Footstar, Inc. has updated its expectations for the total impact of its financial restatement for fiscal years 1997 through the first half of fiscal year 2002, reported on discussions it is having with its bank syndicate.

The Company is continuing to evaluate opportunities to reduce overhead costs and rationalize corporate assets in order to make the best use of its resources and align its cost structure with business demand. Mr. Hilpert and Mr. Wilson will work with R. Shawn Neville, President and CEO of Footstar Athletic, and Jeffrey A. Shepard, President and CEO of the Company's Meldisco business, on these
efforts.

The Company also announced that it is working with its financial advisor, Credit Suisse First Boston, to explore strategic alternatives for its businesses. These alternatives include the potential sale of its Athletic segment.

Based on continued work on the restatement of its financial
results for fiscal years 1997 through the first half of 2002, the Company now expects that the restatement will reduce its earnings in the aggregate over the five-and-one-half year period by no more than $51 million, which is below the low-end of the range of the expected aggregate impact of the restatement that the Company had provided in
its press release on October 31, 2003. After minority interest and taxes, the Company continues to expect the aggregate impact of the restatement to be in the range of $31 million to $38 million, as previously announced in the October 31, 2003 press release. The restatement is not expected to affect the over $10 billion in revenues
or the net cash flows generated during the five-and-one-half year period.

The Company also said it is in discussions with its syndicate of banks, led by Fleet National Bank, about obtaining an extension beyond January 30, 2004 of the date the Company is required to provide audited financial statements, as well as about additional availability.

While select domestic vendors have modified credit
terms, resulting in less than optimal receipts, all major vendors are continuing to ship new product.