Exhibit 99.1

Graphic

Contact:Brett D. Heffes

763/520-8500

FOR IMMEDIATE RELEASE

WINMARK CORPORATION ANNOUNCES

SECOND QUARTER RESULTS

Minneapolis, MN (July 15, 2020)  -  Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended June 27, 2020 of $5,055,200 (or $1.33 per share diluted) compared to net income of $7,301,900 (or $1.79 per share diluted)  in the second quarter of 2019.  For the six months ended June 27, 2020, net income was $12,372,200 (or $3.21 per share diluted) compared to net income of $14,574,100 (or $3.52 per share diluted) for the same period last year.

Second quarter results were impacted by the COVID-19 pandemic, with royalty revenues 38% lower than the second quarter of 2019.  The Company experienced sequential monthly improvement in royalties during the second quarter as franchised stores reopened, with April, May and June royalty revenues of 16%, 76% and 108% of 2019, respectively.  Additionally, during the quarter, the Company repaid $40.0 million in borrowings under its revolving credit facility, ending the quarter with no revolver borrowings and $1.3 million of cash.

Brett D. Heffes, Chief Executive Officer, commented, “Our franchisee’s performance improved throughout the quarter, as they have proven extremely resilient during the pandemic.  While store operations are not fully back to pre-COVID levels, substantial progress has been made in the past 90 days and we are pleased with the overall performance of the Company.  I am impressed daily by the efforts of both our franchisees as well as our Winmark employees.”

Winmark Corporation creates, supports and finances business.  At June 27, 2020, there were 1,255 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 42 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)

    

June 27, 2020

    

December 28, 2019

ASSETS

Current Assets:

    

Cash and cash equivalents

$

1,287,900

$

25,130,300

Restricted cash

50,000

50,000

Receivables, net

1,893,800

1,669,500

Net investment in leases - current

11,688,600

12,800,100

Income tax receivable

-

497,900

Inventories

83,800

86,000

Prepaid expenses

966,900

968,100

Total current assets

15,971,000

41,201,900

Net investment in leases – long-term

7,152,500

12,505,500

Property and equipment, net

2,560,100

2,772,600

Operating lease right of use asset

3,353,100

3,595,200

Goodwill

607,500

607,500

Other assets

475,300

492,500

Deferred income taxes

1,506,900

667,000

$

31,626,400

$

61,842,200

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

Current Liabilities:

Notes payable, net

$

4,236,100

$

3,736,100

Accounts payable

1,831,600

1,015,000

Income tax payable

3,280,800

-

Accrued liabilities

2,455,900

2,783,100

Discounted lease rentals

1,974,700

2,680,700

Deferred revenue

1,694,300

1,717,000

Total current liabilities

15,473,400

11,931,900

Long-Term Liabilities:

Notes payable, net

19,750,700

21,868,800

Discounted lease rentals

1,033,400

836,900

Deferred revenue

7,469,100

7,858,500

Operating lease liabilities

5,522,800

5,846,100

Other liabilities

943,200

1,051,700

Total long-term liabilities

34,719,200

37,462,000

Shareholders’ Equity (Deficit):

Common stock, no par, 10,000,000 shares authorized,
3,723,187 and 3,947,858 shares issued and outstanding

6,411,300

11,929,300

Retained earnings (accumulated deficit)

(24,977,500)

519,000

Total shareholders’ equity (deficit)

(18,566,200)

12,448,300

$

31,626,400

$

61,842,200

2


Winmark Corporation

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

Quarter Ended

Six Months Ended

June 27, 2020

June 29, 2019

June 27, 2020

June 29, 2019

Revenue:

    

    

    

    

    

Royalties

$

7,805,800

$

12,653,200

$

18,978,300

$

24,414,600

Leasing income

3,473,800

3,203,000

9,345,000

8,358,300

Merchandise sales

361,500

721,800

1,115,600

1,332,800

Franchise fees

342,100

413,900

729,500

805,700

Other

406,300

412,300

821,100

824,000

Total revenue

12,389,500

17,404,200

30,989,500

35,735,400

Cost of merchandise sold

346,100

681,200

1,063,800

1,252,700

Leasing expense

516,600

370,900

1,932,800

1,069,600

Provision for credit losses

(111,500)

69,300

503,900

79,400

Selling, general and administrative expenses

4,960,500

6,435,900

10,709,400

13,420,300

Income from operations

6,677,800

9,846,900

16,779,600

19,913,400

Interest expense

(538,700)

(500,300)

(1,063,900)

(942,500)

Interest and other income (expense)

12,600

(6,100)

18,500

(6,400)

Income before income taxes

6,151,700

9,340,500

15,734,200

18,964,500

Provision for income taxes

(1,096,500)

(2,038,600)

(3,362,000)

(4,390,400)

Net income

$

5,055,200

$

7,301,900

$

12,372,200

$

14,574,100

Earnings per share - basic

$

1.37

$

1.94

$

3.34

$

3.80

Earnings per share - diluted

$

1.33

$

1.79

$

3.21

$

3.52

Weighted average shares outstanding - basic

3,688,248

3,771,439

3,699,923

3,839,563

Weighted average shares outstanding - diluted

3,803,807

4,072,408

3,857,779

4,135,827

3


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