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