Vans Settles Lawsuit Alleging Fraud in Corporate Restructuring

Vans Inc. said Tuesday that it has agreed to settle a shareholders’ lawsuit alleging securities violations.

The footwear manufacturer also reported higher earnings and sales for the third quarter and nine months ended Feb. 24.

The lawsuit, filed last June in federal court, sought class-action status to represent people who bought shares of Vans from June 27, 1994, to May 12, 1995. The civil suit, which sought unspecified damages, alleged that the corporate restructuring was part of a scheme to defraud shareholders. Vans said at the time that it had complied with securities laws.

The lawsuit was filed shortly after Vans said it would close its aging shoe manufacturing plant in Orange and take at least a $35-million charge against earnings. The closure, which the company linked to increased consumer demand for products that Vans acquires from overseas producers, put more than 900 employees out of work.

The company said its insurance carrier will pay the entire settlement amount, which was not disclosed. The agreement is subject to court approval.

Vans reported that net income for the third quarter more than doubled to $901,000, or 9 cents a share, from $392,000, or 4 cents a share for the same period a year ago. Sales increased 29% to $27.9 million from $21.7 million.

For the first nine months, net income rose 44% to $2.6 million, or 26 cents a share, from $1.8 million, or 18 cents a share, a year ago. Sales were up 34% to $85.4 million from $63.5 million.