PriceSmart Announces First Quarter Results of Operations

PriceSmart Announces First Quarter Results of Operations

San Diego, CA (January 6, 2012) - PriceSmart, Inc. (NASDAQ: PSMT,) today announced its results of operations for the first quarter of fiscal year 2012 which ended on November 30, 2011.

For the first quarter of fiscal year 2012, net warehouse sales increased 24.1% to $468.3 million from $377.3 million in the first quarter of fiscal year 2011.  Total revenue for the first quarter of fiscal year 2012 was $478.7 million compared to $386.1 million in the first quarter of the prior year.  The Company had 29 clubs in operation as of November 30, 2011, compared to 28 warehouse clubs in operation as of November 30, 2010.

The Company recorded operating income for the first quarter of $24.3 million, compared to operating income of $22.2 million for the first quarter of the prior year.  Net income attributable to PriceSmart was $14.0 million, or $0.47 per diluted share, in the first quarter of fiscal year 2012.  Net income attributable to PriceSmart in the first quarter of fiscal year 2011 was $14.9 million, or $0.50 per diluted share.

Beginning with the current quarter, the Company now reports gains and losses associated with foreign exchange in other income (expense) on the consolidated statement of income, formerly it was reported in net warehouse club cost of goods sold. The Company believes that foreign currency gains and losses are not directly related to the cost of sales but are more closely linked to the financing activities of the Company and its subsidiaries. For example, in the first quarter of fiscal year 2012, the Company incurred a net $1.2 million ($0.04 per share) foreign exchange loss resulting primarily from a devaluation of the Colombian peso. During the first quarter of fiscal year 2011, the Company recorded a $378,000 ($0.01 per share) gain in foreign exchange that was reclassified to conform to the current presentation. 

The Company plans to release its quarterly report on Form 10-Q for the first quarter of fiscal year 2012 on or before January 9, 2012, which will contain additional information about the quarter's results.

About PriceSmart

PriceSmart, headquartered in San Diego, owns and operates U.S.-style membership shopping warehouse clubs in Latin America and the Caribbean, selling high quality merchandise at low prices to PriceSmart members. PriceSmart now operates 29 warehouse clubs in 12 countries and one U.S. territory (five in Costa Rica; four each in Panama and Trinidad; three each in Guatemala and Dominican Republic; two each in El Salvador and Honduras; and one each in Aruba, Barbados, Colombia, 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," "anticipated," "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'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 its business; the Company faces significant competition; future sales growth could be dependent upon the Company acquiring suitable sites for additional warehouse club: the Company may encounter difficulties in the shipment of, and risks inherent in the acquisition and importation of, merchandise to its warehouse clubs; the Company is exposed to weather and other natural disaster risks; 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 own approximately 31.4% of the Company's voting stock, which may make it difficult to complete some corporate transactions without their support and may impede 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; although the Company takes steps to continuously review, enhance, and implement improvements to its internal controls, there may be material weaknesses or significant deficiencies that the Company has not yet identified; as well as the other risks detailed in the Company's U.S. Securities and Exchange Commission ("SEC") reports, including the Company's Annual Report on Form 10-K filed for the year ended August 31, 2011 filed pursuant to the Securities Exchange Act of 1934 on November 9, 2011.  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 John M. Heffner, Principal Financial Officer and Principal Accounting Officer [phone].

PRICESMART, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED-AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

		Three Months Ended
		November 30,
		2011				2010
Revenues:
Net warehouse club sales		$	468,329			$	377,331
Export sales			2,249				1,409
Membership income			6,331				5,425
Other income			1,776				1,907
Total revenues			478,685				386,072
Operating expenses:
Cost of goods sold:
Net warehouse club			400,481				318,191
Export			2,161				1,344
Selling, general and administrative:
Warehouse club operations			42,509				35,133
General and administrative			9,111				8,810
Pre-opening expenses			162				403
Total operating expenses			454,424				363,881
Operating income			24,261				22,191
Other income (expense):
Interest income			184				129
Interest expense			(1,254	)			(956	)
Other income (expense), net			(1,269	)			332
Total other expense			(2,339	)			(495	)
Income from continuing operations before provision for income taxes and loss of unconsolidated affiliates			21,922				21,696
Provision for income taxes			(7,933	)			(6,845	)
Loss of unconsolidated affiliates			7				(5	)
Income from continuing operations			13,996				14,846
Income from discontinued operations, net of tax			(7	)			7
Net income			13,989				14,853
Net income per share available for distribution:
Basic net income per share from continuing operations		$	0.47			$	0.50
Basic net income per share from discontinued operations, net of tax		$	0.00			$	0.00
Basic net income per share		$	0.47			$	0.50
Diluted net income per share from continuing operations		$	0.47			$	0.50
Diluted net income per share from discontinued operations, net of tax		$	0.00			$	0.00
Diluted net income per share		$	0.47			$	0.50
Shares used in per share computations:
Basic			29,503				29,356
Diluted			29,517				29,362
Dividends per share		$	0.00			$	0.00

PRICESMART, INC.

CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

		November 30,
		2011			August 31,
		(Unaudited)			2011
ASSETS
Current Assets:
Cash and cash equivalents	$	58,276			$	76,817
Short-term restricted cash		1,240				1,240
Receivables, net of allowance for doubtful accounts of $3 and $5 as of November 30 and August 31, 2011, respectively		3,978