VOLCOM : Reports 2010 Third Quarter Financial Results

Volcom, Inc. (NASDAQ: VLCM) today announced financial results for the third quarter ended September 30, 2010.

For the 2010 third quarter, total consolidated revenues were $104.7 million, compared with $93.9 million in the third quarter of 2009. 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 $64.5 million, compared with $56.8 million in the prior-year period. Total revenues in the company's Europe segment were $28.7 million, compared with $30.2 million in the same period in 2009. Total revenues in the company's Electric segment were $8.9 million, compared with $6.9 million in 2009. Total revenues in the company's Australia segment were $2.6 million.

?Our results for the third quarter are in line with our plan and reinforce our strategy to gain market share on a global level,? said Richard Woolcott, Volcom's chairman and chief executive officer. ?During the first nine-months of this year, we have experienced solid revenue growth in our mens and boys categories, and our business with our core retailers remains very healthy. In other activities, we have launched major branding initiatives, acquired our Australian licensee, acquired distribution operations in Spain, and launched our e-commerce business. We are encouraged by the momentum thus far and I am proud of our team's focus and dedication to building Volcom into a world brand.?

Woolcott also noted that given the company's continued cash flow from operations, strong balance sheet and no long-term debt, Volcom's Board of Directors has determined that a special cash dividend was appropriate and supports the company's commitment to providing shareholder value.

Consolidated gross profit for the 2010 third quarter was $51.9 million, equal to 49.6% of total revenues, compared with $48.5 million, equal to 51.6% of total revenues, in the third quarter of 2009.

Selling, general and administrative expenses on a consolidated basis were $33.9 million in the 2010 third quarter versus $28.8 million in the comparable period in 2009.

Net income for the 2010 third quarter was $13.1 million, or $0.53 per diluted share, compared with $13.3 million, or $0.54 per diluted share, in the third quarter of 2009.

At September 30, 2010 the company had cash, cash equivalents and short-term investments totaling $105 million, and no long-term debt.

Special Dividend

The company also announced that on October 27, the Board of Directors approved a special cash dividend of $1.00 per share payable on each share of the company's outstanding common stock, including any unvested shares of restricted common stock. The special dividend will be payable on November 19, 2010 to stockholders of record at the close of business on November 8, 2010. In accordance with NASDAQ rules, the company's common stock will start trading on an ex-dividend basis beginning November 4, 2010. The aggregate amount of payments to be made in connection with the special dividend will be approximately $24.4 million.

2010 Fourth Quarter Financial Outlook

For the 2010 fourth quarter, the company currently expects total consolidated revenues of approximately $76 million to $79 million, and fully diluted earnings per share amounts in the range of $0.04 to $0.07.

Giving effect to the company's current outlook for the 2010 fourth quarter, Volcom's full year consolidated revenue expectation is between $321 million and $324 million. This translates to diluted earnings per share for 2010 in the range of $0.89 to $0.92.

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 also will be available through 11:59 p.m. ET, Friday, November 5. Listeners should call [phone] (domestic) or [phone] (international) and use reservation number 15128955.

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 2010 Fourth Quarter Financial Outlook are forward-looking statements. 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.

(tables follow)

VOLCOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except share and per share data)
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2010			2009			2010			2009
Revenues:
Product revenues		$	104,213		$	93,356		$	243,196		$	215,103
Licensing revenues			445			560			1,426			1,348
Total revenues			104,658			93,916			244,622			216,451
Cost of goods sold			52,797			45,433			120,933			107,232
Gross profit			51,861			48,483			123,689			109,219
Selling, general and administrative expenses			33,884			28,825			94,657			82,710
Operating income			17,977			19,658			29,032			26,509
Other income:
Interest income, net			66			127			272			229
Gain on investment in unconsolidated investee			39			?			39			?
Foreign currency gain			1,256			222			1,179			991
Total other income			1,361			349			1,490			1,220
Income before provision for income taxes			19,338			20,007			30,522			27,729
Provision for income taxes			6,285			6,750			9,868			9,381
Net income		$	13,053		$	13,257		$	20,654		$	18,348
Net income per share:
Basic		$	0.54		$	0.54		$	0.85		$	0.75
Diluted		$	0.53		$	0.54		$	0.85		$	0.75
Weighted average shares outstanding:
Basic			24,396,899			24,354,208			24,377,222			24,350,725
Diluted			24,431,095			24,367,464			24,421,970			24,361,034

VOLCOM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
		September 30, 2010			December 31, 2009
Assets
Current assets:
Cash and cash equivalents		$	104,950		$	76,180
Short-term investments			---			35,000
Accounts receivable ? net of allowances			81,821			53,792
Inventories			37,024			33,250
Prepaid expenses and other current assets			9,404			4,353
Income taxes receivable			---			725
Deferred income taxes			8,212			7,700
Total current assets			241,411			211,000
Property and equipment ? net			26,543			26,348
Investment in unconsolidated investee			---			330
Deferred income taxes			3,535			3,545
Intangible assets ? net			10,235			9,784
Goodwill			1,341			1,291
Other assets			1,134			735
Total assets		$	284,199		$	253,033
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable		$	24,328		$	22,788
Accrued expenses and other current liabilities			15,168			9,957
Income taxes payable			3,422			---
Current portion of capital lease obligations			17			50
Total current liabilities			42,935			32,795
Long-term capital lease obligations			27			---
Other long-term liabilities			1,257			1,203
Income taxes payable – non-current			23			68
Stockholders' equity:
Common stock			24			24
Additional paid-in capital			94,279			92,192
Retained earnings			144,334			123,679
Accumulated other comprehensive income			1,320			3,072
Total stockholders' equity			239,957			218,967
Total liabilities and stockholders' equity		$	284,199		$	253,033

VOLCOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
		Nine Months Ended
		September 30,
			2010				2009
Cash flows from operating activities:
Net income		$	20,654			$	18,348
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			4,645				5,034
Gain on investment in unconsolidated investee			(39	)			?
Provision for doubtful accounts			173				2,434
Excess tax benefits related to exercise of stock options			(51	)			?
Loss on disposal of property and equipment			35				3
Stock-based compensation			1,514				1,246
Deferred income taxes			(487	)			(963	)
Changes in operating assets and liabilities, net of effects of acquisition:
Accounts receivable			(24,562	)			(13,574	)
Inventories			376				5,032
Prepaid expenses and other current assets			(4,149	)			(407	)
Income taxes receivable/payable			4,182				6,683
Other assets			(351	)			31
Accounts payable			800				(5,445	)
Accrued expenses and other current liabilities			4,035				1,040
Other long-term liabilities			72				(96	)
Net cash provided by operating activities			6,847				19,366
Cash flows from investing activities:
Purchase of property and equipment			(4,286	)			(3,406	)
Business acquisitions, net of cash acquired			(2,304	)			(897	)
Purchase of short-term investments			(20,000	)			(64,933	)
Sale of short-term investments			55,000				24,944
Proceeds from sale of property and equipment			38				6
Net cash provided by (used in) investing activities			28,448				(44,286	)
Cash flows from financing activities:
Principal payments capital lease obligations			(12	)			(65	)
Proceeds from exercise of stock options			523				?
Excess tax benefits related to exercise of stock options			51				?
Net cash provided by (used in) financing activities			562				(65	)
Effect of exchange rate changes on cash			(7,087	)			4,701
Net increase (decrease) in cash and cash equivalents			28,770				(20,284	)
Cash and cash equivalents ? Beginning of period			76,180				79,613
Cash and cash equivalents ? End of period		$	104,950			$	59,329

VOLCOM, INC. AND SUBSIDIARIES
OPERATING SEGMENT INFORMATION (UNAUDITED)
(in thousands)
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2010			2009			2010				2009
Total revenues:
United States		$	64,487		$	56,769		$	163,513		$	142,839
Europe			28,672			30,250			57,420			57,814
Electric			8,911			6,897			21,101			15,798
Australia			2,588			---			2,588			---
Consolidated		$	104,658		$	93,916		$	244,622		$	216,451
Gross profit:
United States		$	29,261		$	28,350		$	77,409		$	69,874
Europe			15,971			16,016			32,611			30,457
Electric			5,466			4,117			12,506			8,888
Australia			1,163			---			1,163			---
Consolidated		$	51,861		$	48,483		$	123,689		$	109,219
Operating income (loss):
United States		$	6,354		$	9,017		$	11,624		$	13,801
Europe			9,653			9,730			14,725			13,306
Electric			1,885			911			2,598			(598	)
Australia			85			---			85			---
Consolidated		$	17,977		$	19,658		$	29,032		$	26,509

Volcom, Inc.
Doug Collier, CFO
949-646-2175
or
PondelWilkinson Inc.
Rob Whetstone, 310-279-5963
[e-mail]