Footstar (FTAR) Continues Preparation for Wind-Down of its Business; Declares $1 Per Share Cash Dividend

January 8, 2009 4:52 PM EST

Footstar, Inc. (OTCBB: FTAR) announces that Jon Couchman will assume the role of CEO and President while retaining his position as Chairman of the Board. He succeeds Jeff Shepard, whose employment agreement with Footstar terminated on December 31, 2008.

Also, consistent with the Plan of Liquidation adopted by the Footstar Board on May 9, 2008, FTAR is proceeding with the liquidation and dissolution of the Company, following the expiration of its agreement with Kmart (Nasdaq: SHLD) on December 31, 2008 under which it has operated the footwear departments in Kmart stores. Kmart has agreed to purchase the inventory that was in these Kmart footwear departments as of December 31, 2008.

Today, the Company announced a $1 per share cash distribution, payment of which is contingent on receipt of amounts due from Kmart for the inventory. The distribution would be paid to shareholders of record at the close of business on January 20, 2009. The distribution is scheduled to be paid on January 27, 2009 assuming receipt of amounts due from Kmart (and could be delayed or rescheduled in the event such amounts are not timely received).

Under NASDAQ rules, it is anticipated that Footstar's stock will trade ex dividend the day after the payment of the dividend. The Company is continuing to prepare for the wind-down of its business and for the submission of a plan of dissolution to the Company's stockholders.

Footstar, Inc., through its subsidiaries, operates as a retailer of family footwear through licensed footwear departments and wholesale arrangements in the United States.[SM]

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