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):  July 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 July 7, 2011, PriceSmart, Inc. issued a press release regarding its results of operations for its third quarter ended May 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 8.01.    Other Events

In May 2011 the Company entered into an option agreement to acquire approximately 131,524 square feet of land in Cali, Colombia upon which the Company anticipates constructing its second warehouse club in Colombia.
 
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 July 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: July 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 July 7, 2011.


 
 
 



PriceSmart Announces Third Quarter Results of Operations
And Option Agreement to Purchase Land in Cali, Colombia

 
San Diego, CA (July 7, 2011) – PriceSmart, Inc. (NASDAQ: PSMT, www.pricesmart.com) today announced its results of operations for the third quarter of fiscal year 2011 which ended on May 31, 2011.
 
For the third quarter of fiscal year 2011, net warehouse club sales increased 23.6% to $421.6 million from $341.2 million in the third quarter of fiscal year 2010.  Total revenue for the third quarter was $431.1 million, compared to $348.6 million in the prior year.  The Company had 28 warehouse clubs in operation as of May 2011 compared to 27 warehouse clubs in 2010.
 
The Company recorded operating income during the quarter of $22.4 million, as compared to operating income of $18.1 million in the prior year.  Net income attributable to PriceSmart was $16.3 million, or $0.55 per diluted share, in the third quarter of fiscal 2011 as compared to $12.0 million, or $0.40 per diluted share, in the third quarter of fiscal 2010. During the quarter the Company recorded approximately $1.2 million, or approximately $0.04 per diluted share, in gains on the sale of property in Panama.
 
For the first nine months of fiscal year 2011, net warehouse club sales increased 22.8% to $1,239.2 million from $1,008.8 million in the first nine months of fiscal year 2010.  Total revenues for the first nine months of the fiscal year increased 23.0% to $1,266.8 million from $1,030.2 million in the same period of the prior year.  For the first nine months of fiscal year 2011, the Company recorded operating income of $72.2 million and net income attributable to PriceSmart of $49.1 million, or $1.65 per diluted share.  During the same nine month period in fiscal year 2010, the Company recorded operating income of $54.7 million and net income attributable to PriceSmart of $36.1 million, or $1.21 per diluted share.
 
The Company entered into an option agreement in May 2011, to acquire approximately 131,524 square feet of land in Cali, Colombia upon which the Company anticipates constructing its second warehouse club in Colombia.  The transaction, which is subject to certain contingencies, is currently planned to close in the first quarter of fiscal year 2012.
 
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 33% 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
    
Nine Months Ended
  
   
May 31,
    
May 31,
  
   
2011
      
2010
    
2011
    
2010
  
Revenues:
                          
Net warehouse club sales
$
421,637
    
$
341,215
    
$
1,239,232
    
$
1,008,760
  
Export sales
  
1,890
      
868
      
5,170
      
2,461
  
Membership income
  
5,824
      
5,056
      
16,825
      
14,532
  
Other income
  
1,797
      
1,477
      
5,610
      
4,404
  
Total revenues
  
431,148
      
348,616
      
1,266,837
      
1,030,157
  
Operating expenses:
                              
Cost of goods sold:
                              
Net warehouse club
  
358,535
      
288,289
      
1,050,921
      
854,873
  
Export
  
1,804
      
825
      
4,906
      
2,314
  
Selling, general and administrative:
                              
Warehouse club operations
  
38,819
      
31,834
      
111,192
      
92,109
  
General and administrative
  
9,293
      
8,752
      
26,977
      
24,987
  
Pre-opening expenses
  
284
      
840
      
672
      
1,126
  
Total operating expenses
  
408,735
      
330,540
      
1,194,668
      
975,409
  
Operating income
  
22,413
      
18,076
      
72,169
      
54,748
  
Other income (expense):
                              
Interest income
  
300
      
122
      
667
      
460
  
Interest expense
  
(984
)
    
(595
)
    
(3,012
)
    
(1,859
)
Other income (expense), net
  
1,838
      
(240
)
    
1,535
      
(247
)
Total other income (expense)
  
1,154
      
(713
)
    
(810
)
    
(1,646
)
Income from continuing operations before provision for income taxes and loss of unconsolidated affiliates
  
23,567
      
 
17,363
      
71,359
      
53,102
  
Provision for income taxes
  
(7,199
)
    
(5,309
)
    
(22,093
)
    
(16,901
)
Loss of unconsolidated affiliates
  
(3
)
    
(6
)
    
(45
)
    
(11
)
Income from continuing operations
  
16,365
      
12,048
      
49,221
      
36,190
  
Income (loss) from discontinued operations, net of tax
  
(75
)
    
(4
)
    
(161
)
    
40
  
Net income including noncontrolling interest
  
16,290
      
12,044
      
49,060
      
36,230
  
Net (loss) attributable to noncontrolling interest
  
—
      
(20
)
    
—
      
(132
)
Net income attributable to PriceSmart
$
16,290
    
$
12,024
    
$
49,060
    
$
36,098
  
                               
Net income per share attributable to PriceSmart and available for distribution:
                              
Basic net income per share from continuing operations
$
0.55
    
$
0.40
    
$
1.65
    
$
1.21
  
Basic net income (loss) per share from discontinued operations, net of tax
 
$
—
    
 
$
 
—
    
$
—
    
$
—
  
Basic net income per share
$
0.55
    
$
0.40
    
$
1.65
    
$
1.21
  
                               
Diluted net income per share from continuing operations
$
0.55
    
$
0.40
    
$
1.65
    
$
1.21
  
Diluted net income (loss) per share from discontinued operations, net of tax
 
$
—
    
 
$
 
—
    
$
—
    
$
—
  
Diluted net income per share
$
0.55
    
$
0.40
    
$
1.65
    
$
1.21
  
Shares used in per share computations:
                              
Basic
  
29,493
      
29,336
      
29,422
      
29,221
  
Diluted
  
29,502
      
29,345
      
29,430
      
29,253
  
Dividends per share
$
0.00
    
$
0.00
    
$
0.60
    
$
0.50
  
 
 

 
 
 


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

   
May 31,
        
   
2011
    
August 31,
  
   
(Unaudited)
    
2010
  
ASSETS
            
Current Assets:
            
Cash and cash equivalents
$
65,846
    
$
  73,346
  
Short-term restricted cash
  
1,240
      
  1,240
  
Receivables, net of allowance for doubtful accounts of $13 and $15 as of May 31, 2011 and August 31, 2010, respectively
  
3,865
      
  2,855
  
Merchandise inventories
  
167,687
      
  131,190
  
Deferred tax assets – current
  
4,491
      
  3,639
  
Prepaid expenses and other current assets
  
27,969
      
  21,879
  
Assets of discontinued operations
  
507
      
  692
  
Total current assets
  
271,605
      
  234,841
  
Long-term restricted cash
  
20,590
      
  5,640
  
Property and equipment, net
  
281,389
      
  265,544
  
Goodwill
  
37,465
      
  37,471
  
Deferred tax assets – long term
  
14,452
      
  16,637
  
Other assets
  
4,127
      
  4,341
  
Investment in unconsolidated affiliates
  
8,063
      
  8,091
  
Total Assets
$
637,691
    
$
  572,565
  
LIABILITIES AND EQUITY
              
Current Liabilities:
              
Short-term borrowings
$
4,642
    
$
  3,551
  
Accounts payable
  
137,756
      
  124,401
  
Accrued salaries and benefits
  
11,904
      
  10,911
  
Deferred membership income
  
10,950
      
  9,729
  
Income taxes payable
  
7,141
      
  6,615
  
Other accrued expenses
  
10,865
      
  12,095
  
Dividends payable
  
8,970
      
—
  
Long-term debt, current portion
  
7,767
      
  7,715
  
Deferred tax liability – current
  
429
      
  357
  
Liabilities of discontinued operations
  
194
      
  109
  
Total current liabilities
  
200,618
      
  175,483
  
Deferred tax liability – long-term
  
1,824
      
  1,198
  
Long-term portion of deferred rent
  
3,895
      
  3,272
  
Long-term income taxes payable, net of current portion
  
3,087
      
  3,564
  
Long-term debt, net of current portion
  
60,030
      
  53,005
  
Total liabilities
  
269,454
      
  236,522
  
Equity:
              
Common stock, $0.0001 par value, 45,000,000 shares authorized; 30,691,147 and 30,624,666 shares issued and 29,896,954 and 29,897,909 shares outstanding (net of treasury shares) as of May 31, 2011 and August 31, 2010, respectively.
  
3
      
  3
  
Additional paid-in capital
  
382,588
      
  379,368
  
Tax benefit from stock-based compensation
  
5,366
      
  4,490
  
Accumulated other comprehensive loss
  
(17,091
)
    
  (16,672
)
Retained earnings (accumulated deficit)
  
15,543
      
  (15,578
)
Less: treasury stock at cost; 794,193 and 726,757 shares as of May 31, 2011 and August 31, 2010, respectively.
  
(18,172
)
    
  (15,568
)
Total PriceSmart stockholders’ equity and total equity
  
368,237
      
  336,043
  
Total Liabilities and Equity
$
637,691
    
$
  572,565