HUNTINGTON BEACH, Calif.–(BUSINESS WIRE)–Quiksilver, Inc. (NYSE:ZQK - News) today announced operating results for the third quarter ended July 31, 2008. Consolidated net revenues from continuing operations for the third quarter of fiscal 2008 increased 7% to $564.9 million, from $528.6 million in the third quarter of fiscal 2007. Consolidated income from continuing operations for the third quarter of fiscal 2008 was $33.1 million, or $0.25 per share, compared to $35.7 million, or $0.28 per share, for the third quarter of fiscal 2007. Results for the quarter included a $0.03 per share benefit from certain tax adjustments. Net revenues and income from continuing operations for all periods exclude the results of our Rossignol wintersports equipment and apparel operations which are reported as discontinued operations. Including discontinued operations, net income for the quarter was $2.9 million or $0.02 per share compared to a net loss of $7.9 million or ($0.06) per share in the same quarter a year ago. The Company recently announced that it had received a binding offer to purchase Rossignol and expects to close this transaction in the Fall of 2008.

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Robert B. McKnight, Jr., Chairman of the Board, Chief Executive Officer and President of Quiksilver, Inc., commented, “Our performance overall was in-line with our expectations and we are relatively pleased to deliver results in this range given the negative trends we’ve all witnessed during the quarter in the retail environment. Our gross margins benefited from a higher proportion of our revenues coming from Europe and from our retail stores than in the same quarter a year ago and we again achieved some improvements in sourcing margins. At the same time, this business mix drove our expense ratio higher, and a weaker performance at retail, together with conservative ordering by our wholesale customers, led to some deleveraging of expenses.”

All segments have been adjusted to reflect the discontinued operations classification of our Rossignol wintersports equipment and apparel business. The Americas, Europe and Asia/Pacific segments each include operations of our Quiksilver, Roxy, DC and other apparel brand businesses. Net revenues in the Americas segment decreased 4% during the third quarter of fiscal 2008 to $271.9 million from $281.9 million in the third quarter of fiscal 2007. European segment net revenues increased 25% during the third quarter of fiscal 2008 to $232.0 million from $185.6 million in the third quarter of fiscal 2007. Approximately $28.6 million of Europe’s increase was attributable to the positive effect of changes in foreign currency exchange rates. Asia/Pacific segment net revenues decreased slightly to $59.6 million in the third quarter of fiscal 2008 from $59.9 million in the third quarter of fiscal 2007. Asia/Pacific’s decrease would have been greater but for the positive effect of changes in foreign currency exchange rates of approximately $7.9 million.

Consolidated inventories increased 14% to $358.6 million at July 31, 2008 from $315.1 million at July 31, 2007. Changes in foreign currency exchange rates accounted for approximately $22.5 million of the increase in inventories compared to July 31, 2007. Consolidated trade accounts receivable increased 10% to $491.4 million at July 31, 2008 from $445.5 million at July 31, 2007. Changes in foreign currency exchange rates accounted for approximately $31.5 million of the increase in accounts receivable compared to July 31, 2007.

Addressing its outlook for continuing operations, the Company indicated that it continues to believe it can achieve earnings per share for the full fiscal year ending October 31 of slightly below $0.90 per share, including the $0.03 tax benefit recognized in the fiscal third quarter.

About Quiksilver:

Quiksilver, Inc. (NYSE:ZQK - News) is the world’s leading outdoor sports lifestyle company, which designs, produces and distributes a diversified mix of branded apparel, footwear, accessories and related products. The Company’s apparel and footwear brands represent a casual lifestyle for young-minded people that connect with its boardriding culture and heritage.

The reputation of Quiksilver’s brands is based on different outdoor sports. The Company’s Quiksilver, Roxy, DC and Hawk brands are synonymous with the heritage and culture of surfing, skateboarding and snowboarding, and its beach and water oriented swimwear brands include Raisins, Radio Fiji and Leilani.

The Company’s products are sold in over 90 countries in a wide range of distribution, including surf shops, skate shops, snow shops, its proprietary Boardriders Club shops and other company-owned retail stores, other specialty stores and select department stores. Quiksilver’s corporate and Americas’ headquarters are in Huntington Beach, California, while its European headquarters are in St. Jean de Luz, France, and its Asia/Pacific headquarters are in Torquay, Australia.

Forward looking statements:

This press release contains forward-looking statements including but not limited to statements regarding the Company’s 2008 annual earnings per share guidance and other future activities. 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 sections titled “Risk Factors” and “Forward-Looking Statements” in Quiksilver’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

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

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

Three Months Ended July 31,
In thousands, except per share amounts 2008 2007

Revenues, net $ 564,876 $ 528,591
Cost of goods sold 280,047 276,512
Gross profit 284,829 252,079

Selling, general and administrative expense 232,094 194,323
Operating income 52,735 57,756

Interest expense 11,801 11,881
Foreign currency (gain) loss (1,231 ) 310
Minority interest and other expense 415 80
Income before provision for income taxes 41,750 45,485

Provision for income taxes 8,677 9,783

Income from continuing operations $ 33,073 $ 35,702
Loss from discontinued operations, net of tax (30,219 ) (43,569 )
Net income (loss) $ 2,854 $ (7,867 )

Income per share from continuing operations $ 0.26 $ 0.29
Loss per share from discontinued operations $ (0.24 ) $ (0.35 )
Net income (loss) per share $ 0.02 $ (0.06 )

Income per share from continuing operations, assuming dilution $ 0.25 $ 0.28

Loss per share from discontinued operations, assuming dilution
$ (0.23 ) $ (0.34 )
Net income (loss) per share, assuming dilution $ 0.02 $ (0.06 )

Weighted average common shares outstanding 126,220 124,013

Weighted average common shares outstanding, assuming dilution

130,021

129,163

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

Nine Months Ended July 31,
In thousands, except per share amounts 2008 2007

Revenues, net $ 1,657,737 $ 1,459,804
Cost of goods sold 829,042 763,263
Gross profit 828,695 696,541

Selling, general and administrative expense 684,304 565,687
Asset impairment 350 ―

Operating income 144,041 130,854

Interest expense 35,845 35,420
Foreign currency (gain) loss (463 ) 1,732
Minority interest and other expense 18 39
Income before provision for income taxes 108,641 93,663

Provision for income taxes 29,273 20,870

Income from continuing operations $ 79,368 $ 72,793
Loss from discontinued operations (304,678 ) (82,985 )
Net loss $ (225,310 ) $ (10,192 )

Income per share from continuing operations $ 0.63 $ 0.59
Loss per share from discontinued operations $ (2.43 ) $ (0.67 )
Net loss per share $ (1.80 ) $ (0.08 )

Income per share from continuing operations, assuming dilution $ 0.61 $ 0.56

Loss per share from discontinued operations, assuming dilution
$ (2.35 ) $ (0.64 )
Net loss per share, assuming dilution $ (1.74 ) $ (0.08 )

Weighted average common shares outstanding 125,511 123,579

Weighted average common shares outstanding, assuming dilution

129,765

128,966

CONSOLIDATED BALANCE SHEETS (Unaudited)

In thousands

July 31,

2008

July 31,

2007
ASSETS
Current assets:
Cash and cash equivalents $ 99,491 $ 76,007

Trade accounts receivable, less allowance for doubtful accounts of $27,458 (2008) and $18,970 (2007)

491,369

445,469

Other receivables 18,893 29,882
Income tax receivable ― 7,647
Inventories 358,646 315,054
Deferred income taxes 100,777 39,393
Prepaid expenses and other current assets 29,221 24,080
Current assets held for sale 358,832 484,761
Total current assets 1,457,229 1,422,293

Fixed assets, net 258,920 196,358
Intangibles, net 146,862 131,324
Goodwill 417,486 380,134
Other assets 44,892 44,517
Deferred taxes-long term 14,007 ―
Non-current assets held for sale ― 432,418

Total assets

$

2,339,396

$

2,607,044

LIABILITIES & STOCKHOLDERS’ EQUITY

Current Liabilities:

Lines of credit $ 274,685 $ 87,364
Accounts payable 251,623 217,119
Accrued liabilities 129,803 104,465
Current portion of long-term debt 35,584 19,449
Income taxes payable 13,447 ―
Liabilities related to assets held for sale 144,882 400,464
Total current liabilities 850,024 828,861

Long-term debt 744,127 589,507
Deferred taxes and other long-term liabilities 37,164 32,347
Non-current liabilities of assets held for sale 7,736 196,415
Total liabilities 1,639,051 1,647,130

Minority interest ― 9,982

Stockholders’ equity:
Preferred stock ― ―
Common stock 1,306 1,280
Additional paid-in capital 331,269 300,087
Treasury stock (6,778 ) (6,778 )
Retained earnings 191,374 548,867
Accumulated other comprehensive income 183,174 106,476
Total stockholders’ equity 700,345 949,932

Total liabilities & stockholders’ equity $ 2,339,396 $ 2,607,044

Information related to operating segments is as follows (unaudited):

Three Months Ended July 31,
In thousands 2008 2007

Revenues, net:
Americas $ 271,941 $ 281,891
Europe 231,987 185,616
Asia/Pacific 59,634 59,897
Corporate operations 1,314 1,187
$ 564,876 $ 528,591

Gross Profit:
Americas $ 112,552 $ 117,951
Europe 138,439 103,770
Asia/Pacific 33,094 29,263
Corporate operations 744 1,095
$ 284,829 $ 252,079

SG&A Expense:
Americas $ 89,361 $ 78,340
Europe 97,502 76,437
Asia/Pacific 28,580 24,327
Corporate operations 16,651 15,219
$ 232,094 $ 194,323

Operating Income:
Americas $ 23,191 $ 39,611
Europe 40,937 27,333
Asia/Pacific 4,514 4,936
Corporate operations (15,907 ) (14,124 )
$ 52,735 $ 57,756
Nine Months Ended July 31,
In thousands 2008 2007

Revenues, net:
Americas $ 754,491 $ 715,965
Europe 716,770 578,692
Asia/Pacific 182,494 161,984
Corporate operations 3,982 3,163
$ 1,657,737 $ 1,459,804

Gross Profit:
Americas $ 320,087 $ 300,087
Europe 409,866 315,210
Asia/Pacific 96,519 78,591
Corporate operations 2,223 2,653
$ 828,695 $ 696,541

SG&A Expense:
Americas $ 273,668 $ 229,547
Europe 283,639 220,411
Asia/Pacific 88,661 73,347
Corporate operations 38,336 42,382
$ 684,304 $ 565,687

Asset Impairment:
Americas $ 350

$

―

Europe ―

―

Asia/Pacific ―

―

Corporate operations ―

―

$ 350

$

―

Operating Income:
Americas $ 46,069 $ 70,540
Europe 126,227 94,799
Asia/Pacific 7,858 5,244
Corporate operations (36,113 ) (39,729 )
$ 144,041 $ 130,854

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