Volcom Reports 2009 Second Quarter Financial Results

COSTA MESA, Calif.--(Business Wire)--
Volcom, Inc. (NASDAQ:VLCM) today announced financial results for the second
quarter ended June 30, 2009.

For the 2009 second quarter, total consolidated revenues were $54.2 million
compared with $72.5 million in the second quarter of 2008. Total revenues in the
company`s U.S. segment, which includes revenues from the U.S., Canada, Japan and
most other international territories outside of Europe, as well as the company`s
branded retail stores, were $43.6 million compared with $60.2 million in the
prior-year period. Total revenues in the company`s Europe segment were $5.9
million compared with $5.9 million in the same period in 2008. Total revenues in
the company`s Electric segment were $4.7 million compared with $6.4 million last
year.

"Despite the continued macro economic challenges in the second quarter, our
focus and drive to maintain the strength of the Volcom brand is resolute and
propelled by our high quality and innovative products," said Richard Woolcott,
Volcom`s chairman and chief executive officer. "Our global presence is stronger
than ever, and that, coupled with the sound management of our balance sheet,
uniquely provides us with the solid foundation to position our company as a
leader in the action sports industry."

Consolidated gross profit for the 2009 second quarter was $26.4 million, equal
to 48.6% of total revenues, compared with $34.8 million, or 48.0% of total
revenues, in the second quarter of 2008.

Selling, general and administrative expenses on a consolidated basis were $25.9
million in the 2009 second quarter versus $27.9 million in the comparable period
in 2008.

Total operating income for the second quarter of 2009 on a consolidated basis
was $504,000, compared with operating income of $6.9 million in the same period
a year ago.

The company`s consolidated effective tax rate for the 2009 second quarter was
28.8% compared with 33.5% for the second quarter of 2008.

Consolidated net income for the 2009 second quarter was $872,000, or $0.04 per
diluted share, compared with $4.8 million, or $0.20 per diluted share in the
comparable period in 2008.

At June 30, 2009, the company had approximately $96.2 million in cash, cash
equivalents and short-term investments, no significant debt and stockholders`
equity of approximately $199.2 million. Net cash provided by operating
activities for the six-month period ended June 30, 2009 was approximately $16.3
million compared with $5.8 million in the prior year period.

2009 Third Quarter Financial Outlook

In putting forth its financial guidance for the 2009 third quarter, the company
noted a sluggish global retail environment amid continued economic weakness. As
such, the company currently expects total consolidated revenues for the 2009
third quarter of approximately $82 million to $85 million and earnings per
diluted share in the range of $0.35 per share to $0.38 per share.

Conference Call Information

The company will host a conference call today at approximately 4:30 p.m. ET to
discuss its financial results and outlook in further detail. The conference call
will be available to interested parties through a live audio Internet broadcast
at www.volcom.com. A telephone playback of the conference call will also be
available until 11:59 p.m. ET, Thursday, August 6, 2009. Listeners should call
(800) 642-1687 (domestic) or (706) 645-9291 (international) and use reservation:
19614002.

About Volcom, Inc.

Volcom is an innovative designer, marketer and distributor of premium quality
young mens and womens clothing, accessories and related products. The Volcom
brand, symbolized by The Stone , is athlete-driven, creative and forward
thinking. Volcom has consistently followed its motto of "youth against
establishment," and the brand is inspired by the energy of youth culture. Volcom
branded products are sold throughout the United States and internationally.
Volcom`s news announcements and SEC filings are available through the company`s
website at www.volcom.com.

Safe Harbor Statement

Certain statements in this press release and oral statements made from time to
time by representatives of the company are forward-looking statements for
purposes of the safe harbor provisions of The Private Securities Litigation
Reform Act of 1995, including statements in connection with or related to any
discussion of or reference to Volcom`s future operations, opportunities or
financial performance. In particular, statements regarding the company`s
guidance and future financial performance contained under the section entitled
2009 Third Quarter Financial Outlook. These forward-looking statements are based
on management`s current expectations but they involve a number of risks and
uncertainties. Volcom`s actual results and the timing of events could differ
materially from those anticipated in the forward-looking statements as a result
of risks and uncertainties, including, without limitation, further softening of
the retail environment, sales of our products by key retailers, including
Pacific Sunwear and Zumiez, changes in fashion trends and consumer preferences,
general economic conditions, the impact of sourcing costs, and additional
factors which are detailed in our filings with the Securities and Exchange
Commission, including the Risk Factors contained in the company`s Annual Report
on Form 10-K, filed with the Securities and Exchange Commission (the "SEC") and
the subsequently filed Quarterly Reports on Form 10-Q, all of which are
available at www.sec.gov. Readers are urged not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. Volcom is
under no obligation, and expressly disclaims any obligation, to update or alter
any forward-looking statements, whether as a result of new information, future
events or otherwise.

VOLCOM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except share and per share data)

Three Months Ended Six Months Ended

June 30,
June 30,
2009 2008 2009 2008
Revenues:
Product revenues $ 53,804 $ 71,917 $ 121,748 $ 151,904
Licensing revenues 412 539 787 1,106
Total revenues 54,216 72,456 122,535 153,010
Cost of goods sold 27,862 37,690 61,799 76,069
Gross profit 26,354 34,766 60,736 76,941
Selling, general and administrative expenses 25,850 27,903 53,884 55,680
Operating income 504 6,863 6,852 21,261
Other income:
Interest income, net 69 254 101 723
Foreign currency gain 651 180 769 23
Total other income 720 434 870 746
Income before provision for income taxes 1,224 7,297 7,722 22,007
Provision for income taxes 352 2,451 2,631 7,821
Net income $ 872 $ 4,846 $ 5,091 $ 14,186

Net income per share:
Basic $ 0.04 $ 0.20 $ 0.21 $ 0.58
Diluted $ 0.04 $ 0.20 $ 0.21 $ 0.58
Weighted average shares outstanding:
Basic 24,350,071 24,333,482 24,348,972 24,329,771
Diluted 24,361,971 24,387,605 24,359,564 24,359,323

VOLCOM, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)

June 30, 2009 December 31, 2008
Assets
Current assets:
Cash and cash equivalents $ 51,244 $ 79,613
Short-term investments 44,933 -
Accounts receivable - net of allowances 48,487 60,914
Inventories 30,160 27,086
Prepaid expenses and other current assets 3,509 2,596
Income taxes receivable 4,037 3,309
Deferred income taxes 5,275 4,947
Total current assets 187,645 178,465
Property and equipment - net 25,852 26,716
Investments in unconsolidated investees 330 330
Deferred income taxes 4,026 4,028
Intangible assets - net 10,575 10,578
Goodwill 629 665
Other assets 762 841
Total assets $ 229,819 $ 221,623

Liabilities and Stockholders` Equity
Current liabilities:
Accounts payable $ 17,875 $ 15,291
Accrued expenses and other current liabilities 12,213 12,027
Current portion of capital lease obligations 62 71
Total current liabilities 30,150 27,389
Long-term capital lease obligations 1 23
Other long-term liabilities 347 414
Income taxes payable - non-current 96 94
Deferred income taxes
Stockholders` equity:
Common stock 24 24
Additional paid-in capital 91,103 90,456
Retained earnings 107,026 101,935
Accumulated other comprehensive income 1,072 1,288
Total stockholders` equity 199,225 193,703
Total liabilities and stockholders` equity $ 229,819 $ 221,623

VOLCOM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)

Six Months Ended

June 30,
2009 2008
Cash flows from operating activities:
Net income $ 5,091 $ 14,186
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 3,496 3,449
Provision for doubtful accounts 2,527 816
Excess tax benefits related to exercise of stock options - (28 )
Loss on disposal of property and equipment 3 27
Stock-based compensation 672 494
Deferred income taxes (318 ) (175 )
Changes in operating assets and liabilities, net of effects of acquisition:
Accounts receivable 6,638 1,443
Inventories (2,922 ) (11,614 )
Prepaid expenses and other current assets (936 ) (946 )
Income taxes receivable/payable (724 ) (971 )
Other assets 68 63
Accounts payable 2,715 1,910
Accrued expenses 42 (2,709 )
Other long-term liabilities (63 ) (150 )
Net cash provided by operating activities 16,289 5,795

Cash flows from investing activities:
Purchase of property and equipment (1,717 ) (3,248 )
Business acquisitions, net of cash acquired (824 ) (26,864 )
Purchase of intangible assets - (306 )
Purchase of short-term investments (44,933 ) (286 )
Sale of short-term investments - 286
Purchase of additional shares in cost method investee - (32 )
Proceeds from sale of property and equipment 2 -
Net cash used in investing activities (47,472 ) (30,450 )

Cash flows from financing activities:
Principal payments capital lease obligations (37 ) (77 )
Proceeds from government grants - 473
Proceeds from exercise of stock options - 219
Excess tax benefits related to exercise of stock options - 28
Net cash (used in) provided by financing activities (37 ) 643

Effect of exchange rate changes on cash 2,851 1,639

Net decrease in cash and cash equivalents (28,369 ) (22,373 )
Cash and cash equivalents - Beginning of period 79,613 92,962
Cash and cash equivalents - End of period $ 51,244 $ 70,589

VOLCOM, INC. AND SUBSIDIARIES

OPERATING SEGMENT INFORMATION (UNAUDITED)
(in thousands)

Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
Total revenues:
United States $ 43,650 $ 60,175 $ 86,070 $ 109,400
Europe 5,886 5,910 27,564 31,063
Electric 4,680 6,371 8,901 12,547
Consolidated $ 54,216 $ 72,456 $ 122,535 $ 153,010

Gross profit:
United States $ 21,249 $ 27,747 $ 41,523 $ 51,654
Europe 2,634 3,401 14,442 18,070
Electric 2,471 3,618 4,771 7,217
Consolidated $ 26,354 $ 34,766 $ 60,736 $ 76,941
Operating income:
United States $ 3,313 $ 9,199 $ 4,784 $ 14,178
Europe (2,215 ) (2,247 ) 3,577 6,792
Electric (594 ) (89 ) (1,509 ) 291
Consolidated $ 504 $ 6,863 $ 6,852 $ 21,261

Volcom, Inc.
Doug Collier, CFO
949-646-2175
or
PondelWilkinson Inc.
Rob Whetstone, 310-279-5963
rwhetstone@pondel.com
Evan Pondel, 310-279-5973
epondel@pondel.com

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