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Winmark Corporation Announces Year End Results

Stocks in this article: WINA

Winmark Corporation (Nasdaq: WINA) announced today net income for the year ended December 25, 2010 of $10,329,000 or $1.98 per share diluted, compared to net income of $5,849,000 or $1.10 per share diluted, in 2009. The fourth quarter 2010 net income was $3,119,200 or $.60 per share diluted, compared to net income of $1,460,500, or $.28 per share diluted, for the same period last year. Revenues for the year ended December 25, 2010 were $41,203,600, up from $37,296,000 in 2009.

John Morgan, Chairman and Chief Executive Officer, stated “Our franchise business continued to grow from both store sales and opening additional stores. Our leasing business increased its profitability year over year and added new customers acceptable for the current economic environment. We continue to be optimistic about the future of our business model.”

Winmark Corporation creates, supports and finances business. At December 25, 2010, there were 903 franchises in operation under the brands Play It Again Sports®, Plato's Closet®, Once Upon A Child®, and Music Go Round® and there were 15 territories in operation under the Wirth Business Credit® brand. An additional 34 retail franchises have been awarded but are not open. In addition, at December 25, 2010, the Company had loans and leases equal to $32.7 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
 
December 25, 2010 December 26, 2009
(unaudited) (audited)
ASSETS
Current Assets:
Cash and cash equivalents $ 2,257,100 $ 9,490,800
Marketable securities 161,000 1,274,000
Current investments - 2,000,000
Receivables, less allowance for doubtful accounts of
$17,000 and $35,700 1,841,300 1,761,100
Net investment in leases - current 13,856,700 17,575,900
Income tax receivable 294,700 -
Inventories 85,900 111,400
Prepaid expenses 382,600   398,800
Total current assets 18,879,300 32,612,000
Net investment in leases - long term 16,802,500 19,423,700
Long-term investments 3,973,800 2,232,900
Property and equipment, net 1,785,900 1,843,500
Other assets 680,500   692,400
$ 42,122,000 $ 56,804,500
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current line of credit $ 8,800,000 $ 3,983,100
Current renewable unsecured subordinated notes - 9,166,900
Accounts payable 1,274,200 1,415,200
Income tax payable - 183,500
Accrued liabilities 1,513,600 1,794,100
Current discounted lease rentals 530,400 972,600
Current rents received in advance 291,800 294,400
Current deferred revenue 1,041,700 1,188,800
Deferred income taxes   1,832,500 1,057,700
Total current liabilities 15,284,200 20,056,300
Long-term line of credit - 5,298,900
Long-term renewable unsecured subordinated notes - 12,058,700
Long-term discounted lease rentals 26,500 507,600
Long-term rents received in advance 696,900 1,332,000
Long-term deferred revenue 767,600 709,500
Other long-term liabilities 1,678,000 1,298,400
Deferred income taxes 655,800 214,400
Shareholders’ Equity:
Common stock, no par, 10,000,000 shares authorized,
5,020,739 and 5,125,025 shares issued and outstanding 513,700 -
Other comprehensive income - 9,600
Retained earnings   22,499,300 15,319,100
Total shareholders’ equity   23,013,000 15,328,700
$ 42,122,000 $ 56,804,500
 
         
WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
 
Quarter Ended Fiscal Year Ended
December 25, 2010     December 26, 2009 December 25, 2010     December 26, 2009
(unaudited) (audited) (unaudited) (audited)
REVENUE:
Royalties $ 6,727,500 $ 5,969,600 $ 26,489,300 $ 23,616,200
Leasing income 2,606,000 2,420,500 9,896,300 9,536,900
Merchandise sales 335,600 488,200 2,344,800 2,386,700
Franchise fees 480,800 268,300 1,366,400 1,072,900
Other   324,500     236,500     1,106,800     683,300  
Total revenue 10,474,400 9,383,100 41,203,600 37,296,000
COST OF MERCHANDISE SOLD 319,300 473,500 2,231,100 2,290,200
LEASING EXPENSE 250,000 544,900 1,624,200 2,288,200
PROVISION FOR CREDIT LOSSES 46,600 918,000 189,000 2,795,500
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   4,527,000     4,761,800     18,620,300     19,141,700  
Income from operations 5,331,500 2,684,900 18,539,000 10,780,400
GAIN (LOSS) FROM EQUITY INVESTMENTS 63,300 (39,100 ) (259,100 ) (100,500 )
INTEREST EXPENSE (55,000 ) (299,200 ) (980,200 ) (1,309,000 )
INTEREST AND OTHER (LOSS) INCOME   (119,000 )   107,900     257,800     459,300  
Income before income taxes 5,220,800 2,454,500 17,557,500 9,830,200
PROVISION FOR INCOME TAXES   (2,101,600 )   (994,000 )   (7,228,500 )   (3,981,200 )
NET INCOME $ 3,119,200   $ 1,460,500   $ 10,329,000   $ 5,849,000  
EARNINGS PER SHARE - BASIC $ .62   $ .28   $ 2.05   $ 1.10  
EARNINGS PER SHARE - DILUTED $ .60   $ .28   $ 1.98   $ 1.10  
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC   5,013,772     5,205,082     5,044,995     5,303,177  
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED   5,231,581     5,278,875     5,210,614     5,337,668  




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