EXHIBIT 99.1
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Company Contact: | Steven L. Brink | |||
Chief Financial Officer | ||||
Quiksilver, Inc. | ||||
(714) 889-2200 | ||||
Investor Relations: | Chad A. Jacobs, James Palczynski | |||
Integrated Corporate Relations | ||||
(203) 682-8200 |
— Quiksilver, Inc. Reports 2006 First Quarter Financial Results —
– First Quarter 2006 Net Revenues Increase 58% to $541.1 million –
– First Quarter Fiscal 2006 Earnings Per Share Increase 25% to $0.15 –
– Excluding Stock Compensation Expense, EPS Was $0.18, In Line With Guidance –
– Company Reiterates Fiscal 2006 Guidance –
– First Quarter Fiscal 2006 Earnings Per Share Increase 25% to $0.15 –
– Excluding Stock Compensation Expense, EPS Was $0.18, In Line With Guidance –
– Company Reiterates Fiscal 2006 Guidance –
Huntington Beach, California, March 9, 2006 — Quiksilver, Inc. (NYSE:ZQK) today announced operating results for the first quarter ended January 31, 2006. Consolidated net revenues for the first quarter of fiscal 2006 increased 58% to $541.1 from $342.9 million in the first quarter of fiscal 2005. Consolidated net income for the first quarter of fiscal 2006 increased 31% to $18.6 million from $14.2 million the year before. Consolidated net income for the first quarter of fiscal 2006 includes $4.1 million in stock compensation expense required by current accounting standards. No stock compensation expense was recorded in the first quarter of fiscal 2005. First quarter fully diluted earnings per share was $0.15 versus $0.12 for the first quarter of fiscal 2005, as adjusted for the two-for-one stock split that took effect in May 2005. Earnings per share on a fully diluted basis, excluding stock compensation expense, was $0.18 for the first quarter of fiscal 2006, in line with the company’s previous guidance. The $0.03 difference between $0.18 per share excluding stock compensation expense and actual earnings per share of $0.15 per share is determined by dividing $4.1 million, which is the tax-effected stock compensation expense, by 127.2 million weighted average common shares outstanding, assuming dilution.
Net revenues from the company’s newly acquired Rossignol and Cleveland Golf businesses totaled $192 million during the first quarter ended January 31, 2006.
Robert B. McKnight, Jr., Chairman of the Board and Chief Executive Officer of Quiksilver, Inc., commented, “This was an exciting quarter for our organization. Our core business, including Quiksilver, Roxy and DC shoes, was strong in both the US and Europe, and we were pleased that the Rossignol integration continues to track according to plan. We recently had the tremendous opportunity to be involved with the Olympic Games. We are also incredibly proud that Kelly Slater and Chelsea Georgeson won the men’s and women’s world titles for surfing on the World Championship Tours in 2005. This is Chelsea’s first and Kelly’s seventh, a new record. We believe that our company has the dominant position in the outdoor sports market, and we are looking forward to leveraging that position across the full spectrum of our product and marketing capabilities.”
Net revenues in the Americas increased 39% during the first quarter of fiscal 2006 to $220.7 million from $159.3 million in the first quarter of fiscal 2005. As measured in U.S. dollars and reported in the financial statements, European net revenues increased 97% during the first quarter of fiscal 2006 to $261.2 million from $132.6 million in the first quarter of fiscal 2005. As measured in euros, European net revenues increased 118% for
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Quiksilver, Inc. 2006 First Quarter Results
March 9, 2006
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those same periods. Asia/Pacific net revenues increased 16% to $58.3 million in the first quarter of fiscal 2006 from $50.5 million in the first quarter of fiscal 2005.
Inventories totaled $406.5 million at January 31, 2006, which includes $159.1 million from the newly acquired Rossignol and Cleveland Golf businesses. Inventories related to the company’s other businesses grew 5% to $247.5 million at January 31, 2006 from $236.8 million at January 31, 2005. Accounts receivable totaled $533.5 million at January 31, 2006, which includes $241.8 million from the newly acquired Rossignol and Cleveland Golf businesses. Accounts receivable related to the company’s other businesses increased 16% to $291.7 million at January 31, 2006 from $252.1 million at January 31, 2005.
Bernard Mariette, President of Quiksilver, Inc., commented, “We were pleased with our first quarter results, highlighted by significant gains in both sales and earnings per share and continued margin expansion. During the quarter we executed well, achieved our financial plan and further extended our reach around the world. Importantly, the integration program of Rossignol is progressing on all fronts, and we are broadening our initiatives to enhance our gross profitability and improve our competitive position.”
Mr. Mariette continued, “We would like to congratulate all of our athletes who participated in the 2006 Winter Olympic Games in Torino. Rossignol has a legacy of involvement with the Winter Olympics and, along with the riders for the Quiksilver brands, we sponsored 165 athletes from 26 countries who won 36 medals at the games. Their passion, dedication and commitment to excellence inspires us all. We believe that a big part of the appeal of our brands is their association with athletes and the lifestyle and global culture of outdoor sports. We will continue to push ourselves as we build our business, streamline Rossignol’s operations, develop new products, and leverage our respective expertise.”
The company reiterated its fiscal 2006 annual revenue guidance of $2.25 to $2.27 billion and its fiscal 2006 annual diluted earnings per share guidance of $0.87 to $0.88, before stock compensation expense.
The company further noted that it was adjusting its quarterly guidance to primarily reflect improved visibility on the timing of revenues and expenses for its newly acquired Rossignol and Cleveland Golf businesses. In addition, this new guidance incorporates the effects of a challenging environment in the Asia/Pacific region. The company believes that its second quarter sales will now range between $525 to $530 million, a 2% reduction from prior guidance. The company expects second quarter diluted earnings per share of approximately $0.06, before stock compensation expense, versus its prior guidance of $0.17 per share. Offsetting this reduction, the company believes that the third quarter and fourth quarter are likely to show stronger revenues and diluted earnings per share than previously forecasted. The company increased its third quarter revenue guidance by 1% to between $485 and $490 million. It expects third quarter diluted earnings per share of approximately $0.07, before stock compensation expense, versus its prior guidance of $0.03 per share. In the fourth quarter, the company now expects to generate revenues in the range of $710 to $715 million, 1% higher than previous guidance. It expects fourth quarter diluted earnings per share in the range of approximately $0.56 to $0.57, before stock compensation expense, versus its prior guidance of $0.49 to $0.50 per share. Stock compensation expense is expected to amount to $0.03 per share in each of the second and third quarters and $0.02 per share in the fourth quarter of fiscal 2006.
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Quiksilver, Inc. 2006 First Quarter Results
March 9, 2006
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Mr. McKnight concluded, “Passion for sport and the support and sponsorship of athletes are key components of who we are and what we do. We intend to take our love for the outdoors, and the lifestyles associated with a whole range of outdoor sports, and create a message and a vehicle for consumers to share in that spirit. In doing so, we believe that we will heighten our growth prospects and add increased value to our customers, business partners and shareholders around the world.”
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, wintersports and golf equipment, 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, while its wintersports and golf brands symbolize a long standing commitment to technical expertise and competitive success on the mountains and on the links.
The reputation of Quiksilver’s brands is based on different outdoor sports. The Company’s Quiksilver, Roxy, DC Shoes 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 Rossignol, Dynastar, Lange, Look and Kerma brands are leaders in the alpine ski market, and the Company makes snowboarding equipment under its Rossignol, Dynastar, DC Shoes, Roxy, Lib Technologies, Gnu and Bent Metal labels. The Company’s golf business includes Cleveland Golf, as well as Never Compromise putters and Fidra apparel. Gotcha is the Company’s surf-based European brand addressing street fashion.
The Company’s products are sold in over 90 countries in a wide range of distribution, including surf shops, ski shops, skateboard shops, snowboard shops, its proprietary Boardriders Club shops, 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 and Voiron, 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 financial forecast, earnings guidance and the success of the Rossignol integration 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 section titled “Forward-Looking Statements” in Quiksilver’s Annual Report onForm 10-K.
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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,
www.rossignol.com,www.dynastar.com,
www.clevelandgolf.com, andwww.fidragolf.com.
www.quiksilver.com,www.roxy.com,www.dcshoecousa.com,www.quiksilveredition.com,www.hawkclothing.com,
www.rossignol.com,www.dynastar.com,
www.clevelandgolf.com, andwww.fidragolf.com.
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Quiksilver, Inc. 2006 First Quarter Results
March 9, 2006
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CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended January 31, | ||||||||
In thousands, except per share amounts | 2006 | 2005 | ||||||
Revenues, net | $ | 541,142 | $ | 342,860 | ||||
Cost of goods sold | 292,581 | 189,954 | ||||||
Gross profit | 248,561 | 152,906 | ||||||
Selling, general and administrative expense | 211,305 | 129,483 | ||||||
Operating income | 37,256 | 23,423 | ||||||
Interest expense | 12,591 | 1,789 | ||||||
Foreign currency (gain) loss | (497 | ) | 463 | |||||
Minority interest and other (income) expense | (1,226 | ) | 206 | |||||
Income before provision for income taxes | 26,388 | 20,965 | ||||||
Provision for income taxes | 7,785 | 6,751 | ||||||
Net income | $ | 18,603 | $ | 14,214 | ||||
Net income per share | $ | 0.15 | $ | 0.12 | ||||
Net income per share, assuming dilution | $ | 0.15 | $ | 0.12 | ||||
Weighted average common shares outstanding | 121,434 | 117,592 | ||||||
Weighted average common shares outstanding, assuming dilution | 127,240 | 123,154 | ||||||
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Quiksilver, Inc. 2006 First Quarter Results
March 9, 2006
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CONSOLIDATED BALANCE SHEETS (Unaudited)
January 31, | October 31, | |||||||
In thousands | 2006 | 2005 | ||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 109,365 | $ | 75,598 | ||||
Trade accounts receivable, less allowance for doubtful accounts of $16,543 (2006) and $10,727 (2005) | 533,468 | 599,486 | ||||||
Other receivables | 18,314 | 27,414 | ||||||
Inventories | 406,542 | 386,396 | ||||||
Deferred income taxes | 41,768 | 41,646 | ||||||
Prepaid expenses and other current assets | 28,362 | 21,819 | ||||||
Total current assets | 1,137,819 | 1,152,359 | ||||||
Fixed assets, net | 239,632 | 241,979 | ||||||
Intangibles, net | 248,308 | 247,702 | ||||||
Goodwill | 456,200 | 449,377 | ||||||
Other assets | 45,009 | 43,955 | ||||||
Assets held for sale | 23,280 | 23,229 | ||||||
Total assets | $ | 2,150,248 | $ | 2,158,601 | ||||
LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities: | ||||||||
Lines of credit | $ | 247,459 | $ | 220,113 | ||||
Accounts payable | 222,697 | 212,407 | ||||||
Accrued liabilities | 164,346 | 182,973 | ||||||
Current portion of long-term debt | 16,299 | 50,833 | ||||||
Income taxes payable | 17,632 | 27,176 | ||||||
Total current liabilities | 668,433 | 693,502 | ||||||
Long-term debt | 635,289 | 640,348 | ||||||
Deferred income taxes | 77,331 | 81,628 | ||||||
Total liabilities | 1,381,053 | 1,415,478 | ||||||
Minority interest | 9,015 | 10,241 | ||||||
Stockholders’ equity: | ||||||||
Preferred stock | ¯ | |||||||
Common stock | 1,245 | 1,241 | ||||||
Additional paid-in capital | 251,590 | 242,284 | ||||||
Treasury stock | (6,778 | ) | (6,778 | ) | ||||
Retained earnings | 484,646 | 466,043 | ||||||
Accumulated other comprehensive income | 29,477 | 30,092 | ||||||
Total stockholders’ equity | 760,180 | 732,882 | ||||||
Total liabilities & stockholders’ equity | $ | 2,150,248 | $ | 2,158,601 | ||||
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Quiksilver, Inc. 2006 First Quarter Results
March 9, 2006
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Information related to geographic segments is as follows:
Three Months Ended January 31, | ||||||||
In thousands | 2006 | 2005 | ||||||
Revenues, net: | ||||||||
Americas | $ | 220,718 | $ | 159,274 | ||||
Europe | 261,152 | 132,590 | ||||||
Asia/Pacific | 58,342 | 50,450 | ||||||
Corporate operations | 930 | 546 | ||||||
$ | 541,142 | $ | 342,860 | |||||
Gross Profit: | ||||||||
Americas | $ | 87,782 | $ | 62,424 | ||||
Europe | 134,708 | 65,628 | ||||||
Asia/Pacific | 25,812 | 24,282 | ||||||
Corporate operations | 259 | 572 | ||||||
$ | 248,561 | $ | 152,906 | |||||
SG&A Expense: | ||||||||
Americas | $ | 83,819 | $ | 53,733 | ||||
Europe | 91,455 | 50,651 | ||||||
Asia/Pacific | 22,844 | 16,927 | ||||||
Corporate operations | 13,187 | 8,172 | ||||||
$ | 211,305 | $ | 129,483 | |||||
Operating Income: | ||||||||
Americas | $ | 3,963 | $ | 8,691 | ||||
Europe | 43,253 | 14,977 | ||||||
Asia/Pacific | 2,968 | 7,355 | ||||||
Corporate operations | (12,928 | ) | (7,600 | ) | ||||
$ | 37,256 | $ | 23,423 | |||||