UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

______________________________________________________

FORM 10-K

______________________________________________________

(Mark One)



ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended October 31, ~~2014~~2015



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-14229

______________________________________________________

QUIKSILVER, INC.

(Exact name of registrant as specified in its charter)

______________________________________________________



Delaware	33-0199426
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)

~~15202~~5600 ~~Graham~~Argosy ~~Street~~Circle BLDG 100

Huntington Beach, California

92649

(Address of principal executive offices)

(Zip Code)

(714) 889-2200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

~~Title~~Securities ofregistered ~~each~~pursuant ~~class~~to ~~Name~~Section 12(g) of ~~each~~the ~~exchange on which registered Common Stock New York Stock Exchange~~Act:

~~Securities~~Title ~~registered pursuant to Section 12(g)~~ of ~~the Act: None~~Class

Common Stock

___________________________________________________

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No ý

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No ý

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one).

Large accelerated filer x¨ Accelerated filer ¨x Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No ý

The aggregate market value of the Registrant’s Common Stock held by non-affiliates of the Registrant was approximately $~~875~~226 million based upon the closing sale price per share on the New York Stock Exchange as of April 30, ~~2014~~2015, the last business day of Registrant’s most recently completed second fiscal quarter.

As of December 331, ~~2014~~2015, there were ~~174~~172,~~057~~114,~~410~~522 shares of the Registrant’s Common Stock issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

~~Portions~~Not ~~of the Registrant’s Proxy Statement for the Annual Meeting of Stockholders to be held March 17, 2015 are incorporated by reference into Part III of this Form 10-K~~Applicable.

TABLE OF CONTENTS

		Page
PART I
Item 1.	BUSINESS
	Introduction	15
	Our Mission and Strategies	1
	Voluntary Reorganization under Chapter 11	5
	Brands	1
	Notice of Delisting from the New York Stock Exchange	6
	Distribution Channels	2
	Brands	6
	Segment Information and Geographical Sales	2
	Distribution Channels	7
	Product Categories	3
	Segment Information and Geographical Sales	8
	Licensing Agreements	3
	Product Categories	8
	Seasonality	4
	Licensing Agreements	9
	Retail Concepts	4
	Seasonality	9
	Future Season Orders	5
	Retail Concepts	9
	Product Design and Development	5
	Future Season Orders	10
	Production and Raw Materials	5
	Product Design and Development	10
	Imports and Import Restrictions	5
	Production and Raw Materials	10
	Promotion and Advertising	6
	Imports and Import Restrictions	11
	Trademarks and Patents	6
	Promotion and Advertising	11
	Competition	6
	Trademarks and Patents	11
	Employees	7
	Competition	11
	Environmental Matters	7
	Employees	12
	Discontinued Operations	7
	Environmental Matters	12
	Available Information	7
	Discontinued Operations	12
Item 1A.	RISK FACTORS	8
	Available Information	13
Item 1B.	UNRESOLVED STAFF COMMENTS	17
Item 1A.	RISK FACTORS	14
Item 2.	PROPERTIES	18
Item 1B.	UNRESOLVED STAFF COMMENTS	24
Item 3.	LEGAL PROCEEDINGS	18
Item 2.	PROPERTIES	25
Item 4.	MINE SAFETY DISCLOSURES	18
Item 3.	LEGAL PROCEEDINGS	25
Item 4.	MINE SAFETY DISCLOSURES	26
PART II
Item 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	1927
Item 6.	SELECTED FINANCIAL DATA	2129
Item 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2231
Item 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	3960
Item 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	4161
Item 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	4161
Item 9A.	CONTROLS AND PROCEDURES	4161
Item 9B.	OTHER INFORMATION	4464
PART III
Item 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	4465
Item 11.	EXECUTIVE COMPENSATION	4468
Item 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	4488
Item 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	4492
Item 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	4493
PART IV
Item 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	4595
SIGNATURES		85153

2EXPLANATORY NOTE

On September 9, 2015, Quiksilver and each of its ten wholly owned U.S. subsidiaries, filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware for relief under Chapter 11 of the United States Bankruptcy Code. The reorganization cases under Chapter 11 of the Bankruptcy Code are being jointly administered by the Bankruptcy Court as Case No. 15-11880. Quiksilver and each of its ten wholly owned U.S. subsidiaries will continue to operate as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court.

For additional information regarding the Bankruptcy Cases, see Item 1. Business - “Voluntary Reorganization under Chapter 11” and Notes 1 and 22 of the Notes to Consolidated Financial Statements contained elsewhere in this Annual Report on Form 10-K. For a discussion of risk factors relating to the voluntary reorganization filed under Chapter 11, see Item 1A. Risk Factors. The disclosures in this Annual Report on Form 10-K should be read in the context of the voluntary reorganizations filed under Chapter 11.

PART I

Item 1. BUSINESS

Introduction

Quiksilver, Inc. (together with its subsidiaries, the “Company,” “we,” “us,” or “our”) is one of the world’s leading outdoor sports lifestyle companies. We design, develop and distribute branded apparel, footwear, accessories and related products. Our brands, inspired by the passion for outdoor action sports, represent a casual lifestyle for young-minded people who connect with our boardriding culture and heritage. Our three core brands, Quiksilver, Roxy, and DC, are synonymous with the heritage and culture of surfing, skateboarding and snowboarding. Our products combine decades of brand heritage, authenticity and design experience with the latest technical performance innovations available in the marketplace.

~~Quiksilver,~~We ~~Inc.,~~began operations in 1976 as a ~~Delaware~~California corporation, ~~was~~making ~~incorporated~~boardshorts for surfers in ~~1976~~the ~~and~~United ~~became~~States under a ~~publicly-traded~~license ~~company~~agreement with the Quiksilver brand founders in Australia. We reincorporated in Delaware and went public in 1986 ~~(NYSE:~~and, ~~ZQK).~~in subsequent years, acquired the worldwide licenses and trademarks that created the global company that we are today. Our products are sold in over ~~115~~110 countries through a wide range of distribution channels, including wholesale accounts (surf shops, skate shops, snow shops, sporting goods stores, discount centers, specialty stores, online retailers, licensee shops and select department stores), ~~935~~961 owned or licensed Company retail stores, and via our e-commerce websites. In fiscal ~~2014~~2015, 65% of our revenue was generated outside of the United States. Our global headquarters is in Huntington Beach, California. Our fiscal year ends on October 31 (i.e., “fiscal ~~2014~~2015” refers to the year ended October 31, ~~2014~~2015).

~~Our~~Voluntary ~~Mission~~Reorganization ~~and~~under ~~Strategies~~Chapter 11

~~Our~~On ~~mission~~September is9, to2015 ~~build~~(the ~~authentic~~"Petition Date"), ~~active~~Quiksilver, ~~brands~~Inc. ~~into~~and ~~significant~~each of its ten wholly owned U.S. subsidiaries, ~~sustainable~~(together ~~successes~~with Quiksilver, Inc. the “Debtors”), filed voluntary petitions (the "Petitions") in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) for relief under Chapter 11 of the United States Bankruptcy Code. The reorganization cases under Chapter 11 of the Bankruptcy Code are being jointly administered by the Bankruptcy Court as Case No. 15-11880 (the “Bankruptcy Cases”). The Debtors will continue to operate as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court. The Company's foreign subsidiaries are not directly affected by the Petitions and none are expected to voluntarily commence reorganization proceedings or seek protection from creditors under any insolvency or similar law in the U.S. or elsewhere.

InThe ~~our~~Debtors’ ~~efforts~~proposal tofor ~~increase~~the ~~shareholder~~reorganization ~~value~~of their business is set forth in the Second Amended Joint Chapter 11 Plan of Reorganization of Quiksilver, weInc. ~~have~~and ~~adopted~~its ~~three~~Affiliated ~~fundamental~~Debtors ~~strategies:~~and 1Debtors in Possession (the “Plan”). The ~~strengthening~~Proposed ~~our~~Plan ~~brands;~~(as 2defined below) ~~growing~~is ~~sales;~~supported and 3sponsored by Oaktree Capital Management and certain of its affiliates ("Oaktree") ~~driving~~as ~~operational~~Plan ~~efficiencies~~Sponsor under the Plan Sponsor Agreement (the "PSA") and also as the Backstop Parties, under the Backstop Commitment Letter ("the Backstop Commitment Letter"). If ~~Under~~implemented ~~each~~per the terms, the PSA and the Proposed Plan would provide a plan for the Debtors to emerge from bankruptcy as a going concern. The Company can offer no assurance that it will be able to continue as a going concern or obtain the Bankruptcy Court approval of ~~these~~the ~~strategies~~Proposed Plan. In addition, wethe ~~are~~Company ~~pursuing~~can ~~specific~~offer ~~initiatives~~no asassurance ~~outlined~~that ~~below:~~it will be able to develop and successfully execute the Proposed Plan. The Company and its advisors continue to seek alternative restructuring transactions, including a sale of all or substantially all of the assets of the Company, and will continue such efforts pending confirmation of the Proposed Plan by the Bankruptcy Court. The Proposed Plan provides for a significant reduction in the Company's outstanding debt.

~~Strengthening~~On ~~our~~September ~~brands:~~10, ~~improving~~2015, ~~our~~the ~~product~~Bankruptcy ~~offerings~~Court approved, ~~ensuring~~on an interim basis, the Company's debtor-in-possession financing in an aggregate amount of up to $175 million, consisting of (i) a ~~consistent~~$60 ~~global~~million ~~brand~~asset-based ~~presentation~~loan revolving credit facility (the “DIP ABL Facility”) provided by Bank of America, ~~investing~~N.A., inand ~~social~~(ii) ~~media~~a $115 million delayed draw term loan facility (the “DIP Term Loan Facility” and, ~~our~~together ~~website~~with ~~properties~~the DIP ABL Facility, ~~migrating~~the ~~marketing~~"DIP ~~spend~~Facilities") ~~closer~~provided by affiliates of Oaktree. Subject to the ~~point~~satisfaction of ~~customer~~certain ~~contact~~customary conditions to borrowing, the entire DIP ABL Facility and ~~increasing~~$70 ~~brand~~million ~~exposure~~of the DIP Term Loan Facility became available upon entry of the interim order, and the balance of the DIP Term Loan Facility became available upon entry of the final order on October 28, 2015. The proceeds of the DIP Facilities were used in ~~emerging~~part ~~markets~~to repay amounts outstanding under the pre-petition ABL Credit Facility (defined below), under which there were approximately $93 million in borrowings and letters of credit outstanding. The DIP Facilities will mature 150 days after the Petition Date, and contain representations, conditions, covenants and events of default customary for similar facilities.

~~Growing~~On ~~sales:~~October ~~improving~~13, ~~our~~2015, ~~product~~the ~~offerings~~Debtors filed with the Bankruptcy Court and ~~brand~~the ~~segmentation,~~Securities ~~offering~~and ~~channel~~Exchange ~~specific~~Commission ~~product~~a ~~collections,~~proposed ~~extending~~plan ~~our~~of ~~wholesale~~reorganization ~~distribution~~(as may be amended, ~~expanding~~modified ~~and~~or ~~improving~~supplemented ~~our~~from ~~e-commerce~~time ~~platform~~to time, ~~investing~~the in“Proposed ~~emerging~~Plan”) ~~markets,~~for the resolution of the outstanding claims against and ~~increasing~~interests ~~our~~in ~~network~~the Debtors pursuant to section 1121(a) of ~~retail~~the ~~stores~~Bankruptcy Code. On October 16, 2015, the Debtors filed with the Bankruptcy Court a related proposed disclosure statement (as may be

~~Driving~~ operational efficiencies: redesigning core processes to eliminate redundant activities, establishing global controls and monitoring over core processes, improving supply chain effectiveness, centralizing key activities into global centers of excellence, reducing global headcount in accordance with redesigned processes and global centers of excellence, implementing global IT systems and improving aggregation of data to support global processes.5

~~The~~amended, ~~goal~~modified ofor ~~these~~supplemented ~~strategies~~from istime to ~~allow~~time, usthe to“Proposed ~~increase~~Disclosure ~~operating~~Statement”). On ~~income~~November as17, 2015, the Debtors filed a ~~percentage~~first ofamended ~~sales.~~Proposed ~~However~~Disclosure Statement, ~~there~~which ~~can~~includes bea nofirst ~~guarantee~~amended ~~that~~Proposed ~~the~~Plan ~~efforts~~as ~~contemplated~~Exhibit byA ~~these~~thereto. On ~~strategies~~December ~~will~~4, ~~improve~~2015, ~~our~~the ~~operating~~Bankruptcy ~~results.~~Court ~~For~~entered aan ~~description~~order approving the adequacy of ~~significant~~the ~~risks~~Proposed Disclosure Statement and ~~uncertainties~~the ~~that~~Debtors ~~could~~have ~~hinder~~commenced ~~our~~solicitation ~~strategic~~of ~~efforts,~~votes ~~please~~from ~~refer~~eligible toclaimants ~~“Item~~in ~~1A.~~connection ~~Risk~~with ~~Factors”~~the Proposed Plan.

If the terms of the Proposed Plan are implemented, new common shares will be issued to holders of the 2018 Notes. All of the Company’s existing equity securities, including its shares of common stock and warrants, will be cancelled and extinguished without holders receiving any distribution. In addition, new common shares will be offered to the holders of the 2018 Notes (as defined herein) and the 2020 Notes (as defined herein) in a $122.5 million rights offering (the “Exit Rights Offering”) and a €50 million rights offering (the “Euro Notes Rights Offering” and, together with the Exit Rights Offering, the “Rights Offerings”), each of which would be backstopped in full by Oaktree (the “Backstop Commitment”) pursuant to that certain backstop commitment letter (the “Backstop Commitment Letter”) approved by the Bankruptcy Court on December 4, 2015. Finally, the DIP Facilities will be repaid in full utilizing new financing to be obtained by the Debtors prior to consummation of the terms of the Proposed Plan.

For the duration of our Chapter 11 proceedings, our operations and our ability to develop and execute our business plan are subject to the risks and uncertainties associated with the Chapter 11 process as described in Item 1A, “Risk Factors.” As a result of these risks and uncertainties, the number of our outstanding shares and our shareholders, assets, liabilities, officers and/or directors could be significantly different following the outcome of the Chapter 11 proceedings, and the description of our operations, properties and obligations included in this Annual Report on Form 10-K may not accurately reflect our operations, properties and obligations following the Chapter 11 process.

Subject to certain exceptions, under the Bankruptcy Code, the Debtors may assume, assign, or reject certain executory contracts and unexpired leases subject to the approval of the Bankruptcy Court and certain other conditions. Generally, the rejection of an executory contract or unexpired lease is treated as a pre-petition breach of such executory contract or unexpired lease and, subject to certain exceptions, relieves the Debtors of performing their future obligations under such executory contract or unexpired lease but entitles the contract counterparty or lessor to a pre-petition general unsecured claim for damages caused by such deemed breach. Counterparties to such rejected contracts or leases may assert claims against the applicable Debtor's estate for such damages. Generally, the assumption of an executory contract or unexpired lease requires the Debtors to cure existing monetary defaults under such executory contract or unexpired lease and provide adequate assurance of future performance. Accordingly, any description of an executory contract or unexpired lease with any Debtor in this Annual Report on Form 10-K, including where applicable a quantification of our obligations under any such executory contract or unexpired lease with such Debtor is qualified by any overriding rejection rights we have under the Bankruptcy Code. Further, nothing herein is or shall be deemed an admission with respect to any claim amounts or calculations arising from the rejection of any executory contract or unexpired lease and the Debtors expressly preserve all of their rights with respect thereto.

Our ability to continue as a going concern is dependent upon, among other things, (i) our ability to obtain timely confirmation of the Proposed Plan under the Bankruptcy Code; (ii) the cost, duration and outcome of the reorganization process; (iii) our ability to achieve profitability as a company; (iv) our ability to maintain adequate cash on hand; and (v) our ability to generate cash from operations. There can be no assurances regarding our ability to successfully develop, confirm and consummate one or more plans of reorganization that satisfies the conditions of the Bankruptcy Code and, is authorized by the Bankruptcy Court.

Notice of Delisting from the New York Stock Exchange

We received notice from the New York Stock Exchange (the “NYSE”) that trading of our common stock was suspended at the opening of business on September 9, 2015 and the NYSE filed with the Securities and Exchange Commission (the "SEC") to remove our common stock from listing and registration on the NYSE. This decision was reached in view of our September 9, 2015 announcement commencing voluntary proceedings for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court for us and our U.S. subsidiaries. On September 10, 2015, our common stock commenced trading on the over-the-counter market under the symbol "ZQKSQ." On September 29, 2015, the NYSE filed a Form 25 - Notification of Removal from Listing Under Section 12(b) of the Securities Exchange Act of 1934 - with respect to our common stock.

Brands

Our three core brands target the action sports lifestyle and broader outdoor market. Quiksilver and Roxy are leading brands rooted in surfing and are also prominent in snow sports. DC’s reputation is based in skateboarding but it is also popular in ~~BMX,~~ motocross and snowboarding.

Net revenues by brand, as a percentage of total net revenues from continuing operations, for each of the last three fiscal years were as follows:

	2014		2013		2012
	2015		2014		2013
Quiksilver	40	%	40	%	40	%
Roxy	3130	%	2831	%	2728	%
DC	27	%	3027	%	3130	%
Other brands	23	%	2	%	2	%
Total	100	%	100	%	100	%

Quiksilver

We have grown our Quiksilver brand from its origins in 1976 as a line of boardshorts to include a full range of apparel and accessories for men and boys inspired by surfing and boardriding sports.

Roxy

Our Roxy brand, introduced in 1991, includes a full range of apparel, footwear and accessories for young women and girls inspired by surfing, beach and boardriding sports.

We have grown our DC brand, which we acquired in 2004, from its origins as a line of technical skateboarding shoes to include a full range of apparel, footwear and accessories for men, women and children inspired by skateboarding, motocross, ~~BMX,~~ rally car and snowboarding.

Distribution Channels

We sell our products in over ~~115~~110 countries around the world through wholesale customers, our own retail stores and via e-commerce. Net revenues by distribution channel, as a percentage of total net revenues from continuing operations, for each of the last three fiscal years were as follows:

	2014		2013		2012
	2015		2014		2013
Wholesale	6763	%	7166	%	7472	%
Retail	2830	%	2528	%	2324	%
E-commerce	56	%	45	%	34	%
Licensing	1	%	1	%	—	%
Total	100	%	100	%	100	%

Our wholesale revenues are spread over a large and diversified customer base. During fiscal ~~2014~~2015, approximately 1513% of our consolidated revenues from continuing operations were from our ten largest customers, and our largest customer accounted for approximately 32% of such revenues. In the wholesale channel, our products are sold in major markets by over ~~300~~250 independent sales representatives in addition to our employee sales staff. In smaller markets, we use ~~over~~approximately ~~150~~100 local distributors. Our independent sales representatives are generally compensated on a commission basis. We employ retail merchandise coordinators who travel between specified retail locations of our wholesale customers to further improve the presentation of our product and build our brand image at the retail level.

We believe that the integrity and success of our brands is dependent, in part, upon our careful selection of appropriate retailers to support our brands in the wholesale sales channel. A foundation of our business is the distribution of our products through surf shops, skateboard shops, snowboard shops, sporting goods stores, and our own proprietary retail concept stores, where the environment communicates our brand and culture. Our distribution channels serve as a base of legitimacy and long-term loyalty for our brands.

Our products are also distributed through active lifestyle specialty chains. This category includes chains in the United States such as Zumiez, Tilly’s, Famous Footwear, and Journeys, chains in Europe such as Go Sport, Intersport and Sport 2000, and chains in the Asia/Pacific region such as City Beach and Murasaki Sports. Limited collections of our products are distributed through department stores, including Macy’s in the United States, Galeries Lafayette in France, and El Corte Ingles in Spain.

For a discussion regarding our retail distribution channel, please see “Retail Concepts” below.

We also operate several e-commerce websites that sell our products throughout the world and provide online content for our customers regarding our brands, athletes, events and the lifestyle associated with our brands.

We have licensed the right to produce and sell products using our trademarks for certain specific product categories. We may continue to license additional product categories that we believe are peripheral to our core businesses, or where we believe that a licensee would have better expertise, wider product distribution capabilities, superior supply chain capabilities, or where we believe that licensing is a better operating structure for us. For further discussion, please see "Licensing Agreements" below.

Segment Information and Geographical Sales

Our sales are globally diversified. We have four operating segments consisting of the Americas, EMEA and APAC, each of which sells a full range of our products, as well as Corporate Operations. Our Americas segment, consisting of North, South, and Central America, includes net revenues generated primarily from the United States, Canada, Brazil, and Mexico. Net revenues in our Europe, Middle East and Africa segment (“EMEA”) are primarily generated from continental Europe, the United Kingdom, Russia and South Africa. Net revenues from our Asia/Pacific segment (“APAC”) are primarily generated from Australia, Japan, New Zealand, South Korea, Taiwan, and Indonesia. Net revenues in our emerging markets include Brazil, Russia, Indonesia, Mexico, South Korea, Taiwan and China. These markets are reported within their respective regional segments noted above. Royalties earned from various licensees in other international territories are categorized in Corporate Operations, along with revenues from sourcing services to our licensees. For information regarding the revenues, operating income/(loss), and identifiable assets from continuing operations attributable to our operating segments, see Note 3 — Segment and Geographic Information to our consolidated financial statements.

revenues in our Europe, Middle East and Africa segment (“EMEA”) are primarily generated from continental Europe, the United Kingdom, Russia and South Africa. Net revenues from our Asia/Pacific segment (“APAC”) are primarily generated from Australia, Japan, New Zealand, South Korea, Taiwan, and Indonesia. Net revenues in our emerging markets include Brazil, Russia, Indonesia, Mexico, South Korea, Taiwan and China. These markets are reported within their respective regional segments noted above. Royalties earned from various licensees in other international territories are categorized in Corporate Operations, along with revenues from sourcing services to our licensees. For information regarding the revenues, operating income/(loss), and identifiable assets from continuing operations attributable to our operating segments, see Note 2, "Segment and Geographic Information", to our consolidated financial statements.

The following table summarizes our net revenues by country, as a percentage of total net revenues from continuing operations (excluding revenues from licensees), for each of the last three fiscal years:

	2014		2013		2012
	2015		2014		2013
United States	35	%	3835	%	3938	%
France	12	%	12	%	1112	%
Australia/New Zealand	7	%	7	%	87	%
Spain	6	%	56	%	65	%
Canada	54	%	65	%	6	%
Japan	5	%	5	%	5	%
Brazil	4	%	34	%	3	%
Russia	3	%	23	%	2	%
Germany	3	%	3	%	3	%
All other countries	2021	%	1920	%	1719	%
Total	100	%	100	%	100	%

We generally sell our apparel, footwear, accessories and related products to wholesale customers on a net-30 to net-90 day basis in the Americas and EMEA and on a net-10 to net-120 day or 30 day end of month basis in APAC depending on the country, product category, and whether we sell directly to retailers in the country or to a distributor. Some customers are required to pay for product upon delivery. We generally do not reimburse our customers for marketing expenses or guarantee margins to our customers. We offer consignment terms to certain accounts.

Product Categories

We offer apparel, footwear, accessories and related products within each of our core brands. Net revenues by major product group, as a percentage of total net revenues from continuing operations, for each of the last three fiscal years were as follows:

	2014		2013		2012
	2015		2014		2013
Apparel and accessories	7572	%	75	%	7375	%
Footwear	2528	%	25	%	2725	%
Total	100	%	100	%	100	%

Typical retail selling prices of some of our primary products on a segment basis, in the segment's currencies, are as follows:

	Americas(USD)	EMEA(Euros)	APAC(AUD)
T-shirt	2523	23	2732
Walking short	5351	47	5458
Snowboard jacket	~~243~~310	~~156~~123	~~155~~147
Skate shoe	5452	57	67

Licensing Agreements

WeHistorically, we have licensed certain product categories to third party licensees which have the right to ~~produce~~design, source, and sell those products bearing our trademarks. During ~~for~~fiscal ~~certain~~2014, ~~specific~~we executed several licensing agreements for peripheral product categories. In Wethe ~~may~~aggregate, ~~continue~~these tolicensing ~~license~~agreements ~~additional~~cover product categories that wegenerated ~~believe~~approximately ~~are~~$7 ~~peripheral~~million toand ~~our~~$51 ~~core~~million ~~business,~~in orwholesale ~~where~~net werevenues ~~believe~~during ~~that~~fiscal a2015 ~~licensee~~and ~~would have better expertise~~2014, ~~wider~~respectively. No ~~product~~significant ~~distribution~~licensing ~~capabilities,~~agreements ~~superior~~were ~~supply~~entered ~~chain~~into ~~capabilities,~~in orfiscal ~~where we~~ 2015.

believe that licensing is a better operating structure for us. During fiscal 2014, we executed several licensing agreements for peripheral product categories. Pursuant to these agreements, wholesale sales for these categories either already have transitioned, or will transition, to our licensees during fiscal 2015. We plan to purchase products in these categories from our licensee for sales in our retail stores and in our own e-commerce business. In the aggregate, these licensing agreements cover product categories that generated approximately $51 million in wholesale net revenues during fiscal 2014. Royalty revenues from licensing are not expected to fully replace the wholesale net revenues we have historically generated from these product categories. However, over time, royalty revenues are anticipated to result in improved operating margins versus those achieved from producing and distributing these categories internally.

Seasonality

Our products are generally available throughout the year. Demand for certain product categories changes in different seasons of the year. Sales of shorts, short-sleeve shirts, t-shirts and swimwear are higher during the spring and summer seasons. Sales of pants, long-sleeve shirts, fleece, jackets, sweaters and technical outerwear are higher during the fall and holiday seasons. Our fiscal fourth quarter has historically been our largest in terms of net revenues due to the wholesale channel impact of our shipments to retailers in advance of the Christmas/holiday season. Net revenues from continuing operations by quarter, and the associated percentage of full fiscal year net revenues for each of the last three fiscal years, were as follows:

	2014				2013				2012
	2015				2014				2013
In millions			% of NetRevenues				% of NetRevenues				% of NetRevenues
1st Quarter ended January 31	$	~~393~~341	25	%	$	~~412~~395	2325	%	$	~~435~~416	2223	%
2nd Quarter ended April 30	~~397~~333		25	%	~~447~~397		25	%	~~483~~450		25	%
3rd Quarter ended July 31	~~380~~336		2425	%	~~475~~378		2624	%	~~495~~474		26	%
4th Quarter ended October 31	~~400~~336		2625	%	~~476~~401		26	%	~~529~~480		2726	%
Total	$	1,~~570~~346	100	%	$	1,~~811~~571	100	%	$	1,~~942~~820	100	%

Retail Concepts

We believe retail stores are an important component of our overall global growth strategy. We operate a combination of our proprietary, multi-brand Boardriders stores as well as Quiksilver, Roxy and DC brand stores that feature a broad selection of products from our core brands and, at times, a limited selection of products from other brands. The proprietary design of our stores demonstrates our history, authenticity and commitment to surfing and other boardriding sports. In addition to our core brand stores, we operate ~~147~~149 factory outlet stores in which we offer specifically designed products for this channel as well as prior season products. In various territories, we also operate Quiksilver and Roxy shops primarily within larger department stores. These “shop-in-shops” require a much smaller initial investment and are typically smaller than a traditional retail store while having many of the same operational characteristics.

Total Company-owned retail stores are detailed below, by format and segment, at the end of each of the last three fiscal years:

Company Owned Stores by Format	~~2014~~2015	~~2013~~2014	~~2012~~2013
Full-price stores	~~266~~352	~~276~~266	~~291~~276
Shop-in-shops	~~270~~222	~~225~~270	~~194~~225
Factory outlets	~~147~~149	~~130~~147	~~120~~130
Total	~~683~~723	~~631~~683	~~605~~631

Company Owned Stores by Segment	2014	2013	2012
EMEA	296	268	271
APAC	287	263	224
Americas	100	100	110
Total	683	631	605

In addition to the Company-owned stores noted above, we also had 252 stores licensed to independent third parties in various countries as of October 31, 2014.



Company Owned Stores by Segment	2015	2014	2013
EMEA	292	296	268
APAC	315	287	263
Americas	116	100	100
Total	723	683	631

4In addition to the Company-owned stores noted above, we also had 238 stores licensed to independent third parties in various countries as of October 31, 2015.

Future Season Orders

At ~~the end of~~ October 31, ~~2014~~2015, our backlog totaled $~~365~~330 million compared to $~~421~~365 million ~~the~~at ~~year~~October 31, ~~before~~2014. Our backlog depends upon a number of factors and fluctuates based upon the timing of trade shows, sales meetings, the length and timing of various international selling seasons, changes in foreign currency exchange rates, decisions regarding brand distribution and product samples, market conditions, wholesale pricing, product quality, customer acceptance of the product line, and other factors. The timing of shipments also fluctuates from year to year based upon the production of goods, our ability to distribute our products in a timely manner, holidays and events, and customer requests for timing of product delivery. As a consequence, a comparison of backlog from season to season or year to year is not necessarily meaningful and may not be indicative of eventual shipments or forecasted revenues.

Product Design and Development

Our apparel, footwear, accessories and related products are designed to support the positioning of our brands. Creative design, innovative fabrics and quality of workmanship are emphasized. Our design and merchandising teams create seasonal product ranges for each of our brands. These design groups constantly monitor local, regional, and global fashion trends. to develop specific product categories for each of our brands. Our ~~global~~apparel ~~design~~and ~~centers~~accessories inare ~~Huntington~~created ~~Beach,~~by ~~California~~design and merchandising teams based in St. Jean de -De-Luz, France. Our ~~each~~footwear ~~develop~~is ~~specific~~created ~~product~~by ~~categories~~the ~~for~~design ~~each~~and ofmerchandising ~~our~~teams ~~brands~~based ~~globally.~~in Huntington Beach, California. These global design centers share inspiration, design concepts, merchandising themes, graphics and style viewpoints that are globally consistent while reflecting local adaptations for differences in geography, culture and taste.

Production and Raw Materials

Our apparel, footwear, accessories and related products are generally sourced from a variety of suppliers principally in China, South Korea, Indonesia, India, Vietnam, and other parts of ~~the Far East and, to a lesser extent, in Mexico, Turkey, Portugal and other foreign countries~~Asia. After being imported, some of these products require embellishments such as screen printing, dyeing, washing or embroidery. We generally do not enter into supply agreements with our vendors.

During fiscal ~~2014~~2015, noone ~~single~~vendor accounted for approximately 10% of our consolidated production of finished goods. No other supplier of finished goods accounted for more than 7% of our consolidated production. Our largest raw material supplier accounted for 72approximately 30% of our expenditures for raw materials during fiscal ~~2014,~~2015; however, our raw materials expenditures comprised less than 1% of our consolidated production costs. We believe that numerous finished goods and raw materials suppliers are available to provide additional capacity on an as-needed basis and that we enjoy favorable on-going relationships with these suppliers. However, shortages of raw materials or labor pricing pressures can result in delays in deliveries of our products by our suppliers or in increased costs to us.

In addition to our direct sourcing model, we retain independent buying agents, primarily located in China and Vietnam, to assist us in selecting and overseeing the majority of our independent third -party manufacturing and sourcing of finished goods, fabrics, ~~blanks~~ and other products. These agents monitor ~~duties and other~~ trade regulations and perform some of our quality control functions.

We also employ staff in China, Vietnam, Indonesia, ~~India~~ and other countries that are involved in sourcing and quality control functions to assist us in monitoring and coordinating our overseas production. By having employees in regions where we source our products, we enhance our ability to monitor factories to ensure their compliance with our standards of manufacturing practices. Our policies require every factory to comply with a code of conduct relating to factory working conditions and the treatment of workers involved in the manufacture of products.

We continue to explore new sourcing opportunities for finished goods and raw materials, and we believe we have established solid working relationships over many years with vendors who are financially stable and reputable, and who understand our product quality and delivery standards. However, in the event of any unanticipated substantial disruption of our relationships with, or performance by, key existing suppliers and/or contractors, there could be a short-term adverse effect on our operations.

A portion of our finished goods and raw materials must be committed to and purchased prior to the receipt of customer orders. If we overestimate the demand for a particular product, excess production can generally be distributed in our factory outlet stores or through secondary wholesale distribution channels, although this may be at reduced margins. If we overestimate the purchase of a particular raw material, it can generally be used in garments for subsequent seasons or in garments for distribution through our factory outlet stores or secondary wholesale distribution channels, although this may also be at reduced margins.

Imports and Import Restrictions

We import finished goods and raw materials for our domestic operations under multilateral and bilateral trade agreements between the U.S. and a number of foreign countries, including China and India. These agreements impose duties on the products that are imported into the U.S. from the affected countries. In Europe, we operate in the European Union (“EU”) within which there are few trade barriers. We also operate under constraints imposed on imports of finished goods and raw materials from outside the EU, including quotas and duty charges.

within which there are few trade barriers. We also operate under constraints imposed on imports of finished goods and raw materials from outside the EU, including quotas and duty charges.

Promotion and Advertising

The strength of our brands is based upon our history of developing excellent products and our active involvement in surf, skate and snow sports. We sponsor athletes who use our products in outdoor sports, such as surfing, skateboarding, snowboarding, skiing, and motocross, and produce or sponsor events that showcase these sports. Our brands have become closely identified with the lifestyle that is associated with those who are active in these sports. Accordingly, our advertising efforts are focused on presenting our products in the context of these sports and the lifestyle represented by participants in these sports.

We have relationships with leading athletes worldwide. These include ~~Rob~~Torah ~~Dyrdek~~Bright, ~~Torah~~Travis ~~Bright~~Rice, ~~Dane~~Candide ~~Reynolds~~Thorvex, Jeremy Flores, ~~Nyjah~~Robbie ~~Huston,~~Madison and Stephanie Gilmore, among many others. Along with these athletes, many of whom have achieved world champion status in their individual sports, we sponsor up-and-coming professionals and grass roots amateurs. We believe that these athletes ~~validate~~legitimize the ~~quality and~~ performance of our products, maintain an authentic connection with the core users of our products and create a general aspiration to the lifestyle that these athletes represent.

We have, and may continue to, sponsor certain surf, snow and skateboard events, and our sponsored athletes may participate in certain events and promotions. These events have included world-class boardriding events, such as the Quiksilver Pro (in France and Australia), and the Quiksilver In Memory of Eddie Aikau, which we believe is the most prestigious event among surfers. Some of our Quiksilver, DC and Roxy athletes participate in the Summer and Winter X-Games as well as the Olympics.

Our brand messages are communicated through advertising, public relations, social media, editorial content and other programming in both core and mainstream media. Through various entertainment initiatives, we bring our lifestyle message to an even broader audience through television, films, social media, online video, books and co-sponsored events and products.

Trademarks and Patents

Trademarks

We own the “Quiksilver” and “Roxy” trademarks and the related "mountain and wave" and "heart" logos in virtually every country in the world in apparel, footwear and related accessory product classifications. For our DC brand, we own the trademarks “DC Shoes,” “DCSHOECOUSA,” and the related “DC Star” logo in many countries in apparel, footwear and related accessory product classifications. In addition, we maintain a portfolio of other trademarks related to both our core and non-core brands.

We apply for and register our trademarks throughout the world, mainly for use on apparel, footwear, accessories and related products, as well as for retail services. We believe our trademarks and our other intellectual property are crucial to the successful marketing and sale of our products, and we attempt to vigorously prosecute and defend our rights throughout the world. Because of the success of our trademarks, we also maintain global anti-counterfeiting programs to protect our brands.

Patents

Our patent portfolio contains patents and applications primarily related to wetsuits, skate shoes, watches, boardshorts and snowboard boots.

Competition

We face competition from many global lifestyle brands and companies such as Nike, VF Corp., Kering, Vans, Reebok, North Face, Billabong, Hurley, Rip Curl, Volcom, Etnies, O'Neil, and ~~Tom’s~~Under ~~Shoes~~Armour, as well as other regional and local brands that compete with us for market share and floor space with our wholesale customers.

In addition to brand competition, we face distribution channel competition. Our retail stores compete with multi-brand wholesale accounts, as well as vertical retail brands such as Hollister, Gap, and Abercrombie & Fitch, and retail stores of our brand competitors such as Nike stores, Billabong stores, and Vans stores, among others. We also face competition from non-branded retailers such as H&M, Zara and Forever 21.

Our retail stores and e-commerce websites also compete with the e-commerce websites of our wholesale accounts, competitive brands, and online-only competitors such as Amazon and e-Bay, globally, Zappos in the Americas, Zalando in EMEA and TaoBao in China.

Some of our competitors are significantly larger than we are and may have substantially greater resources than we have.

We compete primarily on the basis of successful brand management, product design, product quality, pricing, service and delivery. To remain competitive, we must:


•	maintain our reputation for authenticity in the core outdoor sports lifestyle markets;


•	continue to develop and respond to global fashion and lifestyle trends in our markets;


•	create innovative, high quality and stylish products at appropriate price points;


•	convey our outdoor sports lifestyle messages to consumers worldwide; and


•	source and deliver products on time to our wholesale customers.

Employees

At October 31, ~~2014~~2015, we had approximately 65,~~100~~700 full-time equivalent employees, consisting of approximately 21,~~400~~900 in the Americas, approximately 2,~~300~~200 in EMEA and approximately 1,~~400~~600 in APAC. None of these employees are represented by trade unions. Certain French employees are represented by workers' councils who negotiate with management on behalf of the employees. Management is generally required to share its plans with the workers’ councils, to the extent that these plans affect the represented employees. We have never experienced a work stoppage and consider our working relationships with our employees and the workers’ councils to be good.

Environmental Matters

Some of our facilities and operations have been or are subject to various federal, state and local environmental laws and regulations which govern, among other things, the use and storage of hazardous materials, the storage and disposal of solid and hazardous wastes, the discharge of pollutants into the air, water and land, and the cleanup of contamination. Some of our third party manufacturing partners use, among other things, inks and dyes, and produce related by-products and wastes. We have acquired businesses and properties in the past, and may do so again in the future. In the event we or our predecessors fail or have failed to comply with environmental laws, or cause or have caused a release of hazardous substances or other environmental damage, whether at our sites or elsewhere, we could incur fines, penalties or other liabilities arising out of such noncompliance, releases or environmental damage. Compliance with and liabilities under environmental laws and regulations did not have a significant impact on our capital expenditures, results of operations or competitive position during the ~~last three~~ fiscal years presented in this report.

Discontinued Operations

We have divested or exited certain non-core businesses in order to improve our focus on our three flagship brands. In November 2013 (our fiscal 2014), we completed the sale of Mervin Manufacturing, Inc. (“Mervin”), a manufacturer of snowboards and related products under the Lib Technologies and GNU brands, for $58 million. In January 2014 (our fiscal 2014), we completed the sale of substantially all of the assets of Hawk Designs, Inc. (“Hawk”), our subsidiary that owned and operated our Hawk brand, for $19 million. Both the Mervin and Hawk businesses had been classified as "held for sale" as of October 31, 2013.

Our equity interest in Surfdome Shop, Ltd. (“Surfdome”), a multi-brand e-commerce retailer, has been classified as "held for sale" as of October 31, 2014 and 2013. In December 2014 (our fiscal 2015), we sold our 51% ownership stake in Surfdome. At the completion of the sale, we received net proceeds of approximately $16 million, which included payments to us for all outstanding loans and trade receivables.

The results of operations of these three businesses are reflected in discontinued operations for the period presented herein. See Note ~~18,~~19 "— Discontinued Operations" to our consolidated financial statements for further discussion of the operating results of our discontinued operations.

~~For~~ ~~additional information related to the sale of these businesses, see Item 7. "Management's Discussion and Analysis — Discontinued Operations".~~12

For additional information related to the sale of these businesses, see Item 7. "Management's Discussion and Analysis — Discontinued Operations."

Available Information

We file our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and registration statements, and any amendments thereto, with the ~~Securities and Exchange Commission (~~SEC). All such filings are available online through the SEC’s website at http://www.sec.gov or on our corporate website at http://www.quiksilverinc.com. We make available free of charge, on or through our corporate website, our annual, quarterly and current reports, and any amendments to those reports, as soon as reasonably practicable after electronically filing such reports with the SEC. All court documents and additional information regarding the Bankruptcy Cases are available online through our noticing agent’s website, http://www.kccllc.net/quiksilver. In addition, copies of the written charters for the committees of our board of directors, our Corporate Governance Guidelines, our Code of Ethics for Senior Financial Officers and our Code of Business Conduct and Ethics are also available on our website, and can be found under the Investor Relations-Corporate Governance links. Copies are also available in print, free of charge, by writing to Investor Relations, Quiksilver, Inc., 5600 Argosy Circle BLDG 100, Huntington Beach, California 92649. We may post amendments or waivers of our Code of Ethics for Senior Financial Officers and Code of Business Conduct and Ethics, if any, on our website. This website address is intended to be an inactive textual reference only, and none of the information contained on our website is part of this report or is incorporated in this report by reference.

7 13

and can be found under the Investor Relations-Corporate Governance links. Copies are also available in print, free of charge, by writing to Investor Relations, Quiksilver, Inc., 15202 Graham Street, Huntington Beach, California 92649. We may post amendments or waivers of our Code of Ethics for Senior Financial Officers and Code of Business Conduct and Ethics, if any, on our website. This website address is intended to be an inactive textual reference only, and none of the information contained on our website is part of this report or is incorporated in this report by reference.

Item 1A. RISK FACTORS

Cautionary Note Regarding Forward-Looking Statements

This report on Form 10-K contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are often, but not always, identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “outlook,” “strategy,” “future,” “likely,” “may,” “should,” “could,” “will” and similar references to future periods. ~~Examples of forward-looking statements include, but are not limited to, statements we make regarding:~~

•Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current orbeliefs, expectations and assumptions regarding the future ~~volatility~~of inour ~~certain~~business, ~~economies~~future plans and strategies, ~~credit~~projections, ~~markets~~anticipated events and ~~future~~trends, ~~market~~the economy and other future conditions;. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Any forward-looking statement made by us in this report is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

• our belief that we have sufficient liquidity to fund our business operations during the next twelve months; and

• our expectations regarding our level of capital expenditures in fiscal 2015; and

• our expectations regarding the future performance of our business.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

• our ability to execute our mission and strategies;

• our ability to achieve the financial results that we anticipate;

• our ability to improve our business performance;

• our ability to effectively transition our supply chain and certain other business processes to global scope;

• future expenditures for capital projects;

• increases in production costs and raw materials and disruptions in the supply chains for these materials;

• deterioration of global economic conditions and credit and capital markets;

• potential non-cash asset impairment charges for goodwill, intangible assets or other fixed assets;

• our ability to continue to maintain our brand image and reputation;

• foreign currency exchange rate and interest rate fluctuations;

• our ability to remain compliant with our debt covenants;

• payments due on contractual commitments and other debt obligations;

• our ability to finance our operations;

• changes in political, social and economic conditions and local regulations, particularly in Europe and Asia;

• the occurrence of hostilities or catastrophic events;

• changes in customer demand; and

• disruptions to or breaches of our computer systems and software, as well as natural events such as severe weather, fires, floods and earthquakes or man-made or other disruptions of our operating systems, structures or equipment.

Any forward-looking statement made by us in this report is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Our business faces numerous risks, many of which are beyond our control. The impact of these risks, as well as other unforeseen risks, could have a material negative impact on our business, financial condition or results of operations. The trading price of our common stock or our senior notes could decline as a result. You should consider these risks before deciding to invest in, or maintain your investment in, our common stock or senior notes.

WeBankruptcy-Specific ~~may~~Risk ~~not be successful in improving our results of operations or financial condition.~~Factors

WeQuiksilver, ~~have~~Inc. ~~recently~~and ~~made~~certain ~~significant~~of ~~changes in~~ our ~~strategic~~subsidiaries ~~focus,~~are ~~senior~~subject ~~management,~~to ~~operational~~risks ~~processes,~~and ~~organizational~~uncertainties ~~structure,~~associated ~~location~~with ofour ~~key~~voluntary ~~business~~proceedings ~~functions,~~under ~~expense~~Chapter ~~structure,~~11 ~~brand~~of ~~portfolio,~~the ~~marketing~~Bankruptcy ~~allocation,~~Code ~~and~~filed ~~product~~with ~~pricing~~the inBankruptcy ~~order~~Court toon ~~improve~~September ~~our~~9, ~~performance~~2015. For ~~There~~the ~~can~~duration beof nothe ~~guarantee~~bankruptcy ~~that~~proceedings, ~~these~~our ~~changes~~operations ~~will~~and ~~result~~our inability ~~improved operating results. Additionally, as we work~~ to ~~globalize~~execute ~~certain~~our business ~~processes,~~strategy ~~changes~~will inbe ~~existing~~subject ~~processes~~to ~~may~~risks ~~result in unforeseen issues~~ and ~~complications~~uncertainties ~~that~~associated ~~could~~with ~~have~~bankruptcy. These arisks ~~material adverse effect on our results of operations and financial condition.~~include:

We• ~~may~~our beability ~~unable~~ to continue toas ~~reduce~~a ~~SG&A~~going ~~at the same pace.~~concern;

We• ~~have~~our ~~recently~~ability ~~undertaken~~to ~~various~~obtain ~~restructuring~~Bankruptcy ~~activities,~~Court ~~including~~approval ~~staff~~with ~~reductions,~~respect ~~discontinuation of certain product categories or brands, exiting facilities, and other expense reductions. We believe these activities have contributed~~ to ~~reducing~~motions ~~overall~~filed ~~SG&A~~in ~~levels on a go-forward basis. However, if we do not undertake additional restructuring activities, or decrease~~ the ~~pace~~Bankruptcy ofCases ~~such~~from ~~restructuring~~time ~~activities, we will be unable~~ to ~~sustain further SG&A reductions in future periods, which could be perceived negatively and, as a result, our stock price could decline.~~time;


•	our ability to develop, execute, confirm and consummate the Proposed Plan or any other plan of reorganization with respect to the Bankruptcy Cases;


•	the ability of third parties to seek and obtain court approval to terminate or shorten the exclusivity period for us to propose and confirm a plan of reorganization, to appoint a U.S. trustee or to convert the Bankruptcy Cases to chapter 7 cases;


•	our ability to obtain and maintain normal payment and other terms with credit card companies, customers, vendors and service providers;


•	our ability to maintain contracts that are critical to our operations;


•	our ability to attract, motivate and retain management and other key employees;


•	our ability to retain key vendors or secure alternative supply sources;


•	our ability to fund and execute our business plan; and


•	our ability to obtain acceptable and appropriate financing.

We are subject to risks and uncertainties with respect to the actions and decisions of our creditors and other third parties who have interests in our Bankruptcy Cases that may be inconsistent with our plans.

These risks and uncertainties could significantly affect our business and operations in various ways. For example, negative publicity or events associated with the Bankruptcy Cases could adversely affect our relationships with our vendors and employees, as well as with customers, which in turn could adversely affect our operations and financial condition. Also, pursuant to the Bankruptcy Code, we need Bankruptcy Court approval for transactions outside the ordinary course of business, which may limit our ability to respond to certain events in a timely manner or take advantage of certain opportunities. Because of the risks and uncertainties associated with the Bankruptcy Cases, we cannot predict or quantify the ultimate impact that

events occurring during the Chapter 11 proceedings and its outcome will have on our business, financial condition and results of operations, and the certainty as to our ability to continue as a going concern.

As a result of the Bankruptcy Cases, realization of assets and liquidation of liabilities are subject to uncertainty. While operating under the protection of the Bankruptcy Code, and subject to Bankruptcy Court approval or otherwise as permitted in the normal course of business, we may sell or otherwise dispose of a portion or all of our assets and liquidate or settle liabilities for amounts other than those reflected in our consolidated financial statements. Further, a plan of reorganization could materially change the amounts and classifications reported in our consolidated historical financial statements, which do not give effect to any adjustments to the carrying value of assets or amounts of liabilities that might be necessary as a consequence of confirmation of a plan of reorganization.

Our businesses could suffer from a long and protracted restructuring.

Our future results are dependent upon the successful confirmation and implementation of a plan of reorganization. Failure to obtain this approval in a timely manner could adversely affect our operating results and cash flows, as our ability to obtain financing to fund our operations may be adversely affected by a protracted bankruptcy proceeding. If a protracted reorganization or liquidation is to occur, there is a significant risk that our enterprise value would be substantially eroded to the detriment of all stakeholders.

Furthermore, we cannot predict the ultimate amount of all settlement terms for the liabilities that will be subject to the plan of reorganization. Even if a plan of reorganization is approved and implemented, our operating results and cash flows may be adversely affected by the possible reluctance of prospective lenders to do business with a company that may have recently emerged from bankruptcy.

Operating under Chapter 11 of the Bankruptcy Code may restrict our ability to pursue our business strategies.

Under Chapter 11 of the Bankruptcy Code, transactions outside the ordinary course of business will be subject to the prior approval of the Bankruptcy Court, which may limit our ability to respond to certain events in a timely manner or take advantage of certain opportunities. We must obtain Bankruptcy Court approval to, among other things:


•	engage in certain transactions with our vendors;


•	buy or sell assets outside the ordinary course of business;


•	consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and


•	borrow for our operations, investments or other capital needs or to engage in other business activities that would be in our interest.

We may not be able to obtain confirmation of our Proposed Plan, sufficient debtor-in-possession financing may not be available, and our emergence from the Bankruptcy Cases is not assured.

There can be no assurance that the Proposed Plan (or any other plan of reorganization) will be approved by the Bankruptcy Court, you should exercise extreme caution with respect to existing and future investments in our securities.

There can be no assurances that we will receive the requisite votes to confirm the Proposed Plan. We might also receive official objections to confirmation of the Proposed Plan from the various bankruptcy committees and stakeholders in the Bankruptcy Cases. As such, we cannot predict the impact that any objection might have on the Bankruptcy Court’s decision whether to confirm or not the Proposed Plan. Any objection may cause us to devote significant resources in response which could have a material adverse effect on our business, financial condition and results of operations. In addition, the DIP Facilities may not be sufficient to meet our liquidity requirements or may be restricted or ultimately terminated by the lenders under the DIP Facilities for our breach thereof.

If the Proposed Plan is not confirmed by the Bankruptcy Court, or cash flows and borrowings under the DIP Facilities are not sufficient to meet our liquidity requirements, it is uncertain whether we would be able to reorganize our business. It is also not certain whether any distributions holders of claims against us, including holders of our secured and unsecured debt and equity, would ultimately receive any sum of money with respect to their claims. Our debtors would likely incur significant costs in connection with developing and seeking approval of an alternative plan of reorganization, or additional financing, which might not be supported by any of the current debt holders, various bankruptcy committees or other stakeholders. If an alternative plan of reorganization could not be agreed upon, or additional financing could not be secured, it is possible that we would have to liquidate a portion or all of our assets, in which case it is likely that holders of claims would receive substantially less favorable distribution than they would receive if we were to emerge as a viable, reorganized entity. There can also be no assurance as to

whether we will successfully reorganize and emerge from the Bankruptcy Cases or, if we do successfully reorganize, as to when we would emerge from the Bankruptcy Cases.

The PSA may terminate.

The PSA may terminate if, among other things, the deadlines set forth therein are not met or if the conditions precedent to the Plan Sponsors’ obligation to support the Proposed Plan or to confirm the Proposed Plan are not satisfied in accordance with the terms of the PSA. If the PSA terminates, we may not be able to obtain the support necessary to confirm the Proposed Plan.

The Backstop Commitment Letter may terminate.

The occurrence of the effective date of the Proposed Plan is predicated on, among other things, the receipt of the Backstop Commitment (as defined in the Backstop Commitment Letter) pursuant to the Backstop Commitment Letter. The Backstop Commitment Letter may terminate if, among other things, any Plan Sponsor Termination Event, as described in § 5.01 of the PSA, occurs. If we do not receive the Backstop Commitment, we will not be able to effectuate the transactions scheduled for consummation on the Effective Date.

The Debtors may not be able to consummate the Rights Offering.

The occurrence of the Effective Date is predicated on, among other things, the consummation of the Rights Offerings. We may not be able to consummate the Rights Offerings if, among other things, we do not receive the Backstop Commitment from the Backstop Parties. Failure to consummate the Exit Rights Offering will result our inability to effectuate the transactions scheduled for consummation on the Effective Date.

The Debtors may not be able to obtain favorable pricing with respect to the Exit Facility or may not be able to secure commitments for exit financing.

The occurrence of the Effective Date is predicated on, among other things, the receipt of financing under the Exit Facility. We do not have committed financing for this credit facility. Although we intend to negotiate with the DIP Lenders and others with respect to the Exit Facility, there can be no assurance that we will be able to negotiate definitive documents and receive any or all of the necessary financing, or that we will receive the Exit Financing on favorable terms. If we do not receive the necessary financing under the Exit Facility, we will not be able to effectuate the transactions scheduled for consummation on the Effective Date.

We depend on key personnel and may not be able to retain those employees or recruit additional qualified personnel.

We are highly dependent on the continuing efforts of our senior management team and other key personnel to execute our business plans. Our deteriorating financial performance, along with the Bankruptcy Cases, puts us at risk of losing talent critical to the successful reorganization and ongoing operation of our business. Our business, financial condition, and results of operations could be materially adversely affected if we lose any of these persons during or subsequent to the Bankruptcy Cases, including as a result of any planned overhead reductions required by our business plan. Furthermore, we may be unable to attract and retain qualified replacements as needed in the future. Following the Effective Date, we plan to implement a Management Incentive Plan, which may mitigate some of the foregoing risks.

Our senior management team and other key personnel may not be able to execute the business plans as currently developed, given the substantial distraction to such individuals caused by these Bankruptcy Cases.

As discussed above, the execution of our business plans depends on the efforts of our senior management team and other key personnel to execute our business plans. Such individuals may be required to devote significant efforts to the Bankruptcy Cases, thereby potentially impairing their abilities to execute the business plans. Accordingly, our business plan may not be implemented as anticipated, which may cause its financial results to materially deviate from the current projections.

We may be subject to claims that will not be discharged in the Bankruptcy Cases, which could have a material adverse effect on our results of operations and profitability.

The Bankruptcy Code provides that the confirmation of a plan of reorganization discharges a debtor from substantially all debts arising prior to confirmation and specified debts arising afterwards. With few exceptions, all claims that arose prior to September 9, 2015 and before confirmation of the plan of reorganization (i) would be subject to compromise and/or treatment under the plan of reorganization or (ii) would be discharged in accordance with the Bankruptcy Code and the terms of the plan of reorganization. Any material claims not ultimately discharged by the Bankruptcy Court could have an adverse effect on our results of operations and profitability.

Our financial results may be volatile and may not reflect historical trends.

While in bankruptcy, we expect our financial results to continue to be volatile as asset impairments and dispositions, restructuring activities, contract terminations and rejections, and claims assessments may significantly impact our consolidated financial statements. As a result, our historical financial performance is likely not indicative of our financial performance after the date of the bankruptcy filings. In addition, if we emerge from bankruptcy, the amounts reported in subsequent consolidated financial statements may materially change relative to historical consolidated financial statements, as a result of revisions to our operating plans pursuant to a plan of reorganization. Moreover, if we emerge from bankruptcy, we may be required to adopt fresh start accounting. If fresh start accounting is applicable, our assets and liabilities will be recorded at fair value as of the fresh start reporting date. The fair value of our assets and liabilities may differ materially from the recorded values of assets and liabilities on our consolidated balance sheets. If fresh start accounting is required, our financial results after the application of fresh start accounting may be materially different from historical trends.

We may not have sufficient cash to maintain our operations during the Bankruptcy Cases or fund our emergence from the bankruptcy.

Because of our weakened financial condition, we will have heightened exposure to, and less ability to withstand, the operating risks that are customary in our industry, such as fluctuations in raw material prices and currency exchange rates. Any of these factors could result in the need for substantial additional funding. A number of other factors, including our Chapter 11 filings, our financial results in recent years, our substantial indebtedness and the competitive environment we face, adversely affect the availability and terms of funding that might be available to us during, and upon emergence from, the bankruptcy. As such, we may not be able to source capital at rates acceptable to us, or at all, to fund our current operations or our exit from bankruptcy. The inability to obtain necessary additional funding on acceptable terms would have a material adverse impact on us and on our ability to sustain our operations, both currently and upon emergence from bankruptcy.

Additional Risk Factors

Financial and competitive difficulties of our wholesale customers (independent retailers) may negatively impact our revenues and profitability.

Our wholesale business has been negatively impacted in some areas due to financial and competitive difficulties experienced by some of our independent wholesale customers. Our business may continue to be adversely impacted in the future as a result of such difficulties. Any continuation of financial and competitive difficulties for, or deterioration in the financial health of, our current or prospective wholesale customers could result in decreased sales, uncollectible receivables, increased product returns, decreased margins, or an inability to introduce new products or generate new business. Also, any consolidation of retail accounts, or concentration of market share in a specific area, could significantly increase our credit risk. Any or all of these factors could have a material adverse effect on our business, financial condition, and results of operations.

Additionally, as consumers become more confident shopping online, our wholesale channel customers face increased competition from online competitors, including, but not limited to, Amazon in the Americas, Zalando in EMEA, and Taobao in China. These online competitors may have lower cost structures, higher sales volumes, wider product assortments, and faster marketing response times than some of our traditional wholesale channel customers. In addition, our smaller independent wholesale accounts may face competitive challenges from large multi-location accounts that benefit from better pricing and terms due to higher purchasing volume, larger marketing investments, higher levels of support from suppliers, and superior financial condition. Also, we have made, and plan to make, changes to our wholesale sales force structure whereby wholesale accounts generating less than a minimum annual order volume will not be serviced by a salesperson, but will instead be provided a self-service website from which they may order our products. Lastly, our plans to reduce the size of our product assortment available to wholesale customers could have the effect of reducing wholesale revenues. We have experienced, and expect to continue to experience, difficulties in expanding or maintaining our wholesale channel revenues due to these and other factors. Such difficulties in our wholesale channel could have a material adverse impact on our operating results, financial condition and ~~stock~~the ~~price~~Bankruptcy Cases.

Unfavorable economic conditions could have a material adverse effect on our business, results of operations and financial condition.

Our financial performance has been, and may continue to be, negatively affected by unfavorable economic conditions. Continued or further recessionary economic conditions, or other macro economic factors, may have an adverse impact on our sales volumes, pricing levels and profitability. As domestic and international economic conditions change, trends in discretionary consumer spending become unpredictable and subject to reductions due to uncertainties about the future. When consumers reduce discretionary spending, purchases of specialty apparel and footwear, like our products, tend to decline which may result in reduced orders from retailers for our products, order cancellations, and/or unanticipated discounts. A continuation of the general reduction in consumer discretionary spending in the domestic and international economies, as well as the impact

9 17

of ~~the general reduction in consumer discretionary spending in the domestic and international economies, as well as the impact of~~ tight credit markets on us, our suppliers, other vendors or customers, could have a material adverse effect on our results of operations and financial condition.

The apparel, footwear and accessories industries are each highly competitive, and if we fail to compete effectively, we could lose our market position and/or market share.

The apparel, footwear and accessories industries are each highly competitive. We compete against a number of domestic and international brands, manufacturers, retailers and distributors of apparel, footwear and accessories. In order to compete effectively, we must: (1) maintain the image of our brands and our reputation for authenticity in our core markets; (2) be flexible and innovative in responding to rapidly changing market demands; and (3) offer consumers a wide variety of high quality products at competitive prices.

The purchasing decisions of consumers are highly subjective and can be influenced by many factors, such as brand image, marketing programs and product design. Several of our global competitors enjoy substantial competitive advantages, including greater financial resources for competitive activities, such as sales, marketing, strategic acquisitions and athlete endorsements. The number of our direct competitors and the intensity of competition may increase as we expand into other product lines or as other companies expand into our product categories. Our competitors may enter into business combinations or alliances that strengthen their competitive positions or prevent us from taking advantage of such combinations or alliances. Our competitors also may be able to respond more quickly and effectively than we can to new or changing opportunities, standards or consumer preferences. Our competitors may offers sales terms and conditions that we are unwilling or unable to match. If we fail to retain our competitive position, our sales could decline significantly which would have a material adverse effect on our market share or results of operations, financial condition and liquidity.

If we are unable to develop innovative and stylish products in response to rapid changes in consumer demands and fashion trends, we may suffer a decline in our revenues and market share.

The apparel, footwear and accessories industries are subject to rapidly changing consumer demands based on fashion trends and performance features. Our success depends, in part, on our ability to anticipate, gauge and respond to these changing consumer preferences in a timely manner while preserving the authenticity and image of our brands and the quality of our products.

As is typical with new products, market acceptance of new designs and products we may introduce is subject to uncertainty. In addition, we generally make decisions regarding product designs months in advance of the time when consumer acceptance can be measured. If trends shift away from our products, or if we misjudge the market for our product lines, we may be faced with significant amounts of unsold inventory or other conditions which could have a material adverse effect on our results of operations and financial condition.

The failure of new product designs or new product lines to gain market acceptance could also adversely affect our business and the image of our brands. Achieving market acceptance for new products may also require substantial marketing efforts and expenditures to expand consumer demand. These requirements could strain our management, financial and operational resources. If we do not continue to develop stylish and innovative products that provide better design and performance attributes than the products of our competitors, or if our future product lines misjudge consumer demands, we may lose consumer loyalty, which could result in a decline in our revenues and market share.

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

We maintain an inventory of selected products that we anticipate will be in demand. We may be unable to sell the products we have ordered in advance from manufacturers or that we have in our inventory. Inventory levels in excess of customer demand may result in inventory write-downs or the sale of excess inventory at discounted or closeout prices. These events could significantly harm our operating results and impair the image of our brands. Conversely, if we underestimate consumer demand for our products or if our manufacturers fail to supply quality products in a timely manner, we may experience inventory shortages, which might result in unfilled orders, negatively impact customer relationships, diminish brand loyalty and result in lost revenues, any of which could harm our business.

Our business could be harmed if we fail to execute our internal plans to transition our supply chain and certain other business processes to global scope.

We are in the process of transitioning our footwear and apparel supply chains, as well as certain other business processes, to global scope. If our globalization efforts fail to produce planned efficiencies, or the transition is not managed effectively, we may experience excess inventories, inventory shortage, late deliveries, lost revenues, or increased costs. Any business disruption arising from our globalization efforts, or our failure to effectively execute our internal plans for globalization, could adversely impact our results of operations and financial condition.

Our business could be harmed if we are unable to accurately forecast demand for our products.

To ensure adequate inventory supply, we forecast inventory needs and place orders with our manufacturers before firm orders are placed by our customers. If we fail to accurately forecast customer demand, we may experience excess inventory levels or a shortage of product to deliver to our customers.

Inventory levels in excess of customer demand may result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which would have an adverse effect on gross margin. In addition, if we underestimate the demand for our products, our manufacturers may not be able to produce products to meet our customer requirements, and this could result in delays in the shipment of our products and our ability to satisfy customer demand, as well as damage to our reputation and customer relationships. A failure to accurately predict the level of demand for our products could cause a decline in revenue and adversely impact our results of operations and financial condition.

The demand for our products is seasonal and is dependent upon several unpredictable factors.

Consumer demand for our products can fluctuate significantly from quarter to quarter and year to year. Consumer demand is dependent on many factors, including customer acceptance of our product designs, fashion trends, economic conditions, changes in consumer spending, weather patterns during peak selling periods, and numerous other factors beyond our control. The seasonality of our business and/or misjudgment in anticipating consumer demands could have a material adverse effect on our financial condition and results of operations.

Our industry is subject to pricing pressures that may adversely impact our financial performance.

We source many of our products offshore because manufacturing costs, particularly labor costs, are generally less than in the U.S. Many of our competitors also source their products offshore, possibly at lower costs than ours, and they may use these cost savings to reduce prices. To remain competitive, we may be forced to adjust our prices from time to time in response to these pricing pressures. As a result, our financial performance may be negatively affected if we are forced to reduce our prices while we are unable to reduce production costs or our production costs increase and we are unable to proportionately increase our prices. Any inability on our part to effectively respond to changing prices and sourcing costs could have a material adverse effect on our results of operations, financial condition and liquidity.

Our wholesale pricing strategies may adversely impact our financial performance.

We have recently made, and may continue to make, adjustments to our wholesale prices. We believe these reductions in our wholesale pricing will result in improved in-season sell through of our products by our wholesale customers, reduced product markdowns, and reduced product returns. We believe these reductions in wholesale prices, when combined with related reductions in markdowns and returns, will not be detrimental to our gross margin. If these reductions in our wholesale prices do not result in reductions in markdowns and returns, this could have a material adverse effect on our gross margin, results of operations, financial condition and liquidity.

Fluctuations in the cost and availability of raw materials, labor, and transportation could cause manufacturing delays and increase our costs.

The prices of the fabrics used to manufacture our products depend largely on the market prices for the raw materials used to produce them, particularly cotton. The price and availability of such raw materials may fluctuate significantly, depending on many factors, including crop yields and weather patterns. In addition, the cost of labor at many of our third party manufacturers has been increasing significantly. The cost of logistics and transportation fluctuates in large part due to the price of oil. Any fluctuations in the cost and availability of any of our raw materials or other sourcing costs could have a material adverse effect on our gross margins and our ability to meet consumer demands.

Factors affecting international commerce and our international operations may seriously harm our financial condition.

We generate the majority of our revenues from outside of the United States, and we anticipate that revenue from our international operations could account for an increasingly larger portion of our revenue in the future. Our international operations are directly related to, and dependent on, the volume of international trade and foreign market conditions. International commerce and our international operations are subject to many risks, including:

operations are directly related to, and dependent on, the volume of international trade and foreign market conditions. International commerce and our international operations are subject to many risks, including:


•	recessions in foreign economies;


•	fluctuations in foreign currency exchange rates;


•	the adoption and expansion of trade restrictions;


•	limitations on repatriation of earnings;


•	difficulties in protecting our intellectual property or enforcing our intellectual property rights under the laws of other countries;


•	longer receivables collection periods and greater difficulty in collecting accounts receivable;

• social, political and economic instability, terrorism or other hostilities;


•	unexpected changes in regulatory requirements;


•	fluctuations in foreign tax rates;


•	tariffs, sanctions and other trade barriers; and


•	U.S. government licensing requirements for exports.

The occurrence or consequences of any of these risks may restrict our ability to operate in the affected regions and decrease the profitability of our international operations, which may harm our financial condition.

We have established, and may continue to establish, joint ventures in various foreign territories with independent third party business partners to distribute and sell Quiksilver, Roxy, DC and other branded products in such territories. In addition, we may decide to acquire the remaining portion of existing joint ventures that we do not own. These joint ventures are subject to substantial risks and liabilities associated with their operations, as well as the risk that our relationships with our joint venture partners do not succeed in the manner that we anticipate. If our joint venture operations, or our relationships with our joint venture partners, are not successful, we could face litigation or legal costs in connection with exiting the relationship or delays in making planned changes to our operations in the applicable territories. These costs, delays, and/or investments could adversely impact our ~~our~~ financial condition ~~and/or the market price of our common stock~~.

We have operations in certain emerging markets and developing countries where the risk of asset misappropriation, civil unrest or social instability, theft, other crimes, or frivolous claims is higher than in more developed countries. Likewise, there is less protection for intellectual property rights of foreign companies in these jurisdictions. These risks can significantly increase the cost of operations in such markets.

In addition, as we continue to expand our overseas operations, we are subject to certain anti-corruption laws, including the U.S. Foreign Corrupt Practices Act, in addition to the laws of the foreign countries in which we operate. We must use all commercially reasonable efforts to ensure our employees and agents comply with these laws. If any of our overseas operations, or our employees or agents, violates such laws, we could become subject to sanctions or ~~other~~significant penalties that could negatively affect our reputation, business and operating results.

Uncertainty of changing international trade regulations and quotas on imports of textiles and apparel may adversely affect our business.

Quotas, duties or tariffs may have a material adverse effect on our business, financial condition and results of operations. We currently import raw materials and/or finished garments into the majority of countries in which we sell our products. Substantially all of our import operations are subject to customs duties.

In addition, the countries in which our products are manufactured or into which they are imported may, from time to time, impose new quotas, duties, tariffs, requirements as to where raw materials must be purchased, new workplace regulations or other restrictions on our imports, or otherwise adversely modify existing restrictions. Adverse changes in these costs and restrictions could harm our business.

We rely on third party manufacturers and problems with, or loss of, our suppliers or raw materials could harm our business and results of operations.

Substantially all of our products are produced by independent manufacturers. We face the risk that these third party manufacturers with whom we contract to produce our products may not produce and deliver our products on a timely basis, or at all. We also may be subject to credit reductions and other changes in our business relationships with our suppliers, vendors and customers if they perceive that we would be unable to pay our debts to them in a timely manner. We cannot be certain that we will not experience operational difficulties with our manufacturers, such as reductions in the availability of production capacity, errors in complying with product specifications and regulatory and customer requirements, insufficient quality control, failures to meet production deadlines, increases in materials and manufacturing costs or other business interruptions or failures due to deteriorating economies. The failure or unwillingness of any manufacturer to perform to our expectations could result in supply shortages or delays for certain products and harm our business. Our business may also be harmed by material increases to our cost of goods as a result of increasing labor costs, which manufacturers have recently faced.

If our independent manufacturers fail to comply with appropriate laws, regulations, safety codes, employment practices, human rights, quality standards, environmental standards, production practices, or other obligations and norms, our reputation and brand image could be negatively impacted and we could be exposed to litigation and additional costs which would adversely affect our operational efficiency and results of operations.

The capacity of our manufacturers to manufacture our products also is dependent, in part, upon the availability of raw materials. Our manufacturers may experience shortages of raw materials, which could result in delays in deliveries of our products by our manufacturers or increased costs to us. Any shortage of raw materials or inability of a manufacturer to manufacture or ship our products in a timely manner, or at all, could impair our ability to ship orders of our products in a cost-efficient, timely manner and could cause us to miss the delivery requirements of our customers. As a result, we could experience cancellations of orders, refusals to accept deliveries, or reductions in our prices and margins, any of which could harm our financial performance and results of operations.

~~Labor~~ ~~disruptions at our suppliers, manufacturers, common carriers or ports may adversely affect our business.~~20

~~Our~~manufacture ~~business~~or ~~depends~~ship on our ~~ability to source and distribute~~ products in a timely manner., Asor aat ~~result~~all, wecould ~~rely~~impair onour ~~the~~ability ~~timely~~to ~~and~~ship ~~free~~orders ~~flow~~ of ~~goods~~our ~~through~~products ~~open~~in ~~and operational ports worldwide and on~~ a ~~consistent~~cost-efficient, ~~basis~~timely ~~from~~manner ~~our suppliers~~ and ~~manufacturers.~~could ~~Labor~~cause ~~disputes~~us orto ~~disruptions~~miss atthe ~~various~~delivery ~~ports,~~requirements ~~our~~of ~~common carriers, or at~~ our ~~suppliers~~customers. As ora ~~manufacturers~~result, ~~create~~we ~~significant~~could ~~risks~~experience ~~for~~cancellations ~~our~~of ~~business~~orders, ~~particularly~~refusals ifto ~~these~~accept ~~disputes result in work slowdowns~~deliveries, ~~lockouts, strikes~~ or ~~other~~reductions ~~disruptions~~in ~~during~~ our ~~peak~~prices ~~importing~~and ormargins, ~~manufacturing~~any ~~seasons,~~of ~~and~~which could ~~have~~harm ~~an adverse effect on~~ our ~~business,~~financial ~~potentially~~performance ~~resulting in canceled orders by customers, unanticipated inventory accumulation or shortages,~~ and ~~an adverse impact on our~~ results of operations ~~and financial condition~~.

Our ~~business~~manufacturing ~~could~~and ~~suffer~~logistics ifproviders wemay ~~lose~~be ~~key~~unable ~~management~~ or ~~are~~unwilling ~~unable~~ to ~~attract~~do ~~and~~business ~~retain~~with ~~the~~us, ~~talent~~and ~~required~~manufacture ~~for~~or delivery of our ~~business~~goods and merchandise may be delayed.

~~Our~~We ~~performance~~order isgoods ~~significantly~~for ~~impacted~~each by“selling season” several months in advance of the ~~efforts~~start of such season, and ~~abilities~~the ofgoods ~~our~~must ~~senior~~be ~~management~~placed ~~team.~~“on Ifboard” wevessels ~~lose~~for shipment as early as three months prior to the ~~services~~start of ~~one~~the orseason. As ~~more~~the first batches of ~~our~~products ~~key~~arrive ~~executives~~in the United States, wethey ~~may~~ are distributed through retail and wholesale channels to fill orders for the start of the selling season. If the first scheduled shipments are missed, there will simply not be ~~able~~time for another vendor to ~~successfully~~produce ~~manage~~replacement goods. This would jeopardize our ~~business~~ability orto ~~achieve~~service our ~~business~~customers, ~~objectives~~and would likely result in reduced customer goodwill and loss of market share. Not Ifonly would we ~~are~~be unable to ~~recruit~~supply ~~and~~its ~~retain~~retail ~~qualified~~stores, ~~management~~our ~~personnel~~relationships inwith aour ~~timely~~wholesalers ~~manner~~may be jeopardized, as the wholesalers may choose to work with other suppliers for the remainder of the season. If our ~~results~~manufacturers or logistics providers are unable, due to a natural disaster or otherwise, or unwilling, on account of ~~operations~~the pendency of the Bankruptcy Cases or otherwise, to continue to produce, ship, and ~~financial~~release ~~condition~~goods to or for us, it could ~~suffer~~have a material adverse effect on our business.

WeThe ~~have~~agreements ~~granted~~governing ~~performance-based equity compensation to~~ our ~~senior~~debt ~~management~~obligations ~~team~~contain, ~~that have the potential to generate compensation that could be substantial to them as individuals. Certain of these grants vest upon achievement of specified common stock price thresholds~~ and ~~completion of~~ the ~~required~~Exit ~~service~~Facility ~~period.~~Credit ~~Others~~Agreement ~~vest~~will ~~upon the achievement of specified financial targets. In some cases~~contain, ~~there~~various iscovenants nothat ~~required~~impose ~~post-vesting~~restrictions ~~service~~on ~~period~~us ~~for~~that ~~the~~may ~~grantees.~~affect Ifour ~~the~~ability ~~shares~~to ~~underlying~~operate ~~such~~our ~~equity compensation ultimately vest~~business, ~~the risk of senior management turnover would be heightened~~ and aour ~~departure~~failure ofto ~~any~~comply ~~portion~~with ofthese ~~the~~covenants ~~senior management team~~ could ~~have~~result in an ~~adverse~~acceleration ~~impact~~of on our ~~operations and financial condition~~indebtedness.

~~Our~~The ~~debt~~DIP ~~obligations~~Facilities ~~expose~~contain uscovenants that limit or restrict our ability to ~~certain~~finance ~~risks~~future operations or capital needs, to respond to changing business and economic conditions or to engage in other transactions or business activities that may be important to our growth strategy or otherwise important to us. The DIP Facilities, limit or restrict, among other things, our ability to:

~~Our~~• ~~levels~~incur ofor ~~debt~~guarantee ~~and~~additional ~~leverage may have negative consequences to us, including the following:~~indebtedness;

• wepay ~~may~~dividends ~~have~~or ~~difficulty~~make ~~satisfying~~distributions ~~our~~on ~~obligations with respect to~~ our ~~indebtedness,~~capital ~~and,~~stock ifor wecertain ~~fail~~other torestricted ~~comply~~payments ~~with~~or ~~these requirements, an event of default could result~~investments;

• wemake may be required to dedicate a substantial portion of our cash flow from operations to required interest and, where applicable, principal payments on indebtedness, thereby reducing the availability of cash flow for working capital, capital expenditures and other general corporate activitiesinvestments;

13• engage in transactions with affiliates;

• ~~covenants~~transfer ~~relating to our indebtedness may limit our ability to obtain additional financing for working capital, capital expenditures~~ and ~~other~~sell ~~general corporate activities~~assets;

• weeffect ~~may~~a beconsolidation ~~subject~~or tomerger; ~~credit reductions~~ and ~~other changes in our business relationships with our suppliers, vendors and customers if they perceive that we would be unable to pay our debts to them in a timely manner;~~

• wecreate ~~have~~liens ~~debt~~on ~~agreements~~our ~~with~~assets ~~cross~~to ~~default~~secure ~~provisions, wherein a default in certain agreements could result in a default in other agreements;~~debt.

•Our weability to comply with these provisions may be affected by events beyond our control. Any breach of the covenants in the DIP Facilities could cause a default under the DIP Facilities and other debt, which would restrict the ability to borrow under the DIP Facilities, thereby significantly impacting our liquidity, which could have ~~credit~~a ~~facilities~~material adverse effect on our business, financial condition, cash flows or results of operations. If there were an event of default under the DIP Facilities that ~~are~~was ~~subject~~not cured or waived, the holders of the defaulted debt could cause all amounts outstanding with respect to ~~periodic~~the ~~review~~debt instrument to be due and ~~renewal,~~payable immediately. Our assets and wecash flow may not be ~~unable~~sufficient to ~~extend~~fully ~~these~~repay ~~facilities~~borrowings atunder ~~terms~~the ~~favorable~~DIP toFacilities ~~us,~~if ~~requiring~~accelerated ~~the~~upon ~~use~~an event of ~~cash~~default. If, onas ~~hand~~or when required, we are unable to repay, refinance or ~~reducing~~restructure our ~~available~~indebtedness ~~credit;~~under, or amend the covenants contained in, the DIP Facilities, the lenders under those facilities could seek to institute foreclosure proceedings against the assets securing borrowings under the DIP Facilities.

•The wecredit ~~have~~agreement ~~unsecured~~for ~~short~~and ~~term~~all ~~credit~~documents ~~facilities~~executed in connection with the Exit Facility (as amended, ~~and~~supplemented ~~agreements~~or otherwise modified from time to ~~provide~~time, ~~letters~~the “Exit Financing Credit Agreement”) contemplated by the Plan may contain covenants, restrictions, events of ~~credit~~default, and other provisions similar to the DIP Facilities. Any breach of such covenants in ~~which~~the Exit Financing Credit Agreement could cause a default under the ~~related~~Exit ~~banks~~Financing ~~may~~and ~~elect~~other ~~not~~debt, which would restrict the ability to ~~continue~~borrow under the ~~facility~~Exit Financing, thereby significantly impacting our liquidity, which could ~~reduce~~have a material adverse effect on our ~~available~~business, ~~borrowing~~financial ~~capacity;~~condition, cash flows or results of operations. If there were an event of default under the Exit Financing Credit Agreement that was not cured or waived, the holders of the defaulted debt could exercise all rights and remedies under such credit agreement. Such rights and remedies may include causing all amounts outstanding with respect to the debt instrument to be due and payable immediately. Our assets and cash flows may not be sufficient to fully repay borrowings under the Exit Financing Credit Agreement if accelerated upon an event of default. If, as or when required, we are unable to repay, refinance, or restructure our indebtedness

• ~~we may be placed at a competitive disadvantage against less leveraged competitors.~~21

~~The~~under, ~~agreements~~or ~~governing~~amend ~~our~~the ~~debt~~covenants ~~obligations~~contained ~~contain~~in ~~various~~the ~~covenants~~Exit ~~that~~Financing ~~impose~~Credit ~~restrictions~~Agreement, onthe uslenders ~~that~~under ~~may~~the ~~affect~~Exit ~~our~~Facility ~~ability~~could seek to ~~operate~~institute ~~our~~foreclosure ~~business~~proceedings against the assets securing borrowings under the Exit Financing Credit Agreement.

~~The~~Our ~~agreements~~Euro Notes Indenture similarly contains covenants, ~~including~~restrictions, ~~indentures~~events of default, ~~governing~~and ~~our~~other ~~indebtedness~~provisions ~~impose~~that will remain applicable following the Effective Date, and ~~future~~any ~~financing~~amendment ~~agreements~~of ~~are~~the ~~likely~~Euro toNotes ~~impose~~Indenture in connection with the Exchange Offer may contain similar covenants, ~~operating~~restrictions, events of default, and ~~financial~~other ~~restrictions~~provisions. Any onbreach ~~our~~of ~~activities~~such covenants could cause a default under the Euro Notes Indenture. If ~~These~~there ~~restrictions~~were ~~require~~an usevent toof ~~comply~~default, the holders of the Euro Notes could cause all amounts outstanding with orrespect ~~maintain~~to ~~certain~~the ~~financial~~Euro ~~tests~~Notes ~~and~~to ~~ratios.~~be Indue ~~addition~~and payable immediately, and the ~~agreements~~same ~~limit~~may oroccur ~~prohibit~~with ~~our~~respect ~~ability~~to any amended Euro Notes Indenture. Our assets and cash flow may not be sufficient to, ~~among~~fully ~~other~~repay ~~things:~~borrowings under the Euro Notes if accelerated upon an event of default.

• incur additional debt and guarantees;

• pay distributions or dividends and repurchase stock;

• make other restricted payments, including without limitation, certain restricted investments;

• create liens;

• enter into agreements that restrict dividends from subsidiaries;

• engage in transactions with affiliates; and

• enter into mergers, consolidations or sales of substantially all of our assets, including restrictions on the use of proceeds from sales of certain asset groups.

These restrictions on our ability to operate our business could seriously harm our business by, among other things, limiting our ability to take advantage of financing, merger and acquisition, and other corporate opportunities.

Various risks, uncertainties and events beyond our control could affect our ability to comply with these covenants. Failure to comply with any of the covenants in our existing or future financing agreements could result in a default under those agreements and under other agreements containing cross-default provisions. A default would permit lenders to accelerate the maturity of the debt under these agreements and to foreclose upon any collateral securing the debt. Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations. In addition, the limitations imposed by financing agreements on our ability to incur additional debt and to take other actions might significantly impair our ability to obtain other financing. We cannot assure you that we will be granted waivers or amendments to these agreements if, for any reason, we are unable to comply with these agreements or that we will be able to refinance our debt on terms acceptable to us, or at all.

We lease retail stores, office space, and distribution center facilities under operating leases, and if we terminate such leases prior to their contractual expiration, we could be liable for substantial payments for remaining lease liabilities.

We operate 683 retail stores, as well as various offices, showrooms, distribution centers and equipment, under non-cancelable operating leases. We have, at times, closed certain under-performing stores prior to the termination of their related lease agreements. As a result, we have incurred mutually negotiated lease termination costs with landlords. We may close additional under-performing stores, or other leased facilities, prior to the termination of their related lease agreements in the future. This could require payment to the landlord or lease holder of an early lease termination fee, or require us to continue to make lease payments through the end of the lease while we are not using the related facility. Consequently, we may incur substantial lease termination payments or facility exit expenses that could decrease our profitability, reduce our cash balances or amounts available under credit facilities, and thereby have an adverse effect on our business, financial condition, and results of operations.

Our success is dependent on our ability to protect our worldwide intellectual property rights, and our inability to enforce these rights could harm our business.

Our success depends to a significant degree upon our ability to protect and preserve our intellectual property, including copyrights, trademarks, patents, service marks, trade dress, trade secrets and similar intellectual property. We rely on the intellectual property, patent, trademark and copyright laws of the United States and other countries to protect our proprietary rights. However, we may be unable to prevent third parties from using our intellectual property without our authorization, particularly in those countries where the laws do not protect our proprietary rights as fully as in the United States. The use of our intellectual property or similar intellectual property by others could reduce or eliminate any competitive advantage we have developed, causing us to lose sales or otherwise harm our business. From time to time, we resort to litigation to protect these rights, and these proceedings can be burdensome and costly and we may not prevail.

We have obtained some U.S. and foreign trademarks, patents and service mark registrations, and have applied for additional ones, but cannot guarantee that any of our pending applications will be approved by the applicable governmental authorities. The loss of trademarks, patents and service marks, or the loss of the exclusive use of our trademarks, patents and service marks, could have a material adverse effect on our business, financial condition and results of operations. Accordingly, we devote substantial resources to the establishment and protection of our trademarks, patents and service marks on a worldwide basis and continue to evaluate the registration of additional trademarks, patents and service marks, as appropriate. There can be no assurance that our actions taken to establish and protect our trademarks, patents and service marks will be adequate to prevent imitation of our products by others or to prevent others from seeking to block sales of our products as violations of their trademark, patent or other proprietary rights.

We may be subject to claims that our products have infringed upon the intellectual property rights of others, which may cause us to incur unexpected costs or prevent us from selling our products.

We cannot be certain that our products do not and will not infringe the intellectual property rights of others. We may be subject to legal proceedings and claims in the ordinary course of our business, including claims of alleged infringement of the intellectual property rights of third parties by us or our customers in connection with their use of our products. Any such claims, whether or not meritorious, could result in costly litigation and divert the efforts of our personnel. Moreover, should we be found liable for infringement, we may be required to enter into licensing agreements (if available on acceptable terms or at all) or to pay damages and cease making or selling certain products. Moreover, we may need to redesign, discontinue or rename some of our products to avoid future infringement liability. Any of the foregoing could cause us to incur significant costs and prevent us from manufacturing or selling our products.

IfWe wemay ~~are~~be ~~unable~~adversely toaffected ~~maintain our endorsements~~ by ~~professional~~legal ~~athletes,~~proceedings ~~our ability~~ to ~~market~~which ~~and~~we ~~sell~~are, ~~our~~or ~~products~~ may bebecome, ~~harmed~~a party.

~~A valuable element of our marketing strategy has been to obtain endorsements from prominent athletes~~We, ~~which contribute to the authenticity~~ and ~~image of~~ our ~~brands.~~subsidiaries We believe that this strategy has been an effective means of gaining brand exposure worldwide and creating broad appeal for our products. We cannot be certain that we will be able to maintain our existing relationships with these individuals in the future or that we will be able to attract new athletes to endorse our products. We also are subject to risks related to the selection of athletes whom we choose to endorse our products. We may select athletes who are unable to perform at expected levels or who are not sufficiently marketable. In additioncurrently, ~~negative publicity concerning any of our athletes could harm our brand~~ and ~~adversely~~may ~~impact our business. If we are unable~~ in the future ~~to secure prominent athletes and arrange athlete endorsements of our products on terms we deem to be reasonable~~become, wesubject ~~may be required~~ to ~~modify~~legal ~~our~~proceedings ~~marketing platform and to rely more heavily on other forms of marketing and promotion,~~ which ~~may not prove to be effective. Our inability to obtain endorsements from professional athletes~~ could adversely affect our ~~ability~~business, tofinancial ~~market and sell our products~~condition, ~~resulting~~cash inflows ~~loss~~or ofresults ~~revenues and a loss~~ of ~~profitability~~operations.

InWe ~~some~~rely ~~cases,~~significantly weon ~~sign~~information ~~multi-year~~technology, ~~contracts~~and ~~with~~any ~~sponsored~~failure, ~~athletes. If we should later wish to terminate the contract prior to the expiration date~~inadequacy, ~~we could be required to pay an early termination penalty~~interruption, or ~~negotiated~~security ~~release~~lapse ~~payment,~~of ~~which~~that technology could ~~have~~harm anour ~~adverse~~ability ~~effect~~to oneffectively operate our business ~~and results of operations~~.

Difficulties in implementing our new global Enterprise Resource Planning system and other technologies could impact our ability to design, produce and ship our products on a timely basis.

We are in the process of implementing the SAP Apparel and Footwear Solution in addition to certain peripheral technologies as our core operational and financial system (together, “ERP”). The ongoing implementation of the ERP is a key part of our continuing efforts to manage our business more effectively by eliminating redundancies and improving our overall cost structure and margin performance. Difficulties in implementing our ERP and integrating peripheral technologies into it, including the costs of customizing and updating our ERP, could impact our ability to design, produce and ship our products on a timely basis, and thereby have an adverse effect on our business, financial condition and results of operations.

We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology could harm our ability to effectively operate our business.

Our ability to effectively manage and maintain our supply chain, ship products to customers, and invoice customers on a timely basis depends significantly on several key information systems. The failure of these systems to operate effectively or to integrate with other systems, or a breach in security of any of these systems, could cause delays in product fulfillment and reduced efficiency of our operations, and it could require significant capital investments to remediate any such failure, problem or breach.

In addition, hackers and data thieves are increasingly sophisticated and operate large scale and complex automated attacks. Despite security measures that we and our third party vendors have in place, any breach of our or our third party service providers’ networks may result in the loss of valuable business data, our customers’ or employees’ personal information, or a disruption of our business, which could give rise to unwanted media attention, damage our customer relationships and reputation, and result in lost sales, fines or lawsuits. In addition, we must comply with increasingly complex regulatory standards enacted to protect this business and personal data. Any inability to maintain compliance with these regulatory standards could expose us to risks of litigation and liability, and adversely impact our results of operations and financial condition.

may result in the loss of valuable business data, our customers’ or employees’ personal information, or a disruption of our business, which could give rise to unwanted media attention, damage our customer relationships and reputation, and result in lost sales, fines or lawsuits. In addition, we must comply with increasingly complex regulatory standards enacted to protect this business and personal data. Any inability to maintain compliance with these regulatory standards could expose us to risks of litigation and liability, and adversely impact our results of operations and financial condition.

Changes in interest rates may affect the fair market value of our assets.

Changes in interest rates and foreign exchange rates may affect the fair market value of our assets. Specifically, decreases in interest rates will positively impact the value of our assets and the strengthening of the dollar will negatively impact the value of our net foreign assets.

Changes in foreign currency exchange rates could affect our reported revenues and costs.

We are exposed to gains and losses resulting from fluctuations in foreign currency exchange rates relating to certain sales, royalty income, and product purchases of our international subsidiaries that are denominated in currencies other than ~~their~~our functional currencies. We are also exposed to foreign currency gains and losses resulting from U.S. transactions that are not denominated in U.S. dollars. If we are unsuccessful in hedging these potential losses, our operating results could be negatively impacted and ~~our~~ours cash flows could be significantly reduced. In some cases, as part of ~~our~~its risk management strategies, we may choose not to hedge such risks. If we misjudge these risks, there could be a material adverse effect on our operating results and financial position. We may use foreign currency exchange contracts, or other derivatives, to hedge certain currency exchange risks. Such derivatives may expose us to counterparty risks, and there can be no guarantee that such derivatives will be effective as hedges.

Furthermore, we ~~are~~may be exposed to gains and losses resulting from the effect that fluctuations in foreign currency exchange rates have on the reported results in our consolidated financial statements due to the translation of the statements of operations and balance sheets of ~~our~~its international subsidiaries into U.S. dollars. We may (but generally do not) use foreign currency exchange contracts to hedge the profit and loss effects of this translation effect because such exposures are generally non-cash in nature and because accounting rules would require us to mark these contracts to fair value in the statement of operations at the end of each financial reporting period. We translate our revenues and expenses at average exchange rates during the period. As a result, the reported revenues and expenses of our international subsidiaries would decrease if the U.S. dollar increased in value in relation to other currencies, including but not limited to the euro, Australian dollar, Japanese yen, Brazilian real, or Russian ruble.

~~Future~~Changes ~~sales~~with ofrespect to our ~~common~~licensing ~~stock,~~program orcould ~~the issuance of other equity securities, may~~ adversely ~~affect~~impact ~~the market price of~~ our ~~common stock and the value of our senior notes~~business.

~~Sales~~Historically, ofwe ahave ~~substantial~~licensed ~~number~~certain ofproduct ~~shares~~categories ofto ~~our~~third ~~common~~party ~~stock~~licensees orwhich ~~other~~have ~~equity-related securities could depress~~ the ~~market~~right ~~price~~to ofdesign, ~~our common stock~~source, ~~senior~~and ~~notes,~~sell orcertain ~~both.~~products Webearing ~~cannot~~our ~~predict~~trademarks. By the ~~effect~~first ~~that~~half ~~future sales~~ of ~~our~~fiscal ~~common~~year ~~stock~~2017, orwe ~~other~~anticipate ~~equity-related~~completing ~~securities,~~a ~~including~~transition ~~the~~to ~~exercise~~in-source ~~and/or~~substantially ~~sale~~all oflicensee ~~the~~product ~~equity~~categories. Unforeseen ~~securities~~issues ~~held~~from bythis ~~entities~~transition ~~affiliated~~could ~~with~~result ~~Rhône~~in ~~Capital LLC,~~(i) ~~would~~temporary ~~have~~sales onpressure as the market ~~price~~adjusts ofto our ~~common~~in-house ~~stock~~product offering and/or ~~the~~(ii) ~~value~~temporary ofinefficiencies ~~our~~in ~~senior~~product ~~notes~~design and sourcing.

~~Actions~~Work bystoppages ~~our~~or ~~licensee~~other ~~partners~~labor issues could adversely ~~impact~~affect our ~~brand~~business, ~~reputation~~financial ~~and~~condition, ~~business~~cash flows or results of operations.

We have ~~licensed~~no ~~certain~~unionized ~~product categories to third party licensees which have the right to design~~employees, ~~source,~~but ~~and sell~~ certain ~~products~~French ~~bearing~~employees ~~our~~are ~~trademarks.~~represented Weby ~~anticipate~~workers’ ~~that~~counsels. ~~the~~As ~~product~~we ~~royalties~~have ~~from~~little ~~these~~control ~~licensing~~over ~~agreements~~union ~~could improve the profitability of these categories relative to operating these categories ourselves~~activities, as we ~~believe~~could ~~that~~face ~~our~~difficulties ~~licensee~~in ~~partners~~the ~~have~~future ~~better~~should ~~expertise,~~our ~~wider~~workforce ~~product~~become ~~distribution capabilities, or superior supply chain capabilities~~unionized. ~~Failure~~There ofcan ~~our~~be ~~licensees~~no toassurance ~~source~~that ~~quality~~we ~~products,~~will ~~execute~~not ~~business~~experience ~~plans,~~work orstoppages ~~comply with laws, regulations,~~ or other ~~standards~~labor ~~could~~problems ~~harm~~in the ~~reputation~~future ofwith our ~~brands~~non-unionized ~~and~~employees ~~result~~or inemployees arepresented ~~failure~~by toworkers’ ~~achieve expected royalty income and related profitability and thereby have an adverse effect on our business, financial condition, and results of operations~~counsels.

~~Employment~~The ~~related~~effects ~~matters~~of ~~may~~war, ~~affect~~acts of terrorism, natural disasters, or other unforeseen wide-scale events could have a material adverse effect on our ~~profitability~~operating results and financial condition.

AsThe continued threat of ~~October 31~~terrorism, ~~2014,~~and weassociated ~~had~~heightened nosecurity ~~unionized~~measures ~~employees~~and military actions in response to acts of terrorism, ~~but~~have ~~certain~~disrupted ~~French~~commerce ~~employees~~and ~~are~~have ~~represented~~intensified byuncertainties ~~workers’~~in ~~councils~~the U.S. Asand weinternational ~~have~~economies. ~~little~~Any ~~control~~further ~~over~~acts ~~union~~of ~~activities~~terrorism, weescalated ~~could~~hostilities, ~~face~~a ~~difficulties~~future war, or a widespread natural or other disaster may disrupt commerce, undermine consumer confidence and lead to a further downturn in the ~~future~~U.S. ~~should~~or ~~our~~international ~~workforce~~economies, ~~become~~which ~~unionized~~could negatively impact our revenues. Furthermore, an act of terrorism, war or the implementation of trade sanctions, or the threat thereof, or any natural or other disaster that results in unforeseen interruptions of commerce could negatively impact our business by interfering with our ability to obtain products from our manufacturers.

16 23

~~There~~Trading ~~can~~in beour nosecurities ~~assurance~~during ~~that~~the wependency ~~will~~of ~~not~~the ~~experience~~Bankruptcy ~~work~~Cases ~~stoppages~~is orhighly ~~other~~speculative ~~labor~~and ~~problems~~poses insubstantial ~~the~~risks. ~~future~~It ~~with~~is probable our ~~non-unionized~~common ~~employees~~stock will be canceled and that holders of such common stock will not receive any distribution with respect to, or ~~employees~~be ~~represented~~able byto ~~workers’~~recover ~~councils~~any portion of, their investments.

WeIt ~~employ~~is ~~staff~~too inearly ~~jurisdictions~~to ~~where~~definitively ~~regulations~~determine orif ~~business~~our ~~practices~~Chapter ~~dictate~~11 ~~that~~plan weof ~~provide~~reorganization ~~employees~~will allow for distributions with ~~offer~~respect ~~notification~~to ~~periods~~our orcommon ~~severance~~stock. It ~~payments~~is inprobable ~~connection~~that ~~with~~these equity interests will be canceled and extinguished upon the ~~termination~~approval by the Bankruptcy Court of ~~their~~any ~~employment~~such ~~with~~plan usand ~~which~~the ~~are~~holders ~~significantly~~thereof would not be entitled to receive, and would not receive or retain, any property or interest in ~~excess~~property on account of ~~those~~such ~~traditionally~~equity ~~provided~~interests. In the event of a cancellation of these equity interests, amounts invested by such holders in ~~the~~our ~~United~~outstanding ~~States.~~equity securities will not be recoverable. Consequently, our ~~costs~~currently tooutstanding ~~terminate~~common ~~employees~~stock would have no value. Trading prices for our common stock are very volatile and may bebear ~~greater~~little ~~than~~or no relationship to the ~~costs~~actual recovery, if any, by the holders of ~~other~~such ~~companies~~securities in the Bankruptcy Cases. Accordingly, we encourage that doextreme ~~not~~caution ~~employ~~be ~~significant~~exercised ~~numbers~~with ofrespect ~~employees~~to existing and future investments in ~~these~~our ~~jurisdictions~~equity securities and any of our other securities.

~~The~~Our ~~effects~~common ofstock ~~war,~~is ~~acts~~delisted offrom ~~terrorism,~~the ~~natural~~New ~~disasters~~York orStock ~~other~~Exchange ~~unforeseen~~and ~~wide-scale~~will ~~events~~not ~~could~~be ~~have~~listed ~~a material adverse effect~~ on ~~our~~any ~~operating~~other ~~results~~national ~~and~~securities ~~financial condition~~exchange.

~~The~~We ~~continued~~received ~~threat~~notice offrom ~~terrorism,~~the ~~and~~New ~~associated~~York ~~heightened~~Stock ~~security~~Exchange ~~measures~~(the ~~and~~“NYSE”) ~~military~~that ~~actions~~trading ~~in response to acts~~ of ~~terrorism,~~our ~~has~~common ~~disrupted~~stock ~~commerce~~was ~~and~~suspended ~~has~~at ~~intensified uncertainties in~~ the ~~U.S.~~opening ~~and international economies. Any further acts~~ of ~~terrorism,~~business ~~escalated~~on ~~hostilities,~~September ~~a future war~~9, or2015 ~~a widespread natural or other disaster may disrupt commerce, undermine consumer confidence~~ and ~~lead~~the toNYSE afiled ~~further~~with ~~downturn in~~ the ~~U.S.~~SEC orto ~~international~~remove ~~economies, which could negatively impact~~ our ~~revenues.~~common ~~Furthermore,~~stock anfrom ~~act~~listing ofand ~~terrorism,~~registration ~~war~~on or the implementation of trade sanctions, or the threat thereof, or any natural or other disaster that results in unforeseen interruptions of commerce could negatively impact our business by interfering with our ability to obtain products from our manufacturersNYSE.

~~Failure~~As toa ~~maintain~~result, ~~adequate~~our ~~financial~~common ~~and~~stock ~~management~~now ~~processes~~trades ~~and~~in ~~controls~~the ~~could~~over-the-counter ~~lead~~("OTC") tomarket. The ~~errors~~trading of our common stock in the OTC market rather than the NYSE may negatively impact the trading price of our ~~financial~~common ~~reporting~~stock and ~~could~~the ~~adversely~~levels ~~affect~~of liquidity available to our ~~business~~stockholders. In addition, securities which trade in the OTC market are not eligible for margin loans and make our common stock subject to the provisions of Rule 15g-9 of the Exchange Act, commonly referred to as the “penny stock rule.”

WeOur ~~are~~common ~~required~~stock tomay ~~document~~become ~~and~~subject ~~test our internal controls over financial reporting pursuant~~ to ~~Section 404 of~~ the ~~Sarbanes-Oxley~~associated ~~Act~~risks of ~~2002~~trading (“SOX 404”). As a result, we have incurred and expect to continue to incur substantial expenses to comply with SOX 404 requirements. If, for any reason, our SOX 404 compliance efforts fail to result in an ~~unqualified~~OTC opinion regarding the effectiveness of our internal controls, we could be subject to regulatory scrutiny and a loss of public confidence, which could have a material adverse effect on our business, stock price and ability to attract creditmarket. In addition, if we do not maintain adequate financial and management personnel, processes and controls, we may not be able to: (1) accurately report our financial performance on a timely basis, which could cause a decline in our stock price and adversely affect our ability to raise capital, our results of operations, and our financial condition; and (2) appropriately manage or control our operations, which could adversely impact our results of operations.

IfSecurities traded in the OTC market generally have significantly less liquidity than securities traded on a national securities exchange, due to factors such as the reduced number of investors that will consider investing in the securities, the reduced number of market makers in the securities, and the reduced number of securities analysts that follow such securities. As a result, holders of shares of our ~~goodwill~~common stock may find it difficult to resell their shares at prices quoted in the market or at all. Because of the limited market and generally low volume of trading in our common stock that could occur, ~~other~~the ~~intangible~~share ~~assets~~price of our common stock could be more likely to be affected by broad market fluctuations, general market conditions, fluctuations in our operating results, changes in the market’s perception of our business, and announcements made by us, our competitors, parties with whom we have business relationships or ~~other~~third ~~fixed~~parties ~~assets~~with ~~become~~interests ~~impaired~~in the Bankruptcy Cases. If our securities begin trading in the OTC market, in some cases, we may be ~~required~~subject to ~~record~~additional ~~significant~~compliance ~~non-cash~~requirements ~~charges~~under toapplicable state laws in the issuance of our ~~earnings~~securities. The lack of liquidity in our common stock may also make it difficult for us to issue additional securities for financing or other purposes, or to otherwise arrange for any financing we may need in the future.

We may be required to record impairments of goodwill to the extent the fair value of any of our reporting units becomes less than its carrying value. Our estimates of fair value are based on assumptions about future cash flows of each reporting unit, discount rates applied to these cash flows and current market estimates of value. Based on the uncertainty of future revenue growth rates, gross profit performance, and other assumptions used to estimate goodwill recoverability, future reductions in our expected cash flows could cause a material non-cash impairment charge of goodwill, which could have a material adverse effect on our results of operations and financial condition.

We also have certain other intangible assets including, but not limited to, intellectual property and deferred tax assets, as well as fixed assets in our Company-owned retail stores, which could be at risk of impairment or may require valuation reserves based upon anticipated future benefits to be derived from such assets. Any change in the valuation of such assets could have a material effect on our profitability.

Item 1B. UNRESOLVED STAFF COMMENTS

None.

17 24

Item 2. PROPERTIES

As of October 31, ~~2014~~2015, our principal facilities in excess of 40,000 square feet were as follows:

Location	Principal Use	SquareFootage	LeaseExpiration
Huntington Beach, CA	Offices	223,000	2034	*
Huntington Beach, CA (1)	Offices	223,000	2034	*
Huntington Beach, CA	Offices	120,000	2024
Mira Loma, CA	Distribution center	683,000	2027	*
Huntington Beach, CA	Offices	102,000	2024
St. Jean de Luz, France	Offices	151,000	N/A	**
St. Jean de Luz, France	Distribution center	127,000	N/A	**
St. Jean de Luz, France	Offices	67,000	2021	*
Rives, France	Distribution center	206,000	2016
Torquay, Australia	Offices	54,000	2024	*
Geelong, Australia	Distribution center	81,000	2038	*
Geelong, Australia	Distribution center	134,000	2039	*

___________


(1)	On November 16, 2015, the Debtors rejected the unexpired lease on the facility.



*	Includes extension periods exercisable at our option.
**	These locations are owned.

As of October 31, ~~2014~~2015, we operated ~~100~~116 retail stores in the Americas, ~~296~~292 retail stores in EMEA, and ~~287~~315 retail stores in APAC on leased premises. The leases for our facilities, including retail stores, required aggregate annual rentals of approximately $~~119~~130 million in fiscal ~~2014~~2015. We anticipate that we will be able to extend those leases that expire in the near future on terms satisfactory to us, or, if necessary, locate substitute facilities on acceptable terms. We believe that our corporate, distribution and retail leased facilities are suitable and adequate to meet our current needs.

Item 3. LEGAL PROCEEDINGS

AsIn ~~part~~April 2015, two putative securities class action complaints were filed against the Company and two of ~~our~~its ~~global~~former ~~operations~~officers in the United States District Court for the Central District of California under the following captions: Leiland Stevens, weIndividually ~~may~~and beon ~~involved~~Behalf of All Others Similarly Situated v. Quiksilver, Inc., et al. and Shiva Stein, Individually and on Behalf of All Others Similarly Situated v. Quiksilver, Inc., et al. On June 26, 2015, the court consolidated these lawsuits and named Babulal Parmar as the lead plaintiff. On August 25, 2015, the lead plaintiff filed an amended complaint in ~~legal~~the consolidated action. The amended complaint asserts claims ~~involving~~for ~~trademarks~~violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, ~~intellectual~~as ~~property~~amended, ~~licensing~~and Rule 10b-5 promulgated thereunder. The putative class period in this action is from June 6, ~~employment~~2014 ~~matters~~through March 26, ~~compliance~~2015. The complaint seeks designation of this action as a class action, ~~contracts~~an award of unspecified compensatory damages, interest, costs and expenses, including attorneys’ fees and expert fees, and such other ~~matters~~relief ~~incidental~~as tothe ~~our~~court ~~business~~deems appropriate. We The ~~believe~~Company cannot predict the ~~resolution~~outcome of ~~any~~this ~~such~~ matter ~~currently~~or ~~threatened~~estimate the potential impact on its results of operations, financial position or ~~pending~~cash ~~will~~flows. The Company has not ~~have~~recorded a ~~material~~liability ~~adverse~~for ~~effect~~this onmatter. On ~~our~~September ~~financial~~21, ~~condition~~2015, ~~results~~the ofcourt ~~operations~~entered oran ~~liquidity~~order staying the action pending bankruptcy proceedings.

On June 2, 2015, a shareholder derivative complaint was filed against present and former members of the Company’s Board of Directors and former officers in the Superior Court of the State of California, County of Orange, under the following caption: An H. Vu, Derivatively on Behalf of Quiksilver, Inc. v. Andrew P. Mooney, et al., Defendants, and Quiksilver, Inc., Nominal Defendant. The complaint asserts claims for breach of fiduciary duty, unjust enrichment and gross mismanagement against the individual defendants. The complaint seeks a declaration that plaintiff may maintain the action on behalf of the Company, declaratory relief, unspecified compensatory and exemplary damages, restitution, disgorgement of all profits, benefits and other compensation obtained by the individual defendants, an order directing the Company and the individual defendants to take actions to reform and improve the Company's corporate governance and internal procedures, and all appropriate equitable and/or injunctive relief. The Company cannot predict the outcome of this matter or estimate the potential impact on its results of operations, financial position or cash flows. The Company has not recorded a liability for this matter. On September 14, 2015, the court entered an order suspending the case.

On September 9, 2015, Quiksilver and each of its wholly owned U.S. subsidiaries filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware seeking relief under the provisions of Chapter 11 of the Bankruptcy Code. The Debtors intend to continue to operate their business as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. As a result of the filings, attempts to collect, secure, or enforce remedies with respect to pre-petition claims against us are subject to the automatic stay provisions of section 362 of the Bankruptcy Code, and absent further order of the Bankruptcy Court, no party, subject to certain exceptions, may take any action, also subject to certain exceptions, to recover on pre-petition claims against the Debtors. At this time, it is not possible to predict the outcome of the Bankruptcy Cases or their effect on our business. The Bankruptcy Cases are discussed in greater detail in the accompanying Notes to Consolidated Financial Statements.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

18 26

PART II

Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

~~Our~~On September 10, 2015, our common stock ~~trades~~commenced trading on the ~~New~~OTC ~~York~~market ~~Stock~~under ~~Exchange~~the (“symbol "ZQKSQ." Prior to being suspended from trading on September 9, 2015, our common stock was traded on the NYSE”) under the symbol “ZQK.” The high and low sales prices of our common stock, as reported by the NYSE and OTC Pink Marketplace for the two most recent fiscal years, are set forth below.

	2014				2013
	2015				2014
	High		Low		High		Low
4th Quarter ended October 31	$	30.3555	$	10.4001	$	83.5535	$	41.8140
3rd Quarter ended July 31	61.8975		20.8944		86.1389		52.7489
2nd Quarter ended April 30	82.2746		61.1454		68.8327		56.6514
1st Quarter ended January 31	92.2875		61.9044		69.6728		36.2090

We have historically reinvested our earnings in our business and have never paid a cash dividend. No change in this practice is currently being considered. Any payment of cash dividends in the future will be determined by our Board of Directors, considering conditions existing at that time, ~~including~~ our voluntary proceedings for relief under Chapter 11 of the Bankruptcy Code, earnings, financial requirements and condition, opportunities for reinvesting earnings, business conditions and other factors. In addition, under the indentures related to our senior notes and under our other debt agreements, we must obtain prior consent to pay dividends to our stockholders above a pre-determined amount.

On December 331, ~~2014~~2015, there were ~~859~~868 holders of record of our common stock and an estimated 3514,~~314~~955 beneficial stockholders.

Performance Graph

The following graph compares from November 1, ~~2009~~2010 to October 31, ~~2014~~2015 the yearly percentage change in Quiksilver Inc.'s cumulative total stockholder return on its common stock with the cumulative total return of (i) the NYSE Market Index and (ii) a group of peer companies that in our judgment manufacture and sell products similar to those that we manufacture and sell. The yearly percentage change has been measured by dividing (i) the sum of (A) the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and (B) the difference between the price of the stock at the end and the beginning of the measurement period; by (ii) the stock price at the beginning of the measurement period. The historical stock performance shown on the graph is not intended to, and may not be, indicative of future stock performance.

The performance graph below is being furnished solely to accompany this Annual Report on Form 10-K pursuant to Item 201 (e) of Regulation S-K, and is not being filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any of our filings, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

19 27

Comparison of 5-Year Cumulative Total Return

Among Quiksilver, Inc.,

NYSE Market Index & Peer Group Index

Assumes $100 ~~invested~~Invested on November 1, ~~2009~~2010

Assumes Dividends Reinvested

Fiscal Year Ended October 31, ~~2014~~2015

	2009		2010	2011		2012	2013		2014
	2010			2011			2012			2013		2014		2015
Quiksilver Inc.	$~~100.00~~	100.00	~~$209.55~~	$~~168.35~~	80.34	~~$160.81~~	$~~418.10~~	76.74	~~$87.94~~	$	199.52	$	41.97	$	0.24
NYSE Market Index	$~~100.00~~	100.00	~~$114.54~~	$~~118.38~~	103.35	~~$132.41~~	$~~165.64~~	115.60	~~$183.99~~	$	144.61	$	160.63	$	158.86
Peer Group Index	$~~100.00~~	100.00	~~$134.52~~	$~~190.73~~	141.78	~~$197.24~~	$~~233.44~~	146.62	~~$237.29~~	$	173.53	$	176.39	$	160.59

The following public companies were used in the graph above to represent the Peer Group:

Coach, Inc.

Columbia Sportswear Co

Guess, Inc.

Hampshire Group Ltd

Jones Group, Inc

Fifth & Pacific Companies, Inc

Oxford Industries, Inc

Phillips-Van Heusen Corp

Polo Ralph Lauren Corp

VF Corp

20 28

Item 6. SELECTED FINANCIAL DATA

~~The~~Subsequent ~~statements~~to ofthe ~~operations~~issuance ~~and~~of ~~balance sheet data shown below were derived from~~ our ~~audited~~ consolidated financial statements for the ~~periods~~year ~~presented.~~ended ~~See~~October ~~Note~~31, 182014, ~~“Discontinued~~we ~~Operations”,~~identified and corrected certain immaterial errors related to ~~our~~inappropriate ~~consolidated~~net ~~financial~~revenue ~~statements~~cut-off ~~for~~in afiscal ~~discussion~~2014 ofand prior periods. Consequently, the ~~operating~~consolidated ~~results~~statement of ~~our~~operations ~~discontinued~~for ~~businesses.~~fiscal ~~This~~year ~~selected~~2014 ~~financial~~through ~~data~~2011 ~~should~~and bebalance ~~read~~sheet ~~together~~the ~~with~~end ~~our~~of ~~consolidated~~each ~~financial~~such ~~statements~~fiscal ~~and~~year ~~related~~have ~~notes,~~been asrevised ~~well~~to ascorrect ~~the~~for ~~discussion~~these ~~under~~immaterial ~~the~~errors. See ~~caption~~Note ~~“Management’s~~21 ~~Discussion~~— ~~and~~Restatement ~~Analysis~~ of Prior Period Financial ~~Condition~~Statements, ~~and~~in ~~Results~~our ofConsolidated ~~Operations”~~Financial Statements contained elsewhere in ~~Item~~this 7Annual Report on Form 10-K for additional details.

	Year Ended October 31,
Amounts in thousands, except ratios and per share data	2014 (1) (2)			2013 (1) (2)			2012 (1) (2)			2011 (1) (2)			2010 (1) (2)
Statements of Operations Data
Revenues, net	$	1,570,399		$	1,810,570		$	1,941,849		$	1,916,327		$	1,806,315
(Loss)/income before provision for income taxes	(332,120		)	(73,191		)	(13,341		)	(42,501		)	5,489
Loss from continuing operations(3)	(327,434		)	(238,766		)	(18,019		)	(27,421		)	(17,489		)
Income from discontinued operations(3)	18,057			6,201			7,263			6,163			7,805
Net loss(3)	(309,377		)	(232,565		)	(10,756		)	(21,258		)	(9,684		)
Loss per share from continuing operations(3)	(1.92		)	(1.43		)	(0.11		)	(0.17		)	(0.13		)
Income per share from discontinued operations(3)	0.11			0.04			0.04			0.04			0.06
Net loss per share(3)	(1.81		)	(1.39		)	(0.07		)	(0.13		)	(0.07		)
Loss per share from continuing operations, assuming dilution(3)	(1.92		)	(1.43		)	(0.11		)	(0.17		)	(0.13		)
Income per share from discontinued operations, assuming dilution(3)	0.11			0.04			0.04			0.04			0.06
Net loss per share, assuming dilution(3)	(1.81		)	(1.39		)	(0.07		)	(0.13		)	(0.07		)
Weighted average common shares outstanding(4)	170,492			167,255			164,245			162,430			135,334
Weighted average common shares outstanding, assuming dilution(4)	170,492			167,255			164,245			162,430			135,334
Balance Sheet Data
Total assets	$	1,256,664		$	1,620,470		$	1,718,240		$	1,764,223		$	1,696,121
Working capital	394,296			548,216			549,253			581,361			537,439
Lines of credit	32,929			—			18,147			18,335			22,586
Long-term debt	795,661			831,300			739,822			729,351			706,187
Stockholders’ equity(3)	56,030			369,706			583,310			610,098			610,368

The statements of operations and balance sheet data shown below were derived from our consolidated financial statements for the periods presented. See Note 19 — Discontinued Operations to our consolidated financial statements for a discussion of the operating results of our discontinued businesses. This selected financial data should be read together with our Consolidated Financial Statements and the Notes thereto, as well as the discussion under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7.

(1) Fiscal 2014, 2013, 2012, 2011 and 2010 include asset impairments of $11 million, $12 million, $7 million, $12 million, and $12 million, respectively. Fiscal 2014 and 2011 also include goodwill impairments of $178 million in EMEA and $74 million in APAC, respectively.



	Year Ended October 31,
Amounts in thousands, except ratios and per share data	2015 ^{(1) (2)}			2014 ^{(1) (2)}			2013 ^{(1) (2)}			2012 ^{(1) (2)}			2011 ^{(1) (2)}
Statements of Operations Data
Revenues, net	$	1,345,940		$	1,571,454		$	1,819,544		$	1,942,464		$	1,906,751
Reorganization items ⁽⁵⁾	35,236			—			—			—			—
Loss before provision for income taxes ⁽⁶⁾	(298,055		)	(331,751		)	(70,050		)	(13,126		)	(45,852		)
Loss from continuing operations ^{(3) (6)}	(313,692		)	(327,033		)	(235,625		)	(17,804		)	(30,772		)
Income from discontinued operations ⁽³⁾	7,520			18,970			6,201			7,263			6,163
Net loss ^{(3) (6)}	(306,172		)	(308,063		)	(229,424		)	(10,541		)	(24,609		)
Loss per share from continuing operations ^{(3) (6)}	(1.83		)	(1.92		)	(1.41		)	(0.11		)	(0.19		)
Income per share from discontinued operations ⁽³⁾	0.04			0.11			0.04			0.04			0.04
Net loss per share ^{(3) (6)}	(1.79		)	(1.81		)	(1.37		)	(0.06		)	(0.15		)
Loss per share from continuing operations, assuming dilution ^{(3) (6)}	(1.83		)	(1.92		)	(1.41		)	(0.11		)	(0.19		)
Income per share from discontinued operations, assuming dilution ⁽³⁾	0.04			0.11			0.04			0.04			0.04
Net loss per share, assuming dilution ^{(3) (6)}	(1.79		)	(1.81		)	(1.37		)	(0.06		)	(0.15		)
Weighted average common shares outstanding	171,494			170,492			167,255			164,245			162,430
Weighted average common shares outstanding, assuming dilution	171,494			170,492			167,255			164,245			162,430

	October 31,
Amounts in thousands	2015			2014			2013			2012			2011
Balance Sheet Data
Total assets	$	922,523		$	1,255,982		$	1,617,012		$	1,711,641		$	1,757,409
Working capital	35,846			390,613			544,758			542,654			574,547
Lines of credit	25,143			32,929			—			18,147			18,335
Long-term debt	4,265			795,661			831,300			739,822			729,351
Liabilities subject to compromise ⁽⁴⁾	575,660			—			—			—			—
Stockholders’ equity/(deficit) ⁽³⁾	(289,667		)	53,876			366,248			576,711			603,284

(2) All fiscal years reflect the operations of Mervin and Hawk as discontinued operations. Fiscal 2010 also reflects the operations of Rossignol and Cleveland Golf as discontinued operations. Fiscal 2014, 2013 and 2012 reflect the operations of Surfdome as discontinued operations.___________


(1)	Fiscal 2015, 2014, 2013, 2012 and 2011 include asset impairments of $39 million, $11 million, $12 million, $7 million, and $12 million, respectively. Fiscal 2015 also includes goodwill impairments of $74 million in Americas and $6 million in APAC, and fiscal 2014 includes $178 million in EMEA.


(2)	All fiscal years reflect the operations of Mervin and Hawk as discontinued operations. Fiscal 2015, 2014, 2013 and 2012 reflect the operations of Surfdome as discontinued operations.


(3)	Attributable to Quiksilver, Inc.

~~(4)~~ The significant increase in weighted average common shares outstanding and weighted average common shares outstanding, assuming dilution from fiscal 2010 to fiscal 2011 is primarily due to the debt-for-equity exchange that occurred in August 2010, in which we exchanged $140 million of outstanding debt for 31.1 million shares, which represents an exchange price of $4.50 per share.29

21(4) Amount represents the Debtors' liabilities for known and estimated allowed claims incurred prior to the Petition Date which will be resolved as part of the Bankruptcy Cases. Includes $505 million of debt for the 2018 Notes and 2020 Notes.

~~Item 7~~(5) Reorganization items include direct and incremental costs related to the Bankruptcy Proceedings. ~~MANAGEMENT’S~~Such ~~DISCUSSION~~costs ~~AND~~include ~~ANALYSIS~~professional OFfees ~~FINANCIAL~~related ~~CONDITION~~to ~~AND~~the ~~RESULTS~~Bankruptcy OFProceedings ~~OPERATIONS~~and debtor-in-possession financing, the write-off of unamortized deferred debt financing costs and original debt issuance discount on pre-petition debt, and losses on rejected executory contracts that the Company has determined to be both probable and estimable.

~~The following Management’s Discussion and Analysis of Financial Condition and Results of Operations~~ (~~“MD&A”~~6) ~~should~~Amount beincludes ~~read~~reorganization ~~in conjunction with our Consolidated Financial Statements and Notes thereto included elsewhere in this Annual Report on Form 10-K~~items. The MD&A contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under “Risk Factors” within Item 1A.

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our Consolidated Financial Statements and Notes thereto included elsewhere in this Annual Report on Form 10-K. The MD&A contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under “Risk Factors” within Item 1A. As described under Voluntary Reorganization Under Chapter 11 below, we are currently operating as a debtor-in-possession under Chapter 11 protection. Although progress has been made against the PSA, we can offer no assurance that we will be successful in completing the plan of reorganization. In considering only those events and transactions that have occurred or closed prior to the filing of this Annual Report on Form 10-K, there is substantial doubt that we could continue as a going concern.

Overview

We began operations in 1976 as a California company making boardshorts for surfers in the United States under a license agreement with the Quiksilver brand founders in Australia. We reincorporated in Delaware and went public in 1986 and, in subsequent years, acquired the worldwide licenses and trademarks that created the global company that we are today. Our business is rooted in the strong heritage and authenticity of our core brands, Quiksilver, Roxy and DC, each of which caters to the casual, outdoor lifestyle associated with surfing, skateboarding, snowboarding, ~~BMX~~ and motocross, among other activities. Today, our products are sold in over ~~115~~110 countries through a wide range of distribution points, including wholesale accounts (surf shops, skate shops, snow shops, sporting goods stores, discount centers, specialty stores, ~~select~~online ~~department~~retailers, ~~stores~~licensee shops, and ~~licensed~~select department stores), ~~683~~723 Company-owned retail stores, and via our e-commerce websites. We operate in the outdoor market of the sporting goods industry in which we design, develop and distribute branded apparel, footwear, accessories and related products. We have four operating segments consisting of the Americas, EMEA and APAC, each of which sells a full range of our products, as well as Corporate Operations. Our Americas segment, consisting of North, South, and Central America, includes revenues primarily from the United States, Canada, Brazil, and Mexico. Our EMEA segment, consisting of Europe, the Middle East, and Africa, includes revenues primarily from continental Europe, the United Kingdom, Russia and South Africa. Our APAC segment, consisting of Australia, New Zealand, and Pacific Rim markets, includes revenues primarily from Australia, Japan, New Zealand, South Korea, Taiwan, and Indonesia. Royalties earned from various licensees in other international territories are categorized in Corporate Operations along with revenues from sourcing services for our licensees. For information regarding the operating income and identifiable assets attributed to our operating segments, see Note 2,3 "— Segment and Geographic Information", to our consolidated financial statements.

Voluntary Reorganization Under Chapter 11

On September 8, 2015, the Company reached agreements with holders of approximately 73% of its 2018 Notes in the form of a plan sponsor agreement (“PSA”) that if implemented pursuant to its terms, would significantly reduce the Company’s outstanding debt. The PSA, and specifically a Plan Sponsor Term Sheet appended thereto (the “Term Sheet”), contemplates that a restructuring of the Company’s capital structure would be implemented through a jointly proposed Chapter 11 plan of reorganization (a “Proposed Plan”). On September 9, 2015 (the “Petition Date”), Quiksilver, Inc. and each of its wholly owned U.S. subsidiaries - DC Direct, Inc., DC Shoes, Inc., Fidra, Inc., Hawk Designs, Inc., Mt. Waimea, Inc., Q.S. Optics, Inc., QS Retail, Inc., QS Wholesale, Inc., Quiksilver Entertainment, Inc. and Quiksilver Wetsuits, Inc. (together with Quiksilver, Inc. the “Debtors”) - filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) seeking relief under the provisions of Chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”). The reorganization cases under chapter 11 of the Bankruptcy Code are being jointly administered by the Bankruptcy Court as Case No. 15-11880 (the “Bankruptcy Cases”).

Since the Petition Date, the Debtors have operated their business as “debtors-in-possession” pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code, which will allow the Debtors to continue their operations in the ordinary course during the reorganization proceedings. Each Debtor will remain in possession of its assets and properties, and its business and affairs will continue to be managed by its directors and officers, subject in each case to the supervision of the Bankruptcy Court.

None of the Company's direct or indirect non-U.S. subsidiaries or affiliates have commenced proceedings under Chapter 11 of the Bankruptcy Code, and none are expected to voluntarily commence reorganization proceedings or seek protection from creditors under any insolvency or similar law in the U.S. or elsewhere.

The PSA provides for several milestones for consummation and implementation of the Proposed Plan, and on October 28, 2015, the Bankruptcy Court entered an order approving the Debtors’ assumption of the PSA with certain modifications to the milestones:


•	filing of the Proposed Plan, the Proposed Disclosure Statement, solicitation materials and the motion to approve the disclosure statement with the Bankruptcy Court no later than October 30, 2015;


•	approval of the Proposed Disclosure Statement by the Bankruptcy Court no later than December 4, 2015;


•	approval of the Proposed Plan by the Bankruptcy Court no later than January 29, 2016; and


•	consummation of the Plan no later than February 5, 2016.

On the Petition Date, the Company sought, and thereafter obtained, authority to take a broad range of actions, including, among others, authority to incur post-petition financing, continue certain customer programs, pay certain employee obligations and pay certain pre-petition vendor claims. Additionally, the Company sought, and thereafter obtained, other orders, including orders outlining the provisions of adequate assurance of payment to utility companies and the continued use of the Company’s existing cash management systems.

The Debtors have requested and obtained approval from the Bankruptcy Court on December 4, 2015 for Key Employee Incentive Plans and Key Executive Retention Plans, under which compensation of up to $2 million may be awarded to Company executives and other key employees upon successful execution of the Plan and other measurements. No compensation expense has been recognized for these plans as of October 31, 2015. In addition, $2 million of incentive compensation not subject to Bankruptcy Court approval has been recognized by the Company as of October 31, 2015.

The filing of the Bankruptcy Cases constituted an event of default that accelerated the obligations under the following debt instruments (collectively, the “Debt Documents”):


•	Amended and Restated Credit Agreement, dated as of May 24, 2013, (the "ABL Credit Facility") among the Company, as a guarantor, QS Wholesale, Inc., as lead borrower, the other borrowers and guarantors party thereto, Bank of America, N.A., as administrative agent, and the lenders and other agents party thereto.


•	Indenture, dated as of July 16, 2013, by and among the Company, QS Wholesale, Inc., the subsidiary guarantor parties thereto, and U.S. Bank, National Association (successor to Wells Fargo Bank, National Association), as trustee and collateral agent, with respect to an aggregate principal amount of $280 million of 2018 Notes, plus accrued and unpaid interest thereon.


•	Indenture, dated as of July 16, 2013, by and among the Company, QS Wholesale, Inc., the subsidiary guarantor parties thereto, and U.S. Bank, National Association (successor to Wells Fargo Bank, National Association), as trustee, with respect to an aggregate principal amount of $225 million of 2020 Notes, plus accrued and unpaid interest thereon.

Any efforts to enforce such payment obligations under the Debt Documents are automatically stayed as a result of the filing of the Petitions for relief and the holders’ rights of enforcement in respect of the Debt Documents are subject to the applicable provisions of the Bankruptcy Code. The filing of the Bankruptcy Cases constituted an event of default under the 2017 Notes; however, the Company obtained the consent of holders of more than the required majority in principal amount of the 2017 Notes to, among other things, rescind the acceleration of the obligations under the 2017 Notes and waive the events of default related thereto and compliance with the debt incurrence and lien covenants with respect to the incurrence of the DIP Facilities for a period of up to 210 days from September 9, 2015 which is February 5, 2016.

The filing of the Petitions on September 9, 2015 created defaults and cross defaults pursuant to the terms of the Company’s Indentures to its 2020 Notes, 2018 Notes, 2017 Notes, and the ABL Credit Facility, which accelerated the due dates for the obligations. The filing of a petition under the Bankruptcy Code results in the automatic stay of virtually all actions of creditors to collect pre-petition debts, until such time as the stay is modified or removed. With respect to the 2017 Notes, the Company has received waivers for the defaults and cross defaults and the rescission of the acceleration for a period of up to 210 days from September 9, 2015. The Company has presented its outstanding debt under the 2017 Notes in current liabilities not subject to compromise on its consolidated balance sheet as of October 31, 2015. The Company has presented its outstanding debt under the 2018 Notes and 2020 Notes in liabilities subject to compromise on its consolidated balance sheet as of October 31, 2015. Lastly, the ABL Credit Facility was paid-off in September 2015.

Subject to the satisfaction of certain customary conditions to borrowing, the entire DIP ABL Facility and $70 million of the DIP Term Loan Facility became available upon entry of the interim order, and the balance of the DIP Term Loan Facility became available upon entry of the final order on October 28, 2015. A portion of the proceeds of the DIP Facilities was used in part to repay amounts outstanding under the pre-petition ABL Credit Facility (defined below), under which there were approximately $93 million in borrowings and letters of credit outstanding.

The DIP Facilities will mature 150 days after the Petition Date, and will contain representations, conditions, covenants and events of default customary for similar facilities. The DIP Facilities will collectively be secured by all assets of the Debtors, and such liens will be senior to the lien of the 2018 Notes. The DIP ABL Facility will be secured by a first-priority lien on inventory, receivables, cash and other customary ABL collateral owned by the Debtors (“ABL Collateral”), and a second-priority lien on all other assets of the Debtors (“Term Loan Collateral”). The DIP Term Loan Facility will have a first-priority lien on Term Loan Collateral, and a second-priority lien on all ABL Collateral. A portion of the DIP ABL Facility will be funded to certain Australian, Canadian and Japanese subsidiaries of the Company, which loans will be secured by assets of such foreign subsidiaries.

On October 13, 2015, the Debtors filed with the Bankruptcy Court and the Securities and Exchange Commission a proposed plan of reorganization (as may be amended, modified or supplemented from time to time, the “Proposed Plan”) for the resolution of the outstanding claims against and interests in the Debtors pursuant to section 1121(a) of the Bankruptcy Code. On October 16, 2015, the Debtors filed with the Bankruptcy Court a related proposed disclosure statement (as may be amended, modified or supplemented from time to time, the “Proposed Disclosure Statement”).

Pursuant to the Proposed Plan, upon the Company’s emergence from the Bankruptcy Cases, the Company’s existing debt and accrued interest will be reduced by approximately $500 million, including the extinguishment of all of its 2018 Notes and 2020 Notes. The Company’s 2017 Notes would be reinstated upon the consummation of the transactions set forth in the Plan. As consideration for such extinguishment, the reorganized Company would issue:


•	new common shares to holders of its 2018 Notes; and


•	$12.5 million in cash, which will be allocated between holders of its 2020 Notes and holders of general unsecured claims.

All of the Company’s existing equity securities, including its shares of common stock and warrants, will be cancelled and extinguished without holders receiving any distribution. In addition, new common shares will be offered to the holders of the 2018 Notes and the 2020 Notes in a $122.5 million rights offering (the “Exit Rights Offering”) and a €50 million rights offering (the “Euro Notes Rights Offering” and, together with the Exit Rights Offering, the “Rights Offerings”), each of which would be backstopped in full by Oaktree (the “Backstop Commitment”) pursuant to that certain backstop commitment letter (the “Backstop Commitment Letter”) approved by the Bankruptcy Court on December 4, 2015. Finally, the DIP Facilities will be repaid in full utilizing new financing to be obtained by the Debtors prior to consummation of the terms of the Proposed Plan.

On November 17, 2015, the Debtors filed a first amended Proposed Disclosure Statement, which includes a first amended Proposed Plan as Exhibit A thereto. On December 4, 2015, the Bankruptcy Court entered an order approving the adequacy of the Proposed Disclosure Statement and the Debtors have commenced solicitation of votes from eligible claimants in connection with the Proposed Plan. The Company and its advisors continue to seek alternative restructuring transactions, including a sale of all or substantially all of the assets of the Company, and will continue such efforts pending confirmation of the Proposed Plan by the Bankruptcy Court.

Events Leading to the Commencement of the Chapter 11 Cases

In May of 2013, the Company announced a multi-year profit improvement plan (the “Multi-Year Turnaround Plan”) designed to accelerate the Company’s three fundamental strategies of strengthening its brands, growing sales, and improving operational efficiencies. The new strategy was designed to focus the Company on its three core brands, globalize key functions, and reduce cost structure. The Company’s previous organizational structure was decentralized with each of its three geographic segments: Americas (consisting of United States, Mexico, Brazil, and Canada), EMEA (consisting of Europe, the Middle East, and Africa), and APAC (consisting of Australia, New Zealand, and the Pacific Rim, and headquartered in Torquay, Australia), operating primarily independently. This framework created a fragmented enterprise with regional brand inconsistencies, suboptimal coordination and limited the Company’s ability to take advantage of its global scale. The Company was further challenged in managing its business as a result of the significant indebtedness incurred by the Company to finance the acquisition of Skis Rossignol, S.A. in July 2005. In response to these challenges, the senior management team, with assistance from outside consultants, completed a thorough review of the Company’s global operations to determine the best path for sustainable cost savings and profitable growth. The resulting Multi-Year Turnaround Plan was implemented with a focus on the following:


(a)	Brand Strength: (1) clarifying the positioning of the Company’s three flagship brands (Quiksilver, Roxy, and DC); (2) divesting certain non-core brands; (3) globalizing product design and merchandising; and (4) licensing of secondary or peripheral product categories;


(b)	Sales Growth: (1) reprioritizing marketing investments to emphasize in-store and print marketing along with digital and social media; (2) continued investment in emerging markets and e-commerce; and (3) improving sales execution; and

(c)

Operational Efficiencies: (1) optimizing the Company’s supply chain; (2) reducing product styles by over 30%; (3) improving, selling, general and administrative expense by at least 300 basis points; (4) centralizing global responsibility for key functions, including product design, supply chain, marketing, retail stores, licensing and administrative functions; and (5) closing underperforming retail stores.

As one component of the Multi-Year Turnaround Plan, in November 2013, the Company completed the sale of Mervin Manufacturing, Inc., a manufacturer of snowboards and related products, for $58 million. As a continuation of the Multi-Year Turnaround Plan, in 2014, the Company continued to divest certain non-core businesses in order to improve its focus on the operations of its three core brands (Quiksilver, Roxy, and DC Shoes). In January 2014, it completed the sale of substantially all of the assets of Hawk Designs, its subsidiary that owned and operated the “Hawk” brand, for $19 million. Lastly, in December 2014, at the completion of the sale of the Company’s 51% ownership stake in Surfdome Shop Ltd., a multi-brand e-commerce business, the Company received net proceeds of approximately $16 million.

In addition, as part of the Multi-Year Turnaround Plan initiatives, management spent considerable time on a plan to rationalize the Company’s retail store base, particularly in the United States. As a culmination of those efforts, the Company developed a store closing plan (the “Store Closing Plan”), which it continued to refine from time to time. In particular, during the prepetition period, the Company started to close stores consistent with the Store Closing Plan as and when underperforming store leases came up for renewal or otherwise when there was an opportunity to exit a lease early, such as due to a landlord request. In addition, the Company determined that it would be in the best interests of the Debtors to sell certain excess inventory. To that end, it began soliciting offers from potential liquidation firms to conduct sales of excess inventory (the “Pop Up Sales”) through a “pop up” store program - i.e., temporary locations outside of the Company’s stores (collectively, the “Pop Up Stores”). QS Retail, Inc. entered into the Letter Agreement Governing Inventory Disposition (the “Pop Up Store Agreement”) with Hilco Merchant Resources, LLC and Gordon Brothers Retail Partners, LLC (collectively, the “Agent”), dated June 8, 2015, to conduct the Pop Up Sales. QS Retail, Inc. then entered into a series of short-term license agreements that provided the limited right to use the space to sell merchandise for a limited period - i.e., locations at which to conduct the Pop Up Sales.

Notwithstanding these efforts, in the first fiscal quarter of 2015, the Company reported a net loss, following softer revenue results, year over year from 2014, although gross margin remained largely flat. Specifically, the Company, like many others with a major distribution center located in the western U.S., suffered the impact of the Los Angeles port labor dispute during the early months of 2015. In addition, although the Company’s EMEA operation performed relatively consistently over the same period, the Company’s overall results did not reflect this favorable performance due to the impact of currency exchange rates between the euro and the U.S. dollar (in which currency the Company’s results are reported).

At the end of March 2015, the Company announced management changes in several key areas. First, Pierre Agnes, formerly President, was promoted to Chief Executive Officer and appointed to the board of directors. With over twenty-seven years at the Company, Mr. Agnes was (and remains) well positioned to lead the future of the Company. Second, Greg Healy was promoted to President. Mr. Healy has been with the Company since 1998 and has held several management positions within the Company, including CEO of the Australasia region and CFO, COO, and President of the APAC region. Third, Thomas Chambolle, formerly the regional CFO of EMEA, was promoted to global CFO. Mr. Chambolle’s experience includes working with French government agencies during the global financial crisis as well as serving as CFO of other large companies.

The Strategy Review Committee

As new management continued to execute and refine the Multi-Year Turnaround Plan, the Company continued to face liquidity challenges, particularly in the U.S. In order to support management’s efforts to address liquidity issues, the board of directors formed the Strategy Review Committee (the “SRC”), a subcommittee of the board.

The members of the SRC include Joseph Berardino (Chairman), Michael Clarke, Andrew Sweet, and William M. Barnum, Jr. Mr. Berardino is a managing director in charge of the East region of Alvarez & Marsal’s business consulting practice, and has served on the full board of directors of the Company since 2011. Mr. Clarke has held a number of executive management positions in some of the most recognized companies in the world, including Kraft Foods Europe and The Coca-Cola Company, among others, currently serves as the CEO of Treasury Wine Estates, and has served on the full board of directors of the Company since 2013. Mr. Sweet has extensive experience in private equity and investment banking, is currently a managing director of private equity firm Rhône Group, and has served on the full board of directors of the Company since 2009. Finally, Mr. Barnum serves as a director of several private companies, has been a managing member of venture capital and private

equity investment firm Brentwood Associates since 1986, and has served on the full board of directors of the Company since 1991.

Initially, the SRC recommended engaging financial professionals from Alix Partners (“Alix”) to support management’s efforts to develop the Company’s general business plan, liquidity forecast and restore supply chain efficiencies. In addition, the SRC recommended that the Company retain Peter J. Solomon Company (“PJSC”) as investment banker to explore and advise the SRC and the Company with respect to all range of strategic alternatives.

Following preliminary due diligence, and given its deep background with the Company in connection with prior engagements, PJSC recommended that the Company explore a global refinancing of existing indebtedness at the Company’s full board meeting on June 13, 2015. The purpose of the global refinancing was to supplement the Company’s liquidity and address the maturity of the €200 Euro Notes due December 15, 2017. PJSC initiated contact with parties interested in refinancing the Euro Notes and supplemented the process with outreach to well-recognized second lien lenders to explore the possibility of providing further advances under the borrowing base collateral within the Prepetition ABL Facility.

With respect to refinancing the Euro Notes, PJSC identified 19 potential sources of financing, of which eight executed confidentiality agreements. Of those, PJSC engaged in more advanced discussions with two. Ultimately, as negotiations evolved, Oaktree, who ultimately became the Plan Sponsor, committed a significant level of internal and external professional resources to the process and engaged in a deep level of due diligence with management in multiple Company offices worldwide, as discussed in more detail below.

With respect to expanding the Prepetition ABL Facility, PJSC evaluated structures to provide the Company with incremental liquidity under the existing borrowing base. The alternatives included seeking a first-in-last-out (“FILO”) loan structure as well as a second or subordinated lien on the existing borrowing base. PJSC engaged in more detailed discussions and negotiations with 2 leading FILO lenders who executed confidentiality agreements. Ultimately, the two lenders declined to continue in the process due to their view of the insufficient loan to value ratio. PJSC continued efforts to develop this liquidity source up to and including incorporating such a potential structure into the proposed DIP Facilities.

Beginning in July 2015, the SRC engaged with management and PJSC with respect to these strategic alternatives on a more frequent basis, as the due date for semi-annual payments on the Secured Notes and Unsecured Notes was approaching on August 3, 2015. PJSC provided regular updates on potential refinancing opportunities, and management provided similar updates regarding liquidity forecasts. Also in July, the Company retained FTI Consulting (“FTI”) to provide support for management with respect to liquidity enhancement and forecasting, and to assist the Company in working with the existing ABL Lenders with respect to borrowing base adjustments and reserve negotiations. Finally, in July, the SRC requested that the firm’s longstanding counsel, Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”), advise the Company, including the SRC and the full board, with respect to contingency planning.

At the end of July, management and certain of the Company’s advisors met with the Prepetition ABL Lenders regarding liquidity, the status of refinancing efforts and the Company’s upcoming August 3, 2015 interest payment obligations, including the availability of a 30-day grace period with respect to those obligations. The Prepetition ABL Lenders confirmed that sufficient liquidity was available to make the required interest payments, and management believed that it would have sufficient liquidity to allow PJSC to continue its efforts to seek adequate refinancing for the Company in the near term. The Company had also identified other sources of potential liquidity, in the form of unencumbered assets in EMEA, that might be available to support limited new financing.

The Company’s management and advisors reported the outcome of such meeting to the SRC, and provided an update on refinancing efforts. Management reported its view that while failure to make the August interest payments would preserve short-term liquidity, the market impact of the announcement of the missed payment would have a significant negative impact on vendor and customer confidence during a critical period of building the Company’s 2016 spring wholesale order book. In addition, PJSC and the Company believed that such an announcement would impair the Company’s ability to execute on its ongoing refinancing efforts. After careful consideration of these and related factors, including evaluation of other strategic alternative possibilities that existed, management and the SRC recommended that the Company make the interest payments due on August 3, 2015, and the board approved that recommendation unanimously.

In August, the Company, in consultation with its advisors, including FTI, determined that it was necessary to accelerate and potentially expand the Store Closing Plan in the context of a Chapter 11 filing. In particular, the Debtors decided to close 27 unprofitable stores (collectively, the “Closing Locations”) and liquidate the inventory and other assets (the “Store Closing Sales” and together with the Pop Up Sales, the “Sales”) of the Closing Locations. To maximize the benefit to the Debtors’ estates from the Store Closing Sales, the Debtors and FTI obtained five bids from national liquidation firms that specialize in, among other things, the large-scale liquidation of assets of the type and scale of that owned by the Debtors. The Debtors, together with their advisors, determined that the bid presented by the Agent, who was conducting the Pop Up Sales, represented

the highest and best offer and that entering into the Letter Agreement Governing Inventory Disposition, dated September 4, 2015 between QS Retail and the Agent (the “Store Closing Agreement,” and together with the Pop Up Store Agreement, the “Agency Agreements”) would minimize costs and maximize value.

In mid-August, Oaktree advised the Company that it was prepared to execute a refinancing transaction but only if all of the Company’s global intellectual property and brands (the “IP”) was among the collateral securing such financing. Unfortunately, the covenants underlying the Company’s existing indebtedness made such a refinancing impracticable, absent the ability to restructure such indebtedness available in Chapter 11. As a consequence, the Company immediately engaged with Oaktree regarding the possibility of executing the refinancing and restructuring transaction in the context of a Chapter 11 case, as a continuation of the parallel contingency planning efforts that the Company had begun in July 2015. Those negotiations culminated in the DIP Term Loan Facility and PSA, each as described below.

The Plan Sponsor Agreement

During late August and early September, the Company and Oaktree, through their respective advisors, negotiated the terms of a potential plan of reorganization. The features of the Proposed Plan were set forth in the Plan Sponsor Agreement and are summarized below (with amendments and revisions as appropriate to reflect the terms of the Proposed Plan):


(a)	The Debtors’ Prepetition ABL Facility will be replaced with postpetition financing, and ultimately refinanced through an exit ABL revolver facility;


(b)	The Secured Notes will be converted into equity;


(c)	Additional consideration valued at not less than $12.5 million will be offered to the Debtors’ unsecured creditors, subject to settlement of any intercreditor disputes;


(d)	The Debtors’ guaranties of the Euro Notes will be reinstated;


(e)	Existing equity will be cancelled; and


(f)	Oaktree will backstop the Rights Offerings in accordance with the Plan Sponsor Agreement and the Backstop Commitment Letter.

Oaktree also cooperated with the Debtors in negotiating and obtaining consents from a majority of its Euro Notes holders to waive certain defaults that would otherwise arise from the Debtors’ Chapter 11 cases. Such waiver is an important component of the Debtors’ efforts to preserve value in EMEA and APAC for the benefit of United States creditors during the Chapter 11 process.

The DIP Facilities

As a part of its contingency planning process, the Debtors, through their investment bankers at PJSC, solicited proposals for bankruptcy financing from a number of parties, including the Prepetition ABL Lenders, Oaktree and other parties that had participated in discussions with the Debtors in potential refinancing of the Euro Notes, and other financial institutions. An important consideration for the Debtors for any postpetition financing was to have sufficient funding for a plan of reorganization, as the Debtors had determined that preserving its EMEA operations (and the Euro Notes) would maximize the value of its global enterprise.

The Debtors’ Prepetition ABL Facility is comparable to a traditional asset-based revolver where borrowings are subject to a borrowing base, limited by specific advance rates which vary by collateral type. Given the Debtors’ liquidity profile, however, it quickly became evident that a postpetition ABL would be insufficient for its needs for financing to support an entire Chapter 11 plan process.

As noted above, Oaktree was willing to provide sufficient financing for the plan process, but the initial pricing offered by Oaktree was near the high end of the range of market for comparable DIP proposals, as explained in the Declaration of Durc A. Savini of PJSC in support of the DIP Motion (the “Savini Declaration”) [Docket No. 19]. Accordingly, PJSC and the Debtors negotiated with Oaktree and other market participants to develop a more competitive cost of financing.

After much dialogue, the Debtors and PJSC were successful in forging a collaborative debtor-in-possession financing proposal by both Bank of America, one of the Prepetition ABL Lenders, and Oaktree, in a transaction whereby the Debtors would enjoy a lower blended cost of funds. On September 10, 2015, QS Wholesale, as lead borrower, Quiksilver, Inc. as parent, and Bank of America, as administrative agent and collateral agent, inter alia, entered into the SDIP ABL Credit Agreement. Additionally, concurrently therewith, QS Wholesale, as borrower, Quiksilver, Inc. as parent, and OCM FIE, LLC, an affiliate of Oaktree, as administrative agent, inter alia, entered into the Senior Secured Super-Priority Debtor-in-Possession Credit Agreement DIP Term Loan Credit Agreement.

Known or Anticipated Trends

Based on our recent operating results and current perspective on our operating environment, we anticipate certain trends continuing to impact our operating results over the next few quarters, including:


•	Year-over-year net revenue and gross margin comparisons continuing to be unfavorable due primarily to the impact of currency exchange rates and licensing. We also expect our net revenues and margins to be unfavorably impacted by late deliveries in the short-term and an evolving distribution channel strategy, particularly in North America.


•	Year-over-year SG&A reductions continuing due to expense reduction initiatives implemented in fiscal 2014 and 2015, as well as the impact of foreign currency exchange rates; and


•	Capital expenditures continuing below prior year capital investment levels.

Discontinued Operations

In order to improve our focus on the operations and development of our three core brands (Quiksilver, Roxy and DC), we have divested certain non-core businesses. In ~~November~~the ~~2013~~first quarter of fiscal 2014, we completed the sale of our Mervin business for $58 million. In ~~January~~the second quarter of fiscal 2014, we completed the sale of substantially all of the assets of our Hawk business for $19 million. The sale of these businesses generated a net after-tax gain of approximately $30 million, which is included in income from discontinued operations for fiscal 2014. In December 2014, we sold our 51% ownership stake in Surfdome. At the completion of the sale, we received net proceeds of approximately $16 million, which included payments to us from Surfdome for all outstanding loans and trade receivables. During fiscal 2014, we recorded non-cash impairment charges totaling $21 million in discontinued operations to write-down Surfdome goodwill, intangible assets and other long-term assets to their estimated fair market value. Our sale of the Mervin and Hawk businesses generated income tax expense of approximately $19 million during fiscal 2014. However, as we do not expect to pay income tax on these sales after application of available loss carry-forwards, an offsetting income tax benefit was recognized within continuing operations. ~~The operations of Surfdome generated a tax benefit of approximately $3 million.~~

~~The~~In ~~Mervin~~December 2014, ~~Hawk~~the ~~and~~first ~~Surfdome~~quarter ~~businesses~~of ~~are~~fiscal ~~presented~~2015, aswe ~~discontinued~~sold ~~operations~~our 51% ownership stake in ~~our~~Surfdome ~~consolidated~~Shop ~~financial~~Ltd., ~~statements~~a ~~for~~multi-brand ~~all~~e-commerce ~~periods~~business ~~presented~~("Surfdome"). At ~~See~~the ~~Note~~completion 7of tothe ~~our~~sale, ~~consolidated~~we ~~financial~~received ~~statements,~~net ~~"Intangible~~proceeds ~~Assets~~of ~~and~~approximately ~~Goodwill"~~$16 million, ~~for~~which ~~further~~included ~~discussion~~payments onto ~~the~~us ~~impairment~~from ~~charges.~~Surfdome ~~See~~for ~~Note~~all ~~18,~~outstanding ~~“Discontinued~~loans ~~Operations”,~~and totrade ~~our~~receivables. The ~~consolidated~~transaction ~~financial~~resulted ~~statements~~in ~~for~~an ~~further~~after-tax ~~discussion~~gain of $7 million in the ~~operating~~first ~~results~~quarter of ~~our~~fiscal 2015, which is included in income from discontinued ~~businesses~~operations.

22The Mervin, Hawk and Surfdome businesses are presented as discontinued operations in our consolidated financial statements for all periods presented. See Note 19 — Discontinued Operations to our consolidated financial statements for further discussion of the operating results of our discontinued businesses.

Results of Operations

The following table sets forth selected statement of operations data and other data from continuing operations expressed as a percentage of net revenues for the fiscal years indicated. The discussion of our operating results from continuing operations that follows should be read in conjunction with the table.

	Year Ended October 31,
	2014		2013		2012
	2015		2014		2013
Statements of Operations Data
Revenues, net	100.0	%	100.0	%	100.0	%
Gross profit	4846.62	%	48.26	%	48.51	%
Selling, general and administrative expense	5251.75	%	4752.46	%	4547.71	%
Goodwill impairment	115.39	%	—11.3	%	—	%
Asset impairments	02.79	%	0.7	%	0.47	%
Operating (loss)/income	(1614.1	)%	0(16.1	)%	20.43	%
Interest expense, net	45.80	%	34.98	%	3.19	%
Foreign currency loss/(gain)	0.2	%	0.3	%	(0.1	)%
Foreign currency loss	0.5	%	0.2	%	0.3	%
Loss before (benefit)/provision for income taxes	(21.1	)%	(4.0	)%	(0.7	)%
Reorganization items	2.6	%	—	%	—	%
Loss before provision/(benefit) for income taxes	(22.1	)%	(21.1	)%	(3.8	)%

Fiscal 2014 Compared to Fiscal 2013

Revenues, net

Reconciliation of GAAP Results to Non-GAAP Measures

In order to provide additional information regarding comparable growth rates in our regional operating segments, brands, distribution channels and product groups, we make reference to net revenues on a "constant currency continuing category" basis, which is a non-GAAP measure. Our use of this non-GAAP measure is not intended to be a replacement of net revenues reported on a GAAP basis and readers should not ignore our GAAP-based net revenue results. We believe constant currency continuing category reporting provides additional perspective into the changes in our net revenues, as it adjusts for the effect of changing foreign currency exchange rates from period to period and the net revenue impact from product categories that have been transitioned to a third-party licensing model. Constant currency is calculated by taking the average foreign currency exchange rate for the current period and applying that same rate to the comparable prior year period. Continuing category impacts are determined by removing the comparable prior period wholesale channel net revenues generated from product categories which are now licensed, as well as the current period licensing net revenues generated from those same product categories. Because there was no net revenue impact from transitioning product categories to a third-party licensing model in fiscal 2013, our net revenue comparisons of fiscal 2013 to fiscal 2012 include only constant currency non-GAAP measures.

~~The~~ following tables present net revenues from continuing operations by segment, brand, channel and product group on an as reported (GAAP) basis, and on a constant currency continuing category (non-GAAP) basis, for the fiscal years ended October 31, 2014 and 2013:37

23continuing category reporting provides additional perspective into the changes in our net revenues, as it adjusts for the effect of changing foreign currency exchange rates from period to period and the net revenue impact from product categories that have been transitioned to a third-party licensing model. Constant currency is calculated by taking the average foreign currency exchange rate for the current period and applying that same rate to the comparable prior year period. Continuing category impacts are determined by removing the comparable prior period wholesale channel net revenues generated from product categories which are now licensed, as well as the current period licensing net revenues generated from those same product categories.

The following tables present net revenues from continuing operations by segment, brand, channel and product group on an as reported (GAAP) basis, and on a constant currency continuing category (non-GAAP) basis.

Fiscal 2015 Compared to Fiscal 2014

Revenues, net by Segment

Net revenues by segment, in both historical and on a constant currency continuing category basis, for fiscal 2015 and 2014 were as follows:



In $millions	Americas			EMEA			APAC			Corporate			Total
Fiscal 2015
Net revenues as reported	$	619		$	477		$	245		$	5		$	1,346
Less licensing revenue from licensed product categories	(5		)	—			—			—			(5		)
Constant currency continuing category net revenues	$	614		$	477		$	245		$	5		$	1,341

Fiscal 2014
Net revenues as reported	$	724		$	584		$	262		$	1		$	1,571
Impact of fiscal 2015 foreign exchange rates	(30		)	(99		)	(33		)	—			(162		)
Less wholesale net revenues from licensed product categories	(57		)	—			(1		)	—			(58		)
Constant currency continuing category net revenues	$	637		$	484		$	229		$	1		$	1,351

Change in net revenues as reported ($)	$	(106	)	$	(106	)	$	(17	)	$	4		$	(226	)
Change in net revenues as reported (%)	(15		)%	(18		)%	(6		)%	450		%	(14		)%
Change in constant currency continuing category net revenues ($)	$	(23	)	$	(7	)	$	16		$	4		$	(10	)
Change in constant currency continuing category net revenues (%)	(4		)%	(1		)%	7		%	547		%	(1		)%

Net revenues in our Americas segment decreased $106 million, or 15%, on an as reported basis in fiscal 2015 versus the prior year. Changes in foreign currency exchange rates contributed $30 million of this decrease. In addition, our licensing of peripheral product categories contributed $57 million of this decrease. Net revenues on a constant currency continuing category basis decreased by $23 million, or 4%, primarily due to a reduction in Roxy and DC brand apparel net revenues in the Americas wholesale channel of $14 million and $6 million, respectively. Net revenues in the emerging market of Mexico increased by 15% on an as reported basis (35% in constant currency). Net revenues in the emerging market of Brazil decreased by 22% on an as reported basis reflecting the combination of economic slowdown in Brazil in fiscal 2015 and the negative impact of logistics issues, but remained flat in constant currency. Net revenues in the Americas e-commerce channel decreased 9% on a constant currency continuing category basis in fiscal 2015, primarily due to a reduction in discounting.

Net revenues in our EMEA segment decreased $106 million, or 18%, on an as reported basis in fiscal 2015 versus the prior year. Changes in foreign currency exchange rates contributed $99 million of this decrease. Our licensing of peripheral product categories did not materially affect the EMEA region. Net revenues on a constant currency continuing category basis decreased by $7 million, or 1%, primarily due to lower apparel net revenues in the wholesale channel. EMEA wholesale apparel net revenues decreased across all three core brands, but more significantly in the Quiksilver brand. Net revenues in the e-commerce channel increased 44% on a constant currency continuing category basis in fiscal 2015. Net revenues in the emerging market of Russia decreased 18% on an as reported basis, but increased 34% on a constant currency basis, reflecting the significant adverse impact of currency exchange rate movements.

Net revenues in our APAC segment decreased $17 million, or 6%, on an as reported basis in fiscal 2015 versus the prior year. Changes in foreign currency exchange rates had a negative impact of $33 million. In addition, our licensing of peripheral product categories contributed $1 million of this decrease. Net revenues on a constant currency continuing category basis increased by $16 million, or 7%, primarily due to retail and e-commerce channel net revenue growth. Net revenues in the emerging markets of China, South Korea, Taiwan and Indonesia increased by a combined 12% on an as reported basis (21% in constant currency).

Aggregate net revenues in our emerging markets, which include Brazil, Mexico, Russia, Indonesia, South Korea, China, and Taiwan, decreased 5% versus the comparable prior year period on an as reported basis, but increased 20% in constant currency, reflecting the significant adverse impact of the stronger U.S. dollar on local currency results. These markets are reported within their respective regional segments above.

Revenues, net By Brand

Net revenues by brand, in both historical and on a constant currency continuing category basis, for fiscal 2015 and 2014 were as follows:



In $millions	Quiksilver			Roxy			DC			Other			Total
Fiscal 2015
Net revenues as reported	$	537		$	404		$	367		$	39		$	1,346
Less licensing revenue from licensed product categories	(1		)	(4		)	(1		)	—			(5		)
Constant currency continuing category net revenues	$	536		$	400		$	367		$	39		$	1,341

Fiscal 2014
Net revenues as reported	$	628		$	480		$	427		$	36		$	1,571
Impact of fiscal 2015 foreign exchange rates	(70		)	(45		)	(42		)	(5		)	(162		)
Less wholesale net revenues from licensed product categories	(20		)	(20		)	(18		)	—			(58		)
Constant currency continuing category net revenues	$	538		$	416		$	366		$	31		$	1,351

Change in net revenues as reported ($)	$	(92	)	$	(77	)	$	(60	)	$	3		$	(226	)
Change in net revenues as reported (%)	(15		)%	(16		)%	(14		)%	8		%	(14		)%
Change in constant currency continuing category net revenues ($)	$	(2	)	$	(16	)	$	—		$	8		$	(10	)
Change in constant currency continuing category net revenues (%)	—		%	(4		)%	—		%	25		%	(1		)%

Quiksilver brand net revenues decreased $92 million, or 15%, on an as reported basis in fiscal 2015 versus the prior year. Changes in foreign currency exchange rates contributed $70 million of this decrease. Our licensing of peripheral product categories contributed $20 million of this decrease. Net revenues on a constant currency continuing category basis decreased by $2 million, or 0.4%, primarily due to lower apparel net revenues in the EMEA wholesale channel.

Roxy brand net revenues decreased $77 million, or 16%, on an as reported basis in fiscal 2015 versus the prior year. Changes in foreign currency exchange rates contributed $45 million of this decrease. Our licensing of peripheral product categories contributed $20 million of this decrease. Net revenues on a constant currency continuing category basis decreased $16 million, or 4%, primarily due to lower apparel net revenues in the Americas wholesale channel.

DC brand net revenues decreased $60 million, or 14%, on an as reported basis in fiscal 2015 versus the prior year. Changes in foreign currency exchange rates contributed $42 million of this decrease. Our licensing of peripheral product categories contributed $18 million of this decrease. Net revenues on a constant currency continuing category basis remained unchanged.

Revenues, net By Channel

Net revenues by channel, in both historical and on a constant currency continuing category basis, for fiscal 2015 and 2014 were as follows:



In $millions	Wholesale			Retail			E-com			Licensing			Total
Fiscal 2015
Net revenues as reported	$	840		$	408		$	82		$	16		$	1,346
Less licensing revenue from licensed product categories	—			—			—			(5		)	(5		)
Constant currency continuing category net revenues	$	840		$	408		$	82		$	11		$	1,341

Fiscal 2014
Net revenues as reported	$	1,039		$	445		$	77		$	10		$	1,571
Impact of fiscal 2015 foreign exchange rates	(107		)	(50		)	(6		)	—			(162		)
Less wholesale net revenues from licensed product categories	(58		)	—			—			—			(58		)
Constant currency continuing category net revenues	$	874		$	395		$	72		$	10		$	1,351

Change in net revenues as reported ($)	$	(199	)	$	(37	)	$	5		$	5		$	(226	)
Change in net revenues as reported (%)	(19		)%	(8		)%	6		%	54		%	(14		)%
Change in constant currency continuing category net revenues ($)	$	(34	)	$	13		$	11		$	1		$	(10	)
Change in constant currency continuing category net revenues (%)	(4		)%	3		%	15		%	5		%	(1		)%

Wholesale net revenues decreased $199 million, or 19%, on an as reported basis in fiscal 2015 versus the prior year. Changes in foreign currency exchange rates contributed $107 million of this decrease. Our licensing of peripheral product categories contributed $58 million to this decrease. On a constant currency continuing category basis, wholesale net revenues decreased $34 million, or 4%, primarily due to lower apparel net revenues in our Americas and EMEA wholesale channels. Wholesale channel apparel net revenues decreased in each core brand.

Retail net revenues decreased $37 million, or 8%, on as reported basis in fiscal 2015 versus the prior year. Changes in foreign currency exchange rates contributed $50 million towards this decrease. Our licensing of peripheral product categories did not affect our retail channel. On a constant currency continuing category basis, retail net revenues increased $13 million, or 3%, versus the prior year. Global retail same-store sales were down 2.7% in fiscal 2015, the effect of which was more than offset by 41 net new store openings during the previous twelve months.

E-commerce net revenues increased $5 million, or 6%, on as reported basis in fiscal 2015 versus the prior year. Changes in foreign currency exchange rates had a negative impact of $6 million. Our licensing of peripheral product categories did not affect our e-commerce channel. On a constant currency continuing category basis, e-commerce net revenues increased $11 million, or 15%, versus the prior year. E-commerce net revenues increased significantly in our EMEA and APAC segments as we expanded our online service area, while Americas e-commerce net revenues decreased 9% as a result of a reduction in discounting. On a constant currency continuing category basis, e-commerce net revenues increased 16%, 3% and 25% in the Quiksilver, Roxy and DC brands, respectively.

Revenues, net By Product Group

Net revenues by product group, in both historical and on a constant currency continuing category basis, for fiscal 2015 and 2014 were as follows:



	Apparel and Accessories
In $millions	Apparel and Accessories			Footwear			Total
Fiscal 2015
Net revenues as reported	$	963		$	383		$	1,346
Less licensing revenue from licensed product categories	(5		)	—			(5		)
Constant currency continuing category net revenues	$	958		$	383		$	1,341

Fiscal 2014
Net revenues as reported	$	1,174		$	397		$	1,571
Impact of fiscal 2015 foreign exchange rates	(125		)	(37		)	(162		)
Less wholesale net revenues from licensed product categories	(58		)	—			(58		)
Constant currency continuing category net revenues	$	991		$	360		$	1,351

Change in net revenues as reported ($)	$	(211	)	$	(15	)	$	(226	)
Change in net revenues as reported (%)	(18		)%	(4		)%	(14		)%
Change in constant currency continuing category net revenues ($)	$	(32	)	$	22		$	(10	)
Change in constant currency continuing category net revenues (%)	(3		)%	6		%	(1		)%

Apparel and accessories net revenues decreased $211 million, or 18%, on an as reported basis in fiscal 2015 versus the prior year. Changes in foreign currency exchange rates contributed $125 million of this decrease. Our licensing of peripheral product categories contributed $58 million of this decrease. On a constant currency continuing category basis, net revenues decreased $32 million, or 3%, primarily due to net revenue declines in the Americas and EMEA wholesale channels across all three core brands.

Footwear net revenues decreased $15 million, or 4%, on an as reported basis in fiscal 2015 versus the prior year. Changes in foreign currency exchange rates contributed $37 million of this decrease. Our licensing of peripheral product categories did not affect our footwear product group. On a constant currency continuing category basis, net revenues increased $22 million, or 6%, primarily due to increased net revenue in the Quiksilver wholesale channel.

Gross Profit

Gross profit decreased to $621 million in fiscal 2015 from $763 million in fiscal 2014. Gross margin, or gross profit as a percentage of net revenues, declined to 46.2% in fiscal 2015 from 48.6% in the prior fiscal year. This 240 basis point decrease in gross margin was primarily due to increased discounting in the Americas and EMEA wholesale channels (approximately 300 basis points), the negative impact of the foreign currency variation on cost of goods sold (approximately 180 basis points), and increased inventory reserves (approximately 80 basis points), partially offset by net revenue growth from our higher margin direct-to-consumer channels (approximately 310 basis points).

Gross margin by segment for fiscal 2015 and 2014 was as follows:



					Basis Point (bp) Change Increase (Decrease)
	Year Ended October 31,
	2015		2014
Americas	40.6	%	41.3	%	(70) bp
EMEA	52.6	%	55.6	%	(300) bp
APAC	53.0	%	54.6	%	(160) bp
Consolidated	46.2	%	48.6	%	(240) bp

Selling, General and Administrative Expense ("SG&A")

SG&A from continuing operations decreased $134 million, or 16%, to $693 million in fiscal 2015 from $827 million in fiscal 2014. Changes in foreign currency exchange rates contributed approximately $82 million of this decrease. Of the remaining $52 million decrease, $41 million was attributable to reductions in employee compensation and $11 million was attributable to reduced bad debt expenses.

SG&A by segment as reported for fiscal 2015 and 2014 was as follows:



	Year Ended October 31,								$ Change Increase (Decrease)			Basis Point (bp) Change Increase (Decrease)
	2015				2014
In millions			% of Net Revenues				% of Net Revenues
Americas	$	288	46.5	%	$	335	46.2	%	$	(47	)	30	bp
EMEA	255		53.4	%	311		53.3	%	(56		)	10	bp
APAC	142		57.8	%	156		59.3	%	(14		)	(150	) bp
Corporate Operations	8				26				(18		)
Consolidated	$	693	51.5	%	$	827	52.6	%	$	(134	)	(110	) bp

SG&A by segment for fiscal 2014 has been reclassified to conform to the current year presentation as a result of the Company's centralization of certain global business functions. The decrease in Americas segment SG&A was primarily due to reductions in employee compensation, bad debt expenses, and early lease termination costs, as well as changes in foreign currency exchange rates. The decrease in EMEA and APAC segment SG&A was almost entirely due to changes in foreign currency exchange rates. The decrease in Corporate Operations segment SG&A was primarily due to reductions in employee compensation.

Goodwill Impairments

Goodwill impairment charges were $80 million in fiscal 2015 compared to $178 million in fiscal 2014. In the third quarter of fiscal 2015, goodwill impairment charges of $74 million and $6 million were recorded in our Americas and APAC reporting units, respectively. In the third quarter of fiscal 2014, a goodwill impairment charge of $178 million was recorded in our EMEA reporting unit.

Asset Impairments

Asset impairment charges were $39 million in fiscal 2015 compared to $11 million in fiscal 2014. Impairment charges in fiscal 2015 included $21 million and $3 million to write-down the carrying value of the Quiksilver trademark within the EMEA and APAC reporting units, respectively and $11 million and $5 million related to under-performing retail stores in the Americas and EMEA reporting units, respectively. Impairment charges in fiscal 2014 were due to impairments associated with planned restructuring of our e-commerce and other information technology systems of $7 million, and impairments of certain under-performing retail stores of $4 million.

Non-operating Expenses

Interest expense was $67 million in fiscal 2015 compared to $76 million in fiscal 2014. This decrease was primarily due to lower interest on the 2018 Notes and 2020 Notes and changes in foreign currency exchange rates on our euro-denominated interest expense. On the Petition Date, we ceased recording interest expense on the 2018 Notes and 2020 Notes, and as a result, $6 million of contractual additional interest expense was not recorded in fiscal 2015.

Foreign currency loss was $6 million in fiscal 2015 compared to $3 million in fiscal 2014.

Reorganization items include direct and incremental costs related to the Bankruptcy Proceedings. Such costs include professional fees related to the Bankruptcy Proceedings and debtor-in-possession financing of $15 million, the write-off of unamortized deferred debt financing costs on pre-petition debt of $13 million, the write-off of petition-related debt discounts of $7 million, and losses on rejected executory contracts of $1 million.

Income tax expense for fiscal 2015 was $16 million compared to an income tax benefit of $4 million in fiscal 2014. Income tax expense for fiscal 2015 includes a $7 million non-cash valuation allowance recorded during the fourth quarter against deferred tax assets of certain business units within our APAC segment. The sale of the Mervin and Hawk businesses resulted in aggregate income tax expense of approximately $19 million during fiscal 2014. However, as we do not expect to pay income tax on these sales after application of available loss carry-forwards, an offsetting income tax benefit was recognized within continuing operations. The operations of Surfdome generated a tax benefit of approximately $3 million in fiscal 2014.

Excluding this income tax benefit, we generated income tax expense in both fiscal 2015 and 2014 as we recorded tax expense in certain tax jurisdictions but were unable to record tax benefits against the losses in those jurisdictions where we have previously recorded valuation allowances.

Net Loss from Continuing Operations Attributable to Quiksilver, Inc.

Our net loss from continuing operations attributable to Quiksilver, Inc. in fiscal 2015 was $314 million, or $1.83 per share, compared to $327 million, or $1.92 per share, for fiscal 2014. The increased net loss was primarily attributable to the lower gross profit in fiscal 2015 as noted above.

Fiscal 2014 Compared to Fiscal 2013

Revenues, net By Segment

Net revenues by segment, in both historical and on a constant currency continuing category basis, for fiscal 2014 and 2013 were as follows:

In $millions	Americas			EMEA			APAC			Corporate			Total
Fiscal 2014
Net revenues as reported	$	~~723~~724		$584	~~584~~		$262	~~262~~		$1	1		$	1,~~570~~571
Less licensing revenue from licensed product categories	(5		)	—			—			—			(5		)
Constant currency continuing category net revenues	$	~~718~~719		$	584		$	262		$	1		$	1,~~565~~566
Fiscal 2013
Net revenues as reported	$	~~893~~902		$632	~~632~~		$282	~~282~~		$4	4		$	1,~~811~~820
Impact of fiscal 2014 foreign exchange rates	(13		)	5			(21		)	—			(29		)
Less wholesale net revenues from licensed product categories	(27		)	—			—			—			(27		)
Constant currency continuing category net revenues	$	~~853~~862		$	637		$	261		$	4		$	1,~~754~~764
Change in net revenues as reported ($)	$	(~~170~~178	)	$	(48	)	$	(20	)	$	(3	)	$	(~~241~~248	)
Change in net revenues as reported (%)	(1920		)%	(8		)%	(7		)%	(77		)%	(1314		)%
Change in constant currency continuing category net revenues ($)	$	(~~135~~143	)	$	(53	)	$	1		$	(3	)	$	(~~189~~197	)
Change in constant currency continuing category net revenues (%)	(1617		)%	(8		)%	1		%	(77		)%	(11		)%

Net revenues in our Americas segment decreased $~~170~~178 million, or 1920%, on an as reported basis in fiscal 2014 versus the prior year. Changes in foreign currency exchange rates contributed $13 million of this decrease. In addition, our licensing of peripheral product categories contributed $27 million of this decrease. Net revenues on a constant currency continuing category basis decreased by $~~135~~143 million, or 1617%, primarily due to a decrease of $126 million in the wholesale channel, most significantly in the DC brand, with our Quiksilver and Roxy brands also generating decreased sales. These declines were focused in North America. On a constant currency continuing category basis, net revenues in the emerging markets of Brazil and Mexico increased by a combined 6% on an as reported basis (13% in constant currency).

Net revenues in our EMEA segment decreased $48 million, or 8%, on an as reported basis in fiscal 2014 versus the prior year. Changes in foreign currency exchange rates contributed $5 million of this decrease. Our licensing of peripheral product categories did not affect the EMEA region. Net revenues on a constant currency continuing category basis decreased by $53 million, or 8%, primarily due to a decrease of $57 million in the wholesale channel, primarily in the Quiksilver and DC brands, with our Roxy brand also generating decreased sales. On a constant currency continuing category basis, net revenues decreased most significantly in Germany and France where net revenues declined 23% and 7%, respectively, on an as reported basis. These declines were partially offset by growth of 5% in Russia (18% in constant currency).

Net revenues in our APAC segment decreased $20 million, or 7%, on an as reported basis in fiscal 2014 versus the prior year. Changes in foreign currency exchange rates contributed $21 million of this decrease. Our licensing of peripheral product categories did not affect the APAC region. Net revenues on a constant currency continuing category basis increased by $21 million, or 1%, due to increased sales in the retail ($10 million) and e-commerce ($4 million) channels, partially offset by a decrease of $12 million in the wholesale channel across all three brands. Net revenues decreased 12% in Australia on an as reported basis (6% in constant currency), but net revenues in our APAC emerging markets, which include Indonesia, South Korea, Taiwan and China, grew 5% collectively (14% in constant currency).

Net revenues in our emerging markets as a whole, which include Brazil, Russia, Indonesia, Mexico, South Korea, Taiwan and China increased 5% during fiscal 2014 compared to fiscal 2013 (14% on a constant currency continuing category basis). These markets are reported within their respective regional segments above.

24 45

Revenues, net By Brand

Net revenues by brand, in both historical and on a constant currency continuing category basis, for fiscal 2014 and 2013 were as follows:

In $millions	Quiksilver			Roxy			DC			Other			Total
Fiscal 2014
Net revenues as reported	$	628		$	480		$	427		$	3536		$	1,~~570~~571
Less licensing revenue from licensed product categories	(3		)	—			(2		)	—			(5		)
Constant currency continuing category net revenues	$	625		$	480		$	425		$	3536		$	1,~~565~~566
Fiscal 2013
Net revenues as reported	$	~~721~~724		$	~~511~~514		$	~~542~~545		$	36		$	1,~~811~~820
Impact of fiscal 2014 foreign exchange rates	(12		)	(9		)	(8		)	—			(29		)
Less wholesale net revenues from licensed product categories	(16		)	—			(11		)	—			(27		)
Constant currency continuing category net revenues	$	~~693~~696		$	~~502~~505		$	~~523~~526		$	36		$	1,~~754~~764
Change in net revenues as reported ($)	$	(9396	)	$	(3133	)	$	(~~115~~118	)	$	(1	)	$	(~~241~~248	)
Change in net revenues as reported (%)	(13		)%	(6		)%	(2122		)%	(2		)%	(1314		)%
Change in constant currency continuing category net revenues ($)	$	(6870	)	$	(2224	)	$	(98101	)	$	(1	)	$	(~~189~~197	)
Change in constant currency continuing category net revenues (%)	(10		)%	(45		)%	(19		)%	(12		)%	(11		)%

Quiksilver brand net revenues decreased $9396 million, or 13%, on an as reported basis in fiscal 2014 versus the prior year. Changes in foreign currency exchange rates contributed $12 million of this decrease. Our licensing of peripheral product categories contributed $1716 million of this decrease. Net revenues on a constant currency continuing category basis decreased by $6870 million, or 10%, primarily due to lower net revenues in the EMEA and Americas wholesale channels of $34 million and $25 million, respectively. Wholesale channel net revenues in both the EMEA and Americas segments decreased primarily due to lower customer orders driven by poor prior seasons' sell through, and less effective order fulfillment compared to the prior year.

Roxy brand net revenues decreased $3133 million, or 6%, on an as reported basis in fiscal 2014 versus the prior year. Changes in foreign currency exchange rates contributed $9 million of this decrease. Our licensing of peripheral product categories did not affect the Roxy brand. Net revenues on a constant currency continuing category basis decreased $2224 million, or 45%, primarily due to lower net revenues in the Americas and EMEA wholesale channels of $16 million and $6 million, respectively. Wholesale channel net revenues in both the Americas and EMEA segments decreased primarily due to lower customer orders driven by poor prior seasons' sell through, and less effective order fulfillment compared to the prior year. The decrease in wholesale channel net revenues was partially offset by increased net revenues from our retail and e-commerce channels.

DC brand net revenues decreased $~~115~~118 million, or 2122%, on an as reported basis in fiscal 2014 versus the prior year. Changes in foreign currency exchange rates contributed $8 million of this decrease. Our licensing of peripheral product categories contributed $1011 million of this decrease. Net revenues on a constant currency continuing category basis decreased $98101 million, or 19%, primarily due to a $85 million decline in the Americas wholesale channel driven by decreased clearance sales, narrowed product distribution to mid-tier wholesale customers, and lower customer orders driven by poor prior seasons' sell through.

25 46

Revenues, net By Channel

Net revenues by channel, in both historical and on a constant currency continuing category basis, for fiscal 2014 and 2013 were as follows:

In $millions	Wholesale			Retail			E-com			Licensing			Total
Fiscal 2014
Net revenues as reported	$	1,~~038~~039		$	445		$	77		$	10		$	1,~~570~~571
Less licensing revenue from licensed product categories	—			—			—			(5		)	(5		)
Constant currency continuing category net revenues	$	1,~~038~~039		$	445		$	77		$	5		$	1,~~565~~566
Fiscal 2013
Net revenues as reported	$	1,~~286~~295		$	447		$	69		$	8		$	1,~~811~~820
Impact of fiscal 2014 foreign exchange rates	(22		)	(7		)	—			—			(29		)
Less wholesale net revenues from licensed product categories	(27		)	—			—			—			(27		)
Constant currency continuing category net revenues	$	1,~~237~~246		$	440		$	69		$	8		$	1,~~754~~764
Change in net revenues as reported ($)	$	(~~248~~256	)	$	(2	)	$	8		$	2		$	(~~241~~248	)
Change in net revenues as reported (%)	(1920		)%	—		%	(12		)%	29		%	(1314		)%
Change in constant currency continuing category net revenues ($)	$	(~~199~~207	)	$	5		$	8		$	(3	)	$	(~~189~~197	)
Change in constant currency continuing category net revenues (%)	(1617		)%	1		%	12		%	(4235		)%	(11		)%

Wholesale net revenues decreased $~~248~~256 million, or 1920%, on an as reported basis in fiscal 2014 versus the prior year. Changes in foreign currency exchange rates contributed $22 million of this decrease. Our licensing of peripheral product categories contributed $27 million to this decrease. On a constant currency continuing category basis, wholesale net revenues decreased $~~199~~207 million, or 1617%, primarily due to lower net revenues in our Americas and EMEA segments of $126 million and $57 million, respectively, of which $85 million was from our DC brand, $25 million was from our Quiksilver brand, and $16 million was from our Roxy brand. Both the Americas and EMEA wholesale channels were unfavorably impacted by lower customer orders driven by poor prior season’s sell through, and less effective order fulfillment compared to the prior year.

Retail net revenues decreased $2 million, or less than 1%, on as reported basis in fiscal 2014 versus the prior year. Changes in foreign currency exchange rates contributed $7 million towards this decrease. Our licensing of peripheral product categories did not affect the retail channel. On a constant currency continuing category basis, retail net revenues increased $5 million, or 1%. Global retail same-store sales were flat for fiscal 2014. We ended fiscal 2014 with 683 total retail stores compared to 631 at the end of fiscal 2013.

E-commerce net revenues increased $8 million, or 12%, on both an as reported basis and a constant currency basis, during fiscal 2014 versus the prior year. Our licensing of peripheral product categories did not affect the e-commerce channel. E-commerce net revenues increased in our EMEA and APAC segments by $6 million and $3 million, respectively, as we expanded our online business across all three core brands.

26 47

Revenues, net By Product Group

Net revenues by product group, in both historical and on a constant currency continuing category basis, for fiscal 2014 and 2013 were as follows:

	Apparel and Accessories
In $millions				Footwear			Total
Fiscal 2014
Net revenues as reported	$	1,~~173~~174		$	397		$	1,~~570~~571
Less licensing revenue from licensed product categories	(558		)	—			(558		)
Constant currency continuing category net revenues	$	1,~~168~~116		$	397		$	1,~~565~~513
Fiscal 2013
Net revenues as reported	$	1,~~354~~363		$	457		$	1,~~811~~820
Impact of fiscal 2014 foreign exchange rates	(24		)	(5		)	(29		)
Less wholesale net revenues from licensed product categories	(27		)	—			(27		)
Constant currency continuing category net revenues	$	1,~~303~~312		$	452		$	1,~~754~~764
Change in net revenues as reported ($)	$	(~~181~~188	)	$	(60	)	$	(~~241~~248	)
Change in net revenues as reported (%)	(1314		)%	(13		)%	(1314		)%
Change in constant currency continuing category net revenues ($)	~~(135~~$	(196	)	~~(55~~$	(55	)	~~(189~~$	(251	)
Change in constant currency continuing category net revenues (%)	(1015		)%	(12		)%	(1114		)%

Apparel and accessories net revenues decreased $~~181~~188 million, or 1314%, on an as reported basis in fiscal 2014 versus the prior year. Changes in foreign currency exchange rates contributed $24 million of this decrease. Our licensing of peripheral product categories contributed $27 million of this decrease. On a constant currency continuing category basis, net revenues decreased $~~134~~196 million, or 1015%, primarily due to net revenue declines in the ~~wholesale~~DC ~~channel~~brand and DCwholesale ~~brand~~channel.

Footwear net revenues decreased $60 million, or 13%, on an as reported basis in fiscal 2014 versus the prior year. Changes in foreign currency exchange rates contributed $5 million of this decrease. Our licensing of peripheral product categories did not affect our footwear product group. On a constant currency continuing category basis, net revenues decreased $55 million, or 12%, primarily due to net revenue declines in the DC brand and wholesale channel.

Gross Profit

Gross profit decreased to $763 million in fiscal 2014 from $~~872~~876 million in fiscal 2013. Gross margin, or gross profit as a percentage of net revenues, increased 50 basis points to 48.6% in fiscal 2014 from 48.21% in the prior ~~fiscal~~ year. This 4050 basis point improvement in gross margin was primarily due to the segment and channel net revenue shifts toward our higher margin ~~EMEA and~~ APAC segments, and retail and e-commerce channels versus our Americas ~~segment~~and EMEA segments and wholesale channel.

Gross margin by regional segment for fiscal 2014 and 2013 was as follows:

					BasisPointChange Increase (Decrease)
					Basis Point (bp) Change Increase (Decrease)
	Year Ended October 31,
	2014		2013
Americas	41.3	%	41.54	%	(2010) bp
EMEA	55.6	%	56.7	%	(110) bp
APAC	54.6	%	51.0	%	360 bp
Consolidated	48.6	%	48.21	%	4050 bp

Selling, General and Administrative Expense ("SG&A")

SG&A ~~from continuing operations~~ decreased $30 million, or 4%, to $827 million in fiscal 2014 ~~from~~compared to $858 million in fiscal 2013. The ~~This~~decrease ~~$30~~in ~~million~~SG&A ~~decrease~~ was primarily attributable to reductions in employee compensation of $18 million (including a $13 million reduction in ongoing employee compensation), athlete and event sponsorship of $15 million, facility expenses of $10 million, and related consulting expenses of $6 million. These decreases were partially offset by increased bad debt expense of $15 million within

27 48

$13 million reduction in ongoing employee compensation), athlete and event sponsorship of $15 million, facility expenses of $10 million, and reduced consulting expenses of $6 million. These decreases were partially offset by increased bad debt expense of $15 million within the Americas segment due to increased reserves for doubtful accounts regarding certain independent distributor accounts. SG&A by segment for fiscal 2014 and 2013 was as follows:

SG&A by segment as reported for fiscal 2014 and 2013 was as follows:



	Year Ended October 31,								$ Change Increase (Decrease)			Basis Point (bp) Change Increase (Decrease)
	2014				2013
In millions			% of Net Revenues				% of Net Revenues
Americas	$	335	46.2	%	$	320	35.5	%	$	15		1,070	bp
EMEA	311		53.3	%	324		51.3	%	(13		)	200	bp
APAC	156		59.3	%	146		51.9	%	9			740	bp
Corporate Operations	26				67				(41		)
Consolidated	$	827	52.6	%	$	858	47.1	%	$	(30	)	550	bp

	Year Ended October 31,								$ Change Increase (Decrease)			BasisPointChange Increase (Decrease)
	2014				2013
In millions			% of NetRevenues				% of NetRevenues
Americas	$	318	44.0	%	$	320	35.8	%	$	(2	)	820 bp
EMEA	311		53.3	%	324		51.4	%	(13		)	190 bp
APAC	156		59.2	%	146		51.9	%	9			730 bp
Corporate Operations	43				67				(24		)
Consolidated	$	827	52.7	%	$	858	47.3	%	$	(30	)	540 bp

SG&A by segment for fiscal 2014 has been reclassified to conform to the current year presentation as a result of the Company's centralization of certain global business functions.

~~SG&A~~Goodwill within Corporate Operations decreased $24 million primarily due to organizational changes that transitioned responsibility for certain costs to our other segments. The decrease in Americas and EMEA segment SG&A was primarily due to reductions in employee compensation, athlete and event sponsorship, and facilities expenses, partially offset by increased bad debt expense in the Americas segment. The increase in APAC segment SG&A was primarily due to the allocation of costs associated with the Company's centralization of certain global business functions, including merchandising and design, marketing and supply chain, among others.Impairments

Goodwill impairment charges were $178 million in fiscal 2014 compared to zero in fiscal 2013. In the third quarter of fiscal 2014, a goodwill impairment charge of $178 million was recorded in our EMEA reporting unit.

Asset Impairments

Asset impairment charges were $~~189~~11 million in fiscal 2014 compared to $12 million in fiscal 2013. Impairment charges in fiscal 2014 ~~were~~included ~~due to: 1) the impairment of goodwill associated with our EMEA reporting unit of $178 million; 2)~~ impairments associated with planned restructuring of our e-commerce and other information technology systems of $7 million; and 3) impairments of certain under-performing retail stores of $4 million. Impairments ~~Impairment~~ charges in fiscal 2013 were primarily related to certain under-performing retail stores, discontinued brands, and trademarks associated with those brands.

Non-operating Expenses

Interest expense was $76 million in fiscal 2014 compared to $71 million in fiscal 2013. This increase was primarily due to higher average net borrowings, due to annualizing the refinancing of our U.S. senior notes in July 2013, and higher interest rates associated with that debt.

Our foreign currency loss was $3 million in fiscal 2014 compared to $5 million in fiscal 2013. The reduction in currency translation loss resulted primarily from the foreign currency exchange effect of certain non-euro denominated assets of our European subsidiaries.

Our income tax benefit for fiscal 2014 was $4 million compared to income tax expense of $166 million in fiscal 2013. Income tax expense for fiscal 2013 ~~includes~~included a $157 million non-cash valuation allowance recorded against deferred tax assets primarily in our EMEA segment. Our sale of the Mervin and Hawk businesses resulted in aggregate income tax expense of approximately $19 million during fiscal 2014. However, as we do not expect to pay income tax on these sales after application of available loss carry-forwards, an offsetting income tax benefit was recognized within continuing operations. The operations of Surfdome generated a tax benefit of approximately $3 million. Excluding this income tax benefit, we generated income tax expense in both fiscal 2014 and 2013 as we recorded tax expense in certain tax jurisdictions but were unable to record tax benefits against the losses in those jurisdictions where we have previously recorded valuation allowances.

Net Loss from Continuing Operations Attributable to Quiksilver, Inc.

Our net loss from continuing operations attributable to Quiksilver, Inc. in fiscal 2014 was $327 million, or $1.92 per share, compared to $239 million, or $1.43 per share, for fiscal 2013. The increased net loss was primarily attributable to the lower gross profit in fiscal 2014 as noted above.

Fiscal 2013 Compared to Fiscal 2012

Revenues, net

Revenues, net By Segment

The following tables present consolidated net revenues by segment, in both historical currency and constant currency, for fiscal 2013 and 2012:

In millions Historical Currency (as reported)	Year Ended October 31,				$ Change Increase (Decrease)			% Change Increase (Decrease)
	2013		2012
Americas	$	893	$	961	$	(68	)	(7	)%
EMEA	632		672		(40		)	(6	)%
APAC	282		306		(24		)	(8	)%
Corporate	4		4		—
Total	$	1,811	$	1,942	$	(131	)	(7	)%

In millions Constant Currency (current year exchange rates)	Year Ended October 31,				$ Change Increase (Decrease)			% Change Increase (Decrease)
	2013		2012
Americas	$	893	$	954	$	(61	)	(6	)%
EMEA	632		681		(49		)	(7	)%
APAC	282		283		(1		)	0	%
Corporate	4		4		—
Total	$	1,811	$	1,921	$	(110	)	(6	)%

Our net revenues for fiscal 2013 were $1.81 billion, a decrease of $131 million, or 7%, from $1.94 billion in fiscal 2012. Net revenues in fiscal 2013 declined by a single-digit percentage across all three regional segments with Americas segment net revenues down $68 million, EMEA segment net revenues down $40 million and APAC segment net revenues down $24 million. The decline in net revenues in our APAC segment in fiscal 2013 was almost entirely due to unfavorable changes in foreign currency exchange rates between fiscal 2013 and fiscal 2012. Absent changes in foreign currency exchange rates, APAC net revenues in fiscal 2013 were flat compared to fiscal 2012. A more detailed discussion of net revenue changes by segment, brand and channel as adjusted for changes in foreign currency exchange rates (i.e., in constant currency) is set forth below.

In constant currency, net revenues in the Americas segment decreased 6% versus the prior year due to a 13% decline in DC brand net revenues and a 5% decline in Quiksilver brand net revenues, partially offset by a 3% increase in Roxy brand net revenues. By distribution channel, Americas net revenues declined by 7% in the wholesale channel, 5% in the retail channel, and were flat in the e-commerce channel. Americas net revenues declined by nearly 10% in the United States, partially offset by growth outside of the U.S., particularly in the emerging markets of Brazil and Mexico.

In constant currency, net revenues in the EMEA segment decreased 7% versus the prior year primarily due to a 12% decline in the wholesale distribution channel partially offset by substantial growth in the e-commerce channel and modest growth in the retail channel. EMEA net revenues declined across all three core brands. Net revenues declined most prominently in Spain (17%) and France (3%) due, in part, to the negative economic circumstances in those countries. These declines were partially offset by net revenue growth in Russia and Germany.

In constant currency, net revenues in the APAC segment were flat to last year with 16% growth in DC brand net revenues offset by declines of 4% in Quiksilver brand net revenues and 5% in Roxy brand net revenues. By distribution channel, APAC net revenues grew in excess of 100% in the e-commerce channel as we expanded the perimeter of our online business in this region, and grew by 2% in the retail channel. This growth was offset by a 6% net revenue decline in the wholesale channel. Net revenue growth in APAC emerging markets, particularly South Korea and Indonesia, as well as Japan was offset by a net revenue decrease in Australia/New Zealand due to continuing economic challenges in those countries.

Revenues, net By Brand

In millions Historical Currency (as reported)	Year Ended October 31,				$ Change Increase (Decrease)			% Change Increase (Decrease)
	2013		2012
Quiksilver	$	721	$	784	$	(63	)	(8	)%
Roxy	511		530		(19		)	(4	)%
DC	542		593		(51		)	(9	)%
Other	36		35		1
Total	$	1,811	$	1,942	$	(131	)	(7	)%

In millions Constant Currency (current year exchange rates)	Year Ended October 31,				$ Change Increase (Decrease)			% Change Increase (Decrease)
	2013		2012
Quiksilver	$	721	$	775	$	(54	)	(7	)%
Roxy	511		522		(11		)	(2	)%
DC	542		588		(46		)	(8	)%
Other	36		35		1
Total	$	1,811	$	1,921	$	(110	)	(6	)%

Quiksilver brand net revenues decreased 8% on an as reported basis with single-digit percentage decreases across all three regional segments. By channel, Quiksilver net revenues decreased in both the wholesale and retail channels across all three regional segments but grew within the e-commerce channel in all regional segments.

Roxy brand net revenues decreased 4% on an as reported basis due to net revenue declines of 13% and 6% in the APAC and EMEA segments, respectively, partially offset by 6% net revenue growth in the Americas wholesale channel. By channel, Roxy brand net revenues declined in each of the wholesale and retail channels, partially offset by e-commerce growth within the EMEA and APAC regional segments.

DC brand net revenues decreased 9% on an as reported basis due to a 15% decline in the Americas wholesale channel and 9% and 5% declines in the EMEA and APAC wholesale channels, respectively. DC brand net revenues grew in the retail and e-commerce channels across all three regional segments.

Revenues, net By Channel

Net revenues by channel, in both historical and constant currency, for fiscal 2013 and 2012 were as follows:

In millions Historical Currency (as reported)	Year Ended October 31,				$ Change Increase (Decrease)			% Change Increase (Decrease)
	2013		2012
Wholesale	$	1,294	$	1,430	$	(136	)	(10	)%
Retail	447		457		(10		)	(2	)%
E-commerce	69		55		14			25	%
Total	$	1,811	$	1,942	$	(132	)	(7	)%

In millions Constant Currency (current year exchange rates)	Year Ended October 31,				$ Change Increase (Decrease)			% Change Increase (Decrease)
	2013		2012
Wholesale	$	1,294	$	1,414	$	(120	)	(9	)%
Retail	447		451		(4		)	(1	)%
E-commerce	69		55		14			25	%
Total	$	1,811	$	1,921	$	(110	)	(6	)%

Wholesale net revenues decreased 10% on an as reported basis across all three regional segments and all three core brands, most significantly in the DC and Quiksilver brands and the EMEA and Americas regional segments. Significant economic difficulties in Europe continued to result in the loss of many small accounts in our EMEA segment. Retail net revenues decreased 2% on an as reported basis primarily due to 5% declines in both the Americas and APAC segments, partially offset by 2% growth in the EMEA segment. By brand, Quiksilver and Roxy brand retail net revenues declined by 5% and 7%, respectively, partially offset by 22% growth in DC brand net revenues primarily in the EMEA and APAC segments as we expanded the availability of DC brand products within these segments. E-commerce net revenues increased 25% on an as reported basis versus the prior year due to significant growth within the EMEA and APAC segments.

Gross Profit

Gross profit decreased to $872 million in fiscal 2013 from $941 million in fiscal 2012. Gross margin, or gross profit as a percentage of net revenues, decreased 30 basis points to 48.2% in fiscal 2013 from 48.5% in the prior year, primarily due to increased discounting associated with DC brand net revenues within our wholesale channel. We entered fiscal 2013 with a higher level of DC inventory in the wholesale channel than we planned, which resulted in higher discounting to clear this product.

Gross margin by regional segment for fiscal 2013 and 2012 was as follows:

					BasisPoint (bp)Change Increase (Decrease)
	Year Ended October 31,
	2013		2012
Americas	41.5	%	42.5	%	(100) bp
EMEA	56.7	%	56.1	%	60 bp
APAC	51.0	%	51.2	%	(20) bp
Consolidated	48.2	%	48.5	%	(30) bp

Gross margin in the Americas and APAC segments declined versus the prior year primarily due to increased discounting associated with the DC brand within the wholesale channel. These decreases were partially offset by improved wholesale gross margins in our EMEA segment as a result of reduced discounting versus the prior year and the benefit of aged inventory liquidation, which left us with less aged inventory than the prior year. As of October 31, 2013, aged inventory was approximately 6% of total inventory, a reduction of 100 basis points versus October 31, 2012.

Selling, General and Administrative Expense ("SG&A")

SG&A decreased $31 million, or 3%, to $858 million in fiscal 2013 compared to $888 million in fiscal 2012. The decrease in SG&A was primarily due to reduced employee compensation expenses and event-related marketing expenses, partially offset by higher severance and early lease termination costs as well as increased e-commerce expenses associated with the expansion of our online business. Severance expenses were approximately $26 million in fiscal 2013 compared to approximately $13 million in fiscal 2012. SG&A by segment for fiscal 2013 and 2012 was as follows:

	Year Ended October 31,								$ Change Increase (Decrease)			BasisPoint (bp)Change Increase (Decrease)
	2013				2012
In millions			% of NetRevenues				% of NetRevenues
Americas	$	320	35.8	%	$	349	36.4	%	$	(29	)	(60) bp
EMEA	324		51.4	%	323		48.0	%	1			340 bp
APAC	146		51.9	%	157		51.3	%	(11		)	60 bp
Corporate Operations	67				59				8
Consolidated	$	857	47.3	%	$	888	45.7	%	$	(31	)	160	bp

As a percentage of net revenues, SG&A increased 160 basis points to 47.3% in fiscal 2013 compared to 45.7% in fiscal 2012, primarily due to the net revenue decline in fiscal 2013. SG&A increased as a percentage of net revenues in each of the EMEA and APAC segments primarily due to net revenue declines outpacing any SG&A reductions in fiscal 2013. SG&A improved 60 basis points in the Americas segment as the 8% reduction in SG&A expense was less than the 7% decrease in net revenues.

Asset Impairments

Asset impairment charges were $12 million in fiscal 2013 compared to $7 million in fiscal 2012. Impairment charges in fiscal 2013 were primarily related to our decision to close certain under-performing retail stores, discontinuation of certain brands and trademarks associated with those brands.

Non-operating Expenses

Net interest expense was $71 million in fiscal 2013 compared to $61 million in fiscal 2012. Interest expense in fiscal 2013 includes a $3 million write-off of debt issuance costs related to our senior notes due April 2015 that were redeemed in August 2013 (see Note 8, "Debt", to the consolidated financial statements). The remaining increase in interest expense was primarily due to the higher interest rates associated with our recently issued senior notes due 2018 and 2020 compared to the senior notes which were redeemed.

Our foreign currency loss amounted to $5 million in fiscal 2013 compared to a foreign currency gain of $2 million in fiscal 2012. The fiscal 2013 year loss resulted primarily from the foreign currency exchange effect of certain U.S. dollar denominated liabilities of our foreign subsidiaries.

Our income tax expense was $166 million in fiscal 2013 compared to $4 million in fiscal 2012. Income tax expense for fiscal 2013 includes a $157 million non-cash valuation allowance recorded during the fourth quarter against deferred tax assets primarily in our EMEA segment. Although we incurred a net loss during each of fiscal 2013 and 2012, we incurred income tax expense as we were unable to benefit from the losses in certain jurisdictions where we have recorded valuation allowances.

Net Loss Attributable to Quiksilver, Inc.

Our net loss from continuing operations attributable to Quiksilver, Inc. in fiscal ~~2013~~2014 was $~~239~~327 million, or $1.4392 per share, compared to $18236 million, or $01.1141 per share, for fiscal ~~2012~~2013. The increased net loss was primarily attributable to the ~~$157 million non-cash deferred tax valuation allowance and~~ lower gross profit in fiscal ~~2013~~2014 as noted above.

Financial Position, Capital Resources and Liquidity

The following table shows our cash, working capital and total indebtedness at October 31, ~~2014~~2015 and ~~2013~~2014:

In millions	October 31				$ Change Increase (Decrease)			% Change Increase (Decrease)
	2014		2013
	2015		2014
Cash and cash equivalents	$	4736	$	5747	$	(1011	)	(1823	)%
Restricted cash(1)	21		—		21
Restricted cash	3		21		(18		)	(86	)%
Working capital	~~394~~36		~~548~~391		(~~154~~355		)	(2891	)%
Total indebtedness	829		831		(2		)
Total indebtedness (1)	841		829		12			1	%

(1) Certain of our debt agreements contain restrictions on the usage of funds received from the sale of assets. These restrictions generally require such cash to be used for either repayment of indebtedness, capital expenditures, or other investments in our business. Restricted cash at October 31, 2014 primarily consists of the remaining proceeds of $16 million from the sale of our Mervin and Hawk businesses in the first quarter of 2014, which is subject to these restrictions.___________

32(1) Includes 2018 Notes and 2020 Notes and other minor debt obligations which have been reclassified to liabilities subject to compromise on the Company's consolidated balance sheet at October 31, 2015.

At October 31, ~~2014~~2015, we had $4736 million of cash on hand, $213 million in restricted cash, and $7444 million available on our credit facilities~~, and $21 million available for additional letters of credit in EMEA~~. Taken together, this represents cash and credit facility availability of $~~162~~83 million at October 31, ~~2014~~2015. Our primary credit facilities mature in ~~October~~February 2016 and ~~May~~October ~~2018~~2016. We have no principal payments due on our 2017 Notes, 2018 Notes or 2020 Notes before December 2017. Although we have experienced significant operating losses and cash flow volatility in recent years, we believe we have adequate liquidity to continue executing our plans to drive net revenue growth and operating efficiencies, as well as to provide adequate liquidity to each of our segments. We believe our cash flows from operations, cash on hand, and restricted cash, together with our existing credit facilities, will be adequate to fund our capital requirements for at least the next twelve months from the date of the filing of our consolidated financial statements for the fiscal year ended October 31, 2014.

~~See~~Certain ~~“Debt~~of ~~Structure”~~our ~~below~~debt agreements contain restrictions on the usage of funds. These restrictions generally require such cash to be used for aeither ~~description~~repayment of indebtedness, capital expenditures, or other investments in our business. Restricted cash at October 31, 2015 includes $1 million of the ~~various~~remaining ~~debt~~proceeds ~~agreements~~from ~~comprising~~our sale of the Surfdome business during the first quarter of fiscal 2015. We expect to utilize the remaining proceeds during fiscal 2016. Restricted cash at October 31, 2014 primarily consists of the remaining proceeds of $16 million from the sale of our ~~total~~Mervin ~~indebtedness~~and Hawk businesses in the first quarter of 2014, which was subject to these restrictions.

The decrease in working capital was primarily due to the reclassification of the 2017 Notes to current liabilities of $221 million. As discussed in Note 9 — Debt, the Company's voluntary reorganization under Chapter 11 created defaults and cross defaults pursuant to the terms of the Company’s debt which accelerated the maturity date.

Voluntary Reorganization Under Chapter 11

During the pendency of the Bankruptcy Cases, we expect that our primary sources of liquidity will continue to be cash on hand, cash flows from operations, borrowings under the DIP Facilities, other sales of inventory and the proposed transactions under the PSA.

In addition to the cash requirements necessary to fund ongoing operations, we have incurred and continue to incur significant professional fees and other costs in connection with preparation and handling of the Bankruptcy Cases. We anticipate that we will continue to incur significant professional fees and costs during the pendency of the Bankruptcy Cases.

Although, we believe our cash on hand, cash flow from operating activities, borrowings under the DIP Facilities, and other facilities other sales of inventory and the proposed transactions under the PSA will be adequate to meet the short-term liquidity requirements of our existing business, we cannot assure that such amounts will be sufficient to fund our operations, including operations during the period until such time, if any, and to make the required payments associated with the Bankruptcy Cases, until our Proposed Plan as outlined in the PSA receives the requisite acceptance and is confirmed by the Bankruptcy Court. Our long-term liquidity requirements and the adequacy of our capital resources are difficult to predict at this time and ultimately cannot be determined until after our Plan as outlined in the PSA or another plan of reorganization has been confirmed, if at all, by the Bankruptcy Court. If our future cash flows and capital resources are insufficient, we could face substantial liquidity problems and will likely be required to significantly reduce or delay capital expenditures, curtail, eliminate or dispose of substantial assets or operations, or undertake other significant restructuring measures, which could include reducing the size of our workforce or pursuing other alternatives to restructure or refinance our indebtedness. Such actions could increase the Company’s debt, negatively impact customer confidence in the Company’s ability to provide products, reduce the Company’s ability to raise additional capital, delay improvements in profitability, and adversely affect the Company’s ability to emerge from bankruptcy. There can be no assurance that any of these remedies could, if necessary, be effected on commercially reasonable terms, or at all, or that they would permit the Company to meet its scheduled debt service obligations. In addition, if the Company incurs additional debt, the risks associated with its substantial leverage, including the risk that it will be unable to service the Company’s debt or generate enough cash flow to fund its liquidity needs, could intensify.

For further discussion of liquidity risks and risks associated with the Bankruptcy Cases, see “Item 1A. Risk Factors.”

Our ability to continue as a going concern is dependent upon, among other things, (i) our ability to obtain timely confirmation of our Proposed Plan as outlined in the PSA under the Bankruptcy Code; (ii) the cost, duration and outcome of the reorganization process; (iii) our ability to achieve profitability as a company; (iv) our ability to maintain adequate cash on hand; and (v) our ability to generate cash from operations.

Cash Flows

Cash Flows from Operating Activities

Net cash used in operating activities was $2743 million in fiscal ~~2014~~2015, aan ~~decrease~~increase ~~in cash provided~~ of $5316 million compared to the prior year. The following table summarizes the major categories of changes in cash flows from operations between fiscal ~~2014~~2015 and ~~2013~~2014:

In millions	Fiscal ~~2014~~2015			Fiscal ~~2013~~2014			~~Change~~ $ Change
Net loss	$	(~~320~~307	)	$	(~~234~~318	)	$11	~~(86~~	)
Net effect of non-cash reconciling adjustments	~~266~~194			~~249~~263			17(69		)
Cash provided by operating assets and liabilities	4766			1046			3720
Cash (used in)/provided by operating activities of continuing operations	(7		)	25			(32		)
Cash used in operating activities of continuing operations	(47		)	(9		)	(38		)
Cash (used in)/provided by operating activities of discontinued operations	(19		)	2			(21		)
Cash provided by/(used in) operating activities of discontinued operations	5			(18		)	23
Net cash (used in)/provided by operating activities	$	(26	)	$	27		$	(53	)
Net cash used in operating activities	$	(43	)	$	(27	)	$	(15	)

Net cash used in operating activities of continuing operations was $947 million in fiscal ~~2014~~2015, aan ~~decrease~~increase ~~in cash provided~~ of $3338 million ~~compared~~ to ~~the~~fund ~~prior~~our ~~year.~~losses ~~Our~~from ~~net~~operating ~~loss was $320 million in fiscal 2014~~activities, acompared ~~decline in year-over-year operating results of $86 million versus the prior year. This decline in operating performance was primarily attributable~~ to the ~~net income impact of the $248 million decrease in wholesale channel net revenues in fiscal 2014 versus the~~ prior year~~, partially offset by a $30 million reduction in SG&A and a 40 basis point improvement in gross margin in fiscal 2014 versus the prior year~~. Net ~~Cash~~cash provided by ~~operating~~our ~~assets~~discontinued ~~and~~operations ~~liabilities~~increased ~~was~~by $4723 million infor ~~fiscal 2014, an increase of $37 million versus~~ the ~~prior~~same year. This increase was primarily attributable to: i) reductions in accounts receivable as a result of decreased wholesale net revenues and a 4-day improvement in days sales outstanding; and ii) reductions in inventories as a result of managing inventory levels relative to the net revenue decline in our wholesale channel, which generated a 4-day improvement in inventory days on hand. These improvements were partially offset by decreased accounts payable as a result of supply chain decisions to pay vendors more promptly.

Cash Flows from Investing Activities

Net cash ~~provided~~used byin investing activities was $64 million in fiscal ~~2014~~2015, an increase of $6010 million compared to cash ~~used~~provided by investing activities of $546 million in the prior year. This increase was primarily attributable to ~~the~~a ~~$77~~reduction ~~million~~ in cash ~~proceeds~~provided ~~received~~by ~~from~~investing ~~the~~activities ~~sale~~ of ~~our~~discontinued ~~Mervin~~operations ~~and~~of ~~Hawk~~$64 ~~businesses~~million, ~~during~~partially ~~the~~offset ~~first~~by ~~quarter~~an ofimprovement ~~fiscal~~in ~~2014.~~net ~~The~~restricted ~~remaining~~cash ~~proceeds~~provided ~~from these transactions~~ of $1639 million ~~are~~and ~~restricted~~a bydecrease ~~certain~~in ofcapital ~~our~~expenditures ~~credit~~in ~~agreements~~fiscal 2015 compared to the ~~repayment~~prior ~~of indebtedness and for capital expenditures~~year. Capital expenditures were $5333 million in fiscal ~~2014~~2015, ana ~~increase~~decrease of $120 million compared to the prior year. The ~~These~~ investments made in 2015 were primarily focused on ~~our ongoing enterprise-wide reporting system (SAP) and investments in~~ company-owned retail stores. We expect capital expenditures in fiscal 2015 to be approximately $25 million, primarily for the construction of new retail stores. We intend to fund these expenditures from cash on hand, restricted cash, operating cash flows, availability on our credit facilities, and the $16 million of net proceeds received from our divestiture of Surfdome during December 2014.

Cash Flows from Financing Activities

Net cash provided by financing activities was $1446 million in fiscal ~~2014~~2015, aan ~~decrease~~increase of $3632 million compared to the prior year. This ~~decrease~~increase in cash provided was primarily attributable to: i)increases ~~reduced~~in ~~new~~comparative ~~borrowing~~net ~~needs~~borrowings ~~due~~under toour ~~the~~credit ~~divestiture~~facilities of ~~our~~$38 ~~Mervin~~million, ~~and~~partially ~~Hawk~~offset ~~businesses;~~by ~~and~~a ~~ii)~~reduction ~~the prior year increase~~ in ~~long-term~~proceeds ~~debt arising~~ from ~~the~~stock ~~refinancing~~option exercises of ~~our~~$5 Umillion.~~S. Senior Notes (see "Debt Structure" below).~~

33Working Capital - Trade Accounts Receivable, net and Inventories

~~Working~~Two ~~Capital~~of the primary components of our working capital and near-term ~~Trade~~sources ~~Accounts~~of ~~Receivable~~cash at any point in time are trade accounts receivable, net and ~~Inventories~~inventories. A comparison of the balances of these items as of October 31, 2015 and 2014 is as follows:

Two of the primary components of our working capital and near-term sources of cash at any point in time are trade accounts receivable and inventories. A comparison of the balances of these items as of October 31, 2014 and 2013 is as follows:



	October 31				Change
	2015		2014		Change
Trade accounts receivable, net	$	213	$	311	$	(98	)
Average days sales outstanding⁽¹⁾	82		90		(8		)
Inventories	$	295	$	285	$	10
Inventory days on hand⁽²⁾	131		120		11

	October 31				Change ($/Days)
	2014		2013
Trade accounts receivable	$	320	$	412	$	(92	)
Average days sales outstanding(1)	93		97		(4		)
Inventories	$	279	$	338	$	(59	)
Inventory days on hand(2)	118		122		(4		)

___________

(1) Computed as net accounts receivable as of the balance sheet date, excluding value added taxes, divided by the result obtained by dividing fiscal ~~2014~~2015 and fiscal ~~2013~~2014 fourth quarter net wholesale revenues by 90 days.

(2) Computed as net inventory as of the balance sheet date divided by the result obtained by dividing fiscal ~~2014~~2015 and fiscal ~~2013~~2014 fourth quarter cost of goods sold by 90 days.

~~Days~~Net ~~sales~~trade ~~outstanding~~accounts ~~(“DSO”)~~receivable ~~improved~~decreased by$98 4million ~~days~~to as$213 ofmillion ~~October~~at October 31, ~~2014~~2015 compared to ~~October 31, 2013. The decrease in DSO was primarily due to improved collections and credit management. Total net inventory decreased by~~ $59311 million asat of October 31, 2014 ~~compared~~primarily due to ~~October 31,~~wholesale ~~2013~~net ~~and~~revenue ~~inventory~~decline, ~~days~~and onaverage ~~hand decreased by 4~~ days ~~year~~sales ~~over~~outstanding ~~year~~(“DSO”) asimproved aby ~~result.~~

8%, or 8 days. Total net inventory increased by $10 million as of October 31, 2015 compared to October 31, 2014 and inventory days on hand increased by 11 days year over year as a result.

Debt Structure

WeThe ~~generally~~filing ~~finance~~of ~~our~~the ~~working~~Petitions ~~capital~~on ~~needs~~September 9, 2015 created defaults and ~~capital~~cross ~~investments~~defaults ~~with~~pursuant ~~cash~~to onthe ~~hand~~terms of the Company’s Indentures to its 10.000% Senior Notes due 2020 (the "2020 Notes"), ~~operating~~7.875% ~~cash~~Senior ~~flows~~Secured Notes due 2018 (the "2018 Notes"), 8.875% Notes due 2017 (the "2017 Notes"), and ~~bank~~the ~~revolving~~ABL ~~credit~~Credit ~~facilities~~Facility, which accelerated the due dates for the obligations. The ~~Multiple~~filing ~~banks~~of a petition under the Bankruptcy Code results in the ~~United~~automatic ~~States~~stay of virtually all actions of creditors to collect pre-petition debts, ~~Europe~~until such time the stay is modified or removed. With respect to the 2017 Notes, the Company has received waivers for the defaults and ~~Australia~~cross ~~make~~defaults ~~these~~and ~~credit~~the ~~facilities~~rescission ~~available~~of the acceleration for a period of up to us210 days from September 9, 2015. The WeCompany ~~have~~has ~~used~~presented ~~term~~its outstanding debt under the 2017 Notes in current liabilities not subject to ~~supplement~~compromise ~~these~~on ~~credit~~its ~~facilities~~consolidated balance sheet as of October 31, ~~and~~2015. The itCompany has ~~typically~~presented ~~been~~its ~~used~~outstanding todebt ~~finance~~under ~~long-term~~the ~~assets~~2018 Notes and ~~our~~2020 ~~operations.~~Notes ~~Our~~in ~~debt~~liabilities ~~outstanding~~subject atto compromise on its consolidated balance sheet as of October 31, ~~2014~~2015. Lastly, ~~includes~~as ~~short-term~~discussed ~~and~~below ~~long~~in the DIP Financing section, the ABL Credit Facility was paid-~~term~~off ~~debt~~in asSeptember ~~follows:~~2015.

In millions	Maturity Date	U.S. Dollar		Non-U.S. Dollar		Total
Lines of credit - 0.8% Floating	October 31, 2016	$	—	$	32,929	32,929
2017 Notes - 8.875% Fixed	December 15, 2017	—		252,188		252,188
ABL Credit Facility - 2.1% to 5.6% Floating	May 24, 2018	21,000		14,933		35,933
2018 Notes - 7.875% Fixed	August 1, 2018	278,834		—		278,834
2020 Notes - 10.000% Fixed	August 1, 2020	222,582		—		222,582
Capital lease obligations and other borrowings - Various %	Various	2,257		3,867		6,124
Total Indebtedness		$	524,673	$	303,917	$	828,590

Pursuant to the PSA and the Proposed Plan, the Company’s existing debt and accrued interest will be reduced by approximately $500 million, including the extinguishment of all of its 2018 Notes and 2020 Notes. Additionally, new debtor-in-possession financing of up to $175 million was provided, as more fully described below. The Company’s 2017 Notes would be reinstated upon the consummation of the transactions set forth in the plan of reorganization under the Petitions. For further information on the contemplated restructuring of the Company's capital and debt structure in conjunction with the Petitions, see Note 22 — Voluntary Reorganization under Chapter 11.

AsIn ofaddition ~~October 31,~~to ~~2014,~~ our ~~credit~~debtor-in-possession ~~facilities~~financing ~~allowed~~discussed ~~for~~below, ~~total~~multiple ~~cash~~banks ~~borrowings~~in ~~and~~Europe ~~letters~~make of credit offacilities ~~$187~~available ~~million~~to us. A ~~The~~limited ~~actual~~amount ~~availability~~of ~~and~~our ~~maximum~~outstanding ~~borrowings~~debt ~~possible~~bears ~~under~~interest ~~certain~~based ~~credit~~on ~~facilities~~London ~~fluctuates~~Inter-Bank ~~with~~Offer ~~the~~Rate ~~amount~~("LIBOR") ofor ~~eligible~~Euro ~~assets~~Inter-Bank ~~comprising~~Offer ~~the~~Rate ("~~borrowing base.~~EURIBOR") Atplus ~~October 31, 2014, we had~~ a ~~total of $69 million of direct borrowings and $24 million in letters of~~ credit ~~outstanding~~spread. Our ~~The~~effective ~~amount~~interest ~~of availability for borrowings remaining as of October 31~~rates, ~~2014 was $74 million~~therefore, ~~$59~~will ~~million~~move ofup ~~which~~or ~~could~~down ~~also~~depending beon ~~used~~market ~~for~~conditions. The ~~letters of~~ credit inspreads ~~the~~are ~~United~~subject ~~States and APAC. In addition~~ to ~~the~~change ~~$74~~based ~~million~~on ofour ~~availability~~financial ~~for~~performance ~~borrowings,~~and wemarket ~~also had $21 million in additional capacity for letters of credit in EMEA as of October 31, 2014~~conditions.

AOur ~~limited amount of our outstanding~~ debt ~~bears interest based on London Inter-Bank Offer Rate ("LIBOR")~~outstanding, ~~Tokyo~~as ~~Inter-Bank~~denominated ~~Offer~~in ~~Rate~~either ~~("TIBOR")~~the ~~or Euro Inter-Bank Offer Rate ("EURIBOR") plus a credit spread~~U.S ~~Our~~Dollar ~~effective~~or ~~interest~~other ~~rates~~currencies, ~~therefore~~at October 31, ~~will~~2015 ~~move~~includes upshort-term ~~or down depending on market conditions. The credit spreads are subject to change based on our financial performance~~ and ~~market~~long-term ~~conditions.~~debt as follows:

EMEA lines of credit



In millions	Maturity Date	U.S. Dollar			Non-U.S. Dollar			Total
Debtor-in-Possession Term Loan Facility - 12% Fixed	February 5, 2016	$	70,000		$	—		$	70,000
Debtor-in-Possession ABL Loan Facility - 4.5% Floating	February 5, 2016	8,146			9,588			17,734
Eurofactor line of credit - 0.6% Floating	October 31, 2016	22,835			—			22,835
Lines of credit - 0.8% - 1.9% Floating	December 10, 2015	2,308			—			2,308
2017 Notes - 8.875% Fixed ⁽¹⁾	December 15, 2017	—			218,905			218,905
2018 Notes - 7.875% Fixed ⁽²⁾	August 1, 2018	280,000			—			280,000
2020 Notes - 10.000% Fixed ⁽²⁾	August 1, 2020	225,000			—			225,000
Capital lease obligations and other borrowings - Various % ⁽¹⁾	Various	1,749			2,516			4,265
Total debt		610,038			231,009			841,047
Less: Liabilities subject to compromise		(506,749		)	—			(506,749		)
Less: Current portion		(103,289		)	(230,106		)	(333,395		)
Long-term debt, net of current portion		$	—		$	903		$	903

On October 31, 2013, certain European subsidiaries of the Company entered into a credit facility with a commercial bank. The facility has an initial term of three years and borrowings are limited to €60 million. Borrowing availability under this facility is based on eligible EMEA trade accounts receivable. The facility does not contain any financial covenants.___________

34(1) The 2017 Notes have been classified as current liabilities not subject to compromise on the Company's consolidated balance sheet at October 31, 2015.

We(2) ~~also~~The ~~maintain~~2018 ~~various~~Notes ~~credit~~and ~~facilities~~2020 ~~with~~Notes ~~several~~and ~~banks~~other inminor ~~Europe.~~debt ~~These~~obligations ~~facilities~~have ~~are~~been ~~all~~reclassified ~~unsecured, short-term facilities used~~ to ~~support~~liabilities ~~the~~subject ~~day-~~to~~-day~~ ~~working~~compromise ~~capital~~on ~~needs~~the ofCompany's ~~our~~consolidated ~~EMEA~~balance ~~segment.~~sheet ~~See~~at ~~Note~~October 831, to2015, ~~our~~as ~~consolidated~~they ~~financial~~are ~~statements,~~subject ~~"Debt",~~to ~~for~~resolution ~~further~~during ~~information on~~ the ~~EMEA~~Bankruptcy ~~Credit Facilities~~Cases.

Borrowing Availability and Capacity

As of October 31, 2015, the Company's credit facilities, which includes the DIP Facilities described below, allowed for total cash borrowings and letters of credit of $125 million. The actual availability and maximum borrowings possible under certain credit facilities fluctuates with the amount of eligible assets comprising the "borrowing base." At October 31, 2015, we had a

total of $43 million of direct borrowings and $39 million in letters of credit outstanding. The amount of availability for borrowings remaining as of October 31, 2015 was $44 million, $20 million of which could be used in the United States and APAC. Included in the $44 million of availability for borrowings, the Company had $6 million in availability for letters of credit and $18 million in availability for borrowings in EMEA.

DIP Financing

On September 10, 2015, the Bankruptcy Court approved, on an interim basis, the Company's debtor-in-possession financing in an aggregate amount of up to $175 million, consisting of (i) a $60 million asset-based loan (“ABL”) revolving credit facility (the “DIP ABL Facility”) provided by Bank of America, N.A., and (ii) a $115 million delayed draw term loan facility (the “DIP Term Loan Facility” and, together with the DIP ABL Facility, the "DIP Facilities") provided by affiliates of Oaktree Capital. Subject to the satisfaction of certain customary conditions to borrowing, the entire DIP ABL Facility and $70 million of the DIP Term Loan Facility became available upon entry of the interim order, and the balance of the DIP Term Loan Facility became available upon entry of the final order on October 28, 2015. The proceeds of the DIP Facilities were used in part to repay amounts outstanding under the pre-petition ABL Credit Facility.

The DIP Facilities will mature 150 days after the Petition Date, and contain representations, conditions, covenants and events of default customary for similar facilities. The DIP Facilities are collectively secured by all assets of the Debtors, and such liens are senior to the lien of the 2018 Notes. The DIP ABL Facility is secured by a first-priority lien on inventory, receivables, cash and other customary ABL collateral owned by the Debtors (“ABL Collateral”), and a second-priority lien on all other assets of the Debtors (“Term Loan Collateral”). The DIP Term Loan Facility has a first-priority lien on Term Loan Collateral, and a second-priority lien on all ABL Collateral. A portion of the DIP ABL Facility will be funded to certain Australian, Canadian and Japanese subsidiaries of the Company, which loans will be secured by assets of such foreign subsidiaries. The DIP Term Loan Facility bears interest at 12%. The DIP ABL Facility bears interest at LIBOR plus 3.5%.

The DIP Facilities include standard covenants which are customary for financing transactions of this type; amongst others, they include the retention of an outside restructuring consultant, restrictions on cash management, and compliance with the bankruptcy proceeding requirements. As of October 31, 2015, the Company was in compliance with these covenants.

For fiscal 2015, debt issuance costs for the DIP ABL Facility and DIP Term Loan Facility amounted to $1 million and $3 million, respectively, and have been recorded in reorganization items. All professional fees incurred for the DIP ABL Facility and DIP Term Loan Facility have been recorded in reorganization items.

Eurofactor and other EMEA lines of credit

On October 31, 2013, certain European subsidiaries of the Company entered into a line of credit facility (the "Eurofactor") with a commercial bank. The facility has an initial term of three years and borrowings are limited to €60 million. Borrowing availability under this facility is based on eligible EMEA trade accounts receivable; the facility does not contain any financial covenants.

The Company also maintains various credit facilities with several banks in Europe. These facilities are all unsecured, short-term facilities used to support day-to-day working capital needs of the EMEA segment.

The 2017 Notes

In December 2010, Boardriders S.A., ~~our~~the Company’s wholly-owned subsidiary, issued €200 million aggregate principal amount of its senior notes, which bear a coupon interest rate of 8.875% and are due December 15, 2017 ~~(the “2017 Notes”)~~. The 2017 Notes are general senior obligations and are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by Quiksilver, Inc. and certain of its current and future U.S. and non-U.S. subsidiaries, subject to certain exceptions. We may redeem some or all of the 2017 Notes at fixed redemption prices as set forth in the indenture related to such 2017 Notes. For the year following December 15, 2014, the 2017 Notes ~~can~~were beredeemable ~~redeemed~~ at 104.4%. The 2017 Notes ~~indenture~~were ~~includes~~issued ~~covenants~~at ~~that~~par ~~limit~~value ~~our~~in ~~ability~~a ~~to,~~private ~~among~~offering ~~other~~that ~~things:~~was ~~incur~~exempt ~~additional~~from ~~debt;~~the ~~pay~~registration ~~dividends~~requirements onof ~~our~~the ~~capital~~Securities ~~stock~~Act orof ~~repurchase~~1933, ~~our~~as ~~capital~~amended ~~stock;~~(the ~~make~~“Securities ~~certain~~Act”). The ~~investments;~~2017 ~~enter~~Notes ~~into~~were ~~certain~~offered ~~types~~within ~~of transactions with affiliates; impose limitations on~~ the ~~ability~~United ofStates ~~our~~only ~~restricted subsidiaries~~ to ~~pay~~qualified ~~dividends~~institutional orbuyers ~~make~~in ~~other~~accordance ~~payments~~with toRule 144A ~~Quiksilver,~~under ~~Inc.;~~the ~~use~~Securities ~~assets~~Act asand ~~security~~outside inthe ~~other~~United ~~transactions;~~States ~~and~~only ~~sell~~to ~~certain~~non-U.S. ~~assets~~investors orin ~~merge~~accordance with ~~or into other companies. As of October~~Regulation ~~31,~~S ~~2014,~~under wethe ~~were~~Securities ~~in compliance with these covenants~~Act. The ~~See~~2017 ~~Note~~Notes 8were tonot ~~our~~registered ~~consolidated~~under ~~financial~~the ~~statements,~~Securities ~~"Debt",~~Act ~~for~~or ~~further~~the ~~information~~securities onlaws ~~the~~of ~~2017~~any ~~Notes~~other jurisdiction.

~~ABL~~The ~~Credit~~2017 ~~Facility~~Notes are general senior obligations and are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by Quiksilver, Inc. and certain of its current and future U.S. and non-U.S. subsidiaries, subject to certain exceptions. These subsidiary guarantors include entities with ownership of the Company's Quiksilver, Roxy, and DC trademarks worldwide.

~~On May 24, 2013, we entered into an Amended and Restated Credit Agreement with Bank of America, N.A., and the lenders and other agents party thereto (the “ABL Credit Facility”).~~ The ~~ABL~~Company ~~Credit~~may ~~Facility~~redeem ~~has~~some aor ~~term~~all of ~~five years. The ABL Credit Facility encompasses certain entities within both our Americas and APAC segments. Under~~ the ~~ABL~~2017 ~~Credit~~Notes ~~Facility,~~at ~~our~~fixed ~~borrowings~~redemption ~~are~~prices ~~limited~~as toset ~~the~~forth ~~lesser of (i) $230 million~~ in ~~aggregate, with sublimits for specific subsidiaries (with an option to expand~~ the ~~aggregate~~indenture ~~commitments~~related ~~by up~~ to ansuch ~~additional~~2017 ~~$125~~Notes; ~~million on certain conditions) and (ii) a borrowing base calculated upon designated percentages of eligible accounts receivable~~however, ~~eligible inventory and, in~~ the ~~case~~Company ofdoes ~~U.S.~~not ~~and~~plan ~~Canadian~~to ~~borrowers,~~exercise ~~certain~~this ~~eligible credit card receivables~~redemption. The ~~ABL~~2017 ~~Credit~~Notes ~~Facility~~indenture includes acovenants ~~$145~~that ~~million~~limit ~~total~~the ~~sublimit~~Company’s ~~for~~ability ~~letters~~to ofimpose ~~credit,~~limitations ~~with~~on ~~smaller~~the ~~sublimits~~ability ~~applicable~~of toits ~~specific~~restricted subsidiaries. ~~The~~to ~~ABL~~pay ~~Credit~~dividends ~~Facility~~or ismake ~~guaranteed~~other bypayments to Quiksilver, Inc. In ~~and our domestic~~addition, ~~Canadian,~~this ~~Australian~~indenture ~~and~~includes ~~Japanese~~covenants ~~subsidiaries (other than immaterial subsidiaries), except~~ that ~~our~~limit ~~Canadian, Australian and Japanese subsidiaries do not guarantee~~ the ~~obligations~~Company's ofability ~~the domestic loan parties. The obligations under the ABL Credit Facility are, subject~~ to ~~certain~~incur ~~exceptions,~~additional ~~generally~~debt; ~~secured~~pay bydividends ~~(i) a~~on ~~first~~its ~~priority~~capital ~~security~~stock ~~interest~~or inrepurchase ~~our~~its ~~domestic,~~capital ~~Canadian,~~stock; ~~Australian~~make ~~and~~certain ~~Japanese~~investments; ~~inventory~~enter ~~and~~into accounts receivable, (ii) a security interest in substantially all of our other domestic, Canadian, Australian and Japanese personal property (which security interest is a second priority security interest in the case of the domestic loan parties) and (iii) a pledge of the shares of certain oftypes ~~our subsidiaries, except that the assets~~ of ~~our Canadian, Australian and Japanese subsidiaries do not secure the obligations of the domestic loan parties.~~

~~The~~ ABL Credit Facility contains customary default provisions and provides that, upon the occurrence of an event of default relating to the bankruptcy or insolvency of the borrower or other subsidiaries, the unpaid balance of the principal and accrued interest under the ABL Credit Facility and all other obligations of the borrower under the loan documents will become immediately due and payable without any action under the ABL Credit Facility. Upon the occurrence of any other event of default (which would include a default under other material indebtedness), the agent of the lenders may, by written notice, declare the unpaid balance of the principal and accrued interest under the ABL Credit Facility and all other obligations under the loan documents immediately due and payable without any further action.53

~~The~~transactions ~~ABL~~with ~~Credit~~affiliates; ~~Facility~~use ~~also~~assets ~~includes~~as ~~certain~~security ~~representations~~in ~~and~~other ~~warranties~~transactions; and ~~restrictive~~sell ~~covenants~~certain ~~usual~~assets ~~for~~or ~~facilities~~merge ofwith ~~this~~or ~~type.~~into ~~The ABL Credit Facility does not have a financial maintenance covenant,~~ other ~~than~~companies. As a ~~minimum~~result ~~fixed charge coverage ratio~~ of ~~1.0~~the ~~to 1.0~~Petitions, ~~which~~the ~~does~~Company ~~not~~has ~~apply~~received ~~unless~~waivers ~~remaining~~for ~~borrowing~~the ~~availability~~defaults ~~was~~and tocross ~~fall~~defaults ~~below~~and the ~~greater~~rescission of ~~(a) $15 million and (b) 10% of~~ the ~~total~~acceleration ~~borrowing~~for ~~base~~a ~~available.~~period ~~See~~of ~~Note~~up 8 to ~~our~~210 ~~consolidated~~days ~~financial~~from ~~statements~~September 9, ~~"Debt"~~2015, ~~for~~which ~~further~~is ~~information~~February on5, ~~the ABL Credit Facility~~2016.

Pursuant to the PSA, upon emergence from bankruptcy, the 2017 Notes will be subject to a €50 million principal reduction and a three year extension of the maturity date.

The 2018 Notes and 2020 Notes

On July 16, 2013, Quiksilver, Inc. and its wholly-owned subsidiary, QS Wholesale, Inc. issued (i) $280 million aggregate principal amount in 7.875% Senior Secured Notes due 2018 ~~(the “2018 Notes”)~~, and (ii) $225 million aggregate principal amount in 10.000% Senior Notes due 2020 (the “Original 2020 Notes”). These Innotes ~~November,~~were ~~2013,~~issued ~~the~~in ~~Original~~a ~~2020~~private ~~Notes~~offering ~~were~~that ~~exchanged~~was ~~for~~exempt ~~publicly~~from ~~registered~~the ~~notes~~registration ~~with~~requirements ~~identical~~of ~~terms (~~the ~~“2020~~Securities ~~Notes”)~~Act. They ~~The~~were ~~2018~~offered ~~Notes~~within ~~and~~the ~~2020~~United ~~Notes~~States ~~are~~only ~~general~~to ~~senior~~qualified ~~obligations~~institutional ofbuyers ~~Quiksilver~~in ~~Inc.,~~accordance ~~and~~with ~~its~~Rule ~~wholly-owned~~144A ~~subsidiary,~~under ~~QS Wholesale, Inc. (~~the ~~"Issuers")~~Securities ~~and are fully and unconditionally guaranteed~~Act, ~~jointly~~ and ~~severally,~~outside ~~on a senior basis by certain~~ of ~~our~~the ~~current~~United ~~and~~States ~~future~~only to non-U.S. ~~subsidiaries.~~investors ~~The~~in ~~2018~~accordance ~~Notes~~with ~~and~~Regulation ~~the~~S ~~related~~under ~~guarantees~~the ~~are~~Securities ~~secured~~Act. In byNovember, ~~(1) a~~2013, ~~second-priority security interest in~~ the ~~current~~Original ~~assets~~2020 ofNotes ~~the~~were ~~Issuers~~exchanged ~~and~~for ~~the~~publicly ~~subsidiary~~registered ~~guarantors,~~notes ~~together~~ with ~~all~~identical ~~related general intangibles (excluding intellectual property rights) and other property related to such assets~~terms, ~~including~~known as the ~~proceeds~~2020 ~~thereof, which assets secure our ABL Credit Facility on a first-priority~~ Notes.

35The issuers received net proceeds from the offering of the 2018 Notes and the Original 2020 Notes of approximately $493 million after deducting initial purchaser discounts, but before offering expenses. The Company used a portion of the net proceeds to redeem their former 2015 Notes on August 15, 2013. The Company also used portions of the net proceeds to repay in full and terminate its former Americas term loan, to pay down a portion of the then outstanding amounts under the ABL Credit Facility and to pay related fees and expenses. As a result of the repayments of the former 2015 Notes and the Americas term loan, the Company recorded non-cash expense to reorganization items of approximately $3 million to write-off the deferred debt issuance cost related to such debt during the fiscal year ended October 31, 2015. As a result of the Petitions, the Company recorded non-cash expense to reorganization items of approximately $4 million and $4 million to write-off the deferred debt issuance cost related to the 2018 Notes and 2020 Notes, respectively, during the fiscal year ended October 31, 2015.

The 2018 Notes will mature on August 1, 2018 and bear interest at the rate of 7.875% per annum. The offering price of the 2018 Notes was 99.483% of the principal amount. The 2018 Notes are general senior obligations of the issuers and are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by certain of the Company’s current and future U.S. subsidiaries. The 2018 Notes are secured by (1) a second-priority security interest in the current assets of the issuers and the subsidiary guarantors, together with all related general intangibles (excluding intellectual property rights) and other property related to such assets, including the proceeds thereof, which assets secure the Company’s ABL Credit Facility on a first-priority basis; and (2) a first-priority security interest in substantially all other property (including intellectual property rights, which primarily consist of the Company's Quiksilver and Roxy trademarks in the United States and Mexico, and the Company's DC trademarks worldwide) of the ~~Issuers~~issuers and the guarantors and a first-priority pledge of 100% of the equity interests of certain subsidiaries directly owned by the ~~Issuers~~issuers and the guarantors (but excluding equity interests of applicable foreign subsidiaries of the ~~Issuers~~issuers and the guarantors possessing more than 65% of the total combined voting power of all classes of equity interests of such applicable foreign subsidiaries entitled to vote) and the proceeds of the foregoing. ~~The 2020 Notes are not secured.~~

WeThe ~~may~~2020 ~~redeem~~Notes ~~some~~will ormature ~~all~~on August 1, 2020 and bear interest at the rate of 10.000% per annum. The offering price of the ~~2018~~2020 Notes ~~and~~was 98.757% of the principal amount. The 2020 Notes atare ~~fixed~~general ~~redemption~~senior ~~prices~~obligations asof ~~set~~the ~~forth~~issuers and are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by certain of the Company’s current and future U.S. subsidiaries. The issuers and subsidiary guarantors include entities with ownership of the Company's Quiksilver and Roxy trademarks in the ~~indenture~~United ~~related~~States toand ~~such~~Mexico, ~~notes~~and the Company's DC trademarks worldwide.

The 2018 Notes and 2020 Notes indentures include covenants that limit ~~our~~the Company’s ability to, ~~among~~impose ~~other~~limitations ~~things:~~on ~~incur~~the ~~additional~~ability ~~debt;~~of ~~issue~~its ~~certain~~restricted ~~preferred~~subsidiaries ~~shares;~~to pay dividends ~~on our capital stock~~ or ~~repurchase capital stock;~~ make certain ~~investments;~~other ~~enter~~payments ~~into~~to ~~certain~~the ~~types~~Company. In ofaddition, ~~transactions~~these ~~with~~indentures ~~affiliates;~~include ~~impose~~covenants ~~limitations~~that onlimit the Company’s ability ~~of our restricted subsidiaries~~ to, ~~pay~~among ~~dividends or make certain~~ other ~~payments~~things: ~~to us;~~ use assets as security in other transactions; ~~and~~ sell certain assets; or merge with or into other companies.; Asincur ofadditional ~~October 31,~~debt; ~~2014,~~issue wecertain ~~were~~preferred inshares; ~~compliance~~pay ~~with~~dividends ~~these~~on ~~covenants.~~its ~~See~~capital ~~Note~~stock 8or torepurchase ~~our~~capital ~~consolidated~~stock; ~~financial~~make ~~statements,~~certain ~~"Debt",~~investments; ~~for~~or ~~further~~enter ~~information~~into oncertain types of transactions with affiliates. As of October 31, 2015, the ~~2018~~Company ~~Notes~~was ~~and~~in ~~2020~~compliance ~~Notes~~with these covenants.

Pursuant to the PSA, upon emergence from bankruptcy, the 2018 Notes and 2020 Notes will be extinguished. New common shares will be issued to the holders of the 2018 Notes and $12.5 million in cash will be allocated between holders of the 2020 Notes and the general unsecured creditors.

For fiscal 2015, the contractual interest expense under the 2018 Notes and 2020 Notes was $22 million and $23 million, respectively, however, due to the Petitions, the Company ceased recording interest expense on the Petition Date. As a result,

the Company recorded interest expense of $19 million for each of the 2018 Notes and 2020 Notes in the consolidated statement of operations for fiscal 2015.

Other

For information regarding our contractual payment obligations on our outstanding indebtedness, see Contractual Obligations and Commitments below.

Contractual Obligations and Commitments

We lease certain land and buildings under non-cancelable operating leases. The leases expire at various dates through 2024, excluding renewals at our option, and contain various provisions for rental adjustments including, in certain cases, adjustments based on increases in the Consumer Price Index. The leases generally contain renewal provisions for varying periods of time.

~~Our~~Subject ~~significant~~to ~~contractual~~certain ~~obligations~~exceptions, ~~and~~under ~~commitments~~the asBankruptcy ofCode, ~~October 31~~the Debtors may assume, ~~2014~~assign, ~~are~~or ~~summarized~~reject incertain executory contracts and unexpired leases subject to the ~~following~~approval ~~table:~~of the Bankruptcy Court and certain other conditions.

	Payments Due by Period
In millions	OneYear		Two toThreeYears		Four toFiveYears		AfterFiveYears		Total
Operating lease obligations	$	88	$	130	$	83	$	96	$	397
Long-term debt obligations(1)	2		3		567		223		796
Professional athlete sponsorships(2)	19		20		4		—		43
Certain other obligations(3)	26		3		—		—		29
Total	$	135	$	156	$	654	$	319	$	1,265

Our significant contractual obligations and commitments as of October 31, 2015 are summarized in the following table:

(1) Represents all long-term debt obligations, including capital leases and other borrowings of $6 million. Excludes required interest payments. See Note 8, "Debt", to our consolidated financial statements for interest terms.



	Payments Due by Period
In millions	One Year		Two to Three Years		Four to Five Years		After Five Years		Total
Operating lease obligations ⁽¹⁾	$	69	$	110	$	73	$	86	$	338
Long-term debt obligations ^{(2) (3)}	115		501		225		—		841
Professional athlete sponsorships ⁽⁴⁾	7		5		2		1		14
Certain other obligations ⁽⁵⁾	39		—		—		—		39
Total	$	230	$	616	$	300	$	87	$	1,232

(2) We establish relationships with professional athletes in order to promote our products and brands. We have entered into endorsement agreements with professional athletes in sports such as surfing, skateboarding, snowboarding, BMX and motocross. Many of these contracts provide incentives for magazine exposure and competitive victories while wearing or using our products. It is not possible to determine the amounts we may be required to pay under these agreements as they are subject to many variables. The amounts listed are the approximate amounts of minimum obligations required to be paid under these contracts. The estimated maximum amount that could be paid under existing contracts is approximately $57 million and would assume that all bonuses, victories, etc. are achieved during a five-year period. The actual amounts paid under these agreements may be higher or lower than the amounts listed as a result of the variable nature of these obligations.___________

(31) ~~Certain~~Excludes ~~other~~payments ~~obligations~~for ~~include approximately~~ $2419 million ofrelated ~~contractual~~to ~~letters~~rejected oflease ~~credit~~contracts ~~with~~which ~~maturity~~have ~~dates~~been ofincluded ~~primarily~~in ~~less~~liabilities ~~than~~subject ~~one~~to ~~year~~compromise ~~(see~~on ~~Note~~the ~~8, "Debt", to our~~ consolidated ~~financial~~balance ~~statements~~sheet. ~~for~~Subsequent ~~additional details) and approximately $5 million related~~ to ~~our~~October ~~French profit sharing plan (see Note 14~~31, ~~"Employee Benefit Plans"~~2015, tothe ~~our~~Company ~~consolidated~~has ~~financial~~entered ~~statements~~motions ~~for~~to ~~additional~~reject ~~details).~~approximately We$50 ~~also~~million ~~enter~~of ~~into~~the ~~unconditional~~lease ~~purchase~~commitments, ~~obligations~~which ~~with~~were ~~various~~included ~~suppliers of goods and services~~ in the ~~normal~~table ~~course of operations through purchase orders or other documentation~~above. ~~Such~~These ~~unconditional~~motions ~~purchase~~have ~~obligations~~been ~~are~~approved ~~generally outstanding for periods of less than a year and are settled~~ by ~~cash~~the ~~payments~~Bankruptcy ~~upon delivery of goods and services and are not reflected in this line item~~Court. WeThe ~~have~~Company ~~approximately~~may ~~$19~~continue ~~million~~to ofenter ~~tax~~additional ~~contingencies~~motions ~~related~~ to ~~uncertain~~reject ~~tax~~commitments ~~positions,~~during ~~which is excluded from~~ the ~~table~~Bankruptcy ~~based on the uncertainty of the timing of~~Proceedings.

36(2) Represents all long-term debt obligations, including capital leases and other borrowings, including liabilities subject to compromise on the 2018 Notes and 2020 Notes. Excludes required interest payments. See Note 9 — Debt to the consolidated financial statements for interest terms.

(3) Includes payment for the ~~cash~~2018 ~~flows~~Notes, ofthe ~~these~~2020 ~~contingencies~~Notes ~~See~~and ~~Note~~the ~~13,~~2017 ~~"Income~~Notes ~~Taxes",~~which towould ~~our~~be ~~consolidated~~eliminated ~~financial~~or ~~statements~~altered ~~for~~per ~~additional~~terms ~~information~~of onthe ~~our~~PSA ~~income~~if ~~taxes~~approved by the Bankruptcy Court as noted below.

(4)

We establish relationships with professional athletes in order to promote our products and brands. We have entered into endorsement agreements with professional athletes in sports such as surfing, skateboarding, snowboarding and motocross. Many of these contracts provide incentives for magazine exposure and competitive victories while wearing or using our products. It is not possible to determine the amounts we may be required to pay under these agreements as they are subject to many variables. The amounts listed are the approximate amounts of minimum obligations required to be paid under these contracts. The estimated maximum amount that could be paid under existing contracts is approximately $26 million and would assume that all bonuses, victories, etc. are achieved during a five-year period. The actual amounts paid under these agreements may be higher or lower than the amounts listed as a result of the variable nature of these obligations.

(5)

Certain other obligations include approximately $39 million of contractual letters of credit with maturity dates of less than one year (see Note 9 — Debt to our consolidated financial statements for additional details). We also enter into unconditional purchase obligations with various suppliers of goods and services in the normal course of operations through purchase orders or other documentation. Such unconditional purchase obligations are generally outstanding for periods of less than a year and are settled by cash payments upon delivery of goods and services and are not reflected in this line item. We have approximately $21 million of tax contingencies related to uncertain tax positions, which is excluded from the table based on the uncertainty of the timing of the cash flows of these contingencies. See Note 14 — Income Taxes to our consolidated financial statements for additional information on our income taxes.

Voluntary Reorganization under Chapter 11

Pursuant to the PSA, the 2018 Notes and 2020 Notes will be extinguished, resulting in a reduction of $499 million of payments included in the table above. In addition, pursuant to the PSA, the 2017 Notes will be subject to a €50 million principal reduction and a three year extension of the maturity date if the Exchange Offer is successful. We can offer no assurance that we will be able to obtain Bankruptcy Court approval for our PSA or that the Exchange Offer will be successful.

Off Balance Sheet Arrangements

Other than certain obligations and commitments described in the table above, we did not have any material off balance sheet arrangements as of October 31, ~~2014~~2015.

Inflation

Inflation has been modest during the fiscal years covered by this report, resulting in an insignificant impact on our sales and profits.

New Accounting Pronouncements

For further information on new accounting pronouncements affecting the Company, see Note 1,2 ~~"Significant Accounting Policies~~— New Accounting Pronouncements", to our consolidated financial statements.

Critical Accounting Policies

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. ("GAAP"). To prepare these consolidated financial statements, we must make estimates and assumptions that affect the reported amounts of assets and liabilities. These estimates also affect our reported revenues and expenses. Judgments must also be made about the disclosure of contingent liabilities. Actual results could be significantly different from these estimates. We believe that the following discussion addresses the accounting policies that are necessary to understand and evaluate our reported financial results.

Accounting for Reorganization under Chapter 11

Entities that have filed for bankruptcy under Chapter 11 of the Bankruptcy Code are required to comply with the accounting requirements of Financial Accounting Standards Board's Accounting Standards Codification ("ASC") 852 - Reorganization ("ASC 852"). ASC 852 requires entities in bankruptcy to identify their liabilities into those occurring before and after the bankruptcy filing. The liabilities incurred in the post-petition period are presented and classified as they ordinarily would be under GAAP. The liabilities which existed prior to the filing are also known as pre-petition liabilities. The pre-petition liabilities may be either secured, or unsecured or under secured. The unsecured and under secured liabilities are presented as Liabilities Subject to Compromise on the consolidated balance sheet at our estimate of the expected amount of the creditors' allowed claim under the Bankruptcy Cases, even if the claim will be ultimately be settled for a lesser amount. We used the guidance in ASC 450 - Loss Contingencies to recognize and measure the amount of allowed claims. The estimates and assumptions used to calculate an allowed claim may change from period to period as additional information is known and are subject to a high degree of uncertainty. We are unable to predict the final settlement of these allowed claims. Liabilities subject to compromise include trade accounts payable, debt obligations, accrued interest, workforce related obligations such as severance, obligations for lease losses, and other liabilities.

ASC 852 also requires entities to distinguish transactions and events related to the reorganization in their statements of income. Accordingly, we have classified expenses for transactions and events related to our reorganization in Reorganization Items in our consolidated statement of operations. Reorganization items include professional services related to the execution of our reorganization proceedings, professional services and other costs related to obtaining debtor-in-possession financing, expenses associated with rejected contracts, expenses to write-off unamortized debt financing costs and other items.

During bankruptcy proceedings, we will decide whether to assume or reject our existing contracts and executory contracts, such as leases, athlete sponsorship agreements, and employment agreements. Contracts rejected by us are terminated upon Bankruptcy Court approval. We recorded an estimated amount for our rejected contracts, including damage claims, as a liability subject to compromise on our consolidated balance sheet and a provision to reorganization items in our consolidated statement of operations. We may continue to reject certain remaining existing contracts and executory contracts during the remainder of the Bankruptcy Cases and may record additional estimated amounts for rejected contracts, including damage claims, in future periods.

We have reclassified our unsecured debt and under secured debt, principally consisting of our 2018 Notes and 2020 Notes, to liabilities subject to compromise in our consolidated balance sheet. We ceased amortizing deferred financing costs and original issuance discount and also ceased the accrual of interest as of Petition Date for the debt subject to compromise. We recorded a

non-cash charge to reorganization items in fiscal 2015 to write off these remaining unamortized balances. We continue to accrue interest and amortize deferred financing costs and original issuance discount on our secured debt, including our 2017 Notes, as they would ordinarily be accounted for under GAAP.

The final resolution and settlement of liabilities subject to compromise is subject to approval by the Bankruptcy Court and could be at amounts lower than the amounts we recorded. The payment of liabilities subject to compromise is generally not allowed until our reorganization plan has been approved by the Bankruptcy Court, the timing of which cannot be predicted. Any differences between our recorded estimated allowed claims recorded in liabilities subject to compromise and the ultimate settlement amount to be distributed will be recorded as reorganization items in our consolidated statement of operations as incurred.

We have expensed professional services and other costs as incurred to obtain debtor-in-possession financing as such financing is expected to be replaced with other financing upon our emergence from bankruptcy. Concurrent with obtaining our debtor-in-possession asset-based line of credit financing to replace our previous asset-based line of credit, we expensed all of the associated existing unamortized deferred debt issuance costs related to the previous asset-based line of credit. These financing related expenses are included in reorganization items in the consolidated statement of operations.

Quiksilver, Inc., the parent company, continues to effectively retain control of its wholly owned Debtor subsidiaries included in the Bankruptcy Cases and all Debtors are under the same Bankruptcy Court jurisdiction. As a result, Quiksilver, Inc. continues to consolidate its Debtor subsidiaries in its consolidated financial statements.

Revenue Recognition

Revenues are recognized when the risk of ownership and title passes to our customers, which is generally at the time of shipment in the wholesale channel and at the point of purchase in the retail and e-commerce channels. Generally, we extend credit to our customers and do not require collateral. Our sales agreements with our customers do not provide for any rights of return. However, we do approve returns on a case-by-case basis at our sole discretion to protect our brands and our image. We provide allowances for estimated returns as reductions to revenues when revenues are recorded. Related losses have historically been within our expectations, but there can be no assurance that we will continue to experience the same loss rates. If actual or expected future returns were significantly greater or lower than the allowances we have established, we would record a reduction or increase to net revenues in the period when such determination is known.

Accounts Receivable

Throughout the year, we perform credit evaluations of our customers, and we adjust credit limits based on payment history and the customer’s current creditworthiness. We continuously monitor our collections and maintain a reserve for estimated credit losses based on our historical experience and any specific customer collection issues that have been identified. We also use insurance on certain classes of receivables in our EMEA segment. Historically, our losses have been consistent with our estimates, but there can be no assurance that we will continue to experience the same credit loss rates that we have experienced in the past. It is not uncommon for some of our customers to have financial difficulties from time to time. This is normal given the wide variety of our account base, which includes small surf shops, medium-sized retail chains, and some large department store chains. Upon determination that a significantly greater or lower reserve is necessary, we record a charge or credit to selling, general and administrative expenses in the period when such determination is known.

Inventories

We value inventories at the cost to purchase and/or manufacture the product or the current estimated market value of the inventory, whichever is lower. We regularly review our inventory quantities on hand, and adjust inventory values with a charge to cost of sales in the period in which such determination is known for excess and obsolete inventory based primarily on estimated forecasts of product demand and market value.

Long-Lived Assets

We acquire tangible and intangible assets in the normal course of our business. We evaluate the recovery of non-amortizing intangible assets in conjunction with our goodwill evaluation. We evaluate the recoverability of the carrying amount of other long-lived assets (including fixed assets, trademarks, licenses and other amortizable intangibles) whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Impairment indicators include, but are not limited to, cost factors, financial performance, adverse legal or regulatory developments, industry and market conditions and general economic conditions. An impairment loss is recognized when the carrying value exceeds the undiscounted future cash flows estimated to result from the use and eventual disposition of the asset. Impairments are recognized in operating earnings in the period in which such determination is known. We use our best judgment based on the most current facts and circumstances regarding our business when applying these impairment rules to determine the timing of the impairment tests,

37 57

~~general economic conditions. An impairment loss is recognized when~~ the ~~carrying value exceeds the~~ undiscounted ~~future~~ cash flows estimated to result from the use and eventual disposition of the asset. Impairments are recognized in operating earnings in the period in which such determination is known. We use our best judgment based on the most current facts and circumstances regarding our business when applying these impairment rules to determine the timing of the impairment tests, the undiscounted cash flows used to assess impairments, and the fair value of a potentially impaired asset. The estimates we have used are consistent with the plans and estimates that we use to manage our business. It is possible, however, that the plans may change and estimates used may prove to be inaccurate. If our actual results, or the plans and estimates used in future impairment analyses, are lower than the original estimates used to assess the recoverability of these assets, we could incur future impairment charges.

In connection with the preparation of the Company's consolidated financial statements for the fourth quarter of fiscal 2015, the Company concluded that filing the Petitions, along with the delisting of the Company's stock from the New York Stock Exchange, were indicators of impairment of its long-lived assets. Furthermore, the Company concluded the lowered market prices on the 2017 Notes, 2018 Notes, 2020 Notes, and the decline in net sales were additional indicators of impairment. The Company utilized the income approach and the market approach to estimate the fair value of its indefinite-lived intangible assets which consists of trademarks. In the fourth quarter of fiscal 2015, based upon the results of its interim impairment evaluation of long-lived assets other than goodwill, the Company recorded non-cash asset impairment charges of $5 million and $2 million in the EMEA and APAC reporting units, respectively, to reduce the Quiksilver trademark to fair value. The fair value of the trademarks in the Americas reporting unit exceeded their carrying value by a substantial amount. Changes in estimates and assumptions used to determine whether impairment exists or changes in actual results compared to expected results could result in additional impairment charges in future periods.

In connection with the preparation of our third quarter consolidated financial statements for fiscal 2015, we concluded that the significant decline in the our stock price, lowered market prices on the 2018 Notes, 2020 Notes and 2017 Notes, and the decline in net sales, especially within the wholesale channel, were indicators of impairment. Consequently, we performed an interim impairment test of our indefinite-lived intangible assets, consisting of trademarks, using a discounted cash flow analysis, to determine whether the carrying value of our trademarks were less than the fair value. We determine the fair value of our trademarks using the relief from royalty method and the income method. Significant estimates in these approaches include projected future revenues, discount rates, royalty rates, the determination of similar products and revenue streams, selecting multiples for similar companies and other factors for each trademark. In the third quarter of 2015, based upon the results of its interim impairment evaluation of long-lived assets other than goodwill, the Company recorded a non-cash asset impairment charge of $16 million in the EMEA reporting unit to reduce the Quiksilver trademark to fair value.

Goodwill

Our business acquisitions have resulted in the recognition of goodwill. Goodwill is not amortized but is subject to annual impairment tests (in the fourth fiscal quarter for us) and between annual tests, if events indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value. Significant judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include deterioration in general economic conditions, negative developments in equity and credit markets, adverse changes in the markets in which we operate, increases in costs that have a negative effect on earnings and cash flows, or a trend of negative or declining cash flows over multiple periods, among others.

Goodwill is allocated at the reporting unit level, which is defined as an operating segment or one level below an operating segment. ~~We have two reporting units under which we evaluate goodwill for impairment; the Americas and APAC.~~ The application of the goodwill impairment test requires significant judgment, including the identification of the reporting units, and the determination of both the carrying value and the fair value of the reporting units. The carrying value of each reporting unit is determined by assigning the assets and liabilities, including existing goodwill, to those reporting units. The determination of the fair value of each reporting unit requires significant judgment, including our estimation of future cash flows, which is dependent upon internal forecasts, estimation of the long-term rate of growth of our businesses, estimation of the useful lives of the assets which will generate the cash flows, determination of our weighted-average cost of capital and other factors. In determining the appropriate discount rate, we considered the weighted average cost of capital for each reporting unit which, among other factors, considers the cost of common equity capital and the marginal cost of debt.

The estimates and assumptions used to calculate the fair value of a reporting unit may change from period to period based upon actual operating results, market conditions and our view of future trends, and are subject to a high degree of uncertainty. The estimates we have used are consistent with the plans and estimates that we use to manage our business. It is possible, however, that the plans may change and estimates used may prove to be inaccurate. The estimated fair value of a reporting unit could change materially if different assumptions and estimates were used. If our actual results, or the plans and estimates used in future impairment analyses, are lower than the original estimates used to assess the recoverability of these assets, we could incur future impairment charges.

We test goodwill for impairment using the two-step method. When performing the two-step impairment test, we use a combination of an income approach, which estimates fair value of the reporting unit based upon future discounted cash flows, and a market approach, which estimates fair value using market multiples for transactions in a set of comparable companies. If the carrying value of the reporting unit exceeds its fair value, we then perform the second step of the impairment test to measure the amount of the impairment loss, if any. The second step requires fair valuation of all the reporting unit’s assets and liabilities in a manner similar to a purchase price allocation, with any residual fair value being allocated to goodwill. This residual fair value of goodwill is then compared to the carrying value to determine impairment. An impairment charge will be recognized only when the estimated fair value of a reporting unit, including goodwill, is less than its carrying value.

~~During~~ the second and third quarters of fiscal 2014, we recorded non-cash goodwill impairment charges totaling $178 million in continuing operations to fully impair goodwill associated with our EMEA reporting unit due to the significant decline in our stock price, further net revenue deterioration in the EMEA wholesale channel and impairment related to our Surfdome business. We conducted our annual goodwill impairment test on October 31, 2014, and concluded goodwill for the Americas and APAC reporting units was not impaired. As of October 31, 2014, the fair value of each of our reporting units substantially exceeded their respective carrying values. Goodwill amounted to $74 million for the Americas, and $6 million for APAC as of October 31, 2014.58

residual fair value of goodwill is then compared to the carrying value to determine impairment. An impairment charge will be recognized only when the estimated fair value of a reporting unit, including goodwill, is less than its carrying value.

During the third quarter of fiscal 2014, we recorded non-cash goodwill impairment charges totaling $178 million in continuing operations to fully impair goodwill in its EMEA reporting unit due to the significant decline in the Company's stock price and further net revenue deterioration in the EMEA wholesale channel.

During the third quarter of fiscal 2015, we recorded non-cash goodwill impairment charges of $74 million and $6 million in continuing operations to fully impair goodwill in its Americas and APAC reporting units due to the significant decline in the Company’s stock price, lowered market prices on the 2018 Notes, 2020 Notes, 2017 Notes and the decline in net sales, especially within the wholesale channel.

Income Taxes

We are subject to income taxes in both domestic and foreign tax jurisdictions. The calculation of income tax expense involves significant judgment in the application of global, complex tax laws and regulations. The provision for income taxes is determined using the applicable statutory tax rates in the relevant jurisdictions, which may be more or less than the U.S. federal statutory rate. Current income tax expense is the amount of income taxes expected to be payable for the current year. A deferred income tax asset or liability is established for the expected future consequences of temporary differences in the financial reporting and tax bases of assets and liabilities. We consider future taxable income and ongoing prudent and feasible tax planning strategies in assessing the value of our deferred tax assets. If we determine that it is more likely than not that these assets will not be realized, we would reduce the value of these assets to their expected realizable value by recording a valuation allowance, thereby decreasing net income. Evaluating the value of these assets is necessarily based on our judgment. Realization of deferred tax assets related to operating loss and credit carry-forwards is dependent upon future taxable income in specific jurisdictions, the amount and timing of which is uncertain. If we subsequently determine that the deferred tax assets for which a valuation allowance had been recorded would, in our judgment, be realized in the future, the valuation allowance would be reduced, thereby increasing net income in the period when that determination was made.

reporting and tax bases of assets and liabilities. We consider future taxable income and ongoing prudent and feasible tax planning strategies in assessing the value of our deferred tax assets. If we determine that it is more likely than not that these assets will not be realized, we would reduce the value of these assets to their expected realizable value by recording a valuation allowance, thereby decreasing net income. Evaluating the value of these assets is necessarily based on our judgment. Realization of deferred tax assets related to operating loss and credit carry-forwards is dependent upon future taxable income in specific jurisdictions, the amount and timing of which is uncertain. If we subsequently determine that the deferred tax assets for which a valuation allowance had been recorded would, in our judgment, be realized in the future, the valuation allowance would be reduced, thereby increasing net income in the period when that determination was made.

We do not provide for withholding and U.S. taxes for certain unremitted earnings of non-U.S. subsidiaries because we intend to permanently reinvest these earnings in these foreign operations. Income tax expense could be incurred if these earnings were remitted to the United States. It is not practicable to estimate the amount of the deferred tax liability on such unremitted earnings.

We recognize a tax benefit from an uncertain tax position when, in our judgment, it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the tax position. Judgment is also used in determining that a tax position will be settled and the possible settlement outcomes. We recognize accrued interest and penalties related to unrecognized tax benefits as a component of our provision for income taxes. The application of this guidance can create significant variability in our tax rate from period to period based upon changes in or adjustments to our uncertain tax positions.

Stock-Based Compensation Expense

We recognize compensation expense for all stock-based payments net of an estimated forfeiture rate and only recognize compensation cost for those shares expected to vest using the graded vested method over the requisite service period of the award. For option valuation, we determine the fair value at the grant date using the Black-Scholes option-pricing model which requires the input of certain assumptions, including the expected life of the stock-based payment awards, stock price volatility and interest rates. For performance based equity awards with stock price contingencies, we determine the fair value using a Monte-Carlo simulation, which creates a normal distribution of future stock prices, which is then used to value the awards based on their individual terms.

Foreign Currency Translation

A significant portion of our revenues are generated in Europe, where we operate with the euro as our primary functional currency, and a smaller portion of our revenues are generated in APAC, where we operate with the Australian dollar and Japanese yen as our primary functional currencies. Our European revenues in the United Kingdom are denominated in British pounds, and substantial portions of our EMEA and APAC product is sourced in U.S. dollars, both of which result in exposure to gains and losses that could occur from fluctuations in foreign currency exchange rates. Revenues and expenses that are denominated in foreign currencies are translated using the average exchange rate for the period. Assets and liabilities are translated at the rate of exchange on the balance sheet date. Gains and losses from assets and liabilities denominated in a currency other than the functional currency of the entity on which they reside are generally recognized currently in our statement of operations. Gains and losses from translation of foreign subsidiary financial statements into U.S. dollars are included in accumulated other comprehensive income or loss.

As part of our overall strategy to manage our level of exposure to the risk of fluctuations in foreign currency exchange rates, we enter into foreign currency exchange contracts generally in the form of forward contracts. For all contracts that qualify as cash flow hedges, we record the changes in the fair value of the derivative contracts in other comprehensive income or loss.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to a variety of risks. Two of these risks are foreign currency exchange rate fluctuations and changes in interest rates that affect interest expense. See also Note ~~15,~~16 "— Derivative Financial Instruments", to our consolidated financial statements.

Foreign Currency and Derivatives

We are exposed to gains and losses resulting from fluctuations in foreign currency exchange rates relating to certain sales, royalty income and product purchases of our international subsidiaries that are denominated in currencies other than their functional currencies. We are also exposed to foreign currency gains and losses resulting from domestic transactions that are not denominated in U.S. dollars, and to fluctuations in interest rates related to our variable rate debt. Furthermore, we are exposed to gains and losses resulting from the effect that fluctuations in foreign currency exchange rates have on the reported results in our consolidated financial statements due to the translation of the operating results and financial position of our international subsidiaries. We use foreign currency exchange contracts and intercompany loans as part of our overall strategy to manage the level of exposure to the risk of fluctuations in foreign currency exchange rates.

international subsidiaries. We use foreign currency exchange contracts and intercompany loans as part of our overall strategy to manage the level of exposure to the risk of fluctuations in foreign currency exchange rates.

On the date we enter into a derivative contract, we designate the derivative as a hedge of the identified exposure. Before entering into various hedge transactions, we formally document all relationships between hedging instruments and hedged items, as well as the risk-management objective and strategy. In this documentation, we identify the asset, liability, firm commitment, or forecasted transaction that has been designated as a hedged item and indicate how the hedging instrument is expected to hedge the risks related to the hedged item. We formally measure effectiveness of our hedging relationships both at the hedge inception and on an ongoing basis in accordance with our risk management policy. We will discontinue hedge accounting prospectively:


•	if we determine that the derivative is no longer effective in offsetting changes in the cash flows of a hedged item;


•	when the derivative expires or is sold, terminated or exercised;


•	if it becomes probable that the forecasted transaction being hedged by the derivative will not occur;


•	if a hedged firm commitment no longer meets the definition of a firm commitment; or


•	if we determine that designation of the derivative as a hedge instrument is no longer appropriate.

Derivatives that do not qualify or are no longer deemed effective to qualify for hedge accounting but are used by management to mitigate exposure to currency risks are marked to fair value with corresponding gains or losses recorded in earnings. For all qualifying cash flow hedges, the changes in the fair value of the derivatives are recorded in other comprehensive income. As of October 31, ~~2014~~2015, we were hedging a ~~significant~~ portion of forecasted transactions expected to occur through October ~~2015~~2016. Assuming exchange rates at October 31, ~~2014~~2015 remain constant, $49 million of gains, net of tax, related to hedges of these transactions are expected to be reclassified into earnings over the next 12 months.

We enter into forward exchange and other derivative contracts with major banks and are exposed to foreign currency losses in the event of nonperformance by these banks. We anticipate, however, that these banks will be able to fully satisfy their obligations under the contracts. Accordingly, we do not obtain collateral or other security to support the contracts.

Translation of Results of International Subsidiaries

As discussed above, we are exposed to financial statement gains and losses as a result of translating the operating results and financial position of our international subsidiaries. We translate the local currency statements of operations of our foreign subsidiaries into U.S. dollars using the average exchange rate during the reporting period. Changes in foreign currency exchange rates affect our reported results and distort comparisons from period to period. We generally do not use foreign currency exchange contracts to hedge the profit and loss effects of such exposure as accounting rules do not allow such types of contracts to qualify for hedge accounting.

By way of example, when the U.S. dollar strengthens compared to the euro, there is a negative effect on our reported results for EMEA because it takes more profits in euros to generate the same amount of profits in stronger U.S. dollars. The opposite is also true. That is, when the U.S. dollar weakens there is a positive effect on the translation of our reported results from EMEA. In addition, the statements of operations of APAC are translated from Australian dollars and Japanese yen into U.S. dollars, and ~~there is a negative effect on our reported results for APAC when the U.S. dollar is stronger in comparison to the Australian dollar or Japanese yen.~~

~~EMEA~~ ~~revenues decreased 8% in U.S. dollars during fiscal 2014 compared to fiscal 2013 as reported in our consolidated financial statements, as well as in constant currency.~~ 60

~~APAC~~there ~~revenues~~is ~~decreased~~a 7%negative ineffect ~~U.S.~~on ~~dollars~~our ~~during fiscal 2014 compared to fiscal 2013 as~~ reported inresults ~~our~~for ~~consolidated financial statements. In constant currency,~~ APAC ~~revenues~~when ~~increased~~the ~~1% primarily as a result of a stronger~~ U.S. dollar ~~versus~~is ~~various~~stronger ~~currencies~~ in ~~APAC in~~ comparison to the ~~prior~~Australian ~~fiscal~~dollar ~~year~~or Japanese yen.

40EMEA revenues decreased 18% in U.S. dollars during fiscal 2015 compared to fiscal 2014 as reported in our consolidated financial statements. In constant currency, EMEA revenues decreased 1% primarily as a result of a stronger U.S. dollar versus various currencies in EMEA in comparison to the prior fiscal year.

APAC revenues decreased 6% in U.S. dollars during fiscal 2015 compared to fiscal 2014 as reported in our consolidated financial statements. In constant currency, APAC revenues increased 7% primarily as a result of a stronger U.S. dollar versus various currencies in APAC in comparison to the prior fiscal year.

Interest Rates

A limited amount of our outstanding variable rate debt bears interest based on London Inter-Bank Offer Rate ("LIBOR"), ~~Tokyo Inter-Bank Offer Rate ("TIBOR")~~ or Euro Inter-Bank Offer Rate ("EURIBOR") plus a credit spread. Our effective interest rates, therefore, will move up or down depending on market conditions. The credit spreads are subject to change based on financial performance and market conditions. Interest expense also includes financing fees and related costs and can be affected by foreign currency exchange rate movements upon translating non-U.S. dollar denominated interest expense into U.S. dollars for reporting purposes. The approximate amount of our variable rate debt was $4243 million at October 31, ~~2014~~2015, and the weighted average effective interest rate at that time was 2.3%. If interest rates or credit spreads were to increase by 10% (i.e., to approximately 2.65%), our annual loss before tax would be increased by approximately $0.21 million based on the borrowing levels at the end of fiscal ~~2014~~2015.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary data together with the report thereon of Deloitte & Touche LLP listed in the index at Item 15(a)1 and 15(a)2 are included herein by reference.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

Item 9A. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching our desired disclosure control objectives.

We carried out an evaluation under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of October 31, ~~2014~~2015, the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, and were operating at the reasonable assurance level as of October 31, ~~2014~~2015.

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended October 31, ~~2014~~2015 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Annual Report on Internal Control Over Financial Reporting

Internal control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements ~~for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:~~

for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:


•	pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of the consolidated financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and


•	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Management is responsible for establishing and maintaining adequate internal control over our financial reporting.

Management has used the framework set forth in the report entitled “Internal Control—Integrated Framework” published by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission (~~1992~~2013 Framework) to evaluate the effectiveness of its internal control over financial reporting. Management has concluded that its internal control over financial reporting was effective as of the end of the most recent fiscal year. Deloitte & Touche LLP has issued an attestation report (see below) on our internal control over financial reporting.

The foregoing has been approved by our management, including our Chief Executive Officer and Chief Financial Officer, who have been involved with the assessment and analysis of our internal controls over financial reporting.

42 62

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Quiksilver, Inc.

Huntington Beach, California

We have audited the internal control over financial reporting of Quiksilver, Inc. and subsidiaries (the “Company”) as of October 31, ~~2014~~2015, based on criteria established in Internal Control—Integrated Framework (~~1992~~2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 31, ~~2014~~2015, based on the criteria established in Internal Control — Integrated Framework (~~1992~~2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended October 31, ~~2014~~2015, of the Company and our report dated ~~December~~January 2226, ~~2014~~2016, expressed an unqualified opinion on those financial statements.

/s/ Deloitte & Touche LLP

Costa Mesa, California

~~December~~January 2226, ~~2014~~2016

43 63

Item 9B. OTHER INFORMATION

None.

PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

~~The~~Board ~~information required to be included by this item will be included under the headings “Election~~ of Directors,” “Executive Compensation and Other Information,” and “Corporate Governance” in our proxy statement for the 2015 Annual Meeting of Stockholders. Such information is incorporated herein by reference to our proxy statement, which will be filed with the Securities and Exchange Commission within 120 days of our fiscal year ended October 31, 2014.

WeOur ~~have~~directors ~~adopted~~are aelected ~~Code~~at ofeach ~~Ethics~~annual ~~for~~stockholders ~~Senior~~meeting ~~Financial~~and ~~Officers~~hold inoffice ~~compliance~~until ~~with applicable rules of~~ the ~~Securities~~next ~~and~~annual ~~Exchange~~stockholders ~~Commission~~meeting ~~that~~or ~~applies~~until totheir ~~all~~respective ofsuccessors ~~our~~are ~~senior~~duly ~~executive,~~elected ~~financial~~ and ~~accounting officers, including our principal executive officer, our principal financial officer and our principal accounting officer or controller, or persons performing similar functions~~qualified. Our Webylaws ~~have~~provide ~~posted~~that athe ~~copy~~number of ~~this~~directors ~~Code~~constituting ofthe ~~Ethics~~board ~~on our website, at http://www.quiksilverinc.com. We intend to disclose any amendments to, or waivers from, any provision~~ of ~~this~~directors ~~Code~~will ofbe ~~Ethics~~determined by ~~posting~~resolution ~~such~~of ~~information~~the ~~on such website~~board.

Our current directors are as follows:



Name	Age	Director Since	Position with Quiksilver
Robert B. McKnight, Jr.	62	1976	Director, Chairman of the Board
Pierre Agnes	51	2015	Director, Chief Executive Officer
William M. Barnum, Jr.	61	1991	Director
Joseph F. Berardino	65	2011	Director
Michael A. Clarke	51	2013	Director
M. Steven Langman	54	2009	Director
Andrew W. Sweet	44	2009	Director

Robert B. McKnight, Jr., co-founded Quiksilver in 1976, served as our Executive Chairman from January 2013 until October 2014 and has served as Chairman of the Board since March 2015. Mr. McKnight previously served as Chairman of the Board from 1976 until January 2013 and as Chief Executive Officer from August 1991 to January 2013. He also served as our President from 1979 through July 1991 and from February 2008 to January 2013. Mr. McKnight received a B.S. degree in Business Administration from the University of Southern California. Mr. McKnight also serves on the board of directors of Jones Trading Institutional Services, LLC, a private company. As co-founder of Quiksilver, Mr. McKnight is uniquely qualified to serve on our board. Mr. McKnight’s particular knowledge of the action sports industry and his long tenure of service to us provide an essential contribution to our board’s discussions regarding brand building opportunities and important growth strategies.

Pierre Agnes has been a member of the Board of Directors and our Chief Executive Officer since March 2015. Mr. Agnes previously served as our President from October 2014, Global Head of Apparel from March 2013, and President of Quiksilver Europe from June 2005. Prior to that, he served as Managing Director of Quiksilver Europe from December 2003 to June 2005. Between 1992 and 2002, Mr. Agnes founded and operated Omareef Europe, a licensee for our wetsuits and eyewear that we purchased in November 2002. Mr. Agnes originally joined us in 1988, first as team manager, and later in various capacities throughout our European marketing operations. Mr. Agnes’ long tenure with us as a senior executive, together with his expertise in multiple facets of our operations and his position as our Chief Executive Officer, make him ideally suited to provide the board with industry insights and keep the board informed of current business initiatives.

William M. Barnum, Jr. currently serves as a director of several private companies and has been a Managing Member of Brentwood Associates, a Los Angeles based venture capital and private equity investment firm since 1986. Prior to that, Mr. Barnum held several positions at Morgan Stanley & Co. Mr. Barnum graduated from Stanford University in 1976 with a B.A. in Economics and from the Stanford Graduate School of Business and Stanford Law School in 1981 with an M.B.A. and J.D. Due to Mr. Barnum’s extensive experience in venture capital and private equity investment, he provides valuable perspective to our board discussions on financial and capital market issues. Additionally, his retail and action sports industry experience, as well as his public company board service, provides important insight to our board.

Joseph F. Berardino currently serves as a Managing Director at Alvarez & Marsal, a global professional services firm. Prior to joining Alvarez & Marsal in October 2008, Mr. Berardino was Chairman of the Board of Profectus BioSciences, a biotechnology company, from 2004 until September 2008, and served as its Chief Executive Officer from October 2005 until January 2008. He previously served as Vice-Chairman of Sciens Capital Management, a New York-based alternative asset management firm from 2004 to September 2005 and prior to his tenure at Sciens, he served as Chief Executive Officer of Andersen Worldwide, a global accounting and consulting firm. Mr. Berardino graduated from Fairfield University with a B.S. in Accounting and has been a Certified Public Accountant since 1975 (inactive). Mr. Berardino’s extensive experience in public

accounting and executive management provides him the ability to share with our Board valuable insights into financial reporting, corporate finance and compensation matters.

Michael A. Clarke currently serves as Managing Director and Chief Executive Officer of Treasury Wine Estates, an Australian wine producer and distributor. Prior to joining Treasury Wine Estates in March 2014, Mr. Clarke served as chief executive officer of Premier Foods Plc., a branded food company in the United Kingdom from August 2011 until February 2013. He has also served as President of Kraft Foods Europe from January 2009 until August 2011 and held several positions with The Coca-Cola Company from 1996 to 2008, including President-Northwest Europe from 2005 to 2008, President-South Pacific & Korea from 2000 to 2005 and Senior Vice President-Minute Maid International from 1996 to 2000. Mr. Clarke also has held a variety of positions with Reebok International Ltd. (1991 to 1996), served in senior financial roles with Acer Consulting (Far East) Ltd., consulting engineers, and as a chartered accountant with Deloitte. Mr. Clarke graduated from the University of Cape Town with a Bachelor of Commerce. As a result of his extensive experience in the executive management of some of the largest and most recognized companies in the world, as well as his background in the sports industry, and as a chartered accountant, Mr. Clarke provides our board with a wealth of business, management and financial experience, as well as invaluable insights into foreign business conditions in particular.

M. Steven Langman co-founded Rhône, a private equity firm, in 1996 and since that time has served as Managing Director. Prior to 1996, Mr. Langman was Managing Director of Lazard Frères & Co. LLC where he specialized in mergers and acquisitions, working in both London and New York. Mr. Langman joined Lazard in 1987. Before joining Lazard, he worked in the mergers and acquisition group of Goldman, Sachs & Co. Mr. Langman currently serves on the boards of certain companies in which Rhône or its controlled funds hold interests, including Elizabeth Arden, Inc., which is listed on the NASDAQ stock exchange. Mr. Langman received a B.A. with highest honors from the University of North Carolina at Chapel Hill and an MSc from the London School of Economics. Mr. Langman’s education and extensive experience in private equity, investment banking, mergers and acquisitions and capital markets provides our board with valuable guidance with respect to a range of international operational and financial matters.

Andrew W. Sweet has been a member of our Board since July 2009 and serves as our lead independent director. Mr. Sweet is a Managing Director of Rhône, a private equity firm, which he joined in 1996. Prior to joining Rhône, he worked in the mergers and acquisitions group of Lazard Frères & Co. LLC. Mr. Sweet currently serves on the boards of certain companies in which Rhône or its controlled funds hold interests, including Orion Engineered Carbons S.A., which is listed on the New York Stock Exchange. He graduated from Colgate University in 1993. Mr. Sweet has extensive experience in private equity and investment banking, which allows him to bring significant insight to our board particularly with respect to strategic planning and operational matters, as well as capital market and finance issues.

Pursuant to the terms of a Warrant and Registration Rights Agreement, we entered into on July 31, 2009 with Rhône Capital III L.P. and certain other parties thereto in connection with certain of our senior secured term loans, we were required to increase the number of directors constituting our board of directors by two and fill the newly-created directorships with two directors, Messrs. Langman and Sweet, proposed by two of the parties to the agreement, Triton Onshore SPV L.P. and Triton Coinvestment SPV L.P. (together, the “Appointing Funds”). At each meeting of our stockholders at which directors are to be elected, the Warrant and Registration Rights Agreement requires us to take all steps necessary to nominate one director proposed by Triton Onshore and one director proposed by Triton Coinvestment. If, for any reason, our board or nominating and governance committee determines that a director proposed by either Triton Onshore or Triton Coinvestment is unqualified to serve on our board, Triton Onshore or Triton Coinvestment, as applicable, has the right to propose an alternative individual to be nominated. In addition, if any director proposed by Triton Onshore or Triton Coinvestment is elected and subsequently ceases to serve as a director for any reason during his or her term, we are required to use reasonable best efforts to cause the vacancy created thereby to be filled with a replacement designated by the entity who proposed the director whose services have ceased. Triton Coinvestment’s right to propose one director continues until the parties to the agreement have sold one-third of the shares of our common stock issued upon exercise of the warrants (or warrants exercisable for such amount) issued pursuant to the Warrant and Registration Rights Agreement, other than to affiliates of Rhône Capital III, and Triton Onshore’s right to nominate one director continues until the parties to the agreement have sold two-thirds of the shares of common stock issuable upon exercise of the warrants (or warrants exercisable for such amount), other than to affiliates of Rhône Capital III. On August 9, 2010, in connection with a debt-for-equity exchange, we entered into a Stockholders Agreement, under which, among other things, each of the Appointing Funds is entitled to designate a director to our board of directors; provided, that if the parties to the agreement sell one-third or more of the common stock they received in the debt-for-equity exchange to any persons other than affiliates, then only Triton Onshore will be entitled to designate a director pursuant to the Stockholders Agreement, and if the parties to the agreement sell two-thirds or more of the common stock they received in the debt-for-equity exchange to any persons other than affiliates, then Triton Onshore’s right to designate a director pursuant to the Stockholders Agreement terminates; provided further, however, that for so long as any directors designated by the Appointing Funds pursuant to the Warrant and Registration Rights Agreement serve on the board of directors, then such directors will be counted as directors designated by the Appointing Funds for purposes of the Stockholders Agreement.

Executive Officers

Our current executive officers are as follows:



Name	Age	Position
Pierre Agnes	51	Chief Executive Officer
Thomas Chambolle	42	Chief Financial Officer
Stephen Coulombe	47	Chief Restructuring Officer
Greg Healy	50	President

For additional information with respect to Mr. Agnes who is also a director, see “Board of Directors” above.

Thomas Chambolle has been our Chief Financial Officer since March 2015. Mr. Chambolle joined us as our EMEA Chief Financial Officer in 2013. Previously, Mr. Chambolle was a Managing Partner at Ricol Lasteyrie, a financial advisory consulting firm in France, since 2010. Prior to that, he worked with French government agencies supporting businesses impacted by the global credit crisis, and previously worked as Chief Financial Officer of the spare parts division of Peugeot Citroen, a French car manufacturer.

Steve Coulombe has served as our Chief Restructuring Officer since September 2015. Mr. Coulombe is a senior managing director at FTI Consulting, Inc., a business advisory firm, and is in its Corporate Finance/Restructuring segment. Prior to joining FTI, Mr. Coulombe was with the U.S. division of Business Recovery Services of PricewaterhouseCoopers and its predecessor Pricewaterhouse. Prior to that, he held various positions in the real estate investment industry. Mr. Coulombe holds an M.B.A. from Babson College and a B.S. in business administration from the University of Massachusetts Amherst. He has taught a graduate level course at Babson College entitled “Turnaround Management” and is a member of the American Bankruptcy Institute and the Turnaround Management Association.

Greg Healy has served as our President since March 2015. Prior to that, Mr. Healy served as president of our APAC region from March 2010. Prior to that, Mr. Healy held several management positions within our APAC region, including Chief Executive Officer of Australasia from January 2009 to March 2010 and the dual roles of Chief Operating Officer and Chief Financial Officer of APAC region from 2002 to January 2009. Mr. Healy joined us in 1998 as controller for Australasia. He is a Certified Public Accountant and received his bachelor’s degree in business from Monash University in Melbourne, Australia.

Our executive officers are appointed by the board of directors and serve until their successors have been duly appointed and qualified, unless sooner removed.

Section 16(A) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and certain officers, and persons who own more than ten percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Certain officers, directors and greater-than ten percent shareholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.

To our knowledge, based solely on our review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended October 31, 2015 all Section 16(a) filing requirements applicable to our officers, directors and greater-than ten percent beneficial owners were satisfied.

Code of Ethics

Our Corporate Governance Guidelines, Code of Ethics for Senior Financial Officers and Code of Business Conduct and Ethics are available on our website located at www.quiksilverinc.com, and can be found under the “Investor Relations” and “Corporate Governance” links. We may post amendments to, or waivers of, the provisions of our Code of Ethics for Senior Financial Officers and Code of Business Conduct and Ethics, if any, on our website. Please note, however, that the information contained on our website is not incorporated by reference in, or considered part of, this filing.

Audit Committee

Our Board of Directors maintains a standing audit committee. The charter for our audit committee is available on our website at www.quiksilverinc.com. The audit committee charter requires that the committee be comprised of at least three members, all of whom must be independent under the NYSE listing standards and the Securities and Exchange Commission (SEC) rules regarding audit committee membership. The current members of our audit committee are Messrs. Barnum, Berardino

(Chairman), and Clarke, all of whom are “independent” under the NYSE listing standards and the applicable SEC rules. The board has determined that Mr. Berardino is an “audit committee financial expert” as defined by the rules of the SEC.

Item 11. EXECUTIVE COMPENSATION

~~The information required to be included by this item will be included under the heading “Executive~~ Compensation ~~and~~Discussion Other Information” in our proxy statement for the 2015 Annual Meeting of Stockholders. Such information is incorporated herein by reference to our proxy statement, which will be filed with the Securities and ~~Exchange~~Analysis ~~Commission within 120 days of our fiscal year ended October 31, 2014.~~

This Compensation Discussion and Analysis discusses our executive compensation policies and programs and the compensation decisions regarding fiscal 2015 compensation with respect to our “named executive officers,” who are defined under Securities and Exchange Commission rules as a company’s chief executive officer (including any former chief executive officer that served at any time during the fiscal year), chief financial officer (including any former chief financial officer that served at any time during the fiscal year), the other three most highly compensated executive officers serving at fiscal year-end and up to two additional individuals that would have been among the three most highly compensated executive officers but for the fact that such individuals were no longer serving at fiscal year-end. For fiscal 2015, our named executive officers were:


•	Pierre Agnes (Chief Executive Officer)


•	Thomas Chambolle (Chief Financial Officer)


•	Greg Healy (President)


•	Andrew P. Mooney (former Chief Executive Officer)


•	Richard Shields (former Chief Financial Officer)


•	Alan Vickers (former EVP, Global Wholesale Sales and Operations, and General Manager, Americas Region)

The Compensation Committee

Compensation for our executive officers is determined by our compensation committee which currently consists of William M. Barnum, Jr. (Chairman), Joseph F. Berardino and Andrew W. Sweet. Each of the members (i) satisfies all of the independence requirements under the current NYSE listing standards, (ii) are “outside directors” (as defined in the regulations promulgated pursuant to Section 162(m) of the Internal Revenue Code) and (iii) are “non-employee directors” as defined in Rule 16b-3 promulgated pursuant to the Securities Exchange Act of 1934. The compensation committee’s responsibilities are set forth in its charter. The compensation committee has full authority to directly retain the services of outside counsel and compensation consultants without consulting or obtaining the approval from any of our officers.

Role of Executive Officers in Compensation Decisions

Mr. Agnes, our Chief Executive Officer, and other executive officers, attended portions of compensation committee meetings throughout the year in order to provide information and help explain data relating to matters under consideration by the committee. However, they were not present during deliberations or determinations of their respective compensation or during executive sessions. In addition, our executive officers have, from time to time, provided data and other materials to the committee to assist in the committee’s evaluation of executive compensation as well as materials relevant to the historical compensation and performance of our executive officers. In particular, Mr. Agnes provided the committee with input regarding his assessment of the other executive officers’ performance during fiscal 2015 and a recommendation regarding the amount and type of compensation to be paid to them.

Role of Compensation Consultant

During fiscal 2015, our compensation committee retained Mercer LLC, an external, independent compensation consultant to assist the committee in its duties, including by advising the committee with respect to a redesigned long-term incentive compensation program for fiscal 2015 and beyond that further implemented our philosophy of linking compensation to our operating objectives and the enhancement of stockholder value. In accordance with the rules and regulations of the Securities and Exchange Commission and the New York Stock Exchange, our compensation committee assessed the independence of Mercer and concluded that no conflicts of interest exist that would prevent Mercer from providing independent and objective advice to the committee. The compensation committee instructed Mercer to design and present to the committee a long-term incentive compensation program consisting of equity-based awards that would be granted to our executive officers and other key employees, to be implemented in fiscal 2015. As a result of Mercer’s recommendations, the committee implemented the grant of performance restricted stock units to certain of our employees, including the named executive officers, the terms of which are described in more detail below under “Equity-Based Compensation.”

Compensation Philosophy and Objectives

The compensation committee believes that we must be able to attract, motivate and retain qualified executives in order to be successful. To that end, the committee annually re-evaluates our executive compensation structure to support our philosophy of linking compensation to our operating objectives and the enhancement of stockholder value. The general principles followed by our committee are (i) to provide a cash compensation package consisting of competitive base salaries and incentive opportunities that are linked to corresponding levels of individual and corporate operating performance and (ii) to grant equity incentives pursuant to which increases in our stock price result in an increase in value for the executive officer, thus creating an incentive for our executive officers to increase our long-term stock performance.

Our executive compensation packages generally consist of the following elements:


•	Annual base salary;


•	Annual performance-based cash bonuses;


•	Equity-based compensation consisting of stock options, restricted stock and/or restricted stock unit awards ("RSUs");


•	Severance benefits; and


•	Perquisites which include, among other things, health, disability and life insurance, 401(k) matching contributions (which may be funded, or not, as determined by the compensation committee on an annual basis) and a clothing allowance to purchase our products at wholesale prices.

The combination of these compensation elements is intended to provide an opportunity for our executives to earn a total compensation package which is closely linked to our overall financial and operating performance. We also strive to ensure that our compensation program is competitive with the total compensation paid to similarly situated executives at other companies that we believe would be likely to compete with us for executive talent. However, we do not attempt to set each compensation element for each executive within a particular range related to levels provided by other companies. We believe that each element of our executive compensation program is beneficial in meeting the program’s overall objectives. We have not adopted a formula to allocate total compensation among these elements. Except as otherwise specifically noted in this Compensation Discussion and Analysis, executive compensation decisions made by the compensation committee are inherently subjective and the result of the compensation committee’s business judgment. In making its decisions regarding base salary, target and maximum bonus, and equity award grant levels for the named executive officers, the compensation committee generally considers (in addition to other items specifically noted below) the scope of the executive’s responsibility and the relative internal value to us of the position, the executive’s experience, past performance and expected future contributions, and the need to attract or retain the particular executive.

Stockholder Advisory Vote

In March 2014, we held a stockholder advisory vote on the compensation of our named executive officers, commonly referred to as a say-on-pay vote. Our stockholders overwhelmingly approved the compensation of our named executive officers, with over 86% of stockholder votes cast in favor of our say-on-pay resolution. As we evaluated our compensation practices and talent needs throughout fiscal 2015, we were mindful of the strong support our stockholders expressed for our philosophy of linking compensation to our operating objectives and the enhancement of stockholder value. As a result, for fiscal 2015 our compensation committee retained our general approach to executive compensation, with an emphasis on short and long-term incentive compensation that rewards our most senior executives when they deliver value for our stockholders.

Employment Agreements with our Named Executive Officers

During fiscal 2015, we were party to employment agreements with each of our named executive officers that provided certain compensation, severance and, in some instances, change in control benefits. The employment agreements, and the benefits provided thereunder, are described in detail under “Employment and Separation Agreements” below.

The compensation committee believes that these employment agreements are an essential element of our executive officers’ compensation packages in order to be competitive with other companies that compete with us for executive officer talent, and also to preserve employee morale and productivity, and encourage retention in the face of the potentially disruptive impact of an actual or potential change in control. The severance benefits contained in these agreements also allow executives to assess restructuring and major corporate transactions objectively without regard to the potential impact on their job security.

Design of the Executive Compensation Program

The major elements to our executive compensation program are reviewed and determined annually by the compensation committee, based on the criteria set forth below:

Base Salary

Our executive officer base salaries are reviewed and, if appropriate, adjusted annually by the compensation committee, although minimum salary levels are provided in each executive officer’s employment agreement. We try to ensure that the base salaries are competitive with similarly situated companies in terms of sales, breadth of product lines, multiple distribution channels, international operations and other related factors, but we do not draw rigid comparisons to such similarly situated companies’ executive compensation. We have not established a specific formula for determining base salary increases or decreases, nor have we identified a specific or consistent group of companies that we believe to be “similarly situated” as these may change from time to time. Further, in fiscal 2015, we did not perform any specific competitive compensation analysis with respect to setting the base salary levels of our executive officers.

The annualized base salary of each named executive officer for fiscal 2015 was as follows:



Executive Officer		Fiscal 2015 Base Salary ($)
Pierre Agnes (1)(2)		986,000
Thomas Chambolle (1)(2)		465,000
Greg Healy (2)		650,000
Andrew P. Mooney (3)		1,250,000
Richard Shields (4)		550,000
Alan Vickers (5)		500,000

___________


(1)	Cash compensation is paid in euros. For purposes of this Compensation Discussion and Analysis, all amounts have been translated into U.S. dollars at the October 31, 2015 exchange rate of 1.095 U.S. dollars for each euro.


(2)	Amount reflects annualized salary, effective as of March 26, 2015, the date of each such named executive officer’s promotion to his current position.


(3)	Mr. Mooney was removed as Chief Executive Officer in March 2015. Pursuant to his employment agreement, Mr. Mooney’s fiscal 2015 base salary was paid in 675,676 restricted stock units, 281,532 of which vested on Mr. Mooney’s termination date.


(4)	Mr. Shields resigned as Chief Financial Officer in March 2015.


(5)	Mr. Vickers was removed as Executive Vice President, Global Wholesale Sales and Operations, and General Manager, Americas Region in April 2015.

Annual Performance-Based Cash Bonus

We maintain our annual cash bonus plan, or Incentive Compensation Plan, in order to tie cash bonuses directly to the achievement of specific annual performance and operating goals. Our compensation committee believes this is an appropriate mechanism to incentivize our executive officers and align their compensation with the interests of our stockholders. The Incentive Compensation Plan provides an opportunity for our executive officers to earn annual performance-based cash bonuses based on our financial and operating performance and/or the executive officer’s individual performance during the

fiscal year, with the exact criteria to be determined in the discretion of the compensation committee. Generally, after the end of each fiscal year, the compensation committee reviews our performance against the previously established company-wide or regional financial and operating goals and, if applicable, evaluates each executive officer’s performance against the individual goals set for that officer.

In November 2014, the compensation committee approved bonus award opportunities for fiscal 2015 under our Incentive Compensation Plan. Subject to the opportunity to earn more if we significantly exceeded our designated financial targets, each of the named executive officers was eligible to receive a target bonus under our Incentive Compensation Plan equal to 125% of his fiscal 2015 annualized base salary. For fiscal 2015, the compensation committee determined that each named executive officer’s bonus award opportunity would be based 50% on achievement of a company-wide fiscal 2015 EBITDA target of $66,000,000 and 50% on achievement of a company-wide fiscal 2015 Free Cash Flow target of ($3,000,000). The compensation committee based each named executive officer’s bonus award opportunity on EBITDA and Free Cash Flow based on the committee’s desire to emphasize profit and liquidity improvement in fiscal 2015. No bonus could be awarded to a named executive officer with respect to each target unless at least 85% of such target was achieved. In addition, each named executive officer was eligible to receive bonuses in excess of his target bonus if EBITDA and Free Cash Flow exceeded 108% of the applicable target, with the additional bonus reaching a maximum of 150% of such named executive officer’s target bonus in the event that at least 133% of each target was achieved. EBITDA is defined as income (loss) from continuing operations attributable to Quiksilver, Inc. before (i) interest expense, (ii) provision/(benefit) for income taxes, and (iii) depreciation and amortization. Free Cash Flow is defined as EBITDA less (i) cash interest expense, (ii) cash income taxes, and (iii) capital expenditures, plus non-cash stock compensation and changes in working capital.

For fiscal 2015, because less than 85% of each of the EBITDA and Free Cash Flow target was achieved, no cash bonuses were awarded to our named executive officers under the Incentive Compensation Plan.

Equity-Based Compensation

The compensation committee believes that the use of equity-based awards very closely aligns executive compensation with changes in our stock price and the value to be received by our stockholders during the same period, as well as provides an opportunity for increased equity ownership by our executive officers, which helps further link the interests of our executive officers with those of our stockholders. In March 2013, our stockholders approved the 2013 Performance Incentive Plan, which allows for certain equity based awards to be made to eligible participants.

Under our 2013 Performance Incentive Plan, the compensation committee has discretion, subject to the terms of the plan, to determine which executive officers are to receive awards, the time or times when awards are to be made, the number of shares subject to each award and the type of award, and the vesting and other provisions of the award.

Performance Restricted Stock Units. On November 3, 2014, the compensation committee granted awards of performance restricted stock units, which we refer to herein as “PSUs,” to certain of our employees, including 700,000 PSUs to Mr. Mooney, 150,000 PSUs to Mr. Shields, 350,000 PSUs to Mr. Agnes, 150,000 PSUs to Mr. Vickers, 150,000 PSUs to Mr. Healy and 24,000 PSUs to Mr. Chambolle. Under the applicable award agreements, half of the PSUs granted were eligible for vesting based on achievement of the financial targets tied to the cash bonus Incentive Compensation Plan described above (2015 PSUs) and half are eligible for vesting based on achievement of certain financial goals for fiscal 2016 to be determined by the compensation committee (2016 PSUs). Depending on our achievement of those financial goals, the number of 2015 PSUs and 2016 PSUs that vest (and the number of shares of our common stock that may be issued upon such vesting) may range from zero to 200% of the amount of the grant. Generally, vesting of the 2015 PSUs and the 2016 PSUs requires continued service of the employee through October 31, 2016. However, if the employee experiences a “qualifying termination” during fiscal 2015, meaning that the employee’s employment is terminated (i) by us without cause (as defined in the agreement), (ii) due to the employees death or permanent disability (as defined in the agreement), or (iii) by the employee for “good reason” (but only if the employee is party to a separate employment agreement that provides for the payment of severance upon such a termination, which is the case with each named executive officer), then upon the occurrence of the qualifying termination, the employee will be entitled to retain a prorated portion of 2015 PSUs based on the ratio of the number of calendar days in fiscal 2015 that occurred while the employee was in service to the total number of calendar days in fiscal 2015. The retained 2015 PSUs will remain subject to the vesting conditions described above. In the event of a qualifying termination during fiscal 2015, the employee’s 2016 PSUs will terminate and be cancelled. If the employee experiences a qualifying termination during fiscal 2016, it will have no impact on the employee’s 2015 PSUs and the employee will retain a portion of the employee’s 2016 PSUs to the same extent as the employee would have retained 2015 PSUs had the qualifying termination taken place in fiscal 2015.

During fiscal 2015, each of Messrs. Mooney and Vickers experienced qualifying terminations. For a description of the PSUs retained by Messrs. Mooney and Vickers, see “Employment and Termination Agreements” below. As a result of Mr. Shields's resignation during fiscal 2015, all of the PSUs held by Mr. Shields were cancelled for no value.

On April 7, 2015, in connection with the promotion of Messrs. Agnes, Chambolle and Healy to their current positions, the compensation committee granted an additional 350,000 PSUs to Mr. Agnes, 126,000 PSUs to Mr. Chambolle and 200,000 PSUs to Mr. Healy.

For fiscal 2015, because less than 85% of each of the EBITDA and Free Cash Flow target was achieved, the 2015 PSUs awarded to our named executive officers were cancelled and forfeited.

In the event that a change in control of Quiksilver occurs during fiscal 2016, and in connection with such event Quiksilver ceases to exist or ceases to exist as a public company, the number of 2016 PSUs that vest as a result shall each be determined by deeming each of the financial goals for the applicable period satisfied at the target/100% level; provided, however, that if and to the extent the compensation committee determines that our actual performance for fiscal 2016 through the date of the change in control event exceeds such target/100% level (with the applicable financial goal being prorated for the applicable period), the compensation committee may determine a greater number of 2016 PSUs will vest to reflect the actual performance level.

Stock Options. In order to provide further incentives to certain executive officers and key employees, in June 2015, the compensation committee granted stock option awards, including 1,300,000 stock options to Mr. Agnes, 1,000,000 stock options to Mr. Healy and 750,000 stock options to Mr. Chambolle. The stock options were granted with a strike price equal to the closing price of a share of our common stock on the NYSE on the date of grant, which was $0.861. Each award will vest and become exercisable in three equal and successive annual installments over the three year period commencing on the date of grant, provided the executive officer remains in our service through the applicable vesting date.

Pursuant to the Proposed Plan, all of our existing equity securities, including the PSUs and all outstanding stock options, will be cancelled and extinguished without holders receiving any distribution.

Severance and Change in Control Benefits

The compensation committee believes that severance protections, particularly in the context of a change in control transaction, can play a valuable role in attracting and retaining key executive officers. Accordingly, we provide such protections for certain of our named executive officers and certain other executive officers under the terms of each executive’s employment agreement with us. The compensation committee evaluates the level of severance benefits provided to each named executive officer on a case-by-case basis, and in general, we consider these severance protections an important part of an executive’s compensation and consistent with competitive practices.

As described in more detail below under “Employment and Termination Agreements” and under “Potential Payments Upon Termination, Change in Control or Corporate Transaction,” certain payments may be made to our named executive officers upon a change in control or the termination of the executive’s employment with us depending upon the circumstances surrounding the termination of the executive’s employment.

As further described in more detail below under “Employment and Termination Agreements,” we entered into termination agreements with Messrs. Mooney and Vickers in April 2015, pursuant to which they became entitled to certain payments following the termination of their employment as executive officers.

Perquisites

We provide perquisites to our executive officers that we believe are typical of those provided to senior executives at other companies that compete with us for executive officer talent, which include health and group term life insurance benefits, long-term disability benefits, and 401(k) matching benefits (which may be funded, or not, as determined by the compensation committee on an annual basis). The provision of these perquisites is not tied to individual or corporate operating and financial performance. Instead, the compensation committee believes that these perquisites are beneficial to the creation of a competitive compensation package that is required to retain our executive officers’ services.

Tax and Accounting Implications

Section 162(m) of the Code limits our ability to deduct certain compensation over $1,000,000 paid to certain of our executive officers unless such compensation is based on performance objectives meeting certain criteria or is otherwise excluded from the limitation. Our compensation committee considers the impact of Section 162(m) when approving compensation for our executive officers. However, the compensation committee believes that there may be circumstances in which our interests are best served by maintaining flexibility in the way compensation is provided, whether or not the compensation is fully deductible under Section 162(m). Accordingly, some compensation paid to our executive officers may not be deductible to the extent that the aggregate of non-exempt compensation exceeds the $1,000,000 level. In addition, there can be no assurance that compensation intended to qualify for deductibility under Section 162(m) will, in fact, be deductible.

Material Compensation Committee Actions After Fiscal 2015

In November 2015, in connection with the Bankruptcy Cases, the compensation committee approved two related cash bonus key employee incentive programs (each, a “KEIP”), a U.S. program for employees of the Debtors and a non-U.S. program for employees of our non-Debtor affiliates. Messrs. Agnes and Chambolle are participants in the non-U.S. program. Mr. Healy is a participant in the U.S. program. Each KEIP is designed to provide incentives to the participants (the “KEIP Participants”) to pursue a timely and successful reorganization or sale. Each of the KEIP Participants have and will continue to play a central role in the Chapter 11 process, especially given the ongoing parallel processes for marketing the Debtors and their assets while simultaneously pursuing the consummation of the Proposed Plan. The compensation committee determined that incentivizing the KEIP Participants is critical in order to ensure that these key employees continue in their efforts to successfully guide the Debtors through the bankruptcy process and maximize value for the benefit of all the Debtors’ stakeholders.

Each KEIP provides for variable payouts to the KEIP Participants based upon the achievement of relevant target metrics, including (a) emergence from bankruptcy (through either effectiveness of a plan of reorganization or consummation of a sale of substantially all of the Debtors’ assets), (b) continued compliance with the post-petition credit agreements, including the covenants contained therein, and (c) the achievement of pre-determined personal goals (as determined by a designated superior for each KEIP Participant). Each of these metrics accounts for one-third of the maximum incentive bonus amount which may be earned by each KEIP Participant, such that failure to achieve any of the three metrics results in a deduction of one-third of the maximum incentive bonus amount. Furthermore, the date of emergence from bankruptcy (the “Emergence Date”) also impacts the earned bonus amount. If the Emergence Date occurs on or before February 15, 2016, then the full one-third portion of the maximum incentive bonus amount relating to the emergence from bankruptcy (the “Emergence Amount”) is earned; however, (i) if the Emergence Date occurs on or between February 16, 2016 and March 15, 2016, 85% of the Emergence Amount will be earned and (ii) if the Emergence Date occurs on or between March 16, 2016 and April 15, 2016, 70% of the Emergence Amount will be earned. Payments will be made on or before the fifteenth (15th) calendar day following the Emergence Date subject to later disgorgement as described below.

In the event that a that a KEIP Participant is terminated by us without cause or for reasons of death or disability, such KEIP Participant will be entitled to payment of a pro-rata portion of such KEIP Participant’s award based on the number of days the KEIP Participant was employed after the Petition Date through the date of termination, divided by the number of days from the Petition Date through the Emergence Date. If the KEIP Participant’s employment with us is terminated for cause prior to the payment date, he or she will forfeit any right to a payment under the KEIP. Finally, if a KEIP Participant voluntarily terminates his or her employment with us or is terminated for cause within forty-five (45) calendar days following the Emergence Date, then the KEIP Participant must return any previously paid KEIP bonus amount within five (5) business days of such termination.

The maximum cash bonus that each named executive officer is entitled to under the applicable KEIP is as follows:



Executive Officer		Maximum KEIP Bonus ($)
Pierre Agnes (1)		788,400
Thomas Chambolle (1)		349,000
Greg Healy		649,500

___________


(1)	KEIP bonus amounts for Messrs. Agnes and Chambolle were set in euros and have been translated into U.S. dollars at the October 31, 2015 exchange rate of 1.095 U.S. dollars for each euro.

Summary Compensation Table – Fiscal 2015, 2014, 2013

The following table sets forth summary information concerning the compensation of each of our named executive officers for all services rendered in all capacities to us for the fiscal years ended October 31, 2015, 2014 and 2014 (1):



Name and Principal Position (2)		Year	Salary $	Bonus $	Stock Awards $ (3)	Option Awards $ (3)	Non-Equity Incentive Plan Compensation $	All Other Compensation $ (4)	Total
Pierre Agnes (5)		2015	820,600	—	1,292,000	1,119,000	—	33,100	3,264,700
	Chief Executive Officer	2014	617,500	—	—	—	—	7,200	624,700
		2013	617,500	—	548,000	—	—	7,000	1,172,500

Thomas Chambolle (5)		2015	380,700	11,400	276,000	646,000	—	18,500	1,332,600
	Chief Financial Officer

Greg Healy (6)		2015	522,400	—	646,000	861,000	—	419,000	2,448,400
	President

Andrew P. Mooney (7)		2015	4,700	—	1,784,900	—	—	553,400	2,343,000
	Former Chief Executive	2014	1,000,000	—	—	—	—	52,300	1,052,300
	Officer	2013	803,200	25,000	9,084,000	—	504,800	41,600	10,458,600

Richard Shields		2015	235,500	—	278,000	—	—	7,600	521,100
	Former Chief Financial	2014	550,000	—	—	—	—	8,900	558,900
	Officer	2013	522,900	—	—	—	—	8,700	531,600

Alan Vickers		2015	229,500	—	278,000	—	—	193,000	700,500
	Former EVP, Global Wholesale Sales and Operations, and General Manager, Americas Region

___________


(1)	If the terms of the PSA are implemented, all of our existing equity securities, including our shares of common stock, options, RSUs, and warrants will be cancelled and extinguished without holders receiving any distribution.

(2)

The principal position for each executive officer reflects the executive office(s) and title(s) held by each of them during the fiscal year ended October 31, 2015. Mr. Agnes was appointed as our Chief Executive Officer in March 2015. Mr. Chambolle was appointed Chief Financial Officer in March 2015. Mr. Healy was appointed President in March 2015. Mr. Mooney was removed as Chief Executive Officer in March 2015. Mr. Shields resigned as Chief Financial Officer in March 2015. Mr. Vicker’s employment was terminated in April 2015.

(3)

The amounts listed do not necessarily reflect the dollar amounts of compensation actually realized or that may be realized by our executive officers. In accordance with SEC requirements, these amounts reflect the aggregate grant date fair value computed in accordance with the provisions of ASC Topic 718 related to stock and option awards to the named executive officers in the referenced fiscal year and without any adjustment for estimated forfeitures. See Note 12 of the Notes to Consolidated Financial Statements for the fiscal year ended October 31, 2015 for information regarding assumptions underlying the valuation of stock and option awards.

(4)

For Mr. Agnes for fiscal 2015, this amount includes $2,000 for a life insurance policy premium, $1,900 for a long-term disability policy premium, $500 for health insurance policy premium, $5,700 for clothing allowance to purchase our products at wholesale prices, and $23,000 for vehicle allowance. For Mr. Chambolle for fiscal 2015, this amount includes $2,000 for a life insurance policy premium, $1,900 for a long-term disability policy premium, $500 for health insurance policy premium, and $10,700 for vehicle allowance. For Mr. Healy for fiscal 2015, this amount includes $3,900 for a life insurance policy premium, $11,600 for clothing allowance to purchase our products at wholesale prices, $17,600 for vehicle allowance, $68,100 for superannuation contributions as required by Australian law, and a relocation bonus and housing allowance of $75,200 and $242,600, respectively, for his relocation from Australia to southern California. For Mr. Mooney for fiscal 2015, this amount includes $2,000 for a life insurance policy premium, $4,000 for health insurance policy premium, $16,900 for car service for travel between his home and our headquarters and for business related travel in southern California, $8,700 tax gross-up reimbursement associated with such car service, and

$521,800 in severance payments. For Mr. Shields for fiscal 2015, this amount includes $2,000 for a life insurance policy premium, $800 for a long-term disability policy premium, and $4,800 for health insurance policy premium. For Mr. Vickers for fiscal 2015, this amount includes $2,000 for a life insurance policy premium, $3,500 for health insurance policy premium, and $187,500 in severance payments. Certain of the above benefits of Messrs. Agnes and Chambolle were set in euros and the amounts reflect the U.S. dollar value of these payments at an average exchange rate during fiscal 2015 of approximately 1.135 U.S. dollars per euro and fiscal 2014 and fiscal 2013 of approximately 1.300 U.S. dollars per euro. In addition, certain of the above benefits of Mr. Healy were set in Australian dollar and the amounts reflect the U.S. dollar value of these payments at an average exchange rate during fiscal 2015 approximately 0.771 U.S. dollars per Australian dollar.


(5)	Base salary and bonus were set in euros and his base salary and bonus amounts reflect the U.S. dollar value of these payments at an average exchange rate in fiscal 2015 of approximately 1.135 U.S. dollars per euro and fiscal 2014 and fiscal 2013 of approximately 1.300 U.S. dollars per euro.


(6)	Base salary was set in Australian dollar and his base salary amount reflects the U.S. dollar value of the payments at an average exchange rate in fiscal 2015 of approximately 0.771 U.S. dollars per Australian dollar.

(7)

Included in Mr. Mooney’s 2015 stock award was his 2015 salary of $489,900 in the form of restricted stock units. Pursuant to Mr. Mooney's employment agreement, his fiscal 2015 base salary was paid in 675,676 restricted stock units, 281,532 of which vested on his termination date with a vested value of $489,900. See additional discussion following under “Employment and Termination Agreements.”

Employment and Termination Agreements

Mr. Agnes

We are party to an employment agreement with Pierre Agnes, our Chief Executive Officer. This agreement and, under the terms of this agreement, Mr. Agnes’ employment with us, will automatically terminate on October 31, 2016 (unless the parties agree to an extension). The agreement may be terminated by us or Mr. Agnes for any reason, subject to the payment of certain amounts as set forth below. Under the agreement, we currently pay Mr. Agnes a base salary at an annual rate equal to €900,000 (approximately U.S. $986,000, assuming at the October 31, 2015 exchange rate of 1.095 US dollars per euro). Our compensation committee has the discretion to adjust this base salary based on our performance, Mr. Agnes’ performance, market conditions or such other factors as the committee deems relevant. The agreement also provides that Mr. Agnes is eligible to receive an annual discretionary bonus on terms approved by the compensation committee.

The agreement requires us to maintain a term life insurance policy on the life of Mr. Agnes in the amount of €2,000,000 (approximately U.S. $2,190,000, assuming at the October 31, 2015 exchange rate of 1.095 US dollars per euro), payable to his designees; provided, however, that we are not required to pay annual premiums for the policy in excess of €5,000 (approximately U.S. $5,500, assuming at the October 31, 2015 exchange rate of 1.095 US dollars per euro). The agreement also provides that Mr. Agnes will continue to be a participant in our equity incentive plans, on terms established by our board of directors that must be substantially similar to those granted to our other senior executives. The agreement further provides that Mr. Agnes will be covered by our group health insurance programs and our long-term disability plan for senior executives on the same terms and conditions applicable to comparable employees. We are also required to provide Mr. Agnes with a clothing allowance to purchase our products at wholesale prices.

If we terminate Mr. Agnes’ employment without “Cause” (as defined below), or if Mr. Agnes terminates his employment for “Good Reason” (as defined below) within six months of the event constituting Good Reason, the agreement provides that we will: (1) continue to pay Mr. Agnes’ gross remuneration for a period of eighteen months, (2) pay a pro rata portion of the annual bonus earned, if any, for the fiscal year in which the termination occurs and (3) pay the full amount of any unpaid annual bonus earned from the preceding fiscal year. The foregoing payments are also payable in the event that Mr. Agnes’ employment agreement terminates on October 31, 2016 and his employment terminates effective the same date. If we terminate Mr. Agnes for Cause or Mr. Agnes terminates his employment without Good Reason, then he will receive his base salary and benefits earned and accrued prior to termination and, if the basis for Cause is his death or disability, a pro rata portion of his annual bonus earned for the year in which the termination occurs. In order to receive the payments specified above, other than those earned prior to termination, Mr. Agnes is required to sign a release of claims.

The agreement requires that if we grant stock options to Mr. Agnes after the date of the agreement, the options must provide that if he is terminated by us without Cause, as a result of his death or disability or by him for Good Reason, all of the options will automatically vest in full on an accelerated basis and remain exercisable until the earlier to occur of (1) the first anniversary of the termination, (2) the end of the option term, or (3) termination pursuant to other provisions of the option plan or option agreement, such as a corporate transaction.

For purposes of the agreement, Cause generally includes (1) death, (2) permanent disability, (3) willful misconduct in the performance of duties, (4) commission of a felony or violation of law involving moral turpitude or dishonesty, (5) self-dealing,

(6) willful breach of duty, (7) habitual neglect of duty, or (8) material breach by Mr. Agnes of his obligations under the employment agreement.

For purposes of the agreement, Good Reason generally includes (1) the assignment to Mr. Agnes of duties materially inconsistent with his position, as set forth in the agreement, without his consent, (2) a material change in his reporting level from that set forth in the agreement, without his consent, (3) a material diminution in his authority, without his consent, (4) a material breach by us of our obligations under the agreement, (5) the failure by us to obtain from any successor, before the succession takes place, an agreement to assume and perform our obligations under the employment agreement or (6) requiring Mr. Agnes to be based more than 150 km from Saint Sean de Luz, France, without the his consent.

Mr. Healy

We are party to an employment agreement with Greg Healy, our President. Pursuant to the agreement, Mr. Healy receives an annual base salary of $650,000, which may be adjusted on an annual basis (but not below $650,000). The agreement also provides that Mr. Healy will be paid superannuation contributions at the minimum rate required to avoid liability under Australian law, and that Mr. Healy is eligible to receive an annual discretionary bonus on terms approved by the compensation committee. The agreement may be terminated by us or Mr. Healy for any reason, subject to the payment of certain amounts as set forth below.

The agreement requires us to maintain a AUD $2,000,000 (approximately $1,542,000 at the October 31, 2015 exchange rate of 0.771 dollars per Australian dollar) term life insurance policy on the life of Mr. Healy, payable to his designee; provided, however, that we are not required to pay annual premiums for the policy in excess of AUD $5,000 (approximately $3,950 at the October 31, 2015 exchange rate of 0.771 U.S. dollars per Australian dollar).

The agreement also provides that Mr. Healy will continue to be a participant in our 2013 Performance Incentive Plan, or any successor equity plan, on terms established by the board. The agreement further provides that Mr. Healy will be covered by a senior manager income protection plan in the event of illness or injury on the same terms and conditions applicable to comparable employees in Australia. Mr. Healy will also receive an AUD $15,000 (approximately $11,600 at the October 31, 2015 exchange rate of 0.771 U.S. dollars per Australian dollar) annual clothing allowance to purchase our products at wholesale prices, and a vehicle allowance for the business-related operating costs of one vehicle.

If we terminate Mr. Healy’s employment without Cause, if Mr. Healy’s employment agreement terminates on October 31, 2017 and his employment terminates effective the same date, or if Mr. Healy terminates his employment for Good Reason within six months of the event constituting Good Reason, the agreement provides that we will pay Mr. Healy: (1) his base salary and superannuation contributions for a period of eighteen months, (2) any amounts required by Australian law (including, as applicable, pay in lieu of notice of termination, redundancy pay, pay in lieu of long service leave and pay in lieu of untaken annual leave), (3) a pro rata portion of the annual bonus earned, if any, for the fiscal year in which the termination occurs, and (4) the full amount of any unpaid annual bonus earned from the preceding fiscal year. In order to receive the payments specified above, other than those earned prior to termination, Mr. Healy is required to sign a release of claims.

The agreement requires that if we grant stock options to Mr. Healy after the date of the agreement, the options must provide that if he is terminated by us without Cause, as a result of his death or disability or by him for Good Reason, all of the options will automatically vest in full on an accelerated basis and remain exercisable until the earlier to occur of (1) the first anniversary of the termination, (2) the end of the option term, or (3) termination pursuant to other provisions of the option plan or option agreement, such as a corporate transaction.

“Cause” and “Good Reason” are defined substantially similar to the definitions set forth above under the description of the Mr. Agnes’ employment agreement above.

Mr. Mooney

On April 7, 2015, we entered into a separation agreement with Mr. Mooney.

Pursuant to the terms of the agreement, consistent with the terms of his employment agreement, we agreed to pay Mr. Mooney wage continuation pay in the total amount of $2,504,800, less required tax deductions and withholdings, payable commencing May 2015 and ending March 2017. In connection with the Bankruptcy Cases, we ceased making wage continuation payments to Mr. Mooney in September 2015. In addition, had Mr. Mooney earned a bonus award pursuant to our Incentive Compensation Plan for fiscal year 2015, Mr. Mooney would have been entitled to a pro rata portion of such bonus. No such bonus was earned.

The agreement further provides that Mr. Mooney will retain: (i) 480,000 Stock Price-Based RSUs (as defined in our definitive proxy statement for our 2015 annual meeting of stockholders), pursuant to the restricted stock unit agreement between us and Mr. Mooney, dated January 11, 2013, (ii) 669,767 Stock Price-Based RSUs, pursuant to the restricted stock unit agreement

between us and Mr. Mooney, dated March 19, 2013, and (iii) 140,000 2015 PSUs, pursuant to the performance restricted stock unit agreement between us and Mr. Mooney, dated November 3, 2014. The foregoing retained Stock Price-Based RSUs will continue to be subject to the vesting conditions set forth in the applicable award agreement. The retained 2015 PSUs were subsequently cancelled and forfeited in accordance with their terms. In addition, pursuant to the amendment to Mr. Mooney’s employment agreement entered into on November 3, 2014, and the related restricted stock unit agreement, 281,532 restricted stock units granted to Mr. Mooney in lieu of a cash base salary for fiscal 2015 vested and the underlying shares of the our common stock were issued to Mr. Mooney. All other restricted stock awards granted to Mr. Mooney were cancelled and forfeited.

The agreement also provides for other customary terms and conditions, including a release of claims against us and our affiliates by Mr. Mooney.

Mr. Vickers

On April 1, 2015, we entered into a separation agreement with Mr. Vickers.

Pursuant to the terms of the agreement, consistent with the terms of his employment agreement, we agreed to pay Mr. Vickers wage continuation pay in the total amount of $750,000, less required tax deductions and withholdings, payable commencing April 2015 and ending September 2016. In connection with the Bankruptcy Cases, we ceased making wage continuation payments to Mr. Vickers in September 2015. In addition, had Mr. Vickers earned a bonus award pursuant to our Incentive Compensation Plan for fiscal year 2015, Mr. Vickers would have been entitled to a pro rata portion of such bonus. No such bonus was earned.

The agreement further provides that Mr. Vickers will retain 31,233 2015 PSUs, pursuant to the performance restricted stock unit agreement between us and Mr. Vickers, dated November 3, 2014. The retained 2015 PSUs were subsequently cancelled and forfeited in accordance with their terms.

The agreement also provides for other customary terms and conditions, including a release of claims against us and our affiliates by Mr. Vickers.

Grants of Plan-Based Awards – Fiscal 2015

The following table sets forth summary information regarding all grants of plan-based awards made to our named executive officers during the fiscal year ended October 31, 2015:

Name

Approval

Date

Grant

Date

Estimated Possible Payouts Under Non-Equity Incentive Plan Awards

(1)

Estimated Future Payouts Under Equity Incentive Plan Awards

(2)

All Other Stock Awards: Number of Shares of Stock or Units

(#) (4)

All Other Option Awards: Number of Securities Underlying Options

(#)

Exercise or Base Price of Option Awards ($/Share)

Grant Date Fair Value of Stock and Option Awards

($) (5)

Threshold

($) (3)

Target

($) (3)

Maximum

($) (3)

Threshold

(#)

Target

(#)

Maximum

(#)

Pierre Agnes (6)

—

11/3/14

—

350,000

700,000

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