Footstar BoD declares special cash distribution, payable in June

10 May '08

3 min read

Footstar Inc announced that its Board of Directors has declared a special cash distribution to shareholders of $1.00 per common share. The Company also said that it is proceeding with steps to prepare for the previously reported, anticipated wind-down of its business in 2009.

The special distribution will be paid on June 3, 2008 to shareholders of record at the close of business on May 28, 2008. The Company is reviewing the tax characterization of the distribution, but the distribution is expected to be treated as a return of capital for tax reporting purposes. Shareholders will receive further information on Form 1099 after the end of 2008 and are encouraged to consult their own tax advisors regarding the tax treatment of the distribution.

Footstar also said that its Board has adopted a plan of liquidation in connection with the orderly dissolution of the Company following the expiration at year-end 2008 of its agreement with Kmart to exclusively operate the footwear departments in all Kmart stores.

As previously announced, Footstar will continue to operate the business through December 2008 and then it will be transitioned to Kmart. The plan provides for the complete liquidation of the Company after the end of 2008 by providing for a series of distributions of cash to the stockholders of the Company generated from cash on hand, the sale of certain assets and the wind-down of the Company's business. Under the terms of the plan, the Company contemplates submitting a plan of dissolution to the Company's stockholders in 2009.

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