EX-99.1 2 a43526exv99w1.htm EXHIBIT 99.1 exv99w1
Exhibit 99.1
(Quiksilver Logo)
         
 
  Company Contact:   Bruce Thomas
Vice President, Investor Relations
Quiksilver, Inc.
+1 (714) 889-2200
Quiksilver, Inc. Reports Fiscal 2008 Third Quarter Financial Results
— Net Revenues from Continuing Operations Increase 7% to $565 million —
— Income from Continuing Operations of $0.25 per share Includes Favorable Tax Adjustment —
Huntington Beach, California, September 4, 2008—Quiksilver, Inc. (NYSE:ZQK) today announced operating results for the third quarter ended July 31, 2008. Consolidated net revenues from continuing operations for the third quarter of fiscal 2008 increased 7% to $564.9 million, from $528.6 million in the third quarter of fiscal 2007. Consolidated income from continuing operations for the third quarter of fiscal 2008 was $33.1 million, or $0.25 per share, compared to $35.7 million, or $0.28 per share, for the third quarter of fiscal 2007. Results for the quarter included a $0.03 per share benefit from certain tax adjustments. Net revenues and income from continuing operations for all periods exclude the results of our Rossignol wintersports equipment and apparel operations which are reported as discontinued operations. Including discontinued operations, net income for the quarter was $2.9 million or $0.02 per share compared to a net loss of $7.9 million or ($0.06) per share in the same quarter a year ago. The Company recently announced that it had received a binding offer to purchase Rossignol and expects to close this transaction in the Fall of 2008.
Robert B. McKnight, Jr., Chairman of the Board, Chief Executive Officer and President of Quiksilver, Inc., commented, “Our performance overall was in-line with our expectations and we are relatively pleased to deliver results in this range given the negative trends we’ve all witnessed during the quarter in the retail environment. Our gross margins benefited from a higher proportion of our revenues coming from Europe and from our retail stores than in the same quarter a year ago and we again achieved some improvements in sourcing margins. At the same time, this business mix drove our expense ratio higher, and a weaker performance at retail, together with conservative ordering by our wholesale customers, led to some deleveraging of expenses.”
All segments have been adjusted to reflect the discontinued operations classification of our Rossignol wintersports equipment and apparel business. The Americas, Europe and Asia/Pacific segments each include operations of our Quiksilver, Roxy, DC and other apparel brand businesses. Net revenues in the Americas segment decreased 4% during the third quarter of fiscal 2008 to $271.9 million from $281.9 million in the third quarter of fiscal 2007. European segment net revenues increased 25% during the third quarter of fiscal 2008 to $232.0 million from $185.6 million in the third quarter of fiscal 2007. Approximately $28.6 million of Europe’s increase was attributable to the positive effect of changes in foreign currency exchange rates. Asia/Pacific segment net revenues decreased slightly to $59.6 million in the third quarter of fiscal 2008 from $59.9 million in the third quarter of fiscal 2007. Asia/Pacific’s decrease would have been greater but for the positive effect of changes in foreign currency exchange rates of approximately $7.9 million.
Consolidated inventories increased 14% to $358.6 million at July 31, 2008 from $315.1 million at July 31, 2007. Changes in foreign currency exchange rates accounted for approximately $22.5 million of the increase in inventories compared to July 31, 2007. Consolidated trade accounts receivable increased 10% to $491.4 million at July 31, 2008 from $445.5 million at July 31, 2007. Changes in foreign currency exchange rates accounted for approximately $31.5 million of the increase in accounts receivable compared to July 31, 2007.

 

 

(Quiksilver Logo)
Quiksilver, Inc. 2008 Third Quarter Results
September 4, 2008
Page 2 of 7
Addressing its outlook for continuing operations, the Company indicated that it continues to believe it can achieve earnings per share for the full fiscal year ending October 31 of slightly below $0.90 per share, including the $0.03 tax benefit recognized in the fiscal third quarter.
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, 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.
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 Company’s products are sold in over 90 countries in a wide range of distribution, including surf shops, skate shops, snow shops, its proprietary Boardriders Club shops and other company-owned retail stores, 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, 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 2008 annual 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.

 

 

(Quiksilver Logo)
Quiksilver, Inc. 2008 Third Quarter Results
September 4, 2008
Page 3 of 7
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                 
    Three Months Ended July 31,  
In thousands, except per share amounts   2008     2007  
Revenues, net
   $ 564,876     $ 528,591  
Cost of goods sold
     280,047       276,512  
 
            
Gross profit
     284,829       252,079  
 
                
Selling, general and administrative expense
     232,094       194,323  
 
            
Operating income
     52,735       57,756  
 
                
Interest expense
     11,801       11,881  
Foreign currency (gain) loss
     (1,231 )     310  
Minority interest and other expense
     415       80  
 
            
Income before provision for income taxes
     41,750       45,485  
 
                
Provision for income taxes
     8,677       9,783  
 
            
 
                
Income from continuing operations
   $ 33,073     $ 35,702  
Loss from discontinued operations, net of tax
     (30,219 )     (43,569 )
 
            
Net income (loss)
   $ 2,854     $ (7,867 )
 
            
 
                
Income per share from continuing operations
   $ 0.26     $ 0.29  
 
            
Loss per share from discontinued operations
   $ (0.24 )   $ (0.35 )
 
            
Net income (loss) per share
   $ 0.02     $ (0.06 )
 
            
 
                
Income per share from continuing operations, assuming dilution
   $ 0.25     $ 0.28  
 
            
Loss per share from discontinued operations, assuming dilution
   $ (0.23 )   $ (0.34 )
 
            
Net income (loss) per share, assuming dilution
   $ 0.02     $ (0.06 )
 
            
 
                
Weighted average common shares outstanding
     126,220       124,013  
 
            
 
                
Weighted average common shares outstanding, assuming dilution
     130,021       129,163  
 
            

 

 

(Quiksilver Logo)
Quiksilver, Inc. 2008 Third Quarter Results
September 4, 2008
Page 4 of 7
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                 
    Nine Months Ended July 31,  
In thousands, except per share amounts   2008     2007  
Revenues, net
   $ 1,657,737     $ 1,459,804  
Cost of goods sold
     829,042       763,263  
 
            
Gross profit
     828,695       696,541  
 
                
Selling, general and administrative expense
     684,304       565,687  
Asset impairment
     350       —  
 
            
 
                
Operating income
     144,041       130,854  
 
                
Interest expense
     35,845       35,420  
Foreign currency (gain) loss
     (463 )     1,732  
Minority interest and other expense
     18       39  
 
            
Income before provision for income taxes
     108,641       93,663  
 
                
Provision for income taxes
     29,273       20,870  
 
            
 
                
Income from continuing operations
   $ 79,368     $ 72,793  
Loss from discontinued operations
     (304,678 )     (82,985 )
 
            
Net loss
   $ (225,310 )   $ (10,192 )
 
            
 
                
Income per share from continuing operations
   $ 0.63     $ 0.59  
 
            
Loss per share from discontinued operations
   $ (2.43 )   $ (0.67 )
 
            
Net loss per share
   $ (1.80 )   $ (0.08 )
 
            
 
                
Income per share from continuing operations, assuming dilution
   $ 0.61     $ 0.56  
 
            
Loss per share from discontinued operations, assuming dilution
   $ (2.35 )   $ (0.64 )
 
            
Net loss per share, assuming dilution
   $ (1.74 )   $ (0.08 )
 
            
 
                
Weighted average common shares outstanding
     125,511       123,579  
 
            
 
                
Weighted average common shares outstanding, assuming dilution
     129,765       128,966  
 
            

 

 

(Quiksilver Logo)
Quiksilver, Inc. 2008 Third Quarter Results
September 4, 2008
Page 5 of 7
CONSOLIDATED BALANCE SHEETS (Unaudited)
                 
    July 31,     July 31,  
In thousands   2008     2007  
ASSETS
Current assets:
                
Cash and cash equivalents
   $ 99,491     $ 76,007  
Trade accounts receivable, less allowance for doubtful accounts of $27,458 (2008) and $18,970 (2007)
     491,369       445,469  
Other receivables
     18,893       29,882  
Income tax receivable
     —       7,647  
Inventories
     358,646       315,054  
Deferred income taxes
     100,777       39,393  
Prepaid expenses and other current assets
     29,221       24,080  
Current assets held for sale
     358,832       484,761  
 
            
Total current assets
     1,457,229       1,422,293  
 
                
Fixed assets, net
     258,920       196,358  
Intangibles, net
     146,862       131,324  
Goodwill
     417,486       380,134  
Other assets
     44,892       44,517  
Deferred taxes-long term
     14,007       —  
Non-current assets held for sale
     —       432,418  
 
            
Total assets
   $ 2,339,396     $ 2,607,044  
 
            
 
                
LIABILITIES & STOCKHOLDERS’ EQUITY
 
                
Current Liabilities:
                
Lines of credit
   $ 274,685     $ 87,364  
Accounts payable
     251,623       217,119  
Accrued liabilities
     129,803       104,465  
Current portion of long-term debt
     35,584       19,449  
Income taxes payable
     13,447       —  
Liabilities related to assets held for sale
     144,882       400,464  
 
            
Total current liabilities
     850,024       828,861  
 
                
Long-term debt
     744,127       589,507  
Deferred taxes and other long-term liabilities
     37,164       32,347  
Non-current liabilities of assets held for sale
     7,736       196,415  
 
            
Total liabilities
     1,639,051       1,647,130  
 
                
Minority interest
     —       9,982  
 
                
Stockholders’ equity:
                
Preferred stock
     —       —  
Common stock
     1,306       1,280  
Additional paid-in capital
     331,269       300,087  
Treasury stock
     (6,778 )     (6,778 )
Retained earnings
     191,374       548,867  
Accumulated other comprehensive income
     183,174       106,476  
 
            
Total stockholders’ equity
     700,345       949,932  
 
            
 
                
Total liabilities & stockholders’ equity
   $ 2,339,396     $ 2,607,044  
 
            

 

 

(Quiksilver Logo)
Quiksilver, Inc. 2008 Third Quarter Results
September 4, 2008
Page 6 of 7
Information related to operating segments is as follows (unaudited):
                 
    Three Months Ended July 31,  
In thousands   2008     2007  
Revenues, net:
                
Americas
   $ 271,941     $ 281,891  
Europe
     231,987       185,616  
Asia/Pacific
     59,634       59,897  
Corporate operations
     1,314       1,187  
 
            
 
   $ 564,876     $ 528,591  
 
            
 
                
Gross Profit:
                
Americas
   $ 112,552     $ 117,951  
Europe
     138,439       103,770  
Asia/Pacific
     33,094       29,263  
Corporate operations
     744       1,095  
 
            
 
   $ 284,829     $ 252,079  
 
            
 
                
SG&A Expense:
                
Americas
   $ 89,361     $ 78,340  
Europe
     97,502       76,437  
Asia/Pacific
     28,580       24,327  
Corporate operations
     16,651       15,219  
 
            
 
   $ 232,094     $ 194,323  
 
            
 
                
Operating Income:
                
Americas
   $ 23,191     $ 39,611  
Europe
     40,937       27,333  
Asia/Pacific
     4,514       4,936  
Corporate operations
     (15,907 )     (14,124 )
 
            
 
   $ 52,735     $ 57,756  
 
            

 

 

(Quiksilver Logo)
Quiksilver, Inc. 2008 Third Quarter Results
September 4, 2008
Page 7 of 7
                 
    Nine Months Ended July 31,  
In thousands   2008     2007  
Revenues, net:
                
Americas
   $ 754,491     $ 715,965  
Europe
     716,770       578,692  
Asia/Pacific
     182,494       161,984  
Corporate operations
     3,982       3,163  
 
            
 
   $ 1,657,737     $ 1,459,804  
 
            
 
                
Gross Profit:
                
Americas
   $ 320,087     $ 300,087  
Europe
     409,866       315,210  
Asia/Pacific
     96,519       78,591  
Corporate operations
     2,223       2,653  
 
            
 
   $ 828,695     $ 696,541  
 
            
 
                
SG&A Expense:
                
Americas
   $ 273,668     $ 229,547  
Europe
     283,639       220,411  
Asia/Pacific
     88,661       73,347  
Corporate operations
     38,336       42,382  
 
            
 
   $ 684,304     $ 565,687  
 
            
 
                
Asset Impairment:
                
Americas
   $ 350     $ —  
Europe
     —       —  
Asia/Pacific
     —       —  
Corporate operations
     —       —  
 
            
 
   $ 350     $ —  
 
            
 
                
Operating Income:
                
Americas
   $ 46,069     $ 70,540  
Europe
     126,227       94,799  
Asia/Pacific
     7,858       5,244  
Corporate operations
     (36,113 )     (39,729 )
 
            
 
   $ 144,041     $ 130,854