Foot Locker 2008 Annual Report Download - page 34

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Any material adverse change in customer demand, fashion trends, competitive market forces or customer
acceptance of the Company’s merchandise mix and retail locations, uncertainties related to the effect of competitive
products and pricing, the Company’s reliance on a few key vendors for a significant portion of its merchandise purchases,
and risks associated with foreign global sourcing or economic conditions worldwide could affect the ability of the
Company to continue to fund its needs from business operations.
Cash Flow
Operating activities from continuing operations provided cash of $383 million in 2008 as compared with $283
million in 2007. These amounts reflect income from continuing operations adjusted for non-cash items and working
capital changes. During 2008, the Company recorded non-cash impairment charges and store closing program costs of
$259 million primarily related to its domestic operations. Merchandise inventories represented a $128 million source of
cash in 2008 as inventory purchases were reduced to keep inventory levels in line with sales. Additionally, the Company
contributed $6 million to its Canadian qualified pension plan.
Operating activities from continuing operations provided cash of $283 million in 2007 as compared with $189
million in 2006. During 2007, the Company recorded non-cash impairment charges and store closing program costs of
$124 million related to its domestic operations. Merchandise inventories represented a $55 million source of cash in
2007 as inventory purchases were reduced to keep inventory levels in line with sales. Additionally, the Company did
not contribute to its pension plans in 2007, as no contributions were required, compared with $68 million contributed
in 2006.
Net cash used by investing activities of the Company’s continuing operations was $272 million in 2008 as
compared with $117 million provided by investing activities in 2007. The net cash used by investing activities for
2008 reflects the asset purchase from dELiA*s, Inc. of CCS for $106 million (including capitalized acquisition costs).
Investing activities in 2008 also included a $3 million gain related to the sale of two lease interests in Europe. The
Company did not purchase or sell short-term investments during 2008. However, reflected in investing activities is the
reclassification of $23 million from cash and cash equivalents to short-term investments representing the remaining
money market investment. Capital expenditures of $146 million in 2008 and $148 million in 2007 primarily related to
store remodeling and new stores.
Net cash provided by investing activities of the Company’s continuing operations was $117 million in 2007 as
compared with $108 million used in investing activities in 2006. During 2007, the Company liquidated most of its short-
term investments, which represented auction rate securities, due to issues in the global credit and capital markets.
Capital expenditures of $148 million in 2007 and $165 million in 2006 primarily related to store remodeling and new
stores. During 2007, the Company received $21 million representing the maturity of an investment of $14 million and
the repayment of a note of $7 million.
Net cash used in financing activities of continuing operations was $185 million in 2008 as compared with $138
million in 2007. During 2008, the Company reduced its long-term debt by repaying the balance of its term loan of $88
million. Additionally, the Company purchased and retired $6 million of its $200 million 8.50 percent debentures payable
in 2022. The Company declared and paid dividends totaling $93 million in 2008 and $77 million in 2007. During 2008
and 2007, the Company received proceeds from the issuance of common stock and treasury stock in connection with the
employee stock programs of $2 million and $9 million, respectively.
Net cash used in financing activities of continuing operations was $138 million in 2007 as compared with
$142 million in 2006. During 2007, the Company repaid $2 million of its term loan, purchased and retired $5 million of
its 8.50 percent debentures payable in 2022, and repaid and retired its $14 million Industrial Revenue Bond, which was
accounted for as capital lease. The Company recorded an excess tax benefit related to stock-based compensation of
$1 million as a financing activity. The Company declared and paid dividends totaling $77 million in 2007 and $61 million
in 2006. During 2007 and 2006, the Company received proceeds from the issuance of common stock and treasury stock
in connection with the employee stock programs of $9 million and $12 million, respectively. During 2007, the Company
purchased 2,283,254 shares of its common stock for approximately $50 million.