Foot Locker 2008 Annual Report Download - page 54

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Foreign Currency Translation
The functional currency of the Company’s international operations is the applicable local currency. The
translation of the applicable foreign currency into U.S. dollars is performed for balance sheet accounts using current
exchange rates in effect at the balance sheet date and for revenue and expense accounts using the weighted-average
rates of exchange prevailing during the year. The unearned gains and losses resulting from such translation are included
as a separate component of accumulated other comprehensive loss within shareholders’ equity.
Recent Accounting Pronouncements Not Previously Discussed Herein
In December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations,” (“SFAS No. 141(R)”).
This standard will significantly change the accounting for business combinations. Under SFAS No. 141(R), an acquiring
entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition
date fair value with limited exceptions. SFAS No. 141(R) also includes a substantial number of new disclosure
requirements. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company does
not expect the adoption of SFAS No. 141(R) to have an affect on its Consolidated Financial Statements.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements -
An Amendment of ARB No. 51” (“SFAS No. 160”), which establishes new accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this statement requires
the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and
separate from the parent’s equity. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. This standard does not currently affect the Company.
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities -
An Amendment of FASB Statement No. 133” (“SFAS No. 161”). SFAS No. 161 amends SFAS No. 133 by requiring expanded
disclosures about an entity’s derivative instruments and hedging activities. SFAS No. 161 requires qualitative disclosures
about objectives and strategies for using derivative instruments, quantitative disclosures about the fair values of
derivative instruments and their gains and losses, and disclosures about credit-risk-related contingent features in
derivative instruments. SFAS No. 161 is effective for fiscal years and interim periods beginning after November 15, 2008.
The Company does not expect that the adoption of this standard will have a significant effect on its financial statement
disclosures.
In April 2008, the FASB issued FASB Staff Position No. FAS 142-3, “Determination of the Useful Life of Intangible
Assets” (“FSP 142-3”). FSP 142-3 amends the factors that should be considered in developing renewal or extension
assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other
Intangible Assets.” This FSP is effective for financial statements issued for fiscal years beginning after December 15,
2008, and interim periods within those fiscal years. The Company does not expect that the adoption of FSP 142-3 will
have a significant effect on its financial statements.
In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS
No. 162”). SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles
used in the preparation of financial statements that are presented in conformity with generally accepted accounting
principles in the United States. The Company adopted SFAS No. 162 on the effective date of November 13, 2008 and it did
not have any impact on the Company’s Consolidated Financial Statements.
In June 2008, the FASB issued FASB Staff Position EITF 03-6-1, “Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities” (“FSP EITF 03-6-1”). FSP EITF 03-6-1 provides that
unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether
paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to
the two-class method. The FSP EITF 03-6-1 is effective for financial statements issued for fiscal years beginning after
December 15, 2008, and interim periods within those years. Upon adoption, a company is required to retrospectively
adjust its earnings per share data (including any amounts related to interim periods, summaries of earnings and selected
financial data) to conform with the provisions of FSP EITF 03-6-1. The Company is currently assessing the potential effect
of FSP EITF 03-6-1 on its reporting of earnings per share.