Winmark Corporation (NASDAQ:WINA) announced today net income for the year ended December 25, 2021 of $39,919,900 or $10.48 per share diluted compared to net income of $29,823,300 or $7.72 per share diluted in 2020. The fourth quarter 2021 net income was $11,589,000 or $3.09 per share diluted, compared to net income of $8,092,300 or $2.09 per share diluted, for the same period last year. Revenues for the year ended December 25, 2021 were $78,216,200 up from $66,061,800 in 2020.

"Our 2021 financial results were exceptional. This is a testament to the hard work of our franchise partners, the strength of our sustainable business model as well as the incredible efforts of our employees," stated Brett D. Heffes, Chairman and Chief Executive Officer. "The strategic decision to finalize plans for shedding all non-core activities was a key moment in our history. We believe that our focus on the large and growing resale market will benefit all Winmark stakeholders."

Winmark – the Resale Company®, is a nationally recognized franchising business focused on sustainability and small-business formation. We champion and guide entrepreneurs interested in operating one of our award winning resale franchises: Plato's Closet®, Once Upon A Child®, Play It Again Sports®, Style Encore® and Music Go Round®. At December 25, 2021, there were 1,271 franchises in operation and over 2,800 available territories. An additional 46 franchises have been awarded but are not open.

This press release contains forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), relating to future events or the future financial performance of the Company. Such forward-looking statements are only predictions or statements of intention subject to risks and uncertainties and actual events or results could differ materially from those anticipated. Because actual result may differ, shareholders and prospective investors are cautioned not to place undue reliance on such forward-looking statements.

WINMARK CORPORATION
CONDENSED BALANCE SHEETS
(Unaudited)

	December 25, 2021			December 26, 2020
ASSETS
Current Assets:
Cash and cash equivalents	$	11,407,000		$	6,659,000
Restricted cash		30,000			25,000
Receivables, net		1,103,400			1,581,900
Net investment in leases - current		2,890,600			8,687,500
Income tax receivable		667,500			221,200
Inventories		325,200			106,600
Prepaid expenses		1,008,600			995,200
Total current assets		17,432,300			18,276,400

Net investment in leases – long-term		229,300			4,573,600
Property and equipment, net		1,976,900			2,332,800
Operating lease right of use asset		2,982,000			3,226,300
Goodwill		607,500			607,500
Other assets		418,300			435,900
Deferred income taxes		3,252,700			1,890,700
	$	26,899,000		$	31,343,200

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net	$	4,232,600		$	4,236,100
Accounts payable		2,099,000			1,769,600
Accrued liabilities		2,001,000			2,624,000
Discounted lease rentals		—			1,096,600
Deferred revenue		1,645,000			1,657,400
Total current liabilities		9,977,600			11,383,700
Long-Term Liabilities:
Notes payable, net		43,376,400			17,632,700
Discounted lease rentals		—			574,000
Deferred revenue		6,863,500			7,050,900
Operating lease liabilities		4,810,100			5,307,400
Other liabilities		954,800			773,200
Total long-term liabilities		56,004,800			31,338,200
Shareholders' Equity (Deficit):
Common stock, no par, 10,000,000 shares authorized, 3,635,806 and 3,756,028 shares issued and outstanding		—			9,281,800
Retained earnings (accumulated deficit)		(39,083,400	)		(20,660,500	)
Total shareholders' equity (deficit)		(39,083,400	)		(11,378,700	)
	$	26,899,000		$	31,343,200

WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)

	Quarter Ended						Fiscal Year Ended
	December 25, 2021			December 26, 2020			December 25, 2021			December 26, 2020
Revenue:
Royalties	$	15,638,100		$	13,097,900		$	60,779,300		$	46,286,200
Leasing income		2,796,500			2,443,200			11,148,300			14,484,000
Merchandise sales		1,119,800			468,600			3,100,100			2,215,400
Franchise fees		395,600			379,600			1,496,900			1,444,500
Other		424,300			406,000			1,691,600			1,631,700
Total revenue		20,374,300			16,795,300			78,216,200			66,061,800
Cost of merchandise sold		1,052,800			441,900			2,940,500			2,103,900
Leasing expense		439,500			178,900			1,850,300			2,622,600
Provision for credit losses		(39,300	)		(243,600	)		(206,600	)		(79,300	)
Selling, general and administrative expenses		6,008,200			5,484,000			22,295,800			21,203,100
Income from operations		12,913,100			10,934,100			51,336,200			40,211,500
Interest expense		(508,300	)		(327,900	)		(1,453,900	)		(1,737,500	)
Interest and other income (expense)		(7,900	)		15,700			(15,000	)		43,400
Income before income taxes		12,396,900			10,621,900			49,867,300			38,517,400
Provision for income taxes		(807,900	)		(2,529,600	)		(9,947,400	)		(8,694,100	)
Net income	$	11,589,000		$	8,092,300		$	39,919,900		$	29,823,300
Earnings per share - basic	$	3.20		$	2.16		$	10.87		$	8.02
Earnings per share - diluted	$	3.09		$	2.09		$	10.48		$	7.72
Weighted average shares outstanding - basic		3,622,690			3,747,604			3,671,980			3,719,485
Weighted average shares outstanding - diluted		3,753,982			3,879,796			3,810,480			3,863,264

WINMARK CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)

	Fiscal Year Ended
	December 25, 2021			December 26, 2020
OPERATING ACTIVITIES:
Net income	$	39,919,900		$	29,823,300
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		430,600			484,700
Provision for credit losses		(206,600	)		(79,300	)
Compensation expense related to stock options		1,435,500			1,315,200
Deferred income taxes		(1,362,000	)		(1,223,700	)
Loss from disposal of property and equipment		—			200
Deferred initial direct costs		(2,100	)		(18,300	)
Amortization of deferred initial direct costs		18,900			105,900
Operating lease right of use asset amortization		244,300			368,900
Tax benefits on exercised stock options		2,479,600			872,900
Change in operating assets and liabilities:
Receivables		478,500			87,600
Principal collections on lease receivables		9,915,400			14,829,200
Income tax receivable/payable		(2,925,900	)		(596,200	)
Inventories		(218,600	)		(20,600	)
Prepaid expenses		(13,400	)		(27,100	)
Other assets		17,600			56,600
Accounts payable		329,400			754,600
Accrued and other liabilities		(948,500	)		(691,400	)
Rents received in advance and security deposits		(1,046,600	)		(1,954,000	)
Deferred revenue		(199,800	)		(867,200	)
Net cash provided by operating activities		48,346,200			43,221,300
INVESTING ACTIVITIES:
Purchase of property and equipment		(74,700	)		(45,100	)
Purchase of equipment for lease contracts		(208,400	)		(4,114,000	)
Net cash used for investing activities		(283,100	)		(4,159,100	)
FINANCING ACTIVITIES:
Proceeds from borrowings on line of credit		—			46,600,000
Payments on line of credit		—			(46,600,000	)
Proceeds from borrowings on notes payable		30,000,000			—
Payments on notes payable		(4,250,000	)		(3,750,000	)
Repurchases of common stock		(44,217,500	)		(48,987,500	)
Proceeds from exercises of stock options		8,320,000			8,252,800
Dividends paid		(33,162,600	)		(14,230,800	)
Proceeds from discounted lease rentals		—			1,157,000
Net cash used for financing activities		(43,310,100	)		(57,558,500	)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		4,753,000			(18,496,300	)
Cash, cash equivalents and restricted cash, beginning of period		6,684,000			25,180,300
Cash, cash equivalents and restricted cash, end of period	$	11,437,000		$	6,684,000
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	1,388,900		$	1,738,400
Cash paid for income taxes	$	11,555,100		$	9,552,500

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Balance Sheets to the total of the same amounts shown above:
	Fiscal Year Ended
	December 25, 2021			December 26, 2020
Cash and cash equivalents	$	11,407,000		$	6,659,000
Restricted cash		30,000			25,000
Total cash, cash equivalents and restricted cash	$	11,437,000		$	6,684,000

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Winmark Corporation Announces Year End Results