SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                ----------------
                                    FORM 10-K

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
        EXCHANGE ACT OF 1934
                    FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
                                       OR
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
        EXCHANGE ACT OF 1934

                         COMMISSION FILE NUMBER 0-28596

                               THE NORTH FACE, INC.                   
             (Exact name of registrant as specified in its charter)

     DELAWARE                                               94-3204082
  (State or other jurisdiction of                        (I.R.S. Employer 
  incorporation or organization)                      Identification Number)

2013 Farallon Drive, San Leandro, California                  94577
(Address of principal executive offices)                   (Zip Code)

Registrant's telephone number, including area code: (510)618-3500

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:  Common Stock, par
value $.0025 per share

     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 reports), and (2) has been subject to 
such filing requirements for the past 90 days. Yes X  No ___

     Indicate by check mark if disclosure of delinquent filers pursuant to 
Item 405 of Regulation S-K is not contained herein, and will not be contained, 
to the best of registrant's knowledge, in definitive proxy or information 
statements incorporated by reference in Part III of this Form 10-K or any 
amendment to this Form 10-K.

     On February 20, 1998, the aggregate market value of the registrant's 
voting stock held by non-affiliates was $321,782,282.

     As of February 20, 1998, the number of shares of the registrant's Common 
Stock outstanding was 11,543,759.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive Proxy Statement for the Annual Meeting 
of stockholders scheduled for March 31, 1998, are incorporated by reference in 
Part III of this report.


<PAGE>
                                     PART I

ITEM 1.  BUSINESS.

GENERAL

The North Face, Inc., a Delaware corporation, together with its consolidated 
subsidiaries (the "Company"), designs and distributes technically 
sophisticated outerwear, skiwear, functional sportswear, tents, sleeping bags, 
backpacks and daypacks, all under The North Facer name.  The Company believes 
that The North Facer is the world's premier brand of high-performance outdoor 
apparel and equipment.

Certain statements in this report marked with an asterisk (*) are forward 
looking, and actual results may differ materially from the results expected by 
the Company.  The Company's future growth and operating results may be 
adversely affected by a number of factors, including those set forth under 
"Factors That May Affect The Company's Business" and elsewhere below in Item 1 
of this report.  There may also be important, unforeseen risks not described 
herein.

INDUSTRY OVERVIEW

Technical outdoor apparel and equipment historically have been used primarily 
by professional climbers and serious outdoor enthusiasts.  In recent years, 
these products have become increasingly popular among a broader group of 
consumers. The Company believes that this growth has been the result primarily 
of: (i) an increase in outdoor recreational activities by the general 
population; (ii) a shift in consumer preferences leading to a growing demand 
for highly functional products at the expense of fashion-oriented products; 
(iii) a growing acceptance of outdoor apparel as casual wear; and (iv) an 
increase in the technical sophistication of products in this field.

PRODUCTS

The Company offers a broad range of high-performance, technically-oriented 
outerwear, skiwear, outdoor equipment and functional sportswear ("Tekware") 
designed for extreme applications, such as high altitude mountaineering, ice 
climbing, rock climbing, backpacking, skiing, snowboarding, hiking, training 
and adventure travel.  The Company characterizes its apparel-related products 
as "equipment for the body."  As a result of the experience gained over more 
than 30 years as the brand of choice for many of the world's most challenging 
high altitude and polar expeditions, The North Facer has achieved a unique 
level of authenticity.  The Company's broad product line and manifesto: "For 
over thirty years, individuals whose lives depend on the performance of their 
gear consistently choose The North Face," truly differentiates The North Face 
from any other company in the world.  The North Facer products are original 
designs and carry a lifetime warranty for the original owner against defects 
in materials and workmanship.  In 1996, sales of outerwear, equipment, 
skiwear, Tekware and other products represented approximately 52%, 25%, 12%, 
7% and 4%, of net sales, respectively.  In 1997, sales of outerwear, 
equipment, skiwear, Tekware, Ascentials and other products represented 
approximately 48%, 22%, 10%, 12%, 4%, and 4%, of net sales, respectively.

The Company's goal is to offer the most technically advanced products in its 
field and to establish the industry standard in each product category.*  The 
Company designs many of its products for extreme applications, such as high 
altitude mountaineering, ice climbing and back-country skiing, which it 
believes represent only a small fraction of its potential customers.  These 
products serve to reinforce The North Facer brand image while appealing to 
non-extreme users.  The Company also strives to offer products at more 
moderate price-points that remain "best of class" by incorporating many of the 
features, materials and technology used in its leading edge designs.*  The 
Company believes that this product design philosophy enhances The North Facer 
brand while appealing to the broader consumer market.  

OUTERWEAR

The Company's outerwear is engineered to provide protection in cold, wet and 
windy conditions and to accommodate the range of motion required for the most 
extreme activities.  It is designed to adapt to varying conditions and 
situations, taking into account the unpredictability of the weather and the 
fact that some outdoor activities alternate between periods of extreme 
exertion and total rest, requiring a proper balance between ventilation and 
insulation.  Each year, the Company enhances its outerwear lines by adding new 
products and design innovations.* Overall, the Company introduced 21 new 
outerwear products for 1998.  The Company currently offers three
classifications of  outerwear: Expedition, search and rescue and technical.

EXPEDITION OUTERWEAR

EXPEDITION SYSTEMr is an advanced, integrated cold- weather clothing system in 
which several pieces (including full-body suits, pants, jackets, vests, 
anoraks and accessories) work together in layers to create warmth, protection 
and safety.  Products in the category feature materials which the company 
believes to be state-of-the-art including, Gore-Texr, 700 fill power goose 
down and Polarr fleece.  Since 1994, the Company has significantly expanded 
the Expedition Systemr product line by creating new families of products 
around existing products, such as the Mountain Light and Denali fleece 
families, adding new product segments, such as the Himalayan and Kichatna 
Series, significantly upgrading and restyling existing products, such as the 
Nuptse Series, and adding products such as those specifically designed for 
women.

SEARCH AND RESCUE OUTERWEAR

SEARCH AND RESCUEr introduced a new concept to the outdoor industry.  This 
collection of one-piece suits, shells and fleece is designed to support and 
protect mountain search and rescue teams in extreme weather conditions. 
Although intended for search and rescue experts, several pieces within the 
collection are expected to appeal to consumers who desire its protective 
attributes for less extreme outdoor activities. 

TECHNICAL OUTERWEAR

The Company's new Technical Outerwear collection is offered in four 
components: zip together Gore-Texr shells and goose down garments; 
waterproof/breathable Hydrosealr shells; microfiber windwear; and high 
performance fleece.

The SUMMIT Series of technically advanced Gore-Texr jackets and pants are 
designed to provide protection from very wet and windy conditions.  When these 
shells are zipper mated with the Company's Ascent goose down jackets and 
vests, they provide effective insulation against cold weather.  This is a high 
performance series intended for serious outdoor enthusiasts.

The EXPLORER Series' coats, jackets and pants represent a new generation of 
weatherproof shells, designed as a moderately priced alternative to the 
Company's Gore-Texr shells.  These products feature Hydrosealr, The North 
Face's new, proprietary waterproof/breathable laminated fabric.  This series 
of seam sealed shells is intended to extend the reach of the Company's 
outerwear to a wider audience.

The HIGH AEROBIC OUTPUT SERIES consists of jackets and pants designed to 
provide protection in conditions of wind and light rain.  Featuring The North 
Face's proprietary Hydrenaliner fabric, these garments are applicable to a 
wide range of pursuits, including, running, mountain biking, hiking and other 
aerobic outdoor activities.

The HIGH PERFORMANCE FLEECE SERIES consists of jackets, vests, sweat shirts 
and pants made from advanced Polartecr polyester knitted fabrics.  Included 
among these products is the Company's best selling, 300 weight Denali Jacket 
and its innovative bi-component UltraWickr pullovers.  The Company believes
that the fast wicking capabilities of its UltraWickr garments are substantially
superior  to cotton sweatshirts and represent a significant sales growth
opportunity.

TEKWARETM

In 1996, The Company entered the broader casual apparel market with its 
introduction of TekwareTM, a line of high-performance apparel made from a new 
generation of synthetic fabrics and developed in collaboration with E.I. 
DuPont de Nemours & Co. ("DuPont") and other companies.  Tekware is offered in 
three lines --- Climbing, Training and Trekking --- each with styles for men 
and women.  Each line features a collection of pants, shorts, shirts, 
pullovers, vests, tank tops and tights, each in several styles.  Tekware is 
designed for serious outdoor pursuits but is especially functional for 
everyday use.  The Company currently offers 94 Tekware products for Fall 1998.  
Preseason orders for Tekware for the 1998 Spring season increased more than 
132% over the 1997 Spring season.

ADVANTAGES OF TEKWARE-TM- OVER COTTON CLOTHING

Features                                  Tekware      Cotton
--------------------------------------  -----------  -----------
Quick Drying                                /X/
Abrasion Resistant                          /X/
Shrink Resistant                            /X/
Tear Resistant                              /X/
Fade Resistant                              /X/
Stain Resistant                             /X/
Mildew Resistant                            /X/

Tekware provides an effective complement to the Company's other product 
offerings and will continue to be prominently featured in the Company's Summit 
Shops (see description of Summit Shops following).*  The Company believes 
Tekware will be very appealing to a wide range of customers and will increase 
the amount of selling space devoted to The North Facer products in its dealers'
stores.*  The Company believes Tekware's broad, year-round product line 
supplemented with consistent new product introductions will help create 
sustained consumer interest in The North Facer brand.*  In addition, Tekware 
has increased potential to become a repeat or "replenishment" business for the 
Company as consumers purchase new sportswear to complement or replenish their 
existing wardrobes.* 

EQUIPMENT

Equipment is critical to The North Facer image and reputation and plays an 
extremely important role in its research, development, field testing and 
marketing activities.  The Company offers three lines of technical outdoor 
equipment: tents, sleeping bags and backpacks.  The Company increased its 
equipment sales during 1996 and 1997 by introducing new products and refining 
existing products.  The Company has introduced 34 new equipment products for 
1998.

TENTS. The Company currently offers an extensive line of 20 tent models, 
designed to suit a wide variety of weather conditions and applications.  The 
Company offers 10 expedition-quality tents, including models such as the VE-
25, long renowned as the world's finest base camp tent, and the Mountain Tent, 
rated by CLIMBING MAGAZINE in 1995 as the best two-person expedition tent.  In 
January 1998, BACKPACKER Magazine awarded The North Face, Inc. a Silver 
Service Award in honor of the Company's Oval Intention tent, the "geodesic 
dome tent" that revolutionized tent design.  The crossed pole structure 
pioneered in the Oval Intention makes shelters self-standing and more wind 
resistant.  The one-time Silver Service Awards pay tribute to innovations, 
people, and organizations that have had a significant, positive impact on the 
state of backpacking during the past 25 years.  Additionally, BACKPACKER 
Magazine recently gave the Company a 1998 Editor's Choice Award for its 
Soloist Bivy, a bivy bag with crisscrossing poles to provide tent-like shelter 
for the soloist.  The Company's best selling tents are its three-season and 
recreational tents that also offer a number of advanced features and are used 
by a wide range of consumers for backpacking and camping.

SLEEPING BAGS.  The Company offers 26 models of sleeping bags for 
mountaineering and backpacking that differ in insulation, shell fabrics and 
linings.  The Company offers 13 models in its goose down line and 13 models in 
its synthetic insulated line of sleeping bags to provide comfort in 
temperatures ranging from -35F to +40F. Many of the Company's sleeping bags 
feature proprietary design and materials.  For Fall 1996, the Company 
introduced synthetic sleeping bags made from Polarguard 3D, a high-performance 
product developed by Hoechst Corporation ("Hoechst").  The Company's sleeping 
bags continue to be the choice of many of the worlds high altitudes polar 
expeditions. 

BACKPACKS.  The Company offers a line of backpacks grouped into three 
categories: (i) large volume, internal-frame packs for extended backcountry 
trips; (ii) "tech packs" for specific sport activities; and (iii) day packs, 
which are included in the Company's Ascentials product group.  The large-
volume, internal-frame pack category consists of three different lines based 
on differing load-carrying efficiencies.  These packs are made in a range of 
torso lengths and in sizes to fit both men and women. The "tech pack" line 
consists of 15 models of sport-specific packs designed with the participation 
of the Company's teams of climbers, explorers and extreme skiers for specific 
activities, such as high altitude climbing, ice climbing, rock climbing, 
backcountry skiing and snowboarding.

SNOWSPORTS - SKIWEAR AND SNOWBOARDWEAR

The Company's skiwear and snowboardwear is designed for extreme skiing and 
backcountry snowboarding. While the Company's skiwear is designed for extreme 
users, it has become increasingly popular among recreational skiers.  The 
North Facer skiwear products include parkas, jackets, anoraks, ski pants, ski 
suits, gloves and other accessories.  The Company's five skiwear collections -
- Steep Techr, Men's Extremer Gear, Women's Extremer Gear, Men's Extremer 
Light, Women's Extremer Light and E.G.- Tech (new for Fall 1998)-- have been 
designed for specific applications, including backcountry skiing. The 
Company's skiwear offers highly technical features for optimal weather 
protection, maximum freedom of movement and appropriate ventilation, including 
the use of tough, abrasion-resistant fabrics, such as Kevlar, that are 
strategically overlaid or inset for added protection in areas of excessive 
wear and tear, such as shoulders and elbows. For 1998, the Company has 
introduced 35 new skiwear products.

For Fall 1998, the Company's new snowboardwear, Roam and Chaos, feature 
materials specially designed for toughness, water resistance and 
breathability.  The Company's snowboardwear is designed for serious backcountry
athletes and is constructed with many of the performance details found in the 
Company's expedition outerwear.

ASCENTIALS

ASCENTIALS is comprised of the Company's line of technical apparel and 
equipment accessories.  Technical apparel accessories include a range of high-
performance thermal underwear, head wear, gloves and mittens which have been 
tested extensively throughout the world in extreme conditions.  This 
collection was expanded significantly in 1996 with the introduction of 
daypacks, lumbar packs and cargo bags, providing an opportunity for a wide 
audience of hikers, students and the general public to own The North Facer 
product at a more moderate price. For 1998, the Company has introduced 
additional new products in the categories of daypacks, lumbar packs, cargo 
bags, ballistics luggage and other accessories.  

RESEARCH, DESIGN AND DEVELOPMENT

The Company's goal is to offer the most technically advanced products in the 
world that establish the industry standard in each of the Company's product 
categories.*  To remain on the leading edge of product design and materials 
technology, the Company continually evaluates trends, monitors the needs and 
desires of consumers and works with its materials suppliers to develop new 
materials and products to enhance product designs.* The Company always  strives
to develop proprietary products.*

The Company regularly reviews its product lines and actively seeks input from 
a variety of sources.  At the forefront of the product development effort is a 
30-member product development team, which includes experts in textiles and 
design engineering.  This team, which is responsible for overseeing testing of 
designs and introducing new outerwear, equipment, skiwear and Tekware, is 
organized along major product lines in a team-based structure.  The product 
development team works primarily with staff designers and also with outside 
contract designers.  In addition, the Company's teams of climbers, explorers 
and extreme skiers also are important participants in the Company's research, 
design and development effort.

The product development cycle, from initial design to introduction, can take 
from 12 to 18 months (tents and backpacks may require even more time).  A new 
product may be produced in several prototypes before being submitted for 
testing.  New designs are tested by the Company's teams of climbers, explorers 
and extreme skiers and by in-house and independent laboratories, as well as by 
other Company personnel.  The North Face maintains a materials testing 
laboratory to execute a variety of tests, including water resistance, air 
permeability, tear strength and abrasion resistance.  In 1998, the Company 
plans to establish a state-of-the-art technology center located at the 
Company's headquarters, which will feature advanced laboratory testing 
equipment and environmental chambers enabling the simulation of varied severe 
weather conditions.*  This technology center will be unique and will 
significantly enhance and shorten the Company's product development cycle.*

The Company's products are designed with materials that are essential to their 
technical performance.  Most of these materials are developed in collaboration 
with major suppliers, such as W. L. Gore & Associates, DuPont, Hoechst, Malden 
Mills, Burlington Industries, and Mitsui Textiles. The Company works closely 
with these and other suppliers to develop high-performance materials that 
result in lighter, stronger and more efficient products.  With each innovative 
material, the Company generally seeks proprietary use or an exclusivity 
period, usually one to two years, after which the supplier is free to make the 
material generally available. These suppliers frequently provide much of the 
funding for research and development of the materials they are developing for 
the Company, and often contribute to the costs of promoting products 
incorporating their material.*  The suppliers' willingness to work with The 
North Face in the development of these "next-generation" products is 
attributed to the Company's unique position as the most innovative outdoor 
apparel and equipment company in the industry.

MARKETING AND PROMOTION

The Company's goal is to increase brand awareness by projecting a top-quality, 
technical, extreme and authentic image that appeals to professionals and 
serious outdoor enthusiasts as well as to broader segments of the population.*  
The Company conveys an extreme and highly technical image by featuring world-
class climbers, explorers, skiers and snowboarders using the Company's 
products on high altitude, polar or backcountry expeditions.  The Company's 
marketing materials utilize language and images that, while directed to the 
extreme athlete, also create an emotional connection with broader segments of 
the population.

The Company believes that it has obtained a high level of brand awareness and 
loyalty from the extreme users of its products.  In order to bolster the 
loyalty of these individuals and to further enhance its extreme image, the 
Company is increasing its support of selected high altitude and polar 
expeditions and its teams of climbers, explorers and skiers.*  The North Facer 
products have been the brand choice of many of the world's most challenging 
expeditions for over 30 years.  A small sampling of these expeditions includes 
the 1969 Arctic Institute of North America Altitude Expedition; 1978 American 
Woman's Himalayan Expedition; 1987 International K-2 Expedition; 1989 Trans-
Antarctica Expedition; 1992 American Gasherbrum IV Expedition; 1994 Sagmartha 
Environmental Expedition; 1995 Ak-Su Kyrgyzstan Expeditions; 1996 Shipton 
Spire Expeditions; 1997 Middle Triple Peak Expedition; 1997 Women's Morrocco 
Expedition; and 1997 Queen Maud Land Expedition.

Recognizing that the product choices of professional athletes influence 
consumer preferences, the Company employs and/or has entered into contracts 
with several world-class professional climbers, including Conrad Anker, Kitty 
Calhoun, Greg Child, Lynn Hill, Alex Lowe, Pete Athans, Peter Croft, Nancy 
Feagin, Jay Smith and Thomas Huber; extreme skiers Scot Schmidt, Rick 
Armstrong, Yuji Hirayama and Rob and Eric DesLauriers; and backcountry 
snowboarders Stephen Koch, John Griber,and Jim and Bonnie Zellers.  These 
athletes are essential to the Company's product research, design and testing.  
In addition, they participate in promotional activities on behalf of the 
Company, including demonstrations and appearances at exhibitions, tradeshows, 
retailer clinics and promotional events, and appear in photos to promote the 
Company in catalogs, advertisements, posters and videos.  The Company has 
entered into relationships with the Professional Ski Instructors of America, 
the National Ski Patrol, and the American Association of Snow Board 
Instructors, pursuant to which each of these organizations endorses the 
Company's skiwear and snowboardwear.

In 1994, the Company began an ongoing comprehensive consumer advertising
campaign in outdoor and ski publications.  The Company's advertisements appear 
in magazines such as OUTSIDE, CLIMBING MAGAZINE, BACKPACKER, and MEN'S HEALTH, 
and POWDER.  The Company also has received editorial coverage in a wide range 
of general interest and some outdoor publications, including THE NEW YORK 
TIMES, NATIONAL GEOGRAPHIC, VOGUE and MEN'S JOURNAL as well as broadcast media 
and film coverage.  The Company provides a wide assortment of point-of-
purchase advertising support to retailers, including catalogs, descriptive 
product hangtags and visual aids. Many of these point-of-purchase marketing 
tools are integrated into the Company's Summit Shops (described below).  The 
Company also promotes sales by presenting sizable product displays at three 
industry trade shows, two of which are held in the Spring and one in the Fall 
of each year.  In 1997, the Company incurred expenditures for advertising and 
promotional activities, which were approximately 4% of net sales.  These costs 
are in addition to the marketing dollars provided through cooperative 
relationships with certain key suppliers and research partners.

SUMMIT SHOPS

In the third quarter of 1996, the Company introduced Summit Shops, year-round 
concept shops dedicated to The North Facer products and which are located 
within certain of its wholesale customers' stores.  Summit Shops are intended 
to increase sales at existing specialty retailers by offering an attractively 
designed, professionally merchandised, dedicated selling space featuring an 
array of The North Facer products.*  The objectives of the Summit Shops are 
to: (i) have year-round floor space within selected specialty retailers' 
stores which is dedicated to The North Face's products; (ii) help the 
Company's specialty retailers compete against mainstream apparel retailers; 
(iii) create a repeat customer base; (iv) modernize the specialty retailers' 
approach to merchandising The North Facer products; (v) provide the ability to 
closely monitor retail sell-through at specialty retailers; and (vi) maintain 
a consistent product assortment and marketing presentation at the specialty 
retail level.*  The Company has designed the appearance of each Summit Shop, 
including its fixtures, merchandise displays, descriptive placards and graphic 
images, to increase consumer awareness of The North Facer brand and image. The 
Company provides merchandising support for the Summit Shops, while the 
specialty retailer provides the customer service, sales personnel and the 
actual floor space.  The Company also provides sales and product training for 
the specialty retailers' personnel who work in the Summit Shops.  Each Summit 
Shop is expected to follow certain operational guidelines and maintain minimum 
inventory levels.

A total of 42 Summit Shops were opened in 1996, followed by an additional 160 
shops in 1997.  These shops averaged approximately 430 square feet in size.  
The Company expects to open a minimum of 173 additional Summit Shops in 1998 
under a revised program which will provide a selection of four typical 
formats, each varying in size and design, to better match Summit Shop designs 
with the store's environment and capacity.*  While the Company expects future 
Summit Shops to be an average of 425 feet with an average investment by the 
Company for furniture and fixtures of approximately $35,000, there can be no 
assurance that Summit Shops will not require substantially more total capital 
investment in the future.*

SELECTIVE DISTRIBUTION

To preserve the integrity of The North Facer image and reputation, the Company 
currently limits its distribution to retailers that market products that are 
consistent with the Company's technical standards and that provide a high 
level of customer service and technical expertise.  The Company currently 
sells its products to a select group of specialty mountaineering, backpacking 
and skiing retailers, premium-sporting goods retailers and major outdoor 
specialty retail chains.  The Company does not sell its products to national 
general sporting goods chains or to discount stores. The Company sells its 
products in the United States to approximately 840 wholesale customers, 
representing an estimated 1,350 store fronts.  In Canada, the Company sells 
its products to approximately 260 wholesale customers, representing an 
estimated 290 store fronts, and in Europe, it sells to approximately 650 
wholesale customers, representing an estimated 950 store fronts.  Major 
customers of the Company include Recreational Equipment Inc., and Eastern 
Mountain Sports, Inc.

While the Company intends to continue to add selected new wholesale customers, 
it anticipates focusing primarily on increasing sales to existing wholesale 
customers.*  To accomplish this, the Company has continued to broaden its 
product line, including the introduction of Tekware and Assentials, introduce 
Summit Shops and enhance the core inventory replenishment program.  
Additionally, the Company has and will continue to develop counter-seasonal 
products and will continue to introduce staircasing of products to reach a 
broader consumer base.  The Company believes that Summit Shops have increased 
and will continue to increase sales by expanding selling space devoted to, and 
improving the merchandising of, The North Facer products.*  By increasing 
availability of the Company's best selling products, the Company believes its 
core inventory replenishment program has contributed to more consistent 
product flow to its wholesale customers, particularly those with Summit 
Shops.*  Additionally, the Company believes that its core inventory 
replenishment program has contributed, and will continue to contribute to, an 
increased ability to meet reorder demand.*  In 1997, the Company's reorders 
increased 66% over 1996.

The Company's products are sold to wholesale customers in the United States by 
employee sales representatives, and in Canada and Europe by independent sales 
representatives.  Sales representatives conduct in-store clinics to educate 
sales personnel on the technical qualities and uses of the Company's products, 
provide customer support, review each retail account on a periodic basis and 
assist the Company in forecasting levels of product needs.  Independent sales 
representatives in Canada and Europe are paid on a commission basis. 

The Company maintains a specialty retailer and customer service department to 
handle orders and consumer inquiries as well as a warranty department to 
handle the repair or replacement of defective or damaged merchandise.  All of 
the Company's products (other than those sold through the Company's outlet 
stores) are covered by a lifetime warranty. 

The Company currently distributes its products in the United States from its 
250,445 square foot facility in Vacaville, California.  In Canada the Company 
operates a 22,400 square foot distribution and administrative facility in 
Brampton, Ontario, and in Europe the Company operates a 77,200 square foot 
distribution and administrative facility in Port Glasgow, Scotland.  In May 
1998, the Company intends to outsource its Canadian warehousing and shipping 
functions to a third-party distribution company.*  The majority of the 
Company's U.S. products are shipped by Road Package Systems (RPS) and common 
carriers.

RETAIL OPERATIONS

RETAIL STORES. The Company's retail operations are an important component of 
its marketing and product development strategies and provide a distinctive 
environment in which to merchandise and sell The North Facer product line.  
Located primarily in high-end retail shopping districts and regional shopping 
malls, these stores carry a broad range of The North Facer outerwear, 
equipment, skiwear, Tekware and Assentials  as well as a small percentage of
complementary  products from other manufacturers that enhance the technical
nature and  heritage of the brand.  The Company believes that as a result of
the Company's  ability to control the visual presentation and product
assortment in its  retail stores, these stores help build brand awareness and
introduce consumers to a  broad range of The North Facer products.  These
stores also provide a means  for the Company to test the appeal of new products
and merchandising  techniques.  By working closely with store personnel, many
of whom are outdoor  enthusiasts, the Company also obtains customer feedback
that influences  product design and development.

The following table shows the approximate retail selling space at each of the 
Company's nine retail stores:

                                        Approximate
                                          Selling
                                          Square         Year
Location                                  Footage      Opened
--------------------------------------  -----------  -----------
Denver, CO..................               8,500        1973
Boulder, CO.................               3,400        1982
Seattle, WA.................               4,600        1985
Oakbrook, IL................               3,000        1991
San Francisco, CA...........               8,100        1991
Schaumberg, IL..............               3,400        1991
Costa Mesa, CA..............               5,500        1993
Palo Alto, CA...............               7,800        1994
Chicago, IL.................              12,000        1995

Although the Company considers its retail stores to be an important aspect of 
its business strategy, the Company currently has no plans to open additional 
retail stores, particularly given its focus on the introduction of additional 
Summit Shops.*  The Company believes that Summit Shops will provide many of 
the same benefits as its Company-operated retail stores and that the 
substantially reduced operational and financial commitments associated with 
Summit Shops will result in a higher return on investment.*  The Company is 
considering establishing a brand-enhancing flagship store, possibly in 1999.*

OUTLET STORES.  The Company operates three outlet stores, located in Berkeley 
and San Francisco, California and Freeport, Maine.  An additional temporary 
outlet has been operating in Vacaville, California and is closing in March 
1998.  In 1998, the Company plans to open outlets in Woodbury, New York, 
Quebec, Canada and Port Glasgow, Scotland.*  The outlets serve primarily as an 
effective means to liquidate discontinued and excess wholesale merchandise.

INTERNATIONAL OPERATIONS

International sales accounted for approximately 26% of the Company's net sales 
in 1997.  In 1996, the Company implemented an integrated world-wide approach 
to product development, sourcing and marketing in order to reduce costs, 
ensure consistent worldwide operations and create a unified global brand.  By 
offering substantially the same product lines and promoting the same extreme 
image in catalogs, advertising and point of purchase materials, the Company 
has positioned The North Facer brand in Europe to be consistent with the brand 
image in the United States and Canada.  Outside the United States, The North 
Facer products are sold to wholesale customers in Europe and Canada through 
the Company's wholly-owned subsidiaries and by a licensee in Hong Kong and 
Macao.  In Japan and Korea, substantially all of the Company's trademarks are 
owned by Kabushiki Kaisha Goldwin ("Goldwin"), with which the Company shares a 
business cooperation and marketing alliance.

EUROPE.  The Company believes that it is currently well positioned in Europe 
to take advantage of the same industry trends that are occurring in the United 
States.*  Although the Company has operated in Europe for more than 14 years 
and believes that it is recognized as a leader in the design, marketing and 
distribution of highly technical outdoor apparel and equipment, only recently 
has the Company begun to provide additional resources in Europe to increase 
sales.*  These additional resources include the hiring of a new Chief 
Executive Officer for the Company's European operations in April 1997, the 
establishment of a strategically located Sales and Marketing Center in 
northern Italy, the expansion and enhancement of the Company's European sales 
force and further integration of European and U.S. product development and 
sourcing functions.  The Company's European operations are headquartered in 
Scotland.  The Company distributes its products directly to approximately 650 
wholesale customers representing an estimated 950 store fronts throughout 
Europe.  Its primary markets are the United Kingdom, Germany, Italy, France, 
Spain, Sweden, Denmark and The Netherlands.  Independent sales representatives 
reporting to the Company's sales director are responsible for sales in each 
country.

CANADA.  The Company's Canadian operations are headquartered in Brampton, 
Ontario, and include a distribution center, customer service, administrative 
and warranty service departments. Since early 1995, the Company has sold its 
products in Canada through independent sales representatives to approximately 
260 wholesale customers representing an estimated 290 store fronts in Canada, 
primarily in British Columbia, Ontario and Quebec.  Prior to 1995, the 
Company's products were sold in Canada through a licensee. Recently, the 
Company announced its plan to consolidate certain of its administrative and 
customer service functions of its Canadian operations within the United 
States.  In addition, the Canadian distribution capabilities are being 
outsourced to a third party.

ASIA.  In Japan and Korea, substantially all of the Company's trademarks are 
owned by Goldwin, a leading manufacturer and distributor of high-end sports 
and outdoor apparel and equipment.  The North Facer is the leading high-
performance outdoor brand in Japan.  The Company and Goldwin work closely 
together in the areas of product design, sourcing and brand imaging.  The 
Company believes that Goldwin shares the Company's strategy of building a 
unified global brand.  The Company benefits from this relationship by selling 
products made in the United States to Goldwin and by charging an 
administrative fee for orders, which Goldwin adds to the Company's production 
in China and Southeast Asia.  In Hong Kong and Macao, the Company's products 
are sold through a licensee, Mitsui & Co., Ltd. ("Mitsui").  The Company plans 
to capitalize on its growing worldwide strength by exploring sales 
opportunities in other Asian and Pacific Rim countries.*  

SOURCING AND MANUFACTURING

The Company sources most of its products through approximately 50 unaffiliated 
manufacturers in North America, Asia and Europe, including Hong Kong, China, 
Taiwan, Korea, Indonesia, Bangladesh, Thailand, Portugal and the Philippines.  
The Company's European subsidiary operates a small manufacturing factory in 
Scotland, which accounts for a minor portion of the Company's total 
production. The Company has implemented a global sourcing strategy that is 
expected to enable it to achieve greater economies of scale, improve gross 
margins and maintain uniform quality standards for its products.*  The Company 
believes that it enjoys good relationships with its suppliers and 
manufacturers and has the ability to secure the necessary capacity to meet 
increased demand for its products.*   

To ensure that products manufactured by others are consistent with its
standards, the Company manages all key aspects of the production process, 
including establishing product specifications, selecting the materials to be 
used to produce its products and the suppliers of such materials, and 
negotiating the prices for such materials.  The Company maintains a staff of 
quality control specialists which conducts on-site inspections throughout the 
production process, including at the mills before the fabrics are shipped, at 
the factories as the products are made and, finally, before the finished 
products are shipped.

The Company currently is engaged primarily in a two season, wholesale 
business, Spring (January to June) and Fall (July to December).  Wholesale 
customers place preseason orders from one to eight months prior to the 
beginning of the season for deliveries throughout the season.  Reorders are 
taken throughout the season and are based on availability.  With the 
introduction of the Company's new Tekware line and Summit Shops, the Company 
anticipates that it increasingly will be supplying its products on a year-
round basis.*  The Company introduced a core inventory replenishment program 
in October 1996, under which it attempts to maintain stocks of key products.  
In addition, beginning with the Spring 1998 season, the Company introduced an 
order policy wherein shipments are prioritized according to the date the order 
is placed.  The order policy was implemented to encourage wholesale dealers to 
place orders early allowing the Company greater insight and flexibility in the 
sourcing process.

The Company's Merchandise Forecasting and Planning Department analyzes 
information which it receives from the Company's various sales operations as 
well as historical and market data and develops forecasts for the Company's 
products.  These forecasts are regularly updated to reflect advance orders and 
reorders and are used to develop production quantities.  The Company's Product 
Acquisition Department, in turn, issues purchase orders to the Company's 
unaffiliated manufacturers. Unaffiliated manufacturers purchase the materials 
specified by the Company and manufacture and ship the products to the Company.  
The Company's unaffiliated manufacturers sell finished products to the Company 
on an FOB basis and are at risk for the quality and timely delivery of the 
products.  In 1997, between 30% and 35% of the Company's total production 
requirements were financed with letters of credit; the balance was purchased 
under open terms, typically ranging from 14 to 60 days.

MANAGEMENT INFORMATION SYSTEMS

The Company recognizes the important nature of advanced computerization in 
maintaining and improving its level of service, internal and external 
communication and overall competitive position. The Company's management 
information and electronic data processing systems consist of a full range of 
financial, distribution, merchandising, forecasting and retail systems.  The 
Company has been analyzing its current systems with an eye toward future 
requirements, including Year 2000 compliance issues.  Recently, the Company 
completed a thorough analysis of its existing information systems and new 
systems implementation plan.  The Company concluded that its existing systems 
and enhancement plans are satisfactory for the next several years, however, to 
achieve the Company's long-term growth plans, it must move toward a much 
stronger and more dynamic enterprise software package.  This new system will 
be more appropriate and compatible with the objectives laid out in the 
Company's recently completed strategic plan.*  In the interim, the Company has 
initiated the process of making its existing system Year 2000 compliant and 
expects to be completed with this task by the end of 1998 at an internal cost 
of approximately $400,000.*  In the quarter ended December 31, 1997, the 
Company wrote off $1.8 million of costs associated with its previous and now 
discarded system implementation plan.  Further, the Company expects to spend a 
total of between $2.0 million and $3.0 million in 1998 to begin the process of 
designing and implementing a new enterprise-wide information system.*  An 
additional $3.0 million to $4.0 million is expected to be spent in 1999 to 
complete this implementation.*  The Company believes that once in place, the 
new systems, along with routine upgrades and other enhancements, will be 
sufficient to accommodate the Company's anticipated growth in sales and 
planned expansions for the foreseeable future.*  However, there can be no 
assurance that any system implementation or system upgrades will be completed 
in a timely manner, will be adequate to meet the needs of the Company or will 
not strain the Company's financial resources.

COMPETITION

The markets for the Company's products are highly competitive, and the recent 
growth in these markets has encouraged the entry of many new competitors as 
well as increased competition from established companies.  Although the 
Company believes that it does not compete directly with any single company 
with respect to its entire range of products, the Company does have 
significant competitors within each product category.  In addition, the 
Company has recently begun experiencing increased competition from major 
brand-name apparel companies who are attempting to duplicate the Company's 
styles, particularly in the area of functional sportswear.  These competitors 
are larger and have significantly greater financial, marketing and other 
resources than the Company.  While the Company believes that it has been able 
to compete successfully because of its heritage, brand image and recognition, 
the broad range and quality of its products, and its selective distribution 
and customer service policies, including the lifetime warranty that its 
products carry, there can be no assurance that the Company will be able to 
maintain or increase its market share in the future.  The failure of the 
Company to compete successfully would materially and adversely affect the 
Company's business and results of operations.  

TRADEMARKS AND LICENSING

The Company considers its trademarks to be among its most valuable assets and 
has numerous trademark registrations in the United States, Europe and other 
foreign countries.  Among the Company's trademarks are The North Facer, 'N' 
Design logor, Remote Terrain Gearr, Extreme Gearr, A5r, Expedition  Systemr,
Extremer, TekwareTM, Steep Techr, Quick PitchTM, HydrenalineTM,  Search and
RescueTM and VaporWickTM.  Because of the popularity of many of the  Company's
products and their strong brand identity and distinctive design, The  North
Facer brand in recent years has frequently been subject to unauthorized 
copying and mislabeling of imitation goods.  The Company maintains an 
aggressive program of trademark enforcement and cooperation with domestic and 
foreign customs officials and other authorities, and will continue to 
vigorously defend its trademarks against infringement.* 

The Company has licensed its trademarks to Mitsui, which markets Company-
designed products under The North Facer name in Hong Kong and Macao.  In 
addition, in Japan and Korea substantially all of the Company's trademarks are 
owned by Goldwin.

EMPLOYEES

As of December 31, 1997, the Company had 713 employees, of which 554 were 
employed in the United States, 145 in Europe and 14 in Canada.  None of these 
employees is currently covered by a collective bargaining agreement.  The 
Company believes that its relations with its employees are good.

FACTORS THAT MAY AFFECT THE COMPANY'S BUSINESS

CONSUMER PREFERENCES. Consumer demand for the Company's products may be 
adversely affected if consumer interest in outdoor activities does not grow or 
declines.  If the Company is unable to respond successfully to changes in 
consumer preferences, or if consumer preferences shift toward competing 
products or away from the Company's product categories altogether, the 
Company's business would be adversely affected.  The Company cannot assure 
future growth or consumer demand for its products.

MANAGING GROWTH.  If the Company's business grows, the Company may have 
increased difficulties in managing product design, hiring, marketing, 
distribution, management information and other resources, and in obtaining 
supplies, manufacturing services and working capital.  The Company's future 
profitability will be critically dependent on its ability to achieve and 
manage potential future growth effectively. 

WHOLESALE STRATEGY.  The Company's wholesale customers consist, primarily, of 
specialty outdoor product retailers.  The Company cannot assure that its 
existing customers will increase their purchases of the Company's products, 
that future preseason wholesale orders will increase, or that the Company will 
be able to fill reorders during each season.  Because the Company expects its 
wholesale business to constitute an increasing percentage of total sales going 
forward, overall gross margins may continue to decline in the future.  The 
Company's wholesale strategy also depends on its ability to achieve increased 
sales through its Summit Shop program.  Risks of this program include sourcing 
and managing higher inventory levels, funding all or most of the cost of the 
Summit Shop fixtures without assurance of additional sales and profits, and 
the need to supply products that maintain consumer demand on a year-round 
basis.  There can be no assurance that additional Summit Shops will be opened 
in a timely manner or that their cost or performance will meet the Company's 
expectations.  If the Summit Shop program is unsuccessful, the Company risks 
writeoffs of inventory and fixtures that could have a material adverse effect 
on the Company's business.  The Company believes that the success of its 
Summit Shop program will be highly dependent on market acceptance of its 
TekwareTM line of products, which was introduced in late 1996.

DEPENDENCE ON NEW PRODUCTS.  To continue its growth, the Company must 
successfully introduce new products and improvements to existing products on 
an ongoing basis.  Risks of new product introductions include targeting new 
markets involving more casual outdoor uses, offering products in wider price 
ranges, product obsolescence, increased costs and competition, possible 
consumer rejection of new products or styles and possible dilution of the 
Company's product image.  In 1996, the Company introduced "TekwareTM," a line 
of synthetic outdoor apparel.  The Company's limited experience in marketing 
casual apparel, limited distribution channels, and possible consumer 
resistance to synthetic fabrics could result in slow sales of TekwareTM.

RELIANCE ON UNAFFILIATED MANUFACTURERS.  The Company currently relies on 
approximately 50 unaffiliated manufacturers to produce nearly all of its 
products, with ten of the manufacturers producing approximately 75% of the 
Company's products for 1997.  The Company has no long-term contracts with its 
manufacturing sources, and it competes with other companies for production 
facilities and import quota capacity.  Any disruption in the Company's ability 
to obtain manufacturing services could have a material adverse effect on the 
Company's business.  None of the manufacturers used by the Company produces 
the Company's products exclusively.  The Company has occasionally received, 
and may in the future receive, shipments of products from manufacturers that 
fail to conform to the Company's quality control standards.   The Company 
established its core inventory replenishment program to facilitate reorders of 
core products, and cannot assure that this program will meet reorder 
requirements or avoid excess inventory.

The Company requires its independent manufacturers to operate in compliance 
with applicable laws and regulations.  Although the Company's internal and 
vendor operating guidelines promote ethical business practices and the 
Company's sourcing personnel periodically visit and monitor the operations of 
its independent manufacturers, the Company does not control these vendors or 
their labor practices.  The violation of labor or other laws by an independent 
manufacturer of the Company, or the divergence of an independent 
manufacturer's labor practices from those generally accepted as ethical in the 
United States, could result in adverse publicity for the Company and could 
have a material adverse effect on the Company.

KEY SUPPLIES.  Certain important materials used in the Company's products are 
only available from one or a limited number of independent suppliers.  The 
Company's future success may depend upon the Company's continued ability to 
purchase supplies of technically advanced textiles developed by third parties. 
The Company cannot assure that it will be able to obtain in the future 
adequate supplies of technically advanced materials or that desired purchase 
terms or other benefits of past purchases, such as suppliers' funding of 
development costs and co-op advertising arrangements, will continue. 

FLUCTUATIONS IN SALES.  Sales of the Company's products historically have 
fluctuated due to conditions, such as weather and economic recessions or other 
conditions which reduce consumer spending, which are beyond the Company's 
control.

INTERNATIONAL OPERATIONS.   The Company's business is subject to the risks 
generally associated with doing business abroad.  The Company imports more 
than 60% of its merchandise from contract manufacturers located outside of the 
United States, primarily in the Far East.   A significant portion of the 
Company's products is produced in China.  From time to time, the U.S. 
government has considered imposing punitive tariffs on apparel and other 
exports from China. The imposition of any such tariffs could disrupt the 
supply of the Company's products, which could have a material adverse effect 
on the Company's results of operations.

COMPETITION AND TRADEMARKS.  The Company faces intense competition from major 
brand-name apparel companies, other large companies, and smaller businesses 
specializing in outdoor products.  The Company owns and uses a number of 
trademarks, some of which may be important in maintaining or creating a 
competitive advantage and consumer demand.  Certain competitors in the United 
States and abroad have copied and may in the future copy certain of the 
Company's trademarks and designs.  The Company is also aware of certain 
counterfeiting of the Company's products.   Without authorization by the 
Company, a third party has filed an application in China to register as a 
trademark the Chinese characters for "North Face" and a copy of the Company's 
"N" design.  Unless successfully opposed, this application could result in 
significant adverse consequences to the Company's business.  There is no 
assurance that the Company's efforts to stop or reduce the copying or 
counterfeiting of its trademarks or products will be successful, that the 
Company's trademarks will not violate the proprietary rights of others, or 
that the Company will be able to avoid or successfully defend challenges to 
its trademarks or other intellectual property in the United States or abroad.

KEY PERSONNEL. The Company's future success will depend, in part, upon the 
continued efforts of its executive officers and other key personnel and upon 
the Company's ability to successfully retain current personnel and recruit and 
retain new personnel.  There can be no assurance that any of such persons will 
remain executive offers or employees of the Company in the future.  The loss 
of one or more current executive officer or key employees could have a 
significant adverse effect on the Company's business.  Christopher F. Crawford 
joined the Company as its Chief Financial Officer in September 1997 and Karl
Heinz Salzburger joined in April 1997 as the Chief  Executive Officer of
Europe.  There  can be no assurance that any newly hired executive or key
employee can  successfully manage or contribute to the Company's operations.

PRODUCT AND WARRANTY LIABILITY.  The Company's products are often used in 
severe weather and other extreme conditions.  In 1997, the Company began 
selling portaledges used as sleeping platforms in big wall rock climbing.  
There can be no assurance that insurance maintained by the Company will cover 
possible future losses from product liability claims.  The Company maintains a 
warranty reserve for the lifetime warranty offered on its products, but cannot 
assure that future claims will not exceed this reserve.  Further, in the event 
that the Company experiences problems with product quality or reliability, its 
reputation as a provider of high quality products could suffer, which could 
have a material adverse effect on the Company's business.

STOCK MARKET RISKS.  The trading price of the Company's Common Stock has 
fluctuated significantly since the Company's initial public offering in July 
1996, and may fluctuate in the future as a result of many factors, including 
the Company's operating results, new products introduced by the Company or its 
competitors, market conditions for the Company's products, changes in earnings 
estimates by analysts, actual results reported by the Company which may be 
better or worse than estimates provided by analysts, insider selling of common 
stock and speculation in the trade or business press. The trading price may 
also be affected by retail industry, stock market, or economic factors 
unrelated to the Company's operating performance.  Future sales of substantial 
amounts of Common Stock by existing stockholders may also adversely affect 
prevailing market prices for the Common Stock and could impair the Company's 
ability to raise equity capital in the future.  As of February 20, 1998, the 
Company's directors, officers and certain other affiliates beneficially owned 
approximately 3.5% of the outstanding shares of the Company's Common Stock.

EXECUTIVE OFFICERS OF THE NORTH FACE, INC.

         Name            Age                  Position
----------------------  ------  ------------------------------------
Marsden S. Cason           55   Chairman
William N. Simon           50   Chief Executive Officer, President
                                   and Director
Karl Heinz Salzburger      40   Chief Executive Officer, Europe
Jack A. Boys               39   Vice President of Marketing
Christopher F. Crawford    40   Chief Financial Officer
Tucker Hacking             42   Vice President of Product Acquisitions
Todd Katz                  35   Vice President of Sales

Mr. Cason has been Chairman of the Company since February 1997 and served as 
Chief Executive Officer of the Company from June 1994 to February 1997.  Mr. 
Cason joined the Company's predecessor in January 1993 as President and 
director and served as a director and executive officer of several affiliates 
of the predecessor.  Prior to joining the Company's predecessor, from May 1991 
through January 1993, Mr. Cason was the Chief Executive Officer of Carol 
Management Company and Doral Resort Hotels, an owner and manager of 
condominiums, hotels and conference centers.  Prior to May 1991, Mr. Cason was 
involved in various business ventures as a chief executive officer.

Mr. Simon has been Chief Executive Officer of the Company since February 1997 
and President of the Company since December 1995. From May 1988 through June 
1994, Mr. Simon served as the Chairman of the Board of the Company's 
predecessor and was Vice Chairman of the Company from June 1994 to December 
1995.  From November 1978 through June 1994, Mr. Simon was Chairman and Chief 
Executive Officer of Odyssey Worldwide Holdings B.V. ("Odyssey"), a designer 
and manufacturer of high-end sports and outdoor apparel, and an executive 
officer and director of several other Odyssey affiliates.  Mr. Simon has been 
involved in the design, manufacturing and sales of outdoor clothing and 
equipment for over 27 years.  In January 1993, Odyssey and certain holding 
companies affiliated with Odyssey filed for protection in the United States 
under Chapter 11 of the U.S. Bankruptcy Code.  In September 1994, Mr. Simon 
filed a petition under Chapter 7 of the U.S. Bankruptcy Code and in January 
1995 was granted a discharge by the bankruptcy court and the proceeding was 
dismissed.  Mr. Simon personally had guaranteed substantially all of the 
indebtedness of Odyssey and its affiliated companies and his bankruptcy filing 
was made in order to terminate his personal liability for these corporate 
obligations.

Mr. Salzburger was appointed Chief Executive Officer for the Company's 
European operations effective April 1, 1997.  From 1990 to 1997, Mr. 
Salzburger served in varying capacities with Benetton Sports System, including 
Vice President where he supervised the European subsidiaries, which market and 
distribute Nordica, Prince, Rollerblade, Asolo and Killer Loop.  He also 
served as the General Manager of Sales and Marketing for the Nordica Group 
with Benetton Sports System where he was in charge of the brand strategy and 
the contribution of each of the Groups brands.  From 1986 to 1990, Mr. 
Salzburger had served as Chief Operating Executive of an Italian manufacturer, 
Salvagnini Transferica.

Mr. Boys joined the Company as Vice President of Marketing in March 1996.  
From December 1993 to March 1996, Mr. Boys was Vice President of Marketing for 
Avia Group International, Inc., a manufacturer of athletic footwear, and from 
August 1992 to December 1993 he was Vice President of Marketing for Le Coq 
Sportif International, an athletic footwear and apparel manufacturer.  Mr. 
Boys spent over 10 years with Converse Inc., an athletic footwear company, 
where he held various senior marketing management positions.  Mr. Boys has 
over 16 years of experience in the footwear and apparel industry.

Mr. Crawford was appointed as Chief Financial Officer of the Company on August 
29, 1997.  From March 1992 through May 1997, Mr. Crawford served as the Vice 
President of Business Development and Strategic Planning for CFM Majestic, 
Inc. and as Chief Financial Officer for its subsidiary, Vermont Castings, Inc.  
CFM Majestic is a manufacturer and marketer of premium hearth products.  Mr. 
Crawford is both a C.P.A. and a member of the Oregon Bar.

Mr. Hacking has been Vice President of Product Acquisitions for the Company 
since April 1996 and Director of Product Acquisitions for the Company and its 
predecessor from April 1993 through April 1996.  From January 1990 to April 
1993, Mr. Hacking owned and operated TTH Enterprises, Inc., a company 
specializing in the sports apparel industry.  Previously, Mr. Hacking spent 
over 10 years with Adidas in Europe and the United States, last serving as the 
general manager of operations and sourcing for Adidas America, Inc.  Mr. 
Hacking has over 19 years of experience in the apparel industry.

Mr. Katz has been Vice President of Sales for the Company since January 1997. 
From October 1994 to December 1996, Mr. Katz managed regional sales for the 
Company in the northwestern United States. From October 1988 to October 1994, 
Mr. Katz served as a regional sales manager for W. L. Gore & Associates, Inc., 
manufacturer of Gore-Texr fabrics.

ITEM 2.  PROPERTIES.

The principal executive and administrative offices of the Company are located 
at 2013 Farallon Drive, San Leandro, California.  The general location, use 
and approximate size of the Company's principal properties, all of which, 
other than the facility in Scotland, are leased, are set forth below:

                                                                       Approx-
                                                                        imate
                                                                        Gross
                                                                        Square
        Location                             Use                         Feet
------------------------  ------------------------------------------  ----------
San Leandro, CA              Executive and administrative offices       151,000
Vacaville, CA                Distribution Center                        250,445
San Francisco, CA            Retail store                                14,100
Palo Alto, CA                Retail store                                 7,600
Costa Mesa, CA               Retail store                                 7,100
Seattle, WA                  Retail store                                 6,200
Denver, CO                   Retail store                                14,100
Boulder, CO                  Retail store                                 4,300
Chicago, IL                  Retail store                                16,000
Oakbrook, IL                 Retail store                                 4,000
Schaumberg, IL               Retail store                                 5,000
Berkeley, CA                 Outlet                                      14,200
San Francisco, CA            Outlet                                      10,000
Freeport, ME                 Outlet                                       9,100
Vacaville, CA                Temporary Outlet until March 1998            4,500
Port Glasgow, Scotland       European headquarters, distribution         77,200
                                center and manufacturing facility
Brampton, Ontario            Canadian headquarters and distribution      22,400
                                center
Volpago del Montello, Italy  Sales and Marketing Center                  12,600
Quebec, Canada               Outlet (effective February, 1998)            3,000
Boulder, CO                  Sales Office                                 4,300
Poolesville, MD              Sales Office                                 2,600
Seattle, WA                  Sales Office                                   800

ITEM 3.  LEGAL PROCEEDINGS.   

     None.


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

     None.



                                PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS.

The Company's Common Stock is listed on the Nasdaq National Market and trades 
under the symbol "TNFI."  At February 20, 1998, there were approximately 91 
stockholders of record.  Information concerning certain dividend restrictions 
under the Company's credit facility is set forth in "Management's Discussion 
and Analysis of Financial Condition and Results of Operation-Liquidity and 
Capital Resources" below. The Company does not anticipate paying any dividends 
in the foreseeable future.  

Following are the high and low closing prices for the Company's Common Stock 
for the third and fourth quarters of 1996 and each of the four quarters of 
1997:

                                              HIGH      LOW
                                            --------  --------

 Year Ended December 31, 1996
--------------------------------------
 Third Quarter                               $32.00    $15.25
 Fourth Quarter                              $29.75    $19.25

 Year Ended December 31, 1997
--------------------------------------
 First Quarter                               $21.75    $16.00
 Second Quarter                              $19.50    $13.63
 Third Quarter                               $26.88    $18.50
 Fourth Quarter                              $27.63    $18.75

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

                              THE NORTH FACE, INC.
                      SELECTED CONSOLIDATED FINANCIAL DATA
                     (In thousands, except per share data)

<TABLE>
<CAPTION>
                                               The Predecessor(1|
                                              Fiscal Years Ended|                The Company
                                                  March 31,     |           Years Ended December 31,
                                            --------------------| -------------------------------------------
                                              1993       1994   |    1994       1995       1996       1997
                                            ---------  ---------| ----------  ---------  ---------  ---------
                                                                | (Pro Forma) (2)
<S>                                         <C>        <C>      | <C>         <C>        <C>        <C>
Net sales                                    $86,710    $87,411 |   $89,187   $121,534   $158,226   $208,403
                                                                |
Operating income (loss)                       (6,548)     3,794 |     7,334     10,524     13,544     21,344
                                                                |
Income (loss) before provision for taxes                        |
 and extraordinary item                       (9,991)     1,548 |     2,680      5,583      9,275     18,357
                                                                |
Income (loss) before extraordinary item     ($10,508)      $826 |    $1,708     $3,485     $5,664    $11,107
                                                                |
                                                                |
                                                                |
Earnings Per Share before extraordinary item:(3)                |
    Basic                                                       |                $0.51      $0.65      $0.98
    Diluted                                                     |                $0.47      $0.62      $0.96
                                                                |
Weighted Average Shares Outstanding: (3)                        |
    Basic                                                       |                6,881      8,747     11,297
    Diluted                                                     |                7,434      9,183     11,578

(1) On June 7, 1994 the Company acquired substantially all of the operating assets
    of The North Face (the "Predecessor").  Due to the acquisition, and resulting
    change in accounting basis, and significant differences in the capital structures
    of the Predecessor and the Company, the financial statements of the Company may
    not be comparable to the Predecessor.  Additionally, effective December 31, 1994 
    the Company changed its year end from March 31 to December 31.

(2)  Assumes the acquisition occured on January 1, 1994.
(3)  Pro forma for 1995 and 1996
</TABLE>

<TABLE>
<CAPTION>
                                              As of March 31,   |           As of December 31,
                                            --------------------| -------------------------------------------
                                              1993       1994   |    1994       1995       1996       1997
                                            ---------  ---------| ----------  ---------  ---------  ---------
<S>                                         <C>        <C>      | <C>         <C>        <C>        <C>
BALANCE SHEET DATA                                              |
                                                                |
Working capital                              $23,725    $22,987 |   $14,189    $22,668    $50,438    $59,117
                                                                |
Total assets                                  53,318     50,363 |    66,549     84,508    111,948    174,280
                                                                |
Short term debt                                  782      1,511 |     1,327      4,838         95     25,734
                                                                |
Long term debt                                48,580     46,895 |    29,047     36,388        135      5,177
                                                                |
Stockholders' equity                         (13,346)   (13,130)|    17,179     20,568     86,499    103,293
</TABLE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

                        THE NORTH FACE, INC.
                      SUMMARY FINANCIAL DATA
               (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                As a of Percentage of Sales
                                                 Years Ended December 31,        (except for income taxes)
                                            --------------------------------  -------------------------------
                                              1995       1996        1997       1995       1996       1997
                                            ---------  ---------  ----------  ---------  ---------  ---------
<S>                                         <C>        <C>        <C>         <C>        <C>        <C>
Net sales                                   $121,534   $158,226    $208,403      100.0%     100.0%     100.0%

Gross profit                                  55,064     70,031      95,064       45.3%      44.3%      45.6%

Operating expenses                            44,540     56,487      73,720       36.6%      35.7%      35.4%

Operating income                              10,524     13,544      21,344        8.7%       8.6%      10.2%

Interest expense                              (5,530)    (4,625)     (2,238)      -4.6%      -2.9%      -1.1%

Other income (expense), net                      589        356        (749)       0.5%       0.2%      -0.4%

Income before provision for
 taxes and extraordinary loss                  5,583      9,275      18,357        4.6%       5.9%       8.8%

Provision for income taxes                     2,098      3,611       7,250       37.6%      38.9%      39.5%

Income before extraordinary loss              $3,485     $5,664     $11,107        2.9%       3.6%       5.3%

</TABLE>

The following table sets forth, for the periods indicated, the Company's net 
sales by distribution channel as well as domestic versus international net 
sales:

                                                For the Years Ended December 31,
                                                -------------------------------
                                                  1995       1996       1997
                                                ---------  ---------  ---------

Wholesale customers                              $87,386   $125,292   $173,430

Company operated retail                           29,968     32,768     34,704

Government                                         4,180        166        269
                                                ---------  ---------  ---------
Total net sales                                 $121,534   $158,226   $208,403
                                                =========  =========  =========

United States                                    $96,069   $120,027   $155,954

International                                     25,465     38,199     52,449
                                                ---------  ---------  ---------
Total net sales                                 $121,534   $158,226   $208,403
                                                =========  =========  =========

GENERAL

ACQUISITION.  The assets and certain of the liabilities of the Company's 
predecessor were acquired in June 1994 (the "Acquisition") by the Company, 
which had been formed for this purpose.

PRODUCTS. In 1995, sales of outerwear, equipment, skiwear and other products 
represented approximately 50%, 25%, 14% and 11%, respectively, of net sales. 
In 1996, sales of outerwear, equipment, skiwear, Tekware, and other products 
represented approximately 52%, 25%, 12%, 7% and 4%, respectively, of net 
sales.

In 1997, sales of outerwear, equipment, skiwear, Tekware, Ascentials and other 
products represented approximately, 48%, 22%, 10%, 12%, 4% and 4% 
respectively, of net sales.

DISTRIBUTION. The North Face is a global company with operations in the United 
States, Europe and Canada. To protect the integrity of The North Face brand 
and ensure a high level of customer service, the Company limits the 
distribution of its products to a select number of specialty retailers. The 
Company sells its products to approximately 1,750 wholesale customers 
representing approximately 2,600 store fronts.  Additionally, the Company's 
products are sold under a trademark licensing agreement in Hong Kong, Japan 
and Korea.

ORDER CYCLE. The North Face currently is engaged primarily in a two season 
wholesale business, Spring (January to June) and Fall (July to December). 
Wholesale customers place preseason orders, which generally are non-
cancelable, with the Company from one to eight months prior to the beginning 
of the season. Reorders are placed throughout the season and products are 
shipped based on availability. Preseason orders have typically accounted for 
approximately 75% of total sales to wholesale customers and historically have 
been an accurate indicator of actual product shipments; however, there can be 
no assurance that preseason orders will be an accurate indicator of actual 
product shipments in the future. The Company has decided to increase its 
investment in inventory of core products to better allow it to capture reorder 
opportunities. Accordingly, the foregoing percentages may decline in the 
future. With the introduction of Tekware and Summit Shops, the Company expects 
that it increasingly will be supplying its products to its wholesale customers 
on a year-round basis. Preseason orders for the 1998 Spring season increased 
25% over preseason orders for the 1997 Spring season.

PRODUCTION CYCLE. Based on preseason orders and expected reorders, the Company 
places production orders with its contract manufacturers for an entire season 
three to five months before the beginning of the season. Fixed production 
prices are agreed upon approximately three months prior to placement of such 
production orders. As a result, the Company's production costs are relatively 
predictable one season in advance of the delivery of products. In the past, 
the Company and its wholesale customers were unable to maximize sales of the 
Company's most popular products due to the Company's strategy of determining 
production quantities based primarily on preseason orders. As a result, the 
Company frequently was unable to meet strong reorder demand for its most 
popular items. In October 1996, the Company initiated a core inventory 
replenishment program in which its core products and materials are being 
inventoried for rapid reorder or manufacturing. As a result of this new 
program, the Company has maintained and will continue to maintain higher 
levels of inventories.

SUMMIT SHOPS. In 1996, The North Face introduced Summit Shops in order to 
increase sales to wholesale customers. There were 14 concept shops, precursors 
to the Summit Shops, opened in the first six months of 1996 and 28 Summit 
Shops opened in the second half of 1996, followed by an additional 160 shops 
in 1997. The Company expects to open a minimum of 173 additional Summit Shops 
in 1998. Summit Shops are designed to showcase the Company's products using 
more modern merchandising techniques, enhance the Company's brand and increase 
sales, while minimizing capital investment. An average 425 square foot Summit 
Shop is expected to require a total investment by the Company for furniture 
and fixtures of approximately $35,000. However, there can be no assurance that 
Summit Shops will not require substantially more total capital investment. 
Additionally, the Company will incur certain additional marketing and 
monitoring expenses associated with Summit Shops. The Company's wholesale 
customers will operate the Summit Shops and own the inventory. The Company 
will retain ownership of the furniture and fixtures used in the Summit Shops.

COMPANY-OPERATED RETAIL SALES. The North Face currently operates nine retail 
stores, three outlets and one temporary outlet. New stores and outlets are 
included in comparable store sales commencing in their thirteenth month of 
operation. The Company currently does not plan to open any additional retail 
stores in the near future because the Company believes that Summit Shops will 
provide comparable merchandising and marketing benefits to those that are 
received from Company operated retail stores, with a lower commitment of 
financial and operational resources and a higher return on investment. The 
North Face's gross margins for its Company-operated retail stores are higher 
than for sales to its wholesale customers. Consequently, due to the expected 
growing revenue contribution from the Company's wholesale customers, the 
Company's overall gross margins are expected to decline in the near term.

GOVERNMENT TENT SALES. The North Face historically has produced tents for the 
Marine Corps. The timing of these sales has fluctuated historically and is 
dependent on the Company's obtaining and retaining contracts from the Marine 
Corps. The timing of the sales under these contracts can significantly affect 
the Company's quarterly results. In September 1996, the Company received a new 
tent contract from the Marine Corps totaling approximately $0.9 million with 
two options for an additional $0.9 million each. The Company expects shipments 
to commence pursuant to this contract in 1998. There can be no assurance 
however, that the Company will obtain any additional contracts to produce 
tents for the Marine Corps in the future.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

NET SALES.  Net sales increased by 31.7% to $208.4 million from $158.2 million 
for 1997 compared to 1996.

Net sales to wholesale customers increased by 38.4% to $173.4 million from 
$125.3 million for 1997 compared to 1996. This increase related primarily to 
increased unit shipments to the Company's new and existing wholesale customers 
resulting from:(i) the introduction of new products, including the Ascentials 
product line; (ii) significant growth in sales of Tekware, which accounted for 
over 12% of total sales in 1997 as compared to 7% in 1996; (iii) continued 
strong sales of existing products; (iv) continued growth in international 
sales, especially in Europe; and (v) the opening of 160 summit shops during 
1997.

Company-operated retail-store sales increased by 5.9% to $34.7 million from 
$32.8 million for 1997 compared to 1996. This increase was attributable to 
comparable store sales increases as well as the full- year results of the 
Freeport, Maine retail outlet opened in July 1996 and the partial-year sales 
from the temporary Vacaville Outlet.

GROSS PROFIT. Gross profit as a percentage of net sales for 1997 was 45.6% 
compared to 44.3% for 1996. The higher margin was primarily attributable to 
improved pricing in production, mix of product, improvements in Tekware gross 
margins from the low levels associated with its 1996 introduction and general 
improvements made possible by the Company's increased volume leverage.

OPERATING EXPENSES. Operating expenses include selling, marketing and general 
and administrative expenses. Operating expenses increased by 30.5% to $73.7 
million from $56.5 million for 1997 compared to 1996, primarily as a result of 
increases in variable and fixed costs to support the growth of the Company's 
business. Operating expenses decreased as a percentage of net sales to 35.4% 
for 1997 from 35.7% for 1996.  In connection with the decision to select a new 
enterprise-wide software package, the Company, in December 1997, wrote off 
capitalized software costs of $1.8 million. Additionally, during the fourth 
quarter, the Company reassessed its estimate of future warranty liabilities as 
part of an overall review of the methodology of processing warranty claims.  
As a result of this review, the warranty reserve was reduced at December 31, 
1997 by $1.2 million, which decreased the 1997 operating expenses.

INTEREST EXPENSE. Interest expense decreased to $2.2 million from $4.6 million 
for 1997 compared to 1996 primarily as a result of the application of the 
proceeds from the Company's initial public offering in July 1996 and secondary 
offering in November 1996 to repay debt, partially offset by higher levels of 
working-capital related debt incurred in 1997.

PROVISION FOR INCOME TAXES. Provision for income taxes as a percent of pretax 
income was approximately 39.5% for 1997 compared to 38.9% for 1996. This 
increase in effective rate relates to the Company entering a higher tax 
bracket in 1997 as well as the mix of the Company's pretax earnings amongst 
domestic and international operations, which are subject to different tax 
rates.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

NET SALES. Net sales increased by 30.2% to $158.2 million from $121.5 million 
for 1996 compared to 1995.

Net sales to wholesale customers increased by 43.4% to $125.3 million from 
$87.4 million for 1996 compared to 1995. This increase related primarily to 
increased unit shipments to the Company's existing wholesale customers 
resulting from: (i) the introduction of new products, including the initial 
shipments of Tekware; (ii) continued strong sales of existing products; (iii) 
better service to wholesale customers; (iv) a more targeted advertising and 
marketing campaign; and (v) the opening of 42 concept (Summit) shops during 
1996.

Company-operated retail-store sales increased by 9.3% to $32.8 million from 
$30.0 million for 1996 compared to 1995. This increase was attributable to 
comparable store sales increases of 0.3% as well the opening of one new retail 
store in October 1995 and one outlet in July 1996. In addition, the Company 
closed two outlets in mid 1995.

Government sales decreased by 96.0% to $0.2 million from $4.2 million for 1996 
compared to 1995. This decrease was due to the timing of government tent 
shipments under a contract, which was completed in 1995.

GROSS PROFIT. Gross profit as a percentage of net sales for 1996 was 44.3% 
compared to 45.3% for 1995. The lower margin was primarily attributable to 
faster growth of wholesale sales compared to retail sales, as well as lower 
wholesale margins related primarily to lower initial margins on the 
introduction of the Company's new Tekware line.

OPERATING EXPENSES. Operating expenses include selling, marketing and general 
and administrative expenses. Operating expenses increased by 26.8% to $56.5 
million from $44.5 million for 1996 compared to 1995, primarily as a result of 
increases in variable and fixed costs to support the growth of the Company's 
business and the expansion of the merchandising department to launch the 
Summit Shops program as well as operating costs associated with the operation 
of a new retail store and outlet. Operating expenses decreased as a percentage 
of net sales to 35.7% for 1996 from 36.6% for 1995.

INTEREST EXPENSE. Interest expense decreased to $4.6 million from $5.5 million 
for 1996 compared to 1995 primarily as a result of the application of the 
proceeds from the Company's initial public offering in July 1996 and secondary 
offering in November 1996 used to repay debt, offset by higher levels of debt 
incurred to finance working capital growth.

PROVISION FOR INCOME TAXES. Provision for income taxes as a percent of pretax 
income was approximately 38.9% for 1996 compared to 37.6% for 1995. This 
increase relates to the mix of the Company's pretax earnings between the U.S. 
and the United Kingdom, which have different tax rates.

EXTRAORDINARY ITEM. In 1996, the Company reported a noncash extraordinary 
charge of approximately $860,000, net of income taxes, as a result of 
substantially restructuring both the Credit Facility and the Subordinated Note 
in connection with the Company's initial public offering in July 1996.

QUARTERLY DATA AND SEASONALITY

The following table sets forth certain unaudited financial data for each of 
the Company's eight fiscal quarters ended December 31, 1997. The operating 
results for any quarter are not necessarily indicative of results for any 
future period.

                                           Year Ended December 31, 1997
                                     ---------------------------------------
(In thousands)                          Q1        Q2        Q3        Q4
                                     --------- --------- --------- ---------
Net sales                             $39,342   $31,087   $87,007   $50,967

Gross profit                           17,215    13,041    39,689    25,119

Operating income (loss)                   442    (2,934)   18,887     4,949 (a)

Net Income (Loss)                         235    (2,007)   10,767     2,112

Earnings Per Share:
    Basic                               $0.02    ($0.18)    $0.96     $0.19
    Diluted                             $0.02    ($0.17)    $0.92     $0.18

Weighted Average Shares Outstanding:
    Basic                              11,206    11,222    11,262    11,388
    Diluted                            11,643    11,563    11,708    11,703


                                           Year Ended December 31, 1996
                                     ---------------------------------------
(In thousands)                          Q1        Q2        Q3        Q4
                                     --------- --------- --------- ---------
Net sales                             $31,020   $22,471   $68,138   $36,597

Gross profit                           12,603     9,204    30,703    17,521

Operating income (loss)                   139    (2,512)   13,031     2,886

Income (loss) before extraordinary
  loss                                   (629)   (2,410)    7,412     1,291

Earnings Per Share before extraordinary loss: (pro forma for Q1 and Q2)
    Basic                              ($0.09)   ($0.35)    $0.75     $0.12
    Diluted                            ($0.08)   ($0.33)    $0.71     $0.12

Weighted Average Shares Outstanding:
    Basic                               6,910     6,885     9,887    10,656
    Diluted                             7,401     7,360    10,499    11,121


(a) Includes $1.8 million expense representing the write-off of abandoned
system development costs partially offset by a $1.2 million reduction in the
warranty reserve.


The Company's business is subject to seasonal and quarterly fluctuations. 
Historically, the Company has realized substantially all of its profits in the 
third quarter and has recognized losses during the second quarter, and, until 
1997, the first quarter. The Company's results of operations may fluctuate 
from quarter to quarter as a result of, among other things, the amount and 
timing of shipments to wholesale customers, government shipments, the timing 
and magnitude of discounts in retail stores, advertising and marketing 
expenditures, increases in the number of employees and overhead to support 
growth and store opening costs.

The Company anticipates that it will continue to incur net losses during the 
second calendar quarter for the foreseeable future. Additionally, the 
Company's effective tax rate can vary significantly from quarter to quarter 
due to the relative mix of earnings from the Company's domestic and 
international operations, which are taxed at different rates.  Finally, there 
can be no assurance that the Company will continue to be profitable in the 
first quarter.

LIQUIDITY AND CAPITAL RESOURCES

Throughout 1997, the Company used cash of approximately $18.4 million for 
operations, primarily due to increased levels of inventory and accounts 
receivable and $16.9 million for purchases of fixed assets.  These funds were 
provided by existing cash balances and borrowings under the Company's credit 
facility.

Historically, the Company's ability to maintain adequate levels of inventory 
was constrained by its capital resources.  As a result of increases in its 
credit facility as well as the Company's public offerings in 1996, the Company 
increased its level of inventory in order to better enable it to meet reorder 
demand for its key products.  The Company anticipates that inventory and 
receivable levels will continue to increase as the Company expands its 
business and continues to enhance its core inventory replenishment program.*  
Anticipated increases in inventory are expected to be financed by borrowings 
under the Company's credit facility.*  The Company's credit facility currently 
provides for borrowings up to $60.0 million under its revolving line of 
credit, with actual borrowings limited to the lesser of $60.0 million or 
available collateral (approximately $58.4 million of gross availability as of 
December 31, 1997) of which the Company had $24.4 million outstanding at 
December 31, 1997 at an average interest rate of 7.41%, and for borrowings of 
up to $5.0 million under a term note for capital expenditures, which was fully 
utilized as of December 31, 1997.  The credit facility also provides a 
sublimit for letters of credit of up to $25.0 million to finance the Company's 
purchases of merchandise inventories from foreign suppliers.  At December 31, 
1997, the Company had approximately $3.8 million outstanding under this 
letter-of-credit facility.  Additionally, Europe had approximately $2.0 million
outstanding letters-of-credit as of December 31, 1997.  The credit facility
contains certain financial  covenants with which the Company was in compliance
as of December 31, 1997.

The Company estimates that its capital expenditures in 1998 will be 
approximately $17.0 to $21.0 million.*  This amount will be used principally 
for investing in Summit Shops, the upgrade of management information systems, 
the expansion of the Company's administration and distribution facilities, the 
construction of the new technology center, the expansion of its European sales 
and marketing operations, and remodeling of its existing stores.

The Company anticipates that cash generated from operations, cash available 
under the Company's credit facility, and cash through an expected increase in
its  overall credit facility will be sufficient to satisfy its cash
requirements  for at least the next 12 months.*  However, there can be no
assurance that the  Company will not require additional capital in 1998 or
subsequent years.

FOREIGN EXCHANGE FLUCTUATION

The Company's inventory purchases from contract manufacturers in the Far East 
are denominated in United States dollars; however, purchase prices for the 
Company's products may be impacted by fluctuations in the exchange rate 
between the United States dollar and the local currencies of the contract 
manufacturers, which may have the effect of increasing the Company's cost of 
goods in the future. In addition, the Company's sales in Europe and Canada are 
denominated in the local currencies of the applicable specialty retailer, 
which may have a negative impact on profit margins or the rate of growth of 
sales in those countries if the U.S. dollar were to strengthen significantly.  
Due to the number of foreign currencies involved and the fact that not all of 
these foreign currencies fluctuate in the same manner against the United 
States dollar, the Company cannot quantify in any meaningful way the potential 
effect of such fluctuations on future income. The Company engages in certain 
forward foreign exchange hedging activities with respect to its European and 
Canadian inventory purchases and sales. See Note 11 to the Company's 
Consolidated Financial Statements.

INFLATION

The Company believes that the relatively moderate rates of inflation over the 
last two years in the United States, where it primarily competes, have not had 
a significant effect on its net sales or results of operations. Higher rates 
of inflation have been experienced in a number of foreign countries in which 
the Company's products are manufactured but also have not had a material 
effect on the Company's net sales or results of operations. In the past, the 
Company has been able to offset its cost increases by increasing selling 
prices or changing suppliers.

ASIA CURRENCY CRISIS

The Company may be affected by the current devaluation of the Asian currencies 
due to the Company's importing of raw materials to Asia.  Furthermore, the 
Company may be affected by economic and political conditions in each of the 
countries in which it operates.  Risks associated with operating in the 
international arena include: (i) economic instability, including the possible 
revaluation of currencies; (ii) extreme currency exchange fluctuations where 
the Company has not entered into foreign currency forward and option contracts 
to manage exposure to certain foreign currency commitments hedged any forward 
transactions; (iii) changes to import or export regulations (including 
quotas); (iv) labor or civil unrest; and (v) in certain parts of the world, 
political instability.  The Company has not as yet been materially affected by 
any such risks, but cannot predict the likelihood of such developments 
occurring or the impact of any such risks to the future profitability of the 
Company.

IMPACT OF NEW ACCOUNTING STANDARDS

See Note 2 to the Consolidated Financial Statements for a discussion of the 
impact of new accounting standards.

<PAGE>
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

                              THE NORTH FACE, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                    (In thousands, except per share amounts)
<TABLE> 
<CAPTION> 
                                                For the Years Ended December 31,
                                                -------------------------------
                                                  1997       1996       1995
                                                ---------  ---------  ---------
<S>                                             <C>        <C>        <C>
Net Sales                                       $208,403   $158,226   $121,534
Cost of Sales                                    113,339     88,195     66,470
                                                ---------  ---------  ---------
   Gross Profit                                   95,064     70,031     55,064
Operating Expenses                                73,720     56,487     44,540
                                                ---------  ---------  ---------
   Operating Income                               21,344     13,544     10,524
Interest expense                                  (2,238)    (4,625)    (5,530)
Other Income (expense), net                         (749)       356        589
                                                ---------  ---------  ---------
Income Before Provision for Income
   Taxes and Extraordinary Loss                   18,357      9,275      5,583
Provision for Income Taxes                         7,250      3,611      2,098
                                                ---------  ---------  ---------
Income Before Extraordinary Loss                  11,107      5,664      3,485

Extraordinary Loss on Extinguishment of
   Debt, Net of Income Taxes of $575                 --        (863)       --
                                                ---------  ---------  ---------
Net Income                                       $11,107     $4,801     $3,485
                                                =========  =========  =========

Net Income Per Share before extraordinary item: (1)
    Basic                                          $0.98      $0.65      $0.51
    Diluted                                        $0.96      $0.62      $0.47

Net Income Per Share after extraordinary item: (1)
    Basic                                          $0.98      $0.55      $0.51
    Diluted                                        $0.96      $0.52      $0.47

Weighted Average Shares Outstanding:
    Basic                                         11,297      8,747      6,881
    Diluted                                       11,578      9,183      7,434


(1)  Pro forma for 1996 and 1995.
</TABLE>
          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

<PAGE>


                              THE NORTH FACE, INC.
                          CONSOLIDATED BALANCE SHEETS
               (In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
                                                           December 31,
                                                      ----------------------
                                                         1997        1996
                                                      ----------  ----------
<S>                                                   <C>         <C>
                            ASSETS
Current Assets:
Cash and cash equivalents                                $4,511      $8,315
Accounts receivable, net                                 58,367      24,149
Inventories                                              44,697      31,475
Deferred taxes                                            2,779       2,490
Other current assets                                      8,599       2,879
                                                      ----------  ----------
   Total current assets                                 118,953      69,308

Property and equipment, net                              22,955      12,039
Trademarks and intangibles, net                          29,066      29,346
Debt issuance costs, net                                     27          58
Other assets                                              3,279       1,197
                                                      ----------  ----------
   Total assets                                        $174,280    $111,948
                                                      ==========  ==========

                  LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable                                        $22,459     $11,327
Accrued employee expenses                                 2,917       1,924
Short-term borrowings and current portion of
   long-term debt and capital lease obligations          25,734          95
Income taxes payable                                      1,906       1,010
Other current liabilities                                 6,820       4,514
                                                      ----------  ----------
   Total current liabilities                             59,836      18,870
Long-term debt and capital lease obligations              5,177         135
Other long-term liabilities                               5,974       6,444
                                                      ----------  ----------
   Total liabilities                                     70,987      25,449
                                                      ----------  ----------
Commitments and Contingencies                               --          --
Stockholders' equity:
Series A Preferred Stock, $1.00 par value-shares
   authorized 4,000,000; none issued and outstanding        --          --
Common Stock, $.0025 par value-shares authorized
   50,000,000; issued and outstanding 11,502,000 and
   11,200,000, respectively                                  29          29
Additional paid-in capital                               81,727      76,130
Subscriptions receivable                                      0         (95)
Retained earnings                                        21,220      10,113
Cumulative translation adjustments                          317         322
                                                      ----------  ----------
   Total stockholders' equity                           103,293      86,499
                                                      ----------  ----------
   Total liabilities and stockholders' equity          $174,280    $111,948
                                                      ==========  ==========
</TABLE>
      SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>


                              THE NORTH FACE, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
<TABLE>
<CAPTION>
                                             For the Years Ended December 31, 
                                             ---------------------------------
                                               1997        1996        1995
                                             ---------   ---------   ---------
<S>                                          <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income                                    $11,107      $4,801      $3,485
Adjustments to reconcile net income
   to cash provided by (used in)
   operating activities:
   Depreciation and amortization                5,130       3,595       3,075
   Write-off of information systems             1,750          --          --
   Adjustment to warranty accrual              (1,200)         --          --
   Deferred income taxes                         (289)       (260)       (441)
   Provision for doubtful accounts                 (6)        215         338
   Extraordinary loss                              --         863          --
   Tax benefit of exercise of stock options     4,803       3,595          --
   Effect of changes in:
    Accounts receivable                       (30,844)     (7,782)     (3,434)
    Inventories                               (13,222)    (10,427)     (8,980)
    Other assets                              (11,675)     (2,054)       (469)
    Accounts payable and accrued liabilities   16,058       2,651       3,631
                                             ---------   ---------   ---------
Net Cash Used in Operating Activities:        (18,388)     (4,803)     (2,795)
                                             ---------   ---------   ---------
INVESTING ACTIVITIES:
   Purchase of fixed assets                   (16,886)     (5,982)     (5,665)
                                             ---------   ---------   ---------
FINANCING ACTIVITIES:
   Long-term Debt proceeds                      6,826       2,825       5,600
   Long-term Debt repayments                     (546)    (32,009)     (2,595)
   Proceeds (payments) from revolver, net      24,400     (11,812)      7,847
   Payment of debt issuance costs                 (94)       (262)       (300)
   Proceeds from issuance of stock                889      56,884          --
                                             ---------   ---------   ---------
Net Cash Provided by Financing Activities      31,475      15,626      10,552
                                             ---------   ---------   ---------
Effect of foreign currency fluctuations
   on cash                                         (5)        651         (95)
                                             ---------   ---------   ---------
Increase (Decrease) in Cash and Cash
   Equivalents                                 (3,804)      5,492       1,997
Cash and Cash Equivalents, Beginning
   of Period                                    8,315       2,823         826
                                             ---------   ---------   ---------
Cash and Cash Equivalents, End of Period       $4,511      $8,315      $2,823
                                             =========   =========   =========
SUPPLEMENTAL CASH FLOW INFORMATION:
   Cash paid for:
      Interest                                 $2,136      $4,859      $4,383

      Income taxes                             $4,488      $1,302      $1,785

   Non-Cash Transactions:
      Cancellation of stock and related
      promissory note                           $  --       $  --        $119

      Conversion of Preferred Stock into
      Common Stock                              $  --     $15,075       $  --

</TABLE>
             SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

<PAGE>


                              THE NORTH FACE, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                              Cumula-
                                                        Common Stock           tive    Subscrip-             Trans-
                              Preferred Stock  ----------------------------- Preferred   tions               lation
                            ------------------                    Additional Dividends  Receiv-   Retained   Adjust-
                             Shares   Amount    Shares    Amount   Capital    Accrued    able     Earnings    ments     Total
                            -------- --------- --------- -------- ---------- --------- --------- ---------- --------- ---------
<S>                         <C>      <C>       <C>       <C>      <C>         <C>      <C>       <C>        <C>       <C>
December 31, 1994             1,936   $12,267     3,431       $8       $764      $696     ($261)    $3,939     ($234)  $17,179
  Net Income                    --        --        --       --         --        --        --       3,485       --      3,485
  Cancellation of
    Restricted Stock            --        --       (529)      (1)      (119)      --        119        --        --         (1)
  Stock Dividends on
    Preferred Stock             --        --        --       --         --      1,353       --      (1,353)      --        --
  Translation Adjustments       --        --        --       --         --        --        --         --        (95)      (95)
                            -------- --------- --------- -------- ---------- --------- --------- ---------- --------- ---------
December 31, 1995             1,936    12,267     2,902        7        645     2,049      (142)     6,071      (329)   20,568
  Net Income                    --        --        --       --         --        --        --       4,801       --      4,801
  Stock Dividends on
    Preferred Stock             --        --        --       --         --        759       --        (759)      --        --
  Declaration of
    Preferred Dividends         443     2,808       --       --         --     (2,808)      --         --        --        --
  Conversion of
    Preferred Stock          (2,379)  (15,075)    4,221       11     15,064       --        --         --        --        --
  Exercise of Stock Options
    Including Tax Benefit       --        --        379        1      3,873       --         17        --        --      3,891
  Sale of Common Stock          --        --      3,829       10     56,578       --        --         --        --     56,588
  Cancellation of
    Restricted Stock            --        --       (131)     --         (30)      --         30        --        --         --
  Translation Adjustments       --        --        --       --         --        --        --         --        651       651
                            -------- --------- --------- -------- ---------- --------- --------- ---------- --------- ---------
December 31, 1996               --        --     11,200       29     76,130       --        (95)    10,113       322    86,499
  Net Income                    --        --        --       --         --        --        --      11,107       --     11,107
  Exercise of Stock Options                                                                                                  0
    Including Tax Benefit       --        --        286      --       5,354       --         95        --        --      5,449
  Employee Stock Purchase Plan                       16                 243                                                243
  Translation Adjustments       --        --        --       --         --        --        --         --         (5)       (5)
                            -------- --------- --------- -------- ---------- --------- --------- ---------- --------- ---------
December 31, 1997               --      $ --     11,502      $29    $81,727     $ --         $0    $21,220      $317  $103,293
                            ======== ========= ========= ======== ========== ========= ========= ========== ========= =========
</TABLE>
    SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS AND BASIS OF PRESENTATION

BUSINESS. The North Face, Inc. designs and distributes technically 
sophisticated outerwear, skiwear, functional sportswear, tents, sleeping 
bags, backpacks and daypacks under The North Facer name. The Company sells
its products to select specialty retailers throughout the United States, 
Europe and Canada.  The Company also operates 12 retail stores.  

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include
the financial statements of The North Face, Inc. and its wholly-owned 
subsidiaries.  All intercompany accounts have been eliminated.

USE OF ESTIMATES. The preparation of financial statements in conformity with 
generally accepted accounting principles requires management to make estimates 
and assumptions that affect the reported amounts of assets and liabilities and 
disclosure of contingent assets and liabilities at the date of the financial 
statements and the reported amounts of revenues and expenses during the 
reporting period. Actual amounts could differ from those estimates.

FOREIGN CURRENCY TRANSLATION. The assets and liabilities of the Company's 
foreign subsidiaries have been translated into U.S. dollars using the exchange 
rates in effect at period end, and the revenues and expenses have been 
translated into U.S. dollars using the average exchange rates in effect during 
the period. Adjustments resulting from translating foreign financial 
statements into U.S. dollars are reported as translation adjustments as a 
separate component of stockholders' equity.

CASH AND CASH EQUIVALENTS represent short-term investments with original 
maturities of less than three months.

ACCOUNTS RECEIVABLE are recorded upon the sale of inventory to independent 
retailers. A sale occurs when inventories are shipped and title and risk of 
loss have transferred from the Company to the buyer. Seasonal goods are 
generally shipped to retailers prior to the selling season. The Company offers 
extended payment terms for pre-season orders.

INVENTORIES are stated at the lower of average cost or market. The Company 
principally contracts for the manufacture of its products in the U.S., Asia 
and Europe. Costs related to these inventories represent landed cost, which 
consists of the price paid to third party manufacturers, and inbound duties 
and freight.

TRADEMARKS AND INTANGIBLES are amortized on a straight-line basis over forty 
years. Accumulated amortization at December 31, 1997 and 1996 was 
approximately $2.8 million and $2.0 million, respectively. Amortization 
expense was $785,000, $783,000, and $790,000 for the years ended December 31, 
1997, 1996, and 1995, respectively.

PROPERTY AND EQUIPMENT is stated at cost. Depreciation and amortization is 
computed using the straight-line method over the remaining estimated useful 
life of the asset (or over the remaining lease term, if shorter, for capital 
leases). The estimated useful lives of certain categories are as follows:

Leasehold improvements                      5 - 10 years
Machinery and equipment                     5      years
Furniture, fixtures and office equipment    3 - 7  years

Expenditures for replacements and improvements are capitalized; maintenance 
and repairs are expensed as incurred.

PRODUCT WARRANTY. Substantially all of the Company's products carry a lifetime 
warranty for defects in quality and workmanship which allows the Company to 
repair or replace, at its option, the products found to have a manufacturing 
defect. The Company maintains warranty departments in the U.S., Canada and 
Europe and repairs the majority of items returned under warranty. The 
Company's estimated liability for future warranty claims related to past sales 
at December 31, 1997, and 1996 is approximately $3.9 million and $4.9 million, 
respectively, of which the non-current portion of $3.0 million and $3.8 
million is classified as other long term liabilities as of December 31, 1997 
and 1996, respectively. The current portion of the warranty liability is $.9 
million and $1.2 million and is classified as other current liabilities as of 
December 31, 1997 and 1996, respectively. Warranty expense was approximately 
$464,000, $1,711,000 and $1,004,000 for the years ended  December 31, 1997, 
1996 and 1995, respectively.

DEFERRED RENT. Certain of the Company's operating leases contain predetermined 
fixed increases of the minimum rental rate during the initial lease term. For 
these leases, the Company recognizes the related rental expense on a straight-
line basis over the life of the lease and records the difference between the 
amount charged to rent expense and the rent paid as deferred rent.

INCOME TAXES. The Company applies an asset and liability approach that 
requires the recognition of deferred tax assets and liabilities for the 
expected future tax consequences of events that have been recognized in the 
Company's financial statements or tax returns. In estimating future tax 
consequences, the Company generally considers all expected future events other 
than enactment of changes in the tax laws or rates. Deferred taxes are 
provided for temporary differences between assets and liabilities for 
financial reporting purposes and for income tax purposes and valuation 
allowances are recorded against net deferred tax assets where appropriate. No 
U.S. income tax provisions have been provided on the cumulative undistributed 
earnings of foreign operations as it is the Company's intention to utilize 
those earnings in those foreign operations for an indefinite period of time.

EARNINGS PER SHARE. In February 1997, the Financial Accounting Standards Board 
issued Statement of Financial Accounting Standards No. 128,"Earnings per Share"
(SFAS 128).  The Company adopted SFAS 128 in the fourth quarter of 1997 and 
has restated earnings per share (EPS) data for prior periods to conform with 
SFAS 128.  SFAS 128 requires a dual presentation of basic and diluted EPS.  
Basic EPS is computed by dividing net income by the weighted average of common 
shares outstanding for the period.  Diluted EPS reflects the potential 
dilution that could occur upon exercise of outstanding stock options.  The 
common equivalent shares for 1997, 1996, and 1995 periods were 281,000, 
436,000, 553,000 respectively.

Upon consummation of Company's initial public offering in July 1996, all 
outstanding shares of Series A Preferred Stock were converted into 4,220,808 
shares of Common Stock.  The pro forma net income per share and shares used in 
pro forma per share calculations for the years ended December 31, 1996 and 
1995 reflect this conversion as of the beginning of each period.  In 
accordance with the rules of the Securities and Exchange Commission, all 
common stock equivalents issued within one year of the Company' anticipated 
initial public offering have been considered outstanding for all periods using 
the treasury stock method.  Due to the conversion of Series A Preferred Stock 
into Common Stock historical earnings per share for 1996 and 1995 is not 
meaningful.

STOCK-BASED COMPENSATION. The Company accounts for stock-based awards to
employees using the intrinsic value method in accordance with Accounting 
Principals Board Opinion No. 25, Accounting For Stock Issued To Employees.

DERIVATIVES. Gains and losses on forward foreign exchange contracts used to 
hedge foreign currency denominated receivables are recognized currently.  
Gains and losses related to qualifying hedges of preseason orders (which are 
considered firm commitments) are deferred and recognized in income when the 
hedged transaction occurs.

NEW ACCOUNTING PRONOUNCEMENTS

The Company adopted SFAS No. 121, "Accounting for the Impairment of Long Lived 
Assets and Long Lived Assets to be Disposed of" (SFAS 121) for the year  ended
December 31, 1996. SFAS 121 establishes recognition and measurement  criteria
for losses whenever events or changes in circumstances indicate that  the
carrying value of assets may not be recoverable. There was no effect on  the
Company's consolidated financial statements as a result of the adoption of 
SFAS 121.

In June 1997, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards No. 130, "Reporting Comprehensive  Income" (SFAS
No. 130) which requires that an enterprise report, by major components and as a
single total the change in its net assets during the period from non-owner 
sources; and No. 131, "Disclosures about Segments of an  Enterprise" (SFAS No.
131) which establishes annual and interim reporting standards for an 
enterprise's operating segments and related disclosures about its products, 
services, geographic areas, and major customers.  Adoption of these statements 
will not impact the Company's consolidated financial position, results of 
operations or cash flows, and any effect will be limited to the form and 
content of its disclosures.  Both statements are effective for fiscal years 
beginning after December 15, 1997, with earlier application permitted.

RECLASSIFICATIONS.  Certain amounts in the 1996 and 1995 financial statements 
have been reclassified to conform with the 1997 presentation.

3. ACCOUNTS RECEIVABLE

The allowance for doubtful accounts was $1,276,000 and $1,282,000 as of 
December 31, 1997 and 1996, respectively.  Write-offs to accounts receivable 
during the years ended December 31, 1997, 1996 and 1995 were approximately 
$284,000, $212,000 and $71,000, respectively.

During the years ended December 31, 1997, 1996 and 1995, no customer accounted 
for more than 10% of net sales.

4. INVENTORIES

Inventories as of December 31, 1997 and 1996 consist of (in thousands):

                                                  1997       1996
                                                ---------  ---------
Finished goods                                   $39,652    $28,473
Work in progress                                     789        793
Raw materials                                      4,256      2,209
                                                ---------  ---------
Total inventories                                $44,697    $31,475
                                                =========  =========


5. PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 1997 and 1996 consist of (in 
thousands):

                                                  1997       1996
                                                ---------  ---------

Leasehold improvements                            $7,287     $7,246
Furniture, fixtures and office equipment          22,061      7,459
Machinery and equipment                            1,965      1,476
                                                ---------  ---------
Subtotal                                          31,313     16,181
Less accumulated depreciation and amortization    (8,358)    (4,142)
                                                ---------  ---------
Total property and equipment, net                $22,955    $12,039
                                                =========  =========


Depreciation and amortization expense related to property and equipment was 
$4,218,000, $2,302,000 and $1,268,000 for the years ended December 31, 1997, 
1996 and 1995, respectively.  Maintenance and repair expense was $648,000, 
$671,000 and $565,000 for the years ended December 31, 1997, 1996 and 1995, 
respectively.

6. INCOME TAXES

The provision for income taxes consists of the following (in thousands):

                                   For the Years Ended December 31, 
                                   -------------------------------
                                     1997       1996       1995
Federal                            ---------  ---------  ---------
  Current                            $4,574     $2,514       $825
  Deferred                               26       (338)       375

State
  Current                             1,140        679        202
  Deferred                              121        (80)        77

Foreign
  Current                             1,634        879        641
  Deferred                             (245)       (43)       (22)
                                   ---------  ---------  ---------
                                     $7,250     $3,611     $2,098
                                   =========  =========  =========


   Reconciliation of the U.S. Federal statutory rate to the Company's 
effective tax rate is as follows:

                                   For the Years Ended December 31, 
                                   -------------------------------
                                     1997       1996       1995
                                   ---------  ---------  ---------
Statutory rate                         34.0%      34.0%      34.0%
State income taxes, net of
  federal benefit                       4.5%       4.3%       4.2%
Other                                   1.0%       0.6%      -0.6%
                                   ---------  ---------  ---------
Effective tax rate                     39.5%      38.9%      37.6%
                                   =========  =========  =========


   Deferred income taxes for the Company reflect the tax effects of temporary
differences between amounts of assets and liabilities for financial reporting
purposes and such amounts measured by tax laws.

   Significant components of the net deferred tax asset as of December 31, 1997
and 1996 are as follows (in thousands):

                                                1997       1996
                                              ---------  ---------
Deferred Tax Asset:

Inventory costs not yet deductible              $1,590     $1,048
Depreciation                                     1,014        522
Liabilities not yet deductible for tax           2,935      2,661
                                              ---------  ---------
                                                 5,539      4,231
                                              ---------  ---------
Deferred Tax Liabilities:

Depreciation                                       (97)       (97)
Intangibles                                     (3,781)    (3,169)
Liabilities deductible for tax not book           (849)      (261)
                                              ---------  ---------
                                                (4,727)    (3,527)
                                              ---------  ---------
Net Deferred Income Tax Asset                     $812       $704
                                              =========  =========

Current Asset                                    2,779      2,490
Long-Term Liability                             (1,967)    (1,786)
                                              ---------  ---------
                                                  $812       $704
                                              =========  =========


   The cumulative amount of undistributed earnings of the European and 
Canadian foreign subsidiaries, which the Company intends to indefinitely 
reinvest outside of the United States and upon which deferred income taxes 
are not provided, approximates $9.7 million at December 31, 1997.

7. PENSION PLAN

The Company's European subsidiary has a contributory defined benefit pension
plan covering substantially all full-time employees.  Benefits are based on
years of service and compensation. The Company funds the plan in amounts not
less than the minimum statutory requirements in the United Kingdom.  The plan's
assets consist of investments in the Discretionary Managed Fund operated by
Prudential Portfolio Managers Limited.

Net pension plan expense consisted of the following (in thousands):

                                           For the Years Ended December 31, 
                                           -------------------------------
                                             1997       1996       1995
                                           ---------  ---------  ---------

Service cost                                   $101        $76        $55
Interest cost on projected benefit
  obligations                                   291        222        180
Actual return on plan assets                   (693)      (378)      (323)
Net amortization                                410        176        176
                                           ---------  ---------  ---------
Net pension plan expense                       $109        $96        $88
                                           =========  =========  =========
Contributions to the plan                      $341       $371       $346
                                           =========  =========  =========

   Actuarial present value of the benefit obligation as of December 31, 1997
and 1996 is as follows (in thousands):

                                                        1997       1996
                                                      ---------  ---------
Accumulated benefit obligation                          $3,981     $2,897
Additional amounts related to pension benefit
  obligation compensation increases                          0        221
                                                      ---------  ---------
Projected benefit obligation                             3,981      3,118
Less fair value of assets                               (3,600)    (2,571)
                                                      ---------  ---------
Projected benefit obligation in excess of fair value      $381       $547
                                                      =========  =========

The projected benefit obligation of $381,000 and $547,000 at December 31, 1997 
and 1996, respectively, is included in other long-term liabilities in the 
consolidated balance sheet. The significant assumptions for 1997 and 1996 were 
as follows:

                                                        1997       1996
                                                      ---------  ---------
   Discount rate                                             9%         9%
   Expected long term rate of return on plan assets          9%         9%
   Rate of increase in future compensation levels            7%         7%


8. DEBT

Total debt as of December 31, 1997 and 1996 consists of the following (in 
thousands):

                                             1997       1996
                                           ---------  ---------
Revolving line of credit                    $24,400         $0
Term note                                     5,000          0
Mortgage                                         96        123
Notes payable                                   962        -- 
                                           ---------  ---------
Total                                        30,458        123

Less: current portion                       (25,639)       (26)
                                           ---------  ---------
Long-term debt                               $4,819        $97
                                           =========  =========

Aggregate principal payments for the next five years subsequent to December 
31, 1997 are as follows:

                    1998                    $25,639
                    1999                      1,421
                    2000                      3,380
                    2001                         18
                                           ---------
                                            $30,458
                                           =========

Effective April 7, 1997, the Company entered into a Third Amended and Restated 
Loan & Security Agreement (the "Facility"), expiring in February, 2000, with a 
group of three financial institutions, which includes a term note, a revolving 
line of credit and a letter of credit facility.  The term note (availability 
up to $5,000,000) is payable in equal quarterly installments based on five (5) 
year amortization of the amount outstanding on March 31, 1998 commencing in 
April, 1998, but the outstanding principal balance shall be due and payable in 
full on the Termination Date which is in February, 2000.  The term note 
carries interest payable monthly at the bank's Prime Rate minus .50%.  The 
Company had an outstanding $5,000,000 term note as of December 31, 1997, with 
the interest rate of 8%.  The revolving line of credit provides for borrowing 
up to $60.0 million with the actual borrowings limited to available 
collateral, representing eligible receivables and inventory (approximately 
$58.4 million of gross availability as of December 31, 1997, of which the 
Company had borrowed $24.4 million at December 31, 1997).  Interest on the 
revolving line of credit is payable monthly at a rate of either prime minus 
 .50% or LIBOR plus 1.25%, at the option of the Company.  The average interest 
rate was 7.41% at December 31, 1997.  The revolving line of credit agreement 
provides a sublimit facility for letters of credit up to a maximum of $25 
million (approximately $3.8 million outstanding as of December 31, 1997).  
Fees for outstanding letters of credit are payable quarterly at 2.0% per 
annum.  The Company also pays a monthly unused line fee on the revolver at .5% 
per annum.  Borrowings and outstanding letters of credit under the Facility 
are secured by substantially all of the assets of the Company.  The Facility 
includes certain financial covenants and restrictions on new indebtedness and 
the payment of cash dividends.  The Company was in compliance with all of its 
financial covenants as of December 31, 1997.

In addition, the Company has a European overdraft facility of approximately 
$6.0 million with a bank.  The Company also has a European letter of credit 
facility.  The bank overdraft facility is reduced by the value of any 
outstanding letters of credit.  As of December 31, 1997, the Company had 
outstanding letters of credit under the European facility of approximately 
$2.0 million. 

In connection with the restructuring of the credit facility at the date of the 
initial public offering, the Company recorded a non-cash extraordinary loss in 
1996 of $186,000, net of tax benefits of $124,000, representing the write-off 
of the remaining deferred debt issuance costs.

9. SUBORDINATED DEBT

In 1996, the Company repaid $24.3 million of its subordinated debt using 
proceeds of the Company's initial public offering and secondary offering and 
recorded a non-cash extraordinary loss in 1996 of $677,000, net of tax 
benefits of $451,000, representing the write-off of the remaining deferred 
debt issuance costs.

10. LEASES

The Company leases buildings, equipment and vehicles under non-cancelable 
lease agreements that expire at various dates through 2003. The leases 
generally provide for renewal options for periods ranging from three to ten 
years. The building leases generally provide for additional rents based on 
store sales and for payment of taxes, insurance and maintenance expenses 
related to the leased assets.

Future minimum lease payments under all leases with initial or remaining non-
cancelable lease terms in excess of one year as of December 31, 1997 are as 
follows (in thousands):

                                            Capital   Operating
Year Ending December 31,                    Leases     Leases
-----------------------------              ---------  ---------
   1998                                        $147     $4,734
   1999                                         147      4,819
   2000                                         145      4,559
   2001                                          26      3,434
   2002                                          15      5,602
   Thereafter                                    10
                                           ---------  ---------
   Minimum lease commitments                    490    $23,148
                                                      =========
   Less: amount representing interest           (37)
                                           ---------
   Present value of net minimum lease
      payments                                  453
   Less: current portion                        (95)
                                           ---------
   Long term portion                           $358
                                           =========

The cost of property under capitalized leases was $468,000 and $314,000, as of
December 31, 1997 and 1996, respectively, and primarily represents furniture,
fixtures and office equipment. Accumulated amortization related to these leases
was approximately $303,000 and $249,000 as of December 31, 1997 and 1996,
respectively.

Rental expense for operating leases was as follows (in thousands):

                                             1997       1996       1995
                                           ---------  ---------  ---------
       Minimum rentals                       $4,651     $3,783     $2,568
       Contingent rentals                        90         98        122
                                           ---------  ---------  ---------
                                             $4,741     $3,881     $2,690
                                           =========  =========  =========


11. COMMITMENTS AND CONTINGENCIES

LITIGATION. The Company is party to claims and litigation that arise in the 
normal course of business. Management believes that the ultimate outcome of 
these claims and litigation will not have a material impact on the 
consolidated financial position, results of operations and cash flows of the 
Company.

PURCHASE COMMITMENTS. The Company has approximately $50.2 million and $47.4 
million of purchase commitments as of December 31, 1997 and 1996, 
respectively, related to goods ordered for future production in the normal 
course of business. Certain of these commitments are collateralized by 
outstanding letters of credit (see Note 8).

DERIVATIVES. The Company's international subsidiaries sell merchandise 
throughout Europe and Canada. These sales are denominated in the local 
currency of the retailer's country. Additionally, certain of the purchases of 
the Company's international subsidiaries are denominated in U.S. dollars.  To 
protect the Company from the risk that the eventual net cash inflows resulting 
from the sale of products to foreign customers will be adversely affected by 
changes in exchange rates, the Company's subsidiaries enter into forward 
exchange contracts and options (hedging instruments) to hedge their foreign 
denominated accounts receivable, matched firm orders and anticipated orders.  
As of December 31, 1997 the Company had open forward contracts to sell foreign 
currencies for British pounds as follows: $4.8 million German marks, $4.4 
million French francs, $3.7 million Dutch guilders, $.4 million Italian lira, 
$1.2 million Spanish pesatas, $1.7 million Swiss francs, $1.8 million Swedish 
Kroners, $1.1 million Belgium francs and $1.6 million Danish koronas. As of 
December 31, 1997, the Company had outstanding foreign exchange options to 
sell Canadian dollars for U.S. dollars of $13.7 million and open forward 
exchange contracts to sell Canadian dollars for U.S. dollars of $2.5 million. 
All of the Company's hedging instruments expire in 1998. Deferred gains and 
losses on these transactions are immaterial at December 31, 1997.

12. STOCKHOLDER'S EQUITY

COMMON STOCK.  In July and November 1996, the Company sold 2,823,611 and 
1,000,000 shares, respectively, of its Common Stock in public offerings at 
prices of $14.00 and $23.50, respectively, per share, yielding net proceeds of 
approximately $56.7 million after deducting underwriting discounts of $4.0 
million and expenses of $2.4 million related to the offering. The proceeds 
were used to repay certain portions of the Company's line of credit and senior 
and subordinated indebtedness.

SERIES A PREFERRED STOCK.  Upon consummation of the Company's initial public 
offering, all outstanding shares of Series A Preferred Stock, including 
accrued dividends, were converted into 4,220,808 shares of Common Stock.  
Series A Preferred Stock were entitled to dividends of 10% of the face value 
payable quarterly in either cash or additional shares of Series A Preferred 
Stock, were convertible into common stock, carried liquidation preferences of 
face value and had voting rights on an as-converted basis.

1994 STOCK INCENTIVE PLAN. In 1994, the Company adopted the 1994 Stock 
Incentive Plan (the "1994 Plan") to issue non-qualified stock options 
("NQSOs") to purchase shares of Common Stock.  All NQSOs were granted at an 
exercise price that was, at the time of grant, an amount equal to the fair 
market value of a share of Common Stock, as determined by the Board of 
Directors.  Additionally, 1,159,950 restricted shares of Common Stock were 
granted under the 1994 Plan pursuant to the payment of cash and delivery of 
promissory notes totaling $261,250 due June 7, 2004, bearing interest at a 
rate of 9.0% per annum.  As of December 31, 1997, substantially all of the 
restricted stock had been converted into common stock and the promissory notes 
had been repaid.  The Company currently does not anticipate making additional 
grants under the 1994 Plan.

1995 AND 1996 STOCK INCENTIVE PLANS.  The Company's 1995 Stock Incentive Plan 
(the "1995 Plan") was adopted by the Company in April 1995, and the Company's 
1996 Stock Incentive Plan (the "1996 Plan") was adopted by the Company in May 
1996.  The terms of the 1995 Plan and the 1996 Plan (together, the "Option 
Plans") are substantially the same, except where noted below.

A maximum of 924,820 shares of Common Stock (subject to adjustment in the case 
of certain stock splits, stock dividends, and reorganizations) have been 
reserved for issuance pursuant to options granted under the Option Plans.  
NQSOs granted under the 1995 Plan and NQSOs granted to officers under the 1996 
Plan become fully vested on June 7, 2004, with accelerated vesting over four 
years based upon specified performance goals and expire on June 7, 2004.  
NQSOs and Incentive Stock Options ("ISOs") granted under the 1996 Plan to 
employees vest over 4 years and expire on June 7, 2004. The Company currently 
does not anticipate making additional grants under the 1995 Plan.

Under the 1996 Plan, options with respect to no more than 400,000 shares 
may be granted to any individual in any year and no options may be granted to 
a person who, at the time of grant, owns shares possessing 10% or more of the 
total combined voting power of all classes of stock of the Company. All of the 
Company's officers, directors and other salaried employees are eligible to 
receive options under the Option Plans.

The exercise price of an option granted under the Option Plans may not be less 
than 100% of the fair market value of a share of Common Stock at the date of 
grant and no options may be exercisable more than ten years following the date 
of grant.  For grants to non-officers under the 1996 Plan, vesting must be at 
least 20% per year following the date of grant, unless otherwise permitted by 
applicable law.

1996 DIRECTORS' STOCK OPTION PLAN.  The 1996 Directors' Stock Option Plan (the 
"Directors' Plan") was adopted by the Company in May 1996.  A total of 100,000 
shares of Common Stock has been reserved for issuance under the Directors' 
Plan.  The Directors' Plan provides for the grant of non-qualified stock 
options to purchase 25,000 shares to each non-employee director of the Company 
initially elected to the Board after the effective date of the Directors' 
Plan. Because the disinterested administration requirement of Rule 16b-3 
promulgated under the Securities Exchange Act of 1934 ceased to be applicable 
to awards made under all equity based plans of the Company, no further grants 
will be made as described in the preceding sentence and in lieu thereof awards 
will be made under the Directors' Plan on a discretionary basis to non-
employee directors of the Company. 

Activity for all of the Company's stock option plans from January 1, 1995 
through December 31, 1997 was as follows:

<TABLE> 
<CAPTION> 
                                      1997                     1996                     1995
                               ---------------------------------------------------------------------------
                                               Weighted                 Weighted                 Weighted
                                                Average                  Average                  Average
                                               Exercise                 Exercise                 Exercise
                                 Shares          Price    Shares          Price    Shares          Price
-----------------------------  ----------      -------------------      -------------------      ---------
<S>                            <C>             <C>      <C>             <C>      <C>             <C>
Outstanding, beginning of year 1,069,602          $6.60 1,080,008          $0.90   444,000          $0.23
    Granted                      492,600          18.52   431,430         $14.52   808,267             $1
    Exercised                   (286,011)         $1.93  (379,450)         $0.73       --             --
    Cancelled                   (129,525)        $10.84   (62,386)         $0.23  (172,259)            $0
                               ----------               ----------               ----------
Outstanding, end of year       1,146,666         $12.41 1,069,602          $6.60 1,080,008          $0.90
                               ==========               ==========               ==========

Options exercisable at
   year end                      390,071          $4.31   533,833          $1.09   443,139          $0.96
                               ==========               ==========               ==========
Weighted average fair value
   of options granted during
   the year                              $7.35                    $5.05                    $0.17
                                         ======                   ======                   ======
</TABLE>

The following table summarizes additional information about stock options 
outstanding at December 31, 1997.


<TABLE>
<CAPTION>
                          Options Outstanding          Options Exercisable
                     --------------------------------- ---------------------
                                  Weighted
                                   Average   Weighted              Weighted
                                  Remaining   Average               Average
     Range of          Shares    Contractual Exercise    Shares    Exercise
  Exercise Prices    Outstanding Life (yrs)    Price   Outstanding   Price
-------------------  ----------- ----------- --------- ----------- ---------
<S>                  <C>         <C>         <C>       <C>         <C>
$  0.22 to $  1.13      364,152        6.43     $1.06     316,990     $1.08
   3.38 to    9.60      118,714        6.43      6.85      17,988      6.14
  14.38 to   26.50      663,800        7.88     19.63      55,093     22.21



                     -----------                       -----------
$  0.22 to $ 26.50    1,146,666        7.27    $12.41     390,071     $4.30
                     ===========                       ===========

</TABLE>

EMPLOYEE STOCK PURCHASE PLAN.  The 1996 Employee Stock Purchase Plan (the 
"Employee Plan"), adopted in May 1996, reserved a total of 150,000 shares of 
Common Stock for issuance. Under the Employee Stock Purchase Plan, eligible
full-time employees can choose to have up to 10% of their annual base earnings
withheld to purchase the company's common stock.  The purchase price of the
stock is 85% of the lower of the beginning of the offering period or end of
the offering period market price.  During 1997 and 1996, employees purchased
approximately 15,800 and 5,094 shares respectively at an average price of
$15.95 and $11.81 respectively.  At December 31, 1997, 129,106 shares are
available for future issuance.

PRO FORMA STOCK OPTION INFORMATION.  The Company accounts for its stock-based 
awards using the intrinsic value method in accordance with Accounting 
Principles Board Opinion No. 25, Accounting For Stock Issued To Employees and 
its related interpretations. No compensation cost has been recognized in the 
financial statements for employee stock arrangements.

Had compensation cost for the Company's stock-based compensation plans in 1996 
and 1995 been recorded in accordance with the fair value method of SAFS 123, 
the Company's net income and earnings per share for 1997, 1996 and 1995 would 
approximate the following pro forma amounts (in thousands, except per share 
data):

                                              1997       1996       1995
                                            ---------  ---------  ---------
Income before extraordinary loss:
    As reported                              $11,107     $5,664     $3,485
    Pro forma                                 10,109      5,458      3,443

Diluted income per share before extraordinary loss:
    As reported                                $0.96      $0.62      $0.47
    Pro forma                                   0.89       0.59       0.46


For purposes of computing the above pro forma amounts, the fair value of each 
option granted during 1997, 1996 and 1995 was estimated as of the date of 
grant using the Black-Scholes option-pricing model.  This model requires 
subjective assumptions, including future stock price volatility and expected 
date of exercise, which greatly affects the calculated values.  The following 
weighted average assumptions were used in calculating the fair value of the 
options granted: (i) dividend yield of 0% for 1997, 1996 and 1995; (ii) 
expected volatility of 58.6% for 1997, 45% (for options granted subsequent to 
the filing of the S-1 in connection with the initial public offering through 
December 31, 1996) and 0% (for options granted prior to the filing); (iii) 
risk-free interest rate of 6.56%, 6.38% and 6.38% for 1997, 1996 and 1995 
respectively; and (iv) expected life from vesting to exercise of 6 months for 
1997, 1996 and 1995.  Forfeitures are recognized as they occur.

The effects of applying SFAS 123 in this pro forma disclosure may not be
indicative of future pro forma amounts, because the fair valued method has not 
been applied to awards granted prior to 1995.

DEFINED CONTRIBUTION PLANS.  Effective January, 1998, the Company has 
available a profit sharing retirement plan.  Under the plan employee and 
company contributions qualify for favorable tax treatment under Section 401(k) 
of the Internal Revenue Code.  Under the 401(k) plan, the Company offers a 
discretionary match, based on company growth and profits (paid in The North 
Face, Inc., Common Stock).  Employee contributions are always 100% vested.  
Employer contributions will be vested at 20% per year; 100% after 5 years.  
The Company's Board of Directors has approved the allocation of a 25% matching 
contribution on a maximum of 6% of employee compensation contributed to the 
plan in accordance of the terms of the plan for the year ending 1998.


13. SEGMENT INFORMATION

The following table summarizes the Company's operations by geographical area 
(in thousands).  The Company's intercompany sales are insignificant.

<TABLE>
<CAPTION>
                                         UNITED                        CONSOL-
                                         STATES    CANADA    EUROPE    IDATED
                                        --------- --------- --------- ---------
<S>                                     <C>       <C>       <C>       <C>
For the year ended December 31, 1995:

  Net sales                              $96,069    $5,130   $20,335  $121,534

  Operating income (loss)                  8,635      (200)    2,089    10,524

  Income before provision for income
     taxes                                 3,749      (271)    2,105     5,583

  Identifiable assets                    $72,411    $1,617   $10,480   $84,508

For the year ended December 31, 1996:

  Net sales                             $120,027    $9,462   $28,737  $158,226

  Operating income                        10,482       582     2,480    13,544

  Income before provision for income
     taxes and extraordinary loss          6,332     2,461       482     9,275

  Identifiable assets                    $93,419    $3,769   $14,760  $111,948

For the year ended December 31, 1997:

  Net sales                             $155,954   $12,661   $39,788  $208,403

  Operating income                        15,424     1,369     4,551    21,344

  Income before provision for income
     taxes                                13,793       817     3,747    18,357

  Identifiable assets                   $141,039    $7,396   $25,845  $174,280

</TABLE>


14. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS No. 107, Disclosures about Fair Value of Financial Instruments, requires 
disclosure of the estimated fair value of financial instruments. The carrying 
value of cash and cash equivalents, accounts receivable, accounts payable and 
debt approximates their estimated fair values at December 31, 1997. 

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and the Stockholders of The North Face, Inc.:

We have audited the accompanying consolidated balance sheets of The North 
Face, Inc. and its subsidiaries as of December 31, 1997 and 1996 and the 
related consolidated statements of operations, stockholders' equity and cash 
flows for each of the three years in the period ended December 31, 1997.  
These financial statements are the responsibility of the Company's management. 
Our responsibility is to express an opinion on these financial statements 
based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free of 
material misstatement. An audit includes examining, on a test basis, evidence 
supporting the amounts and disclosures in the financial statements. An audit 
also includes assessing the accounting principles used and significant 
estimates made by management, as well as evaluating the overall financial 
statement presentation. We believe that our audits provide a reasonable basis 
for our opinion.

In our opinion, the consolidated financial statements referred to above 
present fairly, in all material respects, the financial position of The North 
Face, Inc. and its subsidiaries as of December 31, 1997 and 1996, and the 
results of their operations and their cash flows for each of the three years 
in the period ended December 31, 1997, in conformity with generally accepted 
accounting principles.

/s/ Deloitte & Touche LLP

Deloitte & Touche LLP
San Francisco, California
February 6, 1998


                             FINANCIAL REPORTING

Management of The North Face, Inc. is responsible for the information and 
representations contained in this report. The financial statements have been 
prepared in conformity with the generally accepted accounting principles we 
considered appropriate in the circumstances and include some amounts based on 
our best estimates and judgments. Other financial information in this report 
is consistent with these financial statements.

The Company's accounting systems include controls designed to reasonably 
assure that assets are safeguarded from unauthorized use or disposition and 
which provide for the preparation of financial statements in conformity with 
generally accepted accounting principles. These systems are supplemented by 
the selections and training for qualified financial personnel and an 
organizational structure providing for appropriate segregation of duties.

The Board of Directors pursues its responsibilities for these financial 
statements through its Audit Committee, presently consisting of two outside 
directors of the Company. The Audit Committee is responsible for recommending 
to the Board of directors the appointment of the independent auditors and 
reviews with the independent auditors and management the scope and the results 
of the annual audit, the effectiveness of the accounting control system and 
other matters relating to the financial affairs of the company as they deem 
appropriate. The independent auditors have full access to the committee, with 
and without the presence of management, to discuss any appropriate matters.

/s/ William N. Simon           /s/ Christopher F. Crawford
    William N. Simon               Christopher F. Crawford
    Chief Executive Officer        Chief Financial Officer
       and President


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

     None.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Information concerning the directors of the Company and compliance with
Section 16(a) of the Securities Exchange Act of 1934 is incorporated in this 
report by reference from the text under the captions "Proposal 1 - Election of 
Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance" 
included in the Company's Proxy  Statement for the Annual Meeting of 
Stockholders on March 31, 1998.  Information concerning the executive officers 
of the Company is set forth under the caption "Executive Officers of The North 
Face, Inc." in Item 1 of Part I of this report.

ITEM 11.  EXECUTIVE COMPENSATION.

Information concerning executive compensation is incorporated in this
report by reference from the text and tables under the caption "Executive 
Officer Compensation" included in the Company's Proxy Statement for the Annual 
Meeting of Stockholders on March 31, 1998.  Information concerning 
compensation of directors is incorporated in this report by reference from the 
text under the caption "Proposal 1 - Election of Directors" included in that 
proxy statement.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Information concerning security ownership of certain beneficial owners and 
management is incorporated in this report by reference from the text and table 
under the caption "Stock Ownership of Certain Beneficial Owners and 
Management" included in the Company's Proxy Statement for the Annual Meeting 
of Stockholders on March 31, 1998.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Information concerning certain relationships and related transactions 
with executive officers, directors and security holders known to the Company 
to own of record more than 5% of the Company's Common Stock is incorporated in 
this report by reference from the text under the captions "Executive Officer 
Compensation --Compensation Committee Interlocks and Insider Participation" 
included in the Company's Proxy Statement for the Annual Meeting of 
Stockholders on March 31, 1998.


                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

     (a)(1) INDEX TO FINANCIAL STATEMENTS

  Financial Statements:

         Consolidated Balance Sheets as of December 31, 1996 and 1997
         Consolidated Statements of Income for the
            Years Ended December 31, 1995, 1996 and 1997
         Consolidated Statements of Shareholders' Equity for the
            Years Ended December 31, 1995, 1996 and 1997
         Consolidated Statements of Cash Flows for the
            Years Ended December 31, 1995, 1996 and 1997
         Notes to Consolidated Financial Statements
         Independent Auditors' Report

     (2) Financial Statement Schedules

          All schedules are omitted because of the absence of the conditions 
under which they are required or because the required information is set forth 
in the consolidated financial statements and notes thereto.

     (3)   Exhibits

Exhibit No.                             Description

3.1(2)    Amended and Restated Certificate of Incorporation of The North Face, 
Inc.

3.2(A)(1) Amended and Restated By-laws of The North Face, Inc.

10.1(1)** Management Stock Purchase and Non-Competition Agreement, dated as of 
June 6, 1994, among TNF Holdings Company, Inc.,* Marsden S. Cason and William 
A.  McFarlane, as amended by Amendment No.  1, dated as of June 22, 1995.

10.2(1)   Stock Purchase Agreement, dated as of December 28, 1993, between TNF 
Holdings Company, Inc., a California corporation, and Kabushiki Kaisha 
Goldwin, as amended by Memorandum, dated as of March 29,1994, among TNF 
Holdings Company, Inc., a California corporation, and Kabushiki Kaisha 
Goldwin, and Memorandum No.  2, dated as of May 20, 1994, between TNF Holdings 
Company, Inc., a California corporation, and Kabushiki Kaisha Goldwin.

10.3(1)   Securityholders Agreement, dated as of June 7, 1994, among TNF 
Holdings Company, Inc.,* Marsden S.  Cason, William A.  McFarlane, J.H.  
Whitney & Co., Whitney 1990 Equity Fund, L.P., Whitney Subordinated Debt Fund, 
L.P., Richard T.  Peery, Jack L. Richardson, Philip S.  Schlein and Kenneth F. 
Siebel, as amended by Amendment No. 1, dated as of June 22, 1995.

10.4(1)   Registration Rights Agreement, dated as of June 7, 1994, among TNF 
Holdings Company, Inc.,* J.H.  Whitney & Co., Whitney 1990 Equity Fund, L.P., 
Whitney Subordinated Debt Fund, L.P., Marsden S.  Cason and William A. 
McFarlane, as amended by Amendment No.  1, dated as of June 22, 1995, and 
Amendment No.  2, dated as of May 20, 1996.

10.5(1)   Amended and Restated Loan and Security Agreement, dated as of March 
1, 1995, between The North Face, Inc.  and Heller Financial, Inc., as Agent 
and as a Lender, as amended by First Amendment, dated as of May 4, 1995, 
Second Amendment, dated as of August, 1995, Third Amendment, dated as of 
March 27, 1996, and Fourth Amendment, dated May 8, 1996.

10.5A(1)  Form of Second Amended and Restated Loan and Security Agreement, 
dated as of June, 1996, between The North Face, Inc.  and Heller Financial, 
Inc., as Agent and as a Lender.

10.5B     Third Amended and Restated Loan and Security Agreement, dated as of 
April 7, 1997, between The North Face, Inc. and Heller Financial, Inc., as 
Agent and as a lender.

10.6(2)** TNF Holdings Company, Inc.* 1994 Stock Incentive Plan, as amended.

10.7(3)**  The North Face, Inc. 1995 Stock Incentive Plan, as amended.

10.8(1)** The North Face, Inc. 1996 Stock Incentive Plan.

10.9(1)** The North Face, Inc. 1996 Employee Stock Purchase Plan.

10.10(1)** The North Face, Inc. 1996 Directors' Stock Option Plan.

10.11(1) Trademark License, dated October 29, 1993, between the North Face and 
W.L. Gore & Associates, Inc.

11.1     Computation of Earnings Per Share

13(2)    1996 Annual Report to Stockholders

21.1(1)  List of Subsidiaries of The North Face, Inc.

23.1     Consent of Deloitte & Touche LLP.

27.1     Financial Data Schedule.


 . TNF Holdings Company, Inc., a Delaware corporation, changed its name to 
  The North Face, Inc. on June 8, 1994.

**  Indicates management contract or compensatory plan or arrangement.

(1) Incorporated by reference to the Company's Registration Statement on Form 
S-1 (No. 333-04107) and amendments thereto, filed with the Securities and 
Exchange Commission on May 20, 1996, June 3, 1996, and June 24, 1996.

(2) Incorporated by reference to the Company's Registration Statement on Form 
S-1 (No. 333-14945) filed with the Securities and Exchange Commission on 
October 28, 1996.


(2) Incorporated by reference to the Company's Annual Report on Form 10-K for 
the fiscal year ended December 31, 1996.
(3) 
     (b) Reports on Form 8-K: none.

r   Registered trademark
TM  Trademark

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

February 27, 1998                          The North Face, Inc.
                                   (Registrant)


                                   By  /s/ William N. Simon
                                          William N. Simon
                                          Chief Executive Officer

<PAGE>

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears 
below hereby constitutes and appoints Marsden S. Cason, William N. Simon and 
Christopher F. Crawford, and each of them, his true and lawful agent, proxy 
and attorney-in-fact, with full power of substitution and resubstitution, for 
him and in his name, place and stead, in any and all capacities, to (i) act 
on, sign and file with the Securities and Exchange Commission any and all 
amendments to this report on Form 10-K together with all schedules and 
exhibits thereto, (ii) act on, sign and file such certificates, instruments, 
agreements and other documents as may be necessary or appropriate in 
connection therewith, and (iii) take any and all actions which may be 
necessary or appropriate to be done, as fully for all intents and purposes as 
he might or could do in person, hereby approving, ratifying and confirming all 
that such agent, proxy and attorney-in-fact or any of his substitutes may 
lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this 
report has been signed below by the following persons on behalf of the 
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

         Signature                    Title or Capacity                Date
---------------------------  -----------------------------------  ---------------
<S>                          <C>                                  <C>
 \s\  Marsden S. Cason
---------------------------  Chairman                             February 28,1998
    Marsden S. Cason

 \s\  William N. Simon
---------------------------  Chief Executive Officer, President   February 28,1998
     William N. Simon        and Director (Principal Executive
                             Officer)
 \s\Christopher F. Crawford
---------------------------  Chief Financial Officer (Principal   February 28,1998
    Christopher F. Crawford  Financial and Accounting Officer)

  \s\ Robert Bunje
---------------------------  Director                             February 28,1998
     Robert Bunje

  \s\ James Fifield
---------------------------  Director                             February 28,1998
     James Fifield

   \s\ Michael Doyle
---------------------------  Director                             February 28,1998
     Michael Doyle

</TABLE>

<PAGE>

EXHIBIT INDEX

Exhibit No.                             Description

3.1(2)    Amended and Restated Certificate of Incorporation of The North Face, 
Inc.

3.2(A)(1) Amended and Restated By-laws of The North Face, Inc.

10.1(1)** Management Stock Purchase and Non-Competition Agreement, dated as of 
June 6, 1994, among TNF Holdings Company, Inc.,* Marsden S. Cason and William 
A.  McFarlane, as amended by Amendment No.  1, dated as of June 22, 1995.

10.2(1)   Stock Purchase Agreement, dated as of December 28, 1993, between TNF 
Holdings Company, Inc., a California corporation, and Kabushiki Kaisha 
Goldwin, as amended by Memorandum, dated as of March 29,1994, among TNF 
Holdings Company, Inc., a California corporation, and Kabushiki Kaisha 
Goldwin, and Memorandum No.  2, dated as of May 20, 1994, between TNF Holdings 
Company, Inc., a California corporation, and Kabushiki Kaisha Goldwin.

10.3(1)   Securityholders Agreement, dated as of June 7, 1994, among TNF 
Holdings Company, Inc.,* Marsden S.  Cason, William A.  McFarlane, J.H.  
Whitney & Co., Whitney 1990 Equity Fund, L.P., Whitney Subordinated Debt Fund, 
L.P., Richard T.  Peery, Jack L. Richardson, Philip S.  Schlein and Kenneth F. 
Siebel, as amended by Amendment No. 1, dated as of June 22, 1995.

10.4(1)   Registration Rights Agreement, dated as of June 7, 1994, among TNF 
Holdings Company, Inc.,* J.H.  Whitney & Co., Whitney 1990 Equity Fund, L.P., 
Whitney Subordinated Debt Fund, L.P., Marsden S.  Cason and William A. 
McFarlane, as amended by Amendment No.  1, dated as of June 22, 1995, and 
Amendment No.  2, dated as of May 20, 1996.

10.5(1)   Amended and Restated Loan and Security Agreement, dated as of March 
1, 1995, between The North Face, Inc.  and Heller Financial, Inc., as Agent 
and as a Lender, as amended by First Amendment, dated as of May 4, 1995, 
Second Amendment, dated as of August , 1995, Third Amendment, dated as of 
March 27, 1996, and Fourth Amendment, dated May 8, 1996.

10.5A(1)  Form of Second Amended and Restated Loan and Security Agreement, 
dated as of June , 1996, between The North Face, Inc.  and Heller Financial, 
Inc., as Agent and as a Lender.

10.5(B)   Third Amended and Restated Loan and Security Agreement, dated as of 
April 7, 1997, between The North Face, Inc. and Heller Financial, Inc., as 
agent and a Lender.


10.6(2)** TNF Holdings Company, Inc.* 1994 Stock Incentive Plan, as amended.

10.7(3)**  The North Face, Inc. 1995 Stock Incentive Plan, as amended

10.8(1)** The North Face, Inc. 1996 Stock Incentive Plan.

10.9(1)** The North Face, Inc. 1996 Employee Stock Purchase Plan.

10.10(1)** The North Face, Inc. 1996 Directors' Stock Option Plan.

10.11(1) Trademark License, dated October 29, 1993, between the North Face and 
W.L. Gore & Associates, Inc.

11.1     Computation of Earnings Per Share

13(2)    1996 Annual Report to Stockholders

21.1(1)  List of Subsidiaries of The North Face, Inc.

23.1     Consent of Deloitte & Touche LLP.

27.1       Financial Data Schedule.


 . TNF Holdings Company, Inc., a Delaware corporation, changed its name to 
  The North Face, Inc. on June 8, 1994.

**  Indicates management contract or compensatory plan or arrangement.

(1) Incorporated by reference to the Company's Registration Statement on Form 
S-1 (No.  333-04107) and amendments thereto, filed with the Securities and 
Exchange Commission on May 20, 1996, June 3, 1996, and June 24, 1996.

(2) Incorporated by reference to the Company's Registration Statement on Form 
S-1 (No. 333-14945) filed with the Securities and Exchange Commission on 
October 28, 1996.

(3) Incorporated by reference to the Company's Annual Report on Form 10-K for 
the fiscal year ended December 31, 1996.

*   TNF Holdings Company, Inc., a Delaware corporation, changed its name to 
The North Face, Inc. on June 8, 1994.

**  Indicates management contract or compensatory plan or arrangement.