Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jun. 30, 2015 | Jul. 31, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | DECKERS OUTDOOR CORP | |
Entity Central Index Key | 910,521 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --03-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 32,680,352 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2015 | Mar. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 168,744 | $ 225,143 |
Trade accounts receivable, net of allowances ($18,762 at June 30, 2015 and $18,218 at March 31, 2015) | 117,399 | 143,105 |
Inventories | 373,622 | 238,911 |
Prepaid expenses | 18,579 | 15,141 |
Other current assets | 32,218 | 35,057 |
Income taxes receivable | 35,939 | 15,170 |
Deferred tax assets | 14,414 | 14,066 |
Total current assets | 760,915 | 686,593 |
Property and equipment, net of accumulated depreciation ($137,766 at June 30, 2015 and $129,002 at March 31, 2015) | 239,381 | 232,317 |
Goodwill | 127,934 | 127,934 |
Other intangible assets, net of accumulated amortization ($39,254 at June 30, 2015 and $37,316 at March 31, 2015) | 90,141 | 87,743 |
Deferred tax assets | 15,391 | 15,017 |
Other assets | 19,736 | 20,329 |
Total assets | 1,253,498 | 1,169,933 |
Current liabilities: | ||
Short-term borrowings and current portion of mortgage payable | 43,394 | 5,383 |
Trade accounts payable | 227,850 | 85,714 |
Accrued payroll | 19,654 | 27,300 |
Other accrued expenses | 41,391 | 41,066 |
Income taxes payable | 4,969 | 6,858 |
Value added tax payable | 980 | 1,221 |
Total current liabilities | 338,238 | 167,542 |
Long-term liabilities: | ||
Mortgage payable | 33,029 | 33,154 |
Income tax liability | 5,436 | 5,087 |
Deferred rent obligations | 15,997 | 15,663 |
Other long-term liabilities | 12,870 | 11,475 |
Total long-term liabilities | $ 67,332 | $ 65,379 |
Commitments and contingencies (Note 6) | ||
Stockholders’ equity: | ||
Common stock, $0.01 par value; 125,000 shares authorized; shares issued and outstanding of 32,678 at June 30, 2015 and 33,292 at March 31, 2015 | $ 327 | $ 333 |
Additional paid-in capital | 161,124 | 158,777 |
Retained earnings | 705,642 | 798,370 |
Accumulated other comprehensive loss | (19,165) | (20,468) |
Total stockholders’ equity | 847,928 | 937,012 |
Total liabilities and stockholders' equity | $ 1,253,498 | $ 1,169,933 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jun. 30, 2015 | Mar. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Trade accounts receivable, net of allowances ($18,762 at June 30, 2015 and $18,218 at March 31, 2015) | $ 18,762 | $ 18,218 |
Property and equipment, net of accumulated depreciation ($137,766 at June 30, 2015 and $129,002 at March 31, 2015) | 137,766 | 129,002 |
Other intangible assets, net of accumulated amortization ($39,254 at June 30, 2015 and $37,316 at March 31, 2015) | $ 39,254 | $ 37,316 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares | 125,000 | 125,000 |
Common stock, issued shares | 32,678 | 33,292 |
Common stock, outstanding shares | 32,678 | 33,292 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement [Abstract] | ||
Net sales | $ 213,805 | $ 211,469 |
Cost of sales | 127,209 | 124,697 |
Gross profit | 86,596 | 86,772 |
Selling, general and administrative expenses | 150,304 | 137,254 |
Loss from operations | (63,708) | (50,482) |
Other expense (income), net: | ||
Interest income | (116) | (54) |
Interest expense | 1,035 | 438 |
Other, net | 55 | (96) |
Total other expenses, net | 974 | 288 |
Loss before income taxes | (64,682) | (50,770) |
Income tax benefit | (17,355) | (13,708) |
Net loss | (47,327) | (37,062) |
Other comprehensive income (loss), net of tax: | ||
Unrealized loss on foreign currency hedging | (1,463) | (260) |
Foreign currency translation adjustment | 2,766 | 476 |
Total other comprehensive income, net | 1,303 | 216 |
Comprehensive loss | $ (46,024) | $ (36,846) |
Net loss per share: | ||
Basic (in dollars per share) | $ (1.43) | $ (1.07) |
Diluted (in dollars per share) | $ (1.43) | $ (1.07) |
Weighted-average common shares outstanding: | ||
Basic (in shares) | 33,117 | 34,626 |
Diluted (in shares) | 33,117 | 34,626 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities: | ||
Net loss | $ (47,327) | $ (37,062) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation, amortization and accretion | 11,905 | 11,131 |
Change in fair value of contingent consideration | (1,152) | 24 |
Provision for doubtful accounts, net | 3,262 | 512 |
Deferred tax provision | 169 | 0 |
Stock compensation | 2,284 | 2,991 |
Other | 122 | 2,508 |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | 22,443 | (25,004) |
Inventories | (133,811) | (144,460) |
Prepaid expenses and other current assets | (674) | (1,993) |
Income tax receivable | (20,458) | (16,923) |
Other assets | 592 | (1,382) |
Trade accounts payable | 142,136 | 141,117 |
Accrued expenses | (7,757) | 1,812 |
Income taxes payable | (1,890) | 1,019 |
Long-term liabilities | 3,136 | 751 |
Net cash used in operating activities | (27,020) | (64,959) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (18,755) | (18,734) |
Acquisition of tangible and intangible assets | (4,700) | 0 |
Net cash used in investing activities | (23,455) | (18,734) |
Cash flows from financing activities: | ||
Cash paid for shares withheld for taxes | (198) | (73) |
Excess tax benefit from stock compensation | 9 | 14 |
Cash paid for repurchases of common stock | (45,407) | 0 |
Contingent consideration paid | 0 | (115) |
Proceeds from issuance of short-term borrowings | 38,000 | 0 |
Repayments of short-term borrowings | 0 | (3,458) |
Repayment of mortgage principal | (119) | 0 |
Net cash used in financing activities | (7,715) | (3,632) |
Effect of exchange rates on cash | 1,791 | 463 |
Net change in cash and cash equivalents | (56,399) | (86,862) |
Cash and cash equivalents at beginning of period | 225,143 | 245,088 |
Cash and cash equivalents at end of period | 168,744 | 158,226 |
Cash paid during the period for: | ||
Income taxes | 4,012 | 2,267 |
Interest | 185 | 290 |
Non-cash investing and financing activities: | ||
Accruals for purchases of property and equipment | 1,217 | 264 |
Accruals for asset retirement obligations | 154 | 146 |
Accruals for shares withheld for taxes | $ 57 | $ 0 |
General
General | 3 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | General Basis of Presentation The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements and, in the opinion of management, reflect all adjustments necessary for a fair presentation for each of the 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. Deckers Outdoor Corporation (also referred to as 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. The Company’s business is seasonal, with the highest percentage of UGG® brand net sales occurring in the quarters ending September 30 and December 31 and the highest percentage of Teva® and Sanuk® brand net sales occurring in the quarters ending March 31 and June 30 of each year. The other brands do not have a significant seasonal impact on the Company. In July 2014, the Company acquired its UGG brand distributor that sold to retailers in Germany and now operates a wholesale business in Germany through the newly acquired subsidiary. The acquisition included certain intangible and tangible assets and the assumption of liabilities. The purchase price of the acquisition was not material to the Company’s condensed consolidated financial statements. In April 2015, the Company acquired inventory and certain intangible assets, including the trade name related to the Koolaburra® brand, a line of casual comfort footwear using sheepskin and other plush materials. The purchase price of the acquisition was not material to the Company’s condensed consolidated financial statements. Subsequent to June 30, 2015, the Company sold certain tangible and intangible assets including inventory and the trade name related to the MOZO® brand, a footwear brand crafted for culinary professionals. In connection with the sale, the Company had approximately $1,500 of inventory that represents assets held for sale as of June 30, 2015. The impact on the condensed consolidated financial statements is not material. The Company sells its brands through quality domestic retailers and international distributors and retailers, as well as directly to end-user consumers through the Direct-to-Consumer reporting segment. Independent third parties manufacture all of the Company's products. As contemplated by the Securities and Exchange Commission (SEC) under Rule 10-01 of Regulation S-X, the accompanying condensed consolidated financial statements and related footnotes have been condensed and do not contain certain information that will be included in the Company’s annual consolidated financial statements and footnotes thereto. For further information, refer to the consolidated financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2015 , filed with the SEC on June 1, 2015 . Change in Segment Reporting During the first quarter of FY 2016, the Company changed its reportable segments to aggregate the previously separated E-Commerce and retail store operating segments into one Direct-to-Consumer (DTC) reporting segment. This change was driven by the Company’s Omni-Channel strategy for both sales channels to focus on a seamless and intertwined approach to serve our customers. Additionally, the Company changed its organizational structure to align with these Omni-Channel initiatives and aligned the information that our Chief Operating Decision Maker (CODM), the Chief Executive Officer, reviews for purposes of allocating resources and assessing performance. The E-Commerce and retail operating segments of the DTC reporting segment have similar financial performance, products and services, types or classes of customers, distribution characteristics, and sources of manufactured products. After the reorganization, the Company has five reportable segments including the strategic business units for the worldwide wholesale operations of the UGG brand, Teva brand, Sanuk brand, and other brands, and our DTC business. All prior period amounts have been adjusted retrospectively to reflect these operating segment changes. These changes had no impact on consolidated net sales or operating income. See Note 11, "Business Segments, Concentration of Business, Credit Risk and Significant Customers" and Item 2 of this Quarterly Report, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for further disclosure and discussion. Use of Estimates The preparation of the Company’s condensed consolidated financial statements in accordance with United States generally accepted accounting principles (US GAAP) requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. Management bases these estimates and assumptions upon historical experience, existing and known circumstances, authoritative accounting pronouncements and other factors that management believes to be reasonable. Significant areas requiring the use of management estimates relate to inventory write-downs, accounts receivable allowances, returns liabilities, stock compensation, performance based compensation, impairment assessments, depreciation and amortization, income tax liabilities, uncertain tax positions and income tax receivable, fair value of financial instruments, and fair values of acquired intangibles, assets and liabilities, including estimated contingent consideration payments. Actual results could differ materially from these estimates. Recent Accounting Pronouncements On May 28, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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. The ASU will replace most existing revenue recognition guidance in US GAAP when it becomes effective. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its condensed consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. On July 9, 2015, the FASB agreed to a one year deferral of the effective date of this ASU, as well as early application, which will be effective for the Company on April 1, 2017. In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires an entity to present debt issuance costs on the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. Prior to the issuance of the standard, debt issuance costs were required to be presented in the balance sheet as a deferred charge (i.e., an asset). At the June 18, 2015 Emerging Issues Task Force meeting, the SEC observer announced that the SEC would not object if debt issuance costs related to revolving debt arrangements continue to be presented as deferred charges. This ASU is effective for the Company on April 1, 2016, with early adoption permitted. The adoption of this ASU will not have a material impact on the Company’s condensed consolidated financial statements or related disclosures. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, which changed the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value. Current US GAAP requires, at each financial statement date, that entities measure inventory at the lower of cost or market, most commonly the current replacement cost. This ASU is effective for the Company on April 1, 2017, with early adoption permitted. The Company is evaluating the effect that ASU 2015-11 will have on its condensed consolidated financial statements and related disclosures, but believes it will not have a material impact. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Jun. 30, 2015 | |
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 summarized as follows: Goodwill Other Intangible Assets, Net Balance at March 31, 2015 $ 127,934 $ 87,743 Purchase of intangible assets — 3,800 Amortization expense — (1,938 ) Changes in foreign currency exchange rates — 536 Balance at June 30, 2015 $ 127,934 $ 90,141 The Company’s goodwill by segment is as follows: June 30, March 31, UGG brand $ 6,101 $ 6,101 Sanuk brand 113,944 113,944 Other brands 7,889 7,889 Total $ 127,934 $ 127,934 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The fair values of the Company’s cash and cash equivalents, trade accounts receivable, prepaid expenses, income taxes receivable, other current assets, short-term borrowings, trade accounts payable, accrued payroll, other accrued expenses, income taxes payable and value added taxes payable approximate the carrying values due to the relatively short maturities of these instruments. The fair values of the Company’s long-term liabilities, other than contingent consideration, recalculated using current interest rates, would not significantly differ from the carrying values. The fair value of the contingent consideration related to acquisitions and of the Company’s derivatives is measured and recorded at fair value on a recurring basis. Changes in the fair value of contingent consideration resulting from either accretion or changes in discount rates or in the expectations of achieving the performance targets are recorded in selling, general and administrative (SG&A) expenses. 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. In 2010, the Company established a nonqualified deferred compensation program that permits a select group of management employees to defer earnings to a future date on a nonqualified basis. For each plan year, on behalf of the Company, the Company’s Board of Directors (the Board) may, but is not required to, contribute any amount it desires to any participant under this program. The Company’s contribution will be determined by the Board annually. The value of the deferred compensation is recognized based on the fair value of the participants’ accounts. The Company has established a rabbi trust for the purpose of supporting the benefits payable under this program. The assets of the trust are reported in other assets on the Company’s condensed consolidated balance sheets. Deferred compensation of $839 and $540 is included in other accrued expenses and $6,187 and $5,041 is included in other long-term liabilities in the condensed consolidated balance sheets at June 30, 2015 and March 31, 2015, respectively. The inputs used in measuring fair value are prioritized into the following hierarchy: • Level 1: Quoted prices in active markets for identical assets or liabilities. • Level 2: Observable inputs other than quoted prices in active markets for identical assets and liabilities. • Level 3: Unobservable inputs in which little or no market activity exists, therefore requiring the reporting entity to develop its own assumptions. The following table summarizes the financial assets and liabilities that are measured on a recurring basis at fair value: Fair value at June 30, Fair Value Measurement Using 2015 Level 1 Level 2 Level 3 Assets (liabilities) at fair value Nonqualified deferred compensation asset $ 7,026 $ 7,026 $ — $ — Nonqualified deferred compensation liability $ (7,026 ) $ (7,026 ) $ — $ — Designated derivatives assets $ 120 $ — $ 120 $ — Designated derivatives liability $ (2,909 ) $ — $ (2,909 ) $ — Contingent consideration for acquisition of business $ (24,800 ) $ — $ — $ (24,800 ) Fair value at March 31, Fair Value Measurement Using 2015 Level 1 Level 2 Level 3 Assets (liabilities) at fair value Nonqualified deferred compensation asset $ 5,581 $ 5,581 $ — $ — Nonqualified deferred compensation liability $ (5,581 ) $ (5,581 ) $ — $ — Designated derivatives liability $ (487 ) $ — $ (487 ) $ — Contingent consideration for acquisition of business $ (26,000 ) $ — $ — $ (26,000 ) The Level 2 inputs consist of forward spot rates at the end of the reporting period (see Note 8). The fair value of the contingent consideration is based on subjective assumptions. It is reasonably possible the estimated fair value of the contingent consideration could change in the near-term and the effect of the change could be material. Sanuk ® The estimated fair value of the contingent consideration attributable to our Sanuk® (Sanuk) brand acquisition is based on the Sanuk brand's estimated future gross profit in calendar year 2015, using a probability weighted average sales forecast to determine a best estimate of gross profit. The estimated sales forecast includes a compound annual growth rate (CAGR) of 13.7% for the remainder of calendar year 2015. The gross profit forecast for calendar year 2015 is approximately $60,000 , which is then used to apply the contingent consideration percentage in accordance with the applicable agreement (see Note 6). The total estimated contingent consideration is then discounted to the present value with a discount rate of 7.0% . As of June 30, 2015 , the Company had total contingent consideration for the acquisition of the Sanuk brand of approximately $23,300 included in other accrued expenses in the condensed consolidated balance sheets. The Company’s use of different estimates and assumptions could produce different estimates of the value of the contingent consideration. For example, a 5.0% change in the estimated CAGR would change the total liability balance at June 30, 2015 by approximately $2,000 . Hoka One One ® In connection with the Company’s acquisition of the Hoka One One® (Hoka) brand, the purchase price includes contingent consideration with maximum payments of $2,000 , which is based on the Hoka brand’s net sales for calendar years 2013 through 2017, of which approximately $ 500 has been paid. The Company estimates future net sales using a probability weighted average sales forecast to determine a best estimate. Estimated future contingent consideration payments of approximately $1,500 are included in other accrued expenses in the condensed consolidated balance sheet as of June 30, 2015 . The Company’s use of different estimates and assumptions is not expected to have a material impact on the value of the contingent consideration. Refer to Note 6 for further information on the contingent consideration arrangements. The following table presents a reconciliation of the Level 3 measurement (rounded): Balance at March 31, 2015 $ 26,000 Change in fair value (1,200 ) Balance at June 30, 2015 $ 24,800 |
Notes Payable and Long Term Deb
Notes Payable and Long Term Debt | 3 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Notes Payable and Long Term Debt | Notes Payable and Long Term Debt At June 30, 2015 , the Company had outstanding borrowings of $38,000 under the Second Amended and Restated Credit Agreement and outstanding letters of credit of approximately $100 . As a result, the unused balance under the Second Amended and Restated Credit Agreement was approximately $361,900 at June 30, 2015 . At June 30, 2015 , the weighted average interest rate was 1.44% , which is 1.25% above the adjusted London Interbank Offered Rate (LIBOR) for 30 days of 0.19% . Subsequent to June 30, 2015 , the Company borrowed $64,000 , resulting in a total outstanding balance of $102,000 under the Second Amended and Restated Credit Agreement through August 10, 2015. At June 30, 2015 , the Company had approximately $4,900 of outstanding borrowings under the Amended China Credit Facility included in short-term borrowings in the condensed consolidated balance sheets. Interest is based on the People’s Bank of China rate, which was 4.85% at June 30, 2015 . Subsequent to June 30, 2015, the Company repaid approximately $4,900 , resulting in no outstanding borrowings under the Amended China Credit Facility through August 10, 2015. |
Income Taxes
Income Taxes | 3 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company files income tax returns in the US federal jurisdiction and various state, local, and foreign jurisdictions. When tax returns are filed, some positions taken are subject to uncertainty about the merits of the position taken or the amount that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which the Company believes it is more likely than not that the position will be sustained upon examination. Tax positions that meet the more likely than not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement. The portion of the benefits that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying condensed consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. With few exceptions, the Company is no longer subject to US federal, state, local, or non-US income tax examinations by tax authorities for years before 2009. Although the Company believes its tax estimates are reasonable and prepares its tax filings in accordance with all applicable tax laws, the final determination with respect to any tax audits, and any related litigation, could be materially different from the Company’s estimates or from its historical income tax provisions and accruals. The results of an audit or litigation could have a material effect on operating results or cash flows in the periods for which that determination is made. In addition, future period earnings may be adversely impacted by litigation costs, settlements, penalties, or interest assessments. The Company has ongoing income tax examinations in various state and foreign tax jurisdictions. The Company recorded an additional accrual for uncertain tax positions of $357 during the three months ended June 30, 2015 compared to $3,566 , net of federal tax benefit, during the fiscal year ended March 31, 2015 . The accrual relates to tax positions taken in prior years that are open to examination. In addition, accruals for interest and potential penalties of approximately $100 were recorded during the three months ended June 30, 2015 . The Company records accruals relating to interest and potential penalties related to income tax matters in interest expense. It is reasonably possible that approximately $500 of uncertain tax positions will be settled within the next 12 months. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Contractual Obligations. There were no material changes to the operating lease obligations or purchase obligations reported in our Annual Report on Form 10-K, other than those which occurred in the ordinary course of business. Litigation. The Company is currently involved in various legal claims arising in the ordinary course of business. Management does not believe that the disposition of these matters, whether individually or in the aggregate, will have a material effect on the Company’s financial position or results of operations. Contingent Consideration. In July 2011, the Company acquired the Sanuk brand, and the total purchase price included contingent consideration payments. As of June 30, 2015 , the remaining contingent consideration payment, which has no maximum, is 40.0% of the Sanuk brand gross profit in calendar year 2015 and is to be paid within 60 days after December 31, 2015. As of June 30, 2015 and March 31, 2015 , the Company had total contingent consideration for the acquisition of the Sanuk brand of approximately $23,300 and $24,200 , respectively, all of which is included in other accrued expenses in the condensed consolidated balance sheets. Refer to Note 3 for further information on the contingent consideration amounts. In September 2012, the Company acquired Hoka, and the total purchase price included contingent consideration payments with a maximum of $2,000 , which is based on the Hoka brand's net sales for calendar years 2013 through 2017, of which approximately $500 has been paid. As of June 30, 2015 and March 31, 2015 , contingent consideration for the acquisition of the Hoka brand of approximately $1,500 is included in other accrued expenses in the condensed consolidated balance sheets. Refer to Note 3 for further information on the contingent consideration amounts. Future Capital Commitments . As of June 30, 2015 , the Company had approximately $6,000 of material commitments for future capital expenditures primarily related to tenant improvements for retail store space in China and Japan and equipment costs for the new distribution center in Moreno Valley. Indemnification. The Company has agreed to indemnify certain of its licensees, distributors, and promotional partners in connection with claims related to the use of the Company’s intellectual property. The terms of such agreements range up to 5 years initially and generally do not provide for a limitation on the maximum potential future payments. From time to time, the Company also agrees to indemnify its licensees, distributors and promotional partners in connection with claims that the Company’s products infringe the intellectual property rights of third parties. These agreements may or may not be made pursuant to a written contract. In addition, from time to time, the Company also agrees to standard indemnification provisions in commercial agreements in the ordinary course of business. Management believes the likelihood of any payments under any of these arrangements is remote and would be immaterial. This determination was made based on a prior history of insignificant claims and related payments. There are no currently pending claims relating to indemnification matters involving the Company’s intellectual property. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Jun. 30, 2015 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity In May 2006, the Company adopted the 2006 Equity Incentive Plan (2006 Plan), which was amended May 9, 2007. The primary purpose of the 2006 Plan is to encourage ownership in the Company by key personnel, whose long-term service is considered essential to the Company’s continued success. The 2006 Plan provides for 6,000,000 shares of the Company’s common stock that are reserved for issuance to employees, directors, or consultants. The maximum aggregate number of shares that may be issued under the 2006 Plan through the exercise of incentive stock options is 4,500,000 . Pursuant to the Deferred Stock Unit Compensation Plan, a sub plan under the 2006 Plan, a participant may elect to defer settlement of their outstanding unvested awards until such time as elected by the participant. The Company has elected to grant nonvested stock units (NSUs) annually to key personnel. The NSUs granted entitle the employee recipients to receive shares of common stock in the Company upon vesting of the NSUs. The vesting of most NSUs is subject to achievement of certain performance targets, with the remaining NSUs subject only to time restrictions. During the three months ended June 30, 2015 , the Company granted approximately 183,000 performance-based NSUs, as well as approximately 5,000 time-based NSUs, all at a weighted-average grant date fair value of $74.23 per share under the 2006 Plan. The performance-based NSUs will vest in equal one-third installments at the end of each of the three years after the performance goal has been achieved, and the time-based NSUs will vest in equal annual installments over a three year period. The vesting schedule for these awards was established to encourage officers and key employees to remain with the Company for the long-term. As of June 30, 2015 , future unrecognized compensation cost for these NSUs, excluding estimated forfeitures, was approximately $13,900 . As of June 30, 2015 , the Company believed that the achievement of at least the threshold performance objective of the performance-based NSU awards was probable, and therefore recognized compensation expense accordingly for these awards. On a quarterly basis, the Company grants fully-vested shares of its common stock to each of its outside directors. The fair value of such shares is expensed on the date of issuance. In January 2015, the Company approved a new stock repurchase program to repurchase 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 Company’s discretion. Under this program, during the three months ended June 30, 2015 the Company repurchased approximately 625,000 shares, for approximately $45,400 , or an average price of $72.69 . Through June 30, 2015 , the Company had repurchased approximately 1,002,000 shares under this program, for approximately $73,300 , or an average price of $73.21 per share, leaving the remaining approved amount at approximately $126,700 . Between July 1, 2015 and August 7, 2015, the Company repurchased approximately 57,000 shares under the stock repurchase program approved in January 2015 for approximately $4,000 , or an average price of $69.61 per share, leaving the remaining approved amount at approximately $122,700 . The following is a reconciliation of the Company’s retained earnings: Retained Earnings Balance at March 31, 2015 $ 798,370 Net loss (47,327 ) Repurchase of common stock (45,401 ) Balance at June 30, 2015 $ 705,642 |
Foreign Currency Exchange Contr
Foreign Currency Exchange Contracts and Hedging | 3 Months Ended |
Jun. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Foreign Currency Exchange Contracts and Hedging | Foreign Currency Exchange Contracts and Hedging As of June 30, 2015 , the Company had foreign currency forward contracts designated as cash-flow hedges with notional amounts totaling approximately $77,000 , held by five counterparties, and are expected to mature over the next 9 months . At March 31, 2015 , the Company had foreign currency forward contracts designated as cash-flow hedges with notional amounts totaling approximately $46,000 , held by four counterparties. During the three months ended June 30, 2015, the Company entered into, and settled, non-designated derivative contracts with total notional amounts of approximately $42,000 . The nonperformance risk of the Company and the counterparties did not have a material impact on the fair value of the derivatives. During the three months ended June 30, 2015 , the ineffective portion relating to these hedges was immaterial and the hedges remained effective as of June 30, 2015 . The effective portion of the gain or loss on the derivative is reported in other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. As of June 30, 2015 , the total amount in accumulated other comprehensive loss (see Note 9) was expected to be reclassified into income within the next 12 months. The following table summarizes the effect of foreign exchange contracts designated as cash flow hedging relationships: Three Months Ended 2015 2014 Derivatives in designated cash flow hedging relationships Foreign exchange contracts Foreign exchange contracts Amount of loss recognized in OCI on derivative (effective portion) $(2,353) $(823) Location of gain (loss) reclassified from accumulated OCI into income (effective portion) Net Sales Net Sales Amount of gain (loss) reclassified from accumulated OCI into income (effective portion) $— $(13) Location of amount excluded from effectiveness testing SG&A expenses SG&A expenses Amount of gain (loss) excluded from effectiveness testing $52 $(35) The following table summarizes the effect of foreign exchange contracts not designated as hedging instruments: Three Months Ended 2015 2014 Derivatives not designated as hedging instruments Foreign exchange contracts Foreign exchange contracts Location of gain (loss) recognized in income on derivatives SG&A expenses SG&A expenses Amount of gain (loss) recognized in income on derivatives $865 $(81) Subsequent to June 30, 2015 , the Company entered into non-designated derivative contracts with notional amounts totaling approximately $71,000 , held by six counterparties, and are expected to mature over the next 4 months . |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Accumulated balances of the components within accumulated other comprehensive loss were as follows: June 30, March 31, Unrealized loss on foreign currency hedging, net of tax $ (1,772 ) $ (309 ) Cumulative foreign currency translation adjustment, net of tax (17,393 ) (20,159 ) Accumulated other comprehensive loss $ (19,165 ) $ (20,468 ) |
Net Income per Share
Net Income per Share | 3 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Net Income per Share | Net Loss per Share Basic net loss per share represents net loss divided by the weighted-average number of common shares outstanding for the period. Diluted net loss per share represents net loss divided by the weighted-average number of common shares outstanding, including the dilutive impact of potential issuances of common stock. The reconciliations of basic to diluted weighted-average common shares outstanding were as follows: Three Months Ended 2015 2014 Weighted-average shares used in basic computation 33,117,000 34,626,000 Dilutive effect of stock-based awards* — — Weighted-average shares used for diluted computation 33,117,000 34,626,000 *Excluded NSUs 487,000 377,000 *Excluded restricted stock units (RSUs) 487,000 729,000 *Excluded outside director restricted stock awards (RSAs) 8,000 7,000 *Excluded stock appreciation rights (SARs) 700,000 730,000 *For the three months ended June 30, 2015 and 2014 , the Company excluded all NSUs, RSUs, RSAs and SARs from the diluted net loss per share computation because they were antidilutive due to the net loss during the period. |
Business Segments, Concentratio
Business Segments, Concentration of Business, and Credit Risk and Significant Customers | 3 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Business Segments, Concentration of Business, and Credit Risk and Significant Customers | Business Segments, Concentration of Business, Credit Risk and Significant Customers The Company’s reportable segments include the strategic business units for the worldwide wholesale operations of the UGG brand, Teva brand, Sanuk brand, and other brands, and its Direct-to-Consumer (DTC) business. The Company’s other brands include Ahnu®, Hoka One One® (Hoka), Koolaburra®, MOZO®, and TSUBO®. The income (loss) from operations for each of the segments includes only those costs that are specifically related to each segment, which consist primarily of cost of sales, costs for research and development, design, selling and marketing, depreciation, amortization, and the costs of employees and their respective expenses that are directly related to each segment. The unallocated corporate overhead costs include: costs of the distribution centers, certain executive and stock compensation, accounting and finance, legal, information technology, human resources, and facilities costs, among others. See Note 1 “General” and Item 2 of this Quarterly Report “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further disclosure and discussion of the change in segment reporting and the recent strategic initiatives related to the MOZO and TSUBO brands. Business segment information is summarized as follows: Three Months Ended 2015 2014 Net sales to external customers: UGG wholesale $ 66,422 $ 74,193 Teva wholesale 37,066 35,665 Sanuk wholesale 28,513 32,329 Other brands wholesale 21,385 11,825 Direct-to-Consumer 60,419 57,457 $ 213,805 $ 211,469 Income (loss) from operations: UGG wholesale $ (3,380 ) $ 2,693 Teva wholesale 5,874 4,782 Sanuk wholesale 5,348 6,905 Other brands wholesale (4,000 ) (4,011 ) Direct-to-Consumer (15,205 ) (15,042 ) Unallocated overhead costs (52,345 ) (45,809 ) $ (63,708 ) $ (50,482 ) Inter-segment sales from the Company’s wholesale segments to the Company’s DTC segment are at the Company’s cost, and there is no inter-segment profit on these inter-segment sales. Income (loss) from operations of the wholesale segments does not include any inter-segment gross profit from sales to the DTC segment. Business segment asset information is summarized as follows: June 30, March 31, Total assets for reportable segments: UGG wholesale $ 334,392 $ 194,720 Teva wholesale 63,805 77,423 Sanuk wholesale 208,035 224,974 Other brands wholesale 59,098 53,634 Direct-to-Consumer 141,877 147,423 $ 807,207 $ 698,174 The assets allocable to each 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 segments. Unallocated assets are the assets not specifically related to the segments and include cash and cash equivalents, deferred tax assets, and various other assets shared by the Company’s segments. Reconciliations of total assets from reportable segments to the condensed consolidated balance sheets are as follows: June 30, March 31, Total assets for reportable segments $ 807,207 $ 698,174 Unallocated cash and cash equivalents 168,744 225,143 Unallocated deferred tax assets 29,805 29,083 Other unallocated corporate assets 247,742 217,533 Consolidated total assets $ 1,253,498 $ 1,169,933 The Company does not consider international operations a separate segment, as management reviews such operations in the aggregate with the aforementioned segments. Long-lived assets, which consist of property and equipment, in the US and all other countries combined were as follows: June 30, March 31, US $ 205,721 $ 196,513 All other countries* 33,660 35,804 Total $ 239,381 $ 232,317 * No other country’s long-lived assets comprised more than 10% of total long-lived assets as of June 30, 2015 and March 31, 2015 . 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. International sales were 37.1% and 37.5% of the Company’s total net sales for the three months ended June 30, 2015 and 2014 , respectively. For the three months ended June 30, 2015 and 2014 , no single foreign country comprised more than 10% of total net sales. Management performs regular evaluations concerning the ability of its customers to satisfy their obligations and records a provision for doubtful accounts based upon these evaluations. No single customer accounted for more than 10% of net sales for either the three months ended June 30, 2015 or 2014 . As of June 30, 2015 and March 31, 2015 , the Company had one customer representing 13.2 % and 11.8% of net trade accounts receivable, respectively. As of June 30, 2015 and March 31, 2015 , the Company had a second customer representing 10.6% and 11.0% of net trade accounts receivable, respectively. The Company’s production is concentrated at a limited number of independent contractor 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, which is sourced primarily from Australia and the United Kingdom (UK). The Company began using a new raw material, UGGpure TM , wool woven into a durable backing, in some of its UGG products in 2013 and which the Company currently purchases from one supplier. The other materials used by the Company in production are sourced primarily in Asia. The Company’s operations are subject to the customary risks of doing business abroad, including, but not limited to, currency 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. Further, the price of sheepskin is impacted by demand, industry, and competitors. A portion of the Company’s cash and cash equivalents are 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. As of June 30, 2015 , the Company had experienced no loss or lack of access to cash in its operating accounts. 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, market, and interest rate risks. Investment risk has been and may further be exacerbated by US mortgage defaults, credit and liquidity issues, and sovereign debt concerns in Europe, which have affected various sectors of the financial markets. As of June 30, 2015 , the Company had experienced no loss or lack of access to cash in its invested cash and cash equivalents. The Company’s cash and cash equivalents are as follows: June 30, March 31, Money market fund accounts $ 110,895 $ 127,900 Cash 57,849 97,243 Total cash and cash equivalents $ 168,744 $ 225,143 |
General (Policies)
General (Policies) | 3 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements and, in the opinion of management, reflect all adjustments necessary for a fair presentation for each of the 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. Deckers Outdoor Corporation (also referred to as 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. The Company’s business is seasonal, with the highest percentage of UGG® brand net sales occurring in the quarters ending September 30 and December 31 and the highest percentage of Teva® and Sanuk® brand net sales occurring in the quarters ending March 31 and June 30 of each year. The other brands do not have a significant seasonal impact on the Company. In July 2014, the Company acquired its UGG brand distributor that sold to retailers in Germany and now operates a wholesale business in Germany through the newly acquired subsidiary. The acquisition included certain intangible and tangible assets and the assumption of liabilities. The purchase price of the acquisition was not material to the Company’s condensed consolidated financial statements. In April 2015, the Company acquired inventory and certain intangible assets, including the trade name related to the Koolaburra® brand, a line of casual comfort footwear using sheepskin and other plush materials. The purchase price of the acquisition was not material to the Company’s condensed consolidated financial statements. Subsequent to June 30, 2015, the Company sold certain tangible and intangible assets including inventory and the trade name related to the MOZO® brand, a footwear brand crafted for culinary professionals. In connection with the sale, the Company had approximately $1,500 of inventory that represents assets held for sale as of June 30, 2015. The impact on the condensed consolidated financial statements is not material. The Company sells its brands through quality domestic retailers and international distributors and retailers, as well as directly to end-user consumers through the Direct-to-Consumer reporting segment. Independent third parties manufacture all of the Company's products. As contemplated by the Securities and Exchange Commission (SEC) under Rule 10-01 of Regulation S-X, the accompanying condensed consolidated financial statements and related footnotes have been condensed and do not contain certain information that will be included in the Company’s annual consolidated financial statements and footnotes thereto. For further information, refer to the consolidated financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2015 , filed with the SEC on June 1, 2015 . |
Change in Segment Reporting | Change in Segment Reporting During the first quarter of FY 2016, the Company changed its reportable segments to aggregate the previously separated E-Commerce and retail store operating segments into one Direct-to-Consumer (DTC) reporting segment. This change was driven by the Company’s Omni-Channel strategy for both sales channels to focus on a seamless and intertwined approach to serve our customers. Additionally, the Company changed its organizational structure to align with these Omni-Channel initiatives and aligned the information that our Chief Operating Decision Maker (CODM), the Chief Executive Officer, reviews for purposes of allocating resources and assessing performance. The E-Commerce and retail operating segments of the DTC reporting segment have similar financial performance, products and services, types or classes of customers, distribution characteristics, and sources of manufactured products. After the reorganization, the Company has five reportable segments including the strategic business units for the worldwide wholesale operations of the UGG brand, Teva brand, Sanuk brand, and other brands, and our DTC business. All prior period amounts have been adjusted retrospectively to reflect these operating segment changes. These changes had no impact on consolidated net sales or operating income. See Note 11, "Business Segments, Concentration of Business, Credit Risk and Significant Customers" and Item 2 of this Quarterly Report, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for further disclosure and discussion. |
Use of Estimates | Use of Estimates The preparation of the Company’s condensed consolidated financial statements in accordance with United States generally accepted accounting principles (US GAAP) requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. Management bases these estimates and assumptions upon historical experience, existing and known circumstances, authoritative accounting pronouncements and other factors that management believes to be reasonable. Significant areas requiring the use of management estimates relate to inventory write-downs, accounts receivable allowances, returns liabilities, stock compensation, performance based compensation, impairment assessments, depreciation and amortization, income tax liabilities, uncertain tax positions and income tax receivable, fair value of financial instruments, and fair values of acquired intangibles, assets and liabilities, including estimated contingent consideration payments. Actual results could differ materially from these estimates. |
Recent Accounting Pronouncement | Recent Accounting Pronouncements On May 28, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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. The ASU will replace most existing revenue recognition guidance in US GAAP when it becomes effective. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its condensed consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. On July 9, 2015, the FASB agreed to a one year deferral of the effective date of this ASU, as well as early application, which will be effective for the Company on April 1, 2017. In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires an entity to present debt issuance costs on the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. Prior to the issuance of the standard, debt issuance costs were required to be presented in the balance sheet as a deferred charge (i.e., an asset). At the June 18, 2015 Emerging Issues Task Force meeting, the SEC observer announced that the SEC would not object if debt issuance costs related to revolving debt arrangements continue to be presented as deferred charges. This ASU is effective for the Company on April 1, 2016, with early adoption permitted. The adoption of this ASU will not have a material impact on the Company’s condensed consolidated financial statements or related disclosures. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, which changed the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value. Current US GAAP requires, at each financial statement date, that entities measure inventory at the lower of cost or market, most commonly the current replacement cost. This ASU is effective for the Company on April 1, 2017, with early adoption permitted. The Company is evaluating the effect that ASU 2015-11 will have on its condensed consolidated financial statements and related disclosures, but believes it will not have a material impact. |
Goodwill and Other Intangible18
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill and other intangible assets | The Company’s goodwill and other intangible assets are summarized as follows: Goodwill Other Intangible Assets, Net Balance at March 31, 2015 $ 127,934 $ 87,743 Purchase of intangible assets — 3,800 Amortization expense — (1,938 ) Changes in foreign currency exchange rates — 536 Balance at June 30, 2015 $ 127,934 $ 90,141 |
Schedule of total goodwill by segment | The Company’s goodwill by segment is as follows: June 30, March 31, UGG brand $ 6,101 $ 6,101 Sanuk brand 113,944 113,944 Other brands 7,889 7,889 Total $ 127,934 $ 127,934 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Schedule of Company's financial assets and liabilities measured on a recurring basis at fair value | The following table summarizes the financial assets and liabilities that are measured on a recurring basis at fair value: Fair value at June 30, Fair Value Measurement Using 2015 Level 1 Level 2 Level 3 Assets (liabilities) at fair value Nonqualified deferred compensation asset $ 7,026 $ 7,026 $ — $ — Nonqualified deferred compensation liability $ (7,026 ) $ (7,026 ) $ — $ — Designated derivatives assets $ 120 $ — $ 120 $ — Designated derivatives liability $ (2,909 ) $ — $ (2,909 ) $ — Contingent consideration for acquisition of business $ (24,800 ) $ — $ — $ (24,800 ) Fair value at March 31, Fair Value Measurement Using 2015 Level 1 Level 2 Level 3 Assets (liabilities) at fair value Nonqualified deferred compensation asset $ 5,581 $ 5,581 $ — $ — Nonqualified deferred compensation liability $ (5,581 ) $ (5,581 ) $ — $ — Designated derivatives liability $ (487 ) $ — $ (487 ) $ — Contingent consideration for acquisition of business $ (26,000 ) $ — $ — $ (26,000 ) |
Schedule of reconciliation of beginning and ending amounts related to the fair value for contingent consideration for acquisition of business, categorized as Level 3 | The following table presents a reconciliation of the Level 3 measurement (rounded): Balance at March 31, 2015 $ 26,000 Change in fair value (1,200 ) Balance at June 30, 2015 $ 24,800 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Retained Earnings Adjustments | The following is a reconciliation of the Company’s retained earnings: Retained Earnings Balance at March 31, 2015 $ 798,370 Net loss (47,327 ) Repurchase of common stock (45,401 ) Balance at June 30, 2015 $ 705,642 |
Foreign Currency Exchange Con21
Foreign Currency Exchange Contracts and Hedging (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of gains and losses related to derivatives designated as hedging instruments | The following table summarizes the effect of foreign exchange contracts designated as cash flow hedging relationships: Three Months Ended 2015 2014 Derivatives in designated cash flow hedging relationships Foreign exchange contracts Foreign exchange contracts Amount of loss recognized in OCI on derivative (effective portion) $(2,353) $(823) Location of gain (loss) reclassified from accumulated OCI into income (effective portion) Net Sales Net Sales Amount of gain (loss) reclassified from accumulated OCI into income (effective portion) $— $(13) Location of amount excluded from effectiveness testing SG&A expenses SG&A expenses Amount of gain (loss) excluded from effectiveness testing $52 $(35) The following table summarizes the effect of foreign exchange contracts not designated as hedging instruments: Three Months Ended 2015 2014 Derivatives not designated as hedging instruments Foreign exchange contracts Foreign exchange contracts Location of gain (loss) recognized in income on derivatives SG&A expenses SG&A expenses Amount of gain (loss) recognized in income on derivatives $865 $(81) |
Accumulated Other Comprehensi22
Accumulated Other Comprehensive Loss (AOCL) (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Components of accumulated other comprehensive loss | Accumulated balances of the components within accumulated other comprehensive loss were as follows: June 30, March 31, Unrealized loss on foreign currency hedging, net of tax $ (1,772 ) $ (309 ) Cumulative foreign currency translation adjustment, net of tax (17,393 ) (20,159 ) Accumulated other comprehensive loss $ (19,165 ) $ (20,468 ) |
Net Income per Share (Tables)
Net Income per Share (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliations of basic to diluted weighted-average common shares outstanding | The reconciliations of basic to diluted weighted-average common shares outstanding were as follows: Three Months Ended 2015 2014 Weighted-average shares used in basic computation 33,117,000 34,626,000 Dilutive effect of stock-based awards* — — Weighted-average shares used for diluted computation 33,117,000 34,626,000 *Excluded NSUs 487,000 377,000 *Excluded restricted stock units (RSUs) 487,000 729,000 *Excluded outside director restricted stock awards (RSAs) 8,000 7,000 *Excluded stock appreciation rights (SARs) 700,000 730,000 *For the three months ended June 30, 2015 and 2014 , the Company excluded all NSUs, RSUs, RSAs and SARs from the diluted net loss per share computation because they were antidilutive due to the net loss during the period. |
Business Segments, Concentrat24
Business Segments, Concentration of Business, and Credit Risk and Significant Customers (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Schedule of business segments information | Business segment information is summarized as follows: Three Months Ended 2015 2014 Net sales to external customers: UGG wholesale $ 66,422 $ 74,193 Teva wholesale 37,066 35,665 Sanuk wholesale 28,513 32,329 Other brands wholesale 21,385 11,825 Direct-to-Consumer 60,419 57,457 $ 213,805 $ 211,469 Income (loss) from operations: UGG wholesale $ (3,380 ) $ 2,693 Teva wholesale 5,874 4,782 Sanuk wholesale 5,348 6,905 Other brands wholesale (4,000 ) (4,011 ) Direct-to-Consumer (15,205 ) (15,042 ) Unallocated overhead costs (52,345 ) (45,809 ) $ (63,708 ) $ (50,482 ) Business segment asset information is summarized as follows: June 30, March 31, Total assets for reportable segments: UGG wholesale $ 334,392 $ 194,720 Teva wholesale 63,805 77,423 Sanuk wholesale 208,035 224,974 Other brands wholesale 59,098 53,634 Direct-to-Consumer 141,877 147,423 $ 807,207 $ 698,174 |
Schedule of reconciliations of total assets from reportable segments to the condensed consolidated balance sheets | Reconciliations of total assets from reportable segments to the condensed consolidated balance sheets are as follows: June 30, March 31, Total assets for reportable segments $ 807,207 $ 698,174 Unallocated cash and cash equivalents 168,744 225,143 Unallocated deferred tax assets 29,805 29,083 Other unallocated corporate assets 247,742 217,533 Consolidated total assets $ 1,253,498 $ 1,169,933 |
Schedule of long-lived assets, which consist of property and equipment, by major country | Long-lived assets, which consist of property and equipment, in the US and all other countries combined were as follows: June 30, March 31, US $ 205,721 $ 196,513 All other countries* 33,660 35,804 Total $ 239,381 $ 232,317 * No other country’s long-lived assets comprised more than 10% of total long-lived assets as of June 30, 2015 and March 31, 2015 . |
Schedule of the Company's cash and cash equivalents | The Company’s cash and cash equivalents are as follows: June 30, March 31, Money market fund accounts $ 110,895 $ 127,900 Cash 57,849 97,243 Total cash and cash equivalents $ 168,744 $ 225,143 |
Goodwill and Other Intangible25
Goodwill and Other Intangible Assets (Change in Balance) (Details) $ in Thousands | 3 Months Ended |
Jun. 30, 2015USD ($) | |
Changes in goodwill | |
Goodwill, net, balance at the beginning of the period | $ 127,934 |
Goodwill, net, balance at the end of the period | 127,934 |
Other intangible assets, net: | |
Other intangible assets, net, balance at beginning of the period | 87,743 |
Purchase of intangible assets | 3,800 |
Amortization expense | (1,938) |
Changes in foreign currency exchange rates | 536 |
Other intangible assets, net, balance at end of the period | $ 90,141 |
Goodwill and Other Intangible26
Goodwill and Other Intangible Assets (Segment Information) (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Mar. 31, 2015 |
Goodwill | ||
Goodwill | $ 127,934 | $ 127,934 |
UGG brand | ||
Goodwill | ||
Goodwill | 6,101 | 6,101 |
Sanuk brand | ||
Goodwill | ||
Goodwill | 113,944 | 113,944 |
Other brands | ||
Goodwill | ||
Goodwill | $ 7,889 | $ 7,889 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) | 3 Months Ended | ||
Jun. 30, 2015 | Mar. 31, 2015 | Sep. 30, 2012 | |
Contingent Consideration Arrangement | |||
Reconciliation of beginning and ending amounts related to the fair value for contingent consideration for acquisition of business, categorized as Level 3 | |||
Balance at the beginning of the period | $ 26,000,000 | ||
Change in fair value | (1,200,000) | ||
Balance at the end of the period | 24,800,000 | ||
Sanuk | |||
Contingent consideration | |||
Business Combination, Contingent Consideration, Liability | $ 23,300,000 | $ 24,200,000 | |
Sanuk | Contingent Consideration Arrangement | |||
Contingent consideration | |||
Compound annual growth rate (CAGR) (as a percent) | 13.70% | ||
Gross profit range | $ 60,000,000 | ||
Discount rate (as percent) | 7.00% | ||
Percentage point change to compound annual growth rate | 5.00% | ||
Effect of a five-percentage-point change to total liability | $ 2,000,000 | ||
Hoka | Contingent Consideration Arrangement | |||
Contingent consideration | |||
Business Combination, Contingent Consideration, Liability | 1,500,000 | ||
Maximum contingent consideration payments | $ 2,000,000 | ||
Contingent consideration arrangements amount paid | 500,000 | ||
Accrued Expenses | |||
Reconciliation of fair value for acquisition of business, categorized as Level 3 of valuation hierarchy | |||
Deferred compensation, current | 839,000 | 540,000 | |
Accrued Expenses | Hoka | Contingent Consideration Arrangement | |||
Contingent consideration | |||
Business Combination, Contingent Consideration, Liability | 1,500,000 | ||
Other Noncurrent Liabilities | |||
Reconciliation of fair value for acquisition of business, categorized as Level 3 of valuation hierarchy | |||
Deferred compensation liability, noncurrent | $ 6,187,000 | $ 5,041,000 |
Fair Value Measurements (Levels
Fair Value Measurements (Levels 1-3) (Details) - Recurring basis - USD ($) $ in Thousands | Jun. 30, 2015 | Mar. 31, 2015 |
Fair Value | ||
Assets (Liabilities) at fair value | ||
Nonqualified deferred compensation asset | $ 7,026 | $ 5,581 |
Nonqualified deferred compensation liability | (7,026) | (5,581) |
Designated derivatives assets | 120 | |
Designated derivatives liability | (2,909) | (487) |
Contingent consideration for acquisition of business | (24,800) | (26,000) |
Level 1 | ||
Assets (Liabilities) at fair value | ||
Nonqualified deferred compensation asset | 7,026 | 5,581 |
Nonqualified deferred compensation liability | (7,026) | (5,581) |
Designated derivatives assets | 0 | |
Designated derivatives liability | 0 | 0 |
Contingent consideration for acquisition of business | 0 | 0 |
Level 2 | ||
Assets (Liabilities) at fair value | ||
Nonqualified deferred compensation asset | 0 | 0 |
Nonqualified deferred compensation liability | 0 | 0 |
Designated derivatives assets | 120 | |
Designated derivatives liability | (2,909) | (487) |
Contingent consideration for acquisition of business | 0 | 0 |
Level 3 | ||
Assets (Liabilities) at fair value | ||
Nonqualified deferred compensation asset | 0 | 0 |
Nonqualified deferred compensation liability | 0 | 0 |
Designated derivatives assets | 0 | |
Designated derivatives liability | 0 | 0 |
Contingent consideration for acquisition of business | $ (24,800) | $ (26,000) |
Credit Agreement (Narrative) (D
Credit Agreement (Narrative) (Details) - Revolving Credit Facility - Line of Credit - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended |
Aug. 10, 2015 | Jun. 30, 2015 | |
Second Amended and Restated Credit Agreement | ||
Debt Instrument [Line Items] | ||
Long-term Line of Credit | $ 38,000 | |
Letters of Credit Outstanding, Amount | 100 | |
Remaining Borrowing Capacity | $ 361,900 | |
Weighted average interest rate | 1.44% | |
Basis spread on variable rate | 1.25% | |
Debt Instrument Period of Initial Variable Rate | 30 days | |
Adjusted LIBOR interest rate | 0.19% | |
Amended China Credit Agreement | ||
Debt Instrument [Line Items] | ||
Long-term Line of Credit | $ 4,900 | |
Debt Instrument, Interest Rate, Effective Percentage | 4.85% | |
Subsequent Event | Second Amended and Restated Credit Agreement | ||
Debt Instrument [Line Items] | ||
Long-term Line of Credit | $ 102,000 | |
Proceeds from Lines of Credit | 64,000 | |
Subsequent Event | Amended China Credit Agreement | ||
Debt Instrument [Line Items] | ||
Repayments of Lines of Credit | $ 4,900 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2015 | Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Income Tax Rate Reconciliation Adjustment for Uncertainty in Income Taxes | $ 357 | $ 3,566 |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense | 100 | |
Decrease in Unrecognized Tax Benefits is Reasonably Possible | $ 500 |
Commitments and Contingencies (
Commitments and Contingencies (Narrative) (Details) | 3 Months Ended | ||
Jun. 30, 2015USD ($)claim | Mar. 31, 2015USD ($) | Sep. 30, 2012USD ($) | |
Commitments and Contingencies | |||
Business Acquisition Purchase Price, Additional Participation Payment Year Three, Terms | 60 days | ||
Maximum indemnity period of claims for intellectual property | 5 years | ||
Indemnification | |||
Commitments and Contingencies | |||
Number of pending claims | claim | 0 | ||
Future capital expenditures | |||
Commitments and Contingencies | |||
Material commitments | $ 6,000,000 | ||
Sanuk | |||
Commitments and Contingencies | |||
Business Combination, Contingent Consideration, Liability | $ 23,300,000 | $ 24,200,000 | |
Gross profit performance criteria | Sanuk | |||
Commitments and Contingencies | |||
Contingent consideration performance percentage applied to gross profit | 40.00% | ||
Contingent Consideration Arrangement | Hoka | |||
Commitments and Contingencies | |||
Business Combination, Contingent Consideration, Liability | $ 1,500,000 | ||
Maximum contingent consideration payments | $ 2,000,000 | ||
Contingent consideration arrangements amount paid | $ 500,000 |
Stockholders' Equity (Narrative
Stockholders' Equity (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |
Aug. 07, 2015 | Jun. 30, 2015 | Jun. 30, 2015 | Jan. 30, 2015 | |
2006 Equity Incentive Plan (2006 Plan) | ||||
Stockholders' equity | ||||
Common stock reserved for issuance (in shares) | 6,000,000 | 6,000,000 | ||
Maximum number of shares that may be issued through the exercise of incentive stock options | 4,500,000 | 4,500,000 | ||
Compensation cost not yet recognized | $ 13,900,000 | $ 13,900,000 | ||
2006 Equity Incentive Plan (2006 Plan) | Nonvested stock units issued (NSUs) | ||||
Stockholders' equity | ||||
Number of shares granted | 183,000 | |||
NSUs granted that will vest at the end of each of the three years after the performance goals are achieved (as a percent) | 33.33% | |||
2006 Equity Incentive Plan (2006 Plan) | Time-based equity award | ||||
Stockholders' equity | ||||
Number of shares granted | 5,000 | |||
Weighted average grant date fair value | $ 74.23 | |||
Award vesting period of the grants | 3 years | |||
2015 Stock Repurchase Program | ||||
Stockholders' equity | ||||
Maximum stock repurchase amount approved by Board of Directors | $ 200,000,000 | |||
Treasury stock, shares, acquired | 625,000 | |||
Treasury stock, value, acquired | $ 45,400,000 | |||
Treasury stock acquired, average cost per share | $ 72.69 | $ 73.21 | ||
Treasury stock, number of shares held | 1,002,000 | 1,002,000 | ||
Treasury stock, value | $ 73,300,000 | $ 73,300,000 | ||
Remaining stock repurchase amount approved by Board of Directors | $ 126,700,000 | $ 126,700,000 | ||
Subsequent Event | 2015 Stock Repurchase Program | ||||
Stockholders' equity | ||||
Treasury stock, shares, acquired | 57,000 | |||
Treasury stock, value, acquired | $ 4,000,000 | |||
Treasury stock acquired, average cost per share | $ 69.61 | |||
Remaining stock repurchase amount approved by Board of Directors | $ 122,700,000 |
Stockholders' Equity (Change in
Stockholders' Equity (Change in Retained Earnings) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Balance, beginning of period | $ 798,370 | |
Net loss | (47,327) | $ (37,062) |
Repurchase of common stock | (45,401) | |
Balance, end of period | $ 705,642 |
Foreign Currency Exchange Con34
Foreign Currency Exchange Contracts and Hedging (Narrative) (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Aug. 10, 2015USD ($)counterparty | Jun. 30, 2015USD ($)counterparty | Jun. 30, 2014USD ($) | Mar. 31, 2015USD ($)counterparty | |
Foreign currency exchange contracts and hedging | ||||
Number of counterparties in derivative contracts | counterparty | 5 | 4 | ||
Remaining maturity of foreign currency derivatives | 9 months | |||
Derivatives designated as cash flow hedges | Foreign currency exchange contracts | ||||
Summary of the effect of derivative instruments on the consolidated statements of income | ||||
Amount of loss recognized in OCI on derivative (effective portion) | $ (2,353) | $ (823) | ||
Amount of gain (loss) reclassified from accumulated OCI into income (effective portion) | 0 | (13) | ||
Amount of gain (loss) excluded from effectiveness testing | 52 | (35) | ||
Designated as Hedging Instrument | Foreign currency exchange contracts | ||||
Foreign currency exchange contracts and hedging | ||||
Derivative notional amount | 77,000 | $ 46,000 | ||
Non-designated derivatives | Foreign currency exchange contracts | ||||
Foreign currency exchange contracts and hedging | ||||
Derivative notional amount | 42,000 | |||
Summary of the effect of derivative instruments on the consolidated statements of income | ||||
Amount of gain (loss) recognized in income on derivatives | $ 865 | $ (81) | ||
Subsequent Event | Non-designated derivatives | Foreign currency exchange contracts | ||||
Foreign currency exchange contracts and hedging | ||||
Derivative notional amount | $ 71,000 | |||
Number of counterparties in derivative contracts | counterparty | 6 | |||
Remaining maturity of foreign currency derivatives | 4 months |
Accumulated Other Comprehensi35
Accumulated Other Comprehensive Loss (AOCL) (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Mar. 31, 2015 |
Accumulated other comprehensive loss | ||
Unrealized loss on foreign currency hedging, net of tax | $ (1,772) | $ (309) |
Cumulative foreign currency translation adjustment, net of tax | (17,393) | (20,159) |
Accumulated other comprehensive loss | $ (19,165) | $ (20,468) |
Net Income per Share (Additiona
Net Income per Share (Additional Information) (Details) - shares | 3 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | ||
Reconciliations of basic to diluted weighted-average common shares outstanding | |||
Weighted-average shares used in basic computation | 33,117,000 | 34,626,000 | |
Dilutive effect of stock-based awards | [1] | 0 | 0 |
Weighted-average shares used for diluted computation | 33,117,000 | 34,626,000 | |
Excluded NSUs | |||
Options excluded in the computation of diluted income per share | |||
Options excluded in the computation of diluted income per share (in shares) | [1] | 487,000 | 377,000 |
Excluded restricted stock units (RSUs) | |||
Options excluded in the computation of diluted income per share | |||
Options excluded in the computation of diluted income per share (in shares) | [1] | 487,000 | 729,000 |
Excluded outside director restricted stock awards (RSAs) | |||
Options excluded in the computation of diluted income per share | |||
Options excluded in the computation of diluted income per share (in shares) | [1] | 8,000 | 7,000 |
Excluded stock appreciation rights (SARs) | |||
Options excluded in the computation of diluted income per share | |||
Options excluded in the computation of diluted income per share (in shares) | [1] | 700,000 | 730,000 |
[1] | . |
Business Segments, Concentrat37
Business Segments, Concentration of Business, and Credit Risk and Significant Customers (Wholesale Operations) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Mar. 31, 2015 | |
Business segment information | |||
Net sales to external customers | $ 213,805 | $ 211,469 | |
Income (loss) from operations | (63,708) | (50,482) | |
Total assets for reportable segments | 1,253,498 | $ 1,169,933 | |
Reportable segments | |||
Business segment information | |||
Total assets for reportable segments | 807,207 | 698,174 | |
UGG wholesale | |||
Business segment information | |||
Net sales to external customers | 66,422 | 74,193 | |
Income (loss) from operations | (3,380) | 2,693 | |
Total assets for reportable segments | 334,392 | 194,720 | |
Teva wholesale | |||
Business segment information | |||
Net sales to external customers | 37,066 | 35,665 | |
Income (loss) from operations | 5,874 | 4,782 | |
Total assets for reportable segments | 63,805 | 77,423 | |
Sanuk wholesale | |||
Business segment information | |||
Net sales to external customers | 28,513 | 32,329 | |
Income (loss) from operations | 5,348 | 6,905 | |
Total assets for reportable segments | 208,035 | 224,974 | |
Other wholesale | |||
Business segment information | |||
Net sales to external customers | 21,385 | 11,825 | |
Income (loss) from operations | (4,000) | (4,011) | |
Total assets for reportable segments | 59,098 | 53,634 | |
Direct-to-Consumer | |||
Business segment information | |||
Net sales to external customers | 60,419 | 57,457 | |
Income (loss) from operations | (15,205) | (15,042) | |
Total assets for reportable segments | 141,877 | $ 147,423 | |
Unallocated to Segments | |||
Business segment information | |||
Income (loss) from operations | $ (52,345) | $ (45,809) |
Business Segments, Concentrat38
Business Segments, Concentration of Business, and Credit Risk and Significant Customers (Assets) (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2014 | Mar. 31, 2014 |
Reconciliations of total assets from reportable segments to the condensed consolidated balance sheets | ||||
Total assets for reportable segments | $ 1,253,498 | $ 1,169,933 | ||
Unallocated cash and cash equivalents | 168,744 | 225,143 | $ 158,226 | $ 245,088 |
Consolidated total assets | 1,253,498 | 1,169,933 | ||
Reportable segments | ||||
Reconciliations of total assets from reportable segments to the condensed consolidated balance sheets | ||||
Total assets for reportable segments | 807,207 | 698,174 | ||
Consolidated total assets | 807,207 | 698,174 | ||
Unallocated to Segments | ||||
Reconciliations of total assets from reportable segments to the condensed consolidated balance sheets | ||||
Unallocated cash and cash equivalents | 168,744 | 225,143 | ||
Unallocated deferred tax assets | 29,805 | 29,083 | ||
Other unallocated corporate assets | $ 247,742 | $ 217,533 |
Business Segments, Concentrat39
Business Segments, Concentration of Business, and Credit Risk and Significant Customers (Long-lived Assets) (Details) $ in Thousands | 3 Months Ended | ||||
Jun. 30, 2015USD ($)customertannery | Mar. 31, 2015USD ($) | Jun. 30, 2014USD ($) | Mar. 31, 2014USD ($) | ||
Business segment information | |||||
Property and equipment, by major country | $ 239,381 | $ 232,317 | |||
Number of Customers Considered Concentration Risk | customer | 1 | ||||
Number of Tanneries | tannery | 2 | ||||
Cash and cash equivalents | |||||
Money market fund accounts | $ 110,895 | 127,900 | |||
Cash | 57,849 | 97,243 | |||
Total cash and cash equivalents | $ 168,744 | $ 225,143 | $ 158,226 | $ 245,088 | |
Long-lived Assets | |||||
Business segment information | |||||
Concentration risk (as a percent) | 10.00% | ||||
International Net Sales | |||||
Business segment information | |||||
Concentration risk (as a percent) | 37.10% | 37.50% | |||
Concentration risk benchmark (as a percent) | 10.00% | ||||
Net Trade Accounts Receivable | |||||
Business segment information | |||||
Concentration risk benchmark (as a percent) | 10.00% | ||||
Net Trade Accounts Receivable | Customer One | |||||
Business segment information | |||||
Concentration risk (as a percent) | 13.20% | 11.80% | 10.60% | ||
Net Trade Accounts Receivable | Customer Two | |||||
Business segment information | |||||
Concentration risk (as a percent) | 11.00% | ||||
US | |||||
Business segment information | |||||
Property and equipment, by major country | $ 205,721 | $ 196,513 | |||
All other countries | |||||
Business segment information | |||||
Property and equipment, by major country | [1] | $ 33,660 | $ 35,804 | ||
[1] | No other country’s long-lived assets comprised more than 10% of total long-lived assets as of June 30, 2015 and March 31, 2015. |