Quiksilver's consolidated net revenues for the third quarter of fiscal 2005 increased 11% to $373.8 million from $337.9 million in 2004. Consolidated net income for the third quarter of fiscal 2005 increased 26% to $24.6 million from $19.5 million the year before. Third quarter fully diluted earnings per share was $0.20 versus $0.16 for the third quarter of fiscal 2004, both amounts as adjusted for the two-for-one stock split that took effect in May 2005.
Robert B. McKnight, Jr., Chairman of the Board and Chief Executive Officer of Quiksilver, Inc., commented, “Once again, we are reporting strong results for the third quarter, and at the same time, we effectively executed on a number of key strategic initiatives that better position us for the future. During the quarter, we closed our acquisition of Skis Rossignol S.A., completed a highly successful bond offering and put a new global management structure in place. We also signed an exclusive licensing agreement with Kohl's to distribute the Tony Hawk brand in the United States, opened our first Quiksilver Boardriders/Andaska store in Anglet, France and participated in a series of unique marketing events, including skateboarder Danny Way's unprecedented jump over the Great Wall of China. Our teams around the world continue to perform at the highest level, and we look forward to building on the positive momentum that we have created in the marketplace.”
Net revenues in the Americas increased 4% during the third quarter of fiscal 2005 to $196.3 million from $187.9 million in the third quarter of fiscal 2004. As measured in U.S. dollars and reported in the financial statements, European net revenues increased 16% during the third quarter of fiscal 2005 to $133.6 million from $115.4 million in the third quarter of fiscal 2004. As measured in euros, European net revenues increased 14% for those same periods. Asia/Pacific net revenues increased 30% to $43.1 million in the third quarter of fiscal 2005 from $33.1 million in the third quarter of fiscal 2004. As measured in Australian dollars, Asia/Pacific net revenues increased 21% for those same periods.
Bernard Mariette, President of Quiksilver, Inc., commented, “Our integration plans for Rossignol continue to exceed our expectations, and we are more encouraged than ever with regard to our future in the snow and mountain lifestyle market. We have brought our people together to share a unified, global mind set which can be seen in the new Roxy line of ski products, which we believe will get a strong reception from both our customers and consumers. It is perhaps even more evident in the recent announcement we made to combine all of our U.S. mountain sports businesses together under one roof in Park City, Utah next Spring. We are working hard to bring our vision to life and thank all of our employees, partners and customers for helping take this great company to the next level.”
Mr. Mariette continued, “Even as we focus on maximizing the opportunities for the core business within Rossignol, we recognize that our largest prospect for growth with Rossignol will come from expanding the brand into a leader in the sportswear and outerwear market. Our design and merchandising teams are excited about this opportunity, and just as we have come to be the leading lifestyle brand for the beach, we intend to dominate the mountain as well.”
Excluding the inventory acquired as part of the Rossignol acquisition, consolidated inventories amounted to $204.4 million at July 31, 2005, a 19% increase from $171.6 million at July 31, 2004. Excluding the accounts receivable acquired as part of the Rossignol acquisition, consolidated trade accounts receivable increased 23% to $333.5 million at July 31, 2005 from $271.4 million at July 31, 2004.
The Company also indicated its expectations for the fourth quarter ending October 31, 2005, that revenues will range between $582 million and $592 million, and diluted earnings per share will range from $0.26 to $0.27. For the full fiscal year, revenues are expected to range between $1.73 billion and $1.74 billion with diluted earnings per share ranging from $0.86 to $0.87.
Mr. McKnight concluded, “The positive response we received at the recent trade shows, both in the U.S. and abroad, gives us further confidence that our brands remain strong, our products are among the best in the industry and our powerful market position continues to grow. Over the past year, we have significantly enhanced our global platform, and now we move forward as the world leader in the outdoor market. Our entire team is energized and focused on further capitalizing on the great number of compelling opportunities that lie ahead.”
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended
July 31,
-------------------
In thousands, except per share amounts 2005 2004
--------- ---------
Revenues, net $373,751 $337,930
Cost of goods sold 198,836 187,523
--------- ---------
Gross profit 174,915 150,407
Selling, general and administrative expense 133,589 118,864
--------- ---------
Operating income 41,326 31,543
Interest expense 5,490 1,498
Foreign currency gain (388) (28)
Other expense 207 392
--------- ---------
Income before provision for income taxes 36,017 29,681
Provision for income taxes 11,382 10,151
--------- ---------
Net income $24,635 $19,530
========= =========
Net income per share $0.21 $0.17
========= =========
Net income per share, assuming dilution $0.20 $0.16
========= =========
Weighted average common shares outstanding 118,764 116,772
========= =========
Weighted average common shares outstanding,
assuming dilution 124,308 121,626
========= =========
