8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported):  October 11, 2004

Winmark Corporation

(Exact Name of Registrant as Specified in Its Charter)

Minnesota

(State or Other Jurisdiction of Incorporation)

000-22012	41-1622691
(Commission File Number)	(I.R.S. Employer Identification Number)

4200 Dahlberg Drive, Suite 100 Golden Valley, MN 55422-4837

(Address of Principal Executive Offices)  (Zip Code)

(612) 520-8500

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 1.               Registrant’s Business and Operations

Item 1.01  Entry into a Material Definitive Agreement.

On October 8, 2004 the Company agreed to make a $2.0 million equity investment in Commercial Credit Group, Inc., a newly formed equipment leasing company specializing in construction, transportation and waste management equipment.  At closing, the Company paid $1.5 million for approximately 26.5% of the outstanding equity of Commercial Credit Group.  The Company will make the remaining $500,000 of such investment within 24 months and, at such time, will own approximately 28% of the outstanding equity of Commercial Credit Group.  The full text of the press release is set forth in Exhibit 99.1 attached hereto and is incorporated in this Report as if fully set forth herein

On October 13, 2004, Winmark Corporation made a commitment to lend $2.0 million to BridgeFunds Limited at an annual rate of 12% pursuant to several senior subordinated promissory notes.  BridgeFunds Limited advances funds to claimants involved in civil litigation to cover litigation expenses.  The proceeds of the loans will be used to fund these advances.  On October 13, 2004, Winmark Corporation funded $500,000 of such $2.0 million commitment; BridgeFunds can draw down the remaining $1.5 million when they meet specific business milestones.  In addition, Winmark Corporation has received a warrant to purchase 20% of the equity of BridgeFunds Limited on a fully diluted basis.

Section 2.               Financial Information

Item 2.02  Results of Operations and Financial Condition.

On October 12, 2004 the Company announced in a press release its results of operations and financial condition for the second quarter ended September 25, 2004.  The full text of the press release is set forth in Exhibit 99.2 attached hereto and is incorporated in this Report as if fully set forth herein.

The information contained in this Current Report on Form 8-K and the exhibit hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference into any registration statement pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Section 7.               Regulation FD

                Item 7.01  Regulation FD Disclosure.

Item The information provided in Item 1.01 and 2.02 are incorporated herein by reference.

2

Section 9.               Financial Statements and Exhibits

                Item 9.01 Financial Statements and Exhibits.

                (a)           Financial statements of business acquired:  None

                (b)           Pro forma financial information:  None

                (c)           Exhibits:

99.1         Press Release dated October 11, 2004

99.2         Press Release dated October 12, 2004

3

SIGNATURES

                Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		WINMARK CORPORATION
Date: October 13, 2004	By	/s/ Mark T. Hooley
		Mark T. Hooley
		Vice President and General Counsel

4

EXHIBIT INDEX

to

Form 8-K

Winmark Corporation

Exhibit Number	Exhibit Description
99.1	Press Release dated October 11, 2004
99.2	Press Release dated October 12, 2004

5

EX-99.1

Exhibit 99.1

Contact:	John L. Morgan
	763/520-8500

FOR IMMEDIATE RELEASE

WINMARK CORPORATION ANNOUNCES

COMPLETION OF BANK FACILITY AND

INVESTMENT IN COMMERCIAL CREDIT GROUP

Minneapolis, MN (October 11, 2004) — (NASDAQ: WINA) - Winmark Corporation announced that effective September 30, 2004 it established a $15.0 million line of credit with the Minnesota office of LaSalle Bank National Association. The line of credit will be used for growing the Company’s leasing business and for general corporate purposes.  The Company has not yet drawn any funds from the line of credit.

Additionally, the Company announced that over the next 24 months, it will make a $2.0 million equity investment in Commercial Credit Group, Inc. a newly formed equipment leasing company specializing in construction, transportation and waste management equipment.  Based on current ownership, Winmark will own approximately 28% of Commercial Credit Group.  “Dan McDonough, the CEO of Commercial Credit Group, Inc., and his team are a proven group of leasing professionals and we look forward to helping them build their business,” stated John Morgan, Chairman and Chief Executive Officer of Winmark Corporation.

Winmark Corporation provides financial services and develops franchises for retail stores that buy, sell, trade and consign used and new merchandise.  At June 26, 2004, there were 810 franchise and retail stores in operation under the Company’s brands and an additional 33 franchises awarded but not open.  Of the stores in operation, there were 441 Play It Again Sports®, 211 Once Upon A Child®, 115 Plato’s Closet® and 43 Music Go Round® stores.

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 the future performance and growth of our leasing operations and the growth of Commercial Credit Group, Inc. and its effect on the performance of Winmark.  Such forward-looking statements are only predictions or statements of intention subject to risks and uncertainties and actual events or results from such activities could differ materially from those anticipated.  Because actual results may differ, shareholders and prospective investors are cautioned not to place undue reliance on such forward-looking statements.

EX-99.2

Exhibit 99.2

Contact:	John L. Morgan
	763-520-8500

FOR IMMEDIATE RELEASE

WINMARK CORPORATION ANNOUNCES THIRD QUARTER RESULTS

Minneapolis, MN (October 12, 2004)  —  Winmark Corporation (Nasdaq: WINA) today reported net income for the third quarter ended September 25, 2004 of $1,015,300, or $.15 per share diluted, compared to net income of $1,104,100, or $.17 per share diluted, in the third quarter of 2003.

For the nine months ended September 25, 2004, net income was $3,101,900, or $.48 per share diluted, compared to net income of $2,982,700, or $.48 per share diluted, for the same period last year.

John L. Morgan, Chairman and Chief Executive Officer, stated, “Our third quarter saw an increase in revenues from royalties, as our franchisee partners continue to improve despite an unpredictable retail environment.”  Mr. Morgan also added, “We continue to build our infrastructure in our small ticket and middle-market leasing businesses.”

Winmark Corporation develops franchises, provides business services and operates value-oriented retail concepts for stores that buy, sell, trade and consign used and new merchandise.  At September 25, 2004, the Company had 811 stores in operation and an additional 34 franchises awarded but not open.  Of the stores in operation, there were 434 Play It Again Sports^®, 210 Once Upon A Child^®, 124 Plato’s Closet^® and 43 Music Go Round^® stores.

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 long-term strategy of providing solutions for our franchisees and other small businesses and growing our leasing business.  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 25, 2004		December 27, 2003
ASSETS
Current Assets:
Cash and cash equivalents	$	8,179,500	$	4,153,300
Marketable securities	1,431,900		2,343,500
Receivables, less allowance for doubtful accounts of $246,200 and $291,200	2,113,400		2,341,300
Inventories	407,300		528,600
Prepaid expenses and other	306,000		305,800
Deferred income taxes	602,100		602,100
Total current assets	13,040,200		10,274,600
Net investment in leasing operations	634,700		-
Long-term investments	9,004,800		7,783,800
Long-term notes receivables, net	40,000		62,400
Property and equipment, net	300,100		202,200
Other assets, net	640,400		602,600
Deferred income taxes	233,800		233,800
	$	23,894,000	$	19,159,400
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	1,369,500	$		1,491,400
Accrued liabilities	1,201,200		1,544,500
Current deferred revenue	682,700		604,400
Total current liabilities	3,253,400		3,640,300
Long-term deferred revenue	205,800		113,900
Shareholders’ Equity:
Common stock, no par, 10,000,000 shares authorized, 5,948,657 and 5,671,596 shares issued and outstanding	5,044,200		2,996,300
Other comprehensive income	24,300		144,500
Retained earnings	15,366,300		12,264,400
Total shareholders’ equity	20,434,800		15,405,200
	$	23,894,000	$		19,159,400

2

WINMARK CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	Quarter Ended								Nine Months Ended
	September 25, 2004				September 27, 2003				September 25, 2004				September 27, 2003
REVENUE:
Royalties	$	4,087,000			$		3,946,200		$	12,719,700			$	12,116,800
Merchandise sales	1,996,600				3,570,400				6,914,100				10,601,700
Franchise fees	300,900				300,300				693,600				570,300
Other	151,400				150,900				432,700				461,700
Total revenue	6,535,900				7,967,800				20,760,100				23,750,500
COST OF MERCHANDISE SOLD	1,615,800				2,799,000				5,724,500				8,447,800
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	3,237,900				3,402,800				10,002,900				10,756,100
Income from operations	1,682,200				1,766,000				5,032,700				4,546,600
LOSS FROM EQUITY INVESTMENT	(40,700			)	(64,100			)	(123,100			)	(64,100			)
GAIN (LOSS) ON SALE OF MARKETABLE SECURITIES	-				38,000				173,800				153,300
INTEREST AND OTHER INCOME	50,600				70,100				153,600				217,800
Income before income taxes	1,692,100				1,810,000				5,237,000				4,853,600
PROVISION FOR INCOME TAXES	(676,800			)	(705,900			)	(2,135,100			)	(1,870,900			)
NET INCOME	$	1,015,300			$	1,104,100			$		3,101,900		$		2,982,700
EARNINGS PER SHARE — BASIC	$		.17		$	.20			$		.53		$		.53
WEIGHTED AVERAGE SHARES OUTSTANDING — BASIC	5,942,139				5,650,096				5,841,486				5,662,762
EARNINGS PER SHARE — DILUTED	$		.15		$	.17			$		.48		$		.48
WEIGHTED AVERAGE SHARES OUTSTANDING — DILUTED	6,564,937				6,359,966				6,476,050				6,269,001

3