8-K - WINA - Equibles

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

On April 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 June 1, 2023 to shareholders of record on the close of business on May 17, 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 April 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 June 1, 2023 to shareholders of record on the close of business on May 17, 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		First Quarter Results Press Release dated April 19, 2023<br><br>
99.2		Quarterly Cash Dividend Press Release dated April 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: April 19, 2023	By:	/s/ Anthony D. Ishaug
	Anthony D. Ishaug
	Chief Financial Officer and Treasurer

2020 2nd Qtr Results (00022559).DOCX

Exhibit 99.1

Contact:Anthony D. Ishaug

763/520-8500

FOR IMMEDIATE RELEASE

WINMARK CORPORATION ANNOUNCES

FIRST QUARTER RESULTS

Minneapolis, MN (April 19, 2023) - Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended April 1, 2023 of $8,942,700 or $2.49 per share diluted compared to net income of $9,852,500 or $2.65 per share diluted in 2022. Results during the quarter were impacted by the Company’s decision in May 2021 to run-off its leasing portfolio.

“2023 is off to a good start,” commented Brett D. Heffes, Chairman 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 April 1, 2023, there were 1,297 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)


	April 1, 2023		December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents	$	24,551,600	$	13,615,600
Restricted cash		80,000		65,000
Receivables, net		1,581,800		1,438,600
Net investment in leases - current		125,300		344,900
Income tax receivable		—		558,700
Inventories		414,300		770,600
Prepaid expenses		888,000		1,310,400
Total current assets		27,641,000		18,103,800

Net investment in leases – long-term		—		5,400
Property and equipment, net		1,606,100		1,704,600
Operating lease right of use asset		2,649,100		2,716,000
Intangible assets, net		3,259,800		3,348,300
Goodwill		607,500		607,500
Other assets		470,100		429,700
Deferred income taxes		3,516,200		3,540,400
	$	39,749,800	$	30,455,700

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net	$	4,217,900	$	4,217,900
Accounts payable		1,443,700		2,122,000
Income tax payable		2,009,900		—
Accrued liabilities		3,884,600		2,611,700
Deferred revenue		1,673,700		1,643,900
Total current liabilities		13,229,800		10,595,500
Long-Term Liabilities:
Line of Credit/Term Loan		30,000,000		30,000,000
Notes payable, net		38,012,200		39,066,700
Deferred revenue		7,242,100		6,974,200
Operating lease liabilities		4,151,100		4,287,000
Other liabilities		1,159,600		1,164,400
Total long-term liabilities		80,565,000		81,492,300
Shareholders’ Equity (Deficit):
Common stock, no par, 10,000,000 shares authorized,<br>3,463,191 and 3,459,673 shares issued and outstanding		2,873,000		1,806,700
Retained earnings (accumulated deficit)		(56,918,000)		(63,438,800)
Total shareholders’ equity (deficit)		(54,045,000)		(61,632,100)
	$	39,749,800	$	30,455,700

Winmark Corporation

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended
	April 1, 2023		March 26, 2022
Revenue:
Royalties	$	16,747,700	$	15,390,100
Leasing income		1,637,000		2,871,700
Merchandise sales		1,276,000		914,300
Franchise fees		378,200		420,600
Other		484,700		453,100
Total revenue		20,523,600		20,049,800
Cost of merchandise sold		1,187,300		864,500
Leasing expense		316,400		216,000
Provision for credit losses		(4,600)		(8,900)
Selling, general and administrative expenses		6,636,100		5,540,000
Income from operations		12,388,400		13,438,200
Interest expense		(797,600)		(513,100)
Interest and other income (expense)		125,700		(900)
Income before income taxes		11,716,500		12,924,200
Provision for income taxes		(2,773,800)		(3,071,700)
Net income	$	8,942,700	$	9,852,500
Earnings per share - basic	$	2.58	$	2.74
Earnings per share - diluted	$	2.49	$	2.65
Weighted average shares outstanding - basic		3,460,720		3,597,926
Weighted average shares outstanding - diluted		3,594,234		3,716,322

Winmark Corporation

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)


		Three Months Ended
	****	April 1, 2023		****	March 26, 2022		****
OPERATING ACTIVITIES:
Net income		$	8,942,700		$	9,852,500
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			192,500			102,500
Provision for credit losses			(4,600)			(8,900)
Compensation expense related to stock options			475,900			421,600
Deferred income taxes			24,200			(113,200)
Operating lease right of use asset amortization			66,900			60,300
Tax benefits on exercised stock options			77,700			95,300
Change in operating assets and liabilities:
Receivables			(143,200)			(369,900)
Principal collections on lease receivables			423,800			530,500
Income tax receivable/payable			2,490,900			2,946,500
Inventories			356,300			(167,100)
Prepaid expenses			422,400			23,500
Other assets			(40,400)			(10,400)
Accounts payable			(678,300)			(203,000)
Accrued and other liabilities			1,140,200			390,500
Rents received in advance and security deposits			(194,200)			(159,700)
Deferred revenue			297,700			(43,100)
Net cash provided by operating activities			13,850,500			13,347,900
INVESTING ACTIVITIES:
Purchase of property and equipment			(5,500)			(21,500)
Net cash used for investing activities			(5,500)			(21,500)
FINANCING ACTIVITIES:
Proceeds from borrowings on line of credit/term loan			—			15,600,000
Payments on line of credit/term loan			—			(2,000,000)
Payments on notes payable			(1,062,500)			(1,062,500)
Repurchases of common stock			—			(36,591,400)
Proceeds from exercises of stock options			590,400			1,258,300
Dividends paid			(2,421,900)			(1,625,300)
Net cash used for financing activities			(2,894,000)			(24,420,900)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH			10,951,000			(11,094,500)
Cash, cash equivalents and restricted cash, beginning of period			13,680,600			11,437,000
Cash, cash equivalents and restricted cash, end of period		$	24,631,600		$	342,500
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest		$	791,500		$	490,500
Cash paid for income taxes		$	181,200		$	143,100

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:
		Three Months Ended
	****	April 1, 2023		****	March 26, 2022		****
Cash and cash equivalents		$	24,551,600		$	287,500
Restricted cash			80,000			55,000
Total cash, cash equivalents and restricted cash		$	24,631,600		$	342,500

Ex_99.1_2017_2nd_Qtr_Dividend.DOCX

Exhibit 99.2

Contact:Anthony D. Ishaug

763/520-8500

FOR IMMEDIATE RELEASE

WINMARK CORPORATION

ANNOUNCES INCREASE IN CASH DIVIDEND

Minneapolis, MN (April 19, 2023) - Winmark Corporation (Nasdaq: WINA) announced today that its Board of Directors has approved an increase in its regular quarterly cash dividend to shareholders. The quarterly dividend of $0.80 per share represents an increase of $0.10 from its previous dividend rate. The cash dividend will be paid June 1, 2023 to shareholders of record on the close of business on May 17, 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 April 1, 2023, there were 1,297 franchises in operation and over 2,800 available territories. An additional 70 franchises have been awarded but are not open.