# Deckers Outdoor Corp: Form 10-Q for the period ended Jun 30, 2018

- Company: [Deckers Outdoor Corp](/companies/deck.md) (CIK 910521)
- Form: 10-Q
- Filed: 2018-08-09
- Accepted by EDGAR: Aug 9, 2018, 14:53 ET
- Period: 2018-06-30
- Accession: 0000910521-18-000029
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/910521/000091052118000029/deck630201810-q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/910521/000091052118000029/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2018-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2018-04-01 to 2018-06-30 | $250.6m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Gross profit | 3 months, 2018-04-01 to 2018-06-30 | $115.0m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2018-04-01 to 2018-06-30 | $154.4m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2018-04-01 to 2018-06-30 | −$39.4m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2018-04-01 to 2018-06-30 | −$8.6m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2018-04-01 to 2018-06-30 | −$30.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2018-04-01 to 2018-06-30 | −$1.00 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2018-04-01 to 2018-06-30 | −$1.00 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2018-04-01 to 2018-06-30 | 30,423,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2018-04-01 to 2018-06-30 | $8.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2018-04-01 to 2018-06-30 | $7.3m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 3 months, 2018-04-01 to 2018-06-30 | $10.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2018-06-30 | $417.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2018-06-30 | $1.04bn | us-gaap:AssetsCurrent |
| Total assets | at 2018-06-30 | $1.39bn | us-gaap:Assets |
| Current liabilities | at 2018-06-30 | $354.6m | us-gaap:LiabilitiesCurrent |
| Short-term borrowings | at 2018-06-30 | $585.0k | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2018-06-30 | $902.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 48,341 characters.

The following discussion of our financial condition and results of operations should be read together with our condensed consolidated financial statements included in Part I, Item 1 within this Quarterly Report and the audited consolidated financial statements in our 2018 Annual Report. This section contains forward-looking statements that are based on our current expectations and reflect our plans, estimates, and anticipated future financial performance. These statements involve numerous risks and uncertainties. Our actual results may differ materially from those expressed or implied by these forward-looking statements as a result of many factors, including those set forth in the sections entitled “Risk Factors” in Part II, Item 1A, and “Cautionary Note Regarding Forward-Looking Statements” within this Quarterly Report.

### Overview

We are a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories developed for both everyday casual lifestyle use and high performance activities. We market our products primarily under our proprietary UGG, Koolaburra, HOKA, Teva, and Sanuk brands. We sell our products through domestic and international retailers, international distributors, and directly to our global consumers through our DTC business, which is comprised of our retail stores and E-Commerce websites. Independent third party contractors manufacture all of our products.

### Recent Developments

*Restructuring Plan.* In February 2016, we announced the implementation of a multi-year restructuring plan which is designed to realign our brands, optimize our retail store fleet, and consolidate our management and operations. As part of this restructuring plan, we realigned our brands across two groups: Fashion Lifestyle and Performance Lifestyle. The Fashion Lifestyle group includes the UGG and Koolaburra brands. The Performance Lifestyle group includes the HOKA, Teva, and Sanuk brands. In general, the intent of our restructuring plan is to streamline brand operations, reduce overhead costs, create operating efficiencies, and improve collaboration across brands.

We believe our retail stores remain an important component of our Omni-Channel strategy; however, in light of the recent and continuing changes in the retail environment, we also believe it is prudent to further optimize our global brick and mortar footprint, and expect to continue to do so. Accordingly, we anticipate generating future cost savings associated with changes in our retail presence as we optimize our retail store fleet performance, including through closing stores or converting stores to partner retail stores in our wholesale channel. We continue to drive and are evolving our retail store and fleet optimization strategies in line with our long-term objectives, and we are targeting a worldwide retail store count of approximately 125 owned stores. Remaining store closures are expected to occur as retail store leases expire to avoid incurring potentially significant lease termination costs, as well as through conversions to partner retail stores.

Our decision to open or close store locations will be evaluated based on the operating results of each store and our retail store and fleet optimization strategies, which may ultimately impact our global retail store count. Further, the actual number of owned stores as of any particular date is subject to uncertainty and is based on numerous factors, including, but not limited to, the actual and projected costs associated with closing or converting stores, the actual and estimated results of operations of our overall DTC business and continuing changes in consumer buying behaviors and the retail environment.

In connection with our restructuring plan, we have closed 38 retail stores as of June 30, 2018, including conversions to partner retail stores, and consolidated our brand operations and corporate headquarters. As of June 30, 2018, we have incurred cumulative restructuring charges of $55,324, which includes charges within the following categories:

|  | Cumulative Restructuring Charges |
| --- | ---: |
| Lease terminations | $17,987 |
| Retail store fixed asset impairment | 9,372 |
| Severance costs | 9,776 |
| Software and office fixed asset impairment | 6,987 |
| Other\* | 11,202 |
| **Total restructuring charges** | **$55,324** |

\*Includes costs related to office consolidations and termination of contracts and services.

During the three months ended June 30, 2018, we incurred no restructuring charges compared to $1,518 during the three months ended June 30, 2017, which were recorded in SG&A expenses as unallocated overhead costs in the condensed consolidated statements of comprehensive loss. We currently do not anticipate incurring material restructuring charges in future periods, although optimization of our Company-owned retail stores remains a focus.

As a result of the implementation of our restructuring plan, we expect to realize annualized SG&A expense savings in the condensed consolidated statements of comprehensive loss totaling approximately $85,000 by March 31, 2020. The annualized SG&A expense savings are expected to be primarily derived from reductions in (1) operating costs related to the termination of retail store leases and the conversion of certain foreign-owned retail stores to partner retail stores, (2) depreciation and amortization, and (3) overhead costs, including payroll and related benefits, and rent and occupancy costs, among others.

As of June 30, 2018, we have realized approximately $57,000 of annualized SG&A expense savings out of the $85,000 of total anticipated annualized savings from our restructuring plan. The cumulative annualized SG&A expense savings by applicable reportable operating segment, realized as of June 30, 2018, are as follows:

|  | Cumulative Annualized SG&A Expense Savings |
| --- | ---: |
| UGG brand wholesale | $1,000 |
| Sanuk brand wholesale | 1,000 |
| Other brands wholesale | 1,000 |
| Direct-to-Consumer | 37,000 |
| Unallocated overhead costs | 17,000 |
| **Total** | **$57,000** |

In order to achieve our projection of a total of $85,000 of annualized SG&A expense savings by March 31, 2020, we expect to realize approximately $28,000 of additional annualized SG&A expense savings from our restructuring plan, which we anticipate will primarily be derived from further reductions in retail-related costs, including those described above. These additional savings are expected to primarily impact the DTC reportable operating segment and to be fully realized by March 31, 2020. However, both the amount and timing of the actual savings we may achieve as a result of our restructuring plan are uncertain and are based on numerous factors, including, but not limited to, the timing of lease terminations and store closures, the actual costs associated with closing or converting stores, and the actual and estimated results of operations of each store.

Refer to Note 1, "General," under the section entitled "Restructuring" of our condensed consolidated financial statements in Part I, Item 1 within this Quarterly Report for further information.

*Operating Profit Improvement Plan.* In addition to the approximately $85,000 of annualized SG&A expense savings expected from the implementation of our restructuring plan as discussed above, we also expect our other transformation initiatives, announced in February 2017, will result in approximately $65,000 of additional annualized cost of sales improvements and SG&A expense savings, for a total anticipated gross annualized cost savings of approximately $150,000. Cost of sales improvements are expected to result from reducing product development cycle times, optimizing material yields, consolidating our factory base, and continuing to move product manufacturing outside of China. Further annualized SG&A expense savings are expected to result from lower corporate infrastructure costs, process improvement efficiencies, and reduced unallocated indirect spend.

The annualized cost of sales improvements are expected to impact each of the reportable operating segments in an amount that is generally proportionate to the net sales generated by that reportable operating segment, as a percentage of our total net sales. As of June 30, 2018, we have achieved approximately 90% of the expected annualized cost of sales improvements. The remaining additional annualized costs of sales improvements and SG&A expense savings are expected to be realized by March 31, 2020.

We expect the approximately $150,000 of total anticipated gross annualized cost savings will result in approximately $100,000 of net annualized operating profit improvement by March 31, 2020, after reinvestment in marketing and other growth-driving initiatives. However, both the amount and timing of the actual operating profit improvements we may achieve as a result of these transformation initiatives are uncertain and are based on numerous factors, including, but not limited to, the timing and success of certain production and inventory control improvements, the costs associated with improving and transitioning manufacturing operations, and the net impact of certain costs savings initiatives on our operating profit. Actual SG&A expense savings realized during the three months ended June 30, 2018 were offset by increases in variable employee, marketing and warehousing costs, driven by higher sales levels in the current period, as well as foreign currency-related losses.

*Stock Repurchase Programs.* In October 2017, our Board of Directors authorized a new $335,000 stock repurchase program. Combined with the remaining approved amount from the previously-announced stock repurchase program of $65,294, we had the authority to repurchase up to an aggregate of $400,294 of our common stock at that time. As of June 30, 2018, the aggregate remaining approved amount is $240,607. Our repurchase programs do not obligate us to acquire any particular amount of common stock and may be suspended at any time at our discretion.

*Cash Repatriation*. As a result of the enacted Tax Reform Act on December 22, 2017, our accumulated foreign earnings as of December 31, 2017 were subject to a one-time mandatory deemed repatriation tax in transition to a territorial tax regime. In response to the new legislation, we repatriated $250,000 of cash and cash equivalents during the fourth quarter of the fiscal year ended March 31, 2018. For further details on the impacts of the Tax Reform Act during the fiscal year ended March 31, 2018, refer to our 2018 Annual Report. We continue to evaluate our cash repatriation strategy and we anticipate repatriating current and future unremitted earnings of non-US subsidiaries, to the extent they will be subject to US tax, as long as such cash is not required to fund ongoing foreign operations.

### Trends Impacting our Overall Business

Our business and the industry in which we operate continue to be impacted by several important trends:

- Sales of our products are highly seasonal and are sensitive to weather conditions, which are unpredictable and beyond our control. To address seasonality, we are continuing to drive our strategy of introducing counter-seasonal products through category expansion, including the UGG brand’s spring and summer products, and the active lifestyle products of the HOKA brand. Even though we continue to expand our product lines with the goal of creating more year-round styles for our brands to drive sales and offset the impact of weather conditions, 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 our DTC business and our wholesale customers, and is transforming the way we approach our digital marketing efforts.

- In light of the shift in consumer shopping behavior, we are seeking to optimize our brick and mortar retail footprint. In pursuing retail store closures, we have been impacted by costs related to lease terminations, retail store fixed asset impairments, severance costs, and other closure costs. However, we currently do not anticipate incurring material incremental retail store closure costs, primarily because remaining store closures are expected to occur as retail store leases expire to avoid incurring potentially significant lease termination costs, as well as through conversions to partner retail stores.
- We expect our E-Commerce business will continue to be a driver of long-term growth, although we expect the year-over-year growth rate will decline over time as the size of our E-Commerce business increases.
- Beginning in fall 2018, we will be implementing an allocation and segmentation distribution strategy for the UGG brand's Classics franchise in the US wholesale channel.
- 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 to address the evolving behavior of retail consumers and to manage their own product-related inventories.
- Foreign currency exchange rate fluctuations have the potential to cause variations in our operating results. 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 future purchasing patterns of our customers, as well as our operating results.

### Segment Overview

We perform an annual assessment of the appropriateness of our reportable operating segments during the third quarter of our fiscal year. However, due to known circumstances arising during the three months ended June 30, 2018, management performed this assessment during this period. These circumstances included quantitative factors, such as the actual and forecasted sales and operating income of the wholesale operations of the HOKA brand compared to our other reportable operating segments, as well as qualitative factors such as the ongoing growth of, and our increased investment in, the wholesale operations of the HOKA brand. As a result, we added a sixth reportable operating segment to separately report the wholesale operations of the HOKA brand. The wholesale operations of the HOKA brand are no longer presented under the Other brands reportable operating segment. However, the DTC operations of the HOKA brand continue to be reported under the DTC reportable operating segment. Prior periods presented were reclassified to reflect this change.

Our six reportable operating segments now include the worldwide wholesale operations of the UGG brand, HOKA brand, Teva brand, Sanuk brand, and Other brands, as well as DTC. Information reported to the CODM, who is our Principal Executive Officer, is organized into these reportable operating segments and is consistent with how the CODM evaluates our performance and allocates resources.

***UGG Brand.*** The UGG brand is one of the most iconic and recognized brands in our industry which highlights our successful track record of building niche brands into lifestyle market leaders. With loyal consumers around the world, the UGG brand has proven to be a highly resilient line of premium footwear, apparel, and accessories with expanded product offerings and a growing global audience that attracts women, men, and children.

We believe demand for UGG brand products will continue to be driven by the following:

- High consumer brand loyalty due to consistently delivering quality and luxuriously comfortable footwear, apparel, and accessories.
- Diversification of our product lines, including women's spring and summer, men's, and lifestyle offerings. Our strategy of product diversification aims to decrease our reliance on sheepskin and mitigate the impacts of seasonality.
- Continued enhancement of our Omni-Channel and digital marketing capabilities to enable us to better engage existing and prospective consumers and expose them to our brands.

***HOKA Brand***. The HOKA brand is a line of running footwear and apparel that offers enhanced cushioning and inherent stability with minimal weight, designed for runners of all capacities. The HOKA brand is quickly becoming a top brand in the domestic run specialty channel and has received strong word-of-mouth marketing that has fueled both domestic and international sales growth.

***Teva Brand***. The Teva brand pioneered the sport sandal category in 1984, is a leader within the sport sandal and modern outdoor lifestyle categories by fueling the expression of freedom.

***Sanuk Brand***. The Sanuk brand originated in Southern California surf culture and has emerged into a brand with a presence in the relaxed casual shoe and sandal categories. The Sanuk brand’s use of unexpected materials and unconventional constructions, combined with its fun and playful branding, are key elements of the brand's identity.

***Other Brands***. Primarily consist of the Koolaburra brand, a casual footwear fashion line using sheepskin and other plush materials, sold primarily through our wholesale channel and intended to complement our UGG brand offering, as well as other discontinued brands in the prior period presented.

***Direct-to-Consumer***. Our DTC business is comprised of our retail stores and E-Commerce websites. As a result of our evolving Omni-Channel strategy, we believe our retail stores and websites are intertwined and interdependent. We believe many consumers interact with both our brick and mortar stores and our websites before making purchasing decisions.

Our retail store fleet is made up of UGG brand concept stores and UGG brand outlet stores. Through our outlet stores, we sell some of our discontinued styles from prior seasons, full price in-line products, as well as products made specifically for the outlet stores. At June 30, 2018, we had a total of 160 retail stores worldwide, which includes 93 concept stores and 67 outlet stores. During the three months ended June 30, 2018, we opened one and closed six concept stores, including conversions of Company-owned concept stores to partner retail stores. Management continues to target an overall reduction in our worldwide retail store count, as discussed above. Included in the total count of retail stores worldwide are concession stores, defined as concept stores that are operated by us within a department or other store, which we lease from the store owner by paying a percentage of concession store sales. In certain international markets, such as China, we rely on partner retail stores, which are branded stores that are wholly-owned and operated by third parties and not included in the total count of worldwide Company-owned retail stores. When a partner retail store is opened or a store is converted into a partner retail store, the store becomes wholly-owned and operated by third parties and related sales are recorded in our UGG brand or Sanuk brand wholesale reportable operating segments.

Our E-Commerce business provides us with an opportunity to communicate a consistent brand message to consumers that is in line with our brands' promises, drives awareness of key brand initiatives, offers targeted information to specific consumer demographics, and drives consumers to our retail stores. As of June 30, 2018, we operated our E-Commerce business through an aggregate of 22 Company-owned websites in nine different countries.

### Use of Non-GAAP Measures

In order to provide a framework for assessing how our underlying businesses performed during the relevant periods, excluding the effect of foreign currency exchange rate fluctuations, throughout this Quarterly Report we provide certain financial information on a “constant currency basis,” which is in addition to the financial measures calculated and presented in accordance with US GAAP. In order to calculate our constant currency information, we calculate the current period financial information using the foreign currency exchange rates that were in effect during the previous comparable period, excluding the effects of foreign currency exchange rate hedges and re-measurements. We believe evaluating certain financial and operating measures on a constant currency basis is important as it facilitates comparison of our current financial performance to our historical financial performance, excluding the impact of foreign currency exchange rate fluctuations that are not indicative of our core operating results and are largely outside of our control.

Constant currency measures should not be considered in isolation as an alternative to US dollar measures that reflect current period exchange rates or to other financial measures presented in accordance with US GAAP.

We report comparable DTC sales on a constant currency basis for combined retail stores that were open throughout the current and prior reporting period, as well as components of our E-Commerce business. There may be variations in the way that we calculate comparable DTC sales as compared to some of our competitors and other retailers. As a result, information included in this Quarterly Report regarding our comparable DTC sales may not be directly comparable to similar data made available by our competitors or other retailers.

### Results of Operations

### Three Months Ended June 30, 2018 Compared to Three Months Ended June 30, 2017

The following table summarizes our results of operations:

|  | Three Months Ended June 30, 2018 Amount% |  | 2017 Amount% |  | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | $250,594 | 100.0% | $209,717 | 100.0% | $40,877 | 19.5% |
| Cost of sales | 135,629 | 54.1 | 119,092 | 56.8 | (16,537) | (13.9) |
| Gross profit | 114,965 | 45.9 | 90,625 | 43.2 | 24,340 | 26.9 |
| Selling, general and administrative expenses | 154,379 | 61.6 | 146,881 | 70.0 | (7,498) | (5.1) |
| Loss from operations | (39,414) | (15.7) | (56,256) | (26.8) | 16,842 | 29.9 |
| Other (income) expense, net | (363) | (0.1) | 331 | 0.2 | 694 | 209.7 |
| Loss before income taxes | (39,051) | (15.6) | (56,587) | (27.0) | 17,536 | 31.0 |
| Income tax benefit | (8,644) | (3.5) | (14,466) | (6.9) | (5,822) | (40.2) |
| Net loss | $(30,407) | (12.1)% | $(42,121) | (20.1)% | $11,714 | 27.8% |

27

***Net Sales.*** The following table summarizes our net sales by location and our net sales by brand and channel:

| Net sales by location | Three Months Ended June 30, 2018 Amount | 2017 Amount | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| US | $141,707 | $120,714 | $20,993 | 17.4% |
| International | 108,887 | 89,003 | 19,884 | 22.3 |
| **Total** | **$250,594** | **$209,717** | **$40,877** | **19.5%** |
| **Net sales by brand and channel** |  |  |  |  |
| UGG brand |  |  |  |  |
| Wholesale | $81,353 | $63,273 | $18,080 | 28.6% |
| Direct-to-Consumer | 55,118 | 51,459 | 3,659 | 7.1 |
| Total | 136,471 | 114,732 | 21,739 | 18.9 |
| HOKA brand |  |  |  |  |
| Wholesale | 39,954 | 26,538 | 13,416 | 50.6 |
| Direct-to-Consumer | 7,050 | 4,170 | 2,880 | 69.1 |
| Total | 47,004 | 30,708 | 16,296 | 53.1 |
| Teva brand |  |  |  |  |
| Wholesale | 33,196 | 32,123 | 1,073 | 3.3 |
| Direct-to-Consumer | 6,805 | 5,539 | 1,266 | 22.9 |
| Total | 40,001 | 37,662 | 2,339 | 6.2 |
| Sanuk brand |  |  |  |  |
| Wholesale | 20,503 | 22,220 | (1,717) | (7.7) |
| Direct-to-Consumer | 3,935 | 3,955 | (20) | (0.5) |
| Total | 24,438 | 26,175 | (1,737) | (6.6) |
| Other brands |  |  |  |  |
| Wholesale | 2,637 | 427 | 2,210 | 517.6 |
| Direct-to-Consumer | 43 | 13 | 30 | 230.8 |
| Total | 2,680 | 440 | 2,240 | 509.1 |
| **Total** | **$250,594** | **$209,717** | **$40,877** | **19.5%** |
| Total Wholesale | $177,643 | $144,581 | $33,062 | 22.9% |
| Total Direct-to-Consumer | 72,951 | 65,136 | 7,815 | 12.0 |
| **Total** | **$250,594** | **$209,717** | **$40,877** | **19.5%** |

Consolidated net sales increased largely due to higher UGG and HOKA brand total sales. During the three months ended June 30, 2018, we experienced an increase in total volume of pairs sold of 11.8% to 5,700 compared to 5,100 during the prior period. On a constant currency basis, net sales increased 17.6% during the three months ended June 30, 2018 compared to the prior period.

Wholesale net sales of our UGG brand increased due to a higher volume of pairs sold driven primarily by higher reorders and sell-through of our spring and summer product lines compared to the prior period. On a constant currency basis, wholesale net sales of our UGG brand increased 26.7% during the three months ended June 30, 2018 compared to the prior period.

Wholesale net sales of our HOKA brand increased due to a higher volume of pairs sold driven by its continued global growth, as well as sales generated by new product launches compared to the prior period.

Wholesale net sales of our Teva brand increased primarily due to a higher weighted average selling price per pair (WASPP) driven by changes in product mix and fewer closeout sales.

Wholesale net sales of our Sanuk brand decreased due to a lower volume of pairs sold primarily driven by lower performance in the US surf specialty channel and lower international sales in connection with our strategic focus on US markets for this brand.

Wholesale net sales of our Other brands increased due to a higher volume of pairs sold and an increase in WASPP.

DTC net sales increased 12.0% compared to the prior period, largely driven by growth in our E-Commerce business primarily due to a higher volume of pairs sold for the UGG, HOKA, and Teva brands. On a constant currency basis, DTC net sales increased 9.1% during the three months ended June 30, 2018 compared to the prior period.

Comparable DTC net sales for the 13 weeks ended July 1, 2018 increased 6.2% on a constant currency basis compared to the same period during fiscal year 2018. The increase in comparable DTC net sales was largely due to growth in our E-Commerce business for the UGG and HOKA brands.

International sales, which are included in the reportable operating segment sales presented above, increased by 22.3% compared to the prior period. International sales represented 43.5% and 42.4% of total net sales for the three months ended June 30, 2018 and 2017, respectively. The increase in international sales was primarily due to higher sales for the UGG and HOKA brands in Asia, Europe, and Latin America. On a constant currency basis, international sales increased 17.5% during the three months ended June 30, 2018 compared to the prior period.

***Gross Profit.*** Gross margin was 45.9% for the three months ended June 30, 2018, compared to 43.2% for the three months ended June 30, 2017, primarily driven by favorable foreign currency exchange rate fluctuations, improved full-price selling compared to the prior period, and lower input costs as we execute our supply chain initiatives as part of our operating profit improvement plan.

***Selling, General and Administrative Expenses.*** The net increase in SG&A expenses during the three months ended June 30, 2018, compared to the prior period, was primarily as a result of:

- increased compensation costs of approximately $5,400, primarily due to higher long-term incentive compensation, costs related to our in-house converted sales team, as well as a higher global headcount;
- increased advertising, promotion, and other operating expenses of approximately $3,600, primarily due to higher international variable sales-related expenses;
- increased foreign currency-related losses of approximately $2,600 driven by unfavorable foreign currency exchange rates for European and Asian currencies;
- increased warehouse-related expenses of approximately $1,800, primarily due to costs associated with a new North American third-party logistic provider, and higher warehouse costs in Europe in the current period which are variable based upon the increase in regional sales;
- decreased professional and consulting service costs of approximately $2,700, primarily due to lower restructuring charges related to corporate reorganization costs and lower strategic alternative and proxy-related legal costs;
- decreased bad debt expense of approximately $2,500, primarily due to improved customer collections; and
- decreased impairment and depreciation charges of approximately $1,100, primarily due to lower retail store related impairments and closure costs.

***Loss from Operations.*** The following table summarizes income (loss) from operations by reportable operating segment:

|  | Three Months Ended June 30, 2018 Amount | 2017 Amount | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| UGG brand wholesale | $5,869 | $(1,021) | $6,890 | 674.8% |
| HOKA brand wholesale | 5,728 | 1,259 | 4,469 | 355.0 |
| Teva brand wholesale | 8,064 | 4,943 | 3,121 | 63.1 |
| Sanuk brand wholesale | 4,200 | 4,417 | (217) | (4.9) |
| Other brands wholesale | 350 | (233) | 583 | 250.2 |
| Direct-to-Consumer | (7,424) | (12,102) | 4,678 | 38.7 |
| Unallocated overhead costs | (56,201) | (53,519) | (2,682) | (5.0) |
| **Total** | **$(39,414)** | **$(56,256)** | **$16,842** | **29.9%** |

The decrease in total loss from operations during the three months ended June 30, 2018, compared to the prior period, was primarily driven by higher sales at higher gross margins, partially offset by higher overall SG&A expenses primarily due to higher variable selling and marketing costs, unfavorable foreign currency exchange rate fluctuations, and warehouse-related expenses.

The increase in income from operations of UGG brand wholesale was due to higher sales at higher gross margins, partially offset by higher variable selling and marketing costs.

The increase in income from operations of HOKA brand wholesale was due to higher sales at higher gross margins, partially offset by higher variable selling and marketing costs.

The increase in income from operations of Teva brand wholesale was due to higher sales at higher gross margins.

The slight decrease in income from operations of Sanuk brand wholesale was due to lower sales, partially offset by higher gross margins.

The slight increase in income from operations of Other brands wholesale was due to higher sales at higher gross margins, offset by higher variable selling and marketing costs.

The decrease in loss from operations of DTC was primarily due to higher sales at higher gross margins, partially offset by higher variable selling costs.

The increase in unallocated overhead costs was primarily due to unfavorable foreign currency exchange rate fluctuations for European currencies, higher long-term incentive compensation, as well as higher variable warehouse-related expenses driven by higher sales.

***Other (Income) Expense, Net.*** The decrease in other (income) expense, net, during the three months ended June 30, 2018, compared to the prior period, was primarily due to an increase in interest income driven by higher average cash and cash equivalent balances, as well as an increase in interest rates for our liquid investments.

***Income Taxes.*** Income tax benefit and our effective income tax rate are as follows:

|  | Three Months Ended June 30, 2018 | 2017 |
| --- | ---: | ---: |
| Income tax benefit | $(8,644) | $(14,466) |
| Effective income tax rate | 22.1% | 25.6% |

The change in the effective income tax rate was due to the impacts of the enactment of the Tax Reform Act on December 22, 2017, as well as a change in the jurisdictional mix of worldwide income before income taxes forecasted for the fiscal year ending March 31, 2019. Although the Tax Reform Act reduced the US federal income tax rate from 35.0% to 21.0%, our foreign earnings are now subject to US taxation as they are considered global intangible low- taxed income (GILTI). The federal and state taxes on GILTI exceeded the benefit of the US federal tax rate reduction. For further details on the impacts of the Tax Reform Act, refer to Note 5, "Income Taxes," of our condensed consolidated financial statements in Part I, Item 1 within this Quarterly Report.

Foreign loss before income taxes was $3,104 and $3,598 and worldwide loss before income taxes was $39,051 and $56,587 during the three months ended June 30, 2018 and 2017, respectively. The increase in foreign loss before income taxes, as a percentage of worldwide loss before income taxes, was primarily due to higher foreign sales and gross margin improvement, offset by higher foreign operating expenses relative to worldwide operating expenses compared to the prior period.

For the three months ended June 30, 2018 and 2017, we did not generate significant pre-tax earnings from any countries which do not impose a corporate income tax. As of June 30, 2018, we had approximately $206,431 of cash and cash equivalents outside the US, a portion of which may be subject to additional foreign withholding taxes if it were to be repatriated. We have not recognized the one-time mandatory deemed repatriation tax with respect to a small portion of our unremitted earnings of non-US subsidiaries, as a result of which such earnings are currently expected to be reinvested outside of the US indefinitely. Such earnings would become taxable upon repatriation by means of the remittance of taxable dividends or upon the sale or liquidation of these subsidiaries.

We expect our foreign income or loss before income taxes, as well as our effective tax rate, will continue to fluctuate from period to period based on several factors, including the outcome of our retail store and fleet optimization, the impact of our cost savings initiatives, the impact of our global product sourcing organization, our actual financial and operating results from sales generated in domestic and foreign markets, and changes in domestic and foreign tax laws (or in the application or interpretation of those laws). In particular, we believe the continuing evolution and expansion of our brands, our continuing strategy of enhancing product diversification, and the expected growth from our international DTC business, will result in increases in foreign income or loss before income taxes both in absolute terms and as a percentage of worldwide income or loss before income taxes. In addition, we believe our effective tax rate will continue to be impacted by our actual foreign income or loss before income taxes relative to our actual worldwide income or loss before income taxes.

***Net Loss.*** Net loss decreased during the three months ended June 30, 2018, compared to the prior period, primarily due to higher sales at higher gross margins, partially offset by higher SG&A expenses. Net loss per share decreased due to lower net loss combined with lower weighted average common shares outstanding compared to the prior period.

***Other Comprehensive Loss.*** Other comprehensive loss decreased during the three months ended June 30, 2018, compared to the prior period, primarily due to higher foreign currency exchange rate hedge gains, offset by higher foreign currency translation losses driven by changes in our net asset position and European and Asian foreign currency exchange rates.

### Liquidity

We finance our working capital and operating needs using a combination of our cash and cash equivalents balances, cash provided by ongoing operating activities, and available borrowings under our revolving credit facilities, as needed. Our working capital requirements begin when we purchase raw materials and inventories and continue until we ultimately collect the resulting trade accounts receivables. Given the seasonality of our business, our working capital requirements fluctuate significantly throughout the fiscal year. The seasonality of our business also requires us to utilize available cash to build inventory levels during certain quarters in our fiscal year to support higher selling seasons. We believe our cash and cash equivalents balances, cash provided by ongoing operating activities, and available borrowings under our revolving credit facilities will provide sufficient liquidity to enable us to meet our working capital requirements for at least the next 12 months.

We repatriated $250,000 of cash and cash equivalents during the fiscal year ended March 31, 2018. As of June 30, 2018, we had approximately $206,431 of cash and cash equivalents outside the US, a portion of which may be subject to additional foreign withholding taxes if it were to be repatriated. We anticipate repatriating current and future unremitted earnings of non-US subsidiaries, to the extent they will be subject to US tax, as long as such cash is not required to fund ongoing foreign operations.

We continue to evaluate our capital allocation strategy and consider further opportunities to put global cash to use in a way that will profitably grow our business and drive stockholder value, including by repurchasing our stock. Our Board of Directors has authorized stock repurchase programs pursuant to which we have the authority to repurchase up to an aggregate of $400,294 of our common stock. As of June 30, 2018, the aggregate remaining approved amount under these programs is $240,607. Our repurchase programs do not obligate us to acquire any particular amount of common stock and may be suspended at any time at our discretion.

Our cash repatriation strategy, and by extension, our liquidity, may be impacted by a number of additional considerations, which include clarifications of or changes to the Tax Reform Act, including the issuance of final regulations, timing and amount of any additional tax liabilities relating to the Tax Reform Act, additional accounting or regulatory guidance, our ongoing analysis, which may result in changes to various assumptions underlying the estimates, and our actual earnings for current and future fiscal periods. Our liquidity may be further impacted by additional factors, including our operating results, brand perception, unexpected weather conditions, our ability to respond to changes in consumer preferences, collect our receivables in a timely manner and effectively manage our inventories. Furthermore, we may require additional cash resources due to changing business conditions, economic recession, changes in share repurchase strategy, or other future developments, including any investments or acquisitions we may decide to pursue, although we do not have any present commitments with respect to any acquisitions.

If our existing sources of liquidity are insufficient to satisfy our working capital requirements, we may seek to borrow under our existing borrowing arrangements, seek new borrowing arrangements, or sell additional debt or equity securities. The sale of convertible debt or equity securities could result in additional dilution to our stockholders, and equity securities may have rights or preferences that are superior to those of our existing stockholders. The incurrence of additional indebtedness would result in additional debt service obligations that could result in operating and financial covenants that would restrict our operations and could further encumber our assets. In addition, there can be no assurance that any additional financing will be available on acceptable terms, if at all.

### Capital Resources

***Domestic Credit Facility.*** Our Domestic Credit Facility is a five-year, $400,000 secured revolving credit facility which matures on November 13, 2019. As of June 30, 2018 and through August 3, 2018, we had no outstanding balance, outstanding letters of credit of $549, and available borrowings of $399,451 under our Domestic Credit Facility.

***China Credit Facility.*** Our China Credit Facility is an uncommitted revolving line of credit of up to CNY 300,000, or $45,313, and is payable on demand and subject to annual review with a defined aggregate period of borrowing of up to 12 months. As of June 30, 2018 and through August 3, 2018, we had no outstanding balance and available borrowings of $45,313 under our China Credit Facility.

***Japan Credit Facility.*** Our Japan Credit Facility is an uncommitted revolving line of credit of up to JPY 5,500,000, or $49,669, for a maximum term of six months for each draw on the facility. Our Japan Credit Facility renews annually, and is guaranteed by us. We have renewed our Japan Credit Facility through January 31, 2019 under the terms of the original agreement. As of June 30, 2018 and through August 3, 2018, we had no outstanding balance and available borrowings of $49,669 under our Japan Credit Facility.

***Mortgage.*** As of June 30, 2018, we had an outstanding principal balance under the mortgage secured by our corporate headquarters property of $31,943. The loan will mature and require a balloon payment in the amount of $23,700, in addition to any then-outstanding balance, on July 1, 2029.

***Debt Covenants.*** As of June 30, 2018, we were in compliance with all debt covenants under our various revolving credit facilities and our mortgage, discussed above.

Refer to Note 6, "Revolving Credit Facilities and Mortgage Payable," of our condensed consolidated financial statements in Part I, Item 1 within this Quarterly Report for further information on our revolving credit facilities and our mortgage.

### Cash Flows

The following table summarizes our cash flows:

|  | Three Months Ended June 30, 2018 Amount | 2017 Amount | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Net cash provided by (used in) operating activities | $8,073 | $(7,348) | $15,421 | 209.9% |
| Net cash used in investing activities | (7,239) | (3,835) | (3,404) | (88.8) |
| Net cash used in financing activities | (10,638) | (1,026) | (9,612) | (936.8) |

***Operating Activities.*** Our primary source of liquidity is net cash provided by operating activities, which is primarily driven by our net income or loss, other cash receipts and expenditure adjustments and changes in working capital.

The increase in net cash provided by operating activities during the three months ended June 30, 2018, compared to the prior period, was primarily due to a $6,074 net positive change in operating assets and liabilities, as well as the net change in net loss after non-cash adjustments of $9,347. Operating assets and liabilities provided net positive operating cash flows primarily due to an increase in trade payables and accrued expenses of $43,065, driven by the timing of payments and lower accounts payable turnover which is part of our supply chain strategy, offset by higher trade accounts receivable of $34,793 driven by higher sales.

Wholesale channel trade accounts receivable turnover increased to 6.6 times during the three months ended June 30, 2018, compared to 6.5 times during the prior period, due to higher wholesale sales, partially offset by the impact of higher average accounts receivable balances. Inventory turnover increased to 2.3 times during the three months ended June 30, 2018, compared to 2.2 times during the prior period, due to lower average inventory levels and increased costs of sales.

***Investing Activities.*** The increase in net cash used in investing activities during the three months ended June 30, 2018, compared to the prior period, was due to higher capital expenditures for property and equipment primarily driven by higher expenditures on warehouse build-out costs associated with the expansion of our warehouse and distribution center located in Moreno Valley, California, and showroom build-out costs, partially offset by lower capital expenditures for retail store build-out costs and IT infrastructure improvement and hardware costs.

For the remainder of the fiscal year ending March 31, 2019, we estimate capital expenditures will range from approximately $28,000 to $33,000. We anticipate these expenditures will primarily relate to the build-out of our offices and global warehouse and distribution facilities, and IT infrastructure and system improvement costs, as well as fixtures and upgrade costs for certain retail stores in Europe and Asia. However, the actual amount of our future capital expenditures may differ significantly from this estimate depending on the timing of facility build-outs, as well as unforeseen needs to replace existing assets, and the timing of other anticipated and unanticipated expenditures.

***Financing Activities.*** The increase in net cash used in financing activities during the three months ended June 30, 2018, compared to the prior period, was primarily due to stock repurchases.

Refer to Note 8, "Stockholders' Equity," of our condensed consolidated financial statements in Part I, Item 1 within this Quarterly Report for further information on our stock repurchase programs.

### Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

### Contractual Obligations

During the three months ended June 30, 2018, there were no material changes to the obligations reported in our 2018 Annual Report with respect to (1) operating lease commitments, (2) purchase obligations for product or sheepskin, future capital expenditures, commitments under service contracts or requirements to pay promotional expenses, or (3) legal proceedings and claims, other than those that occurred in the ordinary course of business.

### Critical Accounting Policies and Estimates

Management must make certain estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements, based upon historical experience, existing and known circumstances, authoritative accounting pronouncements and other factors that management believes to be reasonable, but actual results could differ materially from these estimates.

There have been no material changes to our critical accounting policies, since those reported in our 2018 Annual Report, with the exception of the adoption of the new revenue standard. In May 2014, the FASB issued the new revenue standard, 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, and replaces most existing revenue recognition guidance under US GAAP. We adopted this ASU and all related amendments for all contracts not yet completed as of April 1, 2018, using the modified retrospective transition method. This method requires a cumulative effect adjustment to be made to opening retained earnings on adoption to reflect the impact of initially applying the new revenue standard. Prior to adoption, we deferred recognition of revenue for certain wholesale and E-Commerce sales arrangements until the product was delivered. However, we elected the practical expedient allowed under the new revenue standard to define shipping and handling costs as a fulfillment service, not a performance obligation. Accordingly, we will now recognize revenue for these arrangements at shipment rather than delivery and, as a result, on adoption of the new revenue standard we recorded a cumulative effect adjustment for a net after-tax increase to opening retained earnings of approximately $1,000 in the condensed consolidated balance sheets. The comparative condensed consolidated financial statements have not been adjusted for the adoption of this ASU and continue to be reported under historical US GAAP.

In our condensed consolidated financial statements in Part I, Item 1 within this Quarterly Report, refer to the section entitled "Recent Accounting Pronouncements" within Note 1, "General," for further information on the impact of our adoption of the new revenue standard on our condensed consolidated financial statements, and to Note 2, "Revenue Recognition," for expanded disclosures regarding our change in accounting policy.

## Market risk

As filed, 5,927 characters.

### Commodity Price Risk

We purchase certain materials that are affected by commodity prices, the most significant of which is sheepskin. The supply of sheepskin used in certain UGG brand products is in high demand and there are a limited number of suppliers able to meet our expectations for the quantity and quality of sheepskin required. While there have historically been significant changes in the price of sheepskin, the price of sheepskin has stabilized in recent years. We use purchasing contracts, pricing arrangements, and refundable deposits to attempt to manage price volatility as an alternative to hedging commodity prices. The purchasing contracts and pricing arrangements we use may result in purchase obligations, which are not reflected in our condensed consolidated balance sheets. In the event of significant commodity price increases, we will likely not be able to adjust our selling prices sufficiently to eliminate the impact of such increases on our margins.

### Foreign Currency Exchange Rate Risk

We face market risk to the extent that foreign currency exchange rate fluctuations affect our foreign assets, liabilities, revenues, and expenses. We hedge certain foreign currency exchange rate risk from existing assets and liabilities. Other than changes in the amount of sales, expenses, and financial positions denominated in foreign currencies, we do not believe there has been a material change in the nature of our primary market risk exposures, including the categories of market risk to which we are exposed and the particular markets that present the primary risk of loss. There has been recent increased volatility with respect to the exchange rates between the US dollar and both British Pounds and Euros. This increased volatility may be due in part to tax, importation and other policies being contemplated by the US government, the withdrawal by the United Kingdom from the European Union (commonly referred to as "Brexit") and other global economic and political issues. We do not know whether this level of volatility will increase or decrease in the future. At August 3, 2018, we are not aware of any factors that are expected to result in a material change in the general nature of our primary market risk exposure.

As of June 30, 2018, a hypothetical 10.0% foreign currency exchange rate fluctuation would have caused the fair value of our financial instruments to increase or decrease by approximately $10,000. Sensitivity analyses do not consider the actions we may take to mitigate our exposure to fluctuations, nor do they consider the effect such hypothetical fluctuations may have on overall economic activity. As our international operations grow and we increase purchases and sales in foreign currencies, we will continue to evaluate our hedging policy and may utilize additional derivative instruments, as needed, to hedge our foreign currency exchange rate risk. We do not use foreign currency exchange rate forward contracts for trading purposes.

Although the majority of our sales and inventory purchases are denominated in US currency, these sales and inventory purchases may be impacted by fluctuations in the exchange rates between the US dollar and local currencies in the international markets where our products are sold and manufactured. Our foreign currency exchange rate risk arises as a result of our European and Asian operations. As we hold more cash and other monetary assets and liabilities in foreign currencies, we are exposed to financial statement transaction gains and losses as a result of re-measuring the financial positions held in foreign currencies into US dollars for subsidiaries that are US dollar functional and also from re-measuring the financial positions held in US dollars and foreign currencies into the functional currency of subsidiaries that are non-US dollar functional. We re-measure monetary assets and liabilities denominated in foreign currencies into US dollars using the exchange rate as of the end of the reporting period. In addition, certain of our foreign subsidiaries’ local currencies are their designated functional currencies, and we translate those subsidiaries’ assets and liabilities into US dollars using the exchange rates as of the end of the reporting period, which results in financial statement translation gains and losses recognized in other comprehensive loss. Foreign currency exchange rate fluctuations affect our reported profits and can distort comparisons from year to year. In addition, if the US dollar strengthens, it may result in increased pricing pressure on our foreign distributors.

Refer to Note 9, "Foreign Currency Exchange Rate Contracts and Hedging," of our condensed consolidated financial statements in Part I, Item 1 within this Quarterly Report for further information on our foreign currency exchange rate forward contracts.

### Interest Rate Risk

Our market risk exposure with respect to financial instruments is tied to changes in the prime rate, the federal funds effective rate, and LIBOR. Our Domestic Credit Facility provides, at our election, for interest on outstanding borrowings at interest rates tied to adjusted LIBOR or the ABR, and is variable based on our total adjusted leverage ratio each quarter. The ABR is defined as the rate per annum equal to the greater of (1) the prime rate, (2) the federal funds effective rate plus 0.50%, and (3) adjusted LIBOR for a one-month interest period plus 1.00%. A hypothetical 1.0% increase in interest rates would have resulted in no aggregate change to interest expense as there were no outstanding borrowings under any of our revolving credit facilities during the three months ended June 30, 2018. Refer to Note 6, "Revolving Credit Facilities and Mortgage Payable," of our condensed consolidated financial statements in Part I, Item 1 within this Quarterly Report for further information on our revolving credit facilities.

## Controls and procedures

As filed, 3,565 characters.

### a) Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act), which are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. In designing and evaluating our disclosure controls and procedures, our management recognized that any system of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours is designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Under the supervision and with the participation of management, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2018. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2018.

### b) Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the three months ended June 30, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

### c) Principal Executive Officer and Principal Financial and Accounting Officer Certifications

The certifications of our Principal Executive Officer and Principal Financial and Accounting Officer required by Rule 13a-14(a) of the Exchange Act are filed herewith as Exhibit 31.1 and Exhibit 31.2, and furnished as Exhibit 32, to this Quarterly Report. This Part I, Item 4, should be read in conjunction with such certifications for a more complete understanding of the topics presented.

### PART II. OTHER INFORMATION

References to "Deckers," "we," "our," "us," or the "Company" refer to Deckers Outdoor Corporation, together with its consolidated subsidiaries. UGG® (UGG), Koolaburra® by UGG (Koolaburra), HOKA ONE ONE® (HOKA), Teva® (Teva), Sanuk® (Sanuk) and UGGpureTM (UGGpure) are some of our trademarks. Other trademarks or trade names appearing elsewhere in this section are the property of their respective owners. Solely for convenience, the trademarks and trade names herein are referred to without the ® and™ symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.

Unless otherwise indicated, all dollar amounts herein are expressed in thousands, except per share data.

## Risk factors

As filed, 1,403 characters.

An investment in our common stock involves risks. Before making an investment decision, you should carefully consider all of the information within this Quarterly Report, including in the sections entitled “Cautionary Note Regarding Forward-Looking Statements,” of our unaudited condensed consolidated financial statements and accompanying notes thereto in Part I, Item 1, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2. In addition, you should carefully consider the risks and uncertainties described in the section entitled “Risk Factors” in Part I, Item 1A of our 2018 Annual Report on Form 10-K (2018 Annual Report), as well as in our other public filings with the Securities and Exchange Commission. If any of the identified risks are realized, our business, financial condition, operating results, and prospects could be materially and adversely affected. In that case, the trading price of our common stock may decline, and you could lose all or part of your investment. In addition, other risks of which we are currently unaware, or which we do not currently view as material, could have a material adverse effect on our business, financial condition, operating results, and prospects.

During the quarter ended June 30, 2018, there were no material changes to the risks and uncertainties disclosed in our 2018 Annual Report.

Filed Aug 9, 2018.
Source: SEC EDGAR, the filing index for accession 0000910521-18-000029. Last ingested by Listed: Oct 29, 2026, 13:00 ET. No prices; not investment advice.