An investment in footwear and a reduction in its slower selling apparel category has helped The Finish Line Inc (Nasdaq:FINL) achieve a 15 per cent sales gain for the thirteen weeks ended August 26, 2000. The specialty retailer of men's, women's and children's brand name athletic and lifestyle footwear, activewear and accessories, has also announced that it plans to open around 30 new stores in the remaining fiscal year.

In a statement, Alan H Cohen, president and chief executive officer said: "We are pleased to report a 15 per cent sales gain for the quarter which included a 3 per cent increase in comparable store sales. However, as we discussed in our August 31 sales release, our product margins suffered due to significant promotions and clearance markdowns in our apparel category. On the positive side, comparable footwear sales continue to be strong, resulting in a 6 per cent gain for the quarter and 5 per cent year to date. We have continued to emphasize the footwear category and reduce our investment in the slower selling apparel category. At the end of the quarter, overall inventories were down 8 per cent per square foot primarily due to significant reductions in apparel, which decreased almost 30 per cent per square foot.

"We plan to open approximately 30 new stores and remodel/expand 12 existing stores equating to a 7-8 per cent increase in retail square footage for this fiscal year. Our balance sheet remains strong with over $50 million in cash and marketable securities and no interest bearing debt as of the end of Q2. Our stockholders' equity has grown to $234 million, which approximates $9.50 per share. We are well positioned financially to remain flexible and strong during a difficult period for athletic apparel retailing."

Second Quarter Results:
Net sales increased 15 per cent to $190.5 million for the thirteen weeks ended August 26, 2000 (the "second quarter" or "Q2") compared to $166.0 million for the same quarter (13 weeks) last year ended August 28, 1999 ("Q2 LY"). Comparable store net sales increased approximately 3 per cent for Q2 versus a decline of 1 per cent reported for Q2 LY.

Net income for the quarter decreased 9 per cent to $7.1 million compared to net income of $7.8 million for the second quarter of last year. Diluted earnings per share were $.29, which is a decline of 6 per cent compared to $.31 per share reported for Q2 LY. Diluted weighted average shares outstanding were 24,703,000 for the thirteen weeks ended August 26, 2000 a decrease of 446,000 shares or 2 per cent) versus 25,149,000 shares outstanding for the same quarter of last year. The reduction in the diluted shares outstanding reflects the effects of the ongoing stock buyback program.

Year-to-date Results:
Net sales increased 13 per cent to $337.2 million for the twenty-six weeks ended August 26, 2000 ("YTD") compared to $298.3 million for the same 26 weeks last year ended August 28, 1999 ("YTD LY"). Comparable store net sales increased approximately 2 per cent for YTD versus a decline of 3% (negative three percent) reported for YTD LY.

Net income YTD decreased 5 five per cent to $10.9 million compared with net income of $11.5 million for YTD LY. Diluted earnings per share were $.44, which is a decline of 4 per cent compared to $.46 per share reported for YTD LY. Diluted weighted average shares outstanding were 24,684,000 for the twenty-six weeks ended August 26, 2000 a decrease of 489,000 shares or 2 per cent versus 25,173,000 shares outstanding for YTD LY. The reduction in the diluted shares outstanding reflects the effects of the ongoing stock buyback program.

Merchandise inventories were $162.7 million at August 26, 2000 compared to $149.0 million at February 26, 2000. On a per square foot basis, merchandise inventories at the end of Q2 decreased approximately 8 per cent compared to one year ago.

The company operated 433 stores at the end of Q2, an increase of 13 per cent over the 384 stores operated one year ago. For the quarter, the company opened 11 new stores and remodeled/expanded six existing stores. One store was closed during the quarter. Total retail square footage increased 15 per cent to 2,629,000 at August 26, 2000 versus 2,291,000 square feet at the end Q2 LY.

The company entered into a new $60,000,000 unsecured committed credit agreement with a syndicate of commercial banks on September 20, 2000. This facility contains restrictive covenants which limits, among other things, mergers and dividends. This facility replaces the prior $75,000,000 facility and matures in September 2003.

The company has experienced, and expects to continue to experience, significant variability in net sales and comparable store net sales from quarter to quarter. Therefore, the results of the periods presented herein are not necessarily indicative of the results to be expected for any other future period or year.


The Finish Line, Inc.
Consolidated Statements of Income (Unaudited)
(In thousands, except per share and store data)

Thirteen Weeks Ended Twenty-six Weeks Ended
Aug 26, Aug 28, Aug 26, Aug 28,
2000 1999 2000 1999
------------------- -------------------
Net Sales $190,542 $165,994 $337,199 $298,290
Cost of Sales
(including occupancy
expenses) 137,296 117,303 243,309 212,473
-------- -------- -------- --------
Gross profit 53,246 48,691 93,890 85,817

Selling, general, and
administrative expenses 42,207 37,037 77,053 68,747
Interest income (net) 169 278 392 564
-------- -------- -------- --------
Income before income taxes 11,208 11,932 17,229 17,634
Income taxes 4,147 4,176 6,375 6,172
-------- -------- -------- --------
Net income $ 7,061 $ 7,756 $ 10,854 $ 11,462
-------- -------- -------- --------
-------- -------- -------- --------
Diluted weighted average
shares outstanding 24,703 25,149 24,684 25,173
-------- -------- -------- --------
-------- -------- -------- --------
Diluted net income
per share $ 0.29 $ 0.31 $ 0.44 $ 0.46
-------- -------- -------- --------
-------- -------- -------- --------
Number of stores open
at end of period 433 384


Condensed Consolidated Balance Sheet
Aug 28, Feb 26,
ASSETS 1999 2000
----------------------------------- ---------- ----------
(Unaudited)
Cash and cash equivalents $ 45,142 $ 13,061
Marketable securities 8,458 11,420
Merchandise inventories 162,676 148,979
Other current assets 11,333 11,784
Property and equipment, net 101,371 101,619
Other assets 3,062 2,232
-------- --------
Total assets $332,042 $289,095
-------- --------
-------- --------

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities $ 90,960 $ 60,346
Deferred rent payments 6,887 6,357
Stockholders' equity 234,195 222,392
-------- --------
Total liabs and stockholders' equity $332,042 $289,095
-------- --------
-------- --------