Winmark Corporation Announces Second Quarter Results

MINNEAPOLIS - July 19, 2017 - (BUSINESS WIRE) - Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended July 1, 2017 of $5,773,200 (or $1.29 per share diluted) compared to net income of $5,394,300 (or $1.25 per share diluted) in the second quarter of 2016. For the six months ended July 1, 2017, net income was $11,189,600 (or $2.50 per share diluted) compared to net income of $9,957,200 (or $2.31 per share diluted) for the same period last year.

Winmark Corporation creates, supports and finances business. At July 1, 2017, there were 1,199 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 59 retail franchises have been awarded but are not open. In addition, at July 1, 2017, the Company had a lease portfolio equal to $41.0 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. 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)

               
      July 1, 2017       December 31, 2016
ASSETS
Current Assets:              
Cash and cash equivalents     $ 1,071,900       $ 1,252,900
Marketable securities       216,500         199,900
Receivables, net       1,597,200         1,479,200
Restricted cash       30,000         40,000
Net investment in leases - current       16,467,800         17,004,800
Income tax receivable       1,330,200         1,678,800
Inventories       99,400         87,500
Prepaid expenses       468,800         1,050,700
Total current assets       21,281,800         22,793,800
Net investment in leases – long-term       24,524,000         24,410,700
Property and equipment, net       625,100         769,600
Goodwill       607,500         607,500
      $ 47,038,400       $ 48,581,600
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:              
Notes payable, net     $ 1,990,000       $ 1,990,000
Accounts payable       1,409,500         1,692,000
Accrued liabilities       2,595,700         1,811,100
Deferred revenue       1,589,100         1,864,700
Total current liabilities       7,584,300         7,357,800
Long-Term Liabilities:              
Line of credit       10,100,000         23,400,000
Notes payable, net       18,931,500         19,926,500
Deferred revenue       1,445,100         1,423,800
Other liabilities       873,900         993,600
Deferred income taxes       3,472,200         3,331,900
Total long-term liabilities       34,822,700         49,075,800
Shareholders’ Equity (Deficit):              

Common stock, no par, 10,000,000 shares authorized, 4,215,528 and 4,165,769 shares issued and outstanding

     

5,139,700

       

2,976,100

Accumulated other comprehensive income (loss)       400         (9,900)
Retained earnings (accumulated deficit)       (508,700)         (10,818,200)
Total shareholders’ equity (deficit)       4,631,400         (7,852,000)
      $ 47,038,400       $ 48,581,600
               

 

 
WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

               
      Quarter Ended       Six Months Ended
      July 1, 2017       June 25, 2016       July 1, 2017       June 25, 2016
REVENUE:                              
Royalties     $ 11,094,400       $ 10,557,300      

$

21,548,400

      $ 20,829,800
Leasing income       3,946,600         4,152,300         9,806,200         8,665,000
Merchandise sales       537,100         625,300         1,285,400         1,362,400
Franchise fees       675,400         493,500         944,700         866,000
Other       496,000         471,400         788,600         756,900
Total revenue       16,749,500         16,299,800         34,373,300         32,480,100
COST OF MERCHANDISE SOLD       499,100         588,300         1,214,100         1,285,700
LEASING EXPENSE       660,600         460,100         1,932,000         1,364,200
PROVISION FOR CREDIT LOSSES       (11,500)         (7,900)         (12,900)         (22,300)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES       6,467,100         5,936,200         12,970,500         12,490,800
Income from operations       9,134,200         9,323,100         18,269,600         17,361,700
INTEREST EXPENSE       (446,300)         (593,800)         (945,400)         (1,234,500)
INTEREST AND OTHER INCOME (EXPENSE)       100         9,500         1,900         (1,000)
Income before income taxes       8,688,000         8,738,800         17,326,100         16,126,200
PROVISION FOR INCOME TAXES       (2,914,800)         (3,344,500)         (6,136,500)         (6,169,000)
NET INCOME     $ 5,773,200       $ 5,394,300       $ 11,189,600       $ 9,957,200
EARNINGS PER SHARE – BASIC     $ 1.37       $ 1.31       $ 2.67       $ 2.42
EARNINGS PER SHARE – DILUTED     $ 1.29       $ 1.25       $ 2.50       $ 2.31
WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC       4,201,982         4,110,429         4,184,558         4,112,254
WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED       4,483,647         4,318,763         4,467,072         4,316,346
                               

Contact:

Brett D. Heffes
Winmark Corporation
763-520-8500

###

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