Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 26, 2020 | Mar. 08, 2021 | Jun. 27, 2020 | |
Document and Entity Information | |||
Entity Registrant Name | WINMARK CORPORATION | ||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 26, 2020 | ||
Document Transition Report | false | ||
Entity File Number | 000-22012 | ||
Entity Incorporation, State or Country Code | MN | ||
Entity Tax Identification Number | 41-1622691 | ||
Entity Address, Address Line One | 605 Highway 169 North, SuiteĀ 400 | ||
Entity Address, City or Town | Minneapolis | ||
Entity Address, State or Province | MN | ||
Entity Address, Postal Zip Code | 55441 | ||
City Area Code | 763 | ||
Local Phone Number | 520-8500 | ||
Title of 12(b) Security | Common Stock, no par value per share | ||
Trading Symbol | WINA | ||
Security Exchange Name | NASDAQ | ||
Amendment Flag | false | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 269,123,924 | ||
Entity Common Stock, Shares Outstanding | 3,713,762 | ||
Current Fiscal Year End Date | --12-26 | ||
Entity Central Index Key | 0000908315 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED CONDENSED BALANCE
CONSOLIDATED CONDENSED BALANCE SHEETS - USD ($) | Dec. 26, 2020 | Dec. 28, 2019 |
Current Assets: | ||
Cash and cash equivalents | $ 6,659,000 | $ 25,130,300 |
Restricted cash | 25,000 | 50,000 |
Receivables, less allowance for doubtful accounts of $800 and $1,900 | 1,581,900 | 1,669,500 |
Net investment in leases - current | 8,687,500 | 12,800,100 |
Income tax receivable | 221,200 | 497,900 |
Inventories | 106,600 | 86,000 |
Prepaid expenses | 995,200 | 968,100 |
Total current assets | 18,276,400 | 41,201,900 |
Net investment in leases - long-term | 4,573,600 | 12,505,500 |
Property and equipment: | ||
Furniture and equipment | 3,575,800 | 3,910,900 |
Building and building improvements | 2,952,100 | 2,955,100 |
Less - accumulated depreciation and amortization | (4,195,100) | (4,093,400) |
Property and equipment, net | 2,332,800 | 2,772,600 |
Operating lease right of use asset | 3,226,300 | 3,595,200 |
Goodwill | 607,500 | 607,500 |
Other assets | 435,900 | 492,500 |
Deferred income taxes | 1,890,700 | 667,000 |
Total assets | 31,343,200 | 61,842,200 |
Current Liabilities: | ||
Notes payable, net of unamortized debt issuance costs of $13,900 and $13,900 | 4,236,100 | 3,736,100 |
Accounts payable | 1,769,600 | 1,015,000 |
Accrued liabilities | 2,624,000 | 2,783,100 |
Discounted lease rentals | 1,096,600 | 2,680,700 |
Deferred revenue | 1,657,400 | 1,717,000 |
Total current liabilities | 11,383,700 | 11,931,900 |
Long-term Liabilities: | ||
Notes payable, net of unamortized debt issuance costs of $54,800 and $68,700 | 17,632,700 | 21,868,800 |
Discounted lease rentals | 574,000 | 836,900 |
Deferred revenue | 7,050,900 | 7,858,500 |
Operating lease liabilities | 5,307,400 | 5,846,100 |
Other liabilities | 773,200 | 1,051,700 |
Total long-term liabilities | 31,338,200 | 37,462,000 |
Commitments and Contingencies | ||
Shareholders' Equity (Deficit): | ||
Common stock, no par value, 10,000,000 shares authorized, 3,756,028 and 3,947,858 shares issued and outstanding | 9,281,800 | 11,929,300 |
Retained earnings (accumulated deficit) | (20,660,500) | 519,000 |
Total shareholders' equity (deficit) | (11,378,700) | 12,448,300 |
Total liabilities and shareholders' equity (deficit) | $ 31,343,200 | $ 61,842,200 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 26, 2020 | Dec. 28, 2019 |
CONSOLIDATED BALANCE SHEETS | ||
Receivables, allowance for doubtful accounts | $ 800 | $ 1,900 |
Unamortized debt issuance costs - Current | 13,900 | 13,900 |
Unamortized debt issuance costs - Noncurrent | $ 54,800 | $ 68,700 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 3,756,028 | 3,947,858 |
Common stock, shares outstanding | 3,756,028 | 3,947,858 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | ||
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 29, 2018 | |
Revenue: | |||
Leasing income | $ 14,484,000 | $ 16,055,800 | |
Leasing income | $ 18,176,500 | ||
Total revenue | 66,061,800 | 73,298,900 | 72,511,100 |
Cost of merchandise sold | 2,103,900 | 2,469,700 | 2,741,100 |
Leasing expense | 2,622,600 | 2,031,100 | 1,929,300 |
Provision for credit losses | (79,300) | (78,300) | 38,600 |
Selling, general and administrative expenses | 21,203,100 | 25,745,300 | 26,038,300 |
Income from operations | 40,211,500 | 43,131,100 | 41,763,800 |
Interest expense | (1,737,500) | (1,731,100) | (2,447,500) |
Interest and other income (expense) | 43,400 | 67,400 | (33,200) |
Income before income taxes | 38,517,400 | 41,467,400 | 39,283,100 |
Provision for income taxes | (8,694,100) | (9,318,100) | (9,157,600) |
Net income | $ 29,823,300 | $ 32,149,300 | $ 30,125,500 |
Earnings per share - basic (in dollars per share) | $ 8.02 | $ 8.37 | $ 7.77 |
Earnings per share - diluted (in dollars per share) | $ 7.72 | $ 7.84 | $ 7.26 |
Weighted average shares outstanding - basic | 3,719,485 | 3,840,638 | 3,874,757 |
Weighted average shares outstanding - diluted | 3,863,264 | 4,100,629 | 4,149,779 |
Royalties | |||
Revenue: | |||
Revenue | $ 46,286,200 | $ 51,421,800 | $ 48,224,500 |
Merchandise sales | |||
Revenue: | |||
Revenue | 2,215,400 | 2,618,800 | 2,903,100 |
Franchise fees | |||
Revenue: | |||
Revenue | 1,444,500 | 1,540,900 | 1,580,300 |
Other | |||
Revenue: | |||
Revenue | $ 1,631,700 | $ 1,661,600 | $ 1,626,700 |
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) | |||
Repurchase of common stock | $ (1,846,400) | (1,846,400) | |
Repurchase of common stock (in shares) | (12,384) | ||
Stock options exercised | $ 2,819,700 | 2,819,700 | |
Stock options exercised (in shares) | 76,992 | ||
Compensation expense relating to stock options | $ 1,976,100 | 1,976,100 | |
Cash dividends | (2,169,900) | (2,169,900) | |
Comprehensive income (Net income) | 30,125,500 | 30,125,500 | |
BALANCE at Dec. 29, 2018 | $ 4,425,600 | (9,234,100) | (4,808,500) |
BALANCE (in shares) at Dec. 29, 2018 | 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 | $ 10,918,300 | 10,918,300 | |
Stock options exercised (in shares) | 190,172 | ||
Compensation expense relating to stock options | $ 1,666,400 | 1,666,400 | |
Cash dividends | (3,449,100) | (3,449,100) | |
Comprehensive income (Net income) | 32,149,300 | 32,149,300 | |
BALANCE at Dec. 28, 2019 | $ 11,929,300 | 519,000 | $ 12,448,300 |
BALANCE (in shares) at Dec. 28, 2019 | 3,947,858 | 3,947,858 | |
Shareholders' Equity (Deficit) | |||
Repurchase of common stock | $ (12,215,500) | (36,772,000) | $ (48,987,500) |
Repurchase of common stock (in shares) | (300,000) | ||
Stock options exercised | $ 8,252,800 | 8,252,800 | |
Stock options exercised (in shares) | 108,170 | ||
Compensation expense relating to stock options | $ 1,315,200 | 1,315,200 | |
Cash dividends | (14,230,800) | (14,230,800) | |
Comprehensive income (Net income) | 29,823,300 | 29,823,300 | |
BALANCE at Dec. 26, 2020 | $ 9,281,800 | $ (20,660,500) | $ (11,378,700) |
BALANCE (in shares) at Dec. 26, 2020 | 3,756,028 | 3,756,028 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 29, 2018 | |
OPERATING ACTIVITIES: | |||
Net Income | $ 29,823,300 | $ 32,149,300 | $ 30,125,500 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 484,700 | 400,100 | 314,100 |
Provisions charged to expense | (79,300) | (78,300) | 38,600 |
Compensation expense related to stock options | 1,315,200 | 1,666,400 | 1,976,100 |
Deferred income taxes | (1,223,700) | (1,815,300) | 827,800 |
Loss from disposal of property and equipment | 200 | 1,900 | |
Deferred initial direct costs | (18,300) | (92,600) | (1,367,800) |
Amortization of deferred initial direct costs | 105,900 | 550,000 | 1,048,500 |
Operating lease right of use asset amortization | 368,900 | 345,400 | |
Tax benefits on exercised stock options | 872,900 | 1,218,900 | 403,800 |
Change in operating assets and liabilities: | |||
Receivables | 87,600 | (116,400) | 242,900 |
Principal collections on lease receivables | 14,829,200 | 19,421,400 | |
Income tax receivable/payable | (596,200) | (1,151,300) | 1,192,500 |
Inventories | (20,600) | 21,600 | (10,500) |
Prepaid expenses | (27,100) | (66,500) | |
Other assets | 56,600 | (9,900) | (132,200) |
Accounts payable | 754,600 | (336,800) | (721,200) |
Accrued and other liabilities | (691,400) | (661,600) | 1,490,000 |
Rents received in advance and security deposits | (1,954,000) | (197,300) | (358,200) |
Deferred revenue | (867,200) | (601,800) | (132,900) |
Net cash provided by operating activities | 43,221,300 | 50,647,200 | 34,937,000 |
INVESTING ACTIVITIES: | |||
Purchase of property and equipment | (45,100) | (169,400) | (693,500) |
Purchase of equipment for lease contracts | (4,114,000) | (9,009,000) | (23,104,800) |
Principal collections on lease receivables | 24,252,200 | ||
Net cash provided by (used for) investing activities | (4,159,100) | (9,178,400) | 453,900 |
FINANCING ACTIVITIES: | |||
Proceeds from borrowings on line of credit | 46,600,000 | 18,800,000 | 7,300,000 |
Payments on line of credit | (46,600,000) | (18,800,000) | (42,700,000) |
Payments on notes payable | (3,750,000) | (3,250,000) | (3,250,000) |
Repurchases of common stock | (48,987,500) | (24,028,100) | (1,846,400) |
Proceeds from exercises of stock options | 8,252,800 | 10,918,300 | 2,819,700 |
Dividends paid | (14,230,800) | (3,449,100) | (2,169,900) |
Proceeds from discounted lease rentals | 1,157,000 | 944,400 | 5,868,500 |
Net cash used for financing activities | (57,558,500) | (18,864,500) | (33,978,100) |
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (18,496,300) | 22,604,300 | 1,412,800 |
Cash, cash equivalents and restricted cash, beginning of period | 25,180,300 | 2,576,000 | 1,163,200 |
Cash, cash equivalents and restricted cash, end of period | $ 6,684,000 | $ 25,180,300 | $ 2,576,000 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS - Supplemental Disclosures - USD ($) | 12 Months Ended | ||
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 29, 2018 | |
SUPPLEMENTAL DISCLOSURES: | |||
Cash paid for interest | $ 1,738,400 | $ 1,705,600 | $ 2,497,000 |
Cash paid for income taxes | 9,552,500 | 11,122,300 | 6,727,600 |
Non-cash landlord leasehold improvements | 2,139,000 | ||
Reconciliation of cash, cash equivalents and restricted cash: | |||
Cash and cash equivalents | 6,659,000 | 25,130,300 | 2,496,000 |
Restricted cash | 25,000 | 50,000 | 80,000 |
Total cash, cash equivalents and restricted cash | $ 6,684,000 | $ 25,180,300 | $ 2,576,000 |
Organization and Business_
Organization and Business: | 12 Months Ended |
Dec. 26, 2020 | |
Organization and Business: | |
Organization and Business: | 1. Organization and Business: ā Winmark Corporation and subsidiaries (the Company) offers licenses to operate franchises using the service marks Platoās ClosetĀ®, Once Upon A ChildĀ®, Play It Again SportsĀ®, Style EncoreĀ® and Music Go RoundĀ®. In addition, the Company sells point-of-sale system hardware to its franchisees and certain merchandise to its Play It Again Sports franchisees. The Company also operates a middle market equipment leasing businesses under the Winmark CapitalĀ® mark and operated a small-ticket financing business under the Wirth Business CreditĀ® mark until November 2020. The Company has a 52/53-week fiscal year that ends on the last Saturday in December. Fiscal years 2020, 2019 and 2018 were ā |
Significant Accounting Policies
Significant Accounting Policies: | 12 Months Ended |
Dec. 26, 2020 | |
Significant Accounting Policies: | |
Significant Accounting Policies: | 2. Significant Accounting Policies: ā Principles of Consolidation ā The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Winmark Capital Corporation, Wirth Business Credit, Inc. and Grow Biz Games, Inc. All material inter-company transactions have been eliminated in consolidation. ā Cash Equivalents ā Cash equivalents consist of highly liquid investments with an original maturity of three months or less when purchased. Cash equivalents are stated at cost, which approximates fair value. As of December 26, 2020 and December 28, 2019, the Company had of cash located in Canadian banks. The Company holds its cash and cash equivalents with financial institutions and at times, such balances may be in excess of insurance limits. ā Receivables ā The Company provides an allowance for doubtful accounts on trade receivables. The allowance for doubtful accounts was at December 26, 2020 and December 28, 2019, respectively. If receivables in excess of the provided allowance are determined uncollectible, they are charged to expense in the year the determination is made. Trade receivables are written off when they become uncollectible (which generally occurs when the franchise terminates and there is no reasonable expectation of collection), and payments subsequently received on such receivable are credited to the allowance for doubtful accounts. Historically, receivables balances written off have not exceeded allowances provided. ā Restricted Cash ā The Company is required by certain states to maintain initial franchise fees in a restricted bank account until the franchise opens. The use of these funds by the Company is restricted until the franchise opens. Cash held in escrow totaled ā Investment in Leasing Operations ā The Company uses the direct finance method of accounting to record income from direct financing leases. At the inception of a lease, the Company records the minimum future lease payments receivable, the estimated residual value of the leased equipment and the unearned lease income. Initial direct costs related to lease originations are deferred as part of the investment and amortized over the lease term. Unearned lease income is the amount by which the total lease receivable plus the estimated residual value exceeds the cost of the equipment. ā Leasing Income Recognition ā 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. ā 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 equipmentās fair value is equal to its carrying amount, the recording of income is consistent with the accounting for a direct financing lease. ā 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. ā Generally, when a lease is more than 90 days delinquent (when more than three monthly payments are owed), the lease is classified as being on non-accrual and the Company stops recognizing leasing income on that date. Payments received on leases in non-accrual status generally reduce the lease receivable. Leases on non-accrual status remain classified as such until there is sustained payment performance that, in the Companyās judgment, would indicate that all contractual amounts will be collected in full. ā Leasing Expense ā Leasing expense includes the cost of financing equipment purchases, the cost of equipment sales as well as depreciation expense for operating lease assets. ā Initial Direct Costs ā The Company defers initial direct costs incurred to originate its leases in accordance with applicable accounting guidance . The initial direct costs deferred are part of the investment in leasing operations and are amortized using the effective interest method. Initial direct costs include commissions and other incremental costs related to originating a lease. ā Lease Residual Values ā 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 Companyās best estimate. ā Allowance for Credit Losses ā The Company maintains an allowance for credit losses at an amount that it believes to be sufficient to absorb losses inherent in its existing lease portfolio as of the reporting dates. Leases are collectively evaluated for potential loss. The Companyās methodology for determining the allowance for credit losses includes consideration of the level of delinquencies and non-accrual leases, historical net charge-off amounts and review of any significant concentrations. ā A provision is charged against earnings to maintain the allowance for credit losses at the appropriate level. If the actual results are different from the Companyās estimates, results could be different. The Companyās policy is to charge-off against the allowance the estimated unrecoverable portion of accounts once they reach 121 days delinquent. ā Inventories ā The Company values its inventories at the lower of cost, as determined by the weighted average cost method, and net realizable values. Inventory consists of computer hardware and related accessories. ā Impairment of Long-lived Assets ā The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying amount of the asset exceeds expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. ā Property and Equipment ā Property and equipment is stated at cost. Depreciation and amortization for financial reporting purposes is provided on the straight-line method. Estimated useful lives used in calculating depreciation and amortization are: three to five years for computer and peripheral equipment, five to seven years for furniture and equipment and the shorter of the lease term or useful life for leasehold improvements. Major repairs, refurbishments and improvements which significantly extend the useful lives of the related assets are capitalized. Maintenance and repairs, supplies and accessories are charged to expense as incurred. ā Goodwill ā The Company reviews its goodwill for impairment at its fiscal year end or whenever events or changes in circumstances indicate that there has been impairment in the value of its goodwill. impairment was noted during fiscal years ended 2020, 2019 and 2018. Goodwill of ā Use of Estimates ā The preparation of financial statements in conformity with generally accepted U.S. accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The ultimate results could differ from those estimates. ā Advertising ā Advertising costs are charged to operating expenses as incurred. Advertising costs were ā Accounting for Stock-Based Compensation ā The Company recognizes the cost of all share-based payments to employees, including grants of employee stock options, in the consolidated financial statements based on the grant date fair value of those awards. This cost is recognized over the period for which an employee is required to provide service in exchange for the award. The Company estimates the fair value of options granted using the Black-Scholes option valuation model. The Company estimates the volatility of its common stock at the date of grant based on its historical volatility rate. The Companyās decision to use historical volatility was based upon the lack of actively traded options on its common stock. The Company estimates the expected term based upon historical option exercises. The risk-free interest rate assumption is based on observed interest rates for the expected term. The Company uses historical data to estimate pre-vesting option forfeitures and record share-based compensation expense only for those awards that are expected to vest. For options granted, the Company amortizes the fair value on a straight-line basis. All options are amortized over the vesting periods, which are generally four years beginning from the date of grant. ā Revenue Recognition ā Franchising ā The following is a description of the principal sources of revenue for the companyās franchising segment. The Companyās performance obligations under franchise agreements consist of (a) a franchise license, including a license to use one of our brands, (b) a point-of-sale software license, (c) initial services, such as pre-opening training and marketing support, and (d) ongoing services, such as marketing services and operational support. These performance obligations are highly interrelated so we do not consider them to be individually distinct and therefore account for them under ASC 606 as a single performance obligation, which is satisfied by providing a right to use our intellectual property over the estimated life of the franchise. The disaggregation of the Companyās franchise revenue is presented within the Revenue lines of the Consolidated Statements of Operations with the amounts included in Revenue: Other delineated below. For more detailed information about reportable segments, see Note 13 ā āSegment Reportingā. Royalties ā The Company collects royalties from each retail franchise based upon a percentage of retail store gross sales. The Company recognizes royalties as revenue when earned. ā Merchandise Sales ā Merchandise sales include the sale of point-of-sale technology equipment to franchisees and the sale of a limited amount of sporting goods to certain Play It Again Sports franchisees. Merchandise sales, which includes shipping and handling charges, are recognized at a point in time when the product has been shipped to the franchisee. Shipping and handling costs associated with outbound freight are accounted for as a fulfillment cost and included in cost of merchandise sold. ā Franchise Fees ā The Company collects initial franchise fees when franchise agreements are signed. The Company recognizes franchise fee revenue over the estimated life of the franchise, beginning with the opening of the franchise, which is when the Company has performed substantially all initial services required by the franchise agreement and the franchisee benefits from the rights afforded by the franchise agreement. The Company had deferred franchise fee revenue of ā Marketing Fees ā Marketing fee revenue is included in the Revenue: Other line of the Consolidated Statements of Operations. The Company bills and collects annual marketing fees from its franchisees at various times throughout the year. The Company recognizes marketing fee revenue on a straight line basis over the franchise duration. The Company recognized ā Software License Fees ā Software license fee revenue is included in the Revenue: Other line of the Consolidated Statements of Operations. The Company bills and collects software license fees from its franchisees when the point-of-sale system is provided to the franchisee. The Company recognizes software license fee revenue on a straight line basis over the franchise duration. The Company recognized ā Contract Liabilities ā The Companyās contract liabilities for its franchise revenues consist of deferred revenue associated with franchise fees and software license fees described above. ā Commission Fees ā The Company capitalizes incremental commission fees paid as a result of obtaining franchise agreement contracts. Capitalized commission fees of $0.5 million and $0.6 million are outstanding at December 26, 2020 and December 28, 2019, respectively and are included in Prepaid expenses and Other assets of the Consolidated Balance Sheets. ā Capitalized commission fees are amortized over the life of the franchise and are included in selling, general and administrative expenses. During the fiscal years ended December 26, 2020, December 28, 2019 and December 29, 2018, the Company recognized $102,600, $107,200 and $99,500 of commission fee expense, respectively. ā Income Taxes ā We account for incomes taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. ā We recognize the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. We record interest and penalties related to unrecognized tax benefits in income tax expense. ā Sales Tax ā The Companyās accounting policy is to present taxes collected from customers and remitted to government authorities on a net basis. ā Discounted Lease Rentals ā The Company may utilize its lease rentals receivable and underlying equipment as collateral to borrow from financial institutions at fixed rates on a non-recourse basis. In the event of a default by a customer, the financial institution has a first lien on the underlying leased equipment, with no further recourse against the Company. Proceeds from discounting are recorded on the balance sheet as discounted lease rentals. As customers make payments, lease income and interest expense are recorded and discounted lease rentals are reduced by the effective interest method. ā Earnings Per Share ā The Company calculates earnings per share by dividing net income by the weighted average number of shares of common stock outstanding to arrive at the Earnings Per Share ā Basic. The Company calculates Earnings Per Share ā Diluted by dividing net income by the weighted average number of shares of common stock and dilutive stock equivalents from the potential exercise of stock options using the treasury stock method. ā The following table sets forth the presentation of shares outstanding used in the calculation of basic and diluted earnings per share (āEPSā): ā ā ā ā ā ā ā ā ā ā ā Year Ended ā December 26, 2020 December 28, 2019 December 29, 2018 Denominator for basic EPS ā weighted average common shares 3,719,485 3,840,638 3,874,757 ā Dilutive shares associated with option plans 143,779 259,991 275,022 ā Denominator for diluted EPS ā weighted average common shares and dilutive potential common shares 3,863,264 4,100,629 4,149,779 ā Options excluded from EPS calculation ā anti-dilutive 14,822 10,262 21,933 ā ā Fair Value Measurements ā 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: ā ā Level 1 ā quoted prices in active markets for identical assets and liabilities. ā Level 2 ā observable inputs other than quoted prices in active markets for identical assets and liabilities. ā Level 3 ā unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions. ā Due to their nature, the carrying value of cash equivalents, receivables, payables and debt obligations approximates fair value. ā Recently Issued Accounting Pronouncements ā In June 2016, the Financial Accounting Standards Board (āFASBā) issued Accounting Standards Update (āASUā) 2016-13, Financial Instruments ā 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 was to be effective for reporting periods beginning after December 15, 2019, with early adoption permitted. In November 2019, the FASB issued ASU 2019-10, Financial Instruments ā Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) Effective Dates, ā Reclassifications ā Certain reclassifications of previously reported amounts have been made to conform to the current year presentation. Such reclassifications did not impact net income or shareholdersā equity (deficit) as previously reported. |
Investment in Leasing Operation
Investment in Leasing Operations: | 12 Months Ended |
Dec. 26, 2020 | |
Investment in Leasing Operations: | |
Investment in Leasing Operations: | 3. Investment in Leasing Operations: ā Investment in leasing operations consists of the following: ā ā ā ā ā ā ā ā ā December 26, 2020 December 28, 2019 Direct financing and sales-type leases: ā ā ā ā ā ā Minimum lease payments receivable ā $ 12,536,300 ā $ 26,001,200 Estimated unguaranteed residual value of equipment ā 2,950,100 ā 4,109,800 Unearned lease income, net of initial direct costs deferred ā (1,439,500) ā (4,039,400) Security deposits ā (2,169,000) ā (3,852,000) Equipment installed on leases not yet commenced ā 1,634,400 ā 3,437,800 Total investment in direct financing and sales-type leases ā 13,512,300 ā 25,657,400 Allowance for credit losses ā (270,200) ā (580,600) Net investment in direct financing and sales-type leases ā 13,242,100 ā 25,076,800 Operating leases: ā ā ā ā ā ā Operating lease assets ā 599,100 ā 820,700 Less accumulated depreciation and amortization ā (580,100) ā (591,900) Net investment in operating leases ā 19,000 ā 228,800 Total net investment in leasing operations ā $ 13,261,100 ā $ 25,305,600 ā As of December 26, 2020, the $13.3 million total net investment in leases consisted of $8.7 million classified as current and $4.6 million classified as long-term. As of December 28, 2019, the $25.3 million total net investment in leases consisted of $12.8 million classified as current and $12.5 million classified as long-term. ā As of December 26, 2020 and December 28, 2019, no customers had leased assets totaling more than 10% of the Companyās total assets. A portion of the lease payments receivable from these customers is assigned as collateral in non-recourse financing with financial institutions. See Note 8 ā āDiscounted Lease Rentalsā. ā Future minimum lease payments receivable under lease contracts and the amortization of unearned lease income, net of initial direct costs deferred, is as follows as of December 26, 2020: ā ā ā ā ā ā ā ā ā ā ā Direct Financing and Sales-Type Leases ā Minimum Lease Income Fiscal Year ā Payments Receivable ā Amortization 2021 ā $ 9,880,100 ā $ 1,286,000 ā 2022 ā 2,584,500 ā 151,400 ā 2023 ā 71,700 ā 2,100 ā ā ā $ 12,536,300 ā $ 1,439,500 ā ā The activity in the allowance for credit losses for leasing operations during 2020, 2019 and 2018, respectively, is as follows: ā ā ā ā ā ā ā ā ā ā ā ā ā December 26, 2020 December 28, 2019 December 29, 2018 Balance at beginning of period ā $ 580,600 ā $ 861,200 ā $ 711,200 ā Provisions charged to expense ā (79,300) ā (78,300) ā 38,600 ā Recoveries ā (11,800) ā 21,900 ā 213,500 ā Deductions for amounts written-off ā (219,300) ā (224,200) ā (102,100) ā Balance at end of period ā $ 270,200 ā $ 580,600 ā $ 861,200 ā ā The Companyās investment in direct financing and sales-type leases (āInvestment In Leasesā) and allowance for credit losses by loss evaluation methodology are as follows: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā December 26, 2020 ā December 28, 2019 ā Investment Allowance for Investment Allowance for ā ā In Leases ā Credit Losses ā In Leases ā Credit Losses Collectively evaluated for loss potential ā $ 13,512,300 ā $ 270,200 ā $ 25,657,400 ā $ 580,600 Individually evaluated for loss potential ā ā ā ā ā ā ā ā Total ā $ 13,512,300 ā $ 270,200 ā $ 25,657,400 ā $ 580,600 ā The Companyās 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 Companyās accruing and non-accrual leases. Delinquent balances are determined based on the contractual terms of the lease. ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā December 26, 2020 ā 0-60 Days 61-90 Days Over 90 Days ā ā ā ā ā ā Delinquent ā Delinquent ā Delinquent and ā ā ā ā ā ā ā ā and Accruing ā and Accruing ā Accruing ā Non-Accrual ā Total Middle-Market ā $ 13,512,300 ā $ ā ā $ ā ā $ ā ā $ 13,512,300 Small-Ticket ā ā ā ā ā ā ā ā ā ā Total Investment in Leases ā $ 13,512,300 ā $ ā ā $ ā ā $ ā ā $ 13,512,300 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā December 28, 2019 ā 0-60 Days 61-90 Days Over 90 Days ā ā ā ā ā ā Delinquent ā Delinquent ā Delinquent and ā ā ā ā ā ā ā ā and Accruing ā and Accruing ā Accruing ā Non-Accrual ā Total Middle-Market ā $ 24,546,300 ā $ ā ā $ ā ā $ ā ā $ 24,546,300 Small-Ticket ā 1,111,100 ā ā ā ā ā ā ā 1,111,100 Total Investment in Leases ā $ 25,657,400 ā $ ā ā $ ā ā $ ā ā $ 25,657,400 ā ā 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 Companyās 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 Companyās best estimate. The Companyās 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 . ā Leasing income as presented on the Consolidated Statements of Operations consists of the following: ā ā ā ā ā ā ā ā Year Ended ā Year Ended ā December 26, 2020 December 28, 2019 Interest income on direct financing and sales-type leases $ 3,651,700 ā $ 7,602,600 Selling profit (loss) at commencement of sales-type leases 2,117,500 ā 2,470,300 Operating lease income ā 2,346,500 ā ā 2,525,600 Income on sales of equipment under lease ā 5,246,000 ā ā 2,855,400 Other ā 1,122,300 ā ā 601,900 Leasing income $ 14,484,000 ā $ 16,055,800 ā |
Receivables_
Receivables: | 12 Months Ended |
Dec. 26, 2020 | |
Receivables: | |
Receivables: | 4. Receivables: ā The Companyās current receivables consisted of the following: ā ā ā ā ā ā ā ā ā ā December 26, 2020 December 28, 2019 Trade ā $ 16,700 ā $ 35,800 ā Royalty ā 1,518,000 ā 1,543,100 ā Other ā 47,200 ā 90,600 ā ā ā $ 1,581,900 ā $ 1,669,500 ā ā As part of its normal operating procedures, the Company requires Standby Letters of Credit as collateral for a portion of its trade receivables. |
Shareholders' Equity (Deficit)_
Shareholders' Equity (Deficit): | 12 Months Ended |
Dec. 26, 2020 | |
Shareholders' Equity (Deficit): | |
Shareholders' Equity (Deficit): | 5. Shareholdersā Equity (Deficit): ā Dividends ā In 2020, the Company declared and paid quarterly cash dividends totaling $0.80 per share ($3.0 million) and a $3.00 per share special cash dividend (the ā2020 Special Dividendā). The 2020 Special Dividend totaled $11.3 million and was paid by cash on hand. ā In 2019 the Company declared and paid quarterly cash dividends totaling $0.90 per share ($3.4 million). ā In 2018, the Company declared and paid quarterly cash dividends totaling $0.56 per share ($2.2 million). ā Repurchase of Common Stock ā In December 2019, the Companyās Board of Directors authorized the repurchase of up to 300,000 shares of our common stock for a price of $163.00 per share through a tender offer (the ā2020 Tender Offerā). The 2020 Tender Offer began on the date of the announcement, December 17, 2019 and expired on January 16, 2020. Upon expiration, the Company purchased 300,000 shares for a total purchase price of approximately $49.0 million, including fees and expenses related to the Tender Offer. The 2020 Tender Offer was financed in part by net borrowings under the Line of Credit. (See Note 6 ā āDebtā). ā In February 2019, the Companyās 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 ā2019 Tender Offerā). The 2019 Tender Offer began on the date of the announcement, February 28, 2019 and expired 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 2019 Tender Offer. The 2019 Tender Offer was financed in part by net borrowings under the Line of Credit. (See Note 6 ā āDebtā). ā In 2018 the Company purchased 12,384 shares of our common stock for an aggregate purchase price of $1.8 million or $149.10 per share. ā Under a previous Board of Directorsā authorization, as of December 26, 2020 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. ā Stock Option Plans and Stock-Based Compensation ā The Company had authorized up to 750,000 shares of common stock for granting either nonqualified or incentive stock options to officers and key employees under the Companyās 2001 Stock Option Plan (the ā2001 Planā). The 2001 Plan expired on February 20, 2011. The Company had authorized up to 700,000 shares of common stock for granting either nonqualified or incentive stock options to officers and key employees under the Companyās 2010 Stock Option Plan (the ā2010 Planā). The 2010 Plan expired on February 24, 2020. The Company had also sponsored a Stock Option Plan for Nonemployee Directors (the āNonemployee Directors Planā), which had reserved a total of 350,000 shares for issuance to directors of the Company who are not employees. ā At the April 29, 2020 Annual Shareholders Meeting, the Companyās shareholders approved a new stock option plan, the 2020 Stock Option Plan (the ā2020 Planā). The 2020 Plan (as described more completely in the Companyās definitive Proxy Statement filed with the United States Securities and Exchange Commission on March 10, 2020) provides for the issuance of up to shares) in the form of either nonqualified or incentive stock option grants. Participants in the 2020 Plan may include employees, officers, directors, consultants and advisors of the Company. ā Grants under the 2020 Plan are (as they were under the 2001 Plan, 2010 Plan and Nonemployee Directors Plan) made by the Compensation Committee of the Board of Directors at a price of not less than 100% of the fair market value on the date of grant. If an incentive stock option is granted to an individual who owns more than 10% of the voting rights of the Companyās common stock, the option exercise price may not be less than 110% of the fair market value on the date of grant. The term of the options may not exceed 10 years , except in the case of nonqualified stock options, whereby the terms are established by the Compensation Committee. Options may be exercisable in whole or in installments, as determined by the Compensation Committee. ā Stock option activity under the 2001 Plan, 2010 Plan, 2020 Plan and Nonemployee Directors Plan (collectively, the āOption Plansā) as of December 26, 2020 was as follows: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Weighted Average ā ā ā ā ā ā ā ā ā Remaining ā ā ā ā ā Number of ā Weighted Average ā Contractual Life ā ā ā ā ā Shares ā Exercise Price ā (years) ā Intrinsic Value Outstanding, December 30, 2017 658,184 ā $ 72.33 5.87 ā $ 37,723,800 Granted 69,000 ā ā 149.51 ā ā ā ā ā Exercised (79,241) ā ā 39.37 ā ā ā ā ā Forfeited ā (8,563) ā ā 119.24 ā ā ā ā ā Outstanding, December 29, 2018 639,380 ā ā 84.12 5.61 ā ā 47,808,100 Granted 54,800 ā ā 170.14 ā ā ā ā ā Exercised (190,172) ā ā 57.41 ā ā ā ā ā Forfeited ā (24,450) ā ā 138.13 ā ā ā ā ā Outstanding, December 28, 2019 479,558 ā ā 101.78 ā 5.79 ā ā 45,283,200 Granted 45,100 ā ā 163.87 ā ā ā ā ā Exercised (108,170) ā ā 76.29 ā ā ā ā ā Forfeited (23,000) ā ā 148.16 ā ā ā ā ā Outstanding, December 26, 2020 393,488 ā $ 113.19 ā 5.61 ā $ 27,864,900 Exercisable, December 26, 2020 280,908 ā $ 94.80 ā 4.39 ā $ 25,059,600 ā The fair value of options granted under the Option Plans during 2020, 2019 and 2018 were estimated on the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions and results: ā ā ā ā ā ā ā ā ā ā ā ā ā ā Year Ended ā December 26, 2020 ā December 28, 2019 December 29, 2018 Risk free interest rate ā 0.45 % ā 1.85 % ā 2.73 % Expected life (years) ā 6 ā ā 6 ā ā 6 ā Expected volatility ā 25.03 % ā 19.30 % ā 19.94 % Dividend yield ā 2.33 % ā 1.38 % ā 1.13 % Option fair value ā $ 28.25 ā $ 30.96 ā $ 32.45 ā ā The total intrinsic value of options exercised during 2020, 2019 and 2018 was $8.4 million, $22.7 million and $8.3 million, respectively. The total fair value of shares vested during 2020, 2019 and 2018 was ā During 2020, 2019 and 2018, option holders surrendered 0 shares, 0 shares and 2,249 shares, respectively, of previously owned common stock as payment for option shares exercised as provided for by the Option Plans. All unexercised options at December 26, 2020 have an exercise price equal to the fair market value on the date of the grant. ā Compensation expense of $1,315,200 , $1,666,400 and $1,976,100 relating to the vested portion of the fair value of stock options granted was expensed to āSelling, General and Administrative Expensesā in 2020, 2019 and 2018, respectively. As of December 26, 2020, the Company had $3.7 million of total unrecognized compensation expense related to stock options that is expected to be recognized over the remaining weighted average vesting period of approximately 2.6 years. |
Debt_
Debt: | 12 Months Ended |
Dec. 26, 2020 | |
Debt: | |
Debt: | 6. Debt: ā Line of Credit ā During 2019, the Companyās Line of Credit with CIBC Bank USA (formerly known as the PrivateBank and Trust Company) and BMO Harris Bank N.A. (the āLine of Creditā) was amended to, among other things: ā ā Provide the consent of the lenders for the 2020 Tender Offer; ā Amend the tangible net worth covenant calculation to remove the effect of the 2020 Tender Offer; and ā Allow the replacement of LIBOR. ā During 2020, the Line of Credit was amended to, among other things: ā ā Decrease the aggregate commitments from $40.0 million to $25.0 million; ā Remove BMO Harris Bank N.A. as a lender under the Credit Agreement; ā Extend the termination date from July 19, 2021 to August 31, 2024; ā Amend the tangible net worth covenant requirement to be reset as of September 26, 2020; ā Permit the Company to issue up to $25.0 million in additional term notes to one or more affiliates or managed accounts of Prudential Investment Management, Inc.; ā Provide the consent of CIBC Bank USA for the 2020 Special Dividend; ā Amend the fixed charge coverage ratio definition to remove the effect of the 2020 Special Dividend. ā The Line of Credit has been and will continue to be used for general corporate purposes. During 2020 and 2019, the Line of Credit was used to finance in part the 2020 Tender Offer and 2019 Tender Offer (as indicated above in Note 5). Borrowings under the Line of Credit are subject to certain borrowing base limitations, and the Line of Credit is secured by a lien against substantially all of the Companyās assets, contains customary financial conditions and covenants, and requires maintenance of minimum levels of debt service coverage and tangible net worth and maximum levels of leverage (all as defined within the Line of Credit). As of December 26, 2020, the Company was in compliance with all of its financial covenants, there were ā The Line of Credit allows the Company to choose between two interest rate options in connection with its borrowings. The interest rate options are the Base Rate (as defined) and the LIBOR Rate (as defined) plus an applicable margin of 0% and 2.0% , respectively. Interest periods for LIBOR borrowings can be one , two , three , six or twelve months, as selected by the Company. The Line of Credit also provides for non-utilization fees of 0.25% per annum on the daily average of the unused commitment. ā Notes Payable ā The Company has a Note Agreement (the āNote Agreementā) with Prudential Investment Management, Inc., its affiliates and managed accounts (āPrudentialā). ā During 2019, the Note Agreement was amended to, among other things, provide the consent of Prudential for the 2020 Tender Offer, and amend the tangible net worth covenant calculation to remove the effects of the 2020 Tender Offer. ā During 2020, the Note Agreement was amended to, among other things, amend the tangible net worth covenant requirement to be reset as of September 26, 2020, provide the consent of Prudential for the declaration and payment of the 2020 Special Dividend and to approve the fixed charge coverage ratio definition to remove the effect of the 2020 Special Dividend. ā As of December 26, 2020, the Company had $13.5 million in principal outstanding from the $25.0 million Series A notes issued in May 2015 and $8.4 million in principal outstanding from the $12.5 million Series B notes issued in August 2017 under the Note Agreement. ā 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. ā The Companyās obligations under the Note Agreement are secured by a lien against substantially all of the Companyās 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 December 26, 2020, 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. ā As of December 26, 2020, required prepayments of the notes payable for each of the next five years and thereafter are as follows: ā ā ā ā 2021 $ 4,250,000 2022 4,250,000 2023 4,250,000 2024 4,250,000 2025 2,750,000 Thereafter 2,187,500 Total $ 21,937,500 ā |
Accrued Liabilities_
Accrued Liabilities: | 12 Months Ended |
Dec. 26, 2020 | |
Accrued Liabilities | |
Accrued Liabilities: | 7. Accrued Liabilities: ā Accrued liabilities at December 26, 2020 and December 28, 2019 are as follows: ā ā ā ā ā ā ā ā ā ā December 26, 2020 December 28, 2019 Accrued compensation and benefits ā $ 1,051,800 ā $ 887,900 ā Rent related liabilities ā 437,400 ā 388,500 ā Accrued interest ā 157,200 ā 210,800 ā Accrued purchases of goods and services ā ā 97,800 ā ā 186,200 ā Other ā 879,800 ā 1,109,700 ā ā ā $ 2,624,000 ā $ 2,783,100 ā ā |
Discounted Lease Rentals_
Discounted Lease Rentals: | 12 Months Ended |
Dec. 26, 2020 | |
Discounted Lease Rentals: | |
Discounted Lease Rentals: | 8. Discounted Lease Rentals: ā The Company utilized certain lease receivables and underlying equipment as collateral to borrow from financial institutions at a weighted average rate of 6.05% at December 26, 2020 on a non-recourse basis. As of December 26, 2020, $1.1 million of the $1.7 million liability balance was current . ā |
Contract Liabilities_
Contract Liabilities: | 12 Months Ended |
Dec. 26, 2020 | |
Contract Liabilities: | |
Contract Liabilities: | 9. Contract Liabilities: ā The Companyās 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 fiscal years 2020 and 2019, respectively: ā ā ā ā ā ā ā ā ā December 26, 2020 December 28, 2019 Balance at beginning of period ā $ 9,575,500 ā $ 10,177,300 Franchise and software license fees collected from franchisees, excluding amount earned as revenue during the period ā 860,100 ā 1,203,500 Fees earned that were included in the balance at the beginning of the period ā (1,727,300) ā (1,805,300) Balance at end of period ā $ 8,708,300 ā $ 9,575,500 ā The following table illustrates future estimated revenue to be recognized for the next five fiscal years and fiscal years thereafter related to performance obligations that are unsatisfied (or partially unsatisfied) as of December 26, 2020: ā ā ā ā ā Contract Liabilities expected to be recognized in ā Amount 2021 ā $ 1,657,400 2022 ā 1,512,500 2023 ā 1,341,200 2024 ā 1,143,500 2025 ā 927,100 Thereafter ā 2,126,600 ā ā $ 8,708,300 ā |
Operating Leases_
Operating Leases: | 12 Months Ended |
Dec. 26, 2020 | |
Operating Leases: | |
Operating Leases: | 10. Operating Leases ā As of December 26, 2020, the Company leases its Minnesota corporate headquarters in a facility with an operating lease that expires in December 2029. Our lease includes 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 lease provides us the option to extend the lease for two additional five year periods. The lease renewal option is at our sole discretion; therefore, the renewals to extend the lease term are not included in our right of use asset and lease liabilities as they are not reasonably certain of exercise. The weighted average remaining lease term for this lease is 9.0 years and the discount rate is 5.5% . As our lease does 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 $1,195,000 , $1,358,000 and $1,235,000 of rent expense for the periods ended December 26, 2020, December 28, 2019 and December 29, 2018, respectively. ā Maturities of operating lease liabilities is as follows as of December 26, 2020: ā ā ā ā ā Operating Lease Liabilities expected to be recognized in Amount 2021 ā $ 723,100 2022 ā 742,900 2023 ā 763,300 2024 ā 784,400 2025 ā 806,000 Thereafter ā 3,452,600 Total lease payments ā ā 7,272,300 Less imputed interest ā ā (1,546,500) Present value of lease liabilities ā $ 5,725,800 ā Of the $5.7 million operating lease liability outstanding at December 26, 2020, $0.4 million is included in Accrued liabilities in the Current liabilities section of the Consolidated Balance Sheets. ā For leases that contain predetermined fixed escalations of the minimum rent, we recognize the related rent expense on a straight-line basis from the date we take possession of the property to the end of the initial lease term. We record any difference between the straight-line rent amounts and amounts payable under the leases as an adjustment to the amortization of the operating lease right of use asset and operating lease liabilities. ā Cash or lease incentives received upon entering into certain leases (ātenant allowancesā) are recognized on a straight-line basis as a reduction to rent from the date we take possession of the property through the end of the initial lease term. In 2019, we recorded a $2.1 million tenant allowance for non-cash landlord leasehold improvements received as a reduction to the operating lease right of use asset. The reduction in rent also causes a reduction in the amortization of the operating lease right of use asset through the end of the initial lease term. ā The Companyās policy for leases with a term of twelve months or less is to exclude these short-term leases from our right of use asset and lease liabilities. ā Supplemental cash flow information related to our operating leases is as follows for the periods ended December 26, 2020 and December 28, 2019: ā ā ā ā ā ā ā ā ā ā Year Ended ā December 26, 2020 December 28, 2019 Cash paid for amounts included in the measurement of lease liabilities: ā ā ā ā ā ā Operating cash flow outflow from operating leases ā $ 703,700 ā $ 493,900 ā ā |
Income Taxes_
Income Taxes: | 12 Months Ended |
Dec. 26, 2020 | |
Income Taxes: | |
Income Taxes: | 11. Income Taxes: ā A reconciliation of the expected federal income tax expense based on the federal statutory tax rate to the actual income tax expense is provided below: ā ā ā ā ā ā ā ā ā ā ā ā ā ā Year Ended ā December 26, 2020 December 28, 2019 December 29, 2018 Federal income tax expense at statutory rate (21%, 21%, 21%) ā $ 8,088,600 ā $ 8,708,200 ā $ 8,249,400 ā Change in valuation allowance ā 54,000 ā 147,900 ā (13,800) ā State and local income taxes, net of federal benefit ā 1,368,500 ā 1,310,800 ā 1,334,100 ā Permanent differences, including stock option expenses ā (1,027,300) ā (1,056,800) ā (355,500) ā Adjustment to uncertain tax positions ā ā 85,100 ā ā (58,500) ā ā 4,500 ā Other, net ā 125,200 ā 266,500 ā (61,100) ā Actual income tax expense ā $ 8,694,100 ā $ 9,318,100 ā $ 9,157,600 ā ā Components of the provision for income taxes are as follows: ā ā ā ā ā ā ā ā ā ā ā ā ā ā Year Ended ā December 26, 2020 December 28, 2019 December 29, 2018 Current: ā ā ā ā ā ā ā ā ā ā Federal ā $ 7,836,000 ā $ 9,076,400 ā $ 6,355,800 ā State ā 1,795,800 ā 1,693,800 ā 1,551,000 ā Foreign ā 286,000 ā 363,200 ā 423,000 ā Current provision ā 9,917,800 ā 11,133,400 ā 8,329,800 ā Deferred: ā ā ā ā ā ā ā ā ā ā Federal ā (1,202,100) ā (1,834,800) ā 967,300 ā State ā (21,600) ā 19,500 ā (139,500) ā Deferred provision ā (1,223,700) ā (1,815,300) ā 827,800 ā Total provision for income taxes ā $ 8,694,100 ā $ 9,318,100 ā $ 9,157,600 ā ā The tax effects of temporary differences that give rise to the net deferred income tax assets and liabilities are presented below: ā ā ā ā ā ā ā ā ā ā December 26, 2020 December 28, 2019 Deferred tax assets: ā ā ā ā ā ā ā Accounts receivable and lease reserves ā $ 66,600 ā $ 154,700 ā Non-qualified stock option expense ā 1,581,900 ā 1,758,100 ā Deferred revenue ā 1,885,400 ā 1,957,500 ā Trademarks ā 36,100 ā 34,500 ā Lease deposits ā 532,600 ā 930,700 ā Loss from and impairment of equity and note investments ā 2,637,600 ā 2,595,500 ā Foreign tax credits ā ā 185,000 ā ā 173,100 ā Valuation allowance ā (2,822,600) ā (2,768,600) ā Other ā 204,600 ā 194,400 ā Total deferred tax assets ā 4,307,200 ā 5,029,900 ā Deferred tax liabilities: ā ā ā ā ā ā ā Lease revenue and initial direct costs ā (2,330,700) ā (4,207,400) ā Depreciation and amortization ā (85,800) ā (155,500) ā Total deferred tax liabilities ā (2,416,500) ā (4,362,900) ā Total net deferred tax assets ā $ 1,890,700 ā $ 667,000 ā ā The Company has assessed its taxable earnings history and prospective future taxable income. Based upon this assessment, the Company has determined that it is more likely than not that its deferred tax assets will be realized in future periods and no valuation allowance is necessary, except for the deferred tax assets related to the loss from and impairment of equity and note investments (which are capital losses for tax purposes) and the foreign tax credits. As a result, valuation allowances of ā The amount of unrecognized tax benefits, including interest and penalties, as of December 26, 2020 and December 28, 2019, was $621,100 and $532,500, respectively, primarily for potential state taxes. ā The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense for all periods presented. The Company had accrued approximately ā The following table summarizes the activity related to the Companyās unrecognized tax benefits: ā ā ā ā ā ā ā Total Balance at December 29, 2018 ā $ 551,300 ā Increases related to current year tax positions ā 131,900 ā Expiration of the statute of limitations for the assessment of taxes ā (184,200) ā Balance at December 28, 2019 ā ā 499,000 ā Increases related to current year tax positions ā 144,500 ā Subtractions for tax positions of prior years ā (133,400) ā Balance at December 26, 2020 ā $ 510,100 ā ā The Company and its subsidiaries file income tax returns in the U.S. federal, numerous state and certain foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2016. We expect various statutes of limitation to expire during the next 12 months. Due to the uncertain response of taxing authorities, a range of outcomes cannot be reasonably estimated at this time. |
Commitments and Contingencies_
Commitments and Contingencies: | 12 Months Ended |
Dec. 26, 2020 | |
Commitments and Contingencies: | |
Commitments and Contingencies: | 12. Commitments and Contingencies: ā Employee Benefit Plan ā The Company provides a 401(k) Savings Incentive Plan which covers substantially all employees. The plan provides for matching contributions and optional profit-sharing contributions at the discretion of the Board of Directors. Employee contributions are fully vested; matching and profit sharing contributions are subject to a five-year service vesting schedule. Company contributions to the plan for 2020, 2019 and 2018 were $324,000 , $343,500 and $361,400 , respectively. ā Litigation ā The Company is exposed to a number of asserted and unasserted legal claims encountered in the normal course of business. Management believes that the ultimate resolution of these matters will not have a material adverse effect on the consolidated financial position or results of operations of the Company. |
Segment Reporting_
Segment Reporting: | 12 Months Ended |
Dec. 26, 2020 | |
Segment Reporting: | |
Segment Reporting: | 13. Segment Reporting: ā 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 Companyās 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: ā ā ā ā ā ā ā ā ā ā ā ā ā ā Year ended ā December 26, 2020 December 28, 2019 December 29, 2018 Revenue: ā ā ā ā ā ā ā ā ā ā Franchising ā $ 51,577,800 ā $ 57,243,100 ā $ 54,334,600 ā Leasing ā 14,484,000 ā 16,055,800 ā 18,176,500 ā Total revenue ā $ 66,061,800 ā $ 73,298,900 ā $ 72,511,100 ā ā ā ā ā ā ā ā ā ā ā ā Reconciliation to operating income: ā ā ā ā ā ā ā ā ā ā Franchising segment contribution ā $ 31,880,200 ā $ 35,169,900 ā $ 31,882,200 ā Leasing segment contribution ā 8,331,300 ā 7,961,200 ā 9,881,600 ā Total operating income ā $ 40,211,500 ā $ 43,131,100 ā $ 41,763,800 ā ā ā ā ā ā ā ā ā ā ā ā Depreciation and amortization: ā ā ā ā ā ā ā ā ā ā Franchising ā $ 285,300 ā $ 281,600 ā $ 240,500 ā Leasing ā 199,400 ā 118,500 ā 73,600 ā Total depreciation and amortization ā $ 484,700 ā $ 400,100 ā $ 314,100 ā ā ā ā ā ā ā ā ā ā ā ā As of ā December 26, 2020 December 28, 2019 Identifiable assets: ā ā ā ā ā ā Franchising ā $ 4,848,300 ā $ 3,736,000 Leasing ā 14,462,600 ā 26,596,700 Unallocated ā 12,032,300 ā 31,509,500 Total ā $ 31,343,200 ā $ 61,842,200 ā Revenues are all generated from United States operations other than franchising revenues from Canadian operations of $4.0 million, $4.7 million and $4.4 million in each of fiscal 2020, 2019 and 2018, respectively. All long-lived assets are located within the United States. |
Significant Accounting Polici_2
Significant Accounting Policies: (Policies) | 12 Months Ended |
Dec. 26, 2020 | |
Significant Accounting Policies: | |
Principles of Consolidation | Principles of Consolidation ā The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Winmark Capital Corporation, Wirth Business Credit, Inc. and Grow Biz Games, Inc. All material inter-company transactions have been eliminated in consolidation. |
Cash Equivalents | Cash Equivalents ā Cash equivalents consist of highly liquid investments with an original maturity of three months or less when purchased. Cash equivalents are stated at cost, which approximates fair value. As of December 26, 2020 and December 28, 2019, the Company had of cash located in Canadian banks. The Company holds its cash and cash equivalents with financial institutions and at times, such balances may be in excess of insurance limits. |
Receivables | Receivables ā The Company provides an allowance for doubtful accounts on trade receivables. The allowance for doubtful accounts was at December 26, 2020 and December 28, 2019, respectively. If receivables in excess of the provided allowance are determined uncollectible, they are charged to expense in the year the determination is made. Trade receivables are written off when they become uncollectible (which generally occurs when the franchise terminates and there is no reasonable expectation of collection), and payments subsequently received on such receivable are credited to the allowance for doubtful accounts. Historically, receivables balances written off have not exceeded allowances provided. ā |
Restricted Cash | Restricted Cash ā The Company is required by certain states to maintain initial franchise fees in a restricted bank account until the franchise opens. The use of these funds by the Company is restricted until the franchise opens. Cash held in escrow totaled ā |
Investment in Leasing Operations | Investment in Leasing Operations ā The Company uses the direct finance method of accounting to record income from direct financing leases. At the inception of a lease, the Company records the minimum future lease payments receivable, the estimated residual value of the leased equipment and the unearned lease income. Initial direct costs related to lease originations are deferred as part of the investment and amortized over the lease term. Unearned lease income is the amount by which the total lease receivable plus the estimated residual value exceeds the cost of the equipment. ā Leasing Income Recognition ā 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. ā 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 equipmentās fair value is equal to its carrying amount, the recording of income is consistent with the accounting for a direct financing lease. ā 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. ā Generally, when a lease is more than 90 days delinquent (when more than three monthly payments are owed), the lease is classified as being on non-accrual and the Company stops recognizing leasing income on that date. Payments received on leases in non-accrual status generally reduce the lease receivable. Leases on non-accrual status remain classified as such until there is sustained payment performance that, in the Companyās judgment, would indicate that all contractual amounts will be collected in full. ā Leasing Expense ā Leasing expense includes the cost of financing equipment purchases, the cost of equipment sales as well as depreciation expense for operating lease assets. ā Initial Direct Costs ā The Company defers initial direct costs incurred to originate its leases in accordance with applicable accounting guidance . The initial direct costs deferred are part of the investment in leasing operations and are amortized using the effective interest method. Initial direct costs include commissions and other incremental costs related to originating a lease. ā Lease Residual Values ā 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 Companyās best estimate. ā Allowance for Credit Losses ā The Company maintains an allowance for credit losses at an amount that it believes to be sufficient to absorb losses inherent in its existing lease portfolio as of the reporting dates. Leases are collectively evaluated for potential loss. The Companyās methodology for determining the allowance for credit losses includes consideration of the level of delinquencies and non-accrual leases, historical net charge-off amounts and review of any significant concentrations. ā A provision is charged against earnings to maintain the allowance for credit losses at the appropriate level. If the actual results are different from the Companyās estimates, results could be different. The Companyās policy is to charge-off against the allowance the estimated unrecoverable portion of accounts once they reach 121 days delinquent. |
Inventories | Inventories ā The Company values its inventories at the lower of cost, as determined by the weighted average cost method, and net realizable values. Inventory consists of computer hardware and related accessories. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets ā The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying amount of the asset exceeds expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. |
Property and Equipment | Property and Equipment ā Property and equipment is stated at cost. Depreciation and amortization for financial reporting purposes is provided on the straight-line method. Estimated useful lives used in calculating depreciation and amortization are: three to five years for computer and peripheral equipment, five to seven years for furniture and equipment and the shorter of the lease term or useful life for leasehold improvements. Major repairs, refurbishments and improvements which significantly extend the useful lives of the related assets are capitalized. Maintenance and repairs, supplies and accessories are charged to expense as incurred. |
Goodwill | Goodwill ā The Company reviews its goodwill for impairment at its fiscal year end or whenever events or changes in circumstances indicate that there has been impairment in the value of its goodwill. impairment was noted during fiscal years ended 2020, 2019 and 2018. Goodwill of ā |
Use of Estimates | Use of Estimates ā The preparation of financial statements in conformity with generally accepted U.S. accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The ultimate results could differ from those estimates. |
Advertising | Advertising ā Advertising costs are charged to operating expenses as incurred. Advertising costs were |
Accounting for Stock-Based Compensation | Accounting for Stock-Based Compensation ā The Company recognizes the cost of all share-based payments to employees, including grants of employee stock options, in the consolidated financial statements based on the grant date fair value of those awards. This cost is recognized over the period for which an employee is required to provide service in exchange for the award. The Company estimates the fair value of options granted using the Black-Scholes option valuation model. The Company estimates the volatility of its common stock at the date of grant based on its historical volatility rate. The Companyās decision to use historical volatility was based upon the lack of actively traded options on its common stock. The Company estimates the expected term based upon historical option exercises. The risk-free interest rate assumption is based on observed interest rates for the expected term. The Company uses historical data to estimate pre-vesting option forfeitures and record share-based compensation expense only for those awards that are expected to vest. For options granted, the Company amortizes the fair value on a straight-line basis. All options are amortized over the vesting periods, which are generally four years beginning from the date of grant. |
Revenue Recognition - Franchising | ā Revenue Recognition ā Franchising ā The following is a description of the principal sources of revenue for the companyās franchising segment. The Companyās performance obligations under franchise agreements consist of (a) a franchise license, including a license to use one of our brands, (b) a point-of-sale software license, (c) initial services, such as pre-opening training and marketing support, and (d) ongoing services, such as marketing services and operational support. These performance obligations are highly interrelated so we do not consider them to be individually distinct and therefore account for them under ASC 606 as a single performance obligation, which is satisfied by providing a right to use our intellectual property over the estimated life of the franchise. The disaggregation of the Companyās franchise revenue is presented within the Revenue lines of the Consolidated Statements of Operations with the amounts included in Revenue: Other delineated below. For more detailed information about reportable segments, see Note 13 ā āSegment Reportingā. Royalties ā The Company collects royalties from each retail franchise based upon a percentage of retail store gross sales. The Company recognizes royalties as revenue when earned. ā Merchandise Sales ā Merchandise sales include the sale of point-of-sale technology equipment to franchisees and the sale of a limited amount of sporting goods to certain Play It Again Sports franchisees. Merchandise sales, which includes shipping and handling charges, are recognized at a point in time when the product has been shipped to the franchisee. Shipping and handling costs associated with outbound freight are accounted for as a fulfillment cost and included in cost of merchandise sold. ā Franchise Fees ā The Company collects initial franchise fees when franchise agreements are signed. The Company recognizes franchise fee revenue over the estimated life of the franchise, beginning with the opening of the franchise, which is when the Company has performed substantially all initial services required by the franchise agreement and the franchisee benefits from the rights afforded by the franchise agreement. The Company had deferred franchise fee revenue of ā Marketing Fees ā Marketing fee revenue is included in the Revenue: Other line of the Consolidated Statements of Operations. The Company bills and collects annual marketing fees from its franchisees at various times throughout the year. The Company recognizes marketing fee revenue on a straight line basis over the franchise duration. The Company recognized ā Software License Fees ā Software license fee revenue is included in the Revenue: Other line of the Consolidated Statements of Operations. The Company bills and collects software license fees from its franchisees when the point-of-sale system is provided to the franchisee. The Company recognizes software license fee revenue on a straight line basis over the franchise duration. The Company recognized ā Contract Liabilities ā The Companyās contract liabilities for its franchise revenues consist of deferred revenue associated with franchise fees and software license fees described above. ā Commission Fees ā The Company capitalizes incremental commission fees paid as a result of obtaining franchise agreement contracts. Capitalized commission fees of $0.5 million and $0.6 million are outstanding at December 26, 2020 and December 28, 2019, respectively and are included in Prepaid expenses and Other assets of the Consolidated Balance Sheets. ā Capitalized commission fees are amortized over the life of the franchise and are included in selling, general and administrative expenses. During the fiscal years ended December 26, 2020, December 28, 2019 and December 29, 2018, the Company recognized $102,600, $107,200 and $99,500 of commission fee expense, respectively. ā |
Income Taxes | Income Taxes ā We account for incomes taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. ā We recognize the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. We record interest and penalties related to unrecognized tax benefits in income tax expense. |
Sales Tax | Sales Tax ā The Companyās accounting policy is to present taxes collected from customers and remitted to government authorities on a net basis. |
Discounted Lease Rentals | Discounted Lease Rentals ā The Company may utilize its lease rentals receivable and underlying equipment as collateral to borrow from financial institutions at fixed rates on a non-recourse basis. In the event of a default by a customer, the financial institution has a first lien on the underlying leased equipment, with no further recourse against the Company. Proceeds from discounting are recorded on the balance sheet as discounted lease rentals. As customers make payments, lease income and interest expense are recorded and discounted lease rentals are reduced by the effective interest method. |
Earnings Per Share | Earnings Per Share ā The Company calculates earnings per share by dividing net income by the weighted average number of shares of common stock outstanding to arrive at the Earnings Per Share ā Basic. The Company calculates Earnings Per Share ā Diluted by dividing net income by the weighted average number of shares of common stock and dilutive stock equivalents from the potential exercise of stock options using the treasury stock method. ā The following table sets forth the presentation of shares outstanding used in the calculation of basic and diluted earnings per share (āEPSā): ā ā ā ā ā ā ā ā ā ā ā Year Ended ā December 26, 2020 December 28, 2019 December 29, 2018 Denominator for basic EPS ā weighted average common shares 3,719,485 3,840,638 3,874,757 ā Dilutive shares associated with option plans 143,779 259,991 275,022 ā Denominator for diluted EPS ā weighted average common shares and dilutive potential common shares 3,863,264 4,100,629 4,149,779 ā Options excluded from EPS calculation ā anti-dilutive 14,822 10,262 21,933 ā ā |
Fair Value Measurements | Fair Value Measurements ā 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: ā ā Level 1 ā quoted prices in active markets for identical assets and liabilities. ā Level 2 ā observable inputs other than quoted prices in active markets for identical assets and liabilities. ā Level 3 ā unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions. ā Due to their nature, the carrying value of cash equivalents, receivables, payables and debt obligations approximates fair value. ā |
Recent Accounting Pronouncements: | Recently Issued Accounting Pronouncements ā In June 2016, the Financial Accounting Standards Board (āFASBā) issued Accounting Standards Update (āASUā) 2016-13, Financial Instruments ā 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 was to be effective for reporting periods beginning after December 15, 2019, with early adoption permitted. In November 2019, the FASB issued ASU 2019-10, Financial Instruments ā Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) Effective Dates, ā |
Reclassifications | Reclassifications ā Certain reclassifications of previously reported amounts have been made to conform to the current year presentation. Such reclassifications did not impact net income or shareholdersā equity (deficit) as previously reported. |
Significant Accounting Polici_3
Significant Accounting Policies: (Tables) | 12 Months Ended |
Dec. 26, 2020 | |
Significant Accounting Policies: | |
Schedule of shares outstanding used in the calculation of basic and diluted earnings per share | ā ā ā ā ā ā ā ā ā ā ā Year Ended ā December 26, 2020 December 28, 2019 December 29, 2018 Denominator for basic EPS ā weighted average common shares 3,719,485 3,840,638 3,874,757 ā Dilutive shares associated with option plans 143,779 259,991 275,022 ā Denominator for diluted EPS ā weighted average common shares and dilutive potential common shares 3,863,264 4,100,629 4,149,779 ā Options excluded from EPS calculation ā anti-dilutive 14,822 10,262 21,933 ā |
Investment in Leasing Operati_2
Investment in Leasing Operations: (Tables) | 12 Months Ended |
Dec. 26, 2020 | |
Investment in Leasing Operations: | |
Schedule of investment in leasing operations | ā ā ā ā ā ā ā ā ā December 26, 2020 December 28, 2019 Direct financing and sales-type leases: ā ā ā ā ā ā Minimum lease payments receivable ā $ 12,536,300 ā $ 26,001,200 Estimated unguaranteed residual value of equipment ā 2,950,100 ā 4,109,800 Unearned lease income, net of initial direct costs deferred ā (1,439,500) ā (4,039,400) Security deposits ā (2,169,000) ā (3,852,000) Equipment installed on leases not yet commenced ā 1,634,400 ā 3,437,800 Total investment in direct financing and sales-type leases ā 13,512,300 ā 25,657,400 Allowance for credit losses ā (270,200) ā (580,600) Net investment in direct financing and sales-type leases ā 13,242,100 ā 25,076,800 Operating leases: ā ā ā ā ā ā Operating lease assets ā 599,100 ā 820,700 Less accumulated depreciation and amortization ā (580,100) ā (591,900) Net investment in operating leases ā 19,000 ā 228,800 Total net investment in leasing operations ā $ 13,261,100 ā $ 25,305,600 |
Schedule of future minimum lease payments receivable under lease contracts and the amortization of unearned lease income, net of initial direct costs deferred | Future minimum lease payments receivable under lease contracts and the amortization of unearned lease income, net of initial direct costs deferred, is as follows as of December 26, 2020: ā ā ā ā ā ā ā ā ā ā ā Direct Financing and Sales-Type Leases ā Minimum Lease Income Fiscal Year ā Payments Receivable ā Amortization 2021 ā $ 9,880,100 ā $ 1,286,000 ā 2022 ā 2,584,500 ā 151,400 ā 2023 ā 71,700 ā 2,100 ā ā ā $ 12,536,300 ā $ 1,439,500 ā |
Schedule of activity in the allowance for credit losses for leasing operations | ā ā ā ā ā ā ā ā ā ā ā ā ā December 26, 2020 December 28, 2019 December 29, 2018 Balance at beginning of period ā $ 580,600 ā $ 861,200 ā $ 711,200 ā Provisions charged to expense ā (79,300) ā (78,300) ā 38,600 ā Recoveries ā (11,800) ā 21,900 ā 213,500 ā Deductions for amounts written-off ā (219,300) ā (224,200) ā (102,100) ā Balance at end of period ā $ 270,200 ā $ 580,600 ā $ 861,200 ā |
Schedule of investment in direct financing and sales-type leases (investment in leases) and allowance for credit losses by loss evaluation methodology | ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā December 26, 2020 ā December 28, 2019 ā Investment Allowance for Investment Allowance for ā ā In Leases ā Credit Losses ā In Leases ā Credit Losses Collectively evaluated for loss potential ā $ 13,512,300 ā $ 270,200 ā $ 25,657,400 ā $ 580,600 Individually evaluated for loss potential ā ā ā ā ā ā ā ā Total ā $ 13,512,300 ā $ 270,200 ā $ 25,657,400 ā $ 580,600 |
Schedule of information regarding accruing and non-accrual leases | ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā December 26, 2020 ā 0-60 Days 61-90 Days Over 90 Days ā ā ā ā ā ā Delinquent ā Delinquent ā Delinquent and ā ā ā ā ā ā ā ā and Accruing ā and Accruing ā Accruing ā Non-Accrual ā Total Middle-Market ā $ 13,512,300 ā $ ā ā $ ā ā $ ā ā $ 13,512,300 Small-Ticket ā ā ā ā ā ā ā ā ā ā Total Investment in Leases ā $ 13,512,300 ā $ ā ā $ ā ā $ ā ā $ 13,512,300 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā December 28, 2019 ā 0-60 Days 61-90 Days Over 90 Days ā ā ā ā ā ā Delinquent ā Delinquent ā Delinquent and ā ā ā ā ā ā ā ā and Accruing ā and Accruing ā Accruing ā Non-Accrual ā Total Middle-Market ā $ 24,546,300 ā $ ā ā $ ā ā $ ā ā $ 24,546,300 Small-Ticket ā 1,111,100 ā ā ā ā ā ā ā 1,111,100 Total Investment in Leases ā $ 25,657,400 ā $ ā ā $ ā ā $ ā ā $ 25,657,400 |
Schedule of components of leasing income | ā ā ā ā ā ā ā ā Year Ended ā Year Ended ā December 26, 2020 December 28, 2019 Interest income on direct financing and sales-type leases $ 3,651,700 ā $ 7,602,600 Selling profit (loss) at commencement of sales-type leases 2,117,500 ā 2,470,300 Operating lease income ā 2,346,500 ā ā 2,525,600 Income on sales of equipment under lease ā 5,246,000 ā ā 2,855,400 Other ā 1,122,300 ā ā 601,900 Leasing income $ 14,484,000 ā $ 16,055,800 |
Receivables_ (Tables)
Receivables: (Tables) | 12 Months Ended |
Dec. 26, 2020 | |
Receivables: | |
Schedule of the Company's current receivables | ā ā ā ā ā ā ā ā ā ā December 26, 2020 December 28, 2019 Trade ā $ 16,700 ā $ 35,800 ā Royalty ā 1,518,000 ā 1,543,100 ā Other ā 47,200 ā 90,600 ā ā ā $ 1,581,900 ā $ 1,669,500 ā |
Shareholders' Equity (Deficit_2
Shareholders' Equity (Deficit): (Tables) | 12 Months Ended |
Dec. 26, 2020 | |
Shareholders' Equity (Deficit): | |
Schedule of stock option activity | ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Weighted Average ā ā ā ā ā ā ā ā ā Remaining ā ā ā ā ā Number of ā Weighted Average ā Contractual Life ā ā ā ā ā Shares ā Exercise Price ā (years) ā Intrinsic Value Outstanding, December 30, 2017 658,184 ā $ 72.33 5.87 ā $ 37,723,800 Granted 69,000 ā ā 149.51 ā ā ā ā ā Exercised (79,241) ā ā 39.37 ā ā ā ā ā Forfeited ā (8,563) ā ā 119.24 ā ā ā ā ā Outstanding, December 29, 2018 639,380 ā ā 84.12 5.61 ā ā 47,808,100 Granted 54,800 ā ā 170.14 ā ā ā ā ā Exercised (190,172) ā ā 57.41 ā ā ā ā ā Forfeited ā (24,450) ā ā 138.13 ā ā ā ā ā Outstanding, December 28, 2019 479,558 ā ā 101.78 ā 5.79 ā ā 45,283,200 Granted 45,100 ā ā 163.87 ā ā ā ā ā Exercised (108,170) ā ā 76.29 ā ā ā ā ā Forfeited (23,000) ā ā 148.16 ā ā ā ā ā Outstanding, December 26, 2020 393,488 ā $ 113.19 ā 5.61 ā $ 27,864,900 Exercisable, December 26, 2020 280,908 ā $ 94.80 ā 4.39 ā $ 25,059,600 |
Schedule of weighted average assumptions used in estimation of fair value of options granted | ā ā ā ā ā ā ā ā ā ā ā ā ā ā Year Ended ā December 26, 2020 ā December 28, 2019 December 29, 2018 Risk free interest rate ā 0.45 % ā 1.85 % ā 2.73 % Expected life (years) ā 6 ā ā 6 ā ā 6 ā Expected volatility ā 25.03 % ā 19.30 % ā 19.94 % Dividend yield ā 2.33 % ā 1.38 % ā 1.13 % Option fair value ā $ 28.25 ā $ 30.96 ā $ 32.45 ā |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 26, 2020 | |
Debt: | |
Schedule of required prepayments of the notes payable for each of the next five years and thereafter | ā ā ā ā 2021 $ 4,250,000 2022 4,250,000 2023 4,250,000 2024 4,250,000 2025 2,750,000 Thereafter 2,187,500 Total $ 21,937,500 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 26, 2020 | |
Accrued Liabilities | |
Schedule of accrued liabilities | ā ā ā ā ā ā ā ā ā ā December 26, 2020 December 28, 2019 Accrued compensation and benefits ā $ 1,051,800 ā $ 887,900 ā Rent related liabilities ā 437,400 ā 388,500 ā Accrued interest ā 157,200 ā 210,800 ā Accrued purchases of goods and services ā ā 97,800 ā ā 186,200 ā Other ā 879,800 ā 1,109,700 ā ā ā $ 2,624,000 ā $ 2,783,100 ā |
Contract Liabilities_ (Tables)
Contract Liabilities: (Tables) | 12 Months Ended |
Dec. 26, 2020 | |
Contract Liabilities: | |
Schedule of activity of current and noncurrent deferred franchise revenue | ā ā ā ā ā ā ā ā ā December 26, 2020 December 28, 2019 Balance at beginning of period ā $ 9,575,500 ā $ 10,177,300 Franchise and software license fees collected from franchisees, excluding amount earned as revenue during the period ā 860,100 ā 1,203,500 Fees earned that were included in the balance at the beginning of the period ā (1,727,300) ā (1,805,300) Balance at end of period ā $ 8,708,300 ā $ 9,575,500 |
Schedule of future estimated revenue to be recognized related to performance obligations | ā ā ā ā ā Contract Liabilities expected to be recognized in ā Amount 2021 ā $ 1,657,400 2022 ā 1,512,500 2023 ā 1,341,200 2024 ā 1,143,500 2025 ā 927,100 Thereafter ā 2,126,600 ā ā $ 8,708,300 |
Operating Leases_ (Tables)
Operating Leases: (Tables) | 12 Months Ended |
Dec. 26, 2020 | |
Operating Leases: | |
Schedule of maturities of operating lease liabilities | ā ā ā ā ā Operating Lease Liabilities expected to be recognized in Amount 2021 ā $ 723,100 2022 ā 742,900 2023 ā 763,300 2024 ā 784,400 2025 ā 806,000 Thereafter ā 3,452,600 Total lease payments ā ā 7,272,300 Less imputed interest ā ā (1,546,500) Present value of lease liabilities ā $ 5,725,800 |
Schedule of supplemental cash flow information related to operating leases | ā ā ā ā ā ā ā ā ā ā Year Ended ā December 26, 2020 December 28, 2019 Cash paid for amounts included in the measurement of lease liabilities: ā ā ā ā ā ā Operating cash flow outflow from operating leases ā $ 703,700 ā $ 493,900 |
Schedule of minimum rental commitments under noncancelable operating leases, made in accordance with accountaing guidance from the prior year | ā |
Income Taxes_ (Tables)
Income Taxes: (Tables) | 12 Months Ended |
Dec. 26, 2020 | |
Income Taxes: | |
Schedule of reconciliation of the expected federal income tax expense based on the federal statutory tax rate to the actual income tax expense | ā ā ā ā ā ā ā ā ā ā ā ā ā ā Year Ended ā December 26, 2020 December 28, 2019 December 29, 2018 Federal income tax expense at statutory rate (21%, 21%, 21%) ā $ 8,088,600 ā $ 8,708,200 ā $ 8,249,400 ā Change in valuation allowance ā 54,000 ā 147,900 ā (13,800) ā State and local income taxes, net of federal benefit ā 1,368,500 ā 1,310,800 ā 1,334,100 ā Permanent differences, including stock option expenses ā (1,027,300) ā (1,056,800) ā (355,500) ā Adjustment to uncertain tax positions ā ā 85,100 ā ā (58,500) ā ā 4,500 ā Other, net ā 125,200 ā 266,500 ā (61,100) ā Actual income tax expense ā $ 8,694,100 ā $ 9,318,100 ā $ 9,157,600 ā |
Schedule of components of the provision for income taxes | ā ā ā ā ā ā ā ā ā ā ā ā ā ā Year Ended ā December 26, 2020 December 28, 2019 December 29, 2018 Current: ā ā ā ā ā ā ā ā ā ā Federal ā $ 7,836,000 ā $ 9,076,400 ā $ 6,355,800 ā State ā 1,795,800 ā 1,693,800 ā 1,551,000 ā Foreign ā 286,000 ā 363,200 ā 423,000 ā Current provision ā 9,917,800 ā 11,133,400 ā 8,329,800 ā Deferred: ā ā ā ā ā ā ā ā ā ā Federal ā (1,202,100) ā (1,834,800) ā 967,300 ā State ā (21,600) ā 19,500 ā (139,500) ā Deferred provision ā (1,223,700) ā (1,815,300) ā 827,800 ā Total provision for income taxes ā $ 8,694,100 ā $ 9,318,100 ā $ 9,157,600 ā |
Schedule of tax effects of temporary differences that give rise to the net deferred income tax assets and liabilities | ā ā ā ā ā ā ā ā ā ā December 26, 2020 December 28, 2019 Deferred tax assets: ā ā ā ā ā ā ā Accounts receivable and lease reserves ā $ 66,600 ā $ 154,700 ā Non-qualified stock option expense ā 1,581,900 ā 1,758,100 ā Deferred revenue ā 1,885,400 ā 1,957,500 ā Trademarks ā 36,100 ā 34,500 ā Lease deposits ā 532,600 ā 930,700 ā Loss from and impairment of equity and note investments ā 2,637,600 ā 2,595,500 ā Foreign tax credits ā ā 185,000 ā ā 173,100 ā Valuation allowance ā (2,822,600) ā (2,768,600) ā Other ā 204,600 ā 194,400 ā Total deferred tax assets ā 4,307,200 ā 5,029,900 ā Deferred tax liabilities: ā ā ā ā ā ā ā Lease revenue and initial direct costs ā (2,330,700) ā (4,207,400) ā Depreciation and amortization ā (85,800) ā (155,500) ā Total deferred tax liabilities ā (2,416,500) ā (4,362,900) ā Total net deferred tax assets ā $ 1,890,700 ā $ 667,000 ā |
Summary of activity related to the Company's unrecognized tax benefits | ā ā ā ā ā ā ā Total Balance at December 29, 2018 ā $ 551,300 ā Increases related to current year tax positions ā 131,900 ā Expiration of the statute of limitations for the assessment of taxes ā (184,200) ā Balance at December 28, 2019 ā ā 499,000 ā Increases related to current year tax positions ā 144,500 ā Subtractions for tax positions of prior years ā (133,400) ā Balance at December 26, 2020 ā $ 510,100 ā |
Segment Reporting_ (Tables)
Segment Reporting: (Tables) | 12 Months Ended |
Dec. 26, 2020 | |
Segment Reporting: | |
Schedule of financial information by segment and reconciliation of segment contribution to operating income | ā ā ā ā ā ā ā ā ā ā ā ā ā ā Year ended ā December 26, 2020 December 28, 2019 December 29, 2018 Revenue: ā ā ā ā ā ā ā ā ā ā Franchising ā $ 51,577,800 ā $ 57,243,100 ā $ 54,334,600 ā Leasing ā 14,484,000 ā 16,055,800 ā 18,176,500 ā Total revenue ā $ 66,061,800 ā $ 73,298,900 ā $ 72,511,100 ā ā ā ā ā ā ā ā ā ā ā ā Reconciliation to operating income: ā ā ā ā ā ā ā ā ā ā Franchising segment contribution ā $ 31,880,200 ā $ 35,169,900 ā $ 31,882,200 ā Leasing segment contribution ā 8,331,300 ā 7,961,200 ā 9,881,600 ā Total operating income ā $ 40,211,500 ā $ 43,131,100 ā $ 41,763,800 ā ā ā ā ā ā ā ā ā ā ā ā Depreciation and amortization: ā ā ā ā ā ā ā ā ā ā Franchising ā $ 285,300 ā $ 281,600 ā $ 240,500 ā Leasing ā 199,400 ā 118,500 ā 73,600 ā Total depreciation and amortization ā $ 484,700 ā $ 400,100 ā $ 314,100 ā ā ā ā ā ā ā ā ā ā ā ā As of ā December 26, 2020 December 28, 2019 Identifiable assets: ā ā ā ā ā ā Franchising ā $ 4,848,300 ā $ 3,736,000 Leasing ā 14,462,600 ā 26,596,700 Unallocated ā 12,032,300 ā 31,509,500 Total ā $ 31,343,200 ā $ 61,842,200 |
Organization and Business_ (Det
Organization and Business: (Details) - item | 12 Months Ended | ||
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 29, 2018 | |
Organization and Business: | |||
Number of weeks in a fiscal year | 52 | 52 | 52 |
Significant Accounting Polici_4
Significant Accounting Policies: Balance Sheet Disclosures (Details) - USD ($) | 12 Months Ended | ||
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 29, 2018 | |
Receivables | |||
Allowance for Doubtful Accounts Receivable, Current | $ 800 | $ 1,900 | |
Restricted Cash | |||
Restricted cash held in escrow | $ 25,000 | 50,000 | $ 80,000 |
Allowance for Credit Losses | |||
Delinquent period for charging-off against allowance for credit losses | 121 days | ||
Canadian operations | |||
Cash Equivalents | |||
Cash located in banks | $ 77,100 | $ 56,500 |
Significant Accounting Polici_5
Significant Accounting Policies: PPE, Goodwill, Advertising, Stock-Based Comp (Details) - USD ($) | 12 Months Ended | ||
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 29, 2018 | |
Goodwill | |||
Goodwill impairment | $ 0 | $ 0 | $ 0 |
Goodwill | 607,500 | 607,500 | |
Advertising | |||
Advertising costs | $ 273,900 | $ 402,700 | $ 423,400 |
Accounting for Stock-Based Compensation | |||
Stock options, vesting period | 4 years | ||
Computer and peripheral equipment | Minimum | |||
Property, plant and equipment | |||
Estimated useful lives | 3 years | ||
Computer and peripheral equipment | Maximum | |||
Property, plant and equipment | |||
Estimated useful lives | 5 years | ||
Furniture and equipment | Minimum | |||
Property, plant and equipment | |||
Estimated useful lives | 5 years | ||
Furniture and equipment | Maximum | |||
Property, plant and equipment | |||
Estimated useful lives | 7 years |
Significant Accounting Polici_6
Significant Accounting Policies: Marketing Fees and Software License Fees (Details) - USD ($) | 12 Months Ended | ||
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 29, 2018 | |
Revenue recognition | |||
Deferred revenue | $ 8,708,300 | $ 9,575,500 | $ 10,177,300 |
Franchise fees | |||
Revenue recognition | |||
Deferred revenue | 6,823,100 | 7,623,800 | |
Revenue | 1,444,500 | 1,540,900 | 1,580,300 |
Marketing Fees | |||
Revenue recognition | |||
Revenue | 1,300,000 | 1,300,000 | 1,300,000 |
Software License Fees | |||
Revenue recognition | |||
Deferred revenue | 1,655,100 | 1,741,800 | |
Revenue | $ 300,000 | $ 300,000 | $ 300,000 |
Significant Accounting Polici_7
Significant Accounting Policies: Commission Fees (Details) - Commission Fees - USD ($) | 12 Months Ended | ||
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 29, 2018 | |
Commission Fees | |||
Capitalized contract costs | $ 500,000 | $ 600,000 | |
Expense | $ 102,600 | $ 107,200 | $ 99,500 |
Significant Accounting Polici_8
Significant Accounting Policies: Earnings Per Share (Details) - shares | 12 Months Ended | ||
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 29, 2018 | |
Earnings Per Share | |||
Denominator for basic EPS - weighted average common shares | 3,719,485 | 3,840,638 | 3,874,757 |
Dilutive shares associated with option plans | 143,779 | 259,991 | 275,022 |
Denominator for diluted EPS - weighted average common shares and dilutive potential common shares | 3,863,264 | 4,100,629 | 4,149,779 |
Options excluded from EPS calculation - anti-dilutive (in shares) | 14,822 | 10,262 | 21,933 |
Investment in Leasing Operati_3
Investment in Leasing Operations: Summary of Leasing Operations (Details) - USD ($) | Dec. 26, 2020 | Dec. 28, 2019 |
Direct financing and sales-type leases: | ||
Minimum lease payments receivable | $ 12,536,300 | $ 26,001,200 |
Estimated unguaranteed residual value of equipment | 2,950,100 | 4,109,800 |
Unearned lease income net of initial direct costs deferred | (1,439,500) | (4,039,400) |
Security deposits | (2,169,000) | (3,852,000) |
Equipment installed on leases not yet commenced | 1,634,400 | 3,437,800 |
Total investment in direct financing and sales-type leases | 13,512,300 | 25,657,400 |
Allowance for credit losses | (270,200) | (580,600) |
Net investment in direct financing and sales-type leases | 13,242,100 | 25,076,800 |
Operating leases: | ||
Operating lease assets | 599,100 | 820,700 |
Less accumulated depreciation and amortization | (580,100) | (591,900) |
Net investment in operating leases | 19,000 | 228,800 |
Total net investment in leasing operations | 13,261,100 | 25,305,600 |
Net investment in leases - current | 8,687,500 | 12,800,100 |
Net investment in leases - long-term | $ 4,573,600 | $ 12,505,500 |
Investment in Leasing Operati_4
Investment in Leasing Operations: Risk Concentration (Details) - customer | 12 Months Ended | |
Dec. 26, 2020 | Dec. 28, 2019 | |
Total assets | ||
Investment in leasing operations | ||
Number of customers | 0 | 0 |
Investment in Leasing Operati_5
Investment in Leasing Operations: Minimum Lease Payments Receivable (Details) - USD ($) | Dec. 26, 2020 | Dec. 28, 2019 |
Direct Financing and Sales-Type Leases, Minimum Lease Payments Receivable | ||
2021 | $ 9,880,100 | |
2022 | 2,584,500 | |
2023 | 71,700 | |
Total | 12,536,300 | $ 26,001,200 |
Direct Financing and Sales-Type Leases, Income Amortization | ||
2021 | 1,286,000 | |
2022 | 151,400 | |
2023 | 2,100 | |
Total | $ 1,439,500 |
Investment in Leasing Operati_6
Investment in Leasing Operations: Credit Losses (Details) - USD ($) | 12 Months Ended | ||
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 29, 2018 | |
Activity in the allowance for credit losses for leasing operations | |||
Balance at beginning of period | $ 580,600 | $ 861,200 | $ 711,200 |
Provisions charged to expense | (79,300) | (78,300) | 38,600 |
Recoveries | (11,800) | 21,900 | 213,500 |
Deductions for amounts written-off | (219,300) | (224,200) | (102,100) |
Balance at end of period | 270,200 | 580,600 | $ 861,200 |
Investment In Leases | |||
Total investment in direct financing and sales-type leases | 13,512,300 | 25,657,400 | |
Allowance for Credit Losses | |||
Total | 270,200 | 580,600 | |
Investment in leases | |||
Investment In Leases | |||
Collectively evaluated for loss potential | 13,512,300 | 25,657,400 | |
Total investment in direct financing and sales-type leases | 13,512,300 | 25,657,400 | |
Allowance for Credit Losses | |||
Collectively evaluated for loss potential | 270,200 | 580,600 | |
Total | $ 270,200 | $ 580,600 |
Investment in Leasing Operati_7
Investment in Leasing Operations: Investment Aging (Details) - USD ($) | Dec. 26, 2020 | Dec. 28, 2019 |
Investment in leasing operations | ||
0-60 Days Delinquent and Accruing | $ 13,512,300 | $ 25,657,400 |
Total investment in direct financing and sales-type leases | 13,512,300 | 25,657,400 |
Middle-Market | ||
Investment in leasing operations | ||
0-60 Days Delinquent and Accruing | 13,512,300 | 24,546,300 |
Total investment in direct financing and sales-type leases | $ 13,512,300 | 24,546,300 |
Small-Ticket | ||
Investment in leasing operations | ||
0-60 Days Delinquent and Accruing | 1,111,100 | |
Total investment in direct financing and sales-type leases | $ 1,111,100 |
Investment in Leasing Operati_8
Investment in Leasing Operations: Leasing Income (Details) - USD ($) | 12 Months Ended | |
Dec. 26, 2020 | Dec. 28, 2019 | |
Leasing income | ||
Interest income on direct financing and sales-type leases | $ 3,651,700 | $ 7,602,600 |
Selling profit (loss) at commencement of sales-type leases | 2,117,500 | 2,470,300 |
Operating lease income | 2,346,500 | 2,525,600 |
Income on sales of equipment under lease | 5,246,000 | 2,855,400 |
Other | 1,122,300 | 601,900 |
Leasing income | $ 14,484,000 | $ 16,055,800 |
Receivables_ (Details)
Receivables: (Details) - USD ($) | Dec. 26, 2020 | Dec. 28, 2019 |
Current receivables | ||
Trade | $ 16,700 | $ 35,800 |
Royalty | 1,518,000 | 1,543,100 |
Other | 47,200 | 90,600 |
Total current receivables | $ 1,581,900 | $ 1,669,500 |
Shareholders' Equity (Deficit_3
Shareholders' Equity (Deficit): Dividends and Repurchase of Common Stock (Details) - USD ($) | Jan. 16, 2020 | Mar. 28, 2019 | Feb. 28, 2019 | Dec. 26, 2020 | Dec. 28, 2019 | Dec. 29, 2018 |
Repurchase of Common Stock | ||||||
Aggregate purchase price of shares repurchased | $ 48,987,500 | $ 24,028,100 | $ 1,846,400 | |||
Dividends | ||||||
Cash dividends declared and paid (in dollars per share) | $ 0.80 | $ 0.90 | $ 0.56 | |||
Aggregate quarterly cash dividends declared and paid, excluding special dividend | $ 3,000,000 | |||||
Special cash dividend approved by Board of Directors (in dollars per share) | $ 3 | |||||
Total special dividend in cash | $ 11,300,000 | |||||
Aggregate quarterly cash dividends declared and paid | $ 14,230,800 | $ 3,449,100 | $ 2,169,900 | |||
2020 Tender Offer | ||||||
Repurchase of Common Stock | ||||||
Shares authorized for repurchase per tender offer | 300,000 | |||||
Price per share of common stock per tender offer | $ 163 | |||||
Number of shares repurchased | 300,000 | |||||
Purchase price of shares per tender offer | $ 49,000,000 | |||||
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 | $ 24,000,000 | |||||
Common Stock Repurchase Program | ||||||
Repurchase of Common Stock | ||||||
Purchase of stock, price per share | $ 149.10 | |||||
Number of shares repurchased | 12,384 | |||||
Aggregate purchase price of shares repurchased | $ 1,800,000 | |||||
Number of additional shares that can be repurchased | 130,604 |
Shareholders' Equity (Deficit_4
Shareholders' Equity (Deficit): Stock Options (Details) - shares | 12 Months Ended | |||
Dec. 26, 2020 | Apr. 29, 2020 | Feb. 24, 2020 | Feb. 20, 2011 | |
2020 Plan | ||||
Stock Option Plans | ||||
Number of shares authorized for issuance | 100,000 | |||
2020 Plan | Stock options | Minimum | ||||
Stock Option Plans | ||||
Exercise price of stock options as a percentage of fair value on the date of grant | 100.00% | |||
Threshold voting rights above which the option exercise price may not be less than 110% of the fair market value (as a percent) | 10.00% | |||
Exercise price of stock options as a percentage of fair value on the date of grant for an individual who owns more than 10% of voting rights | 110.00% | |||
2020 Plan | Stock options | Maximum | ||||
Stock Option Plans | ||||
Term of the option | 10 years | |||
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 | |||
Number of shares authorized and unissued under the plan | 125,465 | |||
Nonemployee Directors Plan | ||||
Stock Option Plans | ||||
Number of shares authorized for issuance | 350,000 | |||
Number of shares authorized and unissued under the plan | 24,500 |
Shareholders' Equity (Deficit_5
Shareholders' Equity (Deficit): Stock Options Activity (Details) - Stock options - USD ($) | 12 Months Ended | |||
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | |
Number of Shares | ||||
Outstanding at the beginning of the period (in shares) | 479,558 | 639,380 | 658,184 | |
Granted (in shares) | 45,100 | 54,800 | 69,000 | |
Exercised (in shares) | (108,170) | (190,172) | (79,241) | |
Forfeited (in shares) | (23,000) | (24,450) | (8,563) | |
Outstanding at the end of the period (in shares) | 393,488 | 479,558 | 639,380 | 658,184 |
Exercisable at the end of the period (in shares) | 280,908 | |||
Weighted Average Exercise Price | ||||
Outstanding at the beginning of the period (in dollars per share) | $ 101.78 | $ 84.12 | $ 72.33 | |
Granted (in dollars per share) | 163.87 | 170.14 | 149.51 | |
Exercised (in dollars per share) | 76.29 | 57.41 | 39.37 | |
Forfeited (in dollars per share) | 148.16 | 138.13 | 119.24 | |
Outstanding at the end of the period (in dollars per share) | 113.19 | $ 101.78 | $ 84.12 | $ 72.33 |
Exercisable at the end of the period (in dollars per share) | $ 94.80 | |||
Weighted Average Remaining Contractual Life (years) | ||||
Outstanding | 5 years 7 months 9 days | 5 years 9 months 14 days | 5 years 7 months 9 days | 5 years 10 months 13 days |
Exercisable at the end of the period | 4 years 4 months 20 days | |||
Intrinsic Value | ||||
Outstanding at the beginning of the period | $ 45,283,200 | $ 47,808,100 | $ 37,723,800 | |
Outstanding at the end of the period | 27,864,900 | $ 45,283,200 | $ 47,808,100 | $ 37,723,800 |
Exercisable at the end of the period | $ 25,059,600 | |||
Weighted average assumptions and results used in estimation of fair value of options granted | ||||
Risk free interest rate (as a percent) | 0.45% | 1.85% | 2.73% | |
Expected life (years) | 6 years | 6 years | 6 years | |
Expected volatility (as a percent) | 25.03% | 19.30% | 19.94% | |
Dividend yield (as a percent) | 2.33% | 1.38% | 1.13% | |
Option fair value (in dollars per share) | $ 28.25 | $ 30.96 | $ 32.45 |
Shareholders' Equity (Deficit_6
Shareholders' Equity (Deficit): Additional Information (Details) - Stock options - USD ($) | 12 Months Ended | ||
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 29, 2018 | |
Additional disclosures | |||
Total intrinsic value of options exercised | $ 8,400,000 | $ 22,700,000 | $ 8,300,000 |
Total fair value of shares vested | $ 9,100,000 | $ 8,600,000 | $ 7,800,000 |
Shares of previously owned common stock surrendered as payment for option shares exercised | 0 | 0 | 2,249 |
Compensation expense | $ 1,315,200 | $ 1,666,400 | $ 1,976,100 |
Total unrecognized compensation expense | $ 3,700,000 | ||
Weighted average period for recognition of unrecognized compensation expense | 2 years 7 months 6 days |
Debt_ Line of Credit (Details)
Debt: Line of Credit (Details) - CIBC Bank USA and BMO Harris Bank N.A. $ in Millions | 12 Months Ended | |
Dec. 26, 2020USD ($)item | Dec. 28, 2019USD ($) | |
One month LIBOR | ||
Line of Credit | ||
Variable rate basis | one month LIBOR | |
Two month LIBOR | ||
Line of Credit | ||
Variable rate basis | two month LIBOR | |
Three month LIBOR | ||
Line of Credit | ||
Variable rate basis | three month LIBOR | |
Six month LIBOR | ||
Line of Credit | ||
Variable rate basis | six month LIBOR | |
Twelve month LIBOR | ||
Line of Credit | ||
Variable rate basis | twelve month LIBOR | |
Line of Credit | ||
Line of Credit | ||
Aggregate commitments | $ 40 | $ 25 |
Maximum amount of additional term notes available for issuance | 25 | |
Borrowings outstanding | 0 | |
Line of credit available for additional borrowings | $ 25 | |
Number of interest rate options | item | 2 | |
Non-utilization fees (as a percent) | 0.25% | |
Line of Credit | Base Rate | ||
Line of Credit | ||
Variable rate basis | Base Rate | |
Applicable margin (as a percent) | 0.00% | |
Line of Credit | LIBOR | ||
Line of Credit | ||
Variable rate basis | LIBOR | |
Applicable margin (as a percent) | 2.00% |
Debt_ Notes Payable (Details)
Debt: Notes Payable (Details) - Prudential Investment Management, Inc - USD ($) | 12 Months Ended | |
Dec. 26, 2020 | May 31, 2015 | |
Notes Payable | ||
Notes Payable | ||
Minimum prepayment | $ 1,000,000 | |
Series A Notes | ||
Notes Payable | ||
Principal amount outstanding | $ 13,500,000 | |
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 | 8,400,000 | |
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 |
Debt_ Maturities (Details)
Debt: Maturities (Details) | Dec. 26, 2020USD ($) |
Required prepayments of the notes payable for each of the next five years and thereafter | |
2021 | $ 4,250,000 |
2022 | 4,250,000 |
2023 | 4,250,000 |
2024 | 4,250,000 |
2025 | 2,750,000 |
Thereafter | 2,187,500 |
Total | $ 21,937,500 |
Accrued Liabilities_ (Details)
Accrued Liabilities: (Details) - USD ($) | Dec. 26, 2020 | Dec. 28, 2019 |
Accrued Liabilities | ||
Accrued compensation and benefits | $ 1,051,800 | $ 887,900 |
Rent related liabilities | 437,400 | 388,500 |
Accrued interest | 157,200 | 210,800 |
Accrued purchases of goods and services | 97,800 | 186,200 |
Other | 879,800 | 1,109,700 |
Accrued liabilities | $ 2,624,000 | $ 2,783,100 |
Discounted Lease Rentals_ (Deta
Discounted Lease Rentals: (Details) - USD ($) | Dec. 26, 2020 | Dec. 28, 2019 |
Discounted Lease Rentals | ||
Discounted lease rentals, current | $ 1,096,600 | $ 2,680,700 |
Discounted lease rentals | $ 1,700,000 | $ 3,500,000 |
Secured Debt. | ||
Discounted Lease Rentals | ||
Weighted average interest rate on a non-recourse basis (as a percent) | 6.05% |
Contract Liabilities_ Activity
Contract Liabilities: Activity (Details) - USD ($) | 12 Months Ended | |
Dec. 26, 2020 | Dec. 28, 2019 | |
Activity of the current and noncurrent deferred franchise revenue | ||
Balance at beginning of period | $ 9,575,500 | $ 10,177,300 |
Franchise and software license fees collected from franchisees, excluding amount earned as revenue during the period | 860,100 | 1,203,500 |
Fees earned that were included in the balance at the beginning of the period | (1,727,300) | (1,805,300) |
Balance at end of period | $ 8,708,300 | $ 9,575,500 |
Contract Liabilities_ Performan
Contract Liabilities: Performance Obligations (Details) | Dec. 26, 2020USD ($) |
Future estimated revenue to be recognized related to performance obligations | |
Revenue, remaining performance obligation | $ 8,708,300 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-12-27 | |
Future estimated revenue to be recognized related to performance obligations | |
Duration of expected recognition period for remaining performance obligation | 1 year |
Revenue, remaining performance obligation | $ 1,657,400 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-12-26 | |
Future estimated revenue to be recognized related to performance obligations | |
Duration of expected recognition period for remaining performance obligation | 1 year |
Revenue, remaining performance obligation | $ 1,512,500 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Future estimated revenue to be recognized related to performance obligations | |
Duration of expected recognition period for remaining performance obligation | 1 year |
Revenue, remaining performance obligation | $ 1,341,200 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-12-31 | |
Future estimated revenue to be recognized related to performance obligations | |
Duration of expected recognition period for remaining performance obligation | 1 year |
Revenue, remaining performance obligation | $ 1,143,500 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-12-29 | |
Future estimated revenue to be recognized related to performance obligations | |
Duration of expected recognition period for remaining performance obligation | 1 year |
Revenue, remaining performance obligation | $ 927,100 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-12-28 | |
Future estimated revenue to be recognized related to performance obligations | |
Duration of expected recognition period for remaining performance obligation | |
Revenue, remaining performance obligation | $ 2,126,600 |
Operating Leases_ Summary (Deta
Operating Leases: Summary (Details) | 12 Months Ended | ||
Dec. 26, 2020USD ($)item | Dec. 28, 2019USD ($) | Dec. 29, 2018USD ($) | |
Operating Leases | |||
Remaining lease term | 9 years | ||
Discount rate (as a percent) | 5.50% | ||
Rent expense | $ | $ 1,195,000 | $ 1,358,000 | $ 1,235,000 |
Corporate headquarters, Minnesota | |||
Operating Leases | |||
Lease renewal option | true | ||
Number of lease extension periods | item | 2 | ||
Lease renewal term | 5 years |
Operating Leases_ Maturities an
Operating Leases: Maturities and other (Details) - USD ($) | 12 Months Ended | |
Dec. 26, 2020 | Dec. 28, 2019 | |
Maturities of operating lease liabilities: | ||
2021 | $ 723,100 | |
2022 | 742,900 | |
2023 | 763,300 | |
2024 | 784,400 | |
2024 | 806,000 | |
Thereafter | 3,452,600 | |
Total | 7,272,300 | |
Less imputed interest | (1,546,500) | |
Present value of lease liabilities | 5,725,800 | |
Operating lease liability | ||
Operating lease liability, current | $ 400,000 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued Liabilities, Current | |
Other disclosures | ||
Tenant allowance recorded during the year as a reduction to the operating lease right of use asset | $ 2,100,000 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flow outflow from operating leases | $ 703,700 | $ 493,900 |
Income Taxes_ Reconciliation, C
Income Taxes: Reconciliation, Components and Deferred Taxes (Details) - USD ($) | 12 Months Ended | ||
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 29, 2018 | |
Income Taxes: | |||
Federal statutory tax rate (as a percent) | 21.00% | 21.00% | 21.00% |
Reconciliation of the expected federal income tax expense based on the federal statutory tax rate to the actual income tax expense | |||
Federal income tax expense at statutory rate (21%, 21%, 35%) | $ 8,088,600 | $ 8,708,200 | $ 8,249,400 |
Change in valuation allowance | 54,000 | 147,900 | (13,800) |
State and local income taxes, net of federal benefit | 1,368,500 | 1,310,800 | 1,334,100 |
Permanent differences, including stock option expenses | (1,027,300) | (1,056,800) | (355,500) |
Adjustment to uncertain tax positions | 85,100 | (58,500) | 4,500 |
Other, net | 125,200 | 266,500 | (61,100) |
Total provision for income taxes | 8,694,100 | 9,318,100 | 9,157,600 |
Current provision for income taxes: | |||
Federal | 7,836,000 | 9,076,400 | 6,355,800 |
State | 1,795,800 | 1,693,800 | 1,551,000 |
Foreign | 286,000 | 363,200 | 423,000 |
Current provision | 9,917,800 | 11,133,400 | 8,329,800 |
Deferred provision for income taxes: | |||
Federal | (1,202,100) | (1,834,800) | 967,300 |
State | (21,600) | 19,500 | (139,500) |
Deferred provision | (1,223,700) | (1,815,300) | 827,800 |
Total provision for income taxes | 8,694,100 | 9,318,100 | $ 9,157,600 |
Deferred tax assets: | |||
Accounts receivable and lease reserves | 66,600 | 154,700 | |
Non-qualified stock option expense | 1,581,900 | 1,758,100 | |
Deferred revenue | 1,885,400 | 1,957,500 | |
Trademarks | 36,100 | 34,500 | |
Lease deposits | 532,600 | 930,700 | |
Loss from and impairment of equity and note investments | 2,637,600 | 2,595,500 | |
Foreign tax credits | 185,000 | 173,100 | |
Valuation allowance | (2,822,600) | (2,768,600) | |
Other | 204,600 | 194,400 | |
Total deferred tax assets | 4,307,200 | 5,029,900 | |
Deferred tax liabilities: | |||
Lease revenue and initial direct costs | (2,330,700) | (4,207,400) | |
Depreciation and amortization | (85,800) | (155,500) | |
Total deferred tax liabilities | (2,416,500) | (4,362,900) | |
Total net deferred tax liabilities | $ 1,890,700 | $ 667,000 |
Income Taxes_ Other (Details)
Income Taxes: Other (Details) - USD ($) | 12 Months Ended | |
Dec. 26, 2020 | Dec. 28, 2019 | |
Deferred tax assets, valuation allowance | ||
Valuation allowance | $ 2,822,600 | $ 2,768,600 |
Unrecognized Tax Benefits | ||
Unrecognized tax benefits, including interest and penalties | 621,100 | 532,500 |
Interest and penalties accrued related to unrecognized tax benefit | 111,000 | 33,500 |
Activity related to the company's unrecognized tax benefits | ||
Balance at the beginning of the period | 499,000 | 551,300 |
Increases related to current year tax positions | 144,500 | 131,900 |
Subtractions for tax positions of prior years | (133,400) | |
Expiration of the statute of limitations for the assessment of taxes | (184,200) | |
Balance at the end of the period | $ 510,100 | $ 499,000 |
Period over which various statutes of limitations are expected to expire | 12 months |
Commitments and Contingencies_
Commitments and Contingencies: (Details) - USD ($) | 12 Months Ended | ||
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 29, 2018 | |
Employee Benefit Plan | |||
Service period for vesting of employer contribution | 5 years | ||
Company contributions | $ 324,000 | $ 343,500 | $ 361,400 |
Segment Reporting_ (Details)
Segment Reporting: (Details) | 12 Months Ended | ||
Dec. 26, 2020USD ($)item | Dec. 28, 2019USD ($) | Dec. 29, 2018USD ($) | |
Segment Reporting | |||
Number of reportable business segments | item | 2 | ||
Total revenue | $ 66,061,800 | $ 73,298,900 | $ 72,511,100 |
Total operating income | 40,211,500 | 43,131,100 | 41,763,800 |
Total depreciation and amortization | 484,700 | 400,100 | 314,100 |
Total identifiable assets | 31,343,200 | 61,842,200 | |
Franchising | Canadian operations | |||
Segment Reporting | |||
Total revenue | 4,000,000 | 4,700,000 | 4,400,000 |
Operating | Franchising | |||
Segment Reporting | |||
Total revenue | 51,577,800 | 57,243,100 | 54,334,600 |
Total operating income | 31,880,200 | 35,169,900 | 31,882,200 |
Total depreciation and amortization | 285,300 | 281,600 | 240,500 |
Total identifiable assets | 4,848,300 | 3,736,000 | |
Operating | Leasing | |||
Segment Reporting | |||
Total revenue | 14,484,000 | 16,055,800 | 18,176,500 |
Total operating income | 8,331,300 | 7,961,200 | 9,881,600 |
Total depreciation and amortization | 199,400 | 118,500 | $ 73,600 |
Total identifiable assets | 14,462,600 | 26,596,700 | |
Unallocated | |||
Segment Reporting | |||
Total identifiable assets | $ 12,032,300 | $ 31,509,500 |