This quarterly report on Form 10-Q may contain certain statements that we believe are, or may be considered to be, "forward-looking" statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally can be identified by use of statements that include phrases such as "believe", "expect", "anticipate", "intend", "plan", "foresee", "may", "will", "estimates", "potential", "continue" or other similar words or phrases. Similarly, statements that describe our objectives, plans or goals also are forward-looking statements. All of these forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those contemplated by the relevant forward-looking statement. The principal risk factors that could cause actual performance and future actions to differ materially from the forward-looking statements include, but are not limited to, fluctuations in oil prices causing changes in gasoline and energy prices, resulting in changes in consumer spending and utility and product costs; product demand and market acceptance risks; the effect of economic conditions including conditions resulting from the current turmoil in the financial services industry and depressed demand in the housing market; the effect of competitive products and pricing; the availability of products; management of growth; and the other risks detailed in the Company's Securities and Exchange Commission filings. Readers are urged to consider these factors carefully in evaluating the forward-looking statements. The forward-looking statements included in this Form 10-Q are made only as of the date of this report and we undertake no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances.

General

The following discussion and analysis should be read in conjunction with Management's Discussion and Analysis of Financial Condition, including Critical Accounting Policies, included in the Company's Annual Report on Form 10-K for the year ended March 1, 2008 (fiscal 2008). Unless otherwise noted, all amounts reflect the results of the Company's continuing operations and therefore Paiva store information and results have been excluded from the following information.

The following table sets forth store and square feet information of the Company by brand for each of the following periods:

                             Thirteen Weeks Ended           Thirty-Nine Weeks Ended
                         November 29,     December 1,     November 29,     December 1,
   Number of Stores:         2008            2007             2008            2007
   Finish Line
   Beginning of period            697             697              697             690
   Opened                           3               7                9              18
   Closed                          (1 )            (3 )             (7 )            (7 )

   End of period                  699             701              699             701

   Man Alive
   Beginning of period             94              95               94              86
   Opened                          -                1               -               11
   Closed                          (1 )            -                (1 )            (1 )

   End of period                   93              96               93              96

   Total
   Beginning of period            791             792              791             776
   Opened                           3               8                9              29
   Closed                          (2 )            (3 )             (8 )            (8 )

   End of period                  792             797              792             797

                                             November 29,   December 1,
                                                 2008          2007
            Square feet information as of:
            Finish Line
            Square feet                         3,819,982     3,875,297
            Average store size                      5,465         5,528
            Man Alive
            Square feet                           321,194       331,909
            Average store size                      3,454         3,457
            Total
            Square feet                         4,141,176     4,207,206

Results of Operations

The following table sets forth net sales of the Company by major category for
each of the following periods (in thousands):



                                         Thirteen Weeks Ended
                              November 29, 2008        December 1, 2007
                 Category        (unaudited)              (unaudited)
                 Footwear    $     200,037     78 %   $     203,073    76 %
                 Softgoods          56,827     22 %          65,626    24 %

                 Total       $     256,864    100 %   $     268,699   100 %

                                       Thirty-Nine Weeks Ended
                              November 29, 2008        December 1, 2007
                 Category        (unaudited)              (unaudited)
                 Footwear    $     730,381     81 %   $     714,697    80 %
                 Softgoods         167,734     19 %         179,712    20 %

                 Total       $     898,115    100 %   $     894,409   100 %

The following table and subsequent discussion sets forth operating data of the Company as a percentage of net sales for the periods indicated below. All amounts reflect the results of the Company's continuing operations unless otherwise noted.

                                        Thirteen Weeks Ended                   Thirty-Nine Weeks Ended
                                  November 29,         December 1,         November 29,        December 1,
                                      2008                2007                 2008               2007
                                            (unaudited)                              (unaudited)
Net sales                                100.0 %             100.0 %              100.0 %            100.0 %
Cost of sales (including
occupancy costs)                          74.1                74.0                 71.0               72.2

Gross profit                              25.9                26.0                 29.0               27.8
Selling, general and
administrative expenses                   31.5                31.0                 28.0               28.4
Terminated merger-related
costs                                       -                  3.6                   -                 1.1

Operating (loss) income                   (5.6 )              (8.6 )                1.0               (1.7 )
Interest income, net                       0.1                 0.1                  0.1                0.1

(Loss) income from
continuing operations before
income taxes                              (5.5 )              (8.5 )                1.1               (1.6 )
Income tax (benefit) expense              (2.1 )              (3.4 )                0.5               (0.5 )

(Loss) income from
continuing operations                     (3.4 )%             (5.1 )%               0.6 %             (1.1 )%

THIRTEEN WEEKS ENDED NOVEMBER 29, 2008 COMPARED TO THIRTEEN WEEKS ENDED DECEMBER
1, 2007

Consolidated net sales decreased 4.4% to $256.9 million for the thirteen weeks ended November 29, 2008 from $268.7 million for the thirteen weeks ended December 1, 2007. This decrease in net sales was primarily attributable to a 3.6% decrease in comparable store net sales for the thirteen weeks ended November 29, 2008. The 3.6% decrease in comparable store net sales was attributable to a 3.3% decrease for Finish Line stores and a 6.8% decrease for Man Alive stores. Comparable footwear net sales for the thirteen weeks ended November 29, 2008 decreased 0.8% while comparable softgoods net sales decreased 12.2% for the comparable period. The 0.8% decrease in comparable footwear net sales was primarily a result of Man Alive exiting the footwear business at the beginning of the year as Finish Line increased 0.1%. The 12.2% decrease in comparable softgoods net sales was attributable to a 17.3% decrease in Finish Line comparable softgoods net sales partially offset by a 3.5% increase in Man Alive comparable softgoods net sales. The 3.5% increase in softgoods at Man Alive was primarily attributable to the transition in product assortment from hip-hop apparel to street wear offerings and a key item strategy including graphic t-shirts and a denim selection. In addition, by removing footwear sections from the selling space, Man Alive was able to offer more apparel than the prior year which assisted in improving their comparable softgoods net sales. Finish Line's decrease of 17.3% in softgoods is primarily the result of management's plan to reduce softgoods inventory levels and focus on increasing inventory turns and the return on investment.

Selling, general and administrative expenses were $81.1 million (31.5% of net sales) for the thirteen weeks ended November 29, 2008 compared to $83.3 million (31.0% of net sales) for the thirteen weeks ended December 1, 2007. The 0.5% increase as a percentage of net sales was due primarily to deleveraging as a result of the negative comparable store net sales. The $2.2 million decrease is primarily attributable to the Company's continued efforts to evaluate and reduce selling, general and administrative expenses including expense reductions in store freight, store wages, and depreciation.

Terminated merger-related costs were $23,000 for the thirteen weeks ended November 29, 2008 compared to $9.7 million (3.6% of net sales) for the thirteen weeks ended December 1, 2007. The $9.7 million consisted of legal and professional fees related to the terminated merger with Genesco.

Net interest income was $0.2 million (0.1% of net sales) for the thirteen-weeks ended November 29, 2008 and December 1, 2007.

The Company's provision for income taxes reflects a benefit of $5.5 million for the thirteen weeks ended November 29, 2008 compared to a benefit of $9.0 million for the thirteen weeks ended December 1, 2007. The $3.5 million change was due to a loss from continuing operations before income taxes of $14.3 million for the thirteen weeks ended November 29, 2008 compared to a loss from continuing operations of $22.8 million for the thirteen weeks ended December 1, 2007 along with a decrease in the effective tax rate to 38.2% for the thirteen weeks ended November 29, 2008 from 39.6% for the thirteen weeks ended December 1, 2007.

Loss from continuing operations for the thirteen weeks ended November 29, 2008 was $8.8 million compared to loss from continuing operations of $13.8 million for the thirteen weeks ended December 1, 2007. Loss from continuing operations per diluted share was $0.16 for the thirteen weeks ended November 29, 2008 compared to loss from continuing operations per diluted share of $0.29 for the thirteen weeks ended December 1, 2007. Diluted weighted average shares outstanding were 53.9 million and 47.2 million for the thirteen weeks ended November 29, 2008 and December 1, 2007, respectively. The 6.7 million increase in diluted weighted average shares outstanding is primarily related to the issuance of 6.5 million shares to Genesco on March 7, 2008 pursuant to the Settlement Agreement (see Note 2 to the Consolidated Financial Statements).

THIRTY-NINE WEEKS ENDED NOVEMBER 29, 2008 COMPARED TO THIRTY-NINE WEEKS ENDED
DECEMBER 1, 2007

Consolidated net sales increased 0.4% ($3.7 million) to $898.1 million for the thirty-nine weeks ended November 29, 2008 from $894.4 million for the thirty-nine weeks ended December 1, 2007. Of this increase, $3.6 million was attributable to sales from 9 stores that were not open during the thirty-nine weeks ended December 1, 2007, a $6.4 million increase in net sales from existing stores open only part of the thirty-nine weeks ended December 1, 2007, and a comparable store net sales increase of 1.1% for the thirty-nine weeks ended November 29, 2008. The consolidated net sales increase was partially offset by reduced sales from 14 closed stores since the thirty-nine weeks ended December 1, 2007 along with down time and reduced square footage related to remodeled/relocated stores. The 1.1% increase in comparable store net sales was attributable to a 1.4% increase for Finish Line stores partially offset by a 4.2% decrease for Man Alive stores. Comparable footwear net sales for the thirty-nine weeks ended November 29, 2008 increased 2.9% while comparable softgoods net sales decreased 6.2%. The 2.9% increase in comparable footwear net sales was primarily a result of a 7.6% increase in average selling price for footwear at Finish Line stores for the thirty-nine weeks ended November 29, 2008 offset partially by a 4.6% decrease in the footwear units sold during the thirty-nine weeks ended November 29, 2008 compared to the thirty-nine weeks ended December 1, 2007. The 6.2% decrease in comparable softgoods net sales was attributable to a 9.7% decrease in Finish Line comparable softgoods net sales offset partially by a 4.2% increase in Man Alive comparable softgoods net sales.

Selling, general and administrative expenses decreased $1.7 million to $251.7 million (28.0% of net sales) for the thirty-nine weeks ended November 29, 2008 from $253.4 million (28.4% of net sales) for the thirty-nine weeks ended December 1, 2007. The 0.4% decrease as a percentage of net sales was due primarily to a decrease in freight expense of 0.4% as a percentage of net sales as a result of leveraging due to the increase in comparable store net sales of 1.1% for the thirty-nine weeks ended November 29, 2008 as well as reduced inventory levels and continually reviewing and adjusting our logistics strategy.

Terminated merger-related costs were $0.1 million for the thirty-nine weeks ended November 29, 2008 compared to $9.9 million (1.1% of net sales) for the thirty-nine weeks ended December 1, 2007. The $9.9 million consisted of legal and professional fees related to the terminated merger with Genesco.

Net interest income was $0.7 million (0.1% of net sales) for the thirty-nine weeks ended November 29, 2008 compared to net interest income of $0.9 million (0.1% of net sales) for the thirty-nine weeks ended December 1, 2007, a decrease of $0.2 million (25.0%). This decrease was due to lower interest rates earned during the thirty-nine weeks ended November 29, 2008 compared to the thirty-nine weeks ended December 1, 2007.

The Company's income tax expense was $4.1 million and its effective tax rate was 43.6% for the thirty-nine weeks ended November 29, 2008 compared to a benefit of $4.6 million and effective tax rate of 32.8% for the thirty-nine weeks ended December 1, 2007. The $8.7 million change was due to the increase in effective tax rate along with income from continuing operations before income taxes of $9.3 million for the thirty-nine weeks ended November 29, 2008 compared to a loss from continuing operations before incomes taxes of $14.1 million for the thirty-nine weeks ended December 1, 2007. The change in effective tax rate relates to state tax expense recorded in the thirty-nine weeks ended November 29, 2008 related to income tax contingencies pursuant to Financial Accounting Standards Board Interpretation No. 48, "Accounting for Income Taxes" and certain state tax rate changes.

Income from continuing operations for the thirty-nine weeks ended November 29, 2008 was $5.2 million compared to loss from continuing operations of $9.5 million for the thirty-nine weeks ended December 1, 2007. Income from continuing operations per diluted share was $0.10 for the thirty-nine weeks ended November 29, 2008 compared to loss from continuing operations per diluted share of $0.20 for the thirty-nine weeks ended December 1, 2007. Diluted weighted average shares outstanding were 54.5 million and 47.2 million for the thirty-nine weeks ended November 29, 2008 and December 1, 2007, respectively. Diluted weighted average shares outstanding for the thirty-nine weeks ended November 29, 2008 includes the impact of the 6.5 million shares issued to Genesco related to the Settlement Agreement (see Note 2 to the Consolidated Financial Statements).

Liquidity and Capital Resources

The Company used $4.5 million of net cash in its operating activities during the thirty-nine weeks ended November 29, 2008 compared to $22.3 million used during the thirty-nine weeks ended December 1, 2007.

Consolidated merchandise inventories were $293.2 million at November 29, 2008 compared to $268.3 million at March 1, 2008 and $338.7 at December 1, 2007. On a comparable per square foot basis, consolidated merchandise inventories decreased 12.0% at November 29, 2008 compared to December 1, 2007 and were 10.4% higher than at March 1, 2008. The 12.0% decrease per square foot compared to December 1, 2007 is a result of management's plan to reduce inventory levels and increase inventory turns.

The Company's working capital was $250.6 million at November 29, 2008, which was a $15.9 million increase from $234.7 million at March 1, 2008.

The Company used net cash in its investing activities of $37.1 million for the thirty-nine weeks ended November 29, 2008 compared to net cash used in investing activities of $25.1 million for the thirty-nine weeks ended December 1, 2007. The $37.1 million used in the thirty-nine weeks ended November 29, 2008 was the result of capital expenditures of $13.1 million and $24.9 million of purchases of short-term investments.

To date, for the year ending February 28, 2009, the Company has opened nine Finish Line stores and remodeled 15 existing Finish Line stores. The Company has not opened any new Man Alive stores or remodeled any existing Man Alive stores this fiscal year. The Company has closed seven Finish Line stores and one Man Alive store during the first three quarters and expects to close another 10-15 stores in the fourth quarter between both concepts. There are no planned remodels or additional new stores to be opened for either Finish Line or Man Alive for the remainder of the fiscal year. In addition, the Company has various other corporate capital and technology projects. The Company expects capital expenditures for the current fiscal year to approximate $15.0 to $17.0 million. In fiscal 2010, the Company currently plans to open 10-15 new Finish Line stores and no new Man Alive stores. The Company also currently plans to remodel 15-20 Finish Line stores and 4 Man Alive stores. The Company would also expect to close between 10-15 Finish Line stores and 5-10 Man Alive stores. Management believes that cash on hand, short-term investments, operating cash flow and the Company's existing $75.0 million bank facility, which expires on February 25, 2010, will provide sufficient capital to complete the Company's current store expansion program and to satisfy the Company's working capital requirements in the foreseeable future.

Pursuant to the Settlement Agreement entered into with UBS and Genesco (see Note 2 to the Consolidated Financial Statements), the Company issued 6,518,971 shares of the Company's Class A Common Stock (the "Shares") to Genesco on March 7, 2008. The Company filed a registration statement relating to the Shares with the Securities and Exchange Commission on April 4, 2008, which was declared effective on April 28, 2008. Genesco distributed the Shares to Genesco shareholders on June 13, 2008.

On July 22, 2004, the Company's Board of Directors instituted a quarterly cash dividend program of $0.025 per share of Class A and Class B Common Stock. The Company suspended future quarterly dividends beginning with the thirteen weeks ended September 1, 2007 until further notice. On July 17, 2008, the Company's Board of Directors reinstated the quarterly cash dividend program with a 20% increase to $0.03 per share of Class A and Class B common stock. The Company has declared dividends of $3,291,000 during the thirty-nine weeks ended November 29, 2008. A cash dividend of $1,645,000 was paid on December 15, 2008 to shareholders of record on November 28, 2008 and was accrued at November 29, 2008 in "Other liabilities and accrued expenses."

On July 17, 2008, the Company's Board of Directors authorized a new stock repurchase program to repurchase up to 5 million shares of the Company's Class A common stock, or approximately 9% of the aggregate Class A and Class B common stock outstanding. Under the stock repurchase program, the Company may purchase shares through December 31, 2011. The Company believes that adoption of the repurchase program could be a viable use of excess cash. Such purchases, if any, will occur from time to time, as market conditions warrant and as the Company deems appropriate when judged against other alternative uses of cash. The Company did not purchase any shares under the new stock repurchase program during the thirteen and thirty-nine weeks ended November 29, 2008.

Discontinued Operations of Paiva

On August 27, 2007, the Board of Directors of the Company approved management's recommendation to proceed with the closure of the Company's Paiva stores. The decision to take this action resulted from a thorough assessment and analysis, which revealed the concept was not demonstrating the potential necessary to deliver an acceptable long-term return on investment. The Company closed all 15 Paiva stores and online business during the thirteen weeks ended December 1, 2007. The results of operations of Paiva have been classified in discontinued operations for all periods presented. The financial results of the Paiva operations, which are included in discontinued operations in the accompanying Consolidated Statements of Operations, were as follows (in thousands):

                                             Thirteen Weeks Ended                   Thirty-Nine Weeks Ended
                                       November 29,       December 1,          November 29,          December 1,
                                           2008               2007                 2008                  2007
                                                 (unaudited)                              (unaudited)
Net sales                              $          -      $        1,642       $           -         $        7,230

Loss from discontinued operations      $          -      $       (3,594 )     $         (202 )      $      (20,285 )
Income tax benefit                                -              (1,405 )                (79 )              (8,122 )

Loss from discontinued operations,
net of income tax                      $          -      $       (2,189 )     $         (123 )      $      (12,163 )

Based on the Company's current estimates as of November 29, 2008, future lease payments, including estimated lease termination payments, and repayment of unamortized construction allowances are expected to result in a total cash outlay of approximately $0.1 million each. Unamortized construction allowances are included within "Deferred credits from landlords." The Company anticipates that all cash payments will occur within the next 4 months.

The balance and net activity for the estimated future lease payments, including estimated lease termination payments, which are included within "Other liabilities and accrued expenses," are as follows (in thousands):

                                                  Lease Reserve
                                                   (unaudited)
                  Balance at March 1, 2008       $         1,574
                  Provision                                  194
                  Cash payments                           (1,668 )

                  Balance at November 29, 2008   $           100

Contractual Obligations

The Company's contractual obligations primarily consist of long-term debt, operating leases and purchase orders for merchandise inventory. There have been no significant changes to the Company's contractual obligations identified in the Company's Annual Report on Form 10-K for the fiscal year ended March 1, . . .