equipment business has also been classified as discontinued operations in our consolidated financial statements for all periods presented.
In August 2008, we entered into an agreement to sell our Rossignol business, including the related brands of Rossignol, Dynastar, Look and Lange for an aggregate purchase price of approximately $50.8 million. This transaction was completed in November 2008. Beginning with our fiscal quarter ended April 30, 2008, we classified our Rossignol business, including both wintersports equipment and apparel, as discontinued operations for all periods presented under SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets." The Rossignol business assets and related liabilities are classified as held for sale, and the operations are classified as discontinued in our consolidated financial statements, for all periods presented. We expect to incur a pre-tax loss on the sale of Rossignol of approximately $150 million, partially offset by an expected tax benefit of approximately $91.0 million during the three months ending January 31, 2009. As a result of this disposition, the following financial information has been adjusted to exclude our wintersports equipment business.
Over the last five years, our revenues from continuing operations have grown from $1.3 billion in fiscal 2004 to $2.3 billion in fiscal 2008. We operate in the outdoor market of the sporting goods industry in which we design, produce and distribute branded apparel, footwear, accessories and related products. We operate in three segments, the Americas, Europe and Asia/Pacific. The Americas segment includes revenues primarily from the U.S. and Canada. The European segment includes revenues primarily from Western Europe. The Asia/Pacific segment includes revenues primarily from Australia, Japan, New Zealand 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. Revenues by segment from continuing operations are as follows:

                                                                     Year Ended October 31,
In thousands                            2008               2007               2006               2005               2004
Americas                             $ 1,061,370        $   995,801        $   831,583        $   752,797        $   612,859
Europe                                   933,119            803,395            660,127            591,228            496,276
Asia/Pacific                             265,067            243,064            225,128            213,277            148,733
Corporate operations                       5,080              4,812              5,312              5,115              5,112

Total revenues, net                  $ 2,264,636        $ 2,047,072        $ 1,722,150        $ 1,562,417        $ 1,262,980

We operate in markets that are highly competitive, and our ability to evaluate and respond to changing consumer demands and tastes is critical to our success. If we are unable to remain competitive and maintain our consumer loyalty, our business will be negatively affected. We believe that our historical success is due to the development of an experienced team of designers, artists, sponsored athletes, technicians, researchers, merchandisers, pattern makers and contractors. Our team and the heritage and current strength of our brands has helped us remain competitive in our markets. Our success in the future will depend, in part, on our ability to continue to design products that are desirable in the marketplace and competitive in the areas of quality, brand image, technical specifications, distribution methods, price, customer service and intellectual property protection.

Results of Operations
The table below shows certain components of our statements of operations and other data as a percentage of revenues:

                                                              Year Ended October 31,
                                                           2008        2007        2006
 Statements of Operations Data
 Revenues, net                                             100.0 %     100.0 %     100.0 %

 Gross profit                                               49.5        48.1        47.2
 Selling, general and administrative expense                40.4        38.2        37.7
 Asset impairments                                           2.9         0.0         0.0

 Operating income                                            6.2         9.9         9.5
 Interest expense                                            2.0         2.3         2.4
 Foreign currency, minority interest and other expense      (0.2 )       0.2         0.0

 Income before provision for income taxes                    4.4 %       7.4 %       7.1 %


 Other data
 Adjusted EBITDA (1)                                        12.3 %      12.7 %      12.9 %

(1) For a definition of Adjusted EBITDA and a reconciliation of income from continuing operations to Adjusted EBITDA, see footnote
(5) to the table under Item 6. Selected
Financial
Data.

Our financial performance has been, and may continue to be, negatively affected by unfavorable global economic conditions. Continued or further deteriorating economic conditions are likely to have an adverse impact on our sales volumes, pricing levels and profitability. As domestic and international economic conditions change, trends in discretionary consumer spending also become unpredictable and subject to reductions due to uncertainties about the future. When consumers reduce discretionary spending, purchases of apparel and footwear may decline. A general reduction in consumer discretionary spending due to the recession in the domestic and international economies or uncertainties regarding future economic prospects could have a material adverse effect on our results of operations.
Fiscal 2008 Compared to Fiscal 2007
Revenues
Our total net revenues increased 11% in fiscal 2008 to $2,264.6 million from $2,047.1 million in fiscal 2007 primarily as a result of changes in foreign currency exchange rates and higher unit sales. The effect of foreign currency exchange rates accounted for approximately $105.7 million of the increase in total net revenues. Our net revenues in each of the Americas, Europe and Asia/Pacific segments include apparel, footwear and accessories product lines for our Quiksilver, Roxy, DC and other brands which include Hawk, Raisins, Leilani, Radio Fiji, Lib Technologies, Gnuand Bent Metal. Revenues in the Americas increased 7% to $1,061.4 million for fiscal 2008 from $995.8 million in the prior year, while European revenues increased 16% to $933.1 million from $803.4 million and Asia/Pacific revenues increased 9% to $265.1 million from $243.1 million for those same periods. In the Americas, the increase in revenues came primarily from DC brand revenues, partially offset by small decreases in our Quiksilver and Roxy brand revenues. The increase in DC brand revenues came primarily from growth in footwear and apparel product lines. The decrease in Quiksilver and Roxy came across all product lines except for increases in our Quiksilver footwear and Roxy apparel product lines. Approximately $89.6 million of Europe's revenue increase was attributable to the positive effects of changes in foreign currency exchange rates. The currency adjusted increase in Europe came primarily from growth in our DC brand and, to a lesser extent, growth in our Roxy brand, partially offset by a slight decrease in our Quiksilverbrand. The increase in DC brand revenues came primarily from growth in footwear and apparel product lines, while increases in Roxy came primarily from growth in the accessories and apparel product lines. Approximately $16.1 million of Asia/Pacific's revenue increase was attributable to the positive effects of changes in foreign currency exchange rates. The currency adjusted increase in Asia/Pacific revenues came primarily from our DC and Quiksilver brands, partially offset by a decrease in our Roxy brand revenues.

Gross Profit
Our consolidated gross profit margin increased to 49.5% in fiscal 2008 from 48.1% in the previous year. The gross profit margin in the Americas segment remained constant at 42.0%, our European gross profit margin increased to 57.0% from 55.1%, and our Asia/Pacific gross profit margin increased to 52.9% from 49.5%. The Americas gross profit margin would have increased due to higher percentages of sales through company-owned retail stores, where we earn both wholesale and retail margins, and improved sourcing costs, but such improvements were wholly offset by market related price compression. Our European gross profit margin increases were primarily due to a higher percentage of our sales through company-owned stores and improved sourcing costs. In Asia/Pacific, the gross profit margin increase compared to the prior year was primarily as a result of the change in mix to higher retail sales compared to the prior year. Selling, General and Administrative Expense Selling, general and administrative expense ("SG&A") increased 17% in fiscal 2008 to $915.9 million from $782.3 million in fiscal 2007. In the Americas, these expenses increased 19% to $372.0 million in fiscal 2008 from $311.8 million in fiscal 2007, in Europe they increased 20% to $380.4 million from $316.9 million, and in Asia/Pacific SG&A increased 16% to $117.2 million from $100.9 million for those same periods. As a percentage of revenues, SG&A increased to 40.4% of revenues in fiscal 2008 compared to 38.2% in fiscal 2007. In the Americas, SG&A as a percentage of revenues increased to 35.0% compared to 31.3%. In Europe, SG&A as a percentage of revenues increased to 40.8% compared to 39.4% and in Asia/Pacific, SG&A as a percentage of revenues increased to 44.2% compared to 41.5% in the prior year. The increase in SG&A as a percentage of revenue in our Americas segment was primarily due to the cost of opening and operating additional retail stores, increased costs resulting from operating our recently acquired Latin American subsidiaries and increased marketing costs. The increase in SG&A costs as a percentage of revenue in our European segment was primarily due to the costs of opening and operating additional retail stores and increased distribution costs. In our Asia/Pacific segment, the increase in SG&A as a percentage of revenue is primarily related to the cost of opening and operating additional retail stores and, to a lesser extent, a legal settlement on a retail store lease.
Asset Impairments
Asset impairment charges totaled $65.8 million in fiscal 2008 compared to zero in fiscal 2007. Of these charges, approximately $55.4 million related to Asia/Pacific goodwill, and approximately $10.4 million related to the impairment of leasehold improvements and other assets in certain retail stores. The goodwill and other impairment charges were recorded as a result of our annual impairment test, where it was determined that the carrying values of our assets were more than the estimated fair value as of October 31, 2008. Separately, we analyzed the profitability of our retail stores and determined that a total of 25 stores, primarily in the U.S., were not generating sufficient cash flows to recover our investment, 9 of which are scheduled to close in 2009. We are evaluating the timing of the closure of the remaining 16 stores and any costs associated with future rent commitments for these stores will be charged to future earnings upon store closure.
Non-operating Expenses
Net interest expense decreased to $45.3 million in fiscal 2008 compared to $46.6 million in fiscal 2007 primarily as a result of lower interest rates on our variable-rate debt in the United States.
Our foreign currency gain amounted to $5.8 million in fiscal 2008 compared to a loss of $4.9 million in fiscal 2007. This current year gain resulted primarily from the foreign exchange effect of certain non-U.S. dollar denominated liabilities.
Our income tax rate increased to 33.5% in fiscal 2008 from 22.8% in fiscal 2007. The current year rate increased significantly due to the non-deductibility of the goodwill asset impairment recorded in fiscal 2008. This increase was partially offset by changes in accrual amounts for certain tax contingencies accounted for under FIN 48.

Income from continuing operations and Adjusted EBITDA Income from continuing operations in fiscal 2008 decreased to $65.5 million, and earnings per share on a diluted basis decreased to $0.51 compared to income from continuing operations of $116.7 million and diluted earnings per share of $0.90 for fiscal 2007. Adjusted EBITDA increased to $278.9 million in fiscal 2008 compared to $260.8 million in fiscal 2007. Fiscal 2007 Compared to Fiscal 2006
Revenues
Our total net revenues increased 19% in fiscal 2007 to $2,047.1 million from $1,722.2 million in fiscal 2006 primarily as a result of increased unit sales. Revenues in the Americas increased 20%, European revenues increased 22%, and Asia/Pacific revenues increased 8%. The effect of foreign currency exchange rates accounted for an increase of approximately $81.8 million in total net revenues. Our net revenues in each of the Americas, Europe and Asia/Pacific segments include apparel, footwear and accessories product lines for our Quiksilver, Roxy, DC and other brands, which include Hawk, Gotcha, Raisins, Leilani, Radio Fiji, Lib Technologies, Gnu and Bent Metal. Gross Profit
Our consolidated gross profit margin increased to 48.1% in fiscal 2007 from 47.2% in the previous year. The gross profit margin in the Americas increased to 42.0% from 41.5%, our European gross profit margin increased to 55.1% from 53.8%, and our Asia/Pacific gross profit margin increased to 49.5% from 49.0%. The increase in the Americas' gross profit margin was primarily due to lower production costs and a higher percentage of sales through company-owned retail stores where higher gross margins are generated. Our European and Asia/Pacific gross profit margin increases were primarily due to higher margins from our apparel brands, largely as a result of the currency effect of sourcing goods in U.S. dollars.
Selling, General and Administrative Expense Selling, general and administrative expense increased 21% in fiscal 2007 to $782.3 million from $648.7 million in fiscal 2006. In the Americas, these expenses increased 23% to $311.8 million in fiscal 2007 from $254.0 million in fiscal 2006; in Europe they increased 25% to $316.9 million from $253.4 million; and in Asia/Pacific they increased 14% to $100.9 million from $88.9 million for those same periods. As a percentage of revenues, selling, general and administrative expense increased to 38.2% of sales in fiscal 2007 compared to 37.7% in fiscal 2006. The increase in selling, general and administrative expense as a percentage of revenues was primarily caused by the cost of opening and operating additional retail stores and increased distribution costs. Non-operating Expenses
Net interest expense increased to $46.6 million in fiscal 2007 compared to $41.3 million in fiscal 2006 primarily as a result of the translation effect of euro denominated interest and, to a lesser extent, higher interest rates on our variable-rate debt in Europe and the United States.
Our foreign currency loss amounted to $4.9 million in fiscal 2007 compared to a gain of $0.3 million in fiscal 2006. This current year loss resulted primarily from the foreign currency contracts that we used to mitigate the risk of translating the results of our international subsidiaries into U.S. dollars and the foreign exchange effect of certain non-U.S. dollar denominated liabilities. Our income tax rate decreased to 22.8% in fiscal 2007 from 27.1% in fiscal 2006. This decrease was primarily caused by the higher impact of certain beneficial items included in our tax rate.
Income from continuing operations and Adjusted EBITDA Income from continuing operations in fiscal 2007 increased to $116.7 million, and earnings per share on a diluted basis increased to $0.90 compared to $89.4 million and diluted earnings per share of $0.70 in fiscal 2006. Adjusted EBITDA increased to $260.8 million in fiscal 2007 compared to $221.7 million in fiscal 2006.

Financial Position, Capital Resources and Liquidity We generally finance our working capital needs and capital investments with operating cash flows and bank revolving lines of credit. Multiple banks in the United States, Europe and Australia make these lines of credit available to us. Term loans are also used to supplement these lines of credit and are typically used to finance long-term assets. In July 2005, we issued $400 million in senior notes to fund a portion of the Rossignol purchase price and to refinance certain existing indebtedness.
We completed the sale of our Rossignol business in November 2008. The net cash proceeds of approximately $38.1 million were used to repay existing indebtedness. As of October 31, 2008, we had $1,060.3 million of indebtedness classified in continuing operations. We had an additional $11.0 million of indebtedness classified in our discontinued operations, which was repaid in November as part of the close of the Rossignol sale. For the fiscal year ended October 31, 2008, we recorded approximately $59.3 million of net interest expense, which includes $14.0 million classified in discontinued operations related to the financing of our Rossignol business. Rossignol interest includes interest on third-party debt plus intercompany interest charged to Rossignol by other Quiksilver entities that, prior to the closing of the sale, financed Rossignol's operations. After the sale of Rossignol, our continuing operations interest expense is expected to be higher as no interest will be allocated to that business. However, we no longer have the obligation to fund the losses or capital expenditures of the Rossignol business and we expect to improve our future debt leverage.
In October 2008, we extended the maturity date for $71.8 million of a $91.4 million credit facility which was due in October. In connection with this extension, we repaid $19.6 million of the original $91.4 million credit facility. The remaining $71.8 million is now due in March 2009 and is expected to be repaid with cash flows from the operations of our European business or refinanced on a long-term basis.
We are highly leveraged; however, we believe that our cash flows from operations, together with our existing credit facilities will be adequate to fund our capital requirements for at least the next twelve months. Additionally, we are currently evaluating potential financing alternatives and plan to seek additional financing which includes extending the maturity of our short-term uncommitted lines of credit in Europe and Asia/Pacific. Potential sources of alternative financing include our existing lenders (for longer term financing), sales of assets and the broader capital markets. We believe that we can obtain this additional financing needed to improve the maturities of our debt, reduce the amount of our short-term uncommitted lines of credit and better position ourselves for the long term. The availability and cost of new financing or asset sales are subject to certain risks and could be adversely affected by current credit and capital market conditions.
Cash and cash equivalents totaled $53.0 million at October 31, 2008 versus $74.3 million at October 31, 2007. Working capital amounted to $631.3 million at October 31, 2008, compared to $631.9 million at October 31, 2007, a decrease of less than 1%.
Operating Cash Flows
Operating activities of continuing operations provided cash of $179.5 million in fiscal 2008 compared to $181.8 million in fiscal 2007. This $2.3 million reduction was primarily due to decreased cash provided from working capital of $32.8 million, partially offset by the effect of our net loss and other non-cash charges which amounted to $30.5 million. Capital Expenditures
We have historically avoided high levels of capital expenditures for our apparel manufacturing functions by using independent contractors for a majority of our production.
Fiscal 2008 capital expenditures were $93.7 million, which was approximately $9.7 million higher than the $84.0 million we spent in fiscal 2007. In fiscal 2008, we increased our investment in company-owned retail stores, warehouse equipment and computer systems.
Capital expenditures for new company-owned retail stores are expected to be reduced in fiscal 2009. A campus facility is being constructed for our European headquarters and computer hardware and software will also be purchased to continuously improve our systems. Capital spending for these and other

projects in fiscal 2009 is expected to range between $60 million and $70 million. We expect to fund our capital expenditures primarily from our operating cash flows and our credit facilities. Acquisitions and Dispositions
In August 2008, we received a binding offer for our Rossignol business, which closed on November 12, 2008 for approximately $50.8 million, comprised of $38.1 million in cash and a $12.7 million seller's note. The purchase price may be adjusted for certain items including an anticipated fair value adjustment to the seller's note due in November 2012. In connection with such disposition, we expect to incur a pre-tax loss of approximately $150 million, partially offset by an expected tax benefit of approximately $91.0 million during the three months ending January 31, 2009. The business sold includes the related brands of Rossignol, Dynastar, Look and Lange.
In October 2007, we entered into an agreement to sell our golf equipment business. This transaction was completed in December 2007 for a transaction value of $132.5 million.
Debt Structure
We generally finance our working capital needs and capital investments with operating cash flows and bank revolving lines of credit. Multiple banks in the United States, Europe and Australia make these lines of credit available to us. Term loans are also used to supplement these lines of credit and are typically used to finance long-term assets. In July 2005, we issued $400 million in senior notes to fund a portion of the acquisition of Rossignol and to refinance certain existing indebtedness. Our debt structure includes short-term lines of credit and long-term loans from both our continuing operations and debt classified in discontinued operations as follows:

In thousands                                             U.S. Dollar          Non U.S. Dollar            Total
Americas short-term credit arrangements                 $           -        $           9,945        $     9,945
European short-term credit arrangements                             -                  187,981            187,981
Asia/Pacific short-term credit arrangements                         -                   51,008             51,008

Short-term lines of credit                                          -                  248,934            248,934

Americas credit facility                                      142,500                        -            142,500
European long-term debt                                             -                  173,331            173,331
European credit facility                                            -                   47,218             47,218
Senior Notes                                                  400,000                        -            400,000
Deferred purchase price obligation                                  -                   41,922             41,922
Capital lease obligations and other borrowings                      -                   17,454             17,454

Long-term debt                                                542,500                  279,925            822,425


Total                                                   $     542,500        $         528,859        $ 1,071,359

In July 2005, we issued $400 million in senior notes, which bear a coupon interest rate of 6.875% and are due April 15, 2015. The senior notes were issued at par value and sold in accordance with Rule 144A and Regulation S. In December 2005, these senior notes were exchanged for publicly registered notes with identical terms. The senior notes are guaranteed on a senior unsecured basis by certain of our domestic subsidiaries that guarantee any of our indebtedness or our subsidiaries' indebtedness, or are obligors under our existing Credit Facility (defined below). We may redeem some or all of the senior notes after April 15, 2010 at fixed redemption prices as set forth in the indenture.
The indenture for our senior notes includes covenants that limit our ability to, among other things: incur additional debt; pay dividends on our capital stock or repurchase our capital stock; make certain investments; enter into certain types of transactions with affiliates; limit dividends or other payments by our restricted subsidiaries to us; use assets as security in other transactions; and sell certain assets or merge with or into other companies. If we experience a change of control (as defined in the indenture), we will be required to offer to purchase the senior notes at a purchase price equal to 101% of the principal amount, plus accrued and unpaid interest. We currently are in compliance with the covenants of the indenture. In addition, we have approximately $8.4 million in debt issuance costs included in other assets as of October 31, 2008.

. . .