Quiksilver Q4 Net Income Up 94%; For 2006 Down 13%

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
                                         ==============  =============

Quiksilver Q4 Net Income Up 94%; For 2006 Down 13%

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
                                         ==============  =============
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