PriceSmart
Announces Third Quarter Results
For the third quarter
of fiscal 2005, total revenues increased 16.2% to $169.6 million from $146.0
million in the third quarter of fiscal year 2004. Net warehouse club sales increased 16.7% to $165.9
million in the current quarter from $142.2 million in the third quarter of
fiscal year 2004. The Company had an
operating loss of $9.1 million in the quarter compared to an operating loss of
$6.0 million in the same period last year.
Third quarter fiscal 2005 net loss attributable to common shareholders
was $13.1 million or ($0.53) per diluted share compared to a net loss
attributable to common shareholders of $7.5 million or ($1.01) per diluted
share in the third quarter of fiscal 2004.
Reviewing the
results, PriceSmart recorded its highest third quarter sales in the Company’s
history. The Company’s gross margin
percentage for the third quarter was less than a year ago primarily due to the
reduction of licensing fees from the Company’s former
Regarding
noteworthy charges recognized in the period, the Company incurred $8.2 million
of asset impairment and closure costs, including a non-cash charge of $7.1
million to write-down the value of the long lived assets (leasehold
improvements and furniture and equipment) at the Company’s U.S. Virgin Islands
warehouse club location. The USVI
operation has shown strong sales growth during the past few months, but the
projected operating cash flows were insufficient to maintain the carrying value
of those assets, necessitating the write-down.
Also included in asset impairment and closure costs are charges totaling
$633,000 related to the Company’s previously closed locations in
The Company also recognized a $603,000 charge related to the planned issuance of 75,212 shares of the Company's common stock as consideration for the termination of an option to purchase certain parcels of land previously granted to a related party in 2001.
For the first nine
months of fiscal 2005, total revenues increased 10.8% to $509.0 million from $459.5
million in the first nine months of fiscal 2004 and net warehouse sales
increased 11.2% during that same period.
For the first nine months of fiscal 2005, the Company recorded an
operating loss of $6.5 million and a net loss attributable to common
shareholders of $18.9 million or ($1.02) per diluted share. During the same nine month period in fiscal
2004, the Company recorded an operating loss of $11.3 million and a net loss
attributable to common shareholders of $18.9 million, or ($2.61) per diluted
share.
The Company had 26
warehouse clubs in operation at the end of the third quarter (excluding 3
unconsolidated warehouse clubs in Mexico that are owned through a 50/50 joint
venture, which were closed effective February 28, 2005). In the comparable period a year ago, the
Company ended with 25 warehouse clubs in operation (excluding 3 unconsolidated
warehouse clubs in
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 net loss in fiscal 2004, a net loss in the first nine months of
2005, and may continue to incur losses in future periods; if the Company fails
to comply with covenants governing its indebtedness, the lenders may elect to
accelerate the Company’s indebtedness and foreclosure on the collateral pledged
to secure the indebtedness; 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 is currently defending litigation relating to its
financial restatement; 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 success of the Company’s business
requires effective assistance from local business people and, as a result, existing
disputes with minority interest shareholders or other disputes with local
business people upon whom the Company depends could adversely affect the
Company’s business; 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-Q filed pursuant to the Securities Exchange Act of 1934 on
April 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. Certain prior period amounts may
have been reclassified to confirm to the current period presentation.
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.
PRICESMART, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED—AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
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Three
Months Ended |
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Nine Months
Ended |
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May 31, |
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May 31, |
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2005 |
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2004 |
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2005 |
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2004 |
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Revenues: |
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Sales: |
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Net warehouse |
$ |
165,902 |
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$ |
142,170 |
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$ |
497,390 |
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$ |
447,379 |
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Export |
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23 |
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169 |
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394 |
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978 |
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Membership income |
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2,647 |
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2,232 |
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7,533 |
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6,512 |
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Other income |
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998 |
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1,423 |
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3,669 |
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4,671 |
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Total revenues |
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169,570 |
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145,994 |
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508,986 |
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459,540 |
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Operating expenses: |
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Cost of goods sold: |
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Net warehouse |
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142,808 |
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122,521 |
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426,370 |
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386,994 |
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Export |
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35 |
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167 |
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396 |
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998 |
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Selling, general and administrative: |
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Warehouse operations |
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21,387 |
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19,831 |
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62,326 |
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60,478 |
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General and administrative |
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6,162 |
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5,490 |
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17,549 |
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16,510 |
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Preopening expenses |
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40 |
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322 |
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42 |
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488 |
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Asset impairment and closure costs |
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8,190 |
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3,684 |
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8,768 |
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5,416 |
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