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Delaware
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95-3015862
|
(State of incorporation)
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(I.R.S. Employer Identification No.)
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Large accelerated filer
x
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Accelerated filer
o
|
|
|
Non-accelerated filer
o
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(Do not check if a smaller reporting company)
|
|
|
|
Smaller reporting company
o
|
|
|
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Emerging growth company
o
|
|
•
|
the results of and costs associated with our Savings Plan (as defined herein) and ongoing restructuring plan, including our retail store fleet optimization and office consolidations;
|
•
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our global business, growth, operating, investing, and financing strategies;
|
•
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our product offerings, distribution channels, and geographic mix;
|
•
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consumer preferences with respect to new brands and products;
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•
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the purchasing behavior and buying patterns of retail consumers;
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•
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the impact of seasonality and weather on our operations;
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•
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our review of a broad range of strategic alternatives;
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•
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expectations regarding our net sales and earnings growth and other financial metrics;
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•
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our development of worldwide distribution channels;
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•
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purchasing behavior of wholesale customers, including timing of orders and management of inventory;
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•
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trends affecting our financial condition, results of operations, capital expenditures, liquidity or cash flows;
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•
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expectations for expansion of Direct-to-Consumer capabilities, primarily in our E-Commerce business;
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•
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overall global economic trends, including foreign currency exchange rate fluctuations;
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•
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reliability of overseas factory production and storage and availability and cost of raw materials;
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•
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the value of goodwill and other intangible assets, and future write-downs or impairment charges;
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•
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changes impacting our tax liability and effective tax rates, including as a result of changes in tax laws or treaties, foreign income or loss, and the realization of net deferred tax assets;
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•
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potential impacts of our ongoing operational systems upgrades and costs associated with our business transformation project implementation;
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•
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commitments and contingencies, including purchase obligations for product and sheepskin; and
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•
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the impact of recent accounting pronouncements.
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June 30, 2017
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|
March 31, 2017
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||||
ASSETS
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(UNAUDITED)
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
279,940
|
|
|
$
|
291,764
|
|
Trade accounts receivable, net of allowances ($27,385 and $32,354 as of June 30, 2017 and March 31, 2017, respectively)
|
108,895
|
|
|
158,643
|
|
||
Inventories, net of reserves ($8,451 and $7,638 as of June 30, 2017 and March 31, 2017, respectively)
|
441,648
|
|
|
298,851
|
|
||
Prepaid expenses
|
18,544
|
|
|
15,996
|
|
||
Other current assets
|
16,961
|
|
|
30,781
|
|
||
Income tax receivable
|
37,392
|
|
|
24,786
|
|
||
Total current assets
|
903,380
|
|
|
820,821
|
|
||
Property and equipment, net of accumulated depreciation ($199,777 and $190,758 as of June 30, 2017 and March 31, 2017, respectively)
|
219,577
|
|
|
225,531
|
|
||
Goodwill
|
13,990
|
|
|
13,990
|
|
||
Other intangible assets, net of accumulated amortization ($56,810 and $54,361 as of June 30, 2017 and March 31, 2017, respectively)
|
63,503
|
|
|
65,138
|
|
||
Deferred tax assets
|
50,698
|
|
|
44,708
|
|
||
Other assets
|
21,710
|
|
|
21,592
|
|
||
Total assets
|
$
|
1,272,858
|
|
|
$
|
1,191,780
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Short-term borrowings
|
$
|
557
|
|
|
$
|
549
|
|
Trade accounts payable
|
229,519
|
|
|
95,893
|
|
||
Accrued payroll
|
22,195
|
|
|
22,608
|
|
||
Other accrued expenses
|
26,189
|
|
|
31,816
|
|
||
Income taxes payable
|
5,070
|
|
|
2,719
|
|
||
Value added tax payable
|
2,345
|
|
|
5,466
|
|
||
Total current liabilities
|
285,875
|
|
|
159,051
|
|
||
|
|
|
|
||||
Long-term liabilities:
|
|
|
|
||||
Mortgage payable
|
31,943
|
|
|
32,082
|
|
||
Income tax liability
|
8,932
|
|
|
13,216
|
|
||
Deferred rent obligations
|
17,992
|
|
|
18,433
|
|
||
Other long-term liabilities
|
14,442
|
|
|
14,743
|
|
||
Total long-term liabilities
|
73,309
|
|
|
78,474
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 7)
|
|
|
|
||||
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
||||
Common stock ($0.01 par value; 125,000 shares authorized; shares issued and outstanding of 31,999 and 31,987 as of June 30, 2017 and March 31, 2017, respectively)
|
320
|
|
|
320
|
|
||
Additional paid-in capital
|
163,194
|
|
|
160,797
|
|
||
Retained earnings
|
778,833
|
|
|
819,589
|
|
||
Accumulated other comprehensive loss
|
(28,673
|
)
|
|
(26,451
|
)
|
||
Total stockholders' equity
|
913,674
|
|
|
954,255
|
|
||
Total liabilities and stockholders' equity
|
$
|
1,272,858
|
|
|
$
|
1,191,780
|
|
|
Three Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Net sales
|
$
|
209,717
|
|
|
$
|
174,393
|
|
Cost of sales
|
119,092
|
|
|
98,141
|
|
||
Gross profit
|
90,625
|
|
|
76,252
|
|
||
Selling, general and administrative expenses
|
146,881
|
|
|
154,571
|
|
||
Loss from operations
|
(56,256
|
)
|
|
(78,319
|
)
|
||
Other expense (income), net:
|
|
|
|
||||
Interest income
|
(452
|
)
|
|
(204
|
)
|
||
Interest expense
|
1,007
|
|
|
1,435
|
|
||
Other income, net
|
(224
|
)
|
|
(669
|
)
|
||
Total other expense, net
|
331
|
|
|
562
|
|
||
Loss before income taxes
|
(56,587
|
)
|
|
(78,881
|
)
|
||
Income tax benefit
|
(14,466
|
)
|
|
(19,963
|
)
|
||
Net loss
|
(42,121
|
)
|
|
(58,918
|
)
|
||
Other comprehensive (loss) income, net of tax:
|
|
|
|
||||
Unrealized (loss) gain on foreign currency exchange rate hedges
|
(3,772
|
)
|
|
2,909
|
|
||
Foreign currency translation adjustment
|
1,550
|
|
|
3,699
|
|
||
Total other comprehensive (loss) income
|
(2,222
|
)
|
|
6,608
|
|
||
Comprehensive loss
|
$
|
(44,343
|
)
|
|
$
|
(52,310
|
)
|
|
|
|
|
||||
Net loss per share:
|
|
|
|
||||
Basic
|
$
|
(1.32
|
)
|
|
$
|
(1.84
|
)
|
Diluted
|
$
|
(1.32
|
)
|
|
$
|
(1.84
|
)
|
Weighted-average common shares outstanding:
|
|
|
|
||||
Basic
|
31,991
|
|
|
32,024
|
|
||
Diluted
|
31,991
|
|
|
32,024
|
|
|
Three Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(42,121
|
)
|
|
$
|
(58,918
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation, amortization and accretion
|
12,268
|
|
|
13,021
|
|
||
Provision for doubtful accounts, net
|
3,015
|
|
|
549
|
|
||
Deferred tax benefit
|
(2,932
|
)
|
|
(2,132
|
)
|
||
Stock-based compensation
|
2,704
|
|
|
2,070
|
|
||
Excess tax benefit from stock compensation
|
25
|
|
|
59
|
|
||
Loss on sale of assets
|
126
|
|
|
244
|
|
||
Impairment of long-lived assets
|
131
|
|
|
—
|
|
||
Restructuring costs
|
1,518
|
|
|
1,732
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Trade accounts receivable, net
|
46,733
|
|
|
56,655
|
|
||
Inventories, net
|
(142,797
|
)
|
|
(169,253
|
)
|
||
Prepaid expenses and other current assets
|
10,112
|
|
|
4,681
|
|
||
Income tax receivable
|
(8,218
|
)
|
|
(5,584
|
)
|
||
Other assets
|
(118
|
)
|
|
(556
|
)
|
||
Trade accounts payable
|
132,108
|
|
|
112,130
|
|
||
Accrued expenses
|
(13,238
|
)
|
|
6,050
|
|
||
Income taxes payable
|
(7,228
|
)
|
|
(584
|
)
|
||
Long-term liabilities
|
564
|
|
|
(3,498
|
)
|
||
Net cash used in operating activities
|
(7,348
|
)
|
|
(43,334
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment, net
|
(3,835
|
)
|
|
(20,114
|
)
|
||
Net cash used in investing activities
|
(3,835
|
)
|
|
(20,114
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from short-term borrowings
|
—
|
|
|
110,000
|
|
||
Repayments of short-term borrowings
|
—
|
|
|
(66,633
|
)
|
||
Cash paid for shares withheld for taxes
|
(893
|
)
|
|
(1,106
|
)
|
||
Contingent consideration paid
|
—
|
|
|
(19,784
|
)
|
||
Repayment of mortgage principal
|
(133
|
)
|
|
(125
|
)
|
||
Net cash (used in) provided by financing activities
|
(1,026
|
)
|
|
22,352
|
|
||
|
|
|
|
||||
Effect of foreign currency exchange rates on cash
|
385
|
|
|
(2,551
|
)
|
||
Net change in cash and cash equivalents
|
(11,824
|
)
|
|
(43,647
|
)
|
||
Cash and cash equivalents at beginning of period
|
291,764
|
|
|
245,956
|
|
||
Cash and cash equivalents at end of period
|
$
|
279,940
|
|
|
$
|
202,309
|
|
|
Three Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid (refunded) during the period for:
|
|
|
|
||||
Income taxes, net of refunds ($886
and
$15,220
as of June 30, 2017 and 2016, respectively)
|
$
|
2,266
|
|
|
$
|
(11,500
|
)
|
Interest
|
580
|
|
|
913
|
|
||
Non-cash investing and financing activities:
|
|
|
|
||||
Accrued for purchases of property and equipment
|
1,557
|
|
|
957
|
|
||
Accrued for asset retirement obligations
|
113
|
|
|
345
|
|
||
Accrued for shares withheld for taxes
|
—
|
|
|
321
|
|
•
|
The calculation of diluted weighted-average shares outstanding no longer includes excess tax benefits as assumed proceeds, which did not have a material impact on the Company’s calculation of diluted earnings per share.
|
•
|
Excess tax benefits and deficiencies were recorded as income tax benefits or expenses in the condensed consolidated statements of comprehensive loss for the
three months ended June 30, 2017
, rather than to additional paid-in capital in the condensed consolidated balance sheets for settlements of share-based payment awards occurring on or after April 1, 2017. The Company's income tax benefit or expense will continue to be impacted by fluctuations in the stock price between grant and vesting dates of its share-based payment awards.
|
•
|
A cumulative adjustment to retained earnings and non-current deferred tax assets for unrecognized excess tax benefits of
$1,365
was recorded on April 1, 2017 in the condensed consolidated balance sheet
as of June 30, 2017
.
|
•
|
The Company has made current and prior period reclassifications in the condensed consolidated statements of cash flows to present cash flows from excess tax benefits as cash flows provided by operating activities instead of the historical presentation as cash flows provided by financing activities.
|
•
|
The Company elected to continue to estimate forfeitures as a component of determining grant date fair value.
|
|
Lease termination costs
|
|
Severance costs
|
|
Termination of various contracts and other services
|
|
Total
|
||||||||
Balance as of March 31, 2017
|
$
|
4,572
|
|
|
$
|
2,555
|
|
|
$
|
3,953
|
|
|
$
|
11,080
|
|
Additional charges
|
—
|
|
|
—
|
|
|
1,518
|
|
|
1,518
|
|
||||
Paid in cash
|
(418
|
)
|
|
(2,052
|
)
|
|
(2,345
|
)
|
|
(4,815
|
)
|
||||
Balance as of June 30, 2017
|
$
|
4,154
|
|
|
$
|
503
|
|
|
$
|
3,126
|
|
|
$
|
7,783
|
|
|
Three Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Direct-to-Consumer
|
$
|
—
|
|
|
$
|
1,335
|
|
Unallocated overhead costs
|
1,518
|
|
|
397
|
|
||
Total restructuring charges
|
$
|
1,518
|
|
|
$
|
1,732
|
|
|
June 30, 2017
|
|
March 31, 2017
|
||||
Goodwill:
|
|
|
|
||||
UGG brand
|
$
|
6,101
|
|
|
$
|
6,101
|
|
Other brands
|
7,889
|
|
|
7,889
|
|
||
Total Goodwill
|
13,990
|
|
|
13,990
|
|
||
Other Intangible Assets:
|
|
|
|
||||
Indefinite-lived Intangible Assets
|
|
|
|
||||
Trademarks
|
15,454
|
|
|
15,454
|
|
||
Definite-lived Intangible Assets
|
|
|
|
||||
Trademarks
|
55,245
|
|
|
55,245
|
|
||
Other
|
49,614
|
|
|
48,800
|
|
||
Total gross carrying amount
|
104,859
|
|
|
104,045
|
|
||
Accumulated amortization
|
(56,810
|
)
|
|
(54,361
|
)
|
||
Net Definite-lived Intangible Assets
|
48,049
|
|
|
49,684
|
|
||
Total Other Intangible Assets
|
63,503
|
|
|
65,138
|
|
||
Total Goodwill and Other Intangible Assets
|
$
|
77,493
|
|
|
$
|
79,128
|
|
Balance, March 31, 2017
|
$
|
65,138
|
|
Amortization expense
|
(1,910
|
)
|
|
Foreign currency exchange rate fluctuations
|
275
|
|
|
Balance, June 30, 2017
|
$
|
63,503
|
|
•
|
Level 1: Quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2: Observable inputs other than quoted prices in active markets for identical assets and liabilities.
|
•
|
Level 3: Unobservable inputs in which little or no market activity exists, therefore requiring the reporting entity to develop its own assumptions.
|
|
Fair Value as of June 30, 2017
|
|
Measured Using
|
||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
Assets (liabilities) at fair value:
|
|
|
|
|
|
|
|
||||||||
Non-qualified deferred compensation asset
|
$
|
6,816
|
|
|
$
|
6,816
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-qualified deferred compensation liability
|
(4,206
|
)
|
|
(4,206
|
)
|
|
—
|
|
|
—
|
|
||||
Designated Derivative Contracts liability
|
(4,192
|
)
|
|
—
|
|
|
(4,192
|
)
|
|
—
|
|
||||
Non-Designated Derivative Contracts asset
|
204
|
|
|
—
|
|
|
204
|
|
|
—
|
|
||||
Non-Designated Derivative Contracts liability
|
(1,807
|
)
|
|
—
|
|
|
(1,807
|
)
|
|
—
|
|
|
Fair Value as of March 31, 2017
|
|
Measured Using
|
||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
Assets (liabilities) at fair value:
|
|
|
|
|
|
|
|
||||||||
Non-qualified deferred compensation asset
|
$
|
6,662
|
|
|
$
|
6,662
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-qualified deferred compensation liability
|
(4,140
|
)
|
|
(4,140
|
)
|
|
—
|
|
|
—
|
|
||||
Designated Derivative Contracts asset
|
1,365
|
|
|
—
|
|
|
1,365
|
|
|
—
|
|
Expected life (in years)
|
|
4.9
|
|
||
Expected volatility
|
|
38.73
|
%
|
||
Risk free interest rate
|
|
1.78
|
%
|
||
Dividend yield
|
|
—
|
%
|
||
Weighted-average exercise price
|
|
$
|
69.29
|
|
|
Weighted-average option value
|
|
$
|
25.03
|
|
|
Retained Earnings
|
||
Balance at March 31, 2017
|
$
|
819,589
|
|
Net loss
|
(42,121
|
)
|
|
Cumulative unrecognized excess tax benefit*
|
1,365
|
|
|
Balance at June 30, 2017
|
$
|
778,833
|
|
|
Designated Derivative Contracts
|
|
Non-Designated Derivative Contracts
|
Notional amount
|
$121,625
|
|
$33,819
|
Fair value recorded in other current assets
|
—
|
|
204
|
Fair value recorded in other current liabilities
|
(4,192)
|
|
(1,807)
|
|
Three Months Ended June 30,
|
||
|
2017
|
|
2016
|
Amount of (loss) gain recognized in other comprehensive (loss) income on derivative instruments (effective portion)
|
$(5,890)
|
|
$4,464
|
Location of amount reclassified from accumulated other comprehensive loss into income (effective portion)
|
Net Sales
|
|
Net Sales
|
Amount of loss reclassified from accumulated other comprehensive loss into income (effective portion)
|
$—
|
|
$(175)
|
Location of amount excluded from effectiveness testing
|
Selling, general and administrative expenses
|
|
Selling, general and administrative expenses
|
Amount of gain excluded from effectiveness testing
|
$333
|
|
$192
|
|
Three Months Ended June 30,
|
||
|
2017
|
|
2016
|
Location of amount recognized in income on derivative instruments
|
Selling, general and administrative expenses
|
|
Selling, general and administrative expenses
|
Amount of loss recognized in income on derivative instruments
|
$(1,603)
|
|
$(591)
|
|
June 30, 2017
|
|
March 31, 2017
|
||||
Unrealized (loss) gain on foreign currency exchange rate hedges, net of tax
|
$
|
(2,916
|
)
|
|
$
|
856
|
|
Cumulative foreign currency translation adjustment
|
(25,757
|
)
|
|
(27,307
|
)
|
||
Accumulated other comprehensive loss
|
$
|
(28,673
|
)
|
|
$
|
(26,451
|
)
|
|
Three Months Ended June 30,
|
||||
|
2017
|
|
2016
|
||
Weighted-average shares used in basic computation
|
31,991,000
|
|
|
32,024,000
|
|
Dilutive effect of stock-based awards and options
|
—
|
|
|
—
|
|
Weighted-average shares used for diluted computation
|
31,991,000
|
|
|
32,024,000
|
|
|
|
|
|
||
Excluded
*:
|
|
|
|
||
Annual RSUs and Annual PSUs
|
389,000
|
|
|
267,000
|
|
SARs
|
240,000
|
|
|
600,000
|
|
LTIP PSUs
|
269,000
|
|
|
396,000
|
|
LTIP NQSOs
|
397,000
|
|
|
—
|
|
Deferred non-employee director restricted stock awards
|
7,000
|
|
|
10,000
|
|
Employee Stock Purchase Plan
|
9,000
|
|
|
—
|
|
|
Three Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Net sales to external customers:
|
|
|
|
||||
UGG brand wholesale
|
$
|
63,273
|
|
|
$
|
45,901
|
|
Teva brand wholesale
|
32,123
|
|
|
29,525
|
|
||
Sanuk brand wholesale
|
22,220
|
|
|
22,303
|
|
||
Other brands wholesale
|
26,965
|
|
|
18,411
|
|
||
Direct-to-Consumer
|
65,136
|
|
|
58,253
|
|
||
|
$
|
209,717
|
|
|
$
|
174,393
|
|
Loss from operations:
|
|
|
|
||||
UGG brand wholesale
|
$
|
(1,021
|
)
|
|
$
|
(10,212
|
)
|
Teva brand wholesale
|
4,943
|
|
|
1,862
|
|
||
Sanuk brand wholesale
|
4,417
|
|
|
4,181
|
|
||
Other brands wholesale
|
1,026
|
|
|
(1,630
|
)
|
||
Direct-to-Consumer
|
(12,102
|
)
|
|
(19,419
|
)
|
||
Unallocated overhead costs
|
(53,519
|
)
|
|
(53,101
|
)
|
||
|
$
|
(56,256
|
)
|
|
$
|
(78,319
|
)
|
|
June 30, 2017
|
|
March 31, 2017
|
||||
Total assets from reportable operating segments
|
$
|
695,034
|
|
|
$
|
606,058
|
|
Unallocated cash and cash equivalents
|
279,940
|
|
|
291,764
|
|
||
Unallocated deferred tax assets
|
50,698
|
|
|
44,708
|
|
||
Other unallocated corporate assets
|
247,186
|
|
|
249,250
|
|
||
Consolidated total assets
|
$
|
1,272,858
|
|
|
$
|
1,191,780
|
|
|
June 30, 2017
|
|
March 31, 2017
|
||||
US
|
$
|
200,845
|
|
|
$
|
206,077
|
|
All other countries*
|
18,732
|
|
|
19,454
|
|
||
Total
|
$
|
219,577
|
|
|
$
|
225,531
|
|
|
June 30, 2017
|
|
March 31, 2017
|
||||
Money market fund accounts
|
$
|
234,635
|
|
|
$
|
198,992
|
|
Cash
|
45,305
|
|
|
92,772
|
|
||
Total cash and cash equivalents
|
$
|
279,940
|
|
|
$
|
291,764
|
|
•
|
Sales of our products are highly seasonal and are sensitive to weather conditions, which are beyond our control. Even though we continue to expand our product lines and create more year-round styles for our brands, the effect of favorable or unfavorable weather on our aggregate sales and operating results continue to be significant.
|
•
|
We believe there has been a meaningful shift in the way consumers shop for products and make purchasing decisions. In particular, brick and mortar retail stores are experiencing significant and prolonged decreases in consumer traffic as consumers continue to migrate to shopping online. This shift is impacting the performance of both our DTC business and of our wholesale customers.
|
•
|
In light of the shift in consumer shopping behavior, we are optimizing our brick and mortar retail footprint. In connection with store closures, we have been impacted by costs to exit lease agreements, retail store fixed asset impairments and other closure costs. We expect this trend to continue as we further evaluate and optimize our retail fleet.
|
•
|
We expect that our E-Commerce business will be a driver of long-term growth, although we expect the year-over-year growth rate will decline over time as the size of our E-Commerce business increases.
|
•
|
We believe consumers are buying product closer to the particular wearing occasion (buy now, wear now), which we believe tends to shorten the purchasing windows for weather-dependent product. Not only does this trend impact our DTC business, we believe it is also impacting the purchasing behavior of our large wholesale customers. In particular, these customers appear to be shortening their purchasing windows as a way to address the evolving behavior of retail consumers and to manage their own product inventory.
|
•
|
Foreign currency exchange rate fluctuations have significantly increased the value of the US dollar compared to most major foreign currencies over the past couple of years. While we seek to hedge some of the risks associated with foreign currency exchange rate fluctuations, these changes are largely outside of our control. We expect these changes will continue to impact the demand for our products and our operating results.
|
•
|
High consumer brand loyalty, due to delivering quality and luxuriously comfortable UGG footwear.
|
•
|
Evolution of our Classics business through the introduction of products such as the Classic Slim, the Classic Luxe, the Classic Street, and the Classic II.
|
•
|
Diversification of our UGG product lines, including women's spring and summer, men's, and lifestyle offerings. We believe that the evolution of the UGG brand and our strategy of product diversification will also help decrease our reliance on sheepskin.
|
•
|
Continued enhancement of our Omni-Channel and digital capabilities to enable us to better engage existing and prospective consumers and expose them to our brands.
|
|
Three Months Ended June 30,
|
|||||||||||||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|||||||||
Net sales
|
$
|
209,717
|
|
|
100.0
|
%
|
|
$
|
174,393
|
|
|
100.0
|
%
|
|
$
|
35,324
|
|
|
20.3
|
%
|
Cost of sales
|
119,092
|
|
|
56.8
|
|
|
98,141
|
|
|
56.3
|
|
|
(20,951
|
)
|
|
(21.3
|
)
|
|||
Gross profit
|
90,625
|
|
|
43.2
|
|
|
76,252
|
|
|
43.7
|
|
|
14,373
|
|
|
18.8
|
|
|||
Selling, general and administrative expenses
|
146,881
|
|
|
70.0
|
|
|
154,571
|
|
|
88.6
|
|
|
7,690
|
|
|
5.0
|
|
|||
Loss from operations
|
(56,256
|
)
|
|
(26.8
|
)
|
|
(78,319
|
)
|
|
(44.9
|
)
|
|
22,063
|
|
|
28.2
|
|
|||
Other expense, net
|
331
|
|
|
0.2
|
|
|
562
|
|
|
0.3
|
|
|
231
|
|
|
41.1
|
|
|||
Loss before income taxes
|
(56,587
|
)
|
|
(27.0
|
)
|
|
(78,881
|
)
|
|
(45.2
|
)
|
|
22,294
|
|
|
28.3
|
|
|||
Income tax benefit
|
(14,466
|
)
|
|
(6.9
|
)
|
|
(19,963
|
)
|
|
(11.4
|
)
|
|
(5,497
|
)
|
|
(27.5
|
)
|
|||
Net loss
|
$
|
(42,121
|
)
|
|
(20.1
|
)%
|
|
$
|
(58,918
|
)
|
|
(33.8
|
)%
|
|
$
|
16,797
|
|
|
28.5
|
%
|
|
Three Months Ended June 30,
|
|||||||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
|||||||
Net sales by location:
|
|
|
|
|
|
|
|
|||||||
US
|
$
|
120,714
|
|
|
$
|
109,507
|
|
|
$
|
11,207
|
|
|
10.2
|
%
|
International
|
89,003
|
|
|
64,886
|
|
|
24,117
|
|
|
37.2
|
|
|||
Total
|
$
|
209,717
|
|
|
$
|
174,393
|
|
|
$
|
35,324
|
|
|
20.3
|
%
|
|
|
|
|
|
|
|
|
|||||||
Net sales by brand and channel:
|
|
|
|
|
|
|
|
|
|
|||||
UGG brand:
|
|
|
|
|
|
|
|
|
|
|||||
Wholesale
|
$
|
63,273
|
|
|
$
|
45,901
|
|
|
$
|
17,372
|
|
|
37.8
|
%
|
Direct-to-Consumer
|
51,459
|
|
|
45,953
|
|
|
5,506
|
|
|
12.0
|
|
|||
Total
|
114,732
|
|
|
91,854
|
|
|
22,878
|
|
|
24.9
|
|
|||
Teva brand:
|
|
|
|
|
|
|
|
|
|
|||||
Wholesale
|
32,123
|
|
|
29,525
|
|
|
2,598
|
|
|
8.8
|
|
|||
Direct-to-Consumer
|
5,539
|
|
|
5,163
|
|
|
376
|
|
|
7.3
|
|
|||
Total
|
37,662
|
|
|
34,688
|
|
|
2,974
|
|
|
8.6
|
|
|||
Sanuk brand:
|
|
|
|
|
|
|
|
|
|
|||||
Wholesale
|
22,220
|
|
|
22,303
|
|
|
(83
|
)
|
|
(0.4
|
)
|
|||
Direct-to-Consumer
|
3,955
|
|
|
4,402
|
|
|
(447
|
)
|
|
(10.2
|
)
|
|||
Total
|
26,175
|
|
|
26,705
|
|
|
(530
|
)
|
|
(2.0
|
)
|
|||
Other brands:
|
|
|
|
|
|
|
|
|
|
|||||
Wholesale
|
26,965
|
|
|
18,411
|
|
|
8,554
|
|
|
46.5
|
|
|||
Direct-to-Consumer
|
4,183
|
|
|
2,735
|
|
|
1,448
|
|
|
52.9
|
|
|||
Total
|
31,148
|
|
|
21,146
|
|
|
10,002
|
|
|
47.3
|
|
|||
Total
|
$
|
209,717
|
|
|
$
|
174,393
|
|
|
$
|
35,324
|
|
|
20.3
|
%
|
|
|
|
|
|
|
|
|
|||||||
Total Wholesale
|
$
|
144,581
|
|
|
$
|
116,140
|
|
|
$
|
28,441
|
|
|
24.5
|
%
|
Total Direct-to-Consumer
|
65,136
|
|
|
58,253
|
|
|
6,883
|
|
|
11.8
|
|
|||
Total
|
$
|
209,717
|
|
|
$
|
174,393
|
|
|
$
|
35,324
|
|
|
20.3
|
%
|
•
|
decreased advertising and marketing expenses of approximately $5,000, primarily driven by the timing of expenses compared to prior period;
|
•
|
increased bad debt expense of approximately $2,500, primarily as a result of the recent payment history on an unsettled customer account in the current period;
|
•
|
decreased occupancy and rent expense of approximately $2,500 due to fewer retail stores and related costs, including restructuring charges for lease termination costs, included in the prior period;
|
•
|
increased other professional service costs of approximately $1,500, which includes restructuring charges for consulting services;
|
•
|
decreased performance-based compensation expense of approximately $1,000, due to lower bonus and stock-based compensation;
|
•
|
decreased materials and supplies expenses of approximately $1,400, related to shipping supplies, primarily driven by achieving warehouse operating efficiencies and completing warehouse transitions in the prior period;
|
•
|
decreased depreciation expenses for IT-related assets of approximately $800; and
|
•
|
decreased commission expenses of approximately $600, largely driven by conversion of sales agent agreements to in-house sales agreements in the prior period.
|
|
Three Months Ended June 30,
|
|||||||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
|||||||
UGG brand wholesale
|
$
|
(1,021
|
)
|
|
$
|
(10,212
|
)
|
|
$
|
9,191
|
|
|
90.0
|
%
|
Teva brand wholesale
|
4,943
|
|
|
1,862
|
|
|
3,081
|
|
|
165.5
|
|
|||
Sanuk brand wholesale
|
4,417
|
|
|
4,181
|
|
|
236
|
|
|
5.6
|
|
|||
Other brands wholesale
|
1,026
|
|
|
(1,630
|
)
|
|
2,656
|
|
|
162.9
|
|
|||
Direct-to-Consumer
|
(12,102
|
)
|
|
(19,419
|
)
|
|
7,317
|
|
|
37.7
|
|
|||
Unallocated overhead costs
|
(53,519
|
)
|
|
(53,101
|
)
|
|
(418
|
)
|
|
(0.8
|
)
|
|||
Total
|
$
|
(56,256
|
)
|
|
$
|
(78,319
|
)
|
|
$
|
22,063
|
|
|
28.2
|
%
|
|
Three Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Income tax benefit
|
$
|
(14,466
|
)
|
|
$
|
(19,963
|
)
|
Effective income tax rate
|
25.6
|
%
|
|
25.3
|
%
|
|
Three Months Ended June 30,
|
|||||||||||||
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
|
|
Amount
|
|
%
|
|||||||||
Net cash used in operating activities
|
$
|
(7,348
|
)
|
|
$
|
(43,334
|
)
|
|
$
|
35,986
|
|
|
83.0
|
%
|
Net cash used in investing activities
|
(3,835
|
)
|
|
(20,114
|
)
|
|
16,279
|
|
|
80.9
|
|
|||
Net cash (used in) provided by financing activities
|
(1,026
|
)
|
|
22,352
|
|
|
(23,378
|
)
|
|
(104.6
|
)
|
DECKERS OUTDOOR CORPORATION
(Registrant)
|
/s/ THOMAS A. GEORGE
|
Thomas A. George
Chief Financial Officer (Principal Financial and Accounting Officer)
|
Name of Participant (“
Awardee
”):
|
_________________________________________
|
|
Total Number of Stock Units Granted:
|
_________________________________________
|
|
Date of Grant:
|
_________________________________________
|
|
Vesting Schedule:
|
August 15, 2018: 33.33%
August 15, 2019: 33.33%
August 15, 2020: 33.33%
|
|
AWARDEE
|
|
DECKERS OUTDOOR CORPORATION
|
_________________________________
|
|
By: _________________________________
|
Signature
|
|
|
_________________________________
|
|
Its: _________________________________
|
Printed Name
|
|
|
_________________________________
|
|
___________________________
|
Residence Address
|
|
Date
|
_________________________________
|
|
|
_________________________________
|
|
|
Date
|
|
|
Name of Participant (“
Awardee
”):
|
___________________________________
|
Total Number of Stock Units Granted:
|
___________________________________
|
Date of Grant:
|
___________________________________
|
Vesting Schedule:
|
August 15, 2018 33.33%
August 15, 2019 33.33%
August 15, 2020 33.34%
|
Performance Period:
|
Fiscal Year Ending March 31, 2018 (the “
Performance Period
”)
|
Performance Criteria:
|
The percentage of unvested Stock Units that may vest will be based on the value of 2018 EPS for the Performance Period as set forth in
Exhibit A
attached hereto (the “
Performance Criteria
”).
|
AWARDEE
|
|
DECKERS OUTDOOR CORPORATION
|
__________________________________
|
|
By: _________________________________
|
Signature
|
|
|
__________________________________
|
|
Its: _________________________________
|
Printed Name
|
|
|
__________________________________
|
|
___________________________
|
Residence Address
|
|
Date
|
__________________________________
|
|
|
__________________________________
|
|
|
Date
|
|
|
Name of Participant (“
Awardee
”):
|
[●]
|
Date of Grant:
|
[●]
|
Total Number of Shares:
|
[●]
|
Exercise Price Per Share:
|
[●]
|
Type of Option:
|
Non-Qualified Stock Option
|
Vesting:
|
This Option shall vest based on the achievement by the Company of the Performance Criteria set forth on
Exhibit A
as described in Section 1 below.
|
Expiration Date:
|
June 13, 2024
This Option may expire earlier as described in Sections 1, 2 and 3 below.
|
AWARDEE
|
|
DECKERS OUTDOOR CORPORATION
|
_________________________________
|
|
By: _________________________________
|
Signature
|
|
|
_________________________________
|
|
Its: _________________________________
|
Printed Name
|
|
|
_________________________________
|
|
___________________________
|
Residence Address
|
|
Date
|
_________________________________
|
|
|
_________________________________
|
|
|
Date
|
|
|
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:
|
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):
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/s/ DAVID POWERS
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David Powers
Chief Executive Officer, President and Director
Deckers Outdoor Corporation
(Principal Executive Officer)
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Deckers Outdoor Corporation;
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2.
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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;
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3.
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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;
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4.
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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:
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5.
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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):
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/s/ THOMAS A. GEORGE
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Thomas A. George
Chief Financial Officer
Deckers Outdoor Corporation
(Principal Financial and Accounting Officer)
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/s/ DAVID POWERS
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David Powers
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Chief Executive Officer, President and Director
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Deckers Outdoor Corporation
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(Principal Executive Officer)
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/s/ THOMAS A. GEORGE
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Thomas A. George
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Chief Financial Officer
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Deckers Outdoor Corporation
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(Principal Financial and Accounting Officer)
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Date: August 9, 2017
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