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):  January 8, 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 January 8, 2010, PriceSmart, Inc. issued a press release regarding its results of operations for its first quarter ended November 30, 2009 and sales for the month of December 2009.  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 January 8, 2010.


 
 
 
1
 
 
 
 
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: January 8, 2010
  
/S/ JOHN M. HEFFNER
   
John M. Heffner
   
Executive Vice President and Chief Financial Officer
   
(Principal Financial Officer and
   
Principal Accounting Officer)



 
 
 
2
 
 



EXHIBIT INDEX
 
Exhibit
Number
  
Description
99.1
  
Press Release of PriceSmart, Inc. dated January 8, 2010.



 
 
 
3
 
 


PriceSmart Announces First Quarter Results of Operations;
December Sales Also Announced

 
San Diego, CA (January 8, 2010) – PriceSmart, Inc. (NASDAQ: PSMT, www.pricesmart.com) today announced its results of operations for the first quarter of fiscal year 2010 which ended on November 30, 2009.
 
For the first quarter of fiscal year 2010, net warehouse sales increased 3.4% to $308.7 million from $298.5 million in the first quarter of fiscal year 2009.  Total revenue for the first quarter was $315.4 million compared to $305.2 million in the prior year.  The Company had 26 clubs in operation as of November 30, 2009, compared to 25 warehouse clubs in operation as of November 30, 2008.
 
The Company recorded operating income in the quarter of $16.2 million, compared to operating income of $14.9 million in the prior year.  Net income attributable to PriceSmart was $10.4 million, or $0.35 per diluted share, in the first quarter of fiscal year 2010.  Net income attributable to PriceSmart in the first quarter of fiscal year 2009 was $10.7 million, or $0.36 per diluted share which included a $1.0 million ($0.03 per diluted share) benefit to tax expense in that prior period.  The Company will release its quarterly report on Form 10-Q for the first quarter of fiscal year 2010 on or before January 11, 2010.

The Company also announced that for the month of December 2009, net sales increased 8.0% to $152.1 million from $140.8 million in December a year earlier.  For the four months ended December 31, 2009, net sales increased 4.9% to $460.7 million from $439.3 million in the same period last year.  There were 26 warehouse clubs in operation at the end of December 2009.
 
For the four weeks ended December 27, 2009, comparable warehouse sales for the 25 warehouse clubs open at least 12 full months increased 3.5% compared to the same four-week period last year.  For the seventeen-week period ended December 27, 2009, comparable warehouse sales increased 1.2% compared to the comparable seventeen-week period a year ago.
 

 

 
 
 
4
 
 

 
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 26 warehouse clubs in 11 countries and one U.S. territory (five in Costa Rica; four in Panama; three each in Guatemala and Trinidad, two each in Dominican Republic, 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,“ "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 the Company’s business; the Company faces significant competition; the Company faces difficulties in the shipment of and inherent risks in the importation of merchandise to its warehouse clubs; the Company is exposed to weather and other risks associated with international operations; 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 40% 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; and the Company faces increased compliance risks associated with compliance with Section 404 of the Sarbanes-Oxley Act of 2002; as well as the other risks detailed in the Company's SEC reports, including the Company's Annual Report on Form 10-K filed pursuant to the Securities Exchange Act of 1934 on November 9, 2009.  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 Robert E. Price, Chief Executive Officer (858) 551-2336; or John M. Heffner, Executive Vice President and Chief Financial Officer (858) 404-8826.



 
 
 
5
 
 

PRICESMART, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED—AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
 
   
Three Months Ended
November 30,
  
   
2009
    
2008
  
Revenues:
            
Net warehouse club sales
  
$
308,653
    
$
298,518
  
Export sales
    
587
      
836
  
Membership income
    
4,649
      
4,325
  
Other income
    
1,530
      
1,529
  
Total revenues
    
315,419
      
305,208
  
Operating expenses:
                
Cost of goods sold:
                
Net warehouse club
    
261,717
      
254,426
  
Export
    
554
      
800
  
Selling, general and administrative:
                
Warehouse club operations
    
29,234
      
27,280
  
General and administrative
    
7,568
      
7,544
  
Pre-opening expenses
    
111
      
—
  
Asset impairment and closure costs
    
—
      
248
  
Total operating expenses
    
299,184
      
290,298
  
Operating income
    
16,235
      
14,910
  
Other income (expense):
                
Interest income
    
215
      
126
  
Interest expense
    
(630
)
    
(581
)
Other income (expense), net
    
4
      
(20
)
Total other income (expense)
    
(411
)
    
(475
)
Income from continuing operations before provision for income taxes and loss of unconsolidated affiliates
    
15,824
      
14,435
  
Provision for income taxes
    
(5,401
)
    
(3,647
)
Loss of unconsolidated affiliates
    
(2
)
    
(5
)
Income from continuing operations
    
10,421
      
10,783
  
Income (loss) from discontinued operations, net of tax
    
9
      
(19
)
Net income
    
10,430
      
10,764
  
Net income attributable to noncontrolling interest
    
(53
)
    
(66
)
Net income attributable to PriceSmart
  
$
10,377
    
$
10,698
  
                 
Net income attributable to PriceSmart:                
Income from continuing operations   $  10,368     $  10,717  
Income (loss) from discontinued operations, net of tax      9        (19 )
    $  10,377     $  10,698  
                 
                 
Net income per share attributable to PriceSmart and available for distribution:                
Basic net income per share from continuing operations
  
$
0.35
    
$
0.36
  
Basic net income per share from discontinued operations, net of tax
  
$
—
    
$
—
  
Basic net income per share
  
$
0.35
    
$
0.36
  
                 
Diluted net income per share from continuing operations
  
$
0.35
    
$
0.36
  
Diluted net income per share from discontinued operations, net of tax
  
$
—
    
$
—
  
Diluted net income per share
  
$
0.35
    
$
0.36
  
                 
Shares used in per share computations:
                
Basic
    
29,105
      
28,860
  
Diluted
    
29,163
      
28,964
  
Dividends per share
  
$
—
    
$
—
  


 
 
 
6
 
 

PRICESMART, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED—AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
 
     
N
        
   
November 30, 2009
    
August 31,
2009
  
ASSETS
              
Current Assets:
              
Cash and cash equivalents
  
$
39,039
    
$
44,193
  
Short-term restricted cash
    
—
      
10
  
Receivables, net of allowance for doubtful accounts of $8 and $10 in November and August of 2009, respectively
    
2,399
      
2,187
  
Merchandise inventories
    
147,390
      
115,841
  
Deferred tax assets – current
    
2,940
      
2,618
  
Prepaid expenses and other current assets
    
18,010
      
19,033
  
Assets of discontinued operations
    
947
      
900
  
Total current assets
    
210,725
      
184,782
  
Long-term restricted cash
    
765
      
732
  
Property and equipment, net
    
236,857
      
231,798
  
Goodwill
    
37,415
      
37,538
  
Deferred tax assets – long term
    
19,849
      
20,938
  
Other assets
    
3,885
      
3,927
  
Investment in unconsolidated affiliates
    
7,761
      
7,658
  
Total Assets
  
$
517,257
    
$
487,373
  
LIABILITIES AND EQUITY
                
Current Liabilities:
                
Short-term borrowings
  
$
2,951
    
$
2,303
  
Accounts payable
    
113,280
      
101,412
  
Accrued salaries and benefits
    
7,715
      
8,831
  
Deferred membership income
    
8,977
      
8,340
  
Income taxes payable
    
5,937
      
5,942
  
Other accrued expenses
    
9,481
      
10,022
  
Long-term debt, current portion
    
5,386
      
4,590
  
Deferred tax liability – current
    
198
      
189
  
Liabilities of discontinued operations
    
121
      
299
  
Total current liabilities
    
154,046
      
141,928
  
Deferred tax liability – long-term
    
1,224
      
1,026
  
Long-term portion of deferred rent
    
2,793
      
2,673
  
Long-term income taxes payable, net of current portion
    
3,562
      
3,458
  
Long-term debt, net of current portion
    
42,795
      
37,120
  
Total liabilities
    
204,420
      
186,205
  
Equity:
                
Common stock, $0.0001 par value, 45,000,000 shares authorized; 30,402,285 and 30,337,109 shares issued and 29,746,173 and 29,681,031 shares outstanding (net of treasury shares), respectively
    
3
      
3
  
Additional paid-in capital
    
378,326
      
377,210
  
Tax benefit from stock-based compensation
    
4,609
      
4,547
  
Accumulated other comprehensive loss
    
(17,149
)
    
(17,230
)
Accumulated deficit
    
(39,621
)
    
(49,998
)
Less: treasury stock at cost; 656,112 shares as of November 30, 2009 and 656,078 as of August 31, 2009.
    
(14,135
)
    
(14,134
)
Total PriceSmart stockholders’ equity
    
312,033
      
300,398
  
Noncontrolling interest
    
804
      
770
  
Total equity
    
312,837
      
301,168
  
Total Liabilities and Equity
  
$
517,257
    
$
487,373