Foot Locker 2006 Annual Report Download - page 4

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TO OUR SHAREHOLDERS
Although faced with several external
challenges in our industry, especially
in Europe, our Company neverthe-
less generated solid fi nancial results
in 2006.
From a strategic standpoint, the
year was noteworthy because we
identifi ed new areas for growth and
took meaningful steps to capitalize
on those opportunities. As a result,
we enter 2007 invigorated with the
belief that our business is well-po-
sitioned to succeed in the global
marketplace. Our goal is to continue
to build on our leadership position
as the largest athletic footwear and
apparel retailer in the world.
Our management team is result-
oriented, self-driven and focused on
producing high returns. At the same
time, we are realistic in our expecta-
tions, which, given the competitive
nature of our industry, leads us to be
prudent in our decision making. We
understand that it may not be pos-
sible for our Company to achieve
its stretch fi nancial goals every year;
however, we continually strive to win
each and every contest in which we
participate and to overachieve when-
ever possible.
2006 Financial Standings
The following are the fi nancial high-
lights of 2006:
• Total sales increased to $5.75
billion
• Sales per gross square foot in-
creased to $365
• Net income per share, before a
non-cash impairment charge pur-
suant to SFAS No. 144, was $1.68
• Cash position, net of debt, was
$236 million
• Book value per share increased to
$14.74
We did not meet all of the goals
we set for ourselves going into the
year and, for the fi rst time this de-
cade, our income from continuing
operations did not increase from the
prior year. Nevertheless, we did post
respectable numbers for the year,
given the challenges we faced. Our
net income includes a $17 million
pre-tax, non-cash impairment charge
recorded during the second quarter
to write-down store long-lived assets
at the Company’s European opera-
tions pursuant to SFAS No. 144. The
Company’s pre-tax earnings from
continuing operations, excluding this
impairment charge, increased by $4
million as compared with the prior
year.
Two of our most important fi nan-
cial accomplishments in 2006 were
reducing the amount of debt on our
balance sheet and ending the year
with our qualifi ed pension plans
fully-funded on a GAAP basis. We
believe that our current fi nancial posi-
tion effectively supports our existing
business and that additional debt
capacity would be available should
we identify new investment opportu-
nities.
We use a team approach to man-
age our diversifi ed group of busi-
nesses, which means that when one
division has an “off-year,” another
division must step up to the plate and
pick up the slack. This was the case
in 2006, as it has been in previous
years. We believe this structure en-
hances our ability to produce consis-
tent fi nancial results in the future.
At Foot Locker, Inc., the goal is to continue to build
on our leadership position as the largest athletic
footwear and apparel retailer in the world.
2