EXHIBIT 99.1
[WHITEHALL JEWELLERS, INC. LOGO]
NEWS RELEASE
================================================================================
For: Whitehall Jewellers, Inc.
Contact: John R. Desjardins
Executive Vice President,
Chief Financial Officer
FOR IMMEDIATE RELEASE TX: 312/762-9751
- ---------------------
WHITEHALL JEWELLERS REPORTS FOURTH QUARTER AND
FISCAL YEAR END FINANCIAL RESULTS
FEBRUARY 2004 COMP STORE SALES UP 10.4% OVER PRIOR YEAR PERIOD
---------------------------
Chicago, Illinois, March 23, 2004 -- Whitehall Jewellers, Inc. (NYSE:JWL) today
reported financial results for the fourth quarter and fiscal year ended January
31, 2004.
For the fiscal fourth quarter, the Company reported net sales of $136.6 million,
compared to $128.4 million in the prior year quarter. Net income for the fourth
quarter was $5.9 million, or $0.42 per share, compared to net income of $14.5
million, or $1.00 per share, for the prior year period. Comparable store sales
increased 6.0% in the fourth quarter compared to a 4.0% decrease for the same
period last year.
For the fiscal year ended January 31, 2004, the Company reported total net sales
of $344.7 million, compared to $341.0 million last year. Net loss was $7.1
million, or $0.51 per share, versus net income of $9.7 million, or $0.64 per
share, for fiscal 2002. Comparable store sales decreased 0.6% for the fiscal
year compared to a 1.9% decrease for the prior fiscal year.
Fourth quarter expenses were significantly higher than last year, primarily as a
result of two items arising from the previously disclosed matters relating to
Capital Factors civil litigation, the SEC inquiry and the U.S. Attorney
investigation. Professional fees increased by approximately $8.6 million ($5.8
million after tax) or $0.41 per share in the quarter over the prior year. In
addition, the Company accrued a reserve of $6.0 million ($4.0 million after tax)
or $0.29 per share in connection with the Capital Factors related matters. These
two items resulted in an increase in expenses totaling $14.6 million ($9.8
million after tax) or $0.70 per share for the quarter.
As previously disclosed, on October 29, 2003, the Company entered into a letter
agreement with its bank group which clarified and supplemented the Revolving
Credit Agreement with respect to the Capital Factors civil litigation, the SEC
inquiry and the U.S. Attorney investigation. As of March 23, 2004, the Company
and the bank group entered into (i) a new letter agreement which rescinded the
October 29, 2003 letter agreement, and (ii) an amendment to the Revolving Credit
Agreement. These new agreements acknowledge that, as of March 23, 2004, the
Capital Factors litigation, the SEC inquiry and the U.S. Attorney investigation
have not resulted in a default under the Revolving Credit Agreement and include
several additional provisions.
The Company continues to cooperate fully with the U.S. Attorney and the SEC.
While the Company's professional fees are continuing, they have been
significantly lower since the end of the fiscal year.
Over the last several months the Company has made numerous changes to enhance
its corporate governance, including changing the composition of its Board of
Directors to increase the percentage of independent directors and hiring a
Director of Internal Audit who reports directly to the Chairman of the Audit
Committee. The Company is in the process of interviewing candidates for the
newly created position of Chief Operating Officer and filling the position of
Executive Vice President of Merchandise. Later this year, the Company will
commence a search for a General Counsel. The Company continues to review and
make improvements to various procedures, policies and controls.
Hugh M. Patinkin, Chairman and Chief Executive Officer, commented, "We're
pleased with the sales momentum we generated in the second half of 2003,
including a solid Christmas season. Led by a strong Valentine's Day, Whitehall's
February comparable store sales were up 10.4% compared to a decline of 4.6% last
year."
Patinkin continued, "In 2004, we will continue to focus on the sales initiatives
which we successfully introduced last year. This year we are introducing
programs which are designed to improve gross margin. Indeed, in January of this
year we implemented several margin improvement initiatives."
The Company closed four stores in the fourth quarter. During the fiscal year
ended January 31, 2004 the Company opened 21 stores and closed a total of 11
stores.
Management will discuss fourth quarter and year-end results during a conference
call this morning at 9:00 a.m. EST. Call Susan Weber at 312-762-0292 to reserve
a space on the call or dial in to the conference call at 1-888-789-0150. This
call will also be broadcast live on the Internet at www.whitehalljewellers.com.
ABOUT WHITEHALL JEWELLERS
Whitehall Jewellers, Inc. is a leading national specialty retailer of fine
jewelry, currently operating 384 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 associated occupancy costs, and
access to funds for new store openings; (5) the high degree of fourth quarter
seasonality of our business; (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;
(11) our ability to maintain adequate information systems capacity and
infrastructure; (12) our leverage 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) developments relating to the consolidated
Capital Factors actions and the related SEC and U.S. Attorney's office
investigations, 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; (16) regulation affecting the
industry generally, including regulation of marketing practices; (17) the
successful integration of acquired locations and assets into our existing
operations; and (18) the risk factors identified from time to time in our
filings with the SEC.
- tables to follow -
3
WHITEHALL JEWELLERS, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND TWELVE MONTHS ENDED JANUARY 31, 2004 AND 2003
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended Twelve Months Ended
January 31, 2004 January 31, 2003 January 31, 2004 January 31, 2003
---------------- ---------------- ----------------- -----------------
Net sales $ 136,595 $ 128,375 $ 344,655 $ 341,037
Cost of sales (including buying and
occupancy expenses) 77,745 72,881 217,622 213,242
--------- --------- --------- ---------
Gross profit 58,850 55,494 127,033 127,795
Selling, general and administrative
expenses 32,837 29,372 114,624 104,891
Professional fees and other charges 16,555 1,987 19,302 2,899
--------- --------- --------- ---------
Income (loss) from operations 9,458 24,135 (6,893) 20,005
Interest expense 770 1,050 4,110 4,341
--------- --------- --------- ---------
Income (loss) before income taxes 8,688 23,085 (11,003) 15,664
Income tax expense (benefit) 2,833 8,628 (3,861) 5,970
--------- --------- --------- ---------
Net income (loss) $ 5,855 $ 14,457 $ (7,142) $ 9,694
========= ========= ========= =========
Basic earnings per share:
Net income (loss) $ 0.42 $ 1.01 $ (0.51) $ 0.67
========= ========= ========= =========
Weighted average common
share and common share
equivalents 13,925 14,275 14,098 14,545
========= ========= ========= =========
Diluted earnings per share:
Net income (loss) $ 0.42 $ 1.00 $ (0.51) $ 0.64
========= ========= ========= =========
Weighted average common
share and common share
equivalents 14,089 14,424 14,098 15,038
========= ========= ========= =========
- more -
For Investor Relations info: investorrelations@whji.com
Internet Website: www.whitehalljewellers.com
WHITEHALL JEWELLERS, INC.
BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)
January 31, 2004 January 31, 2003
---------------- -----------------
ASSETS
Current Assets:
Cash $ 1,901 $ 2,048
Accounts receivable, net 2,544 1,621
Merchandise inventories 206,146 196,694
Other current assets 875 1,470
Current income tax benefit 2,255 ---
Deferred income taxes, net 4,709 2,627
Deferred financing costs 261 510
--------- ---------
Total current assets 218,691 204,970
Property and equipment, net 60,948 61,634
Goodwill, net 5,662 5,662
Deferred financing costs 654 213
--------- ---------
Total assets $ 285,955 $ 272,479
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Revolver loans $ 80,340 $ 94,490
Current portion of long-term debt 640 4,500
Accounts payable 60,538 26,784
Customer deposits 3,601 3,454
Accrued payroll 4,457 3,282
Income taxes payable --- 3,303
Other accrued expenses 21,906 11,380
--------- ---------
Total current liabilities 171,482 147,193
Long-term debt --- 640
Other long-term liabilities 3,535 3,138
Deferred income tax, net 3,638 3,607
--------- ---------
Total liabilities 178,655 154,578
Commitments and contingencies
Stockholders' equity:
Common stock 18 18
Class B common stock --- ----
Additional paid-in capital 106,051 105,795
Retained earnings 40,883 48,025
--------- ---------
146,952 153,838
--------- ---------
Less: Treasury stock, at cost
(4,134,143 and 3,822,637 shares,
respectively) (39,652) (35,937)
--------- ---------
Total stockholders' equity
107,300 117,901
--------- ---------
Total liabilities and stockholders'
equity $ 285,955 $ 272,479
========= =========
# # #
For Investor Relations info: investorrelations@whji.com
Internet Website: www.whitehalljewellers.com