Foot Locker 2014 Annual Report Download - page 69

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FOOT LOCKER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies − (continued)
Accounting for Leases
The Company recognizes rent expense for operating leases as of the possession date for store leases or the
commencement of the agreement for a non-store lease. Rental expense, inclusive of rent holidays, concessions,
and tenant allowances are recognized over the lease term on a straight-line basis. Contingent payments based
upon sales and future increases determined by inflation related indices cannot be estimated at the inception of
the lease and accordingly, are charged to operations as incurred.
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
In May 2014, Financial Accounting Standards Board issued Accounting Standards Update (‘‘ASU’’) 2014-09,
Revenue from Contracts with Customers, issued as a new Topic, Accounting Standards Codification Topic 606.
The core principle of this amendment is that an entity should recognize revenue to depict the transfer of
promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for annual reporting
periods beginning after December 15, 2016, including interim periods within that reporting period, with earlier
adoption not permitted. ASU 2014-09 can be adopted either retrospectively to each prior reporting period
presented or as a cumulative-effect adjustment as of the date of adoption. The adoption of this guidance is not
expected to have a significant effect on our consolidated financial position, results of operations, or cash flows.
Other recently issued accounting pronouncements did not, or are not believed by management to, have a
material effect on the Company’s present or future consolidated financial statements.
2. Segment Information
The Company has determined that its reportable segments are those that are based on its method of internal
reporting. As of January 31, 2015, the Company has two reportable segments, Athletic Stores and
Direct-to-Customers. The accounting policies of both segments are the same as those described in the
Summary of Significant Accounting Policies note.
The Company evaluates performance based on several factors, of which the primary financial measure is
division results. Division profit reflects income before income taxes, corporate expense, non-operating income,
and net interest expense.
2014 2013 2012
(in millions)
Sales
Athletic Stores $6,286 $5,790 $5,568
Direct-to-Customers 865 715 614
Total sales $7,151 $6,505 $6,182
46