Finish Line Inc. (FINL, Financial) filed Quarterly Report for the period ended 2009-11-28.
The Finish Line, Inc. together with its wholly owned subsidiary Spike'sHolding, Inc. is one of the largest mall based specialty retailers of brand name athletic, outdoor and casual footwear, activewear and accessories in the United States. Their store generally carries a large selection of men's, women's and children's athletic and casual shoes, as well as a broad assortment of activewear and accessories. Brand names offered by them include Nike, adidas, Reebok, And 1, K-Swiss, New Balance, Asics, Fila and Skechers. Finish Line Inc. has a market cap of $671.1 million; its shares were traded at around $12.16 with a P/E ratio of 21.4 and P/S ratio of 12.4. The dividend yield of Finish Line Inc. stocks is 0.9%. Finish Line Inc. had an annual average earning growth of 10.7% over the past 10 years.
Loss from discontinued operations, net of income taxes was $14.9 million for the thirty-nine weeks ended November 28, 2009 compared to $5.6 million for the thirty-nine weeks ended November 29, 2008. For the thirty-nine weeks ended November 28, 2009, the loss from discontinued operations of Man Alive included operating losses of $5.6 million as well as $18.3 million related to the loss on the sale of Man Alive. This $18.3 million loss was made up of the $7.7 million Purchase Price Rebate, $7.4 million inventory write-off, $6.7 million property and equipment write-off, and $2.4 million in other charges, partially offset by the reversal of Deferred credits from landlords of $5.9 million. The $23.9 million of loss from discontinued operations was offset partially by an income tax benefit of $9.0 million. For the thirty-nine weeks ended November 29, 2008, the $5.6 million loss from discontinued operations, net of income taxes represented operating losses. See Note 3 to the Companys unaudited financial statements included in this document for further discussion of the Companys discontinued operations.
The Company had net cash of $51.1 million provided by its operating activities during the thirty-nine weeks ended November 28, 2009 as compared to $4.5 million net cash used in operating activities during the thirty-nine weeks ended November 29, 2008. Included in the $4.5 million for the thirty-nine weeks ended November 29, 2008 was $39.0 million paid for the cash portion of the Settlement Agreement (see Note 2 to the Consolidated Financial Statements). At November 28, 2009, the Company had cash and cash equivalents of $149.2 million and no interest bearing debt. Cash equivalents are invested in short-term money market funds invested primarily in high-quality tax-exempt municipal instruments with daily liquidity.
Consolidated merchandise inventories were $237.5 million at November 28, 2009 compared to $239.4 million at February 28, 2009 and $293.2 million at November 29, 2008. Consolidated merchandise inventories at February 28, 2009 and November 29, 2008 contained Man Alive inventory of $6.0 million and $15.8 million, respectively. Finish Line merchandise inventories decreased 14.4% overall and 11.0% on a per square foot basis at November 28, 2009 compared to November 29, 2008. The 11.0% decrease per square foot compared to November 29, 2008 is a result of managements plan to reduce inventory levels and increase inventory turns.
The Company used $24,000 in net cash in investing activities for the thirty-nine weeks ended November 28, 2009 compared to net cash used of $37.1 million for the thirty-nine weeks ended November 29, 2008. The $24,000 used in the thirty-nine weeks ended November 28, 2009 was a result of $9.1 million in payments related to the sale of Man Alive along with $5.8 million of capital expenditures, partially offset by $14.9 million in proceeds from the sale of marketable securities.
For the thirty-nine weeks ended November 28, 2009, the Company has opened 5 Finish Line stores and does not plan to open any additional stores for the remainder of this fiscal year. The Company plans to remodel approximately 7 to 10 existing Finish Line stores during the fiscal year (6 remodeled during the thirty-nine weeks ended November 28, 2009). The Company has closed 13 stores during the thirty-nine weeks ended November 28, 2009 and expects to close another 12 to 15 stores in the 4th quarter. In addition, the Company has various other on going corporate capital and technology projects. The Company expects capital expenditures for the current fiscal year to approximate $8.0 to $11.0 million. Management believes that cash on hand, operating cash flow and the Companys existing $75.0 million unsecured committed Credit Agreement (the Credit Agreement), which expires on February 25, 2010, will provide sufficient capital to satisfy the Companys working capital requirements in the foreseeable future. The Credit Agreement also provides that, under certain circumstances, the Company may increase the aggregate principal amount of revolving loans by up to an additional $75.0 million. The Company is in the process of renewing the Credit Agreement, which is expected to be completed in the 4th quarter.
Read the The complete ReportFINL is in the portfolios of Chuck Royce of ROYCE & ASSOCIATES.
The Finish Line, Inc. together with its wholly owned subsidiary Spike'sHolding, Inc. is one of the largest mall based specialty retailers of brand name athletic, outdoor and casual footwear, activewear and accessories in the United States. Their store generally carries a large selection of men's, women's and children's athletic and casual shoes, as well as a broad assortment of activewear and accessories. Brand names offered by them include Nike, adidas, Reebok, And 1, K-Swiss, New Balance, Asics, Fila and Skechers. Finish Line Inc. has a market cap of $671.1 million; its shares were traded at around $12.16 with a P/E ratio of 21.4 and P/S ratio of 12.4. The dividend yield of Finish Line Inc. stocks is 0.9%. Finish Line Inc. had an annual average earning growth of 10.7% over the past 10 years.
Highlight of Business Operations:
Net sales decreased 6.2% ($52.7 million) to $797.9 million for the thirty-nine weeks ended November 28, 2009 from $850.6 million for the thirty-nine weeks ended November 29, 2008. The decrease was attributable to a comparable store net sales decrease of 4.7% for the thirty-nine weeks ended November 28, 2009 and reduced sales of $15.3 million from 23 closed stores along with down time and reduced square footage related to remodeled/relocated stores, partially offset by a $0.9 million increase from 5 new stores opened subsequent to November 29, 2008 and a $3.1 million increase in net sales from existing stores that were open only part of the thirty-nine weeks ended November 29, 2008. Comparable footwear and comparable softgoods net sales for the thirty-nine weeks ended November 28, 2009 both decreased 4.7%. The 4.7% comparable store net sales decrease was due primarily to decreased levels of consumer spending and traffic due to the macroeconomic environment along with tough comparisons as the Company believes there was a lift in sales related to stimulus checks provided by the U.S. government during a portion of the thirty-nine weeks last year.Loss from discontinued operations, net of income taxes was $14.9 million for the thirty-nine weeks ended November 28, 2009 compared to $5.6 million for the thirty-nine weeks ended November 29, 2008. For the thirty-nine weeks ended November 28, 2009, the loss from discontinued operations of Man Alive included operating losses of $5.6 million as well as $18.3 million related to the loss on the sale of Man Alive. This $18.3 million loss was made up of the $7.7 million Purchase Price Rebate, $7.4 million inventory write-off, $6.7 million property and equipment write-off, and $2.4 million in other charges, partially offset by the reversal of Deferred credits from landlords of $5.9 million. The $23.9 million of loss from discontinued operations was offset partially by an income tax benefit of $9.0 million. For the thirty-nine weeks ended November 29, 2008, the $5.6 million loss from discontinued operations, net of income taxes represented operating losses. See Note 3 to the Companys unaudited financial statements included in this document for further discussion of the Companys discontinued operations.
The Company had net cash of $51.1 million provided by its operating activities during the thirty-nine weeks ended November 28, 2009 as compared to $4.5 million net cash used in operating activities during the thirty-nine weeks ended November 29, 2008. Included in the $4.5 million for the thirty-nine weeks ended November 29, 2008 was $39.0 million paid for the cash portion of the Settlement Agreement (see Note 2 to the Consolidated Financial Statements). At November 28, 2009, the Company had cash and cash equivalents of $149.2 million and no interest bearing debt. Cash equivalents are invested in short-term money market funds invested primarily in high-quality tax-exempt municipal instruments with daily liquidity.
Consolidated merchandise inventories were $237.5 million at November 28, 2009 compared to $239.4 million at February 28, 2009 and $293.2 million at November 29, 2008. Consolidated merchandise inventories at February 28, 2009 and November 29, 2008 contained Man Alive inventory of $6.0 million and $15.8 million, respectively. Finish Line merchandise inventories decreased 14.4% overall and 11.0% on a per square foot basis at November 28, 2009 compared to November 29, 2008. The 11.0% decrease per square foot compared to November 29, 2008 is a result of managements plan to reduce inventory levels and increase inventory turns.
The Company used $24,000 in net cash in investing activities for the thirty-nine weeks ended November 28, 2009 compared to net cash used of $37.1 million for the thirty-nine weeks ended November 29, 2008. The $24,000 used in the thirty-nine weeks ended November 28, 2009 was a result of $9.1 million in payments related to the sale of Man Alive along with $5.8 million of capital expenditures, partially offset by $14.9 million in proceeds from the sale of marketable securities.
For the thirty-nine weeks ended November 28, 2009, the Company has opened 5 Finish Line stores and does not plan to open any additional stores for the remainder of this fiscal year. The Company plans to remodel approximately 7 to 10 existing Finish Line stores during the fiscal year (6 remodeled during the thirty-nine weeks ended November 28, 2009). The Company has closed 13 stores during the thirty-nine weeks ended November 28, 2009 and expects to close another 12 to 15 stores in the 4th quarter. In addition, the Company has various other on going corporate capital and technology projects. The Company expects capital expenditures for the current fiscal year to approximate $8.0 to $11.0 million. Management believes that cash on hand, operating cash flow and the Companys existing $75.0 million unsecured committed Credit Agreement (the Credit Agreement), which expires on February 25, 2010, will provide sufficient capital to satisfy the Companys working capital requirements in the foreseeable future. The Credit Agreement also provides that, under certain circumstances, the Company may increase the aggregate principal amount of revolving loans by up to an additional $75.0 million. The Company is in the process of renewing the Credit Agreement, which is expected to be completed in the 4th quarter.
Read the The complete ReportFINL is in the portfolios of Chuck Royce of ROYCE & ASSOCIATES.
