Converse Announces Earnings Per Share For Third Quarter 1997 of $0.01 Compared to Loss of $0.18 for Third Quarter 1996.

NORTH READING, Mass.--(BUSINESS WIRE)--Nov. 3, 1997--Converse Inc. (NYSE:CVE) today announced financial results for the third quarter 1997, which represent Converse's sixth consecutive quarter of improved net earnings versus the prior periods.

Net sales for the third quarter ended September 27, 1997 were $121.9 million compared to $113.3 million in the third quarter of 1996, an increase of 7.6%. Earnings from operations were $5.0 million compared to $3.1 million in the third quarter of 1996. Net earnings were $0.2 million or $0.01 per share compared to a loss of $3.0 million or an $0.18 loss per share in the third quarter of 1996.

For the nine month period, net sales increased 29.1% to $361.2 million compared to $279.8 million for the prior year period. Earnings from operations were $22.8 million compared to $5.6 million for the nine months ended September 28, 1996. Net earnings from continuing operations for the nine months ended September 27, 1997 were $13.7 million or $0.77 per share compared to a net loss of $10.0 million or a $0.60 loss per share for the prior year period. Net earnings after extraordinary items were $12.9 million or $0.72 per share for the nine months ended September 27, 1997 compared to a net loss of $10.0 million, or a $0.60 loss per share for the nine months ended September 28, 1996.

Earnings results for the nine months ended September 27, 1997 include an after tax gain of approximately $8.0 million or $0.45 per share relating to the successful resolution of outstanding litigation pertaining to the acquisition in 1995 of Apex One, Inc.

Although total net sales increased 7.6% for the third quarter of 1997 compared to the third quarter of 1996, the strong U.S. dollar continues to adversely affect reported international results. On a constant dollar basis, net sales would have increased 10.6% in the third quarter of 1997. United States net sales increased 14.8% to $72.2 million for the third quarter of 1997 from $62.9 million for the third quarter of 1996. International net sales declined 1.4% to $49.7 million for the third quarter of 1997 from $50.4 million for the third quarter of 1996. On a constant dollar basis, international net sales would have increased 5.4%. Pacific region net sales increased 58.4% while the Europe, Middle East and Africa region, Latin America region and Canada recorded sales declines of 26.6%, 18.0% and 33.7%, respectively, as compared to the prior year period.

The Company's third quarter 1997 gross profit increased to $32.1 million or 26.3% of net sales compared to $29.9 million or 26.4% of net sales in the third quarter of 1996. Selling, general and administrative expenses declined slightly to $32.6 million or 26.7% of net sales in the third quarter of 1997 from $33.2 million or 29.3% of net sales for the third quarter 1996.

Royalty income for the third quarter of 1997 decreased by 12.7% to $5.5 million compared to $6.3 million in the third quarter of 1996. International royalty income declined 22.6% as compared to the third quarter of 1996, with the decrease being primarily attributable to the streamlining of the distribution of the Company's licensed products in the Pacific region. United States royalty income increased 81.5% compared to the prior year period due to the addition of several new licensees and significant sales growth by the Company s licensee for children's apparel.

For the nine months ended September 27, 1997, net sales in the United States increased 49.2% to $229.7 million from $154.0 million for the nine months ended September 28,1996. International net sales increased 4.5% to $131.5 million from $125.8 million over the prior year period. Pacific region net sales increased 80.5%, while sales in the Europe, Middle East and Africa region, Latin and South America region and Canada declined 20.5%, 18.1% and 10.4% respectively.

For the nine month period ended September 27, 1997, gross profit increased to $105.1 million or 29.1% of net sales compared to $74.4 million or 26.6% of net sales for the nine months ended September 28, 1996. Selling, general and administrative expenses increased 12.6% to $99.8 million during the nine months ended September 27, 1997 from $88.6 million for the prior year period, but decreased as a percentage of net sales to 27.6% compared to 31.7% for the nine months ended September 28, 1996.

For the first nine months of 1997, royalty income declined by 3.4% to $16.9 million from $17.5 million for the prior year period. International royalty income decreased 12.6% as compared to the first nine months of 1996, which is primarily attributable to the streamlining of the distribution of the Company's licensed products in the Pacific region. United States royalty income rose 72.2% compared to the prior year period.

Converse's global order backlog (futures) increased to $177.3 million at September 27, 1997 from $173.5 million at September 28, 1996, a 2.2% increase. The athletic originals category order backlog improved 63.1% while the basketball, children's and cross training categories recorded declines of 25.3%, 19.8% and 20.8% respectively. The United States order backlog remained relatively flat while international was up 5.0% from the prior year period. On a constant dollar basis, Converse's global order backlog was up 4.8% and international backlog was up 12.1%.

Glenn Rupp, Converse's Chairman and Chief Executive Officer, stated, "Our third quarter performance represents Converse's sixth consecutive quarter of improved net earnings versus the prior periods. The slowdown of growth in the third quarter sales and futures orders is primarily a result of the sluggish retail environment for athletic footwear, particularly the basketball market. We are, however, confident that the fundamental strengths of our business are intact. Converse is maintaining a good presence at retail establishments and we are leveraging the strength of the Company's brand heritage to offset some of the weakness we are experiencing in the basketball category. In particular, our athletic originals category line continues to perform exceptionally well, as evidenced by the 63% increase in backlog at the end of the quarter as compared to last year."

Mr. Rupp continued, "Looking ahead, we anticipate that our sales and earnings will continue to be impacted by the sluggish environment for athletic footwear for the remainder of 1997 and into the first half of 1998. Based on current trends and order backlog levels, we expect fourth quarter sales will be in the range of $80-$90 million and anticipate that gross margins in the fourth quarter will be below third quarter levels. Our solid operating results in recent quarters have reflected our commitment to tightly controlling our expenses and inventories, and we intend to continue to aggressively manage costs going forward."

Mr. Rupp concluded, "We are very focused on maintaining a solid market position in what continues to be a challenging environment. We received positive feedback from retail customers on our Spring 1998 basketball line. However, retailers have ordered conservatively due to the current weakness in the basketball footwear market. We believe our athletic originals business will continue to be a strong performer as we capitalize on the shift in consumer demand back to classics. We are also taking advantage of opportunities to leverage Converse's brand equity by diversifying into the Action Sports category, including performance skateboard footwear, which we are launching in Spring 1998. We believe initiatives such as these will help strengthen our business over the long term."

Converse Inc. is a leading global designer, manufacturer and marketer of high quality athletic footwear for men, women and children. The Company is also a global licensor of sports apparel, accessories and selected footwear. The Company's products are distributed worldwide in over 90 countries through specialty athletic, sporting goods, department and shoe stores. -0-

Any statements set forth above which are not historical facts, including the statements concerning the outlook for sales and earnings in the balance of 1997 and in 1998, are forward looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements. Potential risks and uncertainties include such factors as the financial strength of the Company, the competitive pricing environment of the footwear and apparel industries, consumer demand for athletic footwear, market acceptance of the Company's products, the strength of the U.S. dollar and the success of planned advertising, marketing and promotional campaigns and other risks identified in documents filed by the Company with the Securities and Exchange Commission. -0-

                     CONVERSE INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
            (Dollars in thousands, except per share amounts)
                                (Unaudited)


                Three Months Ended            Nine Months Ended
         Sept. 27, 1997  Sept. 28, 1996   Sept. 27, 1997  Sept. 28, 1996

Net Sales        $121,903     113,318       $361,196        $279,776
Cost of sales      89,799      83,388        256,047         205,342

Gross profit       32,104      29,930        105,149          74,434
  Selling, general
   and administrative
       expenses    32,581      33,153         99,834          88,588
Royalty income      5,502       6,301         16,889          17,546
Restructuring
   expense (credit)   --          --            (563)         (2,209)
Earnings from
  operations        5,025       3,078         22,767           5,601
Loss (credit) on
  investment in
    unconsolidated
      subsidiary      --         --          (13,051)            515

Interest expense,
  net               4,438       4,827         10,992          12,921
Other (income)
  expense, net        303         229          2,597           1,726
Earnings (loss) from
 continuing operations
   before income tax  284      (1,978)        22,229          (9,561)
Income tax expense    109       1,033          8,558             452
Net earnings (loss)
  from continuing
    operations        175      (3,011)        13,671         (10,013)
Extraordinary loss
  net of tax of
  $508 -- write-off
  of deferred
  financing fees       --        --              812             --
Net earnings (loss)  $175    $ (3,011)     $  12,859      $  (10,013)
Net earnings (loss)
  per share:
Continuing
  operations       $ 0.01    $  (0.18)     $    0.77      $    (0.60)
Extraordinary loss   --           --       $   (0.05)            --
Net earnings       $ 0.01    $  (0.18)     $    0.72       $    0.60
Weighted average
  number of common
     shares        17,744      16,707         17,836          16,697
-0-

                   CONVERSE INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEET
           (Dollars in thousands, except per share amounts)
                             (Unaudited)

                             September 27, 1997    December 28, 1996

Assets
Current assets:
  Cash and cash equivalents    $    7,178           $    5,908
  Restricted cash                     --                 1,354
  Receivables, less allowances
   of $1,994 and $3,352,
     respectively                  93,778               61,546
  Inventories                      90,117               86,799
  Refundable income taxes             582                  582
  Prepaid expenses and other
    current assets                 15,359               20,383
       Total current assets       207,014              176,572
Net property, plant and
  equipment                        18,971               17,849
Other assets                       31,788               28,182
                              $   257,763            $ 222,603
Liabilities and Stockholders'
  Equity
(Deficiency)
Current liabilities:
  Short-term debt             $    12,817            $ 13,421
  Current maturities of
   long-term debt                  86,737             117,765
  Accounts payable                 46,682              49,503
  Accrued expenses                 17,182              25,124
  Income taxes payable              2,999               3,407
     Total current liabilities    166,417             209,220
Long-term debt, less current
  maturities                       80,000               9,644
Current assets in excess of
  re-organization value            30,818              32,376
Deferred post-retirement benefits
  other than pensions              10,143              10,231

Stockholders' equity (deficiency)
Common stock, $1.00 stated value,
  50,000,000 shares authorized,
  17,317,956 and 17,213,157
  shares issued and outstanding
  at September 27, 1997 and
  December 28, 1996, respectively  17,318             17,213
Preferred stock, no par value,
  10,000,000 shares authorized,
  none issued and outstanding         --                --
Additional paid-in capital          2,281              5,392
Retained earnings (deficit)       (47,406)           (60,265)
Foreign currency translation
  adjustment                       (1,808)            (1,208)
Total stockholders' equity
  (deficiency)                    (29,615)           (38,868)
                                $ 257,763          $ 222,603

CONTACT: Investor Contact:

Donald J. Camacho

Chief Financial Officer

508-664-1100

Christine DiSanto/Jim Cappuccio

Morgen-Walke Associates

212-850-5600

OR

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V.P. Marketing Communications

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