DECKERS OUTDOOR CORP

Note 2. Revenue Recognition and Business Concentrations

Disaggregated Revenue. Refer to Note 12, “Reportable Operating Segments,” for further information on the

Company’s disaggregation of net sales 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:

Note 3. Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis in thecondensed

consolidated balance sheets, which 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 9, “Derivative

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

including the term definitions.

Note 4. Income Taxes

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

The tax provisions during thethree and six months ended September 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 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 thecurrent period, the net changes in the effective income tax rate, compared to theprior period, were

primarilydue tonon-recurring discrete tax benefits for adjustments to income taxes payable from the prior period.

For thethree months ended September 30, 2026, the change also reflected reductions in excess tax benefits for

stock-based compensation, while forthesix months ended September 30, 2026, the discrete tax benefits were

offset by non-recurring discrete tax expenses related to changes in unrecognized tax benefits.

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Note 5. Revolving Credit Facilities

Primary Credit Facility. In August 2026, Deckers Outdoor Corporation and certain of its consolidated subsidiaries

(collectively, the Borrowers)entered into the First Amendment to the Credit Agreement with Citibank, N.A.

(Citibank), as administrative agent, and the lenders party thereto(First Amendment), which amended the Credit

Agreement, dated December 19, 2022 (Credit Agreement), with Citibank, as administrative agent, and Comerica

Bank, as sole syndication agent (which role was assumed by Fifth Third Bank, as successor by merger with

Comerica Bank), and the lenders party thereto. The Credit Agreement, as amended by the First Amendment, is

referred to herein as the Amended Credit Agreement.

Borrowing Capacity. The Amended Credit Agreement provides for a$500,000 unsecured revolving credit facility

(Primary Credit Facility).

Maturity Date. The maturity date of the Amended Credit Agreement is August 27, 2031, which is the fifth anniversary

of the effective date of the First Amendment.

Interest Rates. Under the Amended Credit Agreement, at the Borrowers’ election, revolving loans issued under the

Primary Credit Facility will bear interest at the term Secured Overnight Financing Rate (SOFR), the adjusted Euro

InterBank Offered Rate (EURIBOR), the Sterling Overnight Index Average (SONIA), the term Canadian Overnight

Repo Rate Average (CORRA), or the adjusted Alternate Base Rate (ABR), in each case plus the applicable interest

rate margin.

The applicable interest rate margin is determined using a pricing grid based on the Company’s total net leverage

ratio and ranges from 1.00% to 1.50% per annum in the case of loans based on the SOFR, EURIBOR, SONIA, or

CORRA, and from 0.00% to 0.50% per annum in the case of loans based on ABR.

As of September 30, 2026, the applicable interest rates for borrowings in US dollars using the 1-month SOFR and

ABR are 4.91% and 7.00%, respectively.

Commitment Fees. Under the Amended Credit Agreement, the Borrowers are required to pay commitment fees of

between 0.10% to 0.175% 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. As of September 30, 2026, the Company hasno outstanding balance, outstanding letters of

credit of$588, and available borrowings of$499,412 under the Primary Credit Facility.

Deferred Financing Costs. In connection with the First Amendment, the Borrowers incurred various commitment,

arrangement, and other fees totaling$1,339, which were primarily recorded in other assets in thecondensed

consolidated balance sheets as of September 30, 2026. These costs will be amortized on a straight-line basis over

the term of the Amended Credit Agreement. Deferred financing costs associated with the Credit Agreement had an

immaterial remaining unamortized balance.

Debt Covenants. Under the Amended Credit Agreement, the total net leverage ratio financial covenant increased to

be no greater than 4.00 to 1.00. As of September 30, 2026, the Borrowers are in compliance withall financial

covenants under the Primary Credit Facility.

Except as described above, the material terms of the Company’s revolving credit facilities remain unchanged from

those previously disclosed in Note 6, “Revolving Credit Facilities,” in the Company’s consolidated financial

statements in Part IV of the 2026 Annual Report.

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Note 6. Leases

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

distribution facilities. 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 primarily reflect continued investments in the

Company’s global retail store footprint, while non-cash additions during thesix months ended September 30, 2026, also

include amounts for a warehouse and DC lease extension, as well as investments in showrooms.

Note 7. Commitments and Contingencies

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

months ended September 30, 2026, to the Company’s purchase obligations disclosed in Note 8, “Commitments and

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

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

business during thesix months ended September 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 Powers Act (IEEPA). In March 2026, the US Court of International Trade directed US

Customs and Border Protection (CBP) to refund previously collected IEEPA tariffs. In April 2026, CBP released the

Consolidated Administration and Processing of Entries (CAPE) functionality to facilitate a phased approach to

process IEEPA tariff refunds.

The Company previously paid an aggregate of approximately $119,000 in gross IEEPA tariffs. As of September 30,

2026, the Company has submitted approximately$106,000 in claims under CBP’s CAPE Phase 2 administrative

refund processand is evaluating approximately$13,000 in additional claims that may qualify for subsequent

phases. The amount and timing of future refunds remain uncertain and subject to changes in CBP’s claims process

and further legal and regulatory developments.

The Company accounts for potential refunds of previously paid tariffs as gain contingencies under Accounting

Standards Codification Topic 450, Contingencies, which recognizes gains in thecondensed consolidated financial

statements when realized or realizable. As of September 30, 2026, the Company hasnot recognized any receivable

related to any unreceived IEEPA tariff refunds or related interest in itscondensed consolidated financial statements.

During thethree and six months ended September 30, 2026, the Company recorded approximately$46,000 of

IEEPA tariff net refunds as a reduction to cost of sales and approximately$3,000 of related interest as interest

income within the Company’scondensed consolidated statements of comprehensive income. The net effect of the

refunds reflects accommodations provided under cost-sharing arrangements with independent manufacturers and

other relevant factors.

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Subsequent to September 30, 2026, through October 8, 2026, the Company received additional IEEPA tariff net

refunds that will be recognized in the Company’scondensed consolidated financial statements in the third fiscal

quarter, which, combined with the refunds previously received, total approximately$87,900, plus associated interest

for a total of approximately$4,700.

The Companyhas been named as a defendant intwo purported consumer class actions relating to alleged tariff-

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

vigorously.

Note 8. Stock-based Compensation

Stock Incentive Plans. The 2024 Stock Incentive Plan (2024 SIP) provides for the issuance of a variety of stock-

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

stock units (PSUs), long-term incentive plan PSUs (LTIP PSUs), stock appreciation rights, stock bonuses, incentive

stock options (ISOs), and non-qualified stock options, to employees, directors, consultants, independent

contractors, and advisors. In September 2024, the 2024 SIP replacedthe 2015 Stock Incentive Plan (2015 SIP).

Annual Stock Awards. The Company granted the following awards during the periods presented:

(1) Theamounts reported reflect achievement of the target performance level under the terms of the applicable LTIP PSUs.

During thesix months ended September 30, 2026, with the exception of the RSU and LTIP PSU awards

summarized above, no material additional awards were granted under the 2024 SIP.

Future unrecognized stock-based compensation for RSUs outstandingas of September 30, 2026, is $46,295.

For the LTIP PSUs granted during thecurrent fiscal year, prior fiscal year, and fiscal year ended March 31, 2025, the

Company expects to exceed theminimum threshold performance criteria based on the Company’s current long-

range forecastas of September 30, 2026. Future unrecognized stock-based compensation for all LTIP PSUs

outstandingas of September 30, 2026, based on the anticipated performance level, is$27,131.

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Note 9. 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).

As of September 30, 2026, the Company has the following derivative contracts recorded at fair value in the

condensed consolidated balance sheets:

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

consolidated 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 counterpartiesdid not have a material impact on the fair value of its

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

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

Note 10, “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:

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Note 10. 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 September 30, 2026, the

aggregate remaining authorization under thestock repurchase program is$4,412,139.

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 September 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 September 30, 2026, through October 8, 2026, the Company repurchased 187,375 shares of its

common stock at a weighted average price of$80.05 per share for$15,000. As of October 8, 2026, the Company

had$4,397,139 remaining authorized for repurchases under thestock repurchase program.

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

consolidated balance sheets, are as follows:

Note 11. Basic and Diluted Shares

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

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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.

Note 12. 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,” of 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 are no inter-segment sales for any period presented.

The CODM does not regularly review total assets or capital expend itures by reportable operating segment.

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

comprehensive income, was as follows:

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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.

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

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

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

(4) 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.

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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