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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended February 2, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
Commission File Number 1-14770
PAYLESS SHOESOURCE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 43-1813160
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
Number)
3231 SOUTH EAST SIXTH AVENUE, TOPEKA, KANSAS 66607-2207
(Address of principal executive offices) (Zip Code)
(785) 233-5171
(Registrant's telephone number,
including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, par value $.01 per share New York Stock Exchange
Preferred stock purchase rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[X]
The aggregate market value of Registrant's Common Stock held by non-affiliates
based on the closing price of $62.31 on April 10, 2002, was $1,391,613,657. For
purposes of this disclosure, the Registrant has assumed that its Directors and
Executive Officers are affiliates of the Registrant.
The Registrant had 22,486,190 shares of $.01 par value Common Stock issued and
outstanding as of April 10, 2002.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Company's Annual Report to Shareowners for the fiscal year
ended February 2, 2002, (the "2001 Annual Report") are incorporated into Part
II, as described herein.
2. Portions of the Company's 2002 Proxy Statement for the Annual Meeting to be
held on May 24, 2002, are incorporated into Part III, as described herein. Such
proxy statement will be filed within 120 days after the end of the fiscal year
covered by this annual report on Form 10-K.
This report contains, and from time to time the Company may publish, forward-
looking statements relating to such matters as anticipated financial
performance, business prospects, technological developments, new products,
future store openings, international expansion, possible strategic alternatives,
new business concepts, fashion trends and similar matters. Statements including
the words "expects," "anticipates," "intends," "plans," "believes," "seeks," or
variations of such words and similar expressions are forward-looking statements.
The Company notes that a variety of factors could cause its actual results and
experience to differ materially from the anticipated results or other
expectations expressed in its forward-looking statements. The risks and
uncertainties that may affect the operations, performance, development and
results of the Company's business include, but are not limited to, the
following: changes in consumer spending patterns; changes in consumer
preferences and overall economic conditions; the impact of competition and
pricing; changes in weather patterns; the financial condition of the suppliers
and manufacturers from whom the Company sources its merchandise; changes in
existing or potential duties, tariffs or quotas; changes in relationships
between the United States and foreign countries, changes in relationships
between Canada and foreign countries, economic and political instability in
foreign countries or restrictive actions by the governments of foreign countries
in which suppliers and manufacturers from whom the Company sources are located
or in which the Company operates stores; changes in trade and/or tax laws;
fluctuations in currency exchange rates; availability of suitable store
locations on appropriate terms; the ability to hire, train and retain
associates; general economic, business and social conditions in the countries
from which the Company sources products, supplies or has or intends to open
stores; the performance of partners in joint ventures; the ability to comply
with local laws in foreign countries; and threats or acts of terrorism. All
subsequent written and oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by these cautionary statements. The Company does not undertake any
obligation to release publicly any revisions to such forward-looking statements
to reflect events or circumstances after the date hereof or thereof or to
reflect the occurrence of unanticipated events.
2
Payless ShoeSource, Inc.
Form 10-K Annual Report
For the fiscal year ended February 2, 2002
PART I
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
PART II
Item 5. Market for Company's Common Equity and Related
Shareowner Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure
PART III
Item 10. Directors and Executive Officers of the Company
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Item 13. Certain Relationships and Related Transactions
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
Signatures
3
PART I
ITEM 1. BUSINESS
GENERAL
Payless ShoeSource, Inc., a Delaware corporation, together with its
subsidiaries, ("Payless," or the "Company") is the largest family footwear
retailer in the United States with $2.91 billion in revenue in the fiscal year
ended February 2, 2002 ("2001"). The Company sold approximately 215 million
pairs of shoes in 2001.
As of February 2, 2002, the Company operated 4,690 Payless ShoeSource(R) stores
in 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands,
Guam, Saipan, Canada, Costa Rica, El Salvador, Guatemala, Trinidad and Tobago,
and the Dominican Republic. Payless ShoeSource stores feature fashionable,
quality footwear for men, women and children, including athletic, casual, dress,
sandals, work and fashion boots and slippers.
As of the end of the fiscal year, the Company operated 258 Parade stores in 23
states, the District of Columbia and Puerto Rico. As part of the restructuring
discussed further under the Management's Discussion and Analysis in the 2001
Annual Report, incorporated herein by reference, ("MD&A") the Company is in the
process of closing approximately 67 Parade stores and exiting certain markets.
Parade offers fashionable women's leather and fine fabric footwear and
accessories at moderate prices.
At year end, the Company also operated 16 Bundles(sm)/Tootsies stores primarily
in the New York City area and 2 Luster(sm) concept stores adjacent to Payless(R)
stores (adjacencies do not count as additional stores). Bundles/Tootsies stores
feature value-priced specialty products including socks, hosiery, sleepwear and
undergarments. The Company also operates one of the world's largest centralized
shoe dyeing facilities.
DEVELOPMENTS
EXPANSION
In November 2001, the Company announced a joint venture agreement with South
America Local Partners, S.A., a holding company formed principally by South
American local partners, to open and operate Payless ShoeSource family footwear
stores in South America. These stores will offer a selection of the same
footwear and accessories available at other Payless ShoeSource locations. The
Company opened its first store in Ecuador on March 8, 2002. The Company
currently intends to open stores in Chile and Peru in the first three quarters
of fiscal 2002.
The Company is also currently testing various concepts related to its core
business including wholesaling shoes and selling its gift cards through other
retailers.
STORES
During 2001, the Company had a net increase of 57 Payless ShoeSource stores (161
openings and 104 closings), a net decrease of 11 Parade(sm) stores (14 openings
and 25 closings) and a net increase of 6 Bundles stores (8 openings
4
and 2 closings). Year-end 2001 store count was 4,690 Payless ShoeSource stores,
258 Parade stores, and 16 Bundles/Tootsies stores and no Luster stand-alone
stores. In addition, there were 2 Bundles and 2 Luster adjacencies (adjacencies
do not count as additional stores).
HISTORY
The Company was founded in Topeka, Kansas in 1956 with a strategy of selling
low-cost, high-quality family footwear on a self-service basis. In 1962, Volume
Distributors, as the Company was known at the time, became a public company. In
1979, the Company (then called Volume Shoe Corporation) was acquired by The May
Department Stores Company of St. Louis, Missouri ("May"). The Company changed
its name to Payless ShoeSource, Inc. in 1991. On May 4, 1996, Payless became an
independent public company incorporated in Missouri as a result of its spin-off
from May. In June 1998, Payless was reorganized into a holding company structure
with the retail operations centralized in Payless ShoeSource, Inc., a Missouri
corporation, the indirect, wholly-owned subsidiary of Payless ShoeSource, Inc.,
a Delaware corporation. The Company is listed for trading on the New York Stock
Exchange under the symbol "PSS."
PAYLESS SHOESOURCE(R) STORES IN THE UNITED STATES AND CANADA
Payless ShoeSource has 4,624 locations in the United States and Canada
(including ShopKo(R) locations), of which 678 incorporate a "Payless
Kids(R)" area and 7 locations are exclusively "Payless Kids" stores. The average
size of the Company's Payless ShoeSource stores in the United States and Canada
is approximately 3,300 square feet. Each store carries on average 8,200 pairs of
shoes selected from approximately 500 styles offered. Payless ShoeSource stores
operate in a variety of real estate formats, including shopping malls, central
business districts, free-standing buildings, strip centers and "store-within-
a-store." Locations incorporating a "Payless Kids" have approximately 1,000
additional square feet of selling space devoted to an expanded assortment of
children's shoes. The stores that include a "Payless Kids" area and those that
are dedicated "Payless Kids" stores are located throughout the country, have
wider aisles, children-friendly seating and an entertainment center for
children.
The Company's Payless ShoeSource stores operate in rural, suburban and urban
environments. The 10 states or provinces with the largest concentration of the
Company's Payless ShoeSource stores are identified below (along with the total
number of Payless ShoeSource stores including ShopKo locations):
STATE/PROVINCE NO. OF PAYLESS SHOESOURCE(R) STORES
------------- -----------------------------------
CALIFORNIA 611
TEXAS 384
FLORIDA 272
NEW YORK 257
ILLINOIS 208
PENNSYLVANIA 186
OHIO 172
MICHIGAN 149
NEW JERSEY 129
ONTARIO, CANADA 111
TOTAL UNITED STATES 4,361
TOTAL CANADA 263
5
The Company's Payless ShoeSource stores are highly automated, each with an
electronic point of sale register (excluding the ShopKo locations) and a back
office computer, that not only records transactions from the register (not in
ShopKo stores), but also serves many other store supporting functions including
price look-up, accumulation of associate hours worked and communications with
the Company's headquarters in Topeka, Kansas. Store associates receive regular
weekly communications from the Company's headquarters describing promotional and
display requirements.
The Company's Payless ShoeSource operations are directed centrally by three
senior officers and a small support staff.
The average Payless ShoeSource store in the United States and Canada has between
four and six associates, including a store manager. The stores are organized
into districts. Districts include Payless ShoeSource(R), Parade(sm), Bundles(sm)
and Luster(sm) stores. District managers, to whom the store managers report,
themselves report to directors of retail operations who have full responsibility
for the stores in their region. Loss prevention, inventory control functions,
human resources, merchandising support and other more general support services,
are all provided from the Company's headquarters.
Skopko(R) is a registered trademark of Shopko Stores, Inc.
PAYLESS SHOESOURCE(R) STORES INTERNATIONALLY (EXCLUDING CANADA)
As of February 2, 2002, the Company was operating 66 Payless ShoeSource stores
in Costa Rica, Guatemala, El Salvador, Dominican Republic and Trinidad and
Tobago. During the first quarter of fiscal 2002, the Company intends to open
stores in Honduras, Nicaragua, Panama and Ecuador. The average size of the
Company's Payless ShoeSource stores in Central America and the Caribbean, at
approximately 2,700 square feet, are smaller than its Payless stores in the
United States and Canada. Each store carries on average 11,000 pairs of shoes
selected from approximately 350 styles offered. Internationally, Payless
ShoeSource stores operate in a variety of real estate formats, including
shopping malls, central business districts, free-standing buildings, and strip
centers.
Financial Information about Geographic Areas (in millions):
Fiscal Fiscal Fiscal
2001 2000 1999
-------- -------- --------
Domestic Revenues $2,753.2 $2,830.4 $2,641.2
Foreign Revenues 160.5 118.0 88.9
-------- -------- --------
Total Revenues $2,913.7 $2,948.4 $2,730.1
Domestic Total $ 968.6 $ 954.0 $1,041.5
Assets
Foreign Total 100.6 48.8 40.9
-------- -------- --------
Assets
Total Assets $1,069.2 $1,022.8 $1,082.4
6
PARADE(sm) STORES
Parade stores emphasize the retail sale of fashionable, quality, primarily
leather, women's shoes. As of February 2, 2002, the Company operated 258 Parade
stores. During 2001, Parade was reorganized to be integrated into Payless
ShoeSource rather than being operated as a separate division.
Major markets include New York City, Chicago, Boston, Philadelphia, Washington,
D.C., Miami, Detroit and Puerto Rico. As a result of the restructuring discussed
under MD&A in the 2001 Annual Report incorporated herein by reference, the
Company is in the process of closing 67 Parade stores. The remaining Parade
locations will be concentrated in the Northeast and selected major metropolitan
areas, including all of its major markets. The average size of a Parade store is
approximately 2,300 square feet. These stores operate in a variety of real
estate formats including shopping malls, central business districts and strip
centers.
BUNDLES(sm)/TOOTSIES
As of February 2, 2002, the Company operated 16 Bundles/Tootsies locations
primarily in the New York City area. Bundles/Tootsies stores carry a wide
variety of socks, underwear, sleepwear and accessories. The Bundles/Tootsies
stores average approximately 1,300 square feet. To leverage its investment in
Bundles/Tootsies, during the third quarter of 2001, the Company began to offer
Bundles merchandise, including an expanded line of athletic and fashion socks,
in all Payless ShoeSource stores.
DYELIGHTS(sm)
The Company operates one of the world's largest shoe dyeing facilities through
its indirect wholly-owned subsidiary, Dyelights, Inc. ("Dyelights"). Currently,
Dyelights dyes shoes exclusively offered through the Company's Parade and
Payless stores. It is possible that Dyelights could provide similar services for
third parties in the future, however, no assurance can be made as to the ability
of Dyelights to attract third party customers.
Customers select the color they would like their shoes to be dyed from a color
book. The colors are regularly updated so that the most popular colors are
offered. Once a shoe is ordered from a store, the shoe is dyed to order. The
dyed shoes are generally available for pick up at the store approximately 10
days after the order is placed. The retail price for Dyelights shoes currently
ranges between $33 and $38, including the dyeing cost.
EMPLOYEES
As of February 2, 2002, the Company had approximately 28,400 employees including
approximately 14,100 U.S. and 800 Canadian full-time associates and 12,000 U.S.
and 1,100 Canadian part-time associates and 350 primarily full-time associates
in the Company's Central American region. Approximately 800 of the Company's
distribution center general warehouse associates are covered by collective
bargaining agreements. Approximately 160 of the Company's other associates are
covered by collective bargaining agreements. Management believes it has a good
relationship with its employees.
The Company is led by a team of 14 senior management executives who have
significant retail industry experience, including an average of nearly 13 years
with the Company and May.
7
PRODUCTS
The Company's Payless ShoeSource stores offer a broad assortment of fashionable,
quality footwear sold at affordable prices for men, women and children,
including athletic, casual, dress, sandals, work and fashion boots and slippers.
Shoes are constructed with leather, canvas and man-made materials. Styling is
updated regularly in an effort to remain current with proven fashion trends.
During 2001, shoes at Payless ShoeSource stores sold at an average retail price
of $12.32/pair. In addition to shoes, Payless ShoeSource stores offer
accessories, including handbags, shoe polish and hosiery. Parade stores feature
fashionable women's dress, casual and athletic footwear priced in the $20 to
$40/pair range. Bundles stores feature both private label and branded socks,
underwear, sleepwear and accessories at prices generally ranging from $1.00 to
$40.00. However, certain seasonal merchandise may be more expensive.
The Company's merchandising effort is led by the President and three general
merchandise managers, each with over 20 years of retail experience. They direct
teams of buyers, planners and distributors that interact with agents and factory
representatives to design, select, produce, inspect and distribute footwear and
accessories to Payless ShoeSource, Parade, Bundles/Tootsies and Luster stores.
CUSTOMERS
The Company sells footwear and accessories to women, men and children of all age
groups. The Company has significant market penetration with its target
customers: women between the ages of 18 and 44. The Company believes that more
than 51% of its target customers purchased at least one pair of shoes from the
Company last year. In 2001, the Company sold more pairs of shoes than any other
U.S. footwear retailer.
SEASONALITY
The retail footwear market is characterized by four high volume seasons: Easter,
early Summer, back-to-school and Winter holiday. The Company must increase
inventory levels during these periods to support the increased demand for
seasonal styles. Unseasonable weather patterns may affect planned sales of
seasonal products such as sandals and boots.
PURCHASING
The Company, both on its own account and through its indirect, wholly-owned
subsidiary, Payless ShoeSource Merchandising, Inc., utilizes a network of agents
and factories in the United States and 11 foreign countries to obtain its
products. These products are manufactured to meet the Company's specifications
and standards. The strength of the Company's relationships with agents and
factories, some dating back over 40 years, has allowed the Company to revise its
sourcing strategies to reflect changing political and economic environments. In
the past, many of the Company's agents and factory owners have played
significant roles in developing production in new factories and in new countries
without compromising production capacity or product quality. In order to
increase quality control and to achieve other efficiencies, Payless has
continued to consolidate its factory base. Payless now relies heavily on several
large factory groups. If any one of them were to be unable to supply the
Company's needs consistent with prior performance Payless could experience
disruptions in shoe deliveries. However, the Company believes that it could find
alternate factories to produce its product and believes that its
8
relationships with its factory base to be good. The People's Republic of China
is a source of approximately 85% of the Company's footwear based on first cost.
There can be no assurance that a change in political climate with or in China
would not have a material adverse effect on the Company. The Company does not
purchase "seconds" or "overruns" and does not own any manufacturing facilities.
The Company closely integrates its merchandise purchasing requirements with
various manufacturers through its sourcing organization which has offices in
Kansas, Taiwan, China, Brazil and Vietnam. Management believes it has good
relationships with the entities from which it sources, although there can be no
assurance that such relationships will remain good or that such entities believe
that such relationships are good.
Worldwide, approximately 52 percent of the Company's merchandise calculated on
an at cost basis is acquired through a network of third-party agents. Payless
ShoeSource International, Inc., the Company's indirect wholly-owned subsidiary
in Taipei, Taiwan, arranges directly with factories for the design, selection,
production management, inspection and distribution of approximately 48 percent
of the shoes acquired for the Company.
Risks inherent in foreign sourcing (i.e., manufacturing outside the United
States) include economic and political instability, transportation delays and
interruptions, restrictive actions by foreign governments, the laws and policies
of the United States or other countries affecting importation of goods,
including duties, quotas and taxes, trade and foreign tax laws and fluctuations
in currency exchange rates. As the Company expands internationally, the Company
faces similar risks in each country in which it has operations. While the
Company has not historically experienced material adverse effects resulting from
the occurrence of these types of risks, there is no assurance that in the future
the occurrence of these risks will not result in increased costs and delays or
disruption in product deliveries that could cause loss of revenue and damage to
customer relationships and have a material adverse effect on the Company.
Imports from China enjoy "permanent normal trade relations" ("PNTR") treatment
under United States tariff laws. PNTR treatment provides the most favorable
level of United States import duty rates.
QUALITY ASSURANCE
The Company's quality assurance organization sets standards and specifications
for product manufacture, performance and appearance. It communicates those
standards and specifications through its copyrighted quality assurance manual.
The Company stands behind the quality of the shoes it sells to its customers by
permitting return of purchased merchandise with proper documentation evidencing
purchase.
The quality assurance organization also provides technical design support for
the Company's direct purchasing function. It is responsible for review and
approval of agent and factory technical design, for worldwide laboratory testing
of materials and components, and for performing in-factory product inspections
to ensure that materials and factory production techniques are consistent with
Company specifications. The Company locates its field inspection personnel close
to the factories and freight consolidation facilities it uses throughout the
world.
9
PRODUCTION MANAGEMENT
The production management organization manages an ongoing process to qualify and
approve new factories, while continually assessing existing factory service and
quality of performance. New factories must meet specified quality standards for
shoe production and minimum capacity requirements. They must also agree to the
Company's production control processes and certify that neither they nor their
suppliers use forced or child labor. Factory performance must continually
improve or the factory runs the risk of being removed from the list of approved
factories. The production management organization utilizes a unique, internally
developed production control process by which the Company is electronically
linked to the factories and agents. This process is designed to ensure on-time
deliveries of merchandise with minimum lead time and without unnecessary costs.
The Company believes that maintaining strong factory relationships, improving
key factory performance factors and improving factory profitability is critical
to long-term sourcing stability. The Company's manufacturing services group,
based in Asia, provides direction and leadership to key factories in the areas
of overall productivity improvement and lead time reduction.
MERCHANDISE DISTRIBUTION
The Company believes that its distribution system provides it with a competitive
advantage. The Company's merchandise distribution teams are able to track shoes
by the pair from order placement through sale to the customer by the use of
perpetual inventory, product planning and retail price management systems. These
systems are maintained by experienced information systems personnel and are
enhanced regularly to improve the product distribution process. Distribution
analysts review sales and inventory by size and style to maintain availability
of product within the Company's stores.
The Company, through its indirect, wholly-owned subsidiary, Payless ShoeSource
Distribution, Inc., operates a single 807,000 square foot distribution center,
including office space and a 12,000 square foot manufacturing facility, in
Topeka, Kansas (the "DC"). The DC is capable of replenishing in-store product
levels by style, color and size. The DC currently handles approximately 70
percent of the Company's distribution needs and operates seven days a week, 20
to 24 hours per day. Management believes this facility is one of the most
highly-automated and cost-efficient distribution facilities in the retail
footwear industry. The remaining 30 percent of the Company's distribution needs
are handled by a fully automated third party facility in Los Angeles,
California.
The Company believes its distribution center system has sufficient capacity to
support more than 5,000 stores. The Company regularly monitors the capacity of
the DC. Among other options, in anticipation of future needs, the Company is
considering opening regional distribution centers in international markets.
Stores generally receive new merchandise at least twice a week, in an effort to
maintain a constant flow of new and replenished merchandise.
INDUSTRY SEGMENTS
The retail footwear industry can be divided into high, moderate and value-priced
segments. The high-priced segment is comprised principally of department stores.
The moderate-priced segment, which includes specialty shoe chains, mass
merchandisers, and junior department stores, has no single dominant competitor.
The Company and national discount mass-merchandisers are predominant in the
value-priced segment.
10
Payless ShoeSource considers itself part of the value-priced segment of the
footwear industry. Parade operates in the moderate-priced segment. Based on
industry data, the United States footwear market is estimated to be
approximately $40 billion/year, and has grown in the low single digits over the
past several years. Industry data suggests that the quality offered in the
value-priced segment has improved significantly in recent years.
COMPETITION
The Company operates in a highly competitive retail market competing primarily
with national and regional discount mass-merchandisers, as well as with other
discount shoe stores and off-price outlet stores. Competition is based on
product selection, quality and availability, price, store location, customer
service and promotional activities. The Company believes that it has a
leadership position in the footwear market.
INTELLECTUAL PROPERTY
The Company, through its wholly-owned subsidiaries, owns certain copyrights,
trademarks, patents and domain names which it uses in its business and regards
as valuable assets. The trademarks include Payless(R), Payless ShoeSource(R),
Payless Kids(R), Parade(sm), Parade of Shoes(R), Bundles(sm), and Luster(sm).
The domain names include Payless.com(R), as well as many derivatives of Payless
ShoeSource. The Company owns all rights to the yellow and orange logo used in
its Payless ShoeSource signs and advertising. In the United States, the Company
owns over 180 pending applications and registrations for its trademarks and owns
several common-law marks under which it markets private label merchandise in its
Payless ShoeSource, Parade, Bundles, and Luster stores. The Company also owns
over 1,400 pending applications and registrations for its trademarks in foreign
countries. The Payless ShoeSource trademark/service mark is registered or
pending in over 55 foreign countries. All of the Company's registered trademarks
may be renewed indefinitely.
MARKETING
The Company's marketing efforts are multi-dimensional, including nationally
broadcast television advertising, newspaper and mail inserts in support of major
promotional periods. In addition to media support, the Company utilizes in-store
promotional materials, including posters, signs and point of sale items. Also,
the Company communicates through the promotional funds, media funds, merchants'
associations and similar efforts that are part of the leasing agreements from
its various landlords. Finally, the Company uses publicity efforts to gain
low-cost awareness of Payless and its core business.
In addition to its marketing staff, the Company uses professional firms to
assist in advertising, creative services, media purchase, publicity, business
and market planning and consumer research.
ENVIRONMENT
Compliance with federal, state and local statutes, rules, ordinance, laws and
other provisions which have been enacted or adopted regulating the discharge of
materials into the environment, or otherwise relating to the protection of the
environment, has not had, and is not expected to have, a material effect on
capital expenditures, earnings or the competitive position of the Company.
11
FOREIGN OPERATIONS
In late 1997, the Company, through its indirect wholly-owned Canadian
subsidiary, Payless ShoeSource Canada Inc., opened its first store in Canada. As
of year end, the Company operated 263 Canadian stores. In February of 1999, the
Company opened its first store in French-speaking Quebec Province. In 2000, the
Company opened its first stores in Costa Rica and in 2001 opened stores in the
Dominican Republic, El Salvador, Guatemala and Trinidad & Tobago. In the first
quarter of 2002, the Company opened stores in Nicaragua, Honduras, Ecuador and
Panama.
In order to facilitate the Company's international expansion, the Company opened
an international office in its former Dallas regional office location. The
international office will provide support to the Company's international
operations. The Dallas international office allows the Company to better focus
on its international growth and provides faster travel times to the Company's
international markets.
DIRECTORS OF THE COMPANY
Listed below are the names and present principal occupations or, if retired,
most recent occupations of the Company's Directors:
NAME PRINCIPAL OCCUPATION
---- --------------------
STEVEN J. DOUGLASS CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
OFFICER OF THE COMPANY
DANIEL BOGGAN JR. SENIOR VICE PRESIDENT OF THE NATIONAL COLLEGIATE
ATHLETIC ASSOCIATION
DUANE L. CANTRELL PRESIDENT OF THE COMPANY
HOWARD R. FRICKE CHAIRMAN OF THE BOARD OF THE SECURITY BENEFIT
GROUP OF COMPANIES
MYLLE B. MANGUM CHIEF EXECUTIVE OFFICER OF MMS INCENTIVES, INC.
MICHAEL E. MURPHY RETIRED, FORMERLY VICE CHAIRMAN AND CHIEF
ADMINISTRATIVE OFFICER OF SARA LEE CORPORATION
ROBERT L. STARK RETIRED, FORMERLY EXECUTIVE VICE PRESIDENT
HALLMARK CARDS, INC.
ROBERT C. WHEELER CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF HILL'S
PET NUTRITION, INC.
IRWIN ZAZULIA RETIRED, FORMERLY PRESIDENT AND CHIEF EXECUTIVE
OFFICER OF HECHT'S
EXECUTIVE OFFICERS OF THE COMPANY
Listed below are the names and ages of the executive officers of the Company as
of April 10, 2002 and offices held by them with the Company.
NAME AGE POSITION AND TITLE
---- --- ------------------
STEVEN J. DOUGLASS 52 CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
DUANE L. CANTRELL 46 PRESIDENT
JOHN N. HAUGH 39 SENIOR VICE PRESIDENT
JAY A. LENTZ 58 SENIOR VICE PRESIDENT
ULLRICH E. PORZIG 56 SENIOR VICE PRESIDENT -- CHIEF FINANCIAL
OFFICER AND TREASURER
WILLIAM J. RAINEY 55 SENIOR VICE PRESIDENT -- GENERAL COUNSEL AND SECRETARY
LARRY M. STRECKER 43 SENIOR VICE PRESIDENT
12
STEVEN J. DOUGLASS is 52 years old and has served as Chairman of the Board and
Chief Executive Officer of Payless since May 4, 1996, the date on which the
Payless Common Stock was distributed in a spin-off by The May Department Stores
Company ("May") to its shareowners (the "Spin-off"). Mr. Douglass served as
Chairman and Chief Executive Officer of Payless from April 1995 to the Spin-off.
He joined Payless in 1993 and served as Senior Vice President/Director of Retail
Operations from 1993 to January 1995 and as Executive Vice President/Director of
Retail Operations from January 1995 to April 1995. Prior to his association with
Payless, Mr. Douglass held several positions at divisions of May, serving as
Chairman of May Company, Ohio from 1990 to 1993 and Senior Vice President and
Chief Financial Officer of J.W. Robinsons from 1986 to 1990. Mr. Douglass is a
director of The Security Benefit Group of Companies. Mr. Douglass has served as
a Director of Payless since April 30, 1996.
DUANE L. CANTRELL is 46 years old and has served as President since February
2002. He joined Payless in 1978 and served as Executive Vice President -
Operations from 1998 to 2002, Executive Vice President - Retail Operations from
April 1997 to April 1998, and Senior Vice President - Retail Operations from May
1995 to April 1997. From 1992 to 1995, he served as Senior Vice President -
Merchandise Distribution and Planning and from 1990 to 1992, he served as Senior
Vice President - Merchandise Distribution. Mr. Cantrell has served as a Director
of Payless since February 3, 2002.
JOHN N. HAUGH is 39 years old and has served as Senior Vice President -
Marketing since January 2000. He served as Executive Vice President Marketing
and Sales for Universal Studios from 1998 to 1999 and prior to that he worked
for Carlson Companies, Inc. From 1993 to 1998 where he held positions of
increasing responsibility including, Vice President of Marketing and Retail
Operations from 1997 to 1998 and General Manager/Vice President Awards Division
from 1995 to 1997.
JAY A. LENTZ is 58 years old and has served as Senior Vice President - Human
Resources since May 2001. Prior to that he was Vice President of Organization
Development from 1992 to 2001 and 1985 to 1990.
ULLRICH E. PORZIG is 56 years old and has served as Senior Vice President -
Chief Financial Officer and Treasurer since February 1996 and from 1986 to 1988.
Between 1993 and 1996, Mr. Porzig was Senior Vice President - Chief Financial
Officer and Treasurer of Petro Stopping Centers L.P. From 1982 to 1993 he was
employed by May in various capacities including Senior Vice President - Finance
and Chief Financial Officer of Foley's from 1988 to 1993.
WILLIAM J. RAINEY is 55 years old and has served as Senior Vice President
General Counsel and Secretary since April 1996. Prior to joining the Company,
Mr. Rainey served as Executive Vice President, General Counsel and Secretary of
Fourth Financial Corporation from 1994 to 1996 and Vice President and General
Counsel of Cabot Corporation from 1991 to 1993.
LARRY M. STRECKER is 43 years old and has served as Senior Vice President -
International and Supply Chain since November 2001. Prior to that he was Senior
Vice President - Retail Operations from March 1999 to November 2001; Senior Vice
President - Managing Director of PSS International from 1996 to 1999 and Vice
President of Worldwide Sourcing from 1993 to 1996. Before joining the Company,
Mr. Strecker was employed by Frito-Lay, Inc. from 1991 to 1993 as Director of
Service and Distribution.
13
ITEM 2. PROPERTIES
The Company leases substantially all of its stores. The leases typically have a
primary term of 5 or 10 years, with up to two five-year renewal options. During
2002, approximately 746 of the Company's leases are due to expire. This includes
168 leases which, as of February 2, 2002, were month-to-month tenancies or were
lease modifications out for signature. Leases usually require payment of base
rent, applicable real estate taxes, common area expenses and, in some cases,
percentage rent based on the store's sales volume. Payless ShoeSource stores in
the United States and Canada average approximately 3,300 square feet and Parade
stores average approximately 2,300 square feet. The Company owns and operates,
directly or through its wholly-owned subsidiaries, a 305,000 square foot central
office building, an 807,000 square foot distribution facility including office
space and an adjacent 12,000 square foot manufacturing facility for Dyelights,
all of which are located in Topeka, Kansas.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings other than ordinary routine
litigation incidental to the business to which registrant or any of its
subsidiaries is a party or of which any of their property is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the 13
weeks ended February 2, 2002.
PART II
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED SHAREOWNER MATTERS
There were approximately 16,000 registered holders of the Company's Common Stock
as of February 2, 2002 compared to approximately 16,700 registered holders as of
February 3, 2001. The information set forth under the headings "Management's
Discussion and Analysis -- Review of Financial Condition - Common Stock and
Market Prices" in the Company's 2001 Annual Report is incorporated herein by
reference.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth under the heading "Summary of Selected Historical
Financial Information" of the Company's 2001 Annual Report is incorporated
herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information set forth under the heading "Management's Discussion and
Analysis" of the Company's 2001 Annual Report is incorporated herein by
reference.
14
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information set forth under the heading "Management's Discussion and
Analysis -- Review of Financial Condition - Market Risk" of the Company's 2001
Annual Report is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Statement of Earnings for the fiscal years 1999, 2000 and 2001,
the Consolidated Balance Sheet as of February 3, 2001 and February 2, 2002, the
Consolidated Statement of Shareowners' Equity, the Consolidated Statement of
Cash Flows for fiscal years 1999, 2000, and 2001, the Notes to Consolidated
Financial Statements and the Report of Independent Public Accountants contained
in the Company's 2001 Annual Report to Shareowners are incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
a) Directors -- The information set forth in the Company's definitive proxy
statement to be filed in connection with its Annual Meeting to be held on May
24, 2002, under the captions "Election of Directors -- Directors and Nominees
for Directors" and "Additional Information -- Section 16(a) Beneficial Ownership
Reporting Compliance" is incorporated herein by reference.
b) Executive Officers -- Information regarding the Executive Officers of the
Company is as set forth in Item 1 of this report under the caption "Executive
Officers of the Company." The information set forth in the Company's definitive
proxy statement to be filed in connection with its Annual Meeting to be held on
May 24, 2002, under the caption "Additional Information -- Section 16(a)
Beneficial Ownership Reporting Compliance" is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth in the Company's definitive proxy statement to be
filed in connection with its Annual Meeting to be held on May 24, 2002, under
the captions "Election of Directors -- The Board and Committees of the Board -
Compensation of Directors," "Compensation and Nominating Committee Report --
EICP" and "-- Retail EICP" and "Executive Compensation" is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth in the Company's definitive proxy statement to be
filed in connection with its Annual Meeting to be held on May 24, 2002, under
the caption "Beneficial Stock Ownership of Directors, Nominees, Executive
Officers and Persons Owning More Than Five Percent of Common Stock" is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
15
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report:
(1) Financial Statements. The following financial statements are
incorporated herein by reference to the Company's 2001 Annual Report to
Shareowners:
PAGE IN
ANNUAL REPORT
Financial Statements:
Consolidated Statement of Earnings for
the three fiscal years ended
February 2, 2002 16
Consolidated Balance Sheet --
February 2, 2002 and February 3, 2001 17
Consolidated Statement of Shareowners'
Equity for the three fiscal years
ended February 2, 2002 18
Consolidated Statement of Cash Flows
for the three fiscal years ended
February 2, 2002 19
Notes to Consolidated Financial
Statements 20-25
Report of Independent Public
Accountants 26
16
(2) EXHIBITS.
NUMBER DESCRIPTION
------ -----------
3.1 Amended and Restated Certificate of Incorporation of the
Company.(1)
3.2 Amended and Restated Bylaws of the Company.(2)
4 Stockholder Protection Rights Agreement, dated as of April 20,
1998, between the Company and UMB Bank, N.A.(1)
10.1 Amended and Restated Tax Sharing Agreement, dated April 2, 1996,
between The May Department Stores Company and Payless ShoeSource,
Inc.(3)
10.2 Sublease, dated as of April 2, 1996, between The May Department
Stores Company and Payless ShoeSource, Inc.(4)
10.3 Credit and Guaranty Agreement dated as of April 17, 2000 among
Payless ShoeSource Finance, Inc., as Borrower, Payless ShoeSource,
Inc. and Certain of its Subsidiaries, as Guarantors, various
Lenders, Goldman Sachs Credit Partners L.P., as Sole Lead Arranger
and Sole Syndication Agent, Bank One, NA, as Administrative Agent,
and First Union National Bank, as Documentation Agent. (7)
10.4 Administrative Services Agreement, dated as of April 2, 1996,
between The May Department Stores Company and Payless ShoeSource,
Inc.(4)
10.5 Payless ShoeSource, Inc. 1996 Stock Incentive Plan, as amended
March 16, 2000. (7)
10.6 Spin-Off Stock Plan, Payless ShoeSource, Inc.(4)
10.7 Spin-Off Cash Plan, Payless ShoeSource, Inc.(4)
10.8 Restricted Stock Plan for Non-Management Directors, as amended
April 20, 1998, effective immediately prior to the effective time
of the Merger (as defined therein).(1)
10.9 Form of Employment Agreement between the Company and certain
executives of the Company. The Company has entered into Employment
Agreements in the form contained in this exhibit with each of the
named executive officers, other than Steven J. Douglass which
expire at various dates on or before May 31, 2003, which contain
agreements not to compete of 1-2 years beyond the expiration date
of the respective Employment Agreements, and provide for annual
base salaries at rates not less than the amounts presently paid to
them. (7)
10.10 Payless ShoeSource, Inc. Supplementary Retirement Plan, as amended
November 16, 2000.(8)
10.11 Payless ShoeSource, Inc, 401(k) Profit Sharing Plan, as amended
and restated effective March 20, 2000.(8)
10.12 Payless ShoeSource, Inc. Deferred Compensation Plan, as amended
July 20, 2000.(8)
17
10.13 Executive Incentive Compensation Plan of the Company, as amended
November 16, 2000.(8)
10.14 Form of Change of Control Agreement. The Company has entered into
Change of Control Agreements with the named executive officers in
the form contained in this exhibit. (7)
10.15 Form of Directors' and Officers' Indemnity Agreement of the
Company. (7)
10.16 Payless ShoeSource, Inc. Deferred Compensation Plan for
Non-Management Directors, as amended March 16, 2000. (7)
10.17 Executive Incentive Compensation Plan for Business Unit Management
of the Company, as amended April 20, 1998, effective immediately
prior to the effective time of the Merger. (1)
10.18 The Stock Appreciation and Phantom Stock Unit Plan of Payless
ShoeSource, Inc. and its Subsidiaries for Payless ShoeSource
International Employees, as amended March 16, 2000. (7)
10.19 Payless ShoeSource, Inc. Profit Sharing Plan for Puerto Rico
Associates, as amended and restated effective March 20, 2000.(8)
10.20 Payless ShoeSource, Inc. Stock Ownership Plan, as amended
effective June 1, 1998.(1)
10.21 Assumption Agreement, dated as of May 22, 1998, between Payless
ShoeSource, Inc., a Missouri corporation and Payless ShoeSource
Holdings, Inc., a Delaware corporation (1)
10.22 Executive Incentive Compensation Plan for Annual Awards for
Merchandising and Retail Operators Functions, effective May 28,
1999.(6)
10.23 Employment Agreement between the Company and Steven J. Douglass
entered into as of November 16, 2000.(8)
10.24 Payless ShoeSource, Inc. Deferred Compensation 401(k) Mirror Plan
effective October 1, 2000.(8)
10.25 First Amendment to the Credit and Guaranty Agreement dated as of
April 17, 2000 among Payless ShoeSource Finance, Inc., as
Borrower, Payless ShoeSource, Inc. and Certain of its
Subsidiaries, as Guarantors, various Lenders, Goldman Sachs Credit
Partners L.P., as Sole Lead Arranger and Sole Syndication Agent,
Bank One, NA, as Administrative Agent, and First Union National
Bank, as Documentation Agent dated as of January 24, 2002.(9)
10.26 Separation Agreement and General Release between Ken C. Hicks and
the Company*
10.27 Payless ShoeSource, Inc. Incentive Compensation Plan*
11.1 Computation of Net Earnings Per Share.*
12.1 Computation of Ratio of Earnings to Fixed Charges.*
18
13.1 2001 Annual Report to Shareowners of Payless ShoeSource, Inc.
(only those portions specifically incorporated by reference shall
be deemed filed with the Commission).*
21.1 Subsidiaries of the Company*
23.1 Consent of Arthur Andersen, LLP.*
99.1 Letter to the Commission pursuant to Temporary Note 3T*
* Filed herewith
(1) Incorporated by reference from the Company's Form 8-K (File Number
1-14770) dated June 1, 1998.
(2) Incorporated by reference from the Company's Form 10-K (File
Number 1-14770) for the fiscal year ended January 30, 1999.
(3) Incorporated by reference from Exhibit 10.1 of the Company's Form
10-Q (File Number 1-11633) for the quarter ended May 4, 1996.
(4) Incorporated by reference from the Company's Registration
Statement on Form 10 (File Number 1-11633) dated February 23, 1996
as amended through April 15, 1996.
(5) Incorporated by reference from the Company's Form 10-Q (File
Number 1-14770) for the quarter ended October 30, 1999.
(6) Incorporated by reference from the Company's Form 10-Q (File
Number 1-14770) for the quarter ended July 31, 1999.
(7) Incorporated by reference from the Company's Form 10-K (File
Number 1-14770 for the year ended January 29, 2000.
(8) Incorporated by reference from the Company's Form 10-K (File
Number 1-14770 for the year ended February 3, 2001.
(9) Incorporated by reference from the Company's Form 8-K (File Number
1-14770) dated January 24, 2002.
THE COMPANY WILL FURNISH TO SHAREOWNERS UPON REQUEST, AND WITHOUT CHARGE, A COPY
OF THE 2001 ANNUAL REPORT AND THE 2002 PROXY STATEMENT, PORTIONS OF WHICH ARE
INCORPORATED BY REFERENCE IN THE FORM 10-K. THE COMPANY WILL FURNISH ANY OTHER
EXHIBIT AT COST.
(b) Reports on Form 8-K:
The Company filed one report on Form 8-K during the last quarter dated January
24, 2002 reporting matters under Item 5, Other Events.
All other schedules and exhibits of the Company for which provision is made in
the applicable regulations of the Securities and Exchange Commission have been
omitted, as they are not required or are inapplicable or the information
required thereby has been given otherwise.
19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
PAYLESS SHOESOURCE, INC.
Date: April 16, 2002 By: /s/ Ullrich E. Porzig
------------------------
Ullrich E. Porzig
Senior Vice President, Chief
Financial Officer and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
By: /s/ Steven J. Douglass Date: April 16, 2002
- ---------------------------
Steven J. Douglass
Chairman, Chief Executive Officer
and Director
(Principal Executive Officer)
By: /s/ Ullrich E. Porzig Date: April 16, 2002
- --------------------------
Ullrich E. Porzig
Senior Vice President,
Chief Financial Officer and Treasurer
(Principal Financial and
Accounting Officer)
By: /s/ Duane L. Cantrell Date: April 16, 2002
- -------------------------
Duane L. Cantrell
President and Director
By: /s/ Daniel Boggan Jr. Date: April 16, 2002
- --------------------------
Daniel Boggan Jr.
Director
By: /s/ Howard R. Fricke Date: April 16, 2002
- -------------------------
Howard R. Fricke
Director
By: /s/ Robert C. Wheeler Date: April 16, 2002
- -----------------------
Robert C. Wheeler
Director
By: /s/ Mylle B. Mangum Date: April 16, 2002
- ------------------------
Mylle B. Mangum
Director
20
By: /s/ Michael E. Murphy Date: April 16, 2002
- --------------------------
Michael E. Murphy
Director
By: /s/ Robert L. Stark Date: April 16, 2002
- ------------------------
Robert L. Stark
Director
By: /s/ Irwin Zazulia Date: April 16, 2002
- ------------------------
Irwin Zazulia
Director
21
EXHIBIT INDEX
EXHIBITS.
NUMBER DESCRIPTION
-------- -----------
3.1 Amended and Restated Certificate of Incorporation of the
Company.(1)
3.2 Amended and Restated Bylaws of the Company.(2)
4 Stockholder Protection Rights Agreement, dated as of April 20,
1998, between the Company and UMB Bank, N.A.(1)
10.1 Amended and Restated Tax Sharing Agreement, dated April 2, 1996,
between The May Department Stores Company and Payless ShoeSource,
Inc.(3)
10.2 Sublease, dated as of April 2, 1996, between The May Department
Stores Company and Payless ShoeSource, Inc.(4)
10.3 Credit and Guaranty Agreement dated as of April 17, 2000 among
Payless ShoeSource Finance, Inc., as Borrower, Payless ShoeSource,
Inc. and Certain of its Subsidiaries, as Guarantors, various
Lenders, Goldman Sachs Credit Partners L.P., as Sole Lead Arranger
and Sole Syndication Agent, Bank One, NA, as Administrative Agent,
and First Union National Bank, as Documentation Agent. (7)
10.4 Administrative Services Agreement, dated as of April 2, 1996,
between The May Department Stores Company and Payless ShoeSource,
Inc.(4)
10.5 Payless ShoeSource, Inc. 1996 Stock Incentive Plan, as amended
March 16, 2000. (7)
10.6 Spin-Off Stock Plan, Payless ShoeSource, Inc.(4)
10.7 Spin-Off Cash Plan, Payless ShoeSource, Inc.(4)
10.8 Restricted Stock Plan for Non-Management Directors, as amended
April 20, 1998, effective immediately prior to the effective time
of the Merger (as defined therein).(1)
10.9 Form of Employment Agreement between the Company and certain
executives of the Company. The Company has entered into Employment
Agreements in the form contained in this exhibit with each of the
named executive officers, other than Steven J. Douglass which
expire at various dates on or before May 31, 2003, which contain
agreements not to compete of 1-2 years beyond the expiration date
of the respective Employment Agreements, and provide for annual
base salaries at rates not less than the amounts presently paid to
them. (7)
10.10 Payless ShoeSource, Inc. Supplementary Retirement Plan, as amended
November 16, 2000.(8)
10.11 Payless ShoeSource, Inc, 401(k) Profit Sharing Plan, as amended
and restated effective March 20, 2000.(8)
10.12 Payless ShoeSource, Inc. Deferred Compensation Plan, as amended
July 20, 2000.(8)
10.13 Executive Incentive Compensation Plan of the Company, as amended
November 16, 2000.(8)
10.14 Form of Change of Control Agreement. The Company has entered into
Change of Control Agreements with the named executive officers in
the form contained in this exhibit. (7)
10.15 Form of Directors' and Officers' Indemnity Agreement of the
Company. (7)
10.16 Payless ShoeSource, Inc. Deferred Compensation Plan for
Non-Management Directors, as amended March 16, 2000. (7)
10.17 Executive Incentive Compensation Plan for Business Unit Management
of the Company, as amended April 20, 1998, effective immediately
prior to the effective time of the Merger. (1)
10.18 The Stock Appreciation and Phantom Stock Unit Plan of Payless
ShoeSource, Inc. and its Subsidiaries for Payless ShoeSource
International Employees, as amended March 16, 2000. (7)
10.19 Payless ShoeSource, Inc. Profit Sharing Plan for Puerto Rico
Associates, as amended and restated effective March 20, 2000.(8)
10.20 Payless ShoeSource, Inc. Stock Ownership Plan, as amended
effective June 1, 1998.(1)
10.21 Assumption Agreement, dated as of May 22, 1998, between Payless
ShoeSource, Inc., a Missouri corporation and Payless ShoeSource
Holdings, Inc., a Delaware corporation (1)
10.22 Executive Incentive Compensation Plan for Annual Awards for
Merchandising and Retail Operators Functions, effective May 28,
1999.(6)
10.23 Employment Agreement between the Company and Steven J. Douglass
entered into as of November 16, 2000.(8)
10.24 Payless ShoeSource, Inc. Deferred Compensation 401(k) Mirror Plan
effective October 1, 2000.(8)
10.25 First Amendment to the Credit and Guaranty Agreement dated as of
April 17, 2000 among Payless ShoeSource Finance, Inc., as
Borrower, Payless ShoeSource, Inc. and Certain of its
Subsidiaries, as Guarantors, various Lenders, Goldman Sachs Credit
Partners L.P., as Sole Lead Arranger and Sole Syndication Agent,
Bank One, NA, as Administrative Agent, and First Union National
Bank, as Documentation Agent dated as of January 24, 2002.(9)
10.26 Separation Agreement and General Release between Ken C. Hicks and
the Company*
10.27 Payless ShoeSource, Inc. Incentive Compensation Plan*
11.1 Computation of Net Earnings Per Share.*
12.1 Computation of Ratio of Earnings to Fixed Charges.*
13.1 2001 Annual Report to Shareowners of Payless ShoeSource, Inc.
(only those portions specifically incorporated by reference shall
be deemed filed with the Commission).*
21.1 Subsidiaries of the Company*
23.1 Consent of Arthur Andersen, LLP.*
99.1 Letter to the Commission pursuant to Temporary Note 3T*
* Filed herewith
(4) Incorporated by reference from the Company's Form 8-K (File Number
1-14770) dated June 1, 1998.
(5) Incorporated by reference from the Company's Form 10-K (File
Number 1-14770) for the fiscal year ended January 30, 1999.
(6) Incorporated by reference from Exhibit 10.1 of the Company's Form
10-Q (File Number 1-11633) for the quarter ended May 4, 1996.
(4) Incorporated by reference from the Company's Registration
Statement on Form 10 (File Number 1-11633) dated February 23, 1996
as amended through April 15, 1996.
(5) Incorporated by reference from the Company's Form 10-Q (File
Number 1-14770) for the quarter ended October 30, 1999.
(6) Incorporated by reference from the Company's Form 10-Q (File
Number 1-14770) for the quarter ended July 31, 1999.
(7) Incorporated by reference from the Company's Form 10-K (File
Number 1-14770 for the year ended January 29, 2000.
(8) Incorporated by reference from the Company's Form 10-K (File
Number 1-14770 for the year ended February 3, 2001.
(9) Incorporated by reference from the Company's Form 8-K (File Number
1-14770) dated January 24, 2002.