8-K

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

EX-99.1

Exhibit 99.1

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

EX-99.2

Exhibit 99.2

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.  

XML

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