##### 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, 2010
 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.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    33-0199426
(I.R.S. Employer
Identification Number)
 15202 Graham Street
Huntington Beach, California
92649
 (714) 889-2200
  Title of 
each classCommon Stock
    
    Name of each exchange
on which registeredNew York Stock Exchange
 None
 Yes o No þ
 Yes o No þ
 Yes þ No o
 Yes o No o
 þ
  Large Accelerated Filer o
Accelerated Filer þ
Non-Accelerated Filer o(Do not check if a smaller reporting company)
Smaller reporting company o Yes o No þ
  DOCUMENTS INCORPORATED BY REFERENCE




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##### 



TABLE OF CONTENTS
 PagePART IItem 1.
    
    BUSINESS
    
    
    1Introduction
    
    
    1Segment Information
    
    
    1Products and Brands
    
    
    2Product Categories
    
    
    2Product Design
    
    
    3Promotion and Advertising
    
    
    3Customers and Sales
    
    
    4Retail Concepts
    
    
    5Seasonality
    
    
    6Production and Raw Materials
    
    
    6Imports and Import Restrictions
    
    
    7Trademarks, Licensing Agreements and Patents
    
    
    7Competition
    
    
    8Future Season Orders
    
    
    8Employees
    
    
    8Environmental Matters
    
    
    8Recent Dispositions
    
    
    9Available Information
    
    
    9Item 1A.
    
    RISK FACTORS
    
    
    9Item 1B.
    
    UNRESOLVED STAFF COMMENTS
    
    
    15Item 2.
    
    PROPERTIES
    
    
    16Item 3.
    
    LEGAL PROCEEDINGS
    
    
    16Item 4.
    
    REMOVED AND RESERVED
    
    
    16PART IIItem 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    17Item 6.
    
    SELECTED FINANCIAL DATA
    
    
    17Item 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    19Item 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    34Item 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
    
    
    83EX-10.40EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2




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PART I
 
 Item 1. BUSINESS
  
 Introduction
 Quiksilver Roxy DC
 Quiksilver Quiksilver Quiksilver Roxy Quiksilver Roxy Quiksilver Roxy DC
  Rossignol, Dynastar, Look Lange
 
 Segment Information
  1




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Products and Brands
 Quiksilver Roxy DCs
 Quiksilver
 Quiksilver Quiksilver Quiksilver
 Roxy
 Roxy Teenie Wahine Roxy Girl Roxy Roxy
 DC
 DC DCs DC
 Other Brands
  
    
    Raisins, Radio Fiji, Leilani  Raisinsand Radio Fijiare swimwear labels for the juniors
market, while Leilaniwas our contemporary swimwear label. We sold our Raisinsjuniors
swimwear label and Leilanicontemporary label in April 2010 and we do not plan to produce
swimwear under these brands in the future.
 
    
    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.
 
    
    Lib Technologiesand Gnu We address the core snowboard market through our Lib
Technologiesand Gnubrands of snowboards and accessories.
 
 Product Categories
  Percentage of Revenues2010
    
    2009
    
    2008Apparel
    
    
    64
    %
    
    
    66
    %
    
    
    65
    %Footwear
    
    
    21
    
    
    
    20
    
    
    
    20Accessories
    
    
    15
    
    
    
    14
    
    
    
    15100
    %
    
    
    100
    %
    
    
    100
    %
 2




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Product Design
  
 Promotion and Advertising
   Quiksilver Pro Quiksilver In Memory of Eddie Aikau Quiksilver DC Roxy X-Games
 Surfer Surfing Transworld Skateboarding
 3




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Customers and Sales
    Quiksilver Roxy Roxy Quiksilver DC Quiksilver Roxy DC
   Percentage of RevenuesDistribution Channel
    
    Americas
    
    Europe
    
    Asia/Pacific
    
    ConsolidatedCore market shops
    
    
    28
    %
    
    
    41
    %
    
    
    77
    %
    
    
    40
    %Specialty stores
    
    
    33
    
    
    
    43
    
    
    
    19
    
    
    
    35Department stores
    
    
    15
    
    
    
    6
    
    
    
    2
    
    
    
    9U.S. exports
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    11Distributors
    
    
    1
    
    
    
    10
    
    
    
    2
    
    
    
    5Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Geographic segment
    
    
    46
    %
    
    
    40
    %
    
    
    14
    %
    
    
    100
    %
   4




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Percentage of RevenuesGeographic Region
    
    2010
    
    2009
    
    2008United States
    
    
    34
    %
    
    
    38
    %
    
    
    39
    %Other Americas
    
    
    12
    
    
    
    9
    
    
    
    8France
    
    
    11
    
    
    
    11
    
    
    
    13United Kingdom and Spain
    
    
    11
    
    
    
    11
    
    
    
    13Other European countries
    
    
    18
    
    
    
    18
    
    
    
    15Asia/Pacific
    
    
    14
    
    
    
    13
    
    
    
    12Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
   
 Retail Concepts
 Quiksilver Quiksilver Roxy Roxy Quiksilver Youth DC Quiksilver Roxy
  Number of StoresAmericas
    
    Europe
    
    Asia/Pacific
    
    CombinedCompany
    
    
    
    
    
    Company
    
    
    
    
    
    Company
    
    
    
    
    
    CompanyStore Concept
    
    Owned
    
    Licensed
    
    Owned
    
    Licensed
    
    Owned
    
    Licensed
    
    Owned
    
    LicensedQuiksilverstores
    
    
    53
    
    
    
    16
    
    
    
    126
    
    
    
    163
    
    
    
    38
    
    
    
    13
    
    
    
    217
    
    
    
    192Shop-in-shops
    
    
    
    
    
    
    
    
    
    
    72
    
    
    
    
    
    
    
    75
    
    
    
    
    
    
    
    147
    
    
    
    Roxystores
    
    
    3
    
    
    
    2
    
    
    
    18
    
    
    
    13
    
    
    
    11
    
    
    
    3
    
    
    
    32
    
    
    
    18Outlet stores
    
    
    46
    
    
    
    
    
    
    
    34
    
    
    
    4
    
    
    
    36
    
    
    
    2
    
    
    
    116
    
    
    
    6Other stores
    
    
    4
    
    
    
    2
    
    
    
    22
    
    
    
    3
    
    
    
    2
    
    
    
    3
    
    
    
    28
    
    
    
    8106
    
    
    
    20
    
    
    
    272
    
    
    
    183
    
    
    
    162
    
    
    
    21
    
    
    
    540
    
    
    
    224
 5




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Seasonality
  Consolidated RevenuesDollar amounts in thousands
    
    2010
    
    
    2009
    
    
    2008Quarter ended January 31
    
    $
    432,737
    
    
    
    24
    %
    
    $
    443,278
    
    
    
    23
    %
    
    $
    496,581
    
    
    
    22
    %Quarter ended April 30
    
    
    468,289
    
    
    
    25
    
    
    
    494,173
    
    
    
    25
    
    
    
    596,280
    
    
    
    26Quarter ended July 31
    
    
    441,475
    
    
    
    24
    
    
    
    501,394
    
    
    
    25
    
    
    
    564,876
    
    
    
    25Quarter ended October 31
    
    
    495,119
    
    
    
    27
    
    
    
    538,681
    
    
    
    27
    
    
    
    606,899
    
    
    
    27$
    1,837,620
    
    
    
    100
    %
    
    $
    1,977,526
    
    
    
    100
    %
    
    $
    2,264,636
    
    
    
    100
    %
 
 Production and Raw Materials
     6




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Imports and Import Restrictions
     
 Trademarks, Licensing Agreements and Patents
 Trademarks
 Quiksilver Roxy Hawk Lib Tech Gnu Bent Metal DCSHOECOUSA DC Star
  Licensing Agreements and Patents
 Quiksilver Roxy DC Quiksilver Roxy Roxy
 Hawk Hawk Hawk Hawk
 7




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Hawk
  
 Competition
   
    
    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 products at appropriate price points; and
    
    convey our outdoor sports lifestyle messages to consumers worldwide.
 
 Future Season Orders
  
 Employees
  
 Environmental Matters
  8




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Recent Dispositions
 Rossignol, Dynastar, Look Lange
 Rossignol
 
 Available Information
   
 Item 1A. RISK FACTORS
  9




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Continuing unfavorable economic conditions could have a material adverse effect on our results of
operations.
  The apparel and footwear industries are each highly competitive, and if we fail to compete
effectively, we could lose our market position.
   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.
    10




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Our business could be harmed if we fail to maintain proper inventory levels.
  Difficulties in implementing our new global enterprise-wide reporting system could impact our
ability to design, produce and ship our products on a timely basis.
  Changes in foreign currency exchange rates could affect our revenues and costs.
   Our debt obligations could limit our flexibility in managing our business and expose us to certain
risks.
  
    
    we may have difficulty satisfying our obligations with respect to our indebtedness,
and, if we fail to comply with these requirements, an event of default could result;
    
    we may be required to dedicate a substantial portion of our cash flow from operations
to required interest and, where applicable, principal 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;
    
    we may be subject to credit reductions and other changes in our business relationships
with our suppliers, vendors and customers if they perceive that we would be unable to pay
our debts to them in a timely manner;
 11




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
    
    we have certain short term and uncommitted lines of credit in our Asia/Pacific segment
that could be canceled on very short notice to us, requiring the use of cash on hand or
available credit; and
    
    we may be placed at a competitive disadvantage against less leveraged competitors.
 Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow
from our business to pay our substantial debt service obligations.
  If our goodwill becomes impaired, we may be required to record a significant charge to our
earnings.
  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.
  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.
   12




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We may be subject to claims that our products have infringed upon the intellectual property rights
of others, which may cause us to incur unexpected costs or prevent us from selling our products.
  If we are unable to maintain our endorsements by professional athletes, our ability to market and
sell our products may be harmed.
  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;
    
    fluctuations in foreign currency exchange rates;
 13




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
    
    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;
    
    social, political and economic instability;
    
    unexpected changes in regulatory requirements;
    
    tariffs and other trade barriers; and
    
    U.S. government licensing requirements for exports.
  Quiksilver, Roxy, DC
 Future sales of our common stock in the public market, or the issuance of other equity securities,
may adversely affect the market price of our common stock and the value of our senior notes.
  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, particularly with respect to cotton and other
commodities and raw materials, and we cannot increase our prices.
 Uncertainty of changing international trade regulations and quotas on imports of textiles and
apparel may adversely affect our business.
   14




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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.
   Employment related matters may affect our profitability.
  
 Item 1B. UNRESOLVED STAFF COMMENTS
  15




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Item 2. PROPERTIES
  Approximate
    
    Current LeaseLocation
    
    Principal Use
    
    Sq. Ft.
    
    ExpirationHuntington Beach, California
    
    Americas/corporate headquarters
    
    
    120,000
    
    
    
    2023
    *Huntington Beach, California
    
    Americas/corporate headquarters
    
    
    100,000
    
    
    
    2013Huntington Beach, California
    
    Americas/corporate headquarters
    
    
    76,000
    
    
    
    2023
    *Mira Loma, California
    
    Americas distribution center
    
    
    683,000
    
    
    
    2027
    *St. Jean de Luz, France
    
    European headquarters
    
    
    151,000
    
    
    
    N/A
    **St. Jean de Luz, France
    
    European distribution center
    
    
    127,000
    
    
    
    N/A
    **Rives, France
    
    European distribution center
    
    
    206,000
    
    
    
    2016Torquay, Australia
    
    Asia/Pacific headquarters
    
    
    54,000
    
    
    
    2024
    *Geelong, Australia
    
    Asia/Pacific distribution center
    
    
    81,000
    
    
    
    2018
    *Geelong, Australia
    
    Asia/Pacific distribution center
    
    
    134,000
    
    
    
    2039
    *
 
 *
    
    Includes extension periods exercisable at our option.**
    
    These locations are owned.  
 Item 3. LEGAL PROCEEDINGS
  
 Item 4. (REMOVED AND RESERVED)
  16




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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 20104th quarter ended October 31, 2010
    
    $
    4.80
    
    
    $
    3.373rd quarter ended July 31, 2010
    
    
    5.79
    
    
    
    3.532nd quarter ended April 30, 2010
    
    
    6.09
    
    
    
    1.981st quarter ended January 31, 2010
    
    
    2.47
    
    
    
    1.64Fiscal 20094th quarter ended October 31, 2009
    
    $
    3.03
    
    
    $
    1.923rd quarter ended July 31, 2009
    
    
    3.83
    
    
    
    1.492nd quarter ended April 30, 2009
    
    
    2.10
    
    
    
    0.911st quarter ended January 31, 2009
    
    
    3.09
    
    
    
    0.80
   
 Item 6. SELECTED FINANCIAL DATA
  17




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Year Ended October 31,Amounts in thousands, except ratios andper share data
    
    2010(1)(2)
    
    2009(1)(2)
    
    2008(1)(2)
    
    2007(1)
    
    2006(1)Statements of Operations DataRevenues, net
    
    $
    1,837,620
    
    
    $
    1,977,526
    
    
    $
    2,264,636
    
    
    $
    2,047,072
    
    
    $
    1,722,150Income (loss) before provision
for income taxes
    
    
    15,333
    
    
    
    (3,622
    )
    
    
    99,261
    
    
    
    151,159
    
    
    
    122,862(Loss) income from continuing
operations(3)
    
    
    (11,514
    )
    
    
    (73,215
    )
    
    
    65,544
    
    
    
    116,727
    
    
    
    89,376Income (loss) from
discontinued operations(3)
    
    
    1,830
    
    
    
    (118,827
    )
    
    
    (291,809
    )
    
    
    (237,846
    )
    
    
    3,640Net (loss) income(3)
    
    
    (9,684
    )
    
    
    (192,042
    )
    
    
    (226,265
    )
    
    
    (121,119
    )
    
    
    93,016(Loss) income per share from
continuing operations(3)
    
    
    (0.09
    )
    
    
    (0.58
    )
    
    
    0.52
    
    
    
    0.94
    
    
    
    0.73Income (loss) per share from
discontinued operations(3)
    
    
    0.01
    
    
    
    (0.94
    )
    
    
    (2.32
    )
    
    
    (1.92
    )
    
    
    0.03Net (loss) income per share(3)
    
    
    (0.07
    )
    
    
    (1.51
    )
    
    
    (1.80
    )
    
    
    (0.98
    )
    
    
    0.76(Loss) income per share from
continuing operations, assuming
dilution(3)
    
    
    (0.09
    )
    
    
    (0.58
    )
    
    
    0.51
    
    
    
    0.90
    
    
    
    0.70Income (loss) per share from
discontinued operations, assuming
dilution(3)
    
    
    0.01
    
    
    
    (0.94
    )
    
    
    (2.25
    )
    
    
    (1.83
    )
    
    
    0.03Net (loss) income per share,
assuming dilution(3)
    
    
    (0.07
    )
    
    
    (1.51
    )
    
    
    (1.75
    )
    
    
    (0.93
    )
    
    
    0.73Weighted average common
shares
    
    
    135,334
    
    
    
    127,042
    
    
    
    125,975
    
    
    
    123,770
    
    
    
    122,074Weighted average common
shares outstanding, assuming
dilution
    
    
    135,334
    
    
    
    127,042
    
    
    
    129,485
    
    
    
    129,706
    
    
    
    127,744Balance Sheet DataTotal assets
    
    $
    1,696,121
    
    
    $
    1,852,608
    
    
    $
    2,170,265
    
    
    $
    2,662,064
    
    
    $
    2,447,378Working capital
    
    
    537,439
    
    
    
    561,697
    
    
    
    631,315
    
    
    
    631,857
    
    
    
    598,714Lines of credit
    
    
    22,586
    
    
    
    32,592
    
    
    
    238,317
    
    
    
    124,634
    
    
    
    61,106Long-term debt
    
    
    706,187
    
    
    
    1,006,661
    
    
    
    822,001
    
    
    
    732,812
    
    
    
    598,434Stockholders equity
    
    
    610,368
    
    
    
    456,595
    
    
    
    599,966
    
    
    
    886,613
    
    
    
    881,127Other DataAdjusted EBITDA(4)
    
    $
    204,377
    
    
    $
    131,532
    
    
    $
    278,945
    
    
    $
    260,786
    
    
    $
    221,687Current ratio
    
    
    2.6
    
    
    
    2.3
    
    
    
    1.9
    
    
    
    1.7
    
    
    
    1.8Return on average stockholders
equity(5)
    
    
    (2.2
    )%
    
    
    (13.9
    )%
    
    
    8.8
    %
    
    
    13.2
    %
    
    
    11.1
    %
 
 (1)
    
    All fiscal years presented reflect the operations of Rossignol and Cleveland
Golf, which were acquired in 2005, as discontinued operations. See note 17 of our
consolidated financial statements.(2)
    
    Fiscal 2010 and 2009 include fixed asset impairments of $11.7 million and $10.7
million, respectively, and fiscal 2008 includes goodwill and fixed asset impairments of $65.8
million.(3)
    
    Attributable to Quiksilver, Inc.(4)
    
    Adjusted EBITDA is defined as (loss) income from continuing operations attributable
to Quiksilver, Inc. before (i) interest expense, net, (ii) income tax expense, (iii)
depreciation and amortization, (iv) non-cash stock-based compensation expense and (v) asset
impairments. Adjusted 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 Adjusted EBITDA, along with other GAAP measures, as a measure of
profitability because 18




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Adjusted 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 jurisdictions, the impact of our asset base, which can differ depending on the book value
of assets, the accounting methods used to compute depreciation and amortization, the existence
or timing of asset impairments and the effect of non-cash stock-based compensation expense.
We believe EBITDA is useful to investors as it is a widely used measure of performance and the
adjustments we make to EBITDA provide further clarity on our profitability. We remove the
effect of non-cash stock-based compensation from our earnings which can vary based on share
price, share price volatility and expected life of the equity instruments we grant. In
addition, this stock-based compensation expense does not result in cash payments by us. We
remove the effect of asset impairments from Adjusted EBITDA for the same reason that we remove
depreciation and amortization as it is part of the impact of our asset base. Adjusted EBITDA
has limitations as a profitability measure in that it does not include the interest expense on
our debts, our provisions for income taxes, the effect of our expenditures for capital assets
and certain intangible assets, the effect of non-cash stock-based compensation expense and the
effect of asset impairments. The following is a reconciliation of (loss) income from
continuing operations attributable to Quiksilver, Inc. to Adjusted EBITDA: Year Ended October 31,Amounts in thousands
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(Loss) income from continuing
operations attributable to
Quiksilver, Inc.
    
    $
    (11,514
    )
    
    $
    (73,215
    )
    
    $
    65,544
    
    
    $
    116,727
    
    
    $
    89,376Income tax expense
    
    
    23,433
    
    
    
    66,667
    
    
    
    33,027
    
    
    
    34,506
    
    
    
    33,181Interest expense, net
    
    
    114,109
    
    
    
    63,924
    
    
    
    45,327
    
    
    
    46,571
    
    
    
    41,317Depreciation and amortization
    
    
    53,861
    
    
    
    55,004
    
    
    
    57,231
    
    
    
    46,852
    
    
    
    37,851Non-cash stock-based
compensation expense
    
    
    12,831
    
    
    
    8,415
    
    
    
    12,019
    
    
    
    16,130
    
    
    
    19,962Non-cash asset impairments
    
    
    11,657
    
    
    
    10,737
    
    
    
    65,797
    
    
    
    
    
    
    
    Adjusted EBITDA
    
    $
    204,377
    
    
    $
    131,532
    
    
    $
    278,945
    
    
    $
    260,786
    
    
    $
    221,687
 
 (5)
    
    Computed based on (loss) income from continuing operations attributable to
Quiksilver, Inc. divided by the average of beginning and ending Quiksilver, Inc. stockholders
equity. 
 Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Overview
 Quiksilver Quiksilver Quiksilver Roxy Quiksilver Roxy Quiksilver Roxy
 Rossignol, Dynastar, Look Lange
 19




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Year Ended October 31,In thousands
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Americas
    
    $
    843,078
    
    
    $
    929,691
    
    
    $
    1,061,370
    
    
    $
    995,801
    
    
    $
    831,583Europe
    
    
    728,952
    
    
    
    792,627
    
    
    
    933,119
    
    
    
    803,395
    
    
    
    660,127Asia/Pacific
    
    
    260,578
    
    
    
    251,596
    
    
    
    265,067
    
    
    
    243,064
    
    
    
    225,128Corporate operations
    
    
    5,012
    
    
    
    3,612
    
    
    
    5,080
    
    
    
    4,812
    
    
    
    5,312Total revenues, net
    
    $
    1,837,620
    
    
    $
    1,977,526
    
    
    $
    2,264,636
    
    
    $
    2,047,072
    
    
    $
    1,722,150
  Results of Operations
  20




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Year Ended October 31,2010
    
    2009
    
    2008Statements of Operations dataRevenues, net
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Gross profit
    
    
    52.6
    
    
    
    47.1
    
    
    
    49.5Selling, general and administrative expense
    
    
    45.3
    
    
    
    43.1
    
    
    
    40.4Asset impairments
    
    
    0.6
    
    
    
    0.5
    
    
    
    2.9Operating income
    
    
    6.7
    
    
    
    3.5
    
    
    
    6.2Interest expense
    
    
    6.2
    
    
    
    3.2
    
    
    
    2.0Foreign currency and other (income) expense
    
    
    (0.3
    )
    
    
    0.5
    
    
    
    (0.2
    )Income (loss) before provision for income taxes
    
    
    0.8
    %
    
    
    (0.2
    )%
    
    
    4.4
    %Other dataAdjusted EBITDA (1)
    
    
    11.1
    %
    
    
    6.7
    %
    
    
    12.3
    %
 
 (1)
    
    For a definition of Adjusted EBITDA and a reconciliation of income from
continuing operations attributable to Quiksilver, Inc. to Adjusted EBITDA, see footnote (3) to the
table under Item 6. Selected Financial Data.  Fiscal 2010 Compared to Fiscal 2009
 Revenues
 Quiksilver Roxy DC Hawk Lib Technologies, Gnu
  21




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##### Table of Contents



In thousands
    
    Americas
    
    Europe
    
    Asia/Pacific
    
    Corporate
    
    TotalHistorical currency (as reported)October 31, 2009
    
    $
    929,691
    
    
    $
    792,627
    
    
    $
    251,596
    
    
    $
    3,612
    
    
    $
    1,977,526October 31, 2010
    
    
    843,078
    
    
    
    728,952
    
    
    
    260,578
    
    
    
    5,012
    
    
    
    1,837,620Percentage (decrease) increase
    
    
    (9
    %)
    
    
    (8
    %)
    
    
    4
    %
    
    
    
    
    
    
    (7
    %)Constant currency (current year
exchange rates)October 31, 2009
    
    $
    929,691
    
    
    $
    783,871
    
    
    $
    303,136
    
    
    $
    3,612
    
    
    $
    2,020,310October 31, 2010
    
    
    843,078
    
    
    
    728,952
    
    
    
    260,578
    
    
    
    5,012
    
    
    
    1,837,620Percentage decrease
    
    
    (9
    %)
    
    
    (7
    %)
    
    
    (14
    %)
    
    
    
    
    
    
    (9
    %)
 Roxy Quiksilver DC Roxy Quiksilver DC Roxy Quiksilver DC Roxy Quiksilver DC
 Gross Profit
  Selling, General and Administrative Expense
  22




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Asset Impairments
  Non-operating Expenses
    Loss from continuing operations and Adjusted EBITDA
  Fiscal 2009 Compared to Fiscal 2008
 Revenues
  23




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In thousands
    
    Americas
    
    Europe
    
    Asia/Pacific
    
    Corporate
    
    TotalHistorical currency (as reported)October 31, 2008
    
    $
    1,061,370
    
    
    $
    933,119
    
    
    $
    265,067
    
    
    $
    5,080
    
    
    $
    2,264,636October 31, 2009
    
    
    929,691
    
    
    
    792,627
    
    
    
    251,596
    
    
    
    3,612
    
    
    
    1,977,526Percentage decrease
    
    
    (12
    %)
    
    
    (15
    %)
    
    
    (5
    %)
    
    
    
    
    
    
    (13
    %)Constant currency (current year
exchange rates)October 31, 2008
    
    $
    1,061,370
    
    
    $
    849,423
    
    
    $
    231,137
    
    
    $
    5,080
    
    
    $
    2,147,010October 31, 2009
    
    
    929,691
    
    
    
    792,627
    
    
    
    251,596
    
    
    
    3,612
    
    
    
    1,977,526Percentage (decrease) increase
    
    
    (12
    %)
    
    
    (7
    %)
    
    
    9
    %
    
    
    
    
    
    
    (8
    %)
 Roxy Quiksilver DC Roxy Quiksilver DC Roxy Quiksilver DC Roxy Quiksilver DC
 Gross Profit
  Selling, General and Administrative Expense
  24




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Asset Impairments
  Non-operating Expenses
    Loss / income from continuing operations and Adjusted EBITDA
  Financial Position, Capital Resources and Liquidity
   25




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26




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Operating Cash Flows
  Capital Expenditures
  Acquisitions and Dispositions
 Rossignol Dynastar Look Lange Raisins Leilani
 Debt Structure
  In thousands
    
    U.S. Dollar
    
    
    Non U.S. Dollar
    
    
    TotalAsia/Pacific short-term credit arrangements
    
    $
    
    
    
    $
    22,586
    
    
    $
    22,586Short-term lines of credit
    
    
    
    
    
    
    22,586
    
    
    
    22,586Americas credit facility
    
    
    
    
    
    
    
    
    
    
    Americas term loan
    
    
    20,000
    
    
    
    
    
    
    
    20,000European credit facilities
    
    
    
    
    
    
    
    
    
    
    European long-term debt
    
    
    
    
    
    
    265,222
    
    
    
    265,222Senior Notes
    
    
    400,000
    
    
    
    
    
    
    
    400,000Capital lease obligations and other borrowings
    
    
    
    
    
    
    20,965
    
    
    
    20,965Long-term debt
    
    
    420,000
    
    
    
    286,187
    
    
    
    706,187Total
    
    $
    420,000
    
    
    $
    308,773
    
    
    $
    728,773
 27




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28




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29




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Contractual Obligations and Commitments
  Payments Due by PeriodTwo to
    
    
    Four to
    
    
    AfterOne
    
    
    Three
    
    
    Five
    
    
    FiveIn thousands
    
    Year
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    TotalOperating lease obligations
    
    $
    101,600
    
    
    $
    166,925
    
    
    $
    105,214
    
    
    $
    102,006
    
    
    $
    475,745Long-term debt obligations(1)
    
    
    5,182
    
    
    
    14,379
    
    
    
    421,404
    
    
    
    265,222
    
    
    
    706,187Professional athlete sponsorships(2)
    
    
    21,243
    
    
    
    22,427
    
    
    
    6,841
    
    
    
    1,680
    
    
    
    52,191Certain other obligations(3)
    
    
    70,163
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70,163$
    198,188
    
    
    $
    203,731
    
    
    $
    533,459
    
    
    $
    368,908
    
    
    $
    1,304,286
 
 (1)
    
    Excludes required interest payments. See note 7 of our consolidated financial
statements for interest terms. $265.2 million due on our European term loans as of October
31, 2010 is included as due after five years as we issued the European Senior Notes in
December 2010 and used the proceeds to repay our existing European term loans.(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 surfing, skateboarding, snowboarding, bmx and motocross. 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 30




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amount that could be paid under existing contracts is
approximately $67.4 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 $70.2 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, we may acquire
additional equity interests from our minority interest partners in Brazil and Mexico, however,
as we are not required to do so, and as these potential purchase amounts generally cannot be
determined significantly in advance, they are not included in this line item. We have
approximately $157.9 million of tax contingencies related to ASC
740, Income Taxes.
See note 12 of our consolidated financial statements
for our complete income taxes disclosure. Based on the uncertainty of
the timing of these contingencies, these amounts have not been included in this line item. Off Balance Sheet Arrangements
  Trade Accounts Receivable and Inventories
   Inflation
  New Accounting Pronouncements
  31




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




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Goodwill
   Income Taxes
   Stock-Based Compensation Expense
  Foreign Currency Translation
  33




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Forward-Looking Statements
  
    
    continuing deterioration of global economic conditions and credit and capital markets;
    
    our ability to remain compliant with our debt covenants;
    
    our ability to achieve the financial results that we anticipate;
    
    payments due on contractual commitments and other debt obligations;
    
    future expenditures for capital projects, including the implementation of our global
enterprise-wide reporting system;
    
    our ability to continue to maintain our brand image and reputation;
    
    foreign currency exchange rate fluctuations;
    
    increases in production costs, particularly with respect to cotton and other commodities,
and raw materials; and
    
    changes in political, social and economic conditions and local regulations, particularly
in Europe and Asia.
  
 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Foreign Currency and Derivatives
  34




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##### Table of Contents




    
    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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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 Annual 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
consolidated financial statements.
    37




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
        
 38




---



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Item 9B. OTHER INFORMATION
  39




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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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PART IV
 
 Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  1.
    
    Consolidated Financial StatementsSee Index to Consolidated Financial Statements on page 42.2.
    
    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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QUIKSILVER, INC.
 
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageAudited consolidated financial statements of Quiksilver, Inc. as
of October 31, 2010 and 2009
and for each of the three years in the period ended
October 31, 2010Report of Independent Registered Public Accounting Firm
    
    
    43Consolidated Statements of Operations
Years Ended October 31, 2010, 2009 and 2008
    
    
    44Consolidated Statements of Comprehensive Income (Loss)
Years Ended October 31, 2010, 2009 and 2008
    
    
    45Consolidated Balance Sheets
October 31, 2010 and 2009
    
    
    46Consolidated Statements of Changes in Equity
Years Ended October 31, 2010, 2009 and 2008
    
    
    47Consolidated Statements of Cash Flows
Years Ended October 31, 2010, 2009 and 2008
    
    
    48Notes to Consolidated Financial Statements
    
    
    49
 42




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
 43




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QUIKSILVER, INC.
 CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended October 31, 2010, 2009 and 2008
 In thousands, except per share amounts
    
    2010
    
    
    2009
    
    
    2008Revenues, net
    
    $
    1,837,620
    
    
    $
    1,977,526
    
    
    $
    2,264,636Cost of goods sold
    
    
    870,372
    
    
    
    1,046,495
    
    
    
    1,144,050Gross profit
    
    
    967,248
    
    
    
    931,031
    
    
    
    1,120,586Selling, general and administrative expense
    
    
    832,066
    
    
    
    851,746
    
    
    
    915,933Asset impairments
    
    
    11,657
    
    
    
    10,737
    
    
    
    65,797Operating income
    
    
    123,525
    
    
    
    68,548
    
    
    
    138,856Interest expense, net
    
    
    114,109
    
    
    
    63,924
    
    
    
    45,327Foreign currency (gain) loss
    
    
    (5,917
    )
    
    
    8,633
    
    
    
    (5,761
    )Other (income) expense
    
    
    
    
    
    
    (387
    )
    
    
    29Income (loss) before provision for income taxes
    
    
    15,333
    
    
    
    (3,622
    )
    
    
    99,261Provision for income taxes
    
    
    23,433
    
    
    
    66,667
    
    
    
    33,027(Loss) income from continuing operations
    
    
    (8,100
    )
    
    
    (70,289
    )
    
    
    66,234Income (loss) from discontinued operations, net of tax
    
    
    1,830
    
    
    
    (118,827
    )
    
    
    (291,809
    )Net loss
    
    
    (6,270
    )
    
    
    (189,116
    )
    
    
    (225,575
    )Less: net income attributable to non-controlling interest
    
    
    (3,414
    )
    
    
    (2,926
    )
    
    
    (690
    )Net loss attributable to Quiksilver, Inc.
    
    $
    (9,684
    )
    
    $
    (192,042
    )
    
    $
    (226,265
    )(Loss) income per share from continuing operations attributable to
Quiksilver, Inc.
    
    $
    (0.09
    )
    
    $
    (0.58
    )
    
    $
    0.52Income (loss) per share from discontinued operations attributable to
Quiksilver, Inc.
    
    $
    0.01
    
    
    $
    (0.94
    )
    
    $
    (2.32
    )Net loss per share attributable to Quiksilver, Inc.
    
    $
    (0.07
    )
    
    $
    (1.51
    )
    
    $
    (1.80
    )(Loss) income per share from continuing operations attributable to
Quiksilver, Inc., assuming dilution
    
    $
    (0.09
    )
    
    $
    (0.58
    )
    
    $
    0.51Income (loss) per share from discontinued operations attributable
to Quiksilver, Inc., assuming dilution
    
    $
    0.01
    
    
    $
    (0.94
    )
    
    $
    (2.25
    )Net loss per share attributable to Quiksilver, Inc., assuming dilution
    
    $
    (0.07
    )
    
    $
    (1.51
    )
    
    $
    (1.75
    )Weighted average common shares outstanding
    
    
    135,334
    
    
    
    127,042
    
    
    
    125,975Weighted average common shares outstanding, assuming dilution
    
    
    135,334
    
    
    
    127,042
    
    
    
    129,485Amounts attributable to Quiksilver, Inc.:(Loss) income from continuing operations
    
    $
    (11,514
    )
    
    $
    (73,215
    )
    
    $
    65,544Income (loss) from discontinued operations, net of tax
    
    
    1,830
    
    
    
    (118,827
    )
    
    
    (291,809
    )Net loss
    
    $
    (9,684
    )
    
    $
    (192,042
    )
    
    $
    (226,265
    )
  44




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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Years Ended October 31, 2010, 2009 and 2008
 In thousands
    
    2010
    
    
    2009
    
    
    2008Net loss
    
    $
    (6,270
    )
    
    $
    (189,116
    )
    
    $
    (225,575
    )Other comprehensive income (loss):Foreign currency translation adjustment
    
    
    2,984
    
    
    
    99,798
    
    
    
    (111,920
    )Reclassification adjustment for foreign currency translation
included in current period loss from discontinued operations
    
    
    
    
    
    
    (47,850
    )
    
    
    Net gain (loss) on derivative instruments, net of tax provision
(benefit) of $7,334 (2010), $(19,965) (2009) and $26,322
(2008)
    
    
    15,302
    
    
    
    (37,062
    )
    
    
    44,313Comprehensive income (loss)
    
    
    12,016
    
    
    
    (174,230
    )
    
    
    (293,182
    )Comprehensive income attributable to non-controlling interest
    
    
    (3,414
    )
    
    
    (2,926
    )
    
    
    (690
    )Comprehensive income (loss) attributable to Quiksilver, Inc.
    
    $
    8,602
    
    
    $
    (177,156
    )
    
    $
    (293,872
    )
  45




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QUIKSILVER, INC.
 CONSOLIDATED BALANCE SHEETS
October 31, 2010 and 2009
 In thousands, except share amounts
    
    2010
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    120,593
    
    
    $
    99,516Restricted cash
    
    
    
    
    
    
    52,706Trade accounts receivable, net
    
    
    368,428
    
    
    
    430,884Other receivables
    
    
    42,512
    
    
    
    25,615Inventories
    
    
    268,037
    
    
    
    267,730Deferred income taxes
    
    
    39,053
    
    
    
    76,638Prepaid expenses and other current assets
    
    
    25,206
    
    
    
    37,333Current assets held for sale
    
    
    12
    
    
    
    1,777Total current assets
    
    
    863,841
    
    
    
    992,199Fixed assets, net
    
    
    220,350
    
    
    
    239,333Intangible assets, net
    
    
    140,567
    
    
    
    142,954Goodwill
    
    
    332,488
    
    
    
    333,758Other assets
    
    
    53,296
    
    
    
    75,353Deferred income taxes long-term
    
    
    85,579
    
    
    
    69,011Total assets
    
    $
    1,696,121
    
    
    $
    1,852,608LIABILITIES AND EQUITYCurrent liabilities:Lines of credit
    
    $
    22,586
    
    
    $
    32,592Accounts payable
    
    
    179,402
    
    
    
    162,373Accrued liabilities
    
    
    115,009
    
    
    
    116,274Current portion of long-term debt
    
    
    5,182
    
    
    
    95,231Income taxes payable
    
    
    3,484
    
    
    
    23,574Liabilities related to assets held for sale
    
    
    739
    
    
    
    458Total current liabilities
    
    
    326,402
    
    
    
    430,502Long-term debt, net of current portion
    
    
    701,005
    
    
    
    911,430Other long-term liabilities
    
    
    49,119
    
    
    
    46,643Total liabilities
    
    
    1,076,526
    
    
    
    1,388,575Commitments and contingencies  Note 9Equity:Preferred stock, $.01 par value, authorized shares  5,000,000;
issued and outstanding shares  none
    
    
    
    
    
    
    Common stock, $.01 par value, authorized shares  285,000,000;
issued shares  166,867,127 (2010) and 131,484,363 (2009)
    
    
    1,669
    
    
    
    1,315Additional paid-in capital
    
    
    513,102
    
    
    
    368,285Treasury stock, 2,885,200 shares
    
    
    (6,778
    )
    
    
    (6,778
    )Accumulated deficit
    
    
    (11,307
    )
    
    
    (1,623
    )Accumulated other comprehensive income
    
    
    113,682
    
    
    
    95,396Total Quiksilver, Inc. stockholders equity
    
    
    610,368
    
    
    
    456,595Non-controlling interest
    
    
    9,227
    
    
    
    7,438Total equity
    
    
    619,595
    
    
    
    464,033Total liabilities and equity
    
    $
    1,696,121
    
    
    $
    1,852,608
  46




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##### Table of Contents



QUIKSILVER, INC.
 
 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Years Ended October 31, 2010, 2009 and 2008
 Retained
    
    
    AccumulatedAdditional
    
    
    
    
    
    
    Earnings
    
    
    Other
    
    
    Non-Common Stock
    
    
    Paid-in
    
    
    Treasury
    
    
    (Accumulated
    
    
    Comprehensive
    
    
    Controlling
    
    
    TotalIn thousands
    
    Shares
    
    
    Amounts
    
    
    Capital
    
    
    Stock
    
    
    Deficit)
    
    
    Income (Loss)
    
    
    Interest
    
    
    EquityBalance, October 31, 2007
    
    
    128,341
    
    
    $
    1,283
    
    
    $
    306,051
    
    
    $
    (6,778
    )
    
    $
    437,940
    
    
    $
    148,117
    
    
    $
    1,237
    
    
    $
    887,850Exercise of stock options
    
    
    1,828
    
    
    
    18
    
    
    
    6,719
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,737Tax benefit from
exercise of stock
options
    
    
    
    
    
    
    
    
    
    
    2,994
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,994Stock compensation
expense
    
    
    
    
    
    
    
    
    
    
    13,002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,002Restricted stock
    
    
    (103
    )
    
    
    (1
    )
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Employee stock purchase
plan
    
    
    257
    
    
    
    3
    
    
    
    1,867
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,870Business acquisitions
    
    
    300
    
    
    
    3
    
    
    
    3,875
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,585
    
    
    
    6,463Adjustment due to
adoption of uncertain
tax position guidance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,256
    )
    
    
    
    
    
    
    
    
    
    
    (21,256
    )Net loss and other
comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (226,265
    )
    
    
    (67,607
    )
    
    
    690
    
    
    
    (293,182
    )Balance, October 31, 2008
    
    
    130,623
    
    
    $
    1,306
    
    
    $
    334,509
    
    
    $
    (6,778
    )
    
    $
    190,419
    
    
    $
    80,510
    
    
    $
    4,512
    
    
    $
    604,478Tax benefit from
exercise of stock
options
    
    
    
    
    
    
    
    
    
    
    439
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    439Stock compensation
expense
    
    
    
    
    
    
    
    
    
    
    8,884
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,884Restricted stock
    
    
    310
    
    
    
    3
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Employee stock purchase
plan
    
    
    551
    
    
    
    6
    
    
    
    855
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    861Stock warrants issued
    
    
    
    
    
    
    
    
    
    
    23,601
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,601Net loss and other
comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (192,042
    )
    
    
    14,886
    
    
    
    2,926
    
    
    
    (174,230
    )Balance, October 31, 2009
    
    
    131,484
    
    
    $
    1,315
    
    
    $
    368,285
    
    
    $
    (6,778
    )
    
    $
    (1,623
    )
    
    $
    95,396
    
    
    $
    7,438
    
    
    $
    464,033Exercise of stock options
    
    
    713
    
    
    
    7
    
    
    
    2,730
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,737Stock compensation
expense
    
    
    
    
    
    
    
    
    
    
    12,831
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,831Restricted stock
    
    
    3,050
    
    
    
    31
    
    
    
    (31
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Employee stock purchase
Plan
    
    
    509
    
    
    
    5
    
    
    
    897
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    902Common stock issued in
debt-for-equity exchange
    
    
    31,111
    
    
    
    311
    
    
    
    131,939
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    132,250Transactions with
non-controlling interest
holders
    
    
    
    
    
    
    
    
    
    
    (3,549
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,625
    )
    
    
    (5,174
    )Net loss and other
comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,684
    )
    
    
    18,286
    
    
    
    3,414
    
    
    
    12,016Balance, October 31, 2010
    
    
    166,867
    
    
    $
    1,669
    
    
    $
    513,102
    
    
    $
    (6,778
    )
    
    $
    (11,307
    )
    
    $
    113,682
    
    
    $
    9,227
    
    
    $
    619,595
  47




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##### Table of Contents



QUIKSILVER, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended October 31, 2010, 2009 and 2008
 In thousands
    
    2010
    
    
    2009
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (6,270
    )
    
    $
    (189,116
    )
    
    $
    (225,575
    )Adjustments to reconcile net loss to net cash provided by operating activities:(Income) loss from discontinued operations
    
    
    (1,830
    )
    
    
    118,827
    
    
    
    291,809Depreciation and amortization
    
    
    53,861
    
    
    
    55,004
    
    
    
    57,231Stock-based compensation and tax benefit on option exercises
    
    
    12,831
    
    
    
    8,415
    
    
    
    9,588Provision for doubtful accounts
    
    
    15,307
    
    
    
    16,235
    
    
    
    15,948(Gain) loss on disposal of fixed assets
    
    
    (464
    )
    
    
    4,194
    
    
    
    350Foreign currency gain
    
    
    (3,078
    )
    
    
    (103
    )
    
    
    (2,618
    )Asset impairments
    
    
    11,657
    
    
    
    10,737
    
    
    
    65,797Non-cash interest
    
    
    56,695
    
    
    
    3,441
    
    
    
    Equity in earnings
    
    
    (524
    )
    
    
    (2
    )
    
    
    1,121Deferred income taxes
    
    
    8,029
    
    
    
    43,234
    
    
    
    (10,445
    )Changes in operating assets and liabilities, net of effects from business acquisitions:Trade accounts receivable
    
    
    39,846
    
    
    
    60,783
    
    
    
    (16,179
    )Other receivables
    
    
    (15,049
    )
    
    
    14,914
    
    
    
    (7,446
    )Inventories
    
    
    4,505
    
    
    
    78,039
    
    
    
    (32,786
    )Prepaid expenses and other current assets
    
    
    7,103
    
    
    
    (157
    )
    
    
    (1,333
    )Other assets
    
    
    8,958
    
    
    
    5,422
    
    
    
    (1,776
    )Accounts payable
    
    
    15,412
    
    
    
    (79,026
    )
    
    
    36,961Accrued liabilities and other long-term liabilities
    
    
    9,276
    
    
    
    5,421
    
    
    
    (14,871
    )Income taxes payable
    
    
    (16,568
    )
    
    
    36,091
    
    
    
    13,688Cash provided by operating activities of continuing operations
    
    
    199,697
    
    
    
    192,353
    
    
    
    179,464Cash provided by (used in) operating activities of discontinued operations
    
    
    3,785
    
    
    
    13,815
    
    
    
    (107,302
    )Net cash provided by operating activities
    
    
    203,482
    
    
    
    206,168
    
    
    
    72,162Cash flows from investing activities:Capital expenditures
    
    
    (43,135
    )
    
    
    (54,564
    )
    
    
    (90,948
    )Business acquisitions, net of acquired cash
    
    
    
    
    
    
    
    
    
    
    (31,127
    )Changes in restricted cash
    
    
    52,706
    
    
    
    
    
    
    
    (46,475
    )Cash provided by (used in) investing activities of continuing operations
    
    
    9,571
    
    
    
    (54,564
    )
    
    
    (168,550
    )Cash provided by investing activities of discontinued operations
    
    
    
    
    
    
    21,848
    
    
    
    103,811Net cash provided by (used in) investing activities
    
    
    9,571
    
    
    
    (32,716
    )
    
    
    (64,739
    )Cash flows from financing activities:Borrowings on lines of credit
    
    
    16,581
    
    
    
    10,346
    
    
    
    185,777Payments on lines of credit
    
    
    (27,021
    )
    
    
    (237,025
    )
    
    
    (47,161
    )Borrowings on long-term debt
    
    
    59,353
    
    
    
    895,268
    
    
    
    240,389Payments on long-term debt
    
    
    (220,566
    )
    
    
    (726,852
    )
    
    
    (198,793
    )Payments of debt and equity issuance costs
    
    
    (9,573
    )
    
    
    (47,478
    )
    
    
    Stock option exercises, employee stock purchases and tax benefit on option exercises
    
    
    3,639
    
    
    
    862
    
    
    
    11,602Transactions with non-controlling interest owners
    
    
    (5,174
    )
    
    
    
    
    
    
    Cash (used in) provided by financing activities of continuing operations
    
    
    (182,761
    )
    
    
    (104,879
    )
    
    
    191,814Cash used in financing activities of discontinued operations
    
    
    
    
    
    
    (11,136
    )
    
    
    (224,794
    )Net cash used in financing activities
    
    
    (182,761
    )
    
    
    (116,015
    )
    
    
    (32,980
    )Effect of exchange rate changes on cash
    
    
    (9,215
    )
    
    
    (10,963
    )
    
    
    4,251Net increase (decrease) in cash and cash equivalents
    
    
    21,077
    
    
    
    46,474
    
    
    
    (21,306
    )Cash and cash equivalents, beginning of year
    
    
    99,516
    
    
    
    53,042
    
    
    
    74,348Cash and cash equivalents, end of year
    
    $
    120,593
    
    
    $
    99,516
    
    
    $
    53,042Supplementary cash flow information:Cash paid (received) during the year for:Interest
    
    $
    54,023
    
    
    $
    58,094
    
    
    $
    70,023Income taxes
    
    $
    15,916
    
    
    $
    (5,794
    )
    
    $
    31,049Non-cash investing and financing activities:Common stock issued for business acquisitions
    
    $
    
    
    
    $
    
    
    
    $
    3,878Transfer of Rossignol debt to continuing operations
    
    $
    
    
    
    $
    
    
    
    $
    78,322Stock warrants issued
    
    $
    
    
    
    $
    23,601
    
    
    $
    Common stock issued in debt-for-equity exchange
    
    $
    132,250
    
    
    $
    
    
    
    $
    
  48




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##### Table of Contents



QUIKSILVER, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended October 31, 2009, 2008 and 2007
 Note 1  Significant Accounting Policies
 Company Business
 Quiksilve Roxy DC Hawk DC, Roxy, Lib Technologies Gnu
 Rossignol Dynastar Look Lange Raisins Leilani
 Subsequent Events
 Adjustment for Retrospective Application of New Accounting Standard Adopted
  Principles of Consolidation
  Basis of Presentation
  49




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##### Table of Contents



Cash Equivalents
  Inventories
  Fixed Assets
  Long-Lived Assets
  Goodwill and Intangible Assets
   Revenue Recognition
  50




---



##### Table of Contents



Year Ended October 31,In thousands
    
    2010
    
    
    2009
    
    
    2008Product shipments, net
    
    $
    1,825,807
    
    
    $
    1,961,389
    
    
    $
    2,254,245Royalty income
    
    
    11,813
    
    
    
    16,137
    
    
    
    10,391$
    1,837,620
    
    
    $
    1,977,526
    
    
    $
    2,264,636
 Promotion and Advertising
  Income Taxes
    Stock-Based Compensation Expense
  Net (Loss) Income per Share
  51




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##### Table of Contents



Fiscal year endedOctober 31,In thousands
    
    2010
    
    
    2009
    
    
    2008Shares used in computing basic net income per share
    
    
    135,334
    
    
    
    127,042
    
    
    
    125,975Dilutive effect of stock options and restricted stock(1)
    
    
    
    
    
    
    
    
    
    
    3,510Dilutive effect of stock warrants(1)
    
    
    
    
    
    
    
    
    
    
    Shares used in computing diluted net income per share
    
    
    135,334
    
    
    
    127,042
    
    
    
    129,485
 
 (1)
    
    For the fiscal year ended October 31, 2010, the shares used in computing
diluted net income per share do not include 4,099,000 dilutive stock options and shares
of restricted stock nor 12,521,000 dilutive warrant shares as the effect is
anti-dilutive. For the fiscal year ended October 31, 2009, the shares used in computing
diluted net income per share do not include 796,000 dilutive stock options and shares of
restricted stock nor 252,000 dilutive warrant shares as the effect is anti-dilutive.
For the fiscal years ended October 31, 2010, 2009 and 2008, additional stock options
outstanding of 11,474,000, 14,861,000 and 12,392,000, respectively, and additional
warrant shares outstanding of 13,133,000, 25,402,000 and zero, respectively, were
excluded from the calculation of diluted EPS, as their effect would have been
anti-dilutive. Foreign Currency and Derivatives
   Comprehensive Income or Loss
  Use of Estimates
  52




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##### Table of Contents



Fair Value of Financial Instruments
 Cash Equivalents
 Subsequent Events
    New Accounting Pronouncements
   53




---



##### Table of Contents



Adjustments for the Retrospective Application of New Accounting Standard Adopted on November
1, 2010
 Consolidated Statements of OperationsAdjustmentsAs
    
    for Non-
    
    AsPreviously
    
    Controlling
    
    CurrentlyIn thousands
    
    Reported
    
    Interest
    
    ReportedYear Ended October 31, 2009Other expense (income)
    
    $
    2,539
    
    
    $
    (2,926
    )
    
    $
    (387
    )Loss before provision for income taxes
    
    
    (6,548
    )
    
    
    2,926
    
    
    
    (3,622
    )Year Ended October 31, 2008Other expense
    
    $
    719
    
    
    $
    (690
    )
    
    $
    29Income before provision for income taxes
    
    
    98,571
    
    
    
    690
    
    
    
    99,261
 Consolidated Balance SheetsAdjustmentsAs
    
    for Non-
    
    AsPreviously
    
    Controlling
    
    CurrentlyIn thousands
    
    Reported
    
    Interest
    
    ReportedAs of October 31, 2009Liabilities and EquityOther long-term liabilities
    
    $
    54,081
    
    
    $
    (7,438
    )
    
    $
    46,643Total liabilities
    
    
    1,396,013
    
    
    
    (7,438
    )
    
    
    1,388,575Non-controlling interest
    
    
    
    
    
    
    7,438
    
    
    
    7,438
 Consolidated Statements of Cash FlowsAdjustmentsAs
    
    for Non-
    
    AsPreviously
    
    Controlling
    
    CurrentlyIn thousands
    
    Reported
    
    Interest
    
    ReportedYear Ended October 31, 2009Net loss
    
    $
    (192,042
    )
    
    $
    2,926
    
    
    $
    (189,116
    )Equity in earnings and minority interest
    
    
    2,924
    
    
    
    (2,926
    )
    
    
    (2
    )Year Ended October 31, 2008Net loss
    
    $
    (226,265
    )
    
    $
    690
    
    
    $
    (225,575
    )Equity in earnings and minority interest
    
    
    1,811
    
    
    
    (690
    )
    
    
    1,121
 Note 2  Business Acquisitions
   54




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##### Table of Contents



Note 3  Allowance for Doubtful Accounts
  Year Ended October 31,In thousands
    
    2010
    
    
    2009
    
    
    2008Balance, beginning of year
    
    $
    47,211
    
    
    $
    31,331
    
    
    $
    21,100Provision for doubtful accounts
    
    
    15,307
    
    
    
    16,235
    
    
    
    15,948Deductions
    
    
    (14,475
    )
    
    
    (355
    )
    
    
    (5,717
    )Balance, end of year
    
    $
    48,043
    
    
    $
    47,211
    
    
    $
    31,331
  Note 4  Inventories
  October 31,In thousands
    
    2010
    
    
    2009Raw materials
    
    $
    6,894
    
    
    $
    6,904Work in process
    
    
    3,914
    
    
    
    5,230Finished goods
    
    
    257,229
    
    
    
    255,596$
    268,037
    
    
    $
    267,730
 Note 5  Fixed Assets
  October 31,In thousands
    
    2010
    
    
    2009Furniture and other equipment
    
    $
    182,655
    
    
    $
    199,380Computer equipment
    
    
    98,712
    
    
    
    101,505Leasehold improvements
    
    
    146,384
    
    
    
    137,966Land use rights
    
    
    40,261
    
    
    
    42,671Land and buildings
    
    
    6,269
    
    
    
    6,368474,281
    
    
    
    487,890Accumulated depreciation and amortization
    
    
    (253,931
    )
    
    
    (248,557
    )$
    220,350
    
    
    $
    239,333
  55




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##### Table of Contents



Note 6  Intangible Assets and Goodwill
  October 31,2010
    
    
    2009Gross
    
    
    Amorti-
    
    
    Net Book
    
    
    Gross
    
    
    Amorti-
    
    
    Net BookIn thousands
    
    Amount
    
    
    zation
    
    
    Value
    
    
    Amount
    
    
    zation
    
    
    ValueAmortizable trademarks
    
    $
    19,752
    
    
    $
    (8,308
    )
    
    $
    11,444
    
    
    $
    19,472
    
    
    $
    (6,745
    )
    
    $
    12,727Amortizable licenses
    
    
    13,219
    
    
    
    (10,465
    )
    
    
    2,754
    
    
    
    12,237
    
    
    
    (8,464
    )
    
    
    3,773Other amortizable intangibles
    
    
    8,386
    
    
    
    (5,318
    )
    
    
    3,068
    
    
    
    8,318
    
    
    
    (4,695
    )
    
    
    3,623Non-amortizable trademarks
    
    
    123,301
    
    
    
    
    
    
    
    123,301
    
    
    
    122,831
    
    
    
    
    
    
    
    122,831$
    164,658
    
    
    $
    (24,091
    )
    
    $
    140,567
    
    
    $
    162,858
    
    
    $
    (19,904
    )
    
    $
    142,954
   Note 7  Lines of Credit and Long-term Debt
  October 31,In thousands
    
    2010
    
    
    2009European short-term credit arrangements
    
    $
    
    
    
    $
    14Asia/Pacific short-term lines of credit
    
    
    22,586
    
    
    
    32,578Americas Credit Facility
    
    
    
    
    
    
    Americas long-term debt
    
    
    20,000
    
    
    
    109,329European long-term debt
    
    
    265,222
    
    
    
    389,029European Credit Facility
    
    
    
    
    
    
    38,243Senior Notes
    
    
    400,000
    
    
    
    400,000Deferred purchase price obligation
    
    
    
    
    
    
    49,144Capital lease obligations and other borrowings
    
    
    20,965
    
    
    
    20,916$
    728,773
    
    
    $
    1,039,253
  56




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57




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Subsequent Events
 58




---



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In thousands2011
    
    $
    5,1822012
    
    
    8,1992013
    
    
    6,1802014
    
    
    16,8722015
    
    
    404,532Thereafter
    
    
    265,222$
    706,187
  October 31, 2010CarryingAmount
    
    
    Fair ValueLines of credit
    
    $
    22,586
    
    
    $
    22,586Long-term debt
    
    
    706,187
    
    
    
    699,687$
    728,773
    
    
    $
    722,273
 59




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Note 8  Accrued Liabilities
  October 31,2010
    
    
    2009Accrued employee compensation and benefits
    
    $
    57,773
    
    
    $
    48,040Accrued sales and payroll taxes
    
    
    12,437
    
    
    
    12,620Derivative liability
    
    
    6,964
    
    
    
    20,611Accrued interest
    
    
    1,593
    
    
    
    2,088Other liabilities
    
    
    36,242
    
    
    
    32,915$
    115,009
    
    
    $
    116,274
 Note 9  Commitments and Contingencies
 Operating Leases
  2011
    
    $
    101,6002012
    
    
    90,1612013
    
    
    76,7642014
    
    
    58,4972015
    
    
    46,717Thereafter
    
    
    102,006$
    475,745
  Professional Athlete Sponsorships
  2011
    
    $
    21,2432012
    
    
    13,2732013
    
    
    9,1542014
    
    
    4,8492015
    
    
    1,992Thereafter
    
    
    1,680$
    52,191
 60




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##### Table of Contents



Litigation
  Indemnities and Guarantees
  Note 10  Stockholders Equity
   Year Ended October 31,2010
    
    2009
    
    2008Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    Average
    
    
    
    
    
    AverageIn thousands
    
    Shares
    
    Price
    
    Shares
    
    Price
    
    Shares
    
    PriceOutstanding, beginning of year
    
    
    15,909,101
    
    
    $
    7.32
    
    
    
    15,902,575
    
    
    $
    9.97
    
    
    
    17,311,049
    
    
    $
    9.30Granted
    
    
    4,403,407
    
    
    
    3.83
    
    
    
    4,563,250
    
    
    
    1.97
    
    
    
    1,310,000
    
    
    
    8.99Exercised
    
    
    (713,062
    )
    
    
    3.84
    
    
    
    
    
    
    
    
    
    
    
    (1,828,338
    )
    
    
    3.69Canceled
    
    
    (6,868,016
    )
    
    
    10.69
    
    
    
    (4,556,724
    )
    
    
    11.21
    
    
    
    (890,136
    )
    
    
    8.55Outstanding, end of year
    
    
    12,731,430
    
    
    
    4.48
    
    
    
    15,909,101
    
    
    
    7.32
    
    
    
    15,902,575
    
    
    
    9.97Options exercisable, end of year
    
    
    4,892,680
    
    
    
    6.70
    
    
    
    10,211,031
    
    
    
    9.15
    
    
    
    12,251,796
    
    
    
    9.19
  61




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Options Outstanding
    
    Options ExercisableWeighted
    
    Weighted
    
    
    
    
    
    WeightedAverage
    
    Average
    
    
    
    
    
    AverageRemaining
    
    Exercise
    
    
    
    
    
    ExerciseRange of Exercise Prices
    
    Shares
    
    Life
    
    Price
    
    Shares
    
    Price(Years)$1.04 - $2.56
    
    
    5,849,085
    
    
    
    8.7
    
    
    $
    2.09
    
    
    
    543,499
    
    
    $
    1.77$2.57 - $4.47
    
    
    1,072,924
    
    
    
    3.1
    
    
    
    3.41
    
    
    
    832,005
    
    
    
    3.50$4.48 - $5.96
    
    
    2,780,583
    
    
    
    4.7
    
    
    
    4.97
    
    
    
    671,676
    
    
    
    4.71$5.97 - $7.44
    
    
    1,033,338
    
    
    
    2.1
    
    
    
    6.66
    
    
    
    1,033,338
    
    
    
    6.66$7.45 - $8.93
    
    
    855,000
    
    
    
    3.0
    
    
    
    8.42
    
    
    
    855,000
    
    
    
    8.42$8.94 - $10.42
    
    
    462,500
    
    
    
    7.0
    
    
    
    9.04
    
    
    
    279,162
    
    
    
    9.06$10.43 - $11.90
    
    
    222,500
    
    
    
    3.5
    
    
    
    11.07
    
    
    
    222,500
    
    
    
    11.07$11.91 - $14.87
    
    
    287,500
    
    
    
    5.0
    
    
    
    13.89
    
    
    
    287,500
    
    
    
    13.89$14.88 - $16.36
    
    
    168,000
    
    
    
    5.4
    
    
    
    15.94
    
    
    
    168,000
    
    
    
    15.9412,731,430
    
    
    
    6.2
    
    
    
    4.48
    
    
    
    4,892,680
    
    
    
    6.70
  WeightedAverageGrant DateShares
    
    Fair ValueNon-vested, beginning of year
    
    
    5,698,070
    
    
    $
    1.90Granted
    
    
    4,403,407
    
    
    
    1.04Vested
    
    
    (1,479,444
    )
    
    
    3.15Canceled
    
    
    (783,283
    )
    
    
    3.29Non-vested, end of year
    
    
    7,838,750
    
    
    
    1.06
     62




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Year Ended October 31,2010
    
    2009
    
    2008Outstanding, beginning of year
    
    
    1,022,003
    
    
    
    721,003
    
    
    
    842,000Granted
    
    
    3,110,000
    
    
    
    590,000
    
    
    
    330,000Vested
    
    
    (1,229,998
    )
    
    
    (9,999
    )
    
    
    (17,329
    )Forfeited
    
    
    (60,001
    )
    
    
    (279,001
    )
    
    
    (433,668
    )Outstanding, end of year
    
    
    2,842,004
    
    
    
    1,022,003
    
    
    
    721,003
    63




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##### Table of Contents



Note 11  Accumulated Other Comprehensive Income
  October 31,In thousands
    
    2010
    
    
    2009Foreign currency translation adjustment
    
    $
    114,935
    
    
    $
    111,951Loss on cash flow hedges
    
    
    (1,253
    )
    
    
    (16,555
    )$
    113,682
    
    
    $
    95,396
 Note 12  Income Taxes
  Year Ended October 31,In thousands
    
    2010
    
    
    2009
    
    
    2008Current:Federal
    
    $
    (1,502
    )
    
    $
    3,221
    
    
    $
    4,403State
    
    
    1,140
    
    
    
    
    
    
    
    (572
    )Foreign
    
    
    18,090
    
    
    
    34,448
    
    
    
    39,64117,728
    
    
    
    37,669
    
    
    
    43,472Deferred:Federal
    
    
    (2,872
    )
    
    
    24,699
    
    
    
    (8,070
    )State
    
    
    (1,087
    )
    
    
    8,166
    
    
    
    (1,980
    )Foreign
    
    
    9,664
    
    
    
    (3,867
    )
    
    
    (395
    )5,705
    
    
    
    28,998
    
    
    
    (10,445
    )Provision for income taxes
    
    $
    23,433
    
    
    $
    66,667
    
    
    $
    33,027
  Year Ended October 31,2010
    
    2009
    
    2008Computed expected statutory federal income
tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State income taxes, net of federal income
tax benefit
    
    
    (10.0
    )
    
    
    150.2
    
    
    
    (1.2
    )Foreign tax rate differential
    
    
    15.7
    
    
    
    505.5
    
    
    
    (10.4
    )Foreign tax exempt income
    
    
    (38.2
    )
    
    
    (174.3
    )
    
    
    (8.9
    )Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    19.5Stock-based compensation
    
    
    4.2
    
    
    
    (21.1
    )
    
    
    1.6Uncertain tax positions
    
    
    (3.1
    )
    
    
    (116.5
    )
    
    
    (5.7
    )Valuation allowance
    
    
    133.1
    
    
    
    (2,016.7
    )
    
    
    2.2Other
    
    
    16.1
    
    
    
    (202.4
    )
    
    
    1.2Effective income tax rate
    
    
    152.8
    %
    
    
    (1,840.3
    )%
    
    
    33.3
    %
 64




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Year Ended October 31,In thousands
    
    2010
    
    
    2009Deferred income tax assets:Allowance for doubtful accounts
    
    $
    9,185
    
    
    $
    8,509Depreciation and amortization
    
    
    539
    
    
    
    869Unrealized gains and losses
    
    
    7,567
    
    
    
    13,349Tax loss carryforwards
    
    
    175,148
    
    
    
    177,134Accruals and other
    
    
    71,656
    
    
    
    66,780264,095
    
    
    
    266,641Deferred income tax liabilities:Intangibles
    
    
    (26,210
    )
    
    
    (27,354
    )(26,210
    )
    
    
    (27,354
    )Deferred income taxes
    
    
    237,885
    
    
    
    239,287Valuation allowance
    
    
    (113,253
    )
    
    
    (93,638
    )Net deferred income taxes
    
    $
    124,632
    
    
    $
    145,649
      65




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Year ended October 31,In thousands
    
    2010
    
    
    2009Balance, beginning of year
    
    $
    42,103
    
    
    $
    25,495Gross increases related to prior year tax positions
    
    
    9,220
    
    
    
    7,134Gross increases related to current year tax positions
    
    
    110,847
    
    
    
    6,461Settlements
    
    
    (10,078
    )
    
    
    Lapse in statute of limitation
    
    
    (7,674
    )
    
    
    (13
    )Foreign exchange and other
    
    
    505
    
    
    
    3,026Balance, end of year
    
    $
    144,923
    
    
    $
    42,103
      66




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Note 13  Employee Plans
   Note 14  Segment and Geographic Information
   Percentage of Revenues2010
    
    2009
    
    2008Apparel
    
    
    64
    %
    
    
    66
    %
    
    
    65
    %Footwear
    
    
    21
    
    
    
    20
    
    
    
    20Accessories
    
    
    15
    
    
    
    14
    
    
    
    15100
    %
    
    
    100
    %
    
    
    100
    %
 67




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##### Table of Contents



Year Ended October 31,In thousands
    
    2010
    
    
    2009
    
    
    2008Revenues, net:Americas
    
    $
    843,078
    
    
    $
    929,691
    
    
    $
    1,061,370Europe
    
    
    728,952
    
    
    
    792,627
    
    
    
    933,119Asia/Pacific
    
    
    260,578
    
    
    
    251,596
    
    
    
    265,067Corporate operations
    
    
    5,012
    
    
    
    3,612
    
    
    
    5,080Consolidated
    
    $
    1,837,620
    
    
    $
    1,977,526
    
    
    $
    2,264,636Gross profit (loss):Americas
    
    $
    390,249
    
    
    $
    349,526
    
    
    $
    445,381Europe
    
    
    436,088
    
    
    
    446,801
    
    
    
    532,034Asia/Pacific
    
    
    141,197
    
    
    
    135,591
    
    
    
    140,168Corporate operations
    
    
    (286
    )
    
    
    (887
    )
    
    
    3,003Consolidated
    
    $
    967,248
    
    
    $
    931,031
    
    
    $
    1,120,586SG&A expense:Americas
    
    $
    324,683
    
    
    $
    364,727
    
    
    $
    371,958Europe
    
    
    340,138
    
    
    
    341,780
    
    
    
    380,374Asia/Pacific
    
    
    128,207
    
    
    
    112,418
    
    
    
    117,219Corporate operations
    
    
    39,038
    
    
    
    32,821
    
    
    
    46,382Consolidated
    
    $
    832,066
    
    
    $
    851,746
    
    
    $
    915,933Asset impairments:Americas
    
    $
    8,686
    
    
    $
    10,092
    
    
    $
    9,317Europe
    
    
    1,785
    
    
    
    645
    
    
    
    692Asia/Pacific
    
    
    1,186
    
    
    
    
    
    
    
    55,788Corporate operations
    
    
    
    
    
    
    
    
    
    
    Consolidated
    
    $
    11,657
    
    
    $
    10,737
    
    
    $
    65,797Operating (loss) income:Americas
    
    $
    56,880
    
    
    $
    (25,293
    )
    
    $
    64,106Europe
    
    
    94,165
    
    
    
    104,376
    
    
    
    150,968Asia/Pacific
    
    
    11,804
    
    
    
    23,173
    
    
    
    (32,839
    )Corporate operations
    
    
    (39,324
    )
    
    
    (33,708
    )
    
    
    (43,379
    )Consolidated
    
    $
    123,525
    
    
    $
    68,548
    
    
    $
    138,856Identifiable assets:Americas
    
    $
    535,580
    
    
    $
    538,533
    
    
    $
    841,318Europe
    
    
    800,754
    
    
    
    923,494
    
    
    
    1,026,268Asia/Pacific
    
    
    298,503
    
    
    
    296,806
    
    
    
    247,480Corporate operations
    
    
    61,284
    
    
    
    93,775
    
    
    
    55,199Consolidated
    
    $
    1,696,121
    
    
    $
    1,852,608
    
    
    $
    2,170,265Goodwill:Americas
    
    $
    75,051
    
    
    $
    77,891
    
    
    $
    76,124Europe
    
    
    181,555
    
    
    
    184,802
    
    
    
    167,814Asia/Pacific
    
    
    75,882
    
    
    
    71,065
    
    
    
    55,412Consolidated
    
    $
    332,488
    
    
    $
    333,758
    
    
    $
    299,350
  68




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Note 15  Derivative Financial Instruments
      Year Ended October 31,2010
    
    2009In thousands
    
    Amount
    
    LocationGain (loss) recognized in OCI on derivatives
    
    $
    15,039
    
    
    $
    (41,036
    )
    
    Other comprehensive incomeGain (loss) reclassified from accumulated
OCI into income
    
    $
    5,712
    
    
    $
    (14,343
    )
    
    Cost of goods soldGain (loss) reclassified from accumulated
OCI into income
    
    $
    894
    
    
    $
    (17
    )
    
    Foreign currency gain (loss)Gain (loss) recognized in income on
derivatives
    
    $
    816
    
    
    $
    (691
    )
    
    Foreign currency gain (loss)
  69




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NotionalIn thousands
    
    Hedged Item
    
    
    Amount
    
    
    Maturity
    
    
    Fair ValueUnited States dollar
    
    Inventory
    
    $
    415,105
    
    
    Nov 2010  Oct 2012
    
    $
    (1,157
    )Swiss francs
    
    Accounts receivable
    
    
    12,011
    
    
    Nov 2010  Oct 2011
    
    
    (390
    )British pounds
    
    Accounts receivable
    
    
    35,930
    
    
    Nov 2010  Oct 2011
    
    
    1,333Interest rate caps
    
    
    
    
    
    
    168,898
    
    
    Jul 2013
    
    
    (1,074
    )$
    631,944
    
    
    
    
    
    
    $
    (1,288
    )
  
    
    Level 1  Valuation is based upon quoted prices for identical instruments traded in
active markets. Level 1 assets and liabilities include debt and equity securities
traded in an active exchange market, as well as U.S. Treasury securities.
    
    Level 2  Valuation is based upon quoted prices for similar instruments in active
markets, quoted prices for identical or similar instruments in markets that are not
active, and model based valuation techniques for which all significant assumptions are
observable in the market or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.
    
    Level 3  Valuation is determined using model-based techniques with significant
assumptions not observable in the market. These unobservable assumptions reflect the
Companys own estimates of assumptions that market participants would use in pricing
the asset or liability. Valuation techniques include the use of third party pricing
services, option pricing models, discounted cash flow models and similar techniques.
 70




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Fair Value Measurements Using
    
    
    Assets (Liabilities)In thousands
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    at Fair ValueOctober 31, 2010Derivative assets:Other receivables
    
    $
    
    
    
    $
    8,428
    
    
    $
    
    
    
    $
    8,428Other assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Derivative liabilities:Accrued liabilities
    
    
    
    
    
    
    (6,964
    )
    
    
    
    
    
    
    (6,964
    )Other long-term liabilities
    
    
    
    
    
    
    (2,752
    )
    
    
    
    
    
    
    (2,752
    )Total fair value
    
    $
    
    
    
    $
    (1,288
    )
    
    $
    
    
    
    $
    (1,288
    )October 31, 2009Derivative assets:Other receivables
    
    $
    
    
    
    $
    936
    
    
    $
    
    
    
    $
    936Other assets
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    7Derivative liabilities:Accrued liabilities
    
    
    
    
    
    
    (20,611
    )
    
    
    
    
    
    
    (20,611
    )Other long-term liabilities
    
    
    
    
    
    
    (3,523
    )
    
    
    
    
    
    
    (3,523
    )Total fair value
    
    $
    
    
    
    $
    (23,191
    )
    
    $
    
    
    
    $
    (23,191
    )
 71




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Note 16  Quarterly Financial Data (Unaudited)
  Quarter EndedIn thousands, except per share amounts
    
    January 31
    
    April 30
    
    July 31
    
    October 31Year ended October 31, 2010Revenues, net
    
    $
    432,737
    
    
    $
    468,289
    
    
    $
    441,475
    
    
    $
    495,119Gross profit
    
    
    222,149
    
    
    
    249,287
    
    
    
    230,733
    
    
    
    265,079(Loss) income from continuing operations
attributable to Quiksilver, Inc.
    
    
    (5,430
    )
    
    
    8,822
    
    
    
    8,163
    
    
    
    (23,069
    )Income from discontinued operations
attributable to Quiksilver, Inc.
    
    
    76
    
    
    
    602
    
    
    
    143
    
    
    
    1,009Net (loss) income attributable to
Quiksilver, Inc.
    
    
    (5,354
    )
    
    
    9,424
    
    
    
    8,306
    
    
    
    (22,060
    )(Loss) income per share from continuing
operations attributable to Quiksilver, Inc.,
assuming dilution
    
    
    (0.04
    )
    
    
    0.06
    
    
    
    0.05
    
    
    
    (0.15
    )Income per share from discontinued
operations attributable to Quiksilver, Inc,
assuming dilution
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.01Net (loss) income per share attributable to
Quiksilver, Inc., assuming dilution
    
    
    (0.04
    )
    
    
    0.06
    
    
    
    0.06
    
    
    
    (0.14
    )Trade accounts receivable
    
    
    322,959
    
    
    
    333,267
    
    
    
    340,921
    
    
    
    368,428Inventories
    
    
    301,216
    
    
    
    226,419
    
    
    
    270,854
    
    
    
    268,037Year ended October 31, 2009Revenues, net
    
    $
    443,278
    
    
    $
    494,173
    
    
    $
    501,394
    
    
    $
    538,681Gross profit
    
    
    207,163
    
    
    
    233,118
    
    
    
    234,364
    
    
    
    256,386(Loss) income from continuing operations
attributable to Quiksilver, Inc.
    
    
    (65,862
    )
    
    
    4,945
    
    
    
    3,413
    
    
    
    (15,711
    )(Loss) income from discontinued
operations attributable to Quiksilver, Inc.
    
    
    (128,564
    )
    
    
    (2,132
    )
    
    
    (2,067
    )
    
    
    13,936Net (loss) income attributable to
Quiksilver, Inc.
    
    
    (194,426
    )
    
    
    2,813
    
    
    
    1,346
    
    
    
    (1,775
    )(Loss) income per share from continuing
operations attributable to Quiksilver, Inc.,
assuming dilution
    
    
    (0.52
    )
    
    
    0.04
    
    
    
    0.03
    
    
    
    (0.12
    )(Loss) income per share from discontinued
operations attributable to Quiksilver, Inc,
assuming dilution
    
    
    (1.01
    )
    
    
    (0.02
    )
    
    
    (0.02
    )
    
    
    0.11Net (loss) income per share attributable to
Quiksilver, Inc., assuming dilution
    
    
    (1.53
    )
    
    
    0.02
    
    
    
    0.01
    
    
    
    (0.01
    )Trade accounts receivable
    
    
    373,357
    
    
    
    410,971
    
    
    
    424,191
    
    
    
    430,884Inventories
    
    
    380,502
    
    
    
    307,735
    
    
    
    334,233
    
    
    
    267,730
 Note 17  Discontinued Operations
  72




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Rossignol Dynastar Look Lange
  Year Ended October 31,In thousands
    
    2010
    
    
    2009
    
    
    2008Revenues, net
    
    $
    672
    
    
    $
    18,171
    
    
    $
    374,149Income (loss) before income taxes
    
    
    379
    
    
    
    (221,201
    )
    
    
    (365,917
    )Benefit for income taxes
    
    
    (1,451
    )
    
    
    (102,374
    )
    
    
    (74,108
    )Income (loss) from discontinued operations
    
    $
    1,830
    
    
    $
    (118,827
    )
    
    $
    (291,809
    )
  Rossignol
 Note 18  Restructuring Charges
  73




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##### Table of Contents



FacilityIn thousands
    
    Workforce
    
    
    & Other
    
    
    TotalBalance, November 1, 2008
    
    $
    
    
    
    $
    
    
    
    $
    Charged to expense
    
    
    19,769
    
    
    
    4,590
    
    
    
    24,359Cash payments
    
    
    (9,768
    )
    
    
    (639
    )
    
    
    (10,407
    )Adjustments to accrual
    
    
    (178
    )
    
    
    
    
    
    
    (178
    )Foreign currency translation
    
    
    135
    
    
    
    
    
    
    
    135Balance, October 31, 2009
    
    
    9,958
    
    
    
    3,951
    
    
    
    13,909Charged to expense
    
    
    8,339
    
    
    
    1,676
    
    
    
    10,015Cash payments
    
    
    (13,020
    )
    
    
    (2,226
    )
    
    
    (15,246
    )Adjustments to accrual
    
    
    (425
    )
    
    
    
    
    
    
    (425
    )Foreign currency translation
    
    
    66
    
    
    
    
    
    
    
    66Balance, October 31, 2010
    
    $
    4,918
    
    
    $
    3,401
    
    
    $
    8,319
 Note 19  Condensed Consolidating Financial Information
   74




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
 Year Ended October 31, 2010
 Non-Quiksilver,
    
    
    Guarantor
    
    
    GuarantorIn thousands
    
    Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues, net
    
    $
    376
    
    
    $
    683,767
    
    
    $
    1,195,536
    
    
    $
    (42,059
    )
    
    $
    1,837,620Cost of goods sold
    
    
    
    
    
    
    373,740
    
    
    
    511,777
    
    
    
    (15,145
    )
    
    
    870,372Gross profit
    
    
    376
    
    
    
    310,027
    
    
    
    683,759
    
    
    
    (26,914
    )
    
    
    967,248Selling, general and administrative
expense
    
    
    36,867
    
    
    
    283,347
    
    
    
    537,153
    
    
    
    (25,301
    )
    
    
    832,066Asset impairments
    
    
    
    
    
    
    7,585
    
    
    
    4,072
    
    
    
    
    
    
    
    11,657Operating (loss) income
    
    
    (36,491
    )
    
    
    19,095
    
    
    
    142,534
    
    
    
    (1,613
    )
    
    
    123,525Interest expense, net
    
    
    28,721
    
    
    
    55,070
    
    
    
    30,318
    
    
    
    
    
    
    
    114,109Foreign currency gain
    
    
    (285
    )
    
    
    (124
    )
    
    
    (5,508
    )
    
    
    
    
    
    
    (5,917
    )Equity in earnings and other
(income) expense
    
    
    (50,399
    )
    
    
    92
    
    
    
    (92
    )
    
    
    50,399
    
    
    
    (Loss) income before (benefit)
provision for income taxes
    
    
    (14,528
    )
    
    
    (35,943
    )
    
    
    117,816
    
    
    
    (52,012
    )
    
    
    15,333(Benefit) provision for income taxes
    
    
    (4,844
    )
    
    
    522
    
    
    
    27,755
    
    
    
    
    
    
    
    23,433(Loss) income from continuing
operations
    
    
    (9,684
    )
    
    
    (36,465
    )
    
    
    90,061
    
    
    
    (52,012
    )
    
    
    (8,100
    )Income from discontinued
operations
    
    
    
    
    
    
    1,485
    
    
    
    345
    
    
    
    
    
    
    
    1,830Net (loss) income
    
    
    (9,684
    )
    
    
    (34,980
    )
    
    
    90,406
    
    
    
    (52,012
    )
    
    
    (6,270
    )Less: net income attributable to
non-controlling interest
    
    
    
    
    
    
    (3,414
    )
    
    
    
    
    
    
    
    
    
    
    (3,414
    )Net (loss) income attributable to
Quiksilver, Inc.
    
    $
    (9,684
    )
    
    $
    (38,394
    )
    
    $
    90,406
    
    
    $
    (52,012
    )
    
    $
    (9,684
    )
 75




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
 Year Ended October 31, 2009
 Non-Quiksilver,
    
    
    Guarantor
    
    
    GuarantorIn thousands
    
    Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues, net
    
    $
    301
    
    
    $
    796,924
    
    
    $
    1,218,860
    
    
    $
    (38,559
    )
    
    $
    1,977,526Cost of goods sold
    
    
    
    
    
    
    502,643
    
    
    
    556,666
    
    
    
    (12,814
    )
    
    
    1,046,495Gross profit
    
    
    301
    
    
    
    294,281
    
    
    
    662,194
    
    
    
    (25,745
    )
    
    
    931,031Selling, general and administrative
expense
    
    
    3,733
    
    
    
    348,228
    
    
    
    526,170
    
    
    
    (26,385
    )
    
    
    851,746Asset impairments
    
    
    
    
    
    
    10,092
    
    
    
    645
    
    
    
    
    
    
    
    10,737Operating (loss) income
    
    
    (3,432
    )
    
    
    (64,039
    )
    
    
    135,379
    
    
    
    640
    
    
    
    68,548Interest expense, net
    
    
    39,097
    
    
    
    8,700
    
    
    
    16,127
    
    
    
    
    
    
    
    63,924Foreign currency loss
    
    
    61
    
    
    
    47
    
    
    
    8,525
    
    
    
    
    
    
    
    8,633Equity in earnings and other
(income) expense
    
    
    147,848
    
    
    
    (398
    )
    
    
    11
    
    
    
    (147,848
    )
    
    
    (387
    )(Loss) income before (benefit)
provision for income taxes
    
    
    (190,438
    )
    
    
    (72,388
    )
    
    
    110,716
    
    
    
    148,488
    
    
    
    (3,622
    )(Benefit) provision for income taxes
    
    
    (2,823
    )
    
    
    42,937
    
    
    
    26,553
    
    
    
    
    
    
    
    66,667(Loss) income from continuing
operations
    
    
    (187,615
    )
    
    
    (115,325
    )
    
    
    84,163
    
    
    
    148,488
    
    
    
    (70,289
    )(Loss) income from discontinued
operations
    
    
    (4,427
    )
    
    
    13,303
    
    
    
    (128,367
    )
    
    
    664
    
    
    
    (118,827
    )Net loss
    
    
    (192,042
    )
    
    
    (102,022
    )
    
    
    (44,204
    )
    
    
    149,152
    
    
    
    (189,116
    )Less: net income attributable to
non-controlling interest
    
    
    
    
    
    
    (2,757
    )
    
    
    (169
    )
    
    
    
    
    
    
    (2,926
    )Net loss attributable to Quiksilver, Inc.
    
    $
    (192,042
    )
    
    $
    (104,779
    )
    
    $
    (44,373
    )
    
    $
    149,152
    
    
    $
    (192,042
    )
 76




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
 Year Ended October 31, 2008
 Non-Quiksilver,
    
    
    Guarantor
    
    
    GuarantorIn thousands
    
    Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues, net
    
    $
    116
    
    
    $
    927,971
    
    
    $
    1,382,879
    
    
    $
    (46,330
    )
    
    $
    2,264,636Cost of goods sold
    
    
    
    
    
    
    521,833
    
    
    
    636,627
    
    
    
    (14,410
    )
    
    
    1,144,050Gross profit
    
    
    116
    
    
    
    406,138
    
    
    
    746,252
    
    
    
    (31,920
    )
    
    
    1,120,586Selling, general and administrative
expense
    
    
    59,739
    
    
    
    345,451
    
    
    
    553,608
    
    
    
    (42,865
    )
    
    
    915,933Asset impairments
    
    
    
    
    
    
    9,317
    
    
    
    56,480
    
    
    
    
    
    
    
    65,797Operating (loss) income
    
    
    (59,623
    )
    
    
    51,370
    
    
    
    136,164
    
    
    
    10,945
    
    
    
    138,856Interest expense (income), net
    
    
    47,512
    
    
    
    377
    
    
    
    (2,562
    )
    
    
    
    
    
    
    45,327Foreign currency (gain) loss
    
    
    (1,505
    )
    
    
    (5,674
    )
    
    
    1,418
    
    
    
    
    
    
    
    (5,761
    )Equity in earnings and other
(income) expense
    
    
    134,831
    
    
    
    (333
    )
    
    
    362
    
    
    
    (134,831
    )
    
    
    29(Loss) income before (benefit)
provision for income taxes
    
    
    (240,461
    )
    
    
    57,000
    
    
    
    136,946
    
    
    
    145,776
    
    
    
    99,261(Benefit) provision for income taxes
    
    
    (14,986
    )
    
    
    2,488
    
    
    
    45,525
    
    
    
    
    
    
    
    33,027(Loss) income from continuing
operations
    
    
    (225,475
    )
    
    
    54,512
    
    
    
    91,421
    
    
    
    145,776
    
    
    
    66,234Loss from discontinued operations
    
    
    (790
    )
    
    
    (22,723
    )
    
    
    (255,976
    )
    
    
    (12,320
    )
    
    
    (291,809
    )Net (loss) income
    
    
    (226,265
    )
    
    
    31,789
    
    
    
    (164,555
    )
    
    
    133,456
    
    
    
    (225,575
    )Less: net income attributable to
non-controlling interest
    
    
    
    
    
    
    (683
    )
    
    
    (7
    )
    
    
    
    
    
    
    (690
    )Net (loss) income attributable to
Quiksilver, Inc.
    
    $
    (226,265
    )
    
    $
    31,106
    
    
    $
    (164,562
    )
    
    $
    133,456
    
    
    $
    (226,265
    )
 77




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##### Table of Contents



CONDENSED CONSOLIDATING BALANCE SHEET
 OCTOBER 31, 2010
 Non-Quiksilver,
    
    
    Guarantor
    
    
    GuarantorIn thousands
    
    Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    164
    
    
    $
    39,172
    
    
    $
    81,257
    
    
    $
    
    
    
    $
    120,593Trade accounts receivable, net
    
    
    
    
    
    
    130,445
    
    
    
    237,983
    
    
    
    
    
    
    
    368,428Other receivables
    
    
    239
    
    
    
    3,930
    
    
    
    38,343
    
    
    
    
    
    
    
    42,512Inventories
    
    
    
    
    
    
    91,622
    
    
    
    177,621
    
    
    
    (1,206
    )
    
    
    268,037Deferred income taxes
    
    
    
    
    
    
    (3,318
    )
    
    
    42,371
    
    
    
    
    
    
    
    39,053Prepaid expenses and other
current assets
    
    
    2,738
    
    
    
    6,493
    
    
    
    15,975
    
    
    
    
    
    
    
    25,206Current assets held for sale
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    12Total current assets
    
    
    3,141
    
    
    
    268,344
    
    
    
    593,562
    
    
    
    (1,206
    )
    
    
    863,841Fixed assets, net
    
    
    6,780
    
    
    
    55,778
    
    
    
    157,792
    
    
    
    
    
    
    
    220,350Intangible assets, net
    
    
    2,979
    
    
    
    49,461
    
    
    
    88,127
    
    
    
    
    
    
    
    140,567Goodwill
    
    
    
    
    
    
    114,863
    
    
    
    217,625
    
    
    
    
    
    
    
    332,488Other assets
    
    
    6,079
    
    
    
    2,171
    
    
    
    45,046
    
    
    
    
    
    
    
    53,296Deferred income taxes long-term
    
    
    
    
    
    
    (10,388
    )
    
    
    95,967
    
    
    
    
    
    
    
    85,579Investment in subsidiaries
    
    
    1,025,085
    
    
    
    
    
    
    
    
    
    
    
    (1,025,085
    )
    
    
    Total assets
    
    $
    1,044,064
    
    
    $
    480,229
    
    
    $
    1,198,119
    
    
    $
    (1,026,291
    )
    
    $
    1,696,121LIABILITIES AND EQUITYCurrent liabilities:Lines of credit
    
    $
    
    
    
    $
    
    
    
    $
    22,586
    
    
    $
    
    
    
    $
    22,586Accounts payable
    
    
    1,268
    
    
    
    70,575
    
    
    
    107,559
    
    
    
    
    
    
    
    179,402Accrued liabilities
    
    
    7,717
    
    
    
    29,558
    
    
    
    77,734
    
    
    
    
    
    
    
    115,009Current portion of long-term debt
    
    
    
    
    
    
    1,500
    
    
    
    3,682
    
    
    
    
    
    
    
    5,182Income taxes payable
    
    
    
    
    
    
    (5,880
    )
    
    
    9,364
    
    
    
    
    
    
    
    3,484Intercompany balances
    
    
    24,711
    
    
    
    (18,474
    )
    
    
    (6,237
    )
    
    
    
    
    
    
    Current liabilities related to assets
held for sale
    
    
    
    
    
    
    
    
    
    
    739
    
    
    
    
    
    
    
    739Total current liabilities
    
    
    33,696
    
    
    
    77,279
    
    
    
    215,427
    
    
    
    
    
    
    
    326,402Long-term debt, net of current portion
    
    
    400,000
    
    
    
    18,500
    
    
    
    282,505
    
    
    
    
    
    
    
    701,005Other long-term liabilities
    
    
    
    
    
    
    41,753
    
    
    
    7,366
    
    
    
    
    
    
    
    49,119Total liabilities
    
    
    433,696
    
    
    
    137,532
    
    
    
    505,298
    
    
    
    
    
    
    
    1,076,526Stockholders/invested equity
    
    
    610,368
    
    
    
    333,785
    
    
    
    692,506
    
    
    
    (1,026,291
    )
    
    
    610,368Non-controlling interest
    
    
    
    
    
    
    8,912
    
    
    
    315
    
    
    
    
    
    
    
    9,227Total liabilities and equity
    
    $
    1,044,064
    
    
    $
    480,229
    
    
    $
    1,198,119
    
    
    $
    (1,026,291
    )
    
    $
    1,696,121
 78




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##### Table of Contents



CONDENSED CONSOLIDATING BALANCE SHEET
 OCTOBER 31, 2009
 Non-Quiksilver,
    
    
    Guarantor
    
    
    GuarantorIn thousands
    
    Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    321
    
    
    $
    1,135
    
    
    $
    98,060
    
    
    $
    
    
    
    $
    99,516Restricted cash
    
    
    
    
    
    
    
    
    
    
    52,706
    
    
    
    
    
    
    
    52,706Trade accounts receivable, net
    
    
    
    
    
    
    150,540
    
    
    
    280,344
    
    
    
    
    
    
    
    430,884Other receivables
    
    
    854
    
    
    
    4,869
    
    
    
    19,892
    
    
    
    
    
    
    
    25,615Inventories
    
    
    
    
    
    
    86,501
    
    
    
    182,006
    
    
    
    (777
    )
    
    
    267,730Deferred income taxes
    
    
    
    
    
    
    8,658
    
    
    
    67,980
    
    
    
    
    
    
    
    76,638Prepaid expenses and other
current assets
    
    
    12,981
    
    
    
    11,039
    
    
    
    13,313
    
    
    
    
    
    
    
    37,333Current assets held for sale
    
    
    
    
    
    
    
    
    
    
    1,777
    
    
    
    
    
    
    
    1,777Total current assets
    
    
    14,156
    
    
    
    262,742
    
    
    
    716,078
    
    
    
    (777
    )
    
    
    992,199Fixed assets, net
    
    
    4,323
    
    
    
    71,265
    
    
    
    163,745
    
    
    
    
    
    
    
    239,333Intangible assets, net
    
    
    2,886
    
    
    
    50,426
    
    
    
    89,642
    
    
    
    
    
    
    
    142,954Goodwill
    
    
    
    
    
    
    118,111
    
    
    
    215,647
    
    
    
    
    
    
    
    333,758Investment in subsidiaries
    
    
    952,358
    
    
    
    
    
    
    
    
    
    
    
    (952,358
    )
    
    
    Other assets
    
    
    7,522
    
    
    
    18,947
    
    
    
    48,884
    
    
    
    
    
    
    
    75,353Deferred income taxes long-term
    
    
    
    
    
    
    (28,017
    )
    
    
    97,028
    
    
    
    
    
    
    
    69,011Total assets
    
    $
    981,245
    
    
    $
    493,474
    
    
    $
    1,331,024
    
    
    $
    (953,135
    )
    
    $
    1,852,608LIABILITIES AND EQUITYCurrent liabilities:Lines of credit
    
    $
    
    
    
    $
    
    
    
    $
    32,592
    
    
    $
    
    
    
    $
    32,592Accounts payable
    
    
    1,594
    
    
    
    60,003
    
    
    
    100,776
    
    
    
    
    
    
    
    162,373Accrued liabilities
    
    
    7,357
    
    
    
    27,084
    
    
    
    81,833
    
    
    
    
    
    
    
    116,274Current portion of long-term debt
    
    
    
    
    
    
    1,140
    
    
    
    94,091
    
    
    
    
    
    
    
    95,231Income taxes payable
    
    
    
    
    
    
    9,174
    
    
    
    14,400
    
    
    
    
    
    
    
    23,574Intercompany balances
    
    
    115,699
    
    
    
    (129,624
    )
    
    
    13,925
    
    
    
    
    
    
    
    Current liabilities related to assets
held for sale
    
    
    
    
    
    
    15
    
    
    
    443
    
    
    
    
    
    
    
    458Total current liabilities
    
    
    124,650
    
    
    
    (32,208
    )
    
    
    338,060
    
    
    
    
    
    
    
    430,502Long-term debt, net of current portion
    
    
    400,000
    
    
    
    110,829
    
    
    
    400,601
    
    
    
    
    
    
    
    911,430Other long-term liabilities
    
    
    
    
    
    
    36,984
    
    
    
    9,659
    
    
    
    
    
    
    
    46,643Total liabilities
    
    
    524,650
    
    
    
    115,605
    
    
    
    748,320
    
    
    
    
    
    
    
    1,388,575Stockholders/invested equity
    
    
    456,595
    
    
    
    370,922
    
    
    
    582,213
    
    
    
    (953,135
    )
    
    
    456,595Non-controlling interest
    
    
    
    
    
    
    6,947
    
    
    
    491
    
    
    
    
    
    
    
    7,438Total liabilities and equity
    
    $
    981,245
    
    
    $
    493,474
    
    
    $
    1,331,024
    
    
    $
    (953,135
    )
    
    $
    1,852,608
 79




---



##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
 Year Ended October 31, 2010
 Non-Quiksilver,
    
    
    Guarantor
    
    
    GuarantorIn thousands
    
    Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net (loss) income
    
    $
    (9,684
    )
    
    $
    (34,980
    )
    
    $
    90,406
    
    
    $
    (52,012
    )
    
    $
    (6,270
    )Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:Loss from discontinued operations
    
    
    
    
    
    
    (1,485
    )
    
    
    (345
    )
    
    
    
    
    
    
    (1,830
    )Depreciation and amortization
    
    
    1,519
    
    
    
    21,494
    
    
    
    30,848
    
    
    
    
    
    
    
    53,861Stock-based compensation and tax
benefit on option exercises
    
    
    12,831
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,831Provision for doubtful accounts
    
    
    
    
    
    
    4,360
    
    
    
    10,947
    
    
    
    
    
    
    
    15,307Equity in earnings
    
    
    (50,399
    )
    
    
    92
    
    
    
    (616
    )
    
    
    50,399
    
    
    
    (524
    )Asset impairments
    
    
    
    
    
    
    8,403
    
    
    
    3,254
    
    
    
    
    
    
    
    11,657Non-cash interest expense
    
    
    1,292
    
    
    
    42,740
    
    
    
    12,663
    
    
    
    
    
    
    
    56,695Deferred taxes
    
    
    
    
    
    
    (5,652
    )
    
    
    13,681
    
    
    
    
    
    
    
    8,029Other adjustments to reconcile net loss
    
    
    (195
    )
    
    
    (1,455
    )
    
    
    (1,892
    )
    
    
    
    
    
    
    (3,542
    )Changes in operating assets and liabilities:Trade accounts receivable
    
    
    
    
    
    
    15,735
    
    
    
    24,111
    
    
    
    
    
    
    
    39,846Inventories
    
    
    
    
    
    
    (5,075
    )
    
    
    7,967
    
    
    
    1,613
    
    
    
    4,505Other operating assets and liabilities
    
    
    16,733
    
    
    
    7,960
    
    
    
    (15,561
    )
    
    
    
    
    
    
    9,132Cash (used in) provided by operating
activities of continuing operations
    
    
    (27,903
    )
    
    
    52,137
    
    
    
    175,463
    
    
    
    
    
    
    
    199,697Cash provided by operating
activities of discontinued operations
    
    
    
    
    
    
    1,507
    
    
    
    2,278
    
    
    
    
    
    
    
    3,785Net cash (used in) provided by
operating activities
    
    
    (27,903
    )
    
    
    53,644
    
    
    
    177,741
    
    
    
    
    
    
    
    203,482Cash flows from investing activities:Capital expenditures
    
    
    (4,160
    )
    
    
    (6,211
    )
    
    
    (32,764
    )
    
    
    
    
    
    
    (43,135
    )Changes in restricted cash
    
    
    
    
    
    
    
    
    
    
    52,706
    
    
    
    
    
    
    
    52,706Cash (used in) provided by investing
activities of continuing operations
    
    
    (4,160
    )
    
    
    (6,211
    )
    
    
    19,942
    
    
    
    
    
    
    
    9,571Cash provided by investing activities of
discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net cash (used in) provided by
investing activities
    
    
    (4,160
    )
    
    
    (6,211
    )
    
    
    19,942
    
    
    
    
    
    
    
    9,571Cash flows from financing activities:Borrowings on lines of credit
    
    
    
    
    
    
    
    
    
    
    16,581
    
    
    
    
    
    
    
    16,581Payments on lines of credit
    
    
    
    
    
    
    
    
    
    
    (27,021
    )
    
    
    
    
    
    
    (27,021
    )Borrowings on long-term debt
    
    
    
    
    
    
    42,735
    
    
    
    16,618
    
    
    
    
    
    
    
    59,353Payments on long-term debt
    
    
    
    
    
    
    (51,489
    )
    
    
    (169,077
    )
    
    
    
    
    
    
    (220,566
    )Payments of debt and equity issuance costs
    
    
    (7,750
    )
    
    
    
    
    
    
    (1,823
    )
    
    
    
    
    
    
    (9,573
    )Proceeds from stock option exercises
    
    
    3,639
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,639Transactions with non-controlling interests owners
    
    
    
    
    
    
    (1,542
    )
    
    
    (3,632
    )
    
    
    
    
    
    
    (5,174
    )Intercompany
    
    
    36,017
    
    
    
    900
    
    
    
    (36,917
    )
    
    
    
    
    
    
    Cash provided by (used in) financing
activities of continuing operations
    
    
    31,906
    
    
    
    (9,396
    )
    
    
    (205,271
    )
    
    
    
    
    
    
    (182,761
    )Cash provided by financing activities of
discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net cash provided by (used in)
financing activities
    
    
    31,906
    
    
    
    (9,396
    )
    
    
    (205,271
    )
    
    
    
    
    
    
    (182,761
    )Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    (9,215
    )
    
    
    
    
    
    
    (9,215
    )Net (decrease) increase in cash and cash
equivalents
    
    
    (157
    )
    
    
    38,037
    
    
    
    (16,803
    )
    
    
    
    
    
    
    21,077Cash and cash equivalents, beginning of period
    
    
    321
    
    
    
    1,135
    
    
    
    98,060
    
    
    
    
    
    
    
    99,516Cash and cash equivalents, end of period
    
    $
    164
    
    
    $
    39,172
    
    
    $
    81,257
    
    
    
    
    
    
    $
    120,593
 80




---



##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
 Year Ended October 31, 2009
 Non-Quiksilver,
    
    
    Guarantor
    
    
    GuarantorIn thousands
    
    Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net loss
    
    $
    (192,042
    )
    
    $
    (102,022
    )
    
    $
    (44,204
    )
    
    $
    149,152
    
    
    $
    (189,116
    )Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:Loss (income) from discontinued operations
    
    
    4,427
    
    
    
    (13,303
    )
    
    
    128,367
    
    
    
    (664
    )
    
    
    118,827Depreciation and amortization
    
    
    1,525
    
    
    
    24,174
    
    
    
    29,305
    
    
    
    
    
    
    
    55,004Stock-based compensation and tax
benefit on option exercises
    
    
    8,415
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,415Provision for doubtful accounts
    
    
    
    
    
    
    10,059
    
    
    
    6,176
    
    
    
    
    
    
    
    16,235Equity in earnings
    
    
    147,848
    
    
    
    
    
    
    
    (2
    )
    
    
    (147,848
    )
    
    
    (2
    )Asset impairments
    
    
    
    
    
    
    9,570
    
    
    
    1,167
    
    
    
    
    
    
    
    10,737Deferred taxes
    
    
    
    
    
    
    47,482
    
    
    
    (4,248
    )
    
    
    
    
    
    
    43,234Other adjustments to reconcile net loss
    
    
    334
    
    
    
    2,660
    
    
    
    4,538
    
    
    
    
    
    
    
    7,532Changes in operating assets and liabilities:Trade accounts receivable
    
    
    
    
    
    
    53,272
    
    
    
    7,511
    
    
    
    
    
    
    
    60,783Inventories
    
    
    
    
    
    
    48,293
    
    
    
    31,050
    
    
    
    (1,304
    )
    
    
    78,039Other operating assets and liabilities
    
    
    (8,929
    )
    
    
    (4,245
    )
    
    
    (4,161
    )
    
    
    
    
    
    
    (17,335
    )Cash (used in) provided by operating
activities of continuing operations
    
    
    (38,422
    )
    
    
    75,940
    
    
    
    155,499
    
    
    
    (664
    )
    
    
    192,353Cash (used in) provided by operating
activities of discontinued operations
    
    
    (19,423
    )
    
    
    36,806
    
    
    
    (4,232
    )
    
    
    664
    
    
    
    13,815Net cash (used in) provided by
operating activities
    
    
    (57,845
    )
    
    
    112,746
    
    
    
    151,267
    
    
    
    
    
    
    
    206,168Cash flows from investing activities:Capital expenditures
    
    
    (3,793
    )
    
    
    (7,214
    )
    
    
    (43,557
    )
    
    
    
    
    
    
    (54,564
    )Cash used in investing activities
of continuing operations
    
    
    (3,793
    )
    
    
    (7,214
    )
    
    
    (43,557
    )
    
    
    
    
    
    
    (54,564
    )Cash provided by investing activities of
discontinued operations
    
    
    
    
    
    
    
    
    
    
    21,848
    
    
    
    
    
    
    
    21,848Net cash used in investing activities
    
    
    (3,793
    )
    
    
    (7,214
    )
    
    
    (21,709
    )
    
    
    
    
    
    
    (32,716
    )Cash flows from financing activities:Borrowings on lines of credit
    
    
    
    
    
    
    
    
    
    
    10,346
    
    
    
    
    
    
    
    10,346Payments on lines of credit
    
    
    
    
    
    
    
    
    
    
    (237,025
    )
    
    
    
    
    
    
    (237,025
    )Borrowings on long-term debt
    
    
    
    
    
    
    547,093
    
    
    
    348,175
    
    
    
    
    
    
    
    895,268Payments on long-term debt
    
    
    
    
    
    
    (561,113
    )
    
    
    (165,739
    )
    
    
    
    
    
    
    (726,852
    )Payments of debt issuance costs
    
    
    
    
    
    
    (27,494
    )
    
    
    (19,984
    )
    
    
    
    
    
    
    (47,478
    )Proceeds from stock option exercises
    
    
    862
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    862Intercompany
    
    
    61,079
    
    
    
    (65,549
    )
    
    
    4,470
    
    
    
    
    
    
    
    Cash provided by (used in) financing
activities of continuing operations
    
    
    61,941
    
    
    
    (107,063
    )
    
    
    (59,757
    )
    
    
    
    
    
    
    (104,879
    )Cash used in financing activities of
discontinued operations
    
    
    
    
    
    
    
    
    
    
    (11,136
    )
    
    
    
    
    
    
    (11,136
    )Net cash provided by (used in)
financing activities
    
    
    61,941
    
    
    
    (107,063
    )
    
    
    (70,893
    )
    
    
    
    
    
    
    (116,015
    )Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    (10,963
    )
    
    
    
    
    
    
    (10,963
    )Net increase (decrease) in cash and cash
equivalents
    
    
    303
    
    
    
    (1,531
    )
    
    
    47,702
    
    
    
    
    
    
    
    46,474Cash and cash equivalents, beginning of period
    
    
    18
    
    
    
    2,666
    
    
    
    50,358
    
    
    
    
    
    
    
    53,042Cash and cash equivalents, end of period
    
    $
    321
    
    
    $
    1,135
    
    
    $
    98,060
    
    
    
    
    
    
    $
    99,516
 81




---



##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
 Year Ended October 31, 2008
 Non-Quiksilver,
    
    
    Guarantor
    
    
    GuarantorIn thousands
    
    Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net (loss) income
    
    $
    (226,265
    )
    
    $
    31,789
    
    
    $
    (164,555
    )
    
    $
    133,456
    
    
    $
    (225,575
    )Adjustments to reconcile net (loss) income to
net cash (used in) provided by operating activities:Loss from discontinued operations
    
    
    790
    
    
    
    22,723
    
    
    
    255,976
    
    
    
    12,320
    
    
    
    291,809Depreciation and amortization
    
    
    2,074
    
    
    
    25,785
    
    
    
    29,372
    
    
    
    
    
    
    
    57,231Stock-based compensation and tax benefit on
option exercises
    
    
    9,588
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,588Provision for doubtful accounts
    
    
    330
    
    
    
    7,213
    
    
    
    8,405
    
    
    
    
    
    
    
    15,948Equity in earnings
    
    
    134,831
    
    
    
    137
    
    
    
    984
    
    
    
    (134,831
    )
    
    
    1,121Asset impairments
    
    
    
    
    
    
    9,317
    
    
    
    56,480
    
    
    
    
    
    
    
    65,797Other adjustments to reconcile net (loss) income
    
    
    (1,478
    )
    
    
    3,422
    
    
    
    (14,657
    )
    
    
    
    
    
    
    (12,713
    )Changes in operating assets and liabilities:Trade accounts receivable
    
    
    
    
    
    
    (21,640
    )
    
    
    5,461
    
    
    
    
    
    
    
    (16,179
    )Inventories
    
    
    
    
    
    
    (5,215
    )
    
    
    (28,946
    )
    
    
    1,375
    
    
    
    (32,786
    )Other operating assets and liabilities
    
    
    (3,395
    )
    
    
    19,531
    
    
    
    9,087
    
    
    
    
    
    
    
    25,223Cash (used in) provided by operating
activities of continuing operations
    
    
    (83,525
    )
    
    
    93,062
    
    
    
    157,607
    
    
    
    12,320
    
    
    
    179,464Cash provided by (used in) operating
activities of discontinued operations
    
    
    12,203
    
    
    
    (27,429
    )
    
    
    (79,756
    )
    
    
    (12,320
    )
    
    
    (107,302
    )Net cash (used in) provided by
operating activities
    
    
    (71,322
    )
    
    
    65,633
    
    
    
    77,851
    
    
    
    
    
    
    
    72,162Cash flows from investing activities:Capital expenditures
    
    
    284
    
    
    
    (38,525
    )
    
    
    (52,707
    )
    
    
    
    
    
    
    (90,948
    )Business acquisitions, net of cash acquired
    
    
    
    
    
    
    (24,174
    )
    
    
    (6,953
    )
    
    
    
    
    
    
    (31,127
    )Changes in restricted cash
    
    
    
    
    
    
    
    
    
    
    (46,475
    )
    
    
    
    
    
    
    (46,475
    )Cash provided by (used in) investing
activities of continuing operations
    
    
    284
    
    
    
    (62,699
    )
    
    
    (106,135
    )
    
    
    
    
    
    
    (168,550
    )Cash provided by investing activities of
discontinued operations
    
    
    
    
    
    
    94,631
    
    
    
    9,180
    
    
    
    
    
    
    
    103,811Net cash provided by (used in)
investing activities
    
    
    284
    
    
    
    31,932
    
    
    
    (96,955
    )
    
    
    
    
    
    
    (64,739
    )Cash flows from financing activities:Borrowings on lines of credit
    
    
    
    
    
    
    
    
    
    
    185,777
    
    
    
    
    
    
    
    185,777Payments on lines of credit
    
    
    
    
    
    
    
    
    
    
    (47,161
    )
    
    
    
    
    
    
    (47,161
    )Borrowings on long-term debt
    
    
    
    
    
    
    173,216
    
    
    
    67,173
    
    
    
    
    
    
    
    240,389Payments on long-term debt
    
    
    
    
    
    
    (159,201
    )
    
    
    (39,592
    )
    
    
    
    
    
    
    (198,793
    )Proceeds from stock option exercises
    
    
    11,602
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,602Intercompany
    
    
    59,442
    
    
    
    (87,168
    )
    
    
    27,726
    
    
    
    
    
    
    
    Cash provided by (used in) financing
activities of continuing operations
    
    
    71,044
    
    
    
    (73,153
    )
    
    
    193,923
    
    
    
    
    
    
    
    191,814Cash used in financing activities of
discontinued operations
    
    
    
    
    
    
    (35,000
    )
    
    
    (189,794
    )
    
    
    
    
    
    
    (224,794
    )Net cash provided by (used in)
financing activities
    
    
    71,044
    
    
    
    (108,153
    )
    
    
    4,129
    
    
    
    
    
    
    
    (32,980
    )Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    4,251
    
    
    
    
    
    
    
    4,251Net increase (decrease) in cash and cash equivalents
    
    
    6
    
    
    
    (10,588
    )
    
    
    (10,724
    )
    
    
    
    
    
    
    (21,306
    )Cash and cash equivalents, beginning of period
    
    
    12
    
    
    
    13,254
    
    
    
    61,082
    
    
    
    
    
    
    
    74,348Cash and cash equivalents, end of period
    
    $
    18
    
    
    $
    2,666
    
    
    $
    50,358
    
    
    
    
    
    
    $
    53,042
 82




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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,
    
    
    
    Senior Vice President andChief Executive Officer and President
    
    
    
    Corporate Controller(Principal Executive Officer)
    
    
    
    (Principal Accounting Officer)
   Signatures
    
    Title
    
    Date Signed/s/ Robert B. McKnight, Jr.

Robert B. McKnight, Jr.
    
    Chairman of the Board, Chief
Executive Officer
and President
(Principal Executive Officer)
    
    January 11, 2011/s/ Joseph Scirocco

Joseph Scirocco
    
    Chief Financial Officer and
Chief Operating Officer
(Principal Financial Officer)
    
    January 11, 2011/s/ Brad L. Holman

Brad L. Holman
    
    Senior Vice President and
Corporate Controller
(Principal Accounting Officer)
    
    January 11, 2011/s/ Charles S. Exon

Charles S. Exon
    
    Chief Administrative Officer, General
Counsel and Director
    
    January 11, 2011/s/ Douglas K. Ammerman

Douglas K. Ammerman
    
    Director
    
    January 11, 2011
 83




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##### Table of Contents



Signatures
    
    Title
    
    Date Signed/s/ William M. Barnum, Jr.
    
    Director
    
    January 11, 2011William M. Barnum, Jr./s/ James G. Ellis
    
    Director
    
    January 11, 2011James G. Ellis/s/ M. Steven Langman
    
    Director
    
    January 11, 2011M. Steven Langman/s/ Robert L. Mettler
    
    Director
    
    January 11, 2011Robert L. Mettler/s/ Paul C. Speaker
    
    Director
    
    January 11, 2011Paul C. Speaker/s/ Andrew W. Sweet
    
    Director
    
    January 11, 2011Andrew W. Sweet
 84




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    DESCRIPTION2.1
    
    Stock Purchase Agreement between the Roger Cleveland Golf Company, Inc.,
Rossignol Ski Company, Incorporated, Quiksilver, Inc. and SRI Sports Limited
dated October 30, 2007 (incorporated by reference to Exhibit 2.3 of the
Companys Annual Report on Form 10-K for the year ended October 31, 2007).2.2
    
    Amendment No. 1 to the Stock Purchase Agreement between the Roger Cleveland Golf
Company, Inc., Rossignol Ski Company, Incorporated, Quiksilver, Inc. and SRI
Sports Limited dated December 7, 2007 (incorporated by reference to Exhibit 2.4
of the Companys Annual Report on Form 10-K for the year ended October 31,
2007).2.3
    
    Stock Purchase Agreement dated November 12, 2008, by and among Quiksilver, Inc.,
Pilot S.A.S., Meribel S.A.S., Quiksilver Americas, Inc., Chartreuse et Mont
Blanc LLC, Chartreuse et Mont Blanc SAS, Chartreuse et Mont Blanc Global
Holdings S.C.A., Macquarie Asset Finance Limited and Mavilia SAS (incorporated
by reference to Exhibit 2.1 of the Companys Current Report on Form 8-K filed on
November 18, 2008).2.4
    
    Amendment No. 1 to Stock Purchase Agreement dated October 29, 2009, by and among
Quiksilver, Inc., Pilot S.A.S., Meribel S.A.S., Quiksilver Americas, Inc.,
Chartreuse et Mont Blanc LLC, Chartreuse et Mont Blanc SAS, Chartreuse et Mont
Blanc Global Holdings S.C.A., Macquarie Asset Finance Limited and Mavilia SAS
(incorporate by reference to Exhibit 2.1 of the Companys Current Report on Form
8-K filed on October 30, 2009).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
    
    Certificate of Designation of the Series A Convertible Preferred Stock of
Quiksilver, Inc. (incorporated by reference to Exhibit 3.1 of the Companys
Current Report on Form 8-K filed on August 4, 2009).3.4
    
    Certificate of Amendment of Restated Certificate of Incorporation of Quiksilver,
Inc. (incorporated by reference to Exhibit 3.1 of the Companys Current Report
on Form 8-K filed on April 1, 2010).3.5
    
    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 November 12,
2010).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).
 85




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##### Table of Contents



ExhibitNumber
    
    DESCRIPTION4.2
    
    Indenture, dated as of December 10, 2010, by and among Boardriders S.A.,
Quiksilver, Inc., as guarantor, the subsidiary guarantor parties thereto, and
Deutsche Trustee Company Limited, as trustee, Deutsche Bank Luxembourg S.A., as
registrar and transfer agent, and Deutsche Bank AG, London Branch, as principal
paying agent and common depositary (incorporated by reference to Exhibit 4.1 of
the Companys Current Report on Form 8-K filed December 13, 2010).10.1
    
    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 10.1 of the Companys Quarterly Report on Form 10-Q filed on June 9,
2010).10.2
    
    English translation of Supplementary Agreement No. 1 dated July 31, 2008 among
Quiksilver, Inc., Skis Rossignol Finance Luxembourg S.A., Skis Rossignol S.A.
and Societe Generale Bank & Trust (incorporated by reference to Exhibit 10.1 of
the Companys Current Report on Form 8-K filed on August 5, 2008).10.3
    
    English translation of Supplementary Agreement No. 2 dated September 25, 2009
among Quiksilver, Inc., Skis Rossignol Finance Luxembourg S.A., Skis Rossignol
S.A. and Societe Generale Bank & Trust (incorporated by reference to Exhibit
10.5 of the Companys Annual Report on Form 10-K filed on January 12, 2010).10.4
    
    Commitment Letter by and among Quiksilver, Inc., Quiksilver Americas, Inc., Bank
of America, N.A., Banc of America Securities LLC, General Electric Capital
Corporation and GE Capital Markets, Inc. dated June 8, 2009 (incorporated by
reference to Exhibit 10.2 of the Companys Current Report on Form 8-K filed on
June 9, 2009).10.5
    
    First Amendment to Commitment Letter by and among Quiksilver, Inc., Quiksilver
Americas, Inc., Bank of America, N.A., Banc of America Securities LLC, General
Electric Capital Corporation and GE Capital Markets, Inc. dated June 24, 2009
(incorporated by reference to Exhibit 10.1 of the Companys Current Report on
Form 8-K filed on June 25, 2009).10.6
    
    Commitment Letter by and among Quiksilver, Inc., Quiksilver Americas, Inc. and
Rhône Capital III L.P. dated June 8, 2009 (incorporated by reference to Exhibit
10.1 of the Companys Current Report on Form 8-K filed on June 9, 2009).10.7
    
    Credit Agreement by and among Quiksilver, Inc., Quiksilver Americas, Inc., as
borrower, Rhône Group L.L.C., as administrative agent, and Romolo Holdings C.V.,
Triton SPV L.P., Triton Onshore SPV L.P., Triton Offshore SPV L.P. and Triton
Coinvestment SPV L.P., as the lenders party thereto, dated July 31, 2009
(incorporated by reference to Exhibit 10.2 of the Companys Quarterly Report on
Form 10-Q filed on June 9, 2010).10.8
    
    Credit Agreement by and among Quiksilver, Inc., Mountain & Wave S.a.r.l., as
borrower, Rhône Group L.L.C., as administrative agent, and Romolo Holdings C.V.,
Triton SPV L.P., Triton Onshore SPV L.P., Triton Offshore SPV L.P. and Triton
Coinvestment SPV L.P., as the lenders party thereto, dated July 31, 2009
(incorporated by reference to Exhibit 10.3 of the Companys Quarterly Report on
Form 10-Q filed on June 9, 2010).10.9
    
    Warrant and Registration Rights Agreement by and among Quiksilver, Inc., Rhône
Capital III L.P. and Romolo Holdings C.V., Triton SPV L.P., Triton Onshore SPV
L.P., Triton Offshore SPV L.P. and Triton Coinvestment SPV L.P., as the initial
warrant holders, dated July 31, 2009 (incorporated by reference to Exhibit 10.4
of the Companys Quarterly Report on Form 10-Q filed on June 9, 2010).
 86




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##### Table of Contents



ExhibitNumber
    
    DESCRIPTION10.10
    
    Credit Agreement by and among Quiksilver Americas, Inc., Bank of America, N.A.,
Banc of America Securities LLC, General Electric Capital Corporation and GE
Capital Markets, Inc. dated July 31, 2009 (the US Credit Agreement)
(incorporated by reference to Exhibit 10.5 of the Companys Amended Quarterly
Report on Form 10-Q/A filed on September 15, 2010). Portions of this exhibit
have been omitted pursuant to a request for confidential treatment filed with
the Securities and Exchange Commission. The omissions have been indicated by
asterisks (*****), and the omitted text has been filed separately with the
Securities and Exchange Commission.10.11
    
    First Amendment to US Credit Agreement dated August 27, 2010 (incorporated by
reference to Exhibit 10.1 of the Companys Current Report on Form 8-K filed
September 2, 2010).10.12
    
    Second Amendment to US Credit Agreement dated November 29, 2010 (incorporated by
reference to Exhibit 10.1 of the Companys Current Report on Form 8-K filed
November 29, 2010).10.13
    
    English Translation of Facilities Agreement by and among Pilot S.A.S. and Na
Pali S.A.S. as borrowers, Quiksilver, Inc., as guarantor, BNP Paribas, Crédit
Lyonnais and Société Générale Corporate & Investment Banking as mandated lead
arrangers, BNP Paribas as agent, Société Générale as security agent, Caisse
Régionale de Crédit Agricole Mutuel Pyrénées Gascogne as issuing bank, and BNP
Paribas, Crédit Lyonnais, Société Générale, Natixis, Caisse Régionale de Crédit
Agricole Mutuel Pyrénées-Gascogne, Banque Populaire du Sud Ouest, CIC  Société
Bordelaise, and HSBC France as original lenders dated July 31, 2009 (French
Facility) (incorporated by reference to Exhibit 10.6 of the Companys
Quarterly Report on Form 10-Q filed on June 9, 2010).10.14
    
    First Amendment to the French Facility dated September 25, 2009 (incorporated by
reference to Exhibit 10.14 of the Companys Annual Report on Form 10-K filed on
January 12, 2010).10.15
    
    Global Amendment Agreement to the French Facility dated September 29, 2009
(incorporated by reference to Exhibit 10.15 of the Companys Annual Report on
Form 10-K filed on January 12, 2010).10.16
    
    Term Loan Agreement dated September 29, 2009 among QS Finance Luxembourg S.A.,
Quiksilver, Inc., Biarritz Holdings S.à r.l. and Société Générale (incorporated
by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K filed
on September 30, 2009).10.17
    
    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)10.18
    
    Quiksilver, Inc. 2000 Stock Incentive Plan, as amended and restated, together
with form Stock Option and Restricted Stock Agreements (incorporated by
reference to Exhibit 10.8 of the Companys Quarterly Report on Form 10-Q filed
on June 9, 2010). (1)10.19
    
    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)10.20
    
    Quiksilver, Inc. 2000 Employee Stock Purchase Plan (incorporated by reference to
Exhibit 10.4 of the Companys Quarterly Report on Form 10-Q for the quarter
ended April 30, 2009). (1)10.21
    
    Quiksilver, Inc. Written Description of Nonemployee Director Compensation
(incorporated by reference to Exhibit 10.7 of the Companys Quarterly Report on
Form 10-Q filed on June 9, 2010). (1)
 87




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##### Table of Contents



ExhibitNumber
    
    DESCRIPTION10.22
    
    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)10.23
    
    Quiksilver, Inc. 2006 Restricted Stock Plan (incorporated by reference to
Exhibit 10.2 of the Companys Current Report on Form 8-K filed on March 28,
2006). (1)10.24
    
    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)10.25
    
    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)10.26
    
    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)10.27
    
    Stock Option Cancellation Agreement by and between Quiksilver, Inc. and Robert
B. McKnight, Jr. dated June 23, 2009 (incorporated by reference to Exhibit 10.11
of the Companys Quarterly Report on Form 10-Q for the quarter ended July 31,
2009). (1)10.28
    
    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)10.29
    
    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)10.30
    
    Stock Option Cancellation Agreement by and between Quiksilver, Inc. and Charles
S. Exon dated June 23, 2009 (incorporated by reference to Exhibit 10.13 of the
Companys Quarterly Report on Form 10-Q for the quarter ended July 31, 2009).
(1)10.31
    
    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)10.32
    
    Amendment to Employment Agreement between Joseph Scirocco and Quiksilver, Inc.
dated June 13, 2008 (incorporated by reference to Exhibit 10.5 of the Companys
Quarterly Report on Form 10-Q for the quarter ended July 31, 2008). (1)10.33
    
    Stock Option Cancellation Agreement by and between Quiksilver, Inc. and Joseph
Scirocco dated June 23, 2009 (incorporated by reference to Exhibit 10.12 of the
Companys Quarterly Report on Form 10-Q for the quarter ended July 31, 2009).
(1)10.34
    
    Form of Employment Agreement between Pierre Agnes and Quiksilver, Inc.
(incorporated by reference to Exhibit 10.38 of the Companys Annual Report on
Form 10-K for the year ended October 31, 2008). (1)10.35
    
    Stock Option Cancellation Agreement by and between Quiksilver, Inc. and Pierre
Agnes dated June 23, 2009 (incorporated by reference to Exhibit 10.14 of the
Companys Quarterly Report on Form 10-Q for the quarter ended July 31, 2009).
(1)10.36
    
    Employment Agreement between Craig Stevenson and Quiksilver, Inc. dated January
19, 2009, as amended (incorporated by reference to Exhibit 10.5 of the Companys
Quarterly Report on Form 10-Q for the quarter ended January 31, 2009). (1)
 88




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##### Table of Contents



ExhibitNumber
    
    DESCRIPTION10.37
    
    Amendment to Employment Agreement between Craig Stevenson and Quiksilver, Inc.
dated December 16, 2009 (incorporated by reference to Exhibit 10.43 of the
Companys Annual Report on Form 10-K filed on January 12, 2010). (1)10.38
    
    Stock Option Cancellation Agreement by and between Quiksilver, Inc. and Craig
Stevenson dated June 23, 2009 (incorporated by reference to Exhibit 10.15 of the
Companys Quarterly Report on Form 10-Q for the quarter ended July 31, 2009).
(1)10.39
    
    Amendments to executive officer base salaries effective as of November 1, 2009
(incorporated by reference to Exhibit 10.47 of the Companys Annual Report on
Form 10-K filed on January 12, 2010). (1)10.40
    
    Amendments to executive officer base salary effective as of November 1, 2010. (1)10.41
    
    AR Financing Facility Contract dated August 22, 2008 between Na Pali S.A.S. and
GE Factofrance SNC (incorporated by reference to Exhibit 10.2 of the Companys
Current Report on Form 8-K filed on August 27, 2008).10.42
    
    Indemnity Agreement by and between Quiksilver, Inc. and Andrew Sweet dated July
31, 2009 (incorporated by reference to Exhibit 10.16 of the Companys Quarterly
Report on Form 10-Q for the quarter ended July 31, 2009). (1)10.43
    
    Indemnity Agreement by and between Quiksilver, Inc. and M. Steven Langman dated
July 31, 2009 (incorporated by reference to Exhibit 10.17 of the Companys
Quarterly Report on Form 10-Q for the quarter ended July 31, 2009). (1)10.44
    
    Amendment to Credit Agreement dated January 11, 2010 by and between Quiksilver,
Inc., Quiksilver Americas, Inc., as borrower, Rhône Group L.L.C., as
administrative agent, and Romolo Holdings C.V., Triton SPV L.P., Triton Onshore
SPV L.P., Triton Offshore SPV L.P. and Triton Coinvestment SPV L.P., as the
lenders party thereto (incorporated by reference to Exhibit 10.53 of the
Companys Annual Report on Form 10-K filed on January 12, 2010).10.45
    
    Amendment to Euro Credit Agreement dated January 11, 2010 by and between
Quiksilver, Inc., Mountain & Wave S.a.r.l., as borrower, Rhône Group L.L.C., as
administrative agent, and Romolo Holdings C.V., Triton SPV L.P., Triton Onshore
SPV L.P., Triton Offshore SPV L.P. and Triton Coinvestment SPV L.P., as the
lenders party thereto Amendments to executive officer base salaries effective as
of November 1, 2009 (incorporated by reference to Exhibit 10.54 of the Companys
Annual Report on Form 10-K filed on January 12, 2010).10.46
    
    Exchange Letter Agreement by and among Quiksilver, Inc., Quiksilver Americas,
Inc., Mountain & Wave S.a.r.l., Rhône Group L.L.C., Romolo Holdings C.V., Triton
SPV L.P., Triton Onshore SPV L.P., Triton Offshore SPV L.P. and Triton
Coinvestment SPV L.P. dated June 14, 2010 (incorporated by reference to Exhibit
10.1 of the Companys Current Report on Form 8-K filed June 15, 2010).10.47
    
    Exchange Agreement by and among Quiksilver, Inc., Quiksilver Americas, Inc.,
Mountain & Wave S.a.r.l., Rhône Group L.L.C., Romolo Holdings C.V., Triton SPV
L.P., Triton Onshore SPV L.P., Triton Offshore SPV L.P. and Triton Coinvestment
SPV L.P. dated June 24, 2010 (incorporated by reference to Exhibit 10.1 of the
Companys Current Report on Form 8-K filed June 25, 2010).10.48
    
    Stockholders Agreement by and among Quiksilver, Inc., Rhône Capital III, L.P.,
Romolo Holdings C.V., Triton SPV L.P., Triton Onshore SPV L.P., Triton Offshore
SPV L.P. and Triton Coinvestment SPV L.P. dated August 9, 2010 (incorporated by
reference to Exhibit 10.1 of the Companys Current Report on Form 8-K filed
August 9, 2010).10.49
    
    Term Loan Agreement by and Among Quiksilver Americas, Inc., as borrower,
Quiksilver, Inc., as a guarantor, Bank of America N.A.., as an administrative
and collateral agent, and the lender parties thereto dated October 27, 2010
(incorporated by reference to Exhibit 10.2 of the Companys Current Report on
Form 8-K filed October 27, 2010).
 89




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##### Table of Contents



ExhibitNumber
    
    DESCRIPTION10.50
    
    First Amendment to Term Loan Agreement by and among Quiksilver Americas, Inc.,
as borrower, Quiksilver, Inc., as a guarantor, Bank of America N.A.., as an
administrative and collateral agent, and the lender parties thereto dated
November 29, 2010 (incorporated by reference to Exhibit 10.1 of the Companys
Current Report on Form 8-K filed November 29, 2010).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 200232.2
    
    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section
906 of The Sarbanes-Oxley Act of 2002
 
 (1)
    
    Management contract or compensatory plan. 90