Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Nov. 30, 2019 | Dec. 31, 2019 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Nov. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 0-22793 | |
Entity Registrant Name | PriceSmart, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 33-0628530 | |
Entity Address, Address Line One | 9740 Scranton Road | |
Entity Address, City or Town | San Diego | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92121 | |
City Area Code | 858 | |
Local Phone Number | 404-8800 | |
Entity Central Index Key | 0001041803 | |
Current Fiscal Year End Date | --08-31 | |
Title of 12(b) Security | Common Stock, $0.0001 par value | |
Trading Symbol | PSMT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 30,612,511 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Nov. 30, 2019 | Aug. 31, 2019 |
Current Assets: | ||
Cash and cash equivalents | $ 111,359 | $ 102,653 |
Short-term restricted cash | 65 | 54 |
Short-term investments | 25,098 | 17,045 |
Receivables, net of allowance for doubtful accounts of $125 as of November 30, 2019 and $144 as of August 31, 2019, respectively | 10,293 | 9,872 |
Merchandise inventories | 388,072 | 331,273 |
Prepaid expenses and other current assets (includes $2,747 and $2,736 as of November 30, 2019 and August 31, 2019, respectively, for the fair value of derivative instruments) | 36,990 | 30,999 |
Total current assets | 571,877 | 491,896 |
Long-term restricted cash | 3,689 | 3,529 |
Property and equipment, net | 693,275 | 671,151 |
Operating lease right-of-use assets, net | 118,203 | |
Goodwill | 45,425 | 46,101 |
Other intangibles, net | 11,977 | 12,576 |
Deferred tax assets | 17,790 | 15,474 |
Other non-current assets (includes $436 and $0 as of November 30, 2019 and August 31, 2019, respectively, for the fair value of derivative instruments) | 51,226 | 44,987 |
Investment in unconsolidated affiliates | 10,649 | 10,697 |
Total Assets | 1,524,111 | 1,296,411 |
Current Liabilities: | ||
Short-term borrowings | 23,018 | 7,540 |
Accounts payable | 328,585 | 286,219 |
Accrued salaries and benefits | 24,131 | 25,401 |
Deferred income | 25,147 | 25,340 |
Income taxes payable | 6,640 | 4,637 |
Other accrued expenses and other current liabilities (includes $127 and $0 as of November 30, 2019 and August 31, 2019, respectively, for the fair value of foreign currency forward contracts) | 40,519 | 32,442 |
Operating lease liabilities, current portion | 8,310 | |
Long-term debt, current portion | 13,726 | 25,875 |
Total current liabilities | 470,076 | 407,454 |
Deferred tax liability | 1,829 | 2,015 |
Long-term portion of deferred rent | 11,198 | |
Long-term income taxes payable, net of current portion | 5,346 | 5,069 |
Long-term operating lease liabilities | 121,698 | |
Long-term debt, net of current portion | 98,084 | 63,711 |
Other long-term liabilities (includes $3,259 and $2,910 for the fair value of derivative instruments and $5,675 and $5,421 for post-employment plans as of November 30, 2019 and August 31, 2019, respectively) | 9,306 | 8,685 |
Total Liabilities | 706,339 | 498,132 |
Stockholders' Equity: | ||
Common stock, $0.0001 par value, 45,000,000 shares authorized; 31,474,818 and 31,461,359 shares issued and 30,612,511 and 30,538,788 shares outstanding (net of treasury shares) as of November 30, 2019 and August 31, 2019, respectively | 3 | 3 |
Additional paid-in capital | 440,756 | 443,084 |
Tax benefit from stock-based compensation | 11,486 | 11,486 |
Accumulated other comprehensive loss | (147,524) | (144,339) |
Retained earnings | 545,532 | 525,804 |
Less: treasury stock at cost, 862,307 shares as of November 30, 2019 and 924,332 shares as of August 31, 2019 | (33,424) | (38,687) |
Total stockholders' equity attributable to PriceSmart, Inc. stockholders | 816,829 | 797,351 |
Noncontrolling interest in consolidated subsidiaries | 943 | 928 |
Total stockholders' equity | 817,772 | 798,279 |
Total Liabilities and Equity | $ 1,524,111 | $ 1,296,411 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Nov. 30, 2019 | Aug. 31, 2019 |
CONSOLIDATED BALANCE SHEETS [Abstract] | ||
Receivables, net of allowance for doubtful accounts | $ 125 | $ 144 |
Prepaid expenses and other current assets, fair value of derivative instruments | 2,747 | 2,736 |
Other non-current assets, fair value of derivative instruments | 436 | 0 |
Other non-current assets, fair value of foreign currency forward contracts | 127 | 0 |
Other long-term liabilities, fair value of derivative instruments | 3,259 | 2,910 |
Other long-term liabilities, post-employment plans | $ 5,675 | $ 5,421 |
Common stock, par value per share | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 45,000,000 | 45,000,000 |
Common stock, shares issued | 31,474,818 | 31,461,359 |
Common stock, shares outstanding | 30,612,511 | 30,538,788 |
Treasury stock, shares | 862,307 | 924,332 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Nov. 30, 2019 | Nov. 30, 2018 | |
Revenues: | ||
Net merchandise sales | $ 778,728 | $ 747,443 |
Export sales | 8,274 | 8,189 |
Membership income | 13,746 | 12,740 |
Other revenue and income | 11,193 | 11,265 |
Total revenues | 811,941 | 779,637 |
Cost of goods sold: | ||
Net merchandise sales | 662,724 | 641,155 |
Export sales | 7,971 | 7,778 |
Non-merchandise | 4,251 | 4,247 |
Selling, general and administrative: | ||
Warehouse club and other operations | 79,373 | 74,222 |
General and administrative | 25,884 | 27,335 |
Pre-opening expenses | 953 | 15 |
Loss on disposal of assets | 71 | 215 |
Total operating expenses | 781,227 | 754,967 |
Operating income | 30,714 | 24,670 |
Other income (expense): | ||
Interest income | 293 | 391 |
Interest expense | (862) | (1,033) |
Other expense, net | (985) | (1,819) |
Total other income (expense) | 1,554 | 2,461 |
Income before provision for income taxes and loss of unconsolidated affiliates | 29,160 | 22,209 |
Provision for income taxes | (9,403) | (7,540) |
Loss of unconsolidated affiliates | (48) | (24) |
Net income | 19,709 | 14,645 |
Less: net (income) loss attributable to noncontrolling interest | 19 | (33) |
Net income attributable to PriceSmart, Inc. | $ 19,728 | $ 14,612 |
Net income attributable to PriceSmart Inc. per share available for distribution: | ||
Basic | $ 0.64 | $ 0.48 |
Diluted | $ 0.64 | $ 0.48 |
Shares used in per share computations: | ||
Basic | 30,277 | 30,172 |
Diluted | 30,284 | 30,189 |
Dividends per share |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | ||
Nov. 30, 2019 | Nov. 30, 2018 | ||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract] | |||
Net income | $ 19,709 | $ 14,645 | |
Less: net (income) loss attributable to noncontrolling interest | 19 | (33) | |
Net income attributable to PriceSmart, Inc. | 19,728 | 14,612 | |
Other Comprehensive Income, net of tax: | |||
Foreign currency translation adjustments | [1] | (3,724) | (13,397) |
Defined benefit pension plan: | |||
Net gain arising during period | 7 | 9 | |
Amortization of prior service cost and actuarial gains included in net periodic pensions cost | 19 | 19 | |
Total defined benefit pension plan | 26 | 28 | |
Derivative instruments: | |||
Unrealized losses on change in derivative obligations | [2] | (432) | (306) |
Unrealized gains on change in fair value of interest rate swaps | [2] | 941 | 429 |
Amounts reclassified from accumulated other comprehensive loss to other expense, for net settlement of derivatives | [2] | 4 | |
Total derivative instruments | 513 | 123 | |
Other comprehensive loss | (3,185) | (13,246) | |
Comprehensive income | 16,543 | 1,366 | |
Less: comprehensive income attributable to noncontrolling interest | 34 | 1 | |
Comprehensive income attributable to PriceSmart Inc. stockholders | $ 16,509 | $ 1,365 | |
[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 8 - 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 Loss [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Total Stockholders' Equity Attributable To PriceSmart, Inc. [Member] | Noncontrolling Interest [Member] | Total |
Balance at Aug. 31, 2018 | $ 3 | $ 432,882 | $ 11,486 | $ (121,216) | $ 473,954 | $ (39,107) | $ 758,002 | $ 636 | $ 758,638 |
Balance (in shares) at Aug. 31, 2018 | 31,373,000 | 912,000 | |||||||
Issuance of restricted stock award (in shares) | 32,000 | ||||||||
Stock-based compensation | 6,046 | 6,046 | 6,046 | ||||||
Net income | 14,612 | 14,612 | 33 | 14,645 | |||||
Other comprehensive income (loss) | (13,246) | (13,246) | 1 | (13,245) | |||||
Balance at Nov. 30, 2018 | $ 3 | 438,928 | 11,486 | (134,462) | 488,566 | $ (39,107) | 765,414 | 670 | 766,084 |
Balance (in shares) at Nov. 30, 2018 | 31,405,000 | 912,000 | |||||||
Balance at Aug. 31, 2018 | $ 3 | 432,882 | 11,486 | (121,216) | 473,954 | $ (39,107) | 758,002 | 636 | 758,638 |
Balance (in shares) at Aug. 31, 2018 | 31,373,000 | 912,000 | |||||||
Balance at Aug. 31, 2019 | $ 3 | 443,084 | 11,486 | (144,339) | 525,804 | $ (38,687) | 797,351 | 928 | $ 798,279 |
Balance (in shares) at Aug. 31, 2019 | 31,461,000 | 924,000 | 30,538,788 | ||||||
Purchase of treasury stock | $ (461) | (461) | $ (461) | ||||||
Purchase of treasury stock (in shares) | 7,000 | ||||||||
Issuance of treasury stock | (5,724) | $ 5,724 | |||||||
Issuance of treasury stock (in shares) | (69,000) | (69,000) | |||||||
Issuance of restricted stock award (in shares) | 85,000 | ||||||||
Forfeiture of restricted stock awards (in shares) | (2,000) | ||||||||
Stock-based compensation | 3,396 | 3,396 | 3,396 | ||||||
Net income | 19,728 | 19,728 | (19) | 19,709 | |||||
Other comprehensive income (loss) | (3,185) | (3,185) | 34 | (3,151) | |||||
Balance at Nov. 30, 2019 | $ 3 | $ 440,756 | $ 11,486 | $ (147,524) | $ 545,532 | $ (33,424) | $ 816,829 | $ 943 | $ 817,772 |
Balance (in shares) at Nov. 30, 2019 | 31,475,000 | 862,000 | 30,612,511 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2019 | Nov. 30, 2018 | |
Operating Activities: | ||
Net income | $ 19,709 | $ 14,645 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 14,814 | 13,723 |
Allowance for doubtful accounts | (19) | 7 |
Loss on sale of property and equipment | 71 | 215 |
Deferred income taxes | (1,234) | 316 |
Equity in losses of unconsolidated affiliates | 48 | 24 |
Stock-based compensation | 3,396 | 6,046 |
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 | (9,762) | (6,200) |
Merchandise inventories | (56,799) | (59,054) |
Accounts payable | 45,880 | 55,985 |
Net cash provided by operating activities | 16,104 | 25,707 |
Investing Activities: | ||
Additions to property and equipment | (37,582) | (35,673) |
Short-term investments | (10,184) | (6,190) |
Proceeds from settlements of short-term investments | 2,066 | 12,406 |
Proceeds from disposal of property and equipment | 13 | 93 |
Net cash used in investing activities | (45,687) | (29,364) |
Financing Activities: | ||
Proceeds from long-term bank borrowings | 25,000 | |
Repayment of long-term bank borrowings | (2,836) | (3,463) |
Proceeds from short-term bank borrowings | 81,202 | |
Repayment of short-term bank borrowings | (65,581) | |
Other financing activities | 19 | (33) |
Purchase of treasury stock | (461) | |
Net cash provided by (used in) financing activities | 37,343 | (3,496) |
Effect of exchange rate changes on cash and cash equivalents and restricted cash | 1,117 | (1,375) |
Net increase (decrease) in cash, cash equivalents | 8,877 | (8,528) |
Cash, cash equivalents, and restricted cash at beginning of period | 106,236 | 96,914 |
Cash, cash equivalents, and restricted cash at end of period | 115,113 | 88,386 |
Supplemental disclosure of noncash investing activities: | ||
Capital expenditures incurred but not yet paid | 10,282 | 2,148 |
Reconciliation of cash, cash equivalents, and restricted cash: | ||
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows | $ 115,113 | $ 88,386 |
COMPANY OVERVIEW AND BASIS OF P
COMPANY OVERVIEW AND BASIS OF PRESENTATION | 3 Months Ended |
Nov. 30, 2019 | |
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,” the “Company,” or "we") business consists primarily of international membership shopping warehouse clubs similar to, but smaller in size than, warehouse clubs in the United States. As of November 30, 2019, the Company had 45 warehouse clubs in operation in 12 countries and one U.S. territory ( seven each in Colombia, Costa Rica, and Panama; five in the Dominican Republic, four each in Trinidad and Guatemala; three in 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 is currently constructing and plans to open warehouse clubs in Liberia, Costa Rica in the summer of 2020 and Bogota, Colombia in the fall of 2020. The Company also plans to build new warehouse clubs in Portmore, Jamaica and Bucaramanga, Colombia and open them in the fall of 2020. Once these four new clubs are open, the Company will operate 49 warehouse clubs. The Company continues to explore and negotiate for other potential sites for future warehouse clubs in Central America, the Caribbean and Colombia. PriceSmart is investing in technology to increase efficiencies and to enable omni-channel capabilities, including e-commerce, to enhance the member experience. PriceSmart also operates a legacy (casillero and marketplace) Aeropost business in 38 countries in Latin America and the Caribbean, many of which overlap with markets where we operate warehouse clubs. Basis of Presentation – The interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q for interim financial reporting pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Effective September 1, 2019, we adopted the requirements of Accounting Standards Update (ASU) 2016-02, "Leases (Topic 842)" (ASC 842) using the modified retrospective approach, under which financial results reported in prior periods were not restated. As a result, the consolidated balance sheet as of November 30, 2019 is not comparable, in this respect, with that as of August 31, 2019. 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, 2019 (the “2019 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. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Nov. 30, 2019 | |
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 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 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 that for its ownership interest in store-front joint ventures within its marketplace and casillero business, the Company has the power to direct the activities that most significantly impact the economic performance of these VIEs. Therefore, the Company has determined that it is the primary beneficiary of these VIEs and has consolidated these entities within its consolidated financial statements. The Company's ownership interest in store-front joint ventures for which the Company has consolidated their financial statements as of November 30, 2019 are listed below: Marketplace and Casillero Store-front Joint Ventures Countries Ownership Basis of Presentation Guatemala Guatemala 60.0 % Consolidated Tortola British Virgin Islands 50.0 % Consolidated Trinidad Trinidad 50.0 % Consolidated In the case of the Company's ownership interest in real estate development joint ventures, both parties to each joint venture share all rights, obligations and the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. As a result, 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 the Company has recorded under the equity method as of November 30, 2019 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 interim consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents – The Company considers as cash and cash equivalents all cash on deposit, highly liquid investments with a maturity of three months or less at the date of purchase, and proceeds due from credit and debit card transactions in the process of settlement. Restricted Cash – The changes in restricted cash are disclosed within the consolidated statement of cash flows based on the nature of the restriction. The following table summarizes the restricted cash reported by the Company (in thousands): November 30, August 31, 2019 2019 Short-term restricted cash: Restricted cash for land purchase option agreements $ 50 $ 50 Other short-term restricted cash 15 4 Total short-term restricted cash $ 65 $ 54 Long-term restricted cash: Other long-term restricted cash (1) $ 3,689 $ 3,529 Total long-term restricted cash $ 3,689 $ 3,529 Total restricted cash $ 3,754 $ 3,583 (1) Other long-term restricted cash consists mainly of cash deposits held within banking institutions in compliance with federal regulatory requirements in Costa Rica and Panama. Short-Term Investments –The Company considers as short-term investments certificates of deposit and similar time-based deposits with financial institutions with maturities over three months and up to one year. Goodwill and Other Intangibles, net – Goodwill and other intangibles totaled $ 57.4 million as of November 30, 2019 and $ 58.7 million as of August 31, 2019 . The Company reviews reported goodwill and other intangibles at the cash-generating unit level for impairment. The Company tests Goodwill for impairment at least annually or when events or changes in circumstances indicate that it is more likely than not that the asset is impaired. Tax Receivables – The Company pays Value Added Tax (“VAT”) or similar taxes (“input VAT”), income taxes, and other taxes within the normal course of the Company’s business in most of the countries in which the Company 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 card processors to remit a portion of sales processed via credit 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 us with a net VAT receivable, forcing us 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, there are defined and structured processes to recover VAT receivables via refunds or offsets. However, in one country without a clearly defined refund process, the Company is actively engaged with the local government to recover VAT receivables totaling $ 6.2 million and $ 5.1 million as of November 30, 2019 and August 31, 2019, respectively. In two other countries, minimum income tax rules require 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 Company had income tax receivables of $ 9.7 million and $ 7.8 million and deferred tax assets of $ 2.7 million as of November 30, 2019 and August 31, 2019 in these countries. While the rules related to refunds of income tax receivables in these countries are either unclear or complex, 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. The Company’s policy for classification and presentation of VAT receivables, income tax receivables and other tax receivables is as follows: Short-term VAT and Income tax receivables, recorded as Other current assets: This classification is used for any countries where the Company’s subsidiary has generally demonstrated the ability to recover the VAT or income tax receivable within one year. The Company also classifies as short-term any approved refunds or credit notes to the extent that the Company expects to receive the refund or use the credit notes within one year. Long-term VAT and Income tax receivables, recorded as Other non-current assets: This classification is used for amounts not approved for refund or credit in countries where the Company’s subsidiary has not demonstrated the ability to obtain refunds within one year and/or for amounts which are subject to outstanding disputes. An allowance is provided against VAT and income tax receivable balances in dispute when the Company does not expect to eventually prevail in its recovery. The Company does not currently have any allowances provided against VAT and income tax receivables. The following table summarizes the VAT receivables reported by the Company (in thousands): November 30, August 31, 2019 2019 Prepaid expenses and other current assets $ 3,068 $ 1,639 Other non-current assets 24,990 22,691 Total amount of VAT receivables reported $ 28,058 $ 24,330 The following table summarizes the Income tax receivables reported by the Company (in thousands): November 30, August 31, 2019 2019 Prepaid expenses and other current assets $ 10,065 $ 9,009 Other non-current assets 19,654 16,381 Total amount of Income tax receivables reported $ 29,719 $ 25,390 Lease Accounting – The Company’s leases are operating leases for warehouse clubs and non-warehouse club facilities such as corporate headquarters, regional offices, and regional distribution centers. The Company does not have finance leases. The Company determines if an arrangement is a lease and classifies it as either a finance or operating lease at lease inception. Operating leases are included in Operating lease right-of-use assets, net ; Operating lease liabilities, current portion ; and Long-term operating lease liabilities on the consolidated balance sheets. Operating lease liabilities are recognized at commencement date based on the present value of the future minimum lease payments over the lease term. The Company’s leases generally do not have a readily determinable implicit rate; therefore, the Company uses a collateralized incremental borrowing rate at the commencement date in determining the present value of future payments. The incremental borrowing rate is based on a yield curve derived by publicly traded bond offerings for companies with similar credit characteristics that approximate the Company's market risk profile. In addition, we adjust the incremental borrowing rate for jurisdictional risk derived from quoted interest rates from financial institutions to reflect the cost of borrowing in the Company’s local markets. The Company’s lease terms may include options to purchase, extend or terminate the lease, which are recognized when it is reasonably certain that the Company will exercise that option. T he Company does not combine lease and non-lease components. The Company measures Right-of-use (“ROU”) assets based on the corresponding lease liabilities, adjusted for any initial direct costs and prepaid lease payments made to the lessor before or at the commencement date (net of lease incentives). The lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease payments are not included in the calculation of the ROU asset and the related lease liability and are recognized as this lease expense is incurred. The Company’s variable lease payments generally relate to amounts the Company pays for additional contingent rent based on a contractually stipulated percentage of sales. 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: restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance based restricted stock units (“PSUs”). Compensation related to RSAs, RSUs and PSUs is based on the fair market value at the time of grant. The Company recognizes the compensation cost related to RSAs and RSUs over the requisite service period as determined by the grant, amortized ratably or on a straight-line basis over the life of the grant. The Company also recognizes compensation cost for PSUs over the performance period. The Company assesses the probability of vesting for awards with performance conditions and adjusts compensation cost based on the probability that performance metrics will be achieved. If the Company determines that an award is unlikely to vest, any previously recorded expense is then reversed. The Company 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. 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. PSUs, similar to RSUs, are awarded with dividend equivalents, provided that such amounts become payable only if the performance metric is achieved. At the time the Compensation Committee confirms the performance metric has been achieved, the accrued dividend equivalents are paid on the PSUs. Treasury Stock – Shares of common stock repurchased by the Company are recorded at cost as treasury stock and result in the reduction of stockholders’ equity in the Company’s consolidated balance sheets. The Company may reissue these treasury shares as part of its stock-based compensation programs. When treasury shares are reissued, the Company uses the first in/first out (“FIFO”) cost method for determining cost of the reissued shares. If the issuance price is higher than the cost, the excess of the issuance price over the cost is credited to additional paid-in capital (“APIC”). If the issuance price is lower than the cost, the difference is first charged against any credit balance in APIC from treasury stock and the balance is charged to retained earnings. During the three months ended November 30, 2019, the Company reissued approximately 69,000 treasury shares. 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), written foreign currency call options, 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 2019 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 reported in accumulated other comprehensive 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 and interest-rate 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 reported 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 8 - Derivative Instruments and Hedging Activities for information on the fair value of interest rate swaps and cross-currency interest rate swaps as of November 30, 2019 and August 31, 2019. 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. Other Instruments . Other derivatives not designated as hedging instruments consist primarily of written call options in which the Company receives a premium that it uses to reduce the costs associated with its hedging activities. For derivative instruments not designated as hedging instruments, the Company recognizes changes in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item, in Other expense, net in the consolidated statements of income in the period of change. Revenue Recognition – The accounting policies and other disclosures such as the disclosure of disaggregated revenues are described in Note 3 – Revenue Recognition. 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 – T he Company changed health insurance providers and is no longer self-insured as of October 1, 2019. The remaining accrued liability for potential health care claims is immaterial as of November 30, 2019. Cost of Goods Sold – The Company includes the cost of merchandise, food service and bakery raw materials in cost of goods sold, net merchandise sales. The Company also includes in cost of goods sold: net merchandise sales the external and internal distribution and handling costs for supplying merchandise, raw materials and supplies to the warehouse clubs. External costs include inbound freight, duties, drayage, fees, insurance, and non-recoverable value-added tax related to inventory shrink, spoilage and damage. Internal costs include payroll and related costs, utilities, consumable supplies, repair and maintenance, rent expense and building and equipment depreciation at the Company's distribution facilities and payroll and other direct costs for in-store demonstrations. For export sales, the Company includes the cost of merchandise and external and internal distribution and handling costs for supplying merchandise in cost of goods sold, exports. For the marketplace and casillero operations, the Company includes the costs of external and internal shipping, handling and other direct costs incurred to provide delivery, insurance and customs processing services in cost of goods sold, non-merchandise. Vendor consideration consists primarily of volume rebates, time-limited product promotions, slotting fees, demonstration reimbursements and prompt payment discounts. Volume rebates that are not threshold based are incorporated into the unit cost of merchandise reducing the inventory cost and cost of goods sold. Volume rebates that are threshold based are recorded as a reduction to cost of goods sold when the Company achieves established purchase levels that are confirmed by the vendor in writing or upon receipt of funds. On a quarterly basis, the Company calculates the amount of rebates recorded in cost of goods sold that relates to inventory on hand and this amount is reclassified as a reduction to inventory, if significant. Slotting fees are related to consideration received by the Company from vendors for preferential "end cap" placement of the vendor's products within the warehouse club. Demonstration reimbursements are related to consideration received by the Company from vendors for the in store promotion of the vendors' products. The Company records the reduction in cost of goods sold on a transactional basis for these programs. Prompt payment discounts are taken in substantially all cases and therefore are applied directly to reduce the acquisition cost of the related inventory, with the resulting effect recorded to cost of goods sold when the inventory is sold. Selling, General and Administrative – Selling, general and administrative costs are comprised primarily of expenses associated with operating warehouse clubs and freight forwarding operations. These operations include the operating costs of the Company’s warehouse clubs and freight forwarding activities, including payroll and related costs, utilities, consumable supplies, repair and maintenance, rent expense, building and equipment depreciation, bank, credit card processing fees, and amortization of intangibles. Also included in selling, general and administrative expenses are the payroll and related costs for the Company’s U.S. and regional management and purchasing centers. Pre-Opening Costs – The Company expenses pre-opening costs (the costs of start-up activities, including organization costs and rent) for new warehouse clubs as incurred. Contingencies and Litigation – The Company records and reserves for loss contingencies if (a) information available prior to issuance of the consolidated financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the consolidated financial statements and (b) the amount of loss can be reasonably estimated. If one or both criteria for accrual are not met, but there is at least a reasonable possibility that a material loss will occur, the Company does not record and reserve for a loss contingency but describes the contingency within a note and provides detail, when possible, of the estimated potential loss or range of loss. If an estimate cannot be made, a statement to that effect is made. 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. The following table discloses the net effect of translation into the reporting currency on other comprehensive loss for these local currency denominated accounts for the three months ended November 30, 2019 and 2018: Three Months Ended November 30, November 30, 2019 2018 Effect on other comprehensive loss due to foreign currency translation $ ( 3,724 ) $ ( 13,397 ) 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. Three Months Ended November 30, November 30, 2019 2018 Currency loss $ ( 1,657 ) $ ( 1,819 ) Recent Accounting Pronouncements – Not Yet Adopted FASB ASC 810 ASU 2018-15 – Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. ASU No. 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with th |
REVENUE RECOGNITION
REVENUE RECOGNITION | 3 Months Ended |
Nov. 30, 2019 | |
REVENUE RECOGNITION [Abstract] | |
Revenue Recognition | NOTE 3 – REVENUE RECOGNITION Performance Obligations The Company identifies each distinct performance obligation to transfer goods (or bundle of goods) or services. The Company recognizes revenue when (or as) it satisfies a performance obligation by transferring control of the goods or services to the customer. Merchandise Sales . The Company recognizes merchandise sales revenue, net of sales taxes, on transactions where the Company has determined that it is the principal in the sale of merchandise. These transactions costs may include shipping commitments and/or shipping revenue if the transaction involves delivery to the customer. Non-merchandise Sales . The Company recognizes non-merchandise revenue, net of sales taxes, on transactions where the Company has determined that it is the agent in the transaction. These transactions primarily consist of contracts the Company enters into with its customers to provide delivery, insurance and customs processing services for products its customers purchase online in the United States either directly from other vendors utilizing the vendor’s website or through the Company’s marketplace site. Revenue is recognized when the Company’s performance obligations have been completed (that is when delivery of the items have been made to the destination point) and is recorded in “non-merchandise revenue” on the Consolidated Statements of Income. Prepayment of orders for which the Company has not fulfilled its performance obligation are recorded as unearned revenue. Additionally, the Company records revenue at the net amounts retained, i.e., the amount paid by the customer less amounts remitted to the respective merchandise vendors, as the Company is acting as an agent and is not the principal in the sale of those goods being purchased from the vendors by the Company’s customers. Membership Fee Revenue. Membership income represents annual membership fees paid by the Company’s warehouse club members, which are recognized ratably over the 12-month term of the membership. Membership refunds are prorated over the remaining term of the membership; accordingly, no refund reserve is required to be established for the periods presented. Membership fee revenue is included in membership income in the Company's consolidated statements of income. The deferred membership fee is included in deferred income in the Company's consolidated balance sheets. Platinum Points Reward Programs. The Company currently offers Platinum memberships in nine of its thirteen countries. The annual fee for a Platinum membership is approximately $ 75 . The Platinum membership provides members with a 2 % rebate on most items, up to an annual maximum of $ 500 . The rebate is issued annually to Platinum members on March 1 and expires August 31. Platinum members can apply this rebate to future purchases at the warehouse club during the redemption period. The Company records this 2 % rebate as a reduction of revenue at the time of the sales transaction. Accordingly, the Company has reduced warehouse sales and has accrued a liability within other accrued expenses and other current liabilities, platinum rewards. The Company has determined that breakage revenue is 5 % of the awards issued; therefore, it records 95 % of the Platinum membership liability at the time of sale. Annually, the Company reviews for expired unused rebates outstanding, and the expired unused rebates are recognized as “Other revenue and income” on the consolidated statements of income. Co-branded Credit Card Points Reward Programs. Most of the Company’s subsidiaries have points reward programs related to Co-branded Credit Cards. These points reward programs provide incremental points that can be used at a future time to acquire merchandise within the Company’s warehouse clubs. This results in two performance obligations, the first performance obligation being the initial sale of the merchandise or services purchased with the co-branded credit card and the second performance obligation being the future use of the points rewards to purchase merchandise or services. As a result, upon the initial sale, the Company allocates the transaction price to each performance obligation with the amount allocated to the future use points rewards recorded as a contract liability within other accrued expenses and other current liabilities on the consolidated balance sheet. The portion of the selling price allocated to the reward points is recognized as Net merchandise sales when the points are used or when the points expire. The Company reviews on an annual basis expired points rewards outstanding, and the expired rewards are recognized as Net merchandise sales on the consolidated statements of income within markets where the co-branded credit card agreement allows for such treatment. Gift Cards . Members’ purchases of gift cards to be utilized at the Company's warehouse clubs are not recognized as sales until the card is redeemed and the customer purchases merchandise using the gift card. The outstanding gift cards are reflected as other accrued expenses and other current liabilities in the consolidated balance sheets. These gift cards generally have a one-year stated expiration date from the date of issuance and are generally redeemed prior to expiration. However, the absence of a large volume of transactions for gift cards impairs the Company's ability to make a reasonable estimate of the redemption levels for gift certificates; therefore, the Company assumes a 100 % redemption rate prior to expiration of the gift certificate. The Company periodically reviews unredeemed outstanding gift certificates, and the gift certificates that have expired are recognized as “Other revenue and income” on the consolidated statements of income. Co-branded Credit Card Revenue Sharing Agreements . As part of the co-branded credit card agreements that the Company has entered into with financial institutions within its markets, the Company often enters into revenue sharing agreements. As part of these agreements, in some countries, the Company receives a portion of the interest income generated from the average outstanding balances on the co-branded credit cards from these financial institutions (“interest generating portfolio” or “IGP”). The Company recognizes its portion of interest received as revenue. As a result of the adoption of ASC 606, the Company has determined that this revenue should be recognized as “Other revenue and income” on the consolidated statements of income. Contract Performance Liabilities Contract performance liabilities as a result of transactions with customers primarily consist of deferred membership income, other deferred income, deferred gift card revenue, Platinum points programs, and liabilities related to co-branded credit card points rewards programs which are included in deferred income and other accrued expenses and other current liabilities in the Company’s consolidated balance sheets. The following table provides these contract balances from transactions with customers as of the dates listed (in thousands): Contract Liabilities November 30, 2019 August 31, 2019 Deferred membership income $ 24,599 $ 24,901 Other contract performance liabilities $ 6,397 $ 4,048 Disaggregated Revenues In the following table, net merchandise sales are disaggregated by merchandise category (in thousands): Three Months Ended November 30, 2019 November 30, 2018 Foods & Sundries $ 392,805 $ 376,328 Fresh Foods 215,238 200,705 Hardlines 90,804 92,154 Softlines 40,324 40,481 Other Business 39,557 37,775 Net Merchandise Sales $ 778,728 $ 747,443 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Nov. 30, 2019 | |
EARNINGS PER SHARE [Abstract] | |
EARNINGS PER SHARE | NOTE 4 – EARNINGS PER SHARE The Company presents basic net income per share using the two-class method. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders and that determines basic net income per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings that would have been available to common stockholders. A participating security is defined as a security that may participate in undistributed earnings with common stock. The Company’s capital structure includes securities that participate with common stock on a one-for-one basis for distribution of dividends. These are the restricted stock awards and restricted stock units issued pursuant to the 2013 Equity Incentive Award Plan. The Company determines the diluted net income per share by using the more dilutive of the two class-method or the treasury stock method and by including the basic weighted average of outstanding performance stock units in the calculation of diluted net income per share under the two-class method and including all potential common shares assumed issued in the calculation of diluted net income per share under the treasury stock method. The following table sets forth the computation of net income per share for the three months ended November 30, 2019 and 2018 (in thousands, except per share amounts): Three Months Ended November 30, November 30, 2019 2018 Net income attributable to PriceSmart, Inc. $ 19,728 $ 14,612 Less: Allocation of income to unvested stockholders ( 258 ) ( 193 ) Net income attributable to PriceSmart, Inc. per share available for distribution $ 19,470 $ 14,419 Basic weighted average shares outstanding 30,277 30,172 Add dilutive effect of performance stock units (two-class method) 7 17 Diluted average shares outstanding 30,284 30,189 Basic net income per share $ 0.64 $ 0.48 Diluted net income per share $ 0.64 $ 0.48 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Nov. 30, 2019 | |
STOCKHOLDERS' EQUITY [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 5 – STOCKHOLDERS’ EQUITY Dividends No dividends were declared by the Company’s Board of Directors during the first three months of fiscal year 2020. The following table summarizes the dividends declared and paid during fiscal year 2019. First Payment Second Payment Declared Amount Record Date Date Paid Amount Record Date Date Paid Amount 1/30/2019 $ 0.70 2/15/2019 2/28/2019 $ 0.35 8/15/2019 8/30/2019 $ 0.35 The Company anticipates the ongoing payment of semi-annual dividends in subsequent periods, although the actual declaration of future dividends, the amount of such dividends, and the establishment of record and payment dates is subject to final determination by the Board of Directors at its discretion after its review of the Company’s financial performance and anticipated capital requirements. 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): Attributable to Noncontrolling PriceSmart Interests Total Beginning balance, September 1, 2019 $ ( 144,339 ) $ 20 $ ( 144,319 ) Foreign currency translation adjustments ( 3,724 ) 34 ( 3,690 ) Defined benefit pension plans 26 — 26 Derivative instruments (1) 513 — 513 Ending balance, November 30, 2019 $ ( 147,524 ) $ 54 $ ( 147,470 ) Attributable to Noncontrolling PriceSmart Interests Total Beginning balance, September 1, 2018 $ ( 121,216 ) $ ( 1 ) $ ( 121,217 ) Foreign currency translation adjustments ( 13,397 ) ( 1 ) ( 13,398 ) Defined benefit pension plans 28 — 28 Derivative Instruments (1) 123 — 123 Ending balance, November 30, 2018 $ ( 134,462 ) $ ( 2 ) $ ( 134,464 ) Attributable to Noncontrolling PriceSmart Interests Total Beginning balance, September 1, 2018 $ ( 121,216 ) $ ( 1 ) $ ( 121,217 ) Foreign currency translation adjustments ( 19,717 ) 21 ( 19,696 ) Defined benefit pension plans ( 112 ) — ( 112 ) Derivative Instruments (1) ( 3,369 ) — ( 3,369 ) Amounts reclassified from accumulated other comprehensive income (loss) (2) 75 — 75 Ending balance, August 31, 2019 $ ( 144,339 ) $ 20 $ ( 144,319 ) (1) See Note 8 - Derivative Instruments and Hedging Activities. (2) Amounts reclassified from accumulated other comprehensive loss related to the minimum pension liability are included in warehouse club and other operations in the Company's consolidated statements of income. Retained Earnings Not Available for Distribution The following table summarizes retained earnings designated as legal reserves of various subsidiaries which cannot be distributed as dividends to PriceSmart, Inc. according to applicable statutory regulations (in thousands): November 30, August 31, 2019 2019 Retained earnings not available for distribution $ 7,926 $ 7,843 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Nov. 30, 2019 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 6 – 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 believes that the final disposition of these matters 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. 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. On May 22, 2019, a class action complaint was filed against PriceSmart, Inc., as well as certain former and current officers in the United States District Court for the Southern District of California. On October 7, 2019, the Court granted Public Employees Retirement Association of New Mexico’s (PERA’s) Motion for Appointment as Lead Plaintiff. On January 3, 2020, PERA filed a consolidated class action complaint, which alleges violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The Company intends to vigorously defend itself against any obligations or liability to the plaintiffs with respect to such claims. The Company believes the claims are without merit. Taxes Income Taxes – For interim reporting, the Company uses an estimated annual effective tax rate (AETR), pursuant to ASC 740-279, to calculate income tax expense. Income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management’s best estimate of current and future taxes to be paid. The Company is subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgments and estimates are required in the determination of the consolidated income tax expense. Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. In evaluating its ability to recover deferred tax assets in the jurisdictions from which they arise, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. In projecting future taxable income, the Company begins with historical results adjusted for the results of discontinued operations and incorporates assumptions about the amount of future state, federal, and foreign pretax operating income adjusted for items that do not have tax consequences. The assumptions about future taxable income require the use of significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, the Company considers three years of cumulative operating income (loss). 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 the interpretations the Company used to calculate its tax liability and therefore require the Company to pay additional taxes. The Company accrues an amount for its estimate of probable additional income tax liability. In certain cases, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than 50% likelihood of being sustained. There were no significant changes in the Company's uncertain income tax positions since August 31, 2019. In evaluating the exposure associated with various non-income tax filing positions, the Company accrues for probable and estimable exposures for non-income tax related tax contingencies. As of November 30, 2019 and August 31, 2019, the Company has recorded within other accrued expenses and other current liabilities a total of $ 3.2 million 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. In two other countries where the Company operates, minimum income tax rules require 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 Company had income tax receivables of $ 9.7 million and $ 7.8 million and deferred tax assets of $ 2.7 million as of November 30, 2019 and August 31, 2019 in these countries. While the rules related to refunds of income tax receivables in these countries are either unclear or complex, 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. Other Commitments 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. As of November 30, 2019, all of the vacated space has been subleased (and/or returned to the landlord). As part of the subleases, the Company provided the landlord of the leased facility a letter of credit (“LOC”) for the initial amount of $ 500,000 which entitled the landlord to draw on the LOC based on a decreasing scale over four year s if certain conditions were to 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. As of November 30, 2019, the remaining balance of the LOC was $ 250,000 . 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 service obligations for various warehouse club developments and expansions. As of November 30, 2019 and August 31, 2019, the Company had approximately $ 15.1 million and $ 14.9 million, respectively, in contractual obligations for construction services not yet rendered. The Company has entered into general land purchase and land purchase option agreements. The Company’s land purchase agreements are typically subject to various conditions, including, but not limited to, the ability to obtain necessary governmental permits or approvals. A deposit under an agreement is typically returned to the Company if all permits or approvals are not obtained. Generally, the Company has the right to cancel any of our agreements to purchase land without cause by forfeiture of some or all of the deposits we have made pursuant to the agreement. The Company does not have a timetable of when or if it will exercise its land purchase options or complete its other land purchase agreements, due to the uncertainty related to the completion of the Company's due diligence reviews or required governmental permits or approvals. 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 all land purchase agreements were completed, the cash use would be approximately $ 6.7 million. The table below summarizes the Company’s interest in real estate joint ventures, commitments to additional future investments and the Company’s maximum exposure to loss as a result of its involvement in these joint venture as of November 30, 2019 (in thousands): Entity % Ownership Initial Investment Additional Investments Net 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 $ 132 $ 7,150 $ 99 $ 7,249 Price Plaza Alajuela PPA, S.A. 50 % 2,193 1,236 70 3,499 785 4,284 Total $ 6,809 $ 3,638 $ 202 $ 10,649 $ 884 $ 11,533 (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
DEBT | 3 Months Ended |
Nov. 30, 2019 | |
DEBT [Abstract] | |
DEBT | NOTE 7 – DEBT Short-term borrowings consist of unsecured lines of credit. The following table summarizes the balances of total facilities, facilities used and facilities available (in thousands): Facilities Used Total Amount Short-term Letters of Facilities Weighted average of Facilities Borrowings Credit Available interest rate November 30, 2019 $ 69,000 $ 23,018 $ 534 $ 45,448 4.8 % August 31, 2019 $ 69,000 $ 7,540 $ 486 $ 60,974 6.1 % As of November 30, 2019 and August 31, 2019, the Company had approximately $ 40.0 million of short-term facilities in the U.S. that require compliance with certain quarterly financial covenants. As of November 30, 2019 and August 31, 2019, the Company was in compliance with respect to these covenants. Each of the facilities expires annually except for the U.S. facility, which expires bi-annually. The facilities are normally renewed. The following table provides the changes in long-term debt for the three-months ended November 30, 2019: (Amounts in thousands) Current portion of long-term debt Long-term debt (net of current portion) Total Balances as of August 31, 2019 $ 25,875 $ 63,711 $ 89,586 (1) Proceeds from long-term debt incurred during the period: Colombia subsidiary — 25,000 25,000 Regularly scheduled loan payments ( 947 ) ( 1,889 ) ( 2,836 ) Reclassifications of short-term debt ( 11,253 ) 11,253 ( 0 ) Translation adjustments on foreign currency debt of subsidiaries whose functional currency is not the U.S. dollar (2) 51 9 60 Balances as of November 30, 2019 $ 13,726 $ 98,084 $ 111,810 (1) (1) The carrying amount of non-cash assets assigned as collateral for these loans was $ 111.3 million. No cash assets were assigned as collateral for these loans. (2) These foreign currency translation adjustments are recorded within Other comprehensive income. As of November 30, 2019, the Company had approximately $ 105.9 million of long-term loans in several foreign subsidiaries that require these subsidiaries to comply with certain annual or quarterly financial covenants, which include debt service and leverage ratios. As of November 30, 2019, the Company was in compliance with all covenants or amended covenants. As of August 31, 2019, the Company had approximately $ 83.1 million of long-term loans in several foreign subsidiaries that require these subsidiaries to comply with certain annual or quarterly financial covenants. Annual maturities of long-term debt are as follows (in thousands): Twelve Months Ended November 30, Amount 2020 $ 13,726 2021 13,348 2022 10,211 2023 21,341 2024 20,771 Thereafter 32,413 Total $ 111,810 |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 3 Months Ended |
Nov. 30, 2019 | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES [Abstract] | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | NOTE 8 – 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 loss. Amounts are deferred in other comprehensive 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 (NDFs) 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. The Company uses other derivatives not designated as hedging instruments that consist primarily of written call options in which the Company receives a premium from the holder. This premium lowers the cost of the Company’s hedging activities. The Company recognizes changes in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item, in Other expense, net in the consolidated statements of income in the period of change. Cash Flow Hedges As of November 30, 2019, all of the Company’s interest rate swap and cross-currency interest rate swap derivative financial instruments are designated and qualify as cash flow hedges. The Company formally documents the hedging relationships for its derivative instruments that qualify for hedge accounting. The following table summarizes agreements for which the Company has recorded cash flow hedge accounting for the three months ended November 30, 2019: 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 Colombia 27-Nov-19 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 25,000,000 Citibank, N.A. Variable rate 3-month Libor plus 2.45 % 7.93 % 27th day of November, February, May and August beginning February 27, 2020 November 27, 2019 - November 27, 2024 Colombia 24-Sep-19 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 12,500,000 PriceSmart, Inc. Variable rate 3-month Libor plus 2.50 % 7.09 % 24th day of December, March, June and September beginning December 24, 2019 September 24, 2019 - September 26, 2022 Panama 25-Jun-18 Bank of Nova Scotia ("Scotiabank") Interest rate swap $ 14,625,000 Bank of Nova Scotia Variable rate 3-month Libor plus 3.0 % 5.99 % 23rd day of each month beginning on July 23, 2018 June 25, 2018 - March 23, 2023 Honduras 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 May 29, 2018 February 26, 2018 - February 24, 2024 PriceSmart, Inc 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 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 For the three months ended November 30, 2019 and 2018, the Company included the gain or loss on the hedged items (that is, variable-rate borrowings) in the same line item—interest expense—as the offsetting gain or loss on the related interest rate swaps as follows (in thousands): Income Statement Classification Interest expense on borrowings (1) Cost of swaps (2) Total Interest expense for the three months ended November 30, 2019 $ 1,014 $ 261 $ 1,275 Interest expense for the three months ended November 30, 2018 $ 1,160 $ 167 $ 1,327 (1) This amount is representative of the interest expense recognized on the underlying hedged transactions. (2) This amount is representative of the interest expense recognized on the cross-currency interest rate swaps designated as cash flow hedging instruments. The total notional balance of the Company’s pay-fixed/receive-variable interest rate swaps and cross-currency interest rate swaps was as follows (in thousands): Notional Amount as of November 30, August 31, Floating Rate Payer (Swap Counterparty) 2019 2019 Union Bank $ 34,850 $ 35,169 Citibank N.A. 60,825 24,225 Scotiabank 17,750 18,375 Total $ 113,425 $ 77,769 Derivatives listed on the table below were designated as cash flow hedging instruments. The table summarizes the effect of the fair value of interest rate swap and cross-currency interest rate swap derivative instruments that qualify for derivative hedge accounting and its associated tax effect on accumulated other comprehensive (income)/loss (in thousands): November 30, 2019 August 31, 2019 Derivatives designated as cash flow hedging instruments Balance Sheet Classification Fair Value Net Tax Effect Net OCI Fair Value Net Tax Effect Net OCI Cross-currency interest rate swaps Other non-current assets $ 436 $ ( 144 ) $ 292 $ — $ — $ — Cross-currency interest rate swaps Other current assets 2,747 ( 906 ) 1,841 2,736 ( 903 ) 1,833 Interest rate swaps Other long-term liabilities ( 1,429 ) 344 ( 1,085 ) ( 2,178 ) 517 ( 1,661 ) Cross-currency interest rate swaps Other long-term liabilities ( 580 ) 174 ( 406 ) ( 732 ) 220 ( 512 ) Cross-currency interest rate swaps Other current liabilities ( 60 ) 18 ( 42 ) — — — Net fair value of derivatives designated as hedging instruments $ 1,114 $ ( 514 ) $ 600 $ ( 174 ) $ ( 166 ) $ ( 340 ) 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. As of November 30, 2019, the Company did not have any material non-deliverable forward foreign-exchange contracts. Other Instruments Other derivatives not designated as hedging instruments consist primarily of written call options in which the Company receives a premium that it uses to reduce the costs associated with its hedging activities. The following table summarizes the fair value of the Company’s other contracts not designated as hedging instruments: November 30, 2019 August 31, 2019 Non-designated derivative contracts Balance Sheet Location Fair Value Balance Sheet Location Fair Value Net fair value of other non-designated derivative contracts that do not qualify for hedge accounting Other long-term liabilities $ ( 1,250 ) Other long-term liabilities $ — For the three months ended November 30, 2019, the Company included in its consolidated statements of income the loss of its other non-designated derivative contracts as follows (in thousands): Three Months Ended November 30, November 30, Income Statement Classification 2019 2018 Other expense, net $ ( 1,270 ) $ — |
SEGMENTS
SEGMENTS | 3 Months Ended |
Nov. 30, 2019 | |
SEGMENTS [Abstract] | |
SEGMENTS | NOTE 9 – SEGMENTS The Company and its subsidiaries are principally engaged in the international operation of membership shopping in 45 warehouse clubs located in 12 countries and one U.S. territory that are located in Central America, the Caribbean and Colombia. In addition, the Company operates distribution centers and corporate offices in the United States. The Company has aggregated its warehouse clubs, distribution centers and corporate offices into reportable segments. The Company’s reportable segments are based on management’s organization of these locations into operating segments by general geographic location, used by management and the Company's chief operating decision maker in setting up management lines of responsibility, providing support services, and making operational decisions and assessments of financial performance. Segment amounts are presented after converting to U.S. dollars and consolidating eliminations. Certain revenues, operating costs and inter-company charges included in the United States segment are not allocated to the segments within this presentation, as it is impractical to do so, and they appear as reconciling items to reflect the amount eliminated on consolidation of intersegment transactions. From time to time, the Company revises the measurement of each segment's operating income and net income, including certain corporate overhead allocations, and other measures as determined by the information regularly reviewed by the Company's chief operating decision maker. When the Company does so, the previous period amounts and balances are reclassified to conform to the current period's presentation. The following tables summarize by segment certain revenues, operating costs and balance sheet items (in thousands): United States Operations Central American Operations Caribbean Operations (1) Colombia Operations Reconciling Items (2) Total Three Months Ended November 30, 2019 Revenue from external customers $ 17,339 $ 466,802 $ 235,017 $ 92,783 $ — $ 811,941 Intersegment revenues 349,950 4,045 1,202 536 ( 355,733 ) — Depreciation, Property and equipment 1,348 6,882 3,966 2,018 — 14,214 Amortization, Intangibles 599 — — — 599 Operating income 2,587 31,700 11,810 4,524 ( 19,907 ) 30,714 Net income (loss) attributable to PriceSmart, Inc. ( 724 ) 26,751 10,318 3,271 ( 19,888 ) 19,728 Long-lived assets (other than deferred tax assets) (3) 84,117 471,366 177,742 143,818 — 877,043 Intangibles, net 11,977 — — — — 11,977 Goodwill 10,695 24,532 10,198 — — 45,425 Total assets 168,375 754,364 369,575 231,797 — 1,524,111 Capital expenditures, net 629 15,243 4,520 20,834 — 41,226 Three Months Ended November 30, 2018 Revenue from external customers $ 17,339 $ 439,806 $ 225,009 $ 97,483 $ — $ 779,637 Intersegment revenues 350,719 437 1,093 278 ( 352,527 ) — Depreciation, Property and equipment 1,960 5,870 3,191 2,103 — 13,124 Amortiazation, Intangibles 599 — — — — 599 Operating income (loss) ( 1,050 ) 28,792 12,027 3,416 ( 18,515 ) 24,670 Net income (loss) attributable to PriceSmart, Inc. ( 3,825 ) 24,185 9,985 2,815 ( 18,548 ) 14,612 Long-lived assets (other than deferred tax assets) (3) 90,061 320,136 149,823 110,969 — 670,989 Intangibles, net 14,381 — — — — 14,381 Goodwill 11,230 24,726 10,292 — — 46,248 Total assets 158,591 592,114 346,397 180,141 — 1,277,243 Capital expenditures, net 1,686 22,771 10,495 1,387 — 36,339 As of August 31, 2019 Long-lived assets (other than deferred tax assets) $ 65,278 $ 383,665 $ 165,584 $ 115,838 $ — $ 730,365 Intangibles, net 12,576 — — — — 12,576 Goodwill 11,315 24,593 10,193 — — 46,101 Total assets 161,583 614,579 340,216 180,033 — 1,296,411 (1) Management considers its club in the U.S. Virgin Islands to be part of its Caribbean operations. (2) The reconciling items reflect the amount eliminated on consolidation of intersegment transactions. (3) Effective September 1, 2019, we adopted the requirements of Accounting Standards Update (ASU) 2016-02, "Leases (Topic 842)" (ASC 842) using the modified retrospective approach, under which financial results reported in prior periods were not restated. As a result, the Long-lived assets (other than deferred tax assets) as of November 30, 2019 is not comparable with that as of November 30, 2018 and August 31, 2019. |
LEASES
LEASES | 3 Months Ended |
Nov. 30, 2019 | |
LEASES [Abstract] | |
LEASES | NOTE 10 – LEASES The Company adopted ASC 842 as of September 1, 2019, using the modified retrospective method and applying transitional relief allowing entities to initially apply the requirements at the adoption date by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, results and disclosures for the reporting periods beginning September 1, 2019 are reported and presented under ASC 842, while prior period amounts and disclosures are not adjusted and continue to be reported and presented under ASC 840. As part of the adoption, the Company elected the following practical expedients: A package of practical expedients allowing the Company to: a) carry forward its historical lease classification; b) avoid reassessing whether any expired or existing contracts are or contain leases; and c) avoid reassessing initial direct costs for any existing lease. A practical expedient related to land easements, allowing the Company to carry forward the accounting treatment for land easements on existing agreements and eliminating the need to reassess existing lease contracts to determine if land easements are separate leases under ASC 842. A practical expedient allowing the Company not to apply the recognition requirements of ASC 842 to short-term leases (12 months or less). The Company did not elect the following practical expedients: A practical expedient that would allow the Company to use hindsight in determining the lease term and to assess impairment of the entity’s right-of use (“ROU”) assets, since election of this expedient could make adoption more complex given that reevaluation of the lease term. A practical expedient allowing the Company to not separate lease components from nonlease components ( e.g. , common area maintenance costs), since the Company does not combine lease and nonlease components for any of its real estate leases. In accordance with ASC 842, the Company determines if an arrangement is a lease at inception or modification of a contract and classifies each lease as either operating or finance lease at commencement. The Company only reassesses lease classification subsequent to commencement upon a change to the expected lease term or the contract being modified. As of November 30, 2019, the Company only has operating leases for its clubs, distribution centers, office space, and land. Operating leases, net of accumulated amortization, are included in operating lease ROU assets, and current and non-current operating lease liabilities, on the Company’s consolidated balance sheets. Lease expense for operating leases is included in selling general and administrative expense on the Company’s consolidated statements of income. Leases with an initial term of twelve months or less are not recorded on the Company’s consolidated balance sheet. The Company is generally obligated for the cost of property taxes, insurance, and maintenance relating to its leases, which are often variable lease payments. Such costs are included in selling, general and administrative expense on the interim unaudited consolidated statements of income. Certain of the Company's lease agreements provide for lease payments based on future sales volumes at the leased location, or include rental payments adjusted periodically for inflation or based on an index, which are not measurable at the inception of the lease. The Company expenses such variable amounts in the period incurred, which is the period in which it becomes probable that the specified target that triggers the variable lease payments will be achieved. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the reasonably certain lease term. The operating lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option or if an economic penalty may be incurred if the option is not exercised. The initial lease term of the Company’s operating leases range from two to 30 years. Where the Company's leases do not provide an implicit rate, a collateralized incremental borrowing rate ("IBR") is used to determine the present value of lease payments. The IBR is based on a yield curve derived by publicly traded bond offerings for companies with similar credit characteristics that approximate the Company's market risk profile. In addition, we adjust the IBR for jurisdictional risk derived from quoted interest rates from financial institutions to reflect the cost of borrowing in the Company’s local markets. Adoption of the standard resulted in the initial recognition of $ 120.6 million of operating lease ROU assets and $ 132.1 million of short-term and long-term operating lease liabilities as of September 1, 2019. The difference between the newly recorded assets and liabilities is $ 11.5 million, which was recorded against our deferred rent balance of $ 11.2 million as of August 31, 2019. The difference of $ 0.3 million was expensed in the first quarter of fiscal year 2020. No cumulative-effect adjustments were recorded to retained earnings, and there was no material impact to the Company’s interim consolidated statements of income, consolidated statements of comprehensive income, or consolidated statements of cash flows. The following table is a summary of the Company’s components of total lease costs for the first quarter of fiscal year 2020 (in thousands): Three Months Ended November 30, 2019 Operating lease cost $ 4,221 Short-term lease cost 53 Variable lease cost 1,081 Sublease income ( 289 ) Total lease costs $ 5,066 The weighted average remaining lease term and weighted average discount rate for operating leases as of November 30, 2019 were as follows: Operating leases Weighted average remaining lease term in years 19.2 Weighted average discount rate percentage 6.5 % Supplemental cash flow information related to leases under which the Company is the lessee was as follows (amounts in thousands): Three Months Ended November 30, 2019 Operating cash flows paid for operating leases $ 3,805 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): Leased Years Ended November 30, Locations (1) 2020 $ 14,318 2021 13,403 2022 13,231 2023 13,129 2024 12,438 Thereafter 179,042 Total future lease payments 245,561 Less imputed interest ( 115,553 ) Total operating lease liabilities $ 130,008 (2) (1) Operating lease obligations have been reduced by approximately $ 2.0 million to reflect expected sub-lease income. Certain obligations under leasing arrangements are collateralized by the underlying asset being leased. (2) Future minimum lease payments include $ 1.5 million of lease payment obligations for the prior leased Miami distribution center. For purposes of calculating the minimum lease payments, a reduction is reflected for the actual sub-lease income the Company expects to receive during the remaining lease term. This sub-lease income was also considered for the purposes of calculating the exit obligation, which was immaterial as of November 30, 2019. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Nov. 30, 2019 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS | NOTE 11 – SUBSEQUENT EVENTS The Company has evaluated all events subsequent to the balance sheet date of November 30, 2019 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. Financing Transactions On December 3, 2019, the Company’s Colombia subsidiary refinanced its existing balloon payment on the original $ 15.0 million U.S. dollar denominated contractual debt. Upon refinance, the Colombia subsidiary entered into a five year cross currency interest rate swap. The swap contract states that the Company will receive interest based on the three-month LIBOR rate plus 2.45 % on a quarterly amortizing initial notional value of $ 7.9 million and pay fixed interest of approximately 7.9 % on a quarterly amortizing initial notional value of $ 7.9 million. On December 6, 2019, the Company's Guatemala subsidiary entered into a long-term loan agreement for 160.0 million Guatemalan quetzales, or approximately $ 20.0 million in U.S. dollars, which is to be repaid in ten years with monthly interest and principal payments beginning in the second year of the loan. The interest rate is fixed at 7.0 % for the first five year period and the loan was funded on December 10, 2019. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policy) | 3 Months Ended |
Nov. 30, 2019 | |
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 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 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 that for its ownership interest in store-front joint ventures within its marketplace and casillero business, the Company has the power to direct the activities that most significantly impact the economic performance of these VIEs. Therefore, the Company has determined that it is the primary beneficiary of these VIEs and has consolidated these entities within its consolidated financial statements. The Company's ownership interest in store-front joint ventures for which the Company has consolidated their financial statements as of November 30, 2019 are listed below: Marketplace and Casillero Store-front Joint Ventures Countries Ownership Basis of Presentation Guatemala Guatemala 60.0 % Consolidated Tortola British Virgin Islands 50.0 % Consolidated Trinidad Trinidad 50.0 % Consolidated In the case of the Company's ownership interest in real estate development joint ventures, both parties to each joint venture share all rights, obligations and the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. As a result, 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 the Company has recorded under the equity method as of November 30, 2019 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 interim consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents – The Company considers as cash and cash equivalents all cash on deposit, highly liquid investments with a maturity of three months or less at the date of purchase, and proceeds due from credit and debit card transactions in the process of settlement. |
Restricted Cash | Restricted Cash – The changes in restricted cash are disclosed within the consolidated statement of cash flows based on the nature of the restriction. The following table summarizes the restricted cash reported by the Company (in thousands): November 30, August 31, 2019 2019 Short-term restricted cash: Restricted cash for land purchase option agreements $ 50 $ 50 Other short-term restricted cash 15 4 Total short-term restricted cash $ 65 $ 54 Long-term restricted cash: Other long-term restricted cash (1) $ 3,689 $ 3,529 Total long-term restricted cash $ 3,689 $ 3,529 Total restricted cash $ 3,754 $ 3,583 (1) Other long-term restricted cash consists mainly of cash deposits held within banking institutions in compliance with federal regulatory requirements in Costa Rica and Panama. |
Short-Term Investments | Short-Term Investments –The Company considers as short-term investments certificates of deposit and similar time-based deposits with financial institutions with maturities over three months and up to one year. |
Goodwill and Other Intangibles, net | Goodwill and Other Intangibles, net – Goodwill and other intangibles totaled $ 57.4 million as of November 30, 2019 and $ 58.7 million as of August 31, 2019 . The Company reviews reported goodwill and other intangibles at the cash-generating unit level for impairment. The Company tests Goodwill for impairment at least annually or when events or changes in circumstances indicate that it is more likely than not that the asset is impaired. |
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 the Company’s business in most of the countries in which the Company 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 card processors to remit a portion of sales processed via credit 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 us with a net VAT receivable, forcing us 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, there are defined and structured processes to recover VAT receivables via refunds or offsets. However, in one country without a clearly defined refund process, the Company is actively engaged with the local government to recover VAT receivables totaling $ 6.2 million and $ 5.1 million as of November 30, 2019 and August 31, 2019, respectively. In two other countries, minimum income tax rules require 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 Company had income tax receivables of $ 9.7 million and $ 7.8 million and deferred tax assets of $ 2.7 million as of November 30, 2019 and August 31, 2019 in these countries. While the rules related to refunds of income tax receivables in these countries are either unclear or complex, 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. The Company’s policy for classification and presentation of VAT receivables, income tax receivables and other tax receivables is as follows: Short-term VAT and Income tax receivables, recorded as Other current assets: This classification is used for any countries where the Company’s subsidiary has generally demonstrated the ability to recover the VAT or income tax receivable within one year. The Company also classifies as short-term any approved refunds or credit notes to the extent that the Company expects to receive the refund or use the credit notes within one year. Long-term VAT and Income tax receivables, recorded as Other non-current assets: This classification is used for amounts not approved for refund or credit in countries where the Company’s subsidiary has not demonstrated the ability to obtain refunds within one year and/or for amounts which are subject to outstanding disputes. An allowance is provided against VAT and income tax receivable balances in dispute when the Company does not expect to eventually prevail in its recovery. The Company does not currently have any allowances provided against VAT and income tax receivables. The following table summarizes the VAT receivables reported by the Company (in thousands): November 30, August 31, 2019 2019 Prepaid expenses and other current assets $ 3,068 $ 1,639 Other non-current assets 24,990 22,691 Total amount of VAT receivables reported $ 28,058 $ 24,330 The following table summarizes the Income tax receivables reported by the Company (in thousands): November 30, August 31, 2019 2019 Prepaid expenses and other current assets $ 10,065 $ 9,009 Other non-current assets 19,654 16,381 Total amount of Income tax receivables reported $ 29,719 $ 25,390 |
Lease Accounting | Lease Accounting – The Company’s leases are operating leases for warehouse clubs and non-warehouse club facilities such as corporate headquarters, regional offices, and regional distribution centers. The Company does not have finance leases. The Company determines if an arrangement is a lease and classifies it as either a finance or operating lease at lease inception. Operating leases are included in Operating lease right-of-use assets, net ; Operating lease liabilities, current portion ; and Long-term operating lease liabilities on the consolidated balance sheets. Operating lease liabilities are recognized at commencement date based on the present value of the future minimum lease payments over the lease term. The Company’s leases generally do not have a readily determinable implicit rate; therefore, the Company uses a collateralized incremental borrowing rate at the commencement date in determining the present value of future payments. The incremental borrowing rate is based on a yield curve derived by publicly traded bond offerings for companies with similar credit characteristics that approximate the Company's market risk profile. In addition, we adjust the incremental borrowing rate for jurisdictional risk derived from quoted interest rates from financial institutions to reflect the cost of borrowing in the Company’s local markets. The Company’s lease terms may include options to purchase, extend or terminate the lease, which are recognized when it is reasonably certain that the Company will exercise that option. T he Company does not combine lease and non-lease components. The Company measures Right-of-use (“ROU”) assets based on the corresponding lease liabilities, adjusted for any initial direct costs and prepaid lease payments made to the lessor before or at the commencement date (net of lease incentives). The lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease payments are not included in the calculation of the ROU asset and the related lease liability and are recognized as this lease expense is incurred. The Company’s variable lease payments generally relate to amounts the Company pays for additional contingent rent based on a contractually stipulated percentage of sales. |
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: restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance based restricted stock units (“PSUs”). Compensation related to RSAs, RSUs and PSUs is based on the fair market value at the time of grant. The Company recognizes the compensation cost related to RSAs and RSUs over the requisite service period as determined by the grant, amortized ratably or on a straight-line basis over the life of the grant. The Company also recognizes compensation cost for PSUs over the performance period. The Company assesses the probability of vesting for awards with performance conditions and adjusts compensation cost based on the probability that performance metrics will be achieved. If the Company determines that an award is unlikely to vest, any previously recorded expense is then reversed. The Company 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. 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. PSUs, similar to RSUs, are awarded with dividend equivalents, provided that such amounts become payable only if the performance metric is achieved. At the time the Compensation Committee confirms the performance metric has been achieved, the accrued dividend equivalents are paid on the PSUs. |
Treasury Stock | Treasury Stock – Shares of common stock repurchased by the Company are recorded at cost as treasury stock and result in the reduction of stockholders’ equity in the Company’s consolidated balance sheets. The Company may reissue these treasury shares as part of its stock-based compensation programs. When treasury shares are reissued, the Company uses the first in/first out (“FIFO”) cost method for determining cost of the reissued shares. If the issuance price is higher than the cost, the excess of the issuance price over the cost is credited to additional paid-in capital (“APIC”). If the issuance price is lower than the cost, the difference is first charged against any credit balance in APIC from treasury stock and the balance is charged to retained earnings. During the three months ended November 30, 2019, the Company reissued approximately 69,000 treasury shares. |
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), written foreign currency call options, 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 2019 Form 10-K. |
Derivatives 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 reported in accumulated other comprehensive 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 and interest-rate 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 reported 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 8 - Derivative Instruments and Hedging Activities for information on the fair value of interest rate swaps and cross-currency interest rate swaps as of November 30, 2019 and August 31, 2019. 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. Other Instruments . Other derivatives not designated as hedging instruments consist primarily of written call options in which the Company receives a premium that it uses to reduce the costs associated with its hedging activities. For derivative instruments not designated as hedging instruments, the Company recognizes changes in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item, in Other expense, net in the consolidated statements of income in the period of change. |
Revenue Recognition | Revenue Recognition – The accounting policies and other disclosures such as the disclosure of disaggregated revenues are described in Note 3 – Revenue Recognition. |
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 – T he Company changed health insurance providers and is no longer self-insured as of October 1, 2019. The remaining accrued liability for potential health care claims is immaterial as of November 30, 2019. |
Cost of Goods Sold | Cost of Goods Sold – The Company includes the cost of merchandise, food service and bakery raw materials in cost of goods sold, net merchandise sales. The Company also includes in cost of goods sold: net merchandise sales the external and internal distribution and handling costs for supplying merchandise, raw materials and supplies to the warehouse clubs. External costs include inbound freight, duties, drayage, fees, insurance, and non-recoverable value-added tax related to inventory shrink, spoilage and damage. Internal costs include payroll and related costs, utilities, consumable supplies, repair and maintenance, rent expense and building and equipment depreciation at the Company's distribution facilities and payroll and other direct costs for in-store demonstrations. For export sales, the Company includes the cost of merchandise and external and internal distribution and handling costs for supplying merchandise in cost of goods sold, exports. For the marketplace and casillero operations, the Company includes the costs of external and internal shipping, handling and other direct costs incurred to provide delivery, insurance and customs processing services in cost of goods sold, non-merchandise. Vendor consideration consists primarily of volume rebates, time-limited product promotions, slotting fees, demonstration reimbursements and prompt payment discounts. Volume rebates that are not threshold based are incorporated into the unit cost of merchandise reducing the inventory cost and cost of goods sold. Volume rebates that are threshold based are recorded as a reduction to cost of goods sold when the Company achieves established purchase levels that are confirmed by the vendor in writing or upon receipt of funds. On a quarterly basis, the Company calculates the amount of rebates recorded in cost of goods sold that relates to inventory on hand and this amount is reclassified as a reduction to inventory, if significant. Slotting fees are related to consideration received by the Company from vendors for preferential "end cap" placement of the vendor's products within the warehouse club. Demonstration reimbursements are related to consideration received by the Company from vendors for the in store promotion of the vendors' products. The Company records the reduction in cost of goods sold on a transactional basis for these programs. Prompt payment discounts are taken in substantially all cases and therefore are applied directly to reduce the acquisition cost of the related inventory, with the resulting effect recorded to cost of goods sold when the inventory is sold. |
Selling, General and Administrative | Selling, General and Administrative – Selling, general and administrative costs are comprised primarily of expenses associated with operating warehouse clubs and freight forwarding operations. These operations include the operating costs of the Company’s warehouse clubs and freight forwarding activities, including payroll and related costs, utilities, consumable supplies, repair and maintenance, rent expense, building and equipment depreciation, bank, credit card processing fees, and amortization of intangibles. Also included in selling, general and administrative expenses are the payroll and related costs for the Company’s U.S. and regional management and purchasing centers. |
Pre-Opening Costs | Pre-Opening Costs – The Company expenses pre-opening costs (the costs of start-up activities, including organization costs and rent) for new warehouse clubs as incurred. |
Contingencies and Litigation | Contingencies and Litigation – The Company records and reserves for loss contingencies if (a) information available prior to issuance of the consolidated financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the consolidated financial statements and (b) the amount of loss can be reasonably estimated. If one or both criteria for accrual are not met, but there is at least a reasonable possibility that a material loss will occur, the Company does not record and reserve for a loss contingency but describes the contingency within a note and provides detail, when possible, of the estimated potential loss or range of loss. If an estimate cannot be made, a statement to that effect is made. |
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. The following table discloses the net effect of translation into the reporting currency on other comprehensive loss for these local currency denominated accounts for the three months ended November 30, 2019 and 2018: Three Months Ended November 30, November 30, 2019 2018 Effect on other comprehensive loss due to foreign currency translation $ ( 3,724 ) $ ( 13,397 ) 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. Three Months Ended November 30, November 30, 2019 2018 Currency loss $ ( 1,657 ) $ ( 1,819 ) |
Recent Accounting Pronouncements - Not Yet Adopted | Recent Accounting Pronouncements – Not Yet Adopted FASB ASC 810 ASU 2018-15 – Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. ASU No. 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). As such, the amendment in this ASU requires an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in subtopic 350-40 in order to determine which implementation costs to capitalize as an asset and which costs to expense. Additionally, the amendments in this ASU require the entity to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. The amendments in this ASU are effective for annual periods beginning after December 15, 2019 and interim periods within those annual periods. Early adoption is permitted. The Company expects to adopt ASU No. 2018-15 on September 1, 2020, the first quarter of fiscal year 2021. The Company will evaluate the impact adoption of this guidance may have on the Company’s consolidated financial statements. FASB ASC 715 ASU 2018-14 – Compensation—Retirement Benefits—Defined Benefit Plans--General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement benefits (Topic 715-20). The standard amends ASC 715 to add, remove and clarify disclosure requirements related to defined benefit pension and other postretirement plans. This ASU is effective for fiscal years ending after December 15, 2020 and must be applied on a retrospective basis. The Company expects to adopt ASU No. 2018-14 on September 1, 2021, the first quarter of fiscal year 2022. The Company will evaluate the impact adoption of this guidance may have on the Company’s consolidated financial statements. FASB ASC 820 ASU 2018-13 – Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820). The standard eliminates such disclosures as the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy. ASU No. 2018-13 adds new disclosure requirements for Level 3 measurements. The amendments in this ASU are effective for annual periods beginning after December 15, 2019. Early adoption is permitted. The Company expects to adopt ASU No. 2018-13 on September 1, 2020, the first quarter of fiscal year 2021. 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 ASU No. 2017-04, 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 No. 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. Early adoption is permitted. The Company expects to adopt ASU No. 2017-04 on September 1, 2020, the first quarter of fiscal year 2021. The Company does not expect this guidance to have a material impact on the Company’s consolidated financial statements. FASB ASC 326 ASU 2016-13 – Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), which amends the FASB’s guidance on the impairment of financial instruments. This standard requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company expects to adopt ASU No. 2016-13 on September 1, 2020, the first quarter of fiscal year 2021. The Company does not expect this guidance to have a material impact on the Company’s consolidated financial statements. |
Recent Accounting Pronouncements Adopted | Recent Accounting Pronouncements Adopted FASB ASC 815 ASU 2018-16 – Derivatives and Hedging — Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes In October 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2018-16, Derivatives and Hedging—Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes, which expands the list of United States benchmark interest rates permitted in the application of hedge accounting. The amendments in this ASU allow use of the Overnight Index Swap (OIS) rate based on the Secured Overnight Financing Rate (SOFR) as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815, Derivatives and Hedging. Adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. FASB ASC 718 ASU 2018-07 - Compensation—Stock Compensation (Topic 718) — Improvements to Nonemployee Share-Based Payment Accounting In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope to include share-based payment transactions for acquiring goods and services from non-employees. The amendments in this ASU apply to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in the grantor’s own operations by issuing share-based payment awards. The amendments in this ASU are effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods. Adoption of this guidance did not have a material impact 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 amends a number of aspects of lease accounting, including requiring lessees to recognize operating leases with a term greater than one year on their balance sheet as a right-of-use asset and corresponding lease liability, measured at the present value of the lease payments. The Company adopted ASU 2016 - 02 using the modified retrospective transition method in the first quarter of fiscal year 2020. In accordance with ASC 842, the Company did not restate comparative periods in transition to ASC 842 and instead reported comparative periods under ASC 840. Adoption of the standard resulted in the initial recognition of $ 120.6 million of operating lease right-of-use (“ROU”) assets and $ 132.1 million of short-term and long-term operating lease liabilities as of September 1, 2019. The difference between the assets and liabilities primarily represents the deferred rent recorded as of August 31, 2019, which was eliminated upon adoption. No cumulative-effect adjustments were recorded to retained earnings, and there was no material impact to the Company’s interim consolidated statements of income, consolidated statements of comprehensive income, or consolidated statements of cash flows. However, several of the Company’s leases are denominated in a currency that is not the functional currency of the Company’s local subsidiary, which results in additional potential foreign currency exchange rate fluctuation exposure. The exposure for the period ended November 30, 2019 was a $ 34.1 million liability. Due to the mix of foreign currency exchange rate fluctuations during the first quarter of fiscal year 2020, the impact to the interim consolidated statements of income and comprehensive income was immaterial. The Company elected the transition package of practical expedients permitted within the new standard which, among other things, allowed it to carry-forward the historical lease classification. The Company also elected the practical expedient to carry forward the accounting treatment for land easements and the practical expedient allowing the Company not to apply the recognition requirements of ASC 842 to short-term leases . However, the Company did not elect to combine lease and non-lease components. Please refer to Note 10 – Leases for further discussion on the Company's leases. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Nov. 30, 2019 | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Summary of Restricted Cash | November 30, August 31, 2019 2019 Short-term restricted cash: Restricted cash for land purchase option agreements $ 50 $ 50 Other short-term restricted cash 15 4 Total short-term restricted cash $ 65 $ 54 Long-term restricted cash: Other long-term restricted cash (1) $ 3,689 $ 3,529 Total long-term restricted cash $ 3,689 $ 3,529 Total restricted cash $ 3,754 $ 3,583 (1) Other long-term restricted cash consists mainly of cash deposits held within banking institutions in compliance with federal regulatory requirements in Costa Rica and Panama. |
Summary of Value Added Tax Receivables | November 30, August 31, 2019 2019 Prepaid expenses and other current assets $ 3,068 $ 1,639 Other non-current assets 24,990 22,691 Total amount of VAT receivables reported $ 28,058 $ 24,330 |
Summary of Income Tax Receivables | November 30, August 31, 2019 2019 Prepaid expenses and other current assets $ 10,065 $ 9,009 Other non-current assets 19,654 16,381 Total amount of Income tax receivables reported $ 29,719 $ 25,390 |
Net Effect of Foreign Currency Translation | Three Months Ended November 30, November 30, 2019 2018 Effect on other comprehensive loss due to foreign currency translation $ ( 3,724 ) $ ( 13,397 ) |
Summary of Foreign Currency Gains and Losses | Three Months Ended November 30, November 30, 2019 2018 Currency loss $ ( 1,657 ) $ ( 1,819 ) |
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. |
Marketplace And Casillero Store Front [Member] | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Schedule of Joint Ventures | Marketplace and Casillero Store-front Joint Ventures Countries Ownership Basis of Presentation Guatemala Guatemala 60.0 % Consolidated Tortola British Virgin Islands 50.0 % Consolidated Trinidad Trinidad 50.0 % Consolidated |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 3 Months Ended |
Nov. 30, 2019 | |
REVENUE RECOGNITION [Abstract] | |
Contract Performance Liabilities | Contract Liabilities November 30, 2019 August 31, 2019 Deferred membership income $ 24,599 $ 24,901 Other contract performance liabilities $ 6,397 $ 4,048 |
Disaggregated Revenues | Three Months Ended November 30, 2019 November 30, 2018 Foods & Sundries $ 392,805 $ 376,328 Fresh Foods 215,238 200,705 Hardlines 90,804 92,154 Softlines 40,324 40,481 Other Business 39,557 37,775 Net Merchandise Sales $ 778,728 $ 747,443 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Nov. 30, 2019 | |
EARNINGS PER SHARE [Abstract] | |
Schedule of the Computation of Net Income Per Share | Three Months Ended November 30, November 30, 2019 2018 Net income attributable to PriceSmart, Inc. $ 19,728 $ 14,612 Less: Allocation of income to unvested stockholders ( 258 ) ( 193 ) Net income attributable to PriceSmart, Inc. per share available for distribution $ 19,470 $ 14,419 Basic weighted average shares outstanding 30,277 30,172 Add dilutive effect of performance stock units (two-class method) 7 17 Diluted average shares outstanding 30,284 30,189 Basic net income per share $ 0.64 $ 0.48 Diluted net income per share $ 0.64 $ 0.48 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Nov. 30, 2019 | |
STOCKHOLDERS' EQUITY [Abstract] | |
Schedule of Dividends | First Payment Second Payment Declared Amount Record Date Date Paid Amount Record Date Date Paid Amount 1/30/2019 $ 0.70 2/15/2019 2/28/2019 $ 0.35 8/15/2019 8/30/2019 $ 0.35 |
Schedule of Components of Other Comprehensive Income (Loss) | Attributable to Noncontrolling PriceSmart Interests Total Beginning balance, September 1, 2019 $ ( 144,339 ) $ 20 $ ( 144,319 ) Foreign currency translation adjustments ( 3,724 ) 34 ( 3,690 ) Defined benefit pension plans 26 — 26 Derivative instruments (1) 513 — 513 Ending balance, November 30, 2019 $ ( 147,524 ) $ 54 $ ( 147,470 ) Attributable to Noncontrolling PriceSmart Interests Total Beginning balance, September 1, 2018 $ ( 121,216 ) $ ( 1 ) $ ( 121,217 ) Foreign currency translation adjustments ( 13,397 ) ( 1 ) ( 13,398 ) Defined benefit pension plans 28 — 28 Derivative Instruments (1) 123 — 123 Ending balance, November 30, 2018 $ ( 134,462 ) $ ( 2 ) $ ( 134,464 ) Attributable to Noncontrolling PriceSmart Interests Total Beginning balance, September 1, 2018 $ ( 121,216 ) $ ( 1 ) $ ( 121,217 ) Foreign currency translation adjustments ( 19,717 ) 21 ( 19,696 ) Defined benefit pension plans ( 112 ) — ( 112 ) Derivative Instruments (1) ( 3,369 ) — ( 3,369 ) Amounts reclassified from accumulated other comprehensive income (loss) (2) 75 — 75 Ending balance, August 31, 2019 $ ( 144,339 ) $ 20 $ ( 144,319 ) (1) See Note 8 - Derivative Instruments and Hedging Activities. (2) Amounts reclassified from accumulated other comprehensive loss related to the minimum pension liability are included in warehouse club and other operations in the Company's consolidated statements of income. |
Summary of Retained Earnings Not Available for Distribution | November 30, August 31, 2019 2019 Retained earnings not available for distribution $ 7,926 $ 7,843 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Nov. 30, 2019 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
Schedule of Variable Interest Entities Maximum Loss Exposure | Entity % Ownership Initial Investment Additional Investments Net 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 $ 132 $ 7,150 $ 99 $ 7,249 Price Plaza Alajuela PPA, S.A. 50 % 2,193 1,236 70 3,499 785 4,284 Total $ 6,809 $ 3,638 $ 202 $ 10,649 $ 884 $ 11,533 (1) The parties intend to seek alternate financing for the project, which could reduce the amount of investments each party would be required to provide. The parties may mutually agree on changes to the project, which could increase or decrease the amount of contributions each party is required to provide. (2) The maximum exposure is determined by adding the Company’s variable interest in the entity and any explicit or implicit arrangements that could require the Company to provide additional financial support. |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Nov. 30, 2019 | |
DEBT [Abstract] | |
Schedule of Short-Term Borrowings | Facilities Used Total Amount Short-term Letters of Facilities Weighted average of Facilities Borrowings Credit Available interest rate November 30, 2019 $ 69,000 $ 23,018 $ 534 $ 45,448 4.8 % August 31, 2019 $ 69,000 $ 7,540 $ 486 $ 60,974 6.1 % |
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, 2019 $ 25,875 $ 63,711 $ 89,586 (1) Proceeds from long-term debt incurred during the period: Colombia subsidiary — 25,000 25,000 Regularly scheduled loan payments ( 947 ) ( 1,889 ) ( 2,836 ) Reclassifications of short-term debt ( 11,253 ) 11,253 ( 0 ) Translation adjustments on foreign currency debt of subsidiaries whose functional currency is not the U.S. dollar (2) 51 9 60 Balances as of November 30, 2019 $ 13,726 $ 98,084 $ 111,810 (1) (1) The carrying amount of non-cash assets assigned as collateral for these loans was $ 111.3 million. No cash assets were assigned as collateral for these loans. (2) These foreign currency translation adjustments are recorded within Other comprehensive income. |
Schedule of Annual Maturities of Long-Term Debt | Twelve Months Ended November 30, Amount 2020 $ 13,726 2021 13,348 2022 10,211 2023 21,341 2024 20,771 Thereafter 32,413 Total $ 111,810 |
DERIVATIVE INSTRUMENTS AND HE_2
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 3 Months Ended |
Nov. 30, 2019 | |
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 Colombia 27-Nov-19 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 25,000,000 Citibank, N.A. Variable rate 3-month Libor plus 2.45 % 7.93 % 27th day of November, February, May and August beginning February 27, 2020 November 27, 2019 - November 27, 2024 Colombia 24-Sep-19 Citibank, N.A. ("Citi") Cross currency interest rate swap $ 12,500,000 PriceSmart, Inc. Variable rate 3-month Libor plus 2.50 % 7.09 % 24th day of December, March, June and September beginning December 24, 2019 September 24, 2019 - September 26, 2022 Panama 25-Jun-18 Bank of Nova Scotia ("Scotiabank") Interest rate swap $ 14,625,000 Bank of Nova Scotia Variable rate 3-month Libor plus 3.0 % 5.99 % 23rd day of each month beginning on July 23, 2018 June 25, 2018 - March 23, 2023 Honduras 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 May 29, 2018 February 26, 2018 - February 24, 2024 PriceSmart, Inc 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 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 |
Interest Rate Swaps [Member] | Cash Flow Hedging [Member] | |
Derivative [Line Items] | |
Schedule of Notional Amounts of Outstanding Derivative Positions | Notional Amount as of November 30, August 31, Floating Rate Payer (Swap Counterparty) 2019 2019 Union Bank $ 34,850 $ 35,169 Citibank N.A. 60,825 24,225 Scotiabank 17,750 18,375 Total $ 113,425 $ 77,769 |
Derivative Swaps [Member] | Cash Flow Hedging [Member] | |
Derivative [Line Items] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | November 30, 2019 August 31, 2019 Derivatives designated as cash flow hedging instruments Balance Sheet Classification Fair Value Net Tax Effect Net OCI Fair Value Net Tax Effect Net OCI Cross-currency interest rate swaps Other non-current assets $ 436 $ ( 144 ) $ 292 $ — $ — $ — Cross-currency interest rate swaps Other current assets 2,747 ( 906 ) 1,841 2,736 ( 903 ) 1,833 Interest rate swaps Other long-term liabilities ( 1,429 ) 344 ( 1,085 ) ( 2,178 ) 517 ( 1,661 ) Cross-currency interest rate swaps Other long-term liabilities ( 580 ) 174 ( 406 ) ( 732 ) 220 ( 512 ) Cross-currency interest rate swaps Other current liabilities ( 60 ) 18 ( 42 ) — — — Net fair value of derivatives designated as hedging instruments $ 1,114 $ ( 514 ) $ 600 $ ( 174 ) $ ( 166 ) $ ( 340 ) |
Derivative Swaps [Member] | Cash Flow Hedging [Member] | Interest Expense [Member] | |
Derivative [Line Items] | |
Schedule of Cash Flow Hedging Instruments, Statements of Financial Performance and Financial Position, Location | Income Statement Classification Interest expense on borrowings (1) Cost of swaps (2) Total Interest expense for the three months ended November 30, 2019 $ 1,014 $ 261 $ 1,275 Interest expense for the three months ended November 30, 2018 $ 1,160 $ 167 $ 1,327 (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. |
Not Designated as Hedging Instrument [Member] | Other Instruments [Member] | |
Derivative [Line Items] | |
Schedule of Cash Flow Hedging Instruments, Statements of Financial Performance and Financial Position, Location | Three Months Ended November 30, November 30, Income Statement Classification 2019 2018 Other expense, net $ ( 1,270 ) $ — |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | November 30, 2019 August 31, 2019 Non-designated derivative contracts Balance Sheet Location Fair Value Balance Sheet Location Fair Value Net fair value of other non-designated derivative contracts that do not qualify for hedge accounting Other long-term liabilities $ ( 1,250 ) Other long-term liabilities $ — |
SEGMENTS (Tables)
SEGMENTS (Tables) | 3 Months Ended |
Nov. 30, 2019 | |
SEGMENTS [Abstract] | |
Summary of Segment Revenues, Operating Costs and Balance Sheet Items | United States Operations Central American Operations Caribbean Operations (1) Colombia Operations Reconciling Items (2) Total Three Months Ended November 30, 2019 Revenue from external customers $ 17,339 $ 466,802 $ 235,017 $ 92,783 $ — $ 811,941 Intersegment revenues 349,950 4,045 1,202 536 ( 355,733 ) — Depreciation, Property and equipment 1,348 6,882 3,966 2,018 — 14,214 Amortization, Intangibles 599 — — — 599 Operating income 2,587 31,700 11,810 4,524 ( 19,907 ) 30,714 Net income (loss) attributable to PriceSmart, Inc. ( 724 ) 26,751 10,318 3,271 ( 19,888 ) 19,728 Long-lived assets (other than deferred tax assets) (3) 84,117 471,366 177,742 143,818 — 877,043 Intangibles, net 11,977 — — — — 11,977 Goodwill 10,695 24,532 10,198 — — 45,425 Total assets 168,375 754,364 369,575 231,797 — 1,524,111 Capital expenditures, net 629 15,243 4,520 20,834 — 41,226 Three Months Ended November 30, 2018 Revenue from external customers $ 17,339 $ 439,806 $ 225,009 $ 97,483 $ — $ 779,637 Intersegment revenues 350,719 437 1,093 278 ( 352,527 ) — Depreciation, Property and equipment 1,960 5,870 3,191 2,103 — 13,124 Amortiazation, Intangibles 599 — — — — 599 Operating income (loss) ( 1,050 ) 28,792 12,027 3,416 ( 18,515 ) 24,670 Net income (loss) attributable to PriceSmart, Inc. ( 3,825 ) 24,185 9,985 2,815 ( 18,548 ) 14,612 Long-lived assets (other than deferred tax assets) (3) 90,061 320,136 149,823 110,969 — 670,989 Intangibles, net 14,381 — — — — 14,381 Goodwill 11,230 24,726 10,292 — — 46,248 Total assets 158,591 592,114 346,397 180,141 — 1,277,243 Capital expenditures, net 1,686 22,771 10,495 1,387 — 36,339 As of August 31, 2019 Long-lived assets (other than deferred tax assets) $ 65,278 $ 383,665 $ 165,584 $ 115,838 $ — $ 730,365 Intangibles, net 12,576 — — — — 12,576 Goodwill 11,315 24,593 10,193 — — 46,101 Total assets 161,583 614,579 340,216 180,033 — 1,296,411 (1) Management considers its club in the U.S. Virgin Islands to be part of its Caribbean operations. (2) The reconciling items reflect the amount eliminated on consolidation of intersegment transactions. (3) Effective September 1, 2019, we adopted the requirements of Accounting Standards Update (ASU) 2016-02, "Leases (Topic 842)" (ASC 842) using the modified retrospective approach, under which financial results reported in prior periods were not restated. As a result, the Long-lived assets (other than deferred tax assets) as of November 30, 2019 is not comparable with that as of November 30, 2018 and August 31, 2019. |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Nov. 30, 2019 | |
LEASES [Abstract] | |
Summary of Components of Total Lease Costs | Three Months Ended November 30, 2019 Operating lease cost $ 4,221 Short-term lease cost 53 Variable lease cost 1,081 Sublease income ( 289 ) Total lease costs $ 5,066 |
Operating Lease, Weighted Average Remaining Lease Term and Weighted Average Discount Rate | Operating leases Weighted average remaining lease term in years 19.2 Weighted average discount rate percentage 6.5 % |
Supplemental Cash Flow Information Related To Leases | Three Months Ended November 30, 2019 Operating cash flows paid for operating leases $ 3,805 |
Schedule of Future Minimum Lease Commitments | Leased Years Ended November 30, Locations (1) 2020 $ 14,318 2021 13,403 2022 13,231 2023 13,129 2024 12,438 Thereafter 179,042 Total future lease payments 245,561 Less imputed interest ( 115,553 ) Total operating lease liabilities $ 130,008 (2) (1) Operating lease obligations have been reduced by approximately $ 2.0 million to reflect expected sub-lease income. Certain obligations under leasing arrangements are collateralized by the underlying asset being leased. (2) Future minimum lease payments include $ 1.5 million of lease payment obligations for the prior leased Miami distribution center. For purposes of calculating the minimum lease payments, a reduction is reflected for the actual sub-lease income the Company expects to receive during the remaining lease term. This sub-lease income was also considered for the purposes of calculating the exit obligation, which was immaterial as of November 30, 2019. |
COMPANY OVERVIEW AND BASIS OF_2
COMPANY OVERVIEW AND BASIS OF PRESENTATION (Narrative) (Details) | 3 Months Ended |
Nov. 30, 2019countrywarehouse | |
Company Overview And Basis Of Presentation [Line Items] | |
Number of stores | 45 |
Ownership interest | 100.00% |
Number of stores expected in the future | 49 |
Colombia [Member] | |
Company Overview And Basis Of Presentation [Line Items] | |
Number of stores | 7 |
Costa Rica [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 | 7 |
Dominican Republic [Member] | |
Company Overview And Basis Of Presentation [Line Items] | |
Number of stores | 5 |
Trinidad [Member] | |
Company Overview And Basis Of Presentation [Line Items] | |
Number of stores | 4 |
Guatemala [Member] | |
Company Overview And Basis Of Presentation [Line Items] | |
Number of stores | 4 |
Honduras [Member] | |
Company Overview And Basis Of Presentation [Line Items] | |
Number of stores | 3 |
El Salvador [Member] | |
Company Overview And Basis Of Presentation [Line Items] | |
Number of stores | 2 |
Nicaragua [Member] | |
Company Overview And Basis Of Presentation [Line Items] | |
Number of stores | 2 |
Aruba [Member] | |
Company Overview And Basis Of Presentation [Line Items] | |
Number of stores | 1 |
Barbados [Member] | |
Company Overview And Basis Of Presentation [Line Items] | |
Number of stores | 1 |
Jamaica [Member] | |
Company Overview And Basis Of Presentation [Line Items] | |
Number of stores | 1 |
United States Virgin Islands [Member] | |
Company Overview And Basis Of Presentation [Line Items] | |
Number of stores | 1 |
Costa Rica, Colombia, Jamaica [Member] | |
Company Overview And Basis Of Presentation [Line Items] | |
Number of stores expected in the future | 4 |
Foreign Countries [Member] | |
Company Overview And Basis Of Presentation [Line Items] | |
Number of countries | country | 12 |
Domestic Territories [Member] | U.S. Federal [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 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Goodwill and Other Intangibles) (Narrative) (Details) - USD ($) $ in Millions | Nov. 30, 2019 | Aug. 31, 2019 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||
Goodwill and other intangibles, net | $ 57.4 | $ 58.7 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tax Receivables) (Narrative) (Details) - USD ($) $ in Thousands | Nov. 30, 2019 | Aug. 31, 2019 |
Tax Receivables [Line Items] | ||
Value added tax receivable | $ 28,058 | $ 24,330 |
Income taxes receivable | 29,719 | 25,390 |
Unknown Country [Member] | ||
Tax Receivables [Line Items] | ||
Value added tax receivable | 6,200 | 5,100 |
Deferred tax assets, net | 2,700 | 2,700 |
Income taxes receivable | $ 9,700 | $ 7,800 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Treasury Stock) (Narrative) (Details) | 3 Months Ended |
Nov. 30, 2019shares | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Reissued treasury shares | 69,000 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Fair Value Measurements) (Narrative) (Details) | 3 Months Ended |
Nov. 30, 2019USD ($) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Non-financial asset impairment | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Recent Accounting Pronouncements Adopted) (Narrative) (Details) - USD ($) | 3 Months Ended | ||
Nov. 30, 2019 | Sep. 01, 2019 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Lease liability | $ 130,008,000 | [1],[2] | $ 132,100,000 |
Operating lease right-of-use assets, net | 118,203,000 | 120,600,000 | |
Foreign currency exposure | $ 34,100,000 | ||
Accounting Standards Update 2016-02 [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Lease liability | 132,100,000 | ||
Operating lease right-of-use assets, net | 120,600,000 | ||
Cumulative effect of accounting change for the adoption of ASU 2016-09 | $ 0 | ||
[1] | Future minimum lease payments include $ 1.5 million of lease payment obligations for the prior leased Miami distribution center. For purposes of calculating the minimum lease payments, a reduction is reflected for the actual sub-lease income the Company expects to receive during the remaining lease term. This sub-lease income was also considered for the purposes of calculating the exit obligation, which was immaterial as of November 30, 2019. | ||
[2] | Operating lease obligations have been reduced by approximately $ 2.0 million to reflect expected sub-lease income. Certain obligations under leasing arrangements are collateralized by the underlying asset being leased. |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Joint Ventures) (Details) | Nov. 30, 2019 | |
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] |
Marketplace And Casillero Store Front [Member] | Guatemala [Member] | Consolidated Entities [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 60.00% | |
Marketplace And Casillero Store Front [Member] | British Virgin Islands [Member] | Consolidated Entities [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 50.00% | |
Marketplace And Casillero Store Front [Member] | Trinidad [Member] | Consolidated Entities [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 50.00% | |
[1] | Joint venture interests are recorded as investment in unconsolidated affiliates on the consolidated balance sheets. |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Summary of Restricted Cash) (Details) - USD ($) $ in Thousands | Nov. 30, 2019 | Aug. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||
Restricted cash for land purchase option agreements | $ 50 | $ 50 | |
Other short-term restricted cash | 15 | 4 | |
Total short-term restricted cash | 65 | 54 | |
Other long-term restricted cash | [1] | 3,689 | 3,529 |
Total long-term restricted cash | 3,689 | 3,529 | |
Total restricted cash | $ 3,754 | $ 3,583 | |
[1] | Other long-term restricted cash consists mainly of cash deposits held within banking institutions in compliance with federal regulatory requirements in Costa Rica and Panama. |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Summary of Value Added Tax Receivables) (Details) - USD ($) $ in Thousands | Nov. 30, 2019 | Aug. 31, 2019 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||
Value Added Tax, Prepaid expenses and other current assets | $ 3,068 | $ 1,639 |
Value Added Tax, Other non-current assets | 24,990 | 22,691 |
Total amount of VAT receivables reported | $ 28,058 | $ 24,330 |
SUMMARY OF SIGNIFICANT ACCOU_12
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Summary of Income Tax Receivables) (Details) - USD ($) $ in Thousands | Nov. 30, 2019 | Aug. 31, 2019 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||
Income Tax Receivable, Prepaid expenses and other current assets | $ 10,065 | $ 9,009 |
Income Tax Receivable, Other non-current assets | 19,654 | 16,381 |
Total amount of income tax receivables reported | $ 29,719 | $ 25,390 |
SUMMARY OF SIGNIFICANT ACCOU_13
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Net Effect of Foreign Currency Translation) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Nov. 30, 2019 | Nov. 30, 2018 | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||
Effect on other comprehensive loss due to foreign currency restatement | [1] | $ (3,724) | $ (13,397) |
[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. |
SUMMARY OF SIGNIFICANT ACCOU_14
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Summary of Foreign Currency Gains and Losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2019 | Nov. 30, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||
Currency loss | $ (1,657) | $ (1,819) |
REVENUE RECOGNITION (Narrative)
REVENUE RECOGNITION (Narrative) (Details) | 3 Months Ended |
Nov. 30, 2019USD ($) | |
REVENUE RECOGNITION [Abstract] | |
Platinum membership redemption rate | 100.00% |
Annual membership fee | $ 75 |
Platinum membership rebate | 2.00% |
Maximum Platinum membership rebate | $ 500 |
Platinum membership recorded liability | 95.00% |
Breakage revenue percent | 5.00% |
REVENUE RECOGNITION (Contract P
REVENUE RECOGNITION (Contract Performance Liabilities) (Details) - USD ($) $ in Thousands | Nov. 30, 2019 | Aug. 31, 2019 |
Deferred Membership Income [Member] | ||
Contract with Customer, Asset and Liability [Line Items] | ||
Contract Liabilities | $ 24,599 | $ 24,901 |
Other Contract Performance Liabilities [Member] | ||
Contract with Customer, Asset and Liability [Line Items] | ||
Contract Liabilities | $ 6,397 | $ 4,048 |
REVENUE RECOGNITION (Disaggrega
REVENUE RECOGNITION (Disaggregated Revenues) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2019 | Nov. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Net Merchandise Sales | $ 778,728 | $ 747,443 |
Foods And Sundries [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net Merchandise Sales | 392,805 | 376,328 |
Fresh Foods [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net Merchandise Sales | 215,238 | 200,705 |
Hardlines [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net Merchandise Sales | 90,804 | 92,154 |
Softlines [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net Merchandise Sales | 40,324 | 40,481 |
Other Business [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net Merchandise Sales | $ 39,557 | $ 37,775 |
EARNINGS PER SHARE (Schedule of
EARNINGS PER SHARE (Schedule of the Computation of Net Income Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Nov. 30, 2019 | Nov. 30, 2018 | |
EARNINGS PER SHARE [Abstract] | ||
Net income attributable to PriceSmart, Inc. | $ 19,728 | $ 14,612 |
Less: Allocation of income to unvested stockholders | (258) | (193) |
Net income attributable to PriceSmart, Inc. per share available for distribution | $ 19,470 | $ 14,419 |
Basic weighted average shares outstanding | 30,277 | 30,172 |
Add dilutive effect of performance stock units (two-class method) | 7 | 17 |
Diluted average shares outstanding | 30,284 | 30,189 |
Basic net income per share | $ 0.64 | $ 0.48 |
Diluted net income per share | $ 0.64 | $ 0.48 |
STOCKHOLDERS' EQUITY (Schedule
STOCKHOLDERS' EQUITY (Schedule of Dividends) (Details) - $ / shares | Aug. 31, 2019 | Feb. 28, 2019 | Jan. 30, 2019 | Nov. 30, 2019 | Nov. 30, 2018 |
Dividends Payable [Line Items] | |||||
Amount | |||||
2019 Dividend Declared [Member] | |||||
Dividends Payable [Line Items] | |||||
Declared | Jan. 30, 2019 | ||||
Amount | $ 0.70 | ||||
2019 First Dividend Paid [Member] | |||||
Dividends Payable [Line Items] | |||||
Record Date | Feb. 15, 2019 | ||||
Date Paid | Feb. 28, 2019 | ||||
Payment Amount | $ 0.35 | ||||
2019 Second Dividend Paid [Member] | |||||
Dividends Payable [Line Items] | |||||
Record Date | Aug. 15, 2019 | ||||
Date Paid | Aug. 30, 2019 | ||||
Payment Amount | $ 0.35 |
STOCKHOLDERS' EQUITY (Schedul_2
STOCKHOLDERS' EQUITY (Schedule of Components of Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Nov. 30, 2019 | Nov. 30, 2018 | Aug. 31, 2019 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance, Attributable to PriceSmart | $ 797,351 | |||
Other comprehensive income (loss), Attributable to PriceSmart | (3,151) | $ (13,245) | ||
Balance, Attributable to PriceSmart | 816,829 | $ 797,351 | ||
Balance | 798,279 | 758,638 | 758,638 | |
Other comprehensive income (loss) | (3,185) | (13,246) | ||
Balance | 817,772 | 766,084 | 798,279 | |
Accumulated Other Comprehensive Loss [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance, Attributable to PriceSmart | (144,339) | (121,216) | (121,216) | |
Other comprehensive income (loss), Attributable to PriceSmart | (3,185) | (13,246) | ||
Balance, Attributable to PriceSmart | (147,524) | (134,462) | (144,339) | |
Balance | (144,339) | (121,216) | (121,216) | |
Balance | (147,524) | (134,462) | (144,339) | |
Foreign Currency Translation Adjustments [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Other comprehensive income (loss), Attributable to PriceSmart | (3,724) | (13,397) | (19,717) | |
Defined Benefit Pension Plans [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Other comprehensive income (loss), Attributable to PriceSmart | 26 | 28 | (112) | |
Derivative Instruments [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Other comprehensive income (loss), Attributable to PriceSmart | [1] | 513 | 123 | (3,369) |
Reclassification From Accumulated Other Comprehensive Income (Loss) [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Amount reclassified from accumulated other comprehensive income (loss), Attributable to PriceSmart | [2] | 75 | ||
AOCI Attributable to Noncontrolling Interest [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | 20 | (1) | (1) | |
Balance | 54 | (2) | 20 | |
Accumulated Foreign Currency Adjustment Attributable to Noncontrolling Interest [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Other comprehensive income (loss) | 34 | (1) | 21 | |
AOCI Including Portion Attributable to Noncontrolling Interest [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | (144,319) | (121,217) | (121,217) | |
Balance | (147,470) | (134,464) | (144,319) | |
Accumulated Foreign Currency Adjustment Including Portion Attributable to Noncontrolling Interest [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Other comprehensive income (loss) | (3,690) | (13,398) | (19,696) | |
Accumulated Defined Benefit Plans Adjustment Including Portion Attributable to Noncontrolling Interest [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Other comprehensive income (loss) | 26 | 28 | (112) | |
Accumulated Derivative Instruments Including Portion Attributable To Noncontrolling Interest [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Other comprehensive income (loss) | [1] | $ 513 | $ 123 | (3,369) |
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) | [2] | $ 75 | ||
[1] | See Note 8 - Derivative Instruments and Hedging Activities. | |||
[2] | Amounts reclassified from accumulated other comprehensive loss related to the minimum pension liability are included in warehouse club and other 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 | Nov. 30, 2019 | Aug. 31, 2019 |
STOCKHOLDERS' EQUITY [Abstract] | ||
Retained earnings not available for distribution | $ 7,926 | $ 7,843 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Aug. 31, 2018 | Jan. 31, 2017 | Nov. 30, 2019 | Aug. 31, 2019 | |
Commitments And Contingencies [Line Items] | ||||
Accrual for taxes other than income taxes, Current | $ 3,200,000 | $ 3,200,000 | ||
Contractual obligation | 15,100,000 | 14,900,000 | ||
Land under purchase options, Not recorded | 6,700,000 | |||
Income taxes receivable | $ 29,719,000 | 25,390,000 | ||
Miami-Dade County, Florida [Member] | ||||
Commitments And Contingencies [Line Items] | ||||
Letter of credit payable to the landlord | $ 500,000 | |||
Debt term | 4 years | |||
Annual decrease in LOC | $ 125,000 | |||
Remaining outstanding balance | $ 250,000 | |||
Unknown Country [Member] | ||||
Commitments And Contingencies [Line Items] | ||||
Income taxes receivable | 9,700,000 | 7,800,000 | ||
Deferred tax assets, net | $ 2,700,000 | $ 2,700,000 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Schedule of Variable Interest Entities Maximum Loss Exposure) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Nov. 30, 2019 | Aug. 31, 2019 | ||
Variable Interest Entity [Line Items] | |||
Initial Investment | $ 6,809 | ||
Additional Investments | 3,638 | ||
Net Income Inception to Date | 202 | ||
Company's Variable Interest in Entity | 10,649 | $ 10,697 | |
Commitment to Future Additional Investments | [1] | 884 | |
Company's Maximum Exposure to Loss in Entity | [2] | $ 11,533 | |
GolfPark Plaza, S.A [Member] | |||
Variable Interest Entity [Line Items] | |||
Percentage Ownership | 50.00% | ||
Initial Investment | $ 4,616 | ||
Additional Investments | 2,402 | ||
Net Income Inception to Date | 132 | ||
Company's Variable Interest in Entity | 7,150 | ||
Commitment to Future Additional Investments | [1] | 99 | |
Company's Maximum Exposure to Loss in Entity | [2] | $ 7,249 | |
Price Plaza Alajuela , S.A. [Member] | |||
Variable Interest Entity [Line Items] | |||
Percentage Ownership | 50.00% | ||
Initial Investment | $ 2,193 | ||
Additional Investments | 1,236 | ||
Net Income Inception to Date | 70 | ||
Company's Variable Interest in Entity | 3,499 | ||
Commitment to Future Additional Investments | [1] | 785 | |
Company's Maximum Exposure to Loss in Entity | [2] | $ 4,284 | |
[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) - USD ($) $ in Thousands | Nov. 30, 2019 | Aug. 31, 2019 | |
Debt Instrument [Line Items] | |||
Total long-term loans | [1] | $ 111,810 | $ 89,586 |
Debt With Covenants [Member] | |||
Debt Instrument [Line Items] | |||
Line of Credit, Current facilities used | 40,000 | 40,000 | |
Group of Subsidiaries [Member] | Debt With Covenants [Member] | |||
Debt Instrument [Line Items] | |||
Total long-term loans | $ 105,900 | $ 83,100 | |
[1] | The carrying amount of non-cash assets assigned as collateral for these loans was $ 111.3 million. No cash assets were assigned as collateral for these loans. |
DEBT (Schedule of Short-Term Bo
DEBT (Schedule of Short-Term Borrowings) (Details) - Facilities [Member] - USD ($) $ in Thousands | Nov. 30, 2019 | Aug. 31, 2019 |
Short-term Debt [Line Items] | ||
Total Amount of Facilities | $ 69,000 | $ 69,000 |
Facilities Available | $ 45,448 | $ 60,974 |
Weighted average interest rate | 4.80% | 6.10% |
Short-term Borrowings [Member] | ||
Short-term Debt [Line Items] | ||
Facilities Used | $ 23,018 | $ 7,540 |
Letters of Credit [Member] | ||
Short-term Debt [Line Items] | ||
Facilities Used | $ 534 | $ 486 |
DEBT (Summary of Changes in Lon
DEBT (Summary of Changes in Long-Term Debt) (Details) | 3 Months Ended | |
Nov. 30, 2019USD ($) | ||
Debt Instrument [Line Items] | ||
Current portion of long-term debt | $ 25,875,000 | |
Long-term debt (net of current portion) | 63,711,000 | |
Total | 89,586,000 | [1] |
Regularly scheduled loan payments, Current | (947,000) | |
Regularly scheduled loan payments, Noncurrent | (1,889,000) | |
Regularly scheduled loan payments total | (2,836,000) | |
Reclassification of long-term debt, Current | (11,253,000) | |
Reclassification of long-term debt, Noncurrent | 11,253,000 | |
Reclassification of long-term debt total | 0 | |
Translation adjustments on foreign currency debt of subsidiaries whose functional currency is not the U.S. dollar, Current | 51,000 | [2] |
Translation adjustments on foreign currency debt of subsidiaries whose functional currency is not the U.S. dollar, Noncurrent | 9,000 | [2] |
Translation adjustments on foreign currency debt of subsidiaries whose functional currency is not the U.S. dollar total | 60,000 | [2] |
Current portion of long-term debt | 13,726,000 | |
Long-term debt (net of current portion) | 98,084,000 | |
Total | 111,810,000 | [1] |
Colombia Subsidiary [Member] | ||
Debt Instrument [Line Items] | ||
Proceeds from long-term debt incurred during the period, Noncurrent | 25,000,000 | |
Total | 25,000,000 | |
Cash Asset [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Collateral amount | 0 | |
NonCash Asset [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Collateral amount | $ 111,300,000 | |
[1] | The carrying amount of non-cash assets assigned as collateral for these loans was $ 111.3 million. No cash assets were assigned as collateral for these loans. | |
[2] | These foreign currency translation adjustments are recorded within Other comprehensive income. |
DEBT (Schedule of Annual Maturi
DEBT (Schedule of Annual Maturities of Long-Term Debt) (Details) - USD ($) $ in Thousands | Nov. 30, 2019 | Aug. 31, 2019 | |
DEBT [Abstract] | |||
2020 | $ 13,726 | ||
2021 | 13,348 | ||
2022 | 10,211 | ||
2023 | 21,341 | ||
2024 | 20,771 | ||
Thereafter | 32,413 | ||
Total | [1] | $ 111,810 | $ 89,586 |
[1] | The carrying amount of non-cash assets assigned as collateral for these loans was $ 111.3 million. No cash assets were assigned as collateral for these loans. |
DERIVATIVE INSTRUMENTS AND HE_3
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Interest Rate Derivatives) (Details) - Cash Flow Hedging [Member] | Nov. 30, 2019USD ($) |
Columbia $25M Interest Rate Swap [Member] | |
Derivative [Line Items] | |
Derivative, Notional amount | $ 25,000,000 |
Debt instrument, Basis spread on variable rate | 2.45% |
Derivative, Fixed interest rate | 7.93% |
Colombia $12.5M Cross Currency Interest Rate Swap [Member] | |
Derivative [Line Items] | |
Derivative, Notional amount | $ 12,500,000 |
Debt instrument, Basis spread on variable rate | 2.50% |
Derivative, Fixed interest rate | 7.09% |
Panama $15M Interest Rate Swap [Member] | |
Derivative [Line Items] | |
Derivative, Notional amount | $ 14,625,000 |
Debt instrument, Basis spread on variable rate | 3.00% |
Derivative, Fixed interest rate | 5.99% |
Honduras $13.5M Cross Currency Interest Rate Swap [Member] | |
Derivative [Line Items] | |
Derivative, Notional amount | $ 13,500,000 |
Debt instrument, Basis spread on variable rate | 3.00% |
Derivative, Fixed interest rate | 9.75% |
Pricesmart $35.7M Interest Rate Swap [Member] | |
Derivative [Line Items] | |
Derivative, Notional amount | $ 35,700,000 |
Debt instrument, Basis spread on variable rate | 1.70% |
Derivative, Fixed interest rate | 3.65% |
Costa Rica $7.5M Cross Currency Interest Rate Swap [Member] | |
Derivative [Line Items] | |
Derivative, Notional amount | $ 7,500,000 |
Debt instrument, Basis spread on variable rate | 2.50% |
Derivative, Fixed interest rate | 7.65% |
Colombia $15M Cross Currency Interest Rate Swap [Member] | |
Derivative [Line Items] | |
Derivative, Notional amount | $ 15,000,000 |
Debt instrument, Basis spread on variable rate | 2.80% |
Derivative, Fixed interest rate | 8.25% |
DERIVATIVE INSTRUMENTS AND HE_4
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Cash Flow Hedging Instruments, Statements of Financial Performance and Financial Position, Location) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Nov. 30, 2019 | Nov. 30, 2018 | ||
Interest Expense [Member] | Cash Flow Hedging [Member] | |||
Derivative [Line Items] | |||
Derivative, gain (loss) on derivative, Net | $ 1,275 | $ 1,327 | |
Interest Rate Contract [Member] | Interest Expense [Member] | Cash Flow Hedging [Member] | |||
Derivative [Line Items] | |||
Derivative, gain (loss) on derivative, Net | [1] | 1,014 | 1,160 |
Interest Rate Swaps [Member] | Interest Expense [Member] | Cash Flow Hedging [Member] | |||
Derivative [Line Items] | |||
Derivative, gain (loss) on derivative, Net | [2] | 261 | $ 167 |
Other Instruments [Member] | Other Expense, Net [Member] | |||
Derivative [Line Items] | |||
Derivative, gain (loss) on derivative, Net | $ (1,270) | ||
[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 HE_5
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Notional Amounts of Outstanding Derivative Positions) (Details) - Cash Flow Hedging [Member] - USD ($) $ in Thousands | Nov. 30, 2019 | Aug. 31, 2019 |
Derivative [Line Items] | ||
Derivative Liability, Notional Amount | $ 113,425 | $ 77,769 |
Union Bank [Member] | ||
Derivative [Line Items] | ||
Derivative Liability, Notional Amount | 34,850 | 35,169 |
Citibank N.A. [Member] | ||
Derivative [Line Items] | ||
Derivative Liability, Notional Amount | 60,825 | 24,225 |
Scotiabank [Member] | ||
Derivative [Line Items] | ||
Derivative Liability, Notional Amount | $ 17,750 | $ 18,375 |
DERIVATIVE INSTRUMENTS AND HE_6
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Derivative Instruments in Statement of Financial Position, Fair Value) (Details) - USD ($) $ in Thousands | Nov. 30, 2019 | Aug. 31, 2019 |
Derivative [Line Items] | ||
Derivative Asset, Noncurrent | $ 436 | $ 0 |
Designated as Hedging Instrument [Member] | ||
Derivative [Line Items] | ||
Derivative Asset, Noncurrent | 1,114 | |
Derivative Liability, Noncurrent | (174) | |
Net Tax Effect | (514) | (166) |
Net OCI | 600 | (340) |
Cross Currency Interest Rate Swaps [Member] | Other Non-current Assets [Member] | Designated as Hedging Instrument [Member] | ||
Derivative [Line Items] | ||
Derivative Asset, Noncurrent | 436 | |
Net Tax Effect | (144) | |
Net OCI | 292 | |
Cross Currency Interest Rate Swaps [Member] | Other Current Assets [Member] | Designated as Hedging Instrument [Member] | ||
Derivative [Line Items] | ||
Derivative Asset, Current | 2,747 | 2,736 |
Net Tax Effect | (906) | (903) |
Net OCI | 1,841 | 1,833 |
Cross Currency Interest Rate Swaps [Member] | Other Long-term Liabilities [Member] | Designated as Hedging Instrument [Member] | ||
Derivative [Line Items] | ||
Derivative Liability, Noncurrent | (580) | (732) |
Net Tax Effect | 174 | 220 |
Net OCI | (406) | (512) |
Cross Currency Interest Rate Swaps [Member] | Other Current Liabilities [Member] | Designated as Hedging Instrument [Member] | ||
Derivative [Line Items] | ||
Derivative Liability, Current | (60) | |
Net Tax Effect | 18 | |
Net OCI | (42) | |
Interest Rate Swaps [Member] | Other Long-term Liabilities [Member] | Designated as Hedging Instrument [Member] | ||
Derivative [Line Items] | ||
Derivative Liability, Noncurrent | (1,429) | (2,178) |
Net Tax Effect | 344 | 517 |
Net OCI | (1,085) | $ (1,661) |
Other Instruments [Member] | Other Long-term Liabilities [Member] | Not Designated as Hedging Instrument [Member] | ||
Derivative [Line Items] | ||
Net OCI | $ (1,250) |
SEGMENTS (Summary of Segment Re
SEGMENTS (Summary of Segment Revenues, Operating Costs and Balance Sheet Items) (Details) $ in Thousands | 3 Months Ended | |||||
Nov. 30, 2019USD ($)warehousecountry | Nov. 30, 2018USD ($) | Aug. 31, 2019USD ($) | ||||
Segment Reporting Information [Line Items] | ||||||
Number of stores | warehouse | 45 | |||||
Segment Reporting Information | ||||||
Revenue | $ 811,941 | $ 779,637 | ||||
Depreciation, Property and equipment | 14,214 | 13,124 | ||||
Amortization, Intangibles | 599 | 599 | ||||
Operating income (loss) | 30,714 | 24,670 | ||||
Net income (loss) attributable to PriceSmart Inc. | 19,728 | 14,612 | ||||
Long-lived assets (other than deferred tax assets) | 877,043 | [1] | 670,989 | [1] | $ 730,365 | |
Intangibles, net | 11,977 | 14,381 | 12,576 | |||
Goodwill | 45,425 | 46,248 | 46,101 | |||
Total assets | 1,524,111 | 1,277,243 | 1,296,411 | |||
Capital expenditures, net | 41,226 | 36,339 | ||||
United States Operations Segment [Member] | ||||||
Segment Reporting Information | ||||||
Revenue | 17,339 | 17,339 | ||||
Depreciation, Property and equipment | 1,348 | 1,960 | ||||
Amortization, Intangibles | 599 | 599 | ||||
Operating income (loss) | 2,587 | (1,050) | ||||
Net income (loss) attributable to PriceSmart Inc. | (724) | (3,825) | ||||
Long-lived assets (other than deferred tax assets) | 84,117 | [1] | 90,061 | [1] | 65,278 | |
Intangibles, net | 11,977 | 14,381 | 12,576 | |||
Goodwill | 10,695 | 11,230 | 11,315 | |||
Total assets | 168,375 | 158,591 | 161,583 | |||
Capital expenditures, net | 629 | 1,686 | ||||
Central American Operations Segment [Member] | ||||||
Segment Reporting Information | ||||||
Revenue | 466,802 | 439,806 | ||||
Depreciation, Property and equipment | 6,882 | 5,870 | ||||
Operating income (loss) | 31,700 | 28,792 | ||||
Net income (loss) attributable to PriceSmart Inc. | 26,751 | 24,185 | ||||
Long-lived assets (other than deferred tax assets) | 471,366 | [1] | 320,136 | [1] | 383,665 | |
Goodwill | 24,532 | 24,726 | 24,593 | |||
Total assets | 754,364 | 592,114 | 614,579 | |||
Capital expenditures, net | 15,243 | 22,771 | ||||
Caribbean Operations Segment [Member] | ||||||
Segment Reporting Information | ||||||
Revenue | [2] | 235,017 | 225,009 | |||
Depreciation, Property and equipment | [2] | 3,966 | 3,191 | |||
Operating income (loss) | [2] | 11,810 | 12,027 | |||
Net income (loss) attributable to PriceSmart Inc. | [2] | 10,318 | 9,985 | |||
Long-lived assets (other than deferred tax assets) | [2] | 177,742 | [1] | 149,823 | [1] | 165,584 |
Goodwill | [2] | 10,198 | 10,292 | 10,193 | ||
Total assets | [2] | 369,575 | 346,397 | 340,216 | ||
Capital expenditures, net | [2] | 4,520 | 10,495 | |||
Colombia Operations Segment [Member] | ||||||
Segment Reporting Information | ||||||
Revenue | 92,783 | 97,483 | ||||
Depreciation, Property and equipment | 2,018 | 2,103 | ||||
Operating income (loss) | 4,524 | 3,416 | ||||
Net income (loss) attributable to PriceSmart Inc. | 3,271 | 2,815 | ||||
Long-lived assets (other than deferred tax assets) | 143,818 | [1] | 110,969 | [1] | 115,838 | |
Total assets | 231,797 | 180,141 | $ 180,033 | |||
Capital expenditures, net | 20,834 | 1,387 | ||||
Intersegment [Member] | ||||||
Segment Reporting Information | ||||||
Revenue | [3] | (355,733) | (352,527) | |||
Intersegment [Member] | United States Operations Segment [Member] | ||||||
Segment Reporting Information | ||||||
Revenue | (349,950) | (350,719) | ||||
Intersegment [Member] | Central American Operations Segment [Member] | ||||||
Segment Reporting Information | ||||||
Revenue | (4,045) | (437) | ||||
Intersegment [Member] | Caribbean Operations Segment [Member] | ||||||
Segment Reporting Information | ||||||
Revenue | [2] | (1,202) | (1,093) | |||
Intersegment [Member] | Colombia Operations Segment [Member] | ||||||
Segment Reporting Information | ||||||
Revenue | (536) | (278) | ||||
Reconciling Items [Member] | ||||||
Segment Reporting Information | ||||||
Operating income (loss) | [3] | (19,907) | (18,515) | |||
Net income (loss) attributable to PriceSmart Inc. | [3] | $ (19,888) | $ (18,548) | |||
Foreign Countries [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Number of countries | country | 12 | |||||
Domestic Territories [Member] | U.S. Federal [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Number of countries | country | 1 | |||||
[1] | Effective September 1, 2019, we adopted the requirements of Accounting Standards Update (ASU) 2016-02, "Leases (Topic 842)" (ASC 842) using the modified retrospective approach, under which financial results reported in prior periods were not restated. As a result, the Long-lived assets (other than deferred tax assets) as of November 30, 2019 is not comparable with that as of November 30, 2018 and August 31, 2019. | |||||
[2] | Management considers its club in the U.S. Virgin Islands to be part of its Caribbean operations. | |||||
[3] | The reconciling items reflect the amount eliminated on consolidation of intersegment transactions. |
LEASES (Narrative) (Details)
LEASES (Narrative) (Details) - USD ($) | 3 Months Ended | |||
Nov. 30, 2019 | Sep. 01, 2019 | Aug. 31, 2019 | ||
Lessee, Lease, Description [Line Items] | ||||
Operating lease right-of-use assets, net | $ 118,203,000 | $ 120,600,000 | ||
Lease liability | 130,008,000 | [1],[2] | $ 132,100,000 | |
Long-term portion of deferred rent | $ 11,198,000 | |||
Deferred rent accruals | 300,000 | |||
Cumulative-effect adjustments on retained earnings | 0 | |||
Newly recorded assets and liabilities difference | $ 11,500,000 | |||
Minimum [Member] | ||||
Lessee, Lease, Description [Line Items] | ||||
Lease term | 2 years | |||
Maximum [Member] | ||||
Lessee, Lease, Description [Line Items] | ||||
Lease term | 30 years | |||
[1] | Future minimum lease payments include $ 1.5 million of lease payment obligations for the prior leased Miami distribution center. For purposes of calculating the minimum lease payments, a reduction is reflected for the actual sub-lease income the Company expects to receive during the remaining lease term. This sub-lease income was also considered for the purposes of calculating the exit obligation, which was immaterial as of November 30, 2019. | |||
[2] | Operating lease obligations have been reduced by approximately $ 2.0 million to reflect expected sub-lease income. Certain obligations under leasing arrangements are collateralized by the underlying asset being leased. |
LEASES (Summary of Components o
LEASES (Summary of Components of Total Lease Costs) (Details) $ in Thousands | 3 Months Ended |
Nov. 30, 2019USD ($) | |
LEASES [Abstract] | |
Operating lease cost | $ 4,221 |
Short-term lease cost | 53 |
Variable lease cost | 1,081 |
Sublease income | (289) |
Total lease costs | $ 5,066 |
LEASES (Weighted Average Remain
LEASES (Weighted Average Remaining Lease Term and Weighted Average Discount Rate) (Details) | Nov. 30, 2019 |
LEASES [Abstract] | |
Weighted average remaining lease term in years | 19 years 2 months 12 days |
Weighted average discount rate percentage | 6.50% |
LEASES (Supplemental Cash Flow
LEASES (Supplemental Cash Flow Information Related To Leases) (Details) $ in Thousands | 3 Months Ended |
Nov. 30, 2019USD ($) | |
LEASES [Abstract] | |
Operating cash flows paid for operating leases | $ 3,805 |
LEASES (Schedule of Future Mini
LEASES (Schedule of Future Minimum Lease Commitments) (Details) - USD ($) $ in Thousands | Nov. 30, 2019 | Sep. 01, 2019 | ||
Operating Leased Assets [Line Items] | ||||
2020 | [1] | $ 14,318 | ||
2021 | [1] | 13,403 | ||
2022 | [1] | 13,231 | ||
2023 | [1] | 13,129 | ||
2024 | [1] | 12,438 | ||
Thereafter | [1] | 179,042 | ||
Total future lease payments | [1] | 245,561 | ||
Less imputed interest | [1] | (115,553) | ||
Total operating lease liabilities | 130,008 | [1],[2] | $ 132,100 | |
Sub-lease income | 2,000 | |||
Miami Distribution Center [Member] | ||||
Operating Leased Assets [Line Items] | ||||
Total future lease payments | $ 1,500 | |||
[1] | Operating lease obligations have been reduced by approximately $ 2.0 million to reflect expected sub-lease income. Certain obligations under leasing arrangements are collateralized by the underlying asset being leased. | |||
[2] | Future minimum lease payments include $ 1.5 million of lease payment obligations for the prior leased Miami distribution center. For purposes of calculating the minimum lease payments, a reduction is reflected for the actual sub-lease income the Company expects to receive during the remaining lease term. This sub-lease income was also considered for the purposes of calculating the exit obligation, which was immaterial as of November 30, 2019. |
SUBSEQUENT EVENTS (Narrative) (
SUBSEQUENT EVENTS (Narrative) (Details) Q in Millions | Dec. 06, 2019USD ($) | Dec. 06, 2019GTQ (Q) | Dec. 03, 2019USD ($) | Nov. 30, 2019USD ($) | Aug. 31, 2019USD ($) | |
Subsequent Event [Line Items] | ||||||
Total long-term loans | [1] | $ 111,810,000 | $ 89,586,000 | |||
Subsequent Event [Member] | Guatemala Subsidiary [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Total long-term loans | $ 20,000,000 | Q 160 | ||||
Debt term | 10 years | |||||
Interest rate | 7.00% | 7.00% | ||||
Subsequent Event [Member] | First Period Of Loan [Member] | Guatemala Subsidiary [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Debt term | 5 years | |||||
Cash Flow Hedging [Member] | Colombia $15M Cross Currency Interest Rate Swap [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Derivative, Notional amount | $ 15,000,000 | |||||
Debt instrument, Basis spread on variable rate | 2.80% | |||||
Derivative, Fixed interest rate | 8.25% | |||||
Cash Flow Hedging [Member] | Subsequent Event [Member] | Colombia 5 Year Cross Currency Interest Rate Swap [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Derivative, Notional amount | $ 7,900,000 | |||||
Debt instrument, Basis spread on variable rate | 2.45% | |||||
Derivative, Fixed interest rate | 7.90% | |||||
[1] | The carrying amount of non-cash assets assigned as collateral for these loans was $ 111.3 million. No cash assets were assigned as collateral for these loans. |