Exhibit 99.1

 

Picture 1

 

 

 

 

 

Contact:Brett D. Heffes 

763/520-8500

 

 

 

 

FOR IMMEDIATE RELEASE

 

WINMARK CORPORATION ANNOUNCES YEAR END RESULTS

 

Minneapolis, MN (February 26, 2018)   Winmark Corporation (Nasdaq: WINA) announced today net income for the year ended December 30, 2017 of $24,565,100 or $5.66 per share diluted compared to net income of $22,217,600 or $5.13 per share diluted in 2016.   The fourth quarter 2017 net income was $7,656,500 or $1.86 per share diluted, compared to net income of $6,166,200 or $1.41 per share diluted, for the same period last year. Revenues for the year ended December 30, 2017 were $69,745,900, up from $66,580,300 in 2016. As a result of the recently enacted Tax Cut and Jobs Act, the Company recognized a one-time, non-cash, tax benefit of approximately $1.5 million or $0.36 per share in the fourth quarter related to the remeasurement of its deferred tax assets and liabilities from the reduction in U.S. federal corporate income tax rates.

 

“Throughout the year, we experienced steady growth in royalties as our franchisees continued to perform well,” noted Brett Heffes, Chief Executive Officer. “We have continued to invest in Winmark Franchise Partners since its launch earlier last year, and I am excited by the long-term opportunities for this business.”

 

Winmark Corporation creates, supports and finances business.  At December 30, 2017, there were 1,211 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 62 retail franchises have been awarded but are not open.  In addition, at December 30, 2017, the Company had a lease portfolio of  $41.3 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.  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 30, 2017

    

December 31, 2016

ASSETS

Current Assets:

 

 

    

 

 

 

 Cash and cash equivalents

 

$

1,073,200

 

$

1,252,900

 Marketable securities

 

 

 —

 

 

199,900

 Receivables, net

 

 

1,796,000

 

 

1,479,200

 Restricted cash

 

 

90,000

 

 

40,000

 Net investment in leases - current

 

 

15,332,300

 

 

17,004,800

 Income tax receivable

 

 

2,161,800

 

 

1,678,800

 Inventories

 

 

97,100

 

 

87,500

 Prepaid expenses

 

 

814,800

 

 

1,050,700

Total current assets

 

 

21,365,200

 

 

22,793,800

 

 

 

 

 

 

 

 Net investment in leases – long-term

 

 

25,945,300

 

 

24,410,700

 Property and equipment, net

 

 

486,800

 

 

769,600

 Goodwill

 

 

607,500

 

 

607,500

 

 

$

48,404,800

 

$

48,581,600

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

Current Liabilities:

 

 

 

 

 

 

 Notes payable, net

 

$

3,236,100

 

$

1,990,000

 Accounts payable

 

 

2,073,000

 

 

1,692,000

 Accrued liabilities

 

 

1,837,300

 

 

1,811,100

 Discounted lease rentals

 

 

570,800

 

 

 —

 Deferred revenue

 

 

1,736,200

 

 

1,864,700

Total current liabilities

 

 

9,453,400

 

 

7,357,800

 

 

 

 

 

 

 

Long-Term Liabilities:

 

 

 

 

 

 

 Line of credit

 

 

35,400,000

 

 

23,400,000

 Notes payable, net

 

 

28,841,000

 

 

19,926,500

 Discounted lease rentals

 

 

1,121,600

 

 

 —

 Deferred revenue

 

 

1,465,500

 

 

1,423,800

 Other liabilities

 

 

845,000

 

 

993,600

 Deferred income taxes

 

 

1,956,500

 

 

3,331,900

Total long-term liabilities

 

 

69,629,600

 

 

49,075,800

 

 

 

 

 

 

 

Shareholders’ Equity (Deficit):

 

 

 

 

 

 

Common stock, no par, 10,000,000 shares authorized,
3,843,078 and 4,165,769 shares issued and outstanding

 

 

1,476,200

 

 

2,976,100

 Accumulated other comprehensive income (loss)

 

 

 —

 

 

(9,900)

 Retained earnings (accumulated deficit)

 

 

(32,154,400)

 

 

(10,818,200)

 

 

 

 

 

 

 

Total shareholders’ equity (deficit)

 

 

(30,678,200)

 

 

(7,852,000)

 

 

$

48,404,800

 

$

48,581,600

 

 


 

Winmark Corporation

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Fiscal Year Ended

 

 

 

December 30, 2017

 

December 31, 2016

 

December 30, 2017

 

December 31, 2016

 

REVENUE:

    

 

 

    

 

 

    

 

 

    

 

 

    

 Royalties

 

$

11,778,400

 

$

11,854,100

 

$

45,643,500

 

$

43,994,900

 

 Leasing income

 

 

4,748,200

 

 

4,444,600

 

 

18,470,200

 

 

17,283,600

 

 Merchandise sales

 

 

513,700

 

 

334,500

 

 

2,572,200

 

 

2,216,900

 

 Franchise fees

 

 

267,200

 

 

257,000

 

 

1,529,700

 

 

1,624,800

 

 Other

 

 

497,200

 

 

475,700

 

 

1,530,300

 

 

1,460,100

 

  Total revenue

 

 

17,804,700

 

 

17,365,900

 

 

69,745,900

 

 

66,580,300

 

COST OF MERCHANDISE SOLD

 

 

490,200

 

 

316,600

 

 

2,432,600

 

 

2,101,400

 

LEASING EXPENSE

 

 

545,100

 

 

313,400

 

 

3,269,100

 

 

2,323,800

 

PROVISION FOR CREDIT LOSSES

 

 

35,200

 

 

70,500

 

 

9,000

 

 

18,500

 

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

 

 

6,071,200

 

 

6,164,100

 

 

25,250,600

 

 

23,835,600

 

  Income from operations

 

 

10,663,000

 

 

10,501,300

 

 

38,784,600

 

 

38,301,000

 

INTEREST EXPENSE

 

 

(807,100)

 

 

(556,000)

 

 

(2,366,400)

 

 

(2,342,800)

 

INTEREST AND OTHER INCOME (EXPENSE)

 

 

(17,000)

 

 

(4,900)

 

 

12,900

 

 

(12,200)

 

  Income before income taxes

 

 

9,838,900

 

 

9,940,400

 

 

36,431,100

 

 

35,946,000

 

PROVISION FOR INCOME TAXES

 

 

(2,182,400)

 

 

(3,774,200)

 

 

(11,866,000)

 

 

(13,728,400)

 

NET INCOME

 

$

7,656,500

 

$

6,166,200

 

$

24,565,100

 

$

22,217,600

 

EARNINGS PER SHARE – BASIC

 

$

2.00

 

$

1.49

 

$

6.06

 

$

5.39

 

EARNINGS PER SHARE – DILUTED

 

$

1.86

 

$

1.41

 

$

5.66

 

$

5.13

 

WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC

 

 

3,830,396

 

 

4,148,021

 

 

4,056,049

 

 

4,122,854

 

WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED

 

 

4,111,229

 

 

4,359,170

 

 

4,339,944

 

 

4,330,490

 

 


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