Winmark Corporation Announces Year End Results

Winmark Corporation (Nasdaq: WINA) announced today net income for the year ended December 31, 2011 of $14,095,000 or $2.69 per share diluted, compared to net income of $10,329,000 or $1.98 per share diluted, in 2010. The fourth quarter 2011 net income was $4,185,000 or $.80 per share diluted, compared to net income of $3,119,200 or $.60 per share diluted, for the same period last year. Revenues for the year ended December 31, 2011 were $51,335,000, up from $41,203,600 in 2010.

John L. Morgan, Chairman and Chief Executive Officer, stated, “We had a good year and fourth quarter due to the steady growth of our franchise business and the significant improvement in our leasing business. We believe that we are well positioned for long-term profitable growth.”

Winmark Corporation creates, supports and finances business. At December 31, 2011, there were 930 franchises in operation under the brands Plato's Closet®, Play It Again Sports®, Once Upon A Child®, and Music Go Round®. An additional 44 retail franchises have been awarded but are not open. In addition, at December 31, 2011, the Company had a lease portfolio equal to $29.8 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)
		December 31, 2011			December 25, 2010
ASSETS
Current Assets:
Cash and cash equivalents		$	9,020,100		$	2,257,100
Marketable securities			1,043,800			161,000
Receivables, net			1,316,200			1,841,300
Net investment in leases - current			11,746,900			13,856,700
Income tax receivable			116,500			294,700
Inventories			68,500			85,900
Prepaid expenses			362,000			382,600
Total current assets			23,674,000			18,879,300
Net investment in leases – long-term			18,102,000			16,802,500
Long-term investments, net			3,817,400			3,973,800
Property and equipment, net			1,474,800			1,785,900
Other assets			677,500			680,500
		$	47,745,700		$	42,122,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Line of credit		$	-		$	8,800,000
Accounts payable			1,460,300			1,274,200
Accrued liabilities			1,346,000			1,513,600
Discounted lease rentals			20,800			530,400
Rents received in advance			274,700			291,800
Deferred revenue			1,212,400			1,041,700
Deferred income taxes			3,464,800			1,832,500
Total current liabilities			7,779,000			15,284,200
Long-Term Liabilities:
Discounted lease rentals			-			26,500
Rents received in advance			269,400			696,900
Deferred revenue			844,300			767,600
Other liabilities			1,389,200			1,678,000
Deferred income taxes			2,355,100			655,800
Total long-term liabilities			4,858,000			3,824,800
Shareholders’ Equity:
Common stock, no par, 10,000,000 shares authorized, 4,987,643 and 5,020,739 shares issued and outstanding			629,800			513,700
Accumulated other comprehensive income			17,000			-
Retained earnings			34,461,900			22,499,300
Total shareholders' equity			35,108,700			23,013,000
		$	47,745,700		$	42,122,000

WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
		Quarter Ended								Fiscal Year Ended
		December 31, 2011				December 25, 2010				December 31, 2011				December 25, 2010
REVENUE:
Royalties		$	8,442,100			$	6,727,500			$	30,360,600			$	26,489,300
Leasing income			3,780,200				2,606,000				16,364,700				9,896,300
Merchandise sales			482,900				335,600				2,481,600				2,344,800
Franchise fees			245,000				480,800				1,081,200				1,366,400
Other			281,600				324,500				1,046,900				1,106,800
Total revenue			13,231,800				10,474,400				51,335,000				41,203,600
COST OF MERCHANDISE SOLD			457,900				319,300				2,366,400				2,231,100
LEASING EXPENSE			966,500				250,000				5,115,800				1,624,200
PROVISION FOR CREDIT LOSSES			(51,600	)			46,600				(43,400	)			189,000
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES			4,953,200				4,527,000				19,048,600				18,620,300
Income from operations			6,905,800				5,331,500				24,847,600				18,539,000
GAIN (LOSS) FROM EQUITY INVESTMENTS			(71,200	)			63,300				(515,800	)			(259,100	)
IMPAIRMENT OF INVESTMENT IN NOTES			(337,000	)			-				(883,100	)			-
INTEREST EXPENSE			(27,800	)			(55,000	)			(112,000	)			(980,200	)
INTEREST AND OTHER INCOME/(EXPENSE)			22,800				(119,000	)			44,900				257,800
Income before income taxes			6,492,600				5,220,800				23,381,600				17,557,500
PROVISION FOR INCOME TAXES			(2,307,600	)			(2,101,600	)			(9,286,600	)			(7,228,500	)
NET INCOME		$	4,185,000			$	3,119,200			$	14,095,000			$	10,329,000
EARNINGS PER SHARE – BASIC		$	.84			$	.62			$	2.83			$	2.05
EARNINGS PER SHARE – DILUTED		$	.80			$	.60			$	2.69			$	1.98
WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC			4,975,878				5,013,772				4,979,036				5,044,995
WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED			5,235,590				5,231,581				5,238,412				5,210,614

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