PRN: Finish Line Reports Third Quarter FY 2011 Results

INDIANAPOLIS, Dec. 21, 2010 /PRNewswire-FirstCall/ — The Finish Line, Inc.
(Nasdaq: FINL) today reported results for the third quarter of fiscal 2011,
representing the 13-week period ended November 27, 2010.

Third Quarter Results

Net sales increased 8.7% to $260.9 million in the third quarter compared to
$240.1 million one year ago. Comparable store net sales increased 10.1% in the
third quarter compared to an increase of 1.7% a year ago.

Finish Line reported third quarter income from continuing operations of $4.1
million, or $0.08 per diluted share compared to income from continuing
operations of $6.5 million or $0.12 per diluted share a year ago, a figure that
included a one-time $6.5 million tax benefit Finish Line recorded in the third
quarter of last year. Without the tax benefit, third quarter non-GAAP income
from continuing operations last year was $16,000 or $0.00 (flat) per diluted
share.

Merchandise inventories increased by 10.4% to $262.2 million at the end of the
quarter compared to $237.5 million a year ago. On a per-square-foot basis,
inventories were up 13.0%. For the same period a year ago, inventory per square
foot declined by 11.0%.

At quarter end, the company had no interest-bearing debt and $222.0 million in
cash and cash equivalents, up from $149.2 million at the end of the third
quarter a year ago.

“Staying focused on the strategic plan we developed last year has again helped
Finish Line deliver strong results,” said Chairman and Chief Executive Officer
Glenn Lyon. “We continue to exceed our internal performance targets, yet there
is more growth to come within our existing business. We believe that we can
achieve annual double digit operating margins in the future by continuing to
drive the top line in our stores and by accelerating growth in e-commerce, which
will become an increasingly more significant factor in our business moving
forward.”

Year-to-Date Results

Net sales increased 5.8% to $844.4 million, compared to $797.9 million for the
same period a year ago. Year-to-date comparable store net sales increased 7.3%
versus a 4.7% decrease last year.

For the 39 weeks ended November 27, 2010, Finish Line reported income from
continuing operations of $34.6 million, or $0.63 per diluted share. This
compares to income from continuing operations of $20.0 million, or $0.36 per
diluted share for the same period a year ago including the one-time $6.5 million
tax benefit. Without the tax benefit, the year-to-date non-GAAP income from
continuing operations was $13.5 million or $0.24 per diluted share. The $0.63
per diluted share represents a 163% increase over the prior year non-GAAP $0.24
per diluted share.

December Sales Update

Comparable store net sales, on a month-to-date basis for the period of November
28 through December 19, increased 4.5% on top of a 4.9% increase for the same
period one year ago.

Q3 Conference Call Tomorrow, December 22, 2010

The company will host a conference call for investors Wednesday, December 22,
2010 at 8:30 a.m. Eastern. To participate in the conference call, dial
866-923-8645 (U.S. and Canada) or 660-422-4970 (International), conference
ID#27174323. To listen online, visit www.finishline.com. A replay of the
conference call can be accessed approximately two hours following the completion
of the call at 800-642-1687, conference ID#27174323. This recording will be made
available through Friday, December 24, 2010. In addition, the replay will be
available online at www.finishline.com.

Q4 Fiscal Year 2011 Release/Conference Call

The company expects to report fourth quarter results Thursday, March 24, 2011
after market close followed by a conference call Friday, March 25, 2011 at
approximately 8:30 a.m. Eastern.

About Finish Line

Finish Line is a premium retailer of athletic shoes, apparel and accessories.
Headquartered in Indianapolis, Finish Line operates 669 stores in malls across
the United States. More than 11,000 Finish Line sneakerologists help customers
each day connect with their sport, their life and their style. Online shopping
is available at www.finishline.com and mobile shopping is available at
m.finishline.com. Follow Finish Line on Twitter at Twitter.com/FinishLine and
“like” Finish Line on Facebook at facebook.com/FinishLineUSA.

Forward-Looking Statements

This news release includes statements that are or may be considered
“forward-looking” 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 words or
phrases such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,”
“may,” “will,” “estimates,” “potential,” “continue,” or words and phrases of
similar meaning.

Statements that describe objectives, plans or goals also are forward-looking
statements. All of these forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
contemplated by the relevant forward-looking statements. 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; fluctuations in oil prices causing
changes in gasoline and energy prices, resulting in changes in consumer spending
and utility and product costs; product demand and market acceptance risks;
further deterioration of economic and business conditions; the inability to
locate and obtain acceptable lease terms for the company’s stores; the effect of
competitive products and pricings; loss of key employees; management of
strategic growth initiatives; 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 herein are made only as of the date of
this report and Finish Line undertakes no obligation to publicly update these
forward-looking statements to reflect subsequent events or circumstances.

The Finish Line, Inc.
Consolidated Statements of Income (Unaudited)
(In thousands, except per share and store data)

Thirty- Thirty-
Thirteen Thirteen Nine Nine
Weeks Weeks Weeks Weeks
Ended Ended Ended Ended
November November November November
27, 28, 27, 28,
2010 2009 2010 2009
—- —- —- —-

Net sales $260,935 $240,056 $844,403 $797,885
Cost of sales (including
occupancy costs) 179,056 169,144 568,785 555,230
——- ——- ——- ——-
Gross profit 81,879 70,912 275,618 242,655

Selling, general and
administrative expenses 75,278 70,351 219,835 218,765
Store closing costs 87 535 87 2,147
— — — —–
Operating income 6,514 26 55,696 21,743

Interest income, net 151 66 370 278
— — — —
Income from continuing
operations before income
taxes 6,665 92 56,066 22,021

Income tax expense
(benefit) 2,531 (6,439) 21,459 1,983
Income from continuing
operations 4,134 6,531 34,607 20,038

(Loss) income from
discontinued operations,
net of income taxes (12) 62 (25) (14,927)
Net income $4,122 $6,593 $34,582 $5,111
====== ====== ======= ======

Income (loss) per diluted
share:
Income from continuing
operations $0.08 $0.12 $0.63 $0.36
Loss from discontinued
operations – – – (0.27)
Net income $0.08 $0.12 $0.63 $0.09
===== ===== ===== =====

Diluted weighted average
shares outstanding 53,351 54,877 53,878 54,615
====== ====== ====== ======

Dividends declared per
share $0.04 $0.03 $0.12 $0.09
===== ===== ===== =====

Store activity for the
period (Finish Line
only):
Beginning of period 667 681 666 689
Opened 4 4 11 5
Closed (2) (4) (8) (13)
End of period 669 681 669 681
=== === === ===
Square feet at end of
period 3,586,387 3,671,926
Average square feet per
store 5,361 5,392

Thirteen Weeks Ended Thirty-Nine Weeks Ended
——————– ———————–
November November November November
27, 28, 27, 28,
2010 2009 2010 2009
—- —- —- —-
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales (including
occupancy costs) 68.6 70.5 67.4 69.6
—- —- —- —-
Gross profit 31.4 29.5 32.6 30.4

Selling, general and
administrative expenses 28.9 29.3 26.0 27.4
Store closing costs – 0.2 – 0.3
— — — —
Operating income 2.5 – 6.6 2.7

Interest income, net 0.1 – – -
— — — —
Income from continuing
operations before
income taxes 2.6 – 6.6 2.7

Income tax expense
(benefit) 1.0 (2.7) 2.5 0.2
— —- — —
Income from continuing
operations 1.6 2.7 4.1 2.5

Loss from discontinued
operations, net of
income taxes – – – (1.9)
— — —-
Net income 1.6% 2.7% 4.1% 0.6%
=== === === ===

Condensed Consolidated Balance Sheets

November November February
27, 28, 27,
2010 2009 2010
—- —- —-
(Unaudited) (Unaudited)
ASSETS
——
Cash and cash equivalents $222,030 $149,184 $234,508
Merchandise inventories, net 262,160 237,459 190,894
Other current assets 29,714 36,312 18,205
Property and equipment, net 130,091 146,537 135,943
Other assets 32,097 24,990 30,718
Total assets $676,092 $594,482 $610,268
======== ======== ========

LIABILITIES AND SHAREHOLDERS’
EQUITY
—————————–
Current liabilities $163,035 $111,883 $114,943
Deferred credits from landlords 36,583 42,407 40,006
Other long-term liabilities 14,194 11,505 13,169
Shareholders’ equity 462,280 428,687 442,150
Total liabilities and
shareholders’ equity $676,092 $594,482 $610,268
======== ======== ========

The Finish Line, Inc.
Reconciliation of GAAP to Non-GAAP Consolidated Statements of Income
(Unaudited)
Thirteen Weeks Ended November 27, 2010 and November 28, 2009
(In thousands, except per share data)

Third Quarter Fiscal 2011

GAAP Adjustments Non-GAAP
—- ———– ——–

Net sales $260,935 $- $260,935
Cost of sales (including
occupancy costs) 179,056 – 179,056
——- — ——-
Gross profit 81,879 – 81,879

Selling, general and
administrative expenses 75,278 – 75,278
Store closing costs 87 – 87
— — —
Operating income 6,514 – 6,514

Interest income, net 151 – 151
— — —
Income from continuing
operations before income
taxes 6,665 – 6,665

Income tax expense
(benefit) (1) 2,531 – 2,531
— —–
Income from continuing
operations 4,134 – 4,134

(Loss) income from
discontinued operations,
net of income taxes (12) – (12)
— —
Net income $4,122 $- $4,122
====== === ======

Income (loss) per diluted
share:
Income from continuing
operations $0.08 $- $0.08
Loss from discontinued
operations – – -
Net income $0.08 $- $0.08
===== === =====

Diluted weighted average
shares outstanding 53,351 – 53,351
====== === ======

Third Quarter Fiscal 2010

GAAP Adjustments Non-GAAP
—- ———– ——–

Net sales $240,056 $- $240,056
Cost of sales (including
occupancy costs) 169,144 – 169,144
——- — ——-
Gross profit 70,912 – 70,912

Selling, general and
administrative expenses 70,351 – 70,351
Store closing costs 535 – 535
— — —
Operating income 26 – 26

Interest income, net 66 – 66
— — —
Income from continuing
operations before income
taxes 92 – 92

Income tax expense (benefit)
(1) (6,439) 6,515 76
—– —
Income from continuing
operations 6,531 (6,515) 16

(Loss) income from
discontinued operations,
net of income taxes 62 – 62
— —
Net income $6,593 $(6,515) $78
====== ======= ===

Income (loss) per diluted
share:
Income from continuing
operations $0.12 $(0.12) $-
Loss from discontinued
operations – – -
Net income $0.12 $(0.12) $-
===== ====== ===

Diluted weighted average
shares outstanding 54,877 – 54,877
====== === ======

Third Quarter Fiscal 2011

GAAP Adjustments Non-GAAP
—- ———– ——–
Net sales 100.0 % % 100.0%
Cost of sales
(including
occupancy costs) 68.6 – 68.6
—- — —-
Gross profit 31.4 – 31.4

Selling, general
and
administrative
expenses 28.9 – 28.9
Store closing
costs – – -
— — —
Operating income 2.5 – 2.5

Interest income,
net 0.1 – 0.1
— — —
Income from
continuing
operations before
income taxes 2.6 – 2.6

Income tax expense
(benefit) (1) 1.0 – 1.0
— — —
Income from
continuing
operations 1.6 – 1.6

(Loss) income from
discontinued
operations, net
of income taxes – – -
— — —
Net income 1.6 % – % 1.6%
==== ===

Third Quarter Fiscal 2010

GAAP Adjustments Non-GAAP
—- ———– ——–
Net sales 100.0 % % 100.0%
Cost of
sales
(including
occupancy
costs) 70.5 – 70.5
—- — —-
Gross
profit 29.5 – 29.5

Selling,
general
and
administrative
expenses 29.3 – 29.3
Store
closing
costs 0.2 – 0.2
— — —
Operating
income – -

Interest
income,
net – – -
— — —
Income
from
continuing
operations
before
income
taxes – – -

Income tax
expense
(benefit)
(1) (2.7) 2.7 -
—- — —
Income
from
continuing
operations 2.7 (2.7) -

(Loss)
income
from
discontinued
operations,
net of
income
taxes – – -
— — —
Net income 2.7 % (2.7)% – %
==== =====

Footnotes to explain adjustments
——————————–
(1) Fiscal 2010 amount reflects the one-time tax benefit related to
the terminated merger.

The Finish Line, Inc.
Reconciliation of GAAP to Non-GAAP Consolidated Statements of Income
(Unaudited)
Thirty-Nine Weeks Ended November 27, 2010 and November 28, 2009
(In thousands, except per share data)

Thirty-Nine Weeks Ended
November 27, 2010

GAAP Adjustments Non-GAAP
—- ———– ——–

Net sales $844,403 $- $844,403
Cost of sales (including
occupancy costs) 568,785 – 568,785
——- — ——-
Gross profit 275,618 – 275,618

Selling, general and
administrative expenses 219,835 – 219,835
Store closing costs 87 – 87
— — —
Operating income 55,696 – 55,696

Interest income, net 370 – 370
— — —
Income from continuing
operations before income taxes 56,066 – 56,066

Income tax expense (1) 21,459 – 21,459
— ——
Income from continuing
operations 34,607 – 34,607

Loss from discontinued
operations, net of income taxes (25) – (25)
— —
Net income (loss) $34,582 $- $34,582
======= === =======

Income (loss) per diluted share:
Income from continuing
operations $0.63 $- $0.63
Loss from discontinued
operations – – -
Net income (loss) $0.63 $- $0.63
===== === =====

Diluted weighted average shares
outstanding 53,878 – 53,878
====== === ======

Thirty-Nine Weeks Ended
November 28, 2009

GAAP Adjustments Non-GAAP
—- ———– ——–

Net sales $797,885 $- $797,885
Cost of sales (including
occupancy costs) 555,230 – 555,230
——- — ——-
Gross profit 242,655 – 242,655

Selling, general and
administrative expenses 218,765 – 218,765
Store closing costs 2,147 – 2,147
—– — —–
Operating income 21,743 – 21,743

Interest income, net 278 – 278
— — —
Income from continuing
operations before income taxes 22,021 – 22,021

Income tax expense (1) 1,983 6,515 8,498
—– —–
Income from continuing
operations 20,038 (6,515) 13,523

Loss from discontinued
operations, net of income taxes (14,927) – (14,927)
— ——-
Net income (loss) $5,111 $(6,515) $(1,404)
====== ======= =======

Income (loss) per diluted share:
Income from continuing
operations $0.36 $(0.12) $0.24
Loss from discontinued
operations (0.27) – (0.27)
—–
Net income (loss) $0.09 $(0.12) $(0.03)
===== ====== ======

Diluted weighted average shares
outstanding 54,615 – 54,615
====== === ======

Thirty-Nine Weeks Ended
November 27, 2010

Non-
GAAP Adjustments GAAP
—- ———– —–
Net sales 100.0 % – % 100.0 %
Cost of sales (including occupancy
costs) 67.4 – 67.4
—- — —-
Gross profit 32.6 – 32.6

Selling, general and administrative
expenses 26.0 – 26.0
Store closing costs – – -
— — —
Operating income 6.6 – 6.6

Interest income, net – – -
— — —
Income from continuing operations
before income taxes 6.6 – 6.6

Income tax expense (1) 2.5 – 2.5
— — —
Income from continuing operations 4.1 – 4.1

Loss from discontinued operations,
net of income taxes – – -
Net income (loss) 4.1 % – % 4.1 %
==== === ====

Thirty-Nine Weeks Ended
November 28, 2009

Non-
GAAP Adjustments GAAP
—- ———– —–
Net sales 100.0 % – % 100.0 %
Cost of sales (including occupancy
costs) 69.6 – 69.6
—- — —-
Gross profit 30.4 – 30.4

Selling, general and administrative
expenses 27.4 – 27.4
Store closing costs 0.3 – 0.3
— — —
Operating income 2.7 – 2.7

Interest income, net – – -
— — —
Income from continuing operations
before income taxes 2.7 – 2.7

Income tax expense (1) 0.2 0.8 1.0
— — —
Income from continuing operations 2.5 (0.8) 1.7

Loss from discontinued operations,
net of income taxes (1.9) – (1.9)
Net income (loss) 0.6% (0.8) % (0.2) %
=== ====== ======

Footnotes to explain adjustments
——————————–
(1) Fiscal 2010 amount reflects the one-time tax benefit related to
the terminated merger.

Media Contact: Investor Contact:
Anne Roman Ed Wilhelm
Corporate Communications Chief Financial Officer
317-613-6577 317-613-6914

SOURCE The Finish Line, Inc.