Quiksilver Doubles Fiscal Q1 Profits on 31% Sales Gain

Quiksilver, Inc. announced consolidated net sales for the first quarter of fiscal 2003 ended January 31, 2003 increased 31% to $192.1 million as compared to fiscal 2002 first quarter consolidated net sales of $147.0 million. Consolidated net income for the first quarter of fiscal 2003 was $6.6 million as compared to $3.1 million. First quarter, fully diluted earnings per share was $0.24 versus $0.13 for the first quarter of fiscal 2002.

Robert B. McKnight, Jr., Chairman of the Board and Chief Executive Officer of Quiksilver, commented, “Our positive momentum from last year continued into fiscal 2003 as we exceeded expectations for the fifth consecutive quarter. We grew our top line by more than 30%, with robust sales across all channels of distribution, and nearly doubled our earnings per share. Our business remains strong, and we are confident in our ability to increase our earnings per share by at least 20% this year.”

Net sales in the Americas increased 14% during the first quarter of fiscal 2003 to $102.0 million as compared to fiscal 2002 first quarter net sales of $89.8 million. As measured in U.S. dollars and reported in the financial statements, European net sales increased 38% during the first quarter of fiscal 2003 to $77.2 million as compared to fiscal 2002 first quarter European net sales of $56.0 million. As measured in euros, European net sales increased 19% for those same periods.

Mr. McKnight continued, “Summer bookings were strong, up 15% on a consolidated basis in the Americas and Europe, despite the challenges of the difficult retail climate. We continue to believe that our authentic lifestyle message, intense focus on our core customer, and diversified distribution structure are enabling us to prosper at a time when many of our competitors are struggling.”

Consolidated inventories increased 24% to $144.2 million at January 31, 2003 from $116.4 million at January 31, 2002. Consolidated trade accounts receivable increased 20% to $173.5 million at January 31, 2003 from $145.0 million at January 31, 2002. Inventory growth was modest compared to the increase in sales. Inventories in the Americas and Europe grew 15% with the new Asia/Pacific division accounting for the balance of the growth. Accounts receivable grew more slowly than sales as average days sales outstanding decreased about ten days.

Bernard Mariette, President of Quiksilver Inc. commented, “Our ability to significantly increase sales and earnings in a tough environment is testament to the ongoing strength of the Quiksilver brand and underscores our operational efficiencies. We move forward with solid momentum, a strong financial position and a powerful growth platform. Quiksilver continues to benefit from demographic and lifestyle trends, and our highly diversified, global operating strategy gives us a compelling advantage in the industry. We have significant expansion potential ahead, and we are dedicated to fully maximizing the opportunities we have created.”

Mr. McKnight concluded, “As we approach the $1 billion sales mark, our philosophy remains the same as it was at inception – bring great product to market that is consistent with the lifestyle of our consumers and create unique marketing programs that both support the brand and further the boardsports culture. What has changed is that we are now doing these things in a global context. Today, we have an incredibly broad base of sales, both from a global perspective and with regard to our portfolio of brands. We also have a well-developed infrastructure to support future growth. Our goal is to continue to leverage our leadership position in the market, and we remain committed to becoming the dominant youth market brand around the world.”

             CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

                                                 Three Months Ended
                                                     January 31,
                                               -----------------------
In thousands, except per share amounts             2003        2002
                                               ----------- -----------

Revenues                                       $  192,080  $  146,959
Cost of goods sold                                110,572      92,179
                                               ----------- -----------
   Gross profit                                    81,508      54,780

Selling, general and administrative expenses       68,425      47,183
                                               ----------- -----------

Operating income                                   13,083       7,597

Interest expense                                    2,116       2,428
Foreign currency loss                                 551           6
Other expense                                         167         160
                                               ----------- -----------
Income before provision for income taxes           10,249       5,003
Provision for income taxes                          3,681       1,917
                                               ----------- -----------

Net income                                     $    6,568  $    3,086