Quiksilver, Inc. saw total net revenues for the fiscal fourth quarter jump 22% to $778.4 million from $637.4 for the same period last year. Consolidated net income for the quarter increased 94% to $65.3 million from $33.6 million the year before. Fourth quarter fully diluted earnings per share increased 89% to 51 cents from 27 cents for the fourth quarter last year.
Consolidated net income for the fourth quarter of fiscal 2006 includes $3.3 million in stock compensation required to be expensed by current accounting standards. No stock compensation expense was recorded in the fourth quarter of fiscal 2005. Earnings per share on a fully diluted basis, excluding stock compensation expense and the related tax effect, was 54 cents for the fourth quarter of fiscal 2006. The 3 cents difference between 54 cents per share, excluding stock compensation expense, and actual earnings per share of 51 cents per share is determined by dividing $3.3 million, which is the tax-effected stock compensation expense, by 128.3 million weighted average common shares outstanding, assuming dilution.
Consolidated net revenues for the full year of fiscal 2006 increased 33% to $2.36 billion from $1.78 billion in fiscal 2005. Consolidated net income for fiscal 2006 includes $14.6 million in stock compensation expense required to be expensed by current accounting standards. No stock compensation expense was recorded in fiscal 2005. Net income for fiscal 2006 decreased 13% to $93.0 million from $107.1 million in fiscal 2005, and diluted net income per share for fiscal 2006 decreased 15% to 73 cents from 86 cents in fiscal 2005. In fiscal 2006, full year earnings per share on a fully diluted basis, excluding stock compensation expense and the related tax effect, were $0.84. The $0.11 difference between $0.84 per share, excluding stock compensation expense, and actual earnings per share of $0.73 is determined by dividing $14.6 million, which is the tax-effected stock compensation expense, by 127.7 million weighted average common shares outstanding, assuming dilution. The Company noted that consolidated fiscal 2005 historical results include the operations of its Rossignol business for three months of the winter season, since it was acquired as of July 31, 2005, the end of the Company's third quarter, but do not include Rossignol's business during the summer season prior to the acquisition when Rossignol has historically generated losses. As a result, consolidated operating results for fiscal 2006, which include Rossignol's business for the full year, are not strictly comparable to fiscal 2005.
Robert B. McKnight, Jr., Chairman of the Board and Chief Executive Officer of Quiksilver, Inc., commented, “During fiscal 2006, with the Rossignol acquisition now firmly under our belt, we have recreated ourselves as a unified organization and have begun to fulfill our vision as the world's leading outdoor sports company. This compelling and expanded strategic position, the power of our portfolio of market leading brands, and the new scale of our business, particularly as it relates to the mountain lifestyle, will enable us to drive strong, long-term rates of sales and income growth.”
Bernard Mariette, President of Quiksilver, Inc., commented, “In every region around the globe and in every brand and business we operate, we have unprecedented growth opportunities. Our Quiksilver, Roxy, DC, and Rossignol businesses are all performing at a high level. Our ongoing focus on strong management, market-leading brands, great product, new market development, balanced distribution, and strategies for profitability enhancement will enable us to demonstrate the power of the operational platform which we have built.”
Net revenues in the Americas increased 14% during the fourth quarter of fiscal 2006 to $330.4 million from $288.9 million in the fourth quarter of fiscal 2005. As measured in U.S. dollars and reported in the financial statements, European net revenues increased 28% during the fourth quarter of fiscal 2006 to $345.8 million from $269.9 million in the fourth quarter of fiscal 2005. As measured in euros, European net revenues increased 23% for those same periods. As measured in U.S. dollars and reported in the financial statements, Asia/Pacific net revenues increased 30% to $100.3 million in the fourth quarter of fiscal 2006 from $77.0 million in the fourth quarter of fiscal 2005. As measured in Australian dollars, Asia/Pacific net revenues increased 31% for those same periods.
Net revenues in the Americas for the full year of fiscal 2006 increased 28% to $1,078.6 million from $843.7 million in fiscal 2005. As measured in U.S. dollars and reported in the financial statements, European net revenues increased 43% during the full year of fiscal 2006 to $1,015.1 million from $712.3 million in fiscal 2005. As measured in euros, European net revenues increased 45% for the year. As measured in U.S. dollars, Asia/Pacific net revenues increased 19% to $263.2 million from $220.9 million in fiscal 2005. As measured in Australian dollars, Asia/Pacific net revenues increased 22% for the year.
Consolidated inventories increased 10% to $425.9 million at October 31, 2006 from $386.4 million at October 31, 2005. Inventories grew 7% in constant dollars. Consolidated trade accounts receivable increased 20% to $721.6 million at October 31, 2006 from $599.5 million at October 31, 2005.
Mr. Mariette continued, “We will continue to execute over the short-term and look to capitalize on strong trends in the youth market and a variety of opportunities in new markets. At the same time, we are very excited to extend the reach and power of our brands for the long term. Most significantly, we are very excited to be launching our new Rossignol apparel range, which will leverage this incredible brand. Our global sourcing initiative, which will enhance the profitability of our company by fully leveraging our scale is also an important project for us in fiscal 2007. Also in the year ahead, we are particularly excited to be celebrating the 100-year anniversary of the Rossignol brand with a variety of events, marketing initiatives and special product ranges.”
Mr. McKnight concluded, “As a global leader with a highly diversified business model, we expect to see growth in every region of the world, across tiers of distribution, within a range of demographic customer groups, with a variety of brands for a wide range of specific outdoor lifestyles. The common thread for all of these initiatives is a passion, which is ingrained in our corporate culture, for the outdoors. We expect this position, a strong, capable operational platform and our dedication to grow our business to enable us to continue to prosper and to deliver excellent returns and significant shareholder value for many years to come.”
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended October 31, ------------------------------ In thousands, except per share amounts 2006 2005 -------------- ------------- Revenues, net $ 778,364 $637,405 Cost of goods sold 428,640 350,067 -------------- ------------- Gross profit 349,724 287,338 Selling, general and administrative expense 241,642 224,956 -------------- ------------- Operating income 108,082 62,382 Interest expense 14,419 11,402 Foreign currency loss 1,105 107 Minority interest and other expense 360 640 -------------- ------------- Income before provision for income taxes 92,198 50,233 Provision for income taxes 26,850 16,629 -------------- ------------- Net income $ 65,348 $ 33,604 ============== ============= Net income per share $ 0.53 $ 0.28 ============== ============= Net income per share, assuming dilution $ 0.51 $ 0.27 ============== ============= Weighted average common shares outstanding 122,566 121,130 ============== ============= Weighted average common shares outstanding, assuming dilution 128,314 126,103 ============== ============= CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Fiscal Year Ended October 31, ----------------------------- In thousands, except per share amounts 2006 2005 -------------- -------------- Revenues, net $ 2,362,288 $ 1,780,869 Cost of goods sold 1,280,738 972,345 -------------- -------------- Gross profit 1,081,550 808,524 Selling, general and administrative expense 897,628 627,342 -------------- -------------- Operating income 183,922 181,182 Interest expense 50,836 21,950 Foreign currency (gain) loss 489 (106) Minority interest and other expense 1,255 992 -------------- -------------- Income before provision for income taxes 131,342 158,346 Provision for income taxes 38,326 51,226 -------------- -------------- Net income $ 93,016 $ 107,120 ============== ============== Net income per share $ 0.76 $ 0.90 ============== ============== Net income per share, assuming dilution $ 0.73 $ 0.86 ============== ============== Weighted average common shares outstanding 122,074 118,920 ============== ============== Weighted average common shares outstanding, assuming dilution 127,744 124,335 ============== ==============
Information related to geographic segments is as follows: Three Months Ended October 31, ------------------------------ Amounts in thousands 2006 2005 -------------- --------------- Revenues, net: Americas $ 330,438 $ 288,950 Europe 345,834 269,875 Asia/Pacific 100,260 77,015 Corporate operations 1,832 1,565 -------------- --------------- $ 778,364 $ 637,405 ============== =============== Gross Profit: Americas $ 132,125 $ 117,444 Europe 173,597 132,530 Asia/Pacific 43,312 37,577 Corporate operations 690 (213) -------------- --------------- $ 349,724 $ 287,338 ============== =============== SG&A Expense: Americas $ 91,773 $ 87,144 Europe 109,674 96,999 Asia/Pacific 26,196 27,471 Corporate operations 13,999 13,342 -------------- --------------- $ 241,642 $ 224,956 ============== =============== Operating Income: Americas $ 40,352 $ 30,300 Europe 63,923 35,531 Asia/Pacific 17,116 10,106 Corporate operations (13,309) (13,555) -------------- --------------- $ 108,082 $ 62,382 ============== =============== Information related to geographic segments (continued): Fiscal Year Ended October 31, ----------------------------- Amounts in thousands 2006 2005 -------------- ------------- Revenues, net: Americas $ 1,078,611 $ 843,677 Europe 1,015,133 712,310 Asia/Pacific 263,158 220,941 Corporate operations 5,386 3,941 -------------- ------------- $ 2,362,288 $1,780,869 ============== ============= Gross Profit: Americas $ 442,148 $ 335,356 Europe 518,218 362,172 Asia/Pacific 118,866 109,698 Corporate operations 2,318 1,298 -------------- ------------- $ 1,081,550 $ 808,524 ============== ============= SG&A Expense: Americas $ 343,288 $ 250,021 Europe 403,136 258,864 Asia/Pacific 97,072 80,098 Corporate operations 54,132 38,359 -------------- ------------- $ 897,628 $ 627,342 ============== ============= Operating Income: Americas $ 98,860 $ 85,335 Europe 115,082 103,308 Asia/Pacific 21,794 29,600 Corporate operations (51,814) (37,061) -------------- ------------- $ 183,922 $ 181,182 ============== =============