EX-99.1 2 a50863exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(QUICKSILVER)
         
 
  Company Contact:   Bruce Thomas
 
      Vice President, Investor Relations
 
      Quiksilver, Inc.
 
      (714) 889-2200
Quiksilver, Inc. Reports Fourth Quarter and Fiscal Year 2008 Results
    – 4th Quarter 2008 Adjusted Income from Continuing Operations of $0.32 per share
    – 4th Quarter 2008 Loss from Continuing Operations of $0.11 per share after Goodwill Charge
    – Fiscal 2008 Adjusted Income from Continuing Operations of $0.93 per share
    – Fiscal 2008 Income from Continuing Operations of $0.51 per share after Goodwill Charge
Huntington Beach, California, December 18, 2008—Quiksilver, Inc. (NYSE: ZQK) today announced operating results for the fourth quarter and full year ended October 31, 2008. Consolidated net revenues for the fourth quarter of fiscal 2008 increased 3% to $606.9 million compared to $587.3 million in the fourth quarter of fiscal 2007. Fourth quarter pro-forma income from continuing operations was $41.6 million or $0.32 per share, and excludes a $55.4 million goodwill impairment charge associated with the company’s revised outlook for its business in the Asia/Pacific region. The pro-forma earnings result exceeded the company’s expectations because of an unanticipated tax benefit of $4.6 million or $0.04 per share. The goodwill impairment charge is a non-cash expense and does not affect the company’s operations, cash flows or covenants associated with its debt. A reconciliation of GAAP results to pro-forma results is provided in the accompanying tables. Including the goodwill charge, the loss from continuing operations for the fourth quarter was $13.8 million or $0.11 per share, compared to income of $43.9 million or $0.34 per share in the same quarter a year ago. Net revenues and income from continuing operations for all periods exclude the results of the Rossignol wintersports and golf equipment businesses which are reported as discontinued operations.
Consolidated net revenues for the full year of fiscal 2008 increased 11% to $2.26 billion compared to $2.05 billion in fiscal 2007. Full year pro-forma income from continuing operations for fiscal 2008, adjusted to exclude the goodwill charge, was $120.9 million or $0.93 per share. Full year income from continuing operations for fiscal 2008, including the goodwill charge, was $65.5 million or $0.51 per share, compared to income of $116.7 million or $0.90 per share in fiscal 2007.
Robert B. McKnight, Jr., Chairman of the Board, President and Chief Executive Officer of Quiksilver, Inc., commented, “I am proud of the efforts of the entire Quiksilver team around the world as we fought through a deteriorating global economy to deliver financial results that were consistent with the outlook we provided 6 months ago. As economic conditions continue to worsen in our key markets in the US and in Europe, we’ve continued our efforts to reduce expenses and capital expenditures, to carefully control inventory and to reconfigure our post-Rossignol capital structure.”
Net revenues in the Americas increased 10% during the fourth quarter of fiscal 2008 to $306.9 million. European net revenues decreased 4% during the fourth quarter to $216.3 million and declined 6% in local currency. Asia/Pacific net revenues increased 2% to $82.6 million in the fourth quarter and increased 10% in local currency.
Net revenues in the Americas for the full year of fiscal 2008 increased 7% to $1,061.4 million. European net revenues increased 16% during the full year of fiscal 2008 to $933.1 million and

 

 

(QUICKSILVER)
Quiksilver, Inc. Reports Fourth Quarter and Fiscal Year 2008 Results
December 18, 2008
Page 2 of 9


were up 4% in local currency. Asia/Pacific net revenues increased 9% to $265.1 million in fiscal 2008 and were up 3% in local currency.
Consolidated inventories increased 5% to $312.1 million at October 31, 2008 from $296.2 million at October 31, 2007. Inventories grew 15% in local currency. Consolidated trade accounts receivable decreased 2% to $470.1 million at October 31, 2008 from $478.0 million at October 31, 2007. Trade accounts receivable grew 6% in local currency.
The company completed the sale of the Rossignol Group in November 2008 and sold Roger Cleveland Golf Company in December 2007. Both of these businesses are treated as discontinued operations in the consolidated statements of income attached to this press release. Quiksilver expects to recognize a non-cash loss of approximately $150 million in the first fiscal quarter of 2009 associated with the sale of Rossignol.
The company stated that as of October 31, 2008, it had approximately $215 million of available liquidity, including non-restricted cash and available borrowing capacity on its existing credit facilities. The company ended fiscal 2008 with $1,071 million of debt, including $11 million of debt within liabilities held for sale. The company is currently in discussions with its European and Asia/Pacific banks to refinance its short-term debt, including $167 million which is uncommitted, and a $72 million facility due to mature in March 2009. In addition, the company is negotiating a term loan to supplement its current credit availability in the US, subject to approval by its US lenders. The company believes that its projected cash flow from operations, together with its existing credit facilities, will be adequate to service its debt and to finance the projected capital requirements of the business. The company also believes that it can obtain additional financing needed to extend the maturities of its debt, reduce the amount of short-term uncommitted lines of credit and better position itself for the long term.
Mr. McKnight concluded, “Now that we have completed the sale of Rossignol and eliminated our exposure to hardgoods manufacturing, we’ve refocused our attention toward our three strong boardsport lifestyle brands Quiksilver, Roxy and DC. Despite an increasingly challenging retail environment, Quiksilver remains the clear number one surf brand in the world, Roxy is still the number one female surf brand and DC is one of the top three footwear brands in the entire action sports industry.”
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.

 

 

(QUICKSILVER)
Quiksilver, Inc. Reports Fourth Quarter and Fiscal Year 2008 Results
December 18, 2008
Page 3 of 9


Forward looking statements:
This press release contains forward-looking statements including but not limited to statements regarding the Company’s financial and liquidity forecasts as well as its ability to refinance its existing indebtedness. 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.dcshoes.com and www.hawkclothing.com.
.

 

 

(QUICKSILVER)
Quiksilver, Inc. Reports Fourth Quarter and Fiscal Year 2008 Results
December 18, 2008
Page 4 of 9


CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                 
    Three Months Ended October 31,  
In thousands, except per share amounts   2008     2007  
Revenues, net
   $ 606,899     $ 587,268  
Cost of goods sold
     315,008       298,764  
 
            
Gross profit
     291,891       288,504  
 
                
Selling, general and administrative expense
     231,629       216,576  
Goodwill impairment
     55,400       —  
Retail store impairments
     10,047       —  
 
            
 
                
Operating (loss) income
     (5,185 )     71,928  
 
                
Interest expense
     9,482       11,151  
Foreign currency (gain) loss
     (5,298 )     3,125  
Minority interest and other expense
     701       82  
 
            
(Loss) income before provision for income taxes
     (10,070 )     57,570  
 
                
Provision for income taxes
     3,754       13,636  
 
            
 
                
(Loss) income from continuing operations
   $ (13,824 )   $ 43,934  
 
            
 
                
Income (loss) from discontinued operations
   $ 12,869     $ (154,861 )
 
            
 
                
Net loss
   $ (955 )   $ (110,927 )
 
            
(Loss) income per share from continuing operations
   $ (0.11 )   $ 0.35  
 
            
Income (loss) per share from discontinued operations
   $ 0.10     $ (1.24 )
 
            
Net loss per share
   $ (0.01 )   $ (0.89 )
 
            
(Loss) income per share from continuing operations, assuming dilution
   $ (0.11 )   $ 0.34  
 
            
Income (loss) per share from discontinued operations, assuming dilution
   $ 0.10     $ (1.19 )
 
            
Net loss per share, assuming dilution
   $ (0.01 )   $ (0.85 )
 
            
 
                
Weighted average common shares outstanding
     127,067       124,492  
 
            
Weighted average common shares outstanding, assuming dilution
     127,067       130,127  
 
            

 

 

(QUICKSILVER)
Quiksilver, Inc. Reports Fourth Quarter and Fiscal Year 2008 Results
December 18, 2008
Page 5 of 9


CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                 
    Fiscal Year Ended October 31,  
In thousands, except per share amounts   2008     2007  
Revenues, net
   $ 2,264,636     $ 2,047,072  
Cost of goods sold
     1,144,050       1,062,027  
 
            
Gross profit
     1,120,586       985,045  
 
                
Selling, general and administrative expense
     915,933       782,263  
Goodwill impairment
     55,400       —  
Retail store impairments
     10,397       —  
 
            
 
                
Operating income
     138,856       202,782  
 
                
Interest expense
     45,327       46,571  
Foreign currency (gain) loss
     (5,761 )     4,857  
Minority interest and other expense
     719       121  
 
            
Income before provision for income taxes
     98,571       151,233  
 
                
Provision for income taxes
     33,027       34,506  
 
            
 
                
Income from continuing operations
   $ 65,544     $ 116,727  
 
            
 
                
Loss from discontinued operations
   $ (291,809 )   $ (237,846 )
 
            
 
                
Net loss
   $ (226,265 )   $ (121,119 )
 
            
 
                
Income per share from continuing operations
   $ 0.52     $ 0.94  
 
            
Loss per share from discontinued operations
   $ (2.32 )   $ (1.92 )
 
            
Net loss per share
   $ (1.80 )   $ (0.98 )
 
            
Income per share from continuing operations, assuming dilution
   $ 0.51     $ 0.90  
 
            
Loss per share from discontinued operations, assuming dilution
   $ (2.25 )   $ (1.83 )
 
            
Net loss per share, assuming dilution
   $ (1.75 )   $ (0.93 )
 
            
 
                
Weighted average common shares outstanding
     125,975       123,770  
 
            
 
                
Weighted average common shares outstanding, assuming dilution
     129,485       129,706  
 
            

 

 

(QUICKSILVER)
Quiksilver, Inc. Reports Fourth Quarter and Fiscal Year 2008 Results
December 18, 2008
Page 6 of 9


Information related to geographic segments is as follows (unaudited):
                 
    Three Months Ended October 31,  
Amounts in thousands   2008     2007  
Revenues, net:
                
Americas
   $ 306,879     $ 279,836  
Europe
     216,349       224,703  
Asia/Pacific
     82,573       81,080  
Corporate operations
     1,098       1,649  
 
            
 
   $ 606,899     $ 587,268  
 
            
 
                
Gross Profit:
                
Americas
   $ 125,294     $ 117,934  
Europe
     122,168       127,713  
Asia/Pacific
     43,649       41,820  
Corporate operations
     780       1,037  
 
            
 
   $ 291,891     $ 288,504  
 
            
 
                
SG&A Expense:
                
Americas
   $ 98,290     $ 82,210  
Europe
     96,735       96,456  
Asia/Pacific
     28,558       27,575  
Corporate operations
     8,046       10,335  
 
            
 
   $ 231,629     $ 216,576  
 
            
 
                
Asset Impairments:
                
Americas
   $ 8,967     $ —  
Europe
     692       —  
Asia/Pacific
     55,788       —  
Corporate operations
     —       —  
 
            
 
   $ 65,447     $ —  
 
            
 
                
Operating (Loss) Income:
                
Americas
   $ 18,037     $ 35,724  
Europe
     24,741       31,257  
Asia/Pacific
     (40,697 )     14,245  
Corporate operations
     (7,266 )     (9,298 )
 
            
 
   $ (5,185 )   $ 71,928  
 
            

 

 

(QUICKSILVER)
Quiksilver, Inc. Reports Fourth Quarter and Fiscal Year 2008 Results
December 18, 2008
Page 7 of 9


Information related to geographic segments (continued):
                 
    Fiscal Year Ended October 31,  
Amounts in thousands   2008     2007  
Revenues, net:
                
Americas
   $ 1,061,370     $ 995,801  
Europe
     933,119       803,395  
Asia/Pacific
     265,067       243,064  
Corporate operations
     5,080       4,812  
 
            
 
   $ 2,264,636     $ 2,047,072  
 
            
 
                
Gross Profit:
                
Americas
   $ 445,381     $ 418,021  
Europe
     532,034       442,923  
Asia/Pacific
     140,168       120,411  
Corporate operations
     3,003       3,690  
 
            
 
   $ 1,120,586     $ 985,045  
 
            
 
                
SG&A Expense:
                
Americas
   $ 371,958     $ 311,757  
Europe
     380,374       316,867  
Asia/Pacific
     117,219       100,922  
Corporate operations
     46,382       52,717  
 
            
 
   $ 915,933     $ 782,263  
 
            
 
                
Asset Impairments:
                
Americas
   $ 9,317     $ —  
Europe
     692       —  
Asia/Pacific
     55,788       —  
Corporate operations
     —       —  
 
            
 
   $ 65,797     $ —  
 
            
 
                
Operating Income:
                
Americas
   $ 64,106     $ 106,264  
Europe
     150,968       126,056  
Asia/Pacific
     (32,839 )     19,489  
Corporate operations
     (43,379 )     (49,027 )
 
            
 
   $ 138,856     $ 202,782  
 
            

 

 

(QUICKSILVER)
Quiksilver, Inc. Reports Fourth Quarter and Fiscal Year 2008 Results
December 18, 2008
Page 8 of 9


GAAP TO PRO-FORMA RECONCILIATION (UNAUDITED)
         
    Three Months Ended  
    October 31,2008  
Loss from continuing operations
   $ (13,824 )
Goodwill impairment
     55,400  
 
      
Pro-forma income from continuing operations
   $ 41,576  
 
      
 
        
Pro-forma income per share from continuing operations
   $ 0.33  
 
      
 
        
Pro-forma income per share from continuing operations, assuming dilution
   $ 0.32  
 
      
 
        
Weighted average common shares outstanding
     127,067  
 
      
 
        
Weighted average common shares outstanding, assuming dilution
     129,183  
 
      
GAAP TO PRO-FORMA RECONCILIATION (UNAUDITED)
         
    Fiscal Year Ended  
    October 31,2008  
Income from continuing operations
   $ 65,544  
Goodwill impairment
     55,400  
 
      
Pro-forma income from continuing operations
   $ 120,944  
 
      
 
        
Pro-forma income per share from continuing operations
   $ 0.96  
 
      
 
        
Pro-forma income per share from continuing operations, assuming dilution
   $ 0.93  
 
      
 
        
Weighted average common shares outstanding
     125,975  
 
      
 
        
Weighted average common shares outstanding, assuming dilution
     129,485  
 
      

 

 

(QUICKSILVER)
Quiksilver, Inc. Reports Fourth Quarter and Fiscal Year 2008 Results
December 18, 2008
Page 9 of 9


CONSOLIDATED SELECTED BALANCE SHEET INFORMATION (UNAUDITED)
                 
    October 31,  
Amounts in thousands   2008     2007  
Cash and cash equivalents
   $ 53,042     $ 74,348  
Restricted cash
     46,475       —  
Trade accounts receivable, net
     470,059       478,049  
Inventories
     312,138       296,167  
Lines of credit and long-term debt
     1,060,318       857,446  
Principal payments on lines of credit and long-term debt are due approximately as follows:
                 
    Fiscal Year Ended October 31,  
Amounts in thousands   2008     2007  
Uncommitted debt
   $ 166,519     $ 124,634  
2008
     —       33,903  
2009
     103,701       34,346  
2010
     284,403       207,211  
2011
     81,946       35,752  
2012
     20,227       21,205  
2013
     3,522       395  
2014
     —       —  
2015
     400,000       400,000  
 
            
 
   $ 1,060,318     $ 857,446