8-K 4th Qtr FY13 Results of Operations and Opening of New Warehouse Club

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): October 30, 2013
_____________________
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 October 30, 2013, PriceSmart, Inc. issued a press release regarding the results of operations for the fourth quarter and fiscal year of 2013. 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 8.01. Other Events
The Company announced the opening of its sixth warehouse club in Costa Rica, located in La Union, Cartago, which opened on October 18, 2013.

Item 9.01. Financial Statements and Exhibits.

(d)
 
The following exhibit is furnished herewith:








Exhibit
No.
 
Description
99.1
 
Press Release of PriceSmart, Inc. dated October 30, 2013.







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: October 30, 2013
 
/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 October 30, 2013.







PriceSmart Announces Fourth Quarter and
Fiscal Year Results of Operations and Conference Call;
Opening of a New Warehouse Club in Costa Rica Also Announced


San Diego, CA (October 30, 2013) - PriceSmart, Inc. (NASDAQ: PSMT) today announced its results of operations for the fourth quarter and fiscal year 2013 which ended on August 31, 2013.

For the fourth quarter of fiscal year 2013, net warehouse club sales were $568.0 million, compared to $498.8 million in the fourth quarter of fiscal year 2012. Total revenues for the fourth quarter was $585.4 million, compared to $514.0 million in the prior year. The Company had 31 warehouse clubs in operation at the end of fiscal year 2013 and 29 warehouse clubs in operation as of the end of fiscal year 2012.

Operating income in the fourth quarter of fiscal year 2013 was $33.0 million, compared to operating income of $27.9 million in the fourth quarter of fiscal year 2012.

The Company recorded net income for the fourth quarter of fiscal year 2013 of $20.8 million or $0.69 per diluted share, compared to net income of $17.7 million or $0.58 per diluted share in the fourth quarter of fiscal year 2012.

Net warehouse club sales increased 12.0% to $2.2 billion during fiscal year 2013, compared to $2.0 billion in the prior year, and total revenues for fiscal year 2013 increased 12.5% to $2.3 billion from $2.0 billion in fiscal year 2012. For fiscal year 2013, the Company recorded operating income of $127.9 million and net income of $84.3 million, or $2.78 per diluted share. For fiscal year 2012, the Company recorded operating income of $107.9 million and net income of $67.6 million or $2.24 per diluted share.

The Company filed its Form 10-K for the year ended August 31, 2013 on October 30, 2013.

PriceSmart management will host a conference call at 12:00 p.m. Eastern time (9:00a.m. Pacific time) on Thursday, October 31, 2013, to discuss the financial results. Individuals interested in participating in the conference call may do so by dialing (800) 730-9234 toll free, or (719) 325-4836 for international callers, and entering participant code 5817132. A digital replay will be available through November 30, 2013, following the conclusion of the call by dialing (888) 203-1112 for domestic callers and (719) 457-0820 for international callers, and entering replay passcode 5817132.

PricesSmart also announced that on October 18, 2013 the Company successfully opened its sixth warehouse club in Costa Rica. This warehouse club, located in La Union, Cartago, brings to 32 the total number of warehouse clubs in operation by the Company.


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 32 warehouse clubs in 12 countries and one U.S. territory (six in Costa Rica; four each in Panama and Trinidad; three each in Guatemala, the Dominican Republic and Colombia; two each in El Salvador and Honduras; and one each in Aruba, Barbados, Jamaica, Nicaragua and the United States Virgin Islands).

This press release may contain forward-looking statements concerning the Company's anticipated future revenues and earnings, adequacy of future cash flow and related matters. These forward-looking statements include, but are not limited to, statements containing the words “expect,” “believe,” “will,” “may,” “should,” “project,” “estimate,” “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: the Company's financial performance is dependent on international operations, which exposes the Company to various risks; any failure by the Company to manage its widely dispersed operations could adversely affect its business; the Company faces significant competition; future sales growth depends, in part, on the Company's ability to successfully open new warehouse clubs; the Company might not identify in a timely manner or effectively respond to changes in



consumer trends and changes in consumer preferences for merchandise and shopping modalities, which could adversely affect its relationship with members, demand for its products and market share; the Company faces difficulties in the shipment of, and risks inherent in the importation of, merchandise to its warehouse clubs; the Company is exposed to weather and other natural disaster risks; general economic conditions could adversely impact the Company's business in various respects; the Company is subject to changes in relationships and agreements with third parties with which the Company does business and/or from which the Company acquires merchandise; the Company relies extensively on computer systems to process transactions, summarize results and manage its business. Failure to adequately maintain the Company's systems and disruptions in its systems could harm its business and adversely affect its results of operations; the Company could be subject to additional tax liabilities; a few of the Company's stockholders own approximately 29.7% of the Company's voting stock, which may make it difficult to complete some corporate transactions without their support and may impede a change in control; the loss of key personnel could harm the Company's business; the Company is subject to volatility in foreign currency exchange rates; the Company faces the risk of exposure to product liability claims, a product recall and adverse publicity; potential future impairments of long lived assets could adversely affect the Company's future results of operations and financial position; write-offs of goodwill and other intangible assets could adversely affect the Company's future results of operations and financial position; the Company faces increased public company compliance risks and compliance risks related to the Company's international operations; the Company faces increased compliance risks associated with compliance with Section 404 of the Sarbanes-Oxley Act of 2002; if remediation costs or hazardous substance contamination levels at certain properties for which the Company maintains financial responsibility exceed management's current expectations, the Company's 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, 2013 filed on October 30, 2013 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
(amounts in thousands, except per share data)


 
Three Months Ended
 
Twelve Months Ended
 
August 31,
 
August 31,
 
2013
 
2012
 
2013
 
2012
Revenues:
 
 
 
 
 
 
 
Net warehouse club sales
$
567,997

 
$
498,806

 
$
2,239,266

 
$
1,999,364

Export sales
7,439

 
6,844

 
23,059

 
15,320

Membership income
9,047

 
7,289

 
33,820

 
26,957

Other income
911

 
1,039

 
3,667

 
3,522

Total revenues
585,394

 
513,978

 
2,299,812

 
2,045,163

Operating expenses:
 
 
 
 
 
 
 
Cost of goods sold:
 
 
 
 
 
 
 
Net warehouse club
482,236

 
422,236

 
1,907,632

 
1,701,332

Export
7,068

 
6,574

 
21,796

 
14,649

Selling, general and administrative:
 
 
 
 
 
 
 
Warehouse club operations
50,664

 
46,424

 
194,140

 
179,618

General and administrative
12,334

 
10,462

 
46,784

 
41,021

Pre-opening expenses
116

 
362

 
1,525

 
617

Total operating expenses
552,418

 
486,058

 
2,171,877

 
1,937,237

Operating income
32,976

 
27,920

 
127,935

 
107,926

Other income (expense):
 
 
 
 
 
 
 
Interest income
257

 
240

 
1,335

 
908

Interest expense
(1,265
)
 
(1,368
)
 
(4,216
)
 
(5,283
)
Other income (expense), net
(439
)
 
138

 
(1,843
)
 
(837
)
Total other income (expense)
(1,447
)
 
(990
)
 
(4,724
)
 
(5,212
)
Income from continuing operations before provision for income taxes and loss of unconsolidated affiliates
31,529

 
26,930

 
123,211

 
102,714

Provision for income taxes
(10,688
)
 
(9,199
)
 
(38,942
)
 
(35,053
)
Income (loss) of unconsolidated affiliates
(2
)
 
(6
)
 
(4
)
 
(15
)
Income from continuing operations
20,839

 
17,725

 
84,265

 
67,646

Income (loss) from discontinued operations, net of tax
—

 
(19
)
 
—

 
(25
)
Net income
$
20,839

 
$
17,706

 
$
84,265

 
$
67,621

Net income per share available for distribution:
 
 
 
 
 
 
 
Basic net income per share from continuing operations
$
0.69

 
$
0.58

 
$
2.78

 
$
2.24

Basic net income per share from discontinued operations, net of tax
—

 
—

 
—

 
—

Basic net income per share
$
0.69

 
$
0.58

 
$
2.78

 
$
2.24

Diluted net income per share from continuing operations
$
0.69

 
$
0.58

 
$
2.78

 
$
2.24

Diluted net income per share from discontinued operations, net of tax
—

 
—

 
—

 
—

Diluted net income per share
$
0.69

 
$
0.58

 
$
2.78

 
$
2.24

Shares used in per share computations:
 
 
 
 
 
 
 
Basic
29,687

 
29,584

 
29,647

 
29,554

Diluted
29,722

 
29,595

 
29,681

 
29,582

Dividends per share
$
—

 
$
—

 
$
0.60

 
$
0.60






PRICESMART, INC.
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except per share data)

 
August 31,
 
2013
 
2012
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
121,874

 
$
91,248

Short-term restricted cash
5,984

 
1,241

Receivables, net of allowance for doubtful accounts of $0 and $1 as of August 31, 2013 and August 31, 2012, respectively
3,130

 
3,361

Merchandise inventories
217,413

 
201,043

Deferred tax assets – current, net
6,290

 
5,619

Prepaid expenses and other current assets
20,890

 
19,067

Total current assets
375,581

 
321,579

Long-term restricted cash
34,775

 
36,505

Property and equipment, net
338,478

 
299,567

Goodwill
36,364

 
36,886

Deferred tax assets – long term
12,871

 
14,835

Other non-current assets (includes $1,505 as of August 31, 2013 for the fair value of derivative instruments)
19,866

 
18,781

Investment in unconsolidated affiliates
8,104

 
7,559

Total Assets
$
826,039

 
$
735,712

LIABILITIES AND EQUITY
 

 
 

Current Liabilities:
 

 
 

Accounts payable
$
199,425

 
$
173,198

Accrued salaries and benefits
17,862

 
14,729

Deferred membership income
16,528

 
13,747

Income taxes payable
8,059

 
8,193

Other accrued expenses
20,136

 
17,515

Long-term debt, current portion
12,757

 
7,237

Deferred tax liability – current
111

 
122

Total current liabilities
274,878

 
234,741

Deferred tax liability – long-term
2,622

 
2,191

Long-term portion of deferred rent
4,440

 
4,336

Long-term income taxes payable, net of current portion
2,184

 
2,512

Long-term debt, net of current portion
60,263

 
71,422

Other long-term liabilities (includes $14 and $1,199 for the fair value of derivative instruments and $589 and $396 for the defined benefit plans as of August 31, 2013 and August 31, 2012, respectively)
603

 
1,596

Total liabilities
344,990

 
316,798

Equity:
 

 
 

Common stock, $0.0001 par value, 45,000,000 shares authorized; 30,924,392 and 30,855,651 shares issued and 30,234,506 and 30,210,255 shares outstanding (net of treasury shares) as of August 31, 2013 and August 31, 2012, respectively
3

 
3

Additional paid-in capital
390,581

 
384,154

Tax benefit from stock-based compensation
8,016

 
6,680

Accumulated other comprehensive loss
(41,475
)
 
(33,182
)
Retained earnings
143,871

 
77,739

Less: treasury stock at cost; 689,886 and 645,426 shares as of August 31, 2013 and August 31, 2012, respectively
(19,947
)
 
(16,480
)
Total equity
481,049

 
418,914

Total Liabilities and Equity
$
826,039

 
$
735,712