Winmark Corporation Announces Year End Results

By: Winmark Corporation | 0 Shares 213 Reads

MINNEAPOLIS - February 25, 2015 - (BUSINESS WIRE) - Winmark Corporation (Nasdaq: WINA) announced today net income for the year ended December 27, 2014 of $20,066,500 or $3.85 per share diluted, compared to net income of $18,231,600 or $3.48 per share diluted, in 2013. The fourth quarter 2014 net income was $5,610,800 or $1.09 per share diluted, compared to net income of $4,585,800 or $.87 per share diluted, for the same period last year. Revenues for the year ended December 27, 2014 were $61,178,700, up from $55,731,200 in 2013.

John L. Morgan, Chairman and Chief Executive Officer, commented, "We ended the year with a solid fourth quarter that was highlighted by a growing and profitable leasing portfolio, as well as steady growth in our franchising business. We opened 94 stores in 2014 and signed an additional 90 agreements for future store openings across all of our brands. Our newest resale concept, Style Encore, currently has 27 open stores and is being well received by both consumers and franchisees."

Winmark Corporation creates, supports and finances business. At December 27, 2014, there were 1,092 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 105 retail franchises have been awarded but are not open. In addition, at December 27, 2014, the Company had a lease portfolio equal to $44.0 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 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)

	December 27, 2014			December 28, 2013
ASSETS
Current Assets:
Cash and cash equivalents	$	2,089,700		$	10,642,600
Marketable securities		466,800			736,500
Receivables, net		1,328,200			1,205,500
Net investment in leases - current		19,831,600			17,239,900
Income tax receivable		4,163,900			166,500
Inventories		93,500			96,700
Prepaid expenses		467,400			587,300
Total current assets		28,441,100			30,675,000

Net investment in leases – long-term		24,188,900			20,301,400
Property and equipment, net		1,420,300			1,382,200
Other assets		677,500			677,500
	$	54,727,800		$	53,036,100

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Line of credit	$	18,500,000		$	-
Accounts payable		1,955,500			2,441,400
Accrued liabilities		1,759,200			1,233,100
Discounted lease rentals		227,300			424,900
Deferred revenue		2,142,600			2,199,900
Deferred income taxes		4,412,600			4,208,200
Total current liabilities		28,997,200			10,507,500

Long-Term Liabilities:
Discounted lease rentals		25,800			277,400
Deferred revenue		1,347,800			1,180,700
Other liabilities		1,403,200			1,489,000
Deferred income taxes		1,344,300			1,436,800
Total long-term liabilities		4,121,100			4,383,900

Shareholders’ Equity:
Common stock, no par, 10,000,000 shares authorized, 4,998,512 and 5,143,530 shares issued and outstanding		422,400			2,949,500
Accumulated other comprehensive loss		(37,100	)		(4,100	)
Retained earnings		21,224,200			35,199,300
Total shareholders' equity		21,609,500			38,144,700
	$	54,727,800		$	53,036,100

WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)

	Quarter Ended						Fiscal Year Ended
	December 27, 2014			December 28, 2013			December 27, 2014			December 28, 2013
REVENUE:
Royalties	$	10,236,600		$	9,407,100		$	38,972,400		$	36,344,100
Leasing income		4,592,300			3,176,000			16,247,300			14,524,100
Merchandise sales		468,700			506,000			2,728,600			2,327,100
Franchise fees		475,000			315,100			1,989,700			1,459,300
Other		410,200			363,200			1,240,700			1,076,600
Total revenue		16,182,800			13,767,400			61,178,700			55,731,200

COST OF MERCHANDISE SOLD		463,600			471,000			2,619,900			2,205,700

LEASING EXPENSE		396,400			302,500			1,630,600			1,592,000

PROVISION FOR CREDIT LOSSES		36,800			23,000			62,900			(44,700	)

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		5,931,500			5,469,300			23,806,000			22,198,200

Income from operations		9,354,500			7,501,600			33,059,300			29,780,000

INTEREST EXPENSE		(127,800	)		(33,400	)		(484,500	)		(213,500	)

INTEREST AND OTHER INCOME (EXPENSE)		(14,200	)		28,200			14,000			23,400

Income before income taxes		9,212,500			7,496,400			32,588,800			29,589,900

PROVISION FOR INCOME TAXES		(3,601,700	)		(2,910,600	)		(12,522,300	)		(11,358,300	)

NET INCOME	$	5,610,800		$	4,585,800		$	20,066,500		$	18,231,600

EARNINGS PER SHARE – BASIC	$	1.12		$	.89		$	3.96		$	3.60

EARNINGS PER SHARE – DILUTED	$	1.09		$	.87		$	3.85		$	3.48

WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC		4,997,831			5,137,415			5,069,391			5,068,975

WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED		5,159,804			5,297,878			5,216,914			5,241,121