Quiksilver, Inc. Reports Second Quarter Fiscal 2012 Financial Results

Forward looking statements:

This press release contains forward-looking statements including but not limited to statements regarding the company’s anticipated second half performance, inventory levels 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, and 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.

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CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
			Three Months Ended April 30,
In thousands, except per share amounts			2012					2011
Revenues, net			$	492,213				$	478,093
Cost of goods sold				250,064					215,924
Gross profit				242,149					262,169
Selling, general and administrative expense				224,010					216,748
Asset impairments				415					74,610
Operating income (loss)				17,724					(29,189	)
Interest expense				15,585					15,096
Foreign currency gain				(609	)				(2,321	)
Income (loss) before provision for income taxes				2,748					(41,964	)
Provision for income taxes				7,155					39,690
Net loss				(4,407	)				(81,654	)
Less: net income attributable to non-controlling interest				(713	)				(1,671	)
Net loss attributable to Quiksilver, Inc.			$	(5,120	)			$	(83,325	)
Net loss per share attributable to Quiksilver, Inc.			$	(0.03	)			$	(0.51	)
Net loss per share attributable to Quiksilver, Inc., assuming dilution			$	(0.03	)			$	(0.51	)
Weighted average common shares outstanding				163,953					162,268
Weighted average common shares outstanding, assuming dilution				163,953					162,268

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
			Six Months Ended April 30,
In thousands, except per share amounts			2012					2011
Revenues, net			$	941,834				$	904,543
Cost of goods sold				471,735					418,904
Gross profit				470,099					485,639
Selling, general and administrative expense				454,425					427,184
Asset impairments				415					74,610
Operating income (loss)				15,259					(16,155	)
Interest expense				30,630					44,064
Foreign currency gain				(2,459	)				(4,430	)
Loss before provision for income taxes				(12,912	)				(55,789	)
Provision for income taxes				12,405					40,941
Net loss				(25,317	)				(96,730	)
Less: net income attributable to non-controlling interest				(2,408	)				(2,863	)
Net loss attributable to Quiksilver, Inc.			$	(27,725	)			$	(99,593	)
Net loss per share attributable to Quiksilver, Inc.			$	(0.17	)			$	(0.62	)
Net loss per share attributable to Quiksilver, Inc., assuming dilution			$	(0.17	)			$	(0.62	)
Weighted average common shares outstanding				163,655					161,879
Weighted average common shares outstanding,assuming dilution				163,655					161,879

CONSOLIDATED BALANCE SHEETS (Unaudited)
In thousands			April 30,			April 30,
			2012			2011
ASSETS
Current assets:
Cash and cash equivalents			$ 79,177			$ 138,592
Trade accounts receivable, less allowancefor doubtful accounts of $41,995 (2012)and $51,772 (2011)			370,974			341,781
Other receivables			26,250			27,347
Income taxes receivable			―			111
Inventories			358,915			289,538
Deferred income taxes – short-term			17,752			24,426
Prepaid expenses and other current assets			31,697			31,270
Total current assets			884,765			853,065
Fixed assets, net			240,424			234,645
Intangibles, net			137,212			139,614
Goodwill			268,340			277,608
Other assets			54,948			52,658
Deferred income taxes – long-term			110,752			80,291
Total assets			$ 1,696,441			$ 1,637,881
LIABILITIES & EQUITY
Current liabilities:
Lines of credit			$ 13,517			$ 4,792
Accounts payable			190,647			178,559
Accrued liabilities			108,770			128,748
Current portion of long-term debt			22,840			5,824
Income taxes payable			3,068			―
Total current liabilities			338,842			317,923
Long-term debt			732,916			722,271
Other long-term liabilities			33,790			63,171
Total liabilities			1,105,548			1,103,365
Equity:
Common stock			1,684			1,677
Additional paid-in capital			544,809			521,148
Treasury stock			(6,778)			(6,778)
Accumulated deficit			(60,290)			(110,900)
Accumulated other comprehensive income			95,096			117,438
Total Quiksilver, Inc. stockholders’ equity			574,521			522,585
Non-controlling interest			16,372			11,931
Total equity			590,893			534,516
Total liabilities & equity			$ 1,696,441			$ 1,637,881

Information related to operating segments is as follows (unaudited):
			Three Months Ended April 30,
In thousands			2012					2011
Revenues, net:
Americas			$	220,975				$	210,669
Europe				195,554					206,941
Asia/Pacific				74,026					58,140
Corporate operations				1,658					2,343
			$	492,213				$	478,093
Gross Profit:
Americas			$	97,709				$	103,501
Europe				108,997					128,332
Asia/Pacific				35,963					30,862
Corporate operations				(520	)				(526	)
			$	242,149				$	262,169
SG&A Expense:
Americas			$	88,407				$	85,139
Europe				83,202					84,569
Asia/Pacific				40,002					37,817
Corporate operations				12,399					9,223
			$	224,010				$	216,748
Asset Impairments:
Americas			$	415				$	465
Europe				―					―
Asia/Pacific				―					74,145
Corporate operations				―					―
			$	415				$	74,610
Operating Income (Loss):
Americas			$	8,887				$	17,897
Europe				25,795					43,763
Asia/Pacific				(4,039	)				(81,100	)
Corporate operations				(12,919	)				(9,749	)
			$	17,724				$	(29,189	)
			Six Months Ended April 30,
In thousands			2012					2011
Revenues, net:
Americas			$	426,383				$	404,459
Europe				364,428					372,140
Asia/Pacific				148,619					125,141
Corporate operations				2,404					2,803
			$	941,834				$	904,543
Gross Profit:
Americas			$	185,637				$	192,967
Europe				210,769					225,632
Asia/Pacific				74,103					67,495
Corporate operations				(410	)				(455	)
			$	470,099				$	485,639
SG&A Expense:
Americas			$	177,888				$	168,133
Europe				169,298					164,986
Asia/Pacific				77,241					72,647
Corporate operations				29,998					21,418
			$	454,425				$	427,184
Asset Impairments:
Americas			$	415				$	465
Europe				―					―
Asia/Pacific				―					74,145
Corporate operations				―					―
			$	415				$	74,610
Operating Income (Loss):
Americas			$	7,334				$	24,369
Europe				41,471					60,646
Asia/Pacific				(3,138	)				(79,297	)
Corporate operations				(30,408	)				(21,873	)
			$	15,259				$	(16,155	)

GAAP TO PRO-FORMA RECONCILIATION (Unaudited)
			Three Months Ended April 30,
In thousands, except per share amounts			2012							2011
Net loss attributable to Quiksilver, Inc.			$	(5,120	)					$	(83,325	)
Non-cash asset impairment charges, net of tax of $32 (2012) and $0 (2011)				383							74,610
Restructuring charges, net of tax of $0 (2012) and $0 (2011)				1,746						―
Effect of APAC tax valuation allowance			―								25,980
Pro-forma (loss) income			$	(2,991	)					$	17,265
Pro-forma (loss) income per share			$	(0.02	)					$	0.11
Pro-forma (loss) income per share, assuming dilution			$	(0.02	)					$	0.09
Weighted average common shares outstanding				163,953							162,268
Weighted average common shares outstanding, assuming dilution				163,953							182,037
			Six Months Ended April 30,
In thousands, except per share amounts			2012							2011
Net loss attributable to Quiksilver, Inc.			$	(27,725	)					$	(99,593	)
Non-cash asset impairment charges, net of tax of $32 (2012) and $0 (2011)				383							74,610
Restructuring charges (credits), net of tax of $0 (2012) and $0 (2011)				3,619							(2,118	)
Effect of APAC tax valuation allowance			―								25,980
Non-cash interest charges, net of tax of $0 (2012) and $4,618 (2011)			―								10,691
Pro-forma (loss) income			$	(23,723	)					$	9,570
Pro-forma (loss) income per share			$	(0.14	)					$	0.06
Pro-forma (loss) income per share, assuming dilution			$	(0.14	)					$	0.05
Weighted average common shares outstanding				163,655							161,879
Weighted average common shares outstanding, assuming dilution				163,655							182,289

ADJUSTED EBITDA and PRO-FORMA ADJUSTED EBITDA RECONCILIATION (Unaudited)
			Three Months Ended April 30,
Amounts in thousands			2012					2011
Net loss attributable to Quiksilver, Inc.			$	(5,120	)			$	(83,325	)
Provision for income taxes				7,155					39,690
Interest expense				15,585					15,096
Depreciation and amortization				14,163					13,470
Non-cash stock-based compensation expense				5,423					2,571
Non-cash asset impairments				415					74,610
Adjusted EBITDA			$	37,621				$	62,112
Restructuring charges				1,746				―
Pro-forma Adjusted EBITDA			$	39,367				$	62,112
			Six Months Ended April 30,
Amounts in thousands			2012					2011
Net loss attributable to Quiksilver, Inc.			$	(27,725	)			$	(99,593	)
Provision for income taxes				12,405					40,941
Interest expense				30,630					44,064
Depreciation and amortization				27,125					27,470
Non-cash stock-based compensation expense				12,400					4,981
Non-cash asset impairments				415					74,610
Adjusted EBITDA			$	55,250				$	92,473
Restructuring charges (credits)				3,619					(2,118	)
Pro-forma Adjusted EBITDA			$	58,869				$	90,355

Definition of Adjusted EBITDA:

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