Winmark Corporation Announces Third Quarter Results

MINNEAPOLIS--()--Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended September 27, 2014 of $5,623,000 (or $1.09 per share diluted) compared to net income of $5,251,500 (or $1.00 per share diluted) in the third quarter of 2013. For the nine months ended September 27, 2014, net income was $14,455,700 (or $2.76 per share diluted) compared to net income of $13,645,800 (or $2.61 per share diluted) for the same period last year.

Winmark Corporation creates, supports and finances business. At September 27, 2014, there were 1,070 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 104 retail franchises have been awarded but are not open. In addition, at September 27, 2014, the Company had a lease portfolio of $43.2 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)

       
September 27, 2014   December 28, 2013
ASSETS
Current Assets:  
Cash and cash equivalents $ 2,015,200 $ 10,642,600
Marketable securities 715,800 736,500
Receivables, net 1,106,600 1,205,500
Net investment in leases - current 20,036,200 17,239,900
Income tax receivable - 166,500
Inventories 96,200 96,700
Prepaid expenses   654,200     587,300  
Total current assets 24,624,200 30,675,000
 
Net investment in leases – long-term 23,114,800 20,301,400
Property and equipment, net 1,501,300 1,382,200
Other assets 677,500 677,500
Deferred income taxes   23,500     -  
$ 49,941,300   $ 53,036,100  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Line of credit $ 20,000,000 $ -
Accounts payable 3,109,400 2,441,400
Income tax payable 26,900 -
Accrued liabilities 2,874,000 1,233,100
Discounted lease rentals 288,300 424,900
Deferred revenue 2,225,200 2,199,900
Deferred income taxes   2,810,500     4,208,200  
Total current liabilities 31,334,300 10,507,500
 
Long-Term Liabilities:
Discounted lease rentals 94,300 277,400
Deferred revenue 1,255,800 1,180,700
Other liabilities 1,385,000 1,489,000
Deferred income taxes   -     1,436,800  
Total long-term liabilities 2,735,100 4,383,900
 
Shareholders’ Equity:

Common stock, no par, 10,000,000 shares authorized, 4,997,512 and 5,143,530 shares issued and outstanding

-

2,949,500

Accumulated other comprehensive loss (41,300 ) (4,100 )
Retained earnings   15,913,200     35,199,300  
Total shareholders’ equity   15,871,900     38,144,700  
$ 49,941,300   $ 53,036,100  
 

WINMARK CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

       
Quarter Ended   Nine Months Ended
September 27, 2014   September 28, 2013   September 27, 2014   September 28, 2013
REVENUE:    
Royalties $ 10,725,000 $ 9,853,900 $ 28,735,800 $ 26,937,000
Leasing income 4,121,800 3,810,100 11,655,000 11,348,100
Merchandise sales 786,100 598,000 2,259,900 1,821,100
Franchise fees 558,200 340,000 1,514,700 1,144,200
Other   213,300     189,900     830,500     713,400  
Total revenue 16,404,400 14,791,900 44,995,900 41,963,800
 
COST OF MERCHANDISE SOLD 742,300 569,200 2,156,300 1,734,700
 
LEASING EXPENSE 808,500 399,300 1,234,200 1,289,500
 
PROVISION FOR CREDIT LOSSES (1,700 ) (29,800 ) 26,100 (67,700 )
 
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   5,677,600     5,311,900     17,874,500     16,728,900  
 
Income from operations 9,177,700 8,541,300 23,704,800 22,278,400
 
INTEREST EXPENSE (150,500 ) (35,500 ) (356,700 ) (180,100 )
 
INTEREST AND OTHER INCOME/(EXPENSE)   27,200     5,500     28,200     (4,800 )
 
Income before income taxes 9,054,400 8,511,300 23,376,300 22,093,500
 
PROVISION FOR INCOME TAXES   (3,431,400 )   (3,259,800 )   (8,920,600 )   (8,447,700 )
 
NET INCOME $ 5,623,000   $ 5,251,500   $ 14,455,700   $ 13,645,800  
 
EARNINGS PER SHARE – BASIC $ 1.12   $ 1.03   $ 2.84   $ 2.70  
 
EARNINGS PER SHARE – DILUTED $ 1.09   $ 1.00   $ 2.76   $ 2.61  
 
WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC   5,022,166     5,116,872     5,093,243     5,046,156  
 
WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED   5,156,785     5,263,311     5,235,949     5,222,196  

Contacts

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

Contacts

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