February
4, 2011
Via Edgar and
Email
Mr. John
Reynolds
Division
of Corporation Finance
United
States Securities and Exchange Commission
450 Fifth
Street, N.W.
Washington,
D.C. 20549
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Re:
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Foot
Locker, Inc.
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Form
10-K filed on March 29, 2010
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Commission
File No. 001-10299
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Dear Mr.
Reynolds:
Please find our responses below to the
comment letter dated January 27, 2011 relating to the Annual Report on Form 10-K
for the fiscal year ended January 30, 2010 (“2009 Form 10-K”) of Foot Locker,
Inc. (the “Company”). To assist your review, we have retyped the text
of the Staff’s comments below.
20. Retirement Plans and
Other Benefits, page 53
Pension and Other
Postretirement Plans
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1.
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We
note your expected return on plan assets to be $43 million and $53 million
for 2009 and 2008 within your calculation of net benefit expense. Please
tell us how you derived these amounts using the expected long-term rates
of return on assets you disclose on page 55. In addition, tell us how you
determine the market-related value of plan assets and confirm to us that
such manner of determining market-related value is consistently applied
from year to year for each asset class. See ASC
715-30-35-48.
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Response
To
compute the expected return on pension plan assets, we apply an expected rate of
return to the beginning of year market-related value (“MRV”) of the U.S.
qualified pension plan assets and to the fair value of the Canadian qualified
plan assets adjusted for planned contributions and projected benefit payments to
be made from the plan assets.
February
4, 2011
Page 2 of
3
The 2009
expected rate of return of 7.63% is a weighted-average of the U.S. and Canadian
pension plans (U.S. assets of $465 million at 8.25% and Canadian assets of $85
million at 4.20%). The MRV used in the calculation of the 2009 expected return
for the U.S. plan was $478 million. Therefore, applying the weighted-average
rate of 7.63% to total assets of $563 million yields an expected return of $43
million.
The 2008
expected rate of return of 8.17% is a weighted-average of the U.S. and Canadian
pension plans (U.S. assets of $346 million at 9.00% and Canadian assets of $72
million at 4.20%). The MRV used in the calculation of the 2008 expected return
for the U.S. plan was $547 million. Therefore, applying the
weighted-average rate of 8.17% to total assets of $619 million yields an
expected return of $51 million.
The
variance from the amount disclosed of $53 million of approximately $2 million
can be explained by the fact that the beginning of year fair value of the
Canadian assets was considerably higher than the ending amount coupled with the
effect from planned contributions and benefit payments.
The
manner of determining MRV has been applied consistently for the U.S. qualified
pension plan from year to year for each asset class. With respect to
equity assets held by our U.S. qualified pension plan, we have elected to
recognize actual returns on these equity assets ratably over a three- or
five-year period when computing our market-related value, depending on which
computation results in MRV closer to fair value. With respect to bonds and other
assets held by our U.S. qualified pension plan, we recognize the actual
returns.
In 2008,
the Company changed its Canadian qualified pension plan asset allocation to
represent 95 percent debt securities and therefore changed its method to use the
fair value of assets. The cumulative effect of this change was not material.
Since 2008, fair value has been consistently applied in the computation of the
expected return on assets.
In the
Company’s 2010 Form 10-K we will disclose the MRV of plan assets.
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2.
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We
note your disclosure included on page 58 stating that you and your U.S.
pension plan were named as defendants in a class action in federal court
in New York in February 2007. Such disclosure appears identical to
previous statements regarding the class action in both your Form 10-K for
the fiscal year ended January 31, 2009 and your Form 10-K for the fiscal
year ended February 2, 2008. Please explain to us the status of this class
action, and revise your disclosures in your upcoming 10-K to include an
estimate of the possible loss or range of loss or a statement that such
estimate cannot be made. See ASC
450-20-50.
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Response
This
action has been stayed temporarily by the court pending a decision by the United
States Supreme Court in Amara
v. Cigna Corp., which involves a similar issue to the issue in the class
action pending against the Company and its U.S. pension plan. Prior
to the stay, this action was in the discovery phase of
proceedings. We will revise our disclosures in the Company’s upcoming
Form 10-K to include an estimate of the possible loss or range of loss or a
statement that such estimate cannot be made.
February
4, 2011
Page 3 of
3
DEF 14A, filed April 9,
2010
Related Person Transactions,
page 13
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3.
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We
note the company’s statement in the Related Person Transaction section on
page 13 that the contemplated related party transactions have amounts
involved that are “not material in relation to [its] business.” Please
note that Item 404 of Regulation S-K requires disclosure of any
transaction, or proposed transaction, in which the company was or is to be
a participant and the amount exceeds $120,000. Please supplementally
confirm that the company has provided the disclosure required by Item 404
of Regulation S-K.
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Response
We
confirm that the Company provided the disclosure required by Item 404 of
Regulation S-K in its proxy statement (DEF 14A) filed on April 9,
2010.
As
requested by the Staff, the Company acknowledges that, with respect to the
filing made by the Company:
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·
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the
Company is responsible for the adequacy and accuracy of the disclosure in
the filing;
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staff
comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the
filing; and
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·
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the
Company may not assert staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities
laws of the United States.
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We trust
that the foregoing addresses each of your comments. We would propose
to include the additional disclosures or make necessary revisions to our future
annual filing. The Company expects to file its Form 10-K for the year
ended January 29, 2011 on March 28, 2011. Should any member of the Staff have
any questions or additional comments regarding the Company’s responses to the
Staff’s comments set forth above, please do not hesitate to contact me at 212
720-3896.
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Sincerely,
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/s/
Giovanna Cipriano
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Senior
Vice President and
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Chief
Accounting Officer
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cc:
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Nicholas
DiPaolo
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Chairman
of the Audit Committee
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Ken
C. Hicks
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Chairman
of the Board, President and Chief Executive Officer
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Robert
McHugh
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Executive
Vice President and Chief Financial Officer
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Gary
Bahler
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Senior
Vice President, General Counsel and Secretary
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