Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 17, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | WINMARK CORP | |
Entity Central Index Key | 908,315 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 3,821,528 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash and cash equivalents | $ 1,060,700 | $ 1,252,900 |
Marketable securities | 199,900 | |
Receivables, less allowance for doubtful accounts of $1,700 and $2,100 | 1,708,100 | 1,479,200 |
Restricted cash | 40,000 | 40,000 |
Net investment in leases - current | 16,311,000 | 17,004,800 |
Income tax receivable | 1,721,500 | 1,678,800 |
Inventories | 67,000 | 87,500 |
Prepaid expenses | 865,400 | 1,050,700 |
Total current assets | 21,773,700 | 22,793,800 |
Net investment in leases - long-term | 24,249,500 | 24,410,700 |
Property and equipment, net | 547,700 | 769,600 |
Goodwill | 607,500 | 607,500 |
Total assets | 47,178,400 | 48,581,600 |
Current Liabilities: | ||
Notes payable, net of unamortized debt issuance costs of $13,900 and $10,000 | 3,236,100 | 1,990,000 |
Accounts payable | 1,474,600 | 1,692,000 |
Accrued liabilities | 2,906,100 | 1,811,100 |
Deferred revenue | 1,649,300 | 1,864,700 |
Total current liabilities | 9,266,100 | 7,357,800 |
Long-Term Liabilities: | ||
Line of credit | 41,900,000 | 23,400,000 |
Notes payable, net of unamortized debt issuance costs of $99,900 and $73,500 | 29,650,100 | 19,926,500 |
Deferred revenue | 1,458,200 | 1,423,800 |
Other liabilities | 808,400 | 993,600 |
Deferred income taxes | 3,485,300 | 3,331,900 |
Total long-term liabilities | 77,302,000 | 49,075,800 |
Shareholders' Equity (Deficit): | ||
Common stock, no par value, 10,000,000 shares authorized, 3,821,528 and 4,165,769 shares issued and outstanding | 2,976,100 | |
Accumulated other comprehensive income (loss) | (9,900) | |
Retained earnings (accumulated deficit) | (39,389,700) | (10,818,200) |
Total shareholders' equity (deficit) | (39,389,700) | (7,852,000) |
Total liabilities and shareholders' equity (deficit) | $ 47,178,400 | $ 48,581,600 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
CONSOLIDATED CONDENSED BALANCE SHEETS | ||
Receivables, allowance for doubtful accounts (in dollars) | $ 1,700 | $ 2,100 |
Unamortized debt issuance costs - Current | 13,900 | 10,000 |
Unamortized debt issuance costs - Noncurrent | $ 99,900 | $ 73,500 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 3,821,528 | 4,165,769 |
Common stock, shares outstanding | 3,821,528 | 4,165,769 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 24, 2016 | Sep. 30, 2017 | Sep. 24, 2016 | |
REVENUE: | ||||
Royalties | $ 12,316,700 | $ 11,311,000 | $ 33,865,100 | $ 32,140,800 |
Leasing income | 3,915,800 | 4,174,000 | 13,722,000 | 12,839,000 |
Merchandise sales | 773,100 | 520,000 | 2,058,500 | 1,882,400 |
Franchise fees | 317,800 | 501,800 | 1,262,500 | 1,367,800 |
Other | 244,500 | 227,500 | 1,033,100 | 984,400 |
Total revenue | 17,567,900 | 16,734,300 | 51,941,200 | 49,214,400 |
COST OF MERCHANDISE SOLD | 728,300 | 499,100 | 1,942,400 | 1,784,800 |
LEASING EXPENSE | 792,000 | 646,200 | 2,724,000 | 2,010,400 |
PROVISION FOR CREDIT LOSSES | (13,300) | (29,700) | (26,200) | (52,000) |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 6,208,900 | 5,180,700 | 19,179,400 | 17,671,500 |
Income from operations | 9,852,000 | 10,438,000 | 28,121,600 | 27,799,700 |
INTEREST EXPENSE | (613,900) | (552,300) | (1,559,300) | (1,786,800) |
INTEREST AND OTHER INCOME (EXPENSE) | 28,000 | (6,300) | 29,900 | (7,300) |
Income before income taxes | 9,266,100 | 9,879,400 | 26,592,200 | 26,005,600 |
PROVISION FOR INCOME TAXES | (3,547,100) | (3,785,200) | (9,683,600) | (9,954,200) |
NET INCOME | $ 5,719,000 | $ 6,094,200 | $ 16,908,600 | $ 16,051,400 |
EARNINGS PER SHARE - BASIC (in dollars per share) | $ 1.42 | $ 1.48 | $ 4.09 | $ 3.90 |
EARNINGS PER SHARE - DILUTED (in dollars per share) | $ 1.33 | $ 1.41 | $ 3.83 | $ 3.72 |
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC (in shares) | 4,024,692 | 4,116,957 | 4,131,269 | 4,113,819 |
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED (in shares) | 4,314,412 | 4,328,168 | 4,416,185 | 4,320,284 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 24, 2016 | Sep. 30, 2017 | Sep. 24, 2016 | |
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME | ||||
NET INCOME | $ 5,719,000 | $ 6,094,200 | $ 16,908,600 | $ 16,051,400 |
OTHER COMPREHENSIVE INCOME (LOSS), BEFORE TAX: | ||||
Unrealized holding net gains (losses) arising during period | (700) | 6,800 | 15,900 | 41,100 |
OTHER COMPREHENSIVE INCOME (LOSS), BEFORE TAX | (700) | 6,800 | 15,900 | 41,100 |
INCOME TAX (EXPENSE) BENEFIT RELATED TO ITEMS OF OTHER COMPREHENSIVE INCOME: | ||||
Unrealized holding net gains/losses arising during period | 300 | (2,600) | (6,000) | (15,500) |
INCOME TAX (EXPENSE) BENEFIT RELATED TO ITEMS OF OTHER COMPREHENSIVE INCOME | 300 | (2,600) | (6,000) | (15,500) |
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX | (400) | 4,200 | 9,900 | 25,600 |
COMPREHENSIVE INCOME | $ 5,718,600 | $ 6,098,400 | $ 16,918,500 | $ 16,077,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 24, 2016 | |
OPERATING ACTIVITIES: | ||
Net Income | $ 16,908,600 | $ 16,051,400 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 275,700 | 320,600 |
Provision for credit losses | (26,200) | (52,000) |
Compensation expense related to stock options | 1,462,500 | 1,324,400 |
Deferred income taxes | 153,400 | 62,100 |
(Gain) Loss on sale of marketable securities | (1,400) | 12,600 |
Deferred initial direct costs | (369,200) | (421,300) |
Amortization of deferred initial direct costs | 345,300 | 356,200 |
Tax benefits on exercised stock options | 592,800 | 69,700 |
Change in operating assets and liabilities: | ||
Receivables | (228,900) | (138,400) |
Restricted cash | (15,000) | |
Income tax receivable/payable | (641,500) | 2,505,700 |
Inventories | 20,500 | (50,400) |
Prepaid expenses | 185,300 | (243,200) |
Accounts payable | (217,400) | (524,400) |
Accrued and other liabilities | 867,000 | 617,600 |
Rents received in advance and security deposits | 92,800 | 392,300 |
Deferred revenue | (181,000) | (261,900) |
Net cash provided by operating activities | 19,238,300 | 20,006,000 |
INVESTING ACTIVITIES: | ||
Proceeds from sale of marketable securities | 217,200 | 52,200 |
Purchase of property and equipment | (53,800) | (46,800) |
Purchase of equipment for lease contracts | (19,253,300) | (16,432,200) |
Principal collections on lease receivables | 20,078,100 | 17,749,900 |
Net cash provided by (used for) investing activities | 988,200 | 1,323,100 |
FINANCING ACTIVITIES: | ||
Proceeds from borrowings on line of credit | 46,900,000 | 10,600,000 |
Payments on line of credit | (28,400,000) | (27,800,000) |
Proceeds from borrowings on notes payable | 12,500,000 | |
Payments on notes payable | (1,500,000) | (1,500,000) |
Repurchases of common stock | (49,904,100) | (1,573,900) |
Proceeds from exercises of stock options | 1,329,200 | 170,900 |
Dividends paid | (1,343,800) | (1,111,900) |
Net cash used for financing activities | (20,418,700) | (21,214,900) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (192,200) | 114,200 |
Cash and cash equivalents, beginning of period | 1,252,900 | 1,006,700 |
Cash and cash equivalents, end of period | 1,060,700 | 1,120,900 |
SUPPLEMENTAL DISCLOSURES: | ||
Cash paid for interest | 1,349,500 | 1,778,400 |
Cash paid for income taxes | $ 9,514,800 | $ 7,316,700 |
Management's Interim Financial
Management's Interim Financial Statement Representation: | 9 Months Ended |
Sep. 30, 2017 | |
Management's Interim Financial Statement Representation: | |
Management's Interim Financial Statement Representation: | 1. Management’s Interim Financial Statement Representation: The accompanying consolidated condensed financial statements have been prepared by Winmark Corporation and subsidiaries (the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The Company has a 52/53 week year which ends on the last Saturday in December. The information in the consolidated condensed financial statements includes normal recurring adjustments and reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of such financial statements. The consolidated condensed financial statements and notes are presented in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for Form 10-Q, and therefore do not contain certain information included in the Company’s annual consolidated financial statements and notes. This report should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s latest Annual Report on Form 10-K. Revenues and operating results for the nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the full year. Reclassifications Certain reclassifications of previously reported amounts have been made to conform to the current year presentation. Such reclassifications did not impact net income or shareholders’ equity (deficit) as previously reported. |
Organization and Business_
Organization and Business: | 9 Months Ended |
Sep. 30, 2017 | |
Organization and Business: | |
Organization and Business: | 2. Organization and Business: The Company offers licenses to operate franchises using the service marks Plato’s Closet®, Once Upon A Child®, Play It Again Sports®, Style Encore® and Music Go Round®. The company uses its Winmark Franchise Partners™ mark in connection with its strategic consulting and corporate development activities. The Company also operates both middle market and small-ticket equipment leasing businesses under the Winmark Capital® and Wirth Business Credit® marks. |
Fair Value Measurements_
Fair Value Measurements: | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Measurements: | |
Fair Value Measurements: | 3. Fair Value Measurements: The Company defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company uses three levels of inputs to measure fair value: · Level 1 – quoted prices in active markets for identical assets and liabilities. · Level 2 – observable inputs other than quoted prices in active markets for identical assets and liabilities. · Level 3 – unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions. The Company’s marketable securities were valued based on Level 1 inputs using quoted prices. Due to their nature, the carrying value of cash equivalents, receivables, payables and debt obligations approximates fair value. |
Investments_
Investments: | 9 Months Ended |
Sep. 30, 2017 | |
Investments: | |
Investments: | 4. Investments: Marketable Securities The following is a summary of marketable securities classified as available-for-sale securities: September 30, 2017 December 31, 2016 Cost Fair Value Cost Fair Value Equity securities $ — $ — $ 215,800 $ 199,900 The Company’s unrealized gains and losses for marketable securities classified as available-for-sale securities in accumulated other comprehensive loss are as follows: September 30, 2017 December 31, 2016 Unrealized gains $ — $ — Unrealized losses — (15,900) Net unrealized gains (losses) $ — $ (15,900) The Company’s realized gains and losses recognized on sales of available-for-sale marketable securities are as follows: Three Months Ended Nine Months Ended September 30, 2017 September 24, 2016 September 30, 2017 September 24, 2016 Realized gains $ 10,300 $ — $ 10,300 $ — Realized losses (8,900) — (8,900) (12,600) Net realized gains (losses) $ 1,400 $ — $ 1,400 $ (12,600) Amounts reclassified out of accumulated other comprehensive loss into earnings is determined by using the average cost of the security when sold. Gross realized gains (losses) reclassified out of accumulated other comprehensive loss into earnings are included in Interest and Other Income (Expense) and the related tax benefits (expenses) are included in the Provision for Income Taxes lines of the Consolidated Condensed Statements of Operations. |
Investment in Leasing Operation
Investment in Leasing Operations: | 9 Months Ended |
Sep. 30, 2017 | |
Investment in Leasing Operations: | |
Investment in Leasing Operations: | 5. Investment in Leasing Operations: Investment in leasing operations consists of the following: September 30, 2017 December 31, 2016 Direct financing and sales-type leases: Minimum lease payments receivable $ 39,565,600 $ 37,839,800 Estimated residual value of equipment 4,797,600 4,754,200 Unearned lease income net of initial direct costs deferred (5,734,900) (5,844,500) Security deposits (4,504,700) (4,424,400) Equipment installed on leases not yet commenced 7,113,000 9,961,600 Total investment in direct financing and sales-type leases 41,236,600 42,286,700 Allowance for credit losses (883,600) (896,000) Net investment in direct financing and sales-type leases 40,353,000 41,390,700 Operating leases: Operating lease assets 1,494,000 800,700 Less accumulated depreciation and amortization (1,286,500) (775,900) Net investment in operating leases 207,500 24,800 Total net investment in leasing operations $ 40,560,500 $ 41,415,500 As of September 30, 2017, the $40.6 million total net investment in leases consists of $16.3 million classified as current and $24.3 million classified as long-term. As of December 31, 2016, the $41.4 million total net investment in leases consists of $17.0 million classified as current and $24.4 million classified as long-term. As of September 30, 2017, leased assets with two customers approximated 26% and 10%, respectively, of the Company’s total assets. As of September 30, 2017, the Company had no future minimum lease payments receivable for operating leases. Future minimum lease payments receivable under lease contracts and the amortization of unearned lease income, net of initial direct costs deferred, is as follows for the remainder of fiscal 2017 and the full fiscal years thereafter as of September 30, 2017: Direct Financing and Sales-Type Leases Minimum Lease Income Fiscal Year Payments Receivable Amortization 2017 $ 6,461,600 $ 1,341,400 2018 19,175,400 3,300,600 2019 11,561,600 1,017,200 2020 2,343,000 74,000 2021 12,800 1,200 Thereafter 11,200 500 $ 39,565,600 $ 5,734,900 The activity in the allowance for credit losses for leasing operations during the first nine months of 2017 and 2016, respectively, is as follows: September 30, 2017 September 24, 2016 Balance at beginning of period $ 896,000 $ 859,100 Provisions charged to expense (26,200) (52,000) Recoveries 13,800 39,800 Deductions for amounts written-off — (29,200) Balance at end of period $ 883,600 $ 817,700 The Company’s investment in direct financing and sales-type leases (“Investment In Leases”) and allowance for credit losses by loss evaluation methodology are as follows: September 30, 2017 December 31, 2016 Investment Allowance for Investment Allowance for In Leases Credit Losses In Leases Credit Losses Collectively evaluated for loss potential $ 41,236,600 $ 883,600 $ 42,286,700 $ 896,000 Individually evaluated for loss potential — — — — Total $ 41,236,600 $ 883,600 $ 42,286,700 $ 896,000 The Company’s key credit quality indicator for its investment in direct financing and sales-type leases is the status of the lease, defined as accruing or non-accrual. Leases that are accruing income are considered to have a lower risk of loss. Non-accrual leases are those that the Company believes have a higher risk of loss. The following table sets forth information regarding the Company’s accruing and non-accrual leases. Delinquent balances are determined based on the contractual terms of the lease. September 30, 2017 0-60 Days 61-90 Days Over 90 Days Delinquent Delinquent Delinquent and and Accruing and Accruing Accruing Non-Accrual Total Middle-Market $ 40,058,900 $ 93,200 $ — $ — $ 40,152,100 Small-Ticket 1,084,500 — — — 1,084,500 Total Investment in Leases $ 41,143,400 $ 93,200 $ — $ — $ 41,236,600 December 31, 2016 0-60 Days 61-90 Days Over 90 Days Delinquent Delinquent Delinquent and and Accruing and Accruing Accruing Non-Accrual Total Middle-Market $ 41,299,600 $ — $ — $ — $ 41,299,600 Small-Ticket 987,100 — — — 987,100 Total Investment in Leases $ 42,286,700 $ — $ — $ — $ 42,286,700 |
Recent Accounting Pronouncement
Recent Accounting Pronouncements: | 9 Months Ended |
Sep. 30, 2017 | |
Recent Accounting Pronouncements: | |
Recent Accounting Pronouncements: | 6. Recent Accounting Pronouncements: Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers , which provides guidance for revenue recognition that supersedes existing revenue recognition guidance (but does not apply to nor supersede accounting guidance for lease contracts). The ASU’s core principle is that an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The ASU should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial application. The new standard will become effective for the Company beginning with the first quarter of fiscal 2018. During 2016, the FASB issued four clarifications on specific topics within the new revenue recognition guidance that did not change the core principles of the guidance originally issued in May 2014. The Company is continuing to evaluate the impact of the adoption of this ASU on the Company’s consolidated financial statements, information technology systems, processes, internal controls and the expected method of adoption. Based on a preliminary assessment, the adoption of this guidance is not expected to impact the Company’s recognition of leasing revenues or revenue from royalties that are based on a percentage of franchisee sales. Upon adoption, initial franchise fees, which are currently recognized upon the opening of a franchise, are expected to be deferred and recognized over the term of the underlying franchise agreement. The effect of the required deferral of initial franchise fees received in a given year will be mitigated by the recognition of revenue from fees retrospectively deferred from prior years. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , which provides guidance on accounting for leases that supersedes existing lease accounting guidance. The ASU’s core principle is that a lessee should recognize lease assets and lease liabilities for those leases classified as operating leases under existing lease accounting guidance. The new standard also makes targeted changes to lessor accounting. This guidance is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. The provisions of this guidance are to be applied using a modified retrospective approach, with elective reliefs, which requires application of the guidance for all periods presented. The Company is currently in the process of evaluating the impact of the adoption of this ASU on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments , which changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. This guidance will be effective for reporting periods beginning after December 15, 2019, with early adoption permitted. The Company is currently in the process of evaluating the impact of the adoption of this ASU on the Company’s consolidated financial statements. Recently Adopted Accounting Pronouncements In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting , which simplifies several aspects of accounting for stock based compensation, including excess tax benefits and deficiencies, forfeiture estimates and classification in the statements of cash flows. Upon adoption, any future excess tax benefits or deficiencies are recorded to the provision for income taxes in the consolidated statements of operations instead of recorded to equity in the consolidated balance sheets. This reclassification can have a material impact on the Company’s provision for income taxes and effective tax rate, depending in part on whether significant stock option exercises occur. In addition, when applying the treasury stock method for computing diluted weighted average common shares, the assumed proceeds available for hypothetical repurchase of shares do not include any windfall tax benefits under the new ASU. As a result, outstanding option awards have a more dilutive effect on earnings per share. The Company adopted ASU 2016-09 in the first quarter of 2017, using a prospective approach. As a result of adopting the ASU, for the three months and nine months ended September 30, 2017, the Company recognized $74,800 and $592,800, respectively, of excess tax benefits as a discrete tax benefit. The treatment of forfeitures has not changed as the Company will continue to estimate the number of forfeitures at the time of the option grant; therefore, there is no cumulative effect on retained earnings. The Company has elected to present the cash flows on a retrospective transition method with prior periods adjusted, which resulted in a reclassification of excess tax benefits for the nine months ended September 24, 2016 of $69,700 from cash flows from financing activities to cash flows from operating activities. |
Earnings Per Share_
Earnings Per Share: | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share: | |
Earnings Per Share: | 7. Earnings Per Share: The following table sets forth the presentation of shares outstanding used in the calculation of basic and diluted earnings per share (“EPS”): Three Months Ended Nine Months Ended September 30, 2017 September 24, 2016 September 30, 2017 September 24, 2016 Denominator for basic EPS — weighted average common shares 4,024,692 4,116,957 4,131,269 4,113,819 Dilutive shares associated with option plans 289,720 211,211 284,916 206,465 Denominator for diluted EPS — weighted average common shares and dilutive potential common shares 4,314,412 4,328,168 4,416,185 4,320,284 Options excluded from EPS calculation — anti-dilutive 10,753 12,868 16,057 18,348 |
Shareholders' Equity (Deficit)_
Shareholders' Equity (Deficit): | 9 Months Ended |
Sep. 30, 2017 | |
Shareholders' Equity (Deficit): | |
Shareholders' Equity (Deficit): | 8. Shareholders’ Equity (Deficit): Dividends On January 25, 2017, the Company’s Board of Directors approved the payment of a $0.10 per share quarterly cash dividend to shareholders of record at the close of business on February 8, 2017, which was paid on March 1, 2017. On April 26, 2017, the Company’s Board of Directors approved the payment of a $0.11 per share quarterly cash dividend to shareholders of record at the close of business on May 10, 2017, which was paid on June 1, 2017. On July 26, 2017, the Company’s Board of Directors approved the payment of a $0.11 per share quarterly cash dividend to shareholders of record at the close of business on August 9, 2017, which was paid on September 1, 2017. Repurchase of Common Stock In July 2017, the Company’s Board of Directors authorized the repurchase of up to 400,000 shares of our common stock for a price of $124.48 per share through a tender offer (the “Tender Offer”). The Tender Offer began on the date of the announcement, July 19, 2017 and expired on August 16, 2017. Upon expiration, the Company accepted for payment 400,000 shares for a total purchase price of approximately $49.9 million, including fees and expenses related to the Tender Offer. Under a previous Board of Directors’ authorization, as of September 30, 2017, the Company has the ability to repurchase an additional 142,988 shares of its common stock. Repurchases may be made from time to time at prevailing prices, subject to certain restrictions on volume, pricing and timing. Stock Option Plans and Stock-Based Compensation The Company had authorized up to 750,000 shares of common stock be reserved for granting either nonqualified or incentive stock options to officers and key employees under the Company’s 2001 Stock Option Plan (the “2001 Plan”). The 2001 Plan expired on February 20, 2011. At the April 26, 2017 Annual Shareholders meeting, the Company’s shareholders approved an increase in the shares of common stock available for granting either nonqualified or incentive stock options to officers and key employees under the Company’s 2010 Stock Option Plan (the “2010 Plan”) by 200,000 shares, from 500,000 to 700,000. The Company also sponsors a Stock Option Plan for Nonemployee Directors (the “Nonemployee Directors Plan”) and has reserved a total of 350,000 shares for issuance to directors of the Company who are not employees. Stock option activity under the 2001 Plan, 2010 Plan and Nonemployee Directors Plan (collectively, the “Option Plans”) as of September 30, 2017 was as follows: Weighted Average Remaining Number of Weighted Average Contractual Life Shares Exercise Price (years) Intrinsic Value Outstanding, December 31, 2016 673,670 $ 62.11 6.11 $ 43,139,100 Granted 36,000 122.19 Exercised (58,686) 28.96 Forfeited (4,750) 95.28 Outstanding, September 30, 2017 646,234 $ 68.23 5.84 $ 41,050,600 Exercisable, September 30, 2017 456,953 $ 54.68 4.82 $ 35,215,600 The fair value of options granted under the Option Plans during the first nine months of 2017 and 2016 were estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions and results: Nine Months Ended September 30, 2017 September 24, 2016 Risk free interest rate % % Expected life (years) 6 6 Expected volatility % % Dividend yield 1.14 % 1.38 % Option fair value $ $ During the nine months ended September 30, 2017, options holders surrendered 2,927 shares of previously owned common shares as payment for option shares exercised as provided for by the Option Plans. All unexercised options at September 30, 2017 have an exercise price equal to the fair market value on the date of the grant. Compensation expense of $1,462,500 and $1,324,400 relating to the vested portion of the fair value of stock options granted was expensed to “Selling, General and Administrative Expenses” in the first nine months of 2017 and 2016, respectively. As of September 30, 2017, the Company had $3.8 million of total unrecognized compensation expense related to stock options that is expected to be recognized over the remaining weighted average vesting period of approximately 2.3 years. A reconciliation of common shares outstanding and total equity (deficit) from December 31, 2016 to September 30, 2017 is as follows: Common Total Equity Shares (Deficit) BALANCE, December 31, 2016 4,165,769 $ (7,852,000) Repurchase of common stock (400,000) (49,904,100) Stock options exercised, net of shares surrendered 55,759 1,329,200 Compensation expense relating to stock options — 1,462,500 Cash dividends — (1,343,800) Comprehensive income — 16,918,500 BALANCE, September 30, 2017 3,821,528 $ (39,389,700) |
Debt_
Debt: | 9 Months Ended |
Sep. 30, 2017 | |
Debt: | |
Debt: | 9. Debt: Line of Credit In July 2017, the Company’s Line of Credit with CIBC Bank USA (as successor by merger to the PrivateBank and Trust Company) and BMO Harris Bank N.A. was amended to, among other things: · Provide the consent of the lenders for the Tender Offer; · Extend the termination date from April 14, 2019 to July 19, 2021; · Amend the tangible net worth covenant calculation to remove the effect of the Tender Offer; · Reduce the applicable margin on interest rate options in connection with LIBOR loans under the Line of Credit; · Permit the Company to sell up to $15.0 million in term notes to one or more affiliates or managed accounts of Prudential to partially fund the Tender Offer. During the first nine months of 2017, the Line of Credit was used to finance in part the Tender Offer and has been and will continue to be used for general corporate purposes. The Line of Credit is secured by a lien against substantially all of the Company’s assets, contains customary financial conditions and covenants, and requires maintenance of minimum levels of debt service coverage and tangible net worth and maximum levels of leverage (all as defined within the Line of Credit). As of September 30, 2017, the Company was in compliance with all of its financial covenants. There were $41.9 million in borrowings outstanding under the line of credit bearing interest ranging from 3.23% to 4.25%, leaving $8.1 million available for additional borrowings. Notes Payable In July 2017, the Note Agreement with Prudential Investment Management, Inc., its affiliates and managed accounts (“Prudential”) was amended to, among other things: · Provide the consent of Prudential for the Tender Offer; · Amend the tangible net worth covenant calculation to remove the effect of the Tender Offer; · Provide for a new $12.5 million term loan to partially fund the Tender Offer. In August 2017, the Company issued $12.5 million of Series B notes to finance in part the Tender Offer. As of September 30, 2017, with the $20.5 million in principal outstanding from the $25.0 million of Series A notes issued in May 2015, the aggregate principal outstanding under the Note Agreement was $33.0 million. The final maturity of the Series A and Series B notes is 10 years from the issuance date. For the Series A notes, interest at a rate of 5.50% per annum on the outstanding principal balance is payable quarterly, along with required prepayments of the principal of $500,000 quarterly for the first five years, and $750,000 quarterly thereafter until the principal is paid in full. For the Series B notes, interest at a rate of 5.10% per annum on the outstanding principal balance is payable quarterly, along with required prepayments of the principal of $312,500 quarterly until the principal is paid in full. The Series A and Series B notes may be prepaid, at the option of the Company, in whole or in part (in a minimum amount of $1.0 million), but prepayments require payment of a Yield Maintenance Amount, as defined in the Note Agreement. The Company’s obligations under the Note Agreement are secured by a lien against substantially all of the Company’s assets (as the notes rank pari passu with the Line of Credit), and the Note Agreement contains customary financial conditions and covenants, and requires maintenance of minimum levels of fixed charge coverage and tangible net worth and maximum levels of leverage (all as defined within the Note Agreement). As of September 30, 2017, the Company was in compliance with all of its financial covenants. In connection with the Note Agreement, the Company incurred debt issuance costs, of which unamortized amounts are presented as a direct deduction from the carrying amount of the related liability. |
Segment Reporting_
Segment Reporting: | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting: | |
Segment Reporting: | 10. Segment Reporting: The Company currently has two reportable business segments, franchising and leasing. The franchising segment franchises value-oriented retail store concepts that buy, sell, trade and consign merchandise as well as provides strategic consulting services related to franchising. The leasing segment includes (i) Winmark Capital Corporation, a middle-market equipment leasing business and (ii) Wirth Business Credit, Inc., a small ticket financing business. Segment reporting is intended to give financial statement users a better view of how the Company manages and evaluates its businesses. The Company’s internal management reporting is the basis for the information disclosed for its business segments and includes allocation of shared-service costs. Segment assets are those that are directly used in or identified with segment operations, including cash, accounts receivable, prepaid expenses, inventory, property and equipment and investment in leasing operations. Unallocated assets include corporate cash and cash equivalents, marketable securities, current and deferred tax amounts and other corporate assets. Inter-segment balances and transactions have been eliminated. The following tables summarize financial information by segment and provide a reconciliation of segment contribution to operating income: Three Months Ended Nine Months Ended September 30, 2017 September 24, 2016 September 30, 2017 September 24, 2016 Revenue: Franchising $ 13,652,100 $ 12,560,300 $ 38,219,200 $ 36,375,400 Leasing 3,915,800 4,174,000 13,722,000 12,839,000 Total revenue $ 17,567,900 $ 16,734,300 $ 51,941,200 $ 49,214,400 Reconciliation to operating income: Franchising segment contribution $ $ $ $ Leasing segment contribution Total operating income $ 9,852,000 $ 10,438,000 $ 28,121,600 $ 27,799,700 Depreciation and amortization: Franchising $ 66,300 $ 79,700 $ 211,200 $ 248,200 Leasing 20,700 23,600 64,500 72,400 Total depreciation and amortization $ 87,000 $ 103,300 $ 275,700 $ 320,600 As of September 30, 2017 December 31, 2016 Identifiable assets: Franchising $ 3,473,100 $ 3,141,300 Leasing 41,444,100 42,735,600 Unallocated 2,261,200 2,704,700 Total $ 47,178,400 $ 48,581,600 |
Investments_ (Tables)
Investments: (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Investments: | |
Summary of marketable securities classified as available-for-sale securities | September 30, 2017 December 31, 2016 Cost Fair Value Cost Fair Value Equity securities $ — $ — $ 215,800 $ 199,900 |
Schedule of the Company's unrealized gains and losses for marketable securities classified as available-for-sale securities in accumulated other comprehensive loss | September 30, 2017 December 31, 2016 Unrealized gains $ — $ — Unrealized losses — (15,900) Net unrealized gains (losses) $ — $ (15,900) |
Schedule of the Company's realized gains and losses recognized on sales of available-for-sale marketable securities | Three Months Ended Nine Months Ended September 30, 2017 September 24, 2016 September 30, 2017 September 24, 2016 Realized gains $ 10,300 $ — $ 10,300 $ — Realized losses (8,900) — (8,900) (12,600) Net realized gains (losses) $ 1,400 $ — $ 1,400 $ (12,600) |
Investment in Leasing Operati18
Investment in Leasing Operations: (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Investment in Leasing Operations: | |
Schedule of investment in leasing operations | September 30, 2017 December 31, 2016 Direct financing and sales-type leases: Minimum lease payments receivable $ 39,565,600 $ 37,839,800 Estimated residual value of equipment 4,797,600 4,754,200 Unearned lease income net of initial direct costs deferred (5,734,900) (5,844,500) Security deposits (4,504,700) (4,424,400) Equipment installed on leases not yet commenced 7,113,000 9,961,600 Total investment in direct financing and sales-type leases 41,236,600 42,286,700 Allowance for credit losses (883,600) (896,000) Net investment in direct financing and sales-type leases 40,353,000 41,390,700 Operating leases: Operating lease assets 1,494,000 800,700 Less accumulated depreciation and amortization (1,286,500) (775,900) Net investment in operating leases 207,500 24,800 Total net investment in leasing operations $ 40,560,500 $ 41,415,500 |
Schedule of future minimum lease payments receivable under lease contracts and the amortization of unearned lease income, net of initial direct costs deferred | Direct Financing and Sales-Type Leases Minimum Lease Income Fiscal Year Payments Receivable Amortization 2017 $ 6,461,600 $ 1,341,400 2018 19,175,400 3,300,600 2019 11,561,600 1,017,200 2020 2,343,000 74,000 2021 12,800 1,200 Thereafter 11,200 500 $ 39,565,600 $ 5,734,900 |
Schedule of activity in the allowance for credit losses for leasing operations | September 30, 2017 September 24, 2016 Balance at beginning of period $ 896,000 $ 859,100 Provisions charged to expense (26,200) (52,000) Recoveries 13,800 39,800 Deductions for amounts written-off — (29,200) Balance at end of period $ 883,600 $ 817,700 |
Schedule of investment in direct financing and sales-type leases (investment in leases) and allowance for credit losses by loss evaluation methodology | September 30, 2017 December 31, 2016 Investment Allowance for Investment Allowance for In Leases Credit Losses In Leases Credit Losses Collectively evaluated for loss potential $ 41,236,600 $ 883,600 $ 42,286,700 $ 896,000 Individually evaluated for loss potential — — — — Total $ 41,236,600 $ 883,600 $ 42,286,700 $ 896,000 |
Schedule of information regarding accruing and non-accrual leases | September 30, 2017 0-60 Days 61-90 Days Over 90 Days Delinquent Delinquent Delinquent and and Accruing and Accruing Accruing Non-Accrual Total Middle-Market $ 40,058,900 $ 93,200 $ — $ — $ 40,152,100 Small-Ticket 1,084,500 — — — 1,084,500 Total Investment in Leases $ 41,143,400 $ 93,200 $ — $ — $ 41,236,600 December 31, 2016 0-60 Days 61-90 Days Over 90 Days Delinquent Delinquent Delinquent and and Accruing and Accruing Accruing Non-Accrual Total Middle-Market $ 41,299,600 $ — $ — $ — $ 41,299,600 Small-Ticket 987,100 — — — 987,100 Total Investment in Leases $ 42,286,700 $ — $ — $ — $ 42,286,700 |
Earnings Per Share_ (Tables)
Earnings Per Share: (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share: | |
Schedule of shares outstanding used in the calculation of basic and diluted earnings per share | Three Months Ended Nine Months Ended September 30, 2017 September 24, 2016 September 30, 2017 September 24, 2016 Denominator for basic EPS — weighted average common shares 4,024,692 4,116,957 4,131,269 4,113,819 Dilutive shares associated with option plans 289,720 211,211 284,916 206,465 Denominator for diluted EPS — weighted average common shares and dilutive potential common shares 4,314,412 4,328,168 4,416,185 4,320,284 Options excluded from EPS calculation — anti-dilutive 10,753 12,868 16,057 18,348 |
Shareholders' Equity (Deficit20
Shareholders' Equity (Deficit): (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Shareholders' Equity (Deficit): | |
Schedule of weighted average assumptions used in estimation of fair value of options granted | Nine Months Ended September 30, 2017 September 24, 2016 Risk free interest rate % % Expected life (years) 6 6 Expected volatility % % Dividend yield 1.14 % 1.38 % Option fair value $ $ |
Schedule of options outstanding and options exercisable | Weighted Average Remaining Number of Weighted Average Contractual Life Shares Exercise Price (years) Intrinsic Value Outstanding, December 31, 2016 673,670 $ 62.11 6.11 $ 43,139,100 Granted 36,000 122.19 Exercised (58,686) 28.96 Forfeited (4,750) 95.28 Outstanding, September 30, 2017 646,234 $ 68.23 5.84 $ 41,050,600 Exercisable, September 30, 2017 456,953 $ 54.68 4.82 $ 35,215,600 |
Schedule of the reconciliation of common shares outstanding and total equity | Common Total Equity Shares (Deficit) BALANCE, December 31, 2016 4,165,769 $ (7,852,000) Repurchase of common stock (400,000) (49,904,100) Stock options exercised, net of shares surrendered 55,759 1,329,200 Compensation expense relating to stock options — 1,462,500 Cash dividends — (1,343,800) Comprehensive income — 16,918,500 BALANCE, September 30, 2017 3,821,528 $ (39,389,700) |
Segment Reporting_ (Tables)
Segment Reporting: (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting: | |
Schedule of financial information by segment and reconciliation of segment contribution to operating income | Three Months Ended Nine Months Ended September 30, 2017 September 24, 2016 September 30, 2017 September 24, 2016 Revenue: Franchising $ 13,652,100 $ 12,560,300 $ 38,219,200 $ 36,375,400 Leasing 3,915,800 4,174,000 13,722,000 12,839,000 Total revenue $ 17,567,900 $ 16,734,300 $ 51,941,200 $ 49,214,400 Reconciliation to operating income: Franchising segment contribution $ $ $ $ Leasing segment contribution Total operating income $ 9,852,000 $ 10,438,000 $ 28,121,600 $ 27,799,700 Depreciation and amortization: Franchising $ 66,300 $ 79,700 $ 211,200 $ 248,200 Leasing 20,700 23,600 64,500 72,400 Total depreciation and amortization $ 87,000 $ 103,300 $ 275,700 $ 320,600 As of September 30, 2017 December 31, 2016 Identifiable assets: Franchising $ 3,473,100 $ 3,141,300 Leasing 41,444,100 42,735,600 Unallocated 2,261,200 2,704,700 Total $ 47,178,400 $ 48,581,600 |
Management's Interim Financia22
Management's Interim Financial Statement Representation: (Details) | 9 Months Ended |
Sep. 30, 2017item | |
Minimum | |
Number of Weeks in Fiscal Year | 52 |
Maximum | |
Number of Weeks in Fiscal Year | 53 |
Investments_ (Details)
Investments: (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2017 | Sep. 24, 2016 | Dec. 31, 2016 | |
Summary of marketable securities classified as available-for-sale securities | ||||
Equity securities, Cost | $ 215,800 | |||
Equity securities, Fair Value | 199,900 | |||
Unrealized gains and losses for marketable securities classified as available-for-sale securities in accumulated other comprehensive loss | ||||
Unrealized losses | (15,900) | |||
Net unrealized losses | $ (15,900) | |||
Realized gains and losses recognized on sales of available-for-sale marketable securities | ||||
Realized gains | $ 10,300 | $ 10,300 | ||
Realized losses | (8,900) | (8,900) | $ (12,600) | |
Net realized losses | $ 1,400 | $ 1,400 | $ (12,600) |
Investment in Leasing Operati24
Investment in Leasing Operations: Summary of Leasing Operations (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Direct financing and sales-type leases: | ||
Minimum lease payments receivable | $ 39,565,600 | $ 37,839,800 |
Estimated residual value of equipment | 4,797,600 | 4,754,200 |
Unearned lease income net of initial direct costs deferred | (5,734,900) | (5,844,500) |
Security deposits | (4,504,700) | (4,424,400) |
Equipment installed on leases not yet commenced | 7,113,000 | 9,961,600 |
Total investment in direct financing and sales-type leases | 41,236,600 | 42,286,700 |
Allowance for credit losses | (883,600) | (896,000) |
Net investment in direct financing and sales-type leases | 40,353,000 | 41,390,700 |
Operating leases: | ||
Operating lease assets | 1,494,000 | 800,700 |
Less accumulated depreciation and amortization | (1,286,500) | (775,900) |
Net investment in operating leases | 207,500 | 24,800 |
Total net investment in leasing operations | 40,560,500 | 41,415,500 |
Net investment in leases - current | 16,311,000 | 17,004,800 |
Net investment in leases - long-term | $ 24,249,500 | $ 24,410,700 |
Investment in Leasing Operati25
Investment in Leasing Operations: Risk Concentration (Details) - Total assets | 9 Months Ended |
Sep. 30, 2017customer | |
Investment in leasing operations | |
Number of customers | 2 |
Customer One Concentration Risk | |
Investment in leasing operations | |
Percentage of concentration risk | 26.00% |
Customer Two Concentration Risk | |
Investment in leasing operations | |
Percentage of concentration risk | 10.00% |
Investment in Leasing Operati26
Investment in Leasing Operations: Minimum Lease Payments Receivable (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Direct Financing and Sales-Type Leases, Minimum Lease Payments Receivable | ||
2,017 | $ 6,461,600 | |
2,018 | 19,175,400 | |
2,019 | 11,561,600 | |
2,020 | 2,343,000 | |
2,021 | 12,800 | |
Thereafter | 11,200 | |
Total | 39,565,600 | $ 37,839,800 |
Direct Financing and Sales-Type Leases, Income Amortization | ||
2,017 | 1,341,400 | |
2,018 | 3,300,600 | |
2,019 | 1,017,200 | |
2,020 | 74,000 | |
2,021 | 1,200 | |
Thereafter | 500 | |
Total | 5,734,900 | |
Operating Leases, Minimum Lease Payments Receivable | ||
Total | $ 0 |
Investment in Leasing Operati27
Investment in Leasing Operations: Credit Losses (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 24, 2016 | Sep. 30, 2017 | Sep. 24, 2016 | Dec. 31, 2016 | |
Activity in the allowance for credit losses for leasing operations | |||||
Balance at beginning of period | $ 896,000 | $ 859,100 | |||
Provision for credit losses | $ (13,300) | $ (29,700) | (26,200) | (52,000) | |
Recoveries | 13,800 | 39,800 | |||
Deductions for amounts written-off | (29,200) | ||||
Balance at end of period | 883,600 | $ 817,700 | 883,600 | $ 817,700 | |
Investment In Leases | |||||
Collectively evaluated for loss potential | 41,236,600 | 41,236,600 | $ 42,286,700 | ||
Total investment in direct financing and sales-type leases | 41,236,600 | 41,236,600 | 42,286,700 | ||
Allowance for Credit Losses | |||||
Collectively evaluated for loss potential | 883,600 | 883,600 | 896,000 | ||
Total | $ 883,600 | $ 883,600 | $ 896,000 |
Investment in Leasing Operati28
Investment in Leasing Operations: Investment Aging (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Investment in leasing operations | ||
0-60 Days Delinquent and Accruing | $ 41,143,400 | $ 42,286,700 |
61-90 Days Delinquent and Accruing | 93,200 | |
Total investment in direct financing and sales-type leases | 41,236,600 | 42,286,700 |
Middle-Market | ||
Investment in leasing operations | ||
0-60 Days Delinquent and Accruing | 40,058,900 | 41,299,600 |
61-90 Days Delinquent and Accruing | 93,200 | |
Total investment in direct financing and sales-type leases | 40,152,100 | 41,299,600 |
Small-Ticket | ||
Investment in leasing operations | ||
0-60 Days Delinquent and Accruing | 1,084,500 | 987,100 |
Total investment in direct financing and sales-type leases | $ 1,084,500 | $ 987,100 |
Recent Accounting Pronounceme29
Recent Accounting Pronouncements: (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2017 | Sep. 24, 2016 | |
Recently Adopted Accounting Pronouncements | |||
Excess tax benefits on exercised stock options, operating activities | $ 592,800 | $ 69,700 | |
Accounting Standards Update 2016-09 | |||
Recently Adopted Accounting Pronouncements | |||
Excess tax benefits on exercised stock options, operating activities | $ 74,800 | $ 592,800 | 69,700 |
Accounting Standards Update 2016-09 | Previously Reported | |||
Recently Adopted Accounting Pronouncements | |||
Excess tax benefits on exercised stock options, financing activities | $ 69,700 |
Earnings Per Share_ (Details)
Earnings Per Share: (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 24, 2016 | Sep. 30, 2017 | Sep. 24, 2016 | |
Earnings Per Share: | ||||
Denominator for basic EPS - weighted average common shares | 4,024,692 | 4,116,957 | 4,131,269 | 4,113,819 |
Dilutive shares associated with option plans | 289,720 | 211,211 | 284,916 | 206,465 |
Denominator for diluted EPS - weighted average common shares and dilutive potential common shares | 4,314,412 | 4,328,168 | 4,416,185 | 4,320,284 |
Options excluded from EPS calculation - anti-dilutive (in shares) | 10,753 | 12,868 | 16,057 | 18,348 |
Shareholders' Equity (Deficit31
Shareholders' Equity (Deficit): Dividends and Repurchase of Common Stock (Details) - USD ($) | Aug. 16, 2017 | Jul. 26, 2017 | Jul. 19, 2017 | Apr. 26, 2017 | Jan. 25, 2017 | Sep. 30, 2017 |
Repurchase of Common Stock | ||||||
Aggregate purchase price of shares repurchased (in dollars) | $ 49,904,100 | |||||
Dividends | ||||||
Cash dividends declared and paid (in dollars per share) | $ 0.11 | $ 0.11 | $ 0.10 | |||
Tender Offer | ||||||
Repurchase of Common Stock | ||||||
Shares authorized for repurchase | 400,000 | |||||
Purchase of stock, price per share | $ 124.48 | |||||
Number of shares repurchased | 400,000 | |||||
Aggregate purchase price of shares repurchased (in dollars) | $ 49,900,000 | |||||
Common Stock Repurchase Program | ||||||
Repurchase of Common Stock | ||||||
Number of additional shares that can be repurchased | 142,988 |
Shareholders' Equity (Deficit32
Shareholders' Equity (Deficit): Stock Option Plans and Stock-Based Compensation (Details) - Stock options - USD ($) | Apr. 26, 2017 | Sep. 30, 2017 | Sep. 24, 2016 | Dec. 31, 2016 | Apr. 25, 2017 | Feb. 20, 2011 |
Number of Shares | ||||||
Outstanding at the beginning of the period (in shares) | 673,670 | |||||
Granted (in shares) | 36,000 | |||||
Exercised (in shares) | (58,686) | |||||
Forfeited (in shares) | (4,750) | |||||
Outstanding at the end of the period (in shares) | 646,234 | 673,670 | ||||
Exercisable at the end of the period (in shares) | 456,953 | |||||
Weighted Average Exercise Price | ||||||
Outstanding at the beginning of the period (in dollars per share) | $ 62.11 | |||||
Granted (in dollars per share) | 122.19 | |||||
Exercised (in dollars per share) | 28.96 | |||||
Forfeited (in dollars per share) | 95.28 | |||||
Outstanding at the end of the period (in dollars per share) | 68.23 | $ 62.11 | ||||
Exercisable at the end of the period (in dollars per share) | $ 54.68 | |||||
Weighted Average Remaining Contractual Life (years) | ||||||
Outstanding | 5 years 10 months 2 days | 6 years 1 month 10 days | ||||
Exercisable at the end of the period | 4 years 9 months 26 days | |||||
Intrinsic Value | ||||||
Outstanding | $ 41,050,600 | $ 43,139,100 | ||||
Exercisable at the end of the period | $ 35,215,600 | |||||
Weighted average assumptions and results used in estimation of fair value of options granted | ||||||
Risk free interest rate (as a percent) | 1.90% | 1.52% | ||||
Expected life (years) | 6 years | 6 years | ||||
Expected volatility (as a percent) | 26.93% | 27.10% | ||||
Dividend yield (as a percent) | 1.14% | 1.38% | ||||
Option fair value (in dollars per share) | $ 31.38 | $ 23.78 | ||||
Additional disclosures | ||||||
Compensation expense | $ 1,462,500 | $ 1,324,400 | ||||
Total unrecognized compensation expense | $ 3,800,000 | |||||
Weighted average period for recognition of unrecognized compensation expense | 2 years 3 months 18 days | |||||
2001 Plan and 2010 Plan | ||||||
Additional disclosures | ||||||
Shares of previously owned common stock surrendered as payment for option shares exercised | 2,927 | |||||
2001 Plan | ||||||
Stock Option Plans | ||||||
Number of shares authorized for issuance | 750,000 | |||||
2010 Plan | ||||||
Stock Option Plans | ||||||
Increase in number of shares authorized for issuance | 200,000 | |||||
Number of shares authorized for issuance | 700,000 | 500,000 | ||||
Nonemployee Directors Plan | ||||||
Stock Option Plans | ||||||
Number of shares authorized for issuance | 350,000 |
Shareholders' Equity (Deficit33
Shareholders' Equity (Deficit): Reconciliation (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 24, 2016 | Sep. 30, 2017 | Sep. 24, 2016 | |
Reconciliation | ||||
BALANCE | $ (7,852,000) | |||
BALANCE (in shares) | 4,165,769 | |||
Repurchase of common stock | $ (49,904,100) | |||
Stock options exercised, net of shares surrendered | 1,329,200 | |||
Compensation expense relating to stock options | 1,462,500 | |||
Cash dividends | (1,343,800) | |||
Comprehensive income | $ 5,718,600 | $ 6,098,400 | 16,918,500 | $ 16,077,000 |
BALANCE | $ (39,389,700) | $ (39,389,700) | ||
BALANCE (in shares) | 3,821,528 | 3,821,528 | ||
Common Stock | ||||
Reconciliation | ||||
BALANCE (in shares) | 4,165,769 | |||
Repurchase of common stock (in shares) | (400,000) | |||
Stock options exercised, net of shares surrendered (in shares) | 55,759 | |||
BALANCE (in shares) | 3,821,528 | 3,821,528 |
Debt_ Line of Credit (Details)
Debt: Line of Credit (Details) - Line of Credit - CIBC Bank USA and BMO Harris Bank N.A. - USD ($) $ in Millions | Sep. 30, 2017 | Jul. 31, 2017 |
Line of Credit | ||
Terms notes, available borrowing to fund Tender Offer | $ 15 | |
Borrowings outstanding | $ 41.9 | |
Line of credit available for additional borrowings | $ 8.1 | |
Minimum | ||
Line of Credit | ||
Interest rate (as a percent) | 3.23% | |
Maximum | ||
Line of Credit | ||
Interest rate (as a percent) | 4.25% |
Debt_ Notes Payable (Details)
Debt: Notes Payable (Details) - Prudential Investment Management, Inc | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Notes Payable | |
Notes Payable | |
Principal amount outstanding | $ 33,000,000 |
Series A Notes | |
Notes Payable | |
Term note, face value | 25,000,000 |
Principal amount outstanding | $ 20,500,000 |
Term of notes payable | 10 years |
Interest rate (as a percent) | 5.50% |
Quarterly principal payment, first five years | $ 500,000 |
Quarterly principal payment, thereafter | 750,000 |
Series B Notes | |
Notes Payable | |
Term note, face value | $ 12,500,000 |
Term of notes payable | 10 years |
Interest rate (as a percent) | 5.10% |
Quarterly principal payment | $ 312,500 |
Minimum prepayment | $ 1,000,000 |
Segment Reporting_ (Details)
Segment Reporting: (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017USD ($) | Sep. 24, 2016USD ($) | Sep. 30, 2017USD ($)item | Sep. 24, 2016USD ($) | Dec. 31, 2016USD ($) | |
Segment Reporting | |||||
Number of reportable business segments | item | 2 | ||||
Total revenue | $ 17,567,900 | $ 16,734,300 | $ 51,941,200 | $ 49,214,400 | |
Total operating income | 9,852,000 | 10,438,000 | 28,121,600 | 27,799,700 | |
Total depreciation and amortization | 87,000 | 103,300 | 275,700 | 320,600 | |
Total identifiable assets | 47,178,400 | 47,178,400 | $ 48,581,600 | ||
Operating | Franchising | |||||
Segment Reporting | |||||
Total revenue | 13,652,100 | 12,560,300 | 38,219,200 | 36,375,400 | |
Total operating income | 8,145,400 | 8,058,800 | 21,500,200 | 20,833,600 | |
Total depreciation and amortization | 66,300 | 79,700 | 211,200 | 248,200 | |
Total identifiable assets | 3,473,100 | 3,473,100 | 3,141,300 | ||
Operating | Leasing | |||||
Segment Reporting | |||||
Total revenue | 3,915,800 | 4,174,000 | 13,722,000 | 12,839,000 | |
Total operating income | 1,706,600 | 2,379,200 | 6,621,400 | 6,966,100 | |
Total depreciation and amortization | 20,700 | $ 23,600 | 64,500 | $ 72,400 | |
Total identifiable assets | 41,444,100 | 41,444,100 | 42,735,600 | ||
Unallocated | |||||
Segment Reporting | |||||
Total identifiable assets | $ 2,261,200 | $ 2,261,200 | $ 2,704,700 |