Foot Locker (FL)

11

Interest Expense

          The following table summarizes the components of net interest expense:

          Interest expense for both the thirteen and thirty-nine weeks ended October 28, 2006 reflects a less favorable rate on the Company’s interest rate swaps as compared with the prior-year periods, offset by lower interest expense on the Company’s long-term debt due to lower balances.

          The increase in interest income is primarily the result of higher average interest rates on cash, cash equivalents and short-term investments. Also included in interest income is the effect of the Company’s cross currency swaps, which reduced interest expense by approximately $2 million for the thirty-nine weeks ended October 28, 2006.

Interest Expense

          Net interest expense of $1 million decreased by $2 million for the thirteen weeks ended July 29, 2006 as compared with the corresponding prior-year period. Interest expense was $6 million for the thirteen week periods ended July 29, 2006 and July 30, 2005.  Interest expense was $11 million and $12 million for the twenty-six week periods ended July 29, 2006 and July 30, 2005, respectively.   Interest income increased to $5 million and $9 million for the thirteen and twenty-six weeks ended July 29, 2006, respectively, from $3 million and $6 million for the thirteen and twenty-six weeks ended July 30, 2005, respectively.  The increase in interest income is primarily the result of higher average interest rates on cash and cash equivalents, an increase in short-term investment income due to a higher rate of return and the Company’s cross currency swaps which reduced interest expense by approximately $1 million and $2 million for the thirteen and twenty-six weeks ended July 29, 2006, respectively.

Interest Expense

          Net interest expense was $1 million for the thirteen weeks ended April 29, 2006. Interest expense was $5 million and $6 million for the thirteen-week periods ended April 29, 2006 and April 30, 2005, respectively.  The Company’s cross currency swaps reduced interest expense by approximately $1 million for the thirteen weeks ended April 29, 2006. Interest income increased to $4 million for the thirteen weeks ended April 29, 2006, from $3 million for the thirteen weeks ended April 30, 2005.  The increase in interest income is primarily the result of higher average interest rates on cash, cash equivalents, and short-term investments coupled with an increase in the average short-term investment balances.