Branded footwear and lifestyle company Vans, Inc (NASDAQ:VANS) today announced financial results for the fourth fiscal quarter and fiscal year ended May 31, 2000.

Net sales for the quarter increased 35.5% to $65.8 million, compared to $48.5 million for the fourth quarter of fiscal 1999. Net income increased 116.5% to $1.8 million versus net income of $819,000 in the same period last year, and diluted earnings per share doubled to $0.12 versus diluted earnings per share of $0.06 in the fourth quarter of fiscal 1999. Net sales for the fiscal year increased 33.3% to $273.5 million, compared to $205.1 million for fiscal year 1999. Net income was $12.1 million, up 38.5%, versus net income of $8.7 million in the same period last year, and diluted earnings per share was $0.84 versus diluted earnings per share of $0.64 in fiscal 1999.

"Fiscal 2000 was a banner year for Vans on a number of different levels and sets the stage for what we believe will be another strong year in fiscal 2001," said Gary H. Schoenfeld, Vans' president and chief executive officer. "From a financial standpoint, we grew our overall sales by 33%, achieved retail comp store gains of 8.2%, with an increase in net income of 38% for the year. Our fourth quarter was similarly strong, as we doubled our earnings on a 35% increase in sales. These results underscore the continued strong growth of the VANS brand, as well as our ability to leverage our infrastructure."(b)

Mr. Schoenfeld continued, "Beyond our financial achievements, we had a number of important strategic initiatives which were successfully undertaken this past year including: the initial roll-out of Vans skate parks, the respective launch of apparel and sunglasses with Pacific Sunwear and Sunglass Hut, our first foray into the video game market through our license agreement with Sony Playstation, the acquisition of High Cascade Snowboard Camp, the premier summer snowboard camp located on the glacier of Mt Hood, the profitable launch of e-commerce on Vans.com, and the addition of Motorola, Ford and Gillette as sponsors of the Vans Triple Crown Series which has now been expanded to 21 top events with a TV reach in excess of 200 million homes worldwide."

For the fourth quarter, total US sales, including sales through Vans' US retail stores, increased 53.8% to $46.8 million, versus $30.4 million for the same period a year ago. US wholesale sales in the fourth quarter increased 70.0% to $26.8 million, versus $15.8 million a year ago. Sales through the company's US retail stores increased 36.5% to $20.0 million in the fourth quarter of fiscal 2000, from $14.7 million for the same period a year ago. Comparable store sales for the fourth quarter were up 7.5% versus the same period last year, the twenty-second consecutive quarter of such increase. Total international sales, including sales through the company's five European retail stores, increased 4.7% to $19.0 million, versus $18.1 million for the same period last year.

"Our US business was very good throughout the year, fueled by strong sell-throughs during back-to-school, which continued through the Spring," Mr Schoenfeld said. "Our strong retail performance was driven by increases in both our men's and women's business and our international business grew over 50% during the year, driven predominantly by strength in Europe and significant increases in Latin America, Australia, New Zealand and Canada."

The company's gross margin for the fourth quarter increased to 41.8% versus 41.5% for the prior year. Operating expenses and other items as a percentage of sales improved 170 basis point to 37.1% for the fourth quarter, versus 38.8% for the same period a year ago.

Worldwide inventory at May 31, 2000, increased to $50.1 million from $37.0 million at May 31, 1999, commensurate with the company's overall growth. The increase in inventory also reflects a better position for earlier shipments scheduled for the back-to-school period.

Mr Schoenfeld concluded, "Over the past five years we have more than tripled our business from $88 million to $274 million. Perhaps more importantly, during a period of significant change in the footwear industry, we have successfully transformed from a US shoe manufacturer to a leading, global sports and lifestyle brand."

"We have a clear strategy to be the worldwide leader in Core Sports and leverage this position into the lifestyle and purchase decisions of our target 10 to 24 year-old demographic," said Mr Schoenfeld. "We see exciting growth prospects both in the US and internationally with men's and women's footwear, apparel, retail and skate parks, and other strategically important parts of our business including events, sponsorships and on- line through Vans.com. Our more than 30% increase in US bookings bodes well for back-to-school, and we believe we are in an excellent position to further leverage what we have created, continue our earnings growth, and increase shareholder value."(b)

Vans, Inc is a leading branded lifestyle company for the youth market. Vans reaches its 10 to 24 year-old target consumers through the sponsorship of core sports such as skateboarding, snowboarding, surfing and wakeboarding, and through major entertainment events and venues, such as the Vand Triple Crown Series, the Vans Warped Tour the Vans World Amateur Skateboarding Championships, the world's largest Vans skate parks, and the Vans High Cascade Snowboard Camp located on Mt Hood. The Company operates 133 retail stores in the US and Europe, and designs, markets and distributes active-casual footwear, clothing and accessories, performance footwear for Core Sports snowboard boots, step-in snowboard boot bindings, and outerwear worldwide. Vans' Internet address is www.vans.com.

(b) These paragraphs contain forward-looking statements about the Company's sales and earnings for fiscal 2001 and beyond. Actual sales and earnings results for the Company may vary significantly and could be impacted by a number of important factors, including but not limited to: (i) the ongoing consolidation of the retail segment of the footwear industry; (ii) the occurrence of downward trends in the US economy, foreign economies and the footwear industry, or the occurrence of events that adversely affect the world economy in general; (iii) changes in the fashion preferences of the company's target customers and the Company's ability to anticipate and respond to such changes; (iv) increasing competition in all lines of the company's business from both large, well-established companies with significant financial resources and brand recognition, and smaller niche competitors who market exclusively to the company's target customers; (v) the cancellation of orders which could alter bookings numbers; (vi) the fluctuation of foreign currencies in relation to the US dollar; and (vii) whether future skate parks opened by the company will be as successful as the Company's current parks. Many of these factors, and others, are discussed more extensively in the company's Annual Report on Form 10-K for the year ended May 31, 1999, which is filed with the Securities and Exchange Commission.

Vans, Inc. Condensed Consolidated Financial Summary

Fourth Quarter and Twelve Months Fiscal Year 2000 and 1999

(Amounts in thousands, except per share amounts)

         

Statements of Operations

Three Months Ended May 31,
Twelve Months Ended May 31,
 
2000
1999
2000
1999
         
Net sales
$ 65,780
$ 48,548
$ 273,510
$ 205,127
Cost of sales
38,284
28,391
158,651
118,458
Gross profit
27,496
20,157
114,859
86,669
Gross profit percentage
41.8%
41.5%
42.0%
42.3%
 
Expenses:
Selling and distribution
17,614
13,757
64,306
46,920
Marketing, advertising and promotion
3,976
4,586
20,228
20,685
General and administrative
2,900
2,672
11,125
8,952
Other income, net(a)
(1,060)
(2,844)
(4,573)
(6,000)
Restructure cost (recoveries)
--
--
--
(393)
Goodwill amortization
371
339
1,417
1,287
Interest expense, net
627
320
2,465
948
24,428
18,830
94,968
72,399
 
Expenses and other items as a percentage of sales
37.1%
38.8%
34.7%
35.3%
Earnings before income taxes and minority interest
3,068
1,327
19,891
14,270
Income tax expense
1,080
192
6,800
4,852
Minority interest
215
316
1,004
693
Net earnings
$ 1,773
$ 819
$ 12,087
$ 8,725
 
Earnings per share information:
 
Basic:
Weighted average shares outstanding
13,728
13,236
13,603
13,290
Net earnings per basic share
$ 0.13
$ 0.06
$ 0.89
$ 0.66
 
Diluted:
Weighted average shares outstanding
14,766
13,746
14,468
13,667
Net earnings per diluted share
$ 0.12
$ 0.06
$ 0.84
$ 0.64

Footnote:
(a) Other income consists primarily of licensing royalties, sublease income, and foreign exchange gains or losses.

Vans, Inc. Condensed Consolidated Financial Summary

Fourth Quarter and Twelve Months Fiscal Year 2000 and 1999
(Dollars in thousands)
     
 
Balance Sheets
ASSETS
May 31, 2000
May 31, 1999
Current assets:
Cash
$ 15,516
$ 7,777
Trade receivables
34,600
30,056
Inventory
50,142
37,025
Deferred tax assets
2,674
1,378
Other
11,925
7,824
 
Total current assets
114,857
84,060
 
Property, plant and equipment - net
29,801
20,411
Intangible assets
23,523
23,127
Other
2,989
2,940
 
Total assets
$171,170
$130,538
 
LIABILITIES
Short-term borrowings
$ 19,706
$ 9,185
Other current liabilities
24,555
13,556
Restructuring costs
204
730
Other long-term liabilities
15,457
10,894
 
Total liabilities
59,922
34,365
 
Minority interest (a)
3,239
1,022
Shareholders' equity
108,009
95,151
 
Total liabilities and shareholders' equity
$171,170
$130,538

 

Sales by Distribution Channel
         
 
Three Months Ended May 31,

Twelve Months Ended May 31,

U.S.:
2000
1999
2000
1999
 
Wholesale
$ 26,786
$ 15,754
$108,663
$ 87,546
Retail
20,023
14,674
77,761
60,050
 
Total U.S.
46,809
30,428
186,424
147,596
Total International
18,971
18,120
87,086
57,531
 
Total Sales
$ 65,780
$ 48,548
$273,510
$205,127

Footnote:
(a) During the second quarter of fiscal 2000, the company acquired an additional 10% of the Common Stock of Global Accessories Limited ("Global") in exchange for Common Stock of the Company. This transaction was effective September 30, 1999, bringing the Company's ownership to 80%. The remaining 20% of the Global shares will be acquired by the company in the second quarter of fiscal 2001.