Quiksilver Fiscal Q3 Net Up 64% on Stronger U.S., Asia Sales

Quiksilver, Inc. reported that consolidated revenues for the fiscal third quarter ended July 31, 2004 increased 34% to $337.9 million from consolidated revenues of $251.5 million in fiscal Q3 2003. Consolidated net income for Q3 increased 64% to $19.5 million as compared to $11.9 million in the year-ago quarter. Third quarter fully diluted earnings per share was 32 cents versus 21 cents for the third quarter of fiscal 2003.

Robert B. McKnight, Jr., Chairman of the Board and Chief Executive Officer of Quiksilver, Inc., commented, “We are very pleased with our accomplishments during the third quarter. This represents our 11th consecutive quarter of exceeding expectations and further highlights our excellent track record of generating strong and consistent financial results. Our business trends are solid, and we are encouraged about our prospects for the future.”

Revenues in the Americas increased 37% during the third quarter of fiscal 2004 to $187.9 million as compared to fiscal 2003 third quarter revenues of $137.4 million. As measured in U.S. dollars and reported in the financial statements, European revenues increased 23% during the third quarter of fiscal 2004 to $115.4 million as compared to fiscal 2003 third quarter European revenues of $93.9 million. As measured in euros, European revenues increased 17% for those same periods. Asia/Pacific revenues increased 67% to $33.1 million in the third quarter of fiscal 2004 compared to $19.8 million in the third quarter of 2003. As measured in Australian dollars, Asia/Pacific revenues increased 56%.

Mr. McKnight continued, “The feedback regarding our Spring lines at recent trade shows around the world, including MAGIC in the U.S. and ASR in Europe, was very positive and reflects our ongoing commitment to develop the best product in the market. We believe that our merchandise is trend right and underscores our status as the dominant lifestyle company for kids and young adults around the world.”

The Company also confirmed its expectations for the fourth quarter fiscal ending October 31, 2004 that revenues will range between $315 million and $320 million, and diluted earnings per share will range between $0.36 and $0.37. For the full fiscal year, revenues are expected to range between $1.23 billion and $1.24 billion with diluted earnings per share ranging from $1.31 to $1.32.

Consolidated inventories increased 8% to $171.6 million at July 31, 2004 from $159.5 million at July 31, 2003. Consolidated trade accounts receivable increased 25% to $271.4 million at July 31, 2004 from $217.9 million at July 31, 2003. Average days sales outstanding decreased by approximately four days compared to the third quarter of the prior year, while inventories grew 5% in constant dollars.

“This first quarter with DC Shoes included in our results was truly exceptional. Congratulations to all of our people around the world not only for the quarterly results, but for the tremendous spirit in which we've integrated DC into our company,” Bernard Mariette, President of Quiksilver, Inc., commented. “We're very impressed by the way that Ken Block, Damon Way and their DC team are already contributing to the development of Quiksilver footwear. We can see the synergies of working together happening faster than we could have expected.”

Mr. McKnight concluded, “Our continued success is really a function of continuing to adhere to a few key disciplines: great product; careful brand management; a healthy philosophy regarding growth; and a strategic development plan designed to enhance each part of our business. Also fundamental to our consistency is the diversification of our company and the continuity of our management teams. We remain focused on further leveraging our leadership position in the industry and fully capitalizing on the many opportunities that lie ahead.”

             CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

                                                    Three Months Ended
                                                         July 31,
                                                    ------------------
In thousands, except per share amounts                2004     2003
                                                    ------------------

Revenues                                            $337,930 $251,498
Cost of goods sold                                   187,523  144,369
                                                    ------------------
   Gross profit                                      150,407  107,129

Selling, general and administrative expense          118,864   85,684
                                                    ------------------

Operating income                                      31,543   21,445

Interest expense                                       1,498    2,232
Foreign currency (gain) loss                             (28)     801
Other expense                                            392      146
                                                    ------------------
Income before provision for income taxes              29,681   18,266
Provision for income taxes                            10,151    6,348
                                                    ------------------

Net income                                           $19,530  $11,918
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Net income per share                                   $0.33    $0.22
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Net income per share, assuming dilution                $0.32    $0.21