Foot Locker 2005 Annual Report Download - page 20

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Our business is subject to economic cycles and retail industry conditions. Purchases of discretionary athletic
footwear, apparel and related products, tend to decline during recessionary periods when disposable income is low and
customers are hesitant to use available credit.
Complications in our distribution centers may affect our business.
We operate three distribution centers worldwide to support our athletic business. If complications arise with any one
facility or any facility is severely damaged or destroyed, the other distribution centers may not be able to support the
resulting additional distribution demands. This may adversely affect our ability to deliver inventory on a timely basis.
A major failure of our information systems could harm our business.
We depend on information systems to process transactions, manage inventory, operate our website, purchase, sell
and ship goods on a timely basis and maintain cost-efficient operations. Any material disruption or slowdown of our
systems could cause information to be lost or delayed which could have a negative impact on our business. We may
experience operational problems with our information systems as a result of system failures, viruses, computer “hackers”
or other causes. We cannot assure that our systems will be adequate to support future growth.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
The properties of the Company and its consolidated subsidiaries consist of land, leased and owned stores and
administrative and distribution facilities. Gross operating square footage and total selling area for the Athletic Stores
segment at the end of 2005 was approximately 14.48 and 8.71 million square feet, respectively. These properties are
primarily located in the United States, Canada, various European countries, Australia and New Zealand.
The Company currently operates three distribution centers, of which one is owned and two are leased, occupying an
aggregate of 2.12 million square feet. Two of the three distribution centers are located in the United States and one is
in Europe.
Item 3. Legal Proceedings
Legal proceedings pending against the Company or its consolidated subsidiaries consist of ordinary, routine
litigation, including administrative proceedings, incidental to the business of the Company, as well as litigation incidental
to the sale and disposition of businesses that have occurred in past years. These legal proceedings include commercial,
intellectual property, customer, and labor-and-employment-related claims, including class action lawsuits in which
plaintiffs allege violations by the Company of state wage and hour and other laws. Management does not believe that
the outcome of such proceedings would have a material adverse effect on the Company’s consolidated financial position,
liquidity, or results of operations, taken as a whole.
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 January 28, 2006.
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