Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
May 31, 2018 | Jun. 30, 2018 | |
Document And Entity Information [Abstract] | ||
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 | Q3 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | May 31, 2018 | |
Entity Common Stock, Shares Outstanding | 30,461,536 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | May 31, 2018 | Aug. 31, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 141,164 | $ 162,434 |
Short-term restricted cash | 676 | 460 |
Receivables, net of allowance for doubtful accounts of $32 and $7 as of May 31, 2018 and August 31, 2017, respectively | 8,998 | 6,460 |
Merchandise inventories | 326,200 | 310,946 |
Prepaid expenses and other current assets | 32,680 | 30,070 |
Total current assets | 509,718 | 510,370 |
Long-term restricted cash | 2,973 | 2,818 |
Property and equipment, net | 597,240 | 557,829 |
Goodwill | 51,351 | 35,642 |
Other intangibles, net | 15,593 | |
Deferred tax assets | 10,509 | 15,412 |
Other non-current assets (includes $4,081 and $2,547 as of May 31, 2018 and August 31, 2017, respectively, for the fair value of derivative instruments) | 48,317 | 44,678 |
Investment in unconsolidated affiliates | 10,769 | 10,765 |
Total Assets | 1,246,470 | 1,177,514 |
Current Liabilities: | ||
Short-term borrowings | 334 | |
Accounts payable | 268,976 | 272,248 |
Accrued salaries and benefits | 23,594 | 19,151 |
Deferred income | 23,785 | 22,100 |
Income taxes payable | 5,124 | 5,044 |
Other accrued expenses | 28,852 | 26,483 |
Dividends payable | 10,652 | |
Long-term debt, current portion | 14,644 | 18,358 |
Total current liabilities | 375,961 | 363,384 |
Deferred tax liability | 5,884 | 1,812 |
Long-term portion of deferred rent | 8,915 | 8,914 |
Long-term income taxes payable, net of current portion | 7,740 | 909 |
Long-term debt, net of current portion | 91,208 | 87,939 |
Other long-term liabilities (includes $537 and $682 for the fair value of derivative instruments and $5,115 and $5,051 for post-employment plans as of May 31, 2018 and August 31, 2017, respectively) | 6,063 | 5,789 |
Total Liabilities | 495,771 | 468,747 |
Stockholders' Equity: | ||
Common stock, $0.0001 par value, 45,000,000 shares authorized; 31,369,568 and 31,275,727 shares issued and 30,472,064 and 30,400,742 shares outstanding (net of treasury shares) as of May 31, 2018 and August 31, 2017, respectively | 3 | 3 |
Additional paid-in capital | 430,133 | 422,395 |
Tax benefit from stock-based compensation | 11,486 | 11,486 |
Accumulated other comprehensive loss | (108,576) | (110,059) |
Retained earnings | 454,901 | 420,866 |
Less: treasury stock at cost, 897,504 and 874,985 shares as of May 31, 2018 and August 31, 2017, respectively | (37,840) | (35,924) |
Total stockholders' equity attributable to PriceSmart, Inc. stockholders | 750,107 | 708,767 |
Noncontrolling interest in consolidated subsidiaries | 592 | |
Total stockholders' equity | 750,699 | 708,767 |
Total Liabilities and Equity | $ 1,246,470 | $ 1,177,514 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | May 31, 2018 | Aug. 31, 2017 |
CONSOLIDATED BALANCE SHEETS [Abstract] | ||
Receivables, allowance for doubtful account | $ 32 | $ 7 |
Other non-current assets, fair value of derivative instruments | 4,081 | 2,547 |
Other long-term liabilities, fair value of derivative instruments | 537 | 682 |
Other long-term liabilities, post-employment plans | $ 5,115 | $ 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 | 31,369,568 | 31,275,727 |
Common stock, shares outstanding | 30,472,064 | 30,400,742 |
Treasury stock, shares | 897,504 | 874,985 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2018 | May 31, 2017 | |
Revenues: | ||||
Net merchandise sales | $ 750,473 | $ 710,699 | $ 2,312,447 | $ 2,199,051 |
Export sales | 9,967 | 6,475 | 27,252 | 25,381 |
Membership income | 12,852 | 12,038 | 37,930 | 35,581 |
Other revenue and income | 8,909 | 1,046 | 11,207 | 3,113 |
Total revenues | 782,201 | 730,258 | 2,388,836 | 2,263,126 |
Cost of goods sold: | ||||
Net merchandise sales | 641,249 | 611,455 | 1,977,840 | 1,879,747 |
Export sales | 9,466 | 6,143 | 25,900 | 24,085 |
Non-merchandise | 1,979 | 1,979 | ||
Selling, general and administrative: | ||||
Warehouse club and other operations | 76,259 | 67,754 | 217,712 | 200,964 |
General and administrative | 24,079 | 16,907 | 63,167 | 51,921 |
Pre-opening expenses | 352 | 9 | 863 | (104) |
Asset impairment | 1,929 | |||
Loss/(gain) on disposal of assets | 388 | 364 | 587 | 1,106 |
Total operating expenses | 753,772 | 702,632 | 2,289,977 | 2,157,719 |
Operating income | 28,429 | 27,626 | 98,859 | 105,407 |
Other income (expense): | ||||
Interest income | 370 | 392 | 1,138 | 1,443 |
Interest expense | (1,362) | (1,828) | (3,609) | (5,126) |
Other income (expense), net | (575) | 1,101 | (87) | 1,088 |
Total other income (expense) | (1,567) | (335) | (2,558) | (2,595) |
Income before provision for income taxes and income (loss) of unconsolidated affiliates | 26,862 | 27,291 | 96,301 | 102,812 |
Provision for income taxes | (8,128) | (8,459) | (40,950) | (31,885) |
Income (loss) of unconsolidated affiliates | (18) | 6 | 3 | (1) |
Net income | 18,716 | 18,838 | 55,354 | 70,926 |
Less: net income (loss) attributable to noncontrolling interest | 22 | 22 | ||
Net income attributable to PriceSmart, Inc. | $ 18,694 | $ 18,838 | $ 55,332 | $ 70,926 |
Net income attributable to PriceSmart Inc. per share available for distribution: | ||||
Basic | $ 0.61 | $ 0.62 | $ 1.82 | $ 2.34 |
Diluted | $ 0.61 | $ 0.62 | $ 1.82 | $ 2.34 |
Shares used in per share computations: | ||||
Basic | 30,137 | 30,043 | 30,105 | 30,010 |
Diluted | 30,137 | 30,045 | 30,105 | 30,014 |
Dividends per share | $ 0.70 | $ 0.70 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
May 31, 2018 | May 31, 2017 | May 31, 2018 | May 31, 2017 | ||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract] | |||||
Net income attributable to PriceSmart, Inc. | $ 18,694 | $ 18,838 | $ 55,332 | $ 70,926 | |
Other Comprehensive Income, net of tax: | |||||
Foreign currency translation adjustments | [1] | (2,461) | (3,074) | (126) | (4,700) |
Defined benefit pension plan: | |||||
Amortization of prior service cost and actuarial gains included in net periodic pensions cost | 42 | 43 | 101 | 29 | |
Total defined benefit pension plan | 42 | 43 | 101 | 29 | |
Derivative instruments: | |||||
Unrealized gains/(losses) on change in fair value of interest rate swaps | [2] | 79 | (416) | 1,516 | 364 |
Total derivative instruments | [2] | 79 | (416) | 1,516 | 364 |
Other comprehensive income (loss) | (2,340) | (3,447) | 1,491 | (4,307) | |
Comprehensive income | 16,354 | 15,391 | 56,823 | 66,619 | |
Less: comprehensive income/(loss) attributable to noncontrolling interest | 8 | 8 | |||
Comprehensive income attributable to PriceSmart Inc. stockholders | $ 16,346 | $ 15,391 | $ 56,815 | $ 66,619 | |
[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 Stockholder's Equity Attributable to PriceSmart, Inc. [Member] | Noncontrolling Interest [Member] | Total |
Balance at Aug. 31, 2016 | $ 3 | $ 412,369 | $ 11,321 | $ (103,951) | $ 351,060 | $ (32,731) | $ 638,071 | $ 638,071 | |
Balance (in shares) at Aug. 31, 2016 | 31,238,000 | 836,000 | |||||||
Purchase of treasury stock | $ (2,011) | (2,011) | (2,011) | ||||||
Purchase of treasury stock (in shares) | 25,000 | ||||||||
Issuance of restricted stock award | |||||||||
Issuance of restricted stock award (in shares) | 48,000 | ||||||||
Forfeiture of restricted stock awards | |||||||||
Forfeiture of restricted stock awards (in shares) | (35,000) | ||||||||
Exercise of stock options | 433 | 433 | 433 | ||||||
Exercise of stock options (in shares) | 8,000 | ||||||||
Stock-based compensation | 7,328 | 231 | 7,559 | 7,559 | |||||
Dividend paid to stockholders | (10,641) | (10,641) | (10,641) | ||||||
Dividend payable to stockholders | (10,643) | (10,643) | (10,643) | ||||||
Net income | 70,926 | 70,926 | 70,926 | ||||||
Other comprehensive income (loss) | (4,307) | (4,307) | (4,307) | ||||||
Balance at May. 31, 2017 | $ 3 | 420,130 | 11,552 | (108,258) | 400,702 | $ (34,742) | 689,387 | 689,387 | |
Balance (in shares) at May. 31, 2017 | 31,259,000 | 861,000 | |||||||
Balance at Aug. 31, 2016 | $ 3 | 412,369 | 11,321 | (103,951) | 351,060 | $ (32,731) | 638,071 | 638,071 | |
Balance (in shares) at Aug. 31, 2016 | 31,238,000 | 836,000 | |||||||
Balance at Aug. 31, 2017 | $ 3 | 422,395 | 11,486 | (110,059) | 420,866 | $ (35,924) | 708,767 | $ 708,767 | |
Balance (in shares) at Aug. 31, 2017 | 31,276,000 | 875,000 | 30,400,742 | ||||||
Acquisition of Aeropost | $ 562 | $ 562 | |||||||
Acquisition of Aeropost (in shares) | |||||||||
Purchase of treasury stock | $ (1,916) | (1,916) | (1,916) | ||||||
Purchase of treasury stock (in shares) | 23,000 | ||||||||
Issuance of restricted stock award | |||||||||
Issuance of restricted stock award (in shares) | 96,000 | ||||||||
Forfeiture of restricted stock awards | |||||||||
Forfeiture of restricted stock awards (in shares) | (7,000) | ||||||||
Exercise of stock options | 269 | 269 | 269 | ||||||
Exercise of stock options (in shares) | 4,000 | ||||||||
Stock-based compensation | 7,469 | 7,469 | 7,469 | ||||||
Dividend paid to stockholders | (10,645) | (10,645) | (10,645) | ||||||
Dividend payable to stockholders | (10,652) | (10,652) | (10,652) | ||||||
Net income | 55,332 | 55,332 | 22 | 55,354 | |||||
Other comprehensive income (loss) | 1,483 | 1,483 | 8 | 1,491 | |||||
Balance at May. 31, 2018 | $ 3 | $ 430,133 | $ 11,486 | $ (108,576) | $ 454,901 | $ (37,840) | $ 750,107 | $ 592 | $ 750,699 |
Balance (in shares) at May. 31, 2018 | 31,369,000 | 898,000 | 30,472,064 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
May 31, 2018 | May 31, 2017 | |
Operating Activities: | ||
Net income attributable to PriceSmart, Inc. | $ 55,332 | $ 70,926 |
Adjustments to reconcile net income attributable to PriceSmart, Inc. to net cash provided by operating activities: | ||
Depreciation and amortization | 38,378 | 34,445 |
Allowance for doubtful accounts | 25 | |
Asset impairment and closure costs | 1,929 | |
(Gain)/loss on sale of property and equipment | 587 | 1,106 |
Deferred income taxes | 6,537 | 3,143 |
Equity in (gains) losses of unconsolidated affiliates | (3) | 1 |
Stock-based compensation | 7,469 | 7,328 |
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 | 3,173 | (717) |
Merchandise inventories | (15,254) | 3,490 |
Accounts payable | (7,408) | (32,825) |
Net cash provided by (used in) operating activities | 90,765 | 86,897 |
Investing Activities: | ||
Business acquisition, net of cash acquired | (23,895) | |
Additions to property and equipment | (74,788) | (99,541) |
Deposits for land purchase option agreements | 300 | (300) |
Proceeds from disposal of property and equipment | 93 | 335 |
Net cash provided by (used in) investing activities | (98,290) | (99,506) |
Financing Activities: | ||
Proceeds from long-term bank borrowings | 28,500 | 47,700 |
Repayment of long-term bank borrowings | (28,931) | (11,009) |
Proceeds from short-term bank borrowings | 82,092 | 678 |
Repayment of short-term bank borrowings | (81,758) | (17,179) |
Cash dividend payments | (10,645) | (10,641) |
Purchase of treasury stock for tax withholding on stock compensation | (1,916) | (2,011) |
Proceeds from exercise of stock options | 269 | 433 |
Net cash provided by (used in) financing activities | (12,389) | 7,971 |
Effect of exchange rate changes on cash and cash equivalents and restricted cash | (985) | (2,391) |
Net increase (decrease) in cash, cash equivalents | (20,899) | (7,029) |
Cash, cash equivalents and restricted cash at beginning of period | 165,712 | 202,716 |
Cash, cash equivalents and restricted cash at end of period | 144,813 | 195,687 |
Reconciliation of cash, cash equivalents, and restricted cash: | ||
Total cash and 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 | 9 Months Ended |
May 31, 2018 | |
COMPANY OVERVIEW AND BASIS OF PRESENTATION [Abstract] | |
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 May 31, 2018 , the Company had 41 consolidated warehouse clubs in operation in 12 countries and one U.S. territory ( seven each in Colombia and Costa Rica; five in Panama; four each in Trinidad and Dominican Republic ; three each in Guatemala 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 . The Company opened a new warehouse club in Santo Domingo, Dominican Republic in May 2018, bringing the total number of warehouse clubs operating in the Dominican Republic to four. In May 2018, the Company acquired land in Panama and the Dominican Republic upon which the Company plans to construct new warehouse clubs. In Panama, the site is in the city of Santiago and, upon completion, will be the sixth warehouse club in Panama. In the Dominican Republic, the site is in the city of Santo Domingo and, upon completion, will be the fifth warehouse club in the Dominican Republic. Both warehouse clubs are currently expected to open in the spring of 2019. Both of these warehouse clubs will be designed using our new small warehouse club format with sales floor square footage between 30,000 to 40,000 square feet, compared to 50,000 to 60,000 sales floor square footage within our most recent standard format warehouse club openings. The Company continues to explore other potential sites for future warehouse clubs in Central America, the Caribbean and South America. PriceSmart also operates a cross-border logistics and e-commerce business through its Aeropost, Inc. (“Aeropost”) subsidiary, which it purchased during March 2018. Aeropost operates directly or via agency relationships in 38 countries in Latin America and the Caribbean and has distribution and administration facilities in Miami, Florida. Basis of Presentation – The interim unaudited 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”) and U.S. generally accepted accounting principles (GAAP) for interim financial information. 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 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 of restricted stock awards and units as they occur – The Company made a policy election to recognize forfeitures of restricted stock awards and units 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. The table below summarizes the change to the prior year balance sheet (in thousands): 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 has changed 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. · 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 this change, retrospectively, which resulted in $231,000 being reclassified from a financing activity to an operating activity for the nine months ended May 31, 2017. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
May 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
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, subsidiaries in which it has a controlling interest, and the Company’s joint ventures for which the Company has determined that it is the primary beneficiary. The Company reports noncontrolling interests in consolidated entities as a component of equity separate from the Company’s equity. The Company’s net income excludes income attributable to its noncontrolling interests. Additionally, the interim consolidated financial statements also include 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. 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. If the Company determines that it is not the primary beneficiary of the VIE, then the Company records its investment in, and the Company's share of the income (loss) of, joint ventures recorded under the equity method. Due to the nature of the joint ventures that the Company participates in and the continued commitments for additional financing, the Company determined these joint ventures are VIEs. The Company has determined for its ownership interest in store-front joint ventures, within its Aeropost subsidiary, that the Company has the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. Therefore, the Company has determined that it is the primary beneficiary of the VIEs and has consolidated these entities within its consolidated financial statements. The Company's ownership interest in these store-front joint ventures, within its Aeropost subsidiary, for which the Company has consolidated their financial statements as of May 31, 2018, are listed below: Aeropost Store-front Joint Ventures Countries Ownership Basis of Presentation El Salvador EL Salvador 60.0 % Consolidated Guatemala Guatemala 60.0 % Consolidated Tortola British Virgin Islands 50.0 % Consolidated Trinidad Trinidad 50.0 % Consolidated For the Company's ownership interest in real estate development joint ventures, 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. The Company's ownership interest in real estate development joint ventures for which the Company has recorded under the equity method as of May 31, 2018 are 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. 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. Goodwill and Other Intangibles – Goodwill and intangibles totaled $66.9 million as of May 31, 2018 and $35.6 million as of August 31, 2017 . In March 2018, the Company acquired Aeropost, Inc., which resulted in the addition of $32.1 million of goodwill and other intangibles. Please see the table below for a description and amounts assigned to each major asset class. Please refer to Note 8 – Acquisition for additional information pertaining to each asset class acquired in the business combination. The Company reviews reported goodwill and other intangibles at the cash-generating unit level for impairment. The Company tests for impairment at least annually or when events or changes in circumstances indicate that it is more likely or than not that the asset is impaired. The changes in the carrying amount of goodwill for the year ended May 31, 2018 are as follows (in thousands): May 31, 2018 Goodwill at August 31, 2017 $ 35,642 Foreign currency exchange rate changes (324) Aeropost acquisition - see Note 8 16,033 Goodwill at May 31, 2018 $ 51,351 The table below summarizes our acquired other intangible assets (in thousands) arising from the Aeropost acquisition: May 31, 2018 Other intangibles at August 31, 2017 $ — Trade name 5,100 Developed technology 11,000 Other intangibles at May 31, 2018 $ 16,100 Amortization (507) Net other intangibles at May 31, 2018 $ 15,593 Total goodwill and other intangibles, net $ 66,944 The table below shows our estimated amortization of intangibles for fiscal years 2018 through 2022 and thereafter is as follows (in thousands): Twelve Month Ended August 31 Amount 2018 $ 1,120 (1) 2019 2,404 2020 2,411 2021 2,404 2022 2,404 Thereafter 5,357 Total $ 16,100 (1) Includes $507,000 of actual recorded amortization expense for the period end ed May 31, 2018. 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 August 31, 2016, there were three countries that lacked a clearly defined process. 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 $377,000 and $1.2 million as of May 31, 2018, 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 rules (which the Company has challenged in court) effective for fiscal years 2015 to 2018 do not clearly allow the Company to obtain a refund or to offset this excess income tax against other taxes. As of May 31, 2018, and August 31, 2017, the Company had deferred tax assets of approximately $2.2 million and $2.0 million, respectively, in this country. Also, the Company had an income tax receivable balance of $5.5 million and $4.3 million as of May 31, 2018 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 these matters. In the third quarter of fiscal year 2018, a revised minimum tax law was passed in this country, which beginning in fiscal 2019 will reduce the minimum tax rate. Additionally, this law clarifies rules for reimbursement of excess minimum tax paid, which the Company believes will facilitate this reimbursement on a go-forward basis. 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): May 31, August 31, 2018 2017 Prepaid expenses and other current assets $ 7,256 $ 6,650 Other non-current assets 19,758 24,904 Total amount of VAT receivables reported $ 27,014 $ 31,554 The following table summarizes the Income tax receivables reported by the Company (in thousands): May 31, August 31, 2018 2017 Prepaid expenses and other current assets $ 4,236 $ 6,403 Other non-current assets 17,347 10,492 Total amount of Income tax receivables reported $ 21,583 $ 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 adopted 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, the 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, based on ASU 2016-09. In addition, the Company reflects the tax savings (deficiency) resulting from the taxation of stock-based compensation as an operating cash flow in its consolidated statement of cash flows. RSAs are outstanding shares of common stock and have the same cash dividend and voting rights as other 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 May 31, 2018 and August 31, 2017 was immaterial. Exit costs of approximately $870,000 were recorded to net merchandise cost of goods sold for the nine months ended May 31, 2018 and $751,000 for the nine months ended May 31, 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. 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 entire gain or loss 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. 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 May 31, 2018 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 May 31, 2018 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 U.S. 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 $581,000 as of May 31, 2018. Asset Impairment Costs – The Company periodically evaluates its long-lived assets for indicators of impairment. Management's judgments are based on market and operational conditions at the time of the evaluation and can include management's best estimate of future business activity. These periodic evaluations could cause management to conclude that impairment factors exist, requiring an adjustment of these assets to their then-current fair value. Future business conditions and/or activity could differ materially from the projections made by management causing the need for additional impairment charges. The Company recorded an impairment charge of approximately $1.9 million for the nine months ended May 31, 2018 related to the write off of internally developed software for e-commerce due to the Company’s acquisition of Aeropost, Inc. and its digital e-commerce platform. 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 and nine months ended May 31, 2018 and 2017 (in thousands): Three Months Ended Nine Months Ended May 31, May 31, May 31, May 31, 2018 2017 2018 2017 Currency gain (loss) $ (575) $ 1,101 $ (87) $ 1,088 Recent Accounting Pronouncements – Not Yet Adopted FASB ASC 220 ASU 2018-02 - Income Statement—Reporting Comprehensive Income (Topic 220)— Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2018, the FASB issued Accounting Standards Update (ASU) No. 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which helps organizations reclassify certain stranded income tax effects in accumulated other comprehensive income resulting from the Tax Cuts and Jobs Act of 2017 (“tax reform”), enacted on December 22, 2017. ASU No. 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from tax reform. Additionally, ASU No. 2018-02 requires financial statement preparers to disclose (1) a description of their accounting policy for releasing income tax effects from accumulated other comprehensive income, (2) whether they elect to reclassify the stranded income tax effects from the tax reform, and (3) information about other income tax effects related to the application of the tax reform that are reclassified from accumulated other comprehensive income to retained earnings, if any. The amendments in this ASU are effective for annual periods beginning after December 15, 2018 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 2017-09 - Compensation—Stock Compensation (Topic 718)—Scope of Modification Accounting In May 2017, the FASB 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 2017, 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 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
May 31, 2018 | |
EARNINGS PER SHARE [Abstract] | |
EARNINGS PER SHARE | NOTE 3 – EARNINGS PER SHARE The Company presents basic net income per share attributable to PriceSmart 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 attributable to PriceSmart 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 attributable to PriceSmart 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 attributable to PriceSmart under the two-class method and including all potential common shares assumed issued in the calculation of diluted net income per share attributable to PriceSmart under the treasury stock method. The following table sets forth the computation of net income per share attributable to PriceSmart for the three and nine months ended May 31, 2018 and 2017 (in thousands, except per share amounts): Three Months Ended Nine Months Ended May 31, May 31, May 31, May 31, 2018 2017 2018 2017 Net income attributable to PriceSmart, Inc. per share available for distribution: $ 18,694 $ 18,838 $ 55,332 $ 70,926 Less: Allocation of income to unvested stockholders (244) (272) (642) (1,034) Net earnings available to common stockholders $ 18,450 $ 18,566 $ 54,690 $ 69,892 Basic weighted average shares outstanding 30,137 30,043 30,105 30,010 Add dilutive effect of stock options (two-class method) — 2 — 4 Diluted average shares outstanding 30,137 30,045 30,105 30,014 Basic $ 0.61 $ 0.62 $ 1.82 $ 2.34 Diluted $ 0.61 $ 0.62 $ 1.82 $ 2.34 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
May 31, 2018 | |
STOCKHOLDERS' EQUITY [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 4 – STOCKHOLDERS’ EQUITY Dividends The following table summarizes the dividends declared and paid during fiscal year 2018 and 2017 (amounts are per share). First Payment Second Payment Declared Amount Record Date Date Paid Date Payable Amount Record Date Date Paid Date Payable Amount 1/24/2018 $ 0.70 2/14/2018 2/28/2018 N/A $ 0.35 8/15/2018 N/A 8/31/2018 $ 0.35 2/1/2017 $ 0.70 2/15/2017 2/28/2017 N/A $ 0.35 8/15/2017 8/31/2017 N/A $ 0.35 The Company anticipates the ongoing semi-annual payment of 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. Comprehensive 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): Nine Months Ended May 31, 2018 Attributable to PriceSmart Noncontrolling Interests Total Beginning balance, September 1, 2017 $ (110,059) $ — $ (110,059) Foreign currency translation adjustments (134) 8 (126) Defined benefit pension plans 101 — 101 Derivative Instruments 1,516 (1) — 1,516 Ending balance, May 31, 2018 $ (108,576) $ 8 $ (108,568) Nine Months Ended May 31, 2017 Attributable to PriceSmart Noncontrolling Interests Total Beginning balance, September 1, 2016 $ (103,951) $ — $ (103,951) Foreign currency translation adjustments (4,700) — (4,700) Derivative Instruments 364 (1) — 364 Amounts reclassified from accumulated other comprehensive income (loss) 29 (2) — 29 Ending balance, May 31, 2017 $ (108,258) $ — $ (108,258) Twelve Months Ended August 31, 2017 Attributable to PriceSmart Noncontrolling Interests Total Beginning balance, September 1, 2016 $ (103,951) $ — $ (103,951) Foreign currency translation adjustments (6,297) — (6,297) Defined benefit pension plans (166) — (166) Derivative Instruments 316 (1) — 316 Amounts reclassified from accumulated other comprehensive income (loss) 39 (2) — 39 Ending balance, August 31, 2017 $ (110,059) $ — $ (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): May 31, August 31, 2018 2017 Retained earnings not available for distribution $ 6,753 $ 6,459 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
May 31, 2018 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
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. In the quarter ended May 31, 2018, as part of the tax Company’s acquisition of Aeropost, the Company booked uncertain income tax positions in the amount of $3.1 million. There were no other significant changes in the Company's uncertain income tax positions as of May 31, 2018 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 May 31, 2018 and August 31, 2017, the Company has recorded within other accrued expenses a total of $3.0 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 $2.8 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 $5.6 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 May 31, 2018 and August 31, 2017, the Company had deferred tax assets of approximately $2.2 million and $2.0 million in this country, respectively. Also, the Company had an income tax receivable balance of $5.5 million and $4.3 million as of May 31, 2018 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 succeed in its refund request and/or court challenge on this matter. In the third quarter of fiscal year 2018, a revised minimum tax law was passed in this country, which beginning in fiscal 2019 will reduce the minimum tax rate. Additionally, this law clarifies rules for reimbursement of excess minimum tax paid, which the Company believes will facilitate this reimbursement on a go-forward basis. The Company has not historically provided for U.S. deferred taxes on cumulative non-U.S. undistributed earnings as such earnings have been deemed by the Company to be indefinitely reinvested. However, subsequent to new United States tax legislation, PriceSmart made a provisional estimate of the one-time transitional repatriation tax on unremitted foreign earnings (“Transition Tax”) of approximately $13.4 million, which was recorded as an income tax expense in the second quarter of fiscal 2018. The cash amounts due for the Transition Tax will be offset by foreign tax credits expected to exceed $10.0 million, with the remainder to be paid in equal installments over 8 years. 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): Maturity of Years ended May 31, Lease Liabilities (1) 2019 $ 13,509 2020 12,138 2021 10,597 2022 9,284 2023 9,412 Thereafter 113,315 Total $ 168,255 (2)(3) (1) Operating lease obligations have been reduced by approximately $1.7 million to reflect sub-lease income. Certain obligations under leasing arrangements are collateralized by the underlying asset being leased. (2) Future minimum lease payments include $2.6 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 for unexecuted subleases. However, projected income for any executed sub-leases would be used to reduce the amount reported as minimum lease payments. Potential sub-lease income was considered, however, for the purposes of calculating the exit obligation which was immaterial on the balance sheet as of May 31, 2018. (3) Future minimum lease payments do not include the approximately $31.6 million of minimum lease payments related to the Honduras lease extension contract entered into in June 2018. See Note 10 – Subsequent Events. 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). As part of the agreement to return one sublease to the landlord, 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 if certain conditions occur related to nonpayment by the new tenant. The balance of this LOC decreases at an annual rate of $125,000 starting in August 2018. 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 May 31, 2018 and as of August 31, 2017 , the Company had approximately $7.9 million 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 May 31, 2018 and August 31, 2017 approximately $545,000 . 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 $14.4 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 tresult of its involvement in these joint venture as of May 31, 2018 (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 $ 274 $ 7,292 $ 99 $ 7,391 Price Plaza Alajuela, S.A. 50 % 2,193 1,236 48 3,477 785 4,262 Total $ 6,809 $ 3,638 $ 322 $ 10,769 $ 884 $ 11,653 (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 $373,000 . 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 and $186,000 for 12-month periods ending May 31, 2019 and for the remaining six-month period ending November 30, 2019, respectively. |
DEBT
DEBT | 9 Months Ended |
May 31, 2018 | |
DEBT [Abstract] | |
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 Outstanding Total Amount Short-term Letters of Facilities Weighted average of Facilities Borrowings Credit Available interest rate May 31, 2018 $ 72,750 $ 334 $ 2,610 $ 69,806 4.0 % August 31, 2017 $ 69,000 $ — $ 966 $ 68,034 — % As of May 31, 2018 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 May 31, 2018 and August 31, 2017, the Company was in compliance with respect to these covenants. Each of the facilities expires annually and is normally renewed. The following table provides the changes in long-term debt for the nine months ended May 31, 2018 : (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) Proceeds from long-term debt incurred during the period: Panama subsidiary 1,500 13,500 15,000 Honduras subsidiary 1,350 12,150 13,500 Repayments of long-term debt: Repayment of loan by Honduras subsidiary with Scotiabank (600) (850) (1,450) Repayment of loans by Honduras subsidiary with Citibank (1,850) (6,063) (7,913) Repayment of loan by Trinidad subsidiary (3,000) (3,000) (6,000) Regularly scheduled loan payments (3,739) (9,829) (13,568) Reclassifications of long-term debt 2,479 (2,479) — Translation adjustments on foreign currency debt of subsidiaries whose functional currency is not the U.S. dollar (2) 146 (160) (14) Balances as of May 31, 2018 $ 14,644 $ 91,208 $ 105,852 (3) (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 $129.5 million. No cash assets were assigned as collateral for these loans. In March 2018, the Company's Panama subsidiary entered into a loan agreement with Scotiabank. The agreement provides for a US $15.0 million loan to be repaid in five years, renewable at the Bank’s exclusive option for one additional period of five years. The loan is to be repaid with quarterly principal and monthly interest payments. The interest rate is set at the 90 day LIBOR rate plus 3% . The loan was funded on March 23, 2018. In March 2018, December 2017 and September 2017 the Company’s Trinidad subsidiary paid off the outstanding principal balances of U.S. $1.5 million, $1.5 million, and $3.0 million, respectively, on a loan agreement entered into with Citibank. In February 2018, the Company’s Honduras subsidiary refinanced its portfolio of loans with Citibank. The original notional amount of this portfolio of loans was $13.5 million, which the Company drew down in fiscal 2015. There was approximately $7.9 million of remaining principal outstanding at the time of the refinancing. Under the refinancing agreement, the portfolio of loans was combined into one loan and the notional amount of the loan increased back to the original $13.5 million, with the interest rate set at the 90 day LIBOR rate plus 3.0% . In conjunction with the refinancing of these loans, the Company’s Honduras subsidiary drew down the additional $5.6 million notional amount during February 2018. In addition, the Company’s Honduras subsidiary entered into a cross-currency interest rate swap with Citibank whereby the Company’s subsidiary will pay Honduras Lempiras at a fixed interest rate of 9.75% . In January 2018, the Company’s Honduras subsidiary paid off the outstanding principal balance of U.S. $1.5 million on a loan agreement entered into with Scotiabank. 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. As of May 31, 2018, Company's Trinidad subsidiary has repaid $4.5 million on this loan in addition of regularly scheduled loan payments. As of May 31, 2018, the remaining balance on this loan was $3.0 million. 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 May 31, 2018 , the Company had approximately $96.1 million of long-term loans in the U.S., Trinidad, Panama, El Salvador, Honduras, Costa Rica and Colombia that require these subsidiaries to comply with certain annual or quarterly financial covenants, which include debt service and leverage ratios. As of May 31, 2018 , 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 May 31, Amount 2019 $ 14,644 2020 23,281 2021 12,881 2022 6,621 2023 4,125 Thereafter 44,300 Total $ 105,852 |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 9 Months Ended |
May 31, 2018 | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES [Abstract] | |
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 entire gain or loss on the derivative reported as a component of other comprehensive income (loss). Amounts are deferred in other comprehensive income (loss) and reclassified into earnings in the same income statement line item that is used to present earnings effect of the hedged item when the hedged item affects earnings. 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 May 31, 2018 , 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 nine months ended May 31, 2018 : 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 (2) 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 Refinanced on February 26,2018 Honduras (2) 26-Feb-18 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 13,500,000 Citibank, N.A. Variable rate 3-month LIBOR plus 3.00% 9.75 % 29th day of May, August, November and February beginning on May 29, 2018 February 26,2018 - February 24, 2023 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 2017. (2) In February 2018, the Company’s Honduras subsidiary refinanced its portfolio of loans entered into with Citibank. The original notional amount of this portfolio of loans was $13.5 million, which the Company drew down in fiscal 2015. There was approximately $7.9 million of remaining principal at the time of the refinancing. Under the refinancing agreement, the portfolio of loans was combined into one loan and the notional amount of the loan increased back to the original $13.5 million, with the interest rate set at the 90 day LIBOR rate plus 3.0%. In conjunction with the refinancing of these loans, the Company’s Honduras subsidiary drew down the additional $5.6 million notional amount during February 2018. As part of the terms, the existing cash flow hedge related to the original loan, was de-designated and incorporated into a new hedging relationship where the Company’s Honduras subsidiary has entered into a cross-currency interest rate swap with Citibank. Under this new hedge agreement, the Company’s Honduras subsidiary will pay Honduras Lempiras, at a fixed interest rate of 9.75%. For the three and nine months ended May 31, 2018 and 2017, 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 May 31, 2018 $ 1,136 $ 277 $ 1,413 Interest expense for the three months ended May 31, 2017 $ 1,080 $ 425 $ 1,505 Interest expense for the nine months ended May 31, 2018 $ 2,859 $ 774 $ 3,633 Interest expense for the nine months ended May 31, 2017 $ 2,584 $ 1,206 $ 3,790 (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 May 31, August 31, Floating Rate Payer (Swap Counterparty) 2018 2017 Union Bank $ 35,700 $ 35,700 Citibank N.A. 28,725 26,088 Scotiabank 11,324 13,724 Total $ 75,749 $ 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): May 31, 2018 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 $ 2,046 $ (618) $ 1,428 $ 2,547 $ (950) $ 1,597 Interest rate swaps Other non-current assets 2,035 (456) 1,579 — — — Interest rate swaps Other long-term liabilities — — — (231) 80 (151) Cross-currency interest rate swaps Other long-term liabilities (537) 161 (376) (451) 135 (316) Net fair value of derivatives designated as hedging instruments $ 3,544 $ (913) $ 2,631 $ 1,865 $ (735) $ 1,130 Fair Value Instruments From time to time the Company enters 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 May 31, 2018. Subsidiary Dates entered into Financial Derivative (Counterparty) Derivative Financial Instrument Notional Amount (in thousands) Settlement Date Effective Period of Forward PSMT, Inc. 29-May-18 MUFG Union Bank, N.A. Forward foreign exchange contracts (USD) $ 577 4-Jun-18 May 29, 2018 - June 04, 2018 For the three and nine months ended May 31, 2018 , 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 Nine Months Ended May 31, May 31, May 31, May 31, Income Statement Classification 2018 2017 2018 2017 Other income (expense), net $ 20 $ (177) $ (141) $ 106 |
ACQUISITION
ACQUISITION | 9 Months Ended |
May 31, 2018 | |
Acquisition [Abstract] | |
Acquisition | NOTE 8 – ACQUISITION On March 15, 2018, the Company acquired Aeropost, Inc. The acquisition has been accounted for in conformity with ASC Topic 805, Business Combinations . The acquisition of Aeropost, Inc. will allow PriceSmart to offer new online shopping options and provides an opportunity to accelerate the development of an omni-channel shopping experience for the Company’s members. The Company paid $29.0 million in cash. Under the merger agreement, $5.0 million of the total consideration has been placed in escrow and its release to the sellers is contingent upon certain key Aeropost, Inc. executives remaining employed with the Company for 15 months from the date of closing. The amount placed in escrow also can be used to satisfy any indemnification claims and post-closing adjustments in favor of the Company. This contingent consideration is accounted for as post-combination compensation expense, reduces the total consideration and will be recorded over this 15 month period. The post-acquisition compensation expense is recorded as prepaid expenses and other current assets on the consolidated balance sheet, and has been treated as use of cash from operating activities on the consolidated statement of cash flows. Below is the table that summarizes the total purchase price consideration (in thousands): May 31, 2018 Estimated consideration on the acquisition date $ 30,046 Estimated assumed net debt at acquisition date (1,093) Total cash consideration 28,953 Post-combination compensation expense, net of claims (3,850) Business acquisition, net assets acquired $ 25,103 Cash acquired 1,208 Business acquisition, net of cash acquired $ 23,895 The Company is still finalizing the allocation of the purchase price, therefore, the purchase price allocation or the provisional measurements of intangible assets, goodwill and deferred income tax assets or liabilities may be adjusted if the Company recognizes additional assets or liabilities to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. The Company expects to complete the allocation of purchase price during fiscal year 2019 . The components of the preliminary purchase price allocation at the acquisition date are as follows (in thousands): May 31, 2018 Current assets $ 4,196 Other non-current assets 746 Property, plant and equipment 2,059 Intangible assets 16,100 Goodwill 16,033 Total assets acquired $ 39,134 Current liabilities (5,862) Non-current liabilities (7,607) (1) Noncontrolling interest (562) Net assets acquired $ 25,103 (1) Includes the recognition of $3.1 million of income tax contingencies. Goodwill represents the excess of the total purchase price over the fair value of the underlying assets. The goodwill is expected not to be deductible for tax purposes. The following sets forth the results of the amounts preliminarily assigned to the identifiable intangible assets acquired (in thousands): Amortization Fair value of Period Assets Acquired Trade name 25 years $ 5,100 Developed technology 5 years 11,000 Total assets acquired $ 16,100 The fair value of the intangible assets is measured based on assumptions and estimations with regards to variable factors such as the amount and timing of future cash flows, appropriate risk-adjusted discount rates, nonperformance risk or other factors that market participants would consider. The trade name and developed technology were valued using the income-based approach and royalty income method, respectively. Intangible assets are amortized on a straight-line basis over the amortization periods noted above , which is included in general and administrative expenses on the accompanying interim unaudited consolidated statements of income . The following unaudited pro forma financial information shows the combined results of operations of the Company, including Aeropost, as if the acquisition had occurred as of the beginning of the periods presented (in thousands): Nine Months Ended 2018 2017 Pro forma total revenues $ 2,410,581 $ 2,296,135 Pro forma net income attributable to PriceSmart, Inc. (1) $ 46,202 $ 64,163 Pro forma net income attributable to noncontrolling interest $ 415 $ 187 Total revenue included in the Consolidated Statement of Income since acquisition $ 7,835 N/A Net income/(loss) included in the Consolidated Statement of Income since acquisition $ (2,290) N/A (1) Includes the pro forma recognition of $2.2 million of post-combination compensation expense, which represents completion of nine of the fifteen months of continued service required to satisfy the $3.8 million remaining purchase price contingency , and $1.3 million for the amortization of intangible assets for the nine months ended May 31, 2018. |
SEGMENTS
SEGMENTS | 9 Months Ended |
May 31, 2018 | |
SEGMENTS [Abstract] | |
SEGMENTS | NOTE 9 – SEGMENTS The Company and its subsidiaries are principally engaged in the international operation of membership shopping in 41 warehouse clubs located in 13 countries/territories that are located in Central America, the Caribbean and Colombia. The Company also acquired a cross-border logistics and e-commerce provider whose central offices and primary distribution facility are located in Miami, which provides service in 38 countries in Latin America and the Caribbean. In addition, the Company operates distribution centers and corporate offices in the United States. The Company has aggregated its warehouse clubs, cross-border logistics, and e-commerce, 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. The Company has aggregated its cross-border logistics and e-commerce operations within the United States reporting segment. 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)(2) Total Three Months Ended May 31, 2018 Revenue from external customers $ 17,802 $ 451,597 $ 214,506 $ 98,296 $ — $ 782,201 Intersegment revenues 291,925 — 1,087 376 (293,388) — Depreciation and amortization 2,245 6,050 2,934 2,337 — 13,566 Operating income (883) 31,257 11,538 2,989 (16,472) 28,429 Net income (loss) attributable to PriceSmart, Inc. (2,792) 25,485 10,074 2,377 (16,450) 18,694 Capital expenditures, net 3,024 12,803 14,368 873 — 31,068 Nine Months Ended May 31, 2018 Revenue from external customers $ 35,087 $ 1,397,668 $ 663,317 $ 292,764 $ — $ 2,388,836 Intersegment revenues 906,114 — 3,265 693 (910,072) — Depreciation and amortization 5,680 17,459 8,343 6,896 — 38,378 Operating income 3,354 100,463 36,763 8,198 (49,919) 98,859 Net income (loss) attributable to PriceSmart, Inc. (17,182) 82,997 33,000 6,414 (49,897) 55,332 Capital expenditures, net 4,612 35,364 33,997 2,729 — 76,702 Long-lived assets (other than deferred tax assets) 72,343 312,468 148,789 125,699 — 659,299 Goodwill and intangibles, net 31,626 30,770 4,548 — — 66,944 Total assets 160,793 562,401 333,985 189,291 — 1,246,470 Three Months Ended May 31, 2017 Revenue from external customers $ 6,455 $ 438,871 $ 201,007 $ 83,925 $ — $ 730,258 Intersegment revenues 259,337 — 853 31 (260,221) — Depreciation and amortization 1,788 5,142 2,594 2,359 — 11,883 Operating income 245 31,444 9,706 1,410 (15,179) 27,626 Net income (loss) attributable to PriceSmart, Inc. (1,795) 25,901 9,251 660 (15,179) 18,838 Capital expenditures, net 2,336 6,895 2,015 770 — 12,016 Nine Months Ended May 31, 2017 Revenue from external customers $ 25,381 $ 1,351,099 $ 627,544 $ 259,102 $ — $ 2,263,126 Intersegment revenues 847,368 — 3,726 53 (851,147) — Depreciation and amortization 4,837 15,146 7,583 6,879 — 34,445 Operating income 10,166 102,410 35,531 3,238 (45,938) 105,407 Net income (loss) attributable to PriceSmart, Inc. 5,998 81,764 28,333 769 (45,938) 70,926 Capital expenditures, net 54,465 33,112 8,554 2,288 — 98,419 Long-lived assets (other than deferred tax assets) 69,141 289,405 107,542 127,528 — 593,616 Goodwill and intangibles, net — 31,113 4,519 — — 35,632 Total assets 142,643 524,806 295,431 180,996 — 1,143,876 As of August 31, 2017 Long-lived assets (other than deferred tax assets) $ 70,353 $ 296,915 $ 122,616 $ 126,206 $ — $ 616,090 Goodwill and intangibles, net — 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. (2) The reconciling items contain a $22,000 adjustment for net income attributable to non-controlling interest. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
May 31, 2018 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS | NOTE 10 – SUBSEQUENT EVENTS The Company has evaluated all events subsequent to the balance sheet date of May 31, 2018 , 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. Other Commitments In June 2018, the Company entered into a lease extension contract in Honduras, which will increase its future minimum lease commitments by approximately $31.6 million. The original lease was due to expire on May 30, 2020 . Years Ended May 31, 2019 $ — 2020 — 2021 1,250 2022 1,250 2023 1,250 Thereafter 27,813 Total $ 31,563 Financing Transactions On June 15, 2018 , the Company entered into a five -year interest rate swap with Scotiabank in which the Company will receive interest based on the three -month LIBOR rate plus 3.00% on a quarterly amortizing initial notional value of U . S . $14.6 million and pay fixed interest of approximately 6.0% on a quarterly amortizing initial notional value of $14.6 million . The derivative instrument requires 57 monthly net settlements of interest. |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policy) | 9 Months Ended |
May 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
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, subsidiaries in which it has a controlling interest, and the Company’s joint ventures for which the Company has determined that it is the primary beneficiary. The Company reports noncontrolling interests in consolidated entities as a component of equity separate from the Company’s equity. The Company’s net income excludes income attributable to its noncontrolling interests. Additionally, the interim consolidated financial statements also include 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. 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. If the Company determines that it is not the primary beneficiary of the VIE, then the Company records its investment in, and the Company's share of the income (loss) of, joint ventures recorded under the equity method. Due to the nature of the joint ventures that the Company participates in and the continued commitments for additional financing, the Company determined these joint ventures are VIEs. The Company has determined for its ownership interest in store-front joint ventures, within its Aeropost subsidiary, that the Company has the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. Therefore, the Company has determined that it is the primary beneficiary of the VIEs and has consolidated these entities within its consolidated financial statements. The Company's ownership interest in these store-front joint ventures, within its Aeropost subsidiary, for which the Company has consolidated their financial statements as of May 31, 2018, are listed below: Aeropost Store-front Joint Ventures Countries Ownership Basis of Presentation El Salvador EL Salvador 60.0 % Consolidated Guatemala Guatemala 60.0 % Consolidated Tortola British Virgin Islands 50.0 % Consolidated Trinidad Trinidad 50.0 % Consolidated For the Company's ownership interest in real estate development joint ventures, 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. The Company's ownership interest in real estate development joint ventures for which the Company has recorded under the equity method as of May 31, 2018 are 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. |
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. |
Goodwill and Other Intangibles | Goodwill and Other Intangibles – Goodwill and intangibles totaled $66.9 million as of May 31, 2018 and $35.6 million as of August 31, 2017 . In March 2018, the Company acquired Aeropost, Inc., which resulted in the addition of $32.1 million of goodwill and other intangibles. Please see the table below for a description and amounts assigned to each major asset class. Please refer to Note 8 – Acquisition for additional information pertaining to each asset class acquired in the business combination. The Company reviews reported goodwill and other intangibles at the cash-generating unit level for impairment. The Company tests for impairment at least annually or when events or changes in circumstances indicate that it is more likely or than not that the asset is impaired. The changes in the carrying amount of goodwill for the year ended May 31, 2018 are as follows (in thousands): May 31, 2018 Goodwill at August 31, 2017 $ 35,642 Foreign currency exchange rate changes (324) Aeropost acquisition - see Note 8 16,033 Goodwill at May 31, 2018 $ 51,351 The table below summarizes our acquired other intangible assets (in thousands) arising from the Aeropost acquisition: May 31, 2018 Other intangibles at August 31, 2017 $ — Trade name 5,100 Developed technology 11,000 Other intangibles at May 31, 2018 $ 16,100 Amortization (507) Net other intangibles at May 31, 2018 $ 15,593 Total goodwill and other intangibles, net $ 66,944 The table below shows our estimated amortization of intangibles for fiscal years 2018 through 2022 and thereafter is as follows (in thousands): Twelve Month Ended August 31 Amount 2018 $ 1,120 (1) 2019 2,404 2020 2,411 2021 2,404 2022 2,404 Thereafter 5,357 Total $ 16,100 (1) Includes $507,000 of actual recorded amortization expense for the period end ed May 31, 2018. |
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 August 31, 2016, there were three countries that lacked a clearly defined process. 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 $377,000 and $1.2 million as of May 31, 2018, 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 rules (which the Company has challenged in court) effective for fiscal years 2015 to 2018 do not clearly allow the Company to obtain a refund or to offset this excess income tax against other taxes. As of May 31, 2018, and August 31, 2017, the Company had deferred tax assets of approximately $2.2 million and $2.0 million, respectively, in this country. Also, the Company had an income tax receivable balance of $5.5 million and $4.3 million as of May 31, 2018 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 these matters. In the third quarter of fiscal year 2018, a revised minimum tax law was passed in this country, which beginning in fiscal 2019 will reduce the minimum tax rate. Additionally, this law clarifies rules for reimbursement of excess minimum tax paid, which the Company believes will facilitate this reimbursement on a go-forward basis. 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): May 31, August 31, 2018 2017 Prepaid expenses and other current assets $ 7,256 $ 6,650 Other non-current assets 19,758 24,904 Total amount of VAT receivables reported $ 27,014 $ 31,554 The following table summarizes the Income tax receivables reported by the Company (in thousands): May 31, August 31, 2018 2017 Prepaid expenses and other current assets $ 4,236 $ 6,403 Other non-current assets 17,347 10,492 Total amount of Income tax receivables reported $ 21,583 $ 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 adopted 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, the 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, based on ASU 2016-09. In addition, the Company reflects the tax savings (deficiency) resulting from the taxation of stock-based compensation as an operating cash flow in its consolidated statement of cash flows. RSAs are outstanding shares of common stock and have the same cash dividend and voting rights as other 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 May 31, 2018 and August 31, 2017 was immaterial. Exit costs of approximately $870,000 were recorded to net merchandise cost of goods sold for the nine months ended May 31, 2018 and $751,000 for the nine months ended May 31, 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. 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 entire gain or loss 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. 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 May 31, 2018 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 May 31, 2018 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 U.S. 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 $581,000 as of May 31, 2018. |
Asset Impairment Costs | Asset Impairment Costs – The Company periodically evaluates its long-lived assets for indicators of impairment. Management's judgments are based on market and operational conditions at the time of the evaluation and can include management's best estimate of future business activity. These periodic evaluations could cause management to conclude that impairment factors exist, requiring an adjustment of these assets to their then-current fair value. Future business conditions and/or activity could differ materially from the projections made by management causing the need for additional impairment charges. The Company recorded an impairment charge of approximately $1.9 million for the nine months ended May 31, 2018 related to the write off of internally developed software for e-commerce due to the Company’s acquisition of Aeropost, Inc. and its digital e-commerce platform. |
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 and nine months ended May 31, 2018 and 2017 (in thousands): Three Months Ended Nine Months Ended May 31, May 31, May 31, May 31, 2018 2017 2018 2017 Currency gain (loss) $ (575) $ 1,101 $ (87) $ 1,088 |
Recent Accounting Pronouncements - Not Yet Adopted | Recent Accounting Pronouncements – Not Yet Adopted FASB ASC 220 ASU 2018-02 - Income Statement—Reporting Comprehensive Income (Topic 220)— Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2018, the FASB issued Accounting Standards Update (ASU) No. 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which helps organizations reclassify certain stranded income tax effects in accumulated other comprehensive income resulting from the Tax Cuts and Jobs Act of 2017 (“tax reform”), enacted on December 22, 2017. ASU No. 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from tax reform. Additionally, ASU No. 2018-02 requires financial statement preparers to disclose (1) a description of their accounting policy for releasing income tax effects from accumulated other comprehensive income, (2) whether they elect to reclassify the stranded income tax effects from the tax reform, and (3) information about other income tax effects related to the application of the tax reform that are reclassified from accumulated other comprehensive income to retained earnings, if any. The amendments in this ASU are effective for annual periods beginning after December 15, 2018 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 2017-09 - Compensation—Stock Compensation (Topic 718)—Scope of Modification Accounting In May 2017, the FASB 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 2017, 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 2017, 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 2016, 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 842 ASU 2016-02 -Leases (Topic 842): Amendments to the FASB Accounting Standards Codification In February 2016, 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 5 – “Commitments and Contingencies” 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 2014, 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 the adoption of this guidance on all of its sources of revenue and the resulting effect it will have on the Company's consolidated financial statements and related disclosures. |
Recent Accounting Pronouncements Adopted | Recent Accounting Pronouncements 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, with early adoption allowed. The Company adopted this guidance during the third quarter of fiscal year 2018. Adoption of this guidance did not have a material effect on the Company's consolidated financial statements. FASB ASC 718 ASU 2016-09 - Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting In March 2016, 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 earnings 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 2015, 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 2016, 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. 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 2016, 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 early adopted this guidance on December 1, 2017. Adoption of this guidance did not have an effect on the Company's consolidated financial statements. |
COMPANY OVERVIEW AND BASIS OF19
COMPANY OVERVIEW AND BASIS OF PRESENTATION (Tables) | 9 Months Ended |
May 31, 2018 | |
COMPANY OVERVIEW AND BASIS OF PRESENTATION [Abstract] | |
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 ACCOUN20
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
May 31, 2018 | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Schedule of Goodwill | May 31, 2018 Goodwill at August 31, 2017 $ 35,642 Foreign currency exchange rate changes (324) Aeropost acquisition - see Note 8 16,033 Goodwill at May 31, 2018 $ 51,351 |
Schedule of Goodwill and Intangibles | May 31, 2018 Other intangibles at August 31, 2017 $ — Trade name 5,100 Developed technology 11,000 Other intangibles at May 31, 2018 $ 16,100 Amortization (507) Net other intangibles at May 31, 2018 $ 15,593 Total goodwill and other intangibles, net $ 66,944 |
Schedule of Amortization of Intangible Assets | Twelve Month Ended August 31 Amount 2018 $ 1,120 (1) 2019 2,404 2020 2,411 2021 2,404 2022 2,404 Thereafter 5,357 Total $ 16,100 (1) Includes $507,000 of actual recorded amortization expense for the period end ed May 31, 2018. |
Summary of Value Added Tax Receivables | May 31, August 31, 2018 2017 Prepaid expenses and other current assets $ 7,256 $ 6,650 Other non-current assets 19,758 24,904 Total amount of VAT receivables reported $ 27,014 $ 31,554 |
Summary of Income Tax Receivables | May 31, August 31, 2018 2017 Prepaid expenses and other current assets $ 4,236 $ 6,403 Other non-current assets 17,347 10,492 Total amount of Income tax receivables reported $ 21,583 $ 16,895 |
Summary of Foreign Currency Gains and Losses | Three Months Ended Nine Months Ended May 31, May 31, May 31, May 31, 2018 2017 2018 2017 Currency gain (loss) $ (575) $ 1,101 $ (87) $ 1,088 |
Aero Post [Member] | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Schedule of Joint Ventures | Aeropost Store-front Joint Ventures Countries Ownership Basis of Presentation El Salvador EL Salvador 60.0 % Consolidated Guatemala Guatemala 60.0 % Consolidated Tortola British Virgin Islands 50.0 % Consolidated Trinidad Trinidad 50.0 % Consolidated |
Real Estate Development [Member] | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Schedule of 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. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
May 31, 2018 | |
EARNINGS PER SHARE [Abstract] | |
Schedule of the Computation of Net Income Per Share | Three Months Ended Nine Months Ended May 31, May 31, May 31, May 31, 2018 2017 2018 2017 Net income attributable to PriceSmart, Inc. per share available for distribution: $ 18,694 $ 18,838 $ 55,332 $ 70,926 Less: Allocation of income to unvested stockholders (244) (272) (642) (1,034) Net earnings available to common stockholders $ 18,450 $ 18,566 $ 54,690 $ 69,892 Basic weighted average shares outstanding 30,137 30,043 30,105 30,010 Add dilutive effect of stock options (two-class method) — 2 — 4 Diluted average shares outstanding 30,137 30,045 30,105 30,014 Basic $ 0.61 $ 0.62 $ 1.82 $ 2.34 Diluted $ 0.61 $ 0.62 $ 1.82 $ 2.34 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
May 31, 2018 | |
STOCKHOLDERS' EQUITY [Abstract] | |
Schedule of Dividends | First Payment Second Payment Declared Amount Record Date Date Paid Date Payable Amount Record Date Date Paid Date Payable Amount 1/24/2018 $ 0.70 2/14/2018 2/28/2018 N/A $ 0.35 8/15/2018 N/A 8/31/2018 $ 0.35 2/1/2017 $ 0.70 2/15/2017 2/28/2017 N/A $ 0.35 8/15/2017 8/31/2017 N/A $ 0.35 |
Schedule of Components of Other Comprehensive Income (Loss) | Nine Months Ended May 31, 2018 Attributable to PriceSmart Noncontrolling Interests Total Beginning balance, September 1, 2017 $ (110,059) $ — $ (110,059) Foreign currency translation adjustments (134) 8 (126) Defined benefit pension plans 101 — 101 Derivative Instruments 1,516 (1) — 1,516 Ending balance, May 31, 2018 $ (108,576) $ 8 $ (108,568) Nine Months Ended May 31, 2017 Attributable to PriceSmart Noncontrolling Interests Total Beginning balance, September 1, 2016 $ (103,951) $ — $ (103,951) Foreign currency translation adjustments (4,700) — (4,700) Derivative Instruments 364 (1) — 364 Amounts reclassified from accumulated other comprehensive income (loss) 29 (2) — 29 Ending balance, May 31, 2017 $ (108,258) $ — $ (108,258) Twelve Months Ended August 31, 2017 Attributable to PriceSmart Noncontrolling Interests Total Beginning balance, September 1, 2016 $ (103,951) $ — $ (103,951) Foreign currency translation adjustments (6,297) — (6,297) Defined benefit pension plans (166) — (166) Derivative Instruments 316 (1) — 316 Amounts reclassified from accumulated other comprehensive income (loss) 39 (2) — 39 Ending balance, August 31, 2017 $ (110,059) $ — $ (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 | May 31, August 31, 2018 2017 Retained earnings not available for distribution $ 6,753 $ 6,459 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
May 31, 2018 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
Schedule of Future Minimum Lease Commitments | Maturity of Years ended May 31, Lease Liabilities (1) 2019 $ 13,509 2020 12,138 2021 10,597 2022 9,284 2023 9,412 Thereafter 113,315 Total $ 168,255 (2)(3) (1) Operating lease obligations have been reduced by approximately $1.7 million to reflect sub-lease income. Certain obligations under leasing arrangements are collateralized by the underlying asset being leased. (2) Future minimum lease payments include $2.6 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 for unexecuted subleases. However, projected income for any executed sub-leases would be used to reduce the amount reported as minimum lease payments. Potential sub-lease income was considered, however, for the purposes of calculating the exit obligation which was immaterial on the balance sheet as of May 31, 2018. (3) Future minimum lease payments do not include the approximately $31.6 million of minimum lease payments related to the Honduras lease extension contract entered into in June 2018. See Note 10 – Subsequent Events. |
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 $ 274 $ 7,292 $ 99 $ 7,391 Price Plaza Alajuela, S.A. 50 % 2,193 1,236 48 3,477 785 4,262 Total $ 6,809 $ 3,638 $ 322 $ 10,769 $ 884 $ 11,653 (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) | 9 Months Ended |
May 31, 2018 | |
DEBT [Abstract] | |
Schedule of Short-Term Borrowings | Facilities Outstanding Total Amount Short-term Letters of Facilities Weighted average of Facilities Borrowings Credit Available interest rate May 31, 2018 $ 72,750 $ 334 $ 2,610 $ 69,806 4.0 % 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) Proceeds from long-term debt incurred during the period: Panama subsidiary 1,500 13,500 15,000 Honduras subsidiary 1,350 12,150 13,500 Repayments of long-term debt: Repayment of loan by Honduras subsidiary with Scotiabank (600) (850) (1,450) Repayment of loans by Honduras subsidiary with Citibank (1,850) (6,063) (7,913) Repayment of loan by Trinidad subsidiary (3,000) (3,000) (6,000) Regularly scheduled loan payments (3,739) (9,829) (13,568) Reclassifications of long-term debt 2,479 (2,479) — Translation adjustments on foreign currency debt of subsidiaries whose functional currency is not the U.S. dollar (2) 146 (160) (14) Balances as of May 31, 2018 $ 14,644 $ 91,208 $ 105,852 (3) (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 $129.5 million. No cash assets were assigned as collateral for these loans. |
Schedule of Annual Maturities of Long-Term Debt | Twelve Months Ended May 31, Amount 2019 $ 14,644 2020 23,281 2021 12,881 2022 6,621 2023 4,125 Thereafter 44,300 Total $ 105,852 |
DERIVATIVE INSTRUMENTS AND HE25
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 9 Months Ended |
May 31, 2018 | |
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 (2) 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 Refinanced on February 26,2018 Honduras (2) 26-Feb-18 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 13,500,000 Citibank, N.A. Variable rate 3-month LIBOR plus 3.00% 9.75 % 29th day of May, August, November and February beginning on May 29, 2018 February 26,2018 - February 24, 2023 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 2017. (2) In February 2018, the Company’s Honduras subsidiary refinanced its portfolio of loans entered into with Citibank. The original notional amount of this portfolio of loans was $13.5 million, which the Company drew down in fiscal 2015. There was approximately $7.9 million of remaining principal at the time of the refinancing. Under the refinancing agreement, the portfolio of loans was combined into one loan and the notional amount of the loan increased back to the original $13.5 million, with the interest rate set at the 90 day LIBOR rate plus 3.0%. In conjunction with the refinancing of these loans, the Company’s Honduras subsidiary drew down the additional $5.6 million notional amount during February 2018. As part of the terms, the existing cash flow hedge related to the original loan, was de-designated and incorporated into a new hedging relationship where the Company’s Honduras subsidiary has entered into a cross-currency interest rate swap with Citibank. Under this new hedge agreement, the Company’s Honduras subsidiary will pay Honduras Lempiras, at a fixed interest rate of 9.75%. |
Interest Rate Swaps [Member] | Cash Flow Hedging [Member] | |
Derivative [Line Items] | |
Schedule of Notional Amounts of Outstanding Derivative Positions | Notional Amount as of May 31, August 31, Floating Rate Payer (Swap Counterparty) 2018 2017 Union Bank $ 35,700 $ 35,700 Citibank N.A. 28,725 26,088 Scotiabank 11,324 13,724 Total $ 75,749 $ 75,512 |
Derivative Swaps [Member] | Cash Flow Hedging [Member] | |
Derivative [Line Items] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | May 31, 2018 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 $ 2,046 $ (618) $ 1,428 $ 2,547 $ (950) $ 1,597 Interest rate swaps Other non-current assets 2,035 (456) 1,579 — — — Interest rate swaps Other long-term liabilities — — — (231) 80 (151) Cross-currency interest rate swaps Other long-term liabilities (537) 161 (376) (451) 135 (316) Net fair value of derivatives designated as hedging instruments $ 3,544 $ (913) $ 2,631 $ 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 May 31, 2018 $ 1,136 $ 277 $ 1,413 Interest expense for the three months ended May 31, 2017 $ 1,080 $ 425 $ 1,505 Interest expense for the nine months ended May 31, 2018 $ 2,859 $ 774 $ 3,633 Interest expense for the nine months ended May 31, 2017 $ 2,584 $ 1,206 $ 3,790 (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. |
Forward Foreign Exchange Contract [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 Nine Months Ended May 31, May 31, May 31, May 31, Income Statement Classification 2018 2017 2018 2017 Other income (expense), net $ 20 $ (177) $ (141) $ 106 |
Non-Deliverable Foreign Exchange Forward [Member] | Fair Value Hedging [Member] | |
Derivative [Line Items] | |
Schedule of Open Non-Deliverable Forward Foreign Exchange Contracts | Subsidiary Dates entered into Financial Derivative (Counterparty) Derivative Financial Instrument Notional Amount (in thousands) Settlement Date Effective Period of Forward PSMT, Inc. 29-May-18 MUFG Union Bank, N.A. Forward foreign exchange contracts (USD) $ 577 4-Jun-18 May 29, 2018 - June 04, 2018 |
ACQUISITION (Tables)
ACQUISITION (Tables) | 9 Months Ended |
May 31, 2018 | |
Acquisition [Abstract] | |
Summary of the Total Purchase Consideration | May 31, 2018 Estimated consideration on the acquisition date $ 30,046 Estimated assumed net debt at acquisition date (1,093) Total cash consideration 28,953 Post-combination compensation expense, net of claims (3,850) Business acquisition, net assets acquired $ 25,103 Cash acquired 1,208 Business acquisition, net of cash acquired $ 23,895 |
Components of the Preliminary Purchase Price Allocation | May 31, 2018 Current assets $ 4,196 Other non-current assets 746 Property, plant and equipment 2,059 Intangible assets 16,100 Goodwill 16,033 Total assets acquired $ 39,134 Current liabilities (5,862) Non-current liabilities (7,607) (1) Noncontrolling interest (562) Net assets acquired $ 25,103 |
Schedule of Intangible Assets Acquired | Amortization Fair value of Period Assets Acquired Trade name 25 years $ 5,100 Developed technology 5 years 11,000 Total assets acquired $ 16,100 |
Pro Forma Financial Information | Nine Months Ended 2018 2017 Pro forma total revenues $ 2,410,581 $ 2,296,135 Pro forma net income attributable to PriceSmart, Inc. (1) $ 46,202 $ 64,163 Pro forma net income attributable to noncontrolling interest $ 415 $ 187 Total revenue included in the Consolidated Statement of Income since acquisition $ 7,835 N/A Net income/(loss) included in the Consolidated Statement of Income since acquisition $ (2,290) N/A (1) Includes the pro forma recognition of $2.2 million of post-combination compensation expense, which represents completion of nine of the fifteen months of continued service required to satisfy the $3.8 million remaining purchase price contingency , and $1.3 million for the amortization of intangible assets for the nine months ended May 31, 2018. |
SEGMENTS (Tables)
SEGMENTS (Tables) | 9 Months Ended |
May 31, 2018 | |
SEGMENTS [Abstract] | |
Summary of Segment Revenues, Operating Costs and Balance Sheet Items | United States Operations Central American Operations Caribbean Operations Colombia Operations Reconciling Items (1)(2) Total Three Months Ended May 31, 2018 Revenue from external customers $ 17,802 $ 451,597 $ 214,506 $ 98,296 $ — $ 782,201 Intersegment revenues 291,925 — 1,087 376 (293,388) — Depreciation and amortization 2,245 6,050 2,934 2,337 — 13,566 Operating income (883) 31,257 11,538 2,989 (16,472) 28,429 Net income (loss) attributable to PriceSmart, Inc. (2,792) 25,485 10,074 2,377 (16,450) 18,694 Capital expenditures, net 3,024 12,803 14,368 873 — 31,068 Nine Months Ended May 31, 2018 Revenue from external customers $ 35,087 $ 1,397,668 $ 663,317 $ 292,764 $ — $ 2,388,836 Intersegment revenues 906,114 — 3,265 693 (910,072) — Depreciation and amortization 5,680 17,459 8,343 6,896 — 38,378 Operating income 3,354 100,463 36,763 8,198 (49,919) 98,859 Net income (loss) attributable to PriceSmart, Inc. (17,182) 82,997 33,000 6,414 (49,897) 55,332 Capital expenditures, net 4,612 35,364 33,997 2,729 — 76,702 Long-lived assets (other than deferred tax assets) 72,343 312,468 148,789 125,699 — 659,299 Goodwill and intangibles, net 31,626 30,770 4,548 — — 66,944 Total assets 160,793 562,401 333,985 189,291 — 1,246,470 Three Months Ended May 31, 2017 Revenue from external customers $ 6,455 $ 438,871 $ 201,007 $ 83,925 $ — $ 730,258 Intersegment revenues 259,337 — 853 31 (260,221) — Depreciation and amortization 1,788 5,142 2,594 2,359 — 11,883 Operating income 245 31,444 9,706 1,410 (15,179) 27,626 Net income (loss) attributable to PriceSmart, Inc. (1,795) 25,901 9,251 660 (15,179) 18,838 Capital expenditures, net 2,336 6,895 2,015 770 — 12,016 Nine Months Ended May 31, 2017 Revenue from external customers $ 25,381 $ 1,351,099 $ 627,544 $ 259,102 $ — $ 2,263,126 Intersegment revenues 847,368 — 3,726 53 (851,147) — Depreciation and amortization 4,837 15,146 7,583 6,879 — 34,445 Operating income 10,166 102,410 35,531 3,238 (45,938) 105,407 Net income (loss) attributable to PriceSmart, Inc. 5,998 81,764 28,333 769 (45,938) 70,926 Capital expenditures, net 54,465 33,112 8,554 2,288 — 98,419 Long-lived assets (other than deferred tax assets) 69,141 289,405 107,542 127,528 — 593,616 Goodwill and intangibles, net — 31,113 4,519 — — 35,632 Total assets 142,643 524,806 295,431 180,996 — 1,143,876 As of August 31, 2017 Long-lived assets (other than deferred tax assets) $ 70,353 $ 296,915 $ 122,616 $ 126,206 $ — $ 616,090 Goodwill and intangibles, net — 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. (2) The reconciling items contain a $22,000 adjustment for net income attributable to non-controlling interest. |
SUBSEQUENT EVENTS (Tables)
SUBSEQUENT EVENTS (Tables) | 9 Months Ended |
May 31, 2018 | |
SUBSEQUENT EVENTS [Abstract] | |
Other Commitments | Years Ended May 31, 2019 $ — 2020 — 2021 1,250 2022 1,250 2023 1,250 Thereafter 27,813 Total $ 31,563 |
COMPANY OVERVIEW AND BASIS OF29
COMPANY OVERVIEW AND BASIS OF PRESENTATION (Narrative) (Details) | 9 Months Ended | ||
May 31, 2017USD ($) | May 31, 2018ft²warehousecountry | Oct. 31, 2017warehouse | |
Company Overview And Basis Of Presentation [Line Items] | |||
Number of stores | 41 | ||
Number of countries | country | 13 | ||
Excess tax benefits, Operating activities | $ | $ 231,000 | ||
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 | ||
Dominican Republic [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 | ||
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 | ||
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 | ||
Aeropost, Inc [Member] | Latin America [Member] | |||
Company Overview And Basis Of Presentation [Line Items] | |||
Number of countries | country | 38 | ||
Minimum [Member] | |||
Company Overview And Basis Of Presentation [Line Items] | |||
Square footage of club warehouse | ft² | 50,000 | ||
Minimum [Member] | Panama and Dominican Republic [Member] | |||
Company Overview And Basis Of Presentation [Line Items] | |||
Square footage of club warehouse | ft² | 30,000 | ||
Maximum [Member] | |||
Company Overview And Basis Of Presentation [Line Items] | |||
Square footage of club warehouse | ft² | 60,000 | ||
Maximum [Member] | Panama and Dominican Republic [Member] | |||
Company Overview And Basis Of Presentation [Line Items] | |||
Square footage of club warehouse | ft² | 40,000 |
COMPANY OVERVIEW AND BASIS OF30
COMPANY OVERVIEW AND BASIS OF PRESENTATION (Schedule of Error Corrections and Prior Period Adjustment) (Details) - USD ($) $ in Thousands | May 31, 2018 | Aug. 31, 2017 |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Retained earnings | $ 454,901 | $ 420,866 |
Additional paid-in capital | $ 430,133 | 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 ACCOUN31
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Goodwill and Intangibles) (Narrative) (Details) - USD ($) $ in Thousands | May 31, 2018 | Mar. 31, 2018 | Aug. 31, 2017 | May 31, 2017 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||||
Goodwill and intangibles, net | $ 66,944 | $ 32,100 | $ 35,642 | $ 35,632 |
SUMMARY OF SIGNIFICANT ACCOUN32
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tax Receivables) (Narrative) (Details) - USD ($) | May 31, 2018 | Aug. 31, 2017 |
Tax Receivables [Line Items] | ||
Value added tax receivable | $ 27,014,000 | $ 31,554,000 |
Income taxes receivable | 21,583,000 | 16,895,000 |
Unknown Country [Member] | ||
Tax Receivables [Line Items] | ||
Value added tax receivable | 377,000 | 1,200,000 |
Deferred tax assets, net | 2,200,000 | 2,000,000 |
Income taxes receivable | $ 5,500,000 | $ 4,300,000 |
SUMMARY OF SIGNIFICANT ACCOUN33
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Stock Based Compensation) (Narrative) (Details) | 9 Months Ended |
May 31, 2018item | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Number Of Equity Awards Offered | 3 |
SUMMARY OF SIGNIFICANT ACCOUN34
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Exit or Disposal Cost Obligations) (Narrative) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |
May 31, 2017 | May 31, 2018 | May 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||
Exit obligation, Other long-term liabilities | $ 496,000 | $ 2,600,000 | |
Exit obligation, Warehouse expenses | $ 870,000 | $ 751,000 |
SUMMARY OF SIGNIFICANT ACCOUN35
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Fair Value Measurements) (Narrative) (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
May 31, 2018 | Aug. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||
Non-financial asset impairment | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN36
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Self-Insurance) (Narrative) (Details) | May 31, 2017USD ($) |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Self-Insurance liability | $ 581,000 |
SUMMARY OF SIGNIFICANT ACCOUN37
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Asset Impairment Costs) (Narrative) (Details) $ in Thousands | 9 Months Ended |
May 31, 2018USD ($) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Asset impairment | $ 1,929 |
SUMMARY OF SIGNIFICANT ACCOUN38
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Joint Ventures) (Details) | May 31, 2018 | |
Aero Post [Member] | El Salvador [Member] | Consolidated Entities [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 60.00% | |
Aero Post [Member] | Guatemala [Member] | Consolidated Entities [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 60.00% | |
Aero Post [Member] | British Virgin Islands [Member] | Consolidated Entities [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 50.00% | |
Aero Post [Member] | Trinidad [Member] | Consolidated Entities [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 50.00% | |
Real Estate Development [Member] | Panama [Member] | Equity Method Investee [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 50.00% | [1] |
Real Estate Development [Member] | Costa Rica [Member] | Equity Method Investee [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 50.00% | [1] |
[1] | Joint venture interests are recorded as investment in unconsolidated affiliates on the consolidated balance sheets. |
SUMMARY OF SIGNIFICANT ACCOUN39
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Goodwill) (Details) $ in Thousands | 9 Months Ended |
May 31, 2018USD ($) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Beginning balance | $ 35,642 |
Foreign currency exchange rate changes | (324) |
Aeropost acquisition - see Note 8 | 16,033 |
Ending balance | $ 51,351 |
SUMMARY OF SIGNIFICANT ACCOUN40
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Goodwill and Intangibles) (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
May 31, 2018 | Mar. 31, 2018 | Aug. 31, 2017 | May 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||||
Beginning balance | ||||
Trade name | 5,100 | |||
Developed technology | 11,000 | |||
Ending balance | 16,100 | |||
Amortization | (507) | |||
Net other intangibles at May 31, 2018 | 15,593 | |||
Total goodwill and other intangibles, net | $ 66,944 | $ 32,100 | $ 35,642 | $ 35,632 |
SUMMARY OF SIGNIFICANT ACCOUN41
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Amortization of Intangible Assets) (Details) $ in Thousands | 9 Months Ended | |
May 31, 2018USD ($) | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||
2,018 | $ 1,120 | [1] |
2,019 | 2,404 | |
2,020 | 2,411 | |
2,021 | 2,404 | |
2,022 | 2,404 | |
Thereafter | 5,357 | |
Total | 16,100 | |
Amortization | $ (507) | |
[1] | Includes $507,000 of actual recorded amortization expense for the period ended May 31, 2018. |
SUMMARY OF SIGNIFICANT ACCOUN42
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Summary of Value Added Tax Receivables) (Details) - USD ($) $ in Thousands | May 31, 2018 | Aug. 31, 2017 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||
Value Added Tax, Prepaid expenses and other current assets | $ 7,256 | $ 6,650 |
Value Added Tax, Other non-current assets | 19,758 | 24,904 |
Total amount of VAT receivables reported | $ 27,014 | $ 31,554 |
SUMMARY OF SIGNIFICANT ACCOUN43
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Summary of Income Tax Receivables) (Details) - USD ($) $ in Thousands | May 31, 2018 | Aug. 31, 2017 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||
Income Taxes Receivable, Prepaid expenses and other current assets | $ 4,236 | $ 6,403 |
Income Taxes Receivable, Other non-current assets | 17,347 | 10,492 |
Total amount of income tax receivables reported | $ 21,583 | $ 16,895 |
SUMMARY OF SIGNIFICANT ACCOUN44
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Summary of Foreign Currency Gains and Losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2018 | May 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||||
Currency gain (loss) | $ (575) | $ 1,101 | $ (87) | $ 1,088 |
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 | 9 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2018 | May 31, 2017 | |
EARNINGS PER SHARE [Abstract] | ||||
Net income (loss) attributable to PriceSmart Inc. | $ 18,694 | $ 18,838 | $ 55,332 | $ 70,926 |
Less: Allocation of income to unvested stockholders | (244) | (272) | (642) | (1,034) |
Net earnings available to common stockholders | $ 18,450 | $ 18,566 | $ 54,690 | $ 69,892 |
Basic weighted average shares outstanding | 30,137 | 30,043 | 30,105 | 30,010 |
Add dilutive effect of stock options (two-class method) | 2 | 4 | ||
Diluted average shares outstanding | 30,137 | 30,045 | 30,105 | 30,014 |
Basic | $ 0.61 | $ 0.62 | $ 1.82 | $ 2.34 |
Diluted | $ 0.61 | $ 0.62 | $ 1.82 | $ 2.34 |
STOCKHOLDERS' EQUITY (Schedule
STOCKHOLDERS' EQUITY (Schedule of Dividends) (Details) - $ / shares | Feb. 28, 2018 | Jan. 24, 2018 | Aug. 31, 2017 | Feb. 28, 2017 | Feb. 01, 2017 | May 31, 2018 | May 31, 2017 | May 31, 2018 | May 31, 2017 |
Dividends Payable [Line Items] | |||||||||
Amount | $ 0.70 | $ 0.70 | |||||||
2018 Dividend Declared [Member] | |||||||||
Dividends Payable [Line Items] | |||||||||
Declared | Jan. 24, 2018 | ||||||||
Amount | $ 0.70 | ||||||||
2017 Dividend Declared [Member] | |||||||||
Dividends Payable [Line Items] | |||||||||
Declared | Feb. 1, 2017 | ||||||||
Amount | $ 0.70 | ||||||||
2018 First Dividend Paid [Member] | |||||||||
Dividends Payable [Line Items] | |||||||||
Record Date | Feb. 14, 2018 | ||||||||
Date Paid | Feb. 28, 2018 | ||||||||
Payment Amount | $ 0.35 | ||||||||
2018 Second Dividend Paid [Member] | |||||||||
Dividends Payable [Line Items] | |||||||||
Record Date | Aug. 15, 2018 | ||||||||
Date Payable | Aug. 31, 2018 | ||||||||
Payment Amount | $ 0.35 | ||||||||
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 Paid | Aug. 31, 2017 | ||||||||
Payment Amount | $ 0.35 |
STOCKHOLDERS' EQUITY (Schedul47
STOCKHOLDERS' EQUITY (Schedule of Components of Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
May 31, 2018 | May 31, 2017 | May 31, 2018 | May 31, 2017 | Aug. 31, 2017 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Balance, Attributable to PriceSmart | $ 708,767 | |||||
Balance, Attributable to PriceSmart | $ 750,107 | 750,107 | $ 708,767 | |||
Balance | 708,767 | $ 638,071 | 638,071 | |||
Other comprehensive income (loss) | (2,340) | $ (3,447) | 1,491 | (4,307) | ||
Balance | 750,699 | 689,387 | 750,699 | 689,387 | 708,767 | |
Accumulated Other Comprehensive Income (Loss) [Member] | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Balance, Attributable to PriceSmart | (110,059) | (103,951) | (103,951) | |||
Balance, Attributable to PriceSmart | (108,576) | (108,258) | (108,576) | (108,258) | (110,059) | |
Balance | (110,059) | (103,951) | (103,951) | |||
Other comprehensive income (loss) | 1,483 | (4,307) | ||||
Balance | (108,576) | (108,258) | (108,576) | (108,258) | (110,059) | |
Foreign Currency Translation Adjustments [Member] | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Other comprehensive income (loss), Attributable to PriceSmart | (134) | (4,700) | (6,297) | |||
Defined Benefit Pension Plans [Member] | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Other comprehensive income (loss), Attributable to PriceSmart | 101 | (166) | ||||
Derivative Instruments [Member] | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Other comprehensive income (loss), Attributable to PriceSmart | [1] | 1,516 | 364 | 316 | ||
Reclassification From Other Comprehensive Income (Loss) To Parent [Member] | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Amount reclassified from accumulated other comprehensive income (loss), Attributable to PriceSmart | [2] | 29 | 39 | |||
AOCI Attributable to Noncontrolling Interest [Member] | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Balance | ||||||
Balance | 8 | 8 | ||||
Accumulated Foreign Currency Adjustment Attributable to Noncontrolling Interest [Member] | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Other comprehensive income (loss) | 8 | |||||
Accumulated Defined Benefit Plans Adjustment Attributable to Noncontrolling Interest [Member] | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Other comprehensive income (loss) | ||||||
Accumulated Derivative Instruments Attributable to Noncontrolling Interest [Member] | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Other comprehensive income (loss) | ||||||
Reclassification From Other Comprehensive Income (Loss) Attributable To Noncontrolling Interest [Member] | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Amounts reclassified from accumulated other comprehensive income (loss) | ||||||
AOCI Including Portion Attributable to Noncontrolling Interest [Member] | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Balance | (110,059) | (103,951) | (103,951) | |||
Balance | $ (108,568) | $ (108,258) | (108,568) | (108,258) | (110,059) | |
Accumulated Foreign Currency Adjustment Including Portion Attributable to Noncontrolling Interest [Member] | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Other comprehensive income (loss) | (126) | (4,700) | (6,297) | |||
Accumulated Defined Benefit Plans Adjustment Including Portion Attributable to Noncontrolling Interest [Member] | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Other comprehensive income (loss) | 101 | (166) | ||||
Accumulated Net Investment Gain (Loss) Including Portion Attributable to Noncontrolling Interest [Member] | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Other comprehensive income (loss) | $ 1,516 | 364 | 316 | |||
Reclassification From Other Comprehensive Income (Loss) Including Portion Attributable To Noncontrolling Interest [Member] | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Amounts reclassified from accumulated other comprehensive income (loss) | $ 29 | $ 39 | ||||
[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. |
STOCKHOLDERS' EQUITY (Summary o
STOCKHOLDERS' EQUITY (Summary of Retained Earnings Not Available for Distribution) (Details) - USD ($) $ in Thousands | May 31, 2018 | Aug. 31, 2017 |
STOCKHOLDERS' EQUITY [Abstract] | ||
Retained earnings not available for distribution | $ 6,753 | $ 6,459 |
COMMITMENTS AND CONTINGENCIES49
COMMITMENTS AND CONTINGENCIES (Narrative) (Details) - USD ($) | 1 Months Ended | 9 Months Ended | ||||
Jan. 31, 2017 | May 31, 2018 | Aug. 31, 2020 | Nov. 30, 2019 | May 31, 2019 | Aug. 31, 2017 | |
Commitments And Contingencies [Line Items] | ||||||
Accrual for taxes other than income taxes, Current | $ 3,000,000 | $ 3,400,000 | ||||
Contractual obligation | 7,900,000 | 7,900,000 | ||||
Land purchase option agreement | 545,000 | 545,000 | ||||
Land under purchase options, Not recorded | 14,400,000 | |||||
Provisional assessments | 2,800,000 | |||||
Additional provisional assessment | 5,600,000 | |||||
Income taxes receivable | 21,583,000 | 16,895,000 | ||||
Transitional repatriation tax | 13,400,000 | |||||
Expected credit to offset Transition Tax | $ 10,000,000 | |||||
Income tax payment period | 8 years | |||||
Miami-Dade County, Florida [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Letter of credit payable to the landlord | $ 500,000 | |||||
Annual decrease in LOC | $ 125,000 | |||||
Unknown Country [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Deferred tax assets, net | 2,200,000 | 2,000,000 | ||||
Income taxes receivable | $ 5,500,000 | $ 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 | $ 186,000 | $ 372,000 | ||||
Scenario, Forecast [Member] | Mexico [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Purchase commitment, Remaining minimum amount committed | $ 373,000 | |||||
Aeropost, Inc [Member] | ||||||
Commitments And Contingencies [Line Items] | ||||||
Income tax contingencies | $ 3,100,000 |
COMMITMENTS AND CONTINGENCIES50
COMMITMENTS AND CONTINGENCIES (Schedule of Future Minimum Lease Commitments) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |
May 31, 2017 | May 31, 2018 | ||
COMMITMENTS AND CONTINGENCIES [Abstract] | |||
2,019 | [1],[2] | $ 13,509,000 | |
2,020 | [1],[2] | 12,138,000 | |
2,021 | [1],[2] | 10,597,000 | |
2,022 | [1],[2] | 9,284,000 | |
2,023 | [1],[2] | 9,412,000 | |
Thereafter | [1],[2] | 113,315,000 | |
Total | [1],[2],[3] | 168,255,000 | |
Sub-lease income | 1,700,000 | ||
Exit obligation, Other long-term liabilities | $ 496,000 | 2,600,000 | |
Reduction for potential sub-lease income | 0 | ||
Other Commitment | $ 31,563,000 | ||
[1] | Future minimum lease payments do not include the approximately $31.6 million of minimum lease payments related to the Honduras lease extension contract entered into in June 2018. See Note 10 - Subsequent Events. | ||
[2] | Operating lease obligations have been reduced by approximately $1.7 million to reflect sub-lease income. Certain obligations under leasing arrangements are collateralized by the underlying asset being leased. | ||
[3] | Future minimum lease payments include $2.6 million of lease payment obligations for the prior leased Miami distribution center. For the purposes of calculating the minimum lease payments, no reduction was considered for the potential sub-lease income the Company could receive during the remaining lease term for unexecuted subleases. However, projected income for any executed sub-leases would be used to reduce the amount reported as minimum lease payments. Potential sub-lease income was considered, however, for the purposes of calculating the exit obligation which was immaterial on the balance sheet as of May 31, 2018. |
COMMITMENTS AND CONTINGENCIES51
COMMITMENTS AND CONTINGENCIES (Schedule of Variable Interest Entities Maximum Loss Exposure) (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
May 31, 2018 | Aug. 31, 2017 | ||
Variable Interest Entity [Line Items] | |||
Initial Investment | $ 6,809 | ||
Additional Investments | 3,638 | ||
Net (Loss)/Income Inception to Date | 322 | ||
Company's Variable Interest in Entity | 10,769 | $ 10,765 | |
Commitment to Future Additional Investments | [1] | 884 | |
Company's Maximum Exposure to Loss in Entity | [2] | $ 11,653 | |
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 | 274 | ||
Company's Variable Interest in Entity | 7,292 | ||
Commitment to Future Additional Investments | [1] | 99 | |
Company's Maximum Exposure to Loss in Entity | [2] | $ 7,391 | |
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 | 48 | ||
Company's Variable Interest in Entity | 3,477 | ||
Commitment to Future Additional Investments | [1] | 785 | |
Company's Maximum Exposure to Loss in Entity | [2] | $ 4,262 | |
[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) | Mar. 31, 2017USD ($)item | Mar. 31, 2018USD ($) | Feb. 28, 2018USD ($) | Jan. 31, 2017USD ($) | May 31, 2018USD ($) | May 31, 2017USD ($) | Jan. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Aug. 31, 2017USD ($) | Aug. 31, 2015USD ($) | ||
Debt Instrument [Line Items] | |||||||||||||
Total | $ 105,852,000 | [1] | $ 106,297,000 | [2] | |||||||||
Repayment of short-term bank borrowings | 81,758,000 | $ 17,179,000 | |||||||||||
Remaining outstanding balance | 69,806,000 | 68,034,000 | |||||||||||
Debt With Covenants [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Line of credit, Current | 40,000,000 | 40,000,000 | |||||||||||
Group of Subsidiaries [Member] | Debt With Covenants [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Total | 96,100,000 | 85,600,000 | |||||||||||
Trinidad Subsidiary [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Remaining outstanding balance | $ 3,000,000 | ||||||||||||
Miami-Dade County, Florida [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Purchase price | $ 46,000,000 | ||||||||||||
Union Bank [Member] | Miami-Dade County, Florida [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt term | 10 years | ||||||||||||
Credit facility funded | 35,700,000 | ||||||||||||
Credit facility, expiration date | Dec. 31, 2027 | ||||||||||||
Citibank [Member] | Trinidad Subsidiary [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Line of credit, Current | $ 1,500,000 | $ 1,500,000 | $ 3,000,000 | ||||||||||
LIBOR measurement period | 90 days | ||||||||||||
Credit facility, variable interest rate | 3.00% | ||||||||||||
Maximum borrowing capacity | $ 12,000,000 | ||||||||||||
Number of payments | item | 8 | ||||||||||||
Repayment of short-term bank borrowings | $ 4,500,000 | ||||||||||||
Citibank [Member] | Honduras Subsidiary [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Proceeds from notional amount | $ 5,600,000 | ||||||||||||
Scotiabank [Member] | Panama Subsidiary [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Line of credit, Current | $ 13,300,000 | ||||||||||||
Debt term | 5 years | ||||||||||||
LIBOR measurement period | 90 days | ||||||||||||
Derivative, variable interest rate | 3.00% | ||||||||||||
Maximum borrowing capacity | $ 15,000,000 | ||||||||||||
Scotiabank [Member] | Honduras Subsidiary [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Line of credit, Current | $ 1,500,000 | ||||||||||||
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 | $ 35,700,000 | ||||||||||||
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% | ||||||||||||
Cross Currency Interest Rate Swaps [Member] | Citibank [Member] | Honduras Subsidiary [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Derivative, fixed interest rate | 9.75% | ||||||||||||
Honduras $13.5M Cross Currency Interest Rate Swap [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
LIBOR measurement period | 90 days | ||||||||||||
Cash Flow Hedging [Member] | Citibank [Member] | Honduras Subsidiary [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Remaining outstanding balance | $ 7,900,000 | ||||||||||||
Cash Flow Hedging [Member] | Honduras $13.5M Cross Currency Interest Rate Swap [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Notional amount | $ 13,500,000 | $ 13,500,000 | |||||||||||
Derivative, variable interest rate | 3.00% | 3.00% | |||||||||||
Derivative, fixed interest rate | 9.75% | ||||||||||||
[1] | The carrying amount of non-cash assets assigned as collateral for these loans was $129.5 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 | May 31, 2018 | Aug. 31, 2017 |
Short-term Debt [Line Items] | ||
Total Amount of Facilities | $ 72,750 | $ 69,000 |
Facilities Available | 69,806 | 68,034 |
Short-term Borrowings [Member] | ||
Short-term Debt [Line Items] | ||
Line of credit, Current | $ 334 | |
Weighted average interest rate | 4.00% | |
Letters of Credit [Member] | ||
Short-term Debt [Line Items] | ||
Line of credit, Current | $ 2,610 | $ 966 |
DEBT (Summary of Changes in Lon
DEBT (Summary of Changes in Long-Term Debt) (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
May 31, 2018 | May 31, 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 | ||
Proceeds from long-term debt total | 28,500 | $ 47,700 | ||
Regularly scheduled loan payments, Current | (3,739) | |||
Regularly scheduled loan payments, Noncurrent | (9,829) | |||
Regularly scheduled loan payments total | (13,568) | |||
Reclassification of long-term debt, Current | 2,479 | |||
Reclassification of long-term debt, Noncurrent | (2,479) | |||
Translation adjustments on foreign-currency debt of subsidiaries whose functional currency is not the U.S. dollar, Current | [2] | 146 | ||
Translation adjustments on foreign-currency debt of subsidiaries whose functional currency is not the U.S. dollar, Noncurrent | [2] | (160) | ||
Translation adjustments on foreign-currency debt of subsidiaries whose functional currency is not the U.S. dollar total | [2] | (14) | ||
Current portion of long-term debt | 14,644 | |||
Long-term debt (net of current portion) | 91,208 | |||
Total | [3] | 105,852 | ||
Panama Subsidiary [Member] | ||||
Debt Instrument [Line Items] | ||||
Proceeds from long-term debt incurred during the period, Current | 1,500 | |||
Proceeds from long-term debt incurred during the period, Noncurrent | 13,500 | |||
Proceeds from long-term debt total | 15,000 | |||
Honduras Subsidiary [Member] | ||||
Debt Instrument [Line Items] | ||||
Proceeds from long-term debt incurred during the period, Current | 1,350 | |||
Proceeds from long-term debt incurred during the period, Noncurrent | 12,150 | |||
Proceeds from long-term debt total | 13,500 | |||
Trinidad Subsidiary [Member] | ||||
Debt Instrument [Line Items] | ||||
Repayments of long-term debt, Current | (3,000) | |||
Repayments of long-term debt, Noncurrent | (3,000) | |||
Repayments of long-term debt total | (6,000) | |||
Cash Asset [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Collateral amount | 0 | $ 0 | ||
NonCash Asset [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Collateral amount | 129,500 | $ 128,400 | ||
Scotiabank [Member] | Honduras Subsidiary [Member] | ||||
Debt Instrument [Line Items] | ||||
Repayments of long-term debt, Current | (600) | |||
Repayments of long-term debt, Noncurrent | (850) | |||
Repayments of long-term debt total | (1,450) | |||
Citibank [Member] | Honduras Subsidiary [Member] | ||||
Debt Instrument [Line Items] | ||||
Repayments of long-term debt, Current | (1,850) | |||
Repayments of long-term debt, Noncurrent | (6,063) | |||
Repayments of long-term debt total | $ (7,913) | |||
[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 $129.5 million. No cash assets were assigned as collateral for these loans. |
DEBT (Schedule of Annual Maturi
DEBT (Schedule of Annual Maturities of Long-Term Debt) (Details) - USD ($) $ in Thousands | May 31, 2018 | Aug. 31, 2017 | [2] | |
DEBT [Abstract] | ||||
2,019 | $ 14,644 | |||
2,020 | 23,281 | |||
2,021 | 12,881 | |||
2,022 | 6,621 | |||
2,023 | 4,125 | |||
Thereafter | 44,300 | |||
Total | $ 105,852 | [1] | $ 106,297 | |
[1] | The carrying amount of non-cash assets assigned as collateral for these loans was $129.5 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 $128.4 million. No cash assets were assigned as collateral for these loans. |
DERIVATIVE INSTRUMENTS AND HE56
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Narrative) (Details) | May 31, 2018item |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES [Abstract] | |
Number of subsidiaries exposed to foreign currency and interest rate cash flow | 3 |
DERIVATIVE INSTRUMENTS AND HE57
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Interest Rate Derivatives) (Details) - USD ($) | 1 Months Ended | ||||
Feb. 28, 2018 | May 31, 2018 | Aug. 31, 2017 | Aug. 31, 2015 | ||
Derivative [Line Items] | |||||
Remaining outstanding balance | $ 69,806,000 | $ 68,034,000 | |||
Pricesmart $35.7M Interest Rate Swap [Member] | Cash Flow Hedging [Member] | |||||
Derivative [Line Items] | |||||
Derivative, Notional amount | [1] | $ 35,700,000 | |||
Debt instrument, Basis spread on variable rate | 1.70% | ||||
Derivative, Fixed interest rate | [1] | 3.65% | |||
Costa Rica $7.5M Cross Currency Interest Rate Swap [Member] | Cash Flow Hedging [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] | Cash Flow Hedging [Member] | |||||
Derivative [Line Items] | |||||
Derivative, Notional amount | [2] | $ 8,500,000 | |||
Debt instrument, Basis spread on variable rate | 3.25% | ||||
Derivative, Fixed interest rate | [2] | 10.75% | |||
Honduras $13.5M Cross Currency Interest Rate Swap [Member] | |||||
Derivative [Line Items] | |||||
LIBOR measurement period | 90 days | ||||
Honduras $13.5M Cross Currency Interest Rate Swap [Member] | Cash Flow Hedging [Member] | |||||
Derivative [Line Items] | |||||
Derivative, Notional amount | $ 13,500,000 | $ 13,500,000 | |||
Debt instrument, Basis spread on variable rate | 3.00% | 3.00% | |||
Derivative, Fixed interest rate | 9.75% | ||||
El Salvador $4M Interest Rate Swap [Member] | Cash Flow Hedging [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] | Cash Flow Hedging [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] | Cash Flow Hedging [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] | Cash Flow Hedging [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] | Cash Flow Hedging [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] | Cash Flow Hedging [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% | ||||
Citibank [Member] | Honduras Subsidiary [Member] | |||||
Derivative [Line Items] | |||||
Proceeds from notional amount | $ 5,600,000 | ||||
Citibank [Member] | Honduras Subsidiary [Member] | Cash Flow Hedging [Member] | |||||
Derivative [Line Items] | |||||
Remaining outstanding balance | $ 7,900,000 | ||||
[1] | The initial notional amount and fixed rate were modified effective January 2017. | ||||
[2] | In February 2018, the Company's Honduras subsidiary refinanced its portfolio of loans entered into with Citibank. The original notional amount of this portfolio of loans was $13.5 million, which the Company drew down in fiscal 2015. There was approximately $7.9 million of remaining principal at the time of the refinancing. Under the refinancing agreement, the portfolio of loans was combined into one loan and the notional amount of the loan increased back to the original $13.5 million, with the interest rate set at the 90 day LIBOR rate plus 3.0%. In conjunction with the refinancing of these loans, the Company's Honduras subsidiary drew down the additional $5.6 million notional amount during February 2018. As part of the terms, the existing cash flow hedge related to the original loan, was de-designated and incorporated into a new hedging relationship where the Company's Honduras subsidiary has entered into a cross-currency interest rate swap with Citibank. Under this new hedge agreement, the Company's Honduras subsidiary will pay Honduras Lempiras, at a fixed interest rate of 9.75%. |
DERIVATIVE INSTRUMENTS AND HE58
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Cash Flow Hedging Instruments, Statements of Financial Performance and Financial Position, Location) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
May 31, 2018 | May 31, 2017 | May 31, 2018 | May 31, 2017 | ||
Interest Expense [Member] | Cash Flow Hedging [Member] | |||||
Derivative [Line Items] | |||||
Derivative, gain (loss) on derivative, Net | $ 1,413 | $ 1,505 | $ 3,633 | $ 3,790 | |
Interest Rate Contract [Member] | Interest Expense [Member] | Cash Flow Hedging [Member] | |||||
Derivative [Line Items] | |||||
Derivative, gain (loss) on derivative, Net | [1] | 1,136 | 1,080 | 2,859 | 2,584 |
Cross Currency Interest Rate Swaps [Member] | Interest Expense [Member] | Cash Flow Hedging [Member] | |||||
Derivative [Line Items] | |||||
Derivative, gain (loss) on derivative, Net | [2] | 277 | 425 | 774 | 1,206 |
Forward Foreign Exchange Contract [Member] | Other Income (Expense) [Member] | Fair Value Hedging [Member] | |||||
Derivative [Line Items] | |||||
Other income (expense), net | $ 20 | $ (177) | $ (141) | $ 106 | |
[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 HE59
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Notional Amounts of Outstanding Derivative Positions) (Details) - Cash Flow Hedging [Member] - USD ($) $ in Thousands | May 31, 2018 | Aug. 31, 2017 |
Derivative [Line Items] | ||
Derivative Liability, Notional Amount | $ 75,749 | $ 75,512 |
Union Bank [Member] | ||
Derivative [Line Items] | ||
Derivative Liability, Notional Amount | 35,700 | 35,700 |
Citibank [Member] | ||
Derivative [Line Items] | ||
Derivative Liability, Notional Amount | 28,725 | 26,088 |
Scotiabank [Member] | ||
Derivative [Line Items] | ||
Derivative Liability, Notional Amount | $ 11,324 | $ 13,724 |
DERIVATIVE INSTRUMENTS AND HE60
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 | May 31, 2018 | Aug. 31, 2017 |
Derivative [Line Items] | ||
Derivative Asset, Noncurrent | $ 4,081 | $ 2,547 |
Designated as Hedging Instrument [Member] | ||
Derivative [Line Items] | ||
Derivative Asset, Noncurrent | 3,544 | 1,865 |
Net Tax Effect | (913) | (735) |
Net OCI | 2,631 | 1,130 |
Cross Currency Interest Rate Swaps [Member] | Other Non-current Assets [Member] | Designated as Hedging Instrument [Member] | ||
Derivative [Line Items] | ||
Derivative Asset, Noncurrent | 2,046 | 2,547 |
Net Tax Effect | (618) | (950) |
Net OCI | 1,428 | 1,597 |
Cross Currency Interest Rate Swaps [Member] | Other Long-Term Liability [Member] | Designated as Hedging Instrument [Member] | ||
Derivative [Line Items] | ||
Derivative Liability, Noncurrent | (537) | (451) |
Net Tax Effect | 161 | 135 |
Net OCI | (376) | (316) |
Interest Rate Swaps [Member] | Other Non-current Assets [Member] | Designated as Hedging Instrument [Member] | ||
Derivative [Line Items] | ||
Derivative Asset, Noncurrent | 2,035 | |
Net Tax Effect | (456) | |
Net OCI | $ 1,579 | |
Interest Rate Swaps [Member] | Other Long-Term Liability [Member] | Designated as Hedging Instrument [Member] | ||
Derivative [Line Items] | ||
Derivative Liability, Noncurrent | (231) | |
Net Tax Effect | 80 | |
Net OCI | $ (151) |
DERIVATIVE INSTRUMENTS AND HE61
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule Of Open Non-Deliverable Forward Foreign Exchange Contract) (Details) $ in Thousands | May 29, 2018USD ($) |
Fair Value Hedging [Member] | Non-Deliverable Foreign Exchange Forward [Member] | |
Derivative [Line Items] | |
Derivative, Notional Amount | $ 577 |
ACQUISITION (Narrative) (Detail
ACQUISITION (Narrative) (Details) - Aeropost, Inc [Member] $ in Thousands | 9 Months Ended |
May 31, 2018USD ($) | |
Business Acquisition [Line Items] | |
Total cash consideration | $ 28,953 |
Period of employment from date of closing | 15 months |
Total consideration | $ 25,103 |
Maximum [Member] | |
Business Acquisition [Line Items] | |
Total consideration | $ 5,000 |
ACQUISITION (Summary of the Tot
ACQUISITION (Summary of the Total Purchase Consideration) (Details) - Aeropost, Inc [Member] $ in Thousands | 9 Months Ended |
May 31, 2018USD ($) | |
Business Acquisition [Line Items] | |
Estimated consideration on the acquisition date | $ 30,046 |
Estimated assumed net debt at acquisition date | (1,093) |
Total cash consideration | 28,953 |
Post-combination compensation expense, net of claims | (3,850) |
Business acquisition, net assets acquired | 25,103 |
Cash acquired | 1,208 |
Business acquisition, net of cash acquired | $ 23,895 |
ACQUISITION (Components of the
ACQUISITION (Components of the Preliminary Purchase Price Allocation) (Details) - USD ($) $ in Thousands | May 31, 2018 | Aug. 31, 2017 |
Business Acquisition [Line Items] | ||
Goodwill | $ 51,351 | $ 35,642 |
Aeropost, Inc [Member] | ||
Business Acquisition [Line Items] | ||
Current assets | 4,196 | |
Other non-current assets | 746 | |
Property, plant and equipment | 2,059 | |
Intangible assets | 16,100 | |
Goodwill | 16,033 | |
Total assets acquired | 39,134 | |
Current liabilities | (5,862) | |
Non-current liabilities | (7,607) | |
Noncontrolling interest | (562) | |
Net assets acquired | 25,103 | |
Income tax contingencies | $ 3,100 |
ACQUISITION (Schedule of Intang
ACQUISITION (Schedule of Intangible Assets Acquired) (Details) - Aeropost, Inc [Member] $ in Thousands | 9 Months Ended |
May 31, 2018USD ($) | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair value of Assets Acquired | $ 16,100 |
Trademark / Trade Name [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Amortization Period | 25 years |
Fair value of Assets Acquired | $ 5,100 |
Developed Technology [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Amortization Period | 5 years |
Fair value of Assets Acquired | $ 11,000 |
ACQUISITION (Pro Forma Financia
ACQUISITION (Pro Forma Financial Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 31, 2018 | May 31, 2018 | May 31, 2017 | ||
Business Acquisition [Line Items] | ||||
Pro forma net income attributable to noncontrolling interest | $ 22 | $ 22 | ||
Total revenue included in the Consolidated Statement of Income since acquisition | 7,835 | |||
Net income/(loss) included in the Consolidated Statement of Income since acquisition | (2,290) | |||
Amortization | 507 | |||
Pro Forma [Member] | ||||
Business Acquisition [Line Items] | ||||
Pro forma total revenues | 2,410,581 | $ 2,296,135 | ||
Pro forma net income attributable to PriceSmart, Inc. | [1] | 46,202 | 64,163 | |
Pro forma net income attributable to noncontrolling interest | 415 | $ 187 | ||
Amortization | $ 1,300 | |||
Aeropost, Inc [Member] | ||||
Business Acquisition [Line Items] | ||||
Period of employment from date of closing | 15 months | |||
Remaining purchase price contingency | $ 3,800 | |||
Remaining period of the fifteen months | 9 months | |||
[1] | Includes the pro forma recognition of $2.2 million of post-combination compensation expense, which represents completion of nine of the fifteen months of continued service required to satisfy the $3.8 million remaining purchase price contingency, and $1.3 million for the amortization of intangible assets for the nine months ended May 31, 2018. |
SEGMENTS (Summary of Segment Re
SEGMENTS (Summary of Segment Revenues, Operating Costs and Balance Sheet Items) (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
May 31, 2018USD ($)warehousecountry | May 31, 2017USD ($) | May 31, 2018USD ($)warehousecountry | May 31, 2017USD ($) | Mar. 31, 2018USD ($) | Aug. 31, 2017USD ($) | ||
Segment Reporting Information [Line Items] | |||||||
Number of stores | warehouse | 41 | 41 | |||||
Number of countries | country | 13 | 13 | |||||
Segment Reporting Information | |||||||
Revenue | $ 782,201 | $ 730,258 | $ 2,388,836 | $ 2,263,126 | |||
Depreciation and amortization | 13,566 | 11,883 | 38,378 | 34,445 | |||
Operating income | 28,429 | 27,626 | 98,859 | 105,407 | |||
Net income (loss) attributable to PriceSmart Inc. | 18,694 | 18,838 | 55,332 | 70,926 | |||
Capital expenditures, net | 31,068 | 12,016 | 76,702 | 98,419 | |||
Long-lived assets (other than deferred tax assets) | 659,299 | 593,616 | 659,299 | 593,616 | $ 616,090 | ||
Goodwill and intangibles, net | 66,944 | 35,632 | 66,944 | 35,632 | $ 32,100 | 35,642 | |
Total assets | 1,246,470 | 1,143,876 | 1,246,470 | 1,143,876 | 1,177,514 | ||
Net income attributable to non-controlling interest | 22 | 22 | |||||
United States Operations Segment [Member] | |||||||
Segment Reporting Information | |||||||
Revenue | 17,802 | 6,455 | 35,087 | 25,381 | |||
Depreciation and amortization | 2,245 | 1,788 | 5,680 | 4,837 | |||
Operating income | (883) | 245 | 3,354 | 10,166 | |||
Net income (loss) attributable to PriceSmart Inc. | (2,792) | (1,795) | (17,182) | 5,998 | |||
Capital expenditures, net | 3,024 | 2,336 | 4,612 | 54,465 | |||
Long-lived assets (other than deferred tax assets) | 72,343 | 69,141 | 72,343 | 69,141 | 70,353 | ||
Goodwill and intangibles, net | 31,626 | 31,626 | |||||
Total assets | 160,793 | 142,643 | 160,793 | 142,643 | 147,650 | ||
Central American Operations Segment [Member] | |||||||
Segment Reporting Information | |||||||
Revenue | 451,597 | 438,871 | 1,397,668 | 1,351,099 | |||
Depreciation and amortization | 6,050 | 5,142 | 17,459 | 15,146 | |||
Operating income | 31,257 | 31,444 | 100,463 | 102,410 | |||
Net income (loss) attributable to PriceSmart Inc. | 25,485 | 25,901 | 82,997 | 81,764 | |||
Capital expenditures, net | 12,803 | 6,895 | 35,364 | 33,112 | |||
Long-lived assets (other than deferred tax assets) | 312,468 | 289,405 | 312,468 | 289,405 | 296,915 | ||
Goodwill and intangibles, net | 30,770 | 31,113 | 30,770 | 31,113 | 31,118 | ||
Total assets | 562,401 | 524,806 | 562,401 | 524,806 | 544,683 | ||
Caribbean Operations Segment [Member] | |||||||
Segment Reporting Information | |||||||
Revenue | 214,506 | 201,007 | 663,317 | 627,544 | |||
Depreciation and amortization | 2,934 | 2,594 | 8,343 | 7,583 | |||
Operating income | 11,538 | 9,706 | 36,763 | 35,531 | |||
Net income (loss) attributable to PriceSmart Inc. | 10,074 | 9,251 | 33,000 | 28,333 | |||
Capital expenditures, net | 14,368 | 2,015 | 33,997 | 8,554 | |||
Long-lived assets (other than deferred tax assets) | 148,789 | 107,542 | 148,789 | 107,542 | 122,616 | ||
Goodwill and intangibles, net | 4,548 | 4,519 | 4,548 | 4,519 | 4,524 | ||
Total assets | 333,985 | 295,431 | 333,985 | 295,431 | 303,234 | ||
Colombia Operations Segment [Member] | |||||||
Segment Reporting Information | |||||||
Revenue | 98,296 | 83,925 | 292,764 | 259,102 | |||
Depreciation and amortization | 2,337 | 2,359 | 6,896 | 6,879 | |||
Operating income | 2,989 | 1,410 | 8,198 | 3,238 | |||
Net income (loss) attributable to PriceSmart Inc. | 2,377 | 660 | 6,414 | 769 | |||
Capital expenditures, net | 873 | 770 | 2,729 | 2,288 | |||
Long-lived assets (other than deferred tax assets) | 125,699 | 127,528 | 125,699 | 127,528 | 126,206 | ||
Total assets | 189,291 | 180,996 | 189,291 | 180,996 | $ 181,947 | ||
Intersegment [Member] | |||||||
Segment Reporting Information | |||||||
Revenue | [1],[2] | (293,388) | (260,221) | (910,072) | (851,147) | ||
Intersegment [Member] | United States Operations Segment [Member] | |||||||
Segment Reporting Information | |||||||
Revenue | (291,925) | (259,337) | (906,114) | (847,368) | |||
Intersegment [Member] | Caribbean Operations Segment [Member] | |||||||
Segment Reporting Information | |||||||
Revenue | (1,087) | (853) | (3,265) | (3,726) | |||
Intersegment [Member] | Colombia Operations Segment [Member] | |||||||
Segment Reporting Information | |||||||
Revenue | (376) | (31) | (693) | (53) | |||
Reconciling Items [Member] | |||||||
Segment Reporting Information | |||||||
Operating income | [1],[2] | (16,472) | (15,179) | (49,919) | (45,938) | ||
Net income (loss) attributable to PriceSmart Inc. | [1],[2] | $ (16,450) | $ (15,179) | $ (49,897) | $ (45,938) | ||
Aeropost, Inc [Member] | Latin America [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Number of countries | country | 38 | 38 | |||||
[1] | The reconciling items contain a $22,000 adjustment for net income attributable to non-controlling interest. | ||||||
[2] | The reconciling items reflect the amount eliminated on consolidation of intersegment transactions. |
SUBSEQUENT EVENTS (Narrative) (
SUBSEQUENT EVENTS (Narrative) (Details) - USD ($) $ in Thousands | Jun. 15, 2018 | Mar. 31, 2018 | May 31, 2018 |
Subsequent Event [Line Items] | |||
Other commitment total | $ 31,563 | ||
Lease expiration date | May 30, 2020 | ||
Scotiabank [Member] | Panama Subsidiary [Member] | |||
Subsequent Event [Line Items] | |||
Debt term | 5 years | ||
Derivative, variable interest rate | 3.00% | ||
LIBOR measurement period | 90 days | ||
Pricesmart $14.6M Interest Rate Swap [Member] | Scotiabank [Member] | |||
Subsequent Event [Line Items] | |||
Offering date | Jun. 15, 2018 | ||
Period of net settlements of interest | 57 months | ||
Subsequent Event [Member] | Pricesmart $14.6M Interest Rate Swap [Member] | Scotiabank [Member] | |||
Subsequent Event [Line Items] | |||
Notional amount | $ 14,600 | ||
Debt term | 5 years | ||
Derivative, variable interest rate | 3.00% | ||
LIBOR measurement period | 3 months | ||
Derivative, Fixed interest rate | 6.00% |
SUBSEQUENT EVENTS (Other Commit
SUBSEQUENT EVENTS (Other Commitments) (Details) $ in Thousands | May 31, 2018USD ($) |
SUBSEQUENT EVENTS [Abstract] | |
2,021 | $ 1,250 |
2,022 | 1,250 |
2,023 | 1,250 |
Thereafter | 27,813 |
Total | $ 31,563 |
Uncategorized Items - psmt-2018
Label | Element | Value |
Dividends Payable | us-gaap_DividendsPayableCurrentAndNoncurrent | $ 10,643,000 |
Dividends Payable | us-gaap_DividendsPayableCurrentAndNoncurrent | $ 10,652,000 |