Foot Locker 2006 Annual Report Download - page 59

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12 Accrued and Other Liabilities
2006 2005
(in millions)
Pension and postretirement benefits .................................. $ 4 $ 72
Incentive bonuses ................................................ 12 20
Other payroll and payroll related costs, excluding taxes .................... 46 52
Taxes other than income taxes ....................................... 46 43
Property and equipment ............................................ 24 16
Customer deposits 1 ............................................... 33 31
Income taxes payable .............................................. 2 3
Fair value of derivative contracts ..................................... 2 1
Current deferred tax liabilities ....................................... 4 3
Sales return reserve ............................................... 4 4
Liabilities of discontinued operations .................................. — 2
Current portion of repositioning and restructuring reserves ................. 1 1
Current portion of reserve for discontinued operations ..................... 3 8
Other operating costs .............................................. 65 49
$246 $305
1 Customer deposits include unredeemed gift cards and certificates, merchandise credits and, deferred revenue related to undelivered
merchandise, including layaway sales.
13 Revolving Credit Facility
At February 3, 2007, the Company had unused domestic lines of credit of $186 million, pursuant to a $200 million
unsecured revolving credit agreement. $14 million of the line of credit was committed to support standby letters of
credit. These letters of credit are primarily used for insurance programs.
In May 2004, shortly after the Footaction acquisition, the Company amended its revolving credit agreement,
thereby extending the maturity date to May 2009 from July 2006. The agreement includes various restrictive financial
covenants with which the Company was in compliance on February 3, 2007. Deferred financing fees are amortized over
the life of the facility on a straight-line basis, which is comparable to the interest method. The unamortized balance at
February 3, 2007 is approximately $1.9 million. Interest is determined at the time of borrowing based on variable rates
and the Company’s fixed charge coverage ratio, as defined in the agreement. The rates range from LIBOR plus 0.875
percent to LIBOR plus 1.625 percent. The quarterly facility fees paid on the unused portion during 2006 and 2005,
which are also based on the Company’s fixed charge coverage ratio, ranged from 0.175 percent to 0.25 percent. There
were no short-term borrowings during 2006 or 2005.
Interest expense, including facility fees, related to the revolving credit facility was $2 million in 2006, 2005 and
2004.
14 Long-Term Debt and Obligations under Capital Leases
In May 2004, the Company obtained a 5-year, $175 million amortizing term loan from the bank group participating
in its existing revolving credit facility to finance a portion of the purchase price of the Footaction stores. The interest
rate on the LIBOR-based, floating-rate loan was 6.5 percent on February 3, 2007 and 5.568 percent on January 28, 2006.
The loan requires minimum principal payments each May, equal to a percentage of the original principal amount of 10
percent in 2005 and 2006, 15 percent in years 2007 and 2008 and 50 percent in year 2009. Closing and upfront fees
totaling approximately $1 million were paid for the term loan and these fees are being amortized using the interest rate
method as determined by the principal repayment schedule. During 2005, the Company repaid $35 million of its 5-year
term loan. This payment was in advance of the originally scheduled payment dates of May 19, 2005 and May 19, 2006 as
permitted by the agreement. During 2006, the Company repaid an additional $50 million of its 5-year term loan. This
payment was in advance of the originally scheduled payment dates of May 19, 2007 and May 19, 2008.