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Form 8-K PRICESMART INC For: Jan 05

January 5, 2017 4:31 PM EST

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION



Washington, D.C. 20549



FORM 8-K



CURRENT REPORT



Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



Date of Report (Date of earliest event reported): January 5, 2017



PriceSmart, Inc.

(Exact name of registrant as specified in its charter)





 

 

 

 



Delaware

000-22793

33-0628530

 



(State or Other Jurisdiction of

Incorporation)

(Commission File Number)

(I.R.S. Employer

Identification No.)

 



9740 Scranton Road, San Diego, CA 92121

(Address of Principal Executive Offices, including Zip Code)



Registrant's telephone number, including area code: (858) 404-8800



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):



 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2)(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



 


 

Item 2.02. Results of Operations and Financial Condition.



On January 5, 2017, PriceSmart, Inc. issued a press release regarding the results of operations for its  first quarter ended November 30, 2016. A copy of the press release is furnished herewith as Exhibit 99.1. Pursuant to the rules and regulations of the Securities and Exchange Commission, such exhibit and the information set forth therein and herein shall be deemed “furnished” and not “filed” for purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section.



Item 9.01. Exhibits.





 

 

 



(d)

The following exhibit is furnished herewith:



 

 

 



Exhibit
No.

 

Description



99.1

 

Press Release of PriceSmart, Inc. dated January 5, 2017.



 

 

 



 

 

 



 


 

SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.





 

 

 

 



Date: January 5, 2017

 

/S/ JOHN M. HEFFNER

 



 

 

John M. Heffner

 



 

 

Executive Vice President and Chief Financial Officer

 



 

 

(Principal Financial Officer and

 



 

 

Principal Accounting Officer)

 



 


 

EXHIBIT INDEX





 

 

 



 

 

 



Exhibit
Number

 

Description



99.1

 

Press Release of PriceSmart, Inc. dated January 5, 2017.



 

 

 



 

 

 



 


 





PriceSmart Announces First Quarter Results of Operations for Fiscal Year 2017





San Diego, CA (January 5, 2017) - PriceSmart, Inc. (NASDAQ: PSMT) today announced its results of operations for the first quarter of fiscal year 2017 which ended on November 30, 2016.

 

For the first quarter of fiscal year 2017, net warehouse club sales increased 3.7% to $716.1 million from $690.8 million in the first quarter of fiscal year 2016. Total revenues for the first quarter of fiscal year 2017 were $739.6 million compared to $711.9 million in the first quarter of the prior year. The Company had 39 clubs in operation as of November 30, 2016, compared to 38 warehouse clubs in operation as of November 30, 2015.

 

The Company recorded operating income for the first quarter of $38.4 million, compared to operating income of $37.3 million for the first quarter of the prior year. Net income was $24.9 million, or $0.82 per diluted share, in the first quarter of fiscal year 2017. Net income in the first quarter of fiscal year 2016 was $23.7 million, or $0.78 per diluted share.



PriceSmart management plans to host a conference call at 12:00 p.m. Eastern time (9:00 a.m. Pacific time) on Friday, January 6, 2017, to discuss the financial results. Individuals interested in participating in the conference call may do so by dialing (877) 675-4756 toll free, or (719) 325-4810 for international callers, and entering participant code 5691450. A digital replay will be available through January 31, 2017, following the conclusion of the call by dialing (888) 203-1112 for domestic callers, or (719) 457-0820 for international callers, and entering relay passcode 5691450.



About PriceSmart

  

PriceSmart, headquartered in San Diego, owns and operates U.S.-style membership shopping warehouse clubs in Latin America and the Caribbean, selling high quality merchandise at low prices to PriceSmart members. PriceSmart now operates 39 warehouse clubs in 12 countries and one U.S. territory (seven in Colombia; six in Costa Rica; five in Panama; four in Trinidad; three each in Guatemala, the Dominican Republic and Honduras; two each in El Salvador and Nicaragua; and one each in Aruba, Barbados, Jamaica and the United States Virgin Islands).

  

This press release may contain forward-looking statements concerning the Company's anticipated future revenues and earnings, adequacy of future cash flow, proposed warehouse club openings, the Company's performance relative to competitors, the outcome of tax proceedings and related matters. These forward-looking statements include, but are not limited to, statements containing the words “expect,” “believe,” “will,” “may,” “should,” “project,” “estimate,” “anticipated,” “scheduled,” and like expressions, and the negative thereof. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including the following risks: our financial performance is dependent on international operations, which exposes us to various risks; any failure by us to manage our widely dispersed operations could adversely affect our business; we face significant competition; future sales growth depends, in part, on our ability to successfully open new warehouse clubs and grow sales in our existing locations; we might not identify in a timely manner or effectively respond to changes in consumer preferences for merchandise, which could adversely affect our relationship with members, demand for our products and market share; although we have begun to offer limited online shopping to our members, our sales could be adversely affected if one or more major international online retailers were to enter our markets or if other competitors were to offer a superior online experience; our profitability is vulnerable to cost increases; we face difficulties in the shipment of and risks inherent in the importation of, merchandise to our warehouse clubs; we are exposed to weather and other natural disaster risks that might not be adequately compensated by insurance; general economic conditions could adversely impact our business in various respects; our failure to maintain our brand and reputation could adversely affect our results of operations; we are subject to risks associated with possible changes in our relationships with third parties with which we do business, as well as the performance of such third parties; we rely extensively on computer systems to process transactions, summarize results and manage our business, and failure to adequately maintain our systems and disruptions in our systems could harm our business and adversely affect our results of operations; we could be subject to additional tax liabilities or subject to reserves on the recoverability of tax receivables; a few of our stockholders own approximately 25.3% of our voting stock as of August 31, 2016, which may make it difficult to complete some corporate transactions without their support and may impede a change in control; failure to attract and retain qualified employees, increases in wage and benefit costs, changes in laws and other labor issues could materially adversely affect our financial performance; we face the possibility of operational interruptions related to union work stoppages; we are subject to volatility in foreign currency exchange rates and limits on our ability to convert foreign currencies into U.S. dollars; we face the risk of exposure to product liability claims, a product recall and adverse publicity; any failure to maintain the security of the information relating to our company, members, employees and vendors that we hold, whether as a result of cybersecurity attacks on our information systems, failure of internal controls, employee negligence or malfeasance or otherwise, could damage our reputation with members, employees, vendors and others, could disrupt our operations, could cause us to incur substantial additional costs and to become subject to litigation and could materially adversely affect our operating results; we are subject to payment related risks; changes in accounting standards and assumptions, projections, estimates and judgments by management related to complex accounting matters could significantly affect our financial condition and results of operations; we face compliance risks related to our international operations; if remediation costs or hazardous substance contamination

 


 

 

levels at certain properties for which we maintain financial responsibility exceed management's current expectations, our financial condition and results of operations could be adversely impacted. The risks described above as well as the other risks detailed in the Company's U.S. Securities and Exchange Commission (“SEC”) reports, including the Company's Annual Report on Form 10-K filed for the fiscal year ended August 31, 2016 filed on October 27, 2016 pursuant to the Securities Exchange Act of 1934. We assume no obligation and expressly disclaim any duty to update any forward- looking statement to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events.

  

For further information, please contact John M. Heffner, Principal Financial Officer and Principal Accounting

Officer (858) 404-8826.

  







 

 


 

PRICESMART, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED—AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)













 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended



 

November 30,

 

November 30,



 

2016

 

2015

Revenues:

 

 

 

 

 

 

Net warehouse club sales

 

$

716,079 

 

$

690,831 

Export sales

 

 

10,734 

 

 

8,232 

Membership income

 

 

11,710 

 

 

11,466 

Other income

 

 

1,049 

 

 

1,402 

Total revenues

 

 

739,572 

 

 

711,931 

Operating expenses:

 

 

 

 

 

 

Cost of goods sold:

 

 

 

 

 

 

Net warehouse club

 

 

608,490 

 

 

590,183 

Export

 

 

10,181 

 

 

7,832 

Selling, general and administrative:

 

 

 

 

 

 

Warehouse club operations

 

 

65,426 

 

 

60,840 

General and administrative

 

 

16,802 

 

 

15,463 

Pre-opening expenses

 

 

(113)

 

 

305 

Loss/(gain) on disposal of assets

 

 

407 

 

 

13 

Total operating expenses

 

 

701,193 

 

 

674,636 

Operating income

 

 

38,379 

 

 

37,295 

Other income (expense):

 

 

 

 

 

 

Interest income

 

 

502 

 

 

178 

Interest expense

 

 

(1,654)

 

 

(1,373)

Other income (expense), net

 

 

(928)

 

 

(244)

Total other income (expense)

 

 

(2,080)

 

 

(1,439)

Income before provision for income taxes and
income (loss) of unconsolidated affiliates

 

 

36,299 

 

 

35,856 

Provision for income taxes

 

 

(11,437)

 

 

(12,130)

Income (loss) of unconsolidated affiliates

 

 

 

 

(54)

Net income

 

$

24,869 

 

 

23,672 

Net income per share available for distribution:

 

 

 

 

 

 

Basic net income per share

 

$

0.82 

 

$

0.78 

Diluted net income per share

 

$

0.82 

 

$

0.78 

Shares used in per share computations:

 

 

 

 

 

 

Basic

 

 

29,982 

 

 

29,890 

Diluted

 

 

29,987 

 

 

29,896 

Dividends per share

 

$

 —

 

$

 —





 

 


 

PRICESMART, INC.

CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)





 

 

 

 

 

 



 

 

 

 

 

 



 

November 30,

 

 

 



 

2016

 

August 31,



 

(Unaudited)

 

2016

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

175,402 

 

$

199,522 

Short-term restricted cash

 

 

517 

 

 

518 

Receivables, net of allowance for doubtful accounts of $7 as of November 30, 2016 and August 31, 2016, respectively

 

 

7,761 

 

 

7,464 

Merchandise inventories

 

 

326,989 

 

 

282,907 

Prepaid expenses and other current assets

 

 

24,194 

 

 

22,143 

Total current assets

 

 

534,863 

 

 

512,554 

Long-term restricted cash

 

 

2,735 

 

 

2,676 

Property and equipment, net

 

 

469,423 

 

 

473,045 

Goodwill

 

 

35,603 

 

 

35,637 

Deferred tax assets

 

 

11,783 

 

 

12,258 

Other non-current assets (includes $4,163 and $3,224 as of November 30, 2016 and August 31, 2016, respectively, for the fair value of derivative instruments)

 

 

52,690 

 

 

49,798 

Investment in unconsolidated affiliates

 

 

10,773 

 

 

10,767 

Total Assets

 

$

1,117,870 

 

$

1,096,735 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Short-term borrowings

 

$

12,211 

 

$

16,534 

Accounts payable

 

 

280,601 

 

 

267,173 

Accrued salaries and benefits

 

 

17,645 

 

 

19,606 

Deferred membership income

 

 

20,905 

 

 

20,920 

Income taxes payable

 

 

4,892 

 

 

4,226 

Other accrued expenses (includes $153 and $110 as of November 30, 2016 and August 31, 2016, respectively, for the fair value of foreign currency forward contracts)

 

 

25,450 

 

 

24,880 

Long-term debt, current portion

 

 

14,664 

 

 

14,565 

Total current liabilities

 

 

376,368 

 

 

367,904 

Deferred tax liability

 

 

1,647 

 

 

1,760 

Long-term portion of deferred rent

 

 

8,759 

 

 

8,961 

Long-term income taxes payable, net of current portion

 

 

883 

 

 

970 

Long-term debt, net of current portion

 

 

69,788 

 

 

73,542 

Other long-term liabilities (includes $1,030 and $1,514 for the fair value of derivative instruments and $4,394 and $4,013 for post employment plans as of November 30, 2016 and August 31, 2016, respectively)

 

 

5,424 

 

 

5,527 

Total Liabilities

 

 

462,869 

 

 

458,664 





 

 

 

 

 

 



 

 

 

 

 

 

Equity:

 

 

 

 

 

 

Common stock $0.0001 par value, 45,000,000 shares authorized; 31,242,784 and 31,237,658 shares issued and 30,406,433 and 30,401,307 shares outstanding (net of treasury shares) as of November 30, 2016 and August 31, 2016, respectively

 

 

 

 

Additional paid-in capital

 

 

414,811 

 

 

412,369 

Tax benefit from stock-based compensation

 

 

11,321 

 

 

11,321 

Accumulated other comprehensive loss

 

 

(114,332)

 

 

(103,951)

Retained earnings

 

 

375,929 

 

 

351,060 

Less: treasury stock at cost, 836,351 shares as of November 30, 2016 and August 31, 2016, respectively

 

 

(32,731)

 

 

(32,731)

Total Equity

 

 

655,001 

 

 

638,071 

Total Liabilities and Equity

 

$

1,117,870 

 

$

1,096,735 



 




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