MINNEAPOLIS--(BUSINESS WIRE)--
Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended September 24, 2016 of $6,094,200 (or $1.41 per share diluted) compared to net income of $5,339,600 (or $1.23 per share diluted) in the third quarter of 2015. For the nine months ended September 24, 2016, net income was $16,051,400 (or $3.72 per share diluted) compared to net income of $16,145,300 (or $3.39 per share diluted) for the same period last year.
Earnings growth during the third quarter was driven by an increase in customer activity within the Company’s lease portfolio and reduced selling, general and administrative expenses. Brett D. Heffes, Chief Executive Officer, commented, “I am pleased that we were able to grow our earnings per share by 15% over last year. Our performance during the quarter demonstrated the benefits of our diverse business model.”
Winmark Corporation creates, supports and finances business. At September 24, 2016, there were 1,184 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 67 retail franchises have been awarded but are not open. In addition, at September 24, 2016, the Company had a lease portfolio of $37.3 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 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) |
||||||||||
| September 24, 2016 | December 26, 2015 | |||||||||
| ASSETS | ||||||||||
| Current Assets: | ||||||||||
| Cash and cash equivalents | $ | 1,120,900 | $ | 1,006,700 | ||||||
| Marketable securities | 204,100 | 227,800 | ||||||||
| Receivables, net | 1,555,300 | 1,416,900 | ||||||||
| Restricted cash | 40,000 | 25,000 | ||||||||
| Net investment in leases - current | 16,264,100 | 17,741,500 | ||||||||
| Income tax receivable | 769,200 | 3,290,400 | ||||||||
| Inventories | 95,600 | 45,200 | ||||||||
| Prepaid expenses | 921,000 | 677,800 | ||||||||
| Total current assets | 20,970,200 | 24,431,300 | ||||||||
| Net investment in leases – long-term | 21,070,300 | 21,246,000 | ||||||||
| Property and equipment, net | 847,700 | 1,121,500 | ||||||||
| Goodwill | 607,500 | 607,500 | ||||||||
| $ | 43,495,700 | $ | 47,406,300 | |||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||||
| Current Liabilities: | ||||||||||
| Notes payable, net | $ | 1,990,000 | $ | 1,990,000 | ||||||
| Accounts payable | 1,118,900 | 1,643,300 | ||||||||
| Accrued liabilities | 2,644,500 | 1,875,700 | ||||||||
| Discounted lease rentals | - | 38,700 | ||||||||
| Deferred revenue | 1,671,700 | 1,963,200 | ||||||||
| Total current liabilities | 7,425,100 | 7,510,900 | ||||||||
| Long-Term Liabilities: | ||||||||||
| Line of credit | 25,200,000 | 42,400,000 | ||||||||
| Notes payable, net | 20,424,000 | 21,916,500 | ||||||||
| Deferred revenue | 1,451,200 | 1,421,600 | ||||||||
| Other liabilities | 1,036,100 | 1,216,300 | ||||||||
| Deferred income taxes | 3,676,900 | 3,614,800 | ||||||||
| Total long-term liabilities | 51,788,200 | 70,569,200 | ||||||||
| Shareholders’ Equity (Deficit): | ||||||||||
|
Common stock, no par, 10,000,000 shares authorized, 4,122,037 and 4,124,767 shares issued and outstanding |
859,200 |
406,500 |
||||||||
| Accumulated other comprehensive loss | (7,300 | ) | (32,900 | ) | ||||||
| Retained earnings (accumulated deficit) | (16,569,500 | ) | (31,047,400 | ) | ||||||
| Total shareholders’ equity (deficit) | (15,717,600 | ) | (30,673,800 | ) | ||||||
| $ | 43,495,700 | $ | 47,406,300 | |||||||
| WINMARK CORPORATION | ||||||||||||||||||||
| CONDENSED STATEMENTS OF OPERATIONS | ||||||||||||||||||||
|
(Unaudited) |
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| Quarter Ended | Nine Months Ended | |||||||||||||||||||
| September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | |||||||||||||||||
| REVENUE: | ||||||||||||||||||||
| Royalties | $ | 11,311,000 | $ | 11,286,100 | $ | 32,140,800 | $ | 31,226,700 | ||||||||||||
| Leasing income | 4,174,000 | 3,247,000 | 12,839,000 | 16,919,900 | ||||||||||||||||
| Merchandise sales | 520,000 | 762,300 | 1,882,400 | 2,182,300 | ||||||||||||||||
| Franchise fees | 501,800 | 483,200 | 1,367,800 | 1,253,500 | ||||||||||||||||
| Other | 227,500 | 220,900 | 984,400 | 917,900 | ||||||||||||||||
| Total revenue | 16,734,300 | 15,999,500 | 49,214,400 | 52,500,300 | ||||||||||||||||
| COST OF MERCHANDISE SOLD | 499,100 | 711,600 | 1,784,800 | 2,055,600 | ||||||||||||||||
| LEASING EXPENSE | 646,200 | 173,400 | 2,010,400 | 4,941,300 | ||||||||||||||||
| PROVISION FOR CREDIT LOSSES | (29,700 | ) | 38,800 | (52,000 | ) | (123,400 | ) | |||||||||||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 5,180,700 | 5,733,900 | 17,671,500 | 18,226,700 | ||||||||||||||||
| Income from operations | 10,438,000 | 9,341,800 | 27,799,700 | 27,400,100 | ||||||||||||||||
| INTEREST EXPENSE | (552,300 | ) | (687,700 | ) | (1,786,800 | ) | (1,142,900 | ) | ||||||||||||
| INTEREST AND OTHER INCOME/(EXPENSE) | (6,300 | ) | (12,400 | ) | (7,300 | ) | (61,800 | ) | ||||||||||||
| Income before income taxes | 9,879,400 | 8,641,700 | 26,005,600 | 26,195,400 | ||||||||||||||||
| PROVISION FOR INCOME TAXES | (3,785,200 | ) | (3,302,100 | ) | (9,954,200 | ) | (10,050,100 | ) | ||||||||||||
| NET INCOME | $ | 6,094,200 | $ | 5,339,600 | $ | 16,051,400 | $ | 16,145,300 | ||||||||||||
| EARNINGS PER SHARE – BASIC | $ | 1.48 | $ | 1.29 | $ | 3.90 | $ | 3.53 | ||||||||||||
| EARNINGS PER SHARE – DILUTED | $ | 1.41 | $ | 1.23 | $ | 3.72 | $ | 3.39 | ||||||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC | 4,116,957 | 4,128,031 | 4,113,819 | 4,568,813 | ||||||||||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED | 4,328,168 | 4,338,230 | 4,320,284 | 4,758,158 | ||||||||||||||||
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