10-K 1 d10k.txt FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------- FORM 10-K (Mark One) [X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended March 2, 2002 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 of Incorporation) (I.R.S. Employer ID No.) 3308 N. Mitthoeffer Road, Indianapolis, Indiana 46235 Registrant's telephone number, including area code: (317) 899-1022 ----------------- Securities registered pursuant to Section 12(b) of the Act: (Title of Each Class) (Name of each exchange on which registered) None None Securities registered pursuant to Section 12(g) of the Act: Class A Common Stock, $.01 par value ----------------- 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this form 10-K. [X] The aggregate market value of the voting stock held by non-affiliates of the Registrant as of April 26, 2002 was approximately $355,261,000, which was based on the last sale price reported for such date by NASDAQ. The number of shares of the Registrant's Common Stock outstanding on April 26, 2002 was: Class A Common Stock: 20,078,995 Class B Common Stock: 4,350,810 DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's Proxy Statement dated June 18, 2002 for the Annual Meeting of Stockholders to be held on July 18, 2002 (hereinafter referred to as the "2002 Proxy Statement") are incorporated into Part III. Portions of the Registrant's Annual Report to Stockholders for the fiscal year ended March 2, 2002, (hereinafter referred to as the "2002 Annual Report to Stockholders") are incorporated into Parts II and IV. 1 PART I ------ Item 1 - Business General ------- The Finish Line, Inc. together with its wholly owned subsidiary Spike's Holding, Inc. (the "Company" or "Finish Line") is one of the largest mall-based specialty retailers of brand name athletic, outdoor and lifestyle footwear, activewear and accessories in the United States. As of May 4, 2002, the Company operated 449 stores in 43 states. A Finish Line store generally carries a large selection of men's, women's and children's athletic and lifestyle shoes, as well as a broad assortment of activewear and accessories. Brand names offered by the Company include Nike, adidas, Reebok, New Balance, K-Swiss, And 1, Timberland, Asics, Saucony, Converse and Skechers. The Company attempts to distinguish itself from other athletic footwear specialty retailers through larger mall-based store formats. Finish Line stores average 6,001 square feet, and the Company's stores opened during fiscal 2002 averaged approximately 4,555 square feet. The Company's strategy is to create an exciting and entertaining retail environment by continually updating store designs, and to operate a larger store size, which permits greater product depth and merchandising flexibility. Since activewear and accessories generally carry higher gross margins than footwear, Finish Line devotes a greater percentage of its sales area to these products than typical athletic footwear specialty stores. Activewear and accessories accounted for approximately 18% of the Company's net sales in fiscal 2002. The Company's principal executive offices are located at 3308 N. Mitthoeffer Road, Indianapolis, Indiana 46235, and its telephone number is (317) 899-1022. Operating Strategies -------------------- Finish Line seeks to be a leading specialty retailer of athletic footwear and activewear in the markets it serves. To achieve this, the Company has developed the following elements to its business strategy: Emphasis on Customer Service and Convenience. The Company is committed to making the shopping experience at Finish Line rewarding and enjoyable, and seeks to achieve this objective by providing convenient mall-based locations with highly functional store designs, offering competitive prices on brand name products, maintaining optimal in-stock levels of merchandise and employing knowledgeable and courteous sales associates. Inventory Management. The Company stresses effective replenishment and distribution to each store. The Company's advanced information and distribution systems enable it to track inventory in each store by stockkeeping unit (SKU) on a daily basis, giving Finish Line flexibility to merchandise its products effectively. In addition, these systems allow the Company to respond promptly to changing customer preferences and to maintain optimal inventory levels in each store. The Company's inventory management system features automatic replenishment driven by point-of-sale (POS) data capture and a highly automated distribution center, which enables Finish Line to ship merchandise to each store every third day. 2 Product Diversity; Broad Demographic Appeal. Finish Line stocks its stores with a combination of the newest high profile and brand name merchandise, unique products manufactured exclusively for the Company, as well as promotional and opportunistic purchases of other brand name merchandise. Product diversity, in combination with the Company's store formats and commitment to customer service, is intended to attract a broad demographic cross-section of customers. Expansion Strategies -------------------- The Company's objective is to continue its store expansion program by introducing Finish Line stores into new markets as well as increasing its visibility in previously established markets. New Store Openings. Since the Company's initial public offering in June 1992, Finish Line has expanded from 104 stores to 449 stores at May 4, 2002. The Company opened 27 new stores in fiscal 2002 and intends to open approximately 30 new stores in fiscal 2003. Total square footage increased 2% in fiscal 2002 over the prior year as a result of the Company's continued expansion. For fiscal 2003 the Company plans to increase its total square footage open by approximately 3% to 5% (30 new stores). Almost all of this square footage growth will result from the continued emphasis on smaller traditional stores averaging approximately 5,000 square feet. The Company expects that its new stores will be in both new and existing geographic markets. Store Format. The Company has added both small and larger stores to its chain over the past five years. This strategy allows for greater flexibility based on market factors when considering a new store. The Company believes this strategy improves its ability to compete against both mall-based and non-mall-based athletic retailers, and in conjunction, the Company has developed two store formats: Traditional Format Concept - The Company as of May 4, 2002 operates 410 traditional format stores which are less than 10,000 square feet in size. They typically are stocked with 600-700 footwear styles and 10,000+ shoes. While the average size of all traditional concept stores is 5,201 square feet, traditional concept stores opened in fiscal 2002 averaged 4,555 square feet. Larger Format Concept - The Company as of May 4, 2002 operates 39 larger format stores which are more than 10,000 square feet in size. They are typically stocked with 1,000 - 1,300 footwear styles and 20,000 - 30,000+ shoes. This format offers Finish Line the opportunity to establish a dominant presence in the best major malls throughout the country. The Company did not open any larger format stores during fiscal year 2002 due to slower sales of activewear and does not expect to open any larger format stores in 2003. Commitment to Continually Strengthen Infrastructure. Over the last several years, Finish Line has made a number of strategic infrastructure investments, including enhancements to its management, store operations, and distribution and information systems. Significant management additions and organizational changes include recruiting additional management professionals with significant industry experience, as well as centralizing the supervision of the footwear and activewear/accessories departments to improve communication and coordination between the two areas. In addition, staffs in both departments have been increased to allow the buyers and merchandisers to focus more time and attention on specific product categories. 3 The Company has also invested in management information systems and the distribution center by implementing Electronic Data Interchange (EDI) and radio frequency (RF) technologies in inventory management/distribution areas. Both technologies are designed to improve the efficiency of inventory management as well as response time and in-stock position. Merchandise ----------- The following table sets forth the percentage of net sales attributable to the categories of footwear, activewear and related accessories during the periods indicated. These percentages fluctuate substantially during the different consumer buying seasons. To take advantage of this seasonality, the Company's stores have been designed to allow for a shift in emphasis in the merchandise mix between footwear and activewear/accessory items. Year Ended ---------------------------------- March 2, March 3, Feb. 26, Category 2002 2001 2000 -------- ------- -------- -------- Footwear 82% 80% 77% Activewear/Accessories 18% 20% 23% ------ ------ ------ Total 100% 100% 100% ====== ====== ====== All merchandising decisions, including merchandise mix, pricing, promotions and markdowns, are made at the corporate headquarters. The store manager and district manager, along with management at the Company's headquarters, review the merchandise mix to adapt to permanent or temporary changes or trends in the marketplace. The Company adopted a more aggressive strategy in selling aged inventory during fiscal 2001, which allowed the Company to reconfigure merchandise assortments to place greater emphasis on better performing fresher merchandise. This has lead to improved inventory turns and merchandise product margins. The Company's activewear/accessories sales have been negatively affected by a fashion shift from branded apparel and more recently by a transition to new merchandising strategies. As a result, activewear/accessories have decreased as a percent of total sales from 32% at March 1, 1997 to 18% at March 2, 2002. The Company believes that activewear/accessories sales will represent 18-20% of total sales in fiscal 2003. Footwear -------- Finish Line's distinctive shoe wall is stocked with the latest in athletic, casual and outdoor footwear that the industry has to offer, including: Nike, adidas, Reebok, Timberland, And 1, K-Swiss, New Balance, Asics, Converse, Fila, Skechers and many others. To make shopping easier for customers, footwear is categorized into definable sections including: basketball, cross-training, running, fitness, tennis, cleated, golf, outdoor, casual and lifestyle. Most categories are available in men's, women's and children's styles. 4 Activewear/Accessories ---------------------- Many of the same companies, that supply Finish Line with quality footwear, also supply activewear, including products made by Nike, adidas and Reebok. Additional suppliers include And 1, along with outdoor activewear from Columbia and Timberland. Many vendors offer footwear, activewear and accessories in "collections". Categories of activewear consist of jackets, caps, tops, pants, shorts, windwear, running wear, warm-ups, fleece, fitness wear and sport-casual wear. In addition, the Company carries licensed apparel and caps which has gained strength this past year. Among the accessories offered by the Company are socks, athletic bags, backpacks, sunglasses, watches and shoe-care products. The Company's apparel sales continued to perform poorly during fiscal 2002 and were even further negatively affected by managements transition to new merchandising strategies undertaken by a new apparel buying team, however, during the fourth quarter of fiscal 2002, the Company reported a positive apparel/accessory comparable sales gain for the first time in fifteen quarters. The Company is working closely with the branded apparel vendors to continue this positive sales trend and has been developing new private label product offerings to provide more competitive introductory price points in key product categories. In March 2002, the Company launched its new private brand apparel line, Finish Line Blue Label. The Finish Line Blue Label brand is targeted toward the recently defined marketing edit point of a young, college-aged consumer who is "action addicted". Marketing --------- The Company attempts to reach its target audience by using a multifaceted approach to marketing and advertising on national, regional and local levels. The Company utilizes television, direct mail, consumer print, outdoor, and the internet in its marketing efforts. The Company also takes advantage of advertising and promotional assistance from many of its suppliers. This assistance takes the form of cooperative advertising programs, in-store sales incentives, point-of-purchase materials, product training for employees and other programs. Total advertising expense for fiscal 2002 and fiscal 2001 was 1.6% of net sales, after deducting co-op reimbursements, for both years, respectively. These percentages fluctuate substantially during the different consumer buying seasons. The Company also believes that it benefits from the multimillion dollar advertising campaigns of its key suppliers, such as Nike, adidas, and Reebok. The Company also uses in-store contests, promotions and event sponsorships, as well as a comprehensive public relations effort to further market the Company. Purchasing and Distribution --------------------------- Finish Line's footwear purchasing is coordinated through a centralized merchandising department under the direction of an Executive Vice President-Chief Merchandising Officer. The buying and merchandise departments are comprised of approximately 45 people. The footwear and activewear/accessories divisions consist of a Vice-President-Footwear, a Vice-President-Apparel, divisional merchandise managers, multiple buyers and associate buyers. Both buying divisions are supported by a planning and merchandising division, which consists of planners, merchandisers and administrative assistants. 5 The Company believes that its ability to buy in large quantities directly from suppliers enables it to obtain favorable pricing and trade terms. Currently, the Company purchases product from approximately 140 suppliers and manufacturers of athletic and fashion products, the largest of which (Nike) accounted for approximately 56% and 53% of total purchases in fiscal 2002 and fiscal 2001, respectively. The Company purchased approximately 78% of total merchandise in both fiscal 2002 and fiscal 2001, respectively, from its five largest suppliers. The Company and its vendors use EDI technology to streamline purchasing and distribution operations. The Company has implemented warehouse management computer software for distribution center processing that features RF technology. This system has helped improve productivity and accuracy as well as reduce the time it takes to send merchandise to stores. The Company believes this innovative technology will continue to improve its operations as well as allow for real-time tracking of inventory within the distribution center and in transit to the stores. Nearly all of the Company's merchandise is shipped directly from suppliers to the distribution center, where the Company processes and ships it by contract and common carriers to its stores. Each day shipments are made to one-third of the Company's stores. In any three-week period, each store will receive five shipments. A shipment is normally received one to four days from the date that the order is filled depending on the store's distance from the distribution center. Historically, the Company maintains approximately two-thirds of a month's supply of merchandise at the distribution center and in turnout to the stores. Management Information System ----------------------------- The Company has a computerized management information system, which includes a local area network of computers at corporate headquarters used by management to support decision-making along with PC-based POS computers at the stores. Store computers are connected via frame relay to computers at corporate headquarters. A perpetual inventory system permits corporate management to review daily each store's inventory by department, class and SKU. This system includes an automated replenishment system that allows the Company to replace faster-selling items more quickly. Store associates are able to use the WAN and perpetual inventory system to locate and sell merchandise that can then be fulfilled from another store. Other functions in the system include accounting, distribution, inventory tracking and control. Store Operations ---------------- The Company's Executive Vice President - Store Operations, Senior Vice President-Store Personnel and regional and district managers visit the stores regularly to review the implementation of Company plans and policies, monitor operations, and review inventories and the presentation of merchandise. Accounting and general financial functions for the stores are conducted at corporate headquarters. Each store has a store manager or co-managers that are responsible for supervision and overall operations, one or more assistant managers and additional full and part-time sales associates. Regional, district and store managers receive a fixed salary and are eligible for bonuses, based primarily on sales, payroll and shrinkage performance goals of the stores for which they are responsible. All assistant store managers and sales associates are paid on an hourly basis. 6 Real Estate ----------- As of May 4, 2002, Finish Line operated 449 stores in 43 states. With the exception of five strip-center stores, all Finish Line stores are located in enclosed shopping malls. The typical store format has a sales floor, which includes a try-on area, and a display area where each style of footwear carried in the store is displayed by category (e.g., basketball, tennis, running), and an adjacent stock room where the footwear inventory is maintained. Sales floors in all stores represent approximately 65% to 75% of the total space. Finish Line believes that its ability to obtain attractive, high traffic store locations, such as enclosed malls, to be a critical element of its business and a key factor in its future growth and profitability. In determining new store locations, management evaluates market areas, in-mall locations, "anchor" stores, consumer traffic, mall sales per square foot, competition and occupancy, construction and other costs associated with opening a store. The Company believes that the number of desirable store sites likely to be available in the future will permit it to implement its growth strategy in total square footage. Finish Line leases all of its stores. Initial lease terms of the stores generally range from five to ten years in duration without renewal options, although some of the stores are subject to leases for five years with one or more renewal options. The leases generally provide for a fixed minimum rental plus a percentage of sales in excess of a specified amount. Based upon expenditures for fiscal 2002, the Company estimates that the cash requirements during fiscal 2003 for opening a traditional new store (averaging approximately 5,000 square feet) will approximate $500,000. This estimate includes $325,000 for fixtures, equipment, leasehold improvements and pre-opening expenses plus $275,000 ($175,000 net of payables) in inventory investment. Competition ----------- The Company's business is highly competitive. Many of the products the Company sells are sold in department stores, national and regional full-line sporting goods stores, athletic footwear specialty stores, athletic footwear superstores, discount stores, traditional shoe stores mass merchandisers, and internet e-tailers. Some of the Company's primary competitors are large national and/or regional chains that have substantially greater financial and other resources than Finish Line. Among the Company's competition are stores that are owned by major suppliers to the Company. To a lesser extent, the Company competes with mail order and local sporting goods and athletic specialty stores. In many cases, the Company's stores are located in enclosed malls or shopping centers in which one or more competitors also operate. Typically, the leases, which the Company enters into, do not restrict the opening of stores by competitors. The Company attempts to differentiate itself from its competition by operating larger, more attractive, well-stocked stores in high retail traffic areas, with competitive prices and knowledgeable and courteous customer service. The Company attempts to keeps its prices competitive with athletic specialty and sporting goods stores in each trade area, including competitors that are not necessarily located inside the mall. The Company believes it accomplishes this by effectively mixing high profile and brand name merchandise with promotional and opportunistic purchases of other brand name merchandise and by controlling expenses, especially administrative and overhead expenses, with small, efficient departments throughout the organization. 7 Seasonal Business ----------------- The Company's business follows a seasonal pattern, peaking over a total of approximately 12 weeks during the late summer (late July through early September) and holiday (Thanksgiving through Christmas) periods. During the fiscal years ended March 2, 2002, and March 3, 2001 these periods accounted for approximately 33% of the Company's annual sales. Employees --------- As of May 4, 2002, the Company employed 9,148 persons, 2,419 of whom were full-time and 6,729 of whom were part-time. Of this total, 508 were employed at the Company's Indianapolis, Indiana corporate headquarters and distribution center and 35 were employed as regional and district managers. Additional part-time employees are typically hired during the back-to-school and holiday seasons. None of the Company's employees are represented by a union and employee relations are generally considered good. Retirement Plan --------------- For the plan year ended December 31, 2001, the Company contributed cash in the amount of $1,088,000 to the Company's Profit Sharing Plan. While no assurances can be given that it will continue to do so in the future, the Company has in the past purchased on the open market its Class A Common Stock and later contributed it in lieu of cash to the Company's Profit Sharing Plan. The Company made no such contributions of stock during fiscal 2002. During 2001 the Company amended and restated the plan to add a 401(K) feature whereby the Company matches 100 percent of employee contributions to the plan up to three percent of the employee's wages. The Company contributed matching funds of approximately $739,000 in fiscal 2002. Trademarks ---------- The Company has registered in the United States Patent and Trademark Office several trademarks relating to its business. The Company believes its trademark and service mark registrations are valid, and it intends to be vigilant with regard to infringing or diluting uses by other parties, and to enforce vigorously its rights in its trademarks and service marks. Item 2 - PROPERTIES In November 1991, the Company moved into its existing corporate headquarters and distribution center located on 16 acres in Indianapolis, Indiana. The facility, which is owned by the Company, was designed and constructed to the Company's specifications and includes automated conveyor and storage rack systems designed to reduce labor costs, increase efficiency in processing merchandise and enhance space productivity. In 1992, the Company purchased an additional 17 adjacent acres, thus bringing the total size of the headquarters property to 33 acres. The facility currently includes 46,000 square feet of office space and 256,000 square feet of warehouse space. In fiscal 2003, the Company plans to commence a 275,000 square foot addition to the office and distribution center in Indianapolis, Indiana. The Company believes the 33 acres will permit the headquarters and distribution center to be expanded to an aggregate of approximately 675,000 square feet through the expansion of the existing building and construction of additional buildings. 8 Store Locations --------------- At May 4, 2002, the Company operated 449 stores in 43 states. With the exception of five strip center stores, all Finish Line stores are located in enclosed shopping malls. The following table sets forth information concerning the Company's stores. STATE TOTAL STATE TOTAL ------------------------ --------- ------------------------- --------- Alabama 3 Missouri 11 Arizona 9 Nebraska 4 Arkansas 4 Nevada 1 California 11 New Hampshire 4 Colorado 8 New Jersey 10 Connecticut 4 New Mexico 1 Delaware 1 New York 24 Florida 21 North Carolina 17 Georgia 17 North Dakota 2 Idaho 1 Ohio 38 Illinois 34 Oklahoma 7 Indiana 24 Oregon 2 Iowa 8 Pennsylvania 27 Kansas 8 South Carolina 5 Kentucky 8 South Dakota 1 Louisiana 4 Tennessee 14 Maine 1 Texas 33 Maryland 16 Vermont 1 Massachusetts 7 Virginia 17 Michigan 20 Washington 5 Mississippi 2 West Virginia 5 Wisconsin 9 --------- Total 449 The Company leases all of its stores. Initial lease terms for the Company's stores generally range from five to ten years in duration without renewal options, although some of the stores are subject to leases for five years with one of more renewal options. The leases generally provide for a fixed minimum rental plus a percentage of sales in excess of a specified amount. 9 Forward - Looking Statements and Risk Factors --------------------------------------------- This Annual Report on Form 10-K and the documents incorporated by reference contain statements, which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Except for the historical information contained herein, the matters discussed in the Form 10-K and the documents incorporated by reference are forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to: changing consumer preferences; the Company's inability to successfully market its footwear, apparel, accessories and other merchandise; price, product and other competition from other retailers (including internet and direct manufacturer sales); the unavailability of products; the inability to locate and obtain favorable lease terms for the Company's stores; the loss of key employees, general economic conditions and adverse factors impacting the retail athletic industry; management of growth, and the other risks detailed in the Company's Securities and Exchange Commission filings. The Company undertakes no obligation to release publicly the results of any revisions to these forward looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Item 3 - LEGAL PROCEEDINGS The Company is from time to time, involved in certain legal proceedings in the ordinary course of conducting its business. Management believes there are no pending legal proceedings in which the Company is currently involved which will have a material adverse effect on the Company's financial position. Item 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II ---- -- Item 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The information required by this item is incorporated herein by reference to page 43 and the inside back cover of the 2002 Annual Report to Stockholders filed as Exhibit 13 to this Annual Report on Form 10-K. Item 6 - SELECTED FINANCIAL DATA The information required by this item is incorporated herein by reference to page 24 of the 2002 Annual Report to Stockholders filed as Exhibit 13 to this Annual Report on Form 10-K. Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information required by this item is incorporated herein by reference to pages 25 through 31 of the 2002 Annual Report to Stockholders filed as Exhibit 13 to this Annual Report on Form 10-K. 10 Item 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information required by this item is incorporated by reference to page 31 of the 2002 Annual Report to Stockholders filed as Exhibit 13 to this Annual Report on Form 10-K. Item 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item is incorporated herein by reference to page 26 and pages 32 through 42 of the 2002 Annual Report to Stockholders filed as Exhibit 13 to this Annual Report on Form 10-K. Item 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no disagreements between the Registrant and its independent auditors on matters of accounting principles or practices. PART III ---- --- Item 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this item is incorporated herein by reference to the Sections entitled "Election of Directors--Nominees", and "Management--Executive Officers and Directors" in the 2002 Proxy Statement to be filed within 120 days of March 2, 2002, the Company's most recent fiscal year end. Item 11 - EXECUTIVE COMPENSATION The information required by this item is incorporated herein by reference to the Section entitled "Executive Compensation" in the 2002 Proxy Statement to be filed within 120 days of March 2, 2002, the Company's most recent fiscal year end. Item 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this item is incorporated herein by reference to the Section entitled "Securities Ownership of Certain Beneficial Owners and Management" in the 2002 Proxy Statement to be filed within 120 days of March 2, 2002, the Company's most recent fiscal year end. Item 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this item is incorporated herein by reference to the Sections entitled "Certain Transactions" and "Compensation Committee Interlocks and Insider Participation" in the 2002 Proxy Statement to be filed within 120 days of March 2, 2002, the Company's most recent fiscal year end. 11 PART IV ---- -- Item 14 - EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) 1. The following financial statements of The Finish Line, Inc. and the report of independent auditors included in the 2002 Annual Report to Stockholders are incorporated herein by reference: Report of Independent Auditors Consolidated Balance Sheets as of March 2, 2002 and March 3, 2001. Consolidated Statements of Income for the years ended March 2, 2002, March 3, 2001, and February 26, 2000. Consolidated Statements of Changes in Stockholders' Equity for the years ended March 2, 2002, March 3, 2001 and February 26, 2000. Consolidated Statements of Cash Flows for the years ended March 2, 2002, March 3, 2001 and February 26, 2000. Notes to Consolidated Financial Statements - March 2, 2002. 2. The Financial Statement Schedule of The Finish Line, Inc. is listed in Item 14(d). (b) Reports on Form 8-K None. (c) Exhibits Exhibit Number Description ------ ----------- 3.1.1 Restated Certificate of Incorporation of The Finish Line, Inc.(1) 3.1.2 Certificate of Amendment to the Restated Certificate of Incorporation of The Finish Line, Inc.(1) 3.2 Bylaws of The Finish Line, Inc. as amended and restated.(1) 4.1 1992 Employee Stock Incentive Plan of The Finish Line, Inc., as amended and restated.(2) 10.6.2 Form of Incentive Stock Option Agreement pursuant to the 1992 Employee Stock Incentive Plan.(1) 10.6.3 Form of Non-Qualified Stock Option Agreement pursuant to the 1992 Employee Stock Incentive Plan.(1) 10.7 Form of Indemnity Agreement between The Finish Line Inc. and each of its Directors or Executive Officers.(1) 10.18 Amended and Restated Tax Indemnification Agreement.(3) 12 10.26 Revolving Credit Agreement among Spike's Holding, Inc., and The Finish Line, Inc. dated May 4, 1997.(4) 10.28 Finish Line, Inc. Non-Employee Director Stock Option Plan, as amended and restated.(5) 10.29 Amendment to Revolving Credit Agreement among Spike's Holding, Inc., and The Finish Line, Inc. dated May 4, 1997.(6) 10.30 Credit Agreement among The Finish Line, Inc. the Lenders Signatory Thereto and National City Bank of Indiana, as Agent, dated September 20, 2000.(7) 10.31 First Amendment to Credit Agreement among The Finish Line, Inc., the Lendors Signatory, Thereto and National City Bank of Indiana, as Agent, dated March 16, 2001.(8) 10.32 The Finish Line, Inc. Profit Sharing and 401(k) Plan Nonstandardized Adoption Agreement Prototype Cash or Deferred Profit Sharing Plan and Trust/Custodial Account sponsored by National City Bank.(8) 13 Annual Report to Stockholders for the year ended March 2, 2002. 21 Subsidiaries of The Finish Line, Inc. 23 Consent of Ernst & Young LLP (independent auditors). (1) Previously filed as a like numbered exhibit to the Registrant's Registration Statement on Form S-1 and amendments thereto (File No. 33-47247) and incorporated herein by reference. (2) Previously filed as a like numbered exhibit to the Registrant's Registration Statement on Form S-8 (File No. 333-62063) and incorporated herein by reference. (3) Previously filed as a like numbered exhibit to the Registrant's Quarterly Report on Form 10-Q (File No. 0-20184) for the quarter ended May 31, 1994 and incorporated herein by reference. (4) Previously filed as a like numbered exhibit to the Registrants' Quarterly Report on Form 10Q (File No. 0-20184) for the quarter ended August 30, 1997 and incorporated herein by reference. (5) Previously filed as a like numbered exhibit to the Registrant's Annual Report on Form 10-K (File No. 0-20184) for the year ended February 27, 1999 and incorporated herein by reference. (6) Previously filed as a like numbered exhibit to the Registrants' Quarterly Report on Form 10Q (File No. 0-20184) for the quarter ended November 27, 1999 and incorporated herein by reference. 13 (7) Previously filed as a like numbered exhibit to the Registrant's Quarterly Report on Form 10-Q (File No. 0-20184) for the quarter ended November 25, 2000 and incorporated herein by reference. (8) Previously filed as a like numbered exhibit to the Registrant's Annual report on Form 10-K (File No. 0-20184) for the year ended March 3, 2001 and incorporated herein by reference. (d) Financial Statement Schedule Page ---- Schedule II -- Valuation and Qualifying Accounts 17 All supporting schedules other than the above have been omitted because they are not required or the information to be set forth therein is included in the financial statements or in the notes thereto. 14 SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) 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: May 15, 2002 By: /s/ Kevin S. Wampler, --------------------- Kevin S. Wampler, Senior Vice President, Chief Accounting Officer, (Principal Financial and Accounting Officer) POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature to this Annual Report on Form 10-K appears below hereby constitutes and appoints Alan H. Cohen and Steven J. Schneider as such person's true and lawful attorney-in-fact and agent with full power of substitution for such person and in such person's name, place and stead, in any and all capacities, to sign and to file with the Securities and Exchange Commission, any and all amendments to this Annual Report on Form 10-K, with exhibits thereto and other documents in connection therewith, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or any substitute therefore, may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: May 15, 2002 /s/ Alan H. Cohen -------------------------- Alan H. Cohen, Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) Date: May 15, 2002 /s/ David I. Klapper ----------------------------- David I. Klapper, Senior Executive Vice President, and Director Date: May 15, 2002 /s/ Larry J. Sablosky ------------------------------- Larry J. Sablosky, Senior Executive Vice President and Director Date: May 15, 2002 /s/ Jonathan K. Layne ------------------------------- Jonathan K. Layne, Director Date: May 15, 2002 /s/ Jeffrey H. Smulyan ------------------------------- Jeffrey H. Smulyan, Director Date: May 15, 2002 /s/ Stephen Goldsmith ------------------------------ Stephen Goldsmith, Director Date: May 15, 2002 /s/ Bill Kirkendall -------------------------------- Bill Kirkendall, Director 15 INDEX TO FINANCIAL STATEMENT SCHEDULE PAGE ------------------------------------- ---- II - Valuation and Qualifying Accounts 17 16 THE FINISH LINE, INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Dollars in thousands)
COL A COL B COL C COL D COL E ----- ----- ----- ----- ----- Additions ------------------------ Charged to Balance Charged to Other Deduc- Balance at Beg. Costs and Accounts- tions- at End of Description of Period Expense Describe Describe Period ----------------------------- --------- ---------- ---------- -------- --------- Year ended February 26, 2000: Deducted from asset account: Reserve for inventory obsolescence ............................ $ 3,300 $ 1,000 -- -- $ 4,300 -------- -------- -------- -------- ------- Total .................................... $ 3,300 $ 1,000 $ 0 $ 0 $ 4,300 ======== ======== ======== ======== ======= Year ended March 3, 2001: Deducted from asset account: Reserve for inventory obsolescence ............................ $ 4,300 $ 7,575 -- -- $11,875 -------- -------- -------- -------- ------- Total .................................. $ 4,300 $ 7,575 $ 0 $ 0 $11,875 ======== ======== ======== ======== ======= Year ended March 2, 2002: Deducted from asset account: Reserve for inventory obsolescence ............................ $ 11,875 $ -- -- $ (9,518) $ 2,357 -------- -------- -------- -------- ------- Total .................................. $ 11,875 $ 0 $ 0 $ (9,518) $ 2,357 ======== ======== ======== ======== =======
17 Exhibit Index ------------- Exhibit Number Description ------ -------------------------------------------------------------- 13 Annual Report to Stockholders for the year ended March 2, 2002 21 Subsidiaries of The Finish Line, Inc. 23 Consent of Ernst & Young LLP (independent auditors). 18