Foot Locker (FL)

15. Revolving Credit Facility

     On May 16, 2008, the Company entered into an amended credit agreement with its banks, providing for a $175 million revolving credit facility and extending the maturity date to May 16, 2011 (the “Credit Agreement”). The Credit Agreement also provides an incremental facility of up to $100 million under certain circumstances. The Credit Agreement provides that the Company comply with certain financial covenants, including (i) a fixed charge coverage ratio of 1.25:1 for the 2008 fiscal year, 1.50:1 for the 2009 fiscal year, and 1.75:1 for each year thereafter and (ii) a minimum liquidity/excess cash flow covenant, as defined in the Credit Agreement, which provides that if at the end of any fiscal quarter minimum liquidity is less than $350 million, the excess cash flow for the four consecutive fiscal quarters ended on such date must be at least $25 million. The amount permitted to be paid by the Company as dividends in any fiscal year is $105 million under the terms of the Credit Agreement. With regard to stock purchases, the Credit Agreement provides that not more than $50 million in the aggregate may be expended unless the fixed charge coverage ratio is at least 2.0:1 for the period of four consecutive fiscal quarters most recently ended prior to any stock repurchase. Additionally, the Credit Agreement provides for a security interest in certain of the Company’s intellectual property and certain other non-inventory assets.

     At January 31, 2009, the Company had unused domestic lines of credit of $166 million, pursuant to its $175 million revolving credit agreement. $9 million of the line of credit was committed to support standby letters of credit. These letters of credit are primarily used for insurance programs.

     Deferred financing fees are amortized over the life of the facility on a straight-line basis, which is comparable to the interest method. The unamortized balance at January 31, 2009 is approximately $2.6 million. Interest is determined at the time of borrowing based on variable rates and the Company’s fixed charge coverage ratio, as defined in the agreement. The rates range from LIBOR plus 1.50 percent to LIBOR plus 2.50 percent. The quarterly facility fees paid on the unused portion, which are also based in the Company’s fixed charge coverage ratio, ranged from 0.1250 percent to 0.8750 and ranged from 0.175 percent to 0.500 percent for 2008 and 2007 respectively. There were no short-term borrowings during 2008 or 2007. Interest expense, including facility fees, related to the revolving credit facility was $2 million in 2008, 2007, and 2006.

     On March 20, 2009, the Company entered into a new credit agreement with its banks, providing for a $200 million revolving credit facility maturing on March 20, 2013 (the “New Credit Agreement”), which replaces the existing Credit Agreement. The New Credit Agreement also provides an incremental facility of up to $100 million under certain circumstances. The New Credit Agreement provides for a security interest in certain of the Company’s domestic assets, including certain inventory assets. However, no material covenants or payment restrictions exist until the Company is borrowing under the agreement and, in that event, the restrictions may vary depending upon the level of borrowings.

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15. Revolving Credit
Facility

     On
May 16, 2008, the Company entered into an amended credit agreement with its
banks, providing for a $175 million revolving credit facility and extending the
maturity date to May 16, 2011 (the “Credit Agreement”). The Credit Agreement
also provides an incremental facility of up to $100 million under certain
circumstances. The Credit Agreement provides that the Company comply with
certain financial covenants, including (i) a fixed charge coverage ratio of
1.25:1 for the 2008 fiscal year, 1.50:1 for the 2009 fiscal year, and 1.75:1 for
each year thereafter and (ii) a minimum liquidity/excess cash flow covenant, as
defined in the Credit Agreement, which provides that if at the end of any fiscal
quarter minimum liquidity is less than $350 million, the excess cash flow for
the four consecutive fiscal quarters ended on such date must be at least $25
million. The amount permitted to be paid by the Company as dividends in any
fiscal year is $105 million under the terms of the Credit Agreement. With regard
to stock purchases, the Credit Agreement provides that not more than $50 million
in the aggregate may be expended unless the fixed charge coverage ratio is at
least 2.0:1 for the period of four consecutive fiscal quarters most recently
ended prior to any stock repurchase. Additionally, the Credit Agreement provides
for a security interest in certain of the Company’s intellectual property and
certain other non-inventory assets.

     At
January 31, 2009, the Company had unused domestic lines of credit of $166
million, pursuant to its $175 million revolving credit agreement. $9 million of
the line of credit was committed to support standby letters of credit. These
letters of credit are primarily used for insurance programs.

     Deferred financing fees are amortized over the life of the facility on a
straight-line basis, which is comparable to the interest method. The unamortized
balance at January 31, 2009 is approximately $2.6 million. Interest is
determined at the time of borrowing based on variable rates and the Company’s
fixed charge coverage ratio, as defined in the agreement. The rates range from
LIBOR plus 1.50 percent to LIBOR plus 2.50 percent. The quarterly facility fees
paid on the unused portion, which are also based in the Company’s fixed charge
coverage ratio, ranged from 0.1250 percent to 0.8750 and ranged from 0.175
percent to 0.500 percent for 2008 and 2007 respectively. There were no
short-term borrowings during 2008 or 2007. Interest expense, including facility
fees, related to the revolving credit facility was $2 million in 2008, 2007, and
2006.

     On
March 20, 2009, the Company entered into a new credit agreement with its banks,
providing for a $200 million revolving credit facility maturing on March 20,
2013 (the “New Credit Agreement”), which replaces the existing Credit Agreement.
The New Credit Agreement also provides an incremental facility of up to $100
million under certain circumstances. The New Credit Agreement provides for a
security interest in certain of the Company’s domestic assets, including certain
inventory assets. However, no material covenants or payment restrictions exist
until the Company is borrowing under the agreement and, in that event, the
restrictions may vary depending upon the level of borrowings.

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