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L.A. GEAR REPORTS FINANCIAL RESULTS

 SANTA MONICA, Calif., Feb. 19 /PRNewswire/ -- L.A. Gear Inc. (NYSE: LA) today announced its financial results for the year and fourth quarter ended Nov. 30, 1992. Net sales for the year ended Nov. 30, 1992, were $430.2 million, compared to $619.2 million for the prior year. The company reported a 1992 loss from continuing operations before preferred dividends and a loss applicable to common stock of $71.9 million ($3.39 per share) and $79.6 million ($3.76 per share), respectively, compared to a 1991 loss from continuing operations before preferred dividends and a loss applicable to common stock of $45.0 million ($2.31 per share), and $67.8 million ($3.49 per share), respectively.
 The decline in 1992 net sales from 1991 was principally due to a 24.6 percent drop in the number of pairs sold worldwide and, to a lesser extent, a reduction in the average selling price per pair, primarily resulting from an inventory reduction program as well as increased price competition. The extensive 1992 price discounts contributed to a decline in gross margin to 25.3 percent in 1992 from 27.5 percent in 1991.
 The 1992 loss is after a pre-tax charge of $23.1 million relating to the previously disclosed settlements of three shareholder class action lawsuits and after pre-tax provisions of $12.5 million for restructuring charges ($10.7 million of which was recorded in the fourth quarter) relating to costs associated with the realignment and consolidation of the company's management information systems; reduced warehousing needs; the write-off of prepaid charges with no anticipated future benefits; workforce reductions; and the settlement of patent litigation. Nonrecurring and restructuring charges of $27.8 million were recorded in the fourth quarter of 1991.
 For the quarter ended Nov. 30, 1992, the company reported a loss from continuing operations before preferred dividends of $29.8 million ($1.30 per share) and a net loss applicable to common stock of $31.8 million ($1.39 per share) on net sales from continuing operations of $79.5 million. During the year-earlier period, net sales from continuing operations were $127.4 million, the loss from continuing operations before preferred dividends was $22.3 million ($1.14 per share) and the net loss applicable to common stock was $39.9 million ($2.04 per share). Results of operations in each period were adversely affected by the nonrecurring and restructuring charges discussed above.
 Despite the reported losses, management believes that the company's financial position has been significantly enhanced. Inventory levels decreased to 5.6 million pairs ($61.5 million) at Nov. 30, 1992 from a 1992 peak of 12.3 million pairs ($157.0 million) at Jan. 31, 1992. The company has not borrowed cash from commercial banks since March 31, 1992, and cash and cash equivalent balances increased to $84 million at Nov. 30, 1992 ($29 million of which collateralized outstanding letters of credit). Cash and cash equivalent balances at Dec. 31, 1992, were $123.9 million ($32.8 million of which collateralized outstanding letters of credit). This increase during December 1992 resulted primarily from the previously announced private placement of $50 million principal amount of 7 3/4 percent Convertible Subordinated Debentures due 2002. Furthermore, as a result of expense reduction programs initiated in the fourth quarter of 1991, selling, general and administrative expenses, exclusive of the nonrecurring and restructuring charges, decreased by $42.7 million (21.2 percent) in 1992.
 In addition, management believes that significant improvements have been made in the areas of product design, sourcing, marketing and distribution through the implementation of the company's restructuring program. For example, the company has realigned its product sources with the help of its new sourcing agent, an affiliate of Pentland Group plc. Management is also pleased with the initial market reception of its new line of lighted shoes.
 As previously announced, the company anticipates a net loss for the first half of 1993. Management cautioned that the on-going process of re-establishing the company's name among retailers and consumers will continue over the next few years and the full extent of the company's achievements in these areas may not be immediately reflected in operating results.
 As a result of restrictions contained in the company's prior bank credit agreement (which was terminated by the company on Nov. 30, 1992), the company was prohibited from paying required quarterly dividends on the Series A Preferred Stock during fiscal 1992. Consequently, on Aug. 31, 1992, the date on which three full quarterly dividends became in arrears, Trefoil Capital Investors, L.P., the holder of the Series A Preferred Stock, became entitled to elect four additional directors to the company's board. On Sept. 1, 1992, Trefoil appointed Clifford A. Miller and Vappalak A. Ravindran as directors and reserved its right to appoint two additional directors.
 On Feb. 17, 1993, the company (1) declared a dividend payment of $9.79 million (payable on Feb. 26, 1993), representing all accrued and unpaid dividends on, and the quarterly dividend scheduled to be paid on Feb. 26, 1993, with respect to, the Series A Preferred Stock and (2) amended its Bylaws to increase the number of directors on its board, effective Feb. 26, 1993, from nine to 10 (with seven of the 10 directors to be elected by the company's common shareholders).
 Upon payment of the preferred dividend on Feb. 26, 1993, the terms of Mr. Miller and Mr. Ravindran, as well as Trefoil's right to elect an additional two directors, will expire. Mr. Miller has been re-appointed to the board, effective Feb. 26, 1993, to fill the vacancy created by the increase in the size of the board. Mr. Miller will stand for re-election to the board by the company's common shareholders at the Annual Meeting of Shareholders scheduled for April 13, 1993. Effective Feb. 26, 1993, Mr. Ravindran will replace R. Rudolph Reinfrank as a director elected by the holder of the company's Series A Preferred Stock.
 L.A. Gear is a leading designer, developer and marketer of a broad range of quality athletic and casual/lifestyle footwear.
 L.A. GEAR INC. AND SUBSIDIARIES
 Selected Consolidated Balance Sheet Data
 (In thousands)
 Nov. 30,
 1992 1991
 Cash and cash equivalents $83,982(a) $1,422
 Accounts receivable, net 56,369 111,470
 Inventories 61,923 141,115
 Borrowings under line of credit --- 20,000
 Working capital 168,049 203,215
 Mandatorily redeemable preferred stock 100,000 100,000
 Retained earnings (accumulated deficit) (40,263) 39,384
 Total shareholders' equity 87,451 131,715
 (a) Cash and cash equivalents includes $29.0 million of collateralized cash.
 L.A. GEAR INC. AND SUBSIDIARIES
 Consolidated Statements of Operations
 (In thousands, except per share amounts)
 Three months ended Year ended
 Nov. 30, Nov. 30,
 (Unaudited)
 1992 1991 1992 1991
 Net sales $79,495 $127,374 $430,194 $619,175
 Cost of sales 59,878 88,206 321,174 448,682
 Gross profit 19,617 39,168 109,020 170,493
 Selling, general
 and administrative
 expenses 49,798 70,059 171,169 225,280
 Shareholder
 litigation
 settlements --- --- 23,075 ---
 Interest expense 155 688 1,421 13,156
 Interest income (579) (51) (1,159) (220)
 Loss from continuing
 operations before
 income taxes (29,757) (31,528) (85,486) (67,723)
 Income tax benefit --- (9,208) (13,585) (22,727)
 Loss from continuing
 operations (29,757) (22,320) (71,901) (44,996)
 Discontinued
 operations:
 Loss from
 discontinued
 operations
 net of income
 tax benefit --- (4,083) --- (9,350)
 Provision for
 estimated loss on
 disposal net of
 income tax benefit --- (11,854) --- (11,854)
 Total --- (15,937) --- (21,204)
 Net loss (29,757) (38,257) (71,901) (66,200)
 Dividends on
 mandatorily
 redeemable
 preferred stock (1,999) (1,625) (7,746) (1,625)
 Loss applicable
 to common stock ($31,756) ($39,882) ($79,647) ($67,825)
 Loss per common
 share from
 continuing
 operations before
 preferred dividends ($1.30) ($1.14) ($3.39) ($2.31)
 Loss per common share:
 Continuing
 operations ($1.39) ($1.22) ($3.76) ($2.40)
 Discontinued
 operations --- (.82) --- (1.09)
 Total ($1.39) ($2.04) ($3.76) ($3.49)
 Weighted average
 common shares
 outstanding 22,897 19,539 21,180 19,453
 -0- 2/19/93
 /CONTACT: Michael Sitrick or Michael Kolbenschlag of Sitrick And Company, 310-788-2850, for L.A. Gear/
 (LA)


CO: L.A. Gear Inc. ST: California IN: TEX SU: ERN

JL-JB -- LA012 -- 8274 02/19/93 08:52 EST
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Date:Feb 19, 1993
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