Attached files
| file | filename |
|---|---|
| 8-K - 8-K - WINMARK CORP | a12-24377_18k.htm |
Exhibit 99.1
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Contact: |
John L. Morgan |
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763/520-8500 |
FOR IMMEDIATE RELEASE
WINMARK CORPORATION ANNOUNCES
THIRD QUARTER RESULTS
Minneapolis, MN (October 17, 2012) — Winmark Corporation (Nasdaq; WINA) announced today net income for the quarter ended September 29, 2012 of $4,259,500 (or $.82 per share diluted) compared to net income of $3,483,500 (or $.66 per share diluted) in 2011. For the nine months ended September 29, 2012, net income was $11,179,900 (or $2.13 per share diluted) compared to net income of $9,910,000 (or $1.89 per share diluted) for the same period last year.
John L. Morgan, Chairman and Chief Executive Officer, stated, “During the quarter, our pre-tax income was reduced by approximately $1.0 million, or $0.20 per share, due to our share of losses from Tomsten, Inc. as well as an impairment charge relating to our investment in BridgeFunds, L.L.C. This compares with a reduction of pre-tax income during the third quarter of 2011 from these investments of $0.5 million, or $0.10 per share.”
Mr. Morgan continued “The strong cash flow from our franchising business allows us to grow our leasing operations. Franchising cash flow is improved by additional stores and store sales growth, which in turn provides us with the capital to invest on behalf of our leasing customers. This combination is the cornerstone of Winmark’s business model.”
Winmark Corporation creates, supports and finances business. At September 29, 2012, there were 958 franchises in operation under the brands Plato’s Closet®, Play It Again Sports®, Once Upon A Child®, and Music Go Round®. An additional 59 retail franchises have been awarded but are not open. In addition, at September 29, 2012, the Company had a lease portfolio of $34.1 million.
This press release contains forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), relating to future events or the future financial performance of the Company including statements with respect to our ability to finance the growth of our leasing and franchising businesses for the foreseeable future. Such forward-looking statements are only predictions or statements of intention subject to risks and uncertainties and actual events or results could differ materially from those anticipated. Because actual result may differ, shareholders and prospective investors are cautioned not to place undue reliance on such forward-looking statements.
WINMARK CORPORATION
CONDENSED BALANCE SHEETS
(unaudited)
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September 29, 2012 |
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December 31, 2011 |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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$ |
2,249,200 |
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$ |
9,020,100 |
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Marketable securities |
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90,400 |
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1,043,800 |
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Receivables, net |
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1,164,500 |
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1,316,200 |
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Net investment in leases - current |
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10,764,800 |
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11,746,900 |
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Income tax receivable |
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427,800 |
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116,500 |
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Inventories |
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85,300 |
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68,500 |
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Prepaid expenses |
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573,300 |
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362,000 |
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Total current assets |
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15,355,300 |
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23,674,000 |
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Net investment in leases — long-term |
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23,373,200 |
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18,102,000 |
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Long-term investments, net |
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2,506,300 |
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3,817,400 |
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Property and equipment, net |
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1,229,700 |
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1,474,800 |
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Other assets |
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677,500 |
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677,500 |
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$ |
43,142,000 |
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$ |
47,745,700 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current Liabilities: |
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Line of credit |
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$ |
10,700,000 |
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$ |
— |
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Accounts payable |
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1,511,300 |
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1,460,300 |
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Accrued liabilities |
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2,443,900 |
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1,346,000 |
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Discounted lease rentals |
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570,100 |
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20,800 |
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Rents received in advance |
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206,600 |
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274,700 |
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Deferred revenue |
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1,583,400 |
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1,212,400 |
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Deferred income taxes |
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3,447,600 |
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3,464,800 |
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Total current liabilities |
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20,462,900 |
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7,779,000 |
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Long-Term Liabilities: |
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Discounted lease rentals |
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658,600 |
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— |
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Rents received in advance |
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135,100 |
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269,400 |
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Deferred revenue |
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923,800 |
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844,300 |
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Other liabilities |
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1,289,700 |
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1,389,200 |
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Deferred income taxes |
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2,586,500 |
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2,355,100 |
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Total long-term liabilities |
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5,593,700 |
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4,858,000 |
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Shareholders’ Equity: |
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Common stock, no par, 10,000,000 shares authorized, 4,993,927 and 4,987,643 shares issued and outstanding |
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— |
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629,800 |
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Accumulated other comprehensive (loss) income |
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(1,200 |
) |
17,000 |
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Retained earnings |
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17,086,600 |
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34,461,900 |
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Total shareholders’ equity |
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17,085,400 |
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35,108,700 |
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$ |
43,142,000 |
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$ |
47,745,700 |
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WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
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Quarter Ended |
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Nine Months Ended |
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September 29, 2012 |
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September 24, 2011 |
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September 29, 2012 |
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September 24, 2011 |
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REVENUE: |
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Royalties |
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$ |
9,178,400 |
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$ |
8,046,400 |
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$ |
25,160,800 |
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$ |
21,918,500 |
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Leasing income |
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4,312,700 |
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2,369,300 |
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9,989,800 |
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12,584,500 |
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Merchandise sales |
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716,600 |
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664,300 |
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2,083,200 |
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1,998,700 |
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Franchise fees |
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411,000 |
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516,200 |
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966,000 |
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836,200 |
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Other |
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180,400 |
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177,300 |
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625,100 |
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765,300 |
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Total revenue |
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14,799,100 |
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11,773,500 |
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38,824,900 |
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38,103,200 |
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COST OF MERCHANDISE SOLD |
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684,400 |
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631,400 |
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1,982,200 |
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1,908,500 |
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LEASING EXPENSE |
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770,700 |
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290,400 |
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1,336,200 |
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4,149,300 |
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PROVISION FOR CREDIT LOSSES |
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(1,700 |
) |
(13,100 |
) |
(69,600 |
) |
8,200 |
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES |
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4,882,200 |
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4,219,100 |
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15,239,900 |
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14,095,400 |
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Income from operations |
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8,463,500 |
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6,645,700 |
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20,336,200 |
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17,941,800 |
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LOSS FROM EQUITY INVESTMENTS |
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(372,300 |
) |
(224,700 |
) |
(650,400 |
) |
(444,600 |
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IMPAIRMENT OF INVESTMENT IN NOTES |
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(660,700 |
) |
(293,200 |
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(660,700 |
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(546,100 |
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INTEREST EXPENSE |
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(110,200 |
) |
(26,200 |
) |
(302,300 |
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(84,200 |
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INTEREST AND OTHER INCOME/(EXPENSE) |
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14,300 |
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(9,000 |
) |
50,600 |
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22,100 |
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Income before income taxes |
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7,334,600 |
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6,092,600 |
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18,773,400 |
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16,889,000 |
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PROVISION FOR INCOME TAXES |
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(3,075,100 |
) |
(2,609,100 |
) |
(7,593,500 |
) |
(6,979,000 |
) | ||||
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NET INCOME |
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$ |
4,259,500 |
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$ |
3,483,500 |
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$ |
11,179,900 |
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$ |
9,910,000 |
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EARNINGS PER SHARE — BASIC |
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$ |
.85 |
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$ |
.70 |
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$ |
2.22 |
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$ |
1.99 |
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EARNINGS PER SHARE — DILUTED |
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$ |
.82 |
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$ |
.66 |
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$ |
2.13 |
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$ |
1.89 |
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WEIGHTED AVERAGE SHARES OUTSTANDING — BASIC |
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5,013,822 |
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4,970,046 |
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5,041,023 |
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4,980,160 |
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WEIGHTED AVERAGE SHARES OUTSTANDING — DILUTED |
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5,222,719 |
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5,263,343 |
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5,257,057 |
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5,239,424 |
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