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Winmark Corporation Announces First Quarter Results

MINNEAPOLIS--(BUSINESS WIRE)--

Winmark Corporation (WINA) announced today net income for the quarter ended March 30, 2019 of $7,272,200 (or $1.73 per share diluted) compared to net income of $6,960,400 (or $1.69 per share diluted) in 2018.

Brett D. Heffes, Chief Executive Officer, commented, “Our first quarter results were positively impacted by the performance of our franchisees, offset by lower activity in our leasing business.”

Winmark Corporation creates, supports and finances business. At March 30, 2019, there were 1,241 franchises in operation under the brands Plato’s Closet®, Once Upon A Child®, Play It Again Sports®, Style Encore® and Music Go Round®. An additional 46 retail franchises have been awarded but are not open. In addition, at March 30, 2019, the Company had a lease portfolio of $35.1 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, 2019 December 29, 2018
ASSETS
Current Assets:
Cash and cash equivalents $ 1,066,800 $ 2,496,000
Restricted cash 65,000 80,000
Receivables, net 1,455,500 1,553,100
Net investment in leases - current 17,321,500 18,547,500
Income tax receivable 565,500
Inventories 113,800 107,600
Prepaid expenses 954,100   901,600  
Total current assets 20,976,700 24,251,300
 
Net investment in leases – long-term 17,786,000 20,455,500
Property and equipment, net 908,800 866,200
Operating lease right of use asset 6,056,100
Goodwill 607,500 607,500
Other assets 496,700   482,600  
$ 46,831,800   $ 46,663,100  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net $ 3,236,100 $ 3,236,100
Accounts payable 1,717,800 1,351,800
Income tax payable 1,664,700
Accrued liabilities 2,669,100 3,128,600
Discounted lease rentals 3,070,700 3,021,900
Deferred revenue 1,750,700   1,744,900  
Total current liabilities 14,109,100 12,483,300
Long-Term Liabilities:
Line of credit 11,500,000
Notes payable, net 24,795,900 25,604,900
Discounted lease rentals 1,937,300 2,723,500
Deferred revenue 8,247,900 8,432,400
Operating lease liabilities 5,823,000
Other liabilities 764,800 1,079,200
Deferred income taxes 1,148,900   1,148,300  
Total long-term liabilities 54,217,800 38,988,300
Shareholders’ Equity (Deficit):

Common stock, no par, 10,000,000 shares authorized, 3,759,186 and 3,907,686 shares issued and outstanding

4,425,600
Retained earnings (accumulated deficit) (21,495,100 ) (9,234,100 )
Total shareholders’ equity (deficit) (21,495,100 ) (4,808,500 )
$ 46,831,800   $ 46,663,100  
 
 
WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
           
Three Months Ended
March 30, 2019   March 31, 2018
REVENUE:  
Royalties $ 11,761,400 $ 11,049,000
Leasing income 5,155,300 5,528,800
Merchandise sales 611,000 776,900
Franchise fees 391,800 400,900
Other 411,700   405,400  
Total revenue 18,331,200 18,161,000
COST OF MERCHANDISE SOLD 571,500 742,500
LEASING EXPENSE 698,700 554,900
PROVISION FOR CREDIT LOSSES 10,100 95,000
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 6,984,400   6,694,400  
Income from operations 10,066,500 10,074,200
INTEREST EXPENSE (442,200 ) (743,800 )
INTEREST AND OTHER EXPENSE (300 ) (1,000 )
Income before income taxes 9,624,000 9,329,400
PROVISION FOR INCOME TAXES (2,351,800 ) (2,369,000 )
NET INCOME $ 7,272,200   $ 6,960,400  
EARNINGS PER SHARE – BASIC $ 1.86   $ 1.81  
EARNINGS PER SHARE – DILUTED $ 1.73   $ 1.69  
WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC 3,906,895   3,847,312  
WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED 4,198,454   4,124,573  
 

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