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):  November 9, 2010
 
 
 
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 November 9, 2010, PriceSmart, Inc. issued a press release regarding its results of operations for its fourth quarter and twelve months ended August 31, 2010.  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 November 9, 2010.


 
 
 
 
 
 



 

 
 
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: November 9, 2010
  
/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 November 9, 2010.



 
 
 
 
 
 


PriceSmart Announces Fourth Quarter and Fiscal Year Results of Operations

 
San Diego, CA (November 9, 2010) – PriceSmart, Inc. (NASDAQ: PSMT, www.pricesmart.com) today announced its results of operations for the fourth quarter and fiscal year 2010 which ended on August 31, 2010.
 
For the fourth quarter of fiscal year 2010, net warehouse sales were $357.0 million compared to $298.0 million in the fourth quarter of fiscal year 2009.  Total revenue for the fourth quarter was $365.7 million compared to $305.1 million in the prior year.  The Company had 27 warehouse clubs in operation as of the end of fiscal year 2010 compared to 26 warehouse clubs in operation at the end of fiscal year 2009.
 
Operating income in the fourth quarter of fiscal year 2010 was $20.1 million compared to operating income of $11.9 million in the fourth quarter of fiscal year 2009.
 
The Company recorded net income attributable to PriceSmart for the fourth quarter of $13.2 million or $0.44 per diluted share compared to net income attributable to PriceSmart of $10.3 million or $0.34 per diluted share in the fourth quarter of fiscal year 2009.  
 
Net warehouse sales increased 11.6% to $1.4 billion during fiscal year 2010 compared to $1.2 billion in the prior year, and total revenue for fiscal year 2010 increased 11.5% to $1.4 billion from $1.3 billion in fiscal year 2009.  For fiscal year 2010, the Company recorded operating income of $74.9 million and net income attributable to PriceSmart of $49.3 million, or $1.65 per diluted share.  For fiscal year 2009, the Company recorded operating income of $57.5 million and net income attributable to PriceSmart of $42.3 million or $1.43(1) per diluted share.
 
Commenting on the results, PriceSmart’s Chief Executive Officer and President Jose Luis Laparte said “I am pleased to note that the Company experienced improved comparable sales growth trends through much of fiscal 2010, notwithstanding some weakness early in the year.  During the fiscal year we successfully opened our fourth warehouse club in Trinidad and relocated one of our Panama City warehouse clubs to a new location.  We also entered into an agreement to acquire land in Barranquilla, Colombia upon which we plan to construct our first warehouse club in that country.  As we begin fiscal year 2011, our positive sales growth trend has continued during the first two months.  Last week (on November 5, 2010) we successfully opened our third warehouse club in the Dominican Republic and we are hopeful that we can open our first Colombian warehouse club by the end of fiscal year 2011.”
 
The Company will file its Annual Report on Form 10-K for the year ended August 31, 2010 on or before November 9, 2010.
 
(1)
Effective September 1, 2009, the Company adopted FASB guidance which addresses whether instruments granted in share-based payment transactions are participating securities and, therefore, have a potential dilutive effect on earnings per share (“EPS”). This guidance was applied retrospectively to all periods presented.


 


 
 
 
 
 
 



 
 
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 Quarterly Report on Form 10-Q filed for the quarter ended May 31, 2010 filed pursuant to the Securities Exchange Act of 1934 on July 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
(amounts in thousands, except per share data)
  
   
Three Months Ended
August 31,
    
Twelve Months Ended
August 31,
  
   
2010
    
2009
    
2010
    
2009
  
Revenues:
                        
Net warehouse club sales
$
357,040
    
$
298,002
    
$
  1,365,801
    
$
1,224,331
  
Export sales
  
1,678
      
900
      
  4,139
      
3,679
  
Membership income
  
5,210
      
4,635
      
  19,742
      
17,903
  
Other income
  
1,806
      
1,546
      
  6,209
      
5,715
  
Total revenues
  
365,734
      
305,083
      
  1,395,891
      
1,251,628
  
Operating expenses:
                              
Cost of goods sold:
                              
Net warehouse club
  
301,501
      
254,282
      
  1,156,374
      
1,044,555
  
Export
  
1,576
      
855
      
  3,890
      
3,484
  
Selling, general and administrative:
                              
Warehouse club operations
  
34,165
      
30,936
      
  126,274
      
114,957
  
General and administrative
  
8,332
      
7,537
      
  33,319
      
30,882
  
Pre-opening expenses
  
(3
)
    
72
      
  1,123
      
515
  
Asset impairment and closure costs (income)
  
18
      
(465
)
    
  18
      
(249
)
Total operating expenses
  
345,589
      
293,217
      
  1,320,998
      
1,194,144
  
Operating income
  
20,145
      
11,866
      
  74,893
      
57,484
  
Other income (expense):
                              
Interest income
  
94
      
140
      
  553
      
457
  
Interest expense
  
(864
)
    
175
      
  (2,723
)
    
(1,700
)
Other expense, net
  
(237
)
    
(503
)
    
  (483
)
    
(539
)
Total other expense
  
(1,007
)
    
(188
)
    
  (2,653
)
    
(1,782
)
Income from continuing operations before provision for income taxes and loss of unconsolidated affiliates
  
19,138
      
11,678
      
  72,240
      
55,702
  
Provision for income taxes
  
(5,887
)
    
(1,372
)
    
  (22,787
)
    
(13,069
)
Loss of unconsolidated affiliates
  
(11
)
    
(1
)
    
  (22
)
    
(21
)
Income from continuing operations
  
13,240
      
10,305
      
  49,431
      
42,612
  
Income (loss) from discontinued operations, net of tax
  
(24
)
    
(1
)
    
  16
      
(28
)
Net income
$
13,216
    
$
10,304
    
$
  49,447
    
$
42,584
  
Net income attributable to noncontrolling interests
  
—
      
(53
)
    
  (132
)
    
  (265
)
Net income attributable to PriceSmart
$
13,216
    
$
10,251
    
$
  49,315
    
$
  42,319
  
                               
Net income attributable to PriceSmart:
                              
Income from continuing operations
$
13,240
    
$
10,252
    
$
  49,299
    
$
  42,347
  
Income (loss) from discontinued operations, net of tax
  
(24
)
    
(1
)
    
  16
      
  (28
)
 
$
13,216
    
$
10,251
    
$
  49,315
    
$
  42,319
  
Net income per share attributable to PriceSmart and available for distribution:
                              
Basic net income per share from continuing operations
$
0.44
    
$
  0.35
    
$
  1.66
    
$
1.43
  
Basic net income per share from discontinued operations, net of tax
$
 —
    
$
 —
    
$
 —
    
$
—
  
Basic net income per share
$
  0.44
    
$
  0.35
    
$
  1.66
    
$
1.43
  
                               
Diluted net income per share from continuing operations
$
0.44
    
$
  0.34
    
$
  1.65
    
$
1.43
  
Diluted net income per share from discontinued operations, net of tax
$
  —
    
$
  —
    
$
  —
    
$
—
  
Diluted net income per share
$
  0.44
    
$
  0.34
    
$
  1.65
    
$
1.43
  
Shares used in per share computations:
                              
Basic
  
  29,351
      
  29,046
      
  29,254
      
28,959
  
Diluted
  
  29,356
      
  29,127
      
  29,279
      
29,057
  
Dividends per share
$
  —
    
$
 —
    
$
  0.50
    
$
0.50
  

 
 
 
 
 
 

PRICESMART, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
   
August 31,
  
   
2010
    
2009
  
ASSETS
              
Current Assets:
              
Cash and cash equivalents
  
$
  73,346
    
$
44,193
  
Short-term restricted cash
    
  1,240
      
10
  
Receivables, net of allowance for doubtful accounts of $15 and $10 as of August 31, 2010 and 2009, respectively
    
  2,855
      
2,187
  
Merchandise inventories
    
  131,190
      
115,841
  
Deferred tax assets – current
    
  3,639
      
2,618
  
Prepaid expenses and other current assets
    
  21,879
      
19,033
  
Assets of discontinued operations
    
  692
      
900
  
Total current assets
    
  234,841
      
184,782
  
Long-term restricted cash
    
  5,640
      
732
  
Property and equipment, net
    
  265,544
      
231,798
  
Goodwill
    
  37,471
      
37,538
  
Deferred tax assets – long term
    
  16,637
      
20,938
  
Other assets
    
  4,341
      
3,927
  
Investment in unconsolidated affiliates
    
  8,091
      
7,658
  
Total Assets
  
$
  572,565
    
$
487,373
  
LIABILITIES AND EQUITY
                
Current Liabilities:
                
Short-term borrowings
  
$
  3,551
    
$
2,303
  
Accounts payable
    
  124,401
      
101,412
  
Accrued salaries and benefits
    
  10,911
      
8,831
  
Deferred membership income
    
  9,729
      
8,340
  
Income taxes payable
    
  6,615
      
5,942
  
Other accrued expenses
    
  12,095
      
10,022
  
Long-term debt, current portion
    
  7,715
      
4,590
  
Deferred tax liability – current
    
  357
      
189
  
Liabilities of discontinued operations
    
  109
      
299
  
Total current liabilities
    
  175,483
      
141,928
  
Deferred tax liability – long-term
    
  1,198
      
1,026
  
Long-term portion of deferred rent
    
  3,272
      
2,673
  
Long-term income taxes payable, net of current portion
    
  3,564
      
3,458
  
Long-term debt, net of current portion
    
  53,005
      
37,120
  
Total liabilities
    
  236,522
      
186,205
  
Equity:
                
Common stock, $0.0001 par value, 45,000,000 shares authorized; 30,624,666 and 30,337,109 shares issued and 29,897,909 and 29,681,031 shares outstanding (net of treasury shares) as of August 31, 2010 and 2009, respectively.
    
  3
      
3
  
Additional paid-in capital
    
  379,368
      
377,210
  
Tax benefit from stock-based compensation
    
  4,490
      
4,547
  
Accumulated other comprehensive loss
    
  (16,672
)
    
(17,230
)
Accumulated deficit
    
  (15,578
)
    
(49,998
)
Less: treasury stock at cost; 726,757 and 656,078 shares as of August 31, 2010 and 2009, respectively.
    
  (15,568
)
    
(14,134
)
Total PriceSmart stockholders’ equity
    
  336,043
      
300,398
  
Noncontrolling interest
    
 —
      
770
  
Total equity
    
  336,043
      
301,168
  
Total Liabilities and Equity
  
$
  572,565
    
$
487,373