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Winmark Corporation Announces Second Quarter Results

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July 13, 2016 11:54 AM EDT

MINNEAPOLIS--(BUSINESS WIRE)-- Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended June 25, 2016 of $5,394,300 (or $1.25 per share diluted) compared to net income of $4,751,400 (or $1.00 per share diluted) in the second quarter of 2015. For the six months ended June 25, 2016, net income was $9,957,200 (or $2.31 per share diluted) compared to net income of $10,805,700 (or $2.18 per share diluted) for the same period last year.

“The second quarter was a strong one for Winmark.” stated Brett D. Heffes, Chief Executive Officer. “Steady franchisee performance, increased leasing activity and sound expense control combined to deliver outstanding growth in operating income and per share results.”

Winmark Corporation creates, supports and finances business. At June 25, 2016, there were 1,169 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 74 retail franchises have been awarded but are not open. In addition, at June 25, 2016, the Company had a lease portfolio equal to $37.0 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)

 
    June 25, 2016     December 26, 2015
ASSETS
Current Assets:
Cash and cash equivalents $ 1,058,800 $ 1,006,700
Marketable securities 197,300 227,800
Receivables, net 1,388,800 1,416,900
Restricted cash 25,000 25,000
Net investment in leases - current 16,486,500 17,741,500
Income tax receivable 768,900 3,290,400
Inventories 81,200 45,200
Prepaid expenses   790,400     677,800  
Total current assets 20,796,900 24,431,300
 
Net investment in leases – long-term 20,477,700 21,246,000
Property and equipment, net 935,700 1,121,500
Goodwill   607,500     607,500  
$ 42,817,800   $ 47,406,300  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net $ 1,990,000 $ 1,990,000
Accounts payable 990,100 1,643,300
Accrued liabilities 2,385,000 1,875,700
Discounted lease rentals - 38,700
Deferred revenue   1,804,200     1,963,200  
Total current liabilities 7,169,300 7,510,900
 
Long-Term Liabilities:
Line of credit 30,500,000 42,400,000
Notes payable, net 20,921,500 21,916,500
Deferred revenue 1,438,000 1,421,600
Other liabilities 1,101,000 1,216,300
Deferred income taxes   3,614,800     3,614,800  
Total long-term liabilities 57,575,300 70,569,200
 
Shareholders’ Equity (Deficit):

Common stock, no par, 10,000,000 shares authorized, 4,109,760 and 4,124,767 shares issued and outstanding

336,300

406,500

Accumulated other comprehensive loss (11,500 ) (32,900 )
Retained earnings (accumulated deficit)   (22,251,600 )   (31,047,400 )
 
Total shareholders’ equity (deficit)   (21,926,800 )   (30,673,800 )
$ 42,817,800   $ 47,406,300  
 
 
WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

           
Quarter Ended     Six Months Ended
June 25, 2016     June 27, 2015     June 25, 2016     June 27, 2015
REVENUE:        
Royalties $ 10,557,300 $ 10,214,400 $ 20,829,800 $ 19,940,600
Leasing income 4,152,300 3,663,300 8,665,000 13,672,900
Merchandise sales 625,300 686,300 1,362,400 1,420,000
Franchise fees 493,500 475,900 866,000 770,300
Other   471,400     436,800     756,900     697,000  
Total revenue 16,299,800 15,476,700 32,480,100 36,500,800
 
COST OF MERCHANDISE SOLD 588,300 645,800 1,285,700 1,344,000
 
LEASING EXPENSE 460,100 510,500 1,364,200 4,767,900
 
PROVISION FOR CREDIT LOSSES (7,900 ) (93,100 ) (22,300 ) (162,200 )
 
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   5,936,200     6,329,300     12,490,800     12,492,800  
 
Income from operations 9,323,100 8,084,200 17,361,700 18,058,300
 
INTEREST EXPENSE (593,800 ) (369,500 ) (1,234,500 ) (455,200 )
 
INTEREST AND OTHER INCOME (EXPENSE)   9,500     9,700     (1,000 )   (49,400 )
 
Income before income taxes 8,738,800 7,724,400 16,126,200 17,553,700
 
PROVISION FOR INCOME TAXES   (3,344,500 )   (2,973,000 )   (6,169,000 )   (6,748,000 )
 
NET INCOME $ 5,394,300   $ 4,751,400   $ 9,957,200   $ 10,805,700  
 
EARNINGS PER SHARE – BASIC $ 1.31   $ 1.04   $ 2.42   $ 2.26  
 
EARNINGS PER SHARE – DILUTED $ 1.25   $ 1.00   $ 2.31   $ 2.18  
 
WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC   4,110,429     4,578,934     4,112,254     4,789,205  
 
WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED   4,318,763     4,768,777     4,316,346     4,968,122  
 

Winmark Corporation
Brett D. Heffes, 763-520-8500

Source: Winmark Corporation


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