MOSS ADAMS CAPITAL: Apparel and foowear market monitor highlights notable deals, stock prices and results.
Details on Industry Insight.
I'll have more later today out of the conference call now taking place between company executives and analysts.
Here's the press release:
HUNTINGTON BEACH, Calif.--(BUSINESS WIRE)--Quiksilver, Inc. (NYSE: ZQK) today announced operating results for the fourth quarter and full year ended October 31, 2008.
Consolidated net revenues for the fourth quarter of fiscal 2008 increased 3% to $606.9 million compared to $587.3 million in the fourth quarter of fiscal 2007. Fourth quarter pro-forma income from continuing operations was $41.6 million or $0.32 per share, and excludes 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 $0.04 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 $0.11 per share, compared to income of $43.9 million or $0.34 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.
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 $0.93 per share. Full year income from continuing operations for fiscal 2008, including the goodwill charge, was $65.5 million or $0.51 per share, compared to income of $116.7 million or $0.90 per share in fiscal 2007.McKnight
Robert B. McKnight, Jr., Chairman of the Board, President and Chief Executive Officer of Quiksilver, Inc., 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. As economic conditions continue to worsen in our key markets in the US and in Europe, we've continued our efforts to reduce expenses and capital expenditures, to carefully control inventory and to reconfigure our post-Rossignol capital structure."
Net revenues in the Americas increased 10% during the fourth quarter of fiscal 2008 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.
Net revenues in the Americas for the full year of fiscal 2008 increased 7% to $1,061.4 million. 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 inventories increased 5% to $312.1 million at October 31, 2008 from $296.2 million at October 31, 2007. Inventories grew 15% in local currency. Consolidated trade accounts receivable decreased 2% to $470.1 million at October 31, 2008 from $478.0 million at October 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 October 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 $1,071 million 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.
Mr. McKnight concluded, "Now that we have completed the sale of Rossignol and eliminated our exposure to hardgoods manufacturing, we've refocused our attention toward our three strong boardsport lifestyle brands Quiksilver, Roxy and DC. Despite an increasingly challenging retail environment, Quiksilver remains the clear number one surf brand in the world, Roxy is still the number one female surf brand and DC is one of the top three footwear brands in the entire action sports industry."