QUIKSILVER INC (Form Type: 8-K, Filing Date: 03/10/2004)

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

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.

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.

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.

— 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

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

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.

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.

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

— 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

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.”

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.

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


		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


				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


		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


	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


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.


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.


	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

Table of Contents

Table of Contents

Table of Contents

Table of Contents


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)


Dated: March 10, 2004		QUIKSILVER, INC.

		By: /s/ Steven L. Brink Steven L. Brink Chief Financial Officer and Treasurer


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


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