Condensed Consolidating Financial Information

9 Months Ended

Jul. 31, 2011

Condensed Consolidating Financial Information [Abstract]

Condensed Consolidating Financial Information

13.

Condensed Consolidating Financial Information

The Company has $400 million in publicly registered senior notes. Obligations under the Company’s senior notes are fully and unconditionally guaranteed by certain of its domestic subsidiaries. The Company is required to present condensed consolidating financial information for Quiksilver, Inc. and its domestic subsidiaries within the notes to the condensed consolidated financial statements in accordance with the criteria established for parent companies in the SEC’s Regulation S-X, Rule 3-10(f). The following condensed consolidating financial information presents the results of operations, financial position and cash flows of Quiksilver Inc., its guarantor subsidiaries, its non-guarantor subsidiaries and the eliminations necessary to arrive at the information for the Company on a consolidated basis as of July 31, 2011 and October 31, 2010 and for the three and nine month periods ended July 31, 2011 and 2010. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. The Company has applied the estimated consolidated annual effective income tax rate to both the guarantor and non-guarantor subsidiaries, adjusting for any discrete items, for interim reporting purposes. In the Company’s consolidated financial statements for the fiscal year ending October 31, 2011, management will apply the actual income tax rates to both the guarantor and non-guarantor subsidiaries. These interim tax rates may differ from the actual annual effective income tax rates for both the guarantor and non-guarantor subsidiaries.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Three Months Ended July 31, 2011

							Non-
	Quiksilver,			Guarantor			Guarantor
In thousands	Inc.			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Revenues, net	$	116		$	216,614		$	302,377		$	(15,790	)	$	503,317
Cost of goods sold		—			122,044			133,825			(7,670	)		248,199
Gross profit		116			94,570			168,552			(8,120	)		255,118
Selling, general and administrative expense		11,366			75,528			140,199			(5,921	)		221,172
Operating (loss) income		(11,250	)		19,042			28,353			(2,199	)		33,946
Interest expense		7,225			1,197			7,241			—			15,663
Foreign currency gain		(23	)		(646	)		(787	)		—			(1,456	)
Equity in earnings		(28,889	)		—			—			28,889			—
Income before provision for income taxes		10,437			18,491			21,899			(31,088	)		19,739
Provision for income taxes		—			1,223			7,773			—			8,996
Net income		10,437			17,268			14,126			(31,088	)		10,743
Less: net income attributable to non-controlling interest		—			(306	)		—			—			(306	)
Net income attributable to Quiksilver, Inc.	$	10,437		$	16,962		$	14,126		$	(31,088	)	$	10,437

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Three Months Ended July 31, 2010

							Non-
	Quiksilver,			Guarantor			Guarantor
In thousands	Inc.			Subsidiaries			Subsidiaries		Eliminations			Consolidated
Revenues, net	$	188		$	200,005		$	254,245	$	(12,963	)	$	441,475
Cost of goods sold		—			108,827			107,659		(5,744	)		210,742
Gross profit		188			91,178			146,586		(7,219	)		230,733
Selling, general and administrative expense		6,590			71,121			121,552		(6,108	)		193,155
Asset impairment		—			1,655			1,570		—			3,225
Operating (loss) income		(6,402	)		18,402			23,464		(1,111	)		34,353
Interest expense		7,228			7,303			6,099		—			20,630
Foreign currency (gain) loss		(44	)		(15	)		272		—			213
Equity in earnings		(21,578	)		—			—		21,578			—
Income before (benefit) provision for income taxes		7,992			11,114			17,093		(22,689	)		13,510
(Benefit) provision for income taxes		(314	)		660			4,750		—			5,096
Income from continuing operations		8,306			10,454			12,343		(22,689	)		8,414
Income from discontinued operations		—			—			143		—			143
Net income		8,306			10,454			12,486		(22,689	)		8,557
Less: net income attributable to non-controlling interest		—			(251	)		—		—			(251	)
Net income attributable to Quiksilver, Inc.	$	8,306		$	10,203		$	12,486	$	(22,689	)	$	8,306

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Nine Months Ended July 31, 2011

							Non-
	Quiksilver,			Guarantor			Guarantor
In thousands	Inc.			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Revenues, net	$	348		$	532,662		$	910,923		$	(36,073	)	$	1,407,860
Cost of goods sold		—			289,527			392,799			(15,223	)		667,103
Gross profit		348			243,135			518,124			(20,850	)		740,757
Selling, general and administrative expense		29,960			220,425			416,353			(18,382	)		648,356
Asset impairments		—			465			74,145			—			74,610
Operating (loss) income		(29,612	)		22,245			27,626			(2,468	)		17,791
Interest expense		21,646			2,970			35,111			—			59,727
Foreign currency loss (gain)		34			(245	)		(5,675	)		—			(5,886	)
Equity in earnings		37,864			—			—			(37,864	)		—
(Loss) income before (benefit) provision for income taxes		(89,156	)		19,520			(1,810	)		35,396			(36,050	)
(Benefit) provision for income taxes		—			(616	)		50,553			—			49,937
Net (loss) income		(89,156	)		20,136			(52,363	)		35,396			(85,987	)
Less: net income attributable to non-controlling interest		—			(3,169	)		—			—			(3,169	)
Net (loss) income attributable to Quiksilver, Inc.	$	(89,156	)	$	16,967		$	(52,363	)	$	35,396		$	(89,156	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Nine Months Ended July 31, 2010

							Non-
	Quiksilver,			Guarantor			Guarantor
In thousands	Inc.			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Revenues, net	$	282		$	511,938		$	861,937		$	(31,656	)	$	1,342,501
Cost of goods sold		—			283,744			368,300			(11,712	)		640,332
Gross profit		282			228,194			493,637			(19,944	)		702,169
Selling, general and administrative expense		28,890			206,890			392,766			(18,815	)		609,731
Asset impairment		—			1,655			1,570			—			3,225
Operating (loss) income		(28,608	)		19,649			99,301			(1,129	)		89,213
Interest expense		21,555			21,466			20,521			—			63,542
Foreign currency gain		(373	)		(167	)		(5,840	)		—			(6,380	)
Equity in earnings		(58,282	)		—			—			58,282			—
Income (loss) before (benefit) provision for income taxes		8,492			(1,650	)		84,620			(59,411	)		32,051
(Benefit) provision for income taxes		(3,884	)		(933	)		23,006			—			18,189
Income (loss) from continuing operations		12,376			(717	)		61,614			(59,411	)		13,862
Income from discontinued operations		—			—			821			—			821
Net income (loss)		12,376			(717	)		62,435			(59,411	)		14,683
Less: net income attributable to non- controlling interest		—			(2,307	)		—			—			(2,307	)
Net income (loss) attributable to Quiksilver, Inc.	$	12,376		$	(3,024	)	$	62,435		$	(59,411	)	$	12,376

CONDENSED CONSOLIDATING BALANCE SHEET
At July 31, 2011

						Non-
	Quiksilver,		Guarantor			Guarantor
In thousands	Inc.		Subsidiaries			Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	277	$	400		$	125,533		$	—		$	126,210
Trade accounts receivable, net		—		149,252			236,675			—			385,927
Other receivables		239		4,644			11,774			—			16,657
Income taxes receivable		—		11,484			(6,810	)		—			4,674
Inventories		—		113,940			254,190			(3,297	)		364,833
Deferred income taxes		—		(3,372	)		21,506			—			18,134
Prepaid expenses and other current assets		2,358		9,984			19,445			—			31,787
Total current assets		2,874		286,332			662,313			(3,297	)		948,222
Fixed assets, net		15,405		60,398			161,335			—			237,138
Intangible assets, net		3,012		48,937			86,985			—			138,934
Goodwill		—		112,216			161,333			—			273,549
Other assets		4,886		3,849			48,133			—			56,868
Deferred income taxes long-term		—		(11,921	)		84,776			—			72,855
Investment in subsidiaries		996,811		—			—			(996,811	)		—
Total assets	$	1,022,988	$	499,811		$	1,204,875		$	(1,000,108	)	$	1,727,566
LIABILITIES AND EQUITY
Current liabilities:
Lines of credit	$	—	$	—		$	8,928		$	—		$	8,928
Accounts payable		2,615		93,730			142,521			—			238,866
Accrued liabilities		11,826		23,039			99,500			—			134,365
Current portion of long-term debt		—		3,000			1,820			—			4,820
Intercompany balances		69,668		(59,793	)		(9,875	)		—			—
Total current liabilities		84,109		59,976			242,894			—			386,979
Long-term debt, net of current portion		400,000		37,160			296,255			—			733,415
Other long-term liabilities		—		39,907			16,149			—			56,056
Total liabilities		484,109		137,043			555,298			—			1,176,450
Stockholders’/invested equity		538,879		350,846			649,262			(1,000,108	)		538,879
Non-controlling interest		—		11,922			315			—			12,237
Total liabilities and equity	$	1,022,988	$	499,811		$	1,204,875		$	(1,000,108	)	$	1,727,566

CONDENSED CONSOLIDATING BALANCE SHEET
At October 31, 2010

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

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Nine Months Ended July 31, 2011

							Non-
	Quiksilver,			Guarantor			Guarantor
In thousands	Inc.			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net (loss) income	$	(89,156	)	$	20,136		$	(52,363	)	$	35,396		$	(85,987	)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization		1,190			14,945			24,019			—			40,154
Stock-based compensation		9,916			—			—			—			9,916
Provision for doubtful accounts		—			2,699			5,913			—			8,612
Asset impairments		—			465			74,145			—			74,610
Equity in earnings		37,864			(158	)		(472	)		(37,864	)		(630	)
Non-cash interest expense		1,034			1,291			15,742			—			18,067
Deferred income taxes		—			1,586			44,329			—			45,915
Other adjustments to reconcile net (loss) income		33			484			(3,081	)		—			(2,564	)
Changes in operating assets and liabilities:
Trade accounts receivable		—			(21,912	)		2,827			—			(19,085	)
Inventories		—			(21,504	)		(64,303	)		2,468			(83,339	)
Other operating assets and liabilities		5,277			3,200			33,027			—			41,504
Net cash (used in) provided by operating activities		(33,842	)		1,232			79,783			—			47,173
Cash flows from investing activities:
Capital expenditures		(9,195	)		(22,177	)		(15,316	)		—			(46,688	)
Business acquisitions, net of cash acquired		—			(528	)		(5,050	)		—			(5,578	)
Net cash used in investing activities		(9,195	)		(22,705	)		(20,366	)		—			(52,266	)
Cash flows from financing activities:
Borrowings on lines of credit		—			—			14,807			—			14,807
Payments on lines of credit		—			—			(29,172	)		—			(29,172	)
Borrowings on long-term debt		—			21,500			270,967			—			292,467
Payments on long-term debt		—			(1,675	)		(259,143	)		—			(260,818	)
Payments of debt issuance costs		—			—			(6,308	)		—			(6,308	)
Stock option exercises and employee stock purchases		4,116			—			—			—			4,116
Intercompany		39,034			(37,124	)		(1,910	)		—			—
Net cash provided by (used in) financing activities		43,150			(17,299	)		(10,759	)		—			15,092
Effect of exchange rate changes on cash		—			—			(4,382	)		—			(4,382	)
Net increase (decrease) in cash and cash equivalents		113			(38,772	)		44,276			—			5,617
Cash and cash equivalents, beginning of period		164			39,172			81,257			—			120,593
Cash and cash equivalents, end of period	$	277		$	400		$	125,533		$	—		$	126,210

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Nine Months Ended July 31, 2010

							Non-
	Quiksilver,			Guarantor			Guarantor
In thousands	Inc.			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	12,376		$	(717	)	$	62,435		$	(59,411	)	$	14,683
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Income from discontinued operations		—			—			(821	)		—			(821	)
Depreciation and amortization		1,155			16,419			22,641			—			40,215
Stock-based compensation		11,414			—			—			—			11,414
Provision for doubtful accounts		—			5,137			6,329			—			11,466
Equity in earnings		(58,282	)		—			(656	)		58,282			(656	)
Asset impairment		—			1,655			1,570			—			3,225
Non-cash interest expense		963			11,641			7,009			—			19,613
Deferred income taxes		—			(2,457	)		24,273			—			21,816
Other adjustments to reconcile net income (loss)		(339	)		(1,221	)		(2,061	)		—			(3,621	)
Changes in operating assets and liabilities:
Trade accounts receivable		—			12,379			46,513			—			58,892
Inventories		—			6,595			(18,022	)		1,129			(10,298	)
Other operating assets and liabilities		8,616			(515	)		15,756			—			23,857
Cash (used in) provided by operating activities of continuing operations		(24,097	)		48,916			164,966			—			189,785
Cash provided by operating activities of discontinued operations		—			—			3,707			—			3,707
Net cash (used in) provided by operating activities		(24,097	)		48,916			168,673			—			193,492
Cash flows from investing activities:
Capital expenditures		(3,319	)		(2,211	)		(24,442	)		—			(29,972	)
Changes in restricted cash		—			—			52,706			—			52,706
Cash (used in) provided by investing activities of continuing operations		(3,319	)		(2,211	)		28,264			—			22,734
Cash used in investing activities of discontinued operations		—			—			—			—			—
Net cash (used in) provided by investing activities		(3,319	)		(2,211	)		28,264			—			22,734
Cash flows from financing activities:
Borrowings on lines of credit		—			—			8,143			—			8,143
Payments on lines of credit		—			—			(16,707	)		—			(16,707	)
Borrowings on long-term debt		—			22,735			14,016			—			36,751
Payments on long-term debt		—			(23,731	)		(159,451	)		—			(183,182	)
Payments of debt issuance costs		—			—			(1,823	)		—			(1,823	)
Stock option exercises, employee stock purchases and tax benefit on option exercises		3,429			—			—			—			3,429
Purchase of non-controlling interest		—			—			(3,549	)		—			(3,549	)
Intercompany		23,691			14,823			(38,514	)		—			—
Cash provided by (used in) financing activities of continuing operations		27,120			13,827			(197,885	)		—			(156,938	)
Cash used in financing activities of discontinued operations		—			—			—			—			—
Net cash provided by (used in) financing activities		27,120			13,827			(197,885	)		—			(156,938	)
Effect of exchange rate changes on cash		—			—			(3,151	)		—			(3,151	)
Net (decrease) increase in cash and cash equivalents		(296	)		60,532			(4,099	)		—			56,137
Cash and cash equivalents, beginning of period		321			1,135			98,060			—			99,516
Cash and cash equivalents, end of period	$	25		$	61,667		$	93,961		$	—		$	155,653