NEWS RELEASE
CONTACT:
Peter D. Brown
Vice
President, Treasurer
and
Investor Relations
Foot Locker, Inc.
(212) 720-4254
Draft
5/1
3/2004
·
Company Expects Its
Second Quarter EPS to Increase 10-to-20 Percent
·
Re-confirms Expected
Full-Year EPS To Increase 10-to-20 Percent
·
Cash Position, nNet of Debt, iIncreased bBy More Than $1007
Million;
Strengthened Financial Position
Company Expects its Second Quarter EPS to Increase
10-to-20 Percent
Re-confirms Expected Full-Year EPS to Increase
10-to-20 Percent
·New $175 Million 5-year Term Loan Executed
$200
Million Revolving Credit Facility Extended to 2009
NEW YORK, NY, May 19, 2004 –
Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer,
today reported financial results for its first quarter ended May 1, 2004.
Financial
Results
Income from continuing
operations for the Company’s first quarter ended May 1, 2004, increased 2115 percent to
$470.31 per share million,
or $0.3147 million per share,
compared with $0.2739
million, or $0.2739 million per share,
last year. For the 13-week first
quarter period, sales increased 5.1 percent to $1,186 million this year
compared with sales of $1,128 million last year. First quarter comparable-store sales increased 0.3 percent.
“Our first quarter
financial performance was in line with our expectations and the earnings
guidance we previously communicated,” stated Matthew D. Serra, Foot Locker,
Inc.’s Chairman and Chief Executive Officer.
“We are pleased with the financial and strategic progress made during
the first quarter. including, in particular, our recent We are also pleased, following the end of
the quarter, to have completed our acquisition of the 350-store Footaction chain.
Given our solid first quarter financial results, we have increasedmore confidence in our
ability to generateincrease income per share
from continuing operations in both our second quarter and full year by 10-to-20
percent.”
Financial Position
The Company’s financial
position strengthened as its cash position, net of debt, position
increased by $1075 million from
the same period last year. Merchandise
inventories are well positioned to support the Company’s recent acquisition of
approximately 350 Footaction stores as well as the Company’s ; it’s existing
business and planned new store openings.
“Our first quarter
financial performance was in line with our expectations and the earnings guidance
we previously communicated,” stated Matthew D. Serra, Foot Locker, Inc.’s
Chairman and Chief Executive Officer.
“We are pleased with the strategic progress made during the first
quarter and, in particular, our recent acquisition of the 350-store Footaction
chain. Given our solid first quarter financial results, we are somewhat more
confident in our ability to increase both our second quarter and full year net
income per share from continuing operations by 10-to-20 percent.”
As previously
reported, the Company completed its purchase of approximately 350 Footaction
stores on May 7, 2004 for $225 million, subject to certain post closing
adjustments. Taking advantage of
current favorable conditions in the interest rate environment, the
Company elected to finance a portion of the purchase price of its recently
acquired Footaction stores through a 5-year, $175 million amortizing term
loan with its existing bank group. The
initial interest rate on the LIBOR-based, floating-rate loan is 32.xx625
percent. Concurrently, tThe Company
also amended and extended to 2009 its revolving credit agreement to be
co-terminus with the final maturity of the term loan.
On April 20, 2004, the Company
provided notification to The Bank of New York, as Trustee under the indenture,
of its intent to redeem the entire $150 million outstanding 5.5% convertible
subordinated notes. As a result of this
redemption notification, the Company expects that most holders will convert
their notes into shares of Foot Locker, Inc. common stock, on or before June 3,
2004, at a conversion price of $16.305.806 per
share.
Mr. Serra continued,
“Maintaining a strong financial position and working towards an investment
grade credit rating remains a high priority for our Company, and we believe
that the continuing progress we have made in enhancing our financial position
and balance sheet is moving us closer towards this goal. Along these lines, we are focused on remaining pursuing growth that is ffinancially prudent as we pursue new
investment opportunities, as evidenced by . Accordingly, the completion of Completing thisthe new financing arrangement in connection with
our Footaction stores purchase. also positions the
Company to more-readily consider additional
investment opportunities, as available.”
Store
Base Update
During the first quarter of
2004 the Company opened 21 stores, remodeled/relocated XX119 stores and
closed 44 stores. At May 1, 2004, the
Company operated 3,587 stores in 16 countries in North America, Europe and
Australia.
The Company is hosting a live
conference call at 10:00 am (EST) on
Thursday, May 20, 2004 to review 2004 first quarter results, discuss our 2004
outlook and
Footaction acquisition, and respond to analysts’ questions. 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 pm on Monday, May 24, 2004.
This press
release contains forward-looking statements, which reflect management’s current
views of future events and financial performance. These forward-looking statements are based on many assumptions
and factors 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), unseasonable weather, risks associated with
foreign global sourcing, including political instability, changes in import
regulations, disruptions to transportation services and distribution, and the
presence of severe acute respiratory syndrome, economic conditions worldwide,
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 plans effectively with regard to each of its business
units, including its plans for the marquee and launch footwear component of its
business, and its plans for the integration of the Footaction stores. 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.
Consolidated Statements of
Operations
(unaudited)
Periods ended May 1, 2004 and May 3,
2003
(In millions, except per share
amounts)
|
|
|
|
|
|
|
First Quarter 2004 |
|
First Quarter 2003 |
|
Sales |
$ 1,186 |
|
$
1,128 |
|
|
|
|
|
|
Cost of sales |
826 |
|
783 |
|
Selling, general and administrative expenses |
248 |
|
241 |
|
Depreciation and amortization |
34 |
|
37 |
|
Interest expense, net |
4 |
|
5 |
|
|
1,112 |
|
1,066 |
|
Income from continuing operations before
income taxes |
74
|
|
62 |
|
Income tax expense |
27 |
|
23 |
|
Income from continuing operations |
47 |
|
39 |
|
|
|
|
|
|
Income on disposal of discontinued operations,
net |
1 |
|
-- |
|
Cumulative effect of accounting changes, net (1) |
-- |
|
(1) |
|
Net income |
$
48 |
|
$
38 |
|
|
|
|
|
|
Diluted EPS: |
|
|
|
|
Income from continuing operations |
$
0.31 |
|
$ 0.27 |
|
Loss on disposal of discontinued operations |
-- |
|
-- |
|
Cumulative effect of accounting changes, net of
income taxes (1) |
-- |
|
(0.01) |
|
Net
income |
$ 0.31 |
|
$ 0.26 |
|
|
|
|
|
|
Weighted-average diluted shares outstanding |
156.2 |
|
151.3 |
|
|
|
|
|
(1) Related to adoption of SFAS No. 143, “Accounting for
Asset Retirement Obligations.”
- MORE -
(1) Related to adoption of SFAS No.143, “Accounting for Asset
Retirement Obligations.” - MORE -
FOOT LOCKER, INC.
Condensed Consolidated Balance Sheets
(unaudited)
(In millions)
|
|
May 1, 2004 |
|
May 3, 2003 |
|
Assets |
|
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
Cash and cash equivalents |
$ 392 |
|
$ 306 |
|
Merchandise inventories |
1,051 |
|
941 |
|
Assets of discontinued operations |