-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UC8tshK3/LKdI9VzutWTwuCigW0d2B0mMiARA5gzsY7BKpse+25aG+mJssTXdzCr SH1VRH/iE1WOJKrnXZOARg== 0000892569-97-001631.txt : 19970617 0000892569-97-001631.hdr.sgml : 19970617 ACCESSION NUMBER: 0000892569-97-001631 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970430 FILED AS OF DATE: 19970616 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUIKSILVER INC CENTRAL INDEX KEY: 0000805305 STANDARD INDUSTRIAL CLASSIFICATION: MEN'S & BOYS' FURNISHINGS, WORK CLOTHING, AND ALLIED GARMENTS [2320] IRS NUMBER: 330199426 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15131 FILM NUMBER: 97624114 BUSINESS ADDRESS: STREET 1: 1740 MONROVIA AVE CITY: COSTA MESA STATE: CA ZIP: 92627 BUSINESS PHONE: 7146451395 MAIL ADDRESS: STREET 1: 1740 MONROVIA AVE CITY: COSTA MESA STATE: CA ZIP: 92627 10-Q 1 QUARTERLY REPORT FOR PERIOD ENDED APRIL 30, 1997 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED APRIL 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 0-15131 QUIKSILVER, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 33-0199426 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1740 MONROVIA AVENUE COSTA MESA, CALIFORNIA 92627 (Address of principal executive offices) (Zip Code) (714) 645-1395 (Registrant's telephone number, including area code) 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 ----- ----- The number of shares outstanding of issuer's Common Stock, par value $0.01 per share, at June 12, 1997 was 7,026,330 2 QUIKSILVER, INC. FORM 10-Q INDEX
PART I - FINANCIAL INFORMATION Page No. - ------------------------------ -------- Item 1. Financial Statements: Condensed Consolidated Balance Sheets April 30, 1997 and October 31, 1996.................................... 2 Condensed Consolidated Statements of Income Three Months Ended April 30, 1997 and 1996............................. 3 Condensed Consolidated Statements of Income Six Months Ended April 30, 1997 and 1996............................... 4 Condensed Consolidated Statements of Cash Flows Six Months Ended April 30, 1997 and 1996............................... 5 Notes to Condensed Consolidated Financial Statements....................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...................................................... 7 Part II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security-Holders.................... 11 Item 6. Exhibits and Reports on Form 8K........................................ 12 SIGNATURE....................................................................... 13
1 3 PART I - FINANCIAL INFORMATION Item 1. Financial Statements QUIKSILVER, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
APRIL 30, OCTOBER 31, 1997 1996 ------------- ------------- ASSETS Current assets: Cash and cash equivalents ............................. $ 304,000 $ 3,429,000 Trade accounts receivable, less allowance for doubtful accounts of $2,011,000 (1997) and $2,873,000 (1996) .............................. 55,168,000 44,554,000 Other receivables .................................... 2,838,000 2,182,000 Inventories - Note 2 ................................. 36,891,000 35,668,000 Prepaid expenses and other current assets ............ 2,373,000 2,027,000 ------------- ------------- Total current assets ............................ 97,574,000 87,860,000 Property and equipment, less accumulated depreciation and amortization of $8,479,000 (1997) and $8,027,000 (1996) 11,484,000 9,655,000 Trademark, less accumulated amortization of $1,562,000 (1997) and $1,486,000 (1996) ............... 1,476,000 1,532,000 Goodwill, less accumulated amortization of $3,435,000 (1997) and $3,103,000 (1996) ............... 14,662,000 15,005,000 Other assets ............................................. 1,731,000 1,528,000 ------------- ------------- Total assets .................................... $ 126,927,000 $ 115,580,000 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Lines of credit ....................................... $ 20,413,000 $ 8,211,000 Accounts payable ...................................... 10,066,000 12,823,000 Accrued liabilities ................................... 6,154,000 10,212,000 Current portion of notes payable ...................... 217,000 240,000 Income taxes payable .................................. 1,833,000 727,000 ------------- ------------- Total current liabilities ....................... 38,683,000 32,213,000 Notes payable ............................................ 2,701,000 2,640,000 ------------- ------------- Total liabilities ............................... 41,384,000 34,853,000 ------------- ------------- Stockholders' equity Preferred stock, $.01 par value, authorized shares - 5,000,000; issued and outstanding shares - none ...................................... -- -- Common stock, $.01 par value, authorized shares - 30,000,000; issued and outstanding shares - 7,024,330 (1997) and 6,965,346 (1996) .... 70,000 70,000 Additional paid-in-capital ............................ 19,576,000 18,971,000 Retained earnings ..................................... 70,898,000 64,399,000 Treasury stock, 130,000 shares ........................ (3,054,000) (3,054,000) Cumulative foreign currency translation adjustment .... (1,947,000) 341,000 ------------- ------------- Total stockholders' equity ...................... 85,543,000 80,727,000 ------------- ------------- Total liabilities and stockholders' equity ...... $ 126,927,000 $ 115,580,000 ============= =============
See notes to condensed consolidated financial statements. 2 4 QUIKSILVER, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED APRIL 30, ------------------------------- 1997 1996 ------------ ------------ Net sales .................................... $ 60,781,000 $ 54,505,000 Cost of goods sold ........................... 36,620,000 32,492,000 ------------ ------------ Gross profit .............................. 24,161,000 22,013,000 ------------ ------------ Operating expenses: Selling, general and administrative expense 15,497,000 13,918,000 Royalty income ............................ (350,000) (186,000) Royalty expense ........................... 691,000 610,000 ------------ ------------ Total operating expenses ............... 15,838,000 14,342,000 ------------ ------------ Operating income ............................. 8,323,000 7,671,000 Interest expense ............................. 427,000 228,000 Foreign currency loss ........................ 8,000 25,000 Other expense ................................ 41,000 52,000 ------------ ------------ Income before provision for income taxes ..... 7,847,000 7,366,000 Provision for income taxes ................... 3,097,000 2,947,000 ------------ ------------ Net income ................................... $ 4,750,000 $ 4,419,000 ============ ============ Net income per common share .................. $ 0.68 $ 0.61 ============ ============ Weighted average common shares and equivalents outstanding ............... 7,004,000 7,202,000 ============ ============
See notes to condensed consolidated financial statements. 3 5 QUIKSILVER, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
SIX MONTHS ENDED APRIL 30, -------------------------------- 1997 1996 ------------- ------------ Net sales .................................... $ 106,725,000 $ 94,992,000 Cost of goods sold ........................... 64,956,000 57,384,000 ------------- ------------ Gross profit .............................. 41,769,000 37,608,000 ------------- ------------ Operating expenses: Selling, general and administrative expense 29,467,000 25,254,000 Royalty income ............................ (710,000) (391,000) Royalty expense ........................... 1,320,000 1,175,000 ------------- ------------ Total operating expenses ............... 30,077,000 26,038,000 ------------- ------------ Operating income ............................. 11,692,000 11,570,000 Interest expense ............................. 714,000 397,000 Foreign currency loss ........................ 80,000 48,000 Other expense ................................ 94,000 153,000 ------------- ------------ Income before provision for income taxes ..... 10,804,000 10,972,000 Provision for income taxes ................... 4,305,000 4,428,000 ------------- ------------ Net income ................................... $ 6,499,000 $ 6,544,000 ============= ============ Net income per common share .................. $ 0.93 $ 0.91 ============= ============ Weighted average common shares and equivalents outstanding ............... 7,021,000 7,188,000 ============= ============
See notes to condensed consolidated financial statements. 4 6 QUIKSILVER, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED APRIL 30, ------------------------------- 1997 1996 ------------ ------------ Cash flows from operating activities: Net income ...................................................... $ 6,499,000 $ 6,544,000 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization ............................. 1,664,000 1,226,000 Provision for doubtful accounts ........................... 329,000 483,000 Loss on sale of fixed assets .............................. 134,000 33,000 Changes in operating assets and liabilities: Trade accounts receivable .............................. (13,266,000) (10,624,000) Other receivables ...................................... 55,000 (647,000) Inventories ............................................ (2,312,000) (773,000) Prepaid expenses and other current assets .............. (405,000) 233,000 Other assets ........................................... 44,000 (108,000) Accounts payable ....................................... (2,033,000) 301,000 Accrued liabilities .................................... (4,234,000) (449,000) Income taxes payable ................................... 1,232,000 1,699,000 ------------ ------------ Net cash used in operating activities ............... (12,293,000) (2,082,000) Cash flows from investing activities: Proceeds from sales of fixed assets ............................. 6,000 20,000 Capital expenditures ............................................ (4,018,000) (1,293,000) Other ........................................................... -- -- ------------ ------------ Net cash used in investing activities ............... (4,012,000) (1,273,000) Cash flows from financing activities: Borrowings on lines of credit ................................... 16,315,000 13,390,000 Payments on lines of credit ..................................... (4,085,000) (11,829,000) Borrowings on long-term debt .................................... 650,000 127,000 Payments on long-term debt ...................................... (234,000) (131,000) Proceeds from stock option exercises ............................ 605,000 2,524,000 ------------ ------------ Net cash provided by financing activities ........... 13,251,000 4,081,000 Effect of exchange rate changes on cash ............................ (71,000) (393,000) ------------ ------------ Net increase (decrease) in cash and cash equivalents ............... (3,125,000) 333,000 Cash and cash equivalents, beginning of period ..................... 3,429,000 3,461,000 ------------ ------------ Cash and cash equivalents, end of period ........................... $ 304,000 $ 3,794,000 ============ ============ Supplementary cash flow information - Cash paid during the period for: Interest ..................................................... $ 600,000 $ 382,000 ============ ============ Income taxes ................................................. $ 2,322,000 $ 3,668,000 ============ ============
See notes to condensed consolidated financial statements. 5 7 QUIKSILVER, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statement presentation. The Company, in its opinion, has included all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of the results of operations for the three and six months ended April 30, 1997 and 1996. The condensed consolidated financial statements and notes thereto should be read in conjunction with the audited financial statements and notes for the year ended October 31, 1996 included in the Company's Annual Report on Form 10-K. Interim results are not necessarily indicative of results for the full year due to seasonal and other factors. 2. Inventories consist of the following:
APRIL 30, OCTOBER 31, 1997 1996 ---- ---- Raw Materials................. $11,639,000 $11,686,000 Work-In-Process............... 4,847,000 3,673,000 Finished Goods................ 20,405,000 20,309,000 ----------- ----------- $36,891,000 $35,668,000 =========== ===========
6 8 PART I - FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations THREE MONTHS ENDED APRIL 30, 1997 COMPARED TO THREE MONTHS ENDED APRIL 30, 1996 Net sales for the three months ended April 30, 1997 increased 11.5% to $60,781,000 from $54,505,000 in the comparable period of the prior year. Domestic net sales for the three months ended April 30, 1997 increased 12.4% to $40,438,000 from $35,962,000 in the comparable period of the prior year, and European net sales increased 9.7% to $20,343,000 from $18,543,000 for those same periods. As measured in French Francs, Quiksilver Europe's functional currency, net sales in the current year's quarter increased 23.5% compared to the prior year. Domestic men's sales decreased 2% to $25,043,000 from $25,542,000 in the comparable period of the prior year, while domestic women's sales increased 47.7% to $15,395,000 from $10,420,000. The domestic sales decrease in men's resulted primarily from lower sales of Pirate Surf and Private label product. Domestic women's sales increased in both the Raisins and Quiksilver Roxy divisions. In Europe, men's sales increased 10.3% to $18,954,000 from $17,189,000, while women's sales increased 2.6% to $1,389,000 from $1,354,000. The gross profit margin for the three months ended April 30, 1997 decreased to 39.8% from 40.4% in the comparable period of the prior year. The domestic gross profit margin decreased to 35.7% from 36.4% in the comparable period of the prior year, and the European gross profit margin decreased somewhat to 47.8% from 48.1% for those same periods. The decrease in the domestic gross profit margin resulted primarily from markdowns taken in the current quarter to sell Pirate Surf product, which has been removed from future season production plans. In Europe, the gross profit margin was relatively stable in the current quarter compared to the previous year. Selling, general and administrative expense ("SG&A") for the three months ended April 30, 1997 increased 11.3% to $15,497,000 from $13,918,000 in the comparable period of the prior year. Domestic SG&A increased 13.2% to $9,683,000 from $8,557,000 in the comparable period of the prior year, and European SG&A increased 8.4% to $5,814,000 from $5,361,000 for those same periods. The increase in domestic SG&A was primarily due to higher personnel costs related to increased sales volume, along with increased marketing and computer system expenses. The increase in European SG&A was primarily due to higher personnel costs related to increased sales volume. Net royalty expense for the three months ended April 30, 1997 decreased 19.6% to $341,000 from $424,000 in the comparable period of the prior year. This decrease was due primarily to increased domestic royalty income from increased sales by licensees, which was partially offset by increased royalty expense related to European sales. The Company receives domestic royalty income from its Mexico, Japan, wetsuit, watch, sunglass, and outlet store licensees as well as Raisins international licensees, and Quiksilver Europe pays royalties on European sales under a trademark agreement with Quiksilver International. Interest expense for the three months ended April 30, 1997 increased 87.3% to $427,000 from $228,000 in the comparable period of the prior year. This increase was primarily due to higher outstanding balances on the Company's lines of credit that resulted from increased working capital needs and borrowings to repurchase shares of the Company's stock in the three months ended October 31, 1996. There are no further stock repurchases planned. The effective income tax rate for the three months ended April 30, 1997, which is based on current estimates of the annual effective income tax rate, decreased to 39.5% from 40.0% in the comparable period of the prior year. As a result of the above factors, net income for the three months ended April 30, 1997 increased 7.5% to $4,750,000 or $0.68 per share from $4,419,000 or $0.61 per share in the comparable period of the prior year. 7 9 SIX MONTHS ENDED APRIL 30, 1997 COMPARED TO SIX MONTHS ENDED APRIL 30, 1996 Net sales for the six months ended April 30, 1997 increased 12.4% to $106,725,000 from $94,992,000 in the comparable period of the prior year. Domestic net sales for the six months ended April 30, 1997 increased 12.8% to $68,599,000 from $60,814,000 in the comparable period of the prior year, and European net sales increased 11.6% to $38,126,000 from $34,178,000 for those same periods. As measured in French Francs, Quiksilver Europe's net sales in the first six months of the current year increased 21.8% compared to the prior year. Domestic men's sales increased 2.1% to $44,846,000 from $43,920,000 in the comparable period of the prior year, while domestic women's sales increased 40.6% to $23,753,000 from $16,894,000. The domestic sales increases came primarily from the Quiksilver Roxy and Raisins Divisions. In Europe, men's sales increased 11.5% to $36,256,000 from $32,531,000, while women's sales increased 13.5% to $1,870,000 from $1,647,000. The gross profit margin for the six months ended April 30, 1997 decreased to 39.1% from 39.6% in the comparable period of the prior year. The domestic gross profit margin decreased to 35.4% from 36.1% in the comparable period of the prior year, and the European gross profit margin increased somewhat to 45.9% from 45.7% for those same periods. The decrease in the domestic gross profit margin resulted primarily from the impact of selling excess raw materials during the six months ended April 30, 1997 at margins that were less than normal wholesale and from markdowns taken during the six months ended April 30, 1997 to sell Pirate Surf product, which has been removed from future season production plans. In Europe, the gross profit margin was relatively stable in the current period compared to the previous year. Selling, general and administrative expense ("SG&A") for the six months ended April 30, 1997 increased 16.7% to $29,467,000 from $25,254,000 in the comparable period of the prior year. Domestic SG&A increased 15.8% to $17,992,000 from $15,533,000 in the comparable period of the prior year, and European SG&A increased 18.0% to $11,475,000 from $9,721,000 for those same periods. The increase in domestic SG&A was primarily due to higher personnel costs related to increased sales volume, along with increased sales and marketing and computer system expenses. The increase in European SG&A was primarily due to higher personnel costs related to increased sales volume. Net royalty expense for the six months ended April 30, 1997 decreased 22.2% to $610,000 from $784,000 in the comparable period of the prior year. This increase was due primarily to increased domestic royalty income from increased sales by licensees, which was partially offset by increased royalty expense related to European sales. Interest expense for the six months ended April 30, 1997 increased 79.8% to $714,000 from $397,000 in the comparable period of the prior year. This increase was primarily due to higher outstanding balances on the Company's lines of credit that resulted from increased working capital needs and borrowings to repurchase shares of the Company's stock in the three months ended October 31, 1996. There are no further stock repurchases planned. The effective income tax rate for the six months ended April 30, 1997, which is based on current estimates of the annual effective income tax rate, decreased to 39.8% from 40.4% in the comparable period of the prior year. As a result of the above factors, net income for the six months ended April 30, 1997 decreased 0.7% to $6,499,000 or $0.93 per share from $6,544,000 or $0.91 per share in the comparable period of the prior year. FINANCIAL POSITION, CAPITAL RESOURCES AND LIQUIDITY The Company finances its capital investments and seasonal working capital requirements with funds generated by operations and its bank revolving lines of credit. 8 10 Net cash used in operating activities for the six months ended April 30, 1997 was $12,293,000 compared to $2,082,000 in the comparable period of the prior year. This $10,211,000 increase in cash used in operating activities was due to three primary factors. Cash paid for inventories net of changes in accounts payable increased by $3,873,000 to support higher planned sales levels in current and future seasons both domestically and in Europe. Accrued liabilities decreased $3,785,000 more in the six months ended April 30, 1997 compared to the six months ended April 30, 1996 primarily as a result of increased payments during the current year for employee benefit programs and sales taxes in Quiksilver Europe. Also, accounts receivable increased $2,642,000 more in the six months ended April 30, 1997 compared to the six months ended April 30, 1996 as a result of a relatively higher percentage of sales occurring in the latter portion of the fiscal 1997 period. The Company uses independent contractors for cutting, sewing and other manufacturing functions and intends to continue to use independent contractors in the foreseeable future. Accordingly, the Company has avoided capital expenditures for these manufacturing functions. For the six months ended April 30, 1997, capital expenditures increased 210.8% to $4,018,000 from $1,293,000 in the comparable period of the prior year primarily from increased investment in computer systems both domestically and in Europe. The Company has available a revolving line of credit with a U.S. bank that is unsecured and provides for maximum financing of $34,000,000. This line of credit expires on April 30, 1998. The Company also has available lines of credit, both secured and unsecured, with banks in Europe that provide for maximum financing of approximately $23,000,000. During the six months ended April 30, 1997, net cash provided by financing activities totaled $13,251,000 compared to $4,081,000 in the comparable period of the prior year. These additional borrowings during the first six months of fiscal 1997 were used to fund the increase in inventories, accounts receivable and capital expenditures and the decrease in accrued liabilities as discussed above. The net decrease in cash and cash equivalents for the six months ended April 30, 1997 was $3,125,000 compared to an increase of $333,000 in the comparable period of the prior year. Cash and cash equivalents decreased $3,125,000 or 91.1% to $304,000 at April 30, 1997 from $3,429,000 at October 31, 1996, while working capital increased $3,244,000 or 5.8% to $58,891,000 from $55,647,000 for that same period. The Company believes its current lines of credit are adequate to cover its seasonal working capital and other requirements for the foreseeable future and that increases in its lines of credit can be obtained as needed to fund future growth. Accounts receivable increased to $55,168,000 at April 30, 1997 from $44,554,000 at October 31, 1996. Domestic accounts receivable increased 35.2% to $38,246,000 at April 30, 1997 from $28,292,000 at October 31, 1996, and European accounts receivable increased 4.1% to $16,922,000 from $16,262,000 for that same period. These increases in accounts receivable resulted from a relatively higher percentage of sales occurring in the latter portion of the six months ended April 30, 1997 and from seasonal factors. Consolidated inventories increased 3.4% to $36,891,000 at April 30, 1997 from $35,668,000 at October 31, 1996. Domestic inventories increased 9.2% to $29,055,000 from $26,611,000 at October 31, 1996, and European inventories decreased 13.5% to $7,836,000 from $9,057,000 for that same period. Inventories increased domestically primarily due to seasonal factors and to support higher planned sales levels in current and future seasons. Inventories decreased in the case of Quiksilver Europe primarily due to the devaluation of the French Franc compared to the U.S. dollar during the six months ended April 30, 1997. In recent years, certain customers of the Company have experienced financial difficulties, including the filing of reorganization proceedings under bankruptcy laws. The Company has not incurred significant losses outside the normal course of business as a result of the financial difficulties of these customers. 9 11 FINANCIAL POSITION, CAPITAL RESOURCES AND LIQUIDITY (CONTINUED) While management believes that allowances for doubtful accounts at April 30, 1997 are adequate, the Company carefully monitors developments regarding its major customers. Additional material financial difficulties encountered by these or other significant customers could have an adverse impact on the Company's financial position or results of operations. FOREIGN CURRENCY The functional currency of Quiksilver Europe is the French Franc. However, Quiksilver Europe sells in various European countries and collects at future dates in the customers' local currencies and purchases certain raw materials or product in currencies other than the French Franc. Accordingly, the Company is exposed to transaction gains and losses that could result from changes in foreign currency exchange rates. When considered appropriate, management purchases financial instruments, primarily forward exchange contracts, to reduce its exposure to these exchange rate fluctuations. For financial reporting purposes, Quiksilver Europe's statements of income are translated from French Francs into U.S. Dollars at average exchange rates in effect during the reporting period. When the French Franc strengthens compared to the U.S. Dollar there is a positive effect on Quiksilver Europe's results as reported in the Company's Consolidated Financial Statements. Conversely, when the U.S. Dollar strengthens, there is a negative effect. 10 12 PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security-Holders The Company's Annual Meeting of Stockholders was held on March 21, 1997. At the Annual Meeting, the following directors were elected to serve on the Company's Board of Directors until the next Annual Meeting and until their respective successors are elected and qualified:
Votes Votes For Withheld --------- ------ Robert B. McKnight, Jr. 6,528,645 45,144 William M. Barnum, Jr. 6,528,645 45,144 Charles E. Crowe 6,528,445 45,344 Michael H. Gray 6,528,645 45,144 Harry Hodge 6,525,845 47,944 Robert G. Kirby 6,528,645 45,144 Tom Roach 6,528,645 45,144
No other matters were voted on at the Annual Meeting. 11 13 PART II - OTHER INFORMATION (continued) Item 6. Exhibits and Reports on Form 8K. (a) Exhibits 10.1 Fourth Amendment to Loan Agreement dated as of April 1, 1997 27.0 Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended April 30, 1997 12 14 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. QUIKSILVER, INC., a Delaware Corporation June 12, 1997 /s/ Steven L. Brink ---------------------------------------- Steven L. Brink Chief Financial Officer, Secretary and Treasurer (Principal Accounting Officer) 13 EX-10.1 2 FOURTH AMENDMENT TO LOAN AGREEMENT DATED 4/1/1997 1 EXHIBIT 10.1 FOURTH AMENDMENT TO LOAN AGREEMENT THIS FOURTH AMENDMENT TO LOAN AGREEMENT (this "Fourth Amendment") dated as of April 1, 1997, is made and entered into by and between QUIKSILVER, INC., a Delaware Corporation ("Borrower"), and UNION BANK OF CALIFORNIA, N.A. ("Bank"). RECITALS: A. Borrower and Bank are parties to that certain Loan Agreement dated April 30, 1996 (the "Agreement"), pursuant to which Bank agreed to extend credit to Borrower and amendments thereto dated September 5, 1996, October 22, 1996 and November 29, 1996. B. Borrower and Bank desire to amend the Agreement subject to the terms and conditions of this Fourth Amendment. AGREEMENT: In consideration of the above recitals and of the mutual covenants and conditions contained herein, Borrower and Bank agree as follows: 1. DEFINED TERMS. Initially capitalized terms used herein which are not otherwise defined shall have the meanings assigned thereto in the Agreement. 2. AMENDMENTS TO THE AGREEMENT. (a) Section 1.1.2 of the Agreement is hereby added in its entirety as follows: "1.1.2 THE REVOLVING LOAN B. Bank will loan to Borrower an amount not to exceed Four Million Dollars ($4,000,000) outstanding in the aggregate at any one time (the "Revolving Loan B"). Borrower may borrow, repay and reborrow all or part of the Revolving Loan B in amounts of not less than Fifty Thousand Dollars ($50,000) in accordance with the terms of the Revolving Note B. All borrowings of the revolving Loan B must be made before July 1, 1997 at which time all unpaid principal and interest of the Revolving Loan B shall be due and payable. The Revolving Loan B shall be evidenced by a promissory note (the "Revolving Note B") on the standard form used by Bank for commercial loans. Bank shall enter each amount borrowed and repaid in Bank's records and such entries shall be deemed to be the amount of the Revolving Loan B outstanding. Omission of Bank to make any such entries shall not discharge Borrower of its obligation to repay in full with interest all amounts borrowed." 1 2 3. EFFECTIVENESS OF THE FOURTH AMENDMENT. This Fourth Amendment shall become effective as of the date hereof when, and only when, Bank shall have received all of the following, in form and substance satisfactory to Bank: (a) This Fourth Amendment, duly executed by Borrower; (b) The Promissory Note, duly executed by Borrower; (c) Such other documents, instruments or agreements as Bank may reasonably deem necessary. 4. RATIFICATION. Except as specifically amended herein above, the Agreement shall remain in full force and effect and is hereby ratified and confirmed. 5. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants as follows: (a) Each of the representations and warranties contained in the Agreement, as may be amended hereby, is hereby reaffirmed as of the date hereof, each as if set forth herein; (b) The execution, delivery and performance of the Fourth Amendment and any other instruments or documents in connection herewith are within Borrower's power, have been duly authorized, are legal, valid and binding obligations of Borrower, and are not in conflict with the terms of any charter, bylaw, or other organization papers of Borrower or with any law, indenture, agreement or undertaking to which Borrower is a party or by which Borrower is bound or affected; (c) No event has occurred and is continuing or would result from this Fourth Amendment which constitutes or would constitute an Event of Default under the Agreement. 6. GOVERNING LAW. This Fourth Amendment and all other instruments or documents in connection herewith shall be governed by and construed according to the laws of the State of California. 7. COUNTERPARTS. This Fourth Amendment may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 2 3 WITNESS the due execution hereof as of the date first above written. QUIKSILVER, INC. UNION BANK OF CALIFORNIA, N.A. /s/ Robert B. McKnight, Jr. /s/ Rita Dailey - ----------------------- ------------------------ Robert B. McKnight, Jr. Rita Dailey Chief Executive Officer Vice President /s/ Steven L. Brink s/s John A. Utz - ----------------------- ------------------------ Steven L. Brink John A. Utz Chief Financial Officer Assistant Vice President 3 EX-27 3 FINANCIAL DATA SCHEDULE
5 The schedule contains summary financial information extracted from the Quiksilver, Inc. April 30, 1997 Form 10-Q and is qualified in its entirety by reference to such Form 10-Q. 3-MOS OCT-31-1997 APR-30-1997 304,000 0 57,179,000 2,011,000 36,891,000 97,574,000 19,963,000 8,479,000 126,927,000 38,683,000 2,701,000 0 0 70,000 85,473,000 126,927,000 60,781,000 60,781,000 36,620,000 36,620,000 0 329,000 427,000 7,847,000 3,097,000 4,750,000 0 0 0 4,750,000 0.68 0.68
-----END PRIVACY-ENHANCED MESSAGE-----