EX-99.1 2 a38814exv99w1.htm EXHIBIT 99.1 exv99w1
 

Exhibit 99.1
         
(QUICKSILVER LOGO))
   Company Contact:   Joe Scirocco
Chief Financial Officer
Quiksilver, Inc.
(714) 889-2200
 
 
  Investor Relations:   Chad Jacobs, James Palczynski, John Rouleau
Integrated Corporate Relations
(203) 682-8200
— Quiksilver, Inc. Reports Fiscal 2008 First Quarter Financial Results —
— First Quarter Net Revenues Increase 14% to $605 million —
— First Quarter EPS from Continuing Operations of $(0.12) —
Huntington Beach, California, March 6, 2008—Quiksilver, Inc. (NYSE:ZQK) today announced operating results for the first quarter ended January 31, 2008. Consolidated revenue from continuing operations for the first quarter of fiscal 2008 increased 14% to $605.3 million from $528.7 million in the first quarter of fiscal 2007. Consolidated income from continuing operations for the first quarter of fiscal 2008 was a loss of $14.7 million, or $0.12 per share, compared to income of $6.8 million, or $0.05 per share, for the first quarter of fiscal 2007. Net revenues and income from continuing operations for all periods exclude the results of our golf equipment business which are reported as discontinued operations.
Robert B. McKnight, Jr., Chairman of the Board, Chief Executive Officer and President of Quiksilver, Inc., commented, “Although we are not satisfied with our financial results in general, we are pleased that our core apparel and footwear operations enabled us to partially offset the more difficult than expected results from our wintersports equipment business. As we go forward, we are energized to regain focus on our core opportunities. We are executing a variety of strategies to improve our gross margin, reduce our expense levels and generate cash flow to repay our indebtedness. We are resolved to continue to pursue strategic transactions to reduce or eliminate our exposure to our wintersports equipment business.”
In November 2007, the company reorganized its operating segments to include a separate wintersports equipment segment. Americas, Europe and Asia/Pacific segments include the apparel operations by geographic region and the wintersports equipment segment includes world-wide equipment operations. The Company’s global apparel revenues increased 19% to $500.5 million from $421.5 million a year ago with approximately $27.7 million of the increase attributed to the effects of foreign currency rates. Within this total, net revenues in the Americas segment increased 18% during the first quarter of fiscal 2008 to $232.9 million from $197.4 million in the first quarter of fiscal 2007. European segment net revenues increased 19% during the first quarter of fiscal 2008 to $205.3 million from $172.0 million in the first quarter of fiscal 2007. Approximately $21.4 million of Europe’s increase was attributable to the positive effect of foreign currency exchange rates. Asia/Pacific segment net revenues increased 19% to $61.3 million in the first quarter of fiscal 2008 from $51.4 million in the first quarter of fiscal 2007. Approximately $6.3 million of Asia/Pacific’s increase was attributable to the positive effect of foreign currency exchange rates. Wintersports equipment segment net revenues decreased 2% to $104.8 million in the first quarter of fiscal 2008 from $107.1 million in the first quarter of fiscal 2007.

 

(QUICKSILVER LOGO)
Quiksilver, Inc. 2008 First Quarter Results
March 6, 2008
Page 2 of 7
The decrease in wintersports equipment revenue was partially offset by a favorable foreign exchange increase of approximately $10.2 million.
Consolidated inventories increased 11% to $490.2 million at January 31, 2008 from $442.8 million at January 31, 2007. Consolidated trade accounts receivable increased 13% to $638.7 million at January 31, 2008 from $566.1 million at January 31, 2007.
The company indicated that visibility into revenues and earnings is limited for the remainder of the year. It acknowledged, however, consensus estimates as published by First Call of $2.6 billion for consolidated revenues and $0.58 for EPS (both from continuing operations) and believes that such estimates should be achievable.
Mr. McKnight concluded, “I am excited to return to the role of President of Quiksilver. This is a unique company with compelling growth opportunities in each of its major brands, within existing markets, in new markets and across a wide range of categories. We have been through difficult situations at a variety of points in our 30-year history and have always emerged stronger and been able to unlock significant value to our shareholders in the process. We believe that a focus on profitability and on our key strengths as one of the few, true branded lifestyle apparel companies will enable us to do so once again.”
Note:
Attachments to this press release include unaudited consolidated quarterly statements of income for the quarters ended January 31, 2008 and 2007 reflecting our golf equipment operations as a discontinued operation and segment information for our fiscal 2007 quarters adjusted for our new operating segments.
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’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, Look and Kerma 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.

 

(QUICKSILVER LOGO)
Quiksilver, Inc. 2008 First Quarter Results
March 6, 2008
Page 3 of 7
Forward looking statements:
This press release contains forward-looking statements including but not limited to statements regarding the Company’s 2008 annual revenue guidance, 2008 annual diluted earnings per share guidance 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.

 

(QUICKSILVER LOGO)
Quiksilver, Inc. 2008 First Quarter Results
March 6, 2008
Page 4 of 7
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                 
    Three Months Ended January 31,  
In thousands, except per share amounts   2008     2007  
 
                
Revenues, net
   $ 605,296     $ 528,677  
Cost of goods sold
     329,646       279,748  
 
            
Gross profit
     275,650       248,929  
 
                
Selling, general and administrative expense
     279,937       221,612  
 
            
 
                
Operating (loss) income
     (4,287 )     27,317  
 
                
Interest expense
     14,640       14,756  
Foreign currency (gain) loss
     (735 )     1,897  
Minority interest and other expense
     74       33  
 
            
(Loss) income before provision for income taxes
     (18,266 )     10,631  
 
                
(Benefit) provision for income taxes
     (3,608 )     3,822  
 
            
 
                
(Loss) income from continuing operations
   $ (14,658 )   $ 6,809  
Loss from discontinued operations
     (7,282 )     (4,336 )
 
            
Net (Loss) income
   $ (21,940 )   $ 2,473  
 
            
 
                
(Loss) income per share from continuing operations
   $ (0.12 )   $ 0.06  
 
            
Loss per share from discontinued operations
   $ (0.06 )   $ (0.04 )
 
            
Net (loss) income per share
   $ (0.18 )   $ 0.02  
 
            
(Loss) income per share from continuing operations, assuming dilution
   $ (0.12 )   $ 0.05  
 
            
Loss per share from discontinued operations, assuming dilution
   $ (0.06 )   $ (0.04 )
 
            
Net (loss) income per share, assuming dilution
   $ (0.18 )   $ 0.02  
 
            
 
                
Weighted average common shares outstanding
     124,508       123,049  
 
            
 
                
Weighted average common shares outstanding, assuming dilution
     124,508       129,234  
 
            

 

(QUICKSILVER LOGO)
Quiksilver, Inc. 2008 First Quarter Results
March 6, 2008
Page 5 of 7
CONSOLIDATED BALANCE SHEETS (Unaudited)
                 
    January 31,     January 31,  
In thousands   2008     2007  
 
                
ASSETS
Current assets:
                
Cash and cash equivalents
   $ 75,181     $ 45,996  
Trade accounts receivable, less allowance for doubtful accounts of $38,816 (2008) and $26,392 (2007)
     638,707       566,066  
Income taxes receivable
     3,853       12,460  
Other receivables
     59,534       35,385  
Inventories
     490,235       442,832  
Deferred income taxes
     66,221       82,068  
Prepaid expenses and other current assets
     40,938       39,530  
Current assets held for sale
     1,946       97,102  
 
            
Total current assets
     1,376,615       1,321,439  
Fixed assets, net
     365,317       292,152  
Intangibles, net
     227,300       216,407  
Goodwill
     416,375       477,575  
Other assets
     47,230       44,184  
Non-current assets held for sale
     15,792       98,381  
 
            
Total assets
   $ 2,448,629     $ 2,450,138  
 
            
 
                
LIABILITIES & STOCKHOLDERS’ EQUITY
                
Current Liabilities:
                
Lines of credit
   $ 271,549     $ 299,059  
Accounts payable
     297,646       239,659  
Accrued liabilities
     194,719       171,105  
Current portion of long-term debt
     35,255       25,111  
Current liabilities of assets held for sale
     110       24,450  
 
            
Total current liabilities
     799,279       759,384  
Long-term debt
     725,098       636,592  
Deferred income taxes and other long-term liabilities
     69,329       99,229  
Non-current liabilities of assets held for sale
     —       42,962  
 
            
Total liabilities
     1,593,706       1,538,167  
Minority interest
     —       10,464  
Stockholders’ equity:
                
Common stock
     1,291       1,272  
Additional paid-in capital
     312,575       284,970  
Treasury stock
     (6,778 )     (6,778 )
Retained earnings
     394,744       561,534  
Accumulated other comprehensive income
     153,091       60,509  
 
            
Total stockholders’ equity
     854,923       901,507  
 
            
Total liabilities & stockholders’ equity
   $ 2,448,629     $ 2,450,138  
 
            

 

(QUICKSILVER LOGO)
Quiksilver, Inc. 2008 First Quarter Results
March 6, 2008
Page 6 of 7
Information related to operating segments is as follows:
                 
    Three Months Ended January 31,  
In thousands   2008     2007  
 
                
Revenues, net:
                
Americas
   $ 232,936     $ 197,374  
Europe
     205,273       172,011  
Asia/Pacific
     61,254       51,383  
Wintersports equipment
     104,846       107,135  
Corporate operations
     987       774  
 
            
 
   $ 605,296     $ 528,677  
 
            
 
                
Gross Profit:
                
Americas
   $ 100,655     $ 83,868  
Europe
     110,347       91,506  
Asia/Pacific
     31,541       24,024  
Wintersports equipment
     32,771       49,021  
Corporate operations
     336       510  
 
            
 
   $ 275,650     $ 248,929  
 
            
 
                
SG&A Expense:
                
Americas
   $ 94,502     $ 73,976  
Europe
     91,926       70,080  
Asia/Pacific
     28,087       23,758  
Wintersports equipment
     54,147       41,331  
Corporate operations
     11,275       12,467  
 
            
 
   $ 279,937     $ 221,612  
 
            
 
                
Operating (Loss) Income:
                
Americas
   $ 6,153     $ 9,892  
Europe
     18,421       21,426  
Asia/Pacific
     3,454       266  
Wintersports equipment
     (21,376 )     7,690  
Corporate operations
     (10,939 )     (11,957 )
 
            
 
   $ (4,287 )   $ 27,317  
 
            

 

(QUICKSILVER LOGO)
Quiksilver, Inc. 2008 First Quarter Results
March 6, 2008
Page 7 of 7
Quarterly information related to 2007 operating segments is adjusted below to reflect new operating segments and is as follows:
                                         
    Quarter Ended     Year Ended  
    January 31,     April 30,     July 31,     October 31,     October 31,  
In thousands   2007     2007     2007     2007     2007  
 
                                        
Revenues, net:
                                        
Americas
   $ 197,374     $ 236,610     $ 279,660     $ 275,785     $ 989,429  
Europe
     172,011       235,711       184,766       245,286       837,774  
Asia/Pacific
     51,383       50,872       60,264       82,459       244,978  
Wintersports equipment
     107,135       32,832       35,053       174,021       349,041  
Corporate operations
     774       1,202       1,187       1,650       4,813  
 
                              
 
   $ 528,677     $ 557,227     $ 560,930     $ 779,201     $ 2,426,035  
 
                              
 
                                        
Gross Profit:
                                        
Americas
   $ 83,868     $ 97,807     $ 117,129     $ 115,939     $ 414,743  
Europe
     91,506       124,688       103,013       133,250       452,457  
Asia/Pacific
     24,024       24,726       29,117       42,058       119,925  
Wintersports equipment
     49,021       5,674       10,351       66,378       131,424  
Corporate operations
     510       1,048       1,096       1,038       3,692  
 
                              
 
   $ 248,929     $ 253,943     $ 260,706     $ 358,663     $ 1,122,241  
 
                              
 
                                        
SG&A Expense:
                                        
Americas
   $ 73,976     $ 75,693     $ 77,876     $ 81,362     $ 308,907  
Europe
     70,080       80,498       79,480       102,656       332,714  
Asia/Pacific
     23,758       25,430       24,456       27,934       101,578  
Wintersports equipment
     41,331       45,036       45,476       37,453       169,296  
Corporate operations
     12,467       15,865       19,467 *     11,117       58,916  
 
                              
 
   $ 221,612     $ 242,522     $ 246,755     $ 260,522     $ 971,411  
 
                              
 
                                        
Asset impairments:
                                        
Americas
   $ —     $ —     $ —     $ —     $ —  
Europe
     —       —       —       —       —  
Asia/Pacific
     —       —       —       —       —  
Wintersports equipment
     —       —       —       166,352       166,352  
Corporate operations
     —       —       —       —       —  
 
                              
 
   $ —     $ —     $ —     $ 166,352     $ 166,352  
 
                              
 
                                        
Operating (Loss) Income:
                                        
Americas
   $ 9,892     $ 22,114     $ 39,253     $ 34,577     $ 105,836  
Europe
     21,426       44,190       23,533       30,594       119,743  
Asia/Pacific
     266       (704 )     4,661       14,124       18,347  
Wintersports equipment
     7,690       (39,362 )     (35,125 )     (137,427 )     (204,224 )
Corporate operations
     (11,957 )     (14,817 )     (18,371 )     (10,079 )     (55,224 )
 
                              
 
   $ 27,317     $ 11,421     $ 13,951     $ (68,211 )   $ (15,522 )
 
                              
 
*   Includes approximately $3.6 million in contract termination charges.