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ACQUISITION | 9 Months Ended
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May 31, 2019
Acquisition [Abstract] |
Acquisition | NOTE 10 – ACQUISITION ﻿ On March 15, 2018, the Company acquired technology, talent and cross-border logistics infrastructure through a marketplace and casillero business operated by Aeropost, Inc. This acquisition has been accounted for in conformity with ASC Topic 805, Business Combinations. PriceSmart is actively integrating and investing in the technology, talent and infrastructure from this business to expand its omni-channel capabilities. The Company paid $29.0 million in cash for this acquisition. 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. The 15-month period lapsed on June 15, 2019, and the key Aeropost, Inc. executives remained employed with the Company during this time, as such, no claim in this respect will be made against the escrow balance for this concept. However, certain indemnification claims and post-closing adjustments submitted by the Company are still pending final resolution with the sellers. ﻿ Below is the table that summarizes the total purchase price consideration (in thousands): ﻿ ﻿
﻿ |  |  |
﻿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 |  |  | (3,754)
﻿Business acquisition, net assets acquired |  | $ | 25,199
﻿Cash acquired |  |  | 1,208
﻿Business acquisition, net of cash acquired |  | $ | 23,991
Below summarizes the fair value of the assets acquired and liabilities assumed (in thousands): ﻿ ﻿
﻿ |  |  |
﻿Current assets |  | $ | 4,196
﻿Other non-current assets |  |  | 746
﻿Property, plant and equipment |  |  | 2,059
﻿Intangible assets |  |  | 16,100
﻿Goodwill |  |  | 11,411
﻿Deferred tax assets, long-term |  |  | 4,078
﻿Total assets acquired |  | $ | 38,590
﻿Current liabilities |  |  | (5,862)
﻿Non-current liabilities |  |  | (6,967)
﻿Noncontrolling interest |  |  | (562)
﻿Net assets acquired |  | $ | 25,199
﻿ ﻿ 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 year s |  | $ | 5,100
﻿Developed technology |  |  | 5 year s |  |  | 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, Inc., as if the acquisition had occurred as of the beginning of the periods presented (in thousands): ﻿ ﻿
﻿ |  |  |  |  |  |
﻿ |  | Three Months Ended |  | Nine Months Ended
﻿ |  | May 31, |  | May 31,
﻿ |  | 2018 |  | 2018
﻿Pro forma total revenues |  | $ | 791,413 |  | $ | 2,410,581
﻿Pro forma net income attributable to PriceSmart, Inc. (1) |  | $ | 15,778 |  | $ | 46,202
﻿Pro forma net income attributable to noncontrolling interest |  | $ | 124 |  | $ | 415
﻿
| (1) |  | Includes the pro forma recognition of $723,000 and $2.2 million post-combination compensation expense, which represents three and nine months of continued service amortization required to satisfy the $3.8 million remaining purchase price contingency.
﻿ The following is summary financial information for Aeropost, Inc., including costs to expand omni-channel capabilities for fiscal year 2019 (in thousands): ﻿ ﻿
﻿ |  |  |  |  |  |  |  |  |  |  |  |
﻿ |  | Three Months Ended |  | Nine Months Ended
﻿ |  | May 31, |  | May 31, |  | May 31, |  | May 31,
﻿ |  | 2019 |  | 2018 |  | 2019 |  | 2018
﻿Total revenue |  | $ | 8,973 |  | $ | 7,835 |  | $ | 28,100 |  | $ | 7,835
﻿Net loss (net of tax benefits) |  | $ | (2,879) |  | $ | (2,290) |  | $ | (10,980) |  | $ | (2,290)
﻿

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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://fasb.org/us-gaap/role/ref/legacyRef -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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