<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q



                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For The Quarterly Period Ended April 29, 2000


                         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 SOUTHEAST SIXTH AVENUE, TOPEKA, KANSAS                   66607-2207
(Address of principal executive offices)                       (Zip Code)


                                 (785) 233-5171
                         (Registrant's telephone number,
                              including area code)


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 and (2) has been subject to such filing
requirements for the past 90 days.

                                                             YES   X     NO
                                                                  ---       ----

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                          Common Stock, $.01 par value
                      22,267,674 shares as of May 26, 2000





<PAGE>   2





                         PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                    PAYLESS SHOESOURCE, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                   (UNAUDITED)

(Dollars in millions)

<TABLE>
<CAPTION>
                                                    April 29,         May 1,       Jan. 29,
ASSETS                                                2000             1999          2000
------                                            ------------    ------------   ------------
<S>                                               <C>             <C>             <C>
Current Assets:
     Cash and cash equivalents                    $       32.9    $       91.6    $     164.2
     Merchandise inventories                             406.4           403.9          349.7
     Current deferred income taxes                         8.9            13.5           12.1
     Other current assets                                 46.6            40.1           40.9
                                                  ------------    ------------    -----------
        Total current assets                             494.8           549.1          566.9

Property and Equipment:
     Land                                                  6.8             7.0            7.5
     Buildings and leasehold
       improvements                                      715.4           665.6          713.9
     Furniture, fixtures and
       equipment                                         310.5           301.2          309.1
     Property under capital leases                         7.3             7.6            7.3
                                                  ------------    ------------    -----------
        Total property and equipment                   1,040.0           981.4        1,037.8
     Accumulated depreciation
        and amortization                                (570.0)         (491.8)        (554.9)
                                                  ------------    ------------    -----------
        Property and equipment                           470.0           489.6          482.9

Deferred income taxes                                     25.2            29.3           21.3
Other assets                                              10.5             4.2            4.4
                                                  ------------    ------------    -----------

        Total Assets                              $    1,000.5    $    1,072.2    $   1,075.5
                                                  ============    ============    ===========

LIABILITIES AND SHAREOWNERS' EQUITY

Current Liabilities:
     Current maturities of
        long-term debt                            $       20.7    $        0.7    $       0.7
     Accounts payable                                     94.8           107.1           81.2
     Accrued expenses                                    120.5           136.1          115.9
                                                  ------------    ------------    -----------
        Total current liabilities                        236.0           243.9          197.8

Long-term debt                                           383.9            71.9          126.1

Other liabilities                                         51.0            49.8           47.8

Total shareowners' equity                                329.6           706.6          703.8

        Total Liabilities and
            Shareowners' Equity                   $    1,000.5    $    1,072.2    $   1,075.5
                                                  ============    ============    ===========
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.


                                       2



<PAGE>   3


                    PAYLESS SHOESOURCE, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
                                   (UNAUDITED)

(Dollars in millions, except per share)

<TABLE>
<CAPTION>
                                                                13 Weeks Ended
                                                         ---------------------------
                                                          April 29,         May 1,
                                                             2000            1999
                                                         -----------      ----------
<S>                                                      <C>              <C>
Net retail sales                                         $     708.5      $    689.2

Cost of sales                                                  481.6           468.6

Selling, general and
    administrative expenses                                    169.7           161.5

Non-recurring item                                               8.0             --

Interest expense, net                                            1.7             0.4
                                                         -----------      ----------

Earnings before income taxes
    and extraordinary loss                                      47.5            58.7

Provision for income taxes                                      18.5            23.4
                                                         -----------      ----------

Net Earnings before                                      $      29.0      $     35.3
    extraordinary loss

Extraordinary loss related to early
 extinguishment of debt, net                                     3.6             --
 of income tax

Net Earnings                                             $      25.4      $     35.3
                                                         ===========      ==========

Diluted Earnings per Share:
 Net earnings before extraordinary loss                         1.02            1.09
 Extraordinary Loss                                             0.13             --
                                                         -----------      ---------
Diluted Earnings per Share                               $      0.89      $     1.09
                                                         ===========      ==========

Basic Earnings per Share:
 Net earnings before extraordinary loss                         1.03            1.09
 Extraordinary Loss                                             0.13             --
                                                         -----------      ---------
Basic Earnings per Share                                 $      0.90      $     1.09
                                                         ===========      ==========

Diluted Weighted Average
Shares Outstanding                                              28.6            32.4
                                                         ===========      ==========

Basic Weighted Average
Shares Outstanding                                              28.4            32.3
                                                         ===========      ==========
</TABLE>


            See Notes to Condensed Consolidated Financial Statements.


                                        3

<PAGE>   4

                    PAYLESS SHOESOURCE, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
(Dollars in millions)                                                  13 Weeks Ended
                                                                ----------------------------
                                                                 April 29,         May 1,
                                                                    2000            1999
                                                                -----------     ------------
<S>                                                             <C>             <C>
Operating Activities:
   Net earnings                                                 $      25.4     $       35.3
   Adjustments for noncash items
   included in net earnings:
       Extraordinary loss related to early
         Extinguishment of debt                                         3.6              --
       Depreciation and amortization                                   24.8             24.0
       Amortization of unearned
         restricted stock                                               1.0              0.5
       Deferred income taxes                                           (0.7)           (2.8)
Changes in working capital:
   Merchandise inventories                                            (56.7)           (61.8)
   Other current assets                                                (3.0)            (5.3)
   Accounts payable                                                    13.6             11.7
   Accrued expenses                                                     6.8             19.3
Other assets and liabilities, net                                       0.1              1.6
                                                                -----------     ------------

Total Operating Activities                                             14.9             22.5
                                                                -----------     ------------

Investing Activities:
   Capital expenditures                                               (13.5)           (21.0)
   Disposition of property and equipment                                1.7              0.1
                                                                -----------     ------------


Total Investing Activities                                            (11.8)           (20.9)
                                                                -----------     ------------

Financing Activities:
   Issuance of long-term debt                                         400.0              --
   Repayment of long-term debt                                       (126.8)            (0.9)
   Payment of debt issuance costs                                      (8.9)             --
   Net purchases of common stock                                     (398.7)           (32.6)
                                                                -----------     ------------

Total Financing Activities                                           (134.4)           (33.5)
                                                                -----------     ------------

Increase (Decrease) in Cash and Cash Equivalents                     (131.3)           (31.9)
Cash and Cash Equivalents, Beginning of Year                          164.2            123.5
                                                                -----------     ------------
Cash and Cash Equivalents,
  End of Period                                                 $      32.9     $       91.6
                                                                ===========     ============

Cash paid during the period:
   Interest                                                     $       3.3     $        0.3
   Income Taxes                                                         4.2              0.6
</TABLE>


            See Notes to Condensed Consolidated Financial Statements.

                                        4
<PAGE>   5


                    PAYLESS SHOESOURCE, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

Payless ShoeSource, Inc., a Missouri corporation ("Payless") and its
subsidiaries were reorganized into a Delaware holding company structure
effective June 1, 1998 through a merger (the "Merger") with Payless Merger
Corp., a Missouri corporation, which was an indirect wholly-owned subsidiary of
Payless and a wholly-owned subsidiary of Payless ShoeSource, Inc., a Delaware
corporation (the "Company"). The Company formerly was a wholly-owned subsidiary
of Payless immediately prior to the merger. Each of the Company and Payless
Merger Corp. were organized in connection with the Merger. Pursuant to the
Merger, Payless became a wholly-owned subsidiary of the Company and is the
principal operating subsidiary of the Company. The transaction was accounted for
as a reorganization of entities under common control (similar to a pooling of
interest). As a result, immediately following the effective time of the Merger
the Company and its subsidiaries had the same consolidated net worth as Payless
and its subsidiaries had immediately prior to the Merger.

For purposes of these Notes to Condensed Consolidated Financial Statements, the
"Registrant", or the "Company" refers to Payless ShoeSource, Inc., a Delaware
corporation, and its subsidiaries, unless the context otherwise requires.

NOTE 2. INTERIM RESULTS. These unaudited Condensed Consolidated Financial
Statements of the Company have been prepared in accordance with the instructions
to Form 10-Q of the United States Securities and Exchange Commission and should
be read in conjunction with the Notes to Consolidated Financial Statements
(pages 22-26) in the Company's 1999 Annual Report. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. In the opinion of management,
the unaudited Condensed Consolidated Financial Statements are fairly presented
and all adjustments (consisting only of normal recurring adjustments) necessary
for a fair statement of the results for the interim periods have been included;
however, certain items are included in these statements based upon estimates for
the entire year. The results for the three month period ended April 29, 2000,
are not necessarily indicative of the results that may be expected for the
fiscal year ending February 3, 2001.

NOTE 3. INVENTORIES.  Merchandise inventories are valued by the
retail method and are stated at the lower of cost, determined using
the first-in, first-out (FIFO) basis, or market.

NOTE 4. LONG-TERM DEBT. In April 2000, the Company repaid its $122 million of
unsecured notes and entered into a new $600 million senior secured credit
facility ("Credit Facility"). The excess of the amount paid over the carrying
value of the Company's unsecured

                                       5

<PAGE>   6

notes was recorded as an extraordinary loss related to early extinguishment of
debt, net of income tax.

The Credit Facility consists of a $400 million term loan and a $200 million
revolving loan, both of which mature in 2005, subject to prepayment without
penalty by the Company at any time. The Company had not drawn on its $200
million revolving loan as of April 29, 2000, however, the balance available to
the Company was reduced by $11.4 million outstanding under a letter of credit.
The term loan and revolving loan bear interest at the LIBOR rate, plus a
variable margin of 1.25% to 2.0%. The variable interest rate for April 2000 was
8.3%. A quarterly commitment fee of between 0.25% and 0.50% per annum is payable
on the unborrowed balance of the revolving loan. The margin on the term loan and
the commitment fee varies based upon performance criteria specified in the
credit agreement. Based on the outstanding indebtedness of $400 million at April
29, 2000, required principal payments are due as follows (in thousands):

<TABLE>
<CAPTION>
                                                 Year           Amount
                                                 ----          --------
                                          <S>                  <C>
                                                 2000           $15,000
                                                 2001            42,500
                                                 2002            72,500
                                                 2003           102,500
                                                 2004           132,500
                                           Thereafter            35,000
                                                               --------
                                                Total          $400,000
                                                               ========
</TABLE>

In order to mitigate the Company's exposure to fluctuations in interest rates,
the Company has entered into a series of interest rate swap agreements whereby
the company will receive interest at the three month LIBOR rate on a $400
million notional amount and pay a weighted average rate of 6.9%. Including the
effect of the interest rate swap agreements, the Company's effective interest
rate on the $400 million outstanding indebtedness was 8.9% during April 2000.

As the long-term debt under the Credit Facility bears interest at current market
rates, its carrying value approximates market value at April 29, 2000. The fair
value of the interest rate swap agreements approximates $1.8 million at April
29, 2000. The estimated fair value of the interest rate swap agreements
approximates the proceeds to settle the outstanding contracts. Dealer quotations
are available for the Company's interest rate swap agreements.

NOTE 5. COMMON STOCK REPURCHASE. In April 2000, the Company completed a
self-tender through which it repurchased 7,547,169 shares of its common stock at
$53 per share. The aggregate purchase price was approximately $400 million. In
conjunction with the share repurchase, the Company recorded an $8.0 million non-
recurring pre-tax charge consisting principally of the analysis and
consideration of various strategic alternatives and costs associated with the
self-tender.

                                       6

<PAGE>   7

NOTE 6. EARNINGS PER SHARE. Basic earnings per share is computed by dividing net
earnings by the weighted average number of shares of common stock outstanding
during the period. Diluted earnings per share include the effect of conversions
of stock options.

NOTE 7.  RECLASSIFICATIONS.  Certain reclassifications have been made to prior
year balances to conform with the current year presentation.

NOTE 8. FOREIGN CURRENCY TRANSLATION. Local currencies are the functional
currencies for all subsidiaries. Accordingly, assets and liabilities of foreign
subsidiaries are translated at the rate of exchange at the balance sheet date.
Income and expense items of these subsidiaries are translated at average rates
of exchange. The foreign currency translation was immaterial for the first
quarter of 2000 and 1999.

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

The following discussion summarizes the significant factors affecting operating
results for the quarters ended April 29, 2000 (2000) and May 1, 1999 (1999).
This discussion and analysis should be read in conjunction with the Condensed
Consolidated Financial Statements and Notes to the Condensed Consolidated
Financial Statements included in this Form 10-Q.

REVIEW OF OPERATIONS

NET EARNINGS

Net earnings totaled $25.4 million in the first quarter of 2000 compared with
$35.3 million in the first quarter of 1999. Excluding the non-recurring item and
extraordinary loss, net earnings for the first quarter of 2000 would have been
$33.9 million.

The following table presents the components of costs and expenses, as a percent
of revenues, for the first quarter of 2000 and 1999.

<TABLE>
<CAPTION>
                                  First Quarter
                                  -------------
                                   2000    1999
                                  -----   -----
<S>                               <C>     <C>
  Cost of sales                    68.0%   68.0%

  Selling, general and
    administrative expenses        24.0    23.4

  Non-recurring item                1.1     --

  Interest (income)/expense, net    0.2     0.1
                                  -----   -----

  Earnings before income taxes
    And extraordinary loss          6.7%    8.5%
                                  =====   =====

  Effective income tax rate        38.9%   39.9%
                                  -----   -----

  Net Earnings before
    extraordinary loss              4.1%    5.1%

  Extraordinary loss,
    net of income tax               0.5%    --
                                  -----   ----

  Net Earnings                      3.6%    5.1%
                                  =====   =====
</TABLE>


                                       7


<PAGE>   8

NET RETAIL SALES

Net retail sales represent the sales of stores operating during the period.
Same-store sales represent sales of stores open during comparable periods.
During the first quarter of 2000 total sales increased 2.8% over the first
quarter of 1999, consisting of a 5.2% increase in unit volume and a 2.3%
decrease in average selling prices. Sales percent increases (decreases) are as
follows:

<TABLE>
<CAPTION>
                                             First Quarter
                                           -----------------
                                           2000        1999
                                           ----        -----
        <S>                                <C>          <C>
        Net Retail Sales                   2.8%         1.2%
        Same-Store Sales                   0.8%        (2.2%)
</TABLE>

COST OF SALES

Cost of sales includes cost of merchandise sold, buying and occupancy costs.
Cost of sales was $481.6 million in the 2000 first quarter, up 2.8% from $468.6
million in the 1999 first quarter.

As a percent of net retail sales, cost of sales remained at 68.0 percent in the
first quarter of 2000, the same as 68.0 percent in the first quarter of 1999.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses were $169.7 million in the 2000
first quarter, up 5.1% from $161.5 million in the 1999 first quarter. As a
percent of net retail sales, selling, general and administrative expenses were
24.0 percent during the first quarter of 2000 compared with 23.4 percent in the
first quarter of 1999.

The increase during the first quarter 2000 was attributed to increases in stores
payroll due to higher hourly wage rates and higher advertising expenditures.

CASH FLOW

Cash flow from operations during the three months ended April 29, 2000, was
$14.9 million. This figure represented 2.1 percent of net retail sales in the
first quarter of 2000 compared with 3.3 percent in the first quarter of 1999.
The reduction in the first quarter of 2000 was primarily attributed to the cash
flow impact of the $8.0 million non-recurring charge. Internally generated funds
are expected to continue to be the most important component of the Company's
capital resources and are expected to fund capital expansion.

CAPITAL EXPENDITURES

Capital expenditures during the first quarter of 2000 totaled $13.5 million with
an additional $136.5 million estimated to be incurred in the remainder of fiscal
year 2000. The Company anticipates that cash flow from operations and the credit
facility will be sufficient to finance projected capital expenditures.

                                       8

<PAGE>   9

FINANCING ACTIVITIES

In April 2000, the Company completed a self-tender through which it repurchased
7,547,169 shares of its common stock at $53 per share. This represented
approximately 25.5 percent of the Company's 29.6 million shares outstanding on
April 10, 2000. The aggregate purchase price was approximately $400 million.

In conjunction with the self-tender, the Company entered into a new $600 million
senior secured credit facility. The credit facility consists of a $400 million
term loan and a $200 million revolving loan, both of which mature in 2005
subject to prepayment without penalty by the Company at any time. During the
quarter, the Company took a $13.9 million pre-tax, $8.5 million after-tax,
charge for non-recurring and extraordinary items principally for costs
associated with the analysis and consideration of various strategic
alternatives, refinancing costs and costs associated with the self-tender.

AVAILABLE CREDIT

While no amounts had been drawn against the Company's $200 million revolving
loan at April 29, 2000, the balance available to the Company was reduced by
$11.4 million outstanding under a letter of credit.


FINANCIAL CONDITION RATIOS

A summary of key financial information for the periods indicated is as follows:

<TABLE>
<CAPTION>
                                              April 29,             May 1,         Jan. 29,
                                                 2000                1999            2000
                                             -----------           --------       ----------
<S>                                             <C>                   <C>             <C>
Current Ratio                                    2.1                   2.3             2.9
Debt-Capitalization Ratio*                      55.1%                  9.3%           15.3%
Fixed Charge Coverage**                          3.7x                  4.0x            3.8x
</TABLE>

*    Debt-to-capitalization has been computed by dividing total debt, which
     includes current and long-term capital lease obligations, by
     capitalization, which includes current and long-term capital lease
     obligations, non-current deferred income taxes and equity. The
     debt-to-capitalization ratio, including the present value of future minimum
     rental payments under operating leases as debt and capitalization, would be
     79.0%, 56.5% and 58.1% respectively, for the periods referred to above. The
     increase in debt to capitalization ratio at April 29, 2000 is primarily the
     result of the $400 million self-tender and the additional debt issued in
     April 2000.

**   Fixed charge coverage, which is presented for the trailing 52 weeks in each
     period ended above, is defined as earnings before income taxes, gross
     interest expense, and the interest component of rent expense, divided by
     gross interest expense and the interest component of rent expense. The
     decrease in the fixed charge coverage ratio at April 29, 2000 is primarily
     the result of the increase in interest expense resulting from the
     additional debt issued in April 2000 and the charge for the non-recurring
     and extraordinary item in the first quarter of 2000.

                                       9

<PAGE>   10

STORE ACTIVITY

At the end of the first quarter of 2000, the Company operated 4,488 Payless
ShoeSource stores in 50 states, Canada, Guam, Saipan, Puerto Rico and the U.S.
Virgin Islands and 221 Parade of Shoes stores. The following table presents the
change in store count for the first quarter of 2000 and 1999.


<TABLE>
<CAPTION>
  PAYLESS SHOESOURCE              First Quarter
                                   ------------
                                    2000   1999
                                   -----  -----
<S>                                <C>    <C>
  Beginning of quarter             4,492  4,357
  Stores opened                       56     64
  Stores closed                      (60)   (34)
                                   -----  -----

  Ending store count               4,488  4,387
                                   =====  =====
</TABLE>

<TABLE>
<CAPTION>
  PARADE OF SHOES                 First Quarter
                                   ------------
                                    2000   1999
                                   -----  -----
<S>                                <C>    <C>
  Beginning of quarter               220    213
  Stores opened                        8      3
  Stores closed                       (7)    (1)
                                   -----  -----

  Ending store count                 221    215
                                   =====  =====
</TABLE>


INTEREST RATE RISK

Interest on the Company's Credit Facility is based on the London Interbank
Offered Rate ("LIBOR") plus a variable margin as defined in the credit
agreement. Therefore, the Company's future borrowing costs may fluctuate
depending upon the volatility of LIBOR. The Company currently mitigates a
portion of its interest rate risk through the use of interest rate swap
agreements, whereby the Company has agreed to exchange, at specific intervals,
the difference between fixed and variable interest amounts calculated by
reference to an agreed-upon notional amount.

The table set forth below summarizes the fair values and contract terms of
financial instruments subject to interest rate risk maintained by the Company as
of April 29, 2000 (dollars in thousands):


<TABLE>
<CAPTION>
                                                            Maturity Date
                             -----------------------------------------------------------------------             Fair Value at
                              2000        2001        2002        2003        2004      Thereafter     Total       29-Apr-00
                             ------      ------      -------     -------     -------    ----------     -----       ---------
<S>                          <C>         <C>         <C>         <C>         <C>          <C>         <C>           <C>
Variable Rate Debt           15,000      42,500      72,500      102,500     132,500      35,000      400,000       400,000
  Average interest rate       8.8%        9.1%        9.2%        9.2%        9.2%         9.2%         9.2%

Variable to Fixed Swaps      80,000      80,000     120,000      120,000       --           --        400,000        1,751
  Average Pay Rate            6.9%        6.9%        6.9%        6.9%                                  6.9%
  Average Receive Rate        6.8%        7.1%        7.2%        7.2%                                  7.1%
</TABLE>

                                       10

<PAGE>   11


The notional amounts of interest rate swap agreements, as presented in the table
above, are used to measure interest to be paid or received and do not represent
the amount of exposure to credit loss. The estimated fair value approximates the
proceeds to settle the outstanding contracts. Interest rates on the variable
debt and the receive rate on the interest rate swaps are estimated using the
average implied LIBOR for the year of maturity based on the yield curve in
effect at April 29, 2000.

FORWARD-LOOKING STATEMENTS

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, e-commerce initiatives, technological
developments, new products, future store openings, possible strategic
alternatives and similar matters. Also, statements including the words
"expects," "anticipates," "intends," "plans," "believes," "seeks," or variations
of such words and similar expressions are forwarding-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; successful implementations of new
technologies; Year 2000 matters; 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, 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;
changes in trade and foreign tax laws; fluctuations in currency exchange rates;
availability of suitable store locations and appropriate terms; the ability to
hire and train associates; and general economic, business and social conditions.

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 to reflect the
occurrence of unanticipated events.


                                       11


<PAGE>   12

                           PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

On September 16, 1999, a lawsuit entitled Martins, Johns and Mason vs.
Payless ShoeSource, Inc. was filed in the Superior Court of the State of
California for the County of Orange (the "Court"). The plaintiffs, all former
managers of Payless ShoeSource stores in California, allege that the Company
violated California wage and labor laws by not paying them overtime wages for
time worked over 40 hours in a week. The plaintiffs further allege that the
case should be certified as a class action and seek overtime wages for all
current or former store managers for Payless ShoeSource stores in California
during the four years prior to September 1999 through the date a judgment may
be rendered. On June 1, 2000, the Court gave preliminary approval to the
settlement of this suit which requires the Company to pay class members a
settlement amount which in the opinion of the Company will not have a material
adverse financial effect on the Company.

The Company and its subsidiaries are also parties to ordinary private litigation
incidental to their business.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a)  The annual meeting of shareowners of the Registrant was held
on May 26, 2000.

(b)  At the annual meeting of shareowners of the Registrant held on
May 26, 2000, action was taken with respect to the election of two
directors of the Registrant: 20,217,775 shares were voted for Mylle
B. Mangum while authority was withheld with respect to 107,387
shares; 20,221,678 shares were voted for Robert L. Stark while
authority was withheld with respect to 103,484 shares. Other
directors whose term of office continued after the meeting include:
Steven J. Douglass, Ken C. Hicks, Howard R. Fricke, Daniel Boggan
Jr., Thomas A. Hays, and Michael E. Murphy.

(c) In addition, shareowners ratified the appointment of Arthur Andersen LLP as
independent auditors (20,262,786 votes in favor, 16,107 votes against and 46,269
votes abstained).

ITEM 5 - OTHER INFORMATION

                  None



                                       12


<PAGE>   13




ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits:

         Number   Description
         ------   -----------
         11.1     Computation of Net
                  Earnings Per Share*

         27.1     Financial Data
                  Schedule*



    * Filed herewith


(b)  Reports on Form 8-K

     None



                                       13



<PAGE>   14

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.



                                              PAYLESS SHOESOURCE, INC.



Date: 6/12/00                               By: /s/ Steven J. Douglass
                                                ----------------------
                                                Steven J. Douglass
                                                Chairman of the Board and
                                                Chief Executive Officer



Date: 6/12/00                               By: /s/ Ullrich E. Porzig
                                                ---------------------
                                                Ullrich E. Porzig
                                                Senior Vice President
                                                Chief Financial Officer
                                                and Treasurer


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