Foot Locker 2010 Annual Report Download - page 57

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Advertising costs, which are included as a component of selling, general and administrative expenses, were
as follows:
2010 2009 2008
(in millions)
Advertising expenses .............................. $97 $94 $107
Cooperative advertising reimbursements ................. (23) (25) (40)
Net advertising expense ............................ $74 $69 $ 67
Catalog Costs
Catalog costs, which primarily comprise paper, printing, and postage, are capitalized and amortized over the
expected customer response period related to each catalog, which is generally 90 days. Cooperative
reimbursements earned for the promotion of certain products are agreed upon with vendors and are recorded in
the same period as the associated catalog expenses are amortized. Prepaid catalog costs totaled $4 million at
January 29, 2011 and January 30, 2010.
Catalog costs, which are included as a component of selling, general and administrative expenses, were as
follows:
2010 2009 2008
(in millions)
Catalog costs.................................... $45 $48 $48
Cooperative reimbursements ......................... (5) (4) (4)
Net catalog expense ............................... $40 $44 $44
Earnings Per Share
The Company accounts for and discloses net earnings (loss) per share using the treasury stock method. The
Company’s basic earnings per share is computed by dividing the Company’s reported net income (loss) for the
period by the weighted-average number of common shares outstanding at the end of the period. The Company’s
restricted stock awards, which contain non-forfeitable rights to dividends, are considered participating securities
and are included in the calculation of basic earnings per share. Diluted earnings per share reflects the
weighted-average number of common shares outstanding during the period used in the basic earnings per share
computation plus dilutive common stock equivalents. The computation of basic and diluted earnings per share is
as follows:
2010 2009 2008
(in millions)
Net income (loss) from continuing operations .............. $ 169 $ 47 $ (79)
Weighted-average common shares outstanding ........... 155.7 156.0 154.0
Basic Earnings per share from continuing operations ......... $ 1.08 $ 0.30 $ (0.52)
Weighted-average common shares outstanding ........... 155.7 156.0 154.0
Dilutive effect of potential common shares .............. 1.0 0.3 —
Weighted-average common shares outstanding assuming
dilution.................................... 156.7 156.3 154.0
Diluted earnings per share from continuing operations ........ $ 1.07 $ 0.30 $ (0.52)
Potential common shares include the dilutive effect of stock options and restricted stock units. Options to
purchase 4.5 million, 6.3 million, and 4.8 million shares of common stock at January 29, 2011, January 30, 2010,
and January 31, 2009, respectively, were not included in the computations because the exercise price of the
options was greater than the average market price of the common shares and, therefore, the effect of their
inclusion would be antidilutive. Contingently issuable shares of 0.5 million have not been included as the vesting
conditions have not been satisfied. Additionally, due to a loss reported for the year ended January 31, 2009,
options and awards of 1.2 million shares of common stock were excluded from the calculation of diluted earnings
per share as the effect would be antidilutive.
38