Winmark Corporation Announces Year End Results

By: Winmark Corporation | 0 Shares 75 Reads

MINNEAPOLIS - (BUSINESS WIRE) - Feb. 27, 2013 - Winmark Corporation (Nasdaq: WINA) announced today net income for the year ended December 29, 2012 of $12,937,900 or $2.47 per share diluted, compared to net income of $14,095,000 or $2.69 per share diluted, in 2011. The fourth quarter 2012 net income was $1,758,000 or $.34 per share diluted, compared to net income of $4,185,000 or $.80 per share diluted, for the same period last year. Revenues for the year ended December 29, 2012 were $51,943,100, up from $51,335,000 in 2011. In addition, as previously disclosed, the company’s results were negatively impacted by a $2.5 million after-tax earnings charge, or $0.47 per share, in the fourth quarter related to the impairment of its investments in both Tomsten, Inc. (d/b/a Archiver’s) and BridgeFunds, LLC.

John L. Morgan, Chairman and Chief Executive Officer, stated, “Our 2012 results continued to demonstrate the strength of our franchising business, with solid growth in royalties and new franchise agreements. Our leasing business, while exhibiting a modest increase in profitability, achieved more meaningful growth in the portfolio of customers and equipment that, along with the development of our sales staff, positions us well for continued long-term success.”

“We are excited about our prospects for 2013 and look forward to introducing our Style EncoreTM concept to the market place as well as the continued execution of our business model,” Mr. Morgan added.

Winmark Corporation creates, supports and finances business. At December 29, 2012, there were 968 franchises in operation under the brands Plato's Closet®, Play It Again Sports®, Once Upon A Child®, and Music Go Round®. An additional 65 retail franchises have been awarded but are not open. In addition, at December 29, 2012, the Company had a lease portfolio equal to $36.2 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)

	December 29, 2012			December 31, 2011
ASSETS
Current Assets:
Cash and cash equivalents	$	2,233,400		$	9,020,100
Marketable securities		85,900			1,043,800
Receivables, net		1,237,100			1,316,200
Net investment in leases - current		13,461,200			11,746,900
Income tax receivable		1,400,700			116,500
Inventories		71,200			68,500
Prepaid expenses		445,200			362,000
Total current assets		18,934,700			23,674,000

Net investment in leases – long-term		22,697,100			18,102,000
Long-term investments, net		-			3,817,400
Property and equipment, net		1,229,500			1,474,800
Other assets		677,500			677,500
	$	43,538,800		$	47,745,700

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Line of credit	$	10,800,000		$	-
Accounts payable		2,203,700			1,460,300
Accrued liabilities		1,286,300			1,346,000
Discounted lease rentals		896,800			20,800
Rents received in advance		134,800			274,700
Deferred revenue		1,641,700			1,212,400
Deferred income taxes		3,549,900			3,464,800
Total current liabilities		20,513,200			7,779,000

Long-Term Liabilities:
Discounted lease rentals		177,900			-
Rents received in advance		117,700			269,400
Deferred revenue		953,000			844,300
Other liabilities		1,254,700			1,389,200
Deferred income taxes		2,594,300			2,355,100
Total long-term liabilities		5,097,600			4,858,000

Shareholders’ Equity:
Common stock, no par, 10,000,000 shares authorized, 4,996,459 and 4,987,643 shares issued and outstanding		-			629,800
Accumulated other comprehensive (loss) income		(4,000	)		17,000
Retained earnings		17,932,000			34,461,900

Total shareholders' equity		17,928,000			35,108,700
	$	43,538,800		$	47,745,700


WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)

	Quarter Ended						Fiscal Year Ended
	December 29, 2012			December 31, 2011			December 29, 2012			December 31, 2011
REVENUE:
Royalties	$	8,599,400		$	8,442,100		$	33,760,200		$	30,360,600
Leasing income		3,222,000			3,780,200			13,211,800			16,364,700
Merchandise sales		667,500			482,900			2,750,700			2,481,600
Franchise fees		325,000			245,000			1,291,000			1,081,200
Other		304,300			281,600			929,400			1,046,900
Total revenue		13,118,200			13,231,800			51,943,100			51,335,000

COST OF MERCHANDISE SOLD		639,300			457,900			2,621,500			2,366,400
LEASING EXPENSE		453,600			966,500			1,789,800			5,115,800
PROVISION FOR CREDIT LOSSES		22,000			(51,600	)		(47,600	)		(43,400	)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		5,040,400			4,953,200			20,280,300			19,048,600
Income from operations		6,962,900			6,905,800			27,299,100			24,847,600
LOSS FROM EQUITY INVESTMENTS		(1,842,500	)		(71,200	)		(2,492,900	)		(515,800	)
IMPAIRMENT OF INVESTMENT IN NOTES		(663,700	)		(337,000	)		(1,324,400	)		(883,100	)
INTEREST EXPENSE		(90,000	)		(27,800	)		(392,300	)		(112,000	)
INTEREST AND OTHER INCOME		15,400			22,800			66,000			44,900
Income before income taxes		4,382,100			6,492,600			23,155,500			23,381,600
PROVISION FOR INCOME TAXES		(2,624,100	)		(2,307,600	)		(10,217,600	)		(9,286,600	)
NET INCOME	$	1,758,000		$	4,185,000		$	12,937,900		$	14,095,000
EARNINGS PER SHARE – BASIC	$	.35		$	.84		$	2.57		$	2.83
EARNINGS PER SHARE – DILUTED	$	.34		$	.80		$	2.47		$	2.69
WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC		4,986,957			4,975,878			5,027,509			4,979,036
WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED		5,179,504			5,235,590			5,237,671			5,238,412