SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED FEBRUARY 1, 2003
COMMISSION FILE NUMBER 1-10299
FOOT LOCKER, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW YORK 13-3513936
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
112 WEST 34TH STREET, NEW YORK, NEW YORK 10120
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 720-3700
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
COMMON STOCK, PAR VALUE $0.01 NEW YORK STOCK EXCHANGE
PREFERRED STOCK PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act).
YES [X] NO [ ]
See pages 12 through 15 for Index of Exhibits.
Number of shares of Common Stock outstanding at April 4, 2003: 141,573,896
The aggregate market value of voting stock held by non-affiliates of the Registrant computed
by reference to the closing price as of the last business day of the Registrant's most recently
completed second fiscal quarter, August 2, 2002, was approximately: $1,248,265,409 *
* For purposes of this calculation only (a) all directors plus one
executive officer and owners of five percent or more of the Registrant
are deemed to be affiliates of the Registrant and (b) shares deemed to
be "held" by such persons at August 2, 2002, include only outstanding
shares of the Registrant's voting stock with respect to which such
persons had, on such date, voting or investment power.
DOCUMENTS INCORPORATED BY REFERENCE
1. The Registrant's Annual Report to Shareholders, pages 18 to 51 (the
"Annual Report") for the fiscal year ended February 1, 2003: Parts I,
II and IV
2. The Registrant's definitive Proxy Statement (the "Proxy Statement") to
be filed in connection with the 2003 Annual Meeting of Shareholders:
Parts III and IV.
TABLE OF CONTENTS
PAGE
----
PART I
Item 1. Business 1
Item 2. Properties 3
Item 3. Legal Proceedings 3
Item 4. Submission of Matters to a Vote of Security Holders 3
PART II
Item 5. Market for the Registrant's Common Equity
and Related Stockholder Matters 4
Item 6. Selected Financial Data 4
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 4
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 4
Item 8. Consolidated Financial Statements and Supplementary Data 6
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 6
PART III
Item 10. Directors and Executive Officers of the Registrant 6
Item 11. Executive Compensation 6
Item 12. Security Ownership of Certain Beneficial Owners and Management 6
Item 13. Certain Relationships and Related Transactions 7
Item 14. Controls and Procedures 7
PART IV
Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K 7
Item 16. Principal Accountant Fees and Services 7
Signatures
Certifications
PART I
ITEM 1. BUSINESS
GENERAL
Foot Locker, Inc., incorporated under the laws of the State of New York
in 1989, is a leading global retailer of athletic footwear and apparel,
operating, as of February 1, 2003, 3,625 primarily mall-based stores in North
America, Europe and Australia. Foot Locker, Inc. and its subsidiaries hereafter
are referred to as the "Registrant."
The Registrant maintains a website on the Internet at
http:\\www.footlocker-inc.com. The Registrant's filings with the Securities and
Exchange Commission, including its annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and all amendments to those
reports, are available free of charge through this website as soon as reasonably
practicable after they are filed with or furnished to the SEC by clicking on the
"SEC Filings" link found.
The Registrant operates in two reportable business segments - Athletic
Stores and Direct-to-Customers. The Athletic Stores segment is one of the
largest athletic footwear and apparel retailers in the world, whose formats
include Foot Locker, Lady Foot Locker, Kids Foot Locker and Champs Sports. The
Direct-to-Customers segment reflects Footlocker.com, Inc., which sells, through
its affiliates, including Eastbay, Inc., to customers through catalogs and
Internet websites. The Registrant believes that its portfolio strategy is unique
in the athletic industry, with specialized retail formats, catalogs and Internet
websites targeted specifically to the men's, women's and children's segments of
the market, allowing the Registrant to tailor its merchandise and service
offerings more effectively to its targeted customers. The disposition of all
businesses previously held for disposal was completed in 2001. The following
table indicates the sales and percent of total sales generated by each of the
business segments in 2002:
Segments Sales Percent of Total Sales
-------- ----- ----------------------
($ in millions)
Athletic Stores $ 4,160 92%
Direct-to-Customers 349 8
--------- -----
Total $ 4,509 100%
========= =====
The financial information concerning industry segments required by Item
101(b) of Regulation S-K is set forth on pages 42 and 43 of the Registrant's
Annual Report to Shareholders ("Annual Report") for the fiscal year ended
February 1, 2003 and is incorporated herein by reference.
AT FEBRUARY 2, AT FEBRUARY 1,
STORE PROFILE 2002 OPENED CLOSED 2003
------------- ---- ------ ------ ----
Foot Locker 1,993 129 62 2,060
Lady Foot Locker 632 1 27 606
Kids Foot Locker 391 1 15 377
Champs Sports 574 26 18 582
----- --- --- -----
TOTAL ATHLETIC STORES 3,590 157 122 3,625
===== === === =====
The service marks and trademarks appearing on this page and elsewhere in this
report (except for NFL) are owned by Foot Locker, Inc. or its subsidiaries.
Athletic Stores
The Registrant operates 3,625 stores in the Athletic Stores segment.
The following is a brief description of the Athletic Stores segment's operating
businesses:
Foot Locker - Foot Locker is a leading athletic footwear and
apparel retailer. Its stores offer the latest in athletic-inspired
performance products, manufactured primarily by the leading athletic
brands. Foot Locker offers products for a wide variety of activities
including running, basketball, hiking, tennis, aerobics, fitness,
baseball, football and soccer. Its 2,060 stores are located in 14
countries including 1,477 in the United States, Puerto Rico, United
States Virgin Islands and Guam, 131 in Canada, 377 in Europe and 75 in
Australia. The domestic stores have an average of 2,400 selling square
feet and the international stores have an average of 1,600 selling
square feet.
-1-
Lady Foot Locker - Lady Foot Locker is a leading U.S. retailer
of athletic footwear, apparel and accessories for women. Its stores
carry all major athletic footwear and apparel brands, as well as casual
wear and an assortment of proprietary merchandise designed for a
variety of activities, including running, basketball, walking and
fitness. Its 606 stores are located in the United States and Puerto
Rico and have an average of 1,300 selling square feet.
Kids Foot Locker - Kids Foot Locker is a national children's
athletic retailer that offers the largest selection of brand-name
athletic footwear, apparel and accessories for infants, boys and girls,
primarily on an exclusive basis. Its stores feature an entertaining
environment geared to both parents and children. Its 377 stores are
located in the United States and Puerto Rico and have an average of
1,500 selling square feet.
Champs Sports - Champs Sports is, after Foot Locker, the
second largest specialty athletic footwear and apparel retailer in the
United States. Its product categories include athletic footwear,
apparel and accessories, and a focused assortment of equipment. This
combination allows Champs Sports to differentiate itself from other
mall-based stores by presenting complete product assortments in a
select number of sporting activities. Its 582 stores are located
throughout the United States and Canada. The Champs Sports stores have
an average of 4,000 selling square feet.
Direct-to-Customers
Footlocker.com - Footlocker.com, Inc., sells, through its
affiliates, directly to customers through catalogs and its Internet
websites. Eastbay, Inc., one of its affiliates, is one of the largest
direct marketers of athletic footwear, apparel, equipment and licensed
private-label merchandise in the United States and provides the
Registrant's seven full-service e-commerce sites access to an
integrated fulfillment and distribution system. The Registrant has an
agreement with the National Football League as its official catalog and
e-commerce retailer, which includes managing the NFL catalog and
e-commerce businesses. Footlocker.com designs, merchandises and
fulfills the NFL's official catalog (NFL Shop) and the e-commerce site
linked to www.NFL.com. In 2002, the Registrant entered into a strategic
alliance to offer footwear and apparel on the Amazon.com website. Foot
Locker is a featured brand in the Amazon.com specialty store for
apparel and accessories.
INFORMATION REGARDING BUSINESS SEGMENTS AND GEOGRAPHIC AREAS
For information regarding sales, operating results and identifiable
assets of the Registrant by business segment and by geographic area as required
by Item 101(d) of Regulation S-K, refer to footnote 6 of the Consolidated
Financial Statements on pages 42 and 43 of the Annual Report. For additional
information on format descriptions, refer to Management's Discussion and
Analysis of Financial Condition and Results of Operations on pages 22 and 23 of
the Annual Report, which is incorporated herein by reference.
EMPLOYEES
The Registrant and its consolidated subsidiaries had 15,844 full-time
and 24,307 part-time employees at February 1, 2003. The Registrant considers
employee relations to be satisfactory.
COMPETITION
The Registrant operates in the retail athletic footwear and apparel
industry. Competition is primarily based upon customer demand, fashion trends,
competitive market forces, merchandise mix, pricing, advertising and retail
location. The industry comprises mall-based specialty retailers, department
stores, discount retailers, sporting goods stores and catalog and Internet
athletic businesses, and the Registrant considers retailers operating in all of
these venues to be its competitors. Foot Locker, through its various retail
formats, is the leading mall-based specialty retailer of athletic footwear and
apparel, and, through Footlocker.com/Eastbay, is a leading catalog and Internet
retailer of athletic products.
MERCHANDISE PURCHASES
The Registrant and its consolidated subsidiaries purchase merchandise
from hundreds of vendors worldwide. In 2002, the Registrant purchased
approximately 44 percent of its athletic merchandise from Nike, Inc. and 11
percent from another major vendor. Approximately 71 percent of the Registrant's
purchases were from its top five vendors. The Registrant generally considers
vendor relations to be satisfactory.
The Registrant's policy is to maintain sufficient quantities of
inventory on hand in its retail stores and distribution centers so that it can
offer customers a full selection of current merchandise. The Registrant
emphasizes turnover and takes markdowns where required to keep merchandise fresh
and current with trends.
-2-
ITEM 2. PROPERTIES
The properties of the Registrant and its consolidated subsidiaries
consist of land, leased and owned stores and administrative and distribution
facilities. Total selling area for the Athletic Stores and Direct-to-Customers
segments at the end of the year was approximately 8.04 million square feet.
These properties are primarily located in the United States, Canada and Europe.
The Registrant currently operates three distribution centers, of which
one is owned and two are leased, occupying an aggregate of 1.88 million square
feet. Two of the three distribution centers are located in the United States and
one is in Europe. The Registrant also has two additional distribution centers
that are leased and sublet, occupying approximately 0.6 million square feet.
Refer to footnote 9 on page 43 of the Annual Report for additional
information regarding the Registrant's and its consolidated subsidiaries'
properties.
ITEM 3. LEGAL PROCEEDINGS
Legal proceedings pending against the Registrant or its consolidated
subsidiaries consist of ordinary, routine litigation, including administrative
proceedings, incident to the businesses of the Registrant, as well as litigation
incident to the sale and disposition of businesses that have occurred in the
past several years. Management does not believe that the outcome of such
proceedings will have a material effect on the Registrant's consolidated
financial position, liquidity, or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
the fourth quarter of the year ended February 1, 2003.
EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to Executive Officers of the Registrant, as of
May 12, 2003, is set forth below:
President and Chief Executive Officer and Director Matthew D. Serra
Executive Vice President and Chief Financial Officer Bruce L. Hartman
President and Chief Executive Officer, Foot Locker, Inc. U.S.A. Richard T. Mina
Senior Vice President, General Counsel and Secretary Gary M. Bahler
Senior Vice President--Real Estate Jeffrey L. Berk
Senior Vice President--Chief Information Officer Marc D. Katz
Senior Vice President--Strategic Planning Lauren B. Peters
Senior Vice President--Human Resources Laurie J. Petrucci
Vice President - Investor Relations and Treasurer Peter D. Brown
Vice President and Chief Accounting Officer Robert W. McHugh
Matthew D. Serra, age 58, has served as President since April 12, 2000
and Chief Executive Officer since March 4, 2001. He served as Chief Operating
Officer from February 2000 to March 3, 2001 and as President and Chief Executive
Officer of Foot Locker Worldwide from September 1998 to February 2000. He served
as Chairman and Chief Executive Officer of Stern's, a division of Federated
Department Stores, Inc., from March 1993 to September 1998.
Bruce L. Hartman, age 49, has served as Executive Vice President since
April 18, 2002 and Chief Financial Officer since February 27, 1999. He served as
Senior Vice President from February 1999 to April 2002. Mr. Hartman served as
Vice President-Corporate Shared Services from August 1998 to February 1999 and
as Vice President and Controller from November 1996 to August 1998.
Richard T. Mina, age 46, has served as President and Chief Executive
Officer of Foot Locker, Inc. U.S.A. since February 2, 2003. He served as
President and Chief Executive Officer of Champs Sports from April 1999 to
February 1, 2003. He served as President of Foot Locker Europe from January 1996
to April 1999.
Gary M. Bahler, age 51, has served as Senior Vice President since
August 1998, General Counsel since February 1993 and Secretary since February
1990. He served as Vice President from February 1993 to August 1998.
Jeffrey L. Berk, age 47, has served as Senior Vice President-Real
Estate since February 2000 and President of Foot Locker Realty, North America
from January 1997 to February 2000.
-3-
Marc D. Katz, age 38, has served as Senior Vice President--Chief
Information Officer since May 12, 2003. Mr. Katz served as Vice President and
Chief Information Officer from July 2002 to May 11, 2003 and as Vice President
and Controller from April 2002 to July 2002. During the period of 1997 to 2002,
he served in the following capacities at the Financial Services Center of Foot
Locker Corporate Services: Vice President and Controller from July 2001 to April
2002; Controller from December 1999 - July 2001; and Retail Controller from
October 1997 to December 1999.
Lauren B. Peters, age 41, has served as Senior Vice
President--Strategic Planning since April 18, 2002. Ms. Peters served as Vice
President--Planning from January 2000 to April 17, 2002. She served as Vice
President and Controller from September 1998 to January 2000 and as Assistant
Controller of the Registrant's Financial Services Center from March 1997 to
August 1998.
Laurie J. Petrucci, age 44, has served as Senior Vice President--Human
Resources since May 2001. Ms. Petrucci served as Senior Vice President - Human
Resources of Foot Locker Worldwide from March 2000 to April 2001. She served as
Vice President of Organizational Development and Training of Foot Locker
Worldwide from February 1999 to March 2000 and as Vice President--Human
Resources of Foot Locker Canada from February 1997 to February 1999.
Peter D. Brown, age 48, has served as Vice President - Investor
Relations and Treasurer since October 2001. Mr. Brown served as Vice President -
Investor Relations and Corporate Development from April 2001 to October 2001 and
as Assistant Treasurer - Investor Relations and Corporate Development from
August 2000 to April 2001. He served as Vice President and Chief Financial
Officer of Lady Foot Locker from October 1999 to August 2000, as Director of the
Registrant's Profit Improvement Task Force from November 1998 to October 1999
and as Assistant Treasurer from July 1993 to November 1998.
Robert W. McHugh, age 44, has served as Vice President and Chief
Accounting Officer since January 2000. He served as Vice President-Taxation from
November 1997 to January 2000.
There are no family relationships among the executive officers or
directors of the Registrant.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Information related to the market for the Registrant's common stock on
pages 34 and 35 and 48 to 50 of the Annual Report under the sections captioned,
"Summary of Significant Accounting Policies," "Stock Plans," "Restricted Stock,"
"Shareholder Rights Plan" and "Shareholder Information and Market Prices
(Unaudited)" is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The Five Year Summary of Selected Financial Data on page 52 of the
Annual Report is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results
of Operations on pages 18 through 28 of the Annual Report is incorporated herein
by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk
The Registrant is exposed to market risk related to both
foreign currency fluctuations and interest rates. Derivative financial
instruments are used by the Registrant to manage its market risk exposure to
foreign currency exchange rate fluctuations. Interest rate swaps are employed by
the Registrant to minimize its exposure to interest rate fluctuations. The
Registrant, as a matter of policy, does not hold derivative financial
instruments for trading or speculative purposes.
-4-
Interest Rates
The Registrant's major exposure to market risk is to changes
in interest rates, primarily in the United States. There were no short-term
borrowings outstanding as of February 1, 2003 or February 2, 2002. Short-term
debt obligations reflect variable interest rate borrowings under the
Registrant's revolving credit agreement.
For information regarding interest rate risk management, as
required by Item 7A, refer to footnote 1 on page 36 and footnote 18 on pages 44
and 45 of the Consolidated Financial Statements of the Annual Report, which is
incorporated herein by reference. The table below presents the fair value of
principal cash flows and related weighted-average interest rates by maturity
dates, including the impact of the interest rate swap outstanding at February 1,
2003, of the Registrant's long-term debt obligations.
FEB. 1, FEB. 2,
2003 2002
(IN MILLIONS) 2003 2004 2005 2006 2007 THEREAFTER TOTAL TOTAL
------------------------------------------------------------------------------------------- -------
Long-term debt $ - - - - - 341 $ 341 $ 380
Fixed rate
Weighted-average interest rate 6.6% 6.6% 6.6% 6.6% 6.6% 6.6%
Foreign Currency Exchange Rates
For information regarding foreign exchange risk management, as
required by Item 7A, refer to footnote 1 on page 36 and footnote 18 on page 44
of the Consolidated Financial Statements of the Annual Report, which is
incorporated herein by reference.
The table below presents the fair value, notional amounts and
weighted-average exchange rates of foreign exchange forward contracts
outstanding at February 1, 2003.
FAIR VALUE CONTRACT VALUE WEIGHTED-AVERAGE
(US IN MILLIONS) (US IN MILLIONS) EXCHANGE RATE
---------------- ---------------- -------------
INVENTORY
Buy euro/ Sell British pound $ 2 $ 45 0.6335
Buy $US/Sell euro (1) 4 0.9470
---- -----
$ 1 $ 49
==== =====
INTERCOMPANY
Buy $US/Sell euro $ (8) $ 128 1.0118
Buy $US/Sell CAD$ - 25 0.6280
Buy euro/Sell British pound - 15 0.6441
---- -----
$ (8) $ 168
==== =====
-5-
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
a) Consolidated Financial Statements
The following, included in the Annual Report, are incorporated
herein by reference:
Page (s) in
Annual Report
-------------
Independent Auditors' Report 29
Consolidated Statements of Operations - Years ended February 1, 2003,
February 2, 2002 and February 3, 2001 30
Consolidated Statements of Comprehensive Income (Loss) - Years ended
February 1, 2003, February 2, 2002 and February 3, 2001 30
Consolidated Balance Sheets -As of February 1, 2003 and February 2, 2002 31
Consolidated Statements of Shareholders' Equity - Years ended February 1, 2003,
February 2, 2002 and February 3, 2001 32
Consolidated Statements of Cash Flows - Years ended February 1, 2003,
February 2, 2002 and February 3, 2001 33
Notes to Consolidated Financial Statements 34
b) Supplementary Data
Quarterly Results on page 51 of the Annual Report is
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no disagreements between the Registrant and its independent
accountants on matters of accounting principles or practices.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Directors of the Registrant
Information relative to directors of the Registrant is set
forth under the section captioned "Election of Directors" in the Proxy
Statement and is incorporated herein by reference.
(b) Executive Officers of the Registrant
Information with respect to executive officers of the
Registrant is set forth immediately following Item 4 in Part I
hereof on pages 3 and 4.
(c) Information with respect to compliance with Section 16(a) of the
Securities Exchange Act of 1934 is set forth under the section
captioned "Section 16(a) Beneficial Ownership Reporting Compliance" in
the Proxy Statement and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information set forth in the Proxy Statement beginning with the section
captioned "Directors Compensation and Benefits" through and including the
section captioned "Compensation Committee Interlocks and Insider Participation"
is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information set forth in the Proxy Statement under the section
captioned "Beneficial Ownership of the Company's Stock" is incorporated herein
by reference.
-6-
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information set forth in the Proxy Statement under the section
captioned "Transactions with Management and Others" is incorporated herein by
reference.
ITEM 14. DISCLOSURE CONTROLS AND PROCEDURES
The Registrant's Principal Executive Officer and Principal Financial
Officer have evaluated the effectiveness of the Registrant's disclosure controls
and procedures, as such term is defined in Rules 13(a)-14(c) and 15(d)-14(c)
under the Securities Exchange Act of 1934, as amended, within the 90-day period
prior to the filing of this report. Based on that evaluation, the Principal
Executive Officer and the Principal Financial Officer concluded that the
disclosure controls and procedures are effective in ensuring that all material
information required to be included in this annual report have been made known
to them in a timely fashion.
There have been no significant changes in the Registrant's internal
controls, or in other factors that could significantly affect internal controls,
subsequent to the date the Principal Executive Officer and the Principal
Financial Officer completed their evaluation.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) (a)(2) Financial Statements
The list of financial statements required by this item is set
forth in Item 8 "Consolidated Financial Statements and Supplementary
Data" in this Annual Report on Form 10-K and is incorporated herein by
reference.
(a)(3) and (c) Exhibits
An index of the exhibits which are required by this item and
which are included or incorporated herein by reference in this report
appears on pages 12 through 15. Those exhibits, which are included in
this Annual Report on Form 10-K, immediately follow the index.
(b) Reports on Form 8-K
The Registrant filed no reports on Form 8-K during the fourth
quarter of the year ended February 1, 2003.
ITEM 16. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information relative to principal accountant fees and services is set
forth under the section captioned "Audit and Non-Audit Fees" in the Proxy
Statement and is incorporated herein by reference.
-7-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
FOOT LOCKER, INC.
By: /s/ MATTHEW D. SERRA
----------------------
Matthew D. Serra
President and Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below on May 19, 2003, by the following persons on behalf of the
Registrant and in the capacities indicated.
/s/ MATTHEW D. SERRA /s/ BRUCE L. HARTMAN
-------------------- ---------------------
Matthew D. Serra Bruce L. Hartman
President and Executive Vice President and
Chief Executive Officer Chief Financial Officer
and Director
/s/ ROBERT W. MCHUGH
--------------------
Robert W. McHugh
Vice President and
Chief Accounting Officer
-8-
/s/ J. CARTER BACOT /s/ JAMES E. PRESTON
------------------- ---------------------
J. Carter Bacot James E. Preston
Non-Executive Director
Chairman of the Board
/s/ PURDY CRAWFORD /s/ DAVID Y. SCHWARTZ
------------------- ----------------------
Purdy Crawford David Y. Schwartz
Director Director
/s/ NICHOLAS DIPAOLO /s/ CHRISTOPHER A. SINCLAIR
-------------------- ----------------------------
Nicholas DiPaolo Christopher A. Sinclair
Director Director
/s/ PHILIP H. GEIER JR. /s/ CHERYL N. TURPIN
------------------------ ---------------------
Philip H. Geier Jr. Cheryl N. Turpin
Director Director
/s/ JAROBIN GILBERT JR. /s/ DONA D. YOUNG
------------------------ -----------------
Jarobin Gilbert Jr. Dona D. Young
Director Director
-9-
CERTIFICATIONS
I, Matthew D. Serra, certify that:
1. I have reviewed this annual report on Form 10-K of Foot Locker, Inc.
(the "Registrant");
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented in
this annual report.
4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13(a)-14 and 15(d)-14) for the Registrant
and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the Registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation Date");
and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the Registrant's auditors and the
Audit Committee of Registrant's Board of Directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
Registrant's ability to record, process, summarize and report
financial data and have identified for the Registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
Registrant's internal controls; and
6. The Registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
May 19, 2003
/s/ Matthew D. Serra
-----------------------------------
Principal Executive Officer
-10-
CERTIFICATIONS
I, Bruce L. Hartman, certify that:
1. I have reviewed this annual report on Form 10-K of Foot Locker, Inc.
(the "Registrant");
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented in
this annual report.
4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13(a)-14 and 15(d)-14) for the Registrant
and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the Registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation Date");
and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the Registrant's auditors and the
Audit Committee of Registrant's Board of Directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
Registrant's ability to record, process, summarize and report
financial data and have identified for the Registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
Registrant's internal controls; and
6. The Registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
May 19, 2003
/s/ Bruce L. Hartman
--------------------------------
Principal Financial Officer
-11-
FOOT LOCKER, INC
INDEX OF EXHIBITS REQUIRED
BY ITEM 15 OF FORM 10-K
AND FURNISHED IN ACCORDANCE
WITH ITEM 601 OF REGULATION S-K
EXHIBIT NO.
IN ITEM 601 OF
REGULATION S-K DESCRIPTION
-------------- -----------
3(i)(a) Certificate of Incorporation of the Registrant, as filed by the Department of State
of the State of New York on April 7, 1989 (incorporated herein by reference to
Exhibit 3(i)(a) to the Quarterly Report on Form 10-Q for the quarterly period ended
July 26, 1997, filed by the Registrant with the SEC on September 4, 1997 (the "July
26, 1997 Form 10-Q")).
3(i)(b) Certificates of Amendment of the Certificate of Incorporation of the Registrant, as
filed by the Department of State of the State of New York on (a) July 20, 1989, (b)
July 24, 1990, (c) July 9, 1997 (incorporated herein by reference to Exhibit 3(i)(b)
to the July 26, 1997 Form 10-Q), (d) June 11, 1998 (incorporated herein by reference
to Exhibit 4.2(a) of the Registration Statement on Form S-8 (Registration No.
333-62425), and (e) November 1, 2001 (incorporated herein by reference to Exhibit
4.2 to the Registration Statement on Form S-8 (Registration No. 333-74688)
previously filed by the Registrant with the SEC).
3(ii) By-laws of the Registrant, as amended (incorporated herein by reference to Exhibit
10.1 to the Quarterly Report on Form 10-Q for the quarterly period ended May 5, 2001
(the "May 5, 2001 Form 10-Q"), filed by the Registrant with the SEC on June 13,
2001).
4.1 The rights of holders of the Registrant's equity securities are defined in the
Registrant's Certificate of Incorporation, as amended (incorporated herein by
reference to (a) Exhibits 3(i)(a) and 3(i)(b) to the July 26, 1997 Form 10-Q,
Exhibit 4.2(a) to the Registration Statement on Form S-8 (Registration No.
333-62425) previously filed by the Registrant with the SEC), and Exhibit 4.2 to the
Registration Statement on Form S-8 (Registration No. 333-74688) previously filed by
the Registrant the SEC).
4.2 Rights Agreement dated as of March 11, 1998 ("Rights Agreement"), between Foot
Locker, Inc. and First Chicago Trust Company of New York, as Rights Agent
(incorporated herein by reference to Exhibit 4 to the Form 8-K dated March 11,
1998).
4.3 Amendment No. 1 to the Rights Agreement dated as of May 28, 1999 (incorporated
herein by reference to Exhibit 4.2(a) to the Quarterly Report on Form 10-Q for the
quarterly period ended May 1, 1999, filed by the Registrant with the SEC on June 4,
1999).
4.4 Amendment No. 2 to the Rights Agreement dated as of October 24, 2001 (incorporated
herein by reference to Exhibit 4.6 to the Registration Statement on Form S-8
(Registration No. 333-74688) previously filed by the Registrant with the SEC).
4.5 Amendment No. 3 to the Rights Agreement dated as of March 18, 2002 (incorporated
herein by reference to Exhibit 4.5 to the Annual Report on Form 10-K for the year
ended February 2, 2001 filed by the Registrant with the SEC on April 29, 2002).
4.6 Indenture dated as of October 10, 1991 (incorporated herein by reference to Exhibit
4.1 to the Registration Statement on Form S-3 (Registration No. 33-43334) previously
filed by the Registrant with the SEC).
-12-
EXHIBIT NO.
IN ITEM 601 OF
REGULATION S-K DESCRIPTION
-------------- -----------
4.7 Forms of Medium-Term Notes (Fixed Rate and Floating Rate) (incorporated herein by
reference to Exhibits 4.4 and 4.5 to the Registration Statement on Form S-3
(Registration No. 33-43334) previously filed by the Registrant with the SEC).
4.8 Form of 8 1/2% Debentures due 2022 (incorporated herein by reference to Exhibit 4 to
the Registrant's Form 8-K dated January 16, 1992).
4.9 Indenture dated as of June 8, 2001 (incorporated herein by reference to Exhibit 4.1
to the Registration Statement on Form S-3 (Registration No. 333-64930) previously
filed by the Registrant with the SEC).
4.10 Form of 5.50% Convertible Subordinated Note (incorporated herein by reference to
Exhibit 4.2 to the Registration Statement on Form S-3 (Registration No. 333-64930)
previously filed by the Registrant with the SEC).
4.11 Registration Rights Agreement dated as of June 8, 2001 (incorporated herein by
reference to Exhibit 4.3 to the Registration Statement on Form S-3 (Registration No.
333-64930) previously filed by the Registrant with the SEC).
4.12 Distribution Agreement dated July 13, 1995 and Forms of Fixed Rate and Floating Rate
Notes (incorporated herein by reference to Exhibits 1, 4.1 and 4.2, respectively, to
the Registrant's Form 8-K dated July 13, 1995).
10.1 1986 Foot Locker Stock Option Plan (incorporated herein by reference to Exhibit
10(b) to the Registrant's Annual Report on Form 10-K for the year ended January 28,
1995, filed by the Registrant with the SEC on April 24, 1995 (the "1994 Form
10-K")).
10.2 Amendment to the 1986 Foot Locker Stock Option Plan (incorporated herein by
reference to Exhibit 10(a) to the Registrant's Annual Report on Form 10-K for the
year ended January 27, 1996, filed by the Registrant with the SEC on April 26, 1996
(the "1995 Form 10-K")).
10.3 Foot Locker 1995 Stock Option and Award Plan (incorporated herein by reference to
Exhibit 10(p) to the 1994 Form 10-K).
10.4 Foot Locker 1998 Stock Option and Award Plan (incorporated herein by reference to
Exhibit 10.4 to the Registrant's Annual Report on Form 10-K for the year ended
January 31, 1998, filed by the Registrant with the SEC on April 21, 1998 (the "1997
Form 10-K")).
10.5 Amendment to the Foot Locker 1998 Stock Option and Award Plan (incorporated herein
by reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for
the period ended July 29, 2000, filed by the Registrant with the SEC on September 7,
2000 (the "July 29, 2000 Form 10-Q")).
10.6 Executive Supplemental Retirement Plan (incorporated herein by reference to Exhibit
10(d) to the Registration Statement on Form 8-B filed by the Registrant with the SEC
on August 7, 1989 (Registration No. 1-10299) (the "8-B Registration Statement")).
10.7 Amendment to the Executive Supplemental Retirement Plan (incorporated herein by
reference to Exhibit 10(c)(i) to the 1994 Form 10-K ).
10.8 Amendment to the Executive Supplemental Retirement Plan (incorporated herein by
reference to Exhibit 10(d)(ii) to the 1995 Form 10-K).
-13-
EXHIBIT NO.
IN ITEM 601 OF
REGULATION S-K DESCRIPTION
-------------- -----------
10.9 Supplemental Executive Retirement Plan (incorporated herein by reference to Exhibit
10(e) to the 1995 Form 10-K).
10.10 Long-Term Incentive Compensation Plan, as amended and restated (incorporated herein
by reference to Exhibit 10(f) to the 1995 Form 10-K).
10.11 Annual Incentive Compensation Plan, as amended (incorporated herein by reference to
Exhibit 10.3 to the July 29, 2000 Form 10-Q).
10.12 Form of indemnification agreement, as amended (incorporated herein by reference to
Exhibit 10(g) to the 8-B Registration Statement).
10.13 Amendment to form of indemnification agreement (incorporated herein by reference to
Exhibit 10.5 to the Quarterly Report on Form 10-Q for the quarterly period ended May
5, 2001 filed by the Registrant with the SEC on June 13, 2001 (the "May 5, 2001 Form
10-Q")).
10.14 Foot Locker Voluntary Deferred Compensation Plan (incorporated herein by reference
to Exhibit 10(i) to the 1995 Form 10-K).
10.15 Foot Locker Directors Stock Option Plan (incorporated herein by reference to Exhibit
10.1 to the July 29, 2000 Form 10-Q).
10.16 Trust Agreement dated as of November 12, 1987 ("Trust Agreement"), between F.W.
Woolworth Co. and The Bank of New York, as amended and assumed by the Registrant
(incorporated herein by reference to Exhibit 10(j) to the 8-B Registration
Statement).
10.17 Amendment to Trust Agreement made as of April 11, 2001 (incorporated herein by
reference to Exhibit 10.4 to May 5, 2001 Form 10-Q).
10.18 Foot Locker Directors' Retirement Plan, as amended (incorporated herein by reference
to Exhibit 10(k) to the 8-B Registration Statement).
10.19 Amendments to the Foot Locker Directors' Retirement Plan (incorporated herein by
reference to Exhibit 10(c) to the Registrant's Quarterly Report on Form 10-Q for the
period ended October 28, 1995, filed by the Registrant with the SEC on December 11,
1995 (the "October 28, 1995 Form 10-Q")).
10.20 Employment Agreement with Matthew D. Serra dated as of January 21, 2003.
10.21 Restricted Stock Agreement with Matthew D. Serra dated as of March 4, 2001
(incorporated herein by reference to Exhibit 10.3 to the May 5, 2001 Form 10-Q).
10.22 Restricted Stock Agreement with Matthew D. Serra dated as of February 2, 2003.
10.23 Foot Locker Executive Severance Pay Plan (incorporated herein by reference to
Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the period ended
October 31, 1998 (the "October 31, 1998 Form 10-Q")).
10.24 Form of Senior Executive Employment Agreement (incorporated herein by referenec to
Exhibit 10.23 to the Registrant's Annual Report on Form 10-K for the year ended
January 29, 2000 filed by the Registrant with the SEC on April 21, 2000 (the "1999
Form 10-K")).
10.25 Form of Executive Employment Agreement (incorporated herein by reference to Exhibit
10.24 to the 1999 Form 10-K).
-14-
EXHIBIT NO.
IN ITEM 601 OF
REGULATION S-K DESCRIPTION
-------------- -----------
10.26 Form of Senior Executive Employment Agreement (incorporated herein by reference to
Exhibit 10.23 to the 1999 Form 10-K).
10.27 Foot Locker, Inc. Directors' Stock Plan (incorporated herein by reference to Exhibit
10(b) to the Registrant's October 28, 1995 Form 10-Q).
10.28 Foot Locker, Inc. Excess Cash Balance Plan (incorporated herein by reference to
Exhibit 10(c) to the 1995 Form 10-K).
10.29 Form of Restricted Stock Agreement (incorporated herein by reference to Exhibit
10.30 to the 1998 Form 10-K).
10.30 Amendment No. 5 dated as of June 8, 2001 to the Credit Agreement dated as of April
9, 1997 (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on
Form 10-Q for the quarterly period ended August 4, 2001 filed by the Registrant with
the SEC on September 18, 2001).
10.31 Amendment No. 6 dated as of July 1, 2002 to the Credit Agreement dated as of April
9, 1997 and amended and restated as of June 8, 2001 (as amended, the "Credit
Agreement") (incorporated herein by reference to Exhibit 10.3 to the August 3, 2002
Form 10-Q).
10.32 Amendment No. 7 dated as of November 22, 2002 to the Credit Agreement.
10.33 Letter of Credit Agreement dated as of March 19, 1999 (incorporated herein by
reference to Exhibit 10.35 to the 1998 10-K).
10.34 Nonstatutory Stock Option Grant Agreement with J. Carter Bacot dated as of February
12, 2001 (incorporated herein by reference to Exhibit 10.6 to the May 5, 2001 Form
10-Q).
10.35 Nonstatutory Stock Option Grant Agreement with J. Carter Bacot dated as of February
4, 2002 (incorporated herein by reference to Exhibit 10 to the Quarterly Report on
Form 10-Q for quarterly period ended May 4, 2002 filed by the Registrant with the
SEC on June 14, 2002).
10.36 Foot Locker 2002 Directors Stock Plan (incorporated herein by reference to Exhibit
10.1 to the Quarterly Report on Form 10-Q for the quarterly period ended August 3,
2002 filed by the Registrant with the SEC on September 12, 2002 (the "August 3, 2002
Form 10-Q")).
12 Computation of Ratio of Earnings to Fixed Charges.
13 2002 Annual Report to Shareholders.
18 Letter on Change in Accounting Principle (incorporated herein by reference to
Exhibit 18 to the 1999 Form 10-K).
21 Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
99.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
-15-
EXHIBIT NO.
IN ITEM 601 OF
REGULATION S-K DESCRIPTION
-------------- -----------
10.20 Employment Agreement with Matthew D. Serra dated as of January 21, 2003.
10.22 Restricted Stock Agreement with Matthew D. Serra dated as of February 2, 2003.
10.32 Amendment No. 7 dated as of November 22, 2002 to the Credit Agreement.
12 Computation of Ratio of Earnings to Fixed Charges.
13 2002 Annual Report to Shareholders.
21 Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
99.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.