Deckers Outdoor Corp.

Fiscal Year Ending: March 31, 2018

Internal Comparison/Analyses: 1. Study and analye your company's financial statements (Balance Sheet, Income Statement, and Statement of Cash Flows) and relevant financial statement notes provided in its 10K filing. Calculate and analyze growth rates of major accounts of your company's financial statements for the past two - three years, and analye significant changes. 2. Calculate and anah'ze your company's common-sized Balance Sheet and common-sized ncome Statement for the past two- three years. Summarize your analysis. Then read the Management Discussion and Analysis (MD&A) section of your company's 10K carefullv, summarize the MD&A and check whether vour common-sized financial statements analyses are on the right track. Revise your analyses according to the new information you learned from MD&A. You may reference the company's MD&A in our fevised summafy. Please calculate key financial ratios (as listed in your textbook P64 Table 3.5 except for EBITDA ratio) of your company. Utilize these ratios and evaluate and analyze your company's short term liquidity, asset utilization efficiency, financial leverage and coverage, profitability, and market performance. Utilize above analyses to summarize your company's past and current financial position and financial performance. This summary should be within 100-200 words. 3. 4. DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (dollar and share data amounts in thousands, except par value) September 30, 2018 March 31, 2018 ASSETS Current assets (UNAUDITED) 182,192 $ Cash and cash equivalents Trade accounts receivable, net of allowances ($14,019 and $33,462 as of September 30, 2018 and March 31, 2018, respectively) Inventories, net of reserves ($8,136 and S9,020 as of September 30, 2018 and March 31, 2018, respectively) Prepaid expenses Other current assets Income tax receivable 429,970 321,784 143,704 514,927 36,671 1,731 1,078,465 299,602 17,639 17,599 2,176 910,690 Total current assets Property and equipment, net of accumulated depreciation ($219,969 and $210,763 as of September 30, 2018 and March 31, 2018, respectively) Goodwill Other intangible assets, net of accumulated amortization ($68,755 and $66,065 as of September 30, 2018 and March 31, 2018, respectively) Deferred tax assets, net Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities 215,720 13,990 220,162 13,990 54,356 38,878 22,559 1,423,968 $ 38,381 23,306 1,264,379 71,473 277,577 31,692 42,887 14,283 10,305 448,217 31,210 62,053 20,505 Short-term borrowings 93,939 55,695 24,446 11,006 3,502 189,166 Trade accounts payable Accrued payroll Other accrued expenses Income taxes payable Value added tax payable Total current liabilities Mortgage payable Income tax liability Deferred rent obligations 31,504 64,735 Other long-term liabilities Total long-term liabilities 15,696 128,964 134,434 Commitments and contingencies Stockholders' equity Common stock ($0.01 par value; 125,000 shares authorized; shares issued and outstanding of 29,371 and 30,447 as of September 30, 2018 and March 31, 2018, respectively) Additional paid-in capital Retained earnings Accumulated other comprehensive loss 294 304 167,587 785,871 (12,983) 940,779 1,264,379 171,094 695,580 Total stockholders' equity Total liabilities and stockholders' equity 846,787 1,423,968 $ See accompanying notes to the condensed consolidated financial statements. DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (dollar and share data amounts in thousands, except per share data) Three Months Ended September 30 Six Months Ended September 30 2018 2017 2018 2017 $501,913 $ 482,460 $ 752,507 692,177 376,435 315,742 304,643 11,099 Net sales Cost of sales 250,026 251,887 161,475 90,412 257,343 225,117 157,762 67,355 385,655 366,852 315,854 50,998 Gross profit Selling, general and administrative expenses Income from operations Interest income Interest expense Other (income) expense, net (509) 1,531 (2,400 2,874 (961) 2,538 1,640 1,365 9,734 2,296 7,438 Total other expense, net 637 89,775 15,403 74,372 1,034 66,321 16,762 49,559 274 50,724 6,759 43,965 Income before income taxes Income tax expense Net income Other comprehensive (loss) income, net of tax (1,197 (3,861) (5,058) 69,314 $ (4,683) 4,518 (165) 7,273 Unrealized (loss) gain on cash flow hedges Foreign currency translation (loss) gain 4,126 2,968 2,057 (11,324) (7,198) 36,767 $ Total other comprehensive (loss) income Comprehensive income 51,616 $ Net income per share 1.55 $ Basic Diluted 0.23 2.48 $ 0.23 Weighted-average common shares outstanding Basic Diluted 29,849 30,028 32,015 32,272 30,134 30,327 32,003 32,256 See accompanying notes to the condensed consolidated financial statements DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (dollar amounts in thousands) Six Months Ended September 30 2018 2017 OPERATING ACTIVITIES Net income 43,965S 7,438 Adjustments to reconcile net income to cash provided by operating activities: 24,453 Depreciation, amortization and accretion Loss on extinguishment of debt Bad debt expense Deferred tax benefit Stock-based compensation Employee stock purchase plan Excess tax benefits from stock compensation Gain) loss on sale of assets Impairment of intangible and other long-lived assets Restructuring charges Changes in operating assets and liabilities 22,134 445 2,394 (2,029) 7,362 90 1,336 (94) 4,678 3,449) 6,798 68 76 273 393 1,518 295 Trade accounts receivable, net Inventories, net Prepaid expenses and other current assets Income tax receivable Other assets Trade accounts payable Accrued expenses Income taxes payable Long-term liabilities (158,883) (227,257) (152,607) (256,709) (2,096) 16,999 (667) 148,894 11,132 1,722 183,638 (28,120) 4,810 (182,790) Net cash used in operating activities (160,737) INVESTING ACTIVITIES Purchases of property and equipment Proceeds from sales of property and equipment, net (14,091) 68 (14,023) (10,158) Net cash used in investing activities (10,151) FINANCING ACTIVITIES Proceeds from short-term borrowings Repayments of short-term borrowings Proceeds on issuance of stock for employee stock purchase plan Cash paid for shares withheld for taxes Cash paid for repurchases of comm Loan origination costs on short-term borrowings Repayment of mortgage principal 108,001 (37,000) 474 156,751 (24,000) 353 (1,871) (134,735) (1,276) on stock Net cash (used in) provided by financing activities Effect of foreign currency exchange rates on cash Net change in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period (69,404) 130,968 (247,778) 429,970 182,192 $ (61,178) 291,764 230,586 DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) dollar amounts in thousands) (continued) Six Months Ended September 30, 2018 2017 SUPPLEMENTAL CASH FLOW DISCLOSURE Cash paid (refunded) during the period Income taxes, net of refunds and payments of $3,730 and $4,111, as of September 30, 2018 and 2017, respectively Interest 8,682 S 2,272 (14,397) 1,607 Non-cash investing and financing activities Accrued for purchases of property and equipment Accrued for asset retirement obligations 2,968 2,757 540 70 See accompanying notes to the condensed consolidated financial statements. Internal Comparison/Analyses: 1. Study and analye your company's financial statements (Balance Sheet, Income Statement, and Statement of Cash Flows) and relevant financial statement notes provided in its 10K filing. Calculate and analyze growth rates of major accounts of your company's financial statements for the past two - three years, and analye significant changes. 2. Calculate and anah'ze your company's common-sized Balance Sheet and common-sized ncome Statement for the past two- three years. Summarize your analysis. Then read the Management Discussion and Analysis (MD&A) section of your company's 10K carefullv, summarize the MD&A and check whether vour common-sized financial statements analyses are on the right track. Revise your analyses according to the new information you learned from MD&A. You may reference the company's MD&A in our fevised summafy. Please calculate key financial ratios (as listed in your textbook P64 Table 3.5 except for EBITDA ratio) of your company. Utilize these ratios and evaluate and analyze your company's short term liquidity, asset utilization efficiency, financial leverage and coverage, profitability, and market performance. Utilize above analyses to summarize your company's past and current financial position and financial performance. This summary should be within 100-200 words. 3. 4. DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (dollar and share data amounts in thousands, except par value) September 30, 2018 March 31, 2018 ASSETS Current assets (UNAUDITED) 182,192 $ Cash and cash equivalents Trade accounts receivable, net of allowances ($14,019 and $33,462 as of September 30, 2018 and March 31, 2018, respectively) Inventories, net of reserves ($8,136 and S9,020 as of September 30, 2018 and March 31, 2018, respectively) Prepaid expenses Other current assets Income tax receivable 429,970 321,784 143,704 514,927 36,671 1,731 1,078,465 299,602 17,639 17,599 2,176 910,690 Total current assets Property and equipment, net of accumulated depreciation ($219,969 and $210,763 as of September 30, 2018 and March 31, 2018, respectively) Goodwill Other intangible assets, net of accumulated amortization ($68,755 and $66,065 as of September 30, 2018 and March 31, 2018, respectively) Deferred tax assets, net Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities 215,720 13,990 220,162 13,990 54,356 38,878 22,559 1,423,968 $ 38,381 23,306 1,264,379 71,473 277,577 31,692 42,887 14,283 10,305 448,217 31,210 62,053 20,505 Short-term borrowings 93,939 55,695 24,446 11,006 3,502 189,166 Trade accounts payable Accrued payroll Other accrued expenses Income taxes payable Value added tax payable Total current liabilities Mortgage payable Income tax liability Deferred rent obligations 31,504 64,735 Other long-term liabilities Total long-term liabilities 15,696 128,964 134,434 Commitments and contingencies Stockholders' equity Common stock ($0.01 par value; 125,000 shares authorized; shares issued and outstanding of 29,371 and 30,447 as of September 30, 2018 and March 31, 2018, respectively) Additional paid-in capital Retained earnings Accumulated other comprehensive loss 294 304 167,587 785,871 (12,983) 940,779 1,264,379 171,094 695,580 Total stockholders' equity Total liabilities and stockholders' equity 846,787 1,423,968 $ See accompanying notes to the condensed consolidated financial statements. DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (dollar and share data amounts in thousands, except per share data) Three Months Ended September 30 Six Months Ended September 30 2018 2017 2018 2017 $501,913 $ 482,460 $ 752,507 692,177 376,435 315,742 304,643 11,099 Net sales Cost of sales 250,026 251,887 161,475 90,412 257,343 225,117 157,762 67,355 385,655 366,852 315,854 50,998 Gross profit Selling, general and administrative expenses Income from operations Interest income Interest expense Other (income) expense, net (509) 1,531 (2,400 2,874 (961) 2,538 1,640 1,365 9,734 2,296 7,438 Total other expense, net 637 89,775 15,403 74,372 1,034 66,321 16,762 49,559 274 50,724 6,759 43,965 Income before income taxes Income tax expense Net income Other comprehensive (loss) income, net of tax (1,197 (3,861) (5,058) 69,314 $ (4,683) 4,518 (165) 7,273 Unrealized (loss) gain on cash flow hedges Foreign currency translation (loss) gain 4,126 2,968 2,057 (11,324) (7,198) 36,767 $ Total other comprehensive (loss) income Comprehensive income 51,616 $ Net income per share 1.55 $ Basic Diluted 0.23 2.48 $ 0.23 Weighted-average common shares outstanding Basic Diluted 29,849 30,028 32,015 32,272 30,134 30,327 32,003 32,256 See accompanying notes to the condensed consolidated financial statements DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (dollar amounts in thousands) Six Months Ended September 30 2018 2017 OPERATING ACTIVITIES Net income 43,965S 7,438 Adjustments to reconcile net income to cash provided by operating activities: 24,453 Depreciation, amortization and accretion Loss on extinguishment of debt Bad debt expense Deferred tax benefit Stock-based compensation Employee stock purchase plan Excess tax benefits from stock compensation Gain) loss on sale of assets Impairment of intangible and other long-lived assets Restructuring charges Changes in operating assets and liabilities 22,134 445 2,394 (2,029) 7,362 90 1,336 (94) 4,678 3,449) 6,798 68 76 273 393 1,518 295 Trade accounts receivable, net Inventories, net Prepaid expenses and other current assets Income tax receivable Other assets Trade accounts payable Accrued expenses Income taxes payable Long-term liabilities (158,883) (227,257) (152,607) (256,709) (2,096) 16,999 (667) 148,894 11,132 1,722 183,638 (28,120) 4,810 (182,790) Net cash used in operating activities (160,737) INVESTING ACTIVITIES Purchases of property and equipment Proceeds from sales of property and equipment, net (14,091) 68 (14,023) (10,158) Net cash used in investing activities (10,151) FINANCING ACTIVITIES Proceeds from short-term borrowings Repayments of short-term borrowings Proceeds on issuance of stock for employee stock purchase plan Cash paid for shares withheld for taxes Cash paid for repurchases of comm Loan origination costs on short-term borrowings Repayment of mortgage principal 108,001 (37,000) 474 156,751 (24,000) 353 (1,871) (134,735) (1,276) on stock Net cash (used in) provided by financing activities Effect of foreign currency exchange rates on cash Net change in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period (69,404) 130,968 (247,778) 429,970 182,192 $ (61,178) 291,764 230,586 DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) dollar amounts in thousands) (continued) Six Months Ended September 30, 2018 2017 SUPPLEMENTAL CASH FLOW DISCLOSURE Cash paid (refunded) during the period Income taxes, net of refunds and payments of $3,730 and $4,111, as of September 30, 2018 and 2017, respectively Interest 8,682 S 2,272 (14,397) 1,607 Non-cash investing and financing activities Accrued for purchases of property and equipment Accrued for asset retirement obligations 2,968 2,757 540 70 See accompanying notes to the condensed consolidated financial statements