
Stockholders' equity:
Common stock 17 17 17
Class B common stock -- -- --
Class C common stock -- -- --
Class D common stock -- -- --
Additional paid-in capital 104,653 103,767 103,541
Accumulated earnings 39,112 38,870 27,167
---------------------------------------------
143,782 142,654 130,725
Less:
Treasury stock, at cost (3,199,628, 3,200,209 and
3,200,376 shares respectively)
(28,960) (28,970) (28,977)
---------------------------------------------
Total stockholders' equity, net 114,822 113,684 101,748
---------------------------------------------
Total liabilities and stockholders' equity
$ 254,687 $ 252,348 $ 271,490
=============================================
The accompanying notes are an integral part of the financial statements.
4
Whitehall Jewellers, Inc.
Statements of Cash Flows
for the three months ended April 30, 2002 and 2001
(unaudited, in thousands)
Three months ended
------------------
April 30, April 30,
2002 2001
---------------------------
Cash flows from operating activities:
Net income(loss) $ 242 $ (1,622)
Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities:
Depreciation and amortization 2,744 2,629
Loss on disposition of assets 15 36
Changes in assets and liabilities:
Increase in accounts receivable, net (622) (888)
Increase in merchandise inventories, net of gold consignment (2,272) (11,752)
(Increase) decrease in other current assets 174 (614)
Increase in prepaid taxes (285) (1,674)
(Decrease)increase in accounts payable (3,209) 10,486
Decrease in income taxes payable (3,226) (2,940)
Increase in customer deposits 114 317
Decrease in accrued liabilities (5,750) (695)
---------------------------
Net cash used in operating activities (12,075) (6,717)
Cash flows from investing activities:
Capital expenditures (2,814) (5,127)
---------------------------
Net cash used in investing activities (2,814) (5,127)
Cash flows from financing activities:
Borrowing on revolver loan 168,318 243,693
Repayment of revolver loan (150,968) (215,663)
Outstanding checks (2,717) (17,078)
Repayment of term loan (1,250) (1,000)
Proceeds from gold consignment -- 3,107
Financing costs -- (316)
Proceeds from employee stock purchase plan 10 --
Proceeds from exercise of stock options 886 200
---------------------------
Net cash provided by financing activities 14,279 12,943
---------------------------
Net change in cash and cash equivalents (610) 1,099
Cash and cash equivalents at beginning of period 2,741 2,926
---------------------------
Cash and cash equivalents at end of period $ 2,131 $ 4,025
===========================
The accompanying notes are an integral part of the financial statements.
5
Whitehall Jewellers, Inc.
Notes to Financial Statements
1. Description of Operations
The financial statements of Whitehall Jewellers, Inc. (the "Company")
include the results of the Company's chain of specialty retail fine jewelry
stores. The Company operates exclusively in one business segment, specialty
retail jewelry. The Company has a national presence with 373 stores as of April
30, 2002, located in 38 states, operating in regional or superregional shopping
malls.
2. Summary of Significant Accounting Policies
Basis for Presentation
The accompanying Balance Sheet as of January 31, 2002 was derived from
the audited financial statements for the year ended January 31, 2002. The
accompanying unaudited Balance Sheets as of April 30, 2002 and 2001 and the
Statements of Income and Cash Flows for the three months ended April 30, 2002
and 2001 have been prepared in accordance with generally accepted accounting
principles for interim financial information. The interim financial statements
reflect all adjustments (consisting only of normal recurring accruals) which
are, in the opinion of management, necessary for a fair presentation of
financial position, results of operations and cash flows for the interim periods
presented. The interim financial statements should be read in the context of the
Financial Statements and footnotes thereto included in the Whitehall Jewellers,
Inc. Annual Report for the fiscal year ended January 31, 2002. References in the
following notes to years and quarters are references to fiscal years and fiscal
quarters.
3. Accounts Receivable, Net
Accounts receivable are shown net of the allowance for doubtful accounts of
$620,000, $ 673,000, and $1,570,000 as of April 30, 2002, January 31, 2002 and
April 30, 2001, respectively.
4. Inventory
As of April 30, 2002, January 31, 2002 and April 30, 2001, merchandising
inventories consisted of:
April 30, 2002 January 31, 2002 April 30, 2001
(in thousands)
Raw Materials $ 7,746 $ 6,958 $ 7,959
Finished Goods 168,457 166,973 178,739
-------------- ---------------- --------------
Inventory $ 176,203 $ 173,931 $ 186,698
============== ================ ==============
Raw materials primarily consist of diamonds, precious gems, semi-precious
gems and gold. Included within finished goods inventory are allowances for
inventory shrink, scrap, and miscellaneous costs of $2,839,000, $ 3,003,000 and
$3,851,000 as of April 30, 2002, January 31, 2002 and April 30, 2001,
respectively. As of April 30, 2002, January 31, 2002 and April 30, 2001,
consignment inventories held by the Company that are not included in the balance
sheets total $80,967,000, $80,425,000, and $75,203,000, respectively.
In addition, gold consignments of $23,298,000, $23,298,000 and $29,416,000,
are not included in the Company's balance sheets as of April 30, 2002, January
31, 2002 and April 30, 2001, respectively.
Certain merchandise procurement, distribution and warehousing costs are
allocated to inventory. As of April 30, 2002, January 31, 2002 and April 30,
6
2001, the amounts included in inventory are $3,328,000, $3,306,000 and
$3,179,000, respectively.
5. Accounts Payable
Accounts payable includes outstanding checks, which were $7,912,000,
$7,140,000 and $3,625,000 as of April 30, 2002, January 31, 2002 and April 30,
2001, respectively.
6. Financing Arrangements
Effective October 31, 2001, the Company amended certain terms and
conditions within its Amended and Restated Revolving Credit, Term Loan and Gold
Consignment Agreement (the "Credit Agreement") with its bank group which
provides for a total facility of $166.5 million through June 30, 2004. Interest
rates and the commitment fee charged on the unused portion of the facility float
based upon the Company's quarterly financial performance.
Under this Credit Agreement, the banks have a collateral security interest
in substantially all of the assets of the Company. The Credit Agreement contains
certain restrictions on capital expenditures, investments, payment of dividends,
assumption of additional debt, acquisitions and divestitures, among others, and
requires the Company to maintain certain financial ratios based on levels of
funded debt, capital expenditures and earnings before interest, taxes,
depreciation and amortization.
Revolver Loan
The revolving loan facility under the Credit Agreement is available up to a
maximum of $150.0 million, including amounts consigned under the gold
consignment facility, and is limited by a borrowing base computed based on the
value of the Company's inventory and accounts receivable. Availability under the
revolver is based on amounts outstanding thereunder, including the value of
consigned gold which fluctuates based on gold prices. Interest rates and
commitment fees on the unused facility float based on the Company's quarterly
financial performance.
The interest rates for borrowings under this agreement are, at the
Company's option, based on Eurodollar rates or the banks' prime rate. Interest
is payable monthly for prime borrowings and upon maturity for Eurodollar
borrowings.
Term Loans
The term loan under the Credit Agreement is available up to a maximum of
$8.5 million ($16.5 million, less principal repayments). The interest rates for
these borrowings are, at the Company's option, based on Eurodollar rates or the
banks' prime rate. Interest is payable monthly for prime borrowings and upon
maturity for Eurodollar borrowings. Interest rates and the commitment fee
charged on the unused facility float based on the Company's quarterly financial
performance.
Gold Consignment Facility
The Company has the opportunity to enter into Gold Consignments with certain
third party financial institutions. The Company provides the third party
financial institution with title to a certain number of troy ounces of gold held
in the Company's existing merchandise inventory in exchange for cash at the
current market price of gold. The Company then consigns the gold from the third
party financial institution, pursuant to the Gold Consignment Agreement. This
agreement entitles the Company to use the gold in the ordinary course of its
business. The Gold Consignment Facility is a transfer of title in specified
quantities of the gold content of the Company's inventory (a non-financial
asset) to a financial institution in exchange for cash. The Company continues to
bear responsibility for damage to the
7
inventory, as is the case in all of its consigned inventory arrangements with
its other vendors.
The Company has accounted for the transaction as a reduction in its inventories,
as it has transferred title to the gold to the financial institution. Similar to
other consigned inventories in the possession of the Company (for which the
Company bears risk of loss but does not possess title), the value of the
inventory is not included in the assets of the Company. The terms of the Gold
Consignment Agreement require the Company to deliver the specified quantities of
consigned gold back to the third party financial institution at the end of the
facility (which currently expires in 2004). Physical delivery can be made from
the Company's inventory or from gold acquired by the Company in the open market.
As an alternative to physical delivery of these specific troy ounces of gold,
the Company can elect to purchase the consigned quantities at the end of the
Consignment Facility at the current market price for gold on that date.
As of April 30, 2002 the Company sold and simultaneously consigned 66,500 troy
ounces of gold for $23.3 million under the gold consignment facility. The
facility provides for the sale of a maximum 115,000 troy ounces or $40.0
million. Under the agreement, the Company pays consignment fees based on the
London Interbank Bullion Rates payable monthly. Consignment rates and commitment
fees on the unused portion of the gold consignment facility float based upon the
Company's quarterly financial performance. On June 30, 2004, the Company is
required to return or repurchase 66,500 troy ounces of gold under this agreement
at the prevailing gold rate in effect on that date, or the facility may re
renewed. Based on the gold rate as of April 30,2002, the market value of gold
consigned was $ 20.5 million.
7. Dilutive Shares That Were Outstanding During the Period
The following table summarizes the reconciliation of the numerators and
denominators for the basic and diluted EPS computations at April 30, 2002 and
2001.
Three months ended
April 30, 2002 April 30, 2001
-------------- --------------
(in thousands, except share
amounts)
Net income (loss) $ 242 $ (1,622)
Weighted average shares for basic EPS 14,667 14,574
Incremental shares upon conversions:
Stock options 715 ---
Weighted average shares for diluted EPS 15,382 14,574
Stock options excluded from the calculation of diluted earnings per share for
the three months ended April 30, 2002 and 2001, were 362,845, and 2,892,086
respectively, due to their antidilutive effect on the calculations.
8. Accounting of Business Combinations and Goodwill and Other Intangibles
In July, 2001, the Financial Accounting Standards Board issued Statement No. 141
("SFAS 141"), "Business Combinations" and Statement No. 142 ("SFAS 142"),
"Goodwill and Other Intangible Assets", which requires that goodwill and
intangible assets with indefinite useful lives no longer be amortized, but
rather be tested for impairment at least annually. The Company adopted the
provisions of SFAS 142 effective February 1, 2002 and has discontinued the
amortization of goodwill. The Company has no other separately identifiable
intangible assets. Pursuant to this standard, the Company has completed an
8
assessment of the categorization of its existing goodwill. In addition, the
Company completed an analysis of the fair value of it's single reporting unit
using both a discounted cash flow analysis and market multiple approach and has
determined that the fair value of it's reporting unit exceeds the carrying value
and therefore, no future impairment testing of goodwill needs to be considered.
The carrying amount of goodwill as of April 30, 2002, January 31, 2002 and April
30, 2001 was $5,662,000, $5,662,000 and $ 5,859,000, respectively. The table
below shows income before income taxes, net income and earnings per share
amounts for the quarters ended April 30, 2002 and April 30, 2001 adjusted to add
back goodwill amortization and related tax effects for the first quarter 2001.
Three Months Ended Three Months Ended
April 30, 2002 April 30, 2001
Reported income (loss) before income taxes $ 376 $ (2,607)
Add back: Goodwill amortization -- 66
------------ ------------
Adjusted income (loss) before income taxes $ 376 $ (2,541)
============ ============
Reported net (loss) income $ 242 $ (1,622)
Add back: After tax impact of goodwill amortization -- 41
------------ ------------
Adjusted net income (loss) $ 242 $ (1,581)
============ ============
BASIC EARNINGS PER SHARE:
Reported net income (loss) $ 0.02 $ (0.11)
Goodwill amortization -- .00
------------ ------------
Adjusted net income (loss) $ 0.02 $ (0.11)
============ ============
DILUTED EARNINGS PER SHARE:
Reported net income (loss) $ 0.02 $ (0.11)
Goodwill amortization -- .00
------------ ------------
Adjusted net income (loss) $ 0.02 $ (0.11)
============ ============
9. Reclassification
Certain Balance Sheet amounts from prior periods were reclassified to conform to
the current year presentation. These reclassifications had no impact on
earnings.
9
PART I - FINANCIAL INFORMATION
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Net sales for the first quarter of fiscal 2002 increased $5.7 million, or
8.2%, to $74.6 million from $68.9 million in the first quarter of fiscal 2001.
New store sales accounted for an increase in sales of $3.6 million. Comparable
store sales increased $3.3 million, or 4.9%, in the first quarter of fiscal 2002
from the first quarter of fiscal 2001. These sales changes were impacted by a
sales decrease of $1.2 million related to closed stores. Comparable store sales
increases primarily resulted from an increase in promotional activity and an
increase usage of one year no interest credit promotions. The total number of
merchandise units sold increased by approximately 13.4% in the first quarter of
fiscal 2002 from the first quarter of fiscal 2001 and the average price per
merchandise sale decreased to $309 in fiscal 2002 from $324 in fiscal 2001.
Credit sales as a percentage of net sales increased to 40.5% in the first
quarter of fiscal 2002 from 40.2% in the first quarter of fiscal 2001, primarily
as a result of decreased sales through secondary credit programs which were more
than offset by increases in other private label credit programs. The Company
opened 13 new stores and closed four stores in the first quarter of fiscal 2002,
increasing the number of stores to 373 as of April 30, 2002 compared to 361 as
of April 30, 2001.
Gross profit increased $1.4 million, or 5.5%, to $27.0 million from $25.6
million in the first quarter of fiscal 2002 compared to the same period in
fiscal 2001. Gross profit as a percentage of sales decreased to 36.2% in the
first quarter of fiscal 2002 compared to 37.2% in the first quarter of fiscal
2001. The 100 basis point reduction in gross profit margin primarily resulted
from an increase in selective and targeted promotional activity. The resultant
decrease in merchandise gross margin was partially offset by improvements in
margin from increased warranty sales and improved repair margin.
Selling, general and administrative expenses decreased $0.9 million, or
3.0%, to $25.6 million from $26.5 million in the first quarter of fiscal 2002
compared to the same period in fiscal 2001. Selling, general and administrative
expense as a percent of sales was reduced to 34.4% versus 38.4% in first quarter
2001. The dollar decrease primarily related to lower other expense ($1.0
million), lower advertising expense ($ 0.2 million) which were partially offset
by higher personnel expense ($0.2 million) and higher credit expense ($0.2
million). The decrease in other expenses resulted from centralized control of
the consumption of supplies and services along with reductions in negotiated
rates for those items. Payroll costs increased primarily due to the increased
number of stores, but were offset by expense reductions to reduce payroll hours
and control labor rates. Store personnel expense contributed 20 basis points of
the 100 basis point improvement in SG&A.
Interest expense decreased approximately $0.7 million to $1.0 million in
the first quarter of fiscal 2002 from $1.7 million in the first quarter of
fiscal 2001. The decrease resulted from lower average borrowings and lower
interest rates.
Income tax expense of $0.1 million in the first quarter of 2002 compared to
an income tax benefit of $1.0 million in the first quarter of 2001, reflects an
expected annual effective tax rate of 35.8% and 37.8%, respectively. The
Company's annual effective tax rate was 34.8% for fiscal 2001.
Net income of $0.2 million in the first quarter of fiscal 2002, compared to
a net loss of $1.6 million in the first quarter of fiscal 2001 resulted from the
factors discussed immediately above. The Company adopted the
10
provisions of SFAS 142 effective February 1, 2002 and has discontinued the
amortization of goodwill. The first quarter of fiscal 2001 net loss adjusted for
FAS 142 goodwill amortization would have remained approximately $1.6 million.
Liquidity and Capital Resources
The Company's cash requirements consist principally of funding inventory at
existing stores, capital expenditures and working capital (primarily inventory)
associated with the Company's new stores. The Company's primary sources of
liquidity have been cash flow from operations and bank borrowings under the
Company's revolver, which was amended on October 31, 2001 as discussed in Note 6
of the April 30, 2002 financial statements in this Form 10-Q.
The Company's inventory levels and working capital requirements have
historically been highest in advance of the Christmas season. The Company has
funded these seasonal working capital needs through borrowings under the
Company's revolver and increases in trade payables and accrued expenses. As of
April 30, 2002, the maximum availability under the credit facility was $45.9
million based on the borrowing base formula. The credit facility covenants also
require the Company to attain certain operating results.
The Company's cash flow used in operating activities was $12.1 million in
the first quarter of 2002 compared to $6.7 million used in operating activities
in the first quarter of fiscal 2001. Increases in merchandise inventories ($2.3
million), decrease in accounts payable ($3.2 million), decreased income taxes
payable ($3.2 million) and decreases in accrued liabilities ($5.8 million) were
partially offset by income from operations ($0.2 million) and depreciation and
amortization ($2.8 million). The increase in merchandise inventories primarily
related to inventory for new store openings, including anticipated store
openings in the second quarter of fiscal 2002 and the 13 completed new store
openings in the first quarter of fiscal 2002. In the first quarter of 2002, the
primary sources of the Company's liquidity included a net increase of $17.350
million in the amount outstanding under the Company's revolver and proceeds for
the exercise of options ($0.9 million). The Company's revolver loan balance was
$52.6 million on April 30, 2002 versus $75.3 million on April 30, 2001. The
Company utilized cash in the first quarter of 2002 to fund decreases in
outstanding checks ($2.7 million) and capital expenditures of $2.8 million,
primarily related to the opening of 13 new stores in the first quarter of 2002
and to repay a portion of the term loan ($1.3 million).
Management expects that cash flow from operating activities and funds
available under its revolving credit facility should be sufficient to support
the Company's current new store expansion program and seasonal working capital
needs for the foreseeable future.
Inflation
Management believes that inflation generally has not had a material effect
on results of its operations.
Item 3 - Quantitative and Qualitative Disclosure About Market Risk
Interest Rate Risk
The Company's exposure to changes in interest rates relates primarily to
its borrowing activities to fund business operations. The Company principally
uses floating rate borrowings under its revolving credit and term loan
facilities. The Company currently does not use derivative financial instruments
to protect itself from fluctuations in interest rates.
11
Gold Price Risk
The Company's exposure to changes in the price of gold relates to its
borrowing activities under its gold consignment facility. The Company accepts as
consignee, and is responsible to return at a future date, a fixed number of
ounces of gold. The periodic charges paid by the Company are computed based on a
percentage of the value of the gold consigned. An increase in the price of gold
could substantially increase the annual costs to the Company of the gold
consigned and the eventual costs to the Company upon the termination of this
arrangement.
There have been no material changes to the Company's market risk during the
three months ended April 30, 2002.
Adoption of Accounting Standards
In July 2001, the FASB issued SFAS No. 143 "Accounting for Asset Retirement
Obligations." SFAS No. 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated retirement costs. This statement is effective for financial
statements issued for fiscal years beginning after June 15, 2002. The Company is
in the process of assessing the impact on the Company upon adoption, however,
management does not expect this to have a material impact on its financial
statements.
12
PART II - OTHER INFORMATION
Item 5 - Other Information
Forward-Looking Statements
This release contains certain forward-looking statements (as such term is
defined in Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934) and information relating to the Company that
are based on the current beliefs of management of the Company as well as
assumptions made by and information currently available to management including
statements related to the markets for our products, general trends and trends in
our operations or financial results, plans, expectations, estimates and beliefs.
In addition, when used in this report, the words "anticipate," "believe,"
"estimate," "expect," "intend," "plan," "predict" and similar expressions and
their variants, as they relate to the Company or our management, may identify
forward-looking statements. Such statements reflect our judgment as of the date
of this report with respect to future events, the outcome of which is subject to
certain risks, including the factors described below, which may have a
significant impact on our business, operating results or financial condition.
Investors are cautioned that these forward-looking statements are inherently
uncertain. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results or outcomes may
vary materially from those described herein. Whitehall Jewellers undertakes no
obligation to update forward-looking statements. The following factors, among
others, may impact forward looking statements contained in this report: (1)
economic conditions, the retail sales environment and our ability to execute our
business strategy and the related effects on comparable store sales and other
results; (2) the extent and results of our store expansion strategy and
associated occupancy costs, and access to funds for new store openings; (3) the
seasonality of our business; (4) the extent and success of our marketing and
promotional programs; (5) personnel costs and the extent to which we are able to
retain and attract key personnel; (6) competition; (7) the availability and cost
of consumer credit; (8) relationships with suppliers; (9) our ability to
maintain adequate information systems capacity and infrastructure; (10) our
leverage and cost of funds; (11) our ability to maintain adequate loss
prevention measures; (12) fluctuations in raw material prices, including
diamond, gem and gold prices; (13) the extent and results of our E-commerce
strategies and those of others; (14) regulation affecting the industry
generally, including regulation of marketing practices; (15) the successful
integration of acquired locations and assets into our existing operations; and
(16) the risk factors identified from time to time in our filings with the
Securities and Exchange Commission.
13
Item 6 - Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit No. Description
- ----------- -----------
3.1 Second Restated Certificate of Incorporation
10.1 1997 Long-Term Incentive Plan
(b) Reports on Form 8-K
On March 20, 2002, the Company filed a Current Report on Form 8-K with the
Securities and Exchange Commission reporting that representatives of the Company
made a presentation to various investors. A copy of the presentation is attached
as an exhibit to the Current Report on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WHITEHALL JEWELLERS, INC.
(Registrant)
Date: June 13, 2002 By: /s/ Jon H. Browne
------------------------------
Jon H. Browne
Executive Vice President -
Chief Financial Officer and Treasurer
(principal financial officer)
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