Attached files
| file | filename |
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| 8-K - 8-K - WINMARK CORP | a13-22365_18k.htm |
Exhibit 99.1
Contact: John L. Morgan
763/520-8500
FOR IMMEDIATE RELEASE
WINMARK CORPORATION ANNOUNCES
THIRD QUARTER RESULTS
Minneapolis, MN (October 16, 2013) — Winmark Corporation (Nasdaq; WINA) announced today net income for the quarter ended September 28, 2013 of $5,251,500 (or $1.00 per share diluted) compared to net income of $4,259,500 (or $.82 per share diluted) in the third quarter of 2012. For the nine months ended September 28, 2013, net income was $13,645,800 (or $2.61 per share diluted) compared to net income of $11,179,900 (or $2.13 per share diluted) for the same period last year.
Earnings growth in the quarter was primarily attributable to the non-cash charges recorded during the third quarter of 2012 related to the Company’s long-term investments. John Morgan, Chairman and CEO, commented “During the quarter, we opened our first Style Encore store and as of the end of the quarter, we had 21 additional signed franchise agreements for this concept. We believe Style Encore represents a significant growth opportunity for our franchising business.”
Winmark Corporation creates, supports and finances business. At September 28, 2013, there were 995 franchises in operation under the brands Plato’s Closet®, Play It Again Sports®, Once Upon A Child®, Music Go Round® and Style Encore™. An additional 88 retail franchises have been awarded but are not open. In addition, at September 28, 2013, the Company had a lease portfolio of $36.7 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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|
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September 28, 2013 |
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December 29, 2012 |
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ASSETS | |||||||
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Current Assets: |
|
|
|
|
| ||
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Cash and cash equivalents |
|
$ |
8,248,000 |
|
$ |
2,233,400 |
|
|
Marketable securities |
|
401,000 |
|
85,900 |
| ||
|
Receivables, net |
|
1,116,900 |
|
1,237,100 |
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Net investment in leases - current |
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16,398,700 |
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13,461,200 |
| ||
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Income tax receivable |
|
366,700 |
|
1,400,700 |
| ||
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Inventories |
|
69,400 |
|
71,200 |
| ||
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Prepaid expenses |
|
618,600 |
|
445,200 |
| ||
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Total current assets |
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27,219,300 |
|
18,934,700 |
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Net investment in leases – long-term |
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20,274,700 |
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22,697,100 |
| ||
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Property and equipment, net |
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1,073,700 |
|
1,229,500 |
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Other assets |
|
677,500 |
|
677,500 |
| ||
|
|
|
$ |
49,245,200 |
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$ |
43,538,800 |
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|
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LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
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Current Liabilities: |
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|
|
|
| ||
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Line of credit |
|
$ |
— |
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$ |
10,800,000 |
|
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Accounts payable |
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1,724,300 |
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2,203,700 |
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Accrued liabilities |
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2,359,100 |
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1,286,300 |
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Discounted lease rentals |
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834,000 |
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896,800 |
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Rents received in advance |
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48,700 |
|
134,800 |
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Deferred revenue |
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1,787,900 |
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1,641,700 |
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Deferred income taxes |
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3,574,200 |
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3,549,900 |
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Total current liabilities |
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10,328,200 |
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20,513,200 |
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Long-Term Liabilities: |
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|
|
|
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Discounted lease rentals |
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382,700 |
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177,900 |
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Rents received in advance |
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111,800 |
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117,700 |
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Deferred revenue |
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1,128,200 |
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953,000 |
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Other liabilities |
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1,148,900 |
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1,254,700 |
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Deferred income taxes |
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2,864,700 |
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2,594,300 |
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Total long-term liabilities |
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5,636,300 |
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5,097,600 |
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Shareholders’ Equity: |
|
|
|
|
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Common stock, no par, 10,000,000 shares authorized, 5,135,961 and 4,996,459 shares issued and outstanding |
|
2,420,300 |
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— |
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Accumulated other comprehensive loss |
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(9,900 |
) |
(4,000 |
) | ||
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Retained earnings |
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30,870,300 |
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17,932,000 |
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Total shareholders’ equity |
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33,280,700 |
|
17,928,000 |
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|
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$ |
49,245,200 |
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$ |
43,538,800 |
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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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|
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September 28, 2013 |
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September 29, 2012 |
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September 28, 2013 |
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September 29, 2012 |
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REVENUE: |
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|
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|
|
|
|
| ||||
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Royalties |
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$ |
9,853,900 |
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$ |
9,178,400 |
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$ |
26,937,000 |
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$ |
25,160,800 |
|
|
Leasing income |
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3,810,100 |
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4,312,700 |
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11,348,100 |
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9,989,800 |
| ||||
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Merchandise sales |
|
598,000 |
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716,600 |
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1,821,100 |
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2,083,200 |
| ||||
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Franchise fees |
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340,000 |
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411,000 |
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1,144,200 |
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966,000 |
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Other |
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189,900 |
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180,400 |
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713,400 |
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625,100 |
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Total revenue |
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14,791,900 |
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14,799,100 |
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41,963,800 |
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38,824,900 |
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COST OF MERCHANDISE SOLD |
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569,200 |
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684,400 |
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1,734,700 |
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1,982,200 |
| ||||
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LEASING EXPENSE |
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399,300 |
|
770,700 |
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1,289,500 |
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1,336,200 |
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PROVISION FOR CREDIT LOSSES |
|
(29,800 |
) |
(1,700 |
) |
(67,700 |
) |
(69,600 |
) | ||||
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES |
|
5,311,900 |
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4,882,200 |
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16,728,900 |
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15,239,900 |
| ||||
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Income from operations |
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8,541,300 |
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8,463,500 |
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22,278,400 |
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20,336,200 |
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LOSS FROM EQUITY INVESTMENTS |
|
— |
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(372,300 |
) |
— |
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(650,400 |
) | ||||
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IMPAIRMENT OF INVESTMENT IN NOTES |
|
— |
|
(660,700 |
) |
— |
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(660,700 |
) | ||||
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INTEREST EXPENSE |
|
(35,500 |
) |
(110,200 |
) |
(180,100 |
) |
(302,300 |
) | ||||
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INTEREST AND OTHER INCOME/(EXPENSE) |
|
5,500 |
|
14,300 |
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(4,800 |
) |
50,600 |
| ||||
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Income before income taxes |
|
8,511,300 |
|
7,334,600 |
|
22,093,500 |
|
18,773,400 |
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PROVISION FOR INCOME TAXES |
|
(3,259,800 |
) |
(3,075,100 |
) |
(8,447,700 |
) |
(7,593,500 |
) | ||||
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NET INCOME |
|
$ |
5,251,500 |
|
$ |
4,259,500 |
|
$ |
13,645,800 |
|
$ |
11,179,900 |
|
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EARNINGS PER SHARE — BASIC |
|
$ |
1.03 |
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$ |
.85 |
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$ |
2.70 |
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$ |
2.22 |
|
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EARNINGS PER SHARE — DILUTED |
|
$ |
1.00 |
|
$ |
.82 |
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$ |
2.61 |
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$ |
2.13 |
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING — BASIC |
|
5,116,872 |
|
5,013,822 |
|
5,046,156 |
|
5,041,023 |
| ||||
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WEIGHTED AVERAGE SHARES OUTSTANDING — DILUTED |
|
5,263,311 |
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5,222,719 |
|
5,222,196 |
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5,257,057 |
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