##### Table of Contents



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 March 2, 2002 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
of Incorporation or Organization) |  | 33-0272893
(I.R.S. Employer
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:
18,395,765 shares
of Common Stock, $.001 par value, as of April 15, 2002.





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TABLE OF CONTENTS



|                             |                                                                                               |                                                      |  |  |  |  |  | 
|---------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION
|                             | ITEM 1. FINANCIAL STATEMENTS.                                                                
|                             |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS               
|                             |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS       
|                             |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                             |                                                                                               | NOTES TO CONDENSED CONSOLIDATED 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                           
|PART II                     
|OTHER INFORMATION           
|                             | ITEM 1. LEGAL PROCEEDINGS                                                                    
|                             | ITEM 5. OTHER INFORMATION                                                                    
|                             | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                  
|EXHIBIT 10.1                
|EXHIBIT 10.2                
|EXHIBIT 10.3                



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##### Table of Contents






PART I
FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS.




VANS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 2, 2002 (UNAUDITED) AND MAY 31, 2001

|                                                                                                                                                                      |                                                                                                                                           |   |                            |            |   |             |             |            |   |             |  | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------- | - | -------------------------- | ---------- | - | ----------- | ----------- | ---------- | - | ----------- |  | 
|                                                                                                                                                                      |                                                                                                                                           |   |                            |            |   | MARCH 2,    |             | MAY 31,   
|                                                                                                                                                                      |                                                                                                                                           |   |                            |            |   | 2002        |             | 2001      
|                                                                                                                                                                      |                                                                                                                                           |   |                            |            |   |             |             |           
|ASSETS                                                                                                                                                               
|Current assets:                                                                                                                                                       |                                                                                                                                           |   |                            |            |   |             |             |           
|                                                                                                                                                                      | Cash and cash equivalents                                                                                                                 |   | $                          | 45,209,866 |   |             | $           | 59,747,584 |  
|                                                                                                                                                                      | Accounts receivable, net of allowance for doubtful accounts
of $1,941,035 and $2,078,600 at March 2, 2002, and May
31, 2001, respectively |   |                            | 45,515,561 |   |             |             | 38,133,438 |  
|                                                                                                                                                                      | Inventories                                                                                                                               |   |                            | 54,984,395 |   |             |             | 52,827,863 |  
|                                                                                                                                                                      | Deferred tax assets                                                                                                                       |   |                            | 3,296,964  |   |             |             | 3,681,825  |  
|                                                                                                                                                                      | Prepaid and other expenses                                                                                                                |   |                            | 16,180,371 |   |             |             | 14,564,517 |  
|                                                                                                                                                                      |                                                                                                                                           |   |                            |            |   |             |             |           
|                                                                                                                                                                      |                                                                                                                                           |   | Total current assets       |            |   | 165,187,157 |             |            |   | 168,955,227 | 
|                                                                                                                                                                      | Property, plant and equipment, net                                                                                                        |   |                            | 44,573,422 |   |             |             | 34,048,020 |  
|                                                                                                                                                                      | Trademarks and patents, net of accumulated amortization
of $529,452 and $377,549 at March 2, 2002, and
May 31, 2001, respectively         |   |                            | 4,238,189  |   |             |             | 2,139,437  |  
|                                                                                                                                                                      | Goodwill                                                                                                                                  |   |                            | 27,818,229 |   |             |             | 23,018,188 |  
|                                                                                                                                                                      | Other assets                                                                                                                              |   |                            | 9,192,021  |   |             |             | 8,798,793  |  
|                                                                                                                                                                      |                                                                                                                                           |   |                            |            |   |             |             |           
|                                                                                                                                                                      |                                                                                                                                           |   | Total Assets               |            | $ | 251,009,018 |             |            | $ | 236,959,665 | 
|                                                                                                                                                                      |                                                                                                                                           |   |                            |            |   |             |             |           
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                 
|Current liabilities:                                                                                                                                                  |                                                                                                                                           |   |                            |            |   |             |             |           
|                                                                                                                                                                      | Short-term borrowings                                                                                                                     |   | $                          | 2,313,052  |   |             | $           | 7,876,515  |  
|                                                                                                                                                                      | Accounts payable                                                                                                                          |   |                            | 14,283,079 |   |             |             | 13,130,377 |  
|                                                                                                                                                                      | Accrued payroll and related expenses                                                                                                      |   |                            | 6,565,387  |   |             |             | 8,450,569  |  
|                                                                                                                                                                      | Accrued interest                                                                                                                          |   |                            | 454,681    |   |             |             | 257,176    |  
|                                                                                                                                                                      | Restructuring costs                                                                                                                       |   |                            | 124,014    |   |             |             | 124,014    |  
|                                                                                                                                                                      | Income taxes payable                                                                                                                      |   |                            | 8,505,102  |   |             |             | 7,305,817  |  
|                                                                                                                                                                      |                                                                                                                                           |   |                            |            |   |             |             |           
|                                                                                                                                                                      |                                                                                                                                           |   | Total current liabilities  |            |   | 32,245,315  |             |            |   | 37,144,468  | 
|Deferred tax liabilities                                                                                                                                              |                                                                                                                                           |   | 4,113,207                  |            |   |             | 4,113,207   |           
|Long-term debt                                                                                                                                                        |                                                                                                                                           |   | 2,426,450                  |            |   |             | 2,347,972   |           
|                                                                                                                                                                      |                                                                                                                                           |   |                            |            |   |             |             |           
|                                                                                                                                                                      |                                                                                                                                           |   | Total Liabilities          |            |   | 38,784,972  |             |            |   | 43,605,647  | 
|                                                                                                                                                                      |                                                                                                                                           |   |                            |            |   |             |             |           
|Minority interest                                                                                                                                                     |                                                                                                                                           |   | 3,125,639                  |            |   |             | 2,876,157   |           
|Stockholders equity:                                                                                                                                                 |                                                                                                                                           |   |                            |            |   |             |             |           
|Preferred stock, $.001 par value, 5,000,000 shares authorized,
1,500,000 shares designated as Series A Participating Preferred
Stock, none issued and outstanding     |                                                                                                                                           |   |                           |            |   |             |            |           
|Common stock, $.001 par value, 40,000,000 shares authorized,
17,699,814 and 17,256,149 shares issued and outstanding at
March 2, 2002, and May 31, 2001, respectively |                                                                                                                                           |   | 17,699                     |            |   |             | 17,256      |           
|Accumulated other comprehensive loss                                                                                                                                  |                                                                                                                                           |   | (3,548,880                 | )          |   |             | (540,883    | )         
|Additional paid-in capital                                                                                                                                            |                                                                                                                                           |   | 180,524,347                |            |   |             | 171,234,630 |           
|Retained earnings                                                                                                                                                     |                                                                                                                                           |   | 32,105,241                 |            |   |             | 19,766,858  |           
|                                                                                                                                                                      |                                                                                                                                           |   |                            |            |   |             |             |           
|                                                                                                                                                                      |                                                                                                                                           |   | Total Stockholders Equity |            |   | 209,098,407 |             |            |   | 190,477,861 | 
|                                                                                                                                                                      |                                                                                                                                           |   |                            |            |   |             |             |           
|Total Liabilities and Stockholders Equity                                                                                                                            |                                                                                                                                           | $ | 251,009,018                |            |   | $           | 236,959,665 |           
|                                                                                                                                                                      |                                                                                                                                           |   |                            |            |   |             |             |           

See accompanying notes to condensed consolidated financial statements.

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VANS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
THIRTEEN WEEKS ENDED MARCH 2, 2002 AND FEBRUARY 24, 2001
(unaudited)

|                                                                                          |                                      |          |                          |                         |  |                      |            |              |  |            |            | 
|----------------------------------------------------------------------------------------- | ------------------------------------ | -------- | ------------------------ | ----------------------- |  | -------------------- | ---------- | ------------ |  | ---------- | ---------- | 
|                                                                                          |                                      |          |                          |                         |  | THIRTEEN WEEKS ENDED
|                                                                                          |                                      |          |                          |                         |  |                     
|                                                                                          |                                      |          |                          |                         |  | MARCH 2,             |            | FEBRUARY 24,
|                                                                                          |                                      |          |                          |                         |  | 2002                 |            | 2001        
|                                                                                          |                                      |          |                          |                         |  |                      |            |             
|Net sales                                                                                 |                                      | $        | 82,150,744               |                         |  | $                    | 80,865,183 |             
|Cost of sales                                                                             |                                      |          | 44,414,057               |                         |  |                      | 46,566,536 |             
|                                                                                          |                                      |          |                          |                         |  |                      |            |             
|                                                                                          |                                      |          | Gross profit             |                         |  | 37,736,687           |            |              |  | 34,298,647 |           
|Operating expenses:                                                                       |                                      |          |                          |                         |  |                      |            |             
|                                                                                          | Selling and distribution             |          |                          | 24,118,408              |  |                      |            | 19,932,663   | 
|                                                                                          | Marketing, advertising and promotion |          |                          | 8,284,341               |  |                      |            | 6,600,427    | 
|                                                                                          | General and administrative           |          |                          | 4,526,005               |  |                      |            | 3,215,164    | 
|                                                                                          | Provision for doubtful accounts      |          |                          | 105,001                 |  |                      |            | 306,541      | 
|                                                                                          | Amortization of intangibles          |          |                          | 61,991                  |  |                      |            | 428,349      | 
|                                                                                          |                                      |          |                          |                         |  |                      |            |             
|                                                                                          |                                      |          | Total operating expenses |                         |  | 37,095,747           |            |              |  | 30,483,144 |           
|                                                                                          |                                      |          |                          |                         |  |                      |            |             
|                                                                                          |                                      |          | Earnings from operations |                         |  | 640,940              |            |              |  | 3,815,503  |           
|Interest income                                                                           |                                      |          | (511,481                 | )                       |  |                      | (90,091    | )           
|Interest and debt expense                                                                 |                                      |          | 276,408                  |                         |  |                      | 761,451    |             
|Other (income) expense, net                                                               |                                      |          | 159,310                  |                         |  |                      | (207,602   | )           
|                                                                                          |                                      |          |                          |                         |  |                      |            |             
|Earnings before income taxes and minority interest in
income of consolidated subsidiaries |                                      |          | 716,703                  |                         |  |                      | 3,351,745  |             
|Income tax expense                                                                        |                                      |          | 215,011                  |                         |  |                      | 1,139,593  |             
|Minority share of income                                                                  |                                      |          | 19,190                   |                         |  |                      | 196,856    |             
|                                                                                          |                                      |          |                          |                         |  |                      |            |             
|Net income                                                                                |                                      | $        | 482,502                  |                         |  | $                    | 2,015,296  |             
|                                                                                          |                                      |          |                          |                         |  |                      |            |             
|Earnings per share information:                                                           |                                      |          |                          |                         |  |                      |            |             
|                                                                                          |                                      | Basic:   |                          |                         |  |                      |            |              |  |           
|                                                                                          |                                      |          |                          | Weighted average shares |  |                      | 17,694,520 |              |  |            | 14,298,905 | 
|Net earnings per share                                                                    |                                      | $        | 0.03                     |                         |  | $                    | 0.14       |             
|                                                                                          |                                      |          |                          |                         |  |                      |            |             
|                                                                                          |                                      | Diluted: |                          |                         |  |                      |            |              |  |           
|                                                                                          |                                      |          |                          | Weighted average shares |  |                      | 18,309,474 |              |  |            | 15,415,826 | 
|Net earnings per share                                                                    |                                      | $        | 0.03                     |                         |  | $                    | 0.13       |             
|                                                                                          |                                      |          |                          |                         |  |                      |            |             

See accompanying notes to condensed consolidated financial statements

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VANS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
THIRTY-NINE WEEKS ENDED MARCH 2, 2002 AND FEBRUARY 24, 2001
(unaudited)

|                                                                                                                                  |                                      |                                                      |                          |             |                         |             |              |             |            |            | 
|--------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ---------------------------------------------------- | ------------------------ | ----------- | ----------------------- | ----------- | ------------ | ----------- | ---------- | ---------- | 
|                                                                                                                                  |                                      |                                                      |                          |             | THIRTY-NINE WEEKS ENDED
|                                                                                                                                  |                                      |                                                      |                          |             |                        
|                                                                                                                                  |                                      |                                                      |                          |             | MARCH 2,                |             | FEBRUARY 24,
|                                                                                                                                  |                                      |                                                      |                          |             | 2002                    |             | 2001        
|                                                                                                                                  |                                      |                                                      |                          |             |                         |             |             
|Net sales                                                                                                                         |                                      | $                                                    | 268,544,002              |             |                         | $           | 255,964,454  |            
|Cost of sales                                                                                                                     |                                      |                                                      | 142,208,342              |             |                         |             | 145,068,276  |            
|                                                                                                                                  |                                      |                                                      |                          |             |                         |             |              |            
|                                                                                                                                  | Gross profit                         |                                                      |                          | 126,335,660 |                         |             |              | 110,896,178 |           
|Operating expenses:                                                                                                               |                                      |                                                      |                          |             |                         |             |              |            
|                                                                                                                                  | Selling and distribution             |                                                      |                          | 69,206,419  |                         |             |              | 58,313,044  |           
|                                                                                                                                  | Marketing, advertising and promotion |                                                      |                          | 26,639,627  |                         |             |              | 19,081,014  |           
|                                                                                                                                  | General and administrative           |                                                      |                          | 11,660,006  |                         |             |              | 9,541,858   |           
|                                                                                                                                  | Provision for doubtful accounts      |                                                      |                          | 330,698     |                         |             |              | 828,088     |           
|                                                                                                                                  | Amortization of intangibles          |                                                      |                          | 151,903     |                         |             |              | 1,207,522   |           
|                                                                                                                                  |                                      |                                                      |                          |             |                         |             |              |            
|                                                                                                                                  |                                      |                                                      | Total operating expenses |             |                         | 107,988,653 |              |             |            | 88,971,526 | 
|                                                                                                                                  |                                      |                                                      |                          |             |                         |             |              |            
|                                                                                                                                  |                                      |                                                      | Earnings from operations |             |                         | 18,347,007  |              |             |            | 21,924,652 | 
|Interest income                                                                                                                   |                                      |                                                      | (1,659,603               | )           |                         |             | (178,848     | )          
|Interest and debt expense                                                                                                         |                                      |                                                      | 714,762                  |             |                         |             | 2,205,605    |            
|Other (income) expense, net                                                                                                       |                                      |                                                      | 250,684                  |             |                         |             | (886,806     | )          
|                                                                                                                                  |                                      |                                                      |                          |             |                         |             |              |            
|Earnings before income taxes, minority interest in
income of consolidated subsidiaries and cumulative
effect of accounting change |                                      |                                                      | 19,041,164               |             |                         |             | 20,784,701   |            
|Income tax expense                                                                                                                |                                      |                                                      | 5,712,349                |             |                         |             | 7,066,797    |            
|Minority share of income                                                                                                          |                                      |                                                      | 990,433                  |             |                         |             | 985,715      |            
|                                                                                                                                  |                                      |                                                      |                          |             |                         |             |              |            
|Income before cumulative effect of accounting change                                                                              |                                      |                                                      | 12,338,382               |             |                         |             | 12,732,189   |            
|Cumulative effect of accounting change                                                                                            |                                      |                                                      |                         |             |                         |             | 441,406      |            
|                                                                                                                                  |                                      |                                                      |                          |             |                         |             |              |            
|Net income                                                                                                                        |                                      | $                                                    | 12,338,382               |             |                         | $           | 12,290,783   |            
|                                                                                                                                  |                                      |                                                      |                          |             |                         |             |              |            
|Earnings per share information:                                                                                                   |                                      |                                                      |                          |             |                         |             |              |            
|                                                                                                                                  | Basic:                               |                                                      |                          |             |                         |             |              |             |           
|                                                                                                                                  |                                      | Weighted average shares                              |                          |             | 17,681,197              |             |              |             | 14,025,970 |           
|                                                                                                                                  |                                      | Income before cumulative effect of accounting change |                          | $           | 0.70                    |             |              | $           | 0.91       |           
|                                                                                                                                  |                                      | Cumulative effect of accounting change               |                          |             |                        |             |              |             | (0.03      | )         
|                                                                                                                                  |                                      |                                                      |                          |             |                         |             |              |            
|Net earnings per share                                                                                                            |                                      | $                                                    | 0.70                     |             |                         | $           | 0.88         |            
|                                                                                                                                  |                                      |                                                      |                          |             |                         |             |              |            
|                                                                                                                                  | Diluted:                             |                                                      |                          |             |                         |             |              |             |           
|                                                                                                                                  |                                      | Weighted average shares                              |                          |             | 18,402,888              |             |              |             | 15,026,553 |           
|                                                                                                                                  |                                      | Income before cumulative effect of accounting change |                          | $           | 0.67                    |             |              | $           | 0.85       |           
|                                                                                                                                  |                                      | Cumulative effect of accounting change               |                          |             |                        |             |              |             | (0.03      | )         
|                                                                                                                                  |                                      |                                                      |                          |             |                         |             |              |            
|Net earnings per share                                                                                                            |                                      | $                                                    | 0.67                     |             |                         | $           | 0.82         |            
|                                                                                                                                  |                                      |                                                      |                          |             |                         |             |              |            

See accompanying notes to condensed consolidated financial statements

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VANS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THIRTY-NINE WEEKS ENDED MARCH 2, 2002 AND FEBRUARY 24, 2001
(unaudited)

|                                                                                |                                                                             |                                                    |                                                     |           |                         |             |              |           |             |             |  
|------------------------------------------------------------------------------- | --------------------------------------------------------------------------- | -------------------------------------------------- | --------------------------------------------------- | --------- | ----------------------- | ----------- | ------------ | --------- | ----------- | ----------- | -
|                                                                                |                                                                             |                                                    |                                                     |           | THIRTY-NINE WEEKS ENDED
|                                                                                |                                                                             |                                                    |                                                     |           |                        
|                                                                                |                                                                             |                                                    |                                                     |           | MARCH 2,                |             | FEBRUARY 24,
|                                                                                |                                                                             |                                                    |                                                     |           | 2002                    |             | 2001        
|                                                                                |                                                                             |                                                    |                                                     |           |                         |             |             
|CASH FLOWS FROM OPERATING ACTIVITIES:                                           |                                                                             |                                                    |                                                     |           |                         |             |              |          
|Net earnings                                                                    |                                                                             | $                                                  | 12,338,382                                          |           |                         | $           | 12,290,783   |          
|Adjustments to reconcile net earnings to net cash used in operating activities: |                                                                             |                                                    |                                                     |           |                         |             |              |          
|                                                                                | Depreciation and amortization                                               |                                                    |                                                     | 5,914,820 |                         |             |              | 5,805,140 |            
|                                                                                | Net gain on sale of equipment                                               |                                                    |                                                     | 53,231    |                         |             |              | 58,307    |            
|                                                                                | Net loss on sale of investment                                              |                                                    |                                                     | (40,276   | )                       |             |              | (615,165  | )          
|                                                                                | Loss on marketable securities                                               |                                                    |                                                     |          |                         |             |              | 486,159   |            
|                                                                                | Minority share of income                                                    |                                                    |                                                     | 990,433   |                         |             |              | 985,715   |            
|                                                                                | Provision for losses on accounts receivable and sales returns               |                                                    |                                                     | 330,698   |                         |             |              | 828,088   |            
|                                                                                | Changes in assets and liabilities, net of effects of business acquisitions: |                                                    |                                                     |           |                         |             |              |           |            
|                                                                                |                                                                             | Accounts receivable                                |                                                     |           | (9,815,031              | )           |              |           | (11,130,954 | )          
|                                                                                |                                                                             | Inventories                                        |                                                     |           | (3,853,891              | )           |              |           | (9,810,311  | )          
|                                                                                |                                                                             | Deferred income taxes                              |                                                     |           | 384,861                 |             |              |           | 129,175     |            
|                                                                                |                                                                             | Prepaid expenses                                   |                                                     |           | (1,615,854              | )           |              |           | 2,068,212   |            
|                                                                                |                                                                             | Other assets                                       |                                                     |           | (1,744,601              | )           |              |           | (1,623,370  | )          
|                                                                                |                                                                             | Accounts payable                                   |                                                     |           | 1,313,346               |             |              |           | 1,883,940   |            
|                                                                                |                                                                             | Accrued payroll and related expenses               |                                                     |           | (1,687,676              | )           |              |           | (978,184    | )          
|                                                                                |                                                                             | Restructuring costs                                |                                                     |           |                        |             |              |           | (80,000     | )          
|                                                                                |                                                                             | Income taxes payable                               |                                                     |           | 1,199,285               |             |              |           | 1,300,188   |            
|                                                                                |                                                                             |                                                    |                                                     |           |                         |             |              |          
|                                                                                |                                                                             |                                                    | Net cash provided by (used in) operating activities |           |                         | 3,767,726   |              |           |             | 1,597,723   |  
|                                                                                |                                                                             |                                                    |                                                     |           |                         |             |              |          
|CASH FLOWS FROM INVESTING ACTIVITIES:                                           |                                                                             |                                                    |                                                     |           |                         |             |              |          
|Purchases of property, plant and equipment                                      |                                                                             |                                                    | (16,298,149                                         | )         |                         |             | (10,059,871  | )        
|Investments in other companies                                                  |                                                                             |                                                    | (5,509,703                                          | )         |                         |             | (631,122     | )        
|Proceeds from sale of property, plant and equipment                             |                                                                             |                                                    | 6,470                                               |           |                         |             | 8,800        |          
|Proceeds from sale of investment                                                |                                                                             |                                                    | 109,091                                             |           |                         |             | 300,000      |          
|                                                                                |                                                                             |                                                    |                                                     |           |                         |             |              |          
|                                                                                |                                                                             |                                                    | Net cash used in investing activities               |           |                         | (21,692,291 | )            |           |             | (10,382,193 | )
|                                                                                |                                                                             |                                                    |                                                     |           |                         |             |              |          
|CASH FLOWS FROM FINANCING ACTIVITIES:                                           |                                                                             |                                                    |                                                     |           |                         |             |              |          
|Proceeds (payments) on short term borrowings, net                               |                                                                             |                                                    | (5,511,768                                          | )         |                         |             | 1,184,032    |          
|Payments on capital lease obligations                                           |                                                                             |                                                    |                                                    |           |                         |             | (15,005      | )        
|Proceeds from long term debt                                                    |                                                                             |                                                    | 78,478                                              |           |                         |             | 1,140,495    |          
|Consolidated subsidiary dividends paid to minority shareholders                 |                                                                             |                                                    | (1,100,950                                          | )         |                         |             | (544,432     | )        
|Proceeds from issuance of common stock                                          |                                                                             |                                                    | 9,890,404                                           |           |                         |             | 2,718,851    |          
|Payment for repurchase of common stock                                          |                                                                             |                                                    | (600,744                                            | )         |                         |             |             |          
|                                                                                |                                                                             |                                                    |                                                     |           |                         |             |              |          
|                                                                                |                                                                             |                                                    | Net cash provided by financing activities           |           |                         | 2,755,920   |              |           |             | 4,483,941   |  
|Effect of exchange rate changes on cash and cash equivalents                    |                                                                             |                                                    | 630,927                                             |           |                         |             | (103,223     | )        
|                                                                                |                                                                             |                                                    |                                                     |           |                         |             |              |          
|                                                                                |                                                                             |                                                    | Net decrease in cash and cash equivalents           |           |                         | (14,537,718 | )            |           |             | (4,403,752  | )
|Cash and cash equivalents, beginning of period                                  |                                                                             |                                                    | 59,747,584                                          |           |                         |             | 15,516,337   |          
|                                                                                |                                                                             |                                                    |                                                     |           |                         |             |              |          
|Cash and cash equivalents, end of period                                        |                                                                             | $                                                  | 45,209,866                                          |           |                         | $           | 11,112,585   |          
|                                                                                |                                                                             |                                                    |                                                     |           |                         |             |              |          
|SUPPLEMENTAL CASH FLOW INFORMATION  AMOUNTS PAID FOR:                          |                                                                             |                                                    |                                                     |           |                         |             |              |          
|                                                                                |                                                                             | Interest                                           |                                                     | $         | 108,992                 |             |              | $         | 204,673     |            
|                                                                                |                                                                             | Income taxes                                       |                                                     | $         | 4,901,243               |             |              | $         | 5,546,626   |            
|NON-CASH INVESTING AND FINANCING ACTIVITIES:                                    |                                                                             |                                                    |                                                     |           |                         |             |              |          
|                                                                                |                                                                             | Increase in investment in consolidated subsidiary: |                                                     |           |                         |             |              |           |             |            
|                                                                                |                                                                             |                                                    | Fair value of net assets acquired                   |           | $                       |            |              |           | $           | 477,638     |  
|                                                                                |                                                                             |                                                    | Stock issued                                        |           | $                       |            |              |           | $           | 2,569,320   |  
|                                                                                |                                                                             | Stock received from sale of investment             |                                                     | $         |                        |             |              | $         | 650,562     |            

See accompanying notes to condensed consolidated financial statements

5



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##### Table of Contents






VANS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



|1. |  | 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 periods are not necessarily indicative of results to be expected
for the current year. The condensed consolidated statement of earnings
and condensed consolidated statement of cash flows for the thirteen
weeks and thirty-nine weeks ended February 24, 2001 have been restated
to reflect the cumulative effect of a change in accounting method for
recognizing revenue on certain transactions, which was effective June 1,
2000. Additionally, certain amounts in the prior period financial
statements have been reclassified to conform to the current period
presentation.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | As of March 2, 2002 and May 31, 2001, inventories are substantially
comprised of finished goods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|3. |  | Basic earnings per share represents net earnings divided by the
weighted-average number of common shares outstanding for the period.
Diluted earnings per share represents net earnings divided by the
weighted-average number of shares outstanding, inclusive of all
potentially dilutive common shares. During the thirteen week and
thirty-nine week periods ended March 2, 2002 and February 24, 2001, the
difference between the weighted average number of shares used in the
basic computation compared to that used in the diluted computation was
due to the dilutive impact of all dilutive stock options. The
reconciliations of basic to diluted weighted average shares are as
follows:                                                                                                                                                                       

|                                                      |  |                      |            |                         |  |          |            |              |  |  |            |  |  |  |            | 
|----------------------------------------------------- |  | -------------------- | ---------- | ----------------------- |  | -------- | ---------- | ------------ |  |  | ---------- |  |  |  | ---------- | 
|                                                      |  | THIRTEEN WEEKS ENDED |            | THIRTY-NINE WEEKS ENDED
|                                                      |  |                      |            |                        
|                                                      |  | MARCH 2,             |            | FEBRUARY 24,            |  | MARCH 2, |            | FEBRUARY 24,
|                                                      |  | 2002                 |            | 2001                    |  | 2002     |            | 2001        
|                                                      |  |                      |            |                         |  |          |            |             
|Weighted average shares
used in basic computation     |  |                      | 17,694,520 |                         |  |          | 14,298,905 |              |  |  | 17,681,197 |  |  |  | 14,025,970 | 
|Dilutive stock options                                |  |                      | 614,954    |                         |  |          | 1,116,921  |              |  |  | 721,691    |  |  |  | 1,000,583  | 
|                                                      |  |                      |            |                         |  |          |            |              |  |  |            |  |  |  |            | 
|Weighted average shares
used for dilutive
computation |  |                      | 18,309,474 |                         |  |          | 15,415,826 |              |  |  | 18,402,888 |  |  |  | 15,026,553 | 
|                                                      |  |                      |            |                         |  |          |            |              |  |  |            |  |  |  |            | 



|   |  | For the thirteen week and thirty-nine week periods ended March 2, 2002 and
February 24, 2001, respectively, 328,500 and 30,000 shares and 345,834 and
60,667 shares, relating to the possible exercise of outstanding stock
options, were not included in the computation of diluted earnings per
share as their effect would have been anti-dilutive.                                                                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|4. |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|5. |  | In Q4 Fiscal 1998, we provided $8,212,000 for restructuring related
to the closure of our Vista, California manufacturing facility (the
Vista Facility) and the restructuring of our European operations. The
estimated provision includes approximately $2,949,000 for two terminated
international agreements and related costs, $2,184,000 for estimated
loss on sale of plant equipment, $1,433,000 in terminated raw material
contracts, $893,000 for involuntary termination benefits for
approximately 300 employees, and $753,000 for costs to close the Vista
Facility and prepare the site for a new tenant.
|  
|   |  | During the first nine months of Fiscal 2002, we did not incur any cash
expenditures related to the termination of two of our international
distributors in Europe or the closure of the Vista Facility. We expect to
make the remaining cash expenditures in March 2002 and January 2003.                                                                                                                                                                                                                                                                                                                               

6



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##### Table of Contents





|6. |  | Our operations are classified into three distinct sales channels:
retail, wholesale and international. Sales through our international
retail stores are included in overall international sales. We evaluate
performance based on channel revenues and consolidated operating income.
Discrete financial information for each sales channel is not yet
available so we do not classify our sales channels as reportable
segments. Revenues for each sales channel are summarized as follows:
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|              |  |                      |            |                         |  |          |            |              |  |   |             |  |  |   |             | 
|------------- |  | -------------------- | ---------- | ----------------------- |  | -------- | ---------- | ------------ |  | - | ----------- |  |  | - | ----------- | 
|              |  | THIRTEEN WEEKS ENDED |            | THIRTY-NINE WEEKS ENDED
|              |  |                      |            |                        
|              |  | MARCH 2,             |            | FEBRUARY 24,            |  | MARCH 2, |            | FEBRUARY 24,
|              |  | 2002                 |            | 2001                    |  | 2002     |            | 2001        
|              |  |                      |            |                         |  |          |            |             
|Retail        |  | $                    | 30,328,000 |                         |  | $        | 28,393,000 |              |  | $ | 87,064,000  |  |  | $ | 79,074,000  | 
|Wholesale     |  |                      | 24,686,000 |                         |  |          | 26,220,000 |              |  |   | 103,933,000 |  |  |   | 101,664,000 | 
|International |  |                      | 27,137,000 |                         |  |          | 26,252,000 |              |  |   | 77,547,000  |  |  |   | 75,226,000  | 
|              |  |                      |            |                         |  |          |            |              |  |   |             |  |  |   |             | 
|              |  | $                    | 82,151,000 |                         |  | $        | 80,865,000 |              |  | $ | 268,544,000 |  |  | $ | 255,964,000 | 
|              |  |                      |            |                         |  |          |            |              |  |   |             |  |  |   |             | 



|   |  | We do not have any individual customers representing more than 10% of
sales.                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|7. |  | Effective June 1, 2001, we adopted Statements of Financial Accounting
Standards Board Standards Nos. 141 and 142 on Business Combinations
and Goodwill and Other Intangible Assets which require that we
prospectively cease amortization of goodwill and instead conduct
periodic tests of goodwill for impairment. The following table shows, on
a pro-forma basis, what earnings and earnings per share would have been
if the new accounting standards had been applied for the periods
indicated.

|                                |          |                        |                        |   |                   |      |                   |   |                    |      |            |   |      |      |            |   |      |      |           |   |      |      | 
|------------------------------- | -------- | ---------------------- | ---------------------- | - | ----------------- | ---- | ----------------- | - | ------------------ | ---- | ---------- | - | ---- | ---- | ---------- | - | ---- | ---- | --------- | - | ---- | ---- | 
|                                |          |                        |                        |   | THIRTEEN WEEKS    |      | THIRTY-NINE       |   | YEAR ENDED MAY 31,
|                                |          |                        |                        |   | ENDED             |      | WEEKS ENDED       |   |                   
|                                |          |                        |                        |   | FEBRUARY 24, 2001 |      | FEBRUARY 24, 2001 |   | 2001               |      | 2000       |   | 1999
|                                |          |                        |                        |   |                   |      |                   |   |                    |      |            |   |     
|Net earnings                    |          | $                      | 2,015,000              |   |                   | $    | 12,291,000        |   |                    | $    | 14,990,000 |   |      | $    | 12,087,000 |   |      | $    | 8,725,000 |  
|Add back: goodwill amortization |          |                        | 390,000                |   |                   |      | 1,097,000         |   |                    |      | 1,514,000  |   |      |      | 1,310,000  |   |      |      | 1,207,000 |  
|                                |          |                        |                        |   |                   |      |                   |   |                    |      |            |   |      |      |            |   |      |      |           |  
|Pro forma net earnings          |          | $                      | 2,405,000              |   |                   | $    | 13,388,000        |   |                    | $    | 16,504,000 |   |      | $    | 13,397,000 |   |      | $    | 9,932,000 |  
|                                |          |                        |                        |   |                   |      |                   |   |                    |      |            |   |      |      |            |   |      |      |           |  
|Per share information:          |          |                        |                        |   |                   |      |                   |   |                    |      |            |   |      |      |            |   |      |      |           |  
|                                | Basic:   |                        |                        |   |                   |      |                   |   |                    |      |            |   |      |      |            |   |      |      |           |   |     
|                                |          | Net earnings           |                        | $ | 0.14              |      |                   | $ | 0.88               |      |            | $ | 1.06 |      |            | $ | 0.89 |      |           | $ | 0.66 |     
|                                |          | Goodwill amortization  |                        |   | 0.03              |      |                   |   | 0.07               |      |            |   | 0.11 |      |            |   | 0.09 |      |           |   | 0.09 |     
|                                |          |                        |                        |   |                   |      |                   |   |                    |      |            |   |      |      |            |   |      |      |           |  
|                                |          | Pro forma net earnings |                        | $ | 0.17              |      |                   | $ | 0.95               |      |            | $ | 1.17 |      |            | $ | 0.98 |      |           | $ | 0.75 |     
|                                |          |                        |                        |   |                   |      |                   |   |                    |      |            |   |      |      |            |   |      |      |           |  
|                                | Diluted: |                        |                        |   |                   |      |                   |   |                    |      |            |   |      |      |            |   |      |      |           |   |     
|                                |          | Net earnings           |                        | $ | 0.13              |      |                   | $ | 0.82               |      |            | $ | 0.99 |      |            | $ | 0.84 |      |           | $ | 0.64 |     
|                                |          | Goodwill amortization  |                        |   | 0.03              |      |                   |   | 0.07               |      |            |   | 0.10 |      |            |   | 0.09 |      |           |   | 0.09 |     
|                                |          |                        |                        |   |                   |      |                   |   |                    |      |            |   |      |      |            |   |      |      |           |  
|                                |          |                        | Pro forma net
earnings |   | $                 | 0.16 |                   |   | $                  | 0.89 |            |   | $    | 1.09 |            |   | $    | 0.93 |           |   | $    | 0.73 | 
|                                |          |                        |                        |   |                   |      |                   |   |                    |      |            |   |      |      |            |   |      |      |           |  



|8. |  | Financial Accounting Standards Board Standards Nos. 141 and 142 on
Business Combinations and Goodwill and Other Intangible Assets also
require that we disclose the following information related to our
intangible assets still subject to amortization and our goodwill. The
amortized intangible assets balance as of March 2, 2002 was:
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       |  |          |           |              |  |          |         |     |  |   |           | 
|---------------------- |  | -------- | --------- | ------------ |  | -------- | ------- | --- |  | - | --------- | 
|                       |  | GROSS    |           |              |  |          |         | NET
|                       |  | CARRYING |           | ACCUMULATED  |  | CARRYING
|                       |  | AMOUNT   |           | AMORTIZATION |  | AMOUNT  
|                       |  |          |           |              |  |         
|Trademarks and patents |  | $        | 4,768,000 |              |  | $        | 530,000 |     |  | $ | 4,238,000 | 
|                       |  |          |           |              |  |          |         |     |  |   |           | 



| |  | The weighted average amortization period for the intangible assets is
approximately 16 years. The estimated amortization expense for these
trademarks and patents for each of the five succeeding fiscal years is
estimated to be $298,000 per year. Changes in the carrying amount of
goodwill for the period ended March 2, 2002 are summarized as follows:
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                            |  |   |            | 
|--------------------------- |  | - | ---------- | 
|Balance as of May 31, 2001  |  | $ | 23,018,000 | 
|Goodwill acquired           |  |   | 4,800,000  | 
|Impairment losses           |  |   |           | 
|                            |  |   |            | 
|Balance as of March 2, 2002 |  | $ | 27,818,000 | 
|                            |  |   |            | 



| |  | In February 2002, we acquired a 70% interest in C.C.R.L. LLC which is in
the business of creating, producing, marketing and promoting the VANS
Warped Tour®. C.C.R.L. LLC was acquired because we believe the
acquisition should produce results which will satisfy our return on
investment criteria and because of the importance of music to our key
customers as a part of our long-term strategy for building and maintaining
a long-term proprietary connection with our core market. The
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents





|    |  | results of operations of C.C.R.L. LLC have been included in our Condensed
Consolidated Statements of Earnings since the February 15, 2002 date of
acquisition. C.C.R.L. LLC had no tangible assets or liabilities at the
date of acquisition. As a result, the entire purchase price of $5,199,000
has been allocated to the following intangible assets: $751,000 to
identifiable intangibles, primarily the Warped Tour® trademark, and
$4,448,000 as goodwill. The identified intangibles will be amortized over
a 10 year life.                                                                                                                                                                                                                                                                                                                                                                              
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The allocation of purchase price is dependent upon certain valuations and
other studies that have not progressed to a stage where there is
sufficient information to make a definitive allocation. Although the
purchase price allocation is preliminary, we do not anticipate that there
will be significant changes necessary to arrive at the final allocation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|9.  |  | Effective June 1, 2001, we adopted Statement of Financial Accounting
Standards No. 133 Accounting for Derivative Instruments and Hedging
Activities which requires us to recognize all derivatives as either
assets or liabilities in the statements of financial position and
measure those instruments at fair value. Derivatives that are not hedges
must be adjusted to fair value through income. Derivatives that are
hedges, depending on the nature of the hedge, are adjusted to fair value
with the effective portion of the adjustment reported in other
comprehensive income until the hedge is recognized in earnings. All
ineffective changes in the derivatives fair value are recognized
currently in earnings. Such ineffectiveness, recognized as an increase
to other income, net, totaled $16,000 and $35,000 during the thirteen
and thirty-nine weeks ended March 2, 2002, respectively.
|   
|    |  | Management believes it is prudent to limit the variability caused by
foreign currency risk. We are exposed to foreign currency risk primarily
through our wholly-owned subsidiaries, Vans Far East Limited (VFEL),
whose functional currency is the euro, and Vans Inc. Limited (VIL),
whose functional currency is the British sterling. The currency risk is
created because our subsidiaries purchases of inventory are priced and
settled in U.S. dollars. To hedge this risk, our subsidiaries enter into
cash flow hedges of forecasted inventory purchases, therefore fixing the
cost of the product and the associated gross margins in their functional
currency. As of March 2, 2002, we hedged our forecasted purchases through
May 2002.                                                                                                                                                        
|   
|    |  | Gains or losses recorded in other comprehensive income are reclassified to
cost of goods sold when the product is sold and the revenue recognized. A
portion of the hedge is de-designated when the forecasted purchase occurs
and the U.S. dollar payable is recognized. All of the existing gains or
losses included in other comprehensive income are expected to be
reclassified into earnings within the next 12 months.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    |  | Additionally, we hold derivative foreign currency forward contracts
denominated in the Argentinean peso. Such contracts do not meet the cash
flow hedge criteria of FAS No. 133. Accordingly, the net change in the
fair value of these derivative instruments has been recorded in other
(income) expense, net. We incurred a $128,000 loss during the
thirteen-week period ended March 2, 2002, and a $55,000 gain during the
thirty-nine week period ended March 2, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|10. |  | Other comprehensive income (loss) refers to revenue, expenses, gains
and losses that are recorded as an element of stockholders equity but
are excluded from net income. Other comprehensive income is comprised
of: (i) unrealized gains and losses on marketable securities categorized
as available for sale under SFAS 115; (ii) unrealized gains and losses
on derivative instruments qualifying as cash flow hedges; and (iii)
foreign currency translation adjustments. The components of total
comprehensive income (loss) for the thirteen and thirty-nine weeks ended
March 2, 2002 and February 24, 2001 were as follows:                                                                                                                                                                                                                                                                          

|                                      |                                                  |                             |         |                      |         |                         |           |          |   |              |            |   |         |   |            |          |   | 
|------------------------------------- | ------------------------------------------------ | --------------------------- | ------- | -------------------- | ------- | ----------------------- | --------- | -------- | - | ------------ | ---------- | - | ------- | - | ---------- | -------- | - | 
|                                      |                                                  |                             |         | THIRTEEN WEEKS ENDED |         | THIRTY-NINE WEEKS ENDED
|                                      |                                                  |                             |         |                      |         |                        
|                                      |                                                  |                             |         | MARCH 2,             |         | FEBRUARY 24,            |           | MARCH 2, |   | FEBRUARY 24,
|                                      |                                                  |                             |         | 2002                 |         | 2001                    |           | 2002     |   | 2001        
|                                      |                                                  |                             |         |                      |         |                         |           |          |   |             
|Net income                            |                                                  | $                           | 482,502 |                      |         | $                       | 2,015,296 |          |   | $            | 12,338,382 |   |         | $ | 12,290,783 |         
|Other comprehensive income (expense): |                                                  |                             |         |                      |         |                         |           |          |   |              |            |   |         |   |            |         
|                                      | Unrealized gain (loss) on securities,
net of tax |                             |         |                     |         |                         |           | 180,724  |   |              |            |  |         |   |            | (224,485 | )
|                                      | Derivatives qualifying as
hedges, net of tax:    |                             |         |                      |         |                         |           |          |   |              |            |   |         |   |            |          |  
|                                      |                                                  | Net derivative gain         |         |                      | 131,296 |                         |           |          |  |              |            |   | 153,873 |   |            |          |  | 
|                                      |                                                  | Reclassifications to income |         |                      | (37,981 | )                       |           |          |  |              |            |   | 6,772   |   |            |          |  | 
|                                      |                                                  |                             |         |                      |         |                         |           |          |   |              |            |   |         |   |            |         
|                                      |                                                  |                             | 93,315  |                      |         |                         |          |          |   |              | 160,645    |   |         |   |           |         

8



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##### Table of Contents



|                                  |                              |             |          |                      |            |                         |           |          |        |              |           |  |            |   |            |  |         | 
|--------------------------------- | ---------------------------- | ----------- | -------- | -------------------- | ---------- | ----------------------- | --------- | -------- | ------ | ------------ | --------- |  | ---------- | - | ---------- |  | ------- | 
|                                  |                              |             |          | THIRTEEN WEEKS ENDED |            | THIRTY-NINE WEEKS ENDED
|                                  |                              |             |          |                      |            |                        
|                                  |                              |             |          | MARCH 2,             |            | FEBRUARY 24,            |           | MARCH 2, |        | FEBRUARY 24,
|                                  |                              |             |          | 2002                 |            | 2001                    |           | 2002     |        | 2001        
|                                  |                              |             |          |                      |            |                         |           |          |        |             
|                                  | Foreign currency translation |             |          |                      |            |                         |           |          |        |              |           |  |            |   |            |  |        
|                                  |                              | adjustments |          |                      | (1,172,650 | )                       |           |          | 98,424 |              |           |  | (3,168,642 | ) |            |  | 205,943 | 
|                                  |                              |             |          |                      |            |                         |           |          |        |              |           |  |            |   |            | 
|Total comprehensive income (loss) |                              | $           | (596,833 | )                    |            | $                       | 2,294,444 |          |        | $            | 9,330,385 |  |            | $ | 12,272,241 | 
|                                  |                              |             |          |                      |            |                         |           |          |        |              |           |  |            |   |            | 



|    |  | In connection with our implementation of new euro-based systems in Europe,
we recalculated the cumulative foreign currency translation adjustment and
recorded a charge to other comprehensive income in Q2 Fiscal 2002 in the
amount of $1,694,000 relating to prior periods dating back to fiscal 1999.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|11. |  | During Q3 Fiscal 2002, we settled the wage and hour litigation we
discussed in our Annual Report on Form 10-K for Fiscal 2001. We agreed
to stipulate to the certification of the class and pay claims of class
members, attorneys fees and other administrative fees in an amount not
to exceed $1.1 million. The settlement was preliminarily approved by the
Court on January 30, 2002 and claim notices were mailed to class members
in March. We do not yet know the final number and dollar amount of
claims submitted. The settlement is subject to final approval by the
Court at a hearing currently scheduled to be held on May 30, 2002. We accrued $698,000 with
respect to this matter in Q3 Fiscal 2002 based on our estimate of the
number of claims that would be submitted and the amount of attorneys
fees and administrative costs that would be payable.
|   
|    |  | On March 20, 2002, we filed a complaint in the Superior Court for the
County of Los Angeles entitled Vans, Inc. vs. Scott Brabson, Gordana
Brabson, Jay Rosendahl, Heidi Rosendahl, Catch Air Technology, et al, Case
No. BC 27031. In this action, we have alleged that the defendants, one of
whom is a former officer of Vans, and another of whom is a former
consultant of Vans, engaged in a conspiracy to obtain unauthorized
payments or commissions from certain of our factories in China. We
believe the amount of money wrongfully obtained by the defendants exceeds
$3.0 million. We sought, and obtained, a temporary restraining order
prohibiting the defendants from transferring certain assets owned by them
and from transferring monies held in certain bank accounts. The
defendants have not yet answered our complaint.                            
|   
|    |  | Additionally, on March 1, 2002, we were sued in Superior Court for
the County of Los Angeles by Cross-Fire Technology and its related
entities (Cross-Fire Technology, et al vs. Vans, Inc. and Arthur I.
Carver, Case No. BC 269228). The plaintiffs are controlled by certain of
the individual defendants in the above lawsuit. The plaintiffs allege
that an officer of Vans made unlawful threats against certain factories
that make footwear for us and the plaintiffs. We intend to vigorously
defend this matter and currently believe we have meritorious defenses in
this matter.                                                                                                                                                                                                                                                                                  




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
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, 2001, and in our press release dated March
20, 2002.

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 Core Sports. Core Sports, including
skateboarding, snowboarding, surfing, wakeboarding, BMX riding 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 Core Sports culture. We have implemented a unique marketing
plan to reach our customers through multiple points of contact which include
owning and operating Core Sports entertainment events and venues, such as the
VANS Triple Crown Series, 11 VANS skateparks and the VANS High Cascade
Snowboard Camp, sponsoring over 600 professional and amateur athletes and the
VANS Warped Tour®, as well as advertising in targeted print and television
media.

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CRITICAL ACCOUNTING POLICIES

The Companys financial condition and results of operations are
necessarily 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:

Accounts Receivable. We evaluate the collectibility of our accounts receivable on a
case-by-case basis, and make adjustments to the provision for doubtful
accounts for expected losses. We consider such things as ability to pay,
bankruptcy, credit ratings and payment history. For all other accounts, we
estimate the provision for doubtful accounts based on historical experience
and past due status of the accounts. If actual market conditions are less
favorable than those projected by management, additional provisions for
doubtful accounts may be required. During the thirteen week and thirty-nine
week periods ended March 2, 2002, no significant changes were made to the
estimates or other judgements that support our provisions for doubtful
accounts.

Inventory. Inventories are valued at the lower of cost or market. The Company
determines the finished goods inventories by the first-in, first-out method
(FIFO). The Company writes down its inventories 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. If actual market conditions are less favorable
than those projected by management, additional inventory write-downs may be
required. During the thirteen week and thirty-nine week periods ended March
2, 2002, no significant changes were made to the estimates or other judgements
that support our inventory valuation.

RESULTS OF OPERATIONS

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

|                                                     |                                      |                                                                                            |                          |      |                      |      |                         |      |          |      |              |      |     |      |       |      |     |      | 
|---------------------------------------------------- | ------------------------------------ | ------------------------------------------------------------------------------------------ | ------------------------ | ---- | -------------------- | ---- | ----------------------- | ---- | -------- | ---- | ------------ | ---- | --- | ---- | ----- | ---- | --- | ---- | 
|                                                     |                                      |                                                                                            |                          |      | THIRTEEN WEEKS ENDED |      | THIRTY-NINE WEEKS ENDED
|                                                     |                                      |                                                                                            |                          |      |                      |      |                        
|                                                     |                                      |                                                                                            |                          |      | MARCH 2,             |      | FEBRUARY 24,            |      | MARCH 2, |      | FEBRUARY 24,
|                                                     |                                      |                                                                                            |                          |      | 2002                 |      | 2001                    |      | 2002     |      | 2001        
|                                                     |                                      |                                                                                            |                          |      |                      |      |                         |      |          |      |             
|Net sales                                            |                                      |                                                                                            | 100.0                    | %    |                      |      | 100.0                   | %    |          |      | 100.0        | %    |     |      | 100.0 | %   
|Cost of sales                                        |                                      |                                                                                            | 54.1                     |      |                      |      | 57.6                    |      |          |      | 53.0         |      |     |      | 56.7  |     
|                                                     |                                      |                                                                                            |                          |      |                      |      |                         |      |          |      |              |      |     |      |       |     
|Gross profit                                         |                                      |                                                                                            | 45.9                     |      |                      |      | 42.4                    |      |          |      | 47.0         |      |     |      | 43.3  |     
|Operating expenses:                                  |                                      |                                                                                            |                          |      |                      |      |                         |      |          |      |              |      |     |      |       |     
|                                                     | Selling and distribution             |                                                                                            |                          | 29.4 |                      |      |                         | 24.6 |          |      |              | 25.8 |     |      |       | 22.8 |    
|                                                     | Marketing, advertising and promotion |                                                                                            |                          | 10.1 |                      |      |                         | 8.2  |          |      |              | 9.9  |     |      |       | 7.5  |    
|                                                     | General and administrative           |                                                                                            |                          | 5.5  |                      |      |                         | 4.0  |          |      |              | 4.3  |     |      |       | 3.7  |    
|                                                     | Provision for doubtful accounts      |                                                                                            |                          | 0.1  |                      |      |                         | 0.4  |          |      |              | 0.1  |     |      |       | 0.3  |    
|                                                     | Amortization of intangibles          |                                                                                            |                          | 0.0  |                      |      |                         | 0.5  |          |      |              | 0.1  |     |      |       | 0.5  |    
|                                                     |                                      |                                                                                            |                          |      |                      |      |                         |      |          |      |              |      |     |      |       |     
|                                                     |                                      |                                                                                            | Total operating expenses |      |                      | 45.1 |                         |      |          | 37.7 |              |      |     | 40.2 |       |      |     | 34.8 | 
|                                                     |                                      |                                                                                            |                          |      |                      |      |                         |      |          |      |              |      |     |      |       |     
|                                                     |                                      | Earnings from operations                                                                   |                          |      | 0.8                  |      |                         |      | 4.7      |      |              |      | 6.8 |      |       |      | 8.5 |     
|Interest income                                      |                                      |                                                                                            | (0.6                     | )    |                      |      | (0.1                    | )    |          |      | (0.6         | )    |     |      | (0.1  | )   
|Interest and debt expense                            |                                      |                                                                                            | 0.3                      |      |                      |      | 0.9                     |      |          |      | 0.2          |      |     |      | 0.8   |     
|Other (income) expense, net                          |                                      |                                                                                            | 0.2                      |      |                      |      | (0.2                    | )    |          |      | 0.1          |      |     |      | (0.3  | )   
|                                                     |                                      |                                                                                            |                          |      |                      |      |                         |      |          |      |              |      |     |      |       |     
|                                                     |                                      | Earnings before income taxes,
minority interest and cumulative
effect of accounting change |                          |      | 0.9                  |      |                         |      | 4.1      |      |              |      | 7.1 |      |       |      | 8.1 |     
|Income tax expense                                   |                                      |                                                                                            | 0.3                      |      |                      |      | 1.4                     |      |          |      | 2.1          |      |     |      | 2.7   |     
|Minority share of income                             |                                      |                                                                                            | 0.0                      |      |                      |      | 0.2                     |      |          |      | 0.4          |      |     |      | 0.4   |     
|                                                     |                                      |                                                                                            |                          |      |                      |      |                         |      |          |      |              |      |     |      |       |     
|Income before cumulative effect of accounting
change |                                      |                                                                                            | 0.6                      | %    |                      |      | 2.5                     | %    |          |      | 4.6          | %    |     |      | 5.0   | %   
|                                                     |                                      |                                                                                            |                          |      |                      |      |                         |      |          |      |              |      |     |      |       |     

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QUARTERLY PERIOD ENDED MARCH 2, 2002 (Q3 FISCAL 2002), AS COMPARED TO
QUARTERLY PERIOD ENDED FEBRUARY 24, 2001 (Q3 FISCAL 2001)

Net Sales

Net sales for Q3 Fiscal 2002 increased 1.6% to $82,151,000 from
$80,865,000 for Q3 Fiscal 2001. The sales increase was due to increased sales
in our retail and international sales channels, as discussed below.

Total U.S. sales, including sales through our U.S. retail stores,
increased approximately 1.0% to $55,014,000 for Q3 Fiscal 2002 from $54,613,000
for Q3 Fiscal 2001. Total international sales, which include sales through our
seven European stores, increased 3.4% to $27,137,000 for Q3 Fiscal 2002, versus
$26,252,000 for Q3 Fiscal 2001.

The increase in total U.S. sales resulted from a 6.8% increase in sales
through our U.S. retail stores, which was offset to a large degree by a 5.9%
decline in U.S. wholesale sales. The decrease in U.S. wholesale sales was
primarily due to (i) an approximately 50.0% decline in sales of womens
footwear, (ii) an approximately 25.0% decrease in sales to certain key accounts
in the moderate-priced sales channel, and (iii) the ongoing adverse impact of
the events of September 11, 2001 on the U.S. economy. The increase in U.S.
retail stores sales was driven by the addition of 19 stores, including five
skateparks, over the last year. Comparable store sales (excluding revenue from
concessions and skate sessions at our skateparks) declined 5.1% year-over-year.
The increase in international sales through VFEL was primarily due to
an approximately
$1,900,000 increase in sales in the United Kingdom and an
approximately $800,000 increase in
sales in Mexico. These increases were partially offset by decreased sales in
Argentina, Brazil, Australia and Spain.

Gross Profit

Gross profit increased 10.0% to $37,737,000 in Q3 Fiscal 2002 from
$34,299,000 in Q3 Fiscal 2001. As a percentage of net sales, gross profit
increased to 45.9% for Q3 Fiscal 2002, versus 42.4% for Q3 Fiscal 2001,
primarily due to changes in channel mix (i.e. increased full-price retail store
and skatepark revenue as a percentage of sales).

Earnings from Operations

Our earnings from operations decreased 83.2% to $641,000 in Q3 Fiscal
2002, versus $3,816,000 in Q3 Fiscal 2001. As a percentage of sales, earnings
from operations decreased to 0.8% for Q3 Fiscal 2002 versus 4.7% last year.
Operating expenses in Q3 Fiscal 2002 increased 21.7% to $37,096,000 from
$30,483,000 in Q3 Fiscal 2001, due to the increases in selling and
distribution, marketing, advertising and promotion, and general and
administrative expenses discussed below. As a percentage of sales, operating
expenses increased to 45.1% versus 37.7% last year.

Selling and distribution.Selling and distribution expenses increased
21.0% to $24,118,000 in Q3 Fiscal 2002 from $19,933,000 in Q3 Fiscal 2001,
primarily due to $3,601,000 of increased personnel costs, rent expense and
other operating costs associated with the expansion of our retail division by
the net addition of 19 new stores, including five skateparks.

Marketing, advertising and promotion.Marketing, advertising and promotion
expenses increased 25.5% to $8,284,000 in Q3 Fiscal 2002 from $6,600,000 in Q3
Fiscal 2001. The increase was primarily due to: (i) an approximately $1,000,000
increase in costs associated with our new television agreement with NBC Sports
for the VANS Triple Crown Series which we were not able to offset by selling
enough advertising spots for the programs due to the weak market for selling
such advertisements; and (ii) an approximately $600,000 planned increase in
marketing expenditures, based on budgeted sales, that were committed to nine to
12 months ago. The planned increase was related to higher costs associated with
the Vans Triple Crown Series and new product-specific advertising. Marketing,
advertising and promotion expense as a percentage of sales increased to 10.1%
for Q3 Fiscal 2002 from 8.2% in Q3 Fiscal 2001.

General and administrative.General and administrative expenses increased
40.8% to $4,526,000 in Q3 Fiscal 2002 from $3,215,000 in Q3 Fiscal 2001,
primarily due to: (i) the accrual of $698,000 in connection with the settlement
of certain litigation (see Part 11 Other Information  Item 1 Legal
Proceedings); (ii) an approximately $300,000 increase in legal and consulting
expense related to the above-mentioned litigation and the ongoing worldwide
effort to protect and preserve our intellectual property rights; (iii) an
approximately $200,000 increase in personnel costs and rent expense for our
European subsidiary, VFEL; and (iv) a $100,000 increase in professional fees
for international tax consulting.

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Provision for doubtful accounts.The amount that was added to the
allowance for doubtful accounts decreased to $105,000 in Q3 Fiscal 2002 from
$307,000 in Q3 Fiscal 2001, primarily due to better-than-expected collection of
past due accounts.

Amortization of intangibles.Effective June 1, 2001, we adopted Statements
of the Financial Accounting Standards Board Standards Nos. 141 and 142 on
Business Combinations and Goodwill and Other Intangible Assets which
require that we prospectively cease the amortization of goodwill and instead
conduct periodic tests of goodwill for impairment. As a result, our
amortization of intangibles decreased to $62,000 for Q3 Fiscal 2002 from
$428,000 in Q3 Fiscal 2001. See note seven to Notes to Condensed Consolidated
Financial Statements.

Interest Income

Interest income increased to $511,000 in Q3 Fiscal 2002, versus $90,000 in
Q3 Fiscal 2001 due to higher cash balances resulting from the cash generated
from our May 2001 public offering. See  Liquidity and Capital Resources.

Interest and Debt Expense

Interest and debt expense decreased to $276,000 for Q3 Fiscal 2002 from
$761,000 in Q3 Fiscal 2001, primarily due to decreased borrowings under our
credit facility and improved interest rates on such borrowings. See 
Liquidity and Capital Resources, Borrowings.

Other (Income) Expense

Other (income) expense 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 decreased to $159,000 of
expense for Q3 Fiscal 2002 from $208,000 of income for Q3 Fiscal 2001,
primarily due to $790,000 of exchange rate losses caused by the devaluation of
the Argentinean peso, partially offset by $369,000 of exchange rate gains
related to the appreciation of the Brazilian real.

Income Tax Expense

Income tax expense decreased to $215,000 in Q3 Fiscal 2002 from $1,140,000
in Q3 Fiscal 2001 as a result of the decrease in earnings discussed above, and
a decrease in our effective tax rate from 34.0% to 30.0% year-over-year. The
decrease in our estimated effective annual tax rate was due to the tax benefit
derived from the operation of VFEL. See note four to Notes to Condensed
Consolidated Financial Statements.

Minority Share of Income

Minority share of income decreased to $19,000 in Q3 Fiscal 2002 from
$197,000 for Q3 Fiscal 2001, primarily due to the decreased profitably of our
joint venture in Argentina as a result of the devaluation of the Argentinean
peso, which was partially offset by the increased profitability of our joint
venture in Mexico and our subsidiary, Van Pac LLC.

THIRTY-NINE WEEK PERIOD ENDED MARCH 2, 2002 (FISCAL 2002 NINE MONTHS), AS
COMPARED TO THIRTY-NINE WEEK PERIOD ENDED FEBRUARY 24, 2001 (FISCAL 2001 NINE
MONTHS)

Net Sales

Net sales for the Fiscal 2002 Nine Months increased 4.9% to $268,544,000
for the Fiscal 2002 Nine Months from $255,964,000 for the Fiscal 2001 Nine
Months. The sales increase was due to a 17.4% increase in net sales for Q1
Fiscal 2002 and the 1.6% increase in sales for Q3 Fiscal 2002 discussed above,
partially offset by an 8.3% decrease in net sales for Q2 Fiscal 2002.

Total U.S. sales, including sales through our U.S. retail stores,
increased 5.7% to $190,997,000 in the Fiscal 2002 Nine Months from $180,738,000
in the Fiscal 2001 Nine Months. Total international sales, which include sales
through our seven European stores, increased 3.1% to $77,547,000 in the Fiscal
2002 Nine Months from $75,226,000 in the Fiscal 2001 Nine Months.

The increase in total U.S. sales primarily resulted from increases in
domestic wholesale sales and sales through our U.S. retail stores in Q1 Fiscal
2002, partially offset by decreases in sales in those channels in Q2 Fiscal
2002 and decreases in domestic

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wholesale sales in Q3 Fiscal 2002. The increase in international sales
through VFEL was due to increases in sales achieved in Q1 Fiscal 2002
and Q3 Fiscal 2002,
partially offset by decreases in sales through VFEL in Q2 Fiscal 2002.

Gross Profit

Gross profit increased 13.9% to $126,336,000 in the Fiscal 2002 Nine
Months from $110,896,000 in the Fiscal 2001 Nine Months. As a percentage of net
sales, gross profit increased to 47.0% for the Fiscal 2002 Nine Months, versus
43.3% for the Fiscal 2001 Nine Months, primarily due to changes in channel mix
(i.e. increased retail and skatepark revenue as a percentage of sales and
increased royalties), improved average selling price and improved inventory
management.

Earnings from Operations

Our earnings from operations decreased 16.3% to $18,347,000 in the Fiscal
2002 Nine Months from $21,925,000 in the Fiscal 2001 Nine Months. As a
percentage of sales, earnings from operations decreased to 6.8% in the Fiscal
2002 Nine Months from 8.5% in the Fiscal 2001 Nine Months. Operating expenses
in the Fiscal 2002 Nine Months increased 21.4% to $107,989,000 from $88,972,000
in the same period a year ago, due to the increases in selling and
distribution, marketing, advertising and promotion, and general and
administrative expenses discussed below. As a percentage of sales, operating
expenses increased to 40.2% for the Fiscal 2002 Nine Months, versus 34.8% last
year.

Selling and distribution.Selling and distribution expenses increased
18.7% to $69,207,000 in the Fiscal 2002 Nine Months from $58,306,000 in the
Fiscal 2001 Nine Months, primarily due to approximately $10,000,000 of
increased personnel costs, rent expense and other operating costs associated
with the expansion of our retail division by the net addition of 19 new stores,
including five skateparks.

Marketing, advertising and promotion.Marketing, advertising and promotion
expenses increased 39.6% to $26,640,000 in the Fiscal 2002 Nine Months from
$19,081,000 in the Fiscal 2001 Nine Months, primarily due to: (i) an
approximately $1,700,000 increase in costs associated with our new television
agreement with NBC Sports for the VANS Triple Crown Series which we were not
able to offset by selling enough advertising spots for the programs due to the
weak market for selling such advertisements; and (ii) an approximately
$5,900,000 planned increase in marketing expenditures related primarily to the
first six months of fiscal 2002 that were
committed to nine to twelve months ago based on forecasted sales. The planned increase was related to
higher costs associated with the Vans Triple Crown Series, increased
advertising during the back-to-school selling season and new product-specific
advertising. We did not achieve our sales forecast primarily due to the factors
described under Net Sales above, and as a result, marketing, advertising and
promotion expense as a percentage of sales increased to 9.9% for the Fiscal
2002 Nine Months from 7.5% for the Fiscal 2001 Nine Months.

General and administrative.General and administrative expenses increased
22.2% to $11,660,000 in the Fiscal 2002 Nine Months from $9,542,000 in the
Fiscal 2001 Nine Months, primarily due to: (i) the accrual of $698,000 in
connection with the settlement of certain litigation (see Part 11 Other
Information  Item 1 Legal Proceedings); (ii) an approximately $500,000
increase in personnel and other expenses related to VFEL; (iii) an approximately $300,000 increase in legal and consulting expenses
related to the above-mentioned litigation and the worldwide effort to protect
and preserve our intellectual property rights; (iv) an approximately $300,000
increase in professional fees for international tax consulting; and (v) an
approximately $300,000 increase in employee related expenses.

Provision for doubtful accounts.The amount that was added to the
allowance for doubtful accounts decreased to $330,000 in the Fiscal 2002 Nine
Months from $836,000 in the Fiscal 2001 Nine Months, primarily due to
better-than-expected collection of past due accounts.

Amortization of intangibles.Amortization of intangibles decreased to
$152,000 in the Fiscal 2002 Nine Months from $1,208,000 in the Fiscal 2001 Nine
Months for the same reasons described under the caption Amortization of
Intangibles in the discussion of Q3 Fiscal 2002 above.

Interest Income

Interest income increased to $1,660,000 in the Fiscal 2002 Nine Months
from $179,000 in the Fiscal 2001 Nine Months for the same reasons described
under the caption Interest Income in the discussion of Q3 Fiscal 2002 above.

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Interest and Debt Expense

Interest and debt expense decreased to $715,000 in the Fiscal 2002 Nine
Months versus $2,206,000 in the same period a year ago for the same reasons
described under the caption Interest and Debt Expense in the discussion of Q3
Fiscal 2002 above.

Other (Income) Expense

Other (income) expense decreased to $251,000 of expense in the Fiscal 2002
Nine Months from $887,000 of income in the same period a year ago due to: (i)
an approximate decrease of $835,000 of income recognized from the sale and
related earn-out of the VANS Warped Tour® in the Fiscal 2001 Nine Months; (ii)
an approximate $392,000 increase in exchange rate losses related primarily to
Argentina; (iii) an approximately $100,000 decrease in non-footwear related
royalties; and (iv) an approximate loss of $289,000 of rental income due to the
sale of our former Orange, California facility in May 2001. These decreases in
other income were partially offset by the non-recurrence of an
other-than-temporary decline in fair value of securities held by us of $486,000
recognized in the Fiscal 2001 Nine Months.

Income Tax Expense

Income tax expense decreased to $5,712,000 in the Fiscal 2002 Nine Months
versus $7,067,000 in the same period a year ago due to the decrease in our
effective tax rate from 34.0% in the Fiscal 2001 Nine Months to 30.0% in the
Fiscal 2002 Nine Months. The decrease in our estimated effective tax rate was
due to the tax benefit derived from the operation of VFEL. See note four to
Notes to Condensed Consolidated Financial Statements.

Minority Share of Income

Minority share of income increased to $990,000 in the Fiscal 2002 Nine
Months from $986,000 in the same period a year ago, primarily due to increased
profitability of our joint ventures in Mexico and Brazil and our subsidiary,
Van Pac LLC, mostly offset by the decreased profitability of our joint venture
in Argentina resulting from the devaluation of the Argentinean peso.

Liquidity and Capital Resources

Cash Flows

We have historically financed our operations with a combination of cash
flows from operations, borrowings under a credit facility and the sale of
equity securities. In May 2001, we completed an underwritten public offering of
our common stock. In connection with the offering, 2,800,000 shares of our
common stock were sold for net proceeds of $60.1 million. In June 2001, an
additional 420,000 shares were sold for net proceeds of $9.2 million to cover
over-allotments. Most of the proceeds of such offering are being used to open
retail stores and skateparks and for general corporate purposes, including the
repurchase of our common stock pursuant to the share repurchase program we
adopted on September 21, 2001. Certain of the proceeds were used to repay debt.

We experienced an inflow of cash from operating activities of $3,768,000
for the Fiscal 2002 Nine Months, compared to an inflow of $1,598,000 for the
same period a year ago. Cash provided by operations during the Fiscal 2002 Nine
Months primarily resulted from earnings and the add-back for depreciation and
amortization, partially offset by an increase in net accounts receivable to
$45,516,000 at March 2, 2002, from $38,133,000 at May 31, 2001, and an increase
in net inventory to $54,984,000 at March 2, 2002, from $52,828,000 at May 31,
2001. Cash inflows from operations in the Fiscal 2001 Nine Months primarily
resulted from earnings and the add-back for depreciation and amortization,
partially offset by increases in accounts receivable and inventory.

We had a net cash outflow from investing activities of $21,692,000 in the
Fiscal 2002 Nine Months, compared to a net cash outflow of $10,382,000 in the
same period a year ago. The cash outflows in the Fiscal 2002 Nine Months were
primarily due to capital expenditures related to new retail store openings and
skateparks and our purchase of a majority interest in the VANS Warped Tour®
which was completed in Q3 Fiscal 2002 (see Part 11  Item 5  Other
Information). Cash used in investing activities for the Fiscal 2001 Nine
Months was primarily related to new retail store openings and skateparks.

We had a net cash inflow from financing activities of $2,756,000 for the
Fiscal 2002 Nine Months, compared to a net cash inflow of $4,484,000 for the
same period a year ago. The increase in the net cash inflow, year-over-year,
was primarily due to the completion of the sale of our common stock in the
public offering to cover over-allotments, partially offset by the pay-down of
short-term

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borrowings under our credit facility. See  Borrowings below. Cash
provided by financing activities in the Fiscal 2001 Nine Months was primarily
related to proceeds from the issuance of common stock related to the exercise
of stock options and increases in long-term debt and short-term borrowings
under our credit facility.

Accounts receivable, net of allowance for doubtful accounts, increased
from $38,133,000 at May 31, 2001, to $45,516,000 at March 2, 2002, primarily
due to (i) an increase in our European accounts receivable resulting from the
increase in sales in those countries, and (ii) an increase in our domestic
accounts receivable resulting from the timing of our Q3 Fiscal 2002 wholesale
sales. These increases were partially offset by a decrease in accounts
receivable from our joint venture in Argentina. Inventories increased to
$54,984,000 at March 2, 2002, from $52,828,000 at May 31, 2001, primarily due
to an increased number of finished goods held for sale at our retail stores to
support the addition of 18 new stores and increased inventory held in our
European distribution center to support increased international sales and orders.

Borrowings

We maintain a $100.0 million unsecured credit facility pursuant to a
credit agreement with several lenders. This credit facility permits us to
utilize the funds thereof for general corporate purposes, capital expenditures,
acquisitions and stock repurchases.

Of the $100.0 million amount of the credit facility, $85.0 million is in
the form of an unsecured revolving line of credit, and $15.0 million is in the
form of an unsecured term loan. The revolving line of credit expires on April
30, 2004. We have the option to pay interest on revolving line of credit
advances at a rate equal to either LIBOR plus a margin, or the base rate plus a
margin. The LIBOR rate margin and the base rate margin are based on our ratio
of Funded Debt to EBITDA, each as defined in the credit agreement.

Of the $15.0 million term loan, approximately $5.0 million was disbursed
at the closing of the credit facility to replace a portion of our former credit
facility used for our 1998 stock repurchase program, which was completed in the
fiscal year ended May 31, 1999, approximately $3.0 million was disbursed in the
second quarter of the fiscal year ended May 31, 2000 for capital expenditures,
and the remaining portion was disbursed in the first quarter of the fiscal year
ending May 31, 2001 for capital expenditures. The term loan was paid off in
full in May 2001 with a portion of the net proceeds of our public offering.

Under the credit agreement, we must maintain certain financial covenants
and are prohibited from engaging in certain transactions or taking certain
corporate actions, such as the payment of dividends, without the consent of the
lenders. At March 2, 2002, we had no borrowings under the credit facility and
were in compliance with all financial and other covenants under the credit
agreement.

Vans Latinoamericana 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 March 2, 2002, the aggregate outstanding balance under the
note was $2,088,000.

Capital Expenditures

Our material commitments for capital expenditures are currently primarily
related to the opening and remodeling of retail stores and the opening of
skateparks. In the fourth quarter of fiscal year 2002, we plan to open two full
price stores and remodel one existing store. We estimate the aggregate cost of
these new stores and the remodel to be approximately $825,000.

We also intend to open one skatepark in June 2002 and estimate the
aggregate cost of our portion of this project to be approximately $800,000
since the landlord for the skatepark has agreed to pay a significant portion of
the capital costs associated with the construction of the park.

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Capital Resources

Our cash position, including $27.4 million invested in investment grade
corporate bonds and asset backed securities and money market mutual funds, was
$45,210,000 at March 2, 2002, compared to $59,748,000 at May 31, 2001. We
believe our capital resources, including the availability under our credit
facility and cash flow from operations, will be sufficient to fund our
operations and capital expenditures and anticipated growth plan for the
foreseeable future.*



---

|* |  | 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) our rate of growth; (ii) the
number of new skateparks we decide to open which must be financed in
whole, or in part, by us; (iii) our product mix between footwear and
snowboard boots; (iv) our ability to effectively manage our inventory
levels; (v) timing differences in payment for our foreign-sourced product;
(vi) the increased utilization of letters of credit for purchases of
foreign-sourced product; (vii) timing differences in payment for product
which is sourced from countries which have longer shipping lead times,
such as China; and (viii) slowing in the U.S. and global economies which
could materially impact our business.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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SEASONALITY

The following table contains unaudited selected quarterly financial data
for the eight quarters ended March 2, 2002 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.

QUARTERLY RESULTS
(DOLLARS IN THOUSANDS)

|                              |                                            |  |               |        |               |  |              |         |              |  |         |        |              |  |             |        |          |  |   |        |   |  |   |         |   |  |   |        |    |  |   |        |   
|----------------------------- | ------------------------------------------ |  | ------------- | ------ | ------------- |  | ------------ | ------- | ------------ |  | ------- | ------ | ------------ |  | ----------- | ------ | -------- |  | - | ------ | - |  | - | ------- | - |  | - | ------ | -- |  | - | ------ | --
|                              |                                            |  | QUARTER ENDED |        | QUARTER ENDED
|                              |                                            |  |               |        |              
|                              |                                            |  | MAY 31,       |        | AUGUST 26,    |  | NOVEMBER 25, |         | FEBRUARY 24, |  | MAY 31, |        | SEPTEMBER 1, |  | DECEMBER 1, |        | MARCH 2,
|                              |                                            |  | 2000          |        | 2000          |  | 2000         |         | 2001         |  | 2001    |        | 2001         |  | 2001        |        | 2002    
|                              |                                            |  |               |        |               |  |              |         |              |  |         |        |              |  |             |        |         
|STATEMENT OF OPERATIONS
DATA: |                                            |  |               |        |               |  |              |         |              |  |         |        |              |  |             |        |          |  |   |        |   |  |   |         |   |  |   |        |    |  |   |       
|                              | Net sales                                  |  | $             | 66,833 |               |  | $            | 100,580 |              |  | $       | 74,520 |              |  | $           | 80,865 |          |  | $ | 85,231 |   |  | $ | 118,060 |   |  | $ | 68,333 |    |  | $ | 82,151 |   
|                              | Gross profit                               |  |               | 28,550 |               |  |              | 44,145  |              |  |         | 32,452 |              |  |             | 34,299 |          |  |   | 37,519 |   |  |   | 55,338  |   |  |   | 33,260 |    |  |   | 37,737 |   
|                              | Earnings from operations                   |  |               | 3,690  |               |  |              | 12,453  |              |  |         | 5,656  |              |  |             | 3,816  |          |  |   | 4,640  |   |  |   | 16,379  |   |  |   | 1,327  |    |  |   | 641    |   
|                              | Net income                                 |  |               | 1,774  |               |  |              | 7,071   |              |  |         | 3,204  |              |  |             | 2,015  |          |  |   | 2,699  |   |  |   | 11,343  |   |  |   | 513    |    |  |   | 483    |   
|AS A PERCENTAGE OF NET
SALES: |                                            |  |               |        |               |  |              |         |              |  |         |        |              |  |             |        |          |  |   |        |   |  |   |         |   |  |   |        |    |  |   |       
|                              | Net sales                                  |  |               | 100    | %             |  |              | 100     | %            |  |         | 100    | %            |  |             | 100    | %        |  |   | 100    | % |  |   | 100     | % |  |   | 100    | %  |  |   | 100    | % 
|                              | Gross profit                               |  |               | 43     |               |  |              | 44      |              |  |         | 44     |              |  |             | 42     |          |  |   | 44     |   |  |   | 47      |   |  |   | 49     |    |  |   | 46     |   
|                              | Earnings from operations                   |  |               | 6      |               |  |              | 13      |              |  |         | 8      |              |  |             | 5      |          |  |   | 6      |   |  |   | 14      |   |  |   | 2      |    |  |   | 1      |   
|                              | Net income                                 |  |               | 3      |               |  |              | 7       |              |  |         | 4      |              |  |             | 2      |          |  |   | 3      |   |  |   | 10      |   |  |   | 1      |    |  |   | 1      |   
|                              | Comparable store
sales Increase (decrease) |  |               | 7.5    | %             |  |              | 8.6     | %            |  |         | 16.8   | %            |  |             | 16.3   | %        |  |   | 9.2    | % |  |   | 4.7     | % |  |   | (8.9   | )% |  |   | (5.1   | )%

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, because snowboarding is a winter
sport, sales of our snowboard boots and the Switch Autolock binding system have
historically been strongest in the first and second fiscal quarters (June
through November).

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 debt obligations. The revolving line of credit and the
term loan bear interest at a rate equal to either (i) LIBOR plus a margin, or
(ii) a base rate plus a margin. The margins are based on our rate of Funded
Debt to EBITDA, each as defined in the credit agreement. See Item 2.
Managements Discussion and Analysis of Financial Condition and Results of
Operations  Liquidity and Capital Resources. As of March 2, 2002, we had no
amounts outstanding under the credit agreement. However, for each $1.0 million
outstanding annually under the agreement, a hypothetical increase of 100 basis
points in short-term interest rates would result in a reduction of
approximately $10,000 in annual pre-tax earnings. We do not use derivative or
other financial instruments to hedge interest rate risks.

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Foreign Currency Risk

We operate our business and sell our products in a number of countries
throughout the world and, as a result, we are exposed to movements on foreign
currency exchange rates. Although we have most of our products manufactured
outside of the United States on a per order basis, these purchases are made in
U.S. dollars. The major foreign currency exposure for us involves Europe, Latin
America and Japan. In particular, recent fluctuations in the value of the euro
and the British sterling have negatively impacted our European business. See
note nine of Notes to Condensed Consolidated Financial Statements.

Additionally, recent weaknesses in Latin American economies, particularly
Argentina, could negatively effect our Latin American business. Our exposure
related to our joint venture in Argentina consists primarily of our
intercompany trade receivable of $1.4 million. Although we believe an
impairment of our investment in the joint venture is unlikely, a further
material change in the economy of Argentina could result in a significant
change to the information presented in the financial statements.

In order to protect against the volatility associated with earnings
currency translations, we may, from time to time, utilize forward foreign
exchange contracts and/or foreign currency options with durations of generally
from three to 12 months. As of March 2, 2002, we had $10.9 million outstanding
in foreign exchange forward contracts, which were entered into to hedge
specific transactions denominated in currencies other than the U.S. dollar.

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PART II




OTHER INFORMATION




ITEM 1. LEGAL PROCEEDINGS

Wage and Hour Litigation.During Q3 Fiscal 2002, we settled the wage and
hour litigation we discussed in our Annual Report on Form 10-K for Fiscal 2001.
We agreed to stipulate to the certification of the class and pay claims of
class members, attorneys fees and other administrative fees in an amount not
to exceed $1.1 million. The settlement was preliminarily approved by the Court
on January 30, 2002 and claim notices were mailed to class members in March.
The settlement is subject to final approval by the Court at a hearing
currently scheduled to be
held on May 30, 2002. We accrued $698,000 with respect to this matter in Q3
Fiscal 2002 based on our estimate of the number of claims that would be
submitted and the amount of attorneys fees and administrative costs that would
be payable.

Litigation involving former Officer and Consultant.On March 20, 2002, we
filed a complaint in the Superior Court for the County of Los Angeles entitled
Vans, Inc. vs. Scott Brabson, Gordana Brabson, Jay Rosendahl, Heidi Rosendahl,
Catch Air Technology, et al, Case No. BC 27031. In this action, we have
alleged that the defendants, one of whom is a former officer of Vans, and
another of whom is a former consultant of Vans, engaged in a conspiracy to
obtain unauthorized payments or commissions from certain of our factories in
China. We believe the amount of money wrongfully obtained by the defendants
exceeds $3.0 million. We sought, and obtained, a temporary restraining order
prohibiting the defendants from transferring certain assets owned by them and
from transferring monies held in certain bank accounts. The defendants have
not yet answered our complaint.

Additionally, on March 1, 2002, we were sued in Superior Court for
the County of Los Angeles by Cross-Fire Technology and its related entities
(Cross-Fire Technology, et al vs. Vans, Inc. and Arthur I. Carver, Case No. BC
269228). The plaintiffs are controlled by certain of the individual defendants
in the above lawsuit. The plaintiffs allege that an officer of Vans made
unlawful threats against certain factories that make footwear for us and the
plaintiffs. We intend to vigorously defend this matter and currently believe
we have meritorious defenses in this matter.




ITEM 5. OTHER INFORMATION



| |  | Officer Resignation. During Q3 Fiscal 2002, Joyce A. Murdock resigned as our Vice President  Human Resources.                    
| |  | ----------------------------------------------------------------------------------------------------------------------------------
|
| |  | VANS Warped Tour.During Q3 Fiscal 2002, we completed our previously announced purchase of a 70% interest in
the VANS Warped Tour.®




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



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



| | 10.1 |  | Employment Agreement, dated as of
January 8, 2002 by and between Vans, Inc. and Joseph D. Giles.                                                       
| | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 10.2 |  | Membership Interest Purchase
Agreement by and among Vans, Inc., Launch Media, Inc., Creative
Artists Agency LLC, Codikow & Carroll PC, and 4 Fini, Inc.
|
| | 10.3 |  | Purchase Agreement by and among the
Vans, Inc., Creative Artists Agency, LLC, Codikow & Carroll PC,
and 4 Fini, Inc.                                   



|(b) |  | Reports on Form 8-K. We filed one report on Form 8-K during the
quarterly period ended March 2, 2002. The report was dated December 19,
2001, and contained certain Regulation FD disclosure.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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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:   April 16, 2002 | By:                                                      | /s/ Gary H. Schoenfeld
|                       |                                                         
|                       | GARY H. SCHOENFELD
President and Chief Executive Officer

|                       |                                                                                                                     |                         
|---------------------- | ------------------------------------------------------------------------------------------------------------------- | ------------------------
|                      
|Date:   April 16, 2002 | By:                                                                                                                 | /s/ Andrew J. Greenebaum
|                       |                                                                                                                    
|                       | ANDREW J. GREENEBAUM
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

20