Condensed Consolidating Financial Information

9 Months Ended

12 Months Ended

Jul. 31, 2013

Senior Notes Due Two Thousand Fifteen [Member]

Jul. 31, 2013

Senior Notes Due Two Thousand Twenty [Member]

Oct. 31, 2012

Quiksilver Inc [Member]

Oct. 31, 2012

Quiksilver, Inc. and QS Wholesale, Inc. [Member]

Condensed Consolidating Financial Information

15. Condensed Consolidating Financial Information — 2015 Notes

As of July 31, 2013, the Company had $400 million of its publicly registered 2015 Notes. Obligations under the Company’s 2015 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 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 100% owned 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, 2013 and October 31, 2012 and for the three and nine month periods ended July 31, 2013 and 2012. 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, 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.

On July 16, 2013, the Company irrevocably deposited with the trustee for the 2015 Notes an amount sufficient to redeem all of the 2015 Notes, including accrued interest ($409 million). The redemption of the 2015 Notes was completed on August 15, 2013, and therefore, the 2015 Notes are no longer outstanding.

Condensed Consolidating Statement of Operations

Third Quarter Ended July 31, 2013

In thousands	Quiksilver, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues, net	$	116		$	235,831		$	287,539		$	(27,722	)	$	495,764
Cost of goods sold		—			140,902			129,953			(19,866	)		250,989
Gross profit		116			94,929			157,586			(7,856	)		244,775
Selling, general and administrative expense		11,426			66,390			146,211			(7,448	)		216,579
Asset impairments		—			925			1,227			—			2,152
Operating (loss)/income		(11,310	)		27,614			10,148			(408	)		26,044
Interest expense, net		12,251			1,392			6,552			—			20,195
Foreign currency (gain)/loss		(91	)		(119	)		4,284			—			4,074
Equity in earnings		(25,964	)		(330	)		—			26,294			—
Income/(loss) before provision/(benefit) for income taxes		2,493			26,671			(688	)		(26,702	)		1,775
Provision/(benefit) for income taxes		422			(628	)		157			—			(49	)
Net income/(loss)		2,071			27,299			(845	)		(26,702	)		1,824
Net loss attributable to non-controlling interest		—			—			247			—			247
Net income/(loss) attributable to Quiksilver, Inc.		2,071			27,299			(598	)		(26,702	)		2,071
Other comprehensive loss		(2,140	)		—			(2,140	)		2,140			(2,140	)
Comprehensive (loss)/income attributable to Quiksilver, Inc.	$	(69	)	$	27,299		$	(2,738	)	$	(24,562	)	$	(69	)

Condensed Consolidating Statement of Operations

Third Quarter Ended July 31, 2012

In thousands	Quiksilver, Inc.			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues, net	$	117		$	258,595	$	285,858		$	(32,131	)	$	512,439
Cost of goods sold		—			152,405		130,167			(23,621	)		258,951
Gross profit		117			106,190		155,691			(8,510	)		253,488
Selling, general and administrative expense		13,533			81,506		137,695			(6,946	)		225,788
Asset impairments		—			141		—			—			141
Operating (loss)/income		(13,416	)		24,543		17,996			(1,564	)		27,559
Interest expense, net		7,253			1,245		6,336			—			14,834
Foreign currency (gain)/loss		(185	)		22		(2,079	)		—			(2,242	)
Equity in earnings		(33,094	)		457		—			32,637			—
Income before provision for income taxes		12,610			22,819		13,739			(34,201	)		14,967
Provision for income taxes		—			513		1,995			—			2,508
Net income		12,610			22,306		11,744			(34,201	)		12,459
Net loss attributable to non-controlling interest		—			—		151			—			151
Net income attributable to Quiksilver, Inc.		12,610			22,306		11,895			(34,201	)		12,610
Other comprehensive loss		(28,120	)		—		(28,120	)		28,120			(28,120	)
Comprehensive (loss)/income attributable to Quiksilver, Inc.	$	(15,510	)	$	22,306	$	(16,225	)	$	(6,081	)	$	(15,510	)

Condensed Consolidating Statement of Operations

Nine Months Ended July 31, 2013

In thousands	Quiksilver, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues, net	$	348		$	591,842		$	874,994		$	(81,654	)	$	1,385,530
Cost of goods sold		—			362,122			407,709			(59,919	)		709,912
Gross profit		348			229,720			467,285			(21,735	)		675,618
Selling, general and administrative expense		39,154			213,577			429,647			(22,336	)		660,042
Asset impairments		—			7,248			3,404			—			10,652
Operating (loss)/income		(38,806	)		8,895			34,234			601			4,924
Interest expense, net		26,789			4,246			19,956			—			50,991
Foreign currency loss		35			244			4,350			—			4,629
Equity in earnings		(4,599	)		(1,018	)		—			5,617			—
(Loss)/income before provision/(benefit) for income taxes		(61,031	)		5,423			9,928			(5,016	)		(50,696	)
Provision/(benefit) for income taxes		422			(161	)		10,061			—			10,322
Net (loss)/income		(61,453	)		5,584			(133	)		(5,016	)		(61,018	)
Net income attributable to non-controlling interest		—			—			(435	)		—			(435	)
Net (loss)/income attributable to Quiksilver, Inc		(61,453	)		5,584			(568	)		(5,016	)		(61,453	)
Other comprehensive loss		(10,753	)		—			(10,753	)		10,753			(10,753	)
Comprehensive (loss)/income attributable to Quiksilver, Inc.	$	(72,206	)	$	5,584		$	(11,321	)	$	5,737		$	(72,206	)

Condensed Consolidating Statement of Operations

Nine Months Ended July 31, 2012

In thousands	Quiksilver, Inc.			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues, net	$	353		$	615,658	$	919,474		$	(81,212	)	$	1,454,273
Cost of goods sold		—			366,655		422,012			(57,981	)		730,686
Gross profit		353			249,003		497,462			(23,231	)		723,587
Selling, general and administrative expense		43,318			233,937		425,162			(22,204	)		680,213
Asset impairments		—			556		—			—			556
Operating (loss)/income		(42,965	)		14,510		72,300			(1,027	)		42,818
Interest expense, net		21,732			3,930		19,802						45,464
Foreign currency (gain)/loss		(298	)		31		(4,434	)					(4,701	)
Equity in earnings		(49,284	)		2,190		—			47,094			—
(Loss)/income before provision for income taxes		(15,115	)		8,359		56,932			(48,121	)		2,055
Provision for income taxes		—			945		13,968			—			14,913
Net (loss)/income		(15,115	)		7,414		42,964			(48,121	)		(12,858	)
Less: Net income attributable to non-controlling interest		—			—		(2,257	)		—			(2,257	)
Net (loss)/income attributable to Quiksilver, Inc		(15,115	)		7,414		40,707			(48,121	)		(15,115	)
Other comprehensive loss		(49,151	)		—		(49,151	)		49,151			(49,151	)
Comprehensive (loss)/income attributable to Quiksilver, Inc.	$	(64,266	)	$	7,414	$	(8,444	)	$	1,030		$	(64,266	)

Condensed Consolidating Balance Sheet

July 31, 2013

In thousands	Quiksilver, Inc.		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	1	$	280	$	62,102	$	—		$	62,383
Restricted cash		409,167		—		—		—			409,167
Trade accounts receivable, net		—		167,514		250,675		—			418,189
Other receivables		19		5,597		19,364		—			24,980
Income taxes receivable		422		255		2,102		—			2,779
Inventories		—		120,697		277,868		597			399,162
Deferred income taxes		—		26,111		22,877		(20,902	)		28,086
Prepaid expenses and other current assets		2,961		8,494		24,364		—			35,819
Intercompany balances		—		115,906		—		(115,906	)		—
Total current assets		412,570		444,854		659,352		(136,211	)		1,380,565
Fixed assets, net		20,261		56,659		151,077		—			227,997
Intangible assets, net		3,816		46,923		87,645		—			138,384
Goodwill		—		111,555		160,862		—			272,417
Other assets		8,373		6,959		39,229		—			54,561
Deferred income taxes long-term		20,387		—		143,452		(45,236	)		118,603
Investment in subsidiaries		1,092,524		6,863		—		(1,099,387	)		—
Total assets	$	1,557,931	$	673,813	$	1,241,617	$	(1,280,834	)	$	2,192,527
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	3,374	$	93,898	$	141,039	$	—		$	238,311
Accrued liabilities		6,320		22,700		77,981		—			107,001
Current portion of long-term debt		—		6,094		37,059		—			43,153
Debt to be redeemed		409,167		—		—		—			409,167
Deferred income taxes		20,902		—		—		(20,902	)		—
Intercompany balances		83,972		—		31,934		(115,906	)		—
Total current liabilities		523,735		122,692		288,013		(136,808	)		797,632
Long-term debt		500,776		9,000		297,318		—			807,094
Deferred income taxes long-term		—		45,236				(45,236	)		—
Other long-term liabilities		—		14,137		20,839		—			34,976
Total liabilities		1,024,511		191,065		606,170		(182,044	)		1,639,702
Stockholders’/invested equity:		533,420		482,748		616,042		(1,098,790	)		533,420
Non-controlling interest		—		—		19,405		—			19,405
Total liabilities and equity	$	1,557,931	$	673,813	$	1,241,617	$	(1,280,834	)	$	2,192,527

Condensed Consolidating Balance Sheet

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		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

Nine Months Ended July 31, 2013

In thousands	Quiksilver, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net (loss)/income	$	(61,453	)	$	5,584		$	(133	)	$	(5,016	)	$	(61,018	)
Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities:
Depreciation and Amortization		1,651			13,164			23,203			—			38,018
Stock based compensation		16,195			—			—			—			16,195
Provision for doubtful accounts		—			(1,544	)		6,055			—			4,511
Asset impairments		—			7,248			3,404			—			10,652
Equity in earnings		(4,599	)		(1,018	)		247			5,617			247
Non-cash interest expense		4,223			1,081			573			—			5,877
Deferred income taxes		—			—			(281	)		—			(281	)
Other adjustments to reconcile net (loss)/income		35			(124	)		733			—			644
Changes in operating assets and liabilities:
Trade accounts receivable		—			15,975			(6,531	)		—			9,444
Inventories		—			(12,841	)		(49,098	)		(601	)		(62,540	)
Other operating assets and liabilities		6,867			(7,050	)		25,917			—			25,734
Net cash (used in)/provided by operating activities		(37,081	)		20,475			4,089			—			(12,517	)
Cash flows from investing activities:
Changes in restricted cash		(409,167	)		—			—			—			(409,167	)
Capital expenditures		(5,327	)		(11,159	)		(22,880	)		—			(39,366	)
Net cash used in investing activities		(414,494	)		(11,159	)		(22,880	)		—			(448,533	)
Cash flows from financing activities:
Borrowings on lines of credit		—			—			6,157			—			6,157
Payments on lines of credit		—			—			(22,561	)		—			(22,561	)
Borrowings on long-term debt		500,776			59,829			86,271			—			646,876
Payments on long-term debt		—			(114,029	)		(28,092	)		—			(142,121	)
Payments of debt issuance costs		(8,775	)		(4,312	)		—			—			(13,087	)
Stock option exercises and employee stock purchases		6,165			—			—			—			6,165
Intercompany		(46,914	)		49,341			(2,427	)		—			—
Net cash provided by/(used in) financing activities		451,252			(9,171	)		39,348			—			481,429
Effect of exchange rate changes on cash		—			—			181			—			181
Net (decrease)/increase in cash and cash equivalents		(323	)		145			20,738			—			20,560
Cash and cash equivalents, beginning of period		324			135			41,364			—			41,823
Cash and cash equivalents, end of period	$	1		$	280		$	62,102		$	—		$	62,383

Condensed Consolidating Statement of Cash Flows

Nine Months Ended July 31, 2012

In thousands	Quiksilver, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net (loss)/income	$	(15,115	)	$	7,414		$	42,964		$	(48,121	)	$	(12,858	)
Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities:
Depreciation and Amortization		1,598			13,338			24,501			—			39,437
Stock based compensation		17,272			—			—			—			17,272
Provision for doubtful accounts		—			(2,530	)		4,131			—			1,601
Asset impairments		—			556			—			—			556
Equity in earnings		(49,284	)		2,190			(19	)		47,094			(19	)
Non-cash interest expense		1,111			1,190			513			—			2,814
Deferred income taxes		—			—			9,349			—			9,349
Other adjustments to reconcile net (loss)/income		(322	)		36			(2,008	)		—			(2,294	)
Changes in operating assets and liabilities:
Trade accounts receivable		—			(19,657	)		(6,048	)		—			(25,705	)
Inventories		—			(3,095	)		(53,616	)		1,027			(55,684	)
Other operating assets and liabilities		4,623			416			3,611			—			8,650
Net cash (used in)/provided by operating activities		(40,117	)		(142	)		23,378			—			(16,881	)
Cash flows from investing activities:
Capital expenditures		(2,861	)		(18,736	)		(25,580	)		—			(47,177	)
Business acquisitions, net of cash acquired		—			—			(9,117	)		—			(9,117	)
Net cash used in investing activities		(2,861	)		(18,736	)		(34,697	)		—			(56,294	)
Cash flows from financing activities:
Borrowings on lines of credit		—			—			11,377			—			11,377
Payments on lines of credit		—			—			(12,326	)		—			(12,326	)
Borrowings on long-term debt		—			80,500			46,534			—			127,034
Payments on long-term debt		—			(43,856	)		(13,657	)		—			(57,513	)
Stock option exercises and employee stock purchases		1,335			—			—			—			1,335
Transactions with non-controlling interest owners		—			(11,000	)		—			—			(11,000	)
Intercompany		41,641			(5,676	)		(35,965	)		—			—
Net cash provided by/(used in) financing activities		42,976			19,968			(4,037	)		—			58,907
Effect of exchange rate changes on cash		—			—			(13,582	)		—			(13,582	)
Net (decrease)/increase in cash and cash equivalents		(2	)		1,090			(28,938	)		—			(27,850	)
Cash and cash equivalents, beginning of period		17			1,331			108,405			—			109,753
Cash and cash equivalents, end of period	$	15		$	2,421		$	79,467		$	—		$	81,903

14. Condensed Consolidating Financial Information – 2020 Notes

In July 2013, the Company issued $225 million aggregate principal amount of its 2020 Notes. The Company has filed a registration statement on From S-4 with the Securities and Exchange Commission for the purposes of commencing an exchange offer to exchange the 2020 Notes for publicly registered notes with identical terms. Obligations under the Company’s 2020 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., QS Wholesale, Inc., the guarantor subsidiaries, the non-guarantor subsidiaries and the eliminations necessary to arrive at the information for the Company on a consolidated basis as of July 31, 2013 and October 31, 2012 and for the three and nine month periods ended July 31, 2013 and 2012. 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, 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.

In the accompanying October 31, 2012 condensed consolidating balance sheet, the Company has made certain corrections, in the classification of amounts in the intercompany balances, investment in subsidiaries and stockholders’/invested equity accounts, from amounts previously reported. These corrections resulted in an aggregate increase (decrease) in total assets of $31.6 million, ($45.6 million), and ($32.5 million) in the QS Wholesale, Guarantor Subsidiaries and Non-Guarantor Subsidiaries columns, respectively, with a $46.5 million increase in the Eliminations column, along with offsetting amounts in total liabilities and equity. The correction within the QS Wholesale column included an increase in Intercompany balances (current assets) and Stockholders’/invested equity of $178.6 million and $31.6 million, respectively, with a corresponding decrease in Investment in subsidiaries of $147.1 million. The correction within the Guarantor Subsidiaries column included a decrease in Intercompany balances (current assets) and Stockholders’/invested equity of $45.6 million and $114.3 million, respectively, with a corresponding increase in Intercompany balances (current liability) of $68.7 million. The correction within Non-Guarantor Subsidiaries column included a decrease in Intercompany balances (current assets) and Stockholders’/invested equity of $32.5 million and $64.4 million, respectively, with a corresponding increase in Intercompany balances (current liability) of $31.9 million. The effect of these corrections did not impact the Company’s previously reported consolidated financial results.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Third Quarter Ended July 31, 2013

In thousands	Quiksilver, Inc.			QS Wholesale, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues, net	$	116		$	123,731		$	164,367		$	287,539		$	(79,989	)	$	495,764
Cost of goods sold		—			73,392			107,406			129,953			(59,762	)		250,989
Gross profit		116			50,339			56,961			157,586			(20,227	)		244,775
Selling, general and administrative expense		11,426			30,817			35,573			146,211			(7,448	)		216,579
Asset impairments		—			—			925			1,227			—			2,152
Operating (loss)/income		(11,310	)		19,522			20,463			10,148			(12,779	)		26,044
Interest expense, net		12,251			1,420			(28	)		6,552			—			20,195
Foreign currency (gain)/loss		(91	)		(63	)		(56	)		4,284			—			4,074
Equity in earnings		(25,541	)		(331	)		—			—			25,872			—
Income/(loss) before provision/(benefit) for income taxes		2,071			18,496			20,547			(688	)		(38,651	)		1,775
Provision/(benefit) for income taxes		—			(206	)		—			157			—			(49	)
Net income/(loss)		2,071			18,702			20,547			(845	)		(38,651	)		1,824
Net loss attributable to non-controlling interest		—			—			—			247			—			247
Net income/(loss) attributable to Quiksilver, Inc.		2,071			18,702			20,547			(598	)		(38,651	)		2,071
Other comprehensive loss		(2,140	)		—			—			(2,140	)		2,140			(2,140	)
Comprehensive (loss)/income attributable to Quiksilver, Inc.	$	(69	)	$	18,702		$	20,547		$	(2,738	)	$	(36,511	)	$	(69	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Third Quarter Ended July 31, 2012

In thousands	Quiksilver, Inc.			QS Wholesale, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues, net	$	117		$	111,519		$	180,380		$	285,858		$	(65,435	)	$	512,439
Cost of goods sold		—			66,365			118,882			130,167			(56,463	)		258,951
Gross profit		117			45,154			61,498			155,691			(8,972	)		253,488
Selling, general and administrative expense		13,533			38,731			42,775			137,695			(6,946	)		225,788
Asset impairments		—			—			141			—			—			141
Operating (loss)/income		(13,416	)		6,423			18,582			17,996			(2,026	)		27,559
Interest expense, net		7,253			1,247			(2	)		6,336			—			14,834
Foreign currency (gain)/loss		(185	)		(8	)		30			(2,079	)		—			(2,242	)
Equity in earnings		(33,094	)		457			—			—			32,637			—
Income before provision for income taxes		12,610			4,727			18,554			13,739			(34,663	)		14,967
Provision for income taxes		—			513			—			1,995			—			2,508
Net income		12,610			4,214			18,554			11,744			(34,663	)		12,459
Net loss attributable to non-controlling interest		—			—			—			151			—			151
Net income attributable to Quiksilver, Inc.		12,610			4,214			18,554			11,895			(34,663	)		12,610
Other comprehensive loss		(28,120	)		—			—			(28,120	)		28,120			(28,120	)
Comprehensive (loss)/income attributable to Quiksilver, Inc.	$	(15,510	)	$	4,214		$	18,554		$	(16,225	)	$	(6,543	)	$	(15,510	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Nine Months Ended July 31, 2013

In thousands	Quiksilver, Inc.			QS Wholesale, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues, net	$	348		$	317,643		$	387,084		$	874,994		$	(194,539	)	$	1,385,530
Cost of goods sold		—			191,351			267,351			407,709			(156,499	)		709,912
Gross profit		348			126,292			119,733			467,285			(38,040	)		675,618
Selling, general and administrative expense		39,154			102,946			110,631			429,647			(22,336	)		660,042
Asset impairments		—			1,646			5,602			3,404			—			10,652
Operating (loss)/income		(38,806	)		21,700			3,500			34,234			(15,704	)		4,924
Interest expense, net		26,789			4,329			(83	)		19,956			—			50,991
Foreign currency loss		35			23			221			4,350			—			4,629
Equity in earnings		(4,599	)		(1,018	)		—			—			5,617			—
(Loss)/income before provision/(benefit) for income taxes		(61,031	)		18,366			3,362			9,928			(21,321	)		(50,696	)
Provision/(benefit) for income taxes		422			(161	)		—			10,061			—			10,322
Net (loss)/income		(61,453	)		18,527			3,362			(133	)		(21,321	)		(61,018	)
Net income attributable to non-controlling interest		—			—			—			(435	)		—			(435	)
Net (loss)/income attributable to Quiksilver, Inc		(61,453	)		18,527			3,362			(568	)		(21,321	)		(61,453	)
Other comprehensive loss		(10,753	)		—			—			(10,753	)		10,753			(10,753	)
Comprehensive (loss)/income attributable to Quiksilver, Inc.	$	(72,206	)	$	18,527		$	3,362		$	(11,321	)	$	(10,568	)	$	(72,206	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Nine Months Ended July 31, 2012

In thousands	Quiksilver, Inc.			QS Wholesale, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues, net	$	353		$	344,468		$	406,531		$	919,474		$	(216,553	)	$	1,454,273
Cost of goods sold		—			212,651			269,473			422,012			(173,450	)		730,686
Gross profit		353			131,817			137,058			497,462			(43,103	)		723,587
Selling, general and administrative expense		43,318			112,420			121,517			425,162			(22,204	)		680,213
Asset impairments		—			—			556			—			—			556
Operating (loss)/income		(42,965	)		19,397			14,985			72,300			(20,899	)		42,818
Interest expense, net		21,732			3,932			(2	)		19,802			—			45,464
Foreign currency (gain)/loss		(298	)		(132	)		163			(4,434	)		—			(4,701	)
Equity in earnings		(49,284	)		2,190			—			—			47,094			—
(Loss)/income before provision for income taxes		(15,115	)		13,407			14,824			56,932			(67,993	)		2,055
Provision for income taxes		—			945			—			13,968			—			14,913
Net (loss)/income		(15,115	)		12,462			14,824			42,964			(67,993	)		(12,858	)
Less: Net income attributable to non-controlling interest		—			—			—			(2,257	)		—			(2,257	)
Net (loss)/income attributable to Quiksilver, Inc		(15,115	)		12,462			14,824			40,707			(67,993	)		(15,115	)
Other comprehensive loss		(49,151	)		—			—			(49,151	)		49,151			(49,151	)
Comprehensive (loss)/income attributable to Quiksilver, Inc.	$	(64,266	)	$	12,462		$	14,824		$	(8,444	)	$	(18,842	)	$	(64,266	)

CONDENSED CONSOLIDATING BALANCE SHEET

July 31, 2013

In thousands	Quiksilver, Inc.		QS Wholesale, Inc.		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	1	$	2,041	$	(1,761	)	$	62,102	$	—		$	62,383
Restricted cash		409,167		—		—			—		—			409,167
Trade accounts receivable, net		—		84,780		82,734			250,675		—			418,189
Other receivables		19		2,252		3,345			19,364		—			24,980
Income taxes receivable		422		255		—			2,102		—			2,779
Inventories		—		39,453		104,942			277,868		(23,101	)		399,162
Deferred income taxes		—		26,617		—			22,877		(21,408	)		28,086
Prepaid expenses and other current assets		2,961		3,822		4,672			24,364		—			35,819
Intercompany balances		—		174,387		—			—		(174,387	)		—
Total current assets		412,570		333,607		193,932			659,352		(218,896	)		1,380,565
Fixed assets, net		20,261		33,315		23,344			151,077		—			227,997
Intangible assets, net		3,816		44,829		2,094			87,645		—			138,384
Goodwill		—		103,880		7,675			160,862		—			272,417
Other assets		8,373		5,873		1,086			39,229		—			54,561
Deferred income taxes long-term		20,387				—			143,452		(45,236	)		118,603
Investment in subsidiaries		1,092,524		12,815		—			—		(1,105,339	)		—
Total assets	$	1,557,931	$	534,319	$	228,131		$	1,241,617	$	(1,369,471	)	$	2,192,527
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	3,374	$	42,374	$	51,524		$	141,039	$	—		$	238,311
Accrued liabilities		6,320		12,947		9,753			77,981		—			107,001
Current portion of long-term debt		—		6,094		—			37,059		—			43,153
Debt to be redeemed		409,167		—		—			—		—			409,167
Deferred income taxes		20,902		—		506			—		(21,408	)		—
Intercompany balances		83,972		—		58,481			31,934		(174,387	)		—
Total current liabilities		523,735		61,415		120,264			288,013		(195,795	)		797,632
Long-term debt		500,776		9,000		—			297,318		—			807,094
Deferred income taxes long-term		—		42,951		2,285			—		(45,236	)		—
Other long-term liabilities		—		4,954		9,183			20,839		—			34,976
Total liabilities		1,024,511		118,320		131,732			606,170		(241,031	)		1,639,702
Stockholders’/invested equity:		533,420		415,999		96,399			616,042		(1,128,440	)		533,420
Non-controlling interest		—		—		—			19,405		—			19,405
Total liabilities and equity	$	1,557,931	$	534,319	$	228,131		$	1,241,617	$	(1,369,471	)	$	2,192,527

CONDENSED CONSOLIDATING BALANCE SHEET

October 31, 2012

In thousands	Quiksilver, Inc.		QS Wholesale, Inc.		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	324	$	1,966	$	(1,831	)	$	41,364	$	—		$	41,823
Trade accounts receivable, net		—		80,522		101,423			251,798		—			433,743
Other receivables		20		2,767		3,391			26,640		—			32,818
Income taxes receivable		—		117		—			—		(117	)		—
Inventories		—		32,156		97,522			237,465		(22,397	)		344,746
Deferred income taxes		—		26,617		—			21,159		(21,408	)		26,368
Prepaid expenses and other current assets		2,277		4,463		5,085			14,546		—			26,371
Intercompany balances		—		218,896		—			—		(218,896	)		—
Total current assets		2,621		367,504		205,590			592,972		(262,818	)		905,869
Fixed assets, net		18,802		39,175		25,321			155,015		—			238,313
Intangible assets, net		3,228		45,547		2,199			88,475		—			139,449
Goodwill		—		103,880		8,336			160,951		—			273,167
Other assets		2,753		2,083		594			42,359		—			47,789
Deferred income taxes long-term		20,387		—		—			138,502		(45,236	)		113,653
Investment in subsidiaries		1,087,924		12,180		—			—		(1,100,104	)		—
Total assets	$	1,135,715	$	570,369	$	242,040		$	1,178,274	$	(1,408,158	)	$	1,718,240
LIABILITIES AND EQUITY
Current liabilities:
Lines of credit	$	—	$	—	$	—		$	18,147	$	—		$	18,147
Accounts payable		6,995		39,542		55,813			101,222		—			203,572
Accrued liabilities		6,189		15,699		12,644			80,359		—			114,891
Current portion of long-term debt		—		8,594		—			10,053		—			18,647
Income taxes payable		—		—		—			1,476		(117	)		1,359
Deferred income taxes		20,902		—		506			—		(21,408	)		—
Intercompany balances		118,319		—		68,707			31,870		(218,896	)		—
Total current liabilities		152,405		63,835		137,670			243,127		(240,421	)		356,616
Long-term debt		400,000		60,700		—			260,475		—			721,175
Deferred income taxes long-term		—		42,951		2,285			—		(45,236	)		—
Other long-term liabilities		—		5,413		9,048			23,752		—			38,213
Total liabilities		552,405		172,899		149,003			527,354		(285,657	)		1,116,004
Stockholders’/invested equity:		583,310		397,470		93,037			631,994		(1,122,501	)		583,310
Non-controlling interest		—		—		—			18,926		—			18,926
Total liabilities and equity	$	1,135,715	$	570,369	$	242,040		$	1,178,274	$	(1,408,158	)	$	1,718,240

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Nine Months Ended July 31, 2013

In thousands	Quiksilver, Inc.			QS Wholesale, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net (loss)/income	$	(61,453	)	$	18,527		$	3,362		$	(133	)	$	(21,321	)	$	(61,018	)
Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities:
Depreciation and Amortization		1,651			8,710			4,454			23,203			—			38,018
Stock based compensation		16,195			—			—			—			—			16,195
Provision for doubtful accounts		—			(257	)		(1,287	)		6,055			—			4,511
Asset impairments		—			1,646			5,602			3,404			—			10,652
Equity in earnings		(4,599	)		(1,018	)		—			247			5,617			247
Non-cash interest expense		4,223			1,081			—			573			—			5,877
Deferred income taxes		—						—			(281	)		—			(281	)
Other adjustments to reconcile net (loss)/income		35			—			(124	)		733			—			644
Changes in operating assets and liabilities:
Trade accounts receivable		—			(4,000	)		19,975			(6,531	)		—			9,444
Inventories		—			(7,297	)		(5,544	)		(65,403	)		15,704			(62,540	)
Other operating assets and liabilities		6,867			341			(7,391	)		25,917			—			25,734
Net cash (used in)/provided by operating activities		(37,081	)		17,733			19,047			(12,216	)		—			(12,517	)
Cash flows from investing activities:
Changes in restricted cash		(409,167	)		—			—			—			—			(409,167	)
Capital expenditures		(5,327	)		(3,908	)		(7,251	)		(22,880	)		—			(39,366	)
Net cash used in investing activities		(414,494	)		(3,908	)		(7,251	)		(22,880	)		—			(448,533	)
Cash flows from financing activities:
Borrowings on lines of credit		—			—			—			6,157			—			6,157
Payments on lines of credit		—			—			—			(22,561	)		—			(22,561	)
Borrowings on long-term debt		500,776			59,829			—			86,271			—			646,876
Payments on long-term debt		—			(114,029	)		—			(28,092	)		—			(142,121	)
Payments of debt issuance costs		(8,775	)		(4,312	)		—			—			—			(13,087	)
Stock option exercises and employee stock purchases		6,165			—			—			—			—			6,165
Intercompany		(46,914	)		44,762			(11,726	)		13,878			—			—
Net cash provided by/(used in) financing activities		451,252			(13,750	)		(11,726	)		55,653			—			481,429
Effect of exchange rate changes on cash		—			—			—			181			—			181
Net (decrease)/increase in cash and cash equivalents		(323	)		75			70			20,738			—			20,560
Cash and cash equivalents, beginning of period		324			1,966			(1,831	)		41,364			—			41,823
Cash and cash equivalents, end of period	$	1		$	2,041		$	(1,761	)	$	62,102		$	—		$	62,383

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Nine Months Ended July 31, 2012

In thousands	Quiksilver, Inc.			QS Wholesale, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net (loss)/income	$	(15,115	)	$	12,462		$	14,824		$	42,964		$	(67,993	)	$	(12,858	)
Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities:
Depreciation and Amortization		1,598			8,420			4,918			24,501			—			39,437
Stock based compensation		17,272			—			—			—			—			17,272
Provision for doubtful accounts		—			(1,127	)		(1,403	)		4,131			—			1,601
Asset impairments		—			—			556			—			—			556
Equity in earnings		(49,284	)		2,190			—			(19	)		47,094			(19	)
Non-cash interest expense		1,111			1,190			—			513			—			2,814
Deferred income taxes		—						—			9,349			—			9,349
Other adjustments to reconcile net (loss)/income		(322	)		—			36			(2,008	)		—			(2,294	)
Changes in operating assets and liabilities:
Trade accounts receivable		—			(5,442	)		(14,215	)		(6,048	)		—			(25,705	)
Inventories		—			47,239			(50,334	)		(73,488	)		20,899			(55,684	)
Other operating assets and liabilities		4,623			(14,661	)		15,077			3,611			—			8,650
Net cash (used in)/provided by operating activities		(40,117	)		50,271			(30,541	)		3,506			—			(16,881	)
Cash flows from investing activities:
Capital expenditures		(2,861	)		(11,548	)		(7,188	)		(25,580	)		—			(47,177	)
Business acquisitions, net of cash acquired		—			—			—			(9,117	)		—			(9,117	)
Net cash used in investing activities		(2,861	)		(11,548	)		(7,188	)		(34,697	)		—			(56,294	)
Cash flows from financing activities:
Borrowings on lines of credit		—			—			—			11,377			—			11,377
Payments on lines of credit		—			—			—			(12,326	)		—			(12,326	)
Borrowings on long-term debt		—			80,500			—			46,534			—			127,034
Payments on long-term debt		—			(43,856	)		—			(13,657	)		—			(57,513	)
Stock option exercises and employee stock purchases		1,335			—			—			—			—			1,335
Transactions with non-controlling interest owners		—			(11,000	)		—			—			—			(11,000	)
Intercompany		41,641			(64,598	)		39,050			(16,093	)		—			—
Net cash provided by/(used in) financing activities		42,976			(38,954	)		39,050			15,835			—			58,907
Effect of exchange rate changes on cash		—			—			—			(13,582	)		—			(13,582	)
Net (decrease)/increase in cash and cash equivalents		(2	)		(231	)		1,321			(28,938	)		—			(27,850	)
Cash and cash equivalents, beginning of period		17			4,972			(3,641	)		108,405			—			109,753
Cash and cash equivalents, end of period	$	15		$	4,741		$	(2,320	)	$	79,467		$	—		$	81,903

Note 18—Condensed Consolidating Financial Information

In December 2005, the Company completed an exchange offer to exchange its Senior Notes for publicly registered notes with identical terms. Obligations under the Company’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, financial position and cash flows 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 as of October 31, 2012 and 2011 and for each of fiscal 2012, 2011 and 2010. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. Certain immaterial balances have been reclassified in the prior year financial statements to conform to the current year presentation. As a result of the adoption of ASU 2011-05, the Company has updated the following condensed consolidated statements of operations to include other comprehensive (loss)/income.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Year Ended October 31, 2012

In thousands	Quiksilver, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues, net	$	469		$	854,754		$	1,262,757		$	(104,741	)	$	2,013,239
Cost of goods sold		—			505,420			602,115			(74,642	)		1,032,893
Gross profit		469			349,334			660,642			(30,099	)		980,346
Selling, general and administrative expense		56,983			311,886			577,868			(30,593	)		916,144
Asset impairments		—			5,162			2,072			—			7,234
Operating (loss)/income		(56,514	)		32,286			80,702			494			56,968
Interest expense		28,987			5,351			26,485			—			60,823
Foreign currency gain		(173	)		(35	)		(1,461	)		—			(1,669	)
Equity in earnings		(74,572	)		4,674			—			69,898			—
(Loss)/income before provision for income taxes		(10,756	)		22,296			55,678			(69,404	)		(2,186	)
Provision for income taxes		—			1,144			6,413			—			7,557
Net (loss)/income		(10,756	)		21,152			49,265			(69,404	)		(9,743	)
Less: net income attributable to non-controlling interest		—			—			(1,013	)		—			(1,013	)
Net (loss)/income attributable to Quiksilver, Inc.		(10,756	)		21,152			48,252			(69,404	)		(10,756	)
Other Comprehensive Loss	(29,715)			—			(29,715)			29,715			(29,715)
Comprehensive (loss)/income attributable to Quiksilver, Inc.	$(40,471)			$21,152			$18,537			$(39,689)			$(40,471)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Year Ended October 31, 2011

In thousands	Quiksilver, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues, net	$	464		$	736,110		$	1,270,320		$	(53,833	)	$	1,953,061
Cost of goods sold		—			399,493			554,593			(24,859	)		929,227
Gross profit		464			336,617			715,727			(28,974	)		1,023,834
Selling, general and administrative expense		43,045			311,840			566,703			(25,639	)		895,949
Asset impairments		—			3,399			82,974			—			86,373
Operating (loss)/income		(42,581	)		21,378			66,050			(3,335	)		41,512
Interest expense		28,871			3,785			41,152			—			73,808
Foreign currency loss/(gain)		30			(40	)		(101	)		—			(111	)
Equity in earnings		(50,224	)		(836	)		—			51,060			—
(Loss)/income before provision/(benefit) for income taxes		(21,258	)		18,469			24,999			(54,395	)		(32,185	)
Provision/(benefit) for income taxes		—			165			(14,480	)		—			(14,315	)
Net (loss)/income		(21,258	)		18,304			39,479			(54,395	)		(17,870	)
Less: net income attributable to non-controlling interest		—			—			(3,388	)		—			(3,388	)
Net (loss)/income attributable to Quiksilver, Inc.		(21,258	)		18,304			36,091			(54,395	)		(21,258	)
Other comprehensive income		2,445			—			2,445			(2,445	)		2,445
Comprehensive (loss)/income attributable to Quiksilver, Inc.	$	(18,813	)	$	18,304		$	38,536		$	(56,840	)	$	(18,813	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Year Ended October 31, 2010

In thousands	Quiksilver, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues, net	$	376		$	683,767		$	1,195,536		$	(42,059	)	$	1,837,620
Cost of goods sold		—			373,740			511,777			(15,145	)		870,372
Gross profit		376			310,027			683,759			(26,914	)		967,248
Selling, general and administrative expense		36,867			283,347			537,153			(25,301	)		832,066
Asset impairments		—			7,585			4,072			—			11,657
Operating (loss)/income		(36,491	)		19,095			142,534			(1,613	)		123,525
Interest expense, net		28,721			55,070			30,318			—			114,109
Foreign currency gain		(285	)		(124	)		(5,508	)		—			(5,917	)
Equity in earnings and other (income)/expense		(50,399	)		(1,482	)		—			51,881			—
(Loss)/income before (benefit)/provision for income taxes		(14,528	)		(34,369	)		117,724			(53,494	)		15,333
(Benefit)/provision for income taxes		(4,844	)		522			27,755			—			23,433
(Loss)/income from continuing operations		(9,684	)		(34,891	)		89,969			(53,494	)		(8,100	)
Income from discontinued operations		—			1,485			345			—			1,830
Net (loss)/income		(9,684	)		(33,406	)		90,314			(53,494	)		(6,270	)
Less: net income attributable to non-controlling interest		—			—			(3,414	)		—			(3,414	)
Net (loss)/income attributable to Quiksilver, Inc.		(9,684	)		(33,406	)		86,900			(53,494	)		(9,684	)
Other comprehensive income		18,286			—			18,286			(18,286	)		18,286
Comprehensive income/(loss) attributable to Quiksilver, Inc.	$	8,602		$	(33,406	)	$	105,186		$	(71,780	)	$	8,602

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
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
Total current assets		2,621		310,717			592,972			(441	)		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		—		(23,550	)		137,203			—			113,653
Investment in subsidiaries		1,087,924		5,028			—			(1,092,952	)		—
Total assets	$	1,115,328	$	519,330		$	1,176,975		$	(1,093,393	)	$	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		—		(117	)		1,476			—			1,359
Intercompany balances		118,834		(95,809	)		(23,025	)		—			—
Total current liabilities		132,018		36,366			188,232			—			356,616
Long-term debt, net of current portion		400,000		60,700			260,475			—			721,175
Other long-term liabilities		—		25,241			12,972			—			38,213
Total liabilities		532,018		122,307			461,679			—			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	$	519,330		$	1,176,975		$	(1,093,393	)	$	1,718,240

CONDENSED CONSOLIDATING BALANCE SHEET

At October 31, 2011

In thousands	Quiksilver, Inc.		Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	17	$	1,331		$	108,405		$	—		$	109,753
Trade accounts receivable, net		—		150,782			246,307			—			397,089
Other receivables		122		5,918			17,150			—			23,190
Income taxes receivable		—		21,338			(17,073	)		—			4,265
Inventories		—		115,456			234,266			(1,965	)		347,757
Deferred income taxes		—		(1,182	)		33,990			—			32,808
Prepaid expenses and other current assets		2,378		8,525			14,526			—			25,429
Total current assets		2,517		302,168			637,571			(1,965	)		940,291
Fixed assets, net		17,602		64,943			155,562			—			238,107
Intangible assets, net		3,007		48,743			86,393			—			138,143
Goodwill		—		112,216			156,373			—			268,589
Other assets		4,457		3,936			47,421			—			55,814
Deferred income taxes long-term		—		(16,682	)		139,961			—			123,279
Investment in subsidiaries		1,084,745		8,929			—			(1,093,674	)		—
Total assets	$	1,112,328	$	524,253		$	1,223,281		$	(1,095,639	)	$	1,764,223
LIABILITIES AND EQUITY
Current liabilities:
Lines of credit	$	—	$	—		$	18,335		$	—		$	18,335
Accounts payable		2,510		88,280			112,233			—			203,023
Accrued liabilities		6,673		30,088			96,183			—			132,944
Current portion of long-term debt		—		3,000			1,628			—			4,628
Intercompany balances		93,047		(34,611	)		(58,436	)		—			—
Total current liabilities		102,230		86,757			169,943			—			358,930
Long-term debt, net of current portion		400,000		36,542			288,181			—			724,723
Other long-term liabilities		—		41,219			16,729			—			57,948
Total liabilities		502,230		164,518			474,853			—			1,141,601
Stockholders’/invested equity		610,098		359,735			735,904			(1,095,639	)		610,098
Non-controlling interest		—		—			12,524			—			12,524
Total liabilities and equity	$	1,112,328	$	524,253		$	1,223,281		$	(1,095,639	)	$	1,764,223

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended October 31, 2012

In thousands	Quiksilver, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net (loss)/income	$	(10,756	)	$	21,152		$	49,265		$	(69,404	)	$	(9,743	)
Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities:
Depreciation and amortization		2,088			18,002			33,142			—			53,232
Stock-based compensation		22,552			—			—			—			22,552
Provision for doubtful accounts		—			(1,642	)		6,236			—			4,594
Asset impairments		—			5,162			2,072			—			7,234
Equity in earnings		(74,572	)		4,674			282			69,898			282
Non-cash interest expense		1,490			1,506			689			—			3,685
Deferred income taxes		—			474			(9,056	)		—			(8,582	)
Other adjustments to reconcile net (loss)/income		(443	)		36			(6,092	)		—			(6,499	)
Changes in operating assets and liabilities:
Trade accounts receivable		—			(29,521	)		(23,884	)		—			(53,405	)
Inventories		—			7,195			(11,679	)		(494	)		(4,978	)
Other operating assets and liabilities		10,255			2,233			(34,399	)		—			(21,911	)
Net cash (used in)/provided by operating activities		(49,386	)		29,271			6,576			—			(13,539	)
Cash flows from investing activities:
Proceeds from the sale of properties and equipment		—			45			8,153			—			8,198
Capital expenditures		(4,388	)		(22,580	)		(39,113	)		—			(66,081	)
Business acquisitions, net of cash acquired		—			—			(9,117	)		—			(9,117	)
Net cash used in investing activities		(4,388	)		(22,535	)		(40,077	)		—			(67,000	)
Cash flows from financing activities:
Transactions with non-controlling interest owners		—			(11,000	)		—			—			(11,000	)
Borrowings on lines of credit		—			—			15,139			—			15,139
Payments on lines of credit		—			—			(12,641	)		—			(12,641	)
Borrowings on long-term debt		—			93,500			46,535			—			140,035
Payments on long-term debt		—			(70,800	)		(42,041	)		—			(112,841	)
Stock option exercises and employee stock purchases		2,241			—			—			—			2,241
Intercompany		51,840			(19,632	)		(32,208	)		—			—
Net cash provided by/(used in) financing activities		54,081			(7,932	)		(25,216	)		—			20,933
Effect of exchange rate changes on cash		—			—			(8,324	)		—			(8,324	)
Net increase/(decrease) in cash and cash equivalents		307			(1,196	)		(67,041	)		—			(67,930	)
Cash and cash equivalents, beginning of period		17			1,331			108,405			—			109,753
Cash and cash equivalents, end of period	$	324		$	135		$	41,364			—		$	41,823

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended October 31, 2011

In thousands	Quiksilver, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net (loss)/income	$	(21,258	)	$	18,304		$	39,479		$	(54,395	)	$	(17,870	)
Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities:
Depreciation and amortization		1,735			20,445			33,079			—			55,259
Stock-based compensation		14,414			—			—			—			14,414
Provision for doubtful accounts		—			1,363			7,369			—			8,732
Asset impairments		—			3,399			82,974			—			86,373
Equity in earnings		(50,224	)		(994	)		(197	)		51,060			(355	)
Non-cash interest expense		1,387			1,808			15,917			—			19,112
Deferred income taxes		—			3,703			(31,951	)		—			(28,248	)
Other adjustments to reconcile net (loss)/income		72			481			(6,219	)		—			(5,666	)
Changes in operating assets and liabilities:
Trade accounts receivable		—			(22,106	)		(11,879	)		—			(33,985	)
Inventories		—			(23,322	)		(50,719	)		3,335			(70,706	)
Other operating assets and liabilities		1,090			(4,275	)		30,274			—			27,089
Net cash (used in)/provided by operating activities		(52,784	)		(1,194	)		108,127			—			54,149
Cash flows from investing activities:
Proceeds from the sale of properties and equipment		—			15			12,531			—			12,546
Capital expenditures		(12,570	)		(34,624	)		(42,396	)		—			(89,590	)
Business acquisitions, net of cash acquired		—			(528	)		(5,050	)		—			(5,578	)
Net cash used in investing activities		(12,570	)		(35,137	)		(34,915	)		—			(82,622	)
Cash flows from financing activities:
Borrowings on lines of credit		—			—			30,070			—			30,070
Payments on lines of credit		—			—			(35,303	)		—			(35,303	)
Borrowings on long-term debt		—			44,500			270,830			—			315,330
Payments on long-term debt		—			(25,524	)		(259,152	)		—			(284,676	)
Payments of debt issuance costs		—			—			(6,391	)		—			(6,391	)
Stock option exercises and employee stock purchases		4,129			—			—			—			4,129
Intercompany		61,078			(20,486	)		(40,592	)		—			—
Net cash provided by/(used in) financing activities		65,207			(1,510	)		(40,538	)		—			23,159
Effect of exchange rate changes on cash		—			—			(5,526	)		—			(5,526	)
Net (decrease)/increase in cash and cash equivalents		(147	)		(37,841	)		27,148			—			(10,840	)
Cash and cash equivalents, beginning of period		164			39,172			81,257			—			120,593
Cash and cash equivalents, end of period	$	17		$	1,331		$	108,405			—		$	109,753

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended October 31, 2010

In thousands	Quiksilver, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net (loss)/income	$	(9,684	)	$	(33,406	)	$	90,314		$	(53,494	)	$	(6,270	)
Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities:
Income from discontinued operations		—			(1,485	)		(345	)		—			(1,830	)
Depreciation and amortization		1,519			21,494			30,848			—			53,861
Stock-based compensation		12,831			—			—			—			12,831
Provision for doubtful accounts		—			4,360			10,947			—			15,307
Equity in earnings		(50,399	)		(1,482	)		(524	)		51,881			(524	)
Asset impairments		—			8,403			3,254			—			11,657
Non-cash interest expense		1,292			42,740			12,663			—			56,695
Deferred taxes		—			(5,652	)		13,681			—			8,029
Other adjustments to reconcile net (loss)/income		(195	)		(1,455	)		(1,892	)		—			(3,542	)
Changes in operating assets and liabilities:
Trade accounts receivable		—			15,735			24,111			—			39,846
Inventories		—			(5,075	)		7,967			1,613			4,505
Other operating assets and liabilities		16,733			7,960			(15,561	)		—			9,132
Cash (used in)/provided by operating activities of continuing operations		(27,903	)		52,137			175,463			—			199,697
Cash provided by operating activities of discontinued operations		—			1,507			2,278			—			3,785
Net cash (used in)/provided by operating activities		(27,903	)		53,644			177,741			—			203,482
Cash flows from investing activities:
Proceeds from the sale of properties and equipment		34			4,519			109			—			4,662
Capital expenditures		(4,194	)		(10,730	)		(32,873	)		—			(47,797	)
Changes in restricted cash		—			—			52,706			—			52,706
Net cash (used in)/provided by investing activities		(4,160	)		(6,211	)		19,942			—			9,571
Cash flows from financing activities:
Borrowings on lines of credit		—			—			16,581			—			16,581
Payments on lines of credit		—			—			(27,021	)		—			(27,021	)
Borrowings on long-term debt		—			42,735			16,618			—			59,353
Payments on long-term debt		—			(51,489	)		(169,077	)		—			(220,566	)
Payments of debt and equity issuance costs		(7,750	)		—			(1,823	)		—			(9,573	)
Proceeds from stock option exercises		3,639			—			—			—			3,639
Transactions with non-controlling interests owners		—			(1,542	)		(3,632	)		—			(5,174	)
Intercompany		36,017			900			(36,917	)		—			—
Net cash provided by/(used in) financing activities		31,906			(9,396	)		(205,271	)		—			(182,761	)
Effect of exchange rate changes on cash		—			—			(9,215	)		—			(9,215	)
Net (decrease)/increase in cash and cash equivalents		(157	)		38,037			(16,803	)		—			21,077
Cash and cash equivalents, beginning of period		321			1,135			98,060			—			99,516
Cash and cash equivalents, end of period	$	164		$	39,172		$	81,257			—		$	120,593

Note 19—Condensed Consolidating Financial Information

Obligations under Quiksilver, Inc.’s and QS Wholesale, Inc.’s senior notes issued on July 16, 2013 (see Note 20—Subsequent Events) are fully and unconditionally guaranteed by certain of the Company’s existing 100% owned domestic subsidiaries. As a result of the subsequent registration of these notes, the Company is required to present condensed consolidating financial information for Quiksilver, Inc., QS Wholesale, Inc., and the Company’s 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, financial position and cash flows of Quiksilver, Inc., QS Wholesale, Inc., Quiksilver, Inc’s 100% owned guarantor subsidiaries, its non-guarantor subsidiaries and the eliminations necessary to arrive at the information for the Company on a consolidated basis as of October 31, 2012 and 2011 and for each of fiscal 2012, 2011 and 2010. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions.

In the accompanying October 31, 2012 and 2011 condensed consolidating balance sheets, the Company has made certain corrections, in the classification of amounts in the intercompany balances, investment in subsidiaries and stockholders’/invested equity accounts, from amounts previously reported. In the October 31, 2012 condensed consolidating balance sheet, these corrections resulted in an aggregate increase/(decrease) in total assets of $31.6 million, ($45.6 million), and ($32.5 million) in the QS Wholesale, Guarantor Subsidiaries and Non-Guarantor Subsidiaries columns, respectively, with a $46.5 million increase in the Eliminations column, along with offsetting amounts in total liabilities and equity. The correction within the QS Wholesale column included an increase in Intercompany balances (current assets) and Stockholders’/invested equity of $178.6 million and $31.6 million, respectively, with a corresponding decrease in Investment in subsidiaries of $147.1 million. The correction within the Guarantor Subsidiaries column included a decrease in Intercompany balances (current assets) and Stockholders’/invested equity of $45.6 million and $114.3 million, respectively, with a corresponding increase in Intercompany balances (current liability) of $68.7 million. The correction within Non-Guarantor Subsidiaries column included a decrease in Intercompany balances (current assets) and Stockholders’/invested equity of $32.5 million and $64.4 million, respectively, with a corresponding increase in Intercompany balances (current liability) of $31.9 million. In the October 31, 2011 condensed consolidating balance sheet, these corrections resulted in an aggregate increase/(decrease) in total assets of $19.6 million, ($67.1 million), and ($65.6 million) in the QS Wholesale, Guarantor Subsidiaries and Non-Guarantor Subsidiaries columns, respectively, with a $113.1 million increase in the Eliminations column, along with offsetting amounts in total liabilities and equity. The correction within the QS Wholesale column included an increase in Intercompany balances (current assets) and Stockholders’/invested equity of $166.7 million and $59.7 million, respectively, with a corresponding decrease in Intercompany balances (current liability) and Investment in subsidiaries of $40.1 million and $147.1 million, respectively. The correction within the Guarantor Subsidiaries column included a decrease in Intercompany balances (current assets) and Stockholders’/invested equity of $67.1 million and $139.7 million, respectively, with a corresponding increase in Intercompany balances (current liability) of $72.7 million. The correction within Non-Guarantor Subsidiaries column included a decrease in Intercompany balances (current assets) and Stockholders’/invested equity of $65.6 million and $67.1 million, respectively, with a corresponding increase in Intercompany balances (current liability) of $1.5 million. The effect of these corrections did not impact the Company’s previously reported consolidated financial results for either 2012 or 2011, and the Company believes that the corrections are immaterial to the consolidated financial statements. 

Condensed Consolidating Statement of Operations

Year Ended October 31, 2012

In thousands	Quiksilver, Inc.			QS Wholesale, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues, net	$	469		$	453,532		$	573,826		$	1,262,757		$	(277,345	)	$	2,013,239
Cost of goods sold		—			275,179			373,016			602,115			(217,417	)		1,032,893
Gross profit		469			178,353			200,810			660,642			(59,928	)		980,346
Selling, general and administrative expense		56,983			147,684			164,202			577,868			(30,593	)		916,144
Asset impairments		—			11			5,151			2,072			—			7,234
Operating (loss)/income		(56,514	)		30,658			31,457			80,702			(29,335	)		56,968
Interest expense, net		28,987			5,352			(1	)		26,485			—			60,823
Foreign currency (gain)/loss		(173	)		(148	)		113			(1,461	)		—			(1,669	)
Equity in earnings		(74,572	)		4,674			—			—			69,898			—
(Loss)/income before provision for income taxes		(10,756	)		20,780			31,345			55,678			(99,233	)		(2,186	)
Provision for income taxes		—			1,144			—			6,413			—			7,557
Net (loss)/income		(10,756	)		19,636			31,345			49,265			(99,233	)		(9,743	)
Less: Net income attributable to non-controlling interest		—			—			—			(1,013	)		—			(1,013	)
Net (loss)/income attributable to Quiksilver, Inc		(10,756	)		19,636			31,345			48,252			(99,233	)		(10,756	)
Other comprehensive loss		(29,715	)		—			—			(29,715	)		29,715			(29,715	)
Comprehensive (loss)/income attributable to Quiksilver, Inc.	$	(40,471	)	$	19,636		$	31,345		$	18,537		$	(69,518	)	$	(40,471	)

Condensed Consolidating Statement of Operations

Year Ended October 31, 2011

In thousands	Quiksilver, Inc.			QS Wholesale, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues, net	$	464		$	440,088		$	479,559		$	1,270,320		$	(237,370	)	$	1,953,061
Cost of goods sold		—			268,361			291,972			554,593			(185,699	)		929,227
Gross profit		464			171,727			187,587			715,727			(51,671	)		1,023,834
Selling, general and administrative expense		43,045			139,530			172,310			566,703			(25,639	)		895,949
Asset impairments		—			1,778			1,621			82,974			—			86,373
Operating (loss)/income		(42,581	)		30,419			13,656			66,050			(26,032	)		41,512
Interest expense, net		28,871			3,795			(10	)		41,152			—			73,808
Foreign currency loss/(gain)		30			(229	)		189			(101	)		—			(111	)
Equity in earnings		(50,224	)		(836	)		—			—			51,060			—
(Loss)/income before provision/(benefit) for income taxes		(21,258	)		27,689			13,477			24,999			(77,092	)		(32,185	)
Provision/(benefit) for income taxes		—			165			—			(14,480	)		—			(14,315	)
Net (loss)/income		(21,258	)		27,524			13,477			39,479			(77,092	)		(17,870	)
Less: Net income attributable to non-controlling interest		—			—			—			(3,388	)		—			(3,388	)
Net (loss)/income attributable to Quiksilver, Inc		(21,258	)		27,524			13,477			36,091			(77,092	)		(21,258	)
Other comprehensive income		2,445			—			—			2,445			(2,445	)		2,445
Comprehensive (loss)/income attributable to Quiksilver, Inc.	$	(18,813	)	$	27,524		$	13,477		$	38,536		$	(79,537	)	$	(18,813	)

Condensed Consolidating Statement of Operations

Year Ended October 31, 2010

In thousands	Quiksilver, Inc.			QS Wholesale, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues, net	$	376		$	418,623		$	421,759		$	1,195,536		$	(198,674	)	$	1,837,620
Cost of goods sold		—			261,491			240,660			511,777			(143,556	)		870,372
Gross profit		376			157,132			181,099			683,759			(55,118	)		967,248
Selling, general and administrative expense		36,867			133,730			149,617			537,153			(29,817	)		832,066
Asset impairments		—			667			6,918			4,072			—			11,657
Operating (loss)/income		(36,491	)		22,735			24,564			142,534			(29,817	)		123,525
Interest expense, net		28,721			55,070			—			30,318			—			114,109
Foreign currency gain		(285	)		(113	)		(11	)		(5,508	)		—			(5,917	)
Equity in earnings and other (income)/expense		(50,399	)		(1,482	)		—			—			51,881			—
(Loss)/income before (benefit)/provision for income taxes		(14,528	)		(30,740	)		24,575			117,724			(81,698	)		15,333
(Benefit)/provision for income taxes		(4,844	)		522			—			27,755			—			23,433
(Loss)/income from continuing operations		(9,684	)		(31,262	)		24,575			89,969			(81,698	)		(8,100	)
Income from discontinued operations		—			—			1,485			345			—			1,830
Net (loss)/income		(9,684	)		(31,262	)		26,060			90,314			(81,698	)		(6,270	)
Less: Net income attributable to non-controlling interest		—			—			—			(3,414	)		—			(3,414	)
Net (loss) income attributable to Quiksilver, Inc		(9,684	)		(31,262	)		26,060			86,900			(81,698	)		(9,684	)
Other comprehensive income		18,286			—			—			18,286			(18,286	)		18,286
Comprehensive income/(loss) attributable to Quiksilver, Inc.	$	8,602		$	(31,262	)	$	26,060		$	105,186		$	(99,984	)	$	8,602

Condensed Consolidating Balance Sheet

October 31, 2012

In thousands	Quiksilver, Inc.		QS Wholesale, Inc.		Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	324	$	1,966	$	(1,831	)	$	41,364	$	—		$	41,823
Trade accounts receivable, net		—		80,522		101,423			251,798		—			433,743
Other receivables		20		2,767		3,391			26,640		—			32,818
Income taxes receivable		—		117		—			—		(117	)		—
Inventories		—		32,156		97,522			237,465		(22,397	)		344,746
Deferred income taxes		—		26,617		—			21,159		(21,408	)		26,368
Prepaid expenses and other current assets		2,277		4,463		5,085			14,546		—			26,371
Intercompany balances				218,896		—			—		(218,896	)		—
Total current assets		2,621		367,504		205,590			592,972		(262,818	)		905,869
Fixed assets, net		18,802		39,175		25,321			155,015		—			238,313
Intangible assets, net		3,228		45,547		2,199			88,475		—			139,449
Goodwill		—		103,880		8,336			160,951		—			273,167
Other assets		2,753		2,083		594			42,359		—			47,789
Deferred income taxes long-term		20,387		—		—			138,502		(45,236	)		113,653
Investment in subsidiaries		1,087,924		12,180		—			—		(1,100,104	)		—
Total assets	$	1,135,715	$	570,369	$	242,040		$	1,178,274	$	(1,408,158	)	$	1,718,240
LIABILITIES AND EQUITY
Current liabilities:
Lines of credit		—	$	—	$	—		$	18,147	$	—		$	18,147
Accounts payable		6,995		39,542		55,813			101,222		—			203,572
Accrued liabilities		6,189		15,699		12,644			80,359		—			114,891
Current portion of long-term debt		—		8,594		—			10,053		—			18,647
Income taxes payable				—		—			1,476		(117	)		1,359
Deferred income taxes		20,902		—		506			—		(21,408	)		—
Intercompany balances		118,319		—		68,707			31,870		(218,896	)		—
Total current liabilities		152,405		63,835		137,670			243,127		(240,421	)		356,616
Long-term debt		400,000		60,700		—			260,475		—			721,175
Deferred income taxes long-term		—		42,951		2,285			—		(45,236	)		—
Other long-term liabilities		—		5,413		9,048			23,752		—			38,213
Total liabilities		552,405		172,899		149,003			527,354		(285,657	)		1,116,004
Stockholders’/invested equity:		583,310		397,470		93,037			631,994		(1,122,501	)		583,310
Non-controlling interest		—		—		—			18,926		—			18,926
Total liabilities and equity	$	1,135,715	$	570,369	$	242,040		$	1,178,274	$	(1,408,158	)	$	1,718,240

Condensed Consolidating Balance Sheet

October 31, 2011

In thousands	Quiksilver, Inc.		QS Wholesale, Inc.		Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	17	$	4,972	$	(3,641	)	$	108,405	$	—		$	109,753
Trade accounts receivable, net		—		72,533		78,249			246,307		—			397,089
Other receivables		122		3,024		2,894			17,150		—			23,190
Income taxes receivable		—		390		—			3,875		—			4,265
Inventories		—		57,862		74,754			234,266		(19,125	)		347,757
Deferred income taxes		—		15,111		—			33,990		(16,293	)		32,808
Prepaid expenses and other current assets		2,378		3,507		5,018			14,526		—			25,429
Intercompany balances		—		166,707		—			—		(166,707	)		—
Total current assets		2,517		324,106		157,274			658,519		(202,125	)		940,291
Fixed assets, net		17,602		36,493		28,450			155,562		—			238,107
Intangible assets, net		3,007		46,510		2,233			86,393		—			138,143
Goodwill		—		103,880		8,336			156,373		—			268,589
Other assets		4,457		3,377		559			47,421		—			55,814
Deferred income taxes long-term		11,531		—		1,577			141,554		(31,383	)		123,279
Investment in subsidiaries		1,084,745		16,082		—			—		(1,100,827	)		—
Total assets	$	1,123,859	$	530,448	$	198,429		$	1,245,822	$	(1,334,335	)	$	1,764,223
LIABILITIES AND EQUITY
Current liabilities:
Lines of credit		—		—		—			18,335		—			18,335
Accounts payable		2,510		50,858		37,422			112,233		—			203,023
Accrued liabilities		6,673		12,666		17,422			96,183		—			132,944
Current portion of long-term debt		—		3,000		—			1,628		—			4,628
Income taxes payable		—		—		—			—		—			—
Deferred income taxes		11,998		—		4,295			—		(16,293	)		—
Intercompany balances		92,580		—		72,661			1,466		(166,707	)		—
Total current liabilities		113,761		66,524		131,800			229,845		(183,000	)		358,930
Long-term debt		400,000		36,542		—			288,181		—			724,723
Deferred income taxes long-term		—		31,383		—			—		(31,383	)		—
Other long-term liabilities		—		6,546		4,937			46,465		—			57,948
Total liabilities		513,761		140,995		136,737			564,491		(214,383	)		1,141,601
Stockholders’/invested equity:		610,098		389,453		61,692			668,807		(1,119,952	)		610,098
Non-controlling interest		—		—		—			12,524		—			12,524
Total liabilities and equity	$	1,123,859	$	530,448	$	198,429		$	1,245,822	$	(1,334,335	)	$	1,764,223

Condensed Consolidating Statement of Cash Flows

Year Ended October 31, 2012

In thousands	Quiksilver, Inc.			QS Wholesale, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net (loss)/income	$	(10,756	)	$	19,636		$	31,345		$	49,265		$	(99,233	)	$	(9,743	)
Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities:
Depreciation and Amortization		2,088			11,314			6,688			33,142			—			53,232
Stock based compensation		22,552						—			—			—			22,552
Provision for doubtful accounts		—			(763	)		(879	)		6,236			—			4,594
Asset impairments		—			11			5,151			2,072			—			7,234
Equity in earnings		(74,572	)		4,674						282			69,898			282
Non-cash interest expense		1,490			1,506			—			689			—			3,685
Deferred income taxes		—			62			412			(9,056	)		—			(8,582	)
Other adjustments to reconcile net (loss)/income		(443	)		(94	)		130			(6,092	)		—			(6,499	)
Changes in operating assets and liabilities:
Trade accounts receivable		—			(7,227	)		(22,294	)		(23,884	)		—			(53,405	)
Inventories		—			23,444			(46,078	)		(11,679	)		29,335			(4,978	)
Other operating assets and liabilities		5,918			(9,589	)		16,159			(34,399	)		—			(21,911	)
Net cash (used in)/provided by operating activities		(53,723	)		42,974			(9,366	)		6,576			—			(13,539	)
Cash flows from investing activities:
Proceeds from the sale of properties and equipment		—			43			2			8,153			—			8,198
Capital expenditures		(4,388	)		(13,744	)		(8,836	)		(39,113	)		—			(66,081	)
Business acquisitions, net of cash acquired		—			—			—			(9,117	)		—			(9,117	)
Net cash used in investing activities		(4,388	)		(13,701	)		(8,834	)		(40,077	)		—			(67,000	)
Cash flows from financing activities:
Borrowings on lines of credit		—			—			—			15,139			—			15,139
Payments on lines of credit		—			—			—			(12,641	)		—			(12,641	)
Borrowings on long-term debt		—			93,500			—			46,535			—			140,035
Payments on long-term debt		—			(70,800	)		—			(42,041	)		—			(112,841	)
Stock option exercises and employee stock purchases		2,241			—			—			—			—			2,241
Transactions with non-controlling interest owners		—			(11,000	)		—			—			—			(11,000	)
Intercompany		56,177			(43,979	)		20,010			(32,208	)		—			—
Net cash provided by/(used in) financing activities		58,418			(32,279	)		20,010			(25,216	)		—			20,933
Effect of exchange rate changes on cash		—			—			—			(8,324	)		—			(8,324	)
Net increase/(decrease) in cash and cash equivalents		307			(3,006	)		1,810			(67,041	)		—			(67,930	)
Cash and cash equivalents, beginning of period		17			4,972			(3,641	)		108,405			—			109,753
Cash and cash equivalents, end of period	$	324		$	1,966		$	(1,831	)	$	41,364		$	—		$	41,823

Condensed Consolidating Statement of Cash Flows

Year Ended October 31, 2011

In thousands	Quiksilver, Inc.			QS Wholesale, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net (loss)/income	$	(21,258	)	$	27,524		$	13,477		$	39,479		$	(77,092	)	$	(17,870	)
Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities:
Depreciation and Amortization		1,735			13,191			7,254			33,079			—			55,259
Stock based compensation		14,414			—			—			—			—			14,414
Provision for doubtful accounts		—			225			1,138			7,369			—			8,732
Asset impairments		—			1,778			1,621			82,974			—			86,373
Equity in earnings		(50,224	)		(994	)		—			(197	)		51,060			(355	)
Non-cash interest expense		1,387			1,808			—			15,917			—			19,112
Deferred income taxes		—			93			3,610			(31,951	)		—			(28,248	)
Other adjustments to reconcile net (loss)/income		72			351			130			(6,219	)		—			(5,666	)
Changes in operating assets and liabilities:
Trade accounts receivable		—			(8,811	)		(13,295	)		(11,879	)		—			(33,985	)
Inventories		—			(49,448	)		3,429			(50,719	)		26,032			(70,706	)
Other operating assets and liabilities		(17,134	)		5,146			8,803			30,274			—			27,089
Net cash (used in)/provided by operating activities		(71,008	)		(9,137	)		26,167			108,127			—			54,149
Cash flows from investing activities:
Proceeds from the sale of properties and equipment		—			5			10			12,531			—			12,546
Capital expenditures		(12,570	)		(21,726	)		(12,898	)		(42,396	)		—			(89,590	)
Business acquisitions, net of cash acquired		—			—			(528	)		(5,050	)		—			(5,578	)
Net cash used in investing activities		(12,570	)		(21,721	)		(13,416	)		(34,915	)		—			(82,622	)
Cash flows from financing activities:
Borrowings on lines of credit		—			—			—			30,070			—			30,070
Payments on lines of credit		—			—			—			(35,303	)		—			(35,303	)
Borrowings on long-term debt		—			44,500			—			270,830			—			315,330
Payments on long-term debt		—			(25,524	)		—			(259,152	)		—			(284,676	)
Payments of debt issuance costs		—			—			—			(6,391	)		—			(6,391	)
Stock option exercises and employee stock purchases		4,129			—			—			—			—			4,129
Intercompany		79,302			(21,853	)		(16,857	)		(40,592	)		—			—
Net cash provided by/(used in) financing activities		83,431			(2,877	)		(16,857	)		(40,538	)		—			23,159
Effect of exchange rate changes on cash		—			—			—			(5,526	)		—			(5,526	)
Net (decrease)/increase in cash and cash equivalents		(147	)		(33,735	)		(4,106	)		27,148			—			(10,840	)
Cash and cash equivalents, beginning of period		164			38,707			465			81,257			—			120,593
Cash and cash equivalents, end of period	$	17		$	4,972		$	(3,641	)	$	108,405		$	—		$	109,753

Condensed Consolidating Statement of Cash Flows

Year Ended October 31, 2010

In thousands	Quiksilver, Inc.			QS Wholesale, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net (loss)/income	$	(9,684	)	$	(31,262	)	$	26,060		$	90,314		$	(81,698	)	$	(6,270	)
Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities:
Income from discontinued operations		—			—			(1,485	)		(345	)		—			(1,830	)
Depreciation and Amortization		1,519			12,134			9,360			30,848			—			53,861
Stock based compensation		12,831			—			—			—			—			12,831
Provision for doubtful accounts		—			2,982			1,378			10,947			—			15,307
Equity in earnings		(50,399	)		(1,482	)		—			(524	)		51,881			(524	)
Asset impairments		—			667			6,918			4,072			—			11,657
Non-Cash interest expense		1,292			42,740			—			12,663			—			56,695
Deferred taxes		—			(2,203	)		(3,449	)		13,681			—			8,029
Other adjustments to reconcile net (loss)/income		(195	)		(1,225	)		(230	)		(1,892	)		—			(3,542	)
Changes in operating assets and liabilities:
Trade accounts receivable		—			10,464			5,271			24,111			—			39,846
Inventories		—			(27,021	)		(6,258	)		7,967			29,817			4,505
Other operating assets and liabilities		8,350			7,975			8,368			(15,561	)		—			9,132
Cash (used in)/provided by operating activities of continuing operations		(36,286	)		13,769			45,933			176,281			—			199,697
Cash provided by operating activities of discontinued operations		—			—			1,507			2,278			—			3,785
Net cash (used in)/provided by operating activities		(36,286	)		13,769			47,440			178,559			—			203,482
Cash flows from investing activities:
Proceeds from the sale of properties and equipment		34			4,500			19			109			—			4,662
Capital expenditures		(4,194	)		(6,901	)		(3,829	)		(32,873	)		—			(47,797	)
Changes in restricted cash		—			—			—			52,706			—			52,706
Net cash (used in)/provided by investing activities		(4,160	)		(2,401	)		(3,810	)		19,942			—			9,571
Cash flows from financing activities:
Borrowings on lines of credit		—			—			—			16,581			—			16,581
Payments on lines of credit		—			—			—			(27,021	)		—			(27,021	)
Borrowings on long-term debt		—			42,735			—			16,618			—			59,353
Payments on long-term debt		—			(51,489	)		—			(169,077	)		—			(220,566	)
Payments of debt and equity issuance costs		(7,750	)		—			—			(1,823	)		—			(9,573	)
Proceeds from stock option exercises		3,639			—			—			—			—			3,639
Transactions with non-controlling interest owners		—			(1,542	)		—			(3,632	)		—			(5,174	)
Intercompany		44,400			36,553			(43,218	)		(37,735	)		—			—
Net cash provided by/(used in) financing activities		40,289			26,257			(43,218	)		(206,089	)		—			(182,761	)
Effect of exchange rate changes on cash		—			—			—			(9,215	)		—			(9,215	)
Net (decrease)/increase in cash and cash equivalents		(157	)		37,625			412			(16,803	)		—			21,077
Cash and cash equivalents, beginning of period		321			1,082			53			98,060			—			99,516
Cash and cash equivalents, end of period	$	164		$	38,707		$	465		$	81,257		$	—		$	120,593