Quiksilver Reports Fiscal 2012 Full-Year, Fourth Quarter Financial Results

Brands (constant currency):

• Quiksilver increased 3% to $794 million;
• Roxy increased 4% to $524 million; and,
• DC increased 12% to $594 million.

Distribution channels (constant currency):

• Wholesale increased 3% to $1.5 billion;
• Retail increased 7% to $454 million. Full-year same store sales in company-owned retail stores grew 4% on a global basis; and,
• E-commerce increased 155% to $87 million.

Fiscal 2012 Fourth Quarter Review:

The following comparisons are between the fourth quarters of fiscal 2012 and fiscal 2011.

Net revenues grew 3% to $559 million compared with $545 million, and grew 6%, or $34 million, in constant currency.

• Americas net revenues increased 12% to $279 million from $250 million, and were up 13% in constant currency.
• Europe net revenues decreased 9% to $192 million from $213 million, and were down 2% in constant currency.
• Asia Pacific net revenues increased 6% to $87 million from $82 million, and were up 7% in constant currency.

Gross margin was 46% of net revenues compared with 52%, primarily driven by increased clearance sales within our wholesale channel, lower margins on those sales, increased discounting within our retail channel, unfavorable foreign exchange rate comparisons, and changes in the geographical composition of net revenues.

SG&A expense decreased 5% to $236 million compared with $248 million, primarily driven by reductions in marketing expenses and other expense reductions implemented during fiscal 2012. These reductions were partially offset by increased e-commerce expenses associated with the growth of our online business. SG&A expenses decreased as a percentage of net revenues by 320 basis points to 42% of net revenues.

Net income attributable to Quiksilver, Inc. was $4 million, or $0.02 per diluted share, compared with $68 million, or $0.38 per diluted share.

Pro-forma income, which excludes $8 million of net after-tax charges and $59 million of net after-tax income, respectively, was $13 million compared with $8 million, or $0.07 and $0.05 per diluted share, respectively.

Pro-forma Adjusted EBITDA was $40 million compared with $54 million.

Fiscal 2012 Fourth Quarter Net Revenue Highlights:

Net revenues increased (in constant currency) across all three distribution channels, as well as in the DC and Roxy brands, and in the Americas and Asia Pacific regions compared with the fourth quarter of fiscal 2011. In addition, emerging markets generated net revenue growth of 27%.

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