-----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,
Q//kuiFgvIIoeHVZH133wRw2BIPK0lEmxyorGtaC+wfArHt/CclPV2K6J3l2O1WB
1+ub2RDE0UO8nyEC2uO8sA==
<SEC-DOCUMENT>0000898430-01-500775.txt : 20010528
<SEC-HEADER>0000898430-01-500775.hdr.sgml : 20010528
ACCESSION NUMBER: 0000898430-01-500775
CONFORMED SUBMISSION TYPE: 10-K405
PUBLIC DOCUMENT COUNT: 6
CONFORMED PERIOD OF REPORT: 20010303
FILED AS OF DATE: 20010525
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: FINISH LINE INC /DE/
CENTRAL INDEX KEY: 0000886137
STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-SHOE STORES [5661]
IRS NUMBER: 351537210
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0228
FILING VALUES:
FORM TYPE: 10-K405
SEC ACT:
SEC FILE NUMBER: 000-20184
FILM NUMBER: 1647719
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
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<FILENAME>d10k405.txt
<DESCRIPTION>FORM 10-K405
<TEXT>
<PAGE>
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 3, 2001 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 27, 2001 was approximately $144,222,000 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 27,
2001 was:
Class A Common Stock: 18,181,215
Class B Common Stock: 6,267,375
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement dated June 12, 2001 for the
Annual Meeting of Stockholders to be held on July 19, 2001 (hereinafter referred
to as the "2001 Proxy Statement") are incorporated into Part III.
Portions of the Registrant's Annual Report to Stockholders for the fiscal year
ended March 3, 2001, (hereinafter referred to as the "2001 Annual Report to
Stockholders") are incorporated into Parts II and IV.
1
<PAGE>
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 April 1, 2001, the
Company operated 442 stores in 42 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, And 1, K-Swiss,
Timberland, Saucony and Skechers.
The Company attempts to distinguish itself from other athletic footwear
specialty retailers through larger mall-based store formats. Finish Line stores
average 6,087 square feet, and the Company's stores opened during fiscal 2001
averaged approximately 5,230 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, 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 20% of the Company's net sales in
fiscal 2001.
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
<PAGE>
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 increase 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 442 stores at April 1, 2001. The
Company opened 34 new stores in fiscal 2001 and intends to open approximately 25
new stores in fiscal 2002. Total square footage increased 7% in fiscal 2001 over
the prior year as a result of the Company's continued expansion.
For fiscal 2002 the Company plans to increase its total square footage
open by approximately 1% to 2% (25 new stores net of 13 planned store closings).
Much 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 currently operates 396
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 5,220 square feet, traditional
concept stores opened in fiscal 2001 averaged 4,997 square feet.
Larger Format Concept - The Company currently operates 40 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 reduced the number of
larger store openings to one during fiscal year 2001 due to slower sales of
activewear and does not expect to open any large format stores in 2002.
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
3
<PAGE>
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.
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 3, Feb. 26, Feb. 27,
Category 2001 2000 1999
-------- -------- -------- --------
Footwear 80% 77% 72%
Activewear/Accessories 20% 23% 28%
------ ------ ------
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 recently adopted a more aggressive strategy in selling aged
inventory, which will allow the Company to reconfigure merchandise assortments
to place greater emphasis on better performing fresher merchandise. This should
lead to improved inventory turns and merchandise product margins.
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
<PAGE>
Activewear/Accessories
- ----------------------
Many of the same companies, which 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. Among the accessories offered by the Company are socks,
athletic bags, backpacks, sunglasses, watches and shoe-care products.
In addition, the Company has continued to build a private label apparel
program through the introduction of two new private label lines, SPK and 808.
SPK meets the needs of our value/performance customers by offering high quality
basic athletic apparel at introductory price points. 808's graphic driven
t-shirts target a college age shopper looking for more contemporary lifestyle
apparel.
The Company's apparel sales continued to be negatively effected in
fiscal 2001 by a significant reduction in the average unit selling price. The
Company is working closely with the branded apparel vendors to reverse these
sales declines and has increased private label product offerings to provide more
competitive introductory price points in key product categories.
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 2001 and fiscal 2000 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-Merchandise and Marketing. The buying and merchandise departments are
comprised of approximately 35 people. The footwear and activewear/accessories
divisions consist of a Senior Vice President-Footwear, Planning and Allocation,
a Vice-President - Apparel, a Vice-President of Footwear, divisional merchandise
managers, multiple buyers and associate buyers. Both buying divisions are
supported by a planning and distribution division, which consists of planners,
merchandisers and administrative assistants.
5
<PAGE>
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 150 suppliers and
manufacturers of athletic and fashion products, the largest of which (Nike)
accounted for approximately 53% and 49% of total purchases in fiscal 2001 and
fiscal 2000, respectively. The Company purchased approximately 78% and 79% of
total merchandise in fiscal 2001 and fiscal 2000, 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.
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.
Management Information System
- -----------------------------
The Company has a computerized management information system, which
includes a 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 modem or 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. 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
mangers 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
<PAGE>
Real Estate
- -----------
As of April 1, 2001, Finish Line operated 442 stores in 42 states. With
the exception of six 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 5 to 10 years in duration without renewal options, although
some of the stores are subject to leases for 5 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 2001, the Company estimates that the
cash requirements 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
7
<PAGE>
throughout the organization.
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 year ended March 3, 2001, these periods accounted for approximately 33%
of the Company's annual sales.
Employees
- ---------
As of April 1, 2001, the Company employed approximately 8,960 persons, 2,230 of
whom were full-time and 6,730 of whom were part-time. Of this total, 433 were
employed at the Company's Indianapolis, Indiana corporate headquarters and
distribution center and 34 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.
Profit Sharing Plan
- -------------------
While no assurances can be given that it will 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. During
fiscal 2001, the Company contributed 165,000 shares of Class A Common Stock to
the Profit Sharing Plan representing a non cash contribution of $1,758,322.
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. This facility includes 46,000 square feet of
office space and 256,000 square feet of warehouse space. The 33 acres will
permit the headquarters and distribution center to be expanded to an aggregate
of approximately 800,000 square feet through the expansion of the existing
building and construction of additional buildings.
8
<PAGE>
Store Locations
- ---------------
At April 1, 2001, the Company operated 442 stores in 42 states. With the
exception of six 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 8 Nebraska 4
Arkansas 4 Nevada 1
California 13 New Hampshire 4
Colorado 9 New Jersey 7
Connecticut 4 New Mexico 1
Delaware 1 New York 24
Florida 22 North Carolina 20
Georgia 17 North Dakota 2
Idaho 1 Ohio 37
Illinois 32 Oklahoma 8
Indiana 24 Oregon 1
Iowa 8 Pennsylvania 27
Kansas 8 South Carolina 5
Kentucky 8 South Dakota 1
Louisiana 4 Tennessee 14
Maine 1 Texas 32
Maryland 16 Virginia 16
Massachusetts 6 Washington 5
Michigan 18 West Virginia 5
Mississippi 2 Wisconsin 8
-------
Total 442
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.
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
9
<PAGE>
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 Company's ability to successfully execute and
benefit from its repositioning plan; 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 27 and the inside back cover of the 2001 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 13 of the 2001 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 14 through 17 of the 2001 Annual Report to Stockholders filed
as Exhibit 13 to this Annual Report on Form 10-K.
Item 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is incorporated by reference to
page 17 of the 2001 Annual Report to Stockholders filed as Exhibit 13 to this
Annual Report on Form 10-K.
10
<PAGE>
Item 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated herein by
reference to page 15 and pages 18 through 26 of the 2001 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 2001 Proxy Statement to be
filed within 120 days of March 3, 2001, 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 2001 Proxy
Statement to be filed within 120 days of March 3, 2001, 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 2001 Proxy Statement to be filed within 120 days
of March 3, 2001, 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 2001 Proxy Statement to
be filed within 120 days of March 3, 2001, the Company's most recent fiscal year
end.
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 2001 Annual Report to
Stockholders are incorporated herein by reference:
11
<PAGE>
Report of Independent Auditors
Consolidated Balance Sheets as of March 3, 2001 and February 26,
2000.
Consolidated Statements of Income for the years ended March
3, 2001, February 26, 2000, and February 27, 1999.
Consolidated Statements of Changes in Stockholders' Equity for the
years ended March 3, 2001, February 26, 2000, and February 27,
1999.
Consolidated Statements of Cash Flows for the years ended March 3,
2001, February 26, 2000 and February 27, 1999.
Notes to Consolidated Financial Statements - March 3, 2001.
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.(3)
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.(2)
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
12
<PAGE>
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.
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.
13 Annual Report to Stockholders for the year ended March 3, 2001.
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
Quarterly Report on Form 10-Q (File No. 0-20184) for the quarter
ended May 31, 1994 and incorporated herein by reference.
(3) 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.
(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.
(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.
13
<PAGE>
(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
<PAGE>
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 23, 2001 By:/s/ Steven J. Schneider,
-----------------------
Steven J. Schneider, Executive Vice President, Chief
Operating Officer, Chief Financial 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 23, 2001 /s/ Alan H. Cohen
--------------------------
Alan H. Cohen, Chairman of the Board, President and
Chief Executive Officer (Principal Executive Officer)
Date: May 23, 2001 /s/ David I. Klapper
--------------------------
David I. Klapper, Senior Executive Vice President, and
Director
Date: May 23, 2001 /s/ Larry J. Sablosky
--------------------------
Larry J. Sablosky, Senior Executive Vice
President and Director
Date: May 23, 2001 /s/ Jonathan K. Layne
--------------------------
Jonathan K. Layne, Director
Date: May 23, 2001 /s/ Jeffrey H. Smulyan
--------------------------
Jeffrey H. Smulyan, Director
Date: May 23, 2001 /s/ Stephen Goldsmith
-------------------------
Stephen Goldsmith, Director
15
<PAGE>
INDEX TO FINANCIAL STATEMENT SCHEDULE PAGE
- ------------------------------------- ----
II - Valuation and Qualifying Accounts 17
16
<PAGE>
THE FINISH LINE, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Dollars in thousands)
<TABLE>
<CAPTION>
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
- ---------------------------- --------- ------- -------- -------- ------
<S> <C> <C> <C> <C> <C>
Year ended February 27, 1999:
Deducted from asset
account:
Reserve for inven-
tory obsolescence.......... $ 3,000 $ 300 -- -- $ 3,300
-------- -------- ------------ ---------- -------
Total....................... $ 3,000 $ 300 $ 0 $ 0 $ 3,300
======== ======== ============ ========== =======
Year ended February 26, 2000:
Deducted from asset
account:
Reserve for inven-
tory obsolescence.......... $ 3,300 $ 1,000 -- -- $ 4,300
-------- -------- ------------ ---------- -------
Total..................... $ 3,300 $ 1,000 $ 0 $ 0 $ 4,300
======== ======== ============ ========== =======
Year ended February 26, 2000:
Deducted from asset
account:
Reserve for inven-
Year ended March 3, 2001:
Deducted from asset
account:
Reserve for inventory
obsolescence................. $ 4,300 $ 7,575 -- -- $11,875(1)
-------- -------- ------------ ---------- -------
Total....................... $ 4,300 $ 7,575 $ 0 $ 0 $11,875
======== ======== ============ ========== =======
</TABLE>
(1) Includes $9.2 million representing inventory writedowns associated
with the repositioning plan approved by the Company in the 4th quarter
of fiscal 2001.
17
<PAGE>
Exhibit Index
-------------
Exhibit
Number Description
- ------- --------------------------------------------------------------
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.
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.
13 Annual Report to Stockholders for the year ended March 3, 2001
21 Subsidiaries of The Finish Line, Inc.
23 Consent of Ernst & Young LLP (independent auditors).
18
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.31
<SEQUENCE>2
<FILENAME>dex1031.txt
<DESCRIPTION>1ST AMENDMENT TO CREDIT AGREEMENT
<TEXT>
<PAGE>
Exhibit 10.31
- --------------------------------------------------------------------------------
FIRST AMENDMENT TO CREDIT AGREEMENT
- --------------------------------------------------------------------------------
among
THE FINISH LINE, INC.,
the LENDERS Signatory Hereto
and
NATIONAL CITY BANK OF INDIANA, as Agent
- --------------------------------------------------------------------------------
Dated as of March 16, 2001
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
PART I. AMENDATORY PROVISIONS.......................................... 1
SECTION 1 Definitions....................................... 1
1.1 Defined Terms..................................... 1
SECTION 6 Covenants......................................... 3
6.17 Consolidated Tangible Net Worth................... 3
6.18 Leverage Ratio.................................... 3
6.25 Restructuring Charges............................. 4
PART II CONTINUING EFFECT.............................................. 4
PART III CONDITIONS PRECEDENT........................................... 5
PART IV INDEPENDENT CREDIT DECISION.................................... 5
</TABLE>
<PAGE>
FIRST AMENDMENT TO CREDIT AGREEMENT
-----------------------------------
THIS FIRST AMENDMENT made as of the 16th day of March, 2001, by and among
THE FINISH LINE, INC. ("Borrower"), the LENDERS party hereto, and NATIONAL CITY
BANK OF INDIANA, as agent for the Lenders hereunder (in such capacity, the
"Agent");
W I T N E S S E T H:
WHEREAS, as of September 20, 2000, the Borrower, the lenders party thereto
and the Agent entered into a certain Credit Agreement (the "Agreement"); and
WHEREAS, the parties desire to amend the Agreement to, among other things,
revise certain financial covenants contained therein and to add an additional
pricing level, all subject to the terms contained herein;
NOW, THEREFORE, in consideration of the premises, and the mutual promises
herein contained, the parties agree that the Agreement shall be, and it hereby
is, amended as provided herein and the parties further agree as follows:
PART I. AMENDATORY PROVISIONS
==============================
SECTION 1.
----------
Definitions
-----------
1.1 Defined Terms.
-------------
Section 1.1 of the Agreement is hereby amended by substituting the
following definitions in lieu of the like existing definitions:
"Applicable Facility Fee" means the per annum fee payable to the Agent
for the pro rata benefit of the Lenders as determined pursuant to Section
2.5, which shall be based on the Leverage Ratio and determined by reference
to the following table:
Leverage Ratio Applicable Facility Fee
-------------- -----------------------
Level 1 Less than 2.0 to 1.0 0.10%
Level 2 Equal to or greater than
2.0 to 1.0 but less than
<PAGE>
2.50 to 1.0 0.15%
Level 3 Equal to or greater than
2.50 to 1.0 but less than
3.0 to 1.0 0.175%
Level 4 Equal to or greater than
3.0 to 1.0 but less than
3.50 to 1.0 0.20%
Level 5 Equal to or greater than
3.50 to 1.0 but less than
4.0 to 1.0 0.25%
Level 6 Equal to or greater than
4.0 to 1.0 0.30%
The Applicable Facility Fee for Level 4 shall initially apply and shall be
subject to adjustment quarterly (upwards or downwards, as appropriate) based on
the Leverage Ratio in accordance with the table set forth above. The Leverage
Ratio shall be determined by the Agent (which determination if made in good
faith shall be conclusive absent manifest error) based on the Financial
Statements. The adjustment, if any, to the Applicable Facility Fee shall be
effective beginning on the fifth (5th) Business Day after the delivery of such
Financial Statements. In the event that Borrower shall at any time fail to
furnish to the Agent in timely fashion the Financial Statements required to be
delivered pursuant to Section 6.1, together with the Compliance Certificate to
be delivered with respect thereto, the Applicable Facility Fee for Level 6 shall
apply until the fifth (5th) Business Day after such Financial Statements and
Compliance Certificate are so delivered. In no event shall the Applicable
Facility Fee be adjusted downward if there exists a Default on the date on which
such downward adjustment would otherwise become effective until such time as the
Default has been cured, waived or ceases to exist. The provisions of this
definition are not intended to, and shall not be construed to, authorize any
violation by Borrower of any financial covenant contained in this Agreement.
"Applicable Margin" means the incremental margin to be paid by Borrower on
LIBOR Loans hereunder and on Letters of Credit issued hereunder, which margin
shall be based on the Leverage Ratio and determined by reference to the
following table:
Leverage Ratio Applicable Margin
-------------- -----------------
Letters
LIBOR Loans of Credit
------------ ----------
Level 1 Less than 2.0 to 1.0 .50% .50%
Level 2 Equal to or greater than
2.0 to 1.0 but less than
2.50 to 1.0 .75% .75%
-2-
<PAGE>
Level 3 Equal to or greater than
2.50 to 1.0 but less than
3.0 to 1.0 1.0% 1.0%
Level 4 Equal to or greater than
3.0 to 1.0 but less than
3.50 to 1.0 1.25% 1.25%
Level 5 Equal to or greater than
3.50 to 1.0 but less than
4.0 to 1.0 1.50% 1.50%
Level 6 Equal to or greater than
4.0 to 1.0 1.75% 1.75%
The Applicable Margin for Level 4 shall initially apply and shall be subject to
adjustment quarterly (upwards or downwards, as appropriate) based on the
Leverage Ratio in accordance with the table set forth above. The Leverage Ratio
shall be determined by the Agent (which determination if made in good faith
shall be conclusive absent manifest error) based on the Financial Statements.
The adjustment, if any, to the Applicable Margin shall be effective beginning on
the fifth (5th) Business Day after the delivery of such Financial Statements.
In the event that Borrower shall at any time fail to furnish to the Agent in
timely fashion the Financial Statements required to be delivered pursuant to
Section 6.1, together with the Compliance Certificate to be delivered with
respect thereto, the Applicable Margin for Level 6 shall apply until the fifth
(5th) Business Day after such Financial Statements and Compliance Certificate
are so delivered. In no event shall the Applicable Margin be adjusted downward
if there exists a Default on the date on which such downward adjustment would
otherwise become effective until such time as the Default has been cured, waived
or ceases to exist. The provisions of this definition are not intended to, and
shall not be construed to, authorize any violation by Borrower of any financial
covenant contained in this Agreement.
SECTION 6
---------
Covenants
---------
6.17. Consolidated Tangible Net Worth. Section 6.17 of the Agreement is
-------------------------------
hereby amended by adding a new sentence at the end thereof as follows:
For purposes of testing the Consolidated Tangible Net Worth for
compliance with this Section 6.17 for the fiscal quarters ending
March 3, 2001 through and including December 1, 2001, an amount equal
to Nine Million Eight Hundred Sixty-Five Thousand Six Hundred Fifty-
Four Dollars ($9,865,654) (which represents the after-tax equivalent
of the noncash portion of restructuring charges permitted under
Section 6.25) shall be added to Borrower=s actual Consolidated
Tangible Net Worth.
6.18. Leverage Ratio. Section 6.18 of the Agreement is hereby amended by
--------------
adding a new sentence at the end thereof as follows:
-3-
<PAGE>
For purposes of testing the Leverage Ratio for compliance with this
Section 6.18 for the fiscal quarters ending March 3, 2001 through and
including December 1, 2001, the denominator within the definition of
Leverage Ratio shall be increased by an amount equal to Fifteen
Million Six Hundred Fifty-Nine Thousand Seven Hundred Sixty-Nine
Dollars ($15,659,769) (which represents the pre-tax noncash portion
of the restructuring charges permitted under Section 6.25).
6.25. Restructuring Charges. Section 6 of the Agreement is hereby amended
---------------------
by adding a new Section 6.25 as follows:
6.25. Restructuring Charges. Borrower shall not incur restructuring
---------------------
charges in excess of Twenty-Five Million Dollars ($25,000,000) in the
aggregate for the period commencing with the fiscal quarter ending March 3,
2001 through the fiscal quarter ending December 1, 2001.
PART II. CONTINUING EFFECT
===========================
Except as expressly modified herein:
(a) All terms, conditions, representations, warranties and covenants
contained in the Agreement shall remain the same and shall continue in full
force and effect, interpreted, wherever possible, in a manner consistent
with this First Amendment; provided, however, in the event of any
-------- -------
irreconcilable inconsistency, this First Amendment shall control;
(b) The representations and warranties contained in the Agreement
shall survive this First Amendment in their original form as continuing
representations and warranties of Borrower; and
(c) Capitalized terms used in this First Amendment, and not
specifically herein defined, shall have the meanings ascribed to them in
the Agreement.
In consideration hereof, Borrower represents, warrants, covenants and agrees
that:
(aa) Each representation and warranty set forth in the Agreement, as
hereby amended, remains true and correct as of the date hereof in all
material respects, except to the extent that such representation and
warranty is expressly intended to apply solely to an earlier date and
except changes reflecting transactions permitted by the Agreement;
(bb) There currently exist no offsets, counterclaims or defenses to
the performance of the Obligations (such offsets, counterclaims or
defenses, if any, being hereby expressly waived);
-4-
<PAGE>
(cc) There has not occurred any Default or Unmatured Default; and
(dd) After giving effect to this First Amendment and any transactions
contemplated hereby, no Default or Unmatured Default is or will be
occasioned hereby or thereby.
PART III. CONDITIONS PRECEDENT
===============================
Notwithstanding anything contained in this First Amendment to the contrary,
this First Amendment shall not become effective until each of the following
conditions precedent have been fulfilled to the satisfaction of the Agent:
(a) The Agent shall have received each of the following, in form and
substance satisfactory to the Agent:
(i) Counterparts of this First Amendment duly executed by the
Agent, Borrower and the Required Lenders;
(ii) A duly executed certificate of the Secretary or any Assistant
Secretary of Borrower (A) certifying as to the effectiveness of
Resolutions of the Board of Directors of Borrower that previously
authorized the execution, delivery and performance of amendments to
the Agreement, and (B) certifying as complete and correct as to
attached copies of the Articles of Incorporation and By-Laws of
Borrower or certifying that such Articles of Incorporation or By-Laws
have not been amended (except as shown) since the previous delivery
thereof to the Agent;
(b) A fee shall be paid by Borrower to the Agent for the pro rata
benefit of each Lender that has delivered and executed a counterpart of
this First Amendment by March 16, 2001 in an amount equal to .05% of such
Lender's aggregate Commitment;
(c) All legal matters incident to this First Amendment shall be
reasonably satisfactory to the Agent and its counsel.
PART IV. INDEPENDENT CREDIT DECISION
=====================================
Each Lender acknowledges that it has, independently and without reliance
upon the Agent or any other Lender, based on such documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter
into this First Amendment.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be executed by their respective officers duly authorized as of the date first
above written.
[THIS SPACE INTENTIONALLY LEFT BLANK]
-6-
<PAGE>
SIGNATURE PAGE OF
THE FINISH LINE, INC.
TO
FIRST AMENDMENT TO CREDIT AGREEMENT
THE FINISH LINE, INC.
By:________________________________
Title:______________________________
3308 North Mitthoeffer Road
Indianapolis, Indiana 46235
Attention: Steven J. Schneider
Facsimile: 317-895-2884
<PAGE>
SIGNATURE PAGE OF
NATIONAL CITY BANK OF INDIANA
TO
FIRST AMENDMENT TO CREDIT AGREEMENT
NATIONAL CITY BANK OF INDIANA,
individually and as Agent
By:________________________________
Title:_____________________________
One National City Center
Suite 200 East
Indianapolis, Indiana 46255
Attention: Thomas A. Schlehuber
Facsimile: 317-267-6249
<PAGE>
SIGNATURE PAGE OF
UNION PLANTERS BANK, NATIONAL ASSOCIATION
TO
FIRST AMENDMENT TO CREDIT AGREEMENT
UNION PLANTERS BANK, NATIONAL
ASSOCIATION
By:________________________________
Title:_____________________________
One Indiana Square, Suite 227
Indianapolis, Indiana 46204
Attention: David W. O'Neal
Facsimile: 317-221-6120
<PAGE>
SIGNATURE PAGE OF
FIRSTAR BANK, N.A.
TO
FIRST AMENDMENT TO CREDIT AGREEMENT
FIRSTAR BANK, N.A.
By:________________________________
Title:_____________________________
3815 River Crossing Parkway, Suite 100
Indianapolis, Indiana 46240
Attention: Christopher A. Black
Facsimile: 317-566-2069
<PAGE>
SIGNATURE PAGE OF
THE NORTHERN TRUST COMPANY
TO
FIRST AMENDMENT TO CREDIT AGREEMENT
THE NORTHERN TRUST COMPANY
By:________________________________
Title:______________________________
50 South LaSalle Street
Chicago, Illinois 60675
Attention: Candelario Martinez
Facsimile: 312-444-7028
<PAGE>
SIGNATURE PAGE OF
LASALLE BANK NATIONAL ASSOCIATION
TO
FIRST AMENDMENT TO CREDIT AGREEMENT
LASALLE BANK NATIONAL
ASSOCIATION
By:________________________________
Title:_____________________________
One American Square, Suite 1600
Indianapolis, Indiana 46204
Attention: William H. Lutes
Facsimile: 317-756-7021
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.32
<SEQUENCE>3
<FILENAME>dex1032.txt
<DESCRIPTION>NONSTANDARDIZED ADOPTION AGREEMENT
<TEXT>
<PAGE>
Exhibit 10.32
Plan #002
NONSTANDARDIZED
ADOPTION AGREEMENT
PROTOTYPE CASH OR DEFERRED PROFIT-SHARING
PLAN AND TRUST/CUSTODIAL ACCOUNT
Sponsored by
NATIONAL CITY BANK
The Employer named below hereby establishes a Cash or Deferred Profit-Sharing
Plan for eligible Employees as provided in this Adoption Agreement and the
accompanying Basic Prototype Plan and Trust/Custodial Account Basic Plan
Document #04.
1. EMPLOYER INFORMATION
NOTE: If multiple Employers are adopting the Plan, complete this
section based on the lead Employer. Additional Employers may
adopt this Plan by attaching executed signature pages to the
back of the Employer's Adoption Agreement.
(a) NAME AND ADDRESS:
The Finish Line, Inc.
3308 N. Mitthoeffer Road
Indianapolis, IN 46236
(b) TELEPHONE NUMBER: (317)899-1022
(c) TAX ID NUMBER: 35-1537210
(d) FORM OF BUSINESS:
[_] (i) Sole Proprietor
[_] (ii) Partnership
[X] (iii) Corporation
[_] (iv) "S" Corporation (formerly known as Subchapter S)
[_] (v) Other: ___________________________
1
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
(e) NAME OF INDIVIDUAL AUTHORIZED TO ISSUE
INSTRUCTIONS TO THE TRUSTEE/CUSTODIAN:
David Klapper, Gary Cohen, Steve Schneider
(f) NAME OF PLAN: The Finish Line, Inc. Profit Sharing and 401(k)
Plan
(g) THREE DIGIT PLAN NUMBER
FOR ANNUAL RETURN/REPORT: 003
2. EFFECTIVE DATE
(a) This is a new Plan having an effective date of____________.
(b) This is an amended Plan.
The effective date of the original Plan was November 1, 1989
----------------.
The effective date of the amended Plan is November 1, 2000
----------------.
(c) If different from above, the Effective Date for the Plan's Elective
Deferral provisions shall be______________.
3. DEFINITIONS
(a) "Collective or Commingled Funds" (Applicable to institutional
Trustees only.) Investment in collective or commingled funds as
permitted at paragraph 13.3(b) of the Basic Plan Document #04
shall only be made to the following specifically named fund(s):
Funds made available after the execution of this Adoption
Agreement will be listed on schedules attached to the end of this
Adoption Agreement.
2
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
(b) "Compensation" Compensation shall be determined on the basis of the:
[X] (i) Plan Year.
[ ] (ii) Employer's Taxable Year.
[ ] (iii) Calendar Year.
Compensation shall be determined on the basis of the following
safe-harbor definition of Compensation in IRS Regulation Section
1.414(s)-1(c):
[ ] (iv) Code Section 6041 and 6051 Compensation,
[X] (v) Code Section 3401(a) Compensation, or
[ ] (vi) Code Section 415 Compensation.
Compensation [ ] shall [X] shall not include Employer
contributions made pursuant to a Salary Savings Agreement which
are not includable in the gross income of the Employee for the
reasons indicated in the definition of Compensation at 1.12 of
the Basic Plan Document #04.
For purposes of the Plan, Compensation shall be limited to $______,
the maximum amount which will be considered for Plan purposes.
[If an amount is specified, it will limit the amount of
contributions allowed on behalf of higher compensated Employees.
Completion of this section is not intended to coordinate with the
$200,000 of Code Section 415(d), thus the amount should be less
than $200,000 as adjusted for cost-of-living increases.]
(iii) Exclusions From Compensation:
(1) overtime.
(2) bonuses.
(3) commissions.
3
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
(4) _________________
Type of Contribution(s) Exclusion(s)
----------------------- ------------
Elective Deferrals [Section 7(b)] n/a
-----------
Matching Contributions [Section 7(c)] n/a
-----------
Qualified Non-Elective Contributions [Section 7(d)]
and Non-Elective Contributions [Section 7(e)]
___________
(c) "Entry Date"
[ ] (i) The first day of the Plan Year nearest the date on
which an Employee meets the eligibility
requirements.
[ ] (ii) The earlier of the first day of the Plan Year or
the first day of the seventh month of the Plan Year
coinciding with or following the date on which an
Employee meets the eligibility requirements.
[ ] (iii) The first day of the Plan Year following the date
on which the Employee meets the eligibility
requirements. If this election is made, the Service
requirement at 4(a)(ii) may not exceed 1/2 year and
the age requirement at 4(b)(ii) may not exceed 20-
1/2.
[ ] (iv) The first day of the month coinciding with or
following the date on which an Employee meets the
eligibility requirements.
[X] (v) The first day of the Plan Year, or the first day of
the fourth month, or the first day of the seventh
month or the first day of the tenth month, of the
Plan Year coinciding with or following the date on
which an Employee meets the eligibility
requirements.
4
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
(d) "Hours of Service" Shall be determined on the basis of the method
selected below. Only one method may be selected. The method
selected shall be applied to all Employees covered under the Plan
as follows:
[X] (i) On the basis of actual hours for which an Employee
is paid or entitled to payment.
[ ] (ii) On the basis of days worked. An Employee shall be
credited with ten (10) Hours of Service if under
paragraph 1.42 of the Basic Plan Document #04 such
Employee would be credited with at least one (1)
Hour of Service during the day.
[ ] (iii) On the basis of weeks worked. An Employee shall be
credited with forty-five (45) Hours of Service if
under paragraph 1.42 of the Basic Plan Document #04
such Employee would be credited with at least one
(1) Hour of Service during the week.
[ ] (iv) On the basis of semi-monthly payroll periods. An
Employee shall be credited with ninety-five (95)
Hours of Service if under paragraph 1.42 of the
Basic Plan Document #04 such Employee would be
credited with at least one (1) Hour of Service
during the semi-monthly payroll period.
[ ] (v) On the basis of months worked. An Employee shall be
credited with one-hundred-ninety (190) Hours of
Service if under paragraph 1.42 of the Basic Plan
Document #04 such Employee would be credited with at
least one (1) Hour of Service during the month.
(e) "Limitation Year" The 12-consecutive month period commencing on
November 1 and ending on October 31.
---------- -----------
If applicable, the Limitation Year will be a short Limitation
Year commencing on November 1 and ending on December 31 .
---------- -----------
Thereafter, the Limitation Year shall end on the date last
specified above.
5
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
(f) "Net Profit"
[X] (i) Not applicable (profits will not be required for
any contributions to the Plan).
[_] (ii) As defined in paragraph 1.49 of the Basic Plan
Document #04.
[_] (iii) Shall be defined as:
______________________
(Only use if definition in paragraph 1.49 of the Basic
Plan Document #04 is to be superseded.)
(g) "Plan Year" The 12-consecutive month period commencing on January
-------
1 and ending on December 31.
- -----------
If applicable, the Plan Year will be a short Plan Year commencing
on November 1 and ending on December 31. Thereafter, the Plan
---------- -----------
Year shall end on the date last specified above.
(h) "Qualified Early Retirement Age" For purposes of making
distributions under the provisions of a Qualified Domestic
Relations Order, the Plan's Qualified Early Retirement Age with
regard to the Participant against whom the order is entered [X]
shall [_] shall not be the date the order is determined to be
qualified. If "shall" is elected, this will only allow payout to
the alternate payee(s).
(i) "Qualified Joint and Survivor Annuity" The safe-harbor provisions
of paragraph 8.7 of the Basic Plan Document #04 [X] are [_] are
not applicable. If not applicable, the survivor annuity shall be
___% (50%, 66-2/3%, 75% or 100%) of the annuity payable during
the lives of the Participant and Spouse. If no answer is
specified, 50% will be used.
(j) "Taxable Wage Base" [paragraph 1.79]
[_] (i) Not Applicable - Plan is not integrated with
Social Security.
6
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
[X] (ii) The maximum earnings considered wages for such
Plan Year under Code Section 3121(a).
[_] (iii) ___% (not more than 100%) of the amount considered
wages for such Plan Year under Code Section
3121(a).
[_] (iv) $___________, provided that such amount is not in
excess of the amount determined-under paragraph
3(j)(ii) above.
[_] (v) For the 1989 Plan Year $10,000. For all subsequent
Plan Years, 20% of the maximum earnings considered
wages for such Plan Year under Code Section
3121(a).
NOTE: Using less than the maximum at (ii) may result in
a change in the allocation formula in Section 7.
(k) "Valuation Date(s)" Allocations to Participant Accounts will be
done in accordance with Article V of the Basic Plan Document #04:
(i) Daily (v) Quarterly
(ii) Weekly (vi) Semi-Annually
(iii) Monthly (vii) Annually
(iv) Bi-Monthly
Indicate Valuation Date(s) to be used by specifying option from
list above:
Type of Contribution(s) Valuation Date(s)
----------------------- -----------------
After-Tax Voluntary Contributions [Section 6] n/a
-----
Elective Deferrals [Section 7(b)] i
-----
Matching Contributions [Section 7(c)] i
-----
7
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
Qualified Non-Elective Contributions [Section 7(d)] i
-----
Non-Elective Contributions [Section 7(e), (f) and (g)] i
-----
Minimum Top-Heavy Contributions [Section 7(i)] i
-----
(l) "Year of Service"
(i) For Eligibility Purposes: The 12-consecutive month period
during which an Employee is credited with 1000 (not more
----
than 1,000) Hours of Service.
(ii) For Allocation Accrual Purposes: The 12-consecutive month
period during which an Employee is credited with 1 (not
---
more than 1,000) Hours of Service.
(iii) For Vesting Purposes: The 12-consecutive month period
during which an Employee is credited with 1000 (not more
----
than 1,000) Hours of Service.
4. ELIGIBILITY REQUIREMENTS
(a) Service:
[_] (i) The Plan shall have no service requirement.
[X] (ii) The Plan shall cover only Employees having
completed at least 1 [not more than three (3)]
Years of Service. If more than one (1) is
specified, for Plan Years beginning in 1989 and
later, the answer will be deemed to be one (1).
NOTE: If the eligibility period selected is less than
one year, an Employee will not be required to
complete any specified number of Hours of
Service to receive credit for such period.
(b) Age:
[_] (i) The Plan shall have no minimum age requirement.
8
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
[X] (ii) The Plan shall cover only Employees having
attained age 21 (not more than age 21).
--
(c) Classification:
The Plan shall cover all Employees who have met the age and
service requirements with the following exceptions:
[_] (i) No exceptions.
[X] (ii) The Plan shall exclude Employees included
in a unit of Employees covered by a collective
bargaining agreement between the Employer and
Employee Representatives, if retirement benefits
were the subject of good faith bargaining. For
this purpose, the term "Employee Representative"
does not include any organization more than half
of whose members are Employees who are owners,
officers, or executives of the Employer.
[X] (iii) The Plan shall exclude Employees who are
nonresident aliens and who receive no earned
income from the Employer which constitutes
income from sources within the United States.
[_] (iv) The Plan shall exclude from participation any
nondiscriminatory classification of Employees
determined as follows:
_______________________
(d) Employees on Effective Date:
[X] (i) Not Applicable. All Employees will be required
to satisfy both the age and Service requirements
specified above.
[_] (ii) Employees employed on the Plan's Effective Date
do not have to satisfy the Service requirements
specified above.
9
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
[_] (iii) Employees employed on the Plan's
Effective Date do not have to satisfy the age
requirements specified above.
5. RETIREMENT AGES
(a) Normal Retirement Age:
If the Employer imposes a requirement that Employees retire upon
reaching a specified age, the Normal Retirement Age selected
below may not exceed the Employer imposed mandatory retirement
age.
[X] (i) Normal Retirement Age shall be 65 (not to exceed
--
age 65).
[_] (ii) Normal Retirement Age shall be the later of
attaining age (not to exceed age 65) or the (not
to exceed the 5th) anniversary of the first day
of the first Plan Year in which the Participant
commenced participation in the Plan.
(b) Early Retirement Age:
[X] (i) Not Applicable.
[_] (ii) The Plan shall have an Early Retirement Age
of_____ (not less than 55) and completion of____
Years of Service.
6. EMPLOYEE CONTRIBUTIONS
[X] (a) Participants shall be permitted to make Elective
Deferrals in any amount from 1 % up to 15 % of their
--- ---
Compensation.
If (a) is applicable, Participants shall be permitted to
amend their Salary Savings Agreements to change the
contribution percentage as provided below:
[_] (i) On the Anniversary Date of the Plan,
[X] (ii) On the Anniversary Date of the Plan and
on the first day of the seventh month
of the Plan Year,
10
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
[_] (iii) On the Anniversary Date of the Plan and
on the first day following any
Valuation Date, or
[_] (iv) Upon 30 days notice to the Employer.
[_] (b) Participants shall be permitted to make after tax
Voluntary Contributions.
[_] (c) Participants shall be required to make after tax
Voluntary Contributions as follows (Thrift Savings Plan):
[_] (i) % of Compensation.
------
[_] (ii) A percentage determined by the Employee
on his or her enrollment form.
[_] (d) If necessary to pass the Average Deferral Percentage
Test, Participants [_] may [_] may not have Elective
Deferrals recharacterized as Voluntary Contributions.
NOTE: The Average Deferral Percentage Test will apply
to contributions under (a) above. The Average
Contribution Percentage Test will apply to
contributions under (b) and (c) above, and may
apply to (a).
7. EMPLOYER CONTRIBUTIONS AND ALLOCATION THEREOF
NOTE: The Employer shall make contributions to the Plan in
accordance with the formula or formulas selected below.
The Employer's contribution shall be subject to the
limitations contained in Articles III and X. For this
purpose, a contribution for a Plan Year shall be limited
for the Limitation Year which ends with or within such
Plan Year. Also, the integrated allocation formulas below
are for Plan Years beginning in 1989 and later. The
Employer's allocation for earlier years shall be as
specified in its Plan prior to amendment for the Tax
Reform Act of 1986.
11
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
(a) Profits Requirement:
(i) Current or Accumulated Net Profits are required for:
[_] (A) Matching Contributions.
[_] (B) Qualified Non-Elective Contributions.
[_] (C) discretionary contributions.
(ii) No Net Profits are required for:
[X] (A) Matching Contributions.
[X] (B) Qualified Non-Elective Contributions.
[X] (C) discretionary contributions.
NOTE: Elective Deferrals can always be contributed
regardless of profits.
[X] (b) Salary Savings Agreement:
The Employer shall contribute and allocate to each Participant's
account an amount equal to the amount withheld from the
Compensation of such Participant pursuant to his or her Salary
Savings Agreement. If applicable, the maximum percentage is
specified in Section 6 above.
An Employee who has terminated his or her election under the
Salary Savings Agreement other than for hardship reasons may not
make another Elective Deferral:
[_] (i) until the first day of the next Plan Year.
[_] (ii) until the first day of the next valuation
period.
[X] (iii) for a period of 6 month(s) (not to exceed 12
------
months).
12
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
[X] (c) Matching Employer Contribution [See paragraphs (h) and (i)]:
[_] (i) Percentage Match: The Employer shall contribute
and allocate to each eligible Participant's
account an amount equal to ____% of the amount
contributed and allocated in accordance with
paragraph 7(b) above and (if checked) ____% of [_]
the amount of Voluntary Contributions made in
accordance with paragraph 4.1 of the Basic Plan
Document #04. The Employer shall not match
Participant Elective Deferrals as provided above
in excess of $_______ or in excess of ____% of the
Participant's Compensation or if applicable,
Voluntary Contributions in excess of $_______ or
in excess of ____% of the Participant's
Compensation. In no event will the match on both
Elective Deferrals and Voluntary Contributions
exceed a combined amount of $________ or _______%.
[X] (ii) Discretionary Match: The Employer shall contribute
and allocate to each eligible Participant's
account a percentage of the Participant's Elective
Deferral contributed and allocated in accordance
with paragraph 7(b) above. The Employer shall set
such percentage prior to the end of the Plan Year.
The Employer shall not match Participant Elective
Deferrals in excess of $_______ or in excess
of______ % of the Participant's Compensation.
[_] (iii) Tiered Match: The Employer shall contribute and
allocate to each Participant's account an amount
equal to_______ % of the first_______ % of the
Participant's Compensation, to the extent
deferred.
_______% of the next ______% of the Participant's
Compensation, to the extent deferred.
_______% of the next ______% of the Participant's
Compensation, to the extent deferred.
NOTE: Percentages specified in (iii) above may not increase as
the percentage of Participant's contribution increases.
[_] (iv) Flat Dollar Match: The Employer shall contribute
and allocate to each Participant's account $_____
if the Participant defers at least 1% of
13
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
Compensation.
[_] (v) Percentage of Compensation Match: The Employer
shall contribute and allocate to each
Participant's account _____% of Compensation if
the Participant defers at least 1% of
Compensation.
[_] (vi) Proportionate Compensation Match: The Employer
shall contribute and allocate to each Participant
who defers at least 1% of Compensation, an amount
determined by multiplying such Employer Matching
Contribution by a fraction the numerator of which
is the Participant's Compensation and the
denominator of which is the Compensation of all
Participants eligible to receive such an
allocation. The Employer shall set such
discretionary contribution prior to the end of the
Plan Year.
[_] (vii) Qualified Match: Employer Matching Contributions
will be treated as Qualified Matching
Contributions to the extent specified below:
[_] (A) All Matching Contributions.
[_] (B) None.
[_] (C) _____% of the Employer's Matching
Contribution.
[_] (D) Up to_______% of each
Participant's Compensation.
[_] (E) The amount necessary to meet the
[_] Average Deferral Percentage
(ADP) Test, [_] Average
Contribution Percentage (ACP)
Test, [_] Both the ADP and ACP
Tests.
(viii) Matching Contribution Computation Period:
The time period upon which matching
contributions will be based shall be
[_] (A) weekly
[X] (B) bi-weekly
14
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
[_] (C) semi-monthly
[_] (D) monthly
[_] (E) quarterly
[_] (F) semi-annually
[_] (G) annually
(ix) Eligibility for Match: Employer Matching
Contributions, whether or not Qualified,
will only be made on Employee
Contributions not withdrawn prior to the
end of the [X] valuation period [_] Plan
Year.
[X] (d) Qualified Non-Elective Employer Contribution - [See paragraphs (h) and
(i)] These contributions are fully vested when contributed.
The Employer shall have the right to make an additional discretionary
contribution which shall be allocated to each eligible Employee in
proportion to his or her Compensation as a percentage of the
Compensation of all eligible Employees. This part of the Employer's
contribution and the allocation thereof shall be unrelated to any
Employee contributions made hereunder. The amount of Qualified non-
Elective Contributions taken into account for purposes of meeting the
ADP or ACP test requirements is:
[X] (i) All such Qualified non-Elective Contributions.
[_] (ii) The amount necessary to meet [_] the ADP test, [_] the
ACP test, [ ] Both the ADP and ACP tests.
Qualified non-Elective Contributions will be made to:
[_] (iii) All Employees eligible to participate.
[_] (iv) Only non-Highly Compensated Employees eligible to
participate.
[_] (e) Additional Employer Contribution Other Than Qualified Non-Elective
Contributions -
15
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
Non-Integrated [See paragraphs (h) and (i)]
The Employer shall have the right to make an additional
discretionary contribution which shall be allocated to each
eligible Employee in proportion to his or her Compensation as a
percentage of the Compensation of all eligible Employees. This
part of the Employer's contribution and the allocation thereof
shall be unrelated to any Employee contributions made hereunder.
[X] (f) Additional Employer Contribution - Integrated Allocation Formula
[See paragraphs (h) and (i)]
The Employer shall have the right to make an additional
discretionary contribution. The Employer's contribution for the
Plan Year plus any forfeitures shall be allocated to the accounts
of eligible Participants as follows:
(i) First, to the extent contributions and forfeitures are
sufficient, all Participants will receive an allocation
equal to 3% of their Compensation.
(ii) Next, any remaining Employer Contributions and
forfeitures will be allocated to Participants who have
Compensation in excess of the Taxable Wage Base (excess
Compensation). Each such Participant will receive an
allocation in the ratio that his or her excess
compensation bears to the excess Compensation of all
Participants. Participants may only receive an allocation
of 3% of excess Compensation.
(iii) Next, any remaining Employer contributions and
forfeitures will be allocated to all Participants in the
ratio that their Compensation plus excess Compensation
bears to the total Compensation plus excess Compensation
of all Participants. Participants may only receive an
allocation of up to 2.7% of their Compensation plus
excess Compensation, under this allocation method. If the
Taxable Wage Base defined at Section 3(j) is less than or
equal to the greater of $10,000 or 20% of the maximum,
the 2.7% need not be reduced. If the amount specified is
greater than the greater of $10,000 or 20% of the maximum
Taxable Wage Base, but not more than 80%, 2.7% must be
reduced to 1.3%. If the amount specified is greater than
80% but less than 100% of the maximum Taxable Wage Base,
the 2.7% must be reduced to 2.4%.
NOTE: If the Plan is not Top-Heavy or if the Top-Heavy minimum
contribution or
16
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
benefit is provided under another Plan [see Section
11(c)(ii)] covering the same Employees, sub-paragraphs
(i) and (ii) above may be disregarded and 5.7%, 4.3% or
5.4% may be substituted for 2.7%, 1.3% or 2.4% where it
appears in (iii) above.
(iv) Next, any remaining Employer contributions and
forfeitures will be allocated to all Participants
(whether or not they received an allocation under the
preceding paragraphs) in the ratio that each
Participant's Compensation bears to all Participants'
Compensation.
[_] (g) Additional Employer Contribution-Alternative Integrated
Allocation Formula. [See paragraph (h) and (i)]
The Employer shall have the right to make an additional
discretionary contribution. To the extent that such contributions
are sufficient, they shall be allocated as follows:
____% of each eligible Participant's Compensation plus _____% of
Compensation in excess of the Taxable Wage Base defined at
Section 3(j) hereof. The percentage on excess compensation may
not exceed the lesser of (i) the amount first specified in this
paragraph or (ii) the greater of 5.7% or the percentage rate of
tax under Code Section 3111(a) as in effect on the first day of
the Plan Year attributable to the Old Age (OA) portion of the
OASDI provisions of the Social Security Act. If the Employer
specifies a Taxable Wage Base in Section 3(j) which is lower than
the Taxable Wage Base for Social Security purposes (SSTWB) in
effect as of the first day of the Plan Year, the percentage
contributed with respect to excess Compensation must be adjusted.
If the Plan's Taxable Wage Base is greater than the larger of
$10,000 or 20% of the SSTWB but not more than 80% of the SSTWB,
the excess percentage is 4.3%. If the Plan's Taxable Wage Base is
greater than 80% of the SSTWB but less than 100% of the SSTWB,
the excess percentage is 5.4%.
NOTE: Only one plan maintained by the Employer may be
integrated with Social Security.
17
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
(h) Allocation of Excess Amounts (Annual Additions)
In the event that the allocation formula above results in an
Excess Amount, such excess shall be:
[_] (i) placed in a suspense account accruing no gains
or losses for the benefit of the Participant.
[X] (ii) reallocated as additional Employer contributions
to all other Participants to the extent that they
do not have any Excess Amount.
(i) Minimum Employer Contribution Under Top-Heavy Plans:
For any Plan Year during which the Plan is Top-Heavy, the sum of
the contributions and forfeitures as allocated to eligible
Employees under paragraphs 7(d), 7(e), 7(f), 7(g) and 9 of this
Adoption Agreement shall not be less than the amount required
under paragraph 14.2 of the Basic Plan document #04. Top-Heavy
minimums will be allocated to:
[_] (i) all eligible Participants.
[X] (ii) only eligible non-Key Employees who are
Participants.
(j) Return of Excess Contributions and/or Excess Aggregate
Contributions:
In the event that one or more Highly Compensated Employees is
subject to both the ADP and ACP tests and the sum of such tests
exceeds the Aggregate Limit, the limit will be satisfied by
reducing the:
[_] (i) the ADP of the affected Highly Compensated
Employees.
[X] (ii) the ACP of the affected Highly Compensated
Employees.
[_] (iii) a combination of the ADP and ACP of the affected
Highly Compensated Employees.
18
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
8. ALLOCATIONS TO TERMINATED EMPLOYEES
[X] (a) The Employer will not allocate Employer related contributions to
Employees who terminate during a Plan Year, unless required to
satisfy the requirements of Code Section 401(a)(26) and 410(b).
(These requirements are effective for 1989 and subsequent Plan
Years.)
[X] (b) The Employer will allocate Employer matching and other related
contributions as indicated below to Employees who terminate during
the Plan Year as a result of:
Matching Other
-------- -----
[X] [X] (i) Retirement.
[X] [X] (ii) Disability.
[X] [X] (iii) Death.
[_] [_] (iv) Other termination of employment
provided that the Participant has
completed a Year of Service as defined
for Allocation Accrual Purposes.
[_] [_] (v) Other termination of employment even
though the Participant has not
completed a Year of Service.
[_] [_] (vi) Termination of employment (for any
reason) provided that the Participant
had completed a Year of Service for
Allocation Accrual Purposes.
9. ALLOCATION OF FORFEITURES
NOTE: Subsections (a), (b) and (c) below apply to forfeitures of
amounts other than Excess Aggregate Contributions.
19
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
(a) Allocation Alternatives:
If forfeitures are allocated to Participants, such
allocation shall be done in the same manner as the
Employer's contribution.
[_] (i) Not Applicable. All contributions are
always fully vested.
[_] (ii) Forfeitures shall be allocated to
Participants in the same manner as the
Employer's contribution.
If allocation to other Participants is
selected, the allocation shall be as
follows:
[1] Amount attributable to Employer
discretionary contributions and
Top-Heavy minimums will be
allocated to:
[_] all eligible Participants
under the Plan.
[_] only those Participants
eligible for an
allocation of Employer
contributions in the
current year.
[_] only those Participants
eligible for an
allocation of matching
contributions in the
current year.
[2] Amounts attributable to Employer
Matching contributions will be
allocated to:
[_] all eligible
Participants.
[_] only those Participants
eligible for allocations
of matching contributions
in the current year.
[X] (iii) Forfeitures shall be applied to reduce
the Employer's contribution for such
Plan Year.
[_] (iv) Forfeitures shall be applied to offset
administrative expenses of
20
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
the Plan. If forfeitures exceed these
expenses, (iii) above shall apply.
(b) Date for Reallocation:
NOTE: If no distribution has been made to a former Participant,
sub-section (i) below will apply to such Participant even
if the Employer elects (ii), (iii) or (iv) below as its
normal administrative policy.
[_] (i) Forfeitures shall be reallocated at the end
of the Plan Year during which the former
Participant incurs his or her fifth
consecutive one year Break In Service.
[_] (ii) Forfeitures will be reallocated immediately
(as of the next Valuation Date).
[_] (iii) Forfeitures shall be reallocated at the end
of the Plan Year during which the former
Employee incurs his or her __ (1st, 2nd,
3rd, or 4th) consecutive one year Break In
Service.
[X] (iv) Forfeitures will be reallocated immediately
(as of the Plan Year end).
(c) Restoration of Forfeitures:
If amounts are forfeited prior to five consecutive 1-year Breaks
in Service, the Funds for restoration of account balances will be
obtained from the following resources in the order indicated
(fill in the appropriate number):
[1] (i) Current year's forfeitures.
[2] (ii) Additional Employer contribution.
[3] (iii) Income or gain to the Plan.
21
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
(d) Forfeitures of Excess Aggregate Contributions shall be:
[X] (i) Applied to reduce Employer contributions.
[_] (ii) Allocated, after all other forfeitures
under the Plan, to the Matching Contribution
account of each non-highly compensated
Participant who made Elective Deferrals or
Voluntary Contributions in the ratio which each
such Participant's Compensation for the Plan
Year bears to the total Compensation of all
Participants for such Plan Year. Such
forfeitures cannot be allocated to the account
of any Highly Compensated Employee.
Forfeitures of Excess Aggregate Contributions will be so applied
at the end of the Plan Year in which they occur.
10. CASH OPTION
[_] (a) The Employer may permit a Participant to elect to defer
to the Plan, an amount not to exceed ____% of any
Employer paid cash bonus made for such Participant for
any year. A Participant must file an election to defer
such contribution at least fifteen (15) days prior to the
end of the Plan Year. If the Employee fails to make such
an election, the entire Employer paid cash bonus to which
the Participant would be entitled shall be paid as cash
and not to the Plan. Amounts deferred under this section
shall be treated for all purposes as Elective Deferrals.
Notwithstanding the above, the election to defer must be
made before the bonus is made available to the
Participant.
[X] (b) Not Applicable.
11. LIMITATIONS ON ALLOCATIONS
[X] This is the only Plan the Employer maintains or ever maintained,
therefore, this section is not applicable.
[_] The Employer does maintain or has maintained another Plan
(including a Welfare Benefit Fund or an individual medical
account (as defined in Code Section 415(1)(2)), under which
amounts are treated as Annual Additions) and has completed the
proper
22
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
sections below.
Complete (a), (b) and (c) only if the Employer maintains or ever
maintained another qualified plan, including a Welfare Benefit
Fund or an individual medical account [as defined in Code Section
415(l)(2)] in which any Participant in this Plan is (or was) a
participant or could possibly become a participant.
(a) If the Participant is covered under another qualified Defined
Contribution Plan maintained by the Employer, other than a Master
or Prototype Plan:
[X] (i) provisions of Article X of the Basic Plan
Document #04 will apply, as if the other plan
were a Master or Prototype Plan.
[_] (ii) Attach provisions stating the method under which
the plans will limit total Annual Additions to
the Maximum Permissible Amount, and will
properly reduce any Excess Amounts, in a manner
that precludes Employer discretion.
(b) If a Participant is or ever has been a participant in a Defined
Benefit Plan maintained by the Employer:
Attach provisions which will satisfy the 1.0 limitation of Code
Section 415(e). Such language must preclude Employer discretion.
The Employer must also specify the interest and mortality
assumptions used in determining Present Value in the Defined
Benefit Plan.
(c) The minimum contribution or benefit required under Code Section
416 relating to Top-Heavy Plans shall be satisfied by:
[_] (i) this Plan.
23
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
[_] (ii) ____________________________________________
(Name of other qualified plan of the Employer).
[_] (iii) Attach provisions stating the method under which
the minimum contribution and benefit provisions
of Code Section 416 will be satisfied. If a
Defined Benefit Plan is or was maintained, an
attachment must be provided showing interest and
mortality assumptions used in the Top-Heavy
Ratio.
12. VESTING
Employees shall have a fully vested and nonforfeitable interest in any
Employer contribution and the investment earnings thereon made in
accordance with paragraphs (select one or more options) [_] 7(c), [_]
7(e), [_] 7(f), [_] 7(g) and [_] 7(i) hereof. Contributions under
paragraph 7(b), 7(c)(vii) and 7(d) are always fully vested. If one or more
of the foregoing options are not selected, such Employer contributions
shall be subject to the vesting table selected by the Employer.
Each Participant shall acquire a vested and nonforfeitable percentage in
his or her account balance attributable to Employer contributions and the
earnings thereon under the procedures selected below except with respect
to any Plan Year during which the Plan is Top-Heavy, in which case the
Two-twenty vesting schedule [Option (b)(iv)] shall automatically apply
unless the Employer has already elected a faster vesting schedule. If the
Plan is switched to option (b)(iv), because of its Top-Heavy status, that
vesting schedule will remain in effect even if the Plan later becomes
non-Top-Heavy until the Employer executes an amendment of this Adoption
Agreement indicating otherwise.
(a) Computation Period:
The computation period for purposes of determining Years of
Service and Breaks in Service for purposes of computing a
Participant's nonforfeitable right to his or her account balance
derived from Employer contributions:
[_] (i) shall not be applicable since Participants are
always fully vested,
[_] (ii) shall commence on the date on which an Employee
first performs an Hour of Service for the Employer
and each subsequent 12-consecutive month period
shall commence on the anniversary thereof, or
24
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
month period shall commence on the anniversary
thereof, or
[X] (iii) shall commence on the first day of the Plan Year
during which an Employee first performs an Hour
of Service for the Employer and each subsequent
12-consecutive month period shall commence on
the anniversary thereof.
A Participant shall receive credit for a Year of Service if he or she
completes at least 1,000 Hours of Service [or if lesser, the number of
hours specified at 3(l)(iii) of this Adoption Agreement] at any time
during the 12-consecutive month computation period. Consequently, a Year
of Service may be earned prior to the end of the 12-consecutive month
computation period and the Participant need not be employed at the end of
the 12-consecutive month computation period to receive credit for a Year
of Service.
(b) Vesting Schedules:
NOTE: The vesting schedules below only apply to a Participant
who has at least one Hour of Service during or after the
1989 Plan Year. If applicable, Participants who separated
from Service prior to the 1989 Plan Year will remain
under the vesting schedule as in effect in the Plan prior
to amendment for the Tax Reform Act of 1986.
25
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
(i) Full and immediate vesting.
Years of Service
----------------
1 2 3 4 5 6 7
-- --- -- -- -- -- --
(ii) % 100%
-----
(iii) % % 100%
----- -----
(iv) % 20% 40% 60% 80% 100%
-----
(v) % % 20% 40% 60% 80% 100%
----- -----
(vi) 10% 20% 30% 40% 60% 80% 100%
(vii) % % % % 100%
----- ----- ----- -----
(viii) 0 % 20 % 50 % 75 % 100 % % 100%
----- ----- ----- ----- ----- ----- -----
NOTE: The percentages selected for schedule (viii) may not be less for
any year than the percentages shown at schedule (v).
[X] All contributions other than those which are fully vested
when contributed will vest under schedule viii above.
----
[ ] Contributions other than those which are fully vested when
contributed will vest as provided below:
Vesting
Option Selected Type Of Employer Contribution
--------------- -----------------------------
________ 7(c) Employer Match on Salary
Savings
________ 7(c) Employer Match on
Employee Voluntary
________ 7(e) Employer Discretionary
________ 7(f) & (g) Employer Discretionary
Integrated
26
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
(c) Service disregarded for Vesting:
[X] (i) Not Applicable. All Service shall be considered.
[_] (ii) Service prior to the Effective Date of this Plan
or a predecessor plan shall be disregarded when computing
a Participant's vested and nonforfeitable interest.
[_] (iii) Service prior to a Participant having attained
age 18 shall be disregarded when computing a
Participant's vested and nonforfeitable interest.
13. SERVICE WITH PREDECESSOR ORGANIZATION
For purposes of satisfying the Service requirements for eligibility, Hours
of Service shall include Service with the following predecessor
organization(s):
(These hours will also be used for vesting purposes.)
14. ROLLOVER/TRANSFER CONTRIBUTIONS
(a) Rollover Contributions, as described at paragraph 4.3 of the
Basic Plan Document #04, [X] shall [_] shall not be permitted. If
permitted, Employees [X] may [_] may not make Rollover
Contributions prior to meeting the eligibility requirements for
participation in the Plan.
(b) Transfer Contributions, as described at paragraph 4.4 of the
Basic Plan Document #04 [_] shall [X] shall not be permitted. If
permitted, Employees [_] may [_] may not make Transfer
Contributions prior to meeting the eligibility requirements for
participation in the Plan.
NOTE: Even if available, the Employer may refuse to accept such
contributions if its Plan meets the safe-harbor rules of
paragraph 8.7 of the Basic Plan Document #04.
27
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
15. HARDSHIP WITHDRAWALS
Hardship withdrawals, as provided for in paragraph 6.9 of the Basic Plan
Document #04, [_] are [X] are not permitted.
16. PARTICIPANT LOANS
Participant loans, as provided for in paragraph 13.5 of the Basic Plan
Document #04, [X] are [_] are not permitted. If permitted, repayments of
principal and interest shall be repaid to [X] the Participant's segregated
account or [_] the general Fund.
17. INSURANCE POLICIES
The insurance provisions of paragraph 13.6 of the Basic Plan Document #04
[_] shall [X] shall not be applicable.
18. EMPLOYER INVESTMENT DIRECTION
The Employer investment direction provisions, as set forth in paragraph
13.7 of the Basic Plan Document #04, [X] shall [_] shall not be
applicable.
19. EMPLOYEE INVESTMENT DIRECTION
(a) The Employee investment direction provisions, as set forth in
paragraph 13.8 of the Basic Plan Document #04, [X] shall [_]
shall not be applicable.
If applicable, Participants may direct their investments:
[_] (i) among funds offered by the Trustee.
[X] (ii) among any allowable investments.
(b) Participants may direct the following kinds of contributions and
the earnings thereon (check all applicable):
[X] (i) All Contributions
[_] (ii) Elective Deferrals
28
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
[_] (iii) Employee Voluntary Contributions (after-tax)
[_] (iv) Employee Mandatory Contributions (after-tax)
[_] (v) Employer Qualified Matching Contributions
[_] (vi) Other Employer Matching Contributions
[_] (vii) Employer Qualified Non-Elective Contributions
[_] (viii) Employer Discretionary Contributions
[_] (ix) Rollover Contributions
[_] (x) Transfer Contributions
[_] (xi) All of above which are checked, but only to the
extent that the Participant is vested in those
contributions.
NOTE: To the extent that Employee investment direction was
previously allowed, the Trustee shall have the right to
either make the assets part of the general Trust, or
leave them as separately invested subject to the rights
of paragraph 13.8.
20. EARLY PAYMENT OPTION
(a) A Participant who separates from Service prior to retirement,
death or Disability [X] may [_] may not make application to the
Employer requesting an early payment of his or her vested account
balance.
(b) A Participant who has attained age 59-1/2 and who has not
separated from Service [X] may [_] may not obtain a distribution
of his or her vested Employer contributions. Distribution can
only be made if the Participant is 100% vested.
(c) A Participant who has attained the Plan's Normal Retirement Age
and who has not separated from Service [X] may [_] may not
receive a distribution of his or her vested
29
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
account balance.
NOTE: If the Participant has had the right to withdraw his or her
account balance in the past, this right may not be taken
away. Notwithstanding the above, to the contrary,
required minimum distributions will be paid. For timing
of distributions, see item 21(a) below.
21. DISTRIBUTION OPTIONS
(a) Timing of Distributions:
In cases of termination for other than death, Disability or
retirement, benefits shall be paid:
[_] (i) As soon as administratively feasible,
following the close of the valuation period
during which a distribution is requested or is
otherwise payable.
[_] (ii) As soon as administratively feasible
following the close of the Plan Year during
which a distribution is requested or is
otherwise payable.
[X] (iii) As soon as administratively feasible,
following the date on which a distribution is
requested or is otherwise payable.
[_] (iv) As soon as administratively feasible,
after the close of the Plan Year during which
the Participant incurs consecutive one-year
Breaks in Service.
[_] (v) Only after the Participant has achieved the
Plan's Normal Retirement Age, or Early
Retirement Age, if applicable.
In cases of death, Disability or retirement, benefits shall be
paid:
[_] (vi) As soon as administratively feasible,
following the close of the valuation period
during which a distribution is requested or is
otherwise payable.
[_] (vii) As soon as administratively feasible
following the close of the Plan Year during
which a distribution is requested or is
otherwise payable.
30
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
[X] (viii) As soon as administratively feasible,
following the date on which a distribution is
requested or is otherwise payable.
(b) Optional Forms of Payment:
[X] (i) Lump Sum.
[_] (ii) Installment Payments.
[_] (iii) Life Annuity*.
[_] (iv) Life Annuity Term Certain*.
Life Annuity with payments guaranteed for years
(not to exceed 20 years, specify all
applicable).
[_] (v) Joint and [ ] 50%, [ ] 66-2/3%, [ ] 75% or [ ]
100% survivor annuity* (specify all applicable).
[_] (vi) Other form(s) specified:___________________
*Not available in Plan meeting provisions of paragraph 8.7 of
Basic Plan Document #04.
(c) Recalculation of Life Expectancy:
In determining required distributions under the Plan,
Participants and/or their Spouse (Surviving Spouse) [_] shall [X]
shall not have the right to have their life expectancy
recalculated annually.
If "shall",
[_] only the Participant shall be recalculated.
[_] both the Participant and Spouse shall be recalculated.
[_] who is recalculated shall be determined by the
Participant.
31
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
22. SPONSOR CONTACT
Employers should direct questions concerning the language contained in and
qualification of the Prototype to:
(Job Title) I/T EB COMPLIANCE OFFICER
(Phone Number) 216-575-2000
In the event that the Sponsor amends, discontinues or abandons this
Prototype Plan, notification will be provided to the Employer's address
provided on the first page of this Agreement.
32
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
23. SIGNATURES:
Due to the significant tax ramifications, the Sponsor recommends that
before you execute this Adoption Agreement, you contact your attorney or
tax advisor, if any.
(a) EMPLOYER:
Name and address of Employer if different than specified in
Section 1 above.
This agreement and the corresponding provisions of the Plan and
Trust/Custodial Account Basic Plan Document #04 were adopted by
the Employer the ____day of _______ , 19__.
Signed for the Employer by:
Title:
Signature: __________________________________
The Employer understands that its failure to properly complete
the Adoption Agreement may result in disqualification of its
Plan.
Employer's Reliance: The adopting Employer may not rely on an
opinion letter issued by the National Office of the Internal
Revenue Service as evidence that the Plan is qualified under Code
Section 401. In order to obtain reliance with respect to Plan
qualification, the Employer must apply to the appropriate Key
District Office for a determination letter.
This Adoption Agreement may only be used in conjunction with
Basic Plan Document #04.
33
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
[X] (b) TRUSTEE:
Name of Trustee:
NATIONAL CITY BANK
The assets of the Fund shall be invested in accordance with
paragraph 13.3 of the Basic Plan Document #04 as a Trust. As
such, the Employer's Plan as contained herein was accepted by the
Trustee the ____day of________ , 20__.
Signed for the Trustee by:
Title:
Signature: _____________________ __________________________
[_] (c) CUSTODIAN:
Name of Custodian:
The assets of the Fund shall be invested in accordance with
paragraph 13.4 of the Basic Plan Document #04 as a Custodial
Account. As such, the Employer's Plan as contained herein was
accepted by the Custodian the ____day of ________, 20__.
Signed for the Custodian by:
Title:
Signature: _______________________ _________________________
(d) SPONSOR:
The Employer's Agreement and the corresponding provisions of the
Plan and Trust/Custodial Account Basic Plan Document #04 were
accepted by the Sponsor the ____day of ________, 20__ .
Signed for the Sponsor by:
34
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #002
Title:
Signature: _______________________________________
35
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>4
<FILENAME>dex13.txt
<DESCRIPTION>ANNUAL REPORT
<TEXT>
<PAGE>
[LOGO OF FINISH LINE]
[PICTURE OF SHOE APPEARS HERE]
- --------------------------------------------------------------------------------
annual report
- --------------------------------------------------------------------------------
<PAGE>
2001 FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Fiscal Fiscal Fiscal
Dollars in thousands (except per share data) 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 663,906 $ 585,963 $ 522,623
Operating income 4,975 23,185 31,946
Operating income as a percent of net sales 0.8% 4.0% 6.1%
Net income 3,745 15,607 20,687
Net income as a percent of net sales 0.6% 2.7% 4.0%
Diluted earnings per share $ .15 $ .62 $ .80
Number of stores open at end of period 436 409 358
Total retail square footage at end of period 2,653,886 2,478,930 2,095,264
Average store size 6,087 6,061 5,853
Total assets $ 308,868 $ 289,095 $ 278,555
Cash and marketable securities 51,935 24,481 40,924
Total debt -- -- --
Total stockholders' equity 226,747 222,392 208,679
=======================================================================================================================
</TABLE>
The Company's fiscal year ends on the Saturday nearest the end of February
starting with fiscal 1998. For fiscal 1997 and prior, the Company's fiscal year
ended at the end of February. As used in this Report, "fiscal 1997," "fiscal
1998," "fiscal 1999," "fiscal 2000," and "fiscal 2001" refer to the Company's
fiscal years ended March 1, 1997; February 28, 1998; February 27, 1999; February
26, 2000 and March 3, 2001 respectively. "Fiscal 2002" and "fiscal 2003" refer
to the Company's fiscal years ending March 2, 2002 and March 1, 2003,
respectively.
[GRAPH] [GRAPH] [GRAPH] [GRAPH]
<PAGE>
Finish Line, Inc. is a leading athletic retailer specializing in brand name
athletic footwear, apparel, and accessories. Known for its signature shoe wall,
Finish Line works to provide customers with more styles and sizes than any other
mall-based retailer. Finish Line began operations in 1976 in Indianapolis,
Indiana and at year-end served customers in 42 states through 436 stores and
online.
ALABAMA
Birmingham
Dothan
Montgomery
ARIZONA
Mesa
Phoenix
Scottsdale
Tucson
ARKANSAS
Fayetteville
Fort Smith
Little Rock
N. Little Rock
CALIFORNIA
Fairfield
Los Angeles
- -Cerritos
- -Culver City
- -Montclair
- -Montebello
- -Northridge
- -West Covina
Orange County
- -Mission Viejo
- -Westminster
Salinas
San Diego
- -Roseville
Stockton
COLORADO
Boulder
Colorado Springs
Denver
Fort Collins
Greeley
CONNECTICUT
Meriden
Trumbull
Waterbury
Waterford
DELAWARE
Wilmington
FLORIDA
Altamonte
Brandon
Clearwater
Crystal River
Daytona Beach
Fort Myers
Jacksonville
Lakeland
Naples
Ocoee
Orlando
Panama City
Pensacola
Port Richey
Sanford
St. Petersburg
Tallahassee
Tampa
GEORGIA
Alpharetta
Athens
Atlanta
- -Decatur
- -Duluth
- -Kennesaw
- -Morrow
- -Union City
Augusta
Buford
Douglasville
Macon
Savannah
IDAHO
Boise
ILLINOIS
Alton
Bloomington
Bourbonnais
Carbondale
Champaign
Chicago
- -Aurora
- -Bloomingdale
- -Calumet City
- -Evergreen Park
- -Fairview Heights
- -Gurnee
- -Lombard
- -Matteson
- -Niles
- -N. Riverside
- -Orland Park
- -Schaumburg
- -Skokie
- -University Park
- -Vernon Hills
- -Waukegan
- -West Dundee
Danville
Forsythe
Marion
Moline
Peoria
Peru
Rockford
Springfield
Sterling
INDIANA
Anderson
Bloomington
Carmel
Elkhart
Evansville
Fort Wayne
Greenwood
Indianapolis
Kokomo
Lafayette
Marion
Merrillville
Michigan City
Mishawaka
Muncie
Richmond
South Bend
Terre Haute
IOWA
Cedar Rapids
Coralville
Davenport
Des Moines
Dubuque
Iowa City
Sioux City
KANSAS
Hutchinson
Manhattan
Olathe
Overland Park
Salina
Topeka
Wichita
KENTUCKY
Ashland
Bowling Green
Florence
Lexington
Louisville
Paducah
LOUISIANA
Alexandria
Bossier City
Lake Charles
Monroe
Shreveport
MAINE
Bangor
MARYLAND
Baltimore
Bethesda
Cumberland
Forestville
Frederick
Glen Burnie
Hagerstown
Laurel
Owings Mills
Salisbury
Towson
Waldorf
MASSACHUSETTS
Brockton
Hanover
Holyoke
Leominster
Saugus
Taunton
MICHIGAN
Adrian
Battle Creek
Bay City
Benton Harbor
Burton
Detroit
- -Auburn Hills
Flint
Fort Gratiot
Grand Rapids
Holland
Lansing
Midland
Monroe
Port Huron
Portage
Taylor
Traverse City
Waterford
MISSISSIPPI
Ridgeland
Tupelo
MISSOURI
Cape Girardeau
Chesterfield
Florissant
Independence
Joplin
Kansas City
St. Ann
St. Louis
St. Peters
Springfield
NEBRASKA
Lincoln
Omaha
NEVADA
Las Vegas
NEW HAMPSHIRE
Concord
Manchester
Newington
Salem
NEW JERSEY
Eatontown
Deptford
Lawrenceville
Paramus
Phillipsburg
Rockaway
Voorhees
NEW MEXICO
Albuquerque
NEW YORK
Albany
Bay Shore
Buffalo
- -Blasdell
- -Williamsville
Clay
Dewitt
Horseheads
Ithaca
Lakewood
Massapequa
Middletown
Nanuet
Niagara Falls
Poughkeepsie
Rochester
Rotterdam
Saratoga Springs
Schenectady
Staten Island
Syracuse
Wilton
NORTH CAROLINA
Asheville
Burlington
Cary
Charlotte
- -Gastonia
- -Pineville
Concord
Fayetteville
Greensboro
Hickory
High Point
Morrisville
Raleigh
Rocky Mount
Winston-Salem
NORTH DAKOTA
Bismarck
Grand Forks
Ohio
Akron
Alliance
Ashtabula
Beaver Creek
Canton
Cincinnati
Cleveland
- -Euclid
- -Mentor
- -N. Olmsted
- -N. Randall
- -Parma
- -Richmond
Heights
Columbus
Dayton
Dublin
Elyria
Findlay
Franklin
Heath
Lancaster
Lima
Mansfield
Marion
New Philadelphia
Niles
Northwood
Piqua
Reynoldsburg
Sandusky
Springfield
St. Clairsville
Toledo
OKLAHOMA
Midwest City
Norman
Oklahoma City
Tulsa
OREGON
Portland
PENNSYLVANIA
Altoona
Bensalem
Bloomsburg
Butler
Camp Hill
Chambersburg
Erie
Exton
Greensburg
Hanover
Indiana
Johnstown
Lancaster
Media
Monaca
North Wales
Pennsdale
Philadelphia
Pittsburgh
Plymouth
Scranton
Uniontown
Washington
West Mifflin
York
SOUTH CAROLINA
Charleston
Columbia
Greenville
SOUTH DAKOTA
Sioux Falls
TENNESSEE
Antioch
Chattanooga
Clarksville
Franklin
Goodlettsville
Johnson City
Memphis
Nashville
TEXAS
Abilene
Amarillo
Austin
Beaumont
Dallas/Fort Worth
- -Arlington
- -Denton
- -Frisco
- -Hurst
- -Irving
- -Lewisville
- -Mesquite
- -Plano
- -Richardson
El Paso
Houston
Humble
Katy
Killeen
Longview
Midland
San Angelo
San Antonio
Sherman
Temple
Tyler
Waco
Wichita Falls
VIRGINIA
Alexandria
Chesapeake
Christiansburg
Dulles
Fredericksburg
Harrisonburg
Lynchburg
Newport News
Norfolk
Richmond
- -Colonial Heights
- -Glen Allen
Roanoke
Virginia Beach
Winchester
Washington
Bellingham
Seattle
Spokane
Tacoma
WEST VIRGINIA
Barboursville
Bridgeport
Charleston
Martinsburg
Morgantown
Wisconsin
Green Bay
Greendale
Janesville
Madison
Milwaukee
Racine
Wauwatosa
1
<PAGE>
TO OUR STOCKHOLDERS
Finish Line completed fiscal 2001 with over $660 million in sales, a gain of 13%
over last year - our 24th straight year of increases. For fiscal 2001,
comparable-store sales increased 1%, reversing a negative same-store sales
performance during the two previous fiscal years. In spite of improved sales
performance, we were not able to stop the slide in net earnings and earnings per
share for the year.
Repositioning Plan
Due to the continued deterioration of earnings, we have reviewed our business
practices to look for ways to improve productivity and performance. During the
1st quarter of fiscal 2002, we announced a repositioning plan designed to
increase long-term profitability of our stores and generate long-term value for
stockholders. The primary component of the plan includes a more aggressive
approach to reducing aged inventory by reconfiguring merchandise assortments to
place greater emphasis on better performing, fresher merchandise. This should
lead to improved inventory turns and product margins. In addition, the Company
announced plans to close approximately 17 under-performing stores, including all
five of our outlet stores. The closing of under-performing stores will direct
assets and attention to more productive uses. We will complete the repositioning
plan as quickly as possible so that we may continue forward with our long-term
strategies for meaningful growth and improved productivity.
Growth and Productivity
Growing our store base has been an important Finish Line goal throughout the
last decade. This aggressive growth strategy has taken us from being a regional
athletic chain to one of the top three national athletic specialty stores in the
mall. From 1996 to fiscal year-end 2001 we have nearly doubled our stores,
growing from 220 to 436. Today, we operate stores in 42 states, from
coast-to-coast, in all regions of the country.
Growth is important; meaningful growth is critical. It's not enough for us
simply to continue our sales growth, we must find ways to become more
productive. Our previously announced repositioning plan is a positive move in
this direction and a logical evolutionary step in the way we do business.
Because of existing business conditions and the need for increased store
productivity, we have decided to temporarily slow our store expansion with fewer
new store openings. Stores that may be under-performing, but are not designated
to close, will be scrutinized by all Company departments to assure everything is
being done to reverse negative performance trends. By adjusting our existing
product mix and introducing new footwear and apparel products into our stores,
we will refine our product assortments to optimize sales-per-square-foot. We
will continue to aggressively manage the Company's expenses and capital
expenditures, which over the years has contributed to Finish Line's position as
one of the most profitable and financially secure retailers in our industry. At
the end of fiscal 2001, our balance sheet showed no interest-bearing debt and
reflected cash and investments of over $50 million.
Over the years as we have grown, the athletic retail environment has also
changed. Consumers now have more shopping choices to satisfy their athletic
product needs, including: new mall retailers, direct mail outlets and e-commerce
options. Additionally, athletic retailing has become more promotional putting
pressure on product margins while mall rents and other occupancy expenses
continue to increase. At Finish Line we understand that to be a successful
retailer, we must recognize these changes and adapt to the new business
environment.
Opportunities
Despite having been in existence for more than 25 years, in many ways we still
think of ourselves as a young company - eager to grow and take advantage of the
opportunities that exist within the industry to
2
<PAGE>
Finish Line is positioned to meet the needs___(PICTURE OF FINISH LINE
of an active, athletic customer base. STORE FRONT)
improve our business. These opportunities include an active consumer base for
whom health, fitness, and sports participation is an important part of their
lifestyle. Also, opportunities exist to expand our market share because most of
our competitors have been shrinking their mall-based store presence during the
last few years.
Our national stature has allowed us to create strategic partnerships with
prominent vendors such as Nike and Reebok, which positions us to sell the
exciting new technologies and products our customer seeks. SHOX and Air Presto
footwear from Nike, Reebok's Iverson basketball shoe and slip-on and postgame
styles from And 1 are just a few examples of the excitement being generated in
the marketplace.
Working with the industry's leading vendors including: Nike, adidas, Reebok and
the increasingly important niche brands such as New Balance, And 1, K-Swiss, and
Timberland, Finish Line offers customers a complete athletic footwear
collection. As a result our footwear business, which currently represents
approximately 80% of our overall product mix, performed well in fiscal 2001 with
a 17% sales increase over fiscal 2000. Further, these vendor partnerships have
allowed us to increase national advertising expenditures and raise Finish Line
brand awareness among potential and existing customers in markets throughout the
United States. Going forward, our challenge is to continue this momentum in our
footwear business and stabilize (and eventually turn around) our under-
performing apparel business.
While product and marketing are key ingredients for success, knowing and
understanding our customer is more critical today than ever. We have gained
valuable information about who is walking into our stores and what they expect
during their visit, through focus groups, surveys, and a new customer loyalty
program (Winner's Circle). We believe our stores have a much broader and varied
consumer base than most of our mall competitors, which provides opportunities
for us to gain market share in the malls. This information, which we are now
able to capture and analyze, should result in additional sales from repeat
customers and better position us to meet the needs of new consumers.
Bright Future
We are excited about the future of our Company. We believe Finish Line will
continue to grow nationally while improving productivity and profit levels.
Through difficult times in our industry, we have been able to expand our store
base and maintain a strong balance sheet. We have confidence in our Company, the
industry, and our vendors; and we believe that any slow-down or downturn in
business is only temporary. The future of athletic specialty retailing remains
bright.
We thank our customers and vendors for their support over the years, and our
stockholders for their loyalty and commitment to the Company. We are committed
to the sustained creation of long-term stockholder value, and feel we have the
vision and team to succeed. We are dedicated, hard working, and remain focused
on our goal of being the best athletic specialty store in or out of the mall.
I would also like to thank and praise our Board of Directors for their guidance
and wise counsel over the years. We have all completed a difficult year and we
think we have made important strategic decisions that will lead us back to the
levels of productivity, profits and increased stockholder value we all desire.
Sincerely,
/s/ Alan H. Cohen
Alan H. Cohen
President and CEO, Finish Line, Inc.
3
<PAGE>
THE STORE
An important point of difference between Finish Line and the competition has
always been our store. Our retail environment is unique within the mall based
athletic specialty category.
We understand that product is king, so we have built stores that allow the
product to reign. Our signature shoe wall showcases an impressive selection of
footwear that attracts the attention of every customer who enters the store. We
also bring important footwear collections off the wall into the store front
windows and onto sales floor tables to allow brands, categories, and new
products to stand out.
This point of difference becomes more clear when comparing store size. Our
average store is approximately 6,100 square feet, which is larger than our
competitors' average stores. This gives us space to feature products for the
whole family (men, women, and children) and allows us to showcase a broader
selection of apparel and accessories that hook up with our footwear.
As a result, Finish Line stores appeal to a broader segment of the population
than the stores of most of our competition.
Finish Line is shopped not just by the sought-after teen demographic, but also
by 20-45 year old customers. Athletic shoes are worn by people of all ages for
many different reasons. Sport is more about attitude than it is about age. So,
whether it's an athletic shoe for a specific sport or a casual shoe to wear for
looks or comfort, Finish Line has the product customers are looking for.
[FASHION MODEL PRESENTING PRODUCT PICTURE APPEARS HERE]
4
<PAGE>
Finish Line stores are designed
to highlight product in a clean,
organized, and inviting manner.
[PICTURE OF FINISH LINE STORE APPEARS HERE]
Quaker Bridge Mall
Lawrenceville, NJ
<PAGE>
THE PRODUCT
This is an exciting time to be a part of the athletic footwear industry. Demand
from consumers for marque product continues to climb, and manufacturers continue
to deliver new and innovative styles to meet this demand.
Our exclusive running initiative with Nike (RNG), which began in fiscal 2001 and
continues into the new fiscal year, has allowed us to gain even greater market
share in this key footwear category. Customers were directed to Finish Line as
the destination for Nike running shoes by powerful in-store merchandising and a
national TV advertising campaign. And Nike continues to deliver the product-from
the recent introduction of the sport-inspired, fashion-forward Air Presto to
their latest technological innovation, SHOX, which made its debut last holiday
season.
Other footwear brands are also creating excitement and strong sales: Reeboks
Iverson Answer basketball shoe has gained momentum at each introduction while
And 1 has created a whole new category of athletic shoes with their "slip-on"
styles like the Post Game or Tochillin.
Timberland and Lugz catapulted the brown boot category to new heights during the
holiday season with their classic outdoor styles. And, whats old is new again.
Retro styles from Nike, Reebok, and adidas enjoy renewed enthusiasm in the
marketplace.
Although footwear remained strong in fiscal 2001, our apparel sales continued to
struggle. Deep discounting in the marketplace and lower average-price-points
have kept this portion of our business from improving. There were bright spots
in certain apparel items, and we plan to expand upon these successes next year
and to eliminate under performing items.
Our private label apparel brand, SPK, continues to grow during this difficult
time in apparel sales. Consisting mostly of athletic basics, SPK gives Finish
Line quality, functional product at introductory price-points while improving
product margins.
6
<PAGE>
At Finish Line customers can find
the latest athletic footwear, apparel
and accessories, whether they're
looking for performance, fashion or
value.
[PICTURE OF MEN'S SHOE WALL APPEARS HERE]
<PAGE>
PRODUCTIVITY
To gain productivity in our existing base of stores, we must focus on three key
factors Product, Systems, and People.
We have to optimize our inventory mix to make sure the right product gets to
each store in the correct quantity. To help accomplish this, Finish Line has
completed a planning system review and has begun to implement a new planning
tool to help better understand the specific needs of each store and to allocate
product accordingly.
Additionally, Finish Line announced a partnership this past year with found.com,
which has a Web-based inventory management tool that will integrate Finish
Line's inventory in all stores and in our distribution center. This system will
give each of our stores, including our online store, real-time access to all
inventory in our system, improving our ability to better meet our customers'
product needs.
Beyond product and systems to improve productivity, Finish Line needs motivated
and energetic people in the stores and the home office. We have always prided
ourselves on having a knowledgeable staff determined to provide a high level of
service customers.
Our store operations department is working hard to retain this point of
difference by launching a new training program that gets back to the
fundamentals of selling athletic shoes and taking care of the customer. After
all, that is what retail is all about.
8
<PAGE>
Finish Line's signature shoe wall
communicates an incredible selection
of footwear - from retro - styled
classics to the newest in fashionable
slip-ons.
[PICTURE OF SHOE WALL APPEARS HERE]
<PAGE>
MARKETING
In todays changing market economy, the customer is in control. With the advent
of the Web and an abundance of retail stores, customers have a large number of
options when buying athletic footwear and apparel.
As a result, Finish Line believes it is increasingly important to know as much
about our customer as possible. Finish Line worked diligently in fiscal 2001 to
gain a better understanding of who is walking in our doors and what they want to
buy.
This past year we introduced our customer loyalty card program, Winners Circle,
which rewards customers for shopping at Finish Line. This program not only
provides great incentives to our best customers, but also gives us a better
understanding of our customers purchasing habits. This information helps us
optimize our purchasing and marketing strategies to build stronger long-term
relationships with our customers.
Through the use of our quarterly magalog, Finish Line (formerly SPIKE), and our
website at www.finishline.com, we have additional ways to communicate with our
customers.
This year Finish Line initiated our largest advertising campaign in the Companys
history to increase national brand awareness. We accomplished this by partnering
with two of our key vendors, Nike and Reebok.
We continued our award-winning running campaign (RNG) with Nike that positions
Finish Line as the destination for the latest Nike running product. The TV spots
illustrate how much Finish Line and our employees love runners. As the
innovative spots state, Maybe We Love Runners Too Much.
Last summer Finish Line also partnered with Reebok to advertise during the most
watched prime-time show on television - CBSs Survivor series. This advertising
created millions of additional consumer impressions, keeping Finish Line top of
mind during the key back-to-school time period.
The net effect of all of these efforts has taken Finish Lines national brand
awareness from 45% to over 70% in one year among our core customer.
10
<PAGE>
Finish Line's selection of
men's, women's and
children's products provide
one-stop-shopping for the
entire family.
[PICTURE OF YOUTH AND WOMEN'S SHOE WALL APPEARS HERE]
<PAGE>
THE FUTURE
Today, more than ever, we realize that everything we do affects our brand and
its perception by our customers. That's why we are committed to constant
improvement on every front. From product offerings based on pertinent customer
information to mall-based and online stores that deliver a compelling shopping
experience, Finish Line is positioned and committed to be the best athletic
footwear retailer in the industry.
Selected Financial Data 13
Management's Discussion and Analysis of
Financial Condition and Results of Operations 14
Consolidated Balance Sheets 18
Consolidated Statements of Income 19
Consolidated Statements of Cash Flow 20
Consolidated Statements of
Changes in Stockholders' Equity 21
Notes to Consolidated Financial Statements 22
Report of Independent Auditors 27
Market Price of Common Stock 27
Senior Officers and Directors 28
Shareholder Information 28
[PICTURE OF FASHION MODEL PRESENTING PRODUCT APPEARS HERE]
12
<PAGE>
SELECT FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March 3, February 26, February 27, February 28, March 1,
(In thousands, except per share and store operating data) 2001 2000 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Income Statement Data:
- ------------------------------------------------------------------------------------------------------------------------------------
Net sales $ 663,906 $ 585,963 $ 522,623 $ 438,911 $ 332,002
Cost of sales (including occupancy expenses) 491,527 423,505 373,170 303,809 229,187
- ------------------------------------------------------------------------------------------------------------------------------------
Gross profit 172,379 162,458 149,453 135,102 102,815
Selling, general and administrative expenses 156,820 139,273 117,507 94,303 72,282
Repositioning and asset impairment charges 10,584 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Operating income 4,975 23,185 31,946 40,799 30,533
Interest income--net 970 826 1,421 2,495 824
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 5,945 24,011 33,367 43,294 31,357
Income taxes 2,200 8,404 12,680 16,560 12,544
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 3,745 $ 15,607 $ 20,687 $ 26,734 $ 18,813
====================================================================================================================================
Earnings Per Share Data:
- ------------------------------------------------------------------------------------------------------------------------------------
Basic earnings per share $ .15 $ .63 $ .81 $ 1.03 $ .81
- ------------------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share $ .15 $ .62 $ .80 $ 1.02 $ .80
====================================================================================================================================
Share Data/(1)/:
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted-average shares 24,458 24,848 25,541 25,963 23,100
- ------------------------------------------------------------------------------------------------------------------------------------
Diluted weighted-average shares 24,663 25,039 25,833 26,317 23,502
====================================================================================================================================
Selected Store Operating Data:
- ------------------------------------------------------------------------------------------------------------------------------------
Number of stores:
Opened during period 34 55 59 53 35
Closed during period 7 4 3 2 4
Open at end of period 436 409 358 302 251
Total square feet/(2)/ 2,653,886 2,478,930 2,095,264 1,586,520 1,088,419
Average square feet per store/(2)/ 6,087 6,061 5,853 5,253 4,336
Net sales per square foot for comparable stores $ 262 $ 272 $ 310 $ 345 $ 352
Increase (decrease) in comparable store net sales/(3)/ 1.3% (2.6)% (1.7)% 5.6% 16.0%
====================================================================================================================================
Balance Sheet Data:
- ------------------------------------------------------------------------------------------------------------------------------------
Working capital $ 133,640 $ 124,898 $ 106,661 $ 120,822 $ 112,079
Total assets 308,868 289,095 278,555 255,978 217,718
Total debt -- -- -- -- --
Stockholders' equity 226,747 222,392 208,679 197,122 169,875
====================================================================================================================================
</TABLE>
(1) Consists of weighted-average common and common equivalent shares outstanding
for the period and was adjusted to give effect for the November 15, 1996
two-for-one stock split.
(2) Computed as of the end of each fiscal period.
(3) Calculated using those stores that were open for the full current fiscal
period and were also open for the full prior fiscal period.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General The following discussion and analysis should be read in conjunction
with the information set forth under "Selected Financial Data" and the Financial
Statements and Notes thereto included elsewhere herein.
The table below sets forth operating data of the Company as a percentage of
net sales for the periods indicated below.
<TABLE>
<CAPTION>
Year Ended
- -----------------------------------------------------------------------------------
March 3, February 26, February 27,
2001 2000 1999
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Income Statement Data:
Net sales 100.0% 100.0% 100.0%
Cost of sales (including
occupancy expenses) 74.0 72.3 71.4
- -----------------------------------------------------------------------------------
Gross profit 26.0 27.7 28.6
Selling, general and
administrative expenses 23.6 23.7 22.5
Repositioning and asset impairment charges 1.6 - -
- -----------------------------------------------------------------------------------
Operating income 0.8 4.0 6.1
Interest income--net 0.1 .1 .3
- -----------------------------------------------------------------------------------
Income before income taxes 0.9 4.1 6.4
Income taxes 0.3 1.4 2.4
- -----------------------------------------------------------------------------------
Net income 0.6% 2.7% 4.0%
- -----------------------------------------------------------------------------------
</TABLE>
Fiscal 2001 Compared to Fiscal 2000 Net sales for fiscal 2001 were $663.9
million, an increase of $77.9 million or 13.3% over fiscal 2000. Of this
increase, $33.9 million was attributable to an increase from the 55 existing
stores open only part of fiscal 2000 and $26.7 million was from a 6.6% increase
in the number of stores open during the period from 409 at the end of fiscal
2000 to 436 at the end of fiscal 2001. The balance of the increase in net sales
was attributable to an approximate $14.0 increase due to fiscal 2001 having 7
additional days as compared to fiscal 2000 and a comparable store net sales
increase of 1.3% in fiscal 2001. Comparable net footwear sales increased 4.9%
for fiscal 2001 while comparable net activewear and accessories sales decreased
10.6%. Net sales per square foot decreased in fiscal 2001 to $262 from $272 in
fiscal 2000. Activewear and accessories continue to be negatively effected by a
significant reduction in the average unit selling price. Net sales per square
foot have been negatively impacted by the decrease in activewear sales.
Gross profit, which includes product margin less store occupancy costs, for
fiscal 2001 was $172.4 million. Excluding the effect of non-recurring charges of
$9.2 million in fiscal 2001 representing inventory writedowns associated with
the repositioning plan discussed below gross profit was $181.6 million, an
increase of approximately $19.1 million or 11.8% over fiscal 2000, and a
decrease of approximately 0.4% as a percent of net sales. Of this 0.4% decrease,
0.3% was due to a decrease in margin for product sold, 0.2% was due to an
increase in occupancy costs as a percentage of net sales, partially offset by a
decrease in inventory shrink of 0.1%.
Selling, general and administrative expenses were $156.8 million, an
increase of $17.5 million or 12.6% over fiscal 2000, and decreased to 23.6% from
23.7% as a percentage of net sales. The dollar increase was primarily
attributable to the operating costs related to the 34 additional stores opened
during 2001. The decrease as a percentage of net sales is a result of the 53
week year in fiscal 2001 which added approximately $14.0 million in sales to the
year.
In the 4th quarter of 2001, the Company approved a repositioning plan (the
"Plan") designed to increase long-term profitability of its retail stores and
generate long term value for stockholders. As part of that plan the Company
recorded pre-tax non-recurring repositioning and asset impairment charges
totaling $19.8 million ($12.5 million after tax or $.51 per share) in connection
with additional inventory mark downs, lease costs and asset impairment charges
for 17 planned store closings, and asset impairment charges for 14 identified
under-performing stores.
The most significant component of the Plan included a more aggressive
approach to reducing aged inventory by reconfiguring merchandise assortments to
place greater emphasis on better performing fresher merchandise. The additional
markdown reserve, which totaled $9.2 million has been recorded as a component of
cost of sales.
In connection with the store closings, the Company established a reserve
for future lease payments after store closures of $3.8 million all of which is
included in accrued expenses at March 3, 2001. Costs will be charged against
this reserve as paid (expected to be primarily in 2002) and the reserve will be
reviewed periodically to determine its adequacy.
The Company recorded an asset impairment charge, pursuant to the
requirements of SFAS No. 121, of $3.1 million related to the planned store
closings. The fixed assets written off could not readily be used at other store
locations nor was there a ready market outside the Company to determine fair
value. The assets, consisting principally of fixtures and leasehold
improvements, are expected to be discarded at the time of store closing.
Accordingly, the asset impairment charge recorded represents the carrying value
of the assets at the time of approval of the repositioning plan and depreciation
of these
14
<PAGE>
MANAGEMENT'S DISCUSSION AND FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(cont.)
<TABLE>
<CAPTION>
Quarter Ended
- ------------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share data) May 27, 2000 August 26,2001 November 25, 2000 March 3, 2001
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $146,657 100.0% $190,542 100.0% $134,503 100.0% $192,204 100.0%
Cost of sales (including occupancy expenses) 106,013 72.3 137,296 72.1 101,378 75.4 146,840 76.4
- -----------------------------------------------------------------------------------------------------------------------------------
Gross profit 40,644 27.7 53,246 27.9 33,125 24.6 45,364 23.6
Selling, general and administrative expenses 34,846 23.8 42,207 22.1 37,404 27.8 42,363 22.0
Repositioning and asset impairment charges - - - - - - 10,584 5.5
- -----------------------------------------------------------------------------------------------------------------------------------
Operating income (loss) 5,798 3.9 11,039 5.8 (4,279) (3.2) (7,583) (3.9)
Interest income--net 223 .2 169 .1 328 .2 250 .1
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 6,021 4.1 11,208 5.9 (3,951) (3.0) (7,333) (3.8)
Income taxes (benefit) 2,228 1.5 4,147 2.2 (1,462) (1.1) (2,713) (1.4)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 3,793 2.6% $ 7,061 3.7% $ (2,489) (1.9)% $ (4,620) (2.4)%
- -----------------------------------------------------------------------------------------------------------------------------------
Basic earnings (loss) per share $ .16 $ .29 $ (.10) $ (.19)
Diluted earnings (loss) per share $ .15 $ .29 $ (.10) $ (.19)
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
- -----------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share data) May 29, 1999 August 28, 1999 November 27, 1999 February 26, 2000
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $132,296 100.0% $165,994 100.0% $120,776 100.0% $166,897 100.0%
Cost of sales (including occupancy expenses) 95,170 71.9 117,303 0.7 91,358 75.6 119,674 71.7
- ----------------------------------------------------------------------------------------------------------------------------------
Gross profit 37,126 28.1 48,691 9.3 29,418 24.4 47,223 28.3
Selling, general and administrative expenses 31,705 24.0 37,037 2.3 33,208 27.5 37,323 22.4
- ----------------------------------------------------------------------------------------------------------------------------------
Operating income (loss) 5,421 4.1 11,654 7.0 (3,790) (3.1) 9,900 5.9
Interest income--net 281 .2 278 .2 204 .2 63 .1
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 5,702 4.3 11,932 7.2 (3,586) (2.9) 9,963 6.0
Income taxes (benefit) 1,996 1.5 4,176 2.5 (1,255) (1.0) 3,487 2.1
- ----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 3,706 2.8% $ 7,756 4.7% $ (2,331) (1.9)% $ 6,476 3.9%
- ----------------------------------------------------------------------------------------------------------------------------------
Basic earnings (loss) per share $ .15 $ .31 $ (.09) $ .26
Diluted earnings (loss) per share $ .15 $ .31 $ (.09) $ .26
==================================================================================================================================
</TABLE>
assets was discontinued at that time. Operating results for the individual
stores will be included in operations through the closing dates of the
respective stores.
The Company also reviewed its under-performing stores for asset impairment
charges. The asset impairment test was applied to all stores with negative
contribution and cash flows. An asset impairment charge of $3.6 million was
calculated as the difference between the carrying amount of the assets and each
store's estimated future discounted cash flows.
Sales in 2001 of the 17 stores to be closed as part of the Plan were $16.9
million. The 13 remaining stores (the Company closed four of the stores in the
fourth quarter of 2001) are expected to be closed by the end of 2002. Thus,
sales in 2002 for these stores will be substantially less than in 2001. The
stores to be closed (which includes five outlet stores) had a negative
contribution of $4.8 million in 2001. Because these stores will not be open all
of 2002 and because the fixed assets for these stores have been written
15
<PAGE>
MANAGEMENT'S DISCUSSION AND FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(cont.)
off as part of the asset impairment charge, we expect losses on these stores
will be lower in 2002 than in 2001. Future exit costs to be recorded in 2002 in
connection with these stores is not expected to be material.
With regards to the 14 underperforming stores for which the fixed assets
were written off as part of the asset impairment charge, depreciation in 2001
was $.5 million and will be zero related to these assets in 2002.
Net interest income for fiscal 2001 was $1.0 million compared to net
interest income of $.8 million for fiscal 2000. The increase was the result of
increased levels of invested cash and marketable securities due to fewer store
openings in fiscal 2001.
Income tax expense was $2.2 million for fiscal 2001 compared to $8.4
million for fiscal 2000. The decrease in the Company's provision for federal and
state taxes in 2001 is due to the decreased level of income before taxes
slightly offset by an increase in the effective tax rate to 37% for fiscal 2001
from 35% in fiscal 2000.
Net income decreased 76.0% to $3.7 million for fiscal 2001 compared to
$15.6 million for fiscal 2000. Diluted net income per share decreased 75.8% to
$.15 for fiscal 2001 compared to $.62 for fiscal 2000. Diluted weighted average
shares outstanding were 24,663,000 and 25,039,000, for fiscal 2001 and 2000,
respectively.
Fiscal 2000 Compared to Fiscal 1999 Net sales for fiscal 2000 were $586.0
million, an increase of $63.3 million or 12.1% over fiscal 1999. Of this
increase, $40.3 million was attributable to a 14.2% increase in the number of
stores open during the period from 358 at the end of fiscal 1999 to 409 at the
end of fiscal 2000. The balance of the increase in net sales was attributable to
an increase of $32.7 million from the 59 existing stores open only part of
fiscal 1999 along with an increase in sales from stores remodeled. These
increases were partially offset by a comparable store net sales decrease of 2.6%
in fiscal 2000. Comparable net footwear sales increased 3.9% for fiscal 2000
while comparable net activewear and accessories sales decreased 19.4%. Net sales
per square foot decreased in fiscal 2000 to $272 from $310 in fiscal 1999.
Activewear and accessories continue to be negatively effected by a fashion shift
by customers to contemporary non-athletic brands and by significant reduction in
the average unit selling price. Sales per square foot have been negatively
impacted by the decrease in activewear sales along with a 3.6% increase in the
average store size from 5,853 square feet at February 27, 1999 to 6,061 square
feet at February 26, 2000.
Gross profit, which includes product margin less store occupancy costs, for
fiscal 2000 was $162.5 million, an increase of $13.0 million or 8.7% over fiscal
1999, and a decrease of approximately 0.9% as a percentage of net sales. Of this
0.9% decrease, 1.4% was due to an increase in occupancy costs as a percentage of
net sales, partially offset by a 0.3% decrease in inventory shrink and 0.2%
increase in margins for product sold.
Selling, general and administrative expenses were $139.3 million, an
increase of $21.8 million or 18.5% over fiscal 1999, and increased to 23.7% from
22.5% as a percentage of net sales. The dollar increase was primarily
attributable to the operating costs related to the 55 additional stores opened
during 2000. The increase as a percentage of net sales is a result of increased
costs related to store payroll, depreciation and freight along with a comparable
store decrease in net sales for fiscal 2000.
Net interest income for fiscal 2000 was $.8 million compared to net
interest income of $1.4 million for fiscal 1999. This decrease was the result of
reduced levels of invested cash and marketable securities due to the Company's
funding of fiscal 2000 expansion and the purchase of treasury stock under the
Company's stock repurchase program.
Income tax expense was $8.4 million for fiscal 2000 compared to $12.7
million for fiscal 1999. The decrease in the Company's provision for federal and
state taxes in 2000 is due to the decreased level of income before taxes along
with a decrease in the effective tax rate to 35% for fiscal 2000 from 38% in
fiscal 1999.
Net income decreased 24.6% to $15.6 million for fiscal 2000 compared to
$20.7 million for fiscal 1999. Diluted net income per share decreased 22.5% to
$.62 for fiscal 2000 compared to $.80 for fiscal 1999. Diluted weighted average
shares outstanding were 25,039,000 and 25,833,000, for fiscal 2000 and 1999,
respectively. The reduction in the diluted weighted average shares outstanding
reflects the repurchase during fiscal 2000 of 472,000 shares of Class A Common
Stock through the Company's stock repurchase program.
Quarterly Comparisons The Company's merchandise is marketed during all
seasons, with the highest volume of merchandise sold during the second and
fourth fiscal quarters as a result of back-to-school and holiday shopping. The
third fiscal quarter has traditionally had the lowest volume of merchandise sold
and the lowest results of operations.
The table on the previous page sets forth quarterly operating data of the
Company, including such data as a percentage of net sales, for fiscal 2001 and
fiscal 2000. This quarterly information is unaudited but, in management's
opinion, reflects all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the information for the
periods presented.
Liquidity and Capital Resources The Company finances the opening of new
stores and the resulting increase in inventory requirements principally from
operating cash flow and cash on hand. Net cash provided by operations was $44.9
million, $12.1 million and $37.7 million respectively, for fiscal 2001, 2000 and
1999. At March 3, 2001, the Company had cash and cash equivalents of $45.4
million and an additional
16
<PAGE>
MANAGEMENT'S DISCUSSION AND FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(cont.)
$6.5 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 three 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.
Merchandise inventories were $145.5 million at March 3, 2001 compared to
$149.0 million at February 26, 2000. On a per square foot basis, merchandise
inventories at March 3, 2001 decreased 8.8% compared to February 26, 2000. The
company believes current inventory levels are appropriate based on the industry
environment.
The Company has an unsecured committed Credit Agreement (the "Facility")
with a syndicate of commercial banks in the amount of $60 million, which expires
on September 20, 2003. The Company periodically reviews its ongoing credit needs
with its syndicate of commercial banks and currently expects to be able to renew
or renegotiate the Facility prior to its expiration for an additional period
beyond the current maturity date of September 20, 2003. The interest rate on the
Facility is, at the Company's election, either a negotiated rate approximating
the federal funds effective rate plus 1.5% (this rate is available on the first
$5 million of borrowings), the bank's LIBOR Rate plus 1.0%, or the bank's prime
commercial lending rate. The margin percentage added to the LIBOR Rate is
subject to adjustment quarterly based on the leverage ratio (as defined). At
March 3, 2001, there were no borrowings outstanding under the Facility.
The Facility contains restrictive covenants which limit, among other
things, mergers, and acquisitions, redemptions of common stock, and payment of
dividends. In addition, the Company must maintain a minimum leverage ratio (as
defined) and minimum consolidated tangible net worth (as defined). The Company
is also subject to a liquidity test and an annual capital expenditure
limitation. The Company was in compliance with all such covenants at March 3,
2001.
Capital expenditures were $16.4 million and $26.3 million for fiscal 2001
and 2000, respectively. Expenditures in 2001 were primarily for the build-out of
34 stores that were opened during fiscal 2001, the remodeling of 13 existing
stores and various corporate projects.
Expenditures in 2000 were primarily for the build-out of 55 stores that
were opened in fiscal 2000 (including 7 large format stores), the remodeling of
18 existing stores, and various corporate projects.
The Company anticipates that total capital expenditures for fiscal 2002
will be approximately $15 million, primarily for the build-out of 25 new stores,
the remodeling of 8-12 existing stores and various corporate projects. The
Company estimates that its cash requirement to open a traditional format new
store (averaging approximately 5,000 square feet) to be $500,000 (net of
construction allowance). These requirements for a traditional store include
approximately $325,000 for fixtures, equipment, and leasehold improvements and
$275,000 ($175,000 net of payables) in new store inventory.
During fiscal 2001, the Company contributed 165,000 shares of Class A
Common Stock to the Company's retirement plan for its employees. The Company
purchased the shares in fiscal 1999 at an aggregate cost of $1.5 million.
During fiscal 2000, the Company contributed 50,000 shares of Finish Line
Class A Common Stock to the Company's retirement plan for its employees. The
Company had purchased the shares in fiscal 1999 at an aggregate cost of $.7
million.
Effective September 2, 1998 the Board of Directors approved a stock
repurchase program. The Company was authorized to purchase on the open market or
in privately negotiated transactions, through December 31, 1999, up to 2.6
million shares of the Company's Class A Common Stock outstanding. Effective
December 28,1999, the Board of Directors extended the stock repurchase program
through December 31, 2000 at which time it expired. Effective January 18, 2001
the Board of Directors approved a new stock repurchase program, through which
the Company is authorized to purchase on the open market or in privately
negotiated transactions through February 28, 2004, up to 2.5 million shares of
the Company's Class A Common Stock outstanding. As of March 3, 2001, the Company
holds 1,841,400 shares of its Class A Common Stock purchased on the open market
at an average price of $7.89 per share for an aggregate purchase amount of $14.5
million. The treasury shares may be issued upon the exercise of employee stock
options or for other corporate purposes.
Management believes that cash on hand, operating cash flow and borrowings
under the Company's existing Facility will be sufficient to complete the
Company's fiscal 2002 store expansion program and to satisfy the Company's other
capital requirements through fiscal 2002.
Market Risk The Company is exposed to changes in interest rates primarily
from its investments in available-for-sale marketable securities. The Company
does not use interest rate derivative instruments to manage exposure to interest
rate changes. A hypothetical 100 basis point increase in interest rates would
adversely effect the net fair value of marketable securities by $88,000 at March
3, 2001.
Effects of Inflation As the costs of inventory and other expenses of the
Company have increased, the Company has generally been able to increase its
selling prices. In periods of high inflation, increased build-out and other
costs could adversely affect the Company's expansion plans.
17
<PAGE>
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 3, February 26,
(in thousands) 2001 2000
- ------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 45,422 $ 13,061
Marketable securities 6,513 11,420
Accounts receivable 3,476 9,555
Merchandise inventories 145,503 148,979
Other 7,233 2,229
- ------------------------------------------------------------------------------------
Total current assets 208,147 185,244
====================================================================================
Property and Equipment
Land 315 315
Building 10,486 10,391
Leasehold improvements 91,657 89,909
Furniture, fixtures, and equipment 41,515 40,737
Construction in progress 2,849 2,087
- ------------------------------------------------------------------------------------
146,822 143,439
Less accumulated depreciation 52,348 41,820
- ------------------------------------------------------------------------------------
94,474 101,619
Other Assets
Deferred income taxes 6,247 2,023
Other - 209
- ------------------------------------------------------------------------------------
6,247 2,232
- ------------------------------------------------------------------------------------
Total assets $308,868 $289,095
====================================================================================
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 53,450 $ 42,188
Employee compensation 6,640 4,637
Accrued property and sales tax 3,914 4,097
Deferred income taxes 906 3,839
Other liabilities and accrued expenses 9,597 5,585
- ------------------------------------------------------------------------------------
Total current liabilities 74,507 60,346
====================================================================================
Long-term deferred rent payments 7,614 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
(2001--20,022; 2000--19,988)
Shares outstanding
(2001--18,181; 2000--18,203) 200 200
Class B:
Shares authorized--12,000
Shares issued and outstanding
(2001--6,268; 2000--6,268) 63 63
Additional paid-in capital 122,748 122,269
Retained earnings 118,257 114,512
Accumulated other comprehensive income (loss) 12 (41)
Treasury stock (2001--1,841; 2000--1,785) (14,533) (14,611)
- ------------------------------------------------------------------------------------
Total stockholders' equity 226,747 222,392
- ------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $308,868 $289,095
====================================================================================
</TABLE>
See accompanying notes.
18
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Year Ended
- ------------------------------------------------------------------------------------------------------------
March 3, February 26, February 27,
(in thousands, except per share amounts) 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $663,906 $585,963 $522,623
Cost of sales (including occupancy expenses) 491,527 423,505 373,170
- ------------------------------------------------------------------------------------------------------------
Gross profit 172,379 162,458 149,453
Selling, general and administrative expenses 156,820 139,273 117,507
Repositioning and asset impairment charges 10,584 - -
- ------------------------------------------------------------------------------------------------------------
Operating income 4,975 23,185 31,946
Interest income--net 970 826 1,421
- ------------------------------------------------------------------------------------------------------------
Income before income taxes 5,945 24,011 33,367
Income taxes 2,200 8,404 12,680
- ------------------------------------------------------------------------------------------------------------
Net income $ 3,745 $ 15,607 $ 20,687
- ------------------------------------------------------------------------------------------------------------
Basic earnings per share $ .15 $ .63 $ .81
- ------------------------------------------------------------------------------------------------------------
Diluted earnings per share $ .15 $ .62 $ .80
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
19
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended
- -----------------------------------------------------------------------------------------------------------------------------
March 3, February 26, February 27,
(in thousands) 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net income $ 3,745 $ 15,607 $ 20,687
Adjustments to reconcile net income to net cash provided by operating activities:
Repositioning and asset impairment charges 10,584 -- --
Depreciation and amortization 16,391 14,369 10,987
Contribution of treasury stock to pension plan 1,758 682 981
Loss on sale of available-for-sale marketable securities -- 19 --
Deferred income taxes (7,157) 5,292 772
(Gain) loss on disposal of property and equipment 247 354 (1)
Changes in operating assets and liabilities:
Accounts receivable 6,079 (2,604) (2,283)
Merchandise inventories 3,476 (13,676) (5,153)
Other current assets (5,760) (232) 747
Other assets 209 39 (23)
Accounts payable 11,262 (8,484) 11,882
Employee compensation 2,003 (388) (129)
Other liabilities and accrued expenses 779 89 (1,477)
Deferred rent payments 1,257 1,015 744
- -----------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 44,873 12,082 37,734
Investing activities
Purchases of property and equipment (16,413) (26,274) (41,398)
Proceeds from disposals of property and equipment 142 366 890
Purchases of short-term marketable securities -- -- (1,971)
Proceeds from maturity of held-to-maturity short-term marketable securities 2,502 2,155 9,856
Proceeds from sale of available-for-sale marketable securities 2,458 4,154 --
- -----------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (11,311) (19,599) (32,623)
Financing activities
Proceeds from short-term debt 48,305 84,800 32,200
Principal payments on short-term debt (48,305) (84,800) (32,200)
Proceeds and tax benefits from exercise of stock options 192 317 2,331
Purchase of treasury stock (1,393) (2,852) (12,442)
- -----------------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (1,201) (2,535) (10,111)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 32,361 (10,052) (5,000)
Cash and cash equivalents at beginning of year 13,061 23,113 28,113
- -----------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 45,422 $ 13,061 $ 23,113
=============================================================================================================================
</TABLE>
See accompanying notes.
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Number of Shares Amount
----------------------------------- ----------------------
(in thousands) Class A Class B Treasury Class A Class B
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at February 28, 1998 18,130 7,842 40 $182 $78
===========================================================================================================================
Net income for 1999
- ---------------------------------------------------------------------------------------------------------------------------
Conversion of Class B
Common Stock to Class A Common Stock 598 (598) 6 (6)
- ---------------------------------------------------------------------------------------------------------------------------
Non-qualified Class A
Common Stock options exercised 193 2
- ---------------------------------------------------------------------------------------------------------------------------
Treasury Stock purchased (1,363) 1,363
- ---------------------------------------------------------------------------------------------------------------------------
Contribution of Treasury Stock
to profit sharing plan 40 (40)
- ---------------------------------------------------------------------------------------------------------------------------
Balance at February 27, 1999 17,598 7,244 1,363 190 72
===========================================================================================================================
Comprehensive income:
Net income for 2000
- ---------------------------------------------------------------------------------------------------------------------------
Other comprehensive loss -
Net unrealized loss on available-for-sale
securities, net of tax benefit of $22
===========================================================================================================================
Total comprehensive income
- ---------------------------------------------------------------------------------------------------------------------------
Conversion of Class B
Common Stock to Class A Common Stock 976 (976) 9 (9)
- ---------------------------------------------------------------------------------------------------------------------------
Non-qualified Class A
Common Stock options exercised 51 1
- ---------------------------------------------------------------------------------------------------------------------------
Treasury Stock purchased (472) 472
- ---------------------------------------------------------------------------------------------------------------------------
Contribution of Treasury
Stock to profit sharing plan 50 (50)
- ---------------------------------------------------------------------------------------------------------------------------
Balance at February 26, 2000 18,203 6,268 1,785 200 63
===========================================================================================================================
Comprehensive income:
Net income for 2001
- ---------------------------------------------------------------------------------------------------------------------------
Other comprehensive income -
Net unrealized gain on available-for-sale
securities, net of tax expense of $30
===========================================================================================================================
Total comprehensive income
- ---------------------------------------------------------------------------------------------------------------------------
Non-qualified Class A
Common Stock options exercised 34
- ---------------------------------------------------------------------------------------------------------------------------
Treasury Stock purchased (221) 221
- ---------------------------------------------------------------------------------------------------------------------------
Contribution of Treasury
Stock to profit sharing plan 165 (165)
- ---------------------------------------------------------------------------------------------------------------------------
Balance at March 3, 2001 18,181 6,268 1,841 $200 $63
===========================================================================================================================
<CAPTION>
Accumulated
Additional Other
Paid-In Retained Comprehensive Treasury
(in thousands) Capital Earnings Loss Stock Totals
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at February 28, 1998 $119,181 $ 78,218 $ -- $ (537) $197,122
===========================================================================================================================
Net income for 1999 20,687 20,687
- ---------------------------------------------------------------------------------------------------------------------------
Conversion of Class B
Common Stock to Class A Common Stock --
- ---------------------------------------------------------------------------------------------------------------------------
Non-qualified Class A
Common Stock options exercised 2,329 2,331
- ---------------------------------------------------------------------------------------------------------------------------
Treasury Stock purchased (12,442) (12,442)
- ---------------------------------------------------------------------------------------------------------------------------
Contribution of Treasury Stock
to profit sharing plan 444 537 981
- ---------------------------------------------------------------------------------------------------------------------------
Balance at February 27, 1999 121,954 98,905 -- (12,442) 208,679
===========================================================================================================================
Comprehensive income:
Net income for 2000 15,607 15,607
- ---------------------------------------------------------------------------------------------------------------------------
Other comprehensive loss -
Net unrealized loss on available-for-sale
securities, net of tax benefit of $22 (41) (41)
===========================================================================================================================
Total comprehensive income 15,607 (41) 15,566
- ---------------------------------------------------------------------------------------------------------------------------
Conversion of Class B
Common Stock to Class A Common Stock --
- ---------------------------------------------------------------------------------------------------------------------------
Non-qualified Class A
Common Stock options exercised 316 317
- ---------------------------------------------------------------------------------------------------------------------------
Treasury Stock purchased (2,852) (2,852)
- ---------------------------------------------------------------------------------------------------------------------------
Contribution of Treasury
Stock to profit sharing plan (1) 683 682
- ---------------------------------------------------------------------------------------------------------------------------
Balance at February 26, 2000 122,269 114,512 (41) (14,611) 222,392
===========================================================================================================================
Comprehensive income:
Net income for 2001 3,745 3,745
- ---------------------------------------------------------------------------------------------------------------------------
Other comprehensive income -
Net unrealized gain on available-for-sale
securities, net of tax expense of $30 53 53
===========================================================================================================================
Total comprehensive income 3,745 53 3,798
- ---------------------------------------------------------------------------------------------------------------------------
Non-qualified Class A
Common Stock options exercised 192 192
- ---------------------------------------------------------------------------------------------------------------------------
Treasury Stock purchased (1,393) (1,393)
- ---------------------------------------------------------------------------------------------------------------------------
Contribution of Treasury
Stock to profit sharing plan 287 1,471 1,758
- ---------------------------------------------------------------------------------------------------------------------------
Balance at March 3, 2001 $122,748 $118,257 $ 12 $(14,533) $226,747
===========================================================================================================================
</TABLE>
See accompanying notes.
21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies
Basis of Presentation The consolidated financial statements include the
accounts of The Finish Line, Inc. and its wholly-owned subsidiary Spike's
Holding, Inc. (collectively the "Company"). Throughout these notes to the
financial statements, the fiscal years ended March 3, 2001, February 26, 2000
and February 27, 1999 are referred to as 2001, 2000 and 1999, respectively.
The Company uses a "Retail" calendar. The Company's fiscal year ends on the
Saturday closest to the last day of February and included 53 weeks in 2001, and
52 weeks in 2000 and 1999.
Nature of Operations Finish Line is a specialty retailer of men's, women's
and children's brand-name athletic, outdoor and lifestyle footwear, activewear
and accessories. The Company manages it business on the basis of one reportable
segment. Finish Line stores average approximately 6,087 square feet in size and
are primarily located in enclosed malls throughout most of the United States.
In 2001, the Company purchased approximately 78% of its merchandise from
its five largest suppliers. The largest supplier, Nike, accounted for
approximately 53%, 49% and 56% of merchandise purchases in 2001, 2000 and 1999,
respectively.
Use of Estimates Preparation of the financial statements requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.
Earnings Per Share Earnings per share are calculated based on the weighted-
average number of outstanding common shares. Diluted earnings per share are
calculated based on the weighted-average number of outstanding common shares,
plus the effect of dilative stock options. All per-share amounts, unless
otherwise noted, are presented on a diluted basis, that is, based on the
weighted-average number of outstanding common shares and the effect of all
potentially dilative common shares (primarily unexercised stock options).
Revenue Recognition Revenues from retail sales are recognized at the time
the customer receives the merchandise.
Cash and Cash Equivalents Cash and cash equivalents include all highly
liquid investments with a maturity date of three months or less when purchased.
Merchandise Inventories Merchandise inventories are valued at the lower of
cost or market using a weighted-average cost method, which approximates the
first-in, first-out method.
Property and Equipment Property and equipment are stated at cost.
Depreciation and amortization are generally provided using the straight-line
method over the estimated useful lives of the assets, or where applicable, the
terms of the respective leases, whichever is shorter.
Impairment of Long-Lived Assets The Company accounts for long-lived assets
in accordance with the provisions of Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-lived Assets to Be Disposed Of." The company reviews long-lived assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is determined by a comparison of the carrying amount of an
asset to future undiscounted net cash flows expected to be generated by the
asset. If such assets are considered to be impaired, the impairment recognized
is measured by comparing projected individual store discounted cash flows to the
asset carrying values.
Store Opening and Closing Costs Store opening costs and other non-
capitalized expenditures incurred prior to opening new retail stores are
expensed as incurred. In the event a store is closed before its lease has
expired, the estimated post-closing lease obligation, less sublease rental
income, is provided for when a decision to close the store is made.
Deferred Rent Payments The Company is a party to various lease agreements
which require scheduled rent increases over the noncancelable lease term. Rent
expense for such leases is recognized on a straight-line basis over the related
lease term. The difference between rent based upon scheduled monthly payments
and rent expense recognized on a straight-line basis is recorded as deferred
rent payments.
Advertising The Company expenses the cost of advertising as incurred.
Advertising expense net of co-op credits for the years ended 2001, 2000 and 1999
amounted to $10,203,000, $9,203,000, and $7,657,000, respectively.
Financial Instruments Financial instruments consist of cash and cash
equivalents, accounts receivable, marketable securities and accounts payable.
The carrying value of cash and cash equivalents, accounts receivable, and
accounts payable approximate fair value. The fair value of marketable securities
is determined on the basis of market quotes by brokers and is disclosed in Note
2.
The Company classifies its marketable securities in one of three categories:
trading, available-for-sale, or held-to-maturity. Held-to-maturity securities
are those securities which the Company has the positive intent and ability to
hold until maturity. Marketable securities not included in trading or
held-to-maturity are classified as available-for-sale.
Management determines the appropriate classification of marketable
securities at the time of purchase and reevaluates such designations as of each
balance sheet date. Held-to-maturity securities are stated at amortized cost,
adjusted for amortization of premiums and accretion of discounts to maturity.
Such amortization is included in interest income. Available-for-sale securities
are carried at fair value with unrealized gains and losses recorded as a
separate component of accumulated other comprehensive income. The Company has no
trading securities.
At March 3, 2001 and February 26, 2000, the Company had not invested in, nor
did it have, any derivative financial instruments.
22
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
Reclassifications Certain reclassifications have been made to the
consolidated financial statements of prior years to conform to the 2001
presentation.
2. Marketable Securities
In January 2000, the Company sold $2,155,000 of investments that were
previously classified as held-to-maturity. The Company's decision was based on
increased borrowing costs in comparison to the rate of return on the
investments. At that time, the Company also transferred all remaining
investments from held-to-maturity to available-for-sale.
The amortized cost transferred was $14,001,000 and the net unrealized loss on
these investments at the date of transfer was $69,000. The following is a
summary of available-for-sale marketable securities (in thousands):
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- ------------------------------------------------------------------------------
March 3, 2001--
municipal obligations $ 6,493 $46 $(26) $ 6,513
- ------------------------------------------------------------------------------
February 26, 2000--
municipal obligations $11,483 $10 $(73) $11,420
- ------------------------------------------------------------------------------
The amortized cost and estimated fair value of marketable securities at
March 3, 2001 by contractual maturity are shown below. Expected maturities may
differ from contractual maturities because the issuers of the securities may
have the right to prepay obligations without prepayment penalties.
Estimated
Amortized Fair
Cost Value
- ------------------------------------------------------------------------------
Due in one year or less $2,045 $2,019
Due after one year through three years 4,448 4,494
- ------------------------------------------------------------------------------
$6,493 $6,513
- ------------------------------------------------------------------------------
3. Debt Agreement
The Company has an unsecured committed Credit Agreement (the "Facility")
with a syndicate of commercial banks in the amount of $60,000,000, which expires
on September 20, 2003. At March 3, 2001, there were no borrowings outstanding
under the Facility.
The Facility contains restrictive covenants which limit, among other things,
mergers, and acquisitions, redemptions of common stock, and payment of
dividends. In addition, the Company must maintain a minimum leverage ratio (as
defined) and minimum consolidated tangible net worth (as defined). The Company
is also subject to a liquidity test and an annual capital expenditure
limitation. The Company was in compliance with all restrictive covenants of the
debt agreement in effect at March 3, 2001.
The interest rate on the Facility is, at the Company's election, either a
negotiated rate approximating the federal funds effective rate plus 1.5% (this
rate is available on the first $5,000,000 of borrowings), the bank's LIBOR Rate
plus 1.0% or the bank's prime commercial lending rate. The margin percentage
added to the LIBOR Rate is subject to adjustment quarterly based on the leverage
ratio (as defined). Interest expense, which approximated interest paid, for
2001, 2000 and 1999 was $26,000, $185,000 and $57,000, respectively. The Company
pays a commitment fee on the unused portion of the Facility at an effective
annual rate of .25%.
4. Leases
The Company leases retail stores under noncancelable operating leases which
generally have lease terms ranging from five to ten years. Most of these lease
arrangements do not provide for renewal periods. Many of the leases contain
contingent rental provisions computed on the basis of store sales. In addition
to rent payments, these leases generally require the Company to pay real
estate taxes, insurance, maintenance, and other costs. The components of rent
expense incurred under these leases is as follows (in thousands):
2001 2000 1999
- ------------------------------------------------------------------
Base Rent $50,341 $44,211 $34,697
Deferred Rent 1,257 1,014 744
Contingent Rent 2,299 1,628 2,871
- ------------------------------------------------------------------
Rent Expense $53,897 $46,853 $38,312
- ------------------------------------------------------------------
A schedule of future base rent payments by fiscal year for signed operating
leases at March 3, 2001 with initial or remaining noncancelable terms of one
year or more is as follows (in thousands):
2002 $ 53,461
2003 53,764
2004 51,916
2005 48,654
2006 45,474
Thereafter 145,304
- ------------------------------------------------------------------
$398,573
- ------------------------------------------------------------------
This schedule of future base rent payments includes lease commitments for
seven new stores and one remodel which were not open as of March 3, 2001.
23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
5. Income Taxes
The components of income taxes are as follows (in thousands):
2001 2000 1999
- ----------------------------------------------------------------
Currently payable:
Federal $ 8,342 $2,756 $10,028
State 1,015 356 1,880
- ----------------------------------------------------------------
9,357 3,112 11,908
Deferred:
Federal (6,411) 4,687 650
State (777) 605 122
- ----------------------------------------------------------------
(7,157) 5,292 772
- ----------------------------------------------------------------
$ 2,200 $8,404 $12,680
- ----------------------------------------------------------------
Deferred income taxes reflect the net tax effects of temporary differences
between the amount of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. Significant components of the
Company's deferred tax assets and liabilities are as follows (in thousands):
March 3, February 26,
2001 2000
- ----------------------------------------------------------------
Deferred tax assets:
Rent accrual $ 4,225 $ 2,225
Property and Equipment 3,372 --
Uniform capitalization 1,132 1,111
Vacation accrual 579 476
Pension accrual 83 240
Other 148 122
- ----------------------------------------------------------------
Total deferred tax assets 9,539 4,174
- ----------------------------------------------------------------
Deferred tax liabilities:
Inventory (4,198) (5,707)
Property and Equipment -- (283)
- ----------------------------------------------------------------
Total deferred tax liabilities (4,198) (5,990)
- ----------------------------------------------------------------
Net deferred tax asset (liability) $ 5,341 $ (1,816)
- ----------------------------------------------------------------
The effective income tax rate varies from the statutory federal income tax
rate for 2001, 2000 and 1999 due to the following:
2001 2000 1999
- ------------------------------------------------------------------------------
Tax at statutory federal income tax rate 35.0% 35.0% 35.0%
State income taxes, net of federal benefit 2.6% 2.6% 3.9%
Tax exempt interest (5.9)% (4.3)% (4.4)
Other 5.3% 1.7% 3.5%
- ------------------------------------------------------------------------------
37.0% 35.0% 38.0%
- ------------------------------------------------------------------------------
Payments of income taxes for 2001, 2000 and 1999 were $5,678,000, $4,751,000
and $13,672,000, respectively.
6. Retirement Plan
The Company sponsors a defined contribution profit sharing plan which covers
substantially all employees who have completed one year of service.
Contributions to this plan are discretionary and are allocated to employees as a
percentage of each covered employee's wages. 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 an
employee's wages. The Company's total expense for the plan in 2001, 2000 and
1999 amounted to $1,036,000, $1,626,000 and $1,621,000, respectively.
7. Stock Options
The Board of Directors has reserved 3,500,000 shares of Class A Common Stock
for issuance upon exercise of options or other awards under the option plan.
Stock options have been granted to directors, officers and other key employees.
All options outstanding under the plans as of the end of fiscal 2001 are
exercisable at a price equal to the fair market value on the date of grant, vest
over four years and expire ten years after the date of grant.
The Company has elected to follow Accounting Principles Board Opinion (APB)
No 25, "Accounting for Stock Issued to Employees" and related interpretations in
accounting for its stock options. Under APB No. 25, because the exercise price
of the Company's employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is recognized.
However, SFAS No. 123, "Accounting for Stock-Based Compensation," requires
presentation of pro forma information as if the Company had accounted for its
employee stock options granted subsequent to December 31, 1994, under the fair
value method. For purposes of pro forma disclosure, the estimated fair value of
the options is amortized to expense over the vesting period.
24
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
Under the fair value method, the Company's net income and earnings per
share would have been as follows:
2001 2000 1999
- -------------------------------------------------------------------
Net income (in thousands)
As reported $3,745 $15,607 $20,687
Pro forma 2,190 14,154 19,165
- -------------------------------------------------------------------
Diluted earnings per share
As reported $ .15 $ .62 $ .80
Pro forma .09 .58 .75
- -------------------------------------------------------------------
The estimated weighted-average fair value of the individual options granted
during 2001, 2000 and 1999 was $6.35, $4.20 and $7.59, respectively, on the date
of grant. The fair values for all years were determined using a Black-Scholes
option-pricing model with the following assumptions:
2001 2000 1999
- -------------------------------------------------------------------
Dividend yield 0% 0% 0%
- -------------------------------------------------------------------
Volatility 78.0% 77.9% 81.6%
- -------------------------------------------------------------------
Risk-free interest rate 6.20% 6.58% 5.70%
- -------------------------------------------------------------------
Expected life 7 years 7 years 7 years
- -------------------------------------------------------------------
A reconciliation of the Company's stock option activity and related
information is as follows:
Number Weighted-Average
of Options Exercise Price
- -------------------------------------------------------------------
February 28, 1998 1,410,027 $ 10.33
Granted 406,000 9.96
Exercised (192,791) 4.67
Canceled (35,920) 14.88
- -------------------------------------------------------------------
February 27, 1999 1,587,316 10.81
Granted 439,300 5.52
Exercised (50,751) 3.92
Canceled (166,825) 12.73
- -------------------------------------------------------------------
February 26, 2000 1,809,040 9.55
Granted 12,000 8.38
Exercised (34,200) 4.24
Canceled (76,105) 10.64
- -------------------------------------------------------------------
March 3, 2001 1,710,735 $ 9.59
- -------------------------------------------------------------------
The following table summarizes information concerning outstanding and
exercisable options at March 3, 2001:
Weighted-
Average Weighted- Weighted-
Range of Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life Price Exercisable Price
- ------------------------------------------------------------------------------
$ 3-$ 5 385,500 4.2 $ 3.97 385,500 $ 3.97
$ 5-$10 766,840 8.0 $ 7.09 193,810 $ 7.78
$10-$15 328,965 6.9 $13.70 217,855 $13.64
$15-$25 229,430 6.1 $21.54 153,210 $21.59
- ------------------------------------------------------------------------------
Options exercisable were 950,375, 721,192 and 425,128 at fiscal year end
2001, 2000 and 1999, respectively.
8. Earnings Per Share
The following is a reconciliation of the numerators and denominators used in
computing earnings per share (in thousands, except per share amounts).
2001 2000 1999
- ------------------------------------------------------------------------------
Income available to common stockholders $ 3,745 $15,607 $20,687
- ------------------------------------------------------------------------------
Basic earnings per share:
Weighted-average number of
common shares outstanding 24,458 24,848 25,541
Basic earnings per share $ .15 $ .63 $ .81
- ------------------------------------------------------------------------------
Diluted earnings per share:
Weighted-average number of
common shares outstanding 24,458 24,848 25,541
Stock options 205 191 292
- ------------------------------------------------------------------------------
Diluted weighted-average number of common
shares outstanding 24,663 25,039 25,833
- ------------------------------------------------------------------------------
Diluted earnings per share $ .15 $ .62 $ .80
- ------------------------------------------------------------------------------
25
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
9. Common Stock
At March 3, 2001, shares of the Company's stock outstanding consisted of
Class A and Class B Common Stock. Class A and Class B Common Stock have
identical rights with respect to dividends and liquidation preference. However,
Class A and Class B Common Stock differ with respect to voting rights,
convertibility and transferability.
Holders of Class A Common Stock are entitled to one vote for each share held
of record, and holders of Class B Common Stock are entitled to ten votes for
each share held of record. The Class A Common Stock and the Class B Common Stock
vote together as a single class on all matters submitted to a vote of
stockholders (including the election of directors), except that, in the case of
a proposed amendment to the Com pany's Restated Certificate of Incorporation
that would alter the powers, preferences or special rights of either Class A
Common Stock or the Class B Common Stock, the class of Common Stock to be
altered shall vote on the amendment as a separate class. Shares of Class A and
Class B Common Stock do not have cumulative voting rights.
While shares of Class A Common Stock are not convertible into any other
series or class of the Company's securities, each share of Class B Common Stock
is freely convertible into one share of Class A Common Stock at the option of
the Class B Stockholders.
Shares of Class B Common Stock may not be transferred to third parities
(except for transfer to certain family members of the holders and in other
limited circumstances). All of the shares of Class B Common Stock are held by
the founding stockholders and their family members.
Effective September 2, 1998, the Company's Board of Directors approved a
stock repurchase program. The Company was authorized to purchase on the open
market or in privately negotiated transactions, through December 31, 1999, up to
2,600,000 shares of Class A Common Stock outstanding. Effective December 28,
1999, the Company's Board of Directors extended the stock repurchase program
through December 31, 2000, at which time it expired. Effective January 18, 2001,
the Board of Directors approved a new stock repurchase program. The Company was
authorized to purchase on the open market or in privately negotiated
transactions through February 28, 2004, up to 2,500,000 shares of the Company's
Class A Common Stock outstanding. As of March 3, 2001, the Company holds as
treasury shares 1,841,400 shares of its Class A Common Stock at an average price
of $7.89 per share for an aggregate purchase amount of $14,533,000. The treasury
shares may be issued upon the exercise of employee stock options or for other
corporate purposes.
10. Repositioning and Asset Impairment Charges
In the 4th quarter of 2001, the Company approved a repositioning plan (the
"Plan"). As part of that Plan, the Company recorded pre-tax non-recurring
repositioning and asset impairment charges totaling $19,809,000 in connection
with additional inventory markdowns, lease costs and asset impairment charges
for 17 planned store closings, and asset impairment charges for 14 identified
under-performing stores.
The most significant component of the Plan included a more aggressive
approach to reducing aged inventory by reconfiguring merchandise assortments to
place greater emphasis on better performing fresher merchandise. The additional
markdown reserve, which totaled $9,225,000, has been recorded as a component of
cost of sales.
In connection with the store closings, the Company established a reserve for
future lease payments after store closures of $3,806,000, all of which is
included in accrued expenses at March 3, 2001. Costs will be charged against
this reserve as incurred and the reserve will be reviewed periodically to
determine its adequacy.
The Company recorded an asset impairment charge, pursuant to the requirements
of SFAS No. 121 of $3,140,000 related to the planned store closings. The fixed
assets written off could not readily be used at other store locations nor was
there a ready market outside the Company to determine fair value. The assets,
consisting principally of fixtures and leasehold improvements, are expected to
be discarded at the time of store closing. Accordingly, the asset impairment
charge recorded represents the carrying value of the assets at the time of
approval of the repositioning plan and depreciation of these assets was
discontinued at that time. Operating results for the individual stores will be
included in operations through the closing dates of the respective stores.
The Company also reviewed its under-performing stores for asset impairment
charges. The asset impairment test was applied to all stores with negative
contribution and cash flows. An asset impairment charge of $3,638,000 was
calculated as the difference between the carrying amount of the assets and each
store's estimated future discounted cash flows.
26
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders of The Finish Line, Inc.
We have audited the accompanying consolidated balance sheets of The Finish
Line, Inc. as of March 3, 2001 and February 26, 2000, and the related
consolidated statements of income, cash flows, and changes in stockholders'
equity for each of the three years in the period ended March 3, 2001. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of The Finish
Line, Inc. at March 3, 2001 and February 26, 2000, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended March 3, 2001, in conformity with accounting principles generally
accepted in the United States.
/s/ Ernest & Young LLP
Fort Wayne, Indiana
March 27, 2001
MARKET PRICE OF COMMON STOCK
Quarter Ended Fiscal 2001 Fiscal 2000
- --------------------------------------------------------------------------------
High Low High Low
- --------------------------------------------------------------------------------
May $11.63 $5.50 $15.88 $11.13
August 9.13 5.63 12.50 8.00
November 9.00 6.50 9.38 5.56
February 8.88 4.75 7.00 4.44
- --------------------------------------------------------------------------------
The Class A Common Stock has traded on the Nasdaq National Market under the
symbol FINL since the Company became a public entity in June 1992. Since its
initial public offering in June 1992, the Company has not declared any cash
dividends and does not anticipate paying any cash dividends in the foreseeable
future. See Management's Discussion and Analysis and Note 3 of Notes to
Consolidated Financial Statements for restrictions on the Company's ability to
pay dividends.
27
<PAGE>
SENIOR OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
Name Age Position Officer or Director Since
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alan H. Cohen 54 Chairman of the Board of Directors
President and Chief Executive Officer 1976
- ------------------------------------------------------------------------------------------------------------------------------------
David I. Klapper/(3)/ 52 Senior Executive Vice President, Director 1976
- ------------------------------------------------------------------------------------------------------------------------------------
Larry J. Sablosky 52 Senior Executive Vice President, Director 1982
- ------------------------------------------------------------------------------------------------------------------------------------
Steven J. Schneider 45 Executive Vice President--COO, CFO and Asst. Secretary 1989
- ------------------------------------------------------------------------------------------------------------------------------------
Gary D. Cohen 48 Executive Vice President--General Counsel and Secretary 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Joseph W. Wood 53 Executive Vice President--Merchandising and Marketing 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Donald E. Courtney 46 Executive Vice President--CIO and Distribution 1989
- ------------------------------------------------------------------------------------------------------------------------------------
George S. Sanders 43 Executive Vice President--Real Estate and Store Development 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Michael L. Marchetti 50 Executive Vice President--Store Operations 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Kevin S. Wampler 38 Senior Vice President--Chief Accounting Officer and Asst. Secretary 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Robert A. Edwards 38 Senior Vice President--Distribution 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas R. Sicari 47 Senior Vice President--Footwear, Planning and Allocation 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Kevin G. Flynn 37 Senior Vice President--Marketing 1997
- ------------------------------------------------------------------------------------------------------------------------------------
James B. Davis 38 Senior Vice President--Real Estate 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Joseph L. Gravitt 41 Senior Vice President--Store Personnel 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Roger C. Underwood 31 Senior Vice President--Information Systems 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Jonathan K. Layne/(1)(2)(3)(4)/ 47 Director 1992
- ------------------------------------------------------------------------------------------------------------------------------------
Jeffrey H. Smulyan/(1)(2)(5)/ 53 Director 1992
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen Goldsmith/(1)(6)/ 54 Director 1999
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Member of the Audit Committee
(2) Member of the Compensation and Stock Option Committee
(3) Member of the Finance Committee
(4) Mr. Layne is a partner in the law firm of Gibson, Dunn & Crutcher LLP
(5) Mr. Smulyan is Chairman of the Board and President of Emmis Communications
Corporation
(6) Mr. Goldsmith is a partner in the law firm of Baker & Daniels LLP
28
<PAGE>
SHAREHOLDER INFORMATION
Transfer Agent and Registrar:
American Stock Transfer & Trust Co.
Shareholder Services
40 Wall Street
New York, NY 10005
Stock Market Information:
The Company's Class A Common Stock is traded on the NASDAQ National Market under
the symbol FINL. As of April 11, 2001, the approximate number of holders of
record of Class A Common Stock was 304. The Company believes that the number of
beneficial holders of its Class A Common Stock was in excess of 500 as of that
date. On April 11, 2001, the closing price for the Company's Class A Common
Stock, as reported by NASDAQ was $7.04.
Financial Reports:
A copy of Form 10-K, the Company's annual report to the Securities and Exchange
Commission, for the current period can be obtained without charge by writing to:
The Finish Line, Inc.
Attn: Chief Financial Officer
3308 N. Mitthoeffer Road
Indianapolis, IN 46235
Internet Address: www.finishline.com
Certain statements contained in this Annual Report regard matters that are not
historical facts and are forward looking statements (as such term is defined in
the rules promulgated pursuant to the Securities Act of 1933, as amended).
Because such forward looking statements contain risks and uncertainties, actual
results may differ materially from those expressed in or implied by such forward
looking statements. Factors that could 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 Company's ability to successfully execute and benefit from its
repositioning plan; the inability to locate and obtain favorable lease term's
for the Company's stores; the loss of key employees, general economic conditions
and adverse factors impacting the retail athletic industry; management growth,
and the other risks detailed in the Company's Securities and Exchange Commission
filings. The Company under takes 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.
<PAGE>
[LOGO]
3308 North Mitthoeffer Road
Indianapolis, Indiana 46235
317-899-1022
www.finishline.com
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>5
<FILENAME>dex21.txt
<DESCRIPTION>LIST OF SUBSIDIARIES
<TEXT>
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE FINISH LINE, INC.
Subsidiary State of Incorporation Percentage of Ownership
- ---------- ---------------------- -----------------------
Spike's Holding, Inc. Delaware 100%
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>6
<FILENAME>dex23.txt
<DESCRIPTION>CONSENT OF ERNST & YOUNG LLP
<TEXT>
<PAGE>
EXHIBIT 23
[LETTERHEAD OF ERNST & YOUNG LLP]
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of The Finish Line, Inc. of our report dated March 27, 2001, included in the
2001 Annual Report to Stockholders of The Finish Line, Inc.
Our audits also included the financial statement schedule of The Finish Line,
Inc. listed in Item 14(d). This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 33-95720, 33-51392 and 333-62063) pertaining to The Finish Line,
Inc. 1992 Employee Stock Incentive Plan and the Registration Statement (Form S-8
No. 33-84590) pertaining to The Finish Line, Inc. Non-Employee Director Stock
Option Plan of our report dated March 27, 2001, with respect to the consolidated
financial statements incorporated herein by reference in the Annual Report (Form
10K) for the year ended March 3, 2001, and our report included in the preceding
paragraph with respect to the financial statement schedule included in this
Annual Report (Form 10-K) of The Finish Line, Inc.
Ernst & Young LLP
Fort Wayne, Indiana
May 23, 2001
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----