POST EMPLOYMENT PLANS

12 Months Ended

Aug. 31, 2023

Defined Contribution Plans

PriceSmart offers a defined contribution 401(k) retirement plan to its U.S. employees, including warehouse club employees in the U.S. Virgin Islands, which auto-enrolls employees in the plan immediately on the first day of employment. The Company makes non-discretionary contributions to the 401(k) plan with a 4% “Company Contribution” based on the employee’s salary regardless of the employee’s own contributions to the plan up to the IRS maximum allowed. The Company also makes incremental non-discretionary contributions to the 401(k) plan to the employees who defer up to 2% of their salary. Employer contributions to the 401(k) plan for the Company's U.S. employees were $2.9 million during fiscal years 2023 and 2022, and $2.6 million during fiscal year 2021.

PriceSmart also offers defined contribution retirement plans in many of its subsidiaries. The Company makes non-discretionary contributions to these plans based on the employee’s salary, regardless of the employee’s own contributions to the plan, up to the maximum allowed. The expenses associated with the plans for the Company’s non-U.S. employees were $4.5 million, $3.6 million and $3.0 million during fiscal years 2023, 2022 and 2021, respectively.

Defined Benefit Plans

The Company's subsidiaries located in three countries have unfunded post-employment benefit plans (defined benefit plans) in which the subsidiary is required to pay a specified benefit upon retirement, voluntary departure or death of the employee. The amount of the benefit is predetermined by a formula based on the employee's earnings history, tenure of service and age. Because the obligation to provide benefits arises as employees render the services necessary to earn the benefits pursuant to the terms of the plan, the Company recognizes the cost of providing the benefits over the projected employee service periods. These payments are only due if an employee reaches certain thresholds, such as tenure and/or age. Therefore, these plans are treated as defined benefit plans. For these defined benefit plans, the Company has engaged actuaries to assist with estimating the current costs associated with these future benefits. The liabilities for these unfunded plans are recorded as non-current liabilities.

The following table summarizes the amount of the funding obligation and the line items in which it is recorded on the consolidated balance sheets as of August 31, 2023 and 2022 and consolidated statements of income for the fiscal years ended August 31, 2023, 2022 and 2021 (in thousands):


	Other Long-Term Liability				Accumulated Other Comprehensive Loss					Operating Expenses
	August 31,									Year Ended August 31,
	2023		2022		2023		2022			2023		2022		2021
Start of period	$	(2,976)	$	(2,298)	$	1,205	$	897		$	—	$	—	$	—
Service cost	(303)		(205)		—		—			365		315		229
Interest cost	(139)		(129)		—		—			139		129		104
Prior service cost (including amortization)	—		—		(26)		(36)			26		36		55
Actuarial gains/(losses)	(2,425)		(344)		2,425		344			122		92		72
Totals	$	(5,843)	$	(2,976)	$	3,604	$	1,205	(1)	$	652	$	572	$	460

(1)The Company has recorded a deferred tax asset of $1,106,000 and $377,000 as of August 31, 2023 and 2022, respectively, relating to the unrealized expense on defined benefit plans. The Company also recorded accumulated other comprehensive loss, net of tax, for $(2,500,000) and $(829,000) as of August 31, 2023 and 2022, respectively. The primary driver of the recorded accumulated other comprehensive loss was a change in assumption for our Trinidad and Tobago post-employment benefit plan in which we expect less turnover from our employees.

The valuation assumptions used to calculate the liability for the defined benefit plans differ based on the country where the plan applies. These assumptions are summarized as follows:

Year Ended August 31,

Valuation Assumptions:

2023

2022

Discount rate

4.6% to 6.4%

3.5% to 6.4%

Future salary escalation

3.0% to 5.2%

3.0% to 4.5%

Percentage of employees assumed to withdraw from Company without a benefit (“turnover”)

6.7% to 15.0%

Percentage of employees assumed to withdraw from Company with a benefit (“disability”)

0.5% to 1.5%

0.5% to 6.6%

For the fiscal year ending August 31, 2024, the Company expects to recognize, as components of net periodic benefit cost, the following amounts currently recorded in accumulated other comprehensive loss (in thousands):


Prior service cost	$	26
Amortization of actuarial loss	539
	$	565

Other Post-Employment Benefit Plans

Some of the Company’s subsidiaries are parties to funded and unfunded post-employment benefit plans based on services that the employees have rendered. These plans require the Company to pay a specified benefit on retirement, voluntary departure or death of the employee, or monthly payments to an external fund manager. The amount of these payments is predetermined by a formula based on the employee's earnings history and tenure of service. Because the obligation to provide benefits arises as employees render the services necessary to earn the benefits pursuant to the terms of the plan, the cost associated with providing the benefits is recognized as the employee provides those services. The employees' rights to receive payment on these plans are not dependent on their reaching certain thresholds like age or tenure. Therefore, these plans are not treated as defined benefit plans. For these post-employment benefit plans, the Company has accrued liabilities that are recorded as accrued salaries and benefits and other long-term liabilities.

The following table summarizes the amounts recorded on the balance sheet and amounts expensed on the consolidated statements of income (in thousands):


	Accrued Salaries and Benefits				Other Long-Term Liability				Restricted Cash Held (1)				Operating Expenses
	Years Ended August 31,
	2023		2022		2023		2022		2023		2022		2023		2022		2021
Other Post Employment Plans	$	738	$	522	$	5,077	$	4,567	$	4,859	$	4,382	$	1,754	$	1,423	$	1,447

(1)With some locations, local statutes require the applicable Company subsidiary to deposit cash in its own name with designated fund managers. The funds earn interest, which the Company recognizes as interest income.