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These excerpts taken from the FL 10-K filed Mar 30, 2009. Liquidity and Capital Resources Liquidity Generally, the Company’s primary source of cash has been from operations. The Company generally finances real estate with operating leases. The principal uses of cash have been to finance inventory requirements, capital expenditures related to store openings, store remodelings, management information systems and other support facilities, and to fund general working capital requirements. Management believes its cash, cash equivalents and future operating cash flow from operations will be adequate to fund its working capital requirements, capital expenditures, retirement plan contributions, anticipated quarterly dividend payments, interest payments, potential share repurchases, and other cash requirements to support the development of its short-term and long-term operating strategies. The Company may also from time to time seek to retire or purchase outstanding debt through open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. During 2008 the Company had $75 million of cash from its international operations invested in the Reserve International Liquidity Fund, Ltd., a money market fund (the “Fund”). This surplus cash was not required or used for daily operations. The Company requested a full redemption on September 16, 2008. At that time, the Company was informed by the Reserve Management Company, the Fund’s investment advisor, that the redemption trades would be honored at a $1.00 per share net asset value. Although the Company received a partial distribution of $49 million in the fourth quarter of 2008, the Company has not received information as to when the remaining amount of its redemption request will be paid. Litigation, to which the Company is not a party, exists that involves how the remaining assets of the Fund should be distributed. Therefore, there is a risk that the Company could receive less than the $1.00 per share net asset value. As a result, during the third quarter of 2008, the Company recognized an impairment loss of $3 million to reflect a decline in fair value that is other-than-temporary. Based on the maturities of the underlying investments in the Fund and the current status of the redemption process, the Company reclassified $23 million (net of the impairment charge of $3 million) from “Cash and cash equivalents” to “Short-term investments” in the Consolidated Balance Sheet as of January 31, 2009. We believe that we have adequate liquidity to meet our business needs through our existing cash balances, our ability to generate cash flows through operations, and the amounts available to borrow under our revolving credit facility. Maintaining access to merchandise that the Company considers appropriate for its business may be subject to the policies and practices of its key vendors. Therefore, the Company believes that it is critical to continue to maintain satisfactory relationships with its key vendors. The Company purchased approximately 80 percent in 2008 and 77 percent in 2007 of its merchandise from its top five vendors and expects to continue to obtain a significant percentage of its athletic product from these vendors in future periods. Approximately 64 percent in 2008 and 56 percent in 2007 was purchased from one vendor — Nike, Inc. Planned capital expenditures for 2009 are approximately $100 million,of which $77 million relates to modernizations of existing stores and new store openings, and $23 million reflects the development of information systems and other support facilities. The Company has the ability to revise and reschedule the anticipated capital expenditure program, should the Company’s financial position require it. The Company has contributed $8 million to its U.S. pension plan in February 2009. Due to the pension plan asset performance experienced for the year ended January 31, 2009, the Company may make additional contributions during 2009 to its U.S. qualified pension plan. The Company is in the process of evaluating the amount and timing of the contribution. The contribution amount will depend on the plan asset performance for the balance of the year and any statutory or regulatory changes that may occur. 17 Any material adverse change in customer demand, fashion trends, competitive market forces or customer acceptance of the Company’s merchandise mix and retail locations, uncertainties related to the effect of competitive products and pricing, the Company’s reliance on a few key vendors for a significant portion of its merchandise purchases, and risks associated with foreign global sourcing or economic conditions worldwide could affect the ability of the Company to continue to fund its needs from business operations. Cash Flow Operating activities from continuing operations provided cash of $383 million in 2008 as compared with $283 million in 2007. These amounts reflect income from continuing operations adjusted for non-cash items and working capital changes. During 2008, the Company recorded non-cash impairment charges and store closing program costs of $259 million primarily related to its domestic operations. Merchandise inventories represented a $128 million source of cash in 2008 as inventory purchases were reduced to keep inventory levels in line with sales. Additionally, the Company contributed $6 million to its Canadian qualified pension plan. Operating activities from continuing operations provided cash of $283 million in 2007 as compared with $189 million in 2006. During 2007, the Company recorded non-cash impairment charges and store closing program costs of $124 million related to its domestic operations. Merchandise inventories represented a $55 million source of cash in 2007 as inventory purchases were reduced to keep inventory levels in line with sales. Additionally, the Company did not contribute to its pension plans in 2007, as no contributions were required, compared with $68 million contributed in 2006. Net cash used by investing activities of the Company’s continuing operations was $272 million in 2008 as compared with $117 million provided by investing activities in 2007. The net cash used by investing activities for 2008 reflects the asset purchase from dELiA*s, Inc. of CCS for $106 million (including capitalized acquisition costs). Investing activities in 2008 also included a $3 million gain related to the sale of two lease interests in Europe. The Company did not purchase or sell short-term investments during 2008. However, reflected in investing activities is the reclassification of $23 million from cash and cash equivalents to short-term investments representing the remaining money market investment. Capital expenditures of $146 million in 2008 and $148 million in 2007 primarily related to store remodeling and new stores. Net cash provided by investing activities of the Company’s continuing operations was $117 million in 2007 as compared with $108 million used in investing activities in 2006. During 2007, the Company liquidated most of its short-term investments, which represented auction rate securities, due to issues in the global credit and capital markets. Capital expenditures of $148 million in 2007 and $165 million in 2006 primarily related to store remodeling and new stores. During 2007, the Company received $21 million representing the maturity of an investment of $14 million and the repayment of a note of $7 million. Net cash used in financing activities of continuing operations was $185 million in 2008 as compared with $138 million in 2007. During 2008, the Company reduced its long-term debt by repaying the balance of its term loan of $88 million. Additionally, the Company purchased and retired $6 million of its $200 million 8.50 percent debentures payable in 2022. The Company declared and paid dividends totaling $93 million in 2008 and $77 million in 2007. During 2008 and 2007, the Company received proceeds from the issuance of common stock and treasury stock in connection with the employee stock programs of $2 million and $9 million, respectively. Net cash used in financing activities of continuing operations was $138 million in 2007 as compared with $142 million in 2006. During 2007, the Company repaid $2 million of its term loan, purchased and retired $5 million of its 8.50 percent debentures payable in 2022, and repaid and retired its $14 million Industrial Revenue Bond, which was accounted for as capital lease. The Company recorded an excess tax benefit related to stock-based compensation of $1 million as a financing activity. The Company declared and paid dividends totaling $77 million in 2007 and $61 million in 2006. During 2007 and 2006, the Company received proceeds from the issuance of common stock and treasury stock in connection with the employee stock programs of $9 million and $12 million, respectively. During 2007, the Company purchased 2,283,254 shares of its common stock for approximately $50 million. 18 Liquidity and Capital Liquidity Generally, the Company’s primary source of cash has been from operations. Management believes its cash, cash equivalents and future operating cash During 2008 the Company had $75 million of cash from its international Maintaining access to merchandise that the Company considers appropriate Planned capital expenditures for 2009 are approximately $100 million,of The 17 | |||||||||||||||||||||||||||||||
Any Cash Flow Operating activities from continuing operations provided cash of $383 Operating activities from continuing operations provided cash of $283 Net Net Net Net 18 | |||||||||||||||||||||||||||||||
Liquidity and Capital Liquidity Generally, the Company’s primary source of cash has been from operations. Management believes its cash, cash equivalents and future operating cash During 2008 the Company had $75 million of cash from its international Maintaining access to merchandise that the Company considers appropriate Planned capital expenditures for 2009 are approximately $100 million,of The 17 | |||||||||||||||||||||||||||||||
Any Cash Flow Operating activities from continuing operations provided cash of $383 Operating activities from continuing operations provided cash of $283 Net Net Net Net 18 | |||||||||||||||||||||||||||||||
These excerpts taken from the FL 10-K filed Mar 31, 2008. Liquidity and Capital Resources Liquidity Generally, the Company’s primary source of cash has been from operations. The Company generally finances real estate with operating leases. The principal uses of cash have been to finance inventory requirements, capital expenditures related to store openings, store remodelings, and management information systems and other support facilities, and to fund general working capital requirements. Management believes its cash, cash equivalents and future operating cash flow from operations will be adequate to fund its working capital requirements, capital expenditures, pension contributions for the Company’s retirement plans, anticipated quarterly dividend payments, scheduled debt repayments, potential share repurchases, and other cash requirements to support the development of its short-term and long-term operating strategies. Maintaining access to merchandise that the Company considers appropriate for its business may be subject to the policies and practices of its key vendors. Therefore, the Company believes that it is critical to continue to maintain satisfactory relationships with its key vendors. The Company purchased approximately 77 percent in 2007 and 78 percent in 2006 of its merchandise from its top five vendors and expects to continue to obtain a significant percentage of its athletic product from these vendors in future periods. Approximately 56 percent in 2007 and 50 percent in 2006 was purchased from one vendor — Nike, Inc. Planned capital expenditures for 2008 are approximately $158 million, of which $135 million relates to modernizations of existing stores and new store openings, and $23 million reflects the development of information systems and other support facilities. Additionally, the Company intends to spend an additional $2 million on key money related to Europe. The Company has the ability to revise and reschedule the anticipated capital expenditure program, should the Company’s financial position require it. Any materially adverse change in customer demand, fashion trends, competitive market forces or customer acceptance of the Company’s merchandise mix and retail locations, uncertainties related to the effect of competitive products and pricing, the Company’s reliance on a few key vendors for a significant portion of its merchandise purchases, and risks associated with foreign global sourcing or economic conditions worldwide could affect the ability of the Company to continue to fund its needs from business operations. Cash Flow Operating activities from continuing operations provided cash of $283 million in 2007 as compared with $189 million in 2006. These amounts reflect income from continuing operations adjusted for non-cash items and working capital changes. During 2007, the Company recorded non-cash impairment charges and store closing program costs of $124 million related to its domestic operations. Merchandise inventories represented a $55 million source of cash in 2007 as inventory purchases were reduced to keep inventory levels in line with sales. Additionally, the Company did not contribute to its pension plans in 2007, as no contributions were required, compared with $68 million contributed in 2006. Operating activities from continuing operations provided cash of $189 million in 2006 as compared with $349 million in 2005. These amounts reflect income from continuing operations adjusted for non-cash items and working capital changes. During 2006, the Company recorded a non-cash impairment charge of $17 million related to the operations in Europe. The decline in operating cash flows of $160 million is primarily due to a reduction of accounts payable at year-end reflecting an acceleration of inventory receipts earlier in the fourth quarter of 2006. In addition, due to the calendar shift related to the 53rd week, approximately $47 million of the decline represents the timing of lease payments. Additionally, the Company contributed $68 million to its U.S. and Canadian qualified pension plans in 2006, as compared with contributions of $26 million in 2005. 15 Net cash provided by investing activities of the Company’s continuing operations was $117 million in 2007 as compared with $108 million used in investing activities in 2006. During 2007, the Company liquidated most of its short-term investments, which represented auction rate securities, due to issues in the global credit and capital markets. Capital expenditures of $148 million in 2007 and $165 million in 2006 primarily related to store remodeling and new stores. During 2007, the Company received $21 million representing the maturity of an investment of $14 million and the repayment of a note of $7 million. Net cash used in investing activities of the Company’s continuing operations was $108 million in 2006 as compared with $182 million in 2005. The Company’s purchase of short-term investments, net of sales, decreased by $49 million in 2006 as compared with an increase of $31 million in 2005. Capital expenditures of $165 million in 2006 and $155 million in 2005 primarily related to store remodeling and new stores. During 2006, the Company received net proceeds of $4 million as a result a lease termination. The Company also received $4 million of insurance proceeds from its insurance carriers related to the final settlement of the property and equipment claims for the 2005 hurricanes. Net cash used in financing activities of continuing operations was $138 million in 2007 as compared with $142 million in 2006. During 2007, the Company repaid $2 million of its term loan, purchased and retired $5 million of its 8.50 percent debentures payable in 2022, and repaid and retired its $14 million Industrial Revenue Bond which was accounted for as capital lease. As required by SFAS No. 123(R), the Company recorded an excess tax benefit related to stock-based compensation of $1 million as a financing activity. The Company declared and paid dividends totaling $77 million in 2007 and $61 million in 2006. During 2007 and 2006, the Company received proceeds from the issuance of common stock and treasury stock in connection with the employee stock programs of $9 million and $12 million, respectively. During 2007, the Company purchased 2,283,254 shares of its common stock for approximately $50 million. On February 20, 2008, the Board of Directors declared a quarterly cash dividend of $0.15 per share, which will be payable on May 2, 2008 to shareholders of record on April 18, 2008. This dividend represents a 20 percent increase over the previous quarterly per share amount and is equivalent to an annualized rate of $0.60 per share. Net cash used in financing activities of continuing operations was $142 million in 2006 as compared with $105 million in 2005. During 2006, the Company repaid $50 million of its term loan and purchased and retired $38 million of its 8.50 percent debentures payable in 2022 at a $2 million discount from face value. The Company recorded an excess tax benefit related to stock-based compensation of $2 million as a financing activity. The Company declared and paid dividends totaling $61 million in 2006 and $49 million in 2005. During 2006 and 2005, the Company received proceeds from the issuance of common stock and treasury stock in connection with the employee stock programs of $12 million and $14 million, respectively. During 2006, the Company purchased 334,200 shares of its common stock for approximately $8 million. Liquidity and Capital Liquidity Generally, the Company’s primary source of cash has been from operations. Management believes its cash, cash equivalents and future operating cash Maintaining access to merchandise Planned capital expenditures for 2008 are approximately $158 million, of Any Cash Flow Operating activities from continuing operations provided cash of $283 Operating activities from continuing operations provided cash of $189 15 | |||||||||||||||||||||||||||||||
Net Net Net Net This excerpt taken from the FL 10-K filed Apr 2, 2007. Liquidity and Capital Resources Liquidity Generally, the Company’s primary source of cash has been from operations. The Company usually finances real estate with operating leases. The principal uses of cash have been to fund inventory requirements, capital expenditures related to store openings, store remodelings, and management information systems and other support facilities, and other general working capital requirements. Management believes operating cash flows and current credit facilities will be adequate to fund its working capital requirements, scheduled pension contributions for the Company’s retirement plans, scheduled debt repayments, anticipated quarterly dividend payments, potential share repurchases, and to support the development of its short-term and long-term operating strategies. Planned capital expenditures for 2007 are approximately $170 million, of which $144 million relates to new store openings and modernizations of existing stores, and $26 million reflects the development of information systems and other support facilities. The Company has the ability to revise and reschedule the anticipated capital expenditure program, should the Company’s financial position require it. Maintaining access to merchandise that the Company considers appropriate for its business may be subject to the policies and practices of its key vendors. Therefore, the Company believes that it is critical to continue to maintain satisfactory relationships with its key vendors. The Company purchased approximately 78 percent in 2006 and 75 percent in 2005 of its merchandise from its top five vendors, in each respective year, and expects to continue to obtain a significant percentage of its athletic product from these vendors in future periods. Approximately 50 percent in 2006 and 49 percent in 2005 was purchased from one vendor — Nike, Inc. During 2006, two of our key vendors merged, the Company’s purchases from this vendor totaled 14 percent. Any materially adverse change in customer demand, fashion trends, competitive market forces or customer acceptance of the Company’s merchandise mix and retail locations, uncertainties related to the effect of competitive products and pricing, the Company’s reliance on a few key vendors for a significant portion of its merchandise purchases, risks associated with foreign global sourcing or economic conditions worldwide could affect the ability of the Company to continue to fund its needs from business operations. Cash Flow Operating activities from continuing operations provided cash of $189 million in 2006 as compared with $349 million in 2005. These amounts reflect income from continuing operations adjusted for non-cash items and working capital changes. During 2006, the Company recorded a non-cash impairment charge of $17 million related to the operations in Europe. The decline in operating cash flows of $160 million is primarily due to a reduction of accounts payable at year-end reflecting an acceleration of inventory receipts earlier in the fourth quarter of 2006. In addition, due to the calendar shift related to the 53rd week, approximately $47 million of the decline represents the timing of lease payments. Additionally, the Company contributed $68 million to its U.S. and Canadian qualified pension plans in 2006, as compared with contributions of $26 million in 2005. Operating activities from continuing operations provided cash of $349 million in 2005 as compared with $272 million in 2004. The net increase in operating cash flows of $77 million is primarily due to improved operating performance and changes in working capital primarily related to changes in merchandise inventories, offset by the related payables and lower pension contributions of $26 million in 2005 as compared with $106 million in 2004. Net cash used in investing activities of the Company’s continuing operations was $108 million in 2006 as compared with $182 million in 2005. The Company’s purchase of short-term investments, net of sales, decreased by $49 million in 2006 as compared with an increase of $31 million in 2005. Capital expenditures of $165 million in 2006 and $155 million in 2005 primarily related to store remodeling and new stores. During 2006, the Company received net proceeds of $4 million as a result of a lease termination. The Company also received $4 million of insurance proceeds from its insurance carriers related to the final settlement of the property and equipment claims for the 2005 hurricane. Net cash used in investing activities of the Company’s continuing operations was $182 million in 2005 as compared with $407 million in 2004. During 2004, the Company paid $226 million for the purchase of 349 Footaction stores from Footstar, Inc. and paid €13 million (approximately $16 million) for the purchase of 11 stores in the Republic of Ireland. 14 During 2005, the Company received $1 million from an escrow account upon the resolution of a Footaction lease matter relating to the 2004 acquisition. The Company’s purchase of short-term investments, net of sales, increased by $31 million in 2005 as compared with an increase of $9 million in 2004. Capital expenditures of $155 million in 2005 and $156 million in 2004 primarily related to store remodeling and new stores. The Company also received $3 million of insurance proceeds related to the hurricanes in 2005, representing the portion of insurance recoveries in excess of losses recorded. Net cash used in financing activities of continuing operations was $142 million in 2006 as compared with $105 million in 2005. During 2006, the Company repaid $50 million of its term loan and purchased and retired $38 million of its 8.50 percent debentures payable in 2022 at a $2 million discount from face value. As required by SFAS No. 123(R), the Company recorded an excess tax benefit related to stock-based compensation of $2 million as a financing activity. The Company declared and paid dividends totaling $61 million in 2006 and $49 million in 2005. During 2006 and 2005, the Company received proceeds from the issuance of common stock and treasury stock in connection with the employee stock programs of $12 million and $14 million, respectively. On February 15, 2006, the Company announced that its Board of Directors authorized a $150 million, three-year share repurchase program. This program was subsequently terminated on March 7, 2007, upon the Board of Directors authorization of a new $300 million, three-year share repurchase program. Under the share repurchase program, subject to legal and contractual restrictions, the Company may make purchases of its common stock, from time to time, depending on market conditions, availability of other investment opportunities and other factors. During 2006, the Company purchased 334,200 shares of its common stock for approximately $8 million. Net cash used in financing activities of continuing operations was $105 million in 2005 as compared with net cash provided of $167 million in 2004. The Company repaid $35 million of its 5-year, $175 million term loan during 2005 and declared and paid dividends totaling $49 million in 2005 and $39 million in 2004. During 2005 and 2004, the Company received proceeds from the issuance of common and treasury stock in connection with employee stock programs of $14 million and $33 million, respectively. As part of the $50 million stock repurchase program in effect in 2005, the Company purchased 1.6 million shares of its common stock during 2005 for approximately $35 million. This excerpt taken from the FL 10-Q filed Nov 30, 2006. LIQUIDITY AND CAPITAL RESOURCES Generally, the Company’s primary sources of cash have been from operations. The Company has a $200 million revolving credit facility. Other than to support standby letter of credit commitments, of which $14 million were in place at October 28, 2006, this revolving credit facility has not been used during 2006. The Company generally finances its stores with operating leases. The principal uses of cash have been to finance inventory requirements, capital expenditures related to store openings, store remodelings, and management information systems and to fund other general working capital requirements. Management believes operating cash flows and current credit facilities will be adequate to finance its working capital requirements, to make scheduled pension contributions for the Company’s retirement plans, to fund anticipated quarterly dividend payments, to make scheduled debt repayments and to support the development of its short-term and long-term operating strategies. Any materially adverse change in customer demand, fashion trends, competitive market forces, or customer acceptance of the Company’s merchandise mix and retail locations, uncertainties related to the effect of competitive products and pricing, the Company’s reliance on a few key vendors for a significant portion of its merchandise purchases and risks associated with foreign global sourcing or economic conditions worldwide, as well as other factors listed under the heading “Disclosure Regarding Forward-Looking Statements,” could affect the ability of the Company to continue to fund its needs from business operations. Net cash used in operating activities of continuing operations was $71 million for the thirty-nine weeks ended October 28, 2006 and net cash provided by operating activities was $74 million for the thirty-nine weeks ended October 29, 2005. These amounts reflect net income adjusted for non-cash items and working capital changes. During the second quarter of 2006, the Company recorded a non-cash impairment charge of $17 million related to the operations in Europe. The Company’s deferred taxes increased $32 million for the thirty-nine weeks ended October 28, 2006 as compared with the prior-year period primarily as a result of the expiration of U.S. bonus depreciation deductions, the tax associated with the Foot Locker Europe impairment charge and pension funding. The decline in operating cash flows primarily represents a decline in accounts payable and other accruals partially offset by a decrease in inventory purchases. The decline in accounts payable primarily reflects the timing of payment for certain marquee product in advance of scheduled launch dates. Additionally, the Company contributed $68 million to its U.S. and Canadian qualified pension plans in February 2006, as compared with contributions of $25 million to its U.S. and Canadian qualified pension plans in February 2005. The U.S. contributions were made in advance of ERISA requirements in both years. Net cash provided by investing activities was $34 million for the thirty-nine weeks ended October 28, 2006 and net cash used in investing activities was $69 million for the thirty-nine weeks ended October 29, 2005. The Company’s sales of short-term investments, net of purchases, increased by $116 million to $162 million for the thirty-nine weeks ended October 28, 2006 as compared with net sales of $46 million for the thirty-nine weeks ended October 28, 2005. Total capital expenditures for 2006 is projected to total $164 million, this comprises $134 million for new store openings and modernizations of existing stores and $30 million for the development of information systems and other support facilities. This amount is $21 million less from what was originally planned primarily as the Company now expects to open fewer stores. In addition, planned lease acquisition costs are $3 million and primarily relate to securing leases for the Company’s European operations. The Company has the ability to revise and reschedule its anticipated capital expenditure program in the event that any changes to the Company’s financial position require it. 23 Net cash used in financing activities for the Company’s operations was $126 million for the thirty-nine weeks ended October 28, 2006 and was $61 million for the thirty-nine weeks ended October 29, 2005. During the first quarter of 2006, the Company made payments of $50 million related to its term loan that were originally due in May of 2007 and 2008. During the third quarter of 2006, the Company repurchased $38 million of its 8.50 percent debentures payable in 2022 at a $2 million discount from face value. As required by SFAS No. 123(R), the Company recorded an excess tax benefit related to stock-based compensation of $2 million as a financing activity. The Company declared and paid a $0.09 per share dividend during the first, second and third quarters of 2006 totaling $42 million, as compared with a $0.075 per share dividend during each of the first three quarters of 2005, which totaled $34 million. The Company received proceeds from the issuance of common stock in connection with the employee stock programs of $8 million and $11 million for the thirty-nine weeks ended October 28, 2006 and October 29, 2005, respectively. As part of an authorized purchase program, the Company purchased 334,200 shares of its common stock during the first quarter of 2006 for approximately $8 million. There were no common stock purchases during the second or third quarters of 2006. On November 15, 2006 the Company’s Board of Directors declared a quarterly dividend on the Company’s common stock of $0.125 per share, which will be payable on February 2, 2007 to shareholders of record as of January 19, 2007. This dividend represents a 39 percent increase over the Company’s previous quarterly per share amount and is equivalent to an annualized rate of $0.50 per share. This excerpt taken from the FL 10-Q filed Aug 31, 2006. LIQUIDITY AND CAPITAL RESOURCES Generally, the Company’s primary sources of cash have been from operations. The Company has a $200 million revolving credit facility. Other than $15 million to support standby letter of credit commitments, this revolving credit facility has not been used during 2006. The Company generally finances real estate with operating leases. The principal uses of cash have been to finance inventory requirements, capital expenditures related to store openings, store remodelings, and management information systems and to fund other general working capital requirements. Management believes operating cash flows and current credit facilities will be adequate to finance its working capital requirements, to make scheduled pension contributions for the Company’s retirement plans, to fund anticipated quarterly dividend payments, to make scheduled debt repayments and to support the development of its short-term and long-term operating strategies. Any materially adverse change in customer demand, fashion trends, competitive market forces, or customer acceptance of the Company’s merchandise mix and retail locations, uncertainties related to the effect of competitive products and pricing, the Company’s reliance on a few key vendors for a significant portion of its merchandise purchases and risks associated with foreign global sourcing or economic conditions worldwide, as well as other factors listed under the heading “Disclosure Regarding Forward-Looking Statements,” could affect the ability of the Company to continue to fund its needs from business operations. Net cash used in operating activities was $111 million for the twenty-six weeks ended July 29, 2006 and was $20 million for the twenty-six weeks ended July 30, 2005. These amounts reflect net income adjusted for non-cash items and working capital changes. During the second quarter of 2006, the Company recorded a non-cash impairment charge of $17 million related to the operations in Europe. Inventory, net of Accounts Payable and other accruals spending increased $20 million for the first half of 2006, as compared with the first half of 2005. The increase in inventory as compared with the prior year period is primarily the result of the shortfall in sales. The Company’s deferred taxes increased $54 million for the first half of 2006 primarily as a result of the expiration of U.S. bonus depreciation deductions, the tax associated with the Foot Locker Europe impairment charge and pension funding. Additionally, the Company contributed $68 million to its U.S. and Canadian qualified pension plans in February 2006, as compared with contributions of $19 million to its U.S. and Canadian qualified pension plans in February 2005. The U.S. contributions were made in advance of ERISA requirements in both years. Net cash provided by investing activities was $83 million for the twenty-six weeks ended July 29, 2006 and was $27 million for the twenty-six weeks ended July 30, 2005. The Company’s sales of short-term investments, net of purchases, increased by $59 million to $165 million in the first half of 2006 as compared with net sales of $106 million in the first half of 2005. Total projected capital expenditures of $166 million for 2006 comprise $136 million for new store openings and modernizations of existing stores and $30 million for the development of information systems and other support facilities. This represents a decline of approximately $19 million from what was originally planned, as the Company now expects to open fewer stores. In addition, planned lease acquisition costs are $4 million and primarily relate to securing leases for the Company’s European operations. The Company has the ability to revise and reschedule its anticipated capital expenditure program in the event that any changes to the Company’s financial position require it. 17 Net cash used in financing activities for the Company’s operations was $77 million for the twenty-six weeks ended July 29, 2006 and was $33 million for the twenty-six weeks ended July 30, 2005. During the first quarter of 2006, the Company made payments of $50 million related to its term loan that were originally due in May of 2007 and 2008. As required by SFAS No. 123(R), the Company recorded an excess tax benefit related to stock-based compensation of $2 million as a financing activity. The Company declared and paid a $0.09 per share dividend during the first and second quarters of 2006 totaling $28 million, as compared with a $0.075 per share dividend during the first and second quarters of 2005, which totaled $23 million. The Company received proceeds from in connection with employee stock programs of $7 million and $11 million for the twenty-six weeks ended July 29, 2006 and July 30, 2005, respectively. As part of an authorized purchase program, the Company purchased 334,200 shares of its common stock during the first quarter of 2006 for approximately $8 million. There were no common stock purchases during the second quarter of 2006. This excerpt taken from the FL 10-Q filed Jun 1, 2006. LIQUIDITY AND CAPITAL RESOURCES Generally, the Company’s primary sources of cash have been from operations. The Company has a $200 million revolving credit facility. Other than $15 million to support standby letter of credit commitments, this revolving credit facility has not been used during 2006. The Company generally finances real estate with operating leases. The principal uses of cash have been to finance inventory requirements, capital expenditures related to store openings, store remodelings, and management information systems, and to fund other general working capital requirements. Management believes operating cash flows and current credit facilities will be adequate to fund its working capital requirements, scheduled pension contributions for the Company’s retirement plans, anticipated quarterly dividend payments, scheduled debt repayments, potential share repurchases, and to support the development of its short-term and long-term operating strategies. Any materially adverse change in customer demand, fashion trends, competitive market forces, or customer acceptance of the Company’s merchandise mix and retail locations, uncertainties related to the effect of competitive products and pricing, the Company’s reliance on a few key vendors for a significant portion of its merchandise purchases and risks associated with foreign global sourcing or economic conditions worldwide, as well as other factors listed under the heading “Disclosure Regarding Forward-Looking Statements,” could affect the ability of the Company to continue to fund its needs from business operations. Net cash used in operating activities of continuing operations was $113 million and $19 million for the thirteen weeks ended April 29, 2006 and April 30, 2005, respectively. These amounts reflect the income from continuing operations adjusted for non-cash items and working capital changes. Accounts payable and other accruals decreased by $1 million in the first quarter of 2006 as compared to an increase of $96 million in the corresponding period of the prior year. The Company contributed $68 million to its U.S. and Canadian qualified pension plans in the first quarter of 2006, as compared with contributions of $19 million and in the first quarter of 2005. The U.S. contributions were made in advance of ERISA requirements in both years. 15 Net cash provided by investing activities was $33 million for the thirteen weeks ended April 29, 2006. Net cash used in investing activities was $35 million for the thirteen weeks ended April 30, 2005. The Company’s sales of short-term investments, net of purchases, increased by $60 million for the thirteen weeks ended April 29, 2006 as compared with an increase in net sales of short-term investments, net of purchases, of $8 million for the thirteen weeks ended April 30, 2005. Total projected capital expenditures of $185 million for 2006 comprise $155 million for new store openings and modernizations of existing stores and $30 million for the development of information systems and other support facilities. In addition, planned lease acquisition costs are $5 million and primarily relate to securing leases for the Company’s European operations. During the thirteen weeks ended April 29, 2006, the Company’s capital expenditures were $34 million as compared with $38 million in the corresponding prior year period. The Company has the ability to revise and reschedule its anticipated capital expenditure program in the event that any changes to the Company’s financial position require it. Net cash used in financing activities for the Company’s continuing operations was $67 million and $24 million for the thirteen weeks ended April 29, 2006, and April 30, 2005, respectively. During the first quarter of 2006, the Company made payments of $50 million related to its term loan that were originally due in May of 2007 and 2008. As required by SFAS No. 123(R), the Company recorded an excess tax benefit related to stock-based compensation of $2 million as a financing activity. The Company declared and paid a $0.09 per share dividend during the first quarter of 2006 totaling $14 million, as compared with a $0.075 per share dividend during the first quarter of 2005, which totaled $12 million. The Company received proceeds from the issuance of common stock in connection with employee stock programs of $3 million and $6 million for the thirteen weeks ended April 29, 2006 and April 30, 2005, respectively. In the first quarter of 2006, the Company’s Board of Directors authorized a $150 million, 3-year share repurchase program. Under the share repurchase program, subject to legal and contractual restrictions, the Company may make purchases of its common stock, from time to time, depending on market conditions, availability of other investment opportunities and other factors. As part of the authorized purchase program, the Company purchased 334,200 shares of its common stock during the first quarter of 2006 for approximately $8 million. This excerpt taken from the FL 10-Q filed Nov 30, 2005. LIQUIDITY AND CAPITAL RESOURCES Generally, the Company’s primary sources of cash have been from operations. The Company has a $200 million revolving credit facility. Other than $27 million to support standby letter of credit commitments, this revolving credit facility has not been used during 2005. The Company generally finances real estate with operating leases. The principal uses of cash have been to finance inventory requirements, capital expenditures related to store openings, store remodelings, and management information systems, and to fund other general working capital requirements. Management believes operating cash flows and current credit facilities will be adequate to fund its working capital requirements, scheduled pension contributions for the Company’s retirement plans, anticipated quarterly dividend payments, scheduled debt repayments, potential share repurchases, and to support the development of its short-term and long-term operating strategies. Any materially adverse change in customer demand, fashion trends, competitive market forces, or customer acceptance of the Company’s merchandise mix and retail locations, uncertainties related to the effect of competitive products and pricing, the Company’s reliance on a few key vendors for a significant portion of its merchandise purchases and risks associated with foreign global sourcing or economic conditions worldwide, as well as other factors listed under the heading “Disclosure Regarding Forward-Looking Statements,” could affect the ability of the Company to continue to fund its needs from business operations. Net cash provided by operating activities of continuing operations was $74 million for the thirty-nine weeks ended October 29, 2005. Net cash provided by operating activities of continuing operations was $5 million for the thirty-nine weeks ended October 30, 2004. These amounts reflect the income from continuing operations adjusted for non-cash items and working capital changes. Inventory purchases were lower in the current year to remain in line with the growth in sales. Additionally, in the third quarter of 2004 the Company was continuing to make incremental inventory purchases for the newly acquired Footaction division. The Company contributed $18 million and $7 million to its U.S. and Canadian qualified pension plans, respectively, in the 2005 year-to-date period, as compared with contributions of $100 million and $6 million to its U.S. and Canadian qualified pension plans, respectively, in the 2004 year-to-date period. The U.S. contributions were made in advance of ERISA requirements in both years. Net cash used in investing activities was $69 million for the thirty-nine weeks ended October 29, 2005. Net cash used in investing activities was $253 million for the thirty-nine weeks ended October 30, 2004. During the thirty-nine weeks ended October 30, 2004, the Company paid $229 million for the purchase of the Footaction stores and $15 million for the purchase of 11 stores in the Republic of Ireland. The Company’s sales of short-term investments, net of purchases, increased by $46 million for the thirty-nine weeks ended October 29, 2005 as compared with an increase in net sales of $134 million for the thirty-nine weeks ended October 30, 2004. Total projected capital expenditures of $162 million for 2005 comprise $138 million for new store openings and modernizations of existing stores and $24 million for the development of information systems and other support facilities. In addition, planned lease acquisition costs are $8 million and primarily relate to securing leases for the Company’s European operations. The Company has the ability to revise and reschedule its anticipated capital expenditure program in the event that any changes to the Company’s financial position require it. -16- Cash used in financing activities for the Company’s continuing operations was $61 million for the thirty-nine weeks ended October 29, 2005. Net cash provided by financing activities was $175 million for the thirty-nine weeks ended October 30, 2004. A $175 million amortizing term loan was obtained on May 19, 2004 simultaneously with the amendment to extend the revolving credit agreement’s expiration date. During the first quarter of 2005, the Company made a payment of approximately $18 million related to its term loan that was originally due in May 2005. The Company declared and paid a $0.075 per share dividend during each of the first three quarters of 2005 totaling $34 million, as compared with a $0.06 per share dividend during the first three quarters of 2004, which totaled $28 million. The Company received proceeds from the issuance of common stock in connection with employee stock programs of $11 million and $30 million for the thirty-nine weeks ended October 29, 2005 and October 30, 2004, respectively. As part of the authorized purchase program, the Company purchased 120,000 shares of its common stock during the second quarter of 2005 for approximately $3 million and 790,200 shares of its common stock during the third quarter of 2005 for approximately $17 million. Through October 29, 2005, the Company has spent $20 million of a $50 million board-authorized share repurchase program that expires in February 2006. The Company expects its Board of Directors to consider the authorization of a new share repurchase program in early 2006. On November 16, 2005, the Company’s Board of Directors declared a quarterly cash dividend on the Company’s common stock of $0.09 per share, which will be payable on January 27, 2006 to shareholders of record on January 13, 2006. This dividend represents a 20 percent increase over the Company’s previous quarterly per share amount and is equivalent to an annualized rate of $0.36 per share. This excerpt taken from the FL 10-Q filed Aug 31, 2005. LIQUIDITY AND CAPITAL RESOURCES Generally, the Company’s primary sources of cash have been from operations. The Company has a $200 million revolving credit facility. Other than $26 million to support standby letter of credit commitments, this revolving credit facility was not used during 2005. The Company generally finances real estate with operating leases. The principal uses of cash have been to finance inventory requirements, capital expenditures related to store openings, store remodelings, and management information systems and to fund other general working capital requirements. Management believes operating cash flows and current credit facilities will be adequate to finance its working capital requirements, to make scheduled pension contributions for the Company’s retirement plans, to fund anticipated quarterly dividend payments, to make scheduled debt repayments and to support the development of its short-term and long-term operating strategies. Any materially adverse change in customer demand, fashion trends, competitive market forces, or customer acceptance of the Company’s merchandise mix and retail locations, uncertainties related to the effect of competitive products and pricing, the Company’s reliance on a few key vendors for a significant portion of its merchandise purchases and risks associated with foreign global sourcing or economic conditions worldwide, as well as other factors listed under the heading “Disclosure Regarding Forward-Looking Statements,” could affect the ability of the Company to continue to fund its needs from business operations. Net cash used in operating activities of continuing operations was $20 million for the twenty-six weeks ended July 30, 2005. Net cash provided by operating activities of continuing operations was $93 million for the twenty-six weeks ended July 31, 2004. These amounts reflect the income from continuing operations adjusted for non-cash items and working capital changes. Inventory, net of Accounts Payable and other accruals spending increased $164 million, excluding the effect of foreign currency fluctuations, for the first half of 2005 as compared with net spending in the first half of 2004. The increase was related to several factors including; properly positioning its inventories for the back to school selling season, increasing inventories in the European operations in order to stimulate sales, as well as increased Footaction inventory as the stores were newly acquired in the second quarter of 2004. The Company contributed $15 million and $4 million to its U.S. and Canadian qualified pension plans, respectively, in February 2005, as compared with contributions of $44 million and $6 million to its U.S. and Canadian qualified pension plans, respectively, in February 2004. The U.S. contributions were made in advance of ERISA requirements in both years. Net cash provided by investing activities was $27 million for the twenty-six weeks ended July 30, 2005. Net cash used in investing activities was $285 million for the twenty-six weeks ended July 31, 2004. During the first half of 2004, the Company paid $224 million for the purchase of the Footaction stores. The Company’s sales of short-term investments, net of purchases, increased by $106 million in the first half of 2005 as compared with an increase in net sales of $37 million in the first half of 2004. Total projected capital expenditures of $163 million for 2005 comprise $140 million for new store openings and modernizations of existing stores and $23 million for the development of information systems and other support facilities. In addition, planned lease acquisition costs are $7 million and primarily relate to securing leases for the Company’s European operations. The Company has the ability to revise and reschedule its anticipated capital expenditure program in the event that any changes to the Company’s financial position require it. -15- Cash used in financing activities for the Company’s continuing operations was $33 million for the twenty-six weeks ended July 30, 2005. Net cash provided by financing activities was $182 million for the twenty-six weeks ended July 31, 2004. A $175 million amortizing term loan was obtained on May 19, 2004 simultaneously with the amendment to extend the revolving credit agreement’s expiration date. During the first quarter of 2005, the Company made a payment of approximately $18 million related to its term loan that was originally due in May 2005. The Company declared and paid a $0.075 per share dividend during the first and second quarters of 2005 totaling $23 million, as compared with a $0.06 per share dividend during the first and second quarters of 2004, which totaled $18 million. The Company received proceeds from the issuance of common stock in connection with employee stock programs of $11 million and $27 million for the twenty-six weeks ended July 30, 2005 and July 31, 2004, respectively. As part of the authorized purchase program, the Company purchased 120,000 shares of its common stock during the second quarter of 2005 for approximately $3 million. Subsequent to quarter-end and through August 27, 2005, the Company purchased an additional 321,500 shares of its common stock for approximately $7 million. This excerpt taken from the FL 10-Q filed Jun 2, 2005. LIQUIDITY AND CAPITAL RESOURCES Generally, the Company’s primary sources of cash have been from operations. The Company has a $200 million revolving credit facility. Other than $26 million to support standby letter of credit commitments, this revolving credit facility was not used during the first quarter of 2005. The Company generally finances real estate with operating leases. The principal uses of cash have been to finance inventory requirements, capital expenditures related to store openings, store remodelings and management information systems and to fund other general working capital requirements. Management believes operating cash flows and current credit facilities will be adequate to finance its working capital requirements, to make scheduled pension contributions for the Company’s retirement plans, to fund anticipated quarterly dividend payments, to make scheduled debt repayments and to support the development of its short-term and long-term operating strategies. Any materially adverse change in customer demand, fashion trends, competitive market forces, or customer acceptance of the Company’s merchandise mix and retail locations, uncertainties related to the effect of competitive products and pricing, the Company’s reliance on a few key vendors for a significant portion of its merchandise purchases and risks associated with foreign global sourcing or economic conditions worldwide, as well as other factors listed under the heading “Disclosure Regarding Forward-Looking Statements,” could affect the ability of the Company to continue to fund its needs from business operations. Net cash used in operating activities of continuing operations was $19 million and $8 million for the thirteen weeks ended April 30, 2005 and May 1, 2004, respectively. These amounts reflect the income from continuing operations adjusted for non-cash items and working capital changes. Inventory, net of Accounts Payable and other accruals spending increased $59 million, excluding the effect of foreign currency fluctuations, for the first quarter of 2005 as compared with net spending in the first quarter of 2004. The increase was primarily related to the Company properly positioning inventories for the second quarter of 2005 in addition to the additional inventory requirement for the Footaction stores. The Company contributed $15 million and $4 million to its U.S. and Canadian qualified pension plans, respectively, in February 2005, as compared with contributions of $44 million and $6 million to its U.S. and Canadian qualified pension plans, respectively, in February 2004. The U.S. contributions were made in advance of ERISA requirements in both years. Cash used in investing activities was $35 million for the first quarter of 2005 and cash provided by investing activities was $36 million for the first quarter of 2004. The Company’s sales of short-term investments, net of purchases, increased by $8 million in the first quarter of 2005 as compared to an increase in net sales of $90 million in the first quarter of 2004. During the first quarter of 2004, the Company deposited $8 million into escrow for the purchase of 349 Footaction stores. Total projected capital expenditures of $163 million for 2005 comprise $140 million for new store openings and modernizations of existing stores and $23 million for the development of information systems and other support facilities. In addition, planned lease acquisition costs are $7 million and primarily relate to securing leases for the Company’s European operations. The Company has the ability to revise and reschedule its anticipated capital expenditure program in the event that any changes to the Company’s financial position require it. Financing activities for the Company’s continuing operations used net cash of $24 million for the thirteen weeks ended April 30, 2005 as compared to net cash provided of $6 million for the thirteen weeks ended May 1, 2004. During the first quarter of 2005, the Company made a payment of approximately $18 million related to its term loan that was originally due in May 2005. The Company declared and paid a $0.075 per share dividend during the first quarter of 2005 totaling $12 million, as compared with a $0.06 per share dividend during the first quarter of 2004, which totaled $9 million. The Company received proceeds from the issuance of common stock in connection with employee stock programs of $6 million and $15 million for the thirteen weeks ended April 30, 2005 and May 1, 2004, respectively. -13- This excerpt taken from the FL 10-K filed Mar 29, 2005. Liquidity and Capital Resources Liquidity Generally, the Company’s primary source of cash
has been from operations. The Company usually finances real estate with operating leases. The principal uses of cash have been to finance inventory
requirements, capital expenditures related to store openings, store remodelings and management information systems, and to fund other general working
capital requirements.
Management believes operating cash flows and current
credit facilities will be adequate to finance its working capital requirements, to make scheduled pension contributions for the Company’s
retirement plans, to fund quarterly dividend payments, to make scheduled debt repayments, and to support the development of its short-term and
long-term operating strategies. The Company expects to contribute an additional $22 million to its U.S. and Canadian qualified pension plans during
fiscal 2005, of which $19 million was made on February 4, 2005. Planned capital expenditures for 2005 are $165 million, of which $143 million relates
to new store openings and modernizations of existing stores and $22 million reflects the development of information systems and other support
facilities. In addition, planned lease acquisition costs are $5 million and primarily relate to the Company’s operations in Europe. The Company
has the ability to revise and reschedule the anticipated capital expenditure program, should the Company’s financial position require
it.
Maintaining access to merchandise that the Company
considers appropriate for its business may be subject to the policies and practices of its key vendors. Therefore, the Company believes that it is
critical to continue to maintain satisfactory relationships with its key vendors. The Company purchased approximately 74 percent in 2004 and 73 percent
in 2003 of its merchandise from its top five vendors, in each respective year, and expects to continue to obtain a significant percentage of its
athletic product from these vendors in future periods. Of that amount, approximately 45 percent in 2004 and 40 percent in 2003 was purchased from one
vendor — Nike, Inc. (“Nike”) — and 13 percent and 14 percent from another in 2004 and 2003, respectively.
Any materially adverse change in customer demand,
fashion trends, competitive market forces or customer acceptance of the Company’s merchandise mix and retail locations, uncertainties related to
the effect of competitive products and pricing, the Company’s reliance on a few key vendors for a significant portion of its merchandise
purchases, risks associated with foreign global sourcing or economic conditions worldwide could affect the ability of the Company to continue to fund
its needs from business operations.
Cash Flow Operating activities from continuing operations
provided cash of $289 million in 2004 as compared with $264 million in 2003. These amounts reflect income from continuing operations adjusted for
non-cash items and working capital changes. The net increase is primarily related to the increase in net income as compared with the prior year, offset
in part by an additional $56 million in pension contributions and increased working capital usage. Merchandise inventories increased by $120 million to
support the recent acquisitions, offset by an increase in accounts payable. The change in other, net primarily reflects a prepaid income tax that
represents an overpayment of tax which the Company will apply to its 2005 payments.
Operating activities from continuing operations
provided cash of $264 million in 2003 as compared with $347 million in 2002. The decrease was primarily the result of a $50 million pension
contribution and increased working capital, partially offset by increased income from continuing operations. Net income increased by $54 million in
2003. Working capital usage included higher net cash outflow for merchandise inventories in 2003 as compared with 2002 and the Company increased its
inventory position to accommodate anticipated sales in 2004. The decrease in income taxes payable was attributable to increased payments made during
2003. The Company received a refund of tax and interest of $13 million during the fourth quarter of 2003.
Net cash used in investing activities of the
Company’s continuing operations was $424 million in 2004 compared with $265 million in 2003. During 2004, the Company paid $226 million for the
purchase of 349 Footaction stores from Footstar, Inc. and paid €13 million (approximately $17 million, of which $1 million remains to be paid) for the
purchase of 11 stores in the Republic of Ireland. The Company’s purchase of short-term investments, net of sales, increased by $9 million in 2004
as compared with an increase of $106 million in 2003. Capital expenditures of $156 million in 2004 and $144 million in 2003 primarily related to store
remodelings and new stores. Lease acquisition costs, primarily to secure and extend leases for prime locations in Europe, were $17 million and $15
million in 2004 and 2003, respectively.
11 Net cash used in investing activities of the
Company’s continuing operations was $265 million in 2003 compared with $314 million in 2002. Capital expenditures of $144 million in 2003 and $150
million in 2002 primarily related to store remodelings and new stores. The Company’s purchase of short-term investments, net of sales, increased
by $106 million in 2003 as compared with an increase of $152 million in 2002. Lease acquisition costs were $15 million and $18 million in 2003 and
2002, respectively. Proceeds from the disposal of real estate of $6 million in 2002 primarily related to the condemnation of a part-owned and
part-leased property.
Net cash provided by financing activities of
continuing operations was $167 million in 2004 as compared with net cash used of $13 million in 2003. The Company elected to finance a portion of the
purchase price of the Footaction stores, and on May 19, 2004 obtained a 5-year, $175 million term loan from the bank group participating in its
existing revolving credit facility. Concurrent with obtaining the term loan, the Company amended and extended the revolving credit facility to expire
in 2009. Financing fees paid for both the term loan and the revolving credit facility amounted to $2 million. The Company repurchased $19 million of
its 8.50 percent debentures that are due in 2022 during 2003. The Company declared and paid dividends totaling $39 million in 2004 and $21 million in
2003. During 2004 and 2003, the Company received proceeds from the issuance of common stock in connection with employee stock programs of $33 million
and $27 million, respectively.
Net cash used in financing activities of continuing
operations was $13 million in 2003 compared with $36 million in 2002. The Company repurchased $19 million of its 8.50 percent debentures that are due
in 2022 during 2003. During 2002, the Company repaid the remaining $32 million of the $40 million 7.00 percent medium-term notes due in October 2002
and retired approximately $9 million of its 8.50 percent debentures. The Company declared and paid dividends, totaling $21 million for the year. During
2002, the Company declared and paid a dividend during the fourth quarter of $0.03 per share totaling $4 million. During 2003 and 2002, the Company
received proceeds from the issuance of common stock in connection with employee stock programs of $27 million and $10 million,
respectively.
Net cash provided by and used in discontinued
operations includes losses from discontinued operations, changes in assets and liabilities of the discontinued segments and disposition activity
related to the reserves. Net cash provided by discontinued operations was $1 million in 2004 as compared with $7 million in 2003. In 2003, net cash
provided by discontinued operations was $7 million and primarily related to an income tax benefit of $21 million offset, in part, by payments against
related reserves of $13 million. In 2002, discontinued operations utilized cash of $10 million which consisted of payments for the Northern
Group’s operations and disposition activity related to the other discontinued segments.
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