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Form 8-K FINISH LINE INC /IN/ For: Mar 24

March 24, 2016 7:22 AM EDT

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


FORM 8-K


CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Date of Report (Date of Earliest Event Reported): March 24, 2016


The Finish Line, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)

Indiana
 
0-20184
 
35-1537210
(State or other jurisdiction
of incorporation)
 
(Commission File
Number)
 
(I.R.S. Employer
Identification No.)
 
 
 
 
 
3308 North Mitthoeffer Road
Indianapolis, Indiana
 
 
 

46235
(Address of principal executive offices)
 
 
 
(Zip Code)

Registrant’s telephone number, including area code: 317-899-1022

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02 Results of Operations and Financial Condition.

On March 24, 2016, The Finish Line, Inc. issued a press release discussing its results of operations for the thirteen and fifty-two weeks ended February 27, 2016, and its financial condition as of February 27, 2016.

A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. The information in this Current Report, including Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.



Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number
Description
99.1
Press release issued March 24, 2016, regarding results of operations


2


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 hereunto duly authorized.
 
 
The Finish Line, Inc.
 
 
 
 
 
 
 
 
Date: March 24, 2016
 
By:
/s/ Edward W. Wilhelm                
 
 
Name:
Edward W. Wilhelm
 
 
Title:
Executive Vice President, Chief Financial Officer
    

3
Exhibit 99.1


Finish Line Reports Fourth Quarter and Full Fiscal Year 2016 Results


INDIANAPOLIS, March 24, 2016 – The Finish Line, Inc. (NASDAQ: FINL) today reported results for the fourth quarter and fiscal year 2016, representing the thirteen and fifty-two weeks ended February 27, 2016.


For the thirteen weeks ended February 27, 2016:

Consolidated net sales were $580.3 million, an increase of 5.2% over the prior year period.
Finish Line comparable store sales increased 4.6%.
On a GAAP basis, diluted earnings per share were $0.09.
Non-GAAP diluted earnings per share, which primarily excludes the impact from the write-off of technology assets and store impairment charges, were $0.83.


For the fifty-two weeks ended February 27, 2016:

Consolidated net sales were a record $1.89 billion, an increase of 3.8% over the prior year.
Finish Line comparable store sales increased 1.8%.
On a GAAP basis, diluted earnings per share were $0.48.
Non-GAAP diluted earnings per share, which primarily excludes the impact from the write-off of technology assets and store impairment charges, were $1.21.


“We worked diligently to improve digital fulfillment rates and flow new inventory to our stores during the fourth quarter which helped us achieve a mid-single digit comparable sales increase and adjusted earnings per share at the high-end of our guidance range,” said Sam Sato, Chief Executive Officer of Finish Line. “In addition to achieving optimal performance from our supply chain, our top priorities are continuing to bolster our vendor relationships and fortifying the foundational strengths of the company through new leadership and improved processes. I am confident that elevating our execution across the organization will result in an enhanced customer experience and drive profitable growth and increased shareholder value over the long-term.”


Balance Sheet

As of February 27, 2016, consolidated merchandise inventories increased 9.6% to $376.5 million compared to $343.4 million as of February 28, 2015. The increase was driven in part by a seasonal build in merchandise inventories associated with an earlier Easter compared to the prior year. On a segment basis, merchandise inventories increased double digits at Macy’s and JackRabbit and mid-single digits at Finish Line.

The company repurchased 2.0 million shares of common stock in the fourth quarter totaling $34.3 million. For the full year, Finish Line repurchased 3.9 million shares totaling $79.9 million. The company has 2.3 million shares remaining on its current Board authorized repurchase program.

As of February 27, 2016, the company had no interest-bearing debt and $79.5 million in cash and cash equivalents, compared to $149.6 million as of February 28, 2015.


1


Non-GAAP Adjustments

During the fourth quarter, the company recorded $52.8 million in non-GAAP adjustments, of which $51.0 million was non-cash. These adjustments primarily consisted of a $33.3 million write-off of technology assets. The remaining $19.5 million was primarily related to store impairment charges.


Outlook

For the fiscal year ending February 25, 2017, Finish Line expects comparable store sales to increase in the 3% to 5% range and earnings per share to be between $1.50 and $1.56.


Q4 Fiscal 2016 Conference Call Today, March 24, 2016 at 8:30 a.m.

The company will host a conference call for investors today, March 24, 2016, at 8:30 a.m. Eastern. To participate in the live conference call, dial 866-923-8645 (U.S. and Canada) or 660-422-4970 (International), conference ID #69202458. The live conference call will also be accessible online at www.finishline.com. A replay of the conference call can be accessed approximately two hours following the completion of the call by dialing 855-859-2056, conference ID #69202458. This recording will be made available through Sunday, April 24, 2016. The replay will also be accessible online at www.finishline.com.


Annual Meeting July 14, 2016

The company’s Board of Directors has established July 14, 2016 as the date of the 2016 annual meeting of shareholders, with May 13, 2016 as the record date for this meeting.


Disclosure Regarding Non-GAAP Measures

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


About The Finish Line, Inc.

The Finish Line, Inc. is a premium retailer of athletic shoes, apparel, and accessories. Headquartered in Indianapolis, Finish Line has approximately 980 Finish Line branded locations primarily in U.S. malls and shops inside Macy’s department stores and employs more than 14,000 sneakerologists who help customers every day connect with their sport, their life, and their style. Online shopping is available at www.finishline.com and www.macys.com. Mobile shopping is available at m.finishline.com. Follow Finish Line on Twitter at Twitter.com/FinishLine  or Twitter.com/FinishLineNews and “like” Finish Line on Facebook at Facebook.com/FinishLine. Track loyalty points and find store and product information with the free Finish Line app downloadable for iOS and Android customers.

Finish Line also operates JackRabbit (previously referred to by the company as Running Specialty Group), which includes 72 specialty running stores in 16 states and the District of Columbia under the JackRabbit, The Running Company, Run On!, Blue Mile, Boulder Running Company, Roncker’s Running Spot, Running Fit, VA Runner, Capital RunWalk, Richmond  RoadRunner, Garry Gribble’s Running Sports, Run Colorado, Raleigh Running Outfitters, Striders, and Indiana Running Company banners. More information is available at www.jackrabbit.com or www.boulderrunningcompany.com. Follow the latest about the brand on Twitter at Twitter.com/JackRabbit or Instagram via @JackRabbitNYC.



2


Forward-Looking Statements

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

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


3



 
 
The Finish Line, Inc.
Consolidated Statements of Income
(In thousands, except per share and store/shop data)
 
 
Thirteen Weeks Ended
 
Fifty-Two Weeks Ended
 
 
February 27,
2016
 
February 28,
2015
 
February 27,
2016
 
February 28,
2015
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
580,254

 
$
551,347

 
$
1,888,888

 
$
1,820,586

Cost of sales (including occupancy costs)
 
383,961

 
363,298

 
1,305,896

 
1,236,783

Gross profit
 
196,293

 
188,049

 
582,992

 
583,803

Selling, general, and administrative expenses
 
144,580

 
123,754

 
503,660

 
459,455

Impairment charges and store closing costs
 
48,183

 
763

 
48,692

 
3,918

Operating income
 
3,530

 
63,532

 
30,640

 
120,430

Interest expense, net
 
61

 
21

 
65

 
15

Income before income taxes
 
3,469

 
63,511

 
30,575

 
120,415

Income tax (benefit) expense
 
(567
)
 
23,078

 
8,779

 
40,673

Net income
 
4,036

 
40,433

 
21,796

 
79,742

Net loss attributable to redeemable noncontrolling interest
 

 
390

 
96

 
2,251

Net income attributable to The Finish Line, Inc.
 
$
4,036

 
$
40,823

 
$
21,892

 
$
81,993

Diluted earnings per share attributable to The Finish Line, Inc. shareholders
$
0.09

 
$
0.87

 
$
0.48

 
$
1.70

Diluted weighted average shares
 
43,513

 
46,593

 
44,787

 
47,658

Dividends declared per share
 
$
0.10

 
$
0.09

 
$
0.37

 
$
0.33

 
 
 
 
 
 
 
 
 
Finish Line store activity for the period:
 
 
 
 
 
 
 
 
     Beginning of period
 
617

 
642

 
637

 
645

       Opened
 

 
1

 
8

 
10

       Closed
 
(26
)
 
(6
)
 
(54
)
 
(18
)
     End of period
 
591

 
637

 
591

 
637

     Square feet at end of period
 
 
 
 
 
3,278,039

 
3,471,448

     Average square feet per store
 

 

 
5,547

 
5,450

Branded shops within department stores activity for the period:
 
 
 
 
 
 
 
 
     Beginning of period
 
394

 
397

 
395

 
185

       Opened
 

 

 
1

 
213

       Closed
 
(2
)
 
(2
)
 
(4
)
 
(3
)
     End of period
 
392

 
395

 
392

 
395

     Square feet at end of period
 
 
 
 
 
476,533

 
404,521

     Average square feet per shop
 

 

 
1,216

 
1,024

JackRabbit store activity for the period:
 
 
 
 
 
 
 
 
     Beginning of period
 
74

 
66

 
71

 
48

       Acquired
 

 
5

 
4

 
20

       Opened
 

 

 
1

 
3

       Closed
 
(2
)
 

 
(4
)
 

     End of period
 
72

 
71

 
72

 
71

     Square feet at end of period
 
 
 
 
 
262,761

 
262,148

     Average square feet per store
 

 

 
3,649

 
3,692

  


4




 
 
Thirteen Weeks Ended
 
Fifty-Two Weeks Ended
 
 
February 27,
2016
 
February 28,
2015
 
February 27,
2016
 
February 28,
2015
Net sales
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
Cost of sales (including occupancy costs)
 
66.2

 
65.9

 
69.1

 
67.9

Gross profit
 
33.8

 
34.1

 
30.9

 
32.1

Selling, general, and administrative expenses
 
24.9

 
22.4

 
26.7

 
25.3

Impairment charges and store closing costs
 
8.3

 
0.1

 
2.6

 
0.2

Operating income
 
0.6

 
11.6

 
1.6

 
6.6

Interest expense, net
 

 

 

 

Income before income taxes
 
0.6

 
11.6

 
1.6

 
6.6

Income tax (benefit) expense
 
(0.1
)
 
4.2

 
0.4

 
2.2

Net income
 
0.7

 
7.4

 
1.2

 
4.4

Net loss attributable to redeemable noncontrolling interest
 

 

 

 
0.1

Net income attributable to The Finish Line, Inc.
 
0.7
%
 
7.4
%
 
1.2
%
 
4.5
%



 
 
Condensed Consolidated Balance Sheets
 
 
February 27,
2016
 
February 28,
2015
 
 
(Unaudited)
 
 
ASSETS
 
 
 
 
Cash and cash equivalents
 
$
79,495

 
$
149,569

Merchandise inventories, net
 
376,506

 
343,403

Other current assets
 
65,352

 
37,685

Property and equipment, net
 
243,393

 
274,360

Goodwill
 
44,029

 
34,719

Other assets, net
 
8,773

 
10,119

     Total assets
 
$
817,548

 
$
849,855

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
Current liabilities
 
$
221,187

 
$
191,282

Deferred credits from landlords
 
32,327

 
29,143

Other long-term liabilities
 
36,390

 
39,696

Redeemable noncontrolling interest, net
 

 
90

Shareholders’ equity
 
527,644

 
589,644

     Total liabilities and shareholders’ equity
 
$
817,548

 
$
849,855





5




The Finish Line, Inc.
Reconciliation of Selling, General, and Administrative Expenses, GAAP to
Selling, General, and Administrative Expenses, Non-GAAP (Unaudited)
(In thousands)

 
 
Thirteen Weeks Ended
 
Fifty-Two Weeks Ended
 
 
February 27, 2016
 
February 28, 2015
 
February 27, 2016
 
February 28, 2015
Selling, general, and administrative expenses, GAAP
 
$
144,580

 
24.9
 %
 
$
123,754

 
22.4
%
 
$
503,660

 
26.7
 %
 
$
459,455

 
25.3
 %
Employee severance, retirement, and other costs
 
(4,586
)
 
(0.8
)
 

 

 
(4,586
)
 
(0.2
)
 
(842
)
 
(0.1
)
Selling, general, and administrative expenses, Non-GAAP
 
$
139,994

 
24.1
 %
 
$
123,754

 
22.4
%
 
$
499,074

 
26.5
 %
 
$
458,613

 
25.2
 %
 

 
Reconciliation of Operating Income, GAAP to Operating Income, Non-GAAP (Unaudited)
(In thousands)

 
 
Thirteen Weeks Ended
 
Fifty-Two Weeks Ended
 
 
February 27, 2016
 
February 28, 2015
 
February 27, 2016
 
February 28, 2015
Operating income, GAAP
 
$
3,530

 
0.6
%
 
$
63,532

 
11.6
%
 
$
30,640

 
1.6
%
 
$
120,430

 
6.6
%
Employee severance, retirement, and other costs
 
4,586

 
0.8

 

 

 
4,586

 
0.2

 
842

 
0.1

Impairment charges and store closing costs
 
48,183

 
8.3

 
763

 
0.1

 
48,692

 
2.6

 
3,918

 
0.2

Operating income, Non-GAAP
 
$
56,299

 
9.7
%
 
$
64,295

 
11.7
%
 
$
83,918

 
4.4
%
 
$
125,190

 
6.9
%



Reconciliation of Income Tax (Benefit) Expense, GAAP to Income Tax Expense, Non-GAAP (Unaudited)
(In thousands)

 
 
Thirteen Weeks Ended
 
Fifty-Two Weeks Ended
 
 
February 27, 2016
 
February 28, 2015
 
February 27, 2016
 
February 28, 2015
Income tax (benefit) expense, GAAP
 
$
(567
)
 
(0.1
)%
 
$
23,078

 
4.2
%
 
$
8,779

 
0.4
%
 
$
40,673

 
2.2
%
Tax affect of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee severance, retirement, and other costs
 
1,766

 
0.3

 

 

 
1,766

 
0.1

 
324

 

Impairment charges and store closing costs
 
18,551

 
3.2

 
293

 

 
18,747

 
1.0

 
1,508

 
0.1

One-time tax benefit
 

 

 

 

 

 

 
4,313

 
0.3

Income tax expense, Non-GAAP
 
$
19,750

 
3.4
 %
 
$
23,371

 
4.2
%
 
$
29,292

 
1.5
%
 
$
46,818

 
2.6
%

 

 

6



Reconciliation of Net Income Attributable to The Finish Line, Inc., GAAP to
Net Income Attributable to The Finish Line, Inc., Non-GAAP (Unaudited)
(In thousands)

 
 
Thirteen Weeks Ended
 
Fifty-Two Weeks Ended
 
 
February 27, 2016
 
February 28, 2015
 
February 27, 2016
 
February 28, 2015
Net income attributable to The Finish Line, Inc., GAAP
 
$
4,036

 
0.7
%
 
$
40,823

 
7.4
%
 
$
21,892

 
1.2
%
 
$
81,993

 
4.5
 %
Employee severance, retirement, and other costs, net of income taxes
 
2,820

 
0.5

 

 

 
2,820

 
0.1

 
518

 

Impairment charges and store closing costs, net of income taxes*
 
29,632

 
5.1

 
470

 
0.1

 
29,945

 
1.6

 
2,354

 
0.2

One-time tax benefit
 

 

 

 

 

 

 
(4,313
)
 
(0.3
)
Net income attributable to The Finish Line, Inc., Non-GAAP
 
$
36,488

 
6.3
%
 
$
41,293

 
7.5
%
 
$
54,657

 
2.9
%
 
$
80,552

 
4.4
 %

* Net of decrease to net loss attributable to redeemable noncontrolling interest for the fifty-two weeks ended February 28, 2015 related to impairment charges of $56.



Reconciliation of Diluted Earnings Per Share Attributable to The Finish Line, Inc. Shareholders, GAAP to
Diluted Earnings Per Share Attributable to The Finish Line, Inc. Shareholders, Non-GAAP (Unaudited)


 
 
Thirteen Weeks Ended
 
Fifty-Two Weeks Ended
 
 
February 27, 2016
 
February 28, 2015
 
February 27, 2016
 
February 28, 2015
Diluted earnings per share attributable to The Finish Line, Inc. shareholders, GAAP
 
$
0.09

 
$
0.87

 
$
0.48

 
$
1.70

Employee severance, retirement, and other costs, net of income taxes
 
0.07

 

 
0.07

 
0.01

Impairment charges and store closing costs, net of income taxes and redeemable noncontrolling interest
 
0.67

 
0.01

 
0.66

 
0.05

One-time tax benefit
 

 

 

 
(0.09
)
Diluted earnings per share attributable to The Finish Line, Inc. shareholders, Non-GAAP
 
$
0.83

 
$
0.88

 
$
1.21

 
$
1.67

 
Note: See Disclosure Regarding Non-GAAP Measures above.
 

Media Contact:
Investor Contact:
Dianna Boyce
Ed Wilhelm
Corporate Communications
Chief Financial Officer
317-613-6577
317-613-6914


7


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