Winmark Corporation Announces First Quarter Results

Business Wire

MINNEAPOLIS--(BUSINESS WIRE)--

Winmark Corporation (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:
Winmark Corporation
Brett D. Heffes, 763-520-8500
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