Exhibit 99.1
Contact: Brett D. Heffes
763/520-8500
FOR IMMEDIATE RELEASE
WINMARK CORPORATION ANNOUNCES
SECOND QUARTER RESULTS
Minneapolis, MN (July 15, 2015) - Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended June 27, 2015 of $4,751,400 (or $1.00 per share diluted) compared to net income of $4,280,800 (or $.82 per share diluted) in the second quarter of 2014. For the six months ended June 27, 2015, net income was $10,805,700 (or $2.18 per share diluted) compared to net income of $8,832,700 (or $1.67 per share diluted) for the same period last year.
The Company’s earnings per share growth during the second quarter was primarily driven by an increase in royalties in the franchising business and the positive impact of the previously announced self-tender offer.
Winmark Corporation creates, supports and finances business. At June 27, 2015, there were 1,116 franchises in operation under the brands Plato’s Closet®, Once Upon A Child®, Play It Again Sports®, Music Go Round® and Style Encore®. An additional 108 retail franchises have been awarded but are not open. In addition, at June 27, 2015, the Company had a lease portfolio equal to $38.7 million.
This press release contains forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), relating to future events or the future financial performance of the Company. Such forward-looking statements are only predictions or statements of intention subject to risks and uncertainties and actual events or results could differ materially from those anticipated. Because actual result may differ, shareholders and prospective investors are cautioned not to place undue reliance on such forward-looking statements.
WINMARK CORPORATION
CONDENSED BALANCE SHEETS
(unaudited)
|
| June 27, 2015 |
| December 27, 2014 |
| ||
ASSETS |
| ||||||
Current Assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 1,120,800 |
| $ | 2,089,700 |
|
Marketable securities |
| 215,200 |
| 466,800 |
| ||
Receivables, net |
| 1,241,500 |
| 1,328,200 |
| ||
Net investment in leases - current |
| 18,727,000 |
| 19,831,600 |
| ||
Income tax receivable |
| 1,388,200 |
| 4,163,900 |
| ||
Inventories |
| 60,800 |
| 93,500 |
| ||
Prepaid expenses |
| 581,600 |
| 467,400 |
| ||
Total current assets |
| 23,335,100 |
| 28,441,100 |
| ||
|
|
|
|
|
| ||
Net investment in leases — long-term |
| 19,983,500 |
| 24,188,900 |
| ||
|
|
|
|
|
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Property and equipment, net |
| 1,293,700 |
| 1,420,300 |
| ||
Other assets |
| 677,500 |
| 677,500 |
| ||
|
| $ | 45,289,800 |
| $ | 54,727,800 |
|
|
| ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current Liabilities: |
|
|
|
|
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Line of credit |
| $ | — |
| $ | 18,500,000 |
|
Notes payable, net |
| 1,988,700 |
| — |
| ||
Accounts payable |
| 1,555,500 |
| 1,955,500 |
| ||
Accrued liabilities |
| 2,459,800 |
| 1,759,200 |
| ||
Discounted lease rentals |
| 131,200 |
| 227,300 |
| ||
Deferred revenue |
| 2,276,600 |
| 2,142,600 |
| ||
Deferred income taxes |
| 3,443,600 |
| 4,412,600 |
| ||
Total current liabilities |
| 11,855,400 |
| 28,997,200 |
| ||
|
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|
|
|
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Long-Term Liabilities: |
|
|
|
|
| ||
Line of credit |
| 49,100,000 |
| — |
| ||
Notes payable, net |
| 22,900,300 |
| — |
| ||
Discounted lease rentals |
| — |
| 25,800 |
| ||
Deferred revenue |
| 1,370,700 |
| 1,347,800 |
| ||
Other liabilities |
| 1,286,900 |
| 1,403,200 |
| ||
Deferred income taxes |
| 254,400 |
| 1,344,300 |
| ||
Total long-term liabilities |
| 74,912,300 |
| 4,121,100 |
| ||
|
|
|
|
|
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Shareholders’ Equity (Deficit): |
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|
|
|
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Common stock, no par, 10,000,000 shares authorized, 4,128,031 and 4,998,512 shares issued and outstanding |
| — |
| 422,400 |
| ||
Accumulated other comprehensive loss |
| (14,600 | ) | (37,100 | ) | ||
Retained earnings (accumulated deficit) |
| (41,463,300 | ) | 21,224,200 |
| ||
|
|
|
|
|
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Total shareholders’ equity (deficit) |
| (41,477,900 | ) | 21,609,500 |
| ||
|
| $ | 45,289,800 |
| $ | 54,727,800 |
|
WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
|
| Quarter Ended |
| Six Months Ended |
| ||||||||
|
| June 27, 2015 |
| June 28, 2014 |
| June 27, 2015 |
| June 28, 2014 |
| ||||
REVENUE: |
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|
|
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|
|
|
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Royalties |
| $ | 10,214,400 |
| $ | 9,200,800 |
| $ | 19,940,600 |
| $ | 18,010,800 |
|
Leasing income |
| 3,663,300 |
| 3,157,600 |
| 13,672,900 |
| 7,533,200 |
| ||||
Merchandise sales |
| 686,300 |
| 685,800 |
| 1,420,000 |
| 1,473,800 |
| ||||
Franchise fees |
| 475,900 |
| 607,500 |
| 770,300 |
| 956,500 |
| ||||
Other |
| 436,800 |
| 387,200 |
| 697,000 |
| 617,200 |
| ||||
Total revenue |
| 15,476,700 |
| 14,038,900 |
| 36,500,800 |
| 28,591,500 |
| ||||
COST OF MERCHANDISE SOLD |
| 645,800 |
| 659,300 |
| 1,344,000 |
| 1,414,000 |
| ||||
LEASING EXPENSE |
| 510,500 |
| 119,100 |
| 4,767,900 |
| 425,700 |
| ||||
PROVISION FOR CREDIT LOSSES |
| (93,100 | ) | (11,100 | ) | (162,200 | ) | 27,800 |
| ||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES |
| 6,329,300 |
| 6,179,000 |
| 12,492,800 |
| 12,196,900 |
| ||||
Income from operations |
| 8,084,200 |
| 7,092,600 |
| 18,058,300 |
| 14,527,100 |
| ||||
INTEREST EXPENSE |
| (369,500 | ) | (144,100 | ) | (455,200 | ) | (206,200 | ) | ||||
INTEREST AND OTHER INCOME (EXPENSE) |
| 9,700 |
| 900 |
| (49,400 | ) | 1,000 |
| ||||
Income before income taxes |
| 7,724,400 |
| 6,949,400 |
| 17,553,700 |
| 14,321,900 |
| ||||
PROVISION FOR INCOME TAXES |
| (2,973,000 | ) | (2,668,600 | ) | (6,748,000 | ) | (5,489,200 | ) | ||||
NET INCOME |
| $ | 4,751,400 |
| $ | 4,280,800 |
| $ | 10,805,700 |
| $ | 8,832,700 |
|
EARNINGS PER SHARE — BASIC |
| $ | 1.04 |
| $ | .84 |
| $ | 2.26 |
| $ | 1.72 |
|
EARNINGS PER SHARE — DILUTED |
| $ | 1.00 |
| $ | .82 |
| $ | 2.18 |
| $ | 1.67 |
|
WEIGHTED AVERAGE SHARES OUTSTANDING — BASIC |
| 4,578,934 |
| 5,109,049 |
| 4,789,205 |
| 5,128,789 |
| ||||
WEIGHTED AVERAGE SHARES OUTSTANDING — DILUTED |
| 4,768,777 |
| 5,243,123 |
| 4,968,122 |
| 5,275,539 |
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