The ratings on Huntington Beach, Calif.-based Quiksilver Inc. reflect Standard&Poor's Ratings Services' view that the company continues to have a "vulnerable" business risk profile because of its exposure to the cyclical apparel industry, its relatively narrow niche focus in the competitive apparel industry, and the fashion risk inherent in its target market. Our ratings also reflect Quiksilver's financial risk profile, which we continue to characterize as "highly leveraged" based on the company's aggressive financial policy and still-high leverage, despite improved credit metrics over the recent years (the company executed a debt-for-equity exchange in late 2010 that lowered leverage to about 4.5x from about 7x). The ratio of lease- and pension-adjusted total debt to EBITDA has increased to 5.7x
