MINNEAPOLIS , July 20 /PRNewswire-FirstCall/ -- Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended July 1, 2006 of $650,400 , or $.11 per share diluted, compared to net income of $542,600 , or $.08 per share diluted, in 2005. For the six months ended July 1, 2006 , net income was $1,763,700 , or $.29 per share diluted, compared to net income of $1,242,500 , or $.19 per share diluted, for the same period last year.
John L. Morgan, Chairman and Chief Executive Officer, stated, 'During the second quarter the franchising business continued its modest growth and our leasing businesses added assets at an acceptable level. We launched a $50 million subordinated debt offering which, when combined with our bank line of credit and cash flow from operations will allow us to finance our growth for the foreseeable future.'
Winmark Corporation provides financial services and develops franchises for retail stores that buy, sell, trade and consign used and new merchandise. At July 1, 2006 , there were 819 franchise stores in operation under the Company's brands and an additional 44 franchises awarded but not open. Of the stores in operation, there were 394 Play It Again Sports(R), 208 Once Upon A Child(R), 171 Plato's Closet(R), 41 Music Go Round(R) and 5 Wirth Business Credit(R) franchises. In addition, at July 1, 2006 , the Company had an equipment leasing portfolio equal to $13.3 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)
July 1, December 31,
2006 2005
ASSETS
Current Assets:
Cash and cash equivalents $1,343,200 $2,947,700
Receivables, less allowance for
doubtful accounts of $40,900 and
$188,700 2,071,500 1,836,300
Investment in direct finance leases 3,234,700 1,478,200
Income tax receivable 548,500 620,500
Inventories 74,000 67,000
Prepaid expenses 1,146,400 804,000
Deferred income taxes 776,800 776,800
Total current assets 9,195,100 8,530,500
Long-term investment in leasing
operations 10,077,800 5,492,400
Long-term investments 11,500,000 11,000,000
Long-term receivables, net 77,800 94,300
Property and equipment, net 529,000 448,600
Other assets, net 607,500 607,500
Deferred income taxes 375,400 375,400
$32,362,600 $26,548,700
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Line of Credit $11,000,000 $-
Accounts payable 581,500 1,156,400
Accrued liabilities 1,698,900 1,435,900
Current discounted lease rentals 151,900 147,600
Rents received in advance 293,600 167,600
Current deferred revenue 856,000 829,100
Total current liabilities 14,581,900 3,736,600
Long-term renewable subordinated notes 3,720,000 -
Long-term discounted lease rentals 121,000 185,600
Long-term deferred revenue 392,300 339,600
Shareholder's Equity:
Common stock, no par, 10,000,000
shares authorized, 5,632,042 and
6,049,037 shares issued and outstanding - 3,840,500
Retained earnings 13,547,400 18,446,400
Total shareholders' equity 13,547,400 22,286,900
$32,362,600 $26,548,700
WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Quarter Ended Six Months Ended
July 1, June 25, July 1, June 25,
2006 2005 2006 2005
REVENUE:
Royalties $4,476,700 $4,208,700 $9,520,500 $8,723,100
Merchandise sales 790,000 1,712,000 2,080,700 3,947,600
Franchise fees 460,700 225,000 675,700 415,000
Leasing income 424,900 93,400 686,700 154,300
Other 121,000 124,700 283,000 268,500
Total revenue 6,273,300 6,363,800 13,246,600 13,508,500
COST OF MERCHANDISE
SOLD 757,600 1,400,300 1,996,700 3,320,300
LEASING EXPENSE 42,900 - 46,700 -
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES 4,406,900 3,987,000 8,728,300 8,032,400
Income from
operations 1,065,900 976,500 2,474,900 2,155,800
LOSS FROM EQUITY
INVESTMENTS - (89,200) - (183,300)
GAIN (LOSS) ON SALE
OF INVESTMENTS - (14,800) - 6,500
INTEREST EXPENSE (121,400) - (121,400) -
INTEREST AND OTHER
INCOME 145,200 84,900 601,300 144,900
Income before
income taxes 1,089,700 957,400 2,954,800 2,123,900
PROVISION FOR INCOME
TAXES (439,300) (414,800) (1,191,100) (881,400)
NET INCOME $650,400 $542,600 $1,763,700 $1,242,500
EARNINGS PER SHARE
- BASIC $.11 $.09 $.30 $.21
WEIGHTED AVERAGE
SHARES OUTSTANDING
- BASIC 5,855,150 6,097,003 5,945,549 6,030,909
EARNINGS PER SHARE
- DILUTED $.11 $.08 $.29 $.19
WEIGHTED AVERAGE
SHARES OUTSTANDING
- DILUTED 6,078,964 6,516,921 6,157,944 6,471,219
SOURCE Winmark Corporation
