EXHIBIT 99.1
[WHITEHALL JEWELLERS, INC. LOGO] NEWS RELEASE
================================================================================
For: Whitehall Jewellers, Inc.
Contact: John R. Desjardins
Executive Vice President
312.762.9751
WHITEHALL JEWELLERS, INC. REPORTS THIRD QUARTER FINANCIAL RESULTS
Chicago, Illinois, November 23, 2004 -- Whitehall Jewellers, Inc.
(NYSE:JWL) today reported financial results for the third quarter ended October
31, 2004.
The Company reported total third quarter sales of $63.3 million
compared to $66.2 million for the third quarter last year. Net loss for the
third fiscal quarter of 2004 was $8.3 million compared to net loss of $7.4
million for the same period a year ago. Net loss per share of $0.60 in the third
quarter compares to net loss per share of $0.53 for the third quarter of last
year.
For the nine-month period ended October 31, 2004, the Company reported
sales of $208.7 million compared to $208.1 million last year. Net loss was $15.2
million versus a net loss of $13.0 million for the same period a year ago. Net
loss per share for the nine-month period was $1.09 compared to net loss per
share of $0.92 for the nine-month period last year. Professional fees, incurred
primarily in connection with the consolidated Capital Factors actions and the
related investigations by the United States Attorney and Securities and Exchange
Commission, amounted to approximately $4.7 million compared to approximately
$2.6 million last year.
As previously disclosed and in connection with its entering into a
non-prosecution agreement with the U.S. Attorney's Office and settlement of
Capital Factors related matters on September 28, 2004, the Company recorded a
litigation accrual of $117,000 during the third quarter for the consolidated
Capital Factors actions and related investigations by the United States Attorney
and Securities and Exchange
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Commission. Litigation accruals for the nine months ended October 31, 2004
totaled $1.0 million approximately and is included in Professional fees and
other charges.
Third quarter results were negatively impacted by a lower income tax
benefit. The effective tax rate used to determine the tax benefit for the third
quarter was lower than in the first two quarters of the current fiscal year.
Hugh M. Patinkin, Chairman and Chief Executive Officer, commented, "As
previously reported in July, the Company began offering price reductions on
certain items that will not be part of the Company's merchandise assortments
going forward. Sales of this merchandise represented 22% of third quarter
merchandise sales, which, because of the price reductions, had a negative effect
on margin."
Mr. Patinkin continued, "In the fourth quarter the Company will
continue to focus its efforts on selling this merchandise as well as on the sale
of its new, fashion right merchandise assortments."
Today at 9:00 a.m. EDT, the Company will host a conference call to
review results for the quarter ended October 31, 2004. To participate in the
call, please dial 800-706-7748, passcode 79837825. This call will also be
webcast live on the Internet at: http://www.whitehalljewellers.com.
ABOUT WHITEHALL JEWELLERS
Whitehall Jewellers, Inc. is a leading national specialty retailer of fine
jewelry, currently operating 386 stores in 38 states. The Company operates
stores in regional and superregional shopping malls under the names Whitehall
Co. Jewellers, Lundstrom Jewelers and Marks Bros. Jewelers.
SAFE HARBOR STATEMENT
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 release, 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 release 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 release: (1) a
change in economic conditions or the financial markets which negatively impacts
the retail sales environment and reduces discretionary spending on goods such as
jewelry; (2) reduced levels of mall traffic caused by economic or other factors;
(3) our ability to execute our business strategy and the related effects on
comparable store sales and other results; (4) the extent and results of our
store expansion strategy and
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associated occupancy costs, and access to funds for new store openings; (5) the
high degree of fourth quarter seasonality of our business and the impact on the
Company's profitability and liquidity; (6) the extent and success of our
marketing and promotional programs; (7) personnel costs and the extent to which
we are able to retain and attract key personnel; (8) the effects of competition;
(9) the availability and cost of consumer credit; (10) relationships with
suppliers including the timely delivery to the Company of appropriate
merchandise on payment terms consistent with past practice; (11) our ability to
maintain adequate information systems capacity and infrastructure; (12) our
leverage, liquidity, and cost of funds and changes in interest rates that may
increase such costs; (13) our ability to maintain adequate loss prevention
measures; (14) fluctuations in raw material prices, including diamond, gem and
gold prices; (15) the impact of current or future price reductions or valuation
allowances taken on certain merchandise inventory identified from time to time
as items which would not be part of the Company's future merchandise
presentation; (16) developments relating to settlement of the consolidated
Capital Factors actions, the non-prosecution agreement entered into with the
U.S. Attorney's Office, the SEC investigation, and shareholder and other civil
litigation, including the impact of such developments on our results of
operations and financial condition and relationship with our lenders or with our
vendors; (17) regulation affecting the industry generally, including regulation
of marketing practices; and (18) the risk factors identified from time to time
in our filings with the SEC.
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- tables to follow -
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Whitehall Jewellers, Inc.
Statements of Operations
For the three months and nine months ended October 31, 2004 and 2003
(unaudited)
(in thousands, except per share data)
<Table>
<Caption>
Three months ended Nine months ended
October 31, October 31, October 31, October 31,
2004 2003 2004 2003
----------------- ---------------- ----------------- ----------------
Net sales $ 63,340 $ 66,179 $ 208,652 $ 208,060
Cost of sales (including buying and occupancy
expenses) 45,781 45,299 142,731 139,877
----------------- ---------------- ----------------- ----------------
Gross profit 17,559 20,880 65,921 68,183
Selling, general and administrative expenses 26,724 29,143 80,754 81,787
Professional fees and other charges 1,428 1,398 5,725 2,747
----------------- ---------------- ----------------- -----------------
Loss from operations (10,593) (9,661) (20,558) (16,351)
Interest expense 1,240 869 3,240 3,341
----------------- ---------------- ----------------- ----------------
Loss before income taxes (11,833) (10,530) (23,798) (19,692)
Income tax benefit (3,525) (3,122) (8,610) (6,694)
----------------- ---------------- ----------------- ----------------
Net loss $ (8,308) $ (7,408) $ (15,188) $ (12,998)
================ ================= ================ =================
Basic earnings per share:
Net loss $ (0.60) $ (0.53) $ (1.09) $ (0.92)
================ ================= ================ =================
Weighted average common share and common share
equivalents 13,948 14,051 13,941 14,156
================ ================= ================ =================
Diluted earnings per share:
Net loss $ (0.60) $ (0.53) $ (1.09) $ (0.92)
================ ================= ================ =================
Weighted average common share and common share
equivalents 13,948 14,051 13,941 14,156
================ ================= ================ =================
</Table>
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Whitehall Jewellers, Inc.
Balance Sheets
(unaudited, in thousands)
<Table>
<Caption>
October 31, 2004 January 31, 2004 October 31, 2003
-------------------- ------------------- -------------------
ASSETS
Current Assets:
Cash $ 1,296 $ 1,901 $ 1,251
Accounts receivable, net 2,006 2,544 497
Merchandise inventories 201,558 206,146 229,393
Other current assets 1,311 875 1,558
Current income tax benefit 10,955 2,294 7,122
Deferred financing costs 301 261 261
Deferred income taxes, net 2,764 5,712 2,577
------------------- -------------------- -------------------
Total current assets 220,191 219,733 242,659
Property and equipment, net 55,355 60,948 62,002
Goodwill, net 5,662 5,662 5,662
Deferred financing costs 528 654 683
------------------- -------------------- -------------------
Total assets $ 281,736 $ 286,997 $ 311,006
=================== ==================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Revolver loan $ 101,928 $ 80,340 $ 107,104
Current portion of long-term debt --- 640 640
Accounts payable 57,341 60,538 71,169
Customer deposits 3,232 3,601 4,771
Accrued payroll 4,134 4,457 4,778
Other accrued expenses 18,064 24,479 14,236
------------------- -------------------- -------------------
Total current liabilities 184,699 174,055 202,698
Deferred income taxes, net 2,685 3,639 3,442
Other long-term liabilities 3,616 3,535 3,446
------------------- -------------------- -------------------
Total liabilities 191,000 181,229 209,586
Commitments and contingencies --- --- ---
Stockholders' equity:
Common stock 18 18 18
Class B common stock --- --- ---
Additional paid-in capital 106,207 106,091 106,041
Retained earnings 24,122 39,311 35,027
Treasury stock, at cost (4,115,226; 4,134,143 and
4,135,626 shares, respectively) (39,611) (39,652) (39,666)
------------------- ------------------- -------------------
Total stockholders' equity, net 90,736 105,768 101,420
------------------- ------------------- -------------------
Total liabilities and stockholders' equity $ 281,736 $ 286,997 $ 311,006
=================== =================== ===================
</Table>
# # #
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Internet Website: www.whitehalljewellers.com