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 6, 2009
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 6, 2009, PriceSmart, Inc. issued a press release regarding its results of operations for its fourth quarter and twelve months ended August 31, 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 November 6, 2009. | |||||
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 6, 2009 | /S/ JOHN M. HEFFNER | |
John M. Heffner | ||
Executive Vice President and Chief Financial Officer | ||
(Principal Financial Officer and | ||
Chief Accounting Officer) |
EXHIBIT INDEX
Exhibit Number | Description | |
99.1 | Press Release of PriceSmart, Inc. dated November 6, 2009. |
PriceSmart Announces Fourth Quarter and Fiscal Year Results of Operations;
October Sales Also Announced
San Diego, CA (November 6, 2009) – PriceSmart, Inc. (NASDAQ: PSMT, www.pricesmart.com) today announced its results of operations for the fourth quarter and fiscal year 2009 which ended on August 31, 2009.
For the fourth quarter of fiscal year 2009, net warehouse sales were $298.0 million compared to $286.1 million in the fourth quarter of fiscal year 2008. Total revenue for the fourth quarter was $305.1 million compared to $292.0 million in the prior year. The Company had 26 warehouse clubs in operation as of the end of fiscal year 2009 compared to 25 warehouse clubs in operation at the end of fiscal year 2008.
Operating income in the fourth quarter of fiscal year 2009 was $11.9 million compared to operating income of $12.9 million in the fourth quarter of fiscal year 2008.
The Company recorded net income for the fourth quarter of $10.3 million or $0.35 per diluted share compared to net income of $11.3 million or $0.39 per diluted share in the fourth quarter of fiscal year 2008. In the fourth quarter of fiscal year 2009, the Company realized a reduction to tax expense in the period of $3.8 million or $0.13 per diluted share, compared to a reduction to tax expense of $3.5 million, or $0.12 per diluted share, in the fourth quarter fiscal year 2008.
Net warehouse sales increased 11.6% to $1.2 billion during fiscal year 2009 compared to $1.1 billion in the prior year, and total revenue for fiscal year 2009 increased 11.8% to $1.3 billion from $1.1 billion in fiscal year 2008. For fiscal year 2009, the Company recorded operating income of $57.5 million and net income of $42.3 million, or $1.45 per diluted share. For fiscal year 2008 the Company recorded net income of $38.1 million or $1.30 per diluted share.
Commenting on the results, PriceSmart President Jose Luis Laparte said, “Despite the difficult time in the world economies we were able to accomplish positive growth for the quarter and full year in both total sales and sales on a same warehouse club basis. During the year we successfully opened our fifth club in Costa Rica and completed the expansion of one club in Nicaragua adding 8,600 square feet. Also during the year, the Company substantially completed the expansion of our Aruba warehouse club, adding 9,000 square feet. This expansion was opened to our members in September 2009. Our plans in the new fiscal year include the opening of our fourth warehouse club in Trinidad and a relocation in Panama of our Los Pueblos warehouse club. We will also continue our evaluation of Colombia as a potential new market for multiple PriceSmart warehouse clubs. In addition, because we were not able to obtain the necessary permits to acquire land we had under contract in Santo Domingo, Dominican Republic, we are actively looking for a new site in the Santo Domingo market. Fiscal year 2010 will still present some challenges until we see a full recovery of the economies in the countries where we have warehouse clubs, but we believe that PriceSmart is in a good position to face those challenges with the talent and dedication of our team and the value we bring to our 651,000 members.”
The Company will file its Annual Report on Form 10-K for the year ended August 31, 2009 on or before November 16, 2009.
PriceSmart also announced that for the month of October 2009, net sales increased 4.9% to $104.1 million from $99.3 million in October a year earlier. For the two months ended October 31, 2009, net sales increased 3.7% to $200.0 million from $192.9 million in the same period last year. There were 26 warehouse clubs in operation at the end of October 2009, compared to 25 warehouse clubs in operation in October 2008.
For the four weeks ended October 25, 2009, comparable warehouse sales for warehouse clubs open at least 12 full months decreased 0.3% compared to the same four-week period last year. For the eight-week period ended October 25, 2009, comparable warehouse sales decreased 0.7% compared to the comparable eight 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 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 one-half 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 12, 2008. 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.
PRICESMART, INC.
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share data)
Three Months Ended | Twelve Months Ended | |||||||||||||||
August 31, | August 31, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Revenues: | ||||||||||||||||
Net warehouse club sales | $ | 298,002 | $ | 286,126 | $ | 1,224,331 | $ | 1,097,510 | ||||||||
Export sales | 900 | 406 | 3,679 | 1,498 | ||||||||||||
Membership income | 4,635 | 4,231 | 17,903 | 16,042 | ||||||||||||
Other income | 1,546 | 1,193 | 5,715 | 4,826 | ||||||||||||
Total revenues | 305,083 | 291,956 | 1,251,628 | 1,119,876 | ||||||||||||
Operating expenses: | ||||||||||||||||
Cost of goods sold: | ||||||||||||||||
Net warehouse club | 254,282 | 242,376 | 1,044,555 | 932,294 | ||||||||||||
Export | 855 | 387 | 3,484 | 1,420 | ||||||||||||
Selling, general and administrative: | ||||||||||||||||
Warehouse club operations | 30,936 | 28,141 | 114,957 | 103,887 | ||||||||||||
General and administrative | 7,537 | 7,686 | 30,882 | 30,327 | ||||||||||||
Pre-opening expenses | 72 | 14 | 515 | 1,010 | ||||||||||||
Asset impairment and closure costs | (465 | ) | 439 | (249 | ) | 1,142 | ||||||||||
Provision for settlement of litigation, including changes in fair value and put agreement | — | 26 | — | 1,370 | ||||||||||||
Total operating expenses | 293,217 | 279,069 | 1,194,144 | 1,071,450 | ||||||||||||
Operating income | 11,866 | 12,887 | 57,484 | 48,426 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest income | 140 | 165 | 457 | 1,193 | ||||||||||||
Interest expense | 175 | (479 | ) | (1,700 | ) | (1,445 | ) | |||||||||
Other expense, net | (503 | ) | (131 | ) | (539 | ) | (346 | ) | ||||||||
Total other expense | (188 | ) | (445 | ) | (1,782 | ) | (598 | ) | ||||||||
Income from continuing operations before provision for income taxes, loss of unconsolidated affiliates and minority interest | 11,678 | 12,442 | 55,702 | 47,828 | ||||||||||||
Provision for income taxes | (1,372 | ) | (844 | ) | (13,069 | ) | (9,124 | ) | ||||||||
Loss of unconsolidated affiliates | (1 | ) | — | (21 | ) | — | ||||||||||
Minority interest | (53 | ) | (128 | ) | (265 | ) | (494 | ) | ||||||||
Income from continuing operations | 10,252 | 11,470 | 42,347 | 38,210 | ||||||||||||
Loss from discontinued operations, net of tax | (1 | ) | (175 | ) | (28 | ) | (104 | ) | ||||||||
Net income | $ | 10,251 | $ | 11,295 | $ | 42,319 | $ | 38,106 | ||||||||
Basic net income per share from continuing operations | $ | 0.35 | $ | 0.39 | $ | 1.46 | $ | 1.32 | ||||||||
Basic net loss per share from discontinued operations, net of tax | $ | — | $ | — | $ | — | $ | — | ||||||||
Basic net income per share | $ | 0.35 | $ | 0.39 | $ | 1.46 | $ | 1.32 | ||||||||
Diluted net income per share from continuing operations | $ | 0.35 | $ | 0.39 | $ | 1.45 | $ | 1.30 | ||||||||
Diluted net loss per share from discontinued operations, net of tax | $ | — | $ | — | $ | — | $ | — | ||||||||
Diluted net income per share | $ | 0.35 | $ | 0.39 | $ | 1.45 | $ | 1.30 | ||||||||
Shares used in per share computations: | ||||||||||||||||
Basic | 29,046 | 28,897 | 28,959 | 28,860 | ||||||||||||
Diluted | 29,228 | 29,192 | 29,181 | 29,210 | ||||||||||||
Dividends per share | $ | — | $ | — | $ | 0.50 | $ | 0.32 |
PRICESMART, INC.
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)
August 31, | ||||||||
2009 | 2008 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 44,193 | $ | 48,121 | ||||
Short-term restricted cash | 10 | 536 | ||||||
Receivables, net of allowance for doubtful accounts of $10 and $11 in 2009 and 2008, respectively | 2,187 | 1,474 | ||||||
Merchandise inventories | 115,841 | 113,894 | ||||||
Deferred tax asset – current | 2,618 | 2,179 | ||||||
Prepaid expenses and other current assets | 19,033 | 17,650 | ||||||
Short-term notes receivable | — | 2,104 | ||||||
Assets of discontinued operations | 900 | 1,247 | ||||||
Total current assets | 184,782 | 187,205 | ||||||
Long-term restricted cash | 732 | 673 | ||||||
Property and equipment, net | 231,798 | 199,576 | ||||||
Goodwill | 37,538 | 39,248 | ||||||
Deferred tax assets – long term | 20,938 | 21,198 | ||||||
Other assets | 3,927 | 3,512 | ||||||
Investment in unconsolidated affiliates | 7,658 | — | ||||||
Total Assets | $ | 487,373 | $ | 451,412 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities: | ||||||||
Short-term borrowings | $ | 2,303 | $ | 3,473 | ||||
Accounts payable | 101,412 | 96,120 | ||||||
Accrued salaries and benefits | 8,831 | 8,271 | ||||||
Deferred membership income | 8,340 | 7,764 | ||||||
Income taxes payable | 5,942 | 3,695 | ||||||
Common stock subject to put agreement | — | 161 | ||||||
Other accrued expenses | 10,022 | 11,877 | ||||||
Dividend payable | — | 4,744 | ||||||
Long-term debt, current portion | 4,590 | 2,737 | ||||||
Deferred tax liability – current | 189 | 486 | ||||||
Liabilities of discontinued operations | 299 | 277 | ||||||
Total current liabilities | 141,928 | 139,605 | ||||||
Deferred tax liability – long-term | 1,026 | 2,339 | ||||||
Long term portion of deferred rent | 2,673 | 2,412 | ||||||
Accrued closure costs | — | 3,489 | ||||||
Long-term income taxes payable, net of current portion | 3,458 | 5,553 | ||||||
Long-term debt, net of current portion | 37,120 | 23,028 | ||||||
Total liabilities | 186,205 | 176,426 | ||||||
Minority interest | 770 | 480 | ||||||
Stockholders’ Equity: | ||||||||
Common stock, $0.0001 par value, 45,000,000 shares authorized; 30,337,109 and 30,195,788 shares issued and 29,681,031 and 29,615,226 shares outstanding (net of treasury shares), respectively | 3 | 3 | ||||||
Additional paid-in capital | 377,210 | 373,192 | ||||||
Tax benefit from stock-based compensation | 4,547 | 4,563 | ||||||
Accumulated other comprehensive loss | (17,230 | ) | (12,897 | ) | ||||
Accumulated deficit | (49,998 | ) | (77,510 | ) | ||||
Less: treasury stock at cost; 656,078 and 580,562 shares, respectively | (14,134 | ) | (12,845 | ) | ||||
Total stockholders’ equity | 300,398 | 274,506 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 487,373 | $ | 451,412 |