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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934


Date of Report (Date of Earliest Event Reported): March 10, 2004

QUIKSILVER, INC.

(Exact Name of Registrant as Specified in its Charter)
         
Delaware
(State or Other Jurisdiction
of Incorporation)
  0-15131
(Commission
File Number)
  33-0199426
(IRS Employer
Identification No.)
     
15202 Graham Street, Huntington Beach, CA
(Address of Principal Executive Offices)
  92649
(Zip Code)

Registrant’s Telephone Number, including Area Code: (714) 889-2200

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

 


TABLE OF CONTENTS

Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS
Item 9. REGULATION FD DISCLOSURE
Item 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
SIGNATURES
EXHIBIT INDEX
EXHIBIT 99.1
EXHIBIT 99.2


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Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS

     (c) The following exhibits are being furnished herewith:

     
Exhibit No.   Description of Exhibit

 
99.1   Press Release, dated March 8, 2004, issued by Quiksilver, Inc.
99.2   Press Release, dated March 10, 2004, issued by Quiksilver, Inc.

Item 9. REGULATION FD DISCLOSURE

On March 8, 2004, Quiksilver, Inc., a Delaware corporation (“Quiksilver”), entered into an agreement with DC Shoes, Inc., a California corporation (“DC Shoes”), certain shareholders of DC Shoes (the “Shareholders”) and Damon Way, under which Quiksilver agreed to purchase all of the shares of DC Shoes held by the Shareholders (the “Shares”). DC Shoes is a designer, producer and distributor of action sports inspired footwear, apparel and related accessories in the United States and internationally.

The total purchase price will consist of an initial payment of approximately $56 million in cash (subject to a working capital adjustment after closing) and approximately 1.6 million restricted shares of Quiksilver Common Stock. In addition, the Shareholders may receive up to an additional $57 million paid over four years through 2007 if DC Shoes reaches certain performance targets.

Quiksilver’s agreement to purchase the Shares is subject to customary closing conditions, including regulatory approvals, and is expected to close by Quiksilver’s third quarter ending July 31, 2004. Quiksilver issued a press release related to this transaction on March 8, 2004, which is attached hereto as Exhibit 99.1.

Item 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

One of the purposes of this Current Report on Form 8-K is to furnish the press release issued by Quiksilver, Inc. on March 10, 2004 announcing its financial results for the quarter ended January 31, 2004. The press release is attached hereto as Exhibit 99.2.

The information contained in Items 9 and 12 and the press releases are being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be deemed incorporated by reference in any filing with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, whether made before or after the date hereof and irrespective of any general incorporation language in any filings, except as shall be expressly set forth by specific reference in such filing.

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SIGNATURES

     Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

     
Dated: March 10, 2004   QUIKSILVER, INC.
 
    By: /s/ Steven L. Brink

Steven L. Brink
Chief Financial Officer and Treasurer

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EXHIBIT INDEX

     
Exhibit No.   Description of Exhibit

 
99.1   Press Release, dated March 8, 2004, issued by Quiksilver, Inc.
99.2   Press Release, dated March 10, 2004, issued by Quiksilver, Inc.

4

 

Exhibit 99.1

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Company Contacts:   Robert B. McKnight, Jr.
Chairman and Chief Executive Officer
Bernard Mariette, President
Steven L. Brink, Chief Financial Officer
Quiksilver, Inc.
(714) 889-2200

FOR IMMEDIATE RELEASE

     
Investor Relations:   James Palczynski/Chad A. Jacobs
Integrated Corporate Relations
(203) 222-9013
     
Media Contacts:   Jeff Rose/Regina Parisi/Elana Weiss
The Rose Group
(310) 280-3710
Sophie Nicolet, Quiksilver Europe
+33 5 5951 5733

— Quiksilver, Inc. Set to Acquire DC Shoes, Inc. —
— Adds International Boardriding Brand To Its Portfolio. —

     Huntington Beach, California, March 8, 2004—Quiksilver, Inc. (NYSE: ZQK) and DC Shoes, Inc. announced a definitive agreement whereby Quiksilver will acquire DC Shoes, the premier designer, producer and distributor of action sports inspired footwear, apparel and related accessories in the U.S. and internationally. Quiksilver, Inc.’s surf-inspired Quiksilver and Roxy brands will be complemented by the DC Shoes brand with its skate-driven lifestyle. The combined businesses are perfectly positioned in the global youth market.

     DC Shoes, Inc. achieved total sales exceeding $100 million in the year ended December 31, 2003. Its broad product line includes a full range of skate shoes and snowboard boots with various technical and design features, as well as men’s and junior’s apparel and accessories. Quiksilver, Inc. reported revenues of $975 million for its fiscal year ended October 31, 2003.

     Robert B. McKnight, Jr., Chairman of the Board and Chief Executive Officer of Quiksilver, Inc., commented, “DC shoes is a tremendous fit with our organization from a cultural, strategic and operational standpoint. They are a young, aggressive and energetic company which reminds me a lot of Quiksilver. We

 


 

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Quiksilver, Inc. Set to Acquire DC Shoes, Inc.
March 8, 2004 – Page 2

both share respect for the authenticity that makes our brands powerful, and we both benefit from product design that reflects technical excellence and great style. We expect to see tremendous synergies between our teams.”

     Bernard Mariette, President of Quiksilver, Inc., commented, “DC Shoes fits all of the criteria we identify as key for an acquisition. DC has fantastic global potential, sizeable revenues, and their culture is very similar to Quiksilver’s. In fact, they have already demonstrated international success, and we can build on this with our global platform that has been developed over the past ten years. We expect DC to flourish with its separate design and marketing teams supported by the logistics of Quiksilver. While we have successfully developed a growing branded footwear business, DC’s management team will help fine tune our footwear operations and product. At the same time, we believe that DC has an excellent, but so far, relatively untapped opportunity, to deliver an even stronger sportswear line to the youth market.”

     Headquartered in Vista, California, privately-held DC Shoes, Inc. commands a leadership position in the action sports industry as the premier designer, producer and distributor of skate-inspired shoes, apparel and related accessories. DC’s brand transcends the traditional boundaries of both footwear and skateboarding, with a diverse product mix respected by boardriders as well as a broad base of consumers. As one of the cornerstones of its marketing strategy, the company has built a world-class team of professional athletes that exemplify and enhance DC’s brand, develop its signature products, and support its promotional efforts.

     Ken Block, President and Founder of DC Shoes, Inc., said, “We are very excited to be partnering with Quiksilver, the number-one action sports brand in the industry. Their global platform will provide us with the resources to make DC even stronger, while allowing us to maintain the integrity and spirit of DC’s roots.”

     Damon Way, Executive Vice President and Founder of DC Shoes, Inc., added, “Quiksilver is the ideal partner for us. Their understanding of our vision as it relates to product development, marketing, distribution, global strategies and athletes could not be any better.”

     Mr. McKnight concluded, “We believe this deal represents yet another step in the evolution of our business and that our shareholders will be well served through this transaction. It fits incredibly well with our strategy of pursuing opportunities in the global youth market. We are thrilled to expand both the depth and

 


 

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Quiksilver, Inc. Set to Acquire DC Shoes, Inc.
March 8, 2004 — Page 3

breadth of our management team and portfolio of brands, and we remain highly focused on our goal of building one of the world’s leading branded consumer apparel, and now footwear, companies.”

     The total purchase price for the acquisition will consist of an initial payment of $56 million in cash and 1.6 million restricted shares of Quiksilver common stock and the assumption of approximately $10 million in funded indebtedness. In addition, the sellers may receive up to an additional $57 million paid over 4 years through 2007 if DC Shoes reaches certain performance targets.

     The acquisition agreement is subject to customary closing conditions, including regulatory approvals, and is expected to close by the third quarter of fiscal 2004. Quiksilver believes the acquisition to be mildly accretive to earnings per share in the current fiscal year and estimates that earnings accretion will be approximately $0.06 per share in fiscal 2005.

     With respect to the transaction, Quiksilver, Inc. is being advised by Citigroup Global Markets, Inc., and DC Shoes, Inc. is being advised by the Sage Group, Inc.

     Quiksilver announced that the Company’s conference call to review the acquisition will be broadcast live over the Internet on Monday, March 8, 2004 at 5:30 p.m. Eastern Time. The broadcast will be hosted at www.quiksilver.com/investor and at http://www.viavid.net/detailpage.aspx?sid=00001A78. To listen to the broadcast, your computer must have Windows Media Player installed. If you do not have Windows Media Player, go to the latter site prior to the call, where you can download the software for free.

 


 

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Quiksilver, Inc. Set to Acquire DC Shoes, Inc.
March 8, 2004 — Page 4

About Quiksilver:

     Quiksilver designs, produces and distributes clothing, accessories and related products for young-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, Roxy, Raisins, and Radio Fiji labels. Quiksilver also manufactures apparel for boys (Quiksilver Boys and Hawk Clothing), girls (Roxy Girl, Teenie Wahine and Raisins Girls), men (Quiksilveredition and Fidra) and women (Leilani swimwear), 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 authentic retail experience for our customers.

Safe Harbor Language

This Press Release contains forward-looking statements. 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, specifically the section titled “Forward Looking Statements” in Quiksilver’s Annual Report on Form 10-K.

* * * * *

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

NOTE: For further information about DC Shoes, Inc., go to
http://www.dcshoes.com

 

 

Exhibit 99.2

(Logo)

     
  Company Contact: Robert B. McKnight, Jr.
Chairman & CEO
Steven L. Brink
Chief Financial Officer
Quiksilver, Inc.
(714) 889-2200
FOR IMMEDIATE RELEASE
  Investor Relations: James Palczynski/Chad A. Jacobs
Integrated Corporate Relations
(203) 222-9013

QUIKSILVER, INC. REPORTS 2004 FIRST QUARTER FINANCIAL RESULTS

— Consolidated Revenues Increase 33% —
— Earnings Per Share of $0.16 Exceeds Consensus Estimate of $0.15 —
— Raising Fiscal 2004 Sales and Earnings Per Share Guidance —

     HUNTINGTON BEACH, CALIFORNIA, MARCH 10, 2004 — - — Quiksilver, Inc. (NYSE:ZQK), today announced operating results for the first quarter ended January 31, 2004.

     Consolidated revenues for the first quarter of fiscal 2004 increased 33% to $256.1 million as compared to fiscal 2003 first quarter consolidated revenues of $192.1 million. Consolidated net income for the first quarter of fiscal 2004 increased 40% to $9.2 million as compared to $6.6 million the year before. First quarter fully diluted earnings per share was $0.16 versus $0.12 for the first quarter of fiscal 2003.

     Robert B. McKnight, Jr., Chairman of the Board and Chief Executive Officer of Quiksilver, Inc., commented, “Our strong performance during the quarter, which once again exceeded expectations, is a great way to start the new fiscal year. These results were primarily driven by strong sales across all divisions, and better than expected operating margins, particularly in the Americas.”

     Revenues in the Americas increased 21% during the first quarter of fiscal 2004 to $123.2 million as compared to fiscal 2003 first quarter revenues of $102.0 million. As measured in U.S. dollars and reported in the financial statements, European revenues increased 37% during the first quarter of fiscal 2004 to $106.2 million as compared to fiscal 2003 first quarter European revenues of $77.2 million. As measured in euros, European net sales increased 16% for those same periods. Asia/Pacific revenues were $26.3 million in the first quarter of fiscal 2004

- more -

 


 

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2004 First Quarter Results
March 10, 2004 — Page 2

compared to $12.1 million in the first quarter of fiscal 2003, which included only two months of Asia/Pacific operations since being acquired.

     Mr. McKnight continued, “We recently returned from the MAGIC apparel trade show in Las Vegas, and the feedback from retailers regarding our fall lines was extremely positive across the board. Our retail stores continue to perform well both here and abroad. We recently promoted Carol Christopherson to Americas President of Retail, and we believe she will have a meaningful and immediate impact on our business.”

     Consolidated inventories increased 24% to $179.3 million at January 31, 2004 from $144.2 million at January 31, 2003. Consolidated trade accounts receivable increased 16% to $200.6 million at January 31, 2004 from $173.5 million at January 31, 2003. Trade account receivable growth was modest compared to the increase in sales as average days sales outstanding decreased about nine days. Inventories grew 16% in constant dollars.

     Bernard Mariette, President of Quiksilver, Inc. commented, “In addition to strong financial performance during the quarter, we continued to make progress on the development of our global operating platform. This was particularly true for our Asia/Pacific division. Our operations in Indonesia are performing very well, and we are excited to have hired David Toda as President of Quiksilver Japan. We continue to believe that Japan represents our best source of growth for this division in the near and intermediate term.”

     Also, today the Company increased its guidance to new ranges of $1.10 billion to $1.12 billion for revenues and $1.22 to $1.25 for earnings per share.

     Mr. McKnight concluded, “Our multi-brand, multi-channel, global approach to our business continues to afford us significant growth prospects into the future. Our momentum remains strong, our financials are sound, and we remain committed to fully capitalizing on our leadership position in the market.”

 


 

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2004 First Quarter Results
March 10, 2004 – Page 3

About Quiksilver:

     Quiksilver designs, produces and distributes clothing, accessories and related products for young-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, Roxy, Raisins, and Radio Fiji labels. Quiksilver also manufactures apparel for boys (Quiksilver Boys and Hawk Clothing), girls (Roxy Girl, Teenie Wahine and Raisins Girls), men (Quiksilveredition and Fidra) and women (Leilani swimwear), 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 authentic retail experience for our customers.

Safe Harbor Language

This Press Release contains forward-looking statements. 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, specifically the section titled “Forward Looking Statements” in Quiksilver’s Annual Report on Form 10-K.

* * * * *

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

 


 

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2004 First Quarter Results
March 10, 2004 — Page 4

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

                   
      Three Months Ended January 31,
     
In thousands, except per share amounts   2004   2003
 
 
Revenues
  $ 256,142     $ 192,080  
Cost of goods sold
    142,473       110,572  
 
   
     
 
 
Gross profit
    113,669       81,508  
Selling, general and administrative expense
    94,735       68,425  
 
   
     
 
Operating income
    18,934       13,083  
Interest expense
    1,589       2,116  
Foreign currency loss
    3,267       551  
Other expense
    282       167  
 
   
     
 
Income before provision for income taxes
    13,796       10,249  
Provision for income taxes
    4,622       3,681  
 
   
     
 
Net income
  $ 9,174     $ 6,568  
 
   
     
 
Net income per share
  $ 0.16     $ 0.13  
 
   
     
 
Net income per share, assuming dilution
  $ 0.16     $ 0.12  
 
   
     
 
Weighted average common shares outstanding
    55,622       51,920  
 
   
     
 
Weighted average common shares outstanding, assuming dilution
    57,927       54,320  
 
   
     
 

 


 

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2004 First Quarter Results
March 10, 2004 — Page 5

CONSOLIDATED BALANCE SHEETS (Unaudited)

                       
          January 31, 2004   October 31, 2003
         
 
Amounts in thousands                
ASSETS
Current assets:
               
 
Cash and cash equivalents
  $ 33,344     $ 27,866  
 
Trade accounts receivable, less allowance for doubtful accounts of $8,830 (2004) and $8,700 (2003)
    200,558       224,418  
 
Other receivables
    7,395       7,617  
 
Inventories
    179,282       146,440  
 
Deferred income taxes
    18,909       17,472  
 
Prepaid expenses and other current assets
    14,999       9,732  
 
   
     
 
   
Total current assets
    454,487       433,545  
Fixed assets, net
    104,273       99,299  
Intangibles, net
    66,143       65,577  
Goodwill
    104,005       98,833  
Deferred income taxes
    2,425       1,984  
Other assets
    7,687       8,732  
 
   
     
 
Total assets
  $ 739,020     $ 707,970  
 
   
     
 
 
LIABILITIES & STOCKHOLDERS’ EQUITY
Current Liabilities:
               
   
Lines of credit
  $ 10,217     $ 20,951  
   
Accounts payable
    85,228       64,537  
   
Accrued liabilities
    40,600       41,759  
   
Current portion of long-term debt
    14,067       8,877  
   
Income taxes payable
    11,636       10,796  
 
   
     
 
     
Total current liabilities
    161,748       146,920  
Long-term debt
    108,445       114,542  
 
   
     
 
     
Total liabilities
    270,193       261,462  
Stockholders’ equity:
               
 
Preferred stock
           
 
Common stock
    570       570  
 
Additional paid-in capital
    156,470       155,310  
 
Treasury stock
    (6,778 )     (6,778 )
 
Retained earnings
    286,728       277,554  
 
Accumulated other comprehensive gain
    31,837       19,852  
 
   
     
 
   
Total stockholders’ equity
    468,827       446,508  
 
   
     
 
Total liabilities & stockholders’ equity
  $ 739,020     $ 707,970  
 
   
     
 

 


 

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2004 First Quarter Results
March 10, 2004 — Page 6

Information related to geographic segments is as follows:

                   
      Three Months Ended January 31,
     
      2004   2003
     
 
Amounts in thousands                
Revenues:
               
 
Americas
  $ 123,199     $ 101,967  
 
Europe
    106,183       77,246  
 
Asia/Pacific
    26,281       12,102  
 
Corporate Operations
    479       765  
 
   
     
 
 
  $ 256,142     $ 192,080  
 
   
     
 
Gross Profit:
               
 
Americas
  $ 49,834     $ 39,150  
 
Europe
    51,285       35,380  
 
Asia/Pacific
    12,485       6,213  
 
Corporate Operations
    65       765  
 
   
     
 
 
  $ 113,669     $ 81,508  
 
   
     
 
SG&A Expense:
               
 
Americas
  $ 39,665     $ 33,396  
 
Europe
    38,399       26,287  
 
Asia/Pacific
    11,268       4,454  
 
Corporate Operations
    5,403       4,288  
 
   
     
 
 
  $ 94,735     $ 68,425  
 
   
     
 
Operating Income:
               
 
Americas
  $ 10,169     $ 5,754  
 
Europe
    12,886       9,093  
 
Asia/Pacific
    1,217       1,759  
 
Corporate Operations
    (5,338 )     (3,523 )
 
   
     
 
 
  $ 18,934     $ 13,083