Play it Again Parent Sees Q2 Profit Dip 4.0% Despite Higher Franchisee Sales

Winmark Corporation reported net income for the quarter ended June 26, 2004 of $726,300, or 11 cents per diluted share, compared to net income of $756,400, or 12 cents per diluted share, in Q2 2003.

For the six months ended June 26, 2004, net income was $2,086,600, or $.32 per share diluted, compared to net income of $1,878,600, or $.30 per share diluted, for the same period last year.

Chairman and Chief Executive Officer John Morgan commented, “Our second quarter saw increases in store level sales in our franchise brands. This was due to an improvement in the economy and the hard work of our franchisees and employees. We started our leasing business in the second quarter, and we will continue to invest time and capital to build for future growth.”

The company reported that there were 441 Play it Again Sports franchise stores open at the end of the quarter.

                           Winmark Corporation
                    CONDENSED STATEMENTS OF OPERATIONS
                               (Unaudited)

                               Quarter Ended           Six Months Ended
                           June 26,    June 28,    June 26,     June 28,
                             2004        2003        2004         2003

  REVENUE:
    Royalties            $4,002,800   $3,879,100  $8,632,700   $8,170,600
    Merchandise sales     2,313,500    3,230,800   4,917,500    7,031,300
    Franchise fees          200,100      135,000     392,700      270,000
    Other                   144,100      157,600     281,300      310,800
      Total revenue       6,660,500    7,402,500  14,224,200   15,782,700

  COST OF MERCHANDISE
    SOLD                  1,956,300    2,527,200   4,108,700    5,648,800

  SELLING, GENERAL
   AND ADMINISTRATIVE
   EXPENSES               3,446,700    3,895,300   6,765,000    7,353,300

      Income from
       operations         1,257,500      980,000   3,350,500    2,780,600

  LOSS FROM EQUITY
   INVESTMENT               (58,100)           -     (82,400)           -

  GAIN (LOSS) ON SALE
   OF INVESTMENTS           (15,400)     112,400     173,800      115,300

  INTEREST AND OTHER
   INCOME                    26,500       80,800     103,000      147,700

      Income before
       income taxes       1,210,500    1,173,200   3,544,900    3,043,600

  PROVISION FOR
   INCOME TAXES            (484,200)    (416,800) (1,458,300)  (1,165,000)

  NET INCOME               $726,300     $756,400  $2,086,600   $1,878,600

  EARNINGS PER SHARE
   - BASIC                     $.12         $.13        $.36         $.33

  EARNINGS PER SHARE
   - DILUTED                   $.11         $.12        $.32         $.30