##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington D.C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended October 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number 1-14229
 QUIKSILVER, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    33-0199426(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)
 15202 Graham Street
Huntington Beach, California92649
 (714) 889-2200
  Title of
    
    Name of each exchangeeach class
    
    on which registeredCommon Stock
    
    New York Stock Exchange
 None
 Yes þ No o
 Yes o No þ
 Yes þ No o
 þ
  Large Accelerated Filer þ Accelerated Filer o Non-Accelerated Filer o
 Yes o No þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



TABLE OF CONTENTS
 PagePART IItem 1.
    
    BUSINESSIntroduction
    
    
    1Segment Information
    
    
    2Products and Brands
    
    
    2Product Categories
    
    
    3Product Design
    
    
    3Promotion and Advertising
    
    
    4Customers and Sales
    
    
    4Retail Concepts
    
    
    6Seasonality
    
    
    7Production and Raw Materials
    
    
    7Imports and Import Restrictions
    
    
    8Trademarks, Licensing Agreements and Patents
    
    
    8Competition
    
    
    9Future Season Orders
    
    
    9Employees
    
    
    9Environmental Matters
    
    
    10Available Information
    
    
    10Item 1A.
    
    RISK FACTORS
    
    
    10Item 1B.
    
    UNRESOLVED STAFF COMMENTS
    
    
    17Item 2.
    
    PROPERTIES
    
    
    18Item 3.
    
    LEGAL PROCEEDINGS
    
    
    18Item 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
    
    
    18PART IIItem 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    19Item 6.
    
    SELECTED FINANCIAL DATA
    
    
    19Item 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    21Item 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
    
    
    35Item 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    36Item 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    36Item 9A.
    
    CONTROLS AND PROCEDURES
    
    
    36Item 9B.
    
    OTHER INFORMATION
    
    
    39PART IIIItem 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
    
    
    40Item 11.
    
    EXECUTIVE COMPENSATION
    
    
    40Item 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    40Item 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
    
    
    40Item 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    40PART IVItem 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    41INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
    
    
    42SIGNATURES
    
    
    80EXHIBIT 2.3EXHIBIT 2.4EXHIBIT 10.9EXHIBIT 10.35EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2




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##### Table of Contents



PART I
 
 Item 1. BUSINESS
  
 Introduction
  Quiksilver
  Boardriders Club
 Quiksilver Roxy Quiksilvers Quiksilver
  1




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##### Table of Contents



Segment Information
  
 Products and Brands
 Quiksilver Roxy DCs Rossignol,
Dynastar, Look, Lange Kerma
 Quiksilver
 Quiksilver Quiksilver Quiksilveredition Quiksilver
 Roxy
 Roxy Teenie Wahine Roxy Girl Roxy Roxy
 Rossignol and Other Wintersports Brands
 Rossignol Rossignol
  
    
    DynastarDynastarsymbolizes technically specific skis for committed skiers to use in all
the different experiences of alpine sports. Dynastarhas a heritage of racing and
performance.
    
    LangeLangeis a ski boot brand, combining its race boot prowess with a commitment to
building better, more comfortable boots for dedicated skiers of every type.
    
    LookLookbindings have a winning history in alpine ski racing. The focus of the Look
brand is the production of high quality, innovative release bindings that perform at the
highest level.
    
    KermaWe produce poles that complement our ski products from both a technical and
aesthetic viewpoint under the Kermabrand.
    
    Lib Technologies, Gnu, Bent MetalWe address the core snowboard market through our Lib
Technologiesand Gnubrands of snowboards and accessories and Bent Metalsnowboard bindings.
 2




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DC
 DC DCs DC
 Other Apparel Brands
  
    
    Raisins, Radio Fiji, LeilaniRaisinsand Radio Fijiare swimwear labels for the juniors
market, while Leilaniis our contemporary swimwear label.
    
    HawkTony Hawk, the world-famous skateboarder, is the inspiration for our Hawkbrand. Our
Hawkbrand targets boys and young men who identify with the skateboarding lifestyle and
recognize Tony Hawk from his broad media and video game exposure.
 
 Product Categories
  Percentage of Revenues2007(1)
    
    
    2006(1)
    
    
    2005(1)Apparel
    
    
    58
    %
    
    
    57
    %
    
    
    68
    %Footwear
    
    
    15
    
    
    
    12
    
    
    
    11Wintersports equipment
    
    
    14
    
    
    
    19
    
    
    
    9Accessories
    
    
    13
    
    
    
    12
    
    
    
    12100
    %
    
    
    100
    %
    
    
    100
    %
 
 (1)
    
    These percentages were significantly impacted by our acquisition of Rossignol in
July 2005.
   
 Product Design
   3




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Promotion and Advertising
   Quiksilvers Big Wave Invitational Roxy Pro Slopestyle Pro Bowlriders DC Quiksilver X-Games Ski World Cup, Ski World Cup, Winter Olympics, Freeride World Cup Winter
X-Games
 Surfer Surfing Snowboard Canada Transworld
Skateboarding Powder, Skieur Freeride
 
 Customers and Sales
  Boardriders Clubs
 4




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##### Table of Contents



Quiksilver Roxy Roxy Quiksilver DC Raisins Leilani Radio Fiji Rossignol Dynastar Look Lange Kerma Lib Technologies, Bent Metal Gnu Quiksilver, Roxy and DC.
   Percentage of RevenuesDistribution Channel
    
    Americas
    
    
    Europe
    
    
    Asia/Pacific
    
    
    ConsolidatedCore market shops
    
    
    26
    %
    
    
    36
    %
    
    
    76
    %
    
    
    36
    %Specialty stores
    
    
    44
    
    
    
    42
    
    
    
    15
    
    
    
    40Department stores
    
    
    18
    
    
    
    4
    
    
    
    9
    
    
    
    10U.S. exports
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    6Distributors
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    8Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Geographic segment
    
    
    45
    %
    
    
    44
    %
    
    
    11
    %
    
    
    100
    %
    5




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Percentage of RevenuesGeographic Region
    
    2007
    
    
    2006
    
    
    2005United States
    
    
    38
    %
    
    
    36
    %
    
    
    40
    %Other Americas
    
    
    7
    
    
    
    7
    
    
    
    6France
    
    
    15
    
    
    
    16
    
    
    
    15United Kingdom and Spain
    
    
    12
    
    
    
    11
    
    
    
    12Other European countries
    
    
    17
    
    
    
    19
    
    
    
    14Asia/Pacific
    
    
    11
    
    
    
    11
    
    
    
    13Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
   
 Retail Concepts
 Quiksilver Boardriders Clubs Quiksilver Roxy Roxy Quiksilver Youth Andaska Rossignol Quiksilver Roxy
 Boardriders Clubs.
 Number of StoresAmericas
    
    
    Europe
    
    
    Asia/Pacific
    
    
    CombinedCompany
    
    
    
    
    
    
    Company
    
    
    
    
    
    
    Company
    
    
    
    
    
    
    CompanyStore Concept
    
    Owned
    
    
    Licensed
    
    
    Owned
    
    
    Licensed
    
    
    Owned
    
    
    Licensed
    
    
    Owned
    
    
    LicensedBoardriders
Clubs
    
    
    50
    
    
    
    16
    
    
    
    81
    
    
    
    148
    
    
    
    34
    
    
    
    20
    
    
    
    165
    
    
    
    184Shop-in-shops
    
    
    
    
    
    
    
    
    
    
    59
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    81
    
    
    
    Roxystores
    
    
    8
    
    
    
    1
    
    
    
    10
    
    
    
    11
    
    
    
    13
    
    
    
    4
    
    
    
    31
    
    
    
    16Outlet stores
    
    
    50
    
    
    
    
    
    
    
    29
    
    
    
    2
    
    
    
    25
    
    
    
    1
    
    
    
    104
    
    
    
    3Other stores
    
    
    3
    
    
    
    2
    
    
    
    22
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    4111
    
    
    
    19
    
    
    
    201
    
    
    
    163
    
    
    
    94
    
    
    
    25
    
    
    
    406
    
    
    
    207
 6




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Seasonality
  Consolidated RevenuesDollar amounts in thousands
    
    2007
    
    
    2006
    
    
    2005Quarter ended January 31
    
    $
    528,677
    
    
    
    22
    %
    
    $
    518,558
    
    
    
    24
    %
    
    $
    342,142
    
    
    
    20
    %Quarter ended April 30
    
    
    557,227
    
    
    
    23
    
    
    
    466,150
    
    
    
    21
    
    
    
    425,593
    
    
    
    25Quarter ended July 31
    
    
    560,930
    
    
    
    23
    
    
    
    483,696
    
    
    
    22
    
    
    
    372,488
    
    
    
    21Quarter ended October 31
    
    
    779,201
    
    
    
    32
    
    
    
    731,830
    
    
    
    33
    
    
    
    594,305
    
    
    
    34$
    2,426,035
    
    
    
    100
    %
    
    $
    2,200,234
    
    
    
    100
    %
    
    $
    1,734,528
    
    
    
    100
    %
 
 Production and Raw Materials
      7




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Imports and Import Restrictions
     
 Trademarks, Licensing Agreements and Patents
 Trademarks
 Quiksilver Roxy Raisins , Radio Fiji, Leilani,
Quiksilveredition, Hawk, Lib Tech, Gnu and Bent Metal, DCSHOECOUSA Rossignol" Dynastar" Lange" Look Kerma
  Licensing Agreements and Patents
 Quiksilver Roxy Quiksilver Roxy Quiksilver Roxy
 8




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Hawk Hawk Hawk Hawk Hawk
  
 Competition
 Boardriders Clubs
  
    
    maintain our reputation for authenticity in the core boardriding and outdoor sports
lifestyle demographics;
    
    continue to develop and respond to global fashion and lifestyle trends in our core markets;
    
    create innovative, high quality and stylish product at appropriate price points;
    
    continue to develop leading technologies in ski equipment; and
    
    convey our outdoor sports lifestyle messages to consumers worldwide.
 
 Future Season Orders
  
 Employees
  9




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Environmental Matters
  
 Available Information
   
 Item 1A. RISK FACTORS
  The apparel, sporting goods and footwear industries are each highly competitive, and if we fail to
compete effectively, we could lose our market position.
  10




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If we are unable to develop innovative and stylish products in response to rapid changes in
consumer demands and fashion trends, we may suffer a decline in our revenues and market share.
     Changes in foreign currency exchange or interest rates could affect our revenues and costs.
   11




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Our business could be harmed if we fail to maintain proper inventory levels.
  Future acquisitions and related financings may place a significant debt burden on us.
  Our significant debt obligations could limit our flexibility in managing our business and expose us
to certain risks.
  
    
    we may have difficulty satisfying our obligations under our senior notes or other
indebtedness and, if we fail to comply with these requirements, an event of default could
result;
    
    we have certain short term lines of credit that could be difficult to replace if not
renewed;
    
    we may be required to dedicate a substantial portion of our cash flow from operations to
required payments on indebtedness, thereby reducing the availability of cash flow for working
capital, capital expenditures and other general corporate activities;
    
    covenants relating to our indebtedness may limit our ability to obtain additional financing
for working capital, capital expenditures and other general corporate activities;
    
    covenants relating to our indebtedness may limit our flexibility in planning for, or
reacting to, changes in our business and the industry in which we operate;
    
    we may be more vulnerable to the impact of economic downturns and adverse developments in
our business; and
    
    we may be placed at a competitive disadvantage against any less leveraged competitors.
 Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt
service obligations to increase significantly.
  War, acts of terrorism, or the threat of either could have an adverse effect on our ability to
procure our products and on the United States and/or international economies.
  12




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Our success is dependent on our ability to protect our worldwide intellectual property rights, and
our inability to enforce these rights could harm our business.
   Our products may infringe the intellectual property rights of others, which may cause us to incur
unexpected costs or prevent us from selling our products.
  Our current executive officers and management are critical to our success, and the loss of any of
these individuals could harm our business, brands and image.
  If we are unable to maintain and expand our endorsements by professional athletes, our ability to
market and sell our products may be harmed.
 13




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We could be negatively impacted if we fail to successfully integrate the businesses we acquire or
we could be negatively impacted by any business dispositions.
  
    
    distracting management from our business operations;
    
    losing key personnel and other employees;
    
    costs, delays, and inefficiencies associated with integrating acquired operations and
personnel;
    
    the impairment of acquired assets and goodwill; and
    
    acquiring the contingent and other liabilities of the businesses we acquire.
    14




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Cyclical trends in apparel, sporting goods and footwear retailing could have a material adverse
effect on our results of operations.
  As a result of our acquisition of Rossignol, we face greater challenges in managing several brands.
  Employment related matters, such as unionization, may affect our profitability.
  The demand for our products is seasonal and sales are dependent upon the weather.
  Factors affecting international commerce and our international operations may seriously harm our
financial condition.
  
    
    recessions in foreign economies;
    
    the adoption and expansion of trade restrictions;
    
    limitations on repatriation of earnings;
    
    difficulties in protecting our intellectual property or enforcing our intellectual property
rights under the laws of other countries;
    
    longer receivables collection periods and greater difficulty in collecting accounts
receivable;
    
    difficulties in managing foreign operations;
 15




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
    
    social, political and economic instability;
    
    unexpected changes in regulatory requirements;
    
    our ability to finance foreign operations;
    
    tariffs and other trade barriers; and
    
    U.S. government licensing requirements for exports.
  Quiksilver Roxy
 If the popularity of the sports associated with our brands were to decrease, our revenues could be
adversely affected and our results of operations could be impaired.
  Our industry is subject to pricing pressures that may adversely impact our financial performance.
  
    
    we are forced to reduce our prices and we cannot reduce our production costs; or
    
    our production costs increase and we cannot increase our prices.
 Changing international trade regulations and the elimination of quotas on imports of textiles and
apparel may increase competition in the apparel industry.
  
    
    quotas imposed by bilateral textile agreements between the countries where our
apparel-producing facilities are located and foreign countries; and
    
    customs duties imposed by the governments where our apparel-producing facilities are
located on imported products, including raw materials.
  16




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We rely on third-party manufacturers and problems with, or loss of, our suppliers or raw materials
could harm our business and results of operations.
    Our failure to comply with, or the imposition of liability under, environmental laws and
regulations could result in significant costs.
  
 Item 1B. UNRESOLVED STAFF COMMENTS
  17




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Item 2. PROPERTIES
  Current LeaseLocation
    
    Principal Use
    
    Approximate Sq. Ft.
    
    ExpirationHuntington Beach, California
    
    Corporate headquarters
    
    
    120,000
    
    
    
    2023
    *Verrayes, Italy
    
    Wintersports manufacturing
    
    
    75,000
    
    
    
    2016
    *Huntington Beach, California
    
    Americas distribution center
    
    
    225,000
    
    
    
    2018
    *Huntington Beach, California
    
    Americas distribution center
    
    
    112,000
    
    
    
    2018
    *Huntington Beach, California
    
    Americas distribution center
    
    
    100,000
    
    
    
    2018
    *Huntington Beach, California
    
    Americas distribution center
    
    
    100,000
    
    
    
    2018
    *Huntington Beach, California
    
    Americas distribution center
    
    
    75,000
    
    
    
    2023
    *Mira Loma, California
    
    Americas distribution center
    
    
    683,000
    
    
    
    2027
    *Vista, California
    
    Corporate headquarters
    
    
    98,000
    
    
    
    2010Ogden, Utah
    
    Americas distribution center
    
    
    104,000
    
    
    
    2016St. Jean de Luz, France
    
    European headquarters
    
    
    80,000
    
    
    
    2011St. Jean de Luz, France
    
    European distribution center
    
    
    100,000
    
    
    
    2007Rives, France
    
    European distribution center
    
    
    206,000
    
    
    
    2016Hendaye, France
    
    European distribution center
    
    
    100,000
    
    
    
    2008St. Etienne de St. Geoirs, France
    
    European distribution center
    
    
    270,000
    
    
    
    2016Moirans, France
    
    European distribution center
    
    
    130,000
    
    
    
    2008Torquay, Australia
    
    Asia/Pacific headquarters
    
    
    54,000
    
    
    
    2024
    *Geelong, Australia
    
    Asia/Pacific distribution center
    
    
    81,000
    
    
    
    2018
    *
 
 *
    
    Includes extension periods exercisable at our option.
  
 Item 3. LEGAL PROCEEDINGS
  Burnis L. Simon, Jr. v. Quicksilver, Inc.
(sic)
 
 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  18




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PART II
 
 Item 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
  High
    
    LowFiscal 20074th quarter ended October 31, 2007
    
    $
    15.21
    
    
    $
    12.503rd quarter ended July 31, 2007
    
    
    14.53
    
    
    
    12.432nd quarter ended April 30, 2007
    
    
    14.65
    
    
    
    11.201st quarter ended January 31, 2007
    
    
    15.75
    
    
    
    13.43Fiscal 20064th quarter ended October 31, 2006
    
    $
    14.30
    
    
    $
    11.833rd quarter ended July 31, 2006
    
    
    13.49
    
    
    
    12.002nd quarter ended April 30, 2006
    
    
    14.80
    
    
    
    13.191st quarter ended January 31, 2006
    
    
    14.26
    
    
    
    11.34
   
 Item 6. SELECTED FINANCIAL DATA
  19




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Years Ended October 31,Amounts in thousands, except ratios andper share data
    
    2007(1)(2)(3)
    
    2006(1)(2)(3)
    
    2005(2)(3)
    
    2004(3)
    
    2003Statement of Income DataRevenues, net
    
    $
    2,426,035
    
    
    $
    2,200,234
    
    
    $
    1,734,528
    
    
    $
    1,262,980
    
    
    $
    971,988(Loss) income before provision
for income taxes
    
    
    (74,443
    )
    
    
    131,516
    
    
    
    160,066
    
    
    
    123,880
    
    
    
    92,220(Loss) income from continuing
operations
    
    
    (98,648
    )
    
    
    94,103
    
    
    
    108,290
    
    
    
    82,501
    
    
    
    59,806Loss from discontinued
operations
    
    
    (22,471
    )
    
    
    (1,087
    )
    
    
    (1,170
    )
    
    
    (1,132
    )
    
    
    (1,290
    )Net (loss) income
    
    
    (121,119
    )
    
    
    93,016
    
    
    
    107,120
    
    
    
    81,369
    
    
    
    58,516(Loss) income per share from
continuing operations (4)
    
    
    (0.80
    )
    
    
    0.77
    
    
    
    0.91
    
    
    
    0.72
    
    
    
    0.55Loss per share from
discontinued operations (4)
    
    
    (0.18
    )
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.01
    )Net (loss) income per share (4)
    
    
    (0.98
    )
    
    
    0.76
    
    
    
    0.90
    
    
    
    0.71
    
    
    
    0.54(Loss) income per share from
continuing operations, assuming
dilution (4)
    
    
    (0.80
    )
    
    
    0.74
    
    
    
    0.87
    
    
    
    0.69
    
    
    
    0.53Loss per share from
discontinued operations, assuming
dilution (4)
    
    
    (0.18
    )
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.01
    )Net (loss) income per share,
assuming dilution (4)
    
    
    (0.98
    )
    
    
    0.73
    
    
    
    0.86
    
    
    
    0.68
    
    
    
    0.52Weighted average common
shares (4)
    
    
    123,770
    
    
    
    122,074
    
    
    
    118,920
    
    
    
    114,388
    
    
    
    108,448Weighted average common
shares outstanding, assuming
dilution (4)
    
    
    123,770
    
    
    
    127,744
    
    
    
    124,335
    
    
    
    119,288
    
    
    
    113,270Balance Sheet DataTotal assets
    
    $
    2,641,528
    
    
    $
    2,447,228
    
    
    $
    2,158,601
    
    
    $
    990,990
    
    
    $
    707,970Working capital
    
    
    631,857
    
    
    
    568,596
    
    
    
    458,857
    
    
    
    343,100
    
    
    
    286,625Lines of credit
    
    
    313,996
    
    
    
    315,891
    
    
    
    219,113
    
    
    
    10,801
    
    
    
    20,951Long-term debt
    
    
    806,434
    
    
    
    664,929
    
    
    
    651,896
    
    
    
    173,513
    
    
    
    123,419Stockholders equity
    
    
    886,613
    
    
    
    881,127
    
    
    
    732,882
    
    
    
    588,244
    
    
    
    446,508Other DataEBITDA(5)
    
    $
    232,725
    
    
    $
    262,089
    
    
    $
    221,961
    
    
    $
    157,034
    
    
    $
    121,590Current ratio
    
    
    1.7
    
    
    
    1.7
    
    
    
    1.7
    
    
    
    2.6
    
    
    
    3.0Return on average stockholders
equity(6)
    
    
    (11.2
    )
    
    
    11.7
    
    
    
    16.4
    
    
    
    15.9
    
    
    
    16.6
 
 (1)
    
    Fiscal 2007 and 2006 include stock compensation expense related to the adoption of
Statement of Financial Accounting Standards No. 123(R). Refer to note 5 below.(2)
    
    Fiscal 2007, 2006 and 2005 include the operations of Rossignol since August 1, 2005.
See Note 2 of our consolidated financial statements.(3)
    
    Fiscal 2007, 2006, 2005 and 2004 include the operations of DC since its acquisition
effective May 1, 2004. See Note 2 of our consolidated financial statements.(4)
    
    Per share amounts and shares outstanding have been adjusted to reflect two-for-one
stock splits effected on May 11, 2005 and May 9, 2003.(5)
    
    EBITDA is defined as income from continuing operations before (i) interest expense,
(ii) income tax expense, (iii) depreciation and amortization, (iv) non-cash stock-based
compensation expense and (v) asset impairments. EBITDA is not defined under generally
accepted accounting principles (GAAP), and it may not be comparable to similarly titled
measures reported by other companies. We use EBITDA, along with GAAP measures, as a measure
of profitability because EBITDA helps us to compare our performance on a consistent basis by
removing from our operating results the impact of our capital structure, the effect of
operating in different tax
 20




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##### Table of Contents



Years Ended October 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(Loss) income from continuing
operations
    
    $
    (98,648
    )
    
    $
    94,103
    
    
    $
    108,290
    
    
    $
    82,501
    
    
    $
    59,806Income taxes
    
    
    24,205
    
    
    
    37,413
    
    
    
    51,776
    
    
    
    41,379
    
    
    
    32,414Interest
    
    
    57,023
    
    
    
    47,444
    
    
    
    20,825
    
    
    
    6,390
    
    
    
    8,267Depreciation and amortization
    
    
    66,894
    
    
    
    62,634
    
    
    
    41,070
    
    
    
    26,764
    
    
    
    21,103Non-cash stock compensation
expense
    
    
    16,899
    
    
    
    20,495
    
    
    
    
    
    
    
    
    
    
    
    Non-cash asset impairments
    
    
    166,352
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    EBITDA
    
    $
    232,725
    
    
    $
    262,089
    
    
    $
    221,961
    
    
    $
    157,034
    
    
    $
    121,590
 
 (6)
    
    Computed based on income from continuing operations divided by the average of
beginning and ending stockholders equity.
 
 Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Overview
 Quiksilver Quiksilver Quiksilver Roxy Boardriders Clubs Quiksilver Roxy Quiksilver Roxy Rossignol Dynastar Lange Look Kerma
   21




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##### Table of Contents



Years Ended October 31,In thousands
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Americas
    
    $
    1,092,076
    
    
    $
    939,370
    
    
    $
    801,836
    
    
    $
    612,859
    
    
    $
    489,425Europe
    
    
    1,070,053
    
    
    
    1,002,475
    
    
    
    709,510
    
    
    
    496,276
    
    
    
    386,226Asia/Pacific
    
    
    259,093
    
    
    
    253,003
    
    
    
    219,241
    
    
    
    148,733
    
    
    
    94,187Corporate operations
    
    
    4,813
    
    
    
    5,386
    
    
    
    3,941
    
    
    
    5,112
    
    
    
    2,150Total revenues, net
    
    $
    2,426,035
    
    
    $
    2,200,234
    
    
    $
    1,734,528
    
    
    $
    1,262,980
    
    
    $
    971,988
  Results of Operations
  Years Ended October 31,2007
    
    2006
    
    2005Statement of Income DataRevenues, net
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Gross profit
    
    
    46.3
    
    
    
    45.7
    
    
    
    45.5Selling, general and administrative expense
    
    
    40.0
    
    
    
    37.6
    
    
    
    35.0Asset impairments
    
    
    6.9
    
    
    
     ̄
    
    
    
     ̄Operating (loss) income
    
    
    (0.6
    )
    
    
    8.1
    
    
    
    10.5Interest expense
    
    
    2.4
    
    
    
    2.1
    
    
    
    1.2Foreign currency, minority interest and other expense
    
    
    0.1
    
    
    
    0.0
    
    
    
    0.1Income (loss) before provision for income taxes
    
    
    (3.1
    )%
    
    
    6.0
    %
    
    
    9.2
    %Other dataEBITDA (1)
    
    
    9.6
    %
    
    
    11.9
    %
    
    
    12.8
    %
 
 (1)
    
    For a definition of EBITDA and a reconciliation of Income from continuing operations
to EBITDA, see footnote (5) to the table under Item 6. Selected Financial Data. Fiscal 2007 Compared to Fiscal 2006
 Revenues
  22




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##### Table of Contents



Quiksilver Roxy DC Hawk Gotcha Raisins Leilani Radio Fiji Rossignol Rossignol Dynastar Look Lange Kerma Lib Technologies Gnu Bent Metal
 DC, Quiksilver Roxy DCs Quiksilver and Roxy
 Years Ended October 31,2007
    
    
    2006Apparel
    
    
    Equipment
    
    
    
    
    
    
    Apparel
    
    
    EquipmentIn thousands
    
    Brands
    
    
    Brands
    
    
    Total
    
    
    Brands
    
    
    Brands
    
    
    TotalAmericas
    
    $
    990,892
    
    
    $
    101,184
    
    
    $
    1,092,076
    
    
    $
    821,870
    
    
    $
    117,500
    
    
    $
    939,370Europe
    
    
    807,346
    
    
    
    262,707
    
    
    
    1,070,053
    
    
    
    661,828
    
    
    
    340,647
    
    
    
    1,002,475Asia/Pacific
    
    
    243,797
    
    
    
    15,296
    
    
    
    259,093
    
    
    
    225,111
    
    
    
    27,892
    
    
    
    253,003Corporate operations
    
    
    
    
    
    
    
    
    
    
    4,813
    
    
    
    
    
    
    
    
    
    
    
    5,386$
    2,042,035
    
    
    $
    379,187
    
    
    $
    2,426,035
    
    
    $
    1,708,809
    
    
    $
    486,039
    
    
    $
    2,200,234
  Gross Profit
  Selling, General and Administrative Expense
  23




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##### Table of Contents



Asset Impairments
  Non-operating Expenses
    Income from continuing operations and EBITDA
  Fiscal 2006 Compared to Fiscal 2005
 Revenues
  Roxy, DC Quiksilver Quiksilver Roxy DCs
 24




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##### Table of Contents



Years Ended October 31,2006
    
    
    2005Apparel
    
    
    Equipment
    
    
    
    
    
    
    Apparel
    
    
    EquipmentIn thousands
    
    Brands
    
    
    Brands
    
    
    Total
    
    
    Brands
    
    
    Brands
    
    
    TotalAmericas
    
    $
    821,870
    
    
    $
    117,500
    
    
    $
    939,370
    
    
    $
    746,954
    
    
    $
    54,882
    
    
    $
    801,836Europe
    
    
    661,828
    
    
    
    340,647
    
    
    
    1,002,475
    
    
    
    590,665
    
    
    
    118,845
    
    
    
    709,510Asia/Pacific
    
    
    225,111
    
    
    
    27,892
    
    
    
    253,003
    
    
    
    215,024
    
    
    
    4,217
    
    
    
    219,241Corporate operations
    
    
    
    
    
    
    
    
    
    
    5,386
    
    
    
    
    
    
    
    
    
    
    
    3,941$
    1,708,809
    
    
    $
    486,039
    
    
    $
    2,200,234
    
    
    $
    1,552,643
    
    
    $
    177,944
    
    
    $
    1,734,528
  Gross Profit
 DC
 Selling, General and Administrative Expense
  Non-operating Expenses
   25




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##### Table of Contents



Income from continuing operations and EBITDA
  Financial Position, Capital Resources and Liquidity
   Operating Cash Flows
   Capital Expenditures
    26




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Acquisitions and Dispositions
    Debt Structure
  In thousands
    
    U.S. Dollar
    
    
    Non U.S. Dollar
    
    
    TotalAmericas short-term credit arrangements
    
    $
    
    
    
    $
    17,811
    
    
    $
    17,811European short-term credit arrangements
    
    
    
    
    
    
    234,589
    
    
    
    234,589Asia/Pacific short-term credit arrangements
    
    
    
    
    
    
    61,596
    
    
    
    61,596Short-term credit arrangements
    
    
    
    
    
    
    313,996
    
    
    
    313,996Americas line of credit
    
    
    129,700
    
    
    
    
    
    
    
    129,700European long-term debt
    
    
    
    
    
    
    216,004
    
    
    
    216,004Senior Notes
    
    
    400,000
    
    
    
    
    
    
    
    400,000Deferred purchase price obligation
    
    
    
    
    
    
    43,649
    
    
    
    43,649Capital lease obligations and other borrowings
    
    
    
    
    
    
    17,081
    
    
    
    17,081Long-term credit arrangements
    
    
    529,700
    
    
    
    276,734
    
    
    
    806,434Total
    
    $
    529,700
    
    
    $
    590,730
    
    
    $
    1,120,430
 27




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28




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##### Table of Contents



Joint Ventures
 Quiksilver Roxy
 Contractual Obligations and Commitments
  29




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##### Table of Contents



Payments Due by PeriodTwo to
    
    
    Four to
    
    
    AfterOne
    
    
    Three
    
    
    Five
    
    
    FiveIn thousands
    
    Year
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    TotalOperating lease obligations
    
    $
    85,963
    
    
    $
    149,881
    
    
    $
    121,931
    
    
    $
    166,393
    
    
    $
    524,168Long-term debt obligations(1)
    
    
    34,306
    
    
    
    314,764
    
    
    
    56,969
    
    
    
    400,395
    
    
    
    806,434Professional athlete sponsorships(2)
    
    
    25,764
    
    
    
    12,278
    
    
    
    3,230
    
    
    
    1,500
    
    
    
    42,772Certain other obligations(3)
    
    
    102,100
    
    
    
     ̄
    
    
    
     ̄
    
    
    
     ̄
    
    
    
    102,100$
    248,133
    
    
    $
    476,923
    
    
    $
    182,130
    
    
    $
    568,288
    
    
    $
    1,475,474
 
 (1)
    
    Excludes required interest payments. See Note 7 of Notes to Consolidated Financial
Statements for interest terms.(2)
    
    We establish relationships with professional athletes in order to promote our
products and brands. We have entered into endorsement agreements with professional athletes
in sports such as skiing, surfing, skateboarding, snowboarding and windsurfing. Many of
these contracts provide incentives for magazine exposure and competitive victories while
wearing or using our products. It is not possible to determine the amounts we may be required
to pay under these agreements as they are subject to many variables. The amounts listed are
the approximate amounts of minimum obligations required to be paid under these contracts. The
estimated maximum amount that could be paid under existing contracts is approximately $72.3
million and would assume that all bonuses, victories, etc. are achieved during a five-year
period. The actual amounts paid under these agreements may be higher or lower than the
amounts listed as a result of the variable nature of these obligations.(3)
    
    Certain other obligations include approximately $98.1 million of contractual
letters of credit with maturity dates of less than one year. We also enter into unconditional
purchase obligations with various vendors and suppliers of goods and services in the normal
course of operations through purchase orders or other documentation or that are undocumented
except for an invoice. Such unconditional purchase obligations are generally outstanding for
periods less than a year and are settled by cash payments upon delivery of goods and services
and are not reflected in this line item. In addition, in certain circumstances we are
required to acquire additional equity interests from certain of our joint venture partners.
The purchase price applicable to these obligations is typically based on formulas that will be
used to value the joint venture operations at the time of purchase. These potential purchase
amounts cannot be determined in advance and are not included in this line item, except for
approximately $4.0 million related to the cash portion of the purchase of a controlling
interest in Quiksilver Brazil which is expected to occur in fiscal 2008. Trade Accounts Receivable and Inventories
   30




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Off Balance Sheet Arrangements
  Inflation
  New Accounting Pronouncements
       31




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##### Table of Contents



Critical Accounting Policies
  Revenue Recognition
  Accounts Receivable
  Inventories
  
    
    weakening economic conditions;
    
    terrorist acts or threats;
    
    unanticipated changes in consumer preferences;
    
    reduced customer confidence in the retail market; and
    
    unseasonable weather.
 32




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##### Table of Contents



Long-Lived Assets
  Goodwill
  Income Taxes
  Stock-Based Compensation Expense
   33




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##### Table of Contents



Foreign Currency Translation
   Forward-Looking Statement
  
    
    our ability to realize the benefits we anticipate from our acquisition of Rossignol;
 
    
    the impact of our substantial leverage on our ability to generate cash flows or obtain
financing to fund our anticipated growth strategies, and the cost of such financing;
 
    
    our plans to expand internationally;
 
    
    our intention to introduce new products and enter into new joint ventures;
 
    
    our plans to open new retail stores;
 
    
    payments due on contractual commitments;
 
    
    future expenditures for capital projects;
 
    
    our ability to continue to maintain our brand image and reputation;
 
    
    our ability to remain compliant with our debt covenants;
 
    
    the integration of acquired businesses and future acquisitions;
 
    
    difficulties encountered with asset or subsidiary dispositions;
 
    
    general economic and business conditions;
 
    
    foreign exchange rate fluctuations; and
 
    
    changes in political, social and economic conditions and local regulations, particularly in
Europe and Asia.
  34




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##### Table of Contents



Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Foreign Currency and Derivatives
    
    
    if we determine that the derivative is no longer effective in offsetting changes in the
cash flows of a hedged item;
 
    
    when the derivative expires or is sold, terminated or exercised;
 
    
    if it becomes probable that the forecasted transaction being hedged by the derivative will
not occur;
 
    
    because a hedged firm commitment no longer meets the definition of a firm commitment; or
 
    
    if we determine that designation of the derivative as a hedge instrument is no longer
appropriate.
  Translation of Results of International Subsidiaries
  35




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##### Table of Contents



Interest Rates
  
 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 Item 9A. CONTROLS AND PROCEDURES
   36




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Managements Report on Internal Control Over Financial Reporting
  
    
    pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of our assets;
 
    
    provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that our receipts and expenditures are being made only in accordance with
authorizations of our management and directors; and
 
    
    provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of our assets that could have a material effect on the
financial statements.
    37




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 
 Internal
ControlIntegrated Framework
    Internal Control
 Integrated Framework
   
 38




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Item 9B. OTHER INFORMATION
  39




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##### Table of Contents



PART III
 
 Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
   
 Item 11. EXECUTIVE COMPENSATION
  
 Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  
 Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  40




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##### Table of Contents



PART IV
 
 Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  1.
    
    Consolidated Financial StatementsSee Index to Consolidated Financial Statements on page 422.
    
    ExhibitsThe Exhibits listed in the Exhibit Index, which appears immediately following the signature
page and is incorporated herein by reference, are filed as part of this Annual Report on Form 10-K.
 41




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##### Table of Contents



QUIKSILVER, INC.
 
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageAudited consolidated financial statements of Quiksilver, Inc. as of and for each
of the three years in the period ended October 31, 2007Report of Independent Registered Public Accounting Firm
    
    43Consolidated Statements of Operations
Years Ended October 31, 2007, 2006 and 2005
    
    44Consolidated Statements of Comprehensive Income
Years Ended October 31, 2007, 2006 and 2005
    
    44Consolidated Balance Sheets
October 31, 2007 and 2006
    
    45Consolidated Statements of Stockholders Equity
Years Ended October 31, 2007, 2006 and 2005
    
    46Consolidated Statements of Cash Flows
Years Ended October 31, 2007, 2006 and 2005
    
    47Notes to Consolidated Financial Statements
    
    49
 42




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
       /s/ Deloitte & Touche LLPDecember 28, 2007Costa Mesa, California 43




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QUIKSILVER, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended October 31, 2007, 2006 and 2005
 In thousands, except per share amounts
    
    2007
    
    
    2006
    
    
    2005Revenues, net
    
    $
    2,426,035
    
    
    $
    2,200,234
    
    
    $
    1,734,528Cost of goods sold
    
    
    1,303,794
    
    
    
    1,193,938
    
    
    
    945,982Gross profit
    
    
    1,122,241
    
    
    
    1,006,296
    
    
    
    788,546Selling, general and administrative expense
    
    
    971,411
    
    
    
    827,025
    
    
    
    607,450Asset impairments  Notes 5 and 6
    
    
    166,352
    
    
    
    
    
    
    
    Operating (loss) income
    
    
    (15,522
    )
    
    
    179,271
    
    
    
    181,096Interest expense
    
    
    57,023
    
    
    
    47,444
    
    
    
    20,825Foreign currency loss (gain)
    
    
    1,777
    
    
    
    8
    
    
    
    (160
    )Minority interest and other expense  Note 2
    
    
    121
    
    
    
    303
    
    
    
    365(Loss) income before provision for income taxes
    
    
    (74,443
    )
    
    
    131,516
    
    
    
    160,066Provision for income taxes  Note 13
    
    
    24,205
    
    
    
    37,413
    
    
    
    51,776(Loss) income from continuing operations
    
    
    (98,648
    )
    
    
    94,103
    
    
    
    108,290Loss from discontinued operations  Note 19
    
    
    (22,471
    )
    
    
    (1,087
    )
    
    
    (1,170
    )Net (loss) income
    
    $
    (121,119
    )
    
    $
    93,016
    
    
    $
    107,120(Loss) income per share from continuing
operations
    
    $
    (0.80
    )
    
    $
    0.77
    
    
    $
    0.91Loss per
share from discontinued operations 
Note 19
    
    
    (0.18
    )
    
    
    (0.01
    )
    
    
    (0.01
    )Net (loss) income per share  Note 1
    
    $
    (0.98
    )
    
    $
    0.76
    
    
    $
    0.90(Loss) income per share from continuing
operations, assuming dilution
    
    $
    (0.80
    )
    
    $
    0.74
    
    
    $
    0.87Loss per share from discontinued operations,
assuming dilution  Note 19
    
    
    (0.18
    )
    
    
    (0.01
    )
    
    
    (0.01
    )Net (loss) income per share, assuming dilution 
Note 1
    
    $
    (0.98
    )
    
    $
    0.73
    
    
    $
    0.86Weighted average common shares outstanding
 Note 1
    
    
    123,770
    
    
    
    122,074
    
    
    
    118,920Weighted average common shares outstanding,
assuming dilution  Note 1
    
    
    123,770
    
    
    
    127,744
    
    
    
    124,335
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended October 31, 2007, 2006 and 2005
 In thousands
    
    2007
    
    
    2006
    
    
    2005Net (loss) income
    
    $
    (121,119
    )
    
    $
    93,016
    
    
    $
    107,120Other comprehensive income (loss):Foreign currency translation adjustment
    
    
    116,882
    
    
    
    27,311
    
    
    
    (14,694
    )Net (loss) gain on derivative instruments, net
of tax of $10,368 (2007), $2,101 (2006)
and $(5,468) (2005)
    
    
    (21,859
    )
    
    
    (4,309
    )
    
    
    10,008Comprehensive (loss) income
    
    $
    (26,096
    )
    
    $
    116,018
    
    
    $
    102,434
  44




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QUIKSILVER, INC.
 
 CONSOLIDATED BALANCE SHEETS
October 31, 2007 and 2006
 In thousands, except share amounts
    
    2007
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    74,348
    
    
    $
    36,834Trade accounts receivable, net  Note 3
    
    
    760,430
    
    
    
    674,734Other receivables
    
    
    70,101
    
    
    
    34,190Inventories  Note 4
    
    
    447,282
    
    
    
    389,663Deferred income taxes  Note 13
    
    
    62,197
    
    
    
    81,434Prepaid expenses and other current assets
    
    
    25,219
    
    
    
    26,844Current assets held for sale  Note 19
    
    
    73,685
    
    
    
    89,483Total current assets
    
    
    1,513,262
    
    
    
    1,333,182Fixed assets, net  Note 5
    
    
    347,322
    
    
    
    277,974Intangible assets, net  Notes 2 and 6
    
    
    225,642
    
    
    
    212,772Goodwill  Notes 2, 6 and 15
    
    
    417,283
    
    
    
    475,495Other assets
    
    
    46,263
    
    
    
    45,628Non-current assets held for sale  Notes 12 and 19
    
    
    91,756
    
    
    
    102,177Total assets
    
    $
    2,641,528
    
    
    $
    2,447,228LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Lines of credit  Note 7
    
    $
    313,996
    
    
    $
    315,891Accounts payable
    
    
    286,807
    
    
    
    214,901Accrued liabilities  Note 8
    
    
    227,840
    
    
    
    192,169Current portion of long-term debt  Note 7
    
    
    34,306
    
    
    
    24,621Income taxes payable  Note 13
    
    
    7,187
    
    
    
    1,844Liabilities related to assets held for sale  Note 19
    
    
    11,269
    
    
    
    15,160Total current liabilities
    
    
    881,405
    
    
    
    764,586Long-term debt  Notes 7 and 18
    
    
    772,128
    
    
    
    640,308Deferred income taxes and other long-term liabilities  Note 13
    
    
    48,466
    
    
    
    86,811Non-current liabilities related to assets held for sale  Notes 7 and 19
    
    
    52,916
    
    
    
    63,203Total liabilities
    
    
    1,754,915
    
    
    
    1,554,908Commitments and contingencies  Note 9Minority interest  Note 2
    
    
    
    
    
    
    11,193Stockholders equity  Note 10: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  128,340,538 (2007) and 126,401,836 (2006)
    
    
    1,283
    
    
    
    1,264Additional paid-in capital
    
    
    306,051
    
    
    
    274,488Treasury stock, 2,885,200 shares
    
    
    (6,778
    )
    
    
    (6,778
    )Retained earnings
    
    
    437,940
    
    
    
    559,059Accumulated other comprehensive income  Note 11
    
    
    148,117
    
    
    
    53,094Total stockholders equity
    
    
    886,613
    
    
    
    881,127Total liabilities and stockholders equity
    
    $
    2,641,528
    
    
    $
    2,447,228
  45




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##### Table of Contents



QUIKSILVER, INC.
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
Years Ended October 31, 2007, 2006 and 2005
 AccumulatedAdditional
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Treasury
    
    
    Retained
    
    
    Comprehensive
    
    
    StockholdersIn thousands, except share amounts
    
    Shares
    
    
    Amounts
    
    
    Capital
    
    
    Stock
    
    
    Earnings
    
    
    Income (Loss)
    
    
    EquityBalance, November 1, 2004
    
    
    120,339,046
    
    
    $
    1,203
    
    
    $
    200,118
    
    
    $
    (6,778
    )
    
    $
    358,923
    
    
    $
    34,778
    
    
    $
    588,244Exercise of stock options
    
    
    1,447,010
    
    
    
    14
    
    
    
    6,528
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,542Tax benefit from exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    5,109
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,109Employee stock purchase
plan
    
    
    157,298
    
    
    
    2
    
    
    
    1,644
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,646Rossignol acquisition
    
    
    2,150,038
    
    
    
    22
    
    
    
    28,885
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,907Net income and other
comprehensive income
(loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    107,120
    
    
    
    (4,686
    )
    
    
    102,434Balance, October 31, 2005
    
    
    124,093,392
    
    
    
    1,241
    
    
    
    242,284
    
    
    
    (6,778
    )
    
    
    466,043
    
    
    
    30,092
    
    
    
    732,882Exercise of stock options
    
    
    1,289,351
    
    
    
    13
    
    
    
    5,119
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,132Tax benefit from exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    3,976
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,976Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    20,751
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,751Restricted stock
    
    
    800,000
    
    
    
    8
    
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Employee stock purchase
plan
    
    
    219,093
    
    
    
    2
    
    
    
    2,366
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,368Net income and other
comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93,016
    
    
    
    23,002
    
    
    
    116,018Balance, October 31, 2006
    
    
    126,401,836
    
    
    
    1,264
    
    
    
    274,488
    
    
    
    (6,778
    )
    
    
    559,059
    
    
    
    53,094
    
    
    
    881,127Exercise of stock options
    
    
    1,804,515
    
    
    
    18
    
    
    
    10,351
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,369Tax benefit from exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    2,896
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,896Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    17,210
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,210Restricted stock
    
    
    42,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Employee stock purchase
plan
    
    
    92,187
    
    
    
    1
    
    
    
    1,106
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,107Net (loss) and other
comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (121,119
    )
    
    
    95,023
    
    
    
    (26,096
    )Balance, October 31, 2007
    
    
    128,340,538
    
    
    $
    1,283
    
    
    $
    306,051
    
    
    $
    (6,778
    )
    
    $
    437,940
    
    
    $
    148,117
    
    
    $
    886,613
  46




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##### Table of Contents



QUIKSILVER, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended October 31, 2007, 2006 and 2005
 In thousands
    
    2007
    
    
    2006
    
    
    2005Cash flows from operating activities:Net (loss) income
    
    $
    (121,119
    )
    
    $
    93,016
    
    
    $
    107,120Adjustments to reconcile net (loss) income to net cash
provided by operating activities:Loss from discontinued operations
    
    
    22,471
    
    
    
    1,087
    
    
    
    1,170Depreciation and amortization
    
    
    66,894
    
    
    
    62,634
    
    
    
    41,070Stock-based compensation and tax benefit on
option exercises
    
    
    14,003
    
    
    
    20,495
    
    
    
    Provision for doubtful accounts
    
    
    8,542
    
    
    
    2,274
    
    
    
    3,592Loss on disposal of fixed assets
    
    
    1,767
    
    
    
    1,205
    
    
    
    3,449Foreign currency loss (gain)
    
    
    1,292
    
    
    
    (487
    )
    
    
    (221
    )Asset impairments
    
    
    166,352
    
    
    
    
    
    
    
    Interest accretion
    
    
    
    
    
    
    
    
    
    
    1,319Minority interest and equity in earnings
    
    
    (210
    )
    
    
    883
    
    
    
    Deferred income taxes
    
    
    (2,254
    )
    
    
    9,027
    
    
    
    4,679Changes in operating assets and liabilities,
net of effects from business acquisitions:Trade accounts receivable
    
    
    (42,715
    )
    
    
    (87,129
    )
    
    
    (225,787
    )Other receivables
    
    
    (30,007
    )
    
    
    (10,522
    )
    
    
    8,960Inventories
    
    
    (18,521
    )
    
    
    (24,932
    )
    
    
    35,477Prepaid expenses and other current assets
    
    
    2,314
    
    
    
    (7,037
    )
    
    
    (421
    )Other assets
    
    
    (2,275
    )
    
    
    (3,216
    )
    
    
    (7,313
    )Accounts payable
    
    
    48,782
    
    
    
    (12,765
    )
    
    
    19,434Accrued liabilities and other long-term liabilities
    
    
    613
    
    
    
    (26,032
    )
    
    
    6,514Income taxes payable
    
    
    9,947
    
    
    
    (23,539
    )
    
    
    7,688Cash provided by (used in) operating
activities of continuing operations
    
    
    125,876
    
    
    
    (5,038
    )
    
    
    6,730Cash used in operating activities of
discontinued operations
    
    
    (1,624
    )
    
    
    (3,260
    )
    
    
    (8,144
    )Net cash provided by (used in) operating
activities
    
    
    124,252
    
    
    
    (8,298
    )
    
    
    (1,414
    )Cash flows from investing activities:Proceeds from the sale of properties and equipment
    
    
    17,355
    
    
    
    5,113
    
    
    
    Capital expenditures
    
    
    (116,290
    )
    
    
    (95,516
    )
    
    
    (70,190
    )Business acquisitions, net of acquired cash  Note 2
    
    
    (42,554
    )
    
    
    (38,434
    )
    
    
    (251,865
    )Cash used in investing activities of
continuing operations
    
    
    (141,489
    )
    
    
    (128,837
    )
    
    
    (322,055
    )Cash used in investing activities of
discontinued operations
    
    
    (19,001
    )
    
    
    (4,510
    )
    
    
    (668
    )Net cash used in investing activities
    
    
    (160,490
    )
    
    
    (133,347
    )
    
    
    (322,723
    )Cash flows from financing activities:Borrowings on lines of credit
    
    
    156,189
    
    
    
    312,403
    
    
    
    122,976Payments on lines of credit
    
    
    (186,650
    )
    
    
    (220,431
    )
    
    
    (97,087
    )Borrowings on long-term debt
    
    
    209,933
    
    
    
    120,252
    
    
    
    588,456Payments on long-term debt
    
    
    (104,358
    )
    
    
    (127,919
    )
    
    
    (284,453
    )Stock option exercises, employee stock purchases
and tax benefit on option exercises
    
    
    14,253
    
    
    
    11,212
    
    
    
    8,188Cash provided by financing activities of
continuing operations
    
    
    89,367
    
    
    
    95,517
    
    
    
    338,080Cash (used in) provided by financing
activities of discontinued operations
    
    
    (9,550
    )
    
    
    10,473
    
    
    
    9,786Net cash provided by financing activities
    
    
    79,817
    
    
    
    105,990
    
    
    
    347,866Effect of exchange rate changes on cash
    
    
    (6,065
    )
    
    
    (3,109
    )
    
    
    (3,328
    )Net increase (decrease) in cash and cash equivalents
    
    
    37,514
    
    
    
    (38,764
    )
    
    
    20,401Cash and cash equivalents, beginning of year
    
    
    36,834
    
    
    
    75,598
    
    
    
    55,197Cash and cash equivalents, end of year
    
    $
    74,348
    
    
    $
    36,834
    
    
    $
    75,598
  47




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##### Table of Contents



QUIKSILVER, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended October 31, 2007, 2006 and 2005
 Supplementary cash flow information:Cash paid during the year for:Interest
    
    $
    59,354
    
    
    $
    47,319
    
    
    $
    18,835Income taxes
    
    $
    16,004
    
    
    $
    52,608
    
    
    $
    34,458Non-cash investing and financing activities:Deferred purchase price obligation  Note 2
    
    $
    26,356
    
    
    $
    24,967
    
    
    $
    32,508Common stock issued for business acquisitions
- Note 2
    
    $
    
    
    
    $
    
    
    
    $
    28,907
  48




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##### Table of Contents



QUIKSILVER, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended October 31, 2007, 2006 and 2005
 Note 1  Significant Accounting Policies
 Company Business
 Quiksilve Roxy DC Shoes Hawk Raisins Radio Fiji Leilani Rossignol Dynastar Look Lange Kerma Rossignol DC Shoes Roxy Lib Technologies Gnu Bent Metal Boardriders Club
  Principles of Consolidation
  Basis of Presentation
  Cash Equivalents
  Inventories
  Fixed Assets
 
 49




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##### Table of Contents



Long-Lived Assets
  Goodwill and Intangible Assets
  Revenue Recognition
   Years Ended October 31,In thousands
    
    2007
    
    
    2006
    
    
    2005Product shipments, net
    
    $
    2,418,951
    
    
    $
    2,195,754
    
    
    $
    1,732,688Royalty income
    
    
    7,084
    
    
    
    4,480
    
    
    
    1,840$
    2,426,035
    
    
    $
    2,200,234
    
    
    $
    1,734,528
 Promotion and Advertising
  Research and Development
  Warranties
  50




---



##### Table of Contents



Stock-Based Compensation
  Income Taxes
  Net (Loss) Income per Share
  Stock Split
  Foreign Currency and Derivatives
   Comprehensive Income
  51




---



##### Table of Contents



Use of Estimates
  Fair Value of Financial Instruments
  New Accounting Pronouncements
      52




---



##### Table of Contents



Note 2  Business Acquisitions
   53




---



##### Table of Contents



In thousands
    
    July 31, 2005Cash acquired
    
    $
    64,396Accounts receivable
    
    
    96,763Inventory
    
    
    232,525Other current assets
    
    
    21,548Fixed assets
    
    
    109,438Deferred income taxes
    
    
    3,572Other assets
    
    
    3,296Amortizing intangible assets
    
    
    20,400Trademarks
    
    
    94,700Goodwill
    
    
    292,168Total assets acquired
    
    
    938,806Other liabilities
    
    
    218,300Long term debt and lines of credit
    
    
    365,126Deferred income taxes
    
    
    40,657Minority interest
    
    
    10,109Net assets acquired
    
    $
    304,614
    In thousands
    
    August 31, 2005Inventory and other current assets
    
    $
    3,239Fixed assets
    
    
    4,839Amortizing intangible assets
    
    
    450Goodwill
    
    
    21,393Total assets acquired
    
    
    29,921Other liabilities
    
    
    7,419Net assets acquired
    
    $
    22,502
 54




---



##### Table of Contents



Note 3  Allowance for Doubtful Accounts
  Years Ended October 31,In thousands
    
    2007
    
    
    2006
    
    
    2005Balance, beginning of year
    
    $
    29,246
    
    
    $
    28,787
    
    
    $
    11,367Provision for doubtful accounts
    
    
    8,542
    
    
    
    2,274
    
    
    
    3,592Acquired balance
    
    
    
    
    
    
    
    
    
    
    18,871Deductions
    
    
    (751
    )
    
    
    (1,815
    )
    
    
    (5,043
    )Balance, end of year
    
    $
    37,037
    
    
    $
    29,246
    
    
    $
    28,787
  Note 4  Inventories
  Years Ended October 31,In thousands
    
    2007
    
    
    2006Raw materials
    
    $
    29,725
    
    
    $
    28,545Work in process
    
    
    12,223
    
    
    
    12,949Finished goods
    
    
    405,334
    
    
    
    348,169$
    447,282
    
    
    $
    389,663
 Note 5  Fixed Assets
  Years Ended October 31,In thousands
    
    2007
    
    
    2006Furniture and other equipment
    
    $
    177,837
    
    
    $
    143,565Computer equipment
    
    
    103,183
    
    
    
    82,644Manufacturing equipment
    
    
    55,764
    
    
    
    54,160Leasehold improvements
    
    
    124,612
    
    
    
    103,218Land use rights
    
    
    46,306
    
    
    
    37,291Land and buildings
    
    
    35,804
    
    
    
    31,851543,506
    
    
    
    452,729Accumulated depreciation and amortization
    
    
    (196,184
    )
    
    
    (174,755
    )$
    347,322
    
    
    $
    277,974
  55




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##### Table of Contents



Note 6  Intangible Assets and Goodwill
  Years Ended October 31,2007
    
    
    2006In thousands
    
    GrossAmount
    
    
    Amorti-zation
    
    
    Net Book Value
    
    
    Gross Amount
    
    
    Amorti-zation
    
    
    Net Book ValueAmortizable trademarks
    
    $
    16,082
    
    
    $
    (4,329
    )
    
    $
    11,753
    
    
    $
    7,159
    
    
    $
    (2,262
    )
    
    $
    4,897Amortizable licenses
    
    
    12,354
    
    
    
    (6,074
    )
    
    
    6,280
    
    
    
    10,332
    
    
    
    (4,047
    )
    
    
    6,285Other amortizable intangibles
    
    
    13,906
    
    
    
    (6,282
    )
    
    
    7,624
    
    
    
    13,767
    
    
    
    (3,997
    )
    
    
    9,770Non-amortizable trademarks
    
    
    199,985
    
    
    
    
    
    
    
    199,985
    
    
    
    191,820
    
    
    
    
    
    
    
    191,820$
    242,327
    
    
    $
    (16,685
    )
    
    $
    225,642
    
    
    $
    223,078
    
    
    $
    (10,306
    )
    
    $
    212,772
    Note 7  Lines of Credit and Long-term Debt
  Years Ended October 31,In thousands
    
    2007
    
    
    2006European short-term credit arrangements
    
    $
    234,589
    
    
    $
    261,593Asia/Pacific short-term lines of credit
    
    
    61,596
    
    
    
    41,464Americas short-term lines of credit
    
    
    17,811
    
    
    
    12,834Americas Credit Facility
    
    
    129,700
    
    
    
    76,150Americas long-term debt
    
    
    
    
    
    
    4,305European long-term debt
    
    
    216,004
    
    
    
    135,796Senior Notes
    
    
    400,000
    
    
    
    400,000Deferred purchase price obligation
    
    
    43,649
    
    
    
    34,701Capital lease obligations and other borrowings
    
    
    17,081
    
    
    
    13,977$
    1,120,430
    
    
    $
    980,820
 56




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##### Table of Contents



57




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##### Table of Contents



2008
    
    $
    34,3062009
    
    
    35,5112010
    
    
    279,2532011
    
    
    35,7562012
    
    
    21,213Thereafter
    
    
    400,395$
    806,434
 Note 8  Accrued Liabilities
  Years Ended October 31,In thousands
    
    2007
    
    
    2006Accrued employee compensation and benefits
    
    $
    64,477
    
    
    $
    66,465Accrued sales and payroll taxes
    
    
    28,766
    
    
    
    21,914Derivative liability
    
    
    38,804
    
    
    
    2,456Accrued interest
    
    
    7,448
    
    
    
    4,748Amounts payable for business acquisitions
    
    
    31,518
    
    
    
    26,683Integration Plan and Pre-acquisition Restructuring Plan liabilities (Note 12)
    
    
    24,845
    
    
    
    48,408Other liabilities
    
    
    31,982
    
    
    
    21,495$
    227,840
    
    
    $
    192,169
 58




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##### Table of Contents



Years Ended October 31,In thousands
    
    2007
    
    
    2006Beginning balance
    
    $
    2,431
    
    
    $
    2,375Warranty expense
    
    
    871
    
    
    
    1,270Repairs and replacements made
    
    
    (1,062
    )
    
    
    (1,214
    )Ending balance
    
    $
    2,240
    
    
    $
    2,431
 Note 9  Commitments and Contingencies
 Operating Leases
  2008
    
    $
    85,9632009
    
    
    77,8142010
    
    
    72,0672011
    
    
    64,2092012
    
    
    57,722Thereafter
    
    
    166,393$
    524,168
  Professional Athlete Sponsorships
  2008
    
    $
    25,7642009
    
    
    8,1752010
    
    
    4,1032011
    
    
    2,4802012
    
    
    750Thereafter
    
    
    1,500$
    42,772
 Litigation
   Indemnities and Guarantees
  59




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##### Table of Contents



Note 10  Stockholders Equity
   Years Ended October 31,2007
    
    2006
    
    2005Weighted Average
    
    
    
    
    
    Weighted Average
    
    
    
    
    
    Weighted AverageIn thousands
    
    Shares
    
    Price
    
    Shares
    
    Price
    
    Shares
    
    PriceOutstanding, beginning of year
    
    
    18,135,699
    
    
    $
    8.61
    
    
    
    17,366,457
    
    
    $
    7.63
    
    
    
    15,084,168
    
    
    $
    5.56Granted
    
    
    1,247,051
    
    
    
    15.19
    
    
    
    2,338,300
    
    
    
    13.67
    
    
    
    3,877,800
    
    
    
    14.44Exercised
    
    
    (1,804,515
    )
    
    
    5.74
    
    
    
    (1,289,351
    )
    
    
    3.99
    
    
    
    (1,477,010
    )
    
    
    3.96Canceled
    
    
    (267,186
    )
    
    
    13.48
    
    
    
    (279,707
    )
    
    
    11.70
    
    
    
    (148,501
    )
    
    
    10.12Outstanding, end of year
    
    
    17,311,049
    
    
    
    9.30
    
    
    
    18,135,699
    
    
    
    8.61
    
    
    
    17,336,457
    
    
    
    7.63Options exercisable, end of year
    
    
    12,395,513
    
    
    
    7.56
    
    
    
    11,177,173
    
    
    
    6.29
    
    
    
    9,161,422
    
    
    
    4.77
  60




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##### Table of Contents



Options Outstanding
    
    Options ExercisableWeighted Average
    
    Weighted Average
    
    
    
    
    
    Weighted AverageRange of Exercise Prices
    
    
    
    Shares
    
    Remaining Life
    
    exercise Price
    
    Shares
    
    exercise Price(Years)$1.64 - $3.27
    
    
    
    
    1,528,948
    
    
    
    1.4
    
    
    $
    2.78
    
    
    
    1,528,948
    
    
    $
    2.78$3.28 - $4.91
    
    
    
    
    3,488,754
    
    
    
    3.2
    
    
    
    3.92
    
    
    
    3,488,754
    
    
    
    3.92$4.92 - $6.54
    
    
    
    
    104,000
    
    
    
    4.5
    
    
    
    5.72
    
    
    
    104,000
    
    
    
    5.72$6.55 - $8.18
    
    
    
    
    2,253,011
    
    
    
    5.2
    
    
    
    6.82
    
    
    
    2,253,011
    
    
    
    6.82$8.19 - $9.82
    
    
    
    
    2,266,167
    
    
    
    6.0
    
    
    
    8.73
    
    
    
    1,755,167
    
    
    
    8.73$9.83 - $11.45
    
    
    
    
    760,668
    
    
    
    6.5
    
    
    
    11.07
    
    
    
    613,334
    
    
    
    11.05$
    11.46 - $14.72
    
    
    
    
    
    5,627,501
    
    
    
    7.6
    
    
    
    14.02
    
    
    
    2,481,635
    
    
    
    14.07$
    14.73 - $16.36
    
    
    
    
    
    1,282,000
    
    
    
    8.9
    
    
    
    15.68
    
    
    
    170,664
    
    
    
    16.3117,311,049
    
    
    
    5.7
    
    
    
    9.30
    
    
    
    12,395,513
    
    
    
    7.56
  Weighted-Average Grant DateShares
    
    Fair ValueNon-vested, beginning of year
    
    
    6,958,526
    
    
    $
    6.29Granted
    
    
    1,247,051
    
    
    
    7.16Vested
    
    
    (3,081,938
    )
    
    
    5.92Canceled
    
    
    (208,103
    )
    
    
    6.72Non-vested, end of year
    
    
    4,915,536
    
    
    
    6.71
     61




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##### Table of Contents



Year EndedIn thousands, except per share amounts
    
    October 31, 2005Income from continuing operations
    
    $
    108,290Less stock-based employee compensation
expense determined under the fair value based method,
net of tax
    
    
    12,442Pro forma income from continuing operations
    
    $
    95,848Income per share from continuing operations
    
    $
    0.91Pro forma net income per share from continuing
operations
    
    $
    0.81Income per share from continuing operations, assuming
dilution
    
    $
    0.87Pro forma net income per share from continuing
operations, assuming dilution
    
    $
    0.78
   Years Ended October 31,2007
    
    
    2006Outstanding, beginning of year
    
    
    800,000
    
    
    
    Granted
    
    
    87,000
    
    
    
    800,000Vested
    
    
    
    
    
    
    Forfeited
    
    
    (45,000
    )
    
    
    Outstanding, end of year
    
    
    842,000
    
    
    
    800,000
  62




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##### Table of Contents



Note 11  Accumulated Other Comprehensive Income
  Years Ended October 31,In thousands
    
    2007
    
    
    2006Foreign currency translation adjustment
    
    $
    171,923
    
    
    $
    55,041(Loss) gain on cash flow hedges and interest rate swaps
    
    
    (23,806
    )
    
    
    (1,947
    )$
    148,117
    
    
    $
    53,094
 Note 12  Rossignol Integration Plan and Pre-acquisition Restructuring Plan
  63




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##### Table of Contents



FacilityIn thousands
    
    Workforce
    
    
    and Other
    
    
    TotalRecorded in purchase price allocation
    
    $
    3,673
    
    
    $
    1,574
    
    
    $
    5,247Adjustment to purchase price
allocation
    
    
    17,463
    
    
    
    752
    
    
    
    18,215Cash payments
    
    
    (17
    )
    
    
    (44
    )
    
    
    (61
    )Foreign currency translation
    
    
    (83
    )
    
    
    (6
    )
    
    
    (89
    )Balance, October 31, 2005
    
    
    21,036
    
    
    
    2,276
    
    
    
    23,312Adjustment to purchase price
allocation
    
    
    33,998
    
    
    
    5,085
    
    
    
    39,083Cash payments
    
    
    (14,122
    )
    
    
    (2,512
    )
    
    
    (16,634
    )Foreign currency translation
    
    
    2,559
    
    
    
    88
    
    
    
    2,647Balance, October 31, 2006
    
    
    43,471
    
    
    
    4,937
    
    
    
    48,408Cash payments
    
    
    (25,589
    )
    
    
    (4,005
    )
    
    
    (29,594
    )Foreign currency translation
    
    
    4,213
    
    
    
    635
    
    
    
    4,849Balance, October 31, 2007
    
    $
    22,095
    
    
    $
    1,567
    
    
    $
    23,663
   In thousands
    
    WorkforceBalance, October 31, 2005
    
    $
    9,447Cash payments
    
    
    (6,926
    )Adjustment to purchase price allocation
    
    
    (1,015
    )Foreign currency translation
    
    
    81Balance, October 31, 2006
    
    
    1,587Cash payments
    
    
    (570
    )Foreign currency translation
    
    
    165Balance, October 31, 2007
    
    $
    1,182
 Note 13  Income Taxes
  Years Ended October 31,In thousands
    
    2007
    
    
    2006
    
    
    2005Current:Federal
    
    $
    (882
    )
    
    $
    4,245
    
    
    $
    9,701State
    
    
    (334
    )
    
    
    (319
    )
    
    
    2,489Foreign
    
    
    35,367
    
    
    
    25,291
    
    
    
    34,88334,151
    
    
    
    29,217
    
    
    
    47,073Deferred:Federal
    
    
    (5,364
    )
    
    
    (1,212
    )
    
    
    2,379State
    
    
    (857
    )
    
    
    (228
    )
    
    
    997Foreign
    
    
    (3,725
    )
    
    
    9,636
    
    
    
    1,327(9,946
    )
    
    
    8,196
    
    
    
    4,703Provision for income taxes
    
    $
    24,205
    
    
    $
    37,413
    
    
    $
    51,776
 64




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##### Table of Contents



Years Ended October 31,2007
    
    
    2006
    
    
    2005Computed expected statutory federal income
tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State income taxes, net of federal income
tax benefit
    
    
    (0.4
    )
    
    
    (0.3
    )
    
    
    1.1Foreign tax rate differential
    
    
    (1.3
    )
    
    
    (7.1
    )
    
    
    (1.8
    )Foreign tax exempt income
    
    
    10.7
    
    
    
    (5.6
    )
    
    
    (2.0
    )Repatriation of foreign earnings, net of credits
    
    
    (0.6
    )
    
    
    5.1
    
    
    
    (0.5
    )Goodwill impairment
    
    
    (72.3
    )
    
    
    
    
    
    
    Stock-based compensation
    
    
    (2.8
    )
    
    
    1.6
    
    
    
    Other
    
    
    (0.8
    )
    
    
    (0.3
    )
    
    
    0.5Effective income tax rate
    
    
    (32.5
    )%
    
    
    28.4
    %
    
    
    32.3
    %
  Years Ended October 31,In thousands
    
    2007
    
    
    2006Deferred income tax assets:Allowance for doubtful accounts
    
    $
    18,910
    
    
    $
    20,160Other comprehensive income
    
    
    35,049
    
    
    
    5,915Operating loss carryforwards
    
    
    28,146
    
    
    
    29,953Nondeductible accruals and other
    
    
    45,889
    
    
    
    51,119127,994
    
    
    
    107,147Deferred income tax liabilities:Depreciation and amortization
    
    
    (17,898
    )
    
    
    (18,625
    )Intangibles
    
    
    (54,277
    )
    
    
    (52,487
    )(72,175
    )
    
    
    (71,112
    )Deferred income taxes
    
    
    55,819
    
    
    
    36,035Valuation allowance
    
    
    (22,422
    )
    
    
    (26,454
    )Net deferred income taxes
    
    $
    33,397
    
    
    $
    9,581
     65




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##### Table of Contents



Note 14  Employee Plans
 Retirement and additional pension plan benefits
   Year Ended October 31,In thousands
    
    2007
    
    
    2006
    
    
    2005Net periodic pension cost:Service cost
    
    $
    995
    
    
    $
    1,109
    
    
    $
    261Interest charge
    
    
    151
    
    
    
    153
    
    
    
    101Realized actuarial (gains) losses during the period
    
    
    (345
    )
    
    
    (529
    )
    
    
    61$
    801
    
    
    $
    733
    
    
    $
    423Benefit obligation:Balance, beginning of period
    
    
    9,342
    
    
    
    9,984
    
    
    
    9,704Disbursements
    
    
    (1,864
    )
    
    
    (1,375
    )
    
    
    (143
    )Net periodic pension costs
    
    
    801
    
    
    
    733
    
    
    
    423Balance, end of period
    
    $
    8,279
    
    
    $
    9,342
    
    
    $
    9,984
  In thousands2008
    
    $
    5622009
    
    
    4182010
    
    
    3702011
    
    
    4062012
    
    
    448Thereafter
    
    
    6,075$
    8,279
   66




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##### Table of Contents



Note 15  Segment and Geographic Information
   Percentage of Revenues2007
    
    2006
    
    2005Apparel
    
    
    58
    %
    
    
    57
    %
    
    
    68
    %Footwear
    
    
    15
    
    
    
    12
    
    
    
    11Wintersports equipment
    
    
    14
    
    
    
    19
    
    
    
    9Accessories
    
    
    13
    
    
    
    12
    
    
    
    12100
    %
    
    
    100
    %
    
    
    100
    %
 67




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##### Table of Contents



In thousands
    
    Years Ended October 31,2007
    
    
    2006
    
    
    2005Revenues, net:Americas
    
    $
    1,092,076
    
    
    $
    939,370
    
    
    $
    801,836Europe
    
    
    1,070,053
    
    
    
    1,002,475
    
    
    
    709,510Asia/Pacific
    
    
    259,093
    
    
    
    253,003
    
    
    
    219,241Corporate operations
    
    
    4,813
    
    
    
    5,386
    
    
    
    3,941Consolidated
    
    $
    2,426,035
    
    
    $
    2,200,234
    
    
    $
    1,734,528Gross profit:Americas
    
    $
    444,286
    
    
    $
    375,022
    
    
    $
    316,778Europe
    
    
    551,738
    
    
    
    512,909
    
    
    
    361,172Asia/Pacific
    
    
    122,525
    
    
    
    116,047
    
    
    
    109,298Corporate operations
    
    
    3,692
    
    
    
    2,318
    
    
    
    1,298Consolidated
    
    $
    1,122,241
    
    
    $
    1,006,296
    
    
    $
    788,546Operating (loss) income:Americas
    
    $
    68,232
    
    
    $
    93,132
    
    
    $
    85,049Europe
    
    
    (33,711
    )
    
    
    115,974
    
    
    
    103,308Asia/Pacific
    
    
    5,114
    
    
    
    21,723
    
    
    
    29,800Corporate operations
    
    
    (55,157
    )
    
    
    (51,558
    )
    
    
    (37,061
    )Consolidated
    
    $
    (15,522
    )
    
    $
    179,271
    
    
    $
    181,096Identifiable assets:Americas
    
    $
    897,029
    
    
    $
    851,260
    
    
    $
    813,549Europe
    
    
    1,313,311
    
    
    
    1,198,803
    
    
    
    977,057Asia/Pacific
    
    
    375,439
    
    
    
    346,491
    
    
    
    313,993Corporate operations
    
    
    55,749
    
    
    
    50,674
    
    
    
    54,002Consolidated
    
    $
    2,641,528
    
    
    $
    2,447,228
    
    
    $
    2,158,601Goodwill:Americas
    
    $
    86,813
    
    
    $
    105,100
    
    
    $
    118,687Europe
    
    
    184,803
    
    
    
    247,849
    
    
    
    175,392Asia/Pacific
    
    
    145,667
    
    
    
    122,546
    
    
    
    129,037Consolidated
    
    $
    417,283
    
    
    $
    475,495
    
    
    $
    423,116
  Note 16  Derivative Financial Instruments
  68




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##### Table of Contents



Notional
    
    
    
    
    FairIn thousands
    
    Amount
    
    
    Maturity
    
    ValueUnited States dollar
    
    $
    470,870
    
    
    Nov. 2007  Oct. 2009
    
    $
    (38,438
    )Canadian dollar
    
    
    16,763
    
    
    Dec. 2007  Apr. 2008
    
    
    353Japanese yen
    
    
    8,721
    
    
    Dec. 2007  Dec. 2008
    
    
    (690
    )Interest rate instruments
    
    
    23,775
    
    
    Apr. 2008  Sept. 2009
    
    
    (29
    )$
    520,129
    
    
    
    
    $
    (38,804
    )
 69




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##### Table of Contents



Note 17  Quarterly Financial Data (Unaudited)
  Quarter EndedIn thousands, except per share amounts
    
    January 31
    
    April 30
    
    July 31
    
    October 31Year ended October 31, 2007Revenues, net
    
    $
    528,677
    
    
    $
    557,227
    
    
    $
    560,930
    
    
    $
    779,201Gross profit
    
    
    248,929
    
    
    
    253,943
    
    
    
    260,706
    
    
    
    358,663Income (loss) from continuing
operations
    
    
    6,809
    
    
    
    (1,880
    )
    
    
    1,289
    
    
    
    (104,866
    )Loss from discontinued operations
    
    
    (4,336
    )
    
    
    (2,920
    )
    
    
    (9,156
    )
    
    
    (6,059
    )Net income (loss)
    
    
    2,473
    
    
    
    (4,800
    )
    
    
    (7,867
    )
    
    
    (110,925
    )Income (loss) per share from
continuing operations, assuming
dilution
    
    
    0.05
    
    
    
    (0.02
    )
    
    
    0.01
    
    
    
    (0.84
    )Loss per share from discontinued
operations, assuming dilution
    
    
    (0.04
    )
    
    
    (0.02
    )
    
    
    (0.07
    )
    
    
    (0.05
    )Net income (loss) per share, assuming
dilution
    
    
    0.02
    
    
    
    (0.04
    )
    
    
    (0.06
    )
    
    
    (0.89
    )Trade accounts receivable
    
    
    566,065
    
    
    
    543,532
    
    
    
    561,388
    
    
    
    760,430Inventories
    
    
    442,832
    
    
    
    420,760
    
    
    
    510,983
    
    
    
    447,282Year ended October 31, 2006Revenues, net
    
    $
    518,558
    
    
    $
    466,150
    
    
    $
    483,696
    
    
    $
    731,830Gross profit
    
    
    238,251
    
    
    
    209,223
    
    
    
    228,526
    
    
    
    330,296Income from continuing operations
    
    
    21,414
    
    
    
    2,319
    
    
    
    4,606
    
    
    
    65,764(Loss) income from discontinued
operations
    
    
    (2,811
    )
    
    
    1,410
    
    
    
    730
    
    
    
    (416
    )Net income
    
    
    18,603
    
    
    
    3,729
    
    
    
    5,336
    
    
    
    65,348Income per share from continuing
operations, assuming dilution
    
    
    0.17
    
    
    
    0.02
    
    
    
    0.04
    
    
    
    0.51(Loss) income per share from
discontinued operations, assuming
dilution
    
    
    (0.02
    )
    
    
    0.01
    
    
    
    
    
    
    
    Net income per share, assuming
dilution
    
    
    0.15
    
    
    
    0.03
    
    
    
    0.04
    
    
    
    0.51Trade accounts receivable
    
    
    500,858
    
    
    
    439,898
    
    
    
    455,553
    
    
    
    674,734Inventories
    
    
    354,878
    
    
    
    351,598
    
    
    
    466,519
    
    
    
    389,663
 Note 18  Condensed Consolidating Financial Information
   70




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CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
 Year Ended October 31, 2007
 Wholly-owned
    
    
    Non-Quiksilver,
    
    
    Guarantor
    
    
    GuarantorIn thousands
    
    Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    ConsolidatedRevenues, net
    
    $
    19
    
    
    $
    956,031
    
    
    $
    1,517,741
    
    
    $
    (47,756
    )
    
    $
    2,426,035Cost of goods sold
    
    
    
    
    
    
    570,605
    
    
    
    750,813
    
    
    
    (17,624
    )
    
    
    1,303,794Gross profit
    
    
    19
    
    
    
    385,426
    
    
    
    766,928
    
    
    
    (30,132
    )
    
    
    1,122,241Selling, general and administrative
expense
    
    
    59,086
    
    
    
    280,793
    
    
    
    661,420
    
    
    
    (29,888
    )
    
    
    971,411Asset impairments
    
    
    
    
    
    
    35,508
    
    
    
    130,844
    
    
    
    
    
    
    
    166,352Operating (loss) income
    
    
    (59,067
    )
    
    
    69,125
    
    
    
    (25,336
    )
    
    
    (244
    )
    
    
    (15,522
    )Interest expense
    
    
    43,480
    
    
    
    5,129
    
    
    
    8,414
    
    
    
    
    
    
    
    57,023Foreign currency loss (gain)
    
    
    3,008
    
    
    
    1,629
    
    
    
    (2,860
    )
    
    
    
    
    
    
    1,777Minority interest and Other
(income) expense
    
    
    
    
    
    
    (73
    )
    
    
    194
    
    
    
    
    
    
    
    121(Loss) income before provision
(benefit) for income taxes
    
    
    (105,555
    )
    
    
    62,440
    
    
    
    (31,084
    )
    
    
    (244
    )
    
    
    (74,443
    )(Benefit) provision for income taxes
    
    
    (18,210
    )
    
    
    10,773
    
    
    
    31,642
    
    
    
    
    
    
    
    24,205(Loss) income from continuing
operations
    
    
    (87,345
    )
    
    
    51,667
    
    
    
    (62,726
    )
    
    
    (244
    )
    
    
    (98,648
    )Loss from discontinued operations
    
    
    (386
    )
    
    
    (18,959
    )
    
    
    (2,686
    )
    
    
    (440
    )
    
    
    (22,471
    )Net (loss) income
    
    $
    (87,731
    )
    
    $
    32,708
    
    
    $
    (65,412
    )
    
    $
    (684
    )
    
    $
    (121,119
    )
 71




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CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
 Year Ended October 31, 2006
 Wholly-owned
    
    
    Non-Quiksilver,
    
    
    Guarantor
    
    
    GuarantorIn thousands
    
    Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    ConsolidatedRevenues, net
    
    $
    592
    
    
    $
    856,939
    
    
    $
    1,391,837
    
    
    $
    (49,134
    )
    
    $
    2,200,234Cost of goods sold
    
    
    
    
    
    
    518,894
    
    
    
    699,535
    
    
    
    (24,491
    )
    
    
    1,193,938Gross profit
    
    
    592
    
    
    
    338,045
    
    
    
    692,302
    
    
    
    (24,643
    )
    
    
    1,006,296Selling, general and administrative
expense
    
    
    49,142
    
    
    
    263,665
    
    
    
    538,686
    
    
    
    (24,468
    )
    
    
    827,025Operating (loss) income
    
    
    (48,550
    )
    
    
    74,380
    
    
    
    153,616
    
    
    
    (175
    )
    
    
    179,271Interest expense
    
    
    38,301
    
    
    
    3,933
    
    
    
    5,210
    
    
    
    
    
    
    
    47,444Foreign currency (gain) loss
    
    
    (730
    )
    
    
    43
    
    
    
    695
    
    
    
    
    
    
    
    8Minority interest and other
expense
    
    
    
    
    
    
    
    
    
    
    303
    
    
    
    
    
    
    
    303(Loss) income before (benefit)
provision for income taxes
    
    
    (86,121
    )
    
    
    70,404
    
    
    
    147,408
    
    
    
    (175
    )
    
    
    131,516(Benefit) provision for income taxes
    
    
    (23,684
    )
    
    
    26,460
    
    
    
    34,637
    
    
    
    
    
    
    
    37,413(Loss) income from continuing
operations
    
    
    (62,437
    )
    
    
    43,944
    
    
    
    112,771
    
    
    
    (175
    )
    
    
    94,103Income (loss) from discontinued
operations
    
    
    
    
    
    
    539
    
    
    
    (1,261
    )
    
    
    (365
    )
    
    
    (1,087
    )Net (loss) income
    
    $
    (62,437
    )
    
    $
    44,483
    
    
    $
    111,510
    
    
    $
    (540
    )
    
    $
    93,016
 72




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CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
 Year Ended October 31, 2005
 Wholly-owned
    
    
    Non-Quiksilver,
    
    
    Guarantor
    
    
    GuarantorIn thousands
    
    Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    ConsolidatedRevenues, net
    
    $
    2,904
    
    
    $
    800,526
    
    
    $
    965,449
    
    
    $
    (34,351
    )
    
    $
    1,734,528Cost of goods sold
    
    
    
    
    
    
    486,814
    
    
    
    470,548
    
    
    
    (11,380
    )
    
    
    945,982Gross profit
    
    
    2,904
    
    
    
    313,712
    
    
    
    494,901
    
    
    
    (22,971
    )
    
    
    788,546Selling, general and administrative
expense
    
    
    31,690
    
    
    
    232,797
    
    
    
    365,623
    
    
    
    (22,660
    )
    
    
    607,450Operating (loss) income
    
    
    (28,786
    )
    
    
    80,915
    
    
    
    129,278
    
    
    
    (311
    )
    
    
    181,096Interest expense
    
    
    12,940
    
    
    
    4,064
    
    
    
    3,821
    
    
    
    
    
    
    
    20,825Foreign currency (gain) loss
    
    
    (356
    )
    
    
    381
    
    
    
    (185
    )
    
    
    
    
    
    
    (160
    )Minority interest and Other expense
    
    
    
    
    
    
    
    
    
    
    365
    
    
    
    
    
    
    
    365(Loss) income before (benefit)
provision for income taxes
    
    
    (41,370
    )
    
    
    76,470
    
    
    
    125,277
    
    
    
    (311
    )
    
    
    160,066(Benefit) provision for income taxes
    
    
    (14,972
    )
    
    
    30,307
    
    
    
    36,441
    
    
    
    
    
    
    
    51,776(Loss) income from continuing
operations
    
    
    (26,398
    )
    
    
    46,163
    
    
    
    88,836
    
    
    
    (311
    )
    
    
    108,290Loss from discontinued operations
    
    
    
    
    
    
    (543
    )
    
    
    (627
    )
    
    
    
    
    
    
    (1,170
    )Net (loss) income
    
    $
    (26,398
    )
    
    $
    45,620
    
    
    $
    88,209
    
    
    $
    (311
    )
    
    $
    107,120
 73




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CONDENSED CONSOLIDATING BALANCE SHEET
 AT OCTOBER 31, 2007
 Wholly-owned
    
    
    Non-Guarantor
    
    
    GuarantorIn thousands
    
    Quiksilver, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    12
    
    
    $
    13,254
    
    
    $
    61,082
    
    
    $
    
    
    
    $
    74,348Trade accounts receivable, net
    
    
    
    
    
    
    248,392
    
    
    
    512,038
    
    
    
    
    
    
    
    760,430Other receivables
    
    
    775
    
    
    
    13,574
    
    
    
    55,752
    
    
    
    
    
    
    
    70,101Inventories
    
    
    
    
    
    
    152,700
    
    
    
    295,878
    
    
    
    (1,296
    )
    
    
    447,282Deferred income taxes
    
    
    
    
    
    
    18,143
    
    
    
    44,054
    
    
    
    
    
    
    
    62,197Prepaid expenses and other
current assets
    
    
    1,596
    
    
    
    7,729
    
    
    
    15,894
    
    
    
    
    
    
    
    25,219Current assets held for sale
    
    
    
    
    
    
    53,044
    
    
    
    21,662
    
    
    
    (1,021
    )
    
    
    73,685Total current assets
    
    
    2,383
    
    
    
    506,836
    
    
    
    1,006,360
    
    
    
    (2,317
    )
    
    
    1,513,262Fixed assets, net
    
    
    6,959
    
    
    
    100,803
    
    
    
    239,560
    
    
    
    
    
    
    
    347,322Intangible assets, net
    
    
    2,626
    
    
    
    47,282
    
    
    
    175,734
    
    
    
    
    
    
    
    225,642Goodwill
    
    
    
    
    
    
    126,437
    
    
    
    290,846
    
    
    
    
    
    
    
    417,283Investment in subsidiaries
    
    
    569,492
    
    
    
    
    
    
    
    
    
    
    
    (569,492
    )
    
    
    Other assets
    
    
    10,120
    
    
    
    5,967
    
    
    
    30,176
    
    
    
    
    
    
    
    46,263Non-current assets held for sale
    
    
    
    
    
    
    72,679
    
    
    
    19,077
    
    
    
    
    
    
    
    91,756Total assets
    
    $
    591,580
    
    
    $
    860,004
    
    
    $
    1,761,753
    
    
    $
    (571,809
    )
    
    $
    2,641,528LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Lines of credit
    
    $
    
    
    
    $
    
    
    
    $
    313,996
    
    
    $
    
    
    
    $
    313,996Accounts payable
    
    
    2,086
    
    
    
    111,086
    
    
    
    173,635
    
    
    
    
    
    
    
    286,807Accrued liabilities
    
    
    20,287
    
    
    
    41,986
    
    
    
    165,567
    
    
    
    
    
    
    
    227,840Current portion of long-term debt
    
    
    
    
    
    
    
    
    
    
    34,306
    
    
    
    
    
    
    
    34,306Income taxes payable
    
    
    
    
    
    
    3,331
    
    
    
    3,856
    
    
    
    
    
    
    
    7,187Intercompany balances
    
    
    178,353
    
    
    
    (6,389
    )
    
    
    (171,964
    )
    
    
    
    
    
    
    Current liabilities of assets held for
sale
    
    
    
    
    
    
    7,274
    
    
    
    3,995
    
    
    
    
    
    
    
    11,269Total current liabilities
    
    
    200,726
    
    
    
    157,288
    
    
    
    523,391
    
    
    
    
    
    
    
    881,405Long-term debt
    
    
    400,000
    
    
    
    129,700
    
    
    
    242,428
    
    
    
    
    
    
    
    772,128Deferred income taxes and other long-term
liabilities
    
    
    
    
    
    
    10,548
    
    
    
    37,918
    
    
    
    
    
    
    
    48,466Non-current liabilities of assets held for
sale
    
    
    
    
    
    
    52,812
    
    
    
    104
    
    
    
    
    
    
    
    52,916Total liabilities
    
    
    600,726
    
    
    
    350,348
    
    
    
    803,841
    
    
    
    
    
    
    
    1,754,915Minority Interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stockholders/invested equity
    
    
    (9,146
    )
    
    
    509,656
    
    
    
    957,912
    
    
    
    (571,809
    )
    
    
    886,613Total liabilities and
stockholders equity
    
    $
    591,580
    
    
    $
    860,004
    
    
    $
    1,761,753
    
    
    $
    (571,809
    )
    
    $
    2,641,528
 74




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##### Table of Contents



CONDENSED CONSOLIDATING BALANCE SHEET
 AT OCTOBER 31, 2006
 Wholly-owned
    
    
    Non-Guarantor
    
    
    GuarantorIn thousands
    
    Quiksilver, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    8
    
    
    $
    3,392
    
    
    $
    33,434
    
    
    $
    
    
    
    $
    36,834Trade accounts receivable, net
    
    
    
    
    
    
    205,682
    
    
    
    469,052
    
    
    
    
    
    
    
    674,734Other receivables
    
    
    1,190
    
    
    
    12,585
    
    
    
    20,415
    
    
    
    
    
    
    
    34,190Inventories
    
    
    
    
    
    
    142,807
    
    
    
    248,125
    
    
    
    (1,269
    )
    
    
    389,663Deferred income taxes
    
    
    
    
    
    
    14,241
    
    
    
    67,193
    
    
    
    
    
    
    
    81,434Prepaid expenses and other
current assets
    
    
    1,703
    
    
    
    9,909
    
    
    
    15,232
    
    
    
    
    
    
    
    26,844Current assets held for sale
    
    
    
    
    
    
    71,508
    
    
    
    18,340
    
    
    
    (365
    )
    
    
    89,483Total current assets
    
    
    2,901
    
    
    
    460,124
    
    
    
    871,791
    
    
    
    (1,634
    )
    
    
    1,333,182Fixed assets, net
    
    
    6,343
    
    
    
    83,379
    
    
    
    188,252
    
    
    
    
    
    
    
    277,974Intangible assets, net
    
    
    2,452
    
    
    
    47,225
    
    
    
    163,095
    
    
    
    
    
    
    
    212,772Goodwill
    
    
    
    
    
    
    127,480
    
    
    
    348,015
    
    
    
    
    
    
    
    475,495Investment in subsidiaries
    
    
    561,992
    
    
    
    
    
    
    
    
    
    
    
    (561,992
    )
    
    
    Other assets
    
    
    10,909
    
    
    
    4,707
    
    
    
    30,012
    
    
    
    
    
    
    
    45,628Non-current assets held for sale
    
    
    
    
    
    
    81,738
    
    
    
    20,439
    
    
    
    
    
    
    
    102,177Total assets
    
    $
    584,597
    
    
    $
    804,653
    
    
    $
    1,621,604
    
    
    $
    (563,626
    )
    
    $
    2,447,228LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Lines of credit
    
    $
    
    
    
    $
    209
    
    
    $
    315,682
    
    
    $
    
    
    
    $
    315,891Accounts payable
    
    
    2,303
    
    
    
    89,045
    
    
    
    123,553
    
    
    
    
    
    
    
    214,901Accrued liabilities
    
    
    13,535
    
    
    
    43,867
    
    
    
    134,796
    
    
    
    (29
    )
    
    
    192,169Current portion of long-term debt
    
    
    
    
    
    
    4,305
    
    
    
    20,316
    
    
    
    
    
    
    
    24,621Income taxes payable
    
    
    
    
    
    
    14,626
    
    
    
    (12,782
    )
    
    
    
    
    
    
    1,844Intercompany balances
    
    
    72,386
    
    
    
    55,117
    
    
    
    (127,503
    )
    
    
    
    
    
    
    Current liabilities of assets held for
sale
    
    
    
    
    
    
    10,564
    
    
    
    4,596
    
    
    
    
    
    
    
    15,160Total current liabilities
    
    
    88,224
    
    
    
    217,733
    
    
    
    458,658
    
    
    
    (29
    )
    
    
    764,586Long-term debt
    
    
    433,701
    
    
    
    77,150
    
    
    
    129,457
    
    
    
    
    
    
    
    640,308Deferred income taxes and other long-term
liabilities
    
    
    
    
    
    
    11,603
    
    
    
    75,208
    
    
    
    
    
    
    
    86,811Non-current liabilities of assets held for
sale
    
    
    
    
    
    
    58,817
    
    
    
    4,386
    
    
    
    
    
    
    
    63,203Total liabilities
    
    
    521,925
    
    
    
    365,303
    
    
    
    667,709
    
    
    
    (29
    )
    
    
    1,554,908Minority interest
    
    
    
    
    
    
    11,193
    
    
    
    
    
    
    
    
    
    
    
    11,193Stockholders/invested equity
    
    
    62,672
    
    
    
    428,157
    
    
    
    953,895
    
    
    
    (563,597
    )
    
    
    881,127Total liabilities and
stockholders equity
    
    $
    584,597
    
    
    $
    804,653
    
    
    $
    1,621,604
    
    
    $
    (563,626
    )
    
    $
    2,447,228
 75




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
 Year Ended October 31, 2007
 Wholly-owned
    
    
    Non-Guarantor
    
    
    GuarantorIn thousands
    
    Quiksilver, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    ConsolidatedCash flows from operating activities:Net (loss) income
    
    $
    (87,731
    )
    
    $
    32,708
    
    
    $
    (66,096
    )
    
    $
    (121,119
    )Adjustments to reconcile net (loss) income to
net cash provided by operating activities:Loss from discontinued operations
    
    
    386
    
    
    
    18,959
    
    
    
    3,126
    
    
    
    22,471Depreciation and amortization
    
    
    629
    
    
    
    21,015
    
    
    
    45,250
    
    
    
    66,894Stock-based compensation and tax benefit
option exercises
    
    
    14,003
    
    
    
    
    
    
    
    
    
    
    
    14,003Provision for doubtful accounts
    
    
    
    
    
    
    3,767
    
    
    
    4,775
    
    
    
    8,542Asset impairments
    
    
    
    
    
    
    35,508
    
    
    
    130,844
    
    
    
    166,352Other adjustments to reconcile net (loss)
income
    
    
    903
    
    
    
    (6,866
    )
    
    
    6,558
    
    
    
    595Changes in operating assets and liabilities:Trade accounts receivable
    
    
    
    
    
    
    (46,478
    )
    
    
    3,763
    
    
    
    (42,715
    )Inventories
    
    
    
    
    
    
    (9,533
    )
    
    
    (8,988
    )
    
    
    (18,521
    )Other operating assets and liabilities
    
    
    19,752
    
    
    
    22,286
    
    
    
    (12,664
    )
    
    
    29,374Cash (used in) provided by operating
activities of continuing operations
    
    
    (52,058
    )
    
    
    71,366
    
    
    
    106,568
    
    
    
    125,876Cash provided by operating activities
of discontinued operations
    
    
    386
    
    
    
    1,272
    
    
    
    (3,282
    )
    
    
    (1,624
    )Net cash (used in) provided by
operating activities
    
    
    (51,672
    )
    
    
    72,638
    
    
    
    103,286
    
    
    
    124,252Cash flows from investing activities:Proceeds from the sale of properties and
equipment
    
    
    
    
    
    
    4,463
    
    
    
    12,892
    
    
    
    17,355Capital expenditures
    
    
    (1,419
    )
    
    
    (42,066
    )
    
    
    (72,805
    )
    
    
    (116,290
    )Business acquisitions, net of cash acquired
    
    
    (1,297
    )
    
    
    (20,628
    )
    
    
    (20,629
    )
    
    
    (42,554
    )Cash used in investing activities of
continuing operations
    
    
    (2,716
    )
    
    
    (58,231
    )
    
    
    (80,542
    )
    
    
    (141,489
    )Cash used in investing activities of
discontinued operations
    
    
    
    
    
    
    (18,771
    )
    
    
    (230
    )
    
    
    (19,001
    )Net cash used in investing activities
    
    
    (2,716
    )
    
    
    (77,002
    )
    
    
    (80,772
    )
    
    
    (160,490
    )Cash flows from financing activities:Borrowings on lines of credit
    
    
    
    
    
    
    
    
    
    
    156,189
    
    
    
    156,189Payments on lines of credit
    
    
    
    
    
    
    (209
    )
    
    
    (186,441
    )
    
    
    (186,650
    )Borrowings on long-term debt
    
    
    
    
    
    
    123,250
    
    
    
    86,683
    
    
    
    209,933Payments on long-term debt
    
    
    
    
    
    
    (74,375
    )
    
    
    (29,983
    )
    
    
    (104,358
    )Proceeds from stock option exercises
    
    
    14,253
    
    
    
    
    
    
    
    
    
    
    
    14,253Intercompany
    
    
    40,139
    
    
    
    (25,646
    )
    
    
    (14,493
    )
    
    
    Cash provided by financing activities
of continuing operations
    
    
    54,392
    
    
    
    23,020
    
    
    
    11,955
    
    
    
    89,367Cash used in financing activities of
discontinued operations
    
    
    
    
    
    
    (8,794
    )
    
    
    (756
    )
    
    
    (9,550
    )Net cash provided by financing
activities
    
    
    54,392
    
    
    
    14,226
    
    
    
    11,199
    
    
    
    79,817Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    (6,065
    )
    
    
    (6,065
    )Net increase in cash and cash equivalents
    
    
    4
    
    
    
    9,862
    
    
    
    27,648
    
    
    
    37,514Cash and cash equivalents, beginning of period
    
    
    8
    
    
    
    3,392
    
    
    
    33,434
    
    
    
    36,834Cash and cash equivalents, end of period
    
    $
    12
    
    
    $
    13,254
    
    
    $
    61,082
    
    
    $
    74,348
 76




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
 Year Ended October 31, 2006
 Wholly-owned
    
    
    Non-Guarantor
    
    
    GuarantorIn thousands
    
    Quiksilver, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    ConsolidatedCash flows from operating activities:Net (loss) income
    
    $
    (62,437
    )
    
    $
    44,483
    
    
    $
    110,970
    
    
    $
    93,016Adjustments to reconcile net (loss) income to
net cash provided by operating activities:Loss (income) from discontinued
operations
    
    
    
    
    
    
    (174
    )
    
    
    1,261
    
    
    
    1,087Depreciation and amortization
    
    
    251
    
    
    
    18,560
    
    
    
    43,823
    
    
    
    62,634Stock-based compensation and tax benefit
on option exercises
    
    
    20,751
    
    
    
    (256
    )
    
    
    
    
    
    
    20,495Provision for doubtful accounts
    
    
    
    
    
    
    (2,113
    )
    
    
    4,387
    
    
    
    2,274Other adjustments to reconcile net (loss)
income
    
    
    (68
    )
    
    
    1,245
    
    
    
    9,451
    
    
    
    10,628Changes in operating assets and liabilities:Trade accounts receivable
    
    
    
    
    
    
    (11,865
    )
    
    
    (75,264
    )
    
    
    (87,129
    )Inventories
    
    
    
    
    
    
    (33,809
    )
    
    
    8,877
    
    
    
    (24,932
    )Other operating assets and liabilities
    
    
    (1,138
    )
    
    
    5,708
    
    
    
    (87,681
    )
    
    
    (83,111
    )Cash (used in) provided by operating
activities of continuing operations
    
    
    (42,641
    )
    
    
    21,779
    
    
    
    15,824
    
    
    
    (5,038
    )Cash used in operating activities of
discontinued operations
    
    
    
    
    
    
    (1,494
    )
    
    
    (1,766
    )
    
    
    (3,260
    )Net cash (used in) provided by
operating activities
    
    
    (42,641
    )
    
    
    20,285
    
    
    
    14,058
    
    
    
    (8,298
    )Cash flows from investing activities:Proceeds from the sale of properties and
equipment
    
    
    
    
    
    
    13
    
    
    
    5,100
    
    
    
    5,113Capital expenditures
    
    
    (4,057
    )
    
    
    (35,111
    )
    
    
    (56,348
    )
    
    
    (95,516
    )Business acquisitions, net of cash acquired
    
    
    (3,074
    )
    
    
    (8,812
    )
    
    
    (26,548
    )
    
    
    (38,434
    )Cash used in investing activities of
continuing operations
    
    
    (7,131
    )
    
    
    (43,910
    )
    
    
    (77,796
    )
    
    
    (128,837
    )Cash used in investing activities of
discontinued operations
    
    
    
    
    
    
    (1,950
    )
    
    
    (2,560
    )
    
    
    (4,510
    )Net cash used in investing activities
    
    
    (7,131
    )
    
    
    (45,860
    )
    
    
    (80,356
    )
    
    
    (133,347
    )Cash flows from financing activities:Borrowings on lines of credit
    
    
    
    
    
    
    374
    
    
    
    312,029
    
    
    
    312,403Payments on lines of credit
    
    
    
    
    
    
    (6,727
    )
    
    
    (213,704
    )
    
    
    (220,431
    )Borrowings on long-term debt
    
    
    
    
    
    
    62,781
    
    
    
    57,471
    
    
    
    120,252Payments on long-term debt
    
    
    (840
    )
    
    
    (24,012
    )
    
    
    (103,067
    )
    
    
    (127,919
    )Proceeds from stock option exercises
    
    
    11,212
    
    
    
    
    
    
    
    
    
    
    
    11,212Intercompany
    
    
    38,145
    
    
    
    (29,442
    )
    
    
    (8,703
    )
    
    
    Cash provided by financing activities
of continuing operations
    
    
    48,517
    
    
    
    2,974
    
    
    
    44,026
    
    
    
    95,517Cash provided by financing activities
of discontinued operations
    
    
    
    
    
    
    4,713
    
    
    
    5,760
    
    
    
    10,473Net cash provided by financing
activities
    
    
    48,517
    
    
    
    7,687
    
    
    
    49,786
    
    
    
    105,990Effect of exchange rate changes on cash
    
    
    86
    
    
    
    (522
    )
    
    
    (2,673
    )
    
    
    (3,109
    )Net decrease in cash and cash equivalents
    
    
    (1,169
    )
    
    
    (18,410
    )
    
    
    (19,185
    )
    
    
    (38,764
    )Cash and cash equivalents, beginning of period
    
    
    1,177
    
    
    
    21,802
    
    
    
    52,619
    
    
    
    75,598Cash and cash equivalents, end of period
    
    $
    8
    
    
    $
    3,392
    
    
    $
    33,434
    
    
    $
    36,834
 77




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
 Year Ended October 31, 2005
 Wholly-owned
    
    
    Non-Guarantor
    
    
    GuarantorIn thousands
    
    Quiksilver, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    ConsolidatedCash flows from operating activities:Net (loss) income
    
    $
    (26,398
    )
    
    $
    45,620
    
    
    $
    87,898
    
    
    $
    107,120Adjustments to reconcile net (loss) income to
net cash provided by operating activities:Loss from discontinued operations
    
    
    
    
    
    
    543
    
    
    
    627
    
    
    
    1,170Depreciation and amortization
    
    
    246
    
    
    
    15,755
    
    
    
    25,069
    
    
    
    41,070Provision for doubtful accounts
    
    
    
    
    
    
    1,636
    
    
    
    1,956
    
    
    
    3,592Other adjustments to reconcile net (loss)
income
    
    
    (224
    )
    
    
    2,932
    
    
    
    6,518
    
    
    
    9,226Changes in operating assets and liabilities:Trade accounts receivable
    
    
    
    
    
    
    (64,035
    )
    
    
    (161,752
    )
    
    
    (225,787
    )Inventories
    
    
    
    
    
    
    22,706
    
    
    
    12,771
    
    
    
    35,477Other operating assets and liabilities
    
    
    (5,495
    )
    
    
    19,870
    
    
    
    20,487
    
    
    
    34,862Cash (used in) provided by operating
activities of continuing operations
    
    
    (31,871
    )
    
    
    45,027
    
    
    
    (6,426
    )
    
    
    6,730Cash used in by operating activities
of discontinued operations
    
    
    
    
    
    
    (8,144
    )
    
    
    
    
    
    
    (8,144
    )Net cash (used in) provided by
operating activities
    
    
    (31,871
    )
    
    
    36,883
    
    
    
    (6,426
    )
    
    
    (1,414
    )Cash flows from investing activities:Capital expenditures
    
    
    (2,473
    )
    
    
    (30,094
    )
    
    
    (37,623
    )
    
    
    (70,190
    )Business acquisitions, net of cash acquired
    
    
    (231,948
    )
    
    
    (11,885
    )
    
    
    (8,032
    )
    
    
    (251,865
    )Cash used in investing activities of
continuing operations
    
    
    (234,421
    )
    
    
    (41,979
    )
    
    
    (45,655
    )
    
    
    (322,055
    )Cash used in investing activities of
discontinued operations
    
    
    
    
    
    
    (668
    )
    
    
    
    
    
    
    (668
    )Net cash used in investing activities
    
    
    (234,421
    )
    
    
    (42,647
    )
    
    
    (45,655
    )
    
    
    (322,723
    )Cash flows from financing activities:Borrowings on lines of credit
    
    
    
    
    
    
    6,208
    
    
    
    116,768
    
    
    
    122,976Payments on lines of credit
    
    
    
    
    
    
    (51,162
    )
    
    
    (45,925
    )
    
    
    (97,087
    )Borrowings on long-term debt
    
    
    484,843
    
    
    
    (32,370
    )
    
    
    135,983
    
    
    
    588,456Payments on long-term debt
    
    
    (140,705
    )
    
    
    (50,738
    )
    
    
    (93,010
    )
    
    
    (284,453
    )Proceeds from stock option exercises
    
    
    8,188
    
    
    
    
    
    
    
    
    
    
    
    8,188Intercompany
    
    
    (81,518
    )
    
    
    135,860
    
    
    
    (54,342
    )
    
    
    Cash provided by financing activities
of continuing operations
    
    
    270,808
    
    
    
    7,798
    
    
    
    59,474
    
    
    
    338,080Cash provided by financing activities
of discontinued operations
    
    
    
    
    
    
    9,786
    
    
    
    
    
    
    
    9,786Net cash provided by financing
activities
    
    
    270,808
    
    
    
    17,584
    
    
    
    59,474
    
    
    
    347,866Effect of exchange rate changes on cash
    
    
    (2,269
    )
    
    
    493
    
    
    
    (1,552
    )
    
    
    (3,328
    )Net increase in cash and cash equivalents
    
    
    2,247
    
    
    
    12,313
    
    
    
    5,841
    
    
    
    20,401Cash and cash equivalents, beginning of period
    
    
    (1,070
    )
    
    
    9,489
    
    
    
    46,778
    
    
    
    55,197Cash and cash equivalents, end of period
    
    $
    1,177
    
    
    $
    21,802
    
    
    $
    52,619
    
    
    $
    75,598
 78




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##### Table of Contents



Note 19  Discontinued Operations
   In thousands
    
    Years Ended October 31,2007
    
    
    2006
    
    
    2005Revenues, net
    
    $
    162,173
    
    
    $
    162,054
    
    
    $
    46,341Loss before income taxes
    
    
    (20,487
    )
    
    
    (174
    )
    
    
    (1,720
    )Provision (benefit) for income taxes
    
    
    1,984
    
    
    
    913
    
    
    
    (550
    )Loss from discontinued operations
    
    $
    (22,471
    )
    
    $
    (1,087
    )
    
    $
    (1,170
    )
   In thousands
    

Year
Ended October 31, 2007Current assets:Receivables, net
    
    $
    40,309Inventories
    
    
    26,415Other current assets
    
    
    6,961$
    73,685Non-current assets:Fixed assets, net
    
    $
    3,619Goodwill and intangible assets, net
    
    
    72,540Other assets
    
    
    301$
    76,460Current liabilities:Accounts payable
    
    $
    6,614Other current liabilities
    
    
    4,655$
    11,269Non-current liabilities:Long-term debt
    
    $
    35,000Other non-current liabilities
    
    
    17,916$
    52,916
 79




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##### Table of Contents



SIGNATURES
   QUIKSILVER, INC.
(Registrant)
 By:
    
    /s/ Robert B. McKnight, Jr.
    
    
    
    By:
    
    /s/ Brad L. HolmanRobert B. McKnight, Jr.
    
    
    
    
    
    Brad L. HolmanChairman of the Board and
    
    
    
    
    
    Vice President of Accounting andChief Executive Officer
    
    
    
    
    
    Financial Reporting(Principal Executive Officer)
    
    
    
    
    
    (Principal Accounting Officer)
   Signatures
    
    Title
    
    Date Signed/s/ Robert B. McKnight, Jr.

Robert B. McKnight, Jr.
    
    Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
    
    December 28, 2007/s/ Joseph Scirocco

Joseph Scirocco
    
    Chief Financial Officer
(Principal Financial Officer)
    
    December 28, 2007/s/ Brad L. Holman

Brad L. Holman
    
    Vice President of Accounting
and Financial Reporting
(Principal Accounting Officer)
    
    December 28, 2007/s/ Bernard Mariette

Bernard Mariette
    
    President and Director
    
    December 28, 2007/s/ Charles S. Exon

Charles Exon
    
    Executive Vice President,
General Counsel and Director
    
    December 28, 2007/s/ Douglas K. Ammerman

Douglas K. Ammerman
    
    Director
    
    December 28, 2007
 80




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##### Table of Contents



Signatures
    
    Title
    
    Date Signed/s/ William M. Barnum, Jr.

William M. Barnum, Jr.
    
    Director
    
    December 28, 2007/s/ Charles E. Crowe

Charles E. Crowe
    
    Director
    
    December 28, 2007/s/ Michael H. Gray

Michael H. Gray
    
    Director
    
    December 28, 2007/s/ Timothy Harmon

Timothy Harmon
    
    Director
    
    December 28, 2007/s/ Heidi J. Ueberroth

Heidi J. Ueberroth
    
    Director
    
    December 28, 2007
 81




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##### Table of Contents



EXHIBIT INDEX
 DESCRIPTION
 ExhibitNumber2.1
    
    Stock Purchase Agreement between the Company and the Sellers of DC Shoes, Inc.
dated March 8, 2004 (incorporated by reference to Exhibit 2.1 of the Companys
Current Report on Form 8-K filed on May 18, 2004).2.2
    
    First Amendment to the Stock Purchase Agreement between the Company and the
Sellers of DC Shoes, Inc. dated May 3, 2004 (incorporated by reference to Exhibit
2.2 of the Companys Current Report on Form 8-K filed on May 18, 2004).2.3
    
    Stock Purchase Agreement between the Roger Cleveland Golf Company, Inc., Rossignol
Ski Company, Incorporated, the Company and SRI Sports Limited dated October 30,
2007.2.4
    
    Amendment No. 1 to the Stock Purchase Agreement between the Roger Cleveland Golf
Company, Inc., Rossignol Ski Company, Incorporated, the Company and SRI Sports
Limited dated December 7, 2007.3.1
    
    Restated Certificate of Incorporation of Quiksilver, Inc., as amended
(incorporated by reference to Exhibit 3.1 of the Companys Annual Report on Form
10-K for the year ended October 31, 2004).3.2
    
    Certificate of Amendment of Restated Certificate of Incorporation of Quiksilver,
Inc. (incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report
on Form 10-Q for the quarter ended April 30, 2005).3.3
    
    Amended and Restated Bylaws of Quiksilver, Inc. (incorporated by reference to
Exhibit 3.1 of the Companys Current Report on Form 8-K filed on December 7,
2007).4.1
    
    Indenture for the 6 7/8% Senior Notes due 2015 dated July 22, 2005, among
Quiksilver, Inc., the subsidiary guarantors set forth therein and Wilmington Trust
Company, as trustee, including the form of Global Note attached thereto
(incorporated by reference to Exhibit 4.1 of the Companys Current Report on Form
8-K filed July 25, 2005).10.1
    
    Registration Rights Agreement for the 6 7/8% Senior Notes due 2015 dated as of
July 22, 2005, among Quiksilver, Inc., certain subsidiaries of Quiksilver, Inc.
and the purchasers listed therein (incorporated by reference to Exhibit 10.1 of
the Companys Current Report on Form 8-K filed July 25, 2005)10.2
    
    Purchase Agreement for the 6 7/8% Senior Notes due 2015 dated July 14, 2005, among
Quiksilver, Inc., certain subsidiaries of Quiksilver, Inc. and the purchasers
listed therein (incorporated by reference to Exhibit 10.2 of the Companys
Quarterly Report on Form 10-Q for the quarter ended July 31, 2005).10.3
    
    English translation of Subscription Agreement for the 3.231% EUR 50,000,000 notes
due July, 2010 dated July 11, 2005 among Skis Rossignol S.A. and certain
subsidiaries and Societe Generale Bank & Trust (incorporated by reference to
Exhibit 10.3 of the Companys Quarterly Report on Form 10-Q for the quarter ended
July 31, 2005).10.4
    
    Amended and Restated Credit Agreement, dated as of June 3, 2005, by and among the
Company, Quiksilver Americas, Inc., the Lenders named therein, JPMorgan Chase
Bank, N.A., as Administrative Agent, and J.P. Morgan Securities, Inc. as Sole
Bookrunner and Sole Lead Arranger (the Amended and Restated Credit Agreement)
(incorporated by reference to Exhibit 10.5 of the Companys Quarterly Report on
Form 10-Q for the quarter ended April 30, 2005).10.5
    
    First Amendment to the Amended and Restated Credit Agreement dated October 28,
2005 (incorporated by reference to Exhibit 10.5 of the Companys Annual Report on
Form 10-K for the year ended October 31, 2005).
 82




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##### Table of Contents



ExhibitNumber10.6
    
    Second Amendment to the Amended and Restated Credit Agreement dated January 17,
2006 (incorporated by reference to Exhibit 10.6 of the Companys Annual Report on
Form 10-K for the year ended October 31, 2005).10.7
    
    Third Amendment to the Amended and Restated Credit Agreement dated March 27, 2006
(incorporated by reference to Exhibit 10.7 of the Companys Annual Report on Form
10-K for the year ended October 31, 2006).10.8
    
    Fourth Amendment to Amended and Restated Credit Agreement dated December 22, 2006
(incorporated by reference to Exhibit 10.31 of the Companys Annual Report on Form
10-K for the year ended October 31, 2006).10.9
    
    Fifth Amendment to Amended and Restated Credit Agreement dated December 5, 2007.10.10
    
    Form of Indemnity Agreement between Quiksilver, Inc. and individual directors and
officers of Quiksilver, Inc. (incorporated by reference to Exhibit 10.8 of the
Companys Annual Report on Form 10-K for the year ended October 31, 2006). (1)10.11
    
    Quiksilver, Inc. Annual Incentive Plan, as restated (incorporated by reference to
Exhibit 10.2 of the Companys Quarterly Report on Form 10-Q for the quarter ended
April 30, 2005).(1)10.12
    
    Quiksilver, Inc. 2000 Stock Incentive Plan, as amended and restated, together with
form Stock Option and Director Restricted Stock Agreements (incorporated by
reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q filed for
the quarter ended April 30, 2007).(1)10.13
    
    Standard Form of Employee Restricted Stock Agreement under the Quiksilver, Inc.
2000 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of the
Companys Current Report on Form 8-K filed on October 22, 2007). (1)10.14
    
    Quiksilver, Inc. 1996 Stock Option Plan, together with form Stock Option
Agreements. (incorporated by reference to Exhibit 10.11 of the Companys Annual
Report on Form 10-K for the year ended October 31, 2006). (1)10.15
    
    Quiksilver, Inc. 1998 Nonemployee Directors Stock Option Plan, together with form
Stock Option Agreement (incorporated by reference to Exhibit 10.9 of the Companys
Annual Report on Form 10-K for the year ended October 31, 2004).(1)10.16
    
    Employment Agreement between David Morgan and Quiksilver, Inc. dated December 22,
2006 (incorporated by reference to Exhibit 10.13 of the Companys Annual Report on
Form 10-K for the year ended October 31, 2006). (1)10.17
    
    Employment Agreement between Robert B. McKnight, Jr. and Quiksilver, Inc. dated
May 25, 2005 (incorporated by reference to Exhibit 10.1 of the Companys Current
Report on Form 8-K filed on May 27, 2005). (1)10.18
    
    Amendment to Employment Agreement between Robert B. McKnight, Jr. and Quiksilver,
Inc. dated December 21, 2006 (incorporated by reference to Exhibit 10.15 of the
Companys Annual Report on Form 10-K for the year ended October 31, 2006). (1)10.19
    
    Employment Agreement between Bernard Mariette and Quiksilver, Inc. dated May 25,
2005 (incorporated by reference to Exhibit 10.2 of the Companys Current Report on
Form 8-K filed on May 27, 2005). (1)10.20
    
    Amendment to Employment Agreement between Bernard Mariette and Quiksilver, Inc.
dated December 21, 2006 (incorporated by reference to Exhibit 10.17 of the
Companys Annual Report on Form 10-K for the year ended October 31, 2006). (1)10.21
    
    Employment Agreement between Charles S. Exon and Quiksilver, Inc. dated May 25,
2005 (incorporated by reference to Exhibit 10.3 of the Companys Current Report on
Form 8-K filed on May 27, 2005). (1)10.22
    
    Amendment to Employment Agreement between Charles S. Exon and Quiksilver, Inc.
dated December 21, 2006 (incorporated by reference to Exhibit 10.19 of the
Companys Annual Report on Form 10-K for the year ended October 31, 2006). (1)
 83




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##### Table of Contents



ExhibitNumber10.23
    
    Employment Agreement between Steven L. Brink and Quiksilver, Inc. dated May 25,
2005 (incorporated by reference to Exhibit 10.4 of the Companys Current Report on
Form 8-K filed on May 27, 2005). (1)10.24
    
    Amendment to Employment Agreement between Steven L. Brink and Quiksilver, Inc.
dated December 21, 2006 (incorporated by reference to Exhibit 10.21 of the
Companys Annual Report on Form 10-K for the year ended October 31, 2006). (1)10.25
    
    Separation Agreement between Steven L. Brink and Quiksilver, Inc. dated April 13,
2007 (incorporated by reference to Exhibit 10.2 of the Companys Form 8-K filed on
April 17, 2007). (1)10.26
    
    Employment Agreement between Joseph Scirocco and Quiksilver, Inc. dated April 12,
2007 (incorporated by reference to Exhibit 10.1 of the Companys Form 8-K filed on
April 17, 2007). (1)10.27
    
    Quiksilver, Inc. 2000 Employee Stock Purchase Plan (incorporated by reference to
Exhibit 10.1 of the Companys Form 8-K filed on March 16, 2007). (1)10.28
    
    Quiksilver, Inc. Written Description of Nonemployee Director Compensation.
(incorporated by reference to Exhibit 10.22 of the Companys Annual Report on Form
10-K for the year ended October 31, 2006). (1)10.29
    
    Quiksilver, Inc. Long Term Incentive Plan (incorporated by reference to Exhibit
10.20 of the Companys Annual Report on Form 10-K for the year ended October 31,
2004).(1)10.30
    
    Award grant under Quiksilver, Inc. Long-Term Incentive Plan dated January 25, 2006
(incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on
Form 10-Q for the quarter ended January 31, 2006). (1)10.31
    
    Award grant under Quiksilver, Inc. Long-Term Incentive Plan dated December 20,
2006 (incorporated by reference to Exhibit 10.25 of the Companys Annual Report on
Form 10-K for the year ended October 31, 2006). (1)10.32
    
    Stock Purchase Agreement dated June 20, 2007 by and between Quiksilver, Inc.,
Rossignol Ski Company, Inc., Laurent Boix-Vives, Jeannine Boix-Vives, Christine
Simon, Sylvie Bernard and Services Expansion International (incorporated by
reference to Exhibit 10.2 to the Companys Quarterly Report on Form 10-Q for the
quarter ended July 31, 2007).10.33
    
    Restricted Stock Agreement by and between Quiksilver, Inc. and Douglas Ammerman
dated June 7, 2007 (incorporated by reference to Exhibit 10.1 to the Companys
Quarterly Report on Form 10-Q for the quarter ended July 31, 2007). (1)10.34
    
    Standard Form of Restricted Stock Issuance Agreement under the Quiksilver, Inc.
2006 Restricted Stock Plan (incorporated by reference to Exhibit 10.1 to the
Companys Current Report on Form 8-K filed on October 4, 2006). (1)10.35
    
    Amendments to executive officer base salaries effective as of November 1, 2007. (1)21.1
    
    Subsidiaries of Quiksilver, Inc.23.1
    
    Consent of Deloitte & Touche LLP24.1
    
    Power of Attorney (included on signature page).31.1
    
    Rule 13a-14(a)/15d-14(a) Certifications  Principal Executive Officer31.2
    
    Rule 13a-14(a)/15d-14(a) Certifications  Principal Financial Officer32.1
    
    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section
906 of The Sarbanes-Oxley Act of 200332.2
    
    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section
906 of The Sarbanes-Oxley Act of 2003
 
 (1)
    
    Management contract or compensatory plan. 84