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):  April 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 April 8, 2010, PriceSmart, Inc. issued a press release regarding its results of operations for its second quarter ended February 28, 2010, March 2010 sales and the relocation of a warehouse club.  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 8, 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: April 8, 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 April 8, 2010.


 
 
 



PriceSmart Announces Second Quarter Results of Operations,
March Sales and the Relocation of a Warehouse Club

 
San Diego, CA (April 8, 2010) – PriceSmart, Inc. (NASDAQ: PSMT, www.pricesmart.com) today announced its results of operations for the second quarter of fiscal year 2010 which ended on February 28, 2010.
 
For the second quarter of fiscal year 2010, net warehouse sales increased 9.3% to $358.9 million from $328.2 million in the second quarter of fiscal year 2009.  Total revenue for the second quarter was $366.1 million compared to $334.8 million in the prior year.  The Company had 26 clubs in operation as of February 2010 and 25 clubs in operation as of February 2009.
 
The Company recorded operating income in the quarter of $20.4 million, compared to operating income of $17.5 million in the prior year.  Net income attributable to PriceSmart was $13.7 million, or $0.46 per diluted share, in the second quarter of fiscal 2010 compared to $12.7 million, or $0.43 per diluted share, in the second quarter of fiscal 2009.
 
For the first six months of fiscal year 2010, net warehouse club sales increased 6.5% to $667.5 million from $626.8 million in the first six months of fiscal year 2009.  Total revenues for the first half of the fiscal year increased 6.5% to $681.5 million from $640.0 million in the same period of the prior year.  For the first six months of 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.  During the same six month period in fiscal year 2009, the Company recorded operating income of $32.4 million and net income attributable to PriceSmart of $23.4 million, or $0.79 per share.
 
The Company also announced that for the month of March 2010 net sales increased 18.6% to $119.4 million, from $100.7 million in March a year earlier.  For the seven months ended March 31, 2010, net sales increased 8.2% to $786.9 million from $727.5 million for the seven months ended March 31, 2009.  There were 26 warehouse clubs in operation at the end of March 2010 and 25 warehouse clubs in operation at the end of March 2009.  The Company believes that March sales growth was positively impacted by the Easter holiday occurring on April 4, compared to last year when it occurred on April 12.
 
For the four weeks ended March 28, 2010 comparable warehouse sales for the warehouse clubs open at least 12 full months increased 12.0%, compared to the same four-week period last year.  For the thirty-week period ended March 28, 2010 comparable ware­house sales increased 4.1%, compared to the comparable thirty-week period a year ago.
 
PriceSmart also announced the relocation of one of its three warehouse clubs in Panama City, Panama (the Los Pueblos Club) to the recently completed new warehouse club at a nearby site, opening on April 9, 2010.  The Company will continue to operate four warehouse clubs in Panama.
 

 
 
 

 
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 may encounter difficulties in the shipment of and risks inherent in the importation of merchandise to its warehouse clubs; the Company is exposed to weather and other natural disaster 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, Principal Executive Officer (858) 551-2336; or John M. Heffner, Executive Vice President and Principal Financial 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,
    
February 28,
    
February 28,
  
   
2010
    
2009
    
2010
    
2009
  
Revenues:
                        
Net warehouse club sales
  
$
358,893
    
$
328,240
    
$
667,545
    
$
626,758
  
Export sales
    
1,006
      
905
      
1,593
      
1,742
  
Membership income
    
4,827
      
4,425
      
9,476
      
8,749
  
Other income
    
1,396
      
1,223
      
2,926
      
2,753
  
Total revenues
    
366,122
      
334,793
      
681,540
      
640,002
  
Operating expenses:
                                
Cost of goods sold:
                                
Net warehouse club
    
304,867
      
279,993
      
566,584
      
534,419
  
Export
    
935
      
861
      
1,489
      
1,661
  
Selling, general and administrative:
                                
Warehouse club operations
    
31,041
      
28,544
      
60,274
      
55,829
  
General and administrative
    
8,667
      
7,812
      
16,235
      
15,352
  
Pre-opening expenses
    
175
      
99
      
286
      
99
  
Asset impairment and closure costs
    
—
      
16
      
—
      
264
  
Total operating expenses
    
345,685
      
317,325
      
644,868
      
607,624
  
Operating income
    
20,437
      
17,468
      
36,672
      
32,378
  
Other income (expense):
                                
Interest income
    
122
      
115
      
338
      
241
  
Interest expense
    
(634
)
    
(609
)
    
(1,264
)
    
(1,190
)
Other expense, net
    
(10
)
    
(42
)
    
(7
)
    
(62
)
Total other expense
    
(522
)
    
(536
)
    
(933
)
    
(1,011
)
Income from continuing operations before provision for income taxes, and loss of unconsolidated affiliates
    
19,915
      
16,932
      
35,739
      
31,367
  
Provision for income taxes
    
(6,190
)
    
(4,090
)
    
(11,592
)
    
(7,737
)
Loss of unconsolidated affiliates
    
(3
)
    
(7
)
    
(5
)
    
(12
)
Income from continuing operations
    
13,722
      
12,835
      
24,142
      
23,618
  
Income (loss) from discontinued operations, net of tax
    
35
      
(63
)
    
44
      
(81
)
Net income
    
13,757
      
12,772
      
24,186
      
23,537
  
Net loss attributable to noncontrolling interest
    
(60
)
    
(85
)
    
(112
)
    
(150
)
Net income attributable to PriceSmart
  
$
13,697
    
$
12,687
    
$
24,074
    
$
23,387
  
                                 
Net income attributable to PriceSmart:
                                
Income from continuing operations
    
13,662
      
12,750
      
24,030
      
23,468
  
Income (loss) from discontinued operations, net of tax
    
35
      
(63
)
    
44
      
(81
)
   
$
13,697
    
$
12,687
    
$
24,074
    
$
23,387
  
Net income per share attributable to PriceSmart and available for distribution:
                                
Basic net income per share from continuing operations
  
$
0.46
    
$
0.43
    
$
0.81
    
$
0.80
  
Basic net income per share from discontinued operations, net of tax
  
$
—
    
$
—
    
$
—
    
$
—
  
Basic net income per share
  
$
0.46
    
$
0.43
    
$
0.81
    
$
0.80
  
                                 
Diluted net income per share from continuing operations
  
$
0.46
    
$
0.43
    
$
0.81
    
$
0.79
  
Diluted net income per share from discontinued operations, net of tax
  
$
—
    
$
—
    
$
—
    
$
—
  
Diluted net income per share
  
$
0.46
    
$
0.43
    
$
0.81
    
$
0.79
  
Shares used in per share computations:
                                
Basic
    
29,222
      
28,916
      
29,163
      
28,888
  
Diluted
    
29,250
      
29,179
      
29,206
      
29,145
  
Dividends per share
  
$
0.50
    
$
0.50
    
$
0.50
    
$
0.50
  

 
 
 

PRICESMART, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
     
N
        
   
February 28, 2010
(Unaudited)
    
August 31,
2009
  
ASSETS
              
Current Assets:
              
Cash and cash equivalents
  
$
63,047
    
$
44,193
  
Short-term restricted cash
    
—
      
10
  
Receivables, net of allowance for doubtful accounts of $8 and $10 as of February 28, 2010 and August 31, 2009, respectively
    
2,454
      
2,187
  
Merchandise inventories
    
124,077
      
115,841
  
Deferred tax assets – current
    
2,800
      
2,618
  
Prepaid expenses and other current assets
    
15,982
      
19,033
  
Assets of discontinued operations
    
820
      
900
  
Total current assets
    
209,180
      
184,782
  
Long-term restricted cash
    
823
      
732
  
Property and equipment, net
    
251,398
      
231,798
  
Goodwill
    
37,455
      
37,538
  
Deferred tax assets – long term
    
19,168
      
20,938
  
Other assets
    
3,982
      
3,927
  
Investment in unconsolidated affiliates
    
8,097
      
7,658
  
Total Assets
  
$
530,103
    
$
487,373
  
LIABILITIES AND EQUITY
                
Current Liabilities:
                
Short-term borrowings
  
$
4,344
    
$
2,303
  
Accounts payable
    
113,097
      
101,412
  
Accrued salaries and benefits
    
7,878
      
8,831
  
Deferred membership income
    
9,490
      
8,340
  
Income taxes payable
    
5,785
      
5,942
  
Other accrued expenses
    
8,718
      
10,022
  
Dividends payable
    
7,429
      
—
  
Long-term debt, current portion
    
6,002
      
4,590
  
Deferred tax liability – current
    
200
      
189
  
Liabilities of discontinued operations
    
109
      
299
  
Total current liabilities
    
163,052
      
141,928
  
Deferred tax liability – long-term
    
1,091
      
1,026
  
Long-term portion of deferred rent
    
2,902
      
2,673
  
Long-term income taxes payable, net of current portion
    
3,545
      
3,458
  
Long-term debt, net of current portion
    
47,127
      
37,120
  
Total liabilities
    
217,717
      
186,205
  
Equity:
                
Common stock, $0.0001 par value, 45,000,000 shares authorized; 30,463,930 and 30,337,109 shares issued and 29,741,523 and 29,681,031 shares outstanding (net of treasury shares) as of February 28, 2010 and August 31, 2009, respectively
    
3
      
3
  
Additional paid-in capital
    
380,147
      
377,210
  
Tax benefit from stock-based compensation
    
4,724
      
4,547
  
Accumulated other comprehensive loss
    
(17,108
)
    
(17,230
)
Accumulated deficit
    
(40,786
)
    
(49,998
)
Less: treasury stock at cost; 722,407 and 656,078 shares as of February 28, 2010 and August 31, 2009, respectively.
    
(15,460
)
    
(14,134
)
Total PriceSmart stockholders’ equity
    
311,520
      
300,398
  
Noncontrolling interest
    
866
      
770
  
Total equity
    
312,386
      
301,168
  
Total Liabilities and Equity
  
$
530,103
    
$
487,373