Converse announces third quarter and nine month results.

NORTH READING, Mass.--(BUSINESS WIRE)--Nov. 11, 1996--Converse Inc. (NYSE:CVE) today announced financial results for the third quarter and nine month period ended September 28, 1996.

Revenues for the third quarter were $113.3 million compared to $110.1 million in the third quarter of 1995. Income from operations was $3.1 million versus a loss from operations of $2.2 million for the same period last year. The net loss in the third quarter narrowed to $3.0 million, or $0.18 per share, compared to a net loss of $6.6 million, or $0.39 per share, for the third quarter of 1995.

U.S. sales in the third quarter increased 9.8% and international sales decreased 4.5%, in each case compared to the third quarter 1995. The Company posted substantial increases in its children's and basketball categories of 28.4% and 14.3%, respectively, which were partially offset by declines in athleisure and cross-training sales.

For the nine month period, revenues were $279.8 million versus $330.6 million for the same period last year. Income from operations was $5.6 million, including a restructuring credit of $2.2 million in the second quarter of 1996, compared to income from operations of $5.5 million for the nine months ended September 30, 1995. The net loss for the nine month period improved to $10.0 million, or $0.60 per share, versus a net loss of $30.4 million, or $1.82 per share, for the same period last year.

For the nine month period, selling, general and administrative expenses were $88.6 million, a net reduction of $22.0 million from the $110.6 million for the same period in 1995. Royalty income for the nine months rose 43.4% to $17.5 million from $12.2 million last year.

Fueled by the success of the All Star 2000, incoming orders for the third quarter increased by 32.0% over last year. As a result, Converse's backlog as of September 28, 1996 increased to $173 million, a 16% increase versus a year ago. The increase in the backlog is attributable to futures orders for the first quarter of 1997. The backlog for fourth quarter shipments is down slightly as compared to September 30, 1995.

Commenting on the results, Glenn Rupp, Chairman and Chief Executive Officer, stated, "Although we posted only a modest operating profit in the third quarter, our results mark the second consecutive quarter of operating earnings improvement versus the year-ago period. We are continuing to realize the benefits of our restructuring plan, which led to further reduction in SG&A for the period, resulting in higher operating earnings on a slight increase in sales."

"We have seen improvement in our operating earnings for the second and third quarters of 1996 and we expect continued improvement in our operating earnings for the fourth quarter of 1996 as compared to the fourth quarter 1995."

Mr. Rupp continued, "The overwhelming response to our All Star 2000 product has reinvigorated the Company and has proven that the underlying strength of the Converse brand, combined with the right product and the right marketing program, can be successful. Over the past few months, we have seen increasing strength in our order activity and the reception to our Spring '97 lines has been very enthusiastic. In particular, four of our new basketball shoes -- The Dr. J. 2000, The Springfield, The Tourney, and the Canvas All Star 2000 -- have generated an excellent response from our retail customers."

"Looking ahead, we are very excited about the recent addition of Jim Solomon to head our worldwide marketing effort. We believe that Converse is regaining a solid market position and Jim's expertise will play an integral role in our ability to generate additional momentum for our brand. With the successful implementation of the restructuring plan and the recent order momentum, the Company is well-positioned to have a strong year in 1997," Mr. Rupp concluded.

Converse Inc., the largest U.S. manufacturer of athletic shoes, is a leading designer, manufacturer and marketer of high quality athletic and leisure footwear and is a licensor of sports apparel and accessories that are distributed worldwide through over 9,000 athletic specialty, sporting goods, department and shoe stores.

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 athletic footwear and apparel industries, product demand, market acceptance of this Company's products and, the success of planned advertising, marketing and promotional campaigns. -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. 28,   Sept. 30,   Sept. 28,   Sept. 30,
                             1996        1995        1996        1995

Net Sales                 $113,318     $110,121    $279,776    $330,641
Cost of sales               83,388       80,783     205,342     225,820
Gross profit                29,930       29,338      74,434     104,821
Selling, general and
 administrative expenses    33,153       36,026      88,588     110,586
Royalty income               6,301        4,489      17,546      12,240
Restructuring expense (credit)   0            0      (2,209)      1,000
Earnings (loss) from
 operations                  3,078       (2,199)      5,601       5,475
Loss on investment in
 unconsolidated subsidiary       0            0         515      41,599
Interest expense             4,827        3,525      12,921       9,518
Other (income) expense, net    229          962       1,726        (555)
Earnings (loss) before
 income tax                 (1,978)      (6,686)     (9,561)    (45,087)
Income tax expense (benefit) 1,033         (103)        452     (14,660)
Net earnings (loss)       $ (3,011)    $ (6,583)   $(10,013)  $ (30,427)
Net earnings (loss)
 per share                $  (0.18)    $  (0.39)   $  (0.60)  $   (1.82)
Weighted average number
 of common shares           16,707       16,692      16,697      16,692

-0-

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

                                           Sept. 28,         Dec. 30,
                                             1996              1995
Assets
Current assets:
 Cash and cash equivalents                 $   4,051        $   2,738
 Restricted cash                                 903              443
 Receivables, less allowances of
  $2,237 and $1,720 respectively              81,274           61,688
 Inventories                                  82,899           81,903
 Refundable income taxes                         --            11,377
 Prepaid expenses and other current assets    25,245           21,059
Total current assets                         194,372          179,208
Asset held for sale                              --             3,066
Net property, plant and equipment             17,095           15,521
Other assets                                  23,634           26,712
                                            $235,101         $224,507

Liabilities and Stockholders'
 Equity (Deficiency)
Current liabilities:
 Short-term debt                              20,173           13,906
 Current maturities of long-term debt          6,392            6,324
 Accounts payable                             42,674           34,208
 Accrued expenses                             28,328           33,295
 Income taxes payable                          2,771            1,795
  Total current liabilities                  100,338           89,528

Long-term debt, less current maturities      123,708          112,824
Current assets in excess of
 reorganization value                         32,896           34,454
Deferred postretirement benefits
 other than pensions                          10,269           10,386

Stockholders' equity (deficiency):
 Common stock, $1.00 stated value,
  50,000,000 shares authorized,
   16,772,156 shares issued and
     outstanding                              16,772           16,692
 Preferred stock, no par value,
  authorized 10,000,000 shares,
   none issued and outstanding                   --               --
  Additional paid in capital                   3,755            3,528
  Retained earnings (deficit)                (51,843)         (41,830)
  Foreign currency translation adjustment       (790)          (1,075)
    Total stockholders' equity (deficiency)  (32,107)         (22,685)
                                            $235,101         $224,507

CONTACT: Converse Inc., North Reading

Investor Contact:

Donald J. Camacho

Chief Financial Officer

508/664-1100

Media Contact:

Ellen Pulda

508/664-1100

or

Morgen-Walke Associates, New York

Investor Contact:

Christine DiSanto/Caroline Babbitt

212/850-5600

Media Contact:

Stacy Berns/Michael McMullan

212/850-5600