NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies
Basis of Presentation.
The consolidated financial statements include the accounts of The Finish Line, Inc. and its subsidiaries (collectively, “Finish Line” or the “Company”). Certain balances from February 25, 2017 were reclassified to conform to the March 3, 2018 presentation. Such reclassifications did not have an effect on short-term, long-term, or total assets. All intercompany transactions and balances have been eliminated. Throughout these notes to the consolidated financial statements, fiscal years ended
March 3, 2018
,
February 25, 2017
, and
February 27, 2016
are referred to as fiscal
2018
,
2017
, and
2016
, respectively.
The Company’s consolidated balance sheets, statements of operations, and cash flows presented reflect its former JackRabbit business as discontinued operations (See Note 2 - “Discontinued Operations and Goodwill Impairment”).
The Company uses a “Retail” calendar. The Company’s fiscal year ends on the Saturday closest to the last day of February and included
53
weeks in fiscal
2018
and
52
weeks in fiscal,
2017
, and
2016
.
Nature of Operations.
Finish Line is a premium retailer of athletic shoes, apparel, and accessories for men, women, and kids, with
556
mall-based locations throughout the United States and Puerto Rico, which averaged
5,603
square feet as of
March 3, 2018
. In addition, the Company has an online presence through its e-commerce and mobile sites.
In addition, the Company is the exclusive retailer of athletic shoes, both in-store and online, for Macy’s Retail Holdings, Inc., Macy’s Puerto Rico, Inc., and Macys.com, Inc. (collectively, “Macy’s”), with Finish Line branded shops in
375
Macy's department stores throughout the United States, Puerto Rico, and Guam, which averaged
1,432
square feet as of April 3, 2018. The Company is responsible for the athletic footwear assortment, inventory, fulfillment, and pricing at all of Macy’s locations and online at www.macys.com. The Company operates branded and unbranded shops in-store at Macy’s. Branded shops include Finish Line signage within those shops and are generally staffed by Finish Line employees, while unbranded shops do not include Finish Line signage and are exclusively serviced by Macy’s employees. There are no differences in the merchandise that is sold, the classification of revenue recorded at retail, or the Company’s operation of the athletic footwear inventory and business between branded and unbranded shops and www.macys.com.
In fiscal
2018
, the Company purchased approximately
94%
of its merchandise from its
five
largest suppliers. The largest supplier, Nike, accounted for approximately
66%
,
71%
, and
73%
of merchandise purchases in fiscal
2018
,
2017
, and
2016
, respectively.
Use of Estimates.
Preparation of the financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Segment Information.
The Company operates 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 fiscal years (in thousands):
|
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
Category
|
|
2018
|
|
2017
|
|
2016
|
Footwear
|
|
$
|
1,721,020
|
|
|
94
|
%
|
|
$
|
1,715,348
|
|
|
93
|
%
|
|
$
|
1,619,002
|
|
|
90
|
%
|
Softgoods
|
|
117,936
|
|
|
6
|
%
|
|
129,045
|
|
|
7
|
%
|
|
179,980
|
|
|
10
|
%
|
Total net sales
|
|
$
|
1,838,956
|
|
|
100
|
%
|
|
$
|
1,844,393
|
|
|
100
|
%
|
|
$
|
1,798,982
|
|
|
100
|
%
|
Cash and Cash Equivalents.
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
March 3, 2018
and
February 25, 2017
, substantially all of the Company’s cash was invested in deposit accounts at banks. The majority of payments due from banks for credit card transactions process within
24
to
48
hours and are accordingly classified as cash and cash equivalents.
Merchandise Inventories.
Merchandise inventories are valued at the lower of cost or market using a weighted-average cost method. The Company’s valuation of merchandise inventory includes markdown adjustments for merchandise that will be sold below cost and the impact of inventory shrink. Markdowns are based upon historical information and assumptions about
future demand and market conditions. Inventory shrink is based on historical information and assumptions about current inventory shrink trends. Supplier rebates are applied as a reduction to the cost of merchandise inventories.
Property and Equipment and Software Development Costs.
Property and equipment are stated at cost and depreciated on a straight-line basis over the estimated useful lives of the assets:
30
years for buildings and
three
to
10
years for furniture, fixtures, and equipment. Improvements to leased premises are amortized on a straight-line basis over the shorter of the estimated useful life of the asset, generally
10
years, or the remaining lease term. Significant additions and improvements that extend the useful life of an asset are capitalized. Maintenance and repairs are charged to current operations as incurred. Depreciation expense for fiscal
2018
,
2017
, and
2016
was
$34.9 million
,
$33.1 million
, and
$31.7 million
, respectively.
Software development costs include capitalized external and internal computer software and software development costs incurred during the application development stage. Software development costs are stated at cost and amortized on a straight-line basis over the estimated useful lives of the assets, which are between
three
and
ten years
. Software development costs are capitalized during the application development stage which generally includes software design and configuration, coding, testing, and installation activities. Capitalized costs include only external direct costs of materials and services consumed in developing or obtaining internal-use software and payroll and payroll-related costs for employees who are directly associated with and devote time to the internal-use software project. Capitalization of such costs ceases no later than the point at which the project is substantially complete and ready for its intended use. Training and maintenance costs are expensed as incurred, while upgrades and enhancements are capitalized if it is probable that such expenditures will result in additional functionality.
The Company reviews its property and equipment and software development costs for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the estimated future undiscounted cash flows expected to be generated by the asset. If an asset is considered to be impaired, the impairment recognized is measured by comparing projected discounted cash flows to the asset’s carrying value. The estimation of fair value is measured by discounting expected future cash flows at the discount rate the Company utilizes to evaluate potential investments.
Store Closing Costs.
Store closing costs represent the non-cash write-off of fixtures and equipment upon a store/shop closing. In the event a store is closed before its lease has expired, any estimated post-closing lease obligations are provided for when the leased space is no longer in use. The Company closed
23
,
43
, and
58
stores/shops in fiscal
2018
,
2017
, and
2016
, respectively.
Goodwill.
Goodwill is not amortized, but reviewed for impairment if impairment indicators arise and, at a minimum, annually.
The goodwill impairment test is a two-step test. In the first step, the Company compares the fair value of each reporting unit with goodwill to its carrying value. The Company determines the fair value of its reporting units with goodwill using a combination of a discounted cash flow and a market value approach. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired and the Company is not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company must perform the second step of the goodwill impairment test in order to determine the implied fair value of the reporting unit’s goodwill and compare it to the carrying value of the reporting unit’s goodwill. The activities in the second step include valuing the tangible and intangible assets and liabilities. If the implied fair value of goodwill is less than the carrying value, an impairment loss is recognized for the difference.
All of the Company’s goodwill was the result of acquisitions made by its discontinued operation. An impairment charge for goodwill was recorded during fiscal year 2017 (see Note 2 - “Discontinued Operations and Goodwill Impairment”). There were
no
similar impairment charges recognized by the Company or its discontinued operation in fiscal
2018
or
2016
.
Leases.
Deferred credits from landlords consist of step rent and allowances from landlords related to the Company’s retail stores. Step rent represents the difference between actual minimum operating lease payments due and straight-line rent expense, which is recorded by the Company over the term of the lease, starting at the lease commencement date. Landlord allowances are generally comprised of amounts promised to the Company by landlords in the form of cash. These allowances are part of the negotiated terms of the lease. In situations where cash is to be received, the Company records a receivable for the full amount of the allowance when certain performance criteria articulated in the lease are met and a liability is concurrently established. This deferred credit from landlords is amortized into income (through lower rent expense) over the term, starting at the lease commencement date, of the applicable lease and the receivable is reduced as amounts are received from the landlord.
The Company recognizes rent expense for minimum operating lease payments on a straight-line basis over the expected lease term, including rent holidays, rent escalation clauses, and/or cancelable option periods where failure to exercise such options would result in an economic penalty. The commencement date of the lease term is the earlier of the date when the Company becomes legally obligated for the rent payments or the date when the Company takes possession of the leased space for build-out.
Certain leases provide for contingent rents and/or license fees, which are determined as a percentage of gross sales in excess of specified levels. The Company records a contingent rent liability in other liabilities and accrued expenses on the consolidated balance sheets and the corresponding rent expense when specified levels have been achieved or when management determines that achieving the specified levels during the fiscal year is probable.
Revenue Recognition.
Revenues are recognized at the time the customer receives the merchandise, which for digital commerce revenues reflects an estimate of shipments not yet received by the customer based on shipping terms and estimated delivery times. As it relates to Macy’s, the Company assumes the risks and rewards of ownership for merchandise at all of Macy’s locations and online at www.macys.com, including risk of loss for delivery, returns, and loss of inventory value. Net sales include merchandise, net of returns, and excludes all taxes.
The Company sells gift cards with no expiration dates to customers and does not charge administrative fees on unused gift cards. The Company recognizes revenue from gift cards when they are redeemed by the customer. In addition, the Company recognizes revenue on unredeemed gift cards when the likelihood of the gift card being redeemed is remote and there is no legal obligation to remit the value of unredeemed gift cards to the relevant jurisdictions. The Company determines the gift card breakage rate based on historical redemption patterns. During the fourth quarter of fiscal
2018
,
2017
, and
2016
, the Company recorded
$0.6 million
,
$0.8 million
, and
$0.8 million
of revenue related to gift card breakage, respectively. Gift card breakage is included in net sales in the Company’s consolidated statements of operations, but it is not included in the comparable sales amounts.
Cost of Sales.
Cost of sales includes the cost associated with acquiring merchandise from suppliers, occupancy costs, license fees, provision for inventory shortages, and credits and allowances from merchandise suppliers. Cash consideration received from merchandise suppliers after the related merchandise has been sold is recorded as an offset to cost of sales in the period negotiations are finalized. For cash consideration received on merchandise still in inventory, the allowance is recorded as a reduction to the cost of on-hand inventory and recorded as a reduction of cost of sales at the time of sale.
Because the Company does not include the costs associated with operating its distribution center and freight within cost of sales, the Company’s gross profit may not be comparable to those of other retailers that may include all such costs related to their distribution centers and freight in cost of sales and in the calculation of gross profit.
Selling, General, and Administrative Expenses.
Selling, general, and administrative expenses include store/shop payroll and related payroll benefits, store/shop operating expenses, advertising, cooperative advertising credits, share-based compensation, costs associated with operating its distribution center, license fees, and other corporate related expenses. Additionally, selling, general, and administrative expenses include inbound freight from vendors to the distribution center as well as outbound freight from the distribution center to stores/shops, to vendors for returns, to third party liquidators, and for shipments of product to customers.
Advertising.
The Company expenses the cost of advertising as incurred, net of reimbursements for cooperative advertising. The reimbursements for cooperative advertising are agreed upon with vendors and are recorded in the same period as the associated expenses are incurred. The following table shows advertising expense for each of the following fiscal years (in thousands):
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
Advertising expense
|
|
$
|
47,517
|
|
|
$
|
47,137
|
|
|
$
|
42,668
|
|
Cooperative advertising credits
|
|
(10,870
|
)
|
|
(7,882
|
)
|
|
(6,342
|
)
|
Net advertising expense
|
|
$
|
36,647
|
|
|
$
|
39,255
|
|
|
$
|
36,326
|
|
Store/Shop Pre-opening Costs.
Store/shop pre-opening costs and other non-capitalized expenditures, including payroll, training costs, and straight-line rent expense, are expensed as incurred.
Income Taxes.
The Company accounts for income taxes under the asset and liability method. Under this method, the amount of taxes currently payable or refundable are accrued and deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets are also recognized for realizable loss and tax credit
carryforwards. The deferred tax assets may be reduced by a valuation allowance, which is established when it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. In addition, management is required to evaluate all available evidence, including estimating future taxable income by taxing jurisdictions, the future reversal of temporary differences, tax planning strategies, and recent results of operations, when making its judgment to determine whether or not to record a valuation allowance for a portion, or all, of its deferred tax assets. Deferred tax assets and liabilities are measured using enacted income tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in income tax rates is recognized in the Company’s consolidated statements of operations in the period that includes the enactment date.
The Company calculates an annual effective income tax rate based on annual income, permanent differences between book and tax income, and statutory income tax rates. The Company adjusts the annual effective income tax rate as additional information on outcomes or events becomes available. The Company’s effective income tax rate is affected by changes in tax law, the tax jurisdiction of new stores/shops or business ventures, the level of earnings or losses, the results of tax audits, permanent tax deductions and credits, the level of investment income, and other items.
On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law. See Note 7, Income Taxes for further discussion of the Tax Act.
The Company’s income tax returns, like those of most companies, are periodically audited by tax authorities. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income among various tax jurisdictions. At any one time, multiple tax years are subject to audit by the various tax authorities. The Company accounts for uncertainty in income taxes using a two-step approach for evaluating income tax positions. The first step requires the Company to conclude that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination by a tax authority. The second step applies if the Company has concluded that the tax position is more likely than not to be sustained upon examination and requires the Company to measure the largest amount of benefit, determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement. The Company adjusts its accrual for uncertain tax positions and income tax provision in the period in which matters are effectively settled with tax authorities at amounts different from its established accrual, the statute of limitations expires for the relevant taxing authority to examine the tax position, new court cases, regulations, or rulings are issued, or when more or new information becomes available. The Company includes its accrual for uncertain tax positions, including accrued penalties and interest, in other long-term liabilities on the consolidated balance sheets unless the liability is expected to be paid within one year. Changes to the accrual for uncertain tax positions, including accrued penalties and interest, are included in income tax expense in the consolidated statements of operations.
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).
Restricted stock units without performance criteria are included 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. When discontinued operations are reported, income from continuing operations represents the “control number” in determining whether potential shares of common stock are dilutive or anti-dilutive. Participating securities have the effect of diluting both basic and diluted earnings per share during periods of net income.
Financial Instruments.
Financial instruments consist of cash and cash equivalents, accounts receivable, and accounts payable. The carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value because of the short maturity of these instruments.
As of
March 3, 2018
and
February 25, 2017
, the Company had not invested in, nor did it have, any derivative financial instruments.
Share-Based Compensation.
The Company accounts for share-based compensation by the measuring and recognizing of compensation expense for all share-based awards made to employees and directors based on estimated fair values on the grant date. The Company is required to estimate the fair value of share-based awards on the date of grant and recognize as expense the value of the portion of the award that is ultimately expected to vest over the requisite service period.
Share-based compensation expense recognized in the consolidated statements of operations is based on awards ultimately expected to vest, and accordingly has been reduced for estimated forfeitures. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company applies an estimated forfeiture rate based on historical data to determine the amount of compensation expense.
Compensation expense for stock options is recognized, net of forfeitures, over the requisite service period on a straight-line basis, using a single option approach (each option is valued as one grant, irrespective of the number of vesting tranches). Restricted stock expense is recognized, net of forfeitures, on a straight-line basis over the requisite service period.
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 reporting entity to develop its own assumptions.
|
Self-Insurance Reserves.
The Company is self-insured for certain losses related to health, workers’ compensation, and general liability insurance, although the Company maintains stop-loss coverage with third-party insurers to limit its liability exposure. Liabilities associated with these losses are estimated in part by considering historical claims experience, industry factors, severity factors, and other actuarial assumptions.
Recent Accounting Pronouncements.
In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance on revenue from contracts with customers and has subsequently issued several amendments which clarify the guidance as well as provide guidance for implementation. The guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. The guidance is effective for annual or interim reporting periods beginning after December 15, 2017. The Company finalized its assessment of the new guidance, which it adopted on March 4, 2018, using a modified retrospective transition approach. The Company has determined that the new guidance will result in a net cumulative-effect adjustment to decrease beginning retained earnings as of the date of adoption, primarily due to a change in how the Company accounts for its loyalty program. The Company has determined that the adoption of the guidance will result in the following additional impacts:
•
Estimated costs of returns will be recorded as a current asset rather than netted within other liabilities and accrued expenses and;
•
Change from the cost deferral accounting method to the revenue deferral accounting method to record the Company’s unredeemed awards related to its customer loyalty program.
The impacts from the adoption of this guidance, including the net cumulative-effect adjustment, did not have a material impact on the Company’s consolidated results of operations, financial position, or cash flows.
In February 2016, the FASB issued guidance on accounting for leases. A primary purpose of the guidance is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Specifically, lessees will be required to recognize the rights and obligations resulting from leases classified as operating leases as assets and liabilities. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and requires a modified retrospective adoption, with early adoption permitted. The Company does not expect to adopt this guidance until it is required and is currently assessing the impact of adopting this guidance and its potential impact to its consolidated results of operations, financial position, cash flows, and related disclosures. The Company expects the guidance to have a material impact due to the significant number of store leases that the Company has under contract.
Other 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.
Recently Adopted Accounting Pronouncements.
In July 2015, the FASB issued guidance on simplifying the measurement of inventory. The guidance, which applies to inventory that is measured using any method other than the last-in, first-out (“LIFO”) or retail inventory method, requires that entities measure inventory at the lower of cost or net realizable value. The Company adopted the provisions of this guidance prospectively on February 26, 2017. The adoption of this guidance did not have a material impact on the Company’s consolidated results of operations, financial position, or cash flows.
In March 2016, the FASB issued guidance on simplifying several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows, and accounting for forfeitures. The Company adopted the provisions of this guidance on February 26, 2017. The impact of the adoption resulted in the following:
•
Excess tax benefits (deficiencies) resulting from share-based compensation are now recorded within income tax expense when the awards vest or are settled, rather than within equity. Additionally, excess tax benefits are now excluded from assumed future proceeds in the Company’s calculation of diluted shares for purposes of determining diluted earnings per share. The prospective adoption of this provision did not have a material effect on the Company’s consolidated results of operations, financial position, or cash flows. The Company recorded excess tax deficiencies related to share-based compensation of approximately
$1.4 million
in fiscal
2018
to income tax expense, whereas such expense previously would have been recorded in equity. In addition, the Company recorded approximately
$0.1 million
of previously unrecognized tax benefits as a cumulative-effect adjustment to beginning retained earnings.
•
The Company elected to continue to expense share-based awards based on awards ultimately expected to vest, which requires the Company to continue to estimate forfeitures on the date of their grant.
•
Excess tax benefits from share-based compensation arrangements are classified as cash flows from operations, rather than as cash flows from financing activities. The Company adopted this change retrospectively, which resulted in an increase of
$0.5 million
and
$0.3 million
to net cash provided by operating activities and an increase of
$0.5 million
and
$0.3 million
in cash flows used in financing activities for fiscal
2017
and
2016
, respectively.
2. Discontinued Operations and Goodwill Impairment
On February 24, 2017, the Company completed the sale of its JackRabbit division to affiliates of CriticalPoint Capital, LLC (the “Buyers”). The transaction took the form of a sale by the Company of its entire membership interest in its affiliated company, which owns JackRabbit, with payments totaling
$11.1 million
, which included a working capital adjustment agreed to with the Buyers on June 23, 2017 of
$1.0 million
, of which
$0.3 million
remains payable as of March 3, 2018 once certain conditions have been met by the Buyers. The Buyers acquired all JackRabbit assets including inventory, leasehold interests, customary liabilities, intellectual property, and the JackRabbit trademark and name pursuant to the purchase agreement.
The sale of JackRabbit resulted in an aggregate loss of
$34.0 million
, which represented the total cash payments to the Buyers of
$11.1 million
, net assets assumed by the Buyers of
$18.3 million
, and one-time costs of approximately
$4.6 million
associated with the transaction.
Net loss from discontinued operations in fiscal
2018
include the working capital adjustment of
$1.0 million
, offset by certain one-time benefits recorded that were associated with the JackRabbit division and the income tax benefit associated with the loss for the periods presented.
The following table presents key financial results of the Company included in “Net loss from discontinued operations, net of tax” for each of the following fiscal years (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
March 3, 2018
|
|
February 25, 2017
|
|
February 27, 2016
|
Net sales
|
|
$
|
—
|
|
|
$
|
89,739
|
|
|
$
|
89,906
|
|
Cost of sales (including occupancy costs)
|
|
—
|
|
|
68,495
|
|
|
62,936
|
|
Gross profit
|
|
—
|
|
|
21,244
|
|
|
26,970
|
|
Selling, general, and administrative expenses
|
|
—
|
|
|
30,488
|
|
|
33,824
|
|
Impairment charges and store closing costs
|
|
—
|
|
|
44,202
|
|
|
5,055
|
|
Loss on sale of discontinued operations
|
|
483
|
|
|
33,500
|
|
|
—
|
|
Loss from discontinued operations before income tax benefit
|
|
(483
|
)
|
|
(86,946
|
)
|
|
(11,909
|
)
|
Income tax benefit
|
|
179
|
|
|
33,582
|
|
|
4,783
|
|
Net loss from discontinued operations, net of tax
|
|
$
|
(304
|
)
|
|
$
|
(53,364
|
)
|
|
$
|
(7,126
|
)
|
During fiscal
2017
, the Company determined that it was more likely than not that the fair value of JackRabbit was less than its carrying value, and upon completion of an impairment analysis, that goodwill was impaired during the Company’s third fiscal quarter. The decrease in JackRabbit’s fair value from the Company’s prior year impairment analysis was the result of preliminary indications of interest for JackRabbit that indicated that the fair value was below its carrying value. Fair value of the JackRabbit reporting unit was determined using preliminary bids from interested parties. As a result of the second step of the goodwill impairment test, JackRabbit’s goodwill had no implied fair value and was written down to
zero
. This resulted in a pretax non-cash goodwill impairment charge of
$44.0 million
that is reflected in asset impairment charges in discontinued operations for the year ended
February 25, 2017
.
The following table provides a reconciliation of the Company’s goodwill for fiscal year
2017
(in thousands):
|
|
|
|
|
Beginning balance
|
$
|
44,029
|
|
Acquisitions
|
—
|
|
Other
|
—
|
|
Impairment
|
(44,029
|
)
|
Ending balance
|
$
|
—
|
|
3. Software Development Costs
Software development costs consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
March 3, 2018
|
|
February 25, 2017
|
Software development costs
|
|
$
|
119,676
|
|
|
138,691
|
|
Less accumulated amortization
|
|
50,792
|
|
|
48,388
|
|
Software development costs, net
|
|
$
|
68,884
|
|
|
90,303
|
|
During fiscal
2018
, the Company recorded an impairment charge of
$14.7 million
due to the write-off of technology software assets related to the Company's enterprise-wide system infrastructure, as the Company determined that the systems were no longer going to be utilized. During fiscal
2017
, the Company recorded an impairment charge of
$0.2 million
due to the write-off of corporate assets. During fiscal
2016
, the Company recorded an impairment charge of
$32.1 million
primarily related to the write-off of technology software assets related to enterprise-wide systems infrastructure, as the Company determined that the systems were no longer going to be used for their 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.
Amortization expense for fiscal
2018
,
2017
, and
2016
was
$18.0 million
,
$16.3 million
, and
$10.5 million
, respectively.
A schedule of expected amortization expense related to the Company's software development costs by fiscal year as of
March 3, 2018
, is as follows (in thousands):
|
|
|
|
|
2019
|
$
|
15,126
|
|
2020
|
13,987
|
|
2021
|
10,816
|
|
2022
|
7,337
|
|
2023
|
6,165
|
|
Thereafter
|
15,453
|
|
|
$
|
68,884
|
|
4. Fair Value Measurements
The following table provides a summary of the recognized assets that are measured at fair value on a recurring basis (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 3, 2018
|
|
February 25, 2017
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified deferred compensation plan
|
|
$
|
4,210
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,517
|
|
|
$
|
—
|
|
|
$
|
—
|
|
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.
There were no liabilities measured at fair value and 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 the 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 Company has certain assets that are measured at fair value on a non-recurring basis and adjusted to fair value under certain circumstances that include those described in Note 2, Discontinued Operations and Goodwill Impairment, Note 3, Software Development Costs, and Note 12, Impairment Charges and Store Closing Costs. The categorization used to price the implied fair value of goodwill and long-lived assets was considered a Level 3 measurement due to the subjective nature of the unobservable inputs used to determine the fair values.
5. Debt Agreement
The Company has an unsecured
$125 million
credit facility with a syndicate of financial institutions, which expires on
November 30, 2021
(the “Credit Facility”). The Credit Facility 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 Credit Facility 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.
There were
no
outstanding borrowings as of
March 3, 2018
. Approximately
$1.6 million
in stand-by letters of credit were outstanding as of
March 3, 2018
. Accordingly, the total revolving credit availability was
$123.4 million
as of
March 3, 2018
.
The Company’s ability to borrow in the future is subject to certain conditions, including compliance with certain covenants and making representations and warranties. The Credit Facility contains restrictive covenants that limit, among other things, mergers and acquisitions (including the Merger with JD Sports Fashion Plc discussed in Note 14, Subsequent Event). In addition, the Company must maintain a maximum leverage ratio (as defined by the Credit Facility) and minimum consolidated tangible net worth (as defined by the Credit Facility). The Company was in compliance with all such covenants as of
March 3, 2018
.
The pricing grid is adjusted quarterly and is based on the Company’s leverage ratio. The minimum pricing is LIBOR plus
0.90%
or Base Rate (as defined by the Credit Facility) and the maximum pricing is LIBOR plus
1.75%
or Base Rate plus
0.75%
. The Company is also 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%
.
6. Leases
The Company leases retail stores under non-cancelable operating leases, which generally have lease terms ranging from
three
to
ten
years. Most of these lease arrangements do not provide for renewal periods; however, management expects that in the normal course of business, expiring leases will generally be renewed or, upon making a decision to relocate, replaced by leases at other premises.
In addition to rent payments, leases generally require additional payments covering real estate taxes, insurance, maintenance, and other costs. These additional payments are excluded from the table below. The components of rent expense incurred under these leases are as follows for each of the following fiscal years (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
Minimum rent
|
$
|
103,361
|
|
|
$
|
103,935
|
|
|
$
|
102,916
|
|
Contingent rent
|
32,041
|
|
|
34,397
|
|
|
28,560
|
|
Rent expense
|
$
|
135,402
|
|
|
$
|
138,332
|
|
|
$
|
131,476
|
|
A schedule of future base rent payments by fiscal year with initial or remaining non-cancelable terms of one year or more is as follows (in thousands):
|
|
|
|
|
2019
|
$
|
125,252
|
|
2020
|
116,311
|
|
2021
|
109,975
|
|
2022
|
104,819
|
|
2023
|
91,781
|
|
Thereafter
|
123,515
|
|
Total
|
$
|
671,653
|
|
The lease commitments in the table above include the guaranteed minimum license fee associated with shops within department stores.
7. Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences between the amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
March 3, 2018
|
|
February 25, 2017
|
Deferred tax assets:
|
|
|
|
Deferred credits from landlords
|
$
|
2,496
|
|
|
$
|
3,243
|
|
Share-based compensation
|
5,645
|
|
|
8,655
|
|
Compensation accrual
|
1,754
|
|
|
1,253
|
|
Deferred compensation
|
1,103
|
|
|
2,151
|
|
State net operating loss and credit carryforwards
|
2,113
|
|
|
2,838
|
|
Other
|
3,804
|
|
|
6,361
|
|
Total deferred tax assets
|
16,915
|
|
|
24,501
|
|
Deferred tax liabilities:
|
|
|
|
Property and equipment and software development costs
|
(18,191
|
)
|
|
(38,094
|
)
|
Merchandise inventories
|
(9,861
|
)
|
|
(18,520
|
)
|
Other
|
(676
|
)
|
|
(113
|
)
|
Total deferred tax liabilities
|
(28,728
|
)
|
|
(56,727
|
)
|
Net deferred tax liability
|
$
|
(11,813
|
)
|
|
$
|
(32,226
|
)
|
The following table sets forth the components of income tax expense from continuing operations for each of the following fiscal years (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
Current:
|
|
|
|
|
|
Federal
|
$
|
14,317
|
|
|
$
|
9,422
|
|
|
$
|
13,553
|
|
State
|
377
|
|
|
1,115
|
|
|
579
|
|
|
14,694
|
|
|
10,537
|
|
|
14,132
|
|
Deferred:
|
|
|
|
|
|
Federal
|
(20,381
|
)
|
|
6,944
|
|
|
533
|
|
State
|
(32
|
)
|
|
1,279
|
|
|
(1,103
|
)
|
|
(20,413
|
)
|
|
8,223
|
|
|
(570
|
)
|
Income tax (benefit) expense
|
$
|
(5,719
|
)
|
|
$
|
18,760
|
|
|
$
|
13,562
|
|
On December 22, 2017, H.R. 1, originally the Tax Cuts & Jobs Act (“the Tax Act”), was signed into law making significant changes to the Internal Revenue Code. Changes include a corporate rate decrease from 35% to 21%, effective January 1, 2018, as well as a variety of other changes including eliminating certain deductions for executive compensation and limiting the deduction for interest. In applying the impacts of the Tax Act, the Company re-measured its deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally a 21% federal tax rate and its related impacts on the state tax rates. The resulting impact was the recognition of an income tax benefit of
$10.1 million
in the fourth quarter of fiscal
2018
. In addition, applying the new U.S. federal corporate tax rate of 21% on January 1, 2018, resulted in a federal income tax statutory rate of
32.6%
in fiscal
2018
.
While the Company believes the
$10.1 million
of income tax benefit is a reasonable estimate of the impact of the Tax Act, additional guidance and clarifications of the Tax Act are expected to be provided in the future. Although the Company does not anticipate any material adjustments, future tax expense or benefit related to the Tax Act may need to be recorded as additional guidance and clarifications of the Tax Acts are provided. Once the Company finalizes certain tax positions when it files its fiscal
2018
U.S. tax return, it will conclude whether any further adjustments are necessary and record the amounts as a
component of income tax expense (benefit) in the reporting period in which such adjustments are determined, which will be no later than the fourth quarter of fiscal 2019.
The income tax (benefit) expense reported differs from the expected tax computed by applying the federal income tax statutory rate of 32.6% for fiscal
2018
and 35% for fiscal
2017
and
2016
to income before income taxes. The reasons for this difference and their tax effects are as follows:
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
Tax at statutory federal income tax rate
|
32.6
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal benefit
|
6.1
|
|
|
4.1
|
|
|
0.7
|
|
Re-measurement of net deferred tax liability
|
(110.7
|
)
|
|
N/A
|
|
|
N/A
|
|
Tax contingencies
|
(3.5
|
)
|
|
(0.7
|
)
|
|
—
|
|
Tax credits
|
(7.5
|
)
|
|
(1.5
|
)
|
|
(6.4
|
)
|
Excess tax deficiencies - share based compensation
|
15.9
|
|
|
N/A
|
|
|
N/A
|
|
Transaction costs
|
4.1
|
|
|
—
|
|
|
—
|
|
Retired executive officer’s compensation
|
—
|
|
|
(2.9
|
)
|
|
—
|
|
Other
|
(0.6
|
)
|
|
0.8
|
|
|
2.6
|
|
|
(63.6
|
)%
|
|
34.8
|
%
|
|
31.9
|
%
|
As of
March 3, 2018
, the Company had
$18.2 million
of net operating loss carryforwards for state purposes. If not used, these carryforwards will expire between fiscal
2022
and
2037
. As of
March 3, 2018
, the Company also had state tax credit carryforwards of
$1.6 million
. If not used, these state tax credit carryforwards will expire between fiscal
2022
and
2028
.
The Company recorded a valuation allowance of
$0.2 million
in fiscal
2018
that is included in the “State Net Operating Loss and Credit Carryforwards” section of total deferred tax assets. In assessing the realizability of the deferred tax asset related to certain state net operating losses and credits, the Company considered whether it was more likely than not to utilize the state net operating losses and credits before they would expire. The ultimate realization of the state net operating losses and state credits is contingent on whether a substantial amount of income may be generated in that specific state in the future allowing a benefit of the loss and credit before they expire. Based on current estimate of future taxable income in certain states, the Company does not believe it is more likely than not to generate enough taxable income allowing for full utilization of certain state net operating losses and credits before they would expire.
The Company began recording excess tax (benefits) deficiencies resulting from share-based compensation within income tax expense when the awards vest or are settled, rather than within equity, starting in fiscal
2018
due to guidance issued by the FASB which the Company adopted on February 26, 2017 (see Note 1, Significant Accounting Policies). The Company recorded excess tax deficiencies related to share-based compensation of approximately
$1.4 million
to income tax expense in fiscal
2018
, whereas such expense previously would have been recorded in equity.
State income taxes, net of federal benefit represent a larger tax effect in fiscal
2018
versus fiscal
2017
, primarily due to the Company's decrease in income from continuing operations before income taxes in fiscal
2018
compared to fiscal
2017
.
During fiscal
2017
, the Company’s Executive Chairman retired. As a result of the retirement, the executive’s compensation was no longer subject to the Internal Revenue Code Section 162 limitation on the deduction for non-performance based compensation as he was not an employee at the end of the fiscal year. The Company claimed a tax benefit upon retirement for expenses not deducted in prior years related to the executive’s time based restricted stock that had not vested in prior years, but did vest during fiscal
2017
. During fiscal
2017
, the increase in state income taxes, net of federal benefit, compared to fiscal
2016
is primarily attributable to state research and development credits generated during fiscal 2016 that were not generated in fiscal
2017
.
Payments (refunds) of income taxes for fiscal
2018
,
2017
, and
2016
equaled
$(18.4) million
,
$(15.1) million
, and
$29.6 million
, respectively.
The Company is subject to U.S. federal income tax as well as income tax by multiple state and local jurisdictions. The Company has substantially concluded all U.S. federal income tax matters through fiscal 2014 and all state and local income tax
matters through fiscal 2010. In the future, the Company may resolve some or all of the issues related to tax matters of open fiscal years, which may require the Company to make payments to settle agreed upon liabilities.
Uncertain Tax Positions
As of
March 3, 2018
and
February 25, 2017
, the Company had
$2.3 million
and
$2.6 million
of unrecognized tax benefits respectively, included in other long-term liabilities on the consolidated balance sheets,
$1.9 million
and
$1.9 million
respectively, of which, if recognized, would affect the effective income tax rate. Of the total unrecognized tax benefits as of
March 3, 2018
, it is reasonably possible that the total unrecognized tax benefits could decrease by up to
$0.5 million
during the next twelve months due to audit settlements, expiration of statute of limitations, or other resolution of uncertainties. Due to the uncertain and complex application of tax rules and regulations, it is possible that the ultimate resolution of audits may result in liabilities that could be different from this estimate. In such case, the Company will record additional tax expense or tax benefit in the tax provision or reclassify amounts on the consolidated balance sheets in the period in which such matter is effectively settled with the tax authority.
The Company recognizes interest and penalty expense, as well as reversal of expense, related to unrecognized tax benefits as components of income tax expense. In fiscal
2018
,
2017
, and
2016
,
$0.0 million
,
$(0.3) million
, and
$(0.8) million
, respectively, of interest and penalties were a benefit and netted against income tax expense on the consolidated statements of operations. The Company has accrued
$0.4 million
and
$0.4 million
for the payment of interest and penalties as of
March 3, 2018
and
February 25, 2017
, respectively.
The following table summarizes by fiscal year the activity related to the Company’s unrecognized tax benefits for U.S. federal and state tax jurisdictions and excludes accrued interest and penalties (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
Unrecognized tax benefits at beginning of year
|
$
|
2,155
|
|
|
$
|
2,485
|
|
|
$
|
1,999
|
|
Increases in tax positions for prior years
|
209
|
|
|
212
|
|
|
1,167
|
|
Decreases in tax positions for prior years
|
(203
|
)
|
|
(26
|
)
|
|
(259
|
)
|
Increases in unrecognized tax benefits as a result of current year activity
|
41
|
|
|
19
|
|
|
176
|
|
Decreases to unrecognized tax benefits as a result of a lapse of the applicable statute of limitations
|
(372
|
)
|
|
(535
|
)
|
|
(598
|
)
|
Unrecognized tax benefits at end of year
|
$
|
1,830
|
|
|
$
|
2,155
|
|
|
$
|
2,485
|
|
8. Retirement Plans and Subsequent Event
The Company sponsors a qualified defined contribution profit sharing plan, which covers substantially all employees of the Company who are age twenty-one or older. Contributions to this plan are discretionary and are allocated to employees as a percentage of each covered employee’s wages. The plan has a 401(k) feature whereby the Company matches employee contributions to the plan. The Company matches
100 percent
of employee contributions to the 401(k) plan on the first
three
percent of an employee’s wages and matches an additional
50 percent
of employee contributions to the 401(k) plan on the next
two
percent up to
five
percent of their wages (maximum of
four
percent Company match). Employee contributions and Company matching contributions vest immediately. The Company’s matching contribution expense for the 401(k) plan in fiscal
2018
,
2017
, and
2016
was
$2.2 million
,
$1.8 million
, and
$1.8 million
, respectively.
The Company has a non-qualified deferred compensation plan for highly compensated employees whose contributions are limited under the qualified defined contribution profit sharing plan. Amounts contributed and deferred under the non-qualified deferred compensation plan are credited or charged with the performance of investment options offered under the plan and elected by the participants. In the event of bankruptcy, the assets of this plan are available to satisfy the claims of general creditors. The liability for compensation deferred under the Company’s non-qualified deferred compensation plan was
$4.2 million
and
$5.5 million
as of March 3, 2018 and February 25, 2017, respectively and are included in other long-term liabilities on the consolidated balance sheets. The Company’s total expense recorded for this plan was
$0
in each of fiscal
2018
,
2017
, and
2016
. On March 25, 2018, the Company terminated its non-qualified deferred compensation plan. The distribution of the plan assets and participant balances could begin in fiscal year 2019 and will be completely paid out no later than March 2019 depending on participant elections.
9. Share-Based Compensation
General
In July 2009, the Company’s shareholders approved and adopted The Finish Line, Inc. 2009 Incentive Plan (the “2009 Incentive Plan”), previously approved by the Company’s Board of Directors (the "Board"). In July 2014, the Company’s shareholders approved and adopted The Finish Line, Inc. 2009 Incentive Plan Amended and Restated as of April 16, 2014, which was further amended as of June 27 and July 14, 2016 (the “Amended and Restated 2009 Incentive Plan”). All such amendments were previously approved by the Board. The Company has reserved an aggregate of
10,500,000
shares of common stock available for issuance under the Amended and Restated 2009 Incentive Plan. The number of shares which may be used for awards other than stock options or stock appreciation rights is limited to
4,000,000
shares of Common Stock. Under the Amended and Restated 2009 Incentive Plan, the Company can provide newly issued shares or treasury stock to satisfy stock option exercises and for the issuance of restricted stock. Future grants are no longer permitted under the 2002 Stock Incentive Plan of The Finish Line, Inc. (the “2002 Incentive Plan”); however, options previously issued under the 2002 Incentive Plan remain outstanding and exercisable.
Total share-based compensation expense in fiscal
2018
,
2017
, and
2016
was
$7.0 million
from continuing operations,
$11.0 million
(
$9.9 million
from continuing operations and
$1.1 million
from discontinued operations), and
$10.9 million
(
$10.6 million
from continuing operations and
$0.3 million
from discontinued operations), respectively.
Stock Option Activity
Stock options have been granted to non-employee directors, officers, and other key employees. Generally, options outstanding under the 2002 Incentive Plan and Amended and Restated 2009 Incentive Plan 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 fiscal
2018
no
stock options were granted. The estimated weighted-average fair value of the individual options granted during fiscal
2017
, and
2016
was
$4.82
, and
$6.49
, respectively, on the date of the grants. The fair values of all options granted were determined using a Black-Scholes option-pricing model with the following weighted average assumptions for each fiscal year:
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
Dividend yield
|
N/A
|
|
2.2
|
%
|
|
1.5
|
%
|
Volatility
|
N/A
|
|
32.9
|
%
|
|
33.4
|
%
|
Risk-free interest rate
|
N/A
|
|
1.3
|
%
|
|
1.4
|
%
|
Expected life
|
N/A
|
|
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.
A reconciliation of the Company’s stock option activity and related information for fiscal
2018
is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Shares
|
|
Weighted
Average
Exercise Price
Per Share
|
|
Weighted
Average
Remaining
Contractual Life
(Years)
|
|
Aggregate
Intrinsic
Value
|
Outstanding at February 25, 2017
|
3,592,592
|
|
|
$
|
21.35
|
|
|
|
|
|
Granted
|
—
|
|
|
—
|
|
|
|
|
|
Exercised
|
(49,656
|
)
|
|
6.19
|
|
|
|
|
$
|
358,000
|
|
Forfeited and expired
|
(285,218
|
)
|
|
22.69
|
|
|
|
|
|
Outstanding at March 3, 2018
|
3,257,718
|
|
|
$
|
21.46
|
|
|
6.4
|
|
$
|
374,000
|
|
Exercisable at March 3, 2018
|
2,183,552
|
|
|
$
|
21.32
|
|
|
5.8
|
|
$
|
374,000
|
|
As of
March 3, 2018
, there was
$2.6 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
1.3 years
.
Intrinsic value for stock options is the difference between the current market value of the Company’s stock and the option strike price. The total intrinsic value of options exercised during fiscal
2018
,
2017
, and
2016
was
$0.4 million
,
$1.3 million
, and
$1.1 million
, respectively.
The following table summarizes information concerning outstanding and exercisable options at
March 3, 2018
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Range of Exercise Prices
|
Number
Outstanding
|
|
Weighted-Average
Remaining
Contractual Life
|
|
Weighted-Average
Exercise Price
|
|
Number
Exercisable
|
|
Weighted-Average
Exercise Price
|
$1.00 - $10.00
|
86,177
|
|
|
0.9
|
|
$
|
6.02
|
|
|
86,177
|
|
|
$
|
6.02
|
|
$10.01 - $15.00
|
47,404
|
|
|
2.0
|
|
13.14
|
|
|
47,404
|
|
|
13.14
|
|
$15.01 - $20.00
|
686,983
|
|
|
5.9
|
|
18.62
|
|
|
601,304
|
|
|
18.86
|
|
$20.01 - $25.00
|
1,955,937
|
|
|
7.1
|
|
21.85
|
|
|
1,062,164
|
|
|
22.04
|
|
$25.01 +
|
481,217
|
|
|
6.1
|
|
27.53
|
|
|
386,503
|
|
|
27.58
|
|
|
3,257,718
|
|
|
6.4
|
|
|
|
|
2,183,552
|
|
|
|
|
The Company recorded compensation expense related to stock options of
$2.6 million
,
$4.4 million
, and
$5.9 million
in fiscal
2018
,
2017
, and
2016
, respectively.
Restricted Stock Activity
The Company has granted shares of the Company’s stock to non-employee directors, officers, and other key employees that are subject to restrictions. The shares or restricted stock granted to employees in fiscal 2018 generally vest ratably over
three
-year periods or vest upon the achievement of specified levels of earnings per share growth and net sales growth over a
three
-year period. The shares of restricted stock granted to employees prior to fiscal 2018 either vest upon the achievement of specified levels of earnings per share growth over a
three
-year period or cliff-vest after a
three
-year period. For performance-based awards, should the earnings per share or net sales growth 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. The Company recorded compensation expense related to restricted stock of
$4.3 million
,
$6.5 million
, and
$4.9 million
in fiscal
2018
,
2017
, and
2016
, respectively.
A reconciliation of the Company’s restricted stock activity and related information for fiscal
2018
is as follows:
|
|
|
|
|
|
|
|
|
Number of
Shares
|
|
Weighted Average
Grant Date
Fair Value
|
Unvested at February 25, 2017
|
597,145
|
|
|
$
|
21.36
|
|
Granted
|
723,184
|
|
|
13.13
|
|
Vested
|
(256,767
|
)
|
|
21.17
|
|
Forfeited
|
(147,921
|
)
|
|
18.08
|
|
Unvested at March 3, 2018
|
915,641
|
|
|
$
|
15.45
|
|
As of
March 3, 2018
, there was
$6.5 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
1.5 years
. The total fair value of awards for which restrictions lapsed (upon which the stock vested) during fiscal
2018
was
$5.4 million
.
Employee Stock Purchase Plan
The Company has an Employee Stock Purchase Plan (“ESPP”). Under the ESPP, participating employees are able to contribute up to
15%
of their annual compensation to acquire shares of the Company’s common stock at
85%
of the market price on a specified date each offering period. The amount of shares purchased per calendar year per employee cannot have a fair market value in excess of
$25,000
. There are
2.4 million
shares of common stock authorized for purchase under the ESPP, of which
48,000
,
37,000
, and
39,000
shares were purchased during fiscal
2018
,
2017
, and
2016
, respectively. The Company recognizes compensation expense based on the
15%
discount at purchase. The Company recorded compensation expense related to the ESPP of
$0.1 million
in each of fiscal
2018
,
2017
, and
2016
.
10. Earnings Per Share
The Company measured its diluted earnings per share utilizing the two-class method for fiscal 2018 and 2016 and the treasury method for fiscal 2017 as those measurements were determined to be more dilutive between the two available methods in each of those fiscal years.
The following is a reconciliation of the numerators and denominators used in computing earnings per share for each of the following fiscal years (in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
Net income from continuing operations
|
|
$
|
14,714
|
|
|
$
|
35,156
|
|
|
$
|
28,922
|
|
Net
income from continuing operations attributable to The Finish Line, Inc. attributable to participating securities
|
|
253
|
|
|
—
|
|
|
347
|
|
Net
income from continuing operations attributable to The Finish Line, Inc. attributable to shareholders
|
|
$
|
14,461
|
|
|
$
|
35,156
|
|
|
$
|
28,575
|
|
|
|
|
|
|
|
|
Net loss from discontinued operations
|
|
$
|
(304
|
)
|
|
$
|
(53,364
|
)
|
|
$
|
(7,126
|
)
|
Net loss attributable to redeemable noncontrolling interest of discontinued operations
|
|
—
|
|
|
—
|
|
|
(96
|
)
|
Net loss from discontinued operations attributable to The Finish Line, Inc. attributable to participating securities
|
|
(4
|
)
|
|
—
|
|
|
(84
|
)
|
Net loss from discontinued operations attributable to shareholders
|
|
$
|
(300
|
)
|
|
$
|
(53,364
|
)
|
|
$
|
(6,946
|
)
|
Net income (loss) attributable to The Finish Line, Inc. attributable to shareholders
|
|
$
|
14,161
|
|
|
$
|
(18,208
|
)
|
|
$
|
21,629
|
|
Basic earnings per share attributable to The Finish Line, Inc. shareholders:
|
|
|
|
|
|
|
Weighted-average number of common shares outstanding
|
|
40,281
|
|
|
40,911
|
|
|
44,565
|
|
Basic earnings per share attributable to The Finish Line, Inc. shareholders:
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.36
|
|
|
$
|
0.86
|
|
|
$
|
0.64
|
|
Discontinued operations
|
|
(0.01
|
)
|
|
(1.31
|
)
|
|
(0.15
|
)
|
Basic earnings per share attributable to The Finish Line, Inc. shareholders
|
|
$
|
0.35
|
|
|
$
|
(0.45
|
)
|
|
$
|
0.49
|
|
Diluted earnings per share attributable to The Finish Line, Inc. shareholders:
|
|
|
|
|
|
|
Weighted-average number of common shares outstanding
|
|
40,281
|
|
|
40,911
|
|
|
44,565
|
|
Dilutive effect of potential common shares(a)
|
|
58
|
|
|
456
|
|
|
222
|
|
Diluted weighted-average number of common shares outstanding
|
|
40,339
|
|
|
41,367
|
|
|
44,787
|
|
Diluted earnings per share attributable to The Finish Line, Inc. shareholders:
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.36
|
|
|
$
|
0.85
|
|
|
$
|
0.64
|
|
Discontinued operations
|
|
(0.01
|
)
|
|
(1.29
|
)
|
|
(0.16
|
)
|
Diluted earnings per share attributable to The Finish Line, Inc. shareholders
|
|
$
|
0.35
|
|
|
$
|
(0.44
|
)
|
|
$
|
0.48
|
|
_____________
|
|
(a)
|
The computation of diluted earnings per share attributable to The Finish Line, Inc. shareholders excludes options to purchase approximately
3.4 million
,
3.0 million
, and
1.7 million
shares of common stock in fiscal
2018
,
2017
, and
2016
, respectively, because the impact of such options would have been antidilutive.
|
11. Common Stock
On July 21, 2011, the Board authorized a share repurchase program to repurchase shares of the Company’s common stock with subsequent amendments on March 26, 2015 and July 13, 2016 authorizing further share repurchases through December 31, 2019 (the “Share Repurchase Program”).
The Company repurchased
0.3 million
shares of its common stock at an average price of
$15.29
per share for an aggregate amount of
$3.8 million
in fiscal
2018
. As of
March 3, 2018
, there were
4.5 million
shares remaining available to repurchase under the Share Repurchase Program.
As of
March 3, 2018
, the Company held
19.4 million
shares of its common stock as treasury shares at an average price of
$20.59
per share for an aggregate carrying amount of
$399.2 million
. The Company’s treasury shares may be issued upon the exercise of employee stock options, under the Employee Stock Purchase Plan (“ESPP”), in the form of restricted stock, or for other corporate purposes. The number of shares of common stock available for issuance of awards of restricted stock and other awards, or upon the exercise of options, is limited under the Amended and Restated 2009 Incentive Plan. Further purchases may occur from time to time as market conditions warrant and as the Company deems appropriate when judged against other alternative uses of cash.
On January 17, 2018, the Company increased its quarterly cash dividend to
$0.115
per share from
$0.11
per share of the Company’s common stock. The Company declared dividends of
$18.2 million
,
$17.0 million
, and
$16.5 million
during fiscal
2018
,
2017
, and
2016
, respectively. As of
March 3, 2018
and
February 25, 2017
, dividends declared but not paid were
$4.7 million
and
$4.5 million
, respectively. Further declarations of dividends remain at the discretion of the Board.
Shareholder Rights Plan
On August 28, 2017, the Company announced that its Board unanimously adopted a shareholder rights plan (the “Rights Plan”) to protect the best interests of Finish Line shareholders. The Board subsequently amended the Rights Plan on March 25, 2018 (the "Rights Plan, as Amended"). The Board authorized the adoption of the Rights Plan, as Amended to protect against any coercive or abusive takeover tactics, and help ensure that the Company’s shareholders are not deprived of the opportunity to realize the full and fair value of their investments.
In connection with the adoption of the Rights Plan, as Amended, the Board authorized
10,000
shares of series A junior participating stock, no par value (“Preferred Stock”) and declared a dividend of
one
Preferred Stock purchase right (a “Right”) for each outstanding share of common stock of the Company on August 25, 2017. The authorization of the Preferred Stock became effective on August 28, 2017. The dividend was paid on September 11, 2017 to shareholders of record at the close of business on that date. Each Right initially entitles the registered holder to purchase from the Company
one ten-thousandth
of a share of Preferred Stock at a price of
$26.00
per Right, in the event the Rights become exercisable, subject to adjustment.
In general, the Rights will become exercisable if a person or group becomes the beneficial owner of
12.5%
or more of the outstanding common stock of the Company, with the exception of JD Sports, any other "Exempt Person" (as defined in the Rights Plan, as Amended), or any person who inadvertently becomes an "Acquiring Person" (as defined in the Rights Plan, as Amended), which determination is subject to the Board's conclusion. In the event that the Rights become exercisable due to the triggering threshold being crossed, each Right will entitle its holder to purchase, at the Right’s exercise price, a number of shares of common stock having a market value at that time of twice the Right’s exercise price. Rights held by the triggering person or group will become void and will not be exercisable to purchase any shares. The Board, at its option, may exchange each Right (other than Rights owned by the triggering person or group that have become void) in whole or in part, at an exchange ratio of one share of common stock per outstanding Right, subject to adjustment.
Persons or groups that beneficially owned 12.5% or more of the outstanding Company common stock prior to the Company’s announcement of the Rights Plan, as Amended will not cause the Rights to be exercisable until such time as those persons or groups become the beneficial owner of any additional shares of Company common stock.
The Rights Plan, as Amended has an expiration date of August 28, 2020, or immediately prior to the effective time of the Merger with JD Sports as discussed in Note 14, Subsequent Event. In addition, the Rights Plan, as Amended will be terminated if shareholder approval of the Rights Plan, as Amended has not been obtained at or before the Company’s 2018 Annual Meeting of Shareholders. The Board will, in general, be entitled to redeem the Rights at
$0.0001
per Right at any time before the triggering threshold is crossed.
12. Impairment Charges and Store Closing Costs
The
$36.7 million
in impairment charges and store closing costs recorded during fiscal
2018
were primarily the result of a
$13.5 million
write-off of technology assets related to enterprise-wide system infrastructure, as the Company determined the systems were no longer going to be utilized, an
$11.6 million
write-off of long-lived assets of underperforming stores, and an
$11.1 million
write-off of obsolete store fixtures and corporate assets. 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
$0.4 million
in store closing costs during fiscal
2018
, which represents the non-cash write-off of fixtures and equipment upon a store/shop closing.
The
$13.3 million
in impairment charges and store closing costs recorded during fiscal
2017
were primarily the result of an
$11.5 million
write-off of long-lived assets of underperforming stores, and a
$1.0 million
write-off of obsolete store fixtures and corporate assets. 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
$0.8 million
in store closing costs during fiscal
2017
.
The
$43.6 million
in impairment charges and store closing costs recorded during fiscal
2016
were primarily the result of a
$33.3 million
write-off of technology assets related to enterprise-wide systems infrastructure, as the Company determined that the systems were no longer going to be used for their originally intended purpose, an
$8.4 million
write-off of long-lived assets of underperforming stores, and a
$1.1 million
write-off of obsolete store fixtures and corporate assets. 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
$0.8 million
in store closing costs during fiscal
2016
.
13. 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.
14. Subsequent Event
On March 25, 2018, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with JD Sports Fashion Plc, a company incorporated under the laws of England and Wales (“JD Sports”), and Genesis Merger Sub, Inc., an Indiana corporation and an indirect wholly-owned indirect subsidiary of JD Sports (“Merger Sub”). Pursuant to the Merger Agreement, and subject to the terms and conditions thereof, Merger Sub will merge with and into the Company (the “Merger), with the Company surviving the Merger as an indirect wholly-owned subsidiary of JD Sports. At the effective time of the Merger, each issued and outstanding class A Common Share, no par value, of the Company (“Company Common Shares”) (other than shares held by the Company in treasury or owned by any subsidiary of the Company, JD Sports, Merger Sub, or any other subsidiary of JD Sports) will automatically be converted into the right to receive
$13.50
in cash (the “Merger Consideration”). In addition, at the effective time of the Merger, all outstanding and unexercised Company stock options (whether vested or unvested) granted under the Company’s 2002 Stock Incentive Plan, as amended, and Amended and Restated 2009 Incentive Plan, as amended, will be cancelled and JD Sports, or the surviving corporation, will pay the holder of each such option an amount in cash (without interest) equal to the product of (x) the excess, if any, of the Merger Consideration over the exercise price per share of the Company Common Shares underlying such option, and (y) the number of Company Common Shares subject to the option (net of withholding taxes and rounded down to the nearest cent). Each award of Company restricted stock that is outstanding and unvested immediately prior to the effective time of the Merger will become fully vested and free of forfeiture restrictions immediately prior to the effective time, and each such share of restricted stock will be converted into the right to receive the Merger Consideration (net of withholding taxes). The Company’s execution of the Merger Agreement did not materially impact the Company’s consolidated financial statements for the year ended March 3, 2018.
The closing of the transaction is subject to the receipt of any required regulatory approvals, the approvals of the Company’s and JD Sports’ shareholders and the satisfaction of other customary closing conditions. The Merger is expected to close as soon as practicable after the satisfaction or waiver of all the conditions to the closing in the Merger Agreement, which is currently expected to be in the late second quarter of calendar year 2018, although delays may occur.
The payment of the Merger Consideration will be funded in part, through debt financing that has been committed to JD Sports by Barclays Bank PLC, HSBC Bank plc, PNC Bank, National Association, and PNC Capital Markets LLC. The Merger Agreement does not contain a financing condition.
The Merger Agreement contains certain termination rights in favor of the parties, as set forth therein, including, among other things, the right of either party, subject to specified limitations, to terminate the Merger Agreement if the Merger is not consummated by September 25, 2018. Upon the termination of the Merger Agreement, under specified circumstances, the Company may be required to pay JD Sports a termination fee of
$28 million
. In addition, if the Merger Agreement is terminated in certain other circumstances, then the Company must pay JD Sports its reasonable and documented out-of-pocket fees and expenses incurred in connection with the Merger and related transactions, as well as JD Sports’ fees and expenses in connection with JD Sports’ financing of the transaction, in an aggregate amount up to
$5.6 million
. Any fees and expenses paid by the Company will be credited against any termination fee that may become due and payable.
Additional information about the Merger is set forth in the Company’s filings with the U.S. Securities and Exchange Commission.
15. Quarterly Financial Information (Unaudited)
The Company’s merchandise is marketed during all seasons, with the highest volume of merchandise sold during the second and fourth fiscal quarters as a result of back-to-school and holiday shopping, respectively. The third fiscal quarter has traditionally had the lowest volume of net sales and the lowest results of operations.
The following tables set forth quarterly operating data of the Company, including such data as a percentage of net sales, for fiscal
2018
and
2017
. This quarterly information is unaudited but, in management’s opinion, reflects all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of the information for the periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
May 27, 2017
|
|
August 26, 2017
|
|
November 25, 2017
|
|
March 3, 2018
|
|
|
(Dollars in thousands, except per share data)
|
Statement of Operations Data(b):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
429,772
|
|
|
100.0
|
%
|
|
$
|
469,352
|
|
|
100.0
|
%
|
|
$
|
378,533
|
|
|
100.0
|
%
|
|
$
|
561,299
|
|
|
100.0
|
%
|
Cost of sales (including occupancy costs)
|
|
302,345
|
|
|
70.4
|
|
|
339,020
|
|
|
72.2
|
|
|
281,117
|
|
|
74.3
|
|
|
384,377
|
|
|
68.5
|
|
Gross profit
|
|
127,427
|
|
|
29.6
|
|
|
130,332
|
|
|
27.8
|
|
|
97,416
|
|
|
25.7
|
|
|
176,922
|
|
|
31.5
|
|
Selling, general, and administrative expenses
|
|
112,412
|
|
|
26.1
|
|
|
121,772
|
|
|
26.0
|
|
|
114,703
|
|
|
30.3
|
|
|
137,597
|
|
|
24.5
|
|
Impairment charges and store closing costs
|
|
2,158
|
|
|
0.5
|
|
|
2,335
|
|
|
0.5
|
|
|
4,286
|
|
|
1.1
|
|
|
27,912
|
|
|
5.0
|
|
Operating income (loss)
|
|
12,857
|
|
|
3.0
|
|
|
6,225
|
|
|
1.3
|
|
|
(21,573
|
)
|
|
(5.7
|
)
|
|
11,413
|
|
|
2.0
|
|
Interest income, net
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
56
|
|
|
—
|
|
Income (loss) from continuing operations before income taxes
|
|
12,857
|
|
|
3.0
|
|
|
6,235
|
|
|
1.3
|
|
|
(21,566
|
)
|
|
(5.7
|
)
|
|
11,469
|
|
|
2.0
|
|
Income tax expense (benefit)(c)
|
|
4,860
|
|
|
1.1
|
|
|
2,888
|
|
|
0.6
|
|
|
(8,625
|
)
|
|
(2.3
|
)
|
|
(4,842
|
)
|
|
(0.9
|
)
|
Net income (loss) from continuing operations
|
|
7,997
|
|
|
1.9
|
|
|
3,347
|
|
|
0.7
|
|
|
(12,941
|
)
|
|
(3.4
|
)
|
|
16,311
|
|
|
2.9
|
|
Net income (loss) from discontinued operations, net of tax
|
|
143
|
|
|
—
|
|
|
(504
|
)
|
|
(0.1
|
)
|
|
27
|
|
|
—
|
|
|
30
|
|
|
—
|
|
Net income
(loss) attributable to The Finish Line, Inc.
|
|
$
|
8,140
|
|
|
1.9
|
|
|
$
|
2,843
|
|
|
0.6
|
|
|
$
|
(12,914
|
)
|
|
(3.4
|
)
|
|
$
|
16,341
|
|
|
2.9
|
|
Basic earnings (loss) per share attributable to The Finish Line, Inc. shareholders(a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.20
|
|
|
|
|
$
|
0.08
|
|
|
|
|
$
|
(0.32
|
)
|
|
|
|
$
|
0.40
|
|
|
|
Discontinued operations
|
|
—
|
|
|
|
|
(0.01
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Basic earnings (loss) per share attributable to The Finish Line, Inc. shareholders(a)
|
|
$
|
0.20
|
|
|
|
|
$
|
0.07
|
|
|
|
|
$
|
(0.32
|
)
|
|
|
|
$
|
0.40
|
|
|
|
Diluted earnings (loss) per share attributable to The Finish Line, Inc. shareholders(a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.20
|
|
|
|
|
$
|
0.08
|
|
|
|
|
$
|
(0.32
|
)
|
|
|
|
$
|
0.40
|
|
|
|
Discontinued operations
|
|
—
|
|
|
|
|
(0.01
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Diluted earnings (loss) per share attributable to The Finish Line, Inc. shareholders(a)
|
|
$
|
0.20
|
|
|
|
|
$
|
0.07
|
|
|
|
|
$
|
(0.32
|
)
|
|
|
|
$
|
0.40
|
|
|
|
Dividends declared per share
|
|
$
|
0.11
|
|
|
|
|
$
|
0.11
|
|
|
|
|
$
|
0.11
|
|
|
|
|
$
|
0.115
|
|
|
|
|
|
(a)
|
Earnings (loss) per share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly amounts may not equal the total for the fiscal year.
|
|
|
(b)
|
The quarter ended March 3, 2018 consisted of 14 weeks compared to 13 weeks in the comparable prior year period.
|
|
|
(c)
|
During the quarter ended March 3, 2018, the Company recorded a provisional
$10.1 million
benefit resulting from the enactment of the Tax Act due to the re-measurement of the Company’s deferred tax assets and liabilities as discussed in Note 7, Income taxes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
May 28, 2016
|
|
August 27, 2016
|
|
November 26, 2016
|
|
February 25, 2017
|
|
|
(Dollars in thousands, except per share data)
|
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
430,044
|
|
|
100.0
|
%
|
|
$
|
485,156
|
|
|
100.0
|
%
|
|
$
|
371,741
|
|
|
100.0
|
%
|
|
$
|
557,452
|
|
|
100.0
|
%
|
Cost of sales (including occupancy costs)
|
|
296,867
|
|
|
69.0
|
|
|
331,447
|
|
|
68.3
|
|
|
272,377
|
|
|
73.3
|
|
|
395,298
|
|
|
70.9
|
|
Gross profit
|
|
133,177
|
|
|
31.0
|
|
|
153,709
|
|
|
31.7
|
|
|
99,364
|
|
|
26.7
|
|
|
162,154
|
|
|
29.1
|
|
Selling, general, and administrative expenses
|
|
117,549
|
|
|
27.3
|
|
|
116,511
|
|
|
24.0
|
|
|
118,133
|
|
|
31.7
|
|
|
128,705
|
|
|
23.1
|
|
Impairment charges and store closing costs
|
|
—
|
|
|
—
|
|
|
182
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,129
|
|
|
2.4
|
|
Operating income (loss)
|
|
15,628
|
|
|
3.7
|
|
|
37,016
|
|
|
7.7
|
|
|
(18,769
|
)
|
|
(5.0
|
)
|
|
20,320
|
|
|
3.6
|
|
Interest (income) expense, net
|
|
(6
|
)
|
|
—
|
|
|
32
|
|
|
—
|
|
|
152
|
|
|
0.1
|
|
|
101
|
|
|
—
|
|
Income (loss) from continuing operations before income taxes
|
|
15,634
|
|
|
3.7
|
|
|
36,984
|
|
|
7.7
|
|
|
(18,921
|
)
|
|
(5.1
|
)
|
|
20,219
|
|
|
3.6
|
|
Income tax expense (benefit)
|
|
5,546
|
|
|
1.3
|
|
|
13,627
|
|
|
2.8
|
|
|
(8,332
|
)
|
|
(2.3
|
)
|
|
7,919
|
|
|
1.4
|
|
Net income (loss) from continuing operations
|
|
10,088
|
|
|
2.4
|
|
|
23,357
|
|
|
4.9
|
|
|
(10,589
|
)
|
|
(2.8
|
)
|
|
12,300
|
|
|
2.2
|
|
Net loss from discontinued operations, net of tax
|
|
(462
|
)
|
|
(0.1
|
)
|
|
(1,282
|
)
|
|
(0.3
|
)
|
|
(29,849
|
)
|
|
(8.1
|
)
|
|
(21,771
|
)
|
|
(3.9
|
)
|
Net income
(loss) attributable to The Finish Line, Inc.
|
|
$
|
9,626
|
|
|
2.3
|
|
|
$
|
22,075
|
|
|
4.6
|
|
|
$
|
(40,438
|
)
|
|
(10.9
|
)
|
|
$
|
(9,471
|
)
|
|
(1.7
|
)
|
Basic earnings (loss) per share attributable to The Finish Line, Inc. shareholders(a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.24
|
|
|
|
|
$
|
0.56
|
|
|
|
|
$
|
(0.26
|
)
|
|
|
|
$
|
0.30
|
|
|
|
Discontinued operations
|
|
(0.01
|
)
|
|
|
|
(0.03
|
)
|
|
|
|
(0.74
|
)
|
|
|
|
(0.53
|
)
|
|
|
Basic earnings (loss) per share attributable to The Finish Line, Inc. shareholders(a)
|
|
$
|
0.23
|
|
|
|
|
$
|
0.53
|
|
|
|
|
$
|
(1.00
|
)
|
|
|
|
$
|
(0.23
|
)
|
|
|
Diluted earnings (loss) per share attributable to The Finish Line, Inc. shareholders(a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.24
|
|
|
|
|
$
|
0.56
|
|
|
|
|
$
|
(0.26
|
)
|
|
|
|
$
|
0.30
|
|
|
|
Discontinued operations
|
|
(0.01
|
)
|
|
|
|
(0.03
|
)
|
|
|
|
(0.74
|
)
|
|
|
|
(0.53
|
)
|
|
|
Diluted earnings (loss) per share attributable to The Finish Line, Inc. shareholders(a)
|
|
$
|
0.23
|
|
|
|
|
$
|
0.53
|
|
|
|
|
$
|
(1.00
|
)
|
|
|
|
$
|
(0.23
|
)
|
|
|
Dividends declared per share
|
|
$
|
0.10
|
|
|
|
|
$
|
0.10
|
|
|
|
|
$
|
0.10
|
|
|
|
|
$
|
0.11
|
|
|
|
|
|
(a)
|
Earnings (loss) per share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly amounts may not equal the total for the fiscal year.
|