Note 5 - Other Income (Expense), Net

12 Months Ended

Feb. 03, 2024

Notes to Financial Statements

Other Income and Other Expense Disclosure [Text Block]

5. Other (Expense) Income, net

($ in millions)	2023			2022			2021
Fair value changes in minority investment	$	(478	)	$	—		$	290
Pension settlement charge		(75	)		—			—
Pension and postretirement net benefit (expense) income, excluding service cost		(8	)		—			7
Share of (losses) earnings related to other minority investments		(1	)		1			3
Minority investment in Retailors, Ltd.		—			(61	)		77
Gain on sale of property		3			—			—
Foot Locker Singapore and Malaysia divestiture		3			—			—
Team Sales divestiture		—			19			—
Other		—			(1	)		7
Total other (expense) income, net	$	(556	)	$	(42	)	$	384

Other (expense) income, net generally includes non-operating items, such as:

- changes in value for our investments accounted for using the fair value measurement alternative, which is at cost adjusted for changes in observable prices minus impairment,

- our share of earnings or losses related to our equity method investments,

- net benefit expense or income related to our pension and postretirement programs, excluding the service cost component,

- changes in fair value, premiums paid, and realized gains associated with foreign currency option contracts,

- changes in the market value of our available-for-sale security, and premiums paid to repurchase and retire bonds.

During the fourth quarter of 2023, we recognized a $478 million non-cash impairment charge related to a minority investment that is accounted for using the fair value measurement alternative, which is cost, adjusted for changes in observable prices minus impairment under the practicability exception. We estimated the fair value using both a discounted cash flow approach and a market approach. There was no impairment recognized in prior years based upon a qualitative assessment. The non-cash gain recorded in 2021 of $290 million was a result of application of the fair value measurement alternative, based on transactions at observable prices.

As part of our efforts to reduce pension plan obligations, during the fourth quarter of 2023 we transferred approximately $109 million of our U.S. Qualified pension plan registered assets and liabilities to an insurance company through the purchase of a group annuity contract, under which an insurance company is required to directly pay and administer pension payments to certain of our pension plan participants, or their designated beneficiaries. In connection with this transaction, we recorded a non-cash pretax settlement charge of $75 million. This settlement charge accelerated the recognition of previously unrecognized losses in "Accumulated Other Comprehensive Loss." 

Effective July 1, 2023, the Company sold its Foot Locker Singapore and Malaysia businesses, consisting primarily of inventory and fixed assets. We received proceeds of $16 million (net of cash of $8 million), resulting in a gain of $3 million. In addition, we sold a corporate office property in North America for proceeds of $6 million, resulting in a gain of $3 million.

During 2022, we sold our investment in a publicly traded stock, Retailors, Ltd. for a loss of $62 million, offset by $1 million of dividend income. In the prior year, the changes in this investment generated non-cash gains of $68 million representing changes in fair value as well as a $9 million discount to the initial public offering price. Also in 2022, we divested our Team Sales business for a gain of $19 million.