Exhibit 99.1
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Contact: |
John L. Morgan |
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763/520-8500 |
FOR IMMEDIATE RELEASE
WINMARK CORPORATION ANNOUNCES YEAR END RESULTS
Minneapolis, MN (February 27, 2013) — Winmark Corporation (Nasdaq: WINA) announced today net income for the year ended December 29, 2012 of $12,937,900 or $2.47 per share diluted, compared to net income of $14,095,000 or $2.69 per share diluted, in 2011. The fourth quarter 2012 net income was $1,758,000 or $.34 per share diluted, compared to net income of $4,185,000 or $.80 per share diluted, for the same period last year. Revenues for the year ended December 29, 2012 were $51,943,100, up from $51,335,000 in 2011. In addition, as previously disclosed, the company’s results were negatively impacted by a $2.5 million after-tax earnings charge, or $0.47 per share, in the fourth quarter related to the impairment of its investments in both Tomsten, Inc. (d/b/a Archiver’s) and BridgeFunds, LLC.
John L. Morgan, Chairman and Chief Executive Officer, stated, “Our 2012 results continued to demonstrate the strength of our franchising business, with solid growth in royalties and new franchise agreements. Our leasing business, while exhibiting a modest increase in profitability, achieved more meaningful growth in the portfolio of customers and equipment that, along with the development of our sales staff, positions us well for continued long-term success.”
“We are excited about our prospects for 2013 and look forward to introducing our Style EncoreTM concept to the market place as well as the continued execution of our business model,” Mr. Morgan added.
Winmark Corporation creates, supports and finances business. At December 29, 2012, there were 968 franchises in operation under the brands Plato’s Closet®, Play It Again Sports®, Once Upon A Child®, and Music Go Round®. An additional 65 retail franchises have been awarded but are not open. In addition, at December 29, 2012, the Company had a lease portfolio equal to $36.2 million.
This press release contains forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), relating to future events or the future financial performance of the Company including statements with respect to our ability to finance the growth of our leasing and franchising businesses for the foreseeable future. Such forward-looking statements are only predictions or statements of intention subject to risks and uncertainties and actual events or results could differ materially from those anticipated. Because actual result may differ, shareholders and prospective investors are cautioned not to place undue reliance on such forward-looking statements.
WINMARK CORPORATION
CONDENSED BALANCE SHEETS
(unaudited)
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December 29, 2012 |
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December 31, 2011 |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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$ |
2,233,400 |
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$ |
9,020,100 |
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Marketable securities |
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85,900 |
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1,043,800 |
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Receivables, net |
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1,237,100 |
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1,316,200 |
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Net investment in leases - current |
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13,461,200 |
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11,746,900 |
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Income tax receivable |
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1,400,700 |
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116,500 |
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Inventories |
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71,200 |
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68,500 |
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Prepaid expenses |
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445,200 |
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362,000 |
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Total current assets |
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18,934,700 |
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23,674,000 |
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Net investment in leases — long-term |
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22,697,100 |
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18,102,000 |
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Long-term investments, net |
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— |
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3,817,400 |
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Property and equipment, net |
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1,229,500 |
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1,474,800 |
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Other assets |
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677,500 |
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677,500 |
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$ |
43,538,800 |
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$ |
47,745,700 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current Liabilities: |
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Line of credit |
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$ |
10,800,000 |
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$ |
— |
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Accounts payable |
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2,203,700 |
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1,460,300 |
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Accrued liabilities |
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1,286,300 |
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1,346,000 |
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Discounted lease rentals |
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896,800 |
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20,800 |
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Rents received in advance |
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134,800 |
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274,700 |
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Deferred revenue |
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1,641,700 |
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1,212,400 |
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Deferred income taxes |
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3,549,900 |
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3,464,800 |
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Total current liabilities |
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20,513,200 |
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7,779,000 |
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Long-Term Liabilities: |
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Discounted lease rentals |
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177,900 |
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— |
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Rents received in advance |
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117,700 |
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269,400 |
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Deferred revenue |
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953,000 |
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844,300 |
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Other liabilities |
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1,254,700 |
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1,389,200 |
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Deferred income taxes |
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2,594,300 |
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2,355,100 |
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Total long-term liabilities |
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5,097,600 |
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4,858,000 |
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Shareholders’ Equity: |
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Common stock, no par, 10,000,000 shares authorized, 4,996,459 and 4,987,643 shares issued and outstanding |
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— |
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629,800 |
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Accumulated other comprehensive (loss) income |
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(4,000 |
) |
17,000 |
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Retained earnings |
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17,932,000 |
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34,461,900 |
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Total shareholders’ equity |
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17,928,000 |
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35,108,700 |
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$ |
43,538,800 |
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$ |
47,745,700 |
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WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
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Quarter Ended |
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Fiscal Year Ended |
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December 29, 2012 |
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December 31, 2011 |
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December 29, 2012 |
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December 31, 2011 |
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REVENUE: |
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Royalties |
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$ |
8,599,400 |
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$ |
8,442,100 |
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$ |
33,760,200 |
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$ |
30,360,600 |
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Leasing income |
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3,222,000 |
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3,780,200 |
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13,211,800 |
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16,364,700 |
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Merchandise sales |
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667,500 |
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482,900 |
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2,750,700 |
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2,481,600 |
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Franchise fees |
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325,000 |
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245,000 |
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1,291,000 |
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1,081,200 |
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Other |
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304,300 |
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281,600 |
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929,400 |
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1,046,900 |
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Total revenue |
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13,118,200 |
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13,231,800 |
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51,943,100 |
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51,335,000 |
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COST OF MERCHANDISE SOLD |
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639,300 |
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457,900 |
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2,621,500 |
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2,366,400 |
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LEASING EXPENSE |
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453,600 |
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966,500 |
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1,789,800 |
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5,115,800 |
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PROVISION FOR CREDIT LOSSES |
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22,000 |
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(51,600 |
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(47,600 |
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(43,400 |
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES |
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5,040,400 |
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4,953,200 |
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20,280,300 |
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19,048,600 |
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Income from operations |
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6,962,900 |
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6,905,800 |
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27,299,100 |
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24,847,600 |
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LOSS FROM EQUITY INVESTMENTS |
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(1,842,500 |
) |
(71,200 |
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(2,492,900 |
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(515,800 |
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IMPAIRMENT OF INVESTMENT IN NOTES |
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(663,700 |
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(337,000 |
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(1,324,400 |
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(883,100 |
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INTEREST EXPENSE |
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(90,000 |
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(27,800 |
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(392,300 |
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(112,000 |
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INTEREST AND OTHER INCOME |
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15,400 |
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22,800 |
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66,000 |
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44,900 |
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Income before income taxes |
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4,382,100 |
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6,492,600 |
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23,155,500 |
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23,381,600 |
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PROVISION FOR INCOME TAXES |
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(2,624,100 |
) |
(2,307,600 |
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(10,217,600 |
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(9,286,600 |
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NET INCOME |
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$ |
1,758,000 |
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$ |
4,185,000 |
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$ |
12,937,900 |
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$ |
14,095,000 |
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EARNINGS PER SHARE — BASIC |
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$ |
.35 |
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$ |
.84 |
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$ |
2.57 |
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$ |
2.83 |
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EARNINGS PER SHARE — DILUTED |
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$ |
.34 |
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$ |
.80 |
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$ |
2.47 |
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$ |
2.69 |
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WEIGHTED AVERAGE SHARES OUTSTANDING — BASIC |
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4,986,957 |
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4,975,878 |
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5,027,509 |
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4,979,036 |
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WEIGHTED AVERAGE SHARES OUTSTANDING — DILUTED |
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5,179,504 |
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5,235,590 |
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5,237,671 |
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5,238,412 |
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