PriceSmart
Announces Fourth Quarter and Fiscal Year Results of Operations; Opening of New
Warehouse Club in
For the fourth quarter of
fiscal 2005 net warehouse sales were $155.4 million, compared to $131.0 million
in the fourth quarter of fiscal 2004. Total revenue for the fourth quarter was
$158.8 million, compared to $133.9 million in the prior year. The sales and
revenue numbers for both years do not include the operational results of the
Company's PriceSmart
The Company recorded an
operating loss in the quarter of $465,000, compared to an operating loss of $3.1
million in the prior year. Significant
items affecting the operating loss in the period included $2.6 million in
asset impairment and closure costs primarily related to a non-cash $2.4 million
write down of real estate in the
The net loss attributable
to common shareholders for the fourth quarter was $24.1 million or ($0.95) per
diluted share. The net loss attributable
to common shareholders included: $16.7 million ($0.66 per diluted share) for
discontinued operations, net of tax resulting from the sale of the Company’s
Philippines operation; $1.3 million ($0.05 per diluted share) related to the
Company’s equity investment in PriceSmart Mexico which was closed in February
2005; and $5.1 million ($0.20 per diluted share) in current period tax
provisions and tax contingencies.
Total revenue for fiscal
2005 increased 13.7% to $618.8 million from $544.2 million and net warehouse
sales increased 14.1% during that same period.
For fiscal year 2005, the Company recorded an operating loss of $5.3
million and a loss from continuing operations before taxes of $9.9 million,
both of which were impacted by $11.4 million in charges associated with asset
impairment and closure costs. The
fiscal 2005 net loss attributable to common shareholders was $63.6 million or
($3.15) per diluted share. Of that
amount, $20.6 million ($1.02 per diluted share) is attributable to deemed
dividends related to the exchange of common stock for outstanding shares of
Series A and Series B preferred stock to common stock in the first quarter of
fiscal year 2005; $19.5 million ($0.96 per diluted share) related to
discontinued operations, primarily PriceSmart Philippines; and $4.4 million
($0.22 per diluted share) associated with the Company’s equity investment in
PriceSmart Mexico. For fiscal 2004, the
Company recorded an operating loss of $6.7 million and a net loss attributable
to common shareholders of $33.3 million, or ($4.57) per diluted share.
Commenting on the fourth
quarter and full year results, Robert E. Price, Chairman and Interim Chief
Executive Officer, said, “We are encouraged by the improvement in operating
results for our Company. Sales increased
18.6% in the most recent quarter, membership sign ups and renewals are very
good and expenses have improved. Fiscal
year 2005 was an extremely productive year for PriceSmart as operations
improved, the balance sheet was strengthened, and losing operations in
The Company ended the fiscal
year with $30.1 million in cash and cash equivalents. The current ratio at year end was 1.28 and
the Company was in compliance with all loan covenants. PriceSmart’s Chief Financial Officer, John M.
Heffner commented, “The financial decisions that were taken this year had a
significant positive impact on strengthening the Company’s financial condition. The Company either retired or converted to
equity $77.1 million in short and long-term debt, thereby reducing interest
expense by nearly $1.3 million in the fourth quarter of fiscal 2005 compared to
a year ago, and eliminating $3.4 million in annualized dividend expense. We are pleased with the progress that has
been achieved.”
PriceSmart also
announced that on November 18 the Company successfully opened its fourth warehouse
club 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
substantial net losses in fiscal 2003, 2004 and 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 foreclose 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 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 could 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; potential future
impairments under SFAS 144 could adversely affect the Company’s future results
of operations and financial position; 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 July 15, 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 conform 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
(amounts in thousands, except per share
data)
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Three
Months Ended August 31, |
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Twelve Months Ended August 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 club |
$ |
155,389 |
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$ |
131,007 |
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$ |
604,994 |
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$ |
530,262 |
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Export |
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31 |
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74 |
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425 |
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1,052 |
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Membership income |
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2,549 |
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2,060 |
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9,424 |
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7,939 |
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Other income |
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876 |
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728 |
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3,982 |
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4,938 |
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Total revenues |
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158,845 |
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133,869 |
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618,825 |
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544,191 |
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Operating expenses: |
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Cost of goods sold: |
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Net warehouse club |
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132,037 |
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111,545 |
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516,611 |
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455,626 |
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Export |
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(2) |
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92 |
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394 |
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1,090 |
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Selling, general and administrative: |
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Warehouse club operations |
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19,848 |
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17,751 |
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73,361 |
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69,846 |
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General and administrative |
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4,761 |
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6,588 |
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22,310 |
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23,098 |
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Preopening expenses |
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57 |
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— |
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99 |
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— |
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Asset impairment and closure costs |
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2,609 |
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952 |
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11,361 |
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1,236 |
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Total expenses |
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159,310 |
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136,928 |
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624,136 |
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550,896 |
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Operating loss |
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(465) |
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(3,059) |
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(5,311) |
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(6,705) |
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Other income (expense): |
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Interest income |
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353 |
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464 |
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1,754 |
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1,929 |
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Interest expense |
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(496) |
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(1,755) |
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(5,385) |
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(7,930) |
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Other expense |
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(575) |
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(70) |
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(994) |
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(215) |
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Income from related party |
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— |
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— |
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— |
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500 |
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Total other income (expense) |
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(718) |
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(1,361) |
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(4,625) |
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(5,716) |
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Loss from continuing operations before provision for
income taxes, losses (including impairment charges in 2005 and 2004) of
unconsolidated affiliate and minority interest |
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(1,183) |
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(4,420) |
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(9,936) |
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(12,421) |
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Provision for income taxes |
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(5,099) |
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(3,056) |
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(9,140) |
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(4,236) |
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Losses (including impairment charges of $845,000 and
$3.1 million in 2005 and 2004, respectively) of unconsolidated affiliate |
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(1,334) |
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(3,482) |
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