DEBT

12 Months Ended

Aug. 31, 2011

NOTE 12 - DEBT

Short-term borrowings consist of lines of credit which are secured by certain assets of the Company and its subsidiaries and in some cases are guaranteed by the Company as summarized below (in thousands):

			Facilities Used
		Total Amount of Facilities	Short-term Borrowings		Letters of Credit		Facilities Available		Weighted average interest rate
August 31, 2011	$	28,033	$	2,259	$	453	$	25,321		9.5	%

August 31, 2010	$	27,940	$	3,551	$	470	$	23,919		9.5	%

Long-term debt consists of the following (in thousands):

		August 31,	August 31,
		2011	2010
Note due July 2017, 9.0% fixed rate(5)	$	5,147	$	5,858
Note due November 2017, (six-month LIBOR + 1.5%) 1.92% current Rate(3) (5) (6)		2,925		3,375
Note due November 2017, (BB Prime rate - 2%)(8)		-		3,334
Note due September 2014, 5.5% fixed rate(1) (5) (6)		6,467		7,267
Note due August 2018, (1 year LIBOR + 2.75%) 3.55% current rate(3) (5)		6,300		7,200
Note due February 2016, 6.71% fixed rate(1) (5) (6)		7,125		8,075
Note due August 2014, 5.5% fixed rate(1) (5) (6)		8,000		9,000
Note due January 2015, 5.5% fixed rate (1) (5) (6)		5,050		5,650
Note due March 2015, (Variable interest, to be reviewed annually)10.25% current rate(2)		4,311		5,511
Note due August 2015, (Yr-1 5.0% Fixed rate, Yrs 2-3 5.5% Fixed rate and Yrs 4-5 Prime rate + 2.5%) 5.0% current rate(1) (5)		4,500		5,000
Note due November 2015, (six-month LIBOR + 2.4%) 2.83% current rate(4) (6)		8,000		-
Note due April 2016, (three-month LIBOR + 0.7%) 0.945% current rate (6) (9) (10)		7,924		-
Note due July 2016, (three-month LIBOR + 0.7%) 0.954% current rate (6) (9) (11)		2,000		-
Note due September 2011, ($475,000 three year, zero interest, discounted loan) (7)		473		450
Total long-term debt		68,222		60,720
Less: current portion		7,771		7,715
Long-term debt, net of current portion	$	60,451	$	53,005

(1)	Loan contains a balloon payment for net principal due at the end of the loan term.
(2)	As collateral for this loan, the Company's Honduras subsidiary entered into an agreement with Banco Del Pais to open and maintain a certificate of deposit with an initial interest rate of 3.88%. The certificate of deposit is for $4.9 million as of August 31, 2011. The certificate of deposit is automatically renewable by Banco Del Pais on an annual basis for the net amortized outstanding balance on the loan.
(3)	The Company has entered into an interest rate swap agreement to eliminate the changes (variability) of the interest payments on these loans. (See Note 14 - Derivative Instruments and Hedging Activities.)
(4)	On November 1, 2010, the Company's Colombia subsidiary entered into a loan agreement with Citibank, N.A. in New York. The agreement establishes a credit facility for $16.0 million to be disbursed in two tranches of $8.0 million each. The interest rate is set at the 6 month LIBOR rate plus 2.4%. The loan term is five years with interest only payments and a balloon payment at maturity. The Company's Colombia subsidiary is required to comply with certain annual financial covenants, which include debt service and leverage ratios. The first reporting period for these financial covenants will be on December 31, 2011. The credit facility is renewable for an additional five-year period at PriceSmart, Colombia's option. As collateral for this credit facility, the Company entered into an agreement with Citibank, N.A. to open and maintain a certificate of deposit equal to the amount outstanding on the loan with an initial interest rate of 6 month LIBOR plus 1.66%.
(5)	As of August 31, 2011 and August 31, 2010, approximately $45.5 million and $54.8 million, respectively, of the Company's long-term debt was collateralized by certain land, buildings, fixtures, equipment and shares of each respective subsidiary. The carrying amount of the non-cash assets assigned as collateral for long-term debt was $93.2 million and $87.4 million as of August 31, 2011 and August 31, 2010, respectively.
(6)	As of August 31, 2011 and August 31, 2010, approximately $47.5 million and $36.7 million, respectively, relate to loans held by the Company's subsidiaries 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. As of August 31, 2011 and August 31, 2010, the Company was in compliance with respect to these covenants.
(7)	As of August 31, 2011 and August 31, 2010, approximately $473,000 and $450,000, respectively, of the Company's long-term debt, current portion was collateralized by shares that the Company owns in the joint venture, Newco2. (See Note 17 - Unconsolidated Affiliates.) On September 29, 2011, the Company exercised its option to cancel its participation in this joint venture. (See Note 19 - Subsequent Events).
(8)	On November 25, 2010, the Company's Barbados subsidiary paid off its Barbados local currency loan to Citicorp Merchant Bank Limited for approximately $3.3 million.
(9)	On March 14, 2011 the Company's Colombia subsidiary entered into a loan agreement with Scotiabank & Trust (Cayman) Ltd. The agreement establishes a credit facility for $16.0 million to be disbursed in several tranches. The interest rate is set at the three-month LIBOR rate plus 0.7%. The loan term is five years with interest only payments and a balloon payment at maturity. This loan is secured by a time deposit of $16.0 million pledged by the Company's Costa Rican subsidiary. The deposit will earn an interest rate of three-month LIBOR. The first tranche of $8.0 million was funded on April 1, 2011 and a second tranche of $2.0 million was funded on July 28, 2011, and the Company secured this portion of the loan with an $8.0 million and $2.0 million secured time deposit, respectively. Subsequent to August 31, 2011, the Company drew down the third and final tranche of $6.0 million on September 30, 2011 and the Company secured this portion of the loan with a $6.0 million secured time deposit. The Company's Colombia subsidiary is required to comply with certain annual financial covenants, which include debt service and leverage ratios. The first reporting period for these financial covenants will be on December 31, 2011.
(10)	The Company's Colombia subsidiary entered into a cross-currency interest rate swap agreement on May 5, 2011 with the Bank of Nova Scotia ("Scotia Bank"). Under the cross-currency interest rate swap agreement, the Company will receive variable interest in U.S. dollars based on the three-month LIBOR rate plus 0.7% on a notional amount of US$8.0 million and pay fixed Colombian peso ("COP") interest of 6.09% on a notional of COP 14,136,000,000 for a term of approximately five years. The first LIBOR reset dates for the hedged long-term debt and the cross-currency interest rate swap occur on the first day of January, April, July, and October, beginning on July 5, 2011. The quarterly interest due to or due from Scotia Bank on the derivative instrument will be settled on a net basis. That is, if the floating leg is greater than the fixed leg on the swap, then the Company will receive a single, net amount from Scotia Bank. Conversely, if the fixed leg is greater than the floating leg, the Company will pay a single net amount to Scotia Bank. (See Note 14 - Derivative Instruments and Hedging Activities.)
(11)	The Company's Colombia subsidiary has subsequently entered into cross-currency interest rate swap agreements dated October 21, 2011 with the Bank of Nova Scotia with respect to notional amounts of U.S dollar $2.0 million and U.S dollar $6.0 million, respectively. On the first of these additional swaps, the Company will receive variable U.S dollar interest based on the three-month LIBOR rate plus 0.7% on a notional of U.S. $2.0 million ("the floating leg") and pay fixed COP interest of 5.30% on a notional of COP 3,801,600,000 ("the fixed leg") for a term of approximately five years (Effective date of July 29, 2011 through April 1, 2016). On the second of these swaps, the Company will receive variable U.S dollar interest based on the three-month LIBOR rate plus 0.7% on a notional of U.S. $6.0 million ("the floating leg") and pay fixed COP interest of 5.45% on a notional of COP 11,404,800,000 ("the fixed leg") for a term of approximately five years (effective date of September 29, 2011 through April 1, 2016).

Annual maturities of long-term debt are as follows (in thousands):

Years Ended August 31,	Amount
2011	$	7,771
2012		7,298
2013		12,298
2014		14,213
2015		23,495
Thereafter		3,147
Total	$	68,222

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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