Participates in the highly competitive apparel industry, with inherent fashion risk. Relatively narrow product focus in youth action sports apparel. Portfolio of well-known brands, including Quiksilver, Roxy and DC Shoes. Recent soft operating performance with decreased EBITDA margin. Weak credit metrics, including high leverage (about 6.3x at Jan. 31, 2013). Less than adequate liquidity due to projected tight covenant cushion. Thin free operating cash flow. The rating outlook is negative. Standard&Poor's Ratings Services believes Quiksilver's liquidity will continue to be less than adequate, given we project covenant cushion to be less than 15% on the company's interest coverage covenant. We also believe that leverage could remain high as Quiksilver's operating performance could continue to be pressured by foreign
