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):  April 18, 2018

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))

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 18, 2018,  Winmark Corporation (the “Company”) announced in a press release its results of operations and financial condition for the first quarter ended March 31, 2018.  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 18, 2018, the Company announced in a press release its results of operations and financial condition for the first quarter ended March 31, 2018.  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 April 18, 2018

EXHIBIT INDEX

to

Form 8-K

Winmark Corporation

Exhibit NumberExhibit Description

99.1 Press Release dated April 18, 2018

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: April 18, 2018	By:	/s/ Anthony D. Ishaug
	Anthony D. Ishaug
	Chief Financial Officer and Treasurer

EX-99.1

Exhibit 99.1

Contact:Brett D. Heffes 

763/520-8500

FOR IMMEDIATE RELEASE

WINMARK CORPORATION ANNOUNCES

FIRST QUARTER RESULTS

Minneapolis, MN (April 18, 2018)    Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended March 31, 2018 of $6,960,400 (or $1.69 per share diluted)  compared to net income of $5,550,800 (or $1.25 per share diluted) in the first quarter of 2017.   

Brett D. Heffes, Chief Executive Officer, stated,  “The first quarter of the year was highlighted by continued positive trends in our franchising business.  Our improved operating results combined with a decrease in tax expense due to the reduction in corporate tax rates yielded exceptionally strong growth in earnings per share.”

Winmark Corporation creates, supports and finances business.  At March 31, 2018, there were 1,223 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 59 retail franchises have been awarded but are not open.  In addition, at March 31, 2018, the Company had a lease portfolio of  $41.9 million.

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)

	March 31, 2018		December 30, 2017 (1)
ASSETS
Current Assets:
Cash and cash equivalents	$	1,800,600	$	1,073,200
Restricted cash		105,000		90,000
Receivables, net		1,592,800		1,796,000
Net investment in leases - current		15,597,200		15,332,300
Income tax receivable		—		2,161,800
Inventories		79,700		97,100
Prepaid expenses		653,300		901,600
Total current assets		19,828,600		21,452,000
Net investment in leases – long-term		26,309,300		25,945,300
Property and equipment, net		581,200		486,800
Goodwill		607,500		607,500
Other assets		398,200		350,400
	$	47,724,800	$	48,842,000
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net	$	3,236,100	$	3,236,100
Accounts payable		2,067,600		2,073,000
Income tax payable		31,100		—
Accrued liabilities		2,101,900		1,837,300
Discounted lease rentals		1,612,100		570,800
Deferred revenue		3,016,900		3,012,700
Total current liabilities		12,065,700		10,729,900
Long-Term Liabilities:
Line of credit		24,600,000		35,400,000
Notes payable, net		28,032,000		28,841,000
Discounted lease rentals		2,679,700		1,121,600
Deferred revenue		7,306,000		7,297,500
Other liabilities		1,358,000		845,000
Deferred income taxes		320,500		320,500
Total long-term liabilities		64,296,200		73,825,600
Shareholders’ Equity (Deficit):
Common stock, no par, 10,000,000 shares authorized, 3,849,506 and 3,843,078 shares issued and outstanding		2,015,400		1,476,200
Retained earnings (accumulated deficit)		(30,652,500)		(37,189,700)
Total shareholders’ equity (deficit)		(28,637,100)		(35,713,500)
	$	47,724,800	$	48,842,000

⁽¹⁾ Adjusted for the adoption of ASU 2014-09 under the retrospective method.

Winmark Corporation

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended
	March 31, 2018		April 1, 2017 (1)
REVENUE:
Royalties	$	11,049,000	$	10,454,000
Leasing income		5,528,800		5,859,600
Merchandise sales		776,900		748,300
Franchise fees		400,900		368,600
Other		405,400		380,400
Total revenue		18,161,000		17,810,900
COST OF MERCHANDISE SOLD		742,500		715,000
LEASING EXPENSE		554,900		1,271,400
PROVISION FOR CREDIT LOSSES		95,000		(1,400)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		6,694,400		6,512,500
Income from operations		10,074,200		9,313,400
INTEREST EXPENSE		(743,800)		(499,100)
INTEREST AND OTHER INCOME (EXPENSE)		(1,000)		1,800
Income before income taxes		9,329,400		8,816,100
PROVISION FOR INCOME TAXES		(2,369,000)		(3,265,300)
NET INCOME	$	6,960,400	$	5,550,800
EARNINGS PER SHARE – BASIC	$	1.81	$	1.33
EARNINGS PER SHARE – DILUTED	$	1.69	$	1.25
WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC		3,847,312		4,167,132
WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED		4,124,573		4,450,495

(1)Adjusted for the adoption of ASU 2014-09 under the retrospective method.