DECKERS OUTDOOR CORP

Note 2. Revenue Recognition and Business Concentrations

Disaggregated Revenue. Refer to Note 10, “Reportable Operating Segments,” for further information on the

Company’s disaggregation of revenue byreportable operating segments.

Channel Concentration. Net sales by channel were as follows:

Geographic Concentration. Net sales by geography were as follows:

Sales Return Asset and Liability. Sales returns are a refund asset for the right to recover the inventory and a

refund liability for the stand-ready right of return. The refund asset for the right to recover the inventory is recorded

in other current assets and the related refund liability is recorded in other accrued expenses in thecondensed

consolidated balance sheets.

The following tables summarize changes in the estimated sales returns for the periods presented:

(1)Net additions to the sales return liability include a provision for anticipated sales returns, which consists of both contractual

return rights and discretionary authorized returns.

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Contract Liabilities. Contract liabilities are recorded in other accrued expenses in thecondensed consolidated

balance sheets and include loyalty programs and other deferred revenue.

Loyalty Programs. Activity related to loyalty programs was as follows:

Deferred Revenue. Activity related to deferred revenue was as follows:

Refer to Note 2, “Revenue Recognition and Business Concentrations,” in the Company’s consolidated financial

statements in Part IV of the 2026 Annual Report for further information on the Company’s variable consideration

accounting policies, including sales return asset and liability, as well as contract liabilities.

Note 3. Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis. Refer to Note 4,

“Fair Value Measurements,” in the Company’s consolidated financial statements in Part IV of the 2026 Annual

Report for further information on the Company’s fair value accounting policies.

Assets and liabilities that are measured on a recurring basis at fair value in thecondensed consolidated balance

sheets are as follows:

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The fair value of Designated Derivative Contracts and Non-Designated Derivative Contracts is determined by using

quoted market prices of the same or similar instruments, including spot and forward currency exchange rates,

adjusted for counterparty exposure and the Company’s own credit risk, if any. Refer to Note 7, “Derivative

Instruments,” for further information, including the definition of the terms Designated Derivative Contracts and Non-

Designated Derivative Contracts.

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Note 4. Income Taxes

Income tax expense and the effective income tax rate were as follows:

The tax provisions during thethree months ended June 30, 2026, and 2025, were computed using the estimated

effective income tax rate applicable to each of the domestic and foreign taxable jurisdictions for the current fiscal

year ending March 31, 2027 (current fiscal year), andprior fiscal year, respectively, and were adjusted for discrete

items that occurred within the periods presented above.

During thethree months ended June 30, 2026, the net change in the effective income tax rate, compared to the

prior period, was primarilydue tonon-recurring discrete tax expense for unrecognized tax benefits in the prior

period and changes injurisdictional mix of worldwide income before taxes.

Note 5. Leases

The Company enters into operating lease contracts, which primarily relate to retail stores, showrooms, offices, and

distribution facilities. There wereno material changes outside the ordinary course of business during thethree

months ended June 30, 2026, to the Company’s operating lease terms disclosed in the 2026 Annual Report.

Supplemental information for amounts presented in thecondensed consolidated statements of cash flows related to

operating leases was as follows:

(1)Amounts disclosed include non-cash additions or reductions resulting from lease remeasurements, as well as adjustments for

tenant improvement allowances. Non-cash additions in thecurrent period are primarily the result of a lease extension for a

warehouse and DC, as well ascontinued investments in the Company’s global retail store footprint and showrooms.

Note 6. Commitments and Contingencies

Purchase Obligations. There wereno material changes outside the ordinary course of business during thethree

months ended June 30, 2026, to the Company’s purchase obligations disclosed in the 2026 Annual Report.

Contingencies. Except as noted below, there were no material changes outside the ordinary course of business

during thethree months ended June 30, 2026, to the Company’s contingencies disclosed in Note 8, “Commitments

and Contingencies,” in the Company’s consolidated financial statements in Part IV of the 2026 Annual Report.

Tariff Refunds. In February 2026, the US Supreme Court invalidated tariffs imposed under the International

Emergency Economic Power Act (IEEPA). In March 2026, the US Court of International Trade subsequently issued

an order directing US Customs and Border Protection (CBP) to refund IEEPA tariffs that were previously collected.

In April 2026, CBP released the Consolidated Administration and Processing Entries (CAPE) functionality to

facilitate a phased approach to process IEEPA tariff refunds. Subsequent to June 30, 2026, the Company began

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filing for refunds of previously paid IEEPA tariffs pursuant to the CAPE Phase 2 administrative refund process

announced in June 2026.

The Company previously paid an aggregate gross amount of approximately$120,000 in IEEPA tariffs. The net effect

that any tariff refunds may have on the Company’scondensed consolidated financial statements may be less than

the gross amount of IEEPA tariffs as a result of a number of factors, including accommodations provided under cost-

sharing arrangements with independent manufacturers, income taxes payable on refunds received, and other

relevant factors. In addition, the amount and timing of receipt of refunds are subject to uncertainty as a result of

potential changes in the CBP claims process, and further legal challenges to current and proposed tariff regimes.

The Company will apply a gain contingency model in accordance with Accounting Standards Codification Topic 450,

Contingencies, to account for potential refunds of previously paid tariffs. Under this model, a gain contingency is not

recognized in thecondensed consolidated financial statements until the gain is realized or realizable. If tariff refunds

are ultimately received or otherwise become realizable, the Company will evaluate the appropriate accounting

treatment under US GAAP based on the facts and circumstances existing at that time, including the nature of the

recovery, applicable tax impacts, cost-sharing or other arrangements with independent manufacturers, and other

relevant factors. The Company may also consider such developments in connection with future business decisions.

As of June 30, 2026, and as of the date of this Quarterly Report, the Company hasnot recognized any receivable

and corresponding reduction to cost of sales related to any IEEPA tariff refunds or related interest in itscondensed

consolidated financial statements. The Company continues to closely monitor these developments and assess the

potential impact on itscondensed consolidated financial statements.

The Company was named as a defendant intwo purported consumer class actions relating to alleged tariff-related

pricing actions and potential governmental tariff reimbursements. The Company intends to defend these matters

vigorously.

Note 7. Derivative Instruments

The Company enters into foreign currency forward or option contracts (derivative contracts) to manage foreign

currency risk and certain of these derivative contracts are designated as cash flow hedges of forecasted sales

(Designated Derivative Contracts). The Company also enters into derivative contracts that are not designated as

cash flow hedges, to offset a portion of anticipated gains and losses on certain intercompany balances until the

expected time of repayment (Non-Designated Derivative Contracts). Refer to Note 1, “General,” in the Company’s

consolidated financial statements in Part IV of the 2026 Annual Report for further information related to accounting

policies on the Company’sderivative contracts.

As of June 30, 2026, the Company has the following Designated Derivative Contracts recorded at fair value in the

condensed consolidated balance sheets and hadno outstanding Non-Designated Derivative Contracts:

As of March 31, 2026, the Company has the following derivative contracts recorded at fair value in thecondensed

consolidated balance sheets:

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The maximum amount of loss the Company would incur if derivative counterparties failed completely to perform

according to the terms of the contracts is limited to the derivative gross fair value of contracts in asset positions. The

non-performance risk of the Company and its counterpartiesdid not have a material impact on the fair value of its

derivative contracts. As of June 30, 2026, unrealized gains onderivative contracts recorded in accumulated other

comprehensive loss (AOCL) are expected to be reclassified into net sales within the next nine months. Refer to

Note 8, “Stockholders’ Equity,” for further information on the components of AOCL.

The following table summarizes changes inunrealized gain (loss) on cash flow hedges included in AOCL, including

the effect of Designated Derivative Contracts and the related income tax effects of unrealized gains or losses that

are recorded in OCI in thecondensed consolidated statements of comprehensive income:

Note 8. Stockholders’ Equity

Stock Repurchase Program (amounts in thousands, except share and per share data). The Company’s Board of

Directors (Board) has approved astock repurchase program which authorizes the Company to repurchase shares

of its common stock in the open market or in privately negotiated transactions, subject to market conditions,

applicable legal requirements, and other factors (collectively, thestock repurchase program). The Board last

approved an additional authorization of$3,500,000 on May 20, 2026, to repurchase shares of the Company’s

common stock under the same conditions as the prior stock repurchase program. As of June 30, 2026, the

aggregate remaining authorization under thestock repurchase program is$4,711,416.

Thestock repurchase program does not obligate the Company to acquire any amount of common stock and may be

suspended at any time at the Company’s discretion. The credit agreements governing the Company’s revolving

credit facilities allow it to make stock repurchases under this program, so long as it does not exceed certain

leverage ratios. As of June 30, 2026, the Companyhas not exceeded the stated leverage ratios, and no defaults

have occurred under these credit agreements.

Stock repurchase activity under thestock repurchase program was as follows:

(1) All share repurchases were made pursuant to the stock repurchase program in open-market transactions.

(2)May not calculate on rounded amounts.

(3) The dollar value of shares repurchased excludes the cost of broker commissions, excise taxes, and other costs.

Subsequent to June 30, 2026, through July 9, 2026, the Company repurchased 311,264 shares of its common stock

at a weighted average price of$103.35 per share for$32,168. As of July 9, 2026, the Company had$4,679,248

remaining authorized for repurchases under thestock repurchase program.

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Accumulated Other Comprehensive Loss. Thecomponents within AOCL, net of tax, recorded in thecondensed

consolidated balance sheets, are as follows:

Note 9. Basic and Diluted Shares

The reconciliation of basic to diluted weighted-average common shares outstanding was as follows:

Excluded Awards. The equity awards excluded from the calculation of the dilutive effect may be excluded due to

one of the following:(1) the shares were antidilutive or (2) the necessary conditions had not been satisfied for the

shares to be deemed issuable based on the Company’s performance for the relevant performance period. The

number of shares stated for each of these excluded awards is the maximum number of shares issuable pursuant to

these awards. For those awards subject to the achievement of performance criteria, the actual number of shares to

be issued pursuant to such awards will be based on Company performance in future periods, net of forfeitures, and

may be materially lower than the number of shares presented, which could result in a lower dilutive effect. Refer to

Note 9, “Stock-Based Compensation,” in the Company’s consolidated financial statements in Part IV of the 2026

Annual Report for further information on the Company’s equity incentive plans.

Note 10. Reportable Operating Segments

There have been no changes to the Company’sreportable operating segments, the measure of segment profit or

loss, or the basis of measurement from those disclosed in Note 13, “Reportable Operating Segments,” in the

Company’s consolidated financial statements in Part IV of the 2026 Annual Report. Accordingly, information

reported to the Chief Operating Decision Maker (CODM), who is the Principal Executive Officer (PEO), continues to

be organized into three reportable operating segments: HOKA brand, UGG brand, and Other brands.

The CODM continues to evaluate reportable operating segment performance and allocate resources based on net

sales, gross profit as a percentage of net sales (gross margin), and income from operations, which includes costs

directly attributable to each reportable operating segment that are regularly reviewed by the CODM. Segment

income from operations excludes unallocated enterprise and shared brand expenses, as well astotal other income,

net. There is no inter-segment sales for any period presented.

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The accounting policies applicable to the Company’sreportable operating segments are consistent with those

described in Note 1, “General,” in the Company’s consolidated financial statements in Part IV of the 2026 Annual

Report. The CODM does not regularly review total assets or capital expenditures by reportable operating segment.

Reportable operating segment information, with a reconciliation to thecondensed consolidated statements of

comprehensive income, was as follows:

(1) Depreciation and other related costs generally include depreciation of property and equipment, amortization and impairment of

intangible assets or other long-lived assets, accretion, loss on disposal of assets, and other miscellaneous costs.

(2) Other segment items are comprised of other SG&A expenses, which primarily include credit card fees, sales commissions,

materials and supplies, travel, certain 3PL service fees, and other miscellaneous expenses.

(3) Operating margin is defined as income from operations divided by net sales.

(4) The Other brands reportable operating segment for the prior period includes financial results for the phase out of the

Koolaburra brand and AHNU brand. Refer to the section titled “Reportable Operating Segments,” in Note 1, “General,” of the

Company’s consolidated financial statements in the 2026 Annual Report for further information.

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A reconciliation of reportable segment income from operations tocondensed consolidated statements of

comprehensive income was as follows:

(1) To the extent that consolidated SG&A expenses exceed reportable operating segment SG&A expenses, they are recorded in

unallocated enterprise and shared brand expenses, which are costs that are managed centrally and not specific to any one

brand.

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