From The Archive
Excerpt
No. 9  March 1997

Extreme Spreadsheet, Dude!

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Excerpts from the prospectus for an initial public stock offering for VANS, a shoe and apparel company that caters to alienated suburban youth.

As a result of [its] reputation, the Company has developed a strong brand image which the Company believes represents the individualistic and outdoor lifestyle or its target customer base. The VANS brand image coincides with what the Company believes is a fundamental shift in the attitudes and lifestyles of young people worldwide, characterized by the rapid growth and acceptance of the alternative, outdoor sports and the desire to lead an individualistic, contemporary lifestyle. The Company believes that underlying factors influencing young people include: (i) programs broadcast worldwide on networks such as MTV, ESPN, and ESPN2; (ii) the growing international distribution and popularity of magazines such as Rolling Stone, TransWorld SKATEboarding, Spin, and Details; and (iii) the increased independence and purchasing power of young people worldwide, as evidenced by the estimated 25 million teenagers in the United States who in 1994 spent approximately $89 billion.

[ … ]

To capitalize on the strength of the VANS brand with young men and women worldwide, the Company has recently repositioned itself from a domestic manufacturer to a market-driven company. With a focus on understanding the attitudes, lifestyle, and product desires of its target consumer base, and by marketing and designing its product line accordingly, the Company believes it is well-positioned to further the growth of the VANS brand in this attractive market.

[ … ]

The Company’s success is largely dependent on its ability to anticipate the rapidly changing fashion tastes of its customers and to provide merchandise that appeals to their preferences in a timely manner. There can be no assurance that the Company will respond in a timely manner to changes in consumer preferences or that the Company will successfully introduce new models and styles of footwear. Achieving market acceptance for new products may also require substantial marketing and product developments efforts and the expenditure of significant funds to create consumer demand…. The failure to introduce new products that gain market acceptance would have a material adverse effect on the Company’s business, financial condition and results of operations, and could adversely affect the image of the VANS brand name.

[ … ]

Prior to fiscal 1995, the Company manufactured all of its footwear at two domestic manufacturing facilities located in Southern California. As part of the Company’s strategic redirection, in the first quarter of fiscal 1995 the Company began to source from South Korea its line of casual and performance footwear known as the International Collection. The success of the International Collection created a domestic manufacturing overcapacity problem for the Company which contributed to an overstock in domestic inventories. In the second quarter of fiscal 1995, the Company increased the inventory valuation allowance from $324,772 to approximately $600,000 in order to help mitigate the risks associated with increased inventory balances. In the third quarter of fiscal 1995, the Company took steps to adjust its U.S. production; however, customer demand for the International Collection continued to grow. In the fourth quarter of fiscal 1995, it first became apparent that the domestic manufacturing workforce reductions would not be sufficient to address the increase in orders for the International Collection and the decrease in demand for domestically-produced footwear, and the Company determined that a plant closure would be required. Therefore, on May 30, 1995 the Board of Directors voted to close its Orange, California manufacturing facility (the “Orange Facility”) and in July 1995, the Company closed the Orange facility. Accordingly, the Company recognized restructuring costs of $30.0 million in the fourth quarter of fiscal 1995. Of that amount: (i) $20.0 million represented a write-off of the goodwill allocated to the manufacturing know-how associated with the Orange Facility (the “Orange Facility Goodwill”)….

[ … ]

The Company’s target customer segment is believed to have very favorable demographics. American Demographics magazine estimates that in 1995 there were approximately 29 million teenagers in the United States alone. This number is expected to increase to approximately 35 million by 2010, representing one of the fastest growing population segments. In addition, these target customers have substantial and increasing purchasing power. In 1994, teenagers spent on estimated $89 billion, of which $57 billion was money they earned themselves. Underscoring the importance of brand image, teenage boys participating in an American Demographics study responded that brand name mattered more in purchasing sneakers than when buying jeans, soft drinks or fast food.

[ … ]

This summer, the Company will be the exclusive sponsor of the “VANS Warped Tour ’96”.

[ … ]

The Company’s casual and casual skate line includes … the Razor™, Fracture™, Wally™, Rail™, Old Skool™, Era™, Mel™, and the Authentic™…. The Company believes the identification of its shoes with top skaters helps to increase sales of its performance footwear. Some of the Company’s performance skate shoes are the Fairlane™, Ratz™, and Pudge™, as well as the Lo Cab™, Half Cab™, Mike Carroll™, and Salman Agah™ signature shoes…. Some of the Company’s women’s shoes include the Lucy™, Ethel™, Jinx™, Nice™, and Coodle™.

[ … ]

The Company sources the International Collection and snowboard boots from ten contractors in South Korea. During the first thirty-nine weeks of fiscal 1996, approximately 64% of the Company’s shoes and 100% of the Company’s boots were manufactured offshore by third party manufacturers.

Excerpts from the prospectus for an initial public stock offering for VANS, a shoe and apparel company that caters to alienated suburban youth.

As a result of [its] reputation, the Company has developed a strong brand image which the Company believes represents the individualistic and outdoor lifestyle or its target customer base. The VANS brand image coincides with what the Company believes is a fundamental shift in the attitudes and lifestyles of young people worldwide, characterized by the rapid growth and acceptance of the alternative, outdoor sports and the desire to lead an individualistic, contemporary lifestyle. The Company believes that underlying factors influencing young people include: (i) programs broadcast worldwide on networks such as MTV, ESPN, and ESPN2; (ii) the growing international distribution and popularity of magazines such as Rolling Stone, TransWorld SKATEboarding, Spin, and Details; and (iii) the increased independence and purchasing power of young people worldwide, as evidenced by the estimated 25 million teenagers in the United States who in 1994 spent approximately $89 billion.

[ … ]

To capitalize on the strength of the VANS brand with young men and women worldwide, the Company has recently repositioned itself from a domestic manufacturer to a market-driven company. With a focus on understanding the attitudes, lifestyle, and product desires of its target consumer base, and by marketing and designing its product line accordingly, the Company believes it is well-positioned to further the growth of the VANS brand in this attractive market.

[ … ]

The Company’s success is largely dependent on its ability to anticipate the rapidly changing fashion tastes of its customers and to provide merchandise that appeals to their preferences in a timely manner. There can be no assurance that the Company will respond in a timely manner to changes in consumer preferences or that the Company will successfully introduce new models and styles of footwear. Achieving market acceptance for new products may also require substantial marketing and product developments efforts and the expenditure of significant funds to create consumer demand…. The failure to introduce new products that gain market acceptance would have a material adverse effect on the Company’s business, financial condition and results of operations, and could adversely affect the image of the VANS brand name.

[ … ]

Prior to fiscal 1995, the Company manufactured all of its footwear at two domestic manufacturing facilities located in Southern California. As part of the Company’s strategic redirection, in the first quarter of fiscal 1995 the Company began to source from South Korea its line of casual and performance footwear known as the International Collection. The success of the International Collection created a domestic manufacturing overcapacity problem for the Company which contributed to an overstock in domestic inventories. In the second quarter of fiscal 1995, the Company increased the inventory valuation allowance from $324,772 to approximately $600,000 in order to help mitigate the risks associated with increased inventory balances. In the third quarter of fiscal 1995, the Company took steps to adjust its U.S. production; however, customer demand for the International Collection continued to grow. In the fourth quarter of fiscal 1995, it first became apparent that the domestic manufacturing workforce reductions would not be sufficient to address the increase in orders for the International Collection and the decrease in demand for domestically-produced footwear, and the Company determined that a plant closure would be required. Therefore, on May 30, 1995 the Board of Directors voted to close its Orange, California manufacturing facility (the “Orange Facility”) and in July 1995, the Company closed the Orange facility. Accordingly, the Company recognized restructuring costs of $30.0 million in the fourth quarter of fiscal 1995. Of that amount: (i) $20.0 million represented a write-off of the goodwill allocated to the manufacturing know-how associated with the Orange Facility (the “Orange Facility Goodwill”)….

[ … ]

The Company’s target customer segment is believed to have very favorable demographics. American Demographics magazine estimates that in 1995 there were approximately 29 million teenagers in the United States alone. This number is expected to increase to approximately 35 million by 2010, representing one of the fastest growing population segments. In addition, these target customers have substantial and increasing purchasing power. In 1994, teenagers spent on estimated $89 billion, of which $57 billion was money they earned themselves. Underscoring the importance of brand image, teenage boys participating in an American Demographics study responded that brand name mattered more in purchasing sneakers than when buying jeans, soft drinks or fast food.

[ … ]

This summer, the Company will be the exclusive sponsor of the “VANS Warped Tour ’96”.

[ … ]

The Company’s casual and casual skate line includes … the Razor™, Fracture™, Wally™, Rail™, Old Skool™, Era™, Mel™, and the Authentic™…. The Company believes the identification of its shoes with top skaters helps to increase sales of its performance footwear. Some of the Company’s performance skate shoes are the Fairlane™, Ratz™, and Pudge™, as well as the Lo Cab™, Half Cab™, Mike Carroll™, and Salman Agah™ signature shoes…. Some of the Company’s women’s shoes include the Lucy™, Ethel™, Jinx™, Nice™, and Coodle™.

[ … ]

The Company sources the International Collection and snowboard boots from ten contractors in South Korea. During the first thirty-nine weeks of fiscal 1996, approximately 64% of the Company’s shoes and 100% of the Company’s boots were manufactured offshore by third party manufacturers.

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