PRICESMART INC - 10-K Annual Report

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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.

(Mark One) /X/ Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended August 31, 2001.

/ / Transitional report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period from
_______ to ________.

COMMISSION FILE NUMBER: 0-22793

PRICESMART, INC.
(Exact name of small business issuer in its charter)

DELAWARE 33-0628530
(State of other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)

4649 MORENA BLVD., SAN DIEGO, CA 92117
(Address of principal executive offices, Zip Code)

Registrant's telephone number, including area code: (858) 581-4530
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, $.0001 PAR VALUE
(Title of Class)

Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act during the
preceding 12 months, and (2) has been subject to such filing requirements for
the past 90 days. Yes /X/ No / /

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /

The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of November 20, 2001 was $102,595,937, based on the last reported
sale of $33.61 per share on November 20, 2001.

As of November 20, 2001, a total of 6,262,220 shares of Common Stock were
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company's Annual Report for fiscal year ending August 31, 2001
are incorporated by reference into Part II of this Form 10-K.

Portions of the Company's definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on January 16, 2002 are incorporated by reference into
Part III of this Form 10-K.

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TABLE OF CONTENTS

Part I

Item 1. Business

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Submission of Matters to a Vote of Security Holders

Part II

Item 5. Market for Common Stock and Related Stockholder Matters
THE INFORMATION REQUIRED BY ITEM 5 IS INCORPORATED HEREIN BY
REFERENCE FROM PRICESMART'S ANNUAL REPORT FOR THE FISCAL YEAR
ENDED AUGUST 31, 2001 UNDER THE HEADING "MARKET FOR COMMON STOCK
AND RELATED STOCKHOLDER MATTERS."

Item 6. Selected Financial Data
THE INFORMATION REQUIRED BY ITEM 6 IS INCORPORATED HEREIN BY
REFERENCE FROM PRICESMART'S ANNUAL REPORT FOR THE FISCAL YEAR
ENDED AUGUST 31, 2001 UNDER THE HEADING "SELECTED FINANCIAL DATA."

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
THE INFORMATION REQUIRED BY ITEM 7 IS INCORPORATED HEREIN BY
REFERENCE FROM PRICESMART'S ANNUAL REPORT FOR THE FISCAL YEAR
ENDED AUGUST 31, 2001 UNDER THE HEADING "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."

Item 7A. Quantitative and Qualitative Disclosures about Market Risk
THE INFORMATION REQUIRED BY ITEM 7A IS INCORPORATED HEREIN BY
REFERENCE FROM PRICESMART'S ANNUAL REPORT FOR THE FISCAL YEAR
ENDED AUGUST 31, 2001 UNDER THE HEADING "QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK."

Item 8. Financial Statements
THE INFORMATION REQUIRED BY ITEM 8 IS INCORPORATED HEREIN BY
REFERENCE FROM PRICESMART'S ANNUAL REPORT FOR THE FISCAL YEAR
ENDED AUGUST 31, 2001 UNDER THE HEADING "FINANCIAL STATEMENTS."

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
NONE

Part III

Item 10. Directors and Executive Officers of the Registrant
THE INFORMATION REQUIRED BY ITEM 10 IS INCORPORATED HEREIN BY
REFERENCE FROM PRICESMART'S DEFINITIVE PROXY STATEMENT FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JANUARY 16, 2002
UNDER THE HEADINGS "ELECTION OF DIRECTORS," "INFORMATION REGARDING
DIRECTORS," "EXECUTIVE OFFICERS OF THE COMPANY" AND "COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT."

Item 11. Executive Compensation
THE INFORMATION REQUIRED BY ITEM 11 IS INCORPORATED HEREIN BY
REFERENCE FROM PRICESMART'S DEFINITIVE PROXY STATEMENT FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JANUARY 16, 2002
UNDER THE HEADINGS "INFORMATION REGARDING THE BOARD," "EXECUTIVE
COMPENSATION AND OTHER INFORMATION" AND "PERFORMANCE GRAPH."

Item 12. Security Ownership of Certain Beneficial Owners and Management
THE INFORMATION REQUIRED BY ITEM 12 IS INCORPORATED HEREIN BY
REFERENCE FROM PRICESMART'S DEFINITIVE PROXY STATEMENT FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JANUARY 16, 2002
UNDER THE HEADING "SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND

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MANAGEMENT."

Item 13. Certain Relationships and Related Transactions
THE INFORMATION REQUIRED BY ITEM 13 IS INCORPORATED HEREIN BY
REFERENCE FROM PRICESMART'S DEFINITIVE PROXY STATEMENT FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JANUARY 16, 2002
UNDER THE HEADING "CERTAIN TRANSACTIONS."

Part IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

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PART I

ITEM 1. BUSINESS

This Form 10-K contains forward-looking statements concerning the Company's
anticipated future revenues and earnings, adequacy of future cash flow and
related matters. These forward-looking statements include, but are not limited
to, statements containing the words "expect", "believe", "will", "may",
"should", "project", "estimate", "scheduled" and like expressions, and the
negative thereof. These statements are subject to risks and uncertainties that
could cause actual results to differ materially from the statements, including
foreign exchange risks, political or economic instability of host countries, and
competition as well as those risks described in the Company's SEC reports,
including the risk factors referenced in this Form 10-K. See "Factors That May
Affect Future Performance."

PriceSmart, Inc.'s ("PriceSmart" or the "Company") business consists of
international membership shopping stores similar to, but smaller in size than,
warehouse clubs in the United States. As of August 31, 2001, the Company had
twenty-two warehouse stores in operation (four in Panama, three each in
Guatemala, Costa Rica, and the Dominican Republic, two each in El Salvador and
Honduras, and one each in Aruba, Barbados, the Philippines, Trinidad, and the
U.S. Virgin Islands) of which the Company owns at least a majority interest.

On July 24, 2001, the Company entered into agreements to increase its ownership
from 62.5% to 90.0% in the operations in Trinidad. The Company entered into
agreements to increase its ownership from 51% to 100% in the operations in
Panama on March 27, 2000 and to increase its ownership from 60% to 100% in the
operations in Costa Rica, the Dominican Republic, El Salvador and Honduras on
July 7, 2000. In addition, there were nine warehouse stores in operation (eight
in China and one in Saipan, Micronesia) licensed to and operated by local
business people as of August 31, 2001. Additionally, until March 1, 2000, the
Company operated a domestic travel program and until April 1, 1999, the Company
operated a domestic auto referral business.

In June 1997, the Price Enterprises, Inc. ("PEI") Board of Directors approved a
plan to separate PEI's core real estate business from the merchandising
businesses it operated through a number of subsidiaries. To effect such
separation, PEI first transferred to the Company, through a series of
preliminary transactions, the assets listed below. PEI then distributed on
August 29, 1997 all of the Company's common stock pro rata to PEI's existing
stockholders through a special dividend (the "Distribution").

Assets transferred to PriceSmart were comprised of: (i) the merchandising
business segment of PEI; (ii) certain real estate properties held for sale (the
"Properties"); (iii) notes receivable from buyers of properties; (iv) cash and
cash equivalents of approximately $58.4 million; and (v) all other assets and
liabilities not specifically associated with PEI's portfolio of investment
properties, except for current corporate income tax assets and liabilities.

BUSINESS STRATEGY

The Company's strategy is to focus on development of the international
merchandising business and to leverage existing capabilities and provide
appropriate returns for its stockholders. Specifically, key elements of the
Company's business strategy include:

PROVIDE LOWER PRICES IN THE MARKET PLACE. The Company's principal business
philosophy is to bring quality products and services at low prices to the
consumer. Future development of the Company's business will be directed to
markets in which the Company can compete effectively by lowering the costs of
goods and services to consumers.

INCREASE MARKET SHARE IN DEVELOPING MARKETS. The Company believes that it is
well positioned to profit from the growth in developing markets due to its
purchasing power and experience with membership warehouses in Central America,
the Caribbean and Asia. The Company intends to continue to satisfy the growing
demand for U.S. consumer goods in such markets by opening additional membership
warehouses, principally in Latin America, the Caribbean and the Philippines.

MARKET SATURATION. The Company seeks to establish significant market share in
the metropolitan areas of emerging market countries by rapidly saturating these
areas with multiple stores.

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INTERNATIONAL MERCHANDISING BUSINESSES

The Company owns and operates U.S.-style membership shopping warehouses through
majority or wholly owned ventures operating in Central America, the Caribbean
and Asia using the trade name "PriceSmart". In fiscal 2001, the Company opened
six new U.S.-style membership shopping warehouses, one warehouse each in the
Dominican Republic (October 2000), Aruba (March 2001), the US Virgin Islands
(May 2001), the Philippines (May 2001), Guatemala (May 2001), and Barbados
(August 2001) bringing the total number of warehouses in operation to twenty-two
operating in eleven countries as of August 31, 2001. Subsequent to fiscal 2001,
the Company opened one additional location in the Philippines in November 2001.
Also, there were nine warehouse stores in operation (eight in China and one in
Saipan, Micronesia) licensed to and operated by local business people at the end
of fiscal 2001, through which the Company earns royalties and other fees in
connection with certain licensing and technology transfer agreements.

The warehouses sell basic consumer goods with an emphasis on quality, low prices
and efficient operations. By offering low prices on brand name and private label
merchandise, the warehouses seek to generate sufficient sales volumes to operate
profitably at relatively low gross margins. The typical no-frills warehouse-type
buildings range in size from 40,000 to 50,000 square feet of selling space and
are located in urban areas to take advantage of dense populations and relatively
higher levels of disposable income. Product selection includes perishable foods
and basic consumer products. Ancillary services include food services, bakery
departments, tire centers, photo centers, pharmacy and optical services. The
target customers are consumers and small businesses. The shopping format
includes an annual membership fee that varies by market from $20 to $35.

Typically, when entering a new market the Company enters into licensing and
technology transfer agreements with a joint venture company (whose majority
stockholder is the Company and whose minority stockholders are local business
people) pursuant to which the Company provides the Company's know-how package,
which includes training and management support, as well as access to the
Company's computer software systems. The license also includes the right to use
the "PriceSmart" mark and certain other trademarks. The Company and its
licensees also enter into product sourcing agreements. The Company receives a
license fee based upon a percentage of the actual licensee sales. The Company
believes that the local business people have been interested in entering into
such joint ventures and obtaining such licenses for a variety of reasons,
including the track record of the Company's management team, the opportunity to
purchase U.S.-sourced products, the benefits of the Company's modern
distribution techniques and the opportunity to obtain exclusive rights to use
the Company's trademarks in the region.

MEMBERSHIP POLICY

PriceSmart's membership fee structure was specifically designed to allow pricing
flexibility from country to country. Membership price points are attractive to
our target consumer base. The value of Membership reinforces Member-Customer
loyalty and membership fees provide a continuing source of revenue. PriceSmart
has two primary types of Members: Business and Diamond (individual).

Business owners and key managers qualify for Business Membership. PriceSmart
promotes Business Membership through its merchandise selection and its marketing
programs primarily targeting wholesalers, institutional buyers and retailers.
Business Members pay an annual membership fee which averages $28 for a primary
and spouse membership card and $12 for additional add-on membership cards.

Individuals pay an annual membership fee, which averages $24. One add-on
membership card is available for an additional $12.

The Company recognizes membership fee revenues over the term of the membership,
which is 12 months. Deferred revenue is presented separately on the face of the
balance sheet and totaled $4.4 million and $3.9 million as of August 31, 2001
and August 31, 2000, respectively. PriceSmart's membership agreements contain an
explicit right to a full refund if our customers are dissatisfied with their
membership. The Company's historical rate of membership fee refunds has been
less than 0.5% of membership income, or approximately $35,000, $26,000 and
$8,000 for years ended August 31, 2001, 2000 and 1999, respectively.

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EXPANSION PLANS

The Company's expansion plans focus on opening new stores in foreign markets,
through majority or wholly owned ventures, primarily in Latin America, the
Caribbean and Asia. The Company believes such foreign markets offer significant
opportunities for growth because they are often characterized by (i) significant
geographic and logistical barriers to entry, (ii) existing higher-priced local
competitors with minimal experience with modern operating processes in
purchasing, distribution, merchandising and information technologies, and (iii)
a demand for U.S. brand-name products that are not widely available in such
markets.

The Company anticipates opening four to six new warehouses in fiscal 2002. As a
result of this growth, the Company believes that it is positioned to achieve
approximately $650 million in revenues in fiscal 2002. Also, based upon
demographics, the gross domestic product and retail sales in markets relative to
the Company's performance in the eleven countries it currently operates, the
Company has identified additional potential locations to open six to ten new
stores in fiscal 2003.

ACQUISITION OF MINORITY INTERESTS

On July 24, 2001, the Company entered into agreements to acquire an additional
27.5% interest in the PriceSmart Trinidad majority owned subsidiary, which
previously had been 62.5% owned by the Company. The purchase price of the 27.5%
interest consisted of: (a) 20,115 shares of PriceSmart common stock; (b) a 9%
interest in the PriceSmart Barbados subsidiary; (c) a 17.5% interest in the
PriceSmart Jamaica subsidiary; (d) a promissory note of $314,000; (e)
forgiveness of a note receivable due to the Company of $317,000 and (f)
assumption of remaining contributions of $340,000 shown net of minority interest
acquired. As a result of this additional interest acquired, the Company
increased its guarantee proportionately for the outstanding long term debt
related to the Trinidad operations.

On March 27, 2000, the Company entered into an agreement to acquire the
remaining interest in the PriceSmart Panama majority owned subsidiary, which
previously had been 51% owned by the Company and 49% owned by BB&M International
Trading Group ("BB&M"), whose principals are several Panamanian businessmen,
including Rafael Barcenas, a director of PriceSmart (see Note 16). In exchange
for BB&M's 49% interest, the Company issued to BB&M's principals 306,748 shares
of PriceSmart common stock. As a result of this acquisition, the Company
increased its guarantee for the outstanding long term debt related to the Panama
operations to 100%.

Under the Stock Purchase Agreement, as amended, related to the Panama
Acquisition, the Company agreed to redeem the shares of the Company's common
stock issued to BB&M at a price of $46.86 per share following the one-year
anniversary of the completion of the acquisition upon the request of BB&M's
principals. On April 5, 2001, the Company repurchased 242,144 shares of its
common stock for an aggregate of approximately $11.4 million in cash, resulting
in an incremental goodwill adjustment of approximately $1.1 million. The Company
has agreed to redeem, at its option for cash or additional stock, the remaining
64,604 shares following the second anniversary of the completion of the
acquisition at the price of $46.86 per share upon the holders' request.

On July 7, 2000, the Company agreed to acquire the 40% interest in PSMT Caribe,
Inc. not held by the Company. PSMT Caribe is the holding company formed by
PriceSmart and PSC, S.A. (a Panamanian company with shareholders representing
five Central American and Caribbean countries, including Edgar Zurcher, a
director of PriceSmart as of November 2000), to hold their respective interests
in the PriceSmart membership warehouse clubs operating in Costa Rica, El
Salvador, Honduras and the Dominican Republic. As consideration for the
acquisition of the 40% interest, PriceSmart issued to PSC, S.A. 679,500 shares
of PriceSmart common stock, half of which were restricted from sale for one year
(subject to certain conditions). As a result of this acquisition, PriceSmart,
Inc. has increased its guarantee for the outstanding long term debt related to
the warehouses operating in Costa Rica, El Salvador, Honduras and the Dominican
Republic to 100%.

Results from operations of the acquired minority interests have been included,
based on sole ownership, in the financial results of the Company from the date
of the transactions.

RELATIONSHIP WITH COSTCO

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In November 1996 PEI, Costco Companies, Inc. ("Costco") and certain of their
respective subsidiaries, including the Company, entered into an Agreement
Concerning Transfer of Certain Assets (the "Asset Transfer Agreement") in
connection with the settlement of litigation arising from the spin-off of PEI
from Costco and the prior merger between The Price Company and Costco.

PEI and Costco agreed in the Asset Transfer Agreement to eliminate all
noncompete and operating agreements and to terminate all trademark and license
agreements between the parties, subject to certain exceptions. Costco agreed to
refrain from conducting membership store businesses in the Northern Mariana
Islands, Guam and Panama through October 31, 1999. The Company has an exclusive
royalty-free right (including against Costco), in the Northern Mariana Islands
and Guam to use "Price Club" and "PriceCostco" marks, and in Panama to use the
"PriceCostco" mark, in connection with the development, operation, advertising
and promotion of the Company's business activities in such areas, subject to
certain restrictions. The Asset Transfer Agreement, however, requires the
Company to use diligent and reasonable efforts to negotiate with its licensee in
the Northern Mariana Islands, Guam and Panama to terminate such right to use the
"Price Club" and "PriceCostco" names and marks at the earliest possible date
before December 12, 2009 for the Northern Mariana Islands and Guam and December
21, 2015 for Panama.

Costco has agreed in the Asset Transfer Agreement that PEI and its downstream
affiliates may use the name "Price" in a "PriceSmart" mark, but PEI and its
downstream affiliates may not use a "PriceSmart" mark in connection with a club
business or other membership activity named "PriceSmart" in the United States,
Canada or Mexico; provided that the limitations on the Company's rights to use
the "PriceSmart" name in the United States, Canada and Mexico terminate 24
months after Costco and its downstream affiliates discontinue their use of the
names "PriceCostco" and "Price Club."

INTELLECTUAL PROPERTY RIGHTS

It is the Company's policy to obtain appropriate proprietary rights protection
for trademarks by filing applications for registrable marks with the U.S. Patent
and Trademark Office, and in certain foreign countries. In addition, the Company
relies on copyright and trade secret laws to protect its proprietary rights. The
Company attempts to protect its trade secrets and other proprietary information
through agreements with its joint ventures, employees, consultants and
suppliers, and other similar measures. There can be no assurance, however, that
the Company will be successful in protecting its proprietary rights. While
management believes that the Company's trademarks, copyrights and other
proprietary know-how have significant value, changing technology and the
competitive marketplace make the Company's future success dependent principally
upon its employees' technical competence and creative skills for continuing
innovation.

There can be no assurance that third parties will not assert claims against the
Company with respect to existing and future trademarks, trade names and sales
techniques. In the event of litigation to determine the validity of any third
party's claims, such litigation could result in significant expense to the
Company and divert the efforts of the Company's management, whether or not such
litigation is determined in favor of the Company.

The Company has filed applications to register under various classifications the
mark "PriceSmart" (and certain other marks) in the U.S. Patent and Trademark
Office, and in certain foreign countries; however, because of objections by one
or more parties, there can be no assurance that the Company will obtain all such
registrations or that the Company has proprietary rights to the marks.

In August 1999, the Company and Associated Wholesale Grocers, Inc. ("AWG")
entered into an agreement regarding the trademark "PriceSmart" and related marks
containing the name "PriceSmart". The Company has agreed not to use the
"PriceSmart" mark or any related marks containing the name "PriceSmart" in
connection with the sale or offer for sale of any goods or services within AWG's
territory of operations, including the following ten states: Kansas, Missouri,
Arkansas, Oklahoma, Nebraska, Iowa, Texas, Illinois, Tennessee and Kentucky. The
Company, however, may use the mark "PriceSmart" or any mark containing the name
"PriceSmart" on the internet or any other global computer network whether within
or outside said territory, and in any national advertising campaign that cannot
reasonably exclude the territory, and the Company may use the mark in connection
with various travel services. AWG has agreed not to oppose

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any trademark applications filed by the Company for registration of the mark
"PriceSmart" or related marks containing the name "PriceSmart", and AWG has
further agreed not to bring any action for trademark infringement against the
Company based upon the Company's use outside the territory (or with respect to
the permitted uses inside the territory) of the mark "PriceSmart" or related
marks containing the name "PriceSmart."

EMPLOYEES

As of August 31, 2001, the Company and its subsidiaries, had a total of 3,476
employees. Approximately 94% of the Company's employees were employed outside of
the United States.

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, timing of shipments, product mix, and currency effects on the cost of
U.S.-sourced products which may make these products more expensive in local
currencies and 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.

FACTORS THAT MAY AFFECT FUTURE PERFORMANCE

THE COMPANY'S FINANCIAL PERFORMANCE IS DEPENDENT ON INTERNATIONAL OPERATIONS,
WHICH EXPOSES IT TO VARIOUS RISKS. The Company's international operations
account for nearly all of the Company's total sales. The Company's financial
performance is subject to risks inherent in operating and expanding the
Company's international membership concept which include: (i) changes in tariffs
and taxes, (ii) the imposition of governmental controls,(iii) trade
restrictions, (iv) greater difficulty and costs associated with international
sales and the administration of an international merchandising business, (v)
limitations on U.S. company ownership in foreign countries, (vi) permitting and
regulatory compliance, (vii) volatility in foreign currency exchange rates,
(viii) the financial and other capabilities of the Company's joint venturers and
licensees, and (ix) general political as well as economic and business
conditions.

ANY FAILURE BY THE COMPANY TO MANAGE ITS GROWTH COULD ADVERSELY AFFECT THE
COMPANY'S BUSINESS. The Company began an aggressive growth strategy in April
1999 in Central America and the Caribbean. The Company has opened six new
warehouses in fiscal 2001 and intends to open four to six additional new
warehouses in fiscal 2002 (one of which was opened in November 2001). The
success of the Company's growth strategy will depend to a significant degree on
the Company's ability to: (i) expand the Company's operations through the
opening of new warehouses, (ii) operate warehouses on a profitable basis and
(iii) maintain positive comparable warehouse sales in the applicable markets.
Some markets may present operational, competitive, regulatory and merchandising
challenges that are similar to, or different from those previously encountered
by the Company. Also, the Company might not be able to adapt the Company's
operations to support these expansion plans, and the new warehouses may not
achieve the profitability necessary for the Company to receive an acceptable
return on investment.

The Company's ability to open new warehouses on a timely basis will also depend
on a number of factors, some of which may be beyond the Company's control,
including the Company's ability to: (i) locate suitable warehouse sites, (ii)
negotiate acceptable lease or acquisition terms, (iii) construct sites on a
timely basis, and (iv) obtain financing in a timely manner and with satisfactory
terms. The growth strategy also will require the Company to hire, train and
retain skilled managers and personnel to support its planned growth, and the
Company may experience difficulties hiring employees who possess the training
and experience necessary to operate the Company's new warehouses, particularly
in foreign markets where language, education and cultural factors may impose
particular challenges. Further, the Company may encounter substantial delays,
increased expenses or loss of potential sites due to the complexities, cultural
differences, and local political issues associated with the regulatory and
permitting processes in the international markets in which the Company

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intends to locate new warehouses. The Company might not be able to open the
planned number of new warehouses according to its schedule or continue to
attract, develop and retain the personnel necessary to pursue the Company's
growth strategy. Failure to do so could have a material adverse effect on the
Company's business, financial condition and results of operations.

In addition, the Company will need to continually evaluate the adequacy of the
Company's existing systems and procedures, including warehouse management,
financial and inventory control and distribution systems. Moreover, as the
Company grows, it will need to continually analyze the sufficiency of the
Company's inventory distribution methods and may require additional facilities
in order to support the Company's planned growth. The Company may not adequately
anticipate all the changing demands that its expanding operations will impose on
these systems. The Company's failure to update the Company's internal systems or
procedures as required could have a material adverse effect on the Company's
business, financial condition and results of operations.

THE COMPANY FACES SIGNIFICANT COMPETITION. The Company's international
merchandising businesses compete with exporters, wholesalers, other membership
merchandisers, local retailers and trading companies in various international
markets. Some of the Company's competitors may have greater resources, buying
power and name recognition. There can be no assurance that the Company's
competitors will not decide to enter the markets in which the Company operates,
or expects to enter, or that the Company's existing competitors will not compete
more effectively against the Company. The Company may be required to implement
price reductions in order to remain competitive should any of the Company's
competitors reduce prices in any of the Company's markets. Moreover, the
Company's ability to expand into and operate profitably in new markets,
particularly small markets, may be adversely affected by the existence or entry
of competing warehouse clubs or discount retailers.

THE COMPANY MAY ENCOUNTER DIFFICULTIES IN THE SHIPMENT OF GOODS TO ITS
WAREHOUSES. The Company is required to transport products over great distances,
typically over water, which results in: (i) substantial lags between the
procurement and delivery of product, thus complicating merchandising and
inventory control methods, (ii) the possible loss of product due to theft or
potential damage to, or destruction of, ships or containers delivering goods,
(iii) tariff, customs and shipping regulation issues, and (iv) substantial ocean
freight and duty costs.

Moreover, only a limited number of transportation companies service the
Company's regions. The inability or failure of one or more key transportation
companies to provide transportation services to the Company, any collusion among
the transportation companies regarding shipping prices or terms, changes in the
regulations that govern shipping tariffs or any other disruption in the
Company's ability to transport the Company's merchandise could have a material
adverse effect on the Company's business, financial condition and results of
operations. In addition, many of the countries in which the Company operates
require registration of imported products, which may result in additional delays
in the Company's deliveries of products to its warehouses.

THE SUCCESS OF THE COMPANY'S BUSINESS REQUIRES EFFECTIVE ASSISTANCE FROM LOCAL
BUSINESS PEOPLE WITH WHOM THE COMPANY HAS ESTABLISHED STRATEGIC RELATIONSHIPS.
Several of the risks associated with the Company's international merchandising
business may be within the control (in whole or in part) of local business
people with whom it has established formal and informal strategic relationships
or may be affected by the acts or omissions of these local business people. In
some cases, these local business people previously held minority interests in
joint venture arrangements and now hold shares of the Company's common stock. No
assurances can be provided that the Company's membership store concept will be
implemented effectively or that these local business people will effectively
help the Company penetrate their respective markets. The failure of these local
business people to assist the Company in their local markets could harm the
Company's business, financial condition and results of operations.

THE COMPANY IS EXPOSED TO WEATHER AND OTHER RISKS ASSOCIATED WITH INTERNATIONAL
OPERATIONS. The Company's operations are subject to the volatile weather
conditions and natural disasters which are encountered in the regions in which
the Company's warehouse stores are located or are planned to be located, and
which could result in delays in construction or result in significant damage to,
or destruction of, the Company's warehouse stores. For example, the Company's
two stores in El Salvador experienced minimal inventory loss and disruption of
their business in January 2001 as a result of an earthquake that measured 7.6 on
the Richter Scale and resulted in an

9

extraordinary loss of approximately $120,000. Losses from business interruption
may not be adequately compensated by insurance and could have a material adverse
effect on our business, financial condition and results of operations.

DECLINES IN THE ECONOMIES OF THE COUNTRIES IN WHICH THE COMPANY OPERATES ITS
WAREHOUSE STORES WOULD HARM ITS BUSINESS. The success of the Company's
operations depends to a significant extent on a number of factors relating to
discretionary consumer spending, including employment rates, business
conditions, consumer spending patterns and customer preferences and other
economic factors in each of the Company's foreign markets. Consumer spending in
the Company's markets may be adversely affected by these factors, which would
affect the Company's growth, sales and profitability. A decline in the national
or regional economies of the foreign countries in which the Company currently
operates, or will operate in the future, could have a material adverse effect on
the Company's business, financial condition and results of operations.

A FEW OF THE COMPANY'S STOCKHOLDERS HAVE SUBSTANTIAL CONTROL OVER THE VOTING
STOCK, WHICH MAY MAKE IT DIFFICULT TO COMPLETE SOME CORPORATE TRANSACTIONS
WITHOUT THEIR SUPPORT AND MAY PREVENT A CHANGE IN CONTROL. As of October 31,
2001, Robert E. Price, who is the Chairman of the Company's Board, and Sol
Price, a significant stockholder of the Company and father of Robert E. Price,
beneficially owned approximately 38% of the Company's outstanding common stock.
As a result, these stockholders will effectively control the outcome of all
matters submitted to the Company's stockholders for approval, including the
election of directors. In addition, this ownership could discourage the
acquisition of the Company's common stock by potential investors, and could have
an anti-takeover effect, possibly depressing the trading price of the Company's
common stock.

THE LOSS OF KEY PERSONNEL COULD HARM THE COMPANY'S BUSINESS. The Company depends
to a large extent on the performance of its senior management team and other key
employees for strategic business direction. The loss of services of any members
of the Company's senior management or other key employees could have a material
adverse effect on the Company's business, financial condition and results of
operations.

THE COMPANY IS SUBJECT TO VOLATILITY IN FOREIGN CURRENCY EXCHANGE. The Company,
through its majority or wholly owned subsidiaries, conducts operations primarily
in Central America, the Caribbean and Asia, and as such is subject to both
economic and political instabilities that cause volatility in foreign currency
exchange rates or weak economic conditions. As of August 31, 2001, the Company
had a total of twenty-two warehouses (adding a twenty-third in November 2001)
operating in eleven foreign countries. For fiscal 2001, 70% of the Company's net
warehouse sales were in foreign currencies, and is expected to increase in
fiscal 2002 to approximately 75%. The Company currently has operations in
Panama, El Salvador and the U.S. Virgin Islands, which have U.S. dollar
denominated currencies. In addition, effective January 1, 2001, the government
of El Salvador changed its currency to the U.S. dollar. The Company expects to
enter into additional foreign countries in the future, which will increase the
percentage of net warehouse sales denominated in foreign currencies, and which
may involve similar economic and political risks as well as challenges that may
be different from those currently encountered by the Company. There can be no
assurance that the Company will not experience a materially adverse effect on
its business, financial condition or result of operations as a result of the
economic and political risks of conducting an international merchandising
business.

Foreign currencies in most of the countries where the Company operates have
historically devalued against the U.S. dollar and are expected to continue to
devalue. Managing foreign exchange is critical for operating successfully in
these markets and the Company manages its risks at times by hedging currencies
through Non Deliverable Forward Exchange Contracts (NDFs). As of August 31,
2001, the Company had $2.0 million in NDFs outstanding. As there are no formal
contemporaneous documentation for NDFs and provided no physical exchange of
currency occurs at maturity (only the resulting gain or loss), they are not
reflected on the balance sheet. If the NDFs were recorded based on their fair
values, the effect would be immaterial. The Company may continue to purchase
NDFs in the future to mitigate foreign exchange losses, but due to the
volatility and lack of derivative financial instruments in the countries the
Company operates, significant risk from unexpected devaluation of local
currencies exist. Foreign exchange transaction losses realized, which are
included as part of the costs of goods sold in the consolidated statements of
operations, for fiscal 2001, fiscal 2000 and fiscal 1999 (including the cost of
the NDFs) were $718,000, $1.3 million and $538,000, respectively.

10

THE COMPANY IS ENGAGED IN LITIGATION IN THE PHILIPPINES THAT QUESTIONS ITS RIGHT
TO OPERATE WAREHOUSE STORES THERE. On May 18, 2001, the Company opened its first
warehouse in Manila, Philippines. The warehouse is operated (through a joint
venture of which the Company is the majority owner) under the name of "S&R Price
Membership Shopping Warehouse." On June 15, 2001 the joint venture was served
with a Complaint filed by a former Company licensee whose license was terminated
by the Company in 1998. The Complaint alleges that the license was
inappropriately terminated and that the former licensee therefore maintains the
exclusive right for 20 years to own and operate warehouses licensed by the
Company in the Philippines. On June 15 the joint venture was also served with a
temporary restraining order issued in that action, requiring that the Company
cease its operations in the Philippines. The Company closed the warehouse in
accordance with the temporary restraining order, but reopened on June 19, 2001
after the Philippine Court of Appeals issued its own temporary restraining order
staying enforcement of the restraining order that had closed the warehouse. The
trial court judge subsequently issued an order lifting the restraining order.
The parties currently are awaiting a decision from the Court of Appeals on the
application, by the Company's joint venture, to dismiss or abate the lawsuit
pending arbitration in Sydney, Australia, pursuant to a contractual arbitration
clause previously agreed to by the parties.

The Company maintains that the factual allegations and legal claims asserted
in the Complaint are without merit and intends to defend them vigorously.
Nevertheless, adverse rulings by the Philippine courts or in the arbitration
proceedings, may suspend or shut-down current operations, delay or prevent
future openings in the Philippines.

ITEM 2. PROPERTIES

WAREHOUSE PROPERTIES. The Company, through its majority or wholly owned
ventures, has a combination of owned or leased properties for each country in
which it operates warehouses. All buildings, both owned and leased, are
constructed by independent contractors. The following is a summary of warehouse
locations currently owned and / or leased by country:

CORPORATE HEADQUARTERS. The Company maintains its headquarters at 4649 Morena
Blvd., San Diego, California 92117-3650. The Company leases 42,000 square feet
of office

11

space from PEI at a rate $25,700 per month pursuant to a triple net lease. The
current term expires on August 31, 2003, and the Company has three remaining
renewal options of two years each. The Company also leases a 85,000 square foot
facility in Miami, Florida at a rate of $39,000 per month that expires on May
31, 2003 with a renewal option of five years. The Company believes that its
existing facilities are adequate to meet its current needs and that suitable
additional or alternative space will be available on commercially reasonable
terms as needed.

PROPERTIES HELD FOR SALE. In connection with the Distribution, PEI transferred
to the Company certain properties historically held for sale by PEI (the
"Properties"). The one remaining Property is improved land which, when sold, is
not expected to generate significant gains or losses. Proceeds from sales of
such Property will be used to fund the Company's businesses and general working
capital requirements. The Company expects such transaction to be completed
within the next twelve months; however, given the nature of such sales
activities, there can be no assurance that this potential sale will be completed
by then or that such proceeds will be fully realized.

ENVIRONMENTAL MATTERS. The Company has agreed to indemnify PEI for all of PEI's
liabilities (including obligations to indemnify Costco with respect to
environmental liabilities) arising out of PEI's prior ownership of the
Properties and the real properties transferred by Costco to PEI that PEI sold
prior to the Distribution. The Company's ownership of real properties and its
agreement to indemnify PEI could subject it to certain environmental
liabilities. As discussed below, certain Properties are located in areas of
current or former industrial activity, where environmental contamination may
have occurred.

Under various federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real estate may be
required to investigate and remediate releases or threatened releases of
hazardous or toxic substances or petroleum products located at such property,
and may be held liable to a governmental entity or to third parties for property
damage and for investigation and remediation costs incurred by such parties in
connection with the contamination. Under certain of these laws, liability may be
imposed without regard to whether the owner knew of or caused the presence of
the contaminants. These costs may be substantial, and the presence of such
substances, or the failure to remediate properly the contamination on such
property, may adversely affect the owner's ability to sell or lease such
property or to borrow money using such property as collateral. Certain federal
and state laws require the removal or encapsulation of asbestos containing
material in poor condition in the event of remodeling or renovation. Other
federal, state and local laws have been enacted to protect sensitive
environmental resources, including threatened and endangered species and
wetlands. Such laws may restrict the development and diminish the value of
property that is inhabited by an endangered or threatened species, is designated
as critical habitat for an endangered or threatened species or is characterized
as wetlands.

In 1994, Costco engaged environmental consultants to conduct Phase I assessments
(involving investigation without soil sampling or groundwater analysis) at each
of the properties that Costco transferred to PEI in 1994, including the
Properties. The Company is unaware of any environmental liability or
noncompliance with applicable environmental laws or regulations arising out of
the Properties or the real properties transferred by Costco to PEI and sold
prior to the Distribution that the Company believes would have a material
adverse effect on its business, assets or results of operations. Nevertheless,
there can be no assurance that the Company's knowledge is complete with regard
to, or that the Phase I assessments have identified, all material environmental
liabilities.

The Company is aware of certain environmental issues, which the Company does not
expect to have a material adverse effect on the Company's business, financial
condition, operating results, cash flow or liquidity, relating to three
properties transferred from Costco to PEI that were sold prior to the
Distribution. The Company has agreed to indemnify PEI for environmental
liabilities arising out of such properties. Set forth below are summaries of
certain environmental matters relating to these properties.

Phoenix (Fry's). The Phoenix (Fry's) site is a 37.1-acre site located in
Phoenix, Arizona. The Phoenix (Fry's) site is located within the West Van Buren
Study Area (the "WVBSA"). Volatile organic compounds ("VOCs") and petroleum
hydrocarbons are present in groundwater in the WVBSA. To date, PEI (as successor
to Costco) has not been identified as a potentially responsible party ("PRP")
for the WVBSA. On March 8, 1995,

12

PEI sold the Phoenix (Fry's) site, and retained responsibility for certain
environmental matters. Investigations conducted in connection with the sale of
the property revealed some hydrocarbon contamination in an area previously
occupied by a fuel pump island. Seven underground fuel storage tanks were
removed in 1989. The Arizona Department of Environmental Quality ("ADEQ") has
required additional testing of the site prior to granting closure of the site.
An independent environmental firm recently completed the required additional
tests and a risk assessment which were submitted to the ADEQ in October 2000,
and the Company anticipates that closure of the site will be granted based on
the test results. However, there can be no assurance that the ADEQ will grant
closure or that additional work will not be required.

Although designated by Arizona law as a "study area," the WVBSA is not a federal
CERCLA site and is not listed on the National Properties List ("NPL").
Immediately to the east of the WVBSA, however, is the East Washington Study
Area(the "EWSA"), which is listed on the NPL. VOCs are also present in
groundwater in the EWSA. If the contamination plumes from the WVBSA and the EWSA
merge, the possibility exists that the two study areas will be merged into one
Federal CERCLA site.

Meadowlands. The Meadowlands site is an unimproved, 12.9-acre site located in
Meadowlands, New Jersey. A prior owner used this site as a debris disposal area.
Elevated levels of heavy metals (including a small area contaminated with
polychlorinated biphenyl) and petroleum hydrocarbons are present in soil at the
Meadowlands site. PEI, however, has not been notified by any governmental
authority, and is not otherwise aware, of any material noncompliance, liability
or claim relating to hazardous or toxic substances or petroleum products in
connection with the Meadowlands site. PEI sold the Meadowlands site on August
11, 1995. Nevertheless, PEI's previous ownership of the Meadowlands site creates
the potential of liability for remediation costs associated with groundwater
beneath the site.

Silver City. The Silver City site contains or has contained petroleum
hydrocarbons in the soil and groundwater. On March 20, 1996, PEI sold the Silver
City site and retained responsibility for certain environmental matters. PEI is
continuing to remediate the soil and groundwater at this property under
supervision of local authorities.

ITEM 3. LEGAL PROCEEDINGS

From time to time the Company and its subsidiaries are subject to legal
proceedings and claims in the ordinary course of business. The Company currently
is not aware of any such legal proceedings or claims (other than disclosed
below) that it believes will have, individually or in the aggregate, a material
adverse effect on its business, financial condition, operating results, cash
flow or liquidity.

On May 18, 2001, the Company opened its first warehouse in Manila, Philippines.
The warehouse is operated (through a joint venture of which the Company is the
majority owner) under the name of "S&R Price Membership Shopping Warehouse". On
June 15, 2001 the joint venture was served with a Complaint filed by a former
Company licensee whose license was terminated by the Company in 1998. The
Complaint alleges that the license was inappropriately terminated and that the
former licensee therefore maintains the exclusive right for 20 years to own and
operate warehouses licensed by the Company in the Philippines. On June 15 the
joint venture was also served with a temporary restraining order issued in that
action, requiring that the Company cease its operations in the Philippines. The
Company closed the warehouse in accordance with the temporary restraining order,
but reopened on June 19, 2001 after the Philippine Court of Appeals issued its
own temporary restraining order staying enforcement of the restraining order
that had closed the warehouse. The trial court judge subsequently issued an
order lifting the restraining order. The parties currently are awaiting a
decision from the Court of Appeals on the application, by the Company's joint
venture, to dismiss or abate the lawsuit pending arbitration in Sydney,
Australia, pursuant to a contractual arbitration clause previously agreed to by
the parties.

The Company maintains that the factual allegations and legal claims asserted
in the Complaint are without merit and intends to defend them vigorously.
Nevertheless, adverse rulings by the Philippine courts or in the arbitration
proceedings, may suspend or shut-down current operations, delay or prevent
future openings in the Philippines.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

13

The Company did not submit any matters to a vote of security holders during the
fourth quarter of fiscal 2001. The Company's Annual Meeting of Stockholders is
scheduled for 10:00 a.m. on January 16, 2002, at the Hilton San Diego Mission
Valley in San Diego, California. Matters to be voted on will be included in the
Company's definitive proxy statement to be filed with the Securities and
Exchange Commission and distributed to stockholders prior to the meeting.

PART II

ITEM 5. MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

The information required by Item 5 is incorporated herein by reference to
PriceSmart's Annual Report for the fiscal year ended August 31, 2001 under the
heading "Market for Common Stock and Related Stockholder Matters."

ITEM 6. SELECTED FINANCIAL DATA

The information required by Item 6 is incorporated herein by reference to
PriceSmart's Annual Report for the fiscal year ended August 31, 2001 under the
heading "Selected Financial Data."

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The information required by Item 7 is incorporated herein by reference to
PriceSmart's Annual Report for the fiscal year ended August 31, 2001 under the
heading "Management's Discussion and Analysis of Financial Condition and Results
of Operations."

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by Item 7A is incorporated herein by reference to
PriceSmart's Annual Report for the fiscal year ended August 31, 2001 under the
heading "Quantitative and Qualitative Disclosures about Market Risk."

ITEM 8. FINANCIAL STATEMENTS

The information required by Item 8 is incorporated herein by reference to
PriceSmart's Annual Report for the fiscal year ended August 31, 2001 under the
heading "Financial Statements."

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by Item 10 is incorporated herein by reference from
PriceSmart's definitive Proxy Statement for the Annual Meeting of Stockholders
to be held on January 16, 2002 under the headings "Election of Directors,"
"Information Regarding Directors," "Executive Officers of the Company" and
"Compliance with Section 16(a) of the Exchange Act."

ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated herein by reference from
PriceSmart's definitive Proxy Statement for the Annual Meeting of Stockholders
to be held on January 16, 2002 under the headings "Information Regarding the
Board," "Executive Compensation and Other Information" and "Performance Graph."

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by Item 12 is incorporated herein by reference from
PriceSmart's definitive Proxy Statement for the Annual Meeting of Stockholders
to be

14

held on January 16, 2002 under the heading "Securities Ownership of Certain
Beneficial Owners and Management."

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by Item 13 is incorporated herein by reference from
PriceSmart's definitive Proxy Statement for the Annual Meeting of Stockholders
to be held on January 16, 2002 under the heading "Certain Transactions."

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) The following financial statements are incorporated by reference into
Part II, Item 8 of this Form 10-K under the respective headings from
the annual report:

Report of Independent Auditors

Consolidated Balance Sheets as of August 31, 2001 and 2000

Consolidated Statements of Operations for the three years ended August
31, 2001

Consolidated Statements of Stockholders' Equity for the three years
ended August 31, 2001

Consolidated Statements of Cash Flows for the three years ended August
31, 2001

Notes to Consolidated Financial Statements

(b) Reports on Form 8-K:

On April 6, 2001, the Company filed a Form 8-K under Item 5 announcing
that the Company repurchased 242,144 shares of its common stock for an
aggregate of approximately $11.4 million in cash resulting in an
incremental goodwill adjustment of approximately $1.1 million. The
Company repurchased these shares pursuant to its obligations under the
Stock Purchase Agreement, as amended, relating to the Company's
acquisition in March 2000 of the 49% minority interest in its
Panamanian subsidiaries which previously had been owned by BB&M
International Trading Group ("BB&M"). In exchange for BB&M's 49%
interest, the Company issued to BB&M's principals 306,748 shares of
the Company's common stock and agreed to redeem the shares issued to
BB&M at a price of $46.86 per share following the one-year anniversary
of the completion of the acquisition upon the request of BB&M's
principals. The Company has agreed to redeem, at its option for cash
or additional stock, the remaining 64,604 shares following the second
anniversary of the completion of the acquisition at the price of
$46.86 per share upon the holders' request.

(c) See Exhibit Index and Exhibits attached to this report

(d) Financial Statement Schedules

See "Schedule II: Valuation and Qualifying Accounts" attached to this
report
15

SCHEDULE II

PRICESMART, INC.

VALUATION AND QUALIFYING ACCOUNTS (IN THOUSANDS)

(1) Deductions from asset impairments related to the sale of six
properties.

(2) Deductions from allowance for doubtful accounts primarily related to
the recovery of prior year write down on accounts receivable.

16

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Dated: November 29, 2001 PRICESMART, INC.

By: /S/ GILBERT A. PARTIDA
------------------------------
Title PRESIDENT AND CHIEF
-------------------
EXECUTIVE OFFICER
-----------------

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.

17

PRICESMART, INC.
EXHIBIT INDEX AND EXHIBITS

18

10.8(c)(6) Second Amendment of Employment Agreement between the
Company and Thomas D. Martin, dated November 22, 1999

10.8(d)(11) Third Amendment of Employment Agreement between PriceSmart,
Inc. and Thomas Martin dated January 11, 2000

10.8(e)(14) Fourth Amendment of Employment Agreement between PriceSmart,
Inc. and Thomas Martin dated January 24, 2001

10.8(f)(7) Fifth Amendment of Employment Agreement between PriceSmart,
Inc. and Thomas Martin dated October 16, 2001

10.9(12) Employment Agreement dated August 19, 1998 between the Company
and Kurt A. May

10.9(a)(6) First Amendment of Employment Agreement between the Company
and Kurt A. May dated November 22, 1999.

10.9(b)(6) Second Amendment of Employment Agreement between the Company
and Kurt A. May dated July 18, 2000.

10.10(12) Members' Agreement dated September 14, 1998 between the
Company and PSMT Caribe, Inc.

10.11(a)(15) Promissory Note (Includes schedule showing certain borrowers,
dates of Notes, amounts of Notes and dates of Pledge
Agreements)

10.11(b)(16) First Amendment to Promissory Note between the Company and
Kevin C. Breen, dated June 1, 1999

10.11(c)(16) First Amendment to Promissory Note between the Company and Ron
deHarte, dated June 1, 1999

10.11(d)(16) First Amendment to Promissory Note between the Company and
Brud Drachman, dated June 1, 1999

10.11(e)(16) First Amendment to Promissory Note between the Company and
Thomas D. Martin, dated June 1, 1999

10.11(f)(16) First Amendment to Promissory Note between the Company and
Kurt A. May, dated June 1, 1999

10.11(g)(16) First Amendment to Promissory Note between the Company and
Bill Naylon, dated June 1, 1999

10.11(h)(16) First Amendment to Promissory Note between the Company and Ed
Oats, dated June 1, 1999

10.11(i)(16) Promissory Note between the Company and Allan C. Youngberg,
dated July 27, 1999

10.12(a)(17) Pledge Agreement (Includes schedule showing certain borrowers,
dates of Notes, amounts of Notes and number of pledged shares)

10.12(b)(16) Pledge Agreement between the Company and Allan C. Youngberg,
dated July 27, 1999

10.13(18) 1998 Equity Participation Plan of PriceSmart, Inc.

10.14(a)(16) Employment Agreement dated as of July 23, 1999 between the
Company and Allan C. Youngberg

10.14(b)(16) First Amendment of Employment Agreement between the Company
and Allan C. Youngberg, dated July 26, 1999

10.14(c)(7) Second Amendment of Employment Agreement between the Company
and Allan C. Youngberg, dated September 26, 2001

19

10.14(d)(7) Third Amendment of Employment Agreement between the Company
and Allan C. Youngberg, dated October 16, 2001

10.15(a)(16) Employment Agreement dated as of March 31, 1998 between the
Company and K.C. Breen

10.15(b)(16) First Amendment of Employment Agreement between the Company
and K.C. Breen, dated March 31, 1999

10.15(c)(16) Second Amendment of Employment Agreement between the Company
and K.C. Breen, dated October 1, 1999

10.15(d)(16) Third Amendment of Employment Agreement between the Company
and K.C. Breen, dated January 11, 2000

10.15(e)(14) Fourth Amendment of Employment Agreement between the Company
and K.C. Breen, dated January 24, 2001

10.15(f)(7) Fifth Amendment of Employment Agreement between the Company
and K.C. Breen, dated October 16, 2001

10.16(16) Trademark Agreement between the Company and Associated
Wholesale Grocers, Inc., dated August 1, 1999

10.17(11) Loan agreement by and between CitiBank and PRICSMARLANDCO,
S.A., Prismar de Costa Rica. S.A., PSMT Caribe, Inc.
Pricesmart, Inc., P.S.C., S.A., and Venture Services, Inc.
dated October 12, 1999 for $5.9 million.

10.18(11) Line of credit between Bank of America and PriceSmart, Inc.
dated January 10, 2000 for $8.0 million.

10.19(11) Loan agreement by and between CitiBank, N.A. and Imobiliaria
PriceSmart, S.A. de C.V., PriceSmart El Salvador, S.A. de
C.V., PSMT Caribe, Inc., PriceSmart, Inc., P.S.C., S.A., and
Venture Services, Inc. dated December 21, 1999 for $5.0
million

10.20(a)(11) Loan agreement by and between The Chase Manhattan Bank and
PriceSmart, Inc. and PB Real Estate, S.A. dated December 20,
1999 for $11.3 million (in Spanish)

10.20(b)(11) Loan agreement by and between The Chase Manhattan Bank and
PriceSmart, Inc. and PB Real Estate, S.A. dated December 20,
1999 for $11.3 million (in English).

10.21(a)(11) Line of Credit for 180 days between Banco Nacional de Credito,
S.A. and PriceSmart Dominicana, S.A. January 11, 2000 for $1.0
million (in Spanish).

10.21(b)(11) Line of Credit for 180 days between Banco Nacional de Credito,
S.A. and PriceSmart Dominicana, S.A. dated January 11, 2000
for $1.0 million (in English).

10.21(c)(11) Line of Credit for 180 days between Banco Nacional de Credito,
S.A. and PriceSmart Dominicana, S.A. dated January 11, 2000
for $1.0 million (in Spanish).

10.21(d)(11) Line of Credit for 180 days between Banco Nacional de Credito,
S.A. and PriceSmart Dominicana, S.A. dated January 11, 2000
for $1.0 million (in English).

10.22(a)(11) Line of Credit for 180 days between Banco Del Progresso, S.A.
and PriceSmart Dominicana, S.A. dated December 23, 1999 for
$2.0 million (in Spanish).

10.22(b)(11) Line of Credit for 180 days between Banco Del Progresso and
PriceSmart Dominicana, S.A. dated December 23, 1999 for $2.0
million (in English).

20

10.23(a)(11) Loan agreement by and between Commercial International Bank &
Trust Co. Ltd. And PRICMARLANDCO, S.A. (Costa Rica) dated
February 4, 2000 for $3.9 million (in Spanish).

10.23(b)(11) Loan agreement by and between Commercial International Bank &
Trust Co. Ltd. And PRICMARLANDCO, S.A. (Costa Rica) dated
February 4, 2000 for $3.9 million (in English).

10.24(a)(11) Loan agreement by and between Banco Nacional de Credito, S.A.
and PriceSmart Dominicana, S.A. dated February 22, 2000 for
$4.2 million (in Spanish).

10.24(b)(11) Loan agreement by and between Banco Nacional de Credito, S.A.
and PriceSmart Dominicana, S.A. dated February 22, 2000 for
$4.2 million (in English).

10.25(11) Loan agreement by and between CitiBank, N.A. and Inmobiliaria
PriceSmart Honduras dated February 25, 2000 for $3.5 million.

10.26(11) Loan agreement by and between Banco Dominicano del Progreso,
S.A., Inmobiliaria PriceSmart, S.A. and PriceSmart Dominicana,
S.A. dated March 10, 2000 for $7.0 million.

10.27(a)(11) Agreement to acquire sole ownership of the Panama PriceSmart
business dated March 22, 2000 between the Company and BB&M
International Trading Group.

10.27(b)(6) Registration Rights Agreement dated as of March 15, 2000 by
and among PriceSmart, Inc. and BB&M International Trading
Group.

10.28(11) Loan agreement by and between Banco Bilbao Vizcaya, S.A. and
PRICSMARLANDCO, S.A. dated May 27, 1999 for $3.75 million.

10.29(19) Promissory Note with Banco Bilbao Vizcaya, S.A. and
Inmobiliaria PriceSmart S.A. DE C.V. (El Salvador) dated April
26, 2000 for $3.750 million.

10.30(a)(6) Stock Purchase Agreement dated as of June 5, 2000 by and among
PriceSmart, Inc., PSC, S.A. and the Shareholders of PSC, S.A.

10.30(b)(6) Registration Rights Agreement dated as of June 5, 2000 by and
among PriceSmart, Inc and the Shareholders of PSC, S.A.

10.31(6) Promissory Note between the Company and John Hildebrandt,
dated April 18, 2000

10.32(6) Loan agreement by and between Royal Merchant Bank and Finance
Company Limited and PSMT Trinidad/Tobago Limited dated June
21, 2000 for $3.5 million.

10.33(14) Master Agreement between PriceSmart, Inc. and Payless ShoeSource
Holdings, Ltd., dated November 27, 2000.

10.34(14) Licensee Agreement - PRC Technology License Agreement, as
amended, between PriceSmart, Inc. and Novont Holdings Co., LTD.
and Novont Inc., dba Timetone International Group and Cheng
Cheng Import Export Co., Ltd., dated February 28, 2001.

10.35(a)(14) Loan Agreement by and between CitiBank, N.A. and PriceSmart
(Guatemala), S.A., dated December 19, 2000 for $1.5 million (in
Spanish).

10.35(b)(14) Loan Agreement by and between CitiBank, N.A. and PriceSmart
(Guatemala), S.A., dated December 19, 2000 for $1.5 million (in
English).

21

10.36(14) Loan Agreement among PriceSmart, Inc., PSMT Caribe, Inc., PSMT
Trinidad / Tobago Limited, and International Finance
Corporation, dated January 26, 2001 for $22.0 million.

10.37(14) Loan Agreement among PriceSmart, Inc., PSMT Caribe, Inc., PSMT
Trinidad / Tobago Limited, and International Finance
Corporation, dated January 26, 2001 for $10.0 million.

10.38(14) Escrow Account Agreement among PriceSmart, Inc., International
Finance Corporation and The Bank of New York, dated
January 26, 2001 for $7.5 million.

10.39(20) Common Stock Purchase Agreement entered into as of April 19,
2001 by and among PriceSmart, Inc., Whiffletree Partners L.P.
and Benchmark Partners.

10.40(20) Common Stock Purchase Agreement entered into as of April 20,
2001 by and among PriceSmart, Inc., Caxton International
Limited, Caxton Equity Growth (BVI) Ltd. and Caxton Equity
Growth LLC.

10.41(7) Loan Agreement among PriceSmart, Inc., PSMT Caribe, Inc.,
Prismar de Costa Rica, S.A., Pricsmarlandco, S.A. and Overseas
Private Investment Corporation, dated August 17, 2001 for $5
million.

10.42(a)(7) Employment Agreement between the Company and William Naylon,
dated as of February 1, 2000

10.42(b)(7) First Amendment to Employment Agreement between the Company
and William Naylon, dated as of January 24, 2001

10.42(c)(7) Second Amendment to Employment Agreement between the Company
and William Naylon, dated as of October 16, 2001

10.43(a)(7) Employment Agreement between the Company and John D.
Hildebrandt, dated as of June 1, 2001

10.43(b)(7) First Amendment to Employment Agreement between the Company
and John Hildebrandt, dated as of October 16, 2001

10.44(7) Loan Agreement among Banco Popular de Puerto Rico, PSMT LLC
and PriceSmart, Inc., dated September 7, 2001 for $2 million

10.45(7) Continuing Guaranty by PriceSmart, Inc. to Banco de Puerto
Rico, date September 7, 2001 for $2 million

10.46(7) Loan Agreement between Metropolitan Bank and Trust Company and
PSMT Philippines Inc., dated September 14, 2001, for 250
million pesos.

10.47(7) DSR Agreement among PriceSmart, Inc., The Bank of New York,
and Overseas Private Investment Corporation, dated August 17,
2001

11.1(7) Computation of Net Income (Loss) Per Common Share (Basic and
Diluted)

13.1(7) Portions of the Company's Annual Report to Stockholders for
the year ended August 31, 2001

21.1(7) Subsidiaries of PriceSmart, Inc.

23.1(7) Consent of Ernst & Young LLP, Independent Auditors

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(1) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended August 31, 1997 filed with the Commission on
November 26, 1997.

(2) Incorporated by reference to Exhibit 10.2 to the Company's Registration
Statement on Form 10 filed with the Commission on July 3, 1997.

(3) Incorporated by reference to Exhibit 10.14 to Amendment No. 1 to the

22

Registration Statement on Form S-4 of Price Enterprises, Inc. filed
with the Commission on November 3, 1994.

(4) Incorporated by reference to Exhibit 10.4 to the Quarterly Report on
Form 10-Q of Price Enterprises, Inc. for the quarter ended June 8, 1997
filed with the Commission on July 17, 1997.

(5) Incorporated by reference to Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended May 31, 1999 filed with the
Commission on July 15, 1999.

(6) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended August 31, 2000 filed with the Commission on
November 29, 2000.

(7) Filed herewith.

(8) Incorporated by reference to the Current Report on Form 8-K filed
September 12, 1997 by Price Enterprises, Inc.

(9) Incorporated by reference to Exhibit 10.8 to Amendment No. 1 to the
Company's Registration Statement on Form 10 filed with the Commission
on August 1, 1997.

(10) Incorporated by reference to Exhibit 10.13 to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1998 filed with
the Commission on April 14, 1998.

(11) Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended February 29, 2000 filed with the Commission
on April 11, 2000.

(12) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended August 31, 1998 filed with the Commission on
November 25, 1998.

(13) Incorporated by reference to Exhibit 10.3 to the Company's Quarterly
Report on Form 10-Q for the quarter ended May 31, 1999 filed with the
Commission on July 15, 1999.

(14) Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended February 28, 2001 filed with the Commission
on April 16, 2001.

(15) Incorporated by reference to Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended November 30, 1998 filed with
the Commission on January 14, 1999.

(16) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended August 31, 1999 filed with the Commission on
November 29, 1999.

(17) Incorporated by reference to Exhibit 10.2 to the Company's Quarterly
Report on Form 10-Q for the quarter ended November 30, 1998 filed with
the Commission on January 14, 1999.

(18) Incorporated by reference to Exhibit 10.2 to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1999 filed with
the Commission on April 14, 1999.

(19) Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended May 31, 2000 filed with the Commission on
July 17, 2000.

(20) Incorporated by reference to the Company's Registration Statement on
Form S-3 filed with the Commission on May 11, 2001

23