Winmark Corporation Announces Third Quarter Results

MINNEAPOLIS - October 15, 2014 - (BUSINESS WIRE) - Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended September 27, 2014 of $5,623,000 (or $1.09 per share diluted) compared to net income of $5,251,500 (or $1.00 per share diluted) in the third quarter of 2013. For the nine months ended September 27, 2014, net income was $14,455,700 (or $2.76 per share diluted) compared to net income of $13,645,800 (or $2.61 per share diluted) for the same period last year.

About Winmark Corporation 

Winmark Corporation creates, supports and finances business. At September 27, 2014, there were 1,070 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 104 retail franchises have been awarded but are not open. In addition, at September 27, 2014, the Company had a lease portfolio of $43.2 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)

         
    September 27, 2014   December 28, 2013
ASSETS
Current Assets:        
Cash and cash equivalents   $ 2,015,200     $ 10,642,600  
Marketable securities     715,800       736,500  
Receivables, net     1,106,600       1,205,500  
Net investment in leases - current     20,036,200       17,239,900  
Income tax receivable     -       166,500  
Inventories     96,200       96,700  
Prepaid expenses     654,200       587,300  
Total current assets     24,624,200       30,675,000  
                 
Net investment in leases – long-term     23,114,800       20,301,400  
Property and equipment, net     1,501,300       1,382,200  
Other assets     677,500       677,500  
Deferred income taxes     23,500       -  
    $ 49,941,300     $ 53,036,100  
     
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:        
Line of credit   $ 20,000,000     $ -  
Accounts payable     3,109,400       2,441,400  
Income tax payable     26,900       -  
Accrued liabilities     2,874,000       1,233,100  
Discounted lease rentals     288,300       424,900  
Deferred revenue     2,225,200       2,199,900  
Deferred income taxes     2,810,500       4,208,200  
Total current liabilities     31,334,300       10,507,500  
                 
Long-Term Liabilities:        
Discounted lease rentals     94,300       277,400  
Deferred revenue     1,255,800       1,180,700  
Other liabilities     1,385,000       1,489,000  
Deferred income taxes     -       1,436,800  
Total long-term liabilities     2,735,100       4,383,900  
                 
Shareholders’ Equity:        

Common stock, no par, 10,000,000 shares authorized, 4,997,512 and 5,143,530 shares issued and outstanding

   

-

     

2,949,500

 
Accumulated other comprehensive loss     (41,300 )     (4,100 )
Retained earnings     15,913,200       35,199,300  
Total shareholders’ equity     15,871,900       38,144,700  
    $ 49,941,300     $ 53,036,100  
         

 

WINMARK CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

         
    Quarter Ended   Nine Months Ended
    September 27, 2014   September 28, 2013   September 27, 2014   September 28, 2013
REVENUE:                
Royalties   $ 10,725,000     $ 9,853,900     $ 28,735,800     $ 26,937,000  
Leasing income     4,121,800       3,810,100       11,655,000       11,348,100  
Merchandise sales     786,100       598,000       2,259,900       1,821,100  
Franchise fees     558,200       340,000       1,514,700       1,144,200  
Other     213,300       189,900       830,500       713,400  
Total revenue     16,404,400       14,791,900       44,995,900       41,963,800  
                                 
COST OF MERCHANDISE SOLD     742,300       569,200       2,156,300       1,734,700  
                                 
LEASING EXPENSE     808,500       399,300       1,234,200       1,289,500  
                                 
PROVISION FOR CREDIT LOSSES     (1,700 )     (29,800 )     26,100       (67,700 )
                                 
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     5,677,600       5,311,900       17,874,500       16,728,900  
                                 
Income from operations     9,177,700       8,541,300       23,704,800       22,278,400  
                                 
INTEREST EXPENSE     (150,500 )     (35,500 )     (356,700 )     (180,100 )
                                 
INTEREST AND OTHER INCOME/(EXPENSE)     27,200       5,500       28,200       (4,800 )
                                 
Income before income taxes     9,054,400       8,511,300       23,376,300       22,093,500  
                                 
PROVISION FOR INCOME TAXES     (3,431,400 )     (3,259,800 )     (8,920,600 )     (8,447,700 )
                                 
NET INCOME   $ 5,623,000     $ 5,251,500     $ 14,455,700     $ 13,645,800  
                                 
EARNINGS PER SHARE – BASIC   $ 1.12     $ 1.03     $ 2.84     $ 2.70  
                                 
EARNINGS PER SHARE – DILUTED   $ 1.09     $ 1.00     $ 2.76     $ 2.61  
                                 
WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC     5,022,166       5,116,872       5,093,243       5,046,156  
                                 
WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED     5,156,785       5,263,311       5,235,949       5,222,196   

SOURCE Winmark Corporation

Contact:

Brett D. Heffes
Winmark Corporation
763-520-8500

###

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