##### 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 December 1, 2001 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:
17,799,743 shares
of Common Stock, $.001 par value, as of January 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 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|                             | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                  
|EXHIBIT 3.1                 
|EXHIBIT 10.1                



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##### Table of Contents






PART I
FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS.




VANS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 1, 2001 (UNAUDITED) AND MAY 31, 2001

|                                                                                                                                                                         |                                                                                                                                              |                           |                            |            |                        |             |             |            |             |             | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------- | -------------------------- | ---------- | ---------------------- | ----------- | ----------- | ---------- | ----------- | ----------- | 
|                                                                                                                                                                         |                                                                                                                                              |                           |                            |            | TWENTY-SIX WEEKS ENDED
|                                                                                                                                                                         |                                                                                                                                              |                           |                            |            |                       
|                                                                                                                                                                         |                                                                                                                                              |                           |                            |            | DECEMBER 1,            |             | MAY 31,    
|                                                                                                                                                                         |                                                                                                                                              |                           |                            |            | 2001                   |             | 2001       
|                                                                                                                                                                         |                                                                                                                                              |                           |                            |            |                        |             |            
|                                                                                                                                                                        
|                                                                                                                                                                        
|                                                                                                                                                                        
|                                                                                                                                                                        
|ASSETS                                                                                                                                                                  
|                                                                                                                                                                        
|                                                                                                                                                                        
|                                                                                                                                                                        
|                                                                                                                                                                        
|Current assets:                                                                                                                                                          |                                                                                                                                              |                           |                            |            |                        |             |             |           
|                                                                                                                                                                         | Cash and cash equivalents                                                                                                                    |                           | $                          | 53,764,344 |                        |             | $           | 59,747,584 |            
|                                                                                                                                                                         | Accounts receivable, net of allowance for doubtful accounts of $1,905,181 and
$2,078,600 at December 1, 2001, and May 31, 2001, respectively |                           |                            | 39,518,668 |                        |             |             | 38,133,438 |            
|                                                                                                                                                                         | Inventories                                                                                                                                  |                           |                            | 55,278,083 |                        |             |             | 52,827,863 |            
|                                                                                                                                                                         | Deferred tax assets                                                                                                                          |                           |                            | 3,483,907  |                        |             |             | 3,681,825  |            
|                                                                                                                                                                         | Prepaid expenses                                                                                                                             |                           |                            | 13,584,210 |                        |             |             | 14,564,517 |            
|                                                                                                                                                                         |                                                                                                                                              |                           |                            |            |                        |             |             |           
|                                                                                                                                                                         |                                                                                                                                              | Total current assets      |                            |            | 165,629,212            |             |             |            | 168,955,227 |            
|                                                                                                                                                                         | Property, plant and equipment, net                                                                                                           |                           |                            | 42,642,782 |                        |             |             | 34,048,020 |            
|                                                                                                                                                                         | Trademarks and patents, net of accumulated amortization of $467,462 and $377,549
at December 1, 2001 and May 31, 2001, respectively          |                           |                            | 3,388,536  |                        |             |             | 2,139,437  |            
|                                                                                                                                                                         | Goodwill                                                                                                                                     |                           |                            | 23,018,188 |                        |             |             | 23,018,188 |            
|                                                                                                                                                                         | Other assets                                                                                                                                 |                           |                            | 9,026,865  |                        |             |             | 8,798,793  |            
|                                                                                                                                                                         |                                                                                                                                              |                           |                            |            |                        |             |             |           
|                                                                                                                                                                         |                                                                                                                                              | Total Assets              |                            | $          | 243,705,583            |             |             | $          | 236,959,665 |            
|                                                                                                                                                                         |                                                                                                                                              |                           |                            |            |                        |             |             |           
|                                                                                                                                                                        
|                                                                                                                                                                        
|                                                                                                                                                                        
|                                                                                                                                                                        
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                    
|                                                                                                                                                                        
|                                                                                                                                                                        
|                                                                                                                                                                        
|                                                                                                                                                                        
|Current liabilities:                                                                                                                                                     |                                                                                                                                              |                           |                            |            |                        |             |             |           
|                                                                                                                                                                         | Short-term borrowings                                                                                                                        |                           | $                          | 1,306,925  |                        |             | $           | 7,876,515  |            
|                                                                                                                                                                         | Accounts payable                                                                                                                             |                           |                            | 8,372,357  |                        |             |             | 13,130,377 |            
|                                                                                                                                                                         | Accrued payroll and related expenses                                                                                                         |                           |                            | 4,970,411  |                        |             |             | 8,450,569  |            
|                                                                                                                                                                         | Accrued interest                                                                                                                             |                           |                            | 304,575    |                        |             |             | 257,176    |            
|                                                                                                                                                                         | Restructuring costs                                                                                                                          |                           |                            | 124,014    |                        |             |             | 124,014    |            
|                                                                                                                                                                         | Income taxes payable                                                                                                                         |                           |                            | 9,066,237  |                        |             |             | 7,305,817  |            
|                                                                                                                                                                         |                                                                                                                                              |                           |                            |            |                        |             |             |           
|                                                                                                                                                                         |                                                                                                                                              | Total current liabilities |                            |            | 24,144,519             |             |             |            | 37,144,468  |            
|Deferred tax liabilities                                                                                                                                                 |                                                                                                                                              |                           | 4,113,207                  |            |                        |             | 4,113,207   |           
|Long-term debt                                                                                                                                                           |                                                                                                                                              |                           | 2,852,768                  |            |                        |             | 2,347,972   |           
|                                                                                                                                                                         |                                                                                                                                              |                           |                            |            |                        |             |             |           
|                                                                                                                                                                         |                                                                                                                                              | Total Liabilities         |                            |            | 31,110,494             |             |             |            | 43,605,647  |            
|                                                                                                                                                                         |                                                                                                                                              |                           |                            |            |                        |             |             |           
|Minority interest                                                                                                                                                        |                                                                                                                                              |                           | 3,006,637                  |            |                        |             | 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, 17,689,716 and
17,256,149 shares issued and outstanding at December 1, 2001, and May 31, 2001,
respectively |                                                                                                                                              |                           | 17,687                     |            |                        |             | 17,256      |           
|Accumulated other comprehensive loss                                                                                                                                     |                                                                                                                                              |                           | (2,469,545                 | )          |                        |             | (540,883    | )         
|Additional paid-in capital                                                                                                                                               |                                                                                                                                              |                           | 180,417,573                |            |                        |             | 171,234,630 |           
|Retained earnings                                                                                                                                                        |                                                                                                                                              |                           | 31,622,737                 |            |                        |             | 19,766,858  |           
|                                                                                                                                                                         |                                                                                                                                              |                           |                            |            |                        |             |             |           
|                                                                                                                                                                         |                                                                                                                                              |                           | Total Stockholders Equity |            |                        | 209,588,452 |             |            |             | 190,477,861 | 
|                                                                                                                                                                         |                                                                                                                                              |                           |                            |            |                        |             |             |           
|Total Liabilities and Stockholders Equity                                                                                                                               |                                                                                                                                              | $                         | 243,705,583                |            |                        | $           | 236,959,665 |           
|                                                                                                                                                                         |                                                                                                                                              |                           |                            |            |                        |             |             |           

See accompanying notes to condensed consolidated financial statements.

2



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VANS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
THIRTEEN WEEKS ENDED DECEMBER 1, 2001 AND NOVEMBER 25, 2000
(unaudited)

|                                                                                          |                                      |        |                          |                         |  |                      |            |              |  |            |            | 
|----------------------------------------------------------------------------------------- | ------------------------------------ | ------ | ------------------------ | ----------------------- |  | -------------------- | ---------- | ------------ |  | ---------- | ---------- | 
|                                                                                          |                                      |        |                          |                         |  | THIRTEEN WEEKS ENDED
|                                                                                          |                                      |        |                          |                         |  |                     
|                                                                                          |                                      |        |                          |                         |  | DECEMBER 1,          |            | NOVEMBER 25,
|                                                                                          |                                      |        |                          |                         |  | 2001                 |            | 2000        
|                                                                                          |                                      |        |                          |                         |  |                      |            |             
|Net sales                                                                                 |                                      | $      | 68,333,243               |                         |  | $                    | 74,519,585 |             
|Cost of sales                                                                             |                                      |        | 35,072,918               |                         |  |                      | 42,067,327 |             
|                                                                                          |                                      |        |                          |                         |  |                      |            |             
|                                                                                          |                                      |        | Gross profit             |                         |  | 33,260,325           |            |              |  | 32,452,258 |           
|Operating expenses:                                                                       |                                      |        |                          |                         |  |                      |            |             
|                                                                                          | Selling and distribution             |        |                          | 21,861,370              |  |                      |            | 19,205,979   | 
|                                                                                          | Marketing, advertising and promotion |        |                          | 7,084,703               |  |                      |            | 4,464,800    | 
|                                                                                          | General and administrative           |        |                          | 2,865,325               |  |                      |            | 2,625,172    | 
|                                                                                          | Provision for doubtful accounts      |        |                          | 73,604                  |  |                      |            | 92,694       | 
|                                                                                          | Amortization of intangibles          |        |                          | 48,620                  |  |                      |            | 407,711      | 
|                                                                                          |                                      |        |                          |                         |  |                      |            |             
|                                                                                          |                                      |        | Total operating expenses |                         |  | 31,933,622           |            |              |  | 26,796,356 |           
|                                                                                          |                                      |        |                          |                         |  |                      |            |             
|                                                                                          |                                      |        | Earnings from operations |                         |  | 1,326,703            |            |              |  | 5,655,902  |           
|Interest income                                                                           |                                      |        | (630,402                 | )                       |  |                      | (63,698    | )           
|Interest and debt expense                                                                 |                                      |        | 55,868                   |                         |  |                      | 691,885    |             
|Other (income) expense, net                                                               |                                      |        | 194,236                  |                         |  |                      | (323,759   | )           
|                                                                                          |                                      |        |                          |                         |  |                      |            |             
|Earnings before income taxes and minority interest in income of
consolidated subsidiaries |                                      |        | 1,707,001                |                         |  |                      | 5,351,474  |             
|Income tax expense                                                                        |                                      |        | 512,101                  |                         |  |                      | 1,819,501  |             
|Minority share of income                                                                  |                                      |        | 682,060                  |                         |  |                      | 327,623    |             
|                                                                                          |                                      |        |                          |                         |  |                      |            |             
|Net income                                                                                |                                      | $      | 512,840                  |                         |  | $                    | 3,204,350  |             
|                                                                                          |                                      |        |                          |                         |  |                      |            |             
|Earnings per share information:                                                           |                                      |        |                          |                         |  |                      |            |             
|                                                                                          |                                      | Basic: |                          |                         |  |                      |            |              |  |           
|                                                                                          |                                      |        |                          | Weighted average shares |  |                      | 17,690,962 |              |  |            | 14,029,305 | 
|Net earnings per share                                                                    |                                      | $      | 0.03                     |                         |  | $                    | 0.23       |             
|                                                                                          |                                      |        |                          |                         |  |                      |            |             
|                                                                                          |                                      |        |                          | Diluted:                |  |                      |            |              |  |            |            | 
|                                                                                          |                                      |        |                          | Weighted average shares |  |                      | 18,257,849 |              |  |            | 14,954,786 | 
|Net earnings per share                                                                    |                                      | $      | 0.03                     |                         |  | $                    | 0.21       |             
|                                                                                          |                                      |        |                          |                         |  |                      |            |             

See accompanying notes to condensed consolidated financial statements

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VANS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
TWENTY-SIX WEEKS ENDED DECEMBER 1, 2001 AND NOVEMBER 25, 2000
(unaudited)

|                                                                                                                                  |                                      |                                                      |                          |            |                        |            |              |            |            |            | 
|--------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ---------------------------------------------------- | ------------------------ | ---------- | ---------------------- | ---------- | ------------ | ---------- | ---------- | ---------- | 
|                                                                                                                                  |                                      |                                                      |                          |            | TWENTY-SIX WEEKS ENDED
|                                                                                                                                  |                                      |                                                      |                          |            |                       
|                                                                                                                                  |                                      |                                                      |                          |            | DECEMBER 1,            |            | NOVEMBER 25,
|                                                                                                                                  |                                      |                                                      |                          |            | 2001                   |            | 2000        
|                                                                                                                                  |                                      |                                                      |                          |            |                        |            |             
|Net sales                                                                                                                         |                                      | $                                                    | 186,393,259              |            |                        | $          | 175,099,271  |           
|Cost of sales                                                                                                                     |                                      |                                                      | 97,794,285               |            |                        |            | 98,501,740   |           
|                                                                                                                                  |                                      |                                                      |                          |            |                        |            |              |           
|                                                                                                                                  | Gross profit                         |                                                      |                          | 88,598,974 |                        |            |              | 76,597,531 |           
|Operating expenses:                                                                                                               |                                      |                                                      |                          |            |                        |            |              |           
|                                                                                                                                  | Selling and distribution             |                                                      |                          | 45,088,797 |                        |            |              | 38,372,858 |           
|                                                                                                                                  | Marketing, advertising and promotion |                                                      |                          | 18,355,286 |                        |            |              | 12,480,587 |           
|                                                                                                                                  | General and administrative           |                                                      |                          | 7,134,000  |                        |            |              | 6,326,694  |           
|                                                                                                                                  | Provision for doubtful accounts      |                                                      |                          | 224,912    |                        |            |              | 529,070    |           
|                                                                                                                                  | Amortization of intangibles          |                                                      |                          | 89,912     |                        |            |              | 779,173    |           
|                                                                                                                                  |                                      |                                                      |                          |            |                        |            |              |           
|                                                                                                                                  |                                      |                                                      | Total operating expenses |            |                        | 70,892,907 |              |            |            | 58,488,382 | 
|                                                                                                                                  |                                      |                                                      |                          |            |                        |            |              |           
|                                                                                                                                  |                                      |                                                      | Earnings from operations |            |                        | 17,706,067 |              |            |            | 18,109,149 | 
|Interest income                                                                                                                   |                                      |                                                      | (1,148,122               | )          |                        |            | (87,757      | )         
|Interest and debt expense                                                                                                         |                                      |                                                      | 438,354                  |            |                        |            | 1,443,154    |           
|Other (income) expense, net                                                                                                       |                                      |                                                      | 91,375                   |            |                        |            | (679,204     | )         
|                                                                                                                                  |                                      |                                                      |                          |            |                        |            |              |           
|Earnings before income taxes, minority interest in income
of consolidated subsidiaries and cumulative effect of
accounting change |                                      |                                                      | 18,324,460               |            |                        |            | 17,432,956   |           
|Income tax expense                                                                                                                |                                      |                                                      | 5,497,338                |            |                        |            | 5,927,204    |           
|Minority share of income                                                                                                          |                                      |                                                      | 971,243                  |            |                        |            | 788,859      |           
|                                                                                                                                  |                                      |                                                      |                          |            |                        |            |              |           
|Income before cumulative effect of accounting change                                                                              |                                      |                                                      | 11,855,879               |            |                        |            | 10,716,893   |           
|Cumulative effect of accounting change                                                                                            |                                      |                                                      |                         |            |                        |            | 441,406      |           
|                                                                                                                                  |                                      |                                                      |                          |            |                        |            |              |           
|Net income                                                                                                                        |                                      | $                                                    | 11,855,879               |            |                        | $          | 10,275,487   |           
|                                                                                                                                  |                                      |                                                      |                          |            |                        |            |              |           
|Earnings per share information:                                                                                                   |                                      |                                                      |                          |            |                        |            |              |           
|                                                                                                                                  | Basic:                               |                                                      |                          |            |                        |            |              |            |           
|                                                                                                                                  |                                      | Weighted average shares                              |                          |            | 17,674,535             |            |              |            | 13,889,503 |           
|                                                                                                                                  |                                      | Income before cumulative effect of accounting change |                          |            | 0.67                   |            |              |            | 0.77       |           
|                                                                                                                                  |                                      | Cumulative effect of accounting change               |                          |            |                       |            |              |            | (0.03      | )         
|                                                                                                                                  |                                      |                                                      |                          |            |                        |            |              |           
|Net earnings per share                                                                                                            |                                      | $                                                    | 0.67                     |            |                        | $          | 0.74         |           
|                                                                                                                                  |                                      |                                                      |                          |            |                        |            |              |           
|                                                                                                                                  | Diluted:                             |                                                      |                          |            |                        |            |              |            |           
|                                                                                                                                  |                                      | Weighted average shares                              |                          |            | 18,449,595             |            |              |            | 14,831,916 |           
|                                                                                                                                  |                                      | Income before cumulative effect of accounting change |                          |            | 0.64                   |            |              |            | 0.72       |           
|                                                                                                                                  |                                      | Cumulative effect of accounting change               |                          |            |                       |            |              |            | (0.03      | )         
|                                                                                                                                  |                                      |                                                      |                          |            |                        |            |              |           
|Net earnings per share                                                                                                            |                                      | $                                                    | 0.64                     |            |                        | $          | 0.69         |           
|                                                                                                                                  |                                      |                                                      |                          |            |                        |            |              |           

See accompanying notes to condensed consolidated financial statements

4



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VANS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
TWENTY-SIX WEEKS ENDED DECEMBER 1, 2001 AND NOVEMBER 25, 2000
(unaudited)

|                                                                                |                                                                             |   |                                                    |                                                     |   |                        |             |              |         |             |            |  
|------------------------------------------------------------------------------- | --------------------------------------------------------------------------- | - | -------------------------------------------------- | --------------------------------------------------- | - | ---------------------- | ----------- | ------------ | ------- | ----------- | ---------- | -
|                                                                                |                                                                             |   |                                                    |                                                     |   | TWENTY-SIX WEEKS ENDED
|                                                                                |                                                                             |   |                                                    |                                                     |   |                       
|                                                                                |                                                                             |   |                                                    |                                                     |   | DECEMBER 1,            |             | NOVEMBER 25,
|                                                                                |                                                                             |   |                                                    |                                                     |   | 2001                   |             | 2000        
|                                                                                |                                                                             |   |                                                    |                                                     |   |                        |             |             
|CASH FLOWS FROM OPERATING ACTIVITIES:                                           |                                                                             |   |                                                    |                                                     |   |                        |             |             
|Net earnings                                                                    |                                                                             | $ | 11,855,879                                         |                                                     |   | $                      | 10,275,487  |             
|Adjustments to reconcile net earnings to net cash used in operating activities: |                                                                             |   |                                                    |                                                     |   |                        |             |             
|                                                                                | Depreciation and amortization                                               |   |                                                    | 3,784,314                                           |   |                        |             | 3,751,263    |        
|                                                                                | Net loss on sale of equipment                                               |   |                                                    | 54,298                                              |   |                        |             | 46,233       |        
|                                                                                | Net gain on sale of investment                                              |   |                                                    | (40,276                                             | ) |                        |             | (615,165     | )      
|                                                                                | Minority share of income                                                    |   |                                                    | 971,243                                             |   |                        |             | 788,859      |        
|                                                                                | Provision for losses on accounts receivable and sales returns               |   |                                                    | 224,912                                             |   |                        |             | 529,070      |        
|                                                                                | Changes in assets and liabilities, net of effects of business acquisitions: |   |                                                    |                                                     |   |                        |             |              |        
|                                                                                |                                                                             |   | Accounts receivable                                |                                                     |   | (2,964,204             | )           |              |         | (2,609,550  | )         
|                                                                                |                                                                             |   | Inventories                                        |                                                     |   | (3,461,828             | )           |              |         | (11,825,667 | )         
|                                                                                |                                                                             |   | Deferred income taxes                              |                                                     |   | 197,918                |             |              |         | 116,177     |           
|                                                                                |                                                                             |   | Prepaid expenses                                   |                                                     |   | 980,307                |             |              |         | 3,930,924   |           
|                                                                                |                                                                             |   | Other assets                                       |                                                     |   | (1,707,070             | )           |              |         | (429,650    | )         
|                                                                                |                                                                             |   | Accounts payable                                   |                                                     |   | (4,690,689             | )           |              |         | (5,776,794  | )         
|                                                                                |                                                                             |   | Accrued payroll and related expenses               |                                                     |   | (3,432,758             | )           |              |         | (751,960    | )         
|                                                                                |                                                                             |   | Income taxes payable                               |                                                     |   | 1,760,420              |             |              |         | 2,012,660   |           
|                                                                                |                                                                             |   |                                                    |                                                     |   |                        |             |             
|                                                                                |                                                                             |   |                                                    | Net cash provided by (used in) operating activities |   |                        | 3,532,466   |              |         |             | (558,113   | )
|                                                                                |                                                                             |   |                                                    |                                                     |   |                        |             |             
|CASH FLOWS FROM INVESTING ACTIVITIES:                                           |                                                                             |   |                                                    |                                                     |   |                        |             |             
|Purchases of property, plant and equipment                                      |                                                                             |   | (12,314,870                                        | )                                                   |   |                        | (8,138,564  | )           
|Proceeds from sale of (investments in) other companies                          |                                                                             |   |                                                   |                                                     |   |                        | (618,935    | )           
|Proceeds from sale of property, plant and equipment                             |                                                                             |   | 3,970                                              |                                                     |   |                        | 8,800       |             
|Proceeds from sale of investment                                                |                                                                             |   | 109,091                                            |                                                     |   |                        | 300,000     |             
|                                                                                |                                                                             |   |                                                    |                                                     |   |                        |             |             
|                                                                                |                                                                             |   |                                                    | Net cash used in investing activities               |   |                        | (12,201,809 | )            |         |             | (8,448,699 | )
|                                                                                |                                                                             |   |                                                    |                                                     |   |                        |             |             
|CASH FLOWS FROM FINANCING ACTIVITIES:                                           |                                                                             |   |                                                    |                                                     |   |                        |             |             
|Proceeds (payments) on short term borrowings, net                               |                                                                             |   | (6,530,980                                         | )                                                   |   |                        | 3,286,522   |             
|Payments on capital lease obligations                                           |                                                                             |   |                                                   |                                                     |   |                        | (15,005     | )           
|Proceeds from long term debt                                                    |                                                                             |   | 504,796                                            |                                                     |   |                        | 2,202,176   |             
|Consolidated subsidiary dividends paid to minority shareholders                 |                                                                             |   | (840,762                                           | )                                                   |   |                        | (408,744    | )           
|Proceeds from issuance of common stock                                          |                                                                             |   | 9,784,116                                          |                                                     |   |                        | 1,114,908   |             
|Payment for repurchase of common stock                                          |                                                                             |   | (600,744                                           | )                                                   |   |                        |            |             
|                                                                                |                                                                             |   |                                                    |                                                     |   |                        |             |             
|                                                                                |                                                                             |   |                                                    | Net cash provided by financing activities           |   |                        | 2,316,426   |              |         |             | 6,179,857  |  
|Effect of exchange rate changes on cash and cash equivalents                    |                                                                             |   | 369,677                                            |                                                     |   |                        | (769,740    | )           
|                                                                                |                                                                             |   |                                                    |                                                     |   |                        |             |             
|                                                                                |                                                                             |   |                                                    | Net decrease in cash and cash equivalents           |   |                        | (5,983,240  | )            |         |             | (3,596,695 | )
|Cash and cash equivalents, beginning of period                                  |                                                                             |   | 59,747,584                                         |                                                     |   |                        | 15,516,337  |             
|                                                                                |                                                                             |   |                                                    |                                                     |   |                        |             |             
|Cash and cash equivalents, end of period                                        |                                                                             | $ | 53,764,344                                         |                                                     |   | $                      | 11,919,642  |             
|                                                                                |                                                                             |   |                                                    |                                                     |   |                        |             |             
|SUPPLEMENTAL CASH FLOW INFORMATION  AMOUNTS PAID FOR:                          |                                                                             |   |                                                    |                                                     |   |                        |             |             
|                                                                                |                                                                             |   | Interest                                           |                                                     | $ | 60,962                 |             |              | $       | 1,401,921   |           
|                                                                                |                                                                             |   | Income taxes                                       |                                                     | $ | 3,882,470              |             |              | $       | 3,730,172   |           
|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 twenty-six weeks ended
November 25, 2000 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 December 1, 2001 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 periods
ended December 1, 2001 and November 25, 2000, 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 |            | TWENTY-SIX WEEKS ENDED
|                                                      |  |                      |            |                       
|                                                      |  | DECEMBER 1,          |            | NOVEMBER 25,           |  | DECEMBER 1, |            | NOVEMBER 25,
|                                                      |  | 2001                 |            | 2000                   |  | 2001        |            | 2000        
|                                                      |  |                      |            |                        |  |             |            |             
|Weighted average shares used in basic
computation     |  |                      | 17,690,962 |                        |  |             | 14,029,305 |              |  |  | 17,674,535 |  |  |  | 13,889,503 | 
|Dilutive stock options                                |  |                      | 566,887    |                        |  |             | 925,481    |              |  |  | 775,060    |  |  |  | 942,413    | 
|                                                      |  |                      |            |                        |  |             |            |              |  |  |            |  |  |  |            | 
|Weighted average shares used for
dilutive computation |  |                      | 18,257,849 |                        |  |             | 14,954,786 |              |  |  | 18,449,595 |  |  |  | 14,831,916 | 
|                                                      |  |                      |            |                        |  |             |            |              |  |  |            |  |  |  |            | 



|   |  | For the thirteen week and twenty-six week periods ended December 1, 2001 and
November 25, 2000, respectively, 689,000 and 45,000 shares and 354,500 and
76,000 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 six 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 January 2002 and January 2003.                                                                                                                                                                                                                                                                                                                              
|  
|6. |  | Our operations are classified into three distinct sales channels:
retail, wholesale and international. 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:                                                                                                                                                                                                                      

6



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##### Table of Contents



|              |  |                      |            |                        |  |             |            |              |  |   |             |  |  |   |             | 
|------------- |  | -------------------- | ---------- | ---------------------- |  | ----------- | ---------- | ------------ |  | - | ----------- |  |  | - | ----------- | 
|              |  | THIRTEEN WEEKS ENDED |            | TWENTY-SIX WEEKS ENDED
|              |  |                      |            |                       
|              |  | DECEMBER 1,          |            | NOVEMBER 25,           |  | DECEMBER 1, |            | NOVEMBER 25,
|              |  | 2001                 |            | 2000                   |  | 2001        |            | 2000        
|              |  |                      |            |                        |  |             |            |             
|Retail        |  | $                    | 23,135,000 |                        |  | $           | 24,690,000 |              |  | $ | 56,736,000  |  |  | $ | 50,682,000  | 
|Wholesale     |  |                      | 26,075,000 |                        |  |             | 28,708,000 |              |  |   | 79,247,000  |  |  |   | 75,444,000  | 
|International |  |                      | 19,123,000 |                        |  |             | 21,122,000 |              |  |   | 50,410,000  |  |  |   | 48,973,000  | 
|              |  |                      |            |                        |  |             |            |              |  |   |             |  |  |   |             | 
|              |  | $                    | 68,333,000 |                        |  | $           | 74,520,000 |              |  | $ | 186,393,000 |  |  | $ | 175,099,000 | 
|              |  |                      |            |                        |  |             |            |              |  |   |             |  |  |   |             | 



|   |  | 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    |      | TWENTY-SIX        |   | YEAR ENDED MAY 31,
|                                |          |                        |                        |   | ENDED             |      | WEEKS ENDED       |   |                   
|                                |          |                        |                        |   | November 25, 2000 |      | November 25, 2000 |   | 2001               |      | 2000       |   | 1999
|                                |          |                        |                        |   |                   |      |                   |   |                    |      |            |   |     
|Net earnings                    |          | $                      | 3,204,000              |   |                   | $    | 10,275,000        |   |                    | $    | 14,990,000 |   |      | $    | 12,087,000 |   |      | $    | 8,725,000 |  
|Add back: goodwill
amortization |          |                        | 371,000                |   |                   |      | 706,000           |   |                    |      | 1,514,000  |   |      |      | 1,310,000  |   |      |      | 1,207,000 |  
|                                |          |                        |                        |   |                   |      |                   |   |                    |      |            |   |      |      |            |   |      |      |           |  
|Pro forma net earnings          |          | $                      | 3,575,000              |   |                   | $    | 10,981,000        |   |                    | $    | 16,504,000 |   |      | $    | 13,397,000 |   |      | $    | 9,932,000 |  
|                                |          |                        |                        |   |                   |      |                   |   |                    |      |            |   |      |      |            |   |      |      |           |  
|Per share information:          |          |                        |                        |   |                   |      |                   |   |                    |      |            |   |      |      |            |   |      |      |           |  
|                                | Basic:   |                        |                        |   |                   |      |                   |   |                    |      |            |   |      |      |            |   |      |      |           |   |     
|                                |          | Net earnings           |                        | $ | 0.23              |      |                   | $ | 0.74               |      |            | $ | 1.06 |      |            | $ | 0.89 |      |           | $ | 0.66 |     
|                                |          | Goodwill amortization  |                        |   | 0.02              |      |                   |   | 0.05               |      |            |   | 0.11 |      |            |   | 0.09 |      |           |   | 0.09 |     
|                                |          |                        |                        |   |                   |      |                   |   |                    |      |            |   |      |      |            |   |      |      |           |  
|                                |          | Pro forma net earnings |                        | $ | 0.25              |      |                   | $ | 0.79               |      |            | $ | 1.17 |      |            | $ | 0.98 |      |           | $ | 0.75 |     
|                                |          |                        |                        |   |                   |      |                   |   |                    |      |            |   |      |      |            |   |      |      |           |  
|                                | Diluted: |                        |                        |   |                   |      |                   |   |                    |      |            |   |      |      |            |   |      |      |           |   |     
|                                |          | Net earnings           |                        | $ | 0.21              |      |                   | $ | 0.69               |      |            | $ | 0.99 |      |            | $ | 0.84 |      |           | $ | 0.64 |     
|                                |          | Goodwill amortization  |                        |   | 0.03              |      |                   |   | 0.05               |      |            |   | 0.10 |      |            |   | 0.09 |      |           |   | 0.09 |     
|                                |          |                        |                        |   |                   |      |                   |   |                    |      |            |   |      |      |            |   |      |      |           |  
|                                |          |                        | Pro forma net earnings |   | $                 | 0.24 |                   |   | $                  | 0.74 |            |   | $    | 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 December 1, 2001
was:
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       |  |          |           |              |  |          |         |     |  |   |           | 
|---------------------- |  | -------- | --------- | ------------ |  | -------- | ------- | --- |  | - | --------- | 
|                       |  | GROSS    |           |              |  |          |         | NET
|                       |  | CARRYING |           | ACCUMULATED  |  | CARRYING
|                       |  | AMOUNT   |           | AMORTIZATION |  | AMOUNT  
|                       |  |          |           |              |  |         
|Trademarks and patents |  | $        | 3,855,998 |              |  | $        | 467,462 |     |  | $ | 3,388,536 | 
|                       |  |          |           |              |  |          |         |     |  |   |           | 



| |  | 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 $240,000 per year.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Changes in the carrying amount of goodwill for the period ended December 1,
2001 are summarized as follows:                                                                                                                                         

|                               |  |   |            | 
|------------------------------ |  | - | ---------- | 
|Balance as of May 31, 2001     |  | $ | 23,018,188 | 
|Goodwill acquired              |  |   |           | 
|Impairment losses              |  |   |           | 
|                               |  |   |            | 
|Balance as of December 1, 2001 |  | $ | 23,018,188 | 
|                               |  |   |            | 

7



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|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 $2,000 and $19,000 during the thirteen
and twenty-six weeks ended December 1, 2001, 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 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 December 1, 2001, we hedged our
forecasted purchases through February 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 of $183,000 during the twenty-six week
period ended December 1, 2001 has been recorded as an increase in other
income, net.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|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 twenty-six weeks ended December
1,2001 and November 25, 2000 were as follows:                                                                                                                                                                                                                                                                          

|                                      |                                               |                             |            |                      |         |                        |           |             |   |              |            |            |        |   |            |          |   | 
|------------------------------------- | --------------------------------------------- | --------------------------- | ---------- | -------------------- | ------- | ---------------------- | --------- | ----------- | - | ------------ | ---------- | ---------- | ------ | - | ---------- | -------- | - | 
|                                      |                                               |                             |            | THIRTEEN WEEKS ENDED |         | TWENTY-SIX WEEKS ENDED
|                                      |                                               |                             |            |                      |         |                       
|                                      |                                               |                             |            | DECEMBER 1,          |         | NOVEMBER 25,           |           | DECEMBER 1, |   | NOVEMBER 25,
|                                      |                                               |                             |            | 2001                 |         | 2000                   |           | 2001        |   | 2000        
|                                      |                                               |                             |            |                      |         |                        |           |             |   |             
|Net income                            |                                               | $                           | 512,840    |                      |         | $                      | 3,204,350 |             |   | $            | 11,855,879 |            |        | $ | 10,275,487 |         
|Other comprehensive income (expense): |                                               |                             |            |                      |         |                        |           |             |   |              |            |            |        |   |            |         
|                                      | Unrealized loss on securities, net of tax     |                             |            |                     |         |                        |           | (491,014    | ) |              |            |           |        |   |            | (405,209 | )
|                                      | Derivatives qualifying as hedges, net of
tax: |                             |            |                      |         |                        |           |             |   |              |            |            |        |   |            |          |  
|                                      |                                               | Net derivative gain         |            |                      | 229,150 |                        |           |             |  |              |            |            | 22,577 |   |            |          |  | 
|                                      |                                               | Reclassifications to income |            |                      | 44,754  |                        |           |             |  |              |            |            | 44,754 |   |            |          |  | 
|                                      |                                               |                             |            |                      |         |                        |           |             |   |              |            |            |        |   |            |         
|                                      |                                               |                             | 273,904    |                      |         |                        |          |             |   |              | 67,331     |            |        |   |           |         
|                                      | Foreign currency translation
adjustments      |                             |            | (1,954,157           | )       |                        |           | 113,757     |   |              |            | (1,995,993 | )      |   |            | 107,519  |  
|                                      |                                               |                             |            |                      |         |                        |           |             |   |              |            |            |        |   |            |         
|Total comprehensive income (loss)     |                                               | $                           | (1,167,413 | )                    |         | $                      | 2,827,093 |             |   | $            | 9,927,217  |            |        | $ | 9,977,797  |         
|                                      |                                               |                             |            |                      |         |                        |           |             |   |              |            |            |        |   |            |         

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 the current quarter in the
amount of $1,694,000 relating to prior periods dating back to fiscal 1999.

8



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

GENERAL

The following discussion contains forward-looking statements about our
revenues, earnings, spending, margins, orders, products, plans, strategies and
objectives that involve risk and uncertainties. Forward-looking statements
include any statement that may predict, forecast or imply future results, and
may contain words like believe, anticipate, expect, estimate,
project, or words similar to those. Our actual results could differ
materially from those discussed herein. Factors that could cause or contribute
to such differences include, but are not limited to, those discussed in
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
December 19, 2001.

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, eleven 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.

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 |      | TWENTY-SIX WEEKS ENDED
|                                                     |                                      |                                                                                            |                          |      |                      |      |                       
|                                                     |                                      |                                                                                            |                          |      | DECEMBER 1,          |      | NOVEMBER 25,           |      | DECEMBER 1, |      | NOVEMBER 25,
|                                                     |                                      |                                                                                            |                          |      | 2001                 |      | 2000                   |      | 2001        |      | 2000        
|                                                     |                                      |                                                                                            |                          |      |                      |      |                        |      |             |      |             
|Net sales                                            |                                      |                                                                                            | 100.0                    | %    |                      |      | 100.0                  | %    |             |      | 100.0        | %    |     |      | 100.0 | %   
|Cost of sales                                        |                                      |                                                                                            | 51.3                     |      |                      |      | 56.5                   |      |             |      | 52.5         |      |     |      | 56.3  |     
|                                                     |                                      |                                                                                            |                          |      |                      |      |                        |      |             |      |              |      |     |      |       |     
|Gross profit                                         |                                      |                                                                                            | 48.7                     |      |                      |      | 43.5                   |      |             |      | 47.5         |      |     |      | 43.7  |     
|Operating expenses:                                  |                                      |                                                                                            |                          |      |                      |      |                        |      |             |      |              |      |     |      |       |     
|                                                     | Selling and distribution             |                                                                                            |                          | 32.0 |                      |      |                        | 25.8 |             |      |              | 24.2 |     |      |       | 21.9 |     
|                                                     | Marketing, advertising and promotion |                                                                                            |                          | 10.4 |                      |      |                        | 6.0  |             |      |              | 9.8  |     |      |       | 7.1  |     
|                                                     | General and administrative           |                                                                                            |                          | 4.2  |                      |      |                        | 3.5  |             |      |              | 3.8  |     |      |       | 3.6  |     
|                                                     | Provision for doubtful accounts      |                                                                                            |                          | 0.1  |                      |      |                        | 0.1  |             |      |              | 0.2  |     |      |       | 0.3  |     
|                                                     | Amortization of intangibles          |                                                                                            |                          | 0.1  |                      |      |                        | 0.5  |             |      |              | 0.0  |     |      |       | 0.5  |     
|                                                     |                                      |                                                                                            |                          |      |                      |      |                        |      |             |      |              |      |     |      |       |     
|                                                     |                                      |                                                                                            | Total operating expenses |      |                      | 46.8 |                        |      |             | 35.9 |              |      |     | 38.0 |       |      |      | 33.4 | 
|                                                     |                                      |                                                                                            |                          |      |                      |      |                        |      |             |      |              |      |     |      |       |     
|                                                     |                                      | Earnings from operations                                                                   |                          |      | 1.9                  |      |                        |      | 7.6         |      |              |      | 9.5 |      |       |      | 10.3 |     
|Interest income                                      |                                      |                                                                                            | (0.9                     | )    |                      |      | (0.1                   | )    |             |      | (0.5         | )    |     |      | (0.1  | )   
|Interest and debt expense                            |                                      |                                                                                            | 0.0                      |      |                      |      | 0.9                    |      |             |      | 0.2          |      |     |      | 0.8   |     
|Other (income) expense, net                          |                                      |                                                                                            | 0.3                      |      |                      |      | (0.4                   | )    |             |      | 0.0          |      |     |      | (0.4  | )   
|                                                     |                                      |                                                                                            |                          |      |                      |      |                        |      |             |      |              |      |     |      |       |     
|                                                     |                                      | Earnings before income taxes, minority interest
and cumulative effect of accounting change |                          |      | 2.5                  |      |                        |      | 7.2         |      |              |      | 9.8 |      |       |      | 10.0 |     
|Income tax expense                                   |                                      |                                                                                            | 0.7                      |      |                      |      | 2.5                    |      |             |      | 2.9          |      |     |      | 3.4   |     
|Minority share of income                             |                                      |                                                                                            | 1.0                      |      |                      |      | 0.4                    |      |             |      | 0.5          |      |     |      | 0.5   |     
|                                                     |                                      |                                                                                            |                          |      |                      |      |                        |      |             |      |              |      |     |      |       |     
|Income before cumulative effect of accounting change |                                      |                                                                                            | 0.8                      | %    |                      |      | 4.3                    | %    |             |      | 6.4          | %    |     |      | 6.1   | %   
|                                                     |                                      |                                                                                            |                          |      |                      |      |                        |      |             |      |              |      |     |      |       |     

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QUARTERLY PERIOD ENDED DECEMBER 1, 2001 (Q2 FISCAL 2002), AS COMPARED TO
QUARTERLY PERIOD ENDED NOVEMBER 25, 2000 (Q2 FISCAL 2001)

Net Sales

Net sales for Q2 Fiscal 2002 decreased 8.3% to $68,333,000 from
$74,520,000 for Q2 Fiscal 2001. The sales decrease was due to decreased sales
in all three sales channels, as discussed below.

Total U.S. sales, including sales through our U.S. retail stores,
decreased 7.8% to $49,210,000 for Q2 Fiscal 2002 from $53,398,000 for Q2 Fiscal
2001. Total international sales, including sales through our seven European
stores, decreased 9.5% to $19,123,000 for Q2 Fiscal 2002, versus $21,122,000
for Q2 Fiscal 2001.

The decrease in total U.S. sales resulted from (i) a 9.2% decrease in
domestic wholesale sales, and (ii) a 6.3% decrease in sales through our U.S.
retail stores. The decrease in wholesale sales was primarily due to the
adverse impact of the events of September 11, 2001 on the U.S.
economy coupled with the general economic slowdown in the United States which negatively affected at-once orders
from our largest customers. The decrease in U.S. retail store sales was driven
by an 8.9% decrease in comparable store sales (excluding revenue from
concessions and skate sessions at our skateparks). The decrease in
international sales through VFEL was primarily due to decreased sales in
Canada, Argentina, France and Japan, partially offset by increased royalties
from our distributor and licensee for Japan and increased sales in Mexico and
the United Kingdom.

Gross Profit

Gross profit increased 2.5% to $33,260,000 in Q2 Fiscal 2002 from
$32,452,000 in Q2 Fiscal 2001. As a percentage of net sales, gross profit
increased to 48.7% for Q2 Fiscal 2002, versus 43.5% for Q2 Fiscal 2001,
primarily due to changes in channel mix (i.e. increased full-price retail store
and skatepark revenue and increased royalties), improved average selling price
and improved inventory management.

Earnings from Operations

Our earnings from operations decreased 76.5% to $1,327,000 in Q2 Fiscal
2002, versus $5,656,000 in Q2 Fiscal 2001. As a percentage of sales, earnings
from operations decreased to 1.9% for Q2 Fiscal 2002 versus 7.6% last year.
Operating expenses in Q2 Fiscal 2002 increased 19.2% to $31,934,000 from
$26,796,000 in Q2 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 46.8% versus 35.9% last year.

Selling and distribution.Selling and distribution expenses increased
13.8% to $21,861,000 in Q2 Fiscal 2002 from $19,206,000 in Q2 Fiscal 2001,
primarily due to increased personnel costs, rent expense and other operating
costs associated with the expansion of our retail division by the net addition
of 16 new stores, including four skateparks. This increase was partially
offset by reduced commissions on wholesale sales and lower U.S. distribution
costs.

Marketing, advertising and promotion.Marketing, advertising and promotion
expenses increased 58.7% to $7,085,000 in Q2 Fiscal 2002 from $4,465,000 in Q2
Fiscal 2001. The increase was primarily due to a planned increase in marketing
expenditures, based on budgeted sales, that were committed to six to nine
months ago. The planned increase was related to higher costs
associated with the Vans Triple
CrownTMSeries, such as our new
television agreement with NBC Sports, and the back-to-school selling
season and new product-specific advertising. We did not achieve our sales
budget primarily due to the economic slowdown in the United States, and as a
result, marketing, advertising and promotion expense as a percentage of sales
increased to 10.4% for Q2 Fiscal 2002 from 6.0% in Q2 Fiscal 2001.

General and administrative.General and administrative expenses increased
9.1% to $2,865,000 in Q2 Fiscal 2002 from $2,625,000 in Q2 Fiscal 2001,
primarily due to: (i) increased professional fees for international tax
consulting; and (ii) increased labor and other employee-related expenses.

Provision for doubtful accounts.The amount that was added to the
allowance for doubtful accounts decreased to $74,000 in Q2 Fiscal 2002 from
$93,000 in Q2 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

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amortization of intangibles decreased to $49,000 for Q2 Fiscal 2002 from
$408,000 in Q2 Fiscal 2001. See note seven to Notes to Condensed Consolidated
Financial Statements.

Interest Income

Interest income increased to $630,000 in Q2 Fiscal 2002, versus $64,000 in
Q2 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 $56,000 for Q2 Fiscal 2002 from
$692,000 in Q2 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 $194,000 of
expense for Q2 Fiscal 2002 from $324,000 of income for Q2 Fiscal 2001,
primarily due to (i) a decrease in the amount of income received from the VANS
Warped Tour®; (ii) a decrease in non-footwear related royalties; and (iii) the
loss of rental income due to the sale of our former facility located in Orange,
California in May 2001. The majority of exchange rate gains and losses from the
euro and the British sterling were offset by changes in the fair value of
derivatives purchased to hedge these transactions. See note nine to Notes to
Condensed Consolidated Financial Statements.

As a result of the January 2002 devaluation of the Argentinean peso, we
have incurred a currency loss of approximately $250,000 which will adversely
impact Other (Income) Expense in Q3 Fiscal 2002.

Income Tax Expense

Income tax expense decreased to $512,000 in Q2 Fiscal 2002 from $1,820,000
in Q2 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.

Minority Share of Income

Minority share of income increased to $682,000 in Q2 Fiscal 2002 from
$328,000 for Q2 Fiscal 2001, primarily due to the increased profitability of
our joint ventures in Mexico and Van Pac LLC, partially offset by the
acquisition of the remaining 20% of our distributor in the United Kingdom which
occurred in October 2000.

TWENTY-SIX WEEK PERIOD ENDED DECEMBER 1, 2001 (FISCAL 2002 SIX MONTHS), AS
COMPARED TO TWENTY-SIX WEEK PERIOD ENDED NOVEMBER 25, 2000 (FISCAL 2001 SIX
MONTHS)

Net Sales

Net sales for the Fiscal 2002 Six Months increased 6.5% to $186,393,000
for the Fiscal 2002 Six Months from $175,099,000 for the Fiscal 2001 Six
Months. The sales increase was due to a 17.4% increase in net sales for Q1
Fiscal 2002, partially offset by the decrease in net sales for Q2 Fiscal 2002
discussed above in Results of Operations  Quarterly Period Ended
December 1, 2001 as Compared to Quarterly Period Ended
November 25, 2000.

Total U.S. sales, including sales through our U.S. retail stores,
increased 7.8% to $135,983,000 in the Fiscal 2002 Six Months from $126,126,000
in the Fiscal 2001 Six Months. Total international sales, including sales
through our seven European stores, increased 2.9% to $50,410,000 in the Fiscal
2002 Six Months from $48,973,000 in the Fiscal 2001 Six Months.

The increase in total U.S. sales resulted from the increases in domestic
wholesale sales and sales through our U.S. retail stores in Q1 Fiscal 2002,
partially offset by the decreases in sales in those channels in Q2 Fiscal 2002
as discussed above in Results of Operations-Quarterly Period Ended December 1,
2001 as Compared to Quarterly Period Ended November 25, 2000. The increase in
international sales through VFEL was due to the increases in sales achieved in
Q1 Fiscal 2002, partially offset by the decreases in

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sales through VFEL in Q2 Fiscal 2002 as discussed above in Results of
Operations  Quarterly Period Ended December 1, 2001 as compared to Quarterly
Period Ended November 25, 2000.

Gross Profit

Gross profit increased 15.7% to $88,599,000 in the Fiscal 2002 Six Months
from $76,598,000 in the Fiscal 2001 Six Months. As a percentage of net sales,
gross profit increased to 47.5% for the Fiscal 2002 Six Months, versus 43.7%
for the Fiscal 2001 Six 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 2.2% to $17,706,000 in the Fiscal
2002 Six Months from $18,109,000 in the Fiscal 2001 Six Months. As a
percentage of sales, earnings from operations decreased to 9.5% in the Fiscal
2002 Six Months from 10.3% in the Fiscal 2001 Six Months. Operating expenses
in the Fiscal 2002 Six months increased 21.2% to $70,893,000 from $58,488,000
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 38.0% for the Fiscal 2002 Six Months, versus 33.4% last
year.

Selling and distribution.Selling and distribution expenses increased
17.5% to $45,089,000 in the Fiscal 2002 Six Months from $38,373,000 in the
Fiscal 2001 Six Months, primarily due to increased personnel costs, rent
expense and other operating costs associated with the expansion of our retail
division by the net addition of 16 new stores, including four skateparks.

Marketing, advertising and promotion.Marketing, advertising and
promotion expenses increased 47.1% to $18,355,000 in the Fiscal 2002 Six Months
from $12,481,000 in the Fiscal 2001 Six Months, primarily due to a planned
increase in marketing expenditures, based on budgeted sales, that were
committed to six to nine months ago. The planned increase was related to higher costs
associated with the Vans Triple
CrownTMSeries, such as our new
television agreement with NBC Sports, and the
back-to-school selling season and new product-specific advertising. We did not
achieve our sales budget in Q2 Fiscal 2002, and as a result, marketing,
advertising and promotion expense as a percentage of sales increased to 9.8%
for the Fiscal 2002 Six Months from 7.1% for the Fiscal 2001 Six Months.

General and administrative.General and administrative expenses increased
12.8% to $7,134,000 in the Fiscal 2002 Six Months from $6,327,000 in the Fiscal
2001 Six Months, primarily due to: (i) increased professional fees for
international tax consulting; (ii) increased labor and other employee-related
expenses to support our sales growth; and (iii) increased legal expenses
related to our ongoing worldwide efforts to protect and preserve our
intellectual property rights.

Provision for doubtful accounts.The amount that was added to the
allowance for doubtful accounts decreased to $225,000 in the Fiscal 2002 Six
Months from $529,000 in the Fiscal 2001 Six Months, primarily due to
better-than-expected collection of past due accounts.

Amortization of intangibles.Amortization of intangibles decreased to
$90,000 in the Fiscal 2002 Six Months from $779,000 in the Fiscal 2001 Six
Months for the same reasons described under the caption Amortization of
Intangibles in the discussion of Q2 Fiscal 2002 above.

Interest Income

Interest income increased to $1,148,000 in the Fiscal 2002 Six Months from
$88,000 in the Fiscal 2001 Six Months due to the same reasons described under
the caption Interest Income in the discussion of Q2 Fiscal 2002 above.

Interest and Debt Expense

Interest and debt expense decreased to $438,000 in the Fiscal 2002 Six
Months versus $1,443,000 in the same period a year ago due to the same reasons
described under the caption Interest and Debt Expense in the discussion of Q2
Fiscal 2002 above.

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Other (Income) Expense

Other (income) expense decreased to $91,000 of expense in the Fiscal 2002
Six Months from $679,000 of income in the same period a year ago due to the
same reasons described under the caption Other (Income) Expense in the
discussion of Q2 Fiscal 2002 above.

Income Tax Expense

Income tax expense decreased to $5,497,000 in the Fiscal 2002 Six Months
versus $5,927,000 in the same period a year ago due to the decrease in our
effective tax rate from 34.0% in the Fiscal 2001 Six Months to 30.0% in the
Fiscal 2002 Six Months. The decrease in our estimated effective tax rate was
due to the tax benefit derived from the operation of VFEL.

Minority Share of Income

Minority share of income increased to $971,000 in the Fiscal 2002 Six
Months from $789,000 in the same period a year ago, due to the same reasons
described under the caption Minority Share of Income in the discussion of Q2
Fiscal 2002 above.

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 $3,532,000
for the Fiscal 2002 Six Months, compared to an outflow of $558,000 for the same
period a year ago. Cash provided by operations during the Fiscal 2002 Six
Months primarily resulted from earnings and the add-back for depreciation and
amortization, partially offset by a decrease in accounts payable and accrued
payroll, an increase in net accounts receivable to $39,519,000 at December 1,
2001, from $38,133,000 at May 31, 2001, and an increase in net inventory to
$55,278,000 at December 1, 2001, from $52,828,000 at May 31, 2001. Cash
outflows from operations in the Fiscal 2001 Six Months primarily resulted from
increases in accounts receivable and inventory and a decrease in accounts
payable, partially offset by our earnings, the increase in income taxes
payable, the decrease in prepaid expenses and the add-back for depreciation and
amortization.

We had a net cash outflow from investing activities of $12,202,000 in the
Fiscal 2002 Six Months, compared to a net cash outflow of $8,449,000 in the
same period a year ago. The cash outflows in the Fiscal 2002 Six Months were
primarily due to capital expenditures related to new retail store openings and
skateparks. Cash used in investing activities for the Fiscal 2001 Six Months
also was primarily related to new retail store openings and skateparks.

We had a net cash inflow from financing activities of $2,316,000 for the
Fiscal 2002 Six Months, compared to a net cash inflow of $6,180,000 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 borrowings under our credit facility. See  Borrowings below.
Cash provided by financing activities in the Fiscal 2001 Six Months was
primarily related to 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 $39,519,000 at December 1, 2001, primarily
due to an increase in our United Kingdom and Mexico accounts receivable
resulting from the increase in sales in those countries and an increase in our
domestic accounts receivable resulting from the timing of our Q2 Fiscal 2002
wholesale sales. These increases were partially offset by decreases
in accounts receivable in our
other international markets. Inventories increased to $55,278,000 at December
1, 2001, 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
14 new stores.

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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 December 1, 2001, 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 December 1, 2001, the aggregate outstanding balance under
the note was $2,853,000.

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 balance of fiscal year 2002, we plan to open approximately
four to six full price stores and remodel three to four existing stores. We
estimate the aggregate cost of all these new stores and remodels to be $2.0 to
$3.0 million.

We also intend to
open one additional skatepark in the balance of fiscal
2002 and estimate the aggregate cost of our portion of this project to be
approximately $2.0 million since the landlord for the skatepark has agreed
to pay a significant portion of the capital costs associated with the
construction of the park.

Capital Resources

Our cash position, including $38.6 million invested in investment grade
corporate bonds and asset backed securities and money market mutual funds, was
$53,764,000 at December 1, 2001, 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 December 1, 2001 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
|                              |                                            |  |               |        |              
|                              |                                            |  | FEBRUARY 26,  |        | MAY 31,       |  | AUGUST 26, |        | NOVEMBER 25, |  | FEBRUARY 24, |         | MAY 31, |  | SEPTEMBER 1, |        | DECEMBER 1,
|                              |                                            |  | 2000          |        | 2000          |  | 2000       |        | 2000         |  | 2001         |         | 2001    |  | 2001         |        | 2001       
|                              |                                            |  |               |        |               |  |            |        |              |  |              |         |         |  |              |        |            
|STATEMENT OF
OPERATIONS DATA: |                                            |  |               |        |               |  |            |        |              |  |              |         |         |  |              |        |             |  |   |        |   |  |   |        |   |  |   |         |   |  |   |       
|                              | Net sales                                  |  | $             | 68,812 |               |  | $          | 66,833 |              |  | $            | 100,580 |         |  | $            | 74,520 |             |  | $ | 80,865 |   |  | $ | 85,231 |   |  | $ | 118,060 |   |  | $ | 68,333 |   
|                              | Gross profit                               |  |               | 28,632 |               |  |            | 28,550 |              |  |              | 44,145  |         |  |              | 32,452 |             |  |   | 34,299 |   |  |   | 37,519 |   |  |   | 55,338  |   |  |   | 33,260 |   
|                              | Earnings from operations                   |  |               | 3,405  |               |  |            | 3,690  |              |  |              | 12,453  |         |  |              | 5,656  |             |  |   | 3,816  |   |  |   | 4,640  |   |  |   | 16,379  |   |  |   | 1,327  |   
|                              | Net income                                 |  |               | 1,712  |               |  |            | 1,774  |              |  |              | 7,071   |         |  |              | 3,204  |             |  |   | 2,015  |   |  |   | 2,699  |   |  |   | 11,343  |   |  |   | 513    |   
|AS A PERCENTAGE OF
NET SALES: |                                            |  |               |        |               |  |            |        |              |  |              |         |         |  |              |        |             |  |   |        |   |  |   |        |   |  |   |         |   |  |   |       
|                              | Net sales                                  |  |               | 100    | %             |  |            | 100    | %            |  |              | 100     | %       |  |              | 100    | %           |  |   | 100    | % |  |   | 100    | % |  |   | 100     | % |  |   | 100    | % 
|                              | Gross profit                               |  |               | 42     |               |  |            | 43     |              |  |              | 44      |         |  |              | 44     |             |  |   | 42     |   |  |   | 44     |   |  |   | 47      |   |  |   | 49     |   
|                              | Earnings from operations                   |  |               | 5      |               |  |            | 6      |              |  |              | 13      |         |  |              | 8      |             |  |   | 5      |   |  |   | 6      |   |  |   | 14      |   |  |   | 2      |   
|                              | Net income                                 |  |               | 2      |               |  |            | 3      |              |  |              | 7       |         |  |              | 4      |             |  |   | 2      |   |  |   | 3      |   |  |   | 10      |   |  |   | 1      |   
|                              | Comparable store sales
Increase (decrease) |  |               | 5.7    | %             |  |            | 7.5    | %            |  |              | 8.6     | %       |  |              | 16.8   | %           |  |   | 16.3   | % |  |   | 9.2    | % |  |   | 4.7     | % |  |   | (8.9   | )%

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.

EURO CONVERSION

On January 1, 1999, 11 of the 15 member countries of the European Union
established a fixed conversion rate between their existing sovereign currencies
and the euro, and adopted the euro as their common legal currency on that date.
The euro conversion became effective for all relevant members of the European
Union on January 1, 2002, and all such members are scheduled to begin using the
euro exclusively as of February 28, 2002. Our information systems for our
subsidiaries and all of our stores located in the relevant member countries of
the European Union have been upgraded to recognize the euro.




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 its 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 December 1, 2001, 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 and
Latin America. In particular, recent fluctuations in the value of the euro and
the British sterling have negatively impacted our European business. Additionally,
recent weaknesses in Latin American economies, particularly Argentina, could
negatively effect our Latin American business. See note nine of Notes to
Condensed Consolidated 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 December 1, 2001, we had $13.8 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

On November 16, 2001, we settled our patent litigation with The Burton
Corporation. Under the terms of the settlement, we agreed to license Burtons
3D compatible binding patent and certain other patents, acquire rights to a
Burton patent relating to certain aspects of our integrated bale technology,
and cross-license Burton under our snowboard-related patent portfolio for a
period of time. The parties are taking all steps necessary to dismiss the
litigation.




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On October 30, 2001, the Company held its 2001 Annual Meeting of
Stockholders. The following matters were voted on at the meeting: (i) the
election of directors; (ii) approval of Amendment No. 2 to the Vans, Inc. 2000
Long-Term Incentive Plan to increase the number of shares under the Plan; (iii)
approval of an amendment to the Companys Restated Certificate of Incorporation
to increase the number of authorized shares of our capital stock; and (iv) the
ratification and approval of KPMG LLP as the Companys independent auditors for
Fiscal 2002.

The results of the voting on these matters (including the names of all
persons elected as directors) are set forth below:

|                                                                                |  |           |            |                  |  |             |                  |   |  |  |        |  |  |  |   | 
|------------------------------------------------------------------------------- |  | --------- | ---------- | ---------------- |  | ----------- | ---------------- | - |  |  | ------ |  |  |  | - | 
|                                                                                |  |           |            |                  |  | VOTES       |                  |   |  |  |        |  |  | 
|PROPOSAL                                                                        |  | VOTES FOR |            | AGAINST/WITHHELD |  | ABSTENTIONS | BROKER NON-VOTES
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |  |           |            |                  |  |             |                 
|                                                                               
|Proposal No. 1                                                                  |  |           |            |                  |  |             |                  |   |  |  |        |  |  |  |   | 
|Election of Directors                                                           |  |           |            |                  |  |             |                  |   |  |  |        |  |  |  |   | 
|Nominees:                                                                       |  |           |            |                  |  |             |                  |   |  |  |        |  |  |  |   | 
|Walter E. Schoenfeld                                                            |  |           | 14,902,478 |                  |  |             | 1,348,873        |   |  |  | 0      |  |  |  | 0 | 
|Gary H. Schoenfeld                                                              |  |           | 11,058,866 |                  |  |             | 5,192,485        | * |  |  | 0      |  |  |  | 0 | 
|Wilbur J. Fix                                                                   |  |           | 16,165,378 |                  |  |             | 86,073           |   |  |  | 0      |  |  |  | 0 | 
|Gerald Grinstein                                                                |  |           | 16,165,878 |                  |  |             | 85,473           |   |  |  | 0      |  |  |  | 0 | 
|James R. Sulat                                                                  |  |           | 16,165,878 |                  |  |             | 85,473           |   |  |  | 0      |  |  |  | 0 | 
|Kathleen M. Gardarian                                                           |  |           | 16,165,378 |                  |  |             | 85,973           |   |  |  | 0      |  |  |  | 0 | 
|Lisa M. Douglas                                                                 |  |           | 16,165,278 |                  |  |             | 86,073           |   |  |  | 0      |  |  |  | 0 | 
|Charles G. Armstrong                                                            |  |           | 16,165,613 |                  |  |             | 85,738           |   |  |  | 0      |  |  |  | 0 | 
|Leonard R. Wilkens                                                              |  |           | 16,164,968 |                  |  |             | 86,383           |   |  |  | 0      |  |  |  | 0 | 
|                                                                               
|Proposal No. 2
Amendment No. 2 to Vans, Inc.
2000 Long-Term Incentive Plan      |  |           | 13,088,861 |                  |  |             | 3,131,602        |   |  |  | 30,888 |  |  |  | 0 | 
|                                                                               
|Proposal No. 3
Amendment to Restated
Certificate of Incorporation               |  |           | 15,210,496 |                  |  |             | 1,038,568        |   |  |  | 2,287  |  |  |  | 0 | 
|                                                                               
|Proposal No. 4
Ratification of KPMG LLP as
Independent Auditors for Fiscal 2002 |  |           | 16,206,501 |                  |  |             | 41,290           |   |  |  | 3,560  |  |  |  | 0 | 



---

|* |  | We believe that most of these votes were from institutional shareholders who
had informed us that they intended to vote against
Mr. Schoenfeld because he served on the Nominating Committee. He has
subsequently resigned from such Committee.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



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



| | 3.1  |  | Certificate of Amendment of Restated Certificate of Incorporation of Vans, Inc.
| | ---- |  | -------------------------------------------------------------------------------
|
| | 10.1 |  | Amendment No. 2 to Vans, Inc. 2000 Long-Term Incentive Plan                    



|(b) |  | Reports on Form 8-K. The Company filed one report on Form 8-K during the
quarterly period ended December 1, 2001. The report was dated September
25, 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: January 15, 2002 | By:                                                      | /s/    Gary H. Schoenfeld
|                       |                                                         
|                       | GARY H. SCHOENFELD
President and Chief Executive Officer

|                       |                                                                                                                     |                            
|---------------------- | ------------------------------------------------------------------------------------------------------------------- | ---------------------------
|Date: January 15, 2002 | By:                                                                                                                 | /s/    Andrew J. Greenebaum
|                       |                                                                                                                    
|                       | ANDREW J. GREENEBAUM
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

19