Converse announces fourth quarter and year end results.

NORTH READING, Mass.--(BUSINESS WIRE)--March 7, 1996--Converse Inc. (NYSE:CVE) today announced financial results for the fourth quarter and fiscal year ended December 30, 1995.

Revenues for the fourth quarter were $76.8 million, compared to $83.8 million in the fourth quarter of 1994. The loss from operations was $35.2 million, including restructuring costs of $13.2 million, versus earnings from operations of $1.8 million last year. The net loss was $41.3 million, or $2.48 per share compared to net income of $0.2 million, or $0.01 per share for the fourth quarter of 1994. On a pro forma basis, the net loss for the fourth quarter 1994 was $0.3 million, or $0.02 per share.

For the twelve month period, revenues were $407.5 million versus $437.3 million in 1994. The loss from operations was $29.7 million, including restructuring costs of $14.2 million, compared to earnings from operations of $36.1 million last year. The net loss for the year was $71.7 million, or $4.30 per share compared to net income of $17.6 million, or $1.05 per share. On a pro forma basis, the net earnings for fiscal 1994 were $16.0 million, or $0.96 per share.

The Company stated that fourth quarter financial results were impacted by an isolated manufacturing defect in the Company's RAW Energy and RAW Power basketball shoes. The Company estimates that the revenue loss associated with this totaled $15 million. Results for 1995 include restructuring expenses of $14.2 million and a pretax loss of $52.2 million related to the Company's investment in Apex One, Inc.

Financial performance for the year reflects a decrease of 30.2% in U.S. sales, which was partially offset by a 43.1% increase in international revenues. The Company recorded substantial growth in its children's and cross-training categories, which were offset by declines in the basketball and athleisure segments.

The decline in gross profits for fiscal 1995 is primarily attributable to weak U.S. sell-through of basketball and athleisure products which resulted in lower selling prices; reduced manufacturing utilization and efficiencies; and higher distribution expenses related to the conversion of international distributors from independent to Company-owned status.

Converse's backlog of firm customer orders decreased to $131.9 million at December 30, 1995 from $174.4 million at the end of 1994, with domestic business showing continued weakness. Order activity has recently begun to rebound on the strength of the Company's back to school products and as a result, the Company's backlog has improved by 14% since the beginning of the year. In addition, orders for back-to-school shipments beginning in the third quarter are up substantially over a year ago.

Gib Ford, Chairman and Chief Executive Officer, said, "Although we are disappointed with our financial performance for the year, we also implemented several positive changes and accomplished important objectives for a return to profitability. The restructuring expenses incurred in 1995 from our recently announced strategic restructuring and other measures have successfully reduced our overhead expenses by approximately $30 million on an annualized basis. In addition to streamlining our operating structure, we are utilizing our heritage in the footwear business to improve the competitive positioning of the Converse brand on a global basis; to develop more focused product lines, and to maximize our spending dollars for a more efficient use of both management and financial resources. We continue to maintain a strong working relationship with our financing sources and are in compliance with all the terms and conditions of our bank agreement."

Mickey Bell, President, commented, "As part of our restructuring, we developed a single brand marketing strategy which allows us to capitalize on the highly recognized Converse All Star trademark. Using this approach, we created an exciting new product, the All Star 2000, which incorporates our traditional All Star patch into a performance shoe. We believe this product, combined with other new developments such as our new Cons Blue footwear and apparel line which has been very well-received, will provide Converse with a unique opportunity and enhanced competitive position in the marketplace."

"As evidenced by our incoming domestic orders for the third quarter we have started 1996 with a very positive response to our back-to-school product lines, particularly the All Star 2000, and recently concluded a successful Atlanta Super Show. We are also pleased to report that our international business continues to demonstrate solid growth with strong increases in 1995 sales, particularly in Europe and the Pacific region. In addition, we're very encouraged by the success of our retail store operation, where sales increased 15.7% in 1995. We believe that the restructuring program in place, coupled with the proven strength of our global brand, will result in a more efficient and profitable Company going forward," Mr. Ford concluded.

Any statements set forth above which are not historical facts 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 and competitive pricing environment of the footwear and apparel industry, product demand, market acceptance, 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
                   CONSOLIDATED STATEMENTS OF OPERATIONS
             (Dollars in thousands, except per share amounts)
                                (Unaudited)

                           Three Months Ended    Fiscal Year Ended

                           12/30/95  12/31/94   12/30/95   12/31/94

Net Sales                   $76,842   $83,800   $407,483   $437,307
Cost of sales                68,128    58,849    293,948    286,555
Gross profit                  8,714    24,951    113,535    150,752
Selling, general and
  administrative expenses    35,746    28,944    146,332    128,876
Royalty income                5,017     5,849     17,257     14,212
Restructuring expense        13,182     -         14,182     -
 Earnings (loss) from
   operations               (35,197)    1,856    (29,722)    36,088

Loss on investment in unconsolidated
  subsidiary                 10,561      -        52,160       -
Interest expense              4,525     2,202     14,043      7,423
Other income (expense), net  (4,521)      382     (3,966)      (504)

Earnings (loss) before
 income tax                 (54,804)       36    (99,891)    28,161

Income tax expense
 (benefit)                  (13,484)     (163)   (28,144)    10,565
Net earnings (loss)       $ (41,320) $    199   $(71,747)   $17,596
Net earnings (loss)
 per share                $   (2.48) $   0.01  $   (4.30)   $  1.05

Net earnings (loss)
 per share (pro forma)              $   (0.03)             $   0.96
Weighted average number of
  common shares             16,692     16,692    16,692      16,692

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

                                    December 30, 1995     December 31, 1994

  Assets
Current assets:
  Cash and cash equivalents             $   2,738            $   4,992
  Restricted cash                             443                   --
  Receivables, less allowances of
   $2,237 and $1,553 respectively          61,688               68,921
  Inventories                              81,903               99,482
  Prepaid expenses and
   other current assets                    21,059               11,540
  Refundable Income Taxes
                                           11,377                  ---
Total current assets                      179,208              184,935

Asset held for sale                         3,066                   --
Net property, plant and equipment          15,521               20,349
Other assets                               26,712               18,442
Total Assets                             $224,507             $223,726

   Liabilities and Stockholders' Equity
Current liabilities:
  Short-term debt                          13,906                5,813
  Current maturities of long-term debt      6,324                   --
  Accounts payable                         34,208               30,540
  Accrued expenses                         33,295               15,887
  Income taxes payable                      1,795                1,573
Total current liabilities                  89,528               53,813

Long-term debt, less current maturities   112,824               77,087
Current assets in excess of
 reorganization value                      34,454               36,532
Deferred postretirement benefits
 other than pensions                       10,386               11,307
Stockholders' equity:
  Common stock $1.00 stated value,
   50,000,000 shares
    authorized, 16,692,156 shares
    issued and outstanding at December 31,
    1995 and December 31, 1994             16,692               16,692
  Preferred stock, no par value,
   authorized 10,000,000 shares
   none issued and outstanding                  -                    -
  Additional paid in capital                3,528                    -
  Retained earnings (deficit)             (41,830)              29,917
  Foreign currency translation adjustment  (1,075)              (1,622)
Total stockholders' equity (deficiency)   (22,685)              44,987
Total liabilities &
  stockholders' equity                   $224,507             $223,726

CONTACT: Converse Inc.

Donald J. Camacho

Chief Financial Officer

508/664-1100

OR

Robert Jones/Christine DiSanto

Morgen-Walke Associates

212/850-5600

OR

Media Contact: Jennifer Murray

Director of Corporate Communications

508/664-1100

OR

Michael McMullen

Morgen-Walke Associates

212/850-5600