Refer to the “Index to Consolidated Financial Statements and Financial Statement Schedule” on page F-1 of this Annual Report on Form 10-K for our Consolidated Financial Statements and the Reports of Independent Registered Public Accounting Firm.

EXHIBIT INDEX

Exhibit Number		Description of Exhibit
3.1		Amended and Restated Certificate of Incorporation of Deckers Outdoor Corporation, as amended through May 27, 2010 (Exhibit 3.1 to the Registrant's Form 10-Q filed on August 9, 2010 and incorporated by reference herein)
3.2		Amended and Restated Bylaws of Deckers Outdoor Corporation, as updated through April 26, 2018 (Exhibit 3.1 to the Registrant's Form 8-K filed on April 30, 2018 and incorporated by reference herein)
10.1		Lease Agreement, dated September 15, 2004, by and between Mission Oaks Associates, LLC and Deckers Outdoor Corporation for distribution center at 3001 Mission Oaks Blvd., Camarillo, CA 93012 (Exhibit 10.37 to the Registrant's Form 10-K filed on March 16, 2005 and incorporated by reference herein)
10.2		First Amendment to Lease Agreement, dated December 1, 2004, by and between Mission Oaks Associates, LLC and Deckers Outdoor Corporation for distribution center at 3001 Mission Oaks Blvd., Camarillo, CA 93012 (Exhibit 10.38 to the Registrant's Form 10-K filed on March 16, 2005 and incorporated by reference herein)
10.3		Amendment to Lease Agreement, dated September 1, 2011, by and between Mission Oaks Associates, LLC and Deckers Outdoor Corporation for distribution center at 3001 Mission Oaks Blvd., Camarillo, CA 93012 (Exhibit 10.23 to the Registrant's Form 10-K filed on February 29, 2012 and incorporated by reference herein)
10.4		Amendment to Lease Agreement, dated September 1, 2011, by and between 450 N. Baldwin Park Associates, LLC and Deckers Outdoor Corporation for distribution center at 3175 Mission Oaks Blvd., Camarillo, CA 93012 (Exhibit 10.24 to the Registrant's Form 10-K filed on February 29, 2012 and incorporated by reference herein)
10.5		Lease Agreement, dated December 5, 2013, by and between Moreno Knox, LLC and Deckers Outdoor Corporation for distribution center at 17791 Perris Blvd., Moreno Valley, CA 92551 (Exhibit 10.6 to the Registrant’s Form 10-K filed on March 3, 2014 and incorporated by reference herein)
*10.6		First Amendment to Lease Agreement, dated June 6, 2017, by and between Moreno Knox, LLC and Deckers Outdoor Corporation for distribution center at 17791 Perris Blvd., Moreno Valley, CA 92551
*10.7		Second Amendment to Lease Agreement, dated July 17, 2017, by and between Moreno Knox, LLC and Deckers Outdoor Corporation for distribution center at 17791 Perris Blvd., Moreno Valley, CA 92551
10.8		Second Amended and Restated Credit Agreement, dated November 13, 2014, by and among Deckers Outdoor Corporation, as Borrower, JPMorgan Chase Bank, National Association, as Administrative Agent, Comerica Bank and HSBC Bank USA, National Association, as Co-Syndication Agents, and the lenders from time to time party thereto (Exhibit 10.1 to the Registrant’s Form 8-K filed on November 19, 2014 and incorporated by reference herein)
*10.9		Amendment No. 1, dated August 28, 2015, to Second Amended and Restated Credit Agreement, dated as of November 13, 2014, among the Company, the designated borrowers, JPMorgan Chase Bank, National Association, as Administrative Agent and the lenders party thereto
*10.10		Amendment No. 2, dated October 3, 2016, to Second Amended and Restated Credit Agreement, dated as of November 13, 2014, among the Company, the designated borrowers, JPMorgan Chase Bank, National Association, as Administrative Agent and the lenders party thereto
10.11		Amendment No. 3, dated November 21, 2017, to Second Amended and Restated Credit Agreement, dated as of November 13, 2014, among the Company, the designated borrowers, JPMorgan Chase Bank, National Association, as Administrative Agent and the lenders party thereto (Exhibit 10.1 to the Registrant’s Form 8-K filed on November 22, 2017 and incorporated by reference herein)
10.12		Term Loan Agreement, dated July 9, 2014, by and among Deckers Cabrillo, LLC, as Borrower and California Bank & Trust, as Lender (Exhibit 10.1 to the Registrant’s Form 8-K filed on July 15, 2014 and incorporated by reference herein)
10.13		Continuing Guaranty Agreement, dated July 9, 2014, by and among Deckers Outdoor Corporation and California Bank & Trust (Exhibit 10.2 to the Registrant’s Form 8-K filed on July 15, 2014 and incorporated by reference herein)

10.14		Deed of Trust, Assignment of Leases and Rents and Security Agreement (including Fixture Filing), dated July 9, 2014, executed by Deckers Cabrillo, LLC (Exhibit 10.3 to the Registrant’s Form 8-K filed on July 15, 2014 and incorporated by reference herein)
#10.15		Form of Change of Control and Severance Agreement (Exhibit 10.19 to the Registrant’s Form 10-K filed on May 30, 2017 and incorporated by reference herein)
#10.16		Consulting Agreement and General Release, dated May 24, 2016 and effective May 31, 2016, entered into by and between Deckers Outdoor Corporation and Angel Martinez (Exhibit 10.1 to the Registrant’s Form 8-K filed on May 27, 2016 and incorporated by reference herein)
#10.17		Deckers Outdoor Corporation 2006 Equity Incentive Plan (Appendix A to the Registrant's Definitive Proxy Statement filed on April 21, 2006 and incorporated by reference herein)
#10.18		First Amendment to Deckers Outdoor Corporation 2006 Equity Incentive Plan (Appendix A to the Registrant's Definitive Proxy Statement filed on April 9, 2007 and incorporated by reference herein)
#10.19		Deckers Outdoor Corporation Second Amended and Restated Deferred Stock Unit Compensation Plan, effective as of December 16, 2015 (Exhibit 10.1 to the Registrant's Form 10-Q filed on November 9, 2017 and incorporated by reference herein)
#10.20		Deckers Outdoor Corporation Amended and Restated Deferred Compensation Plan, effective July 1, 2016 (Exhibit 10.2 to the Registrant’s Form 10-Q filed on November 9, 2017 and incorporated by reference herein)
#10.21		Form of Deckers Outdoor Corporation Management Incentive Program under the 2006 Equity Incentive Plan (Exhibit 10.28 to the Registrant’s Form 10-K filed on March 1, 2013 and incorporated by reference herein)
#10.22		Form of Stock Unit Award Agreement under the 2006 Equity Incentive Plan (Exhibit 10.28 to the Registrant’s Form 10-K filed on March 3, 2014 and incorporated by reference herein)
#10.23		Form of Stock Unit Award Agreement (2015 Performance-Based PSU) under the 2006 Equity Incentive Plan (Exhibit 10.3 to the Registrant’s Form 10-Q filed on November 9, 2017 and incorporated by reference herein)
#10.24		Form of Stock Unit Award Agreement (2015 Time-Based RSU) under the 2006 Equity Incentive Plan (Exhibit 10.4 to the Registrant’s Form 10-Q filed on November 9, 2017 and incorporated by reference herein)
#10.25		Form of Stock Unit Award Agreement (2016 Performance-Based PSU) under the 2006 Equity Incentive Plan (Exhibit 10.5 to the Registrant’s Form 10-Q filed on November 9, 2017 and incorporated by reference herein)
#10.26		Deckers Outdoor Corporation 2015 Employee Stock Purchase Plan (Appendix A to the Registrant's Definitive Proxy Statement filed on July 29, 2015 and incorporated by reference herein)
#10.27		Deckers Outdoor Corporation 2015 Stock Incentive Plan (Appendix B to the Registrant's Definitive Proxy Statement filed on July 29, 2015 and incorporated by reference herein)
#10.28		Management Incentive Plan (Exhibit 10.1 to the Registrant's Form 10-Q filed on August 10, 2015 and incorporated by reference herein)
#10.29		2016 Non-Vested Stock Unit (NSU) Award Agreement (Exhibit 10.2 to the Registrant's Form 10-Q filed on August 10, 2015 and incorporated by reference herein)
#10.30		Form of Restricted Stock Unit Award Agreement under the 2015 Stock Incentive Plan (2016 LTIP Financial Performance Award) (Exhibit 10.1 to the Registrant’s Form 8-K filed on November 24, 2015 and incorporated by reference herein)
#10.31		Form of Stock Unit Award Agreement (2016 Time-Based RSU) under the 2015 Stock Incentive Plan (Exhibit 10.6 to the Registrant’s Form 10-Q filed on November 9, 2017 and incorporated by reference herein)
#10.32		Form of Stock Unit Award Agreement (2017 Performance-Based RSU) under the 2015 Stock Incentive Plan (Exhibit 10.1 to the Registrant’s Form 10-Q filed on August 9, 2016 and incorporated by reference herein)
#10.33		Form of Stock Unit Award Agreement (2017 Time-Based RSU) under the 2015 Stock Incentive Plan (Exhibit 10.2 to the Registrant’s Form 10-Q filed on August 9, 2016 and incorporated by reference herein)
#10.34		Form of Stock Unit Award Agreement (2018 Time-Based RSU) under the 2015 Stock Incentive Plan (Exhibit 10.1 to the Registrant’s Form 10-Q filed on August 9, 2017 and incorporated by reference herein)
#10.35		Form of Stock Unit Award Agreement (2018 Performance-Based PSU) under the 2015 Stock Incentive Plan (Exhibit 10.2 to the Registrant’s Form 10-Q filed on August 9, 2017 and incorporated by reference herein)

#10.36		Form of Performance Stock Option Agreement under 2015 Stock Incentive Plan (Exhibit 10.3 to the Registrant’s Form 10-Q filed on August 9, 2017 and incorporated by reference herein)
*21.1		Subsidiaries of Registrant
*23.1		Consent of Independent Registered Public Accounting Firm
*31.1		Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) under the Exchange Act, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended
*31.2		Certification of the Principal Financial and Accounting Officer pursuant to Rule 13a-14(a) under the Exchange Act, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended
**32		Certification pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*101.INS		XBRL Instance Document
*101.SCH		XBRL Taxonomy Extension Schema Document
*101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
*101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
*101.LAB		XBRL Taxonomy Extension Label Linkbase Document
*101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

• Filed herewith.

** Furnished herewith.

Management contract or compensatory plan or arrangement.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

DECKERS OUTDOOR CORPORATION (Registrant)
/s/ THOMAS A. GEORGE
Thomas A. George Chief Financial Officer (Principal Financial and Accounting Officer)

Date: May 30, 2018

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ DAVID POWERS	Chief Executive Officer, President and Director (Principal Executive Officer)	May 30, 2018
David Powers
/s/ THOMAS A. GEORGE	Chief Financial Officer (Principal Financial and Accounting Officer)	May 30, 2018
Thomas A. George
/s/ JOHN M. GIBBONS	Chairman of the Board	May 30, 2018
John M. Gibbons
/s/ KARYN O. BARSA	Director	May 30, 2018
Karyn O. Barsa
/s/ NELSON C. CHAN	Director	May 30, 2018
Nelson C. Chan
/s/ MICHAEL F. DEVINE, III	Director	May 30, 2018
Michael F. Devine, III
/s/ WILLIAM L. MCCOMB	Director	May 30, 2018
William L. McComb
/s/ JAMES QUINN	Director	May 30, 2018
James Quinn
/s/ LAURI M. SHANAHAN	Director	May 30, 2018
Lauri M. Shanahan
/s/ BONITA C. STEWART	Director	May 30, 2018
Bonita C. Stewart

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

AND FINANCIAL STATEMENT SCHEDULE

	Page
Consolidated Financial Statements:
Reports of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of March 31, 2018 and 2017	F-4
Consolidated Statements of Comprehensive Income (Loss) for the years ended March 31, 2018, 2017, and 2016	F-5
Consolidated Statements of Stockholders' Equity for the years ended March 31, 2018, 2017, and 2016	F-6
Consolidated Statements of Cash Flows for the years ended March 31, 2018, 2017, and 2016	F-7
Notes to Consolidated Financial Statements	F-8
Consolidated Financial Statement Schedule:
Schedule II - Total Valuation and Qualifying Accounts for the years ended March 31, 2018, 2017, and 2016	F-44

All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.

The defined periods for the fiscal years ended March 31, 2018, 2017, and 2016 in the consolidated financial statements, notes and financial statement schedule thereto are expressed herein as "year ended" or "years ended".

F-1

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Deckers Outdoor Corporation:

Opinion on Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Deckers Outdoor Corporation and subsidiaries (the Company) as of March 31, 2018 and 2017, the related consolidated statements of comprehensive income (loss), stockholders' equity, and cash flows for each of the years ended March 31, 2018, 2017 and 2016, and the related notes and financial statement schedule (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years ended March 31, 2018, 2017 and 2016 in conformity with United States (US) generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of March 31, 2018, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated May 30, 2018 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

We have served as the Company's auditor since 1992.

Los Angeles, California

May 30, 2018

F-2

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Deckers Outdoor Corporation:

Opinion on Internal Control over Financial Reporting

We have audited Deckers Outdoor Corporation (the Company) internal control over financial reporting as of March 31, 2018 based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2018, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States or US) (PCAOB), the consolidated balance sheets of the Company as of March 31, 2018 and 2017, the related consolidated statements of comprehensive income (loss), stockholders' equity, and cash flows for each of the years ended March 31, 2018, 2017 and 2016, and the related notes and financial statement schedule (collectively, the consolidated financial statements), and our report dated May 30, 2018 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's report on internal control over financial reporting in Item 9A(b). Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

Los Angeles, California

May 30, 2018

F-3

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except par value)

	As of March 31,
	2018				2017
ASSETS
Current assets:
Cash and cash equivalents	$	429,970			$	291,764
Trade accounts receivable, net of allowances ($33,462 and $32,354 as of March 31, 2018 and March 31, 2017, respectively)	143,704				158,643
Inventories, net of reserves ($9,020 and $7,638 as of March 31, 2018 and March 31, 2017, respectively)	299,602				298,851
Prepaid expenses	17,639				15,996
Other current assets	17,599				30,781
Income tax receivable	2,176				24,786
Total current assets	910,690				820,821
Property and equipment, net of accumulated depreciation ($210,763 and $190,758 as of March 31, 2018 and March 31, 2017, respectively)	220,162				225,531
Goodwill	13,990				13,990
Other intangible assets, net of accumulated amortization ($66,065 and $56,944 as of March 31, 2018 and March 31, 2017, respectively)	57,850				65,138
Deferred tax assets, net	38,381				44,708
Other assets	23,306				21,592
Total assets	$	1,264,379			$	1,191,780
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings	$	578			$	550
Trade accounts payable	93,939				95,893
Accrued payroll	55,695				22,608
Other accrued expenses	24,446				31,815
Income taxes payable	11,006				2,719
Value added tax payable	3,502				5,466
Total current liabilities	189,166				159,051
Long-term liabilities:
Mortgage payable	31,504				32,082
Income tax liability	64,735				13,216
Deferred rent obligations	22,499				18,433
Other long-term liabilities	15,696				14,743
Total long-term liabilities	134,434				78,474
Commitments and contingencies
Stockholders' equity:
Common stock ($0.01 par value; 125,000 shares authorized; shares issued and outstanding of 30,447 and 31,987 as of March 31, 2018 and March 31, 2017, respectively)	304				320
Additional paid-in capital	167,587				160,797
Retained earnings	785,871				819,589
Accumulated other comprehensive loss	(12,983		)		(26,451		)
Total stockholders' equity	940,779				954,255
Total liabilities and stockholders' equity	$	1,264,379			$	1,191,780

See accompanying notes to the consolidated financial statements.

F-4

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(amounts in thousands, except per share data)

	Years Ended March 31,
	2018				2017				2016
Net sales	$	1,903,339			$	1,790,147			$	1,875,197
Cost of sales	971,697				954,912				1,028,529
Gross profit	931,642				835,235				846,668
Selling, general and administrative expenses	709,058				837,154				684,541
Income (loss) from operations	222,584				(1,919		)		162,127
Other expense (income):
Interest income	(3,057		)		(778		)		(420		)
Interest expense	4,585				7,319				5,814
Other expense (income), net	360				(1,474		)		(152		)
Total other expense, net	1,888				5,067				5,242
Income (loss) before income taxes	220,696				(6,986		)		156,885
Income tax expense (benefit)	106,302				(12,696		)		34,620
Net income	114,394				5,710				122,265
Other comprehensive income (loss), net of tax:
Unrealized (loss) gain on foreign currency exchange rate hedges	(613		)		704				461
Foreign currency translation gain (loss)	14,081				(6,598		)		(550		)
Total other comprehensive income (loss)	13,468				(5,894		)		(89		)
Comprehensive income (loss)	$	127,862			$	(184	)		$	122,176
Net income per share:
Basic	$	3.60			$	0.18			$	3.76
Diluted	$	3.58			$	0.18			$	3.70
Weighted-average common shares outstanding:
Basic	31,758				32,000				32,556
Diluted	31,996				32,355				33,039

See accompanying notes to the consolidated financial statements.

F-5

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(amounts in thousands)

	Common Stock							Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive Loss				Total Stockholders' Equity
	Shares			Amount
Balance, March 31, 2015	33,292			$	333			$	158,777			$	798,370			$	(20,468	)		$	937,012
Stock compensation expense	16			—				6,622				—				—				6,622
Shares issued upon vesting	132			1				(1		)		—				—				—
Excess tax benefit from stock compensation	—			—				471				—				—				471
Shares withheld for taxes	—			—				(4,610		)		—				—				(4,610		)
Repurchases of common stock	(1,420	)		(14		)		—				(94,186		)		—				(94,200		)
Net income	—			—				—				122,265				—				122,265
Total other comprehensive loss	—			—				—				—				(89		)		(89		)
Balance, March 31, 2016	32,020			320				161,259				826,449				(20,557		)		967,471
Stock compensation expense	23			—				6,175				—				—				6,175
Shares issued upon vesting	166			2				796				—				—				798
Excess tax benefit from stock compensation	—			—				100				—				—				100
Shares withheld for taxes	—			—				(7,533		)		—				—				(7,533		)
Repurchases of common stock	(222	)		(2		)		—				(12,570		)		—				(12,572		)
Net income	—			—				—				5,710				—				5,710
Total other comprehensive loss	—			—				—				—				(5,894		)		(5,894		)
Balance, March 31, 2017	31,987			320				160,797				819,589				(26,451		)		954,255
Stock compensation expense	15			—				14,302				—				—				14,302
Shares issued upon vesting	148			1				764				—				—				765
Recently adopted ASU impact (refer to Note 1)	—			—				—				1,558				—				1,558
Shares withheld for taxes	—			—				(8,276		)		—				—				(8,276		)
Repurchases of common stock	(1,703	)		(17		)		—				(149,670		)		—				(149,687		)
Net income	—			—				—				114,394				—				114,394
Total other comprehensive income	—			—				—				—				13,468				13,468
Balance, March 31, 2018	30,447			$	304			$	167,587			$	785,871			$	(12,983	)		$	940,779

See accompanying notes to the consolidated financial statements.

F-6

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

	Years Ended March 31,
	2018				2017				2016
Cash flows from operating activities:
Net income	$	114,394			$	5,710			$	122,265
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	48,572				52,628				50,024
Change in fair value of contingent consideration	—				—				(4,411		)
Bad debt expense	4,168				2,847				5,120
Deferred tax expense (benefit)	8,138				(24,495		)		8,167
Stock-based compensation	14,302				6,175				6,622
Excess tax benefits from stock compensation	1,945				100				471
Loss (gain) on sale of assets	387				538				(1,338		)
Impairment of goodwill	—				113,944				—
Impairment of intangible and other long-lived assets	2,417				13,222				9,773
Restructuring charges	1,667				28,984				24,673
Changes in operating assets and liabilities:
Trade accounts receivable, net	10,770				(1,336		)		(23,545		)
Inventories, net	(751		)		1,060				(61,492		)
Prepaid expenses and other current assets	11,124				7,975				(3,681		)
Income tax receivable	26,999				(1,331		)		(8,286		)
Other assets	(1,714		)		2,257				(3,082		)
Trade accounts payable	(2,184		)		(7,825		)		14,775
Contingent consideration	—				—				(819		)
Accrued expenses	28,627				(403		)		(16,221		)
Income taxes payable	(3,638		)		(3,743		)		(397		)
Long-term liabilities	62,128				3,023				7,195
Net cash provided by operating activities	327,351				199,330				125,813
Cash flows from investing activities:
Purchases of property and equipment, net	(34,813		)		(44,499		)		(66,186		)
Proceeds from sales of property and equipment, net	116				—				830
Purchases of tangible, intangible, and other assets, net	—				—				(4,700		)
Proceeds from sale of net assets	—				—				2,835
Net cash used in investing activities	(34,697		)		(44,499		)		(67,221		)
Cash flows from financing activities:
Proceeds from short-term borrowings	214,751				405,988				449,200
Repayments of short-term borrowings	(214,889		)		(468,938		)		(387,120		)
Proceeds on issuance of stock for employee stock purchase plan	765				798				—
Cash paid for shares withheld for taxes	(8,105		)		(8,452		)		(3,691		)
Cash paid for repurchases of common stock	(149,687		)		(12,572		)		(94,200		)
Contingent consideration paid	—				(20,058		)		(445		)
Loan origination costs on short-term borrowings	—				—				(62		)
Repayment of mortgage principal	(550		)		(523		)		(493		)
Net cash used in financing activities	(157,715		)		(103,757		)		(36,811		)
Effect of foreign currency exchange rates on cash	3,267				(5,266		)		(968		)
Net change in cash and cash equivalents	138,206				45,808				20,813
Cash and cash equivalents at beginning of period	291,764				245,956				225,143
Cash and cash equivalents at end of period	$	429,970			$	291,764			$	245,956

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(continued)

	Years Ended March 31,
	2018				2017				2016
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes paid, net of refunds ($23,133, $17,132 and $501 as of March 31, 2018, 2017 and 2016, respectively)	$	14,407			$	14,099			$	29,916
Interest	3,774				5,494				4,640
Non-cash investing and financing activities:
Accrued for purchases of property and equipment	2,020				1,101				2,640
Accrued for asset retirement obligations	1,359				2,359				1,394
Accrued for shares withheld for taxes	171				—				919

See accompanying notes to the consolidated financial statements.

F-7

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

Note 1. General

The Company and Basis of Presentation

The consolidated financial statements and notes thereto include the accounts of Deckers Outdoor Corporation together with its wholly-owned consolidated subsidiaries (collectively referred to herein as the Company). Accordingly, all references to Deckers Outdoor Corporation or Deckers include the consolidated results of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Deckers Outdoor Corporation is a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories developed for both everyday casual lifestyle use and high performance activities. As part of its Omni-Channel platform, the Company's brands are aligned across its Fashion Lifestyle group, including the UGG® (UGG) and Koolaburra® (Koolaburra) brands, and Performance Lifestyle group, including the Teva® (Teva), Sanuk® (Sanuk), and Hoka One One® (Hoka) brands.

The Company sells its products through quality domestic and international retailers, international distributors, and directly to its global consumers through its Direct-to-Consumer (DTC) business, which is comprised of its retail stores and E-Commerce websites. Independent third party contractors manufacture all of the Company's products.

The Company was incorporated in 1975 under the laws of the State of California and was reincorporated under the laws of the State of Delaware in 1993.

Reportable Operating Segments

The Company has five reportable operating segments including the strategic business units for the worldwide wholesale operations of the UGG brand, Teva brand, Sanuk brand and other brands, as well as DTC. It is by these reportable operating segments that information is reported to the Chief Operating Decision Maker, who is the Principal Executive Officer. The Company performs an annual assessment of the appropriateness of its reportable operating segments. Refer to Note 12, "Reportable Operating Segments," for further information on the Company's reportable operating segments.

Use of Estimates

The preparation of the Company's consolidated financial statements and notes thereto are in accordance with accounting principles generally accepted in the United States (US GAAP), which requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and notes thereto. Management bases these estimates and assumptions upon historical experience, existing and known circumstances, authoritative accounting pronouncements and other factors that management believes to be reasonable. Significant areas requiring the use of management estimates relate to inventory write-downs, accounts receivable allowances, returns liabilities, stock-based compensation, impairment assessments, depreciation and amortization, income tax liabilities, uncertain tax positions and income taxes receivable, the fair value of financial instruments, and the fair values of assets and liabilities, including goodwill and other intangible assets. These estimates are based on information available as of the date of the consolidated financial statements and notes thereto, and actual results could differ materially from the results assume or implied based on these estimates.

Re-classifications

Certain re-classifications were made for all prior periods presented including the years ended March 31, 2017 and 2016, to conform to the current period presentation.

F-8

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

Foreign Currency Translation

The Company considers the United States (US) dollar as its functional currency. The Company’s wholly-owned foreign subsidiaries have various assets and liabilities, primarily cash, receivables, and payables, which are denominated in currencies other than their functional currency. The Company re-measures these monetary assets and liabilities using the exchange rate at the end of the reporting period, which results in gains and losses that are included in selling, general and administrative (SG&A) expenses in the consolidated statements of comprehensive income (loss) as incurred, except for gains and losses arising on intercompany foreign currency transactions that are of a long-term investment nature. In addition, the Company translates assets and liabilities of subsidiaries with reporting currencies other than US dollars into US dollars using the exchange rates at of the end of the reporting period, which results in financial statement translation gains and losses in other comprehensive income (loss) (OCI).

Summary of Significant Accounting Policies

Cash Equivalents. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents included $268,976 and $198,992 of money market funds as of March 31, 2018 and 2017, respectively.

Allowance for Doubtful Accounts. The Company provides an allowance against trade accounts receivable for estimated losses that may result from customers' inability to pay. The Company determines the amount of the allowance by analyzing known uncollectible accounts, aged trade accounts receivable, economic conditions and forecasts, historical experience and the customers' credit-worthiness. Trade accounts receivable that are subsequently determined to be uncollectible are charged or written off against this allowance. Write-offs against this allowance are recorded in SG&A expenses in the consolidated statements of comprehensive income (loss). The allowance includes specific allowances for trade accounts, for which all or a portion are identified as potentially uncollectible based on known or anticipated losses.

Allowance for Sales Discounts. The Company provides an allowance for term discounts for wholesale channel sales against trade accounts receivable, which reflects a discount that customers may take, generally based upon meeting certain order, shipment and prompt or early 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 the consolidated statements of comprehensive income (loss) and write-offs are recorded against the allowance for trade accounts receivable in the consolidated balance sheets.

Allowance for Chargebacks. The Company provides an allowance against chargebacks from wholesale customers. When customers pay their invoices, they may take deductions against their invoices that can include chargebacks for price differences, discounts, markdowns, short shipments and other reasons. Therefore, the Company records an allowance for the balance of chargebacks that are outstanding as of the end of each period. This estimate is based on historical trends of the timing and amount of chargebacks taken against wholesale channel customer invoices. Additions to the allowance are recorded against gross sales in the consolidated statements of comprehensive income (loss) and write-offs are recorded against the allowance for trade accounts receivable in the consolidated balance sheets.

Allowance for Sales Returns and Sales Returns Liability. The Company provides an allowance against trade accounts receivable for anticipated future returns of goods shipped prior to period end for the wholesale channel and a liability for anticipated returns of goods sold direct to consumers. In general, the Company accepts returns for damaged or defective products for up to one year. The Company also has a policy whereby returns are accepted from DTC customers for up to 30 days from point of sale for cash or credit with a receipt. The Company bases the amounts of the allowance and liability on historical returns and any recent events that could result in a change from historical return rates, among other factors. Changes to the allowance and sales return liability are recorded against gross sales and costs of sales for related inventory in the consolidated statements of comprehensive income (loss). The sales return liability is recorded in other accrued expenses and the allowance for sales returns is recorded against trade accounts

F-9

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

receivable, and the related cost of sales for estimated product returns is offset to inventories in the consolidated balance sheets.

Inventories. Inventories, principally finished goods on hand and in transit, are stated at the lower of cost (weighted average) or market or net realizable value less an approximate normal profit margin at each financial statement date. Cost includes shipping and handling fees which are subsequently expensed to cost of sales. Market values are determined by historical experience with discounted sales, industry trends and the retail environment. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.

Property and Equipment, Depreciation and Amortization. Property and equipment is stated at cost less accumulated depreciation and amortization, and generally has a useful life expectancy of at least one year. Property and equipment includes tangible, non-consumable items owned by the Company. Software implementation costs are capitalized if they are incurred during the application development stage and relate to costs to obtain computer software from third parties, including related consulting expenses, or costs incurred to modify existing software that results in additional upgrades or enhancements that provide additional functionality. Software costs related to cloud computing arrangements are expensed as incurred, including labor.

Depreciation of property and equipment is calculated using the straight-line method based on the estimated useful life. Leasehold improvements are amortized to their residual value, if any, on the straight-line basis over their estimated economic useful lives or the lease term, whichever is shorter. Changes in the estimate of useful lives may occur after an asset is placed in service, for example, as a result of the Company incurring costs that prolong the useful life of an asset, and are recognized as an adjustment to deprecation over the revised remaining useful life. Depreciation and amortization are recorded in SG&A expenses in the consolidated statements of comprehensive income (loss).

Property and equipment is summarized as follows:

			As of March 31,
	Useful life (years)		2018				2017
Land	Indefinite		$	32,863			$	32,843
Building	39.5		38,945				38,990
Machinery and equipment	1-10		141,255				131,852
Furniture and fixtures	3-7		38,473				38,720
Computer software	3-10		72,310				67,750
Leasehold improvements	1-11		107,079				106,134
Gross property and equipment			430,925				416,289
Less accumulated depreciation and amortization			(210,763		)		(190,758		)
Property and equipment, net			$	220,162			$	225,531

F-10

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

Asset Retirement Obligations. The Company is contractually obligated under certain of its lease agreements to restore certain retail, office and warehouse facilities back to their original conditions. At lease inception, the present value of the estimated fair value of these liabilities is recorded along with the related asset. As of March 31, 2018 and 2017, liabilities for asset retirement obligations were $8,670 and $7,554, respectively, and are recorded in other long-term liabilities in the consolidated balance sheets.

Goodwill and Other Intangible Assets. Goodwill is initially recorded as the excess of the purchase price over the fair value of the net assets acquired in a business combination. Intangible assets consist primarily of indefinite-lived trademarks and definite-lived trademarks, customer and distributor relationships, patents, lease rights, and non-compete agreements arising from the application of purchase accounting. Definite-lived intangible assets are amortized to their estimated residual values, if any, on a straight-line basis over the estimated useful life and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable based on estimated undiscounted future cash flows. If impaired, the asset or asset group is written down to fair value based either on discounted future cash flows or appraised values. Impairment charges and amortization are recorded in SG&A expenses in the consolidated statements of comprehensive income (loss).

Goodwill and indefinite-lived intangible assets are not amortized, but are instead tested annually for impairment. The Company evaluates the Teva brand indefinite-lived trademarks for impairment at October 31st of each year, and evaluates the UGG brand and other brands’ wholesale reportable segment goodwill for impairment at December 31st of each year. The timing of the annual impairment assessment is prescribed by applicable accounting guidance. The Company also performs interim impairment assessments of goodwill and indefinite-lived intangible assets if events or changes in circumstances between annual tests indicate a potential impairment.

The Company first assesses qualitative factors to determine whether it is necessary to perform a quantitative assessment of goodwill or indefinite-lived intangible assets. In general, conditions that may indicate impairment include, but are not limited to the following: (1) a significant adverse change in customer demand or business climate that could affect the value of an asset; (2) change in market share; budget-to-actual performance; consistency of operating margins and capital expenditures; (3) changes in management or key personnel; or (4) changes in general economic conditions. The Company does not calculate the fair value of the assets unless the Company determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. If the Company concludes that it is more likely than not that its fair value is less than its carrying amount, then the Company compares the fair value of the asset to its carrying amount, and if the fair value exceeds its carrying amount, no impairment charge is recognized. If the fair value is less than its carrying amount, the Company will record an impairment charge to write down the asset to its fair value. The quantitative assessment requires an analysis of several best estimates and assumptions, including future sales and operating results, and other factors that could affect fair value or otherwise indicate potential impairment. The goodwill impairment assessment involves valuing the Company’s various reporting units that carry goodwill, which are currently the same as the Company’s reportable operating segments. This includes considering the reporting units' projected ability to generate income from operations and positive cash flow in future periods, as well as perceived changes in consumer demand and acceptance of products, or factors impacting the industry generally. Refer to Note 12, "Reportable Operating Segments," for further information on the Company's reportable operating segments.

Refer to Note 3, "Goodwill and Other Intangible Assets," for further information on the Company's goodwill and intangible assets and annual impairment assessment results.

Other Long-Lived Assets. Other long-lived assets, such as machinery and equipment, internal-use software, and leasehold improvements, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount exceeds the estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount exceeds the fair value of the asset. At least quarterly, the Company evaluates factors that would necessitate an impairment assessment, which include a significant adverse change in the extent or manner in which an asset is used, a significant adverse change in legal factors or the business climate that could affect the value of the asset or a significant decline in the observable market value of an asset, among others.

F-11

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

When an impairment-triggering event has occurred, the Company tests for recoverability of the asset group's carrying value using estimates of undiscounted future cash flows based on the existing service potential of the applicable asset group. In determining the service potential of a long-lived asset group, the Company considers its remaining useful life, cash-flow generating capacity, and physical output capacity. These estimates include the undiscounted future cash flows associated with future expenditures necessary to maintain the existing service potential. Long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. An impairment loss, if any, would only reduce the carrying amount of long-lived assets in the group based on the fair value of the asset group. Impairment charges are recorded in SG&A expenses in the consolidated statements of comprehensive income (loss).

During the years ended March 31, 2018, 2017, and 2016, the Company recognized impairment losses for other long-lived assets primarily for retail store related fixed assets and computer software of approximately $2,400, $11,300, and $19,000, respectively.

Derivative Instruments and Hedging Activities. The Company transacts business in various foreign currencies and has international sales and expenses denominated in foreign currencies, subjecting the Company to foreign currency exchange rate risk. The Company may enter into foreign currency exchange rate forward or option contracts, generally with maturities of 15 months or less, to reduce the volatility of cash flows primarily related to forecasted revenue denominated in certain foreign currencies. In addition, the Company utilizes foreign currency exchange rate contracts and other derivative instruments to mitigate foreign currency exchange rate risk associated with foreign currency-denominated assets and liabilities, primarily intercompany balances. The Company does not use foreign currency exchange rate contracts for trading purposes.

Certain of the Company's foreign currency exchange rate forward contracts are designated cash flow hedges of forecasted sales (Designated Derivative Contracts) and are subject to foreign currency exchange rate risk. These contracts allow the Company to sell Euros and British Pounds in exchange for US dollars at specified contract rates. The Company may also enter into foreign currency exchange rate contracts that are not designated as hedging instruments (Non-Designated Derivative Contracts), and these contracts are generally entered into to offset the gains and losses on certain intercompany balances until the expected time of repayment.

The notional amount of both the Designated and Non-Designated Derivative Contracts are recorded at fair value, based on Level 2 inputs, in other current assets or other accrued expenses in the consolidated balance sheets. The accounting for gains and losses resulting from changes in fair value depends on the use of the derivative instrument and whether it is designated and qualifies for hedge accounting. Changes in the fair value of Designated Derivative Contracts are recognized as a component of accumulated other comprehensive income (loss) (AOCI) within stockholders' equity, and are recognized in earnings in the consolidated statements of comprehensive income (loss) during the period which approximates the time the corresponding third-party sales occur. Changes in the fair value of Non-Designated Derivative Contracts are recorded in SG&A expenses in the consolidated statements of comprehensive income (loss). The changes in fair value for these contracts are generally offset by the gains or losses associated with the underlying foreign currency-denominated balances, which are also recorded in SG&A expenses in the consolidated statements of comprehensive income (loss). Refer to Note 4, "Fair Value Measurements," for further information on the nature of Level 2 inputs. Refer to Note 9, "Foreign Currency Exchange Rate Contracts and Hedging," for further information on the impact of derivative instruments and hedging activities.

For all designated hedging relationships, the Company formally documents the hedging relationship and its risk management objective and strategy for undertaking the hedge, the hedging instrument, the hedged transaction, the nature of the risk being hedged, how the hedging instrument's effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a description of the method used to measure ineffectiveness. The Company factors the nonperformance risk of the Company and the counterparty into the fair value measurements of its derivative instruments. The Company also formally assesses, both at the inception of the hedging relationship and on an ongoing basis, whether the derivative instruments that are used in hedging relationships are highly effective in offsetting changes in cash flows of hedged transactions. The Company assesses hedge effectiveness and measures hedge ineffectiveness at least quarterly. For Designated Derivative Contracts, the effective portion of the gain or loss on the derivative

F-12

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

instrument is recognized in OCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative instrument representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

The Company discontinues hedge accounting prospectively when it determines that the derivative instrument is no longer effective in offsetting cash flows attributable to the hedged risk, the derivative instrument expires or is sold, terminated, or exercised, the cash flow hedge is non-designated because a forecasted transaction is not probable of occurring, or management determines to remove the designation of the cash flow hedge. In all situations in which hedge accounting is discontinued and the derivative instrument remains outstanding, the Company continues to carry the derivative instrument at its fair value on the consolidated balance sheets and recognizes any subsequent changes in fair value in earnings. When it is probable that a forecasted transaction will not occur, the Company discontinues hedge accounting and the accumulated gains or losses in OCI related to the hedging relationship are immediately recorded in earnings.

Revenue Recognition. The Company recognizes wholesale and international distributor revenue when products are shipped or delivered, depending on the contract terms, E-Commerce revenue on delivery, and retail revenue at the point of sale. All sales are recognized when the customer takes title and assumes risk of loss, collection of the related receivable is reasonably assured, persuasive evidence of an arrangement exists, and the sales price is fixed or determinable. For wholesale and international distributor sales, allowances for estimated returns, discounts, chargebacks, and bad debts are provided for when related revenue is recognized. For DTC sales, a sales return liability for estimated returns is provided for when related revenue is recognized. Amounts billed for shipping and handling costs are recorded as a component of net sales, while the related costs paid to third-party shipping companies are recorded as cost of sales. Revenue is presented net of initial direct costs, including fees and taxes (for example, sales taxes, use taxes, value-added taxes, and some types of excise taxes). Taxes are collected from customers and remitted directly to governmental authorities.

Cost of Sales. Cost of sales for the Company's goods are for finished goods, which includes the purchase costs and related overhead. Overhead includes all costs for planning, purchasing, quality control, freight, duties, royalties paid to third parties and shrinkage. Cost includes allocation of initial molds and tooling cost that are amortized based on minimum contractual quantities of related product and recorded in cost of sales when the product is sold in the consolidated statements of comprehensive income (loss).

Research and Development Costs. All research and development costs are expensed as incurred. Such costs amounted to $22,372, $21,256, and $22,176 for the years ended March 31, 2018, 2017 and 2016, respectively, and are recorded in SG&A expenses in the consolidated statements of comprehensive income (loss).

Advertising, Marketing, and Promotion Expenses. Advertising, marketing and promotion expenses include media advertising (television, radio, print, social, digital), tactical advertising (signs, banners, point-of-sale materials) and other promotional costs, with $111,658, $109,579, and $109,738 for the years ended March 31, 2018, 2017 and 2016, respectively, recorded in SG&A expenses in the consolidated statements of comprehensive income (loss). Advertising costs are expensed the first time the advertisement is run. Advertising communication costs are expensed in the period the communication occurs. All other costs of advertising, marketing, and promotion are expensed as incurred. Included in prepaid and other current assets as of March 31, 2018 and 2017 were $2,545 and $900, respectively, related to prepaid advertising, marketing, and promotion expenses for programs expected to take place after such dates.

Rent Expense. Rent expense is recognized using the straight-line method to account for scheduled rental increases or rent holidays. Lease incentives for tenant improvement allowances are recognized as reductions of rent expense over the lease term. The rental payments under some of the Company's retail store leases are based on a minimum rental plus a percentage of the store's sales in excess of stipulated amounts. Rent expenses are recorded in SG&A expenses in the consolidated statements of comprehensive income (loss). Refer to Note 7, "Commitments and Contingencies," for further information on the Company's lease agreements.

Stock-Based Compensation. All of the Company's stock-based compensation is classified within stockholders' equity. Stock compensation expense is measured at the grant date based on the value of the award and is expensed

F-13

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

ratably over the service period. The Company recognizes expense only for those awards that management deems probable of achieving the performance criteria and service conditions. Determining the fair value and related expense of stock-based compensation requires judgment, including estimating the percentage of awards that will be forfeited and probabilities of meeting the awards' performance criteria. If actual forfeitures differ significantly from the estimates or if probabilities change during a period, stock compensation expense and the Company's results of operations could be materially impacted. Stock compensation expense is recorded in SG&A expenses in the consolidated statements of comprehensive income (loss). Refer to Note 8, "Stockholders' Equity," for further information on Company stock-based compensation.

Retirement Plan. The Company provides a 401(k) defined contribution plan that eligible US employees may elect to participate in through tax-deferred contributions. The Company matches 50% of each eligible participant's tax-deferred contributions on up to 6% of eligible compensation on a per payroll period basis, with a true-up contribution if such eligible participant is employed by the Company on the last day of the calendar year. Internationally, the Company has various defined contribution plans. Certain international locations require mandatory contributions under social programs, and the Company contributes at least the statutory minimums. US 401(k) matching contributions totaled $2,269, $2,124, and $2,182 during the years ended March 31, 2018, 2017 and 2016, respectively, and was recorded in SG&A expenses in the consolidated statements of comprehensive income (loss). In addition, the Company may also make discretionary profit sharing contributions to the plan. However, the Company did not make any profit sharing contributions for the years ended March 31, 2018, 2017 and 2016.

Non-qualified Deferred Compensation. In 2010, the Company established a non-qualified deferred compensation program that permits a select group of management employees to defer earnings to a future date on a non-qualified basis. For each plan year, the Company's Board of Directors may, but is not required to, contribute any amount it desires to any participant under this program. The Company's contribution is determined by the Board of Directors annually. In March 2015, the Board of Directors approved a Company contribution feature for future plan years beginning in calendar year 2016 and gave management the authority to approve actual contributions. As of March 31, 2018 and 2017, no material payments were made or pending under this program. The value of the deferred compensation is recognized based on the fair value of the participants' accounts. The Company has established a rabbi trust for the purpose of supporting the benefits payable under this program, with the assets invested in company-owned life insurance policies. Refer to Note 4, "Fair Value Measurements," for further information on the fair value of deferred compensation assets and liabilities.

Self-Insurance. The Company is self-insured for a significant portion of its employee medical and dental liability exposures. Liabilities for self-insured exposures are accrued at the present value of amounts expected to be paid based on historical claims experience and actuarial data for forecasted settlements of claims filed and for incurred but not yet reported claims. Accruals for self-insured exposures are included in current and long-term liabilities based on the expected periods of payment. Excess liability insurance has been purchased to limit the amount of self-insured risk on claims.

Income Taxes. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recorded in the consolidated statements of comprehensive income (loss) in the period that includes the enactment date.

The Company recognizes the effect of income tax positions in the consolidated financial statements only if those positions are more likely than not to be sustained upon examination. Recognized income tax positions are measured at the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Changes in recognition or measurement are recorded in the period in which the change in judgment occurs. The Company records interest and penalties accrued for income tax contingencies as interest expense in the consolidated statements of comprehensive income (loss).

F-14

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

Refer to Note 5, "Income Taxes," for further information on tax impacts and components of tax balances in the consolidated financial statements.

Comprehensive Income (Loss). Comprehensive income (loss) is the total of net earnings and all other non-owner changes in equity. Comprehensive income (loss) includes net income (loss), foreign currency translation adjustments, and unrealized gains and losses on cash flow hedges. Refer to Note 10, "Accumulated Other Comprehensive Loss," for further information on components of OCI recognized by the Company.

Net Income per Share. Basic net income per share represents net income divided by the weighted-average number of common shares outstanding for the period. Diluted net income per share represents net income divided by the weighted-average number of shares outstanding, including the dilutive impact of potential issuances of common stock. Refer to Note 11, "Net Income per Share," for a reconciliation of basic to diluted weighted-average common shares outstanding.

Recent Accounting Pronouncements

Recently Adopted

In July 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-11, Simplifying the Measurement of Inventory. The Company adopted this ASU on April 1, 2017 on a prospective basis and changed its accounting policy to measure inventory at the lower of cost or market or net realizable value less an approximate normal profit margin at each financial statement date. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements and related disclosures.

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The Company adopted this ASU on April 1, 2017 on a prospective basis and changed its accounting policy for certain aspects of share-based payment awards to employees, including the accounting for income taxes and statutory tax withholding requirements, as well as classification of cash flows. Beginning April 1, 2017, the adoption of this ASU had the following impact on the consolidated financial statements and related disclosures:

•	The calculation of diluted weighted-average shares outstanding no longer includes excess tax benefits as assumed proceeds, which did not have a material impact on the Company’s calculation of diluted earnings per share.

•

Excess tax benefits and deficiencies were recorded as income tax benefits or expenses in the consolidated statements of comprehensive income (loss) for the year ended March 31, 2018, rather than as additional paid-in capital in the consolidated balance sheets for settlements of share-based payment awards occurring on or after April 1, 2017. The Company's income tax benefit or expense will continue to be impacted by fluctuations in the stock price between grant and vesting dates of its share-based payment awards.

•	A cumulative adjustment from non-current deferred tax assets to retained earnings for unrecognized excess tax benefits of $1,365 was recorded on April 1, 2017 in the consolidated balance sheet as of March 31, 2018.

•	The Company has made current and prior period reclassifications in the consolidated statements of cash flows to present cash flows from excess tax benefits as cash flows provided by operating activities instead of the historical presentation as cash flows provided by financing activities.

•	The Company elected to continue including an estimate of forfeitures as a component of stock-based compensation expense.

F-15

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, that permits reclassification of the income tax effects of the Tax Cuts and Jobs Act, enacted into law in December 2017 (Tax Reform Act) from AOCI to retained earnings. The Company elected to prospectively adopt this ASU during the fourth quarter of the year ended March 31, 2018 and, as a result, reclassified an immaterial amount of stranded tax effects related to its foreign currency exchange rate derivative instruments to retained earnings.

Not Yet Adopted

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This ASU replaced most existing revenue recognition guidance under US GAAP. The standard permits the use of either the retrospective or cumulative effect transition method. Subsequent to the initial guidance being issued, the FASB provided for a one-year deferral of the effective date, as well as early application. Further, the FASB issued additional guidance which clarified how to apply the implementation guidance related to principal versus agent considerations, how to identify performance obligations and licensing implementation guidance.

This ASU is effective for the Company's annual and interim reporting periods beginning April 1, 2018. The Company elected the cumulative effect transition method and has evaluated its business and contracts to determine any changes to accounting policies, processes, or systems necessary to adopt the requirements of the new standard. Management concluded required changes to its accounting policies and practices are as follows:

•

Revenue for certain wholesale and E-Commerce sales arrangements have been recognized on delivery and the Company has recorded shipment deferrals for undelivered product of each reporting period. However, the Company concluded it will now recognize revenue for these arrangements at shipment rather than delivery under the new standard and will record a cumulative effect adjustment of approximately $1,000 to its retained earnings in the consolidated balance sheets on April 1, 2018 related to the adoption of this ASU.

•	The Company records an allowance for sales returns against trade accounts receivable for its wholesale channel sales. However, the Company concluded that it will reclassify the allowance for sales returns of $20,848 as of March 31, 2018 to accrued expenses in its consolidated balance sheets on April 1, 2018, as the allowance for sales returns is considered a contract liability.

•	Expanded disclosures will be provided in the first reporting period of adoption, including the nature of revenue arrangements, contract liabilities, and constraints on variable consideration.

In February 2016, the FASB issued ASU 2016-02, Leases, to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU requires the recognition of lease assets and lease liabilities by lessees on the balance sheet for those leases classified as operating leases under previous US GAAP. A lessee should recognize a liability in the balance sheet to make lease payments (the lease liability) at fair value and an offsetting "right-of-use" asset representing its right to use the underlying asset for the lease term. This ASU requires a modified retrospective transition method for leases existing at the beginning of the earliest comparative period presented in the adoption-period financial statements. This ASU will be effective for the Company's annual and interim reporting periods beginning April 1, 2019. The Company has completed an initial assessment of the effect that the adoption of this ASU will have on its consolidated financial statements and related disclosures and currently expects an increase in assets and liabilities due to the recognition of the required right-of-use asset and corresponding liability for all lease commitments that are currently classified as operating leases and disclosed in Note 7, "Commitments and Contingencies," such as retail stores, showrooms, and distribution facilities. The recognition of lease expenses is not expected to materially change from the current methodology. Further, the adoption of this ASU will result in expanded disclosures on existing and new lease commitments. The Company has developed an implementation team to evaluate its business operations

F-16

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

and related contracts and determine any necessary changes to accounting policies, processes, or systems in order to adopt this ASU.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows, Classification of Certain Cash Receipts and Cash Payments. This ASU eliminates the diversity in practice related to the classification of certain cash receipts and payments. This ASU will be effective for the Company’s annual and interim reporting periods beginning April 1, 2018, with early adoption permitted. The guidance should be applied retrospectively, requiring adjustment to all comparative periods presented, unless it is impractical to do so, in which case, the guidance should be applied prospectively as of the earliest date practicable. The Company has evaluated its business policies and processes around cash receipts and payments and has concluded the adoption of this ASU will not have a material impact on its consolidated financial statements and related disclosures.

In October 2016, the FASB issued ASU No. 2016-16, Accounting for Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory. This ASU requires that the income tax impact of intra-entity sales and transfers of property, except for inventory, be recognized when the transfer occurs. This ASU will be effective for the Company’s annual and interim reporting periods beginning April 1, 2018 and will require any deferred taxes not yet recognized on intra-entity transfers to be recorded to retained earnings under a modified retrospective approach, with early adoption permitted. The Company has evaluated its business policies and processes around intra-entity transfers of assets other than inventory and has concluded the adoption of this ASU will not have a material impact on its consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU No. 2017-04, Goodwill and Other: Simplifying the Test for Goodwill Impairment, which eliminates step two from the goodwill impairment test. In computing the implied fair value of goodwill under current step two guidance, an entity previously had to perform procedures to determine the fair value of its assets and liabilities at the impairment testing date following the procedure required to determine the fair value of assets acquired and liabilities assumed in a business combination. Under this ASU, an entity is required to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. This ASU will be effective for the Company’s annual and interim reporting periods beginning April 1, 2020, with early adoption permitted on or after January 1, 2017. The Company is evaluating the timing and effect that adoption of this ASU will have on its consolidated financial statements and related disclosures.

In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation: Scope of Modification Accounting, which updates the guidance for changes to the terms or conditions of a share-based payment award which would require the Company to apply modification accounting for share-based payment awards unless all of the following conditions are met: (1) the fair value; (2) vesting conditions; and (3) classification of the modified awards are the same as the fair value, vesting conditions, or classification of the original award immediately before the original award is modified. This ASU will be effective for the Company's annual and interim reporting periods beginning April 1, 2018. The Company has evaluated its business policies and processes around share-based arrangement modifications and has concluded the adoption of this ASU will not have a material impact on its consolidated financial statements and related disclosures.

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities, which amends the hedge accounting guidance to better align an entity's risk management activities and financial reporting for hedge relationships through changes to both the designation and measurement accounting guidance for qualifying hedge relationships. Amendments include changes to align the financial statement presentation of the effects of the hedging instrument and the hedged item in the consolidated financial statements. This ASU will be effective for the Company's annual and interim reporting periods beginning April 1, 2019, with early adoption permitted. The Company is evaluating the effect that the adoption of this ASU will have on its consolidated financial statements and related disclosures.

F-17

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

Note 2. Restructuring

In February 2016, the Company announced the implementation of a multi-year restructuring plan which is designed to realign its brands across its Fashion Lifestyle and Performance Lifestyle groups, optimize the Company's retail store fleet, and consolidate management and operations. In general, the intent of this restructuring plan is to streamline brand operations, reduce overhead costs, create operating efficiencies and improve collaboration.

In connection with the restructuring plan, the Company closed a total of 32 retail stores as of March 31, 2018 and consolidated its brand operations and corporate headquarters. The Company has incurred cumulative restructuring charges of $55,324 since commencement of the restructuring plan through March 31, 2018. Restructuring charges by reportable operating segment are as follows:

		Years Ended March 31,												Cumulative Restructuring Charges
		2018				2017				2016
UGG brand wholesale		$	—			$	2,238			$	—			$	2,238
Sanuk brand wholesale		—				20				3,048				3,068
Other brands wholesale		—				102				2,161				2,263
Direct-to-Consumer		149				12,771				10,534				23,454
Unallocated overhead costs		1,518				13,853				8,930				24,301
Total restructuring charges		$	1,667			$	28,984			$	24,673			$	55,324

During the years ended March 31, 2018, 2017, and 2016, of the total restructuring charges incurred and stated above, $1,667, $28,984, and $22,824 were recorded in SG&A expenses, respectively, and $1,849 in cost of sales during fiscal year 2016 in the consolidated statements of comprehensive income (loss).

Of the cumulative restructuring charges incurred through March 31, 2018, $4,728 remained accrued as of that date, with $1,347 and $3,381 recorded in short-term liabilities and long-term liabilities, respectively, in the consolidated balance sheets. The specific categories of restructuring charges, as well as payments associated with the related accrued liabilities, were as follows:

	Lease termination costs				Retail store fixed asset impairment				Severance costs				Software and office fixed asset impairment				Other*				Total
Fiscal year 2016 charges	$	8,852			$	5,758			$	4,003			$	3,788			$	2,272			$	24,673
Paid in cash	(1,223		)		—				(567		)		—				—				(1,790		)
Non-cash	—				(5,758		)		—				(3,788		)		(463		)		(10,009		)
Liability as of March 31, 2016	7,629				—				3,436				—				1,809				12,874
Additional charges	8,986				3,614				5,773				3,199				7,412				28,984
Paid in cash	(12,043		)		—				(6,403		)		—				(5,268		)		(23,714		)
Non-cash	—				(3,614		)		(251		)		(3,199		)		—				(7,064		)
Liability as of March 31, 2017	4,572				—				2,555				—				3,953				11,080
Additional charges	149				—				—				—				1,518				1,667
Paid in cash	(1,076		)		—				(2,555		)		—				(4,388		)		(8,019		)
Liability as of March 31, 2018	$	3,645			$	—			$	—			$	—			$	1,083			$	4,728

*Includes restructuring charges for costs related to office consolidations, termination of various contracts and other services.

F-18

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

The Company currently does not anticipate incurring material restructuring charges in future periods, though optimization of Company-owned retail stores remains a focus.

As a result of the implementation of this restructuring plan, the Company expects to realize additional annualized SG&A expense savings by the end of fiscal year 2020. Refer to the section entitled "Recent Developments," in "Management's Discussion and Analysis of Financial Condition and Results of Operations," in Part II, Item 7 of this Annual Report on Form 10-K for further information.

Note 3. Goodwill and Other Intangible Assets

The Company's goodwill and other intangible assets are recognized as follows:

	As of March 31,
	2018				2017
Goodwill:
UGG brand	$	6,101			$	6,101
Other brands	7,889				7,889
Total goodwill	13,990				13,990
Other intangible assets:
Indefinite-lived intangible assets
Trademarks	15,454				15,454
Definite-lived intangible assets
Trademarks	55,245				55,245
Other	53,216				51,383
Total gross carrying amount	108,461				106,628
Accumulated amortization	(66,065		)		(56,944		)
Net definite-lived intangible assets	42,396				49,684
Total other intangible assets	57,850				65,138
Total goodwill and other intangible assets	$	71,840			$	79,128

The weighted-average amortization period for definite-lived intangible assets is 15 and 16 years for the years ended March 31, 2018 and 2017, respectively. Intangible assets consist primarily of indefinite-lived trademarks and definite-lived trademarks, customer and distributor relationships, patents, lease rights, and non-compete agreements arising from the application of purchase accounting. Goodwill is allocated to the wholesale reportable operating segments of the brands described above.

F-19

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

Changes to the Company's goodwill in the consolidated balance sheets are as follows:

	Goodwill, Gross				Accumulated Impairment				Goodwill, Net
Balance as of March 31, 2016	$	143,765			$	(15,831	)		$	127,934
Changes related to acquisitions, impairments and other adjustments*	—				(113,944		)		(113,944		)
Balance as of March 31, 2017	143,765				(129,775		)		13,990
Changes related to acquisitions, impairments and other adjustments	—				—				—
Balance as of March 31, 2018	$	143,765			$	(129,775	)		$	13,990

*Impairment recorded for the Sanuk brand wholesale reportable operating segment goodwill, as discussed below.

Annual Impairment Assessment

Goodwill & Indefinite-Lived Intangible Assets. During fiscal years 2018, 2017 and 2016, the Company performed its annual impairment assessment and evaluated the UGG and other brands' wholesale reportable operating segment goodwill at December 31st and evaluated its Teva indefinite-lived trademarks at October 31st. Based on the carrying amounts of the UGG and other brands' goodwill and Teva brand trademarks, the brands' actual fiscal year sales and operating results, and the brands' long-term forecasts of sales and operating results as of their evaluation dates, the Company concluded that these assets were not impaired.

During fiscal year 2017, the Company performed the annual impairment assessment of its Sanuk brand wholesale reportable operating segment goodwill at October 31, 2016, with the assistance of a third party valuation firm. The assessment identified an indicator of impairment and the Company performed the following:

•

Under step one of the impairment assessment, management concluded that the fair value of the Sanuk brand wholesale reportable operating segment was below its carrying value, which was primarily the result of lower-than-forecasted sales, lower market multiples for non-athletic footwear and apparel, and a more limited view of international and domestic expansion opportunities for the brand given the changing retail environment.

•

Under step two of the impairment assessment, management concluded that the fair value allocated to all of the assets and liabilities of the Sanuk brand wholesale reportable operating segment, using a hypothetical allocation of assets, including net tangible and intangible assets, resulted in a non-cash impairment charge of $113,944, which was recognized in the third quarter of fiscal year 2017 and recorded in SG&A expenses in the consolidated statements of comprehensive income (loss).

Definite-Lived Intangible Assets. The Company did not identify any definite-lived intangible asset impairments during the years ended March 31, 2018 and 2016. However, during fiscal year 2017, and in connection with the goodwill impairment discussed above, the Company identified an impairment of the Sanuk brand's amortizable patent. The Company's analysis determined that the Sanuk brand's amortizable patent was fully impaired as the Sanuk SIDEWALK SURFERS utility patent had very limited value in the marketplace because of its limited ability to exclude others from creating similar products. As a result, the Company recognized a non-cash impairment charge to the patent of $4,086 in the Sanuk wholesale reportable operating segment during the third quarter of fiscal year 2017, which was recorded in SG&A expenses in the consolidated statements of comprehensive income (loss). The Company did not identify any additional impairments for Sanuk brand's other definite-lived intangible assets during fiscal year 2017, as the undiscounted future cash flows associated with those assets exceeded their carrying values.

During the third quarter of fiscal year 2017, the Company also recognized an impairment for definite-lived intangible assets in the DTC reportable operating segment of $4,743, due to a decline in market rental rates for European retail stores, which was recorded in SG&A expenses in the consolidated statements of comprehensive income (loss).

F-20

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

Amortization Expense

A reconciliation of charges incurred in the consolidated statements of comprehensive income (loss) relevant to the Company's other intangible assets is as follows:

Balance as of March 31, 2016	$	83,026
Impairment charges	(8,829		)
Amortization expense	(7,945		)
Foreign currency exchange rate fluctuations	(1,114		)
Balance as of March 31, 2017	65,138
Amortization expense	(7,807		)
Foreign currency exchange rate fluctuations	519
Balance as of March 31, 2018	$	57,850

Expected amortization expense for amortizable intangible assets subsequent to March 31, 2018 is as follows:

Years Ending March 31:
2019		$	6,294
2020		3,511
2021		2,534
2022		2,525
2023		2,450
Thereafter		25,082
Total expected amortization in future periods		$	42,396

Note 4. Fair Value Measurements

The fair value of the Company's cash and cash equivalents, net trade accounts receivable, prepaid expenses, income taxes receivable, other current assets, short-term borrowings, trade accounts payable, accrued payroll, other accrued expenses, income taxes payable, and value added tax payable approximate the carrying values due to the relatively short maturities of these assets and liabilities. The fair values of the Company's long-term liabilities do not significantly differ from the carrying values. The Company records the fair value of assets or liabilities associated with derivative instruments and hedging activities in other current assets or other accrued expenses, respectively, in the consolidated balance sheets.

The inputs used in measuring fair value are prioritized into the following hierarchy:

•	Level 1: Quoted prices in active markets for identical assets or liabilities.

•	Level 2: Observable inputs other than quoted prices in active markets for identical assets and liabilities.

•	Level 3: Unobservable inputs in which little or no market activity exists, therefore requiring the reporting entity to develop its own assumptions.

F-21

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

The assets and liabilities that are measured on a recurring basis at fair value are summarized as follows:

	Fair Value as of March 31, 2018				Measured Using
	Level 1				Level 2				Level 3
Assets (liabilities) at fair value:
Non-qualified deferred compensation asset	$	7,172			$	7,172			$	—			$	—
Non-qualified deferred compensation liability	(4,296		)		(4,296		)		—				—
Designated Derivative Contracts asset	950				—				950				—
Designated Derivative Contracts liability	(143		)		—				(143		)		—
Non-Designated Derivative Contracts liability	(10		)		—				(10		)		—

	Fair Value as of March 31, 2017				Measured Using
	Level 1				Level 2				Level 3
Assets (liabilities) at fair value:
Non-qualified deferred compensation asset	$	6,662			$	6,662			$	—			$	—
Non-qualified deferred compensation liability	(4,140		)		(4,140		)		—				—
Designated Derivative Contracts asset	1,365				—				1,365				—

The non-qualified deferred compensation asset of $7,172 is recorded in other assets in the consolidated balance sheets. The non-qualified deferred compensation liability of $4,296 is recorded in the consolidated balance sheets as of March 31, 2018, with $575 recorded in other accrued expenses and $3,721 in other long-term liabilities.

The Level 2 inputs consist of forward spot rates at the end of the applicable reporting period. The Company records the fair value of assets or liabilities associated with derivative instruments and hedging activities in other current assets or other accrued expenses, respectively, in the consolidated balance sheets. Refer to Note 9, "Foreign Currency Exchange Rate Contracts and Hedging," for further information on these derivative instruments.

Note 5. Income Taxes

Changes in Tax Law

On December 22, 2017, H.R.1, also known as the Tax Cuts and Jobs Act (Tax Reform Act) was enacted into law. The Tax Reform Act includes significant changes to US corporate income tax law, including a permanent reduction in the federal corporate income tax rate from 35% to 21%, limitations on the deductibility of interest expense and executive compensation, the transition of the US tax regime from a worldwide tax system to a territorial tax system, and provisions aimed at preventing base erosion of the US tax base.

Further, on December 22, 2017, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 118 (SAB 118) which provides guidance on accounting for the impact of the Tax Reform Act. SAB 118 provides a measurement period, which should not extend beyond one year from the enactment date, during which the Company may complete the accounting for the impacts of the Tax Reform Act under ASC Topic 740. In accordance with SAB 118, the Company must reflect the income tax effects of the Tax Reform Act in the reporting period in which the accounting under ASC 740 is complete.

Provisional Estimates. To the extent accounting for certain income tax effects of the Tax Reform Act is incomplete, the Company can determine a reasonable estimate for those effects and record a provisional estimate in the consolidated financial statements in the first reporting period in which a reasonable estimate can be made. If the Company cannot determine a provisional estimate to be included in the consolidated financial statements, the Company can continue to apply ASC 740 based on the provisions of the tax laws that were in effect immediately prior to the Tax Reform Act being enacted. If the Company is unable to provide a reasonable estimate of certain impacts of the Tax

F-22

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

Reform Act in a reporting period, provisional amounts must be reported in the first reporting period in which a reasonable estimate can be determined.

During the year ended March 31, 2018, the Company recorded the following provisional estimates for the income tax expense impacts from the Tax Reform Act in the consolidated statements of comprehensive income (loss):

•	$57,138 related to the US federal income tax associated with the one-time mandatory deemed repatriation of accumulated foreign earnings, including discrete tax impacts of $44,871 related to foreign earnings and profits generated prior to April 1, 2017, of which $4,571 is payable within 12 months and recorded in current income taxes payable in the consolidated balance sheets.

•	Non-cash income tax expense of approximately $14,395 to re-measure its deferred tax assets and liabilities to the income tax rates applicable for future periods in which they are expected to reverse.

•	State income tax of $1,976 associated with one-time mandatory deemed repatriation of accumulated foreign earnings, of which $607 relates to the state income tax liability recorded for the $250,000 cash distribution remitted from a foreign subsidiary during the quarter ended March 31, 2018, and $927 relates to the deferred state income tax liability on unremitted foreign earnings and profits.

During the quarter ended March 31, 2018, the Company recorded the following adjustments to amounts recorded as prior period provisional estimates for the income tax expense impacts of the Tax Reform Act in the consolidated statements of comprehensive income (loss):

•	An overall reduction of $3,887 related to the US federal income tax associated with the one-time mandatory deemed repatriation of accumulated foreign earnings. This adjustment includes a reduction in the discrete tax impacts of $7,570 offset by an increase in the current year tax expense of $3,683 driven by corrections to earnings and profits reported for years prior to April 1, 2017.

•	An increase of $973 to non-cash income tax expense to re-measure its deferred tax assets and liabilities related to the income tax rates applicable for future periods in which they are expected to reverse. This adjustment was driven by the effects of phased-in US federal tax rate reductions from 35% to 31.5% to 21% on scheduling the reversal of temporary differences.

•	An increase of $1,558 to state income tax associated with the one-time mandatory deemed repatriation of accumulated foreign earnings. This adjustment was driven by the Company's ongoing analysis of the state income tax impacts resulting from the Tax Reform Act.

In accordance with SAB 118, the provisional estimates recorded represent reasonable estimates of the effects of the Tax Reform Act for which the analysis is not yet complete. As the Company completes its analysis of the effects of the Tax Reform Act, including collecting, preparing and analyzing necessary information regarding foreign earnings and profits, performing and refining calculations and obtaining additional guidance from such standard setting and regulatory bodies as the US Internal Revenue Service, US Treasury Department and FASB, among others, it may record adjustments to the provisional estimates. The Company expects to finalize its provisional estimates at the earlier of the time it files its US federal income tax return for the year ended March 31, 2018 or the end of the measurement period provided for under SAB 118, which is December 31, 2018.

The Tax Reform Act includes other provisions with effective dates for the Company beginning January 1, 2018 and beyond. The Company continues to account for other changes that impact business related income, exclusions, deductions and credits that cannot yet be quantified based on existing accounting guidance and the provisions of the tax laws in effect immediately prior to the enactment of the Tax Reform Act. The Company continues to analyze the provisions of the Tax Reform Act to fully assess the anticipated impact on its consolidated financial statements.

F-23

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

Income Tax Expense (Benefit)

Components of income tax expense (benefit) are as follows:

	Years Ended March 31,
	2018				2017				2016
Current
Federal	$	80,339			$	2,184			$	11,971
State	3,437				1,576				2,443
Foreign	14,388				8,039				12,039
Total	98,164				11,799				26,453
Deferred
Federal	12,007				(20,287		)		7,887
State	391				(3,446		)		1,113
Foreign	(4,260		)		(762		)		(833		)
Total	8,138				(24,495		)		8,167
Income tax expense (benefit)	$	106,302			$	(12,696	)		$	34,620

Foreign income before income taxes was $149,214, $63,011, and $105,938 during the years ended March 31, 2018, 2017, and 2016, respectively.

Income Tax Expense (Benefit) Reconciliation

Income tax expense (benefit) differed from that obtained by applying the statutory federal income tax rate to income before income taxes or benefit as follows:

	Years Ended March 31,
	2018				2017				2016
Computed expected income taxes	$	69,556			$	(2,445	)		$	54,910
State income taxes, net of federal income tax benefit	9,044				(1,403		)		1,298
Foreign rate differential	(37,090		)		(8,062		)		(28,233		)
Unrecognized tax benefits	1,301				2,691				3,670
Income tax expense on diminution of operations and nondeductible goodwill	—				3,921				1,352
Foreign income withholding tax expense	262				432				—
Nontaxable income	(7,006		)		(5,055		)		—
US tax on deemed repatriated foreign earnings	57,138				—				—
Re-measurement of deferred taxes	14,395				—				—
Statutory foreign income tax expense (benefit)	59				(2,504		)		(477		)
Other	(1,357		)		(271		)		2,100
Income tax expense (benefit)	$	106,302			$	(12,696	)		$	34,620

F-24

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

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:

	As of March 31,
	2018				2017
Deferred tax assets (liabilities), noncurrent:
Amortization and impairment of intangible assets	$	18,261			$	28,304
Depreciation of property and equipment	(9,638		)		(19,511		)
Stock-based compensation	4,027				6,258
Deferred rent	5,452				6,809
Acquisition costs	481				751
Uniform capitalization adjustment to inventory	3,212				4,971
Bad debt allowance and other reserves	12,939				15,946
State taxes	798				(145		)
Prepaid expenses	(2,686		)		(4,144		)
Accrued bonuses	7,573				1,456
Foreign currency exchange rate hedges	(80		)		(534		)
Other	(2,821		)		1,376
Net operating loss carry-forwards	863				3,171
Deferred tax assets, net	$	38,381			$	44,708

In order to fully realize the deferred tax assets, the Company will need to generate future taxable income of approximately $118,118. The deferred tax assets are primarily related to the Company's domestic operations and are currently expected to be realized between fiscal years 2019 and 2030. The Company recorded various adjustments to non-current deferred tax assets during the year ended March 31, 2018 related to the adoption of new ASUs, as well as $253 attributable to the effective portion of Designated Derivative Contracts recognized in OCI. Refer to the section entitled "Recent Accounting Pronouncements" in Note 1, "General," for more information regarding the adjustments to non-current deferred tax assets as a result of the adoption of ASU Nos. 2016-09 and 2018-02.

Domestic income (loss) before income taxes for the years ended March 31, 2018, 2017, and 2016, was $321,482, $(56,305), and $50,947, respectively, inclusive of intercompany dividends of $250,000, $13,692, and $0, respectively, Based upon 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 and, accordingly, no valuation allowance was recorded in fiscal years 2018 and 2017.

Tax Impact of Foreign Earnings

Pursuant to the Tax Reform Act, the Company recorded approximately $59,114 of US federal and state income taxes on approximately $627,787 of undistributed earnings from its non-US subsidiaries through December 31, 2017. During the quarter ended March 31, 2018, a cash distribution of $250,000 was remitted from a foreign subsidiary and the Company recorded a state income tax provision of $607. No foreign withholding taxes were required. The total income tax expense recorded also includes a deferred state liability of $927 for all undistributed earnings through December 31, 2017.

As of March 31, 2018, the Company reported approximately $385,884 of undistributed earnings from its non-US subsidiaries, of which $203,032 relates to cash and cash equivalents that could be subject to foreign withholding taxes

F-25

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

if repatriated. During the fourth quarter ended March 31, 2018, the Company earned approximately $15,389 from its non-US subsidiaries that is not subject to the one-time mandatory deemed repatriation tax and for which no taxes have been provided. The Company anticipates making future cash distributions only from undistributed earnings that have been or will be subject to US tax. Any remaining earnings balance that has not already been subject to US income tax is expected to be reinvested outside of the US indefinitely as it is required to fund ongoing foreign operations. Due to the complexities in the laws of foreign jurisdictions and assumptions that would have to be made, it is not practicable to estimate the amount of foreign withholding taxes associated with such unremitted earnings.

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 position is recognized in the consolidated financial statements in the period during which the Company believes it is more likely than not that the position will be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not recognition threshold are 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 in the consolidated balance sheets, along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

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

Balance, March 31, 2016	$	8,695
Gross increase related to current year tax positions	1,878
Gross increase related to prior year tax positions	1,154
Balance, March 31, 2017	11,727
Gross increase related to current year tax positions	1,168
Gross increase related to prior year tax positions	1,243
Settlements	(4,501		)
Lapse of statute of limitations	(43		)
Balance, March 31, 2018	$	9,594

As of March 31, 2018, the Company had accrued $9,594 of gross unrecognized tax benefits recorded in long-term income tax liability in the consolidated balance sheets resulting from tax positions that are subject to examination. As of March 31, 2018, the Company accrued interest and potential penalties of $3,224 compared to $2,990 as of March 31, 2017 in the consolidated balance sheets and recorded these amounts in interest expense in the Company's consolidated statements of comprehensive income (loss).

As of March 31, 2018, the Company had $1,301 of net unrecognized tax benefits affecting the Company's effective tax rate and $369 of interest and penalties expenses recorded in interest expense the consolidated statements of comprehensive income (loss). In the next 12 months the Company does not believe it is reasonably possible it will settle any unrecognized tax benefits.

The Company has on-going income tax examinations in various state and foreign tax jurisdictions and regularly assesses tax positions taken in years open to examination. The Company files income tax returns in the US federal jurisdictions and various state, local, and foreign jurisdictions. With few exceptions, the Company is no longer subject to US federal, state, local, or non-US income tax examinations by tax authorities for the fiscal years before 2013.

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 operating results 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,

F-26

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

penalties, or interest assessments. However, it is the opinion of management that the Company does not currently expect these audits and inquiries to have a material impact on the Company's consolidated financial statements.

Note 6. Revolving Credit Facilities and Mortgage Payable

Domestic Credit Facility

In November 2014, the Company amended its Second Amended and Restated Credit Agreement with JPMorgan Chase Bank, National Association (JPMorgan) as the administrative agent, Comerica and HSBC as co-syndication agents, and the lenders party thereto (as amended, Second Amended and Restated Credit Agreement). The Second Amended and Restated Credit Agreement provides for a five-year, $400,000 secured revolving credit facility (Domestic Credit Facility) which contains a $75,000 sublimit for the issuance of letters of credit and a $5,000 sublimit for swing line loans, which matures on November 13, 2019.

In August 2015, the Company entered into an additional amendment to the Second Amended and Restated Credit Agreement to add certain foreign subsidiaries as borrowers, and in October 2016, further amended the Second Amended and Restated Credit Agreement to allow increased borrowing under its China Credit Facility (as defined below). In addition, in November 2017, the Company further amended the Second Amended and Restated Credit Agreement to revise the definition of "change in control". Subject to customary conditions and the approval of any lender whose commitment would be increased, the Company has the option to increase the maximum principal amount available under the Domestic Credit Facility by up to an additional $200,000, resulting in a maximum available principal amount of $600,000. No lender under the Domestic Credit Facility has committed at this time or is obligated to provide any such increase in the commitments. In addition to allowing borrowings in US dollars, the Domestic Credit Facility provides a $150,000 sublimit for borrowings in Euros, British Pounds and any other currency that is subsequently approved by JPMorgan, each lender and the issuing bank.

At the Company's election, interest under the Domestic Credit Facility is tied to the adjusted London Interbank Offered Rate (LIBOR) or the Alternative Base Rate (ABR), and is variable based on the Company's total adjusted leverage ratio. The initial adjusted LIBOR rate is equal to the effective LIBOR rate for the interest period elected, plus 1.25% per annum, or at the ABR plus 0.25% per annum, and thereafter the interest rate will fluctuate between adjusted LIBOR plus 1.25% per annum and adjusted LIBOR plus 2.00% per annum (or between the ABR plus 0.25% per annum and the ABR plus 1.25% per annum), based upon the Company's total adjusted leverage ratio at such time. The ABR is defined in the Second Amended and Restated Credit Agreement as the rate per annum equal to the greater of (1) the prime rate, (2) the federal funds effective rate plus 0.50% and (3) the adjusted LIBOR rate for a one-month interest period plus 1.00%. As of March 31, 2018, the adjusted LIBOR and ABR rates were 3.13% and 5.00%, respectively.

In addition, the Company is initially required to pay commitment fees of 0.175% per annum on the daily amount of the available borrowings under the Domestic Credit Facility, and thereafter the fee rate will fluctuate between 0.175% and 0.30% per annum, based upon the Company's total adjusted leverage ratio.

The Company's obligations under the Second Amended and Restated Credit Agreement are guaranteed by the Company's existing and future wholly-owned domestic subsidiaries (other than certain immaterial subsidiaries, foreign subsidiaries, foreign subsidiary holding companies and specified excluded subsidiaries) (Guarantors), and are secured by a first-priority security interest in substantially all of the assets of the Company and the Guarantors, including all or a portion of the equity interests of certain of the Company's domestic and first-tier foreign subsidiaries.

The Domestic Credit Facility is governed by financial covenants which include: the total adjusted leverage ratio must not be greater than 3.25 to 1.00; the sum of the consolidated annual earnings before interest, taxes, depreciation, and amortization and annual rental expense, divided by the sum of the annual interest expense and the annual rental expense must be greater than 2.25 to 1.00; and other customary limitations. The Domestic Credit Facility is governed by certain other covenants which include: the maximum amount paid for capital expenditures may not exceed $110,000 per year if the total adjusted leverage ratio is equal to or exceeds 2.75 to 1.00; the maximum additional unsecured debt may not exceed $200,000; the Company may not have aggregate Employee Retirement Income Security Act of 1974 events that are considered materially adverse; the Company may not have a change of control (as defined in

F-27

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

the Second Amended and Restated Credit Agreement); and no restrictions on cash dividends, stock repurchases or acquisitions may be made, provided that no event of default has occurred.

During the year ended March 31, 2018, the Company made borrowings and repayments of $185,000 under the Domestic Credit Facility. As of March 31, 2018, the Company had no outstanding balance under the Domestic Credit Facility. As a result, the available borrowings under the Domestic Credit Facility as of March 31, 2018 were $399,451, including outstanding letters of credit of $549. Any amounts outstanding are recorded in short-term borrowings in the consolidated balance sheets. As of March 31, 2018, the Company had a remaining balance of approximately $600 in deferred financing costs related to previous amendments to the Second Amended and Restated Credit Agreement, which includes $400 and $200 recorded in other current assets and long-term other assets, respectively, in the consolidated balance sheets. Deferred financing costs are being amortized ratably over the remaining term of the Second Amended and Restated Credit Agreement.

Subsequent to March 31, 2018, the Company made no additional borrowings under the Domestic Credit Facility. At May 25, 2018, the Company had no outstanding balance and available borrowings of $399,451 under the Domestic Credit Facility.

China Credit Facility

In August 2013, Deckers (Beijing) Trading Co., LTD (DBTC), a wholly-owned subsidiary of the Company, entered into a revolving credit facility agreement in China (as amended, the China Credit Facility) that provided for an uncommitted revolving line of credit. In October 2016, the China Credit Facility was amended to include an increase in the uncommitted revolving line of credit of up to CNY 300,000, or $47,760, and to remove the sublimit of CNY 50,000, or $7,960, for the Company's wholly-owned subsidiary, Deckers Footwear (Shanghai) Co., LTD (DFSC). In March 2017, the China Credit Facility was amended to remove DFSC, leaving DBTC as the only remaining borrower, and to add an overdraft facility sublimit of CNY 100,000, or $15,920.

The China Credit Facility is payable on demand and subject to annual review and renewal with a defined aggregate period of borrowing of up to 12 months. The obligations under the China Credit Facility are guaranteed by the Company for 108.5% of the facility amount in US dollars. Interest is based on 115.0% multiplied by the People’s Bank of China market rate, which was 4.35%. As of March 31, 2018, the total effective interest rate was 5.00%.

During the year ended March 31, 2018, the Company made borrowings and repayments of $21,026 under the China Credit Facility. As of March 31, 2018, the Company had no outstanding balance and available borrowings of $47,760 under the China Credit Facility. Amounts outstanding are recorded in short-term borrowings in the consolidated balance sheets.

Subsequent to March 31, 2018, the Company made no additional borrowings under the China Credit Facility. At May 25, 2018, the Company had no outstanding balance and available borrowings of $47,760 under the China Credit Facility.

Japan Credit Facility

In March 2016, Deckers Japan, G.K., a wholly-owned subsidiary of the Company, entered into a revolving credit facility agreement in Japan (as amended, the Japan Credit Facility) that provides for an uncommitted revolving line of credit of up to JPY 5,500,000, or $51,700, for a maximum term of six months for each draw on the facility. The Japan Credit Facility renews annually, and is guaranteed by the Company. The Company has renewed the Japan Credit Facility through January 31, 2019 under the terms of the original agreement. Interest is based on the Tokyo Interbank Offered Rate (TIBOR) for three months plus 0.40%. As of March 31, 2018, TIBOR for three months was 0.06% and the total effective interest rate was 0.46%. The Japan Credit Facility has customary covenants including a restriction against having losses for two consecutive years, maintaining an interest coverage ratio greater than 1.00 to 1.00, and maintaining higher assets than liabilities.

F-28

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

During the year ended March 31, 2018, the Company made borrowings and repayments of $8,884 under the Japan Credit Facility. As of March 31, 2018, the Company had no outstanding balance under the Japan Credit Facility and available borrowings of $51,700. Amounts outstanding are recorded in short-term borrowings in the consolidated balance sheets.

Subsequent to March 31, 2018, the Company made no additional borrowings under the Japan Credit Facility. At May 25, 2018, the Company had no outstanding balance and available borrowings of $51,700 under the Japan Credit Facility.

Mortgage

In July 2014, the Company obtained a mortgage secured by the property on which its corporate headquarters is located for approximately $33,900. As of March 31, 2018, the outstanding principal balance under the mortgage was $32,082, which includes $578 in short-term borrowings and $31,504 in mortgage payable in the consolidated balance sheets. The mortgage has a fixed interest rate of 4.928%. Payments include interest and principal in an amount that amortizes the principal balance over a 30-year period; however, the loan will mature and have a balloon payment, due on July 1, 2029 of approximately $23,700, in addition to any then-outstanding balance. Minimum principal payments over the next five years are $3,195. In December 2014, the mortgage financial covenants were amended to be consistent with the financial covenants that govern the Domestic Credit Facility, as discussed above.

Debt Covenants

As of March 31, 2018, the Company was in compliance with all debt covenants under the various revolving credit facilities discussed above.

The borrowing and repayment amounts disclosed above for the China Credit Facility and Japan Credit Facility have been translated into US dollars using average currency exchange rates in effect as of the borrowing and repayment dates. The outstanding balance or available borrowing amounts disclosed above for the China Credit Facility and Japan Credit Facility have been translated into US dollars using spot rates in effect as of March 31, 2018. As a result, there are differences between the debt balances within this footnote disclosure and those presented in the consolidated statements of cash flows due to foreign currency exchange rates.

Note 7. Commitments and Contingencies

Operating Lease Commitments

The Company leases office, distribution and retail facilities, and automobiles, under operating lease agreements which continue in effect through January 2029. Some of the leases contain renewal options of anywhere from 1 to 15 years. Since the terms of these arrangements meet the accounting definition of operating lease arrangements, the aggregate sum of future minimum lease payments are not reflected in the consolidated balance sheets.

In June 2017, the Company entered into an addendum to the original lease agreement relating to its warehouse and distribution center located in Moreno Valley, California. Pursuant to the addendum, the Company exercised its option to lease additional square footage and extended the expiration date of the lease to June 2028.

F-29

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

Future minimum commitments under existing operating lease agreements at March 31, 2018 are as follows:

Years Ending March 31,		Future Minimum Lease Commitments
2019		$	54,836
2020		52,256
2021		44,468
2022		38,435
2023		34,341
Thereafter		112,209
Total		$	336,545

The following schedule shows the composition of total rent expense:

	Years Ended March 31,
	2018				2017				2016
Minimum rentals	$	59,531			$	63,050			$	61,227
Contingent rentals	15,924				15,281				16,067
Total	$	75,455			$	78,331			$	77,294

Purchase Obligations

Product. The Company had $455,228 of outstanding purchase orders or other obligations with its manufacturers at March 31, 2018. The Company has an extended design and manufacturing process, which requires it to forecast production volumes and estimate inventory requirements many months before consumers make a decision to purchase its products. The Company generally orders product four to nine months in advance of the anticipated shipment dates based primarily on orders received from wholesale customers and through the DTC reportable operating segment. Accordingly, the aggregate amount reflects purchase commitments for products that the Company reasonably expects to fulfill in the ordinary course of business. However, a significant portion of the purchase commitments can be cancelled by the Company under certain circumstances, though the occurrence of such circumstances is generally limited. As a result, the amount does not necessarily reflect the dollar amount of the Company's binding commitments or minimum purchase commitments, and instead reflects an estimate of its future payment commitments based on information currently available.

Sheepskin. The Company had an aggregate of $106,852 of purchase commitments for sheepskin at March 31, 2018. These commitments generally arise under two-year supply agreements. The aggregate amount reflects the remaining commitments under these purchase orders. The Company enters into contracts requiring purchase commitments of sheepskin that its affiliates, manufacturers, factories, and other agents (each or collectively, a Buyer) must make on or before a specified target date. These agreements may result in unconditional purchase commitments if a Buyer does not meet the minimum purchase requirements. In the event that a Buyer does not purchase such minimum commitments by the target dates, the Company would be responsible for compliance with any and all minimum purchase commitments under these contracts, and the Company would make additional deposit payments towards the purchase of the remaining minimum commitments and such additional deposits would be returned as the Buyer purchases the remaining minimum commitments. The contracts do not permit net settlement. There were no additional deposits on remaining minimum commitments as of March 31, 2018. Included in other current assets on the consolidated balance sheets are approximately $900 and $12,200 of additional deposits related to prior sheepskin contracts as of March 31, 2018 and 2017, respectively.

F-30

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

Minimum commitments for these contracts at March 31, 2018 were as follows:

Contract Effective Date		Final Target Date		Contract Value				Remaining Commitment
October 2016		September 2018		$	53,700			$	15,601
July 2017		September 2018		29,600				16,920
September 2017		September 2018		43,200				21,731
July 2017		September 2019		52,600				52,600
Total				$	179,100			$	106,852

The Company expects that purchases made under these agreements in the ordinary course of business will eventually exceed the minimum commitment levels, and that any deposits will become fully refundable or will be reflected as a credit against purchases.

Subsequent to March 31, 2018, the Company entered into additional sheepskin purchase commitments totaling $85,750 with targeted dates between September 2019 and September 2020.

Other. The Company had an aggregate of $48,082 of other purchase commitments at March 31, 2018, which generally consisted of material commitments for future capital expenditures, commitments under service contracts, and requirements to pay promotional expenses. Future capital expenditures primarily relate to continued build-out and expansion of the warehouse and distribution center located in Moreno Valley, California.

Litigation

From time to time, the Company is involved in various legal proceedings and claims arising in the ordinary course of business. Although the results of legal proceedings and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not, individually or in the aggregate, have a material adverse effect on its business, operating results, financial condition or cash flows. However, regardless of the outcome, litigation can have an adverse impact on the Company because of legal costs, diversion of management time and resources, and other factors.

Contingent Consideration

The purchase price for the Sanuk brand, acquired in July 2011, included contingent consideration payments. The final contingent consideration payment of approximately $19,700 was paid during the year ended March 31, 2017.

The purchase price for the Hoka brand, acquired in September 2012, included contingent consideration through calendar year 2017, with a maximum contingent amount payable of $2,000. The conditions for payment were met during the year ended March 31, 2016; $1,700 was paid as of March 31, 2016, and the remaining contingent consideration payment of $300 was made as of March 31, 2017.

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 range up to five years initially and generally do not provide for a limitation on the maximum potential future payments. From time to time, the Company also agrees to indemnify it licensees, distributors, and promotional partners in connection with claims that the Company's products infringe on the intellectual property rights of third parties. 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.

F-31

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

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. There are currently no pending claims relating to indemnification matters involving the Company's intellectual property.

Note 8. Stockholders' Equity

Equity Incentive Plans

In May 2006, the Company adopted the 2006 Equity Incentive Plan (2006 EIP), which was amended on May 9, 2007. In September 2015, the Company's stockholders approved the 2015 Stock Incentive Plan (2015 SIP), which replaced the Company's 2006 EIP. As with the 2006 EIP, the primary purpose of the 2015 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 2015 SIP reserves 1,275,000 shares of the Company’s common stock for issuance to employees, directors, consultants, independent contractors and advisors, plus any additional shares that are forfeited, or are otherwise terminated under the 2006 EIP. The maximum aggregate number of shares that may be issued to employees under the 2015 SIP through the exercise of incentive stock options is 750,000.

The Company uses various types of stock-based compensation under the 2006 EIP and 2015 SIP, including time-based restricted stock units (RSUs), performance-based stock units (PSUs), stock appreciation rights (SARs), and non-qualified stock options (NQSOs). Annual grants of RSUs (Annual RSUs) and PSUs (Annual PSUs) are available to key personnel and certain executive officers, and long-term incentive plan (LTIP) awards or options are available to certain officers, including named executive officers.

Annual Awards

During fiscal year 2018, the Company elected to grant Annual RSUs and Annual PSUs under the 2015 SIP to key employees, including certain executive officers of the Company. These grants entitle the recipients to receive shares of the Company's common stock upon vesting. The vesting of Annual PSUs is subject to the achievement of pre-established Company performance criteria measured over the fiscal year during which they are granted, and to the extent the performance criteria has been met, vest in equal installments over three years thereafter. The Annual RSUs are subject only to time-based vesting criteria and vest in equal installments over three years following the date of grant. During the year ended March 31, 2018, the Company granted 54,090 Annual PSUs and 133,464 Annual RSUs at a weighted-average grant date fair value of $68.44 and $67.70 per share, respectively. At March 31, 2018, the Company determined that the performance criteria for the fiscal year 2018 Annual PSUs were achieved.

Long-Term Incentive Plan Awards

2007 LTIP SARs and 2007 LTIP PSUs. In May 2007, the Company approved LTIP awards under the 2006 EIP for issuance of SARs (2007 LTIP SARs) and PSUs (2007 LTIP PSUs), which were awarded to certain members of the Company's management team. These awards were subject to vesting based on certain performance criteria and service conditions. Half of the 2007 LTIP SARs and 2007 LTIP PSUs granted were fully vested as of December 31, 2011; 80% of the other half of the awards vested on December 31, 2015, while the remaining 20% did not vest and were cancelled, since it was determined that the Company had not achieved the required performance criteria as of December 31, 2016. Accordingly, the Company recognized a net reversal of stock compensation expense of $2,400 during fiscal year 2017.

2013 LTIP PSUs. In December 2013, the Company approved LTIP awards under the 2006 EIP for issuance of PSUs (2013 LTIP PSUs), which were awarded to certain members of the Company's management team. The 2013 LTIP PSUs were subject to vesting based on certain performance criteria and service conditions over three years. As of March 31, 2015, the Company determined that achievement of the minimum threshold performance criteria was not probable, and accordingly, the Company recognized a net reversal of stock compensation expense of approximately $700. At March 31, 2016, the Company did not meet the minimum threshold performance criteria, and the awards did not vest and were cancelled.

F-32

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

2015 LTIP PSUs. In September 2014, the Company approved LTIP awards under the 2006 EIP for issuance of PSUs (2015 LTIP PSUs), which were awarded to certain members of the Company's management team. The 2015 LTIP PSUs were subject to vesting based on certain performance criteria and service conditions over three years. To the extent financial performance was achieved above the minimum threshold performance criteria, the number of 2015 LTIP PSUs that vested would increase up to the maximum number of units granted under the award. Under this program, the Company granted awards that contained a maximum of approximately 160,000 2015 LTIP PSUs during the year ended March 31, 2015. The weighted-average grant date fair value of the 2015 LTIP PSUs was $98.29 per share. As of March 31, 2016, the Company determined that achievement of the minimum threshold performance criteria was not probable, and accordingly, the Company recognized a net reversal of stock compensation expense of approximately $1,400. As of March 31, 2017, the Company did not meet the minimum threshold performance criteria, and the awards did not vest and were cancelled.

2016 LTIP PSUs. In November 2015, the Company approved LTIP awards under the 2015 SIP for issuance of PSUs (2016 LTIP PSUs), which were awarded to certain members of the Company's management team The 2016 LTIP PSUs were subject to vesting based on certain performance criteria and service conditions over three years. To the extent financial performance was achieved above the minimum threshold performance criteria, the number of 2016 LTIP PSUs that would vest was subject to increase up to a maximum of 200% of the targeted amount for that award. No vesting of any portion of the 2016 LTIP PSUs would occur if the Company failed to achieve at least 90% of the minimum threshold performance criteria. If the Company achieved the performance criteria, vesting of the 2016 LTIP PSUs would be subject to adjustment based on the application of a total stockholder return (TSR) modifier. The amount of the adjustment would be determined based on a comparison of the Company's TSR relative to the TSR of a pre-determined set of peer group companies for the 36-month performance period. Under this program, the Company granted awards that contained a maximum of approximately 308,000 2016 LTIP PSUs during the year ended March 31, 2016. The weighted-average grant date fair value of the 2016 LTIP PSUs was $50.05 per share. The Company did not believe the achievement of at least the minimum threshold performance criteria was probable, and accordingly, did not recognize stock compensation expense for these awards during the years ended March 31, 2018, 2017, or 2016. As of March 31, 2018, the Company did not meet the minimum threshold performance criteria, and the awards did not vest and were cancelled.

Long-Term Incentive Plan Options

During fiscal year 2017, the Company approved LTIP awards under the 2015 SIP for issuance of options (LTIP NQSOs), which were awarded to certain members of the Company’s management team. If the Company achieves the target performance criteria and the recipient provides continuous service, the LTIP NQSOs will vest in three years from the date of grant. Each LTIP NQSO provides the recipient the right to purchase a specified number of shares of the Company's common stock at a fixed exercise price per share based on the closing price of the common stock on the date of grant. The Company measures stock compensation expense for LTIP NQSOs at the date of grant using the Black-Scholes option pricing model.

In November 2016, the Company approved LTIP options (2017 LTIP NQSOs), which were awarded to certain members of the Company's management team, and which will vest on March 31, 2019 if the recipient provides continuous service through that date and the Company achieves the target performance criteria. As of March 31, 2018, the fair value of the 2017 LTIP NQSOs granted, less estimated forfeitures, was $4,825.

In June 2017, the Company approved LTIP options (2018 LTIP NQSOs), which were awarded to certain members of the Company's management team, and which will vest on March 31, 2020 if the recipient provides continuous service through that date and the Company achieves the target performance criteria. As of March 31, 2018, the fair value of the 2018 LTIP NQSOs granted, less estimated forfeitures, was $4,719.

F-33

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

The following table presents the weighted-average valuation assumptions used for the recognition of stock compensation expense for the LTIP NQSOs granted in each period presented:

			2018 LTIP NQSOs				2017 LTIP NQSOs
Expected life (in years)			4.90				5.94
Expected volatility			38.73		%		41.80		%
Risk free interest rate			1.78		%		1.95		%
Dividend yield			—		%		—		%
Weighted-average exercise price			$	69.29			$	61.86
Weighted-average option value			$	25.03			$	26.27

Grants to Directors

Each of the Company's nonemployee directors is entitled to receive common stock with a total value of approximately $125 for annual service on the Board of Directors. 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 the last 10 trading days leading up to, and including, the 15th day of the last month of each quarterly period. Each of these shares is fully vested on the date of issuance.

Stock Compensation Expense

The table below summarizes stock compensation expense by award or option type recognized in the consolidated statements of comprehensive income (loss):

	Years Ended March 31,
	2018				2017				2016
Stock compensation expense recorded for:
Annual RSUs	$	7,761			$	5,191			$	2,356
Annual PSUs	1,829				1,203				3,807
2007 LTIP SARs	—				(1,949		)		893
LTIP PSUs*	—				(296		)		(1,511		)
LTIP NQSOs**	3,432				694				—
Directors' shares	1,134				1,168				1,077
Employee Stock Purchase Plan***	146				164				—
Total stock compensation expense	14,302				6,175				6,622
Income tax benefit recognized	(4,906		)		(2,322		)		(2,525		)
Net stock compensation expense	$	9,396			$	3,853			$	4,097

*2007 LTIP PSUs, 2013 LTIP PSUs, 2015 LTIP PSUs, and 2016 LTIP PSUs are collectively referred to herein as LTIP PSUs.

**LTIP NQSOs include 2017 LTIP NQSOs and 2018 LTIP NQSOs.

***The 2015 Employee Stock Purchase Plan authorizes 1,000,000 shares of the Company's common stock for sale to eligible employees using their after-tax payroll deductions. Each consecutive purchase period is six months in duration and shares are purchased on the last trading day of the purchase period at a price that reflects a 15% discount to the closing price on that date. Purchase windows take place in February and August of each fiscal year.

F-34

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

The table below summarizes the total remaining unrecognized stock compensation expense 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 as of March 31, 2018:

	Unrecognized Stock Compensation Expense				Weighted-Average Remaining Vesting Period (Years)
Annual RSUs	$	7,517			1.2
Annual PSUs	2,115				1.4
LTIP NQSOs	6,057				1.5
Total	$	15,689

Annual RSUs and Annual PSUs Issued under the 2006 EIP and 2015 SIP

The table below summarizes Annual RSU and Annual PSU activity:

	Number of Shares			Weighted- Average Grant-Date Fair Value
Nonvested at March 31, 2015	340,000			$	70.11
Granted	240,000			70.82
Vested	(132,000	)		66.74
Forfeited	(91,000	)		72.84
Cancelled*	(154,000	)		74.22
Nonvested at March 31, 2016	203,000			68.80
Granted	268,000			59.34
Vested	(111,000	)		65.37
Forfeited	(66,000	)		70.79
Cancelled*	(68,000	)		65.23
Nonvested at March 31, 2017	226,000			63.96
Granted	188,000			67.92
Vested	(102,000	)		67.63
Forfeited	(23,000	)		64.59
Nonvested at March 31, 2018	289,000			$	65.18

*Shares cancelled represent Annual PSUs granted that did not meet the required performance criteria.

F-35

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

2007 LTIP SARs Issued Under the 2006 EIP

There were no 2007 LTIP SARs outstanding or exercisable at March 31, 2018. The table below summarizes 2007 LTIP SARs activity:

	2007 LTIP SARs			Weighted- Average Exercise Price				Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at March 31, 2015	715,000			$	26.73			5.8		$	33,000
Exercised	(80,000	)		26.73
Forfeited	(15,000	)		26.73
Outstanding at March 31, 2016	620,000			26.73				3.5		20,600
Exercised	(290,000	)		26.73
Cancelled*	(90,000	)		26.73
Outstanding at March 31, 2017	240,000			26.73				5.1		7,920
Exercised	(240,000	)		26.73
Outstanding and Exercisable at March 31, 2018	—			$	—			—		$	—

*Shares cancelled represent SARs granted that did not meet the required performance criteria.

No SARs have been issued under the 2015 SIP. The maximum contractual term was 10 and 15 years from the grant date for those 2007 LTIP SARs with final vesting dates of December 31, 2011 and December 31, 2015, respectively.

LTIP PSUs Issued Under the 2006 EIP and the 2015 SIP

The table below summarizes LTIP PSU activity:

	Number of Shares			Weighted- Average Grant-Date Fair Value
Nonvested at March 31, 2015	624,000			$	68.82
Granted	308,000			50.05
Vested	(47,000	)		26.73
Forfeited	(232,000	)		70.98
Cancelled*	(264,000	)		63.22
Nonvested at March 31, 2016	389,000			61.53
Granted	7,000			56.56
Forfeited	(27,000	)		68.63
Cancelled*	(100,000	)		89.77
Nonvested at March 31, 2017	269,000			50.22
Cancelled*	(269,000	)		50.22
Nonvested at March 31, 2018	—			$	—

*Shares cancelled represent LTIP PSUs granted that did not meet the required performance criteria.

F-36

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

LTIP NQSOs Issued Under the 2015 SIP

The table below summarizes LTIP NQSO activity:

	Number of Shares			Weighted- Average Grant-Date Fair Value				Weighted- Average Remaining Contractual Term (Years)			Aggregate Intrinsic Value
Nonvested at March 31, 2016	—			$	—			—			$	—
Granted	208,000			61.86
Forfeited	(16,000	)		61.86
Nonvested at March 31, 2017	192,000			61.86				9.0			—
Granted	205,000			69.29
Nonvested at March 31, 2018	397,000			$	65.70			7.1			$	9,700

The amounts granted are the maximum amounts under the respective options.

The maximum contractual term was approximately nine and seven years from the grant date for the 2017 NQSOs and 2018 NQSOs, respectively.

Stock Repurchase Programs

In January 2015, the Company's Board of Directors approved a stock repurchase program which authorized the Company to repurchase up to $200,000 of its common stock in the open market or in privately negotiated transactions, subject to market conditions, applicable legal requirements, and other factors. In October 2017, the Company's Board of Directors authorized a new $335,000 stock repurchase program. Combined with the approximately $65,294 remaining approved amount under the previously-announced stock repurchase program, upon approval of the new repurchase program, the Company had the authority to repurchase up to an aggregate of $400,294 of its common stock at the time. The Company's repurchase programs do not obligate it to acquire any particular amount of common stock and may be suspended at any time at the Company's discretion.

The following table summarizes the stock repurchase activity under the above programs:

	Years Ended March 31,
	2018				2017				2016
Average price paid per share	$	87.91			$	56.51			$	66.32
Total number of shares purchased*	1,702,653				222,471				1,420,349
Approximate dollar value of shares purchased	$	149,687			$	12,572			$	94,200

*All shares were repurchased as part of publicly-announced programs in open-market transactions.

Since inception of the combined January 2015 and October 2017 stock repurchase programs, as of March 31, 2018 and through May 25, 2018, the Company has repurchased an aggregate of 3,722,502 shares for $284,393, at an average price of $76.40 per share, leaving the aggregate remaining approved amount under the October 2017 program at $250,607.

F-37

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

Note 9. Foreign Currency Exchange Rate Contracts and Hedging

As of March 31, 2018, the Company had Designated Derivative Contracts with five counterparties and Non-Designated Derivative Contracts with two counterparties, all with various maturity dates within the next 12 months.

As of March 31, 2018, the Company had the following foreign currency exchange rate forward contracts:

	Designated Derivative Contracts				Non-Designated Derivative Contracts				Total
Notional value	$	126,332			$	4,802			$	131,134
Fair value recorded in other current assets	950				—				950
Fair value recorded in other accrued expenses	(143		)		(10		)		(153		)

As of March 31, 2017, the Company had the following foreign currency exchange rate forward contracts:

	Designated Derivative Contracts				Non-Designated Derivative Contracts				Total
Notional value	$	100,000			$	—			$	100,000
Fair value recorded in other current assets	1,365				—				1,365

During the years ended March 31, 2018 and 2017, the Company entered into and settled Designated Derivative Contracts with notional values totaling approximately $21,000 and $11,000, respectively, and Non-Designated Derivative Contracts with notional values totaling approximately $81,000 and $263,000, respectively. During the year ended March 31, 2018, the Company settled Designated Derivative Contracts with notional values totaling approximately $100,000, which had been entered into in the prior period.

The non-performance risk of the Company and the counterparties did not have a material impact on the fair value of the derivative instruments. During the years ended March 31, 2018 and 2017, the Designated Derivative Contracts remained effective and that portion of any gain or loss was recognized in AOCI and reclassified into earnings in the same period or periods during which the hedged transaction affected earnings. As of March 31, 2018, the amount of unrealized losses on foreign currency exchange rate forward contracts recognized in AOCI is expected to be reclassified into income within the next 15 months. Refer to Note 10, "Accumulated Other Comprehensive Loss," for further information.

The following table summarizes the effect of Designated Derivative Contracts:

	Years Ended March 31,
	2018		2017		2016
Location of amount reclassified from accumulated other comprehensive loss into income (effective portion)	Net sales
Amount of (loss) gain recognized in other comprehensive income (loss) on derivative instruments (effective portion)	$(9,593)		$8,208		$(850)
Amount of (loss) gain reclassified from accumulated other comprehensive loss into income (effective portion)	$(8,541)		$7,082		$(1,592)
Location of amount excluded from effectiveness testing	SG&A expenses
Amount of gain excluded from effectiveness testing	$1,376		$534		$207

F-38

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

The following table summarizes the effect of Non-Designated Derivative Contracts:

	Years Ended March 31,
	2018		2017		2016
Location of amount recognized in income on derivative instruments	SG&A expenses
Amount of (loss) gain recognized in income on derivative instruments	$(2,574)		$2,202		$(1,532)

Subsequent to March 31, 2018 through May 25, 2018, the Company entered into Non-Designated Derivative Contracts with notional values totaling approximately $14,000, which are expected to mature over the next nine months, and no Designated Derivative Contracts. At May 25, 2018, the Company's outstanding hedging contracts were held by an aggregate of five counterparties.

Note 10. Accumulated Other Comprehensive Loss

The components within accumulated other comprehensive loss are as follows:

	As of March 31,
	2018				2017
Unrealized gain on foreign currency exchange rate hedges, net of tax	$	243			$	856
Cumulative foreign currency translation adjustment	(13,226		)		(27,307		)
Accumulated other comprehensive loss	$	(12,983	)		$	(26,451	)

Note 11. Net Income per Share

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

	Years Ended March 31,
	2018			2017			2016
Weighted-average shares used in basic computation	31,758,000			32,000,000			32,556,000
Dilutive effect of stock-based awards and options	238,000			355,000			483,000
Weighted-average shares used for diluted computation	31,996,000			32,355,000			33,039,000
Excluded*:
Annual RSUs and Annual PSUs	200			17,000			—
2007 LTIP SARs	—			—			90,000
LTIP PSUs	—			269,000			389,000
LTIP NQSOs	397,000			192,000			—
Deferred Non-Employee Director Equity Awards	1,000			—			—

*The stock-based awards and options excluded from the dilutive effect were excluded either because the shares were anti-dilutive or because the necessary conditions had not been satisfied for the shares to be issuable based on the Company's performance for the years ended March 31, 2018, 2017 and 2016. The number of shares reflected for each of these excluded awards is the maximum number of shares issuable pursuant to these awards. Refer to Note 8, "Stockholders' Equity," for further information on the Company's stock-based awards and options.

F-39

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

Note 12. Reportable Operating Segments

The Company has five reportable operating segments consisting of the strategic business units for the worldwide wholesale operations for each of the UGG brand, Teva brand, Sanuk brand and other brands, as well as DTC. The Company's other brands currently consist of the Hoka and Koolaburra brands, and included the Ahnu® (Ahnu) brand for the years ended March 31, 2017 and 2016, as well as the TSUBO and MOZO brands for the year ended March 31, 2016.

The Company evaluates reportable operating segment performance primarily based on net sales and income (loss) from operations. The wholesale operations of each brand are managed separately because each requires different marketing, research and development, design, sourcing, and sales strategies. The income (loss) from operations for each of the reportable operating segments includes only those costs which are specifically related to each reportable operating segment, which consist primarily of cost of sales, research and development, design, sales and marketing, depreciation, amortization, and the costs of employees and their respective expenses that are directly related to each reportable operating segment. The Company does not allocate corporate overhead costs or non-operating income and expenses to reportable operating segments. The unallocated corporate overhead costs include unallocable costs associated with distribution centers, certain executive and stock compensation expenses, accounting, finance and legal costs, information technology costs, human resources costs, and facilities costs, among others.

During calendar year 2017, the Company began to leverage elements, including particular styles, of the Ahnu brand under the Teva brand. Effective April 1, 2017, operations for the Ahnu brand were discontinued and certain remaining styles are sold under the Teva brand. Results for the former Ahnu brand are now reported in the Teva brand wholesale reportable operating segment instead of the other brands wholesale reportable operating segment, as presented in the prior period. During the first quarter of fiscal year 2016, the Company changed its reportable operating segments to combine the previously-separated E-Commerce and retail store operating components into one DTC reportable operating segment.

Reportable operating segment information with a reconciliation to the consolidated statements of comprehensive income (loss) is summarized as follows:

	Years Ended March 31,
	2018				2017				2016
Net sales to external customers:
UGG brand wholesale	$	841,893			$	826,355			$	918,102
Teva brand wholesale	117,478				103,694				121,239
Sanuk brand wholesale	78,283				77,552				90,719
Other brands wholesale	149,961				116,206				100,820
Direct-to-Consumer	715,724				666,340				644,317
	$	1,903,339			$	1,790,147			$	1,875,197
Income (loss) from operations:
UGG brand wholesale	$	247,826			$	213,407			$	246,990
Teva brand wholesale	20,400				10,045				17,692
Sanuk brand wholesale	14,474				(110,582		)		15,565
Other brands wholesale	22,258				1,571				(4,384		)
Direct-to-Consumer	156,896				109,802				101,756
Unallocated overhead costs	(239,270		)		(226,162		)		(215,492		)
	$	222,584			$	(1,919	)		$	162,127

F-40

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

	Years Ended March 31,
	2018				2017				2016
Depreciation, amortization and accretion:
UGG brand wholesale	$	3,193			$	3,167			$	2,254
Teva brand wholesale	12				24				54
Sanuk brand wholesale	4,174				5,018				6,556
Other brands wholesale	865				971				1,101
Direct-to-Consumer	13,396				15,669				19,030
Unallocated overhead costs	26,932				27,779				21,029
	$	48,572			$	52,628			$	50,024
Capital expenditures:
UGG brand wholesale	$	58			$	3,444			$	1,458
Teva brand wholesale	—				—				—
Sanuk brand wholesale	20				—				881
Other brands wholesale	—				191				51
Direct-to-Consumer	8,641				15,277				18,445
Unallocated overhead costs	26,094				25,587				45,351
	$	34,813			$	44,499			$	66,186

Inter-segment sales from the Company’s wholesale reportable operating segments to the DTC reportable operating segment are at the Company’s cost, and there is no inter-segment profit on these inter-segment sales, nor are they reflected in income (loss) from operations of the wholesale reportable operating segments.

Assets allocable to each reportable operating segment are as follows:

		As of March 31,
		2018				2017
Total assets from reportable operating segments:
UGG brand wholesale		$	229,894			$	259,444
Teva brand wholesale		85,980				82,505
Sanuk brand wholesale		79,322				80,102
Other brands wholesale		74,809				70,607
Direct-to-Consumer		112,355				113,400
		$	582,360			$	606,058

The assets allocable to each reportable operating segment include accounts receivable, inventory, fixed assets, goodwill, other intangible assets, and certain other assets that are specifically identifiable with one of the Company's reportable operating segments. Unallocated assets are the assets not directly related to a specific reportable operating segment and generally include cash and cash equivalents, deferred tax assets, and various other corporate assets shared by the Company's reportable operating segments.

F-41

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

Total assets allocable to each reportable operating segment reconciled to the consolidated balance sheets are as follows:

		As of March 31,
		2018				2017
Total assets from reportable operating segments		$	582,360			$	606,058
Unallocated cash and cash equivalents		429,970				291,764
Unallocated deferred tax assets		38,381				44,708
Unallocated other corporate assets		213,668				249,250
Total assets		$	1,264,379			$	1,191,780

Note 13. Concentration of Business

Significant Customers

The Company sells its products to customers throughout the US and to foreign customers located in Europe, Asia, Canada, Australia, and Latin America, among other regions. Approximately $617,867, or 32.5%, $539,000, or 30.1%, and $526,000, or 28.1%, of total net sales were denominated in foreign currencies for the years ended March 31, 2018, 2017, and 2016, respectively. International sales were 38.3%, 36.2%, and 35.0% of the Company's total net sales for the years ended March 31, 2018, 2017, and 2016, respectively. For the years ended March 31, 2018, 2017, and 2016, no single foreign country comprised more than 10.0% of the Company's total net sales.

Management performs regular evaluations concerning the ability of the Company's customers to satisfy their obligations to the Company and records an allowance for doubtful accounts based upon these evaluations. The Company's five largest customers accounted for approximately 23.6% of worldwide sales for the year ended March 31, 2018 compared to 20.3% for the year ended March 31, 2017. No single customer accounted for 10.0% or more of the Company's net sales during the years ended March 31, 2018, 2017 and 2016. At March 31, 2018, the Company had two customers that represented a combined 21.6% of net trade accounts receivable compared to one customer that made up 11.2% of net trade accounts receivable at March 31, 2017.

Suppliers

The Company's production is concentrated at a limited number of independent manufacturing factories in Asia. Sheepskin is the principal raw material for certain UGG brand products and the majority of sheepskin is purchased from two tanneries in China and is sourced primarily from Australia and the United Kingdom. Beginning in 2013, in an effort to partially reduce its dependency on sheepskin, the Company began using a proprietary raw material, UGGpureTM (UGGpure), which is a wool woven into a durable backing, in some of its UGG brand products. The Company currently purchases UGGpure from two suppliers. The other production materials used by the Company are sourced primarily in Asia. The Company's operations are subject to the customary risks of doing business abroad, including, but not limited to, foreign currency exchange rate fluctuations, customs duties and related fees, various import controls and other nontariff barriers, restrictions on the transfer of funds, labor unrest and strikes, and, in certain parts of the world, political instability. The supply of sheepskin can be adversely impacted by weather conditions, disease, and harvesting decisions that are completely outside of the Company's control. Furthermore, the price of sheepskin is impacted by numerous other factors, including demand for the Company's products, demand for sheepskin by competitors, changes in consumer preferences and changes in discretionary spending.

Net Property and Equipment

The Company does not consider international operations a separate reportable operating segment. Management reviews such operations in the aggregate with the aforementioned reportable operating segments. Long-lived assets, which consist of net property and equipment, in the US and all other countries combined was as follows:

F-42

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Years Ended March 31, 2018, 2017 and 2016

(dollar amounts in thousands, except per share data)

	As of March 31,
	2018				2017
US	$	203,956			$	206,077
All other countries*	16,206				19,454
Total	$	220,162			$	225,531

*No other country's net property and equipment comprised more than 10.0% of the Company's total net property and equipment as of March 31, 2018 and 2017.

Note 14. Quarterly Summary of Information (Unaudited)

The Company's business is seasonal, with the highest percentage of UGG brand net sales occurring in the quarters ending September 30th and December 31st and the highest percentage of Teva and Sanuk brand net sales occurring in the quarters ending March 31st and June 30th of each year. Net sales of other brands do not have significant seasonal impact on the Company. Due to the size of the UGG brand relative to the Company's other brands, the Company's aggregate net sales in the quarters ending September 30th and December 31st have significantly exceeded net sales in the quarters ending March 31st and June 30th.

Summarized unaudited quarterly financial data are as follows:

	Fiscal Year 2018
	Quarter Ended
	6/30/2017				9/30/2017				12/31/2017				3/31/2018
Net sales	$	209,717			$	482,460			$	810,478			$	400,684
Gross profit	90,625				225,117				423,471				192,429
(Loss) income from operations	(56,256		)		67,355				193,191				18,294
Net (loss) income*	(42,121		)		49,559				86,341				20,615
Net (loss) income per share:
Basic	$	(1.32	)		$	1.55			$	2.71			$	0.66
Diluted	$	(1.32	)		$	1.54			$	2.69			$	0.66

	Fiscal Year 2017
	Quarter Ended
	6/30/2016				9/30/2016				12/31/2016				3/31/2017
Net sales	$	174,393			$	485,944			$	760,345			$	369,465
Gross profit	76,252				216,425				383,634				158,924
(Loss) income from operations	(78,319		)		54,023				53,250				(30,873		)
Net (loss) income*	(58,918		)		39,305				41,027				(15,704		)
Net (loss) income per share:
Basic	$	(1.84	)		$	1.23			$	1.28			$	(0.49	)
Diluted	$	(1.84	)		$	1.21			$	1.27			$	(0.49	)

*Includes restructuring charges of $1,667 and $28,984 for the years ended March 31, 2018 and 2017, respectively, primarily incurred during the third and fourth quarters of fiscal year 2017 and the first and second quarters of fiscal years 2018. Refer to Note 2, "Restructuring," for further information on the nature of restructuring charges incurred. In addition, includes non-cash impairment charges incurred of $113,944 and $4,086 for the Sanuk brand's wholesale reportable operating segment goodwill and patent, respectively, during the third quarter of fiscal year 2017. Refer to Note 3, "Goodwill and Other Intangible Assets," for further information on the Sanuk brand non-cash impairment charges.

F-43

Schedule II

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES

TOTAL VALUATION AND QUALIFYING ACCOUNTS

The following is a summary of allowances for doubtful accounts, sales discounts, chargebacks and sales returns against trade accounts receivable:

	As of March 31,
	2018				2017				2016
Allowance for doubtful accounts (1)
Balance at Beginning of Year	$	5,979			$	5,494			$	2,297
Additions	4,168				2,847				5,120
Deductions	(6,660		)		(2,362		)		(1,923		)
Balance at End of Year	$	3,487			$	5,979			$	5,494
Allowance for sales discounts (2)
Balance at Beginning of Year	$	3,100			$	2,672			$	2,348
Additions	19,972				20,259				25,560
Deductions	(21,672		)		(19,831		)		(25,236		)
Balance at End of Year	$	1,400			$	3,100			$	2,672
Allowance for chargebacks (3)
Balance at Beginning of Year	$	7,028			$	4,968			$	4,041
Additions	19,019				19,584				15,750
Deductions	(18,320		)		(17,524		)		(14,823		)
Balance at End of Year	$	7,727			$	7,028			$	4,968
Allowance for sales returns (4)
Balance at Beginning of Year	$	16,247			$	17,061			$	9,532
Additions	51,677				62,122				42,392
Deductions	(47,076		)		(62,936		)		(34,863		)
Balance at End of Year	$	20,848			$	16,247			$	17,061
Total Allowances	$	33,462			$	32,354			$	30,195

(1)	The additions to the allowance for doubtful accounts represent estimates of the Company's bad debt expense based upon the factors on which the Company evaluates the collectability of its accounts receivable, with actual recoveries netted into additions. Deductions are for the actual write-off of the related trade accounts receivables.

(2)

The additions to the allowance for sales discounts represent estimates of discounts to be taken by the Company's customers based upon the amount of outstanding discounts for prompt or early payments. Deductions are for the actual discounts taken by the Company's wholesale channel customers. Discounts for DTC customers are taken at the point of sale and are not reflected in the allowance for sales discounts.

(3)	The additions to the allowance for chargebacks represent chargebacks and markdowns taken in the respective year, as well as an estimate of amounts that will be taken in the future related to sales in the current reporting period. Deductions are for the actual amounts written off against outstanding trade accounts receivables.

(4)	The additions to the allowance for sales returns represent estimates of returns based upon the Company's historical wholesale channel customer returns experience. Deductions are for the actual return of products. Returns of DTC customer products are excluded as they are separately recorded in the sales return liability.

F-44