VOLCOM, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
2009
(In thousands,
share data)
AssetsCurrent assets:Cash and cash equivalents $ 76,180 30.11%
Short-term investments 35,000 13.83%
53,792 21.26%
Inventories 33,250 13.14%
Prepaid expenses and other current assets 4,353 1.72%
Income taxes receivable 725 0.29%
Deferred income taxes 7,700 3.04%
Total current assets 211,000 83.39%
26,348 10.41%
Investment in unconsolidated investee 330 0.13%
Deferred income taxes 3,545 1.40%
9,784 3.87%
Goodwill 1,291 0.51%
Other assets 735 0.29%
Total assets $ 253,033 100.00%
Liabilities and Stockholders’ EquityCurrent liabilities:Accounts payable $ 22,788 9.01%
Accrued expenses and other current liabilities 9,957 3.94%
Current portion of capital lease obligations 50 0.02%
Total current liabilities 32,795 12.96%
Long-term capital lease obligationsOther long-term liabilities 1,203 0.48%
68 0.03%
0.00%
Stockholders’ equity:
24 0.01%
Additional paid-in capital 92,192 36.43%
Retained earnings 123,679 48.88%
Accumulated other comprehensive income 3,072 1.21%
Total stockholders’ equity 218,967 86.54%
Total liabilities and stockholders’ equity $ 253,033 100.00%
As of December 31,
except share and per
Accounts receivable — net of allowances of $8,626 (2009) and $6,998 (2008)
Property and equipment — net
Intangible assets — net
—
Income taxes payable — non-current
Commitments and contingencies (Note 10)
Common stock, $0.001 par value — 60,000,000 shares authorized; 24,374,362 (2009 and 2008) shares issued and outstanding
2008 2007
(In thousands,
share data)
$ 79,613 35.92% 92,962 45.91%
—
60,914 27.49% 58,270 28.78%
27,086 12.22% 20,440 10.09%
2,596 1.17% 1,720 0.85%
3,309 1.49% 326 0.16%
4,947 2.23% 2,956 1.46%
0.00%
178,465 80.53% 176,674 87.25%
0.00%
26,716 12.05% 24,427 12.06%
330 0.15% 298 0.15%
4,028 1.82% 268 0.13%
10,578 4.77% 363 0.18%
665 0.30% —841 0.38% 464 0.23%
0.00%
$ 221,623 100.00% 202,494 100.00%
$ 15,291 6.90% 18,694 9.23%
11,393 5.14% 10,561 5.22%
71 0.03% 72 0.04%
26,755 12.07% 29,327 14.48%
23 0.01% 33 0.02%
1,048 0.47% 190 0.09%
94 0.04% 89 0.04%
24 0.01% 24 0.01%
90,456 40.82% 89,185 44.04%
101,935 45.99% 80,226 39.62%
1,288 0.58% 3,420 1.69%
193,703 87.40% 172,855 85.36%
$ 221,623 100.00% 202,494 100.00%
As of December 31,
except share and per
—
VOLCOM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
2009 % Revenue % of Change
(In thousands, except share and per share data)
Revenues:Product revenues $ 278,598 99.27%
Licensing revenues 2,041 0.73%
Total revenues 280,639 100.00%
Cost of goods sold 139,844 49.83%
Gross profit 140,795 50.17%
Operating expenses:Selling, general and administrative expenses 110,847 39.50%
Asset impairments
Total operating expenses 110,847 39.50%
Operating income 29,948 10.67%
Other income (loss):Interest income, net 358Foreign currency gain (loss) 1,534 0.55%
Total other income (loss) 1,892 0.67%
Income before provision for income taxes 31,840 11.35%
Provision for income taxes 10,096 3.60%
Net income $ 21,744 7.75%
Net income per share:Basic $ 0.89Diluted $ 0.89Weighted-average shares outstanding:Basic 24,352,146Diluted 24,363,544
Year Ended December 31,
—
2008 % Revenue % of Change 2007 % of Revenue
(In thousands, except share and per share data)
$ 332,110 99.34% $ 265,193 98.73%2,194 0.66% 3,420 1.27%
334,304 100.00% 268,613 100.00%171,208 51.21% 138,570 51.59%
0.00%163,096 48.79% 130,043 48.41%
0.00%112,464 33.64% 79,411 29.56%
16,230 4.85%
128,694 38.50% 79,411 29.56%0.00%
34,402 10.29% 50,632 18.85%
901 0.27% 3,973 1.48%-1,807 -0.54% 401 0.15%
-906 -0.27% 4,374 1.63%
33,496 10.02% 55,006 20.48%11,787 3.53% 21,671 8.07%
$ 21,709 6.49% $ 33,335 12.41%
$ 0.89 $ 1.37$ 0.89 $ 1.37
24,337,923 24,302,89324,357,652 24,419,802
Year Ended December 31,
—
VOLCOM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
2009 2008
(In thousands)
Cash flows from operating activities:Net income $ 21,744 $ 21,709
Depreciation and amortization 6,360 7,315Provision for doubtful accounts 2,490 2,332Loss on disposal of property and equipment 77 1Asset impairments 134 16,230Excess tax benefits related to exercise of stock options (34Stock-based compensation 1,795 985Deferred income taxes (2,277 (6,349Changes in operating assets and liabilities:Accounts receivable 5,241 (3,114Inventories (5,838 (1,844Prepaid expenses and other current assets (1,759 (499Income taxes receivable/payable 2,485 (3,021Other assets 103 (306Accounts payable 7,126 (8,096Accrued expenses (1,623 (1,059Other long-term liabilities 151 422
Net cash provided by operating activities 36,209 24,672
Cash flows from investing activities:Purchase of property and equipment (4,798 (5,915Business acquisitions, net of cash acquired (890 (32,138Purchase of intangible assets (589Purchase of short-term investments (74,932 (278Sale of short-term investments 39,932 278Purchase of additional shares in cost method investee (32Proceeds from sale of property and equipment 18 15
Net cash used in investing activities (40,670 (38,659
Cash flows from financing activities:Principal payments on capital lease obligations (83 (127Proceeds from government grants 455Proceeds from the exercise of stock options 273Excess tax benefits related to exercise of stock options 34
Net cash (used in) provided by financing activities (83 635Effect of exchange rate changes on cash 1,111 3
Net (decrease) increase in cash and cash equivalents (3,433 (13,34979,613 92,962
Year Ended December 31,
Adjustments to reconcile net income to net cash provided by operating activities:
— )
) ) )
) ) — ) —
)
) — — —
)
) Cash and cash equivalents — Beginning of period
$ 76,180 $ 79,613
Supplemental disclosures of cash flow information:Cash paid during the period for:Interest $ 4 $ 110Income taxes 10,380 20,804
Cash and cash equivalents — End of period
2007
(In thousands)
$ 33,335
2,895831
24161
(444934
(191
(23,736(6,789
(311(339(242
9,3963,791
(36
19,279
(14,989
16
(14,973
(78229
1,028444
1,6231,619
7,54885,414
Year Ended December 31,
) ) ) )
) ) ) ) ) ) ) ) ) ) ) ) )
) ) ) — ) — ) — — ) —
) )
) )
)
$ 92,962
$ 3522,799
January 31,In thousands, except share amounts 2010ASSETS Current assets:Cash and cash equivalents $ 149,561 Restricted cash 49,352
322,959 Other receivables 28,832 Inventories 301,216 Deferred income taxes short-term 63,220 Prepaid expenses and other current assets 40,698 Current assets held for sale 86 Total current assets 955,924
225,320 Intangible assets, net 141,995 Goodwill 324,431 Other assets 76,017 Deferred income taxes long-term 58,586 Total assets $ 1,782,273 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Lines of credit $ 24,927 Accounts payable 203,232 Accrued liabilities 91,222 Current portion of long-term debt 93,314 Income taxes payable 14,202 Liabilities related to assets held for sale 324 Total current liabilities 427,221 Long-term debt, net of current portion 858,324
Trade accounts receivable, less allowances of $48,156 (2010) and $47,211 (2009)
Fixed assets, less accumulated depreciation and amortization of $246,655 (2010) and $248,557 (2009)
Other long-term liabilities 40,573 Total liabilities 1,326,118 Stockholders’ equity:
—
1,318 Additional paid-in capital 370,878 Treasury stock, 2,885,200 shares (6,778 Accumulated deficit (6,977 Accumulated other comprehensive income 89,424 Total Quiksilver, Inc. stockholders’ equity 447,865 Non-controlling interest 8,290 Total stockholders’ equity 456,155 Total liabilities and stockholders’ equity $ 1,782,273
Preferred stock, $.01 par value, authorized shares - 5,000,000; issued and outstanding shares - none
Common stock, $.01 par value, authorized shares - 185,000,000; issued shares - 131,761,930 (2010) and 131,484,363 (2009)
12 Mos 3 Mos addIn thousands, except per share amounts 2009 1/31/2010 1/31/2010
Revenues, net $ 1,977,526 432,737 2,410,263
Cost of goods sold 1,046,495 210,588 1,257,083 Gross profit 931,031 222,149 1,153,180 Selling, general and administrative expense 851,746 203,160 1,054,906 Asset impairments 10,737 0 10,737 Operating income 68,548 18,989 87,537 Interest expense, net 63,924 21,873 85,797 Foreign currency loss (gain) 8,633 (1,979) 6,654
Minority interest and other expense(gain) 2,539 851 3,390
(Loss) income before provision for income taxes (6,548) (1,756) (8,304) Provision for income taxes 66,667 3,674 70,341
(Loss) income from continuing operations (73,215) (5,430) (78,645) Loss(Gain) from discontinued operations (118,827) 76 (118,751) Net loss $ (192,042) (5,354) (197,396)
(Loss) income per share from continuing operations (0.58) (0.04) (0.62) $Loss per share from discontinued operations (0.94) 0.00 (0.94) Net loss per share (1.51) (0.04) (1.55)
Weighted average common shares outstanding 127,042 127,648
3 Mos Subtract New 12 Mos1/31/2009 1/31/2009 1/31/2010
443,278 1,966,985 1,966,985
236,115 1,020,968 1,020,968
207,163 946,017 946,017
206,818 848,088 848,088
10,737 10,737
345 87,192 87,192
14,154 71,643 71,643
1,430 5,224 5,224
42 3,348 3,348
(15,281) 6,977 6,977
50,581 19,760 19,760
(65,862) (12,783) (12,783)
(128,564) 9,813 9,813
(194,426) (2,970) (2,970)
(0.52) (0.10) (0.10)
(1.01) 0.07 0.07
(1.53) (0.02) (0.02)
127,039 127,039 127,039
CONSOLIDATED BALANCE SHEETS
2010 2009
(In thousands, except
par amounts)
ASSETSCurrent Assets:
Cash and cash equivalents $ 8,288 $Receivables, net 74,398Inventories, net 77,029Prepaid expenses 10,713Deferred tax assets 13,875
184,303
Property, plant and equipment, net 79,540Intangible assets, net 137,490
Other non-current assets, net 23,841
Total Assets $ 425,174 $
LIABILITIES AND SHAREHOLDERS' EQUITYCurrent Liabilities:
Trade accounts payable and other accrued expenses $ 81,831 $
Accrued compensation 11,514Income taxes payable 2,517
—
95,862
Long-term debt, less current maturities 146,408
Other non-current liabilities 50,066
Non-current deferred income taxes 28,421
Commitments and contingenciesShareholders' Equity:
OXFORD INDUSTRIES, INC.
January 30, January 31,
Total current assets
Short-term debt and current maturities of long-term debt
Total current liabilities
Common stock, $1.00 par value per common share 16,461
Additional paid-in capital 91,840Retained earnings 19,356
Accumulated other comprehensive loss (23,240 )
104,417
Total Liabilities and Shareholders' Equity $ 425,174 $
Total shareholders' equity
2009
(In thousands, except
par amounts)
3,29078,567
119,61610,84510,159
222,477
89,026135,999
20,180
467,682
87,723
14,027—
5,083
106,833
194,187
47,244
32,111
January 31,
15,866
88,42510,621
(27,605 )
87,307
467,682
CONSOLIDATED STATEMENTS OF OPERATIONS
Fiscal 2009
(In thousands, except per share amounts)
Net sales $ 800,658Cost of goods sold 466,975
Gross profit 333,683SG&A 304,330
Amortization of intangible assets 1,256
—
305,586
Royalties and other operating income 13,057
Operating income (loss) 41,154
—Interest expense, net 21,361
Earnings (loss) before income taxes 19,793Income taxes (benefit) 5,169
Net earnings (loss) from continuing operations 14,624
Earnings (loss) from discontinued operations, net of taxes —
Net earnings (loss) $ 14,624
Net earnings (loss) from continuing operations per common share:Basic $ 0.9Diluted $ 0.9
OXFORD INDUSTRIES, INC.
Impairment of goodwill, intangible assets and investment in an unconsolidated entity
Gain on repurchase of 87/8% Senior Unsecured Notes
Earnings (loss) from discontinued operations per common share:Basic $ —Diluted $ —
Net earnings (loss) per common share:Basic $ 0.9Diluted $ 0.9
Weighted average common shares outstanding:Basic 16,297Dilution 7
Diluted 16,304
Dividends declared per common share $ 0.36
Fiscal 2008
Eight-month
Fiscal 2007
Transition
Period Ended
2008
(In thousands, except per share amounts)
$ 947,516 $ 695,798 $ 1,128,907560,314 418,459 682,080
387,202 277,339 446,827358,071 244,033 356,970
2,903 3,184 6,405
314,813 — —
675,787 247,217 363,375
17,294 12,451 16,462
(271,291 ) 42,573 99,914
7,767 — —23,702 15,302 22,214
(287,226 ) 27,271 77,700(15,769 ) 7,094 25,948
(271,457 ) 20,177 51,752
— — (183 )
$ (271,457 ) $ 20,177 $ 51,569
$ (17.00 ) $ 1.17 $ 2.91$ (17.00 ) $ 1.16 $ 2.89
February 2,
$ — $ — $ (0.01 )$ — $ — $ (0.01 )
$ (17.00 ) $ 1.17 $ 2.9$ (17.00 ) $ 1.16 $ 2.88
15,968 17,306 17,770— 71 157
15,968 17,377 17,927
$ 0.72 $ 0.54 $ 0.66
Liquidity Ratios Formulas Units CalculationsCurrent ratio CA/CL Times 211,000/32,795Quick Ratio ((C.A.-Inv)/CL) Times ((211,000-33,250)/32,795)
Leverage RatiosTotal Debt Ratio Debt/Total Assets Times (22,788+9,957+1,203+50)/253,033Debt-Equity Ratio Debt/Total Equity Times (22,788+9,957+1,203+50)/218,967
Activity RatiosInventory Turnover Sales/Inventory Times 280,639/33,250Total Asset Turnover Sales/Total Assets Times 280,639/253,033
Profitability RatiosGross Profit Margin (Sales-COGS)/Sales % (280,639-139,844)/280,639Profit Margin NI/Sales % 21,744/280,639ROA NI/Total Assets % 21,744/253,033ROE NI/Total Equity % 21,744/218,967EPS NI/Shares Outstanding $ 21,744/24,374PE Ratio Price Per Share/EPS Times 16.74/0.89
Liquidity Ratios Formulas Units CalculationsCurrent ratio CA/CL Times 955,924/427,221Quick Ratio ((C.A.-Inv)/CL) Times (955,924-301,216)/427,221
Leverage Ratios
Total Debt Ratio Debt/Total Assets Times
Debt-Equity Ratio Debt/Total Equity Times
Activity RatiosInventory Turnover Sales/Inventory Times 1,966,985/301,216Total Asset Turnover Sales/Total Assets Times 1,966,985/1,782,273
Profitability RatiosGross Profit Margin (Sales-COGS)/Sales $ (1,966,985-1,046,495)/1,966,985Profit Margin NI/Sales % (-2970)/1966985ROA NI/Total Assets % (-2,970)/1,782,273ROE NI/Total Equity % (-2,970)/456,155EPS NI/Shares Outstanding $ (-2,970)/131,484
(24,927+203,232+93,314+858,324+40,573)/1,782,273(24,927+203,232+93,314+858,324+40,573)/456,155
PE Ratio Price Per Share/EPS Times 2.02/(-0.02)
Liquidity Ratios Formulas Units CalculationsCurrent ratio CA/CL Times 184,303/95,862Quick Ratio ((C.A.-Inv)/CL) Times (184,303-77,029)/95,862
Leverage RatiosTotal Debt Ratio Debt/Total Assets Times (81,831+146,408+50,066)/425,174Debt-Equity Ratio Debt/Total Equity Times (81,831+146,408+50,066)/104,417
Activity RatiosInventory Turnover Sales/Inventory Times 800,658/77,029Total Asset Turnover Sales/Total Assets Times 800,658/425,174
Profitability RatiosGross Profit Margin (Sales-COGS)/Sales $ (800,658-466,975)/800,658Profit Margin NI/Sales % 14,624/800,658ROA NI/Total Assets % 14,624/425,174ROE NI/Total Equity % 14,624/104,417EPS NI/Shares Outstanding $ 14,624/16,297PE Ratio Price Per Share/EPS Times 20.49/0.9
Liquidity Ratios Formulas Units Industry AverageCurrent ratio CA/CL Times 3.53Quick Ratio ((C.A.-Inv)/CL) Times 2.69
Leverage RatiosTotal Debt Ratio Debt/Total Assets Times 0.49Debt-Equity Ratio Debt/Total Equity Times 1.83
Activity RatiosInventory Turnover Sales/Inventory Times 8.45Total Asset Turnover Sales/Total Assets Times 1.37
Profitability Ratios
Gross Profit Margin (Sales-COGS)/Sales $ 46.31%Profit Margin NI/Sales % 3.14%ROA NI/Total Assets % 3.96%ROE NI/Total Equity % 7.76%EPS NI/Shares Outstanding $ 0.59PE Ratio Price Per Share/EPS Times -19.82
Volcom 2009 Volcom 20082009 Calculations 2008 Calculations6.43 178,465/26,755 6.67 176,674/29,3275.42 ((178,465-27,086)/27,086 5.66 (176,674-20,440)/29,327
0.13 (15,291+71+23+1,048)/221,623 0.13 (18,694+72+33+190)/202,4940.16 (15,291+71+23+1,048)/193,703 0.14 (18,694+72+33+190)/172,855
8.44 334,304/27,086 12.34 268,613/20,4401.11 334,304/221,623 1.51 268,613/202,494
50.17% (334,394-171,208)/334,394 48.79% (268,613-138,570)/268,6137.75% 21,709/334,304 6.49% 33,335/268,6138.59% 21,709/221,623 9.80% 33,335/202,4949.93% 21,709/193,703 11.21% 33,335/172,855
0.89 21,709/24,374 0.89 33,335/24,30218.76 10.90/.089 12.24 22.03/1.37
Quiksilver 200920092.241.53
0.68
2.68
6.531.10
0.4708059-0.0015-0.0017
-0.01-0.02
-101.00
Oxford Industries20091.921.12
0.652.67
10.391.88
0.4167612%3%
14%0.90
22.77
Volcom 200720076.025.33
0.150.17
13.141.33
48.41%12.41%16.46%19.28%
1.37
16.08
Volcom Liquidity Ratios 2007 2008 2009Current ratio 6.02 6.67 6.43Quick Ratio 5.33 5.66 5.42
Leverage RatiosTotal Debt Ratio 0.15 0.13 0.13Debt-Equity Ratio 0.17 0.14 0.16
Activity RatiosInventory Turnover 13.14 12.34 8.44Total Asset Turnover 1.33 1.51 2.29
Profitability RatiosGross Profit Margin 48.41% 48.79% 50.17%Profit Margin 12.41% 6.49% 7.75%Return on Assets 16.46% 9.80% 8.59%Return on Equity 19.28% 11.21% 9.93%Earnings Per Share 1.37 0.89 0.89Price Earnings Ratio 16.08 12.24 18.76
IndustryLiquidity Ratios AverageCurrent ratio 3.53Quick Ratio 2.69
Leverage RatiosTotal Debt Ratio 0.49Debt-Equity Ratio 1.83
Activity RatiosInventory Turnover 8.45Total Asset Turnover 1.76
Profitability RatiosGross Profit Margin 46.31%Profit Margin 3.14%Return on Assets 3.96%Return on Equity 7.76%Earnings Per Share 0.59Price Earnings Ratio -19.82
2007 2008 20090.00
2.00
4.00
6.00
8.00
10.00
12.00
14.0020072008
20092009
Volcom vs. Industry Avg: Inv Turns
Volcom
Industry Average
Tim
es
2007 2008 20090
0.1
0.2
0.3
0.4
0.5
0.6
0.145767281993541 0.12545178072673 0.134361921172337
0.491218659449844
Volcom vs. Industry Average Leverage Ratios: Total Debt
Volcom Industry Average
2007 2008 20090
0.02
0.04
0.06
0.08
0.1
0.12
0.140.124100471682309
0.0649379008327750.0774803216944188
0.0314117912207977
Volcom vs. Industry Ave: Profit Margin
VolcomIndsutry Average
2007 2008 2009
-25.00
-20.00
-15.00
-10.00
-5.00
0.00
5.00
10.00
15.00
20.00
25.00
20072008
2009
2009
Volcom vs. Industry Avg: P/E Ratio
Volcom
Industry Averag
Tim
es
2007 2008 20090
0.02
0.04
0.06
0.08
0.1
0.12
0.140.124100471682309
0.0649379008327750.0774803216944188
0.0314117912207977
Volcom vs. Industry Ave: Profit Margin
VolcomIndsutry Average
2007 2008 20090
0.05
0.1
0.15
0.2
0.25
0.192849498134274
0.1120736385084380.09930263464357640.0776151708507722
Volcom vs. Industry Ave: ROE
VolcomIndustry Average
0
2
4
6
8
10
12
Volcom vs. Industry Avg: Quick Ratio
Tim
es
2007 2008 20090.00
2.00
4.00
6.00
8.00
10.00
12.00
14.0020072008
20092009
Volcom vs. Industry Avg: Inv Turns
Volcom
Industry Average
Tim
es
2007 2008 20090
0.1
0.2
0.3
0.4
0.5
0.6
0.145767281993541 0.12545178072673 0.134361921172337
0.491218659449844
Volcom vs. Industry Average Leverage Ratios: Total Debt
Volcom Industry Average
2007 2008 20090
0.20.40.60.8
11.21.41.61.8
2
0.170761621011831 0.143534173451108 0.155265405289382
1.83197624021792
Volcom vs. Indsutry Avg: D/E
VolcomIndustry Average
2007 2008 20090
0.02
0.04
0.06
0.08
0.1
0.12
0.140.124100471682309
0.0649379008327750.0774803216944188
0.0314117912207977
Volcom vs. Industry Ave: Profit Margin
VolcomIndsutry Average
2007 2008 20090.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%16.46%
9.80%8.59%
3.96%
Volcom vs. Industry Ave: ROA
VolcomIndustry Average
2007 2008 20090.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.602007
2008 2009
2009
Volcom vs. Industry Avg: EPS
Volcom
Industry Average
$
2007 2008 2009
-25.00
-20.00
-15.00
-10.00
-5.00
0.00
5.00
10.00
15.00
20.00
25.00
20072008
2009
2009
Volcom vs. Industry Avg: P/E Ratio
Volcom
Industry Averag
Tim
es
2007 2008 20090
0.02
0.04
0.06
0.08
0.1
0.12
0.140.124100471682309
0.0649379008327750.0774803216944188
0.0314117912207977
Volcom vs. Industry Ave: Profit Margin
VolcomIndsutry Average
2007 2008 20090.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%16.46%
9.80%8.59%
3.96%
Volcom vs. Industry Ave: ROA
VolcomIndustry Average
2007 2008 20090
0.05
0.1
0.15
0.2
0.25
0.192849498134274
0.1120736385084380.09930263464357640.0776151708507722
Volcom vs. Industry Ave: ROE
VolcomIndustry Average
2007 2008 20090.44
0.45
0.46
0.47
0.48
0.49
0.5
0.51
0.4841277227833350.487867330334067
0.501694347542573
0.463087086023172
Volcom vs. Industry Avg: Gross Profit Margin
VolcomIndsutry Average
0
2
4
6
8
10
12
Volcom vs. Industry Avg: Quick Ratio
Tim
es
2007 2008 20090
0.20.40.60.8
11.21.41.61.8
2
0.170761621011831 0.143534173451108 0.155265405289382
1.83197624021792
Volcom vs. Indsutry Avg: D/E
VolcomIndustry Average
2007 2008 20090.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%16.46%
9.80%8.59%
3.96%
Volcom vs. Industry Ave: ROA
VolcomIndustry Average
2007 2008 20090.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.602007
2008 2009
2009
Volcom vs. Industry Avg: EPS
Volcom
Industry Average
$
2007 2008 20090.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%16.46%
9.80%8.59%
3.96%
Volcom vs. Industry Ave: ROA
VolcomIndustry Average
2007 2008 20090.44
0.45
0.46
0.47
0.48
0.49
0.5
0.51
0.4841277227833350.487867330334067
0.501694347542573
0.463087086023172
Volcom vs. Industry Avg: Gross Profit Margin
VolcomIndsutry Average
•Increase Retail Presence: Five West Coast retail stores–Volcom will need to invest $15,000,000 of its liquid assets to fund this project. –This project will last for five years and has salvage value of $10,000,000. –Initial revenues are based on average price per unit of $27.00 and sales volume of 666,667.–The initial working capital will amount in $6547,200 in year 1, increasing by 80% in year 2 and then in year 3 it will increase 98%, Year 4 and 5 will also have an increase in capital of 96% and 89% respectively. –Sales will increase 25% over the next from fives from year 2009. – As seen in the previously analyzed financial statements the cost of goods sold are half of the annual sales amounts year in and year out, which is emulated in this analysis. –Expenses, such as administrative, employee costs, and other expenses, amount for 30% of sales each year. –Depreciation is based on MACRS Depreciation 5 yrs–Based on management's experience, the effective tax rate will be 31.7%.
VolcomIncrease Retail Presence
Base Case One Exempt Employee making $30,000 per yearCapital investment 15,000,000 22 Hourly Employees working 20 hours making minimum wage of 8 per hourResale 10,000,000
0.1429 0.2449 0.1749 0.1249 0.0893 440.0000 hours per weekMACRS Depreciation 5 yrs 2,143,500 3,673,500 2,623,500 1,873,500 1,339,500 8 minimum wageNet Book Value 12,856,500 9,183,000 6,559,500 4,686,000 3,346,500 51 weeks in a year
Inventory 2,139,301 2,852,401 3,803,202 5,070,936 6,363,025 .2237 based on yr-end 2009 Inventory/COGS.1629 based on yr-end 2009 A/P / COGS
AP 1,466,101 1,954,801 2,606,401 3,475,202 4,633,602Working Capital 0 673,200 897,600 1,196,801 1,595,734 1,729,423
Sales Volume 666,667 666,667Average Cost Per Unit 27
Yr 0 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5Sales 75% 18,000,009 24,000,012 32,000,016 42,666,688 56,888,917Cost of Goods Sold 9,000,005 12,000,006 16,000,008 21,333,344 28,444,459Labor CostExempt Employee 30,000 30,000 30,000 30,000 30,000Hourly Employees 179,520 179,520 179,520 179,520 179,520Utilities 125,000 125,000 125,000 125,000 125,000Administrative and Other Expenses 3,100,000 4,100,000 3,500,000 4,300,000 5,000,000Depreciation 2,143,500 3,673,500 2,623,500 1,873,500 1,339,500EBIT 3,421,985 3,891,986 9,541,988 14,825,324 21,770,439Tax 0.317 1,084,769 1,233,760 3,024,810 4,699,628 6,901,229NI 2,337,215 2,658,226 6,517,178 10,125,696 14,869,210Depreciation 2,143,500 3,673,500 2,623,500 1,873,500 1,339,500OCF 4,480,715 6,331,726 9,140,678 11,999,196 16,208,710
Change in WC -673,200 -224,400 -299,200 -398,934 -133,689 -1,729,423Recovery of NWC 1,729,423Net Change in WC -673,200 -224,400 -299,200 -398,934 1,595,734
Capital spending -15,000,000Resale value 10,000,000Tax savings -2109159.5 (Bk-resale)*TNet Capital Spending -15,000,000 0 0 0 0 7,890,841
OCF 0 4,480,715 6,331,726 9,140,678 11,999,196 16,208,710NWC 0 -673,200 -224,400 -299,200 -398,934 1,595,734Net Cap spend -15,000,000 0 0 0 0 7,890,841Net Cash Flows -15,000,000 3,807,515 6,107,326 8,841,478 11,600,263 25,695,284PVIF 14% CoC 1.0000 0.8772 0.7695 0.6750 0.5921 0.5194 DCF -15,000,000 3,339,952 4,699,588 5,967,997 6,868,516 13,346,131
NPV = $19,222,183
IRR = 45.19%
Paybackcumulative NCFs -15,000,000 -11,192,485 -5,085,159 3,756,319 15,356,582 41,051,866
0.425Payback = 2.4 yrs
VolcomIncrease Retail PresenceBase Case with WACC One Exempt Employee making $30,000 per year
Capital investment 15,000,000 22 Hourly Employees working 20 hours making minimum wage of 8 per hourResale 10,000,000
0.1429 0.2449 0.1749 0.1249 0.0893 440.0000 hours per weekMACRS Depreciation 5 yrs 2,143,500 3,673,500 2,623,500 1,873,500 1,339,500 8 minimum wageNet Book Value 12,856,500 9,183,000 6,559,500 4,686,000 3,346,500 51 weeks in a year
Inventory 2,013,301 2,684,401 3,579,202 5,070,936 6,761,248 .2237 based on yr-end 2009 Inventory/COGS.1629 based on yr-end 2009 A/P / COGS
AP 1,466,101 1,954,801 2,606,401 3,475,202 4,633,602Working Capital 0 547,200 729,600 972,800 1,595,734 2,127,646
Sales Volume 666,667 666,667Average Cost Per Unit 27
Yr 0 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5Sales 75% 18,000,009 24,000,012 32,000,016 42,666,688 56,888,917 Increased sales by 50%Cost of Goods Sold 9,000,005 12,000,006 16,000,008 21,333,344 28,444,459 Changed COGS accordinglyLabor CostExempt Employee 30,000 30,000 30,000 30,000 30,000Hourly Employees 179,520 179,520 179,520 179,520 179,520Utilities 125,000 125,000 125,000 125,000 125,000Administrative and Other Expenses 3,100,000 4,100,000 3,500,000 4,300,000 5,000,000Depreciation 2,143,500 3,673,500 2,623,500 1,873,500 1,339,500EBIT 3,421,985 3,891,986 9,541,988 14,825,324 21,770,439Tax 0.3127 1,070,055 1,217,024 2,983,780 4,635,879 6,807,616NI 2,351,930 2,674,962 6,558,208 10,189,445 14,962,822Depreciation 2,143,500 3,673,500 2,623,500 1,873,500 1,339,500OCF 4,495,430 6,348,462 9,181,708 12,062,945 16,302,322
Change in WC -547,200 -182,400 -243,200 -622,934 -531,911 -2,127,646Recovery of NWC 2,127,646Net Change in WC -547,200 -182,400 -243,200 -622,934 1,595,734
Capital spending -15,000,000Resale value 10,000,000Tax savings -2080549.45 (Bk-resale)*TNet Capital Spending -15,000,000 0 0 0 0 7,919,451
OCF 0 4,495,430 6,348,462 9,181,708 12,062,945 16,302,322NWC 0 -547,200 -182,400 -243,200 -622,934 1,595,734Net Cap spend -15,000,000 0 0 0 0 7,919,451Net Cash Flows -15,000,000 3,948,230 6,166,062 8,938,508 11,440,012 25,817,507PVIF 21% CoC 1.0000 0.8266 0.6834 0.5652 0.4675 0.3867 DCF -15,000,000 3,263,607 4,213,887 5,052,045 5,348,205 9,983,630
NPV = $12,861,374
IRR = 45.62%
Paybackcumulative NCFs -15,000,000 -11,051,770 -4,885,708 4,052,800 15,492,811 41,310,319
0.453Payback = 2.5 yrs
VolcomIncrease Retail Presence
Best Case Increase Sales 10% and Decrease COGS 10%One Exempt Employee making $30,000 per year
Yr 0 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 22 Hourly Employees working 20 hours making minimum wage of 8 per hour0
Capital investment 15,000,000 440.0000 hours per weekResale 10,000,000 8 minimum wage
0.143 0.245 0.175 0.125 0.089 51 weeks in a yearMACRS Depreciation 5 yrs 2,143,500 3,673,500 2,623,500 1,873,500 1,339,500Net Book Value 12,856,500 9,183,000 6,559,500 4,686,000 3,346,500
Inventory 1,925,371 2,406,714 3,008,392 3,760,490 4,700,613
AP 1,319,491 1,649,363 2,061,704 2,577,130 3,221,413Working Capital 605,880 757,350 946,688 1,183,360 1,479,200
Yr 0 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5Sales 10% 19,800,010 24,750,012 30,937,515 38,671,894 48,339,868Cost 8,100,004 10,125,005 12,656,256 15,820,320 19,775,401Labor CostExempt Employee 30,000 30,000 30,000 30,000 30,000Hourly Employees 179,520 179,520 179,520 179,520 179,520Utilities 125,000 125,000 125,000 125,000 125,000Adminstrative and Other Expenses 4,000,000 5,290,480 4,500,000 5,600,000 6,400,000Depreciation 2,143,500 3,673,500 2,623,500 1,873,500 1,339,500EBIT 5,221,986 5,326,507 10,823,239 15,043,554 20,490,447Tax 0.317 1,655,370 1,688,503 3,430,967 4,768,807 6,495,472NI 3,566,616 3,638,004 7,392,272 10,274,747 13,994,976Depreciation 2,143,500 3,673,500 2,623,500 1,873,500 1,339,500OCF 5,710,116 7,311,504 10,015,772 12,148,247 15,334,476
Change in WC -605,880 -151,470 -189,338 -236,672 -295,840 -1,479,200Recovery of NWC 1,479,200Net Change in WC -605,880 -151,470 -189,338 -236,672 1,183,360
Capital spending -15,000,000Resale value 10,000,000Tax savings -2109159.5Net Capital Spending -15,000,000 0 0 0 0 7,890,841
OCF 0 5,710,116 7,311,504 10,015,772 12,148,247 15,334,476NWC 0 -605,880 -151,470 -189,338 -236,672 1,183,360Net Cap spend -15,000,000 0 0 0 0 7,890,841Net Cash Flows -15,000,000 5,104,236 7,160,034 9,826,435 11,911,575 24,408,676PVIF 21% CoC 1.0000 0.8266 0.6834 0.5652 0.4675 0.3867 DCF -15,000,000 4,219,162 4,893,168 5,553,901 5,568,661 9,438,835
NPV = $14,673,726
IRR = 50.22%
Paybackcumulative NCFs -15,000,000 -9,895,764 -2,735,730 7,090,705 19,002,281 43,410,957
0.721594899724634Payback = 2.7 yrs
VolcomIncrease Retail Presence
Worst Case Decrease Sales 10% and Increase COGS 10%0
One Exempt Employee making $30,000 per year0 22 Hourly Employees working 20 hours making minimum wage of 8 per hour
Capital investment 15,000,000Resale 10,000,000 440.0000 hours per week
0.143 0.245 0.175 0.125 0.089 8 minimum wageMACRS Depreciation 5 yrs 2,143,500 3,673,500 2,623,500 1,873,500 1,339,500 51 weeks in a yearNet Book Value 12,856,500 9,183,000 6,559,500 4,686,000 3,346,500
Inventory 2,353,231 2,941,539 3,676,924 4,596,155 5,745,193
AP 1,612,711 2,015,889 2,519,861 3,149,826 3,937,282Working Capital 0 740,520 925,650 1,157,063 1,446,329 1,807,911
Average Cost Per Unit 25
Yr 0 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5Sales 0.1 16,200,008 20,250,010 25,312,513 31,640,641 39,550,801Cost of Goods Sold 9,900,005 12,375,006 15,468,758 19,335,947 24,169,934Labor CostExempt Employee 30,000 30,000 30,000 30,000 30,000Hourly Employee 179,520 179,520 179,520 179,520 179,520Administrative and Other Expenses 2,300,000 3,000,000 2,500,000 3,200,000 3,700,000Utilities 125,000 125,000 125,000 125,000 125,000Depreciation 2,143,500 3,673,500 2,623,500 1,873,500 1,339,500EBIT 1,521,983 866,984 4,385,735 6,896,674 10,006,847Tax 0.317 482,469 274,834 1,390,278 2,186,246 3,172,171NI 1,039,514 592,150 2,995,457 4,710,428 6,834,677Depreciation 2,143,500 3,673,500 2,623,500 1,873,500 1,339,500OCF 3,183,014 4,265,650 5,618,957 6,583,928 8,174,177
Change in WC -740,520 -185,130 -231,413 -289,266 -361,582 -1,807,911Recovery of NWC 1,807,911Net Change in WC -740,520 -185,130 -231,413 -289,266 1,446,329
Capital spending -15,000,000Resale value 10,000,000Tax savings -2109159.5Net Capital Spending -15,000,000 0 0 0 0 7,890,841
OCF 0 3,183,014 4,265,650 5,618,957 6,583,928 8,174,177NWC 0 -740,520 -185,130 -231,413 -289,266 1,446,329Net Cap spend -15,000,000 0 0 0 0 7,890,841Net Cash Flows -15,000,000 2,442,494 4,080,520 5,387,544 6,294,662 17,511,346PVIF 21% CoC 1.0000 0.8266 0.6834 0.5652 0.4675 0.3867 DCF -15,000,000 2,018,966 2,788,627 3,045,040 2,942,755 6,771,637
NPV = $2,567,025
IRR = 26.52%
Paybackcumulative NCFs -15,000,000 -12,557,506 -8,476,986 -3,089,442 3,205,221 20,716,567
0.509196611Payback = 3.5 yrs
0 VolcomIncrease Retail Presence
0 NPV=0 (Revenues)
Capital investment 15,000,000Resale 10,000,000
0.143 0.245 0.175 0.125 0.089MACRS Depreciation 5 yrs 2,143,500 3,673,500 2,623,500 1,873,500 1,339,500Net Book Value 12,856,500 9,183,000 6,559,500 4,686,000 3,346,500
Inventory 1,422,915 1,778,644 2,223,305 2,779,131 3,473,914
AP 975,149 1,218,936 1,523,670 1,904,587 2,380,734Working Capital 0 447,766 559,708 699,635 874,543 1,093,179
Sales Volume 443,420.75Average Price Per Unit $27.00
Yr 0 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5Sales 11,972,360 14,965,450 18,706,813 23,383,516 29,229,395Cost of Goods Sold 5,986,180 7,482,725 9,353,406 11,691,758 14,614,697Labor CostExempt Employee 30,000 30,000 30,000 30,000 30,000Hourly Employees 179,250 179,520 179,520 179,520 179,520Administrative and Other Expenses 3,100,000 4,100,000 3,500,000 4,300,000 5,000,000Depreciation 2,143,500 3,673,500 2,623,500 1,873,500 1,339,500EBIT 533,430 -500,295 3,020,386 5,308,738 8,065,677Tax 0.317 169,097 -158,593 957,462 1,682,870 2,556,820NI 364,333 -341,701 2,062,924 3,625,868 5,508,858Depreciation 2,143,500 3,673,500 2,623,500 1,873,500 1,339,500OCF 2,507,833 3,331,799 4,686,424 5,499,368 6,848,358
Change in WC -447,766 -111,942 -139,927 -174,909 -218,636 -1,093,179Recovery of NWC 1,093,179Net Change in WC -447,766 -111,942 -139,927 -174,909 874,543
Capital spending -15,000,000Resale value 10,000,000Tax savings -2109159.5Net Capital Spending -15,000,000 0 0 0 0 7,890,841
OCF 0 2,507,833 3,331,799 4,686,424 5,499,368 6,848,358NWC 0 -447,766 -111,942 -139,927 -174,909 874,543Net Cap spend -15,000,000 0 0 0 0 7,890,841Net Cash Flows -15,000,000 2,060,066 3,219,857 4,546,497 5,324,459 15,613,742PVIF 21% CoC 1.0000 0.8266 0.6834 0.5652 0.4675 0.3867 DCF -15,000,000 1,702,851 2,200,450 2,569,680 2,489,185 6,037,834
NPV = $0
IRR = 20.94%
Paybackcumulative NCFs -15,000,000 -12,939,934 -9,720,076 -5,173,580 150,880 15,764,622
0.028337115Payback = 3.0 yrs
VolcomIncrease Retail Presence
NPV=0 (COGS)0
Capital investment 15,000,000Resale 10,000,000
0.143 0.245 0.175 0.125 0.089MACRS Depreciation 5 yrs 2,143,500 3,673,500 2,623,500 1,873,500 1,339,500Net Book Value 12,856,500 9,183,000 6,559,500 4,686,000 3,346,500
Inventory 1,884,899 2,827,349 4,241,023 6,361,534 9,542,301
AP 1,291,755 1,937,632 2,906,448 4,359,671 6,539,507Working Capital 0 593,144 889,717 1,334,575 2,001,863 3,002,794
Sales Volume 666,667Average Price Per Unit 27
Yr 0 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5Sales 75% 18,000,009 22,500,011 28,125,014 35,156,268 43,945,334Cost of Goods Sold 7,929,739 11,894,609 17,841,913 26,762,870 40,144,305Labor CostExempt Employee 30,000 30,000 30,000 30,000 30,000Hourly Employees 179,250 179,520 179,520 179,520 179,520Administrative and Other Expenses 3,100,000 4,100,000 3,500,000 4,300,000 5,000,000Depreciation 2,143,500 3,673,500 2,623,500 1,873,500 1,339,500EBIT 4,617,520 2,622,382 3,950,081 2,010,378 -2,747,990Tax 0.317 1,463,754 831,295 1,252,176 637,290 -871,113NI 3,153,766 1,791,087 2,697,905 1,373,088 -1,876,877Depreciation 2,143,500 3,673,500 2,623,500 1,873,500 1,339,500OCF 5,297,266 5,464,587 5,321,405 3,246,588 -537,377
Change in WC -593,144 -296,572 -444,858 -667,288 -1,000,931 -3,002,794Recovery of NWC 3,002,794Net Change in WC -593,144 -296,572 -444,858 -667,288 2,001,863
Capital spending -15,000,000Resale value 10,000,000Tax savings -2109159.5Net Capital Spending -15,000,000 0 0 0 0 7,890,841
OCF 0 5,297,266 5,464,587 5,321,405 3,246,588 -537,377NWC 0 -593,144 -296,572 -444,858 -667,288 2,001,863Net Cap spend -15,000,000 0 0 0 0 7,890,841Net Cash Flows -15,000,000 4,704,122 5,168,015 4,876,547 2,579,300 9,355,326PVIF 21% CoC 1.0000 0.8266 0.6834 0.5652 0.4675 0.3867 DCF -15,000,000 3,888,427 3,531,821 2,756,224 1,205,823 3,617,704
NPV = $0
IRR = 20.94%
Paybackcumulative NCFs -15,000,000 -10,295,878 -5,127,864 -251,317 2,327,984 11,683,310
0.9025640179Payback = 3.9 yrs
VolcomIncrease Retail Presence
Tax Rate = 38% One Exempt Employee making $30,000 per yearCapital investment 15,000,000 22 Hourly Employees working 20 hours making minimum wage of 8 per hourResale 10,000,000
0.1429 0.2449 0.1749 0.1249 0.0893 440.0000 hours per weekMACRS Depreciation 5 yrs 2,143,500 3,673,500 2,623,500 1,873,500 1,339,500 8 minimum wageNet Book Value 12,856,500 9,183,000 6,559,500 4,686,000 3,346,500 51 weeks in a year
Inventory 2,139,300 2,674,125 2,733,550 2,852,400 3,208,950 .2237 based on yr-end 2009 Inventory/COGS.1629 based on yr-end 2009 A/P / COGS
AP 1,466,100 1,832,625 1,873,350 1,954,800 2,199,150Working Capital 0 673,200 841,500 860,200 897,600 1,009,800
Yr 0 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5Sales 18,000,000 22,500,000 23,000,000 24,000,000 27,000,000 Increased sales by 50%Cost of Goods Sold 9,000,000 11,250,000 11,500,000 12,000,000 13,500,000 Changed COGS accordinglyLabor CostExempt Employee 30,000 30,000 30,000 30,000 30,000Hourly Employees 179,520 179,520 179,520 179,520 179,520Utilities 125,000 125,000 125,000 125,000 125,000Administrative and Other Expenses 3,100,000 4,100,000 3,500,000 4,300,000 5,000,000Depreciation 2,143,500 3,673,500 2,623,500 1,873,500 1,339,500EBIT 3,421,980 3,141,980 5,041,980 5,491,980 6,825,980Tax 0.38 1,300,352 1,193,952 1,915,952 2,086,952 2,593,872NI 2,121,628 1,948,028 3,126,028 3,405,028 4,232,108Depreciation 2,143,500 3,673,500 2,623,500 1,873,500 1,339,500OCF 4,265,128 5,621,528 5,749,528 5,278,528 5,571,608
Change in WC -673,200 -168,300 -18,700 -37,400 -112,200 -1,009,800Recovery of NWC 1,009,800Net Change in WC -673,200 -168,300 -18,700 -37,400 897,600
Capital spending -15,000,000Resale value 10,000,000Tax savings -2528330 (Bk-resale)*TNet Capital Spending -15,000,000 0 0 0 0 7,471,670
OCF 0 4,265,128 5,621,528 5,749,528 5,278,528 5,571,608NWC 0 -673,200 -168,300 -18,700 -37,400 897,600Net Cap spend -15,000,000 0 0 0 0 7,471,670Net Cash Flows -15,000,000 3,591,928 5,453,228 5,730,828 5,241,128 13,940,878PVIF 21% CoC 1.0000 0.8266 0.6834 0.5652 0.4675 0.3867 DCF -15,000,000 2,969,087 3,726,736 3,239,064 2,450,227 5,390,937
NPV = $2,776,051
IRR = 27.66%
Paybackcumulative NCFs -15,000,000 -11,408,072 -5,954,845 -224,017 5,017,110 18,957,988
0.957257824Payback = 4.0 yrs
Volcom, Inv.Project Summary
Best Case Base Case Base Case Worst Case NPV = 0 NPV = 0 Tax RateSales +10% WACC Sales - 10%, Revenue COGS 38%COGS - 10% COGS + 10%
NPV = $14,673,726 $19,222,183 $12,861,374 $2,567,025 $0 $0 $2,776,051
IRR = 50.22% 45.19% 45.62% 26.52% 20.94% 20.94% 27.66%
Payback = yrs 2.7 2.4 2.5 3.5 3.0 3.9 4.0
Volcom, Inc.Forecast, Annual Plan and Strategic Long Range Plan
AssumptionsIncome Statement
Category2010
Relationship Annual ForecastRevenues:All Product revenues A/R 1.10Cost of goods sold-% of Sales Inventory & A/P 0.50Operating Expenses:SGA Expenses 1.09Depreciation ExpenseTotal Other Income (Loss) 1.00Tax Rate 32% 0.32 Shares Outstanding 24,374,362 24,374,362
Balance Sheet
Category2010
Relationship Annual ForecastAssets:Current assets:Cash and cash equivalentsShort-term investmentsAccounts receivable-% of sales= 0.1931Inventories-% of COGS= 0.2237Other Current Assets
15000000Other Long-Term AssetsLiabilitiesCurrent liabilities:Accounts payable-% of COGS= 0.1629Accrued expenses and OtherOther long-term liabilitiesAccrued expenses and OtherCurrent portion of capital lease obligationsLong-term capital lease obligationsOther long-term liabilities
Property and equipment — net
Income taxes payable — non-current
Volcom, Inc.Forecast, Annual Plan and Strategic Long Range Plan
AssumptionsIncome Statement
2010 2011 2012Project Impact Annual Forecast Project Impact Annual Forecast
$18,000,009 1.10 $24,000,012 1.10 $9,000,005 0.50 $12,000,006 0.50
$3,100,000 1.09 $4,100,000 1.09 $2,143,500 $3,673,500
1.00 1.00 0.32 0.32
Balance Sheet2010 2011 2012
Project Impact Annual Forecast Project Impact Annual Forecast
$3,475,802 $4,634,402 $2,013,301 $2,684,401
$1,466,101 $1,954,801
Volcom, Inc.Forecast, Annual Plan and Strategic Long Range Plan
AssumptionsIncome Statement
2012Project Impact
$32,000,016 $16,000,008
$3,500,000 $2,623,500
Balance Sheet2012
Project Impact
$6,179,203 $3,579,202
$2,606,401
2009 Annual ACTUALS2009 2009
Income Statement Year End Q1 Q2Revenues:Total Product Revenues $ 280,639,000 $68,319,000 $54,216,000 Cost of goods sold $ 139,844,000 $33,937,000 $27,862,000 Gross profit $ 140,795,000 $ 34,382,000 $ 26,354,000 Operating expenses:Selling, general and administrative expenses $ 104,487,000 $28,034,000 $25,850,000 Depreciation Expense $ 6,360,000 $2,125,875 $2,125,875 Net S,G&A $ 110,847,000 $ 30,159,875 $ 27,975,875 Operating income $ 29,948,000 $ 4,222,125 $ (1,621,875)
Total other income (loss) $ 1,892,000 $473,473 $473,473 Income before provision for income taxes $ 31,840,000 $ 4,695,598 $ (1,148,402)Provision for income taxes $ 11,144,000 $ 2,279,000 $ 352,000
Net income $ 20,696,000 $ 2,416,598 $ (1,500,402)
Net income per share:Basic 84.91% 9.91% -6.16%Diluted 84.91% 9.91% -6.16%Weighted-average shares outstanding:Basic 24,374,362 24,374,362 24,374,362Diluted 24,374,362 24,374,362 24,374,362
2009 2009
Balance Sheet Year End Q1 Q2AssetsCurrent assets:Cash and cash equivalents $ 76,180,000 $ 59,947,000 $ 51,244,000 Short-term investments $ 35,000,000 $ 24,944,000 $ 44,933,000 Accounts receivable $ 53,792,000 $ 56,990,000 $ 48,487,000 Inventories $ 33,250,000 $ 22,290,000 $ 30,160,000 Other Current Assets $ 12,778,000 $ 8,240,000 $ 12,821,000 Total current assets $ 211,000,000 $ 172,411,000 $ 187,645,000
Gross Property & equipment $ 42,029,000 $ 25,612,000 $ 25,852,000 Accumulated depreciation $ 15,681,000 Net Property & equipment $ 26,348,000 $ 25,612,000 $ 25,852,000 Other Long-Term Assets $ 15,685,000 $ 16,789,000 $ 14,580,000 Total Long-term Assets $ 42,033,000 $ 42,401,000 $ 40,432,000 Total assets $ 253,033,000 $ 214,812,000 $ 228,077,000
Liabilities and Stockholders’ EquityCurrent liabilities:
Accounts payable $ 22,788,000 $ 9,955,000 $ 17,875,000 Accrued expenses and other current liabilities $ 10,007,000 $ 8,869,000 $ 12,213,000 Total current liabilities $ 32,795,000 $ 18,824,000 $ 30,088,000
Other long-term liabilities $ 1,271,000 $ 357,000 $ 450,000 Total Long-term Liabilities $ 1,271,000 $ 357,000 $ 450,000 Total Liabilities $ 34,066,000 $ 19,181,000 $ 30,538,000
Stockholders’ equity: $ 24,000 $ 24,000 $ 24,000
Additional paid-in capital $ 92,192,000 $ 90,685,000 $ 91,103,000 Retained earnings $ 123,679,000 $ 106,595,000 $ 105,340,000 Accumulated other comprehensive income $ 3,072,000 $ (1,673,000) $ 1,072,000 Total stockholders’ equity $ 218,967,000 $ 195,631,000 $ 197,539,000
Total liabilities and stockholders’ equity $ 253,033,000 $ 214,812,000 $ 228,077,000
Common stock, $0.001 par value
2009 Annual ACTUALS2009Q3 Q4 Total
$93,916,000 $ 64,188,000 $280,639,000 $45,433,000 $ 32,612,000 $139,844,000
$ 48,483,000 $ 31,576,000 $ 140,795,000
$28,825,000 $ 21,778,000 $104,487,000 $2,125,875 $2,125,875 $8,503,500
$ 30,950,875 $ 23,903,875 $ 112,990,500 $ 17,532,125 $ 7,672,125 $ 27,804,500
$473,473 $473,473 $1,893,892 $ 18,005,598 $ 8,145,598 $ 29,698,392 $ 6,750,000 $ 1,763,000 $ 11,144,000
$ 11,255,598 $ 6,382,598 $ 18,554,392
46.18% 26.19% 76.12%46.18% 26.19% 76.12%
24,374,362 24,374,362 24,374,36224,374,362 24,374,362 24,374,3622009
Q3 Q4 Total
$ 59,329,000 $ 76,180,000 $ 76,180,000 $ 39,989,000 $ 35,000,000 $ 35,000,000 $ 69,752,000 $ 53,792,000 $ 53,792,000 $ 22,425,000 $ 33,250,000 $ 33,250,000 $ 8,929,000 $ 12,778,000 $ 12,778,000 $ 200,424,000 $ 211,000,000 $ 211,000,000
$ 26,525,000 $ 42,029,000 $ 42,029,000
$ 26,525,000 $ 42,029,000 $ 42,029,000 $ 14,544,000 $ 15,685,000 $ 15,685,000 $ 41,069,000 $ 42,033,000 $ 42,033,000 $ 241,493,000 $ 253,033,000 $ 253,033,000
$ 9,835,000 $ 22,788,000 $ 22,788,000 $ 13,436,000 $ 10,007,000 $ 10,007,000 $ 23,271,000 $ 32,795,000 $ 32,795,000
$ 397,000 $ 1,271,000 $ 1,271,000 $ 397,000 $ 1,271,000 $ 1,271,000 $ 23,668,000 $ 34,066,000 $ 34,066,000
$ 24,000 $ 24,000 $ 24,000 $ 91,641,000 $ 92,192,000 $ 92,192,000 $ 121,979,000 $ 123,679,000 $ 123,679,000 $ 4,181,000 $ 3,072,000 $ 3,072,000 $ 217,825,000 $ 218,967,000 $ 218,967,000
$ 241,493,000 $ 253,033,000 $ 253,033,000
Annual Plan2009 2010
1 2 3 4 5 6Income Statement Year End Q1 Q2 Q3 Q4 TotalRevenues:Total Product Revenues $ 280,639,000 $ 79,650,902 $ 64,137,602 $ 107,807,602 $ 75,106,802 $ 326,702,909 Cost of goods sold $ 139,844,000 $ 39,825,451 $ 32,068,801 $ 53,903,801 $ 37,553,401 $ 163,351,455 Gross profit $ 140,795,000 $ 39,825,451 $ 32,068,801 $ 53,903,801 $ 37,553,401 $ 163,351,455 Operating expenses:Selling, general and administrative expenses $ 104,487,000 $31,332,060 $28,951,500 $32,194,250 $24,513,020 $ 116,990,830 Depreciation Expense $ 6,360,000 $ 2,125,875 $ 2,125,875 $ 2,125,875 $ 2,125,875 $ 8,503,500 Net S,G&A $ 110,847,000 $ 33,457,935 $ 31,077,375 $ 34,320,125 $ 26,638,895 $ 125,494,330 Operating income $ 29,948,000 $ 6,367,516 $ 991,426 $ 19,583,676 $ 10,914,506 $ 37,857,124
Total other income (loss) $ 1,892,000 $ 473,000 $ 473,000 $ 473,000 $ 473,000 $ 1,892,000 Income before provision for income taxes $ 31,840,000 $ 6,840,516 $ 1,464,426 $ 20,056,676 $ 11,387,506 $ 39,749,124 Provision for income taxes $ 11,144,000 $ 2,168,444 $ 464,223 $ 6,357,966 $ 3,609,839 $ 12,600,472
Net income $ 20,696,000 $ 4,672,073 $ 1,000,203 $ 13,698,710 $ 7,777,667 $ 27,148,652
Net income per share:Basic 0.85 0.19 0.04 0.56 0.32 1.11Diluted 0.85 0.19 0.04 0.56 0.32 1.11Weighted-average shares outstanding:Basic 24,374,362 24,374,362 24,374,362 24,374,362 24,374,362 24,374,362Diluted 24,374,362 24,374,362 24,374,362 24,374,362 24,374,362 24,374,362
2009 2010
Balance Sheet Year End Q1 Q2 Q3 Q4 TotalAssetsCurrent assets:Cash and cash equivalents $ 76,180,000 $ 70,467,635 $ 67,946,276 $ 80,573,368 $ 88,068,052 $ 88,068,052 Short-term investments $ 35,000,000 $ 35,000,000 $ 35,000,000 $ 35,000,000 $ 35,000,000 $ 35,000,000 Accounts receivable $ 53,792,000 $ 56,379,581 $ 58,295,443 $ 60,977,911 $63,086,332 $ 63,086,332 Inventories $ 33,250,000 $ 32,600,349 $ 33,541,411 $ 35,436,329 $ 36,541,720 $ 36,541,720 Other Current Assets $ 12,778,000 $ 12,778,000 $ 12,778,000 $ 12,778,000 $ 12,778,000 $ 12,778,000 Total current assets $ 211,000,000 $ 207,225,566 $ 207,561,130 $ 224,765,608 $ 235,474,104 $ 235,474,104
Gross Property & equipment $ 42,029,000 $ 57,029,000 $ 57,029,000 $ 57,029,000 $ 57,029,000 $ 57,029,000 Accumulated depreciation $ 15,681,000 $ 17,806,875 $ 19,932,750 $ 22,058,625 $ 24,184,500 $ 24,184,500 Net Property & equipment $ 26,348,000 $ 39,222,125 $ 37,096,250 $ 34,970,375 $ 32,844,500 $ 32,844,500 Other Long-Term Assets $ 15,685,000 $ 15,685,000 $ 15,685,000 $ 15,685,000 $ 15,685,000 $ 15,685,000 Total Long-term Assets $ 42,033,000 $ 54,907,125 $ 52,781,250 $ 50,655,375 $ 48,529,500 $ 48,529,500 Total assets $ 253,033,000 $ 262,132,691 $ 260,342,380 $ 275,420,983 $ 284,003,604 $ 284,003,604
Liabilities and Stockholders’ EquityCurrent liabilities:Accounts payable $ 22,788,000 $ 27,215,618 $ 24,425,104 $ 25,804,998 $ 26,609,952 $ 26,609,952 Accrued expenses and other current liabilities $ 10,007,000 $ 10,007,000 $ 10,007,000 $ 10,007,000 $ 10,007,000 $ 10,007,000 Total current liabilities $ 32,795,000 $ 37,222,618 $ 34,432,104 $ 35,811,998 $ 36,616,952 $ 36,616,952
Other long-term liabilities $ 1,271,000 $ 1,271,000 $ 1,271,000 $ 1,271,000 $ 1,271,000 $ 1,271,000 Total Long-term Liabilities $ 1,271,000 $ 1,271,000 $ 1,271,000 $ 1,271,000 $ 1,271,000 $ 1,271,000 Total Liabilities $ 34,066,000 $ 38,493,618 $ 35,703,104 $ 37,082,998 $ 37,887,952 $ 37,887,952
Stockholders’ equity: $ 24,000 $ 24,000 $ 24,000 $ 24,000 $ 24,000 $ 24,000
Additional paid-in capital $ 92,192,000 $ 92,192,000 $ 92,192,000 $ 92,192,000 $ 92,192,000 $ 92,192,000 Retained earnings $ 123,679,000 $ 128,351,073 $ 129,351,276 $ 143,049,985 $ 150,827,652 $ 150,827,652 Accumulated other comprehensive income $ 3,072,000 $ 3,072,000 $ 3,072,000 $ 3,072,000 $ 3,072,000 $ 3,072,000 Total stockholders’ equity $ 218,967,000 $ 223,639,073 $ 224,639,276 $ 238,337,985 $ 246,115,652 $ 246,115,652
Total liabilities and stockholders’ equity $ 253,033,000 $ 262,132,691 $ 260,342,380 $ 275,420,983 $ 284,003,604 $ 284,003,604
Common stock, $0.001 par value
Adjusted Annual Plan2009 2010
Income Statement Year End Growth Project Total Q1 Q2 Q3 Q4 TotalRevenues:Total Product Revenues $ 280,639,000 $308,702,900 $18,000,009 $326,702,909 $ 79,650,902 $ 64,137,602 $ 107,807,602 $ 75,106,802 $ 326,702,909 Cost of goods sold $ 139,844,000 $154,351,450 $9,000,005 $163,351,455 $ 39,825,451 $ 32,068,801 $ 53,903,801 $ 37,553,401 $ 163,351,455 Gross profit $ 140,795,000 $154,351,450 $9,000,005 $163,351,455 $ 39,825,451 $ 32,068,801 $ 53,903,801 $ 37,553,401 $ 163,351,455 Operating expenses:Selling, general and administrative expenses $ 104,487,000 $113,890,830 $3,100,000 $116,990,830 $31,332,060 $28,951,500 $32,194,250 $24,513,020 $116,990,830 Depreciation Expense $ 6,360,000 $6,360,000 $2,143,500 $8,503,500 $ 2,125,875 $ 2,125,875 $ 2,125,875 $ 2,125,875 $8,503,500 Net S,G&A $ 110,847,000 $120,250,830 $5,243,500 $125,494,330 $ 33,457,935 $ 31,077,375 $ 34,320,125 $ 26,638,895 $125,494,330 Operating income $ 29,948,000 $34,100,620 $3,756,505 $37,857,124 $ 6,367,516 $ 991,426 $ 19,583,676 $ 10,914,506 $ 37,857,125
Total other income (loss) $ 1,892,000 $1,892,000 $0 $1,892,000 $ 473,000 $ 473,000 $ 473,000 $ 473,000 $ 1,892,000 Income before provision for income taxes $ 31,840,000 $35,992,620 $3,756,505 $39,749,124 $ 6,840,516 $ 1,464,426 $ 20,056,676 $ 11,387,506 $ 39,749,125 Provision for income taxes $ 11,144,000 $11,409,661 $1,190,812 $12,600,472 $ 2,168,444 $ 464,223 $ 6,357,966 $ 3,609,839 $ 12,600,472
Net income $ 20,696,000 $24,582,959 $2,565,693 $27,148,652 $ 4,672,073 $ 1,000,203 $ 13,698,710 $ 7,777,667 $ 27,148,652
Net income per share:Basic 0.85 1.11 0.19 0.04 0.56 0.32 1.11Diluted 0.85 1.11 0.19 0.04 0.56 0.32 1.11Weighted-average shares outstanding:Basic 24,374,362 24,374,362 24,374,362 24,374,362 24,374,362 24,374,362 24,374,362Diluted 24,374,362 24,374,362 24,374,362 24,374,362 24,374,362 24,374,362 24,374,362
2009 2010
Balance Sheet Year End Growth Project Total Q1 Q2 Q3 Q4 TotalAssetsCurrent assets:Cash and cash equivalents $ 76,180,000 $ 102,381,861 $ (14,313,809) $ 88,068,052 $ 70,467,635 $ 67,946,276 $ 80,573,368 $ 88,068,052 $ 88,068,052 Short-term investments $ 35,000,000 $ 35,000,000 $ 35,000,000 $ 35,000,000 $ 35,000,000 $ 35,000,000 $ 35,000,000 $ 35,000,000 Accounts receivable $ 53,792,000 $ 59,610,530 $ 3,475,802 $ 63,086,332 $ 56,379,581 $ 58,295,443 $ 60,977,911 $63,086,332 $ 63,086,332 Inventories $ 33,250,000 $ 34,528,419 $ 2,013,301 $ 36,541,720 $ 32,600,349 $ 33,541,411 $ 35,436,329 $ 36,541,720 $ 36,541,720 Other Current Assets $ 12,778,000 $ 12,778,000 $ 12,778,000 $ 12,778,000 $ 12,778,000 $ 12,778,000 $ 12,778,000 $ 12,778,000 Total current assets $ 211,000,000 $ 244,298,811 $ (8,824,707) $ 235,474,104 $ 207,225,566 $ 207,561,130 $ 224,765,608 $ 235,474,104 $ 235,474,104
Gross Property & equipment $ 42,029,000 $ 42,029,000 $ 15,000,000 $ 57,029,000 $ 57,029,000 $ 57,029,000 $ 57,029,000 $ 57,029,000 $ 57,029,000 Accumulated depreciation $ 15,681,000 $ 22,041,000 $ 2,143,500 $ 24,184,500 $ 17,806,875 $ 19,932,750 $ 22,058,625 $ 24,184,500 $ 24,184,500 Net Property & equipment $ 26,348,000 $ 19,988,000 $ 12,856,500 $ 32,844,500 $ 39,222,125 $ 37,096,250 $ 34,970,375 $ 32,844,500 $ 32,844,500 Other Long-Term Assets $ 15,685,000 $ 15,685,000 $ 15,685,000 $ 15,685,000 $ 15,685,000 $ 15,685,000 $ 15,685,000 $ 15,685,000 Total Long-term Assets $ 42,033,000 $ 35,673,000 $ 12,856,500 $ 48,529,500 $ 54,907,125 $ 52,781,250 $ 50,655,375 $ 48,529,500 $ 48,529,500 Total assets $ 253,033,000 $ 279,971,811 $ 4,031,793 $ 284,003,604 $ 262,132,691 $ 260,342,380 $ 275,420,983 $ 284,003,604 $ 284,003,604
Liabilities and Stockholders’ EquityCurrent liabilities:Accounts payable $ 22,788,000 $ 25,143,851 $ 1,466,101 $ 26,609,952 $ 27,215,618 $ 24,425,104 $ 25,804,998 $ 26,609,952 $ 26,609,952 Accrued expenses and other current liabilities $ 10,007,000 $ 10,007,000 $ 10,007,000 $ 10,007,000 $ 10,007,000 $ 10,007,000 $ 10,007,000 $ 10,007,000 Total current liabilities $ 32,795,000 $ 35,150,851 $ 1,466,101 $ 36,616,952 $ 37,222,618 $ 34,432,104 $ 35,811,998 $ 36,616,952 $ 36,616,952
Other long-term liabilities $ 1,271,000 $ 1,271,000 $ 1,271,000 $ 1,271,000 $ 1,271,000 $ 1,271,000 $ 1,271,000 $ 1,271,000 Total Long-term Liabilities $ 1,271,000 $ 1,271,000 $ 1,271,000 $ 1,271,000 $ 1,271,000 $ 1,271,000 $ 1,271,000 $ 1,271,000 Total Liabilities $ 34,066,000 $ 36,421,851 $ 1,466,101 $ 37,887,952 $ 38,493,618 $ 35,703,104 $ 37,082,998 $ 37,887,952 $ 37,887,952
Stockholders’ equity: $ 24,000 $ 24,000 $ 24,000 $ 24,000 $ 24,000 $ 24,000 $ 24,000 $ 24,000
Additional paid-in capital $ 92,192,000 $ 92,192,000 $ 92,192,000 $ 92,192,000 $ 92,192,000 $ 92,192,000 $ 92,192,000 $ 92,192,000 Retained earnings $ 123,679,000 $ 148,261,959 $ 2,565,693 $ 150,827,652 $ 128,351,073 $ 129,351,276 $ 143,049,985 $ 150,827,652 $ 150,827,652 Accumulated other comprehensive income $ 3,072,000 $ 3,072,000 $ 3,072,000 $ 3,072,000 $ 3,072,000 $ 3,072,000 $ 3,072,000 $ 3,072,000 Total stockholders’ equity $ 218,967,000 $ 243,549,959 $ 2,565,693 $ 246,115,652 $ 223,639,073 $ 224,639,276 $ 238,337,985 $ 246,115,652 $ 246,115,652
Total liabilities and stockholders’ equity $ 253,033,000 $ 279,971,811 $ 4,031,793 $ 284,003,604 $ 262,132,691 $ 260,342,380 $ 275,420,983 $ 284,003,604 $ 284,003,604
Common stock, $0.001 par value
Strategic Long-Range PlanIncome Statement 2009 2010 2011Revenues:Total Product Revenues $280,639,000 $326,702,909 $363,573,202 Cost of goods sold $139,844,000 $163,351,455 $181,786,601 Gross profit $140,795,000 $163,351,455 $181,786,601 Operating expenses:Selling, general and administrative expenses $104,487,000 $116,990,830 $131,620,005 Depreciation Expense $6,360,000 $8,503,500 $10,033,500 Net S,G&A $110,847,000 $125,494,330 $141,653,505 Operating income $29,948,000 $37,857,124 $40,133,096
Total other income (loss) $1,892,000 $1,892,000 $1,892,000 Income before provision for income taxes $31,840,000 $39,749,124 $42,025,096 Provision for income taxes $11,144,000 $12,600,472 $13,321,956
Net income $20,696,000 $27,148,652 $28,703,141
Net income per share:Basic 0.85 1.11 1.18Diluted 0.85 1.11 1.18Weighted-average shares outstanding:Basic 24,374,362 24,374,362 24,374,362Diluted 24,374,362 24,374,362 24,374,362
Balance Sheet 2009 2010 2011AssetsCurrent assets:Cash and cash equivalents $ 76,180,000 $ 88,068,052 $ 118,564,182 Short-term investments $ 35,000,000 $ 35,000,000 $ 35,000,000 Accounts receivable $ 53,792,000 $ 63,086,332 $ 70,205,985 Inventories $ 33,250,000 $ 36,541,720 $ 40,665,663 Other Current Assets $ 12,778,000 $ 12,778,000 $ 12,778,000 Total current assets $ 211,000,000 $ 235,474,104 $277,213,830
Gross Property & equipment $ 42,029,000 $ 57,029,000 $ 57,029,000 Accumulated depreciation $ 15,681,000 $ 24,184,500 $ 34,218,000 Net Property & equipment $ 26,348,000 $ 32,844,500 $22,811,000 Other Long-Term Assets $ 15,685,000 $ 15,685,000 $ 15,685,000 Total Long-term Assets $ 42,033,000 $ 48,529,500 $38,496,000 Total assets $ 253,033,000 $ 284,003,604 $315,709,830
Liabilities and Stockholders’ EquityCurrent liabilities:Accounts payable $ 22,788,000 $ 26,609,952 $ 29,613,037 Accrued expenses and other current liabilities $ 10,007,000 $ 10,007,000 $ 10,007,000 Total current liabilities $ 32,795,000 $ 36,616,952 $39,620,037
Other long-term liabilities $ 1,271,000 $ 1,271,000 $ 1,271,000 Total Long-term Liabilities $ 1,271,000 $ 1,271,000 $1,271,000 Total Liabilities $ 34,066,000 $ 37,887,952 $40,891,037
Stockholders’ equity: $ 24,000 $ 24,000 $ 24,000
Additional paid-in capital $ 92,192,000 $ 92,192,000 $ 92,192,000 Retained earnings $ 123,679,000 $ 150,827,652 $ 179,530,793 Accumulated other comprehensive income $ 3,072,000 $ 3,072,000 $ 3,072,000 Total stockholders’ equity $ 218,967,000 $ 246,115,652 $274,818,793
Total liabilities and stockholders’ equity $ 253,033,000 $ 284,003,604 $ 315,709,830
Common stock, $0.001 par value
Strategic Long-Range Plan2012
$405,530,525 $202,765,263 $202,765,263
$146,965,805 $8,983,500
$155,949,305 $46,815,957
$1,892,000 $48,707,957 $15,440,422
$33,267,535
1.361.36
24,374,36224,374,362
2012
$ 151,437,755 $ 35,000,000 $ 78,307,944 $ 45,358,589 $ 12,778,000
$322,882,289
$ 57,029,000 $ 43,201,500
$13,827,500 $ 15,685,000
$29,512,500 $352,394,789
$ 33,030,461 $ 10,007,000
$43,037,461
$ 1,271,000 $1,271,000
$44,308,461
$ 24,000 $ 92,192,000 $ 212,798,328 $ 3,072,000
$308,086,328
$ 352,394,789
Strategic Long-Range PlanIncome Statement 2009 2010 2010
OrganicGrowth ProjectTotal Product Revenues $280,639,000 $308,702,900 $18,000,009 Cost of goods sold $139,844,000 $154,351,450 $9,000,005 Gross profit $140,795,000 $154,351,450 $9,000,005 Operating expenses:Selling, general and administrative expenses $104,487,000 $113,890,830 $3,100,000 Depreciation Expense $6,360,000 $6,360,000 $2,143,500 Net S,G&A $110,847,000 $120,250,830 $5,243,500 Operating income $29,948,000 $34,100,620 $3,756,505
Total other income (loss) $1,892,000 $1,892,000 $0 Income before provision for income taxes $31,840,000 $35,992,620 $3,756,505 Provision for income taxes $11,144,000 $11,409,661 $1,190,812
Net income $20,696,000 $24,582,959 $2,565,693
Net income per share:Basic 0.85Diluted 0.85Weighted-average shares outstanding:Basic 24,374,362Diluted 24,374,362
Balance Sheet 2009 2010 2010
Assets OrganicGrowth Project
Current assets:Cash and cash equivalents $ 76,180,000 $ 102,381,861 -$14,313,809Short-term investments $ 35,000,000 $ 35,000,000 Accounts receivable $ 53,792,000 $59,610,530 $3,475,802Inventories $ 33,250,000 $ 34,528,419 $2,013,301Other Current Assets $ 12,778,000 $ 12,778,000 Total current assets $ 211,000,000 $ 244,298,811 -$8,824,707
Gross Property & equipment $ 42,029,000 $ 42,029,000 $ 15,000,000 Accumulated depreciation $ 15,681,000 $ 22,041,000 $2,143,500 Net Property & equipment $ 26,348,000 $ 19,988,000 $ 12,856,500 Other Long-Term Assets $ 15,685,000 $ 15,685,000 Total Long-term Assets $ 42,033,000 $ 35,673,000 $ 12,856,500 Total assets $ 253,033,000 $ 279,971,811 $ 4,031,793
Liabilities and Stockholders’ EquityCurrent liabilities:Accounts payable $ 22,788,000 $25,143,851 $ 1,466,101 Accrued expenses and other current liabilities $ 10,007,000 $ 10,007,000 Total current liabilities $ 32,795,000 $ 35,150,851 $ 1,466,101
Other long-term liabilities $ 1,271,000 $ 1,271,000 Total Long-term Liabilities $ 1,271,000 $ 1,271,000 Total Liabilities $ 34,066,000 $ 36,421,851 $ 1,466,101
Stockholders’ equity: $ 24,000 $ 24,000
Additional paid-in capital $ 92,192,000 $ 92,192,000 Retained earnings $ 123,679,000 $ 148,261,959 $2,565,693 Accumulated other comprehensive income $ 3,072,000 $ 3,072,000 Total stockholders’ equity $ 218,967,000 $ 243,549,959 $ 2,565,693
Total liabilities and stockholders’ equity $ 253,033,000 $ 279,971,811 $ 4,031,793
Common stock, $0.001 par value
Strategic Long-Range Plan2010 Yr 2 Yr 2 2011 Yr 3
Combined OrganicGrowth Project Combined OrganicGrowth$326,702,909 $339,573,190 $24,000,012 $363,573,202 $373,530,509 $163,351,455 $169,786,595 $12,000,006 $181,786,601 $186,765,255 $163,351,455 $169,786,595 $12,000,006 $181,786,601 $186,765,255
$116,990,830 $127,520,005 $4,100,000 $131,620,005 $143,465,805 $8,503,500 $6,360,000 $3,673,500 $10,033,500 $6,360,000
$125,494,330 $133,880,005 $7,773,500 $141,653,505 $149,825,805 $37,857,124 $35,906,590 $4,226,506 $40,133,096 $36,939,449
$1,892,000 $1,892,000 $0 $1,892,000 $1,892,000 $39,749,124 $37,798,590 $4,226,506 $42,025,096 $38,831,449 $12,600,472 $11,982,153 $1,339,802 $13,321,956 $12,309,569
$27,148,652 $25,816,437 $2,886,704 $28,703,141 $26,521,880
1.11 1.181.11 1.18
24,374,362 24,374,36224,374,362 24,374,362
2010 2011 2011 2011 2012OrganicGrowth Project OrganicGrowth
$88,068,052 $127,658,789 -$9,094,607 $118,564,182 $152,951,208$35,000,000 $35,000,000 $35,000,000 $35,000,000$63,086,332 $65,571,583 $4,634,402 $70,205,985 $72,128,741$36,541,720 $37,981,261 $2,684,401 $40,665,663 $41,779,387$12,778,000 $12,778,000 $12,778,000 $12,778,000
$235,474,104 $278,989,633 -$1,775,803 $277,213,830 $314,637,337
$57,029,000 $ 42,029,000 $ 15,000,000 $57,029,000 $ 42,029,000 $24,184,500 $ 28,401,000 $5,817,000 $34,218,000 $ 34,761,000 $32,844,500 $ 13,628,000 $ 9,183,000 $22,811,000 $ 7,268,000 $15,685,000 $ 15,685,000 $15,685,000 $ 15,685,000 $48,529,500 $ 29,313,000 $ 9,183,000 $38,496,000 $ 22,953,000
$ 284,003,604 $ 308,302,633 $ 7,407,197 $315,709,830 $ 337,590,337
$26,609,952 $27,658,236 $ 1,954,801 $29,613,037 $ 30,424,060 $10,007,000 $ 10,007,000 $10,007,000 $ 10,007,000 $36,616,952 $ 37,665,236 $ 1,954,801 $39,620,037 $ 40,431,060
$1,271,000 $ 1,271,000 $1,271,000 $ 1,271,000 $1,271,000 $ 1,271,000 $1,271,000 $ 1,271,000
$37,887,952 $ 38,936,236 $ 1,954,801 $40,891,037 $ 41,702,060
$24,000 $ 24,000 $ 24,000 $ 24,000 $92,192,000 $ 92,192,000 $ 92,192,000 $ 92,192,000
$150,827,652 $ 174,078,397 $5,452,396 $ 179,530,793 $ 200,600,277 $3,072,000 $ 3,072,000 $ 3,072,000 $ 3,072,000
$246,115,652 $ 269,366,397 $ 5,452,396 $274,818,793 $295,888,277
$284,003,604 $ 308,302,633 $ 7,407,197 $ 315,709,830 $ 337,590,337
Strategic Long-Range PlanYr 3 2012
Project Combined$32,000,016 $405,530,525 $16,000,008 $202,765,263 $16,000,008 $202,765,263
$3,500,000 $146,965,805 $2,623,500 $8,983,500 $6,123,500 $155,949,305 $9,876,508 $46,815,957
$0 $1,892,000 $9,876,508 $48,707,957 $3,130,853 $15,440,422
$6,745,655 $33,267,535
1.361.36
24,374,36224,374,362
2012 2012Project
-$1,513,452 $151,437,755$35,000,000
$6,179,203 $78,307,944$3,579,202 $45,358,589
$12,778,000$8,244,952 $322,882,289
$ 15,000,000 $57,029,000 $8,440,500 $43,201,500
$ 6,559,500 $13,827,500 $15,685,000
$ 6,559,500 $29,512,500 $ 14,804,452 $352,394,789
$ 2,606,401 $33,030,461 $ 10,007,000
$ 2,606,401 $43,037,461
$ 1,271,000 $1,271,000
$ 2,606,401 $44,308,461
$ 24,000 $ 92,192,000
$12,198,051 $ 212,798,328 $ 3,072,000
$ 12,198,051 $308,086,328
$ 14,804,452 $ 352,394,789
Weighted Average Cost of CapitalWACC= E/V * R(e) + D/V * R(D) * (1-Tc)
Cost of Equity:Er=Rf + (Rm-Rf) x βRisk-free Rate R(f)Avg. Market Return R(m): (Avg. S&P 500)Market Risk Premium (Rm-Rf)Beta Coefficient: (yahoo finance)R(e)= Market Value of Equity # of Outstanding SharesStock Price:MVE (E):
Cost Of Debt (D):Current Bonds
Total WACCV: Market value of debt + Market value of equityE/V:D/V:Tax Rate (31.7%)WACC
Weighted Average Cost of CapitalWACC= E/V * R(e) + D/V * R(D) * (1-Tc)
Cost of Equity:
3.3%14.00%10.70%
1.6721.17%
24,300,000$20.50
$498,150,000.00 Cost Of Debt (D):
0Total WACC
$498,150,000.00 1.00
0 0.32
21.17%
Capital StructureCurrent Capital Structure:
Values Current Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 Scenario 6R(e): 21.17% 21.17% 21.17% 21.17% 21.17% 21.17% 21.17%
E/V: 1 0.75 0.50 0.3333 0.25 0.10 0.00
D: 0 0 0 0 0 0 0
D/V: 0 0.25 0.50 0.6667 0.75 0.90 1.00
1-Tc: 0.66 0.66 0.66 0.66 0.66 0.66 0.66
WACC: 21.17% 15.88% 10.58% 7.06% 5.29% 2.12% 0.00%Option 2 use of debt:
Values Current Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 Scenario 6R(e): 21.17% 21.17% 21.17% 21.17% 21.17% 21.17% 21.17%
E/V: 0.998 0.75 0.50 0.3333 0.25 0.10 0.00
D: 2.88% 2.88% 2.88% 2.88% 2.88% 2.88% 2.88%
D/V: 0.20 0.25 0.50 0.6667 0.75 0.90 1.00
1-Tc: 0.66 0.66 0.66 0.66 0.66 0.66 0.66
WACC: 21.51% 16.35% 11.54% 8.32% 6.72% 3.83% 1.90%
V: Total market value= $500,000,000 + $15,000,000 = $515,000,000E: $485,000,000D: 4.37% per bond 10 yr AA
If corporate bonds are 8%, after cost of debt = .08 X (1-T), approximately 5.3% if Tax rate is 34%Need to determine term of bond, 10, 20, 30 years and that it is higher risk (notAAA)
Corporate Bonds 10Yr AA 4.37% 3%
Equity Debt TotalNew WACC 21% 0.09% 20.62%
485000000
To fund $15m project, total market cap becomes $515M. If using debt, 15/515=3%. Equity becomes 97%
If corporate bonds are 8%, after cost of debt = .08 X (1-T), approximately 5.3% if Tax rate is 34%, total market cap becomes $515M. If using debt, 15/515=3%. Equity becomes 97%
Raising Capital Funds
Cost of Investment for project: $15,000,000
Ideal capital structure: If Volcom were to float an offering it would be best to use 100% debt aslisted in our option #2
Equity 0Amount $0 Stock Price: $20.50#of Shares Issued 0
Debt 1.00Amount $15,000,000 #Bonds Issued: 15,000
Indenture Explaination# of Bonds Issued: 15,000 Bonds Issued 15,000Amount of Issue: $15,000,000 The company has issued $15,000,00 worth of bonds.Date of issue: 7/1/2010 The bonds will be sold on 7/1/2010 and will mature onMaturity: 7/1/2030 7/1/2030. Interest is payable annually on June 1 of each Face value: $1,000 year to the person in whose name the bond is registered Coupon rate: 8.30% at close of business on January 1st.Annual coupon: $83.00 Each bondholder will receive $83.00 per bond per year. (8.3% of face value)Offer price: $995.43 Coupon payment dates: 1-Jul Bonds not secured by specific assets.Security: NoneSinking fund: None At any time/ do not have a "deferred call"Call provision: The bonds have a "make-whole" call feature.Call price: Treasury rate Plus 0.15%Rating: Fitch BBB The bonds are in the top grade of investment.
Moody's A2 Negative Covenants include:* The firm cannot pledge any assets to other lenders* The firm cannot sell or lease any major assets without approval of lenderPositive Covenants include:*The company must periodically furnish audited financial statements to lender.
Each bondholder will receive $83.00 per bond per year. (8.3% of face value) 1245 annual int exp
NY Times June 25, 2010 article
Initial Pricing Mark-Up
Base Price Discounted PriceSale Price $27 Initial Markup 23.00%List Price $33.21
Pieces ordered 250,000 250,000
Cash Discount 15%
Savings per Piece $4.98
Total Price $28.23
Sum Total $8,302,500.00 $7,057,125.00
Tax 32%
Shipping and Handling $3,375 $3,375
Total $10,937,767.50 $9,297,608.63
Total Savings: $1,640,158.88
Shipping and Handling per Piece ordered 100 $45.00 Order Minimum1000 $112.50
10,000 $337.50100,000 $1,350.00500,000 $6,750.00 Order Maximum
Termination Costs Assuming Hawiian distributer breaches contract
Cost Items: Percent from Operating ExpensesSalary (Overhead and Office) $310,000.00 7.04%Payroll (taxes included) $31,000.00 0.70%Outside Services $300.00 0.01%Supplies (Office Operation) $75.00 0.00%Repairs / Maintence $210.00 0.00%Advertising $2,000.00 0.05%Vehicle, Deliver and Travel $4,000.00 0.09%Accounting and Legal $12,000.00 0.27%Mortgage $850,000.00 19.31%Telephone/Internet/IT Service $1,500.00 0.03%Utilities $3,000.00 0.07%Insurance $90,000.00 2.04%Taxes $43,000.00 0.98%Depreciation $100,000.00 2.27%Parts:Depreciation $100,000.00 2.27%Assets:Unearned Discount $1,668,802.50 37.91%Equipment Lease $19,000.00 0.43%One Time Costs:Transaction Fees $2,400.00 0.05%Professional Services $5,000.00 0.11%Third Party Contracts:Vehicle Lease $2,000.00 0.05%Litigation $18,000.00 0.41%Consulting Services $30,000.00 0.68%Wind Down Services:Service Continuation $10,000.00 0.23%Professional Services $150,000.00 3.41%
Risk @ 20% $880,401.40
Grand Total of Cost $4,332,688.90