EXHIBIT 99.1
PRESS RELEASE
FOR IMMEDIATE RELEASE | Company Contact: | Robert B. McKnight, Jr. Chairman & CEO Steven L. Brink Chief Financial Officer (714) 889-2200 | ||
Investor Relations: | James Palczynski/Chad A. Jacobs Integrated Corporate Relations (203) 222-9013 |
QUIKSILVER, INC. REPORTS RECORD 2004 THIRD QUARTER
OPERATING RESULTS
— Consolidated Revenues Increase 34% —
— Earnings Per Share increase 52% to $0.32 —
HUNTINGTON BEACH, CALIFORNIA, SEPTEMBER 9, 2004 — Quiksilver, Inc. (NYSE:ZQK) today announced record operating results for the third quarter ended July 31, 2004.
Consolidated revenues for the third quarter of fiscal 2004 increased 34% to $337.9 million as compared to fiscal 2003 third quarter consolidated revenues of $251.5 million. Consolidated net income for the third quarter of fiscal 2004 increased 64% to $19.5 million as compared to $11.9 million. Third quarter fully diluted earnings per share was $0.32 versus $0.21 for the third quarter of fiscal 2003.
Robert B. McKnight, Jr., Chairman of the Board and Chief Executive Officer of Quiksilver, Inc., commented, “We are very pleased with our accomplishments during the third quarter. This represents our 11th consecutive quarter of exceeding expectations and further highlights our excellent track record of generating strong and consistent financial results. Our business trends are solid, and we are encouraged about our prospects for the future.”
Revenues in the Americas increased 37% during the third quarter of fiscal 2004 to $187.9 million as compared to fiscal 2003 third quarter revenues of $137.4 million. As measured in U.S. dollars and reported in the financial statements, European revenues increased 23% during the third quarter of fiscal 2004 to $115.4 million as compared to fiscal 2003 third quarter European revenues of $93.9 million. As measured in euros, European revenues increased 17% for those same periods. Asia/Pacific revenues increased 67% to $33.1 million in the third quarter of fiscal 2004 compared to $19.8 million in the third quarter of 2003. As measured in Australian dollars, Asia/Pacific revenues increased 56%.
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September 9, 2004 — Page 2
Mr. McKnight continued, “The feedback regarding our Spring lines at recent trade shows around the world, including MAGIC in the U.S. and ASR in Europe, was very positive and reflects our ongoing commitment to develop the best product in the market. We believe that our merchandise is trend right and underscores our status as the dominant lifestyle company for kids and young adults around the world.”
The Company also confirmed its expectations for the fourth quarter fiscal ending October 31, 2004 that revenues will range between $315 million and $320 million, and diluted earnings per share will range between $0.36 and $0.37. For the full fiscal year, revenues are expected to range between $1.23 billion and $1.24 billion with diluted earnings per share ranging from $1.31 to $1.32.
Consolidated inventories increased 8% to $171.6 million at July 31, 2004 from $159.5 million at July 31, 2003. Consolidated trade accounts receivable increased 25% to $271.4 million at July 31, 2004 from $217.9 million at July 31, 2003. Average days sales outstanding decreased by approximately four days compared to the third quarter of the prior year, while inventories grew 5% in constant dollars.
“This first quarter with DC Shoes included in our results was truly exceptional. Congratulations to all of our people around the world not only for the quarterly results, but for the tremendous spirit in which we’ve integrated DC into our company,” Bernard Mariette, President of Quiksilver, Inc., commented. “We’re very impressed by the way that Ken Block, Damon Way and their DC team are already contributing to the development of Quiksilver footwear. We can see the synergies of working together happening faster than we could have expected.”
Mr. McKnight concluded, “Our continued success is really a function of continuing to adhere to a few key disciplines: great product; careful brand management; a healthy philosophy regarding growth; and a strategic development plan designed to enhance each part of our business. Also fundamental to our consistency is the diversification of our company and the continuity of our management teams. We remain focused on further leveraging our leadership position in the industry and fully capitalizing on the many opportunities that lie ahead.”
September 9, 2004 — Page 3
About Quiksilver:
Quiksilver designs, produces and distributes clothing, accessories and related products for young-minded people and develops brands that represent a casual lifestyle–driven from a boardriding heritage. Quiksilver’s authenticity is evident in its innovative products, events and retail environments across the globe.
Quiksilver’s primary focus is apparel, footwear and related accessories for young men and young women under the Quiksilver, Roxy, DC Shoes, Raisins, and Radio Fiji labels. Quiksilver also manufactures apparel, footwear and related accessories for boys (Quiksilver Boys and Hawk Clothing), girls (Roxy Girl, Teenie Wahine and Raisins Girls), men (Quiksilveredition and Fidra) and women (Leilani swimwear), as well as snowboards, snowboard boots and bindings under the Lib Technologies, Gnu, DC Shoes, Roxy and Bent Metal labels. Quiksilver’s products are sold throughout the world, primarily in surf shops, skate shops and other specialty stores that provide an authentic retail experience for our customers.
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Safe Harbor Language
This Press Release contains forward-looking statements. 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 section titled “Forward Looking Statements” in Quiksilver’s Annual Report on Form 10-K.
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NOTE: For further information about Quiksilver, Inc., you are invited to take
a look at our world at http://www.quiksilver.com, http://www.roxy.com,
http://www.dcshoecousa.com, http://www.fidragolf.com, http://www.quiksilveredition.com and http://www.hawkclothing.com
September 9, 2004 — Page 4
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended July 31, | ||||||||
In thousands, except per share amounts | 2004 | 2003 | ||||||
Revenues | $ | 337,930 | $ | 251,498 | ||||
Cost of goods sold | 187,523 | 144,369 | ||||||
Gross profit | 150,407 | 107,129 | ||||||
Selling, general and administrative expense | 118,864 | 85,684 | ||||||
Operating income | 31,543 | 21,445 | ||||||
Interest expense | 1,498 | 2,232 | ||||||
Foreign currency (gain) loss | (28 | ) | 801 | |||||
Other expense | 392 | 146 | ||||||
Income before provision for income taxes | 29,681 | 18,266 | ||||||
Provision for income taxes | 10,151 | 6,348 | ||||||
Net income | $ | 19,530 | $ | 11,918 | ||||
Net income per share | $ | 0.33 | $ | 0.22 | ||||
Net income per share, assuming dilution | $ | 0.32 | $ | 0.21 | ||||
Weighted average common shares outstanding | 58,386 | 55,077 | ||||||
Weighted average common shares outstanding, assuming dilution | 60,813 | 57,567 | ||||||
September 9, 2004 — Page 5
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Nine Months Ended July 31, | ||||||||
In thousands, except per share amounts | 2004 | 2003 | ||||||
Revenues | $ | 916,651 | $ | 705,788 | ||||
Cost of goods sold | 505,532 | 398,568 | ||||||
Gross profit | 411,119 | 307,220 | ||||||
Selling, general and administrative expense | 318,246 | 235,483 | ||||||
Operating income | 92,873 | 71,737 | ||||||
Interest expense | 4,563 | 6,455 | ||||||
Foreign currency loss | 2,059 | 1,616 | ||||||
Other expense | 901 | 410 | ||||||
Income before provision for income taxes | 85,350 | 63,256 | ||||||
Provision for income taxes | 28,856 | 22,140 | ||||||
Net income | $ | 56,494 | $ | 41,116 | ||||
Net income per share | $ | 1.00 | $ | 0.76 | ||||
Net income per share, assuming dilution | $ | 0.95 | $ | 0.73 | ||||
Weighted average common shares outstanding | 56,730 | 53,827 | ||||||
Weighted average common shares outstanding, assuming dilution | 59,168 | 56,244 | ||||||
September 9, 2004 — Page 6
CONSOLIDATED BALANCE SHEETS (Unaudited)
July 31, 2004 | October 31, 2003 | |||||||
Amounts in thousands | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 45,389 | $ | 27,866 | ||||
Trade accounts receivable, less allowance for doubtful accounts of $11,248 (2004) and $8,700 (2003) | 271,399 | 224,418 | ||||||
Other receivables | 11,086 | 7,617 | ||||||
Inventories | 171,639 | 146,440 | ||||||
Deferred income taxes | 22,350 | 17,472 | ||||||
Prepaid expenses and other current assets | 13,871 | 9,732 | ||||||
Total current assets | 535,734 | 433,545 | ||||||
Fixed assets, net | 111,690 | 99,299 | ||||||
Intangibles, net | 114,962 | 65,577 | ||||||
Goodwill | 131,328 | 98,833 | ||||||
Deferred income taxes | 3,381 | 1,984 | ||||||
Other assets | 11,793 | 8,732 | ||||||
Total assets | $ | 908,888 | $ | 707,970 | ||||
LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities: | ||||||||
Lines of credit | $ | 5,190 | $ | 20,951 | ||||
Accounts payable | 97,818 | 64,537 | ||||||
Accrued liabilities | 54,069 | 41,759 | ||||||
Current portion of long-term debt | 9,880 | 8,877 | ||||||
Income taxes payable | 14,443 | 10,796 | ||||||
Total current liabilities | 181,400 | 146,920 | ||||||
Long-term debt | 176,716 | 114,542 | ||||||
Total liabilities | 358,116 | 261,462 | ||||||
Stockholders’ equity: | ||||||||
Preferred stock | — | — | ||||||
Common stock | 599 | 570 | ||||||
Additional paid-in capital | 197,335 | 155,310 | ||||||
Treasury stock | (6,778 | ) | (6,778 | ) | ||||
Retained earnings | 334,048 | 277,554 | ||||||
Accumulated other comprehensive income | 25,568 | 19,852 | ||||||
Total stockholders’ equity | 550,772 | 446,508 | ||||||
Total liabilities & stockholders’ equity | $ | 908,888 | $ | 707,970 | ||||
September 9, 2004 — Page 7
Information related to geographic segments is as follows:
Three Months Ended July 31, | ||||||||
Amounts in thousands | 2004 | 2003 | ||||||
Revenues: | ||||||||
Americas | $ | 187,880 | $ | 137,366 | ||||
Europe | 115,436 | 93,852 | ||||||
Asia/Pacific | 33,108 | 19,775 | ||||||
Corporate Operations | 1,506 | 505 | ||||||
$ | 337,930 | $ | 251,498 | |||||
Gross Profit: | ||||||||
Americas | $ | 75,286 | $ | 52,048 | ||||
Europe | 58,194 | 45,612 | ||||||
Asia/Pacific | 16,254 | 8,964 | ||||||
Corporate Operations | 673 | 505 | ||||||
$ | 150,407 | $ | 107,129 | |||||
SG&A Expense: | ||||||||
Americas | $ | 52,676 | $ | 38,354 | ||||
Europe | 44,898 | 33,863 | ||||||
Asia/Pacific | 12,442 | 8,340 | ||||||
Corporate Operations | 8,848 | 5,127 | ||||||
$ | 118,864 | $ | 85,684 | |||||
Operating Income: | ||||||||
Americas | $ | 22,610 | $ | 13,694 | ||||
Europe | 13,296 | 11,749 | ||||||
Asia/Pacific | 3,812 | 624 | ||||||
Corporate Operations | (8,175 | ) | (4,622 | ) | ||||
$ | 31,543 | $ | 21,445 | |||||