15.

Condensed Consolidating Financial Information

The Company has $400 million in publicly registered U.S. senior notes. Obligations under the Company’s U.S. senior notes are fully and unconditionally guaranteed by certain of its existing domestic subsidiaries.

The Company is required to present condensed consolidating financial information for Quiksilver, Inc. and its domestic subsidiaries within the notes to the 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 for the second quarter and first half ended April 30, 2013 and 2012, the financial position as of April 30, 2013 and October 31, 2012, and cash flows for the first half ended April 30, 2013 and 2012, of Quiksilver Inc., its 100% owned guarantor subsidiaries, its non-guarantor subsidiaries and the eliminations necessary to arrive at the information for the Company on a consolidated basis. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. Certain immaterial balances have been reclassified in the April 30, 2012 condensed consolidating financial information to conform to the current year presentation. 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 fiscal 2013, 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

Second Quarter Ended April 30, 2013


In thousands	Quiksilver, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues, net	$	116		$	190,265		$	290,111		$	(21,744	)	$	458,748
Cost of goods sold		—			117,488			144,071			(13,947	)		247,612

Gross profit		116			72,777			146,040			(7,797	)		211,136
Selling, general and administrative expense		11,753			72,999			141,282			(7,830	)		218,204
Asset impairments		—			4,988			344			—			5,332

Operating (loss)/income		(11,637	)		(5,210	)		4,414			33			(12,400	)
Interest expense		7,269			1,386			6,634			—			15,289
Foreign currency (gain)/loss		(28	)		198			(2,788	)		—			(2,618	)
Equity in earnings and other income		13,517			(483	)		—			(13,034	)		—

(Loss)/income before provision for income taxes		(32,395	)		(6,311	)		568			13,067			(25,071	)
Provision for income taxes		—			1,654			5,493			—			7,147

Net loss		(32,395	)		(7,965	)		(4,925	)		13,067			(32,218	)
Less: net income attributable to non-controlling interest		—			—			(177	)		—			(177	)

Net loss attributable to Quiksilver, Inc.		(32,395	)		(7,965	)		(5,102	)		13,067			(32,395	)
Other comprehensive loss		(16,723	)		—			(16,723	)		16,723			(16,723	)

Comprehensive loss attributable to Quiksilver, Inc.	$	(49,118	)	$	(7,965	)	$	(21,825	)	$	29,790		$	(49,118	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Second Quarter Ended April 30, 2012


In thousands	Quiksilver, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues, net	$	120		$	185,686		$	328,589		$	(22,182	)	$	492,213
Cost of goods sold		—			109,044			155,662			(14,642	)		250,064

Gross profit		120			76,642			172,927			(7,540	)		242,149
Selling, general and administrative expense		12,869			74,934			144,422			(8,215	)		224,010
Asset impairments		—			415			—			—			415

Operating (loss)/income		(12,749	)		1,293			28,505			675			17,724
Interest expense		7,239			1,391			6,955			—			15,585
Foreign currency loss/(gain)		13			212			(834	)		—			(609	)
Equity in earnings and other income		(14,881	)		482			—			14,399			—

(Loss)/income before provision for income taxes		(5,120	)		(792	)		22,384			(13,724	)		2,748
Provision for income taxes		—			216			6,939			—			7,155

Net (loss)/income		(5,120	)		(1,008	)		15,445			(13,724	)		(4,407	)
Less: net income attributable to non-controlling interest		—			—			(713	)		—			(713	)

Net (loss)/income attributable to Quiksilver, Inc.		(5,120	)		(1,008	)		14,732			(13,724	)		(5,120	)
Other comprehensive loss		(1,271	)		—			(1,271	)		1,271			(1,271	)

Comprehensive (loss)/income attributable to Quiksilver, Inc.	$	(6,391	)	$	(1,008	)	$	13,461		$	(12,453	)	$	(6,391	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

First Half Ended April 30, 2013


In thousands	Quiksilver, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues, net	$	232		$	356,011		$	587,455		$	(53,932	)	$	889,766
Cost of goods sold		—			221,220			277,756			(40,053	)		458,923

Gross profit		232			134,791			309,699			(13,879	)		430,843
Selling, general and administrative expense		27,728			147,187			283,436			(14,888	)		443,463
Asset impairments		—			6,323			2,177			—			8,500

Operating (loss)/income		(27,496	)		(18,719	)		24,086			1,009			(21,120	)
Interest expense		14,538			2,854			13,404			—			30,796
Foreign currency loss		126			363			66			—			555
Equity in earnings and other income		21,364			(687	)		—			(20,677	)		—

(Loss)/income before provision for income taxes		(63,524	)		(21,249	)		10,616			21,686			(52,471	)
Provision for income taxes		—			467			9,904			—			10,371

Net (loss)/income		(63,524	)		(21,716	)		712			21,686			(62,842	)
Less: net income attributable to non-controlling interest		—			—			(682	)		—			(682	)

Net (loss)/income attributable to Quiksilver, Inc.		(63,524	)		(21,716	)		30			21,686			(63,524	)
Other comprehensive loss		(8,613	)		—			(8,613	)		8,613			(8,613	)

Comprehensive loss attributable to Quiksilver, Inc.	$	(72,137	)	$	(21,716	)	$	(8,583	)	$	30,299		$	(72,137	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

First Half Ended April 30, 2012


In thousands	Quiksilver, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues, net	$	236		$	357,063		$	633,616		$	(49,081	)	$	941,834
Cost of goods sold		—			214,250			291,845			(34,360	)		471,735

Gross profit		236			142,813			341,771			(14,721	)		470,099
Selling, general and administrative expense		29,785			152,431			287,467			(15,258	)		454,425
Asset impairments		—			415			—			—			415

Operating (loss)/income		(29,549	)		(10,033	)		54,304			537			15,259
Interest expense		14,479			2,685			13,466			—			30,630
Foreign currency (gain)/loss		(113	)		9			(2,355	)		—			(2,459	)
Equity in earnings and other income		(16,190	)		1,733			—			14,457			—

(Loss)/income before provision for income taxes		(27,725	)		(14,460	)		43,193			(13,920	)		(12,912	)
Provision for income taxes		—			432			11,973			—			12,405

Net (loss)/income		(27,725	)		(14,892	)		31,220			(13,920	)		(25,317	)
Less: net income attributable to non-controlling interest		—			—			(2,408	)		—			(2,408	)

Net (loss)/income attributable to Quiksilver, Inc.		(27,725	)		(14,892	)		28,812			(13,920	)		(27,725	)
Other comprehensive loss		(21,031	)		—			(21,031	)		21,031			(21,031	)

Comprehensive (loss)/income attributable to Quiksilver, Inc.	$	(48,756	)	$	(14,892	)	$	7,781		$	7,111		$	(48,756	)

CONDENSED CONSOLIDATING BALANCE SHEET

At April 30, 2013


In thousands	Quiksilver, Inc.		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	108	$	694	$	47,091	$	—		$	47,893
Trade accounts receivable, net		—		127,762		247,574		—			375,336
Other receivables		19		8,526		23,388		—			31,933
Income taxes receivable		—		—		4,917		(4,917	)		—
Inventories		—		131,136		234,160		1,008			366,304
Deferred income taxes, short-term		—		5,209		20,487		—			25,696
Prepaid expenses and other current assets		4,594		9,910		18,953		—			33,457
Intercompany balances		—		108,623		52,777		(161,400	)		—

Total current assets		4,721		391,860		649,347		(165,309	)		880,619
Fixed assets, net		19,454		57,774		155,727		—			232,955
Intangible assets, net		3,752		47,171		87,826		—			138,749
Goodwill		—		112,216		160,548		—			272,764
Other assets		1,902		1,982		39,875		—			43,759
Deferred income taxes, long-term		—		—		137,941		(23,550	)		114,391
Investment in subsidiaries		1,066,560		6,986		—		(1,073,546	)		—

Total assets	$	1,096,389	$	617,989	$	1,231,264	$	(1,262,405	)	$	1,683,237

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	2,756	$	85,025	$	97,789	$	—		$	185,570
Accrued liabilities		6,049		22,658		73,773		—			102,480
Long-term debt, current portion		—		6,094		38,740		—			44,834
Income taxes payable		—		5,368		—		(4,917	)		451
Intercompany balances		161,400		—		—		(161,400	)		—

Total current liabilities		170,205		119,145		210,302		(166,317	)		333,335
Long-term debt, net of current portion		400,000		76,000		293,108		—			769,108
Deferred income taxes, long-term		—		23,550		—		(23,550	)		—
Other long-term liabilities		—		23,987		10,971		—			34,958

Total liabilities		570,205		242,682		514,381		(189,867	)		1,137,401
Stockholders’/invested equity		526,184		375,307		697,231		(1,072,538	)		526,184
Non-controlling interest		—		—		19,652		—			19,652

Total liabilities and equity	$	1,096,389	$	617,989	$	1,231,264	$	(1,262,405	)	$	1,683,237

CONDENSED CONSOLIDATING BALANCE SHEET

At October 31, 2012


In thousands	Quiksilver, Inc.		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	324	$	135	$	41,364	$	—		$	41,823
Trade accounts receivable, net		—		181,945		251,798		—			433,743
Other receivables		20		6,158		26,640		—			32,818
Income taxes receivable		—		117		—		(117	)		—
Inventories		—		107,722		237,465		(441	)		344,746
Deferred income taxes		—		5,209		21,159		—			26,368
Prepaid expenses and other current assets		2,277		9,548		14,546		—			26,371
Intercompany balances		—		95,809		23,025		(118,834	)		—

Total current assets		2,621		406,643		615,997		(119,392	)		905,869
Fixed assets, net		18,802		64,496		155,015		—			238,313
Intangible assets, net		3,228		47,746		88,475		—			139,449
Goodwill		—		112,216		160,951		—			273,167
Other assets		2,753		2,677		42,359		—			47,789
Deferred income taxes long-term		—		—		137,203		(23,550	)		113,653
Investment in subsidiaries		1,087,924		5,028		—		(1,092,952	)		—

Total assets	$	1,115,328	$	638,806	$	1,200,000	$	(1,235,894	)	$	1,718,240

LIABILITIES AND EQUITY
Current liabilities:
Lines of credit	$	—	$	—	$	18,147	$	—		$	18,147
Accounts payable		6,995		95,355		101,222		—			203,572
Accrued liabilities		6,189		28,343		80,359		—			114,891
Current portion of long-term debt		—		8,594		10,053		—			18,647
Income taxes payable		—		—		1,476		(117	)		1,359
Intercompany balances		118,834		—		—		(118,834	)		—

Total current liabilities		132,018		132,292		211,257		(118,951	)		356,616
Long-term debt, net of current portion		400,000		60,700		260,475		—			721,175
Deferred income taxes long-term		—		23,550		—		(23,550	)		—
Other long-term liabilities		—		25,241		12,972		—			38,213

Total liabilities		532,018		241,783		484,704		(142,501	)		1,116,004
Stockholders’/invested equity		583,310		397,023		696,370		(1,093,393	)		583,310
Non-controlling interest		—		—		18,926		—			18,926

Total liabilities and equity	$	1,115,328	$	638,806	$	1,200,000	$	(1,235,894	)	$	1,718,240

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

First half Ended April 30, 2013


In thousands	Quiksilver, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net (loss)/income	$	(63,524	)	$	(21,716	)	$	712		$	21,686		$	(62,842	)
Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities:
Depreciation and amortization		1,124			9,014			14,889			—			25,027
Stock-based compensation		11,223			—			—			—			11,223
Provision for doubtful accounts		—			(1,056	)		4,584			—			3,528
Asset impairments		—			6,323			2,177			—			8,500
Equity in earnings		21,364			(687	)		1,058			(20,677	)		1,058
Non-cash interest expense		785			675			378			—			1,838
Deferred income taxes		—			—			184			—			184
Other adjustments to reconcile net (loss)/income		126			(17	)		(377	)		—			(268	)
Changes in operating assets and liabilities:
Trade accounts receivable		—			55,239			1,346			—			56,585
Inventories		—			(23,280	)		2,186			(1,009	)		(22,103	)
Other operating assets and liabilities		(582	)		(20,416	)		(20,126	)		—			(41,124	)

Net cash (used in)/provided by operating activities		(29,484	)		4,079			7,011			—			(18,394	)
Cash flows from investing activities:
Capital expenditures		(3,971	)		(7,601	)		(17,072	)		—			(28,644	)

Net cash used in investing activities		(3,971	)		(7,601	)		(17,072	)		—			(28,644	)
Cash flows from financing activities:
Borrowings on lines of credit		—			—			6,157			—			6,157
Payments on lines of credit		—			—			(8,860	)		—			(8,860	)
Borrowings on long-term debt		—			49,000			54,134			—			103,134
Payments on long-term debt		—			(36,200	)		(9,502	)		—			(45,702	)
Stock option exercises and employee stock purchases		3,832			—			—			—			3,832
Intercompany		29,407			(8,719	)		(20,688	)		—			—

Net cash provided by financing activities		33,239			4,081			21,241			—			58,561
Effect of exchange rate changes on cash		—			—			(5,453	)		—			(5,453	)

Net (decrease)/increase in cash and cash equivalents		(216	)		559			5,727			—			6,070
Cash and cash equivalents, beginning of period		324			135			41,364			—			41,823

Cash and cash equivalents, end of period	$	108		$	694		$	47,091		$	—		$	47,893

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

First Half Ended April 30, 2012


In thousands	Quiksilver, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net (loss)/income	$	(27,725	)	$	(14,892	)	$	31,220		$	(13,920	)	$	(25,317	)
Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities:
Depreciation and amortization		1,138			9,082			16,905			—			27,125
Stock-based compensation		12,400			—			—			—			12,400
Provision for doubtful accounts		—			(1,416	)		1,835			—			419
Asset impairments		—			415			—			—			415
Equity in earnings		(16,190	)		1,733			501			14,457			501
Non-cash interest expense		732			888			344			—			1,964
Deferred income taxes		—			—			9,295			—			9,295
Other adjustments to reconcile net (loss)/income		(138	)		12			(586	)		—			(712	)
Changes in operating assets and liabilities:
Trade accounts receivable		—			25,895			(8,184	)		—			17,711
Inventories		—			(14,290	)		(3,695	)		(537	)		(18,522	)
Other operating assets and liabilities		(1,825	)		(11,645	)		(29,491	)		—			(42,961	)

Net cash (used in)/provided by operating activities		(31,608	)		(4,218	)		18,144			—			(17,682	)
Cash flows from investing activities:
Capital expenditures		(1,559	)		(14,094	)		(18,676	)		—			(34,329	)
Business acquisitions, net of cash acquired		—			—			(9,117	)		—			(9,117	)

Net cash used in investing activities		(1,559	)		(14,094	)		(27,793	)		—			(43,446	)
Cash flows from financing activities:
Borrowings on lines of credit		—			—			8,464			—			8,464
Payments on lines of credit		—			—			(12,326	)		—			(12,326	)
Borrowings on long-term debt		—			62,500			29,477			—			91,977
Payments on long-term debt		—			(35,256	)		(12,100	)		—			(47,356	)
Stock option exercises and employee stock purchases		779			—			—			—			779
Intercompany		32,394			(8,330	)		(24,064	)		—			—

Net cash provided by/(used in) financing activities		33,173			18,914			(10,549	)		—			41,538
Effect of exchange rate changes on cash		—			—			(10,986	)		—			(10,986	)

Net increase/(decrease) in cash and cash equivalents		6			602			(31,184	)		—			(30,576	)
Cash and cash equivalents, beginning of period		17			1,331			108,405			—			109,753

Cash and cash equivalents, end of period	$	23		$	1,933		$	77,221		$	—		$	79,177