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 15, 2002

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)	(IRS Employer Identification No.)

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

(Address of Principal Executive Offices and Zip Code)

(612) 520-8500

(Registrant’s telephone number, including area code)

Item 5.    Other Events and Regulation FD Disclosure.

On October 15, 2002, the Company announced in a press release its third quarter operating results. A copy of the press release is attached as Exhibit 99.1 of this Current Report on Form 8-K.

Item 7.    Financial Statements and Exhibits.

(c)    Exhibits:

99.1    Press Release dated October 15, 2002.

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.

Dated: October 16, 2002	WINMARK CORPORATION
	By	/s/    Mark T. Hooley
		Mark Hooley
		Vice President and General Counsel

EXHIBIT INDEX

to

October 15, 2002 Form 8-K

Winmark Corporation

Exhibit Number	Description
99.1	Press Release dated October 15, 2002.

EX-99.1

EXHIBIT 99.1

Contact:	John L. Morgan
	763-520-8500

FOR IMMEDIATE RELEASE

WINMARK CORPORATION ANNOUNCES THIRD QUARTER RESULTS

Minneapolis, MN (October 15, 2002) — Winmark Corporation today reported net income for the third quarter ended September 28, 2002 of $1,058,700, or $.17 per share diluted, compared to net income of $1,250,700, or $.21 per share diluted, in the third quarter of 2001. Included in the results for the third quarter of 2001 is a $879,000 pre-tax gain, resulting from certain nonrecurring events including the final settlement of amounts due from the August 2000 sale of Computer Renaissance^®.

For the nine months ended September 28, 2002 net income was $2,858,600, or $.47 per share diluted, compared to net income of $2,605,500, or $.46 per share diluted, for the same period last year.

John L. Morgan, Chairman and Chief Executive Officer, stated, “On a comparative basis with last year, the operating earnings for this quarter met management’s expectations. While this demonstrates our ability to grow profits from our existing business, we continue to focus on the sales growth of our franchisees as the way to grow our business.”

Winmark Corporation develops franchises and operates value-oriented retail concepts for stores that buy, sell, trade and consign used and new merchandise. At September 28, 2002, the Company had 836 stores in operation and an additional 18 franchises awarded but not open. Of the stores in operation, there were 482 Play It Again Sports^®, 225 Once Upon A Child^®, 56 Music Go Round^® and 73 Plato’s Closet^® 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 growth of our business and future results from operations. 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 28, 2002			December 29, 2001
ASSETS
Current Assets:
Cash and cash equivalents	$	375,500		$	1,053,000
Short-term investments		6,225,000			2,934,500
Receivables, less allowance for doubtful accounts of $509,700 and $576,000		2,879,200			3,308,800
Inventories		897,300			1,084,100
Prepaid expenses and other		652,400			667,800
Deferred income taxes		1,598,000			1,598,000
Total current assets		12,627,400			10,646,200
Long-term investments		2,000,000			—
Long-term receivables, net		151,400			124,100
Property and equipment, net		394,200			738,100
Other assets, net		707,000			780,600
	$	15,880,000		$	12,289,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	1,898,300		$	1,794,700
Accrued liabilities		2,829,200			2,885,500
Current maturities of long-term debt		—			41,500
Current deferred revenue		583,200			515,600
Total current liabilities		5,310,700			5,237,300
Long-term debt, less current maturities		—			158,000
Deferred gain on sale of building		135,900			273,300
Shareholders’ Equity:
Common stock, no par, 10,000,000 shares authorized, 5,717,197 and 5,383,354 shares issued and outstanding		3,238,300			1,376,000
Common stock warrants		—			822,000
Other comprehensive income (loss)		(85,900	)		—
Retained earnings		7,281,000			4,422,400
Total shareholders’ equity		10,433,400			6,620,400
	$	15,880,000		$	12,289,000

WINMARK CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	Quarter Ended						Nine Months Ended
	September 28, 2002			September 29, 2001			September 28, 2002			September 29, 2001
REVENUE:
Merchandise sales	$	3,689,200		$	4,805,700		$	12,106,800		$	14,625,900
Royalties		3,950,900			3,906,300			12,422,000			11,801,300
Franchise fees		337,500			210,500			595,000			518,000
Other		207,700			211,800			607,500			583,400
Total revenue		8,185,300			9,134,300			25,731,300			27,528,600
COST OF MERCHANDISE SOLD		2,859,300			3,948,400			9,776,100			12,210,300
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		3,617,700			3,564,800			11,366,100			11,397,400
GAIN ON SALE OF COMPUTER RENAISSANCE		—			879,000			—			1,112,300
Income from operations		1,708,300			2,500,100			4,589,100			5,033,200
INTEREST INCOME		69,900			68,400			202,700			241,000
INTEREST EXPENSE		(13,700	)		(511,400	)		(40,600	)		(988,800	)
Income before income taxes		1,764,500			2,057,100			4,751,200			4,285,400
PROVISION FOR INCOME TAXES		(705,800	)		(806,400	)		(1,892,600	)		(1,679,900	)
NET INCOME	$	1,058,700		$	1,250,700		$	2,858,600		$	2,605,500
NET INCOME PER COMMON SHARE—BASIC	$	.19		$	.23		$	.52		$	.48
WEIGHTED AVERAGE SHARES OUTSTANDING—BASIC		5,664,647			5,392,254			5,517,103			5,390,314
NET INCOME PER COMMON SHARE—DILUTED	$	.17		$	.21		$	.47		$	.46
WEIGHTED AVERAGE SHARES OUTSTANDING—DILUTED		6,178,645			5,859,162			6,046,884			5,654,659