0001193125-11-342309.txt : 20111215 0001193125-11-342309.hdr.sgml : 20111215 20111215160858 ACCESSION NUMBER: 0001193125-11-342309 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20111215 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20111215 DATE AS OF CHANGE: 20111215 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUIKSILVER INC CENTRAL INDEX KEY: 0000805305 STANDARD INDUSTRIAL CLASSIFICATION: MEN'S & BOYS' FURNISHINGS, WORK CLOTHING, AND ALLIED GARMENTS [2320] IRS NUMBER: 330199426 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14229 FILM NUMBER: 111263557 BUSINESS ADDRESS: STREET 1: 15202 GRAHAM STREET CITY: HUNTINGTON BEACH STATE: CA ZIP: 92649 BUSINESS PHONE: 714-889-2200 MAIL ADDRESS: STREET 1: 15202 GRAHAM STREET CITY: HUNTINGTON BEACH STATE: CA ZIP: 92649 8-K 1 d271820d8k.htm FORM 8-K Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 15, 2011

 

 

Quiksilver, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware
   001-14229
   33-0199426

(State or other jurisdiction of

incorporation)

  

(Commission

File Number)

  

(IRS Employer

Identification Number)

15202 Graham Street, Huntington Beach, CA
   92649
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (714) 889-2200

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Item 2.02 Results of Operations and Financial Condition.

The purpose of this Current Report on Form 8-K is to furnish the press release issued by Quiksilver, Inc. on December 15, 2011 announcing its financial results for the quarter and fiscal year ended October 31, 2011. The press release is attached hereto as Exhibit 99.1.

In addition to Quiksilver’s GAAP financial information, the press release furnished with this report as Exhibit 99.1 reports pro forma income from continuing operations and pro forma income per share from continuing operations, which are considered non-GAAP financial measures, each excluding non-cash asset impairment charges, restructuring costs, the write off of deferred debt issuance costs associated with previous financings, valuation allowances against deferred tax assets and income primarily related to the settlement of a French tax audit. Quiksilver believes that this non-GAAP information provides consistency and comparability with its past financial reports. Quiksilver has chosen to provide this information because it believes it provides useful information to investors enabling them to perform additional analyses of past, present and future operating performance and as a supplemental means to evaluate Quiksilver’s operations. The press release also reports pro forma adjusted EBITDA, which is also considered a non-GAAP financial measure that Quiksilver believes provides useful information to investors for the same reasons stated above, as well as those set forth in the press release with respect to adjusted EBITDA. The non-GAAP information should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from non-GAAP or other pro forma measures used by other companies.

The information in this Form 8-K and Exhibit shall not be deemed filed for purposes of Section 18 of Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Item 8.01 Other Events.

Annual Meeting of Stockholders

The Company’s Board of Directors has set Tuesday, March 20, 2012, as the date for the Company’s 2012 Annual Meeting of Stockholders. The meeting will be held at 10:00 a.m. local time at the Company’s headquarters, located at 15202 Graham Street, Huntington Beach, California, 92649.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

The following exhibits are being furnished herewith:

 

Exhibit No.

  

Exhibit Title or Description

99.1   Press Release dated December 15, 2011, issued by Quiksilver, Inc.

 

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: December 15, 2011     Quiksilver, Inc.
    (Registrant)
    By:  

/s/ Joseph Scirocco

      Joseph Scirocco
      Chief Financial Officer

 

3

INDEX TO EXHIBITS

 

Exhibit No.

   

Exhibit Title or Description

99.1    Press Release, dated December 15, 2011, issued by Quiksilver, Inc.

 

4

EX-99.1 2 d271820dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

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Company Contact:         Bruce Thomas
  Vice President, Investor Relations
  Quiksilver, Inc.
  +1 (714) 889-2200

Quiksilver, Inc. Reports Fourth Quarter and Fiscal Year 2011 Results

 

•  

Fourth quarter revenues of $545 million grew 10% compared to Q4 last year

 

•  

Full-year fiscal 2011 revenues grew 6% to $1.95 billion

 

•  

Company earned pro-forma Adjusted EBITDA of $57 million for the quarter and $200 million for the full fiscal year

Huntington Beach, California, December 15, 2011—Quiksilver, Inc. (NYSE:ZQK) today announced operating results for the fourth fiscal quarter and full year ended October 31, 2011. Revenues grew 10% to $545.2 million as compared to $495.1 million in the fourth quarter of fiscal 2010 and grew 6% in constant currency. The company earned Pro-forma Adjusted EBITDA of $57.1 million in the quarter compared to $59.5 million earned in the fourth quarter of fiscal 2010. Pro-forma income from continuing operations was $10.8 million, or $0.06 per share, compared to $21.8 million, or $0.12 per share, in the fourth quarter of fiscal 2010. Pro-forma income for the fourth quarter of fiscal 2011 excludes $11.4 million of non-cash asset impairment charges, $8.0 million of restructuring costs and $76.6 million of income primarily related to the settlement of the company’s French tax audit. Including these pro-forma adjustments, income from continuing operations was $67.9 million, or $0.38 per share, compared to a loss of $23.1 million, or $0.15 per share, in the fourth quarter a year ago. A reconciliation of GAAP results to pro-forma results is provided in the accompanying tables.

Consolidated net revenues for the full year of fiscal 2011 grew 6% to $1.95 billion compared to $1.84 billion in fiscal 2010 and grew 3% in constant currency. Pro-forma income from continuing operations for the full year of fiscal 2011 was $30.8 million, or $0.17 per share, and excludes a net $52.1 million of special charges. Of this amount, $86.0 million represents non-cash asset impairment charges, $18.7 million represents valuation allowances provided against deferred tax assets, $10.7 million represents the write-off of deferred debt issuance costs associated with previous financings and $5.9 million represents restructuring costs. These charges were partially offset by $69.3 million of income related to the tax settlement in the fourth quarter. Including these amounts, loss from continuing operations was $21.3 million, or $0.13 per share, compared to $11.5 million, or $0.09 per share, for the full year of fiscal 2010. A reconciliation of GAAP results to pro-forma results is provided in the accompanying tables.

Robert B. McKnight, Jr., Chairman of the Board, Chief Executive Officer and President of Quiksilver, Inc., commented, “We’re pleased to report another quarter of solid financial results and we exit 2011 in great shape to deliver improved performance in 2012 in line with our long-term plans. We made investments in fiscal 2011 to deliver better products from each of our brands, but we are most encouraged by the performance of our Roxy brand, which continues to gain traction in the marketplace and whose revenue performance compared to prior periods has improved steadily in each of the past five quarters. Additionally, despite particularly challenging consumer environments in parts of Europe and Australasia, we continue to see solid growth in our emerging and developing markets around the world.”

Net revenues in the Americas increased 13% during the fourth quarter of fiscal 2011 to $249.8 million from $221.8 million in the fourth quarter of fiscal 2010. As measured in U.S. dollars and reported in the financial statements, European net revenues increased 11% during the fourth quarter of fiscal 2011 to $212.5 million from $190.7 million in the

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Quiksilver, Inc. Reports Fourth Quarter and Fiscal Year 2011 Results

December 15, 2011

Page 2 of 11

 

fourth quarter a year ago. In constant currency, European segment net revenues increased 6% compared to the fourth quarter of fiscal 2010. As measured in U.S. dollars and reported in the financial statements, Asia/Pacific net revenues increased 2% during the fourth quarter of fiscal 2011 to $81.8 million from $80.4 million in the fourth quarter of fiscal 2010. In constant currency, Asia/Pacific segment net revenues decreased 7% compared to the fourth quarter a year ago. Please refer to the accompanying tables in order to better understand the impact of foreign currency exchange rates on revenue trends in the European and Asia/Pacific segments.

For the full year of fiscal 2011, net revenues in the Americas increased 8% to $914.4 million. As measured in U.S. dollars and reported in the financial statements, European net revenues increased 4% during the full year of fiscal 2011 to $761.1 million. In constant currency, European net revenues increased 1% compared to the prior year. As measured in U.S. dollars and reported in the financial statements, Asia/Pacific net revenues increased 5% to $272.5 million for the full year of fiscal 2011. In constant currency, Asia/Pacific net revenues decreased 8% compared to the prior year.

Consolidated inventories increased to $347.8 million at October 31, 2011 as compared to $268.0 million at October 31, 2010. Consolidated trade accounts receivable increased to $397.1 million at October 31, 2011 from $368.4 million at October 31, 2010.

Q4 Highlights

 

•  

The company’s same store sales in its Americas region were up 16% compared to the same quarter a year ago, continuing a run of strong performance in company-owned stores. Additionally, fourth quarter same store sales in its European region turned positive for the first time in 6 fiscal quarters.

 

•  

The company’s Roxy brand continued to build momentum in the fourth quarter. Since refocusing the brand in the image of its original California surfing roots and making key changes within the brand management team, Roxy has delivered five consecutive quarters of continually improving revenue comparisons to prior year periods.

 

•  

Legendary Quiksilver team rider Kelly Slater clinched his unprecedented 11th ASP World Surf Championship as he dominated this year’s tour by winning three events and earning Top 5 finishes in each of the nine events that counted toward his championship point total.

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, snowboards 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 outdoor action sports. The company’s Quiksilver, Roxy, DC, Lib Tech and Hawk brands are synonymous with the heritage and culture of surfing, skateboarding and snowboarding.

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Quiksilver, Inc. Reports Fourth Quarter and Fiscal Year 2011 Results

December 15, 2011

Page 3 of 11

 

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 new growth initiatives 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.dcshoes.com, www.lib-tech.com and www.hawkclothing.com.

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Quiksilver, Inc. Reports Fourth Quarter and Fiscal Year 2011 Results

December 15, 2011

Page 4 of 11

 

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

 

     Three Months Ended October 31,  
In thousands, except per share amounts    2011     2010  

Revenues, net

    $ 545,201      $ 495,119   

Cost of goods sold

      262,124        230,040   
  

 

 

    

 

 

  

Gross profit

      283,077        265,079   

Selling, general and administrative expense

      247,593        222,335   

Asset impairments

      11,763        8,432   
  

 

 

    

 

 

  

Operating income

      23,721        34,312   

Interest expense

      14,081        50,567   

Foreign currency loss

      5,775        463   
  

 

 

    

 

 

  

Income (loss) before (benefit) provision for income taxes

      3,865        (16,718 ) 

(Benefit) provision for income taxes

      (64,252 )      5,244   
  

 

 

    

 

 

  

Income (loss) from continuing operations

    $ 68,117      $ (21,962 ) 

Income from discontinued operations

      —          1,009   
  

 

 

    

 

 

  

Net income (loss)

    $ 68,117      $ (20,953 ) 

Less: net income attributable to non-controlling interest

      (219 )      (1,107 ) 
  

 

 

    

 

 

  

Net income (loss) attributable to Quiksilver, Inc.

    $ 67,898      $ (22,060 ) 
  

 

 

    

 

 

  

Income (loss) per share from continuing operations attributable to Quiksilver, Inc.

    $ 0.42      $ (0.15 ) 
  

 

 

    

 

 

  

Income per share from discontinued operations attributable to Quiksilver, Inc.

    $ —        $ 0.01   
  

 

 

    

 

 

  

Net income (loss) per share attributable to Quiksilver, Inc.

    $ 0.42      $ (0.14 ) 
  

 

 

    

 

 

  

Income (loss) per share from continuing operations attributable to Quiksilver, Inc., assuming dilution

    $ 0.38      $ (0.15 ) 
  

 

 

    

 

 

  

Income per share from discontinued operations attributable to Quiksilver, Inc., assuming dilution

    $ —        $ 0.01   
  

 

 

    

 

 

  

Net income (loss) per share attributable to Quiksilver, Inc., assuming dilution

    $ 0.38      $ (0.14 ) 
  

 

 

    

 

 

  

Weighted average common shares outstanding

      163,117        158,379   
  

 

 

    

 

 

  

Weighted average common shares outstanding, assuming dilution

      179,742        158,379   
  

 

 

    

 

 

  

Amounts attributable to Quiksilver, Inc.:

     

Income (loss) from continuing operations

    $ 67,898      $ (23,069 ) 

Income from discontinued operations

      —          1,009   
  

 

 

    

 

 

  

Net income (loss)

    $ 67,898      $ (22,060 ) 
  

 

 

    

 

 

  

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Quiksilver, Inc. Reports Fourth Quarter and Fiscal Year 2011 Results

December 15, 2011

Page 5 of 11

 

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

 

     Fiscal Year Ended October 31,  
In thousands, except per share amounts    2011     2010  

Revenues, net

    $ 1,953,061      $ 1,837,620   

Cost of goods sold

      929,227        870,372   
  

 

 

    

 

 

  

Gross profit

      1,023,834        967,248   

Selling, general and administrative expense

      895,949        832,066   

Asset impairments

      86,373        11,657   
  

 

 

    

 

 

  

Operating income

      41,512        123,525   

Interest expense

      73,808        114,109   

Foreign currency gain

      (111 )      (5,917 ) 
  

 

 

    

 

 

  

(Loss) income before (benefit) provision for income taxes

      (32,185 )      15,333   

(Benefit) provision for income taxes

      (14,315 )      23,433   
  

 

 

    

 

 

  

Loss from continuing operations

    $ (17,870 )    $ (8,100 ) 

Income from discontinued operations

      —          1,830   
  

 

 

    

 

 

  

Net loss

    $ (17,870 )    $ (6,270 ) 

Less: net income attributable to non-controlling interest

      (3,388 )      (3,414 ) 
  

 

 

    

 

 

  

Net loss attributable to Quiksilver, Inc.

    $ (21,258 )    $ (9,684 ) 
  

 

 

    

 

 

  

Loss per share from continuing operations attributable to Quiksilver, Inc.

    $ (0.13 )    $ (0.09 ) 
  

 

 

    

 

 

  

Income per share from discontinued operations attributable to Quiksilver, Inc.

    $ —        $ 0.01   
  

 

 

    

 

 

  

Net loss per share attributable to Quiksilver, Inc.

    $ (0.13 )    $ (0.07 ) 
  

 

 

    

 

 

  

Loss per share from continuing operations attributable to Quiksilver, Inc., assuming dilution

    $ (0.13 )    $ (0.09 ) 
  

 

 

    

 

 

  

Income per share from discontinued operations attributable to Quiksilver, Inc., assuming dilution

    $ —        $ 0.01   
  

 

 

    

 

 

  

Net loss per share attributable to Quiksilver, Inc., assuming dilution

    $ (0.13 )    $ (0.07 ) 
  

 

 

    

 

 

  

Weighted average common shares outstanding

      162,430        135,334   
  

 

 

    

 

 

  

Weighted average common shares outstanding, assuming dilution

      162,430        135,334   
  

 

 

    

 

 

  

Amounts attributable to Quiksilver, Inc.:

     

Loss from continuing operations

    $ (21,258 )    $ (11,514 ) 

Income from discontinued operations

      —          1,830   
  

 

 

    

 

 

  

Net loss

    $ (21,258 )    $ (9,684 ) 
  

 

 

    

 

 

  

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Quiksilver, Inc. Reports Fourth Quarter and Fiscal Year 2011 Results

December 15, 2011

Page 6 of 11

 

Information related to operating segments is as follows (unaudited):

 

     Three Months Ended
October 31,		  
In thousands    2011     2010  

Revenues, net:

     

Americas

    $ 249,788      $ 221,754   

Europe

      212,522        190,692   

Asia/Pacific

      81,843        80,377   

Corporate operations

      1,048        2,296   
  

 

 

    

 

 

  
   $ 545,201      $ 495,119   
  

 

 

    

 

 

  

Gross Profit:

     

Americas

    $ 117,575      $ 106,643   

Europe

      121,644        114,788   

Asia/Pacific

      42,973        44,026   

Corporate operations

      885        (378 ) 
  

 

 

    

 

 

  
   $ 283,077      $ 265,079   
  

 

 

    

 

 

  

SG&A Expense:

     

Americas

    $ 104,804      $ 87,167   

Europe

      89,999        92,159   

Asia/Pacific

      38,988        35,403   

Corporate operations

      13,802        7,606   
  

 

 

    

 

 

  
   $ 247,593      $ 222,335   
  

 

 

    

 

 

  

Asset Impairments:

     

Americas

    $ 3,426      $ 6,747   

Europe

      1,331        1,685   

Asia/Pacific

      7,006        —     

Corporate operations

      —          —     
  

 

 

    

 

 

  
   $ 11,763      $ 8,432   
  

 

 

    

 

 

  

Operating Income (Loss):

     

Americas

    $ 9,345      $ 12,729   

Europe

      30,314        20,944   

Asia/Pacific

      (3,021 )      8,623   

Corporate operations

      (12,917 )      (7,984 ) 
  

 

 

    

 

 

  
   $ 23,721      $ 34,312   
  

 

 

    

 

 

  

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Quiksilver, Inc. Reports Fourth Quarter and Fiscal Year 2011 Results

December 15, 2011

Page 7 of 11

 

Information related to operating segments (continued):

 

     Fiscal Year Ended
October 31,		  
In thousands    2011     2010  

Revenues, net:

     

Americas

    $ 914,406      $ 843,078   

Europe

      761,100        728,952   

Asia/Pacific

      272,479        260,578   

Corporate operations

      5,076        5,012   
  

 

 

    

 

 

  
   $ 1,953,061      $ 1,837,620   
  

 

 

    

 

 

  

Gross Profit:

     

Americas

    $ 425,607      $ 390,249   

Europe

      453,727        436,088   

Asia/Pacific

      144,815        141,197   

Corporate operations

      (315 )      (286 ) 
  

 

 

    

 

 

  
   $ 1,023,834      $ 967,248   
  

 

 

    

 

 

  

SG&A Expense:

     

Americas

    $ 360,921      $ 324,683   

Europe

      340,387        340,138   

Asia/Pacific

      147,949        128,207   

Corporate operations

      46,692        39,038   
  

 

 

    

 

 

  
   $ 895,949      $ 832,066   
  

 

 

    

 

 

  

Asset Impairments:

     

Americas

    $ 3,891      $ 8,686   

Europe

      1,331        1,785   

Asia/Pacific

      81,151        1,186   

Corporate operations

      —          —     
  

 

 

    

 

 

  
   $ 86,373      $ 11,657   
  

 

 

    

 

 

  

Operating Income (Loss):

     

Americas

    $ 60,795      $ 56,880   

Europe

      112,009        94,165   

Asia/Pacific

      (84,285 )      11,804   

Corporate operations

      (47,007 )      (39,324 ) 
  

 

 

    

 

 

  
   $ 41,512      $ 123,525   
  

 

 

    

 

 

  

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Quiksilver, Inc. Reports Fourth Quarter and Fiscal Year 2011 Results

December 15, 2011

Page 8 of 11

 

GAAP TO PRO-FORMA RECONCILIATION (Unaudited)

 

     Three Months Ended October 31,  
In thousands, except per share amounts    2011     2010  

Income (loss) from continuing operations attributable to Quiksilver, Inc.

    $ 67,898      $ (23,069 ) 

Non-cash asset impairment charges, net of tax of $328 (2011) and $556 (2010)

      11,435        7,876   

Restructuring charges, net of tax of $0 (2011) and $658 (2010)

      8,038        2,612   

Effect of Asia/Pacific tax valuation allowance

      (7,266 )      —     

FIN 48 tax adjustment

      (69,285 )      —     

Non-cash interest charges, net of tax of $0 (2011 and 2010)

      —          34,419   
  

 

 

    

 

 

  

Pro-forma income from continuing operations

    $ 10,820      $ 21,838   
  

 

 

    

 

 

  

Pro-forma income per share from continuing operations

    $ 0.07      $ 0.14   
  

 

 

    

 

 

  

Pro-forma income per share from continuing operations, assuming dilution

    $ 0.06      $ 0.12   
  

 

 

    

 

 

  

Weighted average common shares outstanding

      163,117        158,379   
  

 

 

    

 

 

  

Weighted average common shares outstanding, assuming dilution

      179,742        177,020   
  

 

 

    

 

 

  

 

     Fiscal Year Ended October 31,  
In thousands, except per share amounts    2011     2010  

Loss from continuing operations attributable to Quiksilver, Inc.

    $ (21,258 )    $ (11,514 ) 

Non-cash asset impairment charges, net of tax of $328 (2011) and $1,172 (2010)

      86,045        10,485   

Effect of Asia/Pacific tax valuation allowance

      18,714        —     

Non-cash interest charges, net of tax of $4,618 (2011) and $0 (2010)

      10,691        34,419   

Restructuring charges, net of tax of $0 (2011) and $929 (2010)

      5,920        10,224   

FIN 48 tax adjustment

      (69,285 )      —     

Stock compensation expense

      —          5,240   

Gain from sale of Raisins trademarks

      —          (1,252 ) 
  

 

 

    

 

 

  

Pro-forma income from continuing operations

    $ 30,827      $ 47,602   
  

 

 

    

 

 

  

Pro-forma income per share from continuing operations

    $ 0.19      $ 0.35   
  

 

 

    

 

 

  

Pro-forma income per share from continuing operations, assuming dilution

    $ 0.17      $ 0.31   
  

 

 

    

 

 

  

Weighted average common shares outstanding

      162,430        135,334   
  

 

 

    

 

 

  

Weighted average common shares outstanding, assuming dilution

      182,049        151,954   
  

 

 

    

 

 

  

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Quiksilver, Inc. Reports Fourth Quarter and Fiscal Year 2011 Results

December 15, 2011

Page 9 of 11

 

ADJUSTED EBITDA and PRO-FORMA ADJUSTED EBITDA RECONCILIATION

(Unaudited)

 

     Three Months Ended October 31,  
In thousands    2011     2010  

Income (loss) from continuing operations attributable to Quiksilver, Inc.

    $ 67,898      $ (23,069 ) 

(Benefit) provision for income taxes

      (64,252 )      5,244   

Interest expense

      14,081        50,567   

Depreciation and amortization

      15,105        13,646   

Non-cash stock-based compensation expense

      4,498        1,417   

Non-cash asset impairments

      11,763        8,432   
  

 

 

    

 

 

  

Adjusted EBITDA

    $ 49,093      $ 56,237   

Restructuring charges

      8,038        3,270   
  

 

 

    

 

 

  

Pro-forma Adjusted EBITDA

    $ 57,131      $ 59,507   
  

 

 

    

 

 

  

 

     Twelve Months Ended October 31,  
In thousands    2011     2010  

Loss from continuing operations attributable to Quiksilver, Inc.

    $ (21,258 )    $ (11,514 ) 

(Benefit) provision for income taxes

      (14,315 )      23,433   

Interest expense

      73,808        114,109   

Depreciation and amortization

      55,259        53,861   

Non-cash stock-based compensation expense

      14,414        12,831   

Non-cash asset impairments

      86,373        11,657   
  

 

 

    

 

 

  

Adjusted EBITDA

    $ 194,281      $ 204,377   

Restructuring and other special charges

      5,920        9,901   
  

 

 

    

 

 

  

Pro-forma Adjusted EBITDA

    $ 200,201      $ 214,278   
  

 

 

    

 

 

  

Definition of Adjusted EBITDA:

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 the 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

LOGO

Quiksilver, Inc. Reports Fourth Quarter and Fiscal Year 2011 Results

December 15, 2011

Page 10 of 11

 

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.

SUPPLEMENTAL EXCHANGE RATE INFORMATION

(Unaudited)

In order to better understand growth rates in our foreign operating segments, we make reference to constant currency. Constant currency reporting improves visibility into actual growth rates as it adjusts for the effect of changing foreign currency exchange rates from period to period. Constant currency is calculated by taking the ending foreign currency exchange rate (for balance sheet items) or the average foreign currency exchange rate (for income statement items) used in translation for the current period and applying that same rate to the prior period. Our European segment is translated into constant currency using euros and our Asia/Pacific segment is translated into constant currency using Australian dollars as these are the primary functional currencies of each operating segment. As such, this methodology does not account for movements in individual currencies within a segment (for example, non-euro currencies within our European segment and Japanese yen within our Asia/Pacific segment). A constant currency translation methodology that accounts for movements in each individual currency could yield a different result compared to using only euros and Australian dollars. The following table presents revenues by segment in both historical currency and constant currency for the three months ended October 31, 2010 and 2011 (in thousands):

 

      Americas     Europe     Asia/Pacific     Corporate      Total  

Historical currency (as reported)

            

October 31, 2010

    $ 221,754      $ 190,692      $ 80,377      $ 2,296       $ 495,119   

October 31, 2011

      249,788        212,522        81,843        1,048         545,201   

Percentage increase

      13 %      11 %      2 %         10 % 

Constant currency (current year exchange rates)

            

October 31, 2010

    $ 221,754      $ 200,451      $ 88,272      $ 2,296       $ 512,773   

October 31, 2011

      249,788        212,522        81,843        1,048         545,201   

Percentage increase (decrease)

      13 %      6 %      (7 %)         6 % 

LOGO

Quiksilver, Inc. Reports Fourth Quarter and Fiscal Year 2011 Results

December 15, 2011

Page 11 of 11

 

The following table presents revenues by segment in both historical currency and constant currency for the fiscal years ended October 31, 2010 and 2011 (in thousands):

 

     Americas     Europe     Asia/Pacific     Corporate      Total  

Historical currency (as reported)

            

October 31, 2010

    $ 843,078      $ 728,952      $ 260,578      $ 5,012       $ 1,837,620   

October 31, 2011

      914,406        761,100        272,479        5,076         1,953,061   

Percentage increase

      8 %      4 %      5 %         6 % 

Constant currency (current year exchange rates)

            

October 31, 2010

    $ 843,078      $ 753,557      $ 294,815      $ 5,012       $ 1,896,462   

October 31, 2011

      914,406        761,100        272,479        5,076         1,953,061   

Percentage increase (decrease)

      8 %      1 %      (8 %)         3 % 

CONSOLIDATED SELECTED BALANCE SHEET INFORMATION (Unaudited)

 

     October 31,  
In thousands    2011      2010  

Cash and cash equivalents

    $ 109,753       $ 120,593   

Trade accounts receivable, net

      397,089         368,428   

Inventories

      347,757         268,037   

Lines of credit and long-term debt

      747,686         728,773   
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