Winmark (WINA) 8-K Results of Operations and Financial Condition

Exhibit 99.1

Contact:	John L. Morgan
	763/520-8500

FOR IMMEDIATE RELEASE

WINMARK CORPORATION ANNOUNCES

THIRD QUARTER RESULTS

Minneapolis, MN (October 17, 2012)  —  Winmark Corporation (Nasdaq; WINA) announced today net income for the quarter ended September 29, 2012 of $4,259,500  (or $.82 per share diluted) compared to net income of $3,483,500 (or $.66 per share diluted) in 2011.  For the nine months ended September 29, 2012, net income was $11,179,900 (or $2.13 per share diluted) compared to net income of $9,910,000 (or $1.89 per share diluted) for the same period last year.

John L. Morgan, Chairman and Chief Executive Officer, stated, “During the quarter, our pre-tax income was reduced by approximately $1.0 million, or $0.20 per share, due to our share of losses from Tomsten, Inc. as well as an impairment charge relating to our investment in BridgeFunds, L.L.C.  This compares with a reduction of pre-tax income during the third quarter of 2011 from these investments of $0.5 million, or $0.10 per share.”

Mr. Morgan continued “The strong cash flow from our franchising business allows us to grow our leasing operations.  Franchising cash flow is improved by additional stores and store sales growth, which in turn provides us with the capital to invest on behalf of our leasing customers.  This combination is the cornerstone of Winmark’s business model.”

Winmark Corporation creates, supports and finances business.  At September 29, 2012, there were 958 franchises in operation under the brands Plato’s Closet®, Play It Again Sports®, Once Upon A Child®, and Music Go Round®.  An additional 59 retail franchises have been awarded but are not open.  In addition, at September 29, 2012, the Company had a lease portfolio of $34.1 million.

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 including statements with respect to our ability to finance the growth of our leasing and franchising businesses for the foreseeable future.  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)

	September 29, 2012			December 31, 2011
ASSETS
Current Assets:
Cash and cash equivalents	$	2,249,200		$	9,020,100
Marketable securities	90,400			1,043,800
Receivables, net	1,164,500			1,316,200
Net investment in leases - current	10,764,800			11,746,900
Income tax receivable	427,800			116,500
Inventories	85,300			68,500
Prepaid expenses	573,300			362,000
Total current assets	15,355,300			23,674,000
Net investment in leases — long-term	23,373,200			18,102,000
Long-term investments, net	2,506,300			3,817,400
Property and equipment, net	1,229,700			1,474,800
Other assets	677,500			677,500
	$	43,142,000		$	47,745,700
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Line of credit	$	10,700,000		$	—
Accounts payable	1,511,300			1,460,300
Accrued liabilities	2,443,900			1,346,000
Discounted lease rentals	570,100			20,800
Rents received in advance	206,600			274,700
Deferred revenue	1,583,400			1,212,400
Deferred income taxes	3,447,600			3,464,800
Total current liabilities	20,462,900			7,779,000
Long-Term Liabilities:
Discounted lease rentals	658,600			—
Rents received in advance	135,100			269,400
Deferred revenue	923,800			844,300
Other liabilities	1,289,700			1,389,200
Deferred income taxes	2,586,500			2,355,100
Total long-term liabilities	5,593,700			4,858,000
Shareholders’ Equity:
Common stock, no par, 10,000,000 shares authorized, 4,993,927 and 4,987,643 shares issued and outstanding	—			629,800
Accumulated other comprehensive (loss) income	(1,200		)	17,000
Retained earnings	17,086,600			34,461,900
Total shareholders’ equity	17,085,400			35,108,700
	$	43,142,000		$	47,745,700

WINMARK CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	Quarter Ended						Nine Months Ended
	September 29, 2012			September 24, 2011			September 29, 2012			September 24, 2011
REVENUE:
Royalties	$	9,178,400		$	8,046,400		$	25,160,800		$	21,918,500
Leasing income	4,312,700			2,369,300			9,989,800			12,584,500
Merchandise sales	716,600			664,300			2,083,200			1,998,700
Franchise fees	411,000			516,200			966,000			836,200
Other	180,400			177,300			625,100			765,300
Total revenue	14,799,100			11,773,500			38,824,900			38,103,200
COST OF MERCHANDISE SOLD	684,400			631,400			1,982,200			1,908,500
LEASING EXPENSE	770,700			290,400			1,336,200			4,149,300
PROVISION FOR CREDIT LOSSES	(1,700		)	(13,100		)	(69,600		)	8,200
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	4,882,200			4,219,100			15,239,900			14,095,400
Income from operations	8,463,500			6,645,700			20,336,200			17,941,800
LOSS FROM EQUITY INVESTMENTS	(372,300		)	(224,700		)	(650,400		)	(444,600		)
IMPAIRMENT OF INVESTMENT IN NOTES	(660,700		)	(293,200		)	(660,700		)	(546,100		)
INTEREST EXPENSE	(110,200		)	(26,200		)	(302,300		)	(84,200		)
INTEREST AND OTHER INCOME/(EXPENSE)	14,300			(9,000		)	50,600			22,100
Income before income taxes	7,334,600			6,092,600			18,773,400			16,889,000
PROVISION FOR INCOME TAXES	(3,075,100		)	(2,609,100		)	(7,593,500		)	(6,979,000		)
NET INCOME	$	4,259,500		$	3,483,500		$	11,179,900		$	9,910,000
EARNINGS PER SHARE — BASIC	$	.85		$	.70		$	2.22		$	1.99
EARNINGS PER SHARE — DILUTED	$	.82		$	.66		$	2.13		$	1.89
WEIGHTED AVERAGE SHARES OUTSTANDING — BASIC	5,013,822			4,970,046			5,041,023			4,980,160
WEIGHTED AVERAGE SHARES OUTSTANDING — DILUTED	5,222,719			5,263,343			5,257,057			5,239,424