Quiksilver, Inc.'s consolidated net revenues from continuing operations for the third quarter ended July 31 were $441.5 million compared to $501.4 million in the third quarter of fiscal 2009. Pro-forma consolidated income from continuing operations, was $12.5 million, or 8 cents per share, compared to $3.7 million, or 3 cents per share, for the third quarter of fiscal 2009.

Pro-forma income for the third quarter of fiscal 2010 excludes $2.6 million of asset impairment charges and $1.8 million in restructuring charges, consisting primarily of lease loss accruals. Including these amounts, income from continuing operations was $8.2 million, or 5 cents per share, compared to $3.4 million, or 3 cents per share, for the third quarter of fiscal 2009. 
 
Net revenues and income from continuing operations for all periods exclude the results of the Rossignol wintersports business, which was sold in November 2008 and is reported as discontinued operations.

“We're very pleased to again deliver financial results that exceeded our prior expectations,” said Robert B. McKnight, Jr., chairman of the board, CEO and president of Quiksilver, Inc. “Our team executed well in an economic environment that continues to present significant challenges around the world. We're also delighted to report substantial continued improvement to our capital structure, especially after completing the debt-for-equity exchange with Rh�ne in early August.”

Third Quarter Financial Highlights:

  • Pro-forma Adjusted EBITDA increased 22% to $53.5 million compared to $44.0 million in the third quarter of fiscal 2009 despite a 12% revenue decline.
  • Gross margin improved 560 basis points to 52.3% compared to 46.7% in the third quarter of fiscal 2009.
  • Operating income in the Americas region was 11.8% of revenues as gross margin improved 900 basis points to 46.7% from 37.7% in the third quarter of fiscal 2009.
  • Net debt at July 31, 2010, was $687 million, reduced by $183 million compared to $870 million at July 31, 2009.

Net revenues in the Americas decreased 9% during the third quarter of fiscal 2010 to $234.6 million from $256.8 million in the third quarter of fiscal 2009. As measured in U.S. dollars and reported in the financial statements, European net revenues decreased 20% during the third quarter of fiscal 2010 to $151.7 million from $189.0 million in the third quarter of fiscal 2009. In constant currency, European segment net revenues decreased 11% compared to the prior year. As measured in U.S. dollars and reported in the financial statements, Asia/Pacific net revenues decreased 1% to $54.5 million in the third quarter of fiscal 2010 from $55.1 million in the third quarter of fiscal 2009. In constant currency, Asia/Pacific segment net revenues decreased 10% compared to the prior year.

Consolidated inventories decreased 19% to $270.9 million at July 31, 2010 from $334.2 million at July 31, 2009. Consolidated trade accounts receivable decreased 20% to $340.9 million at July 31, 2010 from $424.2 million at July 31, 2009.

Outlook

The company stated that based on current trends, fourth-quarter revenues are expected to be down in the mid-teens on a percentage basis compared to the same quarter a year ago and that it expects to generate earnings per share on a diluted basis in the mid-single-digit cents range.
 
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
 
Three Months Ended July 31,
In thousands, except per share amounts
2010
   
2009
 
Revenues, net $ 441,475 $ 501,394
Cost of goods sold   210,742   267,030
Gross profit 230,733 234,364
 
Selling, general and administrative expense 193,155 211,771
Asset impairment   3,225 �€�
 
Operating income 34,353 22,593
 
Interest expense 20,630 15,347
Foreign currency loss   213   3,473
Income before provision for income taxes 13,510 3,773
 
Provision for income taxes   5,096   396
 
Income from continuing operations 8,414 3,377
Income (loss) from discontinued operations   143   (2,067 )
Net income 8,557 1,310
Less: net (income) loss attributable to non-controlling interest
  (251 )   36
Net income attributable to Quiksilver, Inc. $ 8,306 $ 1,346
 
 
Income per share from continuing operations attributable to Quiksilver, Inc.
$ 0.06 $ 0.03
Income (loss) per share from discontinued operations attributable to Quiksilver, Inc.
$ 0.00 $ (0.02 )
Net income per share attributable to Quiksilver, Inc.
$ 0.06 $ 0.01
 
Income per share from continuing operations attributable to Quiksilver, Inc., assuming dilution
$ 0.05 $ 0.03
Income (loss) per share from discontinued operations attributable to Quiksilver, Inc., assuming dilution
$ 0.00 $ (0.02 )
Net income per share attributable to Quiksilver, Inc., assuming dilution
$ 0.06 $ 0.01

Information related to operating segments is as follows (unaudited):

                Three Months Ended July 31,
In thousands
2010
   
2009
 
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