SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C.  20549

                                     FORM 10-K
                Annual Report Pursuant to Section 13 or 15(d) of the
                          Securities Exchange Act of 1934

  For the fiscal year ended January 3, 1997     Commission file number: 0-05083

                           HYDE ATHLETIC INDUSTRIES, INC.
                           ------------------------------
               (Exact name of registrant as specified in its charter)

       Massachusetts                                     04-1465840
       -------------                                     ----------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

        Centennial Industrial Park, 13 Centennial Drive, Peabody, MA  01960
         ------------------------------------------------------------------
                      (Address of principal executive offices)

        Registrant's telephone number, including area code:   (508) 532-9000

         Securities registered pursuant to Section 12(b) of the Act:   None

            Securities registered pursuant to Section 12(g) of the Act:

                      Class A Common Stock, $.33-1/3 par value
                      ----------------------------------------
                                  (Title of class)

                      Class B Common Stock, $.33-1/3 par value
                      ----------------------------------------
                                  (Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.   Yes  [ X ]    No [    ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [   ]

The aggregate market value of voting stock held by non-affiliates of the
registrant, as of March 21, 1997, was approximately $6,801,742 (based on the
last sale price of the Class A Common Stock on such date as reported on the
Nasdaq National Market).

The number of shares of the registrant's Class A Common Stock, $.33-1/3 par
value, and Class B Common Stock, $.33-1/3 par value, outstanding on March 21,
1997 was 2,703,227 and 3,533,659, respectively.

Portions of the following documents are incorporated by reference in this
Report.

                        Documents Incorporated by Reference
                         -----------------------------------
              Document                                       Form 10-K Part
              --------                                       --------------

Proxy Statement for Annual Meeting of Stockholders              Part III
of the Registrant to be held on May 15, 1997, to be
filed with the Securities and Exchange Commission.

PART I

ITEM 1 - BUSINESS

Hyde Athletic Industries, Inc. and its subsidiaries (together, "Hyde" or the
"Company") design, develop, manufacture and market (i) a broad line of
performance oriented athletic shoes and apparel for adults under the Saucony
brand name and (ii) outdoor recreational products for children and young adults
under licensed names, such as Barbie(R), Playskool(R) and Spalding(R), as well
as under Brookfield and other proprietary names of the Company (collectively,
"Brookfield products").  The Company's Saucony athletic footwear products
include running, walking, cross training and outdoor trail shoes, and the
Company's Brookfield outdoor recreational products include roller skates, roller
hockey skates and accessories.  The following table sets forth the approximate
contribution to net sales (in dollars and as a percentage of net sales)
attributable to each product line for the periods and geographic areas
indicated.  "Other" consists of Spot-Bilt coaches and officials shoes, Quintana
Roo bicycles and wetsuits, sales of the Company's and other products at retail
factory outlets operated by the Company and sales of other branded products at
the Company's subsidiary in Australia.

<TABLE>
                                                             Net Sales

                                                       (dollars in thousands)
<CAPTION>
                             Fiscal 1994                          Fiscal 1995                     Fiscal 1996
                              ----------                          -----------                      ----------
                        Sales      Sales     Co.         Sales       Sales     Co.          Sales       Sales     Co.
                          $          %        %            $           %        %             $           %        %
                                     -        -                        --       -              -          -        --
 <S>                 <C>            <C>      <C>       <C>            <C>       <C>      <C>             <C>      <C>
Saucony
  Domestic           $   53,939        71%             $   47,040       67%              $   54,445        69%
  International          22,420        29%                 23,628       33%                  24,366        31%
                     ----------    -------             ----------    ------              ----------     ------
  Total              $   76,359       100%     71%     $   70,668      100%      69%     $   78,811       100%      71%
                     ----------    -------             ----------    ------              ----------     ------

 Brookfield
  Domestic           $   19,699        80%             $   18,737       78%              $    9,407        48%
  International           4,824        20%                  5,277       22%                  10,061        52%
                     ----------    -------             ----------    ------              ----------     ------
  Total              $   24,523       100%     23%     $   24,014      100%      23%     $   19,468       100%      18%
                     ----------    -------             ----------    ------              ----------     ------

 Other               $    6,696                 6%          7,881                 8%     $   12,530                 11%
                     ----------             ------     ----------             ------     ----------              ------

 Grand Total         $  107,578               100%     $  102,563               100%     $  110,809                100%
                     ==========             ======     ==========             ======     ==========              ======
</TABLE>


SAUCONY BRAND.  The Company sells quality running, walking, cross training, and
outdoor trail shoes for adults under the Saucony brand name, which has been
marketed in the United States for over 25 years.  The Company assembles most of
its Saucony footwear sold in the United States at its manufacturing facility in
Bangor, Maine, largely with components sourced from independent manufacturers
located overseas.  The Company believes that assembly at its Bangor facility
assists in timely and flexible product delivery in the domestic market.
According to ASD/Target Research, Inc., an independent market research
organization ("ASD/Target Research"), the Company ranked fifth in sales of
running shoes in the United States during 1996.  In addition, according to
ASD/Target Research, the Company's market share of running shoes sold in the
United States was 5.5% in 1996.  The Company believes that a high percentage of
purchasers of Saucony brand footwear buy such products for athletic uses and
that such consumers have greater brand loyalty than athletic shoe purchasers who
buy for casual wear purposes.  The Company has several product offerings within
each of the Saucony brand categories which have different designs and features,
resulting in different cushioning, stability, support characteristics and
prices.

The Company builds its Saucony shoes with a high level of technological
performance characteristics to appeal to athletic users.  As a result of the
Company's application of biomechanical technology in the design process, the
Company believes that its Saucony shoes have a distinctive "fit and feel" that
is attractive to athletic users.  A key element in the design of Saucony shoes
is an anatomically correct toe and heel configuration that provides support and
comfort throughout the human gait cycle for the particular activity for which
the shoe is designed.

Several of the Company's top-of-the-line running and other athletic shoes
incorporate the Company's G.R.I.D. ("Ground Reaction Inertia Device") System, an
innovative midsole system that employs molded strings engineered to create a
feeling similar to that of the "sweet spot" of a tennis racquet.  In contrast
with conventional athletic shoe midsoles, the G.R.I.D. System is designed to
react to various stress forces differently and thereby simultaneously to
maximize shock absorption and minimize rear foot motion.  In 1996, the Company
introduced several new running shoe styles which incorporated Saucony's advanced
midsole technology, the 3D G.R.I.D., and extended the regular G.R.I.D. System
technology into its more moderately priced running shoes.

The Company designs and markets separate lines for men and women within most
Saucony product categories.   The Company currently sells approximately the same
percentage of Saucony shoes to men and women.  The suggested domestic retail
prices for most Saucony footwear products are in the range of $50 to $85 per
pair, with the Company's top of the line running shoes having suggested domestic
retail prices of up to $125 per pair.

The Company designs its Saucony cross training, walking and outdoor trail shoes
with many of the same performance features and "fit and feel" characteristics as
are found in Saucony running shoes.  Currently, the Company's most popular non-
running athletic shoe is a women's traditional white leather walking shoe.

The Company believes that a line of athletic apparel bearing the Saucony name is
supportive of its athletic footwear products and enhances the visibility of the
Saucony brand.  Accordingly, the Company has licensed the Saucony name for the
United States market to the Bangor Trading Company of Chula Vista, California,
for use in connection with a line of sporting apparel.  The Bangor Trading
Company introduced these apparel products into the performance athletic apparel
market in 1993.  The Company also licenses its Saucony apparel brand to selected
markets internationally in addition to designing and marketing its brand
throughout most of Europe.

BROOKFIELD PRODUCTS.  The Company markets a range of recreational and dedicated
enthusiast sports products that provide "Outdoor Fun For Kids." The principal
products in this category include moderately priced roller skates, roller hockey
skates and in-line skates for children and young adults.  Other products include
protective accessories, such as wrist, elbow and knee pads.  These products are
sold through mass merchants, toy and sporting goods departments and, in some
cases, through free-standing sporting goods outlets.

Brookfield products are sold both under names owned by the Company, including
the "Brookfield," "Hyde," and "Spot-Bilt" names, and also under brand names
licensed from third parties, including Mattel, Inc., Hasbro, Inc., Franklin
Sports, Inc., Spalding, Inc., Time Warner Entertainment Company,  and the Walt
Disney Company.  Licensed brands include such recognizable names as Barbie,
Playskool, Nerf, Spalding and Topflite, as well as Mickey and Minnie and 101
Dalmatians.

The Company's strategy for licensed products is to offer categories and families
of products under well known trademarks and children's characters that
distinguish its products from those of its competition.  The Company believes
that the use of these licensed brand names enables it to leverage established
consumer awareness created by licensor-implemented national and international
advertising and promotional programs.

OTHER PRODUCTS

SPOT-BILT BRAND. The Company offers Spot-Bilt shoes for coaches and officials
through the distribution channels for its Saucony brand shoes.  In addition, the
Company has licensed the Spot-Bilt name to a third party that distributes youth
team field sport shoes under this name.  (See Note 3 of Notes to Consolidated
Financial Statements).

QUINTANA ROO.  The Company manufactures and distributes the Quintana Roo line of
triathlon bicycles, road bicycles, mountain bicycles and wet suits.

FACTORY OUTLET STORES.  The Company operates six retail factory outlet stores.
To avoid competing against its customers' retail outlets, the Company generally
limits the products offered at these stores to products with cosmetic defects,
products which have been discontinued and certain slow-moving products.  The
Company sells Saucony, Brookfield, Spot-Bilt and Quintana Roo products at these
outlets, as well as athletic accessory goods of third parties.

HIND.  In the fourth quarter of 1996, the Company purchased trademarks and
related intellectual property from Hind, Inc. ("Hind"), a performance athletic
apparel company.  The Company currently expects to begin delivery of its Hind
apparel products to the retail trade in the third quarter of 1997.

AUSTRALIAN PRODUCTS.  The Company's Australian subsidiary holds the exclusive
license to distribute various non-Hyde products throughout Australia.

PRODUCT DEVELOPMENT

The Company believes that the technical performance (i.e., comfort, support and
stability experienced by the athlete) of its Saucony footwear is important to
purchasers of its products.  The Company uses consulting services of such
professionals as podiatrists, orthopedists, athletes, trainers and coaches as
part of its Saucony product development program.  In developing Brookfield
products, the Company focuses both on comfort and on the color, graphics and
design of the product and the product packaging.  The Company maintains a staff
of 15 persons located in Peabody, Massachusetts to undertake continuing product
development and design.  Product development work also is performed for the
Company by its suppliers at their overseas facilities.  During the years ended
January 3, 1997, January 5, 1996, and December 30, 1994, the Company expended
$1,945,000, $1,851,000, and $1,296,000, respectively, in connection with its
product development programs.

SALES AND MARKETING

SAUCONY BRAND.  The Company's Saucony athletic footwear products are sold at
more than 5,000 retail outlets in the United States, primarily higher-end, full
margin sporting goods chains, independent sporting goods stores, athletic
footwear specialty stores and department stores.  Retail outlets include Foot
Locker/Lady Foot Locker, Athlete's Foot, The Sports Authority, Road Runner's
Sport, Sport Mart and Just For Feet.   With the exception of certain specified
"house accounts" handled directly by the Company, the Company sells its athletic
footwear products in the United States through 12 independent manufacturer's
representatives, whose organizations employ approximately 42 individual sales
representatives. Company sales personnel directly service a limited number of
specified house accounts and sell to a number of national accounts on a joint
basis with the Company's independent representatives.

In 1996, the Company hired a number of additional sales personnel, including
several regional sales managers, and established a sales administration team.
In addition, in recent years, the Company has introduced a state-of-the-art CD-
ROM multimedia sales presentation program and created a Web site on the World
Wide Web(R) at www.saucony.com.

The Company sells its Saucony products outside the United States in 32 countries
through 24 distributors located throughout the world, including joint venture
subsidiaries in which the Company holds controlling interests located in the
Netherlands (which holds the distribution rights to the Company's Saucony
products in the Benelux countries), Australia, Germany and Canada, and through a
branch office in the United Kingdom.  In 1994, the Company formed a German
subsidiary, Saucony Deutschland Vertriebs GmbH, to provide additional sales and
marketing support in Europe and to undertake sales and marketing of Saucony
products in Germany.  The primary overseas markets for the Company's Saucony
products are Europe and Australia.

To accommodate its customers' requirements and plan for its own product needs,
the Company employs a futures orders program for its Saucony products under
which the Company takes orders well in advance of the selling season for a
particular product and commits to ship the product to the customer in time for
the selling season.  The Company affords customers price discounts and extended
payment terms in respect of such advance orders.  The Company generally requires
payment at the time that the selling season ends, which increases the Company's
working capital requirements.

The Company engages in various advertising and promotional programs for its
Saucony products.  The principal media used by the Company as part of its
advertising and promotional programs are magazines, with a particular focus on
athletic and fitness magazines.  The Company also uses radio and regional
television advertising.  To heighten its brand presence in retail outlets, the
Company emphasizes account-specific, in-store promotions of its Saucony
products, such as holding special events, providing consumers with a gift upon
the purchase of specified products and employee contests.  Also to heighten
brand awareness, the Company frequently employs grass roots promotional
activities, such as its "Walking Club" and "Extra Mile Club" promotions.  In
addition, the Company promotes its products on a limited basis through product
endorsements by athletes and sponsorship of sporting events.

Although most of the Company's advertising and promotional programs for its
Saucony brand are directed towards ultimate consumers, the Company promotes
these products to the trade through attendance at trade shows and similar
events.  The Company employs an advertising program under which it reimburses
participating retailers for a portion of the costs incurred by such retailers in
advertising the Company's Saucony products.

BROOKFIELD PRODUCTS.  The Company's Brookfield products are sold through mass
merchants, toy and sporting goods departments and, in some cases, through free-
standing sporting goods outlets.  Retailers of Brookfield products include Sam's
Wholesale Club, Service Merchandise, Target and Toys "R" Us.  The Company sells
its Brookfield products to these retailers in the United States primarily
through nine multi-line independent manufacturers representative agencies.
Company sales personnel directly service a limited number of specified house
accounts for Brookfield products and sell jointly with the Company's independent
representatives to a limited number of national accounts.  The Company has
continued its efforts to expand sales of Brookfield products in international
markets and at the end of 1996 was selling products in 42 foreign countries.

The Company directs most of its advertising and promotional efforts for
Brookfield products towards the trade through attendance at trade shows and
similar events.  The Company also employs an advertising program under which it
reimburses participating retailers for a portion of the costs incurred by such
retailers in advertising Brookfield products.

BACKLOG; SEASONALITY; DISTRIBUTION.  The Company's backlog of unfilled orders
was approximately $42,056,000 at January 3, 1997 and $34,727,000 at January 5,
1996.   The Company expects that all of its backlog at January 3, 1997 will be
shipped in fiscal 1997.  While the Company has not generally experienced
material cancellations of orders, orders may be cancelled by customers without
financial penalty, and backlog does not necessarily represent actual future
shipments.

The Company is subject to seasonality in its product sales because of the
different selling seasons for various products. The Company distributes its
products through its warehouses in Peabody and Brookfield, Massachusetts, as
well as through independent warehouse facilities located throughout the world.
For information about the Company's foreign operations and export sales, see
Note 13 of Notes to Consolidated Financial Statements.

MANUFACTURING

The Company assembles most of its domestically sold Saucony footwear at the
Company's manufacturing facility in Bangor, Maine, largely with components
sourced from independent manufacturers located overseas.  Independent overseas
manufacturers produce the balance of the Company's Saucony products and all of
the Company's Brookfield and Spot-Bilt products.

The overseas manufacturers that supply products and product components to the
Company are located in  the Far East, primarily in China, but also in Taiwan and
Thailand.  The Company seeks to develop additional overseas manufacturing
sources from time to time, both to increase its sourcing capacity and to obtain
alternative sources of supply.  All products and components produced by foreign
suppliers are manufactured in accordance with product specifications furnished
by the Company.  The Company carefully monitors foreign manufacturing operations
and imported products and components to assure compliance with the Company's
design, production and quality requirements.

The number of foreign suppliers and the percentage of the Company's total
foreign production requirements produced by each such supplier vary from time to
time.  During fiscal 1996 the Company purchased products from 16 overseas
suppliers.  One of such suppliers, located in China, accounted for approximately
38% of the Company's total overseas purchases by dollar volume.

The Company is subject to the usual risks of a business involving foreign
suppliers, such as government regulation of fund transfers, export and import
duties and political and labor instability.  The Company has not been materially
affected by any of these factors to date.  Substantially all purchases from
foreign suppliers to date have been denominated in United States dollars in
order to reduce the Company's risk from currency fluctuations.

Although the Company has no long-term manufacturing agreements with its overseas
suppliers and competes with other athletic shoe and recreational product
companies (including companies that are much larger than the Company) for access
to production facilities, management believes that the Company's relationships
with its footwear and other suppliers are strong and that it has the ability to
develop, over time, alternative sources in various countries for footwear,
footwear components and other products obtained from its current suppliers.
However, in the event of a supply interruption, the Company's operations could
be materially and adversely affected if a substantial delay occurred in locating
and obtaining alternative sources of supply.

Raw materials required for the manufacture of the Company's products, including
leather, rubber, nylon and other fabrics, are generally available in the country
in which the products are manufactured.  The Company and its suppliers have not
experienced any difficulty in satisfying their raw material needs to date.

TRADE POLICY

The Company's practice of sourcing products and components overseas, with
subsequent importation into the United States, exposes it to possible product
supply disruptions and increased costs in the event of actions by United States
or foreign government agencies adverse to continued trade or the enactment of
legislation that restricts trade.  For example, on February 2, 1997, the United
States and China reached an agreement on a four-year textile pact that generally
extends current quota arrangements in Chinese textile and apparel exports to the
United States, but reduces quotas on three occasions -- most recently in
September, 1996 when the United States imposed triple charges for illegally
transshipped merchandise (excluding footwear).  China's compliance with the
current textiles agreement is under review by U.S. trade officials.

In addition, Company imports a significant amount of its products and product
components from China.  The United States provides China with most-favored-
nation ("MFN") status, allowing China to receive the same tariff treatment that
the United States extends to its "most favored" trading partners.
Notwithstanding this current policy, Congress could seek to revoke MFN for China
or condition its renewal on factors such as China's human rights record.
Recently, there has been heightened scrutiny of extending MFN for China in light
of certain allegations that Chinese nationals may have sought to improperly or
illegally influence members of the Administration or Congress through political
contributions.  In addition, there has been increasing concern in Congress with
regard to the growing U.S. trade deficit with China.

The administration of existing U.S. trade laws can also create adverse
consequences for trade with the Company's suppliers.  In particular, under
Section 301 of the Trade Act of 1974, as well as "Special 301" and "Super 301,"
the Office of the United States Trade Representative ("USTR") can retaliate
against certain unfair foreign trading practices.  For example, in early 1995
such retaliation almost occurred against China in a Special 301 investigation of
China's intellectual property regime.  However, on February 26, 1995, the United
States and China reached an agreement in this Special 301 investigation,
avoiding the scheduled imposition of increased tariffs by the United States on
certain products imported from China, including certain footwear products.  This
bilateral agreement has extensive compliance features, and China's compliance
with this agreement is currently under review by U.S. trade officials.  On May
15, 1996, based on monitoring carried out under Section 306(a) of the Trade Act
of 1974, as amended, the United States considered that China was not
satisfactorily implementing the February 26, 1995 agreement, and proposed to
impose prohibitive tariffs on certain products from China, including certain
textile and apparel, but excluding footwear.  Additionally, to prevent import
surges, USTR directed Customs to limit exports of certain textile products by
their date of entry.  On June 17, 1996, USTR announced that, based on measures
that China has taken and will take in the future to implement key elements of
the 1995 agreement, the proposed sanctions would not be imposed.  The Company is
unable to predict whether USTR may decide in the future to impose sanctions or
take other actions against China under this agreement.  Also, U.S./ China
foreign relations, especially with respect to China's efforts to accede to the
World Trade Organization, have been contentious in the recent past, and the
Company cannot predict whether this tension will interfere with the ability of
the Company to import products from China in the future.

In addition, USTR has identified certain of the Asian countries in which the
Company's suppliers are located as having various foreign trade barriers.  As a
result of these or other unfair trade practices as identified by USTR, such
countries could be subject to possible retaliation by the United States under
Super or regular Section 301 authority.

The Company is unable to predict whether additional U.S. customs duties, quotas
or other restrictions may be imposed in the future upon the importation of its
products and/or components as a result of any of the matters discussed above, or
because of similar U.S. or foreign government actions.  Such action could result
in increases in the costs of imported footwear, footwear components or other
Company products generally, or  limitations on the Company's ability to import
footwear, footwear components or such other products into the United States.
Such occurrences might adversely affect the sales or profitability of the
Company, possibly materially.


COMPETITION

Competition is intense in the markets in which the Company sells its products.
The Company competes with a large number of other companies, both domestic and
foreign.  Several competitors are large organizations with diversified product
lines, well known brands and financial resources substantially greater than
those of the Company.  The principal competitors for the Company's Saucony
products are Nike, New Balance and ASICS.  The principal competitors for the
Company's Brookfield products are Variflex, Roller Derby, Blade Runner and
Fisher-Price.  The Company believes that the key competitive factors as to both
its Saucony and Brookfield products are styling, durability, product
identification through promotion, brand awareness and price.  Technical
performance is an important competitive factor with respect to the Company's
Saucony products, and name identification is an important competitive factor
with respect to the Company's licensed Brookfield products.  Customer support
services and E.D.I. (Electronic Data Interchange) are also important competitive
factors.  The Company believes that it is competitive in all of these areas.


TRADEMARKS

The Company utilizes trademarks on nearly all of its products and believes that
having distinctive marks is an important factor in marketing its goods.  The
Company has federally registered its Saucony, Spot-Bilt, Hyde, G.R.I.D.,
Quintana Roo, and Hind marks, among others, in the United States.  The Company
has also registered some of these marks in a number of foreign countries,
including countries in Europe, the Far East, and North, Central and South
America.   Although the Company has a foreign trademark registration program for
selected marks, no assurance can be given that it will be able to register or
use such marks in each foreign country in which registration is sought.  The
Company also obtains licenses on a royalty-bearing basis to various marks from
third parties from time to time, generally for two- to three-year periods.  The
Company currently uses Barbie, Playskool, Franklin, Spalding and other marks in
connection with sales of its Brookfield products.

Although the Company has usually been able to renew its licenses upon
expiration, there can be no assurance that it will be able to do so in the
future.  The loss by the Company of its license for the Barbie or Spalding marks
could have a material adverse effect on the Company's consolidated financial
position and results of operations.  In addition, one or more of the Company's
licensed tradenames or likenesses may decline in popularity.


EMPLOYEES

At January 3, 1997, the Company employed approximately 421 people worldwide, of
whom approximately 140 worked at the Company's manufacturing plant in Bangor,
Maine, approximately 25 worked in the Company's Peabody, Massachusetts
warehouse, approximately 29 were sales and marketing personnel, approximately 27
were executive and finance personnel, approximately 15 were product development
and design personnel and the remainder were involved in various other aspects of
the Company's business.  Eighty-four of the Company's employees work at foreign
locations.  The Company believes that its employee relations are excellent.  The
Company has never experienced a strike or other work stoppage.  Approximately 20
employees in the Company's Peabody warehouse were represented by a union at
January 3, 1997.  None of the Company's other employees is represented by a
union or subject to a collective bargaining agreement.

ITEM 2 - PROPERTIES

The Company's general and executive offices and its main distribution facility
are located in Peabody, Massachusetts, and are owned by the Company.  This
facility consists of approximately 175,000 square feet, of which 145,000 square
feet is warehouse space.

The Company owns a factory in Bangor, Maine, containing approximately 82,000
square feet of space, substantially all of which is used for the manufacture of
the Company's Saucony running shoes, mostly with imported components.  The
Company also owns a retail store in Bangor, containing approximately 3,000
square feet of space, and a warehouse in East Brookfield, Massachusetts,
containing approximately 100,000 square feet.  The Company's Australian
subsidiary owns an office and warehouse facility in St. Peters, Australia,
containing approximately 15,000 square feet.

ITEM 3 - LEGAL PROCEEDINGS

A subsidiary of the Company, Saucony Shoe Manufacturing Co., Inc. ("SSM"), was
named as a third-party defendant in the case of United States v. Atlas Minerals
and Chemicals, et al., which was filed on August 9, 1991 in the United States
District Court for the Eastern District of Pennsylvania asserting liability
under the Comprehensive Environmental Response Compensation and Liability Act
for the remediation of hazardous substances contamination at a landfill in
Pennsylvania.  The United States and the original defendants in this case
entered into a settlement agreement under which the original defendants will
conduct or pay for future remedial actions at the landfill, and reimburse the
United States for certain past response costs.  The United States and the
original defendants  estimated these remedial actions and response costs at
approximately $23 million.  The original defendants had initiated third-party
actions against approximately 40 parties, including SSM, seeking reimbursement
or contribution as to these costs.  SSM conducted manufacturing operations from
1968 to 1983, at which time it was phased out of business.  On August 25, 1995,
the court issued an opinion and judgment, holding certain parties in the case
jointly and severally liable for response costs which had been and will be
incurred, and determined the equitable share of each liable party.  The court
determined that SSM's equitable share of response costs was $89,370, or 0.44% of
the total costs.  Should the estimated response costs rise, or should one or
more liable parties fail to satisfy the judgments against them, SSM's obligation
would increase.  Payment of SSM's obligation is expected to occur over a number
of years.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
Not applicable.


EXECUTIVE OFFICERS OF THE REGISTRANT


The executive officers of the Company are as follows:

       Name                   Age                   Position
--------------------          ---           --------------------------


John H. Fisher                49            President, Chief  Executive Officer
                                            and Director


Charles A. Gottesman          46            Executive Vice President,
                                            Chief Operating Officer, Treasurer
                                            and Director


Wolfgang Schweim              44            President, Saucony Athletic Footwear
                                            Division


James A. Buchanan             50            President and General Manager of
                                            Brookfield Athletic Co., Inc. and
                                            Director


Roger P. Deschenes            38            Controller and Chief Accounting
                                            Officer


Kenneth W. Graham             43            Senior Vice President,
                                            Research & Development/Manufacturing


Daniel J. Horgan              41            Vice President, Operations



John H. Fisher became Chief Executive Officer of the Company in 1991.  He was
elected President and Chief Operating Officer in 1985 after having served as
Executive Vice President from 1981 to 1985 and as Vice President, Sales from
1979 and 1981.  Mr. Fisher is a member of the World Federation of Sporting Goods
Industries, is the former Chairman of the Athletic Footwear Council of the
Sporting Goods Manufacturers Association, and is a member of various civic
associations.  Mr. Fisher became a director in 1980.

Charles A. Gottesman has served as Executive Vice President and Chief Operating
Officer of the Company since 1992, and served as Executive Vice President,
Finance from 1989 to 1992, Senior Vice President from 1987 to 1989, Vice
President from 1985 to 1987, and Treasurer since 1983.  Mr. Gottesman became a
director in 1983 and is the brother-in-law of John H. Fisher.

Wolfgang Schweim became President of the Company's Saucony Athletic Footwear
Division in June 1994.  From 1993 to 1994, Mr. Schweim served as Managing
Director for Saucony Europe.  From 1989 to 1993, Mr. Schweim was the German
Managing Director and Marketing Sales Manager for Europe at Asics, an athletic
shoe manufacturer.  Prior to 1989, Mr. Schweim worked in sales and marketing
positions with Nike International, Le Coq Sportif and Adidas AG.

James A. Buchanan joined the Company in 1989 as Vice President, Marketing and
was promoted to his present position in 1990.  From 1985 to 1989, he was
President of Marketing Associates International Ltd., a company engaged in the
marketing of entertainment products, including the European introduction of the
board game Trivial Pursuit.  From 1981 to 1985 he was employed by General Mills,
Inc., first as Director of Marketing for New Ventures (non-foods) and then as
European Marketing Vice President for the General Mills Fun Group.  Mr. Buchanan
became a director in 1991.

Roger P. Deschenes joined the Company in 1990 as Corporate Accounting Manager
and was promoted to Controller and Chief Accounting Officer in October 1995.  He
was employed at Allen-Bradley, a manufacturing company and subsidiary of
Rockwell International, Corp., from 1987 to 1990 as Financial and Cost Reporting
Supervisor. From 1986 to 1987, Mr. Deschenes was employed at Rule Industries,
Inc., a manufacturing firm, as Accounting Manager.  Mr. Deschenes is a Certified
Management Accountant.

Kenneth W. Graham was promoted to Senior Vice President of Research and
Development/Manufacturing in 1996, after serving as Vice President of Research
and Development/Manufacturing.  Mr. Graham joined the Company in 1984 and has
served as Manager and Vice President of Research and Development.  Prior to
joining the Company, Mr. Graham worked for seven years with New Balance Athletic
Shoes Corporation.

Daniel J. Horgan became Vice President of Operations in September 1995 after
serving as Senior Director of Operations from September 1994 to September 1995.
Mr. Horgan joined the Company in 1982 as Manager of Import and Export
Operations, served as Product Procurement and Distribution Manager from 1985 to
1988, Manager of Production from 1988 to 1992, and Director of International
Trade for the Company from 1992 to 1994.

PART II

ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's Class A Common Stock and Class B Common Stock trade on the Nasdaq
National Market under the symbols "HYDEA" and "HYDEB," respectively.  The
following table sets forth, for the periods indicated, the actual high and low
sales prices per share of the Class A Common Stock and the Class B Common Stock
as reported by the Nasdaq National Market.

<TABLE>
<CAPTION>

                                                                    Class A                          Class B
                                                                  Common Stock                     Common Stock
                                                                  ------------                     ------------

                                                                High           Low             High             Low
                                                                ----           ---             ----             ---
    <S>                                                     <C>           <C>              <C>             <C>
    FISCAL YEAR ENDED JANUARY 3, 1997
    ---------------------------------
    First Quarter                                           $    4-3/8    $    3-5/8       $      4-1/4    $    3-3/16
    Second Quarter                                               6-3/4         3-5/8            5-13/16          3-1/4
    Third Quarter                                                6-1/2         4-1/2            5-15/16          4-3/4
    Fourth Quarter                                               5-1/2         4-3/8              5-1/2          4-1/2

    FISCAL YEAR ENDED JANUARY 5, 1996
    ---------------------------------
    First Quarter                                           $    5-1/2    $    4-5/8       $      5-1/2    $     4-5/8
    Second Quarter                                               5-1/2             4              5-1/8          3-7/8
    Third Quarter                                                5-1/4             4                  5              4
    Fourth Quarter                                               5-1/4         3-5/8              4-5/8          3-5/8

</TABLE>

There were 401 and 374 stockholders of record of the Class A Common Stock and
Class B Common Stock, respectively, on March 21, 1997.

The Company does not anticipate paying any cash dividends in the foreseeable
future on the shares of Class A Common Stock or Class B Common Stock.  The
Company currently intends to retain future earnings to fund the development and
growth of its business.  The Company's note agreement with an insurance company
contains certain covenants restricting the cash dividends which may be paid by
the Company.  As of January 3, 1997, approximately $11,507,000 was available for
payment of cash dividends under the terms of these covenants.  Additionally, the
Company's credit facility agreement with two banks further restricts the payment
or declaration of any dividend or other distributions to stockholders, in money
or property, except in shares of its own Common Stock.  Each share of Class B
Common Stock is entitled to a regular cash dividend equal to 110% of the regular
cash dividend, if any, payable on a share of Class A Common Stock.

<TABLE>
ITEM 6 - SELECTED FINANCIAL DATA
Selected Income Statement Data
<CAPTION>
                                         Year Ended          Year Ended         Year Ended         Year Ended       Year Ended
                                         January 3,          January 5,        December 30,       December 31,      January 1,
                                            1997                1996               1994               1993             1993
                                            ----                ----               ----               ----             ----

<S>                                    <C>                 <C>                 <C>               <C>                <C>

Net sales                              $110,809,169        $102,562,755        $107,577,873      $103,735,477       $81,302,002

Income before interest, income
  taxes, minority interest and
  cumulative effect of change in
  accounting principle                    3,181,293           3,320,129           6,256,133         9,081,123         7,701,541

Minority interest                           307,998            (285,820)              8,516           (46,747)          (26,670)

Cumulative effect on prior
  years of change in
  accounting principle (1)                       --                  --                  --                --          (303,538)

Net income                                1,494,090           1,591,106           2,936,637         4,607,698         3,422,099

Net income per common share(2)                 0.24                0.26                0.46              0.76              0.65

Weighted average number of
  common shares and
  equivalents outstanding (2)             6,251,889           6,239,557           6,437,281         6,074,238         5,238,410

Cash dividends per share of
  common stock                                   --                  --                  --                --                --

<CAPTION>
Selected Balance Sheet Data
                                          January 3,         January 5,        December 30,       December 31,      January 1,
                                             1997               1996               1994               1993             1993
                                             ----               ----               ----               ----             ----
<S>                                     <C>                 <C>                 <C>               <C>               <C>
Current assets                          $57,815,101         $59,190,090         $61,621,756       $58,121,147       $49,032,888

Current liabilities                      14,208,783          14,728,785          15,657,860        13,372,714        13,417,951

Working capital                          43,606,318          44,461,305          45,963,896        44,748,433        35,614,937

Total assets                             71,591,726          69,471,289          77,082,332        73,693,786        56,691,068

Long-term debt and capitalized
  lease obligations, net of
  current portion                         4,892,753           4,205,568          11,922,392        12,941,977        10,015,977

Stockholders' equity                     50,078,617          48,365,054          46,754,828        44,709,824        30,868,287


---------------------------
<FN>
(1)  The Company adopted Statement of Financial Accounting Standards 109 (SFAS No. 109) in fiscal 1992.  SFAS No. 109
     required initial application of this statement to be reported as a change in accounting principle.  Included in 1992
     consolidated net income is a charge to earnings of $303,538 or $.06 per share of Common Stock, reflecting the
     cumulative effect of adopting SFAS No.  109.

(2)  See Notes 1 and 10 of the Notes to Consolidated Financial Statements regarding restatement to reflect stock dividend.

</TABLE>


ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Selected Quarterly Financial Results

The following table sets forth certain unaudited quarterly financial data of the
Company for each of the four fiscal quarters in each of fiscal 1996, 1995 and
1994.  The Company believes that this information has been prepared on the same
basis as the audited Consolidated Financial Statements and that all necessary
adjustments, consisting only of normal recurring adjustments, have been included
in the amounts stated below to present fairly the selected quarterly information
when read in conjunction with the audited Consolidated Financial Statements and
the Notes thereto.
<TABLE>
SELECTED QUARTERLY FINANCIAL RESULTS
                                                                      Quarters Ended
                                                                       (Unaudited)
<CAPTION>
                                             April 5,            July 5,            October 4,         January 3,
                                               1996                1996                1996               1997
                                               ----                ----                ----               ----
STATEMENT OF INCOME DATA:
<S>                                       <C>                <C>                 <C>                 <C>
Saucony
  Domestic                                $  18,569,207      $  15,687,804       $  10,796,406       $   9,391,947
  International                               7,139,294          5,489,664           6,418,020           5,318,892
                                          -------------      -------------       -------------       -------------
    Saucony Total                            25,708,501         21,177,468          17,214,426          14,710,839
                                          -------------      -------------       -------------       -------------

Brookfield
  Domestic                                    1,881,752          1,383,626           3,116,876           3,024,950
  International                               1,371,829          3,261,233           3,987,583           1,440,371
                                          -------------      -------------       -------------       -------------
    Brookfield Total                          3,253,581          4,644,859           7,104,459           4,465,321
                                          -------------      -------------       -------------       -------------

Other                                         2,929,811          3,218,663           3,394,633           2,986,608
                                          -------------      -------------       -------------       -------------
Net sales                                    31,891,893         29,040,990          27,713,518          22,162,768

Other income                                    249,654            367,593              95,914             362,504
                                          -------------      -------------       -------------       -------------

Total revenue                                32,141,547         29,408,583          27,809,432          22,525,272
                                          -------------      -------------       -------------       -------------

Costs and expenses
  Cost of sales                              22,587,788         20,848,665          18,903,001          15,109,717
    Selling expenses                          4,578,823          4,823,427           4,136,758           4,101,999
  General and administrative
    expenses                                  3,310,240          3,228,976           3,397,683           3,676,464
  Interest expense                              263,198            239,047             230,660             218,832
                                          -------------      -------------       -------------       -------------

    Total costs and expenses                 30,740,049         29,140,115          26,668,102          23,107,012
                                          -------------      -------------       -------------       -------------

Income (loss) before income
  taxes and minority interest                 1,401,498            268,468           1,141,330            (581,740)

Provision (benefit) for income
  taxes                                         526,618             61,309             392,183            (552,642)

Minority interest in income (loss) of
  consolidated subsidiaries                     135,411             93,466             146,529             (67,408)
                                          -------------      -------------       -------------       --------------

Net income                                $     739,469      $     113,693       $     602,618       $      38,310
                                          =============      =============       =============       =============

Per share amounts:
  Net income                                     $0.12               $0.02               $0.10               $0.01
                                                  ====               =====               ====                =====

Weighted average common shares
  and equivalents outstanding                 6,225,960          6,244,225           6,268,925           6,268,732
                                          =============      =============       =============       =============
</TABLE>

<TABLE>
Statement of Income Data as a Percentage of Net Sales:


                                                                         Quarters Ended
                                                                          (Unaudited)
<CAPTION>
STATEMENT OF INCOME DATA:                          April 5,         July 5,           October 4,        January 3,
                                                     1996             1996               1996              1997
                                                     ----             ----               ----              ----
<S>                                                <C>               <C>              <C>               <C>
Net Sales

Saucony
  Domestic                                            58.2%             54.0%            39.0%             42.4%
  International                                       22.4%             18.9%            23.2%             24.0%
                                                   --------          --------         --------          --------
    Saucony Total                                     80.6%             72.9%            62.2%             66.4%
                                                   --------          --------         --------          --------

Brookfield
  Domestic                                             5.9%              4.8%            11.2%             13.6%
  International                                        4.3%             11.2%            14.4%              6.5%
                                                   --------          --------         --------          --------
    Brookfield Total                                  10.2%             16.0%            25.6%             20.1%
                                                   --------          --------         --------          --------

Other                                                  9.2%             11.1%            12.2%             13.5%
                                                   --------          --------         --------          --------

Net sales                                            100.0%            100.0%           100.0%            100.0%
Other income                                           0.8%              1.2%             0.3%              1.6%
                                                   --------          --------         --------          --------

Total revenue                                        100.8%            101.2%           100.3%            101.6%
                                                   --------          --------         --------          --------

Costs and expenses
  Cost of sales                                       70.8%             71.8%            68.2%             68.2%
  Selling expenses                                    14.4%             16.6%            14.9%             18.5%
  General and administrative
    expenses                                          10.4%             11.1%            12.3%             16.5%
  Interest expense                                     0.8%              0.8%             0.8%              1.0%
                                                   --------          --------         --------          --------

    Total costs and expenses                          96.4%            100.3%            96.2%            104.2%
                                                   --------          --------         --------          --------

Income (loss) before taxes and
  minority interest                                    4.4%              0.9%             4.1%            (2.6%)

Provision (benefit) for income
  taxes                                                1.7%              0.2%             1.4%            (2.5%)

Minority interest in income
  (loss) of consolidated
  subsidiaries                                         0.4%              0.3%             0.5%            (0.3%)
                                                   --------          --------         --------          --------

Net income (loss)                                      2.3%              0.4%             2.2%              0.2%
                                                   ========          ========         ========          ========


</TABLE>
<TABLE>

SELECTED QUARTERLY FINANCIAL RESULTS
                                                                      Quarters Ended
                                                                       (Unaudited)
<CAPTION>
STATEMENT OF INCOME DATA:                   March 31,           June 30,          September 29,       January 5,
                                               1995               1995                 1995              1996
                                               ----               ----                 ----              ----
<S>                                       <C>                <C>                 <C>                 <C>
Saucony
  Domestic                                $  16,146,371      $  12,777,890       $   9,958,877       $   8,156,455
  International                               7,145,958          5,775,849           5,487,042           5,219,465
                                          -------------      -------------       -------------       -------------

    Saucony Total                            23,292,329         18,553,739          15,445,919          13,375,920
                                          -------------      -------------       -------------       -------------

Brookfield
  Domestic                                    4,090,634          3,933,322           6,215,743           4,497,599
  International                                 632,771          1,181,895           1,929,266           1,533,042
                                          -------------      -------------       -------------       -------------

    Brookfield Total                          4,723,405          5,115,217           8,145,009           6,030,641
                                          -------------      -------------       -------------       -------------

Other                                         2,222,167          1,744,781           2,058,338           1,855,290
                                          -------------      -------------       -------------       -------------

Net sales                                    30,237,901         25,413,737          25,649,266          21,261,851

Other income                                    126,221            859,868             383,692             146,078
                                          -------------      -------------       -------------       -------------

Total revenue                                30,364,122         26,273,605          26,032,958          21,407,929
                                          -------------      -------------       -------------       -------------

Costs and expenses
  Cost of sales                              20,376,734         17,380,076          17,464,091          15,639,920
    Selling expenses                          4,860,525          4,361,712           4,419,572           3,045,335
  General and administrative
    expenses                                  3,617,505          3,034,023           3,356,192           3,202,800
  Interest expense                              435,168            311,463             228,306             324,921
                                          -------------      -------------       -------------       -------------

    Total costs and expenses                 29,289,932         25,087,274          25,468,161          22,212,976
                                          -------------      -------------       -------------       -------------

Income (loss) before income
  taxes and minority interest                 1,074,190          1,186,331             564,797            (805,047)

Provision (benefit) for income
  taxes                                         417,103            460,844             220,581            (383,543)

Minority interest in income
  (loss) of consolidated
  subsidiaries                                   28,148           (113,550)             24,808            (225,226)
                                          -------------      --------------      -------------       --------------

Net income (loss)                         $     628,939      $     839,037       $     319,408       $    (196,278)
                                          =============      =============       =============       ==============

Per share amounts:
  Net income (loss)                              $0.10               $0.13               $0.05             $(0.03)
                                                 ====                ====                =====             =======

Weighted average common shares
  and equivalents outstanding                 6,252,746          6,245,913           6,231,606           6,228,588
                                          =============      =============       =============       =============
</TABLE>
<TABLE>
SELECTED QUARTERLY FINANCIAL RESULTS

Statement of Income Data as a Percentage of Net Sales:


                                                                         Quarters Ended
                                                                          (Unaudited)
<CAPTION>
STATEMENT OF INCOME DATA:                          March 31,         June 30,       September 29,       January 5,
                                                     1995              1995              1995              1996
                                                      ---               ----             ----              ----

<S>                                                <C>               <C>              <C>               <C>
Saucony
  Domestic                                            53.4%             50.3%            38.8%             38.4%
  International                                       23.6%             22.7%            21.4%             24.5%
                                                   --------          --------         --------          --------
    Saucony Total                                     77.0%             73.0%            60.2%             62.9%
                                                   --------          --------         --------          --------

Brookfield
  Domestic                                            13.5%             15.5%            24.3%             21.2%
  International                                        2.1%              4.6%             7.5%              7.2%
                                                   --------          --------         --------          --------
    Brookfield Total                                  15.6%             20.1%            31.8%             28.4%
                                                   --------          --------         --------          --------

Other                                                  7.4%              6.9%             8.0%              8.7%
                                                   --------          --------         --------          --------

Net sales                                            100.0%            100.0%           100.0%            100.0%

Other income                                           0.5%              3.4%             1.5%              0.7%
                                                   --------          --------         --------          --------

Total revenue                                        100.5%            103.4%           101.5%            100.7%
                                                   --------          --------         --------          --------

Costs and expenses
  Cost of sales                                       67.4%             68.4%            68.1%             73.6%
  Selling expenses                                    16.1%             17.2%            17.2%             14.3%
  General and administrative
    expenses                                          12.0%             11.9%            13.1%             15.1%
  Interest expense                                     1.4%              1.2%             0.9%              1.5%
                                                   --------          --------         --------          --------

    Total costs and expenses                          96.9%             98.7%            99.3%            104.5%
                                                   --------          --------         --------          --------

Income (loss) before taxes and
  minority interest                                    3.6%              4.7%             2.2%            (3.8%)

Provision (benefit) for income
  taxes                                                1.4%              1.8%             0.9%            (1.8%)

Minority interest in income
  (loss) of consolidated
  subsidiaries                                         0.1%            (0.4%)             0.1%            (1.1%)
                                                   --------          --------         --------          --------

Net income (loss)                                      2.1%              3.3%             1.2%            (0.9%)
                                                   ========          ========         ========          ========

</TABLE>
<TABLE>


STATEMENT OF INCOME DATA:
                                                                        Quarters Ended
<CAPTION>                                                                (Unaudited)

                                             April 1,             July 1,         September 30,      December 30,
                                               1994                 1994               1994              1994
                                               ----                 ----               ----              ----

<S>                                       <C>                 <C>                 <C>                <C>
Saucony
  Domestic                                $   14,754,713      $    14,153,824     $  13,580,430      $  11,450,127
  International                                6,025,409            3,679,950         5,847,618          6,867,348
                                           -------------      ---------------     -------------      -------------
    Saucony Total                             20,780,122           17,833,774        19,428,048         18,317,475
                                           -------------      ---------------     -------------      -------------

Brookfield
  Domestic                                     3,449,622            4,640,359         3,818,867          7,789,835
  International                                  253,649              683,519         2,329,573          1,557,237
                                           -------------      ---------------     -------------      -------------
    Brookfield Total                           3,703,271            5,323,878         6,148,440          9,347,072
                                           -------------      ---------------     -------------      -------------

Other                                          1,630,817            1,587,163         1,876,050          1,601,763
                                           -------------      ---------------     -------------      -------------

Net sales                                     26,114,210           24,744,815        27,452,538         29,266,310

Other income                                     129,850              240,981           379,591            558,028
                                           -------------      ---------------     -------------      -------------

Total revenue                                 26,244,060           24,985,796        27,832,129         29,824,338
                                           -------------      ---------------     -------------      -------------

Costs and expenses
  Cost of goods sold                          17,779,333           16,879,487        18,156,065         19,678,500
  Selling expenses                             4,102,384            4,713,858         4,366,960          4,494,929
  General and administrative
    expenses                                   3,093,239            2,924,344         3,418,839          3,022,252
  Interest expense                               371,138              358,138           360,106            390,865
                                           -------------      ---------------     -------------      -------------

    Total costs and expenses                  25,346,094           24,875,827        26,301,970         27,586,546
                                           -------------      ---------------     -------------      -------------

Income before income taxes
  and minority interest                          897,966              109,969         1,530,159          2,237,792

Provision for income taxes                       319,229               13,277           532,244            965,983

Minority interest in income
  (loss) of consolidated
  subsidiaries                                    61,912              (87,002)           42,449             (8,843)
                                           -------------      ----------------    -------------      --------------

Net income                                $      516,825      $       183,694     $     955,466      $   1,280,652
                                           =============      ===============     =============      =============

Per share amounts:

Net income                                         $0.08               $0.03              $0.15             $0.20
                                                   =====               =====              =====              ====

Weighted average common
  shares and equivalents
  outstanding                                  6,501,071            6,457,466         6,423,956          6,333,950
                                           =============      ===============     =============      =============


</TABLE>
<TABLE>
SELECTED QUARTERLY FINANCIAL RESULTS

Statement of Income Data as a Percentage of Net Sales:


                                                                          Quarters Ended
<CAPTION>                                                                  (Unaudited)

                                               April 1,           July 1,        September 30,       December 30,
                                                 1994               1994              1994               1994
                                                 ----               ----              ----               ----
<S>                                               <C>               <C>              <C>                 <C>
Saucony
  Domestic                                         56.5%             57.2%             49.5%               39.1%
  International                                    23.1%             14.9%             21.3%               23.5%
                                                 -------           -------          --------            --------
    Saucony Total                                  79.6%             72.1%             70.8%               62.6%
                                                 -------           -------          --------            --------

Brookfield
  Domestic                                         13.2%             18.8%             13.9%               26.6%
  International                                     1.0%              2.7%              8.5%                5.3%
                                                 -------           -------          --------            --------
    Brookfield Total                               14.2%             21.5%             22.4%               31.9%
                                                 -------           -------          --------            --------

Other                                               6.2%              6.4%              6.8%                5.5%
                                                 -------           -------          --------            --------

Net sales                                         100.0%            100.0%            100.0%              100.0%
Other income                                        0.5%              1.0%              1.4%                1.9%
                                                 -------           -------          --------            --------

Total revenue                                     100.5%            101.0%            101.4%              101.9%
                                                 -------           -------          --------            --------

Costs and expenses
  Cost of goods sold                               68.1%             68.2%             66.1%               67.2%
  Selling expenses                                 15.7%             19.1%             15.9%               15.5%
  General and administrative
    expenses                                       11.8%             11.8%             12.5%               10.3%
  Interest expense                                  1.4%              1.4%              1.3%                1.3%
                                                 -------           -------          --------            --------

    Total costs and expenses                       97.1%            100.5%             95.8%               94.2%
                                                 -------           -------          --------            --------

Income before taxes and
  minority interest                                 3.4%              0.4%              5.6%                7.7%

Provision for income taxes                          1.2%              0.1%              1.9%                3.3%

Minority interest in income
  (loss) of consolidated
  subsidiaries                                      0.2%            (0.4%)              0.2%                0.0%
                                                 -------           -------          --------            --------

Net income                                          2.0%              0.7%              3.5%                4.4%
                                                 =======           =======          ========            ========


</TABLE>
This Annual Report on Form 10-K contains forward-looking statements.  For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements.  Without limiting the
foregoing, the words "believes," "anticipates," "plans," "expects" and similar
expressions are intended to identify forward-looking statements.  There are a
number of important factors that could cause the Company's actual results to
differ materially from those indicated by such forwarding-looking statements.
These factors include, without limitation, those set forth below under the
caption "Certain Factors That May Affect Future Results."

FISCAL 1996 COMPARED TO FISCAL 1995

The Company's net sales increased 8.0% to $110,809,000 in fiscal 1996 from
$102,563,000 in fiscal 1995.

Net sales of the Company's Saucony products increased 12% to $78,811,000 in
fiscal 1996 from $70,668,000 in fiscal 1995 due primarily to higher selling
prices and, to a lesser extent, increased unit shipment volume.  The Company
believes that the increase resulted from technical and cosmetic improvements to
its Saucony products in 1996.  Saucony domestic net sales increased 16% to
$54,445,000 in fiscal 1996 from $47,040,000 in fiscal 1995, due to higher
selling prices of the Company's recently introduced products in comparison with
the Company's existing products and increased unit shipment volume.  Saucony
foreign net sales increased 3% to $24,366,000 in fiscal 1996 from $23,628,000 in
fiscal 1995, due primarily to higher selling prices and, to a lesser extent,
favorable currency exchange.  The Company currently distributes its Saucony
products in 32 countries through 24 distributors located throughout the world.

Net sales of the Company's Brookfield's products decreased 19% to $19,468,000 in
fiscal 1996 from $24,014,000 in fiscal 1995.  Domestic sales of Brookfield
products decreased 50% to $9,407,000 in fiscal 1996 from $18,737,000 in fiscal
1995, due to lower unit shipment volume for certain licensed products and a
shift in the sales mix to lower-priced product.  The Company believes this
decrease resulted from an oversupply of inventory at the retail level combined
with the Company's current, more conservative credit risk environment.  Foreign
sales of Brookfield products increased 91% to $10,061,000 in fiscal 1996 from
$5,277,000 in fiscal 1995, due primarily to increased unit shipment volume and a
change in product mix, with increased sales of the Company's recently introduced
products that have higher selling prices.  The Company currently distributes its
Brookfield products in 42 countries.

Net sales of other products increased 59% to $12,530,000 in fiscal 1996 from
$7,881,000 in fiscal 1995, due primarily to additional sales from the Company's
wholly-owned subsidiary, Quintana Roo, Inc. ("Quintana Roo"), which was acquired
in August 1995, and increased sales of non-corporate brands by the Company's
Australian subsidiary.

Other income decreased 29% to $1,076,000 in fiscal 1996 from $1,516,000 in
fiscal 1995, due primarily to the gain on the sale of the Company's investment
in a limited partnership and the receipt of the final royalty payment under a
litigation settlement, both of which were recognized in fiscal 1995.

The Company's gross profit increased to $33,360,000 in fiscal 1996 from
$31,702,000 in fiscal 1995.  The Company's gross margin decreased to 30.1% in
fiscal 1996 from 30.9% in fiscal 1995 reflecting decreased margins for both
Saucony and Brookfield products.  The gross margin decrease for Saucony products
resulted from the shipment of a single slow-moving, non-current model, increased
sales of lower-margin footwear and, to a lesser extent, increased freight costs.
The decline in the gross margin for Brookfield products resulted from a shift in
the sales mix to lower-margin domestic Brookfield product and increased
international sales, which have lower margins than domestic sales.

Selling, general and administrative expenses increased to $31,254,000, or 28% of
net sales, in fiscal 1996, from $29,898,000, or 29% of net sales, in fiscal
1995.  Advertising and promotion expenses increased $1,033,000 in fiscal 1996
due primarily to increased  Saucony domestic television and print media
advertising and, to a lesser extent, increased sponsorship of athletes.  Selling
expenses decreased by $79,000 in fiscal 1996 due to management's initiative to
reduce commissions on sales of Saucony products and to increased sales of
Brookfield products to house accounts, which are non- commissionable.  General
and administrative expenses increased $403,000 in fiscal 1996, due to increased
costs related to Quintana Roo, which was acquired in August 1995, and increased
foreign costs for payroll due to increased staffing at several of the Company's
foreign subsidiaries and increased professional fees.

Interest expense decreased 27% to $952,000 in fiscal 1996 from $1,300,000 in
fiscal 1995, reflecting the paydown of the Company's senior notes and debt
reduction realized as a result of the sale by the Company of its limited
partnership investment.

The effective tax rate decreased 16.2%, to 19.2% in fiscal 1996 from 35.4% in
fiscal 1995, due to the recovery by the Company of low-income housing tax
credits, which had previously recaptured, the reversal of a deferred foreign tax
valuation allowance and a shift in the international mix of pretax earnings
among taxing jurisdictions.  The low-income housing tax credit recovery is a
non-recurring event.

FISCAL 1995 COMPARED TO FISCAL 1994

The Company's net sales decreased 5.0% to $102,563,000 in fiscal 1995 from
$107,578,000 in fiscal 1994.

Net sales of the Company's Saucony products decreased 7% to $70,668,000 in
fiscal 1995 from $76,359,000 in fiscal 1994, due to decreased unit shipment
volume and a change in the sales mix to lower-priced product, both of which
reflect a difficult retail environment, marginal acceptance of certain new
product offerings and increasing brand strength of a footwear competitor.
Saucony domestic net sales decreased 13% to $47,040,000 in fiscal 1995 from
$53,939,000 in fiscal 1994, due primarily to lower unit shipment volume, and to
a lesser extent, a change in the sales mix to lower-priced product.  Saucony
foreign net sales increased 5% to $23,628,000 in fiscal 1995 from $22,420,000 in
fiscal 1994 and accounted for 33% of Saucony net sales in fiscal 1995 compared
with 29% of Saucony net sales in fiscal 1994.  The increase in foreign Saucony
net sales reflected market gains due to increased unit shipment volume at the
Company's foreign subsidiaries.  The Company currently distributes its Saucony
products in 32 countries.

Net sales of the Company's Brookfield products decreased 2% to $24,014,000 in
fiscal 1995 from $24,523,000 in fiscal 1994.  Domestic sales of Brookfield
products decreased 5% to $18,737,000 in fiscal 1995 from $19,699,000 in fiscal
1994, primarily as a result of a difficult retail environment at the mass
merchant channels of distribution and the absence of a promotional roller skate
license for the Christmas selling season.  Foreign sales of Brookfield products
increased 9% to $5,277,000 in fiscal 1995 from $4,824,000 in fiscal 1994,
accounting for 22% of net sales of Brookfield products in fiscal 1995, compared
to 20% of net sales of Brookfield products in fiscal 1994.  The increase in
foreign net sales of Brookfield products was attributable to increased
international markets, with distribution in 31 countries in fiscal 1995 compared
with 18 countries in fiscal 1994.

Net sales of other products increased 18% to $7,881,000 in fiscal 1995 from
$6,696,000 in fiscal 1994, due primarily to increased sales on non-corporate
brands by the Company's Australian subsidiary.

Other income increased 16% to $1,516,000 in fiscal 1995 from $1,308,000 in
fiscal 1994 as the result of the gain on the sale of the Company's investment in
a limited partnership and increased royalty income.  Royalty income increased in
fiscal 1995 due to a final payment received under a litigation settlement which
amounted to $272,000.

The Company's gross profit decreased to $31,702,000 in fiscal 1995 from
$35,085,000 in fiscal 1994.  The Company's gross margin decreased to 30.9% in
fiscal 1995 from 32.6% in fiscal 1994 reflecting decreased margins for both
Saucony and Brookfield products.  The decline in gross margin for Saucony
products resulted from a greater proportion of sales of lower-priced, lower-
margin footwear to sales of higher-priced, higher-margin footwear in fiscal
1994.  The decline in gross margin for Brookfield products resulted from a
greater ratio of lower-margin international sales to higher-margin domestic
product sales compared with fiscal 1994.  Increased international sales in
fiscal 1995 by Brookfield as an OEM manufacturer for certain of its licensors
also caused gross margins to contract on some specialty Brookfield product
items.

Selling, general and administrative expense decreased to $29,898,000, or 29.2%
of net sales, in fiscal 1995 from $30,137,000, or 28.0% of net sales, in fiscal
1994.  The increase in selling, general and administrative expenses as a
percentage of net sales in fiscal 1995 as compared to fiscal 1994 was due to the
decrease in net sales in fiscal 1995 in comparison to fiscal 1994.  The absolute
dollar decrease in the amount of selling, general and administrative expenses
resulted from a reduction in Saucony product advertising and promotion spending.
Advertising and promotion expenses decreased $1,263,000 in fiscal 1995 due
primarily to decreased Saucony domestic television and print media advertising.
Selling expenses increased by $272,000 in fiscal 1995 due to increased selling
payroll and tradeshow expenses.  General and administrative expenses increased
$752,000 in fiscal 1995, due to increased foreign spending, including costs
associated with the lease of a warehouse in Australia, increased costs related
to Saucony GmbH, which was formed in December 1994 and increased payroll costs
due to increased staffing at several of the Company's foreign subsidiaries.
Interest expense decreased 12% to $1,300,000 in fiscal 1995 from $1,480,000 in
fiscal 1994, as a result of the paydown of corporate debt during fiscal 1995 and
debt reduction realized as a result of the sale by the Company of its limited
partnership investment.

The provision for income tax declined by $1,116,000 in fiscal 1995 as compared
with fiscal 1994 as a result of the decreases in the Company's pretax earnings.
The effective tax rate decreased by 2.9%, to 35.4% in fiscal 1995 from 38.3% in
fiscal 1994, due primarily to the relative effect of fixed tax credits from the
Company's tax related investment on lower income before tax for fiscal 1995, as
compared with fiscal 1994, and an adjustment to the Company's tax reserves


LIQUIDITY AND CAPITAL RESOURCES

As of January 3, 1997, the Company's cash and cash equivalents totaled
$2,803,000, a decrease of $8,865,000 from January 5, 1996.  The decrease was the
result of an increase in accounts receivable of $6,003,000, net of the provision
for bad debts and discounts of $5,397,000, an increase of $1,691,000 in
inventory during fiscal 1996 and the acquisition of trademarks and tradenames of
an athletic apparel manufacturer for $1,250,000, offset in part by the
depreciation and amortization provision of $1,565,000.  The increase in accounts
receivable was due to increased net sales of the Company's Saucony products in
the fiscal fourth quarter of 1996 and extended payment terms given to certain of
the Company's customers.  The Company's days sales outstanding for its accounts
receivable increased to 96 days at the end of fiscal 1996 from 74 days at the
end of fiscal 1995.  Inventories increased in fiscal 1996 due to an increase in
production at the Company's Bangor manufacturing facility and a higher level of
finished goods inventory at the Company's overseas subsidiaries.  The Company's
inventory turn ratio increased to 2.8 turns in fiscal 1996 from 2.4 turns in
fiscal 1995.

During fiscal 1996, the Company used $5,058,000 of net cash to finance operating
activities, expended $1,984,000 to acquire capital assets and information
technology, expended $1,250,000 to acquire the tradenames and trademarks of an
athletic apparel manufacturer, received $78,000 from the sale of capital assets,
increased short-term borrowings by $1,313,000, expended $2,404,000 to reduce
long-term debt, received $69,000 from the issuance of the Company's common stock
and borrowed $420,000 on a long-term basis, secured by the Company's facility in
St. Peters, Australia.

Principal factors (other than net income, accounts receivable, provision for bad
debts and discounts and inventory) affecting the operating cash flows in fiscal
1996 included a decrease in accrued letters of credit and accounts payable of
$1,151,000 (due to the timing of inventory shipments), and an increase in
accrued expenses of $419,000 (due to increased advertising and promotional
spending).  The declining value of the U.S. dollar decreased the value of cash
and cash equivalents by $51,000.

As of January 5, 1996, the Company's cash and cash equivalents totalled
$11,668,000, an increase of $8,319,000 from December 30, 1994.  The increase was
primarily the result of a decrease in accounts receivable of $6,846,000 and a
decrease in inventory of $5,187,000 during fiscal 1995.  The decrease in
receivables was due to reduced corporate net sales in the fiscal fourth quarter
of 1995.  The Company's days sales outstanding at the end of fiscal 1995
remained consistent with fiscal 1994's level of 74 days.  The Company's
inventory turn ratio decreased to 2.4 turns at the end of fiscal 1995 from 2.7
turns at the end of fiscal 1994.  Inventories in fiscal 1995 decreased due to
lower inventory requirements.

In fiscal 1995, the Company generated approximately $11,215,000 from operations,
expended $1,120,000 for capital expenditures, information technology and other
deferred charges, invested $112,000 to form a new subsidiary, expended $77,000
to repurchase shares of the Company's Common Stock, reduced long-term debt and
other long-term commitments by $2,920,000 and received $1,335,000 in cash as the
result of the sale by the Company of its investment in a limited partnership.
As part of the sale of this investment, the Company realized a reduction of
$4,056,000 of debt and accrued interest, of which $3,259,000 was long-term debt.

Principal factors (other than net income, accounts receivable, provision for bad
debts and discounts and inventory) affecting the Company's operating cash flows
in fiscal 1995 included  an increase in prepaid expenses and other current
assets of $262,000 (due to advance payments for business insurance and
production molds), an increase in marketable securities of $308,000, an increase
in accrued letters of credit of $1,115,000 (due to increased in-transit
inventory), a decrease in accounts payable of $865,000 (due to lower inventory
requirements and reduced operating spending in the fourth quarter of 1995), a
decrease in accrued expenses of $1,605,000 (reflecting decreased sales
commissions, incentive bonuses, royalties payable, and other operating expenses,
which are attributable to the fourth quarter sales decrease and lower interest
payable as a result of the reduction in long term debt) and a decrease in
accrued income taxes of $743,000 due to lower pre-tax income and the timing of
tax payments.  The declining value of the U.S. dollar decreased the value of
cash and cash equivalents by $37,000 in fiscal 1995.

The Company has a credit facility with two principal banks pursuant to which a
$30,000,000 credit line is available to the Company.  This credit facility,
which was amended in January 1997, will extend through August 1, 1998 and
provide for a short-term demand line of credit, in the principal amount of up to
$15,000,000, subject to formula adjustment, and a revolving line of credit in
the principal amount of $15,000,000.   Borrowings under this facility generally
will be made at the primary bank's prime rate of interest.  As of January 3,
1997, there was $2,301,803 outstanding under the current facility.  The Company
had open commitments at such date related to letters of credit in the amount of
$5,347,751.  As of March 7, 1997, $6,440,221 was available for borrowing under
the short-term demand line and $15,000,000 was available for borrowing under the
revolving term line.  Certain of the Company's foreign subsidiaries have credit
facilities, consisting of demand and/or revolving lines of credit, in the
aggregate principal amount of approximately $5,888,000.  As of March 7, 1997, an
aggregate of approximately $2,057,059 was available for borrowing under the
facilities of the foreign subsidiaries.  See Note 9 of Notes to Consolidated
Financial Statements.

On April 29, 1988, Hyde issued to a life insurance company $12,000,000 of 9.70%
senior notes due April 29, 1998.  The notes provide for semi-annual payments of
interest, payable in April and October of each year, continuing to April 1998,
and annual payments of principal of $2,000,000 each from April 1993 to and
including April 1998.  The note purchase agreement relating to the notes
contains restrictive covenants commonly found in such agreements.  See Note 6 of
Notes to Consolidated Financial Statements.  The Company may prepay the note at
the time of any scheduled principal or interest payment, subject to a prepayment
premium in certain circumstances.

During 1996, the Company acquired an information technology hardware system at a
cost of $991,000 pursuant to a long-term capital lease.  The lease provides for
a bargain purchase option at the conclusion of the lease term.  At January 3,
1997, the Company had various commitments for capital expenditures, including
information technology systems, improvements to and expansion of distribution
facilities, both domestic and foreign.  The Company believes that these
commitments are not significant.

The liquidity of the Company is contingent upon a number of factors, principally
the Company's future operating results.  Management believes that the Company's
current cash and cash equivalents, credit facilities and internally generated
funds are adequate to meet its working capital requirements and to fund its
capital investment needs and debt service payments.

INFLATION AND CURRENCY RISK

The effect of inflation on the Company's results of operations over the past
three years has been minimal.  The impact of currency fluctuation on the
purchase of inventory by the Company, from foreign suppliers, has been minimal
as the transactions were denominated in U.S. dollars.  The Company, however, is
subject to currency fluctuation risk with respect to the operating results of
the Company's foreign subsidiaries and certain foreign currency denominated
payables.  The Company has entered into certain forward foreign exchange
contracts to minimize the transaction currency risk.

SFAS 121

Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of" (SFAS No. 121), issued
by the Financial Accounting Standards Board, requires that long-lived assets to
be held and used or disposed of by an entity be reviewed for impairment whenever
events or changes in the circumstances indicate that the carrying amount of an
asset may not be recoverable.  SFAS 121 establishes standards for recognizing
and measuring impairment of long-lived assets, certain identifiable intangibles
and goodwill.  For 1996, the Company determined that an impairment loss was not
required on its long-lived assets.

SFAS 123

The Financial Accounting Standards Board issued Financial Accounting Standards
No. 123 "Accounting for Stock-Based Compensation" (SFAS 123) in October 1995.
SFAS 123 establishes the financial accounting and reporting standards for all
stock-based compensation.  SFAS 123 prescribes a fair value method of accounting
for stock options and other similar equity instruments and encourages companies
to adopt this accounting treatment for all stock-based compensation plans.
However, under SFAS 123, companies are permitted to continue to measure
compensation expense using the intrinsic value based method of accounting as
prescribed by APB Opinion No. 25, "Accounting for Stock Issued to Employees,"
provided that pro forma disclosures are made of net income and earnings per
share had the fair value method been adopted.

SFAS 123 is effective for fiscal years commencing after December 15, 1995.  As
permitted by SFAS 123, the Company is continuing to account for employee stock
compensation expense under the precepts of APB Opinion No. 25.  See Note 11 for
pro forma disclosures of net income and earnings per share, calculated utilizing
the fair value method prescribed under SFAS 123.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

The following important factors, among others, could cause actual results to
differ materially from those indicated by forward-looking statements made in
this Annual Report on Form 10-K and presented elsewhere by management from time
to time.

COMPETITION.  Competition is intense in the markets in which the Company sells
its products.  The Company competes with a large number of other companies, both
domestic and foreign, several of which have diversified products lines, well-
known brands and financial, distribution and marketing resources substantially
greater than those of the Company.  The principal competitors for the Company's
Saucony products are Nike, New Balance and ASICS.  The principal competitors for
the Company's Brookfield products are Variflex, Roller Derby, Blade Runner and
Fisher-Price.

DEPENDENCE ON FOREIGN SUPPLIERS.  A number of manufacturers located in the Far
East, primarily in China, Taiwan and Thailand, supply products and product
components to the Company. During fiscal 1996, one of such suppliers, located in
China, accounted for approximately 38% of the Company's total purchases by
dollar volume.  The Company is subject to the usual risks of a business
involving foreign suppliers, such as currency fluctuations, government
regulation of fund transfers, export and import duties, trade limitations
imposed by the United States or foreign governments and political and labor
instability.  In particular, there are a number of trade-related and other
issues creating significant friction between the governments of the United
States and China, and the imposition of punitive import duties on certain
categories of Chinese products has been threatened in the past and may be
implemented in the future.  In addition, the Company has no long-term
manufacturing agreements with its foreign suppliers and competes with other
athletic shoe and recreational product companies, including companies that are
much larger than the Company, for access to production facilities.

POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS.  The Company's quarterly operating
results may vary significantly depending on a number of factors, including the
timing and shipment of individual orders, market acceptance of new athletic
footwear or outdoor recreational products for children, changes in the Company's
operating expenses, personnel changes, mix of products sold, changes in product
pricing and general economic conditions.  In addition, a substantial portion of
the Company's revenue is realized during the last few weeks of each quarter;
therefore, any delays in orders or shipments are more likely to result in
revenue not being recognized until the following quarter, which could adversely
impact the results of operations for that quarter.  The Company's current
expense levels are based in part on its expectations of future revenue and, as a
result, net income for a given period could be disproportionately affected by
any reduction in revenue.  It is possible that in some future quarter the
Company's revenue or operating results will be below the expectations of stock
market securities analysts and investors; if that were to occur, the market
price of the Common Stock could be materially adversely affected.

MANAGEMENT OF GROWTH.  One element of the Company's business strategy is to seek
acquisitions of businesses and products that are complementary to those of the
Company.  There can be no assurance that the Company will be able to effect any
acquisitions, operate any such acquired businesses profitably or otherwise
implement its growth strategy successfully.  In addition, identifying and
effecting acquisitions and integrating the acquired businesses with the
operations of the Company may place significant demands upon the current
management team and operational systems of the Company.  In order to effect
acquisitions of a certain size, the Company may require additional capital,
which the Company may obtain through additional borrowings under its credit
facility.

DEPENDENCE UPON LICENSING ARRANGEMENTS.  The Company sells Brookfield products
under trade names licensed from other parties.  Most of the Company's licenses
are non-exclusive, have a fixed term and limit the types of products that may be
sold under the license.

DEPENDENCE ON CONSUMER PREFERENCES.  The Company is susceptible to fluctuations
in its business based upon fashion trends and frequently changing consumer style
preferences and product demands, including levels of enthusiasm for athletic
activities.  The Company believes that its success depends in substantial part
on its ability to anticipate, gauge and respond to changing consumer demands and
fashion trends in a timely manner.  Moreover, the Company could be materially
adversely affected by conditions in the retail industry in general, including
consolidation and the resulting decline in the number of retailers and other
cyclical economic factors.

ADVERTISING AND MARKETING PROGRAMS.  The Company's success in the markets in
which it competes depends in part upon the effectiveness of advertising and
marketing programs of the Company.  In particular, the Company must periodically
design and successfully execute new and effective advertising and marketing
programs.

DEPENDENCE ON MAJOR CUSTOMERS.  Although the Company had no customer that
accounted for ten percent or more of the Company's consolidated revenue during
1996, the Company's business is susceptible to the loss of certain key customers
of the Company's  product lines, such as Foot Locker for the Company's Saucony
products and Toys-R-Us for the Company's Brookfield products.


ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See the Index to the Company's Consolidated Financial Statements in Item 14 and
the accompanying consolidated financial statements, notes and schedules which
are filed as part of this Form 10-K following the signature page and are
incorporated herein by this reference.


ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS  ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.








PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this item is contained in part under the caption
"Executive Officers of the Registrant" in PART I hereof, and the remainder is
contained in the Company's Proxy Statement for the Company's Annual Meeting of
Stockholders to be held on May 15, 1997 (the "1997 Proxy Statement") under the
captions "ELECTION OF DIRECTORS" and "SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE" and is  incorporated herein by this reference.  The
Company expects to file the 1997 Proxy Statement within 120 days after the close
of the fiscal year ended January 3, 1997.

Officers are elected on an annual basis and serve at the discretion of the Board
of Directors.

ITEM 11 - EXECUTIVE COMPENSATION

The information required by this item is contained under the captions
"Compensation of Directors," "Compensation of Executive Officers," "Employment
and Consulting Agreements and Other Arrangements" and "Compensation Committee
Interlocks and Insider Participation" in the Company's 1997 Proxy Statement and
is incorporated herein by this reference.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is contained in the Company's 1997 Proxy
Statement under the caption "Stock Ownership of Certain Beneficial Owners and
Management" and is incorporated herein by this reference.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is contained under the caption "Employment
and Consulting Agreements and Other Arrangements" appearing in the Company's
1997 Proxy Statement and is incorporated herein by this reference.

PART IV

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)   1.    Index to Financial Statements
            -----------------------------

      The following consolidated financial statements of Hyde Athletic
        Industries, Inc. and its subsidiaries are included in this report:

      Reports of Independent Accountants

      Consolidated balance sheets at January 3, 1997 and January 5, 1996

      Consolidated statements of income for the years ended January 3, 1997,
        January 5, 1996 and December 30, 1994

      Consolidated statements of stockholders' equity for the years ended
        January 3, 1997, January 5, 1996 and December 30, 1994

      Consolidated statements of cash flows for the years ended January 3, 1997,
        January 5, 1996 and December 30, 1994

      Notes to the consolidated financial statements

      2.    Index to Consolidated Financial Statement  Schedule
            ---------------------------------------------------

       Schedule II  -- Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable, or not
required, or because the required information is included in the consolidated
financial statements or notes thereto.

Separate financial statements of the Company have been omitted since it is
primarily an operating Company and its subsidiaries included in the consolidated
financial statements do not have a minority equity interest or indebtedness to
any person other than the Company in an amount which exceeds 5% of the total
assets as shown by the consolidated financial statements as filed herein.

      3.    Index to Exhibits
            -----------------

      The  exhibits filed as part of this Form 10-K are listed on the Exhibit
Index immediately preceding such exhibits, which Exhibit Index is incorporated
herein by reference.

      (b)   Reports on Form 8-K
            -------------------

      No Current Reports on Form 8-K were filed in the fourth quarter of fiscal
1996.








                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                          HYDE ATHLETIC INDUSTRIES, INC.
                                          ------------------------------
                                          (registrant)


                                          By:  /s/ John H. Fisher
                                          -----------------------------------
                                          John  H.  Fisher
                                          President and Chief Executive Officer

Date:     April 3, 1997

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

         NAME                        CAPACITY                     DATE
         ----                        --------                     ----


/s/ John H. Fisher              President                      April 3, 1997
-------------------------
John H. Fisher                  Chief Executive Officer
                                Director


/s/ Charles A. Gottesman        Executive Vice President       April 3, 1997
-------------------------
Charles A. Gottesman            Chief Operating Officer
                                Director
                                (Principal Financial Officer)


/s/ Roger P. Deschenes          Controller                     April 3, 1997
-------------------------
Roger P. Deschenes              Chief Accounting Officer


/s/ James A. Buchanan           President                      April 3, 1997
-------------------------
James A. Buchanan               Brookfield Athletic Co., Inc.
                                Director


/s/ John J. Neuhauser           Director                       April 3, 1997
-------------------------
John J. Neuhauser


/s/ Jonathan O. Lee             Director                       April 3, 1997
-------------------------
Jonathan O. Lee


/s/ Phyllis H. Fisher           Director                       April 3, 1997
-------------------------
Phyllis H. Fisher







REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of
Hyde Athletic Industries, Inc.

We have audited the consolidated financial statements and the financial
statement schedule of Hyde Athletic Industries, Inc. and Subsidiaries listed in
Item 14(a) of this Annual Report on Form 10-K.  These consolidated financial
statements and financial statement schedule are the responsibility of the
Company's management.  Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on our
audits.  We did not audit the financial statements of Saucony SP Pty. Ltd., a
fifty percent owned joint venture, which statements reflect total net assets and
revenues consisting of thirteen percent and 12 percent, respectively, of the
related consolidated totals.  Those statements were audited by other auditors
whose report has been furnished to us, and in our opinion, insofar as it relates
to the amounts included for Saucony SP Pty. Ltd., is based solely on the report
of the other auditors.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement.  An audit also includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall consolidated financial statement presentation.  We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Hyde
Athletic Industries, Inc. and Subsidiaries as of January 3, 1997 and January 5,
1996, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended January 3, 1997, in conformity with
generally accepted accounting principles.  In addition, in our opinion, the
financial statement schedule referred to above, when considered in relation to
the basic financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included therein.



                                          Coopers & Lybrand L.L.P.
Boston, Massachusetts
March 14, 1997



INDEPENDENT AUDIT REPORT TO THE MEMBERS OF SAUCONY SP PTY., LIMITED

Scope

We have audited the financial statements of Saucony SP Pty., Ltd., as set out on
pages 2 to 18, for the year ended 3 January 1997.  The Company's directors are
responsible for the financial statements.  We have conducted an independent
audit of these financial statements in order to express an opinion on them to
the members of the Company.

Our audit has been conducted in accordance with generally accepted auditing
standards to provide reasonable assurance as to whether the financial statements
are free of material misstatement.  Our procedures included examination, on a
test basis, of evidence supporting the amounts and other disclosures in the
financial statements, and the evaluation of accounting policies and significant
accounting estimates.  These procedures have been undertaken to form an opinion
as to whether, in all material respects, the financial statements are presented
fairly in conformity with generally accepted accounting principles and so as to
present a view which is consistent with our understanding of the Company's
financial position, the results of its operations and its cash flows.

The audit opinion expressed in this report has been formed on the above basis.

Audit Opinion

In our opinion, the financial statements of Saucony SP Pty Limited are properly
drawn up so as to present fairly in accordance with generally accepted
accounting principles the Company's state of affairs as at 3 January 1997 and
its profit and cash flows for the financial year ended on that date.


                                        GRANT THORNTON
                                        Chartered Accountants



/s/ W. H. Chapman
Partner




Sydney, NSW Australia
April 2, 1997
<TABLE>

                                   HYDE ATHLETIC INDUSTRIES, INC. AND SUBSIDIARIES
                                             CONSOLIDATED BALANCE SHEETS

                                                        ASSETS
<CAPTION>
                                                                             January 3,              January 5,
                                                                                1997                    1996
                                                                                ----                    ----

<S>                                                                        <C>                     <C>
Current Assets:
    Cash and cash equivalents                                             $    2,802,864           $  11,668,316
    Marketable securities (Note 2)                                               236,128                 307,500
    Accounts receivable, net of allowance
       for doubtful accounts and discounts
       (1996, $1,334,530; 1995, $940,244) (Note 3)                            22,840,161              17,361,195
    Inventories (Note 4)                                                      28,632,511              26,831,600
    Deferred income taxes (Note 12)                                            1,424,987               1,251,654
    Prepaid expenses and other current assets                                  1,878,450               1,769,825
                                                                          --------------           --------------

    Total current assets                                                      57,815,101              59,190,090
                                                                          --------------           --------------

Property, plant and equipment, net of
  accumulated  depreciation and
  amortization (Note 5)                                                        9,217,468               8,122,937
                                                                          --------------           --------------
Other assets:
    Deferred charges, net of accumulated
       amortization (1996, $1,613,931;
       1995 $1,185,319)                                                        1,447,804                 999,363
    Long-term accounts and notes
       receivable (Note 3)                                                     1,035,987                 353,175
    Goodwill (Note 13)                                                         1,250,001                      --
    Investment in limited partnership (Note 6)                                   753,433                 753,433

    Other                                                                         71,932                  52,291
                                                                          --------------           --------------

    Total other assets                                                         4,559,157               2,158,262
                                                                          --------------           --------------

Total assets                                                              $   71,591,726           $  69,471,289
                                                                          ==============           ==============

<FN>

                                           See notes to consolidated financial statements
</TABLE>
<TABLE>

                                   HYDE ATHLETIC INDUSTRIES, INC. AND SUBSIDIARIES
                                             CONSOLIDATED BALANCE SHEETS


<CAPTION>                                LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                               January 3,              January 5,
                                                                                  1997                    1996
                                                                                  ----                    ----
<S>                                                                         <C>                     <C>
Current liabilities:
    Accrued letters of credit (Note 9)                                       $    1,848,666          $    2,619,819
    Notes payable (Note 9)                                                        4,237,083               4,336,940
    Current portion of long-term debt and capital
       lease obligations (Notes 6 & 7)                                            2,484,459               2,199,225
    Accounts payable                                                              2,121,528               2,436,148
    Accrued expenses (Note 9)                                                     3,517,047               3,136,653
                                                                             --------------          --------------

Total current liabilities:                                                       14,208,783              14,728,785
                                                                             --------------          --------------
Long term obligations:
    Long-term debt, net of current portion (Note 6)                               3,885,342               4,000,000
    Capital lease obligations, net of current portion (Note 7)                    1,007,411                 205,568
    Deferred income taxes (Note 12)                                               1,923,708               2,001,655
                                                                             --------------          --------------

Total long-term obligations                                                       6,816,461               6,207,223
                                                                             --------------          --------------
Commitments and contingencies (Note 9)

Minority interest in consolidated subsidiaries                                      487,865                 170,227
                                                                             --------------          --------------

Stockholders' Equity (Notes 10 & 11)
Preferred stock, $1.00 par; authorized 500,000
    shares; none issued and outstanding                                                  --                      --
Common stock:
      Class A, $.333 par; authorized 20,000,000 shares
       (issued 1996, 2,706,227; 1995, 2,704,727)                                    902,075                 901,575
      Class B, $.333 par; authorized 20,000,000 shares
       (issued 1996, 3,729,059; 1995, 3,710,815)                                  1,243,020               1,236,939
Additional paid-in capital                                                       15,581,353              15,521,470
Retained earnings                                                                33,704,957              32,210,867
Accumulated translation                                                            (233,654)               (257,694)
                                                                             ---------------         --------------
                                                                                 51,197,751              49,613,157
                                                                             --------------          --------------
  Less:
    Common stock held in treasury, at cost
      (1996, 198,400; 1995, 198,400)                                             (1,053,790)             (1,053,790)
    Unearned compensation                                                           (65,344)               (194,313)
                                                                             ---------------         ---------------

                                                                                 50,078,617              48,365,054
                                                                             --------------          --------------

Total liabilities and stockholders' equity                                   $   71,591,726          $   69,471,289
                                                                             ==============          ==============

<FN>
                                          See notes to consolidated financial statements.
</TABLE>
<TABLE>

                                     HYDE ATHLETIC INDUSTRIES, INC. AND SUBSIDIARIES
                                            CONSOLIDATED STATEMENTS OF INCOME

                        For the Years Ended January 3, 1997, January 5, 1996 and December 30, 1994
<CAPTION>
                                                      1996                     1995                    1994
                                                      ----                     ----                    ----
<S>                                             <C>                     <C>                      <C>
Net sales                                       $  110,809,169          $   102,562,755          $  107,577,873
Other income (Note 13)                               1,075,665                1,515,859               1,308,450
                                                 --------------          --------------          --------------
Total revenue                                      111,884,834              104,078,614             108,886,323
                                                 --------------          --------------          --------------

Costs and expenses:
  Cost of sales                                     77,449,171               70,860,821              72,493,385
  Selling expenses                                  17,641,007               16,687,144              17,678,131
  General and administrative
    expenses (Note 9)                               13,613,363               13,210,520              12,458,674
  Interest expense                                     951,737                1,299,858               1,480,247
                                                 --------------          --------------          --------------
    Total costs and expenses                       109,655,278              102,058,343             104,110,437
                                                 --------------          --------------          --------------
Income before income taxes and
  minority interest                                  2,229,556                2,020,271               4,775,886
Provision for income taxes (Note 12)                   427,468                  714,985               1,830,733
Minority interest in income (loss) of
  consolidated subsidiaries                            307,998                 (285,820)                  8,516
                                                 --------------          ---------------         --------------
Net income (Note 11)                            $    1,494,090          $     1,591,106          $    2,936,637
                                                 ==============          ==============          ==============

Per share amounts (Note 1):

Net income (Note 11)                            $          0.24         $           0.26         $          0.46
                                                 ==============          ===============         ===============

Weighted average common shares
  and equivalents outstanding                        6,251,889                6,239,557               6,437,281
                                                 ==============          ==============          ==============

Cash dividends per share of
  common stock                                               0                        0                       0
                                                 ==============          ==============          ==============

 <FN>
                                           See notes to consolidated financial statements

</TABLE>

<TABLE>

                                          HYDE ATHLETIC INDUSTRIES, INC. AND SUBSIDIARIES
                                          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                             For the Years Ended January 3, 1997, January 5, 1996 and December 30, 1994



<CAPTION>

                                      Common Stock          Paid-in       Retained           Treasury Stock
                                   Class A    Class B       Capital       Earnings         Shares      Amount
                                   -------    -------        ------       --------         ------       ------

<S>                              <C>         <C>          <C>            <C>            <C>         <C>

Balance, December 31, 1993       $915,937    $1,249,404   $16,287,197    $27,683,124          --             --

Issuance of 7,688 shares of
 common stock, stock option
 exercise (Note 10)                   333        2,229        23,313             --           --             --

Retirement of 89,566 shares
 of common stock issued under
 restricted stock grant
 (Note 10)                        (14,928)     (14,928)     (914,050)            --           --             --

Issuance of below market
 options (Note 10)                     --           --       237,925             --           --             --

Cancellation of below market
 options (Note 11)                     --           --       (41,580)            --           --             --

Amortization of unearned
 compensation (Note 11)                --           --            --             --           --             --

Acquisition of 176,700 shares of
 common stock, at cost (Note 10)       --           --            --             --      176,700       (922,963)

Reclassification of 4,000
 shares of common stock
 owned by a subsidiary (Note 10)       --           --            --             --        4,000        (54,140)

Net income                             --           --            --      2,936,637           --             --

Foreign currency translation
 adjustments                           --           --            --             --           --             --
                                 --------    ---------     ----------     ----------   ---------      ---------

Balance, December 30, 1994       $901,342    $1,236,705   $15,592,805    $30,619,761     180,700     ($ 977,103)


Issuance of 1,400 shares of
 common stock, stock option
 exercise (Note 14)                   233          234         3,184             --           --             --

Cancellation of below market
 options (Note 11)                     --           --       (74,519)            --           --             --

Amortization of unearned
 compensation (Note 11)                --           --            --             --           --             --

Acquisition of 17,700 shares of
 common stock, at cost
 (Note 10)                             --           --            --             --       17,700        (76,687)

Net income                             --           --            --      1,591,106           --             --

Foreign currency translation
 adjustments                           --           --            --             --           --             --
                                 --------    ---------     ----------     ----------   ---------      ---------

Balance, January 5, 1996         $901,575   $1,236,939    $15,521,470    $32,210,867   $ 198,400    ($1,053,790)

Issuance of 19,744 shares
 of common stock, stock
 option exercise (Note 10)            500        6,081        62,912             --           --             --

Cancellation of below
 market options (Note 11)              --           --        (3,029)            --           --             --

Amortization of unearned
 compensation (Note 11)                --           --            --             --           --             --

Net income                             --           --            --      1,494,090           --             --

Foreign currency translation
 adjustments                           --           --            --             --           --             --
                                 --------   ----------    -----------    -----------   ---------    -----------

Balance, January 3, 1997         $902,075   $1,243,020    $15,581,353    $33,704,957     198,400   $ (1,053,790)
                                 ========   ==========    ===========    ===========   =========   =============



</TABLE>
<TABLE>

                                          HYDE ATHLETIC INDUSTRIES, INC. AND SUBSIDIARIES
                                          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                             For the Years Ended January 3, 1997, January 5, 1996 and December 30, 1994


  <CAPTION>                                                                      Total
                                    Unearned        Notes       Accumulated   Stockholders'
                                   Compensation   Receivable    Translation      Equity
                                   ------------   ----------    -----------      ------


<S>                                <C>           <C>            <C>            <C>
Balance, December 31, 1993         $ (950,354)   $ (400,911)    $  (74,573)    $44,709,824

Issuance of 7,688 shares of
 common stock, stock option
 exercise (Note 10)                        --            --             --          25,875

Retirement of 89,566 shares of
 common stock issued under
 restricted stock grant
 (Note 10)                            542,995       400,911             --              --

Issuance of below market options
 (Note 10)                           (237,925)           --             --              --

Cancellation of below market
 options (Note 11)                     41,580            --             --              --

Amortization of unearned
 compensation (Note 11)               156,493            --             --         156,493

Acquisition of 176,700 shares
 of common stock, at cost
 (Note 10)                                 --            --             --        (922,963)

Reclassification of 4,000
 shares of common stock
 owned by a subsidiary
 (Note 10)                                 --            --             --         (54,140)

Net income                                 --            --             --       2,936,637

Foreign currency translation
 adjustments                               --            --        (96,898)        (96,898)
                                    ----------   ----------     -----------    ------------

Balance, December 30, 1994           (447,211)           --       (171,471)     46,754,828


Issuance of 1,400 shares
 of common stock, stock
 option exercise (Note 14)                 --            --             --           3,651

Cancellation of below market
 options (Note 11)                     74,519            --             --              --

Amortization of unearned
 compensation (Note 11)               178,379            --             --         178,379

Acquisition of 17,700 shares
 of common stock, at cost
 (Note 10)                                 --            --             --         (76,687)

Net income                                 --            --             --       1,591,106

Foreign currency translation
 adjustments                               --            --        (86,223)        (86,223)
                                    ----------   ----------     -----------    ------------

Balance, January 5, 1996           $ (194,313)           --     $ (257,694)    $48,365,054

Issuance of 19,744 shares of
 common stock, stock option
 exercise (Note 10)                        --            --             --          69,493

Cancellation of below market
 options (Note 11)                      3,029            --             --              --

Amortization of unearned
 compensation (Note 11)               125,940            --             --         125,940

Net income                                 --            --             --       1,494,090

Foreign currency translation
 adjustments                               --            --         24,040          24,040
                                    ----------   ----------     ----------     ------------

Balance, January 3, 1997           $  (65,344)           --     $ (233,654)    $50,078,617
                                    ==========   ==========     ===========    ============
<FN>
                                                See notes to condensed consolidated financial statements

</TABLE>

<TABLE>
                                    HYDE ATHLETIC INDUSTRIES, INC. AND SUBSIDIARIES
                                         CONSOLIDATED STATEMENTS OF CASH FLOWS

                       For the Years Ended January 3, 1997, January 5, 1996 and December 30, 1994

<CAPTION>
                                                                    1996               1995              1994
                                                                    ----               ----              ----
<S>                                                           <C>                <C>                <C>
Cash flows from operating activities:
  Net income                                                  $   1,494,090      $   1,591,106      $   2,936,637
  Adjustments to reconcile net income to net cash
  Provided (used) by operating activities:
    Depreciation and amortization                                 1,564,509          1,210,689          1,109,906
    Provision for bad debt and discounts                          5,396,619          5,072,962          4,754,567
    Loss on sale of equipment                                        22,207              2,498              4,491
    Deferred income tax (benefit) expense                          (251,280)          (422,737)           125,992
    Minority interest in (income) loss of
       consolidated subsidiaries                                    307,998           (285,820)             8,516
    Compensation from stock grants and stock options                125,940            178,379            156,493
    Gain on sale of investment in limited partnership                    --           (426,377)                --
Changes in operating assets and liabilities, net of
 effects of acquisitions and foreign currency adjustments:
  Decrease (increase) in assets:
    Marketable securities                                            71,372           (307,500)         4,003,952
    Accounts and notes receivable                               (11,399,928)         1,772,637         (9,765,650)
    Inventories                                                  (1,691,033)         5,187,467         (8,523,396)
    Prepaid expenses and other current assets                        43,259           (261,598)           328,272
  Increase (decrease) in liabilities:
    Accrued letters of credit                                      (775,822)         1,115,229         (1,707,261)
    Accounts payable                                               (375,138)          (865,034)         1,131,609
    Accrued expenses                                                418,713         (1,604,521)         1,209,458
    Accrued income taxes                                             (9,108)          (742,846)           261,512
                                                              --------------     --------------     -------------

Total adjustments                                                (6,551,692)         9,623,428         (6,901,539)
                                                              --------------     -------------      --------------

Net cash provided (used) by operating activities                 (5,057,602)        11,214,534         (3,964,902)
                                                              --------------     -------------      --------------

Cash flows from investing activities:
  Purchases of property, plant and equipment                       (918,353)          (650,570)          (676,371)
  Proceeds from the sale of equipment                                77,834             31,813                496
  Increase in deferred charges and other                         (1,065,701)          (469,257)          (379,933)
  Investment distribution from limited partnership                       --             28,732                 --
  Payments for trademarks and trade names                        (1,250,001)                --                 --
  Payments for business acquisitions,
    net of cash acquired                                                 --           (111,800)                --
  Proceeds from sale of investment in
    limited partnership                                                  --          1,335,289                 --
                                                              -------------      -------------      -------------
Net cash provided (used) by investing activities                 (3,156,221)           164,207         (1,055,808)
                                                              --------------     -------------      --------------




                                     HYDE ATHLETIC INDUSTRIES, INC. AND SUBSIDIARIES
                                     CONSOLIDATED STATEMENT OF CASH FLOWS, CONTINUED
<CAPTION>
                                                                   1996                1995               1994
                                                                   ----                ----               ----
<S>                                                            <C>                 <C>                 <C>
Cash flows from financing activities:
  Net short-term borrowings                                      1,313,007             (30,087)          2,547,110
  Repayment of long-term debt and
    capital lease obligations                                   (2,403,389)         (2,893,098)         (2,487,567)
  Proceeds from long-term borrowings                               419,766                  --                  --
  Common stock repurchased                                              --             (76,687)           (922,963)
  Payment of termination benefit payable                                --             (26,866)           (306,075)
  Issuances of common stock, including options                      69,493               3,651              25,875
                                                             -------------      --------------      --------------

Net cash used by financing activities                             (601,123)         (3,023,087)         (1,143,620)

Effect of exchange rate changes on
  cash and cash equivalents                                        (50,506)            (37,114)           (499,060)
                                                             --------------     ---------------     ---------------

Net increase (decrease) in cash and
  cash equivalents                                              (8,865,452)          8,318,540          (6,663,390)

Cash and cash equivalents at beginning
  of period                                                     11,668,316           3,349,776          10,013,166
                                                             -------------      --------------      --------------

Cash and cash equivalents at end of period                   $   2,802,864      $   11,668,316      $    3,349,776


Supplemental disclosure of cash flow information:

  Cash paid during the year for:
  Income taxes, net of refunds                               $     736,265      $    1,935,902      $    1,507,484
                                                             =============      ==============      ==============

  Interest                                                   $     959,461      $    1,534,015      $    1,245,927
                                                             =============      ==============      ==============

Non-cash Investing and Financing Activities:

Property purchased under capital leases                      $   1,233,656      $      137,853      $      175,377

Reconciliation of assets acquired and
  liabilities assumed, business acquisitions
    Assets acquired                                                     --             232,232                  --
    Liabilities assumed                                                 --             120,432                  --
                                                             -------------      --------------      --------------

  Cash paid for business acquisitions                        $          --      $      111,800                  --
                                                             =============      ==============      ==============

Sale of investment in limited partnership

  Cash received, net of broker fees                                     --           1,335,289                  --
    Reduction in short-term debt, long-term
     debt and accrued liabilities                                       --           4,055,691                  --
                                                             -------------      --------------      --------------

    Total proceeds                                                      --           5,390,980                  --

  Investment in limited partnership, net of distributions               --           4,964,603                  --
                                                             -------------      --------------      --------------

    Gain realized on sale                                               --      $      426,377                  --
                                                             =============      ==============      ==============
<FN>
                                          See notes to consolidated financial statements.
</TABLE>




                HYDE ATHLETIC INDUSTRIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   For the Years Ended January 3, 1997, January 5, 1996 and December 30, 1994


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
     ------------------------------------------

     BUSINESS ACTIVITY
     -----------------

     The Company is an importer and manufacturer of a broad line of high
     performance athletic footwear and outdoor recreational products.  The
     Company markets its products principally to domestic and international
     retailers and distributors.

     REPORTING PERIOD
     ----------------

     The Company adopted a 52-53 week fiscal year reporting period in 1991.  The
     consolidated financial statements and notes for 1996, 1995 and 1994
     represent the fiscal years ended January 3, 1997, January 5, 1996 and
     December 30, 1994, respectively.  In Management's opinion, the consolidated
     financial statements for 1996, 1995 and 1994 are comparable.

     PRINCIPLES OF CONSOLIDATION
     ---------------------------

     The consolidated financial statements include the accounts of Hyde Athletic
     Industries, Inc. and its wholly-owned subsidiaries, Spot-Bilt, Inc.,
     Brookfield Athletic Co., Inc., Saucony, Inc., Saucony Deutschland Vertriebs
     GmbH (Germany), Quintana Roo, Inc. and Hyde International Services Limited
     (Hong Kong), and its majority-owned foreign subsidiary, Saucony Canada,
     Inc., all herein referred to as the "Company".  Hyde International Services
     Limited owns a controlling interest in a subsidiary called Saucony SP Pty
     Limited (Australia). Saucony, Inc. owns a majority interest in a joint
     venture, Saucony Sports BV (Netherlands).  The Company also operates a
     branch in the United Kingdom called Saucony UK and maintains a marketing
     representative office in Germany called Saucony Europe.  Saucony GmbH and
     Quintana Roo, Inc. are included in the consolidated financial statements
     beginning in December 1994 and August 1995, respectively.  Saucony Shoe
     Manufacturing Co., Inc., an inactive wholly-owned domestic subsidiary, was
     dissolved in 1992.  Hyde Security Corp., a wholly-owned domestic
     subsidiary, was dissolved in 1996.  The effects of transactions among
     related companies are eliminated in the consolidated financial statements.

     USE OF ESTIMATES
     ----------------

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities at
     the date of the financial statements and the reported amounts of revenues
     and expenses during the reporting period.  Actual results could differ from
     those estimates.

     REVENUE RECOGNITION
     -------------------
     Sales, net of discounts, and related costs of sales are recognized upon
     shipment of products.

     INVENTORIES
     -----------

     Inventories are stated at lower of cost or market.  Cost is determined
     using the first-in, first-out (FIFO) method.


     PROPERTY, PLANT AND EQUIPMENT
     -----------------------------

     Land, buildings and equipment, including significant improvements to
     existing facilities, are stated at cost.  The assets are depreciated over
     their estimated useful lives or capital lease terms, if shorter, using the
     straight-line method for financial reporting purposes and accelerated
     methods for income tax purposes.  The estimated useful lives of the assets
     are: 33 years for buildings and improvements and 3 to 15 years for office
     equipment and machinery and equipment.  Major renewals and betterments are
     capitalized.  Maintenance, repairs and minor property renewals are expensed
     as incurred. The cost and related accumulated depreciation of all property,
     plant and equipment retired or otherwise disposed of, are removed from the
     accounts.  Any gain or loss, resulting from the retirement or disposition
     of property, plant and equipment, is included in consolidated net income.

     INVESTMENTS
     -----------

     The Company's investment in a real estate limited partnership is carried at
     cost.  It is Management's intention to retain this investment for its long-
     term tax benefit.

     INVESTMENTS IN MARKETABLE SECURITIES
     ------------------------------------

     Investment in debt securities and marketable securities are categorized as
     trading, held-to-maturity or available-for-sale.  Trading securities are
     reported at fair value, with changes in fair value recorded in consolidated
     net income.  Investment securities include both available-for-sale and
     held-to-maturity securities.  Available-for-sale securities are reported at
     fair value, with net unrealized gains and losses included as a separate
     component of stockholders' equity.  Held-to-maturity debt securities are
     reported at amortized cost.  For all investments, unrealized losses, other
     than temporary losses, are recognized in consolidated net income.

     DEFERRED CHARGES AND GOODWILL
     ------------------------------

     Deferred charges consist primarily of computer software, bond issuance,
     trademarks, financing and organization costs.  The deferred charges are
     amortized on the straight-line basis over the estimated useful life of the
     software and the term of the debt; organization costs and trademarks are
     amortized over five years; goodwill, representing the excess of the
     purchase price over the estimated fair value of the net assets of the
     acquired business, is being amortized over the period of expected benefit
     of fifteen years.

     INCOME TAXES
     ------------

     The provision for income taxes is calculated according to the precepts of
     Statement of Financial Accounting Standards No. 109 (SFAS No. 109),
     "Accounting for Income Taxes".  Under SFAS No. 109, income taxes are
     provided for the amount of taxes payable or refundable in the current year
     and for the expected future tax consequences of events that have been
     recognized in the financial statements or tax returns.  As a result of
     recognition and measurement differences between tax laws and financial
     accounting standards, temporary differences arise between the amount of
     taxable income and pretax financial income for a year and the tax bases of
     assets or liabilities and their reported amount in the financial
     statements.  The deferred tax assets and liabilities reported as of January
     3, 1997 and January 5, 1996 reflect the estimated future tax effects
     attributable to temporary differences and carryforwards based on the
     provisions of enacted tax law.

     EARNINGS PER SHARE
     ------------------

     Earnings per common share is based upon the weighted average common shares
     and common equivalents (stock options) outstanding during the year.
     Primary and fully diluted earnings per share are approximately the same.
     All per share amounts reflect the stock dividend (Note 11) which had the
     same effect on the shares of common stock outstanding as a two-for-one
     stock split.

     STATEMENTS OF CASH FLOWS
     ------------------------

     For purposes of these statements, cash equivalents include all short-term
     deposits with an original  maturity of three months or less purchased in
     connection with the Company's cash management program.

     FOREIGN CURRENCY TRANSLATION
     ----------------------------

     The financial statements of the Company's foreign subsidiaries are measured
     using the local currency as the functional currency.  Assets and
     liabilities of these subsidiaries are translated at exchange rates as of
     the balance sheet date.   Revenues and expenses are translated at average
     rates of exchange in effect during the year. The resulting cumulative
     translation adjustments have been recorded as a separate component of
     stockholders' equity.  Foreign currency transaction gains and losses are
     included in consolidated net income.  Net gains from foreign currency
     transaction  translation amounted to $171,405,  $77,409, and $341,651 for
     1996, 1995 and 1994, respectively.

     FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
     -------------------------------------------

     From time to time, the Company enters into forward foreign currency
     exchange contracts to hedge certain foreign currency denominated payables.
     Gains and losses on forward exchange contract are deferred and offset
     against foreign currency exchange gains or losses on the underlying hedged
     item upon consummation of the transaction.

     RECLASSIFICATIONS
     -----------------

     Certain items in prior years' consolidated financial statements have been
     reclassified to conform to the 1996 presentation.

     ADVERTISING AND PROMOTION
     -------------------------

     Advertising and promotion costs are expensed when incurred or expensed
     ratably over the year in relation to sales.  Production costs of future
     media advertising are deferred until the advertising occurs.  Advertising
     and promotion expense amounted to $8,929,860, $7,897,128 and $9,160,105 for
     1996, 1995 and 1994, respectively.

     RESEARCH AND DEVELOPMENT EXPENSES
     ---------------------------------

     Expenditures for research and development of products are expensed as
     incurred.  Research and development expenses amounted to approximately
     $1,945,317, $1,850,521 and $1,295,779 for 1996, 1995 and 1994,
     respectively.

     RELATED PARTY TRANSACTIONS
     --------------------------

     Saucony Sports BV, a majority-owned foreign joint venture, leases office
     space and office equipment from an entity controlled by the minority
     stockholder of Saucony Sports BV.  Rent expense amounted to $12,442,
     $70,980 and $73,300 for 1996, 1995 and 1994, respectively.

     The Company issued a note payable to the minority stockholder of Saucony
     Canada, Inc., a majority-owned foreign subsidiary, as part of the
     consideration paid to acquire an 85% interest in the former Canadian
     distributor.  Interest expense incurred amounted to $7,038 and $10,353 for
     1995 and 1994, respectively.  See Note 6 of the Notes to Consolidated
     Financial Statements for further discussion of the note agreement.  During
     1995, the Company prepaid the note and realized a discount of $13,759 which
     is included in consolidated net income.

     The Company has entered into a consulting agreement with a principal
     stockholder of the Company's Class A Common Stock, beginning January 4,
     1993.  The agreement, as amended, is effective for a term of five years,
     provides for an annual fee of $40,000 during each of the first two years of
     the agreement and $90,000 for each of the remaining three years of the
     agreement.  Included in general and administrative expenses for 1996, 1995
     and 1994 are consulting fees of $90,000, $90,000 and $40,000, respectively.

     The Company presently holds a note receivable of $100,000 from an officer
     of the Company.  The promissory note, originated from a transaction in
     1993, is collateralized by a mortgage from the officer on two parcels of
     real estate.  See Note 3 of the Notes to Consolidated Financial Statements
     for further discussion of the terms and conditions of the promissory note.

     NEW ACCOUNTING PRONOUNCEMENTS
     -----------------------------

     The Financial Accounting Standards Board issued Financial Accounting
     Standards No. 123 "Accounting for Stock-Based Compensation" (SFAS No. 123)
     in October 1995.  SFAS 123 establishes the financial accounting and
     reporting standards for all stock-based compensation.  SFAS 123 prescribes
     a fair value method of accounting for stock options and other similar
     equity instruments and encourages companies to adopt this accounting
     treatment for all stock-based compensation plans.  However, under SFAS 123,
     companies are permitted to continue to measure compensation expense using
     the intrinsic value based method of accounting as prescribed by APB Opinion
     No. 25, "Accounting for Stock Issued to Employees," provided that pro forma
     disclosures are made of net income and earnings per share had the fair
     value method been adopted.

     SFAS 123 is effective for fiscal years commencing after December 15, 1995.
     As permitted by SFAS 123, the Company intends to continue to account for
     employee stock compensation expense under the precepts of APB Opinion No.
     25.  See Note 11 of the Notes to Consolidated Financial Statements for pro
     forma disclosures of net income and earnings per share, calculated
     utilizing the fair value method prescribed under SFAS 123.

     Financial Accounting Standards No. 121, "Accounting for the Impairment of
     Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" (SFAS No.
     121), issued by the Financial Accounting Standards Board, requires that
     long-lived assets, to be held and used or disposed of by an entity, be
     reviewed for impairment whenever events or changes in the circumstances
     indicate that the carrying amount of an asset may not be recoverable.  SFAS
     121 establishes standards for recognizing and measuring impairment of long-
     lived assets, certain identifiable intangibles and goodwill.  For 1996, the
     Company determined that an impairment loss was not required on its long-
     lived assets.

2.   MARKETABLE SECURITIES:
     ---------------------

     As of January 3, 1997, the Company's holdings in marketable securities
     consisted of equity securities which were classified as trading securities.

     The cost of the securities held at January 3, 1997 and January 5, 1996 was
     $170,866 and $287,500, respectively.  As of January 3, 1997 and January 5,
     1996, the market value of such securities was $236,128 and $307,500,
     respectively.  Gross unrealized gains of $65,262 and $20,000, based on
     quoted market prices, are included in consolidated net income for the years
     ended January 3, 1997 and January 5, 1996.

     Included in the determination of net income for the years ended January 3,
     1997, January 5, 1996 and December 30, 1994 were:  1996, net realized gains
     of $9,773 and net unrealized gains of $65,262; 1995, net unrealized gains
     of $20,000; and 1994, net realized losses of $263,267.

3.   ACCOUNTS AND NOTES RECEIVABLE:
     -----------------------------

     During 1995, the Company exchanged inventory having a fair value of
     $1,400,000 for $100,000 in cash, receipt of which occurred in March 1996,
     and media and trade receivable barter credits amounting to $1,300,000.  The
     media and trade receivable barter credits expire on November 14, 1998.  It
     is the Company's intention to utilize the credits during fiscal 1997 and
     fiscal 1998.  As of January 3, 1997, $1,297,714 was outstanding, of which
     $400,000 was included in current accounts receivable and $897,714 was
     included in long-term accounts receivable.

     On December 28, 1993, the Company executed an agreement whereby it granted
     an exclusive, worldwide, nonassignable right and license for the use of the
     "Spot-bilt" and the "single spot" logo trademarks.  The agreement, which
     expires in 1997 and may be renewed for up to three additional one-year
     terms at the licensee's option, contains restrictions with respect to the
     licensed product, its manufacture, distribution and sale.  The agreement
     established a minimum cumulative guaranteed royalty of $630,000, subject to
     annual upward adjustments, due in various quarterly payments, commencing in
     1994.  In 1993, the Company recorded a receivable based upon the minimum
     guaranteed royalty for the present value of future cash flows, utilizing an
     imputed interest rate of 6.0%, which equates to $548,925.  At January 3,
     1997, $218,415 was outstanding, all of which is due in 1997.  The Company
     has received all scheduled payments on a timely basis.

     During 1993, the Company loaned $100,000 to an officer of the Company.  The
     promissory note issued to the Company by the officer is collateralized by a
     mortgage from the officer on two parcels of real estate (land and
     building).  The note calls for semi-annual payments of interest through
     maturity on the unpaid principal amount, commencing on July 1, 1994 and
     five annual principal payments of $15,000 commencing July 1, 1998 and one
     principal payment of $25,000 due on July 1, 2003.  The note bears interest
     at a rate equal to the prevailing prime rate of interest.

4.   INVENTORIES:
     -----------

     Inventories at January 3, 1997 and January 5, 1996 consisted of the
following:

                                          1996               1995
                                          ----               ----


      Finished goods                $ 22,309,805        $ 22,954,048

      Work-in-process                    110,559              20,243

      Raw materials and supplies       6,212,147           3,857,309
                                    ------------        ------------

      Total                         $ 28,632,511        $ 26,831,600
                                    ============        ============






5.    PROPERTY, PLANT AND EQUIPMENT:
      -----------------------------

     Major classes of property, plant and equipment, at cost, at January 3, 1997
     and January 5, 1996 were as follows:

                                                  1996             1995
                                                  ----             ----

            Land                             $    760,812     $    745,307
            Buildings and improvements          7,042,973        7,010,015
            Machinery and equipment             6,975,726        6,228,358
            Capitalized leases                  1,751,214          641,136
            Leasehold improvements                206,360           90,770
                                             ------------     ------------
                                               16,737,085       14,715,586
            Less accumulated depreciation
            and amortization                    7,519,617        6,592,649
                                             ------------     ------------

            Total                            $  9,217,468     $  8,122,937
                                             ============     ============


     Accumulated amortization of the leased property was $344,151 and $235,475
     at January 3, 1997 and  January 5, 1996, respectively.


6.   LONG-TERM DEBT:
     --------------
                                                            1996        1995
                                                            ----        ----
     Senior notes payable due in semiannual
       installments of interest on the unpaid
       principal amount through maturity and
       six annual principal payments of
       $2,000,000 commencing April 29, 1993.
       The notes bear interest at 9.70% and are
       subject to certain restrictive covenants
       pertaining to consolidation or merger
       with another entity, levels of working
       capital, net worth, the payment of cash
       dividends and various other restrictions.       $4,000,000    $ 6,000,000
       Note payable to a bank under a revolving line
       of credit agreement, due on January 30,
       1998, with interest of 8.15%.                    1,581,000             --

     Note payable due in ten semi-annual principal
       payments of $43,477 commencing July 1, 1996
       and interest on the unpaid principal amount
       through maturity.  The note bears interest at
       9.25% and is secured by a mortgage.                391,297             --
                                                       ----------    -----------
                                                        5,972,297      6,000,000

     Less current portion                               2,086,955      2,000,000
                                                       ----------    -----------
                                                       $3,885,342    $ 4,000,000
                                                       ==========    ===========

    Long-term debt maturities payable for the five years and thereafter
    subsequent to January 3, 1997 are as follows:

                          1997                  $ 2,086,955
                          1998                    3,667,955
                          1999                       86,955
                          2000                       86,955
                          2001                       43,477
                                                -----------

                          Total                 $ 5,972,297
                                                ===========

     On October 12, 1993, the Company invested as a limited partner in Columbia
     Housing Partners Corporate Tax Credit II Limited Partnership, a
     Massachusetts limited partnership, by acquiring five (5) units of limited
     partner interest for an aggregate capital contribution of $5,000,000.  The
     Company issued a promissory note, collateralized by the Company's
     partnership interest, in the amount of $6,392,960.  The note was recorded
     at the present value of future cash flows, utilizing an imputed interest
     rate of 7.9% which equates to $4,950,000.

     On June 1, 1995, the Company sold its entire limited partnership interest
     in the Columbia Housing Partners Corporate Tax Credit II Limited
     Partnership for $5,501,000.  Net proceeds totalled $1,335,000, resulting in
     a pre-tax gain of $426,377, after transaction expenses, or $.02 per share
     after tax.  The after-tax gain is based upon projected tax credits and
     passive losses provided by the general partner.  As a result of the sale,
     the Company realized reductions in current and long-term debt and accrued
     interest of $4,056,000.

     During 1995, the Company prepaid its note payable to the minority
     stockholder of the Company's majority-owned Canadian subsidiary, resulting
     in a gain of $13,759, which is included in consolidated net income.

     Under the terms of the senior notes payable, the Company may not declare
     any cash dividends or make any cash distributions unless, immediately
     thereafter, the aggregate amount of cash dividends and cash distributions
     since December 31, 1987 would not exceed the sum of (i) $2,000,000, (ii)
     75% of cumulative consolidated net income as defined (or minus 100% of
     consolidated net income in the case of a loss) for such period and (iii)
     the proceeds of sales of Common Stock of the Company.  As of January 3,
     1997, approximately $11,507,000 was available for payment of cash dividends
     under the terms of these covenants.

7.   CAPITAL LEASE OBLIGATIONS
     -------------------------

     The following is a schedule by years of future minimum lease payments under
     capital leases together with the present value of the net minimum lease
     payments as of January 3, 1997.

            1997...................................         $   473,831
            1998...................................             364,521
            1999...................................             319,906
            2000...................................             274,276
            2001...................................             138,572
                                                            -----------
            Total minimum lease payments                    $ 1,571,106
            Less amounts representing interest                  166,191
                                                            -----------
            Present value of minimum lease payments           1,404,915
            Less current portion                                397,504
                                                            -----------
            Long-term portion                               $ 1,007,411
                                                            ===========


8.   EMPLOYEE BENEFIT PLANS:
     ----------------------

     In 1991, the Company established a qualified retirement plan for the
     benefit of all United States employees who have attained the age of 21 and
     have completed six months of consecutive service.  As amended in 1996, the
     plan permits employees to defer on a pre-tax basis up to 15% of gross wages
     subject to the federal maximum limit.  The Company will match a portion of
     the employee contributions, subject to profitability goals, at the
     discretion of the Board of Directors.  The Company matched 25% of employee
     elective deferrals subject to a limitation of 1.25% of total employee
     compensation.  Both employee and employer contributions are funded, on a
     monthly basis, to a group defined contribution plan administered by an
     independent investment company.  The defined contribution for 1996, 1995
     and 1994 were $85,324, $57,570 and $49,611, respectively.  Expenses related
     to the administration of the plan are paid by the Company.

     During 1995, the Company established a supplementary retirement program to
     provide retirement benefits to certain management and highly compensated
     employees, as determined by the Company's Board of Directors.  Employees
     are eligible to defer up to 15% of gross wages on a pre-tax basis.  The
     Company will match a portion of employee contributions, subject to
     profitability goals, at the discretion of the Board of Directors.  The
     Company match of employee elective deferrals is limited to 1.25% of total
     employee compensation.  Both employee and employer contributions and deemed
     investment income accrued, net of the amount allowable under the qualified
     plan are funded, on a monthly basis to a group defined contribution plan
     administered by an independent investment company.  The defined
     contribution amounted to $5,193 for 1996.  Expenses related to the
     administration of the plan are paid by the Company.

9.   COMMITMENTS AND CONTINGENCIES:
     -----------------------------

     LEASE COMMITMENTS
     -----------------

     The Company is obligated under various leases for equipment and retail
     space through 2002.  Total rental expenses for 1996, 1995 and 1994 were
     $837,170, $673,869 and $479,132, respectively.  Future minimum rental
     payments are as follows:  1997, $457,425; 1998, $398,388; 1999, $295,993;
     2000, $57,397 and 2001 and thereafter, $5,007.

     LICENSES
     --------

     The Company is obligated under various royalty licensing agreements through
     December 31, 2003.  Minimum guaranteed royalties for 1997, 1998, 1999,
     2000, 2001 and thereafter are $189,532, $636,250, $645,000, $20,000,
     $20,000 and $40,000, respectively.

     COMMITMENTS
     -----------

     On August 31, 1993, the Company entered into a credit facility with two
     banks pursuant to which up to a $30,000,000 credit line was available to
     the Company as of January 3, 1997.  This arrangement provides for a short-
     term demand line of credit, in the principal amount of up to $15,000,000,
     subject to formula, for domestic borrowings, international borrowings, and
     letters of credit; and a revolving line of credit in the principal amount
     of up to $15,000,000.  Borrowings under the demand line of credit are made
     at the bank's prime rate of interest while borrowing's under the revolving
     line of credit are made at the bank's prime rate of interest, or at the
     Company's option, the Eurodollar rate (Fixed Rate Option).  At January 3,
     1997, there was $2,301,803 outstanding under this facility.  This credit
     facility, which was amended in January 1997, terminates August 1, 1998.
     This credit facility is subject to the bank's periodic reviews of the
     Company's operations.  The facility contains requirements for maintaining
     defined levels of working capital, net worth, capital expenditures, net
     income and various financial ratios.  Additionally, the facility limits the
     Company's ability to pay or declare a dividend or make other distributions
     to stockholders.

     Saucony Canada Inc. maintains a credit facility with a Canadian lender.
     The agreement provides Saucony Canada with a line of credit for $1,000,000
     Canadian dollars, subject to formula (approximately $730,000 in U.S.
     dollars at January 3, 1997).  The agreement provides for a demand line in
     the principal amount of $300,000 (Canadian dollars), for letters of credit,
     and a revolving line of credit, in the principal amount of $700,000
     (Canadian dollars).  Borrowings under this facility are made at the
     lender's prime lending rate plus .25%.  At January 3, 1997, there was
     $317,376 in U.S. dollars outstanding under this credit facility.  The
     facility contains requirements for maintaining defined levels of net worth,
     working capital and various financial ratios.

     Saucony SP Pty Limited maintains a credit facility with an Australian
     lender.  In October 1996, the agreement was amended, whereby the available
     line was increased.  The principal terms and conditions of the agreement
     remained unchanged.  The credit facility provides Saucony SP with a
     $6,550,000 Australian dollar (approximately $5,178,000 in U.S. dollars at
     January 3, 1997) line of credit.  The agreement provides for a short-term
     demand line of credit, in the principal amount of up to $4,000,000
     (Australian dollars), for letters of credit and foreign exchange
     facilities; a revolving line of credit, in the principal amount of
     $2,000,000 (Australian dollars); and a $550,000 (Australian dollars) five-
     year term loan secured by a mortgage against the Company's facility in St.
     Peters, Australia.  Borrowings under this facility are made at market rates
     of interest as defined in the agreement or at the lender's quoted rate.  At
     January 3, 1997, there was $2,248,973 in U.S. dollars outstanding under
     this credit facility.  The facility is subject to the lender's periodic
     reviews of the Company's operations.

     Saucony Sports BV maintains a credit facility with a Dutch lender.  The
     agreement provides Saucony Sports BV with a 1,500,000 Dutch Guilder
     (approximately $858,000 U.S. dollars at January 3, 1997) line of credit.
     Borrowings under this facility are made at the bank's discount borrowing
     rate plus 1.75%.  At January 3, 1997, $556,792 in U.S. dollars was
     outstanding under this credit facility.

     A division of Saucony, Inc. located in the United Kingdom maintains a
     demand line of credit facility with a British lender.  The credit facility
     provides the Company with a 500,000 Pound Sterling (approximately $843,000
     in U.S. dollars at January 3, 1997) line of credit.  Borrowings under this
     facility are made at the bank's prime rate of interest, plus 1.5%.  At
     January 3, 1997, $784,437 in U.S. dollars was outstanding under this
     facility.

     Saucony Deutschland Vertriebs, GmbH ("Saucony GmbH") maintains a credit
     facility with a German lender.  The credit facility provides Saucony GmbH
     with a 500,000 Deutschmark (approximately $319,000 in U.S. dollars at
     January 3, 1997) line of credit.  Borrowings under this facility are made
     at an interest rate of 8%.  At January 3, 1997, there were no borrowings
     outstanding under this credit facility.

     At January 3, 1997, the Company was committed under open letters of credit
     to several lenders in the aggregate amount of $6,271,786 and under foreign
     exchange contracts in the amount of $275,000.

     The Company is guarantor on credit facility agreements for three foreign
     subsidiaries.  At January 3, 1997, the guarantees totalled $7,927,975, of
     which $2,843,265 was collateralized by the issuance of standby letters of
     credit.

     The Company has entered into an employment contract with one key employee
     that provides for minimum annual compensation of $216,000 in 1997.  The
     contract provides for annual salary, cost-of-living adjustments, additional
     compensation in the form of bonuses based on performance, life insurance
     coverage and options to purchase shares of the Company's common stock.  In
     1996, the Company included in its general and administrative expenses,
     bonus expense to two key employees of $148,000, of which $28,000 is payable
     and is included in accrued expenses at January 3, 1997.  Bonus expense to
     key executives amounted to $275,574 and $456,903 for 1995 and 1994,
     respectively.

     The Company has entered into an employment contract with its managing
     partner of Saucony SP Pty Limited.  The agreement provides minimum annual
     compensation of $250,000 in Australian dollars for three years commencing
     November 13, 1996.  The contract provides for minimum annual salary, cost-
     of-living adjustments and life insurance coverage and additional
     compensation in the form of bonuses based on performance.

     Included in accrued expenses at January 3, 1997 and January 5, 1996 were
     sales commissions payable of $949,857 and $813,940, respectively.

     LITIGATION
     ----------

     The Company is involved in various routine litigation incident to its
     business.  Many of these proceedings are covered in whole or in part by
     insurance.  In Management's opinion, none of these other proceedings will
     have a material adverse effect on the Company's financial position and
     operations and cash flows (irrespective of any potential insurance
     recovery).

10.  STOCKHOLDERS' EQUITY:
     --------------------

     At the Annual Meeting of the Stockholders of the Company, held on May 25,
     1993, the stockholders approved an amendment to the Company's Articles of
     Organization which increased the number of authorized shares of common
     stock of the Company from 7,275,000 to 40,000,000, consisting of 20,000,000
     shares of Class A Common Stock, $.33 1/3 par value per share, and
     20,000,000 shares of Class B Common Stock, $.33 1/3 par value per share;
     reclassified the then existing Common Stock ("Prior Common Stock") as Class
     A Common Stock; authorized a new class of non-voting stock designated as
     Class B Common Stock; and established the rights, powers and limitations of
     the Class A Common Stock and the Class B Common Stock.

     The Class A Common Stock has essentially the same rights, powers and
     limitations as the Prior Common Stock.  The Class B Common Stock is non-
     voting, except with respect to amendments to the Company's Articles of
     Organization that alter or change the powers, preferences or special rights
     of the Class B Common Stock so as to affect them adversely and as otherwise
     required by law.  The Class B Common Stock has certain features, including
     a "Class B Protection" feature and a premium on regular cash dividends, if
     any, which are intended to minimize the economic reasons for the Class A
     Common Stock to trade at a premium compared to the Class B Common Stock.
     The other terms of the Class A Common Stock and Class B Common Stock,
     including rights with respect to special cash dividends, stock dividends,
     stock splits, consideration payable in a merger or consolidation and
     distributions upon liquidation, generally are the same.

     The Board of Directors of the Company declared a stock dividend of one
     share of Class B Common Stock for each share of Class A Common Stock
     outstanding  on  May 16, 1993.  The stock dividend had the same effect on
     the total number of shares of Class A Common Stock outstanding as a two-
     for-one split.  The ex-dividend date for the stock dividend was May 26,
     1993, on which date the Class A Common Stock and the Class B Common Stock
     began to trade separately.  The stock dividend resulted in the issuance of
     2,813,695 shares of Class B Common Stock and the transfer of $937,898 from
     Additional Paid-in Capital to Class B Common Stock.

     At the May 25, 1993 Annual Meeting, the stockholders also approved the 1993
     Equity Incentive Plan ("the Equity Incentive Plan") and 1993 Director Stock
     Option Plan, adopted by the Company's Board of Directors on April 7, 1993.
     On April 20, 1993, the Compensation Committee approved the issuance under
     the Equity Incentive Plan of restricted stock awards, covering 111,968
     shares of Prior Common Stock to nine executive officers of the Company.
     The shares subject to each award were issued on April 27, 1993.  Each award
     vests in equal annual installments over a five-year period, beginning in
     April 1994.  The purchase price for each award was $12 1/8 per share, which
     represents 50% of the fair market value of the Prior Common Stock on the
     date the stock was issued.  The purchase price was paid in the form of a
     non-recourse, non-interest bearing note, which is payable in five equal
     installments, beginning in July 1994 and is collateralized by a pledge of
     the shares subject to the award.  The excess of the quoted market price, as
     of the date of the grant, over the purchase price for each award was
     recorded as unearned compensation and is shown as a separate component of
     stockholders' equity.

     On November 4, 1993, the Company amended the restricted stock award
     agreements and repurchased and retired 67,185 shares of each of the Class A
     and Class B Common Stock issued to the nine executive officers of the
     Company on April 27, 1993.  The purchase price of $6 1/16 per share
     (reflects stock dividend) was paid by the Company by cancellation of a
     portion of the promissory notes issued in conjunction with the original
     stock awards.  During 1994, 3,758 shares each of Class A Common Stock and
     Class B Common Stock, issued to an executive officer of the Company, were
     repurchased and retired as a result of the termination of employment by the
     executive. On June 27, 1994, the Company further amended the restricted
     stock awards and repurchased and retired 41,025 shares of each of the Class
     A and Class B Common Stock, thus repurchasing and retiring all remaining
     restricted shares.

     Issuances by the Company of shares of Class A Common Stock and Class B
     Common Stock, for the years ended January 3, 1997, January 5, 1996 and
     December 30, 1994 were:  1996, 1,500 shares of Class A Common Stock and
     18,244 shares of Class B Common Stock; 1995, 700 shares each of Class A
     Common Stock and Class B Common Stock; and, 1994, 1,000 shares of Class A
     Common Stock and 6,688 shares of Class B Common Stock.

     Also approved at the 1993 Annual Meeting of the Company's Stockholders was
     an amendment to the Company's Articles of Organization.  The amendment
     eliminated the requirement that Preferred Stock must necessarily have
     priority over common stock with respect to dividends.

     The Board of Directors has the authority by resolution to establish the
     rights and designate series of Preferred Stock.  The Company has authorized
     500,000 shares of Preferred Stock for issuance.  No shares or series of
     Preferred Stock were issued and outstanding or designated as of January 3,
     1997 and January 5, 1996.

     In July 1994, the Board of Directors of the Company authorized the
     repurchase of up to an aggregate of 500,000 shares of the Company's Class A
     Common Stock and Class B Common Stock.  The authority to purchase the
     shares of Common Stock expired on the earlier of the first anniversary date
     of this action of Directors, or a determination by the Board of Directors
     to discontinue such repurchases.  During 1994, the Company repurchased
     1,000 shares of Class A Common Stock at a cost of $5,000 and 175,700 shares
     of Class B Common Stock at a cost of $917,963.  During 1995, the Company
     repurchased 17,700 shares of Class B Common Stock at a cost of $76,687.  At
     January 3, 1997, Saucony SP Pty Ltd, a foreign subsidiary controlled by the
     Company, held 2,000 shares of each of the Company's Class A Common Stock
     and Class B Common Stock.

11.  STOCK OPTIONS:
     -------------

     At the May 25, 1993 Annual Meeting, the stockholders approved the Company's
     1993 Equity Incentive Plan (the "Equity Incentive Plan") and the 1993
     Director Stock Option Plan (the "Director Option Plan"), adopted by the
     Company's Board of Directors on April 7, 1993. The 1993 Equity Incentive
     Plan provides for the grant to officers and key employees of the Company,
     incentive stock options, non-statutory stock options and awards of
     restricted stock.  Outside consultants and advisors to the Company are
     eligible to receive only non-statutory options and restricted stock awards
     under the Equity Incentive Plan.

     The Equity Incentive Plan is administered by the Compensation Committee of
     the Board of Directors which, at its sole discretion, grant options to
     purchase shares of Common Stock and make awards of restricted stock.  The
     plan provides that the purchase price per share of Common Stock shall be
     determined by the Board of Directors, provided, however, in the case of
     Incentive Stock Options, the purchase price shall not be less than 100% of
     the fair market value of such stock at the time of grant of the option.
     The terms of option agreements are established by the Board of Directors,
     except, in the case of Incentive Stock Options, wherein the term cannot
     exceed ten years.  Generally, an option cannot be exercised within one year
     of date of grant.  The vesting schedule is subject to the discretion of the
     Board of Directors.

     Restricted stock awards which may be granted under the Equity Incentive
     Plan entitle recipients to purchase shares of the Company's Common Stock
     subject to restrictions concerning the sale, transfer and other disposition
     of the shares issued until such shares are vested.  The Board of Directors
     shall determine the purchase price, which can be less than the fair market
     value of the Common Stock, and the vesting schedule for such award.  The
     Equity Incentive Plan provides for grants of restricted stock awards
     without the payment of any cash purchase price.

     At the 1994 Annual Meeting of Stockholders held on May 26, 1994, the
     stockholders approved an amendment to the Equity Incentive Plan.  The
     amendment increased the number of shares issuable under the Equity
     Incentive Plan from 400,000 to 800,000 shares and limited to 75,000 the
     number of shares for which options or awards may be granted in any calendar
     year to any one person.  As amended, a total of 800,000 shares, in the
     aggregate, of Class A Common Stock and Class B Common Stock have been
     reserved by the Company and may be issued under the plan.

     The Director Stock Option Plan provides for the automatic grant to non-
     employee directors of non-statutory stock options upon specified occasions.
     A total of 100,000 shares of Class B Common Stock have been reserved for
     issuance under the plan.  The option purchase price per share shall equal
     the fair market value of Class B Common Stock on the date of the grant.
     The options are exerciseable at any time, in whole or in part, prior to the
     fifth anniversary of the date of the grant.

     The following table summarizes the awards available for grant under the
     Company's 1993 Equity Incentive Plan and 1993 Director Option Plan for the
     three-year reporting period ended January 3, 1997:
                                                            Shares
                                                            ------

            Shares available at December 31, 1993          233,762
            Additional shares reserved                     400,000
            Awards granted                                (148,800)
            Options expired                                 17,276
                                                            ------
            Shares available at December 30, 1994          502,238
            Awards granted                                (112,000)
            Options expired                                 30,502
                                                            ------
            Shares available at January 5, 1996            420,740
            Awards granted                                  (8,000)
            Options expired                                 33,610
                                                            ------
            Shares available at January 3, 1997            446,350
                                                           =======

     Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
     Based Compensation" SFAS No. 123, encourages, but does not require
     companies to record compensation cost for stock-based employee compensation
     plans at fair value.  The Company has elected to continue to measure stock-
     based compensation expense using the intrinsic value method prescribed by
     Accounting Principles Board Opinion No. 25 and Interpretations, "Accounting
     for Stock Issued to Employees." Accordingly, compensation expense for stock
     options and restricted stock awards is measured as the excess, if any, of
     the quoted market price of the Company's stock at the date of the grant
     over the exercise price an employee must pay to acquire the stock.

     Stock-based compensation arising from the issuance of restricted stock and
     below market option, is being amortized to expense over the vesting period
     of the stock grant or option term and amounted to $125,940, $178,379 and
     $156,493 for 1996, 1995 and 1994, respectively.

     The following table summarizes the Company's stock option activity as of
     December 30, 1994, January 5, 1996 and January 3, 1997:
        <TABLE>
        <CAPTION>
                                                                               Weighted
                                                                               Average
                                                                               Exercise               Option
                                                                Shares          Price              Price Range
                                                                ------           -----              ----------
           <S>                                                <C>              <C>            <C>
           Outstanding at December 31, 1993                     195,570         $  4.81       $   2.00 -  $   12.25

               Granted                                          148,800         $  3.63       $   2.50 -  $    6.00
               Exercised                                         (7,688)        $  3.39       $   2.00 -  $    3.69
               Forfeited                                        (20,476)        $  4.52       $   3.25 -  $   10.75
                                                                --------

           Outstanding at December 30, 1994                     316,206         $  4.28       $   2.00 -  $   12.25
                                                                -------

               Granted                                          112,000         $  4.61       $   4.00 -  $    4.88
               Exercised                                         (1,400)        $  2.61       $   2.25 -  $    2.75
               Forfeited                                        (36,502)        $  4.42       $   2.50 -  $   10.75
                                                                --------

           Outstanding at January 5, 1996                       390,304         $  4.37       $   2.00 -  $   12.25
                                                                -------

               Granted                                            8,000         $  4.00       $   4.00 -  $    4.00
               Exercised                                        (19,744)        $  3.52       $   2.25 -  $    3.69
               Forfeited                                        (10,386)        $  5.00       $   2.25 -  $   10.75
               Expired                                          (35,000)        $  4.68       $   4.68 -  $    4.68
                                                                --------
           Outstanding at January 3, 1997                       333,174         $  4.36       $   2.00 -  $   12.25
                                                                =======

     </TABLE>

     Options exercisable for shares of the Company's Class A and Class B Common
     Stock as of December 30, 1994, January 5, 1996 and January 3, 1997, were as
     follows:

                                                 Options Exercisable
                                         ------------------------------------
                                        Class A        Class B
                                         Common         Common
                                         Stock          Stock         Total
                                         -----           ----          ----

         December 30, 1994               10,700         71,943        82,643
         January 5, 1996                 11,400        155,470       166,870
         January 3, 1997                 11,400        181,953       193,353


     The following table summarizes information about stock options outstanding
     at January 3, 1997:
<TABLE>
<CAPTION>
                                                 Options Outstanding                       Options Exercisable
                                    ------------------------------------------------    ---------------------------

                                                          Weighted
                                          Shares          Average           Weighted       Shares         Weighted
                                       Outstanding       Remaining          Average     Exercisable       Average
                    Range of                at          Contractual         Exercise         at           Exercise
               Exercise Prices         Jan. 3, 1997         Life             Price      Jan. 3, 1997      Price
                --------------         ------------         ----             -----      ------------       ----
             <C>                         <C>                <C>            <C>            <C>             <C>
             $   2.00 -  $   3.69         169,524           2.14           $   3.13         101,886       $  3.54
             $   4.00 -  $   6.00         135,400           3.75           $   4.69          66,717       $  4.81
             $   8.50 -  $   8.50          15,000           0.95           $   8.50          12,000       $  8.50
             $  10.75 -  $  12.50          13,250           1.55           $  12.11          12,750       $ 12.16
                                       ----------                                         ---------
                                          333,174                                           193,353
                                       ==========                                         =========
</TABLE>


     The weighted average fair value at date of grant for options granted in
     1996 and 1995 was $6.07 and $6.44 per option, respectively.  The weighted-
     average fair value of these options at the date of grant was estimated
     using the Black-Scholes option-pricing model with the following weighted-
     average assumptions for 1996 and 1995, respectively:  risk-free interest
     rates of 6.3% and 6.5%; dividend yields of 0% and 0%; volatility factors of
     the expected market price of the Company's common stock of 48.0% and 47.0%;
     and a weighted-average expected life of the options of three years.

     Had the Company determined the stock-based compensation expense for the
     Company's stock option plans based upon the fair value at the grant date
     for stock option awards in 1996 and 1995, consistent with the provisions of
     SFAS No. 123, the Company's net income and net income per share would have
     been reduced to the pro forma amounts indicated below:


                                                   1996             1995
                                                   ----             ----
        Net income:

         As reported                            $1,494,090       $1,591,106
         Compensation expense for stock options    (86,650)        (65,390)
                                                -----------      ----------

        Pro forma net income                    $1,407,440       $1,525,716
                                                ==========       ==========

        Net income per share:

         As reported                                  $0.24           $0.26
         Compensation expense for stock options       (0.01)          (0.01)
                                                ------------     -----------

        Pro forma net income per share                $0.23           $0.25
                                                ===========      ==========


     The pro forma net income for 1996 and 1995 is not representative of the pro
     forma effect on net income in future years because it does not take into
     consideration pro forma compensation expense related to grants made prior
     to 1995.

12.  INCOME TAXES:
     ------------

     The provision for income taxes was calculated according to the precepts of
     Statement of Financial Accounting Standards No. 109, "Accounting for Income
     Taxes." The objective of SFAS No. 109 is to recognize the amount of taxes
     payable or refundable in the current year and to recognize the expected
     future tax consequences of events that have been included in the financial
     statements or tax returns.  SFAS No. 109 requires the identification of all
     cumulative temporary differences arising between the tax bases of assets
     and liabilities and their reported amounts in the financial statements.
     The tax effects of these temporary differences are measured using enacted
     tax rates and are reported on the consolidated balance sheet as deferred
     tax assets and liabilities.  Deferred tax assets are then reduced if it is
     more likely than not that some portion of the expected future tax benefits
     will not be realized.

     The following is a summary of the components of the provision for income
     taxes, current and long- term deferred tax assets and liabilities and a
     reconciliation of the U.S. statutory federal income tax rate to the
     effective income tax rate reflected in the consolidated income statement.

     The provision for income taxes was based on pretax income (loss) before
     minority interest which was subject to taxation by the following
     jurisdictions.  Domestic pretax income includes the pretax income of U.S.
     based entities as well as the international branches of these entities:


                                    1996            1995             1994
                                    ----            ----             ----

        Domestic                $1,396,597       $2,805,549      $4,622,282
        Foreign                    832,959         (785,278)        153,604
                                ----------       -----------     ----------

        Total                   $2,229,556       $2,020,271      $4,775,886
                                ==========       ==========      ==========


     The provision (credit) for income taxes consists of the following:

                                      1996           1995            1994
                                      ----           ----            ----

        Current:
           Federal                $  369,614      $  665,961     $1,217,123
           State                     173,909         232,664        329,813
           Foreign                   135,225         239,097        157,805
                                  ----------      ----------     ----------
                                     678,748       1,137,722      1,704,741
                                  ----------      ----------     ----------
        Deferred:
           Federal                  (128,083)        (30,025)        15,065
           State                     (42,197)         24,828         50,197
           Foreign                   137,000        (482,540)       (61,270)
                                  ----------      -----------    -----------
                                     (33,280)       (487,737)         3,992
                                  -----------     -----------    ----------
        Change in valuation
          allowance                 (218,000)         65,000        122,000
                                  -----------     ----------     ----------

        Total                     $  427,468      $  714,985     $1,830,733
                                  ==========      ==========     ==========




     The current deferred tax asset and long-term deferred tax liability
     reported on the consolidated balance sheet consist of the following items
     as of January 3, 1997 and January 5, 1996.

      Net current deferred tax assets:                  1996          1995
                                                        ----          ----

      Allowance for doubtful accounts and discounts$   400,471    $   276,877
      Inventory allowances and tax costing
        adjustments                                    246,272        265,403
      Deferred compensation                            229,294        178,578
      Accrued expenses, not currently deductible       124,769        140,361
      Untaxed installment receivables                 (174,443)      (127,189)
      Loss carryforwards                               598,624        735,624
      Valuation allowance                                    0       (218,000)
                                                    ----------     -----------

      Total                                        $ 1,424,987    $ 1,251,654
                                                    ==========     ==========

      Net long-term deferred tax liabilities:

      Property, plant and equipment                $   769,004    $   806,283
      Investments in limited partnerships            1,154,704      1,107,416
      Untaxed installment receivables                        0         87,956
                                                    ----------     ----------

      Total                                        $ 1,923,708    $ 2,001,655
                                                    ==========     ==========

      Net deferred tax liability                   $   498,721    $   750,001
                                                    ==========     ==========


  The loss carryforward amount shown above relates to foreign operating
  losses of approximately $1,460,000 which may be carried forward
  indefinitely.  At January 3, 1997, the Company has determined, as provided
  for SFAS No. 109, that it is more likely than not that the deferred tax
  assets resulting from the foreign operating losses, will be realized.

  The differences between the U.S. statutory federal income tax rate and the
  effective income tax rate on pretax income before minority interest are
  summarized as follows:

                                                        1996     1995     1994
                                                        ----     ----     ----
      U.S. federal income tax rate                     34.00%    34.00%   34.00%
      State income tax, net of federal benefit          3.90      8.41     5.21
      (Benefit) detriment of valuation allowance
        relating to foreign losses                     (9.78)     3.15     2.87
      Nondeductible expenses and tax exempt
        income                                          1.41      1.63     0.84
      International tax rate differences               (0.49)     1.23     0.62
      Low-income housing tax credits                   (7.98)    (8.08)   (5.21)
      Adjustment of prior years' estimated
        tax liabilities                                (1.89)    (4.95)    0.00
                                                       ------    ------    ----

      Effective income tax rate                        19.17%    35.39%   38.33%
                                                       ======    ======   ======

     The Company has not recorded deferred income taxes applicable to the
     undistributed earnings of foreign subsidiaries that are indefinitely
     reinvested in foreign operations.  These earnings amounted to approximately
     $2,904,000 at January 3, 1997.



13.  FOREIGN OPERATIONS, GEOGRAPHIC AREAS,  AND OTHER INCOME:
     -------------------------------------------------------

     During 1996, 1995 and 1994, foreign operations of the Company included the
     international activities of Hyde International Services, Ltd. and Saucony
     Deutschland Vertriebs GmbH, wholly owned foreign  subsidiaries; Saucony
     Canada, Ltd. and Saucony Sports BV, majority-owned foreign joint ventures;
     Saucony SP Pty Ltd., a foreign joint venture controlled by the Company; and
     Saucony UK, a branch operation of Saucony, Inc.

     The condensed balance sheet of the Company's foreign operations as of
     January 3, 1997 and  January 5, 1996, are as follows:


                                                       1996            1995
                                                       ----            ----
      ASSETS:
        Current assets:
          Cash                                    $  1,829,703    $  1,314,537
          Accounts receivable                        4,768,217       3,993,168
          Inventories                                8,909,494       7,341,438
        Other current assets                           970,420         917,380
          Noncurrent assets                          1,092,122       1,187,762
                                                  ------------    ------------
                                                  $ 17,569,956    $ 14,754,285
                                                  ============    ============

      LIABILITIES AND STOCKHOLDERS' EQUITY:
        Current liabilities:
          Notes payable                           $  1,935,280    $  4,336,940
        Current portion of long-term debt
           and capital lease obligations                94,105          72,879
          Accounts payable and accrued
           expenses                                  1,613,742       1,404,481
          Due to related parties                     7,161,171       6,799,124
          Long-term debt                             1,885,343              --
          Capitalized lease obligations                 31,327              --
          Minority interest                            487,865         170,227
          Stockholders' equity                       4,361,123       1,970,634
                                                  ------------    ------------

                                                  $ 17,569,956    $ 14,754,285
                                                  ============    ============

     The results of foreign operations included in the consolidated statements
     of income are as follows:
                                             1996         1995        1994
                                              ---         ----         ---

       Net sales to
        unaffiliated parties           $ 23,723,397  $21,214,487  $ 18,822,752
       Net sales to
        affiliated parties
        (eliminated in consolidation)       740,670      737,378        43,967
                                         -----------  ----------    -----------

       Net sales                       $ 24,464,067  $21,951,865  $ 18,866,719
                                         ===========  ==========  ============

       Income (loss) before income
        taxes and minority interest    $    677,162  $   632,367  ($ 1,152,297)
                                          ===========  ==========  ===========

       Net income (loss)               $    466,475  $   810,810  ($ 1,379,349)
                                          ===========  ==========   ==========


     The foreign operations changes in stockholders' equity from 1996 to 1995,
     1995 to 1994, and 1994 to 1993 were due to the recognition of common stock
     and paid-in capital amounts offset by income or losses and accumulated
     translation adjustments.

     Foreign sales attributed to international divisions of the United States
     parent company were $17,442,357, $11,550,486 and $11,486,051, for 1996,
     1995 and 1994, respectively.  Foreign sales attributed to foreign
     subsidiaries were $23,723,397, $21,214,488 and $18,822,752 for 1996, 1995,
     and 1994, respectively.

     The following table summarizes the Company's operations by geographic area:

                                         1996            1995            1994
                                         ----            ----            ----

      NET SALES TO UNAFFILIATED PARTIES:

        United States                $ 69,643,415   $ 69,797,781   $ 77,269,070
        International                  41,165,754     32,764,974     30,308,803
                                     ------------   ------------   ------------
                                     $110,809,169   $102,562,755   $107,577,873
                                     ============   ============   ============

      NET SALES BETWEEN GEOGRAPHIC AREAS:

        United States                $     44,043   $    137,849   $     43,967
        International                   8,147,516      8,241,637      9,076,190
                                     ------------   ------------   ------------
                                     $  8,191,559   $  8,379,486   $  9,120,157
                                     ============   ============   ============

      TOTAL NET SALES:

        United States                $ 69,687,458   $ 69,935,630   $ 77,313,037
        International                  49,313,270     41,006,611     39,384,993
        Less:
         Inter-area eliminations       (8,191,559)    (8,379,486)    (9,120,157)
                                     -------------  -------------  ------------
                                     $110,809,169   $102,562,755   $107,577,873
                                     ============   ============   ============

      OPERATING PROFIT:

        United States                $  1,892,596   $  3,962,144   $  5,934,688
        International                   1,516,366       (592,195)       417,143
        Less:
         Inter-area eliminations         (227,669)       (49,820)       (95,698)
                                     -------------  -------------  ------------
                                     $  3,181,293   $  3,320,129   $  6,256,133
                                     ============   ============   ============

      IDENTIFIABLE ASSETS:

        United States                $ 66,693,871   $ 64,395,000   $ 74,387,496
        International                  17,741,509     14,754,285     14,777,799
        Less:
         Inter-area eliminations      (12,843,654)    (9,677,996)   (12,082,963)
                                     -------------  -------------  ------------
                                     $ 71,591,726   $ 69,471,289   $ 77,082,332
                                     ============   ============   ============


     Net sales to unaffiliated customers is based on the location of the
     customers.  International inter-area sales represent shipment of inventory
     to international subsidiaries and purchases of inventory from international
     subsidiaries.  These inter-area sales are generally priced to recover cost
     plus an appropriate mark-up for profit and are eliminated in the
     determination of consolidated net sales.  Operating profit consists of
     revenue less related cost of sales, selling expenses and general and
     administrative expenses, and does not include interest expense, income
     taxes or minority shareholders' interest.

     Other income consists primarily of royalty income, income from short-term
     investments, income recognized due to the sale or licensing of trademarks,
     foreign currency transaction exchange gains and losses, and gains or losses
     from the sale or disposition of assets.


14.  MAJOR CUSTOMER:
     ---------------

     For 1996, 1995 and 1994, the Company did not have a major customer account
     for more than 10% of gross sales.


15.  ACQUISITIONS:
     ------------

     On December 11, 1991, the Company entered into a joint venture with a Dutch
     company to market and distribute Saucony footwear.  On December 31, 1991,
     the Company purchased 51% of the issued and outstanding stock of Saucony
     Sports BV for $413,598.  On June 9, 1993, the Company increased its
     majority ownership from 51% to 76% by acquiring an additional 25% of the
     issued and outstanding common stock from the minority shareholder, for
     $210,192, which equaled the book value of the stock.

     At January 3, 1997, January 5, 1996 and December 30, 1994, Saucony Sports
     BV had assets of $1,570,594, $1,595,470 and $1,853,804, liabilities of
     $1,235,630, $1,454,778 and $1,551,890 and revenues of $3,083,856,
     $3,215,936 and $2,988,367, respectively.

     On March 1, 1993, the Company acquired 85% of the issued and outstanding
     stock of a Canadian distributor, Saucony Canada, Inc.  The purchase price
     of $350,797 was financed with available cash of $160,954 and the issuance
     of a note payable of $189,843.  At January 3, 1997, January 5, 1996 and
     December 30, 1994, Saucony Canada, Inc. had assets of $2,101,969,
     $1,867,383 and $2,293,569, liabilities of $850,732, $740,380 and
     $1,453,913, and revenues of $4,002,061, $3,776,545 and $3,755,057,
     respectively.

     Effective July 1, 1993, the Company acquired 50% of the issued and
     outstanding common stock of an Australian distributor, Saucony SP Pty.
     Ltd., for $214,159 in cash.  The agreement was completed on November 13,
     1993.  During 1995, the Company increased its investment in Saucony SP Pty.
     Ltd. by acquiring 28 shares of Cumulative Redeemable Preferred Stock ($1
     par) for $2,081,800 in exchange for an equivalent reduction in debt owed to
     the Company by Saucony SP.  The shares, which are redeemable on or after
     January 1, 1998, provide for cumulative preferential dividends and confer
     priority to the preferred shareholders, with respect to dividends and
     return of share capital and share premium.  As the fair value of assets
     acquired equaled the carrying value of the debt reduction, there was no
     impact on consolidated net income.

     At January 3, 1997, January 5, 1996 and December 30, 1994, Saucony SP had
     assets of $9,420,129, $7,401,248 and $7,252,590, liabilities of $6,895,092,
     $5,527,511 and $6,848,537 and revenues of $14,023,651, $11,661,122 and
     $10,840,627, respectively.

     On August 31, 1995, Quintana Roo, Inc., a newly formed subsidiary of the
     Company, acquired the assets of a bicycle and wetsuit manufacturer for
     $112,000 in cash.

     On December 20, 1996, the Company acquired the tradename, trademarks,
     patents and service marks of an athletic apparel manufacturer for
     $1,250,001 in cash.  The entire purchase amount has been recorded as
     goodwill.

     These acquisitions are accounted for as purchases.

16.  CONCENTRATION OF CREDIT RISK:
     ----------------------------

     Financial instruments which potentially subject the Company to credit risk
     consist primarily of cash, cash equivalents and trade receivables.

     The Company maintains cash and cash equivalents with various major
     financial institutions.  Cash equivalents include investments in commercial
     paper of companies with high credit ratings, investments in money market
     securities and securities backed by the U.S. Government.  At times such
     amounts may exceed the F.D.I.C. limits.  The Company limits the amount of
     credit exposure with any one financial institution and believes that no
     significant concentration of credit risk exists with respect to cash
     investments.

     Trade receivables subject the Company to the potential for credit risk with
     customers in the retail and distributor sectors.  To reduce credit risk,
     the Company performs ongoing evaluations of its customers financial
     condition but does not generally require collateral.  Approximately 46% of
     the Company's gross trade receivables balance was represented by 16
     customers at January 3, 1997, which exposes the Company to a concentration
     of credit risk.

17.  FAIR VALUE OF FINANCIAL INSTRUMENTS
     -----------------------------------

     The carrying value of cash, cash equivalents, receivables, long-term debt
     and other notes payable approximates fair value.  The Company believes
     similar terms for current long-term debt and other notes payable would be
     attainable.  The fair value of marketable securities is estimated based
     upon quoted market prices for these securities.  The Company enters into
     forward currency exchange contracts to hedge intercompany liabilities
     denominated in other than the functional currency.  The fair value of the
     Company's foreign currency exchange contracts is estimated based on current
     foreign exchange rates.  At January 3, 1997, the value of the Company's
     foreign currency exchange contracts was $275,000.  Gains and losses on
     forward exchange contracts are deferred and offset against foreign currency
     exchange gains and losses on the underlying hedged item upon consummation
     of the transaction.  At January 3, 1997, estimated fair value of the
     Company's financial instruments approximated the carrying value.

<TABLE>

                                 HYDE ATHLETIC INDUSTRIES, INC. AND SUBSIDIARIES

                                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                    For the Years Ended January 3, 1997, January 5, 1996 and December 30, 1994
                    --------------------------------------------------------------------------



<CAPTION>

                                                                                       Additions
                                                  Balance,          charged to         Deductions         Balance,
                                                 beginning          costs and             from              end
                                                  of year            expenses           reserve           of year
                                                  -------            --------            ------            ------


<S>                                           <C>                <C>               <C>                <C>
Year ended January 3, 1997:
  Allowance for doubtful accounts
  and discounts                               $      940,244     $     5,408,609   $      5,014,323   $     1,334,530

Year ended January 5, 1996:
  Allowance for doubtful accounts
  and discounts                               $    1,147,409     $     5,072,962   $      5,280,127   $       940,244

Year ended December 30, 1994:
  Allowance for doubtful accounts

  and discounts                               $    1,191,819     $     4,754,567   $      4,798,977   $     1,147,409


</TABLE>




                                 EXHIBIT INDEX
                                 -------------


Exhibit
Number                        Description
------                        -----------


3.1       Restated Articles of Organization, as amended, of the
          Registrant are incorporated herein by  reference to
          Exhibit 4.1 to the Registrant's Registration Statement
          on Form S-8 (File No. 33-66482)                               *

3.2       By-Laws, as amended, of the Registrant are incorporated
          herein by reference to Exhibit 3.3 to the Registrant's
          Registration Statement on Form S-2, as amended
          (File No. 33-61040) (the "Form S-2")                          *

10.1      Note Purchase Agreement between the Registrant and
          the Principal Mutual Life Insurance Company is incorporated
          herein by reference to Exhibit (4b) to the Registrant's Annual
          Report on Form 10-K for the fiscal year ended December 31,
          1988 (the "1988 10-K Report")                                 *

10.2      Credit Agreement among the Registrant, State Street Bank
          and Trust Company and CoreStates Bank, N.A., dated
          August 31, 1993 is incorporated herein by reference
          to Exhibit 10.2 to the Registrant's Annual Report on Form
          10-K for the fiscal year ended December 31, 1993 (the
          "1993 10-K Report")                                           *

10.3      Guarantee of the Registrant to the Bank of Nova Scotia
          is incorporated herein by reference to Exhibit 10.3 to
          the 1993 10-K Report                                          *

10.4      Letter of Guarantee of the Registrant to State Street
          Finance Limited is incorporated herein by reference
          to Exhibit 10.4 to the 1993 10-K Report                       *

10.5**    1982 Employee Stock Option Plan, as amended, is
          incorporated herein by reference to Exhibit 10.7
          to the Form S-2                                               *

10.6**    Amendment to the Credit Agreement among the Registrant,
          State Street Bank and Trust Company and CoreStates Bank, N.A.,
          dated August 31, 1993, is incorporated herein by reference
          to Exhibit 10.06 to the Registrant's Quarterly Report on
          Form 10-Q for the 39 weeks ended September 30, 1994           *

10.7**    Consulting Agreement, as amended, between the Registrant
          and Phyllis H. Fisher is incorporated herein by reference to
          Exhibit 10.10 to the 1994 10-K Report                         *

10.8#     License Agreement between Brookfield Athletic Co., Inc. and
          Playskool, Inc., as amended, is incorporated herein by
          reference to Exhibit 10.14 to the Form S-2                    *

10.9#     Letter Agreement, dated June 3, 1993, between Brookfield
          Athletic Co., Inc. and Playskool, Inc. is incorporated herein
          by reference to Exhibit 10.14 to the 1993 10-K Report         *

10.10#    Letter Agreement, dated January 26, 1995, between Brookfield
          Athletic Co., Inc. and Hasbro, Inc. is incorporated herein by
          reference to Exhibit 10.15 of the 1994 10-K Report            *

10.11#    Patent Cross-License Agreement for In-Line Skates, dated
          June 1993, and as amended September 1993, among the
          Registrant, Brookfield Athletic Co., Inc., Rollerblade, Inc.
          and David Wolf is incorporated herein by reference to
          Exhibit 10.17 to the 1993 10-K Report                         *

10.12     License Agreement between the Registrant and Cal's Best,
          Inc. (d/b/a Bangor Trading Company) is incorporated herein
          by reference to Exhibit 10.27 to the Form S-2                 *

10.13#    Trademark License Agreement, dated as of February 1, 1994,
          between the Registrant and Leif J. Ostberg, Inc. is incorporated
          herein by reference to Exhibit 10.21 of the 1993 10-K Report  *

10.14**   1993 Equity Incentive Plan, as amended, is incorporated
          herein by reference to Exhibit 10.21 of the 1994 10-K Report  *

10.15**   1993 Director Option Plan is incorporated herein by reference
          to Exhibit 10.2 to the Registrant's Quarterly Report on Form
          10-Q for the thirteen weeks ended April 2, 1993, as amended
          (the "1993 Form 10-Q")                                        *

10.16**   VP Bonus Plan is incorporated herein by reference to
          Exhibit 10.19 to the Form S-2                                 *

10.17**   Compensation Agreement between the Registrant and
          James H. Noyes, Jr. is incorporated herein by reference
          to Exhibit 10.3 to the 1993 Form 10-Q                         *

10.18#    License and Royalty Agreement between Brookfield
          Athletic Co., Inc. and Franklin Sports, Inc. is incorporated
          herein by reference to Exhibit 10.25 to the 1994 10-K Report  *

10.19#    License Agreement, dated May 2, 1994, between
          Brookfield Athletic Co., Inc. and The Walt Disney Company,
          Inc. is incorporated herein by reference to Exhibit 10.26
          to the 1994 10-K Report                                       *

10.20#    License Agreement dated August 1, 1995 between Spalding
          Sports Worldwide and Brookfield Athletic Co., Inc. is
          incorporated herein by reference to Exhibit 10.25 to
          the Registrant's Annual Report on Form 10-K for the
          fiscal year ended January 5, 1996 (the "1995 10-K Report")    *

10.21#    License Agreement dated April 1, 1995 between Mattel,
          Inc. and Brookfield Athletic Co., Inc. is incorporated
          herein by reference to Exhibit 10.26 to the 1995 10-K Report  *

10.22#    License Agreement dated April 1, 1995 between Hasbro,
          Inc. and Brookfield Athletic Co., Inc. is incorporated herein
          by reference to Exhibit 10.27 to the 1995 10-K Report         *

10.23**   Employment Agreement, dated as of June 1, 1995, between
          the Registrant and Wolfgang Schweim is incorporated herein by
          reference to Exhibit 10.01 to the Registrant's Quarterly Report
          on Form 10-Q for the twenty-six weeks ended June 30, 1995     *

10.24**   Letter Agreement dated March 30, 1995, between the Registrant
          and Principal Mutual Life Insurance Company is incorporated
          herein by reference to Exhibit 10.01 of the Registrant's
          Quarterly Report on Form 10-Q for the thirteen weeks
          ended March 31, 1995                                          *

10.25#    License Agreement, dated April 1, 1996, between Disney
          Enterprises, Inc. and Brookfield Athletic Co., Inc. is
          incorporated herein by reference to Exhibit 10.1 to the
          Registrant's Quarterly Report on Form 10-Q for the twenty-
          six weeks ended July 5, 1996 (the "1996 10-Q Report")         *

10.26#    License Agreement, effective as of January 1, 1997, between
          Mattel, Inc. and Brookfield Athletic Co., Inc. is incorporated
          herein by reference to Exhibit 10.2 to the 1996 10-Q Report   *

10.27#    Second and Third Amendments to the Credit Agreement among the
          Registrant, State Street Bank and Trust Company and CoreStates
          Bank, N.A.

21        Subsidiaries of the Registrant

23.1      Consent of Coopers & Lybrand L.L.P.

23.2      Consent of Grant Thornton

27        Financial Data Schedule



*         Incorporated herein by reference.

**        Management contract or compensatory plan or arrangement filed
          herewith in response to Item 14(a)(3) of the instructions to
          Form 10-K.

#         Confidential treatment previously granted as to certain
          portions of such document.