Winmark Corporation reported that net income for the quarter ended March 26, 2005 fell 48.5% to $699,900, or 11 cents per diluted share, compared to net income of $1,360,300, 21 cents per diluted share 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
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
