Unassociated Document
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
FORM 11-K
x ANNUAL
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31,
2008
or
¨ TRANSITION
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission file
number: 1-10299
A. Full title of the plan and the
address of the plan, if different from that of the issuer named
below:
Foot Locker Puerto Rico 1165(e)
Plan
B. Name of issuer of the securities held
pursuant to the plan and the address of its principal executive
office:
Foot Locker, Inc.
112 West 34
th
Street
New York, NY
10120
Table of
Contents
|
|
Pages
|
Report of Independent Registered
Public Accounting Firm
|
|
3
|
|
|
|
Statements of Net Assets Available
for Benefits as of December 31, 2008 and 2007
|
|
4
|
|
|
|
Statements of Changes in Net
Assets Available for Benefits for the years ended December 31, 2008 and
2007
|
|
5
|
|
|
|
Notes to Financial
Statements
|
|
6-10
|
|
|
|
Supplemental
Schedule*:
|
|
|
|
|
|
Schedule H, Line 4i - Schedule of
Assets (Held at End of Year) as of December 31,
2008
|
|
11
|
* Schedules required by Form 5500, which
are not applicable, have been omitted.
Report of Independent Registered Public
Accounting Firm
Foot Locker Puerto Rico 1165(e) Plan
Administrator:
We have audited the accompanying
statements of net assets available for benefits of the Foot Locker Puerto Rico
1165(e) Plan (the "Plan") as of December 31, 2008 and 2007, and the related statements of changes
in net assets available for benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements
referred to above present fairly, in all material respects, the net assets
available for benefits of the Plan as of December 31, 2008 and
2007, and the changes in
net assets available for benefits for the years then ended in conformity with
U.S. generally accepted accounting principles.
Our audit was made for the purpose of
forming an opinion on the basic financial statements taken as a whole. The
accompanying supplemental Schedule H, line 4i - Schedule of Assets (Held at End
of Year) as of December 31, 2008 is presented for the purpose of
additional analysis and is not a required part of the basic financial statements
but is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan’s management. The supplemental schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ KPMG
LLP
New York, New York
June 22, 2009
FOOTLOCKER PUERTO RICO 1165(e)
PLAN
Statements of Net Assets Available for
Benefits
December 31, 2008 and
2007
|
|
2008
|
|
|
2007
|
|
Assets:
|
|
|
|
|
|
|
Investments, at fair
value
|
|
$ |
594,545 |
|
|
$ |
641,313 |
|
Participant
loans
|
|
|
12,917 |
|
|
|
11,046 |
|
|
|
|
607,462 |
|
|
|
652,359 |
|
Receivable:
|
|
|
|
|
|
|
|
|
Participant
contributions
|
|
|
8,961 |
|
|
|
2,545 |
|
Employer
contribution
|
|
|
53,904 |
|
|
|
39,665 |
|
|
|
|
62,865 |
|
|
|
42,210 |
|
Assets available for
benefits
|
|
$ |
670,327 |
|
|
$ |
694,569 |
|
See accompanying notes to financial
statements.
FOOTLOCKER PUERTO RICO 1165(e)
PLAN
Statements of Changes in Net Assets
Available for Benefits
December 31, 2008 and
2007
|
|
2008
|
|
|
2007
|
|
Additions (deductions) to net
assets attributed to:
|
|
|
|
|
|
|
Investment (loss)
income:
|
|
|
|
|
|
|
Net (depreciation) appreciation of
investments
|
|
$ |
(250,296 |
) |
|
$ |
6,948 |
|
Dividends
|
|
|
3,008 |
|
|
|
1,494 |
|
Interest
|
|
|
624 |
|
|
|
1,484 |
|
Total investment (loss)
income
|
|
|
(246,664
|
) |
|
|
9,926 |
|
Contributions:
|
|
|
|
|
|
|
|
|
Participant
|
|
|
261,626 |
|
|
|
193,386 |
|
Employer
|
|
|
53,904 |
|
|
|
39,665 |
|
Total
contributions
|
|
|
315,530 |
|
|
|
233,051 |
|
Total
additions
|
|
|
68,866 |
|
|
|
242,977 |
|
Deductions from net assets
attributed to:
|
|
|
|
|
|
|
|
|
Benefits paid to
participants
|
|
|
82,412 |
|
|
|
58,349 |
|
Administrative
fees
|
|
|
10,696 |
|
|
|
8,850 |
|
Total
deductions
|
|
|
93,108 |
|
|
|
67,199 |
|
Net (decrease)
increase
|
|
|
(24,242
|
) |
|
|
175,778 |
|
Net assets available for
benefits:
|
|
|
|
|
|
|
|
|
Beginning of
year
|
|
|
694,569 |
|
|
|
518,791 |
|
End of year
|
|
$ |
670,327 |
|
|
$ |
694,569 |
|
See accompanying notes to financial
statements.
FOOT LOCKER PUERTO RICO 1165(e)
PLAN
Notes to
Financial Statements
December
31, 2008 and 2007
The following description of the Plan
provides only general information. Participants should refer to the Plan
document for a more complete description of the Plan's provisions. In September
2004, the Foot Locker Puerto Rico 1165(e) Plan (the “Plan”) was established with
an effective date of January 1, 2004.
The Board of Directors of Foot Locker,
Inc. (the “Parent Company”) and the Parent Company’s Retirement Plan Committee
appointed Oriental Trust as the trustee for the Plan. Ascensus, Inc. formally known as
BISYS Retirement Services
serves as the recordkeeper
and Russell Investment Group provides investment management services to the Plan
effective February 1, 2007.
Foot Locker, Inc. is the parent company
of Foot Locker Retail, Inc. (the “Company”), which is the employer.
Caribbean Pension Consultants provides
administrative services to the Plan related to translating documents,
distributing information to employees, processing loans, performing employer
match calculations and Plan testing, among other services.
The Plan is a defined contribution plan
covering generally all employees of the Company whose primary place of
employment is in Puerto Rico. Eligible employees are those who have attained age
twenty-one and completed one year of service consisting of at least 1,000 hours.
The Plan is subject to the provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
The Plan provides for automatic
revocable enrollment in the
Plan at a contribution rate of 3% of pre-tax annual compensation for
participants who meet the eligibility requirements. The initial automatic enrollment percentage automatically increases each year in 1% increments up to a
maximum of 5%. The maximum
allowable salary reduction contribution is 10% of pre-tax annual compensation,
as defined in the Plan. Participants may elect to change their contribution rate
and salary reduction
agreement as often as daily. Pre-tax contributions may be made up to
the Puerto Rico Department of Treasury limit of $8,000 in 2008. On
August 7, 2008, the pre-tax contributions limit of 10% of the participant’s
annual compensation was eliminated. The pre-tax dollar amount
contribution limit is scheduled to increase gradually through
2013. For 2007, the pre-tax contributions may be made up to $8,000,
or 10% of the participant’s
annual compensation whichever is less. Participants may also roll over certain
amounts representing distributions from other qualified retirement plans in
Puerto Rico prior to becoming eligible to participate in the Plan, however,
additional contributions cannot be made until the completion of one year of
service consisting of at least 1,000 hours. For any participant who (i) has
completed 1,000 hours of service during the Plan year and is actively employed
by the Company on the last day of the Plan year or (ii) during the Plan year,
has died, has become disabled or retired on or after normal retirement age, the
Parent Company also contributes 25% of such participant's pre-tax contributions
to the Plan up to the first 4% of the participant's compensation earned during
the Plan year. Matching contributions, at the Parent Company’s option, are made
either in shares of the Parent Company's common stock ("Foot Locker Shares") or
in cash to be invested in Foot Locker Shares. Effective January 1, 2007,
participants that are invested in the Foot Locker Stock Fund can diversify their
matching contributions into any of the other investment options available under
the Plan at any time. Matching contributions for 2008 were made in April 2009 and for
2007 were made in May 2008,
entirely in Foot Locker Shares and recorded at fair market value on the date of
the Plan’s year-end. Additional contributions may be made at the discretion of
the Parent Company and are subject to certain limitations. No
additional contributions
were made in 2008 or 2007.
Each participant's account is credited
with (a) the participant's contributions and allocations of the Parent Company’s
matching contribution and (b) Plan net earnings, and reduced by (c) Plan net
losses (including maintenance fees paid by the participant) and (d) loan
initiation fees, when applicable. Allocations are based on participants’ salary
deferrals or account balances, as defined. The benefit to which a participant is
entitled is the benefit that can be provided from the participant's vested
account balance.
Participants are immediately vested in
their contributions plus actual earnings thereon. Vesting in the Parent
Company’s matching contributions and earnings thereon is over a five-year
period; a participant vests 20% per year beginning after the first year of
vesting service and is fully vested after five years of vesting
service.
FOOT LOCKER PUERTO RICO 1165(e)
PLAN
Notes to
Financial Statements
December
31, 2008 and 2007
Participants may change their investment
options daily. Effective February 1, 2007, each participant may direct his or
her contributions to the following funds in 1% increments:
Russell Investment Contract Fund – The
fund seeks to diversify across many companies and investment contracts to help
protect the principal and reduce market risk. The contracts held within this
fund are issued by major insurance companies and banks. The fund’s rate of
return fluctuates with the market condition.
Custom Funds FL Fixed Income I Portfolio
– Participant’s assets are invested in a variety of bonds representing a
diversity of sectors and maturities. This fund has less risk and lower returns
than stocks but the advisors seek higher returns than a money market fund or a
shorter maturity bond fund. The fund maintains an intermediate-term portfolio
maturity.
Custom Funds FL Global Balanced
Portfolio – Participant’s assets are invested in a premixed portfolio
strategically invested in U.S. stocks, non-U.S. stocks, U.S. bonds and real
estate. The fund employs a globally moderate balanced strategy by investing in
stocks and short and intermediate term bonds. The fund seeks to generate a
high rate of return.
Custom Funds FL Large Cap Structured
Equity Portfolio – Participant’s assets are invested within a portfolio of large
U.S. companies but is diversified strategically with companies that perform
differently in various economic situations. The fund seeks to achieve high,
long-term rates of return.
Custom Funds FL Russell 1000 Portfolio –
This fund aligns its stock selection with the Russell 1000 Index. The stocks in
this index are highly diversified across the full range of industries and
sectors of the large cap U.S. stock market. This fund seeks to match the index
performance and seeks to provide a highly predictable
return.
Russell Equity I Fund – This fund
utilizes a combination of three distinct styles: value, growth, and market
oriented because no single investment style dominates the market place. This
fund invests in companies ranked among the largest 1,000 companies in the United
States stock market. This fund seeks higher, long-term rates of
return.
Russell Equity II Fund – This fund
utilizes a combination of three distinct styles: value, growth, and market
oriented because no single investment style dominates the market place. This
fund invests in smaller companies ranked among in the United States stock
market. This fund seeks higher, long-term rates of return.
Custom Funds All International Markets
Portfolio – This fund invests in companies from around the world excluding the
United States. The market cycles of the world do not necessarily mirror the
United States and are influenced by different economic factors. This fund is
sensitive to possible risks not found in the United States investments such as
foreign currency fluctuations or political unrest. These types of investments
can have higher returns over the long term but are also fairly volatile in the
short term.
Foot Locker Stock Fund – Participant’s
assets are invested in Foot Locker Shares. Foot Locker Shares may be obtained by
the Trustee directly from the Company out of its authorized but unissued shares
of common stock or out of its treasury shares, or on the open
market.
Participants may borrow from their fund
accounts once each year a minimum of $1,000, up to a maximum equal to the lesser
of $50,000 or 50% of their total vested account balance. Loan transactions are
treated as transfers between the investment funds and the participant loans
fund. Loan terms range up to 5 years, or up to 15 years for the purchase of a
primary residence. The loans are secured by the balance in the participant's
account and bear a rate of interest equal to the prime rate on the date of the
loan distribution. Principal and interest is generally paid ratably through
regular payroll deductions. Participant loans totaling $12,917 and $11,046 were outstanding at December 31,
2008 and December 31, 2007, respectively, bearing interest rates ranging from
4.00% to 8.25% in
2008 and 7.50% to 8.25% in 2007.
FOOT
LOCKER PUERTO RICO 1165(e) PLAN
Notes to
Financial Statements
December
31, 2008 and 2007
Participants
are eligible for a distribution on termination of service, death, disability or
retirement. A participant will receive a lump-sum amount equal to the fair
market value of the participant's vested interest in his or her account. A
participant may elect to have any investment in the Foot Locker Stock Fund and
vested Parent Company matching contributions distributed either in shares or
cash.
Participants
are eligible for a distribution due to financial hardship under certain
conditions in accordance with the Plan Document.
At
December 31, 2008 and December 31, 2007, forfeited non-vested accounts totaled
$438 and $618, respectively, which may be used to pay future administrative
expenses of the Plan and then to reduce future matching
contributions.
Included
in administrative fees are amounts paid by participants for processing loans and
investment management fees. To the extent expenses of administering the Plan are
not paid using forfeitures, the expenses are paid by the Company and therefore
are not included in the accompanying financial statements.
(2) Summary
of Accounting Principles
The
financial statements of the Plan are prepared using the accrual basis of
accounting.
The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and changes therein and
disclosure of contingent assets and liabilities. Actual results could differ
from those estimates and assumptions.
|
(c)
|
Investment
Valuation and Income Recognition
|
The
Plan's investments are stated at fair value. Investments in commingled funds are
valued by the issuer based on quoted market prices of the underlying securities.
Foot Locker shares are valued at quoted market price. Participant loans are
valued at their outstanding cost balances, which approximate fair value. Loan
interest income is allocated to the investment fund from which the amount is
borrowed. Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
Benefits
are recorded when paid.
|
(e)
|
Recent
Accounting Pronouncements Not Previously Discussed
Herein
|
The Plan
adopted the provisions of FASB Interpretation (“FIN”) No. 48, “Accounting for
Uncertainty Income Taxes – An Interpretation of FASB Statement No. 109,” on
January 1, 2007. FIN 48 provides guidance for how certain tax
positions should be recognized, measured, presented and disclosed in the
financial statements. FIN 48 requires evaluation of tax positions
taken or expected to be taken to determine whether the tax positions are “more
likely than not” of being sustained by the applicable tax
authority. The adoption of FIN 48 did not have any effect on the
Plan’s financial statements. The Puerto Rico Department of Treasury,
the primary tax oversight body of the Plan, generally has the ability to examine
the plan activity for up to three prior years.
(3) Plan
Termination
Although
it has not expressed any intent to do so, the Parent Company has the right under
the Plan to discontinue its contributions at any time and/or to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become fully vested in their accounts.
FOOT
LOCKER PUERTO RICO 1165(e) PLAN
Notes to
Financial Statements
December
31, 2008 and 2007
(4) Tax
Status
The
Company believes that the Plan currently is designed and is being operated in
compliance with the applicable requirements of the Puerto Rico Internal Revenue
Code of 1994, as amended, and the trust established thereunder will be entitled
be entitled to exemption from local income taxes. During 2008 and 2009 certain
operational errors were identified that either have been corrected or are being
researched and will be corrected as necessary. These items, both individually
and in the aggregate, are not significant to the Plan’s net assets and financial
condition as of and for the years ended December 31, 2008 and 2007.
(5) Risks
and Uncertainties
The Plan
offers a number of investment options including participant investments in the
Foot Locker Shares. Investment securities are exposed to various risks, such as
interest rate, market and credit risks. Due to the level of risk associated with
certain investment securities, it is at least reasonably possible that changes
in the values of investment securities will occur in the near term and that such
changes could materially affect participants account balances and the amounts
reported in the statement of net assets available for benefits.
The
Plan’s exposure to a concentration of credit risk is limited by the
diversification of investments across all participant-directed fund elections.
Additionally, the investments within each participant-directed fund election are
further diversified into varied financial instruments, with the exception of the
Foot Locker Stock Fund, which invests in the securities of a single
issuer.
(6) Investments
The following investments represent
five percent or more of the Plan’s net assets at December 31:
|
|
2008
|
|
|
2007
|
|
Custom
Funds FL Global Balanced Portfolio – 68,163 units and 49,359 units,
respectively
|
|
$ |
508,494 |
|
|
$ |
525,675 |
|
Foot
Locker Stock Fund – 7,127 units and 4,419 units,
respectively
|
|
$ |
47,289 |
|
|
$ |
54,275 |
|
The
Plan’s investments, including gains and losses on investments bought and sold,
as well as held during the year, (depreciated) appreciated in value by
$(250,296) in 2008 and by $6,948 in 2007.
|
|
2008
|
|
|
2007
|
|
Commingled
funds
|
|
$ |
(209,735 |
) |
|
$ |
39,209 |
|
Common
stock
|
|
|
(40,561 |
) |
|
|
(32,261 |
) |
|
|
$ |
(250,296 |
) |
|
$ |
6,948 |
|
FOOT
LOCKER PUERTO RICO 1165(e) PLAN
Notes to
Financial Statements
December
31, 2008 and 2007
(7) Fair
Value Measurements
On
January 1, 2008, the Plan adopted SFAS No. 157, “Fair value Measurements” (“SFAS
No. 157”). SFAS No. 157 provides a single definition of fair value
and a common framework for measuring fair value as well as new disclosure
requirements for fair value measurements used in financial
statements. Under SFAS No. 157, fair value is determined based upon
the exit price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants exclusive of any
transaction costs. SFAS No. 157 also specifies a fair value hierarchy
based upon observability of inputs used in valuation
techniques. Observable inputs (highest level) reflect market data
obtained from independent sources, while unobservable inputs (lowest level)
reflect internally developed market assumptions. In accordance with
SFAS No. 157, fair value measurements are classified under the following
hierarchy:
Level 1 –
Quoted prices for identical instruments in active markets.
Level 2 –
Quoted prices for similar instruments in active markets; quoted prices for
identical or similar instruments in markets that are not active; and
model-derived valuations in which all significant inputs or significant
value-drivers are observable in active markets.
Level 3 –
Model-derived valuations in which one or more significant inputs or significant
value-drivers are unobservable.
The
following table provides a summary by level of the Plan’s financial assets at
fair value as of December 31, 2008:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Commingled
Funds
|
|
$ |
–
|
|
|
$ |
547,258
|
|
|
$ |
–
|
|
Foot
Locker Stock Fund
|
|
|
47,287 |
|
|
|
|
|
|
|
Participant
loans
|
|
|
|
|
|
|
|
|
12,917 |
|
Total
Investments
|
|
$ |
47,287 |
|
|
$ |
547,258 |
|
|
$ |
12,917 |
|
The following table is a reconciliation
of the Plan’s financial assets classified as Level 3 for the year ended December
31, 2008:
Balance
at January 1, 2008
|
|
$ |
11,046 |
|
Loan
issuances and repayments
|
|
|
1,871 |
|
Balance
at December 31, 2008
|
|
$ |
12,917 |
|
(8) Related
Party Transactions
The Plan
allows for transactions with certain parties who may perform services or have
fiduciary responsibilities to the Plan, including the Company. Certain Plan
investments are shares of various commingled funds which are managed by Russell
Investment Group, who has been designated as the investment manager effective
February 1, 2007. Oppenheimer Funds was the investment manager for the
plan through January 2007. The Plan invests in common stock of the Company and
issues loans to participants, which are secured by the balances in the
participants’ accounts. These transactions qualify as party-in-interest
transactions.
FOOT
LOCKER PUERTO RICO 1165(e) PLAN
Schedule
H, Line 4i - Schedule of Assets (Held at End of Year)
as of
December 31, 2008
|
(b) Identity of Issue,
Borrower,
|
|
(c) Description of investment including maturity date, rate of interest,
|
|
(d)
|
|
|
(e)
|
|
(a)
|
Lessor, or Similar Party
|
|
collateral, par, or maturity value
|
|
Cost **
|
|
|
Current value
|
|
|
|
|
Commingled
Funds:
|
|
|
|
|
|
|
|
*
|
Russell
Investment Group
|
|
Russell
Investment Contract Fund
|
1
unit
|
|
|
— |
|
|
$ |
11 |
|
*
|
Russell
Investment Group
|
|
Custom
Funds FL Fixed Income I Portfolio
|
465
units
|
|
|
— |
|
|
|
4,643 |
|
*
|
Russell
Investment Group
|
|
Custom
funds FL Global Balanced Portfolio
|
68,163
units
|
|
|
— |
|
|
|
508,494 |
|
*
|
Russell
Investment Group
|
|
Custom
Funds FL Large Cap Structured Equity Portfolio
|
2,048
units
|
|
|
— |
|
|
|
12,760 |
|
*
|
Russell
Investment Group
|
|
Custom
Funds FL Russell 1000 Portfolio
|
606
units
|
|
|
— |
|
|
|
3,881 |
|
*
|
Russell
Investment Group
|
|
Russell
Equity I Fund
|
1,531
units
|
|
|
— |
|
|
|
12,202 |
|
*
|
Russell
Investment Group
|
|
Russell
Equity II Fund
|
176
units
|
|
|
— |
|
|
|
1,877 |
|
*
|
Russell
Investment Group
|
|
Custom
Funds All International Markets Portfolio
|
553
units
|
|
|
— |
|
|
|
3,388 |
|
|
|
|
Stock
Fund:
|
|
|
|
|
|
|
|
|
|
*
|
Foot
Locker, Inc.
|
|
Foot
Locker Stock Fund
|
7,127
units
|
|
|
— |
|
|
|
47,289 |
|
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
*
|
Loans
|
|
Participant
loans
|
11
loans were outstanding at December 31, 2008, bearing interest at rates
ranging from 4.00% - 8.25%, maturing through 2012.
|
|
|
— |
|
|
|
12,917 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
607,462 |
|
*
|
Party-in-interest
as defined by ERISA
|
**
|
Cost
basis is not required for participant directed investments and therefore
is not included.
|
See
accompanying report of independent registered public accounting
firm.
SIGNATURE
The Plan. Pursuant to the
requirements of the Securities Exchange Act of 1934, the trustees (or other
persons who administer the employee benefit plan) have duly caused this annual
report to be signed on its behalf of the Plan by the undersigned hereunto duly
authorized.
FOOT LOCKER PUERTO RICO 1165(e)
PLAN
|
|
|
By:
|
/s/
Robert W. McHugh
|
|
Foot
Locker, Inc.
|
|
Robert
W. McHugh
|
|
Chief
Financial
Officer
|
Date:
June 22, 2009
FOOT
LOCKER PUERTO RICO 1165(e) PLAN
INDEX
OF EXHIBITS
Exhibit
No. in Item
|
|
|
|
601
of Regulation S-K
|
Description
|
|
|
23
|
Consent
of Independent Registered Public Accounting
Firm
|