Goodwill and Other Intangible Assets

6 Months Ended

Aug. 02, 2014

Goodwill And Intangible Assets Disclosure [Abstract]

4. Goodwill and Other Intangible Assets

Annually during the first quarter, or more frequently if impairment indicators arise, the Company reviews goodwill and intangible assets with indefinite lives for impairment. The annual review of goodwill performed during the first quarter of 2014 did not result in impairment charges as the fair value of each of the reporting units substantially exceeded its carrying value. During the second quarter of 2014, in connection with the shutdown of the CCS e-commerce business, the Company recorded a non-cash impairment charge of $2 million to write down the value of the CCS tradename. Additionally, during the first quarter of 2014, the Company recorded a non-cash impairment charge of $1 million to fully write down the remaining value of the tradename related to the Company’s stores in the Republic of Ireland, reflecting historical and projected underperformance.

The balances as of August 3, 2013 have been retrospectively adjusted for the finalization of the allocation of the purchase price related to the Runners Point acquisition. Identified intangible assets were adjusted to fair value offset by a decrease in goodwill. Other adjustments to the prior year balances were not significant and therefore not were not retrospectively adjusted.

The following table provides a summary of goodwill by reportable segment:

	August 2,		August 3,		February 1,
Goodwill (in millions)	2014		2013		2014
Athletic Stores	$	20	$	18	$	21
Direct-to-Customers		142		142		142
	$	162	$	160	$	163

The components of finite-lived intangible assets and intangible assets not subject to amortization are as follows:

	August 2, 2014						August 3, 2013						February 1, 2014
	Gross		Accum.		Net		Gross		Accum.		Net		Gross		Accum.		Net
(in millions)	value		amort.		Value		value		amort.		value		value		amort.		value
Amortized intangible assets:⁽¹⁾
Lease acquisition costs	$	152	$	(136)	$	16	$	154	$	(134)	$	20	$	155	$	(137)	$	18
Trademarks		21		(11)		10		21		(10)		11		21		(11)		10
Favorable leases		8		(4)		4		9		(4)		5		8		(3)		5
Customer relationships		21		(21)		—		21		(20)		1		21		(21)		—
	$	202	$	(172)	$	30	$	205	$	(168)	$	37	$	205	$	(172)	$	33

Indefinite life intangible assets:
Runners Point Group trademarks						30						29						30
Other trademarks ⁽²⁾						1						4						4
					$	31					$	33					$	34
Other intangible assets, net					$	61					$	70					$	67

(1)	Includes the effect of foreign currency translation related primarily to the movements of the euro in relation to the U.S. dollar.

(2)	The accumulated impairment charge related to other trademarks is $27 million. This includes $3 million of impairment charges recorded during the twenty-six weeks ended August 2, 2014.

For the twenty-six week period ended August 2, 2014, activity included amortization of $3 million, $3 million related to the impairment charges noted above, and a $1 million decrease related to foreign currency exchange fluctuations. This was offset by $1 million of lease acquisition additions related to Foot Locker Europe, which are being amortized over a weighted-average life of 9 years.

	Thirteen weeks ended				Twenty-six weeks ended
	August 2,		August 3,		August 2,		August 3,
(in millions)	2014		2013		2014		2013
Amortization expense	$	1	$	3	$	3	$	6

Future expected amortization expense for finite life intangible assets is estimated as follows:

	(in millions)
Remainder of 2014	$	3
2015		5
2016		4
2017		4
2018		3
2019		3

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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