Foot Locker 2002 Annual Report Download - page 30

In April 2002, the FASB issued SFAS No . 145, “ Rescissio n o f
FASB Statements No . 4, 44 and 64, Amendment of FASB
Statement No . 13, and Tec hnic al Co rrectio ns” ( “ SFAS No . 145” ) .
SFAS No . 145 amends o ther existing autho ritative pro no unce-
ments to make vario us technical co rrectio ns, including that gains
and lo sses fro m extinguishment of debt no lo nger be classified as
extrao rdinary. The statement also eliminates an inco nsistency
between the required accounting fo r sale-leaseback transactio ns
and the required accounting fo r certain lease mo dificatio ns that
have ec o no mic effects that are similar to sale- leaseback transac-
tio ns. In additio n, it requires that the o riginal lessee under an
o perating lease ag reement that becomes seco ndarily liable shall
reco gnize the fair value o f the guarantee o bligatio n for all trans-
actions o ccurring after May 15, 2002. The Co mpany ado pted SFAS
No . 145 as of May 15, 2002, and it did no t have a material impact
o n its financial po sitio n or results of o peratio ns.
In June 2002, the FASB issued SFAS No . 146, “Accounting fo r
Co sts Asso ciated with Exit o r Dispo sal Activities” ( “ SFAS No .
146” ) , whic h is effective fo r exit and dispo sal activities that are
initiated after December 31, 2002. The statement addresses finan-
cial acco unting and repo rting for co sts associated with exit o r dis-
po sal activities and nullifies Emerging Issues Task Fo rc e ( “ EITF” )
Issue No . 94- 3, “Liability Reco gnitio n fo r Certain Emplo yee
Terminatio n Benefits and Other Co sts to Exit an Activity ( includ-
ing Certain Co sts Incurred in a Restructuring)”. The statement
requires that the fair value o f an initial liability fo r a co st asso ci-
ated with an exit o r dispo sal activity be reco g nized when the lia-
bility is incurred as o ppo sed to when the entity commits to an
exit plan, thereby eliminating the definitio n and requirements fo r
reco gnitio n o f exit costs, as is the guidance under EITF 94- 3. The
Co mpany ado pted SFAS No . 146 in 2002, and it did no t have a
material impact on its financial po sitio n o r results o f operatio ns.
In No vember 2002, EITF Issue No . 02- 16, “Acco unting by a
Custo mer ( Including a Reseller) fo r Certain Co nsideratio n Received
fro m a Vendo r” was issued to clarify the acc o unting fo r co nsider-
atio n rec eived fro m a vendo r. Cash received applies to cash
received fo r reimbursements of c o sts incurred to sell the vendo r’s
pro ducts, co o perative advertising and cash rec eived as rebates or
refunds based upo n cumulative levels o f purchases. The pro -
nouncement applies to new arrangements, including mo difications
of existing arrangements entered into after Dec ember 31, 2002.
The Co mpany ado pted the provisio ns of the prono uncement, as o f
January 1, 2003 and it did no t have a material impact o n its
financial po sitio n o r results o f operatio ns.
New Accounting Pronouncement s
In June 2001, the FASB issued SFAS No . 143, “Accounting fo r Asset
Retirement Obligatio ns” ( “ SFAS No . 143” ) , whic h is effec tive fo r
fiscal years beg inning after June 15, 2002. The Co mpany intends
to ado pt SFAS No . 143 as of the beginning o f fiscal year 2003. The
statement requires that the fair value o f a liability fo r an asset
retirement o bligatio n be recognized in the perio d in whic h it is
inc urred if a reasonable estimate o f fair value can be made. The
asso ciated asset retirement costs are capitalized as part o f the car-
rying amo unt o f the lo ng-lived asset. The initial amo unt to be rec -
o gnized will be at its fair value. The liability will be disc o unted and
accretio n expense will be recognized using the credit-adjusted
risk-free interest rate in effect when the liability is initially reco g -
nized. The Co mpany do es no t expect the ado ption to have a sig-
nificant impact o n its financial po sitio n o r results of o peratio ns.
In December 2002, SFAS No . 148, “Accounting fo r Stock-Based
Co mpensatio n – Transitio n and Disclo sure an amendment of FASB
Statement No . 123,” was issued and pro vides alternative metho ds
of transitio n fo r an entity that c hanges to the fair value based
metho d o f acco unting fo r sto ck-based co mpensation, requires mo re
pro minent disclo sure of the pro fo rma impact o n earning s per share
and requires such disclo sures quarterly fo r interim perio ds begin-
ning in 2003. The Co mpany intends to ado pt the interim disclo sure
requirements as o f the beginning o f fiscal year 2003 and to co n-
tinue to account fo r sto ck-based co mpensatio n under APB No . 25.
Disclosure Regardi ng Forward-Looking Statement s
This repo rt, including the Shareho lders’ Letter, the material fo llo w-
ing the Shareho lders’ Letter, and Management’s Discussio n and
Analysis o f Financial Co nditio n and Results o f Operatio ns, c o ntains
fo rward-lo o king statements within the meaning o f the federal secu-
rities laws. All statements, o ther than statements o f histo rical facts,
which address activities, events o r develo pments that the Co mpany
expects o r anticipates will o r may o c cur in the future, including , but
not limited to , suc h things as future capital expenditures, expan-
sio n, strategic plans, dividend payments, sto ck repurchases, gro wth
of the Co mpany’s business and o peratio ns, inc luding future cash
flows, revenues and earnings, and other such matters are fo rward-
lo o king statements. These fo rward- lo o king statements are based on
many assumptio ns and fac to rs, including, but no t limited to , the
effects of currency fluctuatio ns, c usto mer demand, fashio n trends,
co mpetitive market fo rces, uncertainties related to the effect o f
co mpetitive pro ducts and pricing, c usto mer acc eptance of the
Co mpany’s merchandise mix and retail lo catio ns, the Co mpany’s
reliance on a few key vendo rs fo r a signific ant po rtio n o f its mer-
chandise purchases (and o n o ne key vendo r fo r approximately 44
percent of its merc handise purchases) , unseaso nable weather, risks
asso ciated with fo reig n glo bal so urcing, including po litical instabil-
ity, changes in impo rt reg ulatio ns and the presence of Severe Acute
Respirato ry Syndro me, the effect o n the Co mpany, its suppliers and
custo mers, of any significant future increases in the c o st o f oil o r
petro leum pro ducts, ec o no mic co nditio ns wo rldwide, any changes in
business, po litical and eco no mic co nditions due to the threat o f
future terro rist ac tivities in the United States o r in o ther parts of
the wo rld and related U.S. military actio n overseas, and the ability
of the Co mpany to execute its business plans effectively with regard
to each of its business units, including its plans fo r marquee and
launc h fo o twear compo nent o f its business. Any changes in such
assumptio ns or facto rs co uld pro duce significantly different results.
The Co mpany undertakes no o bligatio n to publicly update fo rward-
lo o king statements, whether as a result of new info rmatio n, future
events o r o therwise.
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