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):  February  26, 2020

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\(s\) | 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 February 26, 2020,  Winmark Corporation (the “Company”) announced in a press release its results of operations and financial condition for the year ended December 28, 2019.  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 February 26, 2020, the Company announced in a press release its results of operations and financial condition for the year ended December 28, 2019.  A copy of the press release is attached as Exhibit 99.1 of this Current Report on Form 8-K.

Item 9.01Financial Statements and Exhibits

(d)Exhibits

| c |  |

| --- | --- | | 99.1 | Press Release dated February 26, 2020 |

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.

WINMARK CORPORATION

| co |  |  |

| --- | --- | --- | | | WINMARK CORPORATION | | | Date: February 26, 2020 | By: | /s/ Anthony D. Ishaug | | | Anthony D. Ishaug | | | | Chief Financial Officer and Treasurer | |

		Ex\_991\_8K\_Earnings	

Exhibit 99.1

Contact:Brett D. Heffes

763/520-8500

FOR IMMEDIATE RELEASE

WINMARK CORPORATION ANNOUNCES YEAR END RESULTS

Minneapolis, MN (February 26, 2020)    Winmark Corporation (Nasdaq: WINA) announced today net income for the year ended December  28, 2019 of $32,149,300 or $7.84 per share diluted compared to net income of $30,125,500 or $7.26 per share diluted in 2018. The fourth quarter 2019 net income was $8,461,400 or $2.08 per share diluted, compared to net income of $7,657,800 or $1.83 per share diluted, for the same period last year. Revenues for the year ended December 28, 2019 were $73,298,900, up from $72,511,100 in 2018.

“Our increased operating results in both the fourth quarter and full year 2019 were due to the improved performance of our core franchising business,” commented Brett D. Heffes, Chief Executive Officer.

Winmark Corporation creates, supports and finances business. At December 28, 2019, there were 1,256 franchises in operation under the brands Plato’s Closet®, Once Upon A Child®, Play It Again Sports®, Style Encore® and Music Go Round®.  An additional 38 retail 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 28, 2019 |  | December 29, 2018 |  |

| --- | --- | --- | --- | --- | | ASSETS | | | | | | Current Assets: | | | | | | Cash and cash equivalents | $ | 25,130,300 | $ | 2,496,000 | | Restricted cash | | 50,000 | | 80,000 | | Receivables, net | | 1,669,500 | | 1,553,100 | | Net investment in leases - current | | 12,800,100 | | 18,547,500 | | Income tax receivable | | 497,900 | | 565,500 | | Inventories | | 86,000 | | 107,600 | | Prepaid expenses | | 968,100 | | 901,600 | | Total current assets | | 41,201,900 | | 24,251,300 | | Net investment in leases – long-term | | 12,505,500 | | 20,455,500 | | Property and equipment, net | | 2,772,600 | | 866,200 | | Operating lease right of use asset | | 3,595,200 | | — | | Goodwill | | 607,500 | | 607,500 | | Other assets | | 492,500 | | 482,600 | | Deferred income taxes | | 667,000 | | — | | | $ | 61,842,200 | $ | 46,663,100 | | LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | | | | | | Current Liabilities: | | | | | | Notes payable, net | $ | 3,736,100 | $ | 3,236,100 | | Accounts payable | | 1,015,000 | | 1,351,800 | | Accrued liabilities | | 2,783,100 | | 3,128,600 | | Discounted lease rentals | | 2,680,700 | | 3,021,900 | | Deferred revenue | | 1,717,000 | | 1,744,900 | | Total current liabilities | | 11,931,900 | | 12,483,300 | | Long-Term Liabilities: | | | | | | Notes payable, net | | 21,868,800 | | 25,604,900 | | Discounted lease rentals | | 836,900 | | 2,723,500 | | Deferred revenue | | 7,858,500 | | 8,432,400 | | Operating lease liabilities | | 5,846,100 | | — | | Other liabilities | | 1,051,700 | | 1,079,200 | | Deferred income taxes | | — | | 1,148,300 | | Total long-term liabilities | | 37,462,000 | | 38,988,300 | | Shareholders’ Equity (Deficit): | | | | | | Common stock, no par, 10,000,000 shares authorized,<br>3,947,858 and 3,907,686 shares issued and outstanding | | 11,929,300 | | 4,425,600 | | Retained earnings (accumulated deficit) | | 519,000 | | (9,234,100) | | Total shareholders’ equity (deficit) | | 12,448,300 | | (4,808,500) | | | $ | 61,842,200 | $ | 46,663,100 |

Winmark Corporation

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

|  | Quarter Ended |  |  |  | Fiscal Year Ended |  |  |  |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Dec. 28, 2019 | | Dec. 29, 2018 | | Dec. 28, 2019 | | Dec. 29, 2018 | | | Revenue: | | | | | | | | | | Royalties | $ | 13,198,400 | $ | 12,488,600 | $ | 51,421,800 | $ | 48,224,500 | | Leasing income | | 3,322,000 | | 3,182,000 | | 16,055,800 | | 18,176,500 | | Merchandise sales | | 581,500 | | 562,900 | | 2,618,800 | | 2,903,100 | | Franchise fees | | 357,800 | | 418,000 | | 1,540,900 | | 1,580,300 | | Other | | 422,900 | | 420,300 | | 1,661,600 | | 1,626,700 | | Total revenue | | 17,882,600 | | 17,071,800 | | 73,298,900 | | 72,511,100 | | Cost of merchandise sold | | 545,300 | | 506,100 | | 2,469,700 | | 2,741,100 | | Leasing expense | | 389,100 | | 160,100 | | 2,031,100 | | 1,929,300 | | Provision for credit losses | | (102,200) | | (109,800) | | (78,300) | | 38,600 | | Selling, general and administrative expenses | | 6,107,400 | | 6,335,800 | | 25,745,300 | | 26,038,300 | | Income from operations | | 10,943,000 | | 10,179,600 | | 43,131,100 | | 41,763,800 | | Interest expense | | (382,400) | | (468,900) | | (1,731,100) | | (2,447,500) | | Interest and other income / expense | | 73,300 | | (19,900) | | 67,400 | | (33,200) | | Income before income taxes | | 10,633,900 | | 9,690,800 | | 41,467,400 | | 39,283,100 | | Provision for income taxes | | (2,172,500) | | (2,033,000) | | (9,318,100) | | (9,157,600) | | Net income | $ | 8,461,400 | $ | 7,657,800 | $ | 32,149,300 | $ | 30,125,500 | | Earnings per share - basic | $ | 2.18 | $ | 1.96 | $ | 8.37 | $ | 7.77 | | Earnings per share - diluted | $ | 2.08 | $ | 1.83 | $ | 7.84 | $ | 7.26 | | Weighted average shares outstanding - basic | | 3,874,570 | | 3,906,657 | | 3,840,638 | | 3,874,757 | | Weighted average shares outstanding - diluted | | 4,065,566 | | 4,176,527 | | 4,100,629 | | 4,149,779 |