<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 10 - Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 29, 2000
-------------
Commission file no. 1-10299
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VENATOR GROUP, INC.
-------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
New York 13-3513936
---------------------------------------------- ------------------------------
<S> <C>
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
112 W. 34th Street, New York, New York 10120
-------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number: (212) 720-3700
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
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Number of shares of Common Stock outstanding at September 1, 2000: 137,899,876
------------
<PAGE> 2
VENATOR GROUP, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets.......................................1
Condensed Consolidated Statements
of Operations..........................................................2
Condensed Consolidated Statements
of Comprehensive Income (Loss).........................................3
Condensed Consolidated Statements
of Cash Flows..........................................................4
Notes to Condensed Consolidated
Financial Statements................................................5-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations......................10-14
Part II. Other Information
Item 1. Legal Proceedings..........................................................15
Item 4. Submission of Matters to a Vote of Security Holders.....................15-16
Item 6. Exhibits and Reports on Form 8-K...........................................16
Signature..................................................................17
Index to Exhibits.......................................................18-20
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
VENATOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except shares)
<TABLE>
<CAPTION>
July 29, July 31, January 29,
2000 1999* 2000
--------------- -------------- --------------
(Unaudited) (Unaudited) (Audited)
ASSETS
------
<S> <C> <C> <C>
Current assets
Cash and cash equivalents.................................... $ 25 $ 78 $ 162
Merchandise inventories...................................... 841 812 739
Assets held for disposal..................................... 45 82 61
Net assets of discontinued operations........................ 9 93 13
Other current assets......................................... 126 158 114
------ ------- ------
1,046 1,223 1,089
Property and equipment, net..................................... 764 941 809
Deferred taxes ................................................. 316 354 317
Goodwill, net ................................................. 147 155 151
Other assets.................................................... 148 100 149
------ ------ ------
$ 2,421 $ 2,773 $ 2,515
====== ======= =======
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<S> <C> <C> <C>
Current liabilities
Short-term debt.............................................. $ 95 $ 332 $ 71
Accounts payable............................................. 315 260 233
Accrued liabilities.......................................... 207 190 254
Current portion of repositioning and restructuring reserves.. 48 25 88
Current portion of reserve for discontinued operations....... 18 105 25
Current portion of long-term debt and obligations
under capital leases....................................... 5 206 106
------ ------ ------
688 1,118 777
Long-term debt and obligations
under capital leases......................................... 310 313 312
Other liabilities............................................... 267 333 287
Shareholders' equity
Common stock and paid-in capital: 138,018,853;
137,402,104 and 137,542,104 shares, respectively........... 343 334 337
Retained earnings............................................ 969 864 945
Accumulated other comprehensive loss......................... (155) (189) (142)
Less: Treasury stock at cost: 189,625; 30,000 and
100,000 shares, respectively............................... (1) - (1)
------ ------- --------
Total shareholders' equity...................................... 1,156 1,009 1,139
------ ------- --------
$ 2,421 $ 2,773 $ 2,515
======= ======= =======
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
* 1999 interim information has been restated to reflect the change in method
for calculating the market-related value of pension plan assets.
-1-
<PAGE> 4
VENATOR GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in millions, except per share amounts)
<TABLE>
<CAPTION>
Thirteen weeks ended Twenty-six weeks ended
------------------------- ------------------------------
July 29, July 31, July 29, July 31,
2000 1999* 2000 1999*
---------- ------------ ------------- --------------
<S> <C> <C> <C> <C>
Sales........................................................ $ 1,041 $ 1,063 $ 2,149 $ 2,142
Costs and Expenses
Cost of sales.............................................. 743 791 1,530 1,582
Selling, general and administrative expenses............... 241 248 499 504
Depreciation and amortization.............................. 41 46 81 91
Restructuring charge....................................... - 52 - 52
Interest expense, net...................................... 6 17 15 28
Other income............................................... (6) (25) (16) (31)
------------ ------------- ------------ ------------
1,025 1,129 2,109 2,226
------------ ------------- ------------ ------------
Income (loss) from continuing operations
before income taxes..................................... 16 (66) 40 (84)
Income tax expense (benefit)................................. 7 (26) 16 (33)
------------ ------------- ------------ ------------
Income (loss) from continuing operations..................... 9 (40) 24 (51)
Income on disposal of discontinued operations, net of
income tax expense of $7................................ - 10 - 10
Cumulative effect of accounting change, net of income tax
expense of $6........................................... - - - 8
------------ ------------- ------------ ------------
Net income (loss)............................................ $ 9 $ (30) $ 24 $ (33)
============ ============= ============ ============
Basic earnings per share:
Income (loss) from continuing operations................ $ 0.07 $ (0.29) $ 0.18 $ (0.37)
Income from discontinued operations..................... - 0.07 - 0.07
Cumulative effect of accounting change.................. - - - 0.06
------------ ------------- ------------ ------------
Net income (loss)....................................... $ 0.07 $ (0.22) $ 0.18 $ (0.24)
============ ============= ============ ============
Weighted-average common shares outstanding................... 137.7 137.3 137.6 137.0
Diluted earnings per share:
Income (loss) from continuing operations................ $ 0.07 $ (0.29) $ 0.18 $ (0.37)
Income from discontinued operations..................... - 0.07 - 0.07
Cumulative effect of accounting change.................. - - - 0.06
------------ ------------- ------------ ------------
Net income (loss)....................................... $ 0.07 $ (0.22) $ 0.18 $ (0.24)
============ ============= ============ ============
Weighted-average common shares assuming dilution............. 139.0 137.3 138.8 137.0
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
* 1999 interim information has been restated to reflect the change in method
for calculating the market-related value of pension plan assets.
-2-
<PAGE> 5
VENATOR GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(in millions)
<TABLE>
<CAPTION>
Thirteen weeks ended Twenty-six weeks ended
--------------------------- -----------------------------
July 29, July 31, July 29, July 31,
2000 1999* 2000 1999*
---------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
Net income (loss)........................................... $ 9 $ (30) $ 24 $ (33)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments arising
during the period, net of deferred tax expense (benefit)
of $1, ($4), ($8) and ($1), respectively................. 2 (6) (13) (2)
---------- ------------- ----------- --------------
Comprehensive income (loss)................................. $ 11 $ (36) $ 11 $ (35)
========== ============= =========== ==============
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
* 1999 interim information has been restated to reflect the change in method
for calculating the market-related value of pension plan assets.
-3-
<PAGE> 6
VENATOR GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in millions)
<TABLE>
<CAPTION>
Twenty-six weeks ended
--------------------------
July 29, July 31,
2000 1999*
---------- ------------
<S> <C> <C>
From Operating Activities:
Net income (loss)............................................................ $ 24 $ (33)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities of continuing operations:
Cumulative effect of accounting change, net of tax......................... - (8)
Restructuring charge....................................................... - 52
Income on disposal of discontinued operations, net of tax ................. - (10)
Depreciation and amortization.............................................. 81 91
Gains on sales of investments................................... (6) -
Gains on sales of real estate.............................................. (10) (31)
Deferred taxes............................................................. (11) (23)
Change in assets and liabilities:
Merchandise inventories.................................................. (106) (26)
Accounts payable and other accruals...................................... 36 (67)
Repositioning and restructuring reserves................................. (41) (8)
Other, net............................................................... 7 (31)
------ -------
Net cash used in operating activities of continuing operations............... (26) (94)
------ -------
From Investing Activities:
Proceeds from sales of investments .......................................... 7 -
Proceeds from sales of real estate .......................................... 7 23
Capital expenditures......................................................... (44) (97)
------ -------
Net cash used in investing activities of continuing operations............... (30) (74)
------ -------
From Financing Activities:
Increase in short-term debt.................................................. 24 82
Reduction in long-term debt and capital lease obligations.................... (103) (3)
Issuance of common stock..................................................... 4 5
------ -------
Net cash (used in) provided by financing activities of continuing operations. (75) 84
------ -------
Net Cash used in Discontinued Operations........................................ (6) (31)
Effect of exchange rate fluctuations
on Cash and Cash Equivalents................................................. - -
------ -------
Net change in Cash and Cash Equivalents......................................... (137) (115)
Cash and Cash Equivalents at beginning of year.................................. 162 193
------ -------
Cash and Cash Equivalents at end of interim period.............................. $ 25 $ 78
====== =======
Cash paid during the period:
Interest..................................................................... $ 19 $ 34
Income taxes................................................................. $ 25 $ 16
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
* 1999 interim information has been restated to reflect the change in method
for calculating the market-related value of pension plan assets.
-4-
<PAGE> 7
VENATOR GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
should be read in conjunction with the Notes to Consolidated Financial
Statements contained in the Registrant's Form 10-K for the year ended January
29, 2000, as filed with the Securities and Exchange Commission (the "SEC") on
April 21, 2000. Certain items included in these statements are based on
management's estimates. In the opinion of management, all material adjustments,
which are of a normal recurring nature, necessary for a fair presentation of
the results for the interim periods have been included. The results for the
twenty-six weeks ended July 29, 2000 are not necessarily indicative of the
results expected for the year.
Cumulative Effect of Change in Accounting Principle
In the fourth quarter of 1999, the Registrant adopted a preferred
method for calculating the market-related value of its U.S. pension plan assets
used in determining annual pension expense. The change was accounted for as if
it had occurred at the beginning of the first quarter of 1999 and accordingly,
interim information presented for 1999 has been restated to reflect this
change. The impact of this change resulted in a non-cash benefit in 1999 of
approximately $14 million before-tax, or $0.06 per diluted share, representing
the cumulative effect of the accounting change related to years prior to 1999.
The change resulted in lower pension expense in 1999 of $4.5 million
before-tax, or $0.02 per diluted share as follows: $0.8 million in each of the
first and second quarters, $1.8 million in the third quarter and $1.1 million
in the fourth quarter.
1999 Restructuring
During the second quarter of 1999, the Registrant recorded a
restructuring charge of $64 million before-tax or $39 million after-tax, in
connection with its plan to sell or liquidate eight non-core businesses: The
San Francisco Music Box Company, Randy River Canada, Foot Locker Outlets,
Colorado, Team Edition, Going To The Game!, Weekend Edition and Burger King
franchises. Major components of the charge included $24 million for leasehold
and real estate disposition costs, $19 million for fixed asset and other asset
impairments, $12 million for inventory markdowns and $9 million for other exit
costs. The inventory markdowns of $12 million were included in cost of sales
while the remaining $52 million restructuring charge was included in operating
expenses. The Registrant recorded an additional charge to the reserve of $3
million in the third quarter of 1999 relating to fixed asset and real estate
disposition costs and a reduction of $4 million in the fourth quarter of 1999
relating to better than anticipated real estate disposition costs related to
the Foot Locker Outlets. In the first quarter of 2000, the Registrant recorded
an additional charge of $5 million related to the disposal of the remaining
businesses. The Registrant recorded a reduction of $3 million to the reserve in
the second quarter of 2000, as the Foot Locker Outlets real estate disposition
continued to produce better than anticipated results. Disposition activity of
approximately $13 million charged to the reserve included $10 million in
leasehold and real estate disposition costs, $1 million for the loss on
disposal of Randy River Canada and $2 million in severance and other costs for
the twenty-six weeks ended July 29, 2000. The reserve balance at July 29, 2000
of $13 million reflects estimated lease costs of $5 million and other
disposition costs of $8 million, which will be substantially utilized in 2000.
In the fourth quarter of 1999, the Registrant announced a further
restructuring plan and recorded a charge of $92 million before-tax or $56
million after-tax. The Registrant planned to close 358 under-performing stores
in the United States and Canada (including the entire Northern Getaway and
Northern Elements formats in the United States) and its Foot Locker stores in
Asia, to reduce sales support and corporate staff by over 30 percent and to
close its distribution center in Maumelle, Arkansas.
As of January 29, 2000, 72 stores included in the accelerated
store-closing program had been closed. During the first and second quarters of
2000, an additional 215 and 11 stores were closed, respectively. In the second
quarter of 2000, the Registrant recorded a further charge of approximately $4
million primarily associated with unfavorable real estate costs, the addition
of 6 stores to the program and further fixed asset write-offs. This charge was
partially offset by $1 million due to management's decision to continue to
operate 14 athletic stores that were originally included in the accelerated
store-closing program, as a result of favorable lease renewal terms offered
during negotiations with landlords.
-5-
<PAGE> 8
The remaining 52 stores included in the program are expected to close
during the balance of the year. Disposition activity charged to the reserve
during the first and second quarters of 2000 amounted to approximately $4
million and $12 million, respectively, and primarily comprised real estate
costs. The reserve balance of $24 million at July 29, 2000 represents leasehold
and real estate disposition costs. Of the original 3,100 planned terminations,
approximately 300 positions have yet to be eliminated in the United States and
Canada as of July 29, 2000.
All remaining Foot Locker stores in Asia were closed during the first
quarter of 2000. Real estate, severance and other exit costs of approximately
$3 million for the twenty-six weeks ended July 29, 2000 essentially utilized
the remaining reserve for those stores.
In connection with the reduction of sales support and corporate staff,
approximately 350 of the 400 positions have been eliminated and the related
severance costs reduced the reserve from $14 million at January 29, 2000 to $5
million at July 29, 2000. The Registrant entered into an agreement to sublease
its Maumelle distribution center earlier than anticipated and to sell the
associated fixed assets, which had been fully impaired in the fourth quarter of
1999, for proceeds of approximately $3 million. The Registrant recorded a
reduction to the Maumelle reserve of $5 million in connection with the
agreement in the first quarter of 2000 and the proceeds were received in the
second quarter. Disposition activity of $2 million in the second quarter of
2000 comprised severance payments of $1 million to eliminate 181 positions and
real estate costs of $1 million. The remaining reserve balance as of July 29,
2000 of $1 million reflects lease and other exit costs.
Sales and operating losses of the above non-core businesses and
under-performing stores included in the consolidated results of operations for
the thirteen and twenty-six weeks ended July 29, 2000 and July 31, 1999,
respectively, are presented below.
<TABLE>
<CAPTION>
Thirteen weeks ended Twenty-six weeks ended
--------------------------------- --------------------------------
(in millions) July 29, 2000 July 31, 1999 July 29, 2000 July 31, 1999
---------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Sales................................................ $ 27 $ 83 $ 63 $ 159
================ ============== =============== ===============
Operating loss....................................... $ (4) $ (20) $ (16) $ (44)
================ ============== =============== ===============
</TABLE>
Inventory, fixed assets and other long-lived assets of all businesses
to be exited have been valued at the lower of cost or net realizable value.
These assets, totaling $45 million, $82 million and $61 million have been
reclassified as assets held for disposal in the Condensed Consolidated Balance
Sheets as of July 29, 2000, July 31, 1999 and January 29, 2000, respectively.
Long-Term Debt
The Registrant purchased $100 million of the $200 million 7.0 percent
debentures, which were due June 1, 2000, at various dates throughout January
2000. The Registrant purchased an additional $13 million of the 7.0 percent
debentures prior to June 1, 2000, when the remaining $87 million balance
outstanding was repaid.
Other Income
Other income of $16 million for the twenty-six weeks ended July 29,
2000 included corporate real estate gains of $4 million and $6 million in the
first and second quarters, respectively, and a $6 million gain associated with
the demutualization of the Metropolitan Life Insurance Company in the first
quarter of 2000. Other income of $31 million for the twenty-six weeks ended
July 31, 1999 reflected corporate real estate gains of $24 million primarily
related to the second quarter sale of two corporate properties, and the
recognition of $7 million of the deferred gain recorded on the 1998 sale of the
corporate headquarters.
-6-
<PAGE> 9
Segment Information
Sales and operating results for the Registrant's reportable segments
for the thirteen and twenty-six weeks ended July 29, 2000 and July 31, 1999,
respectively, are presented below. Operating results reflect income (loss) from
continuing operations before income taxes, excluding corporate expense,
corporate gains and net interest expense.
Sales:
<TABLE>
<CAPTION>
(in millions) Thirteen weeks ended Twenty-six weeks ended
-------------------------------- -------------------------------
July 29, 2000 July 31, 1999 July 29, 2000 July 31, 1999
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Global Athletic Group:
Retail Stores........................................ $ 899 $ 855 $ 1,862 $ 1,738
Direct to Customers.................................. 47 38 104 86
--------------- -------------- -------------- --------------
946 893 1,966 1,824
Northern Group.......................................... 76 86 146 155
All Other *............................................. 19 84 37 163
--------------- -------------- -------------- --------------
$ 1,041 $ 1,063 $ 2,149 $ 2,142
=============== ============== ============== ==============
</TABLE>
Operating Results:
<TABLE>
<CAPTION>
(in millions) Thirteen weeks ended Twenty-six weeks ended
-------------------------------- -------------------------------
July 29, July 31, July 29, July 31,
2000 1999** 2000 1999**
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Global Athletic Group:
Retail Stores (1).................................... $ 48 $ (58) $ 113 $ (42)
Direct to Customers.................................. (5) (1) (8) 3
-------------- -------------- -------------- --------------
43 (59) 105 (39)
Northern Group (2)...................................... (2) (5) (16) (22)
All Other*(3)........................................... (4) 2 (13) 2
-------------- -------------- -------------- --------------
Operating profit (loss)........................... 37 (62) 76 (59)
Corporate expense (income) (4).................... 15 (13) 21 (3)
Interest expense, net............................. 6 17 15 28
-------------- -------------- -------------- --------------
Income (loss) from continuing operations
before income taxes.................................. $ 16 $ (66) $ 40 $ (84)
============== ============== ============== ==============
</TABLE>
(1) Both periods presented for 1999 include restructuring charges
of $64 million. Both periods presented for 2000 include a $3
million reduction in the 1999 second quarter restructuring
charge, offset by a $2 million restructuring charge.
(2) Both periods presented for 2000 include a $1 million
restructuring charge.
(3) Twenty-six weeks ended July 29, 2000 includes first quarter
restructuring charge of $5 million.
(4) Twenty-six weeks ended July 29, 2000 includes a $5 million
reduction in the 1999 fourth quarter restructuring charge.
* All formats presented as "All Other" were either disposed or held for
disposal at July 29, 2000. Sales and operating results in 2000 do not include
Afterthoughts, Weekend Edition and Randy River Canada, which were sold in the
fourth quarter of 1999.
** 1999 interim information has been restated to reflect the change in method
for calculating the market-related value of pension plan assets.
-7-
<PAGE> 10
Discontinued Operations
In the third quarter of 1998, the Registrant announced that it was
exiting its International General Merchandise segment. Disposition activity of
approximately $5 million charged to the reserve for the first half of 2000
primarily reflected lease payments. Of the remaining reserve balance of $5
million at July 29, 2000, $2 million is required to satisfy lease obligations
within twelve months and the remaining $3 million thereafter.
The Registrant also announced in the third quarter of 1998 that it was
exiting its Specialty Footwear segment. Net disposition activity of
approximately $7 million charged to the reserve for the first half of 2000
primarily reflected lease payments. The reserve balance of $21 million at July
29, 2000 primarily represents leasehold obligations, $5 million of which is
expected to be utilized within twelve months and the remaining $16 million
thereafter.
In 1997, the Registrant announced that it was exiting its Domestic
General Merchandise segment. Net disposition activity of approximately $4
million charged to the reserve for the first half of 2000 included payments for
leasehold and real estate disposition costs. The reserve balance of $19 million
at July 29, 2000 is included in current liabilities ($11 million) and other
liabilities ($8 million) and consists principally of real estate disposition
costs.
The following is a summary of the net assets of discontinued operations:
<TABLE>
<CAPTION>
(in millions) July 29, July 31, January 29,
2000 1999 2000
-------- -------- --------
<S> <C> <C> <C>
International General Merchandise
---------------------------------
Assets............................................. $ - $ 45 $ 5
Liabilities........................................ - 7 2
------ --------- --------
Net assets of discontinued operations.............. $ - $ 38 $ 3
------ --------- --------
Specialty Footwear
------------------
Assets ............................................ $ 4 $ 55 $ 5
Liabilities........................................ 2 9 2
--------- --------- --------
Net assets of discontinued operations.............. $ 2 $ 46 $ 3
--------- --------- --------
Domestic General Merchandise
----------------------------
Assets ............................................ $ 11 $ 13 $ 12
Liabilities........................................ 4 4 5
--------- --------- --------
Net assets of discontinued operations.............. $ 7 $ 9 $ 7
--------- --------- --------
Total net assets of discontinued operations........ $ 9 $ 93 $ 13
========= ========= ========
</TABLE>
The assets primarily include deferred tax assets and fixed assets.
Liabilities primarily reflect accounts payable and other accrued liabilities.
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss consists of foreign currency
translation adjustments of $153 million, $146 million, and $140 million, and
minimum pension liability adjustments of $2 million, $43 million, and $2
million, at July 29, 2000, July 31, 1999, and January 29, 2000, respectively.
-8-
<PAGE> 11
Earnings Per Share
Basic earnings per share is computed as net income (loss) divided by
the weighted-average number of common shares outstanding for the period.
Diluted earnings per share reflects the potential dilution that could occur
from common shares issuable through stock-based compensation including stock
options and restricted stock awards. A reconciliation of weighted-average
common shares outstanding to weighted-average common shares assuming dilution
follows:
<TABLE>
<CAPTION>
Thirteen weeks ended Twenty-six weeks ended
--------------------------- -----------------------------
(in millions) July 29, July 31, July 29, July 31,
2000 1999 2000 1999
---------- ------------ ----------- --------------
<S> <C> <C> <C> <C>
Weighted-average common shares outstanding.................... 137.7 137.3 137.6 137.0
Incremental common shares issuable............................ 1.3 - 1.2 -
---------- ------------ ----------- --------------
Weighted-average common shares assuming dilution.............. 139.0 137.3 138.8 137.0
========== ============ =========== ==============
</TABLE>
Incremental common shares were not included in the computation for the
quarter and year-to-date period ended July 31, 1999 since their inclusion in
periods when the Registrant reported a loss from continuing operations would be
antidilutive. Options to purchase 4.9 million and 6.3 million shares of common
stock with an exercise price greater than the average market price were not
included in the computation of diluted earnings per share for the thirteen and
twenty-six weeks ended July 29, 2000, respectively.
Stock Plans
The 1998 Stock Option and Award Plan was amended during the quarter to
provide awards of up to 12,000,000 shares of the Registrant's common stock. The
number of shares reserved for issuance as restricted can not exceed 3,000,000
shares.
During the second quarter, the Registrant adopted the Directors Stock
Option Plan ("Directors Option Plan"). Under the Directors Option Plan,
non-employee directors can receive options to purchase shares of the
Registrant's common stock at 100 percent of the market price at the date of the
grant. Options are exercisable in three equal installments commencing on the
first anniversary of the date of grant. The options terminate 10 years from the
date of grant. An aggregate of 100,000 shares is available for issuance under
the Directors Option Plan.
Recent Accounting Pronouncements
In March 2000, the Financial Accounting Standards Board ("FASB")
issued Financial Interpretation No. 44, "Accounting for Certain Transactions
Involving Stock Compensation, an Interpretation of APB Opinion 25, Accounting
for Stock Issued to Employees," ("FIN No. 44"). FIN No. 44 provides further
guidance related to accounting for stock-based compensation, in particular to
changes in stock-based awards after the grant date. In the second quarter of
2000, the Registrant adopted FIN No. 44, which did not have any impact on its
consolidated financial statements.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
("SAB No. 101"), which interprets generally accepted accounting principles
related to revenue recognition in financial statements. The Registrant will
change its method of accounting for sales under its layaway program and will
record the cumulative effect, if any, of that change in the fourth quarter of
2000. The Registrant does not expect SAB No. 101 to have a significant impact
on its consolidated financial statements. The Emerging Issues Task Force
recently released Issue No. 00-10, "Accounting for Shipping and Handling Fees
and Costs" ("Issue No. 00-10") and Issue No. 00-14, "Accounting for Certain
Sales Incentives" ("Issue No. 00-14"). Issue No. 00-10 requires shipping and
handling charges to customers to be reported as sales and the associated costs
to be included in cost of sales, and Issue No. 00-14 addresses the recognition,
measurement, and income statement classification for certain sales incentives.
The Registrant will adopt Issue No. 00-10 and Issue No. 00-14 in the fourth
quarter of 2000 and does not expect either issue to have a significant impact
on its consolidated financial statements.
-9-
<PAGE> 12
In June 1998, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133"). SFAS 133, as amended by SFAS No. 137 and SFAS No.
138, is effective for the Registrant for fiscal year 2001. SFAS 133
establishes accounting and reporting standards for derivative instruments and
hedging activities. The Registrant is in the process of evaluating SFAS No.
133, as amended, to determine its impact on the consolidated financial
statements.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
References included herein to businesses disposed and held for
disposal relate to Afterthoughts, The San Francisco Music Box Company, Foot
Locker Outlets, Colorado, Team Edition, Going To The Game!, Randy River Canada,
Weekend Edition, Burger King franchises, Foot Locker Asia, Northern Elements
U.S. and Northern Getaway U.S.
RESULTS OF OPERATIONS
Sales of $1,041 million for the second quarter of 2000 decreased 2.1
percent from sales of $1,063 million for the second quarter of 1999, reflecting
a 6.7 percent increase attributable to sales of ongoing formats, offset by an
8.8 percent decline related to businesses disposed and held for disposal. Sales
of $2,149 million for twenty-six weeks ended July 29, 2000 were essentially
flat as compared with $2,142 million for the twenty-six weeks ended July 31,
1999, reflecting an increase of 8.6 percent attributable to ongoing formats,
which was substantially offset by a decline of 8.3 percent related to
businesses disposed and held for disposal. Excluding the effect of foreign
currency fluctuations and sales from businesses disposed and held for disposal,
sales increased 8.9 percent and 10.8 percent for the second quarter and
year-to-date periods of 2000, respectively, as compared with the corresponding
prior-year periods, reflecting increases of 10.4 percent and 11.9 percent in
comparable-store sales.
Gross margin, as a percentage of sales, improved by approximately 300
basis points to 28.6 percent in the second quarter of 2000 and 270 basis points
to 28.8 percent for the twenty-six weeks ended July 29, 2000, as compared with
the corresponding prior-year periods. These increases reflect both improved
purchasing and reduced occupancy and buying costs in 2000 as a percentage of
sales. Excluding the inventory markdowns of $12 million in the second quarter
of 1999 associated with the Registrant's restructuring plan to exit eight
non-core businesses, gross margin increased by approximately 190 basis points
in the second quarter.
Selling, general and administrative expenses ("SG&A") of $241 million
declined to 23.2 percent of sales in the second quarter of 2000 as compared
with 23.3 percent in the corresponding prior-year period. SG&A of $499 million
for the twenty-six weeks ended July 29, 2000, declined approximately 30 basis
points to 23.2 percent of sales. These declines reflect the reduced and more
efficient store base in the first half of 2000 as compared with a year earlier,
offset, in part, by increased store compensation and initiative costs in 2000.
For the twenty-six weeks ended July 29, 2000, SG&A also included Internet costs
of approximately $12 million primarily related to website strategic development
and marketing.
Depreciation and amortization expense of $41 million and $81 million
for the thirteen and twenty-six weeks ended July 29, 2000, respectively, was
approximately 11.0 percent lower than in the corresponding prior-year periods.
These decreases reflect the reduction in depreciable assets as a result of the
disposal of businesses in 1999 and more focused capital expenditure programs in
2000 and 1999, as compared with prior years.
Interest expense, net decreased by $11 million and by $13 million for
the thirteen and twenty-six weeks ended July 29, 2000, respectively, as
compared with the corresponding prior-year periods. These decreases reflect
reduced short-term interest expense related to lower average short-term
borrowing levels, offset in part by higher short-term interest rates, and
reduced long-term interest expense resulting from the early retirement and
repayment of the $200 million 7.0 percent debentures due in June 2000. Interest
income, primarily related to income tax settlements and refunds, of $4 million
in the second quarter of 2000 increased by $3 million compared with the
corresponding period in 1999.
-10-
<PAGE> 13
Other income of $16 million for the twenty-six weeks ended July 29,
2000 included corporate real estate gains of $10 million related to property
sales and a $6 million gain associated with the recent demutualization of the
Metropolitan Life Insurance Company. This compared with $31 million for the
first half of 1999 primarily related to property sales.
The Registrant reported net income for the thirteen and twenty-six
weeks ended July 29, 2000 of $9 million and $24 million, respectively, or $0.07
and $0.18 per diluted share. The Registrant reported a net loss for the quarter
and year-to-date periods ended July 31, 1999 of $30 million and $33 million,
respectively, or $0.22 and $0.24 per diluted share, which included income from
discontinued operations of $10 million after-tax, or $0.07 per diluted share.
The twenty-six weeks ended July 31, 1999 also included income from the
cumulative effect of an accounting change of $8 million after-tax, or $0.06 per
diluted share.
STORE COUNT
The following table summarizes store count by segment, after
reclassification for businesses disposed and held for disposal. During the
twenty-six weeks ended July 29, 2000, the Registrant remodeled or relocated 66
stores. 226 of the 378 stores closed during the first half of 2000 related to
the 1999 accelerated store-closing program and 34 closures reflected the
amalgamation of the Northern Traditions and Northern Reflections formats in the
second quarter of 2000. An additional 52 under-performing stores related to the
accelerated store-closing program will be closed during the balance of the
year, of which 48 are included in the Global Athletic Group at July 29, 2000.
<TABLE>
<CAPTION>
January 29, July 29, July 31,
2000 Opened Closed 2000 1999
---- ------ ------ ---- ----
<S> <C> <C> <C> <C> <C>
Global Athletic Group.......................................... 3,693 10 67 3,636 3,704
Northern Group................................................. 836 11 144 703 849
Disposed and held for disposal................................. 345 2 167 180 1,362
------ ------ ------ ------ -----
Total....................................................... 4,874 23 378 4,519 5,915
------ ------ ------ ------ -----
</TABLE>
SALES
The following table summarizes sales by segment, after
reclassification for businesses disposed and held for disposal. The disposed
and held for disposal category represents all businesses sold or closed or held
for disposal other than the discontinued segments, and are therefore included
in continuing operations.
<TABLE>
<CAPTION>
(in millions) Thirteen weeks ended Twenty-six weeks ended
------------------------------ -------------------------------
July 29, 2000 July 31, 1999 July 29, 2000 July 31, 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Global Athletic Group:
Retail Stores........................................ $ 898 $ 828 $ 1,860 $ 1,687
Direct to Customers.................................. 47 38 104 86
------------- ------------- ------------- -------------
945 866 1,964 1,773
Northern Group.......................................... 76 83 143 149
Disposed and held for disposal.......................... 20 114 42 220
------------- ------------- ------------- -------------
Total sales $ 1,041 $ 1,063 $ 2,149 $ 2,142
============= ============= ============= =============
</TABLE>
Global Athletic Group sales increased by 9.1 percent and by 10.8
percent for the 2000 second quarter and year-to-date periods as compared with
the corresponding prior-year periods, reflecting comparable-store sales
increases of 11.3 percent and 12.6 percent, respectively. Sales from ongoing
retail store formats increased by 8.5 percent and by 10.3 percent,
respectively, reflecting stronger sales performance in all formats,
particularly in Europe. Footwear continued to drive the sales growth across all
formats, particularly the high-end athletic footwear lines, such as Nike Tuned
Air running shoes and Nike Up Tempo basketball shoes. Private label apparel at
the Foot Locker and Lady Foot Locker formats also contributed to the strong
sales performance. Direct to Customers sales increased by 23.7 percent and by
20.9 percent for the thirteen and twenty-six weeks ended July 29, 2000
-11-
<PAGE> 14
as compared with the corresponding prior-year periods. Catalog sales increased
by 5.4 percent to $39 million in the second quarter of 2000 and by 6.0 percent
to $88 million for the year-to-date period. Internet sales of $8 million and
$16 million, excluding freight, for the thirteen and twenty-six weeks ended
July 29, 2000, increased by $7 million and $13 million, respectively, as
compared with the corresponding periods in 1999.
Excluding the impact of foreign currency fluctuations, Northern Group
sales declined by 9.0 percent for the second quarter of 2000 and by 4.4 percent
for the year-to-date period. Comparable-store sales, which were essentially
flat for the second quarter, increased by 2.7 percent for the year-to-date
period, and were offset by the impact of 112 fewer stores in the United States
and Canada. As part of the ongoing reorganization at the Northern Group, the
former Northern Traditions stores were combined with the Northern Reflections
format resulting in an overall reduction of 34 stores.
OPERATING RESULTS
Operating results reflect income (loss) from continuing operations
before income taxes, excluding corporate expense, corporate gains and net
interest expense. The following table summarizes operating profit (loss) by
segment, after reclassification for businesses disposed and held for disposal.
<TABLE>
<CAPTION>
(in millions) Thirteen weeks ended Twenty-six weeks ended
----------------------------- -----------------------------
July 29, July 31, July 29, July 31,
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Global Athletic Group:
Retail Stores........................................ $ 47 $ 15 $ 114 $ 41
Direct to Customers.................................. (5) (1) (8) 3
-------------- -------------- -------------- -------------
42 14 106 44
Northern Group.......................................... (1) (2) (12) (15)
Disposed and held for disposal.......................... (4) (10) (13) (24)
Restructuring charges................................... - (64) (5) (64)
-------------- -------------- -------------- -------------
Total operating profit (loss)........................... $ 37 $ (62) $ 76 $ (59)
============== ============== ============== =============
</TABLE>
The Global Athletic Group reported operating profits of $42 million
and $106 million for the thirteen and twenty-six weeks ended July 29, 2000,
respectively, as compared with $14 million and $44 million for the
corresponding prior-year periods. Operating profit from ongoing retail stores
increased by $32 million and by $73 million, reflecting improved sales and
gross margin rate performances in all athletic formats, in a somewhat less
promotional environment. Direct to Customers operating results declined by $4
million and $11 million, for the thirteen and twenty-six weeks ended July 29,
2000, as compared with the corresponding prior-year periods, resulting
primarily from increased Internet strategic development and marketing costs of
approximately $5 million and $12 million, respectively.
The Northern Group's operating results improved by $1 million and by
$3 million, respectively, for the quarter and year-to-date periods in 2000,
resulting primarily from the closure of under-performing stores.
Restructuring charges of $64 million for the thirteen and twenty-six
weeks ended July 31, 1999 related to the eight non-core businesses to be exited
in the 1999 restructuring program. The remaining businesses in the program
incurred operating losses of $4 million and $13 million in the 2000 second
quarter and year-to-date periods, respectively. Related to the disposition of
these remaining businesses, the Registrant recorded a $5 million charge in the
first quarter of 2000 and a reduction of $3 million in the second quarter of
2000. In addition, the second quarter of 2000 also included an additional
restructuring charge of $3 million related to the 1999 accelerated
store-closing program.
-12-
<PAGE> 15
SEASONALITY
The Registrant's businesses are seasonal in nature. Historically, the
greatest proportion of sales and net income is generated in the fourth quarter
and the lowest proportions of sales and net income are generated in the first
and second quarters, reflecting seasonal buying patterns. As a result of these
seasonal sales patterns, inventory generally increases in the third quarter in
anticipation of the strong fourth quarter sales.
LIQUIDITY AND CAPITAL RESOURCES
Generally, the Registrant's primary sources of cash have been from
operations, borrowings under the revolving credit agreement, and proceeds from
the sale of non-strategic assets. The Registrant generally finances real estate
with operating leases. The principal use of cash has been to finance inventory
requirements, which are generally at their peak during the third and fourth
quarters, debt repayment, capital expenditures related to store openings, store
remodelings and management information systems, and to fund other general
working capital requirements.
Operating activities of continuing operations reduced cash by $26
million for the twenty-six weeks ended July 29, 2000, as compared with $94
million in the corresponding prior-year period. These amounts reflect the
income (loss) from continuing operations reported by the Registrant in those
periods, adjusted for non-cash items and working capital changes. The change in
cash used for merchandise inventories and accounts payable primarily reflects
the additional inventory purchases in 2000 associated with the increased sales
volume. Merchandise inventories, excluding businesses disposed and held for
disposal, of $841 million at July 29, 2000 increased by $64 million from $777
million at July 31, 1999. Included in cash flow from operations for the
twenty-six weeks ended July 29, 2000 were cash payments of approximately $41
million related to the 1999 restructuring program.
Net cash used in investing activities of continuing operations was $30
million and $74 million for the first half of 2000 and 1999, respectively.
Capital expenditures of $44 million for the twenty-six weeks ended July 29,
2000 primarily related to store remodelings as compared with $97 million for
the corresponding prior-year period. Planned capital expenditures of $110
million for 2000 include expenditures for new store openings, remodeling of
existing stores, management information systems, logistics and other support
facilities. Proceeds from real estate disposition activities contributed $7
million in 2000 as compared with $23 million in 1999, primarily reflecting the
sale of two properties in the second quarter. In the second quarter of 2000,
the Registrant received $7 million in cash as a result of the recent
demutualizaton of the Metropolitan Life Insurance Company.
Financing activities for the Registrant's continuing operations
utilized cash of $75 million for the twenty-six weeks ended July 29, 2000
compared to cash provided by financing activities of $84 million for the
corresponding prior-year period. Outstanding borrowings under the Registrant's
revolving credit agreement were $95 million and $332 million at July 29, 2000
and July 31, 1999, respectively, and have been classified as short-term debt.
The facility available at July 29, 2000 was $300 million. During the first
quarter of 2000, the Registrant purchased $12 million of its $200 million 7.0
percent debentures and an additional $1 million on May 10, 2000. On June 1,
2000, the remaining balance of $87 million was repaid with restricted cash
funds set aside on February 15, 2000, as required by the revolving credit
agreement. Management believes current domestic and international credit
facilities and cash provided by operations will be adequate to finance its
working capital requirements and support the development of its short-term and
long-term strategies.
Net cash used in discontinued operations primarily reflects real
estate disposition expenses charged to the Specialty Footwear, International
and Domestic General Merchandise reserves for both periods presented.
-13-
<PAGE> 16
IMPACT OF EUROPEAN MONETARY UNION
The European Union comprises fifteen member states, eleven of which
adopted a common currency, the "euro," effective January 1, 1999. From that
date until January 1, 2002, the transition period, the national currencies will
remain legal tender in the participating countries as denominations of the
euro. Monetary, capital, foreign exchange and interbank markets have converted
to the euro and non-cash transactions are possible in euros. On January 1,
2002, euro bank notes and coins will be issued and the former national
currencies will be withdrawn from circulation no later than July 1, 2002.
The Registrant has reviewed the impact of the euro conversion on its
information systems, accounting systems, vendor payments and human resources,
and the necessary modifications, if any, are substantially in place. Plans to
upgrade or modify the point of sale hardware and software are in progress and
will be executed throughout 2000 and 2001.
The adoption of a single European currency will lead to greater
product pricing transparency and a more competitive environment. The Registrant
will display the euro equivalent price of merchandise as a customer service
during the transition period, as will many retailers, until the official euro
conversion in 2002. The euro conversion is not expected to have a significant
effect on the Registrant's results of operations or financial condition.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements within the meaning of
the federal securities laws. All statements, other than statements of
historical facts, which address activities, events or developments that the
Registrant expects or anticipates will or may occur in the future, including,
but not limited to, such things as future capital expenditures, expansion,
strategic plans, growth of the Registrant's business and operations and euro
related actions and other such matters are forward-looking statements. These
forward-looking statements are based on many assumptions and factors including
effects of currency fluctuations, customer demand, fashion trends, competitive
market forces and economic conditions worldwide and the ability of the
Registrant to implement, in a timely manner, the programs and actions related
to the euro issue. Any changes in such assumptions or factors could produce
significantly different results.
-14-
<PAGE> 17
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The only legal proceedings pending against the Registrant or its
consolidated subsidiaries consist of ordinary, routine litigation,
including administrative proceedings, incident to the businesses of
the Registrant, as well as litigation incident to the sale and
disposition of businesses that have occurred in the past several
years. Management does not believe that the outcome of such
proceedings will have a material effect on the Registrant's
consolidated financial position, liquidity, or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Registrant's annual meeting of shareholders was held on June 8,
2000, in Tarrytown, New York. Proxies were solicited by management of
the Registrant pursuant to Regulation 14A under the Securities Exchange
Act of 1934; there was no solicitation in opposition to management's
nominees as listed in the Notice of 2000 Annual Meeting and Proxy
Statement, both dated April 27, 2000.
(b) Matthew D. Serra was elected as a director in Class I for a one-year
term ending at the annual meeting of shareholders of the Registrant in
2001. Each of Jarobin Gilbert Jr., Allan Z. Loren and David Y.
Schwartz was elected as a director in Class III for a three-year term
ending at the annual meeting in 2003. Except for Mr. Schwartz, all of
such individuals previously served as directors of the Registrant.
James E. Preston, Christopher A. Sinclair, J. Carter Bacot, Purdy
Crawford, Philip H. Geier Jr., and Dale W. Hilpert, having previously
been elected directors of the Registrant for terms continuing beyond
the 2000 annual meeting of shareholders, continue in office as
directors. Margaret P. MacKimm and John J. Mackowski retired as
directors at the 2000 annual meeting.
(c) The matters voted upon and the results of the voting were as follows:
(1) Election of Directors:
<TABLE>
<CAPTION>
Abstentions and
Name Votes For Votes Withheld Broker Non-Votes
---- --------- -------------- ----------------
<S> <C> <C> <C>
Jarobin Gilbert Jr. 104,428,374 13,843,919 0
Allan Z. Loren 104,441,060 13,831,233 0
David Y. Schwartz 112,692,654 5,579,639 0
Matthew D. Serra 116,040,823 2,231,470 0
</TABLE>
(2) Proposal to ratify the appointment of independent accountants:
<TABLE>
<CAPTION>
Votes For Votes Against Abstentions Broker Non-Votes
--------- ------------- ----------- ----------------
<S> <C> <C> <C>
117,501,262 136,836 634,195 0
</TABLE>
(3) Proposal to approve amendments to the 1998 Stock Option and Award
Plan:
<TABLE>
<CAPTION>
Votes For Votes Against Abstentions Broker Non-Votes
--------- ------------- ----------- ----------------
<S> <C> <C> <C>
105,353,730 12,086,021 832,542 0
</TABLE>
-15-
<PAGE> 18
(4) Proposal to reapprove the performance goals and to approve the
amendment of the Annual Incentive Compensation Plan:
<TABLE>
<CAPTION>
Votes For Votes Against Abstentions Broker Non-Votes
--------- ------------- ----------- ----------------
<S> <C> <C> <C>
114,505,205 2,985,727 781,361 0
</TABLE>
(5) Proposal to approve the Directors Stock Option Plan:
<TABLE>
<CAPTION>
Votes For Votes Against Abstentions Broker Non-Votes
--------- ------------- ----------- ----------------
<S> <C> <C> <C>
102,042,076 15,455,310 774,907 0
</TABLE>
At the close of business on the record date of April 24, 2000, there were
outstanding 137,578,699 shares of the Registrant's Common Stock, par value
$0.01 per share ("Common Stock"). There were represented at the meeting,
in person or by proxy, 118,272,293 shares of Common Stock. Such shares
represented 85.97 percent of the total number of shares of such class of
stock outstanding on the record date.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
An index of the exhibits that are required by this item, and which are
furnished in accordance with Item 601 of Regulation S-K, appears on
pages 18 through 20. The exhibits which are in this report immediately
follow the index.
(b) Reports on Form 8-K
The Registrant filed a report on Form 8-K dated May 18, 2000 (date of
earliest event reported) reporting sales and earnings for the first
quarter ended April 29, 2000.
-16-
<PAGE> 19
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VENATOR GROUP, INC.
-------------------
(Registrant)
Date: September 7, 2000
/s/ Bruce Hartman
---------------------------
BRUCE HARTMAN
Senior Vice President
and Chief Financial Officer
-17-
<PAGE> 20
VENATOR GROUP, INC.
INDEX OF EXHIBITS REQUIRED BY ITEM 6(a) OF FORM 10-Q
AND FURNISHED IN ACCORDANCE WITH ITEM 601 OF REGULATION S-K
<TABLE>
<CAPTION>
Exhibit No. in Item 601
of Regulation S-K Description
----------------------- -----------
<S> <C>
1 *
2 *
3(i)(a) Certificate of Incorporation of the Registrant, as filed by the
Department of State of the State of New York on April 7, 1989
(incorporated herein by reference to Exhibit 3(i)(a) to the Quarterly
Report on Form 10-Q for the quarterly period ended July 26, 1997, filed
by the Registrant with the SEC on September 4, 1997 (the "July 26, 1997
Form 10-Q")).
3(i)(b) Certificates of Amendment of the Certificate of Incorporation of the
Registrant, as filed by the Department of State of the State of New York
on (a) July 20, 1989 (b) July 24, 1990 (c) July 9, 1997 (incorporated
herein by reference to Exhibit 3(i)(b) to the July 26, 1997 Form 10-Q)
and (d) June 11, 1998 (incorporated herein by reference to Exhibit 4.2(a)
of the Registration Statement on Form S-8 (Registration No. 333-62425)
previously filed with the SEC).
3(ii) By-laws of the Registrant, as amended (incorporated herein by reference
to Exhibit 4.2 of the Registration Statement on Form S-8 (Registration
No. 333-62425) previously filed with the SEC).
4.1 The rights of holders of the Registrant's equity securities are defined
in the Registrant's Certificate of Incorporation, as amended
(incorporated herein by reference to Exhibits 3(i)(a) and 3(i)(b) to the
July 26, 1997 Form 10-Q and Exhibit 4.2(a) to the Registration Statement
on Form S-8 (Registration No. 333-62425) previously filed with the SEC).
4.2 Rights Agreement dated as of March 11, 1998 ("Rights Agreement"), between
Venator Group, Inc. and First Chicago Trust Company of New York, as
Rights Agent (incorporated herein by reference to Exhibit 4 to the Form
8-K dated March 11, 1998).
4.2(a) Amendment No. 1 to the Rights Agreement, dated as of May 28, 1999
(incorporated herein by reference to Exhibit 4.2(a) to the Quarterly
Report on Form 10-Q for the quarterly period ended May 1, 1999, filed by
the Registrant with the SEC on June 4, 1999).
</TABLE>
-18-
<PAGE> 21
<TABLE>
<CAPTION>
Exhibit No. in Item 601
of Regulation S-K Description
----------------------- -----------
<S> <C>
4.3 Indenture dated as of October 10, 1991 (incorporated herein by reference
to Exhibit 4.1 to the Registration Statement on Form S-3 (Registration
No. 33-43334) previously filed with the SEC).
4.4 Forms of Medium-Term Notes (Fixed Rate and Floating Rate) (incorporated
herein by reference to Exhibits 4.4 and 4.5 to the Registration
Statement on Form S-3 (Registration No. 33-43334) previously filed with
the SEC).
4.5 Form of 8 % Debentures due 2022 (incorporated herein by reference to
Exhibit 4 to the Registrant's Form 8-K dated January 16, 1992).
4.6 Purchase Agreement dated June 1, 1995 and Form of 7% Notes due 2000
(incorporated herein by reference to Exhibits 1 and 4, respectively, to
the Registrant's Form 8-K dated June 7, 1995).
4.7 Distribution Agreement dated July 13, 1995 and Forms of Fixed Rate and
Floating Rate Notes (incorporated herein by reference to Exhibits 1, 4.1
and 4.2, respectively, to the Registrant's Form 8-K dated July 13,
1995).
5 *
8 *
9 *
10.1 Venator Group Directors Stock Option Plan.
10.2 Amendment to Venator Group 1998 Stock
Option and Award Plan.
10.3 Annual Incentive Compensation Plan, as Amended.
11 *
12 Computation of Ratio of Earnings to Fixed Charges.
13 *
15 Letter re: Unaudited Interim Financial Statements.
</TABLE>
-19-
<PAGE> 22
<TABLE>
<CAPTION>
Exhibit No. in Item 601
of Regulation S-K Description
----------------------- -----------
<S> <C>
16 *
17 *
18 *
19 *
20 *
21 *
22 *
23 *
24 *
25 *
26 *
27.1 Financial Data Schedule - July 29, 2000 (which is submitted
electronically to the SEC for information only and not filed).
27.2 Restated Financial Data Schedule - July 31, 1999 (which is
submitted electronically to the SEC for information only and not
filed).
99 Independent Accountants' Review Report.
</TABLE>
--------------------
* Not applicable
-20-
<PAGE> 23
Exhibits filed with this Form 10-Q:
<TABLE>
<CAPTION>
Exhibit No. Description
---------- -----------
<S> <C>
10.1 Venator Group Directors Stock Option Plan.
10.2 Amendment to Venator Group 1998 Stock
Option and Award Plan.
10.3 Annual Incentive Compensation Plan, as Amended.
12 Computation of Ratio of Earnings to Fixed Charges.
15 Letter re: Unaudited Interim Financial Statements.
27.1 Financial Data Schedule - July 29, 2000.
27.2 Restated Financial Data Schedule - July 31, 1999.
99 Independent Accountants' Review Report.
</TABLE>
