EXHIBIT 99.1
[WHITEHALL LOGO] NEWS RELEASE
================================================================================
For: Whitehall Jewellers, Inc.
Contact: John R. Desjardins
Executive Vice President
TX: 312/762-9751
FOR IMMEDIATE RELEASE
WHITEHALL JEWELLERS, INC. REPORTS FOURTH
QUARTER NET INCOME OF $1.05 PER SHARE
Chicago, Illinois, March 5, 2003 - Whitehall Jewellers, Inc. (NYSE:
JWL) today reported financial results for the fourth fiscal quarter and fiscal
year ended January 31, 2003.
For the fourth fiscal quarter ended January 31, 2003, net income was
$15.1 million, or $1.05 per diluted share, versus $15.8 million, or $1.07 per
diluted share, a year ago. Fourth quarter net income of $1.05 per share compares
to analysts' consensus earnings estimate of $0.92 per share. Fourth quarter
income from operations was $25.1 million compared to $26.0 million in the fourth
fiscal quarter of last year. Comparable store sales decreased 4.0% during the
fourth fiscal quarter ended January 31, 2003 versus a comp store sales decrease
of 5.4% in the prior year fourth quarter. Total net sales dropped $2.1 million
to $128.4 million, versus $130.5 million for the fourth fiscal quarter of 2001.
For the fiscal year ended January 31, 2003, net income was $10.5
million or $0.70 per diluted share compared to $10.1 million, or $0.69 per
diluted share for the fiscal year ended January 31, 2002. Comparable store sales
decreased 1.9% for the fiscal year ended January 31, 2003, versus a comparable
store sales decrease of 10.7% in fiscal 2001. Total net sales for the fiscal
year ended January 31, 2003 increased 0.6% to $341.0 million, versus $338.9
million a year ago.
Hugh M. Patinkin, Chairman and Chief Executive Officer, commented, "In
spite of a challenging sales environment, we are pleased with our execution,
both in the field and in our support office."
As a result of the audit of the Company's fiscal year end financial
statements, the Company is making certain intra-year adjustments to its reported
results for the first three quarters of fiscal 2002. The adjustments relate to
the timing of the recognition of certain allowances and discounts
For Investor Relations info: investorrelations@whji.com
Internet Website: www.whitehalljewellers.com
pertaining to its annual vendor agreements as well as incentives associated with
the advantageous purchase of consigned inventory on hand during the fiscal year
that should have been included in the weighted average cost of merchandise
inventory. During the first three quarters of 2002 such incentives had been
recorded by the Company as a direct reduction of cost of sales. In addition, the
adjustments made include, to a significantly lesser extent, a cost of sales
effect related to the Company's gold consignment arrangement which the Company
ended during the third quarter.
The vendor incentives, allowances and discounts have already been
received by the Company. There is no cash impact associated with the quarterly
adjustments. The cumulative earnings impact of the adjustments for the first
three fiscal quarters was to increase the Company's net loss from $0.29 per
share to $0.31 per share, or a difference of $0.02 per share ($258,000). The
quarterly impact of these adjustments is to increase net income by $127,000 in
the first fiscal quarter, reduce net income by $457,000 in the second fiscal
quarter and to reduce net loss by $72,000 in the third fiscal quarter. The
Company intends to promptly file amended forms 10-Q giving effect to these
adjustments.
Mr. Patinkin continued, "While we are not giving specific earnings
guidance, subject to the state of the economy and the threat of war, we expect
earnings to be somewhat lower in the first half of 2003 compared to a strong
first half last year. However, as a result of the anticipated impact of certain
new sales initiatives, we are cautiously optimistic that earnings should show
improvement in the second half of 2003. We continue to be confident about our
long term profit growth opportunities once the economy strengthens."
Today at 10:00 a.m. EST, the Company will host a conference call to
review its fiscal 2002 results. The dial-in number is 877/888-7019. Participants
are asked to dial-in 10 minutes prior to the conference call. This call will
also be broadcast live on the Internet at: http://www.whitehalljewellers.com
For Investor Relations info: investorrelations@whji.com
Internet Website: www.whitehalljewellers.com
Whitehall Jewellers, Inc. is a leading national specialty retailer of
fine jewelry, currently operating 374 stores in 38 states. During fiscal year
ended January 31, 2003, the Company opened 17 new stores and closed 11 existing
stores. We expect to open 21 new stores in fiscal 2003. The Company operates
stores in regional and superregional shopping malls under the names Whitehall
Co. Jewellers, Lundstrom Jewelers and Marks Bros. Jewelers.
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) 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) our ability to execute our business strategy and the related
effects on comparable store sales and other results; (3) the extent and results
of our store expansion strategy and associated occupancy costs, and access to
funds for new store openings; (4) the high degree of fourth quarter seasonality
of our business; (5) the extent and success of our marketing and promotional
programs; (6) personnel costs and the extent to which we are able to retain and
attract key personnel; (7) the effects of competition; (8) the availability and
cost of consumer credit; (9) relationships with suppliers; (10) our ability to
maintain adequate information systems capacity and infrastructure; (11) our
leverage and cost of funds and changes in interest rates that may increase such
costs; (12) our ability to maintain adequate loss prevention measures; (13)
fluctuations in raw material prices, including diamond, gem and gold prices;
(14) the extent and results of our E-commerce strategies and those of others;
(15) regulation affecting the industry generally, including regulation of
marketing practices; (16) the successful integration of acquired locations and
assets into our existing operations; and (17) the risk factors identified from
time to time in our filings with the Securities and Exchange Commission.
- tables to follow -
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Internet Website: www.whitehalljewellers.com
WHITEHALL JEWELLERS, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND TWELVE MONTHS ENDED JANUARY 31, 2003 AND 2002
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<Table>
<Caption>
Three Months Ended Twelve Months Ended
January 31, 2003 January 31, 2002 January 31, 2003 January 31, 2002
---------------- ---------------- ---------------- ----------------
Net sales $ 128,375 $ 130,478 $ 341,037 $ 338,911
Cost of sales (including buying and
occupancy expenses) 72,872 73,764 212,910 206,574
---------------- ---------------- ---------------- ----------------
Gross profit 55,503 56,714 128,127 132,337
Selling, general and administrative
expenses 30,359 30,692 106,790 109,975
---------------- ---------------- ---------------- ----------------
Income from operations 25,144 26,022 21,337 22,362
Interest expense 1,050 1,307 4,341 6,902
---------------- ---------------- ---------------- ----------------
Income before income taxes 24,094 24,715 16,996 15,460
Income tax expense 9,012 8,878 6,469 5,380
---------------- ---------------- ---------------- ----------------
Net income $ 15,082 $ 15,837 $ 10,527 $ 10,080
================ ================ ================ ================
Basic earnings per share:
Net income $ 1.06 $ 1.09 $ 0.72 $ 0.69
================ ================ ================ ================
Weighted average common share
and common share equivalents 14,275 14,593 14,545 14,584
================ ================ ================ ================
Diluted earnings per share:
Net income $ 1.05 $ 1.07 $ 0.70 $ 0.69
================ ================ ================ ================
Weighted average common share and
common share equivalents 14,424 14,849 15,038 14,685
================ ================ ================ ================
</Table>
- more -
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Internet Website: www.whitehalljewellers.com
WHITEHALL JEWELLERS, INC.
BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)
<Table>
<Caption>
January 31, 2003 January 31, 2002
---------------- ----------------
ASSETS
Current Assets:
Cash $ 2,048 $ 2,741
Accounts receivable, net 1,621 1,189
Merchandise inventories 197,859 173,931
Prepaid expenses 1,239 973
Prepaid income tax -- --
Deferred income taxes, net 1,782 2,704
Deferred financing costs 510 511
---------------- ----------------
Total current assets 205,059 182,049
Property and equipment, net 61,634 63,914
Goodwill 5,662 5,662
Deferred income tax, net -- --
Deferred financing costs 213 723
---------------- ----------------
Total assets $ 272,568 $ 252,348
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Revolver loans $ 94,490 $ 35,277
Current portion of long-term debt 4,500 5,250
Accounts payable 24,726 56,695
Customer deposits 3,454 3,963
Accrued payroll 3,282 6,270
Income taxes 3,368 3,226
Other accrued expenses 12,090 18,171
---------------- ----------------
Total current liabilities 145,910 128,852
Term loan -- 4,500
Subordinated debt 640 640
Other long-term liabilities 3,138 2,660
Deferred Income Tax 3,607 2,012
---------------- ----------------
Total liabilities 153,295 138,664
Commitments and contingencies
Stockholders' equity:
Common stock 18 17
Class B common stock -- --
Class C common stock -- --
Class D common stock -- --
Additional paid-in capital 105,795 103,767
Accumulated earnings 49,397 38,870
---------------- ----------------
155,210 142,654
---------------- ----------------
Less: Treasury stock, at cost
(3,822,638 and 3,200,209 shares,
respectively (35,937) (28,970)
---------------- ----------------
Total stockholders' equity 119,273 113,684
---------------- ----------------
Total liabilities and stockholders'
equity $ 272,568 $ 252,348
================ ================
</Table>
For Investor Relations info: investorrelations@whji.com
Internet Website: www.whitehalljewellers.com