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