Finish Line Reports Third Quarter FY 2011 Results

Comp store sales increase 10.1% with earnings of $0.08 per share

News provided by

The Finish Line, Inc.

Dec 21, 2010, 04:35 ET

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)









Thirteen


Thirteen


Thirty-Nine

Thirty-Nine

Weeks Ended

Weeks Ended

Weeks Ended

Weeks Ended

November 27,

November 28,

November 27,

November 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 27,

November 28,

November 27,

November 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 27,

November 28,

February 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


Third Quarter Fiscal 2010


















GAAP

Adjustments

Non-GAAP




GAAP

Adjustments

Non-GAAP


































Net sales

$ 260,935

$               -

$  260,935


$ 240,056

$               -

$  240,056

Cost of sales (including occupancy costs)

179,056

-

179,056


169,144

-

169,144

Gross profit

81,879

-

81,879


70,912

-

70,912
















Selling, general and administrative expenses

75,278

-

75,278


70,351

-

70,351

Store closing costs

87

-

87


535

-

535

Operating income


6,514

-

6,514


26

-

26
















Interest income, net

151

-

151


66

-

66

Income from continuing operations before income taxes

6,665

-

6,665


92

-

92
















Income tax expense (benefit) (1)

2,531

-

2,531


(6,439)

6,515

76

Income from continuing operations

4,134

-

4,134


6,531

(6,515)

16
















(Loss) income from discontinued operations, net of income taxes

(12)

-

(12)


62

-

62

Net income


$     4,122

$               -

$      4,122


$     6,593

$      (6,515)

$           78
















Income (loss) per diluted share:














 Income from continuing operations

$       0.08

$               -

$        0.08


$       0.12

$        (0.12)

$              -

 Loss from discontinued operations

-

-

-


-

-

-

 Net income


$       0.08

$               -

$        0.08


$       0.12

$        (0.12)

$              -
















Diluted weighted average shares outstanding


53,351

-

53,351


54,877

-

54,877



































Third Quarter Fiscal 2011


Third Quarter Fiscal 2010


















GAAP

Adjustments

Non-GAAP




GAAP

Adjustments

Non-GAAP


Net sales

       100.0

%

                 -

%

100.0

%

       100.0

%

                 -

%

100.0

%

Cost of sales (including occupancy costs)


         68.6


                 -


68.6


         70.5


                 -


70.5

Gross profit

         31.4


                 -


31.4


         29.5


                 -


29.5
















Selling, general and administrative expenses


         28.9


                 -


28.9


         29.3


                 -


29.3

Store closing costs

               -


                 -


-


           0.2


                 -


0.2

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


         (2.7)

             2.7


-

Income from continuing operations


           1.6


                 -


1.6


           2.7


            (2.7)

-
















(Loss) income from discontinued operations, net of income taxes

               -


                 -


-


               -


                 -


                -


Net income


           1.6

%

                 -

%

1.6

%

           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



Thirty-Nine Weeks Ended



November 27, 2010

November 28, 2009
















GAAP

Adjustments

Non-GAAP



GAAP

Adjustments

Non-GAAP





























Net sales

$ 844,403

$               -

$  844,403

$ 797,885

$               -

$  797,885

Cost of sales (including occupancy costs)

568,785

-

568,785

555,230

-

555,230

Gross profit

275,618

-

275,618

242,655

-

242,655














Selling, general and administrative expenses

219,835

-

219,835

218,765

-

218,765

Store closing costs

87

-

87

2,147

-

2,147

Operating income


55,696

-

55,696

21,743

-

21,743














Interest income, net

370

-

370

278

-

278

Income from continuing operations before income taxes

56,066

-

56,066

22,021

-

22,021














Income tax expense (1)

21,459

-

21,459

1,983

6,515

8,498

Income from continuing operations

34,607

-

34,607

20,038

(6,515)

13,523














Loss from discontinued operations, net of income taxes

(25)

-

(25)

(14,927)

-

(14,927)

Net income (loss)

$   34,582

$               -

$    34,582

$     5,111

$      (6,515)

$    (1,404)














Income (loss) per diluted share:












 Income from continuing operations

$       0.63

$               -

$        0.63

$       0.36

$        (0.12)

$        0.24

 Loss from discontinued operations

-

-

-

(0.27)

-

(0.27)

 Net income (loss)

$       0.63

$               -

$        0.63

$       0.09

$        (0.12)

$      (0.03)














Diluted weighted average shares outstanding


53,878

-

53,878

54,615

-

54,615
































Thirty-Nine Weeks Ended



Thirty-Nine Weeks Ended



November 27, 2010

November 28, 2009
















GAAP

Adjustments

Non-GAAP



GAAP

Adjustments

Non-GAAP

Net sales

100.0 %

- %

100.0 %

100.0 %

- %

100.0 %

Cost of sales (including occupancy costs)


67.4

-

67.4

69.6

-

69.6

Gross profit

32.6

-

32.6

30.4

-

30.4














Selling, general and administrative expenses


26.0

-

26.0

27.4

-

27.4

Store closing costs

-

-

-

0.3

-

0.3

Operating income


6.6

-

6.6

2.7

-

2.7














Interest income, net

-

-

-

-

-

-

Income from continuing operations before income taxes

6.6

-

6.6

2.7

-

2.7














Income tax expense (1)

2.5

-

2.5

0.2

0.8

1.0

Income from continuing operations


4.1

-

4.1

2.5

(0.8)

1.7














Loss from discontinued operations, net of income taxes

-

-

-

(1.9)

-

(1.9)

Net income (loss)

4.1 %

- %

4.1 %

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.

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