SAB Saratoga Investment Corp

Sales Increased 7.91% MEXICO CITY, Feb. 27 /PRNewswire-FirstCall/ -- Grupo Casa Saba ("Saba," "GCS," "the Company" or "the Group") (NYSE:SAB), one of the leading Mexican distributors of pharmaceutical products, beauty aids, personal care and consumer goods, general merchandise, publications and other products, announces its consolidated financial and operating results for the fourth quarter of 2008. Financial Highlights: (All December 2007 figures are expressed in millions of Mexican pesos as of December 31, 2007, while the figures for December 2008 are expressed in millions of current Mexican pesos. Comparisons are made with the same period of 2007, unless otherwise stated. Figures may vary due to rounding practices. "b.p." stands for basis points). -- Sales for the quarter totaled $7,807.03 million -- Gross income increased 17.86% -- Gross margin for the quarter was 12.21% -- Quarterly operating expenses as a percentage of sales were 7.80% -- The operating margin for the quarter was 4.41% -- Net profit for the quarter reached $222.79 million -- Cash and cash equivalents at the end of the quarter was $524.21 million QUARTERLY EARNINGS NET SALES During the fourth quarter, GCS's sales were $7,807.03 million, an increase of 7.91%. Sales for our Private Pharma division rose 8.46% during the fourth quarter of 2008, as a result of the consolidation of investments made within the sector, including the most recent acquisition of Drogasmil Medicamento e Perfumeria, S.A.(1), a Brazilian pharmacy chain. Sales in our Health, Beauty, Consumer Goods, General Merchandise and Other division increased 14.77% compared to the fourth quarter of 2007. This growth was due to commercial agreements that enabled us to increase promotions and discounts which, in turn, increased our sales. Sales in our Government Pharma division rose 30.37% due to an increase in sales to Petroleos Mexicanos (PEMEX), as well as the Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado ("ISSSTE"), or the Mexican Social Security and Service Institute for Government Employees. Publication sales decreased 45.02%, primarily as a result of lower unit sales. This decrease was due to the fact that Citem stopped distributing some publications that did not meet our minimal profitability requirements. The sales mix did not change significantly this quarter. Private Pharma sales represented 85.74% of total sales (compared to 85.30% during the fourth quarter of 2007), while Government Pharma accounted for 4.08% (versus 3.37% during the fourth quarter of 2007). Health, Beauty, Consumer Goods, General Merchandise and Other represented 8.47% (compared to 7.97% in the fourth quarter of 2007) and Publications made up the remaining 1.71% (versus 3.36% during the fourth quarter of 2007). SALES BY DIVISION PRIVATE PHARMA Sales in our Private Pharma division rose 8.46% during the fourth quarter of 2008, as a result of the consolidation of investments that were made within the sector. This includes the most recent acquisition of Drogasmil Medicamento e Perfumeria, S.A. a Brazilian pharmacy chain. Sales reached $6,693.86 million and represented 85.74% of the Group's total sales. GOVERNMENT PHARMA Sales in our Government Pharma division grew 30.37% due to an increase in sales to PEMEX as well as the Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado ("ISSSTE"). Government Pharma sales reached $318.16 million during 4Q08 and accounted for 4.08% of our total sales. HEALTH, BEAUTY, CONSUMER GOODS, GENERAL MERCHANDISE AND OTHER Sales in our Health, Beauty, Consumer Goods, General Merchandise and Other division reached $661.54 million, an increase of 14.77% versus the fourth quarter of 2007. This was due to commercial agreements that enabled us to increase promotions and discounts which, in turn, increased our sales. As a percentage of total sales, this division went from representing 7.97% in 4Q07 to 8.47% during the fourth quarter of 2008. PUBLICATIONS Publication sales decreased 45.02% during the quarter, primarily as a result of lower unit sales. This decrease was mainly due to the fact that Citem stopped distributing some publications that no longer met our minimal profitability requirements. This division's participation as a percentage of total sales went from 3.36% in 4Q07 to 1.71% in the fourth quarter of 2008. GROSS INCOME During the fourth quarter of the year, Grupo Casa Saba's gross income increased 17.86% to reach $953.38 million. The company's gross margin improved as a result of the recent investments, to 12.21% compared to 11.18% during 4Q07. OPERATING EXPENSES Operating expenses reached $608.78 million, an increase of 50.94% compared to the fourth quarter of 2007. This was due to the investments that were made over the past months. Operating expenses represented 7.80% of our total sales. OPERATING INCOME As a result of the increase in operating expenses, operating income declined 15.04%, to reach $344.59 million. The operating margin was 4.41%, 120 b.p. lower than the 5.61% margin registered in the fourth quarter of 2007. OPERATING INCOME PLUS DEPRECIATION AND AMORTIZATION Operating income plus depreciation and amortization for 4Q08 was $374.30 million, a decrease of 12.23% compared to the fourth quarter of 2007. Depreciation and amortization for the period was $29.71 million, 42.50% higher than in the fourth quarter of 2007. CASH AND CASH EQUIVALENTS Cash and cash equivalents at the end of the fourth quarter of 2008 was $524.21 million. COMPREHENSIVE COST OF FINANCING During the fourth quarter of 2008, GCS's comprehensive cost of financing (CCF) was $69.35 million, due primarily due to an increase in the amount of interest income paid. The interest payments were related to the long-term credit that was obtained as a result of our most recent acquisition in Brazil, as well as the interest that was generated from the utilization of short-term credits for our operations in Mexico and Brazil. OTHER EXPENSES (INCOME) During the fourth quarter of 2008, the Company registered an income of $31.55 million in other expenses (income). The expenses (income) from this line item were derived from activities that are distinct from the company's everyday business operations. TAX PROVISIONS During the fourth quarter, tax provisions were $84.01 million. These provisions included $77.30 million for income tax and $6.7 million for deferred income tax. NET INCOME GCS's net income for the fourth quarter was $222.79 million, a decrease of 39.34% compared to the fourth quarter of 2007. This decrease was primarily due to a higher comprehensive cost of financing (CCF). The net margin for the period was 2.85%, lower than the 5.08% net margin obtained during the fourth quarter of 2007. WORKING CAPITAL During the fourth quarter of 2008, our accounts receivable days were 61.9, compared to 56.5 days during the fourth quarter of 2007. In addition, our accounts payable days increased by 6.9 days compared to 4Q07, to reach 66.1 days. Finally, our inventory days were 67.4 days, 0.8 fewer days than in 4Q07. (1) The acquisition took place on May 15, 2008. DATASOURCE: Grupo Casa Saba CONTACT: Rodrigo Echagaray, IRO, Grupo Casa Saba, +011-52-55-5284-6672, Web site: http://www.casasaba.com/

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