EX-99.1 2 a36467exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
 

EXHIBIT 99.1
         
(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 Fourth Quarter and Full Year Results —
- Adjusted FY07 EPS from Continuing Operations in Line -
- Apparel and Footwear Brands Increase 20% to $2.0 billion in FY07 -
- FY07 EPS from Continuing Operations reported as $(0.80) on Goodwill Charge -
- Company Outlines Initial Fiscal 2008 Outlook -
Huntington Beach, California, December 13, 2007—Quiksilver, Inc. (NYSE: ZQK) today announced operating results for the fourth quarter and full year ended October 31, 2007. Consolidated net revenues for the fourth quarter of fiscal 2007 increased 6% to $779.2 million compared to $731.8 million in the fourth quarter of fiscal 2006. Pro-forma net income, adjusted to eliminate non-cash tax-effected special charges, for the fourth quarter of fiscal 2007 was $65.9 million or $0.51 per share compared to $65.8 million or $0.51 per share the year before. The fiscal 2007 pro-forma result is in line with our expectations after excluding Cleveland Golf, which was sold earlier this week. Consolidated income from continuing operations for the fourth quarter of fiscal 2007 was a loss of $104.9 million or $0.84 per share compared to income of $65.8 million or $0.51 per share the year before. Net revenues and income from continuing operations for all periods excludes the results of our golf equipment business which are reported as discontinued operations. The loss from continuing operations for the fourth quarter of fiscal 2007 includes $170.7 million of non-cash charges primarily related to goodwill impairment, net of tax. A quantitative reconciliation from our GAAP results to our pro-forma quarterly results is provided in the accompanying tables.
Consolidated net revenues for the full year of fiscal 2007 increased 10% to $2.43 billion compared to $2.20 billion in fiscal 2006. Our pro-forma net income, adjusted to eliminate the tax-effected special charges (primarily non-cash), for the fiscal year 2007 was $74.2 million or $0.57 per share compared to $94.1 million or $0.74 per share the year before. Consolidated income from continuing operations for the full year of fiscal 2007 was a loss of $98.6 million or $0.80 per share compared to income of $94.1 million or $0.74 per share in fiscal 2006. The loss from continuing operations for the full fiscal year includes $172.9 million of primarily non-cash special charges, net of tax.
Robert B. McKnight, Jr., Chairman of the Board and Chief Executive Officer of Quiksilver, Inc., commented, “We are pleased to see continuing strength in each of our apparel and footwear brands, which grew their revenue for the year by 20% to $2.0 billion. We believe that we can maintain double digit rates of revenue growth and unlock significant profitability in these businesses over the next several years. These strong results are masked by the difficulties we’ve experienced in the equipment business, which includes the charge we have taken during the fourth quarter to reduce goodwill. While this is unfortunate, we remain optimistic about our longer-term prospects. We have seen and overcome difficult market conditions at a variety of points in our history and have always emerged a stronger company.”

 

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Quiksilver, Inc. Fourth Quarter and Full Year 2007 Results
December 13, 2007
Page 2 of 10
Bernard Mariette, President of Quiksilver, Inc., commented, “We are focused on three major initiatives. First, we intend to leverage the ongoing success of our apparel and footwear business by expanding our reach into new categories and new territories, increasing our penetration in existing markets and product ranges, and by growing our company owned retail presence. Second, we are creating a closely coordinated global sourcing structure to achieve several points of incremental gross margin for that business. Third, we are focused on helping our equipment business recover from the unusually difficult winter season last year. The state of the market, along with currency movements over the past year has negatively impacted both our revenues and profitability. Even so, we continue to believe that the business will improve over the course of the next two seasons. Our underlying belief that the Rossignol brand holds a tremendous and untapped lifestyle opportunity is unchanged. We are looking forward to growing the brand with a revitalized marketing effort and into a host of new product categories.”
Within consolidated revenues for the fourth quarter, apparel brand revenue grew 22% to $589.3 million from $481.8 million, while equipment brand revenue contracted 24% to $188.2 million from $248.2 million. Net revenues in the Americas increased 15% during the fourth quarter of fiscal 2007 to $334.8 million from $290.4 million in the fourth quarter of fiscal 2006. As measured in U.S. dollars and reported in the financial statements, European net revenues increased 2% during the fourth quarter of fiscal 2007 to $350.8 million from $342.4 million in the fourth quarter of fiscal 2006. As measured in euros, European net revenues decreased 7% for those same periods. As measured in U.S. dollars and reported in the financial statements, Asia/Pacific net revenues decreased 5% to $91.9 million in the fourth quarter of fiscal 2007 from $97.2 million in the fourth quarter of fiscal 2006. As measured in Australian dollars, Asia/Pacific net revenues decreased 19% for those same periods.
Within consolidated revenues for the full year, apparel brand revenue grew 20% to $2,042.0 million from $1,708.8 million, while equipment brand revenue contracted 22% to $379.2 million from $486.0 million. Net revenues in the Americas for the full year of fiscal 2007 increased 16% to $1,092.1 million from $939.4 million in fiscal 2006. As measured in U.S. dollars and reported in the financial statements, European net revenues increased 7% during the full year of fiscal 2007 to $1,070.1 million from $1,002.5 million in fiscal 2006. As measured in euros, European net revenues decreased 3% for the year. As measured in U.S. dollars, Asia/Pacific net revenues increased 2% to $259.1 million from $253.0 million in fiscal 2006. As measured in Australian dollars, Asia/Pacific net revenues decreased 11% for the year.
Consolidated inventories increased 15% to $447.3 million at October 31, 2007 from $389.7 million at October 31, 2006. Inventories grew 7% in constant dollars. Consolidated trade accounts receivable increased 13% to $760.4 million at October 31, 2007 from $674.7 million at October 31, 2006. Consolidated trade accounts receivable increased 3% in constant dollars.
The Company today outlined initial fiscal 2008 outlook for revenues of $2.7 billion and earnings per share of approximately $0.70. The Company also noted that the first quarter is expected to continue to reflect strong apparel and footwear business as well as the effects of a challenging winter equipment market. As a result, the Company currently expects to generate revenues of approximately $600 million and to incur a small loss for the quarter.
Mr. Mariette continued, “While fiscal 2008 will still hold some challenges in the equipment business, the market has an excellent opportunity to right-size its inventories and return to more normalized levels of sales in next year’s ski season. We are positioning for this and are working to put processes and people in place to make the most of the opportunity. At the same time, we continue to explore strategies to further reduce our exposure to the non-strategic parts of our equipment business, to repay indebtedness, and to improve our working capital utilization. The sale of Cleveland Golf, which has now been closed, was a great transaction that provides over $100 million of net cash for debt repayment and enables us to better focus on our core opportunities.”

 

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Quiksilver, Inc. Fourth Quarter and Full Year 2007 Results
December 13, 2007
Page 3 of 10
Mr. McKnight concluded, “This company has grown tremendously over the years. We have brands that, within their niches, are as strong as any in the world. We have created clear identities and broad appeal for each of them. We’ve proven highly capable of communicating their messages to consumers with great product and outstanding marketing. As we look ahead to the future and put the difficulty of the past year behind us, we remain optimistic, confidence in our strengths, and in a position to leverage them on behalf of our shareholders.”
Note:
Attachments to this press release include unaudited consolidated quarterly statements of income for each of the quarters in the year ended October 31, 2007 reflecting the operations of the Roger Cleveland Golf Company subsidiary as a discontinued operation.
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 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 brands symbolize a long standing commitment to technical expertise and competitive success on the mountains.
The reputation of Quiksilver Inc.’s brands is based on different outdoor sports. The Company’s 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 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 St. Jean de Moirans, 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 revenue growth, financial forecast and other future 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 sections titled “Risk Factors” and “Forward-Looking Statements” in Quiksilver’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
* * * * *
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 and www.dynastar.com.

 

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Quiksilver, Inc. Fourth Quarter and Full Year 2007 Results
December 13, 2007
Page 4 of 10
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                 
    Three Months Ended October 31,  
In thousands, except per share amounts   2007     2006  
                 
Revenues, net
   $ 779,201     $ 731,830  
Cost of goods sold
     420,538       401,534  
 
            
Gross profit
     358,663       330,296  
 
                
Selling, general and administrative expense
     260,522       223,729  
Asset impairments and other special charges
     166,352       —  
 
            
 
                
Operating (loss) income
     (68,211 )     106,567  
 
                
Interest expense
     14,407       13,513  
Foreign currency (gain) loss
     (1,584 )     1,010  
Minority interest and other expense
     82       103  
 
            
(Loss) income before provision for income taxes
     (81,116 )     91,941  
 
                
Provision for income taxes
     23,750       26,177  
 
            
 
                
Net (loss) income from continuing operations
   $ (104,866 )   $ 65,764  
 
            
 
                
Net loss from discontinued operations
   $ (6,059 )   $ (416 )
 
            
 
                
Net (loss) income
   $ (110,925 )   $ 65,348  
 
            
 
                
(Loss) income per share from continuing operations
   $ (0.84 )   $ 0.54  
 
            
Loss income per share from discontinued operations
   $ (0.05 )   $ —  
 
            
Net (loss) income per share
   $ (0.89 )   $ 0.53  
 
            
(Loss) income per share from continuing operations, assuming dilution
   $ (0.84 )   $ 0.51  
 
            
Loss per share from discontinued operations, assuming dilution
   $ (0.05 )   $ —  
 
            
Net (loss) income per share, assuming dilution
   $ (0.89 )   $ 0.51  
 
            
 
                
Weighted average common shares outstanding
     124,492       122,566  
 
            
 
                
Weighted average common shares outstanding, assuming dilution
     124,492       128,314  
 
            

 

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Quiksilver, Inc. Fourth Quarter and Full Year 2007 Results
December 13, 2007
Page 5 of 10
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                 
    Fiscal Year Ended October 31,  
In thousands, except per share amounts   2007     2006  
                 
Revenues, net
   $ 2,426,035     $ 2,200,234  
Cost of goods sold
     1,303,794       1,193,938  
 
            
Gross profit
     1,122,241       1,006,296  
 
                
Selling, general and administrative expense
     967,854       827,025  
Asset impairments and other special charges
     169,909       —  
 
            
 
                
Operating income
     (15,522 )     179,271  
 
                
Interest expense
     57,023       47,444  
Foreign currency loss
     1,777       8  
Minority interest and other expense
     121       303  
 
            
(Loss) income before provision for income taxes
     (74,443 )     131,516  
 
                
Provision for income taxes
     24,205       37,413  
 
            
 
                
Net (loss) income from continuing operations
   $ (98,648 )   $ 94,103  
 
            
 
                
Net (loss) income from discontinued operations
   $ (22,471 )   $ (1,087 )
 
            
 
                
Net (loss) income
   $ (121,119 )   $ 93,016  
 
            
 
                
(Loss) income per share from continuing operations
   $ (0.80 )   $ 0.77  
 
            
(Loss) income per share from discontinued operations
   $ (0.18 )   $ (0.01 )
 
            
Net (loss) income per share
   $ (0.98 )   $ 0.76  
 
            
(Loss) income per share from continuing operations, assuming dilution
   $ (0.80 )   $ 0.74  
 
            
Loss per share from discontinued operations, assuming dilution
   $ (0.18 )   $ (0.01 )
 
            
Net (loss) income per share, assuming dilution
   $ (0.98 )   $ 0.73  
 
            
 
                
Weighted average common shares outstanding
     123,770       122,074  
 
            
 
                
Weighted average common shares outstanding, assuming dilution
     123,770       127,744  
 
            

 

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Quiksilver, Inc. Fourth Quarter and Full Year 2007 Results
December 13, 2007
Page 6 of 10
Information related to geographic segments is as follows (unaudited):
                 
    Three Months Ended October 31,  
Amounts in thousands   2007     2006  
                 
Revenues, net:
                
Americas
   $ 334,787     $ 290,414  
Europe
     350,825       342,413  
Asia/Pacific
     91,939       97,171  
Corporate operations
     1,650       1,832  
 
            
 
   $ 779,201     $ 731,830  
 
            
 
                
Gross Profit:
                
Americas
   $ 136,021     $ 114,790  
Europe
     177,968       172,080  
Asia/Pacific
     43,636       42,736  
Corporate operations
     1,038       690  
 
            
 
   $ 358,663     $ 330,296  
 
            
 
                
SG&A Expense:
                
Americas
   $ 89,805     $ 76,496  
Europe
     130,328       107,560  
Asia/Pacific
     29,272       25,750  
Corporate operations
     11,117       13,923  
 
            
 
   $ 260,522     $ 223,729  
 
            
 
                
Operating (Loss) Income:*
                
Americas
   $ 10,708     $ 38,294  
Europe
     (72,085 )     64,520  
Asia/Pacific
     3,245       16,986  
Corporate operations
     (10,079 )     (13,233 )
 
            
 
   $ (68,211 )   $ 106,567  
 
            
 
*   For the Americas, Europe and Asia/Pacific operating segments, operating (loss) income includes impairments and related charges for the three months ended October 31, 2007 of $35.5 million, $119.7 million and $11.1 million, respectively, or a total of $166.4 million.
Revenues by classification within operating segments are as follows (Unaudited):
                                                 
    Three Months Ended October 31,  
            2007                     2006        
    Apparel     Equipment                     Equipment        
In thousands   Brands     Brands     Total     Apparel Brands     Brands     Total  
 
                                                
Americas
   $ 278,223     $ 56,564     $ 334,787     $ 221,397     $ 69,017     $ 290,414  
Europe
     229,423       121,402       350,825       177,943       164,470       342,413  
Asia/Pacific
     81,656       10,283       91,939       82,471       14,700       97,171  
Corporate operations
     —       —       1,650       —       —       1,832  
 
                                    
 
   $ 589,302     $ 188,249     $ 779,201     $ 481,811     $ 248,187     $ 731,830  
 
                                    

 

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Quiksilver, Inc. Fourth Quarter and Full Year 2007 Results
December 13, 2007
Page 7 of 10
Information related to geographic segments (continued unaudited):
                 
    Fiscal Year Ended October 31,  
Amounts in thousands   2007     2006  
                 
Revenues, net:
                
Americas
   $ 1,092,076     $ 939,370  
Europe
     1,070,053       1,002,475  
Asia/Pacific
     259,093       253,003  
Corporate operations
     4,813       5,386  
 
            
 
   $ 2,426,035     $ 2,200,234  
 
            
 
                
Gross Profit:
                
Americas
   $ 444,286     $ 375,022  
Europe
     551,738       512,909  
Asia/Pacific
     122,525       116,047  
Corporate operations
     3,692       2,318  
 
            
 
   $ 1,122,241     $ 1,006,296  
 
            
 
                
SG&A Expense:
                
Americas
   $ 340,546     $ 281,890  
Europe
     465,724       396,935  
Asia/Pacific
     106,292       94,324  
Corporate operations
     55,292       53,876  
 
            
 
   $ 967,854     $ 827,025  
 
            
 
                
Operating (Loss) Income:*
                
Americas
   $ 68,232     $ 93,132  
Europe
     (33,711 )     115,974  
Asia/Pacific
     5,114       21,723  
Corporate operations
     (55,157 )     (51,558 )
 
            
 
   $ (15,522 )   $ 179,271  
 
            
 
*   For the Americas, Europe and Asia/Pacific operating segments and Corporate operations, operating (loss)income includes impairments and other special charges for the year ended October 31, 2007 of $35.5 million, $119.7 million, $11.1 million and $3.6 million, respectively, or a total of $169.9 million.
Revenues by classification within operating segments are as follows (Unaudited):
                                                 
    Fiscal Year Ended October 31,  
            2007                     2006        
    Apparel     Equipment                     Equipment        
In thousands   Brands     Brands     Total     Apparel Brands     Brands     Total  
 
                                                
Americas
   $ 990,892     $ 101,184     $ 1,092,076     $ 821,870     $ 117,500     $ 939,370  
Europe
     807,346       262,707       1,070,053       661,828       340,647       1,002,475  
Asia/Pacific
     243,797       15,296       259,093       225,111       27,892       253,003  
Corporate operations
     —       —       4,813       —       —       5,386  
 
                                    
 
   $ 2,042,035     $ 379,187     $ 2,426,035     $ 1,708,809     $ 486,039     $ 2,200,234  
 
                                    

 

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Quiksilver, Inc. Fourth Quarter and Full Year 2007 Results
December 13, 2007
Page 8 of 10
GAAP TO PRO-FORMA RECONCILIATION
         
    Three Months Ended  
    October 31,2007  
 
        
Net loss from continuing operations
   $ (104,866 )
Non-cash asset impairments and related charges, net of tax
     170,729  
 
      
Pro-forma net income from continuing operations
   $ 65,863  
 
      
 
        
Pro-forma net income per share from continuing operations
   $ 0.53  
 
      
 
        
Pro-forma net income per share from continuing operations, assuming dilution
   $ 0.51  
 
      
 
        
Weighted average common shares outstanding
     124,492  
 
      
 
        
Weighted average common shares outstanding, assuming dilution
     130,127  
 
      
GAAP TO PRO-FORMA RECONCILIATION
         
    Fiscal Year Ended  
    October 31,2007  
 
        
Net loss from continuing operations
   $ (98,648 )
Non-cash asset impairments and related charges, net of tax
     170,729  
Contract termination costs, net of tax
     2,134  
 
      
Pro-forma net income from continuing operations
   $ 74,215  
 
      
 
        
Pro-forma net income per share from continuing operations
   $ 0.60  
 
      
 
        
Pro-forma net income per share from continuing operations, assuming dilution
   $ 0.57  
 
      
 
        
Weighted average common shares outstanding
     123,770  
 
      
 
        
Weighted average common shares outstanding, assuming dilution
     129,706  
 
      

 

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Quiksilver, Inc. Fourth Quarter and Full Year 2007 Results
December 13, 2007
Page 9 of 10
CONSOLIDATED QUARTERLY STATEMENTS OF OPERATIONS (Unaudited)
                                 
    Three Months Ended  
    October 31,                    
In thousands, except per share amounts   2007     July 31, 2007     April 30, 2007     January 31, 2007  
                                 
Revenues, net
   $ 779,201     $ 560,930     $ 557,227     $ 528,677  
Cost of goods sold
     420,538       300,224       303,284       279,748  
 
                        
Gross profit
     358,663       260,706       253,943       248,929  
 
                                
Selling, general and administrative expense
     260,522       243,198       242,522       221,612  
Asset impairments and other special charges
     166,352       3,557       —       —  
 
                        
 
                                
Operating (loss) income
     (68,211 )     13,951       11,421       27,317  
 
                                
Interest expense
     14,407       14,180       13,680       14,756  
Foreign currency (gain) loss
     (1,584 )     72       1,392       1,897  
Minority interest and other expense
     82       80       (74 )     33  
 
                        
(Loss) income before provision for income taxes
     (81,116 )     (381 )     (3,577 )     10,631  
 
                                
Provision (benefit) for income taxes
     23,750       (1,670 )     (1,697 )     3,822  
 
                        
 
                                
Net (loss) income from continuing operations
   $ (104,866 )   $ 1,289     $ (1,880 )   $ 6,809  
 
                        
 
                                
(Loss) income per share from continuing operations
   $ (0.84 )   $ 0.01     $ (0.02 )   $ 0.06  
 
                        
(Loss) income per share from continuing operations, assuming dilution
   $ (0.84 )   $ 0.01     $ (0.02 )   $ 0.05  
 
                        
 
                                
Weighted average common shares outstanding
     124,492       124,013       123,596       123,049  
 
                        
 
                                
Weighted average common shares outstanding, assuming dilution
     124,492       129,163       123,596       129,234  
 
                        

 

(LOGO)
Quiksilver, Inc. Fourth Quarter and Full Year 2007 Results
December 13, 2007
Page 10 of 10
CONSOLIDATED SELECTED BALANCE SHEET INFORMATION (Unaudited)
                 
    October 31,  
Amounts in thousands   2007     2006  
                 
Cash and cash equivalents
   $ 74,348     $ 36,834  
Trade accounts receivable, net
     760,430       674,734  
Inventories
     447,282       389,663  
Lines of credit and long-term debt
     1,120,430       985,159