Quiksilver Fiscal Q2 Net Up 23%; Raises Guidance

Quiksilver, Inc. reported that consolidated revenues for the second quarter ended April 30, 2004 increased 23% to $322.6 million as compared to fiscal 2003 second quarter consolidated revenues of $262.2 million. Consolidated net income for the second quarter of fiscal 2004 increased 23% to $27.8 million as compared to $22.6 million the year before. Second quarter fully diluted earnings per share was 47 cents versus 40 cents for the second quarter of fiscal 2003.

Robert B. McKnight, Jr., Chairman of the Board and Chief Executive Officer of Quiksilver, Inc., commented, “We are pleased to continue our strong track record, with the second quarter representing our 10th consecutive quarter of out-performance. The keys to our ongoing success continue to be our clear vision for our brands, an ability to translate our lifestyle position into compelling marketing, a commitment to building a responsive global operating platform, and most importantly, the ability to design and distribute product that resonates with our consumers.”

Revenues in the Americas increased 16% during the second quarter of fiscal 2004 to $148.5 million as compared to fiscal 2003 second quarter revenues of $127.5 million. As measured in U.S. dollars and reported in the financial statements, European revenues increased 29% during the second quarter of fiscal 2004 to $140.3 million as compared to fiscal 2003 second quarter European revenues of $108.5 million. As measured in euros, European revenues increased 14% for those same periods. Asia/Pacific revenues increased 30% to $33.2 million in the second quarter of fiscal 2004 compared to $25.6 million in the second quarter of fiscal 2003. As measured in Australian dollars, Asia/Pacific revenues increased 3%.

Mr. McKnight continued, “We are incredibly pleased with our recent acquisition of DC Shoes. In addition to giving us a strong new brand capable of significant growth on a global scale, the infusion of talent and dedication into our management team and operations is of tremendous benefit to our culture and capabilities. We continue to regard DC Shoes as a significant catalyst for our business, and we are looking forward to demonstrating its potential to our shareholders.”

The Company also announced that it has increased its guidance for the third and fourth fiscal quarters. Quiksilver now expects to generate third quarter revenues and diluted earnings per share of between $300 million and $305 million, and $0.28 to $0.29, respectively. For the fourth quarter, the company now believes that revenues and diluted earnings per share will range between $315 million and $320 million and between $0.36 and $0.37, respectively. Including this upward revision and the quarterly out-performance reported today, the Company now expects annual revenues for fiscal 2004 to range between $1.19 billion and $1.20 billion and for diluted earnings per share to range between $1.27 and $1.29.

Consolidated inventories increased 5% to $127.3 million at April 30, 2004 from $120.8 million at April 30, 2003. Consolidated trade accounts receivable growth was modest compared to the increase in sales, increasing 13% to $257.1 million at April 30, 2004 from $227.0 million at April 30, 2003. Average days sales outstanding decreased about six days. Inventories grew 2% in constant dollars.

Bernard Mariette, President of Quiksilver, Inc., commented, “The benefits of a unified strategic and operational structure for our Company are clear and compelling. We continue to make progress in globalizing our markets and management. In addition to creating opportunities for synergy and revealing incremental opportunities for growth, our efforts have also fostered a tremendous esprit de corps across our entire organization.”

Mr. McKnight concluded, “Even as we achieve record results and reach important milestones in our financial and strategic development, we believe that we are still, in many categories and markets, just scratching the surface of our potential. Our brands continue to reach new levels of recognition and acceptance, our operational efficiency continues to improve, and our strategic position has never been stronger. Despite the challenging character of the global apparel market, we are prospering and expect to continue to do so as we move forward.”

             CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

                                                    Three Months Ended
                                                         April 30,
                                                    ------------------
In thousands, except per share amounts                 2004     2003
                                                    ------------------

Revenues                                            $322,579 $262,210
Cost of goods sold                                   175,536  143,627
                                                    ------------------
   Gross profit                                      147,043  118,583

Selling, general and administrative expense          104,647   81,374
                                                    ------------------

Operating income                                      42,396   37,209

Interest expense                                       1,476    2,107
Foreign currency (gain) loss                          (1,180)     264
Other expense                                            227       97
                                                    ------------------
Income before provision for income taxes              41,873   34,741
Provision for income taxes                            14,083   12,111
                                                    ------------------

Net income                                           $27,790  $22,630
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Net income per share                                   $0.49    $0.42
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Net income per share, assuming dilution                $0.47    $0.40