WINA Winmark Corporation

Winmark Corporation (Nasdaq: WINA) announced today net income for the year ended December 30, 2017 of $24,565,100 or $5.66 per share diluted compared to net income of $22,217,600 or $5.13 per share diluted in 2016. The fourth quarter 2017 net income was $7,656,500 or $1.86 per share diluted, compared to net income of $6,166,200 or $1.41 per share diluted, for the same period last year. Revenues for the year ended December 30, 2017 were $69,745,900, up from $66,580,300 in 2016. As a result of the recently enacted Tax Cut and Jobs Act, the Company recognized a one-time, non-cash, tax benefit of approximately $1.5 million or $0.36 per share in the fourth quarter related to the remeasurement of its deferred tax assets and liabilities from the reduction in U.S. federal corporate income tax rates.

“Throughout the year, we experienced steady growth in royalties as our franchisees continued to perform well,” noted Brett D. Heffes, Chief Executive Officer. “We have continued to invest in Winmark Franchise Partners since its launch earlier last year, and I am excited by the long-term opportunities for this business.”

Winmark Corporation creates, supports and finances business. At December 30, 2017, there were 1,211 franchises in operation under the brands Plato's Closet®, Once Upon A Child®, Play It Again Sports®, Style Encore® and Music Go Round®. An additional 62 retail franchises have been awarded but are not open. In addition, at December 30, 2017, the Company had a lease portfolio of $41.3 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)

           

December 30, 2017

December 31, 2016

ASSETS Current Assets: Cash and cash equivalents $ 1,073,200 $ 1,252,900 Marketable securities — 199,900 Receivables, net 1,796,000 1,479,200 Restricted cash 90,000 40,000 Net investment in leases - current 15,332,300 17,004,800 Income tax receivable 2,161,800 1,678,800 Inventories 97,100 87,500 Prepaid expenses 814,800   1,050,700   Total current assets 21,365,200 22,793,800   Net investment in leases – long-term 25,945,300 24,410,700 Property and equipment, net 486,800 769,600 Goodwill 607,500   607,500   $ 48,404,800   $ 48,581,600     LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) Current Liabilities: Notes payable, net $ 3,236,100 $ 1,990,000 Accounts payable 2,073,000 1,692,000 Accrued liabilities 1,837,300 1,811,100 Discounted lease rentals 570,800 — Deferred revenue 1,736,200   1,864,700   Total current liabilities 9,453,400 7,357,800   Long-Term Liabilities: Line of credit 35,400,000 23,400,000 Notes payable, net 28,841,000 19,926,500 Discounted lease rentals 1,121,600 — Deferred revenue 1,465,500 1,423,800 Other liabilities 845,000 993,600 Deferred income taxes 1,956,500   3,331,900   Total long-term liabilities 69,629,600 49,075,800   Shareholders’ Equity (Deficit):

Common stock, no par, 10,000,000 shares authorized, 3,843,078 and 4,165,769 shares issued and outstanding

1,476,200 2,976,100 Accumulated other comprehensive income (loss) — (9,900 ) Retained earnings (accumulated deficit) (32,154,400 ) (10,818,200 )   Total shareholders’ equity (deficit) (30,678,200 ) (7,852,000 ) $ 48,404,800   $ 48,581,600       WINMARK CORPORATION CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

                        Quarter Ended     Fiscal Year Ended December 30, 2017     December 31, 2016     December 30, 2017     December 31, 2016 REVENUE:         Royalties $ 11,778,400 $ 11,854,100 $ 45,643,500 $ 43,994,900 Leasing income 4,748,200 4,444,600 18,470,200 17,283,600 Merchandise sales 513,700 334,500 2,572,200 2,216,900 Franchise fees 267,200 257,000 1,529,700 1,624,800 Other 497,200   475,700   1,530,300   1,460,100   Total revenue 17,804,700 17,365,900 69,745,900 66,580,300 COST OF MERCHANDISE SOLD 490,200 316,600 2,432,600 2,101,400 LEASING EXPENSE 545,100 313,400 3,269,100 2,323,800 PROVISION FOR CREDIT LOSSES 35,200 70,500 9,000 18,500 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 6,071,200   6,164,100   25,250,600   23,835,600   Income from operations 10,663,000 10,501,300 38,784,600 38,301,000 INTEREST EXPENSE (807,100 ) (556,000 ) (2,366,400 ) (2,342,800 ) INTEREST AND OTHER INCOME (EXPENSE) (17,000 ) (4,900 ) 12,900   (12,200 ) Income before income taxes 9,838,900 9,940,400 36,431,100 35,946,000 PROVISION FOR INCOME TAXES (2,182,400 ) (3,774,200 ) (11,866,000 ) (13,728,400 ) NET INCOME $ 7,656,500   $ 6,166,200   $ 24,565,100   $ 22,217,600   EARNINGS PER SHARE – BASIC $ 2.00   $ 1.49   $ 6.06   $ 5.39   EARNINGS PER SHARE – DILUTED $ 1.86   $ 1.41   $ 5.66   $ 5.13   WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC 3,830,396   4,148,021   4,056,049   4,122,854   WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED 4,111,229   4,359,170   4,339,944   4,330,490    

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Winmark CorporationBrett D. Heffes, 763-520-8500