DECKERS OUTDOOR CORP

Note 2. Revenue Recognition and Business Concentrations

Disaggregated Revenue. Refer to Note 13, “Reportable Operating Segments,” for further information on the

Company’s disaggregation of revenue byreportable operating segment.

Channel Concentration. Netsales by channel were as follows:

Geographic Concentration. Net sales by geography were as follows:

Foreign Currency Concentration. For theyears ended March 31, 2026,2025, and 2024, no single international

country comprised 10.0% or more of the Company’s total net sales. For theyears ended March 31, 2026,2025, and

2024, net sales in foreign currencies, which exclude US denominated distributor sales, were$1,748,061,

$1,376,782, and$1,105,057, respectively.

Customer Concentration. For theyears ended March 31, 2026,2025, and 2024, no single global customer

comprised 10.0% or more of the Company’s total net sales. As of March 31, 2026, the Company hasone customer

that represents 18.5% of trade accounts receivable, net, compared toone customer that represents 13.6% of trade

accounts receivable, net, as of March 31, 2025. Management performs regular evaluations concerning the ability of

the Company’s customers to satisfy their obligations to the Company and recognizes an allowance for doubtful

accounts based on these evaluations.

Variable Consideration. Components of variable consideration include the estimated sales return asset and

liability, as well as allowances for chargebacks and sales discounts. Estimated variable consideration is included in

the transaction price only to the extent it is probable that a significant reversal of cumulative revenue recognized will

not occur in a future period. The Company reassesses these estimates at each reporting period and adjusts them,

as necessary, to reflect changes in facts and circumstances.

Sales Return Asset and Liability. Reserves are recorded for anticipated future returns of goods shipped prior to the

end of the reporting period. In general, the Company accepts returns for damaged or defective products for up to

one year. Returns are generally accepted from customers and end consumers up to 90 days from the point of sale

for cash or credit.

Sales returns are a refund asset for the right to recover the inventory and a refund liability for the stand-ready right

of return. Changes to the refund asset for the right to recover the inventory are recorded against cost of sales and

changes in the refund liability are recorded against gross sales in theconsolidated statements of comprehensive

income. 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 theconsolidated balance sheets. The amounts of these

reserves are determined based on several factors, including known and actual returns, historical returns, and any

recent events that could result in a change from historical return rates.

Table of Contents F-21

The following table summarizes 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.

(2) As of March 31, 2026, and 2025, the sales return liability includes$63,907 and$47,216, respectively, for the wholesale

channel and$16,148 and$16,246, respectively, for the DTC channel.

Allowance for Chargebacks. The Company provides a trade accounts receivable allowance for chargebacks for

wholesale channel sales. When customers pay their invoices, they may take deductions against their invoices that

can include chargebacks for price adjustments, short shipments, and other reasons. Therefore, the Company

records an allowance primarily for known circumstances as well as unknown circumstances based on historical

trends related to the timing and amount of chargebacks taken against customer invoices. Additions to the allowance

are recorded against gross sales or SG&A expenses in theconsolidated statements of comprehensive income.

Allowance for Sales Discounts. The Company provides a trade accounts receivable allowance for sales discounts

for wholesale channel sales, which reflects a discount that customers may take, generally based on meeting certain

order, shipment or prompt payment terms. The Company uses the amount of the discounts that are available to be

taken against the period end trade accounts receivable to estimate and record a corresponding reserve for sales

discounts. Additions to the allowance are recorded against gross sales in theconsolidated statements of

comprehensive income.

Contract Liabilities. Contract liabilities are performance obligations that the Company expects to satisfy or relieve

within thenext 12 months, advance consideration obtained prior to satisfying a performance obligation, or

unconditional obligations to provide goods or services under non-cancelable contracts before the transfer of goods

or services to the customer has occurred. Contract liabilities are recorded in other accrued expenses in the

consolidated balance sheets and include loyalty programs and other deferred revenue.

Loyalty Programs. The Companyhas certain loyalty programs in its DTC channel where consumers can earn

rewards from qualifying purchases that are considered a material right for discounts on future purchases. The

Company defers recognition of revenue for unredeemed loyalty awards acquired through qualifying purchases until

the earlier of actual or estimated redemption or expiration. Estimates are determined based on historical redemption

and expiration patterns. Activity related to loyalty programs for the contract liability recorded in other accrued

expenses in theconsolidated balance sheets was as follows:

Table of Contents F-22

Deferred Revenue. Revenue is deferred for wholesale channel transactions when certain conditions outlined within

the contract terms, including the transfer of control or delivery of product, have not occurred, such as when a

wholesale channel customer prepays for ordered product. Activity related to deferred revenue for the contract

liability recorded in other accrued expenses in theconsolidated balance sheets was as follows:

Note 3. Property and Equipment

Property and equipment, net, are summarized as follows:

Geographic Concentration. Property and equipment, net, by geography was as follows:

(1) As of March 31,2026, and 2025, no property and equipment, net, associated with any single international country represented

10.0% or more of the Company’s total property and equipment, net.

Note 4. Fair Value Measurements

The accounting standard for fair value measurements provides a framework for measuring fair value, which is

defined as the price that would be received for an asset or the exit price that would be paid to transfer a liability in

the principal or most advantageous market in an orderly transaction between market participants on the

measurement date. The fair value hierarchy under this accounting standard requires an entity to maximize the use

of observable inputs, where available.

Table of Contents F-23

The following summarizes the three levels of inputs required:

•Level 1: Quoted prices in active markets for identical assets and 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

Company to develop its own assumptions.

The carrying amount of the Company’s financial instruments, which principally include cash and cash equivalents,

trade accounts receivable, net, trade accounts payable, accrued payroll, and other accrued expenses, approximates

fair value due to their short-term nature. When the Company makes short-term borrowings, the carrying amounts,

which are considered Level 2 liabilities, approximate fair value based upon current rates and terms available to the

Company for similar debt. The Company does not currently have any Level 3 assets or liabilities.

Assets and liabilities that are measured on a recurring basis at fair value in theconsolidated balance sheets are as

follows:

Table of Contents F-24

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 10, “Derivative

Instruments,” for further information regarding Designated Derivative Contracts and Non-Designated Derivative

Contracts.

The Company’s non-financial assets, such as other long-lived assets and definite-lived intangible assets, which

include operating lease assets, machinery and equipment, leasehold improvements, definite-lived trademarks; as

well as indefinite-lived intangible assets and goodwill, are not required to be carried at fair value on a recurring basis

and are reported at carrying value. Instead, these assets are tested for impairment annually, or when an event

occurs or changes in circumstances indicate the carrying value may not be recoverable. When determining fair

value, Level 3 measurements are used for the estimates and assumptions, including undiscounted future cash flows

expected to be generated by the asset groups based upon historical experience, expected market conditions, as

well as management’s plans.

Note 5. Income Taxes

Income Before Income Taxes. Components of income before income taxes recorded in theconsolidated

statements of comprehensive income were as follows:

(1) Domestic income before income taxes for theyear ended March 31, 2024, is presented net of intercompany dividends (or

repatriated cash) of$250,000. No intercompany dividends (or repatriated cash)that were subject to income taxes from a

foreign subsidiary were declared during years ended March 31, 2026, and 2025.

Table of Contents F-25

Income Tax Expense. Components of income tax expense (benefit) recorded in theconsolidated statements of

comprehensive income were as follows:

Income Tax Expense Reconciliation. The following tables provide thereconciliation of income tax expense

(benefit)to the amount computed by applying the US federal statutory tax rate to income before income taxes. The

following table reflects theprospective adoption of ASU 2023-09 and the subsequent table provides prior year

reconciliations before the adoption of ASU 2023-09.

(1) State taxes in California, New York, and Pennsylvania made up the majority (greater than 50 percent) of the tax effect in this

category.

(2)No impact applicable to the periods presented.

Table of Contents F-26

The following table presents cash paid for income taxes, net of refunds, reflecting the prospective adoption of ASU

2023-09:

For theyears ended March 31, 2025, and 2024, cash paid for income taxes was$345,397 and$234,062,

respectively, gross of immaterial tax refunds.

Deferred Taxes. The tax effects of temporary differences that give rise to significant portions of deferred tax assets

and deferred tax liabilities are as follows:

Table of Contents F-27

The deferred tax assets are currently expected to be realized between fiscal years 2027 and 2032. Based on the

level of historical taxable income and projections for future taxable income over the periods in which the deferred

tax assets are deductible, management believes it is more likely than not that the results of future operations will

generate sufficient taxable income to realize the net deferred tax assets. The Company’s tax valuation allowances,

and changes therein, are primarily driven by foreign losses in jurisdictions in which the Company expects limited

future profitability, as well as thereleaseof a valuation allowance on domestic tax attributes.

Repatriation of Cash. Certain earnings of the Company’s non‑US subsidiaries aresubject to US taxation, including

amounts treated as global intangible low-taxed income (commonly known as GILTI), which limits the differences

between the financial reporting and income tax basis of foreign undistributed earnings. In addition, as of March 31,

2026, foreign withholding taxes have not been provided on unremitted earnings of the Company’s non‑US

subsidiaries, as these amounts are considered to be indefinitely reinvested. The Company expects to repatriate

foreign earnings, and the related cash, only to the extent such earnings have been or will be subject to US income

tax and such cash is not required to fund ongoing operations. Due to the number of foreign jurisdictions involved

and the variability in applicable tax laws, the Company is unable to reasonably estimate the amount of foreign

withholding taxes that may be incurred upon repatriation. No intercompany dividends subject to foreign withholding

tax were declared by the Company during theyear ended March 31, 2026.

Changes in Tax Law. The Company has evaluated and is currently monitoring the impact of recent tax law

changes on itsconsolidated financial statements for the following:

•On July 4, 2025, H.R. 1, also known as the One Big Beautiful Bill Act, was signed into law.

Elements relevant to the Company include the reinstatement of bonus depreciation, the deductibility

of domestic research and development expenses, and modifications to international provisions. The

legislation has multiple effective dates, with certain provisions effective during fiscal year 2026 and

other relevant provisions effective during the fiscal year ending March 31, 2027 (next fiscal year).

The Company applied the applicable provisions of the new tax lawduring fiscal year 2026, which

did not have a material impact on the effective tax rate, but did provide cash tax benefits due to

accelerated tax deductions.

•Various jurisdictions in which the Company operates have enacted legislation in response to Pillar

Two model rules (Pillar Two) that were previously released by the Organization for Economic Co-

operation and Development (commonly known as OECD), introducing a 15% global minimum tax

rate applied on a country-by-country basis for large multinational corporations. The Company

applied the applicable provisions of the new tax law during fiscal year 2026. The effects of the new

tax law are included in the ‘Foreign tax effects’ line item in the section above titled “Income Tax

Expense Reconciliation,” but did not have a material impact on the Company’sconsolidated

financial statements. The Company will continue to monitor Pillar Two developments and reflect the

impact of legislative changes in future periods including the additional guidance released in January

2026 regarding the Side-by-Side Framework to exclude US parented companies from the scope of

some Pillar Two taxes.

Unrecognized Tax Benefits. When tax returns are filed, some positions taken are subject to uncertainty about the

merits of the position taken or the amount that would be ultimately sustained upon examination. The benefit of a tax

Table of Contents F-28

position is recorded in theconsolidated financial statements during the period in which the Company believes it is

more likely than not that the position will be sustained upon examination by taxing authorities, and is presented in

the ‘Changes in net unrecognized tax benefits’ line item in the section above titled“Income Tax Expense

Reconciliation.” The recognition threshold is measured as the largest amount of tax benefit that is more than 50%

likely to be realized upon settlement. The portion of the benefit that exceeds the amount measured, as described

above, is recorded as a liability for unrecognized tax benefits, along with any associated interest and penalties, in

theconsolidated balance sheets.

A reconciliation of the beginning and ending amounts of total gross unrecognized tax benefits are as follows:

Total gross unrecognized tax benefits recorded in theconsolidated balance sheets are as follows:

As of March 31, 2026, and 2025, gross unrecognized tax benefits exclude immaterial federal benefits for state

income taxes related to uncertain tax positions in the Company’s income tax returns that would affect the

Company’s effective tax rate, if recognized. Interest and penalties recorded in income tax liability in theconsolidated

balance sheets as of March 31, 2026, and 2025, and in interest expense in theconsolidated statements of

comprehensive income during theyears ended March 31, 2026,2025, and 2024, were immaterial.

The Company has on-going income tax examinations in various state and foreign tax jurisdictions and regularly

assesses tax positions taken during years open to examination. The Company files income tax returns in the US

federal jurisdiction and various state, local, and foreign jurisdictions. With few exceptions, the Company is no longer

subject to US federal, state, local, or foreign income tax examinations by tax authorities before fiscal year 2022.

Although the Company believes its tax estimates are reasonable and prepares its tax filings in accordance with all

applicable tax laws, the final determination with respect to any tax audits, and any related litigation, could be

materially different from the Company’s estimates or from its historical income tax provisions and accruals. The

results of an audit or litigation could have a material impact on results of operations or cash flows in the periods for

which that determination is made. In addition, future period earnings may be adversely impacted by litigation costs,

settlements, penalties, or interest assessments. However, management does not currently expect any such audits

and inquiries to have a material impact on the Company’sconsolidated financial statements.

Note 6. Revolving Credit Facilities

Table of Contents F-29

Primary Credit Facility. In December 2022, the Company refinanced in full and terminated its prior credit

agreement originally entered into in September 2018. The refinanced revolving credit facility agreement is with

Citibank, N.A. (Citibank), as administrative agent, Comerica Bank, as sole syndication agent, which was assumed

by Fifth Third bank, as successor by merger with Comerica Bank and the lenders party thereto (Credit Agreement).

The Credit Agreement provides for afive-year,$400,000 unsecured revolving credit facility (Primary Credit Facility),

contains a$25,000 sublimit for the issuance of letters of credit, and matures on December 19, 2027, subject to

extension on early termination as described in the Credit Agreement.

In addition to allowing borrowings in US dollars, the Primary Credit Facility provides a$175,000 sublimit for

borrowings in Euros, Sterling, Canadian dollars, and any other foreign currency that is subsequently approved by

Citibank, each lender, and each bank issuing letters of credit. Subject to customary conditions, the Company has

the option to increase the maximum principal amount available up to an additional$300,000, resulting in a

maximum available principal amount of$700,000. However, none of the lenders have committed at this time to

provide any such increase in the commitment.

The obligations of the Company and each other borrower under the Primary Credit Facility areg uaranteed by the

Company’s existing and future wholly owned domestic subsidiaries that meet certain materiality thresholds, subject

to limited exceptions. All obligations under the Primary Credit Facility and the foregoing guaranty are unsecured,

andamounts borrowed may be prepaid at any time without a premium or penalty, subject to limited exceptions.

Certain of the Company’s international subsidiaries may also borrow under the Primary Credit Facility, which permits

the Company, subject to customary conditions, to designate one or more additional subsidiaries organized in

international jurisdictions to borrow. The Company is liable for the obligations of each international borrower, but the

obligations of the international borrowers are several (not joint) in nature.

Interest Rate Terms. At the Company’s election, revolving loans issued under the Primary Credit Facility will bear

interest at theadjusted term SOFR, the adjusted Euro InterBank Offered Rate (EURIBOR), the Sterling Overnight

Index Average (SONIA), the Canadian Dollar Offered Rate (CDOR), or the adjusted Alternate Base Rate (ABR), in

each case plus the applicable interest rate margin.

Interest for borrowings in US dollars will fluctuate between SOFR, plus 1.00% and 0.10% based on the Company’s

total net leverage ratio, and ABR, plus 0% per annum. The applicable interest rate margin is based on a pricing grid

based on the Company’s total net leverage ratio and ranges from 1.00% to 1.625% per annum in the case of loans

based on the SOFR, EURIBOR, SONIA, or CDOR, and from 0.00% to 0.625% per annum in the case of loans

based on ABR. As of March 31, 2026, the effective interest rates for the 1-month SOFR and ABR are 4.75% and

6.75%, respectively.

Commitment Fees. The Company is required to pay a fee rate that fluctuates between 0.125% and 0.20% per

annum on the daily unused amount of the Primary Credit Facility, with the exact commitment fee based on the

Company’s total net leverage ratio.

Borrowing Activity. During theyear ended March 31, 2026, the Company madeno borrowings or repayments under

the Primary Credit Facility. As of March 31, 2026, the Company hasno outstanding balance,$593 of outstanding

letters of credit, and available borrowings of$399,407 under the Primary Credit Facility.

China Credit Facility. In October 2021, Deckers (Beijing) Trading Co., LTD (DBTC), a wholly owned subsidiary of

the Company, entered into a credit agreement in China (as amended, the China Credit Facility) that provides for an

uncommitted revolving line of credit of up to CNY 300,000, or$43,512, with an overdraft facility sublimit of

CNY 100,000, or$14,504. The China Credit Facility is payable on demand and subject to annual review with a

defined aggregate period of borrowing of up to 24 months, which was amended to increase from 12 months in

November 2023. The obligations under the China Credit Facility are guaranteed by the Company for 108.5% of the

facility amount in US dollars.

Table of Contents F-30

Interest Rate Terms. Interest is based on the People’s Bank of China market rate multiplied by a variable liquidity

factor. As of March 31, 2026, the effective interest rate is 3.30%.

Borrowing Activity. During theyear ended March 31, 2026, the Company madeno borrowings or repayments under

the China Credit Facility. As of March 31, 2026, the Company hasno outstanding balance, outstanding bank

guarantees of$480, and available borrowings of$43,032 under the China Credit Facility.

Debt Covenants. Under the Credit Agreement, the Company is subject to usual and customary representations and

warranties, and contains usual and customary affirmative and negative covenants, which include limitations on

liens, additional indebtedness, investments, restricted payments, indemnification provisions in favor of the lenders

and transactions with affiliates. The financial covenant requires the total net leverage ratio to be no greater than

3.75 to 1.00.

Under the Credit Agreement, the Company is also subject to other customary limitations, as well as usual and

customary events of default, which include non-payment of principal, interest, fees and other amounts; breach of a

representation or warranty; non-performance of covenants and obligations; default on other material debt;

bankruptcy or insolvency; material judgments; incurrence of certain material Employee Retirement Income Security

Act of 1974 (ERISA) liabilities; and a change of control of the Company. Under the China Credit Facility, DBTC is

subject to usual and customary representations and warranties, and usual and customary affirmative and negative

covenants, which include limitations on liens and additional indebtedness. As of March 31, 2026, the Company is in

compliance with all financial covenants under the Primary Credit Facility and China Credit Facility.

Note 7. Leases

The Company primarily leases retail stores, showrooms, offices, and distribution facilities under operating lease

contracts which vary in lease terms. Some of the Company’s operating leases contain extension options between

one to 15 years. Historically, the Company has not entered into finance leases, and its lease agreements generally

do not contain residual value guarantees, options to purchase underlying assets, or material restrictive covenants.

Variable Lease Payments. Certain leases require additional payments based on (1) actual or forecasted sales

volume (either monthly or annually), (2) reimbursement for real estate taxes (tax), (3) common area maintenance

(CAM), and (4) insurance (collectively, variable lease payments). Variable lease payments are generally excluded

from operating lease assets and lease liabilities and are recorded in rent expense as a component of SG&A

expenses in theconsolidated statements of comprehensive income. Some leases are dependent upon forecasted

annual sales volume, and lease payments are recognized on a straight-line basis as rent expense over each annual

period when the achievement of the related sales target is reasonably likely to occur. Other variable lease

payments, such as tax, CAM, and insurance, are recognized in rent expense as incurred. Some leases contain one

fixed lease payment that includes variable lease payments, which are considered non-lease components. The

Company has elected to account for these instances as a single lease component and the total of these fixed

payments is used to measure the operating lease assets and lease liabilities.

Discount Rate. The Company discounts its unpaid lease payments using the interest rate implicit in the lease or, if

the rate cannot be readily determined, its IBR. Generally, the Company cannot determine the interest rate implicit in

the lease because it does not have access to the lessor’s estimated residual value or the amount of the lessor’s

deferred initial direct costs. The Company has a centralized treasury function, which enables the Company to use a

portfolio approach to discount lease obligations. Therefore, the Company generally derives a discount rate at the

lease commencement date by utilizing its IBR, which is based on what the Company would have to pay on a

collateralized basis to borrow an amount equal to its lease payments under similar terms. Because the Company

does not currently borrow on a collateralized basis under its revolving credit facilities, it uses the interest rate it pays

on its non-collateralized borrowings under its Primary Credit Facility as an input for deriving an appropriate IBR,

adjusted for the amount of the lease payments, the lease term, and the effect on that rate of designating specific

collateral with a value equal to the unpaid lease payments for that lease.

Table of Contents F-31

Rent Expense. The components of rent expense for operating leases, excluding certain occupancy costs such as

maintenance and utilities, primarily recorded in SG&A expenses in theconsolidated statements of comprehensive

income were as follows:

Operating Lease Liabilities. Maturities of undiscounted operating lease payments remainingas of March 31, 2026,

with a reconciliation to the present value of operating lease liabilities recorded in theconsolidated balance sheets,

are as follows:

As of March 31, 2026, operating lease liabilities recorded in theconsolidated balance sheets exclude undiscounted

minimum operating lease payments totaling$22,727 related to leases signed during fiscal year 2026 that had not

yet commenced. These primarily relate to showroom and new retail store leases and areexpected to commence

during thenext fiscal year.

Supplemental Disclosure. Key estimates and judgments related to operating lease assets and lease liabilities that

are outstanding and presented in theconsolidated balance sheets are as follows:

Supplemental non-cash information for amounts presented in theconsolidated statements of cash flows related to

operating leases, were as follows(1):

Table of Contents F-32

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

tenant improvement allowances. Non-cash additions during fiscal year 2026 primarily relate to investments in the Company’s

global retail store footprint made in the ordinary course of business.

Note 8. Commitments and Contingencies

Purchase Obligations. The Company has various types of purchase obligations for which no liability has been

recorded in theconsolidated balance sheets, as it expects to fulfill these commitments in the normal course of

business, as follows:

(1) Purchase obligations for product consist primarily of open purchase orders issued toindependent manufacturers in the ordinary

course of business and reflect the Company’s estimate of future payment commitments based on information currently

available. These obligations may be cancelled in limited situations and such cancellations are infrequent.

(2)Purchase obligations for commodities represent remaining commitments under existing supply agreements, which are subject

to minimum volume commitments (collectively, commodity contracts). The Company currently enters into fixed purchasing

contracts with designated suppliers ofsheepskin and sugarcane-derived (EVA). The Company expects purchases under

commodity contracts in the ordinary course of business will eventually exceed the minimum commitment levels. The reported

amount generally reflects remaining minimum commitments expected to be consumed in future periods in the ordinary course

of business, and any remaining deposits expected to become fully refundable or to be reflected as a credit against future

purchases which are recorded in other assets in theconsolidated balance sheets. As of March 31, 2026, and 2025, the

Company hadno outstanding deposits on supply agreements, andno refunds were received during theyear ended March 31,

2026, as a result of such agreements. During theyear ended March 31, 2025, the Company received a$16,243 refund for

outstanding deposits on supply agreements related toyear ended March 31, 2024. Subsequent to March 31, 2026, through

May 1, 2026, the Company entered into additional commodity contracts for an aggregate minimum volume commitment of

$111,800.

(3)Other purchase obligations consist of non-cancellable fixed and estimated variable minimum commitments for information

technology (IT) services,3PL service fees and other supply chain services, promotional expenses, and other commitments

under service and collaboration contracts.

Litigation. From time to time, the Company is involved in various legal proceedings, disputes, and other claims

arising in the ordinary course of business, including employment, intellectual property, product liability, and breach of

contract claims. Although the results of these matters cannot be predicted with certainty, the Company believes it is

not currently a party to any legal proceedings, disputes, or other claims for which a material loss is considered

probable and for which the amount (or range) of loss is reasonably estimable. However, regardless of the merit of

the claims raised or the outcome, these matters can have an adverse impact on the Company as a result of legal

costs, diversion of management’s time and resources, and other factors.

Indemnification. The Company has agreed to indemnify certain of its licensees, distributors, and promotional

partners in connection with claims related to the use of the Company’s intellectual property. The terms of such

agreements generally do not provide for a limitation on the maximum potential future payments. These agreements

may or may not be made pursuant to a written contract. In addition, from time to time, the Company also agrees to

standard indemnification provisions in commercial agreements in the ordinary course of business. Management

believes the likelihood of any payments under any of these arrangements is remote and would be immaterial. This

determination is made based on a prior history of insignificant claims and related payments.

Table of Contents F-33

Note 9. Stock-based Compensation

Stock Incentive Plans. In September 2015, the Company’s stockholders approved the 2015 Stock Incentive Plan

(2015 SIP), which initially reserved 7,650,000 shares of the Company’s common stock for issuance to employees,

directors, consultants, independent contractors, and advisors. The 2015 SIP provided for the issuance of a variety of

stock-based compensation awards, including RSUs, performance-based restricted stock units (PSUs), LTIP PSUs,

stock appreciation rights, stock bonuses, incentive stock options (ISOs), and non-qualified stock options (NQSOs).

In September 2024, the Company’s stockholders approved the 2024 Stock Incentive Plan (2024 SIP), which

replaced the 2015 SIP. Like the 2015 SIP, the primary purpose of the 2024 SIP is to encourage ownership in the

Company by key personnel, whose long-term service is considered essential to the Company’s continued success.

The 2024 SIP initially reserved 7,800,000 shares of the Company’s common stock for issuance to employees,

directors, consultants, independent contractors, and advisors. The maximum aggregate number of shares that may

be issued to employees under the 2024 SIP through the exercise of ISOs is 4,500,000. As of March 31, 2026,

7,445,947 shares of common stock remained available for future issuance under the 2024 SIP, subject to

adjustment for future stock splits, stock dividends, and similar changes in capitalization.

Annual Stock Awards. During theyears ended March 31, 2026,2025, and 2024, the Company granted RSU and

LTIP PSU awards to certain members of the Company’s management team, which entitle the recipients to receive

shares of the Company’s common stock upon vesting. No dividends are paid or accumulated on any RSU or LTIP

PSU awards.

A summary of the status and changes of the Company’s nonvested shares is as follows:

(1) The amounts granted are the maximum amounts under the terms of the applicable LTIP PSUs.

(2) The amounts vested include shares withheld to cover taxes that are not issued to the recipient.

Restricted Stock Units. RSUs are subject to a time-based vesting condition and typically vest in equal annual

installments over three years following the date of grant.

Table of Contents F-34

Long-Term Incentive Plan Awards. LTIP PSU awards have a multi-fiscal year performance period, generally three

years (Measurement Period), with performance metrics established at the beginning of the period. The grant date

fair value of LTIP PSUs is determined using a Monte-Carlo simulation model, which estimates a range of possible

future stock prices for the Company and each member of a peer group over the Measurement Period. For each

grant, the model incorporates key assumptions, including the Company’s common stock price at the grant date,

risk-free interest rate, expected dividend yield, stock price volatility, and correlation coefficients. The model also

incorporates a market condition based on the Company’s relative TSR compared to a peer group of companies

(peer market condition), which is reflected in the grant date fair value and not subsequently adjusted.

In addition to thepeer market condition reflected in grant date fair value, LTIP PSU awards include financial

performance conditions and service requirements that affect the recognition of compensation expense and the

ultimate vesting of the awards. Financial performance conditions are tied to specified revenue and pre-tax income

targets (financial performance conditions). The Company evaluates the probability of achieving thefinancial

performance conditions based on its most recent long-range forecast at least quarterly and may adjust stock-based

compensation expense to reflect updated expectations.

Following a determination of achievement of thefinancial performance conditions for the applicable Measurement

Period, vesting of each LTIP PSU award is subject to adjustment for thepeer market condition through the

application of the TSR modifier. The number of LTIP PSUs that ultimately vest may increase up to a maximum of

200% of the target award, based on achievement of thefinancial performance conditions and the TSR modifier.

LTIP PSU awards are subject to time-based service requirements and will not vest if minimum threshold financial

performance conditions are not met. For LTIP PSUs granted during the fiscal years 2026,2025, and 2024, the

Company expects to exceed the minimum threshold target performance criteria based on its long-range forecast as

of March 31, 2026.

Grants to Directors. Each of the Company’s nonemployee directors was entitled to receive common stock with a

total value of$170 for annual service on the Board of Directors (Board) during theyear ended March 31, 2026. The

shares are issued in equal quarterly installments with the number of shares being determined using the rolling

average of the closing price of the Company’s common stock during thelastten trading days leading up to, and

including, the grant date, which is in alignment with the Company’s equity grant guidelines. Each of these shares is

fully vested and recorded as compensation expense in theconsolidated statements of comprehensive income on

the date of issuance.

Employee Stock Purchase Plans. In September 2024, the Company’s stockholders approved the 2024 Employee

Stock Purchase Plan (2024 ESPP). The 2024 ESPP reserves 6,000,000 shares of the Company’s common stock

for sale to eligible employees using after-tax payroll deductions, which are refundable until purchases are made,

and are liability-classified. Each offering period under the 2024 ESPP is anticipated to run for approximatelysix

months with purchases occurring on the last day of each offering period (no look-back provision) at a 15% discount

on the closing price on that date. The first offering period commenced on March 1, 2025. As of March 31, 2026,

5,955,235 shares of common stock remained available for future issuance under the 2024 ESPP, subject to

adjustment for future stock splits, stock dividends, and similar changes in capitalization.

Stock-Based Compensation. Components of stock-based compensation recorded, net of estimated forfeitures, in

SG&A expenses in theconsolidated statements of comprehensive income were as follows:

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Unrecognized Stock-Based Compensation. Total remaining unrecognized stock-based compensationas of

March 31, 2026, related to non-vested awards that the Company considers probable to vest and the weighted-

average period over which the cost is expected to be recognized in future periods, is as follows:

Note 10. Derivative Instruments

The Company has the following derivative contracts recorded at fair value in theconsolidated balance sheets:

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 counterparties did not have a material impact on the fair value of its

derivative contracts. As of March 31, 2026, unrealized gains on derivative contracts recorded in AOCL are expected

to be reclassified into net sales within the next twelve months. Refer to Note 11, “Stockholders’ Equity,” for further

information on the components of AOCL.

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The Company settled derivative contracts with notional values as follows:

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

including the effect of Designated Derivative Contracts and the related income tax effects ofunrealized gains or

losses that are recorded in OCI in theconsolidated statements of comprehensive income:

Subsequent to March 31, 2026, through May 1, 2026, the Company entered into Designated Derivative Contracts

and Non-Designated Derivative Contracts with notional values totaling $71,135 and$14,722, respectively, which are

collectively expected to mature within the next twelve months.

Note 11. Stockholders’ Equity

Stock Repurchase Program. The Board has approved a stock 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 authorization of$2,250,000 on May 21, 2025, to repurchase shares of the

Company’s common stock under the same conditions as the prior stock repurchase program. As of March 31, 2026,

the aggregate remaining approved amount under thestock repurchase program is$1,549,602.

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

leverage ratios. As of March 31, 2026, the Company has not exceeded the stated leverage ratios, and no defaults

have occurred under these credit agreements.

Stock repurchase activity under the Company’sstock 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.

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Subsequent to March 31, 2026, through May 1, 2026, the Company repurchased 1,096,908 shares of its common

stock at a weighted average price of$105.75 per share for$115,999. As of May 1, 2026, the Company had

$1,433,603 for repurchases remaining authorized under thestock repurchase program.

On May 20, 2026, the Board approved an additional authorization of$3,500,000, for the Company to repurchase its

Accumulated Other Comprehensive Loss. The components within AOCL, net of tax, recorded in theconsolidated

balance sheets, are as follows:

Note 12. 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,” for further information on the Company’s equity incentive plans.

Note 13. Reportable Operating Segments

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

organized into the Company’sthree reportable operating segments, which include the brand operations for the

HOKA brand, UGG brand, and Other brands. The operations of each brand within these reportable operating

segments are managed separately because each requires different marketing, research and development, design,

sourcing, and sales strategies.

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Segment Net Sales, Gross Margin, and Income from Operations. The CODM regularly evaluates the

performance of each reportable operating segment based on net sales, gross profit as a percentage of net sales

(gross margin), and income from operations when making decisions about resource allocations to each reportable

operating segment. Income from operations of each reportable operating segment includes certain costs which are

specifically related to each reportable operating segment and that are regularly provided to the CODM. These costs

consist of cost of sales; payroll and related expenses, including stock-based compensation; advertising, marketing,

and promotion expenses; rent and occupancy (including maintenance and utilities); depreciation and other related

costs; and other segment items. There areno inter-segment sales for any period presented. The accounting policies

applicable to the Company’sreportable operating segments are consistent with those described in Note 1,

“General.”

Income from operations of each reportable operating segment excludes enterprise and shared brand expenses as

well astotal other income, net, which are not used to assess reportable operating segment performance.

Unallocated enterprise and shared brand expenses are costs that are managed centrally and not specific to any one

brand. These costs are primarily comprised of certain payroll and related expenses, including stock-based

compensation; global IT expenses; 3PL service fees; depreciation, rent, and occupancy for owned warehouses and

DCs and offices; and other SG&A expenses, such as costs for contract services, materials, supplies, and travel.

These costs span multiple functions including owned warehouses and DCs and 3PL service fees, along with

enterprise costs which include centralized commercial operations, IT, finance, human resources, legal, supply chain,

and corporate executives.

The Company does not regularly provide total assets or capital expenditures information byreportable operating

segment to the CODM because that information is not used to evaluate performance or allocate resources to each

reportable operating segment.

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

income, was asfollows:

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(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. During the

year ended March 31, 2024, the Company recorded an impairment to intangible assets of$8,164 for the Sanuk brand definite-

lived trademark. Refer to the section titled “Recoverability of Definite-Lived Intangible and Other Long-Lived Assets,” in Note 1,

“General,” for further information on the impairment loss.

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

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

(3) The Other brands reportable operating segment for fiscal year 2026, includes financial results for the phase out of the

results for the former Sanuk brand through the Sanuk Brand Sale Date. Refer to the section titled“Reportable Operating

Segments,” in Note 1, “General,” for further information.

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A reconciliation of reportable segment income from operations to 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.

Note 14. Supplier Finance Program

The Company has a voluntary Supplier Finance Program (SFP) administered through a third-party platform that

provides the Company’s independent manufacturers that supply its inventory (inventory suppliers) the opportunity to

sell their receivables due from the Company to participating financial institutions in advance of the invoice due date,

at the sole discretion of both inventory suppliers and the financial institutions The Company is not party to the

agreements between these third parties and has no economic interest in aninventory suppliers’ decision to sell a

receivable.

The Company’s payment obligations, including the amounts due and payment terms, which generally do not exceed

90 days, are not impacted by theinventory suppliers’ election to participate in the SFP, and the Company provides

no guarantees to any third parties under the SFP. Accordingly, amounts due toinventory suppliers that elect to

participate in the SFP are recorded intrade accounts payable in theconsolidated balance sheets.

Activity for the Company’s SFP program is as follows:

Payments made in connection with the SFP are reported as cash used in operating activities in the trade accounts

payable line item of theconsolidated statements of cash flows.

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Schedule II

TOTAL VALUATION AND QUALIFYING ACCOUNTS

(dollar amounts in thousands)