2ND QUARTER FISCAL 1998 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _____________________ FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED FEBRUARY 28, 1998 COMMISSION FILE NUMBER 0-22793 PRICESMART, INC. (Exact name of registrant as specified in its charter) DELAWARE 33-0628530 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4649 MORENA BOULEVARD SAN DIEGO, CALIFORNIA 92117 (Address of principal executive offices) (619) 581-4530 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES_X_ NO___ The registrant had 5,911,342 common shares, par value $.0001, outstanding at April 8, 1998.
PRICESMART, INC. INDEX TO FORM 10-Q PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS PAGE ---- Consolidated Balance Sheets.................................... 3 Consolidated Statements of Operations.......................... 4 Consolidated Statements of Cash Flows.......................... 5 Notes to Consolidated Financial Statements..................... 6-7 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................. 8-11 PART II - OTHER INFORMATION ITEM 1 - LEGAL PROCEEDINGS.............................................. 12 ITEM 2 - CHANGES IN SECURITIES.......................................... 12 ITEM 3 - DEFAULTS UPON SENIOR SECURITIES................................ 12 ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............ 12 ITEM 5 - OTHER INFORMATION.............................................. 12 ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K............................... 12 2
PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS PRICESMART, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA) <TABLE> <CAPTION> FEBRUARY 28, AUGUST 31, 1998 1997 ---- ---- ASSETS (Unaudited) <S> <C> <C> Current assets: Cash and equivalents................................ $ 3,494 $ 58,383 Investments available for sale...................... 57,286 - Accounts receivable, net............................ 5,849 4,806 Merchandise inventories............................. 9,575 5,518 Prepaid expenses and other current assets........... 767 578 Property held for sale, net......................... 14,763 19,913 -------- -------- Total current assets................................. 91,734 89,198 Property and equipment: Land................................................ 2,250 2,250 Building and improvements........................... 6,739 4,578 Fixtures and equipment.............................. 7,231 4,712 -------- -------- 16,220 11,540 Less accumulated depreciation....................... (2,583) (1,946) -------- -------- 13,637 9,594 Other assets: City notes receivable............................... 22,203 23,052 Other notes receivable.............................. 4,027 4,041 -------- -------- 26,230 27,093 -------- -------- TOTAL ASSETS.......................................... $131,601 $125,885 -------- -------- -------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Bank borrowings..................................... $ 4,082 $ - Accounts payable, trade............................. 6,048 4,901 Accrued expenses.................................... 3,904 4,813 Other current liabilities........................... 2,685 3,563 -------- -------- Total current liabilities............................. 16,719 13,277 Minority interest..................................... 5,618 5,436 STOCKHOLDERS' EQUITY Common stock, $.0001 par value, 15,000,000 shares authorized, 5,908,235 shares issued and outstanding........................................ 1 1 Additional paid-in capital........................... 107,171 107,171 Unrealized gains on investments...................... 281 - Retained earnings.................................... 1,811 - -------- -------- Total Stockholders' Equity............................ 109,264 107,172 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............ $131,601 $125,885 -------- -------- -------- -------- </TABLE> 3
PRICESMART, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED - AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) <TABLE> <CAPTION> SECOND QUARTER YEAR-TO-DATE ------------------------ ------------------------- 3 MONTHS 12 WEEKS 6 MONTHS 28 WEEKS ENDED ENDED ENDED ENDED FEBRUARY 28, MARCH 16, FEBRUARY 28, MARCH 16, 1998 1997 1998 1997 ------------ --------- ------------ --------- <S> <C> <C> <C> <C> REVENUES Sales: International...................................... $22,542 $13,899 $40,710 $31,214 Electronic Shopping................................ - 411 - 957 International royalties and other fees............... 1,140 796 1,733 1,698 Auto referral, travel and other programs............. 3,298 2,980 6,405 6,442 ------- ------- ------- ------- TOTAL REVENUES....................................... 26,980 18,086 48,848 40,311 EXPENSES Cost of goods sold: International...................................... 20,461 12,813 37,418 29,259 Electronic Shopping................................ - 620 - 1,793 Selling, general and administrative: International...................................... 3,328 2,987 6,060 5,574 Electronic Shopping................................ - 685 - 3,938 Auto referral, travel and other programs........... 2,683 2,447 5,468 5,164 Corporate administrative expenses.................. 722 345 1,269 835 ------- ------- ------- ------- TOTAL EXPENSES........................................ 27,194 19,897 50,215 46,563 ------- ------- ------- ------- OPERATING LOSS........................................ (214) (1,811) (1,367) (6,252) OTHER Real estate operations, net.......................... 171 164 534 92 Interest income, net................................. 1,469 698 2,985 1,426 Minority interest.................................... (161) 46 (185) (109) ------- ------- ------- ------- TOTAL OTHER........................................... 1,479 908 3,334 1,409 ------- ------- ------- ------- Income (loss) before provision (benefit) for income taxes........................................ 1,265 (903) 1,967 (4,843) Provision (benefit) for income taxes................. 156 (371) 156 (1,986) ------- ------- ------- ------- NET INCOME (LOSS)..................................... $ 1,109 $ (532) $ 1,811 $ (2,857) ------- ------- ------- ------- ------- ------- ------- ------- EARNINGS PER SHARE Basic................................................ $.19 $ (.09) $.31 $ (.48) ------- ------- ------- ------- ------- ------- ------- ------- Diluted.............................................. $.18 $ (.09) $.30 $ (.48) ------- ------- ------- ------- ------- ------- ------- ------- SHARES USED IN PER SHARE COMPUTATION Basic................................................ 5,908 5,908 5,908 5,908 ------- ------- ------- ------- ------- ------- ------- ------- Diluted.............................................. 6,074 5,908 6,077 5,908 ------- ------- ------- ------- ------- ------- ------- ------- </TABLE> See accompanying notes. 4
PRICESMART, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED - AMOUNTS IN THOUSANDS) <TABLE> <CAPTION> YEAR-TO-DATE ------------------------ 6 MONTHS 28 WEEKS ENDED ENDED FEBRUARY 28, MARCH 16, 1998 1997 ----------- --------- <S> <C> <C> OPERATING ACTIVITIES Net income (loss)..................................... $ 1,811 $ (2,857) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization...................... 637 901 Income tax benefit................................. - (1,986) Minority interest.................................. 185 109 Change in accounts receivable and other assets..... (5,289) (7,413) Change in accounts payable and other liabilities... (640) 1,987 Change in property held for sale................... 5,150 3,445 -------- -------- Net cash flows provided by (used in) operating activities................................. 1,854 (5,814) INVESTING ACTIVITIES Purchases of investments available for sale........... (76,175) - Sales of investments available for sale............... 19,170 - Additions to property and equipment................... (4,683) (7,104) Payments of notes receivable.......................... 863 4,027 -------- -------- Net cash flows (used in) investing activities.......... (60,825) (3,077) FINANCING ACTIVITIES Proceeds from bank borrowings......................... 4,082 - Net investment by PEI................................. - 5,259 Contributions by Panama JV partner.................... - 3,632 -------- -------- Net cash flows provided by financing activities........ 4,082 8,891 -------- -------- Net decrease in cash................................... (54,889) - Cash and cash equivalents at beginning of period....... 58,383 - -------- -------- Cash and cash equivalents at end of period............. $ 3,494 $ - -------- -------- -------- -------- </TABLE> See accompanying notes. 5
PRICESMART, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) February 28, 1998 NOTE 1 - FORMATION OF THE COMPANY PriceSmart, Inc. ("PriceSmart" or the "Company") owns and operates certain merchandising businesses. The Company's primary business is international merchandising consisting of membership shopping stores similar to, but smaller in size than, warehouse clubs in the United States. As of February 28, 1998, there were a total of six stores licensed to and owned by in-country business people and two stores owned 51% by the Company. (See Liquidity and Capital Resources Section of Management Discussion and Analysis). Additionally, the Company operates domestic auto referral and travel businesses marketed to Costco members. PriceSmart was formed in August 1994 as a subsidiary of Price Enterprises, Inc. ("PEI") and initially operated under the name Price Quest, Inc. and until recently was operating under the name PQI, Inc. However, the Company changed its name to PriceSmart, Inc. effective June 30, 1997 in anticipation of the spin-off of the Company from PEI. In June 1997, the PEI Board of Directors approved, in principle, a plan to separate PEI's core real estate business from the merchandising businesses it operated through a number of subsidiaries. To effect such separation, PEI first transferred to the Company, through a series of preliminary transactions, the assets listed below. PEI then distributed on August 29, 1997 all of the Company's Common Stock pro rata to PEI's existing stockholders through a special dividend (the "Distribution"). Assets transferred to PriceSmart were comprised of: (i) the merchandising business segment of PEI; (ii) certain real estate properties held for sale (the "Properties"); (iii) notes receivable from various municipalities and agencies ("City Notes") and certain secured notes receivable from buyers of properties; (iv) cash and cash equivalents of approximately $58.4 million; and (v) all other assets and liabilities not specifically associated with PEI's portfolio of 27 investment properties, except for current corporate income tax assets and liabilities. NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the 6 months ended February 28, 1998 are not necessarily indicative of the results that may be expected for the year ending August 31, 1998. For further information, refer to the consolidated financial statements and footnotes thereto included in the PriceSmart, Inc. annual report on Form 10-K for the year ended August 31, 1997. The consolidated financial statements include the assets, liabilities and results of operations for its wholly owned and majority owned merchandising businesses. Certain amounts in the prior period financial statements have been reclassified to conform to the current presentation. FISCAL YEAR Effective September 1, 1997, the Company changed its reporting periods to 12 months, ending August 31 with each quarter consisting of 3 months. Prior to the change, the Company generally reported 13 periods (ending on the Sunday closest to August 31) of 4 weeks each, with the first quarter consisting of 16 weeks, and each remaining quarter consisting of 12 weeks. 6
PRICESMART, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) EARNINGS PER SHARE In 1997, the Financial Accounting Standard Board issued Statement of Financial Accounting Standards No. 128, Earnings per Share. Statement 128 replaced the previously reported primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options, warrants, and convertible securities. Diluted earnings per share is very similar to the previously reported fully diluted earnings per share. All earnings per share amounts for all periods have been presented, and where necessary, restated to conform to the Statement 128 requirements. NOTE 3 - INVESTMENTS AVAILABLE FOR SALE Investments available for sale are comprised of U.S. treasury securities and obligations of U.S. government agencies with an average maturity of 2 years and an average yield of 6%. 7
ITEM 2 . MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion contains forward-looking statements that involve risk and uncertainties. The Company's actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed hereunder, as well as those discussed under the caption "Risk Factors" in the Registration Statement on Form 10 filed pursuant to the Securities Exchange Act of 1934, as amended, on July 3, 1997, as amended by Amendment No. 1 to Form 10 filed on August 1, 1997 and Amendment No. 2 to Form 10 filed on August 13, 1997. The following discussion and analysis compares the results of operations for the second quarter and year-to-date periods of fiscal 1998 ended February 28, 1998 to the second quarter and year-to-date periods of fiscal 1997 ended March 16, 1997. All dollar amounts are in thousands. Effective September 1, 1997, the Company changed its reporting periods to 12 months, with each quarter consisting of 3 months. Prior to the change, the Company generally reported 13 periods of 4 weeks each, with the first quarter consisting of 16 weeks, and each remaining quarter consisting of 12 weeks. As a result of the change in reporting periods, the discussion and analysis below compare 90 days of operations in Q2 fiscal 1998 to 84 days of operations for Q2 fiscal 1997; and 181 days of operations for fiscal 1998 year-to-date to 196 days of operations for fiscal 1997 year-to-date. The longer Q2 fiscal 1998 also includes more days of the holiday season compared to fiscal 1997. INTERNATIONAL SALES <TABLE> <CAPTION> International Sales Percent Change ------------------- -------------- <S> <C> <C> 2nd Quarter - FY 1998 $22,542 62% 2nd Quarter - FY 1997 $13,899 - Year-to-Date FY 1998 $40,710 30% Year-to-Date FY 1997 $31,214 - </TABLE> Net sales for Q2 fiscal 1998 increased over Q2 fiscal 1997 primarily due to a second store opened in Panama, and sales made to a new licensed store, both of which opened on December 4, 1997. During the year-to-date period, the increase in sales was also attributed to a full quarter of operations in Q1 fiscal 1998 for the first Panama store compared to a partial quarter in Q1 fiscal 1997 (opened October 1996), and sales made to two licensed stores that opened subsequent to Q1 fiscal 1997. These increases were partially offset by the discontinuation of the export trading business in fiscal 1997. GROSS MARGIN <TABLE> <CAPTION> International Percent Change Percent of Sales ------------- -------------- ---------------- <S> <C> <C> <C> 2nd Quarter - FY 1998 $2,081 92% 9.23% 2nd Quarter - FY 1997 $1,086 - 7.81% Year-to-Date FY 1998 $3,292 68% 8.09% Year-to-Date FY 1997 $1,955 - 6.26% </TABLE> The increase in gross margin as a percent of sales during Q2 fiscal 1998 was primarily due to a 131% increase in Panama sales which have a higher gross margin than that earned on exports of U.S.-sourced products. During the year-to-date period, the increase in gross margin was also attributed to a higher gross margin on Panama sales, but was somewhat offset by decreased shipments of U.S.-sourced products to foreign licensees. 8
The electronic shopping program was discontinued in Q2 fiscal 1997, and a mark-down reserve of $.2 million was taken, in addition to the $.7 million taken in Q1 fiscal 1997. OTHER REVENUES <TABLE> <CAPTION> International Auto Referral, Royalties & Percent Travel and Other Percent Fees Change Programs Change ------ ------ -------------- ------ <S> <C> <C> <C> <C> 2nd Quarter - FY 1998 $1,140 43% $3,298 11% 2nd Quarter - FY 1997 796 - 2,980 - Year-to-Date FY 1998 $1,733 2% $6,405 (1%) Year-to-Date FY 1997 $1,698 - 6,442 - </TABLE> International Royalties and Fees increased in Q2 fiscal 1998 compared to Q2 fiscal 1997 primarily due to an increase in non-recurring store opening fees and higher royalties on increased sales at licensee stores. The year-to-date increase was a result of the same factors as Q2. However, this increase was offset by the shorter reporting period as discussed above. Revenues in Q2 fiscal 1998 from Auto Referral, Travel and other programs increased primarily due to the longer reporting period discussed above. The year-to-date amounts were comparable. SELLING, GENERAL & ADMINISTRATIVE <TABLE> <CAPTION> Auto Referral, Percent Travel and Other Percent International Change Programs Change ------------- --------- --------------- ------- <S> <C> <C> <C> <C> 2nd Quarter - FY 1998 $3,328 11% $2,683 10% 2nd Quarter - FY 1997 2,987 - 2,447 - Year-to-Date FY 1998 $6,060 9% $5,468 6% Year-to-Date FY 1997 5,574 - 5,164 - </TABLE> The increase in selling, general and administrative expenses for International during Q2 fiscal 1998 was primarily due to one additional Panama store opened in December 1997. The fiscal 1998 year-to-date amount was partially offset by a reduction in central expenses in Q1 fiscal 1998. Selling, general and administrative expenses for Electronic Shopping for fiscal 1997 year-to-date period includes a charge of $1.8 million for fixture and equipment write-downs and certain other reserves resulting from the decision to eliminate this business. During Q2 and fiscal 1998 year-to-date periods, selling, general and administrative expenses for Auto Referral, Travel and other programs increased primarily due to increased personnel costs to support a service center test program. 9
CORPORATE AND ADMINISTRATIVE EXPENSE <TABLE> <CAPTION> Amount Percent Change ------ -------------- <S> <C> <C> 2nd Quarter - FY 1998 $ 722 109% 2nd Quarter - FY 1997 345 - Year-to-Date FY 1998 $1,269 52% Year-to-Date FY 1997 835 - </TABLE> Corporate and Administrative Expense for Q2 and year-to-date periods fiscal 1998 reflects the actual costs incurred for corporate administration. In fiscal 1997, the Company was operated as certain subsidiaries of Price Enterprises, Inc. ("PEI"). Certain general and administrative costs of PEI were allocated to the Company, principally based on PEI's specific identification of individual cost items or otherwise based upon estimated levels of effort devoted by its general and administrative departments to individual entities or relative measures of size of entities. The increase in expense is primarily due to the addition of management and incremental expenses associated with becoming a separate, publicly held company. REAL ESTATE OPERATIONS (NET) <TABLE> <CAPTION> Gain (Loss) Revenues Expenses On Sales Net -------- -------- ----------- ----- <S> <C> <C> <C> <C> 2nd Quarter - FY 1998 $ 530 $ (359) $ 0 $171 2nd Quarter - FY 1997 696 (599) 67 164 Year-to-Date FY 1998 $1,210 $ (785) $109 $534 Year-to-Date FY 1997 1,495 (1,470) 67 92 </TABLE> Real estate operations relate to properties held for sale which were transferred to the Company in connection with the Distribution and reflect rental revenue, rental expenses, gain or loss on sale of properties and provisions for asset impairment related to these properties. During Q2 and year-to-date periods, the increase in net income from real estate operations was primarily due to reduced operating expenses resulting from the disposition of non-income producing properties in Q4 fiscal 1997. The increase in Q2 fiscal 1998 was somewhat offset by a gain on sale of a property in Q2 fiscal 1997. The fiscal 1998 year-to-date amount also included increased gains on sale of properties compared to fiscal 1997 year-to-date. INTEREST INCOME Interest income reflects earnings on invested cash, earnings on City Notes and certain secured notes receivable from buyers of formerly owned properties. During Q2 and year-to-date periods, the increase in interest income was primarily due to larger invested cash balances. LIQUIDITY AND CAPITAL RESOURCES While the Company is well positioned to finance its business activities through a variety of sources, it expects to satisfy short-term liquidity requirements through the cash distributed to the Company prior to the Distribution, cash from operations of the Company's businesses, and principal and interest payments on the City Notes and other notes receivable. The Company also expects to generate cash from sales of Properties held for sale, and the cash flow that may ultimately be generated by sales of these properties represents a major source of additional capital resources. The Company's net working capital requirements and capital expenditures are not expected to exceed $4 million and $1 million respectively during the remainder of fiscal 1998. Actual capital expenditures, investment in merchandising businesses and gross proceeds realized from property sales for the remainder of fiscal 1998 may vary from estimated amounts depending on business conditions and other risks and uncertainties to which the Company and its businesses are subject. 10
The Company believes that the Company's cash balances and net cash provided by operating activities, principal and interest payments on notes receivable and sales of its Properties will be sufficient to meet its working capital expenditure requirements for at least fiscal 1998. Management has invested the Company's cash in excess of current operating requirements in short-term, interest-bearing, investment-grade securities. Certain Asian markets served by the Company have experienced a significant devaluation of local currencies relative to the US dollar; particularly in Indonesia. Because the Company transacts its business in U.S. dollars, exchange rate risk is not at issue. However, devaluation of local currencies relative to the U.S. dollar causes U.S. merchandise to be less affordable, and generally has a negative impact on the Company's sales of U.S.-sourced goods to the affected markets, location sales and royalty income. The Company has an immaterial risk of loss in the countries most affected by the economic downturn discussed above, as these are licensing arrangements. It is, however, unclear to what extent this economic situation will impact future results of operations. In early March (three months after the opening of a PriceSmart store in the Philippines), the Company terminated its license agreement with the licensee because the licensee had failed to comply with certain of its contractual obligations. The Company and licensee have begun negotiations regarding the dispute. SEASONALITY Historically, the Company's merchandising businesses have experienced moderate holiday retail seasonality in their markets. In addition to seasonal fluctuations, the Company's operating results fluctuate quarter-to-quarter as a result of economic and political events in markets served by the Company, the timing of holidays, weather, timing of shipments, product mix, and cost of U.S.-sourced products. Because of such fluctuations, the results of operations of any quarter are not indicative of the results that may be achieved for a full fiscal year or any future quarter. In addition, there can be no assurance that the Company's future results will be consistent with past results or the projections of securities analysts. IMPACT OF YEAR 2000 The year 2000 issue results from computer programs and hardware being written with 2 digits rather than 4 digits to define the applicable year. As a result, there is a risk that date sensitive software may recognize a date using "00" as the year 1900, rather than the year 2000. This potentially could result in system failure or miscalculations causing disruptions of operations, including a temporary inability to process transactions or engage in normal business activities. The Company has already received letters of year 2000 compliance from its key hardware and software vendors regarding the Company's core transaction processing systems, including both the point of sale and back room processes. In addition, the Company plans to conduct it's own internal testing of year 2000 compliance by the end of the calendar year 1998. Further, certain custom programs are planned to be modified by the end of calendar year 1998. The total cost of the year 2000 project is not expected to exceed $100,000, which excludes the cost of the recently purchased hardware and software, which was already year 2000 compliant. The Company plans to initiate formal communications with its significant suppliers regarding year 2000 compliance. However, the Company's systems interface with its suppliers is minimal, which makes the Company less vulnerable. The costs of the year 2000 project and the estimated completion date are based on management's best estimates, which are derived utilizing numerous assumptions. However, there can be no guarantee that these estimates will be achieved and actual results could differ materially from the estimates. Specific factors that might cause material differences include, but are not limited to, the availability and cost of trained personnel, the ability to locate and correct all relevant computer codes, and similar uncertainties. 11
PART II - OTHER INFORMATION - ---------------------------- ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 27.1 Financial Data Schedule (b) No reports on Form 8-K were filed for the 3 months ended February 28, 1998 (c) Employment Agreement dated December 15, 1997 between the Company and Gilbert Partida 12
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PRICESMART, INC. REGISTRANT Date: April 13, 1998 /s/ Gil Partida -------------------- Gil Partida PRESIDENT & CHIEF EXECUTIVE OFFICER Date: April 13, 1998 /s/ Karen J. Ratcliff --------------------- Karen J. Ratcliff EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER 13