-----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, JWZs4y07kS1hCBYDF+nVTd/ThUpKASv1jAVFloUPC8hOZvXyp2Qd+PqqoysTlYjS kWwxGfAH83ss1wn6/hveXw== 0000922423-04-000781.txt : 20040525 0000922423-04-000781.hdr.sgml : 20040525 20040525131040 ACCESSION NUMBER: 0000922423-04-000781 CONFORMED SUBMISSION TYPE: DFAN14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20040525 EFFECTIVENESS DATE: 20040525 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: BARINGTON CAPITAL GROUP L P CENTRAL INDEX KEY: 0000887762 FILING VALUES: FORM TYPE: DFAN14A BUSINESS ADDRESS: STREET 1: 888 SEVENTH AVENUE 17TH FL CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2129745400 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PAYLESS SHOESOURCE INC /DE/ CENTRAL INDEX KEY: 0001060232 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-SHOE STORES [5661] IRS NUMBER: 431813160 STATE OF INCORPORATION: DE FISCAL YEAR END: 0130 FILING VALUES: FORM TYPE: DFAN14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-14770 FILM NUMBER: 04829334 BUSINESS ADDRESS: STREET 1: 3231 SOUTH EAST SIXTH STREET CITY: TOPEKA STATE: KS ZIP: 66607-2207 BUSINESS PHONE: 9132335171 MAIL ADDRESS: STREET 1: 3231 S E 6TH ST CITY: TOPEKA STATE: KS ZIP: 66607-2207 FORMER COMPANY: FORMER CONFORMED NAME: PAYLESS SHOESOURCE HOLDINGS INC DATE OF NAME CHANGE: 19980421 DFAN14A 1 kl05084_dfan14a.txt FORM DFAN14A SCHEDULE 14A (Rule 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the registrant [ ] Filed by a party other than the registrant [X] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [ ] Definitive Proxy Statement [X] Definitive Additional Materials [ ] Soliciting Material Under Rule 14a-12 - ------------------------------------------------------------------------------- PAYLESS SHOESOURCE, INC. (Name of Registrant as Specified in Its Charter) - ------------------------------------------------------------------------------- BARINGTON COMPANIES EQUITY PARTNERS, L.P., BARINGTON COMPANIES OFFSHORE FUND, LTD. (BVI), PARCHE, LLC and STARBOARD VALUE & OPPORTUNITY FUND, LLC (Name of Person(s) Filing Proxy Statement if Other Than the Registrant) - ------------------------------------------------------------------------------- Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of transaction: 1 (5) Total fee paid: [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: 2 Barington Companies Equity Partners, L.P. 888 Seventh Avenue, 17th Floor New York, New York 10019 (212) 974-5700 -------------------------------------- AN IMPORTANT MESSAGE TO ALL PAYLESS SHOESOURCE STOCKHOLDERS --------------------------------------- May 25, 2004 Dear Fellow Payless ShoeSource Stockholders: By now you should have received our proxy materials requesting your support to elect our three nominees to the Board of Directors of Payless ShoeSource, Inc. ("Payless" or the "Company") at the Annual Meeting of Stockholders being held this Thursday, May 27, 2004. Our nominees, William J. Fox, Harold D. Kahn and James A. Mitarotonda, are highly qualified candidates who possess significant retail, operational, merchandising and financial experience. We have been encouraged by the support for our nominees who seek to maximize value for all Payless stockholders by working with the other members of the Board of Directors to address the significant operating and financial performance challenges that the Company continues to confront. The Payless Board Has Failed To Maximize Stockholder Value As an investor in the Company, we were heartened by the fact that the Company posted positive returns for its stockholders when it announced results for the first quarter of 2004 less than two weeks ago. Unfortunately, the recent modest improvement in performance cannot erase the disappointing financial record presided over by the Company's current Board during the past three years. Look at the following FACTS: o Poor Share Price Performance o The Company had a total shareholder return of negative 15.7 percent and negative 43.8 percent for the one and three-year periods ending January 30, 2004. 3 o Declining Revenues and Gross Margins o From fiscal year 2001 to fiscal year 2003, net sales decreased 4.5% from $2.91 billion to $2.78 billion. Similarly, same store sales declined 3.9% from fiscal year 2002 to fiscal year 2003, 3.2% from fiscal year 2001 to fiscal year 2002, and 2.9% from fiscal year 2000 to fiscal year 2001. o Cost of sales, as a percentage of sales, increased 3.5% from 69.5% in fiscal year 2001 to 73.0% in fiscal year 2003. o From fiscal year 2001 to fiscal year 2003, gross profits declined to $750.9 million, or 27.0% of net sales, from $881.4 million or 30.3% of net sales. o Increasing Selling, General and Administrative Costs o SG&A costs swelled to an all time high of $752.0 million in fiscal year 2003, or 27.0% of net sales, from $715.9 million, or 24.6% of net sales, in fiscal year 2001. SG&A costs have continued to soar in 2004, increasing 10.7% in the first quarter, from $180.1 million in the first quarter of fiscal year 2003 to $199.3 million in the first quarter of fiscal year 2004. o Diminished Operating Profits o Operating margins declined to 0.0% in fiscal year 2003 from 3.4% in fiscal year 2001. We believe that the Company's performance over the past three years is unacceptable and that management has been slow to address the persistent operational and financial performance issues that have plagued the Company and resulted in diminished stockholder value. The Barington Slate Is Committed To Maximizing Stockholder Value For All Payless Stockholders We have nominated three individuals who are committed to maximizing value for all stockholders of the Company. We feel that the Board of Payless can benefit from their experienced and independent voice that represents the interests of stockholders rather than the status quo. 4 Institutional Shareholder Services, while unfortunately failing to support the Barington slate, recently noted in its May 17, 2004 proxy analysis that: "[W]e do believe that Payless has specific challenges to face with the execution of its "Merchandise Authority" strategy. We would strongly advise that the company seek additional experience and expertise on its board, specifically targeting the challenges of dynamic merchandising within a highly distributed retail network." Our nominees will function as advocates of the interests of stockholders of the Company and bring needed retail, operational, merchandising and financial expertise to the Board. They intend to serve as a catalyst for improved financial performance, working constructively with the other members of the Payless Board to ensure that management properly addresses the operational and financial performance concerns that have been detrimental to stockholder value. At the Company's 2004 Annual Meeting, show the Payless Board your dissatisfaction with the Company's performance by electing independent and experienced directors focused on the interests of all stockholders. With your support we can make a difference. We thank you for your consideration. James A. Mitarotonda For the Barington Companies Group Telephone: (212) 974-5701 5 ACT NOW! THE ANNUAL MEETING IS JUST TWO SHORT DAYS AWAY! SIGN, DATE AND RETURN THE GREEN PROXY CARD VOTING IN FAVOR OF THE BARINGTON COMPANIES GROUP NOMINEES Do not execute the white proxy card furnished by current management. Even if you have previously executed management's white proxy card, you may change your vote by signing and returning a later dated GREEN proxy card of the Barington Companies Group. Only the latest dated proxy card will count. ------------------------------------------- If you hold your shares in street name, through a broker, bank or other custodian, carefully follow the instructions of your custodian and direct it to vote on your behalf FOR the Barington Companies Group nominees. The Barington Companies Group Nominees are ready to act on your behalf. VOTE FOR THE BARINGTON COMPANIES GROUP NOMINEES ON THE GREEN PROXY CARD ------------------------------------------------- If you have any questions or need help voting FOR the Barington Companies Group proposals, please contact our proxy solicitor: Georgeson Shareholder Communications, Inc. 17 State Street, 10th Floor New York, New York 10004 Toll free at (800) 334-9584 Banks and Brokers call (212) 440-9800 ------------------------------------------------- 6 -----END PRIVACY-ENHANCED MESSAGE-----