Winmark Corporation, which franchises stores under the Play It Again Sports and other banners, reported net income for the third quarter ended Sept. 24 of $3.48 million, or 66 cents per share diluted, compared to net income of $2.69, or 51 cents per share diluted, in 2010.
For the nine months ended Sept. 24, net income was $9.91 million, or $1.89 per share diluted, compared to net income of $7.21 million, or $1.39 per share diluted, for the same period last year.
“During the quarter, our earnings growth was primarily driven by the continued strong performance of our franchising brands,” said John L. Morgan, Chairman and Chief Executive Officer. “Additionally, our leasing business continued to show significant increases in both profitability and customer activity. During the quarter, our pre-tax income was reduced by approximately $500,000, or 10 cents per share, due to our share of losses from Tomsten, Inc. as well as an impairment charge relating to our investment in BridgeFunds, LLC.”
Winmark Corporation creates, supports and finances business. At Sept. 24, 2011, there were 923 franchises in operation under the brands Play It Again Sports®, Plato's Closet®, Once Upon A Child®, and Music Go Round®. An additional 39 retail franchises have been awarded but are not open. In addition, at September 24, 2011, the Company had loans and leases equal to $31.8 million.
WINMARK CORPORATION | ||||||||||||||||
CONDENSED STATEMENTS OF OPERATIONS | ||||||||||||||||
(Unaudited) | ||||||||||||||||
| Quarter Ended | Nine Months Ended | |||||||||||||||
| September 24, 2011 | September 25, 2010 | September 24, 2011 | September 25, 2010 | |||||||||||||
| REVENUE: | ||||||||||||||||
| Royalties | $ | 8,046,400 | $ | 7,030,000 | $ | 21,918,500 | $ | 19,761,800 | ||||||||
| Leasing income | 2,369,300 | 2,419,600 | 12,584,500 | 7,290,300 | ||||||||||||
| Merchandise sales | 664,300 | 964,000 | 1,998,700 | 2,009,200 | ||||||||||||
| Franchise fees | 516,200 | 357,100 | 836,200 | 885,600 | ||||||||||||
| Other | 177,300 | 236,600 | 765,300 | 782,300 | ||||||||||||
| Total revenue | 11,773,500 | 11,007,300 | 38,103,200 | 30,729,200 | ||||||||||||
| COST OF MERCHANDISE SOLD | 631,400 | 920,600 | 1,908,500 | 1,911,800 | ||||||||||||
| LEASING EXPENSE | 290,400 | 387,600 | 4,149,300 | 1,374,200 | ||||||||||||
| PROVISION FOR CREDIT LOSSES | (13,100 | ) | 130,500 | 8,200 | 142,400 | |||||||||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 4,219,100 | 4,360,200 | 14,095,400 | 14,093,300 | ||||||||||||
| Income from operations | 6,645,700 | 5,208,400 | 17,941,800 | 13,207,500 | ||||||||||||
| LOSS FROM EQUITY INVESTMENTS | (224,700 | ) | (200,200 | ) | (444,600 | ) | (322,400 | ) | ||||||||
| IMPAIRMENT OF INVESTMENT IN NOTES | (293,200 | ) | – | (546,100 | ) | – | ||||||||||
| INTEREST EXPENSE | (26,200 | ) | (363,900 | ) | (84,200 | ) | (925,200 | ) | ||||||||
| INTEREST AND OTHER INCOME/(EXPENSE) | (9,000 | ) | 96,100 | 22,100 | 376,800 | |||||||||||
| Income before income taxes | 6,092,600 | 4,740,400 | 16,889,000 | 12,336,700 | ||||||||||||
| PROVISION FOR INCOME TAXES | (2,609,100 | ) | (2,050,400 | ) | (6,979,000 | ) | (5,126,900 | ) | ||||||||
| NET INCOME | $ | 3,483,500 | $ | 2,690,000 | $ | 9,910,000 | $ | 7,209,800 | ||||||||
| EARNINGS PER SHARE BASIC | $ | .70 | $ | .54 | $ | 1.99 | $ | 1.43 | ||||||||
| EARNINGS PER SHARE DILUTED | $ | .66 | $ | .51 | $ | 1.89 | $ | 1.39 | ||||||||
