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Failed merger causes huge Finish Line loss

March 27, 2008
Indianapolis-based Finish Line Inc. late this afternoon reported a fourth-quarter loss of $38.6 million, thanks in large part to an $81.5-million charge related to its escape from an ill-fated merger agreement with Tennessee-based Genesco.

Even without the charge, the quarter was tough for the athletic retailer. Comparable-store sales dropped 6 percent, keeping alive a two-year streak of quarters with declining same-store sales.

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Our fourth-quarter sales reflected the challenging environment for retail in general," Finish Line CEO Alan Cohen said in a statement.

H
e said the company's financial position still is strong, and he expects a cash balance of more than $50 million to remain after the company completes its Genesco settlement agreement.

Finish Line bid $1.5 billion in June 2007 for the parent company of mall chains Hat World, Lids and Journeys. But the deal turned sour after credit markets seized up, and sales for both companies declined.

To opt out of the deal, Finish Line agreed to pay Genesco $39 million in cash, along with more than 6.5 million shares of the company. Swiss giant UBS, which offered financing for the deal, agreed to pay the balance of a $175 million settlement, which came a day before a trial was scheduled to begin in New York.

Finish Line operates about 700 Finish Line stores in 47 states and 94 Man Alive locations in 19 states.
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