Winmark Corporation Announces First Quarter Results

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  

###

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