Converse Inc. Pursues New Long-Term Financing and Postpones Filing Annual Report.

Business/Technology Editors

NORTH READING, Mass.--(BUSINESS WIRE)--March 31, 2000

Converse Inc. (OTCBB:CVEO) today announced that for several months it has been working with its financial advisor, Universal Credit Corp., a specialty investment bank, minority owned by Deutsche Bank and Prudential Securities, on a financing transaction which would securitize the Company's trademarks, licensing agreements and all related future royalty income. Based upon the Company's 1999 adjusted royalty income, and subject to the transaction's final rating, the transaction is expected to result in approximately $85 million of gross proceeds. The Company's 1999 royalty income was $16.3 million after adjusting for income generated by the Company's former Japanese non-footwear licenses, which were sold in November 1999.

This financing should increase the Company's capacity to respond to challenges within its industry and improve operating results. The transaction is currently being evaluated by the rating agencies. The status of the transaction makes it necessary for the Company to file its Annual Report on Form 10-K later than the normal March 31 due date. The filing will occur no later than April 17, 2000.

Converse expects to report in its Form 10-K, when filed, that its fiscal 1999 financial results were affected by several significant factors including: (i) continued weakness in the athletic footwear and apparel market which led to a decline of approximately 25% in sales revenue; (ii) the strength of the U.S. dollar in the European and Asian markets resulting in weaker sales, gross profit and licensing income; (iii) the conversion of operating subsidiaries in Spain, Portugal, Mexico and Canada into third party licensing entities; (iv) the Company's aggressive efforts to reduce operating expenses; (v) the sale by the Company in the fourth quarter of its non-footwear trademarks in Japan and the assignment of its Japanese non-footwear license agreements to Itochu Corporation for $25.0 million cash; and (vi) a fourth quarter restructuring charge of approximately $9.4 million relating primarily to initiatives aimed at reducing future operating costs.

Any statements set forth above which are not historical facts, including those statements indicating the belief, expectation or intent of the Company, 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 and inventory levels within the footwear and apparel industries, consumer demand for athletic footwear, market acceptance of the Company's products, the availability and cost of working capital financing, the strength of the U.S. dollar, the success of planned advertising, marketing and promotional campaigns, the ability of the Company to complete a proposed financing transaction and other risks identified in documents filed by the Company with the Securities and Exchange Commission.