-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UqlJAsg+gxEPoYc+kayzWJMyc532agJnhbUUq5Z2ZUaquinPObRaf2yPBsjgGdbb fWpRTsiGQ936IxolQZ+3VQ== /in/edgar/work/20000628/0000898430-00-001938/0000898430-00-001938.txt : 20000920 0000898430-00-001938.hdr.sgml : 20000920 ACCESSION NUMBER: 0000898430-00-001938 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000527 FILED AS OF DATE: 20000628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FINISH LINE INC /DE/ CENTRAL INDEX KEY: 0000886137 STANDARD INDUSTRIAL CLASSIFICATION: [5661 ] IRS NUMBER: 351537210 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20184 FILM NUMBER: 663554 BUSINESS ADDRESS: STREET 1: 3308 N MITTHOEFFER RD CITY: INDINAPOLIS STATE: IN ZIP: 46236 BUSINESS PHONE: 3178991022 MAIL ADDRESS: STREET 1: 3308 N MITTHOEFFER ROAD CITY: INDIANAPOLIS STATE: IN ZIP: 46236 10-Q 1 0001.txt THE FINISH LINE - 10-Q - 5/27/2000 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 May 27, 2000 ------------ 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 identification number) of incorporation or organization) 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 June 16, 2000: Class A 18,212,615 Class B 6,267,375 1 PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS THE FINISH LINE, INC. CONSOLIDATED BALANCE SHEETS (In thousands)
May 27, February 26, 2000 2000 ---------------- ---------------- (unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 9,621 $ 13,061 Marketable securities 8,878 11,420 Accounts receivable 12,583 9,555 Merchandise inventories 169,013 148,979 Income taxes recoverable -- 756 Other 2,071 1,473 ----------- ----------- Total current assets 202,166 185,244 PROPERTY AND EQUIPMENT: Land 315 315 Building 10,385 10,391 Leasehold improvements 94,047 89,909 Furniture, fixtures, and equipment 40,947 40,737 Construction in progress 1,051 2,087 ----------- ----------- 146,745 143,439 Less accumulated depreciation 45,389 41,820 ----------- ----------- 101,356 101,619 OTHER ASSETS: Deferred income taxes 2,467 2,023 Other 190 209 ----------- ----------- 2,657 2,232 ----------- ----------- $306,179 $289,095 =========== ===========
See accompanying notes. 2 THE FINISH LINE, INC. CONSOLIDATED BALANCE SHEETS (In thousands)
May 27, February 26, 2000 2000 ------------- --------------- (unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 56,864 $ 42,188 Employee compensation 2,906 4,637 Accrued income taxes 705 -- Accrued property and sales taxes 3,694 4,097 Deferred income taxes 4,807 3,839 Other liabilities and accrued expenses 3,672 5,585 -------- -------- Total current liabilities 72,648 60,346 Long-term deferred rent payments 6,572 6,357 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 and outstanding - (May 27, 2000 - 19,994; February 26, 2000 - 19,988) 200 200 Class B: Shares authorized - 12,000 Shares issued and outstanding - (May 27, 2000 - 6,268; February 26, 2000 - 6,268) 63 63 Additional paid-in capital 122,593 122,269 Retained earnings 118,305 114,512 Accumulated other comprehensive loss (74) (41) Treasury stock - (May 27, 2000 - 1,781; February 26, 2000 - (14,128) (14,611) 1,785) -------- -------- Total stockholders' equity 226,959 222,392 -------- -------- Total liabilities and stockholders' equity $306,179 $289,095 ======== ========
See accompanying notes. 3 THE FINISH LINE, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited)
Thirteen Weeks Ended May 27, May 29, 2000 1999 -------- -------- Net sales $146,657 $132,296 Cost of sales (including occupancy expense) 106,013 95,170 -------- -------- Gross profit 40,644 37,126 Selling, general, and administrative expenses 34,846 31,705 -------- -------- Operating income 5,798 5,421 Interest income - net 223 281 -------- -------- Income before income taxes 6,021 5,702 Provision for income taxes 2,228 1,996 -------- -------- Net income $ 3,793 $ 3,706 ======== ======== Basic net income per share $.16 $.15 ======== ======== Basic weighted average shares 24,413 24,885 ======== ======== Diluted net income per share $.15 $.15 ======== ======== Diluted weighted average shares 24,665 25,198 ======== ========
See accompanying notes. 4 THE FINISH LINE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) - (Unaudited)
Thirteen Weeks Ended May 27, May 29, 2000 1999 ---------- ---------- OPERATING ACTIVITIES: Net Income $ 3,793 $ 3,706 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 4,074 3,680 Contribution of treasury stock to pension plan 1,758 683 Deferred income taxes 524 (352) Loss on disposal of property and equipment 18 150 Changes in operating assets and liabilities: Accounts receivable (3,028) (3,465) Merchandise inventories (20,034) (15,125) Other current assets (598) (430) Other assets 19 (7) Accounts payable 14,676 6,850 Employee compensation and related payroll taxes (1,731) (1,735) Accrued income taxes 1,461 1,736 Other liabilities and accrued expenses (2,316) (865) Deferred rent payments 215 325 ---------- ---------- Net cash used in operating activities (1,169) (4,849) INVESTING ACTIVITIES: Purchases of property and equipment (3,878) (4,562) Proceeds from disposal of property and equipment 49 166 Proceeds from sale of marketable securities 2,509 504 ---------- ---------- Net cash used in investing activities (1,320) (3,892) FINANCING ACTIVITIES: Proceeds and tax benefits from exercise of stock options 37 165 Purchase of treasury stock (988) -- ---------- ---------- Net cash provided by (used in) financing activities (951) 165 ---------- ---------- Net decrease in cash and cash equivalents (3,440) (8,576) Cash and cash equivalents at beginning of period 13,061 23,113 ---------- ---------- Cash and cash equivalents at end of period $ 9,621 $ 14,537 ========= ==========
See accompanying notes 5 The Finish Line, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The accompanying unaudited consolidated 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 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. 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 26, 2000. 2. Revenue Recognition On December 3, 1999, the SEC staff released Staff Accounting Bulletin No. 101, "Revenue Recognition" ("SAB No. 101") to provide guidance on the recognition, presentation and disclosure of revenue in financial statements. SAB No. 101 does not change existing literature on revenue recognition, but rather it clarifies the staff's position on pre-existing literature. The new standard did not require management to change existing revenue recognition policies and therefore had no impact on the Company's reported financial position or results of operations as of May 27, 2000. 6 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.
Thirteen Weeks Ended May 27, May 29, 2000 1999 --------- --------- (Unaudited) Net Sales 100.0% 100.0% Cost of sales (including occupancy expenses) 72.3 71.9 ---------- ---------- Gross profit 27.7 28.1 Selling, general and administrative expenses 23.8 24.0 ---------- ---------- Operating income 3.9 4.1 Interest income - net (.2) (.2) ---------- ---------- Income before income taxes 4.1 4.3 Provision for income taxes 1.5 1.5 ---------- ---------- Net income 2.6% 2.8% ========== ==========
THIRTEEN WEEKS ENDED MAY 27, 2000 COMPARED TO THIRTEEN WEEKS ENDED MAY 29, 1999 Net sales increased 10.9% to $146.7 million for the thirteen weeks ended May 27, 2000 from $132.3 million for the thirteen weeks ended May 29, 1999. Of this increase, $14.2 million was attributable to a 14.0% increase in the number of stores open during the period from 371 at May 29, 1999 to 423 at May 27,d 2000. The balance of the increase was attributable to a $900,000 increase in net sales from the fourteen existing stores open only part of the first three months of last year. These increases were partially offset by a comparable store sales decrease of 0.7% for the thirteen weeks ended May 27, 2000 for those stores opened during the entire three months of last year. Comparable net footwear sales for the thirteen weeks ended May 27, 2000 increased 2.6% versus the thirteen weeks ended May 29, 1999. Comparable net activewear and accessories sales decreased 13.3% 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 9.1% to $60 for the thirteen weeks ended May 27, 2000 compared to $66 for the comparable period of the prior year. Sales per square foot have been negatively impacted by the decrease in activewear sales along with an 2.4% increase in the average store size from 5,924 square feet at May 29, 1999 to 6,068 square feet at May 27, 2000. 7 Gross profit for the thirteen weeks ended May 27, 2000 was $40.6 million, an increase of $3.5 million over the thirteen weeks ended May 29, 1999. During this same period, gross profit decreased to 27.7% of net sales versus 28.1% for the prior year. Of this 0.4% decrease, 0.7% was due to an increase in occupancy costs as a percentage of net sales which was partially offset by a 0.3% increase in margin for products sold. Selling, general and administrative expenses increased $3.1 million (9.9%) to $34.8 million (23.8% of net sales) for the thirteen weeks ended May 27, 2000 from $31.7 million (24.0% of net sales) for the thirteen weeks ended May 29, 1999. This dollar increase was primarily attributable to the operating costs related to operating 52 additional stores at May 27, 2000 versus May 29, 1999. In addition, current year selling, general and administrative expenses are net of a $493,000 settlement of an insurance claim related to a store fire. Net interest income was $223,000 (.2% of net sales) for the thirteen week period ended May 27, 2000 compared to $281,000 (.2% of net sales) for the thirteen weeks ended May 29, 1999, a decrease of $58,000. The Company's provision for income taxes increased $232,000 for the thirteen weeks ended May 27, 2000 over the thirteen weeks ended May 29, 1999. The increase is due to the increased level of income before income taxes for the thirteen weeks ended May 27, 2000, and an increase in the effective tax rate to 37% for the thirteen weeks ended May 27, 2000 from 35% for the thirteen weeks ended May 29, 1999. The increase in the effective tax rate is due to reduced tax exempt interest income and increased state taxes. Net income increased 2.3% to $3.8 million for the thirteen weeks ended May 27, 2000 compared to $3.7 million for the thirteen weeks ended May 29, 1999. Diluted net income per share was $.15 for both comparable periods ended May 27, 2000 and May 29, 1999. Diluted weighted average shares outstanding were 24,665,000 and 25,198,000, respectively, for the thirteen weeks ended May 27, 2000 and May 29, 1999. The decrease of 2.1% in diluted average shares outstanding is principally the result of the repurchase of 633,400 shares of Class A Common Stock since May 29, 1999 through the stock buyback program authorized by the Board of Directors in September 1998 which expires on December 31, 2000. Liquidity and Capital Resources The Company had a net use of cash of $1.2 million from its operating activities during the thirteen weeks ended May 27, 2000 as compared to a net use of cash from operating activities of $4.8 during the quarter ended May 29, 1999. The Company had a net use of cash from its investing activities of $1.3 million and $3.9 million for the thirteen weeks ended May 27, 2000 and May 29, 1999, respectively. The $1.3 million use of cash in 2000 is primarily due to new and remodeled stores construction totaling $3.9 million, partially offset by the proceeds from the sale of marketable securities. The Company's working capital was $129.5 million at May 27, 2000 which was a $4.6 million increase from $124.9 million at February 26, 2000. Merchandise inventories were $169.0 million at May 27, 2000 compared to $149.0 million at February 26, 2000. On a per square foot basis, merchandise inventories at May 27, 2000 decreased 3.8% compared to May 29, 1999, and were 9.6% higher than at February 26, 2000. The Company believes present levels are appropriate for the selling season. 8 At May 27, 2000, the Company had cash and cash equivalents of $9.6 million and an additional $8.9 million in marketable securities. Cash equivalents are primarily invested in tax exempt instruments with maturities of one to twenty- eight days. Marketable securities represent securities that range in maturity from 90 days to four years and are primarily invested in tax exempt municipal obligations. Marketable securities are classified as available-for-sale and are available to support current operations. The Company's previously announced expansion plans are to increase its retail square footage by approximately 7-8% for fiscal 2001. Management believes that cash and marketable securities on hand, operating cash flow and the Company's existing bank facility in the amount of $75,000,000 which expires on July 10, 2003, 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. 9 PART II - OTHER INFORMATION 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 27 - Financial Data Schedule (b) Reports on Form 8-K None. 10 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: June 27, 2000 By: /s/ Steven J. Schneider ----------------------- Steven J. Schneider, Executive Vice President - Finance, Chief Financial Officer and Assistant Secretary 11 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from financial statements for thirteen weeks ended May 27, 2000 and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS MAR-03-2001 MAY-27-2000 9,621 8,878 12,583 0 169,013 202,166 146,745 45,389 306,179 72,648 0 0 0 263 226,696 306,179 146,657 146,657 106,013 106,013 34,846 0 (223) 6,021 2,228 3,793 0 0 0 3,793 .16 .15
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