10q10k10q10k.net
WINMARK CORP

WINMARK CORPWINAEarnings & Financial Report

Nasdaq · Consumer Discretionary · Retail-Miscellaneous Retail

Winmark Corporation is an American franchisor of five retail businesses that specialize in buying and selling used goods. The company is based in Minneapolis, Minnesota. Winmark was founded in 1988 as Play It Again Sports Franchise Corporation by Ron Olson and Jeffrey Dahlberg after they purchased the Play It Again Sports franchise rights from Martha Morris. They renamed the company to Grow Biz International Inc. in June 1993. Grow Biz went public in August 1993. In 2000, John Morgan replaced...

What changed in WINMARK CORP's 10-K — 2023 vs 2024

Top changes in WINMARK CORP's 2024 10-K

65 paragraphs added · 66 removed · 63 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

15 edited+0 added−0 removed67 unchanged
Additionally, we provide training to our management team and 7 Table of Contents employees regarding diversity and inclusion and we continue to actively work to increase representation among underrepresented demographic groups within our employee base. ​ Available Information We maintain a Web site at www.winmarkcorporation.com, the contents of which are not part of or incorporated by reference into this Annual Report on Form 10-K.
Additionally, we provide training to our management team and employees regarding diversity and inclusion and we continue to actively work to increase representation among underrepresented demographic groups within our employee base. 7 Table of Contents Available Information We maintain a Web site at www.winmarkcorporation.com, the contents of which are not part of or incorporated by reference into this Annual Report on Form 10-K.
For over 30 years, we have offered a sustainable solution for consumers to recycle their gently used clothing, toys, sporting goods and musical instruments. We estimate that, since 2010, stores in our resale brands have extended the lives of over 1.7 billion items.
For over 30 years, we have offered a sustainable solution for consumers to recycle their gently used clothing, toys, sporting goods and musical instruments. We estimate that, since 2010, stores in our resale brands have extended the lives of over 1.9 billion items.
Once a franchisee opens its initial store, it can open additional stores, in any brand, by paying a $15,000 franchise fee for a store in the U.S. and $20,500CAD for a store in Canada, provided an acceptable territory is available and the franchisee meets the brand’s additional store standards.
Once a franchisee opens its initial store, it can open additional stores, in any brand, by paying a $15,000 franchise fee for a store in the U.S. and $20,000CAD for a store in Canada, provided an acceptable territory is available and the franchisee meets the brand’s additional store standards.
Our Play It Again Sports franchise system uses several major vendors for new product including Bowflex, Wilson Sporting Goods, Champro Sports, Rawlings/Easton, CCM Hockey and Bauer Hockey.
Our Play It Again Sports franchise system uses several major vendors for new product including Adidas, Wilson Sporting Goods, Champro Sports, Rawlings/Easton, CCM Hockey and Bauer Hockey.
Our franchise brands offer customers a better way to keep their clothes, sporting goods and music equipment out of landfills and in use for a fuller, longer product lifespan. In 2023 alone, stores across our five resale brands extended the lives of over 182 million items of clothing, toys, books, musical instruments and sports equipment.
Our franchise brands offer customers a better way to keep their clothes, sporting goods and music equipment out of landfills and in use for a fuller, longer product lifespan. In 2024 alone, stores across our five resale brands extended the lives of over 185 million items of clothing, toys, books, musical instruments and sports equipment.
We seek franchisees who: ​ ● have a sufficient net worth; ● have prior business experience; and ● intend to be integrally involved with the management of the business. ​ At December 30, 2023, we had 71 signed franchise agreements, of which the majority are expected to open in 2024. ​ Franchise Support ​ As a franchisor, our success depends upon our ability to develop and support competitive and successful franchise owners.
We seek franchisees who: ​ ● have a sufficient net worth; ● have prior business experience; and ● intend to be integrally involved with the management of the business. ​ At December 28, 2024, we had 79 signed franchise agreements, of which the majority are expected to open in 2025. ​ Franchise Support ​ As a franchisor, our success depends upon our ability to develop and support competitive and successful franchise owners.
Music Go Round franchisees buy, sell and trade gently used and, to a lesser extent, new musical instruments, speakers, amplifiers, music-related electronics and related accessories. ​ The following table presents system-wide sales, which we define as estimated revenues generated by all franchise locations through both in-store and e-commerce sales, for each of the past three years. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ System-Wide Sales ​ ​ (in millions) ​ 2021 2022 2023 Plato’s Closet ​ $ 594.4 ​ $ 638.8 ​ $ 647.6 Once Upon A Child ​ 420.3 ​ 466.2 ​ 504.8 Play It Again Sports ​ 300.7 ​ 324.1 ​ 328.2 Style Encore ​ 49.4 ​ 58.1 ​ 59.2 Music Go Round ​ 41.8 ​ 47.1 ​ 49.2 ​ ​ $ 1,406.6 ​ $ 1,534.3 ​ $ 1,589.0 ​ We have developed an e-commerce platform that allows franchisees of our Music Go Round, Play It Again Sports and Style Encore brands to market and sell in-store product inventory online.
Music Go Round franchisees buy, sell and trade gently used and, to a lesser extent, new musical instruments, speakers, amplifiers, music-related electronics and related accessories. ​ The following table presents system-wide sales, which we define as estimated revenues generated by all franchise locations through both in-store and e-commerce sales, for each of the past three years. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ System-Wide Sales ​ ​ (in millions) ​ 2022 2023 2024 Plato’s Closet ​ $ 638.8 ​ $ 647.6 ​ $ 653.0 Once Upon A Child ​ 466.2 ​ 504.8 ​ 517.9 Play It Again Sports ​ 324.1 ​ 328.2 ​ 331.9 Style Encore ​ 58.1 ​ 59.2 ​ 59.1 Music Go Round ​ 47.1 ​ 49.2 ​ 48.3 ​ ​ $ 1,534.3 ​ $ 1,589.0 ​ $ 1,610.2 ​ We have developed an e-commerce platform that allows franchisees of our Music Go Round, Play It Again Sports and Style Encore brands to market and sell in-store product inventory online.
As of December 30, 2023, we employed 83 employees. None of these employees are covered by a collective bargaining agreement. Our franchisees are independent business owners, therefore, they and their employees are not included in our employee count and are not employees of Winmark Corporation. ​ Our employees are our most valuable resource.
As of December 28, 2024, we employed 89 employees. None of these employees are covered by a collective bargaining agreement. Our franchisees are independent business owners, therefore, they and their employees are not included in our employee count and are not employees of Winmark Corporation. ​ Our employees are our most valuable resource.
Revenues from Canadian franchisees in 2023, 2022 and 2021 were approximately $6.8 million, $6.4 million and $4.9 million, respectively. For additional financial information, please see Item 8 — Financial Statements and Supplementary Data.
Revenues from Canadian franchisees in 2024, 2023 and 2022 were approximately $7.3 million, $6.8 million and $6.4 million, respectively. For additional financial information, please see Item 8 — Financial Statements and Supplementary Data.
Winmark does not own or operate any corporate stores. ​ Of the 1,319 total franchised stores as of December 30, 2023, 149 were located in Canada. ​ Sustainability ​ As a leader in the circular economy, we have been at the forefront of the sustainability movement for over 30 years.
Winmark does not own or operate any corporate stores. ​ Of the 1,350 total franchised stores as of December 28, 2024, 159 were located in Canada. ​ Sustainability ​ As a leader in the circular economy, we have been at the forefront of the sustainability movement for over 30 years.
The franchise fee for our initial store and additional store in Canada is based upon the exchange rate applied to the United States franchise fee on the last business day of the preceding fiscal year. The franchise fee in March 2024 for an initial store in Canada will be $33,200CAD, and an additional store in Canada will be $20,000CAD .
The franchise fee for our initial store and additional store in Canada is based upon the exchange rate applied to the United States franchise fee on the last business day of the preceding fiscal year. The franchise fee in March 2025 for an initial store in Canada will be $36,000CAD, and an additional store in Canada will be $21,600CAD .
Additionally, our franchisees use other vehicles to drive non-store sales including social media platforms (Facebook and Instagram) as well as third-party e-commerce platforms (Shopify) and marketplaces (eBay). ​ 2 Table of Contents The following table presents the royalties and franchise fees contributed by each of our brands for the past three years and the corresponding percentage of consolidated revenues for each such year: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Royalties and Franchise Fees ​ ​ ​ ​ ​ ​ ​ ​ (in millions) ​ % of Consolidated Revenue ​ 2021 2022 2023 2021 2022 2023 Plato’s Closet ​ $ 26.8 ​ $ 29.4 ​ $ 30.2 34.3 % 36.2 % 36.3 % Once Upon A Child ​ 18.9 ​ 21.1 ​ 23.1 24.1 ​ 25.9 ​ 27.7 ​ Play It Again Sports ​ 12.6 ​ 13.6 ​ 13.8 16.1 ​ 16.7 ​ 16.6 ​ Style Encore ​ 2.7 ​ 3.1 ​ 3.1 3.4 ​ 3.8 ​ 3.8 ​ Music Go Round ​ 1.3 ​ 1.5 ​ 1.5 1.7 ​ 1.8 ​ 1.8 ​ ​ ​ $ 62.3 ​ $ 68.7 ​ $ 71.7 79.6 % 84.4 % 86.2 % ​ The following table presents a summary of our net store growth and renewal activity for the fiscal year ended December 30, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AVAILABLE ​ ​ ​ ​ ​ ​ ​ TOTAL ​ ​ ​ ​ ​ TOTAL ​ FOR ​ COMPLETED ​ ​ ​ 12/31/2022 OPENED CLOSED 12/30/2023 RENEWAL RENEWALS % RENEWED Plato’s Closet 500 11 (5) 506 ​ 65 ​ 65 ​ 100 % Once Upon A Child 406 11 (1) 416 ​ 54 ​ 54 ​ 100 % Play It Again Sports 281 17 (4) ​ 294 ​ 34 ​ 34 ​ 100 % Style Encore 71 — (5) 66 ​ 18 ​ 17 ​ 94 % Music Go Round 37 — — 37 ​ 6 ​ 6 ​ 100 % Total Franchised Stores (1) 1,295 39 (15) 1,319 177 ​ 176 99 % ​ (1) All stores are owned and operated by franchisees.
Additionally, our franchisees use other vehicles to drive non-store sales including social media platforms (Facebook and Instagram) as well as third-party e-commerce platforms (Shopify) and marketplaces (eBay). ​ 2 Table of Contents The following table presents the royalties and franchise fees contributed by each of our brands for the past three years and the corresponding percentage of consolidated revenues for each such year: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Royalties and Franchise Fees ​ ​ ​ ​ ​ ​ ​ ​ (in millions) ​ % of Consolidated Revenue ​ 2022 2023 2024 2022 2023 2024 Plato’s Closet ​ $ 29.4 ​ $ 30.2 ​ $ 30.8 36.2 % 36.3 % 37.9 % Once Upon A Child ​ 21.1 ​ 23.1 ​ 24.2 25.9 ​ 27.7 ​ 29.8 ​ Play It Again Sports ​ 13.6 ​ 13.8 ​ 14.1 16.7 ​ 16.6 ​ 17.3 ​ Style Encore ​ 3.1 ​ 3.1 ​ 3.1 3.8 ​ 3.8 ​ 3.9 ​ Music Go Round ​ 1.5 ​ 1.5 ​ 1.5 1.8 ​ 1.8 ​ 1.9 ​ ​ ​ $ 68.7 ​ $ 71.7 ​ $ 73.7 84.4 % 86.2 % 90.7 % ​ The following table presents a summary of our net store growth and renewal activity for the fiscal year ended December 28, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AVAILABLE ​ ​ ​ ​ ​ ​ ​ TOTAL ​ ​ ​ ​ ​ TOTAL ​ FOR ​ COMPLETED ​ ​ ​ 12/30/2023 OPENED CLOSED 12/28/2024 RENEWAL RENEWALS % RENEWED Plato’s Closet 506 14 (5) 515 ​ 55 ​ 55 ​ 100 % Once Upon A Child 416 16 (2) 430 ​ 51 ​ 50 ​ 98 % Play It Again Sports 294 13 (5) ​ 302 ​ 22 ​ 21 ​ 95 % Style Encore 66 4 (1) 69 ​ 15 ​ 15 ​ 100 % Music Go Round 37 — (3) 34 ​ 2 ​ 1 ​ 50 % Total Franchised Stores (1) 1,319 47 (16) 1,350 145 ​ 142 98 % ​ (1) All stores are owned and operated by franchisees.
At December 30, 2023, there were 1,319 franchises in operation in the United States and Canada and over 2,800 available territories.
At December 28, 2024, there were 1,350 franchises in operation in the United States and Canada and over 2,800 available territories.
As of December 30, 2023, 55% of our overall employee count and 53% of our management team identify as female.
As of December 28, 2024, 55% of our overall employee count and 55% of our management team identify as female.
At December 30, 2023, the franchise fee for all brands was $25,000 for an initial store in the U.S. and $34,000CAD for an initial store in Canada.
At December 28, 2024, the franchise fee for all brands was $25,000 for an initial store in the U.S. and $33,200CAD for an initial store in Canada.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

2 edited+0 added−0 removed35 unchanged
As of December 30, 2023, we were in compliance with all of our financial covenants under these facilities; however, failure to comply with these covenants in the future may result in default under one or both of these sources of capital and could result in acceleration of the related indebtedness.
As of December 28, 2024, we were in compliance with all of our financial covenants under these facilities; however, failure to comply with these covenants in the future may result in default under one or both of these sources of capital and could result in acceleration of the related indebtedness.
As of December 30, 2023 each of our five brands have the following number of franchise agreements that will expire over the next three years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2025 2026 Plato’s Closet 56 44 40 ​ Once Upon A Child 51 44 50 ​ Play It Again Sports 22 20 14 ​ Music Go Round 2 4 6 ​ Style Encore 15 8 6 ​ ​ 146 120 116 ​ ​ We believe that renewing a significant number of these franchise relationships is important to our continued success.
As of December 28, 2024 each of our five brands have the following number of franchise agreements that will expire over the next three years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 2026 2027 Plato’s Closet 43 40 36 ​ Once Upon A Child 44 50 38 ​ Play It Again Sports 19 14 18 ​ Music Go Round 4 6 5 ​ Style Encore 8 6 7 ​ ​ 118 116 104 ​ ​ We believe that renewing a significant number of these franchise relationships is important to our continued success.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Our facilities are sufficient to meet our current and immediate future needs. ​ ITEM 3: LEGAL PROCEEDINGS ​ We are not a party to any material litigation and are not aware of any threatened litigation that would have a material adverse effect on our business. ​ ITEM 4: MINE SAFETY DISCLOSURES ​ Not applicable. ​ 11 Table of Contents PART II ​
Our facilities are sufficient to meet our current and immediate future needs. ​ ITEM 3: LEGAL PROCEEDINGS ​ We are not a party to any material litigation and are not aware of any threatened litigation that we believe would have a material adverse effect on our business. ​ ITEM 4: MINE SAFETY DISCLOSURES ​ Not applicable. ​ 11 Table of Contents PART II ​
ITEM 2: PROPERTIES ​ We lease 41,016 square feet at our headquarters facility in Minneapolis, Minnesota. We are obligated to pay rent monthly under the lease, and will pay an average of $840,500 annually over the remaining term that expires in 2029.
ITEM 2: PROPERTIES ​ We lease 41,016 square feet at our headquarters facility in Minneapolis, Minnesota. We are obligated to pay rent monthly under the lease, and will pay an average of $851,700 annually over the remaining term that expires in 2029.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed1 unchanged
The total shares approved for repurchase has been increased by additional Board of Directors’ approvals and as of December 30, 2023 was limited to 5,400,000 shares, of which 78,600 may still be repurchased. ​ The table set forth in Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matter” of this Annual Report is also incorporated herein by reference. ​ Performance Graph ​ In accordance with the rules of the SEC, the following graph compares the performance of our common stock on the NASDAQ stock market to the NASDAQ US Benchmark TR composite index and to the NASDAQ US Benchmark Retail TR industry index, of which we are a component.
The total shares approved for repurchase has been increased by additional Board of Directors’ approvals and as of December 28, 2024 was limited to 5,400,000 shares, of which 78,600 may still be repurchased. ​ The table set forth in Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matter” of this Annual Report is also incorporated herein by reference. ​ Performance Graph ​ In accordance with the rules of the SEC, the following graph compares the performance of our common stock on the NASDAQ stock market to the NASDAQ US Benchmark TR composite index and to the NASDAQ US Benchmark Retail TR industry index, of which we are a component.
For dividend information see Note 6 – “Shareholders’ Equity (Deficit).” ​ At February 26, 2024, there were approximately 52 shareholders of record of our common stock. ​ Purchases of Equity Securities by the Issuer and Affiliated Purchasers ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Maximum Number ​ ​ ​ ​ ​ ​ ​ ​ Shares Purchased as ​ of Shares that may ​ ​ Total Number of ​ Average Price ​ Part of a Publicly ​ yet be Purchased Period Shares Purchased Paid Per Share Announced Plan(1) Under the Plan ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ October 1, 2023 to November 4, 2023 — ​ $ — — 78,600 ​ November 5, 2023 to December 2, 2023 — ​ $ — — 78,600 ​ December 3, 2023 to December 30, 2023 — ​ $ — — 78,600 ​ (1) The Board of Directors’ authorization for the repurchase of shares of the Company’s common stock was originally approved in 1995 with no expiration date.
For dividend information see Note 6 – “Shareholders’ Equity (Deficit).” ​ At February 24, 2025, there were approximately 46 shareholders of record of our common stock. ​ Purchases of Equity Securities by the Issuer and Affiliated Purchasers ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Maximum Number ​ ​ ​ ​ ​ ​ ​ ​ Shares Purchased as ​ of Shares that may ​ ​ Total Number of ​ Average Price ​ Part of a Publicly ​ yet be Purchased Period Shares Purchased Paid Per Share Announced Plan(1) Under the Plan ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 29, 2024 to November 2, 2024 — ​ $ — — 78,600 ​ November 3, 2024 to November 30, 2024 — ​ $ — — 78,600 ​ December 1, 2024 to December 28, 2024 — ​ $ — — 78,600 ​ (1) The Board of Directors’ authorization for the repurchase of shares of the Company’s common stock was originally approved in 1995 with no expiration date.
The graph compares on an annual basis the cumulative total shareholder return on $100 invested on December 29, 2018 though our fiscal year ended December 30, 2023 and assumes reinvestment of all dividends. The performance graph is not necessarily indicative of future investment performance. 12 Table of Contents ITEM 6: [RESERVED] ​ None. ​ ​
The graph compares on an annual basis the cumulative total shareholder return on $100 invested on December 28, 2019 though our fiscal year ended December 28, 2024 and assumes reinvestment of all dividends. The performance graph is not necessarily indicative of future investment performance. ​ 12 Table of Contents ITEM 6: [RESERVED] ​ None. ​ ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

36 edited+2 added−3 removed12 unchanged
This percentage of renewal has ranged between 99% and 100% during the last three years. ​ Our ability to grow our operating income is dependent on our ability to: (i) effectively support our franchise partners so that they produce higher revenues, (ii) open new franchises, and (iii) control our selling, general and administrative expenses.
This percentage of renewal has ranged between 98% and 100% during the last three years. ​ Our ability to grow our operating income is dependent on our ability to: (i) effectively support our franchise partners so that they produce higher revenues, (ii) open new franchises, and (iii) control our selling, general and administrative expenses.
Discussions of 2021 items and year-to-date comparisons between 2022 and 2021 that are not included in this Form 10-K, can be found in ‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’ in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. ​ Overview ​ Winmark – the Resale Company is focused on sustainability and small business formation.
Discussions of 2022 items and year-to-date comparisons between 2023 and 2022 that are not included in this Form 10-K, can be found in ‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’ in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 30, 2023. ​ Overview ​ Winmark – the Resale Company is focused on sustainability and small business formation.
Also, our ability to carry out any of these activities on favorable terms, if at all, may be further impacted by any financial or credit crisis which may limit access to the credit markets and increase our cost of capital. ​ As of the date of this report we believe that the combination of our cash on hand, the cash generated from our franchising and leasing businesses, our Line of Credit and our Shelf Agreement will be adequate to fund our planned operations through 2024. ​ Critical Accounting Policies ​ The Company prepares the consolidated financial statements of Winmark Corporation and Subsidiaries in conformity with accounting principles generally accepted in the United States of America.
Also, our ability to carry out any of these activities on favorable terms, if at all, may be further impacted by any financial or credit crisis which may limit access to the credit markets and increase our cost of capital. ​ As of the date of this report we believe that the combination of our cash on hand, the cash generated from our business, our Line of Credit and our Shelf Agreement will be adequate to fund our planned operations through 2025. ​ Critical Accounting Policies ​ The Company prepares the consolidated financial statements of Winmark Corporation and Subsidiaries in conformity with accounting principles generally accepted in the United States of America.
(See Note 6 — “Shareholders’ Equity (Deficit)” and Note 7 — “Debt”). ​ We have debt obligations and future operating lease commitments for our corporate headquarters. As of December 30, 2023 , we had no other material outstanding commitments. (See Note 1 2 — “Commitments and Contingencies”).
(See Note 6 — “Shareholders’ Equity (Deficit)” and Note 7 — “Debt”). ​ We have debt obligations and future operating lease commitments for our corporate headquarters. As of December 28, 2024 , we had no other material outstanding commitments. (See Note 1 2 — “Commitments and Contingencies”).
This section of this 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
This section of this 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
Given the decision to run-off the portfolio, we anticipate that leasing income net of leasing expense and the size of the leasing portfolio will continue to decrease through the run-off period.
Given the decision to run-off the portfolio, we anticipate that leasing income net of leasing expense will continue to decrease through the remainder of the run-off period.
As of December 30, 2023, we had no revolving loans outstanding, and had delayed draw term loan borrowings totaling $30.0 million that mature in 2029. ​ The Shelf Agreement allows us to offer privately negotiated senior notes to Prudential in an aggregate principal amount up to (i) $100.0 million, less (ii) the aggregate principal amount of notes outstanding at such point (including notes outstanding under the Note Agreement, which at December 30, 2023 was $39.2 million).
As of December 28, 2024, we had no revolving loans outstanding, and had delayed draw term loan borrowings totaling $30.0 million that mature in 2029. 16 Table of Contents ​ The Shelf Agreement allows us to offer privately negotiated senior notes to Prudential in an aggregate principal amount up to (i) $100.0 million, less (ii) the aggregate principal amount of notes outstanding at such point (including notes outstanding under the Note Agreement, which at December 28, 2024 was $30.0 million).
As of December 30, 2023, we were in compliance with all of the financial covenants under the Line of Credit, the Note Agreement and the Shelf Agreement. ​ 16 Table of Contents The Line of Credit provides for up to $20.0 million in revolving loans and $30.0 million in delayed draw term loans.
As of December 28, 2024, we were in compliance with all of the financial covenants under the Line of Credit, the Note Agreement and the Shelf Agreement. ​ The Line of Credit provides for up to $20.0 million in revolving loans and $30.0 million in delayed draw term loans.
(3) Refer to Part II, Item 8 in this report under Note 7 — “Debt” for additional information regarding long-term debt. ​ Our debt facilities include a Line of Credit with CIBC Bank USA and a Note Agreement and Shelf Agreement with Prudential.
(2) Includes interest payable quarterly at 3.18%. (3) Refer to Part II, Item 8 in this report under Note 7 — “Debt” for additional information regarding long-term debt. ​ Our debt facilities include a Line of Credit with CIBC Bank USA and a Note Agreement and Shelf Agreement with Prudential.
During 2023, selling, general and administrative expense increased $2.0 million, or 8.4%, compared to the same period last year. ​ Management also monitors several nonfinancial factors in evaluating the current business operations and future prospects including franchise openings and closings and franchise renewals.
During 2024, selling, general and administrative expense decreased $0.2 million, or 0.7%, compared to the same period last year. ​ Management also monitors several nonfinancial factors in evaluating the current business operations and future prospects including franchise openings and closings and franchise renewals.
At the end of each accounting period, royalty amounts due are based on franchisee sales information. As of December 30, 2023, the Company’s royalty receivable was $1,110,500. ​ The Company collects initial franchise fees when franchise agreements are signed and recognizes the initial franchise fees as revenue over the estimated life of the franchise, beginning when the franchise is opened.
At the end of each accounting period, royalty amounts due are based on franchisee sales information. As of December 28, 2024, the Company’s royalty receivable was $1,219,800. ​ The Company collects initial franchise fees when franchise agreements are signed and recognizes the initial franchise fees as revenue over the estimated life of the franchise, beginning when the franchise is opened.
As of December 30, 2023, we had 1,319 franchises operating under the Plato’s Closet, Once Upon A Child, Play It Again Sports, Style Encore and Music Go Round brands.
As of December 28, 2024, we had 1,350 franchises operating under the Plato’s Closet, Once Upon A Child, Play It Again Sports, Style Encore and Music Go Round brands.
Of the $39.2 million of principal outstanding under the Note Agreement, $9.2 million amortizes over 2024 through 2027, and $30.0 million matures in 2028. ​ See Part II, Item 8, Note 7 – “Debt” for more information regarding the Line of Credit, Note Agreement and Shelf Agreement. ​ We expect to generate the cash necessary to pay our expenses and to pay the principal and interest on our outstanding debt from cash flows provided by operating activities and by opportunistically using other means to repay or refinance our obligations as we determine appropriate.
All of the of principal outstanding under the Note Agreement matures in 2028. ​ See Part II, Item 8, Note 7 – “Debt” for more information regarding the Line of Credit, Note Agreement and Shelf Agreement. ​ We expect to generate the cash necessary to pay our expenses and to pay the principal and interest on our outstanding debt from cash flows provided by operating activities and by opportunistically using other means to repay or refinance our obligations as we determine appropriate.
See Note 3 – “Investment in Leasing Operations” for information regarding the lease portfolio, including future minimum lease payments receivable under lease contracts and the amortization of unearned lease income. ​ Results of Operations ​ The following table sets forth selected information from our Consolidated Statements of Operations expressed as a percentage of total revenue and the percentage change in the dollar amounts from the prior period: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended Fiscal 2023 ​ ​ December 30, ​ December 31, ​ over (under) ​ ​ 2023 2022 2022 Revenue: ​ ​ ​ ​ ​ ​ Royalties 84.4 % 82.5 % 4.6 % Leasing income 5.7 ​ 8.5 ​ (31.3) ​ Merchandise sales 5.7 ​ 4.8 ​ 21.4 ​ Franchise fees 1.8 ​ 1.9 ​ (4.0) ​ Other 2.4 ​ 2.3 ​ 8.0 ​ Total revenue 100.0 ​ 100.0 ​ 2.3 ​ ​ ​ ​ ​ ​ ​ ​ Cost of merchandise sold (5.3) ​ (4.6) ​ 20.2 ​ Leasing expense (0.5) ​ (1.2) ​ (59.5) ​ Provision for credit losses - ​ 0.1 ​ (90.3) ​ Selling, general and administrative expenses (30.2) ​ (28.4) ​ 8.4 ​ Income from operations 64.0 ​ 65.9 ​ (0.6) ​ Interest expense (3.7) ​ (3.6) ​ 6.0 ​ Interest and other income 1.4 ​ 0.1 ​ 1,269.3 ​ Income before income taxes 61.7 ​ 62.4 ​ 1.1 ​ Provision for income taxes (13.4) ​ (14.0) ​ (1.5) ​ Net income 48.3 % 48.4 % 1.9 % ​ Revenue ​ Revenues for the year ended December 30, 2023 totaled $83.2 million compared to $81.4 million in 2022. ​ Royalties and Franchise Fees ​ Royalties increased to $70.2 million for 2023 from $67.1 million for the same period in 2022, a 4.6% increase.
See Note 3 – “Investment in Leasing Operations” for information regarding the lease portfolio. ​ Results of Operations ​ The following table sets forth selected information from our Consolidated Statements of Operations expressed as a percentage of total revenue and the percentage change in the dollar amounts from the prior period: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended Fiscal 2024 ​ ​ December 28, ​ December 30, ​ over (under) ​ ​ 2024 2023 2023 Revenue: ​ ​ ​ ​ ​ ​ Royalties 88.8 % 84.4 % 2.8 % Leasing income 2.2 ​ 5.7 ​ (62.0) ​ Merchandise sales 4.4 ​ 5.7 ​ (24.4) ​ Franchise fees 1.9 ​ 1.8 ​ 2.2 ​ Other 2.7 ​ 2.4 ​ 8.0 ​ Total revenue 100.0 ​ 100.0 ​ (2.3) ​ ​ ​ ​ ​ ​ ​ ​ Cost of merchandise sold (4.2) ​ (5.3) ​ (24.3) ​ Leasing expense — ​ (0.5) ​ (90.8) ​ Provision for credit losses — ​ — ​ (72.7) ​ Selling, general and administrative expenses (30.7) ​ (30.2) ​ (0.7) ​ Income from operations 65.1 ​ 64.0 ​ (0.7) ​ Interest expense (3.5) ​ (3.7) ​ (7.6) ​ Interest and other income 1.4 ​ 1.4 ​ (1.8) ​ Income before income taxes 63.0 ​ 61.7 ​ (0.3) ​ Provision for income taxes (13.9) ​ (13.4) ​ 0.8 ​ Net income 49.1 % 48.3 % (0.6) % ​ Revenue ​ Revenues for the year ended December 28, 2024 totaled $81.3 million compared to $83.2 million in 2023. ​ Royalties and Franchise Fees ​ Royalties increased to $72.2 million for 2024 from $70.2 million for the same period in 2023, a 2.8% increase.
The decrease in segment contribution was due to a decrease in leasing income net of leasing expense, partially offset by a decrease in selling, general and administrative expenses. ​ Liquidity and Capital Resources ​ Our primary sources of liquidity have historically been cash flow from operations and borrowings.
The decrease in segment contribution was due to a decrease in leasing income net of leasing expense. ​ Liquidity and Capital Resources ​ Our primary sources of liquidity have historically been cash flow from operations and borrowings.
The components of the Consolidated Statements of Operations that reduce our net income but do not affect our liquidity include non-cash items for depreciation and amortization and compensation expense related to stock options. ​ We ended 2023 with $13.4 million in cash, cash equivalents and restricted cash compared to $13.7 million in cash, cash equivalents and restricted cash at the end of 2022. ​ Operating activities provided $44.0 million of cash during 2023 compared to $43.8 million provided during 2022. ​ Investing activities used $0.4 million of cash during 2023 compared to $3.7 million used during 2022. ​ Financing activities used $43.9 million of cash during 2023 compared to $37.9 million used during 2022.
The components of the Consolidated Statements of Operations that reduce our net income but do not affect our liquidity include non-cash items for depreciation and amortization and compensation expense related to stock options. ​ We ended 2024 with $12.3 million in cash, cash equivalents and restricted cash compared to $13.4 million in cash, cash equivalents and restricted cash at the end of 2023. ​ Operating activities provided $42.2 million of cash during 2024 compared to $44.0 million provided during 2023.
The increase is primarily due to higher average corporate borrowings when compared to last year. ​ Income Taxes ​ The provision for income taxes was calculated at an effective rate of 21.8% and 22.4% for 2023 and 2022, respectively.
The decrease is primarily due to lower average corporate borrowings when compared to last year. ​ Income Taxes ​ The provision for income taxes was calculated at an effective rate of 22.0% and 21.8% for 2024 and 2023, respectively.
Our most significant financing activities over the past two years have consisted of net borrowings/payments on our debt facilities, the payment of dividends, repurchase of common stock, and net proceeds received from the exercise of stock options.
Our most significant financing activities over the past two years have consisted of payments on our notes payable, the payment of dividends, and net proceeds received from the exercise of stock options.
As of December 30, 2023, we had not issued any notes under the Shelf Agreement.
As of December 28, 2024, we had not issued any notes under the Shelf Agreement.
Direct Franchisee Sales increased to $4.8 million in 2023 from $3.9 million in 2022 . The increase is due to an increase in technology and buying group purchases by our franchisees. ​ Cost of Merchandise Sold ​ Cost of merchandise sold includes in-bound freight and the cost of merchandise associated with Direct Franchisee Sales.
Direct Franchisee Sales decreased to $3.6 million in 2024 from $4.8 million in 2023 . The decrease is due to a decrease in buying group and technology purchases by our franchisees. ​ Cost of Merchandise Sold ​ Cost of merchandise sold includes in-bound freight and the cost of merchandise associated with Direct Franchisee Sales.
The following tables summarize financial information by segment and provide a reconciliation of segment contribution to income from operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 30, 2023 December 31, 2022 Revenue: ​ ​ ​ ​ ​ ​ ​ Franchising ​ $ 78,477,300 ​ $ 74,473,100 ​ Other ​ 4,766,200 ​ 6,937,700 ​ Total revenue ​ $ 83,243,500 ​ $ 81,410,800 ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciliation to income from operations: ​ ​ ​ ​ ​ ​ ​ Franchising segment contribution ​ $ 49,375,900 ​ $ 49,007,900 ​ Other operating segment contribution ​ 3,904,700 ​ 4,604,900 ​ Total income from operations ​ $ 53,280,600 ​ $ 53,612,800 ​ ​ Revenues are all generated from United States operations other than franchising revenue from Canadian operations of $6.8 million and $6.4 million in each of fiscal 2023 and 2022, respectively. ​ 15 Table of Contents Franchising Segment Operating Income ​ The franchising segment’s 2023 operating income increased by $0.4 million, or 0.8%, to $49.4 million from $49.0 million for 2022.
The following tables summarize financial information by segment and provide a reconciliation of segment contribution to income from operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 28, 2024 December 30, 2023 Revenue: ​ ​ ​ ​ ​ ​ ​ Franchising ​ $ 79,477,300 ​ $ 78,477,300 ​ Other ​ 1,811,800 ​ 4,766,200 ​ Total revenue ​ $ 81,289,100 ​ $ 83,243,500 ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciliation to income from operations: ​ ​ ​ ​ ​ ​ ​ Franchising segment contribution ​ $ 51,593,300 ​ $ 49,375,900 ​ Other operating segment contribution ​ 1,337,300 ​ 3,904,700 ​ Total income from operations ​ $ 52,930,600 ​ $ 53,280,600 ​ ​ Revenues are all generated from United States operations other than franchising revenue from Canadian operations of $7.3 million and $6.8 million in each of fiscal 2024 and 2023, respectively. ​ 15 Table of Contents Franchising Segment Operating Income ​ The franchising segment’s 2024 operating income increased by $2.2 million, or 4.5%, to $51.6 million from $49.4 million for 2023.
Leasing income net of leasing expense for the fiscal year of 2023 was $4.4 million compared to $6.0 million in 2022. Our leasing portfolio (net investment in leases – current and long-term), was $0.1 million at December 30, 2023 compared to $0.3 million at December 31, 2022.
Leasing income net of leasing expense for the fiscal year of 2024 was $1.8 million compared to $4.4 million in 2023. Our leasing portfolio (net investment in leases), was $0.0 million at December 28, 2024 compared to $0.1 million at December 30, 2023.
In 2023, we renewed 99% of franchise agreements up for renewal.
In 2024, we renewed 98% of franchise agreements up for renewal.
Cost of merchandise sold increased to $4.5 million in 2023 from $3.7 million in 2022. The increase was due to an increase in Direct Franchisee Sales discussed above.
Cost of merchandise sold decreased to $3.4 million in 2024 from $4.5 million in 2023. The decrease was due to a decrease in Direct Franchisee Sales discussed above.
The decrease is primarily due to a decrease in selling profit on the commencement of sales type leases and lower levels of equipment sales to customers, partially offset by an increase in operating lease income when compared to last year. ​ 14 Table of Contents ​ Merchandise Sales ​ Merchandise sales include the sale of product to franchisees either through our Computer Support Center or through the Play It Again Sports buying group (together, “Direct Franchisee Sales”).
The decrease is primarily due to a decrease in operating lease income and income on sales of equipment under lease resulting from the run off of the portfolio. ​ 14 Table of Contents ​ Merchandise Sales ​ Merchandise sales include the sale of product to franchisees either through our Computer Support Center or through the Play It Again Sports buying group (together, “Direct Franchisee Sales”).
The decrease is primarily due to higher tax benefits on the exercise of non-qualified stock options. ​ Segment Comparison of Fiscal Years 2023 and 2022 ​ As of December 30, 2023, we have one reportable operating segment, franchising, and one non-reportable operating segment. The franchising segment franchises value-oriented retail store concepts that buy, sell and trade merchandise.
The increase is primarily due to an increase in the valuation allowance related to foreign tax credits. ​ Segment Comparison of Fiscal Years 2024 and 2023 ​ As of December 28, 2024, we have one reportable operating segment, franchising, and one non-reportable operating segment. The franchising segment franchises value-oriented retail store concepts that buy, sell and trade merchandise.
During 2023, our royalties increased $3.1 million or 4.6% compared to 2022. ​ Management continually monitors the level and timing of selling, general and administrative expenses. The major components of selling, general and administrative expenses include salaries, wages and benefits, advertising, travel, occupancy, legal and professional fees.
During 2024, our royalties increased $2.0 million or 2.8% compared to 2023. ​ Management continually monitors the level and timing of selling, general and administrative expenses. The major components of selling, general and administrative expenses include compensation & benefits, marketing & advertising, professional services, and occupancy.
The following is a summary of our net store growth and renewal activity for the fiscal year ended December 30, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AVAILABLE ​ ​ ​ ​ ​ ​ ​ TOTAL ​ ​ ​ ​ ​ TOTAL ​ FOR ​ COMPLETED ​ ​ ​ 12/31/2022 ​ OPENED ​ CLOSED ​ 12/30/2023 RENEWAL ​ RENEWALS ​ % RENEWED ​ Plato’s Closet 500 11 (5) 506 65 65 100 % Once Upon A Child 406 11 (1) 416 54 ​ 54 100 % Play It Again Sports 281 17 (4) 294 34 ​ 34 100 % Style Encore 71 — (5) 66 18 17 94 % Music Go Round 37 — — 37 6 6 100 % Total Franchised Stores (1) 1,295 39 (15) 1,319 177 176 99 % ​ (1) All stores are owned and operated by franchisees.
The following is a summary of our net store growth and renewal activity for the fiscal year ended December 28, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AVAILABLE ​ ​ ​ ​ ​ ​ ​ TOTAL ​ ​ ​ ​ ​ TOTAL ​ FOR ​ COMPLETED ​ ​ ​ 12/30/2023 ​ OPENED ​ CLOSED ​ 12/28/2024 RENEWAL ​ RENEWALS ​ % RENEWED ​ Plato’s Closet 506 14 (5) 515 55 55 100 % Once Upon A Child 416 16 (2) 430 51 ​ 50 98 % Play It Again Sports 294 13 (5) 302 22 ​ 21 95 % Style Encore 66 4 (1) 69 15 15 100 % Music Go Round 37 — (3) 34 2 1 50 % Total Franchised Stores (1) 1,319 47 (16) 1,350 145 142 98 % ​ (1) All stores are owned and operated by franchisees.
During 2023, we paid $43.7 million in cash dividends (including a $9.40 per share special cash dividend; the “2023 Special Dividend”), and paid $4.3 million on notes payable; partially offset by $4.0 million of proceeds from the exercise of stock options.
During 2024, we paid $38.9 million in cash dividends (including a $7.50 per share special cash dividend), and paid $9.2 million on notes payable (including $4.9 million in prepayment of notes that had scheduled amortization payments due in 2025-2027); partially offset by $5.0 million of proceeds from the exercise of stock options.
The increase in segment contribution was primarily due to increased royalty revenues, partially offset by an increase in selling, general and administrative expenses. ​ Other Segment Operating Income ​ The other segment operating income for 2023 decreased by $0.7 million, or 15.2%, to $3.9 million from $4.6 million for 2022.
The increase in segment contribution was primarily due to increased royalty revenues. ​ Other Segment Operating Income ​ The other segment operating income for 2024 decreased by $2.6 million, or 65.8%, to $1.3 million from $3.9 million for 2023.
Cost of merchandise sold as a percentage of Direct Franchisee Sales for 2023 and 2022 was 93.7% and 94.7%, respectively. ​ Leasing Expense ​ Leasing expense decreased to $0.4 million in 2023 compared to $1.0 million in 2022.
Cost of merchandise sold as a percentage of Direct Franchisee Sales for 2024 and 2023 was 93.8% and 93.7%, respectively. ​ Selling, General and Administrative Expenses ​ Selling, general and administrative expenses decreased 0.7% to $24.9 million in 2024 from $25.1 million in 2023.
The following table summarizes our significant future contractual obligations at December 30, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments due by period ​ ​ ​ ​ ​ Less than 1 ​ ​ ​ ​ ​ ​ ​ More than 5 ​ ​ Total year 1-3 years 3-5 years years Contractual Obligations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Line of Credit/Term loan (1)(3) ​ $ 37,372,900 ​ $ 1,395,500 ​ $ 2,791,000 ​ $ 2,791,000 ​ $ 30,395,400 ​ Notes Payable (2)(3) ​ 44,413,700 ​ ​ 5,604,800 ​ ​ 6,178,000 ​ ​ 32,630,900 ​ ​ — ​ Operating Lease Obligations ​ 5,042,900 ​ ​ 784,400 ​ ​ 1,634,200 ​ ​ 1,725,700 ​ ​ 898,600 ​ Total Contractual Obligations ​ $ 86,829,500 ​ $ 7,784,700 ​ $ 10,603,200 ​ $ 37,147,600 ​ $ 31,294,000 ​ (1) Includes interest payable monthly at rates ranging from 4.60% to 4.75%.
The following table summarizes our significant future contractual obligations at December 28, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments due by period ​ ​ ​ ​ ​ Less than 1 ​ ​ ​ ​ ​ ​ ​ More than 5 ​ ​ Total year 1-3 years 3-5 years years Contractual Obligations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Line of Credit/Term loan (1)(3) ​ $ 35,977,400 ​ $ 1,395,500 ​ $ 2,791,000 ​ $ 31,790,900 ​ $ — ​ Notes Payable (2)(3) ​ 33,577,500 ​ ​ 954,000 ​ ​ 1,908,000 ​ ​ 30,715,500 ​ ​ — ​ Operating Lease Obligations ​ 4,258,600 ​ ​ 806,000 ​ ​ 1,679,300 ​ ​ 1,773,300 ​ ​ — ​ Total Contractual Obligations ​ $ 73,813,500 ​ $ 3,155,500 ​ $ 6,378,300 ​ $ 64,279,700 ​ $ — ​ (1) Includes interest payable monthly at rates ranging from 4.60% to 4.75%.
Franchise fees include initial franchise fees from the sale of new franchises and transfer fees related to the transfer of existing franchises. Franchise fee revenue is recognized over the estimated life of the franchise, beginning when the franchise opens. An overview of retail brand franchise fees is presented in the Operations subsection of the Business section (Item 1).
Franchise fee revenue is recognized over the estimated life of the franchise, beginning when the franchise opens. An overview of retail brand franchise fees is presented in the Operations subsection of the Business section (Item 1). ​ Leasing Income ​ Leasing income decreased to $1.8 million in 2024 compared to $4.8 million for the same period in 2023.
Franchise fees collected from franchisees but not yet recognized as income are recorded as deferred revenue in the liability section of the consolidated balance sheet. As of December 30, 2023, deferred franchise fee revenue was $7,088,700. ​ Recent Accounting Pronouncements ​ See Note 2, “Significant Accounting Policies — Recently Issued Accounting Pronouncements”. ​ 17 Table of Contents
Franchise fees collected from franchisees but not yet recognized as income are recorded as deferred revenue in the liability section of the consolidated balance sheet.
The increase is primarily due to higher franchisee retail sales and from having additional franchise stores in 2023 compared to 2022. Fiscal 2023 was a 52-week year compared to a 53-week year in fiscal 2022, which also impacted the comparability of royalty revenue. ​ Franchise fees of $1.5 million for 2023 were comparable to $1.6 million for 2022.
The increase is primarily due to having additional franchise stores in 2024 compared to 2023. ​ Franchise fees of $1.5 million for 2024 were comparable to $1.5 million for 2023. Franchise fees include initial franchise fees from the sale of new franchises and transfer fees related to the transfer of existing franchises.
The increase was primarily due to an increase in conference expenses, as we returned to holding an in-person conference for our apparel brands for the first time since the Covid-19 outbreak, advertising related expenses, outside services and amortization expense. ​ Interest Expense ​ Interest expense was $3.1 million in 2023 compared to $2.9 million in 2022.
The decrease was primarily due to a decrease in compensation related expenses. ​ Interest Expense ​ Interest expense was $2.9 million in 2024 compared to $3.1 million in 2023.
Removed
Leasing Income ​ Leasing income decreased to $4.8 million in 2023 compared to $6.9 million for the same period in 2022.
Added
The decrease in cash provided by operating activities in 2024 was due to a decrease in accrued and other liabilities. ​ Investing activities used $0.2 million of cash during 2024 compared to $0.4 million used during 2023. ​ Financing activities used $43.0 million of cash during 2024 compared to $43.9 million used during 2023.
Removed
The decrease was primarily due to a decrease in depreciation on operating leases and a decrease in the associated cost of equipment sales to customers noted above. ​ Selling, General and Administrative Expenses ​ Selling, general and administrative expenses increased 8.4% to $25.1 million in 2023 from $23.2 million in 2022.
Added
As of December 28, 2024, deferred franchise fee revenue was $7,483,300. ​ Recent Accounting Pronouncements ​ See Note 2, “Significant Accounting Policies — Recently Issued Accounting Pronouncements and Recently Adopted Accounting Pronouncements”. ​ 17 Table of Contents
Removed
(2) Includes interest payable quarterly at rates ranging from 3.18% to 5.50% assuming principal payments in accordance with amortizing schedules.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−0 removed1 unchanged
Based upon these revenues and expenses, a 10% increase or decrease in the foreign currency exchange rates would impact annual pretax earnings by approximately $670,000. To date, the Company has not entered into any foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates. ​
Based upon these revenues and expenses, a 10% increase or decrease in the foreign currency exchange rates would impact annual pretax earnings by approximately $730,000. To date, the Company has not entered into any foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates. ​
At December 30, 2023, the Company’s line of credit with CIBC Bank USA included a commitment for revolving loans of $20.0 million. The interest rates applicable to revolving loans are based on either the bank’s base rate or SOFR for short-term borrowings (twelve months or less).
At December 28, 2024, the Company’s line of credit with CIBC Bank USA included a commitment for revolving loans of $20.0 million. The interest rates applicable to revolving loans are based on either the bank’s base rate or SOFR for short-term borrowings (twelve months or less).
The Company had no revolving loans outstanding at December 30, 2023 under this line of credit. The Company’s earnings would be affected by changes in short-term interest rates only in the event that it were to borrow amounts under this facility.
The Company had no revolving loans outstanding at December 28, 2024 under this line of credit. The Company’s earnings would be affected by changes in short-term interest rates only in the event that it were to borrow amounts under this facility.
With the Company’s borrowings at December 30, 2023, a one percent increase in short-term rates would have no impact on annual pretax earnings.
With the Company’s borrowings at December 28, 2024, a one percent increase in short-term rates would have no impact on annual pretax earnings.
The Company had no interest rate derivatives in place at December 30, 2023. ​ None of the Company’s cash and cash equivalents at December 30, 2023 was invested in money market mutual funds, which are subject to the effects of market fluctuations in interest rates. ​ Foreign currency transaction gains and losses were not material to the Company’s results of operations for the year ended December 30, 2023, as approximately 8% of the Company’s total revenues and less than 1% of expenses were denominated in a foreign currency.
The Company had no interest rate derivatives in place at December 28, 2024. ​ None of the Company’s cash and cash equivalents at December 28, 2024 was invested in money market mutual funds, which are subject to the effects of market fluctuations in interest rates. ​ Foreign currency transaction gains and losses were not material to the Company’s results of operations for the year ended December 28, 2024, as approximately 9% of the Company’s total revenues and a de minimis amount of expenses were denominated in a foreign currency.

Other WINA 10-K year-over-year comparisons