Exhibit 99.1

 

Picture 1

 

 

 

 

 

Contact:Brett D. Heffes 

763/520-8500

 

 

 

 

FOR IMMEDIATE RELEASE

 

WINMARK CORPORATION ANNOUNCES

SECOND QUARTER RESULTS

 

Minneapolis, MN (July 18, 2018)   Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended June 30, 2018 of $7,143,000 (or $1.73 per share diluted)  compared to net income of $5,530,700 (or $1.23 per share diluted) in the second quarter of 2017.  For the six months ended June 30, 2018, net income was $14,103,400 (or $3.42 per share diluted) compared to net income of $11,081,500 (or $2.48 per share diluted) for the same period last year.

 

Brett D. Heffes, Chief Executive Officer, commented, “The strong start to 2018 has been highlighted by the positive performance of our franchisees.  We continue to be pleased with the results of the overall business.”

 

Winmark Corporation creates, supports and finances business.  At June 30, 2018, there were 1,224 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 June 30, 2018, the Company had a lease portfolio of  $43.4 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 30, 2018

    

December 30, 2017  (1)

ASSETS

Current Assets:

 

 

    

 

 

 

 Cash and cash equivalents

 

$

1,232,900

 

$

1,073,200

 Restricted cash

 

 

105,000

 

 

90,000

 Receivables, net

 

 

1,502,000

 

 

1,796,000

 Net investment in leases - current

 

 

17,046,100

 

 

15,332,300

 Income tax receivable

 

 

 —

 

 

2,161,800

 Inventories

 

 

150,100

 

 

97,100

 Prepaid expenses

 

 

765,800

 

 

901,600

     Total current assets

 

 

20,801,900

 

 

21,452,000

 

 

 

 

 

 

 

 Net investment in leases – long-term

 

 

26,380,400

 

 

25,945,300

 Property and equipment, net

 

 

630,400

 

 

486,800

 Goodwill

 

 

607,500

 

 

607,500

 Other assets

 

 

396,800

 

 

350,400

 

 

$

48,817,000

 

$

48,842,000

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

Current Liabilities:

 

 

 

 

 

 

 Notes payable, net

 

$

3,236,100

 

$

3,236,100

 Accounts payable

 

 

1,502,900

 

 

2,073,000

 Income tax payable

 

 

237,200

 

 

 —

 Accrued liabilities

 

 

3,214,400

 

 

1,837,300

 Discounted lease rentals

 

 

1,637,100

 

 

570,800

 Deferred revenue

 

 

3,047,200

 

 

3,012,700

     Total current liabilities

 

 

12,874,900

 

 

10,729,900

 

 

 

 

 

 

 

Long-Term Liabilities:

 

 

 

 

 

 

 Line of credit

 

 

18,400,000

 

 

35,400,000

 Notes payable, net

 

 

27,223,000

 

 

28,841,000

 Discounted lease rentals

 

 

2,260,900

 

 

1,121,600

 Deferred revenue

 

 

7,294,500

 

 

7,297,500

 Other liabilities

 

 

1,161,300

 

 

845,000

 Deferred income taxes

 

 

360,200

 

 

320,500

     Total long-term liabilities

 

 

56,699,900

 

 

73,825,600

 

 

 

 

 

 

 

Shareholders’ Equity (Deficit):

 

 

 

 

 

 

Common stock, no par, 10,000,000 shares authorized,
3,868,526 and 3,843,078 shares issued and outstanding

 

 

3,329,600

 

 

1,476,200

 Retained earnings (accumulated deficit)

 

 

(24,087,400)

 

 

(37,189,700)

 

 

 

 

 

 

 

     Total shareholders’ equity (deficit)

 

 

(20,757,800)

 

 

(35,713,500)

 

 

$

48,817,000

 

$

48,842,000

 

(1)

Adjusted for the adoption of ASU 2014-09 under the retrospective method.

 

 


 

Winmark Corporation

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Six Months Ended

 

 

 

June 30, 2018

 

July 1, 2017 (1)

 

June 30, 2018

 

July 1, 2017 (1)

 

REVENUE:

    

 

 

    

 

 

    

 

 

    

 

 

    

 Royalties

 

$

11,821,000

 

$

11,094,400

 

$

22,870,000

 

$

21,548,400

 

 Leasing income

 

 

4,857,100

 

 

3,946,600

 

 

10,385,900

 

 

9,806,200

 

 Merchandise sales

 

 

704,900

 

 

537,100

 

 

1,481,800

 

 

1,285,400

 

 Franchise fees

 

 

378,100

 

 

468,800

 

 

779,000

 

 

837,400

 

 Other

 

 

398,700

 

 

382,800

 

 

804,100

 

 

763,200

 

              Total revenue

 

 

18,159,800

 

 

16,429,700

 

 

36,320,800

 

 

34,240,600

 

COST OF MERCHANDISE SOLD

 

 

681,000

 

 

499,100

 

 

1,423,500

 

 

1,214,100

 

LEASING EXPENSE

 

 

495,800

 

 

660,600

 

 

1,050,700

 

 

1,932,000

 

PROVISION FOR CREDIT LOSSES

 

 

109,000

 

 

(11,500)

 

 

204,000

 

 

(12,900)

 

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

 

 

6,799,300

 

 

6,468,400

 

 

13,493,700

 

 

12,980,900

 

              Income from operations

 

 

10,074,700

 

 

8,813,100

 

 

20,148,900

 

 

18,126,500

 

INTEREST EXPENSE

 

 

(657,900)

 

 

(446,300)

 

 

(1,401,700)

 

 

(945,400)

 

INTEREST AND OTHER INCOME (EXPENSE)

 

 

(11,300)

 

 

100

 

 

(12,300)

 

 

1,900

 

              Income before income taxes

 

 

9,405,500

 

 

8,366,900

 

 

18,734,900

 

 

17,183,000

 

PROVISION FOR INCOME TAXES

 

 

(2,262,500)

 

 

(2,836,200)

 

 

(4,631,500)

 

 

(6,101,500)

 

NET INCOME

 

$

7,143,000

 

$

5,530,700

 

$

14,103,400

 

$

11,081,500

 

EARNINGS PER SHARE – BASIC

 

$

1.85

 

$

1.32

 

$

3.66

 

$

2.65

 

EARNINGS PER SHARE – DILUTED

 

$

1.73

 

$

1.23

 

$

3.42

 

$

2.48

 

WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC

 

 

3,858,446

 

 

4,201,982

 

 

3,852,880

 

 

4,184,558

 

WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED

 

 

4,133,535

 

 

4,483,647

 

 

4,129,055

 

 

4,467,072

 

 

(1)Adjusted for the adoption of ASU 2014-09 under the retrospective method.

 


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