UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
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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:
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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 13, 2021, Winmark Corporation (the “Company”) announced in a press release its results of operations and financial condition for the third quarter ended September 25, 2021. 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 13, 2021, the Company announced in a press release its results of operations and financial condition for the third quarter ended September 25, 2021. A copy of the press release is attached as Exhibit 99.1 of this Current Report on Form 8-K.
On October 13, 2021, 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 $0.45 per share will be paid on December 1, 2021 to shareholders of record on the close of business on November 10, 2021. 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 1, 2021 to shareholders of record on the close of business on November 10, 2021. The total amount of the special dividend payment will be approximately $27.2 million based on the current number of shares outstanding. Future regular or special 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.
On October 14, 2021, the Company repurchased 74,900 shares of its common stock in a block trade from an institutional shareholder at $208.00 per share under its existing share repurchase authorization. The aggregate purchase price of approximately $15.6 million will be paid with cash on hand.
Item 8.01Other Events
On October 13, 2021, 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 $0.45 per share will be paid on December 1, 2021 to shareholders of record on the close of business on November 10, 2021. 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 1, 2021 to shareholders of record on the close of business on November 10, 2021. The total amount of the special dividend payment will be approximately $27.2 million based on the current number of shares outstanding. Future special or regular 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.
On October 14, 2021, the Company repurchased 74,900 shares of its common stock in a block trade from an institutional shareholder at $208.00 per share under its existing share repurchase authorization. The aggregate purchase price of approximately $15.6 million will be paid with cash on hand.
Forward Looking Statements
Certain statements in this Current Report on Form 8-K are forward looking statements made under the safe harbor provision of the Private Securities Litigation Reform Act. Such statements are based on management’s current expectations as of the date of this Report, but involve risks, uncertainties and other factors that may cause actual results to differ materially from those contemplated by such forward looking statements. Investors are cautioned to consider these forward looking statements in light of important factors which may result in material variations
between results contemplated by such forward looking statements and actual results and conditions. More detailed information about these factors is contained under the headings “Forward Looking Statements” and “Risk Factors” in the Company’s periodic reports filed with the SEC, including the Company’s most recent Annual Report on Form 10-K for the fiscal year ended December 26, 2020 and Quarterly Report on Form 10-Q for the second quarter ended June 26, 2021. We caution investors to not place undue reliance on these forward-looking statements, which speak only as of the date they were made. The Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason.
Item 9.01Financial Statements and Exhibits
(d)Exhibits
99.1 | ||
99.2 | Quarterly Cash Dividend and Special Dividend Press Release dated October 13, 2021 | |
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.
WINMARK CORPORATION | ||
Date: October 14, 2021 | By: | /s/ Anthony D. Ishaug |
Anthony D. Ishaug | ||
Chief Financial Officer and Treasurer |
Exhibit 99.1
Contact:Brett D. Heffes
763/520-8500
FOR IMMEDIATE RELEASE
WINMARK CORPORATION ANNOUNCES
THIRD QUARTER RESULTS
Minneapolis, MN (October 13, 2021) - Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended September 25, 2021 of $10,082,500 or $2.67 per share diluted compared to net income of $9,358,800 or $2.43 per share diluted in 2020. For the nine months ended September 25, 2021, net income was $28,330,900 or $7.40 per share diluted compared to net income of $21,731,000 or $5.63 per share diluted for the same period last year.
“We are pleased with the continued strength of our business and the performance of our franchisees. Our sustainable business model continues to be well received by consumers in the communities we serve,” commented Brett D. Heffes, Chairman and Chief Executive Officer.
Winmark - the Resale CompanyTM, 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 25, 2021, there were 1,269 franchises in operation and over 2,000 available territories. An additional 39 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 25, 2021 |
| December 26, 2020 | ||
ASSETS | ||||||
Current Assets: | | |
| | | |
Cash and cash equivalents | | $ | 37,569,100 | | $ | 6,659,000 |
Restricted cash | | | 15,000 | | | 25,000 |
Receivables, net | | | 1,394,900 | | | 1,581,900 |
Net investment in leases - current | | | 3,884,600 | | | 8,687,500 |
Income tax receivable | | | 188,200 | | | 221,200 |
Inventories | | | 408,600 | | | 106,600 |
Prepaid expenses | | | 958,700 | | | 995,200 |
Total current assets | | | 44,419,100 | | | 18,276,400 |
| | | | | | |
Net investment in leases – long-term | | | 1,157,000 | | | 4,573,600 |
Property and equipment, net | | | 2,055,800 | | | 2,332,800 |
Operating lease right of use asset | | | 3,059,300 | | | 3,226,300 |
Goodwill | | | 607,500 | | | 607,500 |
Other assets | | | 416,900 | | | 435,900 |
Deferred income taxes | | | 3,256,200 | | | 1,890,700 |
| | $ | 54,971,800 | | $ | 31,343,200 |
| | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||
Current Liabilities: | | | | | | |
Notes payable, net | | $ | 4,232,600 | | $ | 4,236,100 |
Accounts payable | | | 1,988,600 | | | 1,769,600 |
Accrued liabilities | | | 2,918,800 | | | 2,624,000 |
Discounted lease rentals | | | — | | | 1,096,600 |
Deferred revenue | | | 1,643,900 | | | 1,657,400 |
Total current liabilities | | | 10,783,900 | | | 11,383,700 |
Long-Term Liabilities: | | | | | | |
Notes payable, net | | | 44,434,500 | | | 17,632,700 |
Discounted lease rentals | | | — | | | 574,000 |
Deferred revenue | | | 6,849,600 | | | 7,050,900 |
Operating lease liabilities | | | 4,946,900 | | | 5,307,400 |
Other liabilities | | | 759,000 | | | 773,200 |
Total long-term liabilities | | | 56,990,000 | | | 31,338,200 |
Shareholders’ Equity (Deficit): | | | | | | |
Common stock, no par, 10,000,000 shares authorized, | | | — | | | 9,281,800 |
Retained earnings (accumulated deficit) | | | (12,802,100) | | | (20,660,500) |
Total shareholders’ equity (deficit) | | | (12,802,100) | | | (11,378,700) |
| | $ | 54,971,800 | | $ | 31,343,200 |
2
Winmark Corporation
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
| | Quarter Ended | | Nine Months Ended | | ||||||||
| | September 25, 2021 | | September 26, 2020 | | September 25, 2021 | | September 26, 2020 | | ||||
Revenue: |
| | |
| | |
| | |
| | |
|
Royalties | | $ | 16,375,900 | | $ | 14,210,000 | | $ | 45,141,200 | | $ | 33,188,300 | |
Leasing income | | | 2,266,200 | | | 2,695,800 | | | 8,351,800 | | | 12,040,800 | |
Merchandise sales | | | 704,800 | | | 631,200 | | | 1,980,300 | | | 1,746,800 | |
Franchise fees | | | 383,400 | | | 335,400 | | | 1,101,300 | | | 1,064,900 | |
Other | | | 423,100 | | | 404,600 | | | 1,267,300 | | | 1,225,700 | |
Total revenue | | | 20,153,400 | | | 18,277,000 | | | 57,841,900 | | | 49,266,500 | |
Cost of merchandise sold | | | 681,100 | | | 598,200 | | | 1,887,700 | | | 1,662,000 | |
Leasing expense | | | 358,900 | | | 510,900 | | | 1,410,800 | | | 2,443,700 | |
Provision for credit losses | | | (55,900) | | | (339,600) | | | (167,300) | | | 164,300 | |
Selling, general and administrative expenses | | | 5,380,100 | | | 5,009,700 | | | 16,287,600 | | | 15,719,100 | |
Income from operations | | | 13,789,200 | | | 12,497,800 | | | 38,423,100 | | | 29,277,400 | |
Interest expense | | | (323,200) | | | (345,700) | | | (945,600) | | | (1,409,600) | |
Interest and other income (expense) | | | (18,800) | | | 9,200 | | | (7,100) | | | 27,700 | |
Income before income taxes | | | 13,447,200 | | | 12,161,300 | | | 37,470,400 | | | 27,895,500 | |
Provision for income taxes | | | (3,364,700) | | | (2,802,500) | | | (9,139,500) | | | (6,164,500) | |
Net income | | $ | 10,082,500 | | $ | 9,358,800 | | $ | 28,330,900 | | $ | 21,731,000 | |
Earnings per share - basic | | $ | 2.77 | | $ | 2.51 | | $ | 7.68 | | $ | 5.86 | |
Earnings per share - diluted | | $ | 2.67 | | $ | 2.43 | | $ | 7.40 | | $ | 5.63 | |
Weighted average shares outstanding - basic | | | 3,635,055 | | | 3,730,490 | | | 3,688,419 | | | 3,710,112 | |
Weighted average shares outstanding - diluted | | | 3,782,873 | | | 3,857,702 | | | 3,829,322 | | | 3,857,754 | |
3
Winmark Corporation
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| | Nine Months Ended | | ||||
|
| September 25, 2021 |
| September 26, 2020 |
| ||
OPERATING ACTIVITIES: | | | | | | | |
Net income | | $ | 28,330,900 | | $ | 21,731,000 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | |
Depreciation and amortization | |
| 328,800 | |
| 366,700 | |
Provision for credit losses | |
| (167,300) | |
| 164,300 | |
Compensation expense related to stock options | |
| 1,074,200 | |
| 929,900 | |
Deferred income taxes | |
| (1,365,500) | |
| (1,251,000) | |
Loss from disposal of property and equipment | | | — | | | 200 | |
Deferred initial direct costs | |
| (2,100) | |
| (18,300) | |
Amortization of deferred initial direct costs | |
| 18,800 | |
| 89,400 | |
Operating lease right of use asset amortization | | | 167,000 | | | 293,400 | |
Tax benefits on exercised stock options | |
| 249,200 | |
| 602,400 | |
Change in operating assets and liabilities: | | | | | | | |
Receivables | |
| 187,000 | |
| (278,100) | |
Principal collections on lease receivables | | | 7,452,200 | | | 11,418,500 | |
Income tax receivable/payable | |
| (216,200) | |
| 368,000 | |
Inventories | |
| (302,000) | |
| 900 | |
Prepaid expenses | |
| 36,500 | |
| (190,700) | |
Other assets | | | 19,000 | | | 34,200 | |
Accounts payable | |
| 219,000 | |
| 257,700 | |
Accrued and other liabilities | |
| (94,100) | |
| (864,100) | |
Rents received in advance and security deposits | |
| (674,500) | |
| (1,252,000) | |
Deferred revenue | |
| (214,800) | |
| (630,300) | |
Net cash provided by operating activities | |
| 35,046,100 | |
| 31,772,100 | |
INVESTING ACTIVITIES: | | | | | | | |
Purchase of property and equipment | |
| (51,800) | |
| (33,400) | |
Purchase of equipment for lease contracts | |
| (78,200) | |
| (3,128,200) | |
Net cash used for investing activities | |
| (130,000) | |
| (3,161,600) | |
FINANCING ACTIVITIES: | | | | | | | |
Proceeds from borrowings on line of credit | |
| — | |
| 46,600,000 | |
Payments on line of credit | |
| — | |
| (46,600,000) | |
Proceeds from borrowings on notes payable | | | 30,000,000 | | | — | |
Payments on notes payable | | | (3,187,500) | | | (2,687,500) | |
Repurchases of common stock | |
| (27,892,900) | |
| (48,987,500) | |
Proceeds from exercises of stock options | |
| 1,299,300 | |
| 7,074,100 | |
Dividends paid | |
| (4,234,900) | |
| (2,029,500) | |
Proceeds from discounted lease rentals | | | — | | | 1,157,000 | |
Net cash used for financing activities | |
| (4,016,000) | |
| (45,473,400) | |
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | |
| 30,900,100 | |
| (16,862,900) | |
Cash, cash equivalents and restricted cash, beginning of period | |
| 6,684,000 | |
| 25,180,300 | |
Cash, cash equivalents and restricted cash, end of period | | $ | 37,584,100 | | $ | 8,317,400 | |
SUPPLEMENTAL DISCLOSURES: | | | | | | | |
Cash paid for interest | | $ | 884,100 | | $ | 1,426,100 | |
Cash paid for income taxes | | $ | 10,472,000 | | $ | 6,445,200 | |
| | | | | | | |
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 25, 2021 |
| September 26, 2020 |
| ||
Cash and cash equivalents | | $ | 37,569,100 | | $ | 8,267,400 | |
Restricted cash | |
| 15,000 | |
| 50,000 | |
Total cash, cash equivalents and restricted cash | | $ | 37,584,100 | | $ | 8,317,400 | |
4
Exhibit 99.2
Contact:Brett D. Heffes
763/520-8500
FOR IMMEDIATE RELEASE
WINMARK CORPORATION ANNOUNCES
QUARTERLY CASH DIVIDEND AND SPECIAL DIVIDEND
Minneapolis, MN (October 13, 2021) - 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 $0.45 per share will be paid December 1, 2021 to shareholders of record on the close of business on November 10, 2021. 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 1, 2021 to shareholders of record on the close of business on November 10, 2021. The total amount of the special dividend payment will be approximately $27.2 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.
Brett D. Heffes, Chairman and Chief Executive Officer, stated, “Today’s announcement of a $7.50 per share special dividend reflects the strength and resiliency of our operating model. During the past ten years, we have completed approximately $250 million of share repurchases and declared $110 million of dividends resulting in a total return of capital to shareholders of $360 million. We intend to continue to execute a balanced capital allocation strategy for the benefit of all Winmark shareholders.”
Winmark - the Resale CompanyTM, 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 25, 2021, there were 1,269 franchises in operation and over 2,000 available territories. An additional 39 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.
.
Document and Entity Information |
Apr. 14, 2021 |
---|---|
Document and Entity Information [Abstract] | |
Document Type | 8-K |
Document Period End Date | Oct. 13, 2021 |
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 |
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