8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 10, 2006

PriceSmart, Inc.

(Exact name of registrant as specified in its charter)

Delaware	000-22793	33-0628530
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

9740 Scranton Road, San Diego CA 92121

(Address of principal executive offices, including zip code)

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

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

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

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

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

Item 2.02. Results of Operations and Financial Condition.

On July 10, 2006, PriceSmart, Inc. (the “Company”) issued a press release regarding its results of operations for the third quarter and nine months ended May 31, 2006, its sales for the month of June 2006 and its addition to the Russell 2000 Index. A copy of the press release is furnished herewith as Exhibit 99.1. Pursuant to the rules and regulations of the Securities and Exchange Commission, such exhibit and the information set forth therein and herein shall be deemed “furnished” and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section.

Item 9.01. Financial Statements and Exhibits.

(c) The following exhibit is furnished herewith:

Exhibit No.	Description
99.1	Press release of PriceSmart, Inc. dated July 10, 2006.

SIGNATURES

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

Date: July 14, 2006	PRICESMART, INC.
	By:	/s/ JOHN M. HEFFNER
		John M. Heffner
		Chief Financial Officer

EX-99.1

EXHIBIT 99.1

PriceSmart Announces Third Quarter Results of Operations

June Sales and Addition to Russell 2000 Index also Announced

San Diego, California (July 10, 2006) - PriceSmart, Inc. (NASDAQ:PSMT) today announced its results of operations for the third quarter of fiscal year 2006, which ended on May 31, 2006.

For the third quarter of fiscal year 2006, net warehouse sales increased 19.6% to $180.8 million, from $151.2 million in the third quarter of fiscal year 2005. Total revenue for the third quarter increased 19.5% to $184.6 million, compared to $154.5 million in the prior year. The Company had 23 warehouse clubs in operation as of May 31, 2006, compared to 22 warehouse clubs in operation in the prior year. Net warehouse sales, total revenues and the number of warehouse clubs in operation for both years do not include PriceSmart’s Philippines operations which were sold in August 2005.

The Company recorded operating income in the quarter of $4.6 million, compared to an operating loss of $8.0 million in the third quarter of the prior year, which included asset impairment and closure costs of $8.5 million. Net income from continuing operations was $3.1 million, or $0.11 per diluted share, in the third quarter of fiscal year 2006 compared to a net loss from continuing operations of $12.1 million, or ($0.49) per diluted share, in the third quarter of fiscal 2005. Net income available to common stockholders for the third quarter was $3.2 million, or $0.11 per diluted share. In the third quarter of fiscal year 2005, the Company recorded a net loss attributable to common stockholders of $13.1 million, or ($0.53) per diluted share.

For the first nine months of fiscal 2006, net warehouse sales increased 19.4% to $536.9 million from $449.6 million in the first nine months of fiscal 2005. Total revenues for the first nine months of the fiscal year increased 19.1% to $547.9 million from $460.0 million in the same period of the prior year. For the first nine months of fiscal 2006, the Company recorded operating income of $13.8 million and net income and net income available to common stockholders of $8.5 million, or $0.31 per diluted share. During the same nine-month period in fiscal 2005, the Company recorded an operating loss of $4.8 million and a net loss attributable to common stockholders of $39.5 million, or ($2.15) per diluted share.

Additionally, the Company announced that for the month of June 2006, net sales increased 19.0% to $58.6 million from $49.3 million in June 2005. For the 10 months ended June 30, 2006, net sales increased 19.3% to $595.5 million from $499.3 million in the same period last year. There were 23 warehouse clubs in operation at the end of June 2006 compared to 22 warehouse clubs in operation in June 2005. Net sales and the number of warehouse clubs in operation exclude discontinued operations.

For the four weeks ended July 2, 2006, comparable warehouse sales for warehouse clubs open at least 12 full months increased 13.2% compared to the same four-week period last year. For the 43 weeks ended July 2, 2006, comparable warehouse sales, for warehouse clubs open at least 12 full months, increased 16.1% from the same period a year ago. Comparable warehouse sales for the comparable four- and forty-three week periods of 2005 exclude sales from discontinued operations.

The Company also announced that PriceSmart was added to the Russell 2000 ^® Index when Russell Investment Group reconstituted its family of U.S. indexes on June 30, 2006. Annual reconstitution of Russell indexes captures the 3,000 largest U.S. stocks as of the end of May, ranking them by total market capitalization. The largest 1,000 companies in the ranking comprise the Russell 1000 while the remaining 2,000 companies become the widely used Russell 2000. Russell indexes are used by investment managers and institutional investors for index funds and as benchmarks for both passive and active investment strategies.

About PriceSmart

PriceSmart, headquartered in San Diego, owns and operates U.S.-style membership shopping warehouse clubs in Central America and the Caribbean, selling high quality merchandise at low prices to PriceSmart members. PriceSmart now operates 23 warehouse clubs in 11 countries and one U.S. territory (four each in Panama and Costa Rica; two each in Dominican Republic, El Salvador, Guatemala, Honduras, and Trinidad; and one each in Aruba, Barbados, Jamaica, Nicaragua and the United States Virgin Islands). On August 12, 2005, PriceSmart completed the sale of its interest in its PriceSmart Philippines subsidiary.

This press release may contain forward-looking statements concerning the Company’s anticipated future revenues and earnings, adequacy of future cash flow and related matters. These forward-looking statements include, but are not limited to, statements containing the words “expect,” “believe,” “will,” “may,” “should,” “project,” “estimate,” “scheduled,” and like expressions, and the negative thereof. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including the following risks: the Company had substantial net losses in fiscal 2003, 2004 and 2005, and may continue to incur losses in future periods; if the Company fails to comply with covenants governing its indebtedness, the lenders may elect to accelerate the Company’s indebtedness and foreclose on the collateral pledged to secure the indebtedness; the Company’s financial performance is dependent on international operations which exposes the Company to various risks; any failure by the Company to manage its widely dispersed operations could adversely affect the Company’s business; although the Company has taken and continues to take steps to improve significantly its internal controls, there may be material weaknesses or significant deficiencies that the Company has not yet identified; the Company faces significant competition; the Company faces difficulties in the shipment of and inherent risks in the importation of merchandise to its warehouse clubs; the Company is exposed to weather and other risks associated with international operations; declines in the economies of the countries in which the Company operates its warehouse clubs would harm its business; a few of the Company’s stockholders have control over the Company’s voting stock, which will make it difficult to complete some corporate transactions without their support and may prevent a change in control; the loss of key personnel could harm the Company’s business; the Company is subject to volatility in foreign currency exchange; the Company faces the risk of exposure to product liability claims, a product recall and adverse publicity; a determination that the Company’s long-lived or intangible assets have been impaired could adversely affect the Company’s future results of operations and financial position; and the Company faces increased costs and compliance risks associated with compliance with Section 404 of the Sarbanes-Oxley Act of 2002; as well as the other risks detailed in the Company’s SEC reports, including the Company’s Form 10-Q filed pursuant to the Securities Exchange Act of 1934 on April 14, 2006. We assume no obligation and expressly disclaim any duty to update any forward-looking statement to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events. Certain prior period amounts may have been reclassified to conform to the current period presentation.

For further information, please contact Robert E. Price, Chief Executive Officer (858) 551-2336; or John M. Heffner, Executive Vice President and Chief Financial Officer (858) 404-8826.

PRICESMART, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

	Three Months Ended May 31,						Nine Months Ended May 31,
	2006			2005			2006			2005
Revenues:
Sales:
Net warehouse club	$	180,781		$	151,217		$	536,856		$	449,605
Export		9			23			20			394
Membership income		2,961			2,418			8,423			6,875
Other income		886			849			2,570			3,106
Total revenues		184,637			154,507			547,869			459,980
Operating expenses:
Cost of goods sold:
Net warehouse club		153,619			129,489			458,309			384,574
Export		7			35			23			396
Selling, general and administrative:
Warehouse club operations		20,068			18,367			57,556			53,513
General and administrative		6,312			6,162			17,691			17,549
Preopening expenses		—			40			336			42
Asset impairment and closure costs		59			8,460			172			8,752
Total operating expenses		180,065			162,553			534,087			464,826
Operating income (loss)		4,572			(8,046	)		13,782			(4,846	)
Other income (expense):
Interest income		624			360			1,348			1,401
Interest expense		(708	)		(1,003	)		(2,258	)		(4,889	)
Other expense, net		(71	)		(318	)		(46	)		(419	)
Total other expense		(155	)		(961	)		(956	)		(3,907	)
Income (loss) from continuing operations before provision for income taxes, loss of unconsolidated affiliate and minority interest		4,417			(9,007	)		12,826			(8,753	)
Provision for income taxes		(1,192	)		(3,020	)		(4,686	)		(4,041	)
Loss of unconsolidated affiliate		(12	)		(617	)		(56	)		(3,034	)
Minority interest		(88	)		568			(261	)		402
Income (loss) from continuing operations		3,125			(12,076	)		7,823			(15,426	)
Discontinued operations, net of tax		103			(1,069	)		650			(2,784	)
Net income (loss)		3,228			(13,145	)		8,473			(18,210	)
Preferred dividends		—			—			—			(648	)
Deemed dividend on exchange of common stock for preferred stock		—			—			—			(20,647	)
Net income available to (loss attributable to) common stockholders	$	3,228		$	(13,145	)	$	8,473		$	(39,505	)
Basic income (loss) per share – common stockholders:
Continuing operations	$	0.11		$	(0.49	)	$	0.29		$	(0.84	)
Discontinued operations, net of tax	$	—		$	(0.04	)	$	0.02		$	(0.15	)
Preferred and deemed dividends	$	—		$	—		$	—		$	(1.16	)
Available to (attributable to) common stockholders	$	0.11		$	(0.53	)	$	0.31		$	(2.15	)
Diluted income (loss) per share – common stockholders:
Continuing operations	$	0.11		$	(0.49	)	$	0.29		$	(0.84	)
Discontinued operations, net of tax	$	—		$	(0.04	)	$	0.02		$	(0.15	)
Preferred and deemed dividends	$	—		$	—		$	—		$	(1.16	)
Available to (attributable to) common stockholders	$	0.11		$	(0.53	)	$	0.31		$	(2.15	)
Shares used in per share computations:
Basic		28,373			24,850			26,970			18,409
Diluted		29,067			24,850			27,412			18,409

PRICESMART, INC.

CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

	May 31, 2006			August 31, 2005
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	48,533		$	30,147
Short-term restricted cash		7,556			7,331
Receivables, net of allowance for doubtful accounts of $2,152 and $2,260, respectively		3,289			1,759
Receivables from unconsolidated affiliate		—			811
Merchandise inventories		69,102			65,719
Prepaid expenses and other current assets		7,316			8,360
Assets of discontinued operations		1,754			315
Total current assets		137,550			114,442
Long-term restricted cash		587			1,045
Property and equipment, net		161,444			142,310
Goodwill		31,883			29,600
Deferred tax asset		18,944			22,260
Other assets		2,345			4,108
Investment in unconsolidated affiliate		3,278			6,089
Total assets	$	356,031		$	319,854
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	—		$	1,648
Accounts payable		61,893			57,423
Accounts payable to unconsolidated affiliate		107			—
Accrued salaries and benefits		5,450			4,513
Deferred membership income		5,551			4,773
Income taxes payable		1,691			2,271
Other accrued expenses		10,536			12,547
Long-term debt, current portion		5,417			5,417
Liabilities of discontinued operations		557			663
Total current liabilities		91,202			89,255
Deferred tax liability		951			958
Deferred rent		1,599			1,427
Accrued closure costs		3,273			3,466
Long-term debt, related party		12,500			—
Long-term debt, net of current portion		13,791			23,915
Total liabilities		123,316			119,021
Minority interest		2,580			2,560
Stockholders’ equity:
Common stock, $.0001 par value, 45,000,000 shares authorized; 29,392,508 and 26,031,180 shares issued and 28,954,345 and 25,596,755 shares outstanding (net of treasury shares), respectively		3			3
Additional paid-in capital		367,496			339,644
Unearned compensation on restricted stock		(4,139	)		—
Tax benefit from exercise of stock options		3,379			3,379
Note receivable from stockholder		—			(29	)
Accumulated other comprehensive loss		(14,077	)		(13,757	)
Accumulated deficit		(113,061	)		(121,534	)
Less: treasury stock at cost; 438,163 and 434,425 shares, respectively		(9,466	)		(9,433	)
Total stockholders’ equity		230,135			198,273
Total liabilities and stockholders’ equity	$	356,031		$	319,854