Exhibit 99.1
Contact: | | John L. Morgan |
| | 763/520-8500 |
FOR IMMEDIATE RELEASE
WINMARK CORPORATION ANNOUNCES
FIRST QUARTER RESULTS
Minneapolis, MN (April 12, 2005) — Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended March 26, 2005 of $699,900 (or $.11 per share diluted) compared to net income of $1,360,300 (or $.21 per share diluted) in the first quarter of 2004.
John L. Morgan, Chairman and Chief Executive Officer, stated, “Earnings for the first quarter were disappointing, but partly expected. While we anticipated increased costs to build infrastructure for our leasing business, we were disappointed that the royalties generated by our franchise business were short of our goals. Growing our leased assets and the performance of our franchise business is vital for our continued success.”
Winmark Corporation develops franchises that buy, sell, trade used and new merchandise and provides equipment lease financing to a wide variety of customers. At March 26, 2005, there were 794 franchise and retail stores in operation under the Company’s brands and an additional 39 franchises awarded but not open. Of the stores in operation, there were 410 Play It Again Sports, 209 Once Upon A Child, 134 Plato’s Closet and 41 Music Go Round stores.
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 the performance of our equipment leasing business and our franchise business. 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 26, 2005 | | December 25, 2004 | |
ASSETS | |
Current Assets: | | | | | |
Cash and cash equivalents | | $ | 6,641,300 | | $ | 5,983,500 | |
Marketable securities | | 1,165,100 | | 1,390,800 | |
Receivables, less allowance for doubtful accounts of $184,100 and $202,000 | | 2,507,800 | | 2,019,800 | |
Inventories | | 350,400 | | 419,600 | |
Prepaid expenses and other | | 457,400 | | 654,800 | |
Deferred income taxes | | 492,600 | | 492,600 | |
Total current assets | | 11,614,600 | | 10,961,100 | |
| | | | | |
Net investment in leasing operations | | 1,984,200 | | 1,679,700 | |
Long-term investments | | 11,230,400 | | 10,932,600 | |
Long-term receivables, net | | 38,900 | | 54,400 | |
Property and equipment, net | | 487,400 | | 293,600 | |
Other assets, net | | 662,100 | | 654,600 | |
Deferred income taxes | | 196,400 | | 196,400 | |
| | $ | 26,214,000 | | $ | 24,772,400 | |
| | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | |
Current Liabilities: | | | | | |
Accounts payable | | $ | 1,520,300 | | $ | 1,063,800 | |
Accrued liabilities | | 1,215,600 | | 1,299,300 | |
Current deferred revenue | | 806,200 | | 611,800 | |
Total current liabilities | | 3,542,100 | | 2,974,900 | |
| | | | | |
Long-term deferred revenue | | 278,900 | | 239,200 | |
| | | | | |
Shareholder’s Equity: | | | | | |
Common stock, no par, 10,000,000 shares authorized, 5,964,547 and 5,964,547 shares issued and outstanding | | 5,348,400 | | 5,186,300 | |
Other comprehensive income (loss) | | (1,700 | ) | 25,600 | |
Retained earnings | | 17,046,300 | | 16,346,400 | |
| | | | | |
Total shareholders’ equity | | 22,393,000 | | 21,558,300 | |
| | $ | 26,214,000 | | $ | 24,772,400 | |
WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
| | Three Months Ended | |
| | March 26, 2005 | | March 27, 2004 | |
REVENUE: | | | | | |
Royalties | | $ | 4,514,400 | | $ | 4,629,900 | |
Merchandise sales | | 2,235,600 | | 2,604,000 | |
Franchise fees | | 190,000 | | 192,600 | |
Other | | 204,700 | | 137,200 | |
Total revenue | | 7,144,700 | | 7,563,700 | |
| | | | | |
COST OF MERCHANDISE SOLD | | 1,920,000 | | 2,152,400 | |
| | | | | |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | | 4,045,400 | | 3,318,300 | |
| | | | | |
Income from operations | | 1,179,300 | | 2,093,000 | |
| | | | | |
LOSS FROM EQUITY INVESTMENTS | | (94,100 | ) | (24,300 | ) |
| | | | | |
GAIN ON SALE OF INVESTMENTS | | 21,300 | | 189,200 | |
| | | | | |
INTEREST AND OTHER INCOME | | 60,000 | | 76,500 | |
| | | | | |
Income before income taxes | | 1,166,500 | | 2,334,400 | |
| | | | | |
PROVISION FOR INCOME TAXES | | (466,600 | ) | (974,100 | ) |
| | | | | |
NET INCOME | | $ | 699,900 | | $ | 1,360,300 | |
| | | | | |
EARNINGS PER SHARE - BASIC | | $ | .12 | | $ | .24 | |
| | | | | |
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC | | 5,964,547 | | 5,706,471 | |
| | | | | |
EARNINGS PER SHARE - DILUTED | | $ | .11 | | $ | .21 | |
| | | | | |
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED | | 6,588,089 | | 6,468,385 | |
