EXHIBIT 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
CONTACT: Brian Carney Investor Relations:
Executive Vice President, CFO Don Tomoff
Jo-Ann Stores, Inc. Vice President, Finance
330/656-2600 Jo-Ann Stores, Inc.
http://www.joann.com 330/463-6815
JO-ANN STORES, INC. ANNOUNCES SHARE RECLASSIFICATION PROPOSAL
- - S-4 REGISTRATION STATEMENT FILED IN CONNECTION WITH RECLASSIFICATION
PROPOSAL TO CONVERT COMPANY'S DUAL-CLASS EQUITY STRUCTURE TO A SINGLE
VOTING CLASS OF STOCK
- - TWO NON-INDEPENDENT BOARD MEMBERS TO BE APPOINTED TO EMERITUS STATUS, UPON
COMPLETION OF SEARCH FOR TWO INDEPENDENT BOARD MEMBERS
- - SEARCH UNDERWAY FOR TWO INDEPENDENT BOARD MEMBERS
- - ADOPTS SFAS NO. 123 AND INITIATES THE EXPENSING OF STOCK OPTIONS
HUDSON, OH, May 19, 2003 -- Jo-Ann Stores, Inc. (NYSE: JAS.A and JAS.B)
announced that it has filed a Form S-4 Registration Statement with the
Securities and Exchange Commission today to register securities to be issued in
connection with a proposed reclassification of its two classes of common shares
into one voting class. The proposal must be approved by a majority of the shares
outstanding of both the Company's Class A and Class B shares.
Shares of the Company's Class B shares, which currently do not have voting
rights other than as required by law, will be amended to have one vote per share
and will be redesignated as the Company's "Common Shares". Each of the Class A
shares, which currently have one vote per share, will be reclassified into 1.15
Common Shares, resulting in the issuance of approximately 1.6 million additional
shares that will increase the Company's total shares outstanding by
approximately 8.0%.
The Company expects to hold a special meeting of shareholders on or about August
13, 2003 to vote on the proposal. The Corporate Governance Committee of the
Company's Board of Directors has retained Lehman Brothers to serve as its
advisor in connection with this proposal.
The Company expects to realize a number of benefits from the proposed
reclassification, including:
- increasing the trading volume and liquidity of its shares
- simplifying its equity capital structure
- broadening the appeal of its shares to a larger base of investors
- more closely aligning the voting rights of the Company's
shareholders with their economic interests
As part of the proposal, the Company will also seek to amend and strengthen
various shareholder protection measures included in its code of regulations.
The Rosskamm and Zimmerman founding families, including Betty Rosskamm, Alan
Rosskamm, Alma Zimmerman and their decendents, have indicated that they support
the combination even though they will not receive any such consideration.
Currently, the founding families beneficially own
approximately 25.1% of the Company's outstanding Class A shares and 21.6% of the
Company's outstanding Class B shares. Upon completion of the reclassification,
the founding families will own approximately 23.6% of the outstanding newly
designated Common Shares. Thus, their voting power will decrease from
approximately 25.1% to approximately 23.6%. After the elimination of the dual
class structure, members of the founding families will not be able to sell any
shares without further diluting their voting power.
Jo-Ann Stores also announced that it has initiated a search for two independent
Board candidates and will appoint two of its current Board members, Betty
Rosskamm and Alma Zimmerman, members since 1967, to Emeritus status. Under
Emeritus status, neither Ms. Rosskamm nor Ms. Zimmerman will serve on any of the
committees of the Board, nor will either of them vote on any matters that come
before the Board for approval. The appointment of Ms. Rosskamm and Ms. Zimmerman
to Emeritus status will be effective upon the final selection and approval of
the two new Board candidates.
After filling the two open Board positions, at least six of the Company's eight
voting Board members will be comprised of independent Board members, as defined
under the current proposals of the New York Stock Exchange.
Finally, effective with the first quarter of fiscal 2004, the Company adopted
the fair-value based method of recording stock option expense under SFAS No.
123, "Accounting for Stock-Based Compensation". Previously, the Company did not
recognize compensation expense for stock option grants in its income statement,
but provided pro forma disclosure in its notes to financial statements.
Alan Rosskamm, Chairman or the Board and CEO stated, "The proposals we announced
today help to strengthen Jo-Ann's corporate governance and simplify our capital
structure, making our shares a more attractive investment. After a very thorough
review, analysis and discussion by the Corporate Governance Committee of the
Board of Directors of the Company, along with its advisor, it was determined
that the proposed reclassification plan was in the best interest of all
shareholders and the Company."
Conference Call on the Web
Investors will have the opportunity to listen to the Company's first quarter
earnings conference call at 4:30 p.m. ET today. The Company will also discuss
the share reclassification and corporate initiatives it is undertaking. The call
can be accessed via the Internet through Streetevents at
http://www.streetevents.com and on our Web site at http://www.joann.com (go to
the top of our home page and click on "About Jo-Ann Stores," click on "Our
Company" click on "Investor Relations," then click on the Conference Call icon).
To listen to the live call, please go to the Web site at least 10 minutes before
the call begins to register, download and install any necessary audio software.
For those who cannot listen to the live broadcast, a replay will be available
shortly after the call and will be archived until Monday, May 26th. The replay
may be accessed at http://www.joann.com and at http://www.streetevents.com or by
phone at 800-642-1687, conference ID #9828057.
Jo-Ann Stores, Inc. (http://www.joann.com), the leading national fabric and
craft retailer with locations in 48 states, operates 840 traditional stores and
77 superstores.
This press release contains forward-looking statements that are subject to
certain risks and uncertainties. Our actual results, performance or achievements
may materially differ from those expressed or implied in the forward-looking
statements. Risks and uncertainties that could cause or contribute to such
material differences include, but are not limited to, general economic
conditions, changes in customer demand, changes in trends in the fabric and
craft industry, seasonality, the availability of merchandise, changes in the
competitive pricing for products, and the impact of our and our competitors
store openings and closings, fuel and energy costs, changes in tariff and
freight rates, consumer debt levels, other capital market and geo-political
conditions. Other important factors that may cause actual results to differ
materially from those expressed in the forward-looking statements are discussed
in the Company's Securities and Exchange Commission filings.