Play It Again Parent Sees Slight Q1 Revenue Decrease

Winmark Corporation posted a 2.4% decrease in net revenue for the first quarter to $7.0 million from $7.1 million last year. Net income for the quarter was $1.1 million (or 18 cents per diluted share) compared to net income of $699,900 (or 11 cents per diluted share) in the first quarter of 2005.

John L. Morgan, Chairman and Chief Executive Officer, stated, “The first quarter was very good due to the performance of our franchisees and a $360,000 non-operating gain included in interest and other income. Leasing continues to grow at acceptable levels, but the key to our first quarter was solid performance from our franchising businesses.”

  WINMARK CORPORATION
                      CONDENSED STATEMENTS OF OPERATIONS
                                 (unaudited)

                                                      Three Months Ended
                                               April 1, 2006  March 26, 2005
    REVENUE:
      Royalties                                   $5,043,800     $4,514,400
      Merchandise sales                            1,290,700      2,235,600
      Franchise fees                                 215,000        190,000
      Leasing income                                 258,000         60,900
      Other                                          162,000        143,800
        Total revenue                              6,969,500      7,144,700

    COST OF MERCHANDISE SOLD                       1,239,100      1,920,000

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   4,321,400      4,045,400

        Income from operations                     1,409,000      1,179,300

    LOSS FROM EQUITY INVESTMENTS                           -       (94,100)

    GAIN ON SALE OF MARKETABLE SECURITIES                  -         21,300

    INTEREST AND OTHER INCOME                        456,100         60,000

        Income before income taxes                 1,865,100      1,166,500

    PROVISION FOR INCOME TAXES                      (751,800)      (466,600)

    NET INCOME                                    $1,113,300       $699,900

    EARNINGS PER SHARE - BASIC                          $.18           $.12

    WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC    6,030,371      5,964,547

    EARNINGS PER SHARE - DILUTED                        $.18           $.11

    WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED  6,270,083      6,588,089