Winmark Corporation Announces Second Quarter Results

MINNEAPOLIS - July 15, 2015 - (BUSINESS WIRE) - Winmark Corporation (Nasdaq:WINA) announced today net income for the quarter ended June 27, 2015 of $4,751,400 (or $1.00 per share diluted) compared to net income of $4,280,800 (or $.82 per share diluted) in the second quarter of 2014. For the six months ended June 27, 2015, net income was $10,805,700 (or $2.18 per share diluted) compared to net income of $8,832,700 (or $1.67 per share diluted) for the same period last year.

The Company’s earnings per share growth during the second quarter was primarily driven by an increase in royalties in the franchising business and the positive impact of the previously announced self-tender offer.

Winmark Corporation creates, supports and finances business. At June 27, 2015, there were 1,116 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 108 retail franchises have been awarded but are not open. In addition, at June 27, 2015, the Company had a lease portfolio equal to $38.7 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. 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)

             
      June 27, 2015     December 27, 2014
ASSETS
Current Assets:            
Cash and cash equivalents     $ 1,120,800       $ 2,089,700  
Marketable securities       215,200         466,800  
Receivables, net       1,241,500         1,328,200  
Net investment in leases - current       18,727,000         19,831,600  
Income tax receivable       1,388,200         4,163,900  
Inventories       60,800         93,500  
Prepaid expenses       581,600         467,400  
Total current assets       23,335,100         28,441,100  
                     
Net investment in leases – long-term       19,983,500         24,188,900  
Property and equipment, net       1,293,700         1,420,300  
Other assets       677,500         677,500  
      $ 45,289,800       $ 54,727,800  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:            
Line of credit     $ -       $ 18,500,000  
Notes payable, net       1,988,700         -  
Accounts payable       1,555,500         1,955,500  
Accrued liabilities       2,459,800         1,759,200  
Discounted lease rentals       131,200         227,300  
Deferred revenue       2,276,600         2,142,600  
Deferred income taxes       3,443,600         4,412,600  
Total current liabilities       11,855,400         28,997,200  
                     
Long-Term Liabilities:            
Line of credit       49,100,000         -  
Notes payable, net       22,900,300         -  
Discounted lease rentals       -         25,800  
Deferred revenue       1,370,700         1,347,800  
Other liabilities       1,286,900         1,403,200  
Deferred income taxes       254,400         1,344,300  
Total long-term liabilities       74,912,300         4,121,100  
                     
Shareholders’ Equity (Deficit):            

Common stock, no par, 10,000,000 shares authorized, 4,128,031 and 4,998,512 shares issued and outstanding

     

-

       

422,400

 
Accumulated other comprehensive loss       (14,600 )       (37,100 )
Retained earnings (accumulated deficit)       (41,463,300 )       21,224,200  
Total shareholders’ equity (deficit)       (41,477,900 )       21,609,500  
      $ 45,289,800       $ 54,727,800  
                     

 

 
WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

             
      Quarter Ended     Six Months Ended
      June 27, 2015     June 28, 2014     June 27, 2015     June 28, 2014
REVENUE:                        
Royalties     $ 10,214,400       $ 9,200,800       $ 19,940,600       $ 18,010,800  
Leasing income       3,663,300         3,157,600         13,672,900         7,533,200  
Merchandise sales       686,300         685,800         1,420,000         1,473,800  
Franchise fees       475,900         607,500         770,300         956,500  
Other       436,800         387,200         697,000         617,200  
Total revenue       15,476,700         14,038,900         36,500,800         28,591,500  
                                         
COST OF MERCHANDISE SOLD       645,800         659,300         1,344,000         1,414,000  
                                         
LEASING EXPENSE       510,500         119,100         4,767,900         425,700  
                                         
PROVISION FOR CREDIT LOSSES       (93,100 )       (11,100 )       (162,200 )       27,800  
                                         
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES       6,329,300         6,179,000         12,492,800         12,196,900  
                                         
Income from operations       8,084,200         7,092,600         18,058,300         14,527,100  
                                         
INTEREST EXPENSE       (369,500 )       (144,100 )       (455,200 )       (206,200 )
                                         
INTEREST AND OTHER INCOME (EXPENSE)       9,700         900         (49,400 )       1,000  
                                         
Income before income taxes       7,724,400         6,949,400         17,553,700         14,321,900  
                                         
PROVISION FOR INCOME TAXES       (2,973,000 )       (2,668,600 )       (6,748,000 )       (5,489,200 )
                                         
NET INCOME     $ 4,751,400       $ 4,280,800       $ 10,805,700       $ 8,832,700  
                                         
EARNINGS PER SHARE – BASIC     $ 1.04       $ .84       $ 2.26       $ 1.72  
                                         
EARNINGS PER SHARE – DILUTED     $ 1.00       $ .82       $ 2.18       $ 1.67  
                                         
WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC       4,578,934         5,109,049         4,789,205         5,128,789  
                                         
WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED       4,768,777         5,243,123         4,968,122         5,275,539  
                         

SOURCE Winmark Corporation

Contact:

Brett D. Heffes
Winmark Corporation
763-520-8500

###

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