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Foot Locker, Inc. : Reports 2011 Fourth Quarter Results

03/01/2012 | 05:05pm US/Eastern
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NEW YORK, March 1, 2012 /PRNewswire/ -- Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its fourth quarter and full year ended January 28, 2012.

Fourth Quarter Results

The Company reported net income of $81 million, or $0.53 per share, for the fourth quarter of 2011. These results included an after-tax charge of $3 million, or $0.02 per share, for the impairment of certain intangible assets. In the year-ago period, the Company reported net income of $57 million, or $0.36 per share, which included an after-tax charge of $4 million, or $0.03 per share, for the impairment of certain intangible assets, net of the partial recovery of a short-term investment that was written down in 2008.

Excluding the net charges in both years, fourth quarter non-GAAP net income was $84 million, or $0.55 per share, in 2011 versus $61 million, or $0.39 per share, in 2010. This represents a 41 percent increase in the adjusted net income per share amounts.

Fourth quarter comparable-store sales increased 7.5 percent. Total fourth quarter sales increased 7.9 percent, to $1,502 million this year, compared with sales of $1,392 million for the corresponding prior-year period. Excluding the effect of foreign currency fluctuations, total sales for the fourth quarter increased 8.2 percent.

"The strategies our team identified and began implementing two years ago have elevated our financial and operational performance to new heights," said Ken C. Hicks, Chairman of the Board and Chief Executive Officer of Foot Locker, Inc. "As a result of the efforts of our entire team, we approached or surpassed many of the financial goals the organization set for ourselves in just the second year of our current five year plan."

Fiscal Year Results

For the fiscal year, the Company reported net income of $278 million, or $1.80 per share. These results included the fourth quarter after-tax charge of $3 million mentioned above. Last year, the Company reported net income of $169 million, or $1.07 per share, including the net charge of $4 million after-tax.

Excluding the net charges in both years, full year non-GAAP net income was $281 million, or $1.82 per share in 2011, an increase of 65 percent over the $1.10 per share recorded in 2010.

Comparable-store sales increased 9.8 percent in 2011, and total sales increased 11.4 percent to $5,623 million, compared with sales of $5,049 million last year. Excluding the effect of foreign currency fluctuations, total sales for the full year increased 9.7 percent.

Financial Position

The Company's merchandise inventory at year end was $1,069 million, which was $10 million, or 0.9 percent higher than at the end of last year.

During the fourth quarter of 2011, the Company repurchased 289,100 shares of its common stock for approximately $7 million. For the full year, the Company repurchased approximately 4.9 million shares for $104 million. Last month, the Company announced a new, three-year $400 million share repurchase program extending through January 2015. At the same time, the Company announced a 9 percent increase in its quarterly dividend, to 18 cents per quarter.

At year end 2011, the Company's cash and short-term investments totaled $851 million, while the debt on its balance sheet was $135 million. The Company's total cash position, net of debt, was $157 million higher than the same time last year.

Store Base Update

The Company opened 70 new stores, remodeled or relocated 182 stores, and closed 127 stores during fiscal 2011. At January 28, 2012, the Company operated 3,369 stores in 23 countries in North America, Europe, Australia, and New Zealand. In addition, 34 franchised stores were operating in the Middle East and South Korea.

The Company is hosting a live conference call at 9:00 a.m. (EST) on Friday, March 2, 2012 to discuss these results and provide comments on the current business environment and our outlook for 2012. This conference call may be accessed live from the Investor Relations section of the Foot Locker, Inc. website at http://www.footlocker-inc.com. The conference call will be available for webcast replay until 5:00 p.m. on Friday, March 9, 2012.

Disclosure Regarding Forward-Looking Statements

This report contains forward-looking statements within the meaning of the federal securities laws. Other than statements of historical facts, all statements which address activities, events, or developments that the Company anticipates will or may occur in the future, including, but not limited to, such things as future capital expenditures, expansion, strategic plans, dividend payments, stock repurchases, growth of the Company's business and operations, including future cash flows, revenues, and earnings, and other such matters, are forward-looking statements. These forward-looking statements are based on many assumptions and factors which are detailed in the Company's filings with the Securities and Exchange Commission, including the effects of currency fluctuations, customer demand, fashion trends, competitive market forces, uncertainties related to the effect of competitive products and pricing, customer acceptance of the Company's merchandise mix and retail locations, the Company's reliance on a few key vendors for a majority of its merchandise purchases (including a significant portion from one key vendor), pandemics and similar major health concerns, unseasonable weather, further deterioration of global financial markets, economic conditions worldwide, further deterioration of business and economic conditions, any changes in business, political and economic conditions due to the threat of future terrorist activities in the United States or in other parts of the world and related U.S. military action overseas, the ability of the Company to execute its business and strategic plans effectively with regard to each of its business units, and risks associated with foreign global sourcing, including political instability, changes in import regulations, and disruptions to transportation services and distribution. Any changes in such assumptions or factors could produce significantly different results. The Company undertakes no obligation to update forward-looking statements, whether as a result of new information, future events, or otherwise.



                                               FOOT LOCKER, INC.
                                Condensed Consolidated Statements of Operations
                                                  (unaudited)
                              Periods ended January 28, 2012 and January 29, 2011
                                    (In millions, except per share amounts)


                                               Fourth Quarter 2011                  Fourth Quarter 2010
                                               -------------------                  -------------------
                                                                   Non-                                   Non-
                                          GAAP    Adjustments     GAAP,          GAAP    Adjustments     GAAP,
                                          ----    -----------     -----          ----    -----------     -----
                                                                    As                                     As
                                                                        Adjusted                               Adjusted
                                                                ---------                              ---------
    Sales                                $1,502            $-      $1,502       $1,392            $-      $1,392

    Cost of sales                         1,022             -       1,022          962             -         962
    Selling, general
     and administrative
     expenses                               325             -         325          303             -         303
    Depreciation and
     amortization                            28             -          28           27             -          27
    Impairment (1)                            5            (5)          -           10           (10)          -
    Other (income) (2)                       (3)            -          (3)          (2)            2           -
    Interest expense,
     net                                      2             -           2            2             -           2
                                            ---           ---                      ---           ---         ---
                                          1,379            (5)      1,374        1,302            (8)      1,294
                                          -----           ---       -----        -----           ---       -----

    Income before
     income taxes                           123             5         128           90             8          98
    Income tax expense
     (3)                                     42             2          44           33             4          37
                                            ---           ---         ---          ---           ---         ---
    Net income                              $81            $3         $84          $57            $4         $61
                                            ===           ===         ===          ===           ===         ===

    Diluted EPS                           $0.53         $0.02       $0.55        $0.36         $0.03       $0.39

    Weighted-average
     diluted shares
     outstanding                          153.1             -       153.1        156.2             -       156.2
    ----------------                      -----           ---       -----        -----           ---       -----

    Footnotes to explain adjustments
    --------------------------------
    (1)  2011 and 2010 amount reflects the write-down of CCS intangible
     assets.
    (2)  2010 amount reflects the partial recovery of a short-term
     investment that was written down in 2008.
    (3)  2011 and 2010 amounts reflect the income tax effect of the pre-
     tax adjustments highlighted in footnotes above.



                                             FOOT LOCKER, INC.
                              Condensed Consolidated Statements of Operations
                                                (unaudited)
                            Periods ended January 28, 2012 and January 29, 2011
                                  (In millions, except per share amounts)


                                                Fiscal 2011                         Fiscal 2010
                                                -----------                         -----------
                                                               Non-                                 Non-
                                      GAAP     Adjustments     GAAP,        GAAP     Adjustments    GAAP,
                                      ----     -----------    -----         ----     -----------   -----
                                                                 As                                   As
                                                                    Adjusted                             Adjusted
                                                             ---------                            ---------
    Sales                             $5,623            $-      $5,623      $5,049            $-     $5,049

    Cost of sales                      3,827             -       3,827       3,533             -      3,533
    Selling, general
     and
     administrative
     expenses                          1,244             -       1,244       1,138             -      1,138
    Depreciation and
     amortization                        110             -         110         106             -        106
    Impairment (1)                         5            (5)          -          10           (10)         -
    Other (income)
     (2)                                  (4)            -          (4)         (4)            2         (2)
    Interest expense,
     net                                   6             -           6           9             -          9
                                         ---           ---                     ---           ---        ---
                                       5,188            (5)      5,183       4,792            (8)     4,784
                                       -----           ---       -----       -----           ---      -----

    Income before
     income taxes                        435             5         440         257             8        265
    Income tax
     expense (3)                         157             2         159          88             4         92
                                         ---           ---         ---         ---           ---        ---
    Net income                          $278            $3        $281        $169            $4       $173
                                        ====           ===        ====        ====           ===       ====

    Diluted EPS                        $1.80         $0.02       $1.82       $1.07         $0.03      $1.10


    Weighted-average
     diluted shares
     outstanding                       154.4             -       154.4       156.7             -      156.7
    Footnotes to explain adjustments
    --------------------------------
    (1)  2011 and 2010 amount reflects the write-down of CCS
     intangible assets.
    (2)  2010 amount reflects the partial recovery of a short-term
     investment that was written down in 2008.
    (3)  2011 and 2010 amounts reflect the income tax effect of the
     pre-tax adjustments highlighted in footnotes above.


                              FOOT LOCKER, INC.
                    Condensed Consolidated Balance Sheets
                                 (unaudited)
                                (In millions)


                                               January          January
                                                 28,              29,
                                                  2012             2011
                                                                   ----
    Assets

    CURRENT ASSETS
    Cash and cash equivalents                     $851             $696
    Merchandise inventories                      1,069            1,059
    Other current assets                           159              179
                                                   ---              ---
                                                 2,079            1,934

    Property and equipment, net                    427              386
    Deferred tax assets                            284              296
    Other assets                                   260              280
                                                $3,050           $2,896
                                                ======           ======

    Liabilities and Shareholders' Equity

    CURRENT LIABILITIES
    Accounts payable                              $240             $223
    Accrued and other liabilities                  308              266
                                                   ---              ---
                                                   548              489

    Long-term debt                                 135              137
    Other liabilities                              257              245
    SHAREHOLDERS' EQUITY                         2,110            2,025
                                                $3,050           $2,896
                                                ======           ======




                        FOOT LOCKER, INC.
               Stores and Estimated Square Footage
                           (unaudited)
                  (Square footage in thousands)


                                January    January    January
                                   28,        29,        30,
                                    2012       2011       2010
                                    ----       ----       ----
    Foot Locker U.S.
       Number of stores            1,118      1,144      1,171
       Gross square footage        4,499      4,600      4,744
       Selling square footage      2,656      2,726      2,812

    Footaction
       Number of stores              292        307        319
       Gross square footage        1,351      1,413      1,471
       Selling square footage        846        888        926

    Lady Foot Locker
       Number of stores              331        378        415
       Gross square footage          737        838        915
       Selling square footage        426        482        524

    Kids Foot Locker
       Number of stores              289        294        301
       Gross square footage          692        706        718
       Selling square footage        403        411        422

    Champs Sports
       Number of stores              534        540        552
       Gross square footage        2,845      2,880      2,946
       Selling square footage      1,868      1,910      1,953

    CCS
       Number of stores               22         12          2
       Gross square footage           51         31          6
       Selling square footage         34         20          4

    Foot Locker International
       Number of stores              783        751        740
       Gross square footage        2,276      2,167      2,155
       Selling square footage      1,148      1,101      1,094

    Total Stores Operated
       Number of stores            3,369      3,426      3,500
       Gross square footage       12,451     12,635     12,955
       Selling square footage      7,381      7,538      7,735

    Total Franchised Stores
       Number of stores               34         26         22
       Gross square footage           84         84         78
       Selling square footage         57         55         53
       ----------------------        ---        ---        ---


SOURCE Foot Locker, Inc.

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