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
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Schultze Asset Management, LLC
22-3563247
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)
(b) [X]
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3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(D) OR 2(E)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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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
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,322,081
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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%
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14 TYPE OF REPORTING PERSON
IA
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CUSIP No. 344912209
[ ]
SCHEDULE 13D
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
George J. Schultze
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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
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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:
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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
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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,
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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.
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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
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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
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