EX-99.1 2 a33526exv99w1.htm EXHIBIT 99.1 exv99w1
 

EXHIBIT 99.1
(QUIKSILVER LOGO)
         
 
  Company Contact:   Joe Scirocco
Chief Financial Officer
Quiksilver, Inc.
(714) 889-2200
 
        
 
  Investor Relations:   Chad A. Jacobs, Joe Teklits
Integrated Corporate Relations
(203) 682-8200
— Quiksilver, Inc. Reports 2007 Third Quarter Financial Results —
— Company Reiterates Outlook for Full Fiscal Year, Excluding Special Charges —
Huntington Beach, California, September 6, 2007—Quiksilver, Inc. (NYSE: ZQK) today announced financial results for the third quarter ended July 31, 2007. Consolidated net revenues for the third quarter of fiscal 2007 increased 17% to $612.8 million, from $525.9 million in the third quarter of fiscal 2006. The Company incurred a net loss for the third quarter of fiscal 2007 of $7.9 million or $0.06 per share compared to net income of $5.3 million or $0.04 per share the year before. The net loss for the third quarter of fiscal 2007 includes special charges of approximately $10.5 million, net of tax, related to the planned acquisition of the minority interest in the Company’s Roger Cleveland Golf Company, Inc. subsidiary. As previously announced, this transaction is expected to close in the fourth quarter of fiscal 2007. Excluding these special charges, the Company earned $0.02 per share on a fully diluted basis, in line with its expectations. The $0.08 difference between $0.02 earnings per share, excluding special charges, and actual loss per share of $0.06 per share is determined by dividing $10.5 million, which is the tax-effected special charges, by 129.2 million weighted average common shares outstanding, assuming dilution.
Robert B. McKnight, Jr., Chairman of the Board and Chief Executive Officer of Quiksilver, Inc., commented, “Our apparel and footwear and related businesses performed at a high level during the third quarter with gains coming from each region and brand in both our wholesale and retail businesses. We continue to lead in our core markets with Quiksilver, Roxy, and DC and have excellent growth opportunities in each of those businesses around the world. A prime opportunity is our new Quiksilver Womens brand that we separately announced today, which will launch for Fall 2008. And as we enter the winter season, our order book for Rossignol, although below last year’s, continues to hold.
Net revenues in the Americas increased 21% during the third quarter of fiscal 2007 to $335.0 million from $277.4 million in the third quarter of fiscal 2006. As measured in U.S. dollars and reported in the financial statements, European net revenues increased 11% during the third quarter of fiscal 2007 to $212.7 million from $191.0 million in the third quarter of fiscal 2006. As measured in euros, European net revenues increased 4% for those same periods. Asia/Pacific net revenues increased 13% to $63.9 million in the third quarter of fiscal 2007 from $56.3 million in the third quarter of fiscal 2006. As measured in Australian dollars, Asia/Pacific net revenues increased 1% for those same periods.
Consolidated inventories increased 6% to $545.5 million at July 31, 2007 from $516.4 million at July 31, 2006. Consolidated trade accounts receivable increased 24% to $611.0 million at July 31, 2007 from $492.4 million at July 31, 2006.
Bernard Mariette, President of Quiksilver, Inc., commented, “Our over-arching goal is to transform our business from a well-diversified multi-national company into a truly global

 

 

(QUIKSILVER LOGO)
Quiksilver, Inc. Third Quarter 2007 Results
September 6, 2007
Page 2 of 7
organization. We have solidified the Quiksilver, Roxy and DC brands under global brand managers who we believe can now develop the kind of consistency and coordination, in terms of marketing, retail presentation and product development necessary to maximize their potential both in terms of sales and profitability. We have also begun a process of consolidating our sourcing operations on a global scale that we believe will ultimately provide significant margin benefits. This quarter we introduced our first Roxy fragrance worldwide, in keeping with the global approach to our business. And we’ll do the same with our launch of Quiksilver Womens in the Fall.”
Mr. Mariette continued, “Of course all of our initiatives depend upon people and we feel confident in our team. This includes the recent hiring of several key people and the repositioning of other veteran employees in important global positions. All in all, we are very excited about the groundwork we have laid to transform our business.”
Mr. McKnight concluded, “The power of the brands within our organization is undeniably compelling. Quiksilver, Roxy, DC, Rossignol and Cleveland are leaders in their respective markets and each of them has an opportunity to grow in stature, diversify their product mix, expand their reach, and cement their position in the hearts and minds of consumers around the world.”
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 the Company’s brands is based on different outdoor sports. The Quiksilver, Roxy, DC 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, and Look brands are leaders in the alpine ski market, and the Company makes snowboarding equipment under its Rossignol, Dynastar, DC, 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.
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. The Company’s corporate and Americas’ headquarters are in Huntington Beach, California, while its European headquarters are in St. Jean de Luz and St. Jean de Moirans, France, and its Asia/Pacific headquarters are in Torquay, Australia.

 

 

(QUIKSILVER LOGO)
Quiksilver, Inc. Third Quarter 2007 Results
September 6, 2007
Page 3 of 7
Forward looking statements:
This press release contains forward-looking statements including but not limited to statements regarding the company’s financial forecast and earnings. 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. Third Quarter 2007 Results
September 6, 2007
Page 4 of 7
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                 
    Three Months Ended July 31,  
In thousands, except per share amounts   2007     2006  
Revenues, net
   $ 612,756     $ 525,854  
Cost of goods sold
     331,540       277,079  
 
            
Gross profit
     281,216       248,775  
 
                
Selling, general and administrative expense
     262,232       228,843  
Intangible asset impairment and related charges(1)
     13,175       —  
 
            
 
                
Operating income
     5,809       19,932  
 
                
Interest expense
     15,332       11,877  
Foreign currency loss
     65       377  
Minority interest and other (income) expense
     (18 )     484  
 
            
(Loss) income before (benefit) provision for income taxes
     (9,570 )     7,194  
 
                
(Benefit) provision for income taxes
     (1,703 )     1,858  
 
            
 
                
Net (loss) income
   $ (7,867 )   $ 5,336  
 
            
 
                
Net (loss) income per share
   $ (0.06 )   $ 0.04  
 
            
 
                
Net (loss) income per share, assuming dilution
   $ (0.06 )   $ 0.04  
 
            
 
                
Weighted average common shares outstanding
     124,013       122,341  
 
            
 
                
Weighted average common shares outstanding, assuming dilution
    124,013       127,737  
 
            
(1)   Includes approximately $8.2 million in intangible asset impairment charges related to the Company’s acquisition of the minority interest in Roger Cleveland Golf Company, Inc. and approximately $5.0 million in related contract termination costs.

 

 

(QUIKSILVER LOGO)
Quiksilver, Inc. Third Quarter 2007 Results
September 6, 2007
Page 5 of 7
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                 
    Nine Months Ended July 31,  
In thousands, except per share amounts   2007     2006  
Revenues, net
   $ 1,769,079     $ 1,583,924  
Cost of goods sold
     958,649       852,098  
 
            
Gross profit
     810,430       731,826  
 
                
Selling, general and administrative expense
     763,533       655,986  
Intangible asset impairment and related charges(1)
     13,175       —  
 
            
 
                
Operating income
     33,722       75,840  
 
                
Interest expense
     45,675       36,417  
Foreign currency loss (gain)
     3,481       (616 )
Minority interest and other (income) expense
     (2,166 )     895  
 
            
(Loss) income before (benefit) provision for income taxes
     (13,268 )     39,144  
 
                
(Benefit) provision for income taxes
     (3,076 )     11,476  
 
            
 
                
Net (loss) income
   $ (10,192 )   $ 27,668  
 
            
 
                
Net (loss) income per share
   $ (0.08 )   $ 0.23  
 
            
 
                
Net (loss) income per share, assuming dilution
   $ (0.08 )   $ 0.22  
 
            
 
                
Weighted average common shares outstanding
     123,579       121,928  
 
            
 
                
Weighted average common shares outstanding, assuming dilution
     123,579       127,564  
 
            
(1)   Includes approximately $8.2 million in intangible asset impairment charges related to the Company’s acquisition of the minority interest in Roger Cleveland Golf Company, Inc. and approximately $5.0 million in related contract termination costs.

 

 

(QUIKSILVER LOGO)
Quiksilver, Inc. Third Quarter 2007 Results
September 6, 2007
Page 6 of 7
CONSOLIDATED BALANCE SHEETS (Unaudited)
                 
    July 31,     July 31,  
Amounts in thousands   2007     2006  
ASSETS
Current assets:
                
Cash and cash equivalents
   $ 76,007     $ 84,342  
Trade accounts receivable, less allowance for doubtful accounts of $42,236 (2007) and $30,319 (2006)
     610,973       492,414  
Other receivables
     52,357       32,400  
Income tax receivable
     11,018       5,253  
Inventories
     545,515       516,366  
Deferred income taxes
     94,941       46,859  
Prepaid expenses and other current assets
     31,482       27,991  
 
            
Total current assets
     1,422,293       1,205,625  
 
                
Fixed assets, net
     319,887       264,585  
Intangibles, net
     252,300       247,263  
Goodwill
     545,196       525,846  
Other assets
     49,104       51,326  
Assets held for sale
     18,264       23,311  
 
            
Total assets
   $ 2,607,044     $ 2,317,956  
 
            
 
                
LIABILITIES & STOCKHOLDERS’ EQUITY
 
                
Current Liabilities:
                
Lines of credit
   $ 327,477     $ 278,261  
Accounts payable
     305,067       242,309  
Accrued liabilities
     176,045       195,797  
Current portion of long-term debt
     20,272       22,728  
 
            
Total current liabilities
     828,861       739,095  
 
                
Long-term debt
     716,901       681,248  
Deferred income taxes and other long-term liabilities
     101,368       73,886  
 
            
Total liabilities
     1,647,130       1,494,229  
 
                
Minority interest
     9,982       10,935  
 
                
Stockholders’ equity:
                
Common stock
     1,280       1,254  
Additional paid-in capital
     300,087       268,382  
Treasury stock
     (6,778 )     (6,778 )
Retained earnings
     548,867       493,711  
Accumulated other comprehensive income
     106,476       56,223  
 
            
Total stockholders’ equity
     949,932       812,792  
 
            
Total liabilities & stockholders’ equity
   $ 2,607,044     $ 2,317,956  
 
            

 

 

(QUIKSILVER LOGO)
Quiksilver, Inc. Third Quarter 2007 Results
September 6, 2007
Page 7 of 7
Information related to segments is as follows (Unaudited):
                 
    Three Months Ended July 31,  
Amounts in thousands   2007     2006  
Revenues, net:
                
Americas
   $ 335,013     $ 277,413  
Europe
     212,696       190,998  
Asia/Pacific
     63,860       56,309  
Corporate operations
     1,187       1,134  
 
            
 
   $ 612,756     $ 525,854  
 
            
 
                
Gross Profit:
                
Americas
   $ 138,795     $ 119,075  
Europe
     111,266       101,401  
Asia/Pacific
     30,059       27,697  
Corporate operations
     1,096       602  
 
            
 
   $ 281,216     $ 248,775  
 
            
 
                
SG&A Expense:
                
Americas
   $ 108,544     $ 86,187  
Europe
     121,999       105,845  
Asia/Pacific
     25,397       23,698  
Corporate operations
     19,467       13,113  
 
            
 
   $ 275,407     $ 228,843  
 
            
 
                
Operating Income:
                
Americas
   $ 30,251     $ 32,888  
Europe
     (10,733 )     (4,444 )
Asia/Pacific
     4,662       3,999  
Corporate operations
     (18,371 )     (12,511 )
 
            
 
   $ 5,809     $ 19,932  
 
            
Revenues by classification within operating segments are as follows (Unaudited):
                                                 
    Three Months Ended July 31,  
    2007     2006  
            Equipment                     Equipment        
In thousands   Apparel Brands     Brands     Total     Apparel Brands     Brands     Total  
Americas
   $ 279,829     $ 55,184     $ 335,013     $ 233,112     $ 44,301     $ 277,413  
Europe
     185,012       27,684       212,696       160,698       30,300       190,998  
Asia/Pacific
     59,936       3,924       63,860       52,577       3,732       56,309  
Corporate operations
     —       —       1,187       —       —       1,134  
 
                                    
 
   $ 524,777     $ 86,792     $ 612,756     $ 446,387     $ 78,333     $ 525,584