First quarter earnings per diluted share of $0.50.

Order backlog increased to a record of $76.0 million as of March 31, 2000.
Saucony, Inc. (NASDAQ: SCNYA and SCNYB) announced today a 9% growth in net sales for the first quarter ended March 31, 2000 in comparison with the first quarter of 1999. Net sales increased from $42.4 million in the prior year period to $46.4 million in the first quarter of 2000. Net income was $3.2 million, or $0.50 per share on a diluted basis, compared to $3.3 million, or $0.52 per share on a diluted basis, for the same period last year.

In announcing the financial results for Saucony, Inc.'s first quarter, John H. Fisher, President and Chief Executive Officer, remarked, "Our recently completed first quarter maintains the momentum in our brands, revenues and opportunities. We are especially pleased with the continued success of our Saucony running shoe business, resulting in gains in both our style forward and casual athletic sectors. We have also seen a significant upturn in the Fall 2000 bookings for our technical footwear."

"Our apparel division continues to establish the Hind brand as a leader in technical, moisture management apparel for serious athletes as it grows its distribution base and increases its market share."

"Our footwear and apparel backlog matched with conservative financial management, is consistent with our overall financial goals. The cycling division performance has not met management's expectations, thus the Company has begun to review strategic alternatives for this division."

Order Backlog

Mr. Fisher commented, "We have seen an emerging trend in our industry relative to customer order lead time. The order-to-delivery lead time from certain of our customers has been reduced and has affected our quarter-to-quarter backlog growth comparison. With this trend in mind, we remain confident that our backlog position is consistent with our long-term growth goals. Following this trend, we believe our April-to-April comparison is a better indicator of the health of our business than are our quarter end comparisons. At April 28, 2000, our open order backlog was $80.7 million, or 19% higher than the $68.1 million outstanding at April 30, 1999. Open order backlog at March 31, 2000 was a record $76.0 million, or 13% higher than the $67.1 million outstanding at April 2, 1999."

"With respect to our overall business and the footwear segment in particular, we believe that the rebound of the retail landscape for the industry will continue. The consolidation of floor space and the realigned focus of both large and small dealers over the past months should translate to a healthier industry."

Net Sales

Mr. Fisher commented, "Our first quarter net sales comparison to the prior period was adversely impacted by the loss of distribution due to the closing of Just for Feet, Inc. Included in our March 31, 2000 inventory was approximately $1.5 million, at wholesale, which was scheduled for shipment to Just for Feet, Inc. in the first quarter of 2000. We remain confident that we will ship this inventory at customary margins during fiscal 2000."

Net sales for the first quarter of 2000 increased 9% to $46.4 million from $42.4 million in the prior year period due primarily to increased domestic Saucony footwear unit volumes largely driven by our Originals product lines, offset somewhat by lower sales of our cycling division. Domestic net sales increased 9% to $40.4 million from $36.9 million in the prior year period while international sales increased 9% to $6.0 million from $5.5 million in the prior year period due primarily to increased Saucony footwear unit volume. Footwear accounted for approximately 91% of Company first quarter 2000 sales while the combination of apparel, cycling and factory outlet store revenues accounted for the balance.

Gross Margin

The Company's gross margin in the first quarter of 2000 increased 100 basis points to 37.4% compared to 36.4% in the first quarter of 1999, due to a change in our product mix and lower product returns.

Selling, General and Administrative Expenses

Selling, general and administrative expenses as a percentage of net sales were 25.6% in the first quarter of 2000 compared to 23.0% in the first quarter of 1999. In absolute dollars, selling, general and administrative expenses increased by 22% due to planned increases in television and print media advertising, increased athlete and event sponsorship, increased variable selling expenses, administrative staffing increases and increased professional fees, offset in part by lower provisions for doubtful accounts. Selling expenses as a percentage of net sales in the first quarter of 2000 increased to 15.3% from 12.8% in the 1999 period, while general and administrative expense increased to 10.3% of net sales compared to 10.2% in the first quarter of 1999.

Net Income

Net income for the first quarter was $3.2 million, or $0.50 per share on a diluted basis, compared to $3.3 million, or $0.52 per share on a diluted basis, in the first quarter of 1999.

Notes Payable

Notes payable at March 31, 2000 increased $11.1 million to $13.0 million from $1.9 million at December 31, 1999 due to increased working capital requirements.

Stock Repurchase Program

During the first quarter of 2000, the Company purchased 146,300 shares of its Common Stock for a total expenditure of $1.6 million. Under the stock buyback program approved by the Board of Directors in May 1998, the Company has purchased a total of 294,800 shares of its Common Stock for a total expenditure of $2.7 million.

Other Equity Matters

Mr. Fisher commented, "As part of our effort to enhance shareholder value, the Company's Board of Directors recently completed a review of our dual class capital structure. Upon considering the advice of legal counsel and independent investment bankers, the Board concluded that combining our two classes of stock would result in a significant cost to the Company in preparing the requisite SEC filings and soliciting stockholder consent, yet offered only a very uncertain possibility of a sustained improvement in the trading price of our Common Stock. Therefore, we are continuing to focus on improving our stock price by achieving consistent growth in our year-on-year financial performance."

Investor Conference Call

The Company will provide a Web simulcast and rebroadcast of its first quarter earnings release conference call. The live broadcast of the Company's quarterly conference call is scheduled for May 11, 2000, beginning at 11:00 a.m. EDT and will be accessible online at www.streetevents.com, www.vcall.com and www.streetfusion.com. The online replay will be available shortly after the conference call and will continue through May 26, 2000.

Saucony, Inc. designs, develops, manufactures and markets (i) a broad line of performance-oriented athletic shoes for adults under the Saucony® brand name, (ii) athletic apparel under the Hind® brand name (iii) high-quality bicycles, frames and components under the Quintana Roo®, Merlin® and Real Design® names, and (iv) athletic shoes under the Spot-bilt® name.

This press release contains forward-looking statements that involve a number of risks and uncertainties. For this purpose, any statements 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," "intends," and similar expressions are intended to identify forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are set forth in the Company's Annual Report on Form 10-K under "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Certain Factors that May Affect Future Results" ("Certain Factors") filed by Saucony, Inc. with the Securities and Exchange Commission on March 29, 2000, which Certain Factors discussion is incorporated herein by this reference. Without limiting the foregoing, there can be no assurance as to the level of revenues or net income that will be achieved by the Company because such revenues and net income are materially dependent upon the condition of the domestic and world economies, competition from third parties, and consumer preferences.

 
 
 
                     SAUCONY, INC. AND SUBSIDIARIES
                  Condensed Consolidated Balance Sheet
 
                               (Unaudited)
                             (in thousands)
 
                                 ASSETS
 
                                                 March 31, December 31,
                                                    2000      1999
 
 Current assets:
    Cash and cash equivalents                     $  2,115  $  3,515
    Accounts receivable                             38,753    23,968
    Inventories                                     33,641    35,270
    Prepaid expenses and other current assets        3,427     3,727
      Total current assets                          77,936    66,480
 
 Property, plant and equipment, net                  8,060     8,279
 
 Other assets                                        2,427     2,422
 
 Total assets                                     $ 88,423  $ 77,181
 
 
                  LIABILITIES AND
                   STOCKHOLDERS' EQUITY
 
 Current liabilities:
    Notes payable                                 $ 13,005  $  1,928
    Current maturities of long term debt               379       375
    Accounts payable                                 4,680     5,897
    Accrued expenses and other current
     liabilities                                     7,152     7,203
      Total current liabilities                     25,216    15,403
 
 Long-term obligations:
    Long-term debt                                     186       292
    Deferred income taxes                            2,051     2,045
    Other long-term obligations                        175       171
      Total long-term obligations                    2,412     2,508
 
 Minority interest in consolidated subsidiaries        330       308
 
 Stockholders' equity:
    Common stock, $.33 1/3 par value                 2,242     2,222
    Additional paid in capital                      17,088    16,815
    Retained earnings                               45,887    42,679
    Accumulated translation                           (703)     (564)
                                                    64,514    61,152
 
 Less:
    Common stock held in treasury, at cost          (3,763)   (2,179)
    Notes receivable                                  (276)        0
    Unearned compensation                              (10)      (11)
      Total stockholders' equity                    60,465    58,962
 
 Total liabilities and stockholders' equity       $ 88,423  $ 77,181
 
 
 
                     SAUCONY, INC. AND SUBSIDIARIES
               Condensed Consolidated Statements of Income
         For the Quarter Ended March 31, 2000 and April 2, 1999
 
                               (Unaudited)
              (Amounts in thousands, except per share data)
 
 
 
                                                  Quarter      Quarter
                                                   Ended        Ended
                                                  March 31,    April 2,
                                                    2000        1999
 
 Net sales                                       $ 46,416    $ 42,406
 Other revenue                                        139         208
 Total revenue                                     46,555      42,614
 
 Costs and expenses
    Cost of sales                                  29,070      26,985
    Selling expenses                                7,081       5,433
    General and administrative expenses             4,784       4,308
      Total costs and expenses                     40,935      36,726
 
 Operating income                                   5,620       5,888
 
 Non-operating income (expense)
    Interest, net                                    (132)       (146)
    Foreign currency                                  (47)         26
 Other                                                 87          24
 
 Income before income taxes and
  minority interest                                 5,528       5,792
 
 Provision for income taxes                         2,297       2,430
 
 Minority interest in income of
  consolidated subsidiaries                            23          29
 
 Net income                                      $  3,208    $  3,333
 
 
 Per share amounts:
 
 Earnings per common share - basic               $   0.51    $   0.54
 Earnings per common share - diluted             $   0.50    $   0.52
 
 Weighted average common shares and
  equivalents outstanding                           6,443       6,363
 
 Cash dividends per share of common stock               0           0
 
 
 
                     SAUCONY, INC. AND SUBSIDIARIES
                                Net Sales
 
                               (Unaudited)
                             (in thousands)
 
 
                First Quarter 2000 vs. First Quarter 1999
 
             2000         %        1999         %
 
 Saucony   $42,001      90.5%    $37,675      88.8%
 Other       4,415       9.5%      4,731      11.2%
 Total     $46,416     100.0%    $42,406     100.0%