Exhibit 99.1
Contact: | John L. Morgan |
| 763/520-8500 |
FOR IMMEDIATE RELEASE
WINMARK CORPORATION ANNOUNCES
SECOND QUARTER RESULTS
Minneapolis, MN (July 17, 2013) — Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended June 29, 2013 of $4,336,900 (or $.83 per share diluted) compared to net income of $3,404,400 (or $.65 per share diluted) in the second quarter of 2012.
Earnings growth in the second quarter was due to a higher store count when compared to last year as well as increased sales from franchisees. Additionally, the profitability of the leasing business improved due to the size and performance of the Company’s lease portfolio. John Morgan, Chairman and CEO commented “Your company and its employees worked very hard during the quarter in preparation for our first Style Encore store, which is scheduled to open in the third quarter. We have awarded a total of eight franchise agreements to launch this exciting new women’s resale concept.”
Winmark Corporation creates, supports and finances business. At June 29, 2013, there were 986 franchises in operation under the brands Plato’s Closet®, Play It Again Sports®, Once Upon A Child®, Music Go Round® and Style Encore™. An additional 67 retail franchises have been awarded but are not open. In addition, at June 29, 2013, the Company had a lease portfolio equal to $37.2 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. 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)
|
| June 29, 2013 |
| December 29, 2012 |
| ||
ASSETS |
| ||||||
Current Assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 2,041,300 |
| $ | 2,233,400 |
|
Marketable securities |
| 84,500 |
| 85,900 |
| ||
Receivables, net |
| 1,230,400 |
| 1,237,100 |
| ||
Net investment in leases - current |
| 16,149,700 |
| 13,461,200 |
| ||
Income tax receivable |
| 856,800 |
| 1,400,700 |
| ||
Inventories |
| 76,800 |
| 71,200 |
| ||
Prepaid expenses |
| 388,800 |
| 445,200 |
| ||
Total current assets |
| 20,828,300 |
| 18,934,700 |
| ||
Net investment in leases — long-term |
| 21,043,900 |
| 22,697,100 |
| ||
Property and equipment, net |
| 1,166,000 |
| 1,229,500 |
| ||
Other assets |
| 677,500 |
| 677,500 |
| ||
|
| $ | 43,715,700 |
| $ | 43,538,800 |
|
|
|
|
|
|
| ||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
| ||||||
Current Liabilities: |
|
|
|
|
| ||
Line of credit |
| $ | 2,000,000 |
| $ | 10,800,000 |
|
Accounts payable |
| 1,258,600 |
| 2,203,700 |
| ||
Accrued liabilities |
| 1,983,800 |
| 1,286,300 |
| ||
Discounted lease rentals |
| 906,400 |
| 896,800 |
| ||
Rents received in advance |
| 62,000 |
| 134,800 |
| ||
Deferred revenue |
| 1,569,700 |
| 1,641,700 |
| ||
Deferred income taxes |
| 3,555,600 |
| 3,549,900 |
| ||
Total current liabilities |
| 11,336,100 |
| 20,513,200 |
| ||
Long-Term Liabilities: |
|
|
|
|
| ||
Discounted lease rentals |
| 445,200 |
| 177,900 |
| ||
Rents received in advance |
| 119,700 |
| 117,700 |
| ||
Deferred revenue |
| 956,100 |
| 953,000 |
| ||
Other liabilities |
| 1,184,600 |
| 1,254,700 |
| ||
Deferred income taxes |
| 2,659,600 |
| 2,594,300 |
| ||
Total long-term liabilities |
| 5,365,200 |
| 5,097,600 |
| ||
Shareholders’ Equity: |
|
|
|
|
| ||
Common stock, no par, 10,000,000 shares authorized, 5,044,484 and 4,996,459 shares issued and outstanding |
| 1,142,900 |
| — |
| ||
Accumulated other comprehensive loss |
| (4,900 | ) | (4,000 | ) | ||
Retained earnings |
| 25,876,400 |
| 17,932,000 |
| ||
Total shareholders’ equity |
| 27,014,400 |
| 17,928,000 |
| ||
|
| $ | 43,715,700 |
| $ | 43,538,800 |
|
WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
|
| Quarter Ended |
| Six Months Ended |
| ||||||||
|
| June 29, 2013 |
| June 30, 2012 |
| June 29, 2013 |
| June 30, 2012 |
| ||||
REVENUE: |
|
|
|
|
|
|
|
|
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Royalties |
| $ | 8,608,200 |
| $ | 7,693,900 |
| $ | 17,083,100 |
| $ | 15,982,400 |
|
Leasing income |
| 4,130,200 |
| 3,285,000 |
| 7,538,000 |
| 5,677,100 |
| ||||
Merchandise sales |
| 557,400 |
| 656,800 |
| 1,223,100 |
| 1,366,600 |
| ||||
Franchise fees |
| 389,600 |
| 270,000 |
| 804,200 |
| 555,000 |
| ||||
Other |
| 338,100 |
| 286,700 |
| 523,500 |
| 444,700 |
| ||||
Total revenue |
| 14,023,500 |
| 12,192,400 |
| 27,171,900 |
| 24,025,800 |
| ||||
COST OF MERCHANDISE SOLD |
| 524,400 |
| 633,500 |
| 1,165,500 |
| 1,297,800 |
| ||||
LEASING EXPENSE |
| 610,500 |
| 325,700 |
| 890,200 |
| 565,500 |
| ||||
PROVISION FOR CREDIT LOSSES |
| (51,700 | ) | (14,900 | ) | (37,900 | ) | (67,900 | ) | ||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES |
| 5,879,100 |
| 5,221,600 |
| 11,417,000 |
| 10,357,700 |
| ||||
Income from operations |
| 7,061,200 |
| 6,026,500 |
| 13,737,100 |
| 11,872,700 |
| ||||
LOSS FROM EQUITY INVESTMENTS |
| — |
| (240,700 | ) | — |
| (278,100 | ) | ||||
INTEREST EXPENSE |
| (55,100 | ) | (122,300 | ) | (144,600 | ) | (192,100 | ) | ||||
INTEREST AND OTHER INCOME (EXPENSE) |
| (100 | ) | (10,000 | ) | (10,300 | ) | 36,300 |
| ||||
Income before income taxes |
| 7,006,000 |
| 5,653,500 |
| 13,582,200 |
| 11,438,800 |
| ||||
PROVISION FOR INCOME TAXES |
| (2,669,100 | ) | (2,249,100 | ) | (5,187,800 | ) | (4,518,400 | ) | ||||
NET INCOME |
| $ | 4,336,900 |
| $ | 3,404,400 |
| $ | 8,394,400 |
| $ | 6,920,400 |
|
EARNINGS PER SHARE — BASIC |
| $ | .86 |
| $ | .67 |
| $ | 1.68 |
| $ | 1.37 |
|
EARNINGS PER SHARE — DILUTED |
| $ | .83 |
| $ | .65 |
| $ | 1.61 |
| $ | 1.31 |
|
WEIGHTED AVERAGE SHARES OUTSTANDING — BASIC |
| 5,024,284 |
| 5,056,289 |
| 5,010,803 |
| 5,054,620 |
| ||||
WEIGHTED AVERAGE SHARES OUTSTANDING — DILUTED |
| 5,200,592 |
| 5,268,245 |
| 5,201,644 |
| 5,274,223 |
| ||||