{"id":3388,"date":"2008-12-18T15:25:01","date_gmt":"2008-12-18T23:25:01","guid":{"rendered":"http:\/\/www.boardistan.com\/?p=3388"},"modified":"2008-12-19T07:17:42","modified_gmt":"2008-12-19T15:17:42","slug":"quiksilver-comes-through-q4","status":"publish","type":"post","link":"http:\/\/www.boardistan.com\/?p=3388","title":{"rendered":"Quiksilver Comes Through Q4"},"content":{"rendered":"<p><a href=\"http:\/\/www.boardistan.com\/wp-content\/uploads\/2008\/11\/quik-logo.jpg\" onclick=\"window.open('http:\/\/www.boardistan.com\/wp-content\/uploads\/2008\/11\/quik-logo.jpg','popup','width=180,height=53,scrollbars=no,resizable=yes,toolbar=no,directories=no,location=no,menubar=no,status=yes,left=0,top=0');return false\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.boardistan.com\/wp-content\/uploads\/2008\/12\/quik-logo-tm1.jpg\" height=\"58\" width=\"200\" border=\"1\" align=\"right\" hspace=\"4\" vspace=\"4\" alt=\"Quik-Logo\" \/><\/a>Looks like we should have jumped in on the $.80 <strong>Quiksilver<\/strong> share prices several weeks ago because <strong>Quiksilver<\/strong> is fighting its way through some rough times. In their conference call today with analysts they stated that they doing well, but still have a ways to go.<\/p>\n<blockquote><p>Consolidated net revenues for the fourth quarter of fiscal 2008 increased 3% to $606.9 million compared to $587.3 million in the fourth quarter of fiscal 2007. . . . Consolidated net revenues for the full year of fiscal 2008 increased 11% to $2.26 billion compared to $2.05 billion in fiscal 2007. . . . European net revenues increased 16% during the full year of fiscal 2008 to $933.1 million and were up 4% in local currency.<\/p><\/blockquote>\n<p><strong>Bob McKnight<\/strong> says:<\/p>\n<blockquote><p>I am proud of the efforts of the entire Quiksilver team around the world as we fought through a deteriorating global economy to deliver financial results that were consistent with the outlook we provided 6 months ago. As economic conditions continue to worsen in our key markets in the US and in Europe, we\u2019ve continued our efforts to reduce expenses and capital expenditures, to carefully control inventory and to reconfigure our post-Rossignol capital structure.\u201d<\/p><\/blockquote>\n<p>Notes from the conference call:<\/p>\n<ul>\n<li>Europe has been doing extremely well for the company.<\/li>\n<li>The DC footwear business has been &#8220;quite strong.&#8221;<\/li>\n<li>Sales will be down in the low double digits for the first quarter of 09<\/li>\n<li>Expecting a revenue decline in the high single to low double digits for 2009<\/li>\n<li>Every five cent swing in the Euro translates into $30 million in sales.<\/li>\n<li>Quik will open &#8220;very few new stores&#8221; in 2009. &#8220;Two in the US and maybe 2 or 3 in Asia Pacific and a couple in Europe&#8221;<\/li>\n<li>The company is looking to 25 retail stores. Nine will close in 2009; 21 of the stores are in the US, 12 are full-price stores and 41 percent of those are in California, Arizona, Florida.<\/li>\n<li>Quiksilver&#8217;s top 30 customers worldwide do less than 25 percent of the company&#8217;s sales.<\/li>\n<li>Capital expenditures for the coming year will be cut approximately $34 million from $94 million to $60 million.<\/li>\n<li>They are looking at every area of expenditure and trying to adjust to a new reality as to the projected 2009 revenue.<\/li>\n<li>Company debt still in the $1 billion range<\/li>\n<li>In 2009 there will be $70 million in interest expense<\/li>\n<li>The company also has a $55 million loan, which CFO <strong>Joe Scirocco<\/strong> called &#8220;the big one&#8221; is due on March 14, 2009<\/li>\n<\/ul>\n<p>The Street appeared happy with the report as the stock <strong><a href=\"http:\/\/www.ocbj.com\/industry_article.asp?aID=61289368.908581.1722396.3305737.9693196.776&amp;aID2=132483\" target=\"_blank\">rose 10% in after-hours trading<\/a><\/strong>.<\/p>\n<p>For the whole press release, follow the jump, or <strong><a href=\"http:\/\/seekingalpha.com\/article\/111510-quiksilver-inc-f4q08-qtr-end-10-31-08-earnings-call-transcript\" target=\"_blank\">click here for a transcript<\/a><\/strong>, or listen to the whole call <strong><a href=\"http:\/\/www.quiksilverinc.com\/investor_investorevent.aspx\" target=\"_blank\">right here<\/a><\/strong>.<br \/>\n<!--more-->HUNTINGTON BEACH, Calif.&#8211;Quiksilver, Inc. (NYSE: ZQK) today announced operating results for the fourth quarter and full year ended October 31, 2008. Consolidated net revenues for the fourth quarter of fiscal 2008 increased 3% to $606.9 million compared to $587.3 million in the fourth quarter of fiscal 2007. Fourth quarter pro-forma income from continuing operations was $41.6 million or $0.32 per share, and excludes a $55.4 million goodwill impairment charge associated with the company&#8217;s revised outlook for its business in the Asia\/Pacific region. The pro-forma earnings result exceeded the company&#8217;s expectations because of an unanticipated tax benefit of $4.6 million or $0.04 per share. The goodwill impairment charge is a non-cash expense and does not affect the company&#8217;s operations, cash flows or covenants associated with its debt. A reconciliation of GAAP results to pro-forma results is provided in the accompanying tables. Including the goodwill charge, the loss from continuing operations for the fourth quarter was $13.8 million or $0.11 per share, compared to income of $43.9 million or $0.34 per share in the same quarter a year ago. Net revenues and income from continuing operations for all periods exclude the results of the Rossignol wintersports and golf equipment businesses which are reported as discontinued operations.<\/p>\n<p>Consolidated net revenues for the full year of fiscal 2008 increased 11% to $2.26 billion compared to $2.05 billion in fiscal 2007. Full year pro-forma income from continuing operations for fiscal 2008, adjusted to exclude the goodwill charge, was $120.9 million or $0.93 per share. Full year income from continuing operations for fiscal 2008, including the goodwill charge, was $65.5 million or $0.51 per share, compared to income of $116.7 million or $0.90 per share in fiscal 2007.<\/p>\n<p>Robert B. McKnight, Jr., Chairman of the Board, President and Chief Executive Officer of Quiksilver, Inc., commented, &#8220;I am proud of the efforts of the entire Quiksilver team around the world as we fought through a deteriorating global economy to deliver financial results that were consistent with the outlook we provided 6 months ago. As economic conditions continue to worsen in our key markets in the US and in Europe, we&#8217;ve continued our efforts to reduce expenses and capital expenditures, to carefully control inventory and to reconfigure our post-Rossignol capital structure.&#8221;<\/p>\n<p>Net revenues in the Americas increased 10% during the fourth quarter of fiscal 2008 to $306.9 million. European net revenues decreased 4% during the fourth quarter to $216.3 million and declined 6% in local currency. Asia\/Pacific net revenues increased 2% to $82.6 million in the fourth quarter and increased 10% in local currency.<\/p>\n<p>Net revenues in the Americas for the full year of fiscal 2008 increased 7% to $1,061.4 million. European net revenues increased 16% during the full year of fiscal 2008 to $933.1 million and were up 4% in local currency. Asia\/Pacific net revenues increased 9% to $265.1 million in fiscal 2008 and were up 3% in local currency.<\/p>\n<p>Consolidated inventories increased 5% to $312.1 million at October 31, 2008 from $296.2 million at October 31, 2007. Inventories grew 15% in local currency. Consolidated trade accounts receivable decreased 2% to $470.1 million at October 31, 2008 from $478.0 million at October 31, 2007. Trade accounts receivable grew 6% in local currency.<\/p>\n<p>The company completed the sale of the Rossignol Group in November 2008 and sold Roger Cleveland Golf Company in December 2007. Both of these businesses are treated as discontinued operations in the consolidated statements of income attached to this press release. Quiksilver expects to recognize a non-cash loss of approximately $150 million in the first fiscal quarter of 2009 associated with the sale of Rossignol.<\/p>\n<p>The company stated that as of October 31, 2008, it had approximately $215 million of available liquidity, including non-restricted cash and available borrowing capacity on its existing credit facilities. The company ended fiscal 2008 with $1,071 million of debt, including $11 million of debt within liabilities held for sale. The company is currently in discussions with its European and Asia\/Pacific banks to refinance its short-term debt, including $167 million which is uncommitted, and a $72 million facility due to mature in March 2009. In addition, the company is negotiating a term loan to supplement its current credit availability in the US, subject to approval by its US lenders. The company believes that its projected cash flow from operations, together with its existing credit facilities, will be adequate to service its debt and to finance the projected capital requirements of the business. The company also believes that it can obtain additional financing needed to extend the maturities of its debt, reduce the amount of short-term uncommitted lines of credit and better position itself for the long term.<\/p>\n<p>Mr. McKnight concluded, &#8220;Now that we have completed the sale of Rossignol and eliminated our exposure to hardgoods manufacturing, we&#8217;ve refocused our attention toward our three strong boardsport lifestyle brands Quiksilver, Roxy and DC. Despite an increasingly challenging retail environment, Quiksilver remains the clear number one surf brand in the world, Roxy is still the number one female surf brand and DC is one of the top three footwear brands in the entire action sports industry.&#8221;<\/p>\n<p>About Quiksilver:<\/p>\n<p>Quiksilver, Inc. (NYSE: ZQK) is the world&#8217;s leading outdoor sports lifestyle company, which designs, produces and distributes a diversified mix of branded apparel, footwear, accessories and related products. The Company&#8217;s apparel and footwear brands represent a casual lifestyle for young-minded people that connect with its boardriding culture and heritage.<\/p>\n<p>The reputation of Quiksilver&#8217;s brands is based on different outdoor sports. The Company&#8217;s Quiksilver, Roxy, DC 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.<\/p>\n<p>The Company&#8217;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 and select department stores. Quiksilver&#8217;s corporate and Americas&#8217; headquarters are in Huntington Beach, California, while its European headquarters are in St. Jean de Luz, France, and its Asia\/Pacific headquarters are in Torquay, Australia.<\/p>\n<p>Forward looking statements:<\/p>\n<p>This press release contains forward-looking statements including but not limited to statements regarding the Company&#8217;s financial and liquidity forecasts as well as its ability to refinance its existing indebtedness. These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially. Please refer to Quiksilver&#8217;s SEC filings for more information on the risk factors that could cause actual results to differ materially from expectations, specifically the sections titled &#8220;Risk Factors&#8221; and &#8220;Forward-Looking Statements&#8221; in Quiksilver&#8217;s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.<\/p>\n<p>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 and www.hawkclothing.com.<\/p>\n<p>CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)<\/p>\n<p>Three Months Ended October 31,<\/p>\n<p>In thousands, except per share amounts           2008           2007<\/p>\n<p>Revenues, net                                    $ 606,899      $ 587,268<\/p>\n<p>Cost of goods sold                                 315,008        298,764<\/p>\n<p>Gross profit                                       291,891        288,504<\/p>\n<p>Selling, general and administrative expense        231,629        216,576<\/p>\n<p>Goodwill impairment                                55,400         &#8212;<\/p>\n<p>Retail store impairments                           10,047         &#8212;<\/p>\n<p>Operating (loss) income                            (5,185    )    71,928<\/p>\n<p>Interest expense                                   9,482          11,151<\/p>\n<p>Foreign currency (gain) loss                       (5,298    )    3,125<\/p>\n<p>Minority interest and other expense                701            82<\/p>\n<p>(Loss) income before provision for income taxes    (10,070   )    57,570<\/p>\n<p>Provision for income taxes                         3,754          13,636<\/p>\n<p>(Loss) income from continuing operations         $ (13,824   )  $ 43,934<\/p>\n<p>Income (loss) from discontinued operations       $ 12,869       $ (154,861  )<\/p>\n<p>Net loss                                         $ (955      )  $ (110,927  )<\/p>\n<p>(Loss) income per share from continuing          $ (0.11     )  $ 0.35<br \/>\noperations<\/p>\n<p>Income (loss) per share from discontinued        $ 0.10         $ (1.24     )<br \/>\noperations<\/p>\n<p>Net loss per share                               $ (0.01     )  $ (0.89     )<\/p>\n<p>(Loss) income per share from continuing          $ (0.11     )  $ 0.34<br \/>\noperations, assuming dilution<\/p>\n<p>Income (loss) per share from discontinued        $ 0.10         $ (1.19     )<br \/>\noperations, assuming dilution<\/p>\n<p>Net loss per share, assuming dilution            $ (0.01     )  $ (0.85     )<\/p>\n<p>Weighted average common shares outstanding         127,067        124,492<\/p>\n<p>Weighted average common shares outstanding,        127,067        130,127<br \/>\nassuming dilution<\/p>\n<p>CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)<\/p>\n<p>Fiscal Year Ended October 31,<\/p>\n<p>In thousands, except per share amounts           2008           2007<\/p>\n<p>Revenues, net                                    $ 2,264,636    $ 2,047,072<\/p>\n<p>Cost of goods sold                                 1,144,050      1,062,027<\/p>\n<p>Gross profit                                       1,120,586      985,045<\/p>\n<p>Selling, general and administrative expense        915,933        782,263<\/p>\n<p>Goodwill impairment                                55,400         &#8212;<\/p>\n<p>Retail store impairments                           10,397         &#8212;<\/p>\n<p>Operating income                                   138,856        202,782<\/p>\n<p>Interest expense                                   45,327         46,571<\/p>\n<p>Foreign currency (gain) loss                       (5,761    )    4,857<\/p>\n<p>Minority interest and other expense                719            121<\/p>\n<p>Income before provision for income taxes           98,571         151,233<\/p>\n<p>Provision for income taxes                         33,027         34,506<\/p>\n<p>Income from continuing operations                $ 65,544       $ 116,727<\/p>\n<p>Loss from discontinued operations                $ (291,809  )  $ (237,846  )<\/p>\n<p>Net loss                                         $ (226,265  )  $ (121,119  )<\/p>\n<p>Income per share from continuing operations      $ 0.52         $ 0.94<\/p>\n<p>Loss per share from discontinued operations      $ (2.32     )  $ (1.92     )<\/p>\n<p>Net loss per share                               $ (1.80     )  $ (0.98     )<\/p>\n<p>Income per share from continuing operations,     $ 0.51         $ 0.90<br \/>\nassuming dilution<\/p>\n<p>Loss per share from discontinued operations,     $ (2.25     )  $ (1.83     )<br \/>\nassuming dilution<\/p>\n<p>Net loss per share, assuming dilution            $ (1.75     )  $ (0.93     )<\/p>\n<p>Weighted average common shares outstanding         125,975        123,770<\/p>\n<p>Weighted average common shares outstanding,        129,485        129,706<br \/>\nassuming dilution<\/p>\n<p>Information related to geographic segments is as follows (unaudited):<\/p>\n<p>Three Months Ended October 31,<\/p>\n<p>Amounts in thousands      2008           2007<\/p>\n<p>Revenues, net:<\/p>\n<p>Americas                  $ 306,879      $ 279,836<\/p>\n<p>Europe                      216,349        224,703<\/p>\n<p>Asia\/Pacific                82,573         81,080<\/p>\n<p>Corporate operations        1,098          1,649<\/p>\n<p>$ 606,899      $ 587,268<\/p>\n<p>Gross Profit:<\/p>\n<p>Americas                  $ 125,294      $ 117,934<\/p>\n<p>Europe                      122,168        127,713<\/p>\n<p>Asia\/Pacific                43,649         41,820<\/p>\n<p>Corporate operations        780            1,037<\/p>\n<p>$ 291,891      $ 288,504<\/p>\n<p>SG&#38;A Expense:<\/p>\n<p>Americas                  $ 98,290       $ 82,210<\/p>\n<p>Europe                      96,735         96,456<\/p>\n<p>Asia\/Pacific                28,558         27,575<\/p>\n<p>Corporate operations        8,046          10,335<\/p>\n<p>$ 231,629      $ 216,576<\/p>\n<p>Asset Impairments:<\/p>\n<p>Americas                  $ 8,967        $ &#8212;<\/p>\n<p>Europe                      692            &#8212;<\/p>\n<p>Asia\/Pacific                55,788         &#8212;<\/p>\n<p>Corporate operations        &#8212;             &#8212;<\/p>\n<p>$ 65,447       $ &#8212;<\/p>\n<p>Operating (Loss) Income:<\/p>\n<p>Americas                  $ 18,037       $ 35,724<\/p>\n<p>Europe                      24,741         31,257<\/p>\n<p>Asia\/Pacific                (40,697   )    14,245<\/p>\n<p>Corporate operations        (7,266    )    (9,298    )<\/p>\n<p>$ (5,185    )  $ 71,928<\/p>\n<p>Information related to geographic segments (continued):<\/p>\n<p>Fiscal Year Ended October 31,<\/p>\n<p>Amounts in thousands      2008           2007<\/p>\n<p>Revenues, net:<\/p>\n<p>Americas                  $ 1,061,370    $ 995,801<\/p>\n<p>Europe                      933,119        803,395<\/p>\n<p>Asia\/Pacific                265,067        243,064<\/p>\n<p>Corporate operations        5,080          4,812<\/p>\n<p>$ 2,264,636    $ 2,047,072<\/p>\n<p>Gross Profit:<\/p>\n<p>Americas                  $ 445,381      $ 418,021<\/p>\n<p>Europe                      532,034        442,923<\/p>\n<p>Asia\/Pacific                140,168        120,411<\/p>\n<p>Corporate operations        3,003          3,690<\/p>\n<p>$ 1,120,586    $ 985,045<\/p>\n<p>SG&#38;A Expense:<\/p>\n<p>Americas                  $ 371,958      $ 311,757<\/p>\n<p>Europe                      380,374        316,867<\/p>\n<p>Asia\/Pacific                117,219        100,922<\/p>\n<p>Corporate operations        46,382         52,717<\/p>\n<p>$ 915,933      $ 782,263<\/p>\n<p>Asset Impairments:<\/p>\n<p>Americas                  $ 9,317        $ &#8212;<\/p>\n<p>Europe                      692            &#8212;<\/p>\n<p>Asia\/Pacific                55,788         &#8212;<\/p>\n<p>Corporate operations        &#8212;             &#8212;<\/p>\n<p>$ 65,797       $ &#8212;<\/p>\n<p>Operating Income:<\/p>\n<p>Americas                  $ 64,106       $ 106,264<\/p>\n<p>Europe                      150,968        126,056<\/p>\n<p>Asia\/Pacific                (32,839   )    19,489<\/p>\n<p>Corporate operations        (43,379   )    (49,027   )<\/p>\n<p>$ 138,856      $ 202,782<\/p>\n<p>GAAP TO PRO-FORMA RECONCILIATION (UNAUDITED)<\/p>\n<p>Three Months Ended<\/p>\n<p>October 31,2008<\/p>\n<p>Loss from continuing operations                         $ (13,824 )<\/p>\n<p>Goodwill impairment                                       55,400<\/p>\n<p>Pro-forma income from continuing operations             $ 41,576<\/p>\n<p>Pro-forma income per share from continuing operations   $ 0.33<\/p>\n<p>Pro-forma income per share from continuing operations,  $ 0.32<br \/>\nassuming dilution<\/p>\n<p>Weighted average common shares outstanding                127,067<\/p>\n<p>Weighted average common shares outstanding, assuming      129,183<br \/>\ndilution<\/p>\n<p>GAAP TO PRO-FORMA RECONCILIATION (UNAUDITED)<\/p>\n<p>Fiscal Year Ended<\/p>\n<p>October 31,2008<\/p>\n<p>Income from continuing operations                       $ 65,544<\/p>\n<p>Goodwill impairment                                       55,400<\/p>\n<p>Pro-forma income from continuing operations             $ 120,944<\/p>\n<p>Pro-forma income per share from continuing operations   $ 0.96<\/p>\n<p>Pro-forma income per share from continuing operations,  $ 0.93<br \/>\nassuming dilution<\/p>\n<p>Weighted average common shares outstanding                125,975<\/p>\n<p>Weighted average common shares outstanding, assuming      129,485<br \/>\ndilution<\/p>\n<p>CONSOLIDATED SELECTED BALANCE SHEET INFORMATION (UNAUDITED)<\/p>\n<p>October 31,<\/p>\n<p>Amounts in thousands               2008         2007<\/p>\n<p>Cash and cash equivalents          $ 53,042     $ 74,348<\/p>\n<p>Restricted cash                      46,475       &#8212;<\/p>\n<p>Trade accounts receivable, net       470,059      478,049<\/p>\n<p>Inventories                          312,138      296,167<\/p>\n<p>Lines of credit and long-term debt   1,060,318    857,446<\/p>\n<p>Principal payments on lines of credit and long-term debt are due<br \/>\napproximately as follows:<\/p>\n<p>Fiscal Year Ended October 31,<\/p>\n<p>Amounts in thousands               2008         2007<\/p>\n<p>Uncommitted debt                   $ 166,519    $ 124,634<\/p>\n<p>2008                                 &#8212;           33,903<\/p>\n<p>2009                                 103,701      34,346<\/p>\n<p>2010                                 284,403      207,211<\/p>\n<p>2011                                 81,946       35,752<\/p>\n<p>2012                                 20,227       21,205<\/p>\n<p>2013                                 3,522        395<\/p>\n<p>2014                                 &#8212;           &#8212;<\/p>\n<p>2015                                 400,000      400,000<\/p>\n<p>$ 1,060,318  $ 857,446<\/p>\n<p>Source: Quiksilver, Inc.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Looks like we should have jumped in on the $.80 Quiksilver share prices several weeks ago because Quiksilver is fighting its way through some rough times. In their conference call today with analysts they stated that they doing well, but still have a ways to go. Consolidated net revenues for the fourth quarter of fiscal [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[10,3,4,6,12],"tags":[],"_links":{"self":[{"href":"http:\/\/www.boardistan.com\/index.php?rest_route=\/wp\/v2\/posts\/3388"}],"collection":[{"href":"http:\/\/www.boardistan.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.boardistan.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.boardistan.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/www.boardistan.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3388"}],"version-history":[{"count":22,"href":"http:\/\/www.boardistan.com\/index.php?rest_route=\/wp\/v2\/posts\/3388\/revisions"}],"predecessor-version":[{"id":3418,"href":"http:\/\/www.boardistan.com\/index.php?rest_route=\/wp\/v2\/posts\/3388\/revisions\/3418"}],"wp:attachment":[{"href":"http:\/\/www.boardistan.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3388"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.boardistan.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3388"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.boardistan.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3388"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}