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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-

 (Dollars in thousands, except per share amounts)

 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

 (Dollars in thousands, except per share amounts)

 December 30, 1995 December 31, 1994

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,
 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



Robert Jones/Christine DiSanto

Morgen-Walke Associates



Media Contact: Jennifer Murray

Director of Corporate Communications



Michael McMullen

Morgen-Walke Associates

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Date:Mar 7, 1996
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