FOOL CONFERENCE CALL SYNOPSIS*
By Debora Tidwell (MF Debit)

Quiksilver, Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: QUIK)") else Response.Write("(NASDAQ: QUIK)") end if %>
1740 Monrovia Avenue
Costa Mesa, CA 92627
(714) 645-1395
http://www.quiksilver.com

UNION CITY, Ca., October 27, 1996/FOOLWIRE/ --- Quiksilver held their October analyst conference call on Wednesday, October 23rd. The subjects covered a discussion of their current business, their domestic and European bookings for Spring, the status of their budget process for 1997 and a strategy for 1997 financial models for Quiksilver, comments on the progress on replacing Randy Herrel and the current status of his succession, and a general overview of the company's business going forward.

STATUS OF THE CURRENT QUIKSILVER BUSINESS. Their label is strong and their business, in general, is good. October is not a particularly good month at retail. Business is somewhat tough and slow in general. Retailers are running leaner on tighter inventories and Fall is not traditionally a very good reorder season. Having said all that, the Quiksilver Fall line is currently in the stores and their sell-through was good in August and September. Stores like Pacific Sunwear, Macy's, and The Bon all reported very strong performance from Quiksilver. Their reorders for Fall were down slightly for August and September, but they estimate that the total reorder business will be flat by the end of the fourth quarter when compared to fourth quarter of last year.

They are beginning to ship Holiday and the styles, colors, and fabrications all look great on the product going into the stores. They are also shipping Snow to their account base and it also looks great. They will be reporting sell-through information on Holiday and Snow at the next conference call. So, with all this information, they are still comfortable with the range of current earnings estimates for fourth quarter and the full year.

They opened 5 Quiksils in the fourth quarter in the USA and they opened 8 Quiksils in Europe for a total of 13 in the fourth quarter. This brings their worldwide total to 218 Quiksils. There were no new Boardriders Clubs in the fourth quarter in the USA or Europe and the total remains at 22. Mexico opened one new store in the fourth quarter bringing their total up to 8. Additionally, they have one Boardriders Club for Miami Beach set for a Q2 opening and their newest concept the Quiksilver Roxy store will open by calendar year end 1996 in Honolulu Hawaii.

Boardriders Club sales for the first two months of the fourth quarter were down slightly compared to last year with Quiksils up about 15% for the same two months.

BOOKINGS FOR SPRING. Their Spring line, across all divisions, both here and in Europe look great and is showing nicely in their pre-bookings. During the selling process they had very successful pre-line showings, trade shows, and meetings around the country.

All the paper is not in yet, but from reviewing their top 100 account list (which represents about 50% of the business), doing an analysis of their "by rep" reports, and from the amount of business they have in-hand presently, they are very pleased. Na Pali (Quiksilver Europe) is up about 12-15% from last year already and domestically Quiksilver young men's is up 10.5% to date just on the pre-book with more paper still coming in. Quiksilver boy's domestic is up over 12%, corporate program (private label) is up over 8%, and Roxy (although their deadline is not for a couple of days) between the paper they have in hand or confirmed they are estimating Roxy bookings to be up over 45% just in the bookings number. Total Spring bookings domestically are tracking 10-15% higher than last year. This composite number seems low, but it is due to the fact that the product mix is heavily weighted in the young men's area. There is more paper coming in and that would be additive to the composite numbers. They are already chasing the runaway styles in production.

The majority of their sales reps beat the internal corporate goals by their deadline, which hasn't happened in about 6 seasons. In the past 5 or 6 seasons, they always come out with an internal corporate goal and a strategy and the reps have not come up to that number until this Spring. Usually, by the deadline, there is still a whole bunch of paper out there and it takes several weeks after the deadline to come anywhere near to the corporate plan. And this time the majority of the reps hit it by the deadline which is really strong evidence that the paper is there, in hand, the line was received very strongly and they think Spring is going to be real strong season. Then you have to plan reorder business on top of that to get the final estimate which is the company plan. The reason for the deadline is really for production so they can start planning the buy. A lot of it is already bought, but if there is any chasing to be done, or styles that are runaways, or styles that aren't booking, they can adjust and monitor it. But paper still comes in all the way up until the time they start shipping the Spring line.

Also in the bookings is some hidden evidence that their strategy of growing the Quiksilver label to the inland empire or the more non-core accounts is working. They have designed certain key basic pieces for this market and their national advertising campaign, along with the Quikfix book, is laying the foundation for this strategy. An example of that is Pacific Sunwear whose bookings are up 20% just in the pre-book number. Quiksilver has had some great meetings with Pacific Sunwear the last several weeks and Pacific Sunwear is very excited about adding Roxy to their stores (which will be their lead Juniors line in the stores) and they also have some aggressive growth plans for Quiksilver there. Brass Buckle is way up over last year, and other accounts such as Macy's West and Hecht's are up nicely from last year.

As far as the additional 30-day terms for the retailers to book up, they have run that for 3 or 4 seasons now and it has worked very successfully for them. So, they do book up and that worked from Spring 1996 to Summer 1996 to Fall 1996, that incentive program helped to get pre-book orders up over what they would have been and it also helps reorders because they get more into the store and typically earlier so the selling is better. The more you get into the store and the earlier you get it in there, the better sell-through you have, and that tends to result in better reorders. Quiksilver has worked on this program for four seasons and it has worked quite well in surf and specialty stores. 30-day terms are not an issue in department stores because they really don't care about terms. It is very enticing for retailers that are more cash-flow oriented.

EXPENSES WILL BE UP NEXT YEAR. Keep in mind that they are also planning expenses up next year to support these up revenues, so they are not planning for any margin improvements over last year. Specifically, they are planning to spend more money in 1997 on marketing and advertising, in merchandizing, production, customer service, and accounting people, and in their MIS and information technology areas. Plus, they will have the added expense of a facility upgrade and a partial relocation of their distribution facility. Where they are now is just not big enough so they are pursuing a distribution facility in Huntington Beach California and they are going to convert their current facility into more offices. They will be looking at incremental spending in Europe as well, and mostly in marketing and people.

That is why they keep referring to the budget process. They are going through the plan right now for 1997 which was scheduled to be finalized in their board meeting on Thursday. They asked, therefore, that analysts not change any of their earnings expectations based on their strong Spring bookings yet.

COMMENTS ON RANDY HERREL LEAVING AND THE PLANNED SUCCESSION. [Editor's note: Randy Herrel is Quiksilver's President, COO, and Secretary (and, as such, a director of the company). Randy was credited with turning the company around in the early 1990s after they took a big hit from the emerging popularity of "grunge" fashion. Last week the company announced that he would be leaving to join Ashworth Inc. (a leading manufacturer of golf-inspired sportswear) as their President and CEO, to fulfill his personal career goal of a CEO position at a public company.] They are taking a few days to really outline in detail the type of skills and type of people they are looking for to replace Randy's responsbilities within the company. They are investigating different structures and organization charts. They have been meeting with all of the senior executives and with the board of directors on this subject.

The way they feel today, they think that Steve Brink can shoulder most or all of the financial and CFO obligations and he is already talking to Wall Street now as a face and a voice behind the numbers and strategy of Quiksilver.

They will then be looking for a very senior operations person from the apparel world that can oversee certain other parts of Randy's job description and they are closing in quickly on a couple of candidates for the Senior National Sales Manager post which is something that was going to take a huge burden off of Randy had he stayed. There are plenty of outstanding candidates around and they have a number of good resumes in hand and have already talked to three people they know very well who are available and they think would be very good. If necessary, they can certainly contact one of the many search firms who have contacted them.

As they said last week, they don't think the company will skip a beat as the fourth quarter of 1996 and first quarter of 1997 are what they are, which is part of Randy's tenure and ongoing game plan. And their Spring bookings signal the strong health of the company going forward. They certainly plan to replace the missing parts of Randy quickly but it is not something that has to be done overnight. In the meantime, Randy will be there the next 30 days to help Quiksilver finish and close their year-end, finish up their budgets and the plan for 1997, and to help get Steve Brink acclimated to his role.

SUMMARY AND OTHER MISCELLANEOUS STUFF. So, overall the outlook is very positive for the company going forward, both domestically as well as with their international business. Another exciting bit of information is that you can now find Quiksilver on the World Wide Web. Their website address is http://www.quiksilver.com/ and they encouraged people to look at it because they think it is exciting, fun, and captures the essence of the Quiksilver lifestyle. Also, the current plan is to release year-end earnings on Thursday, December 19th. Because of Thanksgiving week in November and certain company travel plans in the schedule the week before, there will probably be no conference call in November. As far as the stock buyback program, the company has purchased 80,000 shares so far at an average price of about $25 per share.

* A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. Note: Statements made by a company other than historical information may constitute forward-looking statements for which the company can claim protection under the Safe Harbor Act. Please consult the company's filings with the SEC for information on risk factors which might cause actual results to differ materially from the information contained in these forward-looking statements.