-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UgtfPVObla9fCnqZ2ujveUeWILEQwKRsk0zebR9DEYNcGmrEyljk8BIiFW/u70og dWehVnTfroKHxfRURL6LOQ== 0000950135-06-002189.txt : 20060406 0000950135-06-002189.hdr.sgml : 20060406 20060406095800 ACCESSION NUMBER: 0000950135-06-002189 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20060406 DATE AS OF CHANGE: 20060406 GROUP MEMBERS: SCHULTZE ASSET MANAGEMENT LLC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: FOOTSTAR INC CENTRAL INDEX KEY: 0001011308 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-SHOE STORES [5661] IRS NUMBER: 223439443 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-48891 FILM NUMBER: 06743911 BUSINESS ADDRESS: STREET 1: 933 MACARTHUR BLVD CITY: MAHWAH STATE: NJ ZIP: 07430 BUSINESS PHONE: 2019342000 MAIL ADDRESS: STREET 1: 933 MACARTHUR BOULEVARD CITY: MAHWAH STATE: NJ ZIP: 07430 FORMER COMPANY: FORMER CONFORMED NAME: FOOTWEAR GROUP INC DATE OF NAME CHANGE: 19960327 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Schultze George J CENTRAL INDEX KEY: 0001308360 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: BUSINESS PHONE: 914-701-5260 MAIL ADDRESS: STREET 1: C/O SCHULTZE ASSET MANAGEMENT, LLC STREET 2: 3000 WESTCHESTER AVENUE CITY: PURCHASE STATE: NY ZIP: 10577 SC 13D/A 1 b60226gssc13dza.txt FOOTSTAR, INC. SCHEDULE 13D (RULE 13D-101) Information to be included in Statements Filed Pursuant to Rule 13d-1(a) and Amendments Thereto Filed Pursuant to Rule 13d-2(a) SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 2) FOOTSTAR, INC. (Name of Issuer) Common Stock (Title of Class of Securities) 344912209 (CUSIP Number) George J. Schultze Schultze Asset Management, LLC 3000 Westchester Avenue Purchase, NY 10577 with a copy to: Steven London Brown Rudnick Berlack Israels LLP One Financial Center Boston, MA 02111 (617) 856-8200 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) March 24, 2006 (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. [__] Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No. 344912209 SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Schultze Asset Management, LLC 22-3563247 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(D) OR 2(E) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 NUMBER OF ----------------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 1,322,081 OWNED BY EACH ----------------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON 0 WITH ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 1,322,081 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,322,081 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.4% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IA - -------------------------------------------------------------------------------- 2 CUSIP No. 344912209 [ ] SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON George J. Schultze - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(D) OR 2(E) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 NUMBER OF ----------------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 1,322,081 OWNED BY EACH ----------------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON 0 WITH ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 1,322,081 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,322,081 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.4% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- 3 SCHEDULE 13D Company: FOOTSTAR, INC. CUSIP Number: 344912209 ITEM 1. SECURITY AND ISSUER. This Amendment No. 2 (the "Amendment No. 2") to Statement on Schedule 13D amends and supplements the Statement on Schedule 13D filed with the Securities and Exchange Commission ("SEC") on November 24, 2004 (the "Original Statement") and the Amendment No. 1 to Statement filed on Schedule 13D as filed with the SEC on June 28, 2005 (the "Amendment No. 1") and relates to the shares of common stock, par value $.01 per share, (the "Common Stock") of FOOTSTAR, INC., a Delaware corporation (the "Company"). The principal executive offices of the Company are located at 933 MacArthur Boulevard, Mahwah, New Jersey 07430. ITEM 2. IDENTITY AND BACKGROUND. This Amendment No. 2 is filed by Schultze Asset Management, LLC and George J. Schultze (the "Reporting Persons"). Schultze Asset Management, LLC is (i) a privately held asset management firm, (ii) a limited liability company organized under the laws of Delaware, and (iii) registered as an investment adviser under the Investment Advisers Act of 1940 (File No. 801-62112). Schultze Asset Management, LLC's principal business and office address is 3000 Westchester Avenue, Purchase, NY 10577. Schultze Asset Management, LLC acts as investment manager for individual and institutional investors through limited partnerships, offshore funds, and managed accounts (collectively, the "Managed Accounts"). In its capacity as investment manager, and pursuant to investment management agreements between Schultze Asset Management, LLC and each Managed Account, Schultze Asset Management, LLC has the power to vote and dispose of the Common Stock owned by the Managed Accounts. George J. Schultze, a citizen of the United States of America, is the Managing Member of Schultze Asset Management, LLC. George J. Schultze exercises sole voting and investment control over Schultze Asset Management, LLC. George J. Schultze's business address is 3000 Westchester Avenue, Purchase, NY 10577. This amendment No. 2 reports Schultze Asset Management, LLC's and George J. Schultze's indirect beneficial ownership of shares of Common Stock of the Company held by the following Managed Accounts in the indicated amounts: 4
Shares of Common Stock Managed Account of the Company --------------- ---------------------- Schultze Master Fund, Ltd. 1,009,623 AIP Alternative Strategies Funds - Alpha Hedged Strategies Fund 60,961 Arrow Distressed Securities Fund 226,336 Peter Schultze 5,090 Alexis Schultze, IRA 2,571 RH, LLC 17,500 TOTAL 1,322,081
During the past five years, neither of the Reporting Persons have been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or (b) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result thereof was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Certain Managed Accounts acquired or sold shares of Common Stock as follows:
NUMBER OF SHARES ACQUIRED MANAGED ACCOUNT DATE OR (SOLD) PRICE --------------- --------- --------------- ------- AIP Alpha Strategies I Fund 3/20/2006 (10,900) $4.5881 Arrow Distressed Securities Fund 1/27/2006 3,500 $ 3.73 Arrow Distressed Securities Fund 2/15/2006 25,000 $ 4.40 Arrow Distressed Securities Fund 2/17/2006 89,807 $ 4.75 Arrow Distressed Securities Fund 3/16/2006 5,000 $ 4.50 Arrow Distressed Securities Fund 3/20/2006 22,000 $ 4.50 Arrow Distressed Securities Fund 3/21/2006 500 $ 4.50 Arrow Distressed Securities Fund 3/22/2006 14,900 $ 4.60 Arrow Distressed Securities Fund 3/24/2006 17,100 $ 4.72
5 All funds used to purchase or acquire Common Stock of the Company came directly from investment advisory clients. ITEM 4. PURPOSE OF TRANSACTION. Schultze Asset Management, LLC is a long-term shareholder of the Company. The Reporting Persons may hold discussions with management, the board of directors of the Company and other shareholders of the Company concerning ways of maximizing shareholder value. Although the Company's business plan as outlined in its plan of reorganization disclosure statement is not without risk, the Reporting Persons believe that the Company's stock is substantially undervalued. By using two customary valuation ratio measures - (1) enterprise value to last twelve months EBITDA (earnings before interest, taxes, depreciation and amortization), and (2) enterprise value to last twelve months sales -- and comparing these measures for the Company with comparable public footwear companies, it is clear that the Company's common stock trades at substantially less value than other public footwear companies. Based on the ratio of the Company's enterprise value of $64.2 million to the Company's last twelve months' EBITDA of $41.9 million, the Company's common stock trades at only 1.5x EBITDA while comparable public footwear companies (including Payless Shoes, Ross Stores, Foot Locker, Brown Shoe Co., Finish Line, Shoe Carnival, and Rocky Shoes) trade at an average of 7.8x their last twelve months' EBITDA. Similarly, based on the ratio of the Company's enterprise value of $64.2 million to the Company's last twelve months' sales of $715.1 million, the Company's common stock trades at only 0.09x sales while comparable public footwear companies (including Payless Shoes, Ross Stores, Foot Locker, Brown Shoe Co., Finish Line, Shoe Carnival, and Rocky Shoes) trade at an average of 0.64x last twelve months' sales. Neither of the above two valuation measures ascribe any value to the Company's net operating loss carryforward ("NOL") asset. The Company's NOL is approximately $156.1 million based on the Company's latest Annual Report on Form 10-K for the fiscal year ended December 31, 2005. Since the Company's NOL will likely reduce the Company's cash income taxes for the foreseeable future, it is a significant valuable asset that should be reflected in overall enterprise valuation. Given the foregoing, the Reporting Persons may also make proposals to the board, seek to change the composition of, or seek representation on, the board, or solicit proxies or written consents from other shareholders, all with the underlying purpose of increasing shareholder value. In addition, the Reporting Persons may acquire additional shares (i) for investment purposes, or (ii) to change or influence the control of the Company. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) Schultze Asset Management, LLC and George J. Schultze (through Schultze Asset Management, LLC) beneficially own 1,322,081 shares of Common Stock of the Company, 6 which represents approximately 6.35% of the issued and outstanding shares of Common Stock of the Company (based upon the 20,806,641 shares of Common Stock issued and outstanding as reported in the Company's annual report filed on Form 10-K, and filed with the SEC on March 15, 2006). (b) In its capacity as investment manager, and pursuant to revocable investment management agreements between Schultze Asset Management, LLC and each Managed Account, Schultze Asset Management, LLC and George J. Schultze (through Schultze Asset Management, LLC) have the power to vote and dispose of the 1,322,081 shares of Common Stock owned by the various Managed Accounts. (c) Except as described in this Schedule 13D, no transactions in the shares of Common Stock were effected by the Reporting Persons during the past sixty (60) days. (d) The Managed Accounts may have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of Common Stock set forth opposite such Managed Account in Item 2, above. However, Schultze Asset Management, LLC, as the investment manager of each of the Managed Accounts, ultimately has the right to direct such activities. (e) Most of the 1,322,081 shares beneficially owned by the Reporting Persons are not owned economically by the Reporting Persons. Separate Managed Accounts have economic ownership of the 1,322,081 shares beneficially owned by the Reporting Persons. Each such Managed Account is the economic owner of less than 5% of the Company's Common Stock outstanding. No two or more Managed Accounts have any formal or informal understanding among themselves to make any coordinated acquisition of Common Stock. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Except as described in this Schedule 13D, no contracts, arrangements, understandings or similar relationships exist with respect to the securities of the Company between the Reporting Persons and any person or entity. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit I. Joint Filing Agreement by and among Schultze Asset Management, LLC and George J. Schultze, dated as of April 5, 2006. 7 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: April 5, 2006 SCHULTZE ASSET MANAGEMENT, LLC By: /s/ George J. Schultze ------------------------------------ Name: George J. Schultze Title: Managing Member /s/ George J. Schultze ---------------------------------------- George J. Schultze 8 JOINT FILING AGREEMENT Pursuant to Rule 13d-1(k) promulgated under the Securities Exchange Act of 1934, as amended, and subject to the limitations set forth therein, the undersigned persons hereby agree to the joint filing on behalf of each of them an Amendment No. 2 to Schedule 13D (including any additional amendments thereto) with respect to the common stock, par value $.01 per share, of FOOTSTAR, INC., a Delaware corporation. Furthermore, each party to this Agreement expressly authorizes each other party to this Agreement to file the Amendment on his behalf. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument. Date: April 5, 2006 SCHULTZE ASSET MANAGEMENT, LLC By: /s/ George J. Schultze ------------------------------------ Name: George J. Schultze Title: Managing Member /s/ George J. Schultze ---------------------------------------- George J. Schultze 9 -----END PRIVACY-ENHANCED MESSAGE-----