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FOOT LOCKER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
20. Retirement Plans and Other Benefits − (continued)
The following weighted-average assumptions were used to determine the benefit obligations under the plans:
Pension Benefits Postretirement Benefits
2014 2013 2014 2013
Discount rate 3.43% 4.32% 3.40% 4.20%
Rate of compensation increase 3.67% 3.69%
Pension expense is actuarially calculated annually based on data available at the beginning of each year. The
expected return on plan assets is determined by multiplying the expected long-term rate of return on assets by
the market-related value of plan assets for the U.S. qualified pension plan and market value for the Canadian
qualified pension plan. The market-related value of plan assets is a calculated value that recognizes investment
gains and losses in fair value related to equities over three or five years, depending on which computation
results in a market-related value closer to market value. Market-related value for the U.S. qualified plan was
$557 million and $579 million for 2014 and 2013, respectively.
Assumptions used in the calculation of net benefit cost include the discount rate selected and disclosed at the
end of the previous year as well as other assumptions detailed in the table below:
Pension Benefits Postretirement Benefits
2014 2013 2012 2014 2013 2012
Discount rate 4.33% 3.79% 4.16% 4.20% 3.70% 4.00%
Rate of compensation
increase 3.67% 3.69% 3.68%
Expected long-term rate of
return on assets 6.25% 6.24% 6.63%
The expected long-term rate of return on invested plan assets is based on the plans’ weighted-average target
asset allocation, as well as historical and future expected performance of those assets. The target asset
allocation is selected to obtain an investment return that is sufficient to cover the expected benefit payments
and to reduce future contributions by the Company.
The components of net benefit expense (income) are:
Pension Benefits Postretirement Benefits
2014 2013 2012 2014 2013 2012
(in millions)
Service cost $15 $14 $13 $— $— $—
Interest cost 28 25 28 11—
Expected return on plan
assets (38) (39) (40) ———
Amortization of prior service
cost ——— ———
Amortization of net loss (gain) 15 17 17 (3) (3) (4)
Net benefit expense (income) $20 $17 $18 $ (2) $ (2) $ (4)
Beginning with 2001, new retirees were charged the expected full cost of the medical plan and then-existing
retirees will incur 100 percent of the expected future increases in medical plan costs. Any changes in the health
care cost trend rates assumed would not affect the accumulated benefit obligation or net benefit income, since
retirees will incur 100 percent of such expected future increase.
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