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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 10-Q
 
(Mark One)
 
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the thirteen week period ended November 30, 2002
 
OR
 
¨
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                     to                    
 
Commission File number 0-20184
 
The Finish Line, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
  
35-1537210
(State or other jurisdiction of
incorporation or organization)
  
(I.R.S. Employer
identification number)
 
3308 North Mitthoeffer Road, Indianapolis, Indiana 46235
(Address of principal executive offices)(zip code)
 
317-899-1022
(Registrant’s telephone number, including area code)
 
(Former name, former address and former fiscal year, if changed since last report.)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No  ¨
 
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).  Yes  x No  ¨            
 
Shares of common stock outstanding at January 3, 2003:
 
Class A             18,683,620
 
Class B               4,347,810
 

PART 1.    FINANCIAL INFORMATION
 
ITEM 1.    FINANCIAL STATEMENTS
 
THE FINISH LINE, INC.
 
CONSOLIDATED BALANCE SHEETS
(In thousands)
 
    
November 30, 2002
   
December 1, 2001
   
March 2, 2002
    
(unaudited)
   
(unaudited)
     
ASSETS
                     
CURRENT ASSETS:
                     
Cash and cash equivalents
   
$
36,977
   
$
30,406
   
$
74,510
Marketable securities
   
 
745
   
 
5,500
   
 
3,343
Accounts receivable
   
 
9,035
   
 
6,332
   
 
2,221
Merchandise inventories
   
 
180,856
   
 
167,094
   
 
141,878
Income taxes recoverable
   
 
6,395
   
 
3,927
   
 
—  
Other
   
 
11,753
   
 
11,064
   
 
7,673
    
  
  
Total current assets
   
 
245,761
   
 
224,323
   
 
229,625
PROPERTY AND EQUIPMENT:
                     
Land
   
 
315
   
 
315
   
 
315
Building
   
 
8,730
   
 
10,578
   
 
10,767
Leasehold improvements
   
 
106,881
   
 
96,789
   
 
97,724
Furniture, fixtures, and equipment
   
 
53,425
   
 
45,309
   
 
45,685
Construction in progress
   
 
1,242
   
 
1,736
   
 
2,801
    
  
  
    
 
170,593
   
 
154,727
   
 
157,292
Less accumulated depreciation
   
 
75,847
   
 
62,889
   
 
66,554
    
  
  
    
 
94,746
   
 
91,838
   
 
90,738
OTHER ASSETS:
                     
Deferred income taxes
   
 
6,916
   
 
7,603
   
 
7,984
    
  
  
Total assets
   
$
347,423
   
$
323,764
   
$
328,347
    
  
  
 
See accompanying notes.

2

THE FINISH LINE, INC.
 
CONSOLIDATED BALANCE SHEETS
(In thousands)
 
    
November 30, 2002
     
December 1, 2001
     
March 2, 2002
  
    
(unaudited)
     
(unaudited)
         
LIABILITIES AND STOCKHOLDERS’ EQUITY
                           
CURRENT LIABILITIES:
                           
Accounts payable
   
$
72,419
 
   
$
58,571
 
   
$
50,908
 
Employee compensation
   
 
7,456
 
   
 
5,568
 
   
 
7,768
 
Accrued property and sales tax
   
 
3,755
 
   
 
4,071
 
   
 
4,036
 
Deferred income taxes
   
 
4,785
 
   
 
6,214
 
   
 
2,922
 
Other liabilities and accrued expenses
   
 
6,354
 
   
 
7,817
 
   
 
10,145
 
    
  
  
Total current liabilities
   
 
94,769
 
   
 
82,241
 
   
 
75,779
 
Long-term deferred rent payments
   
 
8,874
 
   
 
8,324
 
   
 
8,614
 
STOCKHOLDERS’ EQUITY:
                           
Preferred stock, $.01 par value; 1,000 shares authorized; none issued
   
 
—  
 
   
 
—  
 
   
 
—  
 
Common stock, $.01 par value
                           
Class A:
                           
Shares authorized—30,000
                           
Shares issued—(November 30, 2002 – 18,684; December 1, 2001 – 21,998; March 2, 2002 – 22,045)
                           
Shares outstanding—(November 30, 2002 – 22,048; December 1, 2001–19,754; March 2, 2002 – 19,961)
   
 
220
 
   
 
220
 
   
 
220
 
Class B:
                           
Shares authorized—12,000
                           
Shares issued and outstanding—(November 30, 2002 – 4,348 ; December 1, 2001 – 4,362; March 2, 2002 – 4,351)
   
 
44
 
   
 
44
 
   
 
44
 
Additional paid-in capital
   
 
124,142
 
   
 
123,265
 
   
 
123,559
 
Retained earnings
   
 
146,327
 
   
 
127,712
 
   
 
136,705
 
Accumulated other comprehensive income
   
 
6
 
   
 
23
 
   
 
22
 
Treasury stock—(November 30, 2002 –3,364; December 1, 2001– 2,244; March 2, 2002 – 2,084)
   
 
(26,959
)
   
 
(18,065
)
   
 
(16,596
)
    
  
  
Total stockholders’ equity
   
 
243,780
 
   
 
233,199
 
   
 
243,954
 
    
  
  
Total liabilities and stockholders’ equity
   
$
347,423
 
   
$
323,764
 
   
$
328,347
 
    
  
  
 
See accompanying notes.

3

THE FINISH LINE, INC.
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
    
Thirteen Weeks Ended
     
Thirty–Nine Weeks Ended
  
    
November 30, 2002
     
December 1, 2001
     
November 30, 2002
     
December 1, 2001
  
Net sales
   
$
147,877
 
   
$
142,266
 
   
$
522,733
 
   
$
499,867
 
Cost of sales (including occupancy expenses)
   
 
112,271
 
   
 
107,297
 
   
 
377,903
 
   
 
365,589
 
    
  
  
  
Gross profit
   
 
35,606
 
   
 
34,969
 
   
 
144,830
 
   
 
134,278
 
Selling, general, and administrative expenses
   
 
40,752
 
   
 
38,748
 
   
 
131,356
 
   
 
122,038
 
Repositioning charge reversal
   
 
—  
 
   
 
(549
)
   
 
(1,126
)
   
 
(1,209
)
    
  
  
  
Operating income (loss)
   
 
(5,146
)
   
 
(3,230
)
   
 
14,600
 
   
 
13,449
 
Interest income—net
   
 
137
 
   
 
387
 
   
 
674
 
   
 
1,325
 
    
  
  
  
Income (loss) before income taxes
   
 
(5,009
)
   
 
(2,843
)
   
 
15,274
 
   
 
14,774
 
Provision (benefit) for income taxes
   
 
(1,853
)
   
 
(1,023
)
   
 
5,652
 
   
 
5,319
 
    
  
  
  
Net income (loss)
   
$
(3,156
)
   
$
(1,820
)
   
$
9,622
 
   
$
9,455
 
    
  
  
  
Basic net income (loss) per share
   
$
(.13
)
   
$
(.08
)
   
$
.40
 
   
$
.39
 
    
  
  
  
Basic weighted average shares
   
 
23,443
 
   
 
24,173
 
   
 
24,110
 
   
 
24,339
 
    
  
  
  
Diluted net income (loss) per share
   
$
(.13
)
   
$
(.07
)
   
$
.39
 
   
$
.38
 
    
  
  
  
Diluted weighted average shares
   
 
23,659
 
   
 
24,549
 
   
 
24,514
 
   
 
24,660
 
    
  
  
  
 
 
See accompanying notes.

4

THE FINISH LINE, INC.
 
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)
 
    
Thirty-Nine Weeks Ended
  
    
November 30, 2002
     
December 1, 2001
  
OPERATING ACTIVITIES:
                  
Net Income
   
$
9,622
 
   
$
9,455
 
Adjustments to reconcile net income to net cash used in operating activities:
                  
Depreciation and amortization
   
 
12,812
 
   
 
12,178
 
Repositioning charge reversal
   
 
(1,126
)
   
 
(1,209
)
Deferred income taxes
   
 
2,931
 
   
 
3,945
 
Loss on destruction of property and equipment in a tornado
   
 
1,960
 
   
 
—  
 
Loss (gain) on disposal of property and equipment
   
 
536
 
   
 
(7
)
Accounts receivable
   
 
(6,814
)
   
 
(2,856
)
Merchandise inventories
   
 
(38,978
)
   
 
(21,591
)
Other current assets
   
 
(4,080
)
   
 
(3,831
)
Accounts payable
   
 
21,511
 
   
 
5,121
 
Employee compensation
   
 
(312
)