According to the docket posted, on September 15, 2005, the Court entered the Order and Final Judgment settling the action with the last remaining defendant, KPMG LLP. By the Notice of Pendency of Class Action and Proposed Settlement with KPMG LLP, dated June 28, 2005, the settlement is in the amount of $5 million in cash.

As reported by the Footstar, Inc.'s FORM 10-K for the fiscal year ended January 1, 2005, the Company and certain of its directors and officers were defendants in several purported shareholder class action lawsuits for alleged violations of securities laws. These actions sought unspecified monetary damages and costs and expenses associated with the litigation. These initial complaints alleged that beginning mid-May 2000, the Company and its officers named above misrepresented the Company’s financial performance. The cases were consolidated into a single action in the United States District Court for the Southern District of New York, captioned, Stephen Rush v. Footstar, Inc., et al., 02 Civ. 9130 (SRC) (Consolidated). Footstar and the named plaintiffs mutually agreed to resolve the claims made in the several purported class action lawsuits, without any admission of liability, for the amount of $14.3 million, all of which was funded with insurance proceeds. On June 14, 2005, the court approved the settlement and dismissed the action with prejudice.

On March 2, 2004, Footstar and related entities filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code.

The original Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between February 8, 2002 and November 12, 2002, thereby artificially inflating the price of Footstar securities. Throughout the Class Period, as alleged in the complaint, defendants issued numerous statements and filed quarterly reports and an annual report with the SEC which described the Company's increasing revenues and financial performance. As alleged in the complaint, these statements were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts, among others: (i) that, since at least 2001, the Company had cumulatively understated its accounts payable by approximately $35 million; (ii) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (iii) that as a result, the value of the Company's balance sheet and financial results were materially overstated at all relevant times. On November 13, 2002, Footstar shocked the market by announcing that it had 'discovered discrepancies in the reporting of its account payable balances,' following management's review of the account reconciliation processes of its accounts payable balances. Specifically, defendants had cumulatively understated the Company's accounts payable balances in its athletic segment by approximately $35 million. As a result, the Company announced that it will likely be restating its financial statements for the first nine months of 2002 and prior periods, with a significant portion of the discrepancies affecting fiscal year 2001 and earlier. Following this announcement, shares of Footstar fell $1.25, or almost 20%, to close at $5.05, after hitting an intraday low of $3.30, on volume of 2,137,700 shares traded, or almost six times Footstar's average daily trading volume.