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ACQUISITION | 12 Months Ended
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Aug. 31, 2018
Acquisition [Abstract] |
Acquisition | NOTE 15 – ACQUISITION ﻿ On March 15, 2018, the Company acquired Aeropost, Inc. The acquisition has been accounted for in conformity with ASC Topic 805, Business Combinations. The Company expects the acquisition of Aeropost, Inc. will allow PriceSmart to offer new online shopping options and provides an opportunity to accelerate the development of an omni-channel shopping experience for the Company’s members. The Company paid $29.0 million in cash. Under the merger agreement, $5.0 million of the total consideration has been placed in escrow and its release to the sellers is contingent upon certain key Aeropost, Inc. executives remaining employed with the Company for 15 months from the date of closing. The amount placed in escrow also can be used to satisfy any indemnification claims and post-closing adjustments in favor of the Company. This contingent consideration is accounted for as post-combination compensation expense, reduces the total consideration and will be recorded over this 15 month period. The post-acquisition compensation expense is recorded as prepaid expenses and other current assets on the consolidated balance sheet, and has been treated as use of cash from operating activities on the consolidated statement of cash flows. ﻿ Below is the table that summarizes the total purchase price consideration (in thousands): ﻿ ﻿
﻿ |  |  |
﻿ |  | August 31,
﻿ |  | 2018
﻿Estimated consideration on the acquisition date |  | $ | 30,046
﻿Estimated assumed net liabilities at acquisition date |  |  | (1,093)
﻿Total cash consideration |  |  | 28,953
﻿Post-combination compensation expense, net of claims |  |  | (3,850)
﻿Business acquisition, net assets acquired |  | $ | 25,103
﻿Cash acquired |  |  | 1,208
﻿Business acquisition, net of cash acquired |  | $ | 23,895
﻿ The Company’s purchase price allocation was updated in the fourth quarter of fiscal year 2018. The changes to the fair values assumed from the previous amounts reported as of May 31, 2018 were an increase in net deferred tax assets of $4.2 million and a decrease in goodwill and deferred tax liabilities of $4.8 million and $641,000, respectively. The net deferred tax assets recognized in the fourth quarter of fiscal year 2018 are primarily as a result of a change in estimate regarding the recoverability of Aeropost, Inc.’s U.S. net operating losses. Below summarizes the fair value of the assets acquired and liabilities assumed (in thousands): ﻿ ﻿
﻿ |  |  |
﻿ |  | August 31,
﻿ |  | 2018
﻿Current assets |  | $ | 4,196
﻿Other non-current assets |  |  | 746
﻿Property, plant and equipment |  |  | 2,059
﻿Intangible assets |  |  | 16,100
﻿Goodwill |  |  | 11,230
﻿Deferred tax assets, long-term |  |  | 4,163
﻿Total assets acquired |  | $ | 38,494
﻿Current liabilities |  |  | (5,862)
﻿Non-current liabilities |  |  | (6,967)
﻿Noncontrolling interest |  |  | (562)
﻿Net assets acquired |  | $ | 25,103
﻿ Goodwill represents the excess of the total purchase price over the fair value of the underlying assets. The goodwill is not expected to be deductible for tax purposes. ﻿ The following sets forth the results of the amounts preliminarily assigned to the identifiable intangible assets acquired (in thousands): ﻿ ﻿
﻿ |  |  |  |  |  |
﻿ |  |  | Amortization |  |  | Fair value of
﻿ |  |  | Period |  |  | Assets Acquired
﻿Trade name |  |  | 25 years |  | $ | 5,100
﻿Developed technology |  |  | 5 years |  |  | 11,000
﻿Total assets acquired |  |  |  |  | $ | 16,100
﻿ The fair value of the intangible assets is measured based on assumptions and estimations with regards to variable factors such as the amount and timing of future cash flows, appropriate risk-adjusted discount rates, nonperformance risk or other factors that market participants would consider. The trade name and developed technology were valued using the income-based approach and royalty income method, respectively. Intangible assets are amortized on a straight-line basis over the amortization periods noted above, which is included in general and administrative expenses on the accompanying consolidated statements of income. ﻿ The following unaudited pro forma financial information shows the combined results of operations of the Company, including Aeropost, as if the acquisition had occurred as of the beginning of the periods presented (in thousands): ﻿
﻿ |  |  |  |  |  |  |  |  |
﻿ |  |  | Twelve Months Ended
﻿ |  |  | 2018 |  |  | 2017 |  |  | 2016
﻿Pro forma total revenues |  | $ | 3,197,307 |  | $ | 3,040,168 |  | $ | 2,946,083
﻿Pro forma net income attributable to PriceSmart, Inc. (1) |  | $ | 67,734 |  | $ | 82,587 |  | $ | 80,852
﻿Pro forma net income attributable to noncontrolling interest |  | $ | 444 |  | $ | 248 |  | $ | (20)
﻿
| (1) |  | Includes the pro forma recognition of $3.0 million of post-combination compensation expense, which represents completion of twelve of the fifteen months of continued service required to satisfy the $3.9 million remaining purchase price contingency, and $2.1 million for the amortization of intangible assets for the twelve months ended August 31, 2018.
﻿ The following financial information shows Aeropost’s results of operations since the acquisition on March 15, 2018 (in thousands): ﻿ ﻿
﻿ |  |  |  |  |  |  |  |  |
﻿ |  |  | Twelve Months Ended
﻿ |  |  | 2018 |  |  | 2017 |  |  | 2016
﻿Total revenue included in the Consolidated Statement of Income since acquisition |  | $ | 16,863 |  |  | N/A |  |  | N/A
﻿Net (Loss) from Aeropost Operations, net of tax benefit (1) |  | $ | (6,901) |  |  | N/A |  |  | N/A
﻿
| (1) |  | Does not include approximately $3.4 million of Aeropost-related costs for asset impairment and pre-acquisition costs.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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- References No definition available. + Details
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