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
---------------------------
Chicago, Illinois, April 14, 2005 -- Whitehall Jewellers, Inc. (NYSE:JWL) today
reported financial results for the fourth quarter and fiscal year ended January
31, 2005.
As previously reported, for the fiscal fourth quarter, the Company reported net
sales of $125.6 million, compared to $136.6 million in the prior year quarter.
Net income for the fourth quarter was $5.3 million, or $0.38 per share, compared
to net income of $4.3 million, or $0.31 per share, for the prior year period.
Comparable store sales decreased 8.7% in the fourth quarter compared to a 6.0%
increase for the same period last year.
Fourth quarter professional fees and other charges decreased by approximately
$17.2 million in comparison to the prior year. The decrease was primarily due to
lower professional fees and settlement costs associated with the consolidated
Capital Factors actions and the related United States Attorney and Securities
and Exchange Commission (the "SEC") investigations partially offset by costs
incurred in connection with compliance with certain sections of the
Sarbanes-Oxley Act of 2002. As previously disclosed, on September 28, 2004, the
Company announced that it entered into a non-prosecution agreement with the
United States Attorney's Office for the Eastern District of New York and that it
reached a settlement of the consolidated Capital Factors actions.
For the fiscal year ended January 31, 2005, the Company reported total net sales
of $334.2 million, compared to $344.7 million last year. Net loss was $9.9
million, or $0.71 per share, compared to a net loss of $8.7 million, or $0.62
per share, for fiscal 2003. Comparable store sales declined 3.7% for the fiscal
year compared to a 0.6% decrease in comparable store sales for the prior fiscal
year.
Fiscal year 2004 professional fees and other charges decreased by approximately
$14.2 million in comparison to fiscal year 2003. The decrease was primarily due
to lower professional fees and other charges associated with the consolidated
Capital Factors actions and the related United States Attorney and SEC
investigations partially offset by costs incurred in connection with compliance
with certain sections of the Sarbanes-Oxley Act of 2002.
Daniel H. Levy, Chairman said, "While the days since Hugh Patinkin's passing
have been trying on the Whitehall family, to Hugh's credit, the Company has a
deep management team, and the
Company is well-positioned to execute on its strategies. We are focused on the
business at hand, but nevertheless, our thoughts continue to be with Hugh's
family as we move forward."
Lucinda M. Baier, Chief Executive Officer, said, "During January, we devoted a
significant amount of attention to analyzing our business. We were most
interested in capitalizing on the things that worked and correcting the things
that didn't. By the end of January, we had developed an action plan to improve
our business. As a business, we are making significant progress on our action
plans and our business is responding to the changes that we have made.
On April 6, 2005 the Company entered into an amendment to its Credit Agreement
providing additional borrowing availability under the facility. The additional
facility extends to July 31, 2006 and provides the cash availability the Company
requires to execute on its business plan.
The Company closed four stores in the fourth quarter. During the fiscal year
ended January 31, 2005 the Company opened 6 stores and closed a total of 4
stores.
Management will discuss fourth quarter and year-end results during a conference
call this morning at 9:00 a.m. EST. Call Lynn Nickless at 312-762-0292 to
reserve a space on the call or dial in to the conference call at 866-800-8649,
participant passcode 92227065. This call will also be broadcast live on the
Internet at www.whitehalljewellers.com. A replay of this call will be available
until May 4, 2005. The replay dial in number is 888-286-8010, participant
passcode is 68008651.
ABOUT WHITEHALL JEWELLERS
Whitehall Jewellers, Inc. is a leading national specialty retailer of fine
jewelry, currently operating 385 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," "opinion" 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. The Company 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) increased competition from specialty jewelry retail stores,
2
the Internet and mass merchant discount stores which may adversely impact
our sales and gross margin; (4) our ability to execute our business
strategy and the related effects on comparable store sales and other
results; (5) the extent and results of our store expansion strategy and
associated occupancy costs, and access to funds for new store openings; (6)
the high degree of fourth quarter seasonality of our business and the
impact on the Company's sales, profitability and liquidity; (7) the extent
and success of our merchandising, marketing and/or promotional programs;
(8) personnel costs and the extent to which we are able to retain and
attract key personnel; (9) the effects of competition; (10) the
availability and cost of consumer credit; (11) relationships with suppliers
including the timely delivery to the Company of appropriate merchandise on
payment terms consistent with past practice; (12) our ability to maintain
adequate information systems capacity and infrastructure; (13) our
continued ability to secure sufficient financing on acceptable terms,
including, if an event of default were to occur pursuant to the Company's
revolving loan facility, the Company may be required to negotiate relief
with its lenders or seek new financing to which there may be no assurance
that new financing agreements would be available on acceptable terms or at
all;(14) our leverage, liquidity, and cost of funds and changes in interest
rates that may increase such costs; (15) our ability to maintain adequate
loss prevention measures; (16) fluctuations in raw material prices,
including diamond, gem and gold prices; (17) the impact of current or
future price reductions on margins and resultant 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 as
well as alternative methods of disposition of this merchandise inventory
and resultant valuations taken; (18) developments relating to settlement of
the consolidated Capital Factors actions, the non-prosecution agreement
entered into with the United States 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; (19)
regulation affecting the industry generally, including regulation of
marketing practices; and (20) 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, 2005 AND 2004
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<Table>
<Caption>
Three Months Ended Twelve Months Ended
January 31, 2005 January 31, 2004 January 31, 2005 January 31, 2004
---------------- ---------------- ---------------- ----------------
Net sales $ 125,554 $ 136,595 $ 334,206 $ 344,655
Cost of sales (including buying and
occupancy expenses) 78,638 77,745 221,370 217,622
---------------- ---------------- ---------------- ----------------
Gross profit 46,916 58,850 112,836 127,033
Selling, general and administrative
expenses 34,273 32,836 115,028 114,624
Professional fees and other charges 1,953 19,127 7,679 21,874
---------------- ---------------- ---------------- ----------------
Income (loss) from operations 10,690 6,887 (9,871) (9,465)
Interest expense 1,126 770 4,365 4,110
---------------- ---------------- ---------------- ----------------
Income (loss) before income taxes 9,564 6,117 (14,236) (13,575)
Income tax expense (benefit) 4,257 1,833 (4,353) (4,861)
---------------- ---------------- ---------------- ----------------
Net income (loss) $ 5,307 $ 4,284 $ (9,883) $ (8,714)
================ ================ ================ ================
Basic earnings per share:
Net income (loss) $ 0.38 $ 0.31 $ (0.71) $ (0.62)
================ ================ ================ ================
Weighted average common
share and common share
equivalents 13,951 13,925 13,943 14,098
================ ================ ================ ================
Diluted earnings per share:
Net income (loss) $ 0.38 $ 0.30 $ (0.71) $ (0.62)
================ ================ ================ ================
Weighted average common
share and common share
equivalents 13,960 14,092 13,943 14,098
================ ================ ================ ================
</Table>
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WHITEHALL JEWELLERS, INC.
BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)
<Table>
<Caption>
January 31, 2005 January 31, 2004
---------------- ----------------
ASSETS
Current Assets:
Cash $ 2,206 $ 1,901
Accounts receivable, net 2,688 2,544
Merchandise inventories 183,676 206,146
Other current assets 383 875
Current income tax benefit 3,959 2,294
Deferred income taxes, net 2,255 5,712
Deferred financing costs 360 261
---------------- ----------------
Total current assets 195,527 219,733
Property and equipment, net 54,200 60,948
Goodwill, net 5,662 5,662
Deferred income tax, net 902 --
Deferred financing costs 539 654
---------------- ----------------
Total assets $ 256,830 $ 286,997
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Revolver loans $ 73,793 $ 80,340
Current portion of long-term debt -- 640
Accounts payable 60,076 60,538
Customer deposits 3,042 3,601
Accrued payroll 3,829 4,457
Other accrued expenses 14,587 24,479
---------------- ----------------
Total current liabilities 155,327 174,055
Other long-term liabilities 4,880 3,535
Deferred income tax, net -- 3,639
---------------- ----------------
Total liabilities 160,207 181,229
Commitments and contingencies
Stockholders' equity:
Common stock 18 18
Class B common stock -- --
Additional paid-in capital 106,123 106,091
Retained earnings 29,428 39,311
Treasury stock, at cost (4,108,703 and
4,134,141 shares, respectively) (38,946) (39,652)
---------------- ----------------
Total stockholders' equity 96,623 105,768
Total liabilities and stockholders'
equity $ 256,830 $ 286,997
================ ================
</Table>