Play It Again Parent Sees Q1 Net Income Drop

Winmark Corporation, parent company to Play It Again Sports, reported first quarter net income of $662,200, or 12 cents per share diluted, down 40.5% from $1.1 million, or 18 cents per share diluted in the first quarter of 2006. First quarter revenues increased 9.4% to $7.6 million from $7.0 million last year.

John L. Morgan, chairman and CEO, stated, “Our results in the first quarter continue to be impacted by the ramp up of our two leasing companies Wirth Business Credit and Winmark Capital. Our franchise business performed adequately despite getting off to a slow start. The first quarter of last year included a $360,000 non-operating gain included in interest and other income.”

                        WINMARK CORPORATION
                      CONDENSED STATEMENTS OF OPERATIONS
                                 (unaudited)


                                                      Three Months Ended
                                              March 31, 2007  April 1, 2006
    REVENUE:
      Royalties                                   $5,152,900     $5,043,800
      Merchandise sales                            1,259,100      1,290,700
      Leasing income                                 775,700        261,800
      Franchise fees                                 300,000        215,000
      Other                                          139,200        162,000
        Total revenue                              7,626,900      6,973,300

    COST OF MERCHANDISE SOLD                       1,207,200      1,239,100
    LEASING EXPENSE                                  135,800          3,800
    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   4,993,700      4,321,400

        Income from operations                     1,290,200      1,409,000
    INTEREST EXPENSE                                (333,000)             -
    INTEREST AND OTHER INCOME                        129,400        456,100

        Income before income taxes                 1,086,600      1,865,100

    PROVISION FOR INCOME TAXES                      (424,400)      (751,800)

    NET INCOME                                      $662,200     $1,113,300

    EARNINGS PER SHARE - BASIC                          $.12           $.18

    EARNINGS PER SHARE - DILUTED                        $.12           $.18

    WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC    5,584,731      6,030,371

    WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED  5,716,521      6,270,083