Foot Locker 2012 Annual Report Download - page 46

Net cash used in financing activities was $178 million in 2011 as compared with $127 million in 2010.
During 2011, the Company repurchased 4,904,100 shares of its common stock under its common share
repurchase program for $104 million. Additionally, the Company declared and paid dividends totaling
$101 million and $93 million in 2011 and 2010, respectively, representing a quarterly rate of $0.165 and
$0.15 per share in 2011 and 2010, respectively. During 2011 and 2010, the Company received proceeds
from the issuance of common stock and treasury stock in connection with the employee stock programs of
$22 million and $13 million, respectively. In connection with stock option exercises, the Company recorded
excess tax benefits related to share-based compensation of $5 million and $3 million in 2011 and 2010,
respectively.
Capital Structure
On January 27, 2012, the Company entered into an amended and restated credit agreement (the ‘‘2011
Restated Credit Agreement’’) with its banks. The 2011 Restated Credit Agreement provides for a
$200 million asset based revolving credit facility maturing on January 27, 2017. In addition, during the
term of the 2011 Restated Credit Agreement, the Company may make up to four requests for additional
credit commitments in an aggregate amount not to exceed $200 million. Interest is based on the LIBOR
rate in effect at the time of the borrowing plus a 1.25 to 1.50 percent margin depending on certain
provisions as defined in the 2011 Restated Credit Agreement.
The 2011 Restated Credit Agreement provides for a security interest in certain of the Company’s domestic
assets, including certain inventory assets, but excluding intellectual property. The Company is not required
to comply with any financial covenants as long as there are no outstanding borrowings. With regard to the
payment of dividends and share repurchases, there are no restrictions if the Company is not borrowing
and the payments are funded through cash on hand. If the Company is borrowing, Availability as of the end
of each fiscal month during the subsequent projected six fiscal months following the payment must be at
least 20 percent of the lesser of the Aggregate Commitments and the Borrowing Base (all terms as defined
in the 2011 Restated Credit Agreement). The Company’s management does not currently expect to borrow
under the facility in 2013, other than amounts used to support standby letters of credit.
Credit Rating
As of April 1, 2013, the Company’s corporate credit ratings from Standard & Poor’s and Moody’s Investors
Service are BB+ and Ba2, respectively. In addition, Moody’s Investors Service has rated the Company’s
senior unsecured notes Ba3.
Debt Capitalization and Equity (non-GAAP Measure)
For purposes of calculating debt to total capitalization, the Company includes the present value of
operating lease commitments in total net debt. Total net debt including the present value of operating
leases is considered a non-GAAP financial measure. The present value of operating leases is discounted
using various interest rates ranging from 4.0 percent to 14.5 percent, which represent the Company’s
incremental borrowing rate at inception of the lease. Operating leases are the primary financing vehicle
used to fund store expansion and, therefore, we believe that the inclusion of the present value of operating
leases in total debt is useful to our investors, credit constituencies, and rating agencies.
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