Form 8-K - Current report

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): October 16, 2024

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 October 16, 2024, Winmark Corporation (the “Company”) announced in a press release its results of operations and financial condition for the third quarter ended September 28, 2024. 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 October 16, 2024, the Company announced in a press release its results of operations and financial condition for the third quarter ended September 28, 2024. A copy of the press release is attached as Exhibit 99.1 of this Current Report on Form 8-K.

On October 16, 2024 the Company also announced in a press release that its Board of Directors has approved the payment of a quarterly cash dividend to its shareholders. The quarterly dividend of $0.90 per share will be paid on December 2, 2024 to shareholders of record on the close of business on November 13, 2024. Additionally, the Board of Directors has approved the payment of a special dividend to shareholders. The special dividend of $7.50 per share will be paid on December 2, 2024 to shareholders of record on the close of business on November 13, 2024. The total amount of the special dividend will be approximately $26.4 million based on the current number of shares outstanding. 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 October 16, 2024 the Company announced in a press release that its Board of Directors has approved the payment of a quarterly cash dividend to its shareholders. The quarterly dividend of $0.90 per share will be paid on December 2, 2024 to shareholders of record on the close of business on November 13, 2024. Additionally, the Board of Directors has approved the payment of a special dividend to shareholders. The special dividend of $7.50 per share will be paid on December 2, 2024 to shareholders of record on the close of business on November 13, 2024. The total amount of the special dividend will be approximately $26.4 million based on the current number of shares outstanding. 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 9.01Financial Statements and Exhibits

(d)Exhibits

99.1

99.2

Third Quarter Results Press Release dated October 16, 2024

Quarterly Cash Dividend and Special Dividend Press Release dated October 16, 2024

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: October 16, 2024	By:	/s/ Anthony D. Ishaug
	Anthony D. Ishaug
	Chief Financial Officer and Treasurer

Exhibit 99.1

Contact:Anthony D. Ishaug

763/520-8500

FOR IMMEDIATE RELEASE

WINMARK CORPORATION ANNOUNCES

THIRD QUARTER RESULTS

Minneapolis, MN (October 16, 2024) - Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended September 28, 2024 of $11,120,700 or $3.03 per share diluted compared to net income of $11,149,800 or $3.05 per share diluted in 2023. For the nine months ended September 28, 2024, net income was $30,371,200 or $8.29 per share diluted compared to net income of $30,461,300 or $8.40 per share diluted for the same period last year. Results during the quarter and nine months were impacted by the Company’s decision in May 2021 to run-off its leasing portfolio.

Winmark - the Resale Company®, is a nationally recognized franchisor 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 September 28, 2024, there were 1,343 franchises in operation and over 2,800 available territories. An additional 82 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)


	September 28, 2024		December 30, 2023
ASSETS
Current Assets:
Cash and cash equivalents	$	37,197,000	$	13,361,500
Restricted cash		90,000		25,000
Receivables, net		1,602,200		1,475,300
Net investment in leases - current		—		75,100
Income tax receivable		—		31,400
Inventories		441,800		386,100
Prepaid expenses		1,171,600		1,392,100
Total current assets		40,502,600		16,746,500

Property and equipment, net		1,519,000		1,669,800
Operating lease right of use asset		2,197,600		2,425,900
Intangible assets, net		2,728,800		2,994,300
Goodwill		607,500		607,500
Other assets		478,400		471,300
Deferred income taxes		3,917,300		4,052,400
	$	51,951,200	$	28,967,700

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net	$	3,472,100	$	4,217,900
Accounts payable		1,600,700		1,719,400
Income tax payable		30,400		—
Accrued liabilities		3,776,100		2,858,200
Deferred revenue		1,670,100		1,666,100
Total current liabilities		10,549,400		10,461,600
Long-Term Liabilities:
Line of credit/Term loan		30,000,000		30,000,000
Notes payable, net		32,431,200		34,848,800
Deferred revenue		8,028,600		7,657,500
Operating lease liabilities		3,260,100		3,715,800
Other liabilities		1,425,800		1,440,100
Total long-term liabilities		75,145,700		77,662,200
Shareholders’ Equity (Deficit):
Common stock, no par, 10,000,000 shares authorized, 3,520,402 and 3,496,977 shares issued and outstanding		11,941,900		7,768,800
Retained earnings (accumulated deficit)		(45,685,800)		(66,924,900)
Total shareholders’ equity (deficit)		(33,743,900)		(59,156,100)
	$	51,951,200	$	28,967,700

Winmark Corporation

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Revenue:
Royalties	$	19,512,500	$	19,210,000	$	54,555,700	$	53,063,400
Leasing income		316,200		1,291,900		1,677,400		3,948,700
Merchandise sales		702,500		997,800		2,738,500		3,601,900
Franchise fees		451,200		334,400		1,182,700		1,133,400
Other		528,500		483,700		1,586,800		1,456,200
Total revenue		21,510,900		22,317,800		61,741,100		63,203,600
Cost of merchandise sold		662,500		935,400		2,562,600		3,370,500
Leasing expense		—		11,000		36,600		381,700
Provision for credit losses		—		700		(1,500)		(4,600)
Selling, general and administrative expenses		5,919,800		6,248,200		18,979,000		18,694,300
Income from operations		14,928,600		15,122,500		40,164,400		40,761,700
Interest expense		(704,100)		(763,100)		(2,163,300)		(2,339,800)
Interest and other income		386,400		385,400		855,200		803,400
Income before income taxes		14,610,900		14,744,800		38,856,300		39,225,300
Provision for income taxes		(3,490,200)		(3,595,000)		(8,485,100)		(8,764,000)
Net income	$	11,120,700	$	11,149,800	$	30,371,200	$	30,461,300
Earnings per share - basic	$	3.16	$	3.20	$	8.65	$	8.77
Earnings per share - diluted	$	3.03	$	3.05	$	8.29	$	8.40
Weighted average shares outstanding - basic		3,520,334		3,485,852		3,510,461		3,475,066
Weighted average shares outstanding - diluted		3,671,121		3,653,730		3,663,309		3,627,550

Winmark Corporation

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended
	September 28, 2024		September 30, 2023
OPERATING ACTIVITIES:
Net income	$	30,371,200	$	30,461,300
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment		345,600		313,400
Amortization of intangible assets		265,500		265,500
Provision for credit losses		(1,500)		(4,600)
Compensation expense related to stock options		1,458,200		1,451,000
Deferred income taxes		135,100		148,400
Operating lease right of use asset amortization		228,200		206,000
Tax benefits on exercised stock options		943,300		839,000
Change in operating assets and liabilities:
Receivables		(126,900)		(265,400)
Principal collections on lease receivables		104,700		485,200
Income tax receivable/payable		(881,600)		(281,500)
Inventories		(55,700)		479,700
Prepaid expenses		220,500		215,300
Other assets		(7,200)		(38,000)
Accounts payable		(118,700)		(427,100)
Accrued and other liabilities		472,200		1,021,600
Rents received in advance and security deposits		(28,000)		(254,600)
Deferred revenue		375,100		616,200
Net cash provided by operating activities		33,700,000		35,231,400
INVESTING ACTIVITIES:
Purchase of property and equipment		(194,900)		(284,700)
Net cash used for investing activities		(194,900)		(284,700)
FINANCING ACTIVITIES:
Payments on notes payable		(3,187,500)		(3,187,500)
Proceeds from exercises of stock options		2,715,000		3,154,200
Dividends paid		(9,132,100)		(7,997,900)
Net cash used for financing activities		(9,604,600)		(8,031,200)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		23,900,500		26,915,500
Cash, cash equivalents and restricted cash, beginning of period		13,386,500		13,680,600
Cash, cash equivalents and restricted cash, end of period	$	37,287,000	$	40,596,100
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	2,149,200	$	2,309,100
Cash paid for income taxes	$	8,281,400	$	8,058,100

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:
	Nine Months Ended
	September 28, 2024		September 30, 2023
Cash and cash equivalents	$	37,197,000	$	40,556,100
Restricted cash		90,000		40,000
Total cash, cash equivalents and restricted cash	$	37,287,000	$	40,596,100

Exhibit 99.2

Contact:Anthony D. Ishaug

763/520-8500

FOR IMMEDIATE RELEASE

WINMARK CORPORATION ANNOUNCES

QUARTERLY CASH DIVIDEND AND SPECIAL DIVIDEND

Minneapolis, MN (October 16 ,2024) - 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 $0.90 per share will be paid on December 2, 2024 to shareholders of record on the close of business on November 13, 2024.

Additionally, the Board of Directors has approved the payment of a special dividend to shareholders. The special dividend of $7.50 per share will be paid on December 2, 2024 to shareholders of record on the close of business on November 13, 2024. The total amount of the special dividend will be approximately $26.4 million based on the current number of shares outstanding. It is anticipated that Winmark will use cash on hand to finance the special dividend. 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 September 28, 2024, there were 1,343 franchises in operation and over 2,800 available territories. An additional 82 franchises have been awarded but are not open.

Document and Entity Information	Oct. 16, 2024
Document and Entity Information [Abstract]
Document Type	8-K
Document Period End Date	Oct. 16, 2024
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