UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of report (Date of earliest event
reported): June 21, 2009
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The
Finish Line, Inc.
(Exact
Name of Registrant as Specified in Charter)
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Indiana
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0-20184
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35-1537210
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(State
or Other Jurisdiction of
Incorporation)
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(Commission
File Number)
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(IRS
Employer Identification
No.)
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3308
North Mitthoeffer Road, Indianapolis, Indiana
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46235
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant’s telephone number, including area
code: (317) 899-1022
N/A
(Former
Name or Former Address, if Changed Since Last Report)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01. Entry Into a Material Definitive Agreement.
On June
21, 2009, The Finish Line, Inc. (the “Company”) and its wholly owned subsidiary
The Finish Line Man Alive, Inc. (“Man Alive”) entered into an Asset Purchase
Agreement (the “Agreement”) with Man Alive Acquisitions, LLC (“MA”), an entity
controlled by Jimmy Khezrie, the owner and operator of Jimmy Jazz stores, under
which MA will assume certain assets and liabilities of Man Alive. Both
the Company and over eighty separate entities which are affiliated with MA have
joined the Agreement to guaranty the obligations of Man Alive and MA under the
Agreement, respectively.
The
assets (the “Assets”) to be acquired by MA include all of Man Alive’s leasehold
interests, excluding the leasehold interest in Man Alive’s corporate
headquarters (the “Leases”), all furniture, fixtures and equipment at Man
Alive’s retail stores, the inventory in the stores and in the Company's
distribution center (“Received Inventory”), the inventory under open purchase
order commitments (the “Ordered Inventory”), and all intellectual property
of Man Alive, including the “Man Alive” and “Decibel” trademarks and trade
names. No other significant assets will be purchased by MA.
The
principal liability to be assumed by MA is Man Alive’s liability for the
Leases. Consents to the assignment of the Leases have been received
from substantially all the landlords (the “Landlord Agreements”). MA
must use its best efforts to obtain the remaining Landlord Agreements with Man
Alive’s assistance. As of June 21, 2009, there were only two Landlord
Agreements which had not yet been obtained.
In
consideration for MA assuming the liabilities described above and in the
Agreement, MA will receive the Assets as well as a purchase price rebate (the
“Purchase Price Rebate”) from Man Alive. The Purchase Price Rebate
will be equal to the sum of $8.25 million plus an amount equal to Man Alive’s
gift card liability, minus an amount equal to forty percent (40%) of the sum of
the value of (A) the value of the Received Inventory in excess of $7.5 million,
plus (B) the value of the Ordered Inventory.
The
Purchase Price Rebate is payable in three components. Man Alive will pay MA at
closing the Purchase Price Rebate less (A) the Escrow Amount (as hereafter
defined) and (B) a $2 million installment payment. The Escrow Amount, which will
not be known until closing as described below, will be paid by Man Alive to a
third party escrow agent. The $2 million installment payment will be
paid by Man Alive in 12 equal monthly installments beginning the month after
closing.
The
Escrow Amount will be composed of the following components. First, $2.25 million
will be held in escrow and used to reimburse MA for payments to landlords for
August, September and October, 2009 rents. After these amounts are billed, the
parties will reconcile the actual amounts paid to the landlords for this period,
with the Company and Man Alive reimbursing MA the shortfall, if any, on January
4, 2010. In addition, approximately $2.26 million will be held in escrow,
representing the aggregate estimated amount of rent and additional rent payable
for a limited period following the three-month payment period described above
for any non-assigned leases, assigned leases for which the Company and Man Alive
have not been unconditionally released, and leases guaranteed by the Company
beyond the closing. The escrow amount will be adjusted at the closing date for
any changes prior to that time resulting from obtaining additional lease
assignments, unconditional releases, or releases of guarantees by the
Company.
MA will
hire all Man Alive field staff at the store locations.
Following
the closing, Man Alive and the Company will indemnify Buyer against the amount
of any damages, liabilities, losses, expenses and claims suffered by Buyer as a
result of any breaches by Man Alive or the Company of its or their
representations, warranties, covenants and obligations (including obligations to
discharge all pre-closing liabilities). The indemnity obligations are
subject to a deductible basket of $50,000, a time limit of 18 months, and an
aggregate limitation of $3 million, subject to certain exceptions including
covenants and certain fundamental representations and warranties.
The
Agreement contains certain limited conditions to closing that would allow MA to
terminate the Agreement, and the parties have provided that the closing will
occur on July 3, 2009 to be effective at 11:59 p.m. on July 4,
2009.
The
foregoing summary of the key terms of the Asset Purchase Agreement is qualified
in its entirety by the full text of the Asset Purchase Agreement, attached
hereto as Exhibit 2.1 and incorporated herein by reference.
On June
22, 2009, the Company issued a press release announcing its entry into the Asset
Purchase Agreement and the plan to exit the Man Alive business. A
copy of the Company’s press release is furnished with this Current Report on
Form 8-K as Exhibit 99.1.
Item 2.02. Results of Operations and
Financial Condition.
On June
22, 2009, the Company issued a press release reporting preliminary financial
results for the thirteen weeks ended May 30, 2009.
A copy of
the press release is attached hereto as Exhibit 99.1 and incorporated herein by
reference. This information, including Exhibit 99.1 hereto, shall not be deemed
“filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, and shall not be incorporated by reference into any registration
statement or other document pursuant to the Securities Act of 1933, as
amended.
Item
2.05. Costs Associated with Exit or Disposal Activities.
On June
21, 2009, the Company and Man Alive entered into an Asset Purchase Agreement
pursuant to which they will sell and transfer certain assets and liabilities of
Man Alive. Also, as of June 22, 2009, this plan to exit the Man Alive
business was communicated to the affected employees.
A
description of the Asset Purchase Agreement transaction is included in Item 1.01
of this Current Report and is incorporated herein. As a result of
exiting the Man Alive business, the Company expects to focus its time and
resources on its core Finish Line business. The closing of the Asset
Purchase Agreement is expected to occur on July 3, 2009, to be effective at
11:59 p.m. on July 4, 2009.
The
disposition of Man Alive will be accounted for as a discontinued operation in
the second quarter ending August 29, 2009. The Company will make cash payments
under the Asset Purchase Agreement of approximately $7 million, with
approximately $5 million of that cash payment due at the closing and the
remainder payable in 12 equal monthly installments. In addition to
this cash charge, the Company expects to take a pre-tax charge of approximately
$13-$18 million related primarily to inventory and long-term asset
write-offs. The Company estimates that included in these pre-tax
charges will be approximately $0.6 million in one-time severance-related
charges.
Accordingly,
the Company estimates that the total pre-tax charge expected to be recorded in
connection with its exit from the Man Alive business will be approximately
$20-$25 million. In addition, the Company estimates that the portion
of the charge that will result in future cash expenditures will be approximately
$6-$8 million for payment primarily of open purchase order commitments for
inventory. The Company anticipates that substantially all cash
amounts should be paid within the current fiscal year ending February 27,
2010.
On June
22, 2009, the Company issued a press release disclosing the Asset Purchase
Agreement and the plan to exit the Man Alive business. A copy of the
Company’s press release is furnished with this Current Report on Form 8-K as
Exhibit 99.1.
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Exhibit
Number
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Description
of Exhibit
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2.1
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Asset
Purchase Agreement, dated June 21, 2009
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99.1
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Press
Release issued June 22,
2009
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Forward
Looking Statements
This
Current Report on Form 8-K contains forward looking statements made pursuant to
the safe-harbor provisions of the Private Securities Litigation Reform Act of
1995, including but not limited to statements regarding anticipated charges,
cash expenditures and cost savings associated with exiting the Man Alive
business pursuant to the Asset Purchase Agreement. These forward
looking statements may involve known and unknown risks, uncertainties and
assumptions, and actual results may differ materially from those expressed in or
implied by such forward looking statements.
Factors
relating to the proposed MA transaction that could cause actual results to
differ materially include, but are not limited to: the announcement of, but
failure to close, the sale to MA, in which event performance of the Man Alive
business is likely to deteriorate further, including, but not limited to,
further declining sales and the loss of customers and employees. Factors that
could result in the failure of the proposed MA transaction to close include, but
are not limited to, the failure of either party to satisfy any of their
conditions to closing under the definitive agreement. In addition, the failure
of MA to discharge its post-closing liabilities under the leases it is assuming
from Man Alive or the failure of the Company to obtain all the consents of the
landlords to allow the assignment of the leases, could cause actual results of
the Company to differ materially since either such event could result in certain
liabilities remaining with the Company.
Other
factors that could cause results of the Company to differ materially include,
but are not limited to: changing consumer preferences; the Company’s inability
to successfully market its footwear, apparel, accessories and other merchandise;
price, product and other competition from other retailers (including internet
and direct manufacturer sales); the unavailability of products; the inability to
locate and obtain favorable lease terms for the Company’s stores; the loss of
key employees; the effect of economic conditions including conditions resulting
from the current turmoil in the financial services industry, depressed demand in
the housing market and unemployment rates; management of growth, the outcome of
litigation, and the other risks detailed in the Company’s Securities and
Exchange Commission filings.
The
Company undertakes no obligation to release publicly the results of any
revisions to these forward looking statements that may be made to reflect events
or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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The
Finish Line, Inc.
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Date:
June 22, 2009
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By:
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/s/
Edward W. Wilhelm |
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Edward
W. Wilhelm
Executive
Vice President – Chief Financial
Officer
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Exhibit Number
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Description of Exhibit
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Location
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2.1
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Asset
Purchase Agreement, dated June 21, 2009
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Attached
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99.1
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Press
Release issued June 22, 2009
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Attached
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