UNITED STATES

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 quarterly period ended August 31, 2013

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)

 

 

 

Indiana		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 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 registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter ) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Securities Exchange Act of 1934.

 

Large accelerated filer		x		Accelerated filer		¨
Non-accelerated filer		¨  (Do not check if a smaller reporting company)		Smaller reporting company		¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Shares of Class A common stock outstanding at September 13, 2013: 49,122,498

 

 

 

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PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

THE FINISH LINE, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

		August 31, 2013				September 1, 2012				March 2, 2013
		(unaudited)				(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	203,832			$	254,225			$	226,982
Accounts receivable, net			14,355				9,228				14,768
Merchandise inventories, net			295,952				250,634				243,770
Other			9,497				16,514				6,174
Total current assets			523,636				530,601				491,694
PROPERTY AND EQUIPMENT:
Land			1,557				1,557				1,557
Building			42,490				42,308				42,460
Leasehold improvements			234,193				222,067				227,080
Furniture, fixtures and equipment			156,865				121,540				143,510
Construction in progress			48,558				35,832				36,339
			483,663				423,304				450,946
Less accumulated depreciation			281,213				265,765				270,345
			202,450				157,539				180,601
Deferred income taxes			10,965				17,508				12,018
Goodwill			21,544				8,503				13,888
Other intangible assets			550				550				550
Other assets, net			8,417				6,712				7,671
Total assets		$	767,562			$	721,413			$	706,422

 

See accompanying notes.

 

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THE FINISH LINE, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

		August 31, 2013				September 1, 2012				March 2, 2013
		(unaudited)				(unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	107,030			$	78,304			$	75,641
Employee compensation			19,148				16,870				15,579
Accrued property and sales tax			11,305				10,484				9,245
Income taxes payable			6,848				6,704				5,211
Deferred income taxes			6,453				7,403				7,239
Other liabilities and accrued expenses			21,338				19,049				21,122
Total current liabilities			172,122				138,814				134,037
Deferred credits from landlords			28,544				26,748				27,215
Other long-term liabilities			17,131				15,970				16,638
REDEEMABLE NONCONTROLLING INTEREST			2,772				5,248				3,669
SHAREHOLDERS’ EQUITY:
Preferred stock, $.01 par value; 1,000 shares authorized; none issued			—				—				—
Common stock, $.01 par value
Shares authorized— 110,000
Shares issued—(August 31, 2013 –60,145; September 1, 2012 – 59,573; March 2, 2013 – 59,587)
Shares outstanding—(August 31, 2013 – 48,276; September 1, 2012 – 50,216; March 2, 2013 – 48,193)			597				596				596
Additional paid-in capital			220,153				214,938				217,045
Retained earnings			529,626				477,064				504,883
Treasury stock—(August 31, 2013 – 11,482; September 1, 2012 – 9,357; March 2, 2013 – 11,394)			(203,383	)			(157,965	)			(197,661	)
Total shareholders’ equity			546,993				534,633				524,863
Total liabilities and shareholders’ equity		$	767,562			$	721,413			$	706,422

See accompanying notes.

 

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THE FINISH LINE, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(unaudited)

 

		Thirteen Weeks Ended								Twenty-Six Weeks Ended
		August 31, 2013				September 1, 2012				August 31, 2013				September 1, 2012
Net sales		$	436,030			$	385,011			$	787,083			$	704,060
Cost of sales (including occupancy costs)			289,693				250,461				533,751				464,851
Gross profit			146,337				134,550				253,332				239,209
Selling, general and administrative expenses			103,455				94,711				202,811				179,557
Store closing costs			17				325				203				420
Operating income			42,865				39,514				50,318				59,232
Interest income, net			10				58				24				129
Income before income taxes			42,875				39,572				50,342				59,361
Income tax expense			16,682				15,136				19,635				22,844
Net income			26,193				24,436				30,707				36,517
Net loss attributable to redeemable noncontrolling interest			314				537				875				734
Net income attributable to The Finish Line, Inc.		$	26,507			$	24,973			$	31,582			$	37,251
Basic earnings per share attributable to The Finish Line, Inc. shareholders		$	0.54			$	0.49			$	0.65			$	0.73
Basic weighted average shares			48,327				50,188				48,304				50,441
Diluted earnings per share attributable to The Finish Line, Inc. shareholders		$	0.54			$	0.49			$	0.64			$	0.72
Diluted weighted average shares			48,757				50,866				48,744				51,135
Dividends declared per share		$	0.07			$	0.06			$	0.14			$	0.12

See accompanying notes.

 

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THE FINISH LINE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

 

		Twenty-Six Weeks Ended
		August 31, 2013				September 1, 2012
OPERATING ACTIVITIES:
Net income		$	30,707			$	36,517
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			17,949				14,083
Deferred income taxes			267				(285	)
Share-based compensation			3,382				3,598
Loss on disposal of property and equipment			522				430
Excess tax benefits from share-based compensation			(2,108	)			(2,033	)
Changes in operating assets and liabilities:
Accounts receivable, net			455				(187	)
Merchandise inventories, net			(48,899	)			(30,229	)
Other assets			(3,836	)			46
Accounts payable			33,011				11,058
Employee compensation			2,671				(5,533	)
Income taxes payable			3,517				(6,256	)
Other liabilities and accrued expenses			2,026				867
Deferred credits from landlords			949				(988	)
Net cash provided by operating activities			40,613				21,088
INVESTING ACTIVITIES:
Capital expenditures for property and equipment			(43,206	)			(45,142	)
Proceeds from disposals of property and equipment			52				30
Acquisitions, net of cash acquired			(8,315	)			—
Cash paid for investment			—				(1,000	)
Net cash used in investing activities			(51,469	)			(46,112	)
FINANCING ACTIVITIES:
Dividends paid to shareholders			(6,756	)			(6,138	)
Proceeds from issuance of common stock			4,610				2,237
Excess tax benefits from share-based compensation			2,108				2,033
Purchase of treasury stock			(12,256	)			(32,377	)
Funding of related-party note receivable			—				(4,000	)
Proceeds from sale of redeemable noncontrolling interest			—				10,000
Net cash used in financing activities			(12,294	)			(28,245	)
Net decrease in cash and cash equivalents			(23,150	)			(53,269	)
Cash and cash equivalents at beginning of period			226,982				307,494
Cash and cash equivalents at end of period		$	203,832			$	254,225
Supplemental disclosure of noncash operating and investing activities:
Capital expenditures incurred but not yet paid as of August 31, 2013		$	6,639			$	—
Capital expenditures incurred but not yet paid as of March 2, 2013		$	9,715			$	—

See accompanying notes.

 

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THE FINISH LINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements of The Finish Line, Inc., along with its consolidated subsidiaries (individually and collectively referred to as the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. Preparation of the financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation, have been included. Intercompany accounts and transactions have been eliminated in consolidation.

The Company has experienced, and expects to continue to experience, significant variability in sales, net income and merchandise inventories from reporting period to reporting period. Therefore, the results of the interim periods presented herein are not necessarily indicative of the results to be expected for any other interim period or the full year.

These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended March 2, 2013 (“fiscal 2013”), as filed with the Securities and Exchange Commission (“SEC”) on April 29, 2013.

Segment Information

The Company is a premium retailer of athletic shoes, apparel and accessories for men, women and kids, throughout the United States, through four operating segments, “brick and mortar” stores, digital (which includes internet, mobile and tablet), shops within department stores, and The Running Specialty Group (“Running Specialty”). Given the similar economic characteristics of “brick and mortar” stores, digital, and shops within department stores, which include a similar nature of products sold, type of customer, and method of distribution, and Running Specialty being immaterial, the Company’s operating segments are aggregated into one reportable segment. The following table sets forth net sales of the Company by major category for each of the following periods (in thousands):

 

		Thirteen Weeks Ended (unaudited)
Category		August 31, 2013								September 1, 2012
Footwear		$	389,325				89	%		$	337,650				88	%
Softgoods			46,705				11	%			47,361				12	%
Total		$	436,030				100	%		$	385,011				100	%
		Twenty-Six Weeks Ended (unaudited)
Category		August 31, 2013								September 1, 2012
Footwear		$	705,176				90	%		$	620,208				88	%
Softgoods			81,907				10	%			83,852				12	%
Total		$	787,083				100	%		$	704,060				100	%

Brick and mortar stores and digital are collectively referred to as “Finish Line” throughout this document.

Reclassification

Within the September 1, 2012 consolidated balance sheet, $2.3 million has been reclassified from deferred credits from landlords to other long-term liabilities to conform to the fiscal 2014 presentation.

2. Acquisitions

On March 29, 2012, GCPI SR LLC (“GCPI”) made a $10.0 million strategic investment in Running Specialty. The Company remained majority owner with a 51% ownership. GCPI has the right to “put” and the Company has the right to “call” after March 4, 2017, under certain circumstances, the remaining 49% interest in Running Specialty at an agreed upon price approximating fair value. Also, as part of the transaction, GCPI issued to the Company a $4.0 million related-party promissory note which is collateralized with GCPI’s interest in Running Specialty due March 31, 2021 or earlier depending on certain stipulated events in the control of GCPI. The promissory note calls for interest payments based in part on a fixed rate and in part on participation in the value of other investments held by GCPI. The balance of the promissory note is $4.1 million, at August 31, 2013, and includes accrued interest and has been netted against the “redeemable noncontrolling interest.”

The redeemable noncontrolling interest is classified as mezzanine equity and measured at the greater of redemption value at the end of each reporting period or the historical cost basis of the redeemable noncontrolling interest, net of the $4.1 million promissory note and adjusted for cumulative earnings or loss allocations. The resulting increases or decreases in the estimated redemption amount are affected by corresponding charges against retained earnings, or in the absence of retained earnings, additional paid in capital. As of August 31, 2013, the redeemable noncontrolling interest is measured at historical cost basis. The loss allocation for the twenty-six weeks ended August 31, 2013 and September 1, 2012 were $0.9 million and $0.7 million, respectively.

 

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On October 6, 2012, Running Specialty acquired substantially all the assets and assumed certain liabilities of Run On, Inc., for a purchase price of $2.3 million, net of cash acquired, which was funded through the Company’s existing cash. As of the acquisition date, Run On, Inc. operated five specialty running shops in Texas. In addition to the cash consideration, the transaction included contingent consideration with an estimated fair value of $1.5 million which is included within other long-term liabilities. The Company determined the estimated fair value based on discounted cash flow analyses and estimates made by management.

On December 31, 2012, Running Specialty acquired substantially all the assets and assumed certain liabilities of The Roadrunner of Richmond, Inc., which operated one specialty running shop in Virginia.

The Company allocated the purchase price of each acquisition based upon the tangible and intangible assets acquired, net of liabilities. The combined allocation of the purchase price for Run On, Inc. and The Roadrunner of Richmond, Inc. is detailed below (in thousands):

 

		Allocation of Purchase Price
Goodwill		$	5,497
Tangible assets, net of liabilities			299
Contingent consideration			(1,453	)
Total purchase price		$	4,343

On May 23, 2013, Running Specialty acquired substantially all the assets and assumed certain liabilities of The Running Company, LLC (“Blue Mile”), for a purchase price of $2.0 million, $1.7 million of which was funded through the Company’s existing cash with a final payment due upon agreement of Blue Mile’s working capital as of May 23, 2013. As of the acquisition date, Blue Mile operated six specialty running shops in Indiana and Kentucky.

The Company allocated the purchase price based upon the tangible and intangible assets acquired, net of liabilities. The preliminary allocation of the purchase price for Blue Mile is detailed below (in thousands):

 

		Allocation of Purchase Price
Goodwill		$	1,874
Tangible assets, net of liabilities			98
Total purchase price		$	1,972

On May 31, 2013, Running Specialty acquired substantially all the assets and assumed certain liabilities of Boulder’s Heart & Sole, Inc. (“Boulder Running Company”), for a purchase price of $7.1 million, $6.4 million of which was funded through the Company’s existing cash with the final payment due upon agreement of Boulder Running Company’s working capital as of May 31, 2013. As of the acquisition date, Boulder Running Company operated three specialty running shops in Colorado.

The Company allocated the purchase price based upon the tangible and intangible assets acquired, net of liabilities. The preliminary allocation of the purchase price for Boulder Running Company is detailed below (in thousands):

 

		Allocation of Purchase Price
Goodwill		$	5,670
Tangible assets, net of liabilities			1,459
Total purchase price		$	7,129

A reconciliation of goodwill is detailed below (in thousands):

 

		Goodwill
Balance as of September 1, 2012:		$	8,503
Acquisitions			5,385
Balance as of March 2, 2013:			13,888
Acquisitions			7,544
Other			112
Balance as of August 31, 2013:		$	21,544

3. Fair Value Measurements

Fair value measurements are determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants exclusive of any transaction costs. The Company utilizes a fair value hierarchy based upon the observability of inputs used in valuation techniques as follows:

Level 1:		Observable inputs such as quoted prices in active markets;
Level 2:		Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
Level 3:		Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

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The following table provides a summary of the recognized assets and liabilities that are measured at fair value on a recurring basis (in thousands):

 

		At August 31, 2013												At September 1, 2012												At March 2, 2013
		Level 1				Level 2				Level 3				Level 1				Level 2				Level 3				Level 1				Level 2				Level 3
Assets
Non-qualified deferred compensation plan		$	5,238			$	—			$	—			$	4,630			$	—			$	—			$	4,940			$	—			$	—
Liabilities
Contingent consideration liability		$	—			$	—			$	1,903			$	—			$	—			$	—			$	—			$	—			$	1,453

Included in Level 1 assets are mutual fund investments under a nonqualified deferred compensation plan. The Company estimates the fair value of these investments on a recurring basis using readily available market prices.

The Company has two liabilities that are measured at fair value on a recurring basis related to the contingent consideration for $1.5 million and $0.5 million. The liabilities are adjusted to fair value each reporting period. The categorization of the framework used to price the liabilities is considered Level 3, due to the subjective nature of the unobservable inputs used to determine the fair values.

There were no transfers into or out of Level 1, Level 2 or Level 3 assets or liabilities for any of the periods presented.

Level 3 Valuation Techniques

Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The following table provides a reconciliation of the Company’s Level 3 contingent consideration liabilities during the twenty-six weeks ended August 31, 2013:

 

(in thousands)		Level 3 Liabilities
Balance as of March 2, 2013		$	1,453
Contingent consideration from acquisition			450
Balance as of August 31, 2013		$	1,903

4. Debt Agreement

On November 30, 2012, the Company entered into an unsecured $100 million Amended and Restated Revolving Credit Facility Credit Agreement (the “Amended Credit Agreement”) with certain Lenders, which expires on November 30, 2017. The Amended Credit Agreement provides that, under certain circumstances, the Company may increase the maximum amount of the credit facility in an aggregate principal amount not to exceed $200 million. The Amended Credit Agreement will be used by the Company, among other things, to issue letters of credit, support working capital needs, fund capital expenditures and other general corporate purposes.

Approximately $2.5 million in stand-by letters of credit were outstanding as of August 31, 2013 under the Amended Credit Agreement. No advances were outstanding under the Amended Credit Agreement as of August 31, 2013. Accordingly, the total revolving credit availability under the Amended Credit Agreement was $97.5 million as of August 31, 2013.

The Company’s ability to borrow monies in the future under the Amended Credit Agreement is subject to certain conditions, including compliance with certain covenants and making certain representations and warranties. The Amended Credit Agreement contains restrictive covenants that limit, among other things, mergers and acquisitions. In addition, the Company must maintain a maximum leverage ratio (as defined in the Amended Credit Agreement) and minimum consolidated tangible net worth (as defined in the Amended Credit Agreement). The Company was in compliance with all such covenants as of August 31, 2013.

The Amended Credit Agreement pricing grid is adjusted quarterly and is based on the Company’s leverage ratio (as defined in the Amended Credit Agreement). The minimum pricing is LIBOR plus 0.90% or Base Rate (as defined in the Amended Credit Agreement) and the maximum pricing is LIBOR plus 1.75% or Base Rate (as defined in the Amended Credit Agreement) plus 0.75%. The Company is subject to an unused commitment fee based on the Company’s leverage ratio with minimum pricing of 0.10% and maximum pricing of 0.25%. In addition, the Company is subject to a letter of credit fee based on the Company’s leverage ratio with minimum pricing of 0.40% and maximum pricing of 1.25%.

5. Start-Up Costs

The Company entered into a department license agreement and an on-line shop license agreement (the “Agreements”) with Macy’s, Inc. (“Macy’s”) whereby the Company will be the exclusive provider of men’s, women’s, and kid’s athletic shoes (“Athletic Shoes”) within Macy’s stores and macys.com. The Company will merchandise and fulfill inventory at all of Macy’s locations, and perform in-store build out and staffing at up to approximately 450 of Macy’s locations. The Company has incurred start-up costs to accommodate a conversion of Macy’s Athletic Shoes assortments to Finish Line platforms. The Company took full control of Macy’s Athletic Shoes inventory at Macy’s department store locations as of April 14, 2013 and macys.com as of May 14, 2013. As a part of the conversion, the Company agreed to purchase certain of Macy’s Athletic Shoes at Macy’s original cost. The Company paid cash for the inventory during the second quarter ended August 31, 2013.

The charges from start-up costs related to the Agreements with Macy’s includes the following: freight and handling of inventory from Macy’s to the Company; leased warehouse space at a third party for sorting; and inventory reserves established for inventory purchased from Macy’s to record at the lower of cost or market.

 

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For the twenty-six weeks ended August 31, 2013, the Company incurred $5.8 million in start-up costs through “Cost of sales” and $2.2 million within “Selling, general and administrative expenses” within the Consolidated Statements of Income for a combined $8.0 million. No start-up costs were incurred during the thirteen and twenty-six weeks ended September 1, 2012 or for the thirteen weeks ended August 31, 2013.

6. Earnings Per Share

Basic earnings per share is calculated by dividing net income attributable to the Company’s common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share attributable to the Company’s common shareholders assumes the issuance of additional shares of common stock by the Company upon exercise of all outstanding stock options and contingently issuable securities if the effect is dilutive, in accordance with the treasury stock method or two class method (whichever is more dilutive) discussed in Accounting Standards Codification (“ASC”) 260-10, “Earnings Per Share”.

ASC 260-10 requires the inclusion of restricted stock as participating securities, as they have the right to share in dividends, if declared, equally with common shareholders. During periods of net income, participating securities are allocated a proportional share of net income attributable to the Company’s common shareholders determined by dividing total weighted average participating securities by the sum of total weighted average common shares and participating securities (“the two-class method”). During periods of net loss, no effect is given to participating securities since they do not share in the losses of the Company. Participating securities have the effect of diluting both basic and diluted earnings per share attributable to the Company’s common shareholders during periods of net income.

The following is a reconciliation of the numerators and denominators used in computing earnings per share attributable to the Company’s common shareholders (in thousands, except per share amounts):

 

		Thirteen Weeks Ended								Twenty-Six Weeks Ended
		(unaudited)								(unaudited)
		August 31, 2013				September 1, 2012				August 31, 2013				September 1, 2012
Net income attributable to The Finish Line, Inc.		$	26,507			$	24,973			$	31,582			$	37,251
Net income attributable to participating securities			316				202				375				300
Net income available to The Finish Line, Inc. shareholders		$	26,191			$	24,771			$	31,207			$	36,951
Basic earnings per share:
Weighted-average number of common shares outstanding			48,327				50,188				48,304				50,441
Basic earnings per share		$	0.54			$	0.49			$	0.65			$	0.73
Diluted earnings per share:
Weighted-average number of common shares outstanding			48,327				50,188				48,304				50,441
Stock options(a)			430				678				440				694
Diluted weighted-average number of common shares outstanding			48,757				50,866				48,744				51,135
Diluted earnings per share		$	0.54			$	0.49			$	0.64			$	0.72

 

(a)

The computation of diluted earnings per share excludes options to purchase approximately 1.3 million and 0.9 million shares of common stock in the thirteen weeks ended August 31, 2013 and September 1, 2012, respectively, and 1.3 million and 0.8 million shares of common stock in the twenty-six weeks ended August 31, 2013 and September 1, 2012, respectively, because the impact of such options would have been anti-dilutive.

7. Common Stock

On July 21, 2011, the Company’s Board of Directors authorized a stock repurchase program (the “2011 stock repurchase program”) to repurchase up to 5,000,000 shares of the Company’s Class A common stock outstanding through December 31, 2014. On January 3, 2013, the Company’s Board of Directors amended the program (the “Amended Program”) and authorized the repurchase of an additional 5,000,000 shares of the Company’s Class A common stock, which authorization shall expire on December 31, 2017.

The Company purchased 615,877 shares at an average price of $19.90 per share for an aggregate amount of $12.3 million for the twenty-six weeks ended August 31, 2013. As of August 31, 2013, there were 4,304,464 shares remaining available to repurchase under the Amended Program.

The Company’s treasury shares may be issued upon the exercise of employee stock options, issuance of shares for the Employee Stock Purchase Plan, issuance of restricted stock, or for other corporate purposes. Further purchases will occur from time to time as market conditions warrant and as the Company deems appropriate when judged against other alternative uses of cash.

On July 18, 2013, the Company announced a quarterly cash dividend of $0.07 per share of the Company’s Class A common stock. The Company declared dividends of $3.4 million during the thirteen weeks ended August 31, 2013. The cash dividends of $3.4 million were paid on September 16, 2013 to shareholders of record on August 30, 2013 and was included as of August 31, 2013 in “Other liabilities and accrued expenses” on the Company’s consolidated balance sheet. Further declarations of dividends remain at the discretion of the Company’s Board of Directors.

8. Commitments and Contingencies

Demandware, Inc. (the “Plaintiff”) filed an action against The Finish Line, Inc. in the United States District Court for the Southern District of New York on or about August 12, 2013, alleging breach of contract as it relates to the parties’ engagement to replace Finish Line’s web commerce platform. Plaintiff’s lawsuit seeks $6.6 million in alleged damages, as well as costs and attorney fees and other specified relief to be determined by the court. The possible range of loss for such contingency varies from zero to the extent of any judgment which may be rendered by the court. The Company intends to vigorously defend itself in this matter. The Company does not believe this matter is likely to have a material adverse impact on its consolidated results of operations, liquidity, or financial condition.

The Company is subject, from time to time, to certain legal proceedings and claims in the ordinary course of conducting its business. Although it is not possible to predict with certainty the eventual outcome of any litigation, in the opinion of management, the Company’s legal proceedings are not expected to have a material adverse effect on the Company’s financial condition or results of operations.

 

9

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This quarterly report on Form 10-Q may contain certain statements that the Company believes is, or may be considered to be, “forward-looking” statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally can be identified by use of statements that include, but are not limited to, phrases such as “believe”, “expect”, “future”, “anticipate”, “intend”, “plan”, “foresee”, “may”, “should”, “will”, “estimates”, “potential”, “continue” or other similar words or phrases. Similarly, statements that describe the Company’s objectives, plans or goals also are forward-looking statements. All of these forward-looking statements are subject to risks and uncertainties that could cause the Company’s actual results to differ materially from those contemplated by the relevant forward-looking statement. The principal risk factors that could cause actual performance and future actions to differ materially from the forward-looking statements include, but are not limited to, the Company’s reliance on a few key vendors for a majority of its merchandise purchases (including a significant portion from one key vendor); the availability and timely receipt of products; the ability to timely fulfill and ship products to customers; fluctuations in oil prices causing changes in gasoline and energy prices, resulting in changes in consumer spending as well as increases in utility, freight, and product costs; product demand and market acceptance risks; deterioration of macro-economic and business conditions; the inability to locate and obtain or retain acceptable lease terms for the Company’s stores; the effect of competitive products and pricing; the availability of products; loss of key employees; execution of strategic growth initiatives (including actual and potential mergers and acquisitions and other components of the Company’s capital allocation strategy); and the other risks detailed in the Company’s Securities and Exchange Commission filings. Readers are urged to consider these factors carefully in evaluating the forward-looking statements. The forward-looking statements included in this Form 10-Q are made only as of the date of this report and the Company undertakes no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances.

General

The following discussion and analysis should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations, including Critical Accounting Policies, contained in the Company’s Annual Report on Form 10-K for the year ended March 2, 2013.

The Company is a premium retailer of athletic shoes, apparel and accessories for men, women and kids, throughout the United States, through four operating segments, “brick and mortar” stores, digital (which includes internet, mobile and tablet), shops within department stores, and The Running Specialty Group (“Running Specialty”). Brick and mortar stores and digital are collectively referred to as “Finish Line” throughout this document.

The following table sets forth store and square feet information for each of the following periods:

 

		Thirteen Weeks Ended								Twenty-Six Weeks Ended
Number of Stores:		August 31, 2013				September 1, 2012				August 31, 2013				September 1, 2012
Finish Line:
Beginning of period			651				640				645				637
Opened			9				4				19				13
Closed			(1	)			(6	)			(5	)			(12	)
End of period			659				638				659				638
Branded shops within department stores:
Beginning of period			44				—				3				—
Opened			89				—				130				—
Closed			—				—				—				—
End of period			133				—				133				—
Running Specialty:
Beginning of period			38				19				27				19
Acquired			—				—				9				—
Opened			1				—				3				—
Closed			—				—				—				—
End of period			39				19				39				19
Total:
Beginning of period			733				659				675				656
Acquired			—				—				9				—
Opened			99				4				152				13
Closed			(1	)			(6	)			(5	)			(12	)
End of period			831				657				831				657

 

		August 31, 2013				September 1, 2012
Square feet information as of:
Finish Line:
Square feet			3,571,267				3,449,041
Average store size			5,419				5,406
Branded shops within department stores:
Square feet at end of period			158,948				—
Average square feet per store			1,195				—
Running Specialty:
Square feet			119,964				60,436
Average store size			3,076				3,181
Total:
Square feet			3,850,179				3,509,477

 

10

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Results of Operations

The following tables set forth net sales of the Company by major category for each of the following periods (in thousands):

 

		Thirteen Weeks Ended (unaudited)
Category		August 31, 2013								September 1, 2012
Footwear		$	389,325				89	%		$	337,650				88	%
Softgoods			46,705				11	%			47,361				12	%
Total		$	436,030				100	%		$	385,011				100	%

 

		Twenty-Six Weeks Ended (unaudited)
Category		August 31, 2013								September 1, 2012
Footwear		$	705,176				90	%		$	620,208				88	%
Softgoods			81,907				10	%			83,852				12	%
Total		$	787,083				100	%		$	704,060				100	%

The following table and subsequent discussion sets forth operating data of the Company as a percentage of net sales for the periods indicated below:

 

		Thirteen Weeks Ended								Twenty-Six Weeks Ended
		August 31, 2013				September 1, 2012				August 31, 2013				September 1, 2012
		(unaudited)								(unaudited)
Net sales			100.0	%			100.0	%			100.0	%			100.0	%
Cost of sales (including occupancy costs)			66.4				65.0				67.8				66.0
Gross profit			33.6				35.0				32.2				34.0
Selling, general and administrative expenses			23.8				24.6				25.8				25.5
Store closing costs			—				0.1				—				0.1
Operating income			9.8				10.3				6.4				8.4
Interest income, net			—				—				—				—
Income before income tax			9.8				10.3				6.4				8.4
Income tax expense			3.8				3.9				2.5				3.2
Net income			6.0				6.4				3.9				5.2
Net loss attributable to redeemable noncontrolling interest			—				0.1				0.1				0.1
Net income attributable to The Finish Line, Inc.			6.0	%			6.5	%			4.0	%			5.3	%

 

11

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THIRTEEN AND TWENTY-SIX WEEKS ENDED AUGUST 31, 2013 COMPARED TO THE THIRTEEN AND TWENTY-SIX WEEKS ENDED SEPTEMBER 1, 2012

Net Sales

 

		Thirteen Weeks Ended								Twenty-Six Weeks Ended
		August 31, 2013				September 1, 2012				August 31, 2013				September 1, 2012
		(dollars in thousands)								(dollars in thousands)
		(unaudited)								(unaudited)
Net sales		$	436,030			$	385,011			$	787,083			$	704,060
Comparable store sales increase:			0.9	%			12.3	%			1.6	%			10.3	%

Net sales increased 13.3% for the thirteen weeks ended August 31, 2013 compared to the thirteen weeks ended September 1, 2012. The increase was attributable to a Finish Line comparable store sales increase of 0.9%, an increase in Running Specialty sales of $7.6 million, new Finish Line non comparable store sales contributing $12.8 million due to 21 net additional stores for the thirteen weeks ended August 31, 2013 compared to September 1, 2012, and net sales associated with the shops within department stores of $30.4 million for the thirteen weeks ended August 31, 2013. The Finish Line comparable store sales increase of 0.9% is due to an increase in average dollar per transaction and digital traffic, offset partially by a decrease in store traffic and conversion.

Net sales increased 11.8% for the twenty-six weeks ended August 31, 2013 compared to the twenty-six weeks ended September 1, 2012. The increase was attributable to a Finish Line comparable store sales increase of 1.6%, an increase in Running Specialty sales of $11.3 million, new Finish Line non comparable store sales contributing $20.7 million due to 21 net additional stores for the twenty-six weeks ended August 31, 2013 compared to September 1, 2012, and net sales associated with the shops within department stores of $43.5 million for the twenty-six weeks ended August 31, 2013. The Finish Line comparable store sales increase of 1.6% is due to an increase in average dollar per transaction and an increase in both digital and store traffic, offset partially by a decrease in conversion.

Cost of Sales (Including Occupancy Costs) and Gross Profit

 

		Thirteen Weeks Ended								Twenty-Six Weeks Ended
		August 31, 2013				September 1, 2012				August 31, 2013				September 1, 2012
		(dollars in thousands)								(dollars in thousands)
		(unaudited)								(unaudited)
Cost of sales (including occupancy costs)		$	289,693			$	250,461			$	533,751			$	464,851
Gross profit		$	146,337			$	134,550			$	253,332			$	239,209
Gross profit as a percentage of net sales			33.6	%			35.0	%			32.2	%			34.0	%

The 1.4% decrease in gross profit, as a percentage of net sales, for the thirteen weeks ended August 31, 2013 as compared to the thirteen weeks ended September 1, 2012 was primarily due to a 1.1% decrease in product margin, net of shrink, as a percentage of net sales, and a 0.3% increase in occupancy costs, as a percentage of net sales. The 1.1% decrease in product margin, net of shrink, as a percentage of net sales, was due primarily to higher markdowns as the Company continues to adjust product assortments to meet customer demand. The 0.3% increase in occupancy costs, as a percentage of net sales, is primarily due to longer lease agreements entered into for the Company’s better performing stores within the last year.

The 1.8% decrease in gross profit, as a percentage of net sales, for the twenty-six weeks ended August 31, 2013 as compared to the twenty-six weeks ended September 1, 2012 was primarily due to a 1.5% decrease in product margin, net of shrink, as a percentage of net sales, and a 0.3% increase in occupancy costs, as a percentage of net sales. The 1.5% decrease in product margin, net of shrink, as a percentage of net sales, was due primarily to $5.8 million, or 0.8% of net sales, of start-up costs related to inventory reserves established for inventory purchased from Macy’s during the twenty-six weeks ended August 31, 2013, as well as higher markdowns as the Company continues to adjust product assortments to meet customer demands. The 0.3% increase in occupancy costs, as a percentage of net sales, is primarily due to longer lease agreements entered into for the Company’s better performing stores within the last year.

Selling, General and Administrative Expenses

 

		Thirteen Weeks Ended								Twenty-Six Weeks Ended
		August 31, 2013				September 1, 2012				August 31, 2013				September 1, 2012
		(dollars in thousands)								(dollars in thousands)
		(unaudited)								(unaudited)
Selling, general and administrative expenses		$	103,455			$	94,711			$	202,811			$	179,557
Selling, general and administrative expenses as a percentage of net sales			23.8	%			24.6	%			25.8	%			25.5	%

The $8.7 million increase in selling, general and administrative expenses for the thirteen weeks ended August 31, 2013 as compared to the thirteen weeks ended September 1, 2012 was primarily due to the following: 1.) investments to support the Company’s omni-channel strategy, and 2.) variable costs in fulfillment, freight and payroll in conjunction with the 13.3% increase in consolidated net sales.

The $23.3 million increase in selling, general and administrative expenses for the twenty-six weeks ended August 31, 2013 as compared to the twenty-six weeks ended September 1, 2012 was primarily due to the following: 1.) $2.2 million, or 0.3% of net sales, in start-up costs associated with shipping and handling for the initial inventory takeover and assortment of Macy’s athletic footwear for the twenty-six weeks ended August 31, 2013, 2.) investments to support the Company’s omni-channel strategy, 3.) variable costs in fulfillment, freight and payroll in conjunction with the 11.8% increase in consolidated net sales, and 4.) the initial ramp up of costs associated with building a team and infrastructure for the Macy’s business.

 

12

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Store Closing Costs

 

		Thirteen Weeks Ended								Twenty-Six Weeks Ended
		August 31, 2013				September 1, 2012				August 31, 2013				September 1, 2012
		(dollars in thousands)								(dollars in thousands)
		(unaudited)								(unaudited)
Store closing costs		$	17			$	325			$	203			$	420
Store closing costs as a percentage of net sales			—	%			0.1	%			—	%			0.1	%
Number of stores closed			1				6				5				12

Store closing costs represent the non-cash write-off of any property and equipment upon a store closing.

Interest Income, Net

 

		Thirteen Weeks Ended								Twenty-Six Weeks Ended
		August 31, 2013				September 1, 2012				August 31, 2013				September 1, 2012
		(dollars in thousands)								(dollars in thousands)
		(unaudited)								(unaudited)
Interest income, net		$	10			$	58			$	24			$	129
Interest income, net as a percentage of net sales			—	%			—	%			—	%			—	%

The decrease of $0.1 million during the thirteen and twenty-six weeks ended August 31, 2013 compared to thirteen and twenty-six weeks ended September 1, 2012, respectively, was due to lower invested balances.

Income Tax Expense

 

		Thirteen Weeks Ended								Twenty-Six Weeks Ended
		August 31, 2013				September 1, 2012				August 31, 2013				September 1, 2012
		(dollars in thousands)								(dollars in thousands)
		(unaudited)								(unaudited)
Income tax expense		$	16,682			$	15,136			$	19,635			$	22,844
Income tax expense as a percentage of net sales			3.8	%			3.9	%			2.5	%			3.2	%
Effective income tax rate			38.9	%			38.2	%			39.0	%			38.5	%

The increase in the effective tax rate for the thirteen and twenty-six weeks ended August 31, 2013 compared to the thirteen and twenty-six weeks ended September 1, 2012 relates to the Company incurring additional expenses that are not deductible for income tax purposes.

Redeemable Noncontrolling Interest

 

		Thirteen Weeks Ended								Twenty-Six Weeks Ended
		August 31, 2013				September 1, 2012				August 31, 2013				September 1, 2012
		(dollars in thousands)								(dollars in thousands)
		(unaudited)								(unaudited)
Net loss attributable to redeemable noncontrolling interest		$	314			$	537			$	875			$	734
Net loss attributable to redeemable noncontrolling interest as a percentage of net sales			—	%			0.1	%			0.1	%			0.1	%

Net losses attributable to the redeemable noncontrolling interest for both the thirteen and twenty-six weeks ended August 31, 2013 represents 49% of the net loss generated by Running Specialty for such periods. Net losses attributable to the redeemable noncontrolling interest for the twenty-six weeks ended September 1, 2012 represents 49% of the net loss generated by Running Specialty since March 29, 2012, which was the date of the investment by GCPI SR LLC.

Net Income Attributable to The Finish Line, Inc.

 

		Thirteen Weeks Ended								Twenty-Six Weeks Ended
		August 31, 2013				September 1, 2012				August 31, 2013				September 1, 2012
		(dollars in thousands) (unaudited)								(dollars in thousands) (unaudited)
Net income attributable to The Finish Line, Inc. shareholders		$	26,507			$	24,973			$	31,582			$	37,251
Net income attributable to The Finish Line, Inc. shareholders as a percentage of net sales			6.0	%			6.5	%			4.0	%			5.3	%
Net income attributable to The Finish Line, Inc. shareholders per diluted share		$	0.54			$	0.49			$	0.64			$	0.72

 

13

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The $1.5 million increase in net income attributable to The Finish Line, Inc. for the thirteen weeks ended August 31, 2013 compared to the thirteen weeks ended September 1, 2012 was primarily due to a 13.3% increase in net sales partially offset by a decrease in product margin, as a percentage of sales, and the investments to support the Company’s omni-channel strategy within selling, general, and administrative expenses.

The $5.7 million decrease in net income attributable to The Finish Line, Inc. for the twenty-six weeks ended August 31, 2013 compared to the twenty-six weeks ended September 1, 2012 was primarily due to the $8.0 million of start-up costs ($4.9 million net of income taxes) along with a decrease in product margin as a percentage of net sales, and the investments to support the Company’s omni-channel strategy within selling, general and administrative expenses, partially offset by net sales improvement.

Liquidity and Capital Resources

The Company’s primary source of working capital is cash-on-hand and cash flow from operations. The following table sets forth material balance sheet and liquidity measures of the Company (in thousands):

 

		August 31, 2013				September 1, 2012				March 2, 2013
		(unaudited)				(unaudited)
Cash and cash equivalents		$	203,832			$	254,225			$	226,982
Merchandise inventories, net		$	295,952			$	250,634			$	243,770
Interest-bearing debt		$	—			$	—			$	—
Working capital		$	351,514			$	391,787			$	357,657

Operating Activities

Net cash provided by operating activities during the twenty-six weeks ended August 31, 2013 was $40.6 million compared to $21.1 million for the twenty-six weeks ended September 1, 2012. The increase was primarily a result of a net increase in the cash flow from working capital balances partially offset by a decrease in net income for the twenty-six weeks ended August 31, 2013 compared to the twenty-six weeks ended September 1, 2012. Cash and cash equivalents consist primarily of cash on hand and all highly liquid instruments purchased with a maturity of three months or less at the date of purchase. At August 31, 2013, substantially all of the Company’s cash was invested in deposit accounts at banks.

Consolidated inventories increased 18.1% at August 31, 2013 compared to September 1, 2012, and were 21.4% higher than at March 2, 2013. The increase over the prior year and prior year quarter is primarily related to the purchase of Macy’s Athletic Shoes inventory, as well as the Company’s merchandise assortment within Macy’s. Finish Line inventories decreased 0.5% at August 31, 2013 compared to September 1, 2012 and increased 2.9% from March 2, 2013.

Investing Activities

Net cash used in investing activities for the twenty-six weeks ended August 31, 2013 was $51.5 million compared to $46.1 million for the twenty-six weeks ended September 1, 2012. The increase in cash used in investing activities was primarily a result of two acquisitions completed by Running Specialty for $8.3 million, partially offset by a decrease in capital expenditures of $1.9 million.

The Company intends to invest approximately $80-$90 million in capital expenditures during fiscal 2014. Of this amount, approximately $8-$9 million is intended for the construction of approximately 20-25 new Finish Line stores, and approximately $14-$15 million is intended for the remodeling or repositioning of 25-30 existing Finish Line stores with additional brand shops such as Finish Line’s Nike Track Club, Brand Jordan, as well as other key brand partnerships for “store-within-store” models. In addition, approximately $18 million is expected to be spent on building out shops within department stores. The Company anticipates satisfying all of these capital expenditures through the use of cash-on-hand and operating cash flow. The remaining $40-$48 million to be invested is related primarily to projected capital expenditures of approximately $32-$38 million intended for IT infrastructure investments to support new supply chain and merchandise systems and approximately $2-$3 million intended for technology to support growth in Finish Line’s digital business and $6-$7 million to support Running Specialty new store growth which excludes acquisition capital.

Financing Activities

Net cash used in financing activities for the twenty-six weeks ended August 31, 2013 was $12.3 million compared to $28.2 million for the twenty-six weeks ended September 1, 2012. The $16.0 million reduction in cash used was primarily due to a reduction of $20.1 million of stock repurchases, offset partially by a $2.4 million increase in proceeds from the issuance of common stock, and the sale of redeemable noncontrolling interest, net, of $6.0 million during the twenty-six weeks ended September 1, 2012.

On July 21, 2011, the Company’s Board of Directors authorized a stock repurchase program (the “2011 stock repurchase program”) to repurchase up to 5,000,000 shares of the Company’s Class A common stock outstanding through December 31, 2014. On January 3, 2013, the Company’s Board of Directors amended the program (the “Amended Program”) and authorized the repurchase of an additional 5,000,000 shares of the Company’s Class A common stock, which authorization shall expire on December 31, 2017.

The Company purchased 615,877 shares at an average price of $19.90 per share for an aggregate amount of $12.3 million for the twenty-six weeks ended August 31, 2013. As of August 31, 2013, there were 4,304,464 shares remaining available to repurchase under the Amended Program.

The Company’s treasury shares may be issued upon the exercise of employee stock options, issuance of shares for the Employee Stock Purchase Plan, issuance of restricted stock, or for other corporate purposes. Further purchases will occur from time to time as market conditions warrant and as the Company deems appropriate when judged against other alternative uses of cash.

On July 18, 2013, the Company announced a quarterly cash dividend of $0.07 per share of the Company’s Class A common stock. The Company declared dividends of $3.4 million during the thirteen weeks ended August 31, 2013. The cash dividends of $3.4 million were paid on September 16, 2013 to shareholders of record on August 30, 2013 and was included as of August 31, 2013 in “Other liabilities and accrued expenses” on the Company’s consolidated balance sheet. Further declarations of dividends remain at the discretion of the Company’s Board of Directors.

 

14

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Contractual Obligations

The Company’s contractual obligations primarily consist of operating leases and purchase orders for merchandise inventory. For the twenty-six weeks ended August 31, 2013, there were no significant changes to the Company’s contractual obligations from those identified in the Company’s Annual Report on Form 10-K for the year ended March 2, 2013, other than those which occur in the normal course of business (primarily changes in the Company’s merchandise inventory related to purchase obligations, which fluctuate throughout the year as a result of the seasonal nature of the Company’s operations, and changes to operating leases due to store openings and closings.)

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to adopt accounting policies related to estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, as well as the related disclosure of contingent assets and liabilities at the date of the financial statements. On an ongoing basis, management evaluates the Company’s accounting policies, estimates and judgments, including those related to inventories, long–lived assets and contingencies. Management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of the Company’s market risk associated with interest rates as of March 2, 2013, see “Quantitative and Qualitative Disclosures about Market Risk” in Item 7A of Part II of the Company’s Annual Report on Form 10-K for the fiscal year ended March 2, 2013. For the twenty-six weeks ended August 31, 2013, there has been no significant change in related market risk factors.

 

ITEM 4.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures. With the participation of our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Report. Based upon such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures were effective in ensuring that (i) information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission’s rules and forms and (ii) information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting. There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this Report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

15

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PART II—OTHER INFORMATION

 

ITEM 1.

LEGAL PROCEEDINGS

The Company is subject, from time to time, to certain legal proceedings and claims in the ordinary course of conducting its business. Although it is not possible to predict with certainty the eventual outcome of any litigation, in the opinion of management, the Company’s legal proceedings are not expected to have a material adverse effect on the Company’s financial condition or results of operations

 

ITEM 1A.

RISK FACTORS

Risk factors that affect the Company’s business and financial results are discussed in “Item 1A: Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended March 2, 2013. There has been no significant change to identified risk factors for the twenty-six weeks ended August 31, 2013.

 

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On July 21, 2011, the Company’s Board of Directors authorized the 2011 stock repurchase program to repurchase up to 5,000,000 shares of the Company’s Class A common stock outstanding through December 31, 2014. On January 3, 2013, the Company’s Board of Directors amended the program and authorized the repurchase of an additional 5,000,000 shares of the Company’s Class A common stock, which authorization shall expire on December 31, 2017. Information on the shares repurchased under the Company’s stock repurchase program during the thirteen weeks ended August 31, 2013 is as follows:

 

Month		Total Number of Shares Purchased				Average Price Paid per Share (1)				Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs				Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Program
June (6/2/13 – 7/6/13)			—			$	—				—				4,554,284
July (7/7/13 – 8/3/13)			59,820			$	21.99				59,820				4,494,464
August (8/4/13 – 8/31/13)			190,000			$	21.90				190,000				4,304,464
			249,820			$	21.92				249,820

 

(1)	The average price paid per share includes any brokerage commissions.

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

 

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

 

ITEM 5.

OTHER INFORMATION

None.

 

ITEM 6.

EXHIBITS

(a) Exhibits

 

10.1		Retirement Agreement for Steven J. Schneider (incorporated by reference to Exhibit 10.1 of registrant’s Form 10-Q for the period ending June 1, 2013).
10.2		Retirement Agreement for George S. Sanders (incorporated by reference to Exhibit 10.2 of registrant’s Form 10-Q for the period ending June 1, 2013).
31.1		Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended.
31.2		Certification of Chief Financial Officer Pursuant to Rule 13a–14(a) and 15d-14(a) of the Securities Exchange Act, as amended.
32		Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101		The following materials from The Finish Line, Inc.’s Form 10-Q for the quarterly period ended August 31, 2013, formatted in an XBRL Interactive Data File: (i) Consolidated Balance Sheets-unaudited; (ii) Consolidated Statements of Income-unaudited; (iii) Consolidated Statements of Cash Flows-unaudited; and (iv) Notes to Consolidated Financial Statements-unaudited, with detailed tagging of notes and financial statement schedules.*

 

*

Users of the XBRL-related information in Exhibit 101 of this Quarterly Report on Form 10-Q are advised, in accordance with Regulation S-T Rule 406T, that this Interactive Data File is deemed not filed or as a part of a registration statement for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is otherwise not subject to liability under these sections. The financial information contained in the XBRL-related documents is unaudited and unreviewed.

 

16

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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 thereunto duly authorized.

 

				THE FINISH LINE, INC.
Date: September 27, 2013				By:		/s/ Edward Wilhelm
						Edward W. Wilhelm
						Executive Vice President, Chief Financial Officer

 

17

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Exhibit Index

 

Exhibit Number		Description
10.1		Retirement Agreement for Steven J. Schneider (incorporated by reference to Exhibit 10.1 of registrant’s Form 10-Q for the period ending June 1, 2013).
10.2		Retirement Agreement for George S. Sanders (incorporated by reference to Exhibit 10.2 of registrant’s Form 10-Q for the period ending June 1, 2013).
31.1		Certification of Chief Executive Officer Pursuant to Rule 13a–14(a) and 15d-14(a) of the Securities Exchange Act, as amended.
31.2		Certification of Chief Financial Officer Pursuant to Rule 13a–14(a) and 15d-14(a) of the Securities Exchange Act, as amended.
32		Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101		The following materials from The Finish Line, Inc.’s Form 10-Q for the quarterly period ended August 31, 2013, formatted in an XBRL Interactive Data File: (i) Consolidated Balance Sheets-unaudited; (ii) Consolidated Statements of Income-unaudited; (iii) Consolidated Statements of Cash Flows-unaudited; and (iv) Notes to Consolidated Financial Statements-unaudited, with detailed tagging of notes and financial statement schedules.*

 

*

Users of the XBRL-related information in Exhibit 101 of this Quarterly Report on Form 10-Q are advised, in accordance with Regulation S-T Rule 406T, that this Interactive Data File is deemed not filed or as a part of a registration statement for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is otherwise not subject to liability under these sections. The financial information contained in the XBRL-related documents is unaudited and unreviewed.