<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal years ended December 31, 1999 and 1998
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
VENATOR GROUP 401(k) PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
VENATOR GROUP, INC.
112 WEST 34TH STREET
NEW YORK, NY 10120
<PAGE> 2
VENATOR GROUP 401(k) PLAN
Financial Statements and Schedule
<TABLE>
<CAPTION>
Index
-----
Page
----
<S> <C>
Independent Auditors' Report 1
Statements of Net Assets Available for Benefits as of
December 31, 1999 and 1998 2
Statements of Changes in Net Assets Available for Benefits
for the years ended December 31, 1999 and 1998 3
Notes to Financial Statements 4-11
Supplemental Schedule:
Schedule 1 Line 27(a) - Schedule of Assets Held for Investment
Purposes at December 31, 1999 12
Signature 13
Index of Exhibits 14
</TABLE>
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
Venator Group 401(k) Plan Administrator:
We have audited the accompanying statements of net assets available for plan
benefits of the Venator Group 401(k) Plan (the "Plan") as of December 31, 1999
and 1998, and the related statements of changes in net assets available for
plan benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan
as of December 31, 1999 and 1998, and the changes in net assets available for
plan benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on
Schedule 1 is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974 ("ERISA"). The supplemental schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ KPMG LLP
New York, New York
June 28, 2000
1
<PAGE> 4
VENATOR GROUP 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999
----------------------------------------------------------------
Participant- Nonparticipant-
Directed Directed
------------------ --------------------
Venator Group
Common Stock
Total Funds Fund Total
------------------ -------------------- -------------------
<S> <C> <C> <C>
Assets:
Investments, at fair value $31,741,607 $1,508,819 $33,250,426
Receivables:
Employer's contribution - 1,131,809 1,131,809
Participants' contribution - - -
------------------ -------------------- -------------------
Total receivables - 1,131,809 1,131,809
------------------ -------------------- -------------------
Total assets 31,741,607 2,640,628 34,382,235
------------------ -------------------- -------------------
Liabilities:
Excess contributions payable to participants 180,918 - 180,918
------------------ -------------------- -------------------
Net assets available for plan benefits $31,560,689 $2,640,628 $34,201,317
================== ==================== ===================
</TABLE>
<TABLE>
<CAPTION>
1998
-----------------------------------------------------------
Participant- Nonparticipant-
Directed Directed
---------------- ------------------
Venator Group,
Inc.
Total Funds Common Stock Total
---------------- ------------------ ------------------
<S> <C> <C> <C>
Assets:
Investments, at fair value $24,417,614 $539,736 $24,957,350
Receivables:
Employer's contribution 21,429 1,144,343 1,165,772
Participants' contribution 294,200 - 294,200
---------------- ------------------ ------------------
Total receivables 315,629 1,144,343 1,459,972
---------------- ------------------ ------------------
Total assets 24,733,243 1,684,079 26,417,322
---------------- ------------------ ------------------
Liabilities:
Excess contributions payable to participants - - -
---------------- ------------------ ------------------
Net assets available for plan benefits $24,733,243 $1,684,079 $26,417,322
================ ================== ==================
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 5
VENATOR GROUP 401(k) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999
------------------------------------------------------
Participant- Nonparticipant-
Directed Directed
----------------- -----------------
Venator
Group
Total Funds Common Stock Fund Total
----------------- ----------------- --------------
<S> <C> <C> <C>
Additions:
Additions to net assets attributed to:
Investment income:
Net appreciation in fair value of investments $2,199,674 $187,087 $2,386,761
Dividends 1,299,152 - 1,299,152
Interest 68,856 - 68,856
Contributions:
Participants' 8,839,748 - 8,839,748
Employer's - 1,131,809 1,131,809
----------------- ----------------- --------------
Total additions 12,407,430 1,318,896 13,726,326
----------------- ----------------- --------------
Deductions:
Deductions from net assets attributed to:
Benefits paid to participants (5,558,169) (321,640) (5,879,809)
Loan administrative & maintenance fees (21,815) - (21,815)
Forfeitures - (40,707) (40,707)
----------------- ----------------- --------------
Total deductions (5,579,984) (362,347) (5,942,331)
----------------- ----------------- --------------
Net increase 6,827,446 956,549 7,783,995
Net assets available for plan benefits:
Beginning of year 24,733,243 1,684,079 26,417,322
----------------- ----------------- --------------
End of year $31,560,689 $2,640,628 $34,201,317
================= ================= ==============
</TABLE>
<TABLE>
<CAPTION>
1998
------------------------------------------------------
Participant- Nonparticipant-
Directed Directed
-------------- ----------------
Venator
Group
Total Funds Common Stock Fund Total
-------------- ----------------- ---------------
<S> <C> <C> <C>
Additions:
Additions to net assets attributed to:
Investment income:
Net depreciation in fair value of investments $(66,848) $(1,267,837) $ (1,334,685)
Dividends 1,408,957 - 1,408,957
Interest 51,886 - 51,886
Contributions:
Participants' 8,619,149 - 8,619,149
Employer's 21,429 1,144,343 1,165,772
Transfer of net assets from Eastbay 401(k) plan 1,366,524 - 1,366,524
-------------- ---------------- ---------------
Total additions (deductions) 11,401,097 (123,494) 11,277,603
-------------- ---------------- ---------------
Deductions:
Deductions from net assets attributed to:
Benefits paid to participants (6,058,030) (388,910) (6,446,940)
Loan administrative & maintenance fees (20,362) - (20,362)
Forfeitures - (45,304) (45,304)
-------------- ---------------- ---------------
Total deductions (6,078,392) (434,214) (6,512,606)
-------------- ---------------- ---------------
Net increase (decrease) 5,322,705 (557,708) 4,764,997
Net assets available for plan benefits:
Beginning of year 19,410,538 2,241,787 21,652,325
-------------- ---------------- ---------------
End of year $24,733,243 $1,684,079 $26,417,322
============== ================ ===============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 6
VENATOR GROUP 401(k) PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(1) DESCRIPTION OF PLAN
The following description of the Venator Group 401(k) Plan (the "Plan")
provides only general information. Participants should refer to the Plan
agreement for a more complete description of the Plan's provisions.
(a) GENERAL
The Plan is a defined contribution plan generally covering all
U.S. employees of Venator Group, Inc. (the "Company") and its
affiliates that adopt the Plan. Eligible employees are those who
have attained age twenty-one and completed one year of service
consisting of at least 1,000 hours and who have enrolled in the
Plan. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). The
Plan became effective as of January 1, 1996 and the accounts of
participants in the San Francisco Music Box Co. 401(k) Profit
Sharing Plan and Trust (the "SFMB 401(k) Plan") were transferred
into the Plan at that date. The San Francisco Music Box Company
is a subsidiary of the Company. The benefits of participants in
the SFMB 401(k) Plan who have not performed service on or after
January 1, 1996 are governed by the provisions of the SFMB 401(k)
Plan in effect as of the day such participants incurred a
termination of employment.
Effective January 1, 1998, the Plan was amended to provide for
the merger of the Eastbay Tax Relief Investment Plan ("Eastbay
Plan") into the Plan. Eastbay, Inc. is a subsidiary of the
Company. The accounts of participants in the Eastbay Plan that
were transferred to the Plan totaled $1,366,524 of net assets,
which included $284,112 in the New England Guaranteed Fund ("New
England Fund"). The New England Fund is in the general account of
and is included in the general assets of the New England Mutual
Life Insurance Company ("New England") and earns a guaranteed
rate of interest. Under the agreement between Eastbay and New
England, these monies cannot be transferred to other funds within
the Plan until the contracts expire. The contracts are for a term
of seven years and expire annually until 2004. As the contracts
expire, the monies are rolled over into an equivalent fixed
income fund, which is currently the Stable Value Fund and the
participants can then reallocate the funds at their discretion.
The New England Fund is not available for additional investments.
The benefits of Eastbay participants who have not performed
service on or after January 1, 1998 shall be governed by the
provisions of the Eastbay Plan in effect as of the day such
participants incurred a termination of employment.
4
<PAGE> 7
VENATOR GROUP 401(k) PLAN
Notes to Financial Statements, Continued
(1), CONTINUED
(a),CONTINUED
Effective January 1, 1998, the Plan was further amended to (i)
reflect changes required pursuant to the Small Business Job
Protection Act of 1996, the Taxpayer Relief Act of 1997 and the
Uniformed Services and Reemployment Rights Act of 1994; (ii)
provide for automatic revocable enrollment in the Plan at a
contribution rate of 2% for participants who meet the eligibility
requirements; (iii) improve the Plan's vesting schedule so that a
participant would be fully vested in Plan benefits after five
years of service; and (iv) add two new funds to the Plan's
selection of investment vehicles.
(b) CONTRIBUTIONS
Each year, participants may contribute from 1% to 15% of pretax
annual compensation, as defined in the Plan. In accordance with
the Tax Reform Act of 1986, the maximum amount a participant can
contribute under the Plan was $10,000 for both 1999 and 1998.
Participants may also roll over certain amounts representing
distributions from other qualified contribution plans prior to
becoming eligible to participate in the Plan. However, additional
contributions cannot be made until the completion of a year of
service. For any participant who (i) has completed 1,000 hours of
service during the Plan year and is actively employed by the
Company on the last day of the Plan year or (ii) during the Plan
year, has died, has become disabled or retired on or after normal
retirement age, the Company also contributes 25% of such
participant's pre-tax contributions to the Plan up to the first
4% of the participant's compensation earned during the Plan year.
Matching contributions, at the Company's option, are made either
in shares of the Company's common stock ("Venator Group Shares")
or in cash to be invested in Venator Group Shares, to be held in
the Venator Group Common Stock Fund. Matching contributions for
1999 and 1998 were made entirely in stock and were recorded at
fair market value on the date of the Plan's year-end. Additional
contributions may be made at the discretion of the Company and
are subject to certain limitations. No additional contributions
were made for 1999 and 1998. In March 2000, the Company
reimbursed certain participants for excess amounts contributed
into the Plan during 1999. In 1998, the Company accrued an
additional contribution of $21,429 to meet ERISA requirements,
which was paid in 1999.
5
<PAGE> 8
VENATOR GROUP 401(k) PLAN
Notes to Financial Statements, Continued
(1), CONTINUED
(c) PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contribution and allocations of (a) the Company's matching
contribution and, (b) Plan net earnings. Allocations are based on
participant's salary deferral or account balances, respectively.
The benefit to which a participant is entitled is the benefit
that can be provided from the participant's vested account
balance.
(d) ELIGIBILITY AND VESTING
An employee is eligible to participate in the Plan upon
completion of one year of service and the attainment of age
twenty-one. Participants are immediately vested in their
contributions plus actual earnings thereon. Vesting in the
Company's regular and discretionary matching contributions and
earnings thereon is over a one to five-year period and a
participant will be 100% vested upon five years of credited
service. Former participants of the Eastbay Plan with three or
more years of service on January 1, 1998, will retain the Eastbay
Plan's vesting schedule for existing and future Company matching
contributions. The Eastbay Plan's vesting schedule is over a
four-year period and a participant will be 50% vested after the
third year and 100% vested after the fourth year.
(e) INVESTMENT OPTIONS
Upon enrollment in the Plan, a participant may direct employee
contributions in 5% increments in any of seven investment
options.
Scudder Stable Value Fund - Funds are invested in a collective
investment trust with a portfolio of guaranteed investment
contracts, bank investment contracts, synthetic contracts,
private placements and cash equivalents including traditional
money market instruments. This fund is designed to have
minimal fluctuation in principal value.
6
<PAGE> 9
VENATOR GROUP 401(k) PLAN
Notes to Financial Statements, Continued
(1), CONTINUED
(e),CONTINUED
Scudder Growth and Income Fund - Funds are invested in a
mutual fund with a diversified stock portfolio investing
primarily in common stocks, preferred stocks, and securities
convertible into common stock. The fund allocates its
investments among different industries and companies and
adjusts its portfolio securities for investment considerations
and not for trading purposes.
Scudder Stock Index Fund - Funds are invested in a
bank-maintained collective investment trust. The fund's
objective is to match the total return of the Standard &
Poor's 500 Stock Index.
Scudder Global Fund - Funds are invested in a mutual fund with
a diversified portfolio of marketable securities, primarily
equity securities, including common stocks, preferred stocks,
and convertible debt securities. The fund invests on a
worldwide basis in companies which are incorporated in the
U.S. or in foreign countries.
Scudder Pathway Balanced Portfolio - Funds are invested in a
mix of Scudder stock, bond and stable value mutual funds. The
portfolio provides built-in diversification and the growth
potential of equity investments mixed with the income
potential of fixed-income investments.
Scudder Managers Special Equity Fund - Funds are invested
primarily in equity securities expected to have superior
earnings and growth potential. The fund invests at least 65%
of its assets in equity securities of small-to-medium
capitalization companies with emphasis placed on those with
market capitalizations of under $1 billion.
Venator Group Common Stock Fund - Funds are invested in
Venator Group Shares. Venator Group Shares may be obtained by
the Trustee directly from the Company out of its authorized
but unissued shares of common stock or out of its treasury
shares, or on the open market.
Participants may change their investment options quarterly.
7
<PAGE> 10
VENATOR GROUP 401(k) PLAN
Notes to Financial Statements, Continued
(1), CONTINUED
(f) PARTICIPANT LOANS RECEIVABLE
Participants may borrow from their fund accounts once each year a
minimum of $500 up to a maximum equal to the lesser of $50,000 or
50% of their total vested account balance (excluding matching
contributions). Loan transactions are treated as transfers
between the investment funds and the participant loans fund. Loan
terms range from 1 to 5 years or up to 15 years for the purchase
of a primary residence. The loans are secured by the balance in
the participant's account and bear a rate of interest equal to
the prime rate on the date of the loan distribution, as approved
by the Retirement Administration Committee of the Company's Board
of Directors. Principal and interest is paid ratably through
regular payroll deductions.
(g) PAYMENT OF BENEFITS
Participants are eligible for a distribution on termination of
service, death, disability or retirement. A participant will
receive a lump-sum amount equal to the fair market value of the
participant's vested interest in his or her account. The
investment in the Venator Group Common Stock Fund and vested
Company matching contributions are paid in Venator Group Shares.
Participants are eligible for a distribution due to financial
hardship under certain conditions. The amount of a hardship
withdrawal may not exceed the cost associated with the financial
hardship in addition to any mandatory federal income tax
withholding, state and local income taxes or penalties incurred.
(h) FORFEITURES
Forfeitures are allocated as of the last day of the Plan year.
Forfeitures shall be used to reimburse the Company for
administrative expenses of the Plan (except for certain loan
initiation and maintenance fees paid by the participants) and
then to reduce future matching contributions.
(i) EXPENSES OF ADMINISTERING THE PLAN
Expenses of administering the Plan are paid by the Company and
are not included in the accompanying financial statements, except
for certain loan initiation and maintenance fees paid by the
participants.
8
<PAGE> 11
VENATOR GROUP 401(k) PLAN
Notes to Financial Statements, Continued
(2) SUMMARY OF ACCOUNTING PRINCIPLES
(a) BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the
accrual basis of accounting. The preparation of financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results are not
expected to differ significantly from those estimates.
(b) INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value. Shares of
registered investment companies are valued at quoted market
prices, which represent the net asset value of shares held by the
Plan at year-end. Collective investment contracts and guaranteed
investment contracts are valued at contract value, which
approximates fair value. The Venator Group Shares are valued at
quoted market price. Participant loans are valued at cost, which
approximates fair value. Loan interest income is allocated to the
investment fund from which the amount is borrowed.
Purchases and sales of securities are recorded on a trade-date
basis. Interest income is recorded on the accrual basis.
Dividends are recorded on the ex-dividend date.
(c) PAYMENT OF BENEFITS
Benefits are recorded when paid.
(d) RECENTLY ISSUED ACCOUNTING STANDARDS
In August 1999, the American Institute of Certified Public
Accountants issued Statement of Position 99-3, "Accounting and
Reporting of Certain Defined Contribution Plan Investments and
Other Disclosure Matters" ("SOP 99-3"). SOP 99-3 simplifies the
disclosure for certain investments and is effective for plan
years ending after December 15, 1999. The Plan adopted SOP 99-3
effective for the plan year ended December 31, 1999. Accordingly,
information previously required to be disclosed about
participant-directed fund investment programs is not presented in
the Plan's 1999 financial statements. The Plan's 1998 financial
statements have been restated to conform to the 1999
presentation.
9
<PAGE> 12
VENATOR GROUP 401(k) PLAN
Notes to Financial Statements, Continued
(3) INVESTMENTS
The following presents investments that represent five percent or more of
the Plan's net assets.
<TABLE>
<CAPTION>
December 31,
-----------------------------------------
1999 1998
--------------- ------------------
<S> <C> <C>
Scudder Stable Value Fund
3,882,226 and 3,188,235 shares, respectively $ 3,882,226 $ 3,188,235
Scudder Growth and Income Fund
372,570 and 333,689 shares, respectively $ 9,943,881 $ 8,779,367
Scudder Stock Index Fund
209,732 and 186,371 shares, respectively $ 8,601,125 $ 6,323,555
Scudder Global Fund
154,652 and 131,490 shares, respectively $ 4,828,232 $ 3,771,136
Venator Group Common Stock Fund
390,404 and 186,173 shares, respectively $ * 2,732,830 $ ** 1,210,124
</TABLE>
* 215,545 shares, or $1,508,819 nonparticipant-directed
** 83,036 shares, or $ 539,736 nonparticipant-directed
The Plan's investments (including gains and losses on investments bought
and sold, as well as held during the year) appreciated in value by
$2,386,761 in 1999 and depreciated in value by $1,334,685 in 1998 as
follows:
<TABLE>
<CAPTION>
1999 1998
--------------- ------------------
<S> <C> <C>
Mutual funds $ 2,139,036 $ 990,333
Common stock 247,725 (2,325,018)
--------------- ------------------
$ 2,386,761 $ (1,334,685)
=============== ==================
</TABLE>
(4) PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
Plan termination, participants will become 100% vested in their accounts.
10
<PAGE> 13
VENATOR GROUP 401(k) PLAN
Notes to Financial Statements, Continued
(5) TAX STATUS
The Company received a favorable determination letter from the Internal
Revenue Service with respect to the qualification of the Plan dated
October 24, 1997. The Company intends to apply for a determination letter
from the Internal Revenue Service with respect to the subsequent Plan
amendments. The Plan Administrator believes that the Plan is currently
being operated in compliance with the applicable requirements of the
Internal Revenue Code.
(6) RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by Scudder
Kemper Investments, Inc. Scudder Trust Company, an affiliate of Scudder
Kemper Investments, Inc., is the trustee as defined by the Plan and,
therefore, these transactions qualify as party-in-interest transactions.
11
<PAGE> 14
Schedule 1
VENATOR GROUP 401(k) PLAN
Line 27(a) - Schedule of Assets Held for Investment Purposes
December 31, 1999
<TABLE>
<CAPTION>
Description of investment Cost Market value
------------------------- ---- ------------
<S> <C> <C> <C>
* Scudder Stable Value Fund $ 3,882,226 3,882,226
* Scudder Growth and Income Fund 9,778,111 9,943,881
* Scudder Stock Index Fund 5,861,504 8,601,125
* Scudder Global Fund 4,658,157 4,828,232
* Scudder Pathway Balanced Portfolio 1,159,422 1,198,445
* Scudder Managers Special Equity Fund 612,939 838,667
* Scudder New England Guaranteed Fund 232,822 232,822
* Venator Group Common Stock Fund 4,269,553 2,732,830
* Participant loans receivable 992,198 992,198
---------- ----------
$ 31,446,932 33,250,426
========== ==========
</TABLE>
* Denotes party-in-interest relationships.
See accompanying independent auditors' report.
12
<PAGE> 15
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange At of 1934,
this annual report has been signed on behalf of the Plan by the undersigned
hereunto duly authorized.
VENATOR GROUP 401(k) PLAN
By: /s/ Kimberly M. Mustin
-----------------------
Scudder Trust Company
Trustee of the Plan
Date: June 23, 2000
13
<PAGE> 16
VENATOR GROUP, INC.
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. in item
601 of Regulation S-K Description
--------------------- -----------
<S> <C>
23 Consent of Independent Auditors
</TABLE>
14
