Winmark Corporation Announces First Quarter Results

By: Winmark Corporation | 0 Shares 224 Reads

MINNEAPOLIS - April 13, 2016 - (BUSINESS WIRE) - Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended March 26, 2016 of $4,562,900 (or $1.06 per share diluted) compared to net income of $6,054,300 (or $1.17 per share diluted) in the first quarter of 2015.

Brett D. Heffes, Chief Executive Officer, noted, “During the first quarter, our franchising business experienced modest royalty growth and the timing of customer activity in our leasing portfolio created variability in our results.”

Winmark Corporation creates, supports and finances business. At March 26, 2016, there were 1,154 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 84 retail franchises have been awarded but are not open. In addition, at March 26, 2016, the Company had a lease portfolio equal to $38.3 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. 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)

	March 26, 2016		December 26, 2015
ASSETS
Current Assets:
Cash and cash equivalents	$	1,213,000	$	1,006,700
Marketable securities		220,100		227,800
Receivables, net		1,345,800		1,416,900
Restricted cash		15,000		25,000
Net investment in leases - current		18,122,400		17,741,500
Income tax receivable		-		3,290,400
Inventories		80,300		45,200
Prepaid expenses		946,300		677,800
Total current assets		21,942,900		24,431,300

Net investment in leases – long-term		20,172,900		21,246,000
Property and equipment, net		1,032,200		1,121,500
Goodwill		607,500		607,500
	$	43,755,500	$	47,406,300

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net	$	1,990,000	$	1,990,000
Accounts payable		2,070,000		1,643,300
Income tax payable		1,610,200		-
Accrued liabilities		2,258,900		1,875,700
Discounted lease rentals		-		38,700
Deferred revenue		2,017,100		1,963,200
Total current liabilities		9,946,200		7,510,900

Long-Term Liabilities:
Line of credit		33,500,000		42,400,000
Notes payable, net		21,419,000		21,916,500
Deferred revenue		1,375,300		1,421,600
Other liabilities		1,158,200		1,216,300
Deferred income taxes		3,614,800		3,614,800
Total long-term liabilities		61,067,300		70,569,200

Shareholders’ Equity (Deficit):
Common stock, no par, 10,000,000 shares authorized, 4,110,805 and 4,124,767 shares issued and outstanding		-		406,500
Accumulated other comprehensive loss		(23,200)		(32,900)
Retained earnings (accumulated deficit)		(27,234,800)		(31,047,400)

Total shareholders’ equity (deficit)		(27,258,000)		(30,673,800)
	$	43,755,500	$	47,406,300

WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)

	Three Months Ended
	March 26, 2016		March 28, 2015
REVENUE:
Royalties	$	10,272,500	$	9,726,200
Leasing income		4,512,700		10,009,600
Merchandise sales		737,100		733,700
Franchise fees		372,500		294,400
Other		285,500		260,200
Total revenue		16,180,300		21,024,100

COST OF MERCHANDISE SOLD		697,400		698,200

LEASING EXPENSE		904,100		4,257,400

PROVISION FOR CREDIT LOSSES		(14,400)		(69,100)

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		6,554,600		6,163,500
Income from operations		8,038,600		9,974,100

INTEREST EXPENSE		(640,700)		(85,700)

INTEREST AND OTHER INCOME (EXPENSE)		(10,500)		(59,100)
Income before income taxes		7,387,400		9,829,300

PROVISION FOR INCOME TAXES		(2,824,500)		(3,775,000)

NET INCOME	$	4,562,900	$	6,054,300

EARNINGS PER SHARE - BASIC	$	1.11	$	1.21

EARNINGS PER SHARE - DILUTED	$	1.06	$	1.17

WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC		4,114,071		4,999,475

WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED		4,313,920		5,167,466