Segment Information

9 Months Ended

Oct. 27, 2012

Segment Information

2. Segment Information

The Company has determined that its reportable segments are those that are based on its method of internal reporting. As of October 27, 2012, the Company has two reportable segments, Athletic Stores and Direct-to-Customers. Sales and division results for the Company’s reportable segments for the thirteen weeks and thirty-nine weeks ended October 27, 2012 and October 29, 2011 are presented below. Division profit reflects income before income taxes, corporate expense, net interest expense, and net non-operating income.

	Thirteen weeks ended				Thirty-nine weeks ended
Sales	October 27,		October 29,		October 27,		October 29,
(in millions)	2012		2011		2012		2011
Athletic Stores	$	1,375	$	1,268	$	4,060	$	3,773
Direct-to-Customers		149		126		409		348
Total sales	$	1,524	$	1,394	$	4,469	$	4,121

	Thirteen weeks ended				Thirty-nine weeks ended
Operating Results	October 27,		October 29,		October 27,		October 29,
(in millions)	2012		2011		2012		2011
Athletic Stores	$	166	$	119	$	480	$	360
Direct-to-Customers		18		12		47		32
Restructuring charge (1)		—		—		—		(1	)
Division profit		184		131		527		391
Less: Corporate expense, net		28		25		76		76
Operating profit		156		106		451		315
Other income (2)		—		—		1		1
Interest expense, net		1		1		3		4
Income before income taxes	$	155	$	105	$	449	$	312

(1)

During the first quarter of 2011, the Company increased its 1993 Repositioning and 1991 Restructuring reserve by $1 million for repairs necessary to one of the locations comprising this reserve. This amount is included in selling, general and administrative expenses in the Condensed Consolidated Statement of Operations.

(2)

Other income includes non-operating items, such as: gains from insurance recoveries; discounts/premiums paid on the repurchase and retirement of bonds; royalty income; and the changes in fair value, premiums paid, and realized gains associated with foreign currency option contracts. Other income for the thirty-nine weeks ended October 27, 2012 primarily represents royalty income, partially offset by a premium paid on the repurchase and retirement of bonds. Other income for the thirty-nine weeks ended October 29, 2011 primarily represents lease termination gains related to the sale of leasehold interests and royalty income.