Vans, Inc. Reports Sales and Earnings

SANTA FE SPRINGS, Calif.–(BUSINESS WIRE)–Dec. 16, 1999–Vans,Inc. (Nasdaq: VANS) today announced financial results for the secondfiscal quarter and six months ended November 27, 1999.

Net sales for the quarter increased 26.9% to $57.8 million,compared to $45.6 million for the second quarter of fiscal 1999. Netincome was $2.7 million, versus net income of $2.5 million in the sameperiod last year, and diluted earnings per share was $0.19 versusdiluted earnings per share of $0.19 in the second quarter of fiscal1999. Net sales for the six months increased 26.0% to $140.0 million,compared to $111.1 million for the corresponding six months of fiscal1999. Net income rose to $8.6 million, versus net income of $7.3million in the same period last year, and diluted earnings per shareincreased to $0.60 versus diluted earnings per share of $0.53 in thefirst six months of fiscal 1999.

Gary H. Schoenfeld, Vans’ President and Chief Executive Officerstated, “We are pleased to report our second quarter and first half offiscal 2000 sales and earnings results, and as evidenced by ourbacklog for the third quarter which is up more than 30% both in theU.S. and internationally, we are entering the new millennium and thesecond half of our fiscal year on track for significant growth insales and earnings.” (see note below) “Highlights during the quarter included the formation of astrategic alliance with Sony Playstation (R), which includes alicensing and royalty agreement for upcoming video games coupled withtheir sponsorship of the VANS Triple Crown Series, the opening of theworld’s largest skate park in Ontario, California, and new agreementswith Ford Ranger and Motorola as additional sponsors of the VANSTriple Crown Series,” Mr. Schoenfeld said.

Total U.S. sales, including sales through Vans’ U.S. retailstores, increased 19.5% in the second quarter to $40.6 million, versus$34.0 million for the same period a year ago. Total internationalsales, including sales through the Company’s five European retailstores, increased 48.5% to $17.2 million, versus $11.6 million for thesame period last year. Overall sales through the Company’s 126-storeretail chain (as of November 27, 1999) increased 38.3% to $18.1million in the second quarter of fiscal 2000, from $13.1 million forthe same period a year ago. Comparable store sales for the secondquarter were up 15.0% versus the same period last year, the twentiethconsecutive quarter of such increase. U.S. wholesale sales in thesecond quarter increased 9.5% to $23.3 million, versus $21.2 million ayear ago.

The Company’s gross margin for the second quarter was even withthe prior year at 43.6%. Operating expenses and other items as apercentage of sales was 35.5% for the second quarter versus 34.0% forthe same period a year ago. “A significant portion of the increase inexpenses reflects the operation and infrastructure implemented inEurope over the past year,” Mr. Schoenfeld said. “We are confident inour ability to leverage what we have established to date and are ontrack for significantly higher operating margins in the third quarterversus the prior year.”(see note below) Worldwide inventory for the quarter increased by 27% versus lastyear primarily due to the significant growth internationally and theCompany’s transition from distributors to direct sales in key parts ofEurope. Including an additional 20 retail stores, inventory in theU.S. remained relatively unchanged on a year-to-year basis.

Mr. Schoenfeld concluded, “Twelve months ago our strategicpriorities were to advance the direction of our product, establish theinfrastructure to drive our business in Europe and further build theVANS brand on a global basis through the VANS Triple Crown Series,VANS skateparks and other proprietary initiatives. Having successfullyaccomplished all three goals, we are well-positioned for growth asevidenced by our strong bookings, and are very encouraged about oursales and earnings potentiafor the second half of this year and aswe look ahead to fiscal 2001.”(see note below) Vans, Inc. is a leading branded lifestyle company for the youthmarket. Vans reaches its 10 to 24 year-old target consumers throughthe sponsorship of Core Sports,(TM) such as skateboarding,snowboarding, surfing and wakeboarding, and through majorentertainment events and venues, such as the VANS Triple Crown(TM)Series, the VANS Warped Tour,(TM) the VANS World Amateur SkateboardingChampionships, the world’s largest VANS skateparks, and the Vans HighCascade Snowboard Camp,(TM) located on Mt. Hood. The Company operates126 retail stores in the U.S. and Europe, and designs, markets anddistributes active-casual footwear, clothing and accessories,performance footwear for Core Sports, (TM) snowboard boots, step-insnowboard boot bindings, and outerwear worldwide. Vans’ Internetaddress is www.vans.com.

Note: This paragraph contains forward-looking statements aboutthe Company’s future sales, operating income and net income. Actualsales and earnings results for the Company may be impacted by a numberof important factors, including but not limited to: (i) the occurrenceof downward trends in the U.S. economy, foreign economies and thefootwear industry, or the occurrence of events that adversely affectthe world economy in general; (ii) changes in the fashion preferencesof the Company’s target customers and the Company’s ability toanticipate and respond to such changes; (iii) increasing competitionin all lines of the Company’s business from both large,well-established companies with significant financial resources andbrand recognition, and smaller niche competitors who marketexclusively to the Company’s target customers; (iv) the cancellationof orders which could alter bookings numbers; and (v) the fluctuationof foreign currencies in relation to the U.S. dollar. These factors,and others, are discussed more extensively in the Company’s AnnualReport on Form 10-K for the year ended May 31, 1999, which is filedwith the Securities and Exchange Commission.

(Tables to Follow)

*T

Vans, Inc.

Condensed Consolidated Financial Summary

Second Quarter and Six Months Fiscal Year 2000

(Dollars in thousands, except per share amounts)

Statements of Operations

Three Months Ended Six Months Ended

Nov 27, Nov 28, Nov 27, Nov 28, 1999 1998 1999 1998

Net sales $ 57,823 $ 45,559 $ 139,974 $ 111,062Cost of goods 32,600 25,680 80,187 63,079

Gross profit 25,223 19,879 59,787 47,983Gross profit percentage 43.6% 43.6% 42.7% 43.2%

Expenses:

Selling and distribution 14,655 10,400 29,702 21,195Marketing, advertising and promotion 3,668 3,717 11,202 10,912General and administrative 2,421 1,783 5,412 4,660Other expense

(income), net (a) (1,265) (820) (2,446) (1,564)Goodwill amortization 337 345 671 610Interest expense net 706 75 1,096 152

20,522 15,500 45,637 35,965Expenses and other items as a percentage of sales 35.5% 34.0% 32.6% 32.4%

Earnings before income taxes 4,701 4,379 14,150 12,018Income tax expense 1,598 1,577 4,811 4,327Minority interest 437 271 738 421

Net earnings $ 2,666 $ 2,531 $ 8,601 $ 7,270

Earnings per share information: Basic: Weighted average

Shares outstanding 13,538 13,313 13,512 13,308

Net earnings

per basic share $ 0.20 $ 0.19 $ 0.64 $ 0.55

Diluted: Weighted average

Shares outstanding 14,270 13,623 14,241 13,634

Net earnings

per diluted share $ 0.19 $ 0.19 $ 0.60 $ 0.53

Footnote:

(a) Other income consists primarily of licensing royalties and

sublease income.

Vans, Inc.

Condensed Consolidated Financial Summary

Second Quarter and Six Months Fiscal Year 2000

(In thousands of dollars)

Balance Sheets Nov 27, Nov 28, 1999 1998

ASSETS:

Current assetsCash $ 11,557 $ 9,398Trade receivables 36,211 29,962Inventory 49,384 38,987Deferred income taxes 1,628 5,469Other 8,877 5,852

Total current assets 107,657 89,668 Property, plant and equipment – net 27,358 19,455Intangible assets 24,020 23,511Other 2,830 2,977

Total assets $161,865 $135,611

LIABILITIES:

Short-term borrowings $ 24,439 $ 15,936Current liabilities 15,251 15,040Restructure costs 628 2,331Other long-term liabilities 15,266 6,622

Total liabilities 55,584 39,929 Minority interest (a) 1,263 750Shareholders’ equity 105,018 94,932

Total liabilities and

shareholders’ equity $161,865 $135,611

Sales by Distribution Channel

Three Months Ended Six Months Ended

Nov 27, Nov 28, Nov 27, Nov 28, 1999 1998 1999 1998

U.S.: Wholesale $ 23,268 $ 21,247 $ 58,394 $ 55,294

Retail 17,325 12,713 37,045 29,151

Total U.S. 40,593 33,960 95,439 84,445Total International 17,230 11,599 44,535 26,617

Total Sales $ 57,823 $ 45,559 $139,974 $111,062

*T Footnote:(a) During the second quarter of fiscal 2000, the Company acquired an

additional 10% of the Common Stock of Global Accessories Ltd. in

exchange for Common Stock of the Company. This transaction was

effective as of September 30, 1999, bringing the Company’s

ownership of Global to 80%. The remaining 20% of the Global

Shares is expected to be acquired over the next two years. basic share $ 0.20 $ 0.19 $ 0.64 $ 0.55

Diluted: Weighted average

Shares outstanding 14,270 13,623 14,241 13,634

Net earnings

per diluted share $ 0.19 $ 0.19 $ 0.60 $ 0.53

Footnote:

(a) Other income consists primarily of licensing royalties and

sublease income.

Vans, Inc.

Condensed Consolidated Financial Summary

Second Quarter and Six Months Fiscal Year 2000

(In thousands of dollars)

Balance Sheets Nov 27, Nov 28, 1999 1998

ASSETS:

Current assetsCash $ 11,557 $ 9,398Trade receivables 36,211 29,962Inventory 49,384 38,987Deferred income taxes 1,628 5,469Other 8,877 5,852

Total current assets 107,657 89,668 Property, plant and equipment – net 27,358 19,455Intangible assets 24,020 23,511Other 2,830 2,977

Total assets $161,865 $135,611

LIABILITIES:

Short-term borrowings $ 24,439 $ 15,936Current liabilities 15,251 15,040Restructure costs 628 2,331Other long-term liabilities 15,266 6,622

Total liabilities 55,584 39,929 Minority interest (a) 1,263 750Shareholders’ equity 105,018 94,932

Total liabilities and

shareholders’ equity $161,865 $135,611

Sales by Distribution Channel

Three Months Ended Six Months Ended

Nov 27, Nov 28, Nov 27, Nov 28, 1999 1998 1999 1998

U.S.: Wholesale $ 23,268 $ 21,247 $ 58,394 $ 55,294

Retail 17,325 12,713 37,045 29,151

Total U.S. 40,593 33,960 95,439 84,445Total International 17,230 11,599 44,535 26,617

Total Sales $ 57,823 $ 45,559 $139,974 $111,062

*T Footnote:(a) During the second quarter of fiscal 2000, the Company acquired an

additional 10% of the Common Stock of Global Accessories Ltd. in

exchange for Common Stock of the Company. This transaction was

effective as of September 30, 1999, bringing the Company’s

ownership of Global to 80%. The remaining 20% of the Global

Shares is expected to be acquired over the next two years.