<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549


                                   Form 10-Q

              Quarterly Report Pursuant to Section 13 or 15(d) of
                      The Securities Exchange Act of 1934

                  For the quarterly period ended July 3, 1999

                        Commission File Number 1-13430


                                 Converse Inc.
            (Exact name of registrant as specified in its charter)



           Delaware                                     43-1419731
 (State or other jurisdiction of                     (I.R.S. Employer
 incorporation or organization)                     Identification No.)

         One Fordham Road                                  01864
    North Reading, Massachusetts                        (Zip Code)
(Address of principal executive offices)

      Registrant's telephone number, including area code:  (978) 664-1100

     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
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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.


    As of July 3, 1999, 17,437,140 shares of common stock were outstanding.
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                          PAGE
<S>                                                                       <C>
PART I:    FINANCIAL INFORMATION

           Item 1.     Consolidated Financial Statements

                       A.     Consolidated Balance Sheet                     1
                       B.     Consolidated Statement of Operations           2
                       C.     Consolidated Statement of Cash Flows           3
                       D.     Notes to Consolidated Financial Statements     4

           Item 2.     Management's Discussion and Analysis of              10
                       Financial Condition and Results of Operations

           Item 3.     Quantitative and Qualitative Disclosures About
                       Market Risk                                          19

PART II:   OTHER INFORMATION

           Item 1.     Legal Proceedings                                    20
           Item 2.     Changes in Securities                                20
           Item 3.     Defaults Upon Senior Securities                      20
           Item 4      Submission of Matters to a Vote of
                       Security Holders                                     20
           Item 5.     Other Information                                    21
           Item 6.     Exhibits and Reports on Form 8-K                     22


           SIGNATURE                                                        23
</TABLE>
<PAGE>

                       PART I  -  FINANCIAL INFORMATION

Item 1.   FINANCIAL STATEMENTS

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






<TABLE>
<CAPTION>
                                                                                      (Unaudited)
                                                                  January 2, 1999    July 3, 1999
                                                                  ---------------    ------------
<S>                                                                <C>                <C>
Assets
Current assets:
     Cash and cash equivalents...............................       $   3,274          $    2,317
     Receivables, less allowances of $2,086 and $1,801,
       respectively..........................................          57,826              55,569
     Inventories (Note 3)....................................          71,292              77,723
     Prepaid expenses and other current assets...............           8,962               6,591
                                                                   ----------        ------------
          Total current assets...............................         141,354             142,200
Net property, plant and equipment............................          20,838              19,885
Other assets.................................................          32,814              31,940
                                                                   ----------        ------------
                                                                    $ 195,006          $  194,025
                                                                   ==========        ============

Liabilities and Stockholders' Equity (Deficiency)
Current liabilities:
     Short-term debt.........................................       $   9,557          $    9,010
     Credit facility (Note 4)................................          73,833              85,096
     Accounts payable........................................          37,184              37,206
     Accrued expenses........................................          10,861               8,745
     Income taxes payable....................................           2,861               3,354
                                                                   ----------        ------------
          Total current liabilities..........................         134,296             143,411
Long-term debt (Note 4)......................................         101,799             102,191
Current assets in excess of reorganization value.............          28,221              27,183

Stockholders' equity (deficiency):
     Common stock, $1.00 stated value, 50,000,000 shares
       authorized, 17,319,556 and 17,437,140 shares issued
       and outstanding at outstanding at January 2, 1999
       and July 3, 1999, respectively........................          17,320              17,437
     Preferred stock, no par value, 10,000,000 shares
       authorized none issued and outstanding................              --                  --
     Additional paid-in capital..............................           3,695               4,748
     Unearned compensation...................................            (758)             (1,450)
     Retained deficit........................................         (88,129)            (96,948)
     Accumulated other comprehensive income..................          (1,438)             (2,547)
                                                                   ----------        ------------
          Total stockholders' equity (deficiency)............         (69,310)            (78,760)
                                                                   ----------        ------------
                                                                    $ 195,006          $  194,025
                                                                   ==========        ============
</TABLE>

    See accompanying notes to condensed consolidated financial statements.

                                      -1-
<PAGE>

                        CONVERSE INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
               (Dollars in thousands, except per share amounts)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                 Three Months Ended            Six Months Ended
                                                            ---------------------------   ---------------------------
                                                            July 4, 1998   July 3, 1999   July 4, 1998   July 3, 1999
                                                            ------------   ------------   ------------   ------------
<S>                                                         <C>            <C>            <C>            <C>
Net sales..............................................      $    78,351        $57,140       $173,591       $127,219
Cost of sales..........................................           58,614         42,088        126,039         93,426
                                                            ------------     ----------     ----------     ----------
Gross profit...........................................           19,737         15,052         47,552         33,793
Selling, general and administrative expenses...........           21,964         18,714         51,680         40,365
Royalty income.........................................            4,459          4,940          9,487          9,782
Loss on sale of foreign subsidiaries...................              ---            543            ---            543
                                                            ------------     ----------     ----------     ----------
Earnings from operations...............................            2,232            735          5,359          2,667
Interest expense, net..................................            4,213          5,280          8,661         10,515
Other (income) expense, net............................             (764)            97         (1,151)          (895)
                                                            ------------     ----------     ----------     ----------
Loss before income tax.................................           (1,217)        (4,642)        (2,151)        (6,953)
Income tax expense.....................................              299            938            528          1,866
                                                            ------------     ----------     ----------     ----------
Net loss...............................................      $    (1,516)       $(5,580)      $ (2,679)      $ (8,819)
                                                            ============     ==========     ==========     ==========

Net basic and diluted loss per share (Note 2)..........      $     (0.09)       $ (0.32)      $  (0.15)      $  (0.51)
                                                            ============     ==========     ==========     ==========
Weighted average number of common shares
outstanding (Note 2)...................................           17,320         17,396         17,319         17,363
                                                            ============     ==========     ==========     ==========
</TABLE>

    See accompanying notes to condensed consolidated financial statements.

                                      -2-
<PAGE>

                        CONVERSE INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                            (Dollars in thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                         Six Months Ended
                                                                                 -------------------------------
                                                                                 July 4, 1998       July 3, 1999
                                                                                 ------------       ------------
<S>                                                                              <C>                <C>
Cash flows from operating activities:
  Net earnings (loss).....................................................       $     (2,679)      $     (8,819)
  Adjustments to reconcile net loss to net cash (required for) provided by
  operating activities:
       Depreciation of property, plant and equipment......................              1,834              2,164
       Amortization of intangible assets..................................                234                100
       Amortization of current assets in excess of reorganization
         value............................................................             (1,039)            (1,038)
       Amortization of note discount/warrants.............................                ---                318
       Amortization of deferred compensation..............................                 54                211
       Gain on sale of property, plant and equipment......................             (1,037)               ---
       Deferred income taxes..............................................                ---                224
  Changes in assets and liabilities:
       Receivables........................................................                639              2,257
       Inventories........................................................              4,164             (6,431)
       Prepaid expenses and other current assets..........................              1,240              2,350
       Accounts payable and accrued expenses..............................                728             (2,094)
       Income taxes payable...............................................               (478)               493
       Other long-term assets and liabilities.............................             (1,789)              (538)
                                                                                 ------------       ------------
          Net cash (required for) provided by operating activities........              1,871            (10,803)
                                                                                 ------------       ------------

Cash flows from investing activities:
  Additions to property, plant and equipment..............................             (1,520)            (1,211)
  Proceeds from sale of property, plant and equipment.....................              1,169                ---
                                                                                 ------------       ------------
          Net cash used by investing activities...........................               (351)            (1,211)
                                                                                 ------------       ------------

Cash flows from financing activities:
  Net proceeds from exercise of stock options.............................                 11                ---
  Net proceeds from exercise of warrants..................................                ---                268
  Net proceeds from employee stock purchase plan..........................                ---                 73
  Net proceeds from (payment of) short-term debt..........................             (1,685)              (547)
  Net proceeds from (payment of) credit facility..........................             (2,915)            11,263
                                                                                 ------------       ------------
          Net cash provided (used) by financing activities................             (4,589)            11,057
Net decrease in cash and cash equivalents.................................             (3,069)              (957)
Cash and cash equivalents at beginning of period..........................              5,738              3,274
                                                                                 ------------       ------------
Cash and cash equivalents at end of period................................       $      2,669       $      2,317
                                                                                 ============       ============
</TABLE>

    See accompanying notes to condensed consolidated financial statements.

                                      -3-
<PAGE>

                        CONVERSE INC. AND SUBSIDIARIES
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
               (Dollars in thousands, except per share amounts)


1.   Summary of Significant Accounting Policies

Basis of presentation:

     In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, consisting of normal
recurring accruals, considered necessary for a fair presentation. This interim
financial information and notes thereto should be read in conjunction with the
Company's annual report on Form 10-K for the year ended January 2, 1999. The
Company's consolidated results of operations for the three and six months ended
July 3, 1999 are not necessarily indicative of the results to be expected for
any other interim period or the entire fiscal year.

Reclassifications:

          Certain amounts in the prior period financial statements and related
notes have been reclassified to conform with the current period's presentation.


2.   Net Earnings (Loss) per Common Share

     Net earnings (loss) per common share is computed based on the weighted
average number of common shares and common equivalent shares, if dilutive,
assumed outstanding for the applicable period.


3.   Inventories

     Inventories are summarized as follows:

                                          January 2, 1999  July 3, 1999
                                          ---------------  ------------
          Retail merchandise............     $   4,535      $   4,578
          Finished products.............        57,365         64,791
          Work in process...............         5,009          5,112
          Raw materials.................         4,383          3,242
                                          ------------     ----------
                                             $  71,292      $  77,723
                                          ============     ==========

4.   Debt

     As more fully described in Note 8 to the Consolidated Financial Statements
for the year ended January 2, 1999 included within the Company's annual report
on Form 10-K, in May 1997 the Company issued $80,000 of 7% Convertible
Subordinated Notes due June 1, 2004 (the

                                      -4-
<PAGE>

"Convertible Notes"). The Convertible Notes are convertible at any time prior to
maturity, unless previously redeemed into common stock of the Company, at the
option of the holder, at a price of $21.83 per share, subject to adjustment in
certain events. In addition, the Convertible Notes may be redeemed, in whole or
in part, at the option of the Company, at any time on or after June 5, 2000 at
redemption prices set forth therein plus accrued interest to the date of
redemption. Interest is payable semi-annually on June 1 and December 1. Proceeds
from the Convertible Notes were used to repay indebtedness under the Company's
then existing credit facility.

     Simultaneously with the issuance of the Convertible Notes in May 1997, the
Company entered into a new $150,000 secured credit agreement (the "Credit
Facility") with BT Commercial Corporation ("BTCC") for revolving loans, letters
of credit, foreign exchange contracts and banker acceptances and repaid the then
existing credit facility. In July 1997 BTCC, as agent, syndicated the Credit
Facility to a group of participating lenders (the "Banks"). The amount of credit
available to the Company at any time is limited by a borrowing base formula, as
defined in the Credit Facility, consisting primarily of U.S. accounts receivable
and inventory. The aggregate letters of credit, foreign exchange contracts and
banker acceptances may not exceed $80,000 at any time; revolving loans are
limited only by the Credit Facility's maximum availability less any amounts
outstanding for letters of credit, foreign exchange contracts or banker
acceptances.

     The Credit Facility is for a five-year term and, accordingly, has an
expiration date of May 21, 2002. However, the total revolving loans and banker
acceptances outstanding under the Credit Facility of $85,096 are classified as
current due to the Company's lockbox arrangement (whereby payments made by the
Company's customers are deposited in a lockbox controlled by the Banks) and
certain clauses contained in the Credit Facility regarding mandatory repayment
that involve subjective judgments by the Banks. This classification is required
by Emerging Issues Task Force 95-22, "Balance Sheet Classification of Borrowings
Outstanding under a Revolving Credit Agreement that Includes both a Subjective
Acceleration Clause and a Lockbox Arrangement".

     In September 1998, the Company's Credit Facility was amended to permit the
issuance of the Secured Notes as discussed below. The amendment decreased the
commitment under the Credit Facility from $150,000 to $120,000 and changed a
financial performance covenant. In May 1999, the Company's Credit Facility was
amended to allow for $6,000 of additional borrowing base through July 1999. In
July 1999, the Company's Credit Facility was further amended to extend the
$6,000 of additional borrowing base through October 31, 1999.

     As of July 3, 1999 the Company's borrowing base was $92,843. Utilization
under the Credit Facility amounted to $88,037 consisting of revolving loans of
$80,048, banker acceptances of $5,048 and outstanding letters of credit of
$2,941. Accordingly, $4,806 of the maximum available borrowing base remained
unutilized as of July 3, 1999.

                                      -5-
<PAGE>

     Revolving loans under the Credit Facility bear interest either at the Prime
Lending Rate (as defined therein) plus one percent (1.00%) per annum or at the
Adjusted LIBOR Rate (as defined therein) plus a margin of two and one-half
percent (2.50%) per annum. The foregoing LIBOR margin is subject to reduction
based upon the Company achieving certain interest coverage ratios specified in
the Credit Facility. At July 3, 1999, revolving loans outstanding under the
Credit Facility bore interest of 7.67% based upon the weighted average of the
Prime Lending Rate and Adjusted LIBOR Rate, as defined. Obligations outstanding
under the Credit Facility are secured by first priority liens on substantially
all of the Company's U.S. assets. The Credit Facility requires compliance with
customary affirmative and negative covenants, including certain financial
covenants. At July 3, 1999, the Company was in compliance with all covenants
contained in the Credit Facility, as amended.

     In September 1998, the Company issued $28,643 aggregate principal amount of
15% Senior Secured Notes (the "Secured Notes") due September 16, 2000 (the
"Initial Maturity Date"). Interest on the Secured Notes is payable quarterly in
arrears. The Initial Maturity Date may be extended an additional 12 months at
the Company's option upon written notification of its election to extend and
payment of a fee equal to 3% of the then outstanding principal amount of the
Secured Notes (the "First Extended Maturity Date"). The First Extended Maturity
Date may be extended to May 21, 2002 at the Company's option upon written
notification of its election to extend and payment of an additional fee equal to
3% of the then outstanding principal amount of the Secured Notes. The Secured
Notes were issued in two series: Series A in the aggregate principal amount of
$24,858 (the "Series A Secured Notes") and Series B in the aggregate principal
amount of $3,785 (the "Series B Secured Notes"). The Secured Notes are
redeemable at any time at face amount plus accrued interest. The Secured Notes
require compliance with customary affirmative and negative covenants, including
certain financial covenants, substantially the same as the requirements
contained in the Credit Facility.

     Upon issuance of the Series A Secured Notes, the Company received gross
proceeds of $24,000 after discount from the face amount. In connection with the
issuance of the Series A Secured Notes, the Company issued warrants to purchase
360,000 shares of the Company's common stock to the purchasers and paid funding
fees to certain purchasers amounting to $350. The warrants were valued at $1.22
per share, vest immediately and expire on March 16, 2003. The Company paid a
placement fee of 4% of the gross proceeds, or $960, with respect to the Series A
Secured Notes. The Series A Secured Notes carry a second priority perfected lien
on all real and personal, tangible and intangible assets of the Company.

     The Series B Secured Notes were issued in exchange for the surrender of
$5,735 face amount of Convertible Notes, which were subsequently cancelled by
the Company. In connection with the issuance of the Series B Secured Notes, the
Company paid a placement fee of 2% of the face amount, or $76. The Series B
Secured Notes carry a third priority perfected lien on all real and personal,
tangible and intangible assets of the Company.

     Subsidiaries of the Company maintain asset-based financing arrangements in
certain European countries with various lenders. In general, these financing
arrangements allow for borrowings based upon eligible accounts receivable and
inventory at varying advance rates and

                                      -6-
<PAGE>

varying interest rates. As of July 3, 1999, total short-term borrowings
outstanding under these financing arrangements totaled $9,010. These obligations
are secured by first priority liens on the respective foreign assets being
financed. In addition, Converse Inc. provided guarantees with respect to the
outstanding borrowings for certain of the financing arrangements.

                                      -7-
<PAGE>

5.   Comprehensive Income

     For the three months ended July 4, 1998 and July 3, 1999, comprehensive
income items included in stockholders' equity consisted of cumulative
translation adjustments of $233 and $(564), respectively. Total comprehensive
income (loss) for the second quarter of 1998 was $(1,283) compared to
comprehensive income (loss) of $(6,144) for the second quarter of 1999.

     For the six months ended July 4, 1998 and July 3, 1999, comprehensive
income items included in stockholders' equity consisted of cumulative
translation adjustments of $(55) and $(1,109), respectively. Total comprehensive
income (loss) for the first six months of 1998 was $(2,734) compared to
comprehensive income (loss) of $(9,928) for the first six months of 1999.

6.   Stock Plans and Warrant Exercises

     In February and May 1999, 250,000 shares and 10,000 shares of restricted
stock, respectively, were granted to certain employees, resulting in $922 of
unearned compensation. All restricted stock grants are subject to restrictions
as to continuous employment. The restricted stock vests 100% on the third
anniversary of the grant date. As there is no exercise payment associated with
the restricted stock awards, the cost of the awards, determined as the fair
market value of the shares on the date of grant, is charged to expense ratably
over the three year vesting period.

     In February 1999, 26,172 shares of common stock were issued under the
Company's Employee Stock Purchase Plan. Proceeds of $73 were recorded in
conjunction with this purchase.

     In May 1999, 91,412 shares of common stock were issued pursuant to the
exercise of stock warrants. These warrants had an exercise price of $2.9375.
Proceeds of $268 were recorded in conjunction with this exercise.

7.   Commitments and Contingencies

     Converse is or may become a defendant in a number of pending or threatened
legal proceedings in the ordinary course of its business. Converse believes that
the ultimate outcome of any such proceedings will not have a material adverse
effect on its financial position or results of its operations.

8.   Recently Issued Accounting Standards

     On June 15, 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (FAS 133). FAS 133 is effective for all
fiscal years beginning after June 15, 1999 (January 2, 2000 for the Company).
FAS 133 requires that all derivative instruments be recorded on the balance
sheet at their fair value. Changes in the fair value of derivatives are recorded
each period in current earnings or other comprehensive income, depending on
whether a derivative is designated as part of a hedge transaction and, if it is,
the type of hedge transaction. Management

                                      -8-
<PAGE>

of the Company anticipates that, due to its limited use of derivative
instruments, the adoption of FAS 133 will not have a significant effect on the
Company's results of operations or its financial position.

     On July 8, 1999, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133" (FAS 137). FAS 137 defers the effective date of FAS 133 from
all fiscal years beginning after June 15, 1999 to all fiscal years beginning
after June 15, 2000 (December 31, 2000 for the Company).

9.   Subsequent Events

     On July 1, 1999, Converse entered into a long-term agreement with a third
party company for the exclusive distribution and license rights in Italy for
Converse footwear and apparel. This agreement becomes effective in January 2000
and will have the impact of reducing the Company's future global backlog, net
sales and expenses while increasing the Company's royalty income.

10.  Business Segment Information

     As more fully described in Note 17 to the Consolidated Financial Statements
for the year ended January 2, 1999 included within the Company's annual report
on Form 10-K, the Company has adopted Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information". Summarized financial information concerning the Company's
reportable business segments is shown in the following table:

<TABLE>
<CAPTION>
                                                Europe,                        Americas
                                              Middle East,                    (excluding
                              United States     Africa      Asia Pacific     United States)    Eliminations   Consolidated
                             --------------  ------------  -------------     -------------     -------------  ------------
<S>                             <C>           <C>           <C>              <C>                <C>            <C>
Six months ending July 3,
   1999:
Net sales to customer.......... $  67,948       $  34,684     $  19,697        $   4,890          $   ----       $ 127,219
Intersegment net sales.........    14,888            ----          ----             ----           (14,888)           ----
Segment pretax profit  (loss)..    (9,583)           (229)        3,807             (948)             ----          (6,953)

Segment total assets at July 3,
   1999........................   156,871          30,655         3,130            3,369              ----         194,025


Six months ending July 4,
   1998:
Net sales to customer.......... $  99,296       $  41,395     $  27,210        $   5,690          $   ----       $ 173,591
Intersegment net sales.........    22,296            ----          ----             ----           (22,296)           ----
Segment pretax profit (loss)...   (11,573)           (384)        9,563              243              ----          (2,151)

Segment total assets at January
   2, 1999.....................   153,107          33,066         4,834            3,999              ----         195,006


Three months ending July 3,
   1999:
Net sales to customer.......... $  32,852       $  12,668     $   9,900        $   1,720          $   ----       $  57,140
Intersegment net sales.........     6,189            ----          ----             ----            (6,189)           ----
Segment pretax profit (loss)...    (5,346)         (1,561)        2,471             (206)             ----          (4,642)


Three months ending July 4,
   1998:
Net sales to customer.......... $  45,680       $  13,813     $  15,997        $   2,861          $   ----       $  78,351
Intersegment net sales.........     5,608            ----          ----             ----            (5,608)           ----
Segment pretax profit (loss)...    (5,082)         (1,701)        4,833              733              ----          (1,217)

</TABLE>

                                      -9-
<PAGE>

Item 2.
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS

Comparison of three months ended July 4, 1998 to three months ended July 3, 1999

     The following table sets forth certain items relating to the Company's
operating results as a percentage of net sales for the three months ended July
4, 1998 ("Second Quarter 1998") and for the three months ended July 3, 1999
("Second Quarter 1999").

<TABLE>
<CAPTION>

                                                    Three Months Ended
                                     ---------------------------------------------------
                                       July 4, 1998      %      July 3, 1999       %
                                       ------------      -      ------------       -

<S>                                   <C>              <C>      <C>              <C>
Net sales............................  $ 78,351        100.0     $ 57,140        100.0
Gross profit.........................    19,737         25.2       15,052         26.3
Selling, general and administrative
  Expenses...........................    21,964         28.0       18,714         32.8
Royalty income.......................     4,459          5.7        4,940          8.6
Loss on sale of foreign
  subsidiaries.......................       ---          ---          543          1.0
Earnings from operations.............     2,232          2.8          735          1.3
Interest expense, net................     4,213          5.4        5,280          9.2
Other (income) expense, net..........      (764)        (1.0)          97          0.2
Net loss.............................  $ (1,516)        (1.9)    $ (5,580)        (9.8)
Net basic and diluted loss
  per share.........................   $  (0.09)         ---     $  (0.32)         ---
</TABLE>

Net Sales

     Net sales for the Second Quarter 1999 decreased to $57.1 million from $78.4
million for the Second Quarter 1998, a 27.2% decrease. The $21.3 million
reduction in net sales was attributable to decreases of 24.7%, 30.5%, 39.5% and
31.5% for the Second Quarter 1999 in the categories of basketball, children's,
cross training and athletic originals, respectively, as compared to Second
Quarter 1998. The reduction in net sales was partially offset by a 7.3% increase
in the action sports category.

     Net sales in the United States decreased 28.2% to $32.9 million in the
Second Quarter 1999 from $45.7 million for the Second Quarter 1998. Net sales
decreased 25.7% internationally to $24.3 million for Second Quarter 1999 from
$32.7 million for Second Quarter 1998. Second Quarter 1999 net sales decreased
from Second Quarter 1998 by 8.3%, 38.1% and 39.9% in the Europe, Middle East and
Africa ("E.M.E.A."), Asia Pacific and the Americas regions, respectively.

                                      -10-
<PAGE>

     The Company's net sales continue to suffer from the effects of the athletic
footwear market slowdown which has occurred over the past two years. Also
contributing to the sales decline internationally was the conversion of three
wholly-owned subsidiaries operating in Spain, Portugal and Canada to new
licensing agreements, revenues from which are now recorded as royalty income
rather than as net sales.

Gross Profit

     Gross profit decreased to $15.1 million for Second Quarter 1999 from $19.7
million for Second Quarter 1998, a 23.4% reduction. The net sales reduction
accounted for the majority of the gross profit decline. The Company's gross
profit margin increased to 26.3% of net sales for Second Quarter 1999 compared
to 25.2% of net sales for Second Quarter 1998. The increase is primarily the
result of the slight improvement in the athletic footwear market and the lower
sell off of unsold inventory in the Company's basketball and children's
categories in Second Quarter 1999.

Selling, General and Administrative Expenses

     Selling, general and administrative expenses decreased 15.0% to $18.7
million for Second Quarter 1999 from $22.0 million for Second Quarter 1998. The
decrease in selling, general and administrative expenses of $3.3 million
resulted from reduced spending across all of the Company's functions. As a
percentage of net sales, selling, general and administrative expenses increased
to 32.8% for Second Quarter 1999 from 28.0% for the prior year period. Second
Quarter 1998 expenses included one-time expense credits of $3.3 million
generated by a gain from the curtailment of the active employees from the post-
retirement medical benefit plan and a gain of $0.6 million resulting from
pension curtailment. Excluding these one-time 1998 expense credits of $3.9
million, the expense reduction would have been $7.2 million or 27.8% for Second
Quarter 1999 compared to Second Quarter 1998. As a result of sluggish conditions
in the athletic footwear market, the Company continues to tightly control costs
and inventory levels.

Royalty Income

     Royalty income increased by 8.9% to $4.9 million in Second Quarter 1999
from $4.5 million in Second Quarter 1998. International royalty income, which
currently represents approximately 81% of the Company's total royalty income,
increased 6.7% for Second Quarter 1999 from Second Quarter 1998. The increase
was primarily attributable to an increase of 24.3% in the Asia Pacific region
due mainly to recovery in our Southeast Asia business, partially offset by
weakness in the E.M.E.A. and Americas regions. U.S. royalty income increased by
42.9% to $1.0 million for Second Quarter 1999 from $0.7 million for Second
Quarter 1998. As a percentage of net sales, royalty income was 8.6% in the
Second Quarter 1999 compared to 5.7% in the Second Quarter 1998.

                                      -11-
<PAGE>

Loss on Sale of Foreign Subsidiaries

     In the Second Quarter 1999, the Company recorded a pretax loss totaling
$0.5 million relating to the conversion of our Canada operation from a Company
owned subsidiary (direct operating unit) to a third party licensee/distributor
arrangement.

Earnings from Operations

     Primarily as a result of the factors discussed above, the Company recorded
earnings from operations of $0.7 million for Second Quarter 1999 as compared to
$2.2 million for Second Quarter 1998.  As a percentage of net sales, earnings
from operations were 1.3% and 2.8% for Second Quarter 1999 and Second Quarter
1998, respectively.

Interest Expense

     Interest Expense for Second Quarter 1999 increased to $5.3 million from
$4.2 million for Second Quarter 1998, a 26.2% increase. The increase reflects
the higher borrowing levels in Second Quarter 1999 compared to Second Quarter
1998 as well as higher interest costs associated with the Secured Notes issued
in September 1998.

Other (Income) Expense

     The Second Quarter 1998 income of $0.8 million was primarily attributable
to the May 1998 sale of the Company's Reynosa, Mexico manufacturing facility,
partially offset by foreign exchange losses attributable to the appreciation of
the U.S. dollar.

Net Loss

     The Company recorded a net loss for Second Quarter 1999 of $5.6 million
compared to net loss of $1.5 million for Second Quarter 1998. The net loss for
Second Quarter 1999 includes a charge of $2.0 million to increase the deferred
tax valuation reserve and a loss on sale of foreign subsidiaries of $0.3
million. Excluding these charges, the net loss for Second Quarter 1999 was $3.3
million.

Net Loss Per Share

     The Company recorded a loss per share of $0.32 for Second Quarter 1999
compared to $0.09 loss per share for Second Quarter 1998.  The net loss for the
Second Quarter 1999 includes a charge of $0.11 per share to increase the
deferred tax valuation reserve and loss of $0.02 from sale of foreign
subsidiaries.  Excluding these charges, the net loss for Second Quarter 1999 was
$0.19 per share.

                                      -12-
<PAGE>

Comparison of six months ended July 4, 1998 to six months ended July 3, 1999

     The following table sets forth certain items relating to the Company's
operating results as a percentage of net sales for the six months ended July 4,
1998 ("First Half 1998") and for the six months ended July 3, 1999 ("First Half
1999").

<TABLE>
<CAPTION>
                                                               Six Months Ended
                                              -------------------------------------------------
                                              July 4, 1998       %       July 3, 1999       %
                                              ------------     -----     ------------     -----
  <S>                                         <C>              <C>       <C>              <C>
  Net sales...............................      $173,591        100.0     $127,219         100.0
  Gross profit............................        47,552         27.4       33,793          26.6
  Selling, general and administrative
   expenses...............................        51,680         29.8       40,365          31.7
  Royalty income..........................         9,487          5.5        9,782           7.7
  Loss on sale of foreign subsidiaries....           ---          ---          543           0.4
  Earnings from operations................         5,359          3.1        2,667           2.1
  Interest expense, net...................         8,661          5.0       10,515           8.3
  Other (income) expense..................        (1,151)        (0.7)        (895)         (0.7)
  Net loss................................      $ (2,679)        (1.5)    $ (8,819)         (6.9)
  Net basic and diluted loss
   per share..............................      $  (0.15)         ---     $  (0.51)          ---
</TABLE>


Net Sales

     Net sales for the First Half 1999 decreased 26.7% to $127.2 million from
$173.6 million for First Half 1998.  Compared to the prior year period, the
$46.4 million reduction in net sales was attributable to decreases of 29.6%,
33.4%, 56.3% and 26.3% in the categories of basketball, children's, cross
training and athletic originals, respectively.  The reduction in net sales was
partially offset by a $2.0 million increase in the Company's action sports
category, which was introduced in 1998.

     Net sales in the United States for First Half 1999 decreased 31.6% to $67.9
from $99.3 million for First Half 1998.  International net sales decreased 20.2%
to $59.3 million from $74.3 million in the prior year period.  Net sales in the
E.M.E.A., Asia Pacific, and the Americas regions decreased 16.5%, 27.6% and
14.1%, respectively from the First Half 1998.

     The Company's net sales continued to suffer from the effects of the
athletic footwear market slowdown which has occurred over the past two years.
Contributing to the sales decline internationally was the conversion of three
wholly-owned subsidiaries operating in Spain, Portugal and Canada to new
licensing agreements, revenues from which are now recorded as royalty income
rather than as net sales.

                                      -13-
<PAGE>

Gross Profit

     Gross profit decreased to $33.8 million for First Half of 1999 from $47.6
million for First Half 1998, a 29.0% reduction.   The net sales reduction
accounted for the majority of the gross profit decline.  The Company's gross
profit margin fell to 26.6% of net sales for First Half 1999 compared to 27.4%
of net sales for First Half 1998.  The decline was caused by the industry
downturn and the resulting reduced demand for the Company's products.

Selling, General and Administrative Expenses

     Selling, general and administrative expenses decreased 21.9% to $40.4
million for First Half 1999 from $51.7 million for First Half 1998. The decrease
in selling, general and administrative expenses of $11.3 million resulted in
reduced spending across all of the Company's functions. As a percentage of net
sales, selling, general and administrative expenses increased to 31.7% for First
Half 1999 from 29.8% for the prior year period. First Half 1998 expenses include
one-time expense credits of $3.3 million generated by a gain from the
curtailment of the active employees from the post-retirement medical benefit
plan and a gain of $0.6 million resulting from pension curtailment. Excluding
these one-time 1998 expense credits of $3.9 million, the expense reduction would
have been $15.2 million or 27.3% for First Half 1999 compared to First Half
1998.

Royalty Income

     Royalty income increased 3.2% to $9.8 million in First Half 1999 from $9.5
million in First Half 1998. International royalty income, which currently
represents approximately 82% of the company's total royalty income, was similar
to the prior year period. The international royalty income was favorably
impacted by increase of 12.5% in the Asia Pacific region due mainly to recovery
in the Southeast Asia economies, partially offset by weakness in the E.M.E.A.
and Americas regions. U.S. royalty income increased 13.3% to $1.7 million for
First Half 1999 from $1.5 million for First Half 1998. As a percentage of net
sales, royalty income was 7.7% in the First Half 1999 compared to 5.5% in the
First Half 1998.

Loss on Sale of Foreign Subsidiaries

     In the Second Quarter 1999, the Company recorded a pretax loss totaling
$0.5 million relating to the conversion of our Canada operation from a Company
owned subsidiary (direct operating unit) to a third party licensee/distributor
arrangement.

Earnings from Operations

     Primarily as a result of the factors discussed above, the Company recorded
earnings from operations of $2.7 million for First Half 1999 as compared to $5.4
million for First Half 1998. As a percentage of net sales, earnings from
operations were 2.1% and 3.1% for First Half 1999 and First Half 1998,
respectively.

                                      -14-
<PAGE>

Interest Expense

     Interest Expense for First Half 1999 increased to $10.5 million from $8.7
million for First Half 1998, a 20.7% increase.  The increase reflects the higher
borrowing levels in First Half 1999 compared to First Half 1998 as well as
higher interest costs associated with the Secured Notes issued in September
1998.

Other (Income) Expense

     The First Half 1999 income of $0.9 million was primarily attributable to
gains realized from foreign exchange contracts and put options. The First Half
1998 income of $1.2 million was primarily related to the May 1998 sale of the
Company's Reynosa, Mexico manufacturing facility.

Net Loss

     The Company recorded a net loss for First Half 1999 of $8.8 million
compared to net loss of $2.7 million for First Half 1998. The net loss for the
First Half 1999 includes a charge of $3.8 million to increase the deferred tax
valuation reserve and loss of $0.3 million from the sale of foreign
subsidiaries. The net loss for the First Half 1998 includes a charge of $1.1
million to increase the deferred tax valuation reserve. Excluding these non-
operating charges and credits, the net loss for the First Half 1999 was $4.7
million compared to net loss of $1.6 million in First Half 1998.

Net Loss Per Share

     Net loss per share for the First Half 1999 was $0.51 as compared to net
loss per share of $0.15 for the First Half 1998. Net loss for First Half 1999
includes a charge of $0.22 per share to increase the deferred tax valuation
reserve and loss on sale of foreign subsidiaries of $0.02 per share. Net loss
for the First Half 1998 includes a charge of $0.06 per share to increase the
deferred tax valuation reserve. Excluding these nonrecurring charges, the net
loss per share for the First Half 1999 was $0.27 compared to net loss per share
of $0.09 in First Half 1998.

Liquidity and Capital Resources

     As of July 3, 1999 the Company's working capital (net of cash) position
decreased $7.3 million to a deficit of $3.5 million from $3.8 million at January
2, 1999. Inventory increased $6.4 million due to a seasonal buildup for the
Company's back to school selling period. Accounts receivable and prepaid
expenses decreased $4.5 million due to decreased sales levels and the Company's
efforts to reduce operating costs. Accounts payable, accrued liabilities and
income taxes payable decreased $1.6 million while seasonal borrowings increased
$10.7 million.

     Total borrowings under the Company's Credit Facility and asset based
financing arrangements increased to $85.1 million at July 3, 1999 from $73.8
million at January 2, 1999,

                                      -15-
<PAGE>

reflecting the seasonal working capital needs discussed above (see Note 4 of
Notes to Condensed Consolidated Financial Statements contained herein).

     For First Half 1999 and First Half 1998, net cash provided by (required
for) operating activities was $(10.8) million and $1.9 million, respectively.
Cash required for operating activities in First Half 1999 was primarily used to
fund the Company's seasonal requirements. In the First Half 1998, cash was
provided through inventory reduction and lower operating costs. Net cash used by
investing activities was $1.2 million and $0.4 million for First Half 1999 and
First Half 1998, respectively. Cash invested was for additions to property,
plant and equipment partially offset in First Half 1998 by cash received from
sale of Reynosa facility. Net cash provided by (used for) financing activities
was $11.0 million and ($4.6) million for First Half 1999 and First Half 1998,
respectively. Net cash provided by financing activities in First Half 1999
consisted primarily of proceeds from the Company's seasonal borrowings.

Backlog

     At the end of First Half 1999, the Company's global backlog was $80.9
million, compared to $90.2 million at the end of the First Half 1998, a decrease
of 10.3%. The 1998 backlog figure has been adjusted to eliminate the Company's
backlog in Spain, Portugal and Canada where the Company's subsidiaries
subsequently were converted to licensee arrangements. The Company's categories
of athletic originals, children's and cross training recorded declines of 19.6%,
17.3% and 7.7%, respectively, offset by an improvement in the basketball
category of 22.8%. The United States order backlog increased by 12.2% but was
more than offset by international backlog which decreased 32.0%. The decline was
primarily the result of the continued industry-wide soft demand for athletic
footwear. The amount of backlog at any particular time is affected by a number
of factors, including the scheduling of the introduction of new products and the
timing of the manufacture and shipment of the Company's products. Accordingly a
comparison of backlog as of two different dates is not necessarily meaningful.
In addition, the backlog position is not necessarily indicative of future sales
because the ratio of future orders to "at once" shipments and sales by Company
owned retail stores may vary from year to year.

The Year 2000

     Background

     The "Year 2000 Problem" is the result of many existing computer programs
and embedded chip technology containing programming code in which calendar year
data is abbreviated by using only two digits rather than four to refer to a
year. As a result of this, some of these programs may fail to operate or may not
properly recognize a year that begins with "20" instead of "19." This may cause
such software to recognize a date using "00" as the year 1900 rather than the
year 2000. Even systems and equipment that are not typically thought of as
computer-related often contain embedded hardware or software that may improperly
interpret dates beginning with the year 2000.

                                      -16-
<PAGE>

     The Company's Year 2000 Project

     Converse began working on Year 2000 compliance issues in 1996 when it
established a Company-wide Year 2000 project team (the "Year 2000 Project Team")
to identify all potential non-compliant software, hardware and embedded chip
technology and determine to what extent modification or replacement was
necessary to mitigate the Year 2000 Problem. The first task of the Year 2000
Project Team was to conduct an assessment of all internal hardware, software and
embedded chip technology to determine Year 2000 compliance and to assess the
risks associated with non-compliance by the Company's vendors, suppliers and
customers. The Year 2000 Project Team divided the action steps necessary to
minimize any Year 2000 non-compliance into two distinct categories: internal
compliance of software, hardware and embedded chip technology, and external non-
compliance by the Company's vendors, suppliers and customers.

     Internal Year 2000 Compliance. The Company began the process of executing
     -----------------------------
the necessary code changes and upgrading existing systems in 1996. As a result,
most of the Company's software, hardware and embedded chip technology are
already Year 2000 compliant. The Year 2000 Project Team developed an ongoing
program designed to bring the remaining software, hardware and embedded chip
technology at all of its domestic and international locations into Year 2000
compliance in time to minimize any significant detrimental affects on the
Company's business and operations. In many cases these upgrades were already
planned as part of ongoing business process improvements.

     Currently, the Company has completed approximately 95% of the work believed
to be required to bring all internal systems into compliance. Converse's current
target is to complete all remaining work by the end of the third quarter of
1999.

     External Year 2000 Compliance.  The Year 2000 Project Team reviewed all
     -----------------------------
material relationships between Converse and each of its vendors and suppliers
and determined which ones were critical to Converse's business and operations.
The Company addressed each category as follows:

          "Critical" Suppliers. Converse deemed 165 of its vendors and suppliers
           -------------------
      to be "critical" to the Company's business and operations. Converse has
      sent each of its critical suppliers a detailed Year 2000 readiness
      questionnaire and checklist, followed in some cases by formal
      communication and/or site visits. Response rate to date is 97%, with 93%
      of the respondents indicating all systems have been or will be verified
      Year 2000 compliant. For those critical suppliers that do not respond or
      that do not have adequate compliance plans, Converse is developing
      contingency plans that assume an estimated level of noncompliance. These
      plans will likely consist of early purchase of materials, components,
      work-in-process or finished goods. Even so, these contingency plans are
      subject to much uncertainty and may not be sufficient to mitigate any
      business interruption. Thus, some material adverse impact to Converse may
      result from one or more third parties regardless of Converse's defensive
      contingency plans.

                                      -17-
<PAGE>

          "Non-Critical" Suppliers. The Company sent letters to 2,193 suppliers
           -----------------------
      and vendors deemed to be "non-critical" advising them of the Year 2000
      Problem and requesting that they address compliance. Non-compliance by
      such suppliers would not have a material adverse affect on the Company.

     Costs Associated with Year 2000 Compliance.
                                               -

     Through the second quarter of 1999 the Company spent approximately $2.2
million on incremental costs associated with the Year 2000 Problem. These costs
consisted of new hardware and software as well as the cost of contracted
programmers and the salaries and fringe benefits of employees dedicated to
addressing the Year 2000 Problem. These costs have been funded through operating
cash flows. Approximately $0.8 million of this amount relates to hardware and
software which the Company has capitalized and the remainder has been expensed
as incurred. The Company estimates that an additional $0.3 million will be
incurred during the remainder of 1999 to complete this process. These additional
expenditures will be comprised of some additional new hardware and software, as
well as the cost of contracted programmers and the salaries and benefits of
employees dedicated to addressing the Year 2000 Problem. These estimates are
based on currently available information and may change in the event of
unforeseen future developments.

     Risks Associated with the Year 2000 Problem.

     The failure to correct a material Year 2000 Problem could result in the
interruption in, or failure of, certain normal business activities or operations
of the Company.  Such failures could materially and adversely affect the
Company's results of operations, liquidity and financial condition.  Due to the
general uncertainty inherent in the Year 2000 Problem, resulting primarily from
uncertainty of the Year 2000 readiness of third-party vendors and suppliers, the
Company is unable at this time to determine whether the consequences of any Year
2000 failures will have a material impact on the Company.  As discussed above,
Converse is dependent on a large number of vendors and suppliers in most of the
locations in which the Company operates to deliver a wide range of goods and
services.  These vendors and suppliers, in turn, rely on many sub-tier vendors
and suppliers.  Converse believes that this extended supply chain presents the
area of greatest risk of Year 2000 noncompliance, due to Converse's limited
ability to influence actions of some of these third parties and because of
Converse's inability to accurately estimate the level and impact of
noncompliance of third parties throughout the extended supply chain.

Forward-looking statements

     Any statements set forth above which are not historical facts, including
the statements concerning the outlook for sales, earnings, anticipated cost
savings, and the product and industry developments for 1999 and 2000 are forward
looking statements that involve certain risks and uncertainties that could cause
actual results to differ materially from those in the forward looking
statements. Potential risks and uncertainties include such factors as the
financial strength of the Company, the competitive pricing environment and
inventory levels within the footwear and apparel industries, consumer demand for
athletic footwear, market acceptance of the Company's

                                      -18-
<PAGE>

products, the strength of the U.S. dollar and the success of planned
advertising, marketing and promotional campaigns and other risks identified in
documents filed by the Company with the Securities and Exchange Commission.

Item 3.
          QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

     The Company's exposure to market risk associated with changes in interest
rates relates primarily to its debt obligations.  The Company's Credit Facility
bears interest at the Prime Lending Rate (as defined therein) plus 1% or the
adjusted LIBOR (as defined therein) plus 2.5%.  The Company's foreign borrowings
also have variable interest rates.  The Company's Convertible Notes and Secured
Notes bear fixed rates of interest.  See Item 2 - Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources for further information.  Converse does not use derivative
financial instruments to hedge its interest rate risks.

Foreign Currency Risk

     Converse sells its products in a number of countries throughout the world
and, as a result, is exposed to movements on foreign currency exchange rates.
Although Converse has some of its products manufactured outside of the United
States on a per order basis, these purchases are made in U.S. dollars. The major
foreign currency exposures involve the markets in Western Europe, Japan and
Australia. In order to protect against the volatility associated with earnings
currency translations of foreign subsidiaries and royalty income from sources
outside the United States, the Company may, from time to time, utilize forward
foreign exchange contracts and/or foreign currency options with durations of
generally from three to twelve months.

     As of July 3, 1999, the company had outstanding foreign exchange forward
contracts as follows:


<TABLE>
<CAPTION>
                                                      (currency per USD)
                                             Notional      Average        Estimated
                                              Amount    Contract Rate    Fair Value
                                              ------    -------------    ----------
                                                   (Dollars in thousands)
<S>                                          <C>      <C>                <C>
Foreign exchange sell forward contracts:
    Japanese Yen.........................    $6,414.9      113.34         $ 363.2
    Australian Dollar....................    $1,123.4        1.59         $ (68.5)
    Spanish Pesetas......................    $  140.2      139.80         $  18.7

Foreign exchange buy forward contracts:
    Japanese Yen.........................    $2,217.7      113.44         $(136.4)
</TABLE>

                                      -19-
<PAGE>

Commodity Price Risk

     Raw materials used by the Company are subject to price volatility caused by
weather, supply conditions and other unpredictable factors. The Company does not
have a program of hedging activity to address these risks.

                          PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings.

          There have been no material changes from the information previously
          reported under Item 3 of the Company's annual report on Form 10-K for
          the fiscal year ended January 2, 1999.

Item 2.   Changes in Securities.

                    Not Applicable

Item 3.   Defaults Upon Senior Securities.

                    Not Applicable

Item 4.   Submission of Matters to a Vote of Security-Holders.

          On May 12, 1999, the Company conducted its annual meeting of
          stockholders pursuant to due notice.  A Quorum being present either in
          person or by proxy, the stockholders voted on the following matters:

          1. To elect twelve directors to hold office until the next annual
             meeting and until their successors are elected and qualified

          2. To ratify the appointment of PricewaterhouseCoopers as the
             Company's independent auditors for the next fiscal year.

          3. To consider approval of the Converse Inc. Employee Stock Purchase
             Plan.

          Subsequent to the date the Company's proxy materials were delivered to
          stockholders, Mr. John Ryan, one of the individuals nominated to be
          elected a director of the Company, declined his nomination due to a
          heavy work schedule.  The Executive Committee of the Company's Board
          of Directors subsequently voted to reduce the number of directors to
          be elected to eleven and deleted Mr. Ryan's name from the list of
          nominees.

          No other matters were voted upon.  The votes cast were as follows:

                                      -20-
<PAGE>

          1. Election of directors. The following directors were elected to the
             Company's Board:

<TABLE>
<CAPTION>
                                          NUMBER OF VOTES CAST
                                          --------------------
                                            FOR       WITHHELD
                                            ---       --------
               <S>                        <C>         <C>
               Donald J. Barr             16,871,184   145,986
               Julius W. Erving           16,858,535   158,635
               Robert H. Falk             16,857,016   160,154
               Gilbert Ford               16,856,179   169,991
               Michael S. Gross           16,863,027   154,143
               John J. Hannan             16,855,242   161,928
               Joshua J. Harris           16,163,703   163,703
               John H. Kissick            16,853,688   160,482
               Richard B. Loynd           16,864,968   152,202
               Glenn N. Rupp              16,870,166   147,004
               Michael D. Weiner          16,863,678   153,492
</TABLE>


          2. Ratification of the selection of PricewaterhouseCoopers as the
             Company's independent auditors.

                    For                   16,693,868
                    Against                  216,148
                    Abstain                  107,154

          3. Approval of Converse Inc. Employee Stock Purchase Plan.

                    For                   16,693,868
                    Against                  216,148
                    Abstain                  107,154


Item 5.   Other Information.

               Not Applicable

                                      -21-
<PAGE>

Item 6.   Exhibits and Reports on Form 8-K

          (a)  Exhibits.  The following exhibits are contained in this report:

               10.1  Lease Agreement - Charlotte, North Carolina

               10.2  Fifth Amendment, dated May 28, 1999, to Credit Agreement
                     dated May 21, 1997.

               10.3  Sixth Amendment, dated July 30, 1999, to Credit Agreement
                     dated May 21, 1997.

               27    Financial Data Statement

          (b)  Reports on Form 8-K.

               There were no reports on Form 8-K filed during the quarter ended
               July 3, 1999.

                                      -22-
<PAGE>

                                   SIGNATURE

     Pursuant to the requirements 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.

Dated: August 13, 1999                            Converse Inc.

                                             By:  /s/ Donald J. Camacho
                                                  --------------------------
                                                  Donald J. Camacho
                                                  Senior Vice President and
                                                  Chief Financial Officer

                                      -23-
<PAGE>

                                 EXHIBIT INDEX


Exhibit No.                         Description
-----------                         -----------


10.1   Lease Agreement - Charlotte, North Carolina

10.2   Fifth Amendment, dated May 28, 1999, to Credit Agreement dated May 21,
       1997.

10.3   Sixth Amendment, dated July 30, 1999, to Credit Agreement dated May 21,
       1997.

27     Financial Data Statement