Cost-U-Less, Inc. (the �Company�) (Nasdaq: CULS) today announced
results for its second fiscal quarter ending July 1, 2007 (Q2
2007). Highlights for Q2 2007 were as follows: EPS of $0.16 on net
income of $0.7MM compared to EPS of $0.11 on net income of $0.5MM
for the corresponding period a year ago (Q2 2006). Operating income
of $1.0MM compared to operating income of $0.9MM for Q2 2006.
EBITDA of $1.7MM compared to EBITDA of $1.5MM for Q2 2006 (see
Appendix A). Sales of $55.3MM compared to $53.6MM for Q2 2006.
Gross margin on sales of 19.4% compared to 18.8% for Q2 2006.
Comparable store sales (stores open a full 13 months) increase of
3.3% over Q2 2006. �We are delighted to report this record gross
margin of 19.4% in the Company�s history,� said J. Jeffrey Meder,
the Company�s President and CEO. �Moreover, this comes not at the
expense of top line sales. All but two markets exceeded our same
store sales average of 3.3% for the quarter.� General and
administrative expenses increased 9% to $1.8 million for Q2 2007
due primarily to an increase in professional service expenses
related to the Company�s exploration of a range of strategic
alternatives as announced in its press release of January 30, 2007.
The Company will hold a conference call to discuss its financial
results on Wednesday, August 15, 2007, at 9:00 a.m. Pacific Time.
The presentation will be broadcast live over the Internet in a
listen-only mode through www.earnings.com. Hyperlinks to the
webcast are available through www.costuless.com,
www.streetevents.com and other financial websites. An on-demand
replay of the webcast also will be available beginning at 3:00 p.m.
Pacific Time, August 15, 2007, and subsequently will be archived
and available at www.costuless.com for approximately 30 days.
Cost-U-Less currently operates eleven stores in the Caribbean and
Pacific region: U.S. Virgin Islands (2), Netherlands Antilles (2),
Hawaiian Islands (2), California (1), Guam (2), American Samoa (1),
and Republic of Fiji (1). The Company builds its business through
delivering high-quality U.S. and local goods, progressive
merchandising practices, sophisticated distribution capabilities,
and superior customer service, primarily to island markets.
Additional information about Cost-U-Less is available at
www.costuless.com. Forward Looking Statements This press release
contains statements that are forward-looking. These statements are
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Such statements,
including comparable store sales expectations, trends in or
expectations regarding the Company�s revenue growth, and the
Company�s growth plans are all based on currently available
operating, financial, and competitive information and are subject
to various risks and uncertainties that could cause actual results
to differ materially from historical results or those anticipated,
including that the Company may encounter substantial delays,
increased expenses or loss of potential store sites due to the
complexities, cultural differences, and local political issues
associated with the regulatory and permitting processes in the
island markets in which the Company may locate its stores.
Prolonged adverse occurrences affecting tourism or air travel,
particularly to non-U.S. destinations, including political
instability, armed hostilities, terrorism, natural disasters or
other activity that involves or affects air travel or the tourism
industry generally, could cause actual results to differ materially
from historical results or those anticipated. Other risks and
uncertainties include the Company�s small store base; the mix of
geographic and product revenues; relationships with third parties;
litigation; the Company�s ability to maintain existing credit
facilities and obtain additional credit; business and economic
conditions and growth in various geographic regions; pricing
pressures; political and regulatory instability in various
geographic regions; and other risks and uncertainties detailed in
the Company�s filings with the SEC. Appendix A (in thousands unless
otherwise noted) � Non GAAP measures: � Non GAAP measures are
provided as a complement to results provided in accordance with
accounting principles generally accepted in the United States of
America ("GAAP"). Non GAAP measures are not a substitute for
measures computed in accordance with GAAP. Definitions of such non
GAAP measurements are provided below. These definitions are
provided to allow the reader to reconcile non GAAP data to that
presented in accordance with GAAP. Our non GAAP measures may be
different from the presentation of financial information by other
companies. � EBITDA represents earnings before net interest
expense, income taxes, depreciation, and amortization. We believe
EBITDA is an important non GAAP measure as it provides useful
information. In addition, management uses such non GAAP measures
internally to evaluate the Company's performance and manage its
operations. See below for reconciliation of most comparable GAAP
measurements to EBITDA. � Q2 ended YTD 07/01/07 07/01/07 � Net
income $683 $1,330 Depreciation and amortization 658 1,329 Interest
expense, net (41 ) 5 Income taxes 370 715 EBITDA $1,670 $3,379 � �
Q2 ended YTD 07/02/06 07/02/06 � Net income $475 $1,233
Depreciation and amortization 579 1,141 Interest expense, net 107
213 Income taxes 330 760 EBITDA $1,491 $3,347 � � COST-U-LESS, INC.
� CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands,
except share and per share data) � (Unaudited) � � 13 Weeks Ended
26 Weeks Ended July 1, 2007 July 2, 2006 July 1, 2007 July 2, 2006
� Net sales $ 55,343 $ 53,568 $ 110,971 $ 108,260 Merchandise costs
� 44,604 � 43,515 � � 89,620 � � 88,008 � Gross profit 10,739
10,053 21,351 20,252 � Operating expenses: Store 7,743 7,319 15,259
14,535 General and administrative 1,833 1,680 3,776 3,343 Store
openings � 159 � 139 � � 272 � � 153 � Total operating expenses �
9,735 � 9,138 � � 19,307 � � 18,031 � � Operating income 1,004 915
2,044 2,221 � Other income (expense): Interest income (expense),
net 41 (107 ) (5 ) (213 ) Other � 8 � (3 ) � 6 � � (15 ) Income
before income taxes 1,053 805 2,045 1,993 � Income tax provision �
370 � 330 � � 715 � � 760 � Net income $ 683 $ 475 � $ 1,330 � $
1,233 � � Earnings per common share: Basic $ 0.17 $ 0.12 � $ 0.33 �
$ 0.31 � Diluted $ 0.16 $ 0.11 � $ 0.31 � $ 0.29 � � Weighted
average common shares outstanding, basic � 4,038,363 � 4,021,173 �
� 4,033,824 � � 4,009,506 � Weighted average common shares
outstanding, diluted � 4,280,795 � 4,244,038 � � 4,271,278 � �
4,232,807 � COST-U-LESS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) � (Unaudited) � � July 1, 2007 December 31, 2006
ASSETS � � Current assets: Cash and cash equivalents $ 6,130 $
7,420 Accounts receivable, net 969 1,133 Inventories 25,287 22,829
Other current assets � � � 2,225 � � � 1,049 Total current assets
34,611 32,431 � Buildings and equipment, net 20,016 20,881 Deposits
and other assets � � � 726 � � � 723 � Total assets $ � � 55,353 $
� � 54,035 � � LIABILITIES AND SHAREHOLDERS� EQUITY � Current
liabilities: Accounts payable $ 15,219 $ 15,831 Accrued expenses
and other liabilities 6,257 5,706 Current portion of long-term debt
267 267 Current portion of capital lease � � � 322 � � � 311 Total
current liabilities 22,065 22,115 � Other long-term liabilities
1,731 1,576 Long-term debt, less current portion 1,611 1,744
Capital lease, less current portion � � � 1,440 � � � 1,604 Total
liabilities 26,847 27,039 � Commitments and contingencies � � �
Shareholders� equity � � � 28,506 � � � 26,996 � Total liabilities
and shareholders� equity $ � � 55,353 $ � � 54,035
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