PriceSmart Announces
Agreement to Settle Securities Lawsuit
San Diego, CA., March 3, 2005 –
PriceSmart, Inc. (NASDAQ:PSMT) today announced that a settlement has been
reached in the consolidated securities litigation entitled In re PriceSmart,
Inc. Securities Litigation, Master File No. 03 CV 2260 JAH (BLM), pending
in the United States District Court for the Southern District of California.
This lawsuit is an alleged class action against the Company and certain of its
former officers, filed on behalf of a purported class of persons who purchased
the Company's common stock during a certain class period.
Under the settlement, which is subject to Court approval,
the sum of $2,350,000 shall be paid to plaintiffs (said sum to be inclusive of plaintiffs'
attorneys' fees, in an amount to be determined by the Court), in exchange for a
release of claims and a dismissal of the complaint. It is anticipated that the
Company's insurance carrier will fund approximately 80% of the settlement
payment.
The lawsuit relates to the Company's restatement of
financial statements in late 2003. The settlement was entered into to avoid the
expense and disruption of protracted litigation and does not constitute an
admission of liability by the Company or its former officers. The Company has
previously announced the settlement of a separate federal court securities
lawsuit and a state court shareholder derivative lawsuit, both of which
similarly related to such restatement. The settlement of this third lawsuit
brings to a conclusion all such litigation.
About PriceSmart
PriceSmart, headquartered
in
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 a
substantial loss in fiscal 2003, in fiscal 2004 and the first quarter of fiscal
2005 and may continue to incur losses in future periods; the Company is
required to comply with financial covenants governing its outstanding
indebtedness and is out of compliance with certain covenants, which gives
lenders the right to accelerate the Company’s indebtedness; the Company’s
financial performance is dependent on international operations; any failure by
the Company to manage its widely dispersed operations could adversely affect
its business; although the Company has taken steps to significantly improve its
internal controls, there may be material weaknesses or significant deficiencies
that the Company has not yet identified; the Company is currently defending
litigation relating to its financial restatement; the Company faces significant
competition; the Company may encounter difficulties in the shipment of and
inherent risks in the importation of merchandise to its warehouse clubs; the
success of the Company’s business requires effective assistance from local
business people; 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 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-Q filed
pursuant to the Securities Exchange Act of 1934 on January 14, 2005. 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.
For further information, please contact Robert E.
Price, Interim Chief Executive Officer (858) 551-2336; or John M. Heffner,
Executive Vice President and Chief Financial Officer (858) 404-8826.