Foot Locker 2002 Annual Report Download - page 31

The integrity and o bjectivity of the financial statements and
o ther financial info rmatio n presented in this annual repo rt are
the respo nsibility o f the management o f the Co mpany. The finan-
cial statements have been prepared in co nfo rmity with acc o unt-
ing principles generally acc epted in the United States o f America
and include, when necessary, amo unts based o n the best esti-
mates and judg ments o f manag eme nt.
The Co mpany maintains a system o f internal co ntro ls desig ned
to provide reaso nable assurance, at appropriate c o st, that assets
are safeguarded, transactio ns are executed in acco rdance with
management’s autho rizatio n and the acco unting rec o rds provide
a reliable basis fo r the preparatio n of the financial statements.
The system o f internal ac co unting co ntrols is co ntinually
reviewed by management and impro ved and mo dified as neces-
sary in respo nse to chang ing business co nditio ns. The Co mpany
also maintains an internal audit func tio n fo r evaluating and for-
mally repo rting o n the adequacy and effec tiveness of internal
acco unting co ntrols, po licies and procedures.
The Co mpany’s financ ial statements have been audited by
KPMG LLP, the Co mpany’s independent audito rs, who se repo rt
expresses their o pinio n with respect to the fairness o f the pres-
entatio n o f these statements.
The Audit Co mmittee of the Bo ard of Directo rs, which is c o m-
prised so lely of directo rs who are no t o fficers o r emplo yees o f the
Co mpany, meets regularly with the Co mpany’s management,
internal audito rs, legal co unsel and KPMG LLP to review the activ-
ities of each g ro up and to satisfy itself that each is pro perly dis-
charging its respo nsibility. In additio n, the Audit Co mmittee
meets o n a perio dic basis with KPMG LLP, witho ut management’s
presence, to disc uss the audit o f the financial statements as well
as o ther auditing and financial repo rting matters. The Co mpany’s
internal audito rs and independent audito rs have direc t access to
the Audit Co mmittee.
MATTHEW D. SERRA,
Preside nt and
Chief Executive Officer
BRUCE L. HARTMAN,
Exec utive Vice President and
Chief Financial Officer
May 12, 2003
To the Board of Direc to rs and Shareho lders of Fo o t Lo c ker, Inc.
We have audited the acco mpanying c o nso lidated balance
sheets of Fo o t Lo c ker, Inc. and subsidiaries as o f February 1, 2003
and February 2, 2002, and the related co nso lidated statements of
o peratio ns, comprehensive inco me ( lo ss) , shareho lders’ equity
and cash flo ws fo r each of the years in the three- year perio d
ended February 1, 2003. These co nso lidated financial statements
are the respo nsibility o f Fo o t Lo c ker, Inc.’s management. Our
respo nsibility is to express an opinio n on these conso lidated
financial statements based o n our audits.
We c o nducted o ur audits in acc o rdance with auditing stan-
dards generally accepted in the United States o f America. Tho se
standards require that we plan and perfo rm the audit to o btain
reaso nable assuranc e abo ut whether the financial statements are
free o f material misstatement. An audit includes examining, o n a
test basis, evidence suppo rting the amo unts and disclo sures in
the financial statements. An audit also includes assessing the
acco unting principles used and sig nificant estimates made by
management, as well as evaluating the overall financial state-
ment presentatio n. We believe that o ur audits provide a reaso n-
able basis for o ur o pinion.
In our o pinion, the co nso lidated financial statements referred
to abo ve present fairly, in all material respec ts, the financial
po sitio n o f Fo o t Lo c ker, Inc. and subsidiaries as o f February 1,
2003 and February 2, 2002, and the results of their o peratio ns
and their cash flo ws fo r each o f the years in the three-year perio d
ended February 1, 2003 in co nfo rmity with acc o unting principles
generally accepted in the United States o f America.
As discussed in no te 1 to the co nso lidated financial state-
ments, the Co mpany in 2002 changed its metho d of accounting
fo r go o dwill and o ther intang ible assets, in 2001 c hanged its
metho d o f acco unting fo r derivative financial instruments and
hedg ing activities and in 2000 changed its metho d of accounting
fo r sales under its layaway pro gram.
New Yo rk, NY
March 12, 2003
MANAGEMENT ’S
REPORT
INDEPENDENT
AUDITORS’ REPORT
29