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4-Traders Homepage  >  Equities  >  Nasdaq  >  Finish Line Inc    FINL

Delayed Quote. Delayed  - 09/29 06:43:54 pm
23.48 USD   +0.86%
09/23DJFINISH LINE : Comparable Store Sales Rise
09/23 FINISH LINE : tops Street 2Q forecasts
09/23 FINISH LINE : Reports Second Quarter Fiscal Year 2017 Results
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FINISH LINE : IN/ Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

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09/23/2016 | 05:55pm CEST
This quarterly report on Form 10-Q may contain certain statements that the
Company believes are, or may be considered to be, "forward-looking" statements,
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934.
These forward-looking statements generally can be identified by the use of
statements that include, but are not limited to, words or phrases such as
"believe," "expect," "anticipate," "estimate," "intend," "future," "forecast,"
"outlook," "foresee," "predict," "potential," "plan," "project," "goal," "will,"
"will be," "continue," "lead to," "expand," "grow," "confidence," "could,"
"should," "may," "might," or any variations of such words or other words or
phrases with similar meanings. Similarly, statements that describe the Company's
objectives, plans, or goals also are forward-looking statements. All of these
forward-looking statements are subject to risks, management assumptions, and
uncertainties that could cause the Company's actual results to differ materially
from those contemplated by the relevant forward-looking statement. The principal
risk factors that could cause actual performance and future actions to differ
materially from the forward-looking statements include, but are not limited to,
the Company's reliance on a few key vendors for a majority of its merchandise
purchases (including a significant portion from one key vendor); the
availability and timely receipt of products; the ability to timely fulfill and
ship products to customers; fluctuations in oil prices causing changes in
gasoline and energy prices, resulting in changes in consumer spending as well as
increases in utility, freight, and product costs; product demand and market
acceptance risks; deterioration of macro-economic and business conditions; the
inability to locate and obtain or retain acceptable lease terms for the
Company's stores; the effect of competitive products and pricing; loss of key
employees; execution of strategic growth initiatives (including actual and
potential mergers and acquisitions and other components of the Company's capital
allocation strategy); cybersecurity risks, including breach of customer data; a
major failure of technology and information systems; and the other risks
detailed in the Company's Securities and Exchange Commission filings. Readers
are urged to consider these factors carefully in evaluating the forward-looking
statements. The forward-looking statements included in this Form 10-Q are made
only as of the date of this report and the Company undertakes no obligation to
publicly update these forward-looking statements to reflect subsequent events or
circumstances.
General
The following discussion and analysis should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations, including Critical Accounting Policies, contained in the Company's
Annual Report on Form 10-K for the year ended February 27, 2016.
The Company is a premium retailer of athletic shoes, apparel, and accessories
for men, women, and kids, throughout the United States and Puerto Rico, through
multiple operating segments.
Brick and mortar comparable store sales are sales from Finish Line stores open
longer than one year, beginning in the thirteenth month of a store's operation.
Expanded stores are excluded from the brick and mortar comparable store sales
calculation until the thirteenth month following the re-opening of the store and
temporarily closed stores are excluded during the months that the store is
closed. Brick and mortar comparable store sales do not include sales from
JackRabbit (previously referred to by the Company as Running Specialty Group) or
shops within department stores.
Digital comparable sales are the change in sales year over year for the
reporting period derived from finishline.com and m.finishline.com.
Finish Line comparable store sales is the aggregation of brick and mortar
comparable store sales and digital comparable sales.
Shops within department stores comparable store sales are sales from branded
shops within department stores open longer than one year, including e-commerce
sales, beginning in the thirteenth month of a shop's operation. Expanded shops
are excluded from the shops within department stores comparable store sales
calculation until the thirteenth month following the re-opening of the shop and
temporarily closed shops are excluded during the months that the shop is closed.
Additionally, non-branded shops are excluded from the shops within department
stores comparable store sales calculation.
JackRabbit comparable store sales are sales from JackRabbit stores open longer
than one year or operated longer than one year after being acquired, including
e-commerce sales, beginning in the thirteenth month of a store's operation or
after it was acquired. Expanded stores are excluded from the JackRabbit
comparable store sales calculation until the thirteenth month following the
re-opening of the store and temporarily closed stores are excluded during the
months that the store is closed.

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The following tables set forth store/shop and square feet information of the Company for each of the following periods:


                                                  Thirteen Weeks Ended                  Twenty-Six Weeks Ended
Number of stores/shops                    August 27, 2016     August 29, 2015    August 27, 2016     August 29, 2015
Finish Line:
Beginning of period                                586                   624               591                  637
Opened                                               4                     3                 5                    5
Closed                                              (5 )                  (7 )             (11 )                (22 )
End of period                                      585                   620               585                  620
Branded shops within department stores:
Beginning of period                                392                   395               392                  395
Opened                                               -                     -                 -                    -
Closed                                              (1 )                  (1 )              (1 )                 (1 )
End of period                                      391                   394               391                  394
JackRabbit:
Beginning of period                                 71                    76                72                   71
Acquired                                             -                     -                 -                    4
Opened                                               -                     -                 -                    1
Closed                                              (1 )                   -                (2 )                  -
End of period                                       70                    76                70                   76
Total:
Beginning of period                              1,049                 1,095             1,055                1,103
Acquired                                             -                     -                 -                    4
Opened                                               4                     3                 5                    6
Closed                                              (7 )                  (8 )             (14 )                (23 )
End of period                                    1,046                 1,090             1,046                1,090



Square feet information                   August 27, 2016    August 29, 2015
Finish Line:
Square feet                                     3,249,455          3,395,611
Average store size                                  5,555              5,477
Branded shops within department stores:
Square feet                                       509,880            448,861
Average shop size                                   1,304              1,139
JackRabbit:
Square feet                                       255,758            275,571
Average store size                                  3,654              3,626
Total:
Square feet                                     4,015,093          4,120,043



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Results of Operations
The following tables set forth net sales of the Company by major category for
each of the following periods (in thousands):

                              Thirteen Weeks Ended
Category             August 27, 2016         August 29, 2015
Footwear          $    468,353     92 %   $    432,323     89 %
Softgoods               41,050      8 %         50,827     11 %
Total net sales   $    509,403    100 %   $    483,150    100 %



                             Twenty-Six Weeks Ended
Category             August 27, 2016         August 29, 2015
Footwear          $    886,969     92 %   $    834,501     90 %
Softgoods               75,949      8 %         92,043     10 %
Total net sales   $    962,918    100 %   $    926,544    100 %

The following table and subsequent discussion set forth operating data of the Company as a percentage of net sales for each of the following periods:


                                              Thirteen Weeks Ended          

Twenty-Six Weeks Ended

                                      August 27, 2016     August 29, 2015    August 27, 2016     August 29, 2015
Net sales                                    100.0 %               100.0 %           100.0 %              100.0 %
Cost of sales (including occupancy
costs)                                        68.7                  67.0              68.9                 67.8
Gross profit                                  31.3                  33.0              31.1                 32.2
Selling, general, and
administrative expenses                       24.4                  24.4              25.9                 25.3
Impairment charges and store
closing costs                                  0.1                     -                 -                    -
Operating income                               6.8                   8.6               5.2                  6.9
Interest (expense) income, net                   -                     -                 -                    -
Income before income taxes                     6.8                   8.6               5.2                  6.9
Income tax expense                             2.5                   3.2               1.9                  2.6
Net income                                     4.3                   5.4               3.3                  4.3
Net loss attributable to redeemable
noncontrolling interest                          -                     -                 -                    -
Net income attributable to The
Finish Line, Inc.                              4.3 %                 5.4 %             3.3 %                4.3 %



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Thirteen and Twenty-Six Weeks Ended August 27, 2016 Compared to the Thirteen and
Twenty-Six Weeks Ended August 29, 2015
Net Sales

                                              Thirteen Weeks Ended                   Twenty-Six Weeks Ended
                                       August 27, 2016     August 29, 2015     August 27, 2016     August 29, 2015
                                             (dollars in thousands)                  (dollars in thousands)
Brick and mortar stores sales         $       332,289     $      337,218      $       621,339     $      629,409
Digital sales                                  75,505             60,715              143,418            128,400
Shops within department stores
sales                                          77,362             60,780              150,443            120,302
JackRabbit sales                               24,247             24,437               47,718             48,433
Total net sales                       $       509,403     $      483,150      $       962,918     $      926,544

Brick and mortar comparable store
sales increase (decrease)                         1.4 %             (0.2 )%               1.6 %             (0.1 )%
Digital comparable sales increase                24.4 %             12.1  %              11.7 %             23.3  %
Finish Line comparable store sales
increase                                          5.1 %              1.5  %               3.4 %              3.4  %
Shops within department stores
comparable store sales increase                  31.1 %              N/A                 28.7 %              N/A
JackRabbit comparable store sales
increase (decrease)                               3.2 %             (4.0 )%               3.0 %             (3.7 )%


Net sales increased 5.4% for the thirteen weeks ended August 27, 2016 compared
to the thirteen weeks ended August 29, 2015, which was primarily due to the
following:
•      An increase in Finish Line sales (composed of brick and mortar sales and

digital sales) of 2.5% primarily due to an increase of 5.1% in Finish Line

comparable store sales, which was due to an increase in store average

dollar per transaction and digital conversion and traffic, partially

offset by a decrease in store conversion and traffic and digital average

dollar per transaction. The Finish Line comparable store sales increase

was partially offset by a decrease in net Finish Line store count for the

       thirteen weeks ended August 27, 2016 as compared to the thirteen weeks
       ended August 29, 2015.

• An increase in shops within department stores sales of 27.3%, primarily

due to an increase in comparable sales, partially offset by a decrease in

       non-branded shop sales; and


•      A decrease in JackRabbit sales of 0.8%, primarily due to decreased store

count, partially offset by a JackRabbit comparable store sales increase of

3.2%.



Consolidated footwear sales increased 8.3% for the thirteen weeks ended
August 27, 2016 compared to the thirteen weeks ended August 29, 2015, which was
primarily driven by a women's footwear sales increase in the low-double digits
and a men's and kids' footwear sales increase in the high-single digits.
Consolidated softgoods sales decreased 19.2% for the thirteen weeks ended
August 27, 2016 compared to the thirteen weeks ended August 29, 2015, driven by
softness in apparel and accessories.
Net sales increased 3.9% for the twenty-six weeks ended August 27, 2016 compared
to the twenty-six weeks ended August 29, 2015, which was primarily due to the
following:
•      An increase in Finish Line sales (composed of brick and mortar sales and

digital sales) of 0.9% primarily due to a Finish Line comparable store

sales increase of 3.4%, which was due to an increase in store average

dollar per transaction and traffic and digital conversion, partially

offset by a decrease in store conversion and digital average dollar per

transaction and traffic. The Finish Line comparable store sales increase

was partially offset by a decrease in net Finish Line store count for the

       twenty-six weeks ended August 27, 2016 as compared to the twenty-six weeks
       ended August 29, 2015.

• An increase in shops within department stores sales of 25.1%, primarily

due to an increase in comparable sales, partially offset by a decrease in

       non-branded shop sales; and


•      A decrease in JackRabbit sales of 1.5%, primarily due to decreased store

count, partially offset by a JackRabbit comparable store sales increase of

       3.0%.



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Consolidated footwear sales increased 6.3% for the twenty-six weeks ended
August 27, 2016 compared to the twenty-six weeks ended August 29, 2015, which
was primarily driven by percentage increases in the high-single digits in
women's and kids' footwear sales and a men's footwear sales increase in the
low-single digits. Consolidated softgoods sales decreased 17.5% for the
twenty-six weeks ended August 27, 2016 compared to the twenty-six weeks ended
August 29, 2015, which was primarily driven by softness in apparel and
accessories.
Cost of Sales (Including Occupancy Costs) and Gross Profit

                                              Thirteen Weeks Ended                    Twenty-Six Weeks Ended
                                       August 27, 2016     August 29, 2015     August 27, 2016      August 29, 2015
                                             (dollars in thousands)                   (dollars in thousands)
Cost of sales (including occupancy
costs)                                $       349,929     $       323,943     $        663,633     $       628,361
Gross profit                          $       159,474     $       159,207     $        299,285     $       298,183
Gross profit as a percentage of net
sales                                            31.3 %              33.0 %               31.1 %              32.2 %


Gross profit, as a percentage of net sales, decreased 1.7% for the thirteen
weeks ended August 27, 2016 as compared to the thirteen weeks ended August 29,
2015, which was primarily due to a 2.0% decrease in product margin, as a
percentage of net sales, partially offset by a 0.3% decrease in occupancy costs,
as a percentage of net sales. The 2.0% decrease in product margin, as a
percentage of net sales, was primarily due to the Company continuing to work
through higher inventory levels during the thirteen weeks ended August 27, 2016.
Gross profit, as a percentage of net sales, decreased 1.1% for the twenty-six
weeks ended August 27, 2016 as compared to the twenty-six weeks ended August 29,
2015, which was primarily due to a 1.3% decrease in product margin, as a
percentage of net sales, partially offset by a 0.2% decrease in occupancy costs,
as a percentage of net sales. The 1.3% decrease in product margin, as a
percentage of net sales, was primarily due to the Company continuing to work
through higher inventory levels during the twenty-six weeks ended August 27,
2016.
Selling, General, and Administrative Expenses

                                              Thirteen Weeks Ended                    Twenty-Six Weeks Ended
                                       August 27, 2016     August 29, 2015     August 27, 2016      August 29, 2015
                                             (dollars in thousands)                   (dollars in thousands)
Selling, general, and
administrative expenses               $       124,224     $       117,604     $        249,123     $       234,061
Selling, general, and
administrative expenses as a
percentage of net sales                          24.4 %              24.4 %               25.9 %              25.3 %


Selling, general, and administrative expenses increased $6.6 million for the
thirteen weeks ended August 27, 2016 as compared to the thirteen weeks ended
August 29, 2015, which was primarily due to the following: (1) an increase in
depreciation expense of $1.8 million, which was primarily due to the replacement
of the Company's warehouse and order management system in the third quarter of
fiscal 2016; (2) incremental supply chain expenses of approximately $1.0 million
as a result of the replacement of the Company's warehouse and order management
system in fiscal 2016; (3) incremental credit card costs; (4) increases in
variable costs in fulfillment, credit costs, and Macys.com license fees, in
conjunction with the 5.4% increase in consolidated net sales, offset by a
reduction in incentive compensation costs.
Selling, general, and administrative expenses increased $15.1 million for the
twenty-six weeks ended August 27, 2016 as compared to the twenty-six weeks ended
August 29, 2015, which was primarily due to the following: (1) an increase in
depreciation expense of $3.2 million, which was primarily due to the replacement
of the Company's warehouse and order management system in the third quarter of
fiscal 2016; (2) incremental supply chain expenses of approximately $3.0 million
as a result of the replacement of the Company's warehouse and order management
system in fiscal 2016; (3) incremental credit card costs; (4) increases in
variable costs in fulfillment, credit costs, and Macys.com license fees, in
conjunction with the 3.9% increase in consolidated net sales, offset by a
reduction in incentive compensation costs.

                                       15
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Impairment Charges and Store Closing Costs

                                               Thirteen Weeks Ended                    Twenty-Six Weeks Ended
                                       August 27, 2016      August 29, 2015     August 27, 2016      August 29, 2015
                                              (dollars in thousands)                   (dollars in thousands)
Impairment charges and store
closing costs                         $         336        $           160     $         371        $         328
Impairment charges and store
closing costs as a percentage of
net sales                                       0.1 %                    - %               - %                  - %
Number of stores/shops closed                     7                      8                14                   23


During the thirteen and twenty-six weeks ended August 27, 2016 and August 29,
2015, the impairment charges and store closing costs recorded by the Company
represented the non-cash write-off of fixtures and equipment related to
store/shop closings.
Interest (Expense) Income, Net

                                               Thirteen Weeks Ended                    Twenty-Six Weeks Ended
                                       August 27, 2016       August 29, 2015    August 27, 2016       August 29, 2015
                                              (dollars in thousands)                   (dollars in thousands)

Interest (expense) income, net $ (32 ) $ 1

    $          (26 )       $        (1 )
Interest (expense) income, net as a
percentage of net sales                            - %                 - %                  - %                 - %


Interest income is earned on the Company's investments and interest expense is
incurred on the unused commitment fee and letter of credit fees related to the
Company's Amended and Restated Revolving Credit Facility Credit Agreement.
Income Tax Expense

                                               Thirteen Weeks Ended                     Twenty-Six Weeks Ended
                                       August 27, 2016       August 29, 2015     August 27, 2016      August 29, 2015
                                              (dollars in thousands)                    (dollars in thousands)
Income tax expense                    $        12,807       $        15,583     $       18,064       $        24,198
Income tax expense as a percentage
of net sales                                      2.5 %                 3.2 %              1.9 %                 2.6 %
Effective income tax rate                        36.7 %                37.6 %             36.3 %                37.9 %


The decrease in the effective tax rate for the thirteen and twenty-six weeks
ended August 27, 2016 is a result of a decrease in non-deductible expenses
incurred in the current year compared to the thirteen and twenty-six weeks ended
August 29, 2015.
Net Loss Attributable to Redeemable Noncontrolling Interest

                                                 Thirteen Weeks Ended                        Twenty-Six Weeks Ended
                                        August 27, 2016         August 29, 2015       August 27, 2016         August 29, 2015
                                                (dollars in thousands)                       (dollars in thousands)
Net loss attributable to redeemable
noncontrolling interest               $            -           $            41     $             -           $            96
Net loss attributable to redeemable
noncontrolling interest as a
percentage of net sales                            - %                       - %                 - %                       - %


The net loss attributable to redeemable noncontrolling interest represents the
noncontrolling owner's portion of the net loss generated by JackRabbit for the
applicable period. The decrease in the net loss attributable to redeemable
noncontrolling

                                       16
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interest for the thirteen and twenty-six weeks ended August 27, 2016 as compared
to the thirteen and twenty-six weeks ended August 29, 2015 was due to JackRabbit
becoming a wholly owned subsidiary of the Company during the second quarter of
fiscal 2016.

Net Income Attributable to The Finish Line, Inc.

                                              Thirteen Weeks Ended                    Twenty-Six Weeks Ended
                                       August 27, 2016     August 29, 2015     August 27, 2016      August 29, 2015
                                             (dollars in thousands)                   (dollars in thousands)
Net income attributable to The
Finish Line, Inc.                     $        22,075     $        25,902     $       31,701       $        39,691
Net income attributable to The
Finish Line, Inc. as a percentage
of net sales                                      4.3 %               5.4 %              3.3 %                 4.3 %
Diluted earnings per share
attributable to The Finish Line,
Inc. shareholders                     $          0.53     $          0.57   

$ 0.75 $ 0.86



Net income attributable to The Finish Line, Inc. decreased $3.8 million for the
thirteen weeks ended August 27, 2016 compared to the thirteen weeks ended
August 29, 2015, which was primarily due to the decrease in gross profit, as a
percentage of net sales, an increase in selling, general, and administrative
expenses related to the additional costs to support the 5.4% increase in net
sales and expenses related to the Company's replacement of its warehouse and
order management system in the third quarter of fiscal 2016, partially offset by
the increase in net sales and a decrease in income tax expense.
Net income attributable to The Finish Line, Inc. decreased $8.0 million for the
twenty-six weeks ended August 27, 2016 compared to the twenty-six weeks ended
August 29, 2015, which was primarily due to the decrease in gross profit, as a
percentage of net sales, an increase in selling, general, and administrative
expenses related to additional costs to support the 3.9% increase in net sales
and expenses related to the Company's replacement of its warehouse and order
management system, partially offset by the increase in net sales and a decrease
in income tax expense.
Liquidity and Capital Resources
The Company's primary source of working capital is cash-on-hand and cash flows
from operations. The following table sets forth material balance sheet and
liquidity measures of the Company (in thousands):

                                              August 27, 2016       August 29, 2015       February 27, 2016
Cash and cash equivalents                   $         114,301     $         100,234     $            79,495
Merchandise inventories, net                $         372,263     $         366,335     $           376,506
Interest-bearing debt                       $               -     $               -     $                 -
Working capital                             $         277,248     $         327,405     $           300,166


Operating Activities
Net cash provided by operating activities for the twenty-six weeks ended
August 27, 2016 was $119.3 million compared to net cash provided by operating
activities of $37.2 million for the twenty-six weeks ended August 29, 2015. The
increase in cash provided by operating activities was primarily the result of a
net increase in the cash inflow from working capital balances and an increase in
non-cash expenses, partially offset by a decrease in net income for the
twenty-six weeks ended August 27, 2016 compared to the twenty-six weeks ended
August 29, 2015.
At August 27, 2016, the Company had cash and cash equivalents of $114.3 million.
Cash and cash equivalents consist primarily of cash on hand and highly liquid
instruments with a maturity of three months or less at the date of purchase. At
August 27, 2016, substantially all of the Company's cash was invested in deposit
accounts at banks.
Merchandise inventories, net increased 1.6% at August 27, 2016 compared to
August 29, 2015, and decreased 1.1% from February 27, 2016. The increase in
merchandise inventories, net over the prior year quarter is primarily related to
an increase in merchandise inventories to support the expected increase in net
sales year over year. The decrease in merchandise inventories from February 27,
2016 is due to seasonality as the Company required more merchandise inventories
at the end of the Company's fiscal year 2016 due to expected elevated net sales
for the thirteen weeks ended May 28, 2016 as compared to the

                                       17
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thirteen weeks ending November 26, 2016. Accounts payable increased 46.4% at
August 27, 2016 compared to August 29, 2015 primarily related to the increase in
merchandise inventories and timing of payments to vendors.
Investing Activities
Net cash used in investing activities for the twenty-six weeks ended August 27,
2016 was $34.8 million compared to $43.3 million for the twenty-six weeks ended
August 29, 2015. The decrease in cash used in investing activities was primarily
the result of a $8.3 million decrease in JackRabbit acquisitions in the current
year and a $0.4 million increase in proceeds from disposals of property and
equipment, offset by a $0.1 million increase in capital expenditures.
The Company intends to invest approximately $55-$60 million in capital
expenditures during fiscal 2017. Of this amount, approximately $40 million is
intended for the construction of approximately 7 new brick and mortar stores and
the remodeling or repositioning of 70-80 existing brick and mortar stores. In
addition, approximately $5 million is expected to be spent to reposition and
expand approximately 50 shops within department stores. The remaining $10-15
million to be invested is related primarily to an upgrade of the Company's
digital platform, mobile first strategy, and information security enhancements.
The Company anticipates satisfying all of these capital expenditures through the
use of cash-on-hand and operating cash flows.
Financing Activities
Net cash used in financing activities for the twenty-six weeks ended August 27,
2016 was $49.7 million compared to $43.3 million for the twenty-six weeks ended
August 29, 2015. The $6.5 million increase in cash used in financing activities
was primarily due to a $6.6 million increase in stock repurchases, a $0.4
million decrease in proceeds from the issuance of common stock, a $0.2 million
decrease in excess tax benefits from share-based compensation; partially offset
by a $1.0 million purchase of the remainder of the redeemable noncontrolling
interest in the second quarter fiscal 2016.
Share Repurchase Program
On July 21, 2011, the Company's Board of Directors authorized a share repurchase
program to repurchase shares of the Company's common stock with subsequent
amendments on March 26, 2015 and July 13, 2016 authorizing further share
repurchases through December 31, 2019 (the "Share Repurchase Program").
The Company purchased 2.0 million shares at an average price of $21.28 per share
for an aggregate amount of $42.6 million during the twenty-six weeks ended
August 27, 2016. As of August 27, 2016, there were 5,291,936 shares remaining
available to repurchase under the Share Repurchase Program.
As of August 27, 2016, the Company held 19,196,721 shares of its common stock as
treasury shares at an average price of $20.32 per share for an aggregate
carrying amount of $390.1 million. The Company's treasury shares may be issued
upon the exercise of employee stock options, under the Employee Stock Purchase
Plan, in the form of restricted stock, or for other corporate purposes. The
number of shares of common stock reserved to be issued upon the exercise of
options, restricted stock, or other awards is limited as defined in the 2002
Stock Incentive Plan of The Finish Line, Inc. and The Finish Line, Inc. Amended
and Restated 2009 Incentive Plan. Further purchases will occur from time to time
as market conditions warrant and as the Company deems appropriate when judged
against other alternative uses of cash.
Dividends
On July 14, 2016, the Company announced a quarterly cash dividend of $0.10 per
share of the Company's common stock. The Company declared dividends of $8.4
million during the twenty-six weeks ended August 27, 2016, of which $4.1 million
was included in other liabilities and accrued expenses on the Company's
consolidated balance sheet as of August 27, 2016. Further declarations of
dividends remain at the discretion of the Company's Board of Directors.
Contractual Obligations
The Company's contractual obligations primarily consist of operating leases and
open purchase orders for merchandise inventory. For the twenty-six weeks ended
August 27, 2016, there were no significant changes to the Company's contractual
obligations from those identified in the Company's Annual Report on Form 10-K
for the year ended February 27, 2016, other than those which occur in the
ordinary course of business (primarily changes in the Company's merchandise
inventory related to purchase obligations, which fluctuate throughout the year
as a result of the seasonal nature of the Company's operations, and changes to
operating leases due to store openings and closings).

                                       18
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Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to adopt accounting policies related
to estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period, as well as the related
disclosure of contingent assets and liabilities at the date of the financial
statements. On an ongoing basis, management evaluates the Company's accounting
policies, estimates, and judgments, including those related to inventories,
long-lived assets, and contingencies. Management bases its estimates and
judgments on historical experience and various other factors that are believed
to be reasonable under the circumstances. Actual results may differ from these
estimates.
Item 3. Quantitative and Qualitative Disclosures About Market Risks


For a discussion of the Company's market risk associated with interest rates as
of February 27, 2016, see "Quantitative and Qualitative Disclosures about Market
Risks" in Item 7A of Part II of the Company's Annual Report on Form 10-K for the
fiscal year ended February 27, 2016. For the twenty-six weeks ended August 27,
2016, there has been no significant change in related market risk factors.
Item 4. Controls and Procedures


Disclosure Controls and Procedures. With the participation of our Chief
Executive Officer and Chief Financial Officer, we have evaluated the
effectiveness of our disclosure controls and procedures (as such term is defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), as of the end of the period covered by this
Report. Based upon such evaluation, our Chief Executive Officer and Chief
Financial Officer have concluded that, as of the end of such period, our
disclosure controls and procedures were effective in ensuring that
(i) information required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized, and
reported, within the time periods specified in the Securities Exchange
Commission's rules and forms and (ii) information required to be disclosed by
the Company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the Company's management, including its
principal executive and principal financial officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding required
disclosure.
Internal Control Over Financial Reporting. There were no changes in our internal
control over financial reporting (as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) during the fiscal quarter to which this Report
relates that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.

                                       19

--------------------------------------------------------------------------------

© Edgar Online, source Glimpses

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Financials ($)
Sales 2017 1 974 M
EBIT 2017 99,1 M
Net income 2017 62,9 M
Finance 2017 28,7 M
Yield 2017 1,68%
P/E ratio 2017 15,18
P/E ratio 2018 13,40
EV / Sales 2017 0,46x
EV / Sales 2018 0,44x
Capitalization 944 M
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Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 20
Average target price 23,2 $
Spread / Average Target -0,37%
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Managers
NameTitle
Samuel Michael Sato President, Chief Executive Officer & Director
Glenn S. Lyon Executive Chairman
Melissa Greenwell Chief Operating Officer & Executive Vice President
Edward W. Wilhelm CFO, Executive VP & Head-Investor Relations
Daniel S. Marous Executive VP-Supply Chain & Information Technology
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