Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Nov. 30, 2017 | Dec. 31, 2017 | |
Entity Registrant Name | PRICESMART INC | |
Entity Central Index Key | 1,041,803 | |
Current Fiscal Year End Date | --08-31 | |
Trading Symbol | psmt | |
Entity Filer Category | Large Accelerated Filer | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Nov. 30, 2017 | |
Entity Common Stock, Shares Outstanding | 30,403,542 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Nov. 30, 2017 | Aug. 31, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 129,183 | $ 162,434 |
Short-term restricted cash | 373 | 460 |
Receivables, net of allowance for doubtful accounts of $6 as of November 30, 2017 and $7 as of August 31, 2017, respectively | 6,602 | 6,460 |
Merchandise inventories | 372,413 | 310,946 |
Prepaid expenses and other current assets (includes $71 and $0 as of November 30, 2017 and August 31, 2017, respectively, for the fair value of foreign currency forward contracts) | 36,168 | 30,070 |
Total current assets | 544,739 | 510,370 |
Long-term restricted cash | 2,986 | 2,818 |
Property and equipment, net | 567,038 | 557,829 |
Goodwill | 35,578 | 35,642 |
Deferred tax assets | 15,200 | 15,412 |
Other non-current assets (includes $3,278 and $2,547 as of November 30, 2017 and August 31, 2017, respectively, for the fair value of derivative instruments) | 46,506 | 44,678 |
Investment in unconsolidated affiliates | 10,781 | 10,765 |
Total Assets | 1,222,828 | 1,177,514 |
Current Liabilities: | ||
Short-term borrowings | 2,483 | |
Accounts payable | 297,371 | 272,248 |
Accrued salaries and benefits | 19,250 | 19,151 |
Deferred membership income | 22,234 | 22,100 |
Income taxes payable | 5,217 | 5,044 |
Other accrued expenses | 28,253 | 26,483 |
Long-term debt, current portion | 18,257 | 18,358 |
Total current liabilities | 393,065 | 363,384 |
Deferred tax liability | 1,647 | 1,812 |
Long-term portion of deferred rent | 8,838 | 8,914 |
Long-term income taxes payable, net of current portion | 898 | 909 |
Long-term debt, net of current portion | 80,340 | 87,939 |
Other long-term liabilities (includes $346 and $682 for the fair value of derivative instruments and $5,335 and $5,051 for post employment plans as of November 30, 2017 and August 31, 2017, respectively) | 5,731 | 5,789 |
Total Liabilities | 490,519 | 468,747 |
Equity: | ||
Common stock, $0.0001 par value, 45,000,000 shares authorized; 31,278,595 and 31,275,727 shares issued and 30,403,610 and 30,400,742 shares outstanding (net of treasury shares) as of November 30, 2017 and August 31, 2017, respectively | 3 | 3 |
Additional paid-in capital | 424,856 | 422,395 |
Tax benefit from stock-based compensation | 11,486 | 11,486 |
Accumulated other comprehensive loss | (111,468) | (110,059) |
Retained earnings | 443,356 | 420,866 |
Less: treasury stock at cost, 874,985 shares as of both November 30, 2017 and August 31, 2017, respectively | (35,924) | (35,924) |
Total Equity | 732,309 | 708,767 |
Total Liabilities and Equity | $ 1,222,828 | $ 1,177,514 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Nov. 30, 2017 | Aug. 31, 2017 |
Receivables, allowance for doubtful account | $ 6 | $ 7 |
Prepaid expenses and other current assets, fair value of derivative | 71 | 0 |
Other non-current assets, fair value of derivative instruments | 3,278 | 2,547 |
Other long-term liabilities, fair value of derivative instruments | 346 | 682 |
Other long-term liabilities, defined benefit plan | $ 5,335 | $ 5,051 |
Common stock, par value per share | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 45,000,000 | 45,000,000 |
Common stock, shares issued | 31,278,595 | 31,275,727 |
Common stock, shares outstanding | 30,403,610 | 30,400,742 |
Treasury stock, shares | 874,985 | 874,985 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Nov. 30, 2017 | Nov. 30, 2016 | |
Revenues: | ||
Net warehouse club sales | $ 745,401 | $ 716,079 |
Export sales | 8,147 | 10,734 |
Membership income | 12,375 | 11,710 |
Other income | 1,149 | 1,049 |
Total revenues | 767,072 | 739,572 |
Cost of goods sold: | ||
Net warehouse club | 637,236 | 608,490 |
Export | 7,749 | 10,181 |
Selling, general and administrative: | ||
Warehouse club operations | 69,502 | 65,426 |
General and administrative | 18,830 | 16,802 |
Pre-opening expenses | 430 | (113) |
Loss/(gain) on disposal of assets | 159 | 407 |
Total operating expenses | 733,906 | 701,193 |
Operating income | 33,166 | 38,379 |
Other income (expense): | ||
Interest income | 400 | 502 |
Interest expense | (1,255) | (1,654) |
Other income (expense), net | 278 | (928) |
Total other income (expense) | (577) | (2,080) |
Income before provision for income taxes and income (loss) of unconsolidated affiliates | 32,589 | 36,299 |
Provision for income taxes | (10,115) | (11,437) |
Income (loss) of unconsolidated affiliates | 16 | 7 |
Net income | $ 22,490 | $ 24,869 |
Net income per share available for distribution: | ||
Basic net income per share | $ 0.74 | $ 0.82 |
Diluted net income per share | $ 0.74 | $ 0.82 |
Shares used in per share computations: | ||
Basic | 30,078 | 29,982 |
Diluted | 30,079 | 29,987 |
Dividends per share |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | ||
Nov. 30, 2017 | Nov. 30, 2016 | ||
Net income | $ 22,490 | $ 24,869 | |
Other Comprehensive Income, net of tax: | |||
Foreign currency translation adjustments | [1] | (2,026) | (10,866) |
Defined benefit pension plan: | |||
Amortization of prior service cost and actuarial gains included in net periodic pensions cost | 30 | (7) | |
Total defined benefit pension plan | 30 | (7) | |
Derivative instruments: | |||
Unrealized gains/(losses) on change in fair value of interest rate swaps | [2] | 587 | 492 |
Total derivative instruments | [2] | 587 | 492 |
Other comprehensive income (loss) | (1,409) | (10,381) | |
Comprehensive income | $ 21,081 | $ 14,488 | |
[1] | Translation adjustments arising in translating the financial statements of a foreign entity have no effect on the income taxes of that foreign entity. They may, however, affect: (a) the amount, measured in the parent entity's reporting currency, of withholding taxes assessed on dividends paid to the parent entity and (b) the amount of taxes assessed on the parent entity by the government of its country. The Company has determined that the reinvestment of earnings of its foreign subsidiaries are indefinite because of the long-term nature of the Company's foreign investment plans. Therefore, deferred taxes are not provided for on translation adjustments related to non-remitted earnings of the Company's foreign subsidiaries. | ||
[2] | See Note 7 - Derivative Instruments and Hedging Activities. |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Tax Benefit From Stock Based Compensation [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Total |
Balance at Aug. 31, 2016 | $ 3 | $ 412,369 | $ 11,321 | $ (103,951) | $ 351,060 | $ (32,731) | $ 638,071 |
Balance (in shares) at Aug. 31, 2016 | 31,238,000 | 836,000 | |||||
Issuance of restricted stock award | |||||||
Issuance of restricted stock award (in shares) | 5,000 | ||||||
Stock-based compensation | 2,442 | 2,442 | |||||
Net income | 24,869 | 24,869 | |||||
Other comprehensive income (loss) | (10,381) | (10,381) | |||||
Balance at Nov. 30, 2016 | $ 3 | 414,811 | 11,321 | (114,332) | 375,929 | $ (32,731) | 655,001 |
Balance (in shares) at Nov. 30, 2016 | 31,243,000 | 836,000 | |||||
Balance at Aug. 31, 2017 | $ 3 | 422,395 | 11,486 | (110,059) | 420,866 | $ (35,924) | $ 708,767 |
Balance (in shares) at Aug. 31, 2017 | 31,276,000 | 875,000 | 30,400,742 | ||||
Issuance of restricted stock award | |||||||
Issuance of restricted stock award (in shares) | 3,000 | ||||||
Stock-based compensation | 2,461 | 2,461 | |||||
Net income | 22,490 | 22,490 | |||||
Other comprehensive income (loss) | (1,409) | (1,409) | |||||
Balance at Nov. 30, 2017 | $ 3 | $ 424,856 | $ 11,486 | $ (111,468) | $ 443,356 | $ (35,924) | $ 732,309 |
Balance (in shares) at Nov. 30, 2017 | 31,279,000 | 875,000 | 30,403,610 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2017 | Nov. 30, 2016 | |
Operating Activities: | ||
Net income | $ 22,490 | $ 24,869 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 12,237 | 11,117 |
Allowance for doubtful accounts | (1) | 7 |
(Gain)/loss on sale of property and equipment | 159 | 407 |
Deferred income taxes | (349) | 984 |
Equity in (gains) losses of unconsolidated affiliates | (16) | (7) |
Stock-based compensation | 2,461 | 2,442 |
Change in operating assets and liabilities: | ||
Receivables, prepaid expenses and other current assets, non-current assets, accrued salaries and benefits, deferred membership income and other accruals | (7,049) | (6,516) |
Merchandise inventories | (61,467) | (44,082) |
Accounts payable | 21,372 | 12,894 |
Net cash provided by (used in) operating activities | (10,163) | 2,115 |
Investing Activities: | ||
Additions to property and equipment | (19,752) | (16,973) |
Deposits for land purchase option agreements | (500) | |
Proceeds from disposal of property and equipment | 20 | 108 |
Net cash provided by (used in) investing activities | (19,732) | (17,365) |
Financing Activities: | ||
Repayment of long-term bank borrowings | (7,554) | (3,688) |
Proceeds from short-term bank borrowings | 16,954 | 681 |
Repayment of short-term bank borrowings | (14,696) | (4,155) |
Net cash provided by (used in) financing activities | (5,296) | (7,162) |
Effect of exchange rate changes on cash and cash equivalents and restricted cash | 2,021 | (1,650) |
Net increase (decrease) in cash, cash equivalents, and restricted cash | (33,170) | (24,062) |
Cash, cash equivalents, and restricted cash at beginning of period | 165,712 | 202,716 |
Cash, cash equivalents, and restricted cash at end of period | 132,542 | 178,654 |
Reconciliation of cash, cash equivalents, and restricted cash: | ||
Total Cash, Cash equivalents, and restricted cash shown in statement of cash flows | $ 165,712 | $ 202,716 |
COMPANY OVERVIEW AND BASIS OF P
COMPANY OVERVIEW AND BASIS OF PRESENTATION | 3 Months Ended |
Nov. 30, 2017 | |
COMPANY OVERVIEW AND BASIS OF PRESENTATION | N OTE 1 – COMPANY OVERVIEW AND BASIS OF PRESENTATION PriceSmart, Inc.’s (“PriceSmart” or the “Company”) business consists primarily of international membership shopping warehouse clubs similar to, but smaller in size than, warehouse clubs in the United States. As of November 30, 2017 , the Company had 40 consolidated warehouse clubs in operation in 12 countries and one U.S. territory ( seven each in Colombia and Costa Rica ; five in Panama; four in Trinidad; three each in Guatemala, the Dominican Republic and Honduras ; two each in El Salvador and Nicaragua ; and one each in Aruba, Barbados , Jamaica and the United States Virgin Islands ), of which the Company owns 100% of the corresponding legal entities (see Note 2 - Summary of Significant Accounting Policies). The Company opened a new warehouse club in Santa Ana, Costa Rica in October 2017, bringing the total warehouse clubs operating in Costa Rica to seven . In June 2017, the Company acquired land in Santo Domingo, Dominican Republic. The Company is currently building a warehouse club on this site and expects to open in the spring of calendar year 2018. This will bring the number of PriceSmart warehouse clubs operating in Dominican Republic to four . The Company continues to explore other potential sites for future warehouse clubs in Central America, the Caribbean and Colombia. Basis of Presentation – The interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q for interim financial reporting pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2017 (the “2017 Form 10-K”). The interim consolidated financial statements include the accounts of PriceSmart, Inc., a Delaware corporation, and its subsidiaries. Inter-company transactions between the Company and its subsidiaries have been eliminated in consolidation. Reclassifications to consolidated statement of cash flows recorded during fiscal year 2018 for fiscal year 2017 – Accounting Standards Update (ASU) 2016-18 - The amendments in ASU 2016-18 require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Thus, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and the end-of-period total amounts set forth on the statement of cash flows. The amendments in this ASU are effective for annual periods beginning after December 15, 2017 and interim periods within those fiscal years and will be applied using a retrospective transition method to each period presented. The Company early adopted this ASU as of August 31, 2017. The adoption of this ASU impacted the presentation of cash flows with inclusion of restricted cash flows for each of the presented periods. Additionally, the Company adopted Accounting Standards Update (ASU) 2016-09, effective as of September 1, 2017. The Company made certain elections and changes to account for share-based payments to employees according to the new standard as follows: Accounting for policy election to recognize forfeitures as they occur – The Company made a policy election to recognize forfeitures as they occur. Accordingly, the Company applied the modified retrospective transition method, with a cumulative-effect adjustment to prior-year (August 31, 2017) retained earnings. Therefore, the Company recorded an increase to prior-year retained earnings and a decrease to additional paid-in capital of $367,000 in each case. August 31, 2017 balance sheet line item as previously reported Amount reclassified August 31, 2017 balance sheet line item as currently reported Retained earnings $ 420,499 $ 367 $ 420,866 Additional paid-in capital $ 422,762 $ (367) $ 422,395 Presentation of excess tax benefits and employee taxes paid on the statement of cash flows · According to ASU 2016-09, the cash paid to a tax authority when shares are withheld to satisfy the employer’s statutory income tax withholding obligation should be classified as a financing activity on the statement of cash flows , and the full retrospective transition method should be applied. The Company already classifies cash paid for tax withholdings as a financing activity; thus, the adoption did not change the Company’s classification for this activity. However, the Company will change the naming convention from “Purchase of treasury stock” to “Purchase of treasury stock for tax withholding on stock compensation” in the statement of cash flows. There were no such transactions for the three months ended November 30, 2017 and 2016. · Furthermore , the new standard requires the Company to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. The Company has adopted and implemented this change, retrospectively, for the three months ended November 30, 2017 and 2016; however, no such transactions have occurred during these periods. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Nov. 30, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation – The interim consolidated financial statements of the Company included herein include the assets, liabilities and results of operations of the Company’s wholly owned subsidiaries and the Company's investment in, and the Company's share of the income (loss) of, joint ventures recorded under the equity method. All significant inter-company accounts and transactions have been eliminated in consolidation. The interim consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the SEC and reflect all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary to fairly present the financial position, results of operations and cash flows for the periods presented. The results for interim periods are not necessarily indicative of the results for the full year. As of November 30, 2017 , all of the Company's subsidiaries were wholly owned. Additionally, the Company's ownership interest in real estate development joint ventures as of November 30, 2017 is listed below: Real Estate Development Joint Ventures Countries Ownership Basis of Presentation GolfPark Plaza, S.A. Panama 50.0 % Equity (1) Price Plaza Alajuela PPA, S.A. Costa Rica 50.0 % Equity (1) (1) Joint venture interests are recorded as investment in unconsolidated affiliates on the consolidated balance sheets. The Company determines whether any of the joint ventures in which it has made investments is a Variable Interest Entity (“VIE”) at the start of each new venture and if a reconsideration event has occurred. At this time, the Company also considers whether it must consolidate a VIE and/or disclose information about its involvement in a VIE. A reporting entity must consolidate a VIE if that reporting entity has a variable interest (or combination of variable interests) that will absorb a majority of the VIE's expected losses, receive a majority of the VIE's expected residual returns, or both. A reporting entity must consider the rights and obligations conveyed by its variable interests and the relationship of its variable interests with variable interests held by other parties to determine whether its variable interests will absorb a majority of a VIE's expected losses, receive a majority of the VIE's expected residual returns, or both. The reporting entity that consolidates a VIE is called the primary beneficiary of that VIE. Due to the initial nature of the joint ventures and the continued commitments for additional financing, the Company determined these joint ventures are VIEs. Since all rights, obligations and the power to direct the activities of a VIE that most significantly impact the VIE's economic performance is shared equally by both parties within each joint venture, the Company has determined that it is not the primary beneficiary of the VIEs and, therefore, has accounted for these entities under the equity method. Under the equity method, the Company's investments in unconsolidated affiliates are initially recorded as an investment in the stock of an investee at cost and are adjusted for the carrying amount of the investment to recognize the investor's share of the earnings or losses of the investee after the date of the initial investment. Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Tax Receivables – The Company pays Value Added Tax (“VAT”) or similar taxes (“input VAT”), income taxes, and other taxes within the normal course of its business in most of the countries in which it operates related to the procurement of merchandise and/or services it acquires and/or on sales and taxable income. The Company also collects VAT or similar taxes on behalf of the government (“output VAT”) for merchandise and/or services it sells. If the output VAT exceeds the input VAT, then the difference is remitted to the government, usually on a monthly basis. If the input VAT exceeds the output VAT, this creates a VAT receivable. In most countries where the Company operates, the governments have implemented additional collection procedures, such as requiring credit and debit card processors to remit a portion of sales processed via credit and debit card directly to the government as advance payments of VAT and/or income tax. In the case of VAT, these procedures alter the natural offset of input and output VAT and generally leave the Company with a net VAT receivable, forcing the Company to process significant refund claims on a recurring basis. With respect to income taxes paid, if the estimated income taxes paid or withheld exceed the actual income tax due, this creates an income tax receivable. The Company either requests a refund of these tax receivables or applies the balance to expected future tax payments. These refund or offset processes can take anywhere from several months to several years to complete. In most countries where the Company operates, the tax refund process is defined and structured with regular refunds or offsets. However, as of November 30, 2017, in one country the government has alleged there is not a clearly defined process to allow the tax authorities to refund VAT receivables. As of August 31, 2016, there were three countries that lacked a clearly defined process; however, during the third and fourth quarters of fiscal year 2017, two of these countries clarified the refund mechanism, which we are currently pursuing. The Company, together with its tax and legal advisers, is currently seeking clarification in court in the remaining country without a clearly defined process and expects to prevail. The balance of the VAT receivable in the country with undefined refund mechanisms was approximately $2.2 million and $1.2 million as of November 30, 2017 and August 31, 2017, respectively. In another country in which the Company operates warehouse clubs, a new minimum income tax mechanism took effect in fiscal year 2015, which requires the Company to pay taxes based on a percentage of sales rather than income. As a result, the Company is making income tax payments substantially in excess of those it would expect to pay based on taxable income. The current rules (which the Company has challenged in court) do not clearly allow the Company to obtain a refund or to offset this excess income tax against other taxes. As of November 30, 2017 and August 31, 2017, the Company had deferred tax assets of approximately $2.0 million in this country. Also, the Company had an income tax receivable balance of $5.3 million and $4.3 million as of November 30, 2017 and August 31, 2017, respectively, related to excess payments from fiscal years 2015 to 2017. The Company has not placed any type of allowance on the recoverability of these tax receivables or deferred tax assets because the Company believes that it is more likely than not that it will ultimately succeed in its refund requests, related appeals and/or court challenge on this matter. The Company's policy for classification and presentation of VAT receivables, income tax receivables and other tax receivables is as follows: · Short-term VAT and Income tax receivables, recorded as Other current assets: This classification is used for any countries where the Company's subsidiary has generally demonstrated the ability to recover the VAT or income tax receivable within one year. The Company also classifies as short-term any approved refunds or credit notes to the extent that the Company expects to receive the refund or use the credit notes within one year. · Long -term VAT and Income tax receivables, recorded as Other non-current assets: This classification is used for amounts not approved for refund or credit in countries where the Company's subsidiary has not demonstrated the ability to obtain refunds within one year and/or for amounts which are subject to outstanding disputes. An allowance is provided against VAT and income tax receivable balances in dispute when the Company does not expect to eventually prevail in its recovery. The Company does not currently have any allowances provided against VAT and income tax receivables. The following table summarizes the VAT receivables reported by the Company (in thousands ): November 30, August 31, 2017 2017 Prepaid expenses and other current assets $ 9,998 $ 6,650 Other non-current assets 22,954 24,904 Total amount of VAT receivables reported $ 32,952 $ 31,554 The following table summarizes the Income tax receivables reported by the Company (in thousands ): November 30, August 31, 2017 2017 Prepaid expenses and other current assets $ 6,910 $ 6,403 Other non-current assets 13,494 10,492 Total amount of Income tax receivables reported $ 20,404 $ 16,895 Merchandise Inventories – Merchandise inventories, which include merchandise for resale, are valued at the lower of cost (average cost) or net realizable value . The Company provides for estimated inventory losses and obsolescence between physical inventory counts on the basis of a percentage of sales. The provision is adjusted periodically to reflect the trend of actual physical inventory count results, with physical inventories occurring primarily in the second and fourth fiscal quarters. In addition, the Company may be required to take markdowns below the carrying cost of certain inventory to expedite the sale of such merchandise. Stock Based Compensation – The Company utilizes three types of equity awards: stock options (“options”), restricted stock awards (“RSAs”) and restricted stock units (“RSUs”). The Company ado pted ASU 2016-09 – Compensation - Stock Compensation (Topic 718) on September 1, 2017, see Note 1 – Company Overview and Basis of Presentation for more information on the implementation. Compensation related to options is accounted for by applying the valuation technique based on the Black-Scholes model. Compensation related to RSAs and RSUs is based on the fair market value at the time of grant. The Company recognizes the compensation cost related to these awards over the requisite service period as determined by the grant, amortized ratably or on a straight line basis over the life of the grant. As a result of adoption of ASU 2016-09, t he Company currently accounts for actual forfeitures as they occur . The Company records the tax savings resulting from tax deductions in excess of expense for stock-based compensation and the tax deficiency resulting from stock-based compensation in excess of the related tax deduction as income tax expense or benefit, bas ed on ASU 2016-09. In addition, the Company reflects the tax savings (deficiency) resulting from the taxation of stock-based compensation as a n operating cash flow in its consolidated statement of cash flows . RSAs have the same cash dividend and voting rights as other common stock and are considered to be currently issued and outstanding shares of common stock. Shares of common stock subject to RSUs are not issued nor outstanding until vested, and RSUs do not have the same dividend and voting rights as common stock. However, all outstanding RSUs have accompanying dividend equivalents, requiring payment to the employees and directors with unvested RSUs of amounts equal to the dividend they would have received had the shares of common stock underlying the RSUs been actually issued and outstanding. Payments of dividend equivalents to employees are recorded as compensation expense. Exit or Disposal Cost Obligations – In January 2017, the Company purchased a distribution center in Medley, Miami-Dade County, Florida. The Company transferred its Miami dry distribution center activities that were previously in a leased facility to the new facility during the third quarter of fiscal year 2017. As part of this transaction, the Company has recorded an exit obligation related to the lease of the previous distribution center. The obligation consists of the costs associated with the exit or disposal activity measured initially at its fair value as of May 1, 2017, the date on which the obligation was incurred. These costs are primarily comprised of the costs to terminate the operating lease and other associated costs, including costs to consolidate or close facilities, net of any potential sub-lease income the Company could receive during the remaining lease term. In periods subsequent to initial measurement, changes to the exit obligation, including any changes resulting from a revision to either the timing or the amount of estimated cash flows over the remaining lease period, is measured using the credit-adjusted risk-free rate that was used to measure the initial obligation. During the third quarter of fiscal year 2017, the Company initially recorded an obligation related to this exit activity for approximately $496,000 within other long-term liabilities. The Company’s exit obligation recorded as of August 31, 2017 was approximately $57,000 . The Company’s exit obligation recorded as of November 30, 2017 was approximately $50,000 . Exit costs of approximately $1.4 million were recorded to net warehouse club cost of goods sold for the twelve months ended August 31, 2017. Exit costs of approximately $338,000 were recorded to net warehouse club cost of goods sold for the three months ended November 30, 2017. Fair Value Measurements – The Company measures the fair value for all financial and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring or nonrecurring basis. The fair value of an asset is the price at which the asset could be sold in an orderly transaction between unrelated, knowledgeable and willing parties able to engage in the transaction. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor in a transaction between such parties, not the amount that would be paid to settle the liability with the creditor. The Company has established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring and revaluing fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company was not required to revalue any assets or liabilities utilizing Level 1 or Level 3 inputs at the balance sheet dates. The Company's Level 2 assets and liabilities revalued at the balance sheet dates, on a recurring basis, consisted of cash flow hedges (interest rate swaps and cross-currency interest rate swaps) and forward foreign exchange contracts. In addition, the Company utilizes Level 2 inputs in determining the fair value of long-term debt. The Company did not make any significant transfers in and out of Level 1 and Level 2 fair value tiers during the periods reported on herein. Non-financial assets and liabilities are revalued and recognized at fair value subsequent to initial recognition when there is evidence of impairment. For the periods reported, no impairment of such non-financial assets was recorded. The Company’s current and long-term financial assets and liabilities have fair values that approximate their carrying values. The Company’s long-term financial liabilities consist of long-term debt, which is recorded on the balance sheet at issuance price and adjusted for any applicable unamortized discounts or premiums and debt issuance costs. There have been no significant changes in fair market value of the Company’s current and long-term financial assets, and there have been no material changes to the valuation techniques utilized in the fair value measurement of assets and liabilities as disclosed in the Company’s 2017 Form 10-K. Derivatives Instruments and Hedging Activities – The Company uses derivative financial instruments for hedging and non-trading purposes to manage its exposure to changes in interest and currency exchange rates. In using derivative financial instruments for the purpose of hedging the Company’s exposure to interest and currency exchange rate risks, the contractual terms of a hedged instrument closely mirror those of the hedged item, providing a high degree of risk reduction and correlation. Contracts that are effective at meeting the risk reduction and correlation criteria (effective hedge) are recorded using hedge accounting. If a derivative financial instrument is an effective hedge, changes in the fair value of the instrument will be offset in accumulated other comprehensive income (loss) until the hedged item completes its contractual term. If any portion of the hedge is deemed ineffective, the change in fair value of the hedged assets or liabilities will be immediately recognized in earnings during the period. Instruments that do not meet the criteria for hedge accounting, or contracts for which the Company has not elected hedge accounting, are valued at fair value with unrealized gains or losses reported in earnings during the period of the change. The Company did not change valuation techniques utilized in the fair value measurement of assets and liabilities presented on the Company’s consolidated balance sheets from previous practice during the reporting period. The Company seeks to manage counterparty risk associated with these contracts by limiting transactions to counterparties with which the Company has an established banking relationship. There can be no assurance, however, that this practice effectively mitigates counterparty risk. Cash Flow Instruments. The Company is a party to receive floating interest rate, pay fixed-rate interest rate swaps to hedge the interest rate risk of certain U.S. dollar denominated debt within its international subsidiaries. The swaps are designated as cash flow hedges of interest expense risk. These instruments are considered effective hedges and are recorded using hedge accounting. The Company is also a party to receive variable interest rate, pay fixed interest rate cross-currency interest rate swaps to hedge the interest rate and currency exposure associated with the expected payments of principal and interest of U.S. denominated debt within its international subsidiaries whose functional currency is other than the U.S. dollar. The swaps are designated as cash flow hedges of the currency risk related to payments on the U.S. denominated debt. These instruments are also considered to be effective hedges and are recorded using hedge accounting. Under cash flow hedging, the effective portion of the fair value of the derivative, calculated as the net present value of the future cash flows, is deferred on the consolidated balance sheets in accumulated other comprehensive loss. If any portion of an interest rate swap is determined to be an ineffective hedge, the gains or losses from changes in fair value would be recorded directly in the consolidated statements of income. Amounts recorded in accumulated other comprehensive loss are released to earnings in the same period that the hedged transaction impacts consolidated earnings. See Note 7 - Derivative Instruments and Hedging Activities for information on the fair value of interest rate swaps and cross-currency interest rate swaps as of November 30, 2017 and August 31, 2017 . Fair Value Instruments. The Company is exposed to foreign-currency exchange rate fluctuations in the normal course of business. This includes exposure to foreign-currency exchange rate fluctuations on U.S. dollar denominated liabilities within the Company’s international subsidiaries whose functional currency is other than the U.S. dollar. The Company manages these fluctuations, in part, through the use of non-deliverable forward foreign-exchange contracts that are intended to offset changes in cash flows attributable to currency exchange movements. The contracts are intended primarily to economically address exposure to U.S. dollar merchandise inventory expenditures made by the Company’s international subsidiaries whose functional currency is other than the U.S. dollar. Currently, these contracts are treated for accounting purposes as fair value instruments and do not qualify for derivative hedge accounting, and as such the Company does not apply derivative hedge accounting to record these transactions. As a result, these contracts are valued at fair value with unrealized gains or losses reported in earnings during the period of the change. The Company seeks to mitigate foreign-currency exchange-rate risk with the use of these contracts and does not intend to engage in speculative transactions. These contracts do not contain any credit-risk-related contingent features and are limited to less than one year in duration. See Note 7 - Derivative Instruments and Hedging Activities for information on the fair value of open, unsettled forward foreign-exchange contracts as of November 30, 2017 and August 31, 2017 . Insurance Reimbursements – Receipts from insurance reimbursements up to the amount of the losses recognized are considered recoveries. These recoveries are accounted for when they are probable of receipt. Insurance recoveries are not recognized prior to the recognition of the related cost. Anticipated proceeds in excess of the amount of loss recognized are considered gains and are subject to gain contingency guidance. Anticipated proceeds in excess of a loss recognized in the financial statements are not recognized until all contingencies related to the insurance claim are resolved. Self-Insurance – As of October 1, 2017, PriceSmart, Inc. became self-insured for its employee medical health benefits and in doing so the Company has assumed the financial risk for providing health care benefits to its employees. The Company contracted with Cigna Health and Life Insurance Company (“CHLIC”), a third party administrator, to process claims on its behalf under an Administrative Services Only (ASO) agreement. The Company has elected to purchase “Stop Loss Insurance” to cover the risk in excess of certain dollar limits. The Company establishes an estimated accrual for its insurance program based on available comparable claims data, trends and projected ultimate costs of claims. This accrual is based on estimates prepared with the assistance of outside actuaries and the ultimate cost of these claims may vary from initial estimates and established accrual. The actuaries periodically update their estimates and the Company records such adjustments in the period in which such determination is made. The accrued obligation for this self-insurance program is included in “Accrued salaries and benefits” in the consolidated balance sheets and is $574,000 as of November 30, 2017. Foreign Currency Translation – The assets and liabilities of the Company’s foreign operations are translated to U.S. dollars when the functional currency in the Company’s international subsidiaries is the local currency and not U.S. dollars. Assets and liabilities of these foreign subsidiaries are translated to U.S. dollars at the exchange rate on the balance sheet date, and revenue, costs and expenses are translated at average rates of exchange in effect during the period. The corresponding translation gains and losses are recorded as a component of accumulated other comprehensive income or loss. These adjustments will affect net income upon the sale or liquidation of the underlying investment. Monetary assets and liabilities denominated in currencies other than the functional currency of the respective entity (primarily U.S. dollars) are revalued to the functional currency using the exchange rate on the balance sheet date. These foreign exchange transaction gains (losses), including transactions recorded involving these monetary assets and liabilities, are recorded as Other income (expense) in the consolidated statements of income. The following table summarizes the amounts recorded for the three months ended November 30, 2017 and 2016 (in thousands ): Three Months Ended November 30, November 30, 2017 2016 Currency gain (loss) $ 278 $ (928) Recent Accounting Pronouncements – Not Yet Adopted FASB ASC 815 ASU 2017-12 Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities The FASB has issued Accounting Standards Update (ASU) No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which aims to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The amendments in this ASU are intended to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To satisfy that objective, the amendments expand and refine hedge accounting for both non-financial and financial risk components, and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. Additionally, the amendments (1) permit hedge accounting for risk components in hedging relationships involving non-financial risk and interest rate risk; (2) change the guidance for designating fair value hedges of interest rate risk and for measuring the change in fair value of the hedged item in fair value hedges of interest rate risk; (3) continue to allow an entity to exclude option premiums and forward points from the assessment of hedge effectiveness; and (4) permit an entity to exclude the portion of the change in fair value of a currency swap that is attributable to a cross-currency basis spread from the assessment of hedge effectiveness. The amendments in this ASU are effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods. The Company will evaluate the impact adoption of this guidance may have on the Company’s consolidated financial statements. FASB ASC 715 ASU 2017-09 - Compensation—Stock Compensation (Topic 718)—Scope of Modification Accounting The FASB has issued Accounting Standards Update (ASU) No. 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, which seeks to provide clarity, reduce diversity in practice, and reduce cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation, regarding a change to the terms or conditions of a share-based payment award. This ASU provides guidance concerning which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. Specifically, an entity is to account for the effects of a modification, unless all of the following are satisfied: (1) the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified; (2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (3) the classification of the modified award as an equity instrument or as a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments in this ASU are effective for annual periods beginning after December 15, 2017 and interim periods within those annual periods. Early adoption is permitted. The Company will evaluate the impact adoption of this guidance may have on the Company’s consolidated financial statements. FASB ASC 715 ASU 2017-07- Compensation—Retirement Benefits (Topic 715) — Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost In March 201 7, the FASB issued ASU No. 2017-07, Compensation—Retirement Benefits (Topic 715) — Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU i s designed to improve guidance related to the presentation of defined benefit costs in the income statement. In particular, ASU 2017-07 requires that an employer report the service cost component in the same line item(s) as other compensation costs arising from services rendered by the pertinent employees during the period. The amendments in this ASU are effective for annual periods beginning after December 15, 2017 and interim periods within those annual periods. Early adoption is permitted. The Company will evaluate the impact adoption of this guidance may have on the Company’s consolidated financial statements. FASB ASC 350 ASU 2017-04- Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In January 201 7, the FASB issued Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies the manner in which an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Under the amendments in this ASU, an entity should (1) perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and (2) recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, with the understanding that the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, ASU 2017-04 requires any reporting unit with a zero or negative carrying amount to perform Step 2 of the goodwill impairment test. The amendments in this ASU are effective for annual periods beginning after December 15, 2019. The Company will evaluate the impact adoption of this guidance may have on the Company’s consolidated financial statements. FASB ASC 740 ASU 2016-16- Income Taxes (Topic 740)—Intra-Entity Transfers of Assets Other Than Inventory In October 201 6, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740)—Intra-Entity Transfers of Assets Other Than Inventory. Currently, U.S. GAAP prohibits recognizing current and deferred income tax consequences for an intra-entity asset transfer until the asset has been sold to an outside party. ASU 2016-16 states that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments in this ASU are effective for annual periods beginning after December 15, 2017 and interim periods within those annual periods. Early adoption is permitted. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company will evaluate the impact adoption of this guidance may have on the Company’s consolidated financial statements. FASB ASC 230 ASU 2016-15- Statement of Cash Flows (Topic 230)—Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB Emerging Issues Task Force) In August 201 6, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU addresses stakeholders’ concerns regarding diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and Other Topics. In particular, ASU No. 2016-15 addresses eight specific cash flow issues in an effort to reduce this diversity in practice: (1) debt prepayment or debt extinguishment costs; (2) settlement of zero-coupon bonds; (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests in securi |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Nov. 30, 2017 | |
EARNINGS PER SHARE | NOTE 3 – EARNINGS PER SHARE The Company presents basic net income per share using the two-class method. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders and that determines basic net income per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings that would have been available to common stockholders. A participating security is defined as a security that may participate in undistributed earnings with common stock. The Company’s capital structure includes securities that participate with common stock on a one-for-one basis for distribution of dividends. These are the restricted stock awards and restricted stock units issued pursuant to the 2013 Equity Incentive Award Plan. The Company determines the diluted net income per share by using the more dilutive of the two class-method or the treasury stock method and by including the basic weighted average of outstanding stock options in the calculation of diluted net income per share under the two-class method and including all potential common shares assumed issued in the calculation of diluted net income per share under the treasury stock method. The following table sets forth the computation of net income per share for the three months ended November 30, 2017 and 2016 (in thousands , except per share amounts): Three Months Ended November 30, November 30, 2017 2016 Net income $ 22,490 $ 24,869 Less: Allocation of income to unvested stockholders (300) (420) Net earnings available to common stockholders $ 22,190 $ 24,449 Basic weighted average shares outstanding 30,078 29,982 Add dilutive effect of stock options (two-class method) 1 5 Diluted average shares outstanding 30,079 29,987 Basic net income per share $ 0.74 $ 0.82 Diluted net income per share $ 0.74 $ 0.82 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Nov. 30, 2017 | |
STOCKHOLDERS' EQUITY | NOTE 4 – STOCKHOLDERS’ EQUITY Dividends No dividends were declared by the Company’s Board of Directors during the first three months of fiscal year 2018. The following table summarizes the dividends declared and paid during fiscal year 2017. First Payment Second Payment Declared Amount Record Date Date Paid Date Payable Amount Record Date Date Paid Date Payable Amount 2/1/2017 $ 0.70 2/15/2017 2/28/2017 N/A $ 0.35 8/15/2017 N/A 8/31/2017 $ 0.35 The Company anticipates the ongoing payment of semi-annual dividends in subsequent periods, although the actual declaration of future dividends, the amount of such dividends, and the establishment of record and payment dates is subject to final determination by the Board of Directors at its discretion after its review of the Company’s financial performance and anticipated capital requirements. Com prehensive Income and Accumulated Other Comprehensive Loss The following tables disclose the effects of each component of other comprehensive income (loss), net of tax (in thousands ): Three Months Ended November 30, 2017 Foreign currency translation adjustments Defined benefit pension plans Derivative Instruments Total Beginning balance, September 1, 2017 $ (108,539) $ (442) $ (1,078) $ (110,059) Other comprehensive income (loss) (2,026) 30 587 (1) (1,409) Ending balance, November 30, 2017 $ (110,565) $ (412) $ (491) $ (111,468) Three Months Ended November 30, 2016 Foreign currency translation adjustments Defined benefit pension plans Derivative Instruments Total Beginning balance, September 1, 2016 $ (102,242) $ (315) $ (1,394) $ (103,951) Other comprehensive income (loss) (10,866) (7) 492 (1) (10,381) Ending balance, November 30, 2016 $ (113,108) $ (322) $ (902) $ (114,332) Twelve Months Ended August 31, 2017 Foreign currency translation adjustments Defined benefit pension plans Derivative Instruments Total Beginning balance, September 1, 2016 $ (102,242) $ (315) $ (1,394) $ (103,951) Other comprehensive income (loss) (6,297) (166) 316 (1) (6,147) Amounts reclassified from accumulated other comprehensive income (loss) — 39 (2) — 39 Ending balance, August 31, 2017 $ (108,539) $ (442) $ (1,078) $ (110,059) (1) See Note 7 - Derivative Instruments and Hedging Activities. (2) Amounts reclassified from accumulated other comprehensive income (loss) related to the minimum pension liability are included in warehouse club operations in the Company's Consolidated Statements of Income. Retained Earnings Not Available for Distribution The following table summarizes retained earnings designated as legal reserves of various subsidiaries which cannot be distributed as dividends to PriceSmart, Inc. according to applicable statutory regulations (in thousands): November 30, August 31, 2017 2017 Retained earnings not available for distribution $ 6,557 $ 6,459 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Nov. 30, 2017 | |
COMMITMENTS AND CONTINGENCIES | NOTE 5 – COMMITMENTS AND CONTINGENCIES Legal Proceedings From time to time, the Company and its subsidiaries are subject to legal proceedings, claims and litigation arising in the ordinary course of business related to the Company’s operations and property ownership. The Company evaluates such matters on a case by case basis, and vigorously contests any such legal proceedings or claims which the Company believes are without merit. The Company establishes an accrual for legal proceedings if and when those matters reach a stage where they present loss contingencies that are both probable and reasonably estimable. In such cases, there may be a possible exposure to loss in excess of any amounts accrued. The Company monitors those matters for developments that would affect the likelihood of a loss and the accrued amount, if any, thereof, and adjusts the amount as appropriate. If the loss contingency at issue is not both probable and reasonably estimable, the Company does not establish an accrual, but will continue to monitor the matter for developments that will make the loss contingency both probable and reasonably estimable. If it is at least a reasonable possibility that a material loss will occur, the Company will provide disclosure regarding the contingency. The Company believes that the final disposition of the pending legal proceedings, claims and litigation will not have a material adverse effect on its financial position, results of operations or liquidity. It is possible, however, that the Company's results of operations for a particular quarter or fiscal year could be impacted by changes in circumstances relating to such matters. Taxes Income Taxes – The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carry-forwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized. The Company is required to file federal and state tax returns in the United States and various other tax returns in foreign jurisdictions. The preparation of these tax returns requires the Company to interpret the applicable tax laws and regulations in effect in such jurisdictions, which could affect the amount of tax paid by the Company. The Company, in consultation with its tax advisors, bases its tax returns on interpretations that are believed to be reasonable under the circumstances. The tax returns, however, are subject to routine reviews by the various taxing authorities in the jurisdictions in which the Company files its returns. As part of these reviews, a taxing authority may disagree with respect to the interpretations the Company used to calculate its tax liability and therefore require the Company to pay additional taxes. The Company accrues an amount for its estimate of probable additional income tax liability. In certain cases, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than 50% likelihood of being sustained. There were no material changes in the Company's uncertain income tax positions as of November 30, 2017 and August 31, 2017. In evaluating the exposure associated with various non-income tax filing positions, the Company accrues for probable and estimable exposures for non-income tax related tax contingencies. As of November 30, 2017 and August 31, 2017, the Company has recorded within other accrued expenses a total of $3.2 million and $3.4 million , respectively, for various non-income tax related tax contingencies. While the Company believes the recorded liabilities are adequate, there are inherent limitations in projecting the outcome of litigation, in estimating probable additional income tax liability taking into account uncertain tax positions and in evaluating the probable additional tax associated with various non-income tax filing positions. As such, the Company is unable to make a reasonable estimate of the sensitivity to change of estimates affecting its recorded liabilities. As additional information becomes available, the Company assesses the potential liability and revises its estimates as appropriate. The Company has various appeals pending before tax courts in its subsidiaries' jurisdictions. Any possible settlement could increase or decrease earnings but is not expected to be significant. Audit outcomes and the timing of audit settlements are subject to significant uncertainty. One of the Company’s subsidiaries received assessments claiming $2.7 million of taxes, penalties and interest related to withholding taxes on certain charges for services rendered by the Company. In addition, this subsidiary received assessments totaling $5.5 million for lack of deductibility of the underlying service charges due to the lack of withholding. Based on a review of the Company's tax advisers' interpretation of local law, rulings and jurisprudence (including Supreme Court precedents with respect to the deductibility assessment), the Company expects to prevail in both instances and has not recorded a provision for these assessments. However, the Company had to submit these amounts as advance payments to the government while it appeals. In another country in which the Company has warehouse clubs, beginning in fiscal year 2015, a new minimum income tax mechanism took effect, which requires the Company to pay taxes based on a percentage of sales rather than income. As a result, the Company is making income tax payments substantially in excess of those it would expect to pay based on taxable income. The current rules (which the Company has challenged in court) do not clearly allow the Company to obtain a refund or to offset this excess income tax against other taxes. As of November 30, 2017 and August 31, 2017, the Company had deferred tax assets of approximately $2.0 million in this country. Also, the Company had an income tax receivable ba lance of $5.3 million and $4.3 million as of November 30, 2017 and August 31, 2017, respectively, related to excess payments from fiscal years 2015 and 2017. The Company has not placed any type of allowance on the recoverability of these tax receivables or deferred tax assets, because the Company believes that it is more likely than not that it will succeed in its refund request and/or court challenge on this matter. The Company has not provided for U.S. deferred taxes on cumulative non-U.S. undistributed earnings as such earnings are deemed by the Company to be indefinitely reinvested. Subsequent to the passage of new US tax legislation described in Note 9 – Subsequent Events, the Company is in the process of calculating the amount of taxes that will be due on these non-U.S. undistributed earnings . Other Commitments The Company is committed under non-cancelable operating leases for the rental of facilities and land. Future minimum lease commitments for facilities under these leases with an initial term in excess of one year are as follows (in thousands): Open Years ended November 30, Locations (1) 2018 $ 12,113 2019 11,715 2020 10,795 2021 9,339 2022 9,027 Thereafter 113,822 Total $ 166,811 (2) (1) Operating lease obligations have been reduced by approximately $883,000 to reflect sub-lease income. Certain obligations under leasing arrangements are collateralized by the underlying asset being leased. (2) Future minimum lease payments include $3.0 million of lease payment obligations for the prior leased Miami distribution center. For the purposes of calculating the minimum lease payments, no reduction was considered for the potential sub-lease income the Company could receive during the remaining lease term. This potential sub-lease income was considered, however, for the purposes of calculating the exit obligation of $50,000 recorded on the balance sheet as of November 30, 2017. Projected income for any executed sub-leases would be used to reduce the amount reported as minimum lease payments. In January 2017, the Company purchased a distribution center in Medley, Miami-Dade County, Florida. The Company transferred its Miami dry distribution center activities that were previously in the leased facility to the new facility during the third quarter of fiscal year 2017. Some portions of the vacated previously leased space were subleased (and subsequently returned to the landlord) while the remainder remains available for sublease. As part of the subleases the Company was required to execute and deliver to the landlord of the leased facility a letter of credit (“LOC”) in the amount of $500,000 which entitles the landlord to draw on the LOC based on a decreasing scale over four years, if certain conditions occur related to nonpayment by the new tenant. Although this agreement is considered a guarantee, in measuring the fair value, the Company considers the risk and probability of default by the third party tenant as not likely nor probable, based on the Company’s review of the third party tenant’s financial position as well as the third party’s considerable capital investment into the leased facility. Therefore, the Company has not recorded a liability for this guarantee. The Company is also committed to non-cancelable construction services obligations for various warehouse club developments and expansions. As of November 30, 2017 and August 31, 2017, the Company had approximately $3.2 million and $7.9 million , respectively, in contractual obligations for construction services not yet rendered. The Company has entered into land purchase option agreements that have not been recorded as commitments, for which the Company has recorded within restricted cash and deposits as of November 30, 2017 and August 31, 2017 approximately $600,000 . The land purchase option agreements can be canceled at the sole option of the Company, with the deposits being fully refundable until all permits are issued. The Company does not have a timetable of when or if it will exercise these land purchase options, due to the uncertainty related to the completion of the Company's due diligence reviews. The Company's due diligence reviews include evaluations of the legal status of each property, the zoning and permitting issues related to acquiring approval for the construction and operation of a warehouse club and any other issues related to the property itself that could render the property unsuitable or limit the property's economic viability as a warehouse club site. If the purchase option agreements are exercised, the cash use would be approximately $20.8 million . The table below summarizes the Company’s interest in real estate joint ventures, commitments to additional future investments and the Company’s maximum exposure to loss as a result of its involvement in these joint venture as of November 30, 2017 (in thousands): Entity % Ownership Initial Investment Additional Investments Net (Loss)/Income Inception to Date Company’s Variable Interest in Entity Commitment to Future Additional Investments (1) Company's Maximum Exposure to Loss in Entity (2) GolfPark Plaza, S.A. 50 % $ 4,616 $ 2,402 $ 301 $ 7,319 $ 99 $ 7,418 Price Plaza Alajuela, S.A. 50 % 2,193 1,236 33 3,462 785 4,247 Total $ 6,809 $ 3,638 $ 334 $ 10,781 $ 884 $ 11,665 (1) The parties intend to seek alternate financing for the project, which could reduce the amount of investments each party would be required to provide. The parties may mutually agree on changes to the project, which could increase or decrease the amount of contributions each party is required to provide. (2) The maximum exposure is determined by adding the Company’s variable interest in the entity and any explicit or implicit arrangements that could require the Company to provide additional financial support. The Company contracts for distribution center services in Mexico. The contract for this distribution center's services expires on August 31, 2020 , with the applicable fees and rates to be reviewed at the beginning of each calendar year. Future minimum service commitments related to this contract through the end of the contract term are approximately $442,000 . The Company contracts for off-site data recovery services as part of its disaster recovery plan. The contract for these data recovery services expires on November 30, 2019. Future minimum service commitments related to this contract are approximately $372,000 for each of the 12-month periods ending November 30, 2018 and 2019. |
DEBT
DEBT | 3 Months Ended |
Nov. 30, 2017 | |
DEBT | NOTE 6 – DEBT Short-term borrowings consist of lines of credit that are secured by certain assets of the Company and its subsidiaries, which, in some cases, are guaranteed by the Company. The following table summarizes the balances of total facilities, facilities used and facilities available (in thousands ): Facilities Used Total Amount Short-term Letters of Facilities Weighted average of Facilities Borrowings Credit Available interest rate November 30, 2017 $ 69,000 $ 2,483 $ 562 $ 65,955 4.3 % August 31, 2017 $ 69,000 $ — $ 966 $ 68,034 — % As of November 30, 2017 and August 31, 2017 , the Company had approximately $40.0 million of short-term facilities in the U.S. that require compliance with certain quarterly financial covenants. As of November 30, 2017 and August 31, 2017, the Company was in compliance with respect to these covenants. E ach of the facilities expires annually and is normally renewed. The following table provides the changes in long-term debt for the three months ended November 30, 2017 : (Amounts in thousands) Current portion of long-term debt Long-term debt (net of current portion) Total Balances as of August 31, 2017 $ 18,358 $ 87,939 $ 106,297 (1) Repayments of long-term debt — (3,000) (3,000) Regularly scheduled loan payments (225) (4,554) (4,779) Translation adjustments on foreign-currency debt of subsidiaries whose functional currency is not the U.S. dollar (2) 124 (45) 79 Balances as of November 30, 2017 $ 18,257 $ 80,340 $ 98,597 (3) (1) The carrying amount o f non-cash assets assigned as collateral for th ese loans was $128.4 million . No cash assets were assigned as collateral for th ese loans . (2) These foreign currency translation adjustments are recorded within Other comprehensive income. (3) The carrying amount o f non-cash assets assigned as collateral for th ese loans was $121.0 million . No cash assets were assigned as collateral for th ese loans . In August 2017, the Company’s Panama subsidiary paid off the outstanding principal balance of U.S. $13.3 million on a loan agreement entered into with Scotiabank. The Company’s subsidiary also settled the interest rate swap that it had entered into with Scotiabank related to this loan. On March 31, 2017 , the Company's Trinidad subsidiary entered into a loan agreement with Citibank, N.A. The agreement provides for a $12.0 million loan to be repaid in eight quarterly principal payments plus interest. The interest rate is set at the 90 day LIBOR rate plus 3% . The loan was funded on March 31, 2017. In January 2017, the Company finalized its acquisition of a distribution center in Medley, Miami-Dade County, Florida for a total purchase price of approximately $46.0 million. The Company transferred its Miami distribution center activities previously located in leased facilities to the new distribution center during the third quarter of fiscal year 2017. To finance the acquisition of this property, the Company entered into a 10 -year real estate secured loan with MUFG Union Bank, N.A. (“Union Bank”) for $35.7 million in January 2017. This loan has a variable interest rate of 30 -day LIBOR plus 1.7% , with monthly principal and interest payments maturing in 2027 . The monthly principal and interest payments begin in April 2019. The Company also entered into an interest rate hedge with Union Bank for $35.7 million, the notional amount. Under the hedge, the Company will receive variable interest equal to 30 -day LIBOR plus 1.7% and pay fixed interest at a rate of 3.65% , with an effective date of March 1, 2017 and maturity date of March 1, 2027 . As of November 30, 2017 , the Company had approximately $82.8 million of long-term loans in the U.S., Trinidad, Panama, El Salvador, Honduras, Costa Rica, Barbados and Colombia that require these subsidiaries to comply with certain annual or quarterly financial covenants, which include debt service and leverage ratios. As of November 30, 2017 , the Company was in compliance with all covenants or amended covenants. As of August 31, 2017 , the Company had approximately $85.6 million of long-term loans in Trinidad, Panama, El Salvador, Honduras, Costa Rica, Barbados, and Colombia that require these subsidiaries to comply with certain annual or quarterly financial covenants, which include debt service and leverage ratios. As of August 31, 2017 , the Company was in compliance with all covenants or amended covenants. Annual maturities of long-term debt are as follows (in thousands): Twelve Months Ended November 30, Amount 2018 $ 18,257 2019 19,437 2020 21,438 2021 5,805 2022 2,634 Thereafter 31,026 Total $ 98,597 |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 3 Months Ended |
Nov. 30, 2017 | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | NOTE 7 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company is exposed to interest rate risk relating to its ongoing business operations. To manage interest rate exposure, the Company enters into hedge transactions (interest rate swaps) using derivative financial instruments. The objective of entering into interest rate swaps is to eliminate the variability of cash flows in the LIBOR interest payments associated with variable-rate loans over the life of the loans. As changes in interest rates impact the future cash flow of interest payments, the hedges provide a synthetic offset to interest rate movements. In addition, the Company is exposed to foreign currency and interest rate cash flow exposure related to non-functional currency long-term debt of three of its wholly owned subsidiaries. To manage this foreign currency and interest rate cash flow exposure, the Company’s subsidiaries entered into cross-currency interest rate swaps that convert their U.S. dollar denominated floating interest payments to functional currency fixed interest payments during the life of the hedging instrument. As changes in foreign exchange and interest rates impact the future cash flow of interest payments, the hedges are intended to offset changes in cash flows attributable to interest rate and foreign exchange movements. These derivative instruments (cash flow hedging instruments) are designated and qualify as cash flow hedges, with the effective portion of the gain or loss on the derivative reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction is determined to be ineffective. There were no such amounts recorded for ineffectiveness for the periods reported herein related to the interest rate or cross-currency interest rate swaps of long-term debt. The Company is exposed to foreign-currency exchange-rate fluctuations in the normal course of business, including foreign-currency exchange-rate fluctuations on U.S. dollar denominated liabilities within its international subsidiaries whose functional currency is other than the U.S. dollar. The Company manages these fluctuations, in part, through the use of non-deliverable forward foreign-exchange contracts that are intended to offset changes in cash flow attributable to currency exchange movements. These contracts are intended primarily to economically address exposure to U.S. dollar merchandise inventory expenditures made by the Company’s international subsidiaries whose functional currency is other than the U.S. dollar. Currently, these contracts do not qualify for derivative hedge accounting. The Company seeks to mitigate foreign-currency exchange-rate risk with the use of these contracts and does not intend to engage in speculative transactions. These contracts do not contain any credit-risk-related contingent features. Cash Flow Hedges As of November 30, 2017 , all of the Company’s interest rate swap and cross-currency interest rate swap derivative financial instruments are designated and qualify as cash flow hedges. The Company formally documents the hedging relationships for its derivative instruments that qualify for hedge accounting. The following table summarizes agreements for which the Company has recorded cash flow hedge accounting for the three months ended November 30, 2017 : Subsidiary Date Entered into Derivative Financial Counter- party Derivative Financial Instruments Initial US$ Notional Amount Bank US$ loan Held with Floating Leg (swap counter-party) Fixed Rate for PSMT Subsidiary Settlement Dates Effective Period of swap PriceSmart, Inc (1) 7-Nov-16 MUFG Union Bank, N.A. ("Union Bank") Interest rate swap $ 35,700,000 Union Bank Variable rate 1-month Libor plus 1.7% 3.65 % 1st day of each month beginning on April 1, 2017 March 1, 2017 - March 1, 2027 Costa Rica 28-Aug-15 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 7,500,000 Citibank, N.A. Variable rate 3-month Libor plus 2.50% 7.65 % 28th day of August, November, February, and May beginning on November 30, 2015 August 28, 2015 - August 28, 2020 Honduras 24-Mar-15 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 8,500,000 Citibank, N.A. Variable rate 3-month Libor plus 3.25% 10.75 % 24th day of March, June, September, and December beginning on June 24, 2015 March 24,2015 - March 20, 2020 El Salvador 16-Dec-14 Bank of Nova Scotia ("Scotiabank") Interest rate swap $ 4,000,000 Bank of Nova Scotia Variable rate 30-day Libor plus 3.5% 4.78 % 29th day of each month beginning on December 29, 2014 December 1, 2014 - August 29, 2019 Colombia 10-Dec-14 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 15,000,000 Citibank, N.A. Variable rate 3-month Libor plus 2.8% 8.25 % 4th day of March, June, Sept, Dec. beginning on March 4, 2015 December 4, 2014 - December 3, 2019 Panama 9-Dec-14 Bank of Nova Scotia ("Scotiabank") Interest rate swap $ 10,000,000 Bank of Nova Scotia Variable rate 30-day Libor plus 3.5% 5.16 % 28th day of each month beginning December 29, 2014 November 28, 2014 - November 29, 2019 Honduras 23-Oct-14 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 5,000,000 Citibank, N.A. Variable rate 3-month Libor plus 3.5% 11.6 % 22nd day of January, April, July, and October beginning on January 22, 2015 Settled on October 22, 2017 Panama 1-Aug-14 Bank of Nova Scotia ("Scotiabank") Interest rate swap $ 5,000,000 Bank of Nova Scotia Variable rate 30-day Libor plus 3.5% 4.89 % 21st day of each month beginning on September 22, 2014 August 21, 2014 - August 21, 2019 Panama 22-May-14 Bank of Nova Scotia ("Scotiabank") Interest rate swap $ 3,970,000 Bank of Nova Scotia Variable rate 30-day Libor plus 3.5% 4.98 % 4th day of each month beginning on June 4, 2014 May 5, 2014 - April 4, 2019 (1) The initial notional amount and fixed rate were modified effective January 201 7. For the three months ended November 30, 2017 and 2016, the Company included the gain or loss on the hedged items (that is, variable-rate borrowings) in the same line item—interest expense—as the offsetting gain or loss on the related interest rate swaps as follows (in thousands ): Income Statement Classification Interest expense on borrowings (1) Cost of swaps (2) Total Interest expense for the three months ended November 30, 2017 $ 849 $ 322 $ 1,171 Interest expense for the three months ended November 30, 2016 $ 750 $ 423 $ 1,173 (1) This amount is representative of the interest expense recognized on the underlying hedged transactions. (2) This amount is representative of the interest expense recognized on the cross-currency interest rate swaps designated as cash flow hedging instruments. The total notional balance of the Company’s pay-fixed/receive-variable interest rate swaps and cross-currency interest rate swaps was as follows (in thousands ): Notional Amount as of November 30, August 31, Floating Rate Payer (Swap Counterparty) 2017 2017 Union Bank $ 35,700 $ 35,700 Citibank N.A. 25,063 26,088 Scotiabank 12,924 13,724 Total $ 73,687 $ 75,512 Derivatives listed on the table below were designated as cash flow hedging instruments. The table summarizes the effect of the fair value of interest rate swap and cross-currency interest rate swap derivative instruments that qualify for derivative hedge accounting and its associated tax effect on accumulated other comprehensive (income)/loss (in thousands ): November 30, 2017 August 31, 2017 Derivatives designated as cash flow hedging instruments Balance Sheet Location Fair Value Net Tax Effect Net OCI Fair Value Net Tax Effect Net OCI Cross-currency interest rate swaps Other non-current assets $ 2,514 (938) 1,576 $ 2,547 $ (950) $ 1,597 Interest rate swaps Other non-current assets 764 (272) 492 — — — Interest rate swaps Other long-term liabilities (4) (3) (7) (231) 80 (151) Cross-currency interest rate swaps Other long-term liabilities (342) 114 (228) (451) 135 (316) Net fair value of derivatives designated as hedging instruments $ 2,932 $ (1,099) $ 1,833 $ 1,865 $ (735) $ 1,130 Fair Value Instruments The Company has entered into non-deliverable forward foreign-exchange contracts. These contracts are treated for accounting purposes as fair value contracts and do not qualify for derivative hedge accounting. The use of non-deliverable forward foreign-exchange contracts is intended to offset changes in cash flow attributable to currency exchange movements. These contracts are intended primarily to economically hedge exposure to U.S. dollar merchandise inventory expenditures made by the Company’s international subsidiaries whose functional currency is other than the U.S. dollar. The following table summarizes the non-deliverable forward foreign exchange contracts that are open as of November 30, 2017: Subsidiary Dates entered into Financial Derivative (Counterparty) Derivative Financial Instrument Notional Amount (in thousands) Settlement Date Effective Period of Forward Colombia Oct-17 Citibank, N.A. Forward foreign exchange contracts (USD) 1,000 Dec-17 October 13, 2017 - December 6, 2017 Colombia Oct-17 Citibank, N.A. Forward foreign exchange contracts (USD) 1,000 Dec-17 October 17, 2017 - December 13, 2017 Colombia Oct-17 Citibank, N.A. Forward foreign exchange contracts (USD) 1,000 Dec-17 October 18, 2017 - December 20, 2017 Colombia Oct-17 Citibank, N.A. Forward foreign exchange contracts (USD) 1,000 Dec-17 October 19, 2017 - December 27, 2017 For the three months ended November 30, 2017 , the Company included in its consolidated statements of income the forward derivative gain or (loss) on the non-deliverable forward foreign-exchange contracts as follows (in thousands ): Three Months Ended November 30, November 30, Income Statement Classification 2017 2016 Other income (expense), net $ 93 $ 219 The following table summarizes the fair value of foreign currency forward contracts that do not qualify for derivative hedge accounting (in thousands ): November 30, 2017 August 31, 2017 Non-deliverable forward foreign exchange contracts Balance Sheet Location Fair Value Balance Sheet Location Fair Value Foreign currency forward contracts Other current assets $ 71 Other current assets $ — Foreign currency forward contracts Other accrued expenses — Other accrued expenses — Net fair value of non-deliverable forward foreign exchange contracts designated as hedging instruments that do not qualify for hedge accounting (1) $ 71 $ — (1) The fair value of these financial assets and liabilities measured and recorded using Level 2 inputs, which are inputs other than quoted prices in active markets that are either directly or indirectly observable. |
SEGMENTS
SEGMENTS | 3 Months Ended |
Nov. 30, 2017 | |
SEGMENTS | NOTE 8 – SEGMENTS The Company and its subsidiaries are principally engaged in the international operation of membership shopping in 40 warehouse clubs located in 13 countries/territories that are located in Central America, the Caribbean and Colombia. In addition, the Company operates distribution centers and corporate offices in the United States. The Company has aggregated its warehouse clubs, distribution centers and corporate offices into reportable segments. The Company’s reportable segments are based on management’s organization of these locations into operating segments by general geographic location, used by management and the Company's chief operating decision maker in setting up management lines of responsibility, providing support services, and making operational decisions and assessments of financial performance. Segment amounts are presented after converting to U.S. dollars and consolidating eliminations. Certain revenues, operating costs and inter-company charges included in the United States segment are not allocated to the segments within this presentation, as it is impractical to do so, and they appear as reconciling items to reflect the amount eliminated on consolidation of intersegment transactions. From time to time, the Company revises the measurement of each segment's operating income and net income, including certain corporate overhead allocations, and other measures as determined by the information regularly reviewed by the Company's chief operating decision maker. When the Company does so, the previous period amounts and balances are reclassified to conform to the current period's presentation. The following tables summarize by segment certain revenues, operating costs and balance sheet items (in thousands): United States Operations Central American Operations Caribbean Operations Colombia Operations Reconciling Items (1) Total Three Months Ended November 30, 2017 Revenue from external customers $ 8,147 $ 452,166 $ 214,642 $ 92,117 $ — $ 767,072 Intersegment revenues 340,128 — 1,207 198 (341,533) — Depreciation and amortization 1,744 5,523 2,677 2,293 — 12,237 Operating income 3,739 31,942 11,470 2,145 (16,130) 33,166 Net income (loss) 82 26,796 10,317 1,425 (16,130) 22,490 Capital expenditures, net 1,004 11,370 10,297 832 — 23,503 Long-lived assets (other than deferred tax assets) 70,352 304,434 130,896 121,629 — 627,311 Goodwill — 31,014 4,564 — — 35,578 Total assets 121,674 580,523 334,279 186,352 — 1,222,828 Three Months Ended November 30, 2016 Revenue from external customers $ 10,755 $ 438,234 $ 207,022 $ 83,561 $ — $ 739,572 Intersegment revenues 317,662 — 1,698 10 (319,370) — Depreciation and amortization 1,574 4,864 2,458 2,221 — 11,117 Operating income 7,597 33,504 12,214 913 (15,849) 38,379 Net income 3,658 26,227 10,861 (28) (15,849) 24,869 Capital expenditures, net 2,337 10,756 4,438 473 — 18,004 Long-lived assets (other than deferred tax assets) 20,372 278,721 110,939 125,589 — 535,621 Goodwill — 31,072 4,531 — — 35,603 Total assets 70,283 542,238 321,235 184,114 — 1,117,870 As of August 31, 2017 Long-lived assets (other than deferred tax assets) $ 70,353 $ 296,915 $ 122,616 $ 126,206 $ — $ 616,090 Goodwill — 31,118 4,524 — — 35,642 Total assets 147,650 544,683 303,234 181,947 — 1,177,514 (1) The reconciling items reflect the amount eliminated on consolidation of intersegment transactions. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Nov. 30, 2017 | |
SUBSEQUENT EVENTS | NOTE 9 – SUBSEQUENT EVENTS The Company has evaluated all events subsequent to the balance sheet date of November 30, 2017 through the date of issuance of these consolidated financial statements and has determined that, except as set forth below, there are no subsequent events that require disclosure. Non-deliverable forward foreign-exchange contracts The Company has entered into forward exchange contracts during December 2017 for approximately $5.0 million with settlement date s during January 2018 . New tax legislation In December 2017, the United States approved new legislation that significantly modifies current tax legislation. The Company is currently assessing the impact of this recent legislation; however, the most significant changes to the Company are: · a reduction in the U.S. corporate tax rate from 35.0% to 21.0% starting in January 2018. This will likely result in a one-time non-cash expense to be booked in the second quarter of fiscal year 2018 to reduce the value of certain deferred tax assets. On an ongoing basis, it will likely result in a favorable impact on the Company’s overall effective tax rate. However, substantially all of the Company’s revenue are from foreign sources, much of which attracts foreign withholding taxes. In the past, the Company has generally been able to recover all of the foreign tax credits generated by these withholdings as an offset to U.S. taxes payable. However, the Company currently estimates that foreign tax credits will be higher than 21% of U.S. taxable income and lower than 35%. Therefore, the Company expects to benefit from the reduction of tax rates, but not to the full extent of the rate reduction, as excess foreign tax credits will have to be expensed; and · a one-time tax on accumulated foreig n profits, which will likely result in a tax expense being recorded for the full amount in the second quarter of fiscal 2018, while the payment will be spread over eight years. However, from a cash perspective, the Company expects to be able to offset some of this charge by foreign tax credits accumulated prior to January 1, 2018. |
SUMMARY OF SIGNIFICANT ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policy) | 3 Months Ended |
Nov. 30, 2017 | |
Principles of Consolidation | Principles of Consolidation – The interim consolidated financial statements of the Company included herein include the assets, liabilities and results of operations of the Company’s wholly owned subsidiaries and the Company's investment in, and the Company's share of the income (loss) of, joint ventures recorded under the equity method. All significant inter-company accounts and transactions have been eliminated in consolidation. The interim consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the SEC and reflect all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary to fairly present the financial position, results of operations and cash flows for the periods presented. The results for interim periods are not necessarily indicative of the results for the full year. As of November 30, 2017 , all of the Company's subsidiaries were wholly owned. Additionally, the Company's ownership interest in real estate development joint ventures as of November 30, 2017 is listed below: Real Estate Development Joint Ventures Countries Ownership Basis of Presentation GolfPark Plaza, S.A. Panama 50.0 % Equity (1) Price Plaza Alajuela PPA, S.A. Costa Rica 50.0 % Equity (1) (1) Joint venture interests are recorded as investment in unconsolidated affiliates on the consolidated balance sheets. The Company determines whether any of the joint ventures in which it has made investments is a Variable Interest Entity (“VIE”) at the start of each new venture and if a reconsideration event has occurred. At this time, the Company also considers whether it must consolidate a VIE and/or disclose information about its involvement in a VIE. A reporting entity must consolidate a VIE if that reporting entity has a variable interest (or combination of variable interests) that will absorb a majority of the VIE's expected losses, receive a majority of the VIE's expected residual returns, or both. A reporting entity must consider the rights and obligations conveyed by its variable interests and the relationship of its variable interests with variable interests held by other parties to determine whether its variable interests will absorb a majority of a VIE's expected losses, receive a majority of the VIE's expected residual returns, or both. The reporting entity that consolidates a VIE is called the primary beneficiary of that VIE. Due to the initial nature of the joint ventures and the continued commitments for additional financing, the Company determined these joint ventures are VIEs. Since all rights, obligations and the power to direct the activities of a VIE that most significantly impact the VIE's economic performance is shared equally by both parties within each joint venture, the Company has determined that it is not the primary beneficiary of the VIEs and, therefore, has accounted for these entities under the equity method. Under the equity method, the Company's investments in unconsolidated affiliates are initially recorded as an investment in the stock of an investee at cost and are adjusted for the carrying amount of the investment to recognize the investor's share of the earnings or losses of the investee after the date of the initial investment. |
Use of Estimates | Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Tax Receivables | Tax Receivables – The Company pays Value Added Tax (“VAT”) or similar taxes (“input VAT”), income taxes, and other taxes within the normal course of its business in most of the countries in which it operates related to the procurement of merchandise and/or services it acquires and/or on sales and taxable income. The Company also collects VAT or similar taxes on behalf of the government (“output VAT”) for merchandise and/or services it sells. If the output VAT exceeds the input VAT, then the difference is remitted to the government, usually on a monthly basis. If the input VAT exceeds the output VAT, this creates a VAT receivable. In most countries where the Company operates, the governments have implemented additional collection procedures, such as requiring credit and debit card processors to remit a portion of sales processed via credit and debit card directly to the government as advance payments of VAT and/or income tax. In the case of VAT, these procedures alter the natural offset of input and output VAT and generally leave the Company with a net VAT receivable, forcing the Company to process significant refund claims on a recurring basis. With respect to income taxes paid, if the estimated income taxes paid or withheld exceed the actual income tax due, this creates an income tax receivable. The Company either requests a refund of these tax receivables or applies the balance to expected future tax payments. These refund or offset processes can take anywhere from several months to several years to complete. In most countries where the Company operates, the tax refund process is defined and structured with regular refunds or offsets. However, as of November 30, 2017, in one country the government has alleged there is not a clearly defined process to allow the tax authorities to refund VAT receivables. As of August 31, 2016, there were three countries that lacked a clearly defined process; however, during the third and fourth quarters of fiscal year 2017, two of these countries clarified the refund mechanism, which we are currently pursuing. The Company, together with its tax and legal advisers, is currently seeking clarification in court in the remaining country without a clearly defined process and expects to prevail. The balance of the VAT receivable in the country with undefined refund mechanisms was approximately $2.2 million and $1.2 million as of November 30, 2017 and August 31, 2017, respectively. In another country in which the Company operates warehouse clubs, a new minimum income tax mechanism took effect in fiscal year 2015, which requires the Company to pay taxes based on a percentage of sales rather than income. As a result, the Company is making income tax payments substantially in excess of those it would expect to pay based on taxable income. The current rules (which the Company has challenged in court) do not clearly allow the Company to obtain a refund or to offset this excess income tax against other taxes. As of November 30, 2017 and August 31, 2017, the Company had deferred tax assets of approximately $2.0 million in this country. Also, the Company had an income tax receivable balance of $5.3 million and $4.3 million as of November 30, 2017 and August 31, 2017, respectively, related to excess payments from fiscal years 2015 to 2017. The Company has not placed any type of allowance on the recoverability of these tax receivables or deferred tax assets because the Company believes that it is more likely than not that it will ultimately succeed in its refund requests, related appeals and/or court challenge on this matter. The Company's policy for classification and presentation of VAT receivables, income tax receivables and other tax receivables is as follows: · Short-term VAT and Income tax receivables, recorded as Other current assets: This classification is used for any countries where the Company's subsidiary has generally demonstrated the ability to recover the VAT or income tax receivable within one year. The Company also classifies as short-term any approved refunds or credit notes to the extent that the Company expects to receive the refund or use the credit notes within one year. · Long -term VAT and Income tax receivables, recorded as Other non-current assets: This classification is used for amounts not approved for refund or credit in countries where the Company's subsidiary has not demonstrated the ability to obtain refunds within one year and/or for amounts which are subject to outstanding disputes. An allowance is provided against VAT and income tax receivable balances in dispute when the Company does not expect to eventually prevail in its recovery. The Company does not currently have any allowances provided against VAT and income tax receivables. The following table summarizes the VAT receivables reported by the Company (in thousands ): November 30, August 31, 2017 2017 Prepaid expenses and other current assets $ 9,998 $ 6,650 Other non-current assets 22,954 24,904 Total amount of VAT receivables reported $ 32,952 $ 31,554 The following table summarizes the Income tax receivables reported by the Company (in thousands ): November 30, August 31, 2017 2017 Prepaid expenses and other current assets $ 6,910 $ 6,403 Other non-current assets 13,494 10,492 Total amount of Income tax receivables reported $ 20,404 $ 16,895 |
Merchandise Inventories | Merchandise Inventories – Merchandise inventories, which include merchandise for resale, are valued at the lower of cost (average cost) or net realizable value . The Company provides for estimated inventory losses and obsolescence between physical inventory counts on the basis of a percentage of sales. The provision is adjusted periodically to reflect the trend of actual physical inventory count results, with physical inventories occurring primarily in the second and fourth fiscal quarters. In addition, the Company may be required to take markdowns below the carrying cost of certain inventory to expedite the sale of such merchandise. |
Stock Based Compensation | Stock Based Compensation – The Company utilizes three types of equity awards: stock options (“options”), restricted stock awards (“RSAs”) and restricted stock units (“RSUs”). The Company ado pted ASU 2016-09 – Compensation - Stock Compensation (Topic 718) on September 1, 2017, see Note 1 – Company Overview and Basis of Presentation for more information on the implementation. Compensation related to options is accounted for by applying the valuation technique based on the Black-Scholes model. Compensation related to RSAs and RSUs is based on the fair market value at the time of grant. The Company recognizes the compensation cost related to these awards over the requisite service period as determined by the grant, amortized ratably or on a straight line basis over the life of the grant. As a result of adoption of ASU 2016-09, t he Company currently accounts for actual forfeitures as they occur . The Company records the tax savings resulting from tax deductions in excess of expense for stock-based compensation and the tax deficiency resulting from stock-based compensation in excess of the related tax deduction as income tax expense or benefit, bas ed on ASU 2016-09. In addition, the Company reflects the tax savings (deficiency) resulting from the taxation of stock-based compensation as a n operating cash flow in its consolidated statement of cash flows . RSAs have the same cash dividend and voting rights as other common stock and are considered to be currently issued and outstanding shares of common stock. Shares of common stock subject to RSUs are not issued nor outstanding until vested, and RSUs do not have the same dividend and voting rights as common stock. However, all outstanding RSUs have accompanying dividend equivalents, requiring payment to the employees and directors with unvested RSUs of amounts equal to the dividend they would have received had the shares of common stock underlying the RSUs been actually issued and outstanding. Payments of dividend equivalents to employees are recorded as compensation expense. |
Exit or Disposal Cost Obligations | Exit or Disposal Cost Obligations – In January 2017, the Company purchased a distribution center in Medley, Miami-Dade County, Florida. The Company transferred its Miami dry distribution center activities that were previously in a leased facility to the new facility during the third quarter of fiscal year 2017. As part of this transaction, the Company has recorded an exit obligation related to the lease of the previous distribution center. The obligation consists of the costs associated with the exit or disposal activity measured initially at its fair value as of May 1, 2017, the date on which the obligation was incurred. These costs are primarily comprised of the costs to terminate the operating lease and other associated costs, including costs to consolidate or close facilities, net of any potential sub-lease income the Company could receive during the remaining lease term. In periods subsequent to initial measurement, changes to the exit obligation, including any changes resulting from a revision to either the timing or the amount of estimated cash flows over the remaining lease period, is measured using the credit-adjusted risk-free rate that was used to measure the initial obligation. During the third quarter of fiscal year 2017, the Company initially recorded an obligation related to this exit activity for approximately $496,000 within other long-term liabilities. The Company’s exit obligation recorded as of August 31, 2017 was approximately $57,000 . The Company’s exit obligation recorded as of November 30, 2017 was approximately $50,000 . Exit costs of approximately $1.4 million were recorded to net warehouse club cost of goods sold for the twelve months ended August 31, 2017. Exit costs of approximately $338,000 were recorded to net warehouse club cost of goods sold for the three months ended November 30, 2017. |
Fair Value Measurements | Fair Value Measurements – The Company measures the fair value for all financial and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring or nonrecurring basis. The fair value of an asset is the price at which the asset could be sold in an orderly transaction between unrelated, knowledgeable and willing parties able to engage in the transaction. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor in a transaction between such parties, not the amount that would be paid to settle the liability with the creditor. The Company has established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring and revaluing fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company was not required to revalue any assets or liabilities utilizing Level 1 or Level 3 inputs at the balance sheet dates. The Company's Level 2 assets and liabilities revalued at the balance sheet dates, on a recurring basis, consisted of cash flow hedges (interest rate swaps and cross-currency interest rate swaps) and forward foreign exchange contracts. In addition, the Company utilizes Level 2 inputs in determining the fair value of long-term debt. The Company did not make any significant transfers in and out of Level 1 and Level 2 fair value tiers during the periods reported on herein. Non-financial assets and liabilities are revalued and recognized at fair value subsequent to initial recognition when there is evidence of impairment. For the periods reported, no impairment of such non-financial assets was recorded. The Company’s current and long-term financial assets and liabilities have fair values that approximate their carrying values. The Company’s long-term financial liabilities consist of long-term debt, which is recorded on the balance sheet at issuance price and adjusted for any applicable unamortized discounts or premiums and debt issuance costs. There have been no significant changes in fair market value of the Company’s current and long-term financial assets, and there have been no material changes to the valuation techniques utilized in the fair value measurement of assets and liabilities as disclosed in the Company’s 2017 Form 10-K. |
Derivative Instruments and Hedging Activities | Derivatives Instruments and Hedging Activities – The Company uses derivative financial instruments for hedging and non-trading purposes to manage its exposure to changes in interest and currency exchange rates. In using derivative financial instruments for the purpose of hedging the Company’s exposure to interest and currency exchange rate risks, the contractual terms of a hedged instrument closely mirror those of the hedged item, providing a high degree of risk reduction and correlation. Contracts that are effective at meeting the risk reduction and correlation criteria (effective hedge) are recorded using hedge accounting. If a derivative financial instrument is an effective hedge, changes in the fair value of the instrument will be offset in accumulated other comprehensive income (loss) until the hedged item completes its contractual term. If any portion of the hedge is deemed ineffective, the change in fair value of the hedged assets or liabilities will be immediately recognized in earnings during the period. Instruments that do not meet the criteria for hedge accounting, or contracts for which the Company has not elected hedge accounting, are valued at fair value with unrealized gains or losses reported in earnings during the period of the change. The Company did not change valuation techniques utilized in the fair value measurement of assets and liabilities presented on the Company’s consolidated balance sheets from previous practice during the reporting period. The Company seeks to manage counterparty risk associated with these contracts by limiting transactions to counterparties with which the Company has an established banking relationship. There can be no assurance, however, that this practice effectively mitigates counterparty risk. Cash Flow Instruments. The Company is a party to receive floating interest rate, pay fixed-rate interest rate swaps to hedge the interest rate risk of certain U.S. dollar denominated debt within its international subsidiaries. The swaps are designated as cash flow hedges of interest expense risk. These instruments are considered effective hedges and are recorded using hedge accounting. The Company is also a party to receive variable interest rate, pay fixed interest rate cross-currency interest rate swaps to hedge the interest rate and currency exposure associated with the expected payments of principal and interest of U.S. denominated debt within its international subsidiaries whose functional currency is other than the U.S. dollar. The swaps are designated as cash flow hedges of the currency risk related to payments on the U.S. denominated debt. These instruments are also considered to be effective hedges and are recorded using hedge accounting. Under cash flow hedging, the effective portion of the fair value of the derivative, calculated as the net present value of the future cash flows, is deferred on the consolidated balance sheets in accumulated other comprehensive loss. If any portion of an interest rate swap is determined to be an ineffective hedge, the gains or losses from changes in fair value would be recorded directly in the consolidated statements of income. Amounts recorded in accumulated other comprehensive loss are released to earnings in the same period that the hedged transaction impacts consolidated earnings. See Note 7 - Derivative Instruments and Hedging Activities for information on the fair value of interest rate swaps and cross-currency interest rate swaps as of November 30, 2017 and August 31, 2017 . Fair Value Instruments. The Company is exposed to foreign-currency exchange rate fluctuations in the normal course of business. This includes exposure to foreign-currency exchange rate fluctuations on U.S. dollar denominated liabilities within the Company’s international subsidiaries whose functional currency is other than the U.S. dollar. The Company manages these fluctuations, in part, through the use of non-deliverable forward foreign-exchange contracts that are intended to offset changes in cash flows attributable to currency exchange movements. The contracts are intended primarily to economically address exposure to U.S. dollar merchandise inventory expenditures made by the Company’s international subsidiaries whose functional currency is other than the U.S. dollar. Currently, these contracts are treated for accounting purposes as fair value instruments and do not qualify for derivative hedge accounting, and as such the Company does not apply derivative hedge accounting to record these transactions. As a result, these contracts are valued at fair value with unrealized gains or losses reported in earnings during the period of the change. The Company seeks to mitigate foreign-currency exchange-rate risk with the use of these contracts and does not intend to engage in speculative transactions. These contracts do not contain any credit-risk-related contingent features and are limited to less than one year in duration. See Note 7 - Derivative Instruments and Hedging Activities for information on the fair value of open, unsettled forward foreign-exchange contracts as of November 30, 2017 and August 31, 2017 . |
Insurance Reimbursements | Insurance Reimbursements – Receipts from insurance reimbursements up to the amount of the losses recognized are considered recoveries. These recoveries are accounted for when they are probable of receipt. Insurance recoveries are not recognized prior to the recognition of the related cost. Anticipated proceeds in excess of the amount of loss recognized are considered gains and are subject to gain contingency guidance. Anticipated proceeds in excess of a loss recognized in the financial statements are not recognized until all contingencies related to the insurance claim are resolved. |
Self-Insurance | Self-Insurance – As of October 1, 2017, PriceSmart, Inc. became self-insured for its employee medical health benefits and in doing so the Company has assumed the financial risk for providing health care benefits to its employees. The Company contracted with Cigna Health and Life Insurance Company (“CHLIC”), a third party administrator, to process claims on its behalf under an Administrative Services Only (ASO) agreement. The Company has elected to purchase “Stop Loss Insurance” to cover the risk in excess of certain dollar limits. The Company establishes an estimated accrual for its insurance program based on available comparable claims data, trends and projected ultimate costs of claims. This accrual is based on estimates prepared with the assistance of outside actuaries and the ultimate cost of these claims may vary from initial estimates and established accrual. The actuaries periodically update their estimates and the Company records such adjustments in the period in which such determination is made. The accrued obligation for this self-insurance program is included in “Accrued salaries and benefits” in the consolidated balance sheets and is $574,000 as of November 30, 2017. |
Foreign Currency Translation | Foreign Currency Translation – The assets and liabilities of the Company’s foreign operations are translated to U.S. dollars when the functional currency in the Company’s international subsidiaries is the local currency and not U.S. dollars. Assets and liabilities of these foreign subsidiaries are translated to U.S. dollars at the exchange rate on the balance sheet date, and revenue, costs and expenses are translated at average rates of exchange in effect during the period. The corresponding translation gains and losses are recorded as a component of accumulated other comprehensive income or loss. These adjustments will affect net income upon the sale or liquidation of the underlying investment. Monetary assets and liabilities denominated in currencies other than the functional currency of the respective entity (primarily U.S. dollars) are revalued to the functional currency using the exchange rate on the balance sheet date. These foreign exchange transaction gains (losses), including transactions recorded involving these monetary assets and liabilities, are recorded as Other income (expense) in the consolidated statements of income. The following table summarizes the amounts recorded for the three months ended November 30, 2017 and 2016 (in thousands ): Three Months Ended November 30, November 30, 2017 2016 Currency gain (loss) $ 278 $ (928) |
Recent Accounting Pronouncements - Not Yet Adopted | Recent Accounting Pronouncements – Not Yet Adopted FASB ASC 815 ASU 2017-12 Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities The FASB has issued Accounting Standards Update (ASU) No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which aims to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The amendments in this ASU are intended to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To satisfy that objective, the amendments expand and refine hedge accounting for both non-financial and financial risk components, and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. Additionally, the amendments (1) permit hedge accounting for risk components in hedging relationships involving non-financial risk and interest rate risk; (2) change the guidance for designating fair value hedges of interest rate risk and for measuring the change in fair value of the hedged item in fair value hedges of interest rate risk; (3) continue to allow an entity to exclude option premiums and forward points from the assessment of hedge effectiveness; and (4) permit an entity to exclude the portion of the change in fair value of a currency swap that is attributable to a cross-currency basis spread from the assessment of hedge effectiveness. The amendments in this ASU are effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods. The Company will evaluate the impact adoption of this guidance may have on the Company’s consolidated financial statements. FASB ASC 715 ASU 2017-09 - Compensation—Stock Compensation (Topic 718)—Scope of Modification Accounting The FASB has issued Accounting Standards Update (ASU) No. 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, which seeks to provide clarity, reduce diversity in practice, and reduce cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation, regarding a change to the terms or conditions of a share-based payment award. This ASU provides guidance concerning which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. Specifically, an entity is to account for the effects of a modification, unless all of the following are satisfied: (1) the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified; (2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (3) the classification of the modified award as an equity instrument or as a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments in this ASU are effective for annual periods beginning after December 15, 2017 and interim periods within those annual periods. Early adoption is permitted. The Company will evaluate the impact adoption of this guidance may have on the Company’s consolidated financial statements. FASB ASC 715 ASU 2017-07- Compensation—Retirement Benefits (Topic 715) — Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost In March 201 7, the FASB issued ASU No. 2017-07, Compensation—Retirement Benefits (Topic 715) — Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU i s designed to improve guidance related to the presentation of defined benefit costs in the income statement. In particular, ASU 2017-07 requires that an employer report the service cost component in the same line item(s) as other compensation costs arising from services rendered by the pertinent employees during the period. The amendments in this ASU are effective for annual periods beginning after December 15, 2017 and interim periods within those annual periods. Early adoption is permitted. The Company will evaluate the impact adoption of this guidance may have on the Company’s consolidated financial statements. FASB ASC 350 ASU 2017-04- Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In January 201 7, the FASB issued Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies the manner in which an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Under the amendments in this ASU, an entity should (1) perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and (2) recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, with the understanding that the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, ASU 2017-04 requires any reporting unit with a zero or negative carrying amount to perform Step 2 of the goodwill impairment test. The amendments in this ASU are effective for annual periods beginning after December 15, 2019. The Company will evaluate the impact adoption of this guidance may have on the Company’s consolidated financial statements. FASB ASC 740 ASU 2016-16- Income Taxes (Topic 740)—Intra-Entity Transfers of Assets Other Than Inventory In October 201 6, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740)—Intra-Entity Transfers of Assets Other Than Inventory. Currently, U.S. GAAP prohibits recognizing current and deferred income tax consequences for an intra-entity asset transfer until the asset has been sold to an outside party. ASU 2016-16 states that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments in this ASU are effective for annual periods beginning after December 15, 2017 and interim periods within those annual periods. Early adoption is permitted. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company will evaluate the impact adoption of this guidance may have on the Company’s consolidated financial statements. FASB ASC 230 ASU 2016-15- Statement of Cash Flows (Topic 230)—Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB Emerging Issues Task Force) In August 201 6, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU addresses stakeholders’ concerns regarding diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and Other Topics. In particular, ASU No. 2016-15 addresses eight specific cash flow issues in an effort to reduce this diversity in practice: (1) debt prepayment or debt extinguishment costs; (2) settlement of zero-coupon bonds; (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions; and (8) separately identifiable cash flows and application of the predominance principle. The amendments in this ASU are effective for annual periods beginning after December 15, 2017 and interim periods within those annual periods. Early adoption is permitted. The amendments in this ASU should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company will evaluate the impact adoption of this guidance may have on the Company's consolidated financial statements. FASB ASC 842 ASU 2016-02 -Leases (Topic 842): Amendments to the FASB Accounting Standards Codification In February 201 6, the FASB issued guidance codified in ASC 842, Leases , which supersedes the guidance in ASC 840, Leases . ASC 842 will be effective for the Company on September 1, 2019, and the Company expects to apply the transition practical expedients allowed by the standard. Note 11 – “Leases” provides details on the Company’s current lease arrangements. While the Company continues to evaluate the provisions of ASC 842 to determine how it will be affected, the primary effect will be to require recording right-of-use assets and corresponding lease obligations for current operating leases. The Company expects the adoption of this guidance to have a material impact on the Company's consolidated balance sheets, but not on the consolidated statements of income or cash flows. FASB ASC 606 ASU 2014-09 - Revenue from Contracts with Customers In May 201 4, the Financial Accounting Standards Board (FASB) issued new guidance on the recognition of revenue from contracts with customers. The guidance combines the requirements for reporting revenue and requires disclosures sufficient to describe the nature, amount, timing, and uncertainty of revenue and cash flows arising from these contracts. Transition is permitted either retrospectively or as a cumulative effect adjustment as of the date of adoption. The new standard is effective for fiscal years and interim periods within those years beginning after December 15, 2017. The Company plans to adopt this guidance at the beginning of its first quarter of fiscal year 2019. The Company is evaluating the impact of adoption of this guidance on all potentially significant revenue transactions that will be impacted by the new standard on the Company's consolidated financial statements and related disclosures as a result of adopting this standard. |
Recent Accounting Pronouncements Adopted | Recent Accounting Pronouncements Adopted FASB ASC 718 ASU 2016-09 - Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting In March 201 6, the FASB issued new guidance on stock compensation intended to simplify accounting for share-based payment transactions. The guidance will change accounting for income taxes, forfeitures, and minimum statutory tax withholding requirements. The new standard is effective for fiscal years and interim periods within those years beginning after December 15, 2016, with early adoption permitted. The Company adopted this guidance on September 1, 2017. · The Company determined that the adoption of this guidance did not have a material effect on the result of operations and the calculation of earnings per share. The Company has used the two-step method for the diluted net income per share calculation over the last several years. · The adoption of this guidance and the amendments related to the presentation of employee taxes paid on the statement of cash flows did not have a material effect on the consolidated statements of cash flows. · The adoption of this guidance and the amendments related to the timing of when excess tax benefits are recognized, the effect of minimum statutory withholding requirements, forfeitures, and intrinsic value and the adoption of this methodology using the modified retrospective transition method resulted in the Company electing to eliminate the recording of the forfeiture rate on the expense recorded. The elimination of the forfeiture rate required recording a cumulative-effect adjustment by increasing retained earnings and reducing Additional Paid in Capital, at the beginning of the year of adoption, which was September 1, 2017, for the service periods already incurred for unvested shares . FASB ASC 330 ASU 2015-11 -Inventory (Topic 330): Simplifying the Measurement of Inventory In July 201 5, the FASB issued guidance that will require an entity to measure in-scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This amendment applies to entities, like the Company, that measure inventory value using the average cost method. The amendments in this ASU more closely align the measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards. The amendment in this ASU is effective on a prospective basis for public entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company adopted this guidance on September 1, 2017. Adoption of this guidance did not have a material effect on the Company's consolidated financial statements. FASB ASC 230 ASU 2016-18- Statement of Cash Flows (Topic 230)—Restricted Cash In November 201 6, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230)—Restricted Cash. This ASU addresses the diversity in practice that exists regarding the classification and the presentation of changes in restricted cash on the statement of cash flows. The amendments in ASU No. 2016-18 require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Thus, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and the end-of-period total amounts set forth on the statement of cash flows. The amendments in this ASU are effective for annual periods beginning after December 15, 2017 and interim periods within those fiscal years and will be applied using a retrospective transition method to each period presented. The Company early adopted this ASU as of August 31, 2017. The adoption of this ASU impacted the presentation of cash flows with inclusion of restricted cash flows for each of the presented periods. |
COMPANY OVERVIEW AND BASIS OF18
COMPANY OVERVIEW AND BASIS OF PRESENTATION (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Schedule of Error Corrections and Prior Period Adjustments | August 31, 2017 balance sheet line item as previously reported Amount reclassified August 31, 2017 balance sheet line item as currently reported Retained earnings $ 420,499 $ 367 $ 420,866 Additional paid-in capital $ 422,762 $ (367) $ 422,395 |
SUMMARY OF SIGNIFICANT ACCOUN19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Schedule of Real Estate Development Joint Ventures | Real Estate Development Joint Ventures Countries Ownership Basis of Presentation GolfPark Plaza, S.A. Panama 50.0 % Equity (1) Price Plaza Alajuela PPA, S.A. Costa Rica 50.0 % Equity (1) (1) Joint venture interests are recorded as investment in unconsolidated affiliates on the consolidated balance sheets. |
Summary of Value Added Tax Receivables | November 30, August 31, 2017 2017 Prepaid expenses and other current assets $ 9,998 $ 6,650 Other non-current assets 22,954 24,904 Total amount of VAT receivables reported $ 32,952 $ 31,554 |
Summary of Income Tax Receivables | November 30, August 31, 2017 2017 Prepaid expenses and other current assets $ 6,910 $ 6,403 Other non-current assets 13,494 10,492 Total amount of Income tax receivables reported $ 20,404 $ 16,895 |
Summary of Foreign Currency Gains and Losses | Three Months Ended November 30, November 30, 2017 2016 Currency gain (loss) $ 278 $ (928) |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Schedule of the Computation of Net Income Per Share | Three Months Ended November 30, November 30, 2017 2016 Net income $ 22,490 $ 24,869 Less: Allocation of income to unvested stockholders (300) (420) Net earnings available to common stockholders $ 22,190 $ 24,449 Basic weighted average shares outstanding 30,078 29,982 Add dilutive effect of stock options (two-class method) 1 5 Diluted average shares outstanding 30,079 29,987 Basic net income per share $ 0.74 $ 0.82 Diluted net income per share $ 0.74 $ 0.82 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Schedule of Dividends | First Payment Second Payment Declared Amount Record Date Date Paid Date Payable Amount Record Date Date Paid Date Payable Amount 2/1/2017 $ 0.70 2/15/2017 2/28/2017 N/A $ 0.35 8/15/2017 N/A 8/31/2017 $ 0.35 |
Schedule of Components of Other Comprehensive Income (Loss) | Three Months Ended November 30, 2017 Foreign currency translation adjustments Defined benefit pension plans Derivative Instruments Total Beginning balance, September 1, 2017 $ (108,539) $ (442) $ (1,078) $ (110,059) Other comprehensive income (loss) (2,026) 30 587 (1) (1,409) Ending balance, November 30, 2017 $ (110,565) $ (412) $ (491) $ (111,468) Three Months Ended November 30, 2016 Foreign currency translation adjustments Defined benefit pension plans Derivative Instruments Total Beginning balance, September 1, 2016 $ (102,242) $ (315) $ (1,394) $ (103,951) Other comprehensive income (loss) (10,866) (7) 492 (1) (10,381) Ending balance, November 30, 2016 $ (113,108) $ (322) $ (902) $ (114,332) Twelve Months Ended August 31, 2017 Foreign currency translation adjustments Defined benefit pension plans Derivative Instruments Total Beginning balance, September 1, 2016 $ (102,242) $ (315) $ (1,394) $ (103,951) Other comprehensive income (loss) (6,297) (166) 316 (1) (6,147) Amounts reclassified from accumulated other comprehensive income (loss) — 39 (2) — 39 Ending balance, August 31, 2017 $ (108,539) $ (442) $ (1,078) $ (110,059) (1) See Note 7 - Derivative Instruments and Hedging Activities. (2) Amounts reclassified from accumulated other comprehensive income (loss) related to the minimum pension liability are included in warehouse club operations in the Company's Consolidated Statements of Income. |
Summary of Retained Earnings Not Available for Distribution | November 30, August 31, 2017 2017 Retained earnings not available for distribution $ 6,557 $ 6,459 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Schedule of Future Minimum Lease Commitments | Open Years ended November 30, Locations (1) 2018 $ 12,113 2019 11,715 2020 10,795 2021 9,339 2022 9,027 Thereafter 113,822 Total $ 166,811 (2) (1) Operating lease obligations have been reduced by approximately $883,000 to reflect sub-lease income. Certain obligations under leasing arrangements are collateralized by the underlying asset being leased. (2) Future minimum lease payments include $3.0 million of lease payment obligations for the prior leased Miami distribution center. For the purposes of calculating the minimum lease payments, no reduction was considered for the potential sub-lease income the Company could receive during the remaining lease term. This potential sub-lease income was considered, however, for the purposes of calculating the exit obligation of $50,000 recorded on the balance sheet as of November 30, 2017. Projected income for any executed sub-leases would be used to reduce the amount reported as minimum lease payments. |
Schedule of Variable Interest Entities Maximum Loss Exposure | Entity % Ownership Initial Investment Additional Investments Net (Loss)/Income Inception to Date Company’s Variable Interest in Entity Commitment to Future Additional Investments (1) Company's Maximum Exposure to Loss in Entity (2) GolfPark Plaza, S.A. 50 % $ 4,616 $ 2,402 $ 301 $ 7,319 $ 99 $ 7,418 Price Plaza Alajuela, S.A. 50 % 2,193 1,236 33 3,462 785 4,247 Total $ 6,809 $ 3,638 $ 334 $ 10,781 $ 884 $ 11,665 (1) The parties intend to seek alternate financing for the project, which could reduce the amount of investments each party would be required to provide. The parties may mutually agree on changes to the project, which could increase or decrease the amount of contributions each party is required to provide. (2) The maximum exposure is determined by adding the Company’s variable interest in the entity and any explicit or implicit arrangements that could require the Company to provide additional financial support. |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Schedule of Short-Term Borrowings | Facilities Used Total Amount Short-term Letters of Facilities Weighted average of Facilities Borrowings Credit Available interest rate November 30, 2017 $ 69,000 $ 2,483 $ 562 $ 65,955 4.3 % August 31, 2017 $ 69,000 $ — $ 966 $ 68,034 — % |
Summary of Changes in Long-Term Debt | (Amounts in thousands) Current portion of long-term debt Long-term debt (net of current portion) Total Balances as of August 31, 2017 $ 18,358 $ 87,939 $ 106,297 (1) Repayments of long-term debt — (3,000) (3,000) Regularly scheduled loan payments (225) (4,554) (4,779) Translation adjustments on foreign-currency debt of subsidiaries whose functional currency is not the U.S. dollar (2) 124 (45) 79 Balances as of November 30, 2017 $ 18,257 $ 80,340 $ 98,597 (3) (1) The carrying amount o f non-cash assets assigned as collateral for th ese loans was $128.4 million . No cash assets were assigned as collateral for th ese loans . (2) These foreign currency translation adjustments are recorded within Other comprehensive income. (3) The carrying amount o f non-cash assets assigned as collateral for th ese loans was $121.0 million . No cash assets were assigned as collateral for th ese loans . |
Schedule of Annual Maturities of Long-Term Debt | Twelve Months Ended November 30, Amount 2018 $ 18,257 2019 19,437 2020 21,438 2021 5,805 2022 2,634 Thereafter 31,026 Total $ 98,597 |
DERIVATIVE INSTRUMENTS AND HE24
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Cash Flow Hedging [Member] | |
Derivative [Line Items] | |
Schedule of Interest Rate Derivatives | Subsidiary Date Entered into Derivative Financial Counter- party Derivative Financial Instruments Initial US$ Notional Amount Bank US$ loan Held with Floating Leg (swap counter-party) Fixed Rate for PSMT Subsidiary Settlement Dates Effective Period of swap PriceSmart, Inc (1) 7-Nov-16 MUFG Union Bank, N.A. ("Union Bank") Interest rate swap $ 35,700,000 Union Bank Variable rate 1-month Libor plus 1.7% 3.65 % 1st day of each month beginning on April 1, 2017 March 1, 2017 - March 1, 2027 Costa Rica 28-Aug-15 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 7,500,000 Citibank, N.A. Variable rate 3-month Libor plus 2.50% 7.65 % 28th day of August, November, February, and May beginning on November 30, 2015 August 28, 2015 - August 28, 2020 Honduras 24-Mar-15 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 8,500,000 Citibank, N.A. Variable rate 3-month Libor plus 3.25% 10.75 % 24th day of March, June, September, and December beginning on June 24, 2015 March 24,2015 - March 20, 2020 El Salvador 16-Dec-14 Bank of Nova Scotia ("Scotiabank") Interest rate swap $ 4,000,000 Bank of Nova Scotia Variable rate 30-day Libor plus 3.5% 4.78 % 29th day of each month beginning on December 29, 2014 December 1, 2014 - August 29, 2019 Colombia 10-Dec-14 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 15,000,000 Citibank, N.A. Variable rate 3-month Libor plus 2.8% 8.25 % 4th day of March, June, Sept, Dec. beginning on March 4, 2015 December 4, 2014 - December 3, 2019 Panama 9-Dec-14 Bank of Nova Scotia ("Scotiabank") Interest rate swap $ 10,000,000 Bank of Nova Scotia Variable rate 30-day Libor plus 3.5% 5.16 % 28th day of each month beginning December 29, 2014 November 28, 2014 - November 29, 2019 Honduras 23-Oct-14 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 5,000,000 Citibank, N.A. Variable rate 3-month Libor plus 3.5% 11.6 % 22nd day of January, April, July, and October beginning on January 22, 2015 Settled on October 22, 2017 Panama 1-Aug-14 Bank of Nova Scotia ("Scotiabank") Interest rate swap $ 5,000,000 Bank of Nova Scotia Variable rate 30-day Libor plus 3.5% 4.89 % 21st day of each month beginning on September 22, 2014 August 21, 2014 - August 21, 2019 Panama 22-May-14 Bank of Nova Scotia ("Scotiabank") Interest rate swap $ 3,970,000 Bank of Nova Scotia Variable rate 30-day Libor plus 3.5% 4.98 % 4th day of each month beginning on June 4, 2014 May 5, 2014 - April 4, 2019 (1) The initial notional amount and fixed rate were modified effective January 201 7. |
Fair Value Hedging [Member] | |
Derivative [Line Items] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | November 30, 2017 August 31, 2017 Non-deliverable forward foreign exchange contracts Balance Sheet Location Fair Value Balance Sheet Location Fair Value Foreign currency forward contracts Other current assets $ 71 Other current assets $ — Foreign currency forward contracts Other accrued expenses — Other accrued expenses — Net fair value of non-deliverable forward foreign exchange contracts designated as hedging instruments that do not qualify for hedge accounting (1) $ 71 $ — (1) The fair value of these financial assets and liabilities measured and recorded using Level 2 inputs, which are inputs other than quoted prices in active markets that are either directly or indirectly observable. |
Derivative Swaps [Member] | Cash Flow Hedging [Member] | |
Derivative [Line Items] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | November 30, 2017 August 31, 2017 Derivatives designated as cash flow hedging instruments Balance Sheet Location Fair Value Net Tax Effect Net OCI Fair Value Net Tax Effect Net OCI Cross-currency interest rate swaps Other non-current assets $ 2,514 (938) 1,576 $ 2,547 $ (950) $ 1,597 Interest rate swaps Other non-current assets 764 (272) 492 — — — Interest rate swaps Other long-term liabilities (4) (3) (7) (231) 80 (151) Cross-currency interest rate swaps Other long-term liabilities (342) 114 (228) (451) 135 (316) Net fair value of derivatives designated as hedging instruments $ 2,932 $ (1,099) $ 1,833 $ 1,865 $ (735) $ 1,130 |
Derivative Swaps [Member] | Cash Flow Hedging [Member] | Interest Expense [Member] | |
Derivative [Line Items] | |
Schedule of Cash Flow Hedging Instruments, Statements of Financial Performance and Financial Position, Location | Income Statement Classification Interest expense on borrowings (1) Cost of swaps (2) Total Interest expense for the three months ended November 30, 2017 $ 849 $ 322 $ 1,171 Interest expense for the three months ended November 30, 2016 $ 750 $ 423 $ 1,173 (1) This amount is representative of the interest expense recognized on the underlying hedged transactions. (2) This amount is representative of the interest expense recognized on the cross-currency interest rate swaps designated as cash flow hedging instruments. |
Interest Rate Swap [Member] | Cash Flow Hedging [Member] | |
Derivative [Line Items] | |
Schedule of Notional Amounts of Outstanding Derivative Positions | Notional Amount as of November 30, August 31, Floating Rate Payer (Swap Counterparty) 2017 2017 Union Bank $ 35,700 $ 35,700 Citibank N.A. 25,063 26,088 Scotiabank 12,924 13,724 Total $ 73,687 $ 75,512 |
Forward Foreign Exchange Contract 1 [Member] | Fair Value Hedging [Member] | |
Derivative [Line Items] | |
Schedule of Notional Amounts of Outstanding Derivative Positions | Subsidiary Dates entered into Financial Derivative (Counterparty) Derivative Financial Instrument Notional Amount (in thousands) Settlement Date Effective Period of Forward Colombia Oct-17 Citibank, N.A. Forward foreign exchange contracts (USD) 1,000 Dec-17 October 13, 2017 - December 6, 2017 Colombia Oct-17 Citibank, N.A. Forward foreign exchange contracts (USD) 1,000 Dec-17 October 17, 2017 - December 13, 2017 Colombia Oct-17 Citibank, N.A. Forward foreign exchange contracts (USD) 1,000 Dec-17 October 18, 2017 - December 20, 2017 Colombia Oct-17 Citibank, N.A. Forward foreign exchange contracts (USD) 1,000 Dec-17 October 19, 2017 - December 27, 2017 |
Forward Foreign Exchange Contract 1 [Member] | Fair Value Hedging [Member] | Other Income (Expense) [Member] | |
Derivative [Line Items] | |
Schedule of Cash Flow Hedging Instruments, Statements of Financial Performance and Financial Position, Location | Three Months Ended November 30, November 30, Income Statement Classification 2017 2016 Other income (expense), net $ 93 $ 219 |
SEGMENTS (Tables)
SEGMENTS (Tables) | 3 Months Ended |
Nov. 30, 2017 | |
Summary of Segment Revenues, Operating Costs and Balance Sheet Items | United States Operations Central American Operations Caribbean Operations Colombia Operations Reconciling Items (1) Total Three Months Ended November 30, 2017 Revenue from external customers $ 8,147 $ 452,166 $ 214,642 $ 92,117 $ — $ 767,072 Intersegment revenues 340,128 — 1,207 198 (341,533) — Depreciation and amortization 1,744 5,523 2,677 2,293 — 12,237 Operating income 3,739 31,942 11,470 2,145 (16,130) 33,166 Net income (loss) 82 26,796 10,317 1,425 (16,130) 22,490 Capital expenditures, net 1,004 11,370 10,297 832 — 23,503 Long-lived assets (other than deferred tax assets) 70,352 304,434 130,896 121,629 — 627,311 Goodwill — 31,014 4,564 — — 35,578 Total assets 121,674 580,523 334,279 186,352 — 1,222,828 Three Months Ended November 30, 2016 Revenue from external customers $ 10,755 $ 438,234 $ 207,022 $ 83,561 $ — $ 739,572 Intersegment revenues 317,662 — 1,698 10 (319,370) — Depreciation and amortization 1,574 4,864 2,458 2,221 — 11,117 Operating income 7,597 33,504 12,214 913 (15,849) 38,379 Net income 3,658 26,227 10,861 (28) (15,849) 24,869 Capital expenditures, net 2,337 10,756 4,438 473 — 18,004 Long-lived assets (other than deferred tax assets) 20,372 278,721 110,939 125,589 — 535,621 Goodwill — 31,072 4,531 — — 35,603 Total assets 70,283 542,238 321,235 184,114 — 1,117,870 As of August 31, 2017 Long-lived assets (other than deferred tax assets) $ 70,353 $ 296,915 $ 122,616 $ 126,206 $ — $ 616,090 Goodwill — 31,118 4,524 — — 35,642 Total assets 147,650 544,683 303,234 181,947 — 1,177,514 (1) The reconciling items reflect the amount eliminated on consolidation of intersegment transactions. |
COMPANY OVERVIEW AND BASIS OF26
COMPANY OVERVIEW AND BASIS OF PRESENTATION (Narrative) (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Jun. 30, 2017warehouse | Nov. 30, 2017USD ($)countrywarehouse | Oct. 31, 2017warehouse | Aug. 31, 2017USD ($) | |
Company Overview And Basis Of Presentation [Line Items] | ||||
Number of stores | 40 | |||
Number of countries | country | 13 | |||
Additional paid-in capital | $ | $ 424,856 | $ 422,395 | ||
Subsidiaries [Member] | ||||
Company Overview And Basis Of Presentation [Line Items] | ||||
Noncontrolling interest | 100.00% | |||
Costa Rica [Member] | ||||
Company Overview And Basis Of Presentation [Line Items] | ||||
Number of stores | 7 | 1 | ||
Colombia [Member] | ||||
Company Overview And Basis Of Presentation [Line Items] | ||||
Number of stores | 7 | |||
Panama [Member] | ||||
Company Overview And Basis Of Presentation [Line Items] | ||||
Number of stores | 5 | |||
Trinidad [Member] | ||||
Company Overview And Basis Of Presentation [Line Items] | ||||
Number of stores | 4 | |||
Guatemala [Member] | ||||
Company Overview And Basis Of Presentation [Line Items] | ||||
Number of stores | 3 | |||
Dominican Republic [Member] | ||||
Company Overview And Basis Of Presentation [Line Items] | ||||
Number of stores | 3 | |||
Number of stores expected in the future | 1 | 4 | ||
Honduras [Member] | ||||
Company Overview And Basis Of Presentation [Line Items] | ||||
Number of stores | 3 | |||
El Salvador [Member] | ||||
Company Overview And Basis Of Presentation [Line Items] | ||||
Number of stores | 2 | |||
Nicaragua [Member] | ||||
Company Overview And Basis Of Presentation [Line Items] | ||||
Number of stores | 2 | |||
Aruba [Member] | ||||
Company Overview And Basis Of Presentation [Line Items] | ||||
Number of stores | 1 | |||
Barbados [Member] | ||||
Company Overview And Basis Of Presentation [Line Items] | ||||
Number of stores | 1 | |||
Jamaica [Member] | ||||
Company Overview And Basis Of Presentation [Line Items] | ||||
Number of stores | 1 | |||
United States Virgin Islands [Member] | ||||
Company Overview And Basis Of Presentation [Line Items] | ||||
Number of stores | 1 | |||
Reclassified [Member] | ||||
Company Overview And Basis Of Presentation [Line Items] | ||||
Additional paid-in capital | $ | $ (367) | |||
Foreign Countries [Member] | ||||
Company Overview And Basis Of Presentation [Line Items] | ||||
Number of countries | country | 12 | |||
Domestic Territories [Member] | ||||
Company Overview And Basis Of Presentation [Line Items] | ||||
Number of countries | country | 1 |
COMPANY OVERVIEW AND BASIS OF27
COMPANY OVERVIEW AND BASIS OF PRESENTATION (Schedule of Error Correction and Prior Period Adjustment) (Details) - USD ($) $ in Thousands | Nov. 30, 2017 | Aug. 31, 2017 |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Retained earnings | $ 443,356 | $ 420,866 |
Additional paid-in capital | $ 424,856 | 422,395 |
Previously Reported [Member] | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Retained earnings | 420,499 | |
Additional paid-in capital | 422,762 | |
Reclassified [Member] | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Retained earnings | 367 | |
Additional paid-in capital | $ (367) |
SUMMARY OF SIGNIFICANT ACCOUN28
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tax Receivables) (Narrative) (Details) - USD ($) $ in Thousands | Nov. 30, 2017 | Aug. 31, 2017 |
Tax Receivables [Line Items] | ||
Value added tax receivable | $ 32,952 | $ 31,554 |
Income taxes receivable | 20,404 | 16,895 |
Unknown Country [Member] | ||
Tax Receivables [Line Items] | ||
Value added tax receivable | 2,200 | 1,200 |
Deferred tax assets, net | 2,000 | 2,000 |
Income taxes receivable | $ 5,300 | $ 4,300 |
SUMMARY OF SIGNIFICANT ACCOUN29
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Stock Based Compensation) (Narrative) (Details) | 3 Months Ended |
Nov. 30, 2017item | |
Number Of Equity Awards Offered | 3 |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Exit or Disposal Cost Obligations) (Narrative) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Nov. 30, 2017 | May 31, 2017 | Aug. 31, 2017 | |
Exit obligation, Other long-term liabilities | $ 3,000,000 | $ 496,000 | |
Current exit obligation | 50,000 | $ 57,000 | |
Exit obligation, Warehouse expenses | $ 338,000 | $ 1,400,000 |
SUMMARY OF SIGNIFICANT ACCOUN31
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Fair Value Measurements) (Narrative) (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Nov. 30, 2017 | Aug. 31, 2017 | |
Non-financial asset impairment | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN32
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Self-Insurance) (Narrative) (Details) | Nov. 30, 2017USD ($) |
Self-Insurance liability | $ 574,000 |
SUMMARY OF SIGNIFICANT ACCOUN33
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Real Estate Development Joint Ventures) (Details) | Nov. 30, 2017 | [1] |
Panama [Member] | GolfPark Plaza, S.A [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity Method Investment, Ownership Percentage | 50.00% | |
Costa Rica [Member] | Price Plaza Alajuela PPA, S.A [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity Method Investment, Ownership Percentage | 50.00% | |
[1] | Joint venture interests are recorded as investment in unconsolidated affiliates on the consolidated balance sheets. |
SUMMARY OF SIGNIFICANT ACCOUN34
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Summary of Value Added Tax Receivables) (Details) - USD ($) $ in Thousands | Nov. 30, 2017 | Aug. 31, 2017 |
Value Added Tax, Prepaid expenses and other current assets | $ 9,998 | $ 6,650 |
Value Added Tax, Other non-current assets | 22,954 | 24,904 |
Total amount of VAT receivables reported | $ 32,952 | $ 31,554 |
SUMMARY OF SIGNIFICANT ACCOUN35
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Summary of Income Tax Receivables) (Details) - USD ($) $ in Thousands | Nov. 30, 2017 | Aug. 31, 2017 |
Income Tax Receivables [Line Items] | ||
Income Taxes Receivable, Prepaid expenses and other current assets | $ 6,910 | $ 6,403 |
Income Taxes Receivable, Other non-current assets | 13,494 | 10,492 |
Total amount of income tax receivables reported | $ 20,404 | $ 16,895 |
SUMMARY OF SIGNIFICANT ACCOUN36
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Summary of Foreign Currency Gains and Losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2017 | Nov. 30, 2016 | |
Foreign Currency Gain (Loss) [Member] | ||
Accounting Policies [Line Items] | ||
Currency gain (loss) | $ 278 | $ (928) |
EARNINGS PER SHARE (Schedule of
EARNINGS PER SHARE (Schedule of the Computation of Net Income Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Nov. 30, 2017 | Nov. 30, 2016 | |
Net income | $ 22,490 | $ 24,869 |
Less: Allocation of income to unvested stockholders | (300) | (420) |
Net earnings available to common stockholders | $ 22,190 | $ 24,449 |
Basic weighted average shares outstanding | 30,078 | 29,982 |
Add dilutive effect of stock options (two-class method) | 1 | 5 |
Diluted average shares outstanding | 30,079 | 29,987 |
Basic net income per share | $ 0.74 | $ 0.82 |
Diluted net income per share | $ 0.74 | $ 0.82 |
STOCKHOLDERS' EQUITY (Narrative
STOCKHOLDERS' EQUITY (Narrative) (Details) - $ / shares | 3 Months Ended | |
Nov. 30, 2017 | Nov. 30, 2016 | |
Dividends Payable [Line Items] | ||
Amount | ||
2018 Dividend Declared [Member] | ||
Dividends Payable [Line Items] | ||
Amount | $ 0 |
STOCKHOLDERS' EQUITY (Schedule
STOCKHOLDERS' EQUITY (Schedule of Dividends) (Details) - $ / shares | Aug. 31, 2017 | Feb. 28, 2017 | Feb. 01, 2017 | Nov. 30, 2017 | Nov. 30, 2016 | Aug. 31, 2017 |
Dividends Payable [Line Items] | ||||||
Amount | ||||||
2017 Dividend Declared [Member] | ||||||
Dividends Payable [Line Items] | ||||||
Declared | Feb. 1, 2017 | |||||
Amount | $ 0.70 | |||||
2017 First Dividend Paid [Member] | ||||||
Dividends Payable [Line Items] | ||||||
Record Date | Feb. 15, 2017 | |||||
Date Paid | Feb. 28, 2017 | |||||
Payment Amount | $ 0.35 | |||||
2017 Second Dividend Paid [Member] | ||||||
Dividends Payable [Line Items] | ||||||
Record Date | Aug. 15, 2017 | |||||
Date Payable | Aug. 31, 2017 | |||||
Payment Amount | $ 0.35 |
STOCKHOLDERS' EQUITY (Schedul40
STOCKHOLDERS' EQUITY (Schedule of Components of Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Nov. 30, 2017 | Nov. 30, 2016 | Aug. 31, 2017 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | $ (110,059) | $ (103,951) | $ (103,951) | |
Other comprehensive income (loss) | (1,409) | (10,381) | (6,147) | |
Amounts reclassified from accumulated other comprehensive income (loss) | 39 | |||
Ending balance | (111,468) | (114,332) | (110,059) | |
Foreign Currency Translation Adjustments [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | (108,539) | (102,242) | (102,242) | |
Other comprehensive income (loss) | (2,026) | (10,866) | (6,297) | |
Amounts reclassified from accumulated other comprehensive income (loss) | ||||
Ending balance | (110,565) | (113,108) | (108,539) | |
Defined Benefit Pension Plans [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | (442) | (315) | (315) | |
Other comprehensive income (loss) | 30 | (7) | (166) | |
Amounts reclassified from accumulated other comprehensive income (loss) | [1] | 39 | ||
Ending balance | (412) | (322) | (442) | |
Derivative Instruments [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | (1,078) | (1,394) | (1,394) | |
Other comprehensive income (loss) | [2] | 587 | 492 | 316 |
Amounts reclassified from accumulated other comprehensive income (loss) | ||||
Ending balance | $ (491) | $ (902) | $ (1,078) | |
[1] | Amounts reclassified from accumulated other comprehensive income (loss) related to the minimum pension liability are included in warehouse club operations in the Company's Consolidated Statements of Income. | |||
[2] | See Note 7 - Derivative Instruments and Hedging Activities. |
STOCKHOLDERS' EQUITY (Summary o
STOCKHOLDERS' EQUITY (Summary of Retained Earnings Not Available for Distribution) (Details) - USD ($) $ in Thousands | Nov. 30, 2017 | Aug. 31, 2017 |
Retained earnings not available for distribution | $ 6,557 | $ 6,459 |
COMMITMENTS AND CONTINGENCIES42
COMMITMENTS AND CONTINGENCIES (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||||
Jan. 31, 2017 | Nov. 30, 2017 | Aug. 31, 2020 | Nov. 30, 2019 | Nov. 30, 2018 | Aug. 31, 2017 | |
Commitments And Contingencies [Line Items] | ||||||
Accrual for taxes other than income taxes, Current | $ 3,200,000 | $ 3,400,000 | ||||
Contractual obligation | 3,200,000 | 7,900,000 | ||||
Land purchase option agreement | 600,000 | 600,000 | ||||
Land under purchase options, Not recorded | 20,800,000 | |||||
Provisional assessments | 2,700,000 | |||||
Additional provisional assessment | 5,500,000 | |||||
Income taxes receivable | $ 20,404,000 | 16,895,000 | ||||
Miami-Dade County, Florida [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Letter of credit payable to the landlord | $ 500,000 | |||||
Debt term | 4 years | |||||
Unknown Country [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Deferred tax assets, net | $ 2,000,000 | 2,000,000 | ||||
Income taxes receivable | $ 5,300,000 | $ 4,300,000 | ||||
Mexico [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Distribution contract expiration | Aug. 31, 2020 | |||||
Scenario, Forecast [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Purchase commitment, Remaining minimum amount committed | $ 372,000 | $ 372,000 | ||||
Scenario, Forecast [Member] | Mexico [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Purchase commitment, Remaining minimum amount committed | $ 442,000 |
COMMITMENTS AND CONTINGENCIES43
COMMITMENTS AND CONTINGENCIES (Schedule of Future Minimum Lease Commitments) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Nov. 30, 2017 | May 31, 2017 | Aug. 31, 2017 | ||
Operating Leased Assets [Line Items] | ||||
2,018 | [1] | $ 12,113,000 | ||
2,019 | [1] | 11,715,000 | ||
2,020 | [1] | 10,795,000 | ||
2,021 | [1] | 9,339,000 | ||
2,022 | [1] | 9,027,000 | ||
Thereafter | [1] | 113,822,000 | ||
Total | [1],[2] | 166,811,000 | ||
Sub-lease income | 883,000 | |||
Exit obligation, Other long-term liabilities | 3,000,000 | $ 496,000 | ||
Reduction for potential sub-lease income | 0 | |||
Current exit obligation | $ 50,000 | $ 57,000 | ||
[1] | Operating lease obligations have been reduced by approximately $883,000 to reflect sub-lease income. Certain obligations under leasing arrangements are collateralized by the underlying asset being leased. | |||
[2] | Future minimum lease payments include $3.0 million of lease payment obligations for the prior leased Miami distribution center. For the purposes of calculating the minimum lease payments, no reduction was considered for the potential sub-lease income the Company could receive during the remaining lease term. This potential sub-lease income was considered, however, for the purposes of calculating the exit obligation of $50,000 recorded on the balance sheet as of November 30, 2017. Projected income for any executed sub-leases would be used to reduce the amount reported as minimum lease payments. |
COMMITMENTS AND CONTINGENCIES44
COMMITMENTS AND CONTINGENCIES (Schedule of Variable Interest Entities Maximum Loss Exposure) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Nov. 30, 2017 | Aug. 31, 2017 | ||
Variable Interest Entity [Line Items] | |||
Initial Investment | $ 6,809 | ||
Additional Investments | 3,638 | ||
Net (Loss)/Income Inception to Date | 334 | ||
Company's Variable Interest in Entity | 10,781 | $ 10,765 | |
Commitment to Future Additional Investments | [1] | 884 | |
Company's Maximum Exposure to Loss in Entity | [2] | $ 11,665 | |
GolfPark Plaza, S.A [Member] | |||
Variable Interest Entity [Line Items] | |||
Percentage Ownership | 50.00% | ||
Initial Investment | $ 4,616 | ||
Additional Investments | 2,402 | ||
Net (Loss)/Income Inception to Date | 301 | ||
Company's Variable Interest in Entity | 7,319 | ||
Commitment to Future Additional Investments | [1] | 99 | |
Company's Maximum Exposure to Loss in Entity | [2] | $ 7,418 | |
Price Plaza Alajuela, S.A. [Member] | |||
Variable Interest Entity [Line Items] | |||
Percentage Ownership | 50.00% | ||
Initial Investment | $ 2,193 | ||
Additional Investments | 1,236 | ||
Net (Loss)/Income Inception to Date | 33 | ||
Company's Variable Interest in Entity | 3,462 | ||
Commitment to Future Additional Investments | [1] | 785 | |
Company's Maximum Exposure to Loss in Entity | [2] | $ 4,247 | |
[1] | The parties intend to seek alternate financing for the project, which could reduce the amount of investments each party would be required to provide. The parties may mutually agree on changes to the project, which could increase or decrease the amount of contributions each party is required to provide. | ||
[2] | The maximum exposure is determined by adding the Company's variable interest in the entity and any explicit or implicit arrangements that could require the Company to provide additional financial support. |
DEBT (Narrative) (Details)
DEBT (Narrative) (Details) $ in Thousands | Mar. 31, 2017USD ($)item | Jan. 31, 2017USD ($) | Nov. 30, 2017USD ($) | Aug. 31, 2017USD ($) | ||
Debt Instrument [Line Items] | ||||||
Total | $ 98,597 | [1] | $ 106,297 | [2] | ||
Debt With Covenants [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit, Current | 40,000 | 40,000 | ||||
Group of Subsidiaries [Member] | Debt With Covenants [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Total | $ 82,800 | 85,600 | ||||
Trinidad Subsidiary [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Number of payments | item | 8 | |||||
Miami-Dade County, Florida [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Purchase price | $ 46,000 | |||||
Debt term | 4 years | |||||
Union Bank [Member] | Miami-Dade County, Florida [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt term | 10 years | |||||
Credit facility funded | 35,700 | |||||
Credit facility, expiration date | Dec. 31, 2027 | |||||
Citibank [Member] | Trinidad Subsidiary [Member] | ||||||
Debt Instrument [Line Items] | ||||||
LIBOR measurement period | 90 days | |||||
Credit facility, variable interest rate | 3.00% | |||||
Maximum borrowing capacity | $ 12,000 | |||||
Scotiabank [Member] | Panama Subsidiary [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit, Current | $ 13,300 | |||||
London Interbank Offered Rate (LIBOR) [Member] | Union Bank [Member] | Miami-Dade County, Florida [Member] | ||||||
Debt Instrument [Line Items] | ||||||
LIBOR measurement period | 30 days | |||||
Credit facility, variable interest rate | 1.70% | |||||
Interest Rate Contract [Member] | Union Bank [Member] | Miami-Dade County, Florida [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Notional amount | $ 35,700 | |||||
Derivative, fixed interest rate | 3.65% | |||||
Derivative, effective date | Mar. 1, 2017 | |||||
Derivative, maturity date | Mar. 1, 2027 | |||||
Interest Rate Contract [Member] | London Interbank Offered Rate (LIBOR) [Member] | Union Bank [Member] | Miami-Dade County, Florida [Member] | ||||||
Debt Instrument [Line Items] | ||||||
LIBOR measurement period | 30 days | |||||
Derivative, variable interest rate | 1.70% | |||||
[1] | The carrying amount of non-cash assets assigned as collateral for these loans was $121.0 million. No cash assets were assigned as collateral for these loans. | |||||
[2] | The carrying amount of non-cash assets assigned as collateral for these loans was $128.4 million. No cash assets were assigned as collateral for these loans. |
DEBT (Schedule of Short-Term Bo
DEBT (Schedule of Short-Term Borrowings) (Details) - USD ($) $ in Thousands | Nov. 30, 2017 | Aug. 31, 2017 |
Short-term Debt [Line Items] | ||
Total Amount of Facilities | $ 69,000 | $ 69,000 |
Facilities Available | 65,955 | 68,034 |
Short-term Borrowings [Member] | ||
Short-term Debt [Line Items] | ||
Line of credit, Current | $ 2,483 | |
Weighted average interest rate | 4.30% | |
Letters of Credit [Member] | ||
Short-term Debt [Line Items] | ||
Line of credit, Current | $ 562 | $ 966 |
DEBT (Summary of Changes in Lon
DEBT (Summary of Changes in Long-Term Debt) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Nov. 30, 2017 | Aug. 31, 2017 | ||
Debt Instrument [Line Items] | |||
Current portion of long-term debt | $ 18,358 | ||
Long-term debt (net of current portion) | 87,939 | ||
Total | [1] | 106,297 | |
Repayments of long-term debt, Noncurrent | (3,000) | ||
Repayments of long-term debt total | (3,000) | ||
Regularly scheduled loan payments, Current | (225) | ||
Regularly scheduled loan payments, Noncurrent | (4,554) | ||
Regularly scheduled loan payments total | (4,779) | ||
Translation adjustments on foreign-currency debt of subsidiaries whose functional currency is not the U.S. dollar, Current | [2] | 124 | |
Translation adjustments on foreign-currency debt of subsidiaries whose functional currency is not the U.S. dollar, Noncurrent | [2] | (45) | |
Translation adjustments on foreign-currency debt of subsidiaries whose functional currency is not the U.S. dollar total | [2] | 79 | |
Current portion of long-term debt | 18,257 | ||
Long-term debt (net of current portion) | 80,340 | ||
Total | [3] | 98,597 | |
Cash Asset [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Collateral amount | 0 | $ 0 | |
NonCash Asset [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Collateral amount | $ 121,000 | $ 128,400 | |
[1] | The carrying amount of non-cash assets assigned as collateral for these loans was $128.4 million. No cash assets were assigned as collateral for these loans. | ||
[2] | These foreign currency translation adjustments are recorded within Other comprehensive income. | ||
[3] | The carrying amount of non-cash assets assigned as collateral for these loans was $121.0 million. No cash assets were assigned as collateral for these loans. |
DEBT (Schedule of Annual Maturi
DEBT (Schedule of Annual Maturities of Long-Term Debt) (Details) - USD ($) $ in Thousands | Nov. 30, 2017 | Aug. 31, 2017 | [2] | |
2,018 | $ 18,257 | |||
2,019 | 19,437 | |||
2,020 | 21,438 | |||
2,021 | 5,805 | |||
2,022 | 2,634 | |||
Thereafter | 31,026 | |||
Total | $ 98,597 | [1] | $ 106,297 | |
[1] | The carrying amount of non-cash assets assigned as collateral for these loans was $121.0 million. No cash assets were assigned as collateral for these loans. | |||
[2] | The carrying amount of non-cash assets assigned as collateral for these loans was $128.4 million. No cash assets were assigned as collateral for these loans. |
DERIVATIVE INSTRUMENTS AND HE49
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Interest Rate Derivatives) (Details) - Cash Flow Hedging [Member] $ in Thousands | Nov. 30, 2017USD ($) | |
Pricesmart $35.7M Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Derivative, Notional amount | $ 35,700,000 | [1] |
Debt instrument, Basis spread on variable rate | 1.70% | |
Derivative, Fixed interest rate | 3.65% | [1] |
Costa Rica $7.5M Cross Currency Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Derivative, Notional amount | $ 7,500,000 | |
Debt instrument, Basis spread on variable rate | 2.50% | |
Derivative, Fixed interest rate | 7.65% | |
Honduras $8.5M Cross Currency Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Derivative, Notional amount | $ 8,500,000 | |
Debt instrument, Basis spread on variable rate | 3.25% | |
Derivative, Fixed interest rate | 10.75% | |
El Salvador $4M Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Derivative, Notional amount | $ 4,000,000 | |
Debt instrument, Basis spread on variable rate | 3.50% | |
Derivative, Fixed interest rate | 4.78% | |
Colombia $15M Cross Currency Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Derivative, Notional amount | $ 15,000,000 | |
Debt instrument, Basis spread on variable rate | 2.80% | |
Derivative, Fixed interest rate | 8.25% | |
Panama $10M Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Derivative, Notional amount | $ 10,000,000 | |
Debt instrument, Basis spread on variable rate | 3.50% | |
Derivative, Fixed interest rate | 5.16% | |
Honduras $5M Cross Currency Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Derivative, Notional amount | $ 5,000,000 | |
Debt instrument, Basis spread on variable rate | 3.50% | |
Derivative, Fixed interest rate | 11.60% | |
Panama $5M Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Derivative, Notional amount | $ 5,000,000 | |
Debt instrument, Basis spread on variable rate | 3.50% | |
Derivative, Fixed interest rate | 4.89% | |
Panama $4M Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Derivative, Notional amount | $ 3,970,000 | |
Debt instrument, Basis spread on variable rate | 3.50% | |
Derivative, Fixed interest rate | 4.98% | |
[1] | The initial notional amount and fixed rate were modified effective January 2017. |
DERIVATIVE INSTRUMENTS AND HE50
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Cash Flow Hedging Instruments, Statements of Financial Performance and Financial Position, Location) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Nov. 30, 2017 | Nov. 30, 2016 | ||
Interest Expense [Member] | Cash Flow Hedging [Member] | |||
Derivative [Line Items] | |||
Derivative, gain (loss) on derivative, Net | $ 1,171 | $ 1,173 | |
Interest Rate Contract [Member] | Interest Expense [Member] | Cash Flow Hedging [Member] | |||
Derivative [Line Items] | |||
Derivative, gain (loss) on derivative, Net | [1] | 849 | 750 |
Cross Currency Interest Rate Swaps [Member] | Interest Expense [Member] | Cash Flow Hedging [Member] | |||
Derivative [Line Items] | |||
Derivative, gain (loss) on derivative, Net | [2] | 322 | 423 |
Forward Foreign Exchange Contract 1 [Member] | Other Income (Expense) [Member] | Fair Value Hedging [Member] | |||
Derivative [Line Items] | |||
Other income (expense), net | $ 93 | $ 219 | |
[1] | This amount is representative of the interest expense recognized on the underlying hedged transactions. | ||
[2] | This amount is representative of the interest expense recognized on the cross-currency interest rate swaps designated as cash flow hedging instruments. |
DERIVATIVE INSTRUMENTS AND HE51
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Notional Amounts of Outstanding Derivative Positions) (Details) - USD ($) $ in Thousands | Nov. 30, 2017 | Aug. 31, 2017 |
Cash Flow Hedging [Member] | ||
Derivative [Line Items] | ||
Derivative Liability, Notional Amount | $ 73,687 | $ 75,512 |
Union Bank [Member] | Cash Flow Hedging [Member] | ||
Derivative [Line Items] | ||
Derivative Liability, Notional Amount | 35,700 | 35,700 |
Citibank [Member] | Cash Flow Hedging [Member] | ||
Derivative [Line Items] | ||
Derivative Liability, Notional Amount | 25,063 | 26,088 |
Scotiabank [Member] | Cash Flow Hedging [Member] | ||
Derivative [Line Items] | ||
Derivative Liability, Notional Amount | 12,924 | $ 13,724 |
Colombia Subsidiary [Member] | Citibank [Member] | Forward Foreign Exchange Contract 1 [Member] | Not Designated as Hedging Instrument [Member] | Fair Value Hedging [Member] | ||
Derivative [Line Items] | ||
Derivative Liability, Notional Amount | 1,000 | |
Colombia Subsidiary [Member] | Citibank [Member] | Forward Foreign Exchange Contract 2 [Member] | Not Designated as Hedging Instrument [Member] | Fair Value Hedging [Member] | ||
Derivative [Line Items] | ||
Derivative Liability, Notional Amount | 1,000 | |
Colombia Subsidiary [Member] | Citibank [Member] | Forward Foreign Exchange Contract 3 [Member] | Not Designated as Hedging Instrument [Member] | Fair Value Hedging [Member] | ||
Derivative [Line Items] | ||
Derivative Liability, Notional Amount | 1,000 | |
Colombia Subsidiary [Member] | Citibank [Member] | Forward Foreign Exchange Contract 4 [Member] | Not Designated as Hedging Instrument [Member] | Fair Value Hedging [Member] | ||
Derivative [Line Items] | ||
Derivative Liability, Notional Amount | $ 1,000 |
DERIVATIVE INSTRUMENTS AND HE52
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Derivative Instruments in Statement of Financial Position, Fair Value and Summary of Fair Value of Foreign Currency Forward Contracts) (Details) - USD ($) $ in Thousands | Nov. 30, 2017 | Aug. 31, 2017 | |
Derivative [Line Items] | |||
Derivative Asset, Noncurrent | $ 3,278 | $ 2,547 | |
Designated as Hedging Instrument [Member] | |||
Derivative [Line Items] | |||
Derivative Asset, Noncurrent | 2,932 | 1,865 | |
Net Tax Effect | (1,099) | (735) | |
Total Net OCI | 1,833 | 1,130 | |
Fair Value, Inputs, Level 2 [Member] | Not Designated as Hedging Instrument [Member] | Recurring [Member] | Fair Value Hedging [Member] | |||
Derivative [Line Items] | |||
Total Net OCI | [1] | 71 | |
Interest Rate Swap [Member] | Other Non-current Assets [Member] | Designated as Hedging Instrument [Member] | |||
Derivative [Line Items] | |||
Derivative Asset, Noncurrent | 764 | ||
Net Tax Effect | (272) | ||
Total Net OCI | 492 | ||
Interest Rate Swap [Member] | Other Long-Term Liability [Member] | Designated as Hedging Instrument [Member] | |||
Derivative [Line Items] | |||
Derivative Liability, Noncurrent | (4) | (231) | |
Net Tax Effect | (3) | 80 | |
Total Net OCI | (7) | (151) | |
Forward Foreign Exchange Contract 1 [Member] | Fair Value, Inputs, Level 2 [Member] | Other Current Assets [Member] | Not Designated as Hedging Instrument [Member] | Recurring [Member] | Fair Value Hedging [Member] | |||
Derivative [Line Items] | |||
Total Net OCI | 71 | ||
Cross Currency Interest Rate Swaps [Member] | Other Non-current Assets [Member] | Designated as Hedging Instrument [Member] | |||
Derivative [Line Items] | |||
Derivative Asset, Noncurrent | 2,514 | 2,547 | |
Net Tax Effect | (938) | (950) | |
Total Net OCI | 1,576 | 1,597 | |
Cross Currency Interest Rate Swaps [Member] | Other Long-Term Liability [Member] | Designated as Hedging Instrument [Member] | |||
Derivative [Line Items] | |||
Derivative Liability, Noncurrent | (342) | (451) | |
Net Tax Effect | 114 | 135 | |
Total Net OCI | $ (228) | $ (316) | |
[1] | The fair value of these financial assets and liabilities measured and recorded using Level 2 inputs, which are inputs other than quoted prices in active markets that are either directly or indirectly observable. |
SEGMENTS (Summary of Segment Re
SEGMENTS (Summary of Segment Revenues, Operating Costs and Balance Sheet Items) (Details) $ in Thousands | 3 Months Ended | |||
Nov. 30, 2017USD ($)countrywarehouse | Nov. 30, 2016USD ($) | Aug. 31, 2017USD ($) | ||
Segment Reporting Information [Line Items] | ||||
Number of stores | warehouse | 40 | |||
Number of countries | country | 13 | |||
Segment Reporting Information | ||||
Revenue from external customers | $ 767,072 | $ 739,572 | ||
Depreciation and amortization | 12,237 | 11,117 | ||
Operating income | 33,166 | 38,379 | ||
Net income (loss) | 22,490 | 24,869 | ||
Capital expenditures, net | 23,503 | 18,004 | ||
Long-lived assets (other than deferred tax assets) | 627,311 | 535,621 | $ 616,090 | |
Goodwill | 35,578 | 35,603 | 35,642 | |
Total assets | 1,222,828 | 1,117,870 | 1,177,514 | |
United States Operations [Member] | ||||
Segment Reporting Information | ||||
Revenue from external customers | 8,147 | 10,755 | ||
Depreciation and amortization | 1,744 | 1,574 | ||
Operating income | 3,739 | 7,597 | ||
Net income (loss) | 82 | 3,658 | ||
Capital expenditures, net | 1,004 | 2,337 | ||
Long-lived assets (other than deferred tax assets) | 70,352 | 20,372 | 70,353 | |
Total assets | 121,674 | 70,283 | 147,650 | |
Central American Operations [Member] | ||||
Segment Reporting Information | ||||
Revenue from external customers | 452,166 | 438,234 | ||
Depreciation and amortization | 5,523 | 4,864 | ||
Operating income | 31,942 | 33,504 | ||
Net income (loss) | 26,796 | 26,227 | ||
Capital expenditures, net | 11,370 | 10,756 | ||
Long-lived assets (other than deferred tax assets) | 304,434 | 278,721 | 296,915 | |
Goodwill | 31,014 | 31,072 | 31,118 | |
Total assets | 580,523 | 542,238 | 544,683 | |
Caribbean Operations [Member] | ||||
Segment Reporting Information | ||||
Revenue from external customers | 214,642 | 207,022 | ||
Depreciation and amortization | 2,677 | 2,458 | ||
Operating income | 11,470 | 12,214 | ||
Net income (loss) | 10,317 | 10,861 | ||
Capital expenditures, net | 10,297 | 4,438 | ||
Long-lived assets (other than deferred tax assets) | 130,896 | 110,939 | 122,616 | |
Goodwill | 4,564 | 4,531 | 4,524 | |
Total assets | $ 334,279 | 321,235 | 303,234 | |
Colombia [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Number of stores | warehouse | 7 | |||
Segment Reporting Information | ||||
Revenue from external customers | $ 92,117 | 83,561 | ||
Depreciation and amortization | 2,293 | 2,221 | ||
Operating income | 2,145 | 913 | ||
Net income (loss) | 1,425 | (28) | ||
Capital expenditures, net | 832 | 473 | ||
Long-lived assets (other than deferred tax assets) | 121,629 | 125,589 | 126,206 | |
Total assets | 186,352 | 184,114 | $ 181,947 | |
Intersegment [Member] | ||||
Segment Reporting Information | ||||
Revenue from external customers | [1] | (341,533) | (319,370) | |
Intersegment [Member] | United States Operations [Member] | ||||
Segment Reporting Information | ||||
Revenue from external customers | (340,128) | (317,662) | ||
Intersegment [Member] | Caribbean Operations [Member] | ||||
Segment Reporting Information | ||||
Revenue from external customers | (1,207) | (1,698) | ||
Intersegment [Member] | Colombia [Member] | ||||
Segment Reporting Information | ||||
Revenue from external customers | (198) | (10) | ||
Reconciling Items [Member] | ||||
Segment Reporting Information | ||||
Operating income | [1] | (16,130) | (15,849) | |
Net income (loss) | [1] | $ (16,130) | $ (15,849) | |
[1] | The reconciling items reflect the amount eliminated on consolidation of intersegment transactions. |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Scenario, Forecast [Member] - USD ($) $ in Millions | 3 Months Ended | |
Feb. 28, 2018 | Jan. 31, 2018 | |
Subsequent Event [Line Items] | ||
Tax expense payment period | 8 years | |
Forward Foreign Exchange Contract 5 [Member] | ||
Subsequent Event [Line Items] | ||
Notional amount | $ 5 |