Delaware | 95-3015862 |
(State of incorporation) | (I.R.S. Employer Identification No.) |
Large accelerated filer x | Accelerated filer o |
Non-accelerated filer o | (Do not check if a smaller reporting company) |
Smaller reporting company o | |
Emerging growth company o |
• | the results of and costs associated with our Savings Plan (as defined herein) and ongoing restructuring plan, including our brand realignment, retail store fleet optimization and office consolidations; |
• | our global business, growth, operating, investing, and financing strategies; |
• | our product offerings, distribution channels, and geographic mix; |
• | consumer preferences with respect to new brands and products; |
• | the purchasing behavior and buying patterns of retail consumers; |
• | the impact of seasonality and weather on our results of operations; |
• | expectations regarding our net sales and earnings growth and other financial metrics; |
• | our development of worldwide distribution channels; |
• | purchasing behavior of wholesale customers, including timing of orders and management of inventory; |
• | trends affecting our financial condition and results, capital expenditures, liquidity or cash flows; |
• | expectations for expansion of Direct-to-Consumer capabilities, primarily in our E-Commerce business; |
• | overall global economic trends, including foreign currency exchange rate fluctuations; |
• | reliability of overseas factory production and storage and availability and cost of raw materials; |
• | the value of goodwill and other intangible assets, and future write-downs or impairment charges; |
• | changes impacting our tax liability and effective tax rates, including as a result of changes in tax laws or treaties, foreign income or loss, and the realization of net deferred tax assets; |
• | potential impacts of our ongoing operational systems upgrades and costs associated with our business transformation project implementation; |
• | commitments and contingencies, including purchase obligations for product and sheepskin; and |
• | the impact of recent accounting pronouncements. |
September 30, 2017 | March 31, 2017 | ||||||
ASSETS | (UNAUDITED) | ||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 230,586 | $ | 291,764 | |||
Trade accounts receivable, net of allowances ($37,802 and $32,354 as of September 30, 2017 and March 31, 2017, respectively) | 306,573 | 158,643 | |||||
Inventories, net of reserves ($9,656 and $7,638 as of September 30, 2017 and March 31, 2017, respectively) | 555,560 | 298,851 | |||||
Prepaid expenses | 19,102 | 15,996 | |||||
Other current assets | 28,914 | 30,781 | |||||
Income tax receivable | 12,176 | 24,786 | |||||
Total current assets | 1,152,911 | 820,821 | |||||
Property and equipment, net of accumulated depreciation ($200,591 and $190,758 as of September 30, 2017 and March 31, 2017, respectively) | 216,980 | 225,531 | |||||
Goodwill | 13,990 | 13,990 | |||||
Other intangible assets, net of accumulated amortization ($59,072 and $54,361 as of September 30, 2017 and March 31, 2017, respectively) | 61,679 | 65,138 | |||||
Deferred tax assets | 52,470 | 44,708 | |||||
Other assets | 22,258 | 21,592 | |||||
Total assets | $ | 1,520,288 | $ | 1,191,780 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Short-term borrowings | $ | 133,474 | $ | 549 | |||
Trade accounts payable | 244,846 | 95,893 | |||||
Accrued payroll | 31,529 | 22,608 | |||||
Other accrued expenses | 33,796 | 31,816 | |||||
Income taxes payable | 18,105 | 2,719 | |||||
Value added tax payable | 12,297 | 5,466 | |||||
Total current liabilities | 474,047 | 159,051 | |||||
Long-term liabilities: | |||||||
Mortgage payable | 31,803 | 32,082 | |||||
Income tax liability | 8,059 | 13,216 | |||||
Deferred rent obligations | 22,259 | 18,433 | |||||
Other long-term liabilities | 15,294 | 14,743 | |||||
Total long-term liabilities | 77,415 | 78,474 | |||||
Commitments and contingencies (Note 7) | |||||||
Stockholders' equity: | |||||||
Common stock ($0.01 par value; 125,000 shares authorized; shares issued and outstanding of 32,037 and 31,987 as of September 30, 2017 and March 31, 2017, respectively) | 320 | 320 | |||||
Additional paid-in capital | 166,730 | 160,797 | |||||
Retained earnings | 828,392 | 819,589 | |||||
Accumulated other comprehensive loss | (26,616 | ) | (26,451 | ) | |||
Total stockholders' equity | 968,826 | 954,255 | |||||
Total liabilities and stockholders' equity | $ | 1,520,288 | $ | 1,191,780 |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net sales | $ | 482,460 | $ | 485,944 | $ | 692,177 | $ | 660,337 | |||||||
Cost of sales | 257,343 | 269,519 | 376,435 | 367,660 | |||||||||||
Gross profit | 225,117 | 216,425 | 315,742 | 292,677 | |||||||||||
Selling, general and administrative expenses | 157,762 | 162,402 | 304,643 | 316,973 | |||||||||||
Income (loss) from operations | 67,355 | 54,023 | 11,099 | (24,296 | ) | ||||||||||
Other expense (income), net: | |||||||||||||||
Interest income | (509 | ) | (103 | ) | (961 | ) | (307 | ) | |||||||
Interest expense | 1,531 | 1,943 | 2,538 | 3,378 | |||||||||||
Other expense (income), net | 12 | (289 | ) | (212 | ) | (958 | ) | ||||||||
Total other expense, net | 1,034 | 1,551 | 1,365 | 2,113 | |||||||||||
Income (loss) before income taxes | 66,321 | 52,472 | 9,734 | (26,409 | ) | ||||||||||
Income tax expense (benefit) | 16,762 | 13,167 | 2,296 | (6,796 | ) | ||||||||||
Net income (loss) | 49,559 | 39,305 | 7,438 | (19,613 | ) | ||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Unrealized (loss) gain on foreign currency exchange rate hedges | (911 | ) | (890 | ) | (4,683 | ) | 2,019 | ||||||||
Foreign currency translation adjustment | 2,968 | (856 | ) | 4,518 | 2,843 | ||||||||||
Total other comprehensive income (loss) | 2,057 | (1,746 | ) | (165 | ) | 4,862 | |||||||||
Comprehensive income (loss) | $ | 51,616 | $ | 37,559 | $ | 7,273 | $ | (14,751 | ) | ||||||
Net income (loss) per share: | |||||||||||||||
Basic | $ | 1.55 | $ | 1.23 | $ | 0.23 | $ | (0.61 | ) | ||||||
Diluted | $ | 1.54 | $ | 1.21 | $ | 0.23 | $ | (0.61 | ) | ||||||
Weighted-average common shares outstanding: | |||||||||||||||
Basic | 32,015 | 32,057 | 32,003 | 32,041 | |||||||||||
Diluted | 32,272 | 32,422 | 32,256 | 32,041 |
Six Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 7,438 | $ | (19,613 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||
Depreciation, amortization and accretion | 24,453 | 25,885 | |||||
Provision for doubtful accounts | 4,678 | 610 | |||||
Deferred tax benefit | (3,449 | ) | (2,147 | ) | |||
Stock-based compensation | 6,866 | 4,661 | |||||
Excess tax benefits from stock compensation | 76 | 1,084 | |||||
Loss on sale of assets | 273 | 534 | |||||
Impairment of long-lived assets | 393 | — | |||||
Restructuring charges | 1,518 | 2,632 | |||||
Changes in operating assets and liabilities: | |||||||
Trade accounts receivable, net | (152,607 | ) | (140,615 | ) | |||
Inventories, net | (256,709 | ) | (278,117 | ) | |||
Prepaid expenses and other current assets | (2,096 | ) | (10,090 | ) | |||
Income tax receivable | 16,999 | 6,665 | |||||
Other assets | (667 | ) | 858 | ||||
Trade accounts payable | 148,894 | 102,324 | |||||
Accrued expenses | 11,132 | 21,845 | |||||
Income taxes payable | 5,208 | (2,678 | ) | ||||
Long-term liabilities | 4,810 | (2,370 | ) | ||||
Net cash used in operating activities | (182,790 | ) | (288,532 | ) | |||
Cash flows from investing activities: | |||||||
Purchases of property and equipment, net | (10,151 | ) | (31,626 | ) | |||
Net cash used in investing activities | (10,151 | ) | (31,626 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from short-term borrowings | 156,751 | 302,801 | |||||
Repayments of short-term borrowings | (24,000 | ) | (91,900 | ) | |||
Proceeds from issuance of stock under the employee stock purchase plan | 353 | 412 | |||||
Cash paid for shares withheld for taxes | (1,871 | ) | (4,037 | ) | |||
Contingent consideration paid | — | (19,784 | ) | ||||
Repayment of mortgage principal | (265 | ) | (252 | ) | |||
Net cash provided by financing activities | 130,968 | 187,240 | |||||
Effect of foreign currency exchange rates on cash | 795 | (2,991 | ) | ||||
Net change in cash and cash equivalents | (61,178 | ) | (135,909 | ) | |||
Cash and cash equivalents at beginning of period | 291,764 | 245,956 | |||||
Cash and cash equivalents at end of period | $ | 230,586 | $ | 110,047 |
Six Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Supplemental disclosure of cash flow information: | |||||||
Cash paid (refunded) during the period for: | |||||||
Income taxes refunded, net of payments ($4,111 and $6,592 as of September 30, 2017 and 2016, respectively) | $ | (14,397 | ) | $ | (9,407 | ) | |
Interest | 1,607 | 2,289 | |||||
Non-cash investing and financing activities: | |||||||
Accrued for purchases of property and equipment | 2,757 | 1,875 | |||||
Accrued for asset retirement obligations | 540 | 517 |
• | 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 condensed consolidated statements of comprehensive income (loss) for the three and six months ended September 30, 2017, rather than to additional paid-in capital in the condensed 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 to retained earnings and non-current deferred tax assets for unrecognized excess tax benefits of $1,365 was recognized on April 1, 2017 in the condensed consolidated balance sheet as of September 30, 2017. |
• | The Company has made current and prior period reclassifications in the condensed 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 to estimate forfeitures as a component of determining grant date fair value. |
Lease termination costs | Severance costs | Termination of various contracts and other services | Total | ||||||||||||
Balance as of March 31, 2017 | $ | 4,572 | $ | 2,555 | $ | 3,953 | $ | 11,080 | |||||||
Additional charges | — | — | 1,518 | 1,518 | |||||||||||
Paid in cash | (649 | ) | (2,295 | ) | (3,804 | ) | (6,748 | ) | |||||||
Balance as of September 30, 2017 | $ | 3,923 | $ | 260 | $ | 1,667 | $ | 5,850 |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
UGG brand wholesale | $ | — | $ | 513 | $ | — | $ | 574 | |||||||
Direct-to-Consumer | — | 160 | — | 1,395 | |||||||||||
Unallocated overhead costs | — | 227 | 1,518 | 663 | |||||||||||
Total restructuring charges | $ | — | $ | 900 | $ | 1,518 | $ | 2,632 |
September 30, 2017 | March 31, 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 | 50,052 | 48,800 | |||||
Total gross carrying amount | 105,297 | 104,045 | |||||
Accumulated amortization | (59,072 | ) | (54,361 | ) | |||
Net Definite-lived Intangible Assets | 46,225 | 49,684 | |||||
Total Other Intangible Assets | 61,679 | 65,138 | |||||
Total Goodwill and Other Intangible Assets | $ | 75,669 | $ | 79,128 |
Balance as of March 31, 2017 | $ | 65,138 | |
Amortization expense | (3,866 | ) | |
Foreign currency exchange rate fluctuations | 407 | ||
Balance as of September 30, 2017 | $ | 61,679 |
• | 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. |
Fair Value as of September 30, 2017 | Measured Using | ||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||
Assets (liabilities) at fair value: | |||||||||||||||
Non-qualified deferred compensation asset | $ | 6,984 | $ | 6,984 | $ | — | $ | — | |||||||
Non-qualified deferred compensation liability | (4,128 | ) | (4,128 | ) | — | — | |||||||||
Designated Derivative Contracts liability | (5,583 | ) | — | (5,583 | ) | — | |||||||||
Non-Designated Derivative Contracts asset | 509 | — | 509 | — | |||||||||||
Non-Designated Derivative Contracts liability | (3,177 | ) | — | (3,177 | ) | — |
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 | — |
Expected life (in years) | 4.9 | |||
Expected volatility | 38.73 | % | ||
Risk free interest rate | 1.78 | % | ||
Dividend yield | — | % | ||
Weighted-average exercise price | $ | 69.29 | ||
Weighted-average option value | $ | 25.03 |
Balance as of March 31, 2017 | $ | 819,589 | |
Net income | 7,438 | ||
Cumulative unrecognized excess tax benefit* | 1,365 | ||
Balance as of September 30, 2017 | $ | 828,392 |
Designated Derivative Contracts | Non-Designated Derivative Contracts | ||
Notional amount | $88,815 | $76,689 | |
Fair value recorded in other current assets | — | 509 | |
Fair value recorded in other current liabilities | (5,583) | (3,177) |
Three Months Ended September 30, | |||
2017 | 2016 | ||
Amount of (loss) gain recognized in other comprehensive income (loss) on derivative instruments (effective portion) | $(3,900) | $439 | |
Location of amount reclassified from accumulated other comprehensive loss into income (effective portion) | Net Sales | Net Sales | |
Amount of (loss) gain reclassified from accumulated other comprehensive loss into income (effective portion) | $(2,283) | $1,851 | |
Location of amount excluded from effectiveness testing | Selling, general and administrative expenses | Selling, general and administrative expenses | |
Amount of gain excluded from effectiveness testing | $439 | $163 |
Six Months Ended September 30, | |||
2017 | 2016 | ||
Amount of (loss) gain recognized in other comprehensive income (loss) on derivative instruments (effective portion) | $(9,790) | $4,903 | |
Location of amount reclassified from accumulated other comprehensive loss into income (effective portion) | Net Sales | Net Sales | |
Amount of (loss) gain reclassified from accumulated other comprehensive loss into income (effective portion) | $(2,283) | $1,676 | |
Location of amount excluded from effectiveness testing | Selling, general and administrative expenses | Selling, general and administrative expenses | |
Amount of gain excluded from effectiveness testing | $772 | $355 |
Three Months Ended September 30, | |||
2017 | 2016 | ||
Location of amount recognized in income on derivative instruments | Selling, general and administrative expenses | Selling, general and administrative expenses | |
Amount of loss recognized in income on derivative instruments | $(1,065) | $(290) |
Six Months Ended September 30, | |||
2017 | 2016 | ||
Location of amount recognized in income on derivative instruments | Selling, general and administrative expenses | Selling, general and administrative expenses | |
Amount of loss recognized in income on derivative instruments | $(2,668) | $(881) |
September 30, 2017 | March 31, 2017 | ||||||
Unrealized (loss) gain on foreign currency exchange rate hedges, net of tax | $ | (3,827 | ) | $ | 856 | ||
Cumulative foreign currency translation adjustment | (22,789 | ) | (27,307 | ) | |||
Accumulated other comprehensive loss | $ | (26,616 | ) | $ | (26,451 | ) |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Weighted-average shares used in basic computation | 32,015,000 | 32,057,000 | 32,003,000 | 32,041,000 | |||||||
Dilutive effect of stock-based awards and options | 257,000 | 365,000 | 253,000 | — | |||||||
Weighted-average shares used for diluted computation | 32,272,000 | 32,422,000 | 32,256,000 | 32,041,000 | |||||||
Excluded*: | |||||||||||
Annual RSUs and Annual PSUs | 92,000 | 131,000 | 132,000 | 420,000 | |||||||
SARs | — | 90,000 | — | 480,000 | |||||||
LTIP PSUs | 269,000 | 396,000 | 269,000 | 396,000 | |||||||
LTIP NQSOs | 397,000 | — | 397,000 | — | |||||||
Deferred non-employee director restricted stock awards | 3,000 | — | 3,000 | 10,000 | |||||||
Employee Stock Purchase Plan | — | — | — | 9,000 |
Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net sales to external customers: | |||||||||||||||
UGG brand wholesale | $ | 322,050 | $ | 337,852 | $ | 385,323 | $ | 383,753 | |||||||
Teva brand wholesale | 16,494 | 12,246 | 48,617 | 41,771 | |||||||||||
Sanuk brand wholesale | 12,087 | 15,030 | 34,307 | 37,333 | |||||||||||
Other brands wholesale | 40,521 | 34,830 | 67,486 | 53,241 | |||||||||||
Direct-to-Consumer | 91,308 | 85,986 | 156,444 | 144,239 | |||||||||||
$ | 482,460 | $ | 485,944 | $ | 692,177 | $ | 660,337 | ||||||||
Income (loss) from operations: | |||||||||||||||
UGG brand wholesale | $ | 117,218 | $ | 112,510 | $ | 116,197 | $ | 102,298 | |||||||
Teva brand wholesale | 1,916 | (2,121 | ) | 6,859 | (259 | ) | |||||||||
Sanuk brand wholesale | 1,228 | (211 | ) | 5,645 | 3,970 | ||||||||||
Other brands wholesale | 8,043 | 2,362 | 9,069 | 732 | |||||||||||
Direct-to-Consumer | (3,403 | ) | (6,092 | ) | (15,505 | ) | (25,511 | ) | |||||||
Unallocated overhead costs | (57,647 | ) | (52,425 | ) | (111,166 | ) | (105,526 | ) | |||||||
$ | 67,355 | $ | 54,023 | $ | 11,099 | $ | (24,296 | ) |
September 30, 2017 | March 31, 2017 | ||||||
Total assets from reportable operating segments: | |||||||
UGG brand wholesale | $ | 712,746 | $ | 259,444 | |||
Teva brand wholesale | 49,411 | 82,505 | |||||
Sanuk brand wholesale | 59,583 | 80,102 | |||||
Other brands wholesale | 70,413 | 70,607 | |||||
Direct-to-Consumer | 118,834 | 113,400 | |||||
$ | 1,010,987 | $ | 606,058 |
September 30, 2017 | March 31, 2017 | ||||||
Total assets from reportable operating segments | $ | 1,010,987 | $ | 606,058 | |||
Unallocated cash and cash equivalents | 230,586 | 291,764 | |||||
Unallocated deferred tax assets | 52,470 | 44,708 | |||||
Other unallocated corporate assets | 226,245 | 249,250 | |||||
Consolidated total assets | $ | 1,520,288 | $ | 1,191,780 |
September 30, 2017 | March 31, 2017 | ||||||
US | $ | 198,287 | $ | 206,077 | |||
All other countries* | 18,693 | 19,454 | |||||
Total | $ | 216,980 | $ | 225,531 |
September 30, 2017 | March 31, 2017 | ||||||
Money market fund accounts | $ | 166,866 | $ | 198,992 | |||
Cash | 63,720 | 92,772 | |||||
Total cash and cash equivalents | $ | 230,586 | $ | 291,764 |
• | Sales of our products are highly seasonal and are sensitive to weather conditions, which are beyond our control. Even though we continue to expand our product lines and create more year-round styles for our brands, the effect of favorable or unfavorable weather on our aggregate sales and operating results may continue to be significant. |
• | We believe there has been a meaningful shift in the way consumers shop for products and make purchasing decisions. In particular, brick and mortar retail stores are experiencing significant and prolonged decreases in consumer traffic as customers continue to migrate to shopping online. This shift is impacting the performance of both our DTC business and of our wholesale customers. |
• | In light of the shift in consumer shopping behavior, we are seeking to optimize our brick and mortar retail footprint. In connection with store closures, we have been impacted by costs to exit lease agreements, employee termination costs, retail store fixed asset impairments and other closure costs. We expect this trend to continue as we further evaluate and optimize our retail fleet. |
• | We expect that our E-Commerce business will be a driver of long-term growth, although we expect that the year-over-year growth rate will decline over time as the size of our E-Commerce business increases. |
• | We believe that the continued enhancement of our Omni-Channel capabilities will enable us to increasingly engage existing and prospective consumers in a more connected environment and expose them to our brands. In particular, we are working towards a segmented channel and product distribution approach with the goal of continuing to reduce the number of distribution points within the domestic markets to allow us to elevate distribution among select customers, and enhancing our distribution footprint with the European and Asian markets, including through the use of partner retail stores in China. |
• | We believe consumers are buying product closer to the particular wearing occasion (buy now, wear now), which tends to shorten the purchasing windows for weather-dependent product. Not only does this trend impact our DTC business, we believe it is also impacting the purchasing behavior of our large wholesale customers. In particular, these customers appear to be shortening their purchasing windows as a way to address the evolving behavior of retail consumers and to manage their own product inventory. |
• | Foreign currency exchange rate fluctuations have significantly increased the value of the US dollar compared to most major foreign currencies over the past couple of years. While we seek to hedge some of the risks associated with foreign currency exchange rate fluctuations, these changes are largely outside of our control. We expect these changes will continue to impact the demand for our products and our operating results. |
• | High consumer brand loyalty, due to delivering quality and luxuriously comfortable UGG footwear. |
• | Evolution of our Classics business through the introduction of products such as the Classic Slim, the Classic Luxe, the Classic Street, and the Classic II. |
• | Diversification of our UGG product lines, including women's spring and summer, men's, and lifestyle offerings. We believe that the evolution of the UGG brand and our strategy of product diversification will help decrease our reliance on sheepskin and mitigate the impacts of seasonality. |
• | Continued enhancement of our Omni-Channel and digital capabilities to enable us to better engage existing and prospective consumers and expose them to our brands. |
Three Months Ended September 30, | ||||||||||||||||||||
2017 | 2016 | Change | ||||||||||||||||||
Amount | % | Amount | % | Amount | % | |||||||||||||||
Net sales | $ | 482,460 | 100.0 | % | $ | 485,944 | 100.0 | % | $ | (3,484 | ) | (0.7 | )% | |||||||
Cost of sales | 257,343 | 53.3 | 269,519 | 55.5 | 12,176 | 4.5 | ||||||||||||||
Gross profit | 225,117 | 46.7 | 216,425 | 44.5 | 8,692 | 4.0 | ||||||||||||||
Selling, general and administrative expenses | 157,762 | 32.7 | 162,402 | 33.4 | 4,640 | 2.9 | ||||||||||||||
Income from operations | 67,355 | 14.0 | 54,023 | 11.1 | 13,332 | 24.7 | ||||||||||||||
Other expense, net | 1,034 | 0.2 | 1,551 | 0.3 | 517 | 33.3 | ||||||||||||||
Income before income taxes | 66,321 | 13.8 | 52,472 | 10.8 | 13,849 | 26.4 | ||||||||||||||
Income tax expense | 16,762 | 3.5 | 13,167 | 2.7 | (3,595 | ) | (27.3 | ) | ||||||||||||
Net income | $ | 49,559 | 10.3 | % | $ | 39,305 | 8.1 | % | $ | 10,254 | 26.1 | % |
Three Months Ended September 30, | ||||||||||||||
2017 | 2016 | Change | ||||||||||||
Amount | Amount | Amount | % | |||||||||||
Net sales by location: | ||||||||||||||
US | $ | 302,677 | $ | 312,261 | $ | (9,584 | ) | (3.1 | )% | |||||
International | 179,783 | 173,683 | 6,100 | 3.5 | ||||||||||
Total | $ | 482,460 | $ | 485,944 | $ | (3,484 | ) | (0.7 | )% | |||||
Net sales by brand and channel: | ||||||||||||||
UGG brand: | ||||||||||||||
Wholesale | $ | 322,050 | $ | 337,852 | $ | (15,802 | ) | (4.7 | )% | |||||
Direct-to-Consumer | 78,317 | 74,314 | 4,003 | 5.4 | ||||||||||
Total | 400,367 | 412,166 | (11,799 | ) | (2.9 | ) | ||||||||
Teva brand: | ||||||||||||||
Wholesale | 16,494 | 12,246 | 4,248 | 34.7 | ||||||||||
Direct-to-Consumer | 4,933 | 4,914 | 19 | 0.4 | ||||||||||
Total | 21,427 | 17,160 | 4,267 | 24.9 | ||||||||||
Sanuk brand: | ||||||||||||||
Wholesale | 12,087 | 15,030 | (2,943 | ) | (19.6 | ) | ||||||||
Direct-to-Consumer | 3,136 | 3,841 | (705 | ) | (18.4 | ) | ||||||||
Total | 15,223 | 18,871 | (3,648 | ) | (19.3 | ) | ||||||||
Other brands: | ||||||||||||||
Wholesale | 40,521 | 34,830 | 5,691 | 16.3 | ||||||||||
Direct-to-Consumer | 4,922 | 2,917 | 2,005 | 68.7 | ||||||||||
Total | 45,443 | 37,747 | 7,696 | 20.4 | ||||||||||
Total | $ | 482,460 | $ | 485,944 | $ | (3,484 | ) | (0.7 | )% | |||||
Total Wholesale | $ | 391,152 | $ | 399,958 | $ | (8,806 | ) | (2.2 | )% | |||||
Total Direct-to-Consumer | 91,308 | 85,986 | 5,322 | 6.2 | ||||||||||
Total | $ | 482,460 | $ | 485,944 | $ | (3,484 | ) | (0.7 | )% |
• | decreased commission expenses of approximately $5,600, largely driven by the conversion of sales agent agreements to in-house sales agreements in the prior period; |
• | increased payroll costs of approximately $5,100, primarily due to higher costs for the converted sales agents discussed above, as well as increased long-term incentive compensation costs; |
• | decreased advertising and promotion and other operating expenses of approximately $5,600, primarily driven by the timing of expenses compared to the prior period; |
• | increased bad debt expense of approximately $1,600, primarily attributable to the recent payment history on an unsettled customer account in the current period; |
• | decreased other professional and consulting service costs of approximately $900, primarily driven by the timing of expenses compared to the prior period; |
• | increased warehouse related expenses of approximately $1,200 due to new North American third party logistic provider costs and higher warehouse costs in Asia in the current period; and |
• | decreased depreciation expenses for retail stores and IT-related assets of approximately $600. |
Three Months Ended September 30, | ||||||||||||||
2017 | 2016 | Change | ||||||||||||
Amount | Amount | Amount | % | |||||||||||
UGG brand wholesale | $ | 117,218 | $ | 112,510 | $ | 4,708 | 4.2 | % | ||||||
Teva brand wholesale | 1,916 | (2,121 | ) | 4,037 | 190.3 | |||||||||
Sanuk brand wholesale | 1,228 | (211 | ) | 1,439 | 682.0 | |||||||||
Other brands wholesale | 8,043 | 2,362 | 5,681 | 240.5 | ||||||||||
Direct-to-Consumer | (3,403 | ) | (6,092 | ) | 2,689 | 44.1 | ||||||||
Unallocated overhead costs | (57,647 | ) | (52,425 | ) | (5,222 | ) | (10.0 | ) | ||||||
Total | $ | 67,355 | $ | 54,023 | $ | 13,332 | 24.7 | % |
Three Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Income tax expense | $ | 16,762 | $ | 13,167 | |||
Effective income tax rate | 25.3 | % | 25.1 | % |
Six Months Ended September 30, | ||||||||||||||||||||
2017 | 2016 | Change | ||||||||||||||||||
Amount | % | Amount | % | Amount | % | |||||||||||||||
Net sales | $ | 692,177 | 100.0 | % | $ | 660,337 | 100.0 | % | $ | 31,840 | 4.8 | % | ||||||||
Cost of sales | 376,435 | 54.4 | 367,660 | 55.7 | (8,775 | ) | (2.4 | ) | ||||||||||||
Gross profit | 315,742 | 45.6 | 292,677 | 44.3 | 23,065 | 7.9 | ||||||||||||||
Selling, general and administrative expenses | 304,643 | 44.0 | 316,973 | 48.0 | 12,330 | 3.9 | ||||||||||||||
Income (loss) from operations | 11,099 | 1.6 | (24,296 | ) | (3.7 | ) | 35,395 | 145.7 | ||||||||||||
Other expense, net | 1,365 | 0.2 | 2,113 | 0.3 | 748 | 35.4 | ||||||||||||||
Income (loss) before income taxes | 9,734 | 1.4 | (26,409 | ) | (4.0 | ) | 36,143 | 136.9 | ||||||||||||
Income tax expense (benefit) | 2,296 | 0.3 | (6,796 | ) | (1.0 | ) | (9,092 | ) | (133.8 | ) | ||||||||||
Net income (loss) | $ | 7,438 | 1.1 | % | $ | (19,613 | ) | (3.0 | )% | $ | 27,051 | 137.9 | % |
Six Months Ended September 30, | ||||||||||||||
2017 | 2016 | Change | ||||||||||||
Amount | Amount | Amount | % | |||||||||||
Net sales by location: | ||||||||||||||
US | $ | 423,390 | $ | 421,769 | $ | 1,621 | 0.4 | % | ||||||
International | 268,787 | 238,568 | 30,219 | 12.7 | ||||||||||
Total | $ | 692,177 | $ | 660,337 | $ | 31,840 | 4.8 | % | ||||||
Net sales by brand and channel: | ||||||||||||||
UGG brand: | ||||||||||||||
Wholesale | $ | 385,323 | $ | 383,753 | $ | 1,570 | 0.4 | % | ||||||
Direct-to-Consumer | 129,776 | 120,267 | 9,509 | 7.9 | ||||||||||
Total | 515,099 | 504,020 | 11,079 | 2.2 | ||||||||||
Teva brand: | ||||||||||||||
Wholesale | 48,617 | 41,771 | 6,846 | 16.4 | ||||||||||
Direct-to-Consumer | 10,472 | 10,077 | 395 | 3.9 | ||||||||||
Total | 59,089 | 51,848 | 7,241 | 14.0 | ||||||||||
Sanuk brand: | ||||||||||||||
Wholesale | 34,307 | 37,333 | (3,026 | ) | (8.1 | ) | ||||||||
Direct-to-Consumer | 7,091 | 8,243 | (1,152 | ) | (14.0 | ) | ||||||||
Total | 41,398 | 45,576 | (4,178 | ) | (9.2 | ) | ||||||||
Other brands: | ||||||||||||||
Wholesale | 67,486 | 53,241 | 14,245 | 26.8 | ||||||||||
Direct-to-Consumer | 9,105 | 5,652 | 3,453 | 61.1 | ||||||||||
Total | 76,591 | 58,893 | 17,698 | 30.1 | ||||||||||
Total | $ | 692,177 | $ | 660,337 | $ | 31,840 | 4.8 | % | ||||||
Total Wholesale | $ | 535,733 | $ | 516,098 | $ | 19,635 | 3.8 | % | ||||||
Total Direct-to-Consumer | 156,444 | 144,239 | 12,205 | 8.5 | ||||||||||
Total | $ | 692,177 | $ | 660,337 | $ | 31,840 | 4.8 | % |
• | decreased advertising and marketing expenses and other operating expenses of approximately $10,200, primarily driven by more efficient marketing and the timing of expenses compared to prior period; |
• | decreased commission expenses of approximately $6,200, largely driven by the conversion of sales agent agreements to in-house sales agreements in the prior period; |
• | increased bad debt expense of approximately $4,100, primarily attributable to the recent payment history on an unsettled customer account in the current period; |
• | increased payroll costs of approximately $4,100, primarily due to higher costs for the converted sales agents discussed above, as well as increased long-term incentive compensation costs; |
• | decreased rent and occupancy expenses of approximately $2,300, primarily due to fewer retail stores and related costs, including restructuring charges for lease termination costs included in the prior period; |
• | decreased other operating expenses of approximately $1,900, primarily driven by increased unrealized foreign currency remeasurement gains due to changes in exchange rates for Canadian and European currencies; |
• | decreased materials and supplies expenses of approximately $1,400, related to shipping supplies, driven by achieving warehouse operating efficiencies and completing warehouse transitions in the prior period; |
• | increased warehouse related expenses of approximately $1,200 due to new North American third party logistic provider costs and higher warehouse costs in Asia in the current period; |
• | decreased depreciation expenses for retail stores and IT-related assets of approximately $1,300; and |
• | increased professional and consulting service costs of approximately $1,300, including restructuring charges for consulting services. |
Six Months Ended September 30, | ||||||||||||||
2017 | 2016 | Change | ||||||||||||
Amount | Amount | Amount | % | |||||||||||
UGG brand wholesale | $ | 116,197 | $ | 102,298 | $ | 13,899 | 13.6 | % | ||||||
Teva brand wholesale | 6,859 | (259 | ) | 7,118 | 2,748.3 | |||||||||
Sanuk brand wholesale | 5,645 | 3,970 | 1,675 | 42.2 | ||||||||||
Other brands wholesale | 9,069 | 732 | 8,337 | 1,138.9 | ||||||||||
Direct-to-Consumer | (15,505 | ) | (25,511 | ) | 10,006 | 39.2 | ||||||||
Unallocated overhead costs | (111,166 | ) | (105,526 | ) | (5,640 | ) | (5.3 | ) | ||||||
Total | $ | 11,099 | $ | (24,296 | ) | $ | 35,395 | 145.7 | % |
Six Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Income tax expense (benefit) | $ | 2,296 | $ | (6,796 | ) | ||
Effective income tax rate | 23.6 | % | 25.7 | % |
Six Months Ended September 30, | ||||||||||||||
2017 | 2016 | Change | ||||||||||||
Amount | Amount | Amount | % | |||||||||||
Net cash used in operating activities | $ | (182,790 | ) | $ | (288,532 | ) | $ | 105,742 | 36.6 | % | ||||
Net cash used in investing activities | (10,151 | ) | (31,626 | ) | 21,475 | 67.9 | ||||||||
Net cash provided by financing activities | 130,968 | 187,240 | (56,272 | ) | (30.1 | ) |
Exhibit Number | Description of Exhibit | |
*#10.3 | ||
*#10.4 | ||
*#10.5 | ||
*#10.6 | ||
*31.1 | ||
*31.2 | ||
**32 | ||
*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 |
DECKERS OUTDOOR CORPORATION (Registrant) |
/s/ THOMAS A. GEORGE |
Thomas A. George Chief Financial Officer (Principal Financial and Accounting Officer) |
Page | ||
ARTICLE 1 | DEFINITIONS | 1 |
ARTICLE 2 | SELECTION, ENROLLMENT, ELIGIBILITY | 6 |
ARTICLE 3 | DEFERRAL ELECTIONS | 7 |
ARTICLE 4 | IN-SERVICE DISTRIBUTIONS AND UNFORESEEABLE EMERGENCIES | 12 |
ARTICLE 5 | BENEFITS | 15 |
ARTICLE 6 | BENEFICIARY DESIGNATION | 18 |
ARTICLE 7 | LEAVE OF ABSENCE | 19 |
ARTICLE 8 | TERMINATION, AMENDMENT OR MODIFICATION | 19 |
ARTICLE 9 | ADMINISTRATION | 20 |
ARTICLE 10 | OTHER BENEFITS AND AGREEMENTS | 21 |
ARTICLE 11 | CLAIMS PROCEDURES | 21 |
ARTICLE 12 | TRUST | 22 |
ARTICLE 13 | MISCELLANEOUS | 22 |
1.1 | “Account Balance” shall mean, with respect to a Participant, a credit on the records of the Company equal to the sum across all Class Years and Plan Years of (i) the Retirement Account balances and (ii) the In-Service Account balances. Base Salary deferrals and Bonus deferrals made in Plan Years beginning prior to January 1, 2016, plus investment returns as outlined in Section 3.5, shall be directed to distinct Retirement Accounts and In-Service Accounts as indicated on each Class Year’s Election Form. Base Salary deferrals and Bonus deferrals made in Plan Years beginning on or after January 1, 2016, plus investment returns as outlined in Section 3.5, shall be directed to distinct In-Service Accounts as indicated on each Class Year’s Election Form, and one Retirement Account established for all such Plan Years. Any Company Contribution Amount for a Plan Year beginning prior to January 1, 2016 will be credited to the Retirement Account for that Class Year, and any Company Contribution Amount for Plan Years beginning on or after January 1, 2016 will be credited to the Retirement Account established for such Plan Years (including any sub-account established to account for the vested and unvested portions of such Company Contribution Amount and the investment returns attributable thereto), even if the Participant does not direct any Deferral Amounts into the Retirement Account for that Class Year or for those Plan Years, as applicable. The Account Balance shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant, or his or her Beneficiary, pursuant to the Plan. |
1.2 | “Affiliated Group” shall mean (i) the Company and (ii) all entities with which the Company would be considered a single employer under Code Sections 414(b) and 414(c), provided that in applying Code Sections 1563(a)(1), (2) and (3) for purposes of determining whether a controlled group of corporations exists under Code Section 414(b), the language “at least fifty percent (50%)” shall be used instead of “at least eighty percent (80%)” each place it appears in Code Sections 1563(a)(1), (2) and (3), and in applying Treasury Regulation Section 1.414(c)-2 for purposes of determining whether trades or businesses (whether or not incorporated) are under common control for purposes of Code Section 414(c), the language “at least fifty percent (50%)” shall be used instead of “at least eighty percent (80%)” each place it appears in Treasury Regulation Section 1.414(c)-2. The term “Affiliated Group” shall be interpreted in a manner consistent with the definition of “service recipient” contained in Code Section 409A. |
1.3 | “Annual Installment Method” shall mean an annual installment payment over the number of years selected by the Participant in accordance with the Plan, calculated as follows: (i) for the first annual installment, the vested Account Balance of the Participant shall be calculated as of the date of payment in accordance with Articles 4 and 5, and (ii) for remaining annual installments, the vested Account Balance of the Participant shall be calculated on every applicable anniversary of the first annual installment. Each annual installment shall be calculated by multiplying this balance by a fraction, the numerator of which is one and the denominator of which is the remaining number of annual payments due the Participant. By way of example, if the Participant elects a ten (10) year Annual Installment Method, the first payment shall be one tenth (1/10) of the vested Account Balance, calculated as described in this definition. The following year, the payment shall be one ninth (1/9) of the vested Account Balance, calculated as described in this definition. |
1.4 | “Base Salary” shall mean the annual base rate of cash compensation plus any bonus which does not qualify as “performance based compensation” under Treasury Regulation Section 1.409A-1(e)(1) payable by an Employer during a calendar year, excluding commissions, overtime, fringe benefits, stock options, relocation expenses, incentive payments, non-monetary awards, fees, automobile and other allowances, and prior to reduction for compensation voluntarily deferred or contributed by the Participant pursuant to any qualified or non-qualified plan of the Employer under Code Section 125, 402(e)(3), 402(h) or 403(b). Base Salary payable after the last day of a calendar year solely for services performed during the final payroll period described in Code Section 3401(b) containing December 31 of such year shall be treated as earned during the subsequent calendar year. |
1.5 | “Beneficiary” shall mean the person or persons or entity or entities, designated in accordance with Article 6, who is (are) entitled to receive benefits under the Plan upon the death of a Participant. |
1.6 | “Beneficiary Designation Form” shall mean the form established from time to time by the Plan Administrator that a Participant completes, signs and returns to the Plan Administrator to designate one or more Beneficiaries. |
1.7 | “Board” shall mean the board of directors of the Company, or a delegate of the Board acting under the authority of the Board in respect the Plan. |
1.8 | “Bonus” shall mean either a Discretionary Bonus or a Performance Bonus, as applicable. |
1.9 | “Change in Control” shall mean, with respect to that portion of a Participant’s Account Balance attributable to the 2010 and 2011 Class Years, the occurrence of a "change in the ownership," a "change in the effective control," or a "change in the ownership of a substantial portion of the assets" of the Company within the meaning of, and determined in accordance with, Treasury Regulation Section 1.409A-3(i)(5). With respect to that portion of a Participant’s Account Balance attributable to the 2012 and later Class Years and Plan Years, a Change in Control shall mean the occurrence of a "change in the ownership," a "change in the effective control," or a "change in the ownership of a substantial portion of the assets" of the Participant’s Employer within the meaning of, and determined in accordance with, Treasury Regulation Section 1.409A-3(i)(5). |
1.10 | “Class Year” shall mean the designation of the Account Balance by the year in which the Deferral Amounts are credited under the Plan. |
1.11 | “Code” shall mean the Internal Revenue Code of 1986, as it may be amended from time to time. |
1.12 | “Company” shall mean Deckers Outdoor Corporation and any successor to all or substantially all of the Company’s assets or business. |
1.13 | “Company Contribution Amount” shall mean, for any one Plan Year, the amount determined in accordance with Section 3.3. Company Contribution Amounts shall be credited with investment returns, as outlined in Section 3.5(c). All Company Contribution Amounts with respect to a Plan Year beginning prior to January 1, 2016 shall be credited to the Retirement Account for that Class Year, and all Company Contribution Amounts with respect to Plan Years beginning on or after January 1, 2016 shall be credited to the Retirement Account established for all such Plan Years Years (including any sub-account established to account for the vested and unvested portions of such Company Contribution Amounts and the investment returns attributable thereto), even if the Participant does not direct any Deferral Amounts into the Retirement Account for that Class Year or for those Plan Years, as applicable. |
1.14 | “Deferral Account” shall consist of a Participant’s In-Service Accounts and Retirement Account. |
1.15 | “Deferral Amount” shall mean that portion of a Participant’s Base Salary and Bonus that a Participant elects to have deferred in accordance with Article 3, for any one Plan Year. In the event of a Participant’s Disability, death or a Termination of Employment prior to the end of a Plan Year, such year’s Deferral Amount shall be the actual amount withheld pursuant to the Participant’s Deferral Election from the Participant’s Base Salary and Bonus prior to such event. |
1.16 | “Deferral Election” shall mean a Participant's election on an Election Form to defer a portion of his or her Base Salary or Bonus, in accordance with the provisions of Article 3. |
1.17 | “Disability” shall have the same meaning as outlined in the Deckers Outdoor Corporation 401(k) Plan (or successor to such plan), which is the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months. The permanence and degree of such impairment must be supported by medical evidence. The term "Disability" shall be interpreted in a manner consistent with the definition of "disability" contained in Treasury Regulation Section 1.409A-3(i)(4). |
1.18 | “Disability Benefit” shall mean the benefit set forth in Section 5.5. |
1.19 | “Discretionary Bonus” shall mean any bonus or cash incentive compensation payable by an Employer to a Participant as an Employee and relating to services performed during the Plan Year, other than a Performance Bonus. |
1.20 | “Election Form” shall mean the form established from time to time by the Plan Administrator that a Participant completes, signs and returns to the Plan Administrator to make a Deferral Election under the Plan. |
1.21 | “Employee” shall mean a person who is classified as an employee on the payroll records of the Company or, effective as of February 1, 2010, any of its U.S. subsidiaries. |
1.22 | “Employer” shall mean any member of the Affiliated Group that has one or more Employees or former Employees that are Participants in the Plan. |
1.23 | “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time. |
1.24 | “In-Service Account” shall mean the sum of (i) that portion of a Participant’s Deferral Amount that a Participant elects to have distributed while in the service of the Company in accordance with Article 4, plus (ii) all other amounts credited to the In-Service Account in accordance with the applicable crediting provisions of the Plan, less (iii) all distributions |
1.25 | “In-Service Benefit” shall mean the benefit set forth in Section 4.1. |
1.26 | “Participant” shall mean any Employee (i) who is selected to participate in the Plan, (ii) who elects to participate in the Plan, (iii) who completes, signs and returns an Election Form and a Beneficiary Designation Form, (iv) whose signed Election Form and Beneficiary Designation Form are accepted by the Plan Administrator, (v) who commences participation in the Plan, and (vi) whose participation in the Plan has not terminated. A spouse or former spouse of a Participant shall not be treated as a Participant in the Plan or have an Account Balance under the Plan, even if he or she has an interest in the Participant’s benefits under the Plan as a result of applicable law or property settlements resulting from legal separation or divorce. |
1.27 | “Performance Bonus” shall mean (i) any compensation relating to services performed during the Plan Year payable to a Participant as an Employee under an Employer’s written bonus or cash compensation incentive plans, excluding stock options and restricted stock, and (ii) which qualifies as “performance-based compensation” under Treasury Regulation Section 1.409A-1(e)(1). |
1.28 | “Plan” shall mean this Deckers Outdoor Corporation Deferred Compensation Plan, as amended from time to time. |
1.29 | “Plan Administrator” shall mean the person(s) or entity(ies) appointed by the Board to administer the Plan. In the absence of formal action by the Board to appoint a Plan Administrator, the Plan Administrator shall be the Company. |
1.30 | “Plan Year” shall mean a period beginning on January 1 of each calendar year and continuing through December 31 of such calendar year. |
1.31 | “Retirement”, “Retire(s)” or “Retired” shall mean a Termination of Employment on or after the attainment of age sixty-five (65) for any reason other than a leave of absence, death or Disability. |
1.32 | “Retirement Account” shall mean the sum of (i) that portion of a Participant’s Deferral Amount that a Participant elects to have distributed upon Termination of Employment in accordance with Article 5, plus (ii) all other amounts credited to the Retirement Account in accordance with the applicable crediting provisions of the Plan, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to the Plan that relate to his or her Retirement Account. |
1.33 | “Retirement Benefit” shall mean the benefit set forth in Section 5.1. |
1.34 | “Termination Benefit” shall mean the benefit set forth in Section 5.2. |
1.35 | “Termination of Employment” shall mean a termination of employment with all members of the Affiliated Group in such a manner as to constitute a "separation from service" as defined under, and determined in accordance with, Treasury Regulation Section 1.409A-1(h), voluntarily or involuntarily, for any reason other than Disability, or death. For this purpose, the employment relationship is treated as continuing while a Participant is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six (6) months or, if longer, so long as the individual retains a right to reemployment with any member of the Affiliated Group under an applicable statute or by contract. A leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for a member of the Affiliated Group. If the period of leave exceeds six (6) months and the Participant does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first day immediately following such six (6)-month period. A Termination of Employment will occur if there is a reasonable expectation that the level of services by the Participant for all members of the Affiliated Group will permanently decrease to twenty percent (20%) or less of the average level of services during the previous thirty-six (36) months (or, if shorter, the actual period of services). |
1.36 | “Trust” shall mean one or more rabbi trusts established by the Company in accordance with Article 12 of the Plan, as amended from time to time. |
1.37 | “Unforeseeable Emergency” shall mean a severe financial hardship to the Participant resulting from (i) an illness or accident of the Participant or Beneficiary or his or her spouse or dependent (as defined in Code Section 152(a) without regard to Code Sections 152(b)(1), 152(b)(2), and 152(d)(1)(B)), (ii) loss of the Participant's property due to casualty (including the need to rebuild a home following damage to the home not otherwise covered by insurance), or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The term “Unforeseeable Emergency” shall be interpreted in a manner consistent with the definition of “unforeseeable emergency” contained in Treasury Regulation Section 1.409A-3(i)(3). |
2.1 | Eligibility; Selection by Board. Participation in the Plan shall be limited to those Employees who are determined by the Company to be members of a select group of management or highly compensated employees and who are selected by the Company to participate in the Plan. |
2.2 | Initial Enrollment Requirements. As a condition to participation, each selected Employee shall complete, execute and return to the Plan Administrator an Election Form and a Beneficiary Designation Form, all within thirty (30) days (or such shorter time as the Plan Administrator may determine) after he or she is initially selected to participate in the |
2.3 | Commencement of Participation. Provided an Employee selected to participate in the Plan has met all enrollment requirements set forth in the Plan and required by the Plan Administrator, including returning all required documents to the Plan Administrator within thirty (30) days (or such shorter time as the Plan Administrator may determine) after he or she is initially selected to participate in the Plan, that Employee shall commence participation in the Plan on the first day of the pay period following the date on which the Employee completes all enrollment requirements. However, for the initial enrollment coinciding with the establishment of the Plan, an Employee shall commence participation in the Plan on the first day of the pay period coinciding with or next following the date on which the Employee completes all enrollment requirements. If an Employee fails to meet all such requirements within the period required, that Employee shall not be eligible to participate in the Plan until the first day of the Plan Year following the delivery to and acceptance by the Plan Administrator of the required enrollment documents. |
2.4 | Termination of Deferrals. If the Company determines in good faith that a Participant no longer qualifies as a member of a select group of management or highly compensated employees, as membership in such group is determined in accordance with ERISA Sections 201(2), 301(a)(3) and 401(a)(1), the Participant's entitlement to defer Base Salary and Bonus shall cease with respect to calendar years following the calendar year in which such determination is made, although the Participant shall remain subject to all terms and conditions of the Plan for as long as he remains a Participant. |
3.1 | Elections to Defer Base Salary or Bonus. |
(a) | Deferral Election. |
(i) | New Participant. In connection with a Participant’s commencement of participation in the Plan, a Participant may elect to defer Base Salary or Bonus, by filing with the Plan Administrator an Election Form that conforms to the requirements of Article 2 within the time period specified in Section 2.3, and the Deferral Election shall become irrevocable at the end of such time period. The Deferral Election for the first Plan Year of participation shall apply only to that portion of the Base Salary and Bonus earned after the Deferral Election becomes irrevocable. If a Participant does not make a deferral election with respect to the first Plan Year with respect to which the Participant is first selected to participate in the Plan, the Participant may elect to defer Base Salary or Bonus for any subsequent Plan Year by filing with the Plan Administrator an Election Form that conforms with the requirements of Article 2 before the start of that Plan Year. |
(ii) | Annual Deferral Election. Unless Section 3.1(a)(i) applies, each Participant may elect to defer Base Salary or Bonus for a Plan Year by filing a Deferral Election with the Plan Administrator within the timeframes specified by the Plan Administrator for the Plan Year for which such Base Salary or Bonus is earned. However, the Deferral Election shall become irrevocable (A) with respect to Base Salary or a Discretionary Bonus, as of December 31st of the calendar year immediately preceding the Plan Year during which the Base Salary covered by the Deferral Election is earned and (B) with respect to a Performance Bonus, as of the date six (6) months prior to the end of the performance period of the Performance Bonus, or such earlier dates as specified by the Plan Administrator. |
(b) | Amount of Deferral. A Participant shall designate on the Deferral Election form the amount of Base Salary, Discretionary Bonus and/or Performance Bonus that is to be deferred in accordance with this Article 3. The Deferral Amount, in whole percentages or a specific dollar amount, shall not exceed fifty percent (50%) of the Participant’s Base Salary and ninety-five percent (95%) of each of the Participant’s Discretionary Bonus and Performance Bonus; provided that the total amount deferred by a Participant shall be limited in any calendar year, if necessary, to satisfy FICA, income tax, and employee benefit plan withholding requirements as determined by the Plan Administrator. |
(c) | Allocation of Deferral Amount. A Participant shall further designate on the Deferral Election form for each Plan Year the percentage or a specific dollar amount of such Plan Year’s Base Salary, Discretionary Bonus and Performance Bonus deferrals that will be allocated to the Retirement Account and one or more In-Service Accounts. For Deferral Amounts to be allocated to an In-Service Account, the Participant shall be permitted to designate on the Deferral Election form percentages or specific dollar amounts of such Plan Year’s Base Salary and/or Bonus deferrals to be allocated to different In-Service Accounts with different in-service distribution dates, subject to any limitations on such designations as may be prescribed by the Plan Administrator. The allocation of each Plan Year’s Deferral Amounts into the Retirement Account or In-Service Accounts shall be in whole percentages or specific dollar amounts only. A Participant is not obligated to apply the same percentage allocation to the Base Salary and Bonus deferrals. As an example, a Participant can allocate fifty percent (50%) of the Base Salary deferral into the Retirement Account and fifty percent (50%) into an In-Service Account while allocating one hundred percent (100%) of the Bonus deferrals into the Retirement Account. |
(d) | Duration of Deferral Election. A Participant’s Deferral Election shall apply only to Base Salary and Bonuses earned during the Plan Year to which the Deferral Election relates. A Participant must indicate a new Deferral Election for any subsequent Plan Year by filing a new Election Form with the Plan Administrator prior to the beginning of such Plan Year or at such time as the Plan Administrator may require, which Deferral Election shall be effective on the first day of the next following Plan Year. If a |
(e) | Class Year Elections. For Deferral Amounts credited in Plan Years beginning prior to January 1, 2016, each Plan Year’s Deferral Amount will be maintained in separate and distinct Retirement and In-Service Accounts for each Class Year in which the Deferral Amounts are credited and, if a Participant so elects in accordance with Section 3.1(c), multiple In-Service Accounts may be established for the Participant for the same Class Year. Separate distribution elections shall apply with respect to each Class Year and, if a Participant has designated multiple In-Service Accounts for the Class Year, separate distribution elections shall apply to each such In-Service Account. For Deferral Amounts credited in Plan Years beginning on or after January 1, 2016, separate In-Service Accounts shall be available for each Class Year, and multiple In-Service Accounts with separate distribution elections may be established for the same Class Year, but only one Retirement Account with one distribution election shall be available for the Deferral Amounts credited in all such Plan Years. Any Company Contribution Amount with respect to a Class Year beginning prior to January 1, 2016, or with respect to Plan Years beginning on or after January 1, 2016, shall be allocated and credited to the Retirement Account established for such Class Year or for those Plan Years, as applicable. |
3.2 | Withholding of Deferral Amounts. For each Plan Year, the Base Salary portion of the Deferral Amount shall be withheld from each regularly scheduled Base Salary payroll in substantially equal amounts, as adjusted from time to time for increases and decreases in Base Salary. Any Bonus portion of the Deferral Amount shall be withheld at the time the Bonus is or otherwise would be paid to the Participant, whether or not this occurs during the Plan Year. |
3.3 | Annual Company Contribution Amount. For each Plan Year, the Board may, but is not required to, credit any amount it desires to the Retirement Account of any Participant under the Plan (including any sub-accounts described in Section 3.4), which amount shall equal the annual Company Contribution Amount for that Participant for that Plan Year. The amount so credited to a Participant may be smaller or larger than the amount credited to any other Participant, and the amount credited to any Participant for a Plan Year may be zero (0), even though one or more other Participants receive an annual Company Contribution Amount for that Plan Year. |
3.4 | Vesting. A Participant shall at all times be 100% vested in his or her Deferral Account, including any Company Contribution Amount credited to the Participant’s Retirement Account for Plan Years beginning prior to January 1, 2016. For Plan Years beginning on or after January 1, 2016, the Board may impose vesting requirements (based on periods of service performed by the Participant or such other criteria as the Board determines in its sole discretion) on any Company Contributuion Amount and the investment returns atributable thereto. The Plan Administrator may establish one or more sub-accounts in the R |
3.5 | In-Service Accounts and Retirement Accounts. The Company shall establish accounts for Base Salary Deferral Amounts, Discretionary Bonus Deferral Amounts and Performance Bonus Deferral Amounts, shall further sub-divide such accounts into In-Service Accounts and Retirement Accounts for each Participant under the Plan. In-Service Accounts will be maintained by Class Year and, if a Participant so elects in accordance with Section 3.1(c), multiple In-Service Accounts shall be established for the Participant for the same Class Year. Retirement Accounts will be maintained by Class Year for Deferral Amounts credited prior to January 1, 2016; for Deferral Amounts credited on or after January 1, 2016, only one Retirement Account will be maintained (including any sub-accounts described in Section 3.4). Each Participant’s Deferral Account shall be further divided into separate subaccounts (“notional investment subaccounts”), each of which corresponds to an investment fund elected by the Participant. A Participant’s Deferral Account shall be credited as follows: |
(a) | After amounts are withheld and deferred from a Participant’s Base Salary or Bonus, the Company shall credit the notional investment subaccounts with an amount equal to the amount of Base Salary or Bonus, or both, deferred by the Participant as of the date that the Base Salary or Bonus would have been paid to the Participant absent the Deferral Election, and the portion of the Participant’s deferred Base Salary or Bonus that the Participant has deemed to be invested in a certain type of investment fund shall be credited to the notional investment subaccount corresponding to that investment fund. |
(b) | The Company shall credit the Participant with an amount equal to the annual Company Contribution Amount, if any, for that Participant, on the date or dates to be determined by the Board and the portion of the Participant’s annual Company Contribution Amount that the Participant has deemed to be invested in a certain type of investment fund shall be credited to the notional investment subaccount corresponding to that investment fund. |
(c) | As of the end of each business day, each of the Participant’s notional investment subaccounts shall be credited with earnings (gains or losses) in an amount equal to that determined by multiplying the balance credited to such notional investment subaccount as of the prior day plus amounts allocated to the notional investment subaccount that day by the rate of net gain or loss for the corresponding investment fund for that day. |
(d) | Each of the Participant’s notional investment subaccounts shall be reduced pro rata by the amount of any distributions made to the Participant, as of the date of the distribution. |
3.6 | Investment Elections. |
(a) | The Company shall select, from time to time, commercially available investment funds to be used to determine the amount of earnings (gains or losses) to be credited to the Participant’s notional investment subaccounts under Section 3.5. |
(b) | At the time of making a Deferral Election, a Participant shall designate, on the Deferral Election form, the investment fund or funds in which the Participant’s Deferral Account attributable to deferrals of Base Salary, Discretionary Bonus or Performance Bonus will be deemed to be invested for purposes of determining the amount of earnings (gains or losses) to be allocated to the notional investment subaccounts. The Participant may specify the deemed investment, in whole percentage increments or specific dollar amounts, in one or more of the investment funds as communicated from time to time by the Plan Administrator. Participants may change their investment designations on a daily basis, both with respect to reallocations of their current Account Balance and allocations of future Deferral Amounts, by electing such investment changes through such procedures as may be specified by the Plan Administrator. If the Company establishes a Trust pursuant to Section 12.1 or otherwise sets aside assets to assist in meeting its obligations under the Plan, the Company shall not be obligated to mirror the Participant’s notional investment subaccount elections. |
(c) | Notwithstanding any other provision of the Plan that may be interpreted to the contrary, the investment funds selected by the Company or designation of investment funds by a Participant shall not be considered or construed in any manner as an actual investment of the Participant’s Account Balance in any such investment fund. In the event that the Company or the trustee of the Trust shall invest funds in any or all of the selected investment funds, no Participant shall have any rights in or to such investments. Without limiting the foregoing, a Participant’s Account Balance shall at all times be a bookkeeping (notional) entry only and shall not represent any investment made on his or her behalf by the Company, the Participant’s Employer or the Trust; the Participant shall remain at all times an unsecured creditor of the Company. |
3.7 | FICA and Other Taxes. |
(a) | Deferral Amounts. For each Plan Year in which a Deferral Amount is being withheld from a Participant, the Employer shall withhold from that portion of the Participant’s Base Salary or Bonus that is not being deferred, in a manner determined by the Employer, the Participant’s share of FICA and other employment taxes on such Deferral Amount. If necessary, the Plan Administrator may reduce the Deferral Amount in order to comply with this Section 3.7(a). |
(b) | Company Contribution Amounts. Upon contribution of a Company Contribution Amount or, if later, the date or dates on which such Company Contribution Amount and the investment returns attributable thereto become vested and nonforfeitable, the Employer shall withhold from the Participant’s Base Salary and/or Bonus that is not deferred, in a manner determined by the Employer, the Participant’s share of FICA |
(c) | Distributions. The Company, or the trustee of the Trust, shall withhold from any payments made to a Participant under the Plan all federal, state and local income, employment and other taxes required to be withheld by the Company, or the trustee of the Trust, in connection with such payments, in amounts and in a manner to be determined by the Company and the trustee of the Trust. |
4.1 | In-Service Distributions. A Participant, in connection with his or her initial commencement of participation in the Plan and each subsequent annual enrollment, may elect on an Election Form the month and year of distribution of the Deferral Amount allocated to each of that Class Year’s In-Service Accounts. The Participant shall not be required to make the same distribution election for the Base Salary, Discretionary Bonus and Performance Bonus Deferral Elections made on the Deferral Election form for that Class Year, and shall not be required to make the same distribution election for each In-Service Account established for that Class Year. The Participant may elect to receive payment in the form of a lump sum or pursuant to an Annual Installment Method not to exceed ten (10) years or, effective as of January 1, 2014, fifteen (15) years. If a Participant elects to direct a percentage of the particular Class Year’s Deferral Amount to an In-Service Account but does not indicate the year in which the payment is to be made, then it will be assumed that no In-Service Account election was made for that Class Year and all such Deferral Amounts for that Class Year will be allocated to the Participant’s Retirement Account. In addition, if a Participant makes an election to allocate Deferral Amounts to an In-Service Account and specifies a distribution date but fails to elect a form of payment, the distribution election will be assumed to be a lump sum payment. The lump sum payment shall be made or the installments shall commence as soon as possible after the date elected on the Deferral Election form, but in no event later than the later of (i) the end of the calendar year that includes the elected payment date and (ii) the fifteen (15th) day of the third month following the elected payment date, provided that the Participant may not directly or indirectly designate the taxable year of payment. |
4.2 | Change in Time or Form of Payment for In-Service Distribution. Notwithstanding the methods of payment elected for each In-Service Account, the Participant may elect to change the time of such payment under a subsequent election that meets the following requirements: |
(a) | The subsequent election may not take effect until at least twelve (12) months after the date on which the subsequent election is made. |
(b) | The subsequent election is made not less than twelve (12) months prior to the date of the scheduled payment. |
(c) | The payment with respect to which the subsequent election is made must be deferred for an additional period of not less than five (5) years from the date such payment would otherwise have been made. |
(d) | The subsequent election may not accelerate the time of any payment. |
4.3 | Payout/Suspensions for Unforeseeable Emergencies. If the Participant experiences an Unforeseeable Emergency, the Participant may petition the Plan Administrator to receive a partial or full payout of the portion of the Participant’s Account Balance attributable to Deferral Amounts. Company Contribution Amounts are not available for distribution on account of Unforeseeable Emergencies. Any distribution on account of Unforeseeable Emergencies will be made starting with Deferral Amounts attributable to the most recently completed Class Year’s In-Service Accounts, if any (on a prorata basis from all such accounts, if more than one In-Service Account was established for the Class Year), and progressing to each preceding Class Year as necessary. The Retirement Accounts (excluding Company Contribution Amounts and investment returns attributable thereto) will be used only upon exhausting all completed prior Class Year In-Service Accounts. |
4.4 | Change in Control. Upon a Change in Control, a Participant’s full Account Balance, including both vested and unvested amounts, will be paid in a lump sum as soon as possible following the effective date of the Change in Control, but in no event later than the later of (i) the end of the calendar year that includes the effective date of the Change in Control and (ii) the fifteen (15th) day of the third (3rd) month following the effective date of the Change in Control, provided that the Participant may not directly or indirectly designate the taxable year of payment. |
5.1 | Retirement Benefit. A Participant who Retires shall receive, as a Retirement Benefit, his or her full Account Balance, including both vested and unvested amounts. |
(a) | For Plan Years beginning prior to January 1, 2016, a Participant, in connection with his or her commencement of participation in the Plan and each subsequent Plan Year shall elect on the Deferral Election form the form of payment with respect to that Class Year’s Deferral Amount. The Participant may elect to receive payment in the form of a lump sum or pursuant to an Annual Installment Method not to exceed ten (10) years or, effective as of January 1, 2014, fifteen (15) years. Thus, separate Retirement Benefit distribution elections may apply to each Class Year, but the Participant must make the same Distribution Election for the Base Salary and Bonus Deferral Elections made on the Deferral Election form. |
(b) | For Plan Years beginning on or after January 1, 2016, a Participant, in connection with his or her commencement of participation in the Plan or as needed subsequent to such date, shall elect on the Deferral Election form the form of payment with respect to all Deferral Amounts for all such Plan Years (other than Deferral Amounts credited to In-Service Accounts, for which form of payment elections may still be made on a Class Year basis). The Participant may elect to receive payment in the form of a lump sum or pursuant to an Annual Installment Method not to exceed ten (10) years or, effective as of January 1, 2014, fifteen (15) years. The Participant must make the same Distribution Election for the Base Salary and Bonus Deferral Elections made on the Deferral Election form. |
(c) | Any Company Contribution Amount credited to the Participant’s Retirement Account for a Class Year beginning prior to January 1, 2016, or for Plan Years beginning on or after January 1, 2016, shall be paid in the same manner as elected by the Participant for the Retirement Account established for that Class Year or for those Plan Years, as applicable. |
(d) | If a Participant does not make any election with respect to the payment of the Retirement Benefit, or if the Participant does not elect to allocate a Deferral Amount into the Retirement Account for a Class Year beginning prior to January 1, 2016 or for Plan Years beginning on or after January 1, 2016 but is credited with a Company Contribution Amount for that Class Year or for those Plan Years, as |
5.2 | Termination Benefit. Except as otherwise provided in this Article 5, a Participant who experiences a Termination of Employment prior to Retirement shall receive as a Termination Benefit the vested portion of his or her Account Balance in accordance with the same election made under Section 5.1, and the unvested portion of his or her Account Balance shall be forfeited. The lump sum payment shall be made, or installment payments shall commence, within sixty (60) days of Termination of Employment, provided that the Participant may not directly or indirectly designate the taxable year of payment. |
5.3 | Death Prior to Retirement or Termination of Employment. If a Participant dies prior to Retirement or Termination of Employment, the Participant’s Beneficiaries shall receive a lump sum payment equal to the Participant’s then-remaining Account Balance, incuding both vested and unvested amounts and including any installment payments that have yet to be distributed. The payment shall be made as soon as practicable after certification of death but in no event later than the later of (i) the end of the calendar year that includes the date of death and (ii) the fifteenth (15th) day of the third month following the date of death, provided that the Beneficiary may not directly or indirectly designate the taxable year of payment. |
5.4 | Death after Retirement or Termination of Employment. If a Participant dies after Retirement or Termination of Employment but before the Retirement Benefit or Termination Benefit otherwise payable in accordance with Section 5.1 or 5.2 is paid in full, the Participant’s unpaid Retirement Benefit or Terminaton Benefit, as applicable, shall be paid to the Beneficiary in a lump sum payment as soon as practicable after certification of death but in no event later than the later of (i) the end of the calendar year that includes the date of death and (ii) the fifteenth (15th) day of the third month following the date of death, provided that the Beneficiary may not directly or indirectly designate the taxable year of payment. |
5.5 | Disability Benefit. A Participant who incurs a Disability shall, for benefit purposes under the Plan, be deemed to have experienced a Termination of Employment as of the date the Disability is incurred. The Disability Benefit shall consist of the Participant’s full Account Balance, including both vested and unvested amounts, and shall be paid in the same form as elected in accordance with Section 5.1. The lump sum payment shall be made, or installment payments shall commence within sixty (60) days after the date the Participant incurs the Disability, provided that the Participant may not directly or indirectly designate the taxable year of payment. |
5.6 | Change in Time or Form of Payment for Termination Benefit. Notwithstanding the method of payment elected by a Participant with respect to the Base Salary or Bonus Deferral Amounts, the Participant may elect to change the method of such payment under a subsequent election that meets the following requirements: |
(a) | The subsequent election may not take effect until at least twelve (12) months after the date on which the subsequent election is made. |
(b) | The subsequent election is made not less than twelve (12) months prior to the date of the scheduled payment. |
(c) | The first payment with respect to which the subsequent election is made must be deferred for a period of not less than five (5) years from the date such payment would otherwise have been made. This five (5)-year deferral shall not apply to any change in the benefits payable upon death pursuant to Section 5.3 or 5.4, as applicable, or upon the occurrence of a Disability. |
(d) | The subsequent election may not accelerate the time of any payment. |
5.7 | Limitation on Key Employees. Notwithstanding any other provision of the Plan to the contrary, the payment of a Retirement Benefit or Termination Benefit with respect to a “specified employee,” as defined in, and determined in accordance with, Treasury Regulation Section 1.409A-1(i), of the Affiliated Group shall not be made (or, in the case of payments to be made under an Annual Installment Method, shall not commence) until the six month anniversary of the Participant’s Retirement or Termination of Employment, or, if earlier, the date of the Participant’s death, if at that time any stock of the Company is publicly traded on an established securities market or otherwise. Any installment payments that are delayed pursuant to this provision shall be accumulated and paid on the delayed payment date. |
5.8 | Involuntary Cash Out Limit. If the sum of the Participant’s total Account Balance that is payable under this Article 5 and the deferred compensation amounts under all other such arrangements required to be aggregated with the Plan under Code Section 409A is less than or equal to the deferral limit in effect under Code Section 402(g) for the calendar year in which the Participant experiences a Retirement or Termination of Employment, then, despite the election made by the Participant, the Company may pay such Account Balance in a lump sum as soon as practicable following such Retirement or Termination of Employment. In addition, if the present value of any remaining installments due a Participant who has experienced a Termination of Employment and elected an Annual Installment Method falls below the deferral limit in effect under Code Section 402(g) for the calendar year in which the Participant experienced a Termination of Employment, then the Company m |
6.1 | Beneficiary. Each Participant shall have the right, at any time, to designate his or her Beneficiary(ies) (both primary as well as contingent) to receive any benefits payable under the Plan upon the death of a Participant. The Beneficiary designated under the Plan may be the same as or different from the Beneficiary designation under any other Company or Employer plan in which the Participant participates. |
6.2 | Beneficiary Designation Change. A Participant shall designate his or her Beneficiary by completing and signing the Beneficiary Designation Form, and returning it to the Plan Administrator. A Participant shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Plan Administrator’s rules and procedures, as in effect from time to time. Upon the acceptance by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be canceled. The Plan Administrator shall be entitled to rely on the last Beneficiary Designation Form filed by the Participant and accepted by the Plan Administrator prior to his or her death. If a Participant is married, the designation of a Beneficiary other than the Participant’s spouse shall only be permitted upon written consent of the Participant’s spouse. |
6.3 | Acknowledgment. No designation or change in designation of a Beneficiary shall be effective until received and acknowledged in writing by the Plan Administrator. |
6.4 | No Beneficiary Designation. If a Participant fails to designate a Beneficiary as provided in Sections 6.1, 6.2 and 6.3 above or, if all Beneficiaries predecease the Participant or die prior to complete distribution of the Participant’s benefits, then the Participant’s Beneficiary shall be deemed to be his or her surviving spouse. If the Participant has no surviving spouse, the benefits remaining under the Plan to be paid to a Beneficiary shall be payable to the Participant’s estate. |
6.5 | Doubt as to Beneficiary. If the Plan Administrator has any doubt as to the proper Beneficiary to receive payments pursuant to the Plan, the Plan Administrator shall have the right to cause the Company to withhold such payments until this matter is resolved to the Plan Administrator’s satisfaction. |
6.6 | Discharge of Obligations. The payment of benefits under the Plan to a Beneficiary shall fully and completely discharge the Employer, the Company, the Plan Administrator and the Board from all further obligations under the Plan with respect to the Participant, and that Participant’s participation in the Plan shall terminate upon such full payment of benefits. |
7.1 | Paid Leave of Absence. If a Participant is authorized by the Employer for any reason to take a paid leave of absence from the employment of the Employer, the Participant shall continue to be considered employed by the Employer and the Deferral Amount shall continue to be withheld during such paid leave of absence in accordance with Section 3.1. |
7.2 | Unpaid Leave of Absence. If a Participant is authorized by the Employer for any reason to take an unpaid leave of absence from the employment of the Employer, the Participant shall continue to be considered employed by the Employer and the Participant shall be excused from making deferrals until the Participant returns to a paid employment status. Upon such return, deferrals shall resume for the remaining portion of the Plan Year in which the return occurs, based on the Deferral Election, if any, made for that Plan Year. If no Deferral Election was made for that Plan Year, no deferral shall be withheld. |
8.1 | Termination. Although the Company anticipates that it will continue the Plan for an indefinite period of time, there is no guarantee that the Company will continue the Plan or will not terminate the Plan at any time in the future. Accordingly, the Company reserves the right to terminate the Plan at any time with respect to any or all Participants, by action of the Board or its authorized delegate. Upon the termination of the Plan, further deferrals under the Plan shall terminate but all Account Balances shall remain subject to the terms of the Plan and the distribution elections made in the applicable Deferral Election forms. |
(a) | The termination and liquidation does not occur as a result of downturn in the financial health of the Company; |
(b) | The Company terminates and liquidates all similar arrangements sponsored by a member of the Affiliated Group that would be aggregated with any other arrangements under Treasury Regulation Section 1.409A-1(c) if the Participants had deferrals of compensation under all of the arrangements that are terminated; |
(c) | No payments under the Plan are made within twelve (12) months of the date the Company takes all necessary action to irrevocably terminate and liquidate the Plan other than payments that would be payable under the terms of the Plan if the action to terminate and liquidate the plan had not occurred; |
(d) | All payments are made within twenty-four (24) months of the date the Company takes all necessary action to irrevocably terminate and liquidate the Plan; and |
(e) | No member of the Affiliated Group adopts a new plan that would be aggregated with any terminated and liquidated plan under Treasury Regulation Section 1.409A-1(c) if the same Participant participated in both plans, at any time within three years following the date the Company takes all necessary action to irrevocably terminate and liquidate the Plan. |
8.2 | Amendment. The Company may, at any time, amend or modify the Plan in whole or in part by the action of the Board or its authorized delegate; provided, however, that: (i) no amendment or modification shall be effective to decrease or restrict the value of a Participant’s Account Balance in existence at the time the amendment or modification is made, calculated as if the Participant had experienced a Termination of Employment as of the effective date of the amendment or modification, and (ii) no amendment or modification of this Section 8.2 of the Plan shall be effective. The amendment or modification of the Plan shall not affect any Participant or Beneficiary who has become entitled to the payment of benefits under the Plan as of the date of the amendment or modification. Notwithstanding the foregoing, the Company specifically reserves the right to amend the Plan to conform the provisions of the Plan to the guidance issued by the Secretary of the Treasury with respect to Code Section 409A, in accordance with such guidance. |
8.3 | Effect of Payment. The full payment of the applicable benefit under Article 4 or 5 of the Plan shall completely discharge all obligations to a Participant and his or her Beneficiaries under the Plan and the Participant’s participation in the Plan shall thereupon terminate. |
9.1 | Administrative Duties. To the extent that ERISA applies to the Plan, the Plan Administrator shall be the “named fiduciary” of the Plan and the “administrator” of the Plan, within the meaning of ERISA. The Plan Administrator shall be responsible for the general administration of the Plan. The Plan Administrator will, subject to the terms of the Plan, have the authority to: (i) adopt, alter, and repeal administrative rules and practices governing the Plan, (ii) interpret the terms and provisions of the Plan, and (iii) otherwise supervise the administration of the Plan. All decisions by the Plan Administrator will be made with the approval of not less than a majority of its members. The Plan Administrator may delegate any of its authority to any other person or persons that it deems appropriate. |
9.2 | Agents. In the administration of the Plan, the Plan Administrator may, from time to time, employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel who may be counsel to the Company. |
9.3 | Binding Effect of Decisions. All decisions by the Plan Administrator, and by any other person or persons to whom the Plan Administrator has delegated authority, shall be final and conclusive and binding upon all persons having any interest in the Plan. |
9.4 | Indemnity of Board and Plan Administrator. The Company shall indemnify and hold harmless the members of the Board, the Plan Administrator and any Employee to whom the duties of the Board or Plan Administrator may be delegated, against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to the Plan, except in the case of willful misconduct by the Board, any of its members, the Plan Administrator or any such Employee. |
9.5 | Information. To enable the Plan Administrator to perform its functions, the Company shall supply full and timely information to the Plan Administrator on all matters relating to the compensation of its Participants, the date and circumstances of the Disability, death, Retirement or Termination of Employment of its Participants, and such other pertinent information as the Plan Administrator may reasonably require. |
10.1 | Coordination with Other Benefits. The benefits provided to a Participant and such Participant’s Beneficiary under the Plan are in addition to any other benefits available to such Participant and Beneficiary under any other plan or program for Employees of the Affiliated Group. The Plan shall supplement and shall not supersede, modify or amend any other such plan or program, except as may otherwise be expressly provided. |
11.1 | Procedures for Handling Claims. In accordance with the provisions of ERISA Section 503, the Company shall provide a procedure for handling claims for benefits under the Plan. The procedure shall be in accordance with the regulations issued by the Secretary of Labor and provide adequate written notice within a reasonable period of time with respect to a claim denial. The procedure shall also provide for a reasonable opportunity for a full and fair review by the Company of any claim denial. |
12.1 | Establishment of the Trust. The Company may establish one or more Trusts to which the Company may transfer such assets as the Company determines to assist in meeting its obligations under the Plan. |
12.2 | Interrelationship of the Plan and the Trust. The provisions of the Plan and a Participant's Deferral Election forms shall govern the rights of a Participant to receive distributions pursuant to the Plan. The provisions of the Trust shall govern the rights of the Company, Participants and the creditors of the Company to the assets transferred to the Trust. |
12.3 | Distributions from the Trust. The Company’s obligations under the Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such distribution shall reduce the Company’s obligations under the Plan. |
13.1 | Status of Plan. The Plan is intended to be a plan that is not qualified within the meaning of Code Section 401(a) and that “is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1). The Plan shall be administered and interpreted to the extent possible in a manner consistent with that intent. |
13.2 | Unsecured General Creditor. Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any property or assets of the Company or any other member of the Affiliated Group. For purposes of the payment of benefits under the Plan, any and all of the Company’s assets shall be, and remain, the general, unpledged unrestricted assets of the Company. The Company’s obligation under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future. |
13.3 | Company’s Liability. The Company’s liability for the payment of benefits shall be defined only by the Plan and the Participants’ Deferral Election forms. The Company shall have no obligation to a Participant under the Plan, except as expressly provided in the Plan and his or her Deferral Election forms. |
13.4 | Nonassignability. Neither a Participant, nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are expressly declared to be, unassignable and non-transferable. No part of the amount payable shall, prior to actual |
13.5 | Not a Contract of Employment. The terms and conditions of the Plan shall not be deemed to constitute a contract of employment between an Employer and the Participant, either expressed or implied. Such employment is hereby acknowledged to be an “at will” employment relationship that can be terminated at any time for any reason, or for no reason at all, with or without cause, and with or without notice, unless expressly provided in a written employment agreement. Nothing in the Plan shall be deemed to give a Participant the right to be retained in the service of the Employer, or to interfere with the right of the Employer to discipline or discharge a Participant at any time for any reason. |
13.6 | Furnishing Information. A Participant or his or her Beneficiary will cooperate with the Plan Administrator by furnishing any and all information requested by the Plan Administrator and take such other actions as may be requested in order to facilitate the administration of the Plan and the payments of benefits hereunder, including but not limited to taking such physical examinations as the Plan Administrator may deem necessary. |
13.7 | Terms. Whenever any words are used herein in the masculine, they shall be construed as though they were in the feminine in all cases where they would so apply; and whenever any words are used herein in the singular or in the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply. |
13.8 | Captions. The captions of the articles, sections and paragraphs of the Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions. |
13.9 | Governing Law. Subject to ERISA, the provisions of the Plan shall be construed and interpreted according to the internal laws of the State of California without regard to its conflicts of laws principles. |
13.10 | Notice. Any notice or filing required or permitted to be given to the Board, the Company or the Plan Administrator under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to the address below: |
13.11 | Successors. The provisions of the Plan shall bind and inure to the benefit of the Company and its successors and assigns and the Participant and the Participant’s Beneficiaries. |
13.12 | Spouse’s Interest. The interest in the benefits hereunder of a spouse of a Participant who has predeceased the Participant shall automatically pass to the Participant and shall not be transferable by such spouse in any manner, including but not limited to such spouse’s will, nor shall such interest pass under the laws of intestate succession. |
13.13 | Validity. In case any provision of the Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but the Plan shall be construed and enforced as if such illegal or invalid provision had never been inserted herein. |
13.14 | Incompetent. If the Plan Administrator determines that a benefit under the Plan is to be paid to a minor, a person declared incompetent or to a person incapable of handling the disposition of that person’s property, the Plan Administrator may direct payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or incapable person. The Plan Administrator may require proof of minority, incompetence, incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit. Any payment of a benefit shall be a payment for the account of the Participant and the Participant’s Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Plan for such payment amount. |
13.15 | Court Order. The Company is authorized to make any payments directed by court order in any action in which the Plan, Company, Employer, Plan Administrator or the Board has been named as a party. In addition, if a court determines that a spouse or former spouse of a Participant has an interest in the Participant’s benefits under the Plan in connection with a property settlement or otherwise, the Company shall have the right, notwithstanding any election made by a Participant, to immediately distribute the spouse’s or former spouse’s interest in the Participant’s benefits under the Plan to that spouse or former spouse. |
13.16 | Insurance. The Company, on its own behalf or on behalf of the trustee of the Trust, may apply for and procure insurance on the life of the Participant, in such amounts and in such forms as the Company or trustee of the Trust may choose. The Company or the trustee |
13.17 | No Acceleration of Benefits. The acceleration of the time or schedule of any payment under the Plan is not permitted, except as provided in regulations promulgated by the Secretary of the Treasury. |
13.18 | Compliance with Code Section 409A. The Plan is intended to provide for the deferral of compensation in accordance with the applicable requirements of Code Section 409A for compensation earned, vested, or deferred after December 31, 2004, and shall be interpreted and administered accordingly. Notwithstanding any provisions of the Plan or any Deferral Election form to the contrary, no otherwise permissible election under the Plan shall be given effect that would result in the immediate inclusion in income of any amount under Code Section 409A. |
13.19 | Discretion of the Board, Plan Administrator, Trustee and Company and Interpretation. To the fullest extent permitted by law, the Board, Plan Administrator, Company and Trustee shall each, in its sole and absolute discretion, construe and interpret the terms and provisions of the Plan and to do all things necessary or appropriate to effect the intent and purpose thereof whether or not such powers are specifically set forth in the Plan and Trust Agreement, including any issue arising out of, relating to, or resulting from the administration and operation of the Plan. Such construction and/or interpretation shall be final, conclusive and binding on all persons, entities and parties, including, without limitation, the Participants and Beneficiaries, or successors or assigns thereto, and shall be given the maximum possible deference allowed by law. |
Name of Awardee: | |
Total Number of Stock Units Granted: | |
Grant Date: | |
Vesting Schedule: | March 31, 2016 33.33% March 31, 2017 33.33% March 31, 2018 33.33% |
Performance Period: | Fiscal Year Ending March 31, 2015 (the “Performance Period”) |
Performance Criteria: | The percentage of Nonvested Stock Units that may vest will be based on the value of diluted 2015 EPS as set forth in Exhibit A attached hereto (the “Performance Criteria”). |
AWARDEE: | DECKERS OUTDOOR CORPORATION |
________________________________ | |
Signature | By: _______________________________ |
________________________________ | |
Printed Name | Its: _______________________________ |
________________________________ | |
Residence Address | ______________________________ |
Date | |
_______________________________ | |
_______________________________ | |
Date |
Name of Awardee: | _ |
Total Number of Stock Units Granted: | _ |
Grant Date: | XXXXX |
Vesting Schedule: | First Anniversary of Grant Date: 33.33% Second Anniversary of Grant Date: 33.33% Third Anniversary of Grant Date: 33.33% |
AWARDEE: | DECKERS OUTDOOR CORPORATION |
________________________________ | |
Signature | By: _______________________________ |
________________________________ | |
Printed Name | Its: _______________________________ |
________________________________ | |
Residence Address | ______________________________ |
Date | |
_______________________________ | |
_______________________________ | |
Date |
Name of Awardee: | _ |
Total Number of Stock Units Granted: | _ |
Grant Date: | _ |
Vesting Schedule: | March 15, 2017 33.33% March 15, 2018 33.33% March 15, 2019 33.34% |
Performance Period: | Fiscal Year Ending March 31, 2016 (the “Performance Period”) |
Performance Criteria: | The percentage of Nonvested Stock Units that may vest will be based on the value of diluted 2016 EPS as set forth in Exhibit A attached hereto (the “Performance Criteria”). |
AWARDEE: | DECKERS OUTDOOR CORPORATION |
________________________________ | |
Signature | By: _______________________________ |
________________________________ | |
Printed Name | Its: _______________________________ |
________________________________ | |
Residence Address | ______________________________ |
Date | |
_______________________________ | |
_______________________________ | |
Date |
Name of Participant (“Awardee”): | _ |
Total Number of Stock Units Granted: | _ |
Date of Grant: | _ |
Vesting Schedule: | XXXXXXX : 33.33% XXXXXXX: 33.33% XXXXXXX: 33.34% |
AWARDEE: | DECKERS OUTDOOR CORPORATION |
________________________________ | |
Signature | By: _______________________________ |
________________________________ | |
Printed Name | Its: _______________________________ |
________________________________ | |
Residence Address | ______________________________ |
Date | |
_______________________________ | |
_______________________________ | |
Date |
1. | I have reviewed this Quarterly Report on Form 10-Q of Deckers Outdoor Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
/s/ DAVID POWERS |
David Powers Chief Executive Officer, President and Director Deckers Outdoor Corporation (Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Deckers Outdoor Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
/s/ THOMAS A. GEORGE |
Thomas A. George Chief Financial Officer Deckers Outdoor Corporation (Principal Financial and Accounting Officer) |
/s/ DAVID POWERS | |
David Powers | |
Chief Executive Officer, President and Director | |
Deckers Outdoor Corporation | |
(Principal Executive Officer) | |
/s/ THOMAS A. GEORGE | |
Thomas A. George | |
Chief Financial Officer | |
Deckers Outdoor Corporation | |
(Principal Financial and Accounting Officer) | |
Date: November 9, 2017 |
Document and Entity Information - shares |
6 Months Ended | |
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Sep. 30, 2017 |
Nov. 03, 2017 |
|
Document and Entity Information | ||
Entity Registrant Name | DECKERS OUTDOOR CORP | |
Entity Central Index Key | 0000910521 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --03-31 | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 31,961,417 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Mar. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Trade accounts receivable, allowances (in dollars) | $ 37,802 | $ 32,354 |
Inventory reserves | 9,656 | 7,638 |
Accumulated depreciation | 200,591 | 190,758 |
Accumulated amortization | $ 59,072 | $ 54,361 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares (in shares) | 125,000,000 | 125,000,000 |
Common stock, issued shares (in shares) | 32,037,000 | 31,987,000 |
Common stock, outstanding shares (in shares) | 32,037,000 | 31,987,000 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Income Statement [Abstract] | ||||
Net sales | $ 482,460 | $ 485,944 | $ 692,177 | $ 660,337 |
Cost of sales | 257,343 | 269,519 | 376,435 | 367,660 |
Gross profit | 225,117 | 216,425 | 315,742 | 292,677 |
Selling, general and administrative expenses | 157,762 | 162,402 | 304,643 | 316,973 |
Income (loss) from operations | 67,355 | 54,023 | 11,099 | (24,296) |
Other expense (income), net: | ||||
Interest income | (509) | (103) | (961) | (307) |
Interest expense | 1,531 | 1,943 | 2,538 | 3,378 |
Other expense (income), net | 12 | (289) | (212) | (958) |
Total other expense, net | 1,034 | 1,551 | 1,365 | 2,113 |
Income (loss) before income taxes | 66,321 | 52,472 | 9,734 | (26,409) |
Income tax expense (benefit) | 16,762 | 13,167 | 2,296 | (6,796) |
Net income (loss) | 49,559 | 39,305 | 7,438 | (19,613) |
Other comprehensive income (loss), net of tax: | ||||
Unrealized (loss) gain on foreign currency exchange rate hedges | (911) | (890) | (4,683) | 2,019 |
Foreign currency translation adjustment | 2,968 | (856) | 4,518 | 2,843 |
Total other comprehensive income (loss) | 2,057 | (1,746) | (165) | 4,862 |
Comprehensive income (loss) | $ 51,616 | $ 37,559 | $ 7,273 | $ (14,751) |
Net income (loss) per share: | ||||
Basic (in dollars per share) | $ 1.55 | $ 1.23 | $ 0.23 | $ (0.61) |
Diluted (in dollars per share) | $ 1.54 | $ 1.21 | $ 0.23 | $ (0.61) |
Weighted-average common shares outstanding: | ||||
Basic (in shares) | 32,015 | 32,057 | 32,003 | 32,041 |
Diluted (in shares) | 32,272 | 32,422 | 32,256 | 32,041 |
General |
6 Months Ended | ||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||
General | General The Company and Basis of Presentation Deckers Outdoor Corporation, together with its consolidated subsidiaries (the Company), 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® by UGG (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 end-user consumers both domestically and internationally 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 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. 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 during 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. The unaudited condensed consolidated financial statements and the accompanying notes thereto (referred to herein as the condensed consolidated financial statements) as of September 30, 2017 and for the three and six months ended September 30, 2017 and 2016, have been prepared in accordance with accounting principles generally accepted in the United States (US GAAP) for interim financial information and pursuant to Rule 10-01 Regulation S-X issued by the Securities and Exchange Commission (SEC). Accordingly, they do not include all the information and disclosures required by US GAAP for annual financial statements and the accompanying notes thereto. In the opinion of management, the condensed consolidated financial statements include all adjustments consisting of all normal and recurring entries considered necessary for a fair presentation of the results of interim periods presented. The results of operations for interim periods are not necessarily indicative of results to be achieved for full fiscal years or other interim periods. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes thereto in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2017, filed with the SEC on May 30, 2017 (2017 Annual Report). All intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications were made for all prior periods presented, including the three and six months ended September 30, 2017 and 2016, to conform to the current period presentation. Unless otherwise specifically indicated, all amounts herein are expressed in thousands, except for defined periods and share or per share data. Use of Estimates The preparation of the Company's condensed consolidated financial statements is done in accordance with US GAAP, which requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements. 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, sales returns liabilities, stock-based compensation, impairment assessments, depreciation and amortization, income tax liabilities and receivables, uncertain tax positions, the fair value of financial instruments and other assets and liabilities, including goodwill and other intangible assets. These estimates are based on information available to management as of the date of the condensed consolidated financial statements, and actual results could differ materially from the results assumed or implied based upon these estimates. 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 the Company 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 condensed 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 the Company 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 condensed consolidated financial statements and related disclosures:
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 will replace most existing revenue recognition guidance under US GAAP when it becomes effective. The standard permits the use of either the retrospective or cumulative effect transition method. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers, which provides for a one-year deferral of the effective date of ASU No. 2014-09, as well as early application, which will be effective for the Company's annual and interim reporting periods beginning April 1, 2018. In March 2016, the FASB issued ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies how to apply the implementation guidance related to principal versus agent considerations within ASU No. 2014-09. In April 2016, the FASB issued ASU No. 2016-10, Identifying Performance Obligations and Licensing, which clarifies two components of ASU No. 2014-09: (1) identifying performance obligations and (2) licensing implementation guidance. In May 2016, the FASB issued ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients, which is intended to improve the operability and understandability of the implementation guidance by providing clarifications and practical expedients. The Company is currently evaluating its business and contracts to determine any changes to accounting policies, processes or systems necessary to adopt the requirements of the new standard. The Company believes the adoption of this ASU will not have a material impact on its consolidated financial statements and the Company elected the cumulative effect transition method. However, the adoption of this ASU will result in expanded disclosures. 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, such as retail stores, showrooms, and distribution facilities, as well as expanded disclosures on existing and new lease commitments. The recognition of lease expenses is not expected to materially change from the current methodology. The Company has developed an implementation team to evaluate its business operations 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 is evaluating the effect the adoption of this ASU will have on its consolidated financial statements and related disclosures and currently does not expect adoption to have a material impact. 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 is evaluating its business policies and processes around intra-entity transfers of assets other than inventory to determine the effect the adoption of this ASU will have 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 is evaluating the effect that the adoption of this ASU will have on its consolidated financial statements and related disclosures, and currently does not expect adoption to have a material impact. 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. |
Restructuring |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring | Restructuring In connection with the Company's restructuring plan beginning in the fourth quarter of fiscal year 2016, the Company closed 26 retail stores as of September 30, 2017, and consolidated its brand operations and corporate headquarters. In connection with these restructuring efforts, the Company has incurred total restructuring charges of $55,308 through September 30, 2017. No restructuring charges were incurred during the three months ended September 30, 2017. During the six months ended September 30, 2017, the Company incurred $1,518 of restructuring charges. Of the total amount, $5,850 remained accrued as of September 30, 2017, with $1,638 in short-term liabilities and $4,212 in long-term liabilities. The remaining accrued liability for restructuring charges as of September 30, 2017 is as follows:
The following table summarizes restructuring charges by reportable operating segment and unallocated charges:
It is anticipated that the Company may incur restructuring charges in future periods which are generally expected to be similar in nature to those incurred in prior periods and which are expected to relate to the closing of the Company's retail stores or the conversion of its stores to partner retail stores. |
Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets The Company's goodwill and other intangible assets are as follows:
Aggregate amortization expense for amortizable intangible assets during the six months ended September 30, 2017 was $3,866 compared to $4,135 during the six months ended September 30, 2016. A reconciliation of charges incurred in the condensed consolidated statements of comprehensive income (loss) relevant to the Company's other intangible assets during the six months ended September 30, 2017 is as follows:
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The fair value of the Company's cash and cash equivalents, trade accounts receivable, inventories, net, 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 inputs used in measuring fair value are prioritized into the following hierarchy:
The assets and liabilities that are measured on a recurring basis at fair value are summarized as follows:
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 condensed consolidated balance sheets. Refer to Note 9, "Foreign Currency Exchange Rate Contracts and Hedging" for more information about these derivative instruments. 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. During the six months ended September 30, 2017 and fiscal year ended March 31, 2017, no payments were made under this program. 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. The non-qualified deferred compensation asset of $6,984 is recorded in other assets in the condensed consolidated balance sheets. The non-qualified deferred compensation liability of $4,128 is recorded in the condensed consolidated balance sheets as of September 30, 2017, with $639 recorded in other accrued expenses and $3,489 in other long-term liabilities. |
Income Taxes |
6 Months Ended |
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Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes 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 had $12,872 of net unrecognized tax benefits and associated interest and penalties as of September 30, 2017 in the condensed consolidated balance sheets. It is reasonably possible that $3,053 of net unrecognized tax benefits will be settled within the next 12 months. Refer to the section entitled "Recent Accounting Pronouncements" under Note 1, "General", for more information regarding recording previously unrecognized excess tax benefits for share-based awards as a cumulative adjustment to retained earnings in response to the adoption of ASU No. 2016-09. |
Revolving Credit Facilities and Mortgage Payable |
6 Months Ended |
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Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Revolving Credit Facilities and Mortgage Payable | Revolving Credit Facilities and Mortgage Payable Domestic Credit Facility In November 2014, the Company amended its revolving credit facility agreement with JPMorgan Chase Bank, National Association as the administrative agent, Comerica and HSBC as co-syndication agents, and the lenders party thereto (as amended, the Second Amended and Restated Credit Agreement, or the Domestic Credit Facility). The Domestic Credit Facility is a five-year, $400,000 secured revolving credit facility which matures on November 13, 2019. 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 each quarter. As of September 30, 2017, the adjusted LIBOR and ABR rates were 2.48% and 4.50%, respectively. During the six months ended September 30, 2017, the Company made borrowings of $127,000 and repayments of $24,000 under the Domestic Credit Facility. As of September 30, 2017, the Company had an outstanding balance of $103,000 under the Domestic Credit Facility. As a result, the available borrowings under the Domestic Credit Facility as of September 30, 2017 were $296,451, including outstanding letters of credit of $549. Subsequent to September 30, 2017, the Company borrowed $58,000 and made repayments of $5,000 under the Domestic Credit Facility. At November 9, 2017, the Company had an outstanding balance of $156,000 and available borrowings of $243,451 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 $45,054, and to remove the sublimit of CNY 50,000, or $7,509, 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 $15,018. The China Credit Facility is payable on demand and subject to annual review and renewal. 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 September 30, 2017 the total effective interest rate was 5.0%. During the six months ended September 30, 2017, the Company borrowed $21,027 and made no repayments under the China Credit Facility. As of September 30, 2017, the Company had an outstanding balance of $21,027 and available borrowings of $24,027 under the China Credit Facility. Subsequent to September 30, 2017, the Company made no borrowings or repayments. At November 9, 2017, the Company had an outstanding balance of $21,027 and available borrowings of $24,027 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 (the Japan Credit Facility) that provides for an uncommitted revolving line of credit of up to JPY 5,500,000, or $48,864, 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, 2018. Interest is based on the Tokyo Interbank Offered Rate (TIBOR) plus 0.40%. As of September 30, 2017, TIBOR was 0.03% and the total effective interest rate was 0.43%. During the six months ended September 30, 2017, the Company made borrowings of $8,884 and no repayments under the Japan Credit Facility. As of September 30, 2017, the Company had an outstanding balance of $8,884 under the Japan Credit Facility and available borrowings of $39,980. Subsequent to September 30, 2017, the Company made no borrowings but did make repayments of $2,664. At November 9, 2017, the Company had an outstanding balance of $6,220 and available borrowings of $42,644 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 September 30, 2017, the outstanding principal balance under the mortgage was $32,366, which includes $563 in short-term borrowings and $31,803 in mortgage payable in the condensed consolidated balance sheets. As of September 30, 2017, the Company was in compliance with all debt covenants under its borrowing arrangements and remains in compliance at November 9, 2017. |
Commitments and Contingencies |
6 Months Ended |
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Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Lease Commitments 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. The total future minimum lease commitment through the expiration date as a result of the option being exercised is approximately $77,200. Except as noted above, during the six months ended September 30, 2017, there were no material changes to operating lease commitments other than those that occurred in the ordinary course of business. Purchase Obligations Product and Sheepskin During the six months ended September 30, 2017, there were no material changes to purchase obligations for product, sheepskin and various other service and promotional agreements, other than those that occurred in the ordinary course of business. Other The Company had approximately $16,100 of material commitments for future capital expenditures as of September 30, 2017, which primarily related to the build-out and expansion of the warehouse and distribution center located in Moreno Valley, California. Except as noted above, during the six months ended September 30, 2017, there were no material changes to commitments for capital expenditures, other than those that occurred in the ordinary course of business. 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. |
Stockholders' Equity |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders' Equity Equity Incentive Plans From time to time, the Company awards various types of stock-based compensation under the 2006 Plan and 2015 SIP (as defined in the 2017 Annual Report), including time-based restricted stock units (RSUs), performance-based restricted stock units (PSUs), stock appreciation rights (SARs) and non-qualified stock options (NQSOs). These awards may be issued to eligible employees and other plan participants, including the Company's executive officers. Annual Awards During fiscal year 2018, the Company elected to grant Annual RSUs and Annual PSUs 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, once 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 three months ended September 30, 2017, the Company granted no Annual PSUs and 7,683 Annual RSUs at a weighted-average grant date fair value of $63.80 per share. During the six months ended September 30, 2017, the Company granted 54,090 Annual PSUs at a weighted-average grant date fair value of $68.44 per share and 131,520 Annual RSUs at a weighted-average grant date fair value of $67.60 per share. At September 30, 2017, the Company believes that the achievement of the performance criteria for the fiscal year 2018 Annual PSUs is probable. The Company recorded aggregate stock compensation expense of $2,870 and $4,702 for the fiscal year 2018 Annual RSUs and Annual PSUs during the three and six months ended September 30, 2017, respectively. As of September 30, 2017, future unrecognized stock compensation expense for all Annual RSUs and Annual PSUs granted to date, excluding estimated forfeitures, is $15,385. Long-Term Incentive Options (LTIP) During fiscal year 2017, the Company approved the issuance of LTIP NQSOs under the 2015 SIP to the Company’s executive officers. If the Company achieves the minimum threshold performance criteria and the recipient provides continuous service the LTIP NQSOs will vest in equal installments over three years from the date of grant. Each option grants 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. This model estimates the fair value of the options based on a number of assumptions, such as expected option life, interest rates, the current fair market value and expected volatility, as well as dividend yield of the Company’s common stock. In June 2017, the Company approved the grant of the FY 2018 LTIP NQSOs to the Company's executive officers, which will vest on March 31, 2020 if the recipient provides continuous service through that date and the Company achieves the minimum threshold performance criteria. The fair value of the FY 2018 LTIP NQSOs granted, less estimated forfeitures, was $4,544, with $410 and $489 expensed during the three and six months ended September 30, 2017, respectively. The following table presents the weighted-average valuation assumptions used for the recognition of stock-based compensation expense for the FY 2018 LTIP NQSOs granted:
As of September 30, 2017, future unrecognized stock compensation expense for all LTIP NQSOs granted to date, excluding estimated forfeitures, was $7,989. Stock Repurchase Programs In January 2015, the Board of Directors approved a stock repurchase program authorizing the repurchase of up to $200,000 of the Company's common stock in the open market or in privately-negotiated transactions, subject to market conditions, applicable legal requirements, and other factors. The program does not obligate the Company to acquire any particular amount of common stock and the program may be suspended at any time at the Board of Director's discretion. Since inception through September 30, 2017, the Company has repurchased approximately 2,020,000 shares under this program for approximately $135,000, representing an average price of $66.69 per share, leaving the remaining approved amount at approximately $65,000. During the six months ended September 30, 2017, the Company made no stock repurchases under this program. Subsequent to September 30, 2017, the Board of Directors authorized a new $335,000 stock repurchase program. Combined with the approximately $65,000 remaining approved amount under the previously approved stock repurchase program, the Company has the authority to repurchase up to a total of approximately $400,000 of the Company's common stock. Retained Earnings The following is a reconciliation of the Company's retained earnings as of September 30, 2017:
*Refer to the section entitled "Recent Accounting Pronouncements" under Note 1, "General", for more information regarding recording previously unrecognized excess tax benefits for share-based awards as a cumulative adjustment to retained earnings in response to the adoption of ASU No. 2016-09. |
Foreign Currency Exchange Contracts and Hedging |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign Currency Exchange Contracts and Hedging | Foreign Currency Exchange Rate Contracts and Hedging 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. Forward contracts are used to hedge forecasted sales over specific quarters. 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 anticipated gains and losses on certain intercompany balances until the expected time of repayment. The fair value of the notional amount of both the Designated and Non-Designated Derivative Contracts are recorded in other current assets or other accrued expenses in the condensed consolidated balance sheets. 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 condensed consolidated statements of comprehensive income (loss) during the period which approximates the time the corresponding third-party sales occur. As of September 30, 2017, the Company had total notional value of $165,504 for foreign currency exchange rate forward contracts, which included the following:
As of September 30, 2017, the Company had Designated Derivative Contracts with four counterparties and Non-Designated Derivative Contracts with six counterparties. As of September 30, 2017, the Company had Designated Derivative and Non-Designated Contracts with various maturity dates within the next three to six months. During the three months ended September 30, 2017, the Company settled Designated Derivative Contracts with total notional amounts of approximately $32,810. 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 three and six months ended September 30, 2017, the designated hedges remained effective. The effective portion of the gain or loss on the derivative instrument is recognized in AOCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. As of September 30, 2017, the amount of unrealized losses on foreign currency exchange rate hedges recognized in AOCI (see Note 10, "Accumulated Other Comprehensive Loss", for additional information) is expected to be reclassified into income within the next nine months. The following table summarizes the effect of Designated Derivative Contracts:
The following table summarizes the effect of Non-Designated Derivative Contracts:
The Company entered into Non-Designated Derivative Contracts with notional amounts totaling $3,112, which are expected to mature over the next four months and no Designated Derivative Contracts were entered into subsequent to September 30, 2017. All hedging contracts at November 9, 2017 were held by a total of six counterparties. |
Accumulated Other Comprehensive Loss |
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Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The components within accumulated other comprehensive loss is as follows:
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Net Income (Loss) Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income (Loss) Per Share | Net Income (Loss) per Share Basic net income per share represents net income (loss) 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 common shares outstanding, including the dilutive impact of potential issuances of common stock. The reconciliation of basic to diluted weighted-average common shares outstanding is as follows:
*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 three and six months ended September 30, 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 more information on the nature of these awards. |
Reportable Operating Segments |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable Operating Segments | 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. 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, costs for 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 unallocated corporate overhead costs include: un-allocable costs associated with the distribution centers, certain executive and stock-based 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® (Ahnu) brand under the Teva brand. Effective April 1, 2017, operations for the Ahnu brand have been discontinued and all styles are sold under the Teva brand and are now reported in the Teva brand wholesale reportable operating segment instead of the other brands wholesale reportable operating segment, as presented in the comparative prior period. Reportable operating segment information with reconciliation to the condensed consolidated statements of comprehensive income (loss) is summarized as follows:
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 with reconciliation to the condensed consolidated balance sheets are as follows:
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. Reconciliations of total assets from reportable operating segments to the condensed consolidated balance sheets are as follows:
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Concentration of Business, Significant Customers and Credit Risk |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentration of Business, Significant Customers and Credit Risk | Concentration of Business, Significant Customers and Credit Risk Concentration of Business 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 $160,200, or 33.2%, and $137,000, or 28.2%, of total net sales were denominated in foreign currencies during the three months ended September 30, 2017 and 2016, respectively. Approximately $209,400, or 30.3%, and $181,000, or 27.3%, of total net sales were denominated in foreign currencies during the six months ended September 30, 2017 and 2016, respectively. International sales were 37.3% and 35.7% of the Company's total net sales during the three months ended September 30, 2017 and 2016, respectively, compared to 38.8% and 36.1% during the six months ended September 30, 2017 and 2016, respectively. During the three and six months ended September 30, 2017 and 2016, no single foreign country comprised more than 10% of the Company's total net sales. 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 products and the majority of sheepskin is purchased from two tanneries in China and is sourced primarily from Australia and the UK. 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 the Company's control. Furthermore, the price of sheepskin is impacted by demand, industry, and competitors. Property and equipment, net Property and equipment, net, in the US and all other countries combined were as follows:
*No other country's property and equipment, net, comprised more than 10% of the Company's total property and equipment, net, as of September 30, 2017 and March 31, 2017. Significant Customers Management performs regular evaluations concerning the ability of its customers to satisfy their obligations to the Company and records an allowance for doubtful accounts based upon these evaluations. There was one customer that accounted for 10% or more of the Company's net sales during the three and six months ended September 30, 2017 compared to no customers that accounted for more than 10% of the Company's net sales during the three and six months ended September 30, 2016. At September 30, 2017, the Company had two customers representing 11.9% and 10.4% of trade accounts receivable, net, respectively. At March 31, 2017, the Company had one customer representing 11.2% of trade accounts receivable, net. Credit Risk A portion of the Company's cash and cash equivalents is held as cash in operating accounts with third-party financial institutions. These balances, at times, exceed the Federal Deposit Insurance Corporation insurance limits. While the Company regularly monitors the cash balances in its operating accounts and adjusts the balances as appropriate, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. The remainder of the Company's cash equivalents is invested in interest-bearing funds managed by third-party investment management institutions. These investments can include US treasury bonds and securities, money market funds, and municipal bonds, among other investments. Certain of these investments are subject to general credit, liquidity, and market and interest rate risks. As of September 30, 2017, the Company has experienced no significant loss on its money market funds or lack of access to cash in its operating accounts. The Company's cash and cash equivalents are as follows:
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General (Policies) |
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Sep. 30, 2017 | |||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||
The Company and Basis of Presentation | The Company and Basis of Presentation Deckers Outdoor Corporation, together with its consolidated subsidiaries (the Company), 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® by UGG (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 end-user consumers both domestically and internationally 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 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. 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 during 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. The unaudited condensed consolidated financial statements and the accompanying notes thereto (referred to herein as the condensed consolidated financial statements) as of September 30, 2017 and for the three and six months ended September 30, 2017 and 2016, have been prepared in accordance with accounting principles generally accepted in the United States (US GAAP) for interim financial information and pursuant to Rule 10-01 Regulation S-X issued by the Securities and Exchange Commission (SEC). Accordingly, they do not include all the information and disclosures required by US GAAP for annual financial statements and the accompanying notes thereto. In the opinion of management, the condensed consolidated financial statements include all adjustments consisting of all normal and recurring entries considered necessary for a fair presentation of the results of interim periods presented. The results of operations for interim periods are not necessarily indicative of results to be achieved for full fiscal years or other interim periods. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes thereto in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2017, filed with the SEC on May 30, 2017 (2017 Annual Report). All intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications were made for all prior periods presented, including the three and six months ended September 30, 2017 and 2016, to conform to the current period presentation. Unless otherwise specifically indicated, all amounts herein are expressed in thousands, except for defined periods and share or per share data. |
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Use of Estimates | Use of Estimates The preparation of the Company's condensed consolidated financial statements is done in accordance with US GAAP, which requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements. 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, sales returns liabilities, stock-based compensation, impairment assessments, depreciation and amortization, income tax liabilities and receivables, uncertain tax positions, the fair value of financial instruments and other assets and liabilities, including goodwill and other intangible assets. These estimates are based on information available to management as of the date of the condensed consolidated financial statements, and actual results could differ materially from the results assumed or implied based upon these estimates. |
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Recent Accounting Pronouncements | 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 the Company 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 condensed 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 the Company 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 condensed consolidated financial statements and related disclosures:
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 will replace most existing revenue recognition guidance under US GAAP when it becomes effective. The standard permits the use of either the retrospective or cumulative effect transition method. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers, which provides for a one-year deferral of the effective date of ASU No. 2014-09, as well as early application, which will be effective for the Company's annual and interim reporting periods beginning April 1, 2018. In March 2016, the FASB issued ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies how to apply the implementation guidance related to principal versus agent considerations within ASU No. 2014-09. In April 2016, the FASB issued ASU No. 2016-10, Identifying Performance Obligations and Licensing, which clarifies two components of ASU No. 2014-09: (1) identifying performance obligations and (2) licensing implementation guidance. In May 2016, the FASB issued ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients, which is intended to improve the operability and understandability of the implementation guidance by providing clarifications and practical expedients. The Company is currently evaluating its business and contracts to determine any changes to accounting policies, processes or systems necessary to adopt the requirements of the new standard. The Company believes the adoption of this ASU will not have a material impact on its consolidated financial statements and the Company elected the cumulative effect transition method. However, the adoption of this ASU will result in expanded disclosures. 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, such as retail stores, showrooms, and distribution facilities, as well as expanded disclosures on existing and new lease commitments. The recognition of lease expenses is not expected to materially change from the current methodology. The Company has developed an implementation team to evaluate its business operations 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 is evaluating the effect the adoption of this ASU will have on its consolidated financial statements and related disclosures and currently does not expect adoption to have a material impact. 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 is evaluating its business policies and processes around intra-entity transfers of assets other than inventory to determine the effect the adoption of this ASU will have 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 is evaluating the effect that the adoption of this ASU will have on its consolidated financial statements and related disclosures, and currently does not expect adoption to have a material impact. 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. |
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Fair Value Measurement | The fair value of the Company's cash and cash equivalents, trade accounts receivable, inventories, net, 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 inputs used in measuring fair value are prioritized into the following hierarchy:
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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. During the six months ended September 30, 2017 and fiscal year ended March 31, 2017, no payments were made under this program. 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. |
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Derivatives | 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. Forward contracts are used to hedge forecasted sales over specific quarters. 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 anticipated gains and losses on certain intercompany balances until the expected time of repayment. The fair value of the notional amount of both the Designated and Non-Designated Derivative Contracts are recorded in other current assets or other accrued expenses in the condensed consolidated balance sheets. 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 condensed consolidated statements of comprehensive income (loss) during the period which approximates the time the corresponding third-party sales occur. |
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Net Loss per Share | Basic net income per share represents net income (loss) 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 common shares outstanding, including the dilutive impact of potential issuances of common stock. |
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Cash and Cash Equivalents | A portion of the Company's cash and cash equivalents is held as cash in operating accounts with third-party financial institutions. These balances, at times, exceed the Federal Deposit Insurance Corporation insurance limits. While the Company regularly monitors the cash balances in its operating accounts and adjusts the balances as appropriate, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. The remainder of the Company's cash equivalents is invested in interest-bearing funds managed by third-party investment management institutions. These investments can include US treasury bonds and securities, money market funds, and municipal bonds, among other investments. Certain of these investments are subject to general credit, liquidity, and market and interest rate risks. |
Restructuring (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve by Type of Cost | The remaining accrued liability for restructuring charges as of September 30, 2017 is as follows:
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Restructuring and Related Costs | The following table summarizes restructuring charges by reportable operating segment and unallocated charges:
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Goodwill and Other Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of goodwill and other intangible assets | The Company's goodwill and other intangible assets are as follows:
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Schedule of finite-lived intangible assets | A reconciliation of charges incurred in the condensed consolidated statements of comprehensive income (loss) relevant to the Company's other intangible assets during the six months ended September 30, 2017 is as follows:
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The assets and liabilities that are measured on a recurring basis at fair value are summarized as follows:
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Stockholders' Equity (Tables) |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Options, Valuation Assumptions | The following table presents the weighted-average valuation assumptions used for the recognition of stock-based compensation expense for the FY 2018 LTIP NQSOs granted:
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Schedule of Stockholders Equity | The following is a reconciliation of the Company's retained earnings as of September 30, 2017:
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Foreign Currency Exchange Contracts and Hedging (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of location and amount of gains and losses related to derivatives designated as hedging instruments reported in consolidated financial statements | The following table summarizes the effect of Designated Derivative Contracts:
As of September 30, 2017, the Company had total notional value of $165,504 for foreign currency exchange rate forward contracts, which included the following:
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Schedule of location and amount of gains and losses related to derivatives not designated as hedging instruments reported in consolidated financial statements | The following table summarizes the effect of Non-Designated Derivative Contracts:
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Accumulated Other Comprehensive Loss (Tables) |
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Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Components of accumulated other comprehensive income | The components within accumulated other comprehensive loss is as follows:
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Net Income (Loss) Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Weighted Average Number of Shares | The reconciliation of basic to diluted weighted-average common shares outstanding is as follows:
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Reportable Operating Segments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of business segments information | Assets allocable to each reportable operating segment with reconciliation to the condensed consolidated balance sheets are as follows:
Reportable operating segment information with reconciliation to the condensed consolidated statements of comprehensive income (loss) is summarized as follows:
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Schedule of reconciliations of total assets from reportable segments to the condensed consolidated balance sheets | Reconciliations of total assets from reportable operating segments to the condensed consolidated balance sheets are as follows:
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Concentration of Business, Significant Customers and Credit Risk (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-lived assets, which consist of property and equipment, by major country | Property and equipment, net, in the US and all other countries combined were as follows:
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Schedule of the Company's cash and cash equivalents | The Company's cash and cash equivalents are as follows:
|
Restructuring (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | 20 Months Ended | |||
---|---|---|---|---|---|---|
Sep. 30, 2017
USD ($)
store
|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2017
USD ($)
store
|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2017
USD ($)
store
|
Mar. 31, 2017
USD ($)
|
|
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring charges | $ 0 | $ 1,518 | $ 2,632 | |||
Brand Realignment | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring charges | 0 | $ 900 | 1,518 | $ 2,632 | $ 55,308 | |
Restructuring reserve | $ 5,850 | $ 5,850 | $ 5,850 | $ 11,080 | ||
Brand Realignment | Facility Closing | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Number of stores closed | store | 26 | 26 | 26 | |||
Short Term Liabilities | Brand Realignment | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring reserve | $ 1,638 | $ 1,638 | $ 1,638 | |||
Long Term Liabilities | Brand Realignment | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring reserve | $ 4,212 | $ 4,212 | $ 4,212 |
Restructuring - Schedule of Restructuring by Segment (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 20 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
|
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | $ 0 | $ 1,518 | $ 2,632 | ||
Brand Realignment | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | 0 | $ 900 | 1,518 | 2,632 | $ 55,308 |
Reportable segments | UGG brand wholesale | Brand Realignment | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | 0 | 513 | 0 | 574 | |
Reportable segments | Direct-to-Consumer | Brand Realignment | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | 0 | 160 | 0 | 1,395 | |
Unallocated to Segments | Brand Realignment | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | $ 0 | $ 227 | $ 1,518 | $ 663 |
Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Mar. 31, 2017 |
---|---|---|
Indefinite-lived Intangible Assets | ||
Goodwill | $ 13,990 | $ 13,990 |
Trademarks | 15,454 | 15,454 |
Definite-lived Intangible Assets | ||
Total gross carrying amount | 105,297 | 104,045 |
Accumulated amortization | (59,072) | (54,361) |
Net Definite-lived Intangible Assets | 46,225 | 49,684 |
Total Other Intangible Assets | 61,679 | 65,138 |
Total Goodwill and Other Intangible Assets | 75,669 | 79,128 |
UGG brand wholesale | ||
Indefinite-lived Intangible Assets | ||
Goodwill | 6,101 | 6,101 |
Other brands wholesale | ||
Indefinite-lived Intangible Assets | ||
Goodwill | 7,889 | 7,889 |
Trademarks | ||
Definite-lived Intangible Assets | ||
Total gross carrying amount | 55,245 | 55,245 |
Other Intangible Assets | ||
Definite-lived Intangible Assets | ||
Total gross carrying amount | $ 50,052 | $ 48,800 |
Goodwill and Other Intangible Assets Narrative (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of intangible assets | $ 3,866 | $ 4,135 |
Goodwill and Other Intangible Assets Schedule of Changes in Intangible Assets (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Finite-lived Intangible Assets [Roll Forward] | ||
Intangible assets, net, beginning balance | $ 65,138 | |
Amortization expense | (3,866) | $ (4,135) |
Changes in foreign currency exchange rates | 407 | |
Intangible assets, net, ending balance | $ 61,679 |
Fair Value Measurements Narrative (Details) - USD ($) |
6 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2017 |
Mar. 31, 2017 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Distributions paid | $ 0 | $ 0 |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Non-qualified deferred compensation asset | 6,984,000 | 6,662,000 |
Non-qualified deferred compensation liability | 4,128,000 | $ 4,140,000 |
Deferred compensation liability, current | 639,000 | |
Other long term liabilities | $ 3,489,000 |
Income Taxes Narrative (Details) $ in Thousands |
Sep. 30, 2017
USD ($)
|
---|---|
Income Tax Disclosure [Abstract] | |
Unrecognized tax benefits and associated interest and penalties | $ 12,872 |
Significant change in unrecognized tax benefits is reasonably possible | $ 3,053 |
Revolving Credit Facilities and Mortgage Payable - Mortgage (Details) - USD ($) |
Sep. 30, 2017 |
Mar. 31, 2017 |
Jul. 31, 2014 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Short-term borrowings | $ 133,474,000 | $ 549,000 | |
Mortgage payable | 31,803,000 | $ 32,082,000 | |
Mortgages | |||
Debt Instrument [Line Items] | |||
Debt instrument face amount | $ 33,900,000 | ||
Long-term debt gross | 32,366,000 | ||
Short-term borrowings | 563,000 | ||
Mortgage payable | $ 31,803,000 |
Commitments and Contingencies - Lease Commitments (Details) $ in Thousands |
4 Months Ended |
---|---|
Sep. 30, 2017
USD ($)
| |
Building | |
Commitments and Contingencies | |
Minimum rentals | $ 77,200 |
Commitments and Contingencies - Purchase Commitments (Details) $ in Thousands |
6 Months Ended |
---|---|
Sep. 30, 2017
USD ($)
| |
Other Purchase Commitment | |
Future commitments | |
Purchase commitment amount | $ 16,100 |
Stockholders' Equity - LTIP (Details) - Employee Stock Option - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended |
---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2017 |
Mar. 31, 2017 |
|
2018 Long-Term Incentive Plan NQSOs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock granted net of forfeitures | $ 4,544 | ||
Compensation expenses recorded | $ 410 | 489 | |
Long Term Incentive Plan NQSOs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period (in years) | 3 years | ||
Unrecognized stock compensation expense | $ 7,989 | $ 7,989 |
Stockholders' Equity - LTIP Assumptions (Details) - 2018 Long-Term Incentive Plan NQSOs |
6 Months Ended |
---|---|
Sep. 30, 2017
$ / shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected life (in years) | 4 years 10 months 24 days |
Expected volatility | 38.73% |
Risk free interest rate | 1.78% |
Dividend yield | 0.00% |
Weighted average exercise price (in usd per share) | $ 69.29 |
Weighted average option value (in usd per share) | $ 25.03 |
Stockholders' Equity - Stock Repurchase Plan, Retained Earnings Rollforward (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Mar. 31, 2017 |
|
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | $ 49,559 | $ 39,305 | $ 7,438 | $ (19,613) | |
Retained Earnings | |||||
Increase (Decrease) in Stockholders' Equity | |||||
Beginning balance | 819,589 | ||||
Net income (loss) | 7,438 | ||||
Cumulative effect of new accounting principle in period of adoption | $ 1,365 | ||||
Ending balance | $ 828,392 | $ 828,392 |
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Mar. 31, 2017 |
---|---|---|
Accumulated other comprehensive income | ||
Unrealized (loss) gain on foreign currency exchange rate hedges, net of tax | $ (3,827) | $ 856 |
Cumulative foreign currency translation adjustment | (22,789) | (27,307) |
Accumulated other comprehensive loss | $ (26,616) | $ (26,451) |
Reportable Operating Segments - Reconciliation (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Mar. 31, 2017 |
Sep. 30, 2016 |
Mar. 31, 2016 |
---|---|---|---|---|
Reconciliations of total assets from reportable segments to the condensed consolidated balance sheets | ||||
Cash and cash equivalents | $ 230,586 | $ 291,764 | $ 110,047 | $ 245,956 |
Deferred tax assets | 52,470 | 44,708 | ||
Total assets | 1,520,288 | 1,191,780 | ||
Reportable segments | ||||
Reconciliations of total assets from reportable segments to the condensed consolidated balance sheets | ||||
Total assets | 1,010,987 | 606,058 | ||
Unallocated to Segments | ||||
Reconciliations of total assets from reportable segments to the condensed consolidated balance sheets | ||||
Cash and cash equivalents | 230,586 | 291,764 | ||
Deferred tax assets | 52,470 | 44,708 | ||
Other unallocated corporate assets | $ 226,245 | $ 249,250 |
Concentration of Business, Significant Customers and Credit Risk Cash Equivalents (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Mar. 31, 2017 |
Sep. 30, 2016 |
Mar. 31, 2016 |
---|---|---|---|---|
Risks and Uncertainties [Abstract] | ||||
Money market fund accounts | $ 166,866 | $ 198,992 | ||
Cash | 63,720 | 92,772 | ||
Cash and cash equivalents | $ 230,586 | $ 291,764 | $ 110,047 | $ 245,956 |
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