Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 28, 2019 | Oct. 11, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | WINMARK CORP | |
Entity Central Index Key | 0000908315 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 28, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-28 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 3,830,850 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 28, 2019 | Dec. 29, 2018 |
Current Assets: | ||
Cash and cash equivalents | $ 7,487,200 | $ 2,496,000 |
Restricted cash | 75,000 | 80,000 |
Receivables, less allowance for doubtful accounts of $900 and $400 | 1,594,400 | 1,553,100 |
Net investment in leases - current | 14,352,800 | |
Net investment in leases - current | 18,547,500 | |
Income tax receivable | 391,700 | 565,500 |
Inventories | 69,700 | 107,600 |
Prepaid expenses | 1,012,500 | 901,600 |
Total current assets | 24,983,300 | 24,251,300 |
Net investment in leases - long-term | 15,644,900 | |
Net investment in leases - long-term | 20,455,500 | |
Property and equipment, net | 2,863,700 | 866,200 |
Operating lease right-of-use assets | 3,734,400 | |
Goodwill | 607,500 | 607,500 |
Other assets | 501,200 | 482,600 |
Deferred income taxes | 172,500 | |
Total assets | 48,507,500 | 46,663,100 |
Current Liabilities: | ||
Notes payable, net of unamortized debt issuance costs of $13,900 and $13,900 | 3,486,100 | 3,236,100 |
Accounts payable | 1,185,300 | 1,351,800 |
Accrued liabilities | 2,980,000 | 3,128,600 |
Discounted lease rentals | 3,012,900 | 3,021,900 |
Deferred revenue | 1,730,900 | 1,744,900 |
Total current liabilities | 12,395,200 | 12,483,300 |
Long-Term Liabilities: | ||
Notes payable, net of unamortized debt issuance costs of $72,200 and $82,600 | 22,927,800 | 25,604,900 |
Discounted lease rentals | 1,354,000 | 2,723,500 |
Deferred revenue | 8,031,900 | 8,432,400 |
Operating lease liabilities | 5,953,100 | |
Other liabilities | 971,500 | 1,079,200 |
Deferred income taxes | 1,148,300 | |
Total long-term liabilities | 39,238,300 | 38,988,300 |
Shareholders' Equity (Deficit): | ||
Common stock, no par value, 10,000,000 shares authorized, 3,822,978 and 3,907,686 shares issued and outstanding | 3,851,000 | 4,425,600 |
Retained earnings (accumulated deficit) | (6,977,000) | (9,234,100) |
Total shareholders' equity (deficit) | (3,126,000) | (4,808,500) |
Total liabilities and shareholders' equity (deficit) | $ 48,507,500 | $ 46,663,100 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 28, 2019 | Dec. 29, 2018 |
CONSOLIDATED CONDENSED BALANCE SHEETS | ||
Receivables, allowance for doubtful accounts | $ 900 | $ 400 |
Unamortized debt issuance costs - Current | 13,900 | 13,900 |
Unamortized debt issuance costs - Noncurrent | $ 72,200 | $ 82,600 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 3,822,978 | 3,907,686 |
Common stock, shares outstanding | 3,822,978 | 3,907,686 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Revenue: | ||||
Leasing income | $ 4,375,500 | $ 12,733,800 | ||
Leasing income | 4,375,500 | $ 4,608,600 | $ 14,994,500 | |
Total revenue | 19,680,900 | 19,118,500 | 55,416,300 | 55,439,300 |
Leasing expense | 572,400 | 718,500 | 1,642,000 | 1,769,200 |
Provision for credit losses | (55,500) | (55,600) | 23,900 | 148,400 |
Selling, general and administrative expenses | 6,217,600 | 6,208,800 | 19,637,900 | 19,702,500 |
Income from operations | 12,274,700 | 11,435,300 | 32,188,100 | 31,584,200 |
Interest expense | (406,200) | (576,900) | (1,348,700) | (1,978,600) |
Interest and other income (expense) | 500 | (1,000) | (5,900) | (13,300) |
Income before income taxes | 11,869,000 | 10,857,400 | 30,833,500 | 29,592,300 |
Provision for income taxes | (2,755,200) | (2,493,100) | (7,145,600) | (7,124,600) |
Net income | $ 9,113,800 | $ 8,364,300 | $ 23,687,900 | $ 22,467,700 |
Earnings per share - basic (in dollars per share) | $ 2.39 | $ 2.15 | $ 6.19 | $ 5.81 |
Earnings per share - diluted (in dollars per share) | $ 2.24 | $ 2.01 | $ 5.76 | $ 5.43 |
Weighted average shares outstanding - basic | 3,808,863 | 3,886,473 | 3,829,329 | 3,864,077 |
Weighted average shares outstanding - diluted | 4,065,301 | 4,164,339 | 4,112,318 | 4,140,816 |
Royalties | ||||
Revenue: | ||||
Revenue | $ 13,808,800 | $ 12,865,900 | $ 38,223,400 | $ 35,735,900 |
Merchandise sales | ||||
Revenue: | ||||
Revenue | 704,500 | 858,400 | 2,037,300 | 2,340,200 |
Cost of merchandise sold | 671,700 | 811,500 | 1,924,400 | 2,235,000 |
Franchise fees | ||||
Revenue: | ||||
Revenue | 377,400 | 383,300 | 1,183,100 | 1,162,300 |
Other | ||||
Revenue: | ||||
Revenue | $ 414,700 | $ 402,300 | $ 1,238,700 | $ 1,206,400 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) - USD ($) | Common Stock | Retained Earnings (Accumulated Deficit) | Total |
BALANCE at Dec. 30, 2017 | $ 1,476,200 | $ (37,189,700) | $ (35,713,500) |
BALANCE (in shares) at Dec. 30, 2017 | 3,843,078 | ||
Shareholders’ Equity (Deficit) | |||
Stock options exercised | $ 48,400 | 48,400 | |
Stock options exercised (in shares) | 6,428 | ||
Compensation expense relating to stock options | $ 490,800 | 490,800 | |
Cash dividends | (423,200) | (423,200) | |
Comprehensive income (Net income) | 6,960,400 | 6,960,400 | |
BALANCE at Mar. 31, 2018 | $ 2,015,400 | (30,652,500) | (28,637,100) |
BALANCE (in shares) at Mar. 31, 2018 | 3,849,506 | ||
Shareholders’ Equity (Deficit) | |||
Stock options exercised | $ 798,100 | 798,100 | |
Stock options exercised (in shares) | 19,020 | ||
Compensation expense relating to stock options | $ 516,100 | 516,100 | |
Cash dividends | (577,900) | (577,900) | |
Comprehensive income (Net income) | 7,143,000 | 7,143,000 | |
BALANCE at Jun. 30, 2018 | $ 3,329,600 | (24,087,400) | (20,757,800) |
BALANCE (in shares) at Jun. 30, 2018 | 3,868,526 | ||
Shareholders’ Equity (Deficit) | |||
Repurchase of common stock | $ (558,200) | (558,200) | |
Repurchase of common stock (in shares) | (3,770) | ||
Stock options exercised | $ 1,325,100 | 1,325,100 | |
Stock options exercised (in shares) | 36,446 | ||
Compensation expense relating to stock options | $ 500,900 | 500,900 | |
Cash dividends | (583,000) | (583,000) | |
Comprehensive income (Net income) | 8,364,300 | 8,364,300 | |
BALANCE at Sep. 29, 2018 | $ 4,597,400 | (16,306,100) | (11,708,700) |
BALANCE (in shares) at Sep. 29, 2018 | 3,901,202 | ||
BALANCE at Dec. 29, 2018 | $ 4,425,600 | (9,234,100) | $ (4,808,500) |
BALANCE (in shares) at Dec. 29, 2018 | 3,907,686 | 3,907,686 | |
Shareholders’ Equity (Deficit) | |||
Repurchase of common stock | $ (5,081,000) | (18,947,100) | $ (24,028,100) |
Repurchase of common stock (in shares) | (150,000) | ||
Stock options exercised | $ 156,600 | 156,600 | |
Stock options exercised (in shares) | 1,500 | ||
Compensation expense relating to stock options | $ 498,800 | 498,800 | |
Cash dividends | (586,100) | (586,100) | |
Comprehensive income (Net income) | 7,272,200 | 7,272,200 | |
BALANCE at Mar. 30, 2019 | (21,495,100) | (21,495,100) | |
BALANCE (in shares) at Mar. 30, 2019 | 3,759,186 | ||
BALANCE at Dec. 29, 2018 | $ 4,425,600 | (9,234,100) | $ (4,808,500) |
BALANCE (in shares) at Dec. 29, 2018 | 3,907,686 | 3,907,686 | |
BALANCE at Sep. 28, 2019 | $ 3,851,000 | (6,977,000) | $ (3,126,000) |
BALANCE (in shares) at Sep. 28, 2019 | 3,822,978 | 3,822,978 | |
BALANCE at Mar. 30, 2019 | (21,495,100) | $ (21,495,100) | |
BALANCE (in shares) at Mar. 30, 2019 | 3,759,186 | ||
Shareholders’ Equity (Deficit) | |||
Stock options exercised | $ 788,800 | 788,800 | |
Stock options exercised (in shares) | 22,153 | ||
Compensation expense relating to stock options | $ 516,800 | 516,800 | |
Cash dividends | (942,800) | (942,800) | |
Comprehensive income (Net income) | 7,301,900 | 7,301,900 | |
BALANCE at Jun. 29, 2019 | $ 1,305,600 | (15,136,000) | (13,830,400) |
BALANCE (in shares) at Jun. 29, 2019 | 3,781,339 | ||
Shareholders’ Equity (Deficit) | |||
Stock options exercised | $ 2,049,600 | 2,049,600 | |
Stock options exercised (in shares) | 41,639 | ||
Compensation expense relating to stock options | $ 495,800 | 495,800 | |
Cash dividends | (954,800) | (954,800) | |
Comprehensive income (Net income) | 9,113,800 | 9,113,800 | |
BALANCE at Sep. 28, 2019 | $ 3,851,000 | $ (6,977,000) | $ (3,126,000) |
BALANCE (in shares) at Sep. 28, 2019 | 3,822,978 | 3,822,978 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
OPERATING ACTIVITIES: | ||
Net Income | $ 23,687,900 | $ 22,467,700 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 276,700 | 233,700 |
Provision for credit losses | 23,900 | 148,400 |
Compensation expense related to stock options | 1,511,400 | 1,507,800 |
Deferred income taxes | (1,320,800) | 105,300 |
Deferred initial direct costs | (87,400) | (1,198,600) |
Amortization of deferred initial direct costs | 492,800 | 809,500 |
Operating lease right of use asset amortization | 285,000 | |
Tax benefits on exercised stock options | 580,700 | 297,900 |
Change in operating assets and liabilities: | ||
Receivables | (41,300) | 39,100 |
Principal collections on lease receivables | 14,407,300 | |
Income tax receivable/payable | (406,900) | 2,766,700 |
Inventories | 37,900 | (31,100) |
Prepaid expenses | (110,900) | (173,800) |
Other assets | (18,600) | (90,100) |
Accounts payable | (166,500) | (628,000) |
Accrued and other liabilities | (519,300) | 1,775,800 |
Rents received in advance and security deposits | (149,500) | (376,000) |
Deferred revenue | (414,500) | (35,700) |
Net cash provided by operating activities | 38,067,900 | 27,618,600 |
INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (135,200) | (472,400) |
Purchase of equipment for lease contracts | (7,936,600) | (20,219,800) |
Principal collections on lease receivables | 16,303,500 | |
Net cash used for investing activities | (8,071,800) | (4,388,700) |
FINANCING ACTIVITIES: | ||
Proceeds from borrowings on line of credit | 18,800,000 | 7,300,000 |
Payments on line of credit | (18,800,000) | (32,600,000) |
Payments on notes payable | (2,437,500) | (2,437,500) |
Repurchases of common stock | (24,028,100) | (558,200) |
Proceeds from exercises of stock options | 2,995,000 | 2,171,600 |
Dividends paid | (2,483,700) | (1,584,100) |
Proceeds from discounted lease rentals | 944,400 | 4,557,300 |
Net cash used for financing activities | (25,009,900) | (23,150,900) |
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 4,986,200 | 79,000 |
Cash, cash equivalents and restricted cash, beginning of period | 2,576,000 | 1,163,200 |
Cash, cash equivalents and restricted cash, end of period | $ 7,562,200 | $ 1,242,200 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS - Supplemental Dislcosures - USD ($) | 9 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
SUPPLEMENTAL DISCLOSURES: | ||
Cash paid for interest | $ 1,322,800 | $ 2,015,000 |
Cash paid for income taxes | 8,292,700 | 3,954,700 |
Non-cash landlord leasehold improvements | 2,139,000 | |
Reconciliation of cash, cash equivalents and restricted cash: | ||
Cash and cash equivalents | 7,487,200 | 1,187,200 |
Restricted cash | 75,000 | 55,000 |
Total cash, cash equivalents and restricted cash | $ 7,562,200 | $ 1,242,200 |
Management's Interim Financial
Management's Interim Financial Statement Representation: | 9 Months Ended |
Sep. 28, 2019 | |
Management's Interim Financial Statement Representation: | |
Management's Interim Financial Statement Representation: | WINMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. Management’s Interim Financial Statement Representation: The accompanying consolidated condensed financial statements have been prepared by Winmark Corporation and subsidiaries (the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The Company has a 52/53 week year which ends on the last Saturday in December. The information in the consolidated condensed financial statements includes normal recurring adjustments and reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of such financial statements. The consolidated condensed financial statements and notes are presented in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for Form 10-Q, and therefore do not contain certain information included in the Company’s annual consolidated financial statements and notes. This report should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s latest Annual Report on Form 10-K. Revenues and operating results for the nine months ended September 28, 2019 are not necessarily indicative of the results to be expected for the full year. Reclassifications Certain reclassifications of previously reported amounts have been made to conform to the current year presentation. Such reclassifications did not impact net income or shareholders’ equity (deficit) as previously reported. |
Organization and Business_
Organization and Business: | 9 Months Ended |
Sep. 28, 2019 | |
Organization and Business: | |
Organization and Business: | 2. Organization and Business: The Company offers licenses to operate franchises using the service marks Plato’s Closet®, Once Upon A Child®, Play It Again Sports®, Style Encore® and Music Go Round®. The Company uses its Winmark Franchise Partners® mark in connection with its strategic consulting and corporate development activities. The Company also operates both middle market and small-ticket equipment leasing businesses under the Winmark Capital® and Wirth Business Credit® marks. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements: | 9 Months Ended |
Sep. 28, 2019 | |
Recent Accounting Pronouncements: | |
Recent Accounting Pronouncements: | 3. Recent Accounting Pronouncements: Recently Issued Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments , which changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. This guidance will be effective for reporting periods beginning after December 15, 2019, with early adoption permitted. While the Company is currently in the process of evaluating the impact of the adoption of this ASU on the Company’s consolidated financial statements, at this time it does not believe the adoption of the ASU will have a material impact on its consolidated financial statements. Recently Adopted Accounting Pronouncements 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, as well as adding new disclosures for leasing activities. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842 (Leases) , which provides narrow amendments to clarify how to apply certain aspects of the new lease standard. In July 2018, the FASB also issued ASU 2018-11, Leases (Topic 842): Targeted Improvements , which provides an optional transition method that allows entities to elect to apply the standard prospectively at its effective date, versus recasting the prior periods presented. The Company used the prospective approach of adoption when the new guidance was adopted on December 30, 2018, the first day of fiscal 2019. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard which allowed it to carry forward historical lease classification. Upon adoption, as a lessee, the Company recognized operating lease right-of-use assets of $6.0 million and operating lease liabilities of $6.3 million on its Consolidated Condensed Balance Sheets. The adoption of the standard did not have a material impact on its Consolidated Condensed Statements of Operations or Shareholders’ Equity (Deficit). As a lessor, the adoption of the new standard required the Company to present cash receipts from leases within operating activities in the Consolidated Condensed Statements of Cash Flows, where in prior periods such cash receipts are presented within investing activities. For the nine months ended September 28, 2019, principal collections on lease receivables were $14.4 million. As a lessor, 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. For sales-type leases in which the equipment has a fair value greater or less than its carrying amount, selling profit/loss is recognized at commencement. For subsequent periods or for leases in which the equipment’s fair value is equal to its carrying amount, 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. Additional information and disclosures required by this new standard for the Company as a lessee are contained in Note 11 – “Operating Leases”, and as a lessor in Note 6 – “Investment in Leasing Operations”. |
Contract Liabilities_
Contract Liabilities: | 9 Months Ended |
Sep. 28, 2019 | |
Contract Liabilities: | |
Contract Liabilities: | 4. Contract Liabilities: The Company’s contract liabilities for its franchise revenues consist of deferred revenue associated with franchise fees and software license fees. The table below presents the activity of the current and noncurrent deferred franchise revenue during the third nine months of 2019 and 2018, respectively: September 28, 2019 September 29, 2018 Balance at beginning of period $ 10,177,300 $ 10,310,200 Franchise and software license fees collected from franchisees, excluding amount earned as revenue during the period 979,700 1,354,500 Fees earned that were included in the balance at the beginning of the period (1,394,200) (1,390,200) Balance at end of period $ 9,762,800 $ 10,274,500 The following table illustrates future estimated revenue to be recognized for the remainder of 2019 and full fiscal years thereafter related to performance obligations that are unsatisfied (or partially unsatisfied) as of September 29, 2019. Contract Liabilities expected to be recognized in Amount 2019 $ 433,200 2020 1,693,100 2021 1,554,300 2022 1,409,400 2023 1,238,100 Thereafter 3,434,700 $ 9,762,800 |
Fair Value Measurements_
Fair Value Measurements: | 9 Months Ended |
Sep. 28, 2019 | |
Fair Value Measurements: | |
Fair Value Measurements: | 5. 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. Due to their nature, the carrying value of cash equivalents, receivables, payables and debt obligations approximates fair value. |
Investment in Leasing Operation
Investment in Leasing Operations: | 9 Months Ended |
Sep. 28, 2019 | |
Investment in Leasing Operations: | |
Investment in Leasing Operations: | 6. Investment in Leasing Operations: Investment in leasing operations consists of the following: September 28, 2019 December 29, 2018 Direct financing and sales-type leases: Minimum lease payments receivable $ 31,375,800 $ 40,822,400 Estimated unguaranteed residual value of equipment 4,289,200 4,741,200 Unearned lease income, net of initial direct costs deferred (4,765,000) (6,739,900) Security deposits (3,900,600) (4,118,300) Equipment installed on leases not yet commenced 3,645,700 5,094,800 Total investment in direct financing and sales-type leases 30,645,100 39,800,200 Allowance for credit losses (676,800) (861,200) Net investment in direct financing and sales-type leases 29,968,300 38,939,000 Operating leases: Operating lease assets 665,800 777,000 Less accumulated depreciation and amortization (636,400) (713,000) Net investment in operating leases 29,400 64,000 Total net investment in leasing operations $ 29,997,700 $ 39,003,000 As of September 28, 2019, the $30.0 million total net investment in leases consists of $14.4 million classified as current and $15.6 million classified as long-term. As of December 29, 2018, the $39.0 million total net investment in leases consists of $18.5 million classified as current and $20.5 million classified as long-term. As of September 28, 2019, leased assets with one customer approximated 12% of the Company’s total assets. A portion of the lease payments receivable from this customer were assigned as collateral in non-recourse financing with financial institutions. See Note 10 – “Discounted Lease Rentals”. 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 2019 and the full fiscal years thereafter as of September 28, 2019: Direct Financing and Sales-Type Leases Minimum Lease Income Fiscal Year Payments Receivable Amortization 2019 $ 5,214,200 $ 1,291,400 2020 17,273,500 2,782,500 2021 7,999,300 661,400 2022 876,300 29,100 2023 8,100 500 Thereafter 4,400 100 $ 31,375,800 $ 4,765,000 The activity in the allowance for credit losses for leasing operations during the first nine months of 2019 and 2018, respectively, is as follows: September 28, 2019 September 29, 2018 Balance at beginning of period $ 861,200 $ 711,200 Provisions charged to expense 23,900 148,400 Recoveries 15,700 210,700 Deductions for amounts written-off (224,000) (101,100) Balance at end of period $ 676,800 $ 969,200 The Company’s investment in direct financing and sales-type leases (“Investment In Leases”) and allowance for credit losses by loss evaluation methodology are as follows: September 28, 2019 December 29, 2018 Investment Allowance for Investment Allowance for In Leases Credit Losses In Leases Credit Losses Collectively evaluated for loss potential $ 30,645,100 676,800 $ 39,800,200 $ 861,200 Individually evaluated for loss potential — — — — Total $ 30,645,100 $ 676,800 $ 39,800,200 $ 861,200 The Company’s key credit quality indicator for its investment in direct financing and sales-type leases is the status of the lease, defined as accruing or non-accrual. Leases that are accruing income are considered to have a lower risk of loss. Non-accrual leases are those that the Company believes have a higher risk of loss. The following table sets forth information regarding the Company’s accruing and non-accrual leases. Delinquent balances are determined based on the contractual terms of the lease. September 28, 2019 0-60 Days 61-90 Days Over 90 Days Delinquent Delinquent Delinquent and and Accruing and Accruing Accruing Non-Accrual Total Middle-Market $ 29,409,600 $ — $ — $ — $ 29,409,600 Small-Ticket 1,235,500 — — — 1,235,500 Total Investment in Leases $ 30,645,100 $ — $ — $ — $ 30,645,100 December 29, 2018 0-60 Days 61-90 Days Over 90 Days Delinquent Delinquent Delinquent and and Accruing and Accruing Accruing Non-Accrual Total Middle-Market $ 38,395,000 $ — $ — $ 70,000 $ 38,465,000 Small-Ticket 1,335,200 — — — 1,335,200 Total Investment in Leases $ 39,730,200 $ — $ — $ 70,000 $ 39,800,200 The Company leases high-technology and other business-essential equipment to its leasing customers. Upon expiration of the initial term or extended lease term, depending on the structure of the lease, the customer may return the equipment, renew the lease for an additional term, or purchase the equipment. Due to the uncertainty of such outcome at the end of the lease term, the lease as recorded at commencement represents only the current terms of the agreement. As a lessor, the Company’s leases do not contain non-lease components. The 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. The Company’s risk management strategy for its residual value includes the contractual obligations of customer to maintain, service, and insure the leased equipment, the use of third party remarketers as well as the analytical review of historical asset dispositions. Leasing income as presented on the Consolidated Condensed Statements of Operations consists of the following: Three Months Ended Nine Months Ended September 28, 2019 September 28, 2019 Interest income on direct financing and sales-type leases $ 1,856,000 $ 6,066,800 Selling profit (loss) at commencement of sales-type leases 1,098,100 1,971,600 Operating lease income 702,600 1,908,700 Income on sales of equipment under lease 496,600 2,268,500 Other 222,200 518,200 Leasing income $ 4,375,500 $ 12,733,800 |
Earnings Per Share_
Earnings Per Share: | 9 Months Ended |
Sep. 28, 2019 | |
Earnings Per Share: | |
Earnings Per Share: | 7. Earnings Per Share: The following table sets forth the presentation of shares outstanding used in the calculation of basic and diluted earnings per share (“EPS”): Three Months Ended Nine Months Ended September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Denominator for basic EPS — weighted average common shares 3,808,863 3,886,473 3,829,329 3,864,077 Dilutive shares associated with option plans 256,438 277,866 282,989 276,739 Denominator for diluted EPS — weighted average common shares and dilutive potential common shares 4,065,301 4,164,339 4,112,318 4,140,816 Options excluded from EPS calculation — anti-dilutive 7,146 6,116 6,782 15,428 |
Shareholders' Equity (Deficit)_
Shareholders' Equity (Deficit): | 9 Months Ended |
Sep. 28, 2019 | |
Shareholders' Equity (Deficit): | |
Shareholders' Equity (Deficit): | 8. Shareholders’ Equity (Deficit): Dividends On January 23, 2019, the Company’s Board of Directors approved the payment of a $0.15 per share quarterly cash dividend to shareholders of record at the close of business on February 6, 2019, which was paid on March 1, 2019. On April 24, 2019, the Company’s Board of Directors approved the payment of a $0.25 per share quarterly cash dividend to shareholders of record at the close of business on May 8, 2019, which was paid on June 1, 2019. On July 24, 2019, the Company’s Board of Directors approved the payment of a $0.25 per share quarterly cash dividend to shareholders of record at the close of business on August 7, 2019, which was paid on September 3, 2019. Repurchase of Common Stock In February 2019, the Company’s Board of Directors authorized the repurchase of up to 150,000 shares of our common stock for a price of $159.63 per share through a tender offer (the “Tender Offer”). The Tender Offer began on the date of the announcement, February 28, 2019 and expired on March 28, 2019. Upon expiration, the Company accepted for payment 150,000 shares for a total purchase price of approximately $24.0 million, including fees and expenses related to the Tender Offer. The Tender Offer was financed in part by net borrowings under the Line of Credit. (See Note 9 – “Debt”). Under a previous Board of Directors’ authorization, as of September 28, 2019, the Company has the ability to repurchase an additional 130,604 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. As of September 29, 2019, the Company has authorized up to 700,000 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 September 28, 2019 was as follows: Weighted Average Remaining Number of Weighted Average Contractual Life Shares Exercise Price (years) Intrinsic Value Outstanding, December 29, 2018 639,380 $ 84.12 5.61 $ 47,808,100 Granted 29,250 164.84 Exercised (65,292) 45.87 Outstanding, September 28, 2019 603,338 $ 92.17 5.37 $ 50,698,600 Exercisable, September 28, 2019 440,813 $ 74.76 4.28 $ 44,717,900 The fair value of options granted under the Option Plans during the first nine months of 2019 and 2018 were estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions and results: Nine Months Ended September 28, 2019 September 29, 2018 Risk free interest rate % % Expected life (years) 6 6 Expected volatility % % Dividend yield 1.26 % 1.17 % Option fair value $ $ All unexercised options at September 28, 2019 have an exercise price equal to the fair market value on the date of the grant. Compensation expense of $1,511,400 and $1,507,800 relating to the vested portion of the fair value of stock options granted was expensed to “Selling, General and Administrative Expenses” in the first nine months of 2019 and 2018, respectively. As of September 28, 2019, 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 2.4 years. |
Debt_
Debt: | 9 Months Ended |
Sep. 28, 2019 | |
Debt: | |
Debt: | 9. Debt: Line of Credit As of September 28, 2019, there were no borrowings outstanding under the Company’s revolving credit facility with CIBC Bank USA and BMO Harris Bank N.A. (the “Line of Credit”), leaving $45.0 million available for additional borrowings. The Line of Credit has been and will continue to be used for general corporate purposes. During the first quarter of 2019, the Line of Credit was used to finance in part the Tender Offer (as indicated above). The Line of Credit, which terminates in July 2021, is secured by a lien against substantially all of the Company’s assets, contains customary financial conditions and covenants, and requires maintenance of minimum levels of debt service coverage and tangible net worth and maximum levels of leverage (all as defined within the Line of Credit). As of September 28, 2019, the Company was in compliance with all of its financial covenants. Notes Payable As of September 28, 2019, the Company had $16.5 million in principal outstanding from the $25.0 million Series A notes issued in May 2015 and $10.0 million in principal outstanding from the $12.5 million Series B notes issued in August 2017 under its Note Agreement with Prudential Investment Management, Inc., its affiliates and managed accounts (“Prudential”). The final maturity of the Series A and Series B notes is 10 years from the issuance date. For the Series A notes, interest at a rate of 5.50% per annum on the outstanding principal balance is payable quarterly, along with required prepayments of the principal of $500,000 quarterly for the first five years, and $750,000 quarterly thereafter until the principal is paid in full. For the Series B notes, interest at a rate of 5.10% per annum on the outstanding principal balance is payable quarterly, along with required prepayments of the principal of $312,500 quarterly until the principal is paid in full. The Series A and Series B notes may be prepaid, at the option of the Company, in whole or in part (in a minimum amount of $1.0 million), but prepayments require payment of a Yield Maintenance Amount, as defined in the Note Agreement. The Company’s obligations under the Note Agreement are secured by a lien against substantially all of the Company’s assets (as the notes rank pari passu with the Line of Credit), and the Note Agreement contains customary financial conditions and covenants, and requires maintenance of minimum levels of fixed charge coverage and tangible net worth and maximum levels of leverage (all as defined within the Note Agreement). As of September 28, 2019, 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. |
Discounted Lease Rentals_
Discounted Lease Rentals: | 9 Months Ended |
Sep. 28, 2019 | |
Discounted Lease Rentals: | |
Discounted Lease Rentals: | 10. 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 6.39% at September 28, 2019 on a non-recourse basis. As of September 28, 2019, $3.0 million of the $4.4 million liability balance is current. |
Operating Leases_
Operating Leases: | 9 Months Ended |
Sep. 28, 2019 | |
Operating Leases: | |
Operating Leases: | 11. Operating Leases: As of September 28, 2019, the Company leases its Minnesota corporate headquarters in a facility with an operating lease that expires in December 2029 as well as satellite office space in California with an operating lease that expires in August 2022. Our leases include both lease (fixed payments including rent) and non-lease components (common area or other maintenance costs and taxes) which are accounted for as a single lease component as we have elected the practical expedient to group lease and non-lease components for all leases. The corporate headquarters lease provides us the option to extend the lease for two additional five year periods. The California lease provides us an option to extend the lease for an additional three year period. The lease renewal options are at our sole discretion; therefore, the renewals to extend the lease term are not included in our right of use assets and lease liabilities as they are not reasonably certain of exercise. The weighted average remaining lease term for these leases is 10.1 years and the weighted average discount rate is 5.5%. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. The Company recognized $1,047,600 and $913,800 of rent expense for the periods ended September 28, 2019 and September 29, 2018, respectively. Maturities of operating lease liabilities is as follows for the remainder of fiscal 2019 and full fiscal years thereafter as of September 28, 2019: Operating Lease Liabilities expected to be recognized in Amount 2019 $ 14,300 2020 762,500 2021 783,600 2022 784,400 2023 763,300 Thereafter 5,042,900 Total lease payments 8,151,000 Less imputed interest (1,870,900) Present value of lease liabilities $ 6,280,100 Of the $6.3 million operating lease liability outstanding at September 28, 2019, $0.3 million is included in Accrued liabilities in the Current liabilities section of the Consolidated Condensed Balance Sheets. Supplemental cash flow information related to our operating leases is as follows for the period ended September 28, 2019: Nine Months Ended September 28, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flow outflow from operating leases $ 479,600 |
Segment Reporting_
Segment Reporting: | 9 Months Ended |
Sep. 28, 2019 | |
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, as well as provides strategic consulting services related to franchising. The leasing segment includes (i) Winmark Capital Corporation, a middle-market equipment leasing business and (ii) Wirth Business Credit, Inc., a small ticket financing business. Segment reporting is intended to give financial statement users a better view of how the Company manages and evaluates its businesses. The Company’s internal management reporting is the basis for the information disclosed for its business segments and includes allocation of shared-service costs. Segment assets are those that are directly used in or identified with segment operations, including cash, restricted cash, accounts receivable, prepaid expenses, inventory, property and equipment, investment in leasing operations and goodwill. Unallocated assets include corporate cash and cash equivalents, current and deferred tax amounts, operating lease right of use assets and other corporate assets. Inter-segment balances and transactions have been eliminated. The following tables summarize financial information by segment and provide a reconciliation of segment contribution to operating income: Three Months Ended Nine Months Ended September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Revenue: Franchising $ 15,305,400 $ 14,509,900 $ 42,682,500 $ 40,444,800 Leasing 4,375,500 4,608,600 12,733,800 14,994,500 Total revenue $ 19,680,900 $ 19,118,500 $ 55,416,300 $ 55,439,300 Reconciliation to operating income: Franchising segment contribution $ 9,895,700 $ 9,064,900 $ 25,844,500 $ 23,264,900 Leasing segment contribution 2,379,000 2,370,400 6,343,600 8,319,300 Total operating income $ 12,274,700 $ 11,435,300 $ 32,188,100 $ 31,584,200 Depreciation and amortization: Franchising $ 79,000 $ 60,300 $ 208,900 $ 178,200 Leasing 31,700 18,300 67,800 55,500 Total depreciation and amortization $ 110,700 $ 78,600 $ 276,700 $ 233,700 As of September 28, 2019 December 29, 2018 Identifiable assets: Franchising $ 3,841,400 $ 5,208,400 Leasing 31,771,400 40,490,000 Unallocated 12,894,700 964,700 Total $ 48,507,500 $ 46,663,100 |
Contract Liabilities_ (Tables)
Contract Liabilities: (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Contract Liabilities: | |
Schedule of activity of current and noncurrent deferred franchise revenue | September 28, 2019 September 29, 2018 Balance at beginning of period $ 10,177,300 $ 10,310,200 Franchise and software license fees collected from franchisees, excluding amount earned as revenue during the period 979,700 1,354,500 Fees earned that were included in the balance at the beginning of the period (1,394,200) (1,390,200) Balance at end of period $ 9,762,800 $ 10,274,500 |
Schedule of future estimated revenue to be recognized related to performance obligations | Contract Liabilities expected to be recognized in Amount 2019 $ 433,200 2020 1,693,100 2021 1,554,300 2022 1,409,400 2023 1,238,100 Thereafter 3,434,700 $ 9,762,800 |
Investment in Leasing Operati_2
Investment in Leasing Operations: (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Investment in Leasing Operations: | |
Schedule of investment in leasing operations | September 28, 2019 December 29, 2018 Direct financing and sales-type leases: Minimum lease payments receivable $ 31,375,800 $ 40,822,400 Estimated unguaranteed residual value of equipment 4,289,200 4,741,200 Unearned lease income, net of initial direct costs deferred (4,765,000) (6,739,900) Security deposits (3,900,600) (4,118,300) Equipment installed on leases not yet commenced 3,645,700 5,094,800 Total investment in direct financing and sales-type leases 30,645,100 39,800,200 Allowance for credit losses (676,800) (861,200) Net investment in direct financing and sales-type leases 29,968,300 38,939,000 Operating leases: Operating lease assets 665,800 777,000 Less accumulated depreciation and amortization (636,400) (713,000) Net investment in operating leases 29,400 64,000 Total net investment in leasing operations $ 29,997,700 $ 39,003,000 |
Schedule of future minimum lease payments receivable under lease contracts and the amortization of unearned lease income, net of initial direct costs deferred | Direct Financing and Sales-Type Leases Minimum Lease Income Fiscal Year Payments Receivable Amortization 2019 $ 5,214,200 $ 1,291,400 2020 17,273,500 2,782,500 2021 7,999,300 661,400 2022 876,300 29,100 2023 8,100 500 Thereafter 4,400 100 $ 31,375,800 $ 4,765,000 |
Schedule of activity in the allowance for credit losses for leasing operations | September 28, 2019 September 29, 2018 Balance at beginning of period $ 861,200 $ 711,200 Provisions charged to expense 23,900 148,400 Recoveries 15,700 210,700 Deductions for amounts written-off (224,000) (101,100) Balance at end of period $ 676,800 $ 969,200 |
Schedule of investment in direct financing and sales-type leases (investment in leases) and allowance for credit losses by loss evaluation methodology | September 28, 2019 December 29, 2018 Investment Allowance for Investment Allowance for In Leases Credit Losses In Leases Credit Losses Collectively evaluated for loss potential $ 30,645,100 676,800 $ 39,800,200 $ 861,200 Individually evaluated for loss potential — — — — Total $ 30,645,100 $ 676,800 $ 39,800,200 $ 861,200 |
Schedule of information regarding accruing and non-accrual leases | September 28, 2019 0-60 Days 61-90 Days Over 90 Days Delinquent Delinquent Delinquent and and Accruing and Accruing Accruing Non-Accrual Total Middle-Market $ 29,409,600 $ — $ — $ — $ 29,409,600 Small-Ticket 1,235,500 — — — 1,235,500 Total Investment in Leases $ 30,645,100 $ — $ — $ — $ 30,645,100 December 29, 2018 0-60 Days 61-90 Days Over 90 Days Delinquent Delinquent Delinquent and and Accruing and Accruing Accruing Non-Accrual Total Middle-Market $ 38,395,000 $ — $ — $ 70,000 $ 38,465,000 Small-Ticket 1,335,200 — — — 1,335,200 Total Investment in Leases $ 39,730,200 $ — $ — $ 70,000 $ 39,800,200 |
Schedule of components of leasing income | Three Months Ended Nine Months Ended September 28, 2019 September 28, 2019 Interest income on direct financing and sales-type leases $ 1,856,000 $ 6,066,800 Selling profit (loss) at commencement of sales-type leases 1,098,100 1,971,600 Operating lease income 702,600 1,908,700 Income on sales of equipment under lease 496,600 2,268,500 Other 222,200 518,200 Leasing income $ 4,375,500 $ 12,733,800 |
Earnings Per Share_ (Tables)
Earnings Per Share: (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Earnings Per Share: | |
Schedule of shares outstanding used in the calculation of basic and diluted earnings per share | Three Months Ended Nine Months Ended September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Denominator for basic EPS — weighted average common shares 3,808,863 3,886,473 3,829,329 3,864,077 Dilutive shares associated with option plans 256,438 277,866 282,989 276,739 Denominator for diluted EPS — weighted average common shares and dilutive potential common shares 4,065,301 4,164,339 4,112,318 4,140,816 Options excluded from EPS calculation — anti-dilutive 7,146 6,116 6,782 15,428 |
Shareholders' Equity (Deficit_2
Shareholders' Equity (Deficit): (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Shareholders' Equity (Deficit): | |
Schedule of stock option activity | Weighted Average Remaining Number of Weighted Average Contractual Life Shares Exercise Price (years) Intrinsic Value Outstanding, December 29, 2018 639,380 $ 84.12 5.61 $ 47,808,100 Granted 29,250 164.84 Exercised (65,292) 45.87 Outstanding, September 28, 2019 603,338 $ 92.17 5.37 $ 50,698,600 Exercisable, September 28, 2019 440,813 $ 74.76 4.28 $ 44,717,900 |
Schedule of weighted average assumptions used in estimation of fair value of options granted | Nine Months Ended September 28, 2019 September 29, 2018 Risk free interest rate % % Expected life (years) 6 6 Expected volatility % % Dividend yield 1.26 % 1.17 % Option fair value $ $ |
Operating Leases_ (Tables)
Operating Leases: (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Operating Leases: | |
Schedule of maturities of operating lease liabilities | Operating Lease Liabilities expected to be recognized in Amount 2019 $ 14,300 2020 762,500 2021 783,600 2022 784,400 2023 763,300 Thereafter 5,042,900 Total lease payments 8,151,000 Less imputed interest (1,870,900) Present value of lease liabilities $ 6,280,100 |
Schedule of supplemental cash flow information related to operating leases | Nine Months Ended September 28, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flow outflow from operating leases $ 479,600 |
Segment Reporting_ (Tables)
Segment Reporting: (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Segment Reporting: | |
Schedule of financial information by segment and reconciliation of segment contribution to operating income | Three Months Ended Nine Months Ended September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Revenue: Franchising $ 15,305,400 $ 14,509,900 $ 42,682,500 $ 40,444,800 Leasing 4,375,500 4,608,600 12,733,800 14,994,500 Total revenue $ 19,680,900 $ 19,118,500 $ 55,416,300 $ 55,439,300 Reconciliation to operating income: Franchising segment contribution $ 9,895,700 $ 9,064,900 $ 25,844,500 $ 23,264,900 Leasing segment contribution 2,379,000 2,370,400 6,343,600 8,319,300 Total operating income $ 12,274,700 $ 11,435,300 $ 32,188,100 $ 31,584,200 Depreciation and amortization: Franchising $ 79,000 $ 60,300 $ 208,900 $ 178,200 Leasing 31,700 18,300 67,800 55,500 Total depreciation and amortization $ 110,700 $ 78,600 $ 276,700 $ 233,700 As of September 28, 2019 December 29, 2018 Identifiable assets: Franchising $ 3,841,400 $ 5,208,400 Leasing 31,771,400 40,490,000 Unallocated 12,894,700 964,700 Total $ 48,507,500 $ 46,663,100 |
Management's Interim Financia_2
Management's Interim Financial Statement Representation: (Details) | 9 Months Ended |
Sep. 28, 2019item | |
Minimum | |
Number of Weeks in Fiscal Year | 52 |
Maximum | |
Number of Weeks in Fiscal Year | 53 |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements: ASU 2016-02 (Details) - USD ($) | 9 Months Ended | |
Sep. 28, 2019 | Dec. 30, 2018 | |
Recently Adopted Accounting Pronouncements | ||
Operating lease right-of-use assets | $ 3,734,400 | |
Operating lease liabilities | 6,280,100 | |
Proceeds from Lease Payments | 14,407,300 | |
Accounting Standards Update 2016-02 | ||
Recently Adopted Accounting Pronouncements | ||
Proceeds from Lease Payments | $ 14,400,000 | |
Accounting Standards Update 2016-02 | Adjustment | ||
Recently Adopted Accounting Pronouncements | ||
Operating lease right-of-use assets | $ 6,000,000 | |
Operating lease liabilities | $ 6,300,000 |
Contract Liabilities - Activity
Contract Liabilities - Activity (Details) - USD ($) | 9 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
Activity of the current and noncurrent deferred franchise revenue | ||
Balance at beginning of period | $ 10,177,300 | $ 10,310,200 |
Franchise and software license fees collected from franchisees, excluding amount earned as revenue during the period | 979,700 | 1,354,500 |
Fees earned that were included in the balance at the beginning of the period | (1,394,200) | (1,390,200) |
Balance at end of period | $ 9,762,800 | $ 10,274,500 |
Contract Liabilities - Performa
Contract Liabilities - Performance Obligations (Details) | Sep. 28, 2019USD ($) |
Contract Liabilities: | |
Revenue, remaining peformance obligation | $ 9,762,800 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-09-29 | |
Contract Liabilities: | |
Revenue, remaining peformance obligation | $ 433,200 |
Future estimated revenue to be recognised related to performance obligations | |
Duration of expected recognition period for remaining performance obligation | 3 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-12-29 | |
Contract Liabilities: | |
Revenue, remaining peformance obligation | $ 1,693,100 |
Future estimated revenue to be recognised related to performance obligations | |
Duration of expected recognition period for remaining performance obligation | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-12-27 | |
Contract Liabilities: | |
Revenue, remaining peformance obligation | $ 1,554,300 |
Future estimated revenue to be recognised related to performance obligations | |
Duration of expected recognition period for remaining performance obligation | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-12-26 | |
Contract Liabilities: | |
Revenue, remaining peformance obligation | $ 1,409,400 |
Future estimated revenue to be recognised related to performance obligations | |
Duration of expected recognition period for remaining performance obligation | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Contract Liabilities: | |
Revenue, remaining peformance obligation | $ 1,238,100 |
Future estimated revenue to be recognised related to performance obligations | |
Duration of expected recognition period for remaining performance obligation | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-12-31 | |
Contract Liabilities: | |
Revenue, remaining peformance obligation | $ 3,434,700 |
Future estimated revenue to be recognised related to performance obligations | |
Duration of expected recognition period for remaining performance obligation |
Investment in Leasing Operati_3
Investment in Leasing Operations: Summary of Leasing Operations (Details) - USD ($) | Sep. 28, 2019 | Dec. 29, 2018 |
Direct financing and sales-type leases: | ||
Minimum lease payments receivable | $ 31,375,800 | |
Minimum lease payments receivable | $ 40,822,400 | |
Estimated unguaranteed residual value of equipment | 4,289,200 | |
Estimated unguaranteed residual value of equipment | 4,741,200 | |
Unearned lease income net of initial direct costs deferred | (4,765,000) | |
Unearned lease income net of initial direct costs deferred | (6,739,900) | |
Security deposits | (3,900,600) | |
Security deposits | (4,118,300) | |
Equipment installed on leases not yet commenced | 3,645,700 | |
Equipment installed on leases not yet commenced | 5,094,800 | |
Total investment in direct financing and sales-type leases | 30,645,100 | |
Total investment in direct financing and sales-type leases | 39,800,200 | |
Allowance for credit losses | (676,800) | |
Allowance for credit losses | (861,200) | |
Net investment in direct financing and sales-type leases | 29,968,300 | |
Net investment in direct financing and sales-type leases | 38,939,000 | |
Operating leases: | ||
Operating lease assets | 665,800 | |
Less accumulated depreciation and amortization | (636,400) | |
Net investment in operating leases | 29,400 | |
Total net investment in leasing operations | 29,997,700 | |
Operating lease assets | 777,000 | |
Less accumulated depreciation and amortization | (713,000) | |
Net investment in operating leases | 64,000 | |
Total net investment in leasing operations | 39,003,000 | |
Net investment in leases - current | 14,352,800 | |
Net investment in leases - long-term | $ 15,644,900 | |
Net investment in leases - current | 18,547,500 | |
Net investment in leases - long-term | $ 20,455,500 |
Investment in Leasing Operati_4
Investment in Leasing Operations: Risk Concentration (Details) - Total assets - Customer One Concentration Risk | 9 Months Ended |
Sep. 28, 2019customer | |
Investment in leasing operations | |
Number of customers | 1 |
Percentage of concentration risk | 12.00% |
Investment in Leasing Operati_5
Investment in Leasing Operations: Minimum Lease Payments Receivable (Details) | Sep. 28, 2019USD ($) |
Direct Financing and Sales-Type Leases, Minimum Lease Payments Receivable | |
2019 | $ 5,214,200 |
2020 | 17,273,500 |
2021 | 7,999,300 |
2022 | 876,300 |
2023 | 8,100 |
Thereafter | 4,400 |
Total | 31,375,800 |
Direct Financing and Sales-Type Leases, Income Amortization | |
2019 | 1,291,400 |
2020 | 2,782,500 |
2021 | 661,400 |
2022 | 29,100 |
2023 | 500 |
Thereafter | 100 |
Total | $ 4,765,000 |
Investment in Leasing Operati_6
Investment in Leasing Operations: Credit Losses (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | Dec. 29, 2018 | |
Activity in the allowance for credit losses for leasing operations | |||||
Balance at beginning of period | $ 861,200 | $ 711,200 | |||
Provision for credit losses | $ (55,500) | $ (55,600) | 23,900 | 148,400 | |
Recoveries | 15,700 | 210,700 | |||
Deductions for amounts written-off | (224,000) | (101,100) | |||
Balance at end of period | 676,800 | $ 969,200 | 676,800 | $ 969,200 | |
Investment In Leases | |||||
Total investment in direct financing and sales-type leases | 30,645,100 | 30,645,100 | |||
Total investment in direct financing and sales-type leases | $ 39,800,200 | ||||
Allowance for Credit Losses | |||||
Total | 676,800 | 676,800 | |||
Total | 861,200 | ||||
Investment in leases | |||||
Investment In Leases | |||||
Collectively evaluated for loss potential | 30,645,100 | 30,645,100 | 39,800,200 | ||
Total investment in direct financing and sales-type leases | 30,645,100 | 30,645,100 | |||
Total investment in direct financing and sales-type leases | 39,800,200 | ||||
Allowance for Credit Losses | |||||
Collectively evaluated for loss potential | 676,800 | 676,800 | 861,200 | ||
Total | $ 676,800 | $ 676,800 | |||
Total | $ 861,200 |
Investment in Leasing Operati_7
Investment in Leasing Operations: Investment Aging (Details) - USD ($) | Sep. 28, 2019 | Dec. 29, 2018 |
Investment in leasing operations | ||
0-60 Days Delinquent and Accruing | $ 30,645,100 | $ 39,730,200 |
Non-Accrual | 70,000 | |
Total investment in direct financing and sales-type leases | 30,645,100 | |
Total investment in direct financing and sales-type leases | 39,800,200 | |
Middle-Market | ||
Investment in leasing operations | ||
0-60 Days Delinquent and Accruing | 29,409,600 | 38,395,000 |
Non-Accrual | 70,000 | |
Total investment in direct financing and sales-type leases | 29,409,600 | |
Total investment in direct financing and sales-type leases | 38,465,000 | |
Small-Ticket | ||
Investment in leasing operations | ||
0-60 Days Delinquent and Accruing | 1,235,500 | 1,335,200 |
Total investment in direct financing and sales-type leases | $ 1,235,500 | |
Total investment in direct financing and sales-type leases | $ 1,335,200 |
Investment in Leasing Operati_8
Investment in Leasing Operations: Leasing Income (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 28, 2019 | Sep. 28, 2019 | |
Leasing income | ||
Interest income on direct financing and sales-type leases | $ 1,856,000 | $ 6,066,800 |
Selling profit (loss) at commencement of sales-type leases | 1,098,100 | 1,971,600 |
Operating lease income | 702,600 | 1,908,700 |
Income on sales of equipment under lease | 496,600 | 2,268,500 |
Other | 222,200 | 518,200 |
Leasing income | $ 4,375,500 | $ 12,733,800 |
Earnings Per Share_ (Details)
Earnings Per Share: (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Earnings Per Share: | ||||
Denominator for basic EPS - weighted average common shares | 3,808,863 | 3,886,473 | 3,829,329 | 3,864,077 |
Dilutive shares associated with option plans | 256,438 | 277,866 | 282,989 | 276,739 |
Denominator for diluted EPS - weighted average common shares and dilutive potential common shares | 4,065,301 | 4,164,339 | 4,112,318 | 4,140,816 |
Options excluded from EPS calculation - anti-dilutive (in shares) | 7,146 | 6,116 | 6,782 | 15,428 |
Shareholders' Equity (Deficit_3
Shareholders' Equity (Deficit): Dividends and Repurchase of Common Stock (Details) - USD ($) $ / shares in Units, $ in Millions | Jul. 24, 2019 | Apr. 24, 2019 | Mar. 28, 2019 | Jan. 23, 2019 | Feb. 28, 2019 | Sep. 28, 2019 |
Dividends | ||||||
Cash dividends declared and paid (in dollars per share) | $ 0.25 | $ 0.25 | $ 0.15 | |||
2019 Tender Offer | ||||||
Repurchase of Common Stock | ||||||
Shares authorized for repurchase per tender offer | 150,000 | |||||
Price per share of common stock per tender offer | $ 159.63 | |||||
Number of shares repurchased | 150,000 | |||||
Purchase price of shares per tender offer | $ 24 | |||||
Common Stock Repurchase Program | ||||||
Repurchase of Common Stock | ||||||
Number of additional shares that can be repurchased | 130,604 |
Shareholders' Equity (Deficit_4
Shareholders' Equity (Deficit): Stock Option Plans and Stock-Based Compensation (Details) - Stock options - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Dec. 29, 2018 | Feb. 20, 2011 | |
Number of Shares | ||||
Outstanding at the beginning of the period (in shares) | 639,380 | |||
Granted (in shares) | 29,250 | |||
Exercised (in shares) | (65,292) | |||
Outstanding at the end of the period (in shares) | 603,338 | 639,380 | ||
Exercisable at the end of the period (in shares) | 440,813 | |||
Weighted Average Exercise Price | ||||
Outstanding at the beginning of the period (in dollars per share) | $ 84.12 | |||
Granted (in dollars per share) | 164.84 | |||
Exercised (in dollars per share) | 45.87 | |||
Outstanding at the end of the period (in dollars per share) | 92.17 | $ 84.12 | ||
Exercisable at the end of the period (in dollars per share) | $ 74.76 | |||
Weighted Average Remaining Contractual Life (years) | ||||
Outstanding | 5 years 4 months 13 days | 5 years 7 months 10 days | ||
Exercisable at the end of the period | 4 years 3 months 11 days | |||
Intrinsic Value | ||||
Outstanding | $ 50,698,600 | $ 47,808,100 | ||
Exercisable at the end of the period | $ 44,717,900 | |||
Weighted average assumptions and results used in estimation of fair value of options granted | ||||
Risk free interest rate (as a percent) | 1.98% | 2.73% | ||
Expected life (years) | 6 years | 6 years | ||
Expected volatility (as a percent) | 20.30% | 20.40% | ||
Dividend yield (as a percent) | 1.26% | 1.17% | ||
Option fair value (in dollars per share) | $ 32.65 | $ 31.44 | ||
Additional disclosures | ||||
Compensation expense | $ 1,511,400 | $ 1,507,800 | ||
Total unrecognized compensation expense | $ 3,800,000 | |||
Weighted average period for recognition of unrecognized compensation expense | 2 years 4 months 24 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 | 700,000 | |||
Nonemployee Directors Plan | ||||
Stock Option Plans | ||||
Number of shares authorized for issuance | 350,000 |
Debt_ Line of Credit (Details)
Debt: Line of Credit (Details) - Line of Credit $ in Millions | Sep. 28, 2019USD ($) |
Line of Credit | |
Borrowings outstanding | $ 0 |
Line of credit available for additional borrowings | $ 45 |
Debt_ Notes Payable (Details)
Debt: Notes Payable (Details) - Prudential Investment Management, Inc - USD ($) | 9 Months Ended | ||
Sep. 28, 2019 | Aug. 31, 2017 | May 31, 2015 | |
Notes Payable | |||
Notes Payable | |||
Minimum prepayment | $ 1,000,000 | ||
Series A Notes | |||
Notes Payable | |||
Principal amount outstanding | $ 16,500,000 | ||
Note payable, face amount | $ 25,000,000 | ||
Term of notes payable | 10 years | ||
Interest rate (as a percent) | 5.50% | ||
Quarterly principal payment, first five years | $ 500,000 | ||
Quarterly principal payment, thereafter | 750,000 | ||
Series B Notes | |||
Notes Payable | |||
Principal amount outstanding | $ 10,000,000 | ||
Note payable, face amount | $ 12,500,000 | ||
Term of notes payable | 10 years | ||
Interest rate (as a percent) | 5.10% | ||
Quarterly principal payment | $ 312,500 |
Discounted Lease Rentals_ (Deta
Discounted Lease Rentals: (Details) - USD ($) | Sep. 28, 2019 | Dec. 29, 2018 |
Discounted Lease Rentals | ||
Discounted lease rentals, current | $ 3,012,900 | $ 3,021,900 |
Discounted lease rentals | $ 4,400,000 | |
Secured Debt | ||
Discounted Lease Rentals | ||
Weighted average interest rate on a non-recourse basis (as a percent) | 6.39% |
Operating Leases_ (Details)
Operating Leases: (Details) | 9 Months Ended | |
Sep. 28, 2019USD ($)item | Sep. 29, 2018USD ($) | |
Operating Leases | ||
Weighted average remaining lease term | 10 years 1 month 6 days | |
Weighted average discount rate (as a percent) | 5.50% | |
Rent expense | $ 1,047,600 | |
Rent expense | $ 913,800 | |
Maturities of operating lease liabilities: | ||
2019 | 14,300 | |
2020 | 762,500 | |
2021 | 783,600 | |
2022 | 784,400 | |
2023 | 763,300 | |
Thereafter | 5,042,900 | |
Total lease payments | 8,151,000 | |
Less imputed interest | (1,870,900) | |
Present value of lease liabilities | 6,280,100 | |
Operating lease liability | ||
Operating lease liability, current | $ 300,000 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued Liabilities, Current | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flow outflow from operating leases | $ 479,600 | |
Corporate headquarters, Minnesota | ||
Operating Leases | ||
Lease renewal option | true | |
Number of lease extension periods | item | 2 | |
Lease renewal term | 5 years | |
Satellite office space, California | ||
Operating Leases | ||
Lease renewal option | true | |
Lease renewal term | 3 years |
Segment Reporting_ (Details)
Segment Reporting: (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 28, 2019USD ($) | Sep. 29, 2018USD ($) | Sep. 28, 2019USD ($)item | Sep. 29, 2018USD ($) | Dec. 29, 2018USD ($) | |
Segment Reporting | |||||
Number of reportable business segments | item | 2 | ||||
Total revenue | $ 19,680,900 | $ 19,118,500 | $ 55,416,300 | $ 55,439,300 | |
Total operating income | 12,274,700 | 11,435,300 | 32,188,100 | 31,584,200 | |
Total depreciation and amortization | 110,700 | 78,600 | 276,700 | 233,700 | |
Total identifiable assets | 48,507,500 | 48,507,500 | $ 46,663,100 | ||
Operating | Franchising | |||||
Segment Reporting | |||||
Total revenue | 15,305,400 | 14,509,900 | 42,682,500 | 40,444,800 | |
Total operating income | 9,895,700 | 9,064,900 | 25,844,500 | 23,264,900 | |
Total depreciation and amortization | 79,000 | 60,300 | 208,900 | 178,200 | |
Total identifiable assets | 3,841,400 | 3,841,400 | 5,208,400 | ||
Operating | Leasing | |||||
Segment Reporting | |||||
Total revenue | 4,375,500 | 4,608,600 | 12,733,800 | 14,994,500 | |
Total operating income | 2,379,000 | 2,370,400 | 6,343,600 | 8,319,300 | |
Total depreciation and amortization | 31,700 | $ 18,300 | 67,800 | $ 55,500 | |
Total identifiable assets | 31,771,400 | 31,771,400 | 40,490,000 | ||
Unallocated | |||||
Segment Reporting | |||||
Total identifiable assets | $ 12,894,700 | $ 12,894,700 | $ 964,700 |