Winmark Corporation Announces Year End Results

MINNEAPOLIS - February 24, 2016 - (BUSINESS WIRE) - Winmark Corporation (Nasdaq: WINA) announced today net income for the year ended December 26, 2015 of $21,799,700 or $4.69 per share diluted, compared to net income of $20,066,500 or $3.85 per share diluted, in 2014. The fourth quarter 2015 net income was $5,654,400 or $1.31 per share diluted, compared to net income of $5,610,800 or $1.09 per share diluted, for the same period last year. Revenues for the year ended December 26, 2015 were $69,447,800, up from $61,178,700 in 2014.

“During 2015, we passed an important milestone by achieving more than $1 billion in system-wide sales. We have a talented group of franchisees that are thriving in the current retail environment. Our leasing business continues to add dynamic, growing customers to our portfolio,” stated John L. Morgan, Chairman and Chief Executive Officer.

About Winmark Corporation

Winmark Corporation creates, supports and finances business. At December 26, 2015, there were 1,150 franchises in operation under the brands Plato's Closet®, Once Upon A Child®, Play It Again Sports®, Style Encore® and Music Go Round®. An additional 88 retail franchises have been awarded but are not open. In addition, at December 26, 2015, the Company had a lease portfolio equal to $39.0 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 26, 2015     December 27, 2014
ASSETS
Current Assets:            
Cash and cash equivalents     $ 1,006,700       $ 2,089,700  
Marketable securities       227,800         466,800  
Receivables, net       1,416,900         1,328,200  
Restricted cash       25,000         -  
Net investment in leases - current       17,741,500         19,831,600  
Income tax receivable       3,290,400         4,163,900  
Inventories       45,200         93,500  
Prepaid expenses       677,800         467,400  
Total current assets       24,431,300         28,441,100  
                     
Net investment in leases – long-term       21,246,000         24,188,900  
Property and equipment, net       1,121,500         1,420,300  
Other assets       607,500         677,500  
      $ 47,406,300       $ 54,727,800  
             
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:            
Line of credit     $ -       $ 18,500,000  
Notes payable, net       1,990,000         -  
Accounts payable       1,643,300         1,955,500  
Accrued liabilities       1,875,700         1,759,200  
Discounted lease rentals       38,700         227,300  
Deferred revenue       1,963,200         2,142,600  
Total current liabilities       7,510,900         24,584,600  
             
Long-Term Liabilities:            
Line of credit       42,400,000         -  
Notes payable, net       21,916,500         -  
Discounted lease rentals       -         25,800  
Deferred revenue       1,421,600         1,347,800  
Other liabilities       1,216,300         1,403,200  
Deferred income taxes       3,614,800         5,756,900  
Total long-term liabilities       70,569,200         8,533,700  
             
Shareholders’ Equity (Deficit):            

Common stock, no par, 10,000,000 shares authorized, 4,124,767 and 4,998,512 shares issued and outstanding

     

406,500

       

422,400

 
Accumulated other comprehensive loss       (32,900 )       (37,100 )
Retained earnings (accumulated deficit)       (31,047,400 )       21,224,200  
                     
Total shareholders' equity (deficit)       (30,673,800 )       21,609,500  
      $ 47,406,300       $ 54,727,800  
             

 

 
WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
             
      Quarter Ended     Fiscal Year Ended
      December 26, 2015     December 27, 2014     December 26, 2015     December 27, 2014
REVENUE:                        
Royalties     $ 10,681,300       $ 10,236,600       $ 41,908,000       $ 38,972,400  
Leasing income       4,645,800         4,592,300         21,565,700         16,247,300  
Merchandise sales       634,600         468,700         2,816,900         2,728,600  
Franchise fees       534,600         475,000         1,788,100         1,989,700  
Other       451,200         410,200         1,369,100         1,240,700  
Total revenue       16,947,500         16,182,800         69,447,800         61,178,700  
                                         
COST OF MERCHANDISE SOLD       597,500         463,600         2,653,100         2,619,900  
                                         
LEASING EXPENSE       818,000         396,400         5,759,300         1,630,600  
                                         
PROVISION FOR CREDIT LOSSES       (26,300 )       36,800         (149,700 )       62,900  
                                         
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES       5,867,700         5,931,500         24,094,400         23,806,000  
                                         
Income from operations       9,690,600         9,354,500         37,090,700         33,059,300  
                                         
INTEREST EXPENSE       (659,300 )       (127,800 )       (1,802,200 )       (484,500 )
                                         
INTEREST AND OTHER INCOME (EXPENSE)       (1,900 )       (14,200 )       (63,700 )       14,000  
                                         
Income before income taxes       9,029,400         9,212,500         35,224,800         32,588,800  
                                         
PROVISION FOR INCOME TAXES       (3,375,000 )       (3,601,700 )       (13,425,100 )       (12,522,300 )
                                         
NET INCOME     $ 5,654,400       $ 5,610,800       $ 21,799,700       $ 20,066,500  
                                         
EARNINGS PER SHARE – BASIC     $ 1.37       $ 1.12       $ 4.89       $ 3.96  
                                         
EARNINGS PER SHARE – DILUTED     $ 1.31       $ 1.09       $ 4.69       $ 3.85  
                                         
WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC       4,129,266         4,997,831         4,458,927         5,069,391  
                                         
WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED       4,331,634         5,159,804         4,651,527         5,216,914  
                                         

SOURCE Winmark Corporation

Contact:

Brett D. Heffes
Winmark Corporation
763-520-8500

###

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