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, the failure of MA to discharge its post-closing liabilities under the leases it is assuming from Man Alive, which could cause actual results of the Company to differ materially since such event could result in certain liabilities remaining with the Company; 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 February 28, 2009 (fiscal 2009). 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
                                          May 30,        May 31,
                   Number of Stores:       2009           2008
                   Finish Line
                   Beginning of period         689           697
                   Opened                       -              4
                   Closed                       (5 )          (1 )

                   End of period               684           700

                   Man Alive
                   Beginning of period          85            94
                   Opened                       -             -
                   Closed                       (9 )          -

                   End of period                76            94

                   Total
                   Beginning of period         774           791
                   Opened                       -              4
                   Closed                      (14 )          (1 )

                   End of period               760           794

                                                 May 30,     May 31,
                                                  2009        2008
               Square feet information as of:
               Finish Line
               Square feet                      3,698,519   3,848,242
               Average store size                   5,407       5,497
               Man Alive
               Square feet                        262,448     326,407
               Average store size                   3,453       3,472
               Total
               Square feet                      3,960,967   4,174,649

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
                    Category     May 30, 2009         May 31, 2008
                                  (Unaudited)          (Unaudited)
                    Footwear    $ 226,891    85 %    $ 236,211    82 %
                    Softgoods      40,338    15 %       51,728    18 %

                    Total       $ 267,229   100 %    $ 287,939   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.

                                                               Thirteen Weeks Ended
                                                             May 30,           May 31,
                                                               2009             2008
                                                                    (Unaudited)
Net sales                                                       100.0 %          100.0 %
Cost of sales (including occupancy costs)                        71.1             71.1

Gross profit                                                     28.9             28.9
Selling, general and administrative expenses                     29.2             28.3

Operating (loss) income                                          (0.3 )            0.6
Interest income, net                                               -               0.1

(Loss) income from continuing operations before income
taxes                                                            (0.3 )            0.7
Income tax (benefit) expense                                     (0.1 )            0.4

(Loss) income from continuing operations                         (0.2 )            0.3
(Loss) income from discontinued operations, net of
income taxes                                                       -                -

Net (loss) income                                                (0.2 )%           0.3 %

Consolidated net sales decreased 7.2% to $267.2 million for the thirteen weeks ended May 30, 2009 from $287.9 million for the thirteen weeks ended May 31, 2008. The decrease was attributable to a comparable store net sales decrease of 5.5% for the thirteen weeks ended May 30, 2009 and reduced sales of $7.2 million from 39 closed stores along with down time and reduced square footage related to remodeled/relocated stores, partially offset by a $1.3 million increase from 5 new stores opened subsequent to May 31, 2008 and a $0.3 million increase in net sales from existing stores that were open only part of the thirteen weeks ended May 31, 2008. The 5.5% decrease in comparable store net sales was attributable to a 3.9% decrease for Finish Line stores and a 39.1% decrease for Man Alive stores. Comparable footwear net sales for the thirteen weeks ended May 30, 2009 decreased 2.6% while comparable softgoods net sales decreased 19.3% for the comparable period. The 19.3% decrease in comparable softgoods net sales was attributable to a 12.0% decrease in Finish Line comparable softgoods net sales and a 39.1% decrease in Man Alive comparable softgoods net sales. The 12.0% decrease in softgoods at Finish Line was primarily the result of management's plan to reduce softgoods inventory levels and focus on increasing inventory turns and the return on investment, which the Company achieved during the thirteen weeks ended May 30, 2009. The 39.1% decrease in comparable softgoods net sales at Man Alive was primarily a result of the Company's significant adjustment from an exclusive focus on urban apparel toward a focus on relative metropolitan street wear and a continued decrease in consumer spending due to the recent economic slowdown.

Consolidated gross profit for the thirteen weeks ended May 30, 2009 was $77.1 million, a decrease of $6.0 million (7.3%) from $83.1 million for the thirteen weeks ended May 31, 2008. Gross profit was 28.9% for both periods. Within gross profit, occupancy costs increased 0.3% as a percentage of net sales offset by a 0.2% decrease in inventory shrink and a 0.1% increase in product margin.

Consolidated selling, general and administrative expenses decreased by $3.4 million (4.2%) to $78.0 million (29.2% of net sales) for the thirteen weeks ended May 30, 2009 compared to $81.4 million (28.3% of net sales) for the thirteen weeks ended May 31, 2008. The 0.9% increase as a percentage of net sales is due to deleveraging from the 7.2% decrease in net sales.

Net interest income was $0.1 million for the thirteen-week period ended May 30, 2009 compared to $0.3 million for the thirteen weeks ended May 30, 2008. The decrease of $0.2 million was due to lower earned interest rates as invested balances were higher during the thirteen weeks ended May 30, 2009 compared to the thirteen weeks ended May 31, 2008.

The Company's income tax benefit was $0.2 million for the thirteen weeks ended May 30, 2009 compared to income tax expense of $1.1 million for the thirteen weeks ended May 31, 2008. The $1.3 million change was due to loss from continuing operations before income taxes of $0.8 million for the thirteen weeks ended May 30, 2009 compared to income from continuing operations before income taxes of $2.0 million for the thirteen weeks ended May 31, 2008. The effective tax rates for both periods were impacted by state tax expense recorded related to income tax contingencies pursuant to Financial Accounting Standards Board Interpretation No. 48, "Accounting for Income Taxes" and certain state tax rate changes.

Loss from continuing operations for the thirteen weeks ended May 30, 2009 was $0.6 million compared to income from continuing operations of $0.9 million for the thirteen weeks ended May 31, 2008. Loss from continuing operations per diluted share was $(0.01) for the thirteen weeks ended May 30, 2009 compared to income from continuing operations per diluted share of $0.02 for the thirteen weeks ended May 31, 2008. Diluted weighted average shares outstanding were 54.2 million and 53.9 million for the thirteen weeks ended May 30, 2009 and May 31, 2008, respectively.

The Company had net cash of $6.5 million provided by its operating activities during the thirteen weeks ended May 30, 2009 as compared to $28.4 million used in operating activities during the thirteen weeks ended May 31, 2008. Included in the $28.4 million for the thirteen weeks ended May 31, 2008 was $39.0 million paid for the cash portion of the Settlement Agreement (see Note 2 to the Consolidated Financial Statements). At May 30, 2009, the Company had cash and cash equivalents of $119.0 million and no interest bearing debt. Cash equivalents are primarily invested in short-term money market funds backed by U.S. Treasury and Government securities with daily liquidity.

Consolidated merchandise inventories were $241.6 million at May 30, 2009 compared to $239.4 million at February 28, 2009 and $281.2 million at May 31, 2008. On a comparable per square foot basis, consolidated merchandise inventories decreased 9.5% at May 30, 2009 compared to May 31, 2008, and were 2.9% higher than at February 28, 2009. The 9.5% decrease per square foot compared to May 31, 2008 is a result of management's plan to reduce inventory levels and increase inventory turns.

The Company's working capital was $281.4 million at May 30, 2009, which was a $2.2 million increase from $279.2 million at February 28, 2009.

The Company had net cash provided by investing activities of $12.6 million for the thirteen weeks ended May 30, 2009 compared to net cash used in investing activities of $4.6 million for the thirteen weeks ended May 31, 2008. The $12.6 million provided in the thirteen weeks ended May 30, 2009 was from $14.9 million in proceeds from the sale of marketable securities, partially offset by $2.3 million primarily used for remodeling existing stores.

For the year ending February 27, 2010, the Company intends to open approximately 4 to 6 Finish Line stores (none opened during the thirteen weeks ended May 30, 2009), as well as remodel approximately 5 to 8 existing Finish Line stores (3 remodeled during the thirteen weeks ended May 30, 2009). In addition, the Company has various other corporate capital and technology projects. The Company expects capital expenditures for the current fiscal year to approximate $13.0 to $16.0 million. Management believes that cash on hand, operating cash flow and the Company's existing $75.0 million unsecured committed Credit Agreement (the "Credit Agreement"), which expires on February 25, 2010, will provide sufficient capital to satisfy the Company's 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 and expects to be completed in the 4th quarter.

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 17, 2008, the Company's Board of Directors authorized a new stock repurchase program to repurchase up to 5,000,000 shares of the Company's outstanding Class A common stock. Under the stock repurchase program, the Company may purchase shares through December 31, 2011. The Company did not repurchase any shares under the new stock program during the thirteen weeks ended May 30, 2009.

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. In light of the Merger Agreement entered into with Genesco on June 17, 2007, the Company decided to suspend 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 declared dividends of $1.6 million during the thirteen weeks ended May 30, 2009. As of May 30, 2009, dividends declared but not paid of $1.6 million were accrued in "Other liabilities and accrued expenses" on the Consolidated Balance Sheets. Further declarations of dividends, if any, remain at the discretion of the Company's Board of Directors.

Subsequent Events

On June 21, 2009, the Company and its wholly owned subsidiary The Finish Line Man Alive, Inc. ("Man Alive") entered into a definitive agreement (the "Purchase Agreement") with Man Alive Acquisitions, LLC ("MA") an entity controlled by Jimmy Khezrie, the owner and operator of Jimmy Jazz stores, under which MA assumed 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 transaction closed on July 3, 2009 with an effective date of July 4, 2009.

Man Alive's net assets primarily consisted of property and equipment of $6.8 million, $6.8 million and $23.8 million and inventory of $5.9 million, $4.3 million and $10.0 million as of May 30, 2009, February 28, 2009 and May 31, 2008, respectively. Net sales were $8.1 million for the thirteen weeks ended May 30, 2009 compared to $14.9 million for the thirteen weeks ended May 31, 2008. Loss from continuing operations before income taxes was $3.9 million for the thirteen weeks ended May 30, 2009 compared to a loss from continuing operations before income taxes of $2.4 million for the thirteen weeks ended May 31, 2008.

The disposition of Man Alive will be accounted for as a discontinued operation in the second quarter ending August 29, 2009.

Contractual Obligations

The Company's contractual obligations primarily consist of long-term debt, operating leases, and purchase orders for merchandise inventory. For the thirteen weeks ended May 30, 2009, there were no significant changes to the Company's contractual obligations from those identified in the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 2009, other than those which occur in the normal course of business (primarily changes in the Company's merchandise inventory related to purchase obligations, which fluctuate throughout the year as a result of the seasonal nature of the Company's operations, and reduction of operating leases due to store closings).

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to adopt accounting policies related to estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, as well as the related disclosure of contingent assets and liabilities at the date of the financial statements. On an ongoing basis, management evaluates its accounting policies, estimates and judgments, including those related to inventories, long-lived assets and contingencies. Management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

There have been no material changes to the critical accounting policies and estimates disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 2009.