Quiksilver Reports Year-End Results

HUNTINGTON BEACH, Calif.–(BUSINESS WIRE)–Dec, 2002– Quiksilver, Inc. (NYSE:ZQK):

— Fourth Quarter Earnings of $0.49 cents Per Share, Exceeds First Call Estimate of $0.43

— Spring Backlog Increases 16%

Quiksilver, Inc. (NYSE:ZQK), announced operating results for the fourth quarter and full year ended October 31, 2002.

Consolidated net sales for the fourth quarter of fiscal 2002 increased 14.6% to $194,955,000 as compared to fiscal 2001 fourth quarter consolidated net sales of $170,162,000. Consolidated net income for the fourth quarter of fiscal 2002 increased 412.7% to $12,197,000 as compared to $2,379,000 in the fourth quarter of fiscal 2001, and diluted earnings per share increased 390.0% to $0.49 versus $0.10 for the fourth quarter of fiscal 2001.

Consolidated net sales for the full year of fiscal 2002 increased 13.8% to $700,692,000 as compared to fiscal 2001 full year consolidated net sales of $615,452,000. Consolidated net income for the full year of fiscal 2002 increased 34.2% to $37,591,000 as compared to $28,021,000 in fiscal 2001, and diluted earnings per share for the full year increased 31.6% to $1.54 versus $1.17 for the full year of fiscal 2001.

Robert B. McKnight, Jr., Chairman of the Board and Chief Executive Officer of Quiksilver, Inc., commented, “Our strong performance during the quarter was an extremely gratifying way to end a record year for our company. These results represent our fourth consecutive quarter in which we exceeded expectations, and we look forward to building on our strong momentum as we enter 2003.”

Domestic net sales during the fourth quarter of fiscal 2002 increased 8.5% to $109,650,000 as compared to fiscal 2001 fourth quarter domestic net sales of $101,099,000. As measured in U.S. dollars and reported in the financial statements, European net sales increased 23.5% during the fourth quarter of fiscal 2002 to $85,305,000 as compared to fiscal 2001 fourth quarter European net sales of $69,063,000. As measured in Euros, European net sales increased 14.5% for those same periods.

Domestic net sales for the full year of fiscal 2002 increased 6.8% to $418,008,000 as compared to fiscal 2001 domestic net sales of $391,575,000. As measured in U.S. dollars and reported in the financial statements, European net sales increased 26.3% during the full year of fiscal 2002 to $282,684,000 as compared to fiscal 2001 results of $223,877,000. As measured in Euros, European net sales increased 21.9% for the full year.

Mr. McKnight continued, “In addition to reporting record financial results, fiscal 2002 was also a year filled with many strategic and operational accomplishments for our company. First and foremost, our recently announced merger with Ug Manufacturing Co. Pty. Ltd and Quiksilver Japan K.K., which is expected to close in the next few days, will allow us to consolidate global control over our wholesale business and unify the brand under one powerful operating force. At the same time, the transaction provides us with multiple, synergistic avenues for future growth and the opportunity for further efficiencies in operations and sourcing.

“We also continued to boost our retail presence during the year by opening 26 full-priced company-owned stores as well as acquiring Beach Street, the owner and operator of 26 Quiksilver outlet stores. This deal further cemented our control over our brands and our distribution and enables us to capture some incremental gross margin. From a marketing perspective, we once again sponsored a number of highly successful events, including the Quiksilver in Memory of Eddie Aikau contest, and our team of riders remained at the forefront of the industry. This year, we launched Quiksilver Entertainment, a media venture aimed at helping us leverage the proprietary video footage and content that we already capture in many cases. Finally, we continued to be recognized for our design and product initiatives and for the second year in a row, we were aawarded the “Earnie” for excellence in boys sportswear and design.”

Consolidated inventories decreased 10.9% to $95,872,000 at October 31, 2002 from $107,562,000 at October 31, 2001. Consolidated trade accounts receivable increased 7.9% to $168,237,000 at October 31, 2002 from $155,879,000 at October 31, 2001. Average inventory turnover was approximately 5.0 for the fourth quarter of fiscal 2002 compared to approximately 3.8 for the fourth quarter of the previous year. Accounts receivable increased less than the increase in net sales as domestic accounts receivable decreased 7.6% due to improved collections and the elimination of certain trade accounts receivable when the Company acquired its domestic outlet store licensee, Beach Street, Inc., in September 2002.

Berrnard Mariette, President of Quiksilver, Inc. commented, “This landmark year for our company and the strong momentum we continue to experience is the direct result of the hard work of all of our employees around the world, from design and production to administration and finance. As we write a new chapter in the history of Quiksilver and embark on a truly global path to growth, we take comfort that, at every level, we have one of the finest teams in the world to execute our strategic and operational plans.”

Mr. McKnight concluded, “While we have achieved much over the course of the last 12 months, our sights are set on the future, and we are committed to fully capitalizing on the many opportunities that lie ahead. We remain highly enthusiastic about both the near-term and long-term prospects for Quiksilver, and we move forward as a truly global company with a much stronger operating platform for growth.”

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, Supernatural Manufacturing 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.