News Column

PRICESMART INC - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

July 10, 2014

This Quarterly Report on Form 10-Q contains forward-looking statements concerning PriceSmart, Inc.'s ("PriceSmart" or the "Company") anticipated future revenues and earnings, adequacy of future cash flow, projected warehouse club openings, the Company's performance relative to competitors and related matters. These forward-looking statements include, but are not limited to, statements containing the words "expect," "believe," "will," "may," "should," "project," "estimate," "anticipated," "scheduled," and like expressions, and the negative thereof. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including the following risks: the Company's financial performance is dependent on international operations, which exposes the Company to various risks; any failure by the Company to manage its widely dispersed operations could adversely affect its business; the Company faces significant competition; future sales growth depends, in part, on the Company's ability to successfully open new warehouse clubs; the Company might not identify in a timely manner or effectively respond to changes in consumer trends and changes in consumer preferences for merchandise and shopping modalities, which could adversely affect its relationship with members, demand for its products and market share; the Company faces difficulties in the shipment of, and risks inherent in the importation of, merchandise to its warehouse clubs; the Company is exposed to weather and other natural disaster risks; general economic conditions could adversely impact the Company's business in various respects; the Company is subject to changes in relationships and agreements with third parties with which the Company does business and/or from which the Company acquires merchandise; the Company relies extensively on computer systems to process transactions, summarize results and manage its business, and failure to adequately maintain the Company's systems or disruptions in its systems could harm its business and adversely affect its results of operations; the Company could be subject to additional tax liabilities; a few of the Company's stockholders own approximately 28.1% of the Company's voting stock, which may make it difficult to complete some corporate transactions without their support and may impede a change in control; the loss of key personnel could harm the Company's business; the Company is subject to volatility in foreign currency exchange rates; the Company faces the risk of exposure to product liability claims, a product recall and adverse publicity; potential future impairments of long lived assets could adversely affect the Company's future results of operations and financial position; write-offs of goodwill and other intangible assets could adversely affect the Company's future results of operations and financial position; the Company faces increased public company compliance risks and compliance risks related to the Company's international operations; the Company faces increased compliance risks associated with compliance with Section 404 of the Sarbanes-Oxley Act of 2002; if remediation costs or hazardous substance contamination levels at certain properties for which the Company maintains financial responsibility exceed management's current expectations, the Company's financial condition and results of operations could be adversely impacted. The risks described above as well as the other risks detailed in the Company's U.S. Securities and Exchange Commission ("SEC") reports, including under the heading "Part II - Item 1A - Risk Factors" in the Company's Annual Report on Form 10-K filed for the fiscal year ended August 31, 2013 filed on October 30, 2013 pursuant to the Securities Exchange Act of 1934, as amended, could materially and adversely affect our business, financial condition and results of operations. These risks are not the only risks that the Company faces. The Company also could be affected by additional factors that apply to all companies operating globally and in the U.S., as well as other risks that are not presently known to the Company or that the Company currently considers to be immaterial. The Company assumes no obligation and expressly disclaims any duty to update any forward-looking statement to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events. The following discussion and analysis compares the results of operations for the three and nine month periods ended May 31, 2014 and 2013 and should be read in conjunction with the consolidated financial statements and the accompanying notes included therein. 36 -------------------------------------------------------------------------------- PriceSmart's business consists primarily of international membership shopping warehouse clubs similar to, but smaller in size than, warehouse clubs in the United States. The Company's ownership in all operating subsidiaries as of May 31, 2014 is 100%, and they are presented on a consolidated basis. The number of warehouse clubs in operation as of May 31, 2014 and 2013 for each country or territory are as follows: Anticipated Number of Number of warehouse Warehouse Clubs Warehouse Clubs club openings in Operation as of in Operation as of within the next Country/Territory May 31, 2014 May 31, 2013 12 months Colombia 3 3 3 Panama 4 4 - Costa Rica 6 5 - Dominican Republic 3 3 - Guatemala 3 3 - El Salvador 2 2 - Honduras 3 2 - Trinidad 4 4 - Aruba 1 1 - Barbados 1 1 - U.S. Virgin Islands 1 1 - Jamaica 1 1 - Nicaragua 1 1 - Totals 33 31 3 During May of fiscal year 2014, the Company opened its third warehouse club in Honduras in Tegucigalpa. During fiscal 2013, the Company opened its second and third clubs in Colombia. These clubs are in south and north Cali and opened in October 2012 and May 2013, respectively. In January of fiscal year 2014, the Company acquired land in the southern area of Pereira, Colombia and in the city of Medellin, Colombia and leased land in the city of Bogota, Colombia. The Company is currently constructing new warehouse clubs at these three sites and plans to open them before the end of calendar year 2014. Together with the three warehouse clubs currently operating in Colombia (one in Barranquilla and two in Cali), these three new clubs will bring the number of PriceSmart warehouse clubs operating in Colombia to six. In October 2013, the Company opened its sixth membership warehouse club in Costa Rica in La Union, Cartago. The Company's warehouse clubs are located in Latin America and the Caribbean, and its corporate, U.S. buying operations and distribution centers are primarily located in the United States. The Company's reportable segments are based on management's organization of these locations into operating segments by general geographic location. The Company's operating segments are the United States, Latin America and the Caribbean.



General Economic Factors

Economic conditions in the Company's markets are not homogenous. Where economic conditions are stable or favorable, the Company is experiencing generally positive retail strength (in Panama, Trinidad, Guatemala, the Dominican Republic and Aruba). On the other hand, the approximate 10% devaluation of the Costa Rican colon which occurred in February has negatively impacted the purchasing power of consumers in that country. This devaluation negatively impacts warehouse sales and membership income when translated to and reported in U.S. dollars in the near term and requires the Company to increase the price of imported merchandise to maintain target margins which may negatively impact the demand for those items. In addition, there have been recent announcements of large employers planning to reduce their workforce in Costa Rica, which will likely act as a headwind to economic growth. Costa Rica is PriceSmart's largest market with six warehouse clubs and therefore can have a material impact on the Company's financial performance. Other countries experiencing some level of slower economic and retail activity are Jamaica, Honduras and El Salvador. The Company does not currently face direct competition from U.S. branded membership warehouse club operators. However, it does face competition from various retail formats such as hypermarkets, supermarkets, cash and carry, home improvement centers, electronic retailers and specialty stores, including those within Central America that are owned and operated by a large U.S.-based retailer. The Company has competed effectively in these markets in the past and expects to continue to do 37 -------------------------------------------------------------------------------- so in the future due to the unique nature of the membership warehouse club format. However, new retail competitors may enter our markets (for example, Cost-U-Less, a cash and carry, low price operator with which the Company competes in St. Thomas, opened a location in Barbados a year ago) and existing retailers may expand (for example Wal-Mart's announcement that it intends to invest $1.1 billion in Mexico and Central America) which could adversely impact the Company's ability to compete within these markets. Further, it is possible that U.S. warehouse club operators may decide to enter the Company's markets and compete more directly with PriceSmart in a similar warehouse club format, although the Company has no current indication that such an event is imminent. Many PriceSmart markets are susceptible to foreign currency exchange rate volatility. Currency exchange rate changes either increase or decrease the cost to the Company's subsidiaries of imported products purchased in U.S. dollars and priced in local currency. For the nine months ended May 31, 2014, approximately 52% of the Company's net warehouse sales were comprised of products purchased in U.S. dollars and imported into the markets where PriceSmart warehouse clubs are located, but approximately 79% of the Company's net warehouse sales were in foreign currencies. Currency exchange rate fluctuations affect the Company's consolidated sales and membership income as local-currency-denominated sales are translated to U.S. dollars. Also, as a result of local currency fluctuations, the Company revalues all U.S. dollar-denominated monetary assets and liabilities within the Company's markets that do not use the U.S. dollar as their functional currency. These monetary assets and liabilities include, but are not limited to, excess cash permanently reinvested offshore, U.S. dollar-denominated long-term debt used to finance land acquisitions and the construction of warehouse clubs, and U.S. dollar-denominated accounts payable related to the purchase of merchandise. The Company seeks to manage its foreign exchange risk by (1) adjusting prices on goods acquired in U.S. dollars on a periodic basis to maintain its target margins after taking into account changes in exchange rates; (2) obtaining local currency loans from banks within certain markets where it is economical to do so and where management believes the risk of devaluation and the level of U.S. dollar denominated liabilities warrants this action; (3) reducing the time between the acquisition of product in U.S. dollars and the settlement of that purchase in local currency; (4) maintaining a balance between assets held in local currency and in U.S. dollars; and (5) by entering into cross-currency interest rate swaps and forward currency derivatives. The Company has local-currency-denominated long-term loans in Honduras and Guatemala and has cross-currency interest rate swaps and forward currency derivatives in Colombia. Turbulence in the currency markets can have a significant impact on the value of the foreign currencies within the countries in which the Company operates. The Company reports the gains or losses associated with the revaluation of these monetary assets and liabilities on its Consolidated Statements of Income under the heading "Other income (expense), net." Future volatility and uncertainties regarding the currencies in the Company's countries could have a material impact on the Company's operations in future periods. However, there is no way to accurately forecast how currencies may trade in the future and, as a result, the Company cannot accurately project the impact of the change in rates on the Company's future demand for imported products, reported sales, or financial results.



Business Strategy

The Company's business strategy is to offer for sale to businesses and families a limited number of stock keeping units (SKU's) covering a wide range of products at the lowest possible prices. The Company charges an annual membership fee to its customers. These fees combined with warehouse and distribution operating efficiencies and volume purchasing enable PriceSmart to operate its business on lower merchandise margins than conventional retail stores. The combination of annual membership fees, operating efficiencies and low margins enable PriceSmart to offer its members high quality merchandise at very competitive prices which, in turn, enhances the value of the PriceSmart membership.



Current and Future Management Actions

Generally, the Company's operating efficiencies, earnings and cash flow from operations improve as sales increase. Higher sales provide greater purchasing power and often result in lower product prices from the Company's suppliers. Further, increased sales permit the Company to leverage its selling, general and administrative expenses. Sales growth in our existing locations (comparable warehouse club sales) creates the highest degree of expense leverage. Therefore, the Company prioritizes initiatives that it expects will have the greatest impact on increasing sales, particularly within our existing locations. Looking forward to the next several quarters, the following items are likely to have an impact on the Company's business and the results of operations. The Company seeks to increase sales by growing sales with existing members in its warehouse clubs, by attracting new members at both existing and new clubs and by adding new PriceSmart warehouse clubs. The Company's continued focus on initiatives to increase comparable warehouse club sales within existing warehouse clubs locations resulted in a 2.9% increase in comparable warehouse club sales for the 13-week period ended June 1, 2014 compared to the same 13-week period the prior year. During the first quarter of fiscal 2014, the Company opened its sixth membership warehouse club in Costa Rica in La Union, 38 -------------------------------------------------------------------------------- Cartago, and in the most recent quarter opened its third warehouse club in Honduras. In both cases, these new clubs negatively impacted reported comparable warehouse club sales in the period as warehouse sales transferred to these new clubs from existing clubs. With the addition of these new warehouse clubs, the Company grew warehouse sales by 7.6% for the quarter ended May 31, 2014 compared to the same quarter a year ago. In addition, the Company increased the number of member accounts 10.0% over the prior year. Effective June 1, 2012, the Company raised the annual membership fee by approximately $5.00 in most markets. The annual fee for a Diamond membership in these markets is now approximately $35.00 (entitling members to two cards). A membership fee helps PriceSmart offer high quality merchandise at low prices, providing value to its members. In October 2012, the Company launched the Platinum membership account in Costa Rica. Platinum members pay an annual membership fee of approximately $75.00 for a primary membership card for which they receive an annual 2% rebate of their purchases on most items, up to a maximum annual rebate of $500.00. Platinum members can apply this rebate to future purchases at the warehouse club at the end of the annual membership period. The Company is currently evaluating the Platinum membership program to determine if Platinum memberships should be offered in other of the Company's markets. Logistics and distribution operations are an important part of what allows PriceSmart to deliver high quality merchandise at low prices to our members. The Company continues to explore areas to improve efficiency, lower costs and ensure a good flow of merchandise to our warehouse clubs. The Company has added local and regional distribution centers in several of its markets to improve merchandise flow and in-stock conditions and reduce operating costs, the benefit of which can be passed on to our members in the form of lower merchandise prices. The Company is evaluating whether to add additional local and regional distribution centers in certain countries. The Company has the capability to service members through on-line sales. Members have the ability to purchase merchandise that is not stocked in their local warehouse clubs through PriceSmart's e-commerce website. These purchases are shipped from the U.S. distribution warehouse for pick-up at the member's local warehouse club location. In addition, in certain markets, members who do not reside in a city where a PriceSmart warehouse club is located can purchase in-club merchandise on-line from warehouse clubs located within their country and have it delivered to their home or office via a third party delivery service. The Company has been expanding its offerings in these alternative shopping methods, and while the percentage of sales through these channels relative to the Company's overall sales is small, the Company believes it is an important and growing way to serve its membership. Purchasing land and constructing warehouse clubs is the Company's single largest capital investment. Securing land for warehouse club locations is challenging within the Company's markets, especially in Colombia, because suitable sites at economically feasible prices are difficult to find. In January of fiscal year 2014, the Company acquired land in the southern area of Pereira, Colombia and in the city of Medellin, Colombia and leased land in the city of Bogota, Colombia. The Company is currently constructing new warehouse clubs at these sites that are currently planned to open before the end of calendar year 2014. The Colombia land acquisitions and lease are in keeping with the Company's real estate philosophy. The Company has entered into real estate leases in the past and will likely do so in the future, but the Company's preference is to own rather than lease real estate. Real estate ownership provides a number of advantages as compared to leasing, including lower operating expenses, flexibility to expand or otherwise enhance PriceSmart buildings, long-term control over the use of the property and the residual value that the real estate may have in future years. In order to secure warehouse club locations, the Company occasionally has to purchase more land than is actually needed for the warehouse club facility. To the extent that the Company acquires property in excess of what is needed for a particular warehouse club, the Company generally plans to either sell or develop the excess property. Excess land at Alajuela and Brisas is being held for development by joint ventures formed by the Company and the sellers of the property, which commenced in fiscal year 2011. A similar development strategy is being employed for the Company's excess land at the San Fernando, Trinidad and Arroyo Hondo, Dominican Republic locations where the properties are fully owned by the Company. The recent land purchases in Colombia do not contain excess property beyond that which will be needed by the Company. The profitable sale or development of real estate is highly dependent on real estate market conditions.



Financial highlights for the third quarter of fiscal year 2014 included:

• Net warehouse club sales increased 7.6% over the comparable prior year

period. The Company ended the quarter with 33 warehouse clubs compared to

31 warehouse clubs at the end of the third quarter of fiscal year 2013. Comparable warehouse club sales (that is, sales in the warehouse clubs that have been open for greater than 13 1/2 calendar months) for the 13 weeks ended June 1, 2014 grew 2.9%.



• Membership income for the third quarter of fiscal year 2014 increased 8.9%

to $9.6 million.

• Warehouse gross profits (net warehouse club sales less associated cost of

goods sold) in the quarter increased 10.1% over the prior year period and

warehouse gross profits as a percent of net warehouse club sales were 14.8%, an increase of 34 39

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basis points from the same period last year. • Selling, general and administrative expenses (not including pre-opening

expenses and loss on the disposal of assets) increased 13 basis points as

a percentage of sales compared to the third quarter of last year.

• Operating income for the third quarter of fiscal year 2014 was $31.2

million, an increase of $2.7 million over the third quarter of fiscal year

2013.

• The Company had a $489,000 net gain from currency exchange transactions in

the current quarter compared to a $785,000 net loss from currency exchange

transactions in the same period last year.

• Net income for the third quarter of fiscal year 2014 was $21.3 million, or

$0.70 per diluted share, compared to $18.5 million, or $0.61 per diluted

share, in the comparable prior year period. 40

-------------------------------------------------------------------------------- Reclassifications to consolidated statement of income recorded during fiscal year 2014 for fiscal year 2013 - The Company recorded asset disposal activity during fiscal year 2013 under other income (expense), net. This activity consisted mainly of normally scheduled asset replacement and upgrades involved in operating activities. The Company has determined that these costs represent operating expenses. Therefore, the Company has accordingly recorded such asset disposal activity as operating expenses under loss/(gain) on disposal of assets starting in fiscal year 2014. The Company has made reclassifications to the consolidated statement of income for fiscal year 2013 to conform to the presentation in fiscal year 2014. These reclassifications did not impact net income. The following tables summarize the impact of this reclassification (in thousands): Three Months Ended Total Fiscal Year November 30, 2012 February 28, 2013 May 31, 2013 August 31, 2013 2013 Other income (expense), net - as previously reported $ (58 ) $ (312 ) $ (1,034 ) $ (439 ) $ (1,843 ) Loss/(gain) on disposal of assets, other income (expense), net reclassified to Loss/(gain) on disposal of assets, total operating expenses 57 47 249 536 889 Other income (expense), net - as currently reported $ (1 ) $ (265 ) $ (785 ) $ 97 $ (954 )



COMPARISON OF THE THREE AND NINE MONTHS ENDED MAY 31, 2014 AND 2013

The Company's fiscal second quarter ended on May 31, 2014. Unless otherwise noted, all tables present U.S. dollar amounts in thousands. Certain percentages presented are calculated using actual results prior to rounding.



Net Warehouse Club Sales

Three Months Ended May 31, Nine Months Ended May 31, 2014 2013 2014 2013 Amount % Change Amount Amount % Change Amount Net warehouse club sales $ 597,885 7.6 % $ 555,815$ 1,844,746 10.4 % $ 1,671,269



Comparison of Three and Nine Months Ended May 31, 2014 and 2013

The Company recorded positive sales growth in nearly all countries, the exceptions being Jamaica, that has experienced a significant devaluation of its local currency over the past year (12%) and El Salvador where the Company has also experienced challenges in the economy of the country. The Company recorded double digit sales growth in Colombia, Panama and Aruba and experienced high single digit sales growth in Guatemala and Barbados. The other countries recorded sales growth between 2.5% and 7.2%. The Company opened one new warehouse club in Costa Rica and Honduras compared to the third quarter of fiscal year 2013. Sales growth in Colombia was positively impacted by the full quarter effect of the third warehouse club which opened in May of 2013. Total net warehouse club sales growth of 7.6% during the three months ended May 31, 2014 resulted from a 7.3% growth in transactions and a 0.2% growth in average ticket. Sales for the nine months ended May 31, 2014 continued to reflect positive sales growth in all countries with the exception of Jamaica which has experienced a 12% devaluation of its currency over the past 12 months. The additional sales of one new warehouse club in each of Colombia and Costa Rica during the nine months ended May 31, 2014, compared to the nine-month period ended May 31, 2013, contributed a 4.3% increase in sales. The Company opened a new warehouse club in Honduras on May 1, 2014, which had not yet materially affected sales growth through May 31, 2014. 41

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Comparable Sales

The Company reports comparable warehouse club sales on a "same week" basis with 13 weeks in each quarter beginning on a Monday and ending on a Sunday. The periods are established at the beginning of the fiscal year to provide as close a match as possible to the calendar month and quarter that is used for financial reporting purposes. This approach equalizes the number of weekend days and weekdays in each period for improved sales comparison, as the Company experiences higher warehouse club sales on the weekends. Further, each of the warehouse clubs used in the calculations was open for at least 13 1/2 calendar months before its results for the current period were compared with its results for the prior period. For example, the sales related to the warehouse club opened in Cali, Colombia ("Canas Gordas") on October 19, 2012 were not used in the calculation of comparable warehouse club sales until January 2014. Sales related to the warehouse club opened in Cali, Colombia ("Menga") on May 3, 2013 will not be used in the calculation of comparable warehouse club sales until July 2014. Sales related to the warehouse club opened in La Union, Cartago, Costa Rica ("Tres Rios") on October 18, 2013 will not be used in the calculation of comparable warehouse sales until January 2015. In addition, sales related to the warehouse club opened in Tegucigalpa, Honduras ("El Sauce") on May 1, 2014 will not be used in the calculation of comparable warehouse club sales until July 2015. Comparable warehouse club sales increased 2.9% for the 13-week period ended June 1, 2014, compared to the same 13-week period last year. The Company opened two new warehouse clubs (one in La Cartago, Costa Rica in October and one in Tegucigalpa, Honduras in May). While these new warehouse clubs are attracting new members from areas of their respective cities who were not being served by the Company, it is also resulting in some existing members, particularly those that shopped at our Zapote warehouse club in Costa Rica and our first Tegucigalpa, Honduras warehouse club, choosing to shop at the new location. This transfer of sales from a warehouse club that is included in the calculation of comparable warehouse club sales to a warehouse club that is not included in the calculation has an adverse impact on comparable warehouse club sales. Similarly, although to a lesser extent, the opening of the Cali, Colombia ("Menga") club in May 2013 has resulted in some existing members of the initial club that opened ("Canas Gordas") to shop now in Menga. The Company has not made a specific determination of the negative impact these openings have had on reported comparable warehouse club sales given various factors, such as whether previously existing members are now shopping more often given the greater convenience of this new club, which would make it difficult to provide an accurate assessment.



Net Warehouse Club Sales by Segments

The following tables indicate the net warehouse club sales and the percentage growth in net warehouse club sales during the three and nine months ended May 31, 2014 and 2013 in the segments in which the Company operates. Three Months Ended May 31, 2014 2013 Increase from Amount % of net sales prior year Change Amount % of net sales Latin America $ 409,549 68.5 % $ 31,864 8.4 % $ 377,685 68.0 % Caribbean 188,336 31.5 % 10,206 5.7 % 178,130 32.0 % Net warehouse club sales $ 597,885 100.0 % $ 42,070 7.6 % $ 555,815 100.0 % Nine Months Ended May 31, 2014 2013 Increase from Amount % of net sales prior year Change Amount % of net sales Latin America $ 1,257,502 68.2 % $ 130,133 11.5 % $ 1,127,369 67.5 % Caribbean 587,244 31.8 % 43,344 8.0 % 543,900 32.5 % Net warehouse club sales $ 1,844,746 100.0 % $ 173,477 10.4 % $ 1,671,269 100.0 %



Comparison of Three and Nine Months Ended May 31, 2014 and 2013

For the three and nine months ended May 31, 2014 and 2013, the higher net warehouse club sales growth in Latin America compared to the Caribbean primarily reflects the sales associated with the additional warehouse club sales in Cali, Colombia, La 42 -------------------------------------------------------------------------------- Union, Costa Rica and Tegucigalpa, Honduras in the current periods compared to the prior period. We expect Latin America sales growth to continue to outpace Caribbean sales growth as the next warehouse clubs the Company expects to open are in Colombia. Export Sales Three Months Ended May 31, 2014 2013 Increase from Amount % of net sales prior year Change Amount % of net sales

Export sales 6,577 1.1 % $ 353 5.7 % 6,224 1.1 % Nine Months Ended May 31, 2014 2013 Increase from Amount % of net sales prior year Change Amount % of net sales Export sales $ 19,062 1.0 % $ 3,442 22.0 % $ 15,620 0.9 % The increase in export sales was due to direct sales to a single institutional customer (retailer) in the Philippines for which the Company achieves a gross profit margin of approximately 5%, which is below the Company's warehouse club gross profit margin. Membership Income Three Months Ended May 31, 2014 2013 Increase from Amount prior year % Change Amount Membership income $ 9,552 $ 778 8.9 % $ 8,774 Membership income % to net warehouse club sales 1.6 % 1.6 % Number of total accounts 1,167,402 106,213 10.0 % 1,061,189 Nine Months Ended May 31, 2014 2013 Increase from Amount prior year % Change Amount Membership income $ 28,301$ 3,528 14.2 % $ 24,773 Membership income % to net warehouse club sales 1.5 % 1.5 % Number of total accounts 1,167,402 106,213 10.0 % 1,061,189



Comparison of Three and Nine Months Ended May 31, 2014 and 2013

For the three months ended May 31, 2014, the increase in membership income reflects a growth in membership accounts. Total member accounts grew 10.0% from the prior year period, but the devaluation of the local currencies in Costa Rica and Colombia resulted in a 1.6% reduction in the membership income per member recognized. The membership renewal rate for the 12-month period ended May 31, 2014 was 85.0%.



For the nine months ended May 31, 2014, the increase in membership income reflects a growth in membership accounts and an increase in the average fee collected for new and renewing members.

43 --------------------------------------------------------------------------------



Other Income

Other income consists of rental income and other miscellaneous income.

Three Months Ended May 31, 2014 2013 Amount Increase from prior year % Change Amount Other income $ 1,023 $ 114 12.5 % $ 909 Nine Months Ended May 31, 2014 2013 Amount Increase from prior year % Change Amount Other income $ 2,903 $ 147 5.3 % $ 2,756 Gross Margin



Warehouse Gross Profit Margin

Three Months Ended May 31, 2014 2013 Increase from Amount prior year % to sales Amount % to sales Warehouse club sales $ 597,885$ 42,070 100.0 % $ 555,815 100.0 % Less associated cost of goods 509,684 33,957 85.2 % 475,727 85.6 % Warehouse gross profit margin $ 88,201$ 8,113 14.8 % $ 80,088 14.4 % Nine Months Ended May 31, 2014 2013 Increase from Amount prior year % to sales Amount % to sales Warehouse club sales $ 1,844,746$ 173,477 100.0 % $ 1,671,269 100.0 % Less associated cost of goods 1,575,623 150,227 85.4 % 1,425,396 85.3 % Warehouse gross profit margin $ 269,123$ 23,250 14.6 %



$ 245,873 14.7 %

Comparison of Three and Nine Months Ended May 31, 2014 and 2013

For the three months ended May 31, 2014, warehouse gross profit margin as a percent of sales was 34 basis points higher than the third quarter of fiscal 2013. Compared to the same period a year ago, the net warehouse margins benefited from increased slotting fees related to "end cap" placements of vendor products and supplier rebates along with lower shrink and obsolescence costs which contributed to lower cost of goods sold as a percent of net warehouse sales. For the nine months ended May 31, 2014, warehouse gross profit margin as a percent of sales was 12 basis points lower than the nine months ended on May 31, 2013, with the higher margin percentage recorded in the current quarter offset by lower margin percentages in the first two quarters of the fiscal year compared to the same periods a year ago. 44 --------------------------------------------------------------------------------



Export Sales Gross Profit Margin

Three Months Ended May 31, 2014 2013 Increase from Amount prior year % to sales Amount % to sales Export sales $ 6,577 $ 353 100.0 % $ 6,224 100.0 % Less associated cost of goods sold 6,246 339 95.0 % 5,907 94.9 % Export sales gross profit margin $ 331 $ 14 5.0 % $ 317 5.1 % Nine Months Ended May 31, 2014 2013 Increase from Amount prior year % to sales Amount % to sales Export sales $ 19,062$ 3,442 100.0 % $ 15,620 100.0 % Less associated cost of goods sold 18,110 3,382 95.0 % 14,728 94.3 % Export sales gross profit margin $ 952 $ 60 5.0 % $ 892 5.7 %



Comparison of Three and Nine Months Ended May 31, 2014 and 2013

For the three and nine months ended May 31, 2014 and 2013, the increase in export sales gross margin dollars in fiscal year 2014 was due to an increase in direct sales to an institutional customer (retailer) in the Philippines for which the Company generally earns lower margins than those obtained through its warehouse club sales.



Selling, General and Administrative Expenses

Warehouse Club Operations Three Months Ended May 31, 2014 2013 % to warehouse Increase from % to warehouse Amount club sales prior year % Change Amount club sales Warehouse club operations expense $ 53,617 9.0 % $ 4,196 8.5 % $ 49,421 8.9 % Nine Months Ended May 31, 2014 2013 % to warehouse Increase from % to warehouse Amount club sales prior year % Change Amount club sales Warehouse club operations expense $ 158,592 8.6 % $ 15,116 10.5 % $ 143,476 8.6 %



Comparison of Three and Nine Months Ended May 31, 2014 and 2013

Warehouse club operations expense as a percent of net warehouse sales in the third quarter of fiscal year 2014 increased eight basis points. The additional costs associated with the new warehouse clubs in Costa Rica (Tres Rios) and Honduras (El Sauce), which were not included in the third quarter of last year and contributed a higher level of operating expense compared to the incremental sales generated by these new warehouse clubs, outweighed the positive operating expense leverage recorded across the rest of the Company. For the nine month period, the incremental expense associated with the new warehouse clubs resulted in operating expenses remaining flat as a percent of sales at 8.6%. 45 --------------------------------------------------------------------------------



General and Administrative Expenses

Three Months Ended May 31, 2014 2013 % to warehouse Increase from % to warehouse Amount club sales prior year % Change Amount club sales General and administrative expenses $ 12,604 2.1 % $ 1,200 10.5 % $ 11,404 2.1 % Nine Months Ended May 31, 2014 2013 % to warehouse Increase from % to warehouse Amount club sales prior year % Change Amount club sales General and administrative expenses $ 37,065 2.0 % $ 2,615



7.6 % $ 34,450 2.1 %

Comparison of Three and Nine Months Ended May 31, 2014 and 2013

The expenses associated with the Company's corporate and U.S. buying operations grew 10.5% in the third quarter, primarily resulting from increased headcount within the Company's IT and U.S. buying departments required to support the growth of the Company. General and administrative expenses as a percentage of warehouse club sales remained flat at 2.1%. For the nine month period ending May 31, 2014 these expenses grew 7.6%.



Pre-Opening Expenses

Expenses incurred before a warehouse club is in operation are captured in pre-opening expenses. Three Months Ended May 31, 2014 2013 Increase/ (decrease) from Amount prior year % Change Amount Pre-opening expenses $ 1,125 $ 600 114.3 % $ 525 Nine Months Ended May 31, 2014 2013 Increase/ (decrease) from Amount prior year % Change Amount Pre-opening expenses $ 1,939 $ 530 37.6 % $ 1,409



Comparison of Three and Nine Months Ended May 31, 2014 and 2013

The Company recorded pre-opening expenses during the third quarter of fiscal year 2014 primarily related to the property lease for the new club planned for Bogota, Colombia ("Salitre"). The Company will continue to record the monthly lease expense for this land in pre-opening expenses while the warehouse club is under construction. Upon opening, these expenses will be recognized in warehouse club operations expense. The remaining amount of pre-opening expenses in the quarter related to the Tegucigalpa, Honduras ("El Sauce") warehouse club that opened in May 2014. For the same period in the prior year, the Company recorded pre-opening expenses for costs incurred for the north Cali, Colombia ("Menga") warehouse club which opened in May 2013.



For the nine months ended May 31, 2014, the Company recorded pre-opening expenses related to the La Union, Cartago, Costa Rica ("Tres Rios") warehouse club which opened in October 2013, the Tegucigalpa, Honduras ("El Sauce") warehouse club

46 -------------------------------------------------------------------------------- which opened in May 2014 and the land lease for the Bogota, Colombia warehouse club. For the same period in the prior year, the Company recorded pre-opening expenses related to the opening of the south Cali, Colombia ("Canas Gordas") warehouse club which opened in October 2012 and the north Cali, Colombia ("Menga") warehouse club which opened in May 2013.



Loss/(Gain) on Disposal of Assets

Asset disposal activity consisted mainly of normally scheduled asset replacement and upgrades. Three Months Ended May 31, 2014 2013 Increase/ (decrease) from prior Amount year % Change Amount Loss/(gain) on disposal of assets $ 558$ 309 124.1 % $ 249 Nine Months Ended May 31, 2014 2013 Increase/ (decrease) from prior Amount year % Change Amount Loss/(gain) on disposal of assets $ 746$ 393 111.3 % $ 353 Operating Income Three Months Ended May 31, 2014 2013 % to warehouse Increase/(decrease) from % to warehouse Amount club sales prior year % Change Amount club sales Operating income $ 31,203 5.2 % $ 2,714 9.5 % $ 28,489 5.1 % Nine Months Ended May 31, 2014 2013 % to warehouse Increase/(decrease) from % to warehouse Amount club sales prior year % Change Amount club sales Operating income $ 102,937 5.6 % $ 8,331 8.8 % $ 94,606 5.7 %



Comparison of Three and Nine Months Ended May 31, 2014 and 2013

For the three months ended May 31, 2014, operating income improved $2.7 million compared to the prior year period, primarily due to higher sales and related merchandise margins and higher membership income. As a percentage of sales, operating income increased nine basis points, primarily resulting from higher merchandise margins. For the nine months ended May 31, 2014, operating income improved $8.3 million compared to the prior year period. As a percentage of sales, operating income was 5.6% compared to 5.7% a year ago. 47 --------------------------------------------------------------------------------

Interest Expense Three Months Ended May 31, 2014 2013 Increase/(decrease) from Amount prior year Amount Interest expense on loans $ 1,090 $ 137 $ 953 Interest expense related to hedging activity 405 (77 ) 482 Capitalized interest (452 ) 556 (1,008 ) Net interest expense $ 1,043 $ 616 $ 427 Nine Months Ended May 31, 2014 2013 Increase/(decrease) from Amount prior year Amount Interest expense on loans $ 2,743 $ (156 ) $ 2,899 Interest expense related to hedging activity 1,169 (172 ) 1,341 Capitalized interest (945 ) 344 (1,289 ) Net interest expense $ 2,967 $ 16 $ 2,951



Comparison of Three and Nine Months Ended May 31, 2014 and 2013

Interest expense reflects borrowings by the Company's wholly owned foreign subsidiaries to finance new warehouse club construction and land acquisition, the capital requirements of warehouse club operations, and ongoing working capital requirements.

The increase for the three months ended May, 31, 2014 was primarily due to an increase in the amounts of long-term loans outstanding during the period and a smaller portion of interest expense being capitalized in connection with the construction of warehouse clubs in Colombia. For the nine months ended May 31, 2014, the interest expense remained flat from a year ago, with lower interest expense on loans and lower interest expense related to hedging activity being offset by a lower level of offset for capitalized interest compared with the same period in the prior year. Additionally, there was a slight decrease in net interest expense incurred related to third-party loans due to lower interest rates. Other Income (Expense), net



Other income consists of currency gain or loss.

Three Months Ended May 31, 2014 2013 Amount Increase from prior year Amount Other income (expense), net $ 489 $ 1,274 $ (785 ) Nine Months Ended May 31, 2014 2013 Amount Increase from prior year Amount Other income (expense), net $ 1,512 $ 2,563 $ (1,051 ) 48

--------------------------------------------------------------------------------



Comparison of Three and Nine Months Ended May 31, 2014 and 2013

For the third quarter of fiscal year 2014, the Company recorded a net currency gain of $489,000 resulting from the revaluation of non-functional currency monetary assets and liabilities of the Company's various subsidiaries and offset by the cost associated with non-deliverable forwards in Colombia to manage currency risk. The gain in the current period primarily related to the net U.S. dollar asset position held by the Company's Costa Rican subsidiary at a time when the colon devalued thereby resulting in a revaluation gain. In the year ago period, the Company incurred a $785,000 loss.



Provision for Income Taxes

Three Months Ended May 31, 2014 2013 Amount Change from prior year Amount Current tax expense $ 9,457 $ 1,028 $ 8,429 Net deferred tax provision (benefit) 77 (576 ) 653 Provision for income taxes $ 9,534 $ 452 $ 9,082 Effective tax rate 30.9 % 32.9 % Nine Months Ended May 31, 2014 2013 Amount Change from prior year Amount Current tax expense $ 31,595 5,097 $ 26,498 Net deferred tax provision (benefit) (560 ) (2,316 ) 1,756 Provision for income taxes $ 31,035 $ 2,781 $ 28,254 Effective tax rate 30.4 % 30.8 %



Comparison of Three and Nine Months Ended May 31, 2014 and 2013

The variance in the effective tax rate for the three-month period ended on May 31, 2014 compared to the same period of the prior year was primarily attributable to a 2.8% favorable impact resulting from a greater proportion of income falling into low tax jurisdictions and a favorable impact of 1.8% resulting from the reduction in valuation allowance against net deferred tax assets of the Company's Colombia subsidiary offset by 1.7% due to permanent adjustments relating to the tax effect of foreign currency exchange gains/losses. The variance in the effective tax rate for the first nine months of the period ended on May 31, 2014 compared to the same period of the prior year was primarily attributable to the favorable impact of 1.1% resulting from a greater proportion of income falling into low tax jurisdictions, the favorable impact of 1.1% resulting from the reduction in valuation allowance against net deferred tax assets of the Company's Colombia subsidiary, and the offsetting impact of 0.9% due to permanent adjustments relating to the tax effect of foreign currency exchange gains/losses. 49

--------------------------------------------------------------------------------

Net Income Three Months Ended May 31, 2014 2013 Amount Increase/(decrease) from prior year % Change Amount Net income $ 21,320 $ 2,781 15.0 % $ 18,539 Nine Months Ended May 31, 2014 2013 Amount Increase/(decrease) from prior year % Change Amount Net income $ 71,030 $ 7,604 12.0 % $ 63,426



Other Comprehensive Income (Loss)

Three Months Ended May 31, 2014 2014 2013 Increase/(decrease) from Amount prior year % Change Amount Other comprehensive income (loss) $ 2,591 $ 2,443 1,650.7 % $ 148 Nine Months Ended May 31, 2014 2013 Increase/(decrease) from Amount prior year % Change Amount Other comprehensive income (loss) $ (8,848 ) $ (5,374 ) 154.7 % $ (3,474 )



Comparison of Three and Nine Months Ended May 31, 2014 and 2013

Other comprehensive income/loss for the three and nine month periods ended May 31, 2014 resulted primarily from foreign currency translation adjustments related to the assets, liabilities, revenue, costs and expenses of the Company's subsidiaries and the recording of the unrealized gains (losses) on change in fair value of interest rate swaps. When the functional currency in the Company's international subsidiaries is the local currency and not U.S. dollars, the assets and liabilities of such 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 not affect net income until the sale or liquidation of the underlying investment. The reported other comprehensive income or loss reflects the unrealized increase or decrease in the value in U.S. dollars of the net assets of the subsidiaries as of the date of the balance sheet, which will vary from period to period as exchange rates fluctuate. For the three months ended May 31, 2014 the Company recorded approximately $3.9 million in other comprehensive income due to foreign currency translations and other comprehensive losses related to the change in fair value of interest rate swaps for approximately $1.3 million, net of tax. For the nine months ended May 31, 2014, the Company recorded approximately $8.4 million in other comprehensive losses due to foreign currency translations and other comprehensive losses related to the change in fair value of interest rate swaps for approximately $421,000, net of tax. 50

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LIQUIDITY AND CAPITAL RESOURCES

Financial Position and Cash Flow

The Company requires cash to fund its operating expenses and working capital requirements, including the investment in merchandise inventories, acquisition of land and construction of new warehouse clubs, expansion of existing warehouse clubs and distribution centers, acquisitions of fixtures and equipment, routine upgrades and maintenance of fixtures and equipment within existing warehouse clubs, investments in joint ventures in Panama and Costa Rica to own and operate commercial retail centers located adjacent to the new warehouse clubs, the purchase of treasury stock upon the vesting of restricted stock awards and payment of dividends to stockholders. The Company's primary sources for funding these requirements are cash and cash equivalents on hand and cash generated from operations. The Company evaluates on a regular basis whether it may need to borrow additional funds to cover any shortfall in the Company's ability to generate sufficient cash from operations to meet its operating and capital requirements. As such, the Company may enter into or obtain additional loans and/or credit facilities to provide additional liquidity when necessary. The following table summarizes the cash and cash equivalents held by foreign subsidiaries and domestically by the Company (in thousands). Repatriation of cash and cash equivalents held by foreign subsidiaries may require the Company to accrue and pay taxes. The Company has no plans at this time to repatriate cash through the payment of cash dividends by the foreign subsidiaries to the Company and, therefore, has not accrued taxes that would be due from repatriation. May 31, 2014 August 31, 2013 Cash and cash equivalents held by foreign subsidiaries $ 93,401 $ 75,108 Cash and cash equivalents held domestically 30,358



46,766

Total cash and cash equivalents $ 123,759



$ 121,874

The Company's cash flows are summarized as follows (in thousands):

Nine Months



Ended

May 31, 2014 May 31, 2013 Net cash provided by (used in) continuing operating activities $ 76,193 $



66,936

Net cash provided by (used in) investing activities (84,296 ) (52,863 ) Net cash provided by (used in) financing activities 14,764 (10,792 ) Effect of exchange rates (4,776 ) (2,121 ) Net increase (decrease) in cash and cash equivalents $ 1,885 $ 1,160 51

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The Company's net cash provided by (used in) operating activities for the nine months ended May 31, 2014 and 2013 is summarized below:

Increase/ Nine Months Ended (Decrease) May 31, 2014 May 31, 2013 2014 to 2013 Net income $ 71,030$ 63,426$ 7,604 Adjustments to reconcile net income to net cash provided from (used in) operating activities: Depreciation and amortization 20,932 17,943 2,989 (Gain) loss on sale of property and equipment 746 356 390 Deferred income taxes 1,869 2,143 (274 ) Stock-based compensation expenses 3,397 3,583 (186 ) Other non-cash operating activities (1 ) 6 (7 ) Net non-cash related expenses 26,943 24,031 2,912 Net income from operating activities reconciled for non-cash operating activities 97,973 87,457 10,516 Changes in operating assets and liabilities not including merchandise inventories and accounts payable (11,246 ) 667 (11,913 ) Changes in merchandise inventories (13,280 ) (19,880 ) 6,600 Changes in accounts payable 2,746 (1,308 ) 4,054 Net cash provided by (used in) operating activities $ 76,193$ 66,936$ 9,257 Net cash provided by operating activities for the period was a result of cash generated from operating activities and the addition of cash for reconciled non-cash activities. The cash generated was offset by cash utilized to support higher merchandise inventory levels required to generate planned sales growth and the addition of two new warehouse clubs. The Company also used cash for increases in operating assets and liabilities related to increases in prepaid freight expenses, increases in local income tax prepayments and prepayments on value added taxes that are related to the increases in inventory. The use of cash associated with increases in inventory normally is partially offset by increases in accounts payable related to such inventory acquisitions. However, in the current operating period the Company increased its inventory level to support an added warehouse and higher sales volumes, resulting in an increase in the use of cash associated with the changes in inventory and accounts payable. Net income adjusted for non-cash related activities increased $10.5 million in the current nine-month period over the same period in fiscal year 2013 primarily as a result of higher sales, gross profits and membership income growth. This $10.5 million increase was offset by $1.3 million of additional cash used in the current period for changes in inventory, operating assets, liabilities and accounts payable.



The Company's use of cash in investing activities for the nine months ended May 31, 2014 and 2013 is summarized below:

Increase/ Nine Months Ended (Decrease) May 31, 2014 May 31, 2013 2014 to 2013 Cash used for additions of property and equipment: Land acquisitions $ 21,243$ 11,412$ 9,831 Deposits for land purchase option agreements 850 - 850 Warehouse club expansion, construction, and land improvements 33,349 25,671 7,678 Acquisition of fixtures and equipment 28,182 15,300 12,882 Proceeds from disposals of property and equipment (78 ) (70 ) (8 ) Capital contribution to joint ventures 750 550 200 Net cash flows used by (provided in) investing activities $ 84,296$ 52,863$ 31,433 52

-------------------------------------------------------------------------------- Net cash used in investing activities increased in the first nine months of fiscal year 2014 compared to the first nine months of fiscal year 2013 by approximately $31.4 million primarily due to an increase in cash expended for the construction and completion of a warehouse club in La Union, Cartago, Costa Rica ("Tres Rios"), the construction and completion of a warehouse club in Tegucigalpa, Honduras ("El Sauce"), the purchase of land and the ongoing construction of warehouse clubs on the land in the southern area of Pereira, Colombia and in the city of Medellin, Colombia, the ongoing construction of a warehouse club in the city of Bogota, Colombia on land the Company has leased in Bogota, Colombia and the addition of fixtures and equipment for these warehouse clubs. Cash used in investing activities for the first nine months of fiscal year 2013 consisted primarily of expenditures for the construction of the two warehouse clubs in Cali, Colombia, the continued acquisition of fixtures and equipment for the two warehouse clubs in Cali, Colombia, the purchase of land for the purpose of building and operating warehouse clubs in Costa Rica and Honduras, the start up of construction of the warehouse club in Costa Rica, the addition of fixtures and equipment for existing warehouse clubs, and capital contributions by the Company for the joint ventures during the first nine months of fiscal year 2013. The Company incurs approximately $30.0 million in normal annual capital expenditures for on-going replacement of equipment and building and leasehold improvements. Additionally, the Company has either commitments or plans for capital spending for previously announced new warehouse club construction of approximately $32.5 million. Future additional capital expenditures will be dependent on the timing of future land purchases and/or warehouse club construction activity. The Company has entered into land purchase option agreements that have not been recorded as commitments, for which the Company has recorded within the balance sheet approximately $1.3 million in restricted cash deposits and prepaid expenses. The land purchase option agreements can be canceled at the sole option of the Company. The Company does not have a time table of when or if it will exercise these land purchase options, due to the uncertainty related to the completion of the Company's due diligence review. The Company's due diligence review includes evaluations of the legal status of the property, the zoning and permitting issues related to acquiring approval for the construction and operation of a warehouse club and any other issues related to the property itself that could render the property unsuitable or limit the property's economic viability as a warehouse club site. If the purchase option agreements are all exercised, the cash use would be approximately $31.0 million. Net cash used by financing activities for the nine months ended May 31, 2014 and 2013 is summarized below: Increase/ Nine Months Ended (Decrease) May 31, 2014 May 31, 2013 2014 to 2013 New bank loans offset by establishment of certificates of deposit held against loans and payments on existing bank loans (loan activities) $ 28,344 $ 163 $ 28,181 Cash dividend payments (10,570 ) (9,065 ) (1,505 ) Proceeds from exercise of stock options and the tax benefit related to stock options 1,591 1,396 195 Purchase of treasury stock related to vesting of restricted stock (4,601 ) (3,286 ) (1,315 ) Net cash provided by (used in) financing activities $ 14,764$ (10,792 )$ 25,556 Net cash provided by loan activities increased approximately $28.2 million in the first nine months of fiscal year 2014 over the same period in fiscal year 2013 as the Company received cash from two additional loans entered into by the Company's Panama subsidiary and Honduras subsidiary for approximately $24.0 million and $13.7 million, respectively. The Company also received additional cash from financing activities when compared to the same nine-month period in the prior year from the release of restricted cash related to loans of approximately $6.0 million. These amounts were offset by repayments of long-term loans of approximately $8.1 million under the loan agreement entered into by the Company's Colombia subsidiary on November 1, 2010 with Citibank, N.A. in New York and a long-term loan of approximately $3.5 million under the loan agreement entered into by the Company's Panama subsidiary on September 11, 2010, with MetroBank,S.A. In addition, the nine month year on year comparison of cash provided by financing activities takes into account the Company recording in fiscal year 2013 loans entered into by its Barbados subsidiary for approximately $3.9 million pursuant to a loan agreement with Citi Corp Merchant Bank Limited. 53

-------------------------------------------------------------------------------- Net cash provided by financing activities from loan activities in the first nine months of fiscal year 2013 reflects the Company's Barbados subsidiary entering into a loan agreement with Citicorp Merchant Bank Limited. The agreement established a credit facility for BB$8.0 million (Eight Million Barbados Dollars), approximately U.S. $3.9 million. The release of restricted cash for approximately $2.0 million associated with prior loans in Honduras also contributed to net cash provided by financing activities. These increases in cash were offset by cash used for regularly scheduled payments on loans during the period for approximately $5.8 million and increased restricted cash for approximately $3.1 million related to the purchase of property in Honduras.



The following table summarizes the dividends declared and paid during fiscal year 2014 and 2013.

First Payment Second Payment



Declared Amount Record Date Date Paid Date Payable Amount

Record Date Date Paid Date Payable Amount

1/23/14 $ 0.70 2/14/14 2/28/14 N/A $ 0.35 8/15/14 N/A 8/29/14 $ 0.35 11/27/12 $ 0.60 12/10/12 12/21/12 N/A $ 0.30 8/15/13 8/30/13 N/A $ 0.30 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.



Financing Activities

On March 31, 2014, the Company's Panama subsidiary entered into a loan agreement with The Bank of Nova Scotia. The agreement establishes a credit facility of $34.0 million at a variable interest rate of 30-day LIBOR plus 3.5% for a five year term, monthly principal and interest payments, and a $17.0 million principal payment due at maturity. The facility provides a five year renewal option upon approval of the Bank of Nova Scotia. The loan is secured by assets of the Company's Panama subsidiary. The purpose of the loan is to repay borrowings due to MetroBank, S.A. of $3.2 million and to fund the Company's warehouse club expansion plans. During April 2014, the Company drew down $24.0 million of the $34.0 million facility and repaid the borrowings due to MetroBank, S.A. of $3.2 million. On March 31, 2014, the Company's Panama subsidiary entered into a loan renewal agreement with The Bank of Nova Scotia renewing for an additional five years a 5.5% fixed rate loan originally entered into on August 21, 2009. The balance on the loan as of May 31, 2014 is $5.25 million and on August 21, 2014 will be $5.0 million. The renewal agreement will become effective on August 21, 2014. The renewal agreement establishes a credit facility of $5.0 million at a variable interest rate of 30-day LIBOR plus 2.5% with a floor of 5.5%, for a five year term, with monthly principal and interest payments. The facility provides a five year renewal option upon approval of the Bank of Nova Scotia. On March 7, 2014 the Company's Honduras subsidiary entered into a loan agreement with Banco de America Central Honduras, S.A. The agreement establishes a credit facility for 286.0 million Lempiras, approximately USD $13.8 million. The loan has a variable interest rate of 12.75%, which will be reviewed semiannually. The interest rate may not be less than 12.5%. The loan is for 10 years with a 24-month grace period on principal payments, paying interest quarterly only. Thereafter, interest and principal payments are due quarterly. This loan is secured by assets of the Company's Honduras subsidiary. On March 10, 2014, the Company drew down the full amount of the LPS 286.0 million loan. On November 3, 2013, the Company paid down $8.0 million of the loan agreement entered into by the Company's Colombia subsidiary on November 1, 2010 with Citibank, N.A. in New York. The original agreement established a loan facility for $16.0 million to be disbursed in two tranches of $8.0 million each, but the Company had never borrowed the second tranche. The interest rate was set at the six-month LIBOR rate plus 2.4%. The loan term was for five years with interest only payments and a balloon payment at maturity. The loan facility was renewable for an additional five-year period at the option of the Company's Colombia subsidiary, but if the Company did not draw on the facility or paid off the loan, the facility would terminate. The Company has paid down this loan, and this loan facility has terminated. This loan was secured by a time deposit pledged by the Company equal to the amount outstanding on the loan. The secured time deposit of $8.0 million pledged by the Company was released on November 3, 2013. 54 --------------------------------------------------------------------------------



Derivatives

The Company is exposed to certain risks relating to its ongoing business operations. One risk managed by the Company using derivative instruments is interest rate risk. 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 interest payments associated with variable-rate LIBOR 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 a non-functional currency long-term debt of one of its wholly owned subsidiaries. To manage this foreign currency and interest rate cash flow exposure, this subsidiary enters into cross-currency interest rate swaps that convert its 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. The Company is also exposed to foreign-currency exchange-rate fluctuations on U.S. dollar denominated liabilities within its international subsidiaries whose functional currency is other than the U.S. dollar. The Company manages these fluctuations, in part, through the use of non-deliverable forward foreign-exchange contracts that are intended to offset changes in cash flow attributable to currency exchange movements. 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. 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. Currently, these contracts do not contain any credit-risk-related contingent features. These contracts do not qualify for derivative hedge accounting. The forward currency hedges are not effective cash flow hedges because the notional amount and maturity date of the forward contract does not coincide with the accounts payable balance and due dates. The hedge ineffectiveness is measured by use of the "hypothetical derivative method," and the Company records the changes in the fair value of the forward contract related to the re-measurement of the payable at spot exchange rates as exchange rate gains or losses. The implied interest rate included within the forward contract is reflected in earnings as interest expense. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction is determined to be ineffective. There were no such amounts for the periods reported herein. 55 -------------------------------------------------------------------------------- The following table summarizes agreements for which the Company has recorded cash flow hedge accounting transactions during the nine months ended May 31, 2014: Initial Date Derivative Derivative US Notional Bank US$ Floating Leg Effective Entered Financial Financial Amount (in loan Held (swap Fixed Rate for Settlement Period of Subsidiary into Counter-party Instruments thousands) with counter-party) PSMT Subsidiary Dates swap 4th day of Bank of Nova Bank of Variable rate each month May 5, 2014 Scotia Interest Nova 30-day Libor beginning on - April 4, Panama 22-May-14 ("Scotiabank") rate swap 19,800,000 Scotia plus 3.5% 4.98 % June 4, 2014. 2019 4th day of Bank of Nova Bank of Variable rate each month May 5, 2014 Scotia Interest Nova 30-day Libor beginning on - April 4, Panama 22-May-14 ("Scotiabank") rate swap 3,970,000 Scotia plus 3.5% 4.98 % June 4, 2014 2019 March, June, Cross September and December 5, Bank of Nova currency Bank of Variable rate December, 2012 - Scotia interest Nova 3-month Libor beginning on December 5, Colombia 11-Dec-12 ("Scotiabank") rate swap 8,000,000 Scotia plus 0.7% 4.79 % March 5, 2013 2014 February, Cross May, August February Bank of Nova currency Bank of Variable rate and November 21, 2012 - Scotia interest Nova 3-month Libor beginning on February Colombia 21-Feb-12 ("Scotiabank") rate swap 8,000,000 Scotia plus 0.6% 6.02 % May 22, 2012 21, 2017 Variable rate Cross 6-month May 3, 2012 November 3, Bank of Nova currency Eurodollar and 2011 - Scotia interest Citibank, Libor plus semi-annually November 3, Colombia 17-Nov-11 ("Scotiabank") rate swap 8,000,000 N.A. 2.4% 5.85 % thereafter 2013 January, April, July Cross and October, July 29, Bank of Nova currency Bank of Variable rate beginning on 2011 - Scotia interest Nova 3-month Libor October 29, April 1, Colombia 21-Oct-11 ("Scotiabank") rate swap 2,000,000 Scotia plus 0.7% 5.30 % 2011 2016 March, June, September and Cross December, September Bank of Nova currency Bank of Variable rate beginning on 29, 2011 - Scotia interest Nova 3-month Libor December 29, April 1, Colombia 21-Oct-11 ("Scotiabank") rate swap 6,000,000 Scotia plus 0.7% 5.45 % 2011 2016 January, Cross April, July April 1, Bank of Nova currency Bank of Variable rate and October, 2011 - Scotia interest Nova 3-month Libor beginning on April 1, Colombia 5-May-11 ("Scotiabank") rate swap 8,000,000 Scotia plus 0.7% 6.09 % July 5, 2011 2016 Royal September Royal Bank of Bank of Variable rate 25, 2008 - Trinidad & Interest Trinidad 1-year Libor Annually on September Trinidad 20-Nov-08 Tobago rate swaps 8,900,000 & Tobago plus 2.75% 7.05 % August 26 26, 2013 56

-------------------------------------------------------------------------------- The Company measures the fair value for all financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis or on a nonrecurring basis during the reporting period. The Company has designated the interest rate swaps and cross-currency interest rate swap agreements as hedging instruments and has accounted for them under hedge accounting rules. The following table summarizes the fair value of interest rate swaps and cross-currency interest rate swaps that qualify for derivative hedge accounting (in thousands, except footnote data): Derivative designated as cash flow May 31, 2014 August 31, 2013 hedging instruments Balance Sheet Account Fair Value Balance Sheet Account Fair Value

Cross currency interest Prepaid expenses Prepaid expenses and rate swaps(1)(2) and current assets $ 378 current assets $ - Cross currency interest Other non-current Other non-current rate swaps(1)(2) assets 729 assets 1,505 Other long-term Other Interest rate swaps(3) liabilities (28 ) long-term liabilities (14 ) Cross currency interest Other long-term Other



long-term

rate swaps(1)(4) liabilities (76 ) liabilities - Net fair value of derivatives designated as hedging instruments - assets (liability)(4) $ 1,003$ 1,491



(1) The effective portion of the cross-currency interest rate swaps was recorded

to Accumulated other comprehensive (income)/ loss for $(596,000) and $(1.0)

million as of May 31, 2014 and August 31, 2013, respectively.

(2) The Company has recorded a deferred tax liability amount with an offset to

other comprehensive income - tax of $(435,000) and $(497,000) as of May 31,

2014 and August 31, 2013, respectively, related to asset positions of

cross-currency interest rate swaps.

(3) The effective portion of the interest rate swaps was recorded to Accumulated

other comprehensive loss for $19,000 and $10,000 net of tax as of May 31,

2014 and August 31, 2013, respectively. The Company has recorded a deferred

tax asset amount with an offset to other comprehensive income - tax of

$9,000 and $4,000 as of May 31, 2014 and August 31, 2013, respectively.

There were no interest rate swaps outstanding as of May 31, 2014.

(4) Derivatives listed on the above table were designated as cash flow hedging

instruments.



The Company enters from time to time into non-deliverable forward exchange contracts; as of May 31, 2014 and August 31, 2013 no open amounts for non-deliverable forward foreign exchange contracts were recorded.

57 --------------------------------------------------------------------------------



Short-Term Borrowings and Long-Term Debt

Short-term borrowings consist of lines of credit which are secured by certain assets of the Company and its subsidiaries and are guaranteed by the Company as summarized below (in thousands): Total Facilities Used Weighted Amount of Short-term Facilities average Facilities Borrowings Letters of Credit Available interest rate May 31, 2014 $ 35,895 $ - $ 398 $ 35,497 N/A August 31, 2013 $ 35,863 $ - $ 588 $ 35,275 N/A As of May 31, 2014, the Company had approximately $25.0 million of short-term facilities in the U.S. that require the Company to comply with certain quarterly financial covenants, which include debt service and leverage ratios. As of May 31, 2014 and August 31, 2013, the Company was in compliance with respect to these covenants. As of May 31, 2014 and August 31, 2013, the Company, together with its wholly owned subsidiaries, had $94.1 million and $73.0 million, respectively, outstanding in long-term borrowings. The increase during the fiscal year primarily relates to two additional loans entered into by the Company's Panama subsidiary and Honduras subsidiary for approximately $24.0 million and $13.7 million, respectively, offset by the repayment of a long-term loan of approximately $8.1 million under the loan agreement entered into by the Company's Colombia subsidiary on November 1, 2010 with Citibank, N.A. in New York, the repayment of a long-term loan of approximately $3.2 million under the loan agreement entered into by the Company's Panama subsidiary on September 11, 2010 with MetroBank,S.A. and regularly scheduled loan payments during the period of approximately $6.1 million. Translation adjustments also decreased long-term debt, primarily due to the translation of foreign-currency-denominated debt of subsidiaries whose functional currency is not the U.S. dollar for approximately $730,000. These foreign currency translation adjustments are recorded within Other comprehensive income. The carrying amount of the non-cash assets assigned as collateral for long-term debt was $86.6 million and $55.2 million as of May 31, 2014 and August 31, 2013, respectively. The carrying amount of the cash assets assigned as collateral for long-term debt was $24.9 million and $33.8 million as of May 31, 2014 and August 31, 2013, respectively. As of May 31, 2014 and August 31, 2013, the Company had approximately $68.8 million and $55.9 million, respectively, of long-term loans in Trinidad, Barbados, Panama, El Salvador, Honduras and Colombia that require these subsidiaries to comply with certain annual or quarterly financial covenants, which include debt service and leverage ratios. During the fourth quarter, the Company determined that its Barbados subsidiary was not in compliance with a financial covenant that is measured and reported on an annual basis at the end of the Company's fiscal year. The Company obtained a written waiver from the bank on the annual measurement and reporting for this covenant with respect to any non-compliance for fiscal year 2013 and is in the process of amending the financial covenants within the underlying contract for the long-term loans in the Barbados subsidiary. As of May 31, 2014 and August 31, 2013, the Company was in compliance with all covenants or had received a written waiver from the bank with respect to any non-compliance.



Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have had, or are reasonably likely to have, a material current or future effect on its financial condition or consolidated financial statements.

Repurchase of Equity Securities and Reissuance of Treasury Shares At the vesting dates of restricted stock awards, the Company repurchases shares from the holders of such awards at the prior day's closing price per share, with the funds used to pay the employees' minimum statutory tax withholding requirements. The Company expects to continue this practice going forward. Nine Months Ended May 31, 2014 May 31, 2013 Shares repurchased 48,808 42,434



Cost of repurchase of shares (in thousands) $ 4,601$ 3,286

58 -------------------------------------------------------------------------------- The Company has reissued treasury shares as part of its stock-based compensation programs. However, as summarized below, no treasury shares were reissued during the periods presented: Nine Months Ended May 31, 2014 May 31, 2013 Reissued treasury shares - -



Critical Accounting Estimates

The preparation of the Company's consolidated financial statements requires that management make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Some of the Company's accounting policies require management to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Management continues to review its accounting policies and evaluate its estimates, including those related to contingencies and litigation, taxes and long-lived assets. The Company bases its estimates on historical experience and on other assumptions that management believes to be reasonable under the present circumstances. Using different estimates could have a material impact on the Company's financial condition and results of operations. Contingencies and Litigation: In the ordinary course of business, the Company is periodically named as a defendant in various lawsuits, claims and pending actions and is exposed to tax risks (other than income tax). The principal risks that the Company insures against are workers' compensation, general liability, vehicle liability, property damage, employment practices, errors and omissions, fiduciary liability and fidelity losses. If a potential loss arising from these lawsuits, claims, actions and non-income tax issues is probable and reasonably estimable, the Company records the estimated liability based on circumstances and assumptions existing at the time. The estimates affecting the Company's litigation reserves can be affected by new claims filed after the balance sheet date with respect to events occurring prior to the balance sheet date and developments in pending litigation that may affect the outcome of the litigation. While the Company believes the recorded liabilities are adequate, there are inherent limitations in projecting the outcome of litigation 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. Income Taxes: The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carry-forwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized. As of May 31, 2014, the Company evaluated its deferred tax assets and liabilities and determined that a valuation allowance is necessary for certain foreign deferred tax asset balances, primarily because of the existence of significant negative objective evidence, such as the fact that certain subsidiaries are in a cumulative loss position for the past three years, indicating that certain net operating loss carry-forward periods are not sufficient to realize the related deferred tax assets. The Company had U.S. federal and state tax net operating loss carry-forwards, or NOLs, at May 31, 2014 of approximately $15.3 million and $7.9 million, respectively. In calculating the tax provision, and assessing the likelihood that the Company will be able to utilize the federal deferred tax assets, the Company considered and weighed all of the evidence, both positive and negative, and both objective and subjective. The Company factored into its analysis the inherent risk of forecasting revenue and expenses over an extended period of time and also considered the potential risks associated with its business. Because of the Company's U.S. income from continuing operations and based on projections of future taxable income in the United States, the Company was able to determine that there was sufficient positive evidence to support the conclusion that it was more likely than not that the Company would be able to realize all of its U.S. federal NOLs by generating sufficient taxable income during the carry-forward period. However, if the Company does not achieve its projections of future taxable income in the United States, the Company could be required to take a charge to earnings related to the recoverability of these deferred tax assets. Due to the deemed change of ownership (as defined in Section 382 of the Internal Revenue Code) in October 2004, there are annual limitations in the amount of U.S. taxable income that may be offset by NOLs. The NOLs generated prior to the deemed ownership change date are limited on an annual basis. The Company made a single sales factor election on its California tax returns for fiscal year 2012 59 -------------------------------------------------------------------------------- and 2013, after which time application is mandatory. Application of the single sales factor significantly reduced the California apportionment factor and, therefore, California taxable income. As a result, the Company maintains a valuation allowance on substantially all of its California NOLs. The Company had net foreign deferred tax assets of $9.6 million and $9.8 million as of May 31, 2014 and August 31, 2013, respectively. The Company and its subsidiaries are required to file federal and state income 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 federal, state and foreign taxing authorities in the jurisdictions in which the Company or one of its subsidiaries file tax returns. As part of these reviews, a taxing authority may disagree with respect to the income tax positions taken by the Company ("uncertain tax positions") and, therefore, require the Company or one of its subsidiaries 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. This requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. When facts and circumstances change, the Company reassesses these probabilities and records any changes in the consolidated financial statements as appropriate. There were no material changes in the Company's uncertain income tax positions for the periods ended on May 31, 2014 and August 31, 2013. However, during the nine-months ended May 31, 2014, the Company was required to make a payment to the government in one country with respect to an income tax case that it is currently appealing, but the Company believes it will eventually prevail. The total amount remitted to the government on this case as of this date is $2.6 million. This amount has been recorded in the balance sheet as Other non-current assets, as the Company considers this a payment on account and expects to get a refund thereof upon eventually prevailing on this case. The Company has not provided for U.S. deferred taxes on cumulative non-U.S. undistributed earnings as such earnings are deemed by the Company to be indefinitely reinvested. It is not practicable to determine the U.S. federal income tax liability that would be associated with such earnings because of the complexity of the computation. Value-Added Tax Receivable: The Company pays Value Added Tax ("VAT") or similar taxes ("input VAT") within normal the course of its business in most of the countries it operates in on merchandise and/or services it acquires. The Company also collects VAT or similar taxes on behalf of the government ("output taxes") 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. The Company either requests a refund of this VAT receivable or applies the balance to expected future VAT payables. In some 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. These procedures alter the natural offset of input and output VAT and generally leaves the Company with a net VAT receivable, forcing the Company to process significant refund claims on a recurring basis. These refund processes can take anywhere from several months to several years to complete. In most countries where the Company operates, the VAT refund process is defined and structured with regular refunds or offsets. However, in one country the government has alleged that there is no defined process in the law to allow them to refund this VAT receivable. The Company together with its tax and legal advisers is currently appealing this interpretation in court and based on recent favorable jurisprudence on this matter, expects to prevail. Additionally, the government has recently began an audit to verify the amount of this receivable as a required precursor to any refund. Therefore, the Company has not placed an allowance on the recoverability of this VAT receivable. The balance of the VAT receivable in this country was $4.9 million and $4.3 million as of May 31, 2014 and August 31, 2013, respectively.



The Company's policy for classification and presentation of VAT receivables is as follows:

•Short-term VAT 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 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 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 or countries which are subject to outstanding disputes. 60

--------------------------------------------------------------------------------



Long-lived Assets: The Company periodically evaluates its long-lived assets for indicators of impairment. Indicators that an asset may be impaired are:

• the asset's inability to continue to generate income from operations

and positive cash flow in future periods;

• loss of legal ownership or title to the asset;

• significant changes in its strategic business objectives and utilization of the asset(s); and



• the impact of significant negative industry or economic trends.

Management's judgments are based on market and operational conditions at the time of the evaluation and can include management's best estimate of future business activity, which in turn drives estimates of future cash flows from these assets. These periodic evaluations could cause management to conclude that impairment factors exist, requiring an adjustment of these assets to their then-current fair market value. Future business conditions and/or activity could differ materially from the projections made by management causing the need for additional impairment charges. No impairment charges have been recorded during fiscal year 2014.



Recent Accounting Pronouncements

FASB ASC 606 ASU 2014-09 - Revenue from contracts with customers.

In May 2014, the FASB issued amended guidance on contracts with customers to transfer goods or services or contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). The guidance requires an entity to recognize revenue on contracts with customers to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance requires that an entity depict the consideration by applying the following steps: Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. This amendment is to be either retrospectively adopted to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this ASU recognized at the date of initial application. Adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.



FASB ASC 405 ASU 2013-04 - Obligations resulting from joint and several liability arrangements.

In February 2013, the FASB issued amendments providing guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this update is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance in this update also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendment was retrospectively effective for the Company as of September 1, 2013. Adoption of this guidance did not have a material impact on the Company's consolidated financial statements.



FASB ASC 220 ASU 2013-02 - Reporting of amounts reclassified out of accumulated other comprehensive income.

In February 2013, the FASB issued amended guidance for the presentation requirements for reclassifications out of accumulated other comprehensive income. The amendment requires the Company to provide additional information about reclassifications of accumulated other comprehensive income. The amendment was effective as of March 1, 2013. The Company adopted this guidance on March 1, 2013. Adoption of this guidance did not have a material impact on the Company's consolidated financial statements. 61 --------------------------------------------------------------------------------



Seasonality

Historically, the Company's merchandising businesses have experienced holiday retail seasonality in their markets. In addition to seasonal fluctuations, the Company's operating results fluctuate quarter-to-quarter as a result of economic and political events in markets served by the Company, the timing of holidays, weather, the timing of shipments, product mix, and currency effects on the cost of U.S.-sourced products which may make these products more or less expensive in local currencies and therefore more or less affordable. Because of such fluctuations, the results of operations of any quarter are not indicative of the results that may be achieved for a full fiscal year or any future quarter. In addition, there can be no assurance that the Company's future results will be consistent with past results or the projections of securities analysts.


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Source: Edgar Glimpses


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