MINNEAPOLIS , Oct. 19 /PRNewswire-FirstCall/ -- Winmark Corporation (Nasdaq: WINA) today reported net income for the third quarter ended September 30, 2006 of $838,200 , or $.14 per share diluted, compared to net income of $926,100 , or $.14 per share diluted, in the third quarter of 2005.
For the nine months ended September 30, 2006 , net income was $2,601,900 , or $.43 per share diluted, compared to net income of $2,168,600 , or $.34 per share diluted, for the same period last year.
John L. Morgan, Chairman and Chief Executive Officer, stated, 'During the third quarter, our franchising business performed very well. Our biggest challenge continues to be growing leased assets in Winmark Capital and Wirth Business Credit.'
Winmark Corporation provides financial services and develops franchises for retail stores that buy, sell, trade and consign used and new merchandise. At September 30, 2006 , there were 829 franchises in operation under the Company's brands and an additional 49 franchises awarded but not open. Of the franchises in operation, there were 393 Play It Again Sports(R), 210 Once Upon A Child(R), 176 Plato's Closet(R), 41 Music Go Round(R) and 9 Wirth Business Credit(R). In addition, at September 30, 2006 , the Company had an equipment leasing portfolio equal to $15.4 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)
September 30, December 31,
2006 2005
ASSETS
Current Assets:
Cash and cash equivalents $1,301,800 $2,947,700
Receivables, less allowance for doubtful
accounts of $46,500 and $188,700 2,331,800 1,836,300
Investment in direct finance leases 4,548,400 1,478,200
Income tax receivable 93,500 620,500
Inventories 84,700 67,000
Prepaid expenses and other 1,475,400 804,000
Deferred income taxes 776,800 776,800
Total current assets 10,612,400 8,530,500
Long-term investment in leasing operations 10,881,000 5,492,400
Long-term investments 11,500,000 11,000,000
Long-term receivables, net 76,600 94,300
Property and equipment, net 546,400 448,600
Other assets, net 607,500 607,500
Deferred income taxes 375,400 375,400
$34,599,300 $26,548,700
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current renewable subordinated notes $3,294,300 $-
Accounts payable 868,300 1,156,400
Accrued liabilities 1,869,300 1,435,900
Current discounted lease rentals 154,500 147,600
Rents received in advance 373,900 167,600
Current deferred revenue 976,600 829,100
Total current liabilities 7,536,900 3,736,600
Long-term renewable subordinated notes 12,046,500 -
Long-term discounted lease rentals 81,400 185,600
Long-term deferred revenue 412,900 339,600
Shareholders' Equity:
Common stock, no par, 10,000,000 shares
authorized, 5,632,042 and 6,049,037 shares
issued and outstanding 136,000 3,840,500
Retained earnings 14,385,600 18,446,400
Total shareholders' equity 14,521,600 22,286,900
$34,599,300 $26,548,700
WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Quarter Ended Nine Months Ended
September 30, September 24, September 30, September 24,
2006 2005 2006 2005
REVENUE:
Royalties $4,800,000 $4,230,300 $14,320,500 $12,953,400
Merchandise sales 1,452,600 1,446,100 3,533,300 5,393,700
Franchise fees 305,000 330,000 980,700 745,000
Leasing income 523,100 119,500 1,209,800 273,800
Other 158,900 163,800 441,900 432,300
Total revenue 7,239,600 6,289,700 20,486,200 19,798,200
COST OF MERCHANDISE
SOLD 1,381,900 1,144,900 3,378,600 4,465,200
LEASING EXPENSE 84,500 600 131,200 600
SELLING, GENERAL
AND ADMINISTRATIVE
EXPENSES 4,206,300 3,645,700 12,934,600 11,678,100
Income from
operations 1,566,900 1,498,500 4,041,800 3,654,300
LOSS FROM EQUITY
INVESTMENTS - (5,500) - (188,800)
GAIN ON SALE OF
INVESTMENTS - - - 17,400
INTEREST EXPENSE (307,900) - (429,300) -
INTEREST AND OTHER
INCOME 145,300 90,100 746,600 224,100
Income before
income taxes 1,404,300 1,583,100 4,359,100 3,707,000
PROVISION FOR
INCOME TAXES (566,100) (657,000) (1,757,200) (1,538,400)
NET INCOME $838,200 $926,100 $2,601,900 $2,168,600
EARNINGS PER
SHARE - BASIC $.15 $.15 $.45 $.36
WEIGHTED AVERAGE
SHARES OUTSTANDING
- BASIC 5,632,042 6,012,463 5,841,047 6,024,700
EARNINGS PER
SHARE - DILUTED $.14 $.14 $.43 $.34
WEIGHTED AVERAGE
SHARES OUTSTANDING
- DILUTED 5,853,968 6,424,990 6,056,690 6,452,359
SOURCE Winmark Corporation
