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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.

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 .

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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