3. Segment Information

The Company has integrated all available shopping channels including stores, websites, and catalogs. Store sales are primarily fulfilled from the store’s inventory, but may also be shipped from any of our distribution centers or from a different store location if an item is not available at the original store. Direct-to-customer orders are primarily shipped to our customers through our distribution centers but may also be shipped from any store or a combination of our distribution centers and stores depending on the availability of particular items.

Our operating segments are identified according to how our business activities are managed and evaluated by our chief operating decision maker, our CEO. Prior to fiscal 2018, the Company had two reportable segments: Athletic Stores and Direct-to-Customers. Beginning in fiscal 2018, the Company has changed its organizational and internal reporting structure in order to execute our omni-channel strategy. In light of these changes, the Company has re-evaluated its operating segments, which now reflect the combination of stores and direct-to-customer by geography. The Company has determined that it has two operating segments, North America and International. Our North America operating segment includes the results of the following banners operating in the U.S. and Canada: Foot Locker, Kids Foot Locker, Lady Foot Locker, Champs Sports, Footaction, and SIX:02, including each of their related e-commerce businesses, as well as our Eastbay business that includes internet, catalog, and team sales. Our International operating segment includes the results of the following banners operating in Europe, Asia, Australia, and New Zealand: Foot Locker, Runners Point, Sidestep, and Kids Foot Locker, including each of their related e-commerce businesses. We have further aggregated these operating segments into one reportable segment based upon their shared customer base and similar economic characteristics. Prior-year information has been restated to reflect this change.

The Company evaluates performance based on several factors, of which the primary financial measure is the banner’s financial results referred to as division profit. Division profit reflects income before income taxes, pension litigation charge, corporate expense, non-operating income, and net interest income. The following table summarizes our results:



	Thirteen weeks ended				Thirty-nine weeks ended
	November 3,		October 28,		November 3,		October 28,
	2018		2017		2018		2017
	($ in millions)
Sales	$	1,860	$	1,870	$	5,667	$	5,572

Operating Results
Division profit		165		180		543		592
Less: Pension litigation and reorganization charges (1) (2)		2		13		17		63
Less: Corporate expense (3)		19		12		46		34
Income from operations		144		155		480		495
Interest income, net		(2)		—		(5)		(1)
Other income (4)		—		1		5		2
Income before income taxes	$	146	$	156	$	490	$	498


(1)	Included in the thirteen and thirty-nine weeks ended November 3, 2018 are pre-tax charges of $2 million and $17 million, respectively, relating to a pension litigation matter described further in Note 14, Legal Proceedings. Included in the thirty-nine weeks ended October 28, 2017 is a pre-tax charge of $50 million relating to the same matter.
(2)	During the third quarter of 2017, the Company recorded a $13 million pre-tax charge as a result of the Company reorganizing its organizational structure, described more fully in Note 4, Litigation and Other Charges.
(3)	Corporate expense consists of unallocated selling, general and administrative expenses as well as depreciation and amortization related to the Company’s corporate headquarters, centrally managed departments, unallocated insurance and benefit programs, certain foreign exchange transaction gains and losses, and other items.
(4)	Other income includes non-operating items, such as lease termination gains, franchise royalty income, changes in fair value, premiums paid, realized gains and losses associated with foreign currency option contracts, changes in the market value of our available-for-sale security in conjunction with the adoption of ASU 2016-01 as of the beginning of 2018, and net benefit expense related to our pension and postretirement programs excluding the service cost component conjunction with the adoption of ASU 2017-07 as of the beginning of 2018.