Winmark Corporation Announces First Quarter Results

By: Winmark Corporation | 0 Shares 213 Reads

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