Bear Creek Announces EXPECTED Fiscal 2005 Results.

MEDFORD, Ore. -- Bear Creek Holdings Inc. today announced certain expected results for the fiscal year ended March 26, 2005. Revenues in fiscal 2005 are expected to be approximately $561 million, an increase of approximately $39 million, or 7%, over fiscal 2004, primarily as a result of increased Harry and David catalog and Internet sales, as well as higher sales at the Company's Harry and David stores. EBITDA is expected to be in the range of $44 million to $45 million, an increase of approximately 25% over fiscal 2004, and Adjusted EBITDA is expected to be in the range of $53 million to $54 million, an increase of 8% to 9% over fiscal 2004. Excluding the effect from a change in treatment of non-cash rent expense arising from the sale of the Company in June 2004, our Adjusted EBITDA would have been approximately $54.5 million for fiscal 2005. The Company expects a pre-tax loss in the range of $2.5 million to $3.5 million.

As of March 26, 2005, the Company had total debt outstanding of $245 million, representing the aggregate principal amount of the Company's outstanding senior unsecured notes and floating rate notes. As of March 26, 2005, the Company had cash and cash equivalents of approximately $68 million and total assets of approximately $400 million.

The Company's expected results of operations and financial position as of and for the year ended March 26, 2005 included in this press release are unaudited and are therefore subject to adjustment in connection with the Company's annual audit review process. The Company currently expects its audit to be completed no later than July 15, 2005 due to standalone audit procedures taking longer than expected, and expects to deliver its audited consolidated financial statements to holders of its outstanding senior unsecured and floating rate notes at such time. The Company does not expect the completion of its audit to result in any material changes to the information included in this press release. Results presented for fiscal 2005 represent results for Bear Creek Corporation for the period from March 28, 2004 to June 16, 2004 (the date the Company was acquired by Bear Creek Holdings) and for Bear Creek Holdings for the period from June 17, 2004 to March 26, 2005.

In this press release, the Company uses the terms EBITDA and Adjusted EBITDA, which are non-GAAP financial measures within the meaning of the SEC's rules and regulations governing non-GAAP financial measures. EBITDA as used in this press release is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA as adjusted to add back certain expenses that management believes are not representative of the Company's operating performance. Some of these expenses are excluded for purposes of calculating covenant ratios and compliance under the Company's revolving credit facility and the indenture governing the Company's outstanding senior unsecured notes and floating rate notes. Adjusted EBITDA as used in this press release adds back:

--$2.7 million of compensation expense in connection with a reduction in force implemented beginning in August 2004 and not at the beginning of the 2005 fiscal year in April 2004;

--$1.0 million in a fixed asset impairment charge related to a lower rose crop harvest yield associated with a new growing technique introduced in fiscal 2003;

--$1.6 million of losses incurred at 21 underperforming stores that were closed or are in the process of being closed during fiscal 2005 and fiscal 2006;

--a one-time, non-cash charge of approximately $1.5 million incurred primarily due to a step-up in inventory value associated with purchase accounting;

--one-time consulting costs associated with evaluating the Harry and David brand strategy and information technology strategy projects and employee executive recruiting charges totaling approximately $1.5 million;

--$0.3 million of income in fiscal 2005 related to collection of a note receivable previously written off during fiscal 2002; and

--$0.8 million of fees paid to our equity sponsors since the June 17, 2004 acquisition date under the financial management, consulting and advisory services agreement entered into in connection with the June 2004 acquisition.

The Company believes that EBITDA and Adjusted EBITDA are useful financial measures for assessing operating performance and liquidity, as they provide investors with a more meaningful comparative understanding of what the Company expect its results of operations to be going forward following its acquisition, as well as an additional basis upon which to evaluate the Company's performance and its ability to incur and service debt and to fund capital expenditures. The Company's method of calculating Adjusted EBITDA for this press release and for purposes of assessing compliance with its revolving credit facility and indenture may differ from the methods used by other companies.

EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation, or as substitutes for analysis of the Company's results as reported under GAAP, including net income and cash flow from operations. Some of these limitations include:

--EBITDA and Adjusted EBITDA do not reflect the Company's capital expenditures, or future requirements for capital expenditures or contractual commitments;

--EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, the Company's working capital needs;

--EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the Company's debt; and

--although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements.

Because of these limitations EBITDA and Adjusted EBITDA should not be considered measures of discretionary cash available to the Company to invest in the growth of its business.

Bear Creek, headquartered in Medford, Oregon, is a leading multi-channel specialty retailer and producer of branded premium gift quality fruit and gourmet food products and gifts marketed under the Harry and David(R) brand, and premium rose plants, horticultural products and home and garden decor, marketed under the Jackson & Perkins(R) brand. Our signature Harry and David(R) products include our flagship Royal Riviera(R) pears and Fruit-of-the-Month Club(R), and our signature Jackson & Perkins(R) products include our award-winning premium hybrid Simplicity(R), Ronald Reagan(R) and Princess Diana(R) roses. We market our products through multiple channels, including direct mail, the Internet, business-to-business and consumer telemarketing, through our Harry and David(R) stores and wholesale distribution through select retailers. We currently operate 136 retail locations throughout the country and also operate growing and distribution facilities in Medford, Oregon, Wasco and Somis, California as well as Hebron, Ohio.