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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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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 November 26, 2005



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)





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



Indicate by check mark whether the 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 the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).



Yes  x     No ̈



Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).



Yes ̈No  x



Shares of common stock outstanding at December 16, 2005:



|        |  |           
|------- |  | ----------
|Class A |  | 42,714,898
|Class B |  | 5,141,336 



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1



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PART 1. FINANCIAL INFORMATION



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



THE FINISH LINE, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)



|                                   |  |                  |         |                            |   |                  |  |   |        
|---------------------------------- |  | ---------------- | ------- | -------------------------- | - | ---------------- |  | - | -------
|                                   |  | November 26,2005 |         | November 27,2004(Restated) |   | February 26,2005
|                                   |  | (unaudited)      |         | (unaudited)                |   |                 
|ASSETS                             |  |                  |         |                            |   |                  |  |   |        
|CURRENT ASSETS:                    |  |                  |         |                            |   |                  |  |   |        
|Cash and cash equivalents          |  | $                | 39,339  |                            | $ | 36,817           |  | $ | 55,991 
|Marketable securities              |  |                  |        |                            |   | 12,675           |  |   | 57,175 
|Accounts receivable, net           |  |                  | 16,254  |                            |   | 15,493           |  |   | 14,230 
|Merchandise inventories, net       |  |                  | 311,453 |                            |   | 263,693          |  |   | 241,242
|Income taxes recoverable           |  |                  | 254     |                            |   | 903              |  |   |       
|Other                              |  |                  | 10,690  |                            |   | 6,366            |  |   | 3,162  
|                                   |  |                  |         |                            |   |                  |  |   |        
|Total current assets               |  |                  | 377,990 |                            |   | 335,947          |  |   | 371,800
|                                   |  |                  |        
|PROPERTY AND EQUIPMENT:            |  |                  |         |                            |   |                  |  |   |        
|Land                               |  |                  | 1,557   |                            |   | 315              |  |   | 315    
|Building                           |  |                  | 34,014  |                            |   | 22,029           |  |   | 23,309 
|Leasehold improvements             |  |                  | 242,879 |                            |   | 207,644          |  |   | 217,371
|Furniture, fixtures, and equipment |  |                  | 90,740  |                            |   | 75,316           |  |   | 77,945 
|Construction in progress           |  |                  | 2,989   |                            |   | 9,160            |  |   | 10,616 
|                                   |  |                  |         |                            |   |                  |  |   |        
|                                   |  |                  | 372,179 |                            |   | 314,464          |  |   | 329,556
|Less accumulated depreciation      |  |                  | 157,116 |                            |   | 136,416          |  |   | 141,258
|                                   |  |                  |         |                            |   |                  |  |   |        
|                                   |  |                  | 215,063 |                            |   | 178,048          |  |   | 188,298
|                                   |  |                  |        
|Deferred income taxes              |  |                  | 3,941   |                            |   | 3,428            |  |   | 3,578  
|Intangible assets                  |  |                  | 11,126  |                            |   |                 |  |   | 11,343 
|                                   |  |                  |         |                            |   |                  |  |   |        
|Total assets                       |  | $                | 608,120 |                            | $ | 517,423          |  | $ | 575,019
|                                   |  |                  |         |                            |   |                  |  |   |        



See accompanying notes.



2



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THE FINISH LINE, INC.



CONSOLIDATED BALANCE SHEETS

(In thousands)



|                                                                                                                                 |  |                  |         |   |                            |   |         |                  |  |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ------- | - | -------------------------- | - | ------- | ---------------- |  | - | ------- | -
|                                                                                                                                 |  | November 26,2005 |         |   | November 27,2004(Restated) |   |         | February 26,2005 | 
|                                                                                                                                 |  | (unaudited)      |         |   | (unaudited)                |   |         |                  | 
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                             |  |                  |         |   |                            |   |         |                  |  |   |         |  
|CURRENT LIABILITIES:                                                                                                             |  |                  |         |   |                            |   |         |                  |  |   |         |  
|Accounts payable                                                                                                                 |  | $                | 108,317 |   |                            | $ | 79,460  |                  |  | $ | 92,378  |  
|Employee compensation                                                                                                            |  |                  | 8,732   |   |                            |   | 8,286   |                  |  |   | 12,883  |  
|Accrued property and sales tax                                                                                                   |  |                  | 6,540   |   |                            |   | 5,241   |                  |  |   | 6,914   |  
|Deferred income taxes                                                                                                            |  |                  | 8,703   |   |                            |   | 6,599   |                  |  |   | 7,645   |  
|Other liabilities and accrued expenses                                                                                           |  |                  | 19,967  |   |                            |   | 12,836  |                  |  |   | 17,196  |  
|                                                                                                                                 |  |                  |         |   |                            |   |         |                  |  |   |         |  
|Total current liabilities                                                                                                        |  |                  | 152,259 |   |                            |   | 112,422 |                  |  |   | 137,016 |  
|                                                                                                                                 |  |                  |        
|Deferred credits from landlords                                                                                                  |  |                  | 56,216  |   |                            |   | 50,532  |                  |  |   | 50,532  |  
|                                                                                                                                 |  |                  |        
|Other long-term liabilities                                                                                                      |  |                  |        |   |                            |   |        |                  |  |   | 1,500   |  
|                                                                                                                                 |  |                  |        
|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 - (November 26, 2005  47,649; November 27, 2004  47,060; February 26,
2005  47,649) |  |                  |         |   |                            |   |         |                  |  |   |         |  
|Shares outstanding - (November 26, 2005  42,709; November 27, 2004  42,629; February 26, 2005 
43,578)                        |  |                  | 476     |   |                            |   | 471     |                  |  |   | 476     |  
|Class B:                                                                                                                         |  |                  |         |   |                            |   |         |                  |  |   |         |  
|Shares authorized  10,000                                                                                                       |  |                  |         |   |                            |   |         |                  |  |   |         |  
|Shares issued and outstanding - (November 26, 2005  5,141; November 27, 2004  5,731; February 26, 2005 
5,141)                |  |                  | 52      |   |                            |   | 57      |                  |  |   | 52      |  
|Additional paid-in capital                                                                                                       |  |                  | 141,286 |   |                            |   | 134,649 |                  |  |   | 138,130 |  
|Retained earnings                                                                                                                |  |                  | 292,797 |   |                            |   | 236,993 |                  |  |   | 263,971 |  
|Treasury stock - (November 26, 2005  4,940; November 27, 2004  4,431; February 26, 2005 
4,071)                               |  |                  | (34,966 | ) |                            |   | (17,701 | )                |  |   | (16,658 | )
|                                                                                                                                 |  |                  |         |   |                            |   |         |                  |  |   |         |  
|Total shareholders equity                                                                                                       |  |                  | 399,645 |   |                            |   | 354,469 |                  |  |   | 385,971 |  
|                                                                                                                                 |  |                  |         |   |                            |   |         |                  |  |   |         |  
|Total liabilities and shareholders equity                                                                                       |  | $                | 608,120 |   |                            | $ | 517,423 |                  |  | $ | 575,019 |  
|                                                                                                                                 |  |                  |         |   |                            |   |         |                  |  |   |         |  



See accompanying notes.



3



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THE FINISH LINE, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)



|                                              |  |                      |         |                            |   |                  |  |                            |         |  |   |        
|--------------------------------------------- |  | -------------------- | ------- | -------------------------- | - | ---------------- |  | -------------------------- | ------- |  | - | -------
|                                              |  | Thirteen Weeks Ended |         | ThirtyNine Weeks Ended   
|                                              |  | November 26,2005     |         | November 27,2004(Restated) |   | November 26,2005 |  | November 27,2004(Restated)
|Net sales                                     |  | $                    | 273,980 |                            | $ | 235,253          |  | $                          | 906,820 |  | $ | 805,381
|Cost of sales (including occupancy expenses)  |  |                      | 196,432 |                            |   | 169,305          |  |                            | 627,474 |  |   | 555,987
|                                              |  |                      |         |                            |   |                  |  |                            |         |  |   |        
|Gross profit                                  |  |                      | 77,548  |                            |   | 65,948           |  |                            | 279,346 |  |   | 249,394
|Selling, general, and administrative expenses |  |                      | 76,540  |                            |   | 63,058           |  |                            | 228,794 |  |   | 197,201
|                                              |  |                      |         |                            |   |                  |  |                            |         |  |   |        
|Operating income                              |  |                      | 1,008   |                            |   | 2,890            |  |                            | 50,552  |  |   | 52,193 
|Interest income, net                          |  |                      | 345     |                            |   | 255              |  |                            | 1,406   |  |   | 713    
|                                              |  |                      |         |                            |   |                  |  |                            |         |  |   |        
|Income before income taxes                    |  |                      | 1,353   |                            |   | 3,145            |  |                            | 51,958  |  |   | 52,906 
|Provision for income taxes                    |  |                      | 508     |                            |   | 927              |  |                            | 19,485  |  |   | 19,840 
|                                              |  |                      |         |                            |   |                  |  |                            |         |  |   |        
|Net income                                    |  | $                    | 845     |                            | $ | 2,218            |  | $                          | 32,473  |  | $ | 33,066 
|                                              |  |                      |         |                            |   |                  |  |                            |         |  |   |        
|Basic net income per share                    |  | $                    | .02     |                            | $ | .05              |  | $                          | .67     |  | $ | .69    
|                                              |  |                      |         |                            |   |                  |  |                            |         |  |   |        
|Basic weighted average shares                 |  |                      | 48,312  |                            |   | 48,316           |  |                            | 48,740  |  |   | 48,209 
|                                              |  |                      |         |                            |   |                  |  |                            |         |  |   |        
|Diluted net income per share                  |  | $                    | .02     |                            | $ | .04              |  | $                          | .65     |  | $ | .67    
|                                              |  |                      |         |                            |   |                  |  |                            |         |  |   |        
|Diluted weighted average shares               |  |                      | 49,058  |                            |   | 49,361           |  |                            | 49,605  |  |   | 49,302 
|                                              |  |                      |         |                            |   |                  |  |                            |         |  |   |        
|Dividends declared per share                  |  | $                    | .025    |                            | $ | .025             |  | $                          | .075    |  | $ | .050   
|                                              |  |                      |         |                            |   |                  |  |                            |         |  |   |        



See accompanying notes.



4



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THE FINISH LINE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOW

(In thousands)

(Unaudited)



|                                                                                            |  |                         |          |   |                            |   |         |  
|------------------------------------------------------------------------------------------- |  | ----------------------- | -------- | - | -------------------------- | - | ------- | -
|                                                                                            |  | Thirty-Nine Weeks Ended |         
|                                                                                            |  | November 26,2005        |          |   | November 27,2004(Restated) |  
|OPERATING ACTIVITIES:                                                                       |  |                         |          |   |                            |   |         |  
|Net income                                                                                  |  | $                       | 32,473   |   |                            | $ | 33,066  |  
|Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |                         |          |   |                            |   |         |  
|Depreciation and amortization                                                               |  |                         | 24,870   |   |                            |   | 19,770  |  
|Deferred income taxes                                                                       |  |                         | 695      |   |                            |   | 4,526   |  
|Loss on disposal of property and equipment                                                  |  |                         | 7        |   |                            |   | 419     |  
|Tax benefit from exercise of stock options                                                  |  |                         | 1,871    |   |                            |   | 1,312   |  
|Changes in operating assets and liabilities:                                                |  |                         |          |   |                            |   |         |  
|Accounts receivable                                                                         |  |                         | (2,024   | ) |                            |   | (9,232  | )
|Merchandise inventories                                                                     |  |                         | (70,211  | ) |                            |   | (71,094 | )
|Other current assets                                                                        |  |                         | (7,528   | ) |                            |   | (3,540  | )
|Accounts payable                                                                            |  |                         | 15,939   |   |                            |   | 23,128  |  
|Employee compensation                                                                       |  |                         | (4,151   | ) |                            |   | (3,374  | )
|Accrued income taxes recoverable/payable                                                    |  |                         | (2,922   | ) |                            |   | (5,423  | )
|Other liabilities and accrued expenses                                                      |  |                         | 3,588    |   |                            |   | 1,870   |  
|Deferred credits from landlords                                                             |  |                         | 5,684    |   |                            |   | 3,778   |  
|                                                                                            |  |                         |          |   |                            |   |         |  
|Net cash used in operating activities                                                       |  |                         | (1,709   | ) |                            |   | (4,794  | )
|INVESTING ACTIVITIES:                                                                       |  |                         |          |   |                            |   |         |  
|Purchases of property and equipment                                                         |  |                         | (51,432  | ) |                            |   | (42,373 | )
|Proceeds from disposal of property and equipment                                            |  |                         | 24       |   |                            |   | 162     |  
|Lease acquisition costs                                                                     |  |                         | (17      | ) |                            |   |        |  
|Proceeds from sale of available-for-sale marketable securities                              |  |                         | 249,575  |   |                            |   | 86,648  |  
|Purchases of available-for-sale marketable securities                                       |  |                         | (192,400 | ) |                            |   | (80,548 | )
|                                                                                            |  |                         |          |   |                            |   |         |  
|Net cash provided by (used in) investing activities                                         |  |                         | 5,750    |   |                            |   | (36,111 | )
|FINANCING ACTIVITIES:                                                                       |  |                         |          |   |                            |   |         |  
|Dividends paid to shareholders                                                              |  |                         | (3,670   | ) |                            |   | (1,206  | )
|Proceeds from exercise of stock options                                                     |  |                         | 2,842    |   |                            |   | 1,851   |  
|Purchase of treasury stock                                                                  |  |                         | (19,865  | ) |                            |   |        |  
|                                                                                            |  |                         |          |   |                            |   |         |  
|Net cash (used in) provided by financing activities                                         |  |                         | (20,693  | ) |                            |   | 645     |  
|                                                                                            |  |                         |          |   |                            |   |         |  
|Net decrease in cash and cash equivalents                                                   |  |                         | (16,652  | ) |                            |   | (40,260 | )
|Cash and cash equivalents at beginning of period                                            |  |                         | 55,991   |   |                            |   | 77,077  |  
|                                                                                            |  |                         |          |   |                            |   |         |  
|Cash and cash equivalents at end of period                                                  |  | $                       | 39,339   |   |                            | $ | 36,817  |  
|                                                                                            |  |                         |          |   |                            |   |         |  



See accompanying notes.



5



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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 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 accounting principles generally accepted in the United States 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s consolidated results of operations include those of The Finish Line Man Alive, Inc. (Man Alive), a
wholly-owned subsidiary of The Finish Line, Inc., for the periods presented since the date of its acquisition, January 29, 2005.



The Company has experienced, and expects to continue to experience, significant variability in sales and net income 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 26, 2005 (fiscal 2005).



Recently Issued Accounting Pronouncements



In December 2004, the Financial Accounting Standards Board (FASB) issued Statement No. 123R Share-Based Payment. See Note 3 for further discussion.



6



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In May 2005, the FASB issued Statement No. 154 (FAS 154), Accounting Changes and Error
Corrections, a replacement of Accounting Principles Board (APB) Opinion No. 20, Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements. FAS
154 requires retrospective application to prior period financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. This statement
requires that retrospective application of a change in accounting principle be limited to the direct effects of a change. FAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15,
2005.



7



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In June 2005, the FASBs Emerging Issues Task Force reached a consensus on Issue No. 05-6,
Determining the Amortization Period for Leasehold Improvements Purchased after Lease Inception or Acquired in a Business Combination (EITF 05-6). EITF 05-6 provides guidance on the amortization period for leasehold
improvements in operating leases that are either acquired after the beginning of the initial lease term or acquired as the result of a business combination. This guidance requires leasehold improvements purchased after the beginning of the
initial lease term to be amortized over the shorter of the assets useful life or a term that includes the original lease term plus any renewals that are reasonably assured at the date the leasehold improvements are purchased. This
guidance is effective for reporting periods beginning after June 29, 2005. The adoption of this guidance did not have an impact on the Companys consolidated financial statements.



In October 2005, the FASB issued Staff Position No. 13-1,
Accounting for Rental Costs Incurred during a Construction Period (FSP No. 13-1), to give guidance to a lessee on determining whether rental costs associated with operating leases may be capitalized during a construction
period. FSP No. 13-1 stipulates that such costs shall be (a) recognized as rental expense, (b) included in income from continuing operations, and (c) allocated over the lease term according to the guidance in FASB Statement
No. 13, Accounting for Leases, and FASB Technical Bulletin No. 85-3, Accounting for Operating Leases with Scheduled Rent Increases. The guidance in FSP No. 13-1 is effective for the first
reporting period beginning after December 15, 2005, with early adoption permitted for financial statements or interim financial statements that have not yet been issued. The Company already accounts for such rental costs in accordance with FSP
No. 13-1; therefore, the adoption of FSP No. 13-1 will not have an impact on the Companys consolidated financial statements.



2. Restatement of Prior Financial Information



The Company restated its consolidated balance sheet at November 27, 2004 and its consolidated statements of income and cash flows for the thirteen
and thirty-nine weeks ended November 27, 2004. The restatement also affects periods prior to fiscal 2005. The restatement corrects the Companys historical accounting for operating leases. For information with respect to the restatement,
see Note 2 to the consolidated financial statements contained in the Companys Annual Report on Form 10-K for fiscal 2005. The Company did not amend its previously filed Quarterly Reports on Form 10-Q for the restatement. Therefore,
the financial statements and related financial information contained in such reports should no longer be relied upon. Throughout this Form 10-Q, all referenced amounts for affected prior periods and prior comparisons reflect the balances and amounts
on a restated basis.



8



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As a result of this restatement, the Companys financial results have been adjusted as follows (in
thousands, except per share amounts):



|                                             |  |                                       |         |   |             |   |        |             |  |   |         |  
|-------------------------------------------- |  | ------------------------------------- | ------- | - | ----------- | - | ------ | ----------- |  | - | ------- | -
|                                             |  | Consolidated Statements of Income     |        
|Thirteen weeks ended November 27, 2004       |  | Aspreviously reported                 |         |   | Adjustments |   |        | As restated | 
|Cost of sales (including occupancy expenses) |  | $                                     | 170,662 |   |             | $ | (1,357 | )           |  | $ | 169,305 |  
|Selling, general and administrative expenses |  |                                       | 61,520  |   |             |   | 1,538  |             |  |   | 63,058  |  
|Operating income                             |  |                                       | 3,071   |   |             |   | (181   | )           |  |   | 2,890   |  
|Income before income taxes                   |  |                                       | 3,326   |   |             |   | (181   | )           |  |   | 3,145   |  
|Income taxes                                 |  |                                       | 994     |   |             |   | (67    | )           |  |   | 927     |  
|Net income                                   |  |                                       | 2,332   |   |             |   | (114   | )           |  |   | 2,218   |  
|Basic earnings per share                     |  | $                                     | .05     |   |             | $ |       |             |  | $ | .05     |  
|Diluted earnings per share                   |  | $                                     | .05     |   |             | $ | (.01   | )           |  | $ | .04     |  
|                                             |  |                                       |        
|Thirty-nine weeks ended November 27, 2004    |  | Aspreviously reported                 |         |   | Adjustments |   |        | As restated | 
|Cost of sales (including occupancy expenses) |  | $                                     | 559,793 |   |             | $ | (3,806 | )           |  | $ | 555,987 |  
|Selling, general and administrative expenses |  |                                       | 192,337 |   |             |   | 4,864  |             |  |   | 197,201 |  
|Operating income                             |  |                                       | 53,251  |   |             |   | (1,058 | )           |  |   | 52,193  |  
|Income before income taxes                   |  |                                       | 53,964  |   |             |   | (1,058 | )           |  |   | 52,906  |  
|Income taxes                                 |  |                                       | 20,237  |   |             |   | (397   | )           |  |   | 19,840  |  
|Net income                                   |  |                                       | 33,727  |   |             |   | (661   | )           |  |   | 33,066  |  
|Basic earnings per share                     |  | $                                     | .70     |   |             | $ | (.01   | )           |  | $ | .69     |  
|Diluted earnings per share                   |  | $                                     | .68     |   |             | $ | (.01   | )           |  | $ | .67     |  
|                                             | 
|                                             |  | Consolidated Balance Sheets           |        
|November 27, 2004                            |  | As previously reported                |         |   | Adjustments |   |        | As restated | 
|Deferred income tax asset                    |  | $                                     | 1,394   |   |             | $ | 2,034  |             |  | $ | 3,428   |  
|Property and equipment, net                  |  |                                       | 141,775 |   |             |   | 36,273 |             |  |   | 178,048 |  
|Total assets                                 |  |                                       | 479,116 |   |             |   | 38,307 |             |  |   | 517,423 |  
|Deferred credits from landlords              |  |                                       | 8,893   |   |             |   | 41,639 |             |  |   | 50,532  |  
|Retained earnings                            |  |                                       | 240,325 |   |             |   | (3,332 | )           |  |   | 236,993 |  
|Total shareholders equity                   |  |                                       | 357,801 |   |             |   | (3,332 | )           |  |   | 354,469 |  
|Total liabilities and shareholders equity   |  |                                       | 479,116 |   |             |   | 38,307 |             |  |   | 517,423 |  
|                                             | 
|                                             |  | Consolidated Statements of Cash Flows |        
|Thirty-nine weeks ended November 27, 2004    |  | Aspreviously reported                 |         |   | Adjustments |   |        | As restated | 
|Net cash used in operating activities        |  | $                                     | (12,377 | ) |             | $ | 7,583  |             |  | $ | (4,794  | )
|Net cash used in investing activities        |  |                                       | (28,528 | ) |             |   | (7,583 | )           |  |   | (36,111 | )



9



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3. Stock Based Compensation



As allowed by FASB Statement No. 148 (FAS 148), Accounting for Stock-Based Compensation  Transition and
Disclosure, which amends FASB Statement No. 123 (FAS 123), Accounting for Stock-Based Compensation, the Company has elected to follow APB Opinion No. 25, Accounting for Stock Issued to
Employees and related interpretations in accounting for its stock options. Under APB Opinion No. 25, if the exercise price of the Companys employee stock options equals or exceeds the market price of the underlying stock on the
date of the grant, no compensation expense is recognized. The Company also has an Employee Stock Purchase Plan that qualifies as a non-compensatory employee stock purchase plan under Section 423 of the Internal Revenue Code, and accordingly, no
compensation expense is recognized. As it relates to the granting of restricted shares, compensation expense equal to the market value at the date of grant is recognized over the vesting period.



The pro forma effects of applying FAS 123 may not be representative of the
effects on reported net income and earnings per share of future periods because options vest over several years and additional awards may be made each year.



The effect on net income and earnings per share if the Company had applied the fair value recognition provisions of FAS 123 to its stock-based employee
compensation would have been as follows:



|                                                                                                      |  |                                         |        |   |                            |   |       |                  |  |   |                            |   |  |   |        |  
|----------------------------------------------------------------------------------------------------- |  | --------------------------------------- | ------ | - | -------------------------- | - | ----- | ---------------- |  | - | -------------------------- | - |  | - | ------ | -
|                                                                                                      |  | Thirteen Weeks Ended                    |        |   | Thirty-nine Weeks Ended    |  
|                                                                                                      |  | November 26,2005                        |        |   | November 27,2004(Restated) |   |       | November 26,2005 |  |   | November 27,2004(Restated) |  
|                                                                                                      |  | (in thousands except per share amounts) |       
|Net income as reported                                                                                |  | $                                       | 845    |   |                            | $ | 2,218 |                  |  | $ | 32,473                     |   |  | $ | 33,066 |  
|Total stock based employee compensation expense using the fair value based method, net of related tax |  |                                         | (1,154 | ) |                            |   | (891  | )                |  |   | (2,827                     | ) |  |   | (2,494 | )
|Stock based employee compensation expense recorded, net of related tax                                |  |                                         | 164    |   |                            |   | 77    |                  |  |   | 314                        |   |  |   | 231    |  
|                                                                                                      |  |                                         |        |   |                            |   |       |                  |  |   |                            |   |  |   |        |  
|Pro forma net income (loss)                                                                           |  | $                                       | (145   | ) |                            | $ | 1,404 |                  |  | $ | 29,960                     |   |  | $ | 30,803 |  
|                                                                                                      |  |                                         |        |   |                            |   |       |                  |  |   |                            |   |  |   |        |  
|Diluted earnings per share                                                                            |  |                                         |        |   |                            |   |       |                  |  |   |                            |   |  |   |        |  
|As reported                                                                                           |  | $                                       | .02    |   |                            | $ | .04   |                  |  | $ | .65                        |   |  | $ | .67    |  
|Pro forma                                                                                             |  | $                                       |       |   |                            | $ | .03   |                  |  | $ | .61                        |   |  | $ | .63    |  
|Basic earnings per share                                                                              |  |                                         |        |   |                            |   |       |                  |  |   |                            |   |  |   |        |  
|As reported                                                                                           |  | $                                       | .02    |   |                            | $ | .05   |                  |  | $ | .67                        |   |  | $ | .69    |  
|Pro forma                                                                                             |  | $                                       |       |   |                            | $ | .03   |                  |  | $ | .62                        |   |  | $ | .64    |  



In December 2004, the
FASB issued Statement No. 123R (FAS 123R), Share-Based Payment, a revision of FAS 123. FAS 123R requires the measurement of all stock-based payments to employees, including grants of employee stock options and stock purchase
rights granted pursuant to certain employee stock purchase plans, using a fair-value based method and the recording of such expense in our Consolidated Statements of Income. The accounting provisions of FAS 123R for the Company are effective, and
will be adopted, beginning February 26, 2006, the beginning of the next fiscal year. The pro forma disclosures previously permitted under FAS 123 will no longer be an alternative to financial statement recognition. FAS 123R provides two
alternatives for adoption: (1) a modified prospective method in which compensation cost is recognized for all awards granted subsequent to the effective date of this statement as well as for the unvested portion of awards
outstanding as of the effective date; or (2) a modified retrospective method which follows the approach in the modified prospective method, but



10



---

also permits entities to restate prior periods to record compensation cost calculated under FAS 123 for the pro forma disclosure. The Company has not
yet determined which method of adoption it will apply.



The
adoption of FAS 123R is expected to have an impact on the Companys results of operations, although it will have no impact on the Companys overall financial position. The impact of adopting FAS 123R cannot be accurately
estimated at this time, as it will depend on the market value and the amount of share-based awards granted in future periods. However, had the Company adopted FAS 123R in a prior period, the impact would approximate the impact of FAS 123,
using the Black-Scholes model, as presented in the table above. FAS 123R also requires tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow, in the Consolidated
Statements of Cash Flows. Excess tax deductions for future periods cannot be accurately estimated at this time, as they depend on the timing of stock option exercises and the Companys share price on the exercise date. Excess tax deductions for
the thirty-nine weeks ended November 27, 2004 and November 26, 2005 have been separately classified as tax benefit from exercise of stock options in the Consolidated Statements of Cash Flows.



4. Common Stock



On July 22, 2004, the Companys Board of Directors approved a new stock repurchase program in which the
Company is authorized to purchase on the open market or in privately negotiated transactions through December 2007, up to 5 million shares of the Companys outstanding Class A Common Stock. During the thirty-nine weeks ended
November 26, 2005, the Company has purchased 1,324,600 shares of its Class A Common Stock at an average price of $15.00 per share for an aggregate amount of $19,865,000. As of November 26, 2005, the Company has 3,675,400 shares still
available to repurchase under the program.



On October 21,
2004, the Companys Board of Directors declared a two-for-one split of the Companys Class A and Class B Common Stock which were distributed after the close of business on November 17, 2004 in the form of a 100% stock dividend to
shareholders of record as of November 5, 2004. All references in the consolidated financial statements to number of shares and per share amounts of the Companys Class A and B Common Stock prior to November 17, 2004 have been
retroactively restated to reflect the impact of the Companys stock split.



5. Impact of Hurricanes



During the thirteen
weeks ended November 26, 2005, several hurricanes struck a portion of the southern United States, causing the ultimate closure of two stores in the impacted areas. Based upon the terms of the Companys merchandise, property and business
interruption insurance and related deductibles, management does not believe that the ultimate resolution of these events will be material to the Companys financial position.



11



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



Except for the historical information contained herein, the matters discussed in this filing are forward looking
statements that involve risks and uncertainties that could cause actual results to differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to, product demand and
market acceptance risks, the effect of economic conditions, the reliance on a few key vendors for a majority of merchandise purchases (including a significant portion from one key vendor), the effect of competitive products and pricing, the ability
to attract and retain qualified personnel, the availability of products, management of growth, and the other risks detailed in the Companys Securities and Exchange Commission filings. The words or phrases anticipates,
plans, expects, will continue, believes, estimates, projects, or similar expressions are intended to identify forward looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. The Company disclaims any intent or obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.



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 26, 2005 (fiscal 2005). The Companys consolidated results of operations include those of
The Finish Line Man Alive, Inc. (Man Alive), a wholly-owned subsidiary of The Finish Line, Inc., for the periods presented since the date of its acquisition, January 29, 2005. Man Alive is not, however, included in any comparable store
information. Comparable store information includes Internet sales.



Restatement of Prior Financial Information



We
have restated the consolidated balance sheet at November 27, 2004, and the consolidated statements of income and cash flows for the thirteen and thirty-nine weeks ended November 27, 2004 in this Quarterly Report on Form 10-Q. The
restatement also affects periods prior to fiscal 2005. The restatement adjustments are non-cash and had no impact on revenues or comparable store sales. For information with respect to the restatement, see Note 2 to the consolidated
financial statements contained in our Annual Report on Form 10-K for fiscal 2005. We did not amend our previously filed Quarterly Reports on Form 10-Q for the restatement. Therefore, the financial statements and related financial information
contained in such reports should no longer be relied upon. Throughout Managements Discussion and Analysis of Financial Condition and Results of Operations, all referenced amounts for affected prior periods and prior period comparison
reflect the balances and amounts on a restated basis.



12



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Results of Operations



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



|          |  |                      |         |  |                  |   |  |   |         |  |     |  
|--------- |  | -------------------- | ------- |  | ---------------- | - |  | - | ------- |  | --- | -
|          |  | Thirteen Weeks Ended |        
|          |  | November 26,2005     |         |  | November 27,2004 |  
|          |  | (unaudited)          |         |  | (unaudited)      |  
|Category  |  |                      |         |  |                  |   |  |  
|Footwear  |  | $                    | 209,804 |  | 77               | % |  | $ | 183,357 |  | 78  | %
|Softgoods |  |                      | 64,176  |  | 23               | % |  |   | 51,896  |  | 22  | %
|          |  |                      |         |  |                  |   |  |   |         |  |     |  
|Total     |  | $                    | 273,980 |  | 100              | % |  | $ | 235,253 |  | 100 | %



|          |  |                         |         |  |                  |   |  |   |         |  |     |  
|--------- |  | ----------------------- | ------- |  | ---------------- | - |  | - | ------- |  | --- | -
|          |  | Thirty-nine Weeks Ended |        
|          |  | November 26,2005        |         |  | November 27,2004 |  
|          |  | (unaudited)             |         |  | (unaudited)      |  
|Category  |  |                         |         |  |                  |   |  |  
|Footwear  |  | $                       | 724,020 |  | 80               | % |  | $ | 650,472 |  | 81  | %
|Softgoods |  |                         | 182,800 |  | 20               | % |  |   | 154,909 |  | 19  | %
|          |  |                         |         |  |                  |   |  |   |         |  |     |  
|Total     |  | $                       | 906,820 |  | 100              | % |  | $ | 805,381 |  | 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 |   |  | Thirty-nine Weeks Ended    |  
|                                             |  | November 26,2005     |   |  | November 27,2004(Restated) |   |  | November 26,2005 |   |  | November 27,2004(Restated) |  
|                                             |  | (unaudited)          |   |  | (unaudited)                |  
|Net sales                                    |  | 100.0                | % |  | 100.0                      | % |  | 100.0            | % |  | 100.0                      | %
|Cost of sales (including occupancy expenses) |  | 71.7                 |   |  | 72.0                       |   |  | 69.2             |   |  | 69.0                       |  
|                                             |  |                      |   |  |                            |   |  |                  |   |  |                            |  
|Gross profit                                 |  | 28.3                 |   |  | 28.0                       |   |  | 30.8             |   |  | 31.0                       |  
|Selling, general and administrative expenses |  | 27.9                 |   |  | 26.8                       |   |  | 25.2             |   |  | 24.5                       |  
|                                             |  |                      |   |  |                            |   |  |                  |   |  |                            |  
|Operating income                             |  | .4                   |   |  | 1.2                        |   |  | 5.6              |   |  | 6.5                        |  
|Interest income, net                         |  | .1                   |   |  | .1                         |   |  | .2               |   |  | .1                         |  
|                                             |  |                      |   |  |                            |   |  |                  |   |  |                            |  
|Income before income taxes                   |  | .5                   |   |  | 1.3                        |   |  | 5.8              |   |  | 6.6                        |  
|Provision for income taxes                   |  | .2                   |   |  | .4                         |   |  | 2.2              |   |  | 2.5                        |  
|                                             |  |                      |   |  |                            |   |  |                  |   |  |                            |  
|Net income                                   |  | .3                   | % |  | .9                         | % |  | 3.6              | % |  | 4.1                        | %
|                                             |  |                      |   |  |                            |   |  |                  |   |  |                            |  



13



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Thirteen Weeks Ended November 26, 2005 Compared to Thirteen Weeks Ended November 27, 2004



Net sales increased 16.5% to $274.0 million for the thirteen weeks ended
November 26, 2005 from $235.3 million for the thirteen weeks ended November 27, 2004. This increase in net sales was primarily attributable to a 3.6% increase in comparable store sales for the period along with an increase in net sales
from new stores. As of November 26, 2005, the number of stores in operation increased by 115 stores (19.4%) to 707 from 592 at November 27, 2004. The 115 additional stores were made up of 70 new Finish Line stores less 4 Finish Line
stores closed plus 49 Man Alive stores (37 acquired and 12 opened). Comparable footwear net sales for the thirteen weeks ended November 26, 2005 ̧ increased approximately 4.7% versus the thirteen weeks ended November 27, 2004.
Comparable softgood net sales decreased approximately 0.1% for the comparable period. Net sales per square foot for comparable stores increased to $71 from $70 for the same thirteen-week period of the prior year.



Gross profit for the thirteen weeks ended November 26, 2005 was $77.5
million, an increase of $11.6 million over the thirteen weeks ended November 27, 2004. During this same period, gross profit increased to 28.3% of net sales versus 28.0% for the prior year. This 0.3% increase was due to a 0.8% increase in
margin for product sold, which was partially offset by a 0.4% increase in occupancy costs as a percentage of net sales and a 0.1% increase in inventory shrink. The 0.8% increase in margin for product sold was primarily related to an increase in
softgood margins as private label sales, which have higher margins, continued to perform well during the quarter, along with the prior year quarter having more licensed apparel that was marked down and therefore had lower margins. Also, Man Alive
contributed strong product margins during the thirteen weeks ended November 26, 2005, which represented 0.2% of the 0.8% increase in product margin.



Selling, general and administrative expenses increased $13.4 million, or 21.4%, to $76.5 million (27.9% of net sales) for the thirteen weeks ended
November 26, 2005 from $63.1 million (26.8% of net sales) for the thirteen weeks ended November 27, 2004. This dollar increase was primarily attributable to the operating costs related to operating 115 additional stores (66 net Finish Line
stores and 49 Man Alive stores) at November 26, 2005 versus November 27, 2004. The 1.1% increase as a percentage of sales was primarily related to the following factors: (1) an increase in freight of 0.2%, as a percentage of net
sales, due to higher fuel surcharges; (2) an increase in depreciation expense of 0.4%, as a percentage of net sales, due to higher costs in new stores and the corporate office and distribution center additions; (3) an increase in
advertising of 0.2%, as a percentage of net sales, that is primarily due to a timing difference between quarters this year from the prior year as advertising has decreased as a percentage of net sales year-to-date compared to prior year-to-date; and
(4) an additional 0.3%, as a percentage of net sales, due to Man Alives current cost structure.



Net interest income was $0.3 million (0.1% of net sales) for the thirteen weeks ended November 27, 2004 and November 26, 2005.



The provision for income taxes was $0.5 million for the thirteen weeks ended
November 26, 2005, as compared to $0.9 million for the thirteen weeks ended November 27, 2004. This $0.4 million decrease was due to the decreased level of income before income taxes for the thirteen weeks ended November 26, 2005,
partially offset by an increase in the effective tax rate from 29.5% for the thirteen weeks ended November 27, 2004 to 37.5% for the thirteen weeks ended November 26, 2005. The 29.5% effective tax rate in the prior year was the result of
reducing the year-to-date effective tax rate to 37.5% from 38.0% based on state tax planning initiatives the Company had implemented.



Net income decreased 61.9% to $0.8 million for the thirteen weeks ended November 26, 2005 compared to net income of $2.2 million for the thirteen
weeks ended November 27, 2004. Diluted net income per share was $.02 for the thirteen weeks ended November 26, 2005 compared to diluted net income per share of $.04 for the thirteen weeks ended November 27, 2004. Diluted weighted
average shares outstanding were 49,058,000 and 49,361,000 for the thirteen weeks ended November 26, 2005 and November 27, 2004, respectively.



14



---

Thirty-Nine Weeks Ended November 26, 2005 Compared to Thirty-Nine Weeks Ended November 27, 2004



Net sales increased 12.6%, or $101.4 million, to $906.8
million for the thirty-nine weeks ended November 26, 2005 from $805.4 million for the thirty-nine weeks ended November 27, 2004. Of this increase, $63.4 million was attributable to a 19.4% increase in the number of stores open (70 Finish
Line stores opened less 4 stores closed plus 49 Man Alive stores acquired or opened) during the period from 592 at November 27, 2004 to 707 at November 26, 2005. The balance of the increase was attributable to a $33.1 million increase in
net sales from the existing stores open only part of the first thirty-nine weeks of last year along with a comparable store net sales increase of 0.9% for the thirty-nine weeks ended November 26, 2005. Comparable footwear net sales for the
thirty-nine weeks ended November 26, 2005, increased approximately 2.0%. Comparable net softgood sales decreased approximately 4.0% for the comparable period. The 4.0% decrease in comparable net softgood sales was primarily due to a decline in
the average retail selling price of softgoods. This is primarily related to the shift in fashion from licensed jerseys to more branded and private label sold during the thirty-nine weeks ended November 26, 2005. Net sales per square foot for
comparable stores decreased to $244 from $246 for the same period of the prior year.



Gross profit for the thirty-nine weeks ended November 26, 2005 was $279.3 million, an increase of $30.0 million over the thirty-nine weeks ended November 27, 2004. During this same period gross profit
decreased to 30.8% of net sales versus 31.0% for the prior year. This 0.2% decrease was due to a 0.7% increase in occupancy costs as a percentage of net sales, which was partially offset, by a 0.5% increase in margin for product sold. The 0.7%
increase in occupancy costs as a percentage of net sales was primarily the result of 135 new Finish Line stores opened since February 29, 2004 having higher average occupancy costs on a per square foot basis than the remaining store base.
Additionally, new store sales typically take 3-5 years to reach their sales peak. Therefore, the sales performance per square foot for these new stores is less than the remaining store base. The 0.5% improvement in margin for product sold was
primarily related to an increase in softgood margins as private label sales, which have higher margins, continue to perform well this year, along with the prior year having more licensed apparel that was marked down and therefore had lower margins.
Also, Man Alive contributed strong product margins during the thirty-nine weeks ended November 26, 2005, which represented 0.1% of the 0.5% increase in product margin.



Selling, general and administrative expenses increased $31.6 million, or 16.0%, to $228.8 million (25.2% of net sales) for
the thirty-nine weeks ended November 26, 2005 from $197.2 million (24.5% of net sales) for the thirty-nine weeks ended November 27, 2004. This dollar increase was primarily attributable to the operating costs related to operating 115
additional stores at November 26, 2005 versus November 27, 2004. The 0.7% increase as a percentage of sales was primarily related to an increase in freight of 0.2%, as a percentage of net sales, due to higher fuel surcharges, although the
Company has seen some easing of the fuel surcharges recently, and an increase in depreciation expense of 0.3%, as a percentage of sales, due to higher costs in new stores and the corporate office and distribution center additions. The thirty-nine
weeks ended November 26, 2005 also included a $1.5 million (0.2% of net sales) reserve recorded related to a class action lawsuit.



Net interest income was $1.4 million (0.2% of net sales) for the thirty-nine weeks ended November 26, 2005, compared to net interest income of $0.7
million (0.1% of net sales) for the thirty-nine weeks ended November 27, 2004, an increase of $0.7 million. This increase was due primarily to an increase in interest rates earned in the thirty-nine weeks ended November 26, 2005 compared
to the same period in prior year.



The Companys provision
for federal and state income taxes was $19.5 million for the thirty-nine weeks ended November 26, 2005 compared to $19.8 million for the thirty-nine weeks ended November 27, 2004. The $0.3 million decrease in the provision is due to the
decreased level in income before income taxes for the thirty-nine weeks ended November 26, 2005. The effective tax rate was 37.5% for the thirty-nine weeks ended November 27, 2004 and November 26, 2005.



15



---

Net income decreased 1.8% to $32.5 million for the thirty-nine weeks ended November 26, 2005
compared to $33.1 million for the thirty-nine weeks ended November 27, 2004. Diluted net income per share decreased 3.0% to $.65 for the thirty-nine weeks ended November 26, 2005 compared to diluted net income per share of $.67 for the
thirty-nine weeks ended November 27, 2004. Diluted weighted average shares outstanding were 49,605,000 and 49,302,000 for the periods ended November 26, 2005 and November 27, 2004, respectively. The increase in weighted average shares
outstanding was the result of exercise of Company stock options, offset partially by the purchase of shares by the Company.



Liquidity and Capital Resources



The Company used net cash of $1.7 million in its operating activities during the thirty-nine weeks ended November 26, 2005 as compared to net cash
used in its operating activities of $4.8 million during the thirty-nine weeks ended November 27, 2004.



Consolidated merchandise inventories were $311.5 million at November 26, 2005 compared to $241.2 million at February 26, 2005 and $263.7 million
at November 27, 2004. On a per square foot basis, Finish Line merchandise inventories (excluding Man Alive) at November 26, 2005 increased 4.6% compared to November 27, 2004, and were 17.0% higher than at February 26, 2005. The
17.0% increase from February 26, 2005 is due to the seasonality of the business and building inventory in November for the holiday season in December, which is consistent with prior years.



The Company had working capital of $225.7 million at November 26, 2005,
a decrease of $9.1 million from the working capital of $234.8 million at February 26, 2005.



The Company generated cash of $5.8 million from its investing activities and used net cash of $36.1 million for the thirty-nine week periods ended
November 26, 2005 and November 27, 2004, respectively. In the thirty-nine weeks ended November 26, 2005, $51.4 million was used primarily for construction of new stores, remodeling of existing stores and the expansion of the corporate
offices. Proceeds from the sale of available-for-sale marketable securities were $249.6 for the thirty-nine weeks ended November 26, 2005 offset by purchases of $192.4 million of available-for-sale marketable securities. A portion of the
proceeds were used to purchase $19.9 million of treasury shares and pay $3.7 million in dividends during the thirty-nine week period ended November 26, 2005.



At November 26, 2005 the Company had cash and cash equivalents of $39.3 million and no interest bearing debt. Cash
equivalents are primarily invested in tax-exempt instruments with daily liquidity.



The Company currently plans to open 67 Finish Line stores (64 have been opened through November 26, 2005) and 14 Man Alive stores (12 have been opened through November 26, 2005), remodel 24 existing Finish
Line stores (21 have been completed through November 26, 2005) and close 5-6 Finish Line stores (4 have been closed through November 26, 2005) during this fiscal year. In addition, the Company completed the expansion of the existing
corporate office in Indianapolis and has begun renovation on the previous corporate office space along with various other projects. The Company expects capital expenditures for the current fiscal year to approximate $55-60 million. In fiscal 2007,
the Company currently plans to open 45-50 Finish Line stores, 25-30 Man Alive stores and 10-15 Paiva stores (the new womens concept stores). The Company also plans to remodel 15-20 Finish Line stores. Management believes that cash on hand,
operating cash flow and the Companys existing $75.0 million bank facility, which expires on February 25, 2010, will provide sufficient capital to complete the Companys current store expansion program and to satisfy the
Companys other capital requirements in the foreseeable future.



On July 22, 2004, the Companys Board of Directors approved a new stock repurchase program in which the Company is authorized to purchase on the open market or in privately negotiated transactions through December 2007, up to
5.0 million shares of the Companys Class A Common Stock outstanding. During the thirty-nine weeks ended November 26, 2005, the Company purchased 1.3 million shares of its Class A Common Stock at an average price of
$15.00 per share for an aggregate amount of $19.9 million. The Company has 3.7 million shares still available to repurchase under the program.



16



---

On October 21, 2004, The Companys Board of Directors declared a two-for-one split of
the Companys Class A and Class B Common Stock, which were distributed after the close of business on November 17, 2004 in the form of a 100% stock dividend to shareholders of record as of November 5, 2004. All references within
Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations to number of shares and per share amounts of the Companys Class A and B Common Stock prior to November 17, 2004 have
been retroactively restated to reflect the impact of the Companys stock split.



The Companys contractual obligations primarily consist of long-term debt, operating leases, and purchase orders for merchandise inventory. There have been no significant changes in the Companys contractual
obligations since February 26, 2005, 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 additional operating leases entered into due to store openings).



Recent Accounting Standards



In December 2004, the Financial Accounting Standards Board (FASB) issued Statement No. 123R (FAS 123R), Share-Based Payment, a revision
of FASB issued Statement No. 123 (FAS 123), Accounting for Stock-Based Compensation. FAS 123R requires the measurement of all stock-based payments to employees, including grants of employee stock options and stock purchase rights
granted pursuant to certain employee stock purchase plans, using a fair-value based method and the recording of such expense in our consolidated statements of income. The accounting provisions of FAS 123R for the Company are effective, and will be
adopted, beginning February 26, 2006, the beginning of the next fiscal year. The pro forma disclosures previously permitted under FAS 123 will no longer be an alternative to financial statement recognition. FAS 123R provides two
alternatives for adoption: (1) a modified prospective method in which compensation cost is recognized for all awards granted subsequent to the effective date of this statement as well as for the unvested portion of awards
outstanding as of the effective date; or (2) a modified retrospective method which follows the approach in the modified prospective method, but also permits entities to restate prior periods to record compensation cost
calculated under FAS 123 for the pro forma disclosure. The Company has not yet determined which method of adoption it will apply.



The adoption of FAS 123R is expected to have an impact on the Companys results of operations, although it will have no impact on the
Companys overall financial position. The impact of adopting FAS 123R cannot be accurately estimated at this time, as it will depend on the market value and the amount of share-based awards granted in future periods. See Note 3
to the accompanying consolidated financial statements for the pro forma net income and earnings per share amounts for the thirteen and thirty-nine weeks ended November 27, 2004 and November 26, 2005, presented as if the Company had used a fair-value
based method similar to a method allowed under FAS 123R to measure compensation expense for employee stock-based compensation awards. FAS 123R also requires tax deductions in excess of recognized compensation cost to be reported as a financing cash
flow, rather than as an operating cash flow, in the Consolidated Statements of Cash Flows. Excess tax deductions for future periods cannot be accurately estimated at this time, as they depend on the timing of stock option exercises and the
Companys share price on the exercise date. Excess tax deductions for the thirty-nine weeks ended November 27, 2004 and November 26, 2005 have been separately classified as tax benefit from exercise of stock options in the
Consolidated Statements of Cash Flows.



For further summary on
other recent accounting pronouncements, see Note 1 to the accompanying consolidated financial statements.



17



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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 significant 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 26, 2005.



|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 26, 2005 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 26, 2005. For the thirty-nine weeks ended November 26, 2005, 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 SEC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.



PART II. OTHER INFORMATION



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



None.



18



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|ITEM 2: | CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES
|------- | --------------------------------------------------------------------------------



Shares of Class A Common Stock repurchased by the Company during the quarter ended November 26, 2005, were as
follows:



Issuer Purchases of Equity Securities



|          |  |                                |  |                                |       |                                                                           |           |                                                                             |          
|--------- |  | ------------------------------ |  | ------------------------------ | ----- | ------------------------------------------------------------------------- | --------- | --------------------------------------------------------------------------- | ---------
|Period    |  | Total Numberof SharesPurchased |  | AveragePrice Paidper Share (1) |       | Total Number ofSharesPurchased asPart of PubliclyAnnouncedPlansorPrograms |           | Maximum Number ofShares that May YetBe Purchased Underthe Plans or Programs
|September |  | 452,500                        |  | $                              | 13.88 |                                                                           | 452,500   |                                                                             | 4,447,500
|October   |  | 772,100                        |  | $                              | 15.50 |                                                                           | 772,100   |                                                                             | 3,675,400
|November  |  |                               |  | $                              |      |                                                                           |          |                                                                             | 3,675,400
|          |  |                                |  |                                |       |                                                                           |           |                                                                             |          
|Total     |  | 1,224,600                      |  | $                              | 14.90 |                                                                           | 1,224,600 |                                                                             | 3,675,400
|          |  |                                |  |                                |       |                                                                           |           |                                                                             |          



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



The above repurchases were part of a publicly announced plan that was authorized by the Companys Board of Directors for a maximum of 5.0 million shares of
Common Stock. The program was approved on July 22, 2004 and expires on December 31, 2007.



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



None.



|ITEM 4: | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------



None.



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



None.



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



Exhibits



|     |  |                                                                                                                       
|---- |  | ----------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of Chief Executive Officer Pursuant to Exchange Act Rule 13a-14(a) and 15d-14(a), as amended            
|     | 
|31.2 |  | Certification of Chief Financial Officer Pursuant to Exchange Act Rule 13a14(a) and 15d-14(a), 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



19



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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: December 21, 2005 |  |  |  | By:                   |  | /s/ Kevin S. Wampler
|                        |  |  |  |                       |  |                      |  | Kevin S. Wampler                          
|                        |  |  |  |                       |  |                      |  | Executive Vice President  Chief Financial
|                        |  |  |  |                       |  |                      |  | Officer and Assistant Secretary           



20



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Exhibit Index



|              |  |                                                                                                                       
|------------- |  | ----------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                           
|31.1          |  | Certification of Chief Executive Officer Pursuant to Exchange Act Rule 13a-14(a) and 15d- 14(a), as amended           
|              | 
|31.2          |  | Certification of Chief Financial Officer Pursuant to Exchange Act Rule 13a-14(a) and 15d- 14(a), 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



21