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Delaware
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95-3015862
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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250 Coromar Drive, Goleta, California
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93117
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(Address of principal executive offices)
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(zip code)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Class
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Outstanding at July 31, 2015
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Common Stock, $0.01 par value
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32,680,352
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Page
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Part I.
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Financial Information
|
|
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Item 1.
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Condensed Consolidated Financial Statements (Unaudited)
|
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June 30,
2015 |
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March 31,
2015 |
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ASSETS
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|
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|||
Current assets:
|
|
|
|
|
|||
Cash and cash equivalents
|
$
|
168,744
|
|
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$
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225,143
|
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Trade accounts receivable, net of allowances ($18,762 at June 30, 2015 and $18,218 at March 31, 2015)
|
117,399
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|
|
143,105
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|
||
Inventories
|
373,622
|
|
|
238,911
|
|
||
Prepaid expenses
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18,579
|
|
|
15,141
|
|
||
Other current assets
|
32,218
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|
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35,057
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|
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Income taxes receivable
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35,939
|
|
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15,170
|
|
||
Deferred tax assets
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14,414
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14,066
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Total current assets
|
760,915
|
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|
686,593
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Property and equipment, net of accumulated depreciation ($137,766 at June 30, 2015 and $129,002 at March 31, 2015)
|
239,381
|
|
|
232,317
|
|
||
Goodwill
|
127,934
|
|
|
127,934
|
|
||
Other intangible assets, net of accumulated amortization ($39,254 at June 30, 2015 and $37,316 at March 31, 2015)
|
90,141
|
|
|
87,743
|
|
||
Deferred tax assets
|
15,391
|
|
|
15,017
|
|
||
Other assets
|
19,736
|
|
|
20,329
|
|
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Total assets
|
$
|
1,253,498
|
|
|
$
|
1,169,933
|
|
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|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|||
Current liabilities:
|
|
|
|
|
|||
Short-term borrowings and current portion of mortgage payable
|
$
|
43,394
|
|
|
$
|
5,383
|
|
Trade accounts payable
|
227,850
|
|
|
85,714
|
|
||
Accrued payroll
|
19,654
|
|
|
27,300
|
|
||
Other accrued expenses
|
41,391
|
|
|
41,066
|
|
||
Income taxes payable
|
4,969
|
|
|
6,858
|
|
||
Value added tax payable
|
980
|
|
|
1,221
|
|
||
Total current liabilities
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338,238
|
|
|
167,542
|
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|
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||||
Long-term liabilities:
|
|
|
|
||||
Mortgage payable
|
33,029
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|
|
33,154
|
|
||
Income tax liability
|
5,436
|
|
|
5,087
|
|
||
Deferred rent obligations
|
15,997
|
|
|
15,663
|
|
||
Other long-term liabilities
|
12,870
|
|
|
11,475
|
|
||
Total long-term liabilities
|
67,332
|
|
|
65,379
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 6)
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||
|
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|
||||
Stockholders’ equity:
|
|
|
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|
|||
Common stock, $0.01 par value; 125,000 shares authorized; shares issued and outstanding of 32,678 at June 30, 2015 and 33,292 at March 31, 2015
|
327
|
|
|
333
|
|
||
Additional paid-in capital
|
161,124
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|
|
158,777
|
|
||
Retained earnings
|
705,642
|
|
|
798,370
|
|
||
Accumulated other comprehensive loss
|
(19,165
|
)
|
|
(20,468
|
)
|
||
Total stockholders’ equity
|
847,928
|
|
|
937,012
|
|
||
Total liabilities and stockholders' equity
|
$
|
1,253,498
|
|
|
$
|
1,169,933
|
|
|
Three Months Ended
June 30, |
||||||
|
2015
|
|
2014
|
||||
Net sales
|
$
|
213,805
|
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$
|
211,469
|
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Cost of sales
|
127,209
|
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|
124,697
|
|
||
Gross profit
|
86,596
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|
86,772
|
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||
Selling, general and administrative expenses
|
150,304
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|
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137,254
|
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Loss from operations
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(63,708
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)
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(50,482
|
)
|
||
Other expense (income), net:
|
|
|
|
|
|
||
Interest income
|
(116
|
)
|
|
(54
|
)
|
||
Interest expense
|
1,035
|
|
|
438
|
|
||
Other, net
|
55
|
|
|
(96
|
)
|
||
Total other expenses, net
|
974
|
|
|
288
|
|
||
Loss before income taxes
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(64,682
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)
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(50,770
|
)
|
||
Income tax benefit
|
(17,355
|
)
|
|
(13,708
|
)
|
||
Net loss
|
(47,327
|
)
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|
(37,062
|
)
|
||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||
Unrealized loss on foreign currency hedging
|
(1,463
|
)
|
|
(260
|
)
|
||
Foreign currency translation adjustment
|
2,766
|
|
|
476
|
|
||
Total other comprehensive income, net
|
1,303
|
|
|
216
|
|
||
Comprehensive loss
|
$
|
(46,024
|
)
|
|
$
|
(36,846
|
)
|
|
|
|
|
||||
|
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||||
Net loss per share:
|
|
|
|
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|
||
Basic
|
$
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(1.43
|
)
|
|
$
|
(1.07
|
)
|
Diluted
|
$
|
(1.43
|
)
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|
$
|
(1.07
|
)
|
Weighted-average common shares outstanding:
|
|
|
|
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|
||
Basic
|
33,117
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|
|
34,626
|
|
||
Diluted
|
33,117
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|
|
34,626
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|
|
Three Months Ended
June 30, |
||||||
|
2015
|
|
2014
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net loss
|
$
|
(47,327
|
)
|
|
$
|
(37,062
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
||
Depreciation, amortization and accretion
|
11,905
|
|
|
11,131
|
|
||
Change in fair value of contingent consideration
|
(1,152
|
)
|
|
24
|
|
||
Provision for doubtful accounts, net
|
3,262
|
|
|
512
|
|
||
Deferred tax provision
|
169
|
|
|
—
|
|
||
Stock compensation
|
2,284
|
|
|
2,991
|
|
||
Other
|
122
|
|
|
2,508
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Trade accounts receivable
|
22,443
|
|
|
(25,004
|
)
|
||
Inventories
|
(133,811
|
)
|
|
(144,460
|
)
|
||
Prepaid expenses and other current assets
|
(674
|
)
|
|
(1,993
|
)
|
||
Income tax receivable
|
(20,458
|
)
|
|
(16,923
|
)
|
||
Other assets
|
592
|
|
|
(1,382
|
)
|
||
Trade accounts payable
|
142,136
|
|
|
141,117
|
|
||
Accrued expenses
|
(7,757
|
)
|
|
1,812
|
|
||
Income taxes payable
|
(1,890
|
)
|
|
1,019
|
|
||
Long-term liabilities
|
3,136
|
|
|
751
|
|
||
Net cash used in operating activities
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(27,020
|
)
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|
(64,959
|
)
|
||
Cash flows from investing activities:
|
|
|
|
|
|
||
Purchases of property and equipment
|
(18,755
|
)
|
|
(18,734
|
)
|
||
Acquisition of tangible and intangible assets
|
(4,700
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(23,455
|
)
|
|
(18,734
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
|
||
Cash paid for shares withheld for taxes
|
(198
|
)
|
|
(73
|
)
|
||
Excess tax benefit from stock compensation
|
9
|
|
|
14
|
|
||
Cash paid for repurchases of common stock
|
(45,407
|
)
|
|
—
|
|
||
Contingent consideration paid
|
—
|
|
|
(115
|
)
|
||
Proceeds from issuance of short-term borrowings
|
38,000
|
|
|
—
|
|
||
Repayments of short-term borrowings
|
—
|
|
|
(3,458
|
)
|
||
Repayment of mortgage principal
|
(119
|
)
|
|
—
|
|
||
Net cash used in financing activities
|
(7,715
|
)
|
|
(3,632
|
)
|
||
|
|
|
|
||||
Effect of exchange rates on cash
|
1,791
|
|
|
463
|
|
||
Net change in cash and cash equivalents
|
(56,399
|
)
|
|
(86,862
|
)
|
||
Cash and cash equivalents at beginning of period
|
225,143
|
|
|
245,088
|
|
||
Cash and cash equivalents at end of period
|
$
|
168,744
|
|
|
$
|
158,226
|
|
|
Three Months Ended
June 30, |
||||||
|
2015
|
|
2014
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid during the period for:
|
|
|
|
||||
Income taxes
|
$
|
4,012
|
|
|
$
|
2,267
|
|
Interest
|
$
|
185
|
|
|
$
|
290
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
||
Accruals for purchases of property and equipment
|
$
|
1,217
|
|
|
$
|
264
|
|
Accruals for asset retirement obligations
|
$
|
154
|
|
|
$
|
146
|
|
Accruals for shares withheld for taxes
|
$
|
57
|
|
|
$
|
—
|
|
|
Goodwill
|
|
Other
Intangible
Assets, Net
|
||||
Balance at March 31, 2015
|
$
|
127,934
|
|
|
$
|
87,743
|
|
Purchase of intangible assets
|
—
|
|
|
3,800
|
|
||
Amortization expense
|
—
|
|
|
(1,938
|
)
|
||
Changes in foreign currency exchange rates
|
—
|
|
|
536
|
|
||
Balance at June 30, 2015
|
$
|
127,934
|
|
|
$
|
90,141
|
|
|
June 30,
2015 |
|
March 31,
2015 |
||||
UGG brand
|
$
|
6,101
|
|
|
$
|
6,101
|
|
Sanuk brand
|
113,944
|
|
|
113,944
|
|
||
Other brands
|
7,889
|
|
|
7,889
|
|
||
Total
|
$
|
127,934
|
|
|
$
|
127,934
|
|
•
|
Level 3: Unobservable inputs in which little or no market activity exists, therefore requiring the reporting entity to develop its own assumptions.
|
|
Fair value at June 30,
|
|
Fair Value Measurement Using
|
||||||||||||
|
2015
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets (liabilities) at fair value
|
|
|
|
|
|
|
|
|
|
|
|
||||
Nonqualified deferred compensation asset
|
$
|
7,026
|
|
|
$
|
7,026
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Nonqualified deferred compensation liability
|
$
|
(7,026
|
)
|
|
$
|
(7,026
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Designated derivatives assets
|
$
|
120
|
|
|
$
|
—
|
|
|
$
|
120
|
|
|
$
|
—
|
|
Designated derivatives liability
|
$
|
(2,909
|
)
|
|
$
|
—
|
|
|
$
|
(2,909
|
)
|
|
$
|
—
|
|
Contingent consideration for acquisition of business
|
$
|
(24,800
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(24,800
|
)
|
|
Fair value at March 31,
|
|
Fair Value Measurement Using
|
||||||||||||
|
2015
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets (liabilities) at fair value
|
|
|
|
|
|
|
|
|
|
|
|
||||
Nonqualified deferred compensation asset
|
$
|
5,581
|
|
|
$
|
5,581
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Nonqualified deferred compensation liability
|
$
|
(5,581
|
)
|
|
$
|
(5,581
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Designated derivatives liability
|
$
|
(487
|
)
|
|
$
|
—
|
|
|
$
|
(487
|
)
|
|
$
|
—
|
|
Contingent consideration for acquisition of business
|
$
|
(26,000
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(26,000
|
)
|
Balance at March 31, 2015
|
$
|
26,000
|
|
Change in fair value
|
(1,200
|
)
|
|
Balance at June 30, 2015
|
$
|
24,800
|
|
|
Retained Earnings
|
||
Balance at March 31, 2015
|
$
|
798,370
|
|
Net loss
|
(47,327
|
)
|
|
Repurchase of common stock
|
(45,401
|
)
|
|
Balance at June 30, 2015
|
$
|
705,642
|
|
|
|
Three Months Ended
June 30, |
||
|
|
2015
|
|
2014
|
Derivatives in designated cash flow hedging relationships
|
|
Foreign exchange contracts
|
|
Foreign exchange contracts
|
Amount of loss recognized in OCI on derivative (effective portion)
|
|
$(2,353)
|
|
$(823)
|
Location of gain (loss) reclassified from accumulated OCI into income (effective portion)
|
|
Net Sales
|
|
Net Sales
|
Amount of gain (loss) reclassified from accumulated OCI into income (effective portion)
|
|
$—
|
|
$(13)
|
Location of amount excluded from effectiveness testing
|
|
SG&A expenses
|
|
SG&A expenses
|
Amount of gain (loss) excluded from effectiveness testing
|
|
$52
|
|
$(35)
|
|
|
Three Months Ended
June 30, |
||
|
|
2015
|
|
2014
|
Derivatives not designated as hedging instruments
|
|
Foreign exchange contracts
|
|
Foreign exchange contracts
|
Location of gain (loss) recognized in income on derivatives
|
|
SG&A expenses
|
|
SG&A expenses
|
Amount of gain (loss) recognized in income on derivatives
|
|
$865
|
|
$(81)
|
|
June 30,
2015 |
|
March 31,
2015 |
||||
Unrealized loss on foreign currency hedging, net of tax
|
$
|
(1,772
|
)
|
|
$
|
(309
|
)
|
Cumulative foreign currency translation adjustment, net of tax
|
(17,393
|
)
|
|
(20,159
|
)
|
||
Accumulated other comprehensive loss
|
$
|
(19,165
|
)
|
|
$
|
(20,468
|
)
|
|
Three Months Ended
June 30, |
||||
|
2015
|
|
2014
|
||
Weighted-average shares used in basic computation
|
33,117,000
|
|
|
34,626,000
|
|
Dilutive effect of stock-based awards*
|
—
|
|
|
—
|
|
Weighted-average shares used for diluted computation
|
33,117,000
|
|
|
34,626,000
|
|
|
|
|
|
||
*Excluded NSUs
|
487,000
|
|
|
377,000
|
|
*Excluded restricted stock units (RSUs)
|
487,000
|
|
|
729,000
|
|
*Excluded outside director restricted stock awards (RSAs)
|
8,000
|
|
|
7,000
|
|
*Excluded stock appreciation rights (SARs)
|
700,000
|
|
|
730,000
|
|
|
Three Months Ended
June 30, |
||||||
|
2015
|
|
2014
|
||||
Net sales to external customers:
|
|
|
|
|
|
||
UGG wholesale
|
$
|
66,422
|
|
|
$
|
74,193
|
|
Teva wholesale
|
37,066
|
|
|
35,665
|
|
||
Sanuk wholesale
|
28,513
|
|
|
32,329
|
|
||
Other brands wholesale
|
21,385
|
|
|
11,825
|
|
||
Direct-to-Consumer
|
60,419
|
|
|
57,457
|
|
||
|
$
|
213,805
|
|
|
$
|
211,469
|
|
Income (loss) from operations:
|
|
|
|
|
|
||
UGG wholesale
|
$
|
(3,380
|
)
|
|
$
|
2,693
|
|
Teva wholesale
|
5,874
|
|
|
4,782
|
|
||
Sanuk wholesale
|
5,348
|
|
|
6,905
|
|
||
Other brands wholesale
|
(4,000
|
)
|
|
(4,011
|
)
|
||
Direct-to-Consumer
|
(15,205
|
)
|
|
(15,042
|
)
|
||
Unallocated overhead costs
|
(52,345
|
)
|
|
(45,809
|
)
|
||
|
$
|
(63,708
|
)
|
|
$
|
(50,482
|
)
|
|
June 30,
2015 |
|
March 31,
2015 |
||||
Total assets for reportable segments:
|
|
|
|
||||
UGG wholesale
|
$
|
334,392
|
|
|
$
|
194,720
|
|
Teva wholesale
|
63,805
|
|
|
77,423
|
|
||
Sanuk wholesale
|
208,035
|
|
|
224,974
|
|
||
Other brands wholesale
|
59,098
|
|
|
53,634
|
|
||
Direct-to-Consumer
|
141,877
|
|
|
147,423
|
|
||
|
$
|
807,207
|
|
|
$
|
698,174
|
|
|
June 30,
2015 |
|
March 31,
2015 |
||||
Total assets for reportable segments
|
$
|
807,207
|
|
|
$
|
698,174
|
|
Unallocated cash and cash equivalents
|
168,744
|
|
|
225,143
|
|
||
Unallocated deferred tax assets
|
29,805
|
|
|
29,083
|
|
||
Other unallocated corporate assets
|
247,742
|
|
|
217,533
|
|
||
Consolidated total assets
|
$
|
1,253,498
|
|
|
$
|
1,169,933
|
|
|
June 30,
2015 |
|
March 31,
2015 |
||||
US
|
$
|
205,721
|
|
|
$
|
196,513
|
|
All other countries*
|
33,660
|
|
|
35,804
|
|
||
Total
|
$
|
239,381
|
|
|
$
|
232,317
|
|
|
June 30,
2015 |
|
March 31,
2015 |
||||
Money market fund accounts
|
$
|
110,895
|
|
|
$
|
127,900
|
|
Cash
|
57,849
|
|
|
97,243
|
|
||
Total cash and cash equivalents
|
$
|
168,744
|
|
|
$
|
225,143
|
|
•
|
our global business, growth, operating, investing, and financing strategies;
|
•
|
our product offerings, distribution channel, and geographic mix;
|
•
|
the success of new products, brands, and growth initiatives;
|
•
|
the impact of seasonality on our operations;
|
•
|
expectations regarding our net sales and earnings growth and other financial metrics;
|
•
|
our development of worldwide distribution channels;
|
•
|
trends affecting our financial condition, results of operations, or cash flows;
|
•
|
our expectations for expansion of our Direct-to-Consumer capabilities;
|
•
|
information security and privacy of customer, employee or company information;
|
•
|
overall global economic trends;
|
•
|
reliability of overseas factory production and storage; and
|
•
|
the availability and cost of raw materials.
|
•
|
UGG®: Premier brand in luxurious comfort footwear, handbags, apparel, home and cold weather accessories;
|
•
|
Teva®: Born from the outdoors, active lifestyle footwear for the adventurous spirit; and
|
•
|
Sanuk®: Innovative action sport footwear brand rooted in the surf community.
|
•
|
Sales of our products are highly seasonal and are sensitive to weather conditions, which are beyond our control. Even though we are creating more year-round styles for our brands, the effect of favorable or unfavorable weather on sales can be significant.
|
•
|
Continuing uncertainty surrounding US and global economic conditions has adversely impacted businesses worldwide. Some of our customers have been, and more may be, adversely affected, which in turn has, and may continue to, adversely impact our financial results.
|
•
|
The sheepskin used in certain UGG products is in high demand and limited supply, and there have been significant fluctuations in the price of sheepskin over the years as the demand from competitors for this material has changed.
|
•
|
Our use of UGGpure
TM
, real wool woven into a durable backing used as an alternative to table grade sheepskin, in select products, primarily in linings and foot beds, continues to grow.
|
•
|
The markets for casual, outdoor, and athletic footwear have grown significantly during the last decade. We believe this growth is a result of the trend toward casual dress in the workplace, increasingly active outdoor lifestyles, and a growing emphasis on comfort.
|
•
|
Consumers are more often seeking footwear designed to address a broader array of activities with the same quality, comfort, and high performance attributes they have come to expect from traditional athletic footwear.
|
•
|
Consumers have narrowed their footwear product breadth, focusing on brands with a rich heritage and authenticity as market category creators and leaders.
|
•
|
Consumers have become increasingly focused on luxury and comfort, seeking out products and brands that are fashionable while still comfortable.
|
•
|
There is an emerging sustainable lifestyle movement happening all around the world, and consumers are demanding that brands and companies become more environmentally and socially responsible.
|
•
|
Consumers are following a trend of buy now, wear now. This trend entails the consumer waiting to purchase shoes until they will actually wear them, contrasted with a tendency in the past to purchase shoes they did not plan to wear until later.
|
•
|
High consumer brand loyalty, due to over 36 years of delivering quality and luxuriously comfortable UGG footwear;
|
•
|
Continued exploration of opportunities in new product categories and styles, including those beyond footwear such as loungewear, handbags, cold-weather accessories and a new home offering;
|
•
|
A more robust footwear offering, including transitional products that bridge the seasons between spring and fall;
|
•
|
Expanded slipper category showing incremental growth with added styles for women, men and children;
|
•
|
Growing DTC platform and enhanced Omni-Channel capabilities that enable us to increasingly engage existing and prospective consumers in a more connected environment to introduce our evolving product lines;
|
•
|
Product customization with our UGG by You program allows for deeper connection with brand and products;
|
•
|
Focus on mobile consumers with responsive website design, providing shoppers access to the brand from their mobile device;
|
•
|
Year-round holistic paid advertising approach for women, men and children in targeted digital, high-end print, OOH and across multiple social media platforms;
|
•
|
Holiday and winter focused advertising campaign to drive important seasonal sales;
|
•
|
Continued creation of targeted UGG for Men campaigns;
|
•
|
Targeted DTC marketing to existing and prospective consumers through integrated outreach including email blasts, interactive site design and search engine optimization based content, continued partnership with high-end retailers such as Nordstrom, Dillard's and Bloomingdales, and continued expansion of worldwide retail through new UGG stores;
|
•
|
Expanded product assortments from existing accounts;
|
•
|
Adoption by high-profile celebrities as a favored footwear brand;
|
•
|
Continued media attention that has enabled us to introduce the brand to consumers much faster than we would have otherwise been able to; and
|
•
|
Increased exposure to the brand driven by our concept stores that showcase all of our product offerings.
|
|
FY 2016
|
||||||||
|
Quarter Ended
June 30, 2015 |
|
Quarter Ending
September 30, 2015 |
|
Quarter Ending
December 31, 2015 |
|
Quarter Ending March 31, 2016
|
||
Net sales
|
$
|
213,805
|
|
|
|
|
|
|
|
Loss from operations
|
$
|
(63,708
|
)
|
|
|
|
|
|
|
|
FY 2015
|
||||||||||||||
|
Quarter Ended
June 30, 2014 |
|
Quarter Ended
September 30, 2014 |
|
Quarter Ended
December 31, 2014 |
|
Quarter Ended
March 31, 2015 |
||||||||
Net sales
|
$
|
211,469
|
|
|
$
|
480,273
|
|
|
$
|
784,678
|
|
|
$
|
340,637
|
|
Income (loss) from operations
|
$
|
(50,482
|
)
|
|
$
|
59,583
|
|
|
$
|
214,581
|
|
|
$
|
737
|
|
|
Three Months Ended June 30,
|
|||||||||||||||||||
|
2015
|
|
2014
|
|
Change
|
|||||||||||||||
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|||||||||
Net sales
|
$
|
213,805
|
|
|
100.0
|
%
|
|
$
|
211,469
|
|
|
100.0
|
%
|
|
$
|
2,336
|
|
|
1.1
|
%
|
Cost of sales
|
127,209
|
|
|
59.5
|
|
|
124,697
|
|
|
59.0
|
|
|
2,512
|
|
|
2.0
|
|
|||
Gross profit
|
86,596
|
|
|
40.5
|
|
|
86,772
|
|
|
41.0
|
|
|
(176
|
)
|
|
(0.2
|
)
|
|||
Selling, general and administrative expenses
|
150,304
|
|
|
70.3
|
|
|
137,254
|
|
|
64.9
|
|
|
13,050
|
|
|
9.5
|
|
|||
Loss from operations
|
(63,708
|
)
|
|
(29.8
|
)
|
|
(50,482
|
)
|
|
(23.9
|
)
|
|
(13,226
|
)
|
|
(26.2
|
)
|
|||
Other expenses, net
|
974
|
|
|
0.4
|
|
|
288
|
|
|
0.1
|
|
|
686
|
|
|
238.2
|
|
|||
Loss before income taxes
|
(64,682
|
)
|
|
(30.2
|
)
|
|
(50,770
|
)
|
|
(24.0
|
)
|
|
(13,912
|
)
|
|
(27.4
|
)
|
|||
Income tax benefit
|
(17,355
|
)
|
|
(8.1
|
)
|
|
(13,708
|
)
|
|
(6.5
|
)
|
|
(3,647
|
)
|
|
(26.6
|
)
|
|||
Net loss
|
$
|
(47,327
|
)
|
|
(22.1
|
)%
|
|
$
|
(37,062
|
)
|
|
(17.5
|
)%
|
|
$
|
(10,265
|
)
|
|
(27.7
|
)%
|
|
Three Months Ended June 30,
|
|||||||||||||
|
|
|
|
|
Change
|
|||||||||
|
2015
|
|
2014
|
|
Amount
|
|
%
|
|||||||
Net sales by location:
|
|
|
|
|
|
|
|
|
|
|
|
|||
US
|
$
|
134,474
|
|
|
$
|
132,252
|
|
|
$
|
2,222
|
|
|
1.7
|
%
|
International
|
79,331
|
|
|
79,217
|
|
|
114
|
|
|
0.1
|
|
|||
Total
|
$
|
213,805
|
|
|
$
|
211,469
|
|
|
$
|
2,336
|
|
|
1.1
|
%
|
Net sales by brand and channel:
|
|
|
|
|
|
|
|
|
|
|
|
|||
UGG:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Wholesale
|
$
|
66,422
|
|
|
$
|
74,193
|
|
|
$
|
(7,771
|
)
|
|
(10.5
|
)%
|
Direct-to-Consumer
|
48,073
|
|
|
49,148
|
|
|
(1,075
|
)
|
|
(2.2
|
)
|
|||
Total
|
114,495
|
|
|
123,341
|
|
|
(8,846
|
)
|
|
(7.2
|
)
|
|||
Teva:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Wholesale
|
37,066
|
|
|
35,665
|
|
|
1,401
|
|
|
3.9
|
|
|||
Direct-to-Consumer
|
4,869
|
|
|
3,594
|
|
|
1,275
|
|
|
35.5
|
|
|||
Total
|
41,935
|
|
|
39,259
|
|
|
2,676
|
|
|
6.8
|
|
|||
Sanuk:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Wholesale
|
28,513
|
|
|
32,329
|
|
|
(3,816
|
)
|
|
(11.8
|
)
|
|||
Direct-to-Consumer
|
4,942
|
|
|
3,651
|
|
|
1,291
|
|
|
35.4
|
|
|||
Total
|
33,455
|
|
|
35,980
|
|
|
(2,525
|
)
|
|
(7.0
|
)
|
|||
Other brands:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Wholesale
|
21,385
|
|
|
11,825
|
|
|
9,560
|
|
|
80.8
|
|
|||
Direct-to-Consumer
|
2,535
|
|
|
1,064
|
|
|
1,471
|
|
|
138.3
|
|
|||
Total
|
23,920
|
|
|
12,889
|
|
|
11,031
|
|
|
85.6
|
|
|||
Total
|
$
|
213,805
|
|
|
$
|
211,469
|
|
|
$
|
2,336
|
|
|
1.1
|
%
|
|
|
|
|
|
|
|
|
|||||||
Direct-to-Consumer
|
$
|
60,419
|
|
|
$
|
57,457
|
|
|
$
|
2,962
|
|
|
5.2
|
%
|
•
|
increased expenses of approximately $4,000 for marketing and promotions, largely related to the Hoka and UGG brands;
|
•
|
increased US distribution center costs of approximately $3,000, largely driven by beginning operations at our new distribution center in Moreno Valley;
|
•
|
increased DTC costs of approximately $3,000, largely related to new retail stores opened subsequent to
June 30, 2014
; and
|
•
|
an increase in our accounts receivable allowances of approximately $3,000, reflecting our ongoing assessments of credit risks.
|
|
Three Months Ended June 30,
|
|||||||||||||
|
|
|
|
|
Change
|
|||||||||
|
2015
|
|
2014
|
|
Amount
|
|
%
|
|||||||
UGG wholesale
|
$
|
(3,380
|
)
|
|
$
|
2,693
|
|
|
$
|
(6,073
|
)
|
|
(225.5
|
)%
|
Teva wholesale
|
5,874
|
|
|
4,782
|
|
|
1,092
|
|
|
22.8
|
|
|||
Sanuk wholesale
|
5,348
|
|
|
6,905
|
|
|
(1,557
|
)
|
|
(22.5
|
)
|
|||
Other brands wholesale
|
(4,000
|
)
|
|
(4,011
|
)
|
|
11
|
|
|
0.3
|
|
|||
Direct-to-Consumer
|
(15,205
|
)
|
|
(15,042
|
)
|
|
(163
|
)
|
|
(1.1
|
)
|
|||
Unallocated overhead costs
|
(52,345
|
)
|
|
(45,809
|
)
|
|
(6,536
|
)
|
|
(14.3
|
)
|
|||
Total
|
$
|
(63,708
|
)
|
|
$
|
(50,482
|
)
|
|
$
|
(13,226
|
)
|
|
(26.2
|
)%
|
|
Three Months Ended
June 30, |
||||||
|
2015
|
|
2014
|
||||
Income tax benefit
|
$
|
(17,355
|
)
|
|
$
|
(13,708
|
)
|
Effective income tax rate
|
26.8
|
%
|
|
27.0
|
%
|
|
Three Months Ended June 30,
|
|||||||||||||
|
|
|
|
|
Change
|
|||||||||
|
2015
|
|
2014
|
|
Amount
|
|
%
|
|||||||
Net cash used in operating activities
|
$
|
(27,020
|
)
|
|
$
|
(64,959
|
)
|
|
$
|
37,939
|
|
|
58.4
|
%
|
Net cash used in investing activities
|
$
|
(23,455
|
)
|
|
$
|
(18,734
|
)
|
|
$
|
(4,721
|
)
|
|
(25.2
|
)%
|
Net cash used in financing activities
|
$
|
(7,715
|
)
|
|
$
|
(3,632
|
)
|
|
$
|
(4,083
|
)
|
|
(112.4
|
)%
|
Exhibit
Number
|
|
Description of Exhibit
|
*10.1
|
|
Management Incentive Plan
|
*10.2
|
|
2016 Non-Vested Stock Unit (NSU) Award Agreement
|
*31.1
|
|
Certification of the Chief Executive Officer pursuant to Rule 13A-14(a) under the Exchange Act, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
*31.2
|
|
Certification of the Chief Financial Officer pursuant to Rule 13A-14(a) under the Exchange Act, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
**32.1
|
|
Certification pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
*101.1
|
|
The following materials from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of June 30, 2015 and March 31, 2015; (ii) Condensed Consolidated Statements of Comprehensive Loss for the three months ended June 30, 2015 and 2014; (iii) Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2015 and 2014, and (iv) Notes to Condensed Consolidated Financial Statements.
|
*
|
|
Filed herewith.
|
|
**
|
|
Furnished herewith.
|
|
|
|
Deckers Outdoor Corporation
|
|
|
|
|
|
|
Date:
|
August 10, 2015
|
/s/ Thomas A. George
|
|
|
Thomas A. George
|
|
|
Chief Financial Officer
|
Pursuant to Which Incentive Plan
|
As set forth in the
Schedule
for each Plan Year
|
Plan Effective Date
|
As set forth in the
Schedule
for each Plan Year
|
Plan Period
|
As set forth in the
Schedule
for each Plan Year
|
Anticipated Payment Determination Date
|
As set forth in the
Schedule
for each Plan Year
|
Purpose of Plan
|
The purpose of the Plan is to align the cash incentive compensation that may be earned by certain Company employees with the Company’s achievement of business and financial objectives that the Compensation Committee or Management, as appropriate, believes will assist the Company in achieving its business and strategic objectives, including, but not limited to, driving profitability, increasing cash flow and enhancing operational effectiveness.
|
Section 16 Officers
And Other Employees
|
The Compensation Committee shall make all determinations under this Plan for the Company’s Section 16 Officers and employees who are or may be subject to Section 162(m). The Compensation Committee delegates to the CEO or his designees (“Management”) all determinations for all other employees under this Plan. To the extent that Management selects performance goals for employees that are the same goals as established by the Compensation Committee for Section 16 Officers, Management shall use the performance metric values as set forth by the Compensation Committee. Furthermore, any performance goals selected by Management shall be based on the Board-approved budget for the relevant fiscal year.
|
Eligibility as Participant
|
Deckers’ and its affiliates’ employees with eligible job titles as set forth in the
Schedule
for each Plan Year are generally eligible to participate in the Plan (each such employee, a “Participant”); provided, however, that other than employees who are or may be subject to Section 162(m), Management shall have the discretion to designate all non-Section 16 Officer Participants as it deems appropriate.
A Participant will be eligible to receive a cash incentive payment under the Plan if, throughout the Plan Period and until the date the cash incentive payments are actually made, the Participant:
1.
Continuously serves as a full-time employee of the Company or its affiliates. Continuous employment does not include unpaid leaves of absence unless the leave is required by law or approved in writing by the Company or its affiliates. If, prior to the date the cash incentive payments are actually made, Participant ceases to serve as a full-time employee of the Company or its affiliates due to death, retirement or “Disability” (as defined in the relevant incentive plan), payment shall be as set forth in the
Schedule
for each Plan Year.
2.
Refrains from engaging, directly or indirectly, in any activity that competes with Deckers’ business (as conducted at any point during the Plan Period), as determined by the Compensation Committee or Management, as appropriate;
3.
Refrains from engaging in any activity that could be construed as misconduct, as determined by the Compensation Committee or Management, as appropriate;
4.
Maintains an acceptable employee performance rating, as determined by the Participant’s direct supervisor (or, in the case of the Chief Executive Officer, the Board of Directors); and
5.
A Participant shall not be eligible to participate in the Plan if the Participant is eligible to participate in another Deckers non-equity incentive plan, as determined by the Compensation Committee or Management, as appropriate.
If a Deckers employee is hired, promoted, or transferred from an ineligible job to an eligible job (as determined by reference to the Schedule) on or before the last day of Deckers’ third fiscal quarter, the employee is eligible to become a Participant, subject to compliance with Section 162(m) for employees who are or may be subject thereto. A Deckers’ employee who is initially hired, promoted or transferred to an eligible job after that date, or at any time during Deckers’ fourth fiscal quarter, is not eligible to become a Participant, unless otherwise determined by the Compensation Committee or Management, as appropriate. See the section entitled “Proration of Cash Incentive Payments” for additional information.
The Compensation Committee or Management, as appropriate, reserves the right to make such changes to the definition of Participant, as well as to the criteria that must be met for a Participant to be eligible to receive a cash incentive payment under the Plan, as it deems necessary or appropriate.
|
Target Cash Incentive Payments
|
No Participant shall be entitled to receive a cash incentive payment under the Plan of more than the amount set forth in the
Schedule
with respect to the Plan Period, unless otherwise determined by the Compensation Committee or Management, as appropriate. The target cash incentive payment that may be paid to each Participant under the Plan shall be expressed as a percentage of the Participant’s salary as of the last day of February of the Plan Period, or other reasonable metric, which shall be set by the Compensation Committee for Section 16 Officers and set forth on the
Schedule
and which shall be set by Management for all other Participants. The method by which Management will communicate the calculation of target incentive payments to other Participants shall be set forth on the
Schedule
.
|
Determination of Cash Incentive Payments
|
The actual incentive payment to be paid to each Participant under the Plan shall be determined by reference to Deckers’ and Participant’s achievement of specified business and financial measures for the Plan Period. The business and financial performance measures, as well as the targeted amounts for such measures, shall be established by the Compensation Committee for the Section 16 Officers and employees who are or may be subject to Section 162(m) at the beginning of the Plan Period, and in no event later than 90 days following the commencement of the Plan Period.
Each business and financial measure shall be assigned a percentage weighting that shall be used to determine the portion of the target cash incentive payment that can be earned as a result of Deckers’ and Participant’s achievement relative to that measure. The performance relative to each business or financial measure must meet or exceed the threshold level in order for any cash incentive payment to be made.
The business and financial performance measures applicable to the Plan Period, along with the respective weightings assigned to each, for the Section 16 Officers are set forth on the
Schedule
. The method for how Management will communicate the business and financial performance measures applicable to the Plan Period, along with the respective weightings assigned to each, for other Participants shall be set forth in the
Schedule
.
|
Proration of Cash Incentive Payments
|
Any cash incentive payment a Participant may be eligible to receive under the Plan shall be prorated based upon the total number of days in the Plan Period actually worked by the Participant in an eligible job relative to the number of work days in the Plan Period. For purposes of clarity, this “Proration of Cash Incentive Payments” section only applies to those Participants who enter an eligible job after the Plan Period has begun.
Employees who become Participants for the first time in the fiscal year as a new hire, transfer, or promotion will have their cash incentive payment pro-rated to reflect the effective date of their event; provided that, in order to be eligible to be a Participant, such event must occur on or before the last day of the third fiscal quarter, subject to compliance with Section 162(m) for employees who are or may be subject thereto. Participants who are initially hired, promoted or transferred into an eligible job after that date, or during the fiscal fourth quarter, are not eligible to receive any incentive payout for the Plan Period.
A Participant’s cash incentive payment amount and applicable business and financial performance measures are effective and final on the date as set forth in the
Schedule
, and may be adjusted at the discretion of the Compensation Committee or Management, as appropriate subject to compliance with Section 162(m) for employees who are or may be subject thereto.
|
Administration of Cash Incentive Payments
|
Cash incentive payments shall be determined by the Compensation Committee for the Company’s Section 16 Officers and employees who are or may be subject to Section 162(m) or Management for all other employees under this Plan, by reference to Deckers’ audited financial results for the Plan Period; provided that in no event shall the cash incentive payments be made later than March 15 of the year following the year in which the cash incentive payment is earned.
The following will apply to the Plan and its administration:
•
In the United States, cash incentive payments shall be taxed at the flat IRS rate, plus applicable state and local rates for cash incentive payments unless otherwise agreed in writing between the Participant and the CHRO and CFO. Participants who contribute to a 401(k) or an Executive Nonqualified Deferred Compensation Plan will have contributions deducted from the Plan payouts based on their valid current deferral elections (subject to IRS and Plan limitations).
•
The Plan is intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, for the employees who are or may be subject to Section 162(m) and shall be administered and interpreted in accordance therewith. The Plan is intended to The Plan is intended to satisfy the short-term deferral exception under Section 409A and shall be administered and interpreted in accordance therewith.
•
For purposes of the Executive Nonqualified Deferred Compensation Plan, a separate bonus deferral election must have been made on or before the date the Participant becomes eligible to participate in the Plan for the applicable Plan Year unless otherwise agreed in writing between the Participant and the CHRO and CFO.
•
For all other countries, local regulations and plan provisions apply.
•
The Plan shall be subject to and administered in accordance with the terms and conditions of the relevant incentive plan set forth in the
Schedule
for each Plan Year.
•
In the event of any conflict between the terms and conditions of the Plan, the
Schedule
for any Plan Year or the relevant incentive plan set forth in the
Schedule
for any Plan Year, the terms and conditions of the relevant incentive plan shall control. In the event of any conflict between the terms and conditions of the Plan and the
Schedule
for any Plan Year, the terms and conditions of the Plan shall control.
The Compensation Committee or Management, as appropriate, reserves the right to reduce (including to zero) the amount of a cash incentive payment at its sole discretion.
|
Change of Control and Severance Agreements
|
To the extent the terms of this Plan conflict with any Participant’s Change of Control and Severance Agreement, the terms of the Change of Control and Severance Agreement shall control.
|
•
|
Upon Death or Disability
During the Plan Period
:
___________
|
•
|
Upon Retirement
During the Plan Period
:
___________
|
•
|
Upon Death, Disability or Retirement After the Plan Period and Before the Date the Cash Incentive Payments are Actually Made: ___________
|
Section 16 Officer
|
Target Percentage of Salary
|
|
|
|
|
|
|
|
|
|
|
Name of Awardee:
|
|
Total Number of Stock Units Granted:
|
|
Grant Date:
|
|
|
|
Vesting Schedule:
|
March 15, 2017 33.33%
March 15, 2018 33.33%
March 15, 2019 33.34%
|
Performance Period:
|
Fiscal Year Ending March 31, 2016 (the “
Performance Period
”)
|
Performance Criteria:
|
The percentage of Nonvested Stock Units that may vest will be based on the value of diluted 2016 EPS as set forth in
Exhibit A
attached hereto (the “
Performance Criteria
”).
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Deckers Outdoor Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
August 10, 2015
|
/s/ Angel R. Martinez
|
|
|
Angel R. Martinez
|
|
|
Chief Executive Officer
|
|
|
Deckers Outdoor Corporation
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Deckers Outdoor Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
August 10, 2015
|
/s/ Thomas A. George
|
|
|
Thomas A. George
|
|
|
Chief Financial Officer
|
|
|
Deckers Outdoor Corporation
|
|
|
(Principal Financial and Accounting Officer)
|
Very truly yours,
|
|
|
|
|
|
|
|
|
Angel R. Martinez
|
|
|
|
|
|
/s/ Angel R. Martinez
|
|
|
Chief Executive Officer (Principal Executive Officer)
|
|
|
|
|
|
|
|
|
Thomas A. George
|
|
|
|
|
|
/s/ Thomas A. George
|
|
|
Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
|
Dated:
|
August 10, 2015
|
|