FINL The Finish Line, Inc. (delisted)

The Finish Line, Inc. (NASDAQ: FINL) today reported results for the thirteen weeks ended November 25, 2017.

For the thirteen weeks ended November 25, 2017:

• Consolidated net sales were $378.5 million, an increase of 1.8% over the prior year period.
• Finish Line comparable store sales increased 0.8%.
• Finish Line Macy’s sales increased 2.3%.
• On a GAAP basis, diluted earnings per share from continuing operations were ($0.32).
• Non-GAAP diluted earnings per share from continuing operations, which primarily excludes the impact from store impairment charges, were ($0.26).

“We finished the third quarter ahead of expectations despite a highly promotional environment for athletic footwear,” said Sam Sato, Chief Executive Officer of Finish Line. “The growth initiatives that we’ve put in place are driving increased traffic to our brand and helping increase conversion. While we responded to certain pricing actions in the marketplace to be competitive, we delivered gross margin in line with forecasts, and remained highly disciplined in managing expenses and inventories. Looking ahead, we continue to be cautious in the near-term, but I am confident that the work we are doing to position the company for long-term growth and enhanced profitability is gaining traction.”

Balance Sheet

As of November 25, 2017, consolidated merchandise inventories decreased 2.3% to $392.1 million compared to $401.5 million as of November 26, 2016.

As of November 25, 2017, the company had no interest-bearing debt and $77.2 million in cash and cash equivalents.

Outlook

The company’s outlook is Finish Line comparable sales to decrease 2% to 3% and adjusted earnings per share to be in the range of $0.59 to $0.67 for the 53-week fiscal year ending March 3, 2018 due to the third quarter out-performance, versus the previous guidance range of $0.50 to $0.60, and compared with adjusted earnings per share of $1.06 for the fiscal year ended February 25, 2017, which was a 52-week year. The company estimates that the additional week will contribute approximately $0.06 per share to fourth quarter and full year fiscal 2018 results.

For the fourth quarter ending March 3, 2018, a 14-week quarter, the company still expects Finish Line comparable sales to decrease 3% to 5% and adjusted earnings per share to be in the range of $0.50 to $0.58 inclusive of the $0.06 per share contribution from the extra week, compared with earnings per share of $0.50 for the fourth quarter ended February 25, 2017, a 13-week quarter.

Q3 Fiscal 2018 Conference Call Today, December 21, 2017 at 8:30 a.m.

The company will host a conference call for investors today, December 21, 2017, at 8:30 a.m. Eastern. To participate in the live conference call, dial 877-407-0792 (US and Canada) or 201-689-8263 (International), conference ID #13674385. The live conference call will also be accessible online at www.finishline.com. A replay of the conference call can be accessed approximately two hours following the completion of the call by dialing 844-512-2921, conference ID #13674385. This recording will be made available through Sunday, January 21, 2017. The replay will also be accessible online at www.finishline.com.

Disclosure Regarding Non-GAAP Measures

This report refers to certain financial measures that are identified as non-GAAP. The company believes that these non-GAAP measures, including selling, general, and administrative expenses, operating (loss) income, income tax (benefit) expense, net (loss) income from continuing operations, and diluted (loss) earnings per share from continuing operations, are helpful to investors because they allow for a more direct comparison of the company’s year-over-year performance and are useful in assessing the company’s progress in achieving its long-term financial objectives. This supplemental information should not be considered in isolation or as a substitute for the related GAAP measures. A reconciliation of the non-GAAP measures to the comparable GAAP measures can be found in the company’s Form 8-K filed with the Securities and Exchange Commission with this release.

About The Finish Line, Inc.

The Finish Line, Inc. is a premium retailer that carries the latest and greatest shoes, apparel, and accessories. Headquartered in Indianapolis, Finish Line runs approximately 950 branded locations in U.S. malls and shops inside Macy’s department stores. Finish Line employs more than 14,000 associates who connect customers to sneaker culture through style and sport. Shop online at www.finishline.com or get access to everything on the Finish Line app. Also keep track of what’s fresh by following Finish Line on Instagram, Snapchat, and Twitter.

Forward-Looking Statements

This news release includes statements that are or may be considered “forward-looking” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally can be identified by the use of words or phrases such as “believe,” “expect,” “future,” “anticipate,” “intend,” “plan,” “foresee,” “may,” “should,” “will,” “estimates,” “outlook,” “potential,” “optimistic,” “confidence,” “continue,” “evolve,” “expand,” “growth,” or words and phrases of similar meaning. Statements that describe objectives, plans, or goals also are forward-looking statements.

All of these forward-looking statements are subject to risks, management assumptions, and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statements. The principal risk factors that could cause actual performance and future actions to differ materially from the forward-looking statements include, but are not limited to, the company’s reliance on a few key vendors for a majority of its merchandise purchases (including a significant portion from one key vendor); the availability and timely receipt of products; the ability to timely fulfill and ship products to customers; fluctuations in oil prices causing changes in gasoline and energy prices, resulting in changes in consumer spending as well as increases in utility, freight, and product costs; product demand and market acceptance risks; deterioration of macroeconomic and business conditions; the inability to locate and obtain or retain acceptable lease terms for the company’s stores; the effect of competitive products and pricing; loss of key employees; execution of strategic growth initiatives (including actual and potential mergers and acquisitions and other components of the company’s capital allocation strategy); cybersecurity risks, including breach of customer data; the potential impact of legal or regulatory changes, including the potential impact of pending tax reform legislation; a major failure of technology and information systems; and the other risks detailed in the company’s Securities and Exchange Commission filings. Readers are urged to consider these factors carefully in evaluating the forward-looking statements. The forward-looking statements included herein are made only as of the date of this report and Finish Line undertakes no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances.

  The Finish Line, Inc. Consolidated Statements of Operations (Unaudited) (In thousands, except per share and store/shop data) Thirteen Weeks Ended   Thirty-Nine Weeks Ended November 25,   November 26, November 25,   November 26, 2017 2016 2017 2016 Net sales $ 378,533 $ 371,741 $ 1,277,657 $ 1,286,941 Cost of sales (including occupancy costs) 281,117   272,377   922,482   900,691   Gross profit 97,416 99,364 355,175 386,250 Selling, general, and administrative expenses 114,703 118,133 348,887 352,193 Impairment charges and store closing costs 4,286   —   8,779   182   Operating (loss) income (21,573 ) (18,769 ) (2,491 ) 33,875 Interest income (expense), net 7   (152 ) 17   (178 ) (Loss) income from continuing operations before income taxes (21,566 ) (18,921 ) (2,474 ) 33,697 Income tax (benefit) expense (8,625 ) (8,332 ) (877 ) 10,841   Net (loss) income from continuing operations (12,941 ) (10,589 ) (1,597 ) 22,856 Net income (loss) from discontinued operations, net of tax 27   (29,849 ) (334 ) (31,593 ) Net loss $ (12,914 ) $ (40,438 ) $ (1,931 ) $ (8,737 ) Diluted (loss) earnings per share: Continuing operations (0.32 ) (0.26 ) (0.04 ) 0.54 Discontinued operations —   (0.74 ) (0.01 ) (0.75 ) Diluted loss per share (0.32 ) (1.00 ) (0.05 ) (0.21 ) Diluted weighted average shares 40,313   40,511   40,262   41,234   Dividends declared per share $ 0.11   $ 0.10   $ 0.33   $ 0.30     Finish Line store activity for the period: Beginning of period 569 585 573 591 Opened 2 1 2 6 Closed (5 ) (6 ) (9 ) (17 ) End of period 566   580   566   580   Square feet at end of period 3,162,391 3,224,813 Average square feet per store 5,587 5,560 Branded shops within department stores activity for the period: Beginning of period 378 391 374 392 Opened — 1 4 1 Closed —   —   —   (1 ) End of period 378   392   378   392   Square feet at end of period 540,404 539,923 Average square feet per shop 1,430 1,377       Thirteen Weeks Ended Thirty-Nine Weeks Ended November 25,   November 26, November 25,   November 26, 2017 2016 2017 2016 Net sales 100.0 % 100.0 % 100.0 % 100.0 % Cost of sales (including occupancy costs) 74.3   73.3   72.2   70.0   Gross profit 25.7 26.7 27.8 30.0 Selling, general, and administrative expenses 30.3 31.7 27.3 27.4 Impairment charges and store closing costs 1.1   —   0.7   —   Operating (loss) income (5.7 ) (5.0 ) (0.2 ) 2.6 Interest income (expense), net —   (0.1 ) —   —   (Loss) income from continuing operations before income taxes (5.7 ) (5.1 ) (0.2 ) 2.6 Income tax (benefit) expense (2.3 ) (2.3 ) (0.1 ) 0.8   Net (loss) income from continuing operations (3.4 ) (2.8 ) (0.1 ) 1.8 Net income (loss) from discontinued operations, net of tax —   (8.1 ) (0.1 ) (2.5 ) Net loss (3.4 )% (10.9 )% (0.2 )% (0.7 )%       Condensed Consolidated Balance Sheets November 25,   November 26,   February 25, 2017 2016 2017 (Unaudited) (Unaudited) ASSETS Cash and cash equivalents $ 77,194 $ 33,297 $ 90,856 Merchandise inventories, net 392,099 401,528 331,146 Other current assets 42,046 47,689 69,408 Assets held for sale — 31,935 — Property and equipment, net 150,942 166,655 157,594 Intangible assets, net 84,266 91,658 90,303 Other assets, net 5,191   8,874   7,161 Total assets $ 751,738   $ 781,636   $ 746,468 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities $ 243,233 $ 230,237 $ 221,971 Revolving Credit Facility — 17,000 — Liabilities held for sale — 15,344 — Deferred credits from landlords 34,631 32,401 32,133 Other long-term liabilities 36,499 20,986 40,866 Shareholders’ equity 437,375   465,668   451,498 Total liabilities and shareholders’ equity $ 751,738   $ 781,636   $ 746,468     Reconciliation of Selling, General, and Administrative Expenses, GAAP to Selling, General, and Administrative Expenses, Non-GAAP (Unaudited) (In thousands)     Thirteen Weeks Ended Thirty-Nine Weeks Ended November 25, 2017   November 26, 2016 November 25, 2017   November 26, 2016 Selling, general, and administrative expenses, GAAP $ 114,703     30.3 % $ 118,133   31.7 % $ 348,887   27.3 % $ 352,193   27.4 % Employee severance, retirement, and other costs —   —   (2,132 ) (0.5 ) (338 ) —   (2,132 ) (0.2 ) Selling, general, and administrative expenses, Non-GAAP $ 114,703   30.3 % $ 116,001   31.2 % $ 348,549   27.3 % $ 350,061   27.2 %     Reconciliation of Operating (Loss) Income, GAAP to Operating (Loss) Income, Non-GAAP (Unaudited) (In thousands)     Thirteen Weeks Ended   Thirty-Nine Weeks Ended November 25, 2017   November 26, 2016 November 25, 2017   November 26, 2016 Operating (loss) income, GAAP $ (21,573 )   (5.7 )% $ (18,769 )   (5.0 )% $ (2,491 )   (0.2 )% $ 33,875     2.6 % Employee severance, retirement, and other costs — — 2,132 0.5 338 — 2,132 0.2 Impairment charges and store closing costs 4,286   1.1   —   —   8,779   0.7   182   —   Operating (loss) income, Non-GAAP $ (17,287 ) (4.6 )% $ (16,637 ) (4.5 )% $ 6,626   0.5 % $ 36,189   2.8 %     Reconciliation of Income Tax (Benefit) Expense, GAAP to Income Tax (Benefit) Expense, Non-GAAP (Unaudited) (In thousands)     Thirteen Weeks Ended   Thirty-Nine Weeks Ended November 25, 2017   November 26, 2016 November 25, 2017   November 26, 2016 Income tax (benefit) expense, GAAP $ (8,625 )   (2.3 )% $ (8,332 )   (2.3 )% $ (877 )   (0.1 )% $ 10,841     0.8 % Tax effect of: Employee severance,

retirement, and other costs*

— — 1,453 0.4 130 — 1,453 0.2 Impairment charges and

store closing costs*

1,653   0.4   —   —   3,379   0.3   70   —   Income tax (benefit) expense, Non-GAAP $ (6,972 ) (1.9 )% $ (6,879 ) (1.9 )% $ 2,632   0.2 % $ 12,364   1.0 %

* Tax rate used within is 38.5%

  Reconciliation of Net (Loss) Income From Continuing Operations, GAAP to Net (Loss) Income From Continuing Operations, Non-GAAP (Unaudited) (In thousands)     Thirteen Weeks Ended   Thirty-Nine Weeks Ended November 25, 2017   November 26, 2016 November 25, 2017   November 26, 2016 Net (loss) income from continuing operations, GAAP $ (12,941 )   (3.4 )% $ (10,589 )   (2.8 )% $ (1,597 )   (0.1 )% $ 22,856     1.8 % Employee severance, retirement, and other costs, net of income taxes — — 679 0.1 208 — 679 — Impairment charges and store closing costs, net of income taxes 2,633   0.7   —   —   5,400   0.4   112   —   Net (loss) income from continuing operations, Non-GAAP $ (10,308 ) (2.7 )% $ (9,910 ) (2.7 )% $ 4,011   0.3 % $ 23,647   1.8 %     Reconciliation of Diluted (Loss) Earnings Per Share From Continuing Operations, GAAP to Diluted (Loss) Earnings Per Share From Continuing Operations, Non-GAAP (Unaudited)     Thirteen Weeks Ended   Thirty-Nine Weeks Ended November 25, 2017   November 26, 2016 November 25, 2017   November 26, 2016 Diluted (loss) earnings per share from continuing operations, GAAP $ (0.32 ) $ (0.26 ) $ (0.04 ) $ 0.54 Employee severance, retirement, and other costs, net of income taxes — 0.02 — 0.02 Impairment charges and store closing costs, net of income taxes 0.06   —   0.14   — Diluted (loss) earnings per share from continuing operations, Non-GAAP $ (0.26 ) $ (0.24 ) $ 0.10   $ 0.56

Note: See Disclosure Regarding Non-GAAP Measures above.

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The Finish Line, Inc.MEDIA:Dianna L. Boyce, 317-613-6577Corporate CommunicationsorINVESTORS:Ed Wilhelm, 317-613-6914Chief Financial Officer