Foot Locker 2007 Annual Report Download - page 62
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46
Interest expense related to long-term debt and capital lease obligations, including the effect of the interest
rate swaps and the amortization of the associated debt issuance costs was $18 million in 2007 and $20 million in
both 2006 and 2005. The effect of the interest rate swaps was not significant for the years ended February 2, 2008
and February 3, 2007. The effect of the interest rate swaps resulted in a combined reduction in interest expense of
$1 million in 2005.
16. 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 insurance, maintenance, and other costs as required by some of
the Company’s leases.
Rent expense consists of the following:
2007 2006 2005
(in millions)
Minimum rent ............................................. $521 $496 $489
Other occupancy expenses ................................... 151 145 141
Contingent rent based on sales ................................ 17 21 13
Sublease income ........................................... (1) (1) (1)
Total rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $688 $ 661 $642
Future minimum lease payments under non-cancelable operating leases are:
(in millions)
2008 .................................................................... $ 487
2009 .................................................................... 434
2010 .................................................................... 398
2011 .................................................................... 354
2012 .................................................................... 297
Thereafter ............................................................... 823
Total operating lease commitments ............................................ $2,793
17. Other Liabilities
2007 2006
(in millions)
Pension benefits ...................................................... $35 $21
Postretirement benefits ................................................ 9 11
Straight-line rent liability ............................................... 99 91
Income taxes ........................................................ 29 24
Deferred taxes ....................................................... 15 21
Workers’ compensation / general liability reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 12
Reserve for discontinued operations ....................................... 912
Repositioning and restructuring reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3
Fair value of derivatives ................................................ 32 12
Unfavorable leases .................................................... 2 2
Other .............................................................. 10 9
$255 $218