Quiksilver Inc. – 3rd QTR Results

Huntington Beach, Calif.–Sept. 7, 2000–Quiksilver, Inc. (NYSE:ZQK), today announced operating results for the third quarter and nine months ended July 31, 2000.

Consolidated net sales for the third quarter of fiscal 2000 increased 16.0% to $122,011,000 as compared to fiscal 1999 third quarter consolidated net sales of $105,160,000. Consolidated net income for the third quarter of fiscal 2000 rose to $6,670,000 as compared to $5,623,000, and fully-diluted earnings per share increased 20.8% to $0.29 versus $0.24 for the third quarter of fiscal 1999.

Robert B. McKnight, Jr., Chairman of the Board and Chief Executive Officer of Quiksilver, Inc., commented, “We are once again pleased with our performance during the quarter, particularly given the challenging retail environment. These solid results represent our 14th consecutive quarter of double digit earnings growth, and are a testament to our in-depth knowledge of our consumer, our diversified distribution and the ongoing strength of our brands.”

“Other accomplishments during the quarter included; the completion of the Quiksilver International acquisition, the initial shipment of the Hawk line in specialty stores, the opening of a company-owned Roxy store in South Coast Plaza and the successful launch of our new contemporary women’s line, Alex Goes,” Mr. McKnight continued.

Domestic net sales during the third quarter of fiscal 2000 increased 15.2% to $79,971,000 as compared to fiscal 1999 third quarter domestic net sales of $69,411,000. As measured in French Francs, European net sales increased 31.5% for those same periods. As measured in U.S. dollars and reported in the financial statements, European net sales increased 17.6% during the third quarter of fiscal 2000 to $42,040,000 as compared to fiscal 1999 third quarter European net sales of $35,749,000.

Mr. McKnight further commented, “We once again achieved positive gains across all channels of distribution during the quarter, and sell-throughs have significantly improved over last year’s level and versus last season. We also just came off a very strong show at MAGIC, and we are encouraged about our momentum as we head into the Action Sports Retailer tradeshow.”

Consolidated net sales for the first nine months of fiscal 2000 increased 14.0% to $364,079,000 as compared to fiscal 1999 first nine months consolidated net sales of $319,235,000. Consolidated net income for the first nine months of fiscal 2000 rose to $22,058,000 as compared to $18,719,000, and fully-diluted earnings per share increased 18.8% to $0.95 versus $0.80 for the first nine months of fiscal 1999. Domestic net sales during the first nine nths of fiscal 2000 increased 15.4% to $236,150,000 as compared to fiscal 1999 first nine months domestic net sales of $204,649,000. As measured in French Francs, European net sales increased 26.2% for those same periods. As measured in U.S. dollars and reported in the financial statements, European net sales increased 11.6% during the first nine months of fiscal 2000 to $127,929,000 as compared to fiscal 1999 first nine months European net sales of $114,586,000.

Consolidated inventories increased 15.5% to $83,378,000 at July 31, 2000 from $72,207,000 at October 31, 1999, while increasing 13.9% compared to July 31, 1999. Inventory turnover increased during the quarter in comparison to the previous year. Consolidated trade accounts receivable increased 3.0% to $110,797,000 at July 31, 2000 from $107,619,000 at October 31, 1999, while increasing 17.2% compared to July 31, 1999. These increases in accounts receivable are consistent with the increase in sales.

McKnight concluded, “We are on track to achieve another record year in sales and earnings which underscores our ability to profitably expand our business while preserving the legitimacy of our portfolio of brands. More importantly, we still have a significant amount of unrealized growth potential and we look forward to translating these opportunities into continued long term growth.”

Quiksilver designs, produces and distributes clothing, accessories and related products for active-minded people and develops brands that represent a casual lifestyle – driven from a boardriding heritage. Quiksilver’s authenticity is evident in its innovative products, events and retail environments across the globe.

Quiksilver’s primary focus is apparel for young men and young women under the Quiksilver, Quiksilver Roxy, Raisins, Radio Fiji and Hawk Clothing labels. Quiksilver also manufactures apparel for boys (Quiksilver Boys and Hawk Clothing), girls (Teenie Wahine and Raisins Girls), men (QS Silver Edition) and women (Leilani and Alex Goes), as well as snowboards, snowboard boots and bindings under the Lib Technologies, Gnu and Bent Metal labels. Quiksilver’s products are sold throughout the world, primarily in surf shops and specialty stores that provide an outstanding retail experience for their customers.

NOTE: For further information about Quiksilver, Inc., you are invited to take a look at our world at http://www.quiksilver.com, http://www.mervin.com, and http://www.hawkclothing.com.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

Three Months Ended July 30, 2000 1999 >

Net sales ———— $ 122,011,000 — $ 105,160,000
Cost of goods sold ———— 75,226,000 — $64,193,000
Gross profit ———— 46,785,000 — $ 40,967,000


Operating expenses:
Selling, general and administrative expense
———— 34,194,000 29,727,000
Royalty income ———— (888,000) — $(538,000)
Royalty expense ———— 550,000 — $1,214,000
Total operating expenses ———— 33,856,000 — $30,403,000
Operating income ———— 12,929,000 — $10,564,000
Interest expense ———— 1,713,000— $ 919,000
Foreign currency loss ———— 101,000 — $49,000
Other expense ———— 131,000 — $110,000
Income before provision for income taxes
———— 10,984,000 — $9,486,000
Provision for income taxes ———— 4,314,000 — $3,863,000
Net income ———— $ 6,670,000 — $ 5,623,000
Net income per share ———— $0.30 — $0.25
Net income per share, assuming dilution
———— $0.29 — $0.24
Weighted average common shares outstanding
———— 22,460,000 — $22,279,000
Weighted average common shares outstanding, assuming dilution
———— 23,215,000— $ 23,614,000

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

Nine Months Ended July 31, 2000 1999

Net sales ———— $ 364,079,000 — $ 319,235,000
Cost of goods sold ———— 220,154,000 — $192,508,000
Gross profit ———— 143,925,000 — $126,727,000
Operating expenses:— $
Selling, general and administrative expense ———— 100,857,000 89,675,000
Royalty income ———— (2,010,000) — $(1,508,000)
Royalty expense ———— 3,449,000— $ 3,834,000— $
Total operating expenses ———— 102,296,000 92,001,000
Operating income ———— 41,629,000 — $34,726,000
Interest expense ———— 3,944,000— $ 2,675,000
Foreign currency loss (gain) ———— 224,000 — $(226,000)
Other expense ———— 391,000 — $351,000
Income before provision or income taxes ———— 37,070,000 — $31,926,000
Provision for income taxes ———— 15,012,000 — $13,207,000
Net income ———— $ 22,058,000 — $18,719,000
Net income per share (a) ———— $0.99 — $$0.85
Net income per share, assuming dilution (a) ———— $0.95— $0.80
Weighted average common shares outstanding (a)

Net sales ———— $ 122,011,000 — $ 105,160,000
Cost of goods sold ———— 75,226,000 — $64,193,000
Gross profit ———— 46,785,000 — $ 40,967,000


Operating expenses:
Selling, general and administrative expense
———— 34,194,000 29,727,000
Royalty income ———— (888,000) — $(538,000)
Royalty expense ———— 550,000 — $1,214,000
Total operating expenses ———— 33,856,000 — $30,403,000
Operating income ———— 12,929,000 — $10,564,000
Interest expense ———— 1,713,000— $ 919,000
Foreign currency loss ———— 101,000 — $49,000
Other expense ———— 131,000 — $110,000
Income before provision for income taxes
———— 10,984,000 — $9,486,000
Provision for income taxes ———— 4,314,000 — $3,863,000
Net income ———— $ 6,670,000 — $ 5,623,000
Net income per share ———— $0.30 — $0.25
Net income per share, assuming dilution
———— $0.29 — $0.24
Weighted average common shares outstanding
———— 22,460,000 — $22,279,000
Weighted average common shares outstanding, assuming dilution
———— 23,215,000— $ 23,614,000

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

Nine Months Ended July 31, 2000 1999

Net sales ———— $ 364,079,000 — $ 319,235,000
Cost of goods sold ———— 220,154,000 — $192,508,000
Gross profit ———— 143,925,000 — $126,727,000
Operating expenses:— $
Selling, general and administrative expense ———— 100,857,000 89,675,000
Royalty income ———— (2,010,000) — $(1,508,000)
Royalty expense ———— 3,449,000— $ 3,834,000— $
Total operating expenses ———— 102,296,000 92,001,000
Operating income ———— 41,629,000 — $34,726,000
Interest expense ———— 3,944,000— $ 2,675,000
Foreign currency loss (gain) ———— 224,000 — $(226,000)
Other expense ———— 391,000 — $351,000
Income before provision or income taxes ———— 37,070,000 — $31,926,000
Provision for income taxes ———— 15,012,000 — $13,207,000
Net income ———— $ 22,058,000 — $18,719,000
Net income per share (a) ———— $0.99 — $$0.85
Net income per share, assuming dilution (a) ———— $0.95— $0.80
Weighted average common shares outstanding (a)
———— 22,392,000 22,022,000
Weighted average common shares outstanding, assuming dilution (a)
———— 23,189,000 23,343,000


(a) Per share amounts and shares outstanding have been adjusted to
reflect a three-for-two stock split effected on April 23, 1999.


CONSOLIDATED BALANCE SHEETS (Unaudited)

July 31, 2000 October 31, 1999
ASSETS
Current assets:
Cash and cash equivalents ———— $ 5,161,000 — $ 1,449,000
Trade accounts receivable, less allowance for doubtful
accounts of $5,249,000 (2000) and $5,738,000 (1999)
— $110,797,000 — $ 107,619,000
Other receivables ———— 5,556,000 — $ 4,074,000
Inventories ———— 83,378,000 — $ 72,207,000
Prepaid expenses, current assets———— 9,688,000 — $ 7,825,000
Total current assets ———— 214,580,000 — $ 193,174,000
Property and equipment, net ———— 49,092,000 — $ 45,153,000
Trademark & consulting, net ———— 1,248,000 — $ 1,393,000
Goodwill, net ———— 59,213,000 — $ 17,055,000
Other assets ———— 6,213,000 — $ 2,898,000


LIABILITIES & STOCKHOLDERS’ EQUITY

Current Liabilities:
Lines of credit ———— $ 36,381,000 — $ 28,619,000
Accounts payable ———— 29,548,000 — $ 31,325,000
Accrued liabilities ———— 21,313,000 — $ 19,792,000
Current portion of long-term debt ———— 3,149,000 — $ 3,615,000
Income taxes payable ———— 6,119,000 — $ —
Total current liabilities ———— 96,510,000 — $ 83,351,000
Long-term debt ———— 65,254,000 — $ 24,569,000
Total liabilities ———— 161,764,000 — $ 107,920,000
Stockholders’ equity:
Preferred stock ———— — —
Common stock ———— 231,000 — $ 227,000
Additional paid-in capital ———— 40,095,000 — $ 36,780,000
Treasury stock ———— (6,778,000) — $ (3,054,000)
Retained earnings ———— 143,648,000 — $ 121,590,000
Accumulated other ————
comprehensive loss ———— (8,614,000) — $ (3,790,000)


Total stockholders’ equity 168,582,000 151,753,000
Total liabilities & stockholders’ equity $ 330,346,000 $ 259,673,000
Information related to Domestic and European Operationns is as follows:


Three Months Ended July 31, 2000 1999
Net sales:
Domestic ———— $ 79,971,000 — $ 69,411,000
Europe ———— 42,040,000 — $ 35,749,000
———— $ 122,011,000 — $ 105,160,000
Gross Profit:
Domestic———— $ 29,340,000 — $ 25,747,000
Europe ———— 17,445,000 — $ 15,220,000
———— $ 46,785,000 — $ 40,967,000
SG&A Expense:
Domestic ———— $ 21,565,000 — $ 18,623,000
Europe ———— 12,629,000 — $ 11,104,000
———— $ 34,194,000 — $ 29,727,000
Operating Income:
Domestic ———— $ 9,290,000 — $ 7,488,000
Europe ———— 3,639,000 — $ 3,076,000
———— $ 12,929,000 — $ 10,564,000
———— 22,392,000 22,022,000
Weighted average common shares outstanding, assuming dilution (a)
———— 23,189,000 23,343,000


(a) Per share amounts and shares outstanding have been adjusted to
reflect a three-for-two stock split effected on April 23, 1999.


CONSOLIDATED BALANCE SHEETS (Unaudited)

July 31, 2000 October 31, 1999
ASSETS
Current assets:
Cash and cash equivalents ———— $ 5,161,000 — $ 1,449,000
Trade accounts receivable, less allowance for doubtful
accounts of $5,249,000 (2000) and $5,738,000 (1999)
— $110,797,000 — $ 107,619,000
Other receivables ———— 5,556,000 — $ 4,074,000
Inventories ———— 83,378,000 — $ 72,207,000
Prepaid expenses, current assets———— 9,688,000 — $ 7,825,000
Total current assets ———— 214,580,000 — $ 193,174,000
Property and equipment, net ———— 49,092,000 — $ 45,153,000
Trademark & consulting, net ———— 1,248,000 — $ 1,393,000
Goodwill, net ———— 59,213,000 — $ 17,055,000
Other assets ———— 6,213,000 — $ 2,898,000


LIABILITIES & STOCKHOLDERS’ EQUITY

Current Liabilities:
Lines of credit ———— $ 36,381,000 — $ 28,619,000
Accounts payable ———— 29,548,000 — $ 31,325,000
Accrued liabilities ———— 21,313,000 — $ 19,792,000
Current portion of long-term debt ———— 3,149,000 — $ 3,615,000
Income taxes payable ———— 6,119,000 — $ —
Total current liabilities ———— 96,510,000 — $ 83,351,000
Long-term debt ———— 65,254,000 — $ 24,569,000
Total liabilities ———— 161,764,000 — $ 107,920,000
Stockholders’ equity:
Preferred stock ———— — —
Common stock ———— 231,000 — $ 227,000
Additional paid-in capital ———— 40,095,000 — $ 36,780,000
Treasury stock ———— (6,778,000) — $ (3,054,000)
Retained earnings ———— 143,648,000 — $ 121,590,000
Accumulated other ————
comprehensive loss ———— (8,614,000) — $ (3,790,000)


Total stockholders’ equity 168,582,000 151,753,000
Total liabilities & stockholders’ equity $ 330,346,000 $ 259,673,000
Information related to Domestic and European Operations is as follows:


Three Months Ended July 31, 2000 1999
Net sales:
Domestic ———— $ 79,971,000 — $ 69,411,000
Europe ———— 42,040,000 — $ 35,749,000
———— $ 122,011,000 — $ 105,160,000
Gross Profit:
Domestic———— $ 29,340,000 — $ 25,747,000
Europe ———— 17,445,000 — $ 15,220,000
———— $ 46,785,000 — $ 40,967,000
SG&A Expense:
Domestic ———— $ 21,565,000 — $ 18,623,000
Europe ———— 12,629,000 — $ 11,104,000
———— $ 34,194,000 — $ 29,727,000
Operating Income:
Domestic ———— $ 9,290,000 — $ 7,488,000
Europe ———— 3,639,000 — $ 3,076,000
———— $ 12,929,000 — $ 10,564,000
d European Operations is as follows:


Three Months Ended July 31, 2000 1999
Net sales:
Domestic ———— $ 79,971,000 — $ 69,411,000
Europe ———— 42,040,000 — $ 35,749,000
———— $ 122,011,000 — $ 105,160,000
Gross Profit:
Domestic———— $ 29,340,000 — $ 25,747,000
Europe ———— 17,445,000 — $ 15,220,000
———— $ 46,785,000 — $ 40,967,000
SG&A Expense:
Domestic ———— $ 21,565,000 — $ 18,623,000
Europe ———— 12,629,000 — $ 11,104,000
———— $ 34,194,000 — $ 29,727,000
Operating Income:
Domestic ———— $ 9,290,000 — $ 7,488,000
Europe ———— 3,639,000 — $ 3,076,000
———— $ 12,929,000 — $ 10,564,000