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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q


(Mark One)

|    |  |                                                                                                                                          
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------
|[X] |  | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended
August 30, 2003 or

|     |  |                                                                                                                                     
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------
|[  ] |  | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period
from           to

Commission File Number 0-19402

VANS, INC.

(Exact Name of Registrant as Specified in its Charter)


|                                      |  |                            
|------------------------------------- |  | ---------------------------
|DELAWARE
(State or Other Jurisdiction |  | 33-0272893
(I.R.S. Employer
|of Incorporation or Organization)     |  | Identification No.)        

15700 Shoemaker Avenue
Santa Fe Springs, California 90670-5515
(Address of Principal Executive Offices) (Zip Code)

(562) 565-8267
(Registrants Telephone Number, Including Area Code)

Not applicable
(Former Name, Former Address and Formal Fiscal Year,
if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report(s), 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 registrants
classes of common stock, as of the latest practicable date: 17,913,856 shares
of Common Stock, $.001 par value, as of October 7, 2003.





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TABLE OF CONTENTS



|                             |                                                                                               |  |  |  |  |  |  | 
|---------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION
|                             | ITEM 1. FINANCIAL STATEMENTS.                                                                
|                             | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                             | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                             | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II OTHER INFORMATION   
|                             | ITEM 1. LEGAL PROCEEDINGS                                                                    
|                             | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                  
|EXHIBIT 31.1                
|EXHIBIT 31.2                
|EXHIBIT 32.1                
|EXHIBIT 32.2                



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PART I
FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS.

VANS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(AMOUNTS IN THOUSANDS)


|                                                                                                                                                            |                                                                                                                                     |                            |         |            |         |         |         |        |         | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | ---------- | ------- | ------- | ------- | ------ | ------- | 
|                                                                                                                                                            |                                                                                                                                     |                            |         | AUGUST 30, |         | MAY 31,
|                                                                                                                                                            |                                                                                                                                     |                            |         | 2003       |         | 2003   
|                                                                                                                                                            |                                                                                                                                     |                            |         |            |         |        
|ASSETS                                                                                                                                                      |                                                                                                                                     |                            |         |            |         |         |         |       
|Current assets:                                                                                                                                             |                                                                                                                                     |                            |         |            |         |         |         |       
|                                                                                                                                                            | Cash and cash equivalents                                                                                                           |                            | $       | 52,496     |         |         | $       | 52,844 |        
|                                                                                                                                                            | Accounts receivable, net of allowance for doubtful
accounts of $2,642 and $2,297 at August 30, 2003, and
May 31, 2003, respectively |                            |         | 51,595     |         |         |         | 25,596 |        
|                                                                                                                                                            | Inventories                                                                                                                         |                            |         | 49,326     |         |         |         | 63,955 |        
|                                                                                                                                                            | Deferred income taxes                                                                                                               |                            |         | 2,559      |         |         |         | 3,055  |        
|                                                                                                                                                            | Prepaid expenses and other                                                                                                          |                            |         | 11,029     |         |         |         | 11,617 |        
|                                                                                                                                                            |                                                                                                                                     |                            |         |            |         |         |         |       
|                                                                                                                                                            |                                                                                                                                     | Total current assets       |         |            | 167,005 |         |         |        | 157,067 | 
|                                                                                                                                                            | Property, plant and equipment, net                                                                                                  |                            |         | 24,506     |         |         |         | 25,120 |        
|                                                                                                                                                            | Trademarks and patents, net of accumulated
amortization of $1,545 and $1,378 at August 30, 2003,
and May 31, 2003, respectively     |                            |         | 15,366     |         |         |         | 15,533 |        
|                                                                                                                                                            | Goodwill                                                                                                                            |                            |         | 31,793     |         |         |         | 31,702 |        
|                                                                                                                                                            | Other assets                                                                                                                        |                            |         | 3,532      |         |         |         | 8,362  |        
|                                                                                                                                                            |                                                                                                                                     |                            |         |            |         |         |         |       
|                                                                                                                                                            |                                                                                                                                     | Total assets               |         | $          | 242,202 |         |         | $      | 237,784 | 
|                                                                                                                                                            |                                                                                                                                     |                            |         |            |         |         |         |        |        
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                        |                                                                                                                                     |                            |         |            |         |         |         |       
|Current liabilities:                                                                                                                                        |                                                                                                                                     |                            |         |            |         |         |         |       
|                                                                                                                                                            | Accounts payable                                                                                                                    |                            | $       | 23,649     |         |         | $       | 24,484 |        
|                                                                                                                                                            | Lease termination liabilities                                                                                                       |                            |         | 798        |         |         |         | 8,338  |        
|                                                                                                                                                            | Accrued liabilities                                                                                                                 |                            |         | 14,599     |         |         |         | 13,307 |        
|                                                                                                                                                            | Income taxes payable                                                                                                                |                            |         | 6,455      |         |         |         | 3,296  |        
|                                                                                                                                                            | Liabilities held in connection with disposal activities                                                                             |                            |         | 5,013      |         |         |         | 1,543  |        
|                                                                                                                                                            |                                                                                                                                     |                            |         |            |         |         |         |       
|                                                                                                                                                            |                                                                                                                                     | Total current liabilities  |         |            | 50,514  |         |         |        | 50,968  | 
|Deferred income taxes                                                                                                                                       |                                                                                                                                     |                            | 2,322   |            |         |         | 2,383   |       
|Long-term debt                                                                                                                                              |                                                                                                                                     |                            | 2,512   |            |         |         | 2,523   |       
|                                                                                                                                                            |                                                                                                                                     |                            |         |            |         |         |         |       
|                                                                                                                                                            |                                                                                                                                     | Total liabilities          |         |            | 55,348  |         |         |        | 55,874  | 
|                                                                                                                                                            |                                                                                                                                     |                            |         |            |         |         |         |       
|Minority interest                                                                                                                                           |                                                                                                                                     |                            | 2,527   |            |         |         | 1,735   |       
|Stockholders equity:                                                                                                                                       |                                                                                                                                     |                            |         |            |         |         |         |       
|Common stock, $.001 par value, 40,000 shares authorized,
17,834 and 17,826 shares issued and outstanding at
August 30, 2003, and May 31, 2003, respectively |                                                                                                                                     |                            | 18      |            |         |         | 18      |       
|Additional paid-in capital                                                                                                                                  |                                                                                                                                     |                            | 187,369 |            |         |         | 187,299 |       
|Retained deficit                                                                                                                                            |                                                                                                                                     |                            | (6,228  | )          |         |         | (12,856 | )     
|Accumulated other comprehensive income                                                                                                                      |                                                                                                                                     |                            | 3,168   |            |         |         | 5,714   |       
|                                                                                                                                                            |                                                                                                                                     |                            |         |            |         |         |         |       
|                                                                                                                                                            |                                                                                                                                     | Total stockholders equity |         |            | 184,327 |         |         |        | 180,175 | 
|                                                                                                                                                            |                                                                                                                                     |                            |         |            |         |         |         |       
|Total liabilities and stockholders equity                                                                                                                  |                                                                                                                                     | $                          | 242,202 |            |         | $       | 237,784 |       
|                                                                                                                                                            |                                                                                                                                     |                            |         |            |         |         |         |        |        

See accompanying notes to condensed consolidated financial statements.

2



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VANS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

|                                                                            |                                          |                                                    |        |                      |        |            |        |         |        |  
|--------------------------------------------------------------------------- | ---------------------------------------- | -------------------------------------------------- | ------ | -------------------- | ------ | ---------- | ------ | ------- | ------ | -
|                                                                            |                                          |                                                    |        | THIRTEEN WEEKS ENDED
|                                                                            |                                          |                                                    |        |                     
|                                                                            |                                          |                                                    |        | AUGUST 30,           |        | AUGUST 31,
|                                                                            |                                          |                                                    |        | 2003                 |        | 2002      
|                                                                            |                                          |                                                    |        |                      |        |           
|Retail sales                                                                |                                          | $                                                  | 37,080 |                      |        | $          | 34,649 |        
|National sales                                                              |                                          |                                                    | 53,892 |                      |        |            | 55,569 |        
|International sales                                                         |                                          |                                                    | 37,999 |                      |        |            | 33,060 |        
|                                                                            |                                          |                                                    |        |                      |        |            |        |        
|                                                                            | Net sales                                |                                                    |        | 128,971              |        |            |        | 123,278 |       
|Cost of sales                                                               |                                          |                                                    | 70,035 |                      |        |            | 72,150 |        
|                                                                            |                                          |                                                    |        |                      |        |            |        |        
|                                                                            | Gross profit                             |                                                    |        | 58,936               |        |            |        | 51,128  |       
|Operating Expenses:                                                         |                                          |                                                    |        |                      |        |            |        |        
|                                                                            | Retail                                   |                                                    |        | 16,805               |        |            |        | 16,513  |       
|                                                                            | Marketing, advertising and promotion     |                                                    |        | 9,845                |        |            |        | 10,663  |       
|                                                                            | Selling, distribution and administrative |                                                    |        | 16,353               |        |            |        | 14,742  |       
|                                                                            | Lease termination costs                  |                                                    |        | 1,972                |        |            |        |        |       
|                                                                            | Amortization of intangible assets        |                                                    |        | 167                  |        |            |        | 188     |       
|                                                                            |                                          |                                                    |        |                      |        |            |        |        
|Total operating expenses                                                    |                                          |                                                    | 45,142 |                      |        |            | 42,106 |        
|Income from operations                                                      |                                          |                                                    | 13,794 |                      |        |            | 9,022  |        
|Interest (income), net                                                      |                                          |                                                    | (59    | )                    |        |            | (268   | )      
|Other (income) expense, net                                                 |                                          |                                                    | (78    | )                    |        |            | 762    |        
|                                                                            |                                          |                                                    |        |                      |        |            |        |        
|Income from continuing operations before income taxes and minority interest |                                          |                                                    | 13,931 |                      |        |            | 8,528  |        
|Income tax expense                                                          |                                          |                                                    | 1,309  |                      |        |            | 2,584  |        
|Minority interest                                                           |                                          |                                                    | 1,067  |                      |        |            | 371    |        
|                                                                            |                                          |                                                    |        |                      |        |            |        |        
|Income from continuing operations                                           |                                          |                                                    | 11,555 |                      |        |            | 5,573  |        
|Loss from discontinued operations, net of tax                               |                                          |                                                    | (4,927 | )                    |        |            | (152   | )      
|                                                                            |                                          |                                                    |        |                      |        |            |        |        
|Net income                                                                  |                                          | $                                                  | 6,628  |                      |        | $          | 5,421  |        
|                                                                            |                                          |                                                    |        |                      |        |            |        |        
|Earnings (loss) per share information:                                      |                                          |                                                    |        |                      |        |            |        |        
|                                                                            | Basic:                                   |                                                    |        |                      |        |            |        |         |       
|                                                                            |                                          | Income from continuing operations                  |        | $                    | 0.65   |            |        | $       | 0.31   |  
|                                                                            |                                          | Loss from discontinued operations                  |        |                      | (0.28  | )          |        |         | (0.01  | )
|                                                                            |                                          |                                                    |        |                      |        |            |        |        
|                                                                            |                                          | Net income                                         |        | $                    | 0.37   |            |        | $       | 0.30   |  
|                                                                            |                                          |                                                    |        |                      |        |            |        |        
|                                                                            |                                          | Basic weighted average common shares outstanding   |        |                      | 17,827 |            |        |         | 18,166 |  
|                                                                            | Diluted:                                 |                                                    |        |                      |        |            |        |         |       
|                                                                            |                                          | Income from continuing operations                  |        | $                    | 0.64   |            |        | $       | 0.31   |  
|                                                                            |                                          | Loss from discontinued operations                  |        |                      | (0.27  | )          |        |         | (0.01  | )
|                                                                            |                                          |                                                    |        |                      |        |            |        |        
|                                                                            |                                          | Net income                                         |        | $                    | 0.37   |            |        | $       | 0.30   |  
|                                                                            |                                          |                                                    |        |                      |        |            |        |        
|                                                                            |                                          | Diluted weighted average common shares outstanding |        |                      | 18,096 |            |        |         | 18,352 |  

See accompanying notes to condensed
consolidated financial statements

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VANS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(AMOUNTS IN THOUSANDS)

|                                                                                                                   |                                                                             |                                                        |                                                      |       |                      |       |            |       |         |        |  
|------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------- | ------------------------------------------------------ | ---------------------------------------------------- | ----- | -------------------- | ----- | ---------- | ----- | ------- | ------ | -
|                                                                                                                   |                                                                             |                                                        |                                                      |       | THIRTEEN WEEKS ENDED
|                                                                                                                   |                                                                             |                                                        |                                                      |       |                     
|                                                                                                                   |                                                                             |                                                        |                                                      |       | AUGUST 30,           |       | AUGUST 31,
|                                                                                                                   |                                                                             |                                                        |                                                      |       | 2003                 |       | 2002      
|                                                                                                                   |                                                                             |                                                        |                                                      |       |                      |       |           
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                              |                                                                             |                                                        |                                                      |       |                      |       |            |      
|Income from continuing operations                                                                                  |                                                                             | $                                                      | 11,555                                               |       |                      | $     | 5,573      |      
|Adjustments to reconcile income from continuing operations to net cash
provided by (used in) operating activities: |                                                                             |                                                        |                                                      |       |                      |       |            |      
|                                                                                                                   | Depreciation and amortization                                               |                                                        |                                                      | 1,945 |                      |       |            | 2,448 |        
|                                                                                                                   | Net loss on disposal of equipment                                           |                                                        |                                                      |      |                      |       |            | 27    |        
|                                                                                                                   | Non-cash lease termination costs                                            |                                                        |                                                      | (177  | )                    |       |            |      |        
|                                                                                                                   | Minority share of income                                                    |                                                        |                                                      | 1,067 |                      |       |            | 371   |        
|                                                                                                                   | Provision for losses on accounts receivable                                 |                                                        |                                                      | 402   |                      |       |            | 531   |        
|                                                                                                                   | Changes in assets and liabilities, net of effects of business acquisitions: |                                                        |                                                      |       |                      |       |            |       |        
|                                                                                                                   |                                                                             | Accounts receivable                                    |                                                      |       | (27,374              | )     |            |       | (27,884 | )     
|                                                                                                                   |                                                                             | Inventories                                            |                                                      |       | 13,798               |       |            |       | 6,308   |       
|                                                                                                                   |                                                                             | Deferred income taxes                                  |                                                      |       | 435                  |       |            |       | 924     |       
|                                                                                                                   |                                                                             | Prepaid expenses                                       |                                                      |       | 908                  |       |            |       | 6,056   |       
|                                                                                                                   |                                                                             | Other assets                                           |                                                      |       | (273                 | )     |            |       | (322    | )     
|                                                                                                                   |                                                                             | Accounts payable                                       |                                                      |       | (835                 | )     |            |       | (2,487  | )     
|                                                                                                                   |                                                                             | Accrued liabilities                                    |                                                      |       | 2,404                |       |            |       | 3,159   |       
|                                                                                                                   |                                                                             | Lease termination liabilities                          |                                                      |       | (7,540               | )     |            |       |        |       
|                                                                                                                   |                                                                             | Income taxes payable                                   |                                                      |       | 3,159                |       |            |       | 5,510   |       
|                                                                                                                   |                                                                             |                                                        |                                                      |       |                      |       |            |      
|                                                                                                                   |                                                                             | Net cash provided by (used in) continuing operations   |                                                      |       | (526                 | )     |            |       | 238     |       
|                                                                                                                   |                                                                             | Net cash provided by (used in) discontinued operations |                                                      |       | (1,750               | )     |            |       | 25      |       
|                                                                                                                   |                                                                             |                                                        |                                                      |       |                      |       |            |      
|                                                                                                                   |                                                                             | Net cash provided by (used in) operating activities    |                                                      |       | (2,276               | )     |            |       | 263     |       
|                                                                                                                   |                                                                             |                                                        |                                                      |       |                      |       |            |      
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                                              |                                                                             |                                                        |                                                      |       |                      |       |            |      
|Purchases of property, plant and equipment                                                                         |                                                                             |                                                        | (1,054                                               | )     |                      |       | (5,176     | )    
|Investments in other companies                                                                                     |                                                                             |                                                        | (201                                                 | )     |                      |       | (982       | )    
|Purchases of marketable debt securities                                                                            |                                                                             |                                                        |                                                     |       |                      |       | (516       | )    
|Maturities of marketable debt securities                                                                           |                                                                             |                                                        |                                                     |       |                      |       | 1,015      |      
|Sales of marketable debt securities                                                                                |                                                                             |                                                        |                                                     |       |                      |       | 18,752     |      
|Proceeds from repayment of note receivable                                                                         |                                                                             |                                                        | 5,103                                                |       |                      |       |           |      
|Proceeds from sale of investments                                                                                  |                                                                             |                                                        |                                                     |       |                      |       | 75         |      
|                                                                                                                   |                                                                             |                                                        |                                                      |       |                      |       |            |      
|                                                                                                                   |                                                                             |                                                        | Net cash provided by investing activities            |       |                      | 3,848 |            |       |         | 13,168 |  
|                                                                                                                   |                                                                             |                                                        |                                                      |       |                      |       |            |      
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                              |                                                                             |                                                        |                                                      |       |                      |       |            |      
|Payments on long term debt                                                                                         |                                                                             |                                                        | (11                                                  | )     |                      |       | (240       | )    
|Consolidated subsidiary dividends paid to minority shareholders                                                    |                                                                             |                                                        | (275                                                 | )     |                      |       | (198       | )    
|Proceeds from issuance of common stock                                                                             |                                                                             |                                                        | 70                                                   |       |                      |       | 71         |      
|Repurchases of common stock                                                                                        |                                                                             |                                                        |                                                     |       |                      |       | (2,184     | )    
|                                                                                                                   |                                                                             |                                                        |                                                      |       |                      |       |            |      
|                                                                                                                   |                                                                             |                                                        | Net cash used in financing activities                |       |                      | (216  | )          |       |         | (2,551 | )
|Effect of exchange rate changes on cash and cash equivalents                                                       |                                                                             |                                                        | (1,704                                               | )     |                      |       | 577        |      
|                                                                                                                   |                                                                             |                                                        |                                                      |       |                      |       |            |      
|                                                                                                                   |                                                                             |                                                        | Net increase (decrease) in cash and cash equivalents |       |                      | (348  | )          |       |         | 11,457 |  
|Cash and cash equivalents, beginning of period                                                                     |                                                                             |                                                        | 52,844                                               |       |                      |       | 28,447     |      
|                                                                                                                   |                                                                             |                                                        |                                                      |       |                      |       |            |      
|Cash and cash equivalents, end of period                                                                           |                                                                             | $                                                      | 52,496                                               |       |                      | $     | 39,904     |      
|                                                                                                                   |                                                                             |                                                        |                                                      |       |                      |       |            |      
|SUPPLEMENTAL CASH FLOW INFORMATION:                                                                                |                                                                             |                                                        |                                                      |       |                      |       |            |      
|                                                                                                                   |                                                                             | Interest paid                                          |                                                      | $     | 66                   |       |            | $     | 163     |       
|                                                                                                                   |                                                                             | Income taxes paid (refund)                             |                                                      | $     | (2,346               | )     |            | $     | (3,251  | )     

See accompanying notes to condensed
consolidated financial statements

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VANS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

Vans is a leading global sports and lifestyle company that merchandises,
designs, sources and distributes VANS-branded active-casual and performance
footwear, apparel and accessories for action sports. Action sports, including
skateboarding, snowboarding, surfing, wakeboarding, BMX and motocross, are
generally recognized for the fun, creativity and individual achievement
experienced while attempting various tricks or maneuvers within these sports.
Our focus has been proprietary branding with the goal of creating a leadership
position for our brand and a strong emotional connection with our customers.
Our VANS brand targets 10 to 24 year-old participants, enthusiasts and
emulators of the action sports culture. We have implemented a unique marketing
plan to reach our customers through multiple points of contact which include
owning and operating action sports entertainment events and venues, such as the
VANS Triple Crown Series, VANS skateparks and the VANS High Cascade Snowboard
Camp®, sponsoring professional and amateur athletes and the VANS Warped Tour®,
as well as advertising in targeted print and television media.

We operate retail stores in the U.S. and Europe, and design, market and
distribute active-casual footwear, clothing and accessories, performance
footwear for action sports, snowboard boots, conventional snowboard boot
bindings under our AGENCY brand, step-in snowboard boot bindings under our
SWITCH® brand, and outerwear worldwide. We also offer the PRO-TEC® line of
protective helmets and pads through our subsidiary, Pro-tec, Inc.

Basis of Presentation

The condensed consolidated financial statements included herein are
unaudited and reflect all adjustments, which are, in the opinion of management,
necessary for a fair presentation of the results of the interim periods
presented. The results of operations for the current interim period are not
necessarily indicative of results to be expected for the current year.

The accompanying unaudited condensed consolidated financial statements do
not include certain footnotes and financial presentations as permitted by
accounting principles generally accepted in the United States for interim
purposes. Therefore, these financial statements should be read in conjunction
with the our audited consolidated financial statements and notes thereto for
the year ended May 31, 2003, included in our Annual Report on Form 10-K which
is filed with the Securities and Exchange Commission.

As discussed further in Note 5, in Fiscal 2003 we made the decision to
substantially exit the skatepark business. The results of operations for
skateparks that have ceased operations are presented as discontinued operations
in the accompanying unaudited condensed consolidated financial statements.

Use of Estimates

The consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States. In
preparing the consolidated financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, revenues and expenses and the disclosure of contingent assets and
liabilities. We regularly evaluate the estimates and assumptions related to
allowances for doubtful accounts, sales returns and allowances, inventory
reserves, goodwill and intangible asset valuations, long-lived asset
valuations, deferred income tax valuation allowances, litigation and other
contingencies. We base our estimates on historical experience and on various
other factors that we believe to be reasonable under the circumstances, which
form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. To the extent
there are material differences between the estimates and actual results, future
results of operations will be affected.

Revenue Recognition

Retail sales consist solely of sales through our U.S. retail stores and
skatepark sessions and concessions. National sales include all U.S. sales
except sales through our U.S. retail stores. International sales include all
foreign sales as well as sales through our seven European stores.

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Retail revenue is recognized at the point of sale. Wholesale revenue is
recognized when title passes and the risks and rewards of ownership have
transferred to the customer. Title generally passes upon the delivery of
product to the customer or the customers agent. Royalty revenue is recognized
as it is earned, based on the terms of the underlying royalty agreement.
Skatepark, event and other revenues are recognized when the related goods or
services have been delivered to the customer and we are substantially free from
future obligation, provided that the fundamental criteria for revenue
recognition have been met. Concurrent with the recording of revenues, provision
is made for estimated returns and allowances.

Cash Equivalents

Cash and cash equivalents consist of cash and short-term investments with
original maturities of ninety days or less.

Inventories

Inventories are substantially comprised of finished goods and are valued
at the lower of cost or market (net realizable value). Cost is determined using
the first-in, first-out (FIFO) method. We provide inventory allowances based
on estimates of excess and obsolete inventories. Such allowances are permanent
reductions in the carrying value of the inventory.

Goodwill and Long-Lived Assets

In accordance with Statement of Financial Accounting Standards (SFAS)
No. 142, Goodwill and Intangible Assets, we test goodwill for impairment at
the reporting unit level (operating segment or one level below an operating
segment) on an annual basis or more frequently if we believe indicators of
impairment exist. The performance of the test involves a two-step process. The
first step of the impairment test involves comparing the fair value of our
reporting units with the reporting units carrying amount, including goodwill.
We generally determine the fair value of our reporting units using a weighted
average of the income approach and the market approach. If the carrying amount
of our reporting units exceeds the reporting units fair value, we perform the
second step of the goodwill impairment test to determine the amount of any
impairment loss. The second step of the goodwill impairment test involves
comparing the implied fair value of our reporting units goodwill with the
carrying amount of that goodwill.

We account for long-lived assets in accordance with SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, which
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present. Reviews are performed to
determine whether the carrying value of assets is impaired, based on comparison
to undiscounted expected future cash flows. If this comparison indicates that
there is impairment, the impaired asset is written down to fair value, which is
typically calculated using discounted expected future cash flows using a
discount rate based upon our weighted average cost of capital adjusted for
risks associated with the related operations. Impairment is based on the excess
of the carrying amount over the fair value of those assets.

Other Assets

At May 31, 2003, other assets included a note receivable of $5.1 million,
for which payment was received during the thirteen-week period ended August 30,
2003.

Contingent Consideration

In connection with certain of our acquisitions, if designated future
performance goals are satisfied, the aggregate consideration for these
acquisitions will be increased. Such additional consideration, if earned, will
be paid in the form of cash or unrestricted shares of our common stock, and
will be accounted for in accordance with SFAS No. 141, Business Combinations
(SFAS 141) which superceded Accounting Principles Board (APB) Opinion No.
16, Business Combinations, as of July 1, 2001, and Emerging Issues Task Force
(EITF) Issue No. 95-8, Accounting for Contingent Consideration Paid to the
Shareholders of an Acquired Enterprise in a Purchase Business Combination. Any
additional consideration paid will be allocated to goodwill, which will be
periodically reviewed for impairment. See Note 3.

Income Taxes

We utilize the liability method of accounting for income taxes as set
forth in SFAS No. 109, Accounting for Income Taxes. Under the liability
method, deferred taxes are determined based on the temporary differences
between the financial statement and tax bases of assets and liabilities using
enacted tax rates. A valuation allowance is recorded when it is more likely
than not that some of the deferred tax assets will not be realized.

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Income taxes for the interim periods were computed using the effective tax
rate estimated to be applicable for the full fiscal year, which is subject to
ongoing review and evaluation by management.

Stock-Based Compensation

We account for stock-based awards to employees in accordance with APB
Opinion No. 25, Accounting for Stock Issued to Employees (APB 25), and have
adopted the disclosure-only alternative of SFAS No. 123, Accounting for
Stock-Based Compensation (SFAS 123).

In accordance with the requirements of the disclosure-only alternative of
SFAS 123, set forth below are the assumptions used and pro forma statement of
operations data giving effect to valuing stock-based awards to employees using
the Black-Scholes option pricing model instead of the guidelines provided by
APB 25. Among other factors, the Black-Scholes model considers the expected
life of the option and the expected volatility of our stock price in arriving
at an option valuation.

The per share fair value of stock options granted in connection with stock
option plans has been estimated with the following weighted average
assumptions:

|                         |  |                      |      |            |  |  |      |  
|------------------------ |  | -------------------- | ---- | ---------- |  |  | ---- | -
|                         |  | THIRTEEN WEEKS ENDED
|                         |  |                     
|                         |  | AUGUST 30,           |      | AUGUST 31,
|                         |  | 2003                 |      | 2002      
|                         |  |                      |      |           
|Expected life (in years) |  |                      | 5    |            |  |  | 5    |  
|Volatility               |  |                      | 0.74 |            |  |  | 0.75 |  
|Risk-free interest rate  |  |                      | 2.94 | %          |  |  | 2.27 | %
|Dividend yield           |  |                      | 0.0  | %          |  |  | 0.0  | %

The results of applying the requirements of the disclosure-only
alternative to SFAS 123 to our stock-based awards to employees would
approximate the following (in thousands, except per share data):

|                                                                            |  |                      |       |            |  |   |       |  
|--------------------------------------------------------------------------- |  | -------------------- | ----- | ---------- |  | - | ----- | -
|                                                                            |  | THIRTEEN WEEKS ENDED
|                                                                            |  |                     
|                                                                            |  | AUGUST 30,           |       | AUGUST 31,
|                                                                            |  | 2003                 |       | 2002      
|                                                                            |  |                      |       |           
|Net income  as reported                                                    |  | $                    | 6,628 |            |  | $ | 5,421 |  
|Add: Stock-based compensation expense
included in net income  as reported  |  |                      |      |            |  |   |      |  
|Deduct: Stock-based compensation
expense determined under fair value method |  |                      | (455  | )          |  |   | (344  | )
|                                                                            |  |                      |       |            |  |   |       |  
|Net income  pro forma                                                      |  | $                    | 6,173 |            |  | $ | 5,077 |  
|                                                                            |  |                      |       |            |  |   |       |  
|Basic earnings per share  as reported                                      |  | $                    | 0.37  |            |  | $ | 0.30  |  
|                                                                            |  |                      |       |            |  |   |       |  
|Basic earnings per share  pro forma                                        |  | $                    | 0.35  |            |  | $ | 0.28  |  
|                                                                            |  |                      |       |            |  |   |       |  
|Diluted earnings per share  as reported                                    |  | $                    | 0.37  |            |  | $ | 0.30  |  
|                                                                            |  |                      |       |            |  |   |       |  
|Diluted earnings per share  pro forma                                      |  | $                    | 0.34  |            |  | $ | 0.28  |  
|                                                                            |  |                      |       |            |  |   |       |  

For pro forma purposes, the estimated fair value of our stock-based awards
to employees is amortized over the vesting period of the underlying
instruments.

Reclassifications

Certain amounts in the prior period financial statements have been
reclassified to conform to the current period presentation.

Recent Accounting Pronouncements

In July 2002, the Financial Accounting Standards Board (FASB) issued
SFAS No. 146, Accounting For Costs Associated With Exit or Disposal
Activities (SFAS 146), which addresses financial accounting and reporting
for costs associated with exit or disposal activities and nullifies EITF Issue
No. 94-3, Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring) (EITF 94-3). SFAS 146 is effective for exit or disposal activities

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that are initiated after December 31, 2002. As a result of the
implementation of SFAS 146, the accounting for amounts recorded in connection
with our decision to substantially exit the skatepark business was materially
impacted. Under the guidance of EITF 94-3, we would have recorded as an expense
during the year ended May 31, 2003 (the period in which management committed to
an exit plan for the skateparks), an estimate of certain costs that would be
directly incurred in connection with skatepark closures. The most significant
element of these costs is lease termination charges. With the implementation of
SFAS 146, costs associated with exit activities are to be recorded in the
period in which they are incurred. In the case of lease termination costs, this
is the period in which we enter into an agreement with the landlord.
Accordingly, our future consolidated results of operations will include lease
termination charges in the periods in which we enter into an agreement.
Additionally, other direct costs associated with closing skateparks will be
expensed in future periods as they are incurred.

In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure (SFAS 148), which
permits two additional transition methods for companies that elect to adopt the
fair-value-based method of accounting for stock-based employee compensation.
The statement also expands the disclosure requirements for stock-based
compensation. The provisions of this statement apply to financial statements
for fiscal years ending after December 15, 2002. The adoption of SFAS 148 had
no material financial impact to our consolidated financial statements. We have
provided the additional disclosures required by SFAS 148 for the thirteen-week
periods ended August 30, 2003, and August 31, 2002, elsewhere in Note 1.

In January 2003, the FASB issued FIN No. 46, Consolidation of Variable
Interest Entities (FIN 46). FIN 46 requires a company to consolidate a
variable interest entity if it is designated as the primary beneficiary of that
entity even if the company does not have a majority of voting interests. A
variable interest entity is generally defined as an entity that has
insufficient equity to finance its activities or the owners of the entity lack
the risk and rewards of ownership. The provisions of this statement apply at
inception for any entity created after January 31, 2003. For an entity created
before February 1, 2003, the provisions of this Interpretation must be applied
at the beginning of the first interim or annual period beginning after June 15,
2003. We will adopt the provisions of FIN 46 in the quarter ending November 29,
2003, for existing entities that are within the scope of this Interpretation.
The statement also has disclosure requirements, some of which are required to
be included in financial statements issued after January 31, 2003. Since we do
not currently have any variable interest entities, the adoption of the
provisions of FIN 46 is not expected to have a material impact on our financial
position or results of operations.

2. SUPPLEMENTARY FINANCIAL INFORMATION

Goodwill and Identifiable Intangible Assets

The following table summarizes our identifiable intangible assets and
goodwill balances as of August 30, 2003, and May 31, 2003:

|                                           |                        |       |   |                 |       |              |   |          |        |              |   |       |       |  |   |      |        |  
|------------------------------------------ | ---------------------- | ----- | - | --------------- | ----- | ------------ | - | -------- | ------ | ------------ | - | ----- | ----- |  | - | ---- | ------ | -
|                                           |                        |       |   | AUGUST 30, 2003 |       | MAY 31, 2003
|                                           |                        |       |   |                 |       |             
|                                           |                        |       |   | Gross           |       |              |   |          |        | Gross        |   |       |       | 
|                                           |                        |       |   | Carrying        |       | Accumulated  |   | Carrying |        | Accumulated 
|                                           |                        |       |   | Amount          |       | Amortization |   | Amount   |        | Amortization
|                                           |                        |       |   |                 |       |              |   |          |        |             
|                                           |                        |       |   | (In thousands) 
|Intangible assets subject to amortization: |                        |       |   |                 |       |              |   |          |        |              |   |       |       |  |   |     
|                                           | Trademarks and patents |       | $ | 5,140           |       |              | $ | (1,069   | )      |              | $ | 5,140 |       |  | $ | (938 | )     
|                                           | Other                  |       |   | 886             |       |              |   | (476     | )      |              |   | 886   |       |  |   | (440 | )     
|                                           |                        |       |   |                 |       |              |   |          |        |              |   |       |       |  |   |     
|                                           |                        | Total |   | $               | 6,026 |              |   | $        | (1,545 | )            |   | $     | 6,026 |  |   | $    | (1,378 | )
|                                           |                        |       |   |                 |       |              |   |          |        |              |   |       |       |  |   |      |       

|                                                                  |            |       |   |                |        |          |   |        |        | 
|----------------------------------------------------------------- | ---------- | ----- | - | -------------- | ------ | -------- | - | ------ | ------ | 
|                                                                  |            |       |   | AUGUST         |        | MAY     
|                                                                  |            |       |   | 30, 2003       |        | 31, 2003
|                                                                  |            |       |   |                |        |         
|                                                                  |            |       |   | (In thousands)
|Carrying amount of intangible assets not subject to amortization: |            |       |   |                |        |          |   |       
|                                                                  | Goodwill   |       | $ | 31,793         |        |          | $ | 31,702 |       
|                                                                  | Trademarks |       |   | 10,885         |        |          |   | 10,885 |       
|                                                                  |            |       |   |                |        |          |   |        |       
|                                                                  |            | Total |   | $              | 42,678 |          |   | $      | 42,587 | 
|                                                                  |            |       |   |                |        |          |   |        |       

Goodwill is comprised of $12.7 million associated with the acquisition of
our predecessor company; $6.2 million associated with the acquisition of Mosa
Extreme Sports, Inc., now known as Pro-tec, Inc. (Pro-tec); $5.8 million
related to the acquisition of Global Accessories Limited (now known as Vans
Inc. Limited), our U.K. distributor; $4.9 million associated with our
acquisition of a majority interest in the VANS Warped Tour®; $2.1 million
associated with the acquisition of Compagnie Sunspot SA (Sunspot), our sales
agent for France; and $100,000 associated with the acquisition of certain
assets and liabilities of Max MadHouse GmbH (Max
MadHouse), our exclusive sales agent
for Germany, Austria and the Czech Republic.

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Amortization expense for intangible assets subject to amortization was
$167,000 and $188,000 for the thirteen-week periods ended August 30, 2003, and
August 31, 2002, respectively. Future estimated amortization expense for the
remainder of Fiscal 2004, the next four years and thereafter is as follows (in
thousands):

|                            |            |   |       |       | 
|--------------------------- | ---------- | - | ----- | ----- | 
|FISCAL YEAR ENDING MAY 31,:
|2004                        |            | $ | 262   |      
|2005                        |            |   | 447   |      
|2006                        |            |   | 447   |      
|2007                        |            |   | 440   |      
|2008                        |            |   | 366   |      
|                            | Thereafter |   |       | 2,519 | 
|                            |            |   |       |      
|                            |            | $ | 4,481 |      
|                            |            |   |       |      

Computation of Earnings Per Share

Basic earnings per share represents net income divided by the
weighted-average number of common shares outstanding for the period. Diluted
earnings per share represents net income divided by the weighted-average number
of shares outstanding, inclusive of all potentially dilutive common shares. The
reconciliations of basic to diluted weighted average shares are as follows:

|                                                      |  |                      |        |            |  |  |        | 
|----------------------------------------------------- |  | -------------------- | ------ | ---------- |  |  | ------ | 
|                                                      |  | THIRTEEN WEEKS ENDED
|                                                      |  |                     
|                                                      |  | AUGUST 30,           |        | AUGUST 31,
|                                                      |  | 2003                 |        | 2002      
|                                                      |  |                      |        |           
|                                                      |  | (In thousands)      
|Weighted average shares used in
basic computation     |  |                      | 17,827 |            |  |  | 18,166 | 
|Restricted stock grant                                |  |                      | 68     |            |  |  | 89     | 
|Dilutive stock options                                |  |                      | 201    |            |  |  | 97     | 
|                                                      |  |                      |        |            |  |  |        | 
|Weighted average shares used for
dilutive computation |  |                      | 18,096 |            |  |  | 18,352 | 
|                                                      |  |                      |        |            |  |  |        | 

The following shares were excluded from the computation of diluted
earnings (loss) per share as their effect would have been anti-dilutive:

|              |  |                      |       |            |  |  |       | 
|------------- |  | -------------------- | ----- | ---------- |  |  | ----- | 
|              |  | THIRTEEN WEEKS ENDED
|              |  |                     
|              |  | AUGUST 30,           |       | AUGUST 31,
|              |  | 2003                 |       | 2002      
|              |  |                      |       |           
|              |  | (In thousands)      
|Stock options |  |                      | 1,161 |            |  |  | 1,262 | 

Other Comprehensive Income

Other comprehensive income refers to revenue, expenses, gains and losses
that are recorded as an element of stockholders equity but are excluded from
net income. Accumulated other comprehensive income is comprised of: (i)
unrealized gains and losses on derivative instruments qualifying as cash flow
hedges; and (ii) foreign currency translation adjustments. The components of
other comprehensive income for the thirteen-week periods ended August 30, 2003,
and August 31, 2002, were as follows:

|                            |                                               |                              |       |                      |       |            |       |       |      |  
|--------------------------- | --------------------------------------------- | ---------------------------- | ----- | -------------------- | ----- | ---------- | ----- | ----- | ---- | -
|                            |                                               |                              |       | THIRTEEN WEEKS ENDED
|                            |                                               |                              |       |                     
|                            |                                               |                              |       | AUGUST 30,           |       | AUGUST 31,
|                            |                                               |                              |       | 2003                 |       | 2002      
|                            |                                               |                              |       |                      |       |           
|                            |                                               |                              |       | (In thousands)      
|Net income                  |                                               | $                            | 6,628 |                      |       | $          | 5,421 |      
|Other comprehensive income: |                                               |                              |       |                      |       |            |       |      
|                            | Derivatives qualifying as hedges, net of tax: |                              |       |                      |       |            |       |       |     
|                            |                                               | Net
derivative gain (loss)   |       |                      | 1,300 |            |       |       | (390 | )
|                            |                                               | Reclassifications to expense |       |                      | (337  | )          |       |       | (62  | )
|                            | Foreign currency translation adjustments      |                              |       | (3,509               | )     |            |       | 1,831 |     
|                            |                                               |                              |       |                      |       |            |       |      
|Total comprehensive income  |                                               | $                            | 4,082 |                      |       | $          | 6,800 |      
|                            |                                               |                              |       |                      |       |            |       |      

3. ACQUISITIONS

On June 1, 2003, we acquired certain assets and liabilities of Max
MadHouse for $117,000 in cash consideration. The assets and liabilities
acquired constituted what was formerly the business of our exclusive sales
agent for Germany, Austria and the Czech

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Republic. The consideration for the acquisition was attributed to
acquired identifiable net assets and goodwill. In addition to the initial
purchase price paid, we are required to pay additional cash consideration based
on the level of sales achieved by the acquired business over the three-year
period ending May 31, 2006. Although the aggregate amount of additional
consideration to be paid cannot yet be determined, we currently estimate that
$470,000 will be paid in the current fiscal year and an aggregate of $900,000
in additional consideration may be required. Any such additional consideration
will be allocated to goodwill.

On June 11, 2002, we acquired 100% of the outstanding capital stock of
Sunspot for cash consideration of $2.9 million. During the thirteen-week period
ended August 30, 2003, an additional $873,000 was paid as a result of the sales
levels achieved by Sunspot during the year ended May 31, 2003. Of the total
purchase consideration paid to date, $1.7 million was allocated to identifiable
acquired assets and liabilities on the acquisition date and the remaining $2.1
million has been allocated to goodwill. In addition, we are required to pay
additional cash consideration in connection with this acquisition based on the
level of sales achieved by Sunspot through June 11, 2007. Although the
aggregate amount of additional consideration to be paid cannot yet be
determined, we currently estimate that $900,000 will be paid in the current
fiscal year and an aggregate of $4.2 million in additional consideration may be
required. Any such additional consideration will be allocated to goodwill.

Had the acquisitions of Max MadHouse and Sunspot occurred on June 1, 2002,
our results of operations for the thirteen-week periods ended August 30, 2003,
and August 31, 2002, would not have differed materially from our reported
results of operations for these periods.

Additionally, in connection with our acquisition of Pro-tec on April 15,
2002, the acquisition agreement provides for additional consideration of up to
$1.0 million to be paid by us if certain performance criteria are met during
Fiscal 2004. Such additional consideration, if earned, will be paid either in
cash or unrestricted shares of our common stock and will be allocated to
goodwill.

4. COMMITMENTS AND CONTINGENCIES

Litigation

Vans, Inc. vs. Scott Brabson, Gordana Brabson, Jay Rosendahl, Heidi
Rosendahl, et al, Superior Court for the County of Los
Angeles, Case No. BC27031. The allegations we have made in this case, the companion arbitration,
and the resulting arbitration award are described in our Annual Report on Form
10-K for Fiscal 2003, which is filed with the Securities and Exchange
Commission. No material changes in the status of these matters occurred in the
first quarter of Fiscal 2004, and no amounts have been recorded in our
condensed consolidated financial statements in connection with this matter.

Gordana Brabson vs. Vans, Inc. et. al, Superior Court of California,
County of Santa Barbara, Case No. 01110315. This lawsuit was filed against
Vans, two of Vans executive officers, and certain other individuals and
entities on December 6, 2002, in connection with a lawsuit filed by us against
the plaintiff, her husband and other individuals and entities in which we
alleged that they engaged in a conspiracy to obtain unauthorized payments from
certain of our factories in China. Mrs. Brabson alleged causes of action for
invasion of privacy, trespass, and intentional infliction of emotional distress
relating to the investigation conducted in connection with that litigation. An
agreement to settle this case was reached in the first quarter of Fiscal 2004,
and settlement documents are being prepared. The terms of the settlement are
confidential; however, no amounts have been recorded in the accompanying
condensed consolidated financial statements in connection with this matter.
The settlement of this case will not have a material adverse impact on our
results of operations or financial condition.

Franklin C. Ferrana a/k/a Nikki Sixx vs. Vans, Inc., High Speed
Productions, Inc. d/b/a Thrasher Magazine, Superior Court for the County of Los
Angeles, Case No. BC303262.This lawsuit was filed on September 30, 2003, and
alleges that Vans and Thrasher Magazine misappropriated the image of the
plaintiff in an advertisement. The complaint seeks compensatory damages in
excess of $1.0 million, disgorgement of profits, and punitive damages. We have
not yet filed an answer in this matter and intend to vigorously defend
ourselves.

From time to time, we are involved in legal proceedings arising in the
ordinary course of business. Management does not currently expect that any of
the legal proceedings in which we are currently involved will have a material
adverse impact on future results of operations or financial condition.

Derivatives and Hedging

We are exposed to foreign currency risk primarily through our wholly-owned
subsidiaries, Vans Europe BV (VEBV), whose functional currency is the euro,
and Vans Inc. Limited (VIL), whose functional currency is the British
sterling. This currency risk is primarily related to purchases of
inventory by our subsidiaries which are priced and settled in U.S. dollars. To hedge this risk, our
subsidiaries

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enter into cash flow hedges of forecasted inventory purchases, thereby
fixing the cost of the product and the associated gross margins in their
functional currency. As of August 30, 2003, our subsidiaries hedged
approximately 62% of forecasted inventory purchases through the first quarter
of Fiscal 2005. In addition to hedging inventory purchases, we may also hedge
other foreign currency cash flow and balance sheet exposures as they are
identified.

At August 31, 2003, we had foreign currency forward contracts outstanding
to purchase U.S. dollars using euros with an aggregate notional value of $14.9
million in connection with forecasted inventory purchases. The average
contract rate for these contracts was $1.13 per euro. Net unrealized gains on
foreign exchange contracts at August 31, 2003, aggregated $320,000, all of
which was included in accumulated other comprehensive income and is expected to
be reclassified into earnings within the next twelve months as the inventory
related to these foreign exchange contracts is sold. Actual amounts ultimately
reclassified to earnings are dependent on the exchange rates in effect when
derivative contracts that are currently outstanding mature.

Inventory purchase commitments.

At August 30, 2003, we had firm commitments to purchase inventory in the
amount of $11.4 million. These commitments included contingent liabilities
under open letters of credit with foreign suppliers aggregating $1.4 million.

5. DISCONTINUED OPERATIONS

In Fiscal 2003 we made the decision to substantially exit the skatepark
business. This decision was driven by the proliferation of large, free public
skateparks that have been constructed in close proximity to our skateparks over
the past two and a half years, and which adversely affected attendance and
revenues at our skateparks. When the decision to substantially exit the
skatepark business was made, we operated 11 skateparks and were party to a
lease for the construction of an additional park to be opened in Sacramento,
California in Fiscal 2004. Our skatepark in Bakersfield, California was closed
in February 2003, before we made the decision to substantially exit the
skatepark business.

As of August 30, 2003, we have closed four skateparks: Bakersfield,
California; Denver, Colorado; Phoenix, Arizona; and Atlanta, Georgia. The
Denver, Phoenix and Atlanta parks closed during the quarter ended August 30,
2003. Of the eight skateparks that we continue to operate, we have reached
agreements with the landlords to close five of the parks, one of which is still
being finalized and is expected to result in additional lease termination costs
being recorded in the second quarter of Fiscal 2004. Additionally, we are in
negotiations with the landlords for two of the remaining three parks to obtain
rent concessions and/or terminations of the skatepark leases.

Our operating results for the quarter ended August 30, 2003, include
pre-tax lease termination costs of $2.0 million related to one skatepark lease
termination agreement that was reached during the quarter for a park that we
continued to operate as of August 30, 2003. Additionally, the loss from
discontinued operations for the quarter ended August 30, 2003, includes pre-tax
lease termination charges aggregating $4.7 million that were incurred in
connection with the closing of two parks during the quarter. At August 30,
2003, our balance sheet included lease termination liabilities aggregating
$798,000 and liabilities held in connection with disposal activities
aggregating $5.0 million, representing the portion of these lease termination
costs that had not yet been paid.

Upon the closure of each of our skateparks, the related operating results
will be recast as discontinued operations in the consolidated statements of
operations for all periods presented. Accordingly, the four skateparks we have
closed through August 30, 2003, are presented as discontinued operations in the
accompanying condensed consolidated statements of operations. Summarized
operating results for our discontinued operations were as follows:

|                        |  |                      |        |                 |  |   |       |  
|----------------------- |  | -------------------- | ------ | --------------- |  | - | ----- | -
|                        |  | THIRTEEN WEEKS ENDED
|                        |  |                     
|                        |  | AUGUST 30, 2003      |        | AUGUST 31, 2002
|                        |  |                      |        |                
|                        |  | (In thousands)      
|Net sales               |  | $                    | 901    |                 |  | $ | 1,355 |  
|Gross profit            |  |                      | 478    |                 |  |   | 983   |  
|Lease termination costs |  |                      | (4,687 | )               |  |   |      |  
|Net loss                |  | $                    | (4,927 | )               |  | $ | (152  | )
|                        |  |                      |        |                 |  |   |       |  

6. SEGMENT DISCLOSURES

Our reportable segments are based on three distinct product sales
channels: retail, national and international. The retail segment consists of
U.S. retail operations, which include our domestic retail stores and
skateparks. The national segment consists of all domestic operations outside of
retail operations, which includes the domestic wholesale business, the VANS
Warped Tour® and the

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VANS High Cascade Snowboard Camp®. The international segment includes the
international wholesale business and European retail operations. The
Unallocated category below represents items necessary to reconcile to the
consolidated financial statements, which generally include corporate activities
and operating costs not directly attributable to any one segment. Our chief
operating decision-maker evaluates the performance of our segments based on
gross margin and direct operating profit, excluding such unallocated amounts.

Summary information by segment follows:

|                             |               |               |         |                      |        |            |         |         |        | 
|---------------------------- | ------------- | ------------- | ------- | -------------------- | ------ | ---------- | ------- | ------- | ------ | 
|                             |               |               |         | THIRTEEN WEEKS ENDED
|                             |               |               |         |                     
|                             |               |               |         | AUGUST 30,           |        | AUGUST 31,
|                             |               |               |         | 2003                 |        | 2002      
|                             |               |               |         |                      |        |           
|                             |               |               |         | (In thousands)      
|Net sales:                   |               |               |         |                      |        |            |         |        
|                             | Retail        |               |         |                      |        |            |         |         |       
|                             |               | Skateparks    |         | $                    | 3,975  |            |         | $       | 4,533  | 
|                             |               | Retail stores |         |                      | 33,105 |            |         |         | 30,116 | 
|                             | National      |               |         |                      |        |            |         |         |       
|                             |               | Wholesale     |         |                      | 42,863 |            |         |         | 45,358 | 
|                             |               | Other         |         |                      | 11,029 |            |         |         | 10,211 | 
|                             | International |               |         | 37,999               |        |            |         | 33,060  |       
|                             | Unallocated   |               |         |                     |        |            |         |        |       
|                             |               |               |         |                      |        |            |         |        
|Total net sales              |               | $             | 128,971 |                      |        | $          | 123,278 |        
|                             |               |               |         |                      |        |            |         |         |        | 
|Gross profit:                |               |               |         |                      |        |            |         |        
|                             | Retail        |               |         |                      |        |            |         |         |       
|                             |               | Skateparks    |         | $                    | 2,759  |            |         | $       | 3,398  | 
|                             |               | Retail stores |         |                      | 18,210 |            |         |         | 16,325 | 
|                             | National      |               |         |                      |        |            |         |         |       
|                             |               | Wholesale     |         |                      | 15,044 |            |         |         | 15,898 | 
|                             |               | Other         |         |                      | 2,167  |            |         |         | 598    | 
|                             | International |               |         | 20,756               |        |            |         | 14,909  |       
|                             | Unallocated   |               |         |                     |        |            |         |        |       
|                             |               |               |         |                      |        |            |         |        
|Total gross profit           |               | $             | 58,936  |                      |        | $          | 51,128  |        
|                             |               |               |         |                      |        |            |         |         |        | 
|Income from operations:      |               |               |         |                      |        |            |         |        
|                             | Retail        |               |         |                      |        |            |         |         |       
|                             |               | Skateparks    |         | $                    | (2,011 | )          |         | $       | 86     | 
|                             |               | Retail stores |         |                      | 3,743  |            |         |         | 2,476  | 
|                             | National      |               |         |                      |        |            |         |         |       
|                             |               | Wholesale     |         |                      | 10,796 |            |         |         | 11,851 | 
|                             |               | Other         |         |                      | 1,923  |            |         |         | 435    | 
|                             | International |               |         | 14,789               |        |            |         | 9,129   |       
|                             | Unallocated   |               |         | (15,446              | )      |            |         | (14,955 | )     
|                             |               |               |         |                      |        |            |         |        
|Total income from operations |               | $             | 13,794  |                      |        | $          | 9,022   |        
|                             |               |               |         |                      |        |            |         |         |        | 

Included in skatepark income (loss) from operations for
the thirteen-week period ended August 30, 2003, are lease termination costs of
$2.0 million.

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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The following discussion contains forward-looking statements about our
revenues, earnings, spending, margins, orders, products, plans, strategies and
objectives that involve risk and uncertainties. Forward-looking statements
include any statement that may predict, forecast or imply future results, and
may contain words like believe, anticipate, expect, estimate,
project, or words similar to those. Our actual results could differ
materially from those discussed herein. Factors that could cause or contribute
to such differences include, but are not limited to, those discussed in the
text and footnotes accompanying certain forward-looking statements, as well as
those discussed under the caption Risk Factors on page 14 of our Annual
Report on Form 10-K for the year ended May 31, 2003, which is filed with the
Securities and Exchange Commission, and in our press release dated September
25, 2003.

GENERAL OVERVIEW

Vans is a leading global sports and lifestyle company that merchandises,
designs, sources and distributes VANS-branded active-casual and performance
footwear, apparel and accessories for action sports. Action sports, including
skateboarding, snowboarding, surfing, wakeboarding, BMX and motocross, are
generally recognized for the fun, creativity and individual achievement
experienced while attempting various tricks or maneuvers within these sports.
Our focus has been proprietary branding with the goal of creating a leadership
position for our brand and a strong emotional connection with our customers.
Our VANS brand targets 10 to 24 year-old participants, enthusiasts and
emulators of the action sports culture. We have implemented a unique marketing
plan to reach our customers through multiple points of contact which include
owning and operating action sports entertainment events and venues, such as the
VANS Triple Crown Series, VANS skateparks and the VANS High Cascade Snowboard
Camp, sponsoring professional and amateur athletes and the VANS Warped Tour, as
well as advertising in targeted print and television media.

RECENT DEVELOPMENTS IN OUR EXIT FROM THE SKATEPARK BUSINESS

As previously disclosed by us, in Fiscal 2003 we made the decision to
substantially exit the skatepark business. This decision was driven by the
proliferation of large, free public skateparks that have been constructed in
close proximity to our skateparks over the past two and a half years, and which
adversely affected attendance and revenues at our skateparks. When the
decision to substantially exit the skatepark business was made, we operated 11
skateparks and were party to a lease for the construction of an additional park
to be opened in Sacramento, California in Fiscal 2004. Our skatepark in
Bakersfield, California was closed in February 2003, before we made the
decision to substantially exit the skatepark business.

As of August 30, 2003, we have closed four skateparks: Bakersfield,
California; Denver, Colorado; Phoenix, Arizona; and Atlanta, Georgia. The
Denver, Phoenix and Atlanta parks closed in the first quarter of Fiscal 2004.
Of the eight skateparks that we continue to operate, we have reached agreements
with the landlords to close five of the parks, one of which is still being
finalized and is expected to result in additional lease termination costs being
recorded in the second quarter of Fiscal 2004. Additionally, we are in
negotiations with the landlords for two of the remaining three parks to obtain
rent concessions and/or terminations of the skatepark leases. We currently
plan to keep open one or two of the remaining skateparks primarily to promote
brand awareness, and to close all other parks over the next
24 months. Recently we received an overture from one of our
landlords to keep open one park currently designated for closing. We
are evaluating this issue.

Our operating results for the quarter ended August 30, 2003, include
pre-tax lease termination costs of $2.0 million related to one skatepark lease
termination agreement that was reached during the quarter for a park that we
continued to operate as of August 30, 2003, and pre-tax lease termination charges of
$4.7 million incurred in connection with the closing of two parks during the
quarter. As discussed further in Note 5 to the Condensed Consolidated
Financial Statements, the operating results for closed skateparks are presented
as discontinued operations beginning in the period the skatepark is closed.

CRITICAL ACCOUNTING POLICIES

Our financial condition and results of operations are impacted by the
methods, assumptions and estimates used in the application of critical
accounting policies. Changes in the estimates or other judgements of matters
inherently uncertain that are included within these accounting policies could
result in a significant change to the information presented in the financial
statements. We believe our most critical accounting policies relate to:

Revenue Recognition.We recognize product, skatepark, royalty, event and
other revenue upon concluding that all of the fundamental criteria for revenue
recognition have been met. We record wholesale revenues when title passes and
the risks and rewards of ownership have passed to the customer. Retail store
revenues are recorded at the time of sale. As part of our revenue recognition

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policy, we record estimated returns and miscellaneous claims from
customers as reductions to revenues at the time revenues are recorded. We base
our estimates on historical rates of product returns and claims as well as
specific identification of outstanding claims and returns not yet received from
customers. Actual returns and claims in any future period are inherently
uncertain and thus may differ from our estimates.

Accounts Receivable.We provide allowances for doubtful accounts based on
a number of factors including historical experience and past due status as well
as individual customer circumstances such as ability to pay, bankruptcy, credit
ratings and payment history. If actual market conditions are less favorable
than those projected by us, additional provisions for doubtful accounts may be
required.

Inventory.Inventories are valued at the lower of cost or market. Finished
goods inventories are valued using the first-in, first-out method (FIFO). We
provide reserves for estimated obsolescence or unmarketable inventory equal to
the difference between the cost of inventory and the estimated market value
based upon assumptions about future demand and market conditions. These
reserves become permanent reductions in the carrying value of inventory until
sold. If actual market conditions are less favorable than those projected by
us, additional inventory write-downs may be required.

Impairment of Property, Plant and Equipment.We evaluate the carrying
value of property, plant and equipment assets for impairment when the assets
experience a negative event (i.e., significant downturn in operations, losses
from operating units, natural disaster, etc.). When these events are
identified, we evaluate future undiscounted cash flows related to the
relevant assets. If the projected undiscounted cash flows do not exceed the carrying
value of the assets, we write-down the assets to fair value based on discounted
projected future cash flows. The most significant assumptions we use in this
analysis are those made in estimating future discounted cash flows. In
estimating cash flows, we generally use the financial assumptions in our
current budget and our strategic plan and modify them on a store-by-store basis
if other factors should be considered. The discount rate applied is based upon
our weighted average cost of capital adjusted for the risks associated with the
operations being analyzed.

Goodwill.Goodwill is tested for impairment annually as of March 31 at the
reporting unit level unless a change in circumstances indicates more frequent
impairment analysis is required. Impairment, if any, is measured in part based
on the estimated fair value of the reporting units with the recorded goodwill.
Fair value is determined by using a combination of techniques, such as the
traditional present value approach, the expected cash flow approach, and the
multiple of earnings approach. The most significant assumptions we use in this
analysis are those made in estimating future cash flows. In estimating future
cash flows, we generally use the financial assumptions in our current budget
and our strategic plan, subject to modification as considered necessary,
including sales and expense growth rates and the discount rate we estimate to
represent our cost of funds. Goodwill is comprised of $12.7 million associated
with the acquisition of our predecessor company; $6.2 million associated with
the acquisition of Pro-tec; $5.8 million related to the acquisition of Global
Accessories Limited (now known as Vans Inc. Limited); $4.9 million associated
with our acquisition of a majority interest in the VANS Warped Tour; $2.1
million associated with our acquisition of Sunspot; and $100,000 associated
with the acquisition of certain assets and liabilities of Max MadHouse.

Taxes.We record valuation allowances to reduce our deferred tax assets to
amounts that we believe are more likely than not to be realized. Realization of
deferred tax assets (such as net operating loss carryforwards) is dependent on
future taxable earnings and is therefore uncertain. On a quarterly basis, we
assess the likelihood that our deferred tax asset balance will be recovered
from future taxable income. To the extent we believe that recovery is not
likely, we establish a valuation allowance against our deferred tax asset,
increasing our income tax expense in the period such determination is made.

We have not recorded U.S. income tax expense for foreign earnings that we
have determined to be indefinitely reinvested offshore, thus reducing our
overall income tax expense. The amount of earnings designated as indefinitely
reinvested offshore is based upon the actual deployment of such earnings in our
offshore assets and our expectations of the future cash needs of our U.S. and
foreign entities. Income tax considerations are also a factor in determining
the amount of foreign earnings to be repatriated. In the event actual cash
needs of our U.S. entities exceed our current expectations, we may need to repatriate
foreign earnings which have been designated as indefinitely reinvested
offshore. This would result in additional income tax expense being recorded.
Because the determination of foreign earnings as indefinitely reinvested
offshore involves future plans and expectations, there is a possibility that
amounts determined to be indefinitely reinvested offshore may vary from our
current expectations, thereby affecting future income tax expense.

On an interim basis, we estimate what our effective tax rate will be in
each jurisdiction for the full fiscal year and record a quarterly income tax
provision in accordance with the anticipated blended annual rate. As the fiscal
year progresses, we refine our estimate based upon actual events
and earnings by jurisdiction during the year. This estimation process
can result in significant changes to our expected effective tax rate. The tax rate fluctuations may result from changes in the

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quarterly mix of income or loss in each jurisdiction with different tax
rates. When this occurs, we adjust the income tax provision during the quarter
in which the change in estimate occurs so that the year-to-date provision
equals the expected blended annual rate.

RESULTS OF OPERATIONS

The following table sets forth our operating results, expressed as a
percentage of net sales, for the periods indicated.

VANS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

|                                  |                                          |                                                                             |                          |      |                      |      |            |      |     |      | 
|--------------------------------- | ---------------------------------------- | --------------------------------------------------------------------------- | ------------------------ | ---- | -------------------- | ---- | ---------- | ---- | --- | ---- | 
|                                  |                                          |                                                                             |                          |      | THIRTEEN WEEKS ENDED
|                                  |                                          |                                                                             |                          |      |                     
|                                  |                                          |                                                                             |                          |      | AUGUST 30,           |      | AUGUST 31,
|                                  |                                          |                                                                             |                          |      | 2003                 |      | 2002      
|                                  |                                          |                                                                             |                          |      |                      |      |           
|Retail sales                      |                                          |                                                                             | 28.7                     |      |                      |      | 28.1       |     
|National sales                    |                                          |                                                                             | 41.8                     |      |                      |      | 45.1       |     
|International sales               |                                          |                                                                             | 29.5                     |      |                      |      | 26.8       |     
|                                  |                                          |                                                                             |                          |      |                      |      |            |     
|Net sales                         |                                          |                                                                             | 100.0                    | %    |                      |      | 100.0      | %   
|Cost of sales                     |                                          |                                                                             | 54.3                     |      |                      |      | 58.5       |     
|                                  |                                          |                                                                             |                          |      |                      |      |            |     
|Gross profit                      |                                          |                                                                             | 45.7                     |      |                      |      | 41.5       |     
|Operating expenses:               |                                          |                                                                             |                          |      |                      |      |            |     
|                                  | Retail                                   |                                                                             |                          | 13.0 |                      |      |            | 13.4 |    
|                                  | Marketing, advertising and promotion     |                                                                             |                          | 7.7  |                      |      |            | 8.6  |    
|                                  | Selling, distribution and administrative |                                                                             |                          | 12.7 |                      |      |            | 12.0 |    
|                                  | Lease termination costs                  |                                                                             |                          | 1.5  |                      |      |            | 0.0  |    
|                                  | Amortization of intangibles              |                                                                             |                          | 0.1  |                      |      |            | 0.2  |    
|                                  |                                          |                                                                             |                          |      |                      |      |            |     
|                                  |                                          |                                                                             | Total operating expenses |      |                      | 35.0 |            |      |     | 34.2 | 
|                                  |                                          |                                                                             |                          |      |                      |      |            |     
|                                  |                                          | Income from operations                                                      |                          |      | 10.7                 |      |            |      | 7.3 |     
|Interest (income), net            |                                          |                                                                             | 0.0                      |      |                      |      | (0.2       | )   
|Other
(income) expense, net       |                                          |                                                                             | (0.1                     | )    |                      |      | 0.6        |     
|                                  |                                          |                                                                             |                          |      |                      |      |            |     
|                                  |                                          | Income from continuing operations
before income taxes and minority
interest |                          |      | 10.8                 |      |            |      | 6.9 |     
|Income tax expense                |                                          |                                                                             | 1.0                      |      |                      |      | 2.1        |     
|Minority interest                 |                                          |                                                                             | 0.8                      |      |                      |      | 0.3        |     
|                                  |                                          |                                                                             |                          |      |                      |      |            |     
|Income from continuing operations |                                          |                                                                             | 9.0                      |      |                      |      | 4.5        |     
|Loss from discontinued operations |                                          |                                                                             | (3.8                     | )    |                      |      | (0.1       | )   
|Net income                        |                                          |                                                                             | 5.1                      | %    |                      |      | 4.4        | %   
|                                  |                                          |                                                                             |                          |      |                      |      |            |     

QUARTERLY PERIOD ENDED AUGUST 30, 2003 (Q1 FISCAL 2004), AS COMPARED TO
QUARTERLY PERIOD ENDED AUGUST 31, 2002 (Q1 FISCAL 2003)

Net Sales

Net sales for Q1 Fiscal 2004 increased 4.6% to $129.0 million from $123.3
million for Q1 Fiscal 2003 and included a 13.7% year-over-year
increase in comparable store sales worldwide (excluding revenues from
concessions and skate sessions at our skateparks). The sales increase was the net effect of increases
in Retail and International sales, favorable variances in foreign exchange
rates, and a decrease in National sales, as discussed below.

Retail.Retail sales, which consist solely of sales through our U.S.
retail stores and skatepark sessions and concessions, increased 7.0% to $37.1
million in Q1 Fiscal 2004 from $34.6 million in Q1 Fiscal 2003. This increase
was driven by a year-over-year increase in comparable U.S. store sales (excluding
revenue from concessions and skate sessions at our skateparks) of 12.8%. The comparable store sales increase was fueled by growth in all genders
of footwear as well as apparel. Comparable revenues from concessions and skate
sessions at our skateparks, including three parks that were closed during the
quarter, declined 36.5% year-over-year.

Since the beginning of Q1 Fiscal 2004, we have reduced our U.S. retail
store count by four stores to 153 total stores as a result of closing three
skateparks and the net closing of one store. As discussed above under the
caption Recent Developments In Our Exit from the Skatepark Business, we
currently plan to keep open one or two skateparks primarily to promote brand
awareness, and to close all other parks over the next 24 months.

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National.National sales, which include all U.S. sales except sales
through our U.S. retail stores, decreased 3.0% to $53.9 million in Q1 Fiscal
2004 from $55.6 million in Q1 Fiscal 2003. This decrease was primarily due to
a 7.8% decrease in average selling prices year-over-year, partly offset by a
2.9% increase in units sold. The strongest increases in unit sales were in our
womens footwear business and apparel. Additionally, we had an approximately
$900,000, or 11.5%, year-over-year increase in revenues from the VANS Warped
Tour®.

International.International sales, which include sales through our seven
European stores, increased 14.9% to $38.0 million in Q1 Fiscal 2004 from $33.1
million in Q1 Fiscal 2003. This increase was primarily due to a $4.4 million
increase in European sales and an approximately $800,000 increase in sales in
Mexico and South America. The $4.4 million sales increase in Europe included a
$3.4 million favorable variance in exchange rates and $1.0 million of sales
growth. The sales growth resulted from an 11% increase in units sold, partially
offset by a 6% decrease in local currency average selling prices.

Gross Profit

Gross profit increased 15.3% to $58.9 million in Q1 Fiscal 2004 from $51.1
million in Q1 Fiscal 2003. As a percentage of net sales, gross profit
increased to 45.7% for Q1 Fiscal 2004, versus 41.5% for Q1 Fiscal 2003 as a
result of improved gross margins in the national and international sales
channels, partly offset by decreased retail gross margins. Domestically,
retail gross profit decreased slightly as a percentage of sales from 57.0% in
Q1 Fiscal 2003 to 56.6% in Q1 Fiscal 2004 as a result of decreased skatepark
session revenues and decreased average selling prices. National gross profits increased as a percentage
of sales from 29.7% in Q1 Fiscal 2003 to 31.9% in Q1 Fiscal 2004 largely due to
increased margin contribution from the VANS Warped Tour® in Q1 Fiscal 2004 and
a reduction in wholesale markdowns versus those taken in Q1 Fiscal 2003. Internationally, gross profit
increased as a percentage of sales from 45.1% in Q1 Fiscal 2003 to 54.6% in Q1
Fiscal 2004 driven primarily by favorable fluctuations in exchange rates
between the euro and U.S. dollar and increased license income from Japan.

Income from Operations

We had income from operations of $13.8 million in Q1 Fiscal 2004 versus
$9.0 million in Q1 Fiscal 2003. Operating expenses in Q1 Fiscal 2004 increased
7.2% to $45.1 million versus $42.1 million in Q1 Fiscal 2003 largely due to
$2.0 million of skatepark lease termination costs incurred in Q1 Fiscal 2004.
See Recent Developments in Our Exit from the Skatepark Business, above. As a
percentage of sales, operating expenses increased to 35.0% versus 34.2% a year
ago. The material components of the increase in operating expenses are
discussed below.

Retail.Retail expenses increased slightly to $16.8 million in Q1 Fiscal
2004 versus $16.5 million in Q1 Fiscal 2003 primarily due to the net addition
of one store since the beginning of Fiscal 2003.

Marketing, advertising and promotion.Marketing, advertising and
promotion expenses decreased 7.7% to $9.8 million in Q1 Fiscal 2004 from $10.7
million in Q1 Fiscal 2003, primarily due to planned decreases in promotional
activities related to trade shows and the VANS Triple Crown Series.

Selling, distribution and administrative.Selling, distribution and
administrative expenses increased 10.9% to $16.4 million in Q1 Fiscal 2004 from
$14.7 million in Q1 Fiscal 2003, primarily due to (i) net increased costs of
approximately $400,000 related to our European business, (ii) an increase of
approximately $700,000 in performance-related compensation expense in Q1 Fiscal
2004, and (iii) approximately $500,000 of employee severance costs incurred in
Q1 Fiscal 2004. The net increase in costs related to our European business was
a result of an approximately $800,000 increase related to changes in exchange
rates between European currencies, primarily the Euro, and the U.S. dollar,
offset by approximately $400,000 in reduced costs on a constant dollar basis,
which resulted primarily from reduced inventory storage costs.

Lease termination costs.Please see the discussion of these costs under
the caption Recent Developments in Our Exit from the Skatepark Business.

Amortization of intangibles.Amortization of intangibles decreased
slightly to $167,000 in Q1 Fiscal 2004 compared to $188,000 in Q1 Fiscal 2003,
as a result of certain assets acquired in the Pro-tec acquisition being
completely amortized in Fiscal 2003.

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Interest (Income), Net

Interest
(income), net decreased 78.0% to $59,000 in Q1 Fiscal 2004 from
$268,000 in Q1 Fiscal 2003, primarily due to lower interest rates received on
monies invested by us.

Other (Income) Expense, Net

Other (income) expense, net, primarily consists of royalty payments
received from the non-footwear related licensing of our trademarks, exchange
rate gains and losses, and rental income. Other (income) expense, net,
increased to $78,000 of income for Q1 Fiscal 2004 from $762,000 of expense for
Q1 Fiscal 2003, primarily due to the non-recurrence of foreign currency
transaction losses that occurred in Q1 Fiscal 2003 related to our business in
Brazil and Argentina and a decrease in losses generated on unhedged U.S. dollar
denominated transactions within our European business.

Income Tax Expense

Income tax expense decreased to $1.3 million in Q1 Fiscal 2004 from $2.6
million in Q1 Fiscal 2003, as a result of a lower
effective tax rate. Our effective tax rate was 9.4% in Q1 Fiscal 2004 versus
30.3% in Q1 Fiscal 2003. The decrease in our effective tax rate was due to
substantially all of our Q1 Fiscal 2004 taxable income being generated offshore
in lower tax rate jurisdictions. In future periods, we expect our effective
tax rate to fluctuate as the mix between taxable income generated in U.S. and
foreign jurisdictions changes. In that regard, we expect our effective tax
rate to increase for the remainder of Fiscal 2004 to a range of approximately
26% to 29%. See Critical Accounting Policies  Taxes.

Minority Interest

Minority
interest increased 187.6% to $1.1 million in Q1 Fiscal 2004 from
$371,000 in Q1 Fiscal 2003, primarily as a result of increased income produced
by the VANS Warped Tour® in Q1 Fiscal 2004.

Loss from Discontinued Operations, Net of Tax

As
discussed more fully above under the caption Recent Developments in
Our Exit from the Skatepark Business, in Fiscal 2003 we made the decision to
substantially exit the skatepark business. Discontinued operations for all
periods presented include the results of operations for the four skateparks
that had been closed as of August 30, 2003. Losses from discontinued
operations increased to $4.9 million in Q1 Fiscal 2004 from $152,000 in Q1
Fiscal 2003 primarily as a result of lease termination charges of $4.7 million
incurred in connection with two of the three skateparks that were closed in Q1
Fiscal 2004. As we close additional skateparks in the future, the related
operating results will be recast as discontinued operations in the consolidated
statements of operations for all periods presented.

Liquidity and Capital Resources

Cash Flows

We have historically financed our operations with a combination of cash
flows from operations, borrowings under credit facilities and the sale of
equity securities. At August 30, 2003, we had $116.5 million in working
capital and $52.5 million in cash and cash equivalents. This compares to
working capital of $106.1 million and cash and cash equivalents of $52.8
million at May 31, 2003. Our working capital increased in Q1 Fiscal 2004
primarily as a result of: (i) the receipt of $5.1 million as payoff of a note
receivable held in connection with the sale of our former Orange, California
manufacturing facility; and (ii) Q1 Fiscal 2004 net income of $6.6 million.

During Q1 Fiscal 2004 operating activities used $2.3 million of cash,
including a usage of $1.8 million of cash in connection with discontinued
operations, versus $263,000 of cash provided by operating activities in Q1
Fiscal 2003, which included cash of $25,000 provided by discontinued
operations. The net decrease in operating cash flow from continuing operations
was the result of a $6.0 million increase in income from continuing operations,
a higher reduction in inventory balances in the current quarter compared to the
same period last year, offset by a smaller increase in prepaid expenses in the
current quarter compared to the same period last year and lease termination
costs incurred in the current quarter.

Accounts receivable increased $26.0 million to $51.6 million during Q1
Fiscal 2004, and inventory levels decreased from $64.0 million
at May 31, 2003,
to $49.3 million at August 30, 2003, primarily due to the seasonal increase in
our U.S. wholesale business in

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connection with the back-to-school selling season. Compared to a year
ago, our inventory levels have increased 14.5%. This increase was the result
of both growth in the business and being under-inventoried in our
retail stores a year ago. On average, in Q1 Fiscal 2004, we increased
inventory levels at our U.S. retail stores 22.8% over a year ago, which allowed
us to better service our retail customers. Combined with increased focus in
our womens shoe business and apparel, this led to a 13.7% comparable store
sales increase in Q1 Fiscal 2004.

In connection with our exiting the skatepark business, as more fully
discussed under the caption Recent Developments in Our Exit from the Skatepark
Business, in Q1 Fiscal 2004 we had a net reduction of $7.5 million in lease
termination liabilities as a result of the payment of lease termination costs
for skateparks that we will be closing. In total, we paid $9.1 million during
Q1 Fiscal 2004 in connection with lease termination costs to exit the skatepark
business. Of the amounts paid $1.5 million related to skateparks classified as
discontinued operations in the accompanying condensed consolidated financial
statements. At August 30, 2003, our balance sheet includes lease termination
liabilities of $798,000 and liabilities held in connection with disposal
activities aggregating $5.0 million, which represents lease termination
liabilities related to skateparks classified as discontinued operations. We
expect to incur additional lease termination costs as we conclude negotiations
at skateparks for which we have not yet finalized lease termination agreements.

Investing activities provided cash of $3.8 million in Q1 Fiscal 2004
primarily as a result of the repayment of the $5.1 million note receivable
described above. This was partially offset by $1.1 million in capital
expenditures and $201,000 paid in connection with the purchase of certain of
the assets and liabilities of Max MadHouse. In Q1 Fiscal 2003 investing
activities provided $13.2 million, due mainly to net sales of marketable debt
securities of $19.3 million offset by capital expenditures of $5.2 million and
$982,000 paid in connection with the acquisition of Sunspot. Capital
expenditures were higher in Q1 Fiscal 2003 than in Q1 Fiscal 2004 as a result
of new retail store and skatepark openings.

Cash used in financing activities was $216,000 in Q1 Fiscal 2004, which
was primarily the net result of cash outflows of $275,000 in dividends paid to
a minority shareholder of one of our subsidiaries, partially offset by $70,000
in proceeds from the issuance of common stock. In Q1 Fiscal 2003, financing
activities used $2.6 million in cash, primarily consisting of
$2.2 million in
net cash outflows to purchase common stock pursuant to our stock repurchase
program, $240,000 in net repayments of long-term debt and $198,000 in dividends
paid to the minority shareholder of one of our subsidiaries.

The following table summarizes our contractual payment obligations and
commitments as of August 30, 2003:

|                           |       |   |                                                   |        |      |   |        |        |      |   |        |        |            |   |       |       |  |   |       |       |  |   |        |        |  |   |        |        | 
|-------------------------- | ----- | - | ------------------------------------------------- | ------ | ---- | - | ------ | ------ | ---- | - | ------ | ------ | ---------- | - | ----- | ----- |  | - | ----- | ----- |  | - | ------ | ------ |  | - | ------ | ------ | 
|                           |       |   | PAYMENT OBLIGATIONS BY FISCAL YEAR (IN THOUSANDS)
|                           |       |   |                                                  
|                           |       |   | 2004                                              |        | 2005 |   | 2006   |        | 2007 |   | 2008   |        | THEREAFTER |   | TOTAL
|                           |       |   |                                                   |        |      |   |        |        |      |   |        |        |            |   |      
|Operating leases           |       | $ | 10,230                                            |        |      | $ | 11,981 |        |      | $ | 10,090 |        |            | $ | 9,587 |       |  | $ | 7,742 |       |  | $ | 16,312 |        |  | $ | 65,942 |       
|Long-term debt             |       |   | 117                                               |        |      |   | 2,130  |        |      |   | 5      |        |            |   | 5     |       |  |   | 5     |       |  |   | 250    |        |  |   | 2,512  |       
|Athlete license agreements |       |   | 1,383                                             |        |      |   | 902    |        |      |   | 397    |        |            |   | 142   |       |  |   |      |       |  |   |       |        |  |   | 2,824  |       
|                           |       |   |                                                   |        |      |   |        |        |      |   |        |        |            |   |       |       |  |   |       |       |  |   |        |        |  |   |        |       
|                           | Total |   | $                                                 | 11,730 |      |   | $      | 15,013 |      |   | $      | 10,492 |            |   | $     | 9,734 |  |   | $     | 7,747 |  |   | $      | 16,562 |  |   | $      | 71,278 | 
|                           |       |   |                                                   |        |      |   |        |        |      |   |        |        |            |   |       |       |  |   |       |       |  |   |        |        |  |   |        |       

At August 30, 2003, we had firm commitments to purchase inventory in the
amount of $11.4 million during the second and third quarters of Fiscal 2004.
These commitments included contingent liabilities under open letters of credit
with foreign suppliers aggregating $1.4 million.

Borrowings

We maintain a $20.0 million credit facility, which enables us to obtain
advances for the issuance of commercial letters of credit and standby letters
of credit. Outstanding letters of credit are secured by our cash balances.
This facility matures on May 1, 2004. As of August 30, 2003, $1.4 million in
open commercial letters of credit were outstanding under this facility.

Vans Latinoamericana, our subsidiary for Mexico, maintains a note payable
to Tavistock Holdings A.G., a 49.99% owner of Vans Latinoamericana. The loans
evidenced by the note were made by Tavistock pursuant to a shareholders
agreement requiring Tavistock to provide operating capital, on an as-needed
basis, in the form of loans to Vans Latinoamericana. At August 30, 2003, the
aggregate outstanding balance under the note was $2.1 million.

Share Repurchase Program

On September 21, 2001, we adopted a 1.0 million share repurchase program.
Through the date of this report, we have repurchased 555,700 shares under the
program for an aggregate of $3.3 million. We did not repurchase any stock
under the program in Q1 Fiscal 2004.

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Capital Expenditures

Our future commitments for capital expenditures are primarily related to
the opening and remodeling of retail stores, including a planned opening of a
store on Carnaby Street in London in the second quarter of Fiscal 2004. In
addition to this new store, we plan to open one store and remodel,
re-size or relocate 12 existing stores during the remainder of Fiscal 2004. We estimate
the aggregate cost of these openings, remodels and relocations to be
approximately $3.9 million.

Capital Resources

Our liquid asset position at August 30, 2003, consisted of cash and cash
equivalents of $52.5 million. This compares to cash and cash equivalents of
$52.8 million at May 31, 2003. We believe our capital resources will be
sufficient to fund our operations and capital expenditures and anticipated
growth plan for the foreseeable future.*

RECENT ACCOUNTING PRONOUNCEMENTS

In July 2002, the FASB issued SFAS No. 146, Accounting For Costs
Associated With Exit or Disposal Activities (SFAS 146), which addresses
financial accounting and reporting for costs associated with exit or disposal
activities and nullifies EITF Issue No. 94-3, Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)
(EITF 94-3). SFAS 146 is effective
for exit or disposal activities that are initiated after December 31, 2002. As
a result of the implementation of SFAS 146, the accounting for amounts recorded
in connection with our decision to substantially exit the skatepark business
was materially impacted. Under the guidance of EITF 94-3, we would have
recorded as an expense during the year ended May 31, 2003 (the period in which
management committed to an exit plan for the skateparks), an estimate of
certain costs that would be directly incurred in connection with skatepark
closures. The most significant element of these costs is lease termination
charges. With the implementation of SFAS 146, costs associated with exit
activities are to be recorded in the period in which they are incurred. In the
case of lease termination costs, this is the period in which we enter into an
agreement with the landlord. Accordingly, our future consolidated results of
operations will include lease termination charges in the periods in which we
enter into an agreement. Additionally, other direct costs associated with
closing skateparks will be expensed in future periods as they are incurred.

In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure (SFAS 148), which
permits two additional transition methods for companies that elect to adopt the
fair-value-based method of accounting for stock-based employee compensation.
The statement also expands the disclosure requirements for stock-based
compensation. The provisions of this statement apply to financial statements
for fiscal years ending after December 15, 2002. The adoption of SFAS 148 had
no material financial impact to our consolidated financial statements. We have
provided the additional disclosures required by SFAS 148 for the thirteen-week
periods ended August 30, 2003, and August 31, 2002, in Note 1 to the Condensed
Consolidated Financial Statements.

In January 2003, the FASB issued FIN No. 46, Consolidation of Variable
Interest Entities (FIN 46). FIN 46 requires a company to consolidate a
variable interest entity if it is designated as the primary beneficiary of that
entity even if the company does not have a majority of voting interests. A
variable interest entity is generally defined as an entity that has
insufficient equity to finance its activities or the owners of the entity lack
the risk and rewards of ownership. The provisions of this statement apply at
inception for any entity created after January 31, 2003. For an entity created
before February 1, 2003, the provisions of this Interpretation must be applied
at the beginning of the first interim or annual period beginning after June 15,
2003. We will adopt the provisions of FIN 46 in the quarter ending November 29,
2003, for existing entities that are within the scope of this Interpretation.
The statement also has disclosure requirements, some of which are required to
be included in financial statements issued after January 31, 2003. Since we do
not currently have any variable interest entities, the adoption of the
provisions of FIN 46 is not expected to have a material impact on our financial
position or results of operations.



---

|* |  | Note: This is a forward-looking statement. Our actual cash requirements could
differ materially. Important factors that could cause our need for
additional capital to change include: (i) the aggregate amount of cash we
spend in connection with terminations and/or restructuring of leases for
our skateparks; (ii) our rate of growth; (iii) the number of new stores we
decide to open and the number of store remodels we undertake; (iv) the
amount of stock we repurchase under our repurchase program; (v) our
ability to effectively manage our inventory levels; (vi) timing
differences in payment for our foreign-sourced product; (vii) slowing in
the U.S., California or global economies which could materially impact our
business; and (viii) the ability to repatriate cash held in our European
subsidiaries to the United States without paying a significant amount of
U.S. taxes thereon.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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SEASONALITY

The following table contains unaudited selected quarterly financial data
for the eight quarters ended August 30, 2003, and this data as a percentage of
net sales. In the opinion of management, this unaudited information has been
prepared on the same basis as the audited information and includes all
adjustments necessary to fairly present the information set forth therein.
Results of a particular quarter are not necessarily indicative of the results
for any subsequent quarter.

UNAUDITED CONSOLIDATED QUARTERLY RESULTS
(DOLLARS IN THOUSANDS)

|                              |                                                        |  |               |         |               |  |          |         |              |  |            |        |          |  |          |        |             |  |   |         |    |  |   |         |    |  |   |        |    |  |   |        |   
|----------------------------- | ------------------------------------------------------ |  | ------------- | ------- | ------------- |  | -------- | ------- | ------------ |  | ---------- | ------ | -------- |  | -------- | ------ | ----------- |  | - | ------- | -- |  | - | ------- | -- |  | - | ------ | -- |  | - | ------ | --
|                              |                                                        |  | QUARTER ENDED |         | QUARTER ENDED
|                              |                                                        |  |               |         |              
|                              |                                                        |  | AUGUST 30,    |         | MAY 31,       |  | MARCH 1, |         | NOVEMBER 30, |  | AUGUST 31, |        | MAY 31,  |  | MARCH 2, |        | DECEMBER 1,
|                              |                                                        |  | 2003 (a)      |         | 2003 (b)      |  | 2003 (c) |         | 2002         |  | 2002       |        | 2002 (d) |  | 2002     |        | 2001       
|                              |                                                        |  |               |         |               |  |          |         |              |  |            |        |          |  |          |        |            
|STATEMENT OF
OPERATIONS DATA: |                                                        |  |               |         |               |  |          |         |              |  |            |        |          |  |          |        |             |  |   |         |    |  |   |         |    |  |   |        |    |  |   |       
|                              | Net sales                                              |  | $             | 128,971 |               |  | $        | 62,563  |              |  | $          | 80,946 |          |  | $        | 59,638 |             |  | $ | 123,278 |    |  | $ | 62,631  |    |  | $ | 80,412 |    |  | $ | 67,219 |   
|                              | Gross profit                                           |  |               | 58,936  |               |  |          | 29,341  |              |  |            | 38,290 |          |  |          | 28,343 |             |  |   | 51,128  |    |  |   | 25,176  |    |  |   | 36,485 |    |  |   | 32,411 |   
|                              | Income (loss) from
continuing
operations               |  |               | 11,555  |               |  |          | (19,571 | )            |  |            | (7,272 | )        |  |          | (3,343 | )           |  |   | 5,573   |    |  |   | (11,070 | )  |  |   | 568    |    |  |   | 652    |   
|                              | Income (loss) from
discontinued
operations, net of
tax |  |               | (4,927  | )             |  |          | (3,005  | )            |  |            | (1,934 | )        |  |          | (323   | )           |  |   | (152    | )  |  |   | (3,864  | )  |  |   | (85    | )  |  |   | (139   | ) 
|                              | Net income (loss)                                      |  |               | 6,628   |               |  |          | (22,576 | )            |  |            | (9,206 | )        |  |          | (3,666 | )           |  |   | 5,421   |    |  |   | (14,934 | )  |  |   | 483    |    |  |   | 513    |   
|AS A PERCENTAGE OF
NET SALES: |                                                        |  |               |         |               |  |          |         |              |  |            |        |          |  |          |        |             |  |   |         |    |  |   |         |    |  |   |        |    |  |   |       
|                              | Net sales                                              |  |               | 100     | %             |  |          | 100     | %            |  |            | 100    | %        |  |          | 100    | %           |  |   | 100     | %  |  |   | 100     | %  |  |   | 100    | %  |  |   | 100    | % 
|                              | Gross profit                                           |  |               | 46      |               |  |          | 47      |              |  |            | 47     |          |  |          | 48     |             |  |   | 41      |    |  |   | 40      |    |  |   | 45     |    |  |   | 48     |   
|                              | Income (loss) from
continuing
operations               |  |               | 9       |               |  |          | (31     | )            |  |            | (9     | )        |  |          | (6     | )           |  |   | 5       |    |  |   | (18     | )  |  |   | 1      |    |  |   | 1      |   
|                              | Income (loss) from
discontinued
operations, net of
tax |  |               | (4      | )             |  |          | (5      | )            |  |            | (2     | )        |  |          | (1     | )           |  |   | 0       |    |  |   | (6      | )  |  |   | 0      |    |  |   | 0      |   
|                              | Net income                                             |  |               | 5       |               |  |          | (36     | )            |  |            | (11    | )        |  |          | (6     | )           |  |   | 4       |    |  |   | (24     | )  |  |   | 1      |    |  |   | 1      |   
|                              | Comparable store
sales Increase
(decrease)             |  |               | 13.7    | %             |  |          | 9.0     | %            |  |            | (6.6   | )%       |  |          | (9.3   | )%          |  |   | (4.9    | )% |  |   | (7.4    | )% |  |   | (5.1   | )% |  |   | (8.9   | )%



|(a) |  | Included in income (loss) from continuing operations and net income
(loss) are lease termination costs aggregating $1,972 and $6,659,
respectively.                                                                                                                           
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Included in income (loss) from continuing operations and net income
(loss) are asset impairment charges aggregating $1,209 and $1,213,
respectively; goodwill impairment charges aggregating $4,550; and lease
termination costs aggregating $7,893 and $10,506, respectively.
|   
|(c) |  | Included in income (loss) from continuing operations and net income
(loss) are asset impairment charges aggregating $12,509 and $15,338,
respectively.                                                                                                                        
|   
|(d) |  | Included in income (loss) from continuing operations and net income
(loss) are asset impairment charges aggregating $1,612 and $6,579,
respectively.                                                                                                                          

Our business is seasonal, with the largest percentage of net income and
U.S. sales realized in the first fiscal quarter (June through August), the
back to school selling months. In addition to seasonal fluctuations, our
operating results fluctuate quarter-to-quarter as a result of the timing of
marketing expenditures and holidays, weather, timing of shipments, product mix,
cost of materials and the mix between wholesale and retail channels. Because of
such fluctuations, the results of operations of any quarter are not necessarily
indicative of the results that may be achieved for a full fiscal year or any
future quarter. In addition, there can be no assurance that our future results
will be consistent with past results or the projections of securities analysts.




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our exposure to market risk associated with changes in interest rates
relates primarily to our cash and cash equivalents. At August 30, 2003, we held
$52.5 million in cash and cash equivalents. Cash equivalents consist of highly
liquid investments in federal treasury securities, commercial paper and money
market time deposits with original maturities of three months or less. Due to
the relatively short-term nature of our cash equivalents, cost approximates
fair value. We do not use derivative or other financial instruments to

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hedge interest rate risks. A 1% decline in the annual yield on cash and
cash equivalents would decrease our interest income by approximately $525,000.

Foreign Currency Risk

We operate our business and sell our products in a number of countries
throughout the world and, as a consequence, we are exposed to movements in
foreign currency exchange rates between the local currencies of the foreign
markets in which we operate and the U.S. dollar. Our foreign currency exposure
is generally related to Europe, Mexico and Japan.

Our primary foreign exchange risk arises from purchases of inventory in
U.S. dollars by our European subsidiaries, whose functional currencies are the
euro and British sterling. To hedge this risk, we utilize forward foreign
exchange contracts and/or foreign currency options with durations of generally
from three to twelve months. We generally hedge a substantial portion of our
projected exposure from inventory purchases for the coming 6 to 12 months. As
of August 30, 2003, we had $14.9 million outstanding in foreign exchange
forward contracts to hedge the euro against the U.S. dollar, at an average
contract rate of $1.13 per euro. Net unrealized gains/losses on foreign
exchange contracts at August 30, 2003, aggregated a gain of $320,000, all of
which is included in accumulated other comprehensive income and is expected to
be reclassified into earnings within the next twelve months as the inventory
related to the foreign exchange contacts is sold. During the period from
August 31, 2003, through October 7, 2003, we entered into additional forward
contracts aggregating $4.7 million to hedge the U.S. dollar against the euro,
at an average contract rate of $1.15 per euro. These additional contracts are
to hedge a portion of projected inventory purchases that will occur during the
remainder of Fiscal 2004 and the first quarter of Fiscal 2005.

During the period from August 31, 2003, through October 7, 2003, we also
entered into forward contracts aggregating $1.8 million to hedge the U.S.
dollar against the Japanese yen, at an average contract rate of 111.05 yen per
U.S. dollar. These forward contracts were entered into to hedge projected
future cash flows in connection with certain royalty payments to be received
from our licensee for Japan during the remainder of Fiscal 2004.

In addition to hedging inventory purchases and royalties, we may also
hedge other foreign currency cash flow and balance sheet exposures as they are
identified. We do not hold or issue derivative instruments for trading
purposes.

Our financial performance can be affected by fluctuations in the value of
the euro and British sterling when translating the financial statements of our
European subsidiaries into U.S. dollars. Revenues from euro-sourced and
sterling-sourced operations aggregated $22.9 million and $6.0 million,
respectively, for Q1 Fiscal 2004.




ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures designed to ensure that
information required to be disclosed in reports filed under the Securities and
Exchange Act of 1934, as amended (the Exchange Act), is recorded, summarized
and processed within time periods specified in the SECs rules and forms. As
of the end of the period covered by this report (the Evaluation Date), we
carried out an evaluation, under the supervision and with the participation of
management, including our President and Chief Executive Officer and our Vice
President and Chief Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to Rule 13a-14
under the Exchange Act. Based upon this evaluation, our President and Chief
Executive Officer and our Vice President and Chief Financial Officer concluded
that, as of the Evaluation Date, our disclosure controls and procedures were
effective under Rule 13a-14.

There has been no change in our internal controls over financial reporting
during our most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, our internal controls over financial
reporting.

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PART II
OTHER INFORMATION




ITEM 1. LEGAL PROCEEDINGS

Vans, Inc. vs. Scott Brabson, Gordana Brabson, Jay Rosendahl, Heidi
Rosendahl, et al, Superior Court for the County of Los
Angeles, Case No. BC27031.The allegations we have made in this case, the companion arbitration,
and the resulting arbitration award are described in our Annual Report on Form
10-K for Fiscal 2003, which is filed with the Securities and Exchange
Commission. No material changes in the status of these matters occurred in Q1
Fiscal 2004.

Gordana Brabson vs. Vans, Inc. et. al, Superior Court of California,
County of Santa Barbara, Case No. 01110315. This lawsuit was filed against
Vans, two of Vans executive officers, and certain other individuals and
entities on December 6, 2002, in connection with a lawsuit filed by us against
the plaintiff, her husband and other individuals and entities in which we
alleged that they engaged in a conspiracy to obtain unauthorized payments from
certain of our factories in China. Mrs. Brabson alleged causes of action for
invasion of privacy, trespass, and intentional infliction of emotional distress
relating to the investigation conducted in connection with that litigation. An
agreement to settle this case was reached in Q1 Fiscal 2004, and settlement
documents are being prepared. The terms of the settlement are confidential.
The settlement of this case will not have a material adverse impact on our
future results of operations or financial condition.

Franklin C. Ferrana a/k/a Nikki Sixx vs. Vans, Inc., High Speed
Productions, Inc. d/b/a Thrasher Magazine, Superior Court for the County of Los
Angeles, Case No. BC303262.This lawsuit was filed on September 30, 2003, and
alleges that Vans and Thrasher Magazine misappropriated the image of the
plaintiff in an advertisement. The complaint seeks compensatory damages in
excess of $1.0 million, disgorgement of profits, and punitive damages. We have
not yet filed an answer in this matter and intend to vigorously defend
ourselves.

In addition to the foregoing, from time to time we are the subject of
claims in the ordinary course of our business.




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



|(a) |  | Exhibits.
|--- |  | ---------

|     |  |                                                                                                                                             
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of Scott J. Blechman Pursuant to Rule 13a-14(a) under
the Securities Exchange Act of 1934, as amended                         
|     |  |                                                                                                                                             
|31.2 |  | Certification of Gary H. Schoenfeld Pursuant to Rule 13a-14(a)
under the Securities Exchange Act of 1934, as amended                        
|     |  |                                                                                                                                             
|32.1 |  | Certification of Scott J. Blechman Pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 
|     |  |                                                                                                                                             
|32.2 |  | Certification of Gary H. Schoenfeld Pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002



|(b) |  | Reports on Form 8-K. We filed two reports on Form 8-K during the
quarterly period ended August 30, 2003. The first report was dated July
17, 2003, and disclosed our financial information for the fourth quarter
of Fiscal 2003 and the full-year Fiscal 2003, and the second report was
dated August 13, 2003 and disclosed the resignation of Andrew J.
Greenebaum as our Chief Financial Officer and certain other Regulation FD
information.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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SIGNATURES

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.

|                      |  |              |  |                                             
|--------------------- |  | ------------ |  | --------------------------------------------
|                      |  | VANS, INC.  
|                      |  | (Registrant)
|                      |  |              |  |                                             
|Date: October 8, 2003 |  | By:          |  | /s/ Gary H. Schoenfeld                      
|                      |  |              |  | GARY H. SCHOENFELD                          
|                      |  |              |  | President and Chief Executive Officer       
|                      |  |              |  |                                             
|Date: October 8, 2003 |  | By:          |  | /s/ Scott J. Blechman                       
|                      |  |              |  | SCOTT J. BLECHMAN                           
|                      |  |              |  | Vice President and Chief Financial Officer  
|                      |  |              |  | (Principal Financial and Accounting Officer)

23