Foot Locker 2005 Annual Report Download - page 31

in the foreign exchange currency translation adjustment, primarily related to the value of the euro in relation to the U.S. dollar.
The Company declared and paid dividends totaling $49 million during 2005. The Company repurchased approximately 1.6 million
shares for $35 million during the year. During 2005, the Company reduced its minimum liability for the Company’s pension plans
by $15 million, primarily as a result of the plans’ asset performance. The Company contributed $19 million and $7 million to
the Company’s U.S. and Canadian qualified pension plans, respectively in 2005.
Excluding the present value of operating leases, the Company’s cash, cash equivalents and short-term investments, net
of debt and capital lease obligations, increased to $127 million at January 29, 2005 from $113 million at January 31, 2004.
The Company increased debt and capital lease obligations by $25 million while increasing cash, cash equivalents and short-
term investments by $44 million. This improvement was offset by an increase of $306 million in the present value of operating
leases primarily related to the Footaction acquisition and additional lease renewals entered into during 2004. Including the
present value of operating leases, the Company’s net debt capitalization percent improved 2.9 percentage points in 2004.
Total capitalization increased by $742 million in 2004, which was primarily attributable to an increase in shareholders’ equity.
The increase in shareholders’ equity relates to net income of $293 million in 2004, an increase of $147 million resulting from
the conversion of $150 million subordinated notes to equity, net of unamortized deferred issuance costs, $49 million related
to employee stock plans, and an increase of $19 million in the foreign exchange currency translation adjustment, primarily
related to the strength of the euro. The Company declared and paid dividends totaling $39 million during 2004. The Company
also recorded an increase of $14 million to the minimum liability for the Company’s pension plans during 2004. This increase
was primarily a result of the 40 basis point decrease in the discount rate used to calculate present value of the obligations
as of January 29, 2005, offset, in part, by an increase in the plans’ asset performance. The Company contributed $44 million
and $6 million to the Company’s U.S. and Canadian qualified pension plans, respectively, in February 2004 and an additional
$56 million to the Company’s U.S. qualified pension plan in September 2004, in advance of ERISA requirements.
Contractual Obligations and Commitments
The following tables represent the scheduled maturities of the Company’s contractual cash obligations and other
commercial commitments as of January 28, 2006: Payments Due by Period
Contractual Cash Obligations Total
Less than
1 Year
2–3
Years
3–5
Years
After 5
Years
(in millions)
Long-term debt
(1)
............................... $ 311 $ — $ 52 $ 88 $171
Operating leases .................................. 2,600 454 782 561 803
Capital lease obligations .......................... 15 1 14 — —
Other long-term liabilities
(2)
..................... — — — — —
Total contractual cash obligations ................ $2,926 $455 $848 $649 $974
(1) The amounts presented above represent the contractual maturities of the Company’s long-term debt, excluding interest. Additional information
is included in the “Long-Term Debt and Obligations under Capital Leases” footnote under “Item 8. Consolidated Financial Statements and
Supplementary Data.”
(2) The Company’s other liabilities in the Consolidated Balance Sheet as of January 28, 2006 primarily comprise pension and postretirement benefits, deferred
rent liability, income taxes, workers’ compensation and general liability reserves and various other accruals. These liabilities have been excluded from the
above table as the timing and/or amount of any cash payment is uncertain. The timing of the remaining amounts that are known have not been included
as they are minimal and not useful to the presentation. Additional information on the balance sheet caption is included in the “Other Liabilities” footnote
under “Item 8. Consolidated Financial Statements and Supplementary Data.”
Amount of Commitment Expiration by Period
Other Commercial Commitments
Total
Amounts
Committed
Less than
1 Year
1–3
Years
3–5
Years
After 5
Years
(in millions)
Line of credit ..................................... $ 186 $ — $— $186 $—
Stand-by letters of credit ......................... 14 — — 14 —
Purchase commitments
(3)
........................ 1,733 1,726 6 1 —
Other
(4)
.......................................... 60 28 23 9 —
Total commercial commitments ................... $1,993 $1,754 $29 $210 $—
(3) Represents open purchase orders, as well as minimum required purchases under merchandise contractual agreements, at January 28, 2006. The Company
is obligated under the terms of purchase orders; however, the Company is generally able to renegotiate the timing and quantity of these orders with certain
vendors in response to shifts in consumer preferences.
(4) Represents payments required by non-merchandise purchase agreements and minimum royalty requirements. Effective March 31, 2006, the Company
terminated its agreement with the NFL.
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