SOURCE: PriceSmart, Inc.

November 29, 2007 08:00 ET

PriceSmart Announces Fourth Quarter and Fiscal Year Results of Operations

SAN DIEGO, CA--(Marketwire - November 29, 2007) - PriceSmart, Inc. (NASDAQ: PSMT) (www.pricesmart.com) today announced its results of operations for the fourth quarter and fiscal year 2007 which ended on August 31, 2007.

For the fourth quarter of fiscal year 2007 net warehouse sales were $224.8 million, compared to $182.7 million in the fourth quarter of fiscal year 2006. Total revenue for the fourth quarter was $230.1 million, compared to $186.8 million in the prior year. The Company had 23 warehouse clubs in operation as of the end of fiscal year 2007 and fiscal year 2006.

Operating income in the fourth quarter of fiscal year 2007 was $2.1 million compared to operating income of $4.3 million in the fourth quarter of fiscal year 2006. Fourth quarter 2007 results included asset impairment and closure costs of $819,000 and a reserve of $5.5 million related to a potential settlement of pending litigation. Asset impairment and closure costs were $1.7 million in the fourth quarter of fiscal year 2006.

The Company recorded a net loss attributable to common stockholders for the fourth quarter of $2.9 million or ($0.10) per diluted share compared to net income of $3.4 million or $0.12 per diluted share in the fourth quarter of fiscal year 2006. The net loss in the current period included a previously disclosed non-cash charge of $2.6 million ($0.09 per diluted share) related to the write-down of the Company's investment in PSMT Mexico. In the fourth quarter of fiscal year 2006, net income included $3.0 million of income, net of tax, primarily associated with the collection of a previously fully reserved loan from the Company's former Philippine subsidiary.

Total revenue for fiscal 2007 increased 21.0% to $888.8 million from $734.7 million in fiscal year 2006 and net warehouse sales increased 20.8% to $869.1 million during that same period from $719.6 million in the prior year. For fiscal year 2007 the Company recorded operating income of $28.0 million and net income attributable to common stockholders of $12.9 million or $0.44 per diluted share. For fiscal year 2006 the Company recorded net income attributable to common stockholders of $11.9 million or $0.43 per diluted share.

The Company will file today its Annual Report on Form 10-K for the year ended August 31, 2007.

About PriceSmart

PriceSmart, headquartered in San Diego, owns and operates U.S.-style membership shopping warehouse clubs in Central America and the Caribbean, selling high quality merchandise at low prices to PriceSmart members. PriceSmart now operates 24 warehouse clubs in 11 countries and one U.S. territory (four each in Panama and Costa Rica; three in Guatemala; two each in Dominican Republic, El Salvador, Honduras, and Trinidad; and one each in Aruba, Barbados, Jamaica, Nicaragua and the United States Virgin Islands).

This press release may contain forward-looking statements concerning the Company's anticipated future revenues and earnings, adequacy of future cash flow and related matters. These forward-looking statements include, but are not limited to, statements containing the words "expect," "believe," "will," "may," "should," "project," "estimate," "scheduled," and like expressions, and the negative thereof. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including the following risks: the Company had substantial net losses in fiscal 2003, 2004 and 2005, and may not be able to sustain the profitability it achieved in fiscal 2006 in future periods; the Company's financial performance is dependent on international operations which exposes the Company to various risks; any failure by the Company to manage its widely dispersed operations could adversely affect the Company's business; although the Company has taken and continues to take steps to improve significantly its internal controls, there may be material weaknesses or significant deficiencies that the Company has not yet identified; the Company faces significant competition; the Company faces difficulties in the shipment of and inherent risks in the importation of merchandise to its warehouse clubs; the Company is exposed to weather and other risks associated with international operations; declines in the economies of the countries in which the Company operates its warehouse clubs would harm its business; a few of the Company's stockholders have control over the Company's voting stock, which will make it difficult to complete some corporate transactions without their support and may prevent a change in control; the loss of key personnel could harm the Company's business; the Company is subject to volatility in foreign currency exchange; the Company faces the risk of exposure to product liability claims, a product recall and adverse publicity; a determination that the Company's long-lived or intangible assets have been impaired could adversely affect the Company's future results of operations and financial position; and the Company faces increased costs and compliance risks associated with compliance with Section 404 of the Sarbanes-Oxley Act of 2002; as well as the other risks detailed in the Company's SEC reports, including the Company's Form 10-K filed pursuant to the Securities Exchange Act of 1934 on November 13, 2006, as amended by Amendment No.1 on Form 10K/A filed on December 19, 2006. We assume no obligation and expressly disclaim any duty to update any forward-looking statement to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events.


                           PRICESMART, INC.
           UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
            (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)


                              Three Months Ended     Twelve Months Ended
                                   August 31,            August 31,
                            ======================  ======================
                               2007        2006        2007        2006
                            ==========  ==========  ==========  ==========
Revenues:
  Sales:
    Net warehouse club      $  224,765  $  182,720  $  869,102  $  719,576
    Export                         560          43       1,016          63
  Membership income              3,636       3,097      13,857      11,520
  Other income                   1,174         944       4,826       3,514
                            ----------  ----------  ----------  ----------
      Total revenues           230,135     186,804     888,801     734,673
                            ----------  ----------  ----------  ----------
Operating expenses:
  Cost of goods sold:
    Net warehouse club         190,097     153,103     737,317     611,411
    Export                         530          63         962          86
  Selling, general and
   administrative:
    Warehouse club
     operations                 23,735      21,228      88,029      78,784
    General and
     administrative              7,225       6,388      27,094      24,079
  Pre-opening expenses             117          13         373         349
  Asset impairment and
   closure costs                   819       1,662       1,550       1,834
  Provision for settlement
   of pending litigation         5,500          --       5,500          --
                            ----------  ----------  ----------  ----------
       Total operating
        expenses               228,023     182,457     860,825     716,543
                            ----------  ----------  ----------  ----------
Operating income                 2,112       4,347      27,976      18,130
Other income (expense):
   Interest income                 390         611       1,628       1,959
   Interest expense               (214)       (933)       (788)     (3,191)
   Other expense, net             (195)       (105)       (317)       (151)
                            ----------  ----------  ----------  ----------
      Total other (expense)
       income                      (19)       (427)        523      (1,383)
                            ----------  ----------  ----------  ----------
Income from continuing
 operations before
 provision for income
 taxes, loss of
 unconsolidated affiliate
 and minority interest           2,093       3,920      28,499      16,747
Provision for income taxes      (2,326)     (3,426)    (12,337)     (8,112)
Loss of unconsolidated
 affiliate                      (2,621)        (41)     (2,903)        (97)
Minority interest                 (139)        (93)       (476)       (354)
                            ----------  ----------  ----------  ----------
Income (loss) from
 continuing operations          (2,993)        360      12,783       8,184
Discontinued operations,
 net of tax                         72       3,024         143       3,674
                            ----------  ----------  ----------  ----------
Net income (loss)
 attributable to common
 stockholders               $   (2,921) $    3,384  $   12,926  $   11,858
                            ==========  ==========  ==========  ==========
Basic income (loss) per
 share:
  Continuing operations     $    (0.10) $     0.01  $     0.44  $     0.30
  Discontinued operations,
   net of tax               $       --  $     0.11  $     0.01  $     0.13
                            ----------  ----------  ----------  ----------
  Net income (loss) per
   share available to
   common stockholders      $    (0.10) $     0.12  $     0.45  $     0.43
                            ==========  ==========  ==========  ==========
Diluted income (loss) per
 share:
  Continuing operations     $    (0.10) $     0.01  $     0.44  $     0.30
  Discontinued operations,
   net of tax               $       --  $     0.11  $       --  $     0.13
                            ----------  ----------  ----------  ----------
  Net income (loss) per
   share available to
   common stockholders      $    (0.10) $     0.12  $     0.44  $     0.43
                            ==========  ==========  ==========  ==========
Shares used in per share
 computations:
  Basic                         28,679      28,406      28,534      27,332
                            ==========  ==========  ==========  ==========
  Diluted                       29,389      29,145      29,243      27,735
                            ==========  ==========  ==========  ==========
  Cash dividends per share          --          --  $     0.32          --
                            ==========  ==========  ==========  ==========




                           PRICESMART, INC.
                      CONSOLIDATED BALANCE SHEETS
               (amounts in thousands, except share data)

                                                         August 31,
                                                  ------------------------
                                                      2007         2006
                                                  -----------  -----------

ASSETS
Current Assets:
    Cash and cash equivalents                     $    32,065  $    39,995
    Short-term restricted cash                          8,046        7,651
    Receivables, net of allowance for doubtful
     accounts of $3 and $191 in 2007 and 2006,
     respectively                                       2,705        3,599
    Merchandise inventories                            95,979       77,432
    Prepaid expenses and other current assets          15,777        8,985
  Assets of discontinued operations                     1,380        1,594
                                                  -----------  -----------
Total current assets                                  155,952      139,256

  Long-term restricted cash                               477          531
       Notes receivable                                 2,086           --
  Property and equipment, net                         179,985      162,029
  Goodwill                                             31,652       31,870
  Deferred tax assets                                  19,535       20,183
  Other assets                                          3,732        1,903
  Investment in unconsolidated affiliate                2,000        3,271
                                                  -----------  -----------
Total Assets                                      $   395,419  $   359,043
                                                  ===========  ===========

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
  Short-term borrowings                           $     3,301  $       158
  Accounts payable                                     80,633       65,520
       Accounts payable to unconsolidated
        affiliate                                          --          381
  Accrued salaries and benefits                         6,962        5,765
  Deferred membership income                            6,634        5,780
  Income taxes payable                                  4,593        4,098
  Accrued reserve for settlement of pending
   litigation                                           5,500           --
  Other accrued expenses                               18,564       15,194
       Dividend payable                                 4,678           --
  Long-term debt, current portion                       1,411        5,417
  Liabilities of discontinued operations                  151          130
                                                  -----------  -----------
Total current liabilities                             132,427      102,443
Deferred tax liability                                  1,474        1,101
Deferred rent                                           1,977        1,730
Accrued closure costs                                   3,072        3,226
Long-term debt, net of current portion                  8,008       13,252
                                                  -----------  -----------
Total liabilities                                     146,958      121,752
Minority interest                                       3,145        2,672
Commitments and contingencies

Stockholders’ Equity:
  Common stock, $0.0001 par value, 45,000,000
   shares authorized; 29,815,435 and 29,404,457
   shares issued and 29,339,211 and 28,966,294
   shares outstanding (net of treasury shares),
   respectively                                             3            3
  Additional paid-in capital                          369,848      364,132
  Tax benefit from stock-based compensation             3,970        3,509
  Accumulated other comprehensive loss                (12,343)     (13,883)
  Accumulated deficit                                (106,087)    (109,676)
  Less: treasury stock at cost; 476,224 and
   438,163 shares, respectively                       (10,075)      (9,466)
                                                  -----------  -----------
Total stockholders’ equity                            245,316      234,619
                                                  -----------  -----------
Total Liabilities and Stockholders’ Equity        $   395,419  $   359,043
                                                  ===========  ===========



Contact Information

  • For further information, please contact
    Robert E. Price
    Chief Executive Officer
    (858) 551-2336

    or

    John M. Heffner
    Executive Vice President and Chief Financial Officer
    (858) 404-8826