Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 27, 2014 | Mar. 06, 2015 | Jun. 28, 2014 | |
Document and Entity Information | |||
Entity Registrant Name | WINMARK CORP | ||
Entity Central Index Key | 908315 | ||
Document Type | 10-K | ||
Document Period End Date | 27-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -15 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $123,659,028 | ||
Entity Common Stock, Shares Outstanding | 4,999,594 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED_CONDENSED_BALANCE
CONSOLIDATED CONDENSED BALANCE SHEETS (USD $) | Dec. 27, 2014 | Dec. 28, 2013 |
Current Assets: | ||
Cash and cash equivalents | $2,089,700 | $10,642,600 |
Marketable securities | 466,800 | 736,500 |
Receivables, less allowance for doubtful accounts of $1,600 and $4,300 | 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: | ||
Furniture and equipment | 3,105,200 | 2,728,800 |
Building and building improvements | 1,433,200 | 1,423,200 |
Less - accumulated depreciation and amortization | -3,118,100 | -2,769,800 |
Property and equipment, net | 1,420,300 | 1,382,200 |
Other assets | 677,500 | 677,500 |
Total assets | 54,727,800 | 53,036,100 |
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 |
Commitments and Contingencies | ||
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 |
Total liabilities and shareholders' equity | $54,727,800 | $53,036,100 |
CONSOLIDATED_CONDENSED_BALANCE1
CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 27, 2014 | Dec. 28, 2013 |
CONSOLIDATED CONDENSED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $0 | $0 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 4,998,512 | 5,143,530 |
Common stock, shares outstanding | 4,998,512 | 5,143,530 |
Receivables, allowance for doubtful accounts (in dollars) | $1,600 | $4,300 |
CONSOLIDATED_CONDENSED_STATEME
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | ||
Dec. 27, 2014 | Dec. 28, 2013 | Dec. 29, 2012 | |
REVENUE: | |||
Royalties | $38,972,400 | $36,344,100 | $33,760,200 |
Leasing income | 16,247,300 | 14,524,100 | 13,211,800 |
Merchandise sales | 2,728,600 | 2,327,100 | 2,750,700 |
Franchise fees | 1,989,700 | 1,459,300 | 1,291,000 |
Other | 1,240,700 | 1,076,600 | 929,400 |
Total revenue | 61,178,700 | 55,731,200 | 51,943,100 |
COST OF MERCHANDISE SOLD | 2,619,900 | 2,205,700 | 2,621,500 |
LEASING EXPENSE | 1,630,600 | 1,592,000 | 1,789,800 |
PROVISION FOR CREDIT LOSSES | 62,900 | -44,700 | -47,600 |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 23,806,000 | 22,198,200 | 20,280,300 |
Income from operations | 33,059,300 | 29,780,000 | 27,299,100 |
LOSS FROM EQUITY INVESTMENTS | -2,492,900 | ||
IMPAIRMENT OF INVESTMENT IN NOTES | -1,324,400 | ||
INTEREST EXPENSE | -484,500 | -213,500 | -392,300 |
INTEREST AND OTHER INCOME | 14,000 | 23,400 | 66,000 |
Income before income taxes | 32,588,800 | 29,589,900 | 23,155,500 |
PROVISION FOR INCOME TAXES | -12,522,300 | -11,358,300 | -10,217,600 |
NET INCOME | $20,066,500 | $18,231,600 | $12,937,900 |
EARNINGS PER SHARE - BASIC (in dollars per share) | $3.96 | $3.60 | $2.57 |
EARNINGS PER SHARE - DILUTED (in dollars per share) | $3.85 | $3.48 | $2.47 |
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC (in shares) | 5,069,391 | 5,068,975 | 5,027,509 |
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED (in shares) | 5,216,914 | 5,241,121 | 5,237,671 |
CONSOLIDATED_CONDENSED_STATEME1
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 12 Months Ended | ||
Dec. 27, 2014 | Dec. 28, 2013 | Dec. 29, 2012 | |
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME | |||
NET INCOME | $20,066,500 | $18,231,600 | $12,937,900 |
Unrealized net gains/losses on marketable securities: | |||
Unrealized holding net gains/(losses) arising during period | -47,600 | -100 | -6,500 |
Reclassification adjustment for net gains included in net income | -5,600 | -28,000 | |
OTHER COMPREHENSIVE INCOME (LOSS), BEFORE TAX | -53,200 | -100 | -34,500 |
Unrealized net gains/losses on marketable securities: | |||
Unrealized holding net gains/losses arising during period | 18,000 | 2,500 | |
Reclassification adjustment for net gains included in net income | 2,200 | 11,000 | |
INCOME TAX (EXPENSE) BENEFIT RELATED TO ITEMS OF OTHER COMPREHENSIVE INCOME | 20,200 | 13,500 | |
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX | -33,000 | -100 | -21,000 |
COMPREHENSIVE INCOME | $20,033,500 | $18,231,500 | $12,916,900 |
Consolidated_Statements_of_Sha
Consolidated Statements of Shareholders' Equity (USD $) | Common Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
BALANCE at Dec. 31, 2011 | $629,800 | $34,461,900 | $17,000 | $35,108,700 |
BALANCE (in shares) at Dec. 31, 2011 | 4,987,643 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Repurchase of common stock | -3,874,900 | -3,345,400 | -7,220,300 | |
Repurchase of common stock (in shares) | -134,720 | |||
Stock options exercised and related tax benefits | 2,314,900 | 2,314,900 | ||
Stock options exercised and related tax benefits (in shares) | 143,536 | |||
Compensation expense relating to stock options | 930,200 | 930,200 | ||
Cash dividends | -26,122,400 | -26,122,400 | ||
Comprehensive income (loss) | 12,937,900 | -21,000 | 12,916,900 | |
BALANCE at Dec. 29, 2012 | 17,932,000 | -4,000 | 17,928,000 | |
BALANCE (in shares) at Dec. 29, 2012 | 4,996,459 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Repurchase of common stock | -1,854,900 | -1,854,900 | ||
Repurchase of common stock (in shares) | -28,422 | |||
Stock options exercised and related tax benefits | 3,650,800 | 3,650,800 | ||
Stock options exercised and related tax benefits (in shares) | 175,493 | |||
Compensation expense relating to stock options | 1,153,600 | 1,153,600 | ||
Cash dividends | -964,300 | -964,300 | ||
Comprehensive income (loss) | 18,231,600 | -100 | 18,231,500 | |
BALANCE at Dec. 28, 2013 | 2,949,500 | 35,199,300 | -4,100 | 38,144,700 |
BALANCE (in shares) at Dec. 28, 2013 | 5,143,530 | 5,143,530 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Repurchase of common stock | -4,453,400 | -7,111,400 | -11,564,800 | |
Repurchase of common stock (in shares) | -166,030 | |||
Stock options exercised and related tax benefits | 509,100 | 509,100 | ||
Stock options exercised and related tax benefits (in shares) | 21,012 | |||
Compensation expense relating to stock options | 1,417,200 | 1,417,200 | ||
Cash dividends | -26,930,200 | -26,930,200 | ||
Comprehensive income (loss) | 20,066,500 | -33,000 | 20,033,500 | |
BALANCE at Dec. 27, 2014 | $422,400 | $21,224,200 | ($37,100) | $21,609,500 |
BALANCE (in shares) at Dec. 27, 2014 | 4,998,512 | 4,998,512 |
CONSOLIDATED_CONDENSED_STATEME2
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
Dec. 27, 2014 | Dec. 28, 2013 | Dec. 29, 2012 | |
OPERATING ACTIVITIES: | |||
Net Income | $20,066,500 | $18,231,600 | $12,937,900 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation | 412,000 | 431,500 | 433,300 |
Provision for credit losses | 62,900 | -44,700 | -47,600 |
Compensation expense related to stock options | 1,417,200 | 1,153,600 | 930,200 |
Deferred income taxes | 111,900 | -499,200 | 324,300 |
Gain on sale of marketable securities | -8,700 | -25,200 | -21,200 |
Loss from disposal of property and equipment | 2,300 | 300 | |
Loss from equity investments | 2,492,900 | ||
Impairment of investment in notes | 1,324,400 | ||
Deferred initial direct costs | -850,400 | -444,400 | -728,000 |
Amortization of deferred initial direct costs | 754,400 | 539,900 | 574,000 |
Tax benefits on exercised stock options | -91,100 | -413,600 | -884,300 |
Change in operating assets and liabilities: | |||
Receivables | -122,700 | 31,600 | 79,100 |
Income tax receivable / payable | -3,886,100 | 1,647,800 | -386,400 |
Inventories | 3,200 | -25,500 | -2,700 |
Prepaid expenses | 119,900 | -142,100 | -83,200 |
Accounts payable | -485,900 | 237,700 | 743,400 |
Accrued and other liabilities | 423,700 | -158,300 | -194,200 |
Rents received in advance and security deposits | -55,900 | 342,300 | 142,100 |
Deferred revenue | 109,800 | 785,900 | 538,000 |
Net cash provided by operating activities | 17,983,000 | 21,648,900 | 18,172,300 |
INVESTING ACTIVITIES: | |||
Proceeds from sale of marketable securities | 862,400 | 774,400 | 1,527,700 |
Purchase of marketable securities | -637,200 | -1,399,900 | -583,100 |
Purchase of property and equipment | -452,400 | -396,400 | -188,300 |
Purchase of equipment for lease contracts | -27,547,400 | -20,727,100 | -23,792,800 |
Principal collections on lease receivables | 20,724,600 | 17,755,900 | 16,886,700 |
Net cash used for investing activities | -7,050,000 | -3,993,100 | -6,149,800 |
FINANCING ACTIVITIES: | |||
Proceeds from borrowings on line of credit | 33,900,000 | 2,000,000 | 25,100,000 |
Payments on line of credit | -15,400,000 | -12,800,000 | -14,300,000 |
Repurchases of common stock | -11,564,800 | -1,854,900 | -7,220,300 |
Proceeds from exercises of stock options | 418,000 | 3,237,200 | 1,430,600 |
Dividends paid | -26,930,200 | -964,300 | -26,122,400 |
Proceeds from discounted lease rentals | 721,800 | 1,418,600 | |
Tax benefits on exercised stock options | 91,100 | 413,600 | 884,300 |
Net cash used for financing activities | -19,485,900 | -9,246,600 | -18,809,200 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | -8,552,900 | 8,409,200 | -6,786,700 |
CASH AND CASH EQUIVALENTS, beginning of year | 10,642,600 | 2,233,400 | 9,020,100 |
CASH AND CASH EQUIVALENTS, end of year | 2,089,700 | 10,642,600 | 2,233,400 |
SUPPLEMENTAL DISCLOSURES: | |||
Cash paid for interest | 421,200 | 217,500 | 341,100 |
Cash paid for income taxes | 16,229,000 | 10,135,100 | 10,291,200 |
Non-cash landlord leasehold improvements | $187,800 |
Organization_and_Business
Organization and Business: | 12 Months Ended | |||||||||
Dec. 27, 2014 | ||||||||||
Organization and Business: | ||||||||||
Organization and Business: | 1. Organization and Business: | |||||||||
Winmark Corporation and subsidiaries (the Company) offers licenses to operate franchises using the service marks Plato’s Closet®, Play It Again Sports®, Once Upon A Child®, Music Go Round® and Style Encore®. In addition, the Company sells point-of-sale system hardware to its franchisees and certain merchandise to its Play It Again Sports franchisees. The Company also operates both middle market and small-ticket equipment leasing businesses under the Winmark Capital® and Wirth Business Credit® marks. The Company has a 52/53-week fiscal year that ends on the last Saturday in December. Fiscal years 2014, 2013 and 2012 were 52-week fiscal years. | ||||||||||
Following is a summary of our franchising activity for the fiscal year ended December 27, 2014: | ||||||||||
12/28/13 | OPENED | CLOSED | 12/27/14 | |||||||
Plato’s Closet | ||||||||||
Franchises - US and Canada | 391 | 37 | (2 | ) | 426 | |||||
Once Upon A Child | ||||||||||
Franchises - US and Canada | 282 | 28 | (2 | ) | 308 | |||||
Play It Again Sports | ||||||||||
Franchises - US and Canada | 300 | 5 | (4 | ) | 301 | |||||
Music Go Round | ||||||||||
Franchises - US | 29 | 4 | (0 | ) | 33 | |||||
Style Encore | ||||||||||
Franchises - US | 3 | 21 | (0 | ) | 24 | |||||
Total Franchised Stores | 1,005 | 95 | (8 | ) | 1,092 | |||||
Significant_Accounting_Policie
Significant Accounting Policies: | 12 Months Ended | |||||||
Dec. 27, 2014 | ||||||||
Significant Accounting Policies: | ||||||||
Significant Accounting Policies: | 2. Significant Accounting Policies: | |||||||
Principles of Consolidation | ||||||||
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Winmark Capital Corporation, Wirth Business Credit, Inc. and Grow Biz Games, Inc. All material inter-company transactions have been eliminated in consolidation. The consolidated financial statements also include the Company’s investment in and share of net earnings or losses for its investment in Tomsten, Inc. (“Tomsten”), which is recorded using the equity method of accounting. | ||||||||
Cash Equivalents | ||||||||
Cash equivalents consist of highly liquid investments with an original maturity of three months or less when purchased. Cash equivalents are stated at cost, which approximates fair value. As of December 27, 2014 and December 28, 2013, the Company had $73,100 and $55,700 of cash located in Canadian banks. The Company holds its cash and cash equivalents with financial institutions and at times, such balances may be in excess of insurance limits. | ||||||||
Receivables | ||||||||
The Company provides an allowance for doubtful accounts on trade receivables. The allowance for doubtful accounts was $1,600 and $4,300 at December 27, 2014 and December 28, 2013, respectively. If receivables in excess of the provided allowance are determined uncollectible, they are charged to expense in the year the determination is made. Trade receivables are written off when they become uncollectible (which generally occurs when the franchise terminates and there is no reasonable expectation of collection), and payments subsequently received on such receivable are credited to the allowance for doubtful accounts. Historically, receivables balances written off have not exceeded allowances provided. | ||||||||
Investment in Leasing Operations | ||||||||
The Company uses the direct finance method of accounting to record income from direct financing leases. At the inception of a lease, the Company records the minimum future lease payments receivable, the estimated residual value of the leased equipment and the unearned lease income. Initial direct costs related to lease originations are deferred as part of the investment and amortized over the lease term. Unearned lease income is the amount by which the total lease receivable plus the estimated residual value exceeds the cost of the equipment. | ||||||||
Leasing Income Recognition | ||||||||
Leasing income for direct financing leases is recognized under the effective interest method. The effective interest method of income recognition applies a constant rate of interest equal to the internal rate of return on the lease. Generally, when a lease is more than 90 days delinquent (when more than three monthly payments are owed), the lease is classified as being on non-accrual and the Company stops recognizing leasing income on that date. Payments received on leases in non-accrual status generally reduce the lease receivable. Leases on non-accrual status remain classified as such until there is sustained payment performance that, in the Company’s judgment, would indicate that all contractual amounts will be collected in full. | ||||||||
In certain circumstances, the Company may re-lease equipment in its existing portfolio. As this equipment may have a fair value greater than its carrying amount when re-leased, the Company may be required to account for the lease as a sales-type lease. At inception of a sales-type lease, revenue is recorded that consists of the present value of the future minimum lease payments discounted at the rate implicit in the lease. In subsequent periods, the recording of income is consistent with the accounting for a direct financing lease. | ||||||||
For leases that are accounted for as operating leases, income is recognized on a straight-line basis when payments under the lease contract are due. | ||||||||
Leasing Expense | ||||||||
Leasing expense includes the cost of financing equipment purchases, the cost of equipment sales as well as depreciation expense for operating lease assets. Additionally, at inception of a sales-type lease, cost is recorded that consists of the equipment’s book value, less the present value of its residual and is included in leasing expense. | ||||||||
Initial Direct Costs | ||||||||
The Company defers initial direct costs incurred to originate its leases in accordance with applicable accounting guidance. The initial direct costs deferred are part of the investment in leasing operations and are amortized using the effective interest method. Initial direct costs include commissions and costs associated with credit evaluation, recording guarantees and other security arrangements, documentation and transaction closing. | ||||||||
Lease Residual Values | ||||||||
Residual values reflect the estimated amounts to be received at lease termination from sales or other dispositions of leased equipment to unrelated parties. The leased equipment residual values are based on the Company’s best estimate. | ||||||||
Allowance for Credit Losses | ||||||||
The Company maintains an allowance for credit losses at an amount that it believes to be sufficient to absorb losses inherent in its existing lease portfolio as of the reporting dates. Leases are collectively evaluated for potential loss. The Company’s methodology for determining the allowance for credit losses includes consideration of the level of delinquencies and non-accrual leases, historical net charge-off amounts and review of any significant concentrations. | ||||||||
A provision is charged against earnings to maintain the allowance for credit losses at the appropriate level. If the actual results are different from the Company’s estimates, results could be different. The Company’s policy is to charge-off against the allowance the estimated unrecoverable portion of accounts once they reach 121 days delinquent. | ||||||||
Inventories | ||||||||
The Company values its inventories at the lower of cost, as determined by the weighted average cost method, or market. Inventory consists of computer hardware and related accessories. | ||||||||
Impairment of Long-lived Assets and Investments | ||||||||
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying amount of the asset exceeds expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. | ||||||||
The Company evaluates its long-term equity investments for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying amount may not be recoverable. The impairment, if any, is measured by the difference between the assets’ carrying amount and their fair value (as prescribed by applicable accounting guidance), based on the best information available, including market prices, discounted cash flow analysis or other financial metrics that management utilizes to help determine fair value. | ||||||||
The Company evaluates its long-term note investments for impairment on an annual basis or whenever events or changes in circumstances indicate that it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the notes. The impairment, if any, is measured by the difference between the recorded investment in the notes, including accrued interest, and the present value of expected future cash flows discounted at the effective interest rate of the notes (as prescribed by applicable accounting guidance), based on the best information available to management. Once a note investment is deemed impaired, any significant change in the amount or timing of the expected or actual cash flows requires recalculation of the impairment applying the procedures described above. | ||||||||
Property and Equipment | ||||||||
Property and equipment is stated at cost. Depreciation and amortization for financial reporting purposes is provided on the straight-line method. Estimated useful lives used in calculating depreciation and amortization are: three to five years for computer and peripheral equipment, five to seven years for furniture and equipment and the shorter of the lease term or useful life for leasehold improvements. Major repairs, refurbishments and improvements which significantly extend the useful lives of the related assets are capitalized. Maintenance and repairs, supplies and accessories are charged to expense as incurred. | ||||||||
Goodwill | ||||||||
The Company reviews its goodwill for impairment at its fiscal year end or whenever events or changes in circumstances indicate that there has been impairment in the value of its goodwill. No impairment was noted during the years ended December 27, 2014 and December 28, 2013. Goodwill of $607,500 is included in other assets in the consolidated balance sheets at December 27, 2014 and December 28, 2013, and is all attributable to the Franchising segment. | ||||||||
Use of Estimates | ||||||||
The preparation of financial statements in conformity with generally accepted U.S. accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The ultimate results could differ from those estimates. The most significant estimates relate to allowance for credit losses and impairment of long-term investments. These estimates may be adjusted as more current information becomes available, and any adjustment could be significant. | ||||||||
Advertising | ||||||||
Advertising costs are charged to operating expenses as incurred. Advertising costs were $252,800, $185,300 and $137,200 for fiscal years 2014, 2013 and 2012, respectively. | ||||||||
Accounting for Stock-Based Compensation | ||||||||
The Company recognizes the cost of all share-based payments to employees, including grants of employee stock options, in the consolidated financial statements based on the grant date fair value of those awards. This cost is recognized over the period for which an employee is required to provide service in exchange for the award. | ||||||||
The Company estimates the fair value of options granted using the Black-Scholes option valuation model. The Company estimates the volatility of its common stock at the date of grant based on its historical volatility rate. The Company’s decision to use historical volatility was based upon the lack of actively traded options on its common stock. The Company estimates the expected term based upon historical option exercises. The risk-free interest rate assumption is based on observed interest rates for the expected term. The Company uses historical data to estimate pre-vesting option forfeitures and record share-based compensation expense only for those awards that are expected to vest. For options granted, the Company amortizes the fair value on a straight-line basis. All options are amortized over the vesting periods. | ||||||||
Revenue Recognition - Franchising | ||||||||
The Company collects royalties from each retail franchise based on a percentage of retail store gross sales. The Company recognizes royalties as revenue when earned. The Company collects initial franchise fees when franchise agreements are signed and recognizes the initial franchise fees as revenue when the franchise is opened, which is when the Company has performed substantially all initial services required by the franchise agreement. The Company had deferred franchise fee revenue of $2,005,300 and $2,034,100 at December 27, 2014 and December 28, 2013, respectively. The Company recognizes deferred software license fees over the 10-year life of the initial franchise agreement. The Company had deferred software license fees of $1,399,400 and $1,236,600 at December 27, 2014 and December 28, 2013, respectively. Merchandise sales are recognized when the product has been shipped to the franchisee. | ||||||||
Sales Tax | ||||||||
The Company’s accounting policy is to present taxes collected from customers and remitted to government authorities on a net basis. | ||||||||
Discounted Lease Rentals | ||||||||
The Company may utilize its lease rentals receivable and underlying equipment as collateral to borrow from financial institutions at fixed rates on a non-recourse basis. In the event of a default by a customer, the financial institution has a first lien on the underlying leased equipment, with no further recourse against the Company. Proceeds from discounting are recorded on the balance sheet as discounted lease rentals. As customers make payments, lease income and interest expense are recorded and discounted lease rentals are reduced by the effective interest method. | ||||||||
Earnings Per Share | ||||||||
The Company calculates earnings per share by dividing net income by the weighted average number of shares of common stock outstanding to arrive at the Earnings Per Share — Basic. The Company calculates Earnings Per Share — Diluted by dividing net income by the weighted average number of shares of common stock and dilutive stock equivalents from the potential exercise of stock options using the treasury stock method. | ||||||||
The following table sets forth the presentation of shares outstanding used in the calculation of basic and diluted earnings per share (“EPS”): | ||||||||
Year Ended | ||||||||
December 27, 2014 | December 28, 2013 | December 29, 2012 | ||||||
Denominator for basic EPS — weighted average common shares | 5,069,391 | 5,068,975 | 5,027,509 | |||||
Dilutive shares associated with option plans | 147,523 | 172,146 | 210,162 | |||||
Denominator for diluted EPS — weighted average common shares and dilutive potential common shares | 5,216,914 | 5,241,121 | 5,237,671 | |||||
Options excluded from EPS calculation — anti-dilutive | 39,240 | 30,450 | 30,115 | |||||
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. | ||||||||
The Company determined the fair value of its investment in Tomsten, Inc. to be zero based on Level 3 inputs using a discounted cash flow model which included inputs on future revenues, expenses and other cash flows. See Note 3. | ||||||||
Due to their nature, the carrying value of cash equivalents, receivables, long-term note investments, payables and debt obligations approximates fair value. | ||||||||
Recent Accounting Pronouncements | ||||||||
In May 2014, the Financial Accounting Standards Board 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 is effective for reporting periods beginning after December 15, 2016, and 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 Company is currently in the process of evaluating the impact of the adoption of this ASU on the Company’s consolidated results. | ||||||||
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 as previously reported. | ||||||||
Investments
Investments: | 12 Months Ended | |||||||||||||
Dec. 27, 2014 | ||||||||||||||
Investments: | ||||||||||||||
Investments | 3.Investments | |||||||||||||
Marketable Securities | ||||||||||||||
The following is a summary of marketable securities classified as available-for-sale securities: | ||||||||||||||
December 27, 2014 | December 28, 2013 | |||||||||||||
Cost | Fair Value | Cost | Fair Value | |||||||||||
Equity securities | $ | 526,600 | $ | 466,800 | $ | 743,100 | $ | 736,500 | ||||||
The Company’s unrealized gains and losses for marketable securities classified as available-for-sale securities in accumulated other comprehensive income (loss) are as follows: | ||||||||||||||
Year Ended | ||||||||||||||
December 27, 2014 | December 28, 2013 | December 29, 2012 | ||||||||||||
Unrealized gains | $ | 3,300 | $ | 6,800 | $ | — | ||||||||
Unrealized losses | (63,100 | ) | (13,400 | ) | (6,500 | ) | ||||||||
Net unrealized gains / (losses) | $ | (59,800 | ) | $ | (6,600 | ) | $ | (6,500 | ) | |||||
The Company’s realized gains and losses recognized on sales of available-for-sale marketable securities are as follows: | ||||||||||||||
Year Ended | ||||||||||||||
December 27, 2014 | December 28, 2013 | December 29, 2012 | ||||||||||||
Realized gains | $ | 40,900 | $ | 25,200 | $ | 52,500 | ||||||||
Realized losses | (32,200 | ) | — | (31,300 | ) | |||||||||
Net realized gains | $ | 8,700 | $ | 25,200 | $ | 21,200 | ||||||||
Amounts reclassified out of accumulated other comprehensive income 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 Statements of Operations. | ||||||||||||||
Long-term Investments | ||||||||||||||
Tomsten, Inc. | ||||||||||||||
The Company has an investment in Tomsten, the parent company of “Archiver’s” retail chain. The Company has invested a total of $8.5 million in the purchase of common stock of Tomsten (including $1.0 million invested in June 2011 pursuant to a Rights Offering by Tomsten), with such aggregate investment representing 22.0% of the outstanding common stock of Tomsten. The Company applies the equity method of accounting to this investment. During the first half of 2012, the Company provided management services to Tomsten, and the Company’s Chairman and Chief Executive Officer served on Tomsten’s board of directors. | ||||||||||||||
In 2012, the Company recorded $697,300 for its pro-rata share of Tomsten’s losses in the statement of operations on the line item captioned Loss from Equity Investments. During the fourth quarter of 2012, as part of its impairment analysis for Tomsten the Company determined that the carrying value of its investment was not expected to be recoverable from the future cash flow of the Tomsten business or the sale of its ownership stake and therefore recorded a $1.8 million impairment charge, bringing the carrying value of this investment to $0. On April 29, 2013, Tomsten filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in Minnesota and such proceedings were in progress at December 27, 2014. | ||||||||||||||
BridgeFunds, LLC | ||||||||||||||
In 2004, the Company made a commitment to lend $2.0 million to BridgeFunds Limited at an annual rate of 12% pursuant to several senior subordinated promissory notes, and the commitment was fully funded by 2006. BridgeFunds Limited advances funds to claimants involved in civil litigation to cover litigation expenses. In 2007, in connection with raising capital, BridgeFunds Limited completed a restructuring where all assets and liabilities, including the warrant, were assigned to and assumed by BridgeFunds, LLC (“BridgeFunds”). In 2009, the Company entered into a modification agreement with BridgeFunds, whereby the maturity date of all of the outstanding promissory notes was changed to September 30, 2010, the annual rate of interest on the notes was increased to 15% and monthly prepayments of the principal of such notes in an amount equal to Available Cash Flow (as defined within the agreements governing the notes) is required. In each of 2010, 2011 and 2012, the Company entered into amendments to the agreements governing the notes that extended the maturity date on the notes out by one year, respectively. | ||||||||||||||
During 2012, 2013 and 2014, the Company received no payments of interest and did not receive any payments of principal on the notes. The Company stopped accruing interest on this investment as of September 30, 2010. The Company has deemed this investment to be impaired, and in evaluating the investment for impairment has determined that its present value of expected future cash flows, discounted at the effective interest rate on the notes of 15%, is less than the recorded investment in the notes. In developing its estimate of expected future cash flows, the Company used certain information obtained from BridgeFunds concerning existing liabilities, claimant cases outstanding, historical default rates and settlement discounts on claimant advances, and made certain assumptions regarding the timing of case settlements, the payment of future liabilities and future default and settlement discount rates. The Company recognized $1.3 million in impairment charges during 2012 and established a corresponding valuation allowance that, along with previously recognized impairment charges, reduced the net investment balance to $0 at December 29, 2012. The Company has maintained the net investment balance of $0 as of December 28, 2013 and December 27, 2014, as it does not expect to receive any cash flows from this investment. | ||||||||||||||
Investment_in_Leasing_Operatio
Investment in Leasing Operations: | 12 Months Ended | ||||||||||||||||
Dec. 27, 2014 | |||||||||||||||||
Investment in Leasing Operations: | |||||||||||||||||
Investment in Leasing Operations: | 4.Investment in Leasing Operations: | ||||||||||||||||
Investment in leasing operations consists of the following: | |||||||||||||||||
December 27, 2014 | December 28, 2013 | ||||||||||||||||
Direct financing and sales-type leases: | |||||||||||||||||
Minimum lease payments receivable | $ | 40,739,900 | $ | 35,450,900 | |||||||||||||
Estimated residual value of equipment | 4,347,100 | 4,348,800 | |||||||||||||||
Unearned lease income net of initial direct costs deferred | (6,061,100 | ) | (4,963,400 | ) | |||||||||||||
Security deposits | (3,253,200 | ) | (3,325,600 | ) | |||||||||||||
Equipment installed on leases not yet commenced | 8,364,100 | 6,718,000 | |||||||||||||||
Total investment in direct financing and sales-type leases | 44,136,800 | 38,228,700 | |||||||||||||||
Allowance for credit losses | (386,000 | ) | (822,700 | ) | |||||||||||||
Net investment in direct financing and sales-type leases | 43,750,800 | 37,406,000 | |||||||||||||||
Operating leases: | |||||||||||||||||
Operating lease assets | 806,100 | 1,353,500 | |||||||||||||||
Less accumulated depreciation and amortization | (536,400 | ) | (1,218,200 | ) | |||||||||||||
Net investment in operating leases | 269,700 | 135,300 | |||||||||||||||
Total net investment in leasing operations | $ | 44,020,500 | $ | 37,541,300 | |||||||||||||
As of December 27, 2014, the $44.0 million total net investment in leases consists of $19.8 million classified as current and $24.2 million classified as long-term. As of December 28, 2013, the $37.5 million total net investment in leases consists of $17.2 million classified as current and $20.3 million classified as long-term. | |||||||||||||||||
As of December 27, 2014, leased assets with two customers approximated 15% and 10%, respectively, of the Company’s total assets. As of December 2013, no customer had leased assets totaling more than 10% of the Company’s total assets. | |||||||||||||||||
Future minimum lease payments receivable under lease contracts and the amortization of unearned lease income, net of initial direct costs deferred, is as follows as of December 27, 2014: | |||||||||||||||||
Direct Financing and Sales-Type Leases | Operating Leases | ||||||||||||||||
Fiscal Year | Minimum Lease | Income | Minimum Lease | ||||||||||||||
Payments Receivable | Amortization | Payments Receivable | |||||||||||||||
2015 | $ | 23,924,700 | $ | 4,560,000 | $ | 51,200 | |||||||||||
2016 | 13,166,600 | 1,373,200 | — | ||||||||||||||
2017 | 3,628,400 | 126,900 | — | ||||||||||||||
2018 | 20,200 | 1,000 | — | ||||||||||||||
2019 | — | — | — | ||||||||||||||
Thereafter | — | — | — | ||||||||||||||
$ | 40,739,900 | $ | 6,061,100 | $ | 51,200 | ||||||||||||
The activity in the allowance for credit losses for leasing operations during 2014, 2013 and 2012, respectively, is as follows: | |||||||||||||||||
December 27, 2014 | December 28, 2013 | December 29, 2012 | |||||||||||||||
Balance at beginning of period | $ | 822,700 | $ | 775,800 | $ | 803,800 | |||||||||||
Provisions charged to expense | 62,900 | (44,700 | ) | (47,600 | ) | ||||||||||||
Recoveries | 106,900 | 127,500 | 251,000 | ||||||||||||||
Deductions for amounts written-off | (606,500 | ) | (35,900 | ) | (231,400 | ) | |||||||||||
Balance at end of period | $ | 386,000 | $ | 822,700 | $ | 775,800 | |||||||||||
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: | |||||||||||||||||
December 27, 2014 | December 28, 2013 | ||||||||||||||||
Investment | Allowance for | Investment | Allowance for | ||||||||||||||
In Leases | Credit Losses | In Leases | Credit Losses | ||||||||||||||
Collectively evaluated for loss potential | $ | 44,136,800 | $ | 386,000 | $ | 38,228,700 | $ | 822,700 | |||||||||
Individually evaluated for loss potential | — | — | — | — | |||||||||||||
Total | $ | 44,136,800 | $ | 386,000 | $ | 38,228,700 | $ | 822,700 | |||||||||
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. | |||||||||||||||||
December 27, 2014 | |||||||||||||||||
0-60 Days | 61-90 Days | Over 90 Days | Non-Accrual | Total | |||||||||||||
Delinquent | Delinquent | Delinquent and | |||||||||||||||
and Accruing | and Accruing | Accruing | |||||||||||||||
Middle-Market | $ | 42,948,000 | $ | — | $ | — | $ | — | $ | 42,948,000 | |||||||
Small-Ticket | 1,188,800 | — | — | — | 1,188,800 | ||||||||||||
Total Investment in Leases | $ | 44,136,800 | $ | — | $ | — | $ | — | $ | 44,136,800 | |||||||
December 28, 2013 | |||||||||||||||||
0-60 Days | 61-90 Days | Over 90 Days | Non-Accrual | Total | |||||||||||||
Delinquent | Delinquent | Delinquent and | |||||||||||||||
and Accruing | and Accruing | Accruing | |||||||||||||||
Middle-Market | $ | 36,716,100 | $ | — | $ | — | $ | 416,400 | $ | 37,132,500 | |||||||
Small-Ticket | 1,096,200 | — | — | — | 1,096,200 | ||||||||||||
Total Investment in Leases | $ | 37,812,300 | $ | — | $ | — | $ | 416,400 | $ | 38,228,700 | |||||||
Receivables
Receivables: | 12 Months Ended | ||||||||||
Dec. 27, 2014 | |||||||||||
Receivables: | |||||||||||
Receivables: | 5.Receivables: | ||||||||||
The Company’s current receivables consisted of the following: | |||||||||||
December 27, 2014 | December 28, 2013 | ||||||||||
Trade | $ | 18,000 | $ | 17,700 | |||||||
Royalty | 1,198,000 | 1,150,200 | |||||||||
Other | 112,200 | 37,600 | |||||||||
$ | 1,328,200 | $ | 1,205,500 | ||||||||
The activity in the allowance for doubtful accounts for trade receivables is as follows: | |||||||||||
December 27, 2014 | December 28, 2013 | December 29, 2012 | |||||||||
Balance at beginning of year | $ | 4,300 | $ | 17,300 | $ | 15,100 | |||||
Provisions charged to expense | (200 | ) | (3,800 | ) | 2,900 | ||||||
Deductions for amounts written-off | (2,500 | ) | (9,200 | ) | (700 | ) | |||||
Balance at end of year | $ | 1,600 | $ | 4,300 | $ | 17,300 | |||||
As part of its normal operating procedures, the Company requires Standby Letters of Credit as collateral for a portion of its trade receivables. | |||||||||||
Shareholders_Equity
Shareholders' Equity: | 12 Months Ended | |||||||||||||
Dec. 27, 2014 | ||||||||||||||
Shareholders' Equity: | ||||||||||||||
Shareholders' Equity: | 6.Shareholders’ Equity: | |||||||||||||
Dividends | ||||||||||||||
In 2014, the Company declared and paid quarterly cash dividends totaling $0.23 per share ($1.2 million) and a $5.00 per share special cash dividend (the “2014 Special Dividend”). The 2014 Special Dividend totaled $25.8 million and was financed by a combination of cash on hand as well as net borrowings under the Line of Credit of $13.0 million. (See Note 7 — “Line of Credit”). | ||||||||||||||
In 2013, the Company declared and paid quarterly cash dividends totaling $0.19 per share ($0.96 million). | ||||||||||||||
In 2012, the Company declared and paid quarterly cash dividends totaling $0.15 per share ($0.75 million) and a $5.00 per share special cash dividend (the “2012 Special Dividend”). The 2012 Special Dividend totaled $25.4 million and was financed by a combination of cash on hand as well as net borrowings under the Line of Credit of $12.8 million. (See Note 7 — “Line of Credit”). | ||||||||||||||
Repurchase of Common Stock | ||||||||||||||
In 2014, the Company repurchased 166,030 shares for an aggregate purchase price of $11.6 million or $69.65 per share. In 2013, the Company repurchased 28,422 shares for an aggregate purchase price of $1.9 million or $65.26 per share. In 2012, the Company repurchased 134,720 shares for an aggregate purchase price of $7.2 million or $53.60 per share. Under the Board of Directors’ authorization, as of December 27, 2014 the Company has the ability to repurchase an additional 166,700 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 | ||||||||||||||
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 30, 2014 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”) from 250,000 to 500,000. | ||||||||||||||
Grants under the 2001 Plan and 2010 Plan are made by the Compensation Committee of the Board of Directors at a price of not less than 100% of the fair market value on the date of grant. If an incentive stock option is granted to an individual who owns more than 10% of the voting rights of the Company’s common stock, the option exercise price may not be less than 110% of the fair market value on the date of grant. The term of the options may not exceed 10 years, except in the case of nonqualified stock options, whereby the terms are established by the Compensation Committee. Options may be exercisable in whole or in installments, as determined by the Compensation Committee. | ||||||||||||||
The Company also sponsors a Stock Option Plan for Nonemployee Directors (the “Nonemployee Directors Plan”), and at the April 30, 2014 Annual Shareholders Meeting, the Company’s shareholders approved an increase in the shares of common stock available for granting options to directors of the Company who are not employees from 300,000 to 350,000. | ||||||||||||||
Stock option activity under the 2001 Plan, 2010 Plan and Nonemployee Directors Plan (collectively, the “Option Plans”) as of December 27, 2014 was as follows: | ||||||||||||||
Number of | Weighted Average | Weighted Average | Intrinsic Value | |||||||||||
Shares | Exercise Price | Remaining | ||||||||||||
Contractual Life | ||||||||||||||
(years) | ||||||||||||||
Outstanding at December 31, 2011 | 668,614 | $ | 24.31 | 6.62 | $ | 22,101,800 | ||||||||
Granted | 120,000 | 54.26 | ||||||||||||
Exercised | (174,887 | ) | 19.77 | |||||||||||
Outstanding at December 29, 2012 | 613,727 | 31.46 | 7.06 | 16,010,000 | ||||||||||
Granted | 96,250 | 71.39 | ||||||||||||
Exercised | (176,700 | ) | 18.82 | |||||||||||
Forfeited | (6,565 | ) | 42.2 | |||||||||||
Outstanding at December 28, 2013 | 526,712 | 42.87 | 7.33 | 26,446,700 | ||||||||||
Granted | 97,000 | 73.31 | ||||||||||||
Exercised | (21,012 | ) | 19.89 | |||||||||||
Forfeited | (5,000 | ) | 56.85 | |||||||||||
Outstanding at December 27, 2014 | 597,700 | $ | 48.5 | 6.93 | $ | 20,973,700 | ||||||||
Exercisable at December 27, 2014 | 350,122 | $ | 36.24 | 5.74 | $ | 16,580,000 | ||||||||
The fair value of options granted under the Option Plans during 2014, 2013 and 2012 were estimated on the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions and results: | ||||||||||||||
Year Ended | ||||||||||||||
December 27, 2014 | December 28, 2013 | December 29, 2012 | ||||||||||||
Risk free interest rate | 1.75 | % | 1.60 | % | 0.88 | % | ||||||||
Expected life (years) | 6 | 6 | 6 | |||||||||||
Expected volatility | 33.2 | % | 32.9 | % | 31.9 | % | ||||||||
Dividend yield | 1.66 | % | 1.65 | % | 2.05 | % | ||||||||
Fair value per option granted | $ | 21.02 | $ | 20.36 | $ | 13.43 | ||||||||
Options outstanding as of December 27, 2014 are exercisable as follows: | ||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||
Range of | Number | Weighted Average | Weighted | Number | Weighted | |||||||||
Exercise Price | Outstanding | Remaining | Average | Exercisable | Average | |||||||||
Contractual Life | Exercise Price | Exercise Price | ||||||||||||
(Years) | ||||||||||||||
$ 12.75 - $ 18.40 | 52,261 | 4.01 | $ | 13.97 | 52,261 | $ | 13.97 | |||||||
20.32 - 31.19 | 107,689 | 4.31 | 25.28 | 107,689 | 25.28 | |||||||||
32.92 - 51.17 | 132,000 | 6.60 | 40.77 | 98,309 | 38.71 | |||||||||
53.34 - 82.72 | 305,750 | 8.50 | 65.92 | 91,863 | 59.10 | |||||||||
597,700 | 6.93 | $ | 48.50 | 350,122 | $ | 36.24 | ||||||||
The total intrinsic value of options exercised during 2014, 2013 and 2012 was $1.2 million, $8.7 million and $7.4 million, respectively. The total fair value of shares vested during 2014, 2013 and 2012 was $5.1 million, $3.9 million and $2.8 million, respectively. | ||||||||||||||
During 2014, 2013 and 2012, option holders surrendered 0, 1,207 and 31,351 shares, respectively, of previously owned common stock as payment for option shares exercised as provided for by the Option Plans. All unexercised options at December 27, 2014 have an exercise price equal to the fair market value on the date of the grant. | ||||||||||||||
Compensation expense of $1,417,200, $1,153,600 and $930,200 relating to the vested portion of the fair value of stock options granted was expensed to “Selling, General and Administrative Expenses” in 2014, 2013 and 2012, respectively. As of December 27, 2014, 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 2.6 years. | ||||||||||||||
Line_of_Credit
Line of Credit | 12 Months Ended |
Dec. 27, 2014 | |
Line of Credit | |
Line of Credit | 7.Line of Credit: |
As of December 27, 2014, there was $18.5 million in borrowings outstanding under the Company’s revolving credit facility with The PrivateBank and Trust Company and BMO Harris Bank N.A. (the “Line of Credit”) bearing interest ranging from 2.41% to 3.25%. | |
During 2012, the Line of Credit was amended to, among other things, provide the consent of the lenders for the payment of the 2012 Special Dividend, to amend certain financial covenant calculations to remove the effect of the 2012 Special Dividend in such calculations, to increase the aggregate commitments from $30.0 million to $35.0 million and extend the termination date from July 31, 2014 to February 29, 2016. During 2014, the Line of Credit was amended to, among other things, amend certain financial covenant calculations to remove the effect of the 2014 Special Dividend in such calculations, to reduce the applicable margin on the interest rate options, and to extend the termination date from February 29, 2016 to February 28, 2018. | |
The Line of Credit has been and will continue to be used for general corporate purposes. During 2014 and 2012, the Line of Credit was used to finance in part the 2014 and 2012 Special Dividends (as indicated above). Borrowings under the Line of Credit are subject to certain borrowing base limitations, and 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 December 27, 2014, the Company was in compliance with all of its financial covenants and the Company’s additional borrowing availability under the Line of Credit was $16.5 million. | |
The Line of Credit allows the Company to choose between three interest rate options in connection with its borrowings. The interest rate options are the Base Rate, LIBOR and Fixed Rate (all as defined within the Line of Credit) plus an applicable margin as of December 27, 2014, of 0.25%, 2.75% and 2.75%, respectively. Interest periods for LIBOR borrowings can be one, two or three months, and interest periods for Fixed Rate borrowings can be one, two, three or four years as selected by the Company. The Line of Credit also provides for non-utilization fees of 0.25% per annum on the daily average of the unused commitment. | |
Accrued_Liabilities
Accrued Liabilities | 12 Months Ended | |||||||
Dec. 27, 2014 | ||||||||
Accrued Liabilities | ||||||||
Accrued Liabilities | 8.Accrued Liabilities | |||||||
Accrued liabilities at December 27, 2014 and December 28, 2013 are as follows: | ||||||||
December 27, 2014 | December 28, 2013 | |||||||
Accrued salaries, wages, commissions and bonuses | $ | 696,800 | $ | 325,700 | ||||
Accrued vacation | 208,800 | 219,200 | ||||||
Accrued interest | 43,400 | 21,900 | ||||||
Other | 810,200 | 666,300 | ||||||
$ | 1,759,200 | $ | 1,233,100 | |||||
Discounted_Lease_Rentals
Discounted Lease Rentals: | 12 Months Ended |
Dec. 27, 2014 | |
Discounted Lease Rentals: | |
Discounted Lease Rentals: | 9.Discounted Lease Rentals |
The Company utilized certain lease receivables and underlying equipment as collateral to borrow from financial institutions at a weighted average rate of 3.26% at December 27, 2014 on a non-recourse basis. As of December 27, 2014, $0.2 million of the $0.3 million liability balance is current. | |
Income_Taxes
Income Taxes: | 12 Months Ended | ||||||||||
Dec. 27, 2014 | |||||||||||
Income Taxes: | |||||||||||
Income Taxes: | 10.Income Taxes: | ||||||||||
A reconciliation of the expected federal income tax expense based on the federal statutory tax rate to the actual income tax expense is provided below: | |||||||||||
Year Ended | |||||||||||
December 27, 2014 | December 28, 2013 | December 29, 2012 | |||||||||
Federal income tax expense at statutory rate (35%) | $ | 11,406,100 | $ | 10,356,500 | $ | 8,104,400 | |||||
Valuation allowance | (25,800 | ) | 7,300 | 1,413,600 | |||||||
State and local income taxes, net of federal benefit | 897,800 | 886,200 | 677,700 | ||||||||
Permanent differences, including stock option expenses | 144,500 | 113,000 | 60,200 | ||||||||
Other, net | 99,700 | (4,700 | ) | (38,300 | ) | ||||||
Actual income tax expense | $ | 12,522,300 | $ | 11,358,300 | $ | 10,217,600 | |||||
Components of the provision for income taxes are as follows: | |||||||||||
Year Ended | |||||||||||
December 27, 2014 | December 28, 2013 | December 29, 2012 | |||||||||
Current: | |||||||||||
Federal | $ | 10,567,100 | $ | 10,013,500 | $ | 8,332,400 | |||||
State | 1,456,400 | 1,468,600 | 1,186,000 | ||||||||
Foreign | 386,900 | 375,400 | 374,900 | ||||||||
Current provision | 12,410,400 | 11,857,500 | 9,893,300 | ||||||||
Deferred: | |||||||||||
Federal | 134,200 | (449,300 | ) | 435,300 | |||||||
State | (22,300 | ) | (49,900 | ) | (111,000 | ) | |||||
Deferred provision | 111,900 | (499,200 | ) | 324,300 | |||||||
Total provision for income taxes | $ | 12,522,300 | $ | 11,358,300 | $ | 10,217,600 | |||||
The tax effects of temporary differences that give rise to the net deferred income tax assets and liabilities are presented below: | |||||||||||
December 27, 2014 | December 28, 2013 | ||||||||||
Deferred tax assets: | |||||||||||
Accounts receivable and lease reserves | $ | 169,600 | $ | 376,900 | |||||||
Accrued restructuring charge | 64,200 | 64,600 | |||||||||
Non-qualified stock option expense | 1,382,400 | 946,000 | |||||||||
Deferred franchise and software license fees | 720,900 | 606,600 | |||||||||
Trademarks | 91,100 | 95,600 | |||||||||
Lease deposits | 1,228,300 | 1,263,600 | |||||||||
Loss from and impairment of equity and note investments | 4,055,800 | 4,081,600 | |||||||||
Valuation allowance | (4,055,800 | ) | (4,081,600 | ) | |||||||
Other | 420,100 | 328,200 | |||||||||
Total deferred tax assets | 4,076,600 | 3,681,500 | |||||||||
Deferred tax liabilities: | |||||||||||
Lease revenue and initial direct costs | (9,579,400 | ) | (9,101,900 | ) | |||||||
Depreciation and amortization | (254,100 | ) | (224,600 | ) | |||||||
Total deferred tax liabilities | (9,833,500 | ) | (9,326,500 | ) | |||||||
Total net deferred tax liabilities | $ | (5,756,900 | ) | $ | (5,645,000 | ) | |||||
During the years ended December 27, 2014, December 28, 2013 and December 29, 2012, $91,100, $413,600 and $884,300 respectively, was directly credited to stockholders’ equity to account for excess tax benefits related to stock option exercises. | |||||||||||
The Company has assessed its taxable earnings history and prospective future taxable income. Based upon this assessment, the Company has determined that it is more likely than not that its deferred tax assets will be realized in future periods and no valuation allowance is necessary, except for the deferred tax assets related to the loss from and impairment of equity and note investments (which are capital losses for tax purposes). As a result, valuation allowances of $4.1 million and $4.1 million as of December 27, 2014 and December 28, 2013, respectively, have been recorded. | |||||||||||
The amount of unrecognized tax benefits, including interest and penalties, as of December 27, 2014 and December 28, 2013, was $465,500 and $398,000, respectively, primarily for potential foreign and state taxes. | |||||||||||
The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense for all periods presented. The Company had accrued approximately $16,500 and $14,300 for the payment of interest and penalties at December 27, 2014 and December 28, 2013, respectively. | |||||||||||
The following table summarizes the activity related to the Company’s unrecognized tax benefits: | |||||||||||
Total | |||||||||||
Balance at December 29, 2012 | $ | 312,300 | |||||||||
Increases related to current year tax positions | 111,500 | ||||||||||
Additions for tax positions of prior years | 17,700 | ||||||||||
Expiration of the statute of limitations for the assessment of taxes | (57,800 | ) | |||||||||
Balance at December 28, 2013 | 383,700 | ||||||||||
Increases related to current year tax positions | 136,500 | ||||||||||
Additions for tax positions of prior years | 1,600 | ||||||||||
Expiration of the statute of limitations for the assessment of taxes | (72,800 | ) | |||||||||
Balance at December 27, 2014 | $ | 449,000 | |||||||||
The Company and its subsidiaries file income tax returns in the U.S. federal, numerous state and certain foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2010. The Internal Revenue Service concluded its examination of our U.S. federal tax return for the fiscal year ended 2010 in 2012. We expect various statutes of limitation to expire during the next 12 months. Due to the uncertain response of taxing authorities, a range of outcomes cannot be reasonably estimated at this time. | |||||||||||
Commitments_and_Contingencies
Commitments and Contingencies: | 12 Months Ended | ||||
Dec. 27, 2014 | |||||
Commitments and Contingencies: | |||||
Commitments and Contingencies: | 11.Commitments and Contingencies: | ||||
Employee Benefit Plan | |||||
The Company provides a 401(k) Savings Incentive Plan which covers substantially all employees. The plan provides for matching contributions and optional profit-sharing contributions at the discretion of the Board of Directors. Employee contributions are fully vested; matching and profit sharing contributions are subject to a five-year service vesting schedule. Company contributions to the plan for 2014, 2013 and 2012 were $297,400, $281,900 and $271,800, respectively. | |||||
Operating Leases | |||||
As of December 27, 2014, the Company rents its corporate headquarters in a facility with a lease that expires in August 2019 as well as satellite office space in California with a lease that expires in January 2019. These leases require the Company to pay maintenance, insurance, taxes and other expenses in addition to minimum annual rent. Total rent expense under operating leases, inclusive of maintenance, insurance, taxes and other expenses, was $1,026,800 in 2014, $883,800 in 2013 and $866,300 in 2012. As of December 27, 2014, minimum rental commitments under noncancelable operating leases, exclusive of maintenance, insurance, taxes and other expenses, are as follows: | |||||
2015 | $ | 677,500 | |||
2016 | 691,200 | ||||
2017 | 705,000 | ||||
2018 | 718,800 | ||||
2019 | 451,100 | ||||
Thereafter | — | ||||
Total | $ | 3,243,600 | |||
For leases that contain predetermined fixed escalations of the minimum rent, we recognize the related rent expense on a straight-line basis from the date we take possession of the property to the end of the initial lease term. We record any difference between the straight-line rent amounts and amounts payable under the leases as part of deferred rent, in accrued liabilities or other liabilities, as appropriate. | |||||
Cash or lease incentives received upon entering into certain leases (“tenant allowances”) are recognized on a straight-line basis as a reduction to rent from the date we take possession of the property through the end of the initial lease term. We record the unamortized portion of tenant allowances as a part of deferred rent, in accrued liabilities or other liabilities, as appropriate. | |||||
At December 27, 2014 and December 28, 2013, total deferred rent included in our consolidated balance sheets was $1.0 million and $1.1 million, respectively, of which $0.8 million and $1.0 million, respectively was included in other liabilities. | |||||
Litigation | |||||
The Company is exposed to a number of asserted and unasserted legal claims encountered in the normal course of business. Management believes that the ultimate resolution of these matters will not have a material adverse effect on the consolidated financial position or results of operations of the Company. | |||||
Segment_Reporting
Segment Reporting: | 12 Months Ended | ||||||||||
Dec. 27, 2014 | |||||||||||
Segment Reporting: | |||||||||||
Segment Reporting: | 12.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. 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 the 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, prepaids, inventory, property and equipment and investment in leasing operations. Unallocated assets include corporate cash and cash equivalents, marketable securities, long-term investments, 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: | |||||||||||
Year Ended | |||||||||||
December 27, 2014 | December 28, 2013 | December 29, 2012 | |||||||||
Revenue: | |||||||||||
Franchising | $ | 44,931,400 | $ | 41,207,100 | $ | 38,731,300 | |||||
Leasing | 16,247,300 | 14,524,100 | 13,211,800 | ||||||||
Total revenue | $ | 61,178,700 | $ | 55,731,200 | $ | 51,943,100 | |||||
Reconciliation to operating income: | |||||||||||
Franchising segment contribution | $ | 23,631,800 | $ | 21,867,700 | $ | 20,705,100 | |||||
Leasing segment contribution | 9,427,500 | 7,912,300 | 6,594,000 | ||||||||
Total operating income | $ | 33,059,300 | $ | 29,780,000 | $ | 27,299,100 | |||||
Depreciation: | |||||||||||
Franchising | $ | 325,100 | $ | 339,600 | $ | 337,200 | |||||
Leasing | 86,900 | 91,900 | 96,100 | ||||||||
Total depreciation | $ | 412,000 | $ | 431,500 | $ | 433,300 | |||||
As of | |||||||||||
December 27, 2014 | December 28, 2013 | ||||||||||
Identifiable assets: | |||||||||||
Franchising | $ | 3,258,300 | $ | 7,407,400 | |||||||
Leasing | 44,870,800 | 42,490,800 | |||||||||
Unallocated | 6,598,700 | 3,137,900 | |||||||||
Total | $ | 54,727,800 | $ | 53,036,100 | |||||||
Revenues are all generated from United States operations other than franchising revenues from Canadian operations of $2.9 million, $2.7 million and $2.5 million in each of fiscal 2014, 2013 and 2012, respectively. All long-lived assets are located within the United States. | |||||||||||
Related_Party_Transactions
Related Party Transactions: | 12 Months Ended |
Dec. 27, 2014 | |
Related Party Transactions: | |
Related Party Transactions: | 13.Related Party Transactions: |
On December 20, 2012, in connection with the Company’s existing stock repurchase plan, Winmark repurchased 16,000 shares of common stock from Dean B. Phillips, a member of the Company’s Board of Directors at the time, for aggregate consideration of $889,600, or $55.60 per share. | |
Quarterly_Financial_Data_Unaud
Quarterly Financial Data (Unaudited): | 12 Months Ended | ||||||||||||||||
Dec. 27, 2014 | |||||||||||||||||
Quarterly Financial Data (Unaudited): | |||||||||||||||||
Quarterly Financial Data (Unaudited): | 14.Quarterly Financial Data (Unaudited): | ||||||||||||||||
The Company’s unaudited quarterly results for the years ended December 27, 2014 and December 28, 2013 were as follows: | |||||||||||||||||
First | Second | Third | Fourth | Total | |||||||||||||
Quarter | Quarter | Quarter | Quarter | ||||||||||||||
2014 | |||||||||||||||||
Total Revenue | $ | 14,552,600 | $ | 14,038,900 | $ | 16,404,400 | $ | 16,182,800 | $ | 61,178,700 | |||||||
Income from Operations | 7,434,500 | 7,092,600 | 9,177,700 | 9,354,500 | 33,059,300 | ||||||||||||
Net Income | 4,551,900 | 4,280,800 | 5,623,000 | 5,610,800 | 20,066,500 | ||||||||||||
Net Income Per Common Share — Basic | $ | 0.88 | $ | 0.84 | $ | 1.12 | $ | 1.12 | $ | 3.96 | |||||||
Net Income Per Common Share — Diluted | $ | 0.86 | $ | 0.82 | $ | 1.09 | $ | 1.09 | $ | 3.85 | |||||||
2013 | |||||||||||||||||
Total Revenue | $ | 13,148,400 | $ | 14,023,500 | $ | 14,791,900 | $ | 13,767,400 | $ | 55,731,200 | |||||||
Income from Operations | 6,675,900 | 7,061,200 | 8,541,300 | 7,501,600 | 29,780,000 | ||||||||||||
Net Income | 4,057,500 | 4,336,900 | 5,251,500 | 4,585,800 | 18,231,600 | ||||||||||||
Net Income Per Common Share — Basic | $ | 0.81 | $ | 0.86 | $ | 1.03 | $ | 0.89 | $ | 3.60 | |||||||
Net Income Per Common Share — Diluted | $ | 0.78 | $ | 0.83 | $ | 1.00 | $ | 0.87 | $ | 3.48 | |||||||
The total of basic and diluted earnings per common share by quarter may not equal the totals for the year as there are changes in the weighted average number of common shares outstanding each quarter and basic and diluted earnings per common share are calculated independently for each quarter. | |||||||||||||||||
Significant_Accounting_Policie1
Significant Accounting Policies: (Policies) | 12 Months Ended | |||||||
Dec. 27, 2014 | ||||||||
Significant Accounting Policies: | ||||||||
Principles of Consolidation | Principles of Consolidation | |||||||
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Winmark Capital Corporation, Wirth Business Credit, Inc. and Grow Biz Games, Inc. All material inter-company transactions have been eliminated in consolidation. The consolidated financial statements also include the Company’s investment in and share of net earnings or losses for its investment in Tomsten, Inc. (“Tomsten”), which is recorded using the equity method of accounting. | ||||||||
Cash Equivalents | Cash Equivalents | |||||||
Cash equivalents consist of highly liquid investments with an original maturity of three months or less when purchased. Cash equivalents are stated at cost, which approximates fair value. As of December 27, 2014 and December 28, 2013, the Company had $73,100 and $55,700 of cash located in Canadian banks. The Company holds its cash and cash equivalents with financial institutions and at times, such balances may be in excess of insurance limits. | ||||||||
Receivables | Receivables | |||||||
The Company provides an allowance for doubtful accounts on trade receivables. The allowance for doubtful accounts was $1,600 and $4,300 at December 27, 2014 and December 28, 2013, respectively. If receivables in excess of the provided allowance are determined uncollectible, they are charged to expense in the year the determination is made. Trade receivables are written off when they become uncollectible (which generally occurs when the franchise terminates and there is no reasonable expectation of collection), and payments subsequently received on such receivable are credited to the allowance for doubtful accounts. Historically, receivables balances written off have not exceeded allowances provided. | ||||||||
Investment in Leasing Operations | Investment in Leasing Operations | |||||||
The Company uses the direct finance method of accounting to record income from direct financing leases. At the inception of a lease, the Company records the minimum future lease payments receivable, the estimated residual value of the leased equipment and the unearned lease income. Initial direct costs related to lease originations are deferred as part of the investment and amortized over the lease term. Unearned lease income is the amount by which the total lease receivable plus the estimated residual value exceeds the cost of the equipment. | ||||||||
Leasing Income Recognition | ||||||||
Leasing income for direct financing leases is recognized under the effective interest method. The effective interest method of income recognition applies a constant rate of interest equal to the internal rate of return on the lease. Generally, when a lease is more than 90 days delinquent (when more than three monthly payments are owed), the lease is classified as being on non-accrual and the Company stops recognizing leasing income on that date. Payments received on leases in non-accrual status generally reduce the lease receivable. Leases on non-accrual status remain classified as such until there is sustained payment performance that, in the Company’s judgment, would indicate that all contractual amounts will be collected in full. | ||||||||
In certain circumstances, the Company may re-lease equipment in its existing portfolio. As this equipment may have a fair value greater than its carrying amount when re-leased, the Company may be required to account for the lease as a sales-type lease. At inception of a sales-type lease, revenue is recorded that consists of the present value of the future minimum lease payments discounted at the rate implicit in the lease. In subsequent periods, the recording of income is consistent with the accounting for a direct financing lease. | ||||||||
For leases that are accounted for as operating leases, income is recognized on a straight-line basis when payments under the lease contract are due. | ||||||||
Leasing Expense | ||||||||
Leasing expense includes the cost of financing equipment purchases, the cost of equipment sales as well as depreciation expense for operating lease assets. Additionally, at inception of a sales-type lease, cost is recorded that consists of the equipment’s book value, less the present value of its residual and is included in leasing expense. | ||||||||
Initial Direct Costs | ||||||||
The Company defers initial direct costs incurred to originate its leases in accordance with applicable accounting guidance. The initial direct costs deferred are part of the investment in leasing operations and are amortized using the effective interest method. Initial direct costs include commissions and costs associated with credit evaluation, recording guarantees and other security arrangements, documentation and transaction closing. | ||||||||
Lease Residual Values | ||||||||
Residual values reflect the estimated amounts to be received at lease termination from sales or other dispositions of leased equipment to unrelated parties. The leased equipment residual values are based on the Company’s best estimate. | ||||||||
Allowance for Credit Losses | ||||||||
The Company maintains an allowance for credit losses at an amount that it believes to be sufficient to absorb losses inherent in its existing lease portfolio as of the reporting dates. Leases are collectively evaluated for potential loss. The Company’s methodology for determining the allowance for credit losses includes consideration of the level of delinquencies and non-accrual leases, historical net charge-off amounts and review of any significant concentrations. | ||||||||
A provision is charged against earnings to maintain the allowance for credit losses at the appropriate level. If the actual results are different from the Company’s estimates, results could be different. The Company’s policy is to charge-off against the allowance the estimated unrecoverable portion of accounts once they reach 121 days delinquent. | ||||||||
Inventories | Inventories | |||||||
The Company values its inventories at the lower of cost, as determined by the weighted average cost method, or market. Inventory consists of computer hardware and related accessories. | ||||||||
Impairment of Long-lived Assets and Investments | Impairment of Long-lived Assets and Investments | |||||||
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying amount of the asset exceeds expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. | ||||||||
The Company evaluates its long-term equity investments for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying amount may not be recoverable. The impairment, if any, is measured by the difference between the assets’ carrying amount and their fair value (as prescribed by applicable accounting guidance), based on the best information available, including market prices, discounted cash flow analysis or other financial metrics that management utilizes to help determine fair value. | ||||||||
The Company evaluates its long-term note investments for impairment on an annual basis or whenever events or changes in circumstances indicate that it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the notes. The impairment, if any, is measured by the difference between the recorded investment in the notes, including accrued interest, and the present value of expected future cash flows discounted at the effective interest rate of the notes (as prescribed by applicable accounting guidance), based on the best information available to management. Once a note investment is deemed impaired, any significant change in the amount or timing of the expected or actual cash flows requires recalculation of the impairment applying the procedures described above. | ||||||||
Property and Equipment | Property and Equipment | |||||||
Property and equipment is stated at cost. Depreciation and amortization for financial reporting purposes is provided on the straight-line method. Estimated useful lives used in calculating depreciation and amortization are: three to five years for computer and peripheral equipment, five to seven years for furniture and equipment and the shorter of the lease term or useful life for leasehold improvements. Major repairs, refurbishments and improvements which significantly extend the useful lives of the related assets are capitalized. Maintenance and repairs, supplies and accessories are charged to expense as incurred. | ||||||||
Goodwill | Goodwill | |||||||
The Company reviews its goodwill for impairment at its fiscal year end or whenever events or changes in circumstances indicate that there has been impairment in the value of its goodwill. No impairment was noted during the years ended December 27, 2014 and December 28, 2013. Goodwill of $607,500 is included in other assets in the consolidated balance sheets at December 27, 2014 and December 28, 2013, and is all attributable to the Franchising segment. | ||||||||
Use of Estimates | Use of Estimates | |||||||
The preparation of financial statements in conformity with generally accepted U.S. accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The ultimate results could differ from those estimates. The most significant estimates relate to allowance for credit losses and impairment of long-term investments. These estimates may be adjusted as more current information becomes available, and any adjustment could be significant. | ||||||||
Advertising | Advertising | |||||||
Advertising costs are charged to operating expenses as incurred. Advertising costs were $252,800, $185,300 and $137,200 for fiscal years 2014, 2013 and 2012, respectively. | ||||||||
Accounting for Stock-Based Compensation | Accounting for Stock-Based Compensation | |||||||
The Company recognizes the cost of all share-based payments to employees, including grants of employee stock options, in the consolidated financial statements based on the grant date fair value of those awards. This cost is recognized over the period for which an employee is required to provide service in exchange for the award. | ||||||||
The Company estimates the fair value of options granted using the Black-Scholes option valuation model. The Company estimates the volatility of its common stock at the date of grant based on its historical volatility rate. The Company’s decision to use historical volatility was based upon the lack of actively traded options on its common stock. The Company estimates the expected term based upon historical option exercises. The risk-free interest rate assumption is based on observed interest rates for the expected term. The Company uses historical data to estimate pre-vesting option forfeitures and record share-based compensation expense only for those awards that are expected to vest. For options granted, the Company amortizes the fair value on a straight-line basis. All options are amortized over the vesting periods. | ||||||||
Revenue Recognition | Revenue Recognition - Franchising | |||||||
The Company collects royalties from each retail franchise based on a percentage of retail store gross sales. The Company recognizes royalties as revenue when earned. The Company collects initial franchise fees when franchise agreements are signed and recognizes the initial franchise fees as revenue when the franchise is opened, which is when the Company has performed substantially all initial services required by the franchise agreement. The Company had deferred franchise fee revenue of $2,005,300 and $2,034,100 at December 27, 2014 and December 28, 2013, respectively. The Company recognizes deferred software license fees over the 10-year life of the initial franchise agreement. The Company had deferred software license fees of $1,399,400 and $1,236,600 at December 27, 2014 and December 28, 2013, respectively. Merchandise sales are recognized when the product has been shipped to the franchisee. | ||||||||
Sales Tax | Sales Tax | |||||||
The Company’s accounting policy is to present taxes collected from customers and remitted to government authorities on a net basis. | ||||||||
Discounted Lease Rentals | Discounted Lease Rentals | |||||||
The Company may utilize its lease rentals receivable and underlying equipment as collateral to borrow from financial institutions at fixed rates on a non-recourse basis. In the event of a default by a customer, the financial institution has a first lien on the underlying leased equipment, with no further recourse against the Company. Proceeds from discounting are recorded on the balance sheet as discounted lease rentals. As customers make payments, lease income and interest expense are recorded and discounted lease rentals are reduced by the effective interest method. | ||||||||
Earnings Per Share | Earnings Per Share | |||||||
The Company calculates earnings per share by dividing net income by the weighted average number of shares of common stock outstanding to arrive at the Earnings Per Share — Basic. The Company calculates Earnings Per Share — Diluted by dividing net income by the weighted average number of shares of common stock and dilutive stock equivalents from the potential exercise of stock options using the treasury stock method. | ||||||||
The following table sets forth the presentation of shares outstanding used in the calculation of basic and diluted earnings per share (“EPS”): | ||||||||
Year Ended | ||||||||
December 27, 2014 | December 28, 2013 | December 29, 2012 | ||||||
Denominator for basic EPS — weighted average common shares | 5,069,391 | 5,068,975 | 5,027,509 | |||||
Dilutive shares associated with option plans | 147,523 | 172,146 | 210,162 | |||||
Denominator for diluted EPS — weighted average common shares and dilutive potential common shares | 5,216,914 | 5,241,121 | 5,237,671 | |||||
Options excluded from EPS calculation — anti-dilutive | 39,240 | 30,450 | 30,115 | |||||
Fair Value Measurements | 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. | ||||||||
The Company determined the fair value of its investment in Tomsten, Inc. to be zero based on Level 3 inputs using a discounted cash flow model which included inputs on future revenues, expenses and other cash flows. See Note 3. | ||||||||
Due to their nature, the carrying value of cash equivalents, receivables, long-term note investments, payables and debt obligations approximates fair value. | ||||||||
Recent Accounting Pronouncements: | Recent Accounting Pronouncements | |||||||
In May 2014, the Financial Accounting Standards Board 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 is effective for reporting periods beginning after December 15, 2016, and 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 Company is currently in the process of evaluating the impact of the adoption of this ASU on the Company’s consolidated results. | ||||||||
Reclassifications | 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 as previously reported. | ||||||||
Organization_and_Business_Tabl
Organization and Business: (Tables) | 12 Months Ended | |||||||||
Dec. 27, 2014 | ||||||||||
Organization and Business: | ||||||||||
Summary of franchising activity | ||||||||||
12/28/13 | OPENED | CLOSED | 12/27/14 | |||||||
Plato’s Closet | ||||||||||
Franchises - US and Canada | 391 | 37 | (2 | ) | 426 | |||||
Once Upon A Child | ||||||||||
Franchises - US and Canada | 282 | 28 | (2 | ) | 308 | |||||
Play It Again Sports | ||||||||||
Franchises - US and Canada | 300 | 5 | (4 | ) | 301 | |||||
Music Go Round | ||||||||||
Franchises - US | 29 | 4 | (0 | ) | 33 | |||||
Style Encore | ||||||||||
Franchises - US | 3 | 21 | (0 | ) | 24 | |||||
Total Franchised Stores | 1,005 | 95 | (8 | ) | 1,092 | |||||
Significant_Accounting_Policie2
Significant Accounting Policies: (Tables) | 12 Months Ended | |||||||
Dec. 27, 2014 | ||||||||
Significant Accounting Policies: | ||||||||
Schedule of shares outstanding used in the calculation of basic and diluted earnings per share | ||||||||
Year Ended | ||||||||
December 27, 2014 | December 28, 2013 | December 29, 2012 | ||||||
Denominator for basic EPS — weighted average common shares | 5,069,391 | 5,068,975 | 5,027,509 | |||||
Dilutive shares associated with option plans | 147,523 | 172,146 | 210,162 | |||||
Denominator for diluted EPS — weighted average common shares and dilutive potential common shares | 5,216,914 | 5,241,121 | 5,237,671 | |||||
Options excluded from EPS calculation — anti-dilutive | 39,240 | 30,450 | 30,115 | |||||
Investments_Tables
Investments: (Tables) | 12 Months Ended | |||||||||||||
Dec. 27, 2014 | ||||||||||||||
Investments: | ||||||||||||||
Summary of marketable securities classified as available-for-sale securities | ||||||||||||||
December 27, 2014 | December 28, 2013 | |||||||||||||
Cost | Fair Value | Cost | Fair Value | |||||||||||
Equity securities | $ | 526,600 | $ | 466,800 | $ | 743,100 | $ | 736,500 | ||||||
Schedule of the Company's unrealized gains and losses for marketable securities classified as available-for-sale securities in accumulated other comprehensive loss | ||||||||||||||
Year Ended | ||||||||||||||
December 27, 2014 | December 28, 2013 | December 29, 2012 | ||||||||||||
Unrealized gains | $ | 3,300 | $ | 6,800 | $ | — | ||||||||
Unrealized losses | (63,100 | ) | (13,400 | ) | (6,500 | ) | ||||||||
Net unrealized gains / (losses) | $ | (59,800 | ) | $ | (6,600 | ) | $ | (6,500 | ) | |||||
Schedule of the Company's realized gains and losses recognized on sales of available-for-sale marketable securities | ||||||||||||||
Year Ended | ||||||||||||||
December 27, 2014 | December 28, 2013 | December 29, 2012 | ||||||||||||
Realized gains | $ | 40,900 | $ | 25,200 | $ | 52,500 | ||||||||
Realized losses | (32,200 | ) | — | (31,300 | ) | |||||||||
Net realized gains | $ | 8,700 | $ | 25,200 | $ | 21,200 | ||||||||
Investment_in_Leasing_Operatio1
Investment in Leasing Operations: (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 27, 2014 | |||||||||||||||||
Investment in Leasing Operations: | |||||||||||||||||
Schedule of investment in leasing operations | |||||||||||||||||
December 27, 2014 | December 28, 2013 | ||||||||||||||||
Direct financing and sales-type leases: | |||||||||||||||||
Minimum lease payments receivable | $ | 40,739,900 | $ | 35,450,900 | |||||||||||||
Estimated residual value of equipment | 4,347,100 | 4,348,800 | |||||||||||||||
Unearned lease income net of initial direct costs deferred | (6,061,100 | ) | (4,963,400 | ) | |||||||||||||
Security deposits | (3,253,200 | ) | (3,325,600 | ) | |||||||||||||
Equipment installed on leases not yet commenced | 8,364,100 | 6,718,000 | |||||||||||||||
Total investment in direct financing and sales-type leases | 44,136,800 | 38,228,700 | |||||||||||||||
Allowance for credit losses | (386,000 | ) | (822,700 | ) | |||||||||||||
Net investment in direct financing and sales-type leases | 43,750,800 | 37,406,000 | |||||||||||||||
Operating leases: | |||||||||||||||||
Operating lease assets | 806,100 | 1,353,500 | |||||||||||||||
Less accumulated depreciation and amortization | (536,400 | ) | (1,218,200 | ) | |||||||||||||
Net investment in operating leases | 269,700 | 135,300 | |||||||||||||||
Total net investment in leasing operations | $ | 44,020,500 | $ | 37,541,300 | |||||||||||||
Schedule of future minimum lease payments receivable under lease contracts and the amortization of unearned lease income, net of initial direct costs deferred | Future minimum lease payments receivable under lease contracts and the amortization of unearned lease income, net of initial direct costs deferred, is as follows as of December 27, 2014: | ||||||||||||||||
Direct Financing and Sales-Type Leases | Operating Leases | ||||||||||||||||
Fiscal Year | Minimum Lease | Income | Minimum Lease | ||||||||||||||
Payments Receivable | Amortization | Payments Receivable | |||||||||||||||
2015 | $ | 23,924,700 | $ | 4,560,000 | $ | 51,200 | |||||||||||
2016 | 13,166,600 | 1,373,200 | — | ||||||||||||||
2017 | 3,628,400 | 126,900 | — | ||||||||||||||
2018 | 20,200 | 1,000 | — | ||||||||||||||
2019 | — | — | — | ||||||||||||||
Thereafter | — | — | — | ||||||||||||||
$ | 40,739,900 | $ | 6,061,100 | $ | 51,200 | ||||||||||||
Schedule of activity in the allowance for credit losses for leasing operations | |||||||||||||||||
December 27, 2014 | December 28, 2013 | December 29, 2012 | |||||||||||||||
Balance at beginning of period | $ | 822,700 | $ | 775,800 | $ | 803,800 | |||||||||||
Provisions charged to expense | 62,900 | (44,700 | ) | (47,600 | ) | ||||||||||||
Recoveries | 106,900 | 127,500 | 251,000 | ||||||||||||||
Deductions for amounts written-off | (606,500 | ) | (35,900 | ) | (231,400 | ) | |||||||||||
Balance at end of period | $ | 386,000 | $ | 822,700 | $ | 775,800 | |||||||||||
Schedule of investment in direct financing and sales-type leases (investment in leases) and allowance for credit losses by loss evaluation methodology | |||||||||||||||||
December 27, 2014 | December 28, 2013 | ||||||||||||||||
Investment | Allowance for | Investment | Allowance for | ||||||||||||||
In Leases | Credit Losses | In Leases | Credit Losses | ||||||||||||||
Collectively evaluated for loss potential | $ | 44,136,800 | $ | 386,000 | $ | 38,228,700 | $ | 822,700 | |||||||||
Individually evaluated for loss potential | — | — | — | — | |||||||||||||
Total | $ | 44,136,800 | $ | 386,000 | $ | 38,228,700 | $ | 822,700 | |||||||||
Schedule of information regarding accruing and non-accrual leases | |||||||||||||||||
December 27, 2014 | |||||||||||||||||
0-60 Days | 61-90 Days | Over 90 Days | Non-Accrual | Total | |||||||||||||
Delinquent | Delinquent | Delinquent and | |||||||||||||||
and Accruing | and Accruing | Accruing | |||||||||||||||
Middle-Market | $ | 42,948,000 | $ | — | $ | — | $ | — | $ | 42,948,000 | |||||||
Small-Ticket | 1,188,800 | — | — | — | 1,188,800 | ||||||||||||
Total Investment in Leases | $ | 44,136,800 | $ | — | $ | — | $ | — | $ | 44,136,800 | |||||||
December 28, 2013 | |||||||||||||||||
0-60 Days | 61-90 Days | Over 90 Days | Non-Accrual | Total | |||||||||||||
Delinquent | Delinquent | Delinquent and | |||||||||||||||
and Accruing | and Accruing | Accruing | |||||||||||||||
Middle-Market | $ | 36,716,100 | $ | — | $ | — | $ | 416,400 | $ | 37,132,500 | |||||||
Small-Ticket | 1,096,200 | — | — | — | 1,096,200 | ||||||||||||
Total Investment in Leases | $ | 37,812,300 | $ | — | $ | — | $ | 416,400 | $ | 38,228,700 | |||||||
Receivables_Tables
Receivables: (Tables) | 12 Months Ended | ||||||||||
Dec. 27, 2014 | |||||||||||
Receivables: | |||||||||||
Schedule of the Company's current receivables | |||||||||||
December 27, 2014 | December 28, 2013 | ||||||||||
Trade | $ | 18,000 | $ | 17,700 | |||||||
Royalty | 1,198,000 | 1,150,200 | |||||||||
Other | 112,200 | 37,600 | |||||||||
$ | 1,328,200 | $ | 1,205,500 | ||||||||
Schedule of activity in the allowance for doubtful accounts for trade receivables | |||||||||||
December 27, 2014 | December 28, 2013 | December 29, 2012 | |||||||||
Balance at beginning of year | $ | 4,300 | $ | 17,300 | $ | 15,100 | |||||
Provisions charged to expense | (200 | ) | (3,800 | ) | 2,900 | ||||||
Deductions for amounts written-off | (2,500 | ) | (9,200 | ) | (700 | ) | |||||
Balance at end of year | $ | 1,600 | $ | 4,300 | $ | 17,300 | |||||
Shareholders_Equity_Tables
Shareholders' Equity: (Tables) | 12 Months Ended | |||||||||||||
Dec. 27, 2014 | ||||||||||||||
Shareholders' Equity: | ||||||||||||||
Schedule of stock option activity under the 2001 Plan, 2010 Plan and Nonemployee Directors Plan | ||||||||||||||
Number of | Weighted Average | Weighted Average | Intrinsic Value | |||||||||||
Shares | Exercise Price | Remaining | ||||||||||||
Contractual Life | ||||||||||||||
(years) | ||||||||||||||
Outstanding at December 31, 2011 | 668,614 | $ | 24.31 | 6.62 | $ | 22,101,800 | ||||||||
Granted | 120,000 | 54.26 | ||||||||||||
Exercised | (174,887 | ) | 19.77 | |||||||||||
Outstanding at December 29, 2012 | 613,727 | 31.46 | 7.06 | 16,010,000 | ||||||||||
Granted | 96,250 | 71.39 | ||||||||||||
Exercised | (176,700 | ) | 18.82 | |||||||||||
Forfeited | (6,565 | ) | 42.2 | |||||||||||
Outstanding at December 28, 2013 | 526,712 | 42.87 | 7.33 | 26,446,700 | ||||||||||
Granted | 97,000 | 73.31 | ||||||||||||
Exercised | (21,012 | ) | 19.89 | |||||||||||
Forfeited | (5,000 | ) | 56.85 | |||||||||||
Outstanding at December 27, 2014 | 597,700 | $ | 48.5 | 6.93 | $ | 20,973,700 | ||||||||
Exercisable at December 27, 2014 | 350,122 | $ | 36.24 | 5.74 | $ | 16,580,000 | ||||||||
Schedule of weighted average assumptions used in estimation of fair value of options granted | ||||||||||||||
Year Ended | ||||||||||||||
December 27, 2014 | December 28, 2013 | December 29, 2012 | ||||||||||||
Risk free interest rate | 1.75 | % | 1.60 | % | 0.88 | % | ||||||||
Expected life (years) | 6 | 6 | 6 | |||||||||||
Expected volatility | 33.2 | % | 32.9 | % | 31.9 | % | ||||||||
Dividend yield | 1.66 | % | 1.65 | % | 2.05 | % | ||||||||
Fair value per option granted | $ | 21.02 | $ | 20.36 | $ | 13.43 | ||||||||
Schedule of options outstanding and options exercisable | ||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||
Range of | Number | Weighted Average | Weighted | Number | Weighted | |||||||||
Exercise Price | Outstanding | Remaining | Average | Exercisable | Average | |||||||||
Contractual Life | Exercise Price | Exercise Price | ||||||||||||
(Years) | ||||||||||||||
$ 12.75 - $ 18.40 | 52,261 | 4.01 | $ | 13.97 | 52,261 | $ | 13.97 | |||||||
20.32 - 31.19 | 107,689 | 4.31 | 25.28 | 107,689 | 25.28 | |||||||||
32.92 - 51.17 | 132,000 | 6.60 | 40.77 | 98,309 | 38.71 | |||||||||
53.34 - 82.72 | 305,750 | 8.50 | 65.92 | 91,863 | 59.10 | |||||||||
597,700 | 6.93 | $ | 48.50 | 350,122 | $ | 36.24 | ||||||||
Accrued_Liabilities_Tables
Accrued Liabilities (Tables) | 12 Months Ended | |||||||
Dec. 27, 2014 | ||||||||
Accrued Liabilities | ||||||||
Schedule of accrued liabilities | ||||||||
December 27, 2014 | December 28, 2013 | |||||||
Accrued salaries, wages, commissions and bonuses | $ | 696,800 | $ | 325,700 | ||||
Accrued vacation | 208,800 | 219,200 | ||||||
Accrued interest | 43,400 | 21,900 | ||||||
Other | 810,200 | 666,300 | ||||||
$ | 1,759,200 | $ | 1,233,100 | |||||
Income_Taxes_Tables
Income Taxes: (Tables) | 12 Months Ended | ||||||||||
Dec. 27, 2014 | |||||||||||
Income Taxes: | |||||||||||
Schedule of reconciliation of the expected federal income tax expense based on the federal statutory tax rate to the actual income tax expense | |||||||||||
Year Ended | |||||||||||
December 27, 2014 | December 28, 2013 | December 29, 2012 | |||||||||
Federal income tax expense at statutory rate (35%) | $ | 11,406,100 | $ | 10,356,500 | $ | 8,104,400 | |||||
Valuation allowance | (25,800 | ) | 7,300 | 1,413,600 | |||||||
State and local income taxes, net of federal benefit | 897,800 | 886,200 | 677,700 | ||||||||
Permanent differences, including stock option expenses | 144,500 | 113,000 | 60,200 | ||||||||
Other, net | 99,700 | (4,700 | ) | (38,300 | ) | ||||||
Actual income tax expense | $ | 12,522,300 | $ | 11,358,300 | $ | 10,217,600 | |||||
Schedule of components of the provision for income taxes | |||||||||||
Year Ended | |||||||||||
December 27, 2014 | December 28, 2013 | December 29, 2012 | |||||||||
Current: | |||||||||||
Federal | $ | 10,567,100 | $ | 10,013,500 | $ | 8,332,400 | |||||
State | 1,456,400 | 1,468,600 | 1,186,000 | ||||||||
Foreign | 386,900 | 375,400 | 374,900 | ||||||||
Current provision | 12,410,400 | 11,857,500 | 9,893,300 | ||||||||
Deferred: | |||||||||||
Federal | 134,200 | (449,300 | ) | 435,300 | |||||||
State | (22,300 | ) | (49,900 | ) | (111,000 | ) | |||||
Deferred provision | 111,900 | (499,200 | ) | 324,300 | |||||||
Total provision for income taxes | $ | 12,522,300 | $ | 11,358,300 | $ | 10,217,600 | |||||
Schedule of tax effects of temporary differences that give rise to the net deferred income tax assets and liabilities | |||||||||||
December 27, 2014 | December 28, 2013 | ||||||||||
Deferred tax assets: | |||||||||||
Accounts receivable and lease reserves | $ | 169,600 | $ | 376,900 | |||||||
Accrued restructuring charge | 64,200 | 64,600 | |||||||||
Non-qualified stock option expense | 1,382,400 | 946,000 | |||||||||
Deferred franchise and software license fees | 720,900 | 606,600 | |||||||||
Trademarks | 91,100 | 95,600 | |||||||||
Lease deposits | 1,228,300 | 1,263,600 | |||||||||
Loss from and impairment of equity and note investments | 4,055,800 | 4,081,600 | |||||||||
Valuation allowance | (4,055,800 | ) | (4,081,600 | ) | |||||||
Other | 420,100 | 328,200 | |||||||||
Total deferred tax assets | 4,076,600 | 3,681,500 | |||||||||
Deferred tax liabilities: | |||||||||||
Lease revenue and initial direct costs | (9,579,400 | ) | (9,101,900 | ) | |||||||
Depreciation and amortization | (254,100 | ) | (224,600 | ) | |||||||
Total deferred tax liabilities | (9,833,500 | ) | (9,326,500 | ) | |||||||
Total net deferred tax liabilities | $ | (5,756,900 | ) | $ | (5,645,000 | ) | |||||
Summary of activity related to the Company's unrecognized tax benefits | |||||||||||
Total | |||||||||||
Balance at December 29, 2012 | $ | 312,300 | |||||||||
Increases related to current year tax positions | 111,500 | ||||||||||
Additions for tax positions of prior years | 17,700 | ||||||||||
Expiration of the statute of limitations for the assessment of taxes | (57,800 | ) | |||||||||
Balance at December 28, 2013 | 383,700 | ||||||||||
Increases related to current year tax positions | 136,500 | ||||||||||
Additions for tax positions of prior years | 1,600 | ||||||||||
Expiration of the statute of limitations for the assessment of taxes | (72,800 | ) | |||||||||
Balance at December 27, 2014 | $ | 449,000 | |||||||||
Commitments_and_Contingencies_
Commitments and Contingencies: (Tables) | 12 Months Ended | ||||
Dec. 27, 2014 | |||||
Commitments and Contingencies: | |||||
Schedule of minimum rental commitments under noncancelable operating leases | |||||
2015 | $ | 677,500 | |||
2016 | 691,200 | ||||
2017 | 705,000 | ||||
2018 | 718,800 | ||||
2019 | 451,100 | ||||
Thereafter | — | ||||
Total | $ | 3,243,600 | |||
Segment_Reporting_Tables
Segment Reporting: (Tables) | 12 Months Ended | ||||||||||
Dec. 27, 2014 | |||||||||||
Segment Reporting: | |||||||||||
Schedule of financial information by segment and reconciliation of segment contribution to operating income | |||||||||||
Year Ended | |||||||||||
December 27, 2014 | December 28, 2013 | December 29, 2012 | |||||||||
Revenue: | |||||||||||
Franchising | $ | 44,931,400 | $ | 41,207,100 | $ | 38,731,300 | |||||
Leasing | 16,247,300 | 14,524,100 | 13,211,800 | ||||||||
Total revenue | $ | 61,178,700 | $ | 55,731,200 | $ | 51,943,100 | |||||
Reconciliation to operating income: | |||||||||||
Franchising segment contribution | $ | 23,631,800 | $ | 21,867,700 | $ | 20,705,100 | |||||
Leasing segment contribution | 9,427,500 | 7,912,300 | 6,594,000 | ||||||||
Total operating income | $ | 33,059,300 | $ | 29,780,000 | $ | 27,299,100 | |||||
Depreciation: | |||||||||||
Franchising | $ | 325,100 | $ | 339,600 | $ | 337,200 | |||||
Leasing | 86,900 | 91,900 | 96,100 | ||||||||
Total depreciation | $ | 412,000 | $ | 431,500 | $ | 433,300 | |||||
As of | |||||||||||
December 27, 2014 | December 28, 2013 | ||||||||||
Identifiable assets: | |||||||||||
Franchising | $ | 3,258,300 | $ | 7,407,400 | |||||||
Leasing | 44,870,800 | 42,490,800 | |||||||||
Unallocated | 6,598,700 | 3,137,900 | |||||||||
Total | $ | 54,727,800 | $ | 53,036,100 | |||||||
Quarterly_Financial_Data_Unaud1
Quarterly Financial Data (Unaudited): (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 27, 2014 | |||||||||||||||||
Quarterly Financial Data (Unaudited): | |||||||||||||||||
Schedule of the Company's quarterly financial data | |||||||||||||||||
First | Second | Third | Fourth | Total | |||||||||||||
Quarter | Quarter | Quarter | Quarter | ||||||||||||||
2014 | |||||||||||||||||
Total Revenue | $ | 14,552,600 | $ | 14,038,900 | $ | 16,404,400 | $ | 16,182,800 | $ | 61,178,700 | |||||||
Income from Operations | 7,434,500 | 7,092,600 | 9,177,700 | 9,354,500 | 33,059,300 | ||||||||||||
Net Income | 4,551,900 | 4,280,800 | 5,623,000 | 5,610,800 | 20,066,500 | ||||||||||||
Net Income Per Common Share — Basic | $ | 0.88 | $ | 0.84 | $ | 1.12 | $ | 1.12 | $ | 3.96 | |||||||
Net Income Per Common Share — Diluted | $ | 0.86 | $ | 0.82 | $ | 1.09 | $ | 1.09 | $ | 3.85 | |||||||
2013 | |||||||||||||||||
Total Revenue | $ | 13,148,400 | $ | 14,023,500 | $ | 14,791,900 | $ | 13,767,400 | $ | 55,731,200 | |||||||
Income from Operations | 6,675,900 | 7,061,200 | 8,541,300 | 7,501,600 | 29,780,000 | ||||||||||||
Net Income | 4,057,500 | 4,336,900 | 5,251,500 | 4,585,800 | 18,231,600 | ||||||||||||
Net Income Per Common Share — Basic | $ | 0.81 | $ | 0.86 | $ | 1.03 | $ | 0.89 | $ | 3.60 | |||||||
Net Income Per Common Share — Diluted | $ | 0.78 | $ | 0.83 | $ | 1.00 | $ | 0.87 | $ | 3.48 | |||||||
Organization_and_Business_Deta
Organization and Business: (Details) | 12 Months Ended |
Dec. 27, 2014 | |
item | |
Franchising activity | |
Number of weeks in a fiscal year | 52 |
Franchising activity | |
Number of franchises in operation at the beginning of the period | 1,005 |
OPENED | 95 |
CLOSED | -8 |
Number of franchises in operation at the end of the period | 1,092 |
Minimum | |
Franchising activity | |
Number of weeks in a fiscal year | 52 |
Plato's Closet | US and Canada | |
Franchising activity | |
Number of franchises in operation at the beginning of the period | 391 |
OPENED | 37 |
CLOSED | -2 |
Number of franchises in operation at the end of the period | 426 |
Once Upon A Child | US and Canada | |
Franchising activity | |
Number of franchises in operation at the beginning of the period | 282 |
OPENED | 28 |
CLOSED | -2 |
Number of franchises in operation at the end of the period | 308 |
Play It Again Sports | US and Canada | |
Franchising activity | |
Number of franchises in operation at the beginning of the period | 300 |
OPENED | 5 |
CLOSED | -4 |
Number of franchises in operation at the end of the period | 301 |
Music Go Round | US | |
Franchising activity | |
Number of franchises in operation at the beginning of the period | 29 |
OPENED | 4 |
Number of franchises in operation at the end of the period | 33 |
Style Encore | US | |
Franchising activity | |
Number of franchises in operation at the beginning of the period | 3 |
OPENED | 21 |
Number of franchises in operation at the end of the period | 24 |
Significant_Accounting_Policie3
Significant Accounting Policies: (Details) (USD $) | 12 Months Ended | |||
Dec. 27, 2014 | Dec. 28, 2013 | Dec. 29, 2012 | Dec. 31, 2011 | |
item | ||||
Receivables | ||||
Allowance for Doubtful Accounts Receivable, Current | $1,600 | $4,300 | $17,300 | $15,100 |
Leasing Income Recognition | ||||
Threshold delinquent period of lease rentals to classify lease as non-accrual | 90 days | |||
Minimum monthly payments owed to classify lease as non-accrual | 3 | |||
Allowance for Credit Losses | ||||
Delinquent period for charging-off against allowance for credit losses | 121 days | |||
Canadian operations | ||||
Cash equivalents | ||||
Cash located in banks | $73,100 | $55,700 |
Significant_Accounting_Policie4
Significant Accounting Policies: (Detail 2) (USD $) | 12 Months Ended | ||
Dec. 27, 2014 | Dec. 28, 2013 | Dec. 29, 2012 | |
Goodwill | |||
Goodwill | $607,500 | $607,500 | |
Goodwill impairment | 0 | 0 | |
Advertising | |||
Advertising costs | 252,800 | 185,300 | 137,200 |
Revenue Recognition | |||
Deferred franchise fee revenue | 2,005,300 | 2,034,100 | |
Period of recognition of deferred software license fees | 10 years | ||
Deferred software license fees | $1,399,400 | $1,236,600 | |
Earnings Per Share | |||
Denominator for basic EPS - weighted average common shares | 5,069,391 | 5,068,975 | 5,027,509 |
Dilutive shares associated with option plans | 147,523 | 172,146 | 210,162 |
Denominator for diluted EPS - weighted average common shares and dilutive potential common shares | 5,216,914 | 5,241,121 | 5,237,671 |
Options excluded from EPS calculation - anti-dilutive (in shares) | 39,240 | 30,450 | 30,115 |
Computer and peripheral equipment | Minimum | |||
Property and equipment | |||
Estimated useful lives | 3 years | ||
Computer and peripheral equipment | Maximum | |||
Property and equipment | |||
Estimated useful lives | 5 years | ||
Furniture and equipment | Minimum | |||
Property and equipment | |||
Estimated useful lives | 5 years | ||
Furniture and equipment | Maximum | |||
Property and equipment | |||
Estimated useful lives | 7 years |
Investments_Details
Investments: (Details) (USD $) | 12 Months Ended | ||
Dec. 27, 2014 | Dec. 28, 2013 | Dec. 29, 2012 | |
Summary of marketable securities classified as available-for-sale securities | |||
Equity securities, Cost | $526,600 | $743,100 | |
Equity securities, Fair Value | 466,800 | 736,500 | |
Unrealized gains and losses for marketable securities classified as available-for-sale securities in accumulated other comprehensive loss | |||
Unrealized gains | 3,300 | 6,800 | |
Unrealized losses | -63,100 | -13,400 | -6,500 |
Net unrealized losses | -59,800 | -6,600 | -6,500 |
Realized gains and losses recognized on sales of available-for-sale marketable securities | |||
Realized gains | 40,900 | 25,200 | 52,500 |
Realized losses | -32,200 | -31,300 | |
Net realized gains/(losses) | $8,700 | $25,200 | $21,200 |
Investments_Details_2
Investments (Details 2) (USD $) | 12 Months Ended | 3 Months Ended | 0 Months Ended | 12 Months Ended | |||||
Dec. 29, 2012 | Dec. 27, 2014 | Dec. 28, 2013 | Dec. 29, 2012 | Sep. 30, 2010 | Dec. 31, 2011 | Dec. 25, 2010 | Dec. 31, 2004 | Jun. 30, 2011 | |
Investments | |||||||||
Losses from equity investments | $2,492,900 | ||||||||
Impairment charges | 1,324,400 | ||||||||
BridgeFunds, LLC | |||||||||
Investments | |||||||||
Carrying amount of investment | 0 | 0 | 0 | 0 | |||||
Interest received | 0 | 0 | 0 | ||||||
Tomsten | |||||||||
Investments | |||||||||
Investment at cost | 8,500,000 | ||||||||
Investment owned as a percentage of outstanding common stock | 22.00% | ||||||||
Losses from equity investments | 697,300 | ||||||||
Carrying amount of investment | 0 | 0 | |||||||
Impairment charges | 1,800,000 | ||||||||
Tomsten | Rights Offering | |||||||||
Investments | |||||||||
Investment at cost | 1,000,000 | ||||||||
Investment in senior subordinated promissory notes in BridgeFunds | |||||||||
Investments | |||||||||
Commitment to lend pursuant to senior subordinated promissory note | 2,000,000 | ||||||||
Annual rate of Interest (as a percent) | 15.00% | 12.00% | |||||||
Extension period to maturity date | 1 year | 1 year | 1 year | ||||||
Impairment charges | $1,300,000 |
Investment_in_Leasing_Operatio2
Investment in Leasing Operations: (Details) (USD $) | Dec. 27, 2014 | Dec. 28, 2013 |
Direct financing and sales-type leases: | ||
Minimum lease payments receivable | $40,739,900 | $35,450,900 |
Estimated residual value of equipment | 4,347,100 | 4,348,800 |
Unearned lease income net of initial direct costs deferred | -6,061,100 | -4,963,400 |
Security deposits | -3,253,200 | -3,325,600 |
Equipment installed on leases not yet commenced | 8,364,100 | 6,718,000 |
Total investment in direct financing and sales-type leases | 44,136,800 | 38,228,700 |
Allowance for credit losses | -386,000 | -822,700 |
Net investment in direct financing and sales-type leases | 43,750,800 | 37,406,000 |
Operating leases: | ||
Operating lease assets | 806,100 | 1,353,500 |
Less accumulated depreciation and amortization | -536,400 | -1,218,200 |
Net investment in operating leases | 269,700 | 135,300 |
Total net investment in leasing operations | 44,020,500 | 37,541,300 |
Net investment in leases - current | 19,831,600 | 17,239,900 |
Net investment in leases - long-term | $24,188,900 | $20,301,400 |
Investment_in_Leasing_Operatio3
Investment in Leasing Operations: (Details 2) (Total assets) | 12 Months Ended | |
Dec. 27, 2014 | Dec. 28, 2013 | |
customer | ||
Investment in leasing operations | ||
Number of customers | 2 | |
Customer one concentration risk for leased assets | ||
Investment in leasing operations | ||
Number of customers | 0 | |
Percentage of concentration risk | 15.00% | 10.00% |
Customer Two Concentration Risk | ||
Investment in leasing operations | ||
Percentage of concentration risk | 10.00% |
Investment_in_Leasing_Operatio4
Investment in Leasing Operations: (Details 3) (USD $) | Dec. 27, 2014 | Dec. 28, 2013 |
Direct Financing and Sales-Type Leases, Minimum Lease Payments Receivable | ||
2015 | $23,924,700 | |
2016 | 13,166,600 | |
2017 | 3,628,400 | |
2018 | 20,200 | |
Total | 40,739,900 | 35,450,900 |
Direct Financing and Sales-Type Leases, Income Amortization | ||
2015 | 4,560,000 | |
2016 | 1,373,200 | |
2017 | 126,900 | |
2018 | 1,000 | |
Total | 6,061,100 | |
Operating Leases, Minimum Lease Payments Receivable | ||
2015 | 51,200 | |
Total | $51,200 |
Investment_in_Leasing_Operatio5
Investment in Leasing Operations: (Details 4) (USD $) | 12 Months Ended | ||
Dec. 27, 2014 | Dec. 28, 2013 | Dec. 29, 2012 | |
Activity in the allowance for credit losses for leasing operations | |||
Balance at beginning of period | $822,700 | $775,800 | $803,800 |
Provisions charged to expense | 62,900 | -44,700 | -47,600 |
Recoveries | 106,900 | 127,500 | 251,000 |
Deductions for amounts written-off | -606,500 | -35,900 | -231,400 |
Balance at end of period | $386,000 | $822,700 | $775,800 |
Investment_in_Leasing_Operatio6
Investment in Leasing Operations: (Details 5) (USD $) | Dec. 27, 2014 | Dec. 28, 2013 |
Investment In Leases | ||
Total investment in direct financing and sales-type leases | $44,136,800 | $38,228,700 |
Allowance for Credit Losses | ||
Total | 386,000 | 822,700 |
Investment in leases | ||
Investment In Leases | ||
Collectively evaluated for loss potential | 44,136,800 | 38,228,700 |
Total investment in direct financing and sales-type leases | 44,136,800 | 38,228,700 |
Allowance for Credit Losses | ||
Collectively evaluated for loss potential | 386,000 | 822,700 |
Total | $386,000 | $822,700 |
Investment_in_Leasing_Operatio7
Investment in Leasing Operations: (Details 6) (USD $) | Dec. 27, 2014 | Dec. 28, 2013 |
Investment in leasing operations | ||
0-60 Days Delinquent and Accruing | $44,136,800 | $37,812,300 |
Non-Accrual | 416,400 | |
Total investment in direct financing and sales-type leases | 44,136,800 | 38,228,700 |
Middle-Market | ||
Investment in leasing operations | ||
0-60 Days Delinquent and Accruing | 42,948,000 | 36,716,100 |
Non-Accrual | 416,400 | |
Total investment in direct financing and sales-type leases | 42,948,000 | 37,132,500 |
Small-Ticket | ||
Investment in leasing operations | ||
0-60 Days Delinquent and Accruing | 1,188,800 | 1,096,200 |
Total investment in direct financing and sales-type leases | $1,188,800 | $1,096,200 |
Receivables_Detail
Receivables: (Detail) (USD $) | 12 Months Ended | ||
Dec. 27, 2014 | Dec. 28, 2013 | Dec. 29, 2012 | |
Current receivables | |||
Trade | $18,000 | $17,700 | |
Royalty | 1,198,000 | 1,150,200 | |
Other | 112,200 | 37,600 | |
Total current receivables | 1,328,200 | 1,205,500 | |
Activity in the allowance for doubtful accounts for trade receivables | |||
Balance at beginning of year | 4,300 | 17,300 | 15,100 |
Provisions charged to expense | -200 | -3,800 | 2,900 |
Deductions for amounts written-off | -2,500 | -9,200 | -700 |
Balance at end of year | $1,600 | $4,300 | $17,300 |
Shareholders_Equity_Details
Shareholders' Equity: (Details) (USD $) | 12 Months Ended | ||
Dec. 27, 2014 | Dec. 28, 2013 | Dec. 29, 2012 | |
Repurchase of Common Stock | |||
Aggregate purchase price of shares repurchased (in dollars) | $11,564,800 | $1,854,900 | $7,220,300 |
Dividends | |||
Cash dividend approved by Board of Directors (in dollars per share) | $0.23 | $0.19 | $0.15 |
Special cash dividend approved by Board of Directors (in dollars per share) | $5 | $5 | |
Total special dividend in cash | 25,800,000 | 25,400,000 | |
Borrowings on line of credit for special dividend | 13,000,000 | 12,800,000 | |
Aggregate quarterly cash dividends declared and paid | 1,200,000 | 960,000 | 750,000 |
Common Stock Repurchase Program | |||
Repurchase of Common Stock | |||
Number of shares repurchased | 166,030 | 28,422 | 134,720 |
Aggregate purchase price of shares repurchased (in dollars) | $11,600,000 | $1,900,000 | $7,200,000 |
Aggregate purchase price per share of shares repurchased (in dollars per share) | $69.65 | $65.26 | $53.60 |
Number of additional shares that can be repurchased | 166,700 |
Shareholders_Equity_Details_2
Shareholders' Equity: (Details 2) (USD $) | 12 Months Ended | |||||
Dec. 27, 2014 | Dec. 28, 2013 | Dec. 29, 2012 | Dec. 31, 2011 | Apr. 30, 2014 | Dec. 25, 2010 | |
Stock options | ||||||
Number of Shares | ||||||
Outstanding at the beginning of the period (in shares) | 526,712 | 613,727 | 668,614 | |||
Granted (in shares) | 97,000 | 96,250 | 120,000 | |||
Exercised (in shares) | -21,012 | -176,700 | -174,887 | |||
Forfeited (in shares) | -5,000 | -6,565 | ||||
Outstanding at the end of the period (in shares) | 597,700 | 526,712 | 613,727 | 668,614 | ||
Exercisable at the end of the period (in shares) | 350,122 | |||||
Weighted Average Exercise Price | ||||||
Outstanding at the beginning of the period (in dollars per share) | $42.87 | $31.46 | $24.31 | |||
Granted (in dollars per share) | $73.31 | $71.39 | $54.26 | |||
Exercised (in dollars per share) | $19.89 | $18.82 | $19.77 | |||
Forfeited (in dollars per share) | $56.85 | $42.20 | ||||
Outstanding at the end of the period (in dollars per share) | $48.50 | $42.87 | $31.46 | $24.31 | ||
Exercisable at the end of the period (in dollars per share) | $36.24 | |||||
Weighted Average Remaining Contractual Life (years) | ||||||
Outstanding | 6 years 11 months 5 days | 7 years 3 months 29 days | 7 years 22 days | 6 years 7 months 13 days | ||
Exercisable at the end of the period | 5 years 8 months 27 days | |||||
Intrinsic Value | ||||||
Outstanding at the beginning of the period | $26,446,700 | $16,010,000 | $22,101,800 | |||
Outstanding at the end of the period | 20,973,700 | 26,446,700 | 16,010,000 | 22,101,800 | ||
Exercisable at the end of the period | $16,580,000 | |||||
Weighted average assumptions and results used in estimation of fair value of options granted | ||||||
Risk free interest rate (as a percent) | 1.75% | 1.60% | 0.88% | |||
Expected life (years) | 6 years | 6 years | 6 years | |||
Expected volatility (as a percent) | 33.20% | 32.90% | 31.90% | |||
Dividend yield (as a percent) | 1.66% | 1.65% | 2.05% | |||
Option fair value (in dollars per share) | $21.02 | $20.36 | $13.43 | |||
2001 Plan | ||||||
Stock option plans | ||||||
Number of shares authorized for issuance | 750,000 | |||||
2001 Plan | Stock options | Minimum | ||||||
Stock option plans | ||||||
Exercise price of stock options as a percentage of fair value on the date of grant | 100.00% | |||||
2010 Plan | Stock options | ||||||
Stock option plans | ||||||
Number of shares authorized for issuance | 500,000 | 250,000 | ||||
2010 Plan | Stock options | Minimum | ||||||
Stock option plans | ||||||
Exercise price of stock options as a percentage of fair value on the date of grant for an individual who owns more than 10% of voting rights | 110.00% | |||||
Exercise price of stock options as a percentage of fair value on the date of grant | 100.00% | |||||
Threshold voting rights above which the option exercise price may not be less than 110% of the fair market value (as a percent) | 10.00% | |||||
2010 Plan | Stock options | Maximum | ||||||
Stock option plans | ||||||
Term of the option | 10 years | |||||
Nonemployee Directors Plan | Stock options | ||||||
Stock option plans | ||||||
Number of shares authorized for issuance | 300,000 | 350,000 |
Shareholders_Equity_Details_3
Shareholders' Equity: (Details 3) (Stock options, USD $) | 12 Months Ended | ||
Dec. 27, 2014 | Dec. 28, 2013 | Dec. 29, 2012 | |
Additional disclosures | |||
Compensation expense | $1,417,200 | $1,153,600 | $930,200 |
Total unrecognized compensation expense | 3,800,000 | ||
Weighted average period for recognition of unrecognized compensation expense | 2 years 7 months 6 days | ||
Total intrinsic value of options exercised | 1,200,000 | 8,700,000 | 7,400,000 |
Total fair value of shares vested | $5,100,000 | $3,900,000 | $2,800,000 |
Shares of previously owned common stock surrendered as payment for option shares exercised | 0 | 1,207 | 31,351 |
Options Outstanding | |||
Number Outstanding (in shares) | 597,700 | ||
Weighted Average Remaining Contractual Life | 6 years 11 months 5 days | ||
Weighted Average Exercise Price (in dollars per share) | $48.50 | ||
Options Exercisable | |||
Number Exercisable (in shares) | 350,122 | ||
Weighted Average Exercise Price (in dollars per share) | $36.24 | ||
$12.75 - $18.40 | |||
Stock options outstanding and exercisable | |||
Range of Exercise Price, low end of range (in dollars per share) | $12.75 | ||
Range of Exercise Price, high end of range (in dollars per share) | $18.40 | ||
Options Outstanding | |||
Number Outstanding (in shares) | 52,261 | ||
Weighted Average Remaining Contractual Life | 4 years 4 days | ||
Weighted Average Exercise Price (in dollars per share) | $13.97 | ||
Options Exercisable | |||
Number Exercisable (in shares) | 52,261 | ||
Weighted Average Exercise Price (in dollars per share) | $13.97 | ||
$20.32 - $31.19 | |||
Stock options outstanding and exercisable | |||
Range of Exercise Price, low end of range (in dollars per share) | $20.32 | ||
Range of Exercise Price, high end of range (in dollars per share) | $31.19 | ||
Options Outstanding | |||
Number Outstanding (in shares) | 107,689 | ||
Weighted Average Remaining Contractual Life | 4 years 3 months 22 days | ||
Weighted Average Exercise Price (in dollars per share) | $25.28 | ||
Options Exercisable | |||
Number Exercisable (in shares) | 107,689 | ||
Weighted Average Exercise Price (in dollars per share) | $25.28 | ||
$32.92 - $51.17 | |||
Stock options outstanding and exercisable | |||
Range of Exercise Price, low end of range (in dollars per share) | $32.92 | ||
Range of Exercise Price, high end of range (in dollars per share) | $51.17 | ||
Options Outstanding | |||
Number Outstanding (in shares) | 132,000 | ||
Weighted Average Remaining Contractual Life | 6 years 7 months 6 days | ||
Weighted Average Exercise Price (in dollars per share) | $40.77 | ||
Options Exercisable | |||
Number Exercisable (in shares) | 98,309 | ||
Weighted Average Exercise Price (in dollars per share) | $38.71 | ||
$53.34 - $82.72 | |||
Stock options outstanding and exercisable | |||
Range of Exercise Price, low end of range (in dollars per share) | $53.34 | ||
Range of Exercise Price, high end of range (in dollars per share) | $82.72 | ||
Options Outstanding | |||
Number Outstanding (in shares) | 305,750 | ||
Weighted Average Remaining Contractual Life | 8 years 6 months | ||
Weighted Average Exercise Price (in dollars per share) | $65.92 | ||
Options Exercisable | |||
Number Exercisable (in shares) | 91,863 | ||
Weighted Average Exercise Price (in dollars per share) | $59.10 |
Line_of_Credit_Details
Line of Credit (Details) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 27, 2014 | Dec. 29, 2012 |
item | ||
One month LIBOR | ||
Line of Credit | ||
Variable rate basis | One month LIBOR | |
Two month LIBOR | ||
Line of Credit | ||
Variable rate basis | Two month LIBOR | |
Three month LIBOR | ||
Line of Credit | ||
Variable rate basis | Three month LIBOR | |
Line of Credit Member | ||
Line of Credit | ||
Aggregate commitments | $35 | |
Borrowings outstanding | 18.5 | |
Aggregate commitments, prior to amendment | 30 | |
Number of interest rate options | 3 | |
Non-utilization fees (as a percent) | 0.25% | |
Borrowing availability | $16.50 | |
Line of Credit Member | Minimum | ||
Line of Credit | ||
Interest rate (as a percent) | 2.41% | |
Line of Credit Member | Maximum | ||
Line of Credit | ||
Interest rate (as a percent) | 3.25% | |
Line of Credit Member | Base Rate | ||
Line of Credit | ||
Variable rate basis | Base Rate | |
Applicable margin (as a percent) | 0.25% | |
Line of Credit Member | LIBOR | ||
Line of Credit | ||
Variable rate basis | LIBOR | |
Applicable margin (as a percent) | 2.75% | |
Line of Credit Member | Fixed Rate | ||
Line of Credit | ||
Variable rate basis | Fixed Rate | |
Applicable margin (as a percent) | 2.75% | |
Line of Credit Member | One year fixed rate | ||
Line of Credit | ||
Variable rate basis | One year Fixed Rate | |
Line of Credit Member | Two year fixed rate | ||
Line of Credit | ||
Variable rate basis | Two year Fixed Rate | |
Line of Credit Member | Three year fixed rate | ||
Line of Credit | ||
Variable rate basis | Three year Fixed Rate | |
Line of Credit Member | Four year fixed rate | ||
Line of Credit | ||
Variable rate basis | Four year Fixed Rate |
Accrued_Liabilities_Detail
Accrued Liabilities (Detail) (USD $) | Dec. 27, 2014 | Dec. 28, 2013 |
Accrued Liabilities | ||
Accrued salaries, wages, commissions and bonuses | $696,800 | $325,700 |
Accrued vacation | 208,800 | 219,200 |
Accrued interest | 43,400 | 21,900 |
Other | 810,200 | 666,300 |
Accrued liabilities | $1,759,200 | $1,233,100 |
Discounted_Lease_Rentals_Detai
Discounted Lease Rentals: (Details) (USD $) | Dec. 27, 2014 | Dec. 28, 2013 |
Discounted Lease Rentals: | ||
Weighted average interest rate on a non-recourse basis (as a percent) | 3.26% | |
Secured Debt, Current | $227,300 | $424,900 |
Total Liability | $300,000 |
Income_Taxes_Detail
Income Taxes: (Detail) (USD $) | 12 Months Ended | ||
Dec. 27, 2014 | Dec. 28, 2013 | Dec. 29, 2012 | |
Reconciliation of the expected federal income tax expense based on the federal statutory tax rate to the actual income tax expense | |||
Federal income tax expense at statutory rate (35%) | $11,406,100 | $10,356,500 | $8,104,400 |
Valuation allowance | -25,800 | 7,300 | 1,413,600 |
State and local income taxes, net of federal benefit | 897,800 | 886,200 | 677,700 |
Permanent differences, including stock option expenses | 144,500 | 113,000 | 60,200 |
Other, net | 99,700 | -4,700 | -38,300 |
Income Tax Expense (Benefit), Total | 12,522,300 | 11,358,300 | 10,217,600 |
Current provision for income taxes: | |||
Federal | 10,567,100 | 10,013,500 | 8,332,400 |
State | 1,456,400 | 1,468,600 | 1,186,000 |
Foreign | 386,900 | 375,400 | 374,900 |
Current provision | 12,410,400 | 11,857,500 | 9,893,300 |
Deferred provision for income taxes: | |||
Federal | 134,200 | -449,300 | 435,300 |
State | -22,300 | -49,900 | -111,000 |
Deferred provision | 111,900 | -499,200 | 324,300 |
Income Tax Expense (Benefit), Total | 12,522,300 | 11,358,300 | 10,217,600 |
Deferred tax assets: | |||
Accounts receivable and lease reserves | 169,600 | 376,900 | |
Accrued restructuring charge | 64,200 | 64,600 | |
Non-qualified stock option expense | 1,382,400 | 946,000 | |
Deferred franchise and software license fees | 720,900 | 606,600 | |
Trademarks | 91,100 | 95,600 | |
Lease deposits | 1,228,300 | 1,263,600 | |
Loss from and impairment of equity and note investments | 4,055,800 | 4,081,600 | |
Valuation allowance | -4,055,800 | -4,081,600 | |
Other | 420,100 | 328,200 | |
Total deferred tax assets | 4,076,600 | 3,681,500 | |
Deferred tax liabilities: | |||
Lease revenue and initial direct costs | -9,579,400 | -9,101,900 | |
Depreciation and amortization | -254,100 | -224,600 | |
Total deferred tax liabilities | -9,833,500 | -9,326,500 | |
Total net deferred tax liabilities | -5,756,900 | -5,645,000 | |
Excess tax benefits related to stock option exercises | 91,100 | 413,600 | 884,300 |
Unrecognized tax benefits, including interest and penalties | 465,500 | 398,000 | |
Interest and penalties accrued related to unrecognized tax benefit | 16,500 | 14,300 | |
Activity related to the company's unrecognized tax benefits | |||
Balance at the beginning of the period | 383,700 | 312,300 | |
Increases related to current year tax positions | 136,500 | 111,500 | |
Additions for tax positions of prior years | 1,600 | 17,700 | |
Expiration of the statute of limitations for the assessment of taxes | -72,800 | -57,800 | |
Balance at the end of the period | $449,000 | $383,700 | $312,300 |
Period over which various statutes of limitations are expected to expire | 12 months |
Commitments_and_Contingencies_1
Commitments and Contingencies: (Detail) (USD $) | 12 Months Ended | ||
Dec. 27, 2014 | Dec. 28, 2013 | Dec. 29, 2012 | |
Employee Benefit Plan | |||
Service period for vesting of employer contribution | 5 years | ||
Company contributions | $297,400 | $281,900 | $271,800 |
Operating Leases | |||
Rent expense under operating leases | 1,026,800 | 883,800 | 866,300 |
Minimum rental commitments | |||
2015 | 677,500 | ||
2016 | 691,200 | ||
2017 | 705,000 | ||
2018 | 718,800 | ||
2019 | 451,100 | ||
Total | 3,243,600 | ||
Total deferred rent | 1,000,000 | 1,100,000 | |
Deferred rent included in other liabilities | $800,000 | $1,000,000 |
Segment_Reporting_Details
Segment Reporting: (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 27, 2014 | Sep. 27, 2014 | Jun. 28, 2014 | Mar. 29, 2014 | Dec. 28, 2013 | Sep. 28, 2013 | Jun. 29, 2013 | Mar. 30, 2013 | Dec. 27, 2014 | Dec. 28, 2013 | Dec. 29, 2012 | |
item | |||||||||||
Segment Reporting | |||||||||||
Number of reportable business segments | 2 | ||||||||||
Total revenue | $16,182,800 | $16,404,400 | $14,038,900 | $14,552,600 | $13,767,400 | $14,791,900 | $14,023,500 | $13,148,400 | $61,178,700 | $55,731,200 | $51,943,100 |
Total operating income | 9,354,500 | 9,177,700 | 7,092,600 | 7,434,500 | 7,501,600 | 8,541,300 | 7,061,200 | 6,675,900 | 33,059,300 | 29,780,000 | 27,299,100 |
Total depreciation | 412,000 | 431,500 | 433,300 | ||||||||
Total identifiable assets | 54,727,800 | 53,036,100 | 54,727,800 | 53,036,100 | |||||||
Franchising | Canadian operations | |||||||||||
Segment Reporting | |||||||||||
Total revenue | 2,900,000 | 2,700,000 | 2,500,000 | ||||||||
Operating | Franchising | |||||||||||
Segment Reporting | |||||||||||
Total revenue | 44,931,400 | 41,207,100 | 38,731,300 | ||||||||
Total operating income | 23,631,800 | 21,867,700 | 20,705,100 | ||||||||
Total depreciation | 325,100 | 339,600 | 337,200 | ||||||||
Total identifiable assets | 3,258,300 | 7,407,400 | 3,258,300 | 7,407,400 | |||||||
Operating | Leasing | |||||||||||
Segment Reporting | |||||||||||
Total revenue | 16,247,300 | 14,524,100 | 13,211,800 | ||||||||
Total operating income | 9,427,500 | 7,912,300 | 6,594,000 | ||||||||
Total depreciation | 86,900 | 91,900 | 96,100 | ||||||||
Total identifiable assets | 44,870,800 | 42,490,800 | 44,870,800 | 42,490,800 | |||||||
Unallocated | |||||||||||
Segment Reporting | |||||||||||
Total identifiable assets | $6,598,700 | $3,137,900 | $6,598,700 | $3,137,900 |
Related_Party_Transactions_Det
Related Party Transactions: (Details) (USD $) | 12 Months Ended | ||
Dec. 27, 2014 | Dec. 28, 2013 | Dec. 29, 2012 | |
Related party transactions | |||
Stock Repurchased and Retired During Period, Value | $11,564,800 | $1,854,900 | $7,220,300 |
Dean B. Phillips | Common Stock | |||
Related party transactions | |||
Stock Repurchased and Retired During Period, Shares | 16,000 | ||
Stock Repurchased and Retired During Period, Value | $889,600 | ||
Repurchase price per share (in dollars per share) | $55.60 |
Quarterly_Financial_Data_Detai
Quarterly Financial Data (Details): (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 27, 2014 | Sep. 27, 2014 | Jun. 28, 2014 | Mar. 29, 2014 | Dec. 28, 2013 | Sep. 28, 2013 | Jun. 29, 2013 | Mar. 30, 2013 | Dec. 27, 2014 | Dec. 28, 2013 | Dec. 29, 2012 | |
Quarterly Financial Data (Unaudited): | |||||||||||
Total Revenue | $16,182,800 | $16,404,400 | $14,038,900 | $14,552,600 | $13,767,400 | $14,791,900 | $14,023,500 | $13,148,400 | $61,178,700 | $55,731,200 | $51,943,100 |
Income from Operations | 9,354,500 | 9,177,700 | 7,092,600 | 7,434,500 | 7,501,600 | 8,541,300 | 7,061,200 | 6,675,900 | 33,059,300 | 29,780,000 | 27,299,100 |
Net Income | $5,610,800 | $5,623,000 | $4,280,800 | $4,551,900 | $4,585,800 | $5,251,500 | $4,336,900 | $4,057,500 | $20,066,500 | $18,231,600 | $12,937,900 |
Net Income Per Common Share - Basic | $1.12 | $1.12 | $0.84 | $0.88 | $0.89 | $1.03 | $0.86 | $0.81 | $3.96 | $3.60 | $2.57 |
Net Income Per Common Share - Diluted | $1.09 | $1.09 | $0.82 | $0.86 | $0.87 | $1 | $0.83 | $0.78 | $3.85 | $3.48 | $2.47 |