Winmark Corporation Announces Year End Results

MINNEAPOLIS - February 25, 2015 - (BUSINESS WIRE) - Winmark Corporation (Nasdaq: WINA) announced today net income for the year ended December 27, 2014 of $20,066,500 or $3.85 per share diluted, compared to net income of $18,231,600 or $3.48 per share diluted, in 2013. The fourth quarter 2014 net income was $5,610,800 or $1.09 per share diluted, compared to net income of $4,585,800 or $.87 per share diluted, for the same period last year. Revenues for the year ended December 27, 2014 were $61,178,700, up from $55,731,200 in 2013.

John L. Morgan, Chairman and Chief Executive Officer, commented, "We ended the year with a solid fourth quarter that was highlighted by a growing and profitable leasing portfolio, as well as steady growth in our franchising business. We opened 94 stores in 2014 and signed an additional 90 agreements for future store openings across all of our brands. Our newest resale concept, Style Encore, currently has 27 open stores and is being well received by both consumers and franchisees."

Winmark Corporation creates, supports and finances business. At December 27, 2014, there were 1,092 franchises in operation under the brands Plato's Closet®, Once Upon A Child®, Play It Again Sports®, Music Go Round® and Style Encore®. An additional 105 retail franchises have been awarded but are not open. In addition, at December 27, 2014, the Company had a lease portfolio equal to $44.0 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)

         
    December 27, 2014   December 28, 2013
ASSETS
Current Assets:        
Cash and cash equivalents   $ 2,089,700     $ 10,642,600  
Marketable securities     466,800       736,500  
Receivables, net     1,328,200       1,205,500  
Net investment in leases - current     19,831,600       17,239,900  
Income tax receivable     4,163,900       166,500  
Inventories     93,500       96,700  
Prepaid expenses     467,400       587,300  
Total current assets     28,441,100       30,675,000  
                 
Net investment in leases – long-term     24,188,900       20,301,400  
Property and equipment, net     1,420,300       1,382,200  
Other assets     677,500       677,500  
    $ 54,727,800     $ 53,036,100  
     
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:        
Line of credit   $ 18,500,000     $ -  
Accounts payable     1,955,500       2,441,400  
Accrued liabilities     1,759,200       1,233,100  
Discounted lease rentals     227,300       424,900  
Deferred revenue     2,142,600       2,199,900  
Deferred income taxes     4,412,600       4,208,200  
Total current liabilities     28,997,200       10,507,500  
         
Long-Term Liabilities:        
Discounted lease rentals     25,800       277,400  
Deferred revenue     1,347,800       1,180,700  
Other liabilities     1,403,200       1,489,000  
Deferred income taxes     1,344,300       1,436,800  
Total long-term liabilities     4,121,100       4,383,900  
         
Shareholders’ Equity:        

Common stock, no par, 10,000,000 shares authorized, 4,998,512 and 5,143,530 shares issued and outstanding

   

422,400

     

2,949,500

 
Accumulated other comprehensive loss     (37,100 )     (4,100 )
Retained earnings     21,224,200       35,199,300  
Total shareholders' equity     21,609,500       38,144,700  
    $ 54,727,800     $ 53,036,100  
         

 

WINMARK CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

         
    Quarter Ended   Fiscal Year Ended
    December 27, 2014   December 28, 2013   December 27, 2014   December 28, 2013
REVENUE:                
Royalties   $ 10,236,600     $ 9,407,100     $ 38,972,400     $ 36,344,100  
Leasing income     4,592,300       3,176,000       16,247,300       14,524,100  
Merchandise sales     468,700       506,000       2,728,600       2,327,100  
Franchise fees     475,000       315,100       1,989,700       1,459,300  
Other     410,200       363,200       1,240,700       1,076,600  
Total revenue     16,182,800       13,767,400       61,178,700       55,731,200  
                                 
COST OF MERCHANDISE SOLD     463,600       471,000       2,619,900       2,205,700  
                                 
LEASING EXPENSE     396,400       302,500       1,630,600       1,592,000  
                                 
PROVISION FOR CREDIT LOSSES     36,800       23,000       62,900       (44,700 )
                                 
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     5,931,500       5,469,300       23,806,000       22,198,200  
                                 
Income from operations     9,354,500       7,501,600       33,059,300       29,780,000  
                                 
INTEREST EXPENSE     (127,800 )     (33,400 )     (484,500 )     (213,500 )
                                 
INTEREST AND OTHER INCOME (EXPENSE)     (14,200 )     28,200       14,000       23,400  
                                 
Income before income taxes     9,212,500       7,496,400       32,588,800       29,589,900  
                                 
PROVISION FOR INCOME TAXES     (3,601,700 )     (2,910,600 )     (12,522,300 )     (11,358,300 )
                                 
NET INCOME   $ 5,610,800     $ 4,585,800     $ 20,066,500     $ 18,231,600  
                                 
EARNINGS PER SHARE – BASIC   $ 1.12     $ .89     $ 3.96     $ 3.60  
                                 
EARNINGS PER SHARE – DILUTED   $ 1.09     $ .87     $ 3.85     $ 3.48  
                                 
WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC     4,997,831       5,137,415       5,069,391       5,068,975  
                                 
WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED     5,159,804       5,297,878       5,216,914       5,241,121  
                                 

SOURCE Winmark Corporation 

Contact:

Brett D. Heffes
Winmark Corporation
763-520-8500

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