form8k.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 

CURRENT REPORT
 
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
 
        Date of Report (Date of earliest event reported):  April 7, 2011
  
PriceSmart, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
000-22793
33-0628530
(State or Other Jurisdiction of
Incorporation)
(Commission File Number)
 
(I.R.S. Employer
 Identification No.)
 
9740 Scranton Road, San Diego, CA 92121
(Address of Principal Executive Offices, including Zip Code)
 
Registrant’s telephone number, including area code: (858) 404-8800
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o  
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2)(b))

o  
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 
 

 
Item 2.02.    Results of Operations and Financial Condition.
 
On April 7, 2011, PriceSmart, Inc. issued a press release regarding its results of operations for its second quarter ended February 28, 2011 and net warehouse club sales for the month ended March 31, 2011.  A copy of the press release is furnished herewith as Exhibit 99.1.  Pursuant to the rules and regulations of the Securities and Exchange Commission, such exhibit and the information set forth therein and herein shall be deemed “furnished” and not “filed” for purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section.
 
Item 9.01.   Financial Statements and Exhibits.
 
(d)
  
The following exhibit is furnished herewith:
 
Exhibit
No.
  
Description
99.1
  
Press Release of PriceSmart, Inc. dated April 7, 2011.

 
 
 


 

 
 
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 hereunto duly authorized.
 
 

 
     
     
Date: April 7, 2011
  
/S/ JOHN M. HEFFNER
   
John M. Heffner
   
Executive Vice President and Chief Financial Officer
   
(Principal Financial Officer and
   
Principal Accounting Officer)


 
 
 


EXHIBIT INDEX
 
Exhibit
Number
  
Description
99.1
  
Press Release of PriceSmart, Inc. dated April 7, 2011.


 
 
 



PriceSmart Announces Second Quarter Results of Operations
and March Sales

 
San Diego, CA (April 7, 2011) – PriceSmart, Inc. (NASDAQ: PSMT, www.pricesmart.com) today announced its results of operations for the second quarter of fiscal year 2011 which ended on February 28, 2011.
 
For the second quarter of fiscal year 2011, net warehouse club sales increased 22.7% to $440.3 million from $358.9 million in the second quarter of fiscal year 2010.  Total revenues for the second quarter of fiscal year 2011 were $449.6 million compared to $366.1 million in the prior year.  The Company had 28 clubs in operation as of February 2011 and 26 clubs in operation as of February 2010.
 
The Company recorded operating income during the quarter of $27.2 million, as compared to operating income of $20.4 million in the prior year.  Net income attributable to PriceSmart was $17.9 million, or $0.60 per diluted share, in the second quarter of fiscal year 2011 as compared to $13.7 million, or $0.46 per diluted share, in the second quarter of fiscal year 2010.
 
For the first six months of fiscal year 2011, net warehouse club sales increased 22.5% to $817.6 million from $667.5 million in the first six months of fiscal year 2010.  Total revenues for the first half of fiscal year 2011 increased 22.6% to $835.7 million from $681.5 million in the same period of the prior year.  For the first six months of fiscal year 2011, the Company recorded operating income of $49.8 million and net income attributable to PriceSmart of $32.8 million, or $1.11 per diluted share.  During the same six month period in fiscal year 2010, the Company recorded operating income of $36.7 million and net income attributable to PriceSmart of $24.1 million, or $0.81 per diluted share.
 
The Company also announced that for the month of March 2011, net warehouse club sales increased 16.6% to $139.2 million, from $119.4 million in March a year earlier.  For the seven months ended March 31, 2011, net warehouse club sales increased 21.6% to $956.8 million from $786.9 million for the seven months ended March 31, 2010.  There were 28 warehouse clubs in operation at the end of March 2011 and 26 warehouse clubs in operation at the end of March 2010.
 
For the four weeks ended April 3, 2011, comparable net warehouse club sales for the warehouse clubs open at least 13 1/2 full months increased 16.7%, compared to the same four-week period last year.  For the thirty-week period ended April 3, 2011, comparable net ware­house club sales increased 16.9%, compared to the comparable thirty-week period a year ago.
 
 

 

 
 
 

About PriceSmart
 
PriceSmart, headquartered in San Diego, owns and operates U.S.-style membership shopping warehouse clubs in Central America and the Caribbean, selling high quality merchandise at low prices to PriceSmart members. PriceSmart now operates 28 warehouse clubs in 11 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, 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; 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 nearly 39% 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, 2010 filed pursuant to the Securities Exchange Act of 1934 on November 9, 2010.  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 (858) 404-8826.
 

 
 
 

 

 
PRICESMART, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED—AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
   
Three Months Ended
    
Six Months Ended
  
   
February 28,
    
February 28,
  
   
2011
      
2010
    
2011
    
2010
  
Revenues:
                          
Net warehouse club sales
$
440,263
    
$
358,893
    
$
817,595
    
$
667,545
  
Export sales
  
1,872
      
 1,006
      
3,280
      
1,593
  
Membership income
  
5,576
      
4,827
      
11,001
      
9,476
  
Other income
  
1,906
      
1,396
      
3,813
      
2,926
  
Total revenues
  
449,617
      
366,122
      
835,689
      
681,540
  
Operating expenses:
                              
Cost of goods sold:
                              
Net warehouse club
  
374,573
      
304,867
      
692,386
      
566,584
  
Export
  
1,758
      
935
      
3,102
      
1,489
  
Selling, general and administrative:
                              
Warehouse club operations
  
37,239
      
31,041
      
72,373
      
60,274
  
General and administrative
  
8,874
      
8,667
      
17,684
      
16,235
  
Pre-opening expenses
  
(15
)
    
175
      
388
      
286
  
Total operating expenses
  
422,429
      
345,685
      
785,933
      
644,868
  
Operating income
  
27,188
      
20,437
      
49,756
      
36,672
  
Other income (expense):
                              
Interest income
  
239
      
122
      
367
      
338
  
Interest expense
  
(1,071
)
    
(634
)
    
(2,028
)
    
(1,264
)
Other income (expense), net
  
(260
)
    
(10
)
    
(303
)
    
(7
)
Total other expense
  
(1,092
)
    
(522
)
    
(1,964
)
    
(933
)
Income from continuing operations before provision for income taxes and loss of unconsolidated affiliates
  
 
26,096
      
 
19,915
      
47,792
      
35,739
  
Provision for income taxes
  
(8,049
)
    
(6,190
)
    
(14,894
)
    
(11,592
)
Loss of unconsolidated affiliates
  
(37
)
    
(3
)
    
(42
)
    
(5
)
Income from continuing operations
  
18,010
      
13,722
      
32,856
      
24,142
  
Income (loss) from discontinued operations, net of tax
  
(93
)
    
35
      
(86
)
    
44
  
Net income
  
17,917
      
13,757
      
32,770
      
24,186
  
Net income attributable to noncontrolling interest
  
—
      
(60
)
    
—
      
(112
)
Net income attributable to PriceSmart
$
17,917
    
$
13,697
    
$
32,770
    
$
24,074
  
                               
Net income attributable to PriceSmart:
                              
Income from continuing operations
  
18,010
      
13,662
      
32,856
      
24,030
  
Income (loss) from discontinued operations, net of tax
  
(93
)
    
35
      
(86
)
    
44
  
 
$
17,917
    
$
13,697
    
$
32,770
    
$
24,074
  
Net income per share attributable to PriceSmart and available for distribution:
                              
Basic net income per share from continuing operations
$
0.60
    
$
0.46
    
$
1.11
    
$
0.81
  
Basic net income (loss) per share from discontinued operations, net of tax
 
$
 
—
    
 
$
 
—
    
$
—
    
$
—
  
Basic net income per share
$
0.60
    
$
0.46
    
$
1.11
    
$
0.81
  
                               
Diluted net income per share from continuing operations
$
0.60
    
$
0.46
    
$
1.11
    
$
0.81
  
Diluted net income (loss) per share from discontinued operations, net of tax
 
$
 
—
    
 
$
 
—
    
$
—
    
$
—
  
Diluted net income per share
$
0.60
    
$
0.46
    
$
1.11
    
$
0.81
  
Shares used in per share computations:
                              
Basic
  
29,414
      
29,222
      
29,385
      
29,163
  
Diluted
  
29,423
      
29,250
      
29,392
      
29,206
  
Dividends per share
$
0.60
    
$
0.50
    
$
0.60
    
$
0.50
  

 
 
 

PRICESMART, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)


   
February 28,
        
   
2011
    
August 31,
  
   
(Unaudited)
    
2010
  
ASSETS
            
Current Assets:
            
Cash and cash equivalents
$
70,659
    
$
  73,346
  
Short-term restricted cash
  
1,240
      
  1,240
  
Receivables, net of allowance for doubtful accounts of $16 and $15 as of February 28, 2011 and August 31, 2010, respectively.
  
3,167
      
  2,855
  
Merchandise inventories
  
151,692
      
  131,190
  
Deferred tax assets – current
  
4,086
      
  3,639
  
Prepaid expenses and other current assets
  
24,031
      
  21,879
  
Assets of discontinued operations
  
803
      
  692
  
Total current assets
  
255,678
      
  234,841
  
Long-term restricted cash
  
13,670
      
  5,640
  
Property and equipment, net
  
280,919
      
  265,544
  
Goodwill
  
37,533
      
  37,471
  
Deferred tax assets – long term
  
15,344
      
  16,637
  
Other assets
  
4,301
      
  4,341
  
Investment in unconsolidated affiliates
  
8,061
      
  8,091
  
Total Assets
$
615,506
    
$
  572,565
  
LIABILITIES AND EQUITY
              
Current Liabilities:
              
Short-term borrowings
$
2,984
    
$
  3,551
  
Accounts payable
  
142,567
      
  124,401
  
Accrued salaries and benefits
  
9,442
      
  10,911
  
Deferred membership income
  
11,014
      
  9,729
  
Income taxes payable
  
6,216
      
  6,615
  
Other accrued expenses
  
11,490
      
  12,095
  
Dividends payable
  
8,969
      
—
  
Long-term debt, current portion
  
7,761
      
  7,715
  
Deferred tax liability – current
  
425
      
  357
  
Liabilities of discontinued operations
  
212
      
  109
  
Total current liabilities
  
201,080
      
  175,483
  
Deferred tax liability – long-term
  
1,718
      
  1,198
  
Long-term portion of deferred rent
  
3,744
      
  3,272
  
Long-term income taxes payable, net of current portion
  
3,361
      
  3,564
  
Long-term debt, net of current portion
  
54,185
      
  53,005
  
Total liabilities
  
264,088
      
  236,522
  
Equity:
              
Common stock, $0.0001 par value, 45,000,000 shares authorized; 30,688,399 and 30,624,666 shares issued and 29,896,805 and 29,897,909 shares outstanding (net of treasury shares) as of February 28, 2011 and August 31, 2010, respectively.
  
3
      
  3
  
Additional paid-in capital
  
381,436
      
  379,368
  
Tax benefit from stock-based compensation
  
5,371
      
  4,490
  
Accumulated other comprehensive loss
  
(16,565
)
    
  (16,672
)
Accumulated deficit
  
(746
)
    
  (15,578
)
Less: treasury stock at cost; 791,594 and 726,757 shares as of February 28, 2011 and August 31, 2010, respectively.
  
(18,081
)
    
  (15,568
)
Total PriceSmart stockholders’ equity and total equity
  
351,418
      
  336,043
  
Total Liabilities and Equity
$
615,506
    
$
  572,565