Foot Locker 2011 Annual Report Download - page 90

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FOOT LOCKER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
22. Legal Proceedings − (continued)
Management does not believe that the outcome of any such legal proceedings pending against the
Company or its consolidated subsidiaries, including the Pereira consolidated cases and Hill as described
above, would have a material adverse effect on the Company’s consolidated financial position, liquidity, or
results of operations, taken as a whole.
23. Commitments
In connection with the sale of various businesses and assets, the Company may be obligated for certain
lease commitments transferred to third parties and pursuant to certain normal representations,
warranties, or indemnifications entered into with the purchasers of such businesses or assets. Although
the maximum potential amounts for such obligations cannot be readily determined, management believes
that the resolution of such contingencies will not have a material effect on the Company’s consolidated
financial position, liquidity, or results of operations. The Company is also operating certain stores and
making rental payments for which lease agreements are in the process of being negotiated with landlords.
Although there is no contractual commitment to make these payments, it is likely that a lease will
be executed.
The Company does not have any off-balance sheet financing, other than operating leases entered into in
the normal course of business and disclosed above, or unconsolidated special purpose entities. The
Company does not participate in transactions that generate relationships with unconsolidated entities or
financial partnerships, including variable interest entities.
24. Quarterly Results (Unaudited) 1
st
Q2
nd
Q3
rd
Q4
th
Q Year
(in millions, except per share amounts)
Sales
2011 1,452 1,275 1,394 1,502 $5,623
2010 1,281 1,096 1,280 1,392 $5,049
Gross margin
(1)
2011 475 388 453 480 $1,796
2010 393 305 388 430 $1,516
Operating profit
(2)
2011 150 59 106 122 $ 437
2010 87 11 74 90 $ 262
Net income
2011 94 37 66 81
(3)
$ 278
2010 54 6 52 57
(3),(4)
$ 169
Basic earnings per share:
2011 0.61 0.24 0.43 0.53 $ 1.81
2010 0.35 0.04 0.33 0.36 $ 1.08
Diluted earnings per share:
2011 0.60 0.24 0.43 0.53 $ 1.80
2010 0.34 0.04 0.33 0.36 $ 1.07
(1) Gross margin represents sales less cost of sales.
(2) Operating profit represents income from continuing operations before income taxes, interest expense, net, and
non-operating income.
(3) During the fourth quarters of 2011 and 2010, the Company recorded impairment charges of $5 million and $10 million,
respectively, related to its CCS tradename.
(4) During the fourth quarter of 2010, a realized gain of $2 million was recorded related to the Reserve International Fund, a
money-market investment.
70