Winmark Corporation Announces Third Quarter Results

MINNEAPOLIS - October 14, 2015 - (BUSINESS WIRE) - Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended September 26, 2015 of $5,339,600 (or $1.23 per share diluted) compared to net income of $5,623,000 (or $1.09 per share diluted) in the third quarter of 2014. For the nine months ended September 26, 2015, net income was $16,145,300 (or $3.39 per share diluted) compared to net income of $14,455,700 (or $2.76 per share diluted) for the same period last year.

The Company experienced modest royalty growth in the franchising business, while profits in the leasing business were lower when compared to last year due to the timing of customer activity in the portfolio. Earnings per share growth during the quarter was positively impacted by the previously reported self-tender offer.

Winmark Corporation creates, supports and finances business. At September 26, 2015, there were 1,133 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 104 retail franchises have been awarded but are not open. In addition, at September 26, 2015, the Company had a lease portfolio of $40.3 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 26, 2015     December 27, 2014
ASSETS
Current Assets:            
Cash and cash equivalents     $ 1,060,700       $ 2,089,700  
Marketable securities       226,500         466,800  
Receivables, net       1,314,200         1,328,200  
Net investment in leases - current       18,260,700         19,831,600  
Income tax receivable       855,000         4,163,900  
Inventories       59,600         93,500  
Prepaid expenses       757,500         467,400  
Total current assets       22,534,200         28,441,100  
                     
Net investment in leases – long-term       21,994,700         24,188,900  
Property and equipment, net       1,218,800         1,420,300  
Other assets       607,500         677,500  
Deferred income taxes       419,400         -  
      $ 46,774,600       $ 54,727,800  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:            
Line of credit     $ -       $ 18,500,000  
Notes payable, net       1,988,700         -  
Accounts payable       1,208,400         1,955,500  
Accrued liabilities       3,139,800         1,759,200  
Discounted lease rentals       75,800         227,300  
Deferred revenue       2,139,200         2,142,600  
Deferred income taxes       2,846,400         4,412,600  
Total current liabilities       11,398,300         28,997,200  
             
Long-Term Liabilities:            
Line of credit       46,200,000         -  
Notes payable, net       22,403,200         -  
Discounted lease rentals       -         25,800  
Deferred revenue       1,536,100         1,347,800  
Other liabilities       1,248,800         1,403,200  
Deferred income taxes       -         1,344,300  
Total long-term liabilities       71,388,100         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

     

434,700

       

422,400

 
Accumulated other comprehensive loss       (33,700 )       (37,100 )
Retained earnings (accumulated deficit)       (36,412,800 )       21,224,200  
                     
Total shareholders’ equity (deficit)       (36,011,800 )       21,609,500  
      $ 46,774,600       $ 54,727,800  
                     

 

 
WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

             
      Quarter Ended     Nine Months Ended
      September 26, 2015     September 27, 2014     September 26, 2015     September 27, 2014
REVENUE:                        
Royalties     $ 11,286,100       $ 10,725,000       $ 31,226,700       $ 28,735,800  
Leasing income       3,247,000         4,121,800         16,919,900         11,655,000  
Merchandise sales       762,300         786,100         2,182,300         2,259,900  
Franchise fees       483,200         558,200         1,253,500         1,514,700  
Other       220,900         213,300         917,900         830,500  
Total revenue       15,999,500         16,404,400         52,500,300         44,995,900  
                                         
COST OF MERCHANDISE SOLD       711,600         742,300         2,055,600         2,156,300  
                                         
LEASING EXPENSE       173,400         808,500         4,941,300         1,234,200  
                                         
PROVISION FOR CREDIT LOSSES       38,800         (1,700 )       (123,400 )       26,100  
                                         
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES       5,733,900         5,677,600         18,226,700         17,874,500  
                                         
Income from operations       9,341,800         9,177,700         27,400,100         23,704,800  
                                         
INTEREST EXPENSE       (687,700 )       (150,500 )       (1,142,900 )       (356,700 )
                                         
INTEREST AND OTHER INCOME/(EXPENSE)       (12,400 )       27,200         (61,800 )       28,200  
                                         
Income before income taxes       8,641,700         9,054,400         26,195,400         23,376,300  
                                         
PROVISION FOR INCOME TAXES       (3,302,100 )       (3,431,400 )       (10,050,100 )       (8,920,600 )
                                         
NET INCOME     $ 5,339,600       $ 5,623,000       $ 16,145,300       $ 14,455,700  
                                         
EARNINGS PER SHARE – BASIC     $ 1.29       $ 1.12       $ 3.53       $ 2.84  
                                         
EARNINGS PER SHARE – DILUTED     $ 1.23       $ 1.09       $ 3.39       $ 2.76  
                                         
WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC       4,128,031         5,022,166         4,568,813         5,093,243  
                                         
WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED       4,338,230         5,156,785         4,758,158         5,235,949  
                                         

 SOURCE Winmark Corporation

Contact:

Brett D. Heffes
Winmark Corporation
763-520-8500

###

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