Volcom sees income and profit gains in its 2010 Q1

VOLCOM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except share and per share data)

Three Months Ended

March 31,2010 2009

Revenues:

Product revenues $ 76,834 $ 67,944

Licensing revenues 586 375

Total revenues 77,420 68,319

Cost of goods sold 35,425 33,937

Gross profit 41,995 34,382

Selling, general and administrative expenses 31,008 28,034

Operating income 10,987 6,348

Other income:

Interest income, net 109 33

Foreign currency (loss) gain (10 ) 118

Total other income 99 151

Income before provision for income taxes 11,086 6,499

Provision for income taxes 3,552 2,279

Net income $ 7,534 $ 4,220

Net income per share:

Basic $ 0.31 $ 0.17

Diluted $ 0.31 $ 0.17

Weighted average shares outstanding:

Basic 24,356,857 24,347,857

Diluted 24,376,971 24,357,044

VOLCOM, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands)

March 31, 2010 December 31, 2009

Assets

Current assets:

Cash and cash equivalents $ 63,992 $ 76,180

Short-term investments 45,000 35,000

Accounts receivable — net of allowances 59,679 53,792

Inventories 26,233 33,250

Prepaid expenses and other current assets 5,204 4,353

Income taxes receivable -- 725

Deferred income taxes 7,915 7,700

Total current assets 208,023 211,000

Property and equipment — net 25,640 26,348

Investments in unconsolidated investees 330 330

Deferred income taxes 3,541 3,545

Intangible assets — net 9,562 9,784

Goodwill 1,254 1,291

Other assets 792 735

Total assets $ 249,142 $ 253,033

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable $ 10,627 $ 22,788

Accrued expenses and other current liabilities 10,123 9,957

Income taxes payable 2,691 --

Current portion of capital lease obligations 20 50

Total current liabilities 23,461 32,795

Other long-term liabilities 1,200 1,203

Income taxes payable – non-current 68 68

Stockholders’ equity:

Common stock 24 24

Additional paid-in capital 92,731 92,192

Retained earnings 131,213 123,679

Accumulated other comprehensive income 445 3,072

Total stockholders’ equity 224,413 218,967

Total liabilities and stockholders’ equity $ 249,142 $ 253,033

VOLCOM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

Three Months Ended

March 31, 2010 2009

Cash flows from operating activities:

Net income $ 7,534 $ 4,220

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 1,517 1,765

Provision for doubtful accounts (217 ) 1,113

Loss on disposal of property and equipment 3 4

Stock-based compensation 550 246

Deferred income taxes (201 ) (78 )

Changes in operating assets and liabilities:

Accounts receivable (8,010 ) (473 )

Inventories 6,532 4,135

Prepaid expenses and other current assets (904 ) 392

Income taxes receivable/payable 3,488 2,273

Other assets (69 ) 37

Accounts payable (11,608 ) (4,802 )

Accrued expenses 140 (2,792 )

Other long-term liabilities 14 (30 )

Net cash (used in) provided by operating activities (1,231 ) 6,010

Cash flows from investing activities:

Purchase of property and equipment (1,005 ) (734 )

Business acquisitions, net of cash acquired — (794 )

Purchase of short-term investments (20,000 ) (24,944 )

Sale of short-term investments 10,000 —

Net cash used in investing activities (11,005 ) (26,472 )

Cash flows from financing activities:

Principal payments on capital lease obligations (4 ) (18 )

Net cash used in financing activities (4 ) (18 )

Effect of exchange rate changes on cash 52 814

Net decrease in cash and cash equivalents (12,188 ) (19,666 )

Cash and cash equivalents — Beginning of period 76,180 79,613

Cash and cash equivalents — End of period $ 63,992 $ 59,947

VOLCOM, INC. AND SUBSIDIARIES

OPERATING SEGMENT INFORMATION (UNAUDITED)

(in thousands)

Three Months Ended

March 31, 2010 2009

Total revenues:

United States $ 48,179 $ 42,420

Europe 23,626 21,678

Electric 5,615 4,221

Consolidated $ 77,420 $ 68,319

Gross profit:

United States $ 24,224 $ 20,275

Europe 14,277 11,807

Electric 3,494 2,300

Consolidated $ 41,995 $ 34,382

Operating income (loss):

United States $2,744  $1,471

Europe  7,977 5,792

Electric  266 (915)

Consolidated $10,987 $6,348