2. 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:


	2018		2017		2016
	($ in millions)
Division profit (1)		789		810		1,070
Less: Pension litigation and reorganization charges (2), (3)		18		191		—
Less: Corporate expense (4)		72		48		70
Income from operations		699		571		1,000
Interest income (expense), net		9		2		(2)
Other income		5		5		6
Income before income taxes	$	713	$	578	$	1,004

(1)

Included in the results for 2018, 2017, and 2016 are non-cash impairment charges of $19 million, $20 million, and $6 million, respectively.

During 2018, the Company recorded a charge totaling $4 million to write down store fixtures and leasehold improvements related to Runners Point, Sidestep, and SIX:02. Additionally, the Company recorded a charge of $15 million to write down the values of the trademarks/ trade names associated with Runners Point.

The 2017 amount includes a charge of $16 million to write down long-lived store assets of SIX:02, and a charge of $4 million to write down primarily long-lived store assets of Runners Point and Sidestep.

The 2016 amounts reflect charges to write down long-lived store assets of Runners Point and Sidestep. See Note 3, Litigation and Other Charges for additional information.

(2)

Included in the 2018 and 2017 amounts are pre-tax charge of $18 million and $178 million, respectively, relating to a pension litigation matter described further in Note 22, Legal Proceedings.

(3)

Included in the 2017 amount is $13 million in pre-tax reorganization costs related to the reduction and reorganization of division and corporate staff that occurred in the third quarter of 2017, described more fully in Note 3, Litigation and Other Charges.

(4)

Corporate expense for all years presented reflects the reallocation of expense between corporate and the operating divisions. Based upon annual internal studies of corporate expense, the allocation of such expenses to the operating divisions was increased by $40 million for 2018, $4 million for 2017, and $9 million for 2016, thereby reducing corporate expense.

Sales disaggregated based upon channel as of and for the fiscal years ended February 2, 2019, February 3, 2018, and January 28, 2017 are presented in the following table.


	2018		2017		2016
	($ in millions)
Sales
Stores	$	6,714	$	6,673	$	6,744
Direct-to-customers		1,225		1,109		1,022
Total sales	$	7,939	$	7,782	$	7,766

Sales and long-lived asset information by geographic area as of and for the fiscal years ended February 2, 2019, February 3, 2018, and January 28, 2017 are presented in the following tables. Sales are attributed to the country in which the sales transaction is fulfilled. Long-lived assets reflect property and equipment.


	2018		2017		2016
	($ in millions)
Sales
United States	$	5,647	$	5,532	$	5,562
International		2,292		2,250		2,204
Total sales	$	7,939	$	7,782	$	7,766

Long-Lived Assets
United States	$	602	$	607	$	575
International		234		259		190
Total long-lived assets	$	836	$	866	$	765

For the year ended February 2, 2019, the countries that comprised the majority of the sales and long-lived assets for the international category were Canada, Italy, France, and Germany. No other individual country included in the international category was significant.


	Depreciation and
	Amortization						Capital Expenditures (1)						Total Assets
	2018		2017		2016		2018		2017		2016		2018		2017		2016
	($ in millions)
Division	$	160	$	157	$	144	$	112	$	205	$	197	$	2,900	$	3,132	$	3,140
Corporate		18		16		14		75		69		69		920		829		700
Total Company	$	178	$	173	$	158	$	187	$	274	$	266	$	3,820	$	3,961	$	3,840

(1)

Represents cash capital expenditures for all years presented