Converse Inc. Pursues New Long-Term Financing

Converse Inc. announced that it has been working with its financial advisor, Universal Credit Corp., on a financing transaction which would secure 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.

Converse expects to report in its Form 10-K, to be filed no later than April 17, 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.