Quiksilver Reports Fiscal 2012 Full-Year, Fourth Quarter Financial Results

  Quiksilver Reports Fiscal 2012 Full-Year, Fourth Quarter Financial Results

 --Full-year Revenues Increase to $2.0 Billion, Up 7% in Constant Currency--

Business Wire

HUNTINGTON BEACH, Calif. -- December 13, 2012

Quiksilver, Inc. (NYSE:ZQK) today announced operating results for the fiscal
2012 full year and fourth quarter ended October 31, 2012.

“We are pleased, despite economic headwinds in certain markets, especially
Europe and Australia, that revenues for fiscal 2012 increased across all three
regions, all three major brands and all three distribution channels, in
constant currency,” said Robert B. McKnight, Jr., Chairman of the Board, Chief
Executive Officer and President of Quiksilver, Inc.

“We remain focused on our three core long-term initiatives, which are
strengthening our brands, increasing global sales and driving operational
efficiencies. Our brands received excellent exposure this year due to the
success of our key athletes, who continue to dominate in our core sports. Our
focus on sales resulted in continued growth for the Quiksilver and Roxy
brands, as well as strong growth in our DC brand, our e-commerce business and
our emerging markets. And, we made measurable progress in operating efficiency
by controlling expenses, as seen in the reduction in fourth quarter SG&A as a
percentage of sales.”

Please refer to the accompanying tables for a reconciliation of GAAP results
to certain non-GAAP results for the full year and fourth quarter, net revenues
in historical and constant currency, and a definition of our emerging markets.

Fiscal 2012 Full Year Review:

The following comparisons refer to fiscal 2012 versus fiscal 2011.

Net revenues grew 3% to $2.01 billion compared with $1.95 billion, and grew
7%, or $125 million, in constant currency.

  *Americas net revenues increased 8% to $992 million from $914 million, and
    were up 10% in constant currency.
  *Europe net revenues decreased 7% to $711 million from $761 million, and
    were up 1% in constant currency.
  *Asia Pacific net revenues increased 13% to $307 million from $272 million,
    and were up 12% in constant currency.

Gross margin was 49% of net revenues compared with 52%, primarily driven by
increased clearance sales within our wholesale channel, higher levels of
discounting in our retail channel, changes in the geographical composition of
net revenues, higher input costs, and unfavorable foreign exchange rate
comparisons.

SG&A expense increased 2% to $916 million compared with $896 million,
primarily due to increased e-commerce expenses and higher non-cash stock
compensation expenses, partially offset by reduced marketing expenses and
other expense reductions implemented during fiscal 2012. SG&A expenses
decreased as a percentage of net revenues by 40 basis points to 46% of net
revenues.

Net loss attributable to Quiksilver, Inc. was $11 million, or $0.07 per share,
compared with $21 million, or $0.13 per share.

Pro-forma income, which excludes $18 million and $47 million of net after-tax
charges, was $7 million and $25 million, or $0.04 and $0.14 per diluted share,
respectively.

Pro-forma Adjusted EBITDA was $153 million compared with $192 million.

Fiscal 2012 Net Revenue Highlights:

Net revenues increased (in constant currency) across all three major brands,
all three regions, and all three distribution channels compared with fiscal
2011. In addition, emerging markets generated net revenue growth of 28%.

Brands (constant currency):

  *Quiksilver increased 3% to $794 million;
  *Roxy increased 4% to $524 million; and,
  *DC increased 12% to $594 million.

Distribution channels (constant currency):

  *Wholesale increased 3% to $1.5 billion;
  *Retail increased 7% to $454 million. Full-year same store sales in
    company-owned retail stores grew 4% on a global basis; and,
  *E-commerce increased 155% to $87 million.

Fiscal 2012 Fourth Quarter Review:

The following comparisons are between the fourth quarters of fiscal 2012 and
fiscal 2011.

Net revenues grew 3% to $559 million compared with $545 million, and grew 6%,
or $34 million, in constant currency.

  *Americas net revenues increased 12% to $279 million from $250 million, and
    were up 13% in constant currency.
  *Europe net revenues decreased 9% to $192 million from $213 million, and
    were down 2% in constant currency.
  *Asia Pacific net revenues increased 6% to $87 million from $82 million,
    and were up 7% in constant currency.

Gross margin was 46% of net revenues compared with 52%, primarily driven by
increased clearance sales within our wholesale channel, lower margins on those
sales, increased discounting within our retail channel, unfavorable foreign
exchange rate comparisons, and changes in the geographical composition of net
revenues.

SG&A expense decreased 5% to $236 million compared with $248 million,
primarily driven by reductions in marketing expenses and other expense
reductions implemented during fiscal 2012. These reductions were partially
offset by increased e-commerce expenses associated with the growth of our
online business. SG&A expenses decreased as a percentage of net revenues by
320 basis points to 42% of net revenues.

Net income attributable to Quiksilver, Inc. was $4 million, or $0.02 per
diluted share, compared with $68 million, or $0.38 per diluted share.

Pro-forma income, which excludes $8 million of net after-tax charges and $59
million of net after-tax income, respectively, was $13 million compared with
$8 million, or $0.07 and $0.05 per diluted share, respectively.

Pro-forma Adjusted EBITDA was $40 million compared with $54 million.

Fiscal 2012 Fourth Quarter Net Revenue Highlights:

Net revenues increased (in constant currency) across all three distribution
channels, as well as in the DC and Roxy brands, and in the Americas and Asia
Pacific regions compared with the fourth quarter of fiscal 2011. In addition,
emerging markets generated net revenue growth of 27%.

Brands (constant currency):

  *Quiksilver decreased 5% to $200 million;
  *Roxy increased 2% to $135 million; and,
  *DC increased 18% to $187 million.

Distribution channels (constant currency):

  *Wholesale increased 4% to $430 million;
  *Retail increased 4% to $107 million. Fourth quarter same store sales in
    company-owned retail stores grew slightly; and,
  *E-commerce increased 148% to $22 million.

About Quiksilver:

Quiksilver, Inc. is one of the world’s leading outdoor sports lifestyle
companies. Quiksilver designs, produces and distributes a diversified mix of
branded apparel, footwear and accessories. The company’s apparel and footwear
brands, inspired by the passion for outdoor action sports, represent a casual
lifestyle for young-minded people who connect with its boardriding culture and
heritage. The company’s Quiksilver, Roxy, DC, Lib Tech and Hawk brands are
synonymous with the heritage and culture of surfing, skateboarding and
snowboarding. The company’s products are sold in over 90 countries in a wide
range of distribution, including surf shops, skate shops, snow shops, its
proprietary Boardriders Club shops and other company-owned retail stores,
other specialty stores, select department stores and through various
e-commerce channels. Quiksilver’s corporate headquarters are in Huntington
Beach, California.

Forward looking statements:

This press release contains forward-looking statements including but not
limited to statements regarding the company’s three core long-term initiatives
and other future activities. These forward-looking statements are subject to
risks and uncertainties, and actual results may differ materially. Please
refer to Quiksilver’s SEC filings for more information on the risk factors
that could cause actual results to differ materially from expectations, and
specifically the sections titled “Risk Factors” and “Forward-Looking
Statements” in Quiksilver’s Annual Report on Form 10-K and Quarterly Reports
on Form 10-Q.

NOTE: For further information about Quiksilver, Inc., please visit our website
at www.quiksilverinc.com. We also invite you to explore our brand sites,
www.quiksilver.com, www.roxy.com, www.dcshoes.com, www.lib-tech.com and
www.hawkclothing.com.


QUIKSILVER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                                                            
                                                                 
                     Three months ended          Fiscal Year Ended
In thousands,
except per share     October 31,                 October 31,
amounts
                     2012          2011          2012            2011
                                                                 
Revenues, net        $ 558,966     $ 545,201     $ 2,013,239     $ 1,953,061
Cost of goods sold    302,207     262,124     1,032,893     929,227   
                                                                 
Gross profit           256,759       283,077       980,346         1,023,834
                                                                 
Selling, general
and administrative     235,931       247,593       916,144         895,949
expense
Asset impairments     6,678       11,763      7,234         86,373    
                                                                 
Operating income       14,150        23,721        56,968          41,512
                                                                 
Interest expense       15,359        14,081        60,823          73,808
Foreign currency      3,032       5,775       (1,669    )    (111      )
loss (gain)
                                                                 
(Loss) income
before provision       (4,241  )     3,865         (2,186    )     (32,185   )
for income taxes
                                                                 
(Benefit)
provision for         (7,356  )    (64,252 )    7,557         (14,315   )
income taxes
                                                                 
Net income (loss)      3,115         68,117        (9,743    )     (17,870   )
Net loss (income)
attributable to       1,244       (219    )    (1,013    )    (3,388    )
non-controlling
interest
                                                                 
Net income (loss)
attributable to      $ 4,359      $ 67,898     $ (10,756   )   $ (21,258   )
Quiksilver, Inc.
                                                                 
Net income (loss)
per share
attributable to
Quiksilver, Inc.:
Basic                $ 0.03        $ 0.42        $ (0.07     )   $ (0.13     )
Diluted              $ 0.02        $ 0.38        $ (0.07     )   $ (0.13     )
                                                                 
Weighted average
common shares
outstanding:
Basic                  165,227       163,117       164,245         162,430
Diluted                178,348       179,742       164,245         162,430


QUIKSILVER, INC. AND SUBSIDIARIES
INFORMATION RELATED TO OPERATING SEGMENTS (UNAUDITED)
                                                          
                                                                 
                 Three months ended              Fiscal Year Ended
In thousands     October 31,                     October 31,
                 2012          2011              2012            2011
Revenues, net:
Americas         $ 279,106     $ 249,788         $ 991,625       $ 914,406
Europe             192,348       212,522           710,852         761,100
Asia/Pacific       86,899        81,843            307,141         272,479
Corporate         613         1,048           3,621         5,076     
operations
                   558,966       545,201           2,013,239       1,953,061
                                                                 
Gross Profit:
Americas         $ 118,130     $ 117,575         $ 429,868       $ 425,607
Europe             95,039        121,644           393,944         453,727
Asia/Pacific       43,472        42,973            156,833         144,815
Corporate         118         885             (299      )    (315      )
operations
                   256,759       283,077           980,346         1,023,834
                                                                 
SG&A Expense:
Americas         $ 91,653      $ 104,804         $ 362,322       $ 360,921
Europe             87,375        89,999            337,535         340,387
Asia/Pacific       42,259        38,988            157,247         147,949
Corporate         14,644      13,802          59,040        46,692    
operations
                   235,931       247,593           916,144         895,949
                                                                 
Asset
Impairments:
Americas         $ 4,711       $ 3,426           $ 5,267         $ 3,891
Europe             560           1,331             560             1,331
Asia/Pacific       1,407         7,006             1,407           81,151
Corporate         -           -               -             -         
operations
                   6,678         11,763            7,234           86,373
                                                                 
Operating
Income (Loss):
Americas         $ 21,766      $ 9,345           $ 62,279        $ 60,795
Europe             7,104         30,314            55,849          112,009
Asia/Pacific       (194    )     (3,021  )         (1,821    )     (84,285   )
Corporate         (14,526 )    (12,917 )        (59,339   )    (47,007   )
operations
                   14,150        23,721            56,968          41,512

The Company's references to emerging markets in this press release refer to
net revenues generated in Brazil, Mexico, Korea, China, Indonesia, Taiwan and
Russia collectively.


QUIKSILVER, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP PRO-FORMA INCOME RECONCILIATION (UNAUDITED)
                                                              
                                                                   
                         Three months ended          Fiscal Year Ended
In thousands, except     October 31, ^(1)            October 31, ^(1)
per share amounts
                         2012          2011          2012          2011
                                                                   
Net income (loss)
attributable to          $ 4,359       $ 67,898      $ (10,756 )   $ (21,258 )
Quiksilver, Inc.
Restructuring charges,
net of tax of $1,586,      6,223         8,038         15,415        5,920
$0, $2,719, and $0,
respectively
Non-cash asset
impairments, net of
tax of $233, $328,         6,445         11,435        6,969         86,045
$265, and $328,
respectively
Gain on retail store
closures, net of tax
of $(1,819), $(1,184),     (4,245  )     (2,403  )     (4,245  )     (5,334  )
$(1,819), and
$(2,627), respectively
Effect of APAC tax         -             (7,266  )     -             18,714
valuation allowance
FIN 48 tax adjustment      -             (69,285 )     -             (69,285 )
Non-cash interest
charges, net of tax of    -           -           -           10,691  
$0, $0, $0, and
$4,618, respectively
                                                                   
Pro-forma income           12,782        8,417         7,383         25,493
                                                                   
Pro-forma income per
share:
Basic                    $ 0.08        $ 0.05        $ 0.04        $ 0.16
Diluted                  $ 0.07        $ 0.05        $ 0.04        $ 0.14
                                                                   
Weighted average
common shares
outstanding:
Basic                      165,227       163,117       164,245       162,430
Diluted                    178,348       179,742       178,907       182,049

(1) Certain prior year and prior quarter amounts have been reclassified to be
consistent with current financial statement presentation.


QUIKSILVER, INC. AND SUBSIDIARIES
ADJUSTED EBITDA & PRO-FORMA ADJUSTED EBITDA RECONCILIATION (UNAUDITED)
                                                              
                                                                   
                          Three months ended         Twelve Months Ended
In thousands              October 31,                October 31,
                          2012         2011          2012          2011
                                                                   
Net income (loss)
attributable to           $ 4,359      $ 67,898      $ (10,756 )   $ (21,258 )
Quiksilver, Inc.
(Benefit) provision for     (7,356 )     (64,252 )     7,557         (14,315 )
income taxes
Interest expense            15,359       14,081        60,823        73,808
Depreciation and            13,795       15,105        53,232        55,259
amortization
Non-cash stock-based        5,280        4,498         22,552        14,414
compensation expense
Non-cash asset             6,678      11,763      7,234       86,373  
impairments
                                                                   
Adjusted EBITDA             38,115       49,093        140,642       194,281
                                                                   
Restructuring and other    1,745      4,451       12,070      (2,041  )
special charges ^(1)
                                                                   
Pro-forma Adjusted          39,860       53,544        152,712       192,240
EBITDA

(1) Certain prior year and prior quarter amounts have been reclassified to be
consistent with current financial statement presentation.

Definition of Adjusted EBITDA and Pro-forma Adjusted EBITDA:



Adjusted EBITDA is defined as net income (loss) attributable to Quiksilver,
Inc. before (i) interest expense, (ii) (benefit) provision for income taxes,
(iii) depreciation and amortization, (iv) non-cash stock-based compensation
expense and (v) non-cash asset impairments. Pro-forma Adjusted EBITDA is
defined as Adjusted EBITDA excluding restructuring and other special charges 
(including, but not limited to, non-operating charges for gains and losses on
lease exit activities as well as severance and other employee termination
costs as a result of downsizing and reorganization). Adjusted EBITDA and
Pro-forma Adjusted EBITDA are not defined under generally accepted accounting
principles (“GAAP”), and may not be comparable to similarly titled measures
reported by other companies. We use Adjusted EBITDA and Pro-forma Adjusted
EBITDA, along with other GAAP measures, as measures of profitability because
Adjusted EBITDA and Pro-forma Adjusted EBITDA compare our performance on a
consistent basis by removing from our operating results the impact of our
capital structure, the effect of operating in different tax jurisdictions, the
impact of our asset base, which can differ depending on the book value of
assets, the accounting methods used to compute depreciation and amortization,
the existence or timing of asset impairments and the effect of non-cash
stock-based compensation expense. We believe EBITDA is useful to investors as
it is a widely used measure of performance and the adjustments we make to
EBITDA provide further clarity on our profitability. We remove the effect of
non-cash stock-based compensation from our earnings which can vary based on
share price, share price volatility and the expected life of the equity
instruments we grant. In addition, this stock-based compensation expense does
not result in cash payments by us. We remove the effect of asset impairments
from Adjusted EBITDA for the same reason that we remove depreciation and
amortization, as it is part of the non-cash impact of our asset base.  We also
remove from Pro-forma Adjusted EBITDA the impact of certain non-operating
charges for gains and losses on lease exit activities as well as severance and
other employee termination costs as these costs are not typically part of
normal, day-to-day operations.  Adjusted EBITDA and Pro-forma Adjusted EBITDA
have limitations as profitability measures in that they do not include the
interest expense on our debts, our provisions for income taxes, the effect of
our expenditures for capital assets and certain intangible assets, the effect
of non-cash stock-based compensation expense and the effect of non-cash asset
impairments.


SUPPLEMENTAL EXCHANGE RATE INFORMATION

(Unaudited)

In order to better understand growth rates in our operating segments, we make
reference to constant currency. Constant currency reporting improves visibility
into actual growth rates as it adjusts for the effect of variances in foreign
currency exchange rates from period to period. Constant currency is calculated by
taking the ending foreign currency exchange rate (for balance sheet items) or the
average foreign currency exchange rate (for income statement items) used in
translation for the current period and applying that same rate to the prior
period. The following table presents net revenues by segment in both historical
currency and constant currency for the three months ended October 31, 2012 and
2011 (in thousands):
                                                               
                                                                     
Net
revenues
in
historical   Americas      Europe         Asia/Pacific   Corporate   Total
currency
(as
reported)
                                                                     
October      $ 249,788     $ 212,522      $  81,843      $  1,048    $ 545,201
31, 2011
October        279,106       192,348         86,899         613        558,966
31, 2012
Percentage
increase       12      %     (9      %)      6       %                 3         %
(decrease)
                                                                     
Net
revenues
in
constant
currency
(current
year
exchange
rates)
                                                                     
October        247,942       195,460         80,908         1,028      525,338
31, 2011
October        279,106       192,348         86,899         613        558,966
31, 2012
Percentage
increase       13      %     (2      %)      7       %                 6         %
(decrease)
                                                                     
                                                                     
The following table presents net revenues by segment in both historical currency
and constant currency for the fiscal years ended October 31, 2012 and 2011 (in
thousands):
                                                                     
Net
revenues
in
historical   Americas      Europe         Asia/Pacific   Corporate   Total
currency
(as
reported)
                                                                     
October      $ 914,406     $ 761,100      $  272,479     $  5,076    $ 1,953,061
31, 2011
October        991,625       710,852         307,141        3,621      2,013,239
31, 2012
Percentage
increase       8       %     (7      %)      13      %                 3         %
(decrease)
                                                                     
Net
revenues
in
constant
currency
(current
year
exchange
rates)
                                                                     
October        903,683       705,682         273,392        5,018      1,887,775
31, 2011
October        991,625       710,852         307,141        3,621      2,013,239
31, 2012
Percentage     10      %     1       %       12      %                 7         %
increase


QUIKSILVER, INC. AND SUBSIDIARIES
CONSOLIDATED SELECTED BALANCE SHEET INFORMATION (UNAUDITED)
                                                      
In thousands                           October 31, 2012   October 31, 2011
                                                          
  Cash and cash equivalents            $     41,823       $     109,753
  Trade accounts receivable, net             433,743            397,089
  Inventories                                344,746            347,757
  Lines of credit and long-term debt         757,969            747,686

Contact:

PondelWilkinson Inc.
Robert Jaffe
Investor Relations
310-279-5980
zqk@quiksilver.com