Finish Line Q4 Net Income Up 37%; Raises 2005 Guidance

The Finish Line, Inc. reported that net sales increased 30% to $305.3 million for the thirteen weeks ended February 28, 2004 compared to $234.4 million reported for the year-ago period. Comparable store net sales increased 19% for Q4 on top of a 10% increase reported for Q4 LY.

On a GAAP basis, net income for Q4 increased 37% to $21.0 million, or 86 cents per diluted share, versus net income of $15.4 million, or 66 cents per diluted share, in Q4 LY. This is an increase of 30% in diluted earnings per share.

In Q4 LY, the Company recognized a gain from a tornado insurance settlement of 20 cents per diluted share less asset impairment charges of four cents per diluted share. Excluding these items noted above, non-GAAP adjusted diluted earnings per share would have been 50 cents per share in Q4 LY.

Therefore, Q4 earnings per diluted share of 86 cents increased 72% versus comparable earnings of 50 cents per diluted share for Q4 LY.

For the full year, net sales increased 30% to $985.9 million compared to $757.2 million for Fiscal 2003. Comparable store net sales increased 20% for Fiscal 2004 on top of a 3% increase for Fiscal 2003.

On a GAAP basis, net income for Fiscal 2004 increased 89% to $47.3 million or $1.96 per diluted share versus $1.03 per diluted share for Fiscal 2003. Fiscal 2004 included a gain from the insurance settlement of three cents per diluted share. The Company reported net income for Fiscal 2003 of $25.0 million or $1.03 per diluted share that included a gain from the insurance settlement of 19 cents per diluted share and repositioning reversal of three cents per diluted share less asset impairment charges of four cents per diluted share.

Excluding extraordinary items, Fiscal 2004 non-GAAP adjusted net income per diluted share on a comparable basis would have been $1.93 versus 85 cents in Fiscal 2003, or an increase of 127%.

“We are pleased to report a 30% increase (GAAP basis) in diluted earnings per share and a 72% increase in non-GAAP adjusted earnings per share for the fourth quarter of Fiscal 2004 versus the same period last year,” stated Alan H. Cohen, Finish Line's Chief Executive Officer. “We made progress in all line items of the income statement as gross profit margin improved 210 basis points (occupancy costs improving 170 basis points and product margins increasing 40 basis points), while SG&A expenses improved 110 basis points.”

“Our balance sheet remains strong with $95.9 million in cash and marketable securities and no interest bearing debt, and our stockholders' equity is $323.3 million, which supports our financial flexibility. We continue to benefit from our position as the premier destination for athletic footwear, and we are optimistic as we go forward into Fiscal 2005.”

Merchandise inventories were $192.6 million at February 28, 2004 compared to $158.8 million at March 1, 2003. On a per square foot basis, merchandise inventories at fiscal year end increased approximately 12% (twelve percent) compared to one year ago.

The Company operated 531 stores at February 28, 2004, an increase of 11% (eleven percent) over the 477 stores operated one year ago. For the full fiscal year, the Company opened 58 new stores, remodeled 27 existing stores and closed 4 stores. Total retail square footage increased 9% (nine percent) to 3,081,000 at February 28, 2004 versus 2,839,000 at March 1, 2003.

With the improved Q4 results and an increase to Fiscal 2005 Q1 guidance, the Company announced it has increased diluted earnings per share guidance for Fiscal 2005 to a range of $2.29 to $2.33 from $2.22 to $2.26.

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


                               Thirteen    Thirteen   Fifty-two    Fifty-two
                                 Weeks       Weeks      Weeks        Weeks
                                 Ended       Ended      Ended        Ended
                              February 28,  March 1,  February 28,  March 1,
                                  2004        2003       2004         2003
                              ----------  ----------  ----------  ----------

    Net Sales                  $305,262    $234,427   $985,891     $757,159
    Cost of Sales (including
     occupancy expenses)        207,538     164,401    686,987      542,303
                              ----------  ----------  ----------  ----------
    Gross profit                 97,724      70,026    298,904      214,856

    Selling, general, and
     administrative expenses     63,952      51,715    224,540      183,072
    Insurance settlement              -      (7,382)    (1,228)      (7,382)
    Asset impairment charge           -       1,364          -        1,364
    Repositioning charge
     (reversal)                       -           -          -       (1,126)
    Interest income - net           178         140        651          814
                              ----------  ----------  ----------  ----------
    Income before income taxes   33,950      24,469     76,243       39,742
    Income taxes                 12,901       9,054     28,973       14,705
                              ----------  ----------  ----------  ----------
    Net income                  $21,049     $15,415    $47,270      $25,037

                              ==========  ==========  ==========  ==========
    Diluted net income
     per share                    $0.86       $0.66      $1.96        $1.03