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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): July 19, 2023

Winmark Corporation

(Exact Name of Registrant as Specified in Its Charter)

Minnesota

(State or Other Jurisdiction of Incorporation)

000-22012

41-1622691

(Commission File Number)

(I.R.S. Employer Identification Number)

605 Highway 169 North, Suite 400, Minneapolis, Minnesota 55441

(Address of Principal Executive Offices) (Zip Code)

(763) 520-8500

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

Trading Symbol

Name of each exchange on which registered:

Common Stock, no par value per share

WINA

Nasdaq Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 2.02Results of Operations and Financial Condition

On July 19, 2023, Winmark Corporation (the “Company”) announced in a press release its results of operations and financial condition for the second quarter July 1, 2023. A copy of the press release is attached as Exhibit 99.1 of this Current Report on Form 8-K.

Item 7.01Regulation FD Disclosure

On July 19, 2023, the Company announced in a press release its results of operations and financial condition for the second quarter ended July 1, 2023. A copy of the press release is attached as Exhibit 99.1 of this Current Report on Form 8-K.

On July 19, 2023, the Company also announced in a press release that its Board of Directors has approved the payment of a cash dividend to its shareholders. The quarterly dividend of $0.80 per share will be paid on September 1, 2023 to shareholders of record on the close of business on August 16, 2023. Future dividends will be subject to Board approval. A copy of the press release is attached as Exhibit 99.2 of this Current Report of Form 8-K.

Item 8.01Other Events

On July 19, 2023 the Company announced in a press release that its Board of Directors approved the payment of a cash dividend to its shareholders. The quarterly dividend of $0.80 per share will be paid on September 1, 2023 to shareholders of record on the close of business on August 16, 2023. Future dividends will be subject to Board approval. A copy of the press release is attached as Exhibit 99.2 of this Current Report on Form 8-K.

Item 9.01Financial Statements and Exhibits

(d)Exhibits

c

99.1

Second Quarter Results Press Release dated July 19, 2023

99.2

Quarterly Cash Dividend Press Release dated July 19, 2023

104

Cover Page Interactive Data File (embedded within the Inline XBRL Document and incorporated as Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

co

WINMARK CORPORATION

Date: July 19, 2023

By:

/s/ Anthony D. Ishaug

Anthony D. Ishaug

Chief Financial Officer and Treasurer

Exhibit 99.1

Graphic

Contact:Anthony D. Ishaug

763/520-8500

FOR IMMEDIATE RELEASE

WINMARK CORPORATION ANNOUNCES

SECOND QUARTER RESULTS

Minneapolis, MN (July 19, 2023)  -  Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended July 1, 2023 of $10,368,800 or $2.85 per share diluted compared to net income of $9,027,200 or $2.54 per share diluted in 2022.

“Our year-to-date results reflect positive franchisee performance and Winmark’s continued emphasis on providing exceptional operational support.” commented Brett D. Heffes, Chair and Chief Executive Officer.

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 July 1, 2023, there were 1,303 franchises in operation and over 2,800 available territories.  An additional 70 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)

    

July 1, 2023

    

December 31, 2022

ASSETS

Current Assets:

    

Cash and cash equivalents

$

32,321,500

$

13,615,600

Restricted cash

55,000

65,000

Receivables, net

1,592,500

1,438,600

Net investment in leases - current

90,000

344,900

Income tax receivable

522,500

558,700

Inventories

446,900

770,600

Prepaid expenses

819,700

1,310,400

Total current assets

35,848,100

18,103,800

Net investment in leases – long-term

5,400

Property and equipment, net

1,593,400

1,704,600

Operating lease right of use asset

2,580,400

2,716,000

Intangible assets, net

3,171,300

3,348,300

Goodwill

607,500

607,500

Other assets

461,300

429,700

Deferred income taxes

3,392,000

3,540,400

$

47,654,000

$

30,455,700

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

Current Liabilities:

Notes payable, net

$

4,217,900

$

4,217,900

Accounts payable

1,638,400

2,122,000

Accrued liabilities

4,269,000

2,611,700

Deferred revenue

1,677,700

1,643,900

Total current liabilities

11,803,000

10,595,500

Long-Term Liabilities:

Line of Credit/Term Loan

30,000,000

30,000,000

Notes payable, net

36,957,700

39,066,700

Deferred revenue

7,338,300

6,974,200

Operating lease liabilities

4,013,200

4,287,000

Other liabilities

1,154,900

1,164,400

Total long-term liabilities

79,464,100

81,492,300

Shareholders’ Equity (Deficit):

Common stock, no par, 10,000,000 shares authorized,
3,485,036 and 3,459,673 shares issued and outstanding

5,723,600

1,806,700

Retained earnings (accumulated deficit)

(49,336,700)

(63,438,800)

Total shareholders’ equity (deficit)

(43,613,100)

(61,632,100)

$

47,654,000

$

30,455,700

2


Winmark Corporation

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended

Six Months Ended

July 1, 2023

June 25, 2022

July 1, 2023

June 25, 2022

Revenue:

    

    

    

    

    

Royalties

$

17,105,800

$

15,981,300

$

33,853,500

$

31,371,400

Leasing income

1,019,800

1,212,000

2,656,800

4,083,700

Merchandise sales

1,328,100

1,027,200

2,604,100

1,941,500

Franchise fees

420,700

391,500

798,900

812,100

Other

487,800

458,800

972,500

911,900

Total revenue

20,362,200

19,070,800

40,885,800

39,120,600

Cost of merchandise sold

1,247,800

970,200

2,435,100

1,834,700

Leasing expense

54,300

299,600

370,700

515,600

Provision for credit losses

(700)

(15,700)

(5,300)

(24,600)

Selling, general and administrative expenses

5,810,000

5,461,600

12,446,100

11,001,600

Income from operations

13,250,800

12,355,100

25,639,200

25,793,300

Interest expense

(779,100)

(712,000)

(1,576,700)

(1,225,100)

Interest and other income (expense)

292,300

(13,800)

418,000

(14,700)

Income before income taxes

12,764,000

11,629,300

24,480,500

24,553,500

Provision for income taxes

(2,395,200)

(2,602,100)

(5,169,000)

(5,673,800)

Net income

$

10,368,800

$

9,027,200

$

19,311,500

$

18,879,700

Earnings per share - basic

$

2.98

$

2.61

$

5.57

$

5.35

Earnings per share - diluted

$

2.85

$

2.54

$

5.34

$

5.19

Weighted average shares outstanding - basic

3,478,628

3,463,886

3,469,675

3,530,902

Weighted average shares outstanding - diluted

3,634,688

3,559,231

3,614,462

3,637,772

3


Winmark Corporation

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

Six Months Ended

    

July 1, 2023

    

June 25, 2022

    

OPERATING ACTIVITIES:

Net income

$

19,311,500

$

18,879,700

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

 

385,100

 

219,400

Provision for credit losses

 

(5,300)

 

(24,600)

Compensation expense related to stock options

 

942,000

 

771,400

Deferred income taxes

 

148,400

 

(185,400)

Operating lease right of use asset amortization

135,600

122,200

Tax benefits on exercised stock options

 

832,300

 

348,000

Change in operating assets and liabilities:

Receivables

 

(153,900)

 

(218,400)

Principal collections on lease receivables

499,800

1,636,100

Income tax receivable/payable

 

(796,100)

 

(549,500)

Inventories

 

323,700

 

(278,200)

Prepaid expenses

 

490,700

 

147,600

Other assets

(31,600)

(2,200)

Accounts payable

 

(483,600)

 

(209,700)

Accrued and other liabilities

 

1,390,000

 

2,213,500

Rents received in advance and security deposits

 

(234,200)

 

(472,700)

Deferred revenue

 

397,900

 

(28,200)

Net cash provided by operating activities

 

23,152,300

 

22,369,000

INVESTING ACTIVITIES:

Purchase of property and equipment

 

(96,900)

 

(43,000)

Reacquired franchise rights

(3,540,000)

Net cash used for investing activities

 

(96,900)

 

(3,583,000)

FINANCING ACTIVITIES:

Proceeds from borrowings on line of credit/term loan

 

 

33,700,000

Payments on line of credit/term loan

 

 

(3,700,000)

Payments on notes payable

(2,125,000)

(2,125,000)

Repurchases of common stock

 

 

(47,847,500)

Proceeds from exercises of stock options

 

2,974,900

 

2,553,700

Dividends paid

 

(5,209,400)

 

(4,052,600)

Net cash used for financing activities

 

(4,359,500)

 

(21,471,400)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

18,695,900

 

(2,685,400)

Cash, cash equivalents and restricted cash, beginning of period

 

13,680,600

 

11,437,000

Cash, cash equivalents and restricted cash, end of period

$

32,376,500

$

8,751,600

SUPPLEMENTAL DISCLOSURES:

Cash paid for interest

$

1,563,800

$

1,108,100

Cash paid for income taxes

$

4,984,600

$

6,060,800

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:

Six Months Ended

    

July 1, 2023

    

June 25, 2022

    

Cash and cash equivalents

$

32,321,500

$

8,696,600

Restricted cash

 

55,000

 

55,000

Total cash, cash equivalents and restricted cash

$

32,376,500

$

8,751,600

4


Exhibit 99.2

Graphic

Contact:Anthony D. Ishaug

763/520-8500

FOR IMMEDIATE RELEASE

WINMARK CORPORATION ANNOUNCES

QUARTERLY CASH DIVIDEND

Minneapolis, MN (July 19, 2023)  -  Winmark Corporation (Nasdaq: WINA) announced today that its Board of Directors has approved the payment of a quarterly cash dividend to shareholders. The quarterly dividend of $0.80 per share will be paid on September 1, 2023 to shareholders of record on the close of business on August 16, 2023. Future dividends will be subject to Board approval.

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 July 1, 2023, there were 1,303 franchises in operation and over 2,800 available territories.  An additional 70 franchises have been awarded but are not open.  


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Document and Entity Information
Jul. 19, 2023
Document and Entity Information [Abstract]  
Document Type 8-K
Document Period End Date Jul. 19, 2023
Entity File Number 000-22012
Entity Registrant Name Winmark Corporation
Entity Incorporation, State or Country Code MN
Entity Tax Identification Number 41-1622691
Entity Address, Address Line One 605 Highway 169 North
Entity Address, Adress Line Two Suite 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
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, no par value per share
Trading Symbol WINA
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Entity Central Index Key 0000908315
Amendment Flag false

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