Restatement of Prior Period Financial Statements

Subsequent to the issuance of the Company's consolidated financial statements for the year ended October 31, 2014, the Company identified errors related to inappropriate revenue cut-off (revenues inappropriately recognized prior to meeting the GAAP revenue recognition criteria) that impacted prior periods, including each quarter of fiscal 2014 and earlier periods. The Company determined that certain shipments previously reported as revenue in its Americas wholesale channel did not meet the criteria for revenue recognition until the subsequent quarter when the shipments were delivered to, and accepted by, its wholesale customers. The impact of the inappropriate revenue cut-off was to overstate net revenue and gross margin for the three months ended July 31, 2014, and to understate net revenue and gross margin for the nine months ended July 31, 2014. Accumulated deficit was understated for the three months ended July 31, 2014 and overstated for the nine months ended July 31, 2014. For fiscal 2014 as a whole, the impact of this error was to overstate net revenue and gross margin and to understate accumulated deficit.

The Company assessed the materiality of these errors to each of the 2014, 2013 and 2012 fiscal years, as well as to each quarter of fiscal 2014, in accordance with the SEC's SAB No. 99, Materiality, and concluded that the errors were not material to any of these periods. However, the Company also concluded that recording an out of period correction would be material to the three months ended January 31, 2015, as it would materially understate first quarter results and key revenue trends within its Americas segment. Consequently, in accordance with SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, the accompanying condensed consolidated statement of operations for the three and nine month periods ended July 31, 2014 and condensed consolidated balance sheet as of October 31, 2014 have been revised to correct for these immaterial errors.

During the first quarter of fiscal 2015, the Company also identified an error in the recording of estimated non-cash impairment charges within discontinued operations related to Surfdome in the fourth quarter of fiscal 2014. The impact of this error was to understate assets held for sale, accumulated other comprehensive income, and non-controlling interest, and to overstate accumulated deficit as of October 31, 2014. The Company assessed the materiality of this error and concluded it was not material to previously reported annual and interim amounts. The Company corrected the error in the first quarter of fiscal 2015 in connection with the closing of the sale of Surfdome.

The table below is a summary of the impact of these corrections on selected balance sheet data:



	October 31, 2014
In thousands	As Previously Reported			As Restated
Trade accounts receivable	$	319,840		$	311,014
Inventories	278,780			284,517
Total current assets	744,089			741,000
Assets held for sale, net of current portion	2,987			5,394
Total assets	1,256,664			1,255,982
Income taxes payable	1,156			1,124
Current portion of assets held for sale	12,640			13,266
Total current liabilities	349,793			350,387
Total liabilities	1,199,154			1,199,748
Accumulated deficit	(585,263		)	(587,407		)
Accumulated other comprehensive income	57,298			57,288
Total Quiksilver, Inc. stockholders' equity	56,030			53,876
Non-controlling interest	1,480			2,358
Total equity	57,510			56,234

Selected Segment Data:
Americas identifiable assets	$	467,920		$	464,831
EMEA identifiable assets	510,896			513,303

The table below is a summary of the impact of these corrections on selected statements of operations data:



	Three Months Ended July 31, 2014						Nine Months Ended July 31, 2014
In thousands	As Previously Reported			As Restated			As Previously Reported			As Restated
Revenues, net	$	380,016		$	378,215		$	1,169,749		$	1,170,066
Gross profit	181,701			181,071			575,890			576,001
Operating loss	(202,050		)	(202,680		)	(225,032		)	(224,921		)
Loss from continuing operations	(217,802		)	(218,309		)	(278,313		)	(278,079		)
Net loss attributable to Quiksilver, Inc.	(220,085		)	(220,592		)	(257,759		)	(257,525		)
Net loss per share attributable to Quiksilver, Inc.	$	(1.29	)	$	(1.29	)	$	(1.51	)	$	(1.51	)

Selected Americas Segment Data:
Revenues, net	$	191,357		$	189,556		$	550,949		$	551,266
Gross margin	76,983			76,353			231,065			231,176
Operating loss	(12,284		)	(12,914		)	(48,877		)	(48,766		)

The correction of these errors had no net impact on the Company's net cash used in operating activities for the nine months ended July 31, 2014.