Winmark Corporation Announces First Quarter Results

MINNEAPOLIS - April 17, 2013 - (BUSINESS WIRE) - Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended March 30, 2013 of $4,057,500 (or $.78 per share diluted) compared to net income of $3,516,000 (or $.67 per share diluted) in the first quarter of 2012.

The Company’s earnings growth during the first quarter was primarily driven by an increase in the size and performance of its lease portfolio and, to a lesser extent, its franchising business which experienced slower growth when compared to last year’s first quarter. During the quarter, the Company reduced its bank debt by $6.3 million.

Winmark Corporation creates, supports and finances business. At March 30, 2013, there were 983 franchises in operation under the brands Plato's Closet®, Play It Again Sports®, Once Upon A Child®, and Music Go Round®. An additional 60 retail franchises have been awarded but are not open. In addition, at March 30, 2013, the Company had a lease portfolio equal to $35.8 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. 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 30, 2013     December 29, 2012
ASSETS
Current Assets:            
Cash and cash equivalents     $ 2,191,500       $ 2,233,400  
Marketable securities       89,300         85,900  
Receivables, net       1,211,100         1,237,100  
Net investment in leases - current       14,599,400         13,461,200  
Income tax receivable       -         1,400,700  
Inventories       72,000         71,200  
Prepaid expenses       422,500         445,200  

Total current assets

      18,585,800         18,934,700  
                     
Net investment in leases – long-term       21,237,200         22,697,100  
Property and equipment, net       1,176,100         1,229,500  
Other assets       677,500         677,500  
      $ 41,676,600       $ 43,538,800  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:            
Line of credit     $ 4,500,000       $ 10,800,000  
Accounts payable       1,828,500         2,203,700  
Income taxes payable       759,400         -  
Accrued liabilities       1,632,700         1,286,300  
Discounted lease rentals       815,100         896,800  
Rents received in advance       82,000         134,800  
Deferred revenue       1,547,800         1,641,700  
Deferred income taxes       3,549,900         3,549,900  

Total current liabilities

      14,715,400         20,513,200  
             
Long-Term Liabilities:            
Discounted lease rentals       180,700         177,900  
Rents received in advance       112,200         117,700  
Deferred revenue       954,000         953,000  
Other liabilities       1,219,700         1,254,700  
Deferred income taxes       2,594,300         2,594,300  
Total long-term liabilities       5,060,900         5,097,600  
             
Shareholders’ Equity:            
Common stock, no par, 10,000,000 shares authorized,

4,999,647 and 4,996,459 shares issued and outstanding

     

112,700

       

-

 
Accumulated other comprehensive loss       (1,900 )       (4,000 )
Retained earnings       21,789,500         17,932,000  
Total shareholders’ equity       21,900,300         17,928,000  
      $ 41,676,600       $ 43,538,800  
             
 
WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

       
      Three Months Ended
      March 30, 2013     March 31, 2012
REVENUE:            
Royalties     $ 8,474,900       $ 8,288,500  
Leasing income       3,407,800         2,392,100  
Merchandise sales       665,700         709,800  
Franchise fees       414,600         285,000  
Other       185,400         158,000  
Total revenue       13,148,400         11,833,400  
                     
COST OF MERCHANDISE SOLD       641,100         664,300  
                     
LEASING EXPENSE       279,700         239,800  
                     
PROVISION FOR CREDIT LOSSES       13,800         (53,000 )
                     
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES       5,537,900         5,136,100  
Income from operations       6,675,900         5,846,200  
                     
LOSS FROM EQUITY INVESTMENTS       -         (37,400 )
                     
INTEREST EXPENSE       (89,500 )       (69,800 )
                     
INTEREST AND OTHER INCOME (EXPENSE)       (10,200 )       46,300  
Income before income taxes       6,576,200         5,785,300  
                     

PROVISION FOR INCOME TAXES

     

(2,518,700

)

     

(2,269,300

)

                     

NET INCOME

   

$

4,057,500

     

$

3,516,000

 
             
EARNINGS PER SHARE - BASIC     $ .81       $ .70  
             
EARNINGS PER SHARE - DILUTED     $ .78       $ .67  
             
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC       4,997,322         5,052,952  
             
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED       5,202,696         5,280,202  
             

Contact:

Winmark Corporation
John L. Morgan
763-520-8500

###

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