Quiksilver, Inc. reported consolidated net revenues increased 3% in the fourth quarter ended Oct. 31, to $606.9 million compared to $587.3 million in the fourth quarter of fiscal 2007.

The company said fourth quarter pro-forma income from continuing operations was $41.6 million or 32 cents per share excluding a $55.4 million goodwill impairment charge associated with the company’s revised outlook for its business in the Asia/Pacific region. The pro-forma earnings result exceeded the company’s expectations because of an unanticipated tax benefit of $4.6 million or 4 cents per share.
 
The goodwill impairment charge is a non-cash expense and does not affect the company’s operations, cash flows or covenants associated with its debt. A reconciliation of GAAP results to pro-forma results is provided in the accompanying tables. Including the goodwill charge, the loss from continuing operations for the fourth quarter was $13.8 million or 11 cents per share, compared to income of $43.9 million or 34 cents per share in the same quarter a year ago. Net revenues and income from continuing operations for all periods exclude the results of the Rossignol wintersports and golf equipment businesses which are reported as discontinued operations.

Net revenues in the Americas increased 10% during the fourth quarter  to $306.9 million. European net revenues decreased 4% during the fourth quarter to $216.3 million and declined 6% in local currency. Asia/Pacific net revenues increased 2% to $82.6 million in the fourth quarter and increased 10% in local currency.

Robert B. McKnight, Jr., chairman of the board, president and CEO of Quiksilver, commented, “I am proud of the efforts of the entire Quiksilver team around the world as we fought through a deteriorating global economy to deliver financial results that were consistent with the outlook we provided 6 months ago.”

Net revenues in the Americas for the full year of fiscal 2008 increased 7% to $1.06 billion. European net revenues increased 16% during the full year of fiscal 2008 to $933.1 million and were up 4% in local currency. Asia/Pacific net revenues increased 9% to $265.1 million in fiscal 2008 and were up 3% in local currency.

Consolidated net revenues for the full year of fiscal 2008 increased 11% to $2.26 billion compared to $2.05 billion in fiscal 2007. Full year pro-forma income from continuing operations for fiscal 2008, adjusted to exclude the goodwill charge, was $120.9 million or 93 cents per share.
 
Full year income from continuing operations for fiscal 2008, including the goodwill charge, was $65.5 million or 51 cents per share, compared to income of $116.7 million or 90 cents per share in fiscal 2007.

Consolidated inventories increased 5% to $312.1 million at Oct. 31, 2008 from $296.2 million at Oct. 31, 2007. Inventories grew 15% in local currency. Consolidated trade accounts receivable decreased 2% to $470.1 million at Oct. 31, 2008 from $478.0 million at Oct. 31, 2007. Trade accounts receivable grew 6% in local currency.

The company completed the sale of the Rossignol Group in November 2008 and sold Roger Cleveland Golf Company in December 2007. Both of these businesses are treated as discontinued operations in the consolidated statements of income attached to this press release. Quiksilver expects to recognize a non-cash loss of approximately $150 million in the first fiscal quarter of 2009 associated with the sale of Rossignol.

The company stated that as of Oct. 31, 2008, it had approximately $215 million of available liquidity, including non-restricted cash and available borrowing capacity on its existing credit facilities. The company ended fiscal 2008 with $1.07 billion of debt, including $11 million of debt within liabilities held for sale. The company is currently in discussions with its European and Asia/Pacific banks to refinance its short-term debt, including $167 million which is uncommitted, and a $72 million facility due to mature in March 2009.

In addition, the company is negotiating a term loan to supplement its current credit availability in the US, subject to approval by its US lenders. The company believes that its projected cash flow from operations, together with its existing credit facilities, will be adequate to service its debt and to finance the projected capital requirements of the business. The company also believes that it can obtain additional financing needed to extend the maturities of its debt, reduce the amount of short-term uncommitted lines of credit and better position itself for the long term.
 
 
 
 

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

 

 

 

Three Months Ended October 31,

In thousands, except per share amounts

 

  2008

 

     2007

 

 

 

 

 

Revenues, net

 

$

606,899

 

 

$

587,268

 

Cost of goods sold

 

 

315,008

 

 

 

298,764

 

Gross profit

 

 

291,891

 

 

 

288,504

 

 

 

 

 

 

Selling, general and administrative expense

 

 

231,629

 

 

 

216,576

 

Goodwill impairment

 

 

55,400

 

 

 

–

 

Retail store impairments

 

 

10,047

 

 

 

–

 

 

 

 

 

 

Operating (loss) income

 

 

(5,185 )

 

 

 

71,928

 

 

 

 

 

 

Interest expense

 

 

9,482

 

 

 

11,151

 

Foreign currency (gain) loss

 

 

(5,298)

 

 

 

3,125

 

Minority interest and other expense

 

 

701

 

 

 

82

 

(Loss) income before provision for income taxes

 

 

(10,070)

 

 

 

57,570

 

 

 

 

 

 

Provision for income taxes

 

 

3,754

 

 

 

13,636

 

 

 

 

 

 

(Loss) income from continuing operations

 

$

(13,824)

 

 

$

43,934

 

 

 

 

 

 

Income (loss) from discontinued operations

 

$

12,869

 

 

$

(154,861) 

 

 

 

 

 

 

Net loss

 

$

(955)

 

 

$

(110,927)

 

 

 

 

 

 

 

 

 

 

 

(Loss) income per share from continuing operations

 

$

(0.11 )

 

 

$

0.35

 

Income (loss) per share from discontinued operations

 

$

0.10

 

 

$

(1.24)

 

Net loss per share

 

$

(0.01)

 

 

$

(0.89)

 

(Loss) income per share from continuing operations, assuming dilution

 

$

(0.11)

 

 

$

0.34

 

Income (loss) per share from discontinued operations, assuming dilution

 

$

0.10

 

 

$

(1.19)

 

Net loss per share, assuming dilution

 

$

(0.01 )

 

 

$

(

Share This