SECURITIES AND EXCHANGE
COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q





(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended August 28, 2010

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission File number 0-20184





The Finish Line, Inc.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Indiana                                                        |  | 35-1537210                             
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
identification number)



|                                                  |  |           
|------------------------------------------------- |  | ----------
|3308 North Mitthoeffer Road Indianapolis, Indiana |  | 46235     
|(Address of principal executive offices)          |  | (zip code)

317-899-1022

(Registrants telephone number, including area code)



(Former name, former address and former fiscal year, if changed
since last report.)





Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No   ̈

Indicate by check mark whether registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Securities Exchange Act of 1934.



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  | x
|                        |  |                                                  | 
|Non-accelerated filer   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

Shares of common stock outstanding at September 17, 2010:



|        |  |           
|------- |  | ----------
|Class A |  | 51,371,304
|Class B |  | 1,945,529 









---

PART 1. FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

THE FINISH LINE, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)



|                                  |  |                |  |                |  |                 
|--------------------------------- |  | -------------- |  | -------------- |  | ----------------
|                                  |  | August 28,2010 |  | August 29,2009 |  | February 27,2010
|                                  |  | (unaudited)    |  | (unaudited)    |  |                 
|ASSETS                            |  |                |  |                |  |                 
|CURRENT ASSETS:                   |  |                |  |                |  |                 
|Cash and cash equivalents         |  | $253,703       |  | $142,926       |  | $234,508        
|Accounts receivable, net          |  | 4,961          |  | 4,651          |  | 3,767           
|Merchandise inventories, net      |  | 217,040        |  | 221,365        |  | 190,894         
|Income taxes receivable           |  | 6,648          |  | 14,453         |  |                
|Other                             |  | 5,080          |  | 8,696          |  | 14,438          
|                                  |  |                |  |                |  |                 
|Total current assets              |  | 487,432        |  | 392,091        |  | 443,607         
|                                  |  |                | 
|PROPERTY AND EQUIPMENT:           |  |                |  |                |  |                 
|Land                              |  | 1,557          |  | 1,557          |  | 1,557           
|Building                          |  | 41,620         |  | 41,616         |  | 41,620          
|Leasehold improvements            |  | 226,682        |  | 238,876        |  | 225,718         
|Furniture, fixtures and equipment |  | 107,845        |  | 107,895        |  | 104,295         
|Construction in progress          |  | 1,760          |  | 1,302          |  | 2,635           
|                                  |  |                |  |                |  |                 
|                                  |  | 379,464        |  | 391,246        |  | 375,825         
|Less accumulated depreciation     |  | 250,752        |  | 238,407        |  | 239,882         
|                                  |  |                |  |                |  |                 
|                                  |  | 128,712        |  | 152,839        |  | 135,943         
|                                  |  |                | 
|Deferred income taxes             |  | 26,710         |  | 30,549         |  | 27,357          
|Other assets, net                 |  | 4,329          |  | 1,682          |  | 3,361           
|                                  |  |                |  |                |  |                 
|Total assets                      |  | $647,183       |  | $577,161       |  | $610,268        
|                                  |  |                |  |                |  |                 

See accompanying notes.



---

THE FINISH LINE, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)



|                                                                                                              |  |                |   |  |                |   |  |                  |  
|------------------------------------------------------------------------------------------------------------- |  | -------------- | - |  | -------------- | - |  | ---------------- | -
|                                                                                                              |  | August 28,2010 |   |  | August 29,2009 |   |  | February 27,2010 |  
|                                                                                                              |  | (unaudited)    |   |  | (unaudited)    |   |  |                  |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                          |  |                |   |  |                |   |  |                  |  
|CURRENT LIABILITIES:                                                                                          |  |                |   |  |                |   |  |                  |  
|Accounts payable                                                                                              |  | $  97,159      |   |  | $  53,494      |   |  | $  60,301        |  
|Employee compensation                                                                                         |  | 11,672         |   |  | 10,217         |   |  | 16,258           |  
|Accrued property and sales tax                                                                                |  | 7,682          |   |  | 8,306          |   |  | 7,637            |  
|Income taxes payable                                                                                          |  |               |   |  |               |   |  | 10,119           |  
|Deferred income taxes                                                                                         |  | 4,908          |   |  | 5,819          |   |  | 4,370            |  
|Other liabilities and accrued expenses                                                                        |  | 15,271         |   |  | 18,895         |   |  | 16,258           |  
|                                                                                                              |  |                |   |  |                |   |  |                  |  
|Total current liabilities                                                                                     |  | 136,692        |   |  | 96,731         |   |  | 114,943          |  
|                                                                                                              |  |                |  
|Deferred credits from landlords                                                                               |  | 37,937         |   |  | 43,661         |   |  | 40,006           |  
|Other long-term liabilities                                                                                   |  | 13,820         |   |  | 15,109         |   |  | 13,169           |  
|                                                                                                              |  |                |  
|SHAREHOLDERS EQUITY:                                                                                         |  |                |   |  |                |   |  |                  |  
|Preferred stock, $.01 par value; 1,000 shares authorized; none issued                                         |  |               |   |  |               |   |  |                 |  
|Common stock, $.01 par value                                                                                  |  |                |   |  |                |   |  |                  |  
|Class A:                                                                                                      |  |                |   |  |                |   |  |                  |  
|Shares authorized  100,000                                                                                   |  |                |   |  |                |   |  |                  |  
|Shares issued  (August 28, 2010  57,597; August 29, 2009  56,712; February 27, 2010  57,256)              |  |                |   |  |                |   |  |                  |  
|Shares outstanding  (August 28, 2010  50,816; August 29, 2009  51,737; February 27, 2010
 51,085)         |  | 576            |   |  | 567            |   |  | 572              |  
|Class B:                                                                                                      |  |                |   |  |                |   |  |                  |  
|Shares authorized  10,000                                                                                    |  |                |   |  |                |   |  |                  |  
|Shares issued and outstanding  (August 28, 2010  1,750; August 29, 2009 
2,597; February 27, 2010  2,053) |  | 18             |   |  | 26             |   |  | 21               |  
|Additional paid-in capital                                                                                    |  | 193,669        |   |  | 187,435        |   |  | 189,664          |  
|Retained earnings                                                                                             |  | 338,460        |   |  | 278,970        |   |  | 312,305          |  
|Treasury stock  (August 28, 2010  6,781; August 29, 2009  4,975; February 27,2010 
6,171)                 |  | (73,989        | ) |  | (45,338        | ) |  | (60,412          | )
|                                                                                                              |  |                |   |  |                |   |  |                  |  
|Total shareholders equity                                                                                    |  | 458,734        |   |  | 421,660        |   |  | 442,150          |  
|                                                                                                              |  |                |   |  |                |   |  |                  |  
|Total liabilities and shareholders equity                                                                    |  | $647,183       |   |  | $577,161       |   |  | $610,268         |  
|                                                                                                              |  |                |   |  |                |   |  |                  |  

See accompanying notes.



---

THE FINISH LINE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)



|                                                                |  |                      |         |                |                        |         |                |  |   |                |   |  |   |         |  
|--------------------------------------------------------------- |  | -------------------- | ------- | -------------- | ---------------------- | ------- | -------------- |  | - | -------------- | - |  | - | ------- | -
|                                                                |  | Thirteen Weeks Ended |         |                | Twenty-Six Weeks Ended |        
|                                                                |  | August 28,2010       |         | August 29,2009 |                        |         | August 28,2010 |  |   | August 29,2009 |  
|Net sales                                                       |  | $                    | 301,070 |                | $                      | 298,733 |                |  | $ | 583,468        |   |  | $ | 557,829 |  
|Cost of sales (including occupancy costs)                       |  |                      | 201,301 |                |                        | 203,364 |                |  |   | 389,729        |   |  |   | 386,085 |  
|                                                                |  |                      |         |                |                        |         |                |  |   |                |   |  |   |         |  
|Gross profit                                                    |  |                      | 99,769  |                |                        | 95,369  |                |  |   | 193,739        |   |  |   | 171,744 |  
|Selling, general and administrative expenses                    |  |                      | 72,778  |                |                        | 75,260  |                |  |   | 144,557        |   |  |   | 148,414 |  
|Store closing costs                                             |  |                      |        |                |                        | 1,381   |                |  |   |               |   |  |   | 1,612   |  
|                                                                |  |                      |         |                |                        |         |                |  |   |                |   |  |   |         |  
|Operating income                                                |  |                      | 26,991  |                |                        | 18,728  |                |  |   | 49,182         |   |  |   | 21,718  |  
|Interest income, net                                            |  |                      | 155     |                |                        | 108     |                |  |   | 219            |   |  |   | 211     |  
|                                                                |  |                      |         |                |                        |         |                |  |   |                |   |  |   |         |  
|Income from continuing operations before income taxes           |  |                      | 27,146  |                |                        | 18,836  |                |  |   | 49,401         |   |  |   | 21,929  |  
|Income tax expense                                              |  |                      | 10,342  |                |                        | 7,088   |                |  |   | 18,928         |   |  |   | 8,422   |  
|                                                                |  |                      |         |                |                        |         |                |  |   |                |   |  |   |         |  
|Income from continuing operations                               |  |                      | 16,804  |                |                        | 11,748  |                |  |   | 30,473         |   |  |   | 13,507  |  
|Income (loss) from discontinued operations, net of income taxes |  |                      | 10      |                |                        | (12,622 | )              |  |   | (13            | ) |  |   | (14,989 | )
|                                                                |  |                      |         |                |                        |         |                |  |   |                |   |  |   |         |  
|Net income (loss)                                               |  | $                    | 16,814  |                | $                      | (874    | )              |  | $ | 30,460         |   |  | $ | (1,482  | )
|                                                                |  |                      |         |                |                        |         |                |  |   |                |   |  |   |         |  
|Income (loss) per basic share:                                  |  |                      |         |                |                        |         |                |  |   |                |   |  |   |         |  
|Income from continuing operations                               |  | $                    | 0.31    |                | $                      | 0.21    |                |  | $ | 0.56           |   |  | $ | 0.24    |  
|Loss from discontinued operations                               |  |                      |        |                |                        | (0.23   | )              |  |   |               |   |  |   | (0.27   | )
|                                                                |  |                      |         |                |                        |         |                |  |   |                |   |  |   |         |  
|Net income (loss)                                               |  | $                    | 0.31    |                | $                      | (0.02   | )              |  | $ | 0.56           |   |  | $ | (0.03   | )
|                                                                |  |                      |         |                |                        |         |                |  |   |                |   |  |   |         |  
|Basic weighted average shares                                   |  |                      | 53,266  |                |                        | 54,271  |                |  |   | 53,370         |   |  |   | 54,212  |  
|                                                                |  |                      |         |                |                        |         |                |  |   |                |   |  |   |         |  
|Income (loss) per diluted share:                                |  |                      |         |                |                        |         |                |  |   |                |   |  |   |         |  
|Income from continuing operations                               |  | $                    | 0.31    |                | $                      | 0.21    |                |  | $ | 0.56           |   |  | $ | 0.24    |  
|Loss from discontinued operations                               |  |                      |        |                |                        | (0.23   | )              |  |   |               |   |  |   | (0.27   | )
|                                                                |  |                      |         |                |                        |         |                |  |   |                |   |  |   |         |  
|Net income (loss)                                               |  | $                    | 0.31    |                | $                      | (0.02   | )              |  | $ | 0.56           |   |  | $ | (0.03   | )
|                                                                |  |                      |         |                |                        |         |                |  |   |                |   |  |   |         |  
|Diluted weighted average shares                                 |  |                      | 53,986  |                |                        | 54,560  |                |  |   | 54,141         |   |  |   | 54,484  |  
|                                                                |  |                      |         |                |                        |         |                |  |   |                |   |  |   |         |  
|Dividends declared per share                                    |  | $                    | 0.04    |                | $                      | 0.03    |                |  | $ | 0.08           |   |  | $ | 0.06    |  
|                                                                |  |                      |         |                |                        |         |                |  |   |                |   |  |   |         |  

See accompanying notes.



---

THE FINISH LINE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) - (Unaudited)



|                                                                                         |  |                        |         |   |                |   |         |  
|---------------------------------------------------------------------------------------- |  | ---------------------- | ------- | - | -------------- | - | ------- | -
|                                                                                         |  | Twenty-Six Weeks Ended |        
|                                                                                         |  | August 28,2010         |         |   | August 29,2009 |  
|OPERATING ACTIVITIES:                                                                    |  |                        |         |   |                |   |         |  
|Net income (loss)                                                                        |  | $                      | 30,460  |   |                | $ | (1,482  | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                        |         |   |                |   |         |  
|Loss on sale of discontinued operations                                                  |  |                        |        |   |                |   | 18,364  |  
|Depreciation and amortization                                                            |  |                        | 13,255  |   |                |   | 15,974  |  
|Deferred income taxes                                                                    |  |                        | 1,185   |   |                |   | 5,347   |  
|Share-based compensation                                                                 |  |                        | 1,860   |   |                |   | 1,708   |  
|(Gain) loss on disposal of property and equipment                                        |  |                        | (32     | ) |                |   | 1,949   |  
|Excess tax benefits from share-based compensation                                        |  |                        | (1,032  | ) |                |   | (110    | )
|Changes in operating assets and liabilities:                                             |  |                        |         |   |                |   |         |  
|Accounts receivable, net                                                                 |  |                        | (1,194  | ) |                |   | 279     |  
|Merchandise inventories, net                                                             |  |                        | (26,146 | ) |                |   | 11,603  |  
|Other assets                                                                             |  |                        | 9,732   |   |                |   | 9,589   |  
|Accounts payable                                                                         |  |                        | 36,858  |   |                |   | (10,975 | )
|Employee compensation                                                                    |  |                        | (4,586  | ) |                |   | (2,690  | )
|Income taxes                                                                             |  |                        | (15,807 | ) |                |   | (6,355  | )
|Other liabilities and accrued expenses                                                   |  |                        | (176    | ) |                |   | 594     |  
|Deferred credits from landlords                                                          |  |                        | (2,069  | ) |                |   | (2,402  | )
|                                                                                         |  |                        |         |   |                |   |         |  
|Net cash provided by operating activities                                                |  |                        | 42,308  |   |                |   | 41,393  |  
|                                                                                         |  |                       
|INVESTING ACTIVITIES:                                                                    |  |                        |         |   |                |   |         |  
|Payments for sale of discontinued operations                                             |  |                        | (667    | ) |                |   | (7,643  | )
|Additions to property and equipment                                                      |  |                        | (6,035  | ) |                |   | (4,357  | )
|Proceeds from disposals of property and equipment                                        |  |                        | 52      |   |                |   | 69      |  
|Proceeds from sale of marketable securities                                              |  |                        |        |   |                |   | 14,913  |  
|                                                                                         |  |                        |         |   |                |   |         |  
|Net cash (used in) provided by investing activities                                      |  |                        | (6,650  | ) |                |   | 2,982   |  
|                                                                                         |  |                       
|FINANCING ACTIVITIES:                                                                    |  |                        |         |   |                |   |         |  
|Dividends paid to shareholders                                                           |  |                        | (4,334  | ) |                |   | (3,293  | )
|Proceeds from issuance of common stock                                                   |  |                        | 2,639   |   |                |   | 772     |  
|Excess tax benefits from share-based compensation                                        |  |                        | 1,032   |   |                |   | 110     |  
|Purchase of treasury stock                                                               |  |                        | (15,800 | ) |                |   |        |  
|                                                                                         |  |                        |         |   |                |   |         |  
|Net cash used in financing activities                                                    |  |                        | (16,463 | ) |                |   | (2,411  | )
|                                                                                         |  |                        |         |   |                |   |         |  
|Net increase in cash and cash equivalents                                                |  |                        | 19,195  |   |                |   | 41,964  |  
|Cash and cash equivalents at beginning of period                                         |  |                        | 234,508 |   |                |   | 100,962 |  
|                                                                                         |  |                        |         |   |                |   |         |  
|Cash and cash equivalents at end of period                                               |  | $                      | 253,703 |   |                | $ | 142,926 |  
|                                                                                         |  |                        |         |   |                |   |         |  

See accompanying notes.



---

THE FINISH LINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.
Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements of The Finish Line, Inc., along with its wholly-owned subsidiaries,
(collectively, the Company) have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. Preparation of the financial statements requires management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair
presentation, have been included.

The Company has experienced, and expects to continue to experience, significant variability
in sales and net income (loss) from reporting period to reporting period. Therefore, the results of the interim periods presented herein are not necessarily indicative of the results to be expected for any other interim period or the full year.

These financial statements should be read in conjunction with the financial statements and notes thereto contained in the
Companys Annual Report on Form 10-K for the year ended February 27, 2010 (fiscal 2010).



---

2. Discontinued Operations

Man Alive

On June 21, 2009, The Finish Line, Inc. and its wholly owned subsidiary The Finish Line Man Alive, Inc. (Man Alive)
entered into a definitive asset purchase agreement (the Purchase Agreement) with Man Alive Acquisitions, LLC (the Buyer), under which the Buyer assumed certain assets and liabilities of Man Alive. The transaction closed
on July 3, 2009 with an effective date of July 4, 2009.

For the thirteen weeks ended August 29, 2009, the loss
from discontinued operations of Man Alive included operating losses of $1.7 million as well as $18.4 million related to the loss on the sale of Man Alive. The $18.4 million was made up of the $7.7 million Purchase Price Rebate, $7.6 million
inventory write-off, $6.7 million property and equipment write-off, and $2.3 million in other charges, partially offset by the reversal of Deferred credits from landlords of $5.9 million.

For the twenty-six weeks ended August 29, 2009, the loss from discontinued operations of Man Alive included operating losses of $5.6
million as well as $18.4 million related to the loss on sale of Man Alive.

The financial results of the Man Alive operations,
which are included in discontinued operations in the accompanying Consolidated Statements of Operations, were as follows (in thousands):



|                                                              |  |                      |    |                |                        |         |                |  |   |                |   |  |   |         |  
|------------------------------------------------------------- |  | -------------------- | -- | -------------- | ---------------------- | ------- | -------------- |  | - | -------------- | - |  | - | ------- | -
|                                                              |  | Thirteen Weeks Ended |    |                | Twenty-Six Weeks Ended |        
|                                                              |  | August 28,2010       |    | August 29,2009 |                        |         | August 28,2010 |  |   | August 29,2009 |  
|                                                              |  | (unaudited)          |    |                | (unaudited)            |        
|Net sales                                                     |  | $                    |   |                | $                      | 2,791   |                |  | $ |               |   |  | $ | 10,925  |  
|                                                              |  |                      |    |                |                        |         |                |  |   |                |   |  |   |         |  
|Income (loss) from discontinued operations                    |  | $                    | 10 |                | $                      | (20,073 | )              |  | $ | (27            | ) |  | $ | (23,991 | )
|Income tax expense (benefit)                                  |  |                      | 4  |                |                        | (7,453  | )              |  |   | (10            | ) |  |   | (9,004  | )
|                                                              |  |                      |    |                |                        |         |                |  |   |                |   |  |   |         |  
|Income (loss) from discontinued operations, net of income tax |  | $                    | 6  |                | $                      | (12,620 | )              |  | $ | (17            | ) |  | $ | (14,987 | )
|                                                              |  |                      |    |                |                        |         |                |  |   |                |   |  |   |         |  

Based on the Purchase Agreement with the Buyer, all cash outlays related to deferred payments to Man Alive
were made by July 2010. The balance and net activity for the $2.0 million installment payment to the Buyer were as follows (in thousands):



|                             |  |                     |        |  
|---------------------------- |  | ------------------- | ------ | -
|                             |  | Installment Payment |       
|                             |  | (unaudited)         |       
|Balance at February 28, 2009 |  | $                   |       |  
|Provision (Fiscal 2010)      |  |                     | 2,000  |  
|Cash payments (Fiscal 2010)  |  |                     | (1,333 | )
|                             |  |                     |        |  
|Balance at February 27, 2010 |  |                     | 667    |  
|Cash payments (Fiscal 2011)  |  |                     | (667   | )
|                             |  |                     |        |  
|Balance at August 28, 2010   |  | $                   |       |  
|                             |  |                     |        |  



---

3. Fair Value Measurements

Fair value measurements are determined based upon the exit price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants exclusive of any transaction costs. The Company utilizes a fair value hierarchy based upon the observability of inputs used in valuation techniques as follows:



| |  |          |  |                                                                                                                                   
| |  | -------- |  | ----------------------------------------------------------------------------------------------------------------------------------
| |  | Level 1: |  | Observable inputs such as quoted prices in active markets;                                                                        
| |  |         
| |  | Level 2: |  | Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and                        
| |  |         
| |  | Level 3: |  | Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company has cash equivalents in short-term money market funds invested primarily in high-quality tax-exempt municipal instruments.
The primary objective of our short-term investment activity is to preserve our capital for the purpose of funding operations and we do not enter into short-term investments for trading or speculative purposes. The fair values are based on unadjusted
quoted market prices for the funds in active markets with sufficient volume and frequency (Level 1). Also included in Level 1 assets are mutual fund investments under the non-qualified deferred compensation plan. The Company estimates the fair value
of these investments on a recurring basis using market prices that are readily available.

As of August 28, 2010, the
Company had no non-financial assets or non-financial liabilities requiring measurement at fair value.

4. Recent Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update
(ASU) 2010-06, which amends Accounting Standards Codification (ASC) 820-10, Fair Value Measurement and Disclosures, and requires new disclosures surrounding certain fair value measurements. ASU 2010-06 is
effective for the first interim or annual reporting period beginning on or after December 15, 2009, except for certain disclosures about purchases, sales, issuances and settlements in the rollforward of activity in Level 3 fair value
measurements, which are effective for the first interim and annual reporting periods beginning on or after December 15, 2010. The adoption of ASU 2010-06 did not have a material effect on the Companys consolidated financial statements.

Other recent ASUs issued by the FASB and guidance issued by the Securities and Exchange Commission did not, or are not
believed by management to, have a material effect on the Companys present or future consolidated financial statements.

5. Common
Stock

On January 21, 2010, the Companys Board of Directors increased its quarterly cash dividend from $0.03 per
share to $0.04 per share of its Class A and Class B common stock. The Company declared dividends of $4,304,000 during the twenty-six weeks ended August 28, 2010. A cash dividend of $2,130,000 was paid on September 13, 2010 to
shareholders of record on August 27, 2010 and was accrued as of August 28, 2010 in Other liabilities and accrued expenses. Further declarations of dividends, if any, remain at the discretion of the Companys Board of
Directors.

On July 17, 2008, the Companys Board of Directors authorized a stock repurchase program to repurchase
up to 5,000,000 shares of the Companys Class A common stock outstanding through December 31, 2011. The Company purchased 1,176,929 shares under the stock repurchase program at an average price of $13.42 per share for an aggregate
amount of $15,800,000 during the twenty-six weeks ended August 28, 2010. The remaining shares available for repurchase under the stock repurchase program are 2,433,358 shares as of August 28, 2010. The treasury shares may be issued upon
the exercise of employee stock options, issuance of shares for the Employee Stock Purchase Plan, issuance of restricted stock, or for other corporate purposes. Further 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.



---

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

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 Companys reliance on a few key vendors for a majority of its merchandise purchases (including a significant portion from one key vendor); the availability and timely receipt of products;
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; further deterioration of economic and business conditions;
the inability to locate and obtain acceptable lease terms for the Companys stores; the effect of competitive products and pricings; loss of key employees; management of strategic growth initiatives; 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
and Results of Operations, including Critical Accounting Policies, included in the Companys Annual Report on Form 10-K for the year ended February 27, 2010 (fiscal 2010). Unless otherwise noted, all amounts reflect the
results of the Companys continuing operations, and therefore, Man Alive and 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 for each of the following periods:



|                               |  |                      |   |  |                        |   |  |                |   |  |                |  
|------------------------------ |  | -------------------- | - |  | ---------------------- | - |  | -------------- | - |  | -------------- | -
|                               |  | Thirteen Weeks Ended |   |  | Twenty-Six Weeks Ended |  
|                               |  | August 28,2010       |   |  | August 29,2009         |   |  | August 28,2010 |   |  | August 29,2009 |  
|Number of Stores:              |  |                      |   |  |                        |   |  |                |   |  |                |  
|Beginning of period            |  | 667                  |   |  | 684                    |   |  | 666            |   |  | 689            |  
|Opened                         |  | 3                    |   |  | 1                      |   |  | 7              |   |  | 1              |  
|Closed                         |  | (3                   | ) |  | (4                     | ) |  | (6             | ) |  | (9             | )
|                               |  |                      |   |  |                        |   |  |                |   |  |                |  
|End of period                  |  | 667                  |   |  | 681                    |   |  | 667            |   |  | 681            |  
|                               |  |                      |   |  |                        |   |  |                |   |  |                |  
|                               |  |                      |   | 
|                               |  |                      |   |  |                        |   |  | August 28,2010 |   |  | August 29,2009 |  
|Square feet information as of: |  |                      |   |  |                        |   |  |                |   |  |                |  
|Square feet                    |  |                      |   |  |                        |   |  | 3,580,313      |   |  | 3,674,694      |  
|Average store size             |  |                      |   |  |                        |   |  | 5,368          |   |  | 5,396          |  



---

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 (Unaudited)   |        
|Category  |  | August 28,2010                     |         |  | August 29,2009 |  
|Footwear  |  | $                                  | 262,054 |  | 87             | % |  | $ | 259,965 |  | 87  | %
|Softgoods |  |                                    | 39,016  |  | 13             | % |  |   | 38,768  |  | 13  | %
|          |  |                                    |         |  |                |   |  |   |         |  |     |  
|Total     |  | $                                  | 301,070 |  | 100            | % |  | $ | 298,733 |  | 100 | %
|          |  |                                    |         |  |                |   |  |   |         |  |     |  
|          | 
|          |  | Twenty-Six Weeks Ended (Unaudited) |        
|Category  |  | August 28,2010                     |         |  | August 29,2009 |  
|Footwear  |  | $                                  | 511,936 |  | 88             | % |  | $ | 486,857 |  | 87  | %
|Softgoods |  |                                    | 71,532  |  | 12             | % |  |   | 70,972  |  | 13  | %
|          |  |                                    |         |  |                |   |  |   |         |  |     |  
|Total     |  | $                                  | 583,468 |  | 100            | % |  | $ | 557,829 |  | 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 |   |  | Twenty-Six Weeks Ended |   
|                                                       |  | August 28,2010       |   |  | August 29,2009         |    |  | August 28,2010 |   |  | August 29,2009 |   
|                                                       |  | (unaudited)          |   |  | (unaudited)            |   
|Net sales                                              |  | 100.0                | % |  | 100.0                  | %  |  | 100.0          | % |  | 100.0          | % 
|Cost of sales (including occupancy costs)              |  | 66.9                 |   |  | 68.1                   |    |  | 66.8           |   |  | 69.2           |   
|                                                       |  |                      |   |  |                        |    |  |                |   |  |                |   
|Gross profit                                           |  | 33.1                 |   |  | 31.9                   |    |  | 33.2           |   |  | 30.8           |   
|Selling, general and administrative expenses           |  | 24.2                 |   |  | 25.2                   |    |  | 24.8           |   |  | 26.6           |   
|Store closing costs                                    |  |                     |   |  | 0.4                    |    |  |               |   |  | 0.3            |   
|                                                       |  |                      |   |  |                        |    |  |                |   |  |                |   
|Operating income                                       |  | 8.9                  |   |  | 6.3                    |    |  | 8.4            |   |  | 3.9            |   
|Interest income, net                                   |  | 0.1                  |   |  |                       |    |  |               |   |  |               |   
|                                                       |  |                      |   |  |                        |    |  |                |   |  |                |   
|Income from continuing operations before income taxes  |  | 9.0                  |   |  | 6.3                    |    |  | 8.4            |   |  | 3.9            |   
|Income tax expense                                     |  | 3.4                  |   |  | 2.4                    |    |  | 3.2            |   |  | 1.5            |   
|                                                       |  |                      |   |  |                        |    |  |                |   |  |                |   
|Income from continuing operations                      |  | 5.6                  |   |  | 3.9                    |    |  | 5.2            |   |  | 2.4            |   
|Loss from discontinued operations, net of income taxes |  |                     |   |  | (4.2                   | )  |  |               |   |  | (2.7           | ) 
|                                                       |  |                      |   |  |                        |    |  |                |   |  |                |   
|Net income (loss)                                      |  | 5.6                  | % |  | (0.3                   | )% |  | 5.2            | % |  | (0.3           | )%
|                                                       |  |                      |   |  |                        |    |  |                |   |  |                |   



---

THIRTEEN AND TWENTY-SIX WEEKS ENDED AUGUST 28, 2010 COMPARED TO THIRTEEN AND TWENTY-SIX WEEKS ENDED
AUGUST 29, 2009

Net Sales



|                                               |  |                        |         |   |                        |   |         |                |  |   |                |   |  |   |         |   
|---------------------------------------------- |  | ---------------------- | ------- | - | ---------------------- | - | ------- | -------------- |  | - | -------------- | - |  | - | ------- | --
|                                               |  | Thirteen Weeks Ended   |         |   | Twenty-Six Weeks Ended |  
|                                               |  | August 28,2010         |         |   | August 29,2009         |   |         | August 28,2010 |  |   | August 29,2009 |  
|                                               |  | (dollars in thousands) |         |   | (dollars in thousands) |  
|                                               |  | (unaudited)            |         |   | (unaudited)            |  
|Net sales                                      |  | $                      | 301,070 |   |                        | $ | 298,733 |                |  | $ | 583,468        |   |  | $ | 557,829 |   
|Comparable store net sales increase (decrease) |  |                        | 2.0     | % |                        |   | (9.9    | )%             |  |   | 6.1            | % |  |   | (7.2    | )%

Net sales increased 0.8%
for the thirteen weeks ended August 28, 2010 compared to the thirteen weeks ended August 29, 2009. The increase was attributable to a comparable store net sales increase of 2.0% for the thirteen weeks ended August 28, 2010, partially
offset by reduced sales of closed stores along with down time and reduced square footage related to remodeled/relocated stores. Comparable footwear net sales for the thirteen weeks ended August 28, 2010 increased 2.0% while comparable softgoods
net sales increased 2.1% for the comparable period. The comparable store net sales increase of 2.0% was driven by a 6.4% increase in average dollar per transaction, partially offset by a 3.0% decline in store traffic and a 1.5% decrease in store
conversion.

Net sales increased 4.6% for the twenty-six weeks ended August 28, 2010 compared to the twenty-six weeks
ended August 29, 2009. The increase was attributable to a comparable store net sales increase of 6.1% for the twenty-six weeks ended August 28, 2010 and a $5.1 million increase from 11 new stores opened subsequent to August 29, 2009,
partially offset by reduced sales of $10.4 million from 25 closed stores along with down time and reduced square footage related to remodeled/relocated stores. Comparable footwear net sales for the twenty-six weeks ended August 28, 2010
increased 6.6% while comparable softgoods net sales increased 2.7% for the comparable period. The increase in comparable footwear net sales is attributable to a 6.7% increase in footwear average selling price as the Companys inventory aging
remains low allowing the Company to sell more full priced products. The comparable store net sales increase of 6.1% was driven by a 7.8% increase in average dollar per transaction, partially offset by a 1.8% decline in store traffic and a 0.2%
decrease in store conversion.

Cost of Sales (Including Occupancy Costs) and Gross Profit



|                                          |  |                        |         |   |                        |   |         |                |  |   |                |   |  |   |         |  
|----------------------------------------- |  | ---------------------- | ------- | - | ---------------------- | - | ------- | -------------- |  | - | -------------- | - |  | - | ------- | -
|                                          |  | Thirteen Weeks Ended   |         |   | Twenty-Six Weeks Ended |  
|                                          |  | August 28,2010         |         |   | August 29,2009         |   |         | August 28,2010 |  |   | August 29,2009 |  
|                                          |  | (dollars in thousands) |         |   | (dollars in thousands) |  
|                                          |  | (unaudited)            |         |   | (unaudited)            |  
|Cost of sales (including occupancy costs) |  | $                      | 201,301 |   |                        | $ | 203,364 |                |  | $ | 389,729        |   |  | $ | 386,085 |  
|Gross profit                              |  | $                      | 99,769  |   |                        | $ | 95,369  |                |  | $ | 193,739        |   |  | $ | 171,744 |  
|Gross profit as a percentage of net sales |  |                        | 33.1    | % |                        |   | 31.9    | %              |  |   | 33.2           | % |  |   | 30.8    | %

The 1.2% increase in gross
profit, as a percentage of net sales, for the thirteen weeks ended August 28, 2010 as compared to the thirteen weeks ended August 29, 2009 was due to a 0.6% increase in product margin as a percentage of net sales and a 0.6% decrease in
occupancy costs as a percentage of net sales. The 0.6% increase in product margin is primarily attributable to selling more full priced product as a result of having low levels of aged inventory. The 0.6% decrease in occupancy costs as a percentage
of net sales is primarily the result of leveraging the 2.0% comparable store net sales increase and continuing to work with our landlords to negotiate mutually acceptable terms.

The 2.4% increase in gross profit, as a percentage of net sales, for the twenty-six weeks ended August 28, 2010 as compared to the
twenty-six weeks ended August 29, 2009 was due to a 1.2% increase in product margin as a percentage of net sales and a 1.2% decrease in occupancy costs as a percentage of net sales. The 1.2% increase in product margin is primarily attributable
to selling more full priced product as a result of having low levels of aged inventory. The 1.2% decrease in occupancy costs as a percentage of net sales is primarily the result of leveraging the 6.1% comparable store net sales increase and
continuing to work with our landlords to negotiate mutually acceptable terms.



---

Selling, General and Administrative Expenses



|                                                                          |  |                        |        |   |                        |   |        |                |  |   |                |   |  |   |         |  
|------------------------------------------------------------------------- |  | ---------------------- | ------ | - | ---------------------- | - | ------ | -------------- |  | - | -------------- | - |  | - | ------- | -
|                                                                          |  | Thirteen Weeks Ended   |        |   | Twenty-Six Weeks Ended |  
|                                                                          |  | August 28,2010         |        |   | August 29,2009         |   |        | August 28,2010 |  |   | August 29,2009 |  
|                                                                          |  | (dollars in thousands) |        |   | (dollars in thousands) |  
|                                                                          |  | (unaudited)            |        |   | (unaudited)            |  
|Selling, general and administrative expenses                              |  | $                      | 72,778 |   |                        | $ | 75,260 |                |  | $ | 144,557        |   |  | $ | 148,414 |  
|Selling, general and administrative expenses as a percentage of net sales |  |                        | 24.2   | % |                        |   | 25.2   | %              |  |   | 24.8           | % |  |   | 26.6    | %

The $2.5 million decrease
in selling, general and administrative expenses for the thirteen weeks ended August 28, 2010 as compared to the thirteen weeks ended August 29, 2009 was primarily due to a decrease in depreciation, advertising, repairs and maintenance and
supplies due to targeted cost reductions and reduced store levels.

The $3.9 million decrease in selling, general and
administrative expenses for the twenty-six weeks ended August 28, 2010 as compared to the twenty-six weeks ended August 29, 2009 was primarily due to a decrease in depreciation, advertising, repairs and maintenance and supplies due to
targeted cost reductions and reduced store levels. The decrease in selling, general and administrative expenses as a percentage of net sales was primarily due to expense leveraging with the 6.1% increase in comparable store net sales as well as a
continued focus on controlling expenses.

Store Closing Costs



|                                                 |  |                        |   |   |                        |   |       |                |  |   |                |   |  |   |       |  
|------------------------------------------------ |  | ---------------------- | - | - | ---------------------- | - | ----- | -------------- |  | - | -------------- | - |  | - | ----- | -
|                                                 |  | Thirteen Weeks Ended   |   |   | Twenty-Six Weeks Ended |  
|                                                 |  | August 28,2010         |   |   | August 29,2009         |   |       | August 28,2010 |  |   | August 29,2009 |  
|                                                 |  | (dollars in thousands) |   |   | (dollars in thousands) |  
|                                                 |  | (unaudited)            |   |   | (unaudited)            |  
|Store closing costs                              |  | $                      |  |   |                        | $ | 1,381 |                |  | $ |               |   |  | $ | 1,612 |  
|Store closing costs as a percentage of net sales |  |                        |  | % |                        |   | 0.4   | %              |  |   |               | % |  |   | 0.3   | %

Store closing costs
represent the non-cash write-off of any property and equipment upon a store closing. There were no store closing costs in the twenty-six weeks ended August 28, 2010 as all stores closed during that period had no remaining net book value upon
closing.

Interest Income, Net



|                                                  |  |                        |     |   |                        |   |     |                |  |   |                |   |  |   |     |  
|------------------------------------------------- |  | ---------------------- | --- | - | ---------------------- | - | --- | -------------- |  | - | -------------- | - |  | - | --- | -
|                                                  |  | Thirteen Weeks Ended   |     |   | Twenty-Six Weeks Ended |  
|                                                  |  | August 28,2010         |     |   | August 29,2009         |   |     | August 28,2010 |  |   | August 29,2009 |  
|                                                  |  | (dollars in thousands) |     |   | (dollars in thousands) |  
|                                                  |  | (unaudited)            |     |   | (unaudited)            |  
|Interest income, net                              |  | $                      | 155 |   |                        | $ | 108 |                |  | $ | 219            |   |  | $ | 211 |  
|Interest income, net as a percentage of net sales |  |                        | 0.1 | % |                        |   |    | %              |  |   |               | % |  |   |    | %

The increase of $47,000
was due to higher invested balances and higher earned interest rates during the thirteen weeks ended August 28, 2010 compared to the thirteen weeks ended August 29, 2009.

The increase of $7,000 was due to higher invested balances during the twenty-six weeks ended August 28, 2010 compared to the
twenty-six weeks ended August 29, 2009.



---

Income Taxes



|                                                |  |                        |        |   |                        |   |       |                |  |   |                |   |  |   |       |  
|----------------------------------------------- |  | ---------------------- | ------ | - | ---------------------- | - | ----- | -------------- |  | - | -------------- | - |  | - | ----- | -
|                                                |  | Thirteen Weeks Ended   |        |   | Twenty-Six Weeks Ended |  
|                                                |  | August 28,2010         |        |   | August 29,2009         |   |       | August 28,2010 |  |   | August 29,2009 |  
|                                                |  | (dollars in thousands) |        |   | (dollars in thousands) |  
|                                                |  | (unaudited)            |        |   | (unaudited)            |  
|Income tax expense                              |  | $                      | 10,342 |   |                        | $ | 7,088 |                |  | $ | 18,928         |   |  | $ | 8,422 |  
|Income tax expense as a percentage of net sales |  |                        | 3.4    | % |                        |   | 2.4   | %              |  |   | 3.2            | % |  |   | 1.5   | %
|Effective income tax rate                       |  |                        | 38.1   | % |                        |   | 37.6  | %              |  |   | 38.3           | % |  |   | 38.4  | %

The increase in income tax
expense of $3.3 million for the thirteen weeks ended August 28, 2010 compared to the thirteen weeks ended August 29, 2009 is due primarily to income from continuing operations before income taxes increasing to $27.1 million for the
thirteen weeks ended August 28, 2010 from $18.8 million for the thirteen weeks ended August 29, 2009. The increase in effective tax rate is due to a decrease in tax-exempt interest income and an increase in state tax rates.

The increase in income tax expense of $10.5 million for the twenty-six weeks ended August 28, 2010 compared to the twenty-six weeks
ended August 29, 2009 is due to income from continuing operations before income taxes increasing to $49.4 million for the twenty-six weeks ended August 28, 2010 from $21.9 million for the twenty-six weeks ended August 29, 2009.

Income from Continuing Operations



|                                                               |  |                        |        |   |                        |   |        |                |  |   |                |   |  |   |        |  
|-------------------------------------------------------------- |  | ---------------------- | ------ | - | ---------------------- | - | ------ | -------------- |  | - | -------------- | - |  | - | ------ | -
|                                                               |  | Thirteen Weeks Ended   |        |   | Twenty-Six Weeks Ended |  
|                                                               |  | August 28,2010         |        |   | August 29,2009         |   |        | August 28,2010 |  |   | August 29,2009 |  
|                                                               |  | (dollars in thousands) |        |   | (dollars in thousands) |  
|                                                               |  | (unaudited)            |        |   | (unaudited)            |  
|Income from continuing operations                              |  | $                      | 16,804 |   |                        | $ | 11,748 |                |  | $ | 30,473         |   |  | $ | 13,507 |  
|Income from continuing operations as a percentage of net sales |  |                        | 5.6    | % |                        |   | 3.9    | %              |  |   | 5.2            | % |  |   | 2.4    | %
|Income from continuing operations per diluted share            |  | $                      | 0.31   |   |                        | $ | 0.21   |                |  | $ | 0.56           |   |  | $ | 0.24   |  

The $5.1 million
increase in income from continuing operations for the thirteen weeks ended August 28, 2010 compared to the thirteen weeks ended August 29, 2009 is attributable to the net sales improvement, maximizing product margins and managing expenses
as discussed above.

The $17.0 million increase in income from continuing operations for the twenty-six weeks ended
August 28, 2010 compared to the twenty-six weeks ended August 29, 2009 is attributable to the 4.6% net sales improvement, maximizing product margins and managing expenses as discussed above.



---

Discontinued Operations



|                                                                                             |  |                        |    |   |                        |   |         |                |  |   |                |   |  |   |         |   
|-------------------------------------------------------------------------------------------- |  | ---------------------- | -- | - | ---------------------- | - | ------- | -------------- |  | - | -------------- | - |  | - | ------- | --
|                                                                                             |  | Thirteen Weeks Ended   |    |   | Twenty-Six Weeks Ended |  
|                                                                                             |  | August 28,2010         |    |   | August 29,2009         |   |         | August 28,2010 |  |   | August 29,2009 |  
|                                                                                             |  | (dollars in thousands) |    |   | (dollars in thousands) |  
|                                                                                             |  | (unaudited)            |    |   | (unaudited)            |  
|Income (loss) from discontinued operations, net of income taxes                              |  | $                      | 10 |   |                        | $ | (12,622 | )              |  | $ | (13            | ) |  | $ | (14,989 | ) 
|Income (loss) from discontinued operations, net of income taxes as a percentage of net sales |  |                        |   | % |                        |   | (4.2    | )%             |  |   |               | % |  |   | (2.7    | )%

For the thirteen weeks
ended August 29, 2009, the $12.6 million loss from discontinued operations of Man Alive included operating losses of $1.7 million as well as $18.4 million related to the loss on the sale of Man Alive and $7.5 million of income tax benefit. The
$18.4 million was made up of the $7.7 million Purchase Price Rebate, $7.6 million inventory write-off, $6.7 million property and equipment write-off, and $2.3 million in other charges, partially offset by the reversal of Deferred credits from
landlords of $5.9 million.

For the twenty-six weeks ended August 29, 2009, the $15.0 million loss from
discontinued operations of Man Alive included operating losses of $5.6 million, a $18.4 million related to the loss on sale of Man Alive, and $9.0 million of income tax benefit.

Man Alive was sold effective July 4, 2009, and therefore, the financial results of Man Alive have been classified in discontinued
operations for all periods presented. See Note 2 to the Companys unaudited financial statements in this document for a further discussion of the Companys discontinued operations.

Liquidity and Capital Resources

The Companys primary source of working capital is cash flow from operations. The following table sets forth material balance sheet
and liquidity measures of the Company (dollars in thousands):



|                             |  |                |         |                |   |                  |  |   |        
|---------------------------- |  | -------------- | ------- | -------------- | - | ---------------- |  | - | -------
|                             |  | August 28,2010 |         | August 29,2009 |   | February 27,2010
|                             |  | (unaudited)    |         | (unaudited)    |   |                 
|Cash and cash equivalents    |  | $              | 253,703 |                | $ | 142,926          |  | $ | 234,508
|Merchandise inventories, net |  | $              | 217,040 |                | $ | 221,365          |  | $ | 190,894
|Interest-bearing debt        |  | $              |        |                | $ |                 |  | $ |       
|Working capital              |  | $              | 350,740 |                | $ | 295,360          |  | $ | 328,664

Operating
Activities

The Company had cash flows provided by operating activities during the twenty-six weeks ended August 28,
2010 of $42.3 million compared to $41.4 million provided by operating activities during the twenty-six weeks ended August 29, 2009. Cash equivalents consist of short-term money market funds invested primarily in high-quality, tax-exempt,
municipal instruments with daily liquidity.

On a comparable per square foot basis, merchandise inventories increased 0.6% at
August 28, 2010 compared to August 29, 2009, and were 14.0% higher than at February 27, 2010.

Investing
Activities

The Company had cash flows used in investing activities for the twenty-six weeks ended August 28, 2010 of
$6.7 million compared to net cash provided by investing activities of $3.0 million for the twenty-six weeks ended August 29, 2009. The $6.7 million used in the twenty-six weeks ended August 28, 2010 was a result of $6.0 million used
primarily for the construction of new stores, the remodeling of existing stores and merchandise system enhancements, along with $0.7 million in payments related to the sale of Man Alive. The $3.0 million provided in the twenty-six weeks ended
August 29, 2009 was from $14.9 million in proceeds from the sale of marketable securities, partially offset by $7.6 million in payments related to the sale of Man Alive and $4.3 million of capital expenditures.

For the year ending February 26, 2011, the Company anticipates opening 8 to 10 new stores (7 opened during the twenty-six weeks
ended August 28, 2010), remodeling 7 to 10 existing stores (4 remodeled during the twenty-six weeks ended August 28, 2010), and closing 10 to 15 stores (6 closed during the twenty-six weeks ended August 28, 2010). The Company will
also continue the initial rollout of Nike Track Club to approximately half of the Companys existing stores with formats varying in size depending on store size and sales volume. In addition, the Company has various other capital and technology
projects that will require capital expenditures. The Company expects capital expenditures for the current fiscal year to approximate $20.0 to $25.0 million.



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Financing Activities

The Company had cash flows used in financing activities for the twenty-six weeks ended August 28, 2010 of $16.5 million compared to
net cash used in financing activities of $2.4 million for the twenty-six weeks ended August 29, 2009. The $14.1 million change is due to $15.8 million used for repurchase of shares under the stock repurchase program and a $1.0 million increase
in dividends paid, partially offset by a $1.8 million increase in proceeds received from the issuance of common stock in connection with employee stock programs and a $0.9 million increase in excess tax benefits from share-based compensation.

On July 17, 2008, the Companys Board of Directors authorized a stock repurchase program to repurchase up to
5.0 million shares of the Companys Class A common stock outstanding through December 31, 2011. The Company purchased 1.2 million shares under the stock repurchase program at an average price of $13.42 per share for an
aggregate amount of $15.8 million during the twenty-six weeks ended August 28, 2010. The remaining shares available for repurchase under the stock repurchase program are 2.4 million shares as of August 28, 2010. The treasury shares
may be issued upon the exercise of employee stock options, issuance of shares for the Employee Stock Purchase Plan, issuance of restricted stock, or for other corporate purposes. Further 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.

On
January 21, 2010, the Companys Board of Directors increased its quarterly cash dividend from $0.03 per share to $0.04 per share of its Class A and Class B common stock. The Company declared dividends of $4.3 million during the
twenty-six weeks ended August 28, 2010. A cash dividend of $2.1 million was paid on September 13, 2010 to shareholders of record on August 27, 2010 and was accrued as of August 28, 2010 in Other liabilities and accrued
expenses. Further declarations of dividends, if any, remain at the discretion of the Companys Board of Directors. The Companys Board of Directors plan to review the dividend rate annually for possible changes and will take into
consideration the Companys cash flows, business conditions and other relevant factors.

Other  Uses of Cash

The Company is committed to investing in opportunities that will result in continued long-term growth and value for its
shareholders including the continued rollout of the new running concept Nike Track Club. The Company is rolling out several different size formats of Nike Track Club featuring an expanded selection of shoes and apparel and the largest format will
include a t-shirt customization station. The Company is also creating a new store design which the Company believes will create distinction for Finish Line and align with its premium brand. This new store design will include Nike Track Club and
construction has begun on an existing Finish Line store for this pilot. Additionally, the Company continues to invest in technology to support the growth of its cross-channel strategy, including in-store, online and mobile commerce. This dedication
of resources is demonstrated by the recent launch of an improved Finishline.com. The Company is also continuing to invest in infrastructure technology to support business growth.

In addition to developing growth within its core Finish Line business, the Company is also dedicated to assessing growth opportunities
outside its existing business model. The Company is committed to taking a disciplined approach in pursuing these potential growth opportunities.



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Contractual Obligations

The Companys contractual obligations primarily consist of long-term debt, operating leases and purchase orders for merchandise
inventory. For the twenty-six weeks ended August 28, 2010, 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 27, 2010, 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 27, 2010.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

For a discussion of the Companys market risk associated with interest rates as of February 27, 2010 see Quantitative and
Qualitative Disclosures about Market Risk in Item 7A of Part II of the Companys Annual Report on Form 10-K for the fiscal year ended February 27, 2010. For the twenty-six weeks ended August 28, 2010, there has been no
significant change in related market risk factors.



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

Disclosure Controls and Procedures. With the participation of our Chief Executive Officer and Chief Financial Officer, we have
evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)), as of the end of the period
covered by this report. Based upon such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures were effective in ensuring that
(i) information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange
Commissions rules and forms and (ii) information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Companys management, including its
principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting. There have not been any changes in our internal control over financial reporting (as
such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.



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PART II - OTHER INFORMATION



|ITEM 1: | LEGAL PROCEEDINGS
|------- | -----------------

The
Company is subject from time to time, to certain legal proceedings and claims in the ordinary course of conducting its business. Although it is not possible to predict with certainty the eventual outcome of any litigation, in the opinion of
management, the Companys legal proceedings are not expected to have a material adverse effect on the Companys financial position or results of operations.



|ITEM 1A: | RISK FACTORS
|-------- | ------------

Risk
factors that affect the Companys business and financial results are discussed in Item 1A: Risk Factors in the Companys Annual Report on Form 10-K for the fiscal year ended February 27, 2010. There has been no significant
change to identified risk factors for the twenty-six weeks ended August 28, 2010.



|ITEM 2: | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- | -----------------------------------------------------------

Information on the shares repurchased under the program during the second quarter of fiscal 2011 is as follows:



|                          |  |                                 |  |                                 |       |                                                                              |           |                                                                                                    |          
|------------------------- |  | ------------------------------- |  | ------------------------------- | ----- | ---------------------------------------------------------------------------- | --------- | -------------------------------------------------------------------------------------------------- | ---------
|Month                     |  | Total Number ofShares Purchased |  | Average PricePaid per Share (1) |       | Total Number ofShares Purchasedas Part of
PubliclyAnnouncedPlans or Programs |           | Maximum Number (orApproximate DollarValue) of Shares thatMay Yet Be PurchasedUnder the
Program (2)
|June (5/30/10  7/3/10)   |  | 372,012                         |  | $                               | 13.98 |                                                                              | 372,012   |                                                                                                    | 3,238,275
|July (7/4/10  7/31/10)   |  | 151,118                         |  | $                               | 13.93 |                                                                              | 151,118   |                                                                                                    | 3,087,157
|August (8/1/10  8/28/10) |  | 653,799                         |  | $                               | 12.95 |                                                                              | 653,799   |                                                                                                    | 2,433,358
|                          |  |                                 |  |                                 |       |                                                                              |           |                                                                                                    |          
|                          |  | 1,176,929                       |  | $                               | 13.42 |                                                                              | 1,176,929 |                                                                                                    |          
|                          |  |                                 |  |                                 |       |                                                                              |           |                                                                                                    |          



|(1) |  The average price paid per share includes any brokerage commissions.
|--- | ----------------------------------------------------------------------

|(2) |  All remaining shares that can be purchased are included in the Companys stock repurchase program which was publicly announced on July 17, 2008 and
expires on December 31, 2011. The plan originally authorized repurchase of up to 5.0 million shares of the Companys outstanding Class A common stock.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---

|ITEM 3: | DEFAULTS UPON SENIOR SECURITIES
|------- | -------------------------------

None.



|ITEM 4: | REMOVED AND RESERVED
|------- | --------------------



|ITEM 5: | OTHER INFORMATION
|------- | -----------------

None.



|ITEM 6: | EXHIBITS
|------- | --------



| | (a) | Exhibits
| | --- | --------



|     |  |                                                                                                                                   
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
|     | 
|31.2 |  | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
|     | 
|32   |  | Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.           



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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 thereunto duly authorized.



|                         |  |                       |  |                                                                   
|------------------------ |  | --------------------- |  | ------------------------------------------------------------------
|                         |  | THE FINISH LINE, INC.
|                         |  |                      
|Date: September 23, 2010 |  | By:                   |  | /S/    EDWARD W.
WILHELM                                          
|                         |  |                       |  | Edward W. Wilhelm
Executive Vice President-Chief Financial Officer



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EXHIBIT INDEX



|               |  |                                                                                                                              
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------
|Exhibit
Number |  | Description                                                                                                                  
|               | 
|31.1           |  | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended.
|               | 
|31.2           |  | Certification of Chief Financial Officer Pursuant to Rule 13a14(a) and 15d-14(a) of the Securities Exchange Act, as amended.
|               | 
|32             |  | Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.