<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ---
EXCHANGE ACT OF 1934
For the thirteen week period ended November 27, 1999
-----------------
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to _______________________
Commission File number 0-20184
The Finish Line, Inc.
- ----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 35-1537210 (State or
- ----------------------------------------------------------------------
other jurisdiction (I.R.S. Employer
of incorporation or organization) identification number)
3308 North Mitthoeffer Road Indianapolis, Indiana 46235 (Address
- ----------------------------------------------------------------------
of principal executive offices) (zip code)
317-899-1022
- ----------------------------------------------------------------------------
(Registrant's telephone number, including area code)
____________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No ___
---
Shares of common stock outstanding at December 31, 1999:
Class A 18,590,065
Class B 6,267,375
Page 1 of 17
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE FINISH LINE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
November 27, February 27,
1999 1999
-------------- ---------------
ASSETS (unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 10,866 $ 23,113
Short-term marketable securities 2,009 2,155
Accounts receivable 16,504 6,951
Merchandise inventories 173,824 135,303
Income taxes recoverable 1,953 --
Deferred income taxes -- 2,432
Other 2,035 1,241
-------- --------
Total current assets 207,191 171,195
PROPERTY AND EQUIPMENT:
Land 315 315
Building 10,390 10,251
Leasehold improvements 89,039 74,948
Furniture, fixtures, and equipment 36,127 30,418
Construction in progress 819 4,251
-------- --------
136,690 120,183
Less accumulated depreciation 38,450 29,749
-------- --------
98,240 90,434
OTHER ASSETS:
Marketable securities 14,147 15,656
Deferred income taxes 1,952 1,022
Other 228 248
-------- --------
16,327 16,926
-------- --------
Total assets $321,758 $278,555
======== ========
</TABLE>
See accompanying notes.
Page 2 of 17
<PAGE>
THE FINISH LINE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
November 27, February 27,
1999 1999
------------ -------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (unaudited)
CURRENT LIABILITIES:
Accounts payable $ 63,090 $ 50,672
Notes payable to bank 19,700 --
Employee compensation and related payroll taxes 4,443 5,025
Accrued income taxes -- 446
Accrued property and sales tax 3,425 3,533
Deferred income taxes 1,783 --
Other liabilities and accrued expenses 5,104 4,858
------------ -------------
Total current liabilities 97,545 64,534
Long-term deferred rent payments 6,117 5,342
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 1,000 shares authorized; none issued -- --
Common stock, $.01 par value
Class A:
Shares authorized - 30,000
Shares issued - (November 27, 1999 - 19,983;
February 27, 1999 - 18,961)
Shares outstanding - (November 27, 1999 - 18,590;
February 27, 1999 - 17,598) 200 190
Class B:
Shares authorized - 12,000
Shares issued and outstanding - (November 27, 1999 - 6,267;
February 27, 1999 - 7,244) 63 72
Additional paid-in capital 122,245 121,954
Retained earnings 108,036 98,905
Treasury stock - (November 27, 1999 - 1,393;
February 27, 1999 - 1,363) (12,448) (12,442)
------------ -------------
Total stockholders' equity 218,096 208,679
------------ -------------
Total liabilities and stockholders' equity $321,758 $278,555
============ =============
</TABLE>
See accompanying notes.
Page 3 of 17
<PAGE>
THE FINISH LINE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty Nine Weeks Ended
------------------------------- ---------------------------------
Nov. 27, Nov. 28, Nov. 27, Nov. 28,
1999 1998 1999 1998
--------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 120,776 $ 109,655 $ 419,066 $ 370,976
Cost of sales (including occupancy expenses) 91,358 81,874 303,831 263,464
-------------- -------------- ---------------- --------------
Gross profit 29,418 27,781 115,235 107,512
Selling, general, and administrative expenses 33,208 27,454 101,955 86,096
-------------- -------------- ---------------- --------------
Operating income (loss) (3,790) 327 13,280 21,416
Interest income - net (204) (313) (768) (1,200)
-------------- -------------- ---------------- --------------
Income (loss) before income taxes (3,586) 640 14,048 22,616
Provision (benefit) for income taxes (1,255) 244 4,917 8,595
-------------- -------------- ---------------- --------------
Net income (loss) $ (2,331) $ 396 $ 9,131 $ 14,021
============== ============== ================ ==============
Basic net income (loss) per share $ (.09) $ .02 $ .37 $ .54
============== ============== ================ ==============
Basic weighted average shares 24,861 25,088 24,888 25,776
============== ============== ================ ==============
Diluted net income (loss) per share $ (.09) $ .02 $ .36 $ .54
============== ============== ================ ==============
Diluted weighted average shares 25,002 25,274 25,116 26,106
============== ============== ================ ==============
</TABLE>
See accompanying notes.
Page 4 of 17
<PAGE>
THE FINISH LINE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands) (Unaudited)
<TABLE>
<CAPTION>
Thirty-Nine Weeks Ended
-----------------------------------------
November 27, November 28,
1999 1998
----------------- ------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 9,131 $ 14,021
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 10,346 7,752
Contribution of treasury stock to profit sharing plan 683 981
Deferred income taxes 3,285 (630)
Loss on disposal of property and equipment 241 8
Changes in operating assets and liabilities:
Accounts receivable (9,553) (8,937)
Merchandise inventories (38,521) (16,591)
Other current assets (794) 194
Other assets 20 (33)
Accounts payable 12,418 18,750
Employee compensation and related payroll taxes (582) (909)
Accrued income taxes payable/recoverable (2,399) (5,337)
Other liabilities and accrued expenses 138 1,783
Deferred rent payments 775 540
----------------- ------------------
Net cash provided by (used in) operating activities (14,812) 11,592
INVESTING ACTIVITIES:
Purchases of property and equipment (18,682) (29,955)
Proceeds from disposal of property and equipment 289 4
Purchase of marketable securities -- (1,970)
Proceeds from maturity of short-term marketable securities 1,655 8,510
----------------- ------------------
Net cash used in investing activities (16,738) (23,411)
FINANCING ACTIVITIES:
Proceeds from short-term debt 38,600 24,100
Principal payments on short-term debt (18,900) (21,100)
Proceeds and tax benefits from exercise of stock options 293 2,287
Purchase of treasury stock (690) (12,442)
----------------- ------------------
Net cash used in (provided by) financing activities 19,303 (7,155)
----------------- ------------------
Net decrease in cash and cash equivalents (12,247) (18,974)
Cash and cash equivalents at beginning of period 23,113 28,113
----------------- ------------------
Cash and cash equivalents at end of period $ 10,866 $ 9,139
================= ==================
</TABLE>
See accompanying notes.
Page 5 of 17
<PAGE>
The Finish Line, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying unaudited financial statements of The Finish Line, Inc.
and its wholly-owned subsidiary Spike's Holding, Inc. (collectively the
"Company") have been prepared in accordance with generally accepted accounting
principles 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 generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments, considered
necessary for a fair presentation, have been included.
The Company has experienced, and expects to continue to experience,
significant variability in sales and net income from quarter to quarter.
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.
Except for the historical information contained herein, the matters
discussed in this filing are forward looking statements that involve risks and
uncertainties that could cause actual results to differ materially from those
expressed in any of the forward looking statements. Such risks and
uncertainties include, but are not limited to, product demand and market
acceptance risks, the effect of economic conditions, the effect of competitive
products and pricing, the availability of products, management of growth, and
the other risks detailed in the Company's Securities and Exchange Commission
filings.
These financial statements should be read in conjunction with the financial
statements and notes thereto for the year ended February 27, 1999.
Throughout this document, the term "fiscal 2000" refers to the Company's
current fiscal year which ends February 26, 2000.
2. Purchase of Treasury Stock
During the thirteen weeks ended November 27, 1999, the Company purchased
80,000 shares of its Class A Common Stock in the open market at an average price
of $8.63 per share for an aggregate purchase amount of $690,000. The Company has
purchased 1,393,000 shares of Class A Common Stock out of the 2.6 million shares
authorized by the Board. The treasury shares may be issued upon the exercise of
employee stock options or for other corporate purposes.
The Company's current stock repurchase program which was scheduled to
expire by its terms on December 31, 1999 has been extended by the Board through
and including December 31, 2000.
Page 6 of 17
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The following table and subsequent discussion sets forth operating data of
the Company as a percentage of net sales for the periods indicated below. The
following discussion and analysis should be read in conjunction with the
unaudited Financial Statements included elsewhere herein.
<TABLE>
<CAPTION>
Thirteen Thirty - Nine
Weeks Ended Weeks Ended
------------------------------ ------------------------------
Nov. 27, Nov. 28, Nov. 27, Nov. 28,
1999 1998 1999 1998
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Income Statement Data: (Unaudited)
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales (including occupancy costs) 75.6 74.7 72.5 71.0
--------- --------- --------- ---------
Gross profit 24.4 25.3 27.5 29.0
Selling, general and administrative expenses 27.5 25.0 24.3 23.2
--------- --------- --------- ---------
Operating income (loss) (3.1) .3 3.2 5.8
Interest income - net ( .2) (.3) (.2) (.3)
--------- --------- --------- ---------
Income (loss) before income taxes (2.9) .6 3.4 6.1
Provision (benefit) for income taxes (1.0) .2 1.2 2.3
--------- --------- --------- ---------
Net income (loss) (1.9)% .4% 2.2% 3.8%
========= ========= ========= =========
</TABLE>
Page 7 of 17
<PAGE>
Thirteen Weeks Ended 11/27/99 Compared to Thirteen Weeks Ended 11/28/98
Net sales increased 10.1% to $120.8 million for the thirteen weeks ended
November 27, 1999 from $109.7 million for the thirteen weeks ended November 28,
1998. This increase in net sales was primarily attributable to net sales from
new stores partially offset by a comparable store sales decrease. As of
November 27, 1999, the number of stores in operation increased 14.5% to 410 from
358 at November 28, 1998. During the thirteen weeks ended November 27, 1999, the
Company's comparable store sales decreased 3.7% compared to the same period in
the prior year. Comparable footwear net sales for the thirteen weeks ended
November 27, 1999 increased approximately 5.1% versus the thirteen weeks ended
November 28, 1998. Comparable activewear and accessories net sales decreased
approximately 23.7% for the comparable period. Activewear and accessories
continue to be negatively effected by a fashion shift by customers to
contemporary non-athletic brands and by a significant reduction in the average
unit selling price. Net sales per square foot decreased to $54 from $62 for the
same thirteen week period of the prior year.
Gross profit for the thirteen weeks ended November 27, 1999 was $29.4
million, an increase of $1.6 million over the thirteen weeks ended November 28,
1998. During this same period, gross profit decreased to 24.4% of net sales
versus 25.3% for the prior year. Of this 0.9% decrease, 1.7% was due to an
increase in occupancy costs as a percentage of net sales, which was partially
offset by a 0.6% increase in margins for product sold and a decrease in
inventory shrink expense of 0.2%.
Selling, general and administrative expenses increased $5.8 million (21.0%)
to $33.2 million (27.5% of net sales) for the thirteen weeks ended November 27,
1999 from $27.5 million (25.0% of net sales) for the thirteen weeks ended
November 28, 1998. This dollar increase was primarily attributable to the
operating costs related to operating 52 additional stores at November 27, 1999
versus November 28, 1998. The increase as a percentage of net sales is
primarily attributable to increased costs related to store payroll, depreciation
and advertising along with a comparable store decrease in sales during the
thirteen week period.
Net interest income was $204,000 (.2% of net sales) for the thirteen weeks
ended November 27, 1999, compared to net interest income of $313,000 (.3% of net
sales) for the thirteen weeks ended November 28, 1998, a decrease of $109,000.
This decrease was the result of reduced invested cash balances due to the
Company's funding of fiscal 2000 expansion and the purchase of treasury stock
under the Company's stock repurchase program.
The Company had a benefit for income taxes of $1.3 million for the thirteen
weeks ended November 27, 1999, as compared to a provision for income taxes of
$244,000 for the thirteen weeks ended November 28, 1998. The decrease is due to
the decreased level of income before income taxes for the thirteen weeks ended
November 27, 1999, along with a decrease in the effective tax rate to 35.0% for
the thirteen weeks ended November 27, 1999 from 38.0% for the thirteen weeks
ended November 28, 1998. The decrease in the effective tax rate is due to
ongoing tax planning initiatives.
Diluted net loss per share was $(.09) for the thirteen weeks ended November
27, 1999 compared to diluted net income per share of $.02 for the thirteen weeks
ended November 28, 1998. Diluted weighted average shares outstanding were
25,002,000 and 25,274,000 respectively, for the periods ended November 27, 1999
and November 28, 1998.
Page 8 of 17
<PAGE>
Thirty Nine Weeks Ended 11/27/99 Compared to Thirty Nine Weeks Ended 11/28/98
Net sales increased 13.0% to $419.1 million for the thirty nine weeks ended
November 27, 1999 from $371.0 million for the thirty nine weeks ended November
28, 1998. Of this increase, $21.7 million was attributable to a 14.5% increase
in the number of stores open during the period from 358 at November 28, 1998 to
410 at November 27, 1999. The balance of the increase was attributable to a
$33.8 million increase in net sales from the existing stores open only part of
the first thirty nine weeks of last year. These increases were partially offset
by a comparable store net sales decrease of 3.0% for the thirty nine weeks ended
November 27, 1999. Comparable footwear net sales for the thirty nine weeks
ended November 27, 1999 increased approximately 3.0%. Comparable activewear and
accessories net sales decreased approximately 20.1% for the comparable period.
Activewear and accessories continue to be negatively effected by a fashion shift
by customers to contemporary non-athletic brands. Net sales per square foot
decreased to $199 from $227 for the same period of the prior year. Sales per
square foot have been negatively impacted by the decrease in activewear sales
along with a 3.4% increase in the average store size from 5,853 square feet at
November 28, 1998 to 6,051 square feet at November 27, 1999.
Gross profit for the thirty nine weeks ended November 27, 1999 was $115.2
million, an increase of $7.7 million over the thirty nine weeks ended November
28, 1998. During this same period, gross profit decreased to 27.5% of net sales
versus 29.0% for the prior year. Of this 1.5% decrease, 1.6% was due to an
increase in occupancy costs as a percentage of net sales. Additionally, margin
for product sold decreased 0.1%, however it was offset by a 0.2% decrease in
inventory shrink expense.
Selling, general and administrative expenses increased $15.9 million (18.4%)
to $102.0 million (24.3% of net sales) for the thirty nine weeks ended November
27, 1999 from $86.1 million (23.2% of net sales) for the thirty nine weeks ended
November 28, 1998. This dollar increase was primarily attributable to the
operating costs related to operating 52 additional stores at November 27, 1999
versus November 28, 1998. The increase as a percentage of net sales is a
result of increased costs related to store payroll, depreciation and freight
along with a comparable store decrease in sales for the thirty nine weeks ended
November 27, 1999.
Net interest income was $768,000 (.2% of net sales) for the thirty nine
weeks ended November 27, 1999, compared to net interest income of $1.2 million
(.3% of net sales) for the thirty nine weeks ended November 28, 1998, a decrease
of $432,000. This decrease was primarily the result of reduced invested cash
balances due to the Company's funding of fiscal 2000 expansion.
The Company's provision for federal and state income taxes decreased $3.7
million for the thirty nine weeks ended November 27, 1999. The decrease is due
to the decreased level in income before income taxes for the thirty nine weeks
ended November 27, 1999, along with a decrease in the effective tax rate to
35.0% for the thirty nine weeks ended November 27, 1999 from 38.0% for the
thirty nine weeks ended November 28, 1998. The decrease in effective tax rate
is due to ongoing tax planning initiatives.
Diluted net income per share decreased 33.3% to $.36 for the thirty nine
weeks ended November 27, 1999 compared to diluted net income per share of $.54
for the thirty nine weeks ended November 28, 1998. Diluted weighted average
shares outstanding were 25,116,000 and 26,106,000 respectively for the periods
ended November 27, 1999 and November 28, 1998.
Page 9 of 17
<PAGE>
Liquidity and Capital Resources
The Company used cash of $14.8 million in its operating activities during
the thirty nine weeks ended November 27, 1999 as compared to generating cash
from its operating activities of $11.6 million during the thirty nine weeks
ended November 28, 1998. The decrease in cash generated by operating activities
was primarily the result of lower earnings and increased inventory levels net of
accounts payable.
The Company had a net use of cash from its investing activities, of $16.7
million and $23.4 million for the thirty nine week periods ended November 27,
1999 and November 28, 1998, respectively. Of the $16.7 million used in fiscal
2000, $18.7 million was used for new store construction and remodeling of
existing stores, which was partially offset by $1.7 million in net maturities of
marketable securities.
The Company anticipates that total capital expenditures for fiscal 2000 and
fiscal 2001 will be approximately $34 million and $17-21 million, respectively,
primarily for the opening of new stores and the remodeling of existing stores.
At November 27, 1999 the Company had cash equivalents of $10.9 million and
short-term marketable securities of $2.0 million. Cash equivalents are
primarily invested in tax exempt instruments with maturities of one to twenty-
eight days. Short-term marketable securities range in maturity from 90 - 365
days from date of purchase and are primarily invested in tax exempt municipal
obligations. In addition, the Company held long-term marketable securities of
$14.1 million at November 27, 1999. Long-term marketable securities are
primarily invested in tax exempt municipal obligations with maturities ranging
from one to five years.
In addition to the cash and marketable securities, the Company has a
$75,000,000 revolving line of credit which expires July 2003. The line of
credit contains restrictive covenants that limit, among other things, the
Company's ability to declare or pay dividends, incur or guarantee debt, redeem
shares of its capital stock, be a party to a merger, acquire or dispose of
assets or engage in any other transactions outside the ordinary course of
business. At November 27, 1999 the Company had borrowed $19.7 million under the
line and is in compliance with all restrictive covenants.
The Company had positive working capital of $109.6 million at November 27,
1999, an increase of $2.9 million from the working capital of $106.7 million at
February 27, 1999.
Merchandise inventories were $173.8 million at November 27, 1999 compared to
$135.3 million at February 27, 1999. On a per square foot basis, merchandise
inventories at November 27, 1999 were approximately flat compared to November
28, 1998, and were approximately 8.5% higher than at February 27, 1999. The
Company believes present levels are appropriate for the selling season and
industry environment.
The Company plans to increase its retail square footage by approximately
7.5% for fiscal 2001 which is a decrease from previously announced plans of
increasing retail square footage by approximately 15%. This change is a result
of the current industry environment and trends. Management believes that cash
on hand, operating cash flow and the Company's existing bank facility will
provide sufficient capital to complete the Company's fiscal 2001 store expansion
program and to satisfy the Company's other capital requirements through fiscal
2001.
Page 10 of 17
<PAGE>
Year 2000 Readiness
As of the date of this filing, January 4, 2000, the Company has not incurred any
significant business disruptions as a result of year 2000 issues (as defined
below). However, while no such occurance has developed as of the date of this
filing, year 2000 issues that may arise related to material Third Parties (as
defined below) may not become apparent immediately and therefore, there is no
assurance that the Company will not be affected by Third Party noncompliance in
the future. The Company will continue to monitor the issue vigilantly and work
to remediate any issues that may arise.
The year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Such software and
devices with embedded technology may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in system failures or
miscalculations leading to disruptions in the Company's operations, including,
among other things, a temporary inability to process transactions, receive
inventory from suppliers, ship inventory to stores, or engage in similar
business activities.
The Company's year 2000 Plan (Plan) was completed in four phases as it relates
to IT systems, non-IT systems and third party suppliers, vendors and service
providers ("Third Parties"). The four phases include inventory and assessment;
remediation; testing; and contingency planning.
The Company has undertaken initiatives to ensure that its information technology
(IT) systems and non-IT systems will function properly with respect to dates in
the year 2000 and thereafter. IT systems include hardware, accounting, data
processing, and telephone systems, cash registers, hand-held terminals,
scanning equipment, and other miscellaneous systems. Non-IT systems include
alarm systems, time clocks, fax machines, material handling equipment,
sprinklers, and heating, ventilating and air conditioning systems.
The Company has completed the four phases of the Plan as it relates to
substantially all IT and non-IT systems. The Company utilizes commercially
available packaged software to support the majority of its application needs. A
majority of such packages have been represented by the respective vendors as
year 2000 compliant. Testing to date has confirmed this.
Risks
The Company believes that Third Parties represent the area of greatest risk to
the Company including the potential failure of mall utilities and failure of
merchandise vendor production facilities. This is due to the Company's limited
ability to influence actions of the Third Parties, and because of the Company's
inability to estimate the level and impact of noncompliance of Third Parties in
some instances. Material Third Parties have been identified and the Company has
opened communication with them in regards to the year 2000 issue.
Correspondence was sent to material Third Parties and the Company has received
return correspondence from a large majority stating that they expect to be year
2000 compliant in 1999. The Company has performed follow-up inquiries with non-
responding Third Parties and has developed contingency plans as necessary.
Page 11 of 17
<PAGE>
The Company purchased 56% of its merchandise from Nike in fiscal 1999 and
expects merchandise purchases in fiscal 2000 to continue at a significant level.
Nike has publicly stated that a substantial number of their significant
suppliers and customers have not responded to Nike's surveys or provided
assurance of their year 2000 readiness or have not responded with sufficient
detail for Nike to determine their year 2000 readiness. However, as documented
in Nike's regulatory filings, they appear to have developed contingency plans to
mitigate the impact of year 2000 issues that may occur.
A majority of the products purchased by the Company from Nike and its other key
vendors are sourced in Asia. From the Company's review and through third party
sources, including key vendor disclosures, it appears that the Asian factories
which produce these products may have limited year 2000 exposure due to the
limited amount of automation. The Company does however have concerns regarding
infrastructure in Asia such as electric power and telecommunications. Such
failures could materially and adversely affect the Company's results of
operations, liquidity, and financial condition.
Contingency Plans
The Company has developed contingency plans with regards to the year 2000 issue.
The contingency plans for receipt of merchandise from the Company's key vendor,
Nike, have included taking receipt of product early and developing joint
contingency plans with Nike to insure continued timely receipt of product.
Contingency plans regarding store operations include distributing operating
procedures to store personnel, timely availability of replacement store
registers as necessary and the full staffing of our store systems support staff
during high risk periods.
Completed contingency plans for the Company's IT systems include, where
appropriate, manual work processes, insuring proper backup of all critical
systems prior to critical process dates, off-site system recovery availability
and insuring that personnel the Company deem essential to system operations and
recovery are scheduled to be available during high risk periods.
Although the Company anticipates no material business disruptions will occur as
a result of the year 2000 issue, there can be no assurance that the Company has
correctly anticipated the level, impact or duration of potential noncompliance
by its material Third Parties. As a result, there is no certainty that the
Company's contingency plans will be sufficient to mitigate the impact of
noncompliance by material Third Parties and this may result in a material
adverse effect to the Company regardless of the Company's contingency plans.
The failure of any contingency plans could have a material adverse effect on the
Company's results of operations, liquidity or financial condition.
Costs
Costs related to the year 2000 issue are funded through operating cash flows.
The Company has not incurred significant historic costs related to the year 2000
issue as systems have been upgraded as part of the Company's growth and normal
maintenance routines. Through November 27, 1999 the Company had expended
approximately $125,000 in remediation efforts, including the costs of new
software and modifying the applicable code of existing software. The Company
has expensed the majority of these costs to date.
The above section, even if incorporated by reference into other documents or
disclosures, is a year 2000 Readiness Disclosure as defined under the Year 2000
Information and Readiness Disclosure Act of 1998.
Page 12 of 17
<PAGE>
ITEM 1: Legal Proceedings
-----------------
None.
ITEM 2: Changes in Securities
---------------------
None.
ITEM 3: Defaults Upon Senior Securities
-------------------------------
None.
ITEM 4: Submission of Matters to a Vote of Security-Holders
---------------------------------------------------
None.
ITEM 5: Other Information
-----------------
None.
ITEM 6: Exhibits and Reports on Form 8-K:
---------------------------------
(a) Exhibits
10.29-Amendment to Revolving Credit Agreement among Spike's
Holding, Inc., and The Finish Line, Inc. dated May 4, 1997
11-Computation of Net Income Per Share.
27-Financial Data Schedule
(b) Reports on Form 8-K
None.
Page 13 of 17
<PAGE>
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: January 4, 2000 By:/s/ Steven J. Schneider
--------------------------
Steven J. Schneider
Sr. Vice President - Finance, Chief
Financial Officer and Assistant
Secretary
Page 14 of 17
<PAGE>
EXHIBIT 10.29
Amendment to Revolving Credit Agreement among Spike's Holding, Inc., and The
Finish Line, Inc. dated May 4, 1997
W I T N E S E T H:
Whereas, Spike's Holding, Inc., a Delaware corporation (the "Company") and The
Finish Line, Inc., a Delaware corporation (the "Borrower") have previously
entered in a Revolving Credit Agreement dated May 4, 1997 (the "Original
Agreement"), and
Whereas, the Company and the Borrower mutually desire to extend the termination
date to May 4, 2001 and increase the maximum loan amount from $50,000,000 to
$60,000,000, and
Whereas, the Company's Board of Directors has approved the extension of the
termination date and the increase in maximum loan amount as listed above on
September 27, 1999.
NOW THEREFORE, in consideration of the mutual covenants and agreements contained
herein and in the original agreement, the parties hereto agree to the following
amendment:
Article I - Definition of the following have been amended to read:
"Loan Commitment" shall mean the obligation of the Company to make Revolving
---------------
Loans up to an aggregate principal amount at any one time outstanding equal to
$60,000,000. The Company has the exclusive option of increasing the Loan
Commitment and any increase in such Loan Commitment shall be subject to the
terms and conditions contained herein.
"Termination Date" shall mean May 4, 2001, unless otherwise extended to a
----------------
later date by the Company pursuant to Section 2.05 hereof.
All other terms and conditions of the Original Agreement remain unchanged.
IN WITNESS WHEREOF, the parties have caused this Amendment #1 to the Revolving
Credit Agreement to be executed by their duly authorized officers as of
September 27, 1999.
Spike's Holding, Inc. The Finish Line, Inc.
By: /s/ Linda M. Disher By: /s/ Steven J. Schneider
------------------- -----------------------
Name: Linda M. Disher Name: Steven J. Schneider
Title: President Title: Sr. VP - Finance & Asst.
Secretary
<PAGE>
EXHIBIT 11
COMPUTATION OF NET INCOME PER SHARE
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Thirteen Thirty - Nine
Weeks Ended Weeks Ended
------------------------- ------------------------
Nov. 27, Nov. 28, Nov. 27, Nov. 28,
1999 1998 1999 1998
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Basic
- -----
Average shares outstanding 24,861 25,088 24,888 25,776
======== ======== ======== ========
Net income (loss) $ (2,331) $ 396 $ 9,131 $ 14,021
======== ======== ======== ========
Per share amount $ ( .09) $ .02 $ .37 $ .54
======== ======== ======== ========
Diluted
- -------
Average shares outstanding 24,861 25,088 24,888 25,776
Net effect of dilutive stock options 141 186 228 330
-------- -------- -------- --------
Total 25,002 25,274 25,116 26,106
======== ======== ======== ========
Net income (loss) $ (2,331) $ 396 $ 9,131 $ 14,021
======== ======== ======== ========
Per Share amount $ ( .09) $ .02 $ .36 $ .54
======== ======== ======== ========
</TABLE>
Page 16 of 17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from financial
statements for the thirty-nine weeks ended November 27, 1999 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-26-2000
<PERIOD-END> NOV-27-1999
<CASH> 10,866
<SECURITIES> 2,009
<RECEIVABLES> 16,504
<ALLOWANCES> 0
<INVENTORY> 173,824
<CURRENT-ASSETS> 207,191
<PP&E> 136,690
<DEPRECIATION> 38,450
<TOTAL-ASSETS> 321,758
<CURRENT-LIABILITIES> 97,545
<BONDS> 0
0
0
<COMMON> 263
<OTHER-SE> 217,833
<TOTAL-LIABILITY-AND-EQUITY> 321,758
<SALES> 419,066
<TOTAL-REVENUES> 419,066
<CGS> 303,831
<TOTAL-COSTS> 303,831
<OTHER-EXPENSES> 101,955
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (768)
<INCOME-PRETAX> 14,048
<INCOME-TAX> 4,917
<INCOME-CONTINUING> 9,131
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,131
<EPS-BASIC> .37
<EPS-DILUTED> .36
</TABLE>
