Form 10-Q FINISH LINE INC /IN/ For: May 30

Form 10-Q FINISH LINE INC /IN/ For: May 30

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June 26, 2015 2:23 PM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________________________________________

FORM 10-Q

______________________________________________

(Mark One)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 30, 2015



¨	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)

______________________________________________



Indiana		35-1537210
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

3308 North Mitthoeffer Road Indianapolis, Indiana		46235
(Address of principal executive offices)		(zip code)

317-899-1022

(Registrant’s telephone number, including area code)

(Former name, former address, and former fiscal year, if changed since last report.)

______________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Securities Exchange Act of 1934.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares of the registrant’s Class A Common Stock outstanding on June 12, 2015 was 44,871,651.

PART I - FINANCIAL INFORMATION



Item 1.	Financial Statements

THE FINISH LINE, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)



	May 30, 2015		May 31, 2014		February 28, 2015
	(unaudited)		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	82,193	$	196,583	$	149,569
Accounts receivable, net	16,222		16,839		16,663
Merchandise inventories, net	323,319		294,990		343,403
Income taxes receivable	13		—		8,963
Other	18,193		9,687		12,059
Total current assets	439,940		518,099		530,657
Property and equipment:
Land	1,557		1,557		1,557
Building	43,645		42,848		43,637
Leasehold improvements	250,665		242,731		248,399
Furniture, fixtures, and equipment	191,945		170,661		187,404
Construction in progress	102,326		66,702		102,944
	590,138		524,499		583,941
Less accumulated depreciation	314,765		295,777		309,581
Total property and equipment, net	275,373		228,722		274,360
Goodwill	44,187		29,458		34,719
Other assets, net	9,830		8,422		10,119
Total assets	$	769,330	$	784,701	$	849,855

See accompanying notes.

THE FINISH LINE, INC.

CONSOLIDATED BALANCE SHEETS - (CONTINUED)

(in thousands, except per share data)



	May 30, 2015			May 31, 2014			February 28, 2015
	(unaudited)			(unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	79,576		$	105,803		$	133,053
Employee compensation	13,440			13,243			19,093
Accrued property and sales tax	8,816			8,743			10,499
Income taxes payable	—			5,523			—
Deferred income taxes	4,943			3,017			6,215
Other liabilities and accrued expenses	28,791			26,032			28,637
Total current liabilities	135,566			162,361			197,497
Commitments and contingencies
Deferred credits from landlords	29,964			28,674			29,143
Deferred income taxes	21,247			1,216			21,182
Other long-term liabilities	12,291			20,416			12,299
Redeemable noncontrolling interest, net	35			561			90
Shareholders’ equity:
Preferred stock, $.01 par value; 1,000 shares authorized; none issued	—			—			—
Common stock, $.01 par value; 110,000 shares authorized; 60,145 shares issued
Shares outstanding—(May 30, 2015 – 44,874; May 31, 2014 – 47,769; February 28, 2015 – 46,052)	601			601			601
Additional paid-in capital	228,847			220,219			227,006
Retained earnings	643,498			576,198			633,910
Treasury stock—(May 30, 2015 – 14,884; May 31, 2014 – 11,989; February 28, 2015 – 13,706)	(302,719		)	(225,545		)	(271,873		)
Total shareholders’ equity	570,227			571,473			589,644
Total liabilities and shareholders’ equity	$	769,330		$	784,701		$	849,855

See accompanying notes.

THE FINISH LINE, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)



	Thirteen Weeks Ended
	May 30, 2015			May 31, 2014
Net sales	$	443,394		$	406,531
Cost of sales (including occupancy costs)	304,418			277,651
Gross profit	138,976			128,880
Selling, general, and administrative expenses	116,457			108,896
Impairment charges and store closing costs	168			2,314
Operating income	22,351			17,670
Interest (expense) income, net	(2		)	7
Income before income taxes	22,349			17,677
Income tax expense	8,615			7,022
Net income	13,734			10,655
Net loss attributable to redeemable noncontrolling interest	55			1,780
Net income attributable to The Finish Line, Inc.	$	13,789		$	12,435

Basic earnings per share attributable to The Finish Line, Inc. shareholders	$	0.30		$	0.26
Basic weighted average shares	45,436			47,929

Diluted earnings per share attributable to The Finish Line, Inc. shareholders	$	0.30		$	0.25
Diluted weighted average shares	45,719			48,360

Dividends declared per share	$	0.09		$	0.08

See accompanying notes.

THE FINISH LINE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)



	Thirteen Weeks Ended
	May 30, 2015			May 31, 2014
Operating activities:
Net income	$	13,734		$	10,655
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Impairment charges and store closing costs	168			2,314
Depreciation and amortization	10,095			9,644
Deferred income taxes	(1,207		)	(1,131		)
Loss on disposals of property and equipment	19			252
Gain on settlement of contingent consideration	(329		)	—
Share-based compensation	2,390			2,127
Excess tax benefits from share-based compensation	(133		)	(1,046		)
Changes in operating assets and liabilities:
Accounts receivable, net	441			(769		)
Merchandise inventories, net	20,717			10,574
Other assets	(5,601		)	8,395
Accounts payable	(46,250		)	(11,954		)
Employee compensation	(5,653		)	(11,026		)
Income taxes payable	9,072			(1,129		)
Other liabilities and accrued expenses	(2,979		)	(2,687		)
Deferred credits from landlords	821			1,016
Net cash (used in) provided by operating activities	(4,695		)	15,235
Investing activities:
Capital expenditures for property and equipment	(18,879		)	(20,614		)
Acquisitions, net of cash acquired	(8,278		)	(4,674		)
Proceeds from disposals of property and equipment	16			7
Net cash used in investing activities	(27,141		)	(25,281		)
Financing activities:
Dividends paid to shareholders	(4,193		)	(3,895		)
(Payments) proceeds from issuance of common stock, net of settlement of tax withholding obligations	(176		)	3,962
Excess tax benefits from share-based compensation	133			1,046
Purchases of treasury stock	(31,304		)	(18,653		)
Purchase of redeemable noncontrolling interest	—			(9,000		)
Proceeds from repayment of related-party promissory note	—			4,090
Net cash used in financing activities	(35,540		)	(22,450		)
Net decrease in cash and cash equivalents	(67,376		)	(32,496		)
Cash and cash equivalents at beginning of period	149,569			229,079
Cash and cash equivalents at end of period	$	82,193		$	196,583
Supplemental disclosure of noncash operating and investing activities:
Capital expenditures incurred but not yet paid as of May 30, 2015 and May 31, 2014	$	5,684		$	5,520
Capital expenditures incurred but not yet paid as of February 28, 2015 and March 1, 2014	$	13,532		$	9,200

See accompanying notes.

THE FINISH LINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Summary of Significant Accounting Policies

Basis of Presentation. The accompanying unaudited consolidated financial statements of The Finish Line, Inc., along with its consolidated subsidiaries (individually and collectively referred to as the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. 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 these estimates. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation, have been included. All intercompany transactions and balances have been eliminated.

The Company has experienced, and expects to continue to experience, significant variability in sales, net income, and merchandise inventories from reporting period to reporting period. Therefore, the results of the interim periods presented herein are not necessarily indicative of the results to be expected for any other interim period or the full year.

These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended February 28, 2015 (“fiscal 2015”), as filed with the Securities and Exchange Commission (“SEC”) on April 29, 2015.

Segment Information. The Company is a premium retailer of athletic shoes, apparel, and accessories for men, women, and kids, throughout the United States and Puerto Rico, through multiple operating segments. The Company’s operating segments have similar economic characteristics, which include a similar nature of products sold, type of customer, and method of distribution. As such, the Company’s operating segments are aggregated into one reportable segment. The following table sets forth net sales of the Company by major category for each of the following periods (in thousands):



	Thirteen Weeks Ended
Category	May 30, 2015				May 31, 2014
Footwear	$	402,179	91	%	$	369,194	91	%
Softgoods	41,215		9	%	37,337		9	%
Total net sales	$	443,394	100	%	$	406,531	100	%

Recent Accounting Pronouncements. Recently issued accounting pronouncements did not, or are not believed by management to, have a material effect on the Company’s present or future consolidated financial statements.

2. Acquisitions and Goodwill

During the thirteen weeks ended May 30, 2015, the Company completed one immaterial acquisition of assets for total consideration of $8.9 million. The entity from which the assets were acquired operated four specialty running stores in New York. In connection with this acquisition, the Company recorded goodwill of $8.8 million during the thirteen weeks ended May 30, 2015. Goodwill is deductible for U.S. federal income tax purposes.

The Company allocated the aggregated preliminary purchase price for the acquisition based upon the tangible and intangible assets acquired, net of liabilities. The allocation of the preliminary purchase price is detailed below (in thousands):



	Allocation of Purchase Price
Goodwill	$	8,816
Tangible assets, net of liabilities	115
Total purchase price	$	8,931

During fiscal 2015, the Company completed seven individually immaterial acquisitions of assets for total consideration of $11.4 million, net of cash acquired. A component of the consideration for two of the acquisitions included contingent consideration with an estimated fair value of $0.7 million, which is included within other liabilities and accrued expenses on

the consolidated balance sheets. The Company determined the estimated fair values based on discounted cash flow analyses and estimates made by management. The entities from which the assets were acquired operated 20 specialty running stores in Colorado, Indiana, Kansas, Michigan, Missouri, North Carolina, and Utah. In connection with these acquisitions, the Company recorded goodwill of $9.7 million.

During the thirteen weeks ended May 30, 2015, the Company made the final working capital payments for two of the fiscal 2015 acquisitions, which did not have a material effect on the preliminary purchase price allocation. The Company allocated the aggregated preliminary purchase prices based upon the tangible and intangible assets acquired, net of liabilities. The allocation of the preliminary purchase prices for the fiscal 2015 acquisitions is detailed below (in thousands):



	Allocation of Purchase Price
Goodwill	$	9,719
Tangible assets, net of liabilities	1,699
Total purchase price	$	11,418

A reconciliation of goodwill is detailed below (in thousands):



	Goodwill
Balance as of March 1, 2014	$	25,608
Acquisitions	9,067
Other	44
Balance as of February 28, 2015	34,719
Acquisitions	8,816
Other	652
Balance as of May 30, 2015	$	44,187

3. Fair Value Measurements

Fair value measurements are determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants exclusive of any transaction costs. The Company utilizes a fair value hierarchy based upon the observability of inputs used in valuation techniques as follows:



Level 1:		Observable inputs such as quoted prices in active markets;

Level 2:		Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

Level 3:		Unobservable inputs in which there is little or no market data, which require the Company to develop its own assumptions.

The following table provides a summary of the recognized assets and liabilities that are measured at fair value on a recurring basis (in thousands):



	May 30, 2015						May 31, 2014						February 28, 2015
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets:
Non-qualified deferred compensation plan	$	6,425	$	—	$	—	$	6,117	$	—	$	—	$	6,424	$	—	$	—
Liabilities:
Contingent consideration liabilities	$	—	$	—	$	441	$	—	$	—	$	2,253	$	—	$	—	$	650

Included in Level 1 assets are mutual fund investments under a non-qualified deferred compensation plan. The Company estimates the fair value of these investments on a recurring basis using readily available market prices.

Included in Level 3 liabilities are the contingent consideration liabilities related to the Company’s acquisitions. The liabilities are adjusted to fair value each reporting period. The categorization of the framework used to price the liabilities is considered Level 3, due to the subjective nature of the unobservable inputs used to determine the fair values.

There were no transfers into or out of Level 1, Level 2, or Level 3 assets or liabilities for any of the periods presented.

Level 3 Valuation Techniques

Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques and at least one significant model assumption or input is unobservable.

The following table provides a reconciliation of the Company’s Level 3 contingent consideration liabilities during the thirteen weeks ended May 30, 2015 (in thousands):



	Level 3 Liabilities
Balance as of February 28, 2015	$	650
Contingent consideration from acquisition	120
Settlement of contingent consideration	(329		)
Balance as of May 30, 2015	$	441

The Company has certain assets that are measured at fair value on a non-recurring basis and are adjusted to fair value under certain circumstances that include those described in Note 7, Impairment Charges and Store Closing Costs. The categorization used to price the assets is considered a Level 3 measurement due to the subjective nature of the unobservable inputs used to determine the fair value.

Additionally, in connection with the acquisitions and purchase price allocations that are described in Note 2, Acquisitions and Goodwill, the Company recognized the acquired assets and liabilities at fair value. All amounts are recognized as Level 3 measurements due to the subjective nature of the unobservable inputs used to determine the fair values.

4. Debt Agreement

On November 30, 2012, the Company entered into an unsecured $100 million Amended and Restated Revolving Credit Facility Credit Agreement (the “Amended Credit Agreement”) with certain Lenders, which expires on November 30, 2017. The Amended Credit Agreement provides that, under certain circumstances, the Company may increase the maximum amount of the credit facility in an aggregate principal amount not to exceed $200 million. The Amended Credit Agreement is used by the Company, among other things, to issue letters of credit, support working capital needs, fund capital expenditures, and for other general corporate purposes.

Approximately $2.2 million in stand-by letters of credit were outstanding as of May 30, 2015 under the Amended Credit Agreement. No advances were outstanding under the Amended Credit Agreement as of May 30, 2015. Accordingly, the total revolving credit availability under the Amended Credit Agreement was $97.8 million as of May 30, 2015.

The Company’s ability to borrow monies in the future under the Amended Credit Agreement is subject to certain conditions, including compliance with certain covenants and making certain representations and warranties. The Amended Credit Agreement contains restrictive covenants that limit, among other things, mergers and acquisitions. In addition, the Company must maintain a maximum leverage ratio (as defined in the Amended Credit Agreement) and minimum consolidated tangible net worth (as defined in the Amended Credit Agreement). The Company was in compliance with all such covenants as of May 30, 2015.

The Amended Credit Agreement pricing grid is adjusted quarterly and is based on the Company’s leverage ratio (as defined in the Amended Credit Agreement). The minimum pricing is LIBOR plus 0.90% or Base Rate (as defined in the Amended Credit Agreement) and the maximum pricing is LIBOR plus 1.75% or Base Rate plus 0.75%. The Company is subject to an unused commitment fee based on the Company’s leverage ratio with minimum pricing of 0.10% and maximum pricing of 0.25%. In addition, the Company is subject to a letter of credit fee based on the Company’s leverage ratio with minimum pricing of 0.40% and maximum pricing of 1.25%.

5. Earnings Per Share

Basic earnings per share attributable to The Finish Line, Inc. shareholders is calculated by dividing net income attributable to The Finish Line, Inc. associated with common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share attributable to The Finish Line, Inc. shareholders assumes the issuance of additional shares of common stock by the Company upon exercise of all outstanding stock options and contingently issuable securities if the effect is dilutive, in accordance with the treasury stock method or two-class method (whichever is more dilutive) discussed in Accounting Standards Codification (“ASC”) 260-10, Earnings Per Share.

ASC 260-10 requires the inclusion of restricted stock as participating securities, since they have the right to share in dividends, if declared, equally with common shares. During periods of net income, participating securities are allocated a proportional share of net income attributable to The Finish Line, Inc. determined by dividing total weighted average participating securities by the sum of total weighted average common shares and participating securities (“the two-class method”). During periods of net loss, no effect is given to participating securities since they do not share in the losses of the Company. Participating securities have the effect of diluting both basic and diluted earnings per share during periods of net income.

The following is a reconciliation of the numerators and denominators used in computing earnings per share (in thousands, except per share amounts):



	Thirteen Weeks Ended
	May 30, 2015		May 31, 2014
Net income attributable to The Finish Line, Inc.	$	13,789	$	12,435
Net income attributable to The Finish Line, Inc. attributable to participating securities	165		149
Net income attributable to The Finish Line, Inc. available to common shareholders	$	13,624	$	12,286
Basic earnings per share attributable to The Finish Line, Inc. shareholders:
Weighted-average number of common shares outstanding	45,436		47,929
Basic earnings per share attributable to The Finish Line, Inc. shareholders	$	0.30	$	0.26
Diluted earnings per share attributable to The Finish Line, Inc. shareholders:
Weighted-average number of common shares outstanding	45,436		47,929
Dilutive effect of potential common shares(a)	283		431
Diluted weighted-average number of common shares outstanding	45,719		48,360
Diluted earnings per share attributable to The Finish Line, Inc. shareholders	$	0.30	$	0.25


(a)	The computation of diluted earnings per share attributable to The Finish Line, Inc. shareholders excludes options to purchase approximately 1.4 million and 0.6 million shares of common stock in the thirteen weeks ended May 30, 2015 and May 31, 2014, respectively, because the impact of such options would have been anti-dilutive.

6. Common Stock

On July 21, 2011, the Company’s Board of Directors authorized a share repurchase program (the “2011 Share Repurchase Program”) to repurchase up to 5,000,000 shares of the Company’s common stock outstanding through December 31, 2014. On January 3, 2013, the Company’s Board of Directors amended the 2011 Share Repurchase Program (the “2013 Amended Program”) and authorized the repurchase of an additional 5,000,000 shares of the Company’s common stock, which authorization shall expire on December 31, 2017. On March 26, 2015, the Company’s Board of Directors amended the 2013 Amended Program (the “2015 Amended Program”) and authorized the repurchase of an additional 5,000,000 shares of the Company’s common stock, which authorization shall expire on December 31, 2018.

The Company purchased 1,250,000 shares at an average price of $25.04 per share for an aggregate amount of $31.3 million during the thirteen weeks ended May 30, 2015. As of May 30, 2015, there were 4,954,503 shares remaining available to repurchase under the 2015 Amended Program.

As of May 30, 2015, the Company held 14,884,449 shares of its common stock as treasury shares at an average price of $20.34 per share for an aggregate carrying amount of $302.7 million. The Company’s treasury shares may be issued upon the exercise of employee stock options, under the Employee Stock Purchase Plan, in the form of restricted stock, or for other corporate purposes. The number of shares of common stock reserved for issuance upon the exercise of options, restricted stock, or other awards is limited as defined in the 2002 Stock Incentive Plan of The Finish Line, Inc. (the “2002 Incentive Plan”) and The Finish Line, Inc. Amended and Restated 2009 Incentive Plan (the “Amended 2009 Incentive Plan”). Further purchases will occur from time to time as market conditions warrant and as the Company deems appropriate when judged against other alternative uses of cash.

On April 16, 2015, the Company announced a quarterly cash dividend of $0.09 per share of the Company’s common stock. The Company declared dividends of $4.2 million during the thirteen weeks ended May 30, 2015. The cash dividends of $4.2 million were paid on June 15, 2015 to shareholders of record on May 29, 2015 and were included in other liabilities and accrued expenses on the Company’s consolidated balance sheet as of May 30, 2015. Further declarations of dividends remain at the discretion of the Company’s Board of Directors.

7. Impairment Charges and Store Closing Costs

During the thirteen weeks ended May 30, 2015, the Company recorded $0.2 million in store closing costs, which represents the non-cash write-off of fixtures and equipment upon a store or shop within a department store closing.

The $2.3 million in impairment charges and store closing costs that were recorded during the thirteen weeks ended May 31, 2014, were primarily the result of a $2.1 million charge for the write-off of tangible and indefinite-lived intangible assets related to one of the Company’s websites, as the Company determined that the website was no longer going to be used for its originally intended purpose. The asset impairment charges were calculated as the difference between the carrying amount of the impaired assets and their estimated future discounted cash flows. Additionally, the Company recorded $0.2 million in store closing costs during the thirteen weeks ended May 31, 2014.

8. Commitments and Contingencies

The Company is subject, from time to time, to certain legal proceedings and claims in the ordinary course of conducting its business. The Company establishes a liability related to its legal proceedings and claims when it has determined that it is probable that the Company has incurred a liability and the related amount can be reasonably estimated. If the Company determines that an obligation is reasonably possible, the Company will, if material, disclose the nature of the loss contingency and the estimated range of possible loss, or include a statement that no estimate of loss can be made. The Company 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, results of operations, or cash flows.

9. Equity Compensation

General

Total share-based compensation expense for the thirteen weeks ended May 30, 2015 and May 31, 2014 was $2.4 million and $2.1 million, respectively.

Stock Option Activity

Stock options have been granted to non-employee directors, officers, and other key employees. Generally, options outstanding under the 2002 and Amended 2009 Incentive Plans 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. During the thirteen weeks ended May 30, 2015 and May 31, 2014, the Company granted approximately 761,550 and 601,000 options, respectively. The estimated weighted-average fair value of the individual options granted during the thirteen weeks ended May 30, 2015 and May 31, 2014, was $6.57 and $8.57, respectively, on the date of the grant. The fair values for all options were determined using a Black-Scholes option-pricing model with the following weighted average assumptions:



	Thirteen Weeks Ended
	May 30, 2015		May 31, 2014
Dividend yield	1.49	%	1.20	%
Volatility	33.4	%	37.1	%
Risk-free interest rate	1.41	%	1.73	%
Expected life	5.0 years		5.0 years

The dividend yield assumption is based on the Company’s history and expectation of dividend payouts. The expected volatility assumption is based on the Company’s analysis of historical volatility. The risk-free interest rate assumption is based on the average daily closing rates during the period for U.S. treasury notes that have a life which approximates the expected life of the option. The expected life of employee stock options represents the weighted-average period the stock options are expected to remain outstanding based on historical exercise experience.

As of May 30, 2015, there was $10.0 million of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested options. That cost is expected to be recognized over a weighted average period of 2.0 years.

Restricted Stock Activity

The Company has granted shares of the Company’s common stock to non-employee directors, officers, and other key employees that are subject to restrictions. The restricted stock granted to employees under the 2002 and Amended 2009 Incentive Plans either vest upon the achievement of specified levels of profitability growth over a three-year period or were granted such that they cliff-vest after a three-year period. For performance-based awards, should the profitability criteria not be met over the three-year period, the shares will be forfeited. All restricted stock awards issued to non-employee directors cliff-vest after a one-year period from the grant date. During the thirteen weeks ended May 30, 2015 and May 31, 2014, the Company granted approximately 181,000 and 168,000 restricted shares, respectively.

As of May 30, 2015, there was $8.1 million of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested restricted stock. That cost is expected to be recognized over a weighted average period of 2.1 years.

10. Redeemable Noncontrolling Interest

On March 29, 2012, GCPI SR LLC (“GCPI”) made a $10.0 million strategic investment in Running Specialty, though the Company remained the majority owner. GCPI has the right to “put” and the Company has the right to “call” after March 4, 2017, under certain circumstances, GCPI’s interest in Running Specialty at an agreed upon price approximating fair value. Also, as part of the transaction, GCPI issued to the Company a $4.0 million related-party promissory note (the “Promissory Note”), which was collateralized with GCPI’s interest in Running Specialty, due March 31, 2021 or earlier depending on certain stipulated events in the control of GCPI. The Promissory Note called for interest payments based in part on a fixed rate and in part on participation in the value of other investments held by GCPI. The Promissory Note and related accrued interest had no balance at May 30, 2015 and May 31, 2014.

On April 25, 2014, the Company entered into a Membership Interest Purchase Agreement (“Membership Agreement”) with GCPI to increase the Company’s ownership in Running Specialty for a purchase price of $10.5 million. The Company paid GCPI $9.0 million of the purchase price in cash at closing after deducting the $4.1 million balance of the Promissory Note that was due from GCPI to the Company. The remaining $1.5 million purchase price is due to GCPI upon the earlier of April 30, 2017 or the date of liquidation or consummation of a sale of Running Specialty. The balance of the $1.5 million liability is included in other long-term liabilities on the consolidated balance sheets. In addition, the Membership Agreement provided an additional “put” to GCPI and “call” to the Company of GCPI’s remaining interest in Running Specialty at an agreed upon price commencing on April 25, 2015 and ending on June 30, 2015, which would close on July 31, 2015.

The redeemable noncontrolling interest is classified as mezzanine equity and measured at the greater of estimated fair value at the end of each reporting period or the historical cost basis of the redeemable noncontrolling interest, net of the Promissory Note and related accrued interest and adjusted for cumulative earnings or loss allocations. The resulting increases or decreases in the estimated redemption amount are affected by corresponding charges against retained earnings, or in the absence of retained earnings, additional paid-in capital. As of May 30, 2015 and May 31, 2014, the redeemable noncontrolling interest was measured at historical cost basis.

A rollforward of redeemable noncontrolling interest, net, is detailed below (in thousands):



	Thirteen Weeks Ended
	May 30, 2015			May 31, 2014
Redeemable noncontrolling interest, net, beginning of period	$	90		$	1,774
Net loss attributable to redeemable noncontrolling interest	(55		)	(1,780		)
Purchase of redeemable noncontrolling interest	—			(10,500		)
Proceeds and interest related to the Promissory Note	—			4,083
Decrease in The Finish Line, Inc.’s additional paid-in capital for purchase of redeemable noncontrolling membership interest	—			6,984
Redeemable noncontrolling interest, net, end of period	$	35		$	561



Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

This quarterly report on Form 10-Q may contain certain statements that the Company believes are, or may be considered to be, “forward-looking” statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

These forward-looking statements generally can be identified by use of statements that include, but are not limited to, words or phrases such as “believe”, “expect”, “anticipate”, “estimate”, “intend”, “future”, “forecast”, “outlook”, “foresee”, “predict”, “project”, “potential”, “plan”, “goal”, “will”, “will be”, “continue”, “lead to”, “expand”, “grow”, “confidence”, “could”, “should”, “may”, “might,” or other similar words or phrases. Similarly, statements that describe the Company’s objectives, plans, or goals also are forward-looking statements. All of these forward-looking statements are subject to risks and uncertainties that could cause the Company’s actual results to differ materially from those contemplated by the relevant forward-looking statement. The principal risk factors that could cause actual performance and future actions to differ materially from the forward-looking statements include, but are not limited to, the Company’s reliance on a few key vendors for a majority of its merchandise purchases (including a significant portion from one key vendor); the availability and timely receipt of products; the ability to timely fulfill and ship products to customers; fluctuations in oil prices causing changes in gasoline and energy prices, resulting in changes in consumer spending as well as increases in utility, freight, and product costs; product demand and market acceptance risks; deterioration of macro-economic and business conditions; the inability to locate and obtain or retain acceptable lease terms for the Company’s stores; the effect of competitive products and pricing; loss of key employees; execution of strategic growth initiatives (including actual and potential mergers and acquisitions and other components of the Company’s capital allocation strategy); cybersecurity risks, including breach of customer data; and the other risks detailed in the Company’s Securities and Exchange Commission filings. Readers are urged to consider these factors carefully in evaluating the forward-looking statements. The forward-looking statements included in this Form 10-Q are made only as of the date of this report and the Company undertakes no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances.

General

The following discussion and analysis should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations, including Critical Accounting Policies, contained in the Company’s Annual Report on Form 10-K for the year ended February 28, 2015.

The Company is a premium retailer of athletic shoes, apparel, and accessories for men, women, and kids, throughout the United States, through multiple operating segments.

Brick and mortar comparable store sales are sales from Finish Line stores open longer than one year, beginning in the thirteenth month of a store’s operation. Expanded stores are excluded from the brick and mortar comparable store sales calculation until the thirteenth month following the re-opening of the store and temporarily closed stores are excluded during the months that the store is closed. This does not include shops within department stores.

Digital comparable sales are the change in sales year over year for the reporting period derived from finishline.com and m.finishline.com.

Finish Line comparable store sales is the aggregation of brick and mortar comparable store sales and digital comparable sales.

Running Specialty comparable store sales are sales from stores open longer than one year or operated longer than one year after being acquired, including e-commerce sales, beginning in the thirteenth month of a store’s operation or after it was acquired. Expanded stores are excluded from the Running Specialty comparable store sales calculation until the thirteenth month following the re-opening of the store and temporarily closed stores are excluded during the months that the store is closed.

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



	Thirteen Weeks Ended
Number of stores/shops	May 30, 2015		May 31, 2014
Finish Line:
Beginning of period	637		645
Opened	2		3
Closed	(15	)	(3	)
End of period	624		645
Branded shops within department stores:
Beginning of period	395		185
Opened	—		77
Closed	—		—
End of period	395		262
Running Specialty:
Beginning of period	71		48
Acquired	4		8
Opened	1		2
Closed	—		—
End of period	76		58
Total:
Beginning of period	1,103		878
Acquired	4		8
Opened	3		82
Closed	(15	)	(3	)
End of period	1,095		965



Square feet information	May 30, 2015	May 31, 2014
Finish Line:
Square feet	3,413,420	3,512,190
Average store size	5,470	5,445
Branded shops within department stores:
Square feet	422,783	294,978
Average shop size	1,070	1,126
Running Specialty:
Square feet	275,842	199,905
Average store size	3,630	3,447
Total:
Square feet	4,112,045	4,007,073

Results of Operations

The following table sets forth net sales of the Company by major category for each of the following periods (in thousands):



	Thirteen Weeks Ended
Category	May 30, 2015				May 31, 2014
Footwear	$	402,179	91	%	$	369,194	91	%
Softgoods	41,215		9	%	37,337		9	%
Total net sales	$	443,394	100	%	$	406,531	100	%

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



	Thirteen Weeks Ended
	May 30, 2015		May 31, 2014
Net sales	100.0	%	100.0	%
Cost of sales (including occupancy costs)	68.7		68.3
Gross profit	31.3		31.7
Selling, general, and administrative expenses	26.2		26.8
Impairment charges and store closing costs	0.1		0.6
Operating income	5.0		4.3
Interest income, net	—		—
Income before income taxes	5.0		4.3
Income tax expense	1.9		1.7
Net income	3.1		2.6
Net loss attributable to redeemable noncontrolling interest	—		0.5
Net income attributable to The Finish Line, Inc.	3.1	%	3.1	%

Thirteen Weeks Ended May 30, 2015 Compared to the Thirteen Weeks Ended May 31, 2014

Net Sales



	Thirteen Weeks Ended
	May 30, 2015			May 31, 2014
	(dollars in thousands)
Brick and mortar stores sales	$	292,191		$	295,431
Digital sales	67,685			49,947
Shops within department stores sales	59,522			43,847
Running Specialty sales	23,996			17,306
Total net sales	$	443,394		$	406,531

Brick and mortar comparable store sales increase	0.2		%	2.5		%
Digital comparable sales increase	35.5		%	22.9		%
Finish Line comparable store sales increase	5.5		%	5.0		%
Running Specialty comparable store sales decrease	(4.0		)%	N/A

Net sales increased 9.1% for the thirteen weeks ended May 30, 2015 compared to the thirteen weeks ended May 31, 2014. The increase was attributable to a Finish Line comparable store sales increase of 5.5%, an increase in shops within department stores sales of 35.8%, primarily due to increased shop count, and an increase in Running Specialty sales of 38.7%, primarily due to increased store count, offset partially by a decrease in net sales resulting from a net decrease in Finish Line store count for the thirteen weeks ended May 30, 2015 compared to the thirteen weeks ended May 31, 2014. The Finish Line comparable store sales increase of 5.5% was due to an increase in average dollar per transaction, digital traffic, and digital conversion, partially offset by a decrease in store conversion and store traffic.

Consolidated footwear sales increased 8.9% for the thirteen weeks ended May 30, 2015 compared to the thirteen weeks ended May 31, 2014, which was primarily driven by a mid single digit increase in men’s, a low twenty percent increase in women’s, and a mid single digit increase in kids’ footwear sales. Consolidated softgoods sales increased 10.4% for the thirteen weeks ended May 30, 2015 compared to the thirteen weeks ended May 31, 2014.

Cost of Sales (Including Occupancy Costs) and Gross Profit



	Thirteen Weeks Ended
	May 30, 2015			May 31, 2014
	(dollars in thousands)
Cost of sales (including occupancy costs)	$	304,418		$	277,651
Gross profit	$	138,976		$	128,880
Gross profit as a percentage of net sales	31.3		%	31.7		%

The 0.4% decrease in gross profit, as a percentage of net sales, for the thirteen weeks ended May 30, 2015 as compared to the thirteen weeks ended May 31, 2014, was primarily due to a 0.2% decrease in product margin, net of shrink, as a percentage of net sales, and a 0.2% increase in occupancy costs, as a percentage of net sales. The 0.2% decrease in product margin, net of shrink, as a percentage of net sales, was primarily the result of higher shrink and being slightly more promotional in the thirteen weeks ended May 30, 2015 compared to the thirteen weeks ended May 31, 2014. The 0.2% increase in occupancy costs, as a percentage of net sales, was primarily due to deleveraging against the comparable store sales increase.

Selling, General, and Administrative Expenses



	Thirteen Weeks Ended
	May 30, 2015			May 31, 2014
	(dollars in thousands)
Selling, general, and administrative expenses	$	116,457		$	108,896
Selling, general, and administrative expenses as a percentage of net sales	26.2		%	26.8		%

The $7.6 million increase in selling, general, and administrative expenses for the thirteen weeks ended May 30, 2015 as compared to the thirteen weeks ended May 31, 2014, was primarily due to the following: (1) the increased cost associated with store payroll related to the growth in shops within department stores and growth in Running Specialty stores; and (2) variable costs in fulfillment, Macys.com license fees, and payroll in conjunction with the 9.1% increase in consolidated net sales.

Impairment Charges and Store Closing Costs



	Thirteen Weeks Ended
	May 30, 2015			May 31, 2014
	(dollars in thousands)
Impairment charges and store closing costs	$	168		$	2,314
Impairment charges and store closing costs as a percentage of net sales	0.1		%	0.6		%
Number of stores/shops closed	15			3

During the thirteen weeks ended May 30, 2015, the Company recorded $0.2 million in store closing costs, which represent the non-cash write-off of fixtures and equipment upon a store or shop within a department store closing.

The $2.3 million in impairment charges and store closing costs recorded during the thirteen weeks ended May 31, 2014, were primarily the result of a $2.1 million charge for the write-off of tangible and indefinite-lived intangible assets related to one of the Company’s websites, as the Company determined that the website was no longer going to be used for its originally intended purpose. Additionally, the Company recorded $0.2 million in store closing costs during the thirteen weeks ended May 31, 2014.

Interest (Expense) Income, Net



	Thirteen Weeks Ended
	May 30, 2015			May 31, 2014
	(dollars in thousands)
Interest (expense) income, net	$	(2	)	$	7
Interest (expense) income, net as a percentage of net sales	—		%	—		%

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

Income Tax Expense



	Thirteen Weeks Ended
	May 30, 2015			May 31, 2014
	(dollars in thousands)
Income tax expense	$	8,615		$	7,022
Income tax expense as a percentage of net sales	1.9		%	1.7		%
Effective income tax rate	38.5		%	39.7		%

The decrease in the effective tax rate is a result of a decrease in state tax expense and other non-deductible expenses incurred during the thirteen weeks ended May 30, 2015 compared to the thirteen weeks ended May 31, 2014.

Net Loss Attributable to Redeemable Noncontrolling Interest



	Thirteen Weeks Ended
	May 30, 2015			May 31, 2014
	(dollars in thousands)
Net loss attributable to redeemable noncontrolling interest	$	55		$	1,780
Net loss attributable to redeemable noncontrolling interest as a percentage of net sales	—		%	0.5		%

The net loss attributable to redeemable noncontrolling interest represents the noncontrolling owner’s portion of the net loss generated by Running Specialty for the applicable period. The decrease for the thirteen weeks ended May 30, 2015 compared to the thirteen weeks ended May 31, 2014 was primarily due to the decrease in the noncontrolling owner's interest in Running Specialty and improved results of Running Specialty.

Net Income Attributable to The Finish Line, Inc.



	Thirteen Weeks Ended
	May 30, 2015			May 31, 2014
	(dollars in thousands, except for per share amounts)
Net income attributable to The Finish Line, Inc.	$	13,789		$	12,435
Net income attributable to The Finish Line, Inc. as a percentage of net sales	3.1		%	3.1		%
Diluted earnings per share attributable to The Finish Line, Inc. shareholders	$	0.30		$	0.25

The $1.4 million increase in net income attributable to The Finish Line, Inc. for the thirteen weeks ended May 30, 2015 compared to the thirteen weeks ended May 31, 2014 was primarily due to the increase in net sales and the decrease in impairment charges. These changes were partially offset by a decrease in gross profit as a percentage of net sales, the decrease in net loss attributable to redeemable noncontrolling interest, and the increase in selling, general, and administrative expenses to support the increase in sales in shops within department stores and Running Specialty in the current year.

Liquidity and Capital Resources

The Company’s primary source of working capital is cash on hand and cash flows from operations. The following table sets forth material balance sheet and liquidity measures of the Company (in thousands):



	May 30, 2015		May 31, 2014		February 28, 2015
Cash and cash equivalents	$	82,193	$	196,583	$	149,569
Merchandise inventories, net	$	323,319	$	294,990	$	343,403
Interest-bearing debt	$	—	$	—	$	—
Working capital	$	304,374	$	355,738	$	333,160

Operating Activities

Net cash used in operating activities for the thirteen weeks ended May 30, 2015 was $4.7 million compared to net cash provided by operating activities of $15.2 million for the thirteen weeks ended May 31, 2014. This decrease was primarily the result of a decrease in impairment charges and store closing costs and an increase in cash outflow in working capital balances, partially offset by an increase in net income for the thirteen weeks ended May 30, 2015 compared to the thirteen weeks ended May 31, 2014.

At May 30, 2015, the Company had cash and cash equivalents of $82.2 million. Cash and cash equivalents consist primarily of cash on hand and highly liquid instruments with a maturity of three months or less at the date of purchase. At May 30, 2015, substantially all of the Company’s cash was invested in deposit accounts at banks.

Merchandise inventories, net, increased 9.6% at May 30, 2015 compared to May 31, 2014, and decreased 5.8% from February 28, 2015. The increase in merchandise inventories, net over the prior year quarter is primarily related to an increase in inventory due to the expected increase in sales year over year. The decrease in merchandise inventories from February 28, 2015 is due to seasonality as the Company was building inventory at the end of the Company’s fiscal year 2015. The decrease in

accounts payable from February 28, 2015 is primarily related to the decrease in merchandise inventories and the timing of merchandise inventory receipts.

Investing Activities

Net cash used in investing activities for the thirteen weeks ended May 30, 2015 was $27.1 million compared to $25.3 million for the thirteen weeks ended May 31, 2014. The increase in cash used in investing activities was primarily the result of a $3.6 million increase in cash paid for Running Specialty acquisitions, partially offset by a $1.7 million decrease in capital expenditures in the current year.

The Company intends to invest approximately $60 million in capital expenditures during the Company’s fiscal year 2016. Of this amount, approximately $25 million is intended for the construction of new brick and mortar stores and the remodeling or repositioning of 65-80 existing brick and mortar stores, including additional brand shops such as Finish Line’s Nike Track Club and Brand Jordan, as well as other key brand partnerships for “store-within-store” models. In addition, approximately $5-8 million is expected to be spent to reposition and expand 75-100 shops within department stores. The remaining $27-$30 million to be invested is related primarily to projected capital expenditures for technology investments to support new warehouse management, order management, and Macy’s merchandise systems, an upgrade of our digital platform, and enhancements to our customer data and analytics systems. The Company anticipates satisfying all of these capital expenditures through the use of cash-on-hand and operating cash flows.

Financing Activities

Net cash used in financing activities for the thirteen weeks ended May 30, 2015 was $35.5 million compared to $22.5 million for the thirteen weeks ended May 31, 2014. The $13.0 million increase in cash used in financing activities was primarily due to a $12.7 million increase in stock repurchases, a $4.1 million decrease in proceeds from the issuance of common stock, $4.1 million of proceeds from the repayment of a related-party promissory note in the prior year, a $0.9 million decrease in excess tax benefits from share-based compensation, and a $0.3 million increase in dividends paid to shareholders, partially offset by the purchase of redeemable noncontrolling interest of $9.0 million in the thirteen weeks ended May 31, 2014.

Share Repurchase Program

As of May 30, 2015, the Company held 14,884,449 shares of its common stock as treasury shares at an average price of $20.34 per share for an aggregate carrying amount of $302.7 million. The Company’s treasury shares may be issued upon the exercise of employee stock options, under the Employee Stock Purchase Plan, in the form of restricted stock, or for other corporate purposes. The number of shares of common stock reserved to be issued upon the exercise of options, restricted stock, or other awards is limited as defined in the 2002 Stock Incentive Plan of The Finish Line, Inc. and The Finish Line, Inc. Amended and Restated 2009 Incentive Plan. Further purchases will occur from time to time as market conditions warrant and as the Company deems appropriate when judged against other alternative uses of cash.

Dividends

On April 16, 2015, the Company announced a quarterly cash dividend of $0.09 per share of the Company’s common stock. The Company declared dividends of $4.2 million during the thirteen weeks ended May 30, 2015, of which $4.2 million was included in other liabilities and accrued expenses on the Company’s consolidated balance sheet as of May 30, 2015 and was paid on June 15, 2015 to shareholders of record on May 29, 2015. Further declarations of dividends remain at the discretion of the Company’s Board of Directors.

Contractual Obligations

The Company’s contractual obligations primarily consist of operating leases and open purchase orders for merchandise inventory. For the thirteen weeks ended May 30, 2015, there were no significant changes to the Company’s contractual obligations from those identified in the Company’s Annual Report on Form 10-K for the year ended February 28, 2015, other than those which occur in the ordinary course of business (primarily changes in the Company’s merchandise inventory related to purchase obligations, which fluctuate throughout the year as a result of the seasonal nature of the Company’s operations, and changes to operating leases due to store openings and closings).

Critical Accounting Policies and Estimates

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



Item 3.	Quantitative and Qualitative Disclosures About Market Risk

For a discussion of the Company’s market risk associated with interest rates as of February 28, 2015, see “Quantitative and Qualitative Disclosures about Market Risk” in Item 7A of Part II of the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2015. For the thirteen weeks ended May 30, 2015, there has been no significant change in related market risk factors.



Item 4.	Controls and Procedures

Disclosure Controls and Procedures. With the participation of our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Report. Based upon such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures were effective in ensuring that (i) information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the Securities Exchange Commission’s rules and forms and (ii) information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this Report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION



Item 1.	Legal Proceedings

The Company is subject, from time to time, to certain legal proceedings and claims in the ordinary course of conducting its business. Although it is not possible to predict with certainty the eventual outcome of any litigation, in the opinion of management, the Company’s legal proceedings are not expected to have a material adverse effect on its financial position, results of operations, or cash flows.



Item 1A.	Risk Factors

Risk factors that affect the Company’s business and financial results are discussed in “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2015. There has been no significant change to identified risk factors for the thirteen weeks ended May 30, 2015.



Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

Details on the shares repurchased under the 2013 and 2015 Amended Programs during the thirteen weeks ended May 30, 2015 are as follows:



Period	Total Number of Shares Purchased	Average Price Paid per Share(1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Program
March 1, 2015 – April 4, 2015	150,000	$	24.70	150,000	6,054,503
April 5, 2015 – May 2, 2015	1,100,000	25.09		1,100,000	4,954,503
May 3, 2015 – May 30, 2015	—	—		—	4,954,503
	1,250,000	$	25.04	1,250,000

_______________________

(1)The average price paid per share includes any brokerage commissions.



Item 3.	Defaults Upon Senior Securities

None.



Item 4.	Mine Safety Disclosures

Not applicable.



Item 5.	Other Information

None.



Item 6.	Exhibits

(a) Exhibits



Exhibit Number	Description

10.1	Employment Agreement of Bill Kirkendall, dated as of April 25, 2014.*

10.2	Employment Agreement of Imran Jooma, dated as of February 9, 2015.*

31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended.

31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended.

32	Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101	The following materials from The Finish Line, Inc.’s Form 10-Q for the quarterly period ended May 30, 2015, formatted in an XBRL Interactive Data File: (i) Consolidated Balance Sheets-unaudited; (ii) Consolidated Statements of Income-unaudited; (iii) Consolidated Statements of Cash Flows-unaudited; and (iv) Notes to Consolidated Financial Statements-unaudited, with detailed tagging of notes and financial statement schedules.

*	Management contract or compensatory plan, contract, or arrangement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.




		THE FINISH LINE, INC.

Date:	June 26, 2015	By:	/s/ Edward W. Wilhelm
			Edward W. Wilhelm
			Executive Vice President, Chief Financial Officer

EXHIBIT INDEX



Exhibit Number	Description

10.1	Employment Agreement of Bill Kirkendall, dated as of April 25, 2014.

10.2	Employment Agreement of Imran Jooma, dated as of February 9, 2015.

31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended.

31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended.

32	Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101	The following materials from The Finish Line, Inc.’s Form 10-Q for the quarterly period ended May 30, 2015, formatted in an XBRL Interactive Data File: (i) Consolidated Balance Sheets-unaudited; (ii) Consolidated Statements of Income-unaudited; (iii) Consolidated Statements of Cash Flows-unaudited; and (iv) Notes to Consolidated Financial Statements-unaudited, with detailed tagging of notes and financial statement schedules.

Exhibit 10.1

Employment Agreement

This Employment Agreement (the “Agreement”) is made and entered into as of April 25, 2014 (the “Effective Date”) by and between The Finish Line, Inc. (the “Company”) and BILL KIRKENDALL (“Executive”).

Whereas, the Company and Executive desire to enter into this Agreement in order to set forth the terms of Executive’s employment by the Company, as set forth herein;

Now, Therefore, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, the Company and Executive agree as follows:

Employment; Term. The Company hereby agrees to continue to employ Executive, and Executive hereby accepts such employment with the Company, in each case, on the terms and subject to the conditions hereinafter set forth. Subject to the provisions of Section 7 of this Agreement, Executive shall be employed by the Company commencing on the Effective Date and ending on December 31, 2014 (as such period may be extended pursuant to the terms hereof, the “Employment Term”) on the terms and subject to the conditions set forth in this Agreement; provided, however, that commencing on January 1, 2015 and on each anniversary thereafter (each an “Extension Date”), the Employment Term shall be automatically extended for an additional one‑year period, unless the Company or Executive provides the other party hereto with written notice at least 180 days before the next Extension Date that the Employment Term shall not be so extended (“Non-Renewal Notice”).


2.	Position; Relocation.


(a)	While employed by the Company hereunder, Executive shall serve as the Company’s EVP, President, The Running Specialty Group (“RSG”). In such position, Executive shall have such duties and authority as shall be determined from time to time by the Company’s Chief Executive Officer (the “CEO”) and/or the board of directors of the Company (the “Board”).

(b)

While employed by the Company hereunder, Executive will devote Executive’s full business time and best efforts to the performance of Executive’s duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict or interfere with the rendition of such services to the Company either directly or indirectly, without the prior written consent of the Board or the CEO.

(c)

Executive’s principal place of employment shall be at the Company’s Denver, Colorado office. Executive agrees to relocate his principal/primary family residence from Iowa to Denver, CO (including surrounding communities) by not later than July 31, 2014. The Company agrees to provide temporary housing during a transition period that shall not extend past July 31, 2014 and further agrees to assist Executive with relocation expenses as provided in Exhibit A.

Base Salary. As compensation for services rendered to the Company, the Company shall initially pay Executive a base salary at the annual rate of $420,000. While employed by the Company hereunder, Executive shall be entitled to such increases in Executive’s base salary, if any, as may be determined from time to time in the sole discretion of the Board. Executive’s annual base salary, as in effect from time to time, is hereinafter referred to as the “Base Salary.”


4.	Bonus & Equity Programs.

(a)

Annual. In addition to the Base Salary, while employed by the Company hereunder, Executive shall be eligible to participate in such annual and long‑term incentive bonus compensation programs or arrangements, and annual equity grants programs or arrangements, as determined from time to time by the Board, provided that, for FY 2015 75% of Executive’s bonus (66.66% of which shall be guaranteed) shall be tied to RSG performance and the remaining 25% shall be tied to Finish Line performance (in particular, its Enterprise Adjusted Operating Income); and for FY 2015, Executive shall be entitled to full year participation.

(b) Sign-on. Executive shall also be entitled to the following:


(i)	a grant of time based restricted stock equal in value to 50% of Base Salary with a three year cliff vest; and


(ii)	a grant of stock options equal in value to 50% of Base Salary that vest over four years (10%, 20%, 30% & 40%).


5.	Employee Benefits. While employed by the Company hereunder, Executive shall be eligible to participate in the Company’s employee benefit plans as in effect from time to time pursuant to the terms of those employee benefit plans.


6.	Business Expenses. While employed by the Company hereunder, reasonable business expenses (including travel expenses) incurred by Executive in the performance of Executive’s duties hereunder shall be reimbursed by the Company in accordance with Company policies.

Termination. Executive’s employment hereunder may be terminated by either party at any time and for any or no reason; provided that Executive will be required to give the Company advance written notice of any resignation of Executive’s employment (as set forth in this Section 7). Notwithstanding any other provision of this Agreement, the provisions of this Section 7 shall exclusively govern Executive’s rights upon termination of employment with the Company and its affiliates.


(a)	By the Company For Cause or By Executive Resignation without Good Reason.

(i)

Executive’s employment hereunder may be terminated by the Company for Cause (as defined below) at any time upon delivery of written notice to Executive. Executive’s employment hereunder shall terminate automatically upon Executive’s resignation without Good Reason (as defined below); provided that Executive will be required to give the Company at least 30 days advance written notice of a resignation without Good Reason.

(ii)

For purposes of this Agreement, “Cause” shall mean (A) the willful and continued failure by Executive to perform his or her duties with respect to the Company or its affiliates for a period of more than 30 days; (B) the willful or intentional engaging by Executive in conduct that causes material injury, monetarily or otherwise, to the Company including, without limitation, breach of fiduciary duty, fraud, misappropriation, embezzlement or theft; (C) Executive’s conviction for, or a plea of nolo contendere to, the commission of a felony or any other crime involving moral turpitude; or (D) Executive’s breach of this Agreement after notice from the Company and failure of Executive to cure within 10 days after receipt of notice from the Company.


(iii)	If Executive’s employment is terminated by the Company for Cause, or if Executive resigns without Good Reason, Executive shall be entitled to receive:


(A)	the Base Salary through the date of termination (including payment for any accrued but unused vacation time);


(B)	any earned but unpaid portion of Executive’s annual performance bonus (if any) for the fiscal year preceding the fiscal year in which such termination occurs;

(C) reimbursement for any unreimbursed business expenses properly incurred by Executive in accordance with Company policy prior to the date of Executive’s termination; and


(D)	such employee benefits, if any, as to which Executive may be entitled under the employee benefit plans of the Company according to their terms (the amounts described in clauses (A) through (D) hereof, reduced by any amounts owed by Executive to the Company, being referred to as the “Accrued Rights”).

Following such termination of Executive’s employment by the Company for Cause or resignation without Good Reason by Executive, except as set forth in this Section 7(a)(iii), Executive shall have no further rights to any compensation or any other benefits under this Agreement.


(b)	Disability or Death.

(i)

Executive’s employment hereunder shall terminate upon Executive’s death and may be terminated by the Company if Executive becomes (in the good faith judgment of the Board) physically or mentally incapacitated and is therefore unable for a period of three (3) consecutive months or for an aggregate of six (6) months in any twelve (12) consecutive month period to perform Executive’s duties (such incapacity is hereinafter referred to as “Disability”).


(ii)	Upon termination of Executive’s employment hereunder for either Disability or death, Executive or Executive’s estate (as the case may be) shall be entitled to receive:


(A)	the Accrued Rights; and

(B)

if Executive was eligible to receive one or more bonuses for the fiscal year during which Executive’s employment is terminated (the “Termination Year”), an amount equal to a pro‑rated portion (based on the number of days in the Termination Year during which Executive was employed) of the annual cash bonus and any other cash bonus Executive would have received for the Termination Year had he or she remained employed through the entire fiscal year (based on the Company’s actual performance for the Termination Year), payable when bonuses are generally paid to the

Company’s executives for the Termination Year but no later than two and one half months after the end of the fiscal year in which the cash bonus was earned.

Following Executive’s termination of employment due to death or Disability, except as set forth in this Section 7(b)(ii), Executive shall have no further rights to any compensation or any other benefits under this Agreement.


(c)	By the Company Without Cause, Resignation of Executive with Good Reason or Non‑Renewal of Agreement.


(i)	Executive’s employment hereunder may be terminated by the Company at any time without Cause (other than by reason of death or Disability). Executive’s employment hereunder may be terminated by Executive for Good Reason (as defined below).

(ii)

For purposes of this Agreement, “Good Reason” shall mean if, other than for Cause, any of the following has occurred: (A) any material diminution in the Base Salary (except for across the board reductions for all similarly situated executives of the Company); (B) a material change in the geographic location of which Executive must perform the Services; (C) a material breach by the Company of this Agreement; or (D) if such termination of employment occurs within 30 days prior to two years following a Change in Control (as defined in Section 7(d)), a material diminution in Executive’s authority, duties or responsibilities. For Executive to have the right to resign for Good Reason, all of the following must timely occur: (x) Executive must provide the Company with notice of the occurrence of any of the Good Reason events within the 90 day period immediately following the first occurrence of such event and such notice must describe in detail the Good Reason event and the proposed cure to such event, (y) the Company must fail to cure such event with a period of 30 days from the date of receipt of such notice, and (z) the Notice of Termination is delivered by Executive to the Company within 90 days following the day on which the 30 day period set forth in the preceding clause (y) expires.


(iii)	Except as set forth in Section 7(d), if Executive’s employment is terminated by the Company without Cause (other than by reason of death or Disability) or if Executive resigns for Good Reason, in either case, other than within the period that begins 30 days prior to a Change in Control and ends two years following a Change in Control, Executive shall be entitled to receive:


(A)	the Accrued Rights; and


(B)	subject to Section 7(e) and Executive’s continued compliance with the provisions of Sections 8 and 9 hereof:


(1)	a lump sum payment equal to 1.5 times the Base Salary, payable within 60 days following the date of such termination of employment (the “Termination Date”); and


(2)	continued provision of group health benefits to Executive and his or her dependents for 12 months following the Termination Date in accordance with the terms thereof and with the same cost as if Executive remained employed during such period; and

(3)

If Executive was eligible to receive one or more bonuses for the Termination Year, an amount equal to a pro‑rated portion (based on the number of days in the Termination Year during which Executive was employed) of the annual cash bonus and any other cash bonus Executive would have received for the Termination Year had Executive remained employed through the entire fiscal year (based on the Company’s actual performance for the Termination Year), payable when bonuses are generally paid to the Company’s executives for the Termination Year but no later than two and one half months after the end of the fiscal year in which the cash bonus was earned.


(iv)	Except as set forth in Section 7(d), if the Company provides Executive with a written Non-Renewal Notice and his/her employment is terminated by the Company without Cause on the last day of the Employment Term, Section 7(c)(iii) shall not apply and Executive shall be entitled to receive:


(A)	the Accrued Rights; and


(B)	subject to Section 7(e) and Executive's continued compliance with the provisions of Sections 8 and 9 hereof:


(1)	a lump sum cash payment equal to the Base Salary, payable within 60 days following the Termination Date;


(2)	continued provision of group health benefits to Executive and his/her dependents for one year following the Termination Date in accordance with the terms thereof and with the same cost as if Executive remained employed during such period; and

(3)

if Executive was eligible to receive one or more cash bonuses for the calendar year during which Executive's employment is terminated (the “Termination Year”), an amount equal to a pro-rated portion (based on the number of days in the Termination Year during which Executive was employed) of the annual cash bonus and any other cash bonus Executive would have received for the Termination Year had he/she remained employed through the entire year (based on the Company's actual performance for the Termination Year), payable when bonuses are generally paid to the Company’s executives for the Termination Year but no later than two and one half months after the end of the year in which the cash bonus was earned.

Following Executive’s termination of employment by the Company without Cause (other than by reason of Executive’s death or Disability) or by Executive’s resignation for Good Reason, except as set forth in this Section 7(c)(iii), Section 7(c)(iv) or in Section 7(d)(iii), Executive shall have no further rights to any compensation or any other benefits under this Agreement.


(d)	Change in Control.


(i)	For purposes of this Agreement, “Change in Control” shall mean the consummation of one or more of the following:

(A) the sale, exchange, lease or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company to any “person” or “group” (as such terms are used in the Securities Exchange Act of 1934, as amended);


(B)	any person or group is or becomes the beneficial owner, directly or indirectly, of more than 35% of the total voting power of the voting stock of the Company (or any entity which controls the Company or which is a successor to all or substantially all of the assets of the Company), including by way of merger, consolidation, tender or exchange offer or otherwise;

(C)

a merger, consolidation or similar reorganization of the Company with or into another entity, if the shareholders of the common stock of the Company immediately prior to such transaction do not own a majority of the voting power of the voting stock of the surviving company or its parent immediately after the transaction in substantially the same proportions as immediately prior to such transaction; or

(D)

during any 12‑month period, individuals who at the beginning of such period constituted the Board (together with any new directors whose election by the Board (whether through the filling of a vacancy or otherwise) or whose nomination for election by the shareholders of the Company was approved by a vote of a majority of the directors of the Company then still in office, who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the board of directors then in office.

(ii)

In the event of a Change in Control (determined without regard to subclause (A) of the definition set forth in Section 7(d)(i)), notwithstanding any provision in any equity compensation plan maintained by the Company or any award agreement between the Company and Executive, all stock options and awards of restricted stock granted to Executive, which are outstanding and have not otherwise vested shall be deemed vested immediately prior to the consummation of the Change in Control (determined without regard to subclause (A) of the definition set forth in Section 7(d)(i)). For purposes of this Section 7(d)(ii), the terms “stock option” and “restricted stock” should be read to include all other similar equity instruments.(iii) If Executive’s employment is terminated by the Company without Cause (other than by reason of death or Disability) or if Executive resigns for Good Reason, in either case, during the period that begins 30 days prior to a Change in Control (as defined below) and ends two years following a Change in Control, Executive shall be entitled to receive:


(A)	the Accrued Rights; and


(B)	subject to Section 7(e) and Executive’s continued compliance with the provisions of Sections 8 and 9 hereof:


(1)	a lump sum payment equal to 2.5 times the sum of (i) the Base Salary, plus (ii) Executive’s target annual bonus for Termination Year, plus (iii) the value of any other bonus the

executive could have earned during the year of termination pursuant to the Company’s then existing bonus programs, payable within 60 days following the Termination Date; and


(2)	continued provision of group health benefits to Executive and his or her dependents for 18 months following the Termination Date in accordance with the terms thereof and with the same cost as if Executive remained employed during such period.

Following Executive’s termination of employment by the Company without Cause (other than by reason of Executive’s death or Disability) or by Executive’s resignation for Good Reason, except as set forth in this Section 7(d)(iii), Section 7(c)(iii), or Section 7(c)(iv), Executive shall have no further rights to any compensation or any other benefits under this Agreement.

(e)

Release. Any compensation and benefits to be provided under Section 7(c)(iii)(B), Section 7(c)(iv)(B) or Section 7(d)(iii)(B), as applicable, shall be provided only if Executive timely executes and does not revoke a release and waiver agreement which shall be approved by the Company and shall contain, among such other terms and conditions determined by the Company, typical post separation terms and a general release and waiver of all claims that Executive may have against the Company and any of its affiliates relating to the employment and termination of employment of Executive (“Release”). The Release must be signed by Executive and become effective and irrevocable in accordance with its terms (taking into account any applicable revocation period set forth therein), no later than the 60th day after the date of termination of Executive’s employment (the “Termination Date”). If Executive fails to execute and furnish the Release, or if the Release furnished by Executive has not become effective and irrevocable in accordance with its terms (taking into account any applicable revocation period set forth therein) within such 60 day period, Executive will not be entitled to any payment or benefit under this Agreement other than the Accrued Rights.

(f)

Parachute Taxes. Anything in this Agreement to the contrary notwithstanding, in the event that any compensation, payment or distribution by the Company and all affiliates to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Severance Payments”), would, but for this Section 7(f), be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), the following provisions shall apply: (i) if the Severance Payments, reduced by the sum of (A) the Excise Tax (as defined below) and (B) the total of the federal, state, and local income and employment taxes payable by Executive on the amount of the Severance Payments which are in excess of the Threshold Amount (as defined below), are greater than or equal to the Threshold Amount, Executive shall be entitled to the full benefits payable under this Agreement, and (ii) if the Threshold Amount is less than (A) the Severance Payments, but greater than (B) the Severance Payments reduced by the sum of (1) the Excise Tax and (2) the total of the federal, state, and local income and employment taxes on the amount of the Severance Payments which are in excess of the Threshold Amount, then the benefits payable under this Agreement shall be reduced (but not below zero) to the extent necessary so that the maximum Severance Payments shall not exceed the Threshold Amount. For the purposes of this Section, “Threshold Amount” shall mean three times Executive’s “base amount” within the meaning of Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations promulgated thereunder less one dollar ($1.00) and “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, and any interest or penalties incurred by Executive with respect to such excise tax. The determination as to which of the alternative provisions of this Section 7(f) shall apply to Executive shall be made by a nationally recognized accounting firm selected by the Company or one of its affiliates (the “Accounting Firm”). For purposes of determining which of the alternative provisions of this Section 7(f) shall apply, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income taxes at the highest marginal rates of individual taxation in the state and locality of Executive’s residence on the Termination Date, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. Any determination by the Accounting Firm shall be binding upon the Company and Executive, absent fraud or manifest error. In addition, notwithstanding anything herein to the contrary, in the event any payments are to be reduced, the reduction shall take place in a manner that produces the greatest economic advantage to Executive (and if reduction of two or more payments produce the same economic advantage they shall be reduced proportionally), and any payment required shall be made by the end of Executive’s taxable year next following the Company’s taxable year in which Executive remits the payment (this sentence shall be interpreted consistent with Treas. Reg. § 1.409A-3(i)(1)(v)).

(g)

not so qualify, are intended to qualify for the separation pay exceptions to Section 409A, to the maximum extent possible. To the extent that a payment or benefit provided pursuant to this Agreement is not exempt from the application of the requirements of Section 409A, then termination or cessation of employment of Executive under this Agreement shall be interpreted to mean “separation from service” as such term is defined in Section 409A. To the extent that none of these exceptions (or any other available exception) applies, then notwithstanding anything contained herein to the contrary, and to the extent required to comply with Section 409A, if a Participant is a “specified employee,” as determined under the Company’s policy for identifying specified employees on his or her Termination Date, then all amounts due under this Plan that constitute a “deferral of compensation” within the meaning of Section 409A, that are provided as a result of a separation from service (as defined in accordance with the default rules under Section 409A), and that would otherwise be paid or provided during the first six months following the Termination Date, shall be accumulated through and paid or provided (together with interest at the applicable federal rate under Section 7872(f)(2)(A) of the Code in effect on the Termination Date) on the first business day that is more than six months after the date of the Termination Date (or, if the Participant dies during such six month period, on the date of the Participant’s death). With regard to any provision herein that provides for reimbursement of costs and expenses or in kind benefits, except as permitted by Section 409A: (i) the right to reimbursement or in kind benefits shall not be subject to liquidation or exchange for another benefit; (ii) the amount of expenses eligible for reimbursement, or in kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in kind benefits to be provided, in any other taxable year; and (iii) such payments shall be made on or before the last day of the Participant’s taxable year following the taxable year in which the expense occurred, or such earlier date as required hereunder. This Section 7(g) shall be interpreted in accordance with Treas. Reg. § 1.409A-3(i)(1)(iv)(A). The tax treatment of the benefits provided under this Agreement is not warranted or guaranteed. Neither the Company, its affiliates nor their respective directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by Executive (or any other individual claiming a benefit through Executive) as a result of this Agreement. Upon the inclusion of any amount into the Participant’s income as a result of the failure of this Agreement to comply with the requirements of Section 409A a distribution not to exceed the amount that shall be included in income shall be made as soon as is administratively practicable following the discovery of the failure of the Agreement to comply with Section 409A (this sentence shall be interpreted consistent with Treas. Reg. § 1.409A 3(j)(4)(vii)).

(h)

Notice of Termination. Any termination of employment by the Company for Cause shall be communicated by written Notice of Termination to Executive in accordance with Section 11(h) hereof. In addition, any termination of employment by Executive for Good Reason shall be communicated by written Notice of Termination to the Company in accordance with Section 11(h) hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated.

(i)

Board/Committee Resignation. Upon termination of Executive’s employment for any reason, Executive agrees that Executive shall automatically be deemed to have resigned, as of the date of such termination, from the Board (and any committees thereof) and the board of directors or similar governing body (and any committees thereof) of any of the Company’s affiliates, and any position in which Executive is acting on behalf of or as a representative of the Company (such as a trustee or administrative committee member with respect to a tax‑qualified retirement plan).


8.	Non‑Competition; Non‑Solicitation.

(a)

Executive acknowledges and recognizes the highly competitive nature of the businesses of the Company and its affiliates. Both parties acknowledge that it is important for the Company to protect its legitimate business interests by restricting Executive’s ability to compete in a limited manner. The parties acknowledge and agree this limited non‑competition provision is drafted narrowly so as to safeguard the Company’s legitimate business interests while not unreasonably preventing or interfering with Executive’s ability to obtain other employment. For a period of one (1) year after separation from the Company, Executive shall not:

(i)

directly or indirectly, in a competitive capacity, work for, advise, manage, own, or act as an agent or consultant for or a board member of or have any business connection or employment relationship with any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise whatsoever (“Person”) which competes with the Company or its affiliates including, without limitation, in the athletic specialty and/or sporting goods retail industry (a “Competitive Business”) in the United States;


(ii)	directly or indirectly, own or have a financial interest in, any Competitive Business, directly or indirectly, as a lender, guarantor, owner, member, partner, or shareholder;

(iii) directly or indirectly, in a competitive capacity, interfere with, or attempt to interfere with, business relationships between the Company or any of its affiliates and their respective customers, suppliers, partners, investors or vendors, with which Executive had direct or indirect contact during the last two (2) years of Executive’s employment with the Company; and/or

(iv) directly or indirectly, in a competitive capacity, interfere with, or attempt to interfere with, business relationships between the Company or any of its affiliates and their respective customers, suppliers, partners, investors or vendors, with which Executive had direct or indirect responsibility during the last two (2) years of Executive’s employment with the Company.

(b)

Notwithstanding anything to the contrary in this Agreement, Executive may, directly or indirectly own, solely as an investment, securities of any Person engaged in a Competitive Business that are publicly traded on a national or regional stock exchange or on the over‑the‑counter market if Executive (i) is not a controlling Person of, or a member of a group that controls, such Person and (ii) does not, directly or indirectly, own 1% or more of any class of securities of such Person.


(c)	Employee agrees that Employee will not, for a period of one (1) year after separation from the Company, directly or indirectly, alone or in concert with others, solicit, encourage or seek to influence any employee of the Company or any of its affiliate to leave his or her employment with the Company or any of its affiliates

(d)

It is expressly understood and agreed that although Executive and the Company consider the restrictions contained in this Section 8 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against Executive, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.

(e)

Executive understands and agrees that the restricted one (1) year time periods set forth herein are material terms of this Agreement and that the Company is entitled to Executive’s compliance with these terms for the full agreed-upon periods of time. Therefore, the restricted periods of time set forth herein will be tolled during any period of non-compliance. If the Company must seek injunctive relief or judicial intervention, the restricted time periods set forth herein will not commence until Executive is judged by a court of competent jurisdiction to be in compliance with the terms of this Agreement.


(f)	The provisions of this Section 8 shall survive the cessation of Executive’s employment for any reason or no reason.


9.	Confidentiality; Intellectual Property.


(a)	Confidentiality.

(i)

Executive will not at any time (whether during or after Executive’s employment with the Company) (x) retain or use for the benefit, purposes or account of Executive or any other Person (other than the Company); or (y) disclose, divulge, reveal, communicate, share, transfer or provide access to any Person outside the Company (other than its professional advisers who are bound by confidentiality obligations), any non‑public, proprietary or confidential information -including without limitation trade secrets, know‑how, research and development, software, databases, inventions, processes, formulae, technology, designs and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, store site selection, new store openings, government and regulatory activities and approvals - concerning the past, current or future business, activities and operations of the Company, its subsidiaries or affiliates and/or any third party that has disclosed or provided any of same to the Company on a confidential basis (“Confidential Information”) without the prior written authorization of the Board.

(ii)

“Confidential Information” shall not include any information that is (a) generally known to the industry or the public other than as a result of Executive’s breach of this covenant; (b) made legitimately available to Executive without a confidentiality restriction by a third party without breach of any confidentiality obligation of that third party; or (c) required by law to be disclosed; provided that Executive shall give prompt written notice to the Company of such requirement, disclose no more information than is so required, and cooperate with any attempts by the Company to obtain a protective order or similar treatment.


(iii)	Except as required by law, Executive shall not disclose to anyone, other than Executive’s immediate family and legal or financial advisors, the existence or contents of this Agreement; provided that Executive may disclose to any prospective future employer the provisions of Sections 8 and 9 of this Agreement provided they agree to maintain the confidentiality of such terms.

(iv)

Upon termination of Executive’s employment with the Company for any reason, Executive shall (x) cease and not thereafter commence use of any Confidential Information or intellectual property (including without limitation, any patent, invention, copyright, trade secret, trademark, trade name, logo, domain name or other source indicator) owned or used by the Company, its subsidiaries or affiliates; (y) immediately destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters and other data) in Executive’s possession or control (including any of the foregoing stored or located in Executive’s office, home, laptop or other computer, whether or not Company property) that contain Confidential Information or otherwise relate to the business of the Company, its affiliates and subsidiaries, except that Executive may retain only those portions of any personal notes, notebooks and diaries that do not contain any Confidential Information; and (z) notify and fully cooperate with the Company regarding the delivery or destruction of any other Confidential Information of which Executive is or becomes aware.


(b)	The provisions of this Section 9 shall survive the cessation of Executive’s employment for any reason or no reason.


10.	Relief.

(a)

Executive understands that the Company will be irreparably damaged, in an amount that may be impossible to ascertain, if the provisions of Section 8 or 9 of this Agreement are not strictly adhered to and complied with by Executive. In the event of breach by Executive of any provision of Section 8 or 9 of this Agreement, Executive agrees that Company shall be entitled, in addition to reasonable attorneys’ fees, costs and remedies otherwise available to Company at law or in equity, to injunctions, both temporary, preliminary and permanent, enjoining and restraining such threatened, intended or actual breach, and Executive irrevocably consents to the issuance of such injunctive relief by any court of competent jurisdiction. Executive acknowledges that in addition to injunctive relief, the Company may recover monetary damages such as those related to misappropriation, actual damages and unjust enrichment and, in appropriate circumstances, exemplary damages in accordance with the Indiana Uniform Trade Secrets Act and/or other remedies available at law or equity.

(b)

Executive acknowledges that (i) separate and distinct promises in this Agreement are reasonable, enforceable, and necessary in order to protect the Company’s legitimate business interests; (ii) after separation of employment from the Company, Executive will possess the Company’s trade secrets and confidential information which Executive will inevitably use if he or she were to engage in the conduct prohibited by Sections 8 and 9, that such use would be unfair and extremely detrimental to the Company; (iii) any violation will result in an irreparable injury to the Company; and (iv) the enforcement of Sections 8 or 9 by a remedy by way of injunction will not prevent Executive from earning a livelihood.

(c)

Sections 8 and 9 of this Agreement shall be construed as independent of any other provision of this Agreement and shall survive the termination of this Agreement. The existence of any claim or cause of action by Executive against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the Sections 8 and 9 of this Agreement.


11.	Miscellaneous.

(a)

Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed by and construed in accordance with the laws of the State of Indiana, without regard to conflicts of laws principles thereof. Any and all disputes between the parties which may arise pursuant to this Agreement will be heard and determined before an appropriate federal court in the Southern District of Indiana, or, if not maintainable therein, then in an appropriate Indiana state court in Marion County, Indiana. The parties acknowledge that such courts have jurisdiction to interpret and enforce the provisions of this Agreement, and the parties consent to, and waive any and all objections that they may have as to, personal jurisdiction and/or venue in such courts. Executive specifically consents to personal jurisdiction in the State of Indiana. Executive further understands and acknowledges that in the event the Company initiates litigation against Executive, the Company may need to prosecute such litigation in Executive’s forum state, in the State of Indiana or in such other state where Executive is subject to personal jurisdiction. Notwithstanding any rights to a jury trial for any claims, Executive waives any right to a jury trial, and agrees that any claim of any type hereunder lodged in any court will be tried, if at all, without a jury.


(b)	Entire Agreement/Amendments. This Agreement contains the entire understanding of the parties with respect to the employment of Executive by the Company. There are no restrictions, agreements, promises, warranties, covenants

or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein. This Agreement may not be altered, modified, or amended except by written instrument signed by the parties hereto.


(c)	No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.


(d)	Severability. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby.

(e)

Assignment. This Agreement, and all of Executive’s rights and duties hereunder, shall not be assignable or delegable by Executive. Any purported assignment or delegation by Executive in violation of the foregoing shall be null and void ab initio and of no force or effect. This Agreement may be assigned by the Company to a Person that is an affiliate or a successor in interest to any portion of the business operations of the Company. Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such affiliate or successor Person.

(f)

Set Off; No Mitigation. The Company’s obligation to pay Executive the amounts provided and to make the arrangements provided hereunder shall be subject to set‑off, counterclaim or recoupment of amounts owed by Executive to the Company or its affiliates; provided, however, that in no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under Section 7 of this Agreement.


(g)	Successors; Binding Agreement. This Agreement shall inure to the benefit of and be binding upon personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

(h)

Notice. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand or overnight courier or three days after it has been mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below in this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

If to the Company:

The Finish Line, Inc.

3308 N. Mitthoeffer Road

Indianapolis, Indiana 46235

Attention: Chairperson of the Compensation and Stock Option Committee

If to Executive:

To the most recent address of Executive set forth in the personnel records of the Company.


(i)	Prior Agreements. This Agreement supersedes all prior agreements and understandings (including verbal agreements) between Executive and the Company and/or its affiliates regarding the terms and conditions of Executive’s employment with the Company and/or its affiliates.


(j)	Cooperation. Executive shall provide Executive’s reasonable cooperation in connection with any action or proceeding (or any appeal from any action or proceeding), which relates to events occurring during Executive’s employment hereunder. This provision shall survive any termination of this Agreement.


(k)	Withholding Taxes. The Company may withhold from any amounts payable under this Agreement such Federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.


(l)	Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.


(m)	Clawback. Notwithstanding anything herein to the contrary, Executive agrees that payments made to Executive may be subject to repayment pursuant to one or more clawback or recoupment policies of the Company as are in effect at any time and from time to time.


(n)	Other Benefits. Any benefits received by Executive pursuant to this Agreement shall be in lieu of any severance policy or severance plan maintained by the Company or its affiliates (other than a stock option, restricted stock, share or unit, performance share or unit, supplemental retirement, deferred compensation or similar plan or agreement

which may contain provisions operative on a termination of Executive’s employment or may incidentally refer to accelerated vesting or accelerated payment upon a termination of employment). Any economic or other benefit to Executive under this Agreement, other than the Accrued Benefits, will not be taken into account in determining any benefits to which Executive may be entitled under any profit sharing, retirement or other benefit or compensation plan maintained by the Company and its affiliates, unless provided otherwise in any such plan.

(o)

Preparation and Review of Agreement. Executive acknowledges and agrees that Executive has carefully read this entire Agreement and has been given sufficient opportunity to discuss this Agreement with the Company before signing. The Company and Executive each acknowledge that each party to this Agreement has had the opportunity to be represented by counsel in connection with this Agreement. Accordingly, any rule of law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the party that drafted it has no application and is expressly waived.

(p)

No Other Agreements. Executive represents and warrants to the Company that (i) his or her execution, delivery and performance of this Agreement does not and shall not conflict with or result in the breach of or violation of any other agreement or instrument to which he or she is a party or by which he or she is bound; (ii) he or she is not a party to or bound by any Non-Competition / Non-Solicitation Agreement which is in conflict with or would be breached by the execution and performance of this Agreement; and (iii) upon the execution and delivery of this Agreement by Company it shall be valid and binding upon Employee.

(q)

Disclosure of this Agreement. In order to preserve the Company’s rights under this Agreement, the Company may advise any third party of the existence of this Agreement and of its terms and may provide such third party copies hereof, and the Company shall have no liability for doing so. Executive shall notify each subsequent employer or Person using the services of Executive at any time within one (1) year following the cessation of Executive’s employment with the Company of the existence and provisions of this Agreement. Executive also shall immediately notify the Company, in writing, of the name, principal business address and area of business of any employment or similar relationship that Executive enters into within one (1) year following the termination (for whatever reason) of Executive’s employment with the Company. The expiration of this one (1) year notification period shall have no effect on the applicability or enforceability of the provisions of any other part of this Agreement.

In Witness Whereof, the parties hereto have duly executed this Employment Agreement as of the day and year first above written.



The Finish Line, Inc.

By:	/s/ Glenn S. Lyon
	Glenn S. Lyon, CEO

EXECUTIVE
	/s/ Bill Kirkendall
	Bill Kirkendall

EXHBIT A

Relocation Assistance. Finish Line is prepared to assist with the expense of relocation as stated in the relocation policy provided to you with exceptions noted below:

▪

You will be eligible for a relocation package that includes two (2) trips for two people up to 3 days/2 nights each trip, reimbursement of pre-approved and reasonable relocation costs of reimbursable relocation items as outlined in the Finish Line Relocation Policy, which includes temporary housing in Denver, use of a moving company provided by Finish Line, and selling and closing costs and incidental expenses (subject to receipts). Per IRS regulations, portions of this reimbursement are taxable (e.g. all expenses except for the physical move itself). Finish Line will seek to gross up these payments to cover what we anticipate will be taxable portions of relocation expenses.

▪

The above relocation expenses will be reimbursed to you or paid on your behalf by the company in the form of a loan that will have no repayment obligation conditioned upon your continued employment for a period of not less than 24 months. In the event that you voluntarily terminate your employment with the Company, or you are terminated for cause: a) before the conclusion of 12 months of employment, you will be required to repay the Company 100% of these expenses; b) if between 12 - 18 months of employment, you will be required to repay two-thirds of these expenses; and c) if between 18 and 24 months of employment, you will be required to repay one-third of these expenses.

Exhibit 10.2

Employment Agreement

This Employment Agreement (the “Agreement”) is made and entered into as of February 9, 2015 (the “Effective Date”) by and between The Finish Line, Inc. (the “Company”) and IMRAN JOOMA (“Executive”).

Whereas, the Company and Executive desire to enter into this Agreement in order to set forth the terms of Executive’s employment by the Company, as set forth herein;

Employment; Term. The Company hereby agrees to employ Executive, and Executive hereby accepts such employment with the Company, in each case, on the terms and subject to the conditions hereinafter set forth. Subject to the provisions of Section 7 of this Agreement, Executive shall be employed by the Company commencing on the Effective Date and ending on December 31, 2015 (as such period may be extended pursuant to the terms hereof, the “Employment Term”) on the terms and subject to the conditions set forth in this Agreement; provided, however, that commencing on January 1, 2016, and on each anniversary thereafter (each an “Extension Date”), the Employment Term shall be automatically extended for a one‑year period, unless the Company or Executive provides the other party hereto with written notice at least 180 days before the next Extension Date that the Employment Term shall not be so extended (“Non-Renewal Notice”).


2.	Position; Relocation.


(a)	While employed by the Company hereunder, Executive shall serve as the Company’s EVP, Chief Omni-channel Officer. In such position, Executive shall have such duties and authority as shall be determined from time to time by the Company’s President (the “President”) or Chief Executive Officer (the “CEO”).

(b)

While employed by the Company hereunder, Executive will devote his full business time and best efforts to the performance of Executive’s duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict or interfere with the rendition of such services to the Company either directly or indirectly, without the prior written consent of the President or the CEO, provided that Executive may serve on civic and charitable boards with approval of the President or the CEO.

(c)

Executive’s principal place of employment shall be at the Company’s corporate headquarters in Indianapolis, Indiana. Executive agrees to relocate his principal/primary family residence from Illinois to Indianapolis, IN (including surrounding communities) by not later than six months from the Effective Date. The Company agrees to provide temporary housing during a transition period that shall not extend beyond six months from the Effective Date and further agrees to assist Executive with relocation expenses as provided in Exhibit A.

Base Salary. As compensation for services rendered to the Company, the Company shall pay Executive a base salary at the annual rate of $549,000. While employed by the Company hereunder, Executive shall be entitled to such increases in Executive’s base salary, if any, as may be determined from time to time in the sole discretion of the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”). Executive’s annual base salary, as in effect from time to time, is hereinafter referred to as the “Base Salary.”


4.	Bonus & Equity Programs.

(a)

Annual. In addition to the Base Salary, while employed by the Company hereunder, Executive shall be eligible to participate in such annual and long‑term incentive bonus compensation programs or arrangements, and annual equity grants programs or arrangements, as determined from time to time by the Compensation Committee. For FY 2015, Executive shall be entitled to prorated participation in the annual bonus program in the amount of $118,950, prorated participation in the long-term incentive bonus program, but shall not be entitled to any annual equity grants.


(b)	Sign-on. Executive shall also be entitled to the following:

(i)

$300,000 cash payment (grossed up for taxes) payable in two installments, the first of which shall be $200,000 and paid 45 days after the Effective Date, provided that Executive is employed as of the pay date. The second installment payment of $100,000 shall be paid within 15 days of the first anniversary of the Effective Date provided that Executive is employed as of the pay date. In the event that within 12 months of the Effective Date, Executive voluntarily terminates employment with the Company without “Good Reason” or is terminated for “Cause”, Executive agrees to repay the Company 100% of these cash payments;


(ii)	a grant of time based restricted stock equal to 50% of Base Salary with a vesting schedule of 50% after 1 year, 25% on March 1, 2016 and 25% on March 1, 2017; and


(iii)	a grant of stock options equal to 100% of Base Salary with a vesting schedule of 50% after 1 year and 50% after 2 years.


(c)	Special Incentive. Subject to Compensation Committee approval, Executive shall be entitled in March, 2016 to an additional award of time based restricted shares equal to 50% of Base Salary that cliff vests after 3 years.


5.	Employee Benefits. While employed by the Company hereunder, Executive shall be eligible to participate in the Company’s employee benefit plans as in effect from time to time pursuant to the terms of those employee benefit plans.


6.	Business Expenses. While employed by the Company hereunder, reasonable business expenses (including travel expenses) incurred by Executive in the performance of Executive’s duties hereunder shall be reimbursed by the Company in accordance with Company policies.


(a)	By the Company For Cause or By Executive Resignation without Good Reason.

(i)

(ii)

For purposes of this Agreement, “Cause” shall mean (A) the willful and continued failure by Executive to perform his or her material duties with respect to the Company or its affiliates for a period of more than 30 days; (B) the willful or intentional engaging by Executive in conduct that causes material injury, monetarily or otherwise, to the Company including, without limitation, breach of fiduciary duty, fraud, misappropriation, embezzlement or theft; (C) Executive’s conviction for, or a plea of nolo contendere to, the commission of a felony or any other crime involving moral turpitude; or (D) Executive’s breach of this Agreement after notice from the Company and failure of Executive to cure within 10 days after receipt of notice from the Company.


(iii)	If Executive’s employment is terminated by the Company for Cause, or if Executive resigns without Good Reason, Executive shall be entitled to receive:


(A)	the Base Salary through the date of termination (including payment for any accrued but unused vacation time);


(B)	any earned but unpaid portion of Executive’s annual performance bonus (if any) for the fiscal year preceding the fiscal year in which such termination occurs;


(C)	reimbursement for any unreimbursed business expenses properly incurred by Executive in accordance with Company policy prior to the date of Executive’s termination; and


(D)	such employee benefits, if any, as to which Executive may be entitled under the employee benefit plans of the Company according to their terms (the amounts described in clauses (A) through (D) hereof, reduced by any amounts owed by Executive to the Company, being referred to as the “Accrued Rights”).


(b)	Disability or Death.

(i)


(ii)	Upon termination of Executive’s employment hereunder for either Disability or death, Executive or Executive’s estate (as the case may be) shall be entitled to receive:


(A)	the Accrued Rights; and

(B)


(c)	By the Company Without Cause, Resignation of Executive with Good Reason or Non‑Renewal of Agreement.


(i)	Executive’s employment hereunder may be terminated by the Company at any time without Cause (other than by reason of death or Disability). Executive’s employment hereunder may be terminated by Executive for Good Reason (as defined below).

(ii)


(iii)	Except as set forth in Section 7(d), if Executive’s employment is terminated by the Company without Cause (other than by reason of death or Disability) or if Executive resigns for Good Reason, in either case, other than within the period that begins 30 days prior to a Change in Control and ends two years following a Change in Control, Executive shall be entitled to receive:


(A)	the Accrued Rights; and


(B)	subject to Section 7(e) and Executive’s continued compliance with the provisions of Sections 8 and 9 hereof:


(1)	a lump sum payment equal to 1.5 times the Base Salary, payable within 60 days following the date of such termination of employment (the “Termination Date”); and


(2)	continued provision of group health benefits to Executive and his or her dependents for twelve months following the Termination Date in accordance with the terms thereof and with the same cost as if Executive remained employed during such period; and

(3)


(iv)	Except as set forth in Section 7(d), if the Company provides Executive with a written Non-Renewal Notice and his/her employment is terminated by the Company without Cause on the last day of the Employment Term, Section 7(c)(iii) shall not apply and Executive shall be entitled to receive:


(A)	the Accrued Rights; and


(B)	subject to Section 7(e) and Executive's continued compliance with the provisions of Sections 8 and 9 hereof:


(1)	a lump sum cash payment equal to the Base Salary, payable within 60 days following the Termination Date;


(2)	continued provision of group health benefits to Executive and his/her dependents for one year following the Termination Date in accordance with the terms thereof and with the same cost as if Executive remained employed during such period; and

(3)


(d)	Change in Control.


(i)	For purposes of this Agreement, “Change in Control” shall mean the consummation of one or more of the following:


(A)	the sale, exchange, lease or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company to any “person” or “group” (as such terms are used in the Securities Exchange Act of 1934, as amended);


(B)	any person or group is or becomes the beneficial owner, directly or indirectly, of more than 35% of the total voting power of the voting stock of the Company (or any entity which controls the Company or which is a successor to all or substantially all of the assets of the Company), including by way of merger, consolidation, tender or exchange offer or otherwise;

(C)

(D)

(ii)

subclause (A) of the definition set forth in Section 7(d)(i)). For purposes of this Section 7(d)(ii), the terms “stock option” and “restricted stock” should be read to include all other similar equity instruments.


(iii)	If Executive’s employment is terminated by the Company without Cause (other than by reason of death or Disability) or if Executive resigns for Good Reason, in either case, during the period that begins 30 days prior to a Change in Control (as defined below) and ends two years following a Change in Control, Executive shall be entitled to receive:


(A)	the Accrued Rights; and


(B)	subject to Section 7(e) and Executive’s continued compliance with the provisions of Sections 8 and 9 hereof:


(1)	a lump sum payment equal to 2.5 times the sum of (i) the Base Salary, plus (ii) Executive’s target annual bonus for Termination Year, plus (iii) the value of any other bonus the executive could have earned during the year of termination pursuant to the Company’s then existing bonus programs, payable within 60 days following the Termination Date; and


(2)	continued provision of group health benefits to Executive and his or her dependents for 18 months following the Termination Date in accordance with the terms thereof and with the same cost as if Executive remained employed during such period.

Following Executive’s termination of employment by the Company without Cause (other than by reason of Executive’s death or Disability) or by Executive’s resignation for Good Reason, except as set forth in this Section 7(d)(iii), Section 7(c)(iii), or Section 7(c)(iv), Executive shall have no further rights to any compensation or any other benefits under this Agreement.

(e)

(f)

in the state and locality of Executive’s residence on the Termination Date, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. Any determination by the Accounting Firm shall be binding upon the Company and Executive, absent fraud or manifest error. In addition, notwithstanding anything herein to the contrary, in the event any payments are to be reduced, the reduction shall take place in a manner that produces the greatest economic advantage to Executive (and if reduction of two or more payments produce the same economic advantage they shall be reduced proportionally), and any payment required shall be made by the end of Executive’s taxable year next following the Company’s taxable year in which Executive remits the payment (this sentence shall be interpreted consistent with Treas. Reg. § 1.409A-3(i)(1)(v)).

(g)

Effect of Section 409A of the Code. It is intended that the payments and benefits provided under this Section 7 shall be exempt from the application of the requirements of Section 409A of the Code (“Section 409A”). Specifically, any taxable benefits or payments provided under this Agreement are intended to be separate payments that qualify for the “short term deferral” exception to Section 409A to the maximum extent possible, and to the extent they do not so qualify, are intended to qualify for the separation pay exceptions to Section 409A, to the maximum extent possible. To the extent that a payment or benefit provided pursuant to this Agreement is not exempt from the application of the requirements of Section 409A, then termination or cessation of employment of Executive under this Agreement shall be interpreted to mean “separation from service” as such term is defined in Section 409A. To the extent that none of these exceptions (or any other available exception) applies, then notwithstanding anything contained herein to the contrary, and to the extent required to comply with Section 409A, if a Participant is a “specified employee,” as determined under the Company’s policy for identifying specified employees on his or her Termination Date, then all amounts due under this Plan that constitute a “deferral of compensation” within the meaning of Section 409A, that are provided as a result of a separation from service (as defined in accordance with the default rules under Section 409A), and that would otherwise be paid or provided during the first six months following the Termination Date, shall be accumulated through and paid or provided (together with interest at the applicable federal rate under Section 7872(f)(2)(A) of the Code in effect on the Termination Date) on the first business day that is more than six months after the date of the Termination Date (or, if the Participant dies during such six month period, on the date of the Participant’s death). With regard to any provision herein that provides for reimbursement of costs and expenses or in kind benefits, except as permitted by Section 409A: (i) the right to reimbursement or in kind benefits shall not be subject to liquidation or exchange for another benefit; (ii) the amount of expenses eligible for reimbursement, or in kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in kind benefits to be provided, in any other taxable year; and (iii) such payments shall be made on or before the last day of the Participant’s taxable year following the taxable year in which the expense occurred, or such earlier date as required hereunder. This Section 7(g) shall be interpreted in accordance with Treas. Reg. § 1.409A-3(i)(1)(iv)(A). The tax treatment of the benefits provided under this Agreement is not warranted or guaranteed. Neither the Company, its affiliates nor their respective directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by Executive (or any other individual claiming a benefit through Executive) as a result of this Agreement. Upon the inclusion of any amount into the Participant’s income as a result of the failure of this Agreement to comply with the requirements of Section 409A a distribution not to exceed the amount that shall be included in income shall be made as soon as is administratively practicable following the discovery of the failure of the Agreement to comply with Section 409A (this sentence shall be interpreted consistent with Treas. Reg. § 1.409A 3(j)(4)(vii)).

(h)

(i)


8.	Non‑Competition; Non‑Solicitation.

(a)

(i)


(ii)	directly or indirectly, own or have a financial interest in, any Competitive Business, directly or indirectly, as a lender, guarantor, owner, member, partner, or shareholder;


(iii)	directly or indirectly, in a competitive capacity, interfere with, or attempt to interfere with, business relationships between the Company or any of its affiliates and their respective customers, suppliers, partners, investors or vendors, with which Executive had direct or indirect contact during the last two (2) years of Executive’s employment with the Company; and/or


(iv)	directly or indirectly, in a competitive capacity, interfere with, or attempt to interfere with, business relationships between the Company or any of its affiliates and their respective customers, suppliers, partners, investors or vendors, with which Executive had direct or indirect responsibility during the last two (2) years of Executive’s employment with the Company.

(b)


(c)	Employee agrees that Employee will not, for a period of one (1) year after separation from the Company, directly or indirectly, alone or in concert with others, solicit, encourage or seek to influence any employee of the Company or any of its affiliate to leave his or her employment with the Company or any of its affiliates

(d)

(e)


(f)	The provisions of this Section 8 shall survive the cessation of Executive’s employment for any reason or no reason.


9.	Confidentiality; Intellectual Property.


(a)	Confidentiality.


(i)	Executive will not at any time (whether during or after Executive’s employment with the Company) (x) retain or use for the benefit, purposes or account of Executive or any other Person (other than the Company); or (y) disclose, divulge, reveal, communicate, share, transfer or provide access to any Person outside the

Company (other than its professional advisers who are bound by confidentiality obligations), any non‑public, proprietary or confidential information -including without limitation trade secrets, know‑how, research and development, software, databases, inventions, processes, formulae, technology, designs and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, store site selection, new store openings, government and regulatory activities and approvals - concerning the past, current or future business, activities and operations of the Company, its subsidiaries or affiliates and/or any third party that has disclosed or provided any of same to the Company on a confidential basis (“Confidential Information”) without the prior written authorization of the Board.

(ii)


(iii)	Except as required by law, Executive shall not disclose to anyone, other than Executive’s immediate family and legal or financial advisors, the existence or contents of this Agreement; provided that Executive may disclose to any prospective future employer the provisions of Sections 8 and 9 of this Agreement provided they agree to maintain the confidentiality of such terms.

(iv)


(b)	The provisions of this Section 9 shall survive the cessation of Executive’s employment for any reason or no reason.


10.	Relief.

(a)

(b)


(c)	Sections 8 and 9 of this Agreement shall be construed as independent of any other provision of this Agreement and shall survive the termination of this Agreement. The existence of any claim or cause of action by Executive

against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the Sections 8 and 9 of this Agreement.


11.	Miscellaneous.

(a)

(b)

Entire Agreement/Amendments. This Agreement contains the entire understanding of the parties with respect to the employment of Executive by the Company. There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein. This Agreement may not be altered, modified, or amended except by written instrument signed by the parties hereto.


(c)	No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.


(d)	Severability. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby.

(e)

(f)


(g)	Successors; Binding Agreement. This Agreement shall inure to the benefit of and be binding upon personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

(h)

If to the Company:

The Finish Line, Inc.

3308 N. Mitthoeffer Road

Indianapolis, Indiana 46235

Attention: Chairperson of the Compensation and Stock Option Committee

If to Executive:

To the most recent address of Executive set forth in the personnel records of the Company.


(i)	Prior Agreements. This Agreement supersedes all prior agreements and understandings (including verbal agreements) between Executive and the Company and/or its affiliates regarding the terms and conditions of Executive’s employment with the Company and/or its affiliates.


(j)	Cooperation. Executive shall provide Executive’s reasonable cooperation in connection with any action or proceeding (or any appeal from any action or proceeding), which relates to events occurring during Executive’s employment hereunder. This provision shall survive any termination of this Agreement.


(k)	Withholding Taxes. The Company may withhold from any amounts payable under this Agreement such Federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.


(l)	Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.


(m)	Clawback. Notwithstanding anything herein to the contrary, Executive agrees that payments made to Executive may be subject to repayment pursuant to one or more clawback or recoupment policies of the Company as are in effect at any time and from time to time.

(n)

Other Benefits. Any benefits received by Executive pursuant to this Agreement shall be in lieu of any severance policy or severance plan maintained by the Company or its affiliates (other than a stock option, restricted stock, share or unit, performance share or unit, supplemental retirement, deferred compensation or similar plan or agreement which may contain provisions operative on a termination of Executive’s employment or may incidentally refer to accelerated vesting or accelerated payment upon a termination of employment). Any economic or other benefit to Executive under this Agreement, other than the Accrued Benefits, will not be taken into account in determining any benefits to which Executive may be entitled under any profit sharing, retirement or other benefit or compensation plan maintained by the Company and its affiliates, unless provided otherwise in any such plan.

(o)

(p)

(q)

Indemnification. The Company shall indemnify the Executive and hold him harmless to the extent provided under the Company's by-laws against in respect to any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including reasonable attorney's fees), losses, and damages resulting from the Executive's performance of his duties and obligations to the Company. This provision shall survive the cessation of Executive's employment except where Executive was terminated for Cause.

(r)

In Witness Whereof, the parties hereto have duly executed this Employment Agreement as of the day and year first above written.



The Finish Line, Inc.

By:	/s/ Glenn S. Lyon
	Glenn S. Lyon, CEO

EXECUTIVE

	/s/ Imran Jooma
	Imran Jooma

EXHBIT A

Relocation Assistance. Finish Line is prepared to assist you with the expense of relocation as stated in the relocation policy provided to you with exceptions noted below:

▪

Our intent is to reimburse the reasonable costs of your relocation. You will be eligible for a relocation package that includes two (2) trips for two people up to 3 days/2 nights each trip, reimbursement of pre-approved and reasonable relocation costs including selling costs, closing costs and relocating household items and vehicles (up to 3 vehicles + 2 recreational vehicles). Finish Line does not cap relocation expenses for executives, but does define reimbursable relocation items in the Finish Line Relocation Policy, which includes temporary housing in Indianapolis, use of a moving company provided by Finish Line, and selling (all realtor commissions for your current home) and closing costs (for the purchase of your new home) and incidental expenses (subject to receipts). Per IRS regulations, portions of this reimbursement are taxable (e.g. all expenses except for the physical move itself). You will also be eligible for reimbursement of reasonable weekly commuting costs (including airfare and airport parking), to and from Chicago to Indianapolis and Boulder for a period of up to (6) months from your hire date. Finish Line will seek to gross up these payments to cover what is anticipated will be taxable portions of relocation expenses.

▪

The above relocation expenses will be reimbursed to you or paid on your behalf by the company in the form of a loan that will have no repayment obligation conditioned upon your continued employment for a period of not less than 12 months. In the event that you resign your employment with the Company without “Good Reason”, or are terminated for “Cause” before the conclusion of 12 months of employment, you will be required to repay the Company 100% of these expenses. To further clarify intent, examples of “Cause” include not being present for work and ethical or criminal misconduct, but would not include the quality of your work performance.

Exhibit 31.1

CERTIFICATION

I, Glenn S. Lyon, certify that:



1.	I have reviewed this quarterly report on Form 10-Q of The Finish Line, Inc.;



2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;



4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report), that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and



5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.




Date:	June 26, 2015

By:	/s/ Glenn S. Lyon
	Glenn S. Lyon
	Chairman and Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Edward W. Wilhelm, certify that:



1.	I have reviewed this quarterly report on Form 10-Q of The Finish Line, Inc.;



2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;



4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report), that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and



5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.




Date:	June 26, 2015

By:	/s/ Edward W. Wilhelm
	Edward W. Wilhelm
	Executive Vice President, Chief Financial Officer

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned hereby certifies, in his capacity as an officer of The Finish Line, Inc. (the “Company”), for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:


•	The Quarterly Report of the Company on Form 10-Q for the thirteen weeks ended May 30, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78); and


•	The information contained in such report fairly presents, in all material respects, the financial condition and results of operation of the Company.




Date:	June 26, 2015

By:	/s/ Glenn S. Lyon
	Glenn S. Lyon
	Chairman and Chief Executive Officer

By:	/s/ Edward W. Wilhelm
	Edward W. Wilhelm
	Executive Vice President, Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to The Finish Line, Inc. and will be retained by The Finish Line, Inc. and forwarded to the Securities and Exchange Commission or its staff upon request.

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