Winmark (WINA) 10-Q 21 Apr 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 26, 2016	Apr. 15, 2016
Document and Entity Information
Entity Registrant Name	WINMARK CORP
Entity Central Index Key	908,315
Document Type	10-Q
Document Period End Date	Mar. 26, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		4,110,805
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 26, 2016	Dec. 26, 2015
Current Assets:
Cash and cash equivalents	$ 1,213,000	$ 1,006,700
Marketable securities	220,100	227,800
Receivables, less allowance for doubtful accounts of $2,200 and $200	1,345,800	1,416,900
Restricted cash	15,000	25,000
Net investment in leases - current	18,122,400	17,741,500
Income tax receivable		3,290,400
Inventories	80,300	45,200
Prepaid expenses	946,300	677,800
Total current assets	21,942,900	24,431,300
Net investment in leases - long-term	20,172,900	21,246,000
Property and equipment, net	1,032,200	1,121,500
Goodwill	607,500	607,500
Total assets	43,755,500	47,406,300
Current Liabilities:
Notes payable, net of unamortized debt issuance costs of $10,000 and $10,000	1,990,000	1,990,000
Accounts payable	2,070,000	1,643,300
Income tax payable	1,610,200
Accrued liabilities	2,258,900	1,875,700
Discounted lease rentals		38,700
Deferred revenue	2,017,100	1,963,200
Total current liabilities	9,946,200	7,510,900
Long-Term Liabilities:
Line of credit	33,500,000	42,400,000
Notes payable, net of unamortized debt issuance costs of $81,000 and $83,500	21,419,000	21,916,500
Deferred revenue	1,375,300	1,421,600
Other liabilities	1,158,200	1,216,300
Deferred income taxes	3,614,800	3,614,800
Total long-term liabilities	61,067,300	70,569,200
Shareholders' Equity (Deficit):
Common stock, no par, 10,000,000 shares authorized, 4,110,805 and 4,124,767 shares issued and outstanding		406,500
Accumulated other comprehensive loss	(23,200)	(32,900)
Retained earnings (accumulated deficit)	(27,234,800)	(31,047,400)
Total shareholders' equity (deficit)	(27,258,000)	(30,673,800)
Total liabilities and shareholders' equity (deficit)	$ 43,755,500	$ 47,406,300

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Mar. 26, 2016	Dec. 26, 2015
CONSOLIDATED CONDENSED BALANCE SHEETS
Receivables, allowance for doubtful accounts (in dollars)	$ 2,200	$ 200
Unamortized debt issuance costs - Current	10,000	10,000
Unamortized debt issuance costs - Noncurrent	$ 81,000	$ 83,500
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	4,110,805	4,124,767
Common stock, shares outstanding	4,110,805	4,124,767

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended
	Mar. 26, 2016	Mar. 28, 2015
REVENUE:
Royalties	$ 10,272,500	$ 9,726,200
Leasing income	4,512,700	10,009,600
Merchandise sales	737,100	733,700
Franchise fees	372,500	294,400
Other	285,500	260,200
Total revenue	16,180,300	21,024,100
COST OF MERCHANDISE SOLD	697,400	698,200
LEASING EXPENSE	904,100	4,257,400
PROVISION FOR CREDIT LOSSES	(14,400)	(69,100)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	6,554,600	6,163,500
Income from operations	8,038,600	9,974,100
INTEREST EXPENSE	(640,700)	(85,700)
INTEREST AND OTHER INCOME (EXPENSE)	(10,500)	(59,100)
Income before income taxes	7,387,400	9,829,300
PROVISION FOR INCOME TAXES	(2,824,500)	(3,775,000)
NET INCOME	$ 4,562,900	$ 6,054,300
EARNINGS PER SHARE - BASIC (in dollars per share)	$ 1.11	$ 1.21
EARNINGS PER SHARE - DILUTED (in dollars per share)	$ 1.06	$ 1.17
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC (in shares)	4,114,071	4,999,475
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED (in shares)	4,313,920	5,167,466

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)	3 Months Ended
	Mar. 26, 2016	Mar. 28, 2015
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
NET INCOME	$ 4,562,900	$ 6,054,300
Unrealized net gains (losses) on marketable securities:
Unrealized holding net gains (losses) arising during period	15,600	48,700
Reclassification adjustment for net gains included in net income		(2,300)
OTHER COMPREHENSIVE INCOME (LOSS), BEFORE TAX	15,600	46,400
Unrealized net gains/losses on marketable securities:
Unrealized holding net gains/losses arising during period	(5,900)	(18,500)
Reclassification adjustment for net gains included in net income		900
INCOME TAX (EXPENSE) BENEFIT RELATED TO ITEMS OF OTHER COMPREHENSIVE INCOME	(5,900)	(17,600)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX	9,700	28,800
COMPREHENSIVE INCOME	$ 4,572,600	$ 6,083,100

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Mar. 26, 2016	Mar. 28, 2015
OPERATING ACTIVITIES:
Net Income	$ 4,562,900	$ 6,054,300
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	109,200	107,600
Provision for credit losses	(14,400)	(69,100)
Compensation expense related to stock options	449,800	405,300
Deferred income taxes		(1,027,300)
Loss on sale of marketable securities	6,200	22,800
Deferred initial direct costs	(180,700)	(154,900)
Amortization of deferred initial direct costs	100,000	259,400
Tax benefits on exercised stock options	(9,700)	(16,600)
Change in operating assets and liabilities:
Receivables	71,100	139,200
Restricted cash	10,000
Income tax receivable/payable	4,904,400	5,662,900
Inventories	(35,100)	17,400
Prepaid expenses	(268,500)	(62,700)
Accounts payable	426,700	507,300
Accrued and other liabilities	338,300	(14,100)
Rents received in advance and security deposits	129,000	(242,100)
Deferred revenue	7,600	158,100
Net cash provided by operating activities	10,606,800	11,747,500
INVESTING ACTIVITIES:
Proceeds from sale of marketable securities	17,100	299,000
Purchase of marketable securities		(33,800)
Purchase of property and equipment	(19,900)	(52,700)
Purchase of equipment for lease contracts	(4,734,500)	(7,873,100)
Principal collections on lease receivables	5,343,400	9,166,900
Net cash provided by investing activities	606,100	1,506,300
FINANCING ACTIVITIES:
Proceeds from borrowings on line of credit	500,000	600,000
Payments on line of credit	(9,400,000)	(13,500,000)
Payments on notes payable	(500,000)
Repurchases of common stock	(1,477,800)
Proceeds from exercises of stock options	150,200	100
Dividends paid	(288,700)	(299,900)
Tax benefits on exercised stock options	9,700	16,600
Net cash used for financing activities	(11,006,600)	(13,183,200)
NET INCREASE IN CASH AND CASH EQUIVALENTS	206,300	70,600
Cash and cash equivalents, beginning of period	1,006,700	2,089,700
Cash and cash equivalents, end of period	1,213,000	2,160,300
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	635,300	103,500
Cash paid (received) for income taxes, net	$ (2,079,600)	$ (860,600)

Management's Interim Financial

Management's Interim Financial Statement Representation:	3 Months Ended
	Mar. 26, 2016
Management's Interim Financial Statement Representation:
Management's Interim Financial Statement Representation:	1. Management’s Interim Financial Statement Representation: The accompanying consolidated condensed financial statements have been prepared by Winmark Corporation and subsidiaries (the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The Company has a 52/53 week year which ends on the last Saturday in December. The information in the consolidated condensed financial statements includes normal recurring adjustments and reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of such financial statements. The consolidated condensed financial statements and notes are presented in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for Form 10-Q, and therefore do not contain certain information included in the Company’s annual consolidated financial statements and notes. This report should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s latest Annual Report on Form 10-K. Revenues and operating results for the three months ended March 26, 2016 are not necessarily indicative of the results to be expected for the full year. Reclassifications Certain reclassifications of previously reported amounts have been made to conform to the current year presentation. Such reclassifications did not impact net income or shareholders’ equity (deficit) as previously reported.

Organization and Business_

Organization and Business:	3 Months Ended
	Mar. 26, 2016
Organization and Business:
Organization and Business:	2. Organization and Business: The Company offers licenses to operate franchises using the service marks Plato’s Closet®, Once Upon A Child®, Play It Again Sports®, Style Encore® and Music Go Round®. The Company also operates both middle market and small-ticket equipment leasing businesses under the Winmark Capital® and Wirth Business Credit® marks.

Fair Value Measurements_

Fair Value Measurements:	3 Months Ended
	Mar. 26, 2016
Fair Value Measurements
Fair Value Measurements:	3. Fair Value Measurements: The Company defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company uses three levels of inputs to measure fair value: · Level 1 — quoted prices in active markets for identical assets and liabilities. · Level 2 — observable inputs other than quoted prices in active markets for identical assets and liabilities. · Level 3 — unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions. The Company’s marketable securities were valued based on Level 1 inputs using quoted prices. Due to their nature, the carrying value of cash equivalents, receivables, payables and debt obligations approximates fair value.

Investments_

Investments:	3 Months Ended
	Mar. 26, 2016
Investments:
Investments:	4. Investments: Marketable Securities The following is a summary of marketable securities classified as available-for-sale securities: March 26, 2016 December 26, 2015 Cost Fair Value Cost Fair Value Equity securities $ $ $ $ The Company’s unrealized gains and losses for marketable securities classified as available-for-sale securities in accumulated other comprehensive loss are as follows: March 26, 2016 December 26, 2015 Unrealized gains $ — $ — Unrealized losses ) ) Net unrealized losses $ ) $ ) The Company’s realized gains and losses recognized on sales of available-for-sale marketable securities are as follows: Three Months Ended March 26, 2016 March 28, 2015 Realized gains $ — $ Realized losses ) ) Net realized losses $ ) $ ) Amounts reclassified out of accumulated other comprehensive loss into earnings is determined by using the average cost of the security when sold. Gross realized gains (losses) reclassified out of accumulated other comprehensive loss into earnings are included in Interest and Other Income (Expense) and the related tax benefits (expenses) are included in the Provision for Income Taxes lines of the Consolidated Condensed Statements of Operations.

Investment in Leasing Operation

Investment in Leasing Operations:	3 Months Ended
	Mar. 26, 2016
Investment in Leasing Operations:
Investment in Leasing Operations:	5. Investment in Leasing Operations: Investment in leasing operations consists of the following: March 26, 2016 December 26, 2015 Direct financing and sales-type leases: Minimum lease payments receivable $ $ Estimated residual value of equipment Unearned lease income net of initial direct costs deferred ) ) Security deposits ) ) Equipment installed on leases not yet commenced Total investment in direct financing and sales-type leases Allowance for credit losses ) ) Net investment in direct financing and sales-type leases Operating leases: Operating lease assets Less accumulated depreciation and amortization ) ) Net investment in operating leases Total net investment in leasing operations $ $ As of March 26, 2016, the $38.3 million total net investment in leases consists of $18.1 million classified as current and $20.2 million classified as long-term. As of December 26, 2015, the $39.0 million total net investment in leases consists of $17.7 million classified as current and $21.3 million classified as long-term. As of March 26, 2016, leased assets with three customers approximated 19%, 14% and 11%, respectively, 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 for the remainder of fiscal 2016 and the full fiscal years thereafter as of March 26, 2016: Direct Financing and Sales-Type Leases Operating Leases Minimum Lease Payments Receivable Income Amortization Minimum Lease Payments Receivable 2016 $ $ $ 2017 — 2018 — 2019 — 2020 — — — Thereafter — — — $ $ $ The activity in the allowance for credit losses for leasing operations during the first three months of 2016 and 2015, respectively, is as follows: March 26, 2016 March 28, 2015 Balance at beginning of period $ $ Provisions charged to expense ) ) Recoveries Deductions for amounts written-off ) ) Balance at end of period $ $ 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: March 26, 2016 December 26, 2015 Investment In Leases Allowance for Credit Losses Investment In Leases Allowance for Credit Losses Collectively evaluated for loss potential $ $ $ $ Individually evaluated for loss potential — — — — Total $ $ $ $ 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-accruing. 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. March 26, 2016 0-60 Days Delinquent and Accruing 61-90 Days Delinquent and Accruing Over 90 Days Delinquent and Accruing Non-Accrual Total Middle-Market $ $ — $ — $ — $ Small-Ticket — — Total Investment in Leases $ $ — $ — $ $ December 26, 2015 0-60 Days Delinquent and Accruing 61-90 Days Delinquent and Accruing Over 90 Days Delinquent and Accruing Non-Accrual Total Middle-Market $ $ — $ — $ — $ Small-Ticket — — Total Investment in Leases $ $ $ — $ — $

Recent Accounting Pronouncement

Recent Accounting Pronouncements:	3 Months Ended
	Mar. 26, 2016
Recent Accounting Pronouncements:
Recent Accounting Pronouncements:	6. Recent Accounting Pronouncements: In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers , which provides guidance for revenue recognition that supersedes existing revenue recognition guidance (but does not apply to nor supersede accounting guidance for lease contracts). The ASU’s core principle is that an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. As a result of the FASB’s issuance of ASU 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date , which deferred the effective date of ASU 2014-09 for all entities by one year, such ASU is effective for reporting periods beginning after December 15, 2017, 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 new standard will become effective for the Company beginning with the first quarter of fiscal 2018. The Company is currently in the process of evaluating the impact of the adoption of this ASU on the Company’s consolidated results. In January 2016, the FASB issued ASU 2016-01, Financial Statements — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities , which requires equity investments in unconsolidated entities (other than those accounted for using the equity method of accounting) to be measured at fair value with changes in fair value recognized in net income. There will no longer be an available-for-sale classification for equity securities with readily determinable fair values. The new guidance is effective for periods beginning after December 15, 2017, with early adoption permitted. The Company is currently in the process of evaluating the impact of the adoption of this ASU on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which provides guidance on accounting for leases that supersedes existing lease accounting guidance. The ASU’s core principle is that a lessee should recognize lease assets and lease liabilities for those leases classified as operating leases under existing lease accounting guidance. The new standard also makes targeted changes to lessor accounting. This guidance is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. The provisions of this guidance are to be applied using a modified retrospective approach, with elective reliefs, which requires application of the guidance for all periods presented. The Company is currently in the process of evaluating the impact of the adoption of this ASU on the Company’s consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which simplifies the accounting for the taxes related to stock based compensation, including adjustments to how excess tax benefits should be classified. This guidance will be effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The Company is currently in the process of evaluating the impact of the adoption of this ASU on the Company’s consolidated financial statements.

Earnings Per Share_

Earnings Per Share:	3 Months Ended
	Mar. 26, 2016
Earnings Per Share:
Earnings Per Share:	7. Earnings Per Share: The following table sets forth the presentation of shares outstanding used in the calculation of basic and diluted earnings per share (“EPS”): Three Months Ended March 26, 2016 March 28, 2015 Denominator for basic EPS — weighted average common shares Dilutive shares associated with option plans Denominator for diluted EPS — weighted average common shares and dilutive potential common shares Options excluded from EPS calculation — anti-dilutive

Shareholders' Equity (Deficit)_

Shareholders' Equity (Deficit):	3 Months Ended
	Mar. 26, 2016
Shareholders' Equity (Deficit):
Shareholders' Equity (Deficit):	8. Shareholders’ Equity (Deficit): Dividends On January 27, 2016, the Company’s Board of Directors approved the payment of a $0.07 per share quarterly cash dividend to shareholders of record at the close of business on February 10, 2016, which was paid on March 1, 2016. Repurchase of Common Stock In the first three months of 2016 the Company repurchased 16,149 shares of its common stock. Under the Board of Directors’ authorization, as of March 26, 2016, the Company has the ability to repurchase additional 144,033 shares of its common stock. Repurchases may be made from time to time at prevailing prices, subject to certain restrictions on volume, pricing and timing. Stock Option Plans and Stock-Based Compensation The Company had authorized up to 750,000 shares of common stock be reserved for granting either nonqualified or incentive stock options to officers and key employees under the Company’s 2001 Stock Option Plan (the “2001 Plan”). The 2001 Plan expired on February 20, 2011. The Company has authorized up to 500,000 shares of common stock to be reserved for granting either nonqualified or incentive stock options to officers and key employees under the Company’s 2010 Stock Option Plan (the “2010 Plan”). The Company also sponsors a Stock Option Plan for Nonemployee Directors (the “Nonemployee Directors Plan”) and has reserved a total of 350,000 shares for issuance to directors of the Company who are not employees. Stock option activity under the 2001 Plan, 2010 Plan and Nonemployee Directors Plan (collectively, the “Option Plans”) as of March 26, 2016 was as follows: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Intrinsic Value Outstanding at December 26, 2015 $ $ Exercised ) Outstanding at March 26, 2016 $ $ Exercisable at March 26, 2016 $ $ No options were granted during the three months ended March 26, 2016 or the three months ended March 28, 2015. All unexercised options at March 26, 2016 have an exercise price equal to the fair market value on the date of the grant. Compensation expense of $449,800 and $405,300 relating to the vested portion of the fair value of stock options granted was expensed to “Selling, General and Administrative Expenses” in the first three months of 2016 and 2015, respectively. As of March 26, 2016, the Company had $3.6 million of total unrecognized compensation expense related to stock options that is expected to be recognized over the remaining weighted average vesting period of approximately 2.3 years.

Debt_

Debt:	3 Months Ended
	Mar. 26, 2016
Debt:
Debt:	9. Debt: Line of Credit As of March 26, 2016, there were $33.5 million in borrowings outstanding under the Company’s $60.0 million Line of Credit with the PrivateBank and Trust Company and BMO Harris Bank N.A., bearing interest ranging from 2.68% to 3.50%, leaving $26.5 million available for additional borrowings. The Line of Credit has been and will continue to be used for general corporate purposes. The Line of Credit is secured by a lien against substantially all of the Company’s assets, contains customary financial conditions and covenants, and requires maintenance of minimum levels of debt service coverage and tangible net worth and maximum levels of leverage (all as defined within the Line of Credit). As of March 26, 2016, the Company was in compliance with all of its financial covenants. Notes Payable As of March 26, 2016, the Company had $23.5 million in principal outstanding from the $25.0 million Note Agreement (the “Note Agreement”) entered into in May 2015 with Prudential Investment Management, Inc., its affiliates and managed accounts (“Prudential”). The final maturity of the notes is 10 years. Interest at a rate of 5.50% per annum on the outstanding principal balance is payable quarterly, along with required prepayments of the principal of $500,000 quarterly for the first five years, and $750,000 quarterly thereafter until the principal is paid in full. The notes may be prepaid, at the option of the Company, in whole or in part (in a minimum amount of $1.0 million), but prepayments require payment of a Yield Maintenance Amount, as defined in the Note Agreement. The Company’s obligations under the Note Agreement are secured by a lien against substantially all of the Company’s assets (as the notes rank pari passu with the Line of Credit), and the Note Agreement contains customary financial conditions and covenants, and requires maintenance of minimum levels of fixed charge coverage and tangible net worth and maximum levels of leverage (all as defined within the Note Agreement). As of March 26, 2016, the Company was in compliance with all of its financial covenants. In connection with the Note Agreement, the Company incurred debt issuance costs, of which unamortized amounts are presented as a direct deduction from the carrying amount of the related liability.

Segment Reporting_

Segment Reporting:	3 Months Ended
	Mar. 26, 2016
Segment Reporting:
Segment Reporting:	10. Segment Reporting: The Company currently has two reportable business segments, franchising and leasing. The franchising segment franchises value-oriented retail store concepts that buy, sell, trade and consign merchandise. The leasing segment includes (i) Winmark Capital Corporation, a middle-market equipment leasing business and (ii) Wirth Business Credit, Inc., a small ticket financing business. Segment reporting is intended to give financial statement users a better view of how the Company manages and evaluates its businesses. The Company’s internal management reporting is the basis for the information disclosed for its business segments and includes allocation of shared-service costs. Segment assets are those that are directly used in or identified with segment operations, including cash, accounts receivable, prepaids, inventory, property and equipment and investment in leasing operations. Unallocated assets include corporate cash and cash equivalents, marketable securities, current and deferred tax amounts and other corporate assets. Inter-segment balances and transactions have been eliminated. The following tables summarize financial information by segment and provide a reconciliation of segment contribution to operating income: Three Months Ended March 26, 2016 March 28, 2015 Revenue: Franchising $ $ Leasing Total revenue $ $ Reconciliation to operating income: Franchising segment contribution $ $ Leasing segment contribution Total operating income $ $ Depreciation: Franchising $ $ Leasing Total depreciation $ $ As of March 26, 2016 December 26, 2015 Identifiable assets: Franchising $ $ Leasing Unallocated Total $ $

Investments_ (Tables)

Investments: (Tables)	3 Months Ended
	Mar. 26, 2016
Investments:
Summary of marketable securities classified as available-for-sale securities	March 26, 2016 December 26, 2015 Cost Fair Value Cost Fair Value Equity securities $ $ $ $
Schedule of the Company's unrealized gains and losses for marketable securities classified as available-for-sale securities in accumulated other comprehensive loss	March 26, 2016 December 26, 2015 Unrealized gains $ — $ — Unrealized losses ) ) Net unrealized losses $ ) $ )
Schedule of the Company's realized gains and losses recognized on sales of available-for-sale marketable securities	Three Months Ended March 26, 2016 March 28, 2015 Realized gains $ — $ Realized losses ) ) Net realized losses $ ) $ )

Investment in Leasing Operati18

Investment in Leasing Operations: (Tables)	3 Months Ended
	Mar. 26, 2016
Investment in Leasing Operations:
Schedule of investment in leasing operations	March 26, 2016 December 26, 2015 Direct financing and sales-type leases: Minimum lease payments receivable $ $ Estimated residual value of equipment Unearned lease income net of initial direct costs deferred ) ) Security deposits ) ) Equipment installed on leases not yet commenced Total investment in direct financing and sales-type leases Allowance for credit losses ) ) Net investment in direct financing and sales-type leases Operating leases: Operating lease assets Less accumulated depreciation and amortization ) ) Net investment in operating leases Total net investment in leasing operations $ $
Schedule of future minimum lease payments receivable under lease contracts and the amortization of unearned lease income, net of initial direct costs deferred	Direct Financing and Sales-Type Leases Operating Leases Minimum Lease Payments Receivable Income Amortization Minimum Lease Payments Receivable 2016 $ $ $ 2017 — 2018 — 2019 — 2020 — — — Thereafter — — — $ $ $
Schedule of activity in the allowance for credit losses for leasing operations	March 26, 2016 March 28, 2015 Balance at beginning of period $ $ Provisions charged to expense ) ) Recoveries Deductions for amounts written-off ) ) Balance at end of period $ $
Schedule of investment in direct financing and sales-type leases (investment in leases) and allowance for credit losses by loss evaluation methodology	March 26, 2016 December 26, 2015 Investment In Leases Allowance for Credit Losses Investment In Leases Allowance for Credit Losses Collectively evaluated for loss potential $ $ $ $ Individually evaluated for loss potential — — — — Total $ $ $ $
Schedule of information regarding accruing and non-accrual leases	March 26, 2016 0-60 Days Delinquent and Accruing 61-90 Days Delinquent and Accruing Over 90 Days Delinquent and Accruing Non-Accrual Total Middle-Market $ $ — $ — $ — $ Small-Ticket — — Total Investment in Leases $ $ — $ — $ $ December 26, 2015 0-60 Days Delinquent and Accruing 61-90 Days Delinquent and Accruing Over 90 Days Delinquent and Accruing Non-Accrual Total Middle-Market $ $ — $ — $ — $ Small-Ticket — — Total Investment in Leases $ $ $ — $ — $

Earnings Per Share_ (Tables)

Earnings Per Share: (Tables)	3 Months Ended
	Mar. 26, 2016
Earnings Per Share:
Schedule of shares outstanding used in the calculation of basic and diluted earnings per share	Three Months Ended March 26, 2016 March 28, 2015 Denominator for basic EPS — weighted average common shares Dilutive shares associated with option plans Denominator for diluted EPS — weighted average common shares and dilutive potential common shares Options excluded from EPS calculation — anti-dilutive

Shareholders' Equity (Deficit20

Shareholders' Equity (Deficit): (Tables)	3 Months Ended
	Mar. 26, 2016
Shareholders' Equity (Deficit):
Schedule of stock option activity	Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Intrinsic Value Outstanding at December 26, 2015 $ $ Exercised ) Outstanding at March 26, 2016 $ $ Exercisable at March 26, 2016 $ $

Segment Reporting_ (Tables)

Segment Reporting: (Tables)	3 Months Ended
	Mar. 26, 2016
Segment Reporting:
Schedule of financial information by segment and reconciliation of segment contribution to operating income	Three Months Ended March 26, 2016 March 28, 2015 Revenue: Franchising $ $ Leasing Total revenue $ $ Reconciliation to operating income: Franchising segment contribution $ $ Leasing segment contribution Total operating income $ $ Depreciation: Franchising $ $ Leasing Total depreciation $ $ As of March 26, 2016 December 26, 2015 Identifiable assets: Franchising $ $ Leasing Unallocated Total $ $

Management's Interim Financia22

Management's Interim Financial Statement Representation: (Details)	3 Months Ended
	Mar. 26, 2016item
Minimum
Number of Weeks in Fiscal Year	52
Maximum
Number of Weeks in Fiscal Year	53

Investments_ (Details)

Investments: (Details) - USD ($)	3 Months Ended
	Mar. 26, 2016	Mar. 28, 2015	Dec. 26, 2015
Summary of marketable securities classified as available-for-sale securities
Equity securities, Cost	$ 257,300		$ 280,600
Equity securities, Fair Value	220,100		227,800
Unrealized gains and losses for marketable securities classified as available-for-sale securities in accumulated other comprehensive loss
Unrealized losses	(37,200)		(52,800)
Net unrealized losses	(37,200)		$ (52,800)
Realized gains and losses recognized on sales of available-for-sale marketable securities
Realized gains		$ 13,400
Realized losses	(6,200)	(36,200)
Net realized losses	$ (6,200)	$ (22,800)

Investment in Leasing Operati24

Investment in Leasing Operations: Summary of Leasing Operations (Details) - USD ($)	Mar. 26, 2016	Dec. 26, 2015
Direct financing and sales-type leases:
Minimum lease payments receivable	$ 37,488,800	$ 37,181,600
Estimated residual value of equipment	4,512,200	4,511,000
Unearned lease income net of initial direct costs deferred	(4,943,000)	(4,999,700)
Security deposits	(3,780,300)	(3,640,500)
Equipment installed on leases not yet commenced	5,764,200	6,754,200
Total investment in direct financing and sales-type leases	39,041,900	39,806,600
Allowance for credit losses	(841,600)	(859,100)
Net investment in direct financing and sales-type leases	38,200,300	38,947,500
Operating leases:
Operating lease assets	1,019,800	1,083,300
Less accumulated depreciation and amortization	(924,800)	(1,043,300)
Net investment in operating leases	95,000	40,000
Total net investment in leasing operations	38,295,300	38,987,500
Net investment in leases - current	18,122,400	17,741,500
Net investment in leases - long-term	$ 20,172,900	$ 21,246,000

Investment in Leasing Operati25

Investment in Leasing Operations: Risk Concentration (Details) - Total assets	3 Months Ended
	Mar. 26, 2016customer
Investment in leasing operations
Number of customers	3
Customer One Concentration Risk
Investment in leasing operations
Percentage of concentration risk	19.00%
Customer Two Concentration Risk
Investment in leasing operations
Percentage of concentration risk	14.00%
Customer Three Concentration Risk Member
Investment in leasing operations
Percentage of concentration risk	11.00%

Investment in Leasing Operati26

Investment in Leasing Operations: Minimum Lease Payments Receivable (Details) - USD ($)	Mar. 26, 2016	Dec. 26, 2015
Direct Financing and Sales-Type Leases, Minimum Lease Payments Receivable
2,016	$ 18,726,700
2,017	14,109,600
2,018	4,536,000
2,019	116,500
Total	37,488,800	$ 37,181,600
Direct Financing and Sales-Type Leases, Income Amortization
2,016	2,940,500
2,017	1,734,100
2,018	268,300
2,019	100
Total	4,943,000
Operating Leases, Minimum Lease Payments Receivable
2,016	10,000
Total	$ 10,000

Investment in Leasing Operati27

Investment in Leasing Operations: Credit Losses (Details) - USD ($)	3 Months Ended
	Mar. 26, 2016	Mar. 28, 2015	Dec. 26, 2015
Investment In Leases
Total investment in direct financing and sales-type leases	$ 39,041,900		$ 39,806,600
Allowance for Credit Losses
Collectively evaluated for loss potential	841,600		859,100
Total	841,600		859,100
Investment in leases
Activity in the allowance for credit losses for leasing operations
Balance at beginning of period	859,100	$ 386,000
Provisions charged to expense	(14,400)	(69,100)
Recoveries	700	620,600
Deductions for amounts written-off	(3,800)	(4,900)
Balance at end of period	841,600	$ 932,600
Investment In Leases
Collectively evaluated for loss potential	39,041,900		39,806,600
Total investment in direct financing and sales-type leases	$ 39,041,900		$ 39,806,600

Investment in Leasing Operati28

Investment in Leasing Operations: Investment Aging (Details) - USD ($)	Mar. 26, 2016	Dec. 26, 2015
Investment in leasing operations
0-60 Days Delinquent and Accruing	$ 39,039,900	$ 39,802,400
61-90 Days Delinquent and Accruing		4,200
Non-Accrual	2,000
Total investment in direct financing and sales-type leases	39,041,900	39,806,600
Middle-Market
Investment in leasing operations
0-60 Days Delinquent and Accruing	37,881,000	38,616,600
Total investment in direct financing and sales-type leases	37,881,000	38,616,600
Small-Ticket
Investment in leasing operations
0-60 Days Delinquent and Accruing	1,158,900	1,185,800
61-90 Days Delinquent and Accruing		4,200
Non-Accrual	2,000
Total investment in direct financing and sales-type leases	$ 1,160,900	$ 1,190,000

Earnings Per Share_ (Details)

Earnings Per Share: (Details) - shares	3 Months Ended
	Mar. 26, 2016	Mar. 28, 2015
Earnings Per Share:
Denominator for basic EPS - weighted average common shares	4,114,071	4,999,475
Dilutive shares associated with option plans	199,849	167,991
Denominator for diluted EPS - weighted average common shares and dilutive potential common shares	4,313,920	5,167,466
Options excluded from EPS calculation - anti-dilutive (in shares)	14,870	21,058

Shareholders' Equity (Deficit30

Shareholders' Equity (Deficit): Dividends and Repurchase of Common Stock (Details) - $ / shares	Jan. 27, 2016	Mar. 26, 2016
Dividends
Cash dividends declared and paid (in dollars per share)	$ 0.07
Common Stock Repurchase Program
Repurchase of Common Stock
Number of shares repurchased		16,149
Number of additional shares that can be repurchased		144,033

Shareholders' Equity (Deficit31

Shareholders' Equity (Deficit): Stock Option Plans and Stock-Based Compensation (Details) - Stock options - USD ($)	3 Months Ended		12 Months Ended
	Mar. 26, 2016	Mar. 28, 2015	Dec. 26, 2015
Number of Shares
Outstanding at the beginning of the period (in shares)	668,740
Exercised (in shares)	(2,187)
Outstanding at the end of the period (in shares)	666,553		668,740
Exercisable at the end of the period (in shares)	438,390
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 53.73
Exercised (in dollars per share)	68.69
Outstanding at the end of the period (in dollars per share)	53.68		$ 53.73
Exercisable at the end of the period (in dollars per share)	$ 41.63
Weighted Average Remaining Contractual Life (years)
Outstanding	6 years 1 month 24 days		6 years 4 months 28 days
Exercisable at the end of the period	5 years 11 days
Intrinsic Value
Outstanding	$ 29,704,000		$ 25,582,300
Exercisable at the end of the period	$ 24,817,100
Additional disclosures
Granted (in shares)	0	0
Compensation expense	$ 449,800	$ 405,300
Total unrecognized compensation expense	$ 3,600,000
Weighted average period for recognition of unrecognized compensation expense	2 years 3 months 18 days
2001 Plan
Stock Option Plans
Number of shares authorized for issuance	750,000
2010 Plan
Stock Option Plans
Number of shares authorized for issuance	500,000
Nonemployee Directors Plan
Stock Option Plans
Number of shares authorized for issuance	350,000

Debt_ Line of Credit (Details)

Debt: Line of Credit (Details) $ in Millions	Mar. 26, 2016USD ($)
Private Bank, Trust Company and BMO Harris Bank N A
Line of Credit
Borrowings outstanding	$ 33.5
Maximum borrowing capacity	60
Line of credit available for additional borrowings	$ 26.5
Minimum
Line of Credit
Interest rate (as a percent)	2.68%
Maximum
Line of Credit
Interest rate (as a percent)	3.50%

Debt_ Notes Payable (Details)

Debt: Notes Payable (Details) - Notes Payable, Other Payables - Prudential Investment Management, Inc - USD ($)	1 Months Ended
	May. 30, 2015	Mar. 26, 2016
Notes Payable
Notes Payable, Carrying Value		$ 23,500,000
Notes Payable, Face Value	$ 25,000,000
Term of Notes Payable	10 years
Interest	5.50%
Quarterly principal payment, first five year	$ 500,000
Quarterly principal payment, thereafter	750,000
Minimum prepayment	$ 1,000,000

Segment Reporting_ (Details)

Segment Reporting: (Details)	3 Months Ended
	Mar. 26, 2016USD ($)item	Mar. 28, 2015USD ($)	Dec. 26, 2015USD ($)
Segment Reporting
Number of reportable business segments | item	2
Total revenue	$ 16,180,300	$ 21,024,100
Total operating income	8,038,600	9,974,100
Total depreciation	109,200	107,600
Total identifiable assets	43,755,500	47,406,300	$ 47,406,300
Operating | Franchising
Segment Reporting
Total revenue	11,667,600	11,014,500
Total operating income	5,909,700	5,636,800
Total depreciation	84,800	85,300
Total identifiable assets	3,034,600	3,100,900
Operating | Leasing
Segment Reporting
Total revenue	4,512,700	10,009,600
Total operating income	2,128,900	4,337,300
Total depreciation	24,400	22,300
Total identifiable assets	39,468,800	39,687,400
Unallocated
Segment Reporting
Total identifiable assets	$ 1,252,100	$ 4,618,000