##### 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, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number 1-14229
 QUIKSILVER, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
(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
 þ
 Large accelerated filer þAccelerated filer oNon-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.
    
    BUSINESSIntroduction
    
    
    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
    
    
    16Item 2.
    
    PROPERTIES
    
    
    16Item 3.
    
    LEGAL PROCEEDINGS
    
    
    16Item 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    17PART IIItem 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    18Item 6.
    
    SELECTED FINANCIAL DATA
    
    
    18Item 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    20Item 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    33Item 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    34Item 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    34Item 9A.
    
    CONTROLS AND PROCEDURES
    
    
    34Item 9B.
    
    OTHER INFORMATION
    
    
    38PART IIIItem 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    39Item 11.
    
    EXECUTIVE COMPENSATION
    
    
    39Item 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    39Item 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
    
    
    39Item 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    39PART IVItem 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    40INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
    
    
    41SIGNATURES
    
    
    78EX-10.13EX-10.14EX-10.22EX-10.37EX-10.38EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2




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PART I
 
 Item 1. BUSINESS
  
 Introduction
    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 Leilaniis our contemporary swimwear label.
    
    HawkTony Hawk, the world-famous skateboarder, is the inspiration for our Hawkbrand. Our
Hawkbrand targets boys and young men who identify with the skateboarding lifestyle and
recognize Tony Hawk from his broad media and video game exposure.
    
    Lib Technologies, Gnu, Bent MetalWe address the core snowboard market through our Lib
Technologiesand Gnubrands of snowboards and accessories and Bent Metalsnowboard bindings.
 
 Product Categories
  Percentage of Revenues2008
    
    
    2007
    
    
    2006Apparel
    
    
    65
    %
    
    
    66
    %
    
    
    69
    %Footwear
    
    
    20
    
    
    
    18
    
    
    
    16Accessories
    
    
    15
    
    
    
    16
    
    
    
    15100
    %
    
    
    100
    %
    
    
    100
    %
  2




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Product Design
  
 Promotion and Advertising
   Quiksilvers Big Wave Invitational Roxy Pro Slopestyle Pro Bowlriders DC X-Games
 Surfer Surfing Snowboard Canada Transworld
Skateboarding
 3




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Customers and Sales
    Quiksilver Roxy Roxy Quiksilver DC Raisins Leilani Radio Fiji
   Percentage of RevenuesDistribution Channel
    
    Americas
    
    Europe
    
    Asia/Pacific
    
    ConsolidatedCore market shops
    
    
    30
    %
    
    
    41
    %
    
    
    79
    %
    
    
    40
    %Specialty stores
    
    
    34
    
    
    
    42
    
    
    
    20
    
    
    
    36Department stores
    
    
    21
    
    
    
    6
    
    
    
    1
    
    
    
    12U.S. exports
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    7Distributors
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    5Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Geographic segment
    
    
    47
    %
    
    
    41
    %
    
    
    12
    %
    
    
    100
    %
   4




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Percentage of RevenuesGeographic Region
    
    2008
    
    2007
    
    2006United States
    
    
    39
    %
    
    
    42
    %
    
    
    42
    %Other Americas
    
    
    8
    
    
    
    7
    
    
    
    6France
    
    
    13
    
    
    
    13
    
    
    
    14United Kingdom and Spain
    
    
    13
    
    
    
    14
    
    
    
    13Other European countries
    
    
    15
    
    
    
    12
    
    
    
    12Asia/Pacific
    
    
    12
    
    
    
    12
    
    
    
    13Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
   
 Retail Concepts
 Quiksilver Quiksilver Roxy Roxy Quiksilver Youth Quiksilver Roxy
  Number of StoresAmericas
    
    Europe
    
    Asia/Pacific
    
    CombinedCompany
    
    
    
    
    
    Company
    
    
    
    
    
    Company
    
    
    
    
    
    CompanyStore Concept
    
    Owned
    
    Licensed
    
    Owned
    
    Licensed
    
    Owned
    
    Licensed
    
    Owned
    
    LicensedQuiksilverstores
    
    
    64
    
    
    
    13
    
    
    
    100
    
    
    
    157
    
    
    
    35
    
    
    
    20
    
    
    
    199
    
    
    
    190Shop-in-shops
    
    
    
    
    
    
    
    
    
    
    64
    
    
    
    
    
    
    
    33
    
    
    
    
    
    
    
    97
    
    
    
    Roxystores
    
    
    3
    
    
    
    2
    
    
    
    22
    
    
    
    14
    
    
    
    11
    
    
    
    5
    
    
    
    36
    
    
    
    21Outlet stores
    
    
    55
    
    
    
    
    
    
    
    29
    
    
    
    2
    
    
    
    27
    
    
    
    1
    
    
    
    111
    
    
    
    3Other stores
    
    
    6
    
    
    
    2
    
    
    
    23
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    29
    
    
    
    5128
    
    
    
    17
    
    
    
    238
    
    
    
    176
    
    
    
    106
    
    
    
    26
    
    
    
    472
    
    
    
    219
 5




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Seasonality
  Consolidated RevenuesDollar amounts in thousands
    
    2008
    
    
    2007
    
    
    2006Quarter ended January 31
    
    $
    496,581
    
    
    
    22
    %
    
    $
    410,854
    
    
    
    20
    %
    
    $
    349,328
    
    
    
    20
    %Quarter ended April 30
    
    
    596,280
    
    
    
    26
    
    
    
    520,359
    
    
    
    25
    
    
    
    430,112
    
    
    
    25Quarter ended July 31
    
    
    564,876
    
    
    
    25
    
    
    
    528,591
    
    
    
    26
    
    
    
    448,717
    
    
    
    26Quarter ended October 31
    
    
    606,899
    
    
    
    27
    
    
    
    587,268
    
    
    
    29
    
    
    
    493,993
    
    
    
    29$
    2,264,636
    
    
    
    100
    %
    
    $
    2,047,072
    
    
    
    100
    %
    
    $
    1,722,150
    
    
    
    100
    %
 
 Production and Raw Materials
     6




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




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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
  
 Available Information
   
 Item 1A. RISK FACTORS
  9




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Our significant debt obligations could limit our flexibility in managing our business and expose us
to certain risks.
  
    
    we may have difficulty satisfying our obligations under our senior notes or other
indebtedness and, if we fail to comply with these requirements, an event of default could
result;
 
    
    we have certain short term and uncommitted lines of credit that could be difficult to
replace if not renewed, or that could otherwise be canceled on very short notice to us;
 
    
    we are subject to volatile credit markets, changing terms from our existing lenders and
increasing interest rates or requirements for increased collateral with our lenders;
 
    
    we may be required to dedicate a substantial portion of our cash flow from operations to
required payments on indebtedness, thereby reducing the availability of cash flow for working
capital, capital expenditures and other general corporate activities;
 
    
    covenants relating to our indebtedness may limit our ability to obtain additional financing
for working capital, capital expenditures and other general corporate activities;
 
    
    covenants relating to our indebtedness may limit our flexibility in planning for, or
reacting to, changes in our business and the industry in which we operate;
 
    
    we may be 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;
 
    
    we may be more vulnerable to the impact of economic downturns, including the current
recessionary global economy, and adverse developments in our business; and
 
    
    we may be placed at a competitive disadvantage against any 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.
  Continuing unfavorable economic conditions could have a material adverse effect on our results of
operations.
   10




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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.
    Our business could be harmed if we fail to maintain proper inventory levels.
  11




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Changes in foreign currency exchange or interest rates could affect our revenues and costs.
   Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt
service obligations to increase significantly.
  War, acts of terrorism, or the threat of either could have an adverse effect on our ability to
procure our products and on the United States and/or international economies.
  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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Our products may infringe the intellectual property rights of others, which may cause us to incur
unexpected costs or prevent us from selling our products.
  If we are unable to maintain and expand 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.
  13




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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.
  Factors affecting international commerce and our international operations may seriously harm our
financial condition.
  
    
    recessions in foreign economies;
    
    fluctuations in foreign currency exchange rates;
    
    the adoption and expansion of trade restrictions;
    
    limitations on repatriation of earnings;
    
    difficulties in protecting our intellectual property or enforcing our intellectual property
rights under the laws of other countries;
    
    longer receivables collection periods and greater difficulty in collecting accounts
receivable;
    
    difficulties in managing foreign operations;
    
    social, political and economic instability;
    
    unexpected changes in regulatory requirements;
    
    our ability to finance foreign operations;
    
    tariffs and other trade barriers; and
    
    U.S. government licensing requirements for exports.
  Quiksilver Roxy
 If the popularity of the sports associated with our brands were to decrease, our revenues could be
adversely affected and our results of operations could be impaired.
  Our industry is subject to pricing pressures that may adversely impact our financial performance.
  14




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
    
    we are forced to reduce our prices and we cannot reduce our production costs; or
    
    our production costs increase and we cannot increase our prices.
 Changing international trade regulations and the elimination of quotas on imports of textiles and
apparel may increase competition in the apparel industry.
  
    
    quotas imposed by bilateral textile agreements between the countries where our
apparel-producing facilities are located and foreign countries; and
    
    customs duties imposed by the governments where our apparel-producing facilities are
located on imported products, including raw materials.
   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.
  15




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Our failure to comply with, or the imposition of liability under, environmental laws and
regulations could result in significant costs.
  
 Item 1B. UNRESOLVED STAFF COMMENTS
  
 Item 2. PROPERTIES
  Approximate
    
    Current LeaseLocation
    
    Principal Use
    
    Sq. Ft.
    
    ExpirationHuntington Beach, California
    
    Corporate headquarters
    
    
    120,000
    
    
    
    2023
    *Huntington Beach, California
    
    Americas distribution center
    
    
    225,000
    
    
    
    2023
    *Huntington Beach, California
    
    Americas distribution center
    
    
    112,000
    
    
    
    2018
    *Huntington Beach, California
    
    Americas distribution center
    
    
    100,000
    
    
    
    2023
    *Huntington Beach, California
    
    Americas distribution center
    
    
    100,000
    
    
    
    2023
    *Huntington Beach, California
    
    Americas distribution center
    
    
    75,000
    
    
    
    2023
    *Mira Loma, California
    
    Americas distribution center
    
    
    683,000
    
    
    
    2027
    *Vista, California
    
    Americas distribution center
    
    
    100,000
    
    
    
    2010St. Jean de Luz, France
    
    European headquarters
    
    
    80,000
    
    
    
    N/A
    **St. Jean de Luz, France
    
    European distribution center
    
    
    100,000
    
    
    
    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
  16




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Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  17




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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 20084th quarter ended October 31, 2008
    
    $
    8.64
    
    
    $
    1.773rd quarter ended July 31, 2008
    
    
    10.21
    
    
    
    7.352nd quarter ended April 30, 2008
    
    
    10.49
    
    
    
    8.061st quarter ended January 31, 2008
    
    
    12.78
    
    
    
    7.04Fiscal 20074th quarter ended October 31, 2007
    
    $
    15.21
    
    
    $
    12.503rd quarter ended July 31, 2007
    
    
    14.53
    
    
    
    12.432nd quarter ended April 30, 2007
    
    
    14.65
    
    
    
    11.201st quarter ended January 31, 2007
    
    
    15.75
    
    
    
    13.43
   
 Item 6. SELECTED FINANCIAL DATA
  18




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Year Ended October 31,Amounts in thousands, except ratios and per share data
    
    2008(1)(2)(3)(7)
    
    2007(1)(2)(3)
    
    2006(1)(2)(3)
    
    2005(2)(3)
    
    2004(3)Statements of Operations DataRevenues, net
    
    $
    2,264,636
    
    
    $
    2,047,072
    
    
    $
    1,722,150
    
    
    $
    1,562,417
    
    
    $
    1,262,980Income before provision
for income taxes
    
    
    98,571
    
    
    
    151,233
    
    
    
    122,557
    
    
    
    142,743
    
    
    
    123,880Income from continuing
operations income taxes
    
    
    65,544
    
    
    
    116,727
    
    
    
    89,376
    
    
    
    96,155
    
    
    
    82,501(Loss) income from
discontinued operations
    
    
    (291,809
    )
    
    
    (237,846
    )
    
    
    3,640
    
    
    
    10,965
    
    
    
    (1,132
    )Net (loss) income
    
    
    (226,265
    )
    
    
    (121,119
    )
    
    
    93,016
    
    
    
    107,120
    
    
    
    81,369Income per share from
continuing operations (4)
    
    
    0.52
    
    
    
    0.94
    
    
    
    0.73
    
    
    
    0.81
    
    
    
    0.72(Loss) income per share from
discontinued operations (4)
    
    
    (2.32
    )
    
    
    (1.92
    )
    
    
    0.03
    
    
    
    0.09
    
    
    
    (0.01
    )Net (loss) income per share (4)
    
    
    (1.80
    )
    
    
    (0.98
    )
    
    
    0.76
    
    
    
    0.90
    
    
    
    0.71Income per share from
continuing operations, assuming
dilution (4)
    
    
    0.51
    
    
    
    0.90
    
    
    
    0.70
    
    
    
    0.77
    
    
    
    0.69(Loss) income per share from
discontinued operations, assuming
dilution (4)
    
    
    (2.25
    )
    
    
    (1.83
    )
    
    
    0.03
    
    
    
    0.09
    
    
    
    (0.01
    )Net (loss) income per share,
assuming dilution (4)
    
    
    (1.75
    )
    
    
    (0.93
    )
    
    
    0.73
    
    
    
    0.86
    
    
    
    0.68Weighted average common
shares (4)
    
    
    125,975
    
    
    
    123,770
    
    
    
    122,074
    
    
    
    118,920
    
    
    
    114,388Weighted average common
shares outstanding, assuming
dilution (4)
    
    
    129,485
    
    
    
    129,706
    
    
    
    127,744
    
    
    
    124,335
    
    
    
    119,288Balance Sheet DataTotal assets
    
    $
    2,170,265
    
    
    $
    2,662,064
    
    
    $
    2,447,378
    
    
    $
    2,158,601
    
    
    $
    990,990Working capital
    
    
    631,315
    
    
    
    631,857
    
    
    
    598,714
    
    
    
    458,857
    
    
    
    343,100Lines of credit
    
    
    238,317
    
    
    
    124,634
    
    
    
    61,106
    
    
    
    35,158
    
    
    
    10,801Long-term debt
    
    
    822,001
    
    
    
    732,812
    
    
    
    598,434
    
    
    
    536,436
    
    
    
    173,513Stockholders equity
    
    
    599,966
    
    
    
    886,613
    
    
    
    881,127
    
    
    
    732,882
    
    
    
    588,244Other DataAdjusted EBITDA(5)
    
    $
    278,945
    
    
    $
    260,786
    
    
    $
    221,687
    
    
    $
    194,331
    
    
    $
    157,034Current ratio
    
    
    1.9
    
    
    
    1.7
    
    
    
    1.8
    
    
    
    1.7
    
    
    
    2.6Return on average stockholders
equity(6)
    
    
    8.8
    
    
    
    13.2
    
    
    
    11.1
    
    
    
    14.6
    
    
    
    15.9
 
 (1)
    
    Fiscal 2008, 2007 and 2006 include stock compensation expense related to the
adoption of Statement of Financial Accounting Standards No. 123(R). Refer to note 5 below.(2)
    
    Fiscal 2008, 2007, 2006 and 2005 reflect the operations of Rossignol and Cleveland
Golf, which were acquired in 2005, as discontinued operations. See Note 18 of our
consolidated financial statements.(3)
    
    Fiscal 2008, 2007, 2006, 2005 and 2004 include the operations of DC since its
acquisition effective May 1, 2004.(4)
    
    Per share amounts and shares outstanding have been adjusted to reflect a two-for-one
stock split effected on May 11, 2005.(5)
    
    Adjusted EBITDA is defined as income from continuing operations before (i) interest
expense, (ii) income tax expense, (iii) depreciation and amortization, (iv) non-cash
stock-based compensation expense and (v) asset impairments. 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 GAAP measures, as a measure of profitability because Adjusted EBITDA
helps us to compare our 19




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##### Table of Contents



Year Ended October 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Income from continuing
operations
    
    $
    65,544
    
    
    $
    116,727
    
    
    $
    89,376
    
    
    $
    96,155
    
    
    $
    82,501Income taxes
    
    
    33,027
    
    
    
    34,506
    
    
    
    33,181
    
    
    
    46,588
    
    
    
    41,379Interest
    
    
    45,327
    
    
    
    46,571
    
    
    
    41,317
    
    
    
    16,945
    
    
    
    6,390Depreciation and amortization
    
    
    57,231
    
    
    
    46,852
    
    
    
    37,851
    
    
    
    34,643
    
    
    
    26,764Non-cash stock-based
compensation expense
    
    
    12,019
    
    
    
    16,130
    
    
    
    19,962
    
    
    
    
    
    
    
    Non-cash asset impairments
    
    
    65,797
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Adjusted EBITDA
    
    $
    278,945
    
    
    $
    260,786
    
    
    $
    221,687
    
    
    $
    194,331
    
    
    $
    157,034
 
 (6)
    
    Computed based on income from continuing operations divided by the average of
beginning and ending stockholders equity.(7)
    
    Fiscal 2008 includes goodwill and other asset impairments of $65,797. 
 Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Overview
 Quiksilver Quiksilver Quiksilver Roxy Quiksilver Roxy Quiksilver Roxy
  20




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Rossignol Dynastar Look Lange .
  Year Ended October 31,In thousands
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Americas
    
    $
    1,061,370
    
    
    $
    995,801
    
    
    $
    831,583
    
    
    $
    752,797
    
    
    $
    612,859Europe
    
    
    933,119
    
    
    
    803,395
    
    
    
    660,127
    
    
    
    591,228
    
    
    
    496,276Asia/Pacific
    
    
    265,067
    
    
    
    243,064
    
    
    
    225,128
    
    
    
    213,277
    
    
    
    148,733Corporate operations
    
    
    5,080
    
    
    
    4,812
    
    
    
    5,312
    
    
    
    5,115
    
    
    
    5,112Total revenues, net
    
    $
    2,264,636
    
    
    $
    2,047,072
    
    
    $
    1,722,150
    
    
    $
    1,562,417
    
    
    $
    1,262,980
  21




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Results of Operations
  Year Ended October 31,2008
    
    2007
    
    2006Statements of Operations DataRevenues, net
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Gross profit
    
    
    49.5
    
    
    
    48.1
    
    
    
    47.2Selling, general and administrative expense
    
    
    40.4
    
    
    
    38.2
    
    
    
    37.7Asset impairments
    
    
    2.9
    
    
    
    0.0
    
    
    
    0.0Operating income
    
    
    6.2
    
    
    
    9.9
    
    
    
    9.5Interest expense
    
    
    2.0
    
    
    
    2.3
    
    
    
    2.4Foreign currency, minority interest and other expense
    
    
    (0.2
    )
    
    
    0.2
    
    
    
    0.0Income before provision for income taxes
    
    
    4.4
    %
    
    
    7.4
    %
    
    
    7.1
    %Other dataAdjusted EBITDA (1)
    
    
    12.3
    %
    
    
    12.7
    %
    
    
    12.9
    %
 
 (1)
    
    For a definition of Adjusted EBITDA and a reconciliation of income from continuing
operations to Adjusted EBITDA, see footnote (5) to the table under Item 6. Selected Financial Data.  Fiscal 2008 Compared to Fiscal 2007
 Revenues
 Quiksilver Roxy DC Hawk Raisins Leilani Radio Fiji, Lib Technologies, Gnu Bent Metal DC Quiksilver Roxy DC Quiksilver Roxy Quiksilver Roxy DC Roxy Quiksilver DC Roxy DC Quiksilver Roxy
 22




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Gross Profit
  Selling, General and Administrative Expense
  Asset Impairments
  Non-operating Expenses
    23




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Income from continuing operations and Adjusted EBITDA
  Fiscal 2007 Compared to Fiscal 2006
 Revenues
 Quiksilver Roxy DC Hawk Gotcha Raisins Leilani Radio Fiji, Lib Technologies, Gnu Bent Metal.
 Gross Profit
  Selling, General and Administrative Expense
  Non-operating Expenses
    Income from continuing operations and Adjusted EBITDA
  24




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Financial Position, Capital Resources and Liquidity
      Operating Cash Flows
  Capital Expenditures
    25




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Acquisitions and Dispositions
 Rossignol Dynastar Look Lange
  Debt Structure
  In thousands
    
    U.S. Dollar
    
    
    Non U.S. Dollar
    
    
    TotalAmericas short-term credit arrangements
    
    $
    
    
    
    $
    9,945
    
    
    $
    9,945European short-term credit arrangements
    
    
    
    
    
    
    187,981
    
    
    
    187,981Asia/Pacific short-term credit arrangements
    
    
    
    
    
    
    51,008
    
    
    
    51,008Short-term lines of credit
    
    
    
    
    
    
    248,934
    
    
    
    248,934Americas credit facility
    
    
    142,500
    
    
    
    
    
    
    
    142,500European long-term debt
    
    
    
    
    
    
    173,331
    
    
    
    173,331European credit facility
    
    
    
    
    
    
    47,218
    
    
    
    47,218Senior Notes
    
    
    400,000
    
    
    
    
    
    
    
    400,000Deferred purchase price obligation
    
    
    
    
    
    
    41,922
    
    
    
    41,922Capital lease obligations and other borrowings
    
    
    
    
    
    
    17,454
    
    
    
    17,454Long-term debt
    
    
    542,500
    
    
    
    279,925
    
    
    
    822,425Total
    
    $
    542,500
    
    
    $
    528,859
    
    
    $
    1,071,359
   26




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27




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Contractual Obligations and Commitments
  Payments Due by PeriodTwo to Three
    
    
    Four to Five
    
    
    After FiveIn thousands
    
    One Year
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    TotalOperating lease obligations
    
    $
    82,247
    
    
    $
    149,499
    
    
    $
    114,252
    
    
    $
    145,113
    
    
    $
    491,111Long-term debt obligations(1)
    
    
    32,328
    
    
    
    366,349
    
    
    
    23,748
    
    
    
    400,000
    
    
    
    822,425Professional athlete sponsorships(2)
    
    
    17,506
    
    
    
    11,033
    
    
    
    2,973
    
    
    
    500
    
    
    
    32,012Certain other obligations(3)
    
    
    88,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88,500$
    220,581
    
    
    $
    526,881
    
    
    $
    140,973
    
    
    $
    545,613
    
    
    $
    1,434,048
 
 (1)
    
    Excludes required interest payments. See Note 7 of our Consolidated Financial
Statements for interest terms.(2)
    
    We establish relationships with professional athletes in order to promote our
products and brands. We have entered into endorsement agreements with professional athletes
in sports such as surfing, skateboarding, snowboarding and windsurfing. Many of these
contracts provide incentives for magazine exposure and competitive victories while wearing or
using our products. It is not possible to determine the amounts we may be required to pay
under these agreements as they are subject to many variables. The amounts listed are the 28




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approximate amounts of minimum obligations required to be paid under these contracts. The
estimated maximum amount that could be paid under existing contracts is approximately $58.7
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 $88.5 million of contractual
letters of credit with maturity dates of less than one year. We also enter into unconditional
purchase obligations with various vendors and suppliers of goods and services in the normal
course of operations through purchase orders or other documentation or that are undocumented
except for an invoice. Such unconditional purchase obligations are generally outstanding for
periods less than a year and are settled by cash payments upon delivery of goods and services
and are not reflected in this line item. In addition, in certain circumstances we are
required to acquire additional equity interests from our minority interest partners in Brazil
and Mexico. These purchase requirements are generally based on revenue targets in U.S.
dollars which can be significantly impacted by currency fluctuations. The purchase price
applicable to these obligations is typically based on formulas that will be used to value the
subsidiaries operations at the time of purchase. We do not expect any payments related to
these commitments in fiscal 2009 and these potential purchase amounts generally cannot be
determined beyond one year and are not included in this line item. We have approximately
$30.9 million of FIN 48 tax contingencies as disclosed in Note 12 of our Consolidated
Financial Statements. Based on the uncertainly of the timing of these contingencies, these
amounts have not been included in this line item. Trade Accounts Receivable and Inventories
   Off Balance Sheet Arrangements
  Inflation
  New Accounting Pronouncements
   29




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Critical Accounting Policies
  Revenue Recognition
  30




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##### Table of Contents



Accounts Receivable
  Inventories
  
    
    weakening economic conditions;
    
    terrorist acts or threats;
    
    unanticipated changes in consumer preferences;
    
    reduced customer confidence in the retail market; and
    
    unseasonable weather.
  Long-Lived Assets
  Goodwill
  Income Taxes
  31




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Stock-Based Compensation Expense
  Foreign Currency Translation
   Forward-Looking Statements
  
    
    continuing deterioration of global economic conditions and credit and capital markets;
 
    
    our ability to obtain new financing or refinancing on reasonable terms:
 32




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##### Table of Contents




    
    our ability to remain compliant with our debt covenants;
 
    
    our ability to achieve the financial results that we anticipate;
 
    
    our plans to open new retail stores;
 
    
    payments due on contractual commitments and other debt obligations;
 
    
    future expenditures for capital projects;
 
    
    our ability to continue to maintain our brand image and reputation;
 
    
    foreign exchange rate fluctuations; 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
    
    
    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;
 33




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##### Table of Contents




    
    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
    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
  34




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35




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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.
    36




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 
 Internal
ControlIntegrated Framework
    Internal Control
 Integrated Framework
   
 37




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Item 9B. OTHER INFORMATION
  38




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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
  39




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PART IV
 
 Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  1.
    
    Consolidated Financial StatementsSee Index to Consolidated Financial Statements on page 412.
    
    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.
 40




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QUIKSILVER, INC.
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageAudited consolidated financial statements of Quiksilver, Inc. as of October 31, 2008 and 2007
and for each of the three years in the period ended October 31, 2008Report of Independent Registered Public Accounting Firm
    
    
    42Consolidated Statements of Operations
Years Ended October 31, 2008, 2007 and 2006
    
    
    43Consolidated Statements of Comprehensive (Loss) Income
Years Ended October 31, 2008, 2007 and 2006
    
    
    43Consolidated Balance Sheets
October 31, 2008 and 2007
    
    
    44Consolidated Statements of Stockholders Equity
Years Ended October 31, 2008, 2007 and 2006
    
    
    45Consolidated Statements of Cash Flows
Years Ended October 31, 2008, 2007 and 2006
    
    
    46Notes to Consolidated Financial Statements
    
    
    47
 41




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
        
 42




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QUIKSILVER, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended October 31, 2008, 2007 and 2006
 In thousands, except per share amounts
    
    2008
    
    
    2007
    
    
    2006Revenues, net
    
    $
    2,264,636
    
    
    $
    2,047,072
    
    
    $
    1,722,150Cost of goods sold
    
    
    1,144,050
    
    
    
    1,062,027
    
    
    
    909,557Gross profit
    
    
    1,120,586
    
    
    
    985,045
    
    
    
    812,593Selling, general and administrative expense
    
    
    915,933
    
    
    
    782,263
    
    
    
    648,707Asset impairments
    
    
    65,797
    
    
    
    
    
    
    
    Operating income
    
    
    138,856
    
    
    
    202,782
    
    
    
    163,886Interest expense, net
    
    
    45,327
    
    
    
    46,571
    
    
    
    41,317Foreign currency (gain) loss
    
    
    (5,761
    )
    
    
    4,857
    
    
    
    (291
    )Minority interest and other expense
    
    
    719
    
    
    
    121
    
    
    
    303Income before provision for income taxes
    
    
    98,571
    
    
    
    151,233
    
    
    
    122,557Provision for income taxes  Note 12
    
    
    33,027
    
    
    
    34,506
    
    
    
    33,181Income from continuing operations
    
    
    65,544
    
    
    
    116,727
    
    
    
    89,376(Loss) income from discontinued operations 
Note 18
    
    
    (291,809
    )
    
    
    (237,846
    )
    
    
    3,640Net (loss) income
    
    $
    (226,265
    )
    
    $
    (121,119
    )
    
    $
    93,016Income per share from continuing operations
    
    $
    0.52
    
    
    $
    0.94
    
    
    $
    0.73(Loss) income per share from discontinued
operations  Note 18
    
    
    (2.32
    )
    
    
    (1.92
    )
    
    
    0.03Net (loss) income per share  Note 1
    
    $
    (1.80
    )
    
    $
    (0.98
    )
    
    $
    0.76Income per share from continuing operations,
assuming dilution
    
    $
    0.51
    
    
    $
    0.90
    
    
    $
    0.70(Loss) income per share from discontinued
operations, assuming dilution  Note 18
    
    
    (2.25
    )
    
    
    (1.83
    )
    
    
    0.03Net (loss) income per share, assuming dilution 
Note 1
    
    $
    (1.75
    )
    
    $
    (0.93
    )
    
    $
    0.73Weighted average common shares outstanding 
Note 1
    
    
    125,975
    
    
    
    123,770
    
    
    
    122,074Weighted average common shares outstanding,
assuming dilution  Note 1
    
    
    129,485
    
    
    
    129,706
    
    
    
    127,744
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
Years Ended October 31, 2008, 2007 and 2006
 In thousands
    
    2008
    
    
    2007
    
    
    2006Net (loss) income
    
    $
    (226,265
    )
    
    $
    (121,119
    )
    
    $
    93,016Other comprehensive (loss) income:Foreign currency translation adjustment
    
    
    (111,920
    )
    
    
    116,882
    
    
    
    27,311Net gain (loss) on derivative instruments, net
of tax of $26,322 (2008), $10,368 (2007)
and $2,101 (2006)
    
    
    44,313
    
    
    
    (21,859
    )
    
    
    (4,309
    )Comprehensive (loss) income
    
    $
    (293,872
    )
    
    $
    (26,096
    )
    
    $
    116,018
  43




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QUIKSILVER, INC.
 
 CONSOLIDATED BALANCE SHEETS
October 31, 2008 and 2007
 In thousands, except share amounts
    
    2008
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    53,042
    
    
    $
    74,348Trade accounts receivable, net  Note 3
    
    
    470,059
    
    
    
    478,049Other receivables
    
    
    70,376
    
    
    
    37,328Income taxes receivable
    
    
    10,738
    
    
    
    Inventories  Note 4
    
    
    312,138
    
    
    
    296,167Deferred income taxes  Note 12
    
    
    12,220
    
    
    
    43,776Prepaid expenses and other current assets
    
    
    25,869
    
    
    
    20,722Current assets held for sale  Note 18
    
    
    411,442
    
    
    
    562,872Total current assets
    
    
    1,365,884
    
    
    
    1,513,262Restricted cash  Note 7
    
    
    46,475
    
    
    
    Fixed assets, net  Note 5
    
    
    235,528
    
    
    
    236,663Intangible assets, net  Note 6
    
    
    144,434
    
    
    
    142,420Goodwill  Notes 6 and 14
    
    
    299,350
    
    
    
    398,899Other assets
    
    
    39,594
    
    
    
    42,232Deferred income taxes long-term  Note 12
    
    
    39,000
    
    
    
    20,536Non-current assets held for sale  Note 18
    
    
    
    
    
    
    308,052Total assets
    
    $
    2,170,265
    
    
    $
    2,662,064LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Lines of credit  Note 7
    
    $
    238,317
    
    
    $
    124,634Accounts payable
    
    
    235,729
    
    
    
    192,923Accrued liabilities  Note 8
    
    
    93,548
    
    
    
    157,084Current portion of long-term debt  Note 7
    
    
    31,904
    
    
    
    33,903Income taxes payable  Note 12
    
    
    
    
    
    
    8,850Liabilities related to assets held for sale  Note 18
    
    
    135,071
    
    
    
    364,011Total current liabilities
    
    
    734,569
    
    
    
    881,405Long-term debt, net of current portion  Notes 7 and 17
    
    
    790,097
    
    
    
    698,909Other long-term liabilities
    
    
    39,607
    
    
    
    11,313Non-current liabilities related to assets held for sale  Notes 7 and 18
    
    
    6,026
    
    
    
    183,824Total liabilities
    
    
    1,570,299
    
    
    
    1,775,451Commitments and contingencies  Note 9Stockholders equity  Note 10:Preferred stock, $.01 par value, authorized shares  5,000,000;
issued and outstanding shares  none
    
    
    
    
    
    
    Common stock, $.01 par value, authorized shares  185,000,000;
issued shares  130,622,566 (2008) and 128,340,538 (2007)
    
    
    1,306
    
    
    
    1,283Additional paid-in capital
    
    
    334,509
    
    
    
    306,051Treasury stock, 2,885,200 shares
    
    
    (6,778
    )
    
    
    (6,778
    )Retained earnings
    
    
    190,419
    
    
    
    437,940Accumulated other comprehensive income  Note 11
    
    
    80,510
    
    
    
    148,117Total stockholders equity
    
    
    599,966
    
    
    
    886,613Total liabilities and stockholders equity
    
    $
    2,170,265
    
    
    $
    2,662,064
  44




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QUIKSILVER, INC.
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
Years Ended October 31, 2008, 2007 and 2006
 Accumulated OtherCommon Stock
    
    
    Additional Paid-in
    
    
    
    
    
    
    
    
    
    
    Comprehensive
    
    
    Total StockholdersIn thousands, except share amounts
    
    Shares
    
    
    Amounts
    
    
    Capital
    
    
    Treasury Stock
    
    
    Retained Earnings
    
    
    Income (Loss)
    
    
    EquityBalance, October 31, 2005
    
    
    124,093,392
    
    
    $
    1,241
    
    
    $
    242,284
    
    
    $
    (6,778
    )
    
    $
    466,043
    
    
    $
    30,092
    
    
    $
    732,882Exercise of stock options
    
    
    1,289,351
    
    
    
    13
    
    
    
    5,119
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,132Tax benefit from exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    3,976
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,976Stock compensation
expense
    
    
    
    
    
    
    
    
    
    
    20,751
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,751Restricted stock
    
    
    800,000
    
    
    
    8
    
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Employee stock purchase
plan
    
    
    219,093
    
    
    
    2
    
    
    
    2,366
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,368Net income and other
comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93,016
    
    
    
    23,002
    
    
    
    116,018Balance, October 31, 2006
    
    
    126,401,836
    
    
    
    1,264
    
    
    
    274,488
    
    
    
    (6,778
    )
    
    
    559,059
    
    
    
    53,094
    
    
    
    881,127Exercise of stock options
    
    
    1,804,515
    
    
    
    18
    
    
    
    10,351
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,369Tax benefit from exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    2,896
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,896Stock compensation
expense
    
    
    
    
    
    
    
    
    
    
    17,210
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,210Restricted stock
    
    
    42,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Employee stock purchase
plan
    
    
    92,187
    
    
    
    1
    
    
    
    1,106
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,107Net loss and other
comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (121,119
    )
    
    
    95,023
    
    
    
    (26,096
    )Balance, October 31, 2007
    
    
    128,340,538
    
    
    
    1,283
    
    
    
    306,051
    
    
    
    (6,778
    )
    
    
    437,940
    
    
    
    148,117
    
    
    
    886,613Exercise of stock options
    
    
    1,828,338
    
    
    
    18
    
    
    
    6,719
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,737Tax benefit from exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    2,994
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,994Stock compensation
expense
    
    
    
    
    
    
    
    
    
    
    13,002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,002Restricted stock
    
    
    (103,668
    )
    
    
    (1
    )
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Employee stock purchase
plan
    
    
    257,178
    
    
    
    3
    
    
    
    1,867
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,870Business acquisitions
    
    
    300,180
    
    
    
    3
    
    
    
    3,875
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,878FIN 48 liability adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,256
    )
    
    
    
    
    
    
    (21,256
    )Net loss and other
comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (226,265
    )
    
    
    (67,607
    )
    
    
    (293,872
    )Balance, October 31, 2008
    
    
    130,622,566
    
    
    $
    1,306
    
    
    $
    334,509
    
    
    $
    (6,778
    )
    
    $
    190,419
    
    
    $
    80,510
    
    
    $
    599,966
  45




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##### Table of Contents



QUIKSILVER, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended October 31, 2008, 2007 and 2006
 In thousands
    
    2008
    
    
    2007
    
    
    2006Cash flows from operating activities:Net (loss) income
    
    $
    (226,265
    )
    
    $
    (121,119
    )
    
    $
    93,016Adjustments to reconcile net (loss) income to net cash provided by (used in)
operating activities:Loss (income) from discontinued operations
    
    
    291,809
    
    
    
    237,846
    
    
    
    (3,640
    )Depreciation and amortization
    
    
    57,231
    
    
    
    46,852
    
    
    
    37,851Stock-based compensation and tax benefit on option exercises
    
    
    9,588
    
    
    
    13,234
    
    
    
    19,962Provision for doubtful accounts
    
    
    15,948
    
    
    
    7,790
    
    
    
    4,075Loss on disposal of fixed assets
    
    
    350
    
    
    
    2,479
    
    
    
    1,554Foreign currency (gain) loss
    
    
    (2,618
    )
    
    
    1,266
    
    
    
    (146
    )Asset impairments
    
    
    65,797
    
    
    
    
    
    
    
    Equity in earnings and minority interest
    
    
    1,811
    
    
    
    (210
    )
    
    
    883Deferred income taxes
    
    
    (10,445
    )
    
    
    (15,412
    )
    
    
    (5,740
    )Changes in operating assets and liabilities, net of effects from business
acquisitions:Trade accounts receivable
    
    
    (16,179
    )
    
    
    (57,217
    )
    
    
    (39,450
    )Other receivables
    
    
    (7,446
    )
    
    
    (13,030
    )
    
    
    (7,213
    )Inventories
    
    
    (32,786
    )
    
    
    (19,563
    )
    
    
    (59,111
    )Prepaid expenses and other current assets
    
    
    (1,333
    )
    
    
    988
    
    
    
    (6,388
    )Other assets
    
    
    (1,776
    )
    
    
    (3,426
    )
    
    
    (1,055
    )Accounts payable
    
    
    36,961
    
    
    
    21,650
    
    
    
    (2,659
    )Accrued liabilities and other long-term liabilities
    
    
    (14,871
    )
    
    
    43,064
    
    
    
    (3,687
    )Income taxes payable
    
    
    13,688
    
    
    
    36,657
    
    
    
    (13,338
    )Cash provided by operating activities of continuing operations
    
    
    179,464
    
    
    
    181,849
    
    
    
    14,914Cash used in operating activities of discontinued operations
    
    
    (107,302
    )
    
    
    (57,597
    )
    
    
    (23,212
    )Net cash provided by (used in) operating activities
    
    
    72,162
    
    
    
    124,252
    
    
    
    (8,298
    )Cash flows from investing activities:Proceeds from the sale of properties and equipment
    
    
    2,801
    
    
    
    5,754
    
    
    
    2,284Capital expenditures
    
    
    (93,749
    )
    
    
    (84,030
    )
    
    
    (72,990
    )Business acquisitions, net of acquired cash  Note 2
    
    
    (31,127
    )
    
    
    (41,257
    )
    
    
    (33,566
    )Changes in restricted cash  Note 7
    
    
    (46,475
    )
    
    
    
    
    
    
    Cash used in investing activities of continuing operations
    
    
    (168,550
    )
    
    
    (119,533
    )
    
    
    (104,272
    )Cash provided by (used in) investing activities of discontinued operations
    
    
    103,811
    
    
    
    (40,957
    )
    
    
    (29,075
    )Net cash used in investing activities
    
    
    (64,739
    )
    
    
    (160,490
    )
    
    
    (133,347
    )Cash flows from financing activities:Borrowings on lines of credit
    
    
    185,777
    
    
    
    71,846
    
    
    
    94,437Payments on lines of credit
    
    
    (47,161
    )
    
    
    (17,247
    )
    
    
    (61,103
    )Borrowings on long-term debt
    
    
    240,389
    
    
    
    209,311
    
    
    
    121,814Payments on long-term debt
    
    
    (198,793
    )
    
    
    (101,611
    )
    
    
    (35,141
    )Stock option exercises, employee stock purchases and tax benefit on option exercises
    
    
    11,602
    
    
    
    14,253
    
    
    
    11,212Cash provided by financing activities of continuing operations
    
    
    191,814
    
    
    
    176,552
    
    
    
    131,219Cash used in financing activities of discontinued operations
    
    
    (224,794
    )
    
    
    (96,735
    )
    
    
    (25,229
    )Net cash (used in) provided by financing activities
    
    
    (32,980
    )
    
    
    79,817
    
    
    
    105,990Effect of exchange rate changes on cash
    
    
    4,251
    
    
    
    (6,065
    )
    
    
    (3,109
    )Net (decrease) increase in cash and cash equivalents
    
    
    (21,306
    )
    
    
    37,514
    
    
    
    (38,764
    )Cash and cash equivalents, beginning of year
    
    
    74,348
    
    
    
    36,834
    
    
    
    75,598Cash and cash equivalents, end of year
    
    $
    53,042
    
    
    $
    74,348
    
    
    $
    36,834Supplementary cash flow information:Cash paid during the year for:Interest
    
    $
    70,023
    
    
    $
    62,894
    
    
    $
    50,241Income taxes
    
    $
    31,049
    
    
    $
    17,454
    
    
    $
    52,446Non-cash investing and financing activities:Deferred purchase price obligation  Note 2
    
    $
    
    
    
    $
    26,356
    
    
    $
    24,967Common stock issued for business acquisitions
    
    $
    3,878
    
    
    $
    
    
    
    $
    Transfer of Rossignol debt to continuing operations
    
    $
    78,322
    
    
    $
    
    
    
    $
    
  46




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##### Table of Contents



QUIKSILVER, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended October 31, 2008, 2007 and 2006
 Note 1  Significant Accounting Policies
 Company Business
 Quiksilve Roxy DC Shoes Hawk Raisins Radio Fiji Leilani DC Shoes, Roxy, Lib Technologies, Gnu Bent Metal
 Rossignol Dynastar, Look Lange
   Principles of Consolidation
  Basis of Presentation
  47




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##### Table of Contents



Cash Equivalents
  Inventories
  Fixed Assets
  Long-Lived Assets
  Goodwill and Intangible Assets
  Revenue Recognition
   Year Ended October 31,In thousands
    
    2008
    
    
    2007
    
    
    2006Product shipments, net
    
    $
    2,254,245
    
    
    $
    2,040,289
    
    
    $
    1,717,741Royalty income
    
    
    10,391
    
    
    
    6,783
    
    
    
    4,409$
    2,264,636
    
    
    $
    2,047,072
    
    
    $
    1,722,150
 48




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##### Table of Contents



Promotion and Advertising
  Income Taxes
   Stock-Based Compensation Expense
  Net (Loss) Income per Share
  Foreign Currency and Derivatives
   49




---



##### Table of Contents



Comprehensive (Loss) Income
  Use of Estimates
  Fair Value of Financial Instruments
  New Accounting Pronouncements
     50




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##### Table of Contents



Note 2  Business Acquisitions
   Note 3  Allowance for Doubtful Accounts
  Year Ended October 31,In thousands
    
    2008
    
    
    2007
    
    
    2006Balance, beginning of year
    
    $
    21,100
    
    
    $
    15,758
    
    
    $
    12,557Provision for doubtful accounts
    
    
    15,948
    
    
    
    7,790
    
    
    
    4,075Deductions
    
    
    (5,717
    )
    
    
    (2,448
    )
    
    
    (874
    )Balance, end of year
    
    $
    31,331
    
    
    $
    21,100
    
    
    $
    15,758
  51




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##### Table of Contents



Note 4  Inventories
  October 31,In thousands
    
    2008
    
    
    2007Raw materials
    
    $
    9,156
    
    
    $
    10,158Work in process
    
    
    7,743
    
    
    
    5,164Finished goods
    
    
    295,239
    
    
    
    280,845$
    312,138
    
    
    $
    296,167
 Note 5  Fixed Assets
  October 31,In thousands
    
    2008
    
    
    2007Furniture and other equipment
    
    $
    178,200
    
    
    $
    179,387Computer equipment
    
    
    103,472
    
    
    
    85,922Leasehold improvements
    
    
    134,320
    
    
    
    108,864Land use rights
    
    
    38,508
    
    
    
    46,306Land and buildings
    
    
    4,600
    
    
    
    5,476459,100
    
    
    
    425,955Accumulated depreciation and amortization
    
    
    (223,572
    )
    
    
    (189,292
    )$
    235,528
    
    
    $
    236,663
  Note 6  Intangible Assets and Goodwill
  October 31,2008
    
    
    2007In thousands
    
    Gross Amount
    
    
    Amortization
    
    
    Net Book Value
    
    
    Gross Amount
    
    
    Amortization
    
    
    Net Book ValueAmortizable trademarks
    
    $
    18,976
    
    
    $
    (5,559
    )
    
    $
    13,417
    
    
    $
    15,220
    
    
    $
    (4,350
    )
    
    $
    10,870Amortizable licenses
    
    
    9,103
    
    
    
    (5,386
    )
    
    
    3,717
    
    
    
    12,354
    
    
    
    (6,074
    )
    
    
    6,280Other amortizable intangibles
    
    
    8,103
    
    
    
    (3,942
    )
    
    
    4,161
    
    
    
    6,482
    
    
    
    (3,556
    )
    
    
    2,926Non-amortizable trademarks
    
    
    123,139
    
    
    
    
    
    
    
    123,139
    
    
    
    122,344
    
    
    
    
    
    
    
    122,344$
    159,321
    
    
    $
    (14,887
    )
    
    $
    144,434
    
    
    $
    156,400
    
    
    $
    (13,980
    )
    
    $
    142,420
  52




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##### Table of Contents



Note 7  Lines of Credit and Long-term Debt
  October 31,In thousands
    
    2008
    
    
    2007European short-term credit arrangements
    
    $
    187,309
    
    
    $
    78,020Asia/Pacific short-term lines of credit
    
    
    51,008
    
    
    
    46,614Americas Credit Facility
    
    
    142,500
    
    
    
    129,700Americas long-term debt
    
    
    
    
    
    
    European long-term debt
    
    
    172,907
    
    
    
    142,400European Credit Facility
    
    
    47,218
    
    
    
    Senior Notes
    
    
    400,000
    
    
    
    400,000Deferred purchase price obligation
    
    
    41,922
    
    
    
    43,649Capital lease obligations and other borrowings
    
    
    17,454
    
    
    
    17,063$
    1,060,318
    
    
    $
    857,446
   53




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##### Table of Contents



54




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##### Table of Contents



2009
    
    $
    31,9042010
    
    
    284,4032011
    
    
    81,9462012
    
    
    20,2272013
    
    
    3,521Thereafter
    
    
    400,000$
    822,001
  October 31, 2008Carrying Amount
    
    
    Fair ValueLines of credit
    
    $
    238,317
    
    
    $
    238,317Long-term debt
    
    
    822,001
    
    
    
    622,001$
    1,060,318
    
    
    $
    860,318
 55




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##### Table of Contents



Note 8  Accrued Liabilities
  October 31,2008
    
    
    2007Accrued employee compensation and benefits
    
    $
    44,405
    
    
    $
    46,220Accrued sales and payroll taxes
    
    
    8,658
    
    
    
    11,236Derivative liability
    
    
    
    
    
    
    38,438Accrued interest
    
    
    2,784
    
    
    
    7,448Amounts payable for business acquisitions
    
    
    
    
    
    
    31,518Other liabilities
    
    
    37,701
    
    
    
    22,224$
    93,548
    
    
    $
    157,084
 Note 9  Commitments and Contingencies
 Operating Leases
  2009
    
    $
    82,2472010
    
    
    79,0182011
    
    
    70,4812012
    
    
    61,9442013
    
    
    52,308Thereafter
    
    
    145,113$
    491,111
  Professional Athlete Sponsorships
  2009
    
    $
    17,5062010
    
    
    6,9922011
    
    
    4,0412012
    
    
    2,3732013
    
    
    600Thereafter
    
    
    500$
    32,012
 Litigation
  56




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##### Table of Contents



Indemnities and Guarantees
  Note 10  Stockholders Equity
   Year Ended October 31,2008
    
    2007
    
    2006Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    Average
    
    
    
    
    
    AverageIn thousands
    
    Shares
    
    Price
    
    Shares
    
    Price
    
    Shares
    
    PriceOutstanding, beginning of year
    
    
    17,311,049
    
    
    $
    9.30
    
    
    
    18,135,699
    
    
    $
    8.61
    
    
    
    17,366,457
    
    
    $
    7.63Granted
    
    
    1,310,000
    
    
    
    8.99
    
    
    
    1,247,051
    
    
    
    15.19
    
    
    
    2,338,300
    
    
    
    13.67Exercised
    
    
    (1,828,338
    )
    
    
    3.69
    
    
    
    (1,804,515
    )
    
    
    5.74
    
    
    
    (1,289,351
    )
    
    
    3.99Canceled
    
    
    (890,136
    )
    
    
    8.55
    
    
    
    (267,186
    )
    
    
    13.48
    
    
    
    (279,707
    )
    
    
    11.70Outstanding, end of year
    
    
    15,902,575
    
    
    
    9.97
    
    
    
    17,311,049
    
    
    
    9.30
    
    
    
    18,135,699
    
    
    
    8.61Options exercisable, end of year
    
    
    12,251,796
    
    
    
    9.19
    
    
    
    12,395,513
    
    
    
    7.56
    
    
    
    11,177,173
    
    
    
    6.29
  57




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##### Table of Contents



Options Outstanding
    
    Options ExercisableWeighted
    
    Weighted
    
    
    
    
    
    WeightedAverage
    
    Average
    
    
    
    
    
    AverageRemaining
    
    Exercise
    
    
    
    
    
    ExerciseRange of Exercise Prices
    
    Shares
    
    Life
    
    Price
    
    Shares
    
    Price(Years)$2.98 - $4.47
    
    
    2,451,456
    
    
    
    2.2
    
    
    $
    3.56
    
    
    
    2,451,456
    
    
    $
    3.56$4.48 - $5.96
    
    
    714,676
    
    
    
    2.3
    
    
    
    4.78
    
    
    
    714,676
    
    
    
    4.78$5.97 - $7.44
    
    
    1,676,007
    
    
    
    4.1
    
    
    
    6.66
    
    
    
    1,676,007
    
    
    
    6.66$7.45 - $8.93
    
    
    2,510,667
    
    
    
    5.1
    
    
    
    8.57
    
    
    
    2,445,667
    
    
    
    8.58$8.94 - $10.42
    
    
    1,243,000
    
    
    
    9.2
    
    
    
    9.03
    
    
    
    45,000
    
    
    
    9.77$10.43 - $11.90
    
    
    781,668
    
    
    
    5.5
    
    
    
    11.09
    
    
    
    780,001
    
    
    
    11.09$11.91 - $13.39
    
    
    135,000
    
    
    
    7.9
    
    
    
    12.67
    
    
    
    64,997
    
    
    
    12.49$13.40 - $14.87
    
    
    5,141,101
    
    
    
    6.6
    
    
    
    14.10
    
    
    
    3,571,687
    
    
    
    14.14$14.88 - $16.36
    
    
    1,249,000
    
    
    
    7.9
    
    
    
    15.68
    
    
    
    502,305
    
    
    
    15.8815,902,575
    
    
    
    5.5
    
    
    
    9.97
    
    
    
    12,251,796
    
    
    
    9.19
  WeightedAverageGrant DateShares
    
    Fair ValueNon-vested, beginning of year
    
    
    4,915,536
    
    
    $
    6.71Granted
    
    
    1,310,000
    
    
    
    3.85Vested
    
    
    (2,478,186
    )
    
    
    6.43Canceled
    
    
    (96,571
    )
    
    
    6.54Non-vested, end of year
    
    
    3,650,779
    
    
    
    5.88
    58




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##### Table of Contents



Year Ended October 31,2008
    
    2007
    
    2006Outstanding, beginning of year
    
    
    842,000
    
    
    
    800,000
    
    
    
    Granted
    
    
    330,000
    
    
    
    87,000
    
    
    
    800,000Vested
    
    
    (17,329
    )
    
    
    
    
    
    
    Forfeited
    
    
    (433,668
    )
    
    
    (45,000
    )
    
    
    Outstanding, end of year
    
    
    721,003
    
    
    
    842,000
    
    
    
    800,000
    Note 11  Accumulated Other Comprehensive Income
  October 31,In thousands
    
    2008
    
    
    2007Foreign currency translation adjustment
    
    $
    60,003
    
    
    $
    171,923Gain (loss) on cash flow hedges
    
    
    20,507
    
    
    
    (23,806
    )$
    80,510
    
    
    $
    148,117
 59




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##### Table of Contents



Note 12  Income Taxes
  Year Ended October 31,In thousands
    
    2008
    
    
    2007
    
    
    2006Current:Federal
    
    $
    (1,876
    )
    
    $
    (597
    )
    
    $
    5,081State
    
    
    (572
    )
    
    
    399
    
    
    
    95Foreign
    
    
    45,920
    
    
    
    49,789
    
    
    
    33,98943,472
    
    
    
    49,591
    
    
    
    39,165Deferred:Federal
    
    
    (8,070
    )
    
    
    (5,103
    )
    
    
    (1,538
    )State
    
    
    (1,980
    )
    
    
    (770
    )
    
    
    (468
    )Foreign
    
    
    (395
    )
    
    
    (9,212
    )
    
    
    (3,978
    )(10,445
    )
    
    
    (15,085
    )
    
    
    (5,984
    )Provision for income taxes
    
    $
    33,027
    
    
    $
    34,506
    
    
    $
    33,181
  Year Ended October 31,2008
    
    2007
    
    2006Computed expected statutory federal income
tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State income taxes, net of federal income
tax benefit
    
    
    (1.2
    )
    
    
    0.2
    
    
    
    (0.1
    )Foreign tax rate differential
    
    
    (8.1
    )
    
    
    (8.7
    )
    
    
    (8.1
    )Foreign tax exempt income
    
    
    (9.0
    )
    
    
    (5.3
    )
    
    
    (6.0
    )Repatriation of foreign earnings, net of credits
    
    
    0.7
    
    
    
    0.4
    
    
    
    5.4Goodwill impairment
    
    
    19.7
    
    
    
    
    
    
    
    Stock-based compensation
    
    
    1.6
    
    
    
    1.2
    
    
    
    1.5Uncertain tax positions
    
    
    (5.7
    )
    
    
    1.3
    
    
    
    0.1Other
    
    
    0.5
    
    
    
    (1.3
    )
    
    
    (0.7
    )Effective income tax rate
    
    
    33.5
    %
    
    
    22.8
    %
    
    
    27.1
    %
 60




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##### Table of Contents



Year Ended October 31,In thousands
    
    2008
    
    
    2007Deferred income tax assets:Allowance for doubtful accounts
    
    $
    13,176
    
    
    $
    6,912Depreciation and amortization
    
    
    6,467
    
    
    
    Other comprehensive income
    
    
    
    
    
    
    34,946Tax loss carryforwards
    
    
    113,655
    
    
    
    3,206Accruals and other
    
    
    55,133
    
    
    
    46,021Basis difference in Rossignol investment
    
    
    147,621
    
    
    
    336,052
    
    
    
    91,085Deferred income tax liabilities:Depreciation and amortization
    
    
    
    
    
    
    (1,073
    )Other comprehensive income
    
    
    (8,689
    )
    
    
    Basis difference in receivables due from Rossignol
    
    
    (111,845
    )
    
    
    Intangibles
    
    
    (25,633
    )
    
    
    (25,200
    )(146,167
    )
    
    
    (26,273
    )Deferred income taxes
    
    
    189,885
    
    
    
    64,812Valuation allowance
    
    
    (138,665
    )
    
    
    (500
    )Net deferred income taxes
    
    $
    51,220
    
    
    $
    64,312
      61




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##### Table of Contents



In thousands
    
    TotalBalance at November 1, 2007
    
    $
    29,552Gross increases related to prior year tax positions
    
    
    2,759Gross increases related to current year tax positions
    
    
    7,888Settlements
    
    
    (6,770
    )Lapse in statute of limitation
    
    
    (4,700
    )Foreign exchange and other
    
    
    (3,234
    )Balance at October 31, 2008
    
    $
    25,495
     Note 13  Employee Plans
   62




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##### Table of Contents



Note 14  Segment and Geographic Information
   Percentage of Revenues2008
    
    
    2007
    
    
    2006Apparel
    
    
    65
    %
    
    
    66
    %
    
    
    69
    %Footwear
    
    
    20
    
    
    
    18
    
    
    
    16Accessories
    
    
    15
    
    
    
    16
    
    
    
    15100
    %
    
    
    100
    %
    
    
    100
    %
 63




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##### Table of Contents



Year Ended October 31,In thousands
    
    2008
    
    
    2007
    
    
    2006Revenues, net:Americas
    
    $
    1,061,370
    
    
    $
    995,801
    
    
    $
    831,583Europe
    
    
    933,119
    
    
    
    803,395
    
    
    
    660,127Asia/Pacific
    
    
    265,067
    
    
    
    243,064
    
    
    
    225,128Corporate operations
    
    
    5,080
    
    
    
    4,812
    
    
    
    5,312Consolidated
    
    $
    2,264,636
    
    
    $
    2,047,072
    
    
    $
    1,722,150Gross profit:Americas
    
    $
    445,381
    
    
    $
    418,021
    
    
    $
    344,842Europe
    
    
    532,034
    
    
    
    442,923
    
    
    
    355,132Asia/Pacific
    
    
    140,168
    
    
    
    120,411
    
    
    
    110,375Corporate operations
    
    
    3,003
    
    
    
    3,690
    
    
    
    2,244Consolidated
    
    $
    1,120,586
    
    
    $
    985,045
    
    
    $
    812,593SG&A expense:Americas
    
    $
    371,958
    
    
    $
    311,757
    
    
    $
    254,029Europe
    
    
    380,374
    
    
    
    316,867
    
    
    
    253,408Asia/Pacific
    
    
    117,219
    
    
    
    100,922
    
    
    
    88,918Corporate operations
    
    
    46,382
    
    
    
    52,717
    
    
    
    52,352Consolidated
    
    $
    915,933
    
    
    $
    782,263
    
    
    $
    648,707Asset impairments:Americas
    
    $
    9,317
    
    
    $
    
    
    
    $
    Europe
    
    
    692
    
    
    
    
    
    
    
    Asia/Pacific
    
    
    55,788
    
    
    
    
    
    
    
    Corporate operations
    
    
    
    
    
    
    
    
    
    
    Consolidated
    
    $
    65,797
    
    
    $
    
    
    
    $
    Operating income (loss):Americas
    
    $
    64,106
    
    
    $
    106,264
    
    
    $
    90,813Europe
    
    
    150,968
    
    
    
    126,056
    
    
    
    101,724Asia/Pacific
    
    
    (32,839
    )
    
    
    19,489
    
    
    
    21,457Corporate operations
    
    
    (43,379
    )
    
    
    (49,027
    )
    
    
    (50,108
    )Consolidated
    
    $
    138,856
    
    
    $
    202,782
    
    
    $
    163,886Identifiable assets:Americas
    
    $
    841,318
    
    
    $
    908,435
    
    
    $
    796,427Europe
    
    
    1,026,268
    
    
    
    1,307,738
    
    
    
    1,266,813Asia/Pacific
    
    
    247,480
    
    
    
    390,338
    
    
    
    333,464Corporate operations
    
    
    55,199
    
    
    
    55,553
    
    
    
    50,674Consolidated
    
    $
    2,170,265
    
    
    $
    2,662,064
    
    
    $
    2,447,378Goodwill:Americas
    
    $
    76,124
    
    
    $
    73,709
    
    
    $
    66,813Europe
    
    
    167,814
    
    
    
    179,012
    
    
    
    146,295Asia/Pacific
    
    
    55,412
    
    
    
    146,178
    
    
    
    115,513Consolidated
    
    $
    299,350
    
    
    $
    398,899
    
    
    $
    328,621
  64




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##### Table of Contents



Note 15  Derivative Financial Instruments
     65




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##### Table of Contents



In thousands
    
    NotionalAmount
    
    
    Maturity

    
    Fair ValueUnited States dollar
    
    $
    315,449
    
    
    Nov. 2008  Sept. 2010
    
    $
    33,523Swiss franc
    
    
    6,184
    
    
    Nov. 2008  Oct. 2009
    
    
    (131
    )Japanese yen
    
    
    4,823
    
    
    Dec. 2008
    
    
    96Canadian dollar
    
    
    4,203
    
    
    Dec. 2008
    
    
    Interest rate instruments
    
    
    11,749
    
    
    Sept. 2009
    
    
    15$
    342,408
    
    
    
    
    
    
    $
    33,503
 Note 16  Quarterly Financial Data (Unaudited)
  Quarter EndedIn thousands, except per share amounts
    
    January 31
    
    April 30
    
    July 31
    
    October 31Year ended October 31, 2008Revenues, net
    
    $
    496,581
    
    
    $
    596,280
    
    
    $
    564,876
    
    
    $
    606,899Gross profit
    
    
    243,524
    
    
    
    300,342
    
    
    
    284,829
    
    
    
    291,891Income (loss) from continuing
operations
    
    
    7,570
    
    
    
    38,725
    
    
    
    33,073
    
    
    
    (13,824
    )(Loss) income from discontinued
operations
    
    
    (29,510
    )
    
    
    (244,949
    )
    
    
    (30,219
    )
    
    
    12,869Net (loss) income
    
    
    (21,940
    )
    
    
    (206,224
    )
    
    
    2,854
    
    
    
    (955
    )Income (loss) per share from
continuing operations, assuming
dilution
    
    
    0.06
    
    
    
    0.30
    
    
    
    0.25
    
    
    
    (0.11
    )(Loss) income per share from
discontinued operations, assuming
dilution
    
    
    (0.24
    )
    
    
    (1.88
    )
    
    
    (0.23
    )
    
    
    0.10Net (loss) income per share, assuming
dilution
    
    
    (0.18
    )
    
    
    (1.59
    )
    
    
    0.02
    
    
    
    (0.01
    )Trade accounts receivable
    
    
    402,536
    
    
    
    473,032
    
    
    
    491,369
    
    
    
    470,059Inventories
    
    
    364,362
    
    
    
    304,059
    
    
    
    358,646
    
    
    
    312,138Year ended October 31, 2007Revenues, net
    
    $
    410,854
    
    
    $
    520,359
    
    
    $
    528,591
    
    
    $
    587,268Gross profit
    
    
    195,080
    
    
    
    249,382
    
    
    
    252,079
    
    
    
    288,504Income from continuing operations
    
    
    4,672
    
    
    
    32,419
    
    
    
    35,702
    
    
    
    43,934Loss from discontinued operations
    
    
    (2,197
    )
    
    
    (37,219
    )
    
    
    (43,569
    )
    
    
    (154,861
    )Net income (loss)
    
    
    2,475
    
    
    
    (4,800
    )
    
    
    (7,867
    )
    
    
    (110,927
    )Income per share from continuing
operations, assuming dilution
    
    
    0.04
    
    
    
    0.25
    
    
    
    0.28
    
    
    
    0.34Loss per share from discontinued
operations, assuming dilution
    
    
    (0.02
    )
    
    
    (0.29
    )
    
    
    (0.34
    )
    
    
    (1.19
    )Net income (loss) per share, assuming
dilution
    
    
    0.02
    
    
    
    (0.04
    )
    
    
    (0.06
    )
    
    
    (0.85
    )Trade accounts receivable
    
    
    323,264
    
    
    
    421,280
    
    
    
    445,469
    
    
    
    478,049Inventories
    
    
    321,534
    
    
    
    274,580
    
    
    
    315,054
    
    
    
    296,167
 66




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Note 17  Condensed Consolidating Financial Information
   67




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CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
 Year Ended October 31, 2008
 Non-Guarantor
    
    
    GuarantorIn thousands
    
    Quiksilver, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    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
    )Minority interest, equity in earnings and
other expense (income)
    
    
    134,831
    
    
    
    350
    
    
    
    369
    
    
    
    (134,831
    )
    
    
    719(Loss) income before (benefit)
provision for income taxes
    
    
    (240,461
    )
    
    
    56,317
    
    
    
    136,939
    
    
    
    145,776
    
    
    
    98,571(Benefit) provision for income taxes
    
    
    (14,986
    )
    
    
    2,488
    
    
    
    45,525
    
    
    
    
    
    
    
    33,027(Loss) income from continuing
operations
    
    
    (225,475
    )
    
    
    53,829
    
    
    
    91,414
    
    
    
    145,776
    
    
    
    65,544Loss from discontinued operations
    
    
    (790
    )
    
    
    (22,723
    )
    
    
    (255,976
    )
    
    
    (12,320
    )
    
    
    (291,809
    )Net (loss) income
    
    $
    (226,265
    )
    
    $
    31,106
    
    
    $
    (164,562
    )
    
    $
    133,456
    
    
    $
    (226,265
    )
 68




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CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
 Year Ended October 31, 2007
 Non-Quiksilver, Inc.
    
    
    Guarantor
    
    
    Guarantor
    
    
    EliminationsIn thousands
    
    (adjusted)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    (adjusted)
    
    
    ConsolidatedRevenues, net
    
    $
    19
    
    
    $
    893,969
    
    
    $
    1,196,874
    
    
    $
    (43,790
    )
    
    $
    2,047,072Cost of goods sold
    
    
    
    
    
    
    525,839
    
    
    
    550,977
    
    
    
    (14,789
    )
    
    
    1,062,027Gross profit
    
    
    19
    
    
    
    368,130
    
    
    
    645,897
    
    
    
    (29,001
    )
    
    
    985,045Selling, general and administrative
expense
    
    
    52,955
    
    
    
    260,140
    
    
    
    497,158
    
    
    
    (27,990
    )
    
    
    782,263Operating (loss) income
    
    
    (52,936
    )
    
    
    107,990
    
    
    
    148,739
    
    
    
    (1,011
    )
    
    
    202,782Interest expense, net
    
    
    43,480
    
    
    
    2,202
    
    
    
    889
    
    
    
    
    
    
    
    46,571Foreign currency loss
    
    
    3,008
    
    
    
    1,579
    
    
    
    270
    
    
    
    
    
    
    
    4,857Minority interest, equity in earnings
and other expense (income)
    
    
    33,388
    
    
    
    (73
    )
    
    
    194
    
    
    
    (33,388
    )
    
    
    121(Loss) income before (benefit)
provision for income taxes
    
    
    (132,812
    )
    
    
    104,282
    
    
    
    147,386
    
    
    
    32,377
    
    
    
    151,233(Benefit) provision for income taxes
    
    
    (16,066
    )
    
    
    9,996
    
    
    
    40,576
    
    
    
    
    
    
    
    34,506(Loss) income from continuing
operations
    
    
    (116,746
    )
    
    
    94,286
    
    
    
    106,810
    
    
    
    32,377
    
    
    
    116,727(Loss) income from discontinued
operations
    
    
    (4,373
    )
    
    
    (61,578
    )
    
    
    (172,222
    )
    
    
    327
    
    
    
    (237,846
    )Net (loss) income
    
    $
    (121,119
    )
    
    $
    32,708
    
    
    $
    (65,412
    )
    
    $
    32,704
    
    
    $
    (121,119
    )
 69




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
 Year Ended October 31, 2006
 Non-Quiksilver, Inc.
    
    
    Guarantor
    
    
    Guarantor
    
    
    EliminationsIn thousands
    
    (adjusted)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    (adjusted)
    
    
    ConsolidatedRevenues, net
    
    $
    592
    
    
    $
    781,777
    
    
    $
    976,829
    
    
    $
    (37,048
    )
    
    $
    1,722,150Cost of goods sold
    
    
    
    
    
    
    464,919
    
    
    
    455,422
    
    
    
    (10,784
    )
    
    
    909,557Gross profit
    
    
    592
    
    
    
    316,858
    
    
    
    521,407
    
    
    
    (26,264
    )
    
    
    812,593Selling, general and administrative
expense
    
    
    47,168
    
    
    
    243,290
    
    
    
    383,077
    
    
    
    (24,828
    )
    
    
    648,707Operating (loss) income
    
    
    (46,576
    )
    
    
    73,568
    
    
    
    138,330
    
    
    
    (1,436
    )
    
    
    163,886Interest expense, net
    
    
    38,301
    
    
    
    1,682
    
    
    
    1,334
    
    
    
    
    
    
    
    41,317Foreign currency (gain) loss
    
    
    (730
    )
    
    
    87
    
    
    
    352
    
    
    
    
    
    
    
    (291
    )Minority interest, equity in earnings
and other (income) expense
    
    
    (156,404
    )
    
    
    
    
    
    
    303
    
    
    
    156,404
    
    
    
    303Income (loss) before (benefit)
provision for income taxes
    
    
    72,257
    
    
    
    71,799
    
    
    
    136,341
    
    
    
    (157,840
    )
    
    
    122,557(Benefit) provision for income taxes
    
    
    (23,210
    )
    
    
    26,671
    
    
    
    29,720
    
    
    
    
    
    
    
    33,181Income (loss) from continuing
operations
    
    
    95,467
    
    
    
    45,128
    
    
    
    106,621
    
    
    
    (157,840
    )
    
    
    89,376(Loss) income from discontinued
operations
    
    
    (2,451
    )
    
    
    306
    
    
    
    4,889
    
    
    
    896
    
    
    
    3,640Net income (loss)
    
    $
    93,016
    
    
    $
    45,434
    
    
    $
    111,510
    
    
    $
    (156,944
    )
    
    $
    93,016
 70




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##### Table of Contents



CONDENSED CONSOLIDATING BALANCE SHEET
 OCTOBER 31, 2008
 Non-Guarantor
    
    
    GuarantorIn thousands
    
    Quiksilver, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    18
    
    
    $
    2,666
    
    
    $
    50,358
    
    
    $
    
    
    
    $
    53,042Trade accounts receivable, net
    
    
    
    
    
    
    214,033
    
    
    
    256,026
    
    
    
    
    
    
    
    470,059Other receivables
    
    
    866
    
    
    
    9,824
    
    
    
    59,686
    
    
    
    
    
    
    
    70,376Income taxes receivable
    
    
    
    
    
    
    2,859
    
    
    
    7,879
    
    
    
    
    
    
    
    10,738Inventories
    
    
    
    
    
    
    134,812
    
    
    
    178,738
    
    
    
    (1,412
    )
    
    
    312,138Deferred income taxes
    
    
    
    
    
    
    21,560
    
    
    
    (9,340
    )
    
    
    
    
    
    
    12,220Prepaid expenses and other
current assets
    
    
    6,019
    
    
    
    8,773
    
    
    
    11,077
    
    
    
    
    
    
    
    25,869Current assets held for sale
    
    
    
    
    
    
    70,367
    
    
    
    341,075
    
    
    
    
    
    
    
    411,442Total current assets
    
    
    6,903
    
    
    
    464,894
    
    
    
    895,499
    
    
    
    (1,412
    )
    
    
    1,365,884Restricted cash
    
    
    
    
    
    
    
    
    
    
    46,475
    
    
    
    
    
    
    
    46,475Fixed assets, net
    
    
    5,775
    
    
    
    96,686
    
    
    
    133,067
    
    
    
    
    
    
    
    235,528Intangible assets, net
    
    
    2,754
    
    
    
    51,113
    
    
    
    90,567
    
    
    
    
    
    
    
    144,434Goodwill
    
    
    
    
    
    
    117,235
    
    
    
    182,115
    
    
    
    
    
    
    
    299,350Investment in subsidiaries
    
    
    1,185,761
    
    
    
    
    
    
    
    
    
    
    
    (1,185,761
    )
    
    
    Other assets
    
    
    9,300
    
    
    
    3,387
    
    
    
    26,907
    
    
    
    
    
    
    
    39,594Deferred income taxes long-term
    
    
    
    
    
    
    3,992
    
    
    
    35,008
    
    
    
    
    
    
    
    39,000Non-current assets held for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total assets
    
    $
    1,210,493
    
    
    $
    737,307
    
    
    $
    1,409,638
    
    
    $
    (1,187,173
    )
    
    $
    2,170,265LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Lines of credit
    
    $
    
    
    
    $
    
    
    
    $
    238,317
    
    
    $
    
    
    
    $
    238,317Accounts payable
    
    
    5,121
    
    
    
    102,987
    
    
    
    127,621
    
    
    
    
    
    
    
    235,729Accrued liabilities
    
    
    18,436
    
    
    
    17,455
    
    
    
    57,657
    
    
    
    
    
    
    
    93,548Current portion of long-term debt
    
    
    
    
    
    
    2,061
    
    
    
    29,843
    
    
    
    
    
    
    
    31,904Intercompany balances
    
    
    186,970
    
    
    
    (122,584
    )
    
    
    (64,386
    )
    
    
    
    
    
    
    Current liabilities related to assets
held for sale
    
    
    
    
    
    
    35,398
    
    
    
    99,673
    
    
    
    
    
    
    
    135,071Total current liabilities
    
    
    210,527
    
    
    
    35,317
    
    
    
    488,725
    
    
    
    
    
    
    
    734,569Long-term debt, net of current portion
    
    
    400,000
    
    
    
    143,501
    
    
    
    246,596
    
    
    
    
    
    
    
    790,097Other long-term liabilities
    
    
    
    
    
    
    29,882
    
    
    
    9,725
    
    
    
    
    
    
    
    39,607Non-current liabilities related to
assets held for sale
    
    
    
    
    
    
    
    
    
    
    6,026
    
    
    
    
    
    
    
    6,026Total liabilities
    
    
    610,527
    
    
    
    208,700
    
    
    
    751,072
    
    
    
    
    
    
    
    1,570,299Stockholders/invested equity
    
    
    599,966
    
    
    
    528,607
    
    
    
    658,566
    
    
    
    (1,187,173
    )
    
    
    599,966Total liabilities and
stockholders equity
    
    $
    1,210,493
    
    
    $
    737,307
    
    
    $
    1,409,638
    
    
    $
    (1,187,173
    )
    
    $
    2,170,265
 71




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##### Table of Contents



CONDENSED CONSOLIDATING BALANCE SHEET
 OCTOBER 31, 2007
 Non-Quiksilver, Inc.
    
    
    Guarantor
    
    
    Guarantor
    
    
    EliminationsIn thousands
    
    (adjusted)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    (adjusted)
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    12
    
    
    $
    13,254
    
    
    $
    61,082
    
    
    $
    
    
    
    $
    74,348Trade accounts receivable, net
    
    
    
    
    
    
    199,606
    
    
    
    278,443
    
    
    
    
    
    
    
    478,049Other receivables
    
    
    775
    
    
    
    13,035
    
    
    
    23,518
    
    
    
    
    
    
    
    37,328Inventories
    
    
    
    
    
    
    129,568
    
    
    
    167,895
    
    
    
    (1,296
    )
    
    
    296,167Deferred income taxes
    
    
    
    
    
    
    17,192
    
    
    
    26,584
    
    
    
    
    
    
    
    43,776Prepaid expenses and other
current assets
    
    
    1,596
    
    
    
    7,358
    
    
    
    11,768
    
    
    
    
    
    
    
    20,722Current assets held for sale
    
    
    
    
    
    
    126,823
    
    
    
    437,070
    
    
    
    (1,021
    )
    
    
    562,872Total current assets
    
    
    2,383
    
    
    
    506,836
    
    
    
    1,006,360
    
    
    
    (2,317
    )
    
    
    1,513,262Fixed assets, net
    
    
    6,959
    
    
    
    97,856
    
    
    
    131,848
    
    
    
    
    
    
    
    236,663Intangible assets, net
    
    
    2,626
    
    
    
    47,282
    
    
    
    92,512
    
    
    
    
    
    
    
    142,420Goodwill
    
    
    
    
    
    
    175,049
    
    
    
    223,850
    
    
    
    
    
    
    
    398,899Investment in subsidiaries
    
    
    1,465,251
    
    
    
    
    
    
    
    
    
    
    
    (1,465,251
    )
    
    
    Other assets
    
    
    10,120
    
    
    
    5,941
    
    
    
    26,171
    
    
    
    
    
    
    
    42,232Deferred income taxes long-term
    
    
    
    
    
    
    7,352
    
    
    
    13,184
    
    
    
    
    
    
    
    20,536Non-current assets held for sale
    
    
    
    
    
    
    27,040
    
    
    
    281,012
    
    
    
    
    
    
    
    308,052Total assets
    
    $
    1,487,339
    
    
    $
    867,356
    
    
    $
    1,774,937
    
    
    $
    (1,467,568
    )
    
    $
    2,662,064LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Lines of credit
    
    $
    
    
    
    $
    
    
    
    $
    124,634
    
    
    $
    
    
    
    $
    124,634Accounts payable
    
    
    2,086
    
    
    
    73,773
    
    
    
    117,064
    
    
    
    
    
    
    
    192,923Accrued liabilities
    
    
    20,287
    
    
    
    38,503
    
    
    
    98,294
    
    
    
    
    
    
    
    157,084Current portion of long-term debt
    
    
    
    
    
    
    
    
    
    
    33,903
    
    
    
    
    
    
    
    33,903Income taxes payable
    
    
    
    
    
    
    5,769
    
    
    
    3,081
    
    
    
    
    
    
    
    8,850Intercompany balances
    
    
    178,353
    
    
    
    (72,601
    )
    
    
    (105,752
    )
    
    
    
    
    
    
    Current liabilities related to assets
held for sale
    
    
    
    
    
    
    111,845
    
    
    
    252,166
    
    
    
    
    
    
    
    364,011Total current liabilities
    
    
    200,726
    
    
    
    157,289
    
    
    
    523,390
    
    
    
    
    
    
    
    881,405Long-term debt, net of current portion
    
    
    400,000
    
    
    
    129,700
    
    
    
    169,209
    
    
    
    
    
    
    
    698,909Other long-term liabilities
    
    
    
    
    
    
    10,268
    
    
    
    1,045
    
    
    
    
    
    
    
    11,313Non-current liabilities related to assets
held for sale
    
    
    
    
    
    
    60,444
    
    
    
    123,380
    
    
    
    
    
    
    
    183,824Total liabilities
    
    
    600,726
    
    
    
    357,701
    
    
    
    817,024
    
    
    
    
    
    
    
    1,775,451Stockholders/invested equity
    
    
    886,613
    
    
    
    509,655
    
    
    
    957,913
    
    
    
    (1,467,568
    )
    
    
    886,613Total liabilities and
stockholders equity
    
    $
    1,487,339
    
    
    $
    867,356
    
    
    $
    1,774,937
    
    
    $
    (1,467,568
    )
    
    $
    2,662,064
 72




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##### 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
    )
    
    $
    31,106
    
    
    $
    (164,562
    )
    
    $
    133,456
    
    
    $
    (226,265
    )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
    
    
    
    
    
    
    
    
    
    
    
    (134,831
    )
    
    
    Asset impairments
    
    
    
    
    
    
    9,317
    
    
    
    56,480
    
    
    
    
    
    
    
    65,797Other adjustments to reconcile net
(loss) income
    
    
    (1,478
    )
    
    
    4,242
    
    
    
    (13,666
    )
    
    
    
    
    
    
    (10,902
    )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:Proceeds from the sale of properties and
equipment
    
    
    1,930
    
    
    
    147
    
    
    
    724
    
    
    
    
    
    
    
    2,801Capital expenditures
    
    
    (1,646
    )
    
    
    (38,672
    )
    
    
    (53,431
    )
    
    
    
    
    
    
    (93,749
    )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
 73




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
 Year Ended October 31, 2007
 Non-Quiksilver, Inc.
    
    
    Guarantor
    
    
    Guarantor
    
    
    EliminationsIn thousands
    
    (adjusted)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    (adjusted)
    
    
    ConsolidatedCash flows from operating activities:Net (loss) income
    
    $
    (121,119
    )
    
    $
    32,708
    
    
    $
    (65,412
    )
    
    $
    32,704
    
    
    $
    (121,119
    )Adjustments to reconcile net (loss) income to
net cash (used in) provided by operating
activities:Loss (income) from discontinued
operations
    
    
    4,373
    
    
    
    61,578
    
    
    
    172,222
    
    
    
    (327
    )
    
    
    237,846Depreciation and amortization
    
    
    629
    
    
    
    20,402
    
    
    
    25,821
    
    
    
    
    
    
    
    46,852Stock-based compensation and tax
benefit on option exercises
    
    
    13,234
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,234Provision for doubtful accounts
    
    
    
    
    
    
    3,978
    
    
    
    3,812
    
    
    
    
    
    
    
    7,790Equity in earnings
    
    
    33,388
    
    
    
    
    
    
    
    
    
    
    
    (33,388
    )
    
    
    Other adjustments to reconcile net
(loss) income
    
    
    903
    
    
    
    (6,518
    )
    
    
    (6,262
    )
    
    
    
    
    
    
    (11,877
    )Changes in operating assets and liabilities:Trade accounts receivable
    
    
    
    
    
    
    (47,237
    )
    
    
    (9,980
    )
    
    
    
    
    
    
    (57,217
    )Inventories
    
    
    
    
    
    
    (7,972
    )
    
    
    (12,275
    )
    
    
    684
    
    
    
    (19,563
    )Other operating assets and liabilities
    
    
    16,534
    
    
    
    20,672
    
    
    
    48,697
    
    
    
    
    
    
    
    85,903Cash (used in) provided by operating
activities of continuing operations
    
    
    (52,058
    )
    
    
    77,611
    
    
    
    156,623
    
    
    
    (327
    )
    
    
    181,849Cash provided by (used in) operating
activities of discontinued operations
    
    
    386
    
    
    
    (4,973
    )
    
    
    (53,337
    )
    
    
    327
    
    
    
    (57,597
    )Net cash (used in) provided by
operating activities
    
    
    (51,672
    )
    
    
    72,638
    
    
    
    103,286
    
    
    
    
    
    
    
    124,252Cash flows from investing activities:Proceeds from the sale of properties and
equipment
    
    
    
    
    
    
    4,463
    
    
    
    1,291
    
    
    
    
    
    
    
    5,754Capital expenditures
    
    
    (1,419
    )
    
    
    (40,456
    )
    
    
    (42,155
    )
    
    
    
    
    
    
    (84,030
    )Business acquisitions, net of cash acquired
    
    
    (1,297
    )
    
    
    (38,353
    )
    
    
    (1,607
    )
    
    
    
    
    
    
    (41,257
    )Cash used in investing activities of
continuing operations
    
    
    (2,716
    )
    
    
    (74,346
    )
    
    
    (42,471
    )
    
    
    
    
    
    
    (119,533
    )Cash used in investing activities of
discontinued operations
    
    
    
    
    
    
    (2,656
    )
    
    
    (38,301
    )
    
    
    
    
    
    
    (40,957
    )Net cash used in investing activities
    
    
    (2,716
    )
    
    
    (77,002
    )
    
    
    (80,772
    )
    
    
    
    
    
    
    (160,490
    )Cash flows from financing activities:Borrowings on lines of credit
    
    
    
    
    
    
    
    
    
    
    71,846
    
    
    
    
    
    
    
    71,846Payments on lines of credit
    
    
    
    
    
    
    
    
    
    
    (17,247
    )
    
    
    
    
    
    
    (17,247
    )Borrowings on long-term debt
    
    
    
    
    
    
    123,250
    
    
    
    86,061
    
    
    
    
    
    
    
    209,311Payments on long-term debt
    
    
    
    
    
    
    (74,375
    )
    
    
    (27,236
    )
    
    
    
    
    
    
    (101,611
    )Proceeds from stock option exercises
    
    
    14,253
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,253Intercompany
    
    
    40,139
    
    
    
    (25,646
    )
    
    
    (14,493
    )
    
    
    
    
    
    
    Cash provided by financing activities
of continuing operations
    
    
    54,392
    
    
    
    23,229
    
    
    
    98,931
    
    
    
    
    
    
    
    176,552Cash used in financing activities of
discontinued operations
    
    
    
    
    
    
    (9,003
    )
    
    
    (87,732
    )
    
    
    
    
    
    
    (96,735
    )Net cash provided by financing
activities
    
    
    54,392
    
    
    
    14,226
    
    
    
    11,199
    
    
    
    
    
    
    
    79,817Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    (6,065
    )
    
    
    
    
    
    
    (6,065
    )Net increase in cash and cash equivalents
    
    
    4
    
    
    
    9,862
    
    
    
    27,648
    
    
    
    
    
    
    
    37,514Cash and cash equivalents, beginning of period
    
    
    8
    
    
    
    3,392
    
    
    
    33,434
    
    
    
    
    
    
    
    36,834Cash and cash equivalents, end of period
    
    $
    12
    
    
    $
    13,254
    
    
    $
    61,082
    
    
    
    
    
    
    $
    74,348
 74




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
 Year Ended October 31, 2006
 Non-Quiksilver, Inc.
    
    
    Guarantor
    
    
    Guarantor
    
    
    EliminationsIn thousands
    
    (adjusted)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    (adjusted)
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    93,016
    
    
    $
    45,434
    
    
    $
    111,510
    
    
    $
    (156,944
    )
    
    $
    93,016Adjustments to reconcile net income (loss) to
net cash (used in) provided by operating
activities:Loss (income) from discontinued operations
    
    
    2,451
    
    
    
    (306
    )
    
    
    (4,889
    )
    
    
    (896
    )
    
    
    (3,640
    )Depreciation and amortization
    
    
    251
    
    
    
    17,386
    
    
    
    20,214
    
    
    
    
    
    
    
    37,851Stock-based compensation and tax
benefit on option exercises
    
    
    20,751
    
    
    
    (256
    )
    
    
    (533
    )
    
    
    
    
    
    
    19,962Provision for doubtful accounts
    
    
    
    
    
    
    (1,793
    )
    
    
    5,868
    
    
    
    
    
    
    
    4,075Equity in earnings
    
    
    (156,404
    )
    
    
    
    
    
    
    
    
    
    
    156,404
    
    
    
    Other adjustments to reconcile net income
(loss)
    
    
    (68
    )
    
    
    1,245
    
    
    
    (4,626
    )
    
    
    
    
    
    
    (3,449
    )Changes in operating assets and liabilities:Trade accounts receivable
    
    
    
    
    
    
    (14,300
    )
    
    
    (25,150
    )
    
    
    
    
    
    
    (39,450
    )Inventories
    
    
    
    
    
    
    (36,322
    )
    
    
    (23,329
    )
    
    
    540
    
    
    
    (59,111
    )Other operating assets and liabilities
    
    
    (1,138
    )
    
    
    6,559
    
    
    
    (39,761
    )
    
    
    
    
    
    
    (34,340
    )Cash (used in) provided by operating
activities of continuing operations
    
    
    (41,141
    )
    
    
    17,647
    
    
    
    39,304
    
    
    
    (896
    )
    
    
    14,914Cash (used in) provided by operating
activities of discontinued operations
    
    
    (2,451
    )
    
    
    3,590
    
    
    
    (25,247
    )
    
    
    896
    
    
    
    (23,212
    )Net cash (used in) provided by
operating activities
    
    
    (43,592
    )
    
    
    21,237
    
    
    
    14,057
    
    
    
    
    
    
    
    (8,298
    )Cash flows from investing activities:Proceeds from the sale of properties and
equipment
    
    
    
    
    
    
    13
    
    
    
    2,271
    
    
    
    
    
    
    
    2,284Capital expenditures
    
    
    (4,057
    )
    
    
    (34,412
    )
    
    
    (34,521
    )
    
    
    
    
    
    
    (72,990
    )Business acquisitions, net of cash acquired
    
    
    (3,074
    )
    
    
    (8,812
    )
    
    
    (21,680
    )
    
    
    
    
    
    
    (33,566
    )Cash used in investing activities of
continuing operations
    
    
    (7,131
    )
    
    
    (43,211
    )
    
    
    (53,930
    )
    
    
    
    
    
    
    (104,272
    )Cash used in investing activities of
discontinued operations
    
    
    
    
    
    
    (2,649
    )
    
    
    (26,426
    )
    
    
    
    
    
    
    (29,075
    )Net cash used in investing activities
    
    
    (7,131
    )
    
    
    (45,860
    )
    
    
    (80,356
    )
    
    
    
    
    
    
    (133,347
    )Cash flows from financing activities:Borrowings on lines of credit
    
    
    
    
    
    
    
    
    
    
    94,437
    
    
    
    
    
    
    
    94,437Payments on lines of credit
    
    
    
    
    
    
    
    
    
    
    (61,103
    )
    
    
    
    
    
    
    (61,103
    )Borrowings on long-term debt
    
    
    
    
    
    
    62,781
    
    
    
    59,033
    
    
    
    
    
    
    
    121,814Payments on long-term debt
    
    
    (840
    )
    
    
    (24,012
    )
    
    
    (10,289
    )
    
    
    
    
    
    
    (35,141
    )Proceeds from stock option exercises
    
    
    11,212
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,212Intercompany
    
    
    39,096
    
    
    
    (29,939
    )
    
    
    (9,157
    )
    
    
    
    
    
    
    Cash provided by financing activities
of continuing operations
    
    
    49,468
    
    
    
    8,830
    
    
    
    72,921
    
    
    
    
    
    
    
    131,219Cash used in financing activities of
discontinued operations
    
    
    
    
    
    
    (2,095
    )
    
    
    (23,134
    )
    
    
    
    
    
    
    (25,229
    )Net cash provided by financing
activities
    
    
    49,468
    
    
    
    6,735
    
    
    
    49,787
    
    
    
    
    
    
    
    105,990Effect of exchange rate changes on cash
    
    
    86
    
    
    
    (522
    )
    
    
    (2,673
    )
    
    
    
    
    
    
    (3,109
    )Net decrease in cash and cash equivalents
    
    
    (1,169
    )
    
    
    (18,410
    )
    
    
    (19,185
    )
    
    
    
    
    
    
    (38,764
    )Cash and cash equivalents, beginning of period
    
    
    1,177
    
    
    
    21,802
    
    
    
    52,619
    
    
    
    
    
    
    
    75,598Cash and cash equivalents, end of period
    
    $
    8
    
    
    $
    3,392
    
    
    $
    33,434
    
    
    
    
    
    
    $
    36,834
 75




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##### Table of Contents



Note 18  Discontinued Operations
    Rossignol Dynastar Look Lange
 76




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##### Table of Contents



Year Ended October 31,In thousands
    
    2008
    
    
    2007
    
    
    2006Revenues, net
    
    $
    374,149
    
    
    $
    541,136
    
    
    $
    640,138(Loss) income before income taxes
    
    
    (365,917
    )
    
    
    (246,163
    )
    
    
    8,785(Benefit) provision for income taxes
    
    
    (74,108
    )
    
    
    (8,317
    )
    
    
    5,145(Loss) income from discontinued operations
    
    $
    (291,809
    )
    
    $
    (237,846
    )
    
    $
    3,640
   Year Ended October 31,In thousands
    
    2008Current assets:Receivables, net
    
    $
    242,694Inventories
    
    
    144,324Other current assets
    
    
    24,424$
    411,442Current liabilities:Lines of credit and current portion of long-term debt
    
    $
    10,670Accounts payable
    
    
    71,092Other current liabilities
    
    
    53,309$
    135,071Non-current liabilities:Long-term debt
    
    $
    371Other non-current liabilities
    
    
    5,655$
    6,026
 77




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##### Table of Contents



SIGNATURES
   QUIKSILVER, INC.  (Registrant)
 By:
    
    /s/ Robert B. McKnight, Jr.
    
    
    
    By:
    
    /s/ Brad L. Holman

Robert B. McKnight, Jr.
Chairman of the Board,
Chief Executive Officer and President
(Principal Executive Officer)
    
    
    
    
    
    Brad L. Holman
Vice President of Accounting and
Financial Reporting
(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)
    
    December 30, 2008/s/ Joseph Scirocco

Joseph Scirocco
    
    Chief Financial Officer
(Principal Financial Officer)
    
    December 30, 2008/s/ Brad L. Holman

Brad L. Holman
    
    Vice President of Accounting
and Financial Reporting
(Principal Accounting Officer)
    
    December 30, 2008/s/ Charles S. Exon

Charles S. Exon
    
    Chief Administrative Officer,
General Counsel and Director
    
    December 30, 2008/s/ Douglas K. Ammerman

Douglas K. Ammerman
    
    Director
    
    December 30, 2008
 78




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##### Table of Contents



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

William M. Barnum, Jr.
    
    Director
    
    December 30, 2008/s/ Charles E. Crowe

Charles E. Crowe
    
    Director
    
    December 30, 2008/s/ Timothy Harmon

Timothy Harmon
    
    Director
    
    December 30, 2008
 79




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##### Table of Contents



EXHIBIT INDEX
 DESCRIPTION
 ExhibitNumber2.1
    
    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
    
    Offer Letter dated August 25, 2008, by and among Quiksilver, Inc., Pilot
S.A.S., Meribel S.A.S., Quiksilver Americas, Inc. and Chartreuse et Mont
Blanc LLC (incorporated by reference to Exhibit 10.1 of the Companys Current
Report on Form 8-K filed on August 27, 2008).2.4
    
    Amended and Restated Offer Letter dated October 31, 2008, by and among
Quiksilver, Inc., Pilot S.A.S., Meribel S.A.S., Quiksilver Americas, Inc. and
Chartreuse et Mont Blanc LLC (incorporated by reference to Exhibit 10.1 of
the Companys Current Report on Form 8-K filed on October 31, 2008).2.5
    
    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).3.1
    
    Restated Certificate of Incorporation of Quiksilver, Inc., as amended
(incorporated by reference to Exhibit 3.1 of the Companys Annual Report on
Form 10-K for the year ended October 31, 2004).3.2
    
    Certificate of Amendment of Restated Certificate of Incorporation of
Quiksilver, Inc. (incorporated by reference to Exhibit 10.1 of the Companys
Quarterly Report on Form 10-Q for the quarter ended April 30, 2005).3.3
    
    Amended and Restated Bylaws of Quiksilver, Inc. (incorporated by reference to
Exhibit 3.1 of the Companys Current Report on Form 8-K filed on December 7,
2007).4.1
    
    Indenture for the 6 7/8% Senior Notes due 2015 dated July 22, 2005, among
Quiksilver, Inc., the subsidiary guarantors set forth therein and Wilmington
Trust Company, as trustee, including the form of Global Note attached thereto
(incorporated by reference to Exhibit 4.1 of the Companys Current Report on
Form 8-K filed July 25, 2005).10.1
    
    Registration Rights Agreement for the 6 7/8% Senior Notes due 2015 dated as
of July 22, 2005, among Quiksilver, Inc., certain subsidiaries of Quiksilver,
Inc. and the purchasers listed therein (incorporated by reference to Exhibit
10.1 of the Companys Current Report on Form 8-K filed July 25, 2005)10.2
    
    Purchase Agreement for the 6 7/8% Senior Notes due 2015 dated July 14, 2005,
among Quiksilver, Inc., certain subsidiaries of Quiksilver, Inc. and the
purchasers listed therein (incorporated by reference to Exhibit 10.2 of the
Companys Quarterly Report on Form 10-Q for the quarter ended July 31, 2005).
 80




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##### Table of Contents



ExhibitNumber10.3
    
    English translation of Subscription Agreement for the 3.231% EUR 50,000,000
notes due July 2010 dated July 11, 2005 among Skis Rossignol S.A. and certain
subsidiaries and Societe Generale Bank & Trust (incorporated by reference to
Exhibit 10.3 of the Companys Quarterly Report on Form 10-Q for the quarter
ended July 31, 2005).10.4
    
    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).10.5
    
    Amended and Restated Credit Agreement, dated as of June 3, 2005, by and among
Quiksilver, Inc., Quiksilver Americas, Inc., the Lenders named therein,
JPMorgan Chase Bank, N.A., as Administrative Agent, and J.P. Morgan
Securities, Inc. as Sole Bookrunner and Sole Lead Arranger (the Amended and
Restated Credit Agreement) (incorporated by reference to Exhibit 10.5 of the
Companys Quarterly Report on Form 10-Q for the quarter ended April 30,
2005).10.6
    
    First Amendment to the Amended and Restated Credit Agreement dated October
28, 2005 (incorporated by reference to Exhibit 10.5 of the Companys Annual
Report on Form 10-K for the year ended October 31, 2005).10.7
    
    Second Amendment to the Amended and Restated Credit Agreement dated January
17, 2006 (incorporated by reference to Exhibit 10.6 of the Companys Annual
Report on Form 10-K for the year ended October 31, 2005).10.8
    
    Third Amendment to the Amended and Restated Credit Agreement dated March 27,
2006 (incorporated by reference to Exhibit 10.7 of the Companys Annual
Report on Form 10-K for the year ended October 31, 2006).10.9
    
    Fourth Amendment to Amended and Restated Credit Agreement dated December 22,
2006 (incorporated by reference to Exhibit 10.31 of the Companys Annual
Report on Form 10-K for the year ended October 31, 2006).10.10
    
    Fifth Amendment to Amended and Restated Credit Agreement dated December 5,
2007 (incorporated by reference to Exhibit 10.9 of the Companys Annual
Report on Form 10-K for the year ended October 31, 2007).10.11
    
    Sixth Amendment to Amended and Restated Credit Agreement dated February 14,
2008 (incorporated by reference to Exhibit 10.3 of the Companys Form 10-Q
for the quarter ended January 31, 2008).10.12
    
    Seventh Amendment to Amended and Restated Credit Agreement dated July 31,
2008 (incorporated by reference to Exhibit 10.1 of the Companys Quarterly
Report on Form 10-Q for the quarter ended July 31, 2008).10.13
    
    Eighth Amendment to Amended and Restated Credit Agreement dated November 12,
2008.10.14
    
    Ninth Amendment to Amended and Restated Credit Agreement dated November 12,
2008.10.15
    
    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)10.16
    
    Quiksilver, Inc. Annual Incentive Plan, as restated (incorporated by
reference to Exhibit 10.2 of the Companys Quarterly Report on Form 10-Q for
the quarter ended April 30, 2005).(1)10.17
    
    Quiksilver, Inc. 2000 Stock Incentive Plan, as amended and restated, together
with form Stock Option and Director Restricted Stock Agreements (incorporated
by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q
for the quarter ended April 30, 2007).(1)
 81




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##### Table of Contents



ExhibitNumber10.18
    
    Standard Form of Employee Restricted Stock Agreement under the Quiksilver,
Inc. 2000 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of
the Companys Current Report on Form 8-K filed on October 22, 2007). (1)10.19
    
    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. 1996 Stock Option Plan, together with form Stock Option
Agreements (incorporated by reference to Exhibit 10.11 of the Companys
Annual Report on Form 10-K for the year ended October 31, 2006). (1)10.21
    
    Quiksilver, Inc. 2000 Employee Stock Purchase Plan (incorporated by reference
to Exhibit 10.1 of the Companys Form 8-K filed on March 16, 2007). (1)10.22
    
    Quiksilver, Inc. Written Description of Nonemployee Director Compensation. (1)10.23
    
    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)10.24
    
    Award grant under Quiksilver, Inc. Long-Term Incentive Plan dated December
20, 2006 (incorporated by reference to Exhibit 10.25 of the Companys Annual
Report on Form 10-K for the year ended October 31, 2006). (1)10.25
    
    Award grant under Quiksilver, Inc. Long-Term Incentive Plan dated January 29,
2008 (incorporated by reference to Exhibit 10.4 of the Companys Quarterly
Report on Form 10-Q for the quarter ended January 31, 2008). (1)10.26
    
    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)10.27
    
    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)10.28
    
    Separation and Transition Agreement between David H. Morgan and Quiksilver,
Inc. dated August 24, 2008 (incorporated by reference to Exhibit 10.3 of the
Companys Current Report on Form 8-K filed on August 27, 2008). (1)10.29
    
    Separation and Transition Agreement between Bernard Mariette and Quiksilver,
Inc. dated February 11, 2008 (incorporated by reference to Exhibit 10.1 of
the Companys Current Report on Form 8-K filed on February 13, 2008). (1)10.30
    
    Separation Agreement between Steven L. Brink and Quiksilver, Inc. dated April
13, 2007 (incorporated by reference to Exhibit 10.2 of the Companys Form 8-K
filed on April 17, 2007). (1)10.31
    
    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)10.32
    
    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)10.33
    
    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)10.34
    
    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)
 82




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##### Table of Contents



ExhibitNumber10.35
    
    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)10.36
    
    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)10.37
    
    Employment Agreement, as amended, between Martin Samuels and Quiksilver, Inc.
dated May 25, 2005. (1)10.38
    
    Form of Employment Agreement between Pierre Agnes and Quiksilver, Inc. (1)10.39
    
    Stock Purchase Agreement dated June 20, 2007 by and between Quiksilver, Inc.,
Rossignol Ski Company, Inc., Laurent Boix-Vives, Jeannine Boix-Vives,
Christine Simon, Sylvie Bernard and Services Expansion International
(incorporated by reference to Exhibit 10.2 to the Companys Quarterly Report
on Form 10-Q for the quarter ended July 31, 2007).10.40
    
    Amendments to executive officer base salaries effective as of November 1,
2007 (incorporated by reference to Exhibit 10.35 of the Companys Annual
Report on Form 10-K for the year ended October 31, 2007). (1)10.41
    
    Amendments to executive officer base salaries effective as of February 1,
2008 (incorporated by reference to Exhibit 10.6 of the Companys Quarterly
Report on Form 10-Q for the quarter ended January 31, 2008). (1)10.42
    
    English Translation of the Credit Facility Agreement dated March 14, 2008 by
and among Pilot SAS, the Banks named therein, BNP Paribas as the Security
Agent and Societe Generale as the Credit Agent (incorporated by reference to
Exhibit 10.3 of the Companys Quarterly Report on Form 10-Q for the quarter
ended April 30, 2008).10.43
    
    English Translation of Amendment No.1 to the Credit Facility Agreement dated
March 14, 2008 by and among Pilot SAS, the Banks named therein, BNP Paribas
as the Security Agent and Societe Generale as the Credit Agent (incorporated
by reference to Exhibit 10.6 of the Companys Quarterly Report on Form 10-Q
for the quarter ended July 31, 2008).10.44
    
    English Translation of Amendment No. 2 to Line of Credit Agreement dated
March 14, 2008 between Pilot S.A.S. and Societe Generale, BNP Paribas and Le
Credit Lyonnais (incorporated by reference to Exhibit 10.2 of the Companys
Current Report on Form 8-K filed on October 31, 2008).10.45
    
    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).10.46
    
    Bank Account Pledge Agreement dated September 19, 2008, by and among Na Pali,
S.A.S., JPMorgan Chase Bank, N.A., London branch, J.P. Morgan Europe Limited
and Societe Generale, as account bank (incorporated by reference to Exhibit
10.1 of the Companys Current Report on Form 8-K filed on September 24,
2008).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 2003
 83




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ExhibitNumber32.2
    
    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of The Sarbanes-Oxley Act of 2003
 
 (1)
    
    Management contract or compensatory plan. 84