Foot Locker 2014 Annual Report Download - page 64

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FOOT LOCKER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies − (continued)
Advertising costs, which are included as a component of selling, general and administrative expenses, were as
follows:
2014 2013 2012
(in millions)
Advertising expenses $125 $124 $132
Cooperative advertising reimbursements (21) (22) (25)
Net advertising expense $104 $102 $107
Catalog Costs
Catalog costs, which are primarily comprised of 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 $3 million
for both January 31, 2015 and February 1, 2014.
Catalog costs, which are included as a component of selling, general and administrative expenses, were as
follows:
2014 2013 2012
(in millions)
Catalog costs $32 $36 $45
Cooperative reimbursements (7) (5) (6)
Net catalog expense $25 $31 $39
Earnings Per Share
The Company accounts for and discloses earnings per share using the treasury stock method. Basic earnings
per share is computed by dividing reported net income for the period by the weighted-average number of
common shares outstanding at the end of the period. 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:
2014 2013 2012
(in millions, except per share data)
Net Income $ 520 $ 429 $ 397
Weighted-average common shares outstanding 143.9 148.4 151.2
Basic earnings per share $ 3.61 $ 2.89 $ 2.62
Weighted-average common shares outstanding 143.9 148.4 151.2
Dilutive effect of potential common shares 2.1 2.1 2.8
Weighted-average common shares outstanding assuming dilution 146.0 150.5 154.0
Diluted earnings per share $ 3.56 $ 2.85 $ 2.58
41