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8-K - FORM 8-K - QUIKSILVER INCd627937d8k.htm

Exhibit 99.1

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

QUIKSILVER, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The following pro forma consolidated financial information is based on the historical financial statements of Quiksilver, Inc. and its subsidiaries (the “Company”), including certain pro forma adjustments, and has been prepared to illustrate the pro forma effect of the disposition of Mervin Manufacturing, Inc. (“Mervin”).

The unaudited pro forma consolidated statements of operations for the nine months ended July 31, 2013 and for the fiscal year ended October 31, 2012, assume that the disposition of Mervin occurred at the beginning of those periods. The statements of operations do not include any gain or loss on the sale or costs associated with the sale of the business. The unaudited pro forma consolidated balance sheet as of July 31, 2013 is presented as if the disposition of Mervin had occurred as of that date.

The unaudited pro forma consolidated financial information has been prepared based upon available information and management estimates; actual amounts may differ from these estimated amounts. The unaudited pro forma consolidated financial statements are not necessarily indicative of the financial position or results of operations that might have occurred had the disposition occurred as of the dates stated above. The pro forma adjustments are described in the notes to the pro forma financial statements.

The unaudited pro forma consolidated financial information should be read in conjunction with the audited financial statements and notes and related Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2012 and unaudited interim financial statements and the related MD&A included in the July 31, 2013 Form 10-Q.


QUIKSILVER, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED JULY 31, 2013

(In thousands, except per share amounts)

 

           Unaudited     Unaudited  
           Pro Forma     Pro Forma  
     Unaudited     Adjustments     Statement  
     Historical     Mervin     of Operations  

Revenues, net

   $ 1,385,530      $ (11,462 )  a    $ 1,374,068   

Cost of goods sold

     709,912        (5,038 )  a      704,874   
  

 

 

   

 

 

   

 

 

 

Gross profit

     675,618        (6,424     669,194   

Sellling, general and administrative expense

     660,042        (4,760 )  a      655,282   

Asset impairment

     10,652        —          10,652   
  

 

 

   

 

 

   

 

 

 

Operating income

     4,924        (1,664     3,260   

Interest expense

     50,991        8    a      50,999   

Foreign currency loss

     4,629        (192 )  a      4,437   
  

 

 

   

 

 

   

 

 

 

Loss/income before provision for income taxes

     (50,696     (1,480     (52,176

Provision for income taxes

     10,322        (84 )  b      10,238   
  

 

 

   

 

 

   

 

 

 

Loss/income from continuing operations

     (61,018     (1,396     (62,414

Less: net income attributable to non-controlling interest

     (435     —          (435
  

 

 

   

 

 

   

 

 

 

Net loss/income attributable to Quiksilver, Inc.

   $ (61,453   $ (1,396   $ (62,849
  

 

 

   

 

 

   

 

 

 

Loss/income per share attributable to Quiksilver Inc.

   $ (0.37   $ (0.01   $ (0.38
  

 

 

   

 

 

   

 

 

 

Loss/income per share attributable to Quiksilver Inc., assuming dilution

   $ (0.37   $ (0.01   $ (0.38
  

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding

     166,735        —          166,735   
  

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding, assuming dilution

     166,735        —          166,735   
  

 

 

   

 

 

   

 

 

 


QUIKSILVER, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE FISCAL YEAR ENDED OCTOBER 31, 2012

(In thousands, except per share amounts)

 

           Unaudited     Unaudited  
           Pro Forma     Pro Forma  
           Adjustments     Statement  
     Historical     Mervin     of Operations  

Revenues, net

   $ 2,013,239      $ (33,489 )  a    $ 1,979,750   

Cost of goods sold

     1,032,893        (15,826 )  a      1,017,067   
  

 

 

   

 

 

   

 

 

 

Gross profit

     980,346        (17,663     962,683   

Sellling, general and administrative expense

     916,144        (10,464 )  a      905,680   

Asset impairment

     7,234        —          7,234   
  

 

 

   

 

 

   

 

 

 

Operating income

     56,968        (7,199     49,769   

Interest expense

     60,823        2    a      60,825   

Foreign currency gain

     (1,669     (17 )  a      (1,686
  

 

 

   

 

 

   

 

 

 

Loss/income before provision for income taxes

     (2,186     (7,184     (9,370

Provision for income taxes

     7,557        (396 )  b      7,161   
  

 

 

   

 

 

   

 

 

 

Loss/income from continuing operations

     (9,743     (6,788     (16,531

Less: net income attributable to non-controlling interest

     (1,013     —          (1,013
  

 

 

   

 

 

   

 

 

 

Net loss/income attributable to Quiksilver, Inc.

   $ (10,756   $ (6,788   $ (17,544
  

 

 

   

 

 

   

 

 

 

Loss/income per share attributable to Quiksilver Inc.

   $ (0.07   $ (0.04   $ (0.11
  

 

 

   

 

 

   

 

 

 

Loss/income per share attributable to Quiksilver Inc., assuming dilution

   $ (0.07   $ (0.04   $ (0.11
  

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding

     164,245        —          164,245   
  

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding, assuming dilution

     164,245        —          164,245   
  

 

 

   

 

 

   

 

 

 


QUIKSILVER, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

AS OF JULY 31, 2013

(In thousands)

 

           Unaudited        
           Pro Forma     Unaudited  
     Unaudited     Adjustments     Pro Forma  
     Historical     Mervin     Balance Sheet  

ASSETS

      

Current assets:

      

Cash and cash equivalents

   $ 62,383      $ 51,499    c    $ 113,882   

Restricted cash

     409,167        —          409,167   

Trade accounts receivable, net

     418,189        (7,211 )  d      410,978   

Other receivables

     24,980        —          24,980   

Income taxes receivable

     2,779        480    d      3,259   

Inventories

     399,162        (13,768 )  d      385,394   

Deferred income taxes

     28,086        —          28,086   

Prepaid expenses and other current assets

     35,819        (790 )  d      35,029   
  

 

 

   

 

 

   

 

 

 

Total current assets

     1,380,565        30,210        1,410,775   

Fixed assets, net

     227,997        (641 )  d      227,356   

Intangible assets, net

     138,384        (269 )  d      138,115   

Goodwill

     272,417        —          272,417   

Other assets

     54,561        (92 )  d      54,469   

Deferred income taxes long-term

     118,603        —          118,603   
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 2,192,527      $ 29,208      $ 2,221,735   
  

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

      

Current liabilities:

      

Accounts payable

   $ 238,311      $ (846 )  d    $ 237,465   

Accrued liabilities

     107,001        198    e      107,199   

Current portion of long-term debt

     43,153        —          43,153   

Debt to be redeemed

     409,167        —          409,167   
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     797,632        (648     796,984   

Long-term debt, net of current portion

     807,094        —          807,094   

Other long-term liabilities

     34,976        (176 )  d      34,800   
  

 

 

   

 

 

   

 

 

 

Total liabilities

     1,639,702        (824     1,638,878   
  

 

 

   

 

 

   

 

 

 

Stockholders’ equity

      

Preferred stock, $.01 par value, authorized shares - 5,000,000; issued and outstanding shares - none

     —          —          —     

Common stock, $.01 par value, authorized shares - 285,000,000; issued shares - 171,247,866

     1,712        —          1,712   

Additional paid-in capital

     567,601        —          567,601   

Treasury stock, 2,885,200 shares

     (6,778     —          (6,778

Accumulated deficit

     (104,774     29,965    f      (74,809

Accumulated other comprehensive income

     75,659        67    g      75,726   
  

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     533,420        30,032        563,452   
  

 

 

   

 

 

   

 

 

 

Non-controlling interest

     19,405        —          19,405   
  

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 2,192,527      $ 29,208      $ 2,221,735   
  

 

 

   

 

 

   

 

 

 


QUIKSILVER, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 

1. BASIS OF PRESENTATION

The accompanying unaudited pro forma consolidated financial statements give effect to the pro forma adjustments necessary to reflect the disposition of Mervin as if the disposition occurred at the beginning of the periods presented in the pro forma statements of operations and as of July 31, 2013 in the pro forma balance sheet.

 

2. PRO FORMA ADJUSTMENTS

The unaudited pro forma consolidated statements of operations and balance sheet reflect the effect of the following pro forma adjustments:

 

  a) Reduction of revenue and expenses associated with Mervin included in the Company’s historical consolidated financial statements.

 

  b) Provision for income taxes based on the statutory rates in effect for the Mervin business in certain tax jurisdictions. No provision for income taxes was provided for the Mervin business in other tax jurisdictions as the Company recorded losses in those jurisdictions and did not record a tax benefit against those losses.

 

  c) Cash proceeds received for sale of Mervin of $51.5 million, which exclude a working capital adjustment of $6.6 million, which is subject to future revision.

 

  d) Elimination of assets and liabilities associated with Mervin included in the Company’s historical consolidated financial statements.

 

  e) Elimination of accrued liabilities associated with Mervin of $1.4 million, offset by the Company’s estimate of the total costs before taxes to be incurred in connection with the sale of Mervin yet to be paid of approximately $1.6 million. The net amount is reflected as an increase to accrued liabilities.

 

  f) Estimated net gain on sale of Mervin, reflected as a reduction of the Company’s accumulated deficit as of July 31, 2013.

 

  g) Foreign currency translation losses from Mervin of approximately $0.1 million, included as an increase to accumulated other comprehensive income as of July 31, 2013.