Winmark Corporation Announces First Quarter Results

MINNEAPOLIS - April 16, 2014 - (BUSINESS WIRE) - Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended March 29, 2014 of $4,551,900 (or $.86 per share diluted) compared to net income of $4,057,500 (or $.78 per share diluted) in the first quarter of 2013.

Earnings growth during the first quarter was driven by an increase in customer activity within the Company’s lease portfolio as well as increased royalties in the franchising business. John Morgan, Chairman and CEO, commented, "We experienced solid growth in our lease portfolio during the quarter, and when coupled with the continued growth in new signed franchise agreements positions us well for long-term success."

Winmark Corporation creates, supports and finances business. At March 29, 2014, there were 1,021 franchises in operation under the brands Plato's Closet®, Once Upon A Child®, Play It Again Sports®, Music Go Round® and Style Encore®. An additional 117 retail franchises have been awarded but are not open. In addition, at March 29, 2014, the Company had a lease portfolio equal to $40.0 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 29, 2014   December 28, 2013
 
ASSETS
 
Current Assets:        
Cash and cash equivalents   $ 2,411,800       $ 10,642,600
Marketable securities     791,600     736,500
Receivables, net     1,047,800     1,205,500
Net investment in leases - current     17,174,700     17,239,900
Income tax receivable     -     166,500
Inventories     96,700     96,700
Prepaid expenses     581,700     587,300
Total current assets     22,104,300     30,675,000
             
Net investment in leases – long-term     22,841,900     20,301,400
Property and equipment, net     1,405,200     1,382,200
Other assets     677,500     677,500
    $ 47,028,900   $ 53,036,100
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
Current Liabilities:        
Line of credit   $ 14,000,000   $ -
Accounts payable     1,616,700     2,441,400
Income tax payable     1,829,200     -
Accrued liabilities     2,126,400     1,233,100
Discounted lease rentals     378,900     424,900
Deferred revenue     2,288,800     2,199,900
Deferred income taxes     4,208,200     4,208,200
Total current liabilities     26,448,200     10,507,500
         
Long-Term Liabilities:        
         
Discounted lease rentals     204,300     277,400
Deferred revenue     1,238,700     1,180,700
Other liabilities     1,480,500     1,489,000
Deferred income taxes     1,436,800     1,436,800
Total long-term liabilities     4,360,300     4,383,900
         
Shareholders’ Equity:        

Common stock, no par, 10,000,000 shares authorized, 5,144,589 and 5,143,530 shares issued and outstanding

   

2,506,500

   

2,949,500

Accumulated other comprehensive loss     (13,900)     (4,100)
Retained earnings     13,727,800     35,199,300
Total shareholders’ equity     16,220,400     38,144,700
    $ 47,028,900   $ 53,036,100
         

 

WINMARK CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

     
    Three Months Ended
    March 29, 2014   March 30, 2013
REVENUE:        
Royalties   $ 8,810,000       $ 8,474,900
Leasing income     4,375,600     3,407,800
Merchandise sales     788,000     665,700
Franchise fees     349,000     414,600
Other     230,000     185,400
Total revenue     14,552,600     13,148,400
             
COST OF MERCHANDISE SOLD     754,700     641,100
             
LEASING EXPENSE     306,600     279,700
             
PROVISION FOR CREDIT LOSSES     38,900     13,800
             
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     6,017,900     5,537,900
Income from operations     7,434,500     6,675,900
             
INTEREST EXPENSE     (62,100)     (89,500)
             
INTEREST AND OTHER INCOME (EXPENSE)     100     (10,200)
Income before income taxes     7,372,500     6,576,200
             

PROVISION FOR INCOME TAXES

   

(2,820,600)

   

(2,518,700)

             

NET INCOME

 

$

4,551,900

 

$

4,057,500

         
EARNINGS PER SHARE - BASIC   $ .88   $ .81
         
EARNINGS PER SHARE - DILUTED   $ .86   $ .78
         
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC     5,148,519     4,997,322
         
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED     5,307,946     5,202,696

Contact:

Brett D. Heffes
Winmark Corporation
763-520-8500

###

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