Foot Locker 2005 Annual Report Download - page 56

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Maturities of long-term debt and minimum rent payments under capital leases in future periods are:
Long-Term
Debt
Capital
Leases Total
(in millions)
2006 ................................................................ $ 50
(1)
$1 $51
2007 ................................................................ — 14 14
2008 ................................................................ 2 — 2
2009 ................................................................ 88 — 88
2010 ................................................................ — — —
Thereafter ........................................................... 171 — 171
311 15 326
Less: Current portion ................................................ 50 1 51
$261 $14 $275
(1) Represents the Company’s $50 million principal payment on its 5-year term loan that was made in February 2006 and was in advance of the originally
scheduled payment dates of May 19, 2007 and May 19, 2008.
The Company has various interest rate swap agreements, which convert $100 million of the 8.50 percent debentures
from a fixed interest rate to a variable interest rate. The effect of these swaps resulted in a combined reduction in interest
expense of $1 million in 2005, $3 million in 2004, and $4 million in 2003.
The net fair value of the interest rate swaps at January 28, 2006 was a liability $1 million, of which $1 million was
included in other assets and $2 million was included in other liabilities. The carrying value of the 8.50 percent debentures
was decreased by $1 million for these swaps, which are collectively classified as a fair value hedge. At January 29, 2005,
the net fair value of the interest rate swaps was $2 million, and was included in other assets.
Interest expense related to long-term debt and capital lease obligations, including the impact of the interest rate
swaps and the amortization of the associated debt issuance costs, and was $20 million in 2005, $19 million in 2004 and
$22 million in 2003.
14 Leases
The Company is obligated under operating leases for almost all of its store properties. Some of the store leases contain
renewal options with varying terms and conditions. Management expects that in the normal course of business, expiring
leases will generally be renewed or, upon making a decision to relocate, replaced by leases on other premises. Operating
lease periods generally range from 5 to 10 years. Certain leases provide for additional rent payments based on a percentage
of store sales. Rent expense includes real estate taxes, insurance, maintenance, and other costs as required by some of
the Company’s leases. The present value of operating leases is discounted using various interest rates ranging from
4 percent to 13 percent.
Rent expense consists of the following:
2005 2004 2003
(in millions)
Rent ....................................................... $630 $605 $532
Contingent rent based on sales ............................. 13 11 11
Sublease income ........................................... (1) (1) (1)
Total rent expense ......................................... $642 $615 $542
40