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

Brands (constant currency):

• Quiksilver decreased 5% to $200 million;
• Roxy increased 2% to $135 million; and,
• DC increased 18% to $187 million.

Distribution channels (constant currency):

• Wholesale increased 4% to $430 million;
• Retail increased 4% to $107 million. Fourth quarter same store sales in company-owned retail stores grew slightly; and,
• E-commerce increased 148% to $22 million.

About Quiksilver:

Quiksilver, Inc. is one of the world’s leading outdoor sports lifestyle companies. Quiksilver designs, produces and distributes a diversified mix of branded apparel, footwear and accessories. The company’s apparel and footwear brands, inspired by the passion for outdoor action sports, represent a casual lifestyle for young-minded people who connect with its boardriding culture and heritage. The company’s Quiksilver, Roxy, DC, Lib Tech and Hawk brands are synonymous with the heritage and culture of surfing, skateboarding and snowboarding. The company’s products are sold in over 90 countries in a wide range of distribution, including surf shops, skate shops, snow shops, its proprietary Boardriders Club shops and other company-owned retail stores, other specialty stores, select department stores and through various e-commerce channels. Quiksilver’s corporate headquarters are in Huntington Beach, California.

Forward looking statements:

This press release contains forward-looking statements including but not limited to statements regarding the company’s three core long-term initiatives 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., please visit our website at www.quiksilverinc.com . We also invite you to explore our brand sites, www.quiksilver.com , www.roxy.com , www.dcshoes.com , www.lib-tech.com and www.hawkclothing.com .

QUIKSILVER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
		Three months ended								Fiscal Year Ended
In thousands, except per share amounts		October 31,								October 31,
		2012				2011				2012				2011
Revenues, net		$	558,966			$	545,201			$	2,013,239			$	1,953,061
Cost of goods sold			302,207				262,124				1,032,893				929,227
Gross profit			256,759				283,077				980,346				1,023,834
Selling, general and administrative expense			235,931				247,593				916,144				895,949
Asset impairments			6,678				11,763				7,234				86,373
Operating income			14,150				23,721				56,968				41,512
Interest expense			15,359				14,081				60,823				73,808
Foreign currency loss (gain)			3,032				5,775				(1,669	)			(111	)
(Loss) income before provision for income taxes			(4,241	)			3,865				(2,186	)			(32,185	)
(Benefit) provision for income taxes			(7,356	)			(64,252	)			7,557				(14,315	)
Net income (loss)			3,115				68,117				(9,743	)			(17,870	)
Net loss (income) attributable to non-controlling interest			1,244				(219	)			(1,013	)			(3,388	)
Net income (loss) attributable to Quiksilver, Inc.		$	4,359			$	67,898			$	(10,756	)		$	(21,258	)
Net income (loss) per share attributable to Quiksilver, Inc.:
Basic		$	0.03			$	0.42			$	(0.07	)		$	(0.13	)
Diluted		$	0.02			$	0.38			$	(0.07	)		$	(0.13	)
Weighted average common shares outstanding:
Basic			165,227				163,117				164,245				162,430
Diluted			178,348				179,742				164,245				162,430

QUIKSILVER, INC. AND SUBSIDIARIES
INFORMATION RELATED TO OPERATING SEGMENTS (UNAUDITED)
		Three months ended										Fiscal Year Ended
In thousands		October 31,										October 31,
		2012				2011						2012				2011
Revenues, net:
Americas		$	279,106			$	249,788					$	991,625			$	914,406
Europe			192,348				212,522						710,852				761,100
Asia/Pacific			86,899				81,843						307,141				272,479
Corporate operations			613				1,048						3,621				5,076
			558,966				545,201						2,013,239				1,953,061
Gross Profit:
Americas		$	118,130			$	117,575					$	429,868			$	425,607
Europe			95,039				121,644						393,944				453,727
Asia/Pacific			43,472				42,973						156,833				144,815
Corporate operations			118				885						(299	)			(315	)
			256,759				283,077						980,346				1,023,834
SG&A Expense:
Americas		$	91,653			$	104,804					$	362,322			$	360,921
Europe			87,375				89,999						337,535				340,387
Asia/Pacific			42,259				38,988						157,247				147,949
Corporate operations			14,644				13,802						59,040				46,692
			235,931				247,593						916,144				895,949
Asset Impairments:
Americas		$	4,711			$	3,426					$	5,267			$	3,891
Europe			560				1,331						560				1,331
Asia/Pacific			1,407				7,006						1,407				81,151
Corporate operations			-				-						-				-
			6,678				11,763						7,234				86,373
Operating Income (Loss):
Americas		$	21,766			$	9,345					$	62,279			$	60,795
Europe			7,104				30,314						55,849				112,009
Asia/Pacific			(194	)			(3,021	)					(1,821	)			(84,285	)
Corporate operations			(14,526	)			(12,917	)					(59,339	)			(47,007	)
			14,150				23,721						56,968				41,512

The Company's references to emerging markets in this press release refer to net revenues generated in Brazil, Mexico, Korea, China, Indonesia, Taiwan and Russia collectively.

QUIKSILVER, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP PRO-FORMA INCOME RECONCILIATION (UNAUDITED)
		Three months ended								Fiscal Year Ended
In thousands, except per share amounts		October 31, (1)								October 31, (1)
		2012				2011				2012				2011
Net income (loss) attributable to Quiksilver, Inc.		$	4,359			$	67,898			$	(10,756	)		$	(21,258	)
Restructuring charges, net of tax of $1,586, $0, $2,719, and $0, respectively			6,223				8,038				15,415				5,920
Non-cash asset impairments, net of tax of $233, $328, $265, and $328, respectively			6,445				11,435				6,969				86,045
Gain on retail store closures, net of tax of $(1,819), $(1,184), $(1,819), and $(2,627), respectively			(4,245	)			(2,403	)			(4,245	)			(5,334	)
Effect of APAC tax valuation allowance			-				(7,266	)			-				18,714
FIN 48 tax adjustment			-				(69,285	)			-				(69,285	)
Non-cash interest charges, net of tax of $0, $0, $0, and $4,618, respectively			-				-				-				10,691
Pro-forma income			12,782				8,417				7,383				25,493
Pro-forma income per share:
Basic		$	0.08			$	0.05			$	0.04			$	0.16
Diluted		$	0.07			$	0.05			$	0.04			$	0.14
Weighted average common shares outstanding:
Basic			165,227				163,117				164,245				162,430
Diluted			178,348				179,742				178,907				182,049

(1) Certain prior year and prior quarter amounts have been reclassified to be consistent with current financial statement presentation.

QUIKSILVER, INC. AND SUBSIDIARIES
ADJUSTED EBITDA & PRO-FORMA ADJUSTED EBITDA RECONCILIATION (UNAUDITED)
		Three months ended								Twelve Months Ended
In thousands		October 31,								October 31,
		2012				2011				2012				2011
Net income (loss) attributable to Quiksilver, Inc.		$	4,359			$	67,898			$	(10,756	)		$	(21,258	)
(Benefit) provision for income taxes			(7,356	)			(64,252	)			7,557				(14,315	)
Interest expense			15,359				14,081				60,823				73,808
Depreciation and amortization			13,795				15,105				53,232				55,259
Non-cash stock-based compensation expense			5,280				4,498				22,552				14,414
Non-cash asset impairments			6,678				11,763				7,234				86,373
Adjusted EBITDA			38,115				49,093				140,642				194,281
Restructuring and other special charges (1)			1,745				4,451				12,070				(2,041	)
Pro-forma Adjusted EBITDA			39,860				53,544				152,712				192,240

(1) Certain prior year and prior quarter amounts have been reclassified to be consistent with current financial statement presentation.
Definition of Adjusted EBITDA and Pro-forma Adjusted EBITDA:   Adjusted EBITDA is defined as net income (loss) attributable to Quiksilver, Inc. before (i) interest expense, (ii) (benefit) provision for income taxes, (iii) depreciation and amortization, (iv) non-cash stock-based compensation expense and (v) non-cash asset impairments. Pro-forma Adjusted EBITDA is defined as Adjusted EBITDA excluding restructuring and other special charges (including, but not limited to, non-operating charges for gains and losses on lease exit activities as well as severance and other employee termination costs as a result of downsizing and reorganization). Adjusted EBITDA and Pro-forma Adjusted EBITDA are not defined under generally accepted accounting principles (“GAAP”), and may not be comparable to similarly titled measures reported by other companies. We use Adjusted EBITDA and Pro-forma Adjusted EBITDA, along with other GAAP measures, as measures of profitability because Adjusted EBITDA and Pro-forma Adjusted EBITDA compare our performance on a consistent basis by removing from our operating results the impact of our capital structure, the effect of operating in different tax jurisdictions, the impact of our asset base, which can differ depending on the book value of assets, the accounting methods used to compute depreciation and amortization, the existence or timing of asset impairments and the effect of non-cash stock-based compensation expense. We believe EBITDA is useful to investors as it is a widely used measure of performance and the adjustments we make to EBITDA provide further clarity on our profitability. We remove the effect of non-cash stock-based compensation from our earnings which can vary based on share price, share price volatility and the expected life of the equity instruments we grant. In addition, this stock-based compensation expense does not result in cash payments by us. We remove the effect of asset impairments from Adjusted EBITDA for the same reason that we remove depreciation and amortization, as it is part of the non-cash impact of our asset base. We also remove from Pro-forma Adjusted EBITDA the impact of certain non-operating charges for gains and losses on lease exit activities as well as severance and other employee termination costs as these costs are not typically part of normal, day-to-day operations. Adjusted EBITDA and Pro-forma Adjusted EBITDA have limitations as profitability measures in that they do not include the interest expense on our debts, our provisions for income taxes, the effect of our expenditures for capital assets and certain intangible assets, the effect of non-cash stock-based compensation expense and the effect of non-cash asset impairments.

SUPPLEMENTAL EXCHANGE RATE INFORMATION (Unaudited)
In order to better understand growth rates in our operating segments, we make reference to constant currency. Constant currency reporting improves visibility into actual growth rates as it adjusts for the effect of variances in foreign currency exchange rates from period to period. Constant currency is calculated by taking the ending foreign currency exchange rate (for balance sheet items) or the average foreign currency exchange rate (for income statement items) used in translation for the current period and applying that same rate to the prior period. The following table presents net revenues by segment in both historical currency and constant currency for the three months ended October 31, 2012 and 2011 (in thousands):
Net revenues in historical currency (as reported)		Americas				Europe				Asia/Pacific				Corporate			Total
October 31, 2011		$	249,788			$	212,522			$	81,843			$	1,048		$	545,201
October 31, 2012			279,106				192,348				86,899				613			558,966
Percentage increase (decrease)			12	%			(9	%)			6	%						3	%
Net revenues in constant currency (current year exchange rates)
October 31, 2011			247,942				195,460				80,908				1,028			525,338
October 31, 2012			279,106				192,348				86,899				613			558,966
Percentage increase (decrease)			13	%			(2	%)			7	%						6	%
The following table presents net revenues by segment in both historical currency and constant currency for the fiscal years ended October 31, 2012 and 2011 (in thousands):
Net revenues in historical currency (as reported)		Americas				Europe				Asia/Pacific				Corporate			Total
October 31, 2011		$	914,406			$	761,100			$	272,479			$	5,076		$	1,953,061
October 31, 2012			991,625				710,852				307,141				3,621			2,013,239
Percentage increase (decrease)			8	%			(7	%)			13	%						3	%
Net revenues in constant currency (current year exchange rates)
October 31, 2011			903,683				705,682				273,392				5,018			1,887,775
October 31, 2012			991,625				710,852				307,141				3,621			2,013,239
Percentage increase			10	%			1	%			12	%						7	%

QUIKSILVER, INC. AND SUBSIDIARIES
CONSOLIDATED SELECTED BALANCE SHEET INFORMATION (UNAUDITED)
In thousands					October 31, 2012			October 31, 2011
	Cash and cash equivalents				$	41,823		$	109,753
	Trade accounts receivable, net					433,743			397,089
	Inventories					344,746			347,757
	Lines of credit and long-term debt					757,969			747,686

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