EX-99.1 2 a21224exv99w1.htm EXHIBIT 99.1 exv99w1
 

(Quiksilver Logo)   Exhibit 99.1
     
Company Contact:
  Steven L. Brink
 
  Chief Financial Officer
 
  Quiksilver, Inc.
 
  (714) 889-2200
 
Investor Relations:
  Chad A. Jacobs, Joe Teklits, James Palczynski
 
  Integrated Corporate Relations
 
  (203) 682-8200
— Quiksilver, Inc. Reports 2006 Second Quarter Financial Results —
— Second Quarter 2006 Net Revenues Increase 21% to $516.9 million —
— Second Quarter Fiscal 2006 Earnings Per Share Was $0.03 —
— Excluding Stock Compensation Expense, EPS Was $0.06, In Line With Guidance —
— Company Reiterates Fiscal 2006 Guidance —
Huntington Beach, California, June 8, 2006 — Quiksilver, Inc. (NYSE:ZQK) today announced operating results for the second quarter ended April 30, 2006. Consolidated net revenues for the second quarter of fiscal 2006 increased 21% to $516.9 from $426.9 million in the second quarter of fiscal 2005. Consolidated net income for the second quarter of fiscal 2006 was $3.7 million compared to $34.7 million the year before. The Company’s fiscal 2006 quarterly results include Rossignol and Cleveland Golf, which were acquired in July 2005. Rossignol’s business is seasonal and has a positive effect on the Company’s first and fourth quarters when it generates profits but has a negative effect in the second and third quarters during its seasonally low shipping periods. Consolidated net income for the second quarter of fiscal 2006 includes $3.8 million in stock compensation required to be expensed by current accounting standards. No stock compensation expense was recorded in the second quarter of fiscal 2005. Second quarter fully diluted earnings per share was $0.03 versus $0.28 for the second quarter of fiscal 2005. Earnings per share on a fully diluted basis, excluding stock compensation expense and the related tax effect, was $0.06 for the second quarter of fiscal 2006, in line with the company’s previous guidance. The $0.03 difference between $0.06 per share, excluding stock compensation expense, and actual earnings per share of $0.03 per share is determined by dividing $3.8 million, which is the tax-effected stock compensation expense, by 127.8 million weighted average common shares outstanding, assuming dilution.
Net revenues from the company’s newly acquired Rossignol and Cleveland Golf businesses totaled $86.2 million during the second quarter ended April 30, 2006.
Robert B. McKnight, Jr., Chairman of the Board and Chief Executive Officer of Quiksilver, Inc., commented, “We were pleased to meet our profitability targets for the quarter and we remain confident in our ability to do so for the remainder of the year. Our core business is strong, despite some short-term challenges in the Asia-Pacific region. Even with this softness, our diversified business model enabled us to achieve our overall objectives. Additionally, we are excited that our Rossignol business performed above expectations in the second quarter and that the integration is proceeding smoothly.”
Net revenues in the Americas increased 26% during the second quarter of fiscal 2006 to $250.0 million from $199.2 million in the second quarter of fiscal 2005. As measured in U.S. dollars and reported in the financial statements, European net revenues increased 23% during the second quarter of fiscal 2006 to $217.1 million from $176.3 million in the second quarter of fiscal 2005. As measured in euros, European net revenues increased 33% for those same periods. Asia/Pacific net revenues decreased 4% to $48.2 million in the second quarter of fiscal 2006 from $50.3 million in the second quarter of fiscal 2005. As measured in Australian dollars, Asia/Pacific net revenues increased 2% for those same periods.

 

 

(Quiksilver Logo)
Quiksilver, Inc. 2006 Second Quarter Results
June 8, 2006
Page 2 of 7
Inventories totaled $402.0 million at April 30, 2006, which includes $191.0 million from the newly acquired Rossignol and Cleveland Golf businesses. Inventories related to the company’s other businesses grew 19% to $211.0 million at April 30, 2006 from $177.8 million at April 30, 2005. Excluding Rossignol and on a like-for-like basis, average turnover was 3.9x at April 30, 2006 versus 4.1x at April 30, 2005. Accounts receivable totaled $483.0 million at April 30, 2006, which includes $123.0 million from the newly acquired Rossignol and Cleveland Golf businesses. Accounts receivable related to the company’s other businesses increased 5% to $360.0 million at April 30, 2006 from $342.0 million at April 30, 2005.
Bernard Mariette, President of Quiksilver, Inc., commented, “During the quarter we developed a clear focus on priorities, executed well, completed a large portion of our restructuring and integration for Rossignol, and positioned the company to achieve both its short term and long-term objectives. The combination of our powerful brands, our world-class team, and our comprehensive strategic vision for the business will enable us to continue to create a wide variety of compelling growth opportunities, including the creation of a full line of lifestyle apparel products under the Rossignol brand to be launched in 2007.”
Mr. Mariette continued, “We recently returned from our global management meeting with all of our senior managers in Hawaii, and the commitment and ambition of this team is tremendous. Our vision is clear, our brands have great potential and we remain dedicated to further building our position as the world’s leader in the outdoor market.”
The Company reiterated its fiscal 2006 annual revenue guidance of $2.25 to $2.27 billion and its fiscal 2006 annual diluted earnings per share guidance of $0.87 to $0.88, before stock compensation expense and the related tax effect. Stock compensation expense is expected to reduce fiscal 2006 annual diluted earnings per share by $0.11.
Mr. McKnight concluded, “The restructuring of the management team and back office for Rossignol is largely completed. We’ve eliminated redundancy, done away with the operational silos that limited growth and profitability, streamlined our infrastructure, and consolidated our warehousing and distribution operations. The integration is on plan, our core business remains strong and we are excited to demonstrate the power of our brands to our shareholders over the quarters and years to come.”
About Quiksilver:
Quiksilver, Inc. (NYSE:ZQK) is the world’s leading outdoor sports lifestyle company, which designs, produces and distributes a diversified mix of branded apparel, wintersports and golf equipment, footwear, accessories and related products. The Company’s apparel and footwear brands represent a casual lifestyle for young-minded people that connect with its boardriding culture and heritage, while its wintersports and golf brands symbolize a long standing commitment to technical expertise and competitive success on the mountains and on the links.
The reputation of Quiksilver’s brands is based on different outdoor sports. The Company’s Quiksilver, Roxy, DC Shoes and Hawk brands are synonymous with the heritage and culture of surfing, skateboarding and snowboarding, and its beach and water oriented swimwear brands include Raisins, Radio Fiji and Leilani. The Rossignol, Dynastar, Lange, Look and Kerma brands are leaders in the alpine ski market, and the Company makes snowboarding equipment under its Rossignol, Dynastar, DC Shoes, Roxy, Lib Technologies, Gnu and Bent Metal labels. The Company’s golf business includes Cleveland Golf, as well as Never Compromise putters and Fidra apparel. Gotcha is the Company’s surf-based European brand addressing street fashion.

 

 

(Quiksilver Logo)
Quiksilver, Inc. 2006 Second Quarter Results
June 8, 2006
Page 3 of 7
The Company’s products are sold in over 90 countries in a wide range of distribution, including surf shops, ski shops, skateboard shops, snowboard shops, its proprietary Boardriders Club shops, other specialty stores and select department stores. Quiksilver’s corporate and Americas’ headquarters are in Huntington Beach, California, while its European headquarters are in St. Jean de Luz and Voiron, France, and its Asia/Pacific headquarters are in Torquay, Australia.
Forward looking statements:
This press release contains forward-looking statements including but not limited to statements regarding the company’s financial forecast, earnings and revenue guidance and the success of the Rossignol integration activities. These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially. Please refer to Quiksilver’s SEC filings for more information on the risk factors that could cause actual results to differ materially from expectations, specifically the section titled “Forward-Looking Statements” in Quiksilver’s Annual Report on Form 10-K.
* * * * *
NOTE: For further information about Quiksilver, Inc., you are invited to take a look at our world at www.quiksilver.com,
www.roxy.com, www.dcshoecousa.com, www.quiksilveredition.com, www.hawkclothing.com,
www.rossignol.com, www.dynastar.com,
www.clevelandgolf.com, and www.fidragolf.com.

 

 

(Quiksilver Logo)
Quiksilver, Inc. 2006 Second Quarter Results
June 8, 2006
Page 4 of 7
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                 
    Three Months Ended April 30,  
In thousands, except per share amounts   2006     2005  
Revenues, net
   $ 516,928     $ 426,853  
Cost of goods sold
     282,438       233,488  
 
            
Gross profit
     234,490       193,365  
Selling, general and administrative expense
     215,838       139,314  
 
            
Operating income
     18,652       54,051  
Interest expense
     11,949       3,269  
Foreign currency gain
     (496 )     (288 )
Minority interest and other expense (income)
     1,637       (61 )
 
            
Income before provision for income taxes
     5,562       51,131  
Provision for income taxes
     1,833       16,464  
 
            
Net income
   $ 3,729     $ 34,667  
 
            
Net income per share
   $ 0.03     $ 0.29  
 
            
Net income per share, assuming dilution
   $ 0.03     $ 0.28  
 
            
Weighted average common shares outstanding
     122,018       118,169  
 
            
Weighted average common shares outstanding, assuming dilution
     127,790       123,791  
 
            

 

 

(Quiksilver Logo)
Quiksilver, Inc. 2006 Second Quarter Results
June 8, 2006
Page 5 of 7
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                 
    Six Months Ended April 30,  
In thousands, except per share amounts   2006     2005  
Revenues, net
   $ 1,058,070     $ 769,713  
Cost of goods sold
     575,019       423,442  
 
            
Gross profit
     483,051       346,271  
Selling, general and administrative expense
     427,143       268,797  
 
            
Operating income
     55,908       77,474  
Interest expense
     24,540       5,058  
Foreign currency (gain) loss
     (993 )     175  
Minority interest and other expense
     411       145  
 
            
Income before provision for income taxes
     31,950       72,096  
Provision for income taxes
     9,618       23,215  
 
            
Net income
   $ 22,332     $ 48,881  
 
            
Net income per share
   $ 0.18     $ 0.41  
 
            
Net income per share, assuming dilution
   $ 0.18     $ 0.40  
 
            
Weighted average common shares outstanding
     121,721       117,877  
 
            
Weighted average common shares outstanding, assuming dilution
     127,479       123,448  
 
            

 

 

(Quiksilver Logo)
Quiksilver, Inc. 2006 Second Quarter Results
June 8, 2006
Page 6 of 7
CONSOLIDATED BALANCE SHEETS (Unaudited)
                 
    April 30,     October 31,  
In thousands   2006     2005  
ASSETS
Current assets:
                
Cash and cash equivalents
   $ 96,818     $ 75,598  
Trade accounts receivable, less allowance for doubtful accounts of $19,875 (2006) and $10,727 (2005)
     482,978       599,486  
Other receivables
     26,633       27,414  
Inventories
     402,033       386,396  
Deferred income taxes
     44,220       41,646  
Prepaid expenses and other current assets
     26,017       21,819  
 
            
Total current assets
     1,078,699       1,152,359  
Fixed assets, net
     266,096       241,979  
Intangibles, net
     247,482       247,702  
Goodwill
     475,730       449,377  
Other assets
     45,464       43,955  
Assets held for sale
     18,944       23,229  
 
            
Total assets
   $ 2,132,415     $ 2,158,601  
 
            
LIABILITIES & STOCKHOLDERS’ EQUITY
Current Liabilities:
                
Lines of credit
   $ 205,471     $ 220,113  
Accounts payable
     197,193       212,407  
Accrued liabilities
     147,556       182,973  
Current portion of long-term debt
     16,267       50,833  
Income taxes payable
     ¯       27,176  
 
            
Total current liabilities
     566,487       693,502  
Long-term debt
     684,800       640,348  
Deferred income taxes
     74,340       81,628  
 
            
Total liabilities
     1,325,627       1,415,478  
Minority interest
     10,353       10,241  
Stockholders’ equity:
                
Preferred stock
     ¯       ¯  
Common stock
     1,252       1,241  
Additional paid-in capital
     261,734       242,284  
Treasury stock
     (6,778 )     (6,778 )
Retained earnings
     488,375       466,043  
Accumulated other comprehensive income
     51,852       30,092  
 
            
Total stockholders’ equity
     796,435       732,882  
 
            
Total liabilities & stockholders’ equity
   $ 2,132,415     $ 2,158,601  
 
            

 

 

(Quiksilver Logo)
Quiksilver, Inc. 2006 Second Quarter Results
June 8, 2006
Page 7 of 7
Information related to geographic segments is as follows:
                 
    Three Months Ended April 30,  
In thousands   2006     2005  
Revenues, net:
                
Americas
   $ 250,042     $ 199,192  
Europe
     217,149       176,272  
Asia/Pacific
     48,247       50,331  
Corporate operations
     1,490       1,058  
 
            
 
   $ 516,928     $ 426,853  
 
            
Gross Profit:
                
Americas
   $ 103,166     $ 76,697  
Europe
     108,512       90,595  
Asia/Pacific
     22,045       25,541  
Corporate operations
     767       532  
 
            
 
   $ 234,490     $ 193,365  
 
            
SG&A Expense:
                
Americas
   $ 81,509     $ 53,272  
Europe
     96,162       56,891  
Asia/Pacific
     24,334       19,201  
Corporate operations
     13,833       9,950  
 
            
 
   $ 215,838     $ 139,314  
 
            
Operating Income:
                
Americas
   $ 21,657     $ 23,425  
Europe
     12,350       33,704  
Asia/Pacific
     (2,289 )     6,340  
Corporate operations
     (13,066 )     (9,418 )
 
            
 
   $ 18,652     $ 54,051