Foot Locker 2005 Annual Report Download - page 57

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Future minimum lease payments under non-cancelable operating leases are:
(in millions)
2006 ..................................................................................... $ 454
2007 ..................................................................................... 420
2008 ..................................................................................... 362
2009 ..................................................................................... 299
2010 ..................................................................................... 262
Thereafter ................................................................................ 803
Total operating lease commitments ...................................................... $2,600
Present value of operating lease commitments ........................................... $1,934
15 Other Liabilities
2005 2004
(in millions)
Pension benefits .......................................................... $ 42 $130
Postretirement benefits ................................................... 84 95
Straight-line rent liability ................................................. 83 77
Income taxes .............................................................. 35 29
Workers’ compensation / general liability reserves ......................... 12 11
Reserve for discontinued operations ....................................... 14 11
Repositioning and restructuring reserves .................................. 3 3
Fair value of derivatives ................................................... 2 —
Unfavorable leases ........................................................ 3 3
Other ...................................................................... 15 17
$293 $376
16 Discontinued Operations
On January 23, 2001, the Company announced that it was exiting its 694-store Northern Group segment. During the
second quarter of 2001, the Company completed the liquidation of the 324 stores in the United States. On September 28,
2001, the Company completed the stock transfer of the 370 Northern Group stores in Canada, through one of its wholly
owned subsidiaries for approximately CAD$59 million (approximately US$38 million), which was paid in the form of a note
(the “Note”). Another wholly owned subsidiary of the Company was the assignor of the store leases involved in the
transaction and therefore retains potential liability for such leases. The net amount of the assets and liabilities of the
former operations was written down to the estimated fair value of the Note. The transaction was accounted for pursuant
to SEC Staff Accounting Bulletin Topic 5:E, “Accounting for Divestiture of a Subsidiary or Other Business Operation,” as
a “transfer of assets and liabilities under contractual arrangement” as no cash proceeds were received and the
consideration comprised the Note, the repayment of which was dependent on the future successful operations of
the business.
An agreement in principle had been reached during December 2002 to receive CAD$5 million (approximately US$3
million) cash consideration in partial prepayment of the Note and accrued interest, and further, the Company agreed to
reduce the face value of the Note to CAD$17.5 million (approximately US$12 million). During the fourth quarter of 2002,
circumstances had changed sufficiently such that it became appropriate to recognize the transaction as an accounting
divestiture. Accordingly, the Note was recorded in the financial statements at its estimated fair value of CAD$16 million
(approximately US$10 million). On May 6, 2003, the amendments to the Note were executed and a cash payment of
CAD$5.2 million was received from the purchasers of the Northern Group, representing principal and interest through the
date of the amendment. On January 15, 2004, the Company received an additional payment of CAD$1 million, representing
a partial repayment of the Note. On August 20, 2004, the Company received a contingent payment of CAD$1 million, which
was based upon a certain transaction that occurred. As a result of the settlement of the contingent transaction, the
CAD$17.5 million Note was replaced with a new CAD$15.5 million note. The terms of the new note are substantially the
same as the May 6, 2003 Note, including the expiration date and interest payment terms.
41