News

Quiksilver, Inc. Reports Fiscal 2008 Third Quarter Financial Results

HUNTINGTON BEACH, Calif.-(Business Wire)-September 4, 2008 - Quiksilver, Inc. (NYSE:ZQK) today announced operating results for the third quarter ended July 31, 2008. Consolidated net revenues from continuing operations for the third quarter of fiscal 2008 increased 7% to $564.9 million, from $528.6 million in the third quarter of fiscal 2007. Consolidated income from continuing operations for the third quarter of fiscal 2008 was $33.1 million, or $0.25 per share, compared to $35.7 million, or $0.28 per share, for the third quarter of fiscal 2007. Results for the quarter included a $0.03 per share benefit from certain tax adjustments. Net revenues and income from continuing operations for all periods exclude the results of our Rossignol wintersports equipment and apparel operations which are reported as discontinued operations. Including discontinued operations, net income for the quarter was $2.9 million or $0.02 per share compared to a net loss of $7.9 million or ($0.06) per share in the same quarter a year ago. The Company recently announced that it had received a binding offer to purchase Rossignol and expects to close this transaction in the Fall of 2008.

Robert B. McKnight, Jr., Chairman of the Board, Chief Executive Officer and President of Quiksilver, Inc., commented, “Our performance overall was in-line with our expectations and we are relatively pleased to deliver results in this range given the negative trends we’ve all witnessed during the quarter in the retail environment. Our gross margins benefited from a higher proportion of our revenues coming from Europe and from our retail stores than in the same quarter a year ago and we again achieved some improvements in sourcing margins. At the same time, this business mix drove our expense ratio higher, and a weaker performance at retail, together with conservative ordering by our wholesale customers, led to some deleveraging of expenses.”

All segments have been adjusted to reflect the discontinued operations classification of our Rossignol wintersports equipment and apparel business. The Americas, Europe and Asia/Pacific segments each include operations of our Quiksilver, Roxy, DC and other apparel brand businesses. Net revenues in the Americas segment decreased 4% during the third quarter of fiscal 2008 to $271.9 million from $281.9 million in the third quarter of fiscal 2007. European segment net revenues increased 25% during the third quarter of fiscal 2008 to $232.0 million from $185.6 million in the third quarter of fiscal 2007. Approximately $28.6 million of Europe’s increase was attributable to the positive effect of changes in foreign currency exchange rates. Asia/Pacific segment net revenues decreased slightly to $59.6 million in the third quarter of fiscal 2008 from $59.9 million in the third quarter of fiscal 2007. Asia/Pacific’s decrease would have been greater but for the positive effect of changes in foreign currency exchange rates of approximately $7.9 million.

Consolidated inventories increased 14% to $358.6 million at July 31, 2008 from $315.1 million at July 31, 2007. Changes in foreign currency exchange rates accounted for approximately $22.5 million of the increase in inventories compared to July 31, 2007. Consolidated trade accounts receivable increased 10% to $491.4 million at July 31, 2008 from $445.5 million at July 31, 2007. Changes in foreign currency exchange rates accounted for approximately $31.5 million of the increase in accounts receivable compared to July 31, 2007.

Addressing its outlook for continuing operations, the Company indicated that it continues to believe it can achieve earnings per share for the full fiscal year ending October 31 of slightly below $0.90 per share, including the $0.03 tax benefit recognized in the fiscal third quarter.

About Quiksilver:

Quiksilver, Inc. (NYSE:ZQK) is the world’s leading outdoor sports lifestyle company, which designs, produces and distributes a diversified mix of branded apparel, footwear, accessories and related products. The Company’s apparel and footwear brands represent a casual lifestyle for young-minded people that connect with its boardriding culture and heritage.

The reputation of Quiksilver’s brands is based on different outdoor sports. The Company’s Quiksilver, Roxy, DC and Hawk brands are synonymous with the heritage and culture of surfing, skateboarding and snowboarding, and its beach and water oriented swimwear brands include Raisins, Radio Fiji and Leilani.

The Company’s products are sold in over 90 countries in a wide range of distribution, including surf shops, skate shops, snow shops, its proprietary Boardriders Club shops and other company-owned retail stores, other specialty stores and select department stores. Quiksilver’s corporate and Americas’ headquarters are in Huntington Beach, California, while its European headquarters are in St. Jean de Luz, France, and its Asia/Pacific headquarters are in Torquay, Australia.

Forward looking statements:

This press release contains forward-looking statements including but not limited to statements regarding the Company’s 2008 annual earnings per share guidance and other future activities. These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially. Please refer to Quiksilver’s SEC filings for more information on the risk factors that could cause actual results to differ materially from expectations, specifically the sections titled “Risk Factors” and “Forward-Looking Statements” in Quiksilver’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

NOTE: For further information about Quiksilver, Inc., you are invited to take a look at our world at www.quiksilver.com, www.roxy.com, www.dcshoecousa.com, www.quiksilveredition.com, www.hawkclothing.com.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended July 31,
In thousands, except per share amounts	2008			2007

Revenues, net	$	564,876		$	528,591
Cost of goods sold		280,047			276,512
Gross profit		284,829			252,079

Selling, general and administrative expense		232,094			194,323
Operating income		52,735			57,756

Interest expense		11,801			11,881
Foreign currency (gain) loss		(1,231	)		310
Minority interest and other expense		415			80
Income before provision for income taxes		41,750			45,485

Provision for income taxes		8,677			9,783

Income from continuing operations	$	33,073		$	35,702
Loss from discontinued operations, net of tax		(30,219	)		(43,569	)
Net income (loss)	$	2,854		$	(7,867	)

Income per share from continuing operations	$	0.26		$	0.29
Loss per share from discontinued operations	$	(0.24	)	$	(0.35	)
Net income (loss) per share	$	0.02		$	(0.06	)

Income per share from continuing operations, assuming dilution	$	0.25		$	0.28
Loss per share from discontinued operations, assuming dilution	$	(0.23	)	$	(0.34	)
Net income (loss) per share, assuming dilution	$	0.02		$	(0.06	)

Weighted average common shares outstanding		126,220			124,013

Weighted average common shares outstanding, assuming dilution		130,021			129,163

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Nine Months Ended July 31,
In thousands, except per share amounts	2008			2007

Revenues, net	$	1,657,737		$	1,459,804
Cost of goods sold		829,042			763,263
Gross profit		828,695			696,541

Selling, general and administrative expense		684,304			565,687
Asset impairment		350		―

Operating income		144,041			130,854

Interest expense		35,845			35,420
Foreign currency (gain) loss		(463	)		1,732
Minority interest and other expense		18			39
Income before provision for income taxes		108,641			93,663

Provision for income taxes		29,273			20,870

Income from continuing operations	$	79,368		$	72,793
Loss from discontinued operations		(304,678	)		(82,985	)
Net loss	$	(225,310	)	$	(10,192	)

Income per share from continuing operations	$	0.63		$	0.59
Loss per share from discontinued operations	$	(2.43	)	$	(0.67	)
Net loss per share	$	(1.80	)	$	(0.08	)

Income per share from continuing operations, assuming dilution	$	0.61		$	0.56
Loss per share from discontinued operations, assuming dilution	$	(2.35	)	$	(0.64	)
Net loss per share, assuming dilution	$	(1.74	)	$	(0.08	)

Weighted average common shares outstanding		125,511			123,579

Weighted average common shares outstanding, assuming dilution		129,765			128,966