Winmark Corporation Announces Second Quarter Results

MINNEAPOLIS--()--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
 

Contacts

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

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