þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 33-0199426 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
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EX-10.3 | ||||||||
EX-10.4 | ||||||||
EX-31.1 | ||||||||
EX-31.2 | ||||||||
EX-32.1 | ||||||||
EX-32.2 |
1
Item 1. | Financial Statements |
Three months ended April 30, | ||||||||
In thousands, except per share amounts | 2011 | 2010 | ||||||
Revenues, net |
$ | 478,093 | $ | 468,289 | ||||
Cost of goods sold |
215,924 | 219,002 | ||||||
Gross profit |
262,169 | 249,287 | ||||||
Selling, general and administrative expense |
216,748 | 213,416 | ||||||
Asset impairments |
74,610 | | ||||||
Operating (loss) income |
(29,189 | ) | 35,871 | |||||
Interest expense |
15,096 | 21,039 | ||||||
Foreign currency gain |
(2,321 | ) | (4,614 | ) | ||||
Other income |
| (5 | ) | |||||
(Loss) income before provision for income taxes |
(41,964 | ) | 19,451 | |||||
Provision for income taxes |
39,690 | 9,419 | ||||||
(Loss) income from continuing operations |
(81,654 | ) | 10,032 | |||||
Income from discontinued operations |
| 602 | ||||||
Net (loss) income |
(81,654 | ) | 10,634 | |||||
Less: net income attributable to non-controlling interest |
(1,671 | ) | (1,210 | ) | ||||
Net (loss) income attributable to Quiksilver, Inc. |
$ | (83,325 | ) | $ | 9,424 | |||
(Loss) income per share from continuing operations attributable
to Quiksilver, Inc. |
$ | (0.51 | ) | $ | 0.07 | |||
Income per share from discontinued operations attributable to
Quiksilver, Inc. |
$ | | $ | 0.00 | ||||
Net (loss) income per share attributable to Quiksilver, Inc. |
$ | (0.51 | ) | $ | 0.07 | |||
(Loss) income per share from continuing operations attributable to
Quiksilver, Inc., assuming dilution |
$ | (0.51 | ) | $ | 0.06 | |||
Income per share from discontinued operations attributable to
Quiksilver, Inc., assuming dilution |
$ | | $ | 0.00 | ||||
Net (loss) income per share attributable to Quiksilver, Inc.,
assuming dilution |
$ | (0.51 | ) | $ | 0.06 | |||
Weighted average common shares outstanding |
162,268 | 128,090 | ||||||
Weighted average common shares outstanding, assuming dilution |
162,268 | 145,376 | ||||||
Amounts attributable to Quiksilver, Inc.: |
||||||||
(Loss) income from continuing operations |
$ | (83,325 | ) | $ | 8,822 | |||
Income from discontinued operations |
| 602 | ||||||
Net (loss) income |
$ | (83,325 | ) | $ | 9,424 | |||
Three months ended April 30, | ||||||||
In thousands | 2011 | 2010 | ||||||
Net (loss) income |
$ | (81,654 | ) | $ | 10,634 | |||
Other comprehensive income: |
||||||||
Foreign currency translation adjustment |
33,935 | 1,054 | ||||||
Net unrealized (loss) gain on derivative instruments,
net of tax of $(11,294) (2011) and $3,952 (2010) |
(22,244 | ) | 6,984 | |||||
Comprehensive (loss) income |
(69,963 | ) | 18,672 | |||||
Comprehensive income attributable to non-controlling interest |
(1,671 | ) | (1,210 | ) | ||||
Comprehensive (loss) income attributable to Quiksilver, Inc. |
$ | (71,634 | ) | $ | 17,462 | |||
2
Six months ended April 30, | ||||||||
In thousands, except per share amounts | 2011 | 2010 | ||||||
Revenues, net |
$ | 904,543 | $ | 901,026 | ||||
Cost of goods sold |
418,904 | 429,590 | ||||||
Gross profit |
485,639 | 471,436 | ||||||
Selling, general and administrative expense |
427,184 | 416,576 | ||||||
Asset impairments |
74,610 | | ||||||
Operating (loss) income |
(16,155 | ) | 54,860 | |||||
Interest expense |
44,064 | 42,912 | ||||||
Foreign currency gain |
(4,430 | ) | (6,593 | ) | ||||
(Loss) income before provision for income taxes |
(55,789 | ) | 18,541 | |||||
Provision for income taxes |
40,941 | 13,093 | ||||||
(Loss) income from continuing operations |
(96,730 | ) | 5,448 | |||||
Income from discontinued operations |
| 678 | ||||||
Net (loss) income |
(96,730 | ) | 6,126 | |||||
Less: net income attributable to non-controlling interest |
(2,863 | ) | (2,056 | ) | ||||
Net (loss) income attributable to Quiksilver, Inc. |
$ | (99,593 | ) | $ | 4,070 | |||
(Loss) income per share from continuing operations attributable to
Quiksilver, Inc. |
$ | (0.62 | ) | $ | 0.03 | |||
Income per share from discontinued operations attributable to
Quiksilver, Inc. |
$ | | $ | 0.01 | ||||
Net (loss) income per share attributable to Quiksilver, Inc. |
$ | (0.62 | ) | $ | 0.03 | |||
(Loss) income per share from continuing operations attributable to
Quiksilver, Inc., assuming dilution |
$ | (0.62 | ) | $ | 0.02 | |||
Income per share from discontinued operations attributable to
Quiksilver, Inc., assuming dilution |
$ | | $ | 0.00 | ||||
Net (loss) income per share attributable to Quiksilver, Inc.,
assuming dilution |
$ | (0.62 | ) | $ | 0.03 | |||
Weighted average common shares outstanding |
161,879 | 127,875 | ||||||
Weighted average common shares outstanding, assuming dilution |
161,879 | 139,622 | ||||||
Amounts attributable to Quiksilver, Inc.: |
||||||||
(Loss) income from continuing operations |
$ | (99,593 | ) | $ | 3,392 | |||
Income from discontinued operations |
| 678 | ||||||
Net (loss) income |
$ | (99,593 | ) | $ | 4,070 | |||
Six months ended April 30, | ||||||||
In thousands | 2011 | 2010 | ||||||
Net (loss) income |
$ | (96,730 | ) | $ | 6,126 | |||
Other comprehensive (loss) income: |
||||||||
Foreign currency translation adjustment |
27,695 | (22,273 | ) | |||||
Net unrealized gain (loss) on derivative instruments,
net of tax of $(10,899) (2011) and $11,976 (2010) |
(23,939 | ) | 24,339 | |||||
Comprehensive (loss) income |
(92,974 | ) | 8,192 | |||||
Comprehensive income attributable to non-controlling interest |
(2,863 | ) | (2,056 | ) | ||||
Comprehensive (loss) income attributable to Quiksilver, Inc. |
$ | (95,837 | ) | $ | 6,136 | |||
3
April 30, | October 31, | |||||||
In thousands, except share amounts | 2011 | 2010 | ||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 138,592 | $ | 120,593 | ||||
Trade accounts receivable, less allowances of $51,772 (2011)
and $48,043 (2010) |
341,781 | 368,428 | ||||||
Other receivables |
27,347 | 42,512 | ||||||
Income taxes receivable |
111 | | ||||||
Inventories |
289,538 | 268,037 | ||||||
Deferred income taxes short-term |
24,426 | 39,053 | ||||||
Prepaid expenses and other current assets |
31,270 | 25,206 | ||||||
Current assets held for sale |
| 12 | ||||||
Total current assets |
853,065 | 863,841 | ||||||
Fixed assets, less accumulated depreciation and amortization
of $267,483 (2011) and $253,931 (2010) |
234,645 | 220,350 | ||||||
Intangible assets, net |
139,614 | 140,567 | ||||||
Goodwill |
277,608 | 332,488 | ||||||
Other assets |
52,658 | 53,296 | ||||||
Deferred income taxes long-term |
80,291 | 85,579 | ||||||
Total assets |
$ | 1,637,881 | $ | 1,696,121 | ||||
LIABILITIES AND EQUITY |
||||||||
Current liabilities: |
||||||||
Lines of credit |
$ | 4,792 | $ | 22,586 | ||||
Accounts payable |
178,559 | 179,402 | ||||||
Accrued liabilities |
128,748 | 115,009 | ||||||
Current portion of long-term debt |
5,824 | 5,182 | ||||||
Income taxes payable |
| 3,484 | ||||||
Liabilities related to assets held for sale |
| 739 | ||||||
Total current liabilities |
317,923 | 326,402 | ||||||
Long-term debt, net of current portion |
722,271 | 701,005 | ||||||
Other long-term liabilities |
63,171 | 49,119 | ||||||
Total liabilities |
1,103,365 | 1,076,526 | ||||||
Equity: |
||||||||
Preferred stock, $.01 par value, authorized shares - 5,000,000;
issued and outstanding shares none |
| | ||||||
Common stock, $.01 par value, authorized shares - 285,000,000;
issued shares 167,739,657 (2011) and 166,867,127 (2010) |
1,677 | 1,669 | ||||||
Additional paid-in capital |
521,148 | 513,102 | ||||||
Treasury stock, 2,885,200 shares |
(6,778 | ) | (6,778 | ) | ||||
Accumulated deficit |
(110,900 | ) | (11,307 | ) | ||||
Accumulated other comprehensive income |
117,438 | 113,682 | ||||||
Total Quiksilver, Inc. stockholders equity |
522,585 | 610,368 | ||||||
Non-controlling interest |
11,931 | 9,227 | ||||||
Total equity |
534,516 | 619,595 | ||||||
Total liabilities and equity |
$ | 1,637,881 | $ | 1,696,121 | ||||
4
Six months ended April 30, | ||||||||
In thousands | 2011 | 2010 | ||||||
Cash flows from operating activities: |
||||||||
Net (loss) income |
$ | (96,730 | ) | $ | 6,126 | |||
Adjustments to reconcile net (loss) income to net cash provided by
operating activities: |
||||||||
Income from discontinued operations |
| (678 | ) | |||||
Depreciation and amortization |
27,470 | 27,023 | ||||||
Stock-based compensation |
4,981 | 10,135 | ||||||
Provision for doubtful accounts |
5,390 | 10,144 | ||||||
Loss (gain) on disposal of fixed assets |
1,635 | (728 | ) | |||||
Foreign currency loss (gain) |
76 | (2,758 | ) | |||||
Asset impairments |
74,610 | | ||||||
Non-cash interest expense |
17,087 | 12,930 | ||||||
Equity in earnings |
21 | 183 | ||||||
Deferred income taxes |
40,347 | 16,709 | ||||||
Changes in operating assets and liabilities, net of the effects from
business acquisitions: |
||||||||
Trade accounts receivable |
33,664 | 73,053 | ||||||
Other receivables |
10,890 | 4,942 | ||||||
Inventories |
(6,611 | ) | 29,466 | |||||
Prepaid expenses and other current assets |
(8,437 | ) | (10,430 | ) | ||||
Other assets |
(1,916 | ) | 4,004 | |||||
Accounts payable |
(4,959 | ) | (18,177 | ) | ||||
Accrued liabilities and other long-term liabilities |
(11,875 | ) | (14,422 | ) | ||||
Income taxes payable |
(13,675 | ) | (16,297 | ) | ||||
Cash provided by operating activities of continuing operations |
71,968 | 131,225 | ||||||
Cash provided by operating activities of discontinued operations |
| 3,287 | ||||||
Net cash provided by operating activities |
71,968 | 134,512 | ||||||
Cash flows from investing activities: |
||||||||
Capital expenditures |
(33,930 | ) | (18,839 | ) | ||||
Business acquisitions, net of cash acquired |
(5,578 | ) | | |||||
Changes in restricted cash |
| 52,706 | ||||||
Cash (used in) provided by investing activities of continuing
operations |
(39,508 | ) | 33,867 | |||||
Cash used in investing activities of discontinued operations |
| | ||||||
Net cash (used in) provided by investing activities |
(39,508 | ) | 33,867 | |||||
Cash flows from financing activities: |
||||||||
Borrowings on lines of credit |
9,929 | | ||||||
Payments on lines of credit |
(28,031 | ) | (16,707 | ) | ||||
Borrowings on long-term debt |
270,475 | 32,410 | ||||||
Payments on long-term debt |
(257,392 | ) | (136,972 | ) | ||||
Payments of debt issuance costs |
(6,308 | ) | (1,823 | ) | ||||
Stock option exercises and employee stock purchases |
3,074 | 2,888 | ||||||
Cash used in financing activities of continuing operations |
(8,253 | ) | (120,204 | ) | ||||
Cash used in financing activities of discontinued operations |
| | ||||||
Net cash used in financing activities |
(8,253 | ) | (120,204 | ) | ||||
Effect of exchange rate changes on cash |
(6,208 | ) | (2,362 | ) | ||||
Net increase in cash and cash equivalents |
17,999 | 45,813 | ||||||
Cash and cash equivalents, beginning of period |
120,593 | 99,516 | ||||||
Cash and cash equivalents, end of period |
$ | 138,592 | $ | 145,329 | ||||
Supplementary cash flow information: |
||||||||
Cash paid during the period for: |
||||||||
Interest |
$ | 17,834 | $ | 28,961 | ||||
Income taxes |
$ | 14,144 | $ | 8,628 | ||||
5
6
Three months ended | Six months ended | |||||||||||||||
April 30, | April 30, | |||||||||||||||
In thousands | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Shares used in computing basic net
(loss) income per share |
162,268 | 128,090 | 161,879 | 127,875 | ||||||||||||
Dilutive effect of stock options and
restricted stock(1) |
| 3,828 | | 2,147 | ||||||||||||
Dilutive effect of stock warrants(1) |
| 13,458 | | 9,600 | ||||||||||||
Shares used in computing diluted net
(loss) income per share |
162,268 | 145,376 | 161,879 | 139,622 | ||||||||||||
(1) | For the three months ended April 30, 2011, the shares used in computing diluted net loss per share do not include 5,021,000 of dilutive stock options and shares of restricted stock, nor 14,748,000 of dilutive warrant shares as the effect is anti-dilutive given the Companys loss. For the three months ended April 30, 2011 and 2010, additional stock options outstanding of 11,092,000 and 13,377,000, respectively, and additional warrant shares outstanding of 10,906,000 and 12,196,000, respectively, were excluded from the calculation of diluted EPS, as their effect would have been anti-dilutive based on the application of the treasury stock method. For the six months ended April 30, 2011, the shares used in computing diluted net loss per share do not include 5,272,000 of dilutive stock options and shares of restricted stock, nor 15,138,000 of dilutive warrant shares as the effect is anti-dilutive given the Companys loss. For the six months ended April 30, 2011 and 2010, additional stock options outstanding of 10,983,000 and 14,426,000, respectively, and additional warrant shares outstanding of 10,516,000 and 16,054,000, respectively, were excluded from the calculation of diluted EPS, as their effect would have been anti-dilutive based on the application of the treasury stock method. |
7
Weighted | Weighted | Aggregate | ||||||||||||||
Dollar amounts in thousands, | Average | Average | Intrinsic | |||||||||||||
except per share amounts | Shares | Price | Life | Value | ||||||||||||
Outstanding, October 31, 2010 |
12,731,430 | $ | 4.48 | |||||||||||||
Granted |
2,056,000 | 5.06 | ||||||||||||||
Exercised |
(616,163 | ) | 4.13 | $ | 548 | |||||||||||
Canceled |
(535,343 | ) | 8.57 | |||||||||||||
Outstanding, April 30, 2011 |
13,635,924 | $ | 4.43 | 6.5 | $ | 13,757 | ||||||||||
Options exercisable, April 30, 2011 |
4,908,851 | $ | 6.00 | 4.1 | $ | 3,510 | ||||||||||
Weighted- | ||||||||
Average Grant | ||||||||
Shares | Date Fair Value | |||||||
Non-vested, October 31, 2010 |
7,838,750 | $ | 1.06 | |||||
Granted |
2,056,000 | 3.42 | ||||||
Vested |
(1,158,509 | ) | 1.83 | |||||
Canceled |
(9,168 | ) | 0.70 | |||||
Non-vested, April 30, 2011 |
8,727,073 | $ | 1.51 | |||||
Shares | ||||
Outstanding, October 31, 2010 |
2,842,004 | |||
Granted |
105,000 | |||
Vested |
(837,001 | ) | ||
Forfeited |
| |||
Outstanding, April 30, 2011 |
2,110,003 | |||
8
April 30, | October 31, | |||||||
In thousands | 2011 | 2010 | ||||||
Raw materials |
$ | 9,660 | $ | 6,894 | ||||
Work in-process |
2,187 | 3,914 | ||||||
Finished goods |
277,691 | 257,229 | ||||||
$ | 289,538 | $ | 268,037 | |||||
April 30, 2011 | October 31, 2010 | |||||||||||||||||||||||
Net | Net | |||||||||||||||||||||||
Amorti- | Book | Gross | Amorti- | Book | ||||||||||||||||||||
In thousands | Gross Amount | zation | Value | Amount | zation | Value | ||||||||||||||||||
Amortizable trademarks |
$ | 20,362 | $ | (9,355 | ) | $ | 11,007 | $ | 19,752 | $ | (8,308 | ) | $ | 11,444 | ||||||||||
Amortizable licenses |
14,690 | (12,364 | ) | 2,326 | 13,219 | (10,465 | ) | 2,754 | ||||||||||||||||
Other amortizable intangibles |
8,487 | (5,672 | ) | 2,815 | 8,386 | (5,318 | ) | 3,068 | ||||||||||||||||
Non-amortizable trademarks |
123,466 | | 123,466 | 123,301 | | 123,301 | ||||||||||||||||||
$ | 167,005 | $ | (27,391 | ) | $ | 139,614 | $ | 164,658 | $ | (24,091 | ) | $ | 140,567 | |||||||||||
9
April 30, | October 31, | |||||||
In thousands | 2011 | 2010 | ||||||
Americas |
$ | 76,182 | $ | 75,051 | ||||
Europe |
195,219 | 181,555 | ||||||
Asia/Pacific |
6,207 | 75,882 | ||||||
$ | 277,608 | $ | 332,488 | |||||
April 30, | October 31, | |||||||
In thousands | 2011 | 2010 | ||||||
Foreign currency translation adjustment |
$ | 142,630 | $ | 114,935 | ||||
Loss on cash flow hedges |
(25,192 | ) | (1,253 | ) | ||||
$ | 117,438 | $ | 113,682 | |||||
10
Three Months Ended April 30, | ||||||||
In thousands | 2011 | 2010 | ||||||
Revenues, net: |
||||||||
Americas |
$ | 210,669 | $ | 199,733 | ||||
Europe |
206,941 | 208,708 | ||||||
Asia/Pacific |
58,140 | 58,645 | ||||||
Corporate operations |
2,343 | 1,203 | ||||||
$ | 478,093 | $ | 468,289 | |||||
Gross profit: |
||||||||
Americas |
$ | 103,501 | $ | 92,997 | ||||
Europe |
128,332 | 125,108 | ||||||
Asia/Pacific |
30,862 | 31,400 | ||||||
Corporate operations |
(526 | ) | (218 | ) | ||||
$ | 262,169 | $ | 249,287 | |||||
SG&A expense: |
||||||||
Americas |
$ | 85,139 | $ | 81,191 | ||||
Europe |
84,569 | 85,960 | ||||||
Asia/Pacific |
37,817 | 32,259 | ||||||
Corporate operations |
9,223 | 14,006 | ||||||
$ | 216,748 | $ | 213,416 | |||||
Asset impairments: |
||||||||
Americas |
$ | 465 | $ | | ||||
Europe |
| | ||||||
Asia/Pacific |
74,145 | | ||||||
Corporate operations |
| | ||||||
$ | 74,610 | $ | | |||||
Operating income (loss): |
||||||||
Americas |
$ | 17,897 | $ | 11,806 | ||||
Europe |
43,763 | 39,148 | ||||||
Asia/Pacific |
(81,100 | ) | (859 | ) | ||||
Corporate operations |
(9,749 | ) | (14,224 | ) | ||||
$ | (29,189 | ) | $ | 35,871 | ||||
11
Six Months Ended April 30, | ||||||||
In thousands | 2011 | 2010 | ||||||
Revenues, net: |
||||||||
Americas |
$ | 404,459 | $ | 386,694 | ||||
Europe |
372,140 | 386,585 | ||||||
Asia/Pacific |
125,141 | 125,697 | ||||||
Corporate operations |
2,803 | 2,050 | ||||||
$ | 904,543 | $ | 901,026 | |||||
Gross profit: |
||||||||
Americas |
$ | 192,967 | $ | 174,012 | ||||
Europe |
225,632 | 229,361 | ||||||
Asia/Pacific |
67,495 | 68,443 | ||||||
Corporate operations |
(455 | ) | (380 | ) | ||||
$ | 485,639 | $ | 471,436 | |||||
SG&A expense: |
||||||||
Americas |
$ | 168,133 | $ | 157,552 | ||||
Europe |
164,986 | 171,764 | ||||||
Asia/Pacific |
72,647 | 63,636 | ||||||
Corporate operations |
21,418 | 23,624 | ||||||
$ | 427,184 | $ | 416,576 | |||||
Asset impairments: |
||||||||
Americas |
$ | 465 | $ | | ||||
Europe |
| | ||||||
Asia/Pacific |
74,145 | | ||||||
Corporate operations |
| | ||||||
$ | 74,610 | $ | | |||||
Operating income (loss): |
||||||||
Americas |
$ | 24,369 | $ | 16,460 | ||||
Europe |
60,646 | 57,597 | ||||||
Asia/Pacific |
(79,297 | ) | 4,807 | |||||
Corporate operations |
(21,873 | ) | (24,004 | ) | ||||
$ | (16,155 | ) | $ | 54,860 | ||||
April 30, | October 31, | |||||||
2011 | 2010 | |||||||
Identifiable assets: |
||||||||
Americas |
$ | 515,509 | $ | 535,580 | ||||
Europe |
868,913 | 800,754 | ||||||
Asia/Pacific |
200,779 | 298,503 | ||||||
Corporate operations |
52,680 | 61,284 | ||||||
$ | 1,637,881 | $ | 1,696,121 | |||||
8. | Derivative Financial Instruments |
The Company is exposed to gains and losses resulting from fluctuations in foreign currency exchange rates relating to certain sales, royalty income and product purchases of its international subsidiaries that are denominated in currencies other than their functional currencies. The Company is also exposed to foreign currency gains and losses resulting from domestic transactions that are not denominated in U.S. dollars. Furthermore, the Company is exposed to gains and losses resulting from the effect that fluctuations in foreign currency exchange rates have on the reported results in the Companys consolidated financial statements due to the translation of the operating results and financial position of the Companys international subsidiaries. As part of its overall strategy to manage the level of exposure to the risk of |
12
fluctuations in foreign currency exchange rates, the Company uses various foreign currency exchange contracts and intercompany loans. | ||
The Company accounts for all of its cash flow hedges under ASC 815, Derivatives and Hedging, which requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the consolidated balance sheet. In accordance with ASC 815, the Company designates forward contracts as cash flow hedges of forecasted purchases of commodities. | ||
For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (OCI) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. As of April 30, 2011, the Company was hedging forecasted transactions expected to occur through July 2013. Assuming April 30, 2011 exchange rates remain constant, $25.2 million of losses, net of tax, related to hedges of these transactions are expected to be reclassified into earnings over the next 27 months. | ||
For the six months ended April 30, 2011 and 2010, the effective portions of gains and losses on derivative instruments in the condensed consolidated statements of operations were as follows: |
Six Months Ended April 30, | ||||||||||||
2011 | 2010 | |||||||||||
In thousands | Amount | Location | ||||||||||
(Loss) gain recognized in OCI on derivatives |
$ | (31,896 | ) | $ | 27,731 | Other comprehensive income | ||||||
Gain reclassified from accumulated OCI
into income |
$ | 1,206 | $ | 6,906 | Cost of goods sold | |||||||
Loss reclassified from accumulated OCI into
income |
$ | (1,033 | ) | $ | | Interest expense | ||||||
Gain reclassified from accumulated OCI into
income |
$ | 277 | $ | 342 | Foreign currency gain | |||||||
Gain recognized in income on derivatives |
$ | | $ | 816 | Foreign currency gain |
On the date the Company enters into a derivative contract, management designates the derivative as a hedge of the identified exposure. The Company formally documents all relationships between hedging instruments and hedged items, as well as the risk-management objective and strategy for entering into various hedge transactions. In this documentation, the Company identifies the asset, liability, firm commitment, or forecasted transaction that has been designated as a hedged item and indicates how the hedging instrument is expected to hedge the risks related to the hedged item. The Company formally measures effectiveness of its hedging relationships both at the hedge inception and on an ongoing basis in accordance with its risk management policy. The Company would discontinue hedge accounting prospectively (i) if management determines that the derivative is no longer effective in offsetting changes in the cash flows of a hedged item, (ii) when the derivative expires or is sold, terminated, or exercised, (iii) if it becomes probable that the forecasted transaction being hedged by the derivative will not occur, (iv) because a hedged firm commitment no longer meets the definition of a firm commitment, or (v) if management determines that designation of the derivative as a hedge instrument is no longer appropriate. | ||
The Company enters into forward exchange and other derivative contracts with major banks and is exposed to exchange rate losses in the event of nonperformance by these banks. The Company anticipates, however, that these banks will be able to fully satisfy their obligations |
13
under the contracts. Accordingly, the Company does not obtain collateral or other security to support the contracts. | ||
As of April 30, 2011, the Company had the following outstanding derivative contracts to hedge forecasted purchases and future cash receipts: |
Notional | ||||||||||||||||
In thousands | Commodity | Amount | Maturity | Fair Value | ||||||||||||
United States dollars |
Inventory | $ | 530,035 | May 2011 Jul 2013 | $ | (36,321 | ) | |||||||||
Swiss francs |
Accounts receivable | 18,399 | May 2011 Oct 2012 | (452 | ) | |||||||||||
British pounds |
Accounts receivable | 17,499 | May 2011 Oct 2011 | 1,231 | ||||||||||||
$ | 565,933 | $ | (35,542 | ) | ||||||||||||
ASC 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 also establishes a fair value hierarchy which prioritizes the valuation inputs into three broad levels. Based on the underlying inputs, each fair value measurement in its entirety is reported in one of the three levels. These levels are: |
| Level 1 Valuation is based upon quoted prices for identical instruments traded in active markets. Level 1 assets and liabilities include debt and equity securities traded in an active exchange market, as well as U.S. Treasury securities. | ||
| Level 2 Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | ||
| Level 3 Valuation is determined using model-based techniques with significant assumptions not observable in the market. These unobservable assumptions reflect the Companys own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include the use of third party pricing services, option pricing models, discounted cash flow models and similar techniques. |
The following tables reflect the fair values of assets and liabilities measured and recognized at fair value on a recurring basis on the accompanying condensed consolidated balance sheets: |
Fair Value Measurements Using | Assets (Liabilities) | |||||||||||||||
Level 1 | Level 2 | Level 3 | at Fair Value | |||||||||||||
In thousands | April 30, 2011 | |||||||||||||||
Derivative assets: |
||||||||||||||||
Other receivables |
$ | | $ | 1,279 | $ | | $ | 1,279 | ||||||||
Other assets |
| 46 | | 46 | ||||||||||||
Derivative liabilities: |
||||||||||||||||
Accrued liabilities |
| (22,868 | ) | | (22,868 | ) | ||||||||||
Other long-term liabilities |
| (13,999 | ) | | (13,999 | ) | ||||||||||
Total fair value |
$ | | $ | (35,542 | ) | $ | | $ | (35,542 | ) | ||||||
14
Fair Value Measurements Using | Assets (Liabilities) | |||||||||||||||
Level 1 | Level 2 | Level 3 | at Fair Value | |||||||||||||
In thousands | October 31, 2010 | |||||||||||||||
Derivative assets: |
||||||||||||||||
Other receivables |
$ | | $ | 8,428 | $ | | $ | 8,428 | ||||||||
Other assets |
| | | | ||||||||||||
Derivative liabilities: |
||||||||||||||||
Accrued liabilities |
| (6,964 | ) | | (6,964 | ) | ||||||||||
Other long-term liabilities |
| (2,752 | ) | | (2,752 | ) | ||||||||||
Total fair value |
$ | | $ | (1,288 | ) | $ | | $ | (1,288 | ) | ||||||
9. | Litigation, Indemnities and Guarantees |
The Company is involved from time to time in legal claims involving trademarks and intellectual property, licensing, employee relations and other matters incidental to its business. The Company believes the resolution of any such matter currently pending will not have a material adverse effect on its financial condition, results of operations or cash flows. | ||
During its normal course of business, the Company has made certain indemnities, commitments and guarantees under which it may be required to make payments in relation to certain transactions. These include (i) intellectual property indemnities to the Companys customers and licensees in connection with the use, sale and/or license of Company products, (ii) indemnities to various lessors in connection with facility leases for certain claims arising from such facility or lease, (iii) indemnities to vendors and service providers pertaining to claims based on the negligence or willful misconduct of the Company, and (iv) indemnities involving the accuracy of representations and warranties in certain contracts. The duration of these indemnities, commitments and guarantees varies and, in certain cases, may be indefinite. The majority of these indemnities, commitments and guarantees do not provide for any limitation of the maximum potential for future payments the Company could be obligated to make. As of April 30, 2011, the Company had not recorded any liability for these indemnities, commitments and guarantees in the accompanying condensed consolidated balance sheets. |
10. | Income Taxes |
During the six months ended April 30, 2011, the Company evaluated the realizability of all of its deferred tax assets in each tax jurisdiction, including Australia, Japan, and New Zealand. The Australian consolidated tax group includes a portion of the Asia/Pacific operating segment as well as the Australian entities included in the corporate operations segment. | ||
Accordingly, the Company has concluded that based on all available information and proper weighting of objective and subjective evidence as of April 30, 2011, including a cumulative loss that had been sustained over a three-year period, it is more likely than not that its deferred tax assets in certain jurisdictions in the Asia/Pacific segment will not be realized and a full valuation allowance of $26.0 million was established. As of April 30, 2011, the Company also continued to maintain a full valuation allowance against its net deferred tax assets in the United States. As a result of the valuation allowances recorded in the U.S. and certain jurisdictions in the Asia/Pacific segment, no tax benefits are recognized for losses in those tax jurisdictions. | ||
On April 30, 2011, the Companys liability for uncertain tax positions was approximately $147.4 million resulting from unrecognized tax benefits, excluding interest and penalties. During the six months ended April 30, 2011, the Company increased its liability for uncertain tax positions, exclusive of interest and penalties, by $2.5 million. This increase resulted from increases of $0.3 million for positions taken in prior periods and $7.4 million due to foreign currency exchange rate |
15
fluctuations, partially offset by a decrease of $5.2 million due to settlements with taxing authorities. | ||
If the Companys positions are favorably sustained by the relevant taxing authority, approximately $142.6 million, excluding interest and penalties, of uncertain tax position liabilities would favorably impact the Companys effective tax rate in future periods. | ||
The Company includes interest and penalties related to unrecognized tax benefits in its provision for income taxes in the accompanying condensed consolidated statements of operations. During the six months ended April 30, 2011, the Company recorded an expense of approximately $1.2 million relating to interest and penalties, and as of April 30, 2011, the Company had a liability for interest and penalties of $12.8 million. | ||
During the next 12 months, it is reasonably possible that the Companys liability for uncertain tax positions may change by a significant amount as a result of the resolution or payment of uncertain tax positions related to intercompany transactions between foreign affiliates and certain foreign withholding tax exposures. Conclusion of these matters could result in settlement for different amounts than the Company has accrued as uncertain tax benefits. If a position which the Company concluded was more likely than not is subsequently not upheld, then the Company would need to accrue and ultimately pay an additional amount. Conversely, the Company could settle positions with the tax authorities for amounts lower than have been accrued or extinguish a position through payment. The Company believes the outcomes which are reasonably possible within the next 12 months range from an increase of the liability for unrecognized tax benefits of up to $2 million to a reduction of the liability for unrecognized tax benefits of up to $130 million, excluding penalties and interest. |
11. | Restructuring Charges | |
In connection with its cost reduction efforts, the Company formulated the Fiscal 2009 Cost Reduction Plan (the Plan). The Plan covers the global operations of the Company, but is primarily concentrated in the United States. During the six months ended April 30, 2011, the Company determined that it would utilize certain facilities in the United States that were previously vacated, and reversed approximately $2.1 million of previously recognized lease loss accruals. The Company continues to evaluate its facilities in the United States, as well as its overall cost structure, and may incur future charges under the Plan. | ||
Activity and liability balances recorded as part of the Plan are as follows: |
Facility | ||||||||||||
In thousands | Workforce | & Other | Total | |||||||||
Balance November 1, 2009 |
$ | 9,958 | $ | 3,951 | $ | 13,909 | ||||||
Charged to expense |
8,339 | 1,676 | 10,015 | |||||||||
Cash payments |
(13,020 | ) | (2,226 | ) | (15,246 | ) | ||||||
Adjustments to accrual |
(425 | ) | | (425 | ) | |||||||
Foreign currency translation |
66 | | 66 | |||||||||
Balance, October 31, 2010 |
4,918 | 3,401 | 8,319 | |||||||||
Charged to expense |
816 | 232 | 1,048 | |||||||||
Cash payments |
(4,649 | ) | (550 | ) | (5,199 | ) | ||||||
Adjustments to accrual |
| (2,118 | ) | (2,118 | ) | |||||||
Foreign currency translation |
11 | 9 | 20 | |||||||||
Balance, April 30, 2011 |
$ | 1,096 | $ | 974 | $ | 2,070 | ||||||
16
12. | Debt | |
A summary of lines of credit and long-term debt is as follows: |
April 30, | October 31, | |||||||
In thousands | 2011 | 2010 | ||||||
European short-term credit arrangements |
$ | | $ | | ||||
Asia/Pacific short-term lines of credit |
4,792 | 22,586 | ||||||
Americas credit facility |
| | ||||||
Americas long-term debt |
20,000 | 20,000 | ||||||
European long-term debt |
| 265,222 | ||||||
European credit facility |
| | ||||||
Senior notes |
400,000 | 400,000 | ||||||
European senior notes |
296,780 | | ||||||
Capital lease obligations and other borrowings |
11,315 | 20,965 | ||||||
$ | 732,887 | $ | 728,773 | |||||
As of April 30, 2011, the Companys credit facilities allowed for total maximum cash borrowings and letters of credit of $261.3 million. The Companys total maximum borrowings and actual availability fluctuate depending on the extent of assets comprising the Companys borrowing base under certain credit facilities. The Company had $4.8 million of borrowings drawn on these credit facilities as of April 30, 2011, and letters of credit issued at that time totaled $105.6 million. The amount of availability for additional borrowings under these facilities as of April 30, 2011 was $71.5 million, $59.5 million of which could also be used for letters of credit in the United States. In addition to the $71.5 million of additional availability for borrowings, the Company also had $77.1 million in additional capacity for letters of credit in Europe and Asia/Pacific as of April 30, 2011. Many of the Companys debt agreements contain customary default provisions and restrictive covenants. The Company is currently in compliance with such covenants. | ||
In December 2010, Boardriders SA, a wholly owned subsidiary of the Company, issued 200 million (approximately $265 million at the date of issuance) in senior notes (European Senior Notes), which bear a coupon interest rate of 8.875% and are due December 15, 2017. The European Senior Notes were issued at par value in a private offering that is exempt from the registration requirements of the Securities Act of 1933, as amended (the Securities Act). The European Senior Notes were offered within the United States only to qualified institutional buyers in accordance with Rule 144A under the Securities Act and outside the United States only to non-U.S. investors in accordance with Regulation S under the Securities Act. The European Senior Notes will not be registered under the Securities Act or the securities laws of any other jurisdiction. | ||
The European Senior Notes are general senior obligations of Boardriders SA and are fully and unconditionally guaranteed on a senior unsecured basis by the Company and certain of the Companys current and future U.S. and non-U.S. subsidiaries, subject to certain exceptions. Boardriders SA may redeem some or all of the European Senior Notes at fixed redemption prices as set forth in the indenture related to such European Senior Notes. The European Senior Notes indenture includes covenants that limit the ability of Quiksilver, Inc. and its restricted subsidiaries to, among other things: incur additional debt; pay dividends on their capital stock or repurchase their capital stock; make certain investments; enter into certain types of transactions with affiliates; pay dividends or make other payments to Quiksilver, Inc.; use assets as security in other transactions; and sell certain assets or merge with or into other companies. The Company is currently in compliance with these covenants. | ||
The Company used the proceeds from the European Senior Notes to repay its then existing European term loans and to pay related fees and expenses. As a result, the Company recognized non-cash, non-operating charges during the six months ended April 30, 2011 of |
17
approximately $13.7 million, included in interest expense, to write-off the deferred debt issuance costs related to such term loans. The Company capitalized approximately $6.4 million of debt issuance costs associated with the issuance of the European Senior Notes, which will be amortized into interest expense over the seven year term of the European Senior Notes. |
The estimated fair values of the Companys lines of credit and long-term debt are as follows: |
April 30, 2011 | ||||||||
In thousands | Carrying Amount | Fair Value | ||||||
Lines of credit |
$ | 4,792 | $ | 4,792 | ||||
Long-term debt |
728,095 | 735,989 | ||||||
$ | 732,887 | $ | 740,781 | |||||
The fair value of the Companys long-term debt is calculated based on the market price of the Companys publicly traded senior notes, the trading price of the Companys European Senior Notes and the carrying values of the majority of the Companys other debt obligations. |
The carrying value of the Companys trade accounts receivable and accounts payable approximates fair value due to their short-term nature. |
The Company has $400 million in publicly registered senior notes. Obligations under the Companys senior notes are fully and unconditionally guaranteed by certain of its domestic subsidiaries. The Company is required to present condensed consolidating financial information for Quiksilver, Inc. and its domestic subsidiaries within the notes to the condensed consolidated financial statements in accordance with the criteria established for parent companies in the SECs Regulation S-X, Rule 3-10(f). The following condensed consolidating financial information presents the results of operations, financial position and cash flows of Quiksilver Inc., its guarantor subsidiaries, its non-guarantor subsidiaries and the eliminations necessary to arrive at the information for the Company on a consolidated basis as of April 30, 2011 and October 31, 2010 and for the three and six month periods ended April 30, 2011 and 2010. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. The Company has applied the estimated consolidated annual effective income tax rate to both the guarantor and non-guarantor subsidiaries, adjusting for any discrete items, for interim reporting purposes. In the Companys consolidated financial statements for the fiscal year ending October 31, 2011, management will apply the actual income tax rates to both the guarantor and non-guarantor subsidiaries. These interim tax rates may differ from the actual annual effective income tax rates for both the guarantor and non-guarantor subsidiaries. |
18
Non- | ||||||||||||||||||||
Guarantor | Guarantor | |||||||||||||||||||
In thousands | Quiksilver, Inc. | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Revenues, net |
$ | 116 | $ | 165,411 | $ | 322,977 | $ | (10,411 | ) | $ | 478,093 | |||||||||
Cost of goods sold |
| 85,076 | 134,565 | (3,717 | ) | 215,924 | ||||||||||||||
Gross profit |
116 | 80,335 | 188,412 | (6,694 | ) | 262,169 | ||||||||||||||
Selling, general and administrative
expense |
8,690 | 73,286 | 141,614 | (6,842 | ) | 216,748 | ||||||||||||||
Asset impairments |
| 465 | 74,145 | | 74,610 | |||||||||||||||
Operating (loss) income |
(8,574 | ) | 6,584 | (27,347 | ) | 148 | (29,189 | ) | ||||||||||||
Interest expense |
7,210 | 924 | 6,962 | | 15,096 | |||||||||||||||
Foreign currency loss (gain) |
108 | 261 | (2,690 | ) | | (2,321 | ) | |||||||||||||
Equity in earnings and other
income |
67,433 | | | (67,433 | ) | | ||||||||||||||
(Loss) income before (benefit)
provision for income taxes |
(83,325 | ) | 5,399 | (31,619 | ) | 67,581 | (41,964 | ) | ||||||||||||
(Benefit) provision for income taxes |
| (1,894 | ) | 41,584 | | 39,690 | ||||||||||||||
Net (loss) income |
(83,325 | ) | 7,293 | (73,203 | ) | 67,581 | (81,654 | ) | ||||||||||||
Less: net income attributable
to non-controlling interest |
| (1,671 | ) | | | (1,671 | ) | |||||||||||||
Net (loss) income attributable to
Quiksilver, Inc. |
$ | (83,325 | ) | $ | 5,622 | $ | (73,203 | ) | $ | 67,581 | $ | (83,325 | ) | |||||||
19
Non- | ||||||||||||||||||||
Guarantor | Guarantor | |||||||||||||||||||
In thousands | Quiksilver, Inc. | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Revenues, net |
$ | | $ | 162,140 | $ | 315,725 | $ | (9,576 | ) | $ | 468,289 | |||||||||
Cost of goods sold |
| 87,270 | 134,243 | (2,511 | ) | 219,002 | ||||||||||||||
Gross profit |
| 74,870 | 181,482 | (7,065 | ) | 249,287 | ||||||||||||||
Selling, general and administrative
expense |
14,118 | 69,651 | 136,630 | (6,983 | ) | 213,416 | ||||||||||||||
Operating (loss) income |
(14,118 | ) | 5,219 | 44,852 | (82 | ) | 35,871 | |||||||||||||
Interest expense |
7,146 | 7,035 | 6,858 | | 21,039 | |||||||||||||||
Foreign currency gain |
(132 | ) | (138 | ) | (4,344 | ) | | (4,614 | ) | |||||||||||
Equity in earnings and other
income |
(29,094 | ) | (5 | ) | | 29,094 | (5 | ) | ||||||||||||
Income (loss) before (benefit)
provision for income taxes |
7,962 | (1,673 | ) | 42,338 | (29,176 | ) | 19,451 | |||||||||||||
(Benefit) provision for income taxes |
(1,462 | ) | | 10,881 | | 9,419 | ||||||||||||||
Income (loss) from continuing
operations |
9,424 | (1,673 | ) | 31,457 | (29,176 | ) | 10,032 | |||||||||||||
Income from discontinued
operations |
| | 602 | | 602 | |||||||||||||||
Net income (loss) |
9,424 | (1,673 | ) | 32,059 | (29,176 | ) | 10,634 | |||||||||||||
Less: net income attributable
to non-controlling interest |
| (1,210 | ) | | | (1,210 | ) | |||||||||||||
Net income (loss) attributable to
Quiksilver, Inc. |
$ | 9,424 | $ | (2,883 | ) | $ | 32,059 | $ | (29,176 | ) | $ | 9,424 | ||||||||
20
Non- | ||||||||||||||||||||
Guarantor | Guarantor | |||||||||||||||||||
In thousands | Quiksilver, Inc. | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Revenues, net |
$ | 232 | $ | 316,048 | $ | 608,546 | $ | (20,283 | ) | $ | 904,543 | |||||||||
Cost of goods sold |
| 167,483 | 258,974 | (7,553 | ) | 418,904 | ||||||||||||||
Gross profit |
232 | 148,565 | 349,572 | (12,730 | ) | 485,639 | ||||||||||||||
Selling, general and administrative
expense |
18,594 | 144,897 | 276,154 | (12,461 | ) | 427,184 | ||||||||||||||
Asset impairments |
| 465 | 74,145 | | 74,610 | |||||||||||||||
Operating (loss) income |
(18,362 | ) | 3,203 | (727 | ) | (269 | ) | (16,155 | ) | |||||||||||
Interest expense |
14,421 | 1,773 | 27,870 | | 44,064 | |||||||||||||||
Foreign currency loss (gain) |
57 | 401 | (4,888 | ) | | (4,430 | ) | |||||||||||||
Equity in earnings and other income |
66,753 | | | (66,753 | ) | | ||||||||||||||
(Loss) income before (benefit)
provision for income taxes |
(99,593 | ) | 1,029 | (23,709 | ) | 66,484 | (55,789 | ) | ||||||||||||
(Benefit) provision for income taxes |
| (1,839 | ) | 42,780 | | 40,941 | ||||||||||||||
Net (loss) income |
(99,593 | ) | 2,868 | (66,489 | ) | 66,484 | (96,730 | ) | ||||||||||||
Less: net income attributable
to non-controlling interest |
| (2,863 | ) | | | (2,863 | ) | |||||||||||||
Net (loss) income attributable to
Quiksilver, Inc. |
$ | (99,593 | ) | $ | 5 | $ | (66,489 | ) | $ | 66,484 | $ | (99,593 | ) | |||||||
21
Non- | ||||||||||||||||||||
Guarantor | Guarantor | |||||||||||||||||||
In thousands | Quiksilver, Inc. | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Revenues, net |
$ | 94 | $ | 311,933 | $ | 607,692 | $ | (18,693 | ) | $ | 901,026 | |||||||||
Cost of goods sold |
| 174,917 | 260,641 | (5,968 | ) | 429,590 | ||||||||||||||
Gross profit |
94 | 137,016 | 347,051 | (12,725 | ) | 471,436 | ||||||||||||||
Selling, general and administrative
expense |
22,300 | 135,769 | 271,214 | (12,707 | ) | 416,576 | ||||||||||||||
Operating (loss) income |
(22,206 | ) | 1,247 | 75,837 | (18 | ) | 54,860 | |||||||||||||
Interest expense |
14,327 | 14,163 | 14,422 | | 42,912 | |||||||||||||||
Foreign currency gain |
(329 | ) | (152 | ) | (6,112 | ) | | (6,593 | ) | |||||||||||
Equity in earnings and other income |
(36,704 | ) | | | 36,704 | | ||||||||||||||
Income (loss) before (benefit)
provision for income taxes |
500 | (12,764 | ) | 67,527 | (36,722 | ) | 18,541 | |||||||||||||
(Benefit) provision for income taxes |
(3,570 | ) | (1,593 | ) | 18,256 | | 13,093 | |||||||||||||
Income (loss) from continuing
operations |
4,070 | (11,171 | ) | 49,271 | (36,722 | ) | 5,448 | |||||||||||||
Income from discontinued operations |
| | 678 | | 678 | |||||||||||||||
Net income (loss) |
4,070 | (11,171 | ) | 49,949 | (36,722 | ) | 6,126 | |||||||||||||
Less: net income attributable to non-controlling interest |
| (2,056 | ) | | | (2,056 | ) | |||||||||||||
Net income (loss) attributable to
Quiksilver, Inc. |
$ | 4,070 | $ | (13,227 | ) | $ | 49,949 | $ | (36,722 | ) | $ | 4,070 | ||||||||
22
Non- | ||||||||||||||||||||
Guarantor | Guarantor | |||||||||||||||||||
In thousands | Quiksilver, Inc. | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
ASSETS |
||||||||||||||||||||
Current assets: |
||||||||||||||||||||
Cash and cash equivalents |
$ | 45 | $ | 407 | $ | 138,140 | $ | | $ | 138,592 | ||||||||||
Trade accounts receivable, net |
| 99,406 | 242,375 | | 341,781 | |||||||||||||||
Other receivables |
231 | 5,104 | 22,012 | | 27,347 | |||||||||||||||
Income taxes receivable |
| 11,072 | (10,961 | ) | | 111 | ||||||||||||||
Inventories |
| 106,200 | 184,288 | (950 | ) | 289,538 | ||||||||||||||
Deferred income taxes |
| (3,372 | ) | 27,798 | | 24,426 | ||||||||||||||
Prepaid expenses and other
current assets |
2,515 | 10,695 | 18,060 | | 31,270 | |||||||||||||||
Total current assets |
2,791 | 229,512 | 621,712 | (950 | ) | 853,065 | ||||||||||||||
Fixed assets, net |
12,119 | 56,096 | 166,430 | | 234,645 | |||||||||||||||
Intangible assets, net |
3,007 | 49,090 | 87,517 | | 139,614 | |||||||||||||||
Goodwill |
| 111,977 | 165,631 | | 277,608 | |||||||||||||||
Investment in subsidiaries |
966,707 | | | (966,707 | ) | | ||||||||||||||
Other assets |
5,267 | 4,134 | 43,257 | | 52,658 | |||||||||||||||
Deferred income taxes long-term |
| (12,121 | ) | 92,412 | | 80,291 | ||||||||||||||
Total assets |
$ | 989,891 | $ | 438,688 | $ | 1,176,959 | $ | (967,657 | ) | $ | 1,637,881 | |||||||||
LIABILITIES AND EQUITY |
||||||||||||||||||||
Current liabilities: |
||||||||||||||||||||
Lines of credit |
$ | | $ | | $ | 4,792 | $ | | $ | 4,792 | ||||||||||
Accounts payable |
3,224 | 74,042 | 101,293 | | 178,559 | |||||||||||||||
Accrued liabilities |
4,378 | 19,919 | 104,451 | | 128,748 | |||||||||||||||
Current portion of long-term debt |
| 3,000 | 2,824 | | 5,824 | |||||||||||||||
Intercompany balances |
59,704 | (59,811 | ) | 107 | | | ||||||||||||||
Total current liabilities |
67,306 | 37,150 | 213,467 | | 317,923 | |||||||||||||||
Long-term debt, net of current
portion |
400,000 | 17,000 | 305,271 | | 722,271 | |||||||||||||||
Other long-term liabilities |
| 39,011 | 24,160 | | 63,171 | |||||||||||||||
Total liabilities |
467,306 | 93,161 | 542,898 | | 1,103,365 | |||||||||||||||
Stockholders/invested equity |
522,585 | 333,911 | 633,746 | (967,657 | ) | 522,585 | ||||||||||||||
Non-controlling interest |
| 11,616 | 315 | | 11,931 | |||||||||||||||
Total liabilities and equity |
$ | 989,891 | $ | 438,688 | $ | 1,176,959 | $ | (967,657 | ) | $ | 1,637,881 | |||||||||
23
Non- | ||||||||||||||||||||
Quiksilver, | Guarantor | Guarantor | ||||||||||||||||||
In thousands | Inc. | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
ASSETS |
||||||||||||||||||||
Current assets: |
||||||||||||||||||||
Cash and cash equivalents |
$ | 164 | $ | 39,172 | $ | 81,257 | $ | | $ | 120,593 | ||||||||||
Trade accounts receivable, net |
| 130,445 | 237,983 | | 368,428 | |||||||||||||||
Other receivables |
239 | 3,930 | 38,343 | | 42,512 | |||||||||||||||
Inventories |
| 91,622 | 177,621 | (1,206 | ) | 268,037 | ||||||||||||||
Deferred income taxes |
| (3,318 | ) | 42,371 | | 39,053 | ||||||||||||||
Prepaid expenses and other
current assets |
2,738 | 6,493 | 15,975 | | 25,206 | |||||||||||||||
Current assets held for sale |
| | 12 | | 12 | |||||||||||||||
Total current assets |
3,141 | 268,344 | 593,562 | (1,206 | ) | 863,841 | ||||||||||||||
Fixed assets, net |
6,780 | 55,778 | 157,792 | | 220,350 | |||||||||||||||
Intangible assets, net |
2,979 | 49,461 | 88,127 | | 140,567 | |||||||||||||||
Goodwill |
| 114,863 | 217,625 | | 332,488 | |||||||||||||||
Other assets |
6,079 | 2,171 | 45,046 | | 53,296 | |||||||||||||||
Deferred income taxes long-term |
| (10,388 | ) | 95,967 | | 85,579 | ||||||||||||||
Investment in subsidiaries |
1,025,085 | | | (1,025,085 | ) | | ||||||||||||||
Total assets |
$ | 1,044,064 | $ | 480,229 | $ | 1,198,119 | $ | (1,026,291 | ) | $ | 1,696,121 | |||||||||
LIABILITIES AND EQUITY |
||||||||||||||||||||
Current liabilities: |
||||||||||||||||||||
Lines of credit |
$ | | $ | | $ | 22,586 | $ | | $ | 22,586 | ||||||||||
Accounts payable |
1,268 | 70,575 | 107,559 | | 179,402 | |||||||||||||||
Accrued liabilities |
7,717 | 29,558 | 77,734 | | 115,009 | |||||||||||||||
Current portion of long-term debt |
| 1,500 | 3,682 | | 5,182 | |||||||||||||||
Income taxes payable |
| (5,880 | ) | 9,364 | | 3,484 | ||||||||||||||
Intercompany balances |
24,711 | (18,474 | ) | (6,237 | ) | | | |||||||||||||
Current liabilities related to
assets held for sale |
| | 739 | | 739 | |||||||||||||||
Total current liabilities |
33,696 | 77,279 | 215,427 | | 326,402 | |||||||||||||||
Long-term debt, net of current
portion |
400,000 | 18,500 | 282,505 | | 701,005 | |||||||||||||||
Other long-term liabilities |
| 41,753 | 7,366 | | 49,119 | |||||||||||||||
Total liabilities |
433,696 | 137,532 | 505,298 | | 1,076,526 | |||||||||||||||
Stockholders/invested equity |
610,368 | 333,785 | 692,506 | (1,026,291 | ) | 610,368 | ||||||||||||||
Non-controlling interest |
| 8,912 | 315 | | 9,227 | |||||||||||||||
Total liabilities and equity |
$ | 1,044,064 | $ | 480,229 | $ | 1,198,119 | $ | (1,026,291 | ) | $ | 1,696,121 | |||||||||
24
Non- | ||||||||||||||||||||
Quiksilver, | Guarantor | Guarantor | ||||||||||||||||||
In thousands | Inc. | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash flows from operating activities: |
||||||||||||||||||||
Net (loss) income |
$ | (99,593 | ) | $ | 2,868 | $ | (66,489 | ) | $ | 66,484 | $ | (96,730 | ) | |||||||
Adjustments to reconcile net (loss) income to net
cash (used in) provided by operating activities: |
||||||||||||||||||||
Depreciation and amortization |
826 | 10,156 | 16,488 | | 27,470 | |||||||||||||||
Stock-based compensation |
4,981 | | | | 4,981 | |||||||||||||||
Provision for doubtful accounts |
| 1,226 | 4,164 | | 5,390 | |||||||||||||||
Asset impairments |
| 465 | 74,145 | | 74,610 | |||||||||||||||
Equity in earnings |
66,753 | (158 | ) | 179 | (66,753 | ) | 21 | |||||||||||||
Non-cash interest expense |
681 | 841 | 15,565 | | 17,087 | |||||||||||||||
Deferred income taxes |
| 1,747 | 38,600 | | 40,347 | |||||||||||||||
Other adjustments to reconcile net (loss) income |
57 | 454 | 1,200 | | 1,711 | |||||||||||||||
Changes in operating assets and liabilities: |
||||||||||||||||||||
Trade accounts receivable |
| 29,813 | 3,851 | | 33,664 | |||||||||||||||
Inventories |
| (14,605 | ) | 7,725 | 269 | (6,611 | ) | |||||||||||||
Other operating assets and liabilities |
(2,981 | ) | (22,526 | ) | (4,465 | ) | | (29,972 | ) | |||||||||||
Net cash (used in) provided by operating activities |
(29,276 | ) | 10,281 | 90,963 | | 71,968 | ||||||||||||||
Cash flows from investing activities: |
||||||||||||||||||||
Capital expenditures |
(5,332 | ) | (12,108 | ) | (16,490 | ) | | (33,930 | ) | |||||||||||
Business acquisitions, net of cash acquired |
| (528 | ) | (5,050 | ) | | (5,578 | ) | ||||||||||||
Net cash used in investing activities |
(5,332 | ) | (12,636 | ) | (21,540 | ) | | (39,508 | ) | |||||||||||
Cash flows from financing activities: |
||||||||||||||||||||
Borrowings on lines of credit |
| | 9,929 | | 9,929 | |||||||||||||||
Payments on lines of credit |
| | (28,031 | ) | | (28,031 | ) | |||||||||||||
Borrowings on long-term debt |
| | 270,475 | | 270,475 | |||||||||||||||
Payments on long-term debt |
| | (257,392 | ) | | (257,392 | ) | |||||||||||||
Payments of debt issuance costs |
| | (6,308 | ) | | (6,308 | ) | |||||||||||||
Stock option exercises and employee stock purchases |
3,074 | | | | 3,074 | |||||||||||||||
Intercompany |
31,415 | (36,410 | ) | 4,995 | | | ||||||||||||||
Net cash provided by (used in) financing activities |
34,489 | (36,410 | ) | (6,332 | ) | | (8,253 | ) | ||||||||||||
Effect of exchange rate changes on cash |
| | (6,208 | ) | | (6,208 | ) | |||||||||||||
Net (decrease) increase in cash and cash equivalents |
(119 | ) | (38,765 | ) | 56,883 | | 17,999 | |||||||||||||
Cash and cash equivalents, beginning of period |
164 | 39,172 | 81,257 | | 120,593 | |||||||||||||||
Cash and cash equivalents, end of period |
$ | 45 | $ | 407 | $ | 138,140 | $ | | $ | 138,592 | ||||||||||
25
Non- | ||||||||||||||||||||
Quiksilver, | Guarantor | Guarantor | ||||||||||||||||||
In thousands | Inc. | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash flows from operating activities: |
||||||||||||||||||||
Net income (loss) |
$ | 4,070 | $ | (11,171 | ) | $ | 49,949 | $ | (36,722 | ) | $ | 6,126 | ||||||||
Adjustments to reconcile net income (loss) to net
cash (used in) provided by operating activities: |
||||||||||||||||||||
Income from discontinued operations |
| | (678 | ) | | (678 | ) | |||||||||||||
Depreciation and amortization |
768 | 11,094 | 15,161 | | 27,023 | |||||||||||||||
Stock-based compensation |
10,135 | | | | 10,135 | |||||||||||||||
Provision for doubtful accounts |
| 3,934 | 6,210 | | 10,144 | |||||||||||||||
Equity in earnings |
(36,704 | ) | | 183 | 36,704 | 183 | ||||||||||||||
Non-cash interest expense |
635 | 7,603 | 4,692 | | 12,930 | |||||||||||||||
Deferred income taxes |
| (548 | ) | 17,257 | | 16,709 | ||||||||||||||
Other adjustments to reconcile net income (loss) |
(296 | ) | (1,184 | ) | (2,006 | ) | | (3,486 | ) | |||||||||||
Changes in operating assets and liabilities: |
||||||||||||||||||||
Trade accounts receivable |
| 42,647 | 30,406 | | 73,053 | |||||||||||||||
Inventories |
| 4,648 | 24,800 | 18 | 29,466 | |||||||||||||||
Other operating assets and liabilities |
121 | (21,941 | ) | (28,560 | ) | | (50,380 | ) | ||||||||||||
Cash (used in) provided by operating activities of
continuing operations |
(21,271 | ) | 35,082 | 117,414 | | 131,225 | ||||||||||||||
Cash provided by operating activities of
discontinued operations |
| | 3,287 | | 3,287 | |||||||||||||||
Net cash (used in) provided by operating activities |
(21,271 | ) | 35,082 | 120,701 | | 134,512 | ||||||||||||||
Cash flows from investing activities: |
||||||||||||||||||||
Capital expenditures |
(154 | ) | (664 | ) | (18,021 | ) | | (18,839 | ) | |||||||||||
Changes in restricted cash |
| | 52,706 | | 52,706 | |||||||||||||||
Cash (used in) provided by investing activities of
continuing operations |
(154 | ) | (664 | ) | 34,685 | | 33,867 | |||||||||||||
Cash used in investing activities of discontinued
operations |
| | | | | |||||||||||||||
Net cash (used in) provided by investing activities |
(154 | ) | (664 | ) | 34,685 | | 33,867 | |||||||||||||
Cash flows from financing activities: |
||||||||||||||||||||
Borrowings on lines of credit |
| | | | | |||||||||||||||
Payments on lines of credit |
| | (16,707 | ) | | (16,707 | ) | |||||||||||||
Borrowings on long-term debt |
| 22,735 | 9,675 | | 32,410 | |||||||||||||||
Payments on long-term debt |
| (23,395 | ) | (113,577 | ) | | (136,972 | ) | ||||||||||||
Payments of debt issuance costs |
| | (1,823 | ) | | (1,823 | ) | |||||||||||||
Stock option exercises and employee stock purchases |
2,888 | | | | 2,888 | |||||||||||||||
Intercompany |
19,543 | 26,516 | (46,059 | ) | | | ||||||||||||||
Cash provided by (used in) financing activities of
continuing operations |
22,431 | 25,856 | (168,491 | ) | | (120,204 | ) | |||||||||||||
Cash used in financing activities of discontinued
operations |
| | | | | |||||||||||||||
Net cash provided by (used in) financing activities |
22,431 | 25,856 | (168,491 | ) | | (120,204 | ) | |||||||||||||
Effect of exchange rate changes on cash |
| | (2,362 | ) | | (2,362 | ) | |||||||||||||
Net increase (decrease) in cash and cash equivalents |
1,006 | 60,274 | (15,467 | ) | 45,813 | |||||||||||||||
Cash and cash equivalents, beginning of period |
321 | 1,135 | 98,060 | | 99,516 | |||||||||||||||
Cash and cash equivalents, end of period |
$ | 1,327 | $ | 61,409 | $ | 82,593 | $ | | $ | 145,329 | ||||||||||
26
27
Three Months Ended | Six Months Ended | |||||||||||||||
April 30, | April 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Statements of Operations data |
||||||||||||||||
Revenues, net |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Gross profit |
54.8 | 53.2 | 53.7 | 52.3 | ||||||||||||
Selling, general and administrative expense |
45.3 | 45.6 | 47.2 | 46.2 | ||||||||||||
Asset impairments |
15.6 | | 8.2 | | ||||||||||||
Operating (loss) income |
(6.1 | ) | 7.7 | (1.8 | ) | 6.1 | ||||||||||
Interest expense |
3.2 | 4.5 | 4.9 | 4.8 | ||||||||||||
Foreign currency gain and other income |
(0.5 | ) | (1.0 | ) | (0.5 | ) | (0.7 | ) | ||||||||
(Loss) income before provision for income taxes |
(8.8 | ) | 4.2 | (6.2 | ) | 2.1 | ||||||||||
Other data |
||||||||||||||||
Adjusted EBITDA(1) |
13.0 | % | 13.0 | % | 10.2 | % | 10.7 | % | ||||||||
(1) | Adjusted EBITDA is defined as income (loss) from continuing operations attributable to Quiksilver, Inc. before (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization, (iv) non-cash stock-based compensation expense and (v) asset impairments. Adjusted EBITDA is not defined under generally accepted accounting principles (GAAP), and it may not be comparable to similarly titled measures reported by other companies. We use Adjusted EBITDA, along with other GAAP measures, as a measure of profitability because Adjusted EBITDA helps us to compare our performance on a consistent basis by removing from our operating results the impact of our capital structure, the effect of operating in different tax jurisdictions, the impact of our asset base, which can differ depending on the book value of assets, the accounting methods used to compute depreciation and amortization, the existence or timing of asset impairments and the effect of non-cash stock-based compensation expense. We believe EBITDA is useful to investors as it is a widely used measure of performance and the adjustments we make to EBITDA provide further clarity on our profitability. We remove the effect of non-cash stock-based compensation from our earnings which can vary based on share price, share price volatility and expected life of the equity instruments we grant. In addition, this stock-based compensation expense does not result in cash payments by us. We remove the effect of asset impairments from Adjusted EBITDA for the same reason that we remove depreciation and amortization as it is part of the impact of our asset base. Adjusted EBITDA has limitations as a profitability measure in that it does not include the interest expense on our debts, our provisions for income taxes, the effect of our expenditures for capital assets and certain intangible assets, the effect of non-cash stock-based compensation expense and the effect of asset impairments. The following is a reconciliation of (loss) income from continuing operations attributable to Quiksilver, Inc. to Adjusted EBITDA: |
Three Months Ended | Six Months Ended | |||||||||||||||
April 30, | April 30, | |||||||||||||||
In thousands | 2011 | 2010 | 2011 | 2010 | ||||||||||||
(Loss) income from continuing operations
attributable to Quiksilver, Inc. |
$ | (83,325 | ) | $ | 8,822 | $ | (99,593 | ) | $ | 3,392 | ||||||
Provision for income taxes |
39,690 | 9,419 | 40,941 | 13,093 | ||||||||||||
Interest expense |
15,096 | 21,039 | 44,064 | 42,912 | ||||||||||||
Depreciation and amortization |
13,470 | 13,453 | 27,470 | 27,023 | ||||||||||||
Non-cash stock-based compensation expense |
2,571 | 8,003 | 4,981 | 10,135 | ||||||||||||
Non-cash asset impairments |
74,610 | | 74,610 | | ||||||||||||
Adjusted EBITDA |
$ | 62,112 | $ | 60,736 | $ | 92,473 | $ | 96,555 | ||||||||
28
In thousands | Americas | Europe | Asia/Pacific | Corporate | Total | |||||||||||||||
Historical currency (as reported) |
||||||||||||||||||||
April 30, 2010 |
$ | 199,733 | $ | 208,708 | $ | 58,645 | $ | 1,203 | $ | 468,289 | ||||||||||
April 30, 2011 |
210,669 | 206,941 | 58,140 | 2,343 | 478,093 | |||||||||||||||
Percentage increase (decrease) |
5 | % | (1 | %) | (1 | %) | 2 | % | ||||||||||||
Constant currency (current year exchange rates) |
||||||||||||||||||||
April 30, 2010 |
199,733 | 215,852 | 66,200 | 1,203 | 482,988 | |||||||||||||||
April 30, 2011 |
210,669 | 206,941 | 58,140 | 2,343 | 478,093 | |||||||||||||||
Percentage increase (decrease) |
5 | % | (4 | %) | (12 | %) | (1 | %) |
29
30
In thousands | Americas | Europe | Asia/Pacific | Corporate | Total | |||||||||||||||
Historical currency (as reported) |
||||||||||||||||||||
April 30, 2010 |
$ | 386,694 | $ | 386,585 | $ | 125,697 | $ | 2,050 | $ | 901,026 | ||||||||||
April 30, 2011 |
404,459 | 372,140 | 125,141 | 2,803 | 904,543 | |||||||||||||||
Percentage increase (decrease) |
5 | % | (4 | %) | (0 | %) | 0 | % | ||||||||||||
Constant currency (current year exchange rates) |
||||||||||||||||||||
April 30, 2010 |
386,694 | 379,459 | 139,344 | 2,050 | 907,547 | |||||||||||||||
April 30, 2011 |
404,459 | 372,140 | 125,141 | 2,803 | 904,543 | |||||||||||||||
Percentage increase (decrease) |
5 | % | (2 | %) | (10 | %) | (0 | %) |
31
32
33
34
| weakening economic conditions; | |
| terrorist acts or threats; | |
| unanticipated changes in consumer preferences; | |
| reduced customer confidence; and | |
| unseasonable weather. |
35
36
| our ability to achieve the financial results that we anticipate; | |
| future expenditures for capital projects, including the implementation of our global enterprise-wide reporting system; | |
| increases in production costs and raw materials, particularly with respect to cotton and other commodities; | |
| deterioration of global economic conditions and credit and capital markets; | |
| our ability to remain compliant with our debt covenants; | |
| payments due on contractual commitments and other debt obligations; | |
| our ability to continue to maintain our brand image and reputation; | |
| foreign currency exchange rate fluctuations; and | |
| changes in political, social and economic conditions and local regulations, particularly in Europe and Asia. |
37
38
Item 6. | ||
Exhibits | ||
2.1
|
Stock Purchase Agreement between the Roger Cleveland Golf Company, Inc., Rossignol Ski Company, Incorporated, Quiksilver, Inc. and SRI Sports Limited dated October 30, 2007 (incorporated by reference to Exhibit 2.3 of the Companys Annual Report on Form 10-K for the year ended October 31, 2007). | |
2.2
|
Amendment No. 1 to the Stock Purchase Agreement between the Roger Cleveland Golf Company, Inc., Rossignol Ski Company, Incorporated, Quiksilver, Inc. and SRI Sports Limited dated December 7, 2007 (incorporated by reference to Exhibit 2.4 of the Companys Annual Report on Form 10-K for the year ended October 31, 2007). | |
2.3
|
Stock Purchase Agreement dated November 12, 2008, by and among Quiksilver, Inc., Pilot S.A.S., Meribel S.A.S., Quiksilver Americas, Inc., Chartreuse et Mont Blanc LLC, Chartreuse et Mont Blanc S.A.S., Chartreuse et Mont Blanc Global Holdings S.C.A., Macquarie Asset Finance Limited and Mavilia S.A.S. (incorporated by reference to Exhibit 2.1 of the Companys Current Report on Form 8-K filed on November 18, 2008). | |
2.4
|
Amendment No. 1 to Stock Purchase Agreement dated October 29, 2009, by and among Quiksilver, Inc., Pilot S.A.S., Meribel S.A.S., Quiksilver Americas, Inc., Chartreuse et Mont Blanc LLC, Chartreuse et Mont Blanc S.A.S., Chartreuse et Mont Blanc Global Holdings S.C.A., Macquarie Asset Finance Limited and Mavilia S.A.S. (incorporated by reference to Exhibit 2.1 of the Companys Current Report on Form 8-K filed on October 30, 2009). | |
3.1
|
Restated Certificate of Incorporation of Quiksilver, Inc., as amended (incorporated by reference to Exhibit 3.1 of the Companys Annual Report on Form 10-K for the year ended October 31, 2004). | |
3.2
|
Certificate of Amendment of Restated Certificate of Incorporation of Quiksilver, Inc. (incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q for the quarter ended April 30, 2005). | |
3.3
|
Certificate of Designation of the Series A Convertible Preferred Stock of Quiksilver, Inc. (incorporated by reference to Exhibit 3.1 of the Companys Current Report on Form 8-K filed on August 4, 2009). | |
3.4
|
Certificate of Amendment of Restated Certificate of Incorporation of Quiksilver, Inc. (incorporated by reference to Exhibit 3.1 of the Companys Current Report on Form 8-K filed on April 1, 2010). | |
3.5
|
Amended and Restated Bylaws of Quiksilver, Inc. (incorporated by reference to Exhibit 3.1 of the Companys Current Report on Form 8-K filed on November 2, 2010). | |
4.1
|
Indenture for the 6 7/8% Senior Notes due 2015 dated July 22, 2005, among Quiksilver, Inc., the subsidiary guarantors set forth therein and Wilmington Trust Company, as trustee, including the form of Global Note attached thereto (incorporated by reference to Exhibit 4.1 of the Companys Current Report on Form 8-K filed July 25, 2005). | |
4.2
|
Indenture, dated as of December 10, 2010, by and among Boardriders S.A., Quiksilver, Inc., as guarantor, the subsidiary guarantor parties thereto, and Deutsche Trustee Company Limited, as trustee, Deutsche Bank Luxembourg S.A., as registrar and transfer agent, and Deutsche Bank AG, London Branch, as principal paying agent and common depositary (incorporated by reference to Exhibit 4.1 of the Companys Current Report on Form 8-K filed December 13, 2010). | |
10.1
|
Quiksilver, Inc. Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K filed February 9, 2011). (1) |
39
Item 6. | ||
Exhibits | ||
10.2
|
Quiksilver, Inc. 2000 Stock Incentive Plan, as amended and restated, together with Form Stock Option and Restricted Stock Agreements (incorporated by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K filed March 23, 2011). (1) | |
10.3
|
Consulting Services Agreement between Paul Speaker and Quiksilver, Inc. dated March 23, 2011. (1) | |
10.4
|
Standard Form of Restricted Stock Unit Agreement under the Quiksilver, Inc. 2000 Stock Incentive Plan, as amended and restated. (1) | |
31.1
|
Rule 13a-14(a)/15d-14(a) Certifications Principal Executive Officer | |
31.2
|
Rule 13a-14(a)/15d-14(a) Certifications Principal Financial Officer | |
32.1
|
Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 Chief Executive Officer | |
32.2
|
Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 Chief Financial Officer |
(1) | Management contract or compensatory plan. |
40
QUIKSILVER, INC., a Delaware corporation |
||||
June 9, 2011 | /s/ Brad L. Holman | |||
Brad L. Holman | ||||
Senior Vice President and Corporate Controller (Principal Accounting Officer and Authorized Signatory) |
||||
41
2
3
QUIKSILVER, INC. | PAUL SPEAKER | |||||||||||||
Signed:
|
Signed: | |||||||||||||
Print Name: | Print Name: | |||||||||||||
Title: | Title: | |||||||||||||
Address: | 15202 Graham Street | Address: | ||||||||||||
Huntington Beach, CA 92649 |
4
A. | Services. | |
Consultant will leverage existing relationships and expertise to provide services in connection with the strategic planning and implementation of the 2011 Quiksilver Pro New York (the Event). Specifically, Consultant will: |
| provide expertise and guidance to Quiksilvers internal Event marketing team | ||
| assist in the negotiation of third party corporate sponsorships in support of the Event | ||
| facilitate introductions to broadcast, print and digital outlets for media coverage of the Event | ||
| liaise with local municipalities and other principals to secure necessary permits, licenses, authorizations and support for the Event | ||
| provide oversight of Event budget items and third party consultants engaged by Quiksilver |
B. | Term of Work Order. The Term of this Work Order shall commence on the Effective Date and shall continue until October 31, 2011, or until either party gives notice of termination as set forth in the Agreement. |
5
Participant:
|
_______________ | |
Grant Date:
|
_______________ | |
Number of Restricted |
||
Stock Units Granted:
|
_______________ |
QUIKSILVER, INC., a Delaware corporation |
||||
By: | ||||
Print Name: | ||||
Its: |
PARTICIPANT | |||
Signature | |||
Print Name |
6
7
8
Date: June 9, 2011 | /s/ Robert B. McKnight, Jr. | |||
Robert B. McKnight, Jr. | ||||
Chief Executive Officer (Principal Executive Officer) |
43
Date: June 9, 2011 | /s/ Joseph Scirocco | |||
Joseph Scirocco | ||||
Chief Financial & Operating Officer (Principal Financial Officer) |
44
/s/ Robert B. McKnight, Jr. | ||||
Robert B. McKnight, Jr. | ||||
Chief Executive Officer June 9, 2011 |
45
/s/ Joseph Scirocco | ||||
Joseph Scirocco | ||||
Chief Financial & Operating Officer June 9, 2011 |
46