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Winmark Corporation Announces First Quarter Results

Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended March 31, 2012 of $3,516,000 (or $.67 per share diluted) compared to net income of $3,026,300 (or $.58 per share diluted) in the first quarter of 2011.

John L. Morgan, Chairman and Chief Executive Officer, stated, “We are pleased with our performance during the first quarter. Our results were driven by the growth of our franchising business and continued progress in building our leasing portfolio.”

Winmark Corporation creates, supports and finances business. At March 31, 2012, there were 939 franchises in operation under the brands Plato's Closet®, Play It Again Sports®, Once Upon A Child®, and Music Go Round®. An additional 50 retail franchises have been awarded but are not open. In addition, at March 31, 2012, the Company had a lease portfolio equal to $29.6 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)

       
March 31, 2012   December 31, 2011
 
ASSETS
Current Assets:  
Cash and cash equivalents $ 2,093,400 $ 9,020,100
Marketable securities - 1,043,800
Receivables, net 1,282,400 1,316,200
Net investment in leases - current 11,465,300 11,746,900
Income tax receivable - 116,500
Inventories 69,100 68,500
Prepaid expenses   437,400   362,000
Total current assets 15,347,600 23,674,000
Net investment in leases – long-term 18,096,700 18,102,000
Long-term investments, net 3,780,000 3,817,400
Property and equipment, net 1,384,000 1,474,800
Other assets   677,500   677,500
$ 39,285,800 $ 47,745,700
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Line of credit $ 12,100,000 $ -
Accounts payable 1,269,800 1,460,300
Income taxes payable 58,200 -
Accrued liabilities 1,709,900 1,346,000
Discounted lease rentals 13,900 20,800
Rents received in advance 282,000 274,700
Deferred revenue 1,376,800 1,212,400
Deferred income taxes   3,487,900   3,464,800
Total current liabilities 20,298,500 7,779,000
 
Long-Term Liabilities:
Rents received in advance 194,500 269,400
Deferred revenue 847,300 844,300
Other liabilities 1,314,200 1,389,200
Deferred income taxes   2,607,100   2,355,100
Total long-term liabilities 4,963,100 4,858,000
 
Shareholders’ Equity:

Common stock, no par, 10,000,000 shares authorized,  5,075,954 and 4,987,643 shares issued and outstanding

1,565,800

629,800

Accumulated other comprehensive income - 17,000
Retained earnings   12,458,400   34,461,900
Total shareholders’ equity   14,024,200   35,108,700
$ 39,285,800 $ 47,745,700
 

WINMARK CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

   
Three Months Ended
March 31, 2012   March 26, 2011
REVENUE:  
Royalties $ 8,288,500 $ 7,052,800
Leasing income 2,392,100 3,235,000
Merchandise sales 709,800 501,400
Franchise fees 285,000 75,000
Other   158,000     240,700  
Total revenue 11,833,400 11,104,900
 
COST OF MERCHANDISE SOLD 664,300 482,900
 
LEASING EXPENSE 239,800 518,700
 
PROVISION FOR CREDIT LOSSES (53,000 ) 45,400
 
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   5,136,100     4,845,900  
Income from operations 5,846,200 5,212,000
 
LOSS FROM EQUITY INVESTMENTS (37,400 ) (77,000 )
 
INTEREST EXPENSE (69,800 ) (31,100 )
 
INTEREST AND OTHER INCOME   46,300     17,200  
Income before income taxes 5,785,300 5,121,100
 

PROVISION FOR INCOME TAXES

 

(2,269,300

)

 

(2,094,800

)

 

NET INCOME

$

3,516,000

 

$

3,026,300

 
 
EARNINGS PER SHARE - BASIC $ .70   $ .61  
 
EARNINGS PER SHARE - DILUTED $ .67   $ .58  
 
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC   5,052,952     4,989,588  
 
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED   5,280,202     5,215,484  




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