Winmark Corporation Announces First Quarter Results

By: Winmark Corporation | 1,014 Shares 80 Reads

MINNEAPOLIS--(BUSINESS WIRE)--Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended March 31, 2012 of $3,516,000 (or $.67 per share diluted) compared to net income of $3,026,300 (or $.58 per share diluted) in the first quarter of 2011.

John L. Morgan, Chairman and Chief Executive Officer, stated, “We are pleased with our performance during the first quarter. Our results were driven by the growth of our franchising business and continued progress in building our leasing portfolio.”

Winmark Corporation creates, supports and finances business. At March 31, 2012, there were 939 franchises in operation under the brands Plato's Closet®, Play It Again Sports®, Once Upon A Child®, and Music Go Round®. An additional 50 retail franchises have been awarded but are not open. In addition, at March 31, 2012, the Company had a lease portfolio equal to $29.6 million.

This press release contains forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), relating to future events or the future financial performance of the Company including statements with respect to our ability to finance the growth of our leasing and franchising businesses for the foreseeable future. Such forward-looking statements are only predictions or statements of intention subject to risks and uncertainties and actual events or results could differ materially from those anticipated. Because actual result may differ, shareholders and prospective investors are cautioned not to place undue reliance on such forward-looking statements.


WINMARK CORPORATION
CONDENSED BALANCE SHEETS
(unaudited)

	March 31, 2012		December 31, 2011

ASSETS
Current Assets:
Cash and cash equivalents	$	2,093,400	$	9,020,100
Marketable securities		-		1,043,800
Receivables, net		1,282,400		1,316,200
Net investment in leases - current		11,465,300		11,746,900
Income tax receivable		-		116,500
Inventories		69,100		68,500
Prepaid expenses		437,400		362,000
Total current assets		15,347,600		23,674,000
Net investment in leases – long-term		18,096,700		18,102,000
Long-term investments, net		3,780,000		3,817,400
Property and equipment, net		1,384,000		1,474,800
Other assets		677,500		677,500
	$	39,285,800	$	47,745,700

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Line of credit	$	12,100,000	$	-
Accounts payable		1,269,800		1,460,300
Income taxes payable		58,200		-
Accrued liabilities		1,709,900		1,346,000
Discounted lease rentals		13,900		20,800
Rents received in advance		282,000		274,700
Deferred revenue		1,376,800		1,212,400
Deferred income taxes		3,487,900		3,464,800
Total current liabilities		20,298,500		7,779,000

Long-Term Liabilities:
Rents received in advance		194,500		269,400
Deferred revenue		847,300		844,300
Other liabilities		1,314,200		1,389,200
Deferred income taxes		2,607,100		2,355,100
Total long-term liabilities		4,963,100		4,858,000

Shareholders’ Equity:
Common stock, no par, 10,000,000 shares authorized, 5,075,954 and 4,987,643 shares issued and outstanding		1,565,800		629,800
Accumulated other comprehensive income		-		17,000
Retained earnings		12,458,400		34,461,900
Total shareholders’ equity		14,024,200		35,108,700
	$	39,285,800	$	47,745,700

WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)

	Three Months Ended
	March 31, 2012			March 26, 2011
REVENUE:
Royalties	$	8,288,500		$	7,052,800
Leasing income		2,392,100			3,235,000
Merchandise sales		709,800			501,400
Franchise fees		285,000			75,000
Other		158,000			240,700
Total revenue		11,833,400			11,104,900

COST OF MERCHANDISE SOLD		664,300			482,900

LEASING EXPENSE		239,800			518,700

PROVISION FOR CREDIT LOSSES		(53,000	)		45,400

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		5,136,100			4,845,900
Income from operations		5,846,200			5,212,000

LOSS FROM EQUITY INVESTMENTS		(37,400	)		(77,000	)

INTEREST EXPENSE		(69,800	)		(31,100	)

INTEREST AND OTHER INCOME		46,300			17,200
Income before income taxes		5,785,300			5,121,100

PROVISION FOR INCOME TAXES		(2,269,300	)		(2,094,800	)

NET INCOME	$	3,516,000		$	3,026,300

EARNINGS PER SHARE - BASIC	$	.70		$	.61

EARNINGS PER SHARE - DILUTED	$	.67		$	.58

WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC		5,052,952			4,989,588

WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED		5,280,202			5,215,484