10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

(Mark one)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2009
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to

Commission File Number: 0-22446

DECKERS OUTDOOR CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	95-3015862
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
495-A South Fairview Avenue, Goleta, California	93117
(Address of principal executive offices)	(zip code)

(805) 967-7611

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes  x    No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  o    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at July 28, 2009
Common Stock, $0.01 par value	13,134,341

DECKERS OUTDOOR CORPORATION

AND SUBSIDIARIES

Table of Contents

		Page
Part I.    Financial Information
Item 1.	Financial Statements (Unaudited):
	Condensed Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008	1
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2009 and 2008	2
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008	3
	Notes to Condensed Consolidated Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30
Item 4.	Controls and Procedures	31
Part II.    Other Information
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Submission of Matters to a Vote of Security Holders	32
Item 5.	Other Information	32
Item 6.	Exhibits	33
Signatures		34

DECKERS OUTDOOR CORPORATION

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

(amounts in thousands, except par value)

	June 30,		December 31,
	2009		2008
Assets
Current assets:
Cash and cash equivalents	$	108,163	$	176,804
Restricted cash	300		300
Short-term investments	67,144		17,976
Trade accounts receivable, net of allowances of $6,538 and $10,706 as of June 30, 2009 and December 31, 2008, respectively	63,068		108,129
Inventories	145,644		92,740
Prepaid expenses and other current assets	4,849		3,691
Deferred tax assets	13,324		13,324
Total current assets	402,492		412,964
Restricted cash	400		700
Property and equipment, at cost, net	32,637		28,318
Intangible assets, net	24,934		24,034
Deferred tax assets	17,447		17,447
Other assets	458		258
Total assets	$	478,368	$	483,721
Liabilities and Stockholders’ Equity
Current liabilities:
Trade accounts payable	$	51,442	$	42,960
Accrued expenses	13,218		27,672
Income taxes payable	3,527		24,577
Total current liabilities	68,187		95,209
Long-term liabilities	5,185		3,847
Stockholders’ equity:
Deckers Outdoor Corporation stockholders’ equity:
Common stock, $0.01 par value; authorized 50,000 and 20,000 shares; issued and outstanding 13,134 and 13,089 shares as of June 30, 2009 and December 31, 2008, respectively	131		131
Additional paid-in capital	120,426		115,214
Retained earnings	283,734		268,515
Accumulated other comprehensive income	391		392
Total Deckers Outdoor Corporation stockholders’ equity	404,682		384,252
Noncontrolling interest	314		413
Total equity	404,996		384,665
Total liabilities and equity	$	478,368	$	483,721

See accompanying notes to condensed consolidated financial statements.

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DECKERS OUTDOOR CORPORATION

AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

(amounts in thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
Net sales	$	102,548		$	91,116		$	236,774		$	188,651
Cost of sales	61,763			54,776			137,076			106,163
Gross profit	40,785			36,340			99,698			82,488
Selling, general and administrative expenses	36,560			28,384			76,147			57,472
Impairment loss	1,000			14,900			1,000			14,900
Income (loss) from operations	3,225			(6,944		)	22,551			10,116
Other (income) expense, net:
Interest income	(276		)	(663		)	(872		)	(2,052		)
Interest expense	(940		)	39			(923		)	71
Other, net	(23		)	(6		)	(42		)	(257		)
	(1,239		)	(630		)	(1,837		)	(2,238		)
Income (loss) before income taxes	4,464			(6,314		)	24,388			12,354
Income taxes	1,697			(2,494		)	9,268			4,880
Net income (loss)	2,767			(3,820		)	15,120			7,474
Net loss attributable to noncontrolling interest	112			—			99			—
Net income (loss) attributable to Deckers Outdoor Corporation	$	2,879		$	(3,820	)	$	15,219		$	7,474
Net income (loss) attributable to Deckers Outdoor Corporation common stockholders per share:
Basic	$	0.22		$	(0.29	)	$	1.16		$	0.57
Diluted	$	0.22		$	(0.29	)	$	1.15		$	0.57
Weighted-average common shares outstanding:
Basic	13,116			13,032			13,103			13,020
Diluted	13,210			13,032			13,208			13,178

See accompanying notes to condensed consolidated financial statements.

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DECKERS OUTDOOR CORPORATION

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(amounts in thousands)

	Six months ended
	June 30,
	2009			2008
Cash flows from operating activities:
Net income	$	15,120		$	7,474
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation, amortization and accretion	4,723			2,649
Provision for doubtful accounts, net	468			298
Write-down of inventory	1,669			1,107
Impairment loss	1,000			14,900
Share-based compensation	4,873			3,390
Other	(3		)	6
Changes in operating assets and liabilities, net of assets and liabilities acquired in the acquisition of Ahnu, Inc.:
Restricted cash	300			117
Trade accounts receivable	44,817			17,209
Inventories	(52,755		)	(62,133		)
Prepaid expenses and other current assets	(1,047		)	(1,531		)
Income taxes receivable	—			(4,260		)
Other assets	(200		)	(27		)
Trade accounts payable	7,901			14,244
Accrued expenses	(17,715		)	(5,950		)
Income taxes payable	(20,384		)	(17,498		)
Long-term liabilities	1,338			2,639
Net cash used in operating activities	(9,895		)	(27,366		)
Cash flows from investing activities:
Purchases of short-term investments	(66,948		)	(173,714		)
Proceeds from sales of short-term investments	16,903			239,334
Purchases of property and equipment	(6,563		)	(9,787		)
Acquisitions of businesses	(1,675		)	(5,876		)
Net cash (used in) provided by investing activities	(58,283		)	49,957
Cash flows from financing activities:
Cash paid for shares withheld for taxes	(1,124		)	—
Excess tax benefits from share-based compensation	659			2,340
Cash received from issuances of common stock	—			210
Net cash (used in) provided by financing activities	(465		)	2,550
Effect of exchange rates on cash	2			(30		)
Net change in cash and cash equivalents	(68,641		)	25,111
Cash and cash equivalents at beginning of period	176,804			54,525
Cash and cash equivalents at end of period	$	108,163		$	79,636
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes	$	28,854		$	24,297
Interest	$	4		$	561
Non-cash investing activity:
Accruals for purchases of property and equipment	$	1,456		$	788
Non-cash financing activity:
Accruals for shares withheld for taxes	$	363		$	862

See accompanying notes to condensed consolidated financial statements.

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DECKERS OUTDOOR CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except share quantity and per share data)

(1)General

(a)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.  Our business is seasonal, with the highest percentage of UGG® brand net sales occurring in the third and fourth quarters and the highest percentage of Teva® brand net sales occurring in the first and second quarters of each year. To date, the other brands have not had a seasonal impact on the Company.  In March 2009, the Company acquired 100% of the ownership interest of Ahnu, Inc., an outdoor performance and lifestyle footwear brand.  The Company does not expect the Ahnu® brand to have a significant effect on the seasonality of its consolidated net sales in 2009.

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 December 31, 2008.

The Company has evaluated subsequent events through the date of this report, which represents the date the condensed consolidated financial statements were issued.

(b)Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in accordance with US generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes.  Significant areas requiring the use of management estimates relate to inventory reserves; allowances for bad debts, returns, chargebacks and discounts; share-based compensation; impairment assessments; depreciation and amortization; income tax liabilities and uncertain tax positions; fair value of financial instruments; and fair values of acquired intangibles, assets and liabilities. Actual results could differ materially from these estimates.

(c)Reclassifications

Certain items in the prior year’s condensed consolidated financial statements have been reclassified to conform to the current year presentation.

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DECKERS OUTDOOR CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except share quantity and per share data)

(2)Stockholders’ Equity

In May 2009, the shareholders of the Company approved an amendment to the Company’s Restated Certificate of Incorporation to increase the authorized number of shares of common stock from 20,000,000 shares to 50,000,000 shares.

In June 2009, the Company announced that the Board of Directors approved a stock repurchase program to repurchase up to $50,000 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.  The purchases will be funded from available working capital.  As of June 30, 2009, the Company did not repurchase any of its common stock under this program.

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DECKERS OUTDOOR CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except share quantity and per share data)

(3)Comprehensive Income (Loss)

Comprehensive income (loss) is the total of net income (loss) and all other non-owner changes in equity. At June 30, 2009 and December 31, 2008, accumulated other comprehensive income of $391and $392, respectively, consisted of net unrealized gains on short-term investments and cumulative foreign currency translation adjustment.

Comprehensive income (loss) is determined as follows:

	Three months ended					Six months ended
	June 30,					June 30,
	2009		2008			2009			2008
Net income (loss)	$	2,767	$	(3,820	)	$	15,120		$	7,474
Other comprehensive income (loss):
Unrealized gain (loss) on short-term investments	5		(3		)	5			95
Cumulative foreign currency translation adjustment	41		—			(6		)	78
Total other comprehensive income (loss)	46		(3		)	(1		)	173
Comprehensive income (loss)	2,813		(3,823		)	15,119			7,647
Comprehensive loss attributable to noncontrolling interest	112		—			99			—
Comprehensive income (loss) attributable to Deckers Outdoor Corporation	$	2,925	$	(3,823	)	$	15,218		$	7,647

(4)Net Income (Loss) Attributable to Deckers Outdoor Corporation Common Stockholders per Share

Basic net income (loss) per share represents net income (loss) divided by the weighted-average number of common shares outstanding for the period.  Diluted net income (loss) per share represents net income (loss) divided by the weighted-average number of shares outstanding, including the dilutive impact of potential issuances of common stock.  For the three and six months ended June, 30, 2009 and 2008, the difference between the weighted-average number of basic and diluted common shares resulted from the dilutive impact of NSUs and options to purchase common stock.

The reconciliations of basic to diluted weighted-average common shares outstanding were as follows:

	Three months ended		Six months ended
	June 30,		June 30,
	2009	2008	2009	2008
Weighted-average shares used in basic computation	13,116,000	13,032,000	13,103,000	13,020,000
Dilutive effect of NSUs and stock options	94,000	—	105,000	158,000
Weighted-average shares used for diluted computation	13,210,000	13,032,000	13,208,000	13,178,000

All options outstanding as of June 30, 2009 and 2008 were included in the computation of diluted income per share for the three and six months ended June 30, 2009 and for the six months ended June 30, 2008, respectively.  The Company excluded 157,000 options and NSUs that were not contingently issuable that were outstanding as of June 30, 2008 from the diluted net loss per share computation for the three months ended June 30, 2008, because they were anti-dilutive due to the net loss for the period.

The Company excluded 90,000 and 86,000 contingently issuable shares of common stock underlying its NSUs from the diluted net income (loss) per share computation for the three and six months ended June 30, 2009 and 2008, respectively.  The Company excluded all of its SARs and RSUs from the diluted net income per share computation for the three and six months ended June 30, 2009 and 2008, respectively.  The shares were excluded because the necessary conditions had not been satisfied for the shares to be issuable based on the Company’s performance through June 30, 2009 and 2008, respectively.

(5)Restricted Cash

In January 2007, the Company entered into an escrow agreement by and among Deckers Outdoor Corporation, MacGillivray Freeman Films, Inc., and Comerica Bank.  The agreement was initiated in conjunction with the Company’s purchase obligation with a movie production company for advertising services.  As a result of the agreement, during the six months ended June 30,

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DECKERS OUTDOOR CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except share quantity and per share data)

2009, the Company paid $300 of the purchase obligation and had $700 of restricted cash related to this obligation remaining as of June 30, 2009.  Film production was completed and the movie was released in March 2008. Accordingly, the Company recorded the full $1,250 obligation as advertising expense during the first quarter of 2008.  Of the total restricted cash related to this obligation, $300 is short-term and is included as a current asset, and the remaining $400 is long-term and is included as a noncurrent asset in the Company’s condensed consolidated balance sheet at June 30, 2009.  The agreement contains a disbursement schedule according to when the remaining funds will be disbursed to the production company, which is as follows:

January 2010	$	300
January 2011	200
January 2012	200
	$	700

(6)Fair Value Measurements

The fair values of the Company’s cash and cash equivalents, restricted cash, trade accounts receivable, prepaid expenses and other current assets, trade accounts payable, accrued expenses, and income 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 and off-balance sheet liabilities, if recalculated based on current interest rates, would not significantly differ from the recorded amounts.

The Company adopted SFAS No. 157, “Fair Value Measurements” (SFAS 157) and ASC 820 “Fair Value Measurements and Disclosures” (ASC 820) for financial assets and financial liabilities effective January 1, 2008 and for nonfinancial assets and liabilities beginning January 1, 2009.  The adoption of this standard did not have a material effect on the Company’s condensed consolidated financial statements.  SFAS 157 and ASC 820 prioritize the inputs used in measuring fair value into the following hierarchy:

·Level 1:  Quoted prices (unadjusted) in active markets for identical assets or liabilities.

·Level 2:  Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable.

·Level 3:  Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.

Short-term investments are classified as available for sale under the provisions of SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities” and ASC 320 “Investments — Debt and Equity Securities.” Accordingly, the short-term investments are reported at fair value, with any unrealized gains and losses included as a separate component of stockholders’ equity.  Interest and dividends are included in interest income in the condensed consolidated statements of operations.  Securities with original maturities of three months or less are classified as cash equivalents.  Those that mature over three months from their original date and in less than one year are classified as short-term investments, as the funds are used for working capital requirements.  The fair values of the Company’s short-term investments are shown in the table below and were determined based on Level 1 inputs under SFAS 157 and ASC 820.

	June 30, 2009						December 31, 2008
	Cost		Unrealized Gains		Fair Value		Cost		Unrealized Gains		Fair Value
Short-term Investments
Government and agency securities	$	67,093	$	51	$	67,144	$	17,930	$	46	$	17,976
Total short-term investments	$	67,093	$	51	$	67,144	$	17,930	$	46	$	17,976

The cost of securities sold is based on the specific identification method.  Proceeds from sales of available for sale securities were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2009		2008		2009		2008
Proceeds from sales	$	11,425	$	79,404	$	16,903	$	239,334

(7)Credit Facility

The Company’s revolving credit facility with Comerica Bank (the “Facility”) provides for a maximum availability of $20,000.  Up to $12,500 of borrowings may be in the form of letters of credit. The Facility bears interest at the lender’s prime rate (3.25% at June 30, 2009) or, at the Company’s option, at the London Interbank Offered Rate, or LIBOR, (0.31% at June 30, 2009) plus 1.0% to 2.5%, depending on the ratio of liabilities to earnings before interest, taxes, depreciation and amortization, and is secured by substantially all assets. The Facility includes annual commitment fees of $60 per year and expires on June 1, 2010. 

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DECKERS OUTDOOR CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except share quantity and per share data)

At June 30, 2009, the Company had no outstanding borrowings under the Facility and outstanding letters of credit aggregated $189.  As a result, $19,811 was available under the Facility at June 30, 2009.

The agreements underlying the Facility contain certain financial covenants.  The Company amended the Facility including certain financial covenants in June 2009.  The covenants currently include a limitation on aggregate annual lease payments of $20,000, a quick ratio requirement of at least 0.90:1.00, a minimum profitability requirement of $1,000 per fiscal quarter (except for the current quarter ended June 30, 2009, there is a maximum net loss of $3,000), a limitation on annual consolidated capital expenditures of $25,000 in fiscal year 2009 and $15,000 in any fiscal year thereafter, a minimum tangible net worth requirement of $37,000 commencing with the fiscal year ended December 31, 2004 plus 75% of consolidated net profit on a cumulative basis, and a requirement that the Company’s consolidated total liabilities to consolidated effective tangible net worth ratio be no greater than 1.50:1.00.  The agreements also contain a prohibition on the payment of dividends.

(8)Recent Accounting Pronouncements

In December 2007, the FASB issued Statement No. 141 (revised 2007), “Business Combinations” (SFAS 141R) and ASC 805 “Business Combinations” (ASC 805). The objective of SFAS 141R and ASC 805 is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. SFAS 141R and ASC 805 require that all business combinations be accounted for by applying the acquisition method (previously referred to as the purchase method), and most identifiable assets, liabilities, noncontrolling interests, and goodwill acquired in business combinations to be recorded at “full fair value.” SFAS 141R and ASC 805 also broaden the definition of a business and changes the treatment of direct acquisition-related costs from being included in the purchase price to instead being generally expensed if they are not costs associated with issuing debt or equity securities. The Company adopted SFAS 141R and ASC 805 on January 1, 2009, and applied the provisions to its new business combination.  In its business combinations accounted for under SFAS 141R and ASC 805, the Company recorded a liability of $820, included in long-term liabilities in the condensed consolidated balance sheet, that would not have otherwise been recorded when compared to the previous guidance of SFAS No. 141, “Business Combinations” (SFAS 141).

In December 2007, the FASB issued Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51” (SFAS 160) and ASC 810 “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51” (ASC 810). The objective of SFAS 160 and ASC 810 is to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards for noncontrolling interests in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 and ASC 810 specify that noncontrolling interests (referred to as minority interests prior to SFAS 160 and ASC 810) be reported as a separate component of equity, not as a liability or other item outside of equity, which changes the accounting for transactions with noncontrolling interest holders. The Company adopted SFAS 160 and ASC 810 on January 1, 2009, and applied the provisions to the Company’s current noncontrolling interest and reclassified it into equity on the condensed consolidated balance sheets.  In addition, net income (loss) and net income (loss) attributable to Deckers Outdoor Corporation have been adjusted on the condensed consolidated statements of operations to conform to SFAS 160 and ASC 810.

In April 2009, the FASB issued Staff Position No. 141R-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies” (FSP 141R-1) and ASC 805 “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies” (ASC 805).  FSP 141R-1 and ASC 805 amend the provisions in Statement 141R and ASC 805 for the initial recognition and measurement, subsequent measurement and accounting, and disclosures for assets and liabilities arising from contingencies in business combinations. The FSP eliminates the distinction between contractual and non-contractual contingencies, including the initial recognition and measurement criteria in Statement 141R and ASC 805 and instead carries forward most of the provisions in SFAS 141 and ASC 805 for acquired contingencies. FSP 141R-1 and ASC 805 are effective for contingent assets and contingent liabilities acquired in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company applied the provisions of FSP 141R-1 and ASC 805 effective January 1, 2009, and the adoption of the FSP did not have a material impact on the Company’s condensed consolidated financial statements.

In May 2009, the FASB issued Statement No. 165, “Subsequent Events” (SFAS 165) and ASC 855 “Subsequent Events” (ASC 855).  The standard requires the disclosure of the date through which an entity has evaluated subsequent events and whether that represents the date the financial statements were issued or were available to be issued.  SFAS 165 and ASC 855 are effective for

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DECKERS OUTDOOR CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except share quantity and per share data)

interim or annual financial periods ending after June 15, 2009.  The Company applied the requirements of SFAS 165 and ASC 855 to its condensed consolidated financial statements for the period ended June 30, 2009, and the adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

In June 2009, the FASB issued Statement No. 168 “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162” (SFAS 168) and ASC 105 “Generally Accepted Accounting Principles” (ASC 105).  SFAS 168 and ASC 105 establish the FASB Accounting Standards Codification as the source of authoritative accounting principles recognized by the FASB to be applied by non-governmental entities in the preparation of financial statements in conformity with US GAAP.  SFAS 168 and ASC 105 are effective for financial statements issued for interim and annual periods ending after September 15, 2009.  The Company has included both references in its condensed consolidated financial statements for the period ending June 30, 2009.

(9)Business Segments, Concentration of Business, and Credit Risk and Significant Customers

The Company’s accounting policies of the segments below are the same as those described in the summary of significant accounting policies, except that the Company does not allocate share-based compensation, interest, non-operating income and expenses, income taxes, net income (loss) attributable to the noncontrolling interest, or certain unusual items to segments. The Company evaluates segment performance primarily based on net sales and income or loss from operations. The Company’s reportable segments include the strategic business units responsible for the worldwide wholesale operations of the UGG brand, Teva brand, Simple® brand, and its other brands, its eCommerce business and its retail store business.  The wholesale operations of each brand are managed separately because each requires different marketing, research and development, design, sourcing and sales strategies. The eCommerce and retail store segments are managed separately because they are direct to consumer sales, while the brand segments are wholesale sales.  The income or loss from operations for each of the segments includes only those costs which are specifically related to each segment, which consist primarily of cost of sales, costs for research and development, design, marketing, sales, commissions, bad debts, depreciation, amortization and the costs of employees and their respective expenses that are directly related to each business segment. The unallocated corporate overhead costs are the shared costs of the organization and include the following: costs of the distribution centers, certain executive compensation, accounting and finance, legal, information technology, credit and collections, human resources and facilities costs, among others.  The gross profit derived from the sales to third parties of the eCommerce segment and the US retail store segment is separated into two components:  (i) the wholesale profit is included in the operating income or loss of each of the brands’ wholesale segments, and (ii) the retail profit is included in the operating income or loss of the eCommerce segment and the retail store segment.  The gross profit of the international portion of the retail segment includes both the wholesale and retail profit.

The Company’s other brands consist of TSUBO® and Ahnu.  In May 2008, the Company acquired 100% of the ownership interest of TSUBO, LLC, and in March 2009, the Company acquired 100% of the ownership interest of Ahnu, Inc.  The wholesale operations of these brands are included as one reportable segment, other wholesale, presented in the figures below.

9

DECKERS OUTDOOR CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except share quantity and per share data)

Net sales and operating income (loss) by business segment are summarized as follows:

	Three months ended						Six months ended
	June 30,						June 30,
	2009			2008			2009			2008
Net sales to external customers:
UGG wholesale	$	66,616		$	54,373		$	129,601		$	89,755
Teva wholesale	20,175			22,888			54,812			59,697
Simple wholesale	2,384			3,728			6,038			8,116
Other wholesale	2,008			653			4,837			653
eCommerce	5,262			6,422			21,448			22,058
Retail stores	6,103			3,052			20,038			8,372
	$	102,548		$	91,116		$	236,774		$	188,651
Income (loss) from operations:
UGG wholesale	$	23,072		$	16,529		$	50,465		$	33,182
Teva wholesale	4,377			(9,093		)	12,187			(255		)
Simple wholesale	(2,721		)	114			(5,196		)	167
Other wholesale	(2,259		)	(60		)	(3,294		)	(60		)
eCommerce	552			1,512			5,479			6,705
Retail stores	(1,011		)	(369		)	5			(100		)
Unallocated overhead costs	(18,785		)	(15,577		)	(37,095		)	(29,523		)
	$	3,225		$	(6,944	)	$	22,551		$	10,116

Business segment asset information is summarized as follows:

	June 30,		December 31,
	2009		2008
Total assets for reportable segments:
UGG wholesale	$	172,343	$	158,726
Teva wholesale	38,598		43,999
Simple wholesale	6,186		7,693
Other wholesale	8,345		5,211
eCommerce	873		2,726
Retail stores	22,242		18,482
	$	248,587	$	236,837

The assets allocable to each reporting segment generally include accounts receivable, inventory, intangible assets and certain other assets that are specifically identifiable with one of the Company’s business segments. Unallocated assets are the assets not specifically related to one of the segments and generally include the Company’s cash and cash equivalents, short-term investments, 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:

10

DECKERS OUTDOOR CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except share quantity and per share data)

	June 30,		December 31,
	2009		2008
Total assets for reportable segments	$	248,587	$	236,837
Unallocated cash and cash equivalents and short-term investments	175,307		194,780
Unallocated deferred tax assets	30,771		30,771
Other unallocated corporate assets	23,703		21,333
Consolidated total assets	$	478,368	$	483,721

The Company sells its products to customers throughout the US and to foreign customers located in Europe, Canada, Australia, Asia, and Latin America, among other regions.  International sales were 45.3% and 37.3% of the Company’s total net sales for the three months ended June 30, 2009 and 2008, respectively.  International sales were 33.1% and 28.0% of the Company’s total net sales for the six months ended June 30, 2009 and 2008, respectively.  The Company does not consider international operations a separate segment, as management reviews such operations in the aggregate with the aforementioned segments.

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 10.0% of the Company’s net sales for either the six months ended June 30, 2009 or 2008.  As of June 30, 2009 and December 31, 2008, the Company had one customer representing 12.7% and 34.1% of net trade accounts receivable, respectively.

The Company’s production and sourcing is concentrated in China, New Zealand and Australia, with the vast majority of its production at six independent contractor factories in China. 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.

(10)Commitments and Contingencies

The Company agreed to make loans to its joint venture with Stella International, should the need arise. The estimated total loans by Deckers and Stella International is expected to be approximately $4,000 contributed by both parties in proportion to their respective ownership in the joint venture.  The Company owns 51% of the joint venture. The Company also entered into agreements to make potential future earn-out payments relating to its acquisitions of TSUBO, LLC and Ahnu, Inc.  The potential TSUBO, LLC earn-out is based on the amount, if any, that sales of TSUBO products exceed certain predetermined base revenue levels for each year from 2008 to 2012.  At June 30, 2009, the Company did not anticipate, and therefore did not accrue, any earn-out payments for TSUBO, LLC in accordance with SFAS 141 and ASC 805.  The potential Ahnu, Inc. earn-out is based on the amount, if any, that gross profit of Ahnu products exceeds certain base levels for each year from 2010 to 2013.  As of June 30, 2009, in accordance with SFAS 141R and ASC 805, $820 is included for the Ahnu Inc. earn-out within long-term liabilities in the condensed consolidated balance sheet.

The Company had certain tax obligations to authorities in China for one of the Company’s foreign subsidiaries. The Company paid certain amounts against these obligations and also negotiated certain reductions of previously accrued amounts. In accordance with SFAS No. 5, “Accounting for Contingencies” and ASC 450 “Contingencies,” as of June 30, 2009, management has determined that any remaining liability for such matters is remote.  Accordingly, the Company has reversed the previously accrued amount of approximately $1,600, primarily as a reduction of cost of sales of approximately $600 and interest expense of approximately $1,000, for the three and six months ended June 30, 2009.

In September 2008, the Company entered into a pilot services agreement whereby a third party is providing the Company with selling services. In connection with this agreement, the Company has guaranteed the third party’s obligations to a merchant services provider. The Company may terminate this guarantee upon thirty days written notice to the merchant services provider. The agreement does not provide for a maximum payout; however, management believes the likelihood of any payments under this guarantee is remote and would have an immaterial effect on the condensed consolidated financial statements.  The Company determined this based upon an analysis of the third party’s historical financial data and sales and returns projections.

11

DECKERS OUTDOOR CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except share quantity and per share data)

The Company is currently involved in various legal claims arising from the ordinary course of business. Management does not believe that the disposition of these matters will have a material effect on the Company’s financial position or results of operations.  The Company indemnifies its licensees, distributors and certain promotional partners in connection with claims alleging use of the Company’s licensed intellectual property.  The terms of the agreements range up to five years initially and do not provide for a limitation on the maximum potential future payments.  Management believes the likelihood of any payments is remote and would be immaterial.  The Company determined the risk was low based on a prior history of insignificant claims.  The Company is not currently involved in any indemnification matters in regards to its intellectual property.

In February 2009, the Company entered into a contract requiring minimum purchase commitments of sheepskin of approximately $64,000 that Deckers’ affiliates, manufacturers, factories and other agents (each or collectively, a “Buyer”) must make on or before December 31, 2010.  This contract may result in an unconditional purchase obligation if a Buyer does not meet the minimum purchase requirements.  In the event that a Buyer does not purchase such minimum commitments on or before December 31, 2010, the Company is required to purchase any remaining amounts on or before December 31, 2010. The contract does not permit net settlement.  The Company expects sheepskin purchases by third party factories supplying UGG product to the Company will exceed these levels in 2009 and 2010.  Therefore, management believes the likelihood of any non-performance payments under this contractual arrangement is remote and would have an immaterial effect on the condensed consolidated financial statements.  The Company determined this based upon its historical and projected sales and inventory purchases.

(11)Business Combinations

In May 2008, the Company acquired 100% of the ownership interest of TSUBO, LLC.  The acquisition resulted in the recognition of goodwill of $3,496, nonamortizable intangible assets of $1,970 related to the TSUBO trademarks and trade name, as well as $470 of amortizable intangible assets related to TSUBO brand distributor relationships.  All of the TSUBO goodwill was written off as of December 31, 2008.  In the three months ended June 30, 2009, the Company recorded an impairment loss of $1,000 on the TSUBO trademarks (see note 12).

In March 2009, the Company acquired 100% of the ownership interest of Ahnu, Inc., an outdoor performance and lifestyle footwear brand.  The Company paid cash consideration in the form of a loan that was entered into concurrently with a definitive agreement for the acquisition of Ahnu, Inc.  In accordance with SFAS 141R and ASC 805, the acquisition-date fair value of the total consideration transferred was as follows:

Consideration
Cash paid	$	1,675
Contingent consideration arrangement	820
	$	2,495
Total identifiable net assets	$	1,138
Goodwill	1,357
	$	2,495

In addition, the Company may pay future earn-outs based on the amount, if any, that gross profit of Ahnu products exceeds certain base levels for each year from 2010 to 2013.  The earn-out for each year, if any, will be payable within ninety days after the end of each year.  There is no maximum to this potential earn-out, however management believes the estimated undiscounted range of outcomes for this contingent consideration was zero to $8,800.  The weighted average fair value of the potential earn-out of $820, based on Level 3 inputs under SFAS 157 and ASC 820, was included as purchase consideration and is included within long-term liabilities in the condensed consolidated balance sheet as of June 30, 2009.

The Company made this acquisition because it believes that the Ahnu brand complements its existing portfolio of lifestyle brands, and that the Ahnu brand’s target consumer, product selection, industry niche and relative under-penetration in the marketplace make it a good fit for the Company. The preliminary purchase price allocation, subject to a measurement period not to exceed one year, resulted in the recognition of $1,357 of goodwill and amortizable intangible assets of $695 related to the Ahnu trademarks, trade name and customer relationships, and was determined, in part, based on the Company’s expectation that it can leverage its design, marketing and distribution capabilities to grow the Ahnu brand into a meaningful

12

DECKERS OUTDOOR CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(amounts in thousands, except share quantity and per share data)

business over the next several years, consistent with the Company’s mission to build niche brands into global market leaders.  The goodwill is included in the Company’s other brands wholesale reportable segment and none of it is expected to be deductible for tax purposes.  The Company adjusted the preliminary measurement of allocated assets and liabilities in the quarter ended June 30, 2009.  Such adjustments were immaterial to the condensed consolidated balance sheet and statements of operations.  The trademarks and trade name are being amortized over ten years and the customer relationships are being amortized over four years.

As of June 30, 2009 and December 31, 2008, the Company had total net goodwill of $7,458 and $6,101, respectively.

(12)Goodwill and Other Intangible Assets

As of June 30, 2009, the Company did not reach its 2009 TSUBO brand period-to-date sales targets and reduced its long-term forecast for TSUBO brand sales.  These factors were indicators that the TSUBO intangible assets were possibly impaired.  As a result, in accordance with SFAS 142 and ASC 350 “Intangibles — Goodwill and Other,” the Company conducted an interim impairment evaluation of the TSUBO intangible assets as of June 30, 2009 and concluded that the fair value of the TSUBO trademarks was lower than the carrying amount.  Therefore, the Company recognized an impairment loss of $1,000 on the TSUBO trademarks during the three and six months ended June 30, 2009.  The impairment loss is included as a part of the other wholesale reportable segment.  In addition, the Company will amortize the remaining TSUBO trademarks of $970 over ten years.

As of June 30, 2008, the Company did not reach its 2008 Teva brand period-to-date sales targets and reduced its long-term forecast for Teva brand sales.  As a result, the Company conducted an interim impairment evaluation of the Teva goodwill and intangible assets as of June 30, 2008 and concluded that the Teva goodwill was not impaired, but the fair value of the Teva trademarks was lower than the carrying amount. Therefore, the Company recognized an impairment loss of $14,900 on the Teva trademarks during the three and six months ended June 30, 2008.  The impairment loss is included as a part of the Teva wholesale reportable segment.

These impairment losses are included in a separate line item within the Company’s income (loss) from operations.  Both the TSUBO and Teva trademarks were evaluated based on Level 3 inputs using a relief from royalty method, primarily based on management’s forecasted sales, a royalty rate, and discount rates.

(13)Subsequent Events

Subsequent to June 30, 2009, the Company repurchased approximately 150,000 shares of its common stock for approximately $10,200 under its stock repurchase program.

13

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This report and the information incorporated by reference in this report contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We sometimes use words such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “project,” “will” and similar expressions, as they relate to us, our management and our industry, to identify forward-looking statements. Forward-looking statements relate to our expectations, beliefs, plans, strategies, prospects, future performance, anticipated trends and other future events. Specifically, this report and the information incorporated by reference in this report contain forward-looking statements relating to, among other things:

·our business, growth, operating and financing strategies;

·our product mix;

·the success of new products;

·the impact of seasonality on our operations;

·expectations regarding our net sales and earnings growth and other financial metrics;

·our development of international distribution channels;

·trends affecting our financial condition or results of operations; and

·overall global economic trends.

We have based our forward-looking statements largely on our current expectations and projections about future events and financial trends affecting our business. Actual results may differ materially. Some of the risks, uncertainties and assumptions that may cause actual results to differ from these forward-looking statements are described in Part II, Item 1A, “Risk Factors.” In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this report and the information incorporated by reference in this report might not happen.

You should read this report in its entirety, together with the documents that we file as exhibits to this report and the documents that we incorporate by reference in this report with the understanding that our future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements and we assume no obligation to update such forward-looking statements publicly for any reason.

The “UGG,” “Teva,” “Simple,” “TSUBO,” and “Ahnu” families of related marks, images and symbols are our trademarks and intellectual property.  Other trademarks, trade names and service marks appearing in this report are the property of their respective holders.  References to “Deckers,” “we,” “us,” “our,” or similar terms refer to Deckers Outdoor Corporation together with its consolidated subsidiaries.  Unless otherwise specifically indicated, all dollar amounts herein are expressed in thousands, except for share quantity, per share data, and selling prices.

Overview

We are a leading designer, producer and brand manager of innovative, high-quality footwear and accessories and the category creator in the luxury sheepskin, sport sandal and sustainable footwear segments. We market our products primarily under three proprietary brands:

·UGG®: Authentic luxury sheepskin boots and a full line of luxury and comfort footwear and accessories;

·Teva®: High performance sport shoes and rugged outdoor footwear and accessories; and

·Simple®: Innovative sustainable-lifestyle footwear and accessories.

In addition to our primary brands, our newest brands include TSUBO®, a line of high-end casual footwear that incorporates style, function and maximum comfort and Ahnu®, a line of outdoor performance and lifestyle footwear.

We sell our brands through our quality domestic retailers and international distributors and directly to our end-user consumers through our eCommerce business and our retail stores. We sell our footwear in both the domestic market and in international markets.  Independent third parties manufacture all of our products.

Our business has been impacted by several important trends affecting our end markets:

14

·Recent changes in US and global economic conditions have adversely impacted businesses generally. Some of our customers have been, and more may be, adversely affected, which in turn has, and may continue to, adversely impact our financial results.

·The markets for casual, outdoor and athletic footwear have grown significantly during the last decade. We believe this growth is a result of the trend toward casual dress in the workplace, increasingly active outdoor lifestyles and a growing emphasis on comfort.

·Consumers are more often seeking footwear designed to address a broader array of activities with the same quality, comfort and high performance attributes they have come to expect from traditional athletic footwear.

·Our customers have narrowed their footwear product breadth, focusing on brands with a rich heritage and authenticity as market category creators and leaders.

·Consumers have become increasingly focused on luxury and comfort, seeking out products and brands that are fashionable while still comfortable.

·There is an emerging sustainable lifestyle movement happening all around the world.  Consumers are demanding that brands and companies take a more responsible approach when it comes to protecting the environment.

By emphasizing our brands’ images and our focus on comfort, performance and authenticity, we believe we can maintain a loyal consumer following that is less susceptible to fluctuations caused by changing fashions and changes in consumer preferences.

Below is an overview of the various components of our business, including some of the important factors that affect each business and some of our strategies for growing each business.

UGG Brand Overview

The UGG brand has become a well-known brand throughout the US as well as internationally.  Over the past several years, our UGG brand has received increased media exposure including increased print media in national ads and cooperative advertising with our customers, which has contributed to broader public awareness of the UGG brand and significantly increased demand for the collection.  We believe that the increased media focus and demand for UGG products were driven by the following:

·consumer brand loyalty, due to the luxury and comfort of UGG footwear,

·increased marketing in high-end magazines,

·successful targeting of high-end distribution,

·adoption by high-profile film and television celebrities as a favored footwear brand,

·increased media attention that has enabled us to introduce the brand to consumers much faster than we would have otherwise been able to,

·increased exposure to the brand driven by our concept stores which showcase all of our product offerings,

·continued geographic expansion across the US and internationally, and

·continued innovation of new product categories and styles.

We believe the luxury and comfort features of UGG products will continue to drive long-term consumer demand.  Recognizing that there is a significant fashion element to UGG footwear and that footwear fashions fluctuate, our strategy seeks to prolong the longevity of the brand by offering a broader product line suitable for wear in a variety of climates and occasions and by limiting distribution to selected higher-end retailers.  As part of this strategy we have increased our product offering, including a growing spring line, an expanded men’s line, as well as a fall line that consists of a range of luxurious collections for both genders.  These collections include: fashion collections, a variety of casual comfort collections, and cold weather offerings, as well as our Classic, Ultra, Ultimate and Slippers collections.

Teva Brand Overview

Though participation in many traditional outdoor recreational activities is on the decline, we continue to see consumer preferences shifting towards an outdoor lifestyle and to outdoor activities that can be done in a day, an afternoon, or even an hour.  Because of our Teva brand’s heritage in outdoor footwear and our continued commitment to product innovation, the brand remains popular with traditional outdoor athletes and enthusiasts.  Although sales are slightly lower than 2008, the Teva brand has held up well through the recent economic downturn and has begun to appeal to a new generation of outdoor consumers entering the market.  The Teva product line now includes a broad range of

15

performance and lifestyle products and price points, both open and closed toe footwear, appropriate for all seasons, for men, women and children.

We see continuing opportunity to grow the Teva brand within our core outdoor specialty and sporting goods channels of trade.  We also believe there are significant expansion opportunities into the family footwear, department store, and better footwear channels.  Through effective channel management and clear product line segmentation, we believe we can grow the Teva brand in all of these channels without alienating our core consumer or retailers in the outdoor specialty channel.  However, we cannot assure investors that these efforts will be successful.

Simple Brand Overview

The Simple brand is committed to innovation and bringing sustainable products to the market, growing the brand’s business, while at the same time bringing environmental awareness and creating meaningful, environmentally friendly products for a global market. The Simple brand is a leader in sustainable footwear and accessories.  We feel that how we make Simple products is just as important as why we make them.  That means our goal is to find more sustainable and innovative ways of doing business.  We are committed to our goal of making Simple products 100% sustainable, thus minimizing the ecological footprint left on the planet.  Green Toe®, our collection of sustainable footwear, represents a revolutionary shift in thinking about footwear by building a shoe from the inside out using sustainable materials and processes.

The progress in Green Toe has influenced the rest of the Simple product line, which has led to the development of additional product platforms, such as ecoSNEAKS®.  This product collection also uses sustainable materials such as water-based cements, certified organic cotton, British Leather Consortium (BLC) and International Standards Organization (ISO) 14001 leathers, hemp, and outsoles made from recycled car tires.  We promote our Simple brand by emphasizing that we make fashionable, youthful, functional and sustainable footwear.  Our goal is to create a dialogue with the consumer through all communication vehicles and to show people that sustainability is an emerging lifestyle for everyone, not just environmentally conscious individuals.  Our print advertising campaigns include national publications and alternative weekly publications in select cities around the world.  Our online advertising campaign reaches consumers through websites that focus on sustainability as well as popular culture.  Additionally, we sponsor environmental-themed concerts and green festivals to showcase and tell the sustainable lifestyle brand story.

Other Brands Overview

In May 2008, we acquired 100% of the ownership interest of TSUBO, LLC.  TSUBO, meaning pressure point in Japanese, is marketed as high-end casual footwear for men and women. The brand is the synthesis of ergonomics and style, with a full line of sport and dress casuals, boots, sandals and heels constructed to provide consumers with contemporary footwear that incorporates style, function and maximum comfort.  The TSUBO brand has a rich heritage with consumers in major cities around the world, who appreciate design, pay attention to detail, and will not sacrifice comfort.  We intend to build on this heritage, positioning the TSUBO brand as the premium footwear solution for people in the city, providing all day comfort, style and quality.  The TSUBO brand strives to become well known in the most important style, design, architecture, art and fashion centers around the world.  We will continue to create product addressing consumers’ unique needs: all-day comfort, innovative style and superior quality.  At the same time, we will market to the TSUBO brand consumers where they live, emphasizing regional advertising and in-market grass roots, product placement and public relations efforts.

In March 2009, we acquired 100% of the ownership interest of Ahnu, Inc.  Founded in 2006 and headquartered in Alameda, California, Ahnu is an outdoor performance and lifestyle footwear brand with products for men, women and children.  The name Ahnu is derived from the goddess of balance and well-being in Celtic mythology.  The brand focuses on balancing work and play, family and friends, and self and society.  The Ahnu brand product goal is to achieve uncompromising footwear performance by developing footwear that will provide the appropriate balance of traction, grip, flexibility, cushioning and durability for a variety of outdoor activities — whether on trails, beaches or sidewalks.  Ahnu products are sold throughout the US, primarily at outdoor specialty stores and independent shoe stores, as well as in Canada and New Zealand.

We believe that the TSUBO and Ahnu brands complement our existing portfolio of lifestyle brands, and that the TSUBO and Ahnu brands’ target consumer, product selection, industry niche and relative under-penetration in the marketplace make these brands a good fit for us. We expect to leverage our design, marketing and distribution capabilities to grow these brands into meaningful brands over the next several years, consistent with our mission to build niche brands into global market leaders.  Nevertheless, we cannot assure investors that our efforts will be successful.

16

eCommerce Overview

Our eCommerce business, which sells all of our primary brands, enables us to meet the growing demand for these products, sell the products at retail prices and provide significant incremental operating income.  The eCommerce business enables us to directly interact and reinforce our relationships with the consumer.  Our Teva and UGG Australia websites both won BizRate’s Circle of Excellence Platinum Awards for both 2007 and 2008.  The award recognizes online retailers with top customer satisfaction ratings.  In prior years, our eCommerce business has had significant revenue growth, much of which occurred as the UGG brand gained popularity and as consumers continued to increase usage of the internet for footwear and other purchases.

Managing our eCommerce business requires us to focus on the latest trends and techniques for web design, to generate internet traffic to our websites, to effectively convert website visits into orders, and to maximize average order sizes.  We plan to continue to grow our internet business through improved website features and performance, increased marketing and international websites. Overall, our eCommerce business benefits from the strength of our brands and, as we grow our brands over time, we expect this division to continue to be an important segment of our business.  Nevertheless, we cannot assure investors that eCommerce sales will grow at their prior pace or that revenue from our eCommerce business will not continue to decline.

Retail Stores Overview

Since spring 2008, we have opened seven new retail stores: six concept stores (San Francisco, New York City, Beijing, Tokyo, and two in London) and one retail outlet store in New Jersey.  As of June 30, 2009, we have a total of 14 retail stores worldwide.  Continuing to build on the success of our existing UGG Australia stores, in the second half of 2009, we plan to open two additional domestic stores including a retail outlet in the Desert Hills Premium Outlets in Cabazon, California and an UGG brand concept store in Honolulu, Hawaii.  Internationally, our stores in the UK and China were successful in their first holiday season.  For the second half of 2009, we plan to continue to expand internationally by opening two new stores.

In July 2008, we entered into a joint venture agreement with an affiliate of Stella International Holdings Limited for the opening of retail stores and wholesale distribution for the UGG brand in China.  Under this agreement, we opened our first UGG Australia concept store in Beijing in December 2008.  The joint venture is owned 51% by Deckers.

Our retail stores enable us to directly impact our customers’ experience, meet the growing demand for these products, sell the products at retail prices and provide us with incremental annual operating income.  In addition, our UGG Australia concept stores allow us to showcase our entire line; whereas, a retailer may not carry the whole line.

Seasonality

Our business is seasonal, with the highest percentage of UGG brand net sales occurring in the third and fourth quarters of each year and the highest percentage of Teva brand net sales occurring in the first and second quarters.  To date, our other brands have not had a seasonal impact on the Company.

17

	2009
	First Quarter		Second Quarter		Third Quarter	Fourth Quarter
Net sales	$	134,226	$	102,548
Income from operations*	$	19,326	$	3,225

	2008
	First Quarter		Second Quarter			Third Quarter		Fourth Quarter
Net sales	$	97,535	$	91,116		$	197,288	$	303,506
Income (loss) from operations*	$	17,060	$	(6,944	)	$	43,081	$	63,722

	2007
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Net sales	$	72,575	$	52,730	$	129,381	$	194,243
Income from operations	$	15,072	$	2,864	$	30,660	$	56,957

* Included in income (loss) from operations in the second quarter of 2008 is a $14,900 impairment loss on our Teva trademarks.  Included in the fourth quarter of 2008 is a $20,925 impairment loss on our Teva trademarks, Teva goodwill, and TSUBO goodwill.  Included in the second quarter of 2009 is a $1,000 impairment loss on our TSUBO trademarks.

With the dramatic growth in the UGG brand in recent years, combined with the introduction of a fall Teva product line, net sales in the last half of the year have exceeded that for the first half of the year.  Given our expectations for each of our brands in 2009, we currently expect this trend to continue.  Nonetheless, actual results could differ materially depending upon the economic environment, consumer preferences, availability of product, competition and our customers continuing to carry and promote our various product lines, among other risks and uncertainties.  See Part II, Item 1A, “Risk Factors.”

Results of Operations

Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008

The following table summarizes the Company’s results of operations:

	Three Months Ended June 30,
	2009					2008					Change
	Amount			%		Amount			%		Amount			%
Net sales	$	102,548		100.0	%	$	91,116		100.0	%	$	11,432		12.5	%
Cost of sales	61,763			60.2		54,776			60.1		6,987			12.8
Gross profit	40,785			39.8		36,340			39.9		4,445			12.2
Selling, general and administrative expenses	36,560			35.7		28,384			31.2		8,176			28.8
Impairment loss	1,000			1.0		14,900			16.4		(13,900		)	-93.3
Income (loss) from operations	3,225			3.1		(6,944		)	(7.6	)	10,169			146.4
Other income, net	(1,239		)	(1.2	)	(630		)	(0.7	)	(609		)	-96.7
Income (loss) before income taxes	4,464			4.4		(6,314		)	(6.9	)	10,778			170.7
Income taxes	1,697			1.7		(2,494		)	(2.7	)	4,191			168.0
Net income (loss)	2,767			2.7		(3,820		)	(4.2	)	6,587			172.4
Net loss attributable to the noncontrolling interest	112			0.1		—			—		112			*
Net income (loss) attributable to Deckers Outdoor Corporation	$	2,879		2.8	%	$	(3,820	)	(4.2	)%	$	6,699		175.4	%

* Calculation of percentage change is not meaningful.

Overview.  The increase in net sales was primarily due to an increase in UGG product sales.  The increase in income (loss) from operations resulted primarily from the increase in net sales as well as the impairment loss in the three months ended June 30, 2008, partially offset by higher selling, general and administrative expenses.

18

Net Sales

The following table summarizes net sales by location and net sales by brand and distribution channel:

	Three Months Ended June 30,
					Change
	2009		2008		Amount			%
Net sales by location:
US	$	56,132	$	57,092	$	(960	)	-1.7	%
International	46,416		34,024		12,392			36.4
Total	$	102,548	$	91,116	$	11,432		12.5	%
Net sales by brand and distribution channel:
UGG:
Wholesale	$	66,616	$	54,373	$	12,243		22.5	%
eCommerce	2,070		3,404		(1,334		)	-39.2
Retail stores	5,733		2,781		2,952			106.1
Total	74,419		60,558		13,861			22.9
Teva:
Wholesale	20,175		22,888		(2,713		)	-11.9
eCommerce	2,208		2,194		14			0.6
Retail stores	167		140		27			19.3
Total	22,550		25,222		(2,672		)	-10.6
Simple:
Wholesale	2,384		3,728		(1,344		)	-36.1
eCommerce	924		802		122			15.2
Retail stores	179		131		48			36.6
Total	3,487		4,661		(1,174		)	-25.2
Other:
Wholesale	2,008		653		1,355			207.5
eCommerce	60		22		38			172.7
Retail stores	24		—		24			*
Total	2,092		675		1,417			209.9
Total	$	102,548	$	91,116	$	11,432		12.5	%

* Calculation of percentage change is not meaningful.

The increase in net sales was primarily driven by strong sales for the UGG brand.  In addition, our weighted-average wholesale selling price per pair increased 12.4% to $34.78 for the three months ended June 30, 2009 from $30.94 for the three months ended June 30, 2008, resulting primarily from higher UGG sales, which generally carry a higher average selling price.  During the quarter, we experienced an increase in the number of pairs sold of our UGG brand, as well as contributions from our new brands, offset by a decrease in the number of pairs sold of our Teva brand, thus we remained flat overall in the total volume of footwear sold for all brands of approximately 2.8 million pairs for the three months ended June 30, 2009 and 2008.

Wholesale net sales of our UGG brand increased primarily due to an increase of fall orders shipping to our international distributors and our domestic retailers, as well as an increase in the weighted-average wholesale selling price per pair.  We cannot assure investors that UGG brand sales will continue to grow at their past pace or that revenue from UGG products will not at some point decline.

Wholesale net sales of our Teva brand decreased primarily due to a decrease in the number of pairs sold, partially offset by an increase in the weighted-average wholesale selling price per pair.  The decline in sales was also the result of lower reorders combined with lower closeout sales due to our lower inventory balances versus last year.

Wholesale net sales of our Simple brand decreased primarily due to a decrease in the weighted-average wholesale selling price per pair, partially offset by an increase in the number of pairs sold.  Also, Simple brand sales were higher in the second quarter of 2008 in part due to the launch of Planet Walkers®, and we experienced a lower than normal rate of reorder business in the second quarter of 2009.

19

Wholesale net sales of our other brands increased, as we did not own Ahnu during the three months ended June 30, 2008, and we purchased TSUBO in May 2008.

Net sales of our eCommerce business decreased by $1,160, or 18.1%, for the three months ended June 30, 2009 compared to the three months ended June 30, 2008.  The decrease in sales resulted primarily from more first quarter backorders carried into and shipped in the second quarter of 2008 than 2009 for the UGG brand.

Net sales of our retail store business increased by $3,051, or 100.0%, for the three months ended June 30, 2009 compared to the three months ended June 30, 2008.  The increase in retail, being mainly UGG sales, was largely due to the addition of seven new stores opened since June 30, 2008.  We do not expect this growth rate to continue because as we increase the number of our stores, each new store will have less proportional impact on our growth rate.  For those stores that were open during the full second quarter of 2008 and 2009, same store sales grew by 8.4%.  Nevertheless, we cannot assure investors that retail store sales will continue to grow at their recent pace or that revenue from our retail store business will not at some point decline.

International sales, which are included in the segment sales above, for all of our products combined represented 45.3% of worldwide net sales for the three months ended June 30, 2009 compared to 37.3% of worldwide net sales for the three months ended June 30, 2008.  The majority of the international sales growth was from the UGG brand in each of our international markets, led by the European region.  We discovered an immaterial error in the international sales growth for the three months ended June 30, 2009 as originally reported in our earnings release furnished on July 23, 2009.  In the earnings release, we reported international sales growth of 36.8% as compared to the same period last year; in this Quarterly Report on Form 10-Q, we publish the correct figure of 36.4% in the preceding table.

Gross Profit.  As a percentage of net sales, gross margin decreased slightly to 39.8% for the three months ended June 30, 2009, compared to 39.9% for the three months ended June 30, 2008.  Our gross margins fluctuate based on several factors, and we expect our gross margin to increase slightly for the full year of 2009 compared to 2008.

Selling, General and Administrative Expenses.  As a percentage of net sales, selling, general and administrative expenses, or SG&A, increased to 35.7% for the three months ended June 30, 2009 compared to 31.2% for the three months ended June 30, 2008.  The increase in SG&A resulted primarily from a planned increase in payroll expenses, seven new retail stores that were not open in the second quarter of 2008, and divisional expenses primarily related to our new brands.

Income (Loss) from Operations

The following table summarizes operating income (loss) by segment:

	Three Months Ended June 30,
							Change
	2009			2008			Amount			%
UGG wholesale	$	23,072		$	16,529		$	6,543		39.6	%
Teva wholesale (1)	4,377			(9,093		)	13,470			148.1
Simple wholesale	(2,721		)	114			(2,835		)	*
Other wholesale	(2,259		)	(60		)	(2,199		)	*
eCommerce	552			1,512			(960		)	-63.5
Retail stores	(1,011		)	(369		)	(642		)	-174.0
Unallocated overhead costs	(18,785		)	(15,577		)	(3,208		)	-20.6
Total	$	3,225		$	(6,944	)	$	10,169		146.4	%

* Calculation of percentage change is not meaningful.

(1)  Included in Teva loss from operations is an impairment loss of $14,900 during the second quarter of 2008.

Income from operations increased due to the increase in net sales and the impairment loss in the three months ended June 30, 2008, partially offset by the higher selling, general and administrative expenses.

The increase in income from operations of UGG brand wholesale was primarily the result of the higher sales and gross margins, partially offset by higher divisional selling expenses.

The increase in income from operations of Teva brand wholesale was largely due to the impairment loss in the three months ended June 30, 2008 as well as reduced marketing expenses, partially offset by lower sales and gross margins.

20

The loss from operations of Simple brand wholesale was primarily due to lower gross margins attributed to negative average gross margins on closeout sales, as well as lower total sales.  In addition, we recognized our planned increase in marketing and promotional expenses.

We did not own our other brands during the full three months ended June 30, 2008.  We are implementing a new marketing campaign and investing in re-launching our TSUBO brand since our acquisition in May 2008.  However, we plan to defer the remaining spend until economic conditions improve.  Our Ahnu brand is still a new brand in the marketplace. Because of these reasons, as well as the economic recession, we expect to continue reporting a loss from operations for our other brands for at least the remainder of 2009.

Income from operations of our eCommerce business decreased primarily due to lower UGG brand sales and slightly lower gross margins.

Loss from operations of our retail store business increased primarily due to higher operating expenses, mainly related to our new store openings, and lower domestic gross margins, partially offset by the increase in net sales. We expect to have income from operations for the full year 2009.

The increase in unallocated overhead costs resulted primarily from higher corporate payroll costs due to the planned increase in headcount andhigher legal costs, both related to our continued growth.

Other (Income) Expense, Net.  Interest expense was negative due to the reversal of interest and penalties originally recorded in prior periods related to certain tax obligations for one of the Company’s foreign subsidiaries.  Management determined that any remaining liability for such matters is remote, and therefore we reversed the previously accrued amount.  In addition, interest income decreased by $387, or 58.4%, for the three months ended June 30, 2009, compared to the three months ended June 30, 2008.  The decrease resulted primarily from lower overall market interest rates, as well as a shift in our investment mix to a greater percentage of safer, more liquid and lower yielding investments.

Income Taxes.Income taxes for the interim periods are computed using the effective tax rate estimated to be applicable for the full fiscal year, which is subject to ongoing review and evaluation by management and can vary from quarter to quarter.  Income tax expense (benefit) and effective income tax rates were as follows:

	Three months ended
	June 30,
	2009			2008
Income tax expense (benefit)	$	1,697		$	(2,494	)
Effective income tax rate	38.0		%	39.5		%

The decrease in the effective tax rate was primarily due to the increase in our projected annual international pre-tax income as a percentage of worldwide pre-tax income, as income generated in most of our foreign jurisdictions are taxed at significantly lower rates than the US.

Net Loss Attributable to the Noncontrolling Interest.  Net loss attributable to the noncontrolling interest in our joint venture with Stella International, which was formed in July 2008, was $112 for the three months ended June 30, 2009.

Net Income (Loss) Attributable to Deckers Outdoor Corporation.  Our net income increased as a result of the items discussed above.  Our diluted earnings per share increased by 175.9% to $0.22 for the three months ended June 30, 2009 compared to $(0.29) in the same period of 2008, primarily as a result of the increase in net income.

21

Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008

The following table summarizes the Company’s results of operations:

	Six Months Ended June 30,
	2009					2008					Change
	Amount			%		Amount			%		Amount			%
Net sales	$	236,774		100.0	%	$	188,651		100.0	%	$	48,123		25.5	%
Cost of sales	137,076			57.9		106,163			56.3		30,913			29.1
Gross profit	99,698			42.1		82,488			43.7		17,210			20.9
Selling, general and administrative expenses	76,147			32.2		57,472			30.5		18,675			32.5
Impairment loss	1,000			0.4		14,900			7.9		(13,900		)	-93.3
Income from operations	22,551			9.5		10,116			5.4		12,435			122.9
Other income, net	(1,837		)	(0.8	)	(2,238		)	(1.2	)	401			17.9
Income before income taxes	24,388			10.3		12,354			6.5		12,034			97.4
Income taxes	9,268			3.9		4,880			2.6		4,388			89.9
Net income	15,120			6.4		7,474			4.0		7,646			102.3
Net loss attributable to the noncontrolling interest	99			0.0		—			—		99			*
Net income attributable to Deckers Outdoor Corporation	$	15,219		6.4	%	$	7,474		4.0	%	$	7,745		103.6	%

* Calculation of percentage change is not meaningful.

Overview.  The increase in net sales was primarily due to an increase in UGG wholesale product sales and retail stores sales.  The increase in income from operations resulted primarily from the increase in net sales as well as the impairment loss in the six months ended June 30, 2008, partially offset by a lower gross margin and higher selling, general and administrative expenses.

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Net Sales

The following table summarizes net sales by location and net sales by brand and distribution channel:

	Six Months Ended June 30,
					Change
	2009		2008		Amount			%
Net sales by location:
U.S.	$	158,302	$	135,783	$	22,519		16.6	%
International	78,472		52,868		25,604			48.4
Total	$	236,774	$	188,651	$	48,123		25.5	%
Net sales by brand and distribution channel:
UGG:
Wholesale	$	129,601	$	89,755	$	39,846		44.4	%
eCommerce	16,651		17,578		(927		)	-5.3
Retail stores	19,536		7,979		11,557			144.8
Total	165,788		115,312		50,476			43.8
Teva:
Wholesale	54,812		59,697		(4,885		)	-8.2
eCommerce	3,079		3,063		16			0.5
Retail stores	224		188		36			19.1
Total	58,115		62,948		(4,833		)	-7.7
Simple:
Wholesale	6,038		8,116		(2,078		)	-25.6
eCommerce	1,591		1,395		196			14.1
Retail stores	254		205		49			23.9
Total	7,883		9,716		(1,833		)	-18.9
Other:
Wholesale	4,837		653		4,184			640.7
eCommerce	127		22		105			477.3
Retail stores	24		—		24			*
Total	4,988		675		4,313			639.0
Total	$	236,774	$	188,651	$	48,123		25.5	%

* Calculation of percentage change is not meaningful.

The increase in net sales was primarily driven by strong sales for the UGG brand.  In addition, our weighted-average wholesale selling price per pair increased 16.4% to $31.25 for the six months ended June 30, 2009 from $26.84 for the six months ended June 30, 2008, resulting primarily from higher UGG sales, which generally carry a higher average selling price.  During the period, we experienced an increase in the number of pairs sold of our UGG and Simple brands, as well as contributions from our new brands, partially offset by a decrease in the number of pairs sold of our Teva brand, resulting in a 6.5% overall increase in the volume of footwear sold for all brands to approximately 6.6 million pairs for the six months ended June 30, 2009 compared to approximately 6.2 million pairs for the six months ended June 30, 2008.

Wholesale net sales of our UGG brand increased primarily due to an increase in sales to both domestic customers and international distributors, as well as higher weighted-average wholesale selling prices per pair.  We cannot assure investors that UGG brand sales will continue to grow at their past pace or that revenue from UGG products will not at some point decline.

Wholesale net sales of our Teva brand decreased primarily due to a decrease in the number of pairs sold, partially offset by an increase in the weighted-average wholesale selling price per pair.

Wholesale net sales of our Simple brand decreased primarily due to a decrease in the weighted-average wholesale selling price per pair partially offset by an increase in the number of pairs sold.

Wholesale net sales of our other brands increased, as we did not own our other brands for the full six months ended June 30, 2008.

23

Net sales of our eCommerce business decreased by $610, or 2.8%, for the six months ended June 30, 2009 compared to the six months ended June 30, 2008.  The sales decrease was attributed to fewer pairs shipped, with the greatest impact from the UGG brand.

Net sales of our retail store business increased by $11,666, or 139.3%, for the six months ended June 30, 2009 compared to the six months ended June 30, 2008.  The increase in net sales was driven by an increase in sales of UGG products, which was partially due to the addition of seven new stores opened since June 30, 2008.  We do not expect this growth rate to continue because as we increase the number of our stores, each new store will have less proportional impact on our growth rate.  For those stores that were open during the full six month period ended June 30, 2008 and 2009, same store sales grew by 21.7%.  Nevertheless, we cannot assure investors that retail store sales will continue to grow at their recent pace or that revenue from our retail store business will not at some point decline.

International sales, which are included in the segment sales above, for all of our products combined represented 33.1% of net sales for the six months ended June 30, 2009 compared to 28.0% of net sales for the six months ended June 30, 2008.  The majority of the international sales growth was from the UGG brand in each of our international markets, led by the European region.

Gross Profit.  As a percentage of net sales, gross margin decreased to 42.1% for the six months ended June 30, 2009, compared to 43.7% for the six months ended June 30, 2008, primarily due to closeout sales including negative margins on Simple closeout sales.  In addition, our international distributor sales, which carry lower margins, were a greater percentage of our total sales for the first six months of 2009 versus 2008.  Our gross margins fluctuate based on several factors, and we expect our gross margin to increase slightly for the full year of 2009 compared to 2008.

Selling, General and Administrative Expenses.  As a percentage of net sales, SG&A increased to 32.2% of net sales for the six months ended June 30, 2009 compared to 30.5% for the six months ended June 30, 2008.  The increase in SG&A resulted primarily from a planned increase in payroll expenses, marketing expenses, including approximately $3,000 of incremental marketing investments for our Simple and TSUBO brands, and costs associated with seven new retail stores that were not open in the first six months of 2008.

Income from Operations

The following table summarizes operating income (loss) by product line and eCommerce and retail store business:

	Six Months Ended June 30,
							Change
	2009			2008			Amount			%
UGG wholesale	$	50,465		$	33,182		$	17,283		52.1	%
Teva wholesale (1)	12,187			(255		)	12,442			*
Simple wholesale	(5,196		)	167			(5,363		)	*
Other wholesale	(3,294		)	(60		)	(3,234		)	*
eCommerce	5,479			6,705			(1,226		)	-18.3
Retail stores	5			(100		)	105			105.0
Unallocated overhead costs	(37,095		)	(29,523		)	(7,572		)	-25.6
Total	$	22,551		$	10,116		$	12,435		122.9	%

* Calculation of percentage change is not meaningful.

(1)  Included in Teva loss from operations is an impairment loss of $14,900 during the second quarter of 2008.

Income from operations increased primarily due to the impairment loss in the six months ended June 30, 2008 as well as the increase in net sales, partially offset by the lower gross margin and higher selling, general and administrative expenses.

The increase in income from operations of UGG brand wholesale was primarily the result of the higher sales as well as lower bad debt expenses, partially offset by increased marketing and promotional expenses and lower gross margins.

The increase in income from operations of Teva brand wholesale was largely due to the impairment loss in the six months ended June 30, 2008 as well as decreased division expenses including our portion of the production costs for the documentary IMAX film, “Grand Canyon Adventure, River at Risk” in the six months ended June 30, 2008 plus other reduced marketing and promotional expenses.  These reductions in expenses were partially offset by lower sales and gross margins.

24

The increase in the loss from operations of Simple brand wholesale was primarily due to lower gross margins, mainly attributed to an increased impact of closeout sales, and lower total sales.  In addition, we recognized our planned increase in marketing and promotional expenses.

We did not own our other brands during the full six months ended June 30, 2008.  We began a new marketing campaign and invested in re-launching our TSUBO brand since our acquisition in May 2008.  However, we plan to defer the remaining spend until economic conditions improve. Our Ahnu brand is still a new brand in the marketplace.  Because of these reasons, as well as the economic recession, we expect to continue reporting a loss from operations for our other brands for at least the remainder of 2009.

Income from operations of our eCommerce business decreased primarily due to lower UGG brand sales, lower gross margins, and higher operating costs.

Income from operations of our retail store business increased primarily due to the increase in net sales, partially offset by lower domestic gross margins and higher operating expenses primarily related to our new store openings.

Unallocated overhead costs increased primarily from higher corporate payroll costs resulting from our planned increase in headcount andhigher distribution center costs, both related to our continued growth.

Other (Income) Expense, Net.  Interest expense was negative due to the reversal of interest and penalties originally recorded in prior periods related to certain tax obligations for one of the Company’s foreign subsidiaries.  Management determined that any remaining liability for such matters is remote, and therefore we reversed the previously accrued amount.  In addition, interest income decreased by $1,180, or 57.5%, for the six months ended June 30, 2009, compared to the six months ended June 30, 2008.  The decrease resulted primarily from lower overall market interest rates, as well as a shift in our investment mix to a greater percentage of safer, more liquid and lower yielding investments.

Income Taxes.Income taxes for the interim periods are computed using the effective tax rate estimated to be applicable for the full fiscal year, which is subject to ongoing review and evaluation by management and can vary from quarter to quarter.  Income tax expense and effective income tax rates were as follows:

	Six months ended
	June 30,
	2009			2008
Income tax expense	$	9,268		$	4,880
Effective income tax rate	38.0		%	39.5		%

The decrease in the effective tax rate was primarily due to the increase in our projected annual international pre-tax income as a percentage of worldwide pre-tax income, as income generated in most of our foreign jurisdictions are taxed at significantly lower rates than the US.  We anticipate our effective tax rate for the full year 2009 to be approximately 37% to 38%.  Our effective tax rate is based on pre-tax income projections, which are inherently subjective.

Net Loss Attributable to the Noncontrolling Interest.  Net loss attributable to the noncontrolling interest in our joint venture with Stella International, which was formed in July 2008, was $99 for the six months ended June 30, 2009.

Net Income Attributable to Deckers Outdoor Corporation.  Our net income increased as a result of the items discussed above.  Our diluted earnings per share increased by 101.8% to $1.15 for the six months ended June 30, 2009 compared to $0.57 in the same period of 2008, primarily as a result of the increase in net income.

Off-Balance Sheet Arrangements

We have off-balance sheet arrangements consisting of operating lease obligations and purchase obligations.  See “Contractual Obligations” below.

Liquidity and Capital Resources

We finance our working capital and operating needs using a combination of our cash and cash equivalents balances, short-term investments, cash generated from operations and, as needed, the credit available under our revolving credit facility. In an economic recession or under other adverse economic conditions, we may be unable to realize a return on our cash and cash equivalents and short-term investments, secure additional credit on favorable terms, renew our existing credit or access our existing line of credit. Such failures may impact our working capital reserves and have a material adverse effect on our business.

25

Since the latter part of 2007, US and foreign credit markets have experienced adverse conditions, including unusual volatility and a lack of secondary market liquidity, which conditions have presented, and continue to present, significant challenges to the investment markets and have limited the availability of short-term debt for working capital. While it is difficult to predict how long these adverse conditions will exist, these factors, if they continue, could adversely impact our future financial condition and our future results of operations.

The seasonality of our business requires us to build inventory levels in anticipation of the sales for the coming season. The UGG brand generally builds its fall and winter inventories in the second and third quarters to support sales for the UGG brand’s major selling seasons, which historically occur during the third and fourth quarters, whereas the Teva brand generally begins to build its inventory levels beginning in the fourth and first quarter in anticipation of the spring selling season that occurs in the first and second quarters.

Our cash flow cycle includes the purchase of these inventories, the subsequent sale of the inventories and the eventual collection of the resulting accounts receivables. As a result, our working capital requirements begin when we purchase the inventories and continue until we ultimately collect the resulting receivables. Given the seasonality of our UGG and Teva brands, our working capital requirements fluctuate significantly throughout the year. The cash required to fund these working capital fluctuations is generally provided using our internal cash flows. If necessary, we may borrow funds under our revolving credit facility.

Cash from Operating Activities.  Net cash used in operating activities was $9,895 and $27,366 for the six months ended June 30, 2009 and 2008, respectively.  The change in net cash used in operating activities was primarily due to a greater decrease in accounts receivable and a lower increase in inventory in the first six months of 2009 compared to the first six months of 2008. The larger decrease in accounts receivable was primarily due to increased cash collections in the six months ended June 30, 2009 versus the same period in 2008.  The lower increase in inventory was primarily due to timing of our inventory purchases, as well as higher sales in the six months ended June 30, 2009 versus June 30, 2008.  These changes were partially offset by a greater decrease in accrued expenses in the first six months of 2009 compared to the first six months of 2008.  The greater decrease in accrued expenses was primarily due to higher accrued payroll and other accrued expenses at December 31, 2008 compared to December 31, 2007.  Net working capital increased by $16,550 to $334,305 as of June 30, 2009 from $317,755 as of December 31, 2008, primarily as a result of higher inventory and short-term investments and lower income taxes payable and accrued expenses.  The increase in working capital was partially offset by the lower cash and cash equivalents balances and trade accounts receivable.  Changes in working capital are due to our normal seasonality and timing of cash receipts and cash payments.

Cash from Investing Activities.  For the six months ended June 30, 2009, net cash used in investing activities was $58,283, which resulted primarily from net purchases of short-term investments and purchases of property and equipment.  Our larger capital expenditures were related to expansion of our warehouse pick module and computer hardware and software.  For the six months ended June 30, 2008, net cash provided by investing activities was $49,957, which was comprised primarily of net sales of short-term investments, partially offset by purchases of property and equipment and our acquisition of TSUBO, LLC.  Our capital expenditures were primarily related to our inventory pick module and leasehold improvements and furniture for additional corporate offices.

Cash from Financing Activities.  For the six months ended June 30, 2009, net cash used in financing activities was $465 compared to net cash provided by financing activities of $2,550 for the six months ended June 30, 2008.  For the six months ended June 30, 2009 net cash used was comprised of cash paid for shares withheld for taxes from employee stock unit vestings offset by excess tax benefits from share-based compensation.  For the six months ended June 30, 2008, net cash provided by financing activities consisted of the excess tax benefits from stock-based compensation as well as cash received from the exercise of stock options.

In June 2009, we announced that our Board of Directors approved a stock repurchase program to repurchase up to $50,000 of our 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 us to acquire any particular amount of common stock and the program may be suspended at any time at our discretion.  The purchases will be funded from available working capital.  As of June 30, 2009, we had not repurchased any of our common stock under this program.  However, subsequent to June 30, 2009, we repurchased approximately 150,000 shares for a total of approximately $10,200.

Our working capital consists primarily of cash and cash equivalents, short-term investments, trade accounts receivable, inventories and trade accounts payable.  At June 30, 2009, working capital was $334,305, including $108,163 of cash and cash equivalents and $67,144 of short-term investments.  Trade accounts receivable decreased by 41.7% to $63,068 at June 30, 2009 from $108,129 at December 31, 2008, primarily due to increased cash collections and normal seasonality.  Accounts receivable turnover increased to 9.3 times in the twelve months ended June 30, 2009 from 8.9 times in the twelve months ended December 31, 2008. The increase was due primarily to higher sales for the twelve months ended June 30, 2009 compared to the twelve months ended December 31, 2008.

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Inventories increased 57.0% to $145,644 at June 30, 2009 from $92,740 at December 31, 2008, reflecting a $62,412, increase in UGG inventory, a $1,757 increase in other brands’ inventory, and a $9,669 and $1,596 decrease in Teva and Simple brand inventory, respectively.  The overall increase in inventory as of June 30, 2009 was largely due to normal seasonality as well as the increased number of retail stores which requires more inventory on hand.  Inventory turnover was 3.6 times for the twelve months ended June 30, 2009 compared to 4.1 times for the twelve months ended December 31, 2008.  The decrease in turnover was largely due to an increase in average inventory balances due to normal seasonality.

Our revolving credit facility with Comerica Bank, or the Facility, provides for a maximum availability of $20,000.  Up to $12,500 of borrowings may be in the form of letters of credit.  The Facility bears interest at the lender’s prime rate (3.25% at June 30, 2009) or, at our option, at the London Interbank Offered Rate, or LIBOR, (0.31% at June 30, 2009) plus 1.0% to 2.5%, depending on our ratio of liabilities to earnings before interest, taxes, depreciation and amortization, and is secured by substantially all of our assets.  The Facility includes annual commitment fees of $60 per year and expires on June 1, 2010.  At June 30, 2009, we had no outstanding borrowings under the Facility and outstanding letters of credit of $189.  As a result, $19,811 was available under the Facility at June 30, 2009.

The agreements underlying the Facility contain certain financial covenants.  We amended the Facility in June 2009, including amending some of these covenants.  The covenants currently include a limitation on aggregate annual lease payments of $20,000, a quick ratio requirement of at least 0.90:1.00, a minimum profitability requirement of $1,000 per fiscal quarter (except for the current quarter ended June 30, 2009, there is a maximum net loss of $3,000,) a limitation on annual consolidated capital expenditures of $25,000 in fiscal year 2009 and $15,000 in any fiscal year thereafter, a minimum tangible net worth requirement of $37,000 commencing with the fiscal year ended December 31, 2004, plus 75% of consolidated net profit on a cumulative basis, and a requirement that our consolidated total liabilities to consolidated effective tangible net worth ratio be no greater than 1.50:1.00.  The agreements also contain a prohibition on the payment of dividends.  At June 30, 2009, we were in compliance with all covenants and remain so as of the date of this report.

As of June 30, 2009, we had no material commitments for future capital expenditures but estimate that the remaining capital expenditures for 2009 will range from approximately $13,000 to $15,000. We anticipate the larger expenditures will include the build-out of new retail stores and miscellaneous computer hardware and software.  The actual amount of capital expenditures for the remainder of 2009 may differ from this estimate, largely depending on any unforeseen needs to replace existing assets and the timing of expenditures.

We believe that internally generated funds, the available borrowings under our existing Facility, cash and cash equivalents, and short-term investments will provide sufficient liquidity to enable us to meet our current and foreseeable working capital requirements.  However, risks and uncertainties that could impact our ability to maintain our cash position include our growth rate, the continued strength of our brands, the global economic conditions, our ability to respond to changes in consumer preferences, our ability to collect our receivables in a timely manner, our ability to effectively manage our inventories, the availability of short-term credit and market volatility, among others.  Please refer to our Annual Report on Form 10-K under Item 1A. Risk Factors and this Quarterly Report on Form 10-Q under Item 1A. Risk Factors for a discussion of additional factors that may affect our working capital position.  Furthermore, we may require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If these sources are insufficient to satisfy our cash requirements, we may seek to sell debt securities or additional equity securities or to obtain a new facility or draw on our existing Facility.  The sale of convertible debt securities or additional equity securities could result in additional dilution to our stockholders.  The incurrence of indebtedness would result in incurring debt service obligations and could result in operating and financial covenants that would restrict our operations.  In addition, there can be no assurance that any additional financing will be available on acceptable terms, if at all. We may, from time to time, evaluate acquisitions of other businesses or brands.  As of June 30, 2009, there were no material binding understandings, commitments or agreements with respect to the acquisition of any other businesses.

Contractual Obligations.  The following table summarizes our contractual obligations at June 30, 2009, and the effects such obligations are expected to have on liquidity and cash flow in future periods.

	Payments Due by Period
			Less than						More than
	Total		1 Year		1-3 Years		3-5 Years		5 Years
Operating lease obligations(1)	$	66,684	$	12,042	$	23,820	$	12,535	$	18,287
Purchase obligations(2)	224,763		223,450		1,313		—		—
Unrecognized tax benefits(3)	2,290		—		2,290		—		—
Total	$	293,737	$	235,492	$	27,423	$	12,535	$	18,287

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(1)Our operating lease obligations consist primarily of building leases for our retail locations, distribution centers, and corporate and regional offices.  Other long-term liabilities on our condensed consolidated balance sheet include primarily deferred rents, which are included in operating lease obligations in this table.

(2)Our purchase obligations consist largely of purchase orders, promotional expenses, service contracts, and minimum purchase commitments.  Outstanding purchase orders are primarily with our third party manufacturers and are expected to be paid within one year.  These are outstanding open orders and not minimum obligations.  Our promotional expenditures and service contracts are due periodically through 2012.  In February 2009, we entered into a contract requiring minimum purchase commitments of sheepskin of approximately $64,000 that Deckers’ affiliates, manufacturers, factories and other agents (each or collectively, a “Buyer”) must make on or before December 31, 2010.  This contract may result in an unconditional purchase obligation if a Buyer does not meet the minimum purchase requirements.  In the event that a Buyer does not purchase such minimum commitments on or before December 31, 2010, Deckers is required to purchase any remaining amounts on or before December 31, 2010.  We expect our sheepskin purchases by third party factories supplying UGG product to us will exceed these levels in 2009 and 2010.  Therefore, we do not anticipate having to make any non-performance payments under this contractual arrangement; however, we are not able to reasonably estimate when or if cash payments will occur and have included these amounts in this table.  We believe this will not materially affect our liquidity or results of operations, as it is in the normal course of our business.

(3)The unrecognized tax benefits are related to uncertain tax positions taken in our income tax return that would impact the effective tax rate, if recognized.

In addition to the amounts in the table above, we have entered into other off-balance sheet arrangements.  We agreed to make loans to our joint venture with Stella International, should the need arise. The estimated total loans by Deckers and Stella International is expected to be approximately $4,000 contributed by both parties in proportion to their respective ownership in the joint venture.   We also have potential future earn-out payments relating to our May 2008 acquisition of TSUBO, LLC and our March 2009 acquisition of Ahnu, Inc.  The potential earn-out for TSUBO, LLC is based on the amount, if any, that sales of TSUBO products exceed certain base revenue levels for each year from 2008 to 2012.  See Note 10, “Commitments and Contingencies,” to the condensed consolidated financial statements for further discussion.  The potential earn-out for Ahnu, Inc. is based on the amount, if any, that gross profit of Ahnu products exceeds certain base levels for each year from 2010 to 2013.  See Note 11, “Business Combinations,” to the condensed consolidated financial statements for further discussion.  These amounts were excluded from the table above as all conditions for the earn-out payments have not been met.  Earn-out payments of $820 were included as purchase consideration for Ahnu, Inc. and are included within long-term liabilities in the condensed consolidated balance sheet as of June 30, 2009.

Impact of Inflation

We believe that the rates of inflation during the three most recent fiscal years have not had a material impact on our net sales or income (loss) from operations.

Critical Accounting Policies and Estimates

Revenue Recognition.We recognize revenue when products are shipped and the customer takes title and assumes risk of loss, collection of relevant receivable is probable, persuasive evidence of an arrangement exists, and the sales price is fixed or determinable.  Allowances for estimated returns, discounts and chargebacks are provided for when related revenue is recorded. Amounts billed for shipping and handling costs are recorded as a component of net sales, while the related costs paid to third-party shipping companies are recorded as a cost of sales.  We present revenue net of taxes collected from customers and remitted to governmental authorities.

Use of Estimates.The preparation of condensed consolidated financial statements in conformity with US generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures about contingent liabilities and the reported amounts of net sales and expenses during the reporting period.  Management bases these estimates and assumptions upon historical experience, existing, known circumstances, authoritative accounting pronouncements and other factors that management believes to be reasonable.  Management reasonably could use different estimates and assumptions, and changes in estimates and assumptions could occur from period to period, with the result in each case being a potential material change in the financial statement presentation of our financial condition or results of operations. We have historically been materially accurate in our estimates used for the reserves and allowances below.  We believe that the estimates and assumptions below are among those most important to an understanding of our condensed consolidated financial statements contained in this report.

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Allowance for Doubtful Accounts.  We provide a reserve against trade accounts receivable for estimated losses that may result from customers’ inability to pay.  We determine the amount of the reserve by analyzing known uncollectible accounts, aged trade accounts receivables, economic conditions, historical experience, and the customers’ credit-worthiness. Trade accounts receivable that are subsequently determined to be uncollectible are charged or written off against this reserve. The reserve includes specific reserves for accounts which are identified as potentially uncollectible, plus a non-specific reserve for the balance of accounts based on our historical loss experience with bad debts.  Reserves have been established for all probable losses of this nature.  The gross trade accounts receivable balance was $69,606 and the allowance for doubtful accounts was $2,415, or 3.5%, of accounts receivable, at June 30, 2009, compared to gross trade accounts receivable of $118,835 and the allowance of $2,482, or 2.1%, of accounts receivable, at December 31, 2008.  The increase in the allowance as a percentage of accounts receivable was primarily due to additional downgrading of the collectability of several accounts due to current economic conditions, which increased the reserve percentage applied to those accounts.  Our use of different estimates and assumptions could produce different financial results.  For example, a 1.0% change in the rate used to estimate the reserve for the accounts we consider to have credit risk and are not specifically identified as uncollectible would change the allowance for doubtful accounts at June 30, 2009 by approximately $410.

Reserve for Sales Discounts.  A significant portion of our domestic net sales and resulting trade accounts receivable reflects a discount that the customers may take, generally based upon meeting certain order, shipment and payment timelines.  We estimate the amount of the discounts that are available to be taken against the period-end trade accounts receivable, and we record a corresponding reserve for sales discounts.  The reserve for discounts was $1,008, or 1.4%, of gross accounts receivable, at June 30, 2009 and $4,241, or 3.6%, of gross accounts receivable, at December 31, 2008.  The decrease in the reserve as a percentage of accounts receivable was primarily due to a lower percentage of total outstanding customer balances being eligible for terms discounts as of June 30, 2009 compared to December 31, 2008.  Our use of different estimates and assumptions could produce different financial results. For example a 10.0% change in the estimate of the percentage of accounts that will ultimately take their discount would change the reserve for sales discounts at June 30, 2009 by approximately $100.

Allowance for Estimated Returns.  We record an allowance for anticipated future returns of goods shipped prior to period-end. In general, we accept returns for damaged or defective products but discourage returns for other reasons. We base the amount of the allowance on any approved customer requests for returns, historical returns experience and any recent events that could result in a change from historical returns rates, among other factors. The allowance for returns was $1,064 at June 30, 2009, or 1.0%, of net sales for the three months ended June 30, 2009, and $2,335 at December 31, 2008, or 0.8%, of net sales for the three months ended December 31, 2008.  Our use of different estimates and assumptions could produce different financial results. For example, a 1.0% change in the rate used to estimate the percentage of sales expected to ultimately be returned would change the reserve for returns at June 30, 2009 by approximately $410.

Allowance for Estimated Chargebacks. When our customers pay their invoices, they often take deductions for chargebacks against their invoices, which we seldom recover.  Therefore, we record an allowance for the balance of chargebacks that are outstanding in our accounts receivable balance as of the end of each quarter, along with an estimated reserve for chargebacks that have not yet been taken against outstanding accounts receivable balances.  This estimate is based on historical trends of the timing of chargebacks taken against invoices.  The allowance for chargebacks was $2,051, or 2.9%, of gross accounts receivable, at June 30, 2009 and $1,648, or 1.4%, of gross accounts receivable, at December 31, 2008.  The increase in the allowance was primarily because many of the open chargebacks were carried over from the fourth quarter of 2008, as the period to resolve the chargebacks has become longer.

Inventory Write-Downs.  Inventories are stated at lower of cost or market. We review the various items in inventory on a regular basis for excess, obsolete, and impaired inventory.  In doing so, we write the inventory down to the lower of cost or estimated future net selling prices.  At June 30, 2009, inventories were stated at $145,644, net of inventory write-downs of $1,752.  At December 31, 2008, inventories were stated at $92,740, net of inventory write-downs of $3,680.  The decrease in inventory write-downs was primarily due to the sell-through of previously written-down inventory, primarily in our Teva and Simple brand inventories.  Our use of different estimates and assumptions could produce different financial results. For example, a 10.0% change in the estimated selling prices of our potentially obsolete inventory would change the inventory write-down reserve at June 30, 2009 by approximately $370.

Valuation of Goodwill, Intangible and Other Long-Lived Assets.Annually, or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, we assess the impairment of goodwill, intangible and other long-lived assets on a separate asset basis based on assumptions and judgments regarding the carrying amount of these assets individually. We test goodwill and nonamortizable intangible assets for impairment on an annual basis based on the fair value of the reporting unit for goodwill and the fair value of the assets for nonamortizable intangibles compared to their respective carrying value. We consider other long-lived assets to be impaired if we determine that the carrying value may not be recoverable. Among other considerations, we consider the following factors:

·the assets’ ability to continue to generate income from operations and positive cash flow in future periods;

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·any changes in legal ownership of rights to the assets; and

·changes in consumer demand or acceptance of the related brand names, products or features associated with the assets.

If we determine the assets to be impaired, we recognize an impairment loss equal to the amount by which the carrying value of the assets exceeds the estimated fair value of the assets.  In addition, as it relates to long-lived assets, we base the useful lives and related amortization or depreciation expense on the estimate of the period that the assets will generate sales or otherwise be used by us.

As of June 30, 2009, our inability to reach our 2009 TSUBO brand period to date sales targets along with a reduced long-term forecast for TSUBO brand sales growth were indicators that the TSUBO intangible assets were possibly impaired.  As a result, we conducted an interim impairment evaluation of the TSUBO intangible assets as of June 30, 2009 and concluded that the fair value of the TSUBO trademarks was lower than the carrying amount.  Therefore, we recognized an impairment loss of $1,000 in the second quarter of 2009 on the TSUBO trademarks.  In addition, the Company will amortize the remaining TSUBO trademarks of $970 over 10 years.

As of June 30, 2008, our inability to reach our 2008 Teva brand period to date sales targets along with a reduced long-term forecast for Teva brand sales growth were indicators that the Teva goodwill and other intangible assets were possibly impaired.  As a result, we conducted an interim impairment evaluation of the Teva goodwill and other intangible assets as of June 30, 2008 and concluded that the Teva goodwill was not impaired, but the fair value of the Teva trademarks was lower than the carrying amount. Therefore, we recognized an impairment loss of $14,900 in the second quarter of 2008 on the Teva trademarks.

The annual impairment testing date is still December 31 of each year; however, management will perform an interim test of recoverability should facts and circumstances warrant.  Such facts and circumstances could include further deterioration of general economic conditions or the retail environment, customers reducing orders in response to such conditions and increased competition.  These or other factors could result in impairment of our remaining goodwill and other intangible assets.  Our use of different estimates (including estimated royalty rates, discount rates, market multiples, and future revenues, among others) and assumptions could produce different financial results.

Share-based Compensation Expense.Financial Accounting Standards Board, or FASB, Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment”, or SFAS 123R, and Accounting Standards Codification subtopic “Compensation: Stock Compensation”, or ASC 718,  require that share-based payment transactions with employees be accounted for using the fair value method and expensed ratably over the vesting period of the award.  Share-based compensation expense is based on the fair values of all share-based awards as of the grant date. Determining the expense of share-based awards at the grant date requires judgment, including estimating the percentage of awards that will be forfeited, probabilities of meeting criteria for performance-based awards, stock volatility, the expected life of the award, and other inputs.  If actual forfeitures differ significantly from the estimates, share-based compensation expense and our results of operations could be materially impacted.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

Derivative Instruments.Although we have used foreign currency hedges in the past, we currently do not utilize forward contracts or other derivative instruments to mitigate exposure to fluctuations in the foreign currency exchange rate, as the majority of our purchases and sales for the foreseeable future will be denominated in US currency.  As our international operations grow and we increase purchases and sales in foreign currencies, we will evaluate and utilize derivative instruments, as needed, to hedge our foreign currency exposures.

Although the majority of our sales and inventory purchases are denominated in US currency, our sales and inventory purchases may be impacted by fluctuations in the exchange rates between the US dollar and the local currencies in the international markets where our products are sold and manufactured.  If the US dollar strengthens, it may result in increased pricing pressure on our distributors, which may have a negative impact on our net sales and gross margins.  We are unable to estimate the amount of any impact on sales and gross margins attributed to pricing pressures caused by fluctuations in exchange rates.

Market Risk.Our market risk exposure with respect to financial instruments is to changes in the prime rate in the US and changes in LIBOR.  Our revolving line of credit provides for interest on outstanding borrowings at rates tied to the prime rate or at our election tied to LIBOR.  At June 30, 2009, we had no outstanding borrowings under the revolving line of credit.  A 1.0% increase in interest rates on our current borrowings would have no impact on income (loss) before income taxes.

We face market risk to the extent that changes in foreign currency exchange rates affect our foreign assets and liabilities. We manage these risks by attempting to denominate contractual and other foreign arrangements in US dollars and by maintaining a significant percentage of our liabilities in US dollars.  We do not believe that there has been a material change in the nature of our primary

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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.  As of the date of this Quarterly Report on Form 10-Q, we do not know of or expect there to be any material change in the general nature of our primary market risk exposure in the near term.

Item 4.    Controls and Procedures

Disclosure Controls and Procedures

Disclosure controls and procedures are the controls and other procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.  Disclosure controls and procedures include, among other processes, controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

The Company carried out an evaluation, under the supervision and with the participation of management, including the principal executive officer and the principal financial officer of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2009 pursuant to Exchange Act Rule 13a-15.  Based upon that evaluation, the principal executive officer and the principal financial officer believe that as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective in making known to them material information relating to the Company (including its consolidated subsidiaries) required to be included in this report.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the quarter ended June 30, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II.   OTHER INFORMATION

Item 1.      Legal Proceedings

We are involved in routine litigation arising in the ordinary course of business. Such routine matters, if decided adversely to us, would not, in the opinion of management, have a material adverse effect on our financial condition or results of operations. Additionally, we have many pending disputes in the US Patent and Trademark Office, foreign trademark offices and US federal and foreign courts regarding unauthorized use or registration of our brand trademarks. We also are aware of many instances throughout the world in which a third party is using our UGG trademarks within its internet domain name, and we have discovered and are investigating several manufacturers and distributors of counterfeit Teva and UGG products.

Item 1A.   Risk Factors

Our stock repurchase plan may be suspended or terminated at any time, which may result in a decrease in our stock price.

We have announced a plan to repurchase shares of our common stock in the market under an arrangement pursuant to which management is permitted to determine the amount and timing of repurchases in its discretion subject to an overall limit.  Our ability and willingness to repurchase shares is subject to, among other things, the availability of cash resources and credit at rates and upon terms we believe are prudent.  Stock market conditions, the market value of our common stock and other factors may also make it imprudent for us from time to time to engage in repurchase activity.  There can be no assurance that we will repurchase shares.  If our repurchase program is curtailed, our stock price and our earnings per share may be negatively affected.

There have been no other material changes from the risk factors disclosed in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed on March 2, 2009.

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Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

In June 2009, the Company announced that the Board of Directors approved a stock repurchase program to repurchase up to $50,000 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. The purchases will be funded from available working capital. As of June 30, 2009, the Company did not repurchase any of its common stock under this program.

Item 3.Defaults upon Senior Securities

Not applicable

Item 4.Submission of Matters to a Vote of Security Holders

On May 28, 2009, the Company held its Annual Meeting of Stockholders, whereby the stockholders (i) elected eight directors to serve until the Annual Meeting of 2010 and until his or her successor is elected and qualified, (ii) ratified the selection of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2009, and (iii) ratified an amendment to the Company’s Restated Certificate of Incorporation to increase the authorized number of shares of the Company’s common stock from 20,000,000 to 50,000,000.  The results of the stockholder vote on such matters were as follows:

1.ELECTION OF DIRECTORS

		Total votes
	Total votes for	withheld from
	each nominee	each nominee
Angel R. Martinez	10,513,807	1,777,386
Rex A. Licklider	10,585,562	1,705,631
John M. Gibbons	8,305,769	3,985,424
John G. Perenchio	8,306,326	3,984,867
Maureen Conners	8,306,598	3,984,595
Tore Steen	11,793,918	497,275
Ruth M. Owades	11,793,991	497,202
Karyn O. Barsa	11,788,849	502,344

2.RATIFY THE APPOINTMENT OF KPMG LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2009

For	11,053,239
Against	1,233,723
Abstentions and broker non-votes	4,231
	12,291,193

3.INCREASE NUMBER OF AUTHORIZED SHARES OF THE COMPANY’S COMMON STOCK

For	7,847,411
Against	4,440,233
Abstentions and broker non-votes	3,549
	12,291,193

Item 5.Other Information

Not applicable

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Item 6.Exhibits

EXHIBIT INDEX

Exhibit  Number	Description of Exhibit
3.1*	Amended and Restated Certificate of Incorporation of Deckers Outdoor Corporation as amended through June 4, 2009.
3.2	Restated Bylaws of Deckers Outdoor Corporation, as amended by the Board of Directors through March 11, 2009 (Exhibit 3.2 to the Registrant’s Form 10-Q for the quarterly period ended March 31, 2009 and incorporated by reference herein).
10.1	Amendment No. 11 dated June 29, 2009 to Amended and Restated Credit Agreement among Deckers Outdoor Corporation and Comerica Bank (Exhibit 10.1 to the Registrant’s Form 8-K filed on July 7, 2009 and incorporated by reference herein).
31.1*	Certification of Principal Executive Officer, Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer, Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32*	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Filed herewith.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Deckers Outdoor Corporation
Date: August 10, 2009	/s/ Zohar Ziv
	Zohar Ziv
	Chief Operating Officer
	(Duly Authorized Officer on Behalf of the Registrant and Principal Financial and Accounting Officer)

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EX-3.1

Exhibit 3.1

RESTATED

CERTIFICATE OF INCORPORATION OF

DECKERS FOOTWEAR CORPORATION

Deckers Footwear Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Corporation”), does hereby certify:

1.             That the name of the Corporation is Deckers Footwear Corporation, and its Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on August 3, 1993.

2.             That, in accordance with the requirements of Sections 242 and 245 of the General Corporation Law of the State of Delaware, the Board of Directors of the Corporation, by unanimous written consent dated as of September 8, 1993, adopted resolutions proposing and declaring advisable an amendment and restatement of the Certificate of Incorporation in the form of an Amended and restated Certificate of Incorporation, and directing that such Amended and restated Certificate of Incorporation be submitted to the sole stockholder of the Corporation for its consideration.  The resolutions setting forth the proposed amendment and restatement are as follows:

NOW, THEREFORE, BE IT RESOLVED, that the Certificate of Incorporation of the Corporation be amended and restated in its entirety as follows:

“AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

DECKERS OUTDOOR CORPORATION

a Delaware corporation

ARTICLE I

NAME OF CORPORATION

The name of this corporation is

Deckers Outdoor Corporation

ARTICLE II

REGISTERED OFFICE

The address of the registered office of the Corporation in the State of Delaware is 1013 Centre Road, in the City of Wilmington, County of New Castle, and the name of its registered agent at that address is Corporation Service Company.

ARTICLE III

PURPOSE

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law.

ARTICLE IV

AUTHORIZED CAPITAL STOCK

SECTION 1.           Authorized Shares.  The Corporation shall be authorized to issue two classes of shares of stock to be designated, respectively, “Preferred Stock” and “Common Stock”; the total number of shares that the Corporation shall have authority to issue is Twenty-five Million (25,000,000); the total number of shares of Preferred Stock shall be Five Million (5,000,000) and all such shares shall have a par value of one cent ($.01); and the total number of shares of Common Stock shall be Twenty Million (20,000,000), and each such share shall have a par value of one cent ($.01).

SECTION 2.           Preferred Stock.  The shares of Preferred Stock may be issued from time to time in one or more series.  The Board is hereby vested with authority to fix by resolution or resolutions the designations and the powers, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, including, without limitation, the dividend rate, conversion or exchange rights, redemption price and liquidation preference, of any series of shares of Preferred Stock, and to fix the number of shares constituting any such series, and to increase or decrease the number of shares of any such series (but not below the number of shares thereof then outstanding).  In case the number of shares of any such series shall be so decreased, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution or resolutions originally fixing the number of shares of such series.

SECTION 3.           Distributions upon Liquidation.  In the event of any dissolution, liquidation or winding up of the affairs of the Corporation, whether voluntary or involuntary, after payment or provision for payment of the debts and other liabilities of the Corporation, the holders of each series of Preferred Stock shall be entitled to receive, out of the net assets of the Corporation, an amount for each share of such series of Preferred Stock equal to the amount fixed and determined by the Board in the resolution or resolutions creating such series and providing for the issuance of such shares, and no more, before any of the assets of the Corporation shall be distributed or paid over to the holders of Common Stock.  After payment in full of said amounts to the holders of Preferred Stock of all series, the remaining assets and funds of the Corporation shall be divided among and paid to the holders of shares

2

of Common Stock.  If, upon such dissolution, liquidation or winding up, the assets of the Corporation distributable as aforesaid among the holders of Preferred Stock of all series shall be insufficient to permit full payment to them of said preferential amounts, then such assets shall be distributed ratably among such holders of Preferred Stock in proportion to the respective total amounts that they shall be entitled to receive as provided in this Section 3.

ARTICLE V

INCORPORATOR

The name and mailing address of the incorporator of the Corporation is:

Diana M. Wilson

1140 Mark Avenue

Carpinteria, CA 93013

ARTICLE VI

ANNUAL MEETINGS OF STOCKHOLDERS

The annual meeting of stockholders shall be held at such time, on such date and at such place (within or without the State of Delaware) as provided in the Bylaws of the Corporation.  Subject to any requirement of applicable law, the books of the Corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the Board or in the Bylaws of the Corporation.  Elections of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide.

ARTICLE VII

CALL OF SPECIAL MEETINGS OF STOCKHOLDERS

Special meetings of stockholders of the Corporation for any purpose or purposes may be called at any time (i) by a majority of the members of the Board, (ii) by a committee of the Board that has been duly designated by the Board and whose power and authority, as provided in a resolution by the Board or in the Bylaws of the Corporation, includes the power to call such meetings, or (iii) by the holders of shares entitled to cast not less than ten percent of the votes at such meeting; but such special meetings of stockholders of the Corporation may not be called by any other Person or Persons or in any other manner; provided, however, that if and to the extent that any special meeting of stockholders may be called by any other Person or Persons specified in any certificate of designations filed under Section 151(g) of the Delaware General Corporation Law (or its successor statute as in effect from time to time), then such special meeting may also be called by the Person or Persons, in the manner, at the times and for the purposes so specified.

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ARTICLE VIII

STOCKHOLDER ACTION BY WRITTEN CONSENT

Any election of directors or other action by the stockholders of the Corporation must be effected at an annual or special meeting of stockholders and may not be effected by written consent without a meeting.

ARTICLE IX

ELECTION OF DIRECTORS

SECTION 1.           Classified Board.  Except to the extent otherwise provided in any certificate of designations filed under Section 151(g) of the Delaware General Corporation Law (or its successor statute as in effect from time to time), the Board of Directors shall be and is divided into three classes, Class I, Class II and Class III.  Such classes shall be as nearly equal in number of directors as reasonably possible.  Each director shall serve for a term ending on the third annual meeting following the annual meeting at which such director was elected; provided, however, that the directors first elected to Class I shall serve for a term ending on the annual meeting date next following the end of calendar year 1993, the directors first elected to Clams II shall serve for a term ending on the second annual meeting date next following the end of calendar year 1993, and the directors first elected to Class III shall serve for a term ending on the third annual meeting date next following the end of calendar year 1993.  The foregoing notwithstanding, each director shall serve until a successor to such director shall have been duly elected and qualified unless such director shall resign, become disqualified or shall otherwise be removed in accordance with law.

At each annual election, the directors chosen to succeed those whose terms then expire shall be of the same class of the directors they succeed unless, by reason of any intervening changes in the authorized number of directors, the designated board shall designate one or more directorships whose term then expires as directorships of another class in order more nearly to achieve equality of number of directors among the classes.  If a director dies, resigns or is removed, the director chosen to fill the vacant directorship shall be of the same class as the director he or she succeeds, unless, by reason of any previous changes in the authorized number of directors, the Board shall designate such vacant directorship as a directorship of another class in order more nearly to achieve equality in the number of directors among the classes.

Notwithstanding the rule that the three classes shall be as nearly equal in number of directors as reasonably possible, in the event of any change in the authorized number of directors, each director then continuing to serve as such shall nevertheless continue as a director of the class of which such director is a member until the expiration of his or her current term or his or her prior death, resignation or removal.  If any newly created directorship may, consistently with the rule that the three classes shall be as nearly equal in number of directors as reasonably possible, be allocated to one of two or more classes, the Board shall allocate it to that of the available classes whose term of office is due to expire at the earliest date following such allocation.

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Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may, unless the Board of Directors determines otherwise, only be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director; provided, however, that if the holders of any class or classes of stock or series thereof are entitled to elect one or more directors, vacancies and newly created directorships of such class or classes or series may only be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected.

SECTION 2.           Election of Directors by Preferred Stockholders.  During any period when the holders of any Preferred Stock or any one or more series thereof, voting as a class, shall be entitled to elect a specific number of directors, by reason of dividend arrearages or other provisions giving them the right to do so, then and during such time as such right continues (1) the then otherwise authorized number of directors shall be increased by such specified number of directors, and the holders of such Preferred Stock or such series thereof, voting as a class, shall be entitled to elect the additional directors so provided for, pursuant to the provisions of such Preferred Stock or series; (2) each such additional director shall serve for such term, and have such voting powers, as shall be stated in the provisions pertaining to such Preferred Stock or series; provided, however, that, notwithstanding the foregoing, any such director’s term shall earlier expire upon the due election and qualification of a successor to such director or upon any resignation, disqualification or removal of such director in accordance with law.  Whenever the holders of shares of any series of Preferred Stock are divested of such rights to elect a specified number of directors pursuant to the resolution or resolutions of the Board creating such series and providing for the issuance of such shares, the terms of office of all directors elected by the holders of such series of Preferred Stock pursuant to such rights, or elected to fill any vacancies resulting from the death, resignation or removal of directors so elected by the holders of such series of Preferred Stock, shall forthwith terminate and the authorized number of directors shall be reduced accordingly.

SECTION 3.           Stockholder Nominees.  Nominations by stockholders of persons for election to the Board shall be made only in accordance with the procedures set forth in the Bylaws of the Corporation.

SECTION 4.           Removal.  Subject to the rights of the holders of any series of Preferred Stock then outstanding, any director, or the entire Board, may be removed from office with or without cause, at any time, and only by the affirmative vote of the holders of a majority of the shares of Voting Stock then outstanding.

ARTICLE X

LIABILITY AND INDEMNIFICATION

To the fullest extent permitted by the Delaware General Corporation Law, as the same exists or may hereafter be amended (the “Delaware Law”), a director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director.  The Corporation shall indemnify, in the manner and to the fullest extent permitted by the Delaware Law, any person (or the estate of any person) who is or was a party to, or is threatened to be made a party to, any threatened,

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pending or completed action, suit or proceeding, whether or not by or in the right of the Corporation, and whether civil, criminal, administrative, investigative or otherwise, by reason of the fact that such person is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise.  The Corporation may indemnify, in the manner and to the fullest extent permitted by the Delaware Law, any person (or the estate of any person) who is or was a party to, or is threatened to be made a party to, any threatened, pending or completed action, suit or proceeding, whether or not by or in the right of the Corporation, and whether civil, criminal, administrative, investigative or otherwise, by reason of the fact that such person is or was an employee or agent of the Corporation, or is or was serving at the request of the Corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise.  Expenses incurred by any such director, officer, employee or agent in defending any such action, suit or proceeding may be advanced by the Corporation prior to the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director, officer, employee or agent to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified as authorized by the Delaware Law and this Article X.  The Corporation may, to the fullest extent permitted by the Delaware Law, purchase and maintain insurance on behalf of any such director, officer, employee or agent against any liability which may be asserted against such person.  To the fullest extent permitted by the Delaware Law, the indemnification provided herein shall include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement and, in the manner provided by the Delaware Law, any such expenses may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding.  The indemnification provided herein shall not be deemed to limit the right of the Corporation to indemnify any other person for any such expenses to the fullest extent permitted by the Delaware Law, nor shall it be deemed exclusive of any other rights to which any person seeking indemnification from the Corporation may be entitled under any agreement, votes of stockholders or disinterested directors, or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office.

No repeal or modification of the foregoing paragraph shall adversely affect any right or protection of a director of the Corporation existing by virtue of the foregoing paragraph at the time of such repeal or modification.

ARTICLE XI

AMENDMENT OF CORPORATE DOCUMENTS

SECTION 1.           Certificate of Incorporation.  In addition to any affirmative vote required by applicable law or any other provision of this Certificate of Incorporation or specified in any agreement, and in addition to any voting rights granted to or held by the holders of Common Stock or Preferred Stock, any alteration, amendment, repeal or rescission (any “Change”) of any provision of this Certificate of Incorporation must be approved by a majority of the directors of the Corporation then in office and by the affirmative vote of the holders of a majority of the Voting Stock then outstanding; provided, however, that if any such Change relates to any Article other than Articles I, II or VI hereof, or Section 1 of Article IV hereof, such Change must also be approved either (i) by a majority of the authorized number of directors, or (ii) by the affirmative vote of the holders of not less than

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66-2/3% of the shares of Voting Stock then outstanding.  Subject to the foregoing, the corporation reserves the right to alter, amend, repeal or rescind any provision contained in this Certificate of Incorporation in any manner now or hereafter prescribed by law.

SECTION 2.           Bylaws.  In addition to any affirmative vote required by applicable law and any voting rights granted to or held by the holders of Common Stock or Preferred Stock, any Change of any provision of the Bylaws of the Corporation must be approved either (A) by a majority of the authorized number of directors, or (B) by the affirmative vote of the holders of not less than 66-2/3% of the shares of Voting Stock then outstanding.  Subject to the foregoing, the Board shall have the power to make, alter, amend, repeal or rescind the Bylaws of the Corporation.

ARTICLE XII

CREDITOR COMPROMISES OR ARRANGEMENT

Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting or the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs.  If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockho1ders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation.

ARTICLE XIII

DEFINITIONS

For purposes of this Certificate of Incorporation, the following terms shall have the meanings indicated, and all capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in Section 203(c) of the Delaware General Corporation Law, as in effect on the date hereof:

(A)          “Board” shall mean the Board of Directors of the Corporation.

(B)           “Voting Stock” shall mean stock of the Corporation of any class or series entitled to vote generally in the election of directors of the Corporation, and each reference herein to a percentage or portion of shares of Voting Stock shall refer to such percentage or portion of the votes entitled to be cast by the holders of such shares.”

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RESOLVED FURTHER, that that a special meeting of the sole stockholder be called, at which the Amended and Restated Certificate of Incorporation shall be submitted to the sole stockholder of the Corporation for its consideration;

RESOLVED FURTHER, that, upon the approval of the Amended and Restated Certificate of Incorporation by the sole stockholder, the officers of the Corporation be, and each of them hereby is, authorized to execute and to cause to be acknowledged, filed and recorded in accordance with the requirements of the General Corporation Law of the State of Delaware a certificate setting forth the foregoing resolutions and the Amended and Restated Certificate of Incorporation;

RESOLVED FURTHER, that, upon its filing with the Secretary of State of the State of Delaware, a certified copy of the Amended and Restated Certificate of Incorporation be inserted by the Secretary of this Corporation in the Book of Minutes of this Corporation and kept at the principal office for the transaction of business of this Corporation; and

RESOLVED FURTHER, that the officers of this Corporation be, and each of them hereby is, authorized and directed to execute all documents and to take such action as they may deem necessary or advisable in order to carry out the purposes of these resolutions.

3.             That, thereafter pursuant to resolution of the Board of Directors of the Corporation, such Amended and Restated Certificate of Incorporation was submitted to the sole stockholder for its consideration, and such sole stockholder approved of the such Amended and Restated Certificate of Incorporation at a special meeting held on September 13, 1993.

4.             That said Amended and Restated Certificate of Incorporation was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, Deckers Footwear Corporation has caused this certificate to be signed by its President and attested by its Secretary, this 13th day of September, 1993.

DECKERS FOOTWEAR CORPORATION
By:	/s/ Douglas B. Otto
Douglas B. Otto, President
ATTEST:
By:	/s/ Diana W. Wilson
Diana W. Wilson, Secretary

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CERTIFICATE OF OWNERSHIP AND MERGER

MERGING DECKERS CORPORATION

INTO DECKERS OUTDOOR CORPORATION

Deckers Corporation, a corporation organized and existing under the laws of the State of California does hereby certify:

1.             That Deckers Corporation was incorporated on the 1st day of August, 1975, in the State of California, pursuant to the California Corporations Code;

2.             That Deckers Corporation owns all of the outstanding shares of capital stock of Deckers Outdoor Corporation, a corporation incorporated on the 3rd day of August, 1993, pursuant to the General Corporation Law of Delaware;

3.             That Deckers Corporation, by the following resolutions of its Board of Directors, duly adopted by the Board of Directors by unanimous written consent dated as of the 13th day of September, 1993, determined to merge itself into Deckers Outdoor Corporation, and hereby does so merge effective upon the filing of this Certificate:

NOW, THEREFORE, BE IT RESOLVED, that Deckers Corporation (the “Corporation”) merge itself into Deckers Outdoor Corporation, a Delaware corporation and a wholly-owned subsidiary of the Corporation (“Deckers Delaware”), which corporation, Deckers Delaware, will be the surviving corporation and will assume all of the assets, obligations and liabilities of the Corporation (the “Merger”); and

RESOLVED FURTHER, that the terms and conditions of the Merger shall be as follows:  Upon completion of the Merger, each shareholder of the Corporation shall receive that number of shares of the common stock of Deckers Delaware that is equal to 4.25 times the number of shares of common stock of the Corporation held by such shareholder and shall have no further claims of any kind or nature; all of the shares of common stock of the Corporation held by all shareholders of the Corporation shall thereafter be surrendered and canceled; and all of the previously outstanding shares of common stock of the Corporation, all of which are held by Deckers California, shall be surrendered and canceled; and

RESOLVED FURTHER, that, upon completion of the Merger, each outstanding option to purchase shares (the “Option Shares”) of Common Stock of the Corporation be converted into an option to purchase that number of shares of Common Stock of Deckers Delaware equal to 4.25 times the number of Option Shares for such option is exercisable, the per share price at which such option is exercisable shall be converted to a per share price equal to such option’s existing per share exercise price divided by 4.25, and each such option shall continue in effect in accordance with the terms of grant of such option;

RESOLVED FURTHER, that the proposed Merger be submitted to the shareholders of the Corporation and that, upon receiving the written consent of the holders of at least a majority of all of the outstanding shares of capital stock of the Corporation entitled to vote thereof, the proposed Merger shall be approved; and

RESOLVED FURTHER, that Deckers Delaware, as the surviving corporation in the Merger, shall notify each stockholder of record of Deckers Delaware and of the Corporation promptly after the effective date of the Merger that the Merger has become effective; and

RESOLVED FURTHER, that the appropriate officers of Deckers Corporation be, and each of them hereby is, authorized and directed to cause to be prepared and executed a Certificate of Ownership and Merger setting forth a copy of these resolutions and the date of adoption thereof, and to cause the same to be filed with the Secretaries of State of the State of Delaware and of the State of California, and to cause a certified copy of the same to be recorded in the office of the Recorder of Deeds of New Castle County; and

RESOLVED FURTHER, that the appropriate officers of the Corporation be, and each of them hereby is, authorized and directed to take all such further actions and to execute all such further documents as are deemed necessary or advisable to effect the foregoing resolutions.

4.             That this merger has been approved by the holders of at least a majority of all of the outstanding shares of capital stock of Deckers Corporation entitled to vote thereof by written consent without a meeting in accordance with section 603(a) of the California Corporations Code.

IN WITNESS WHEREOF, Deckers Corporation has caused this certificate to be signed by its President and attested by its Secretary, this 17th day of September, 1993.

DECKERS CORPORATION
By:	/s/ Douglas B. Otto
Douglas B. Otto, President
ATTEST:
By:	/s/ Douglas B. Otto
Douglas B. Otto, Secretary

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CERTIFICATE OF DESIGNATION

OF

SERIES A PREFERRED STOCK

OF

DECKERS OUTDOOR CORPORATION

(pursuant to Section 151 of the Delaware General Corporation Law)

DOUGLAS OTTO and JOSEPH E. NIDA certify that:

1.             They are the President and Secretary, respectively, of DECKERS OUTDOOR CORPORATION, a Delaware corporation (the “Corporation”).

2.             The Corporation is authorized to issue FIVE MILLION (5,000,000) shares of preferred stock, none of which have been issued.

3.             The following resolutions were duly adopted by the Board of Directors:

WHEREAS, the Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) of the Corporation provides for a class of its authorized stock known as preferred stock, comprising FIVE MILLION (5,000,000) shares, par value of one cent ($.01), issuable from time to time in one or more series;

WHEREAS, the Board of Directors of the Corporation is authorized to determine the rights, preferences, privileges and restrictions, including the dividend rights, dividend rate, voting rights, conversion rights, rights and terms of redemption and liquidation preferences of any wholly unissued series of preferred stock and the number of shares constituting any series and the designation thereof, of any of them; and

WHEREAS, the Corporation desires to issue one series of preferred stock, to be known as “Series A Preferred Stock,” and it is the desire of the Board of Directors of the Corporation, pursuant to its authority as aforesaid, to determine and fix the rights, preferences, privileges, restrictions and other matters relating to the Series A Preferred Stock.

NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide for the issuance of the Series A Preferred Stock and does hereby fix and determine the rights, preferences, privileges, restrictions and other matters relating to the Series A Preferred Stock as follows:

1.             Designation.  The series of preferred stock shall consist of ONE MILLION THREE HUNDRED SEVENTY-FIVE THOUSAND (1,375,000) shares designated and known as “Series A Preferred Stock”.

2.Voting.

(a)The holders of the Series A Preferred Stock shall be entitled to notice of all stockholders meetings in accordance with the Corporation’s bylaws, and the holders of the Series A Preferred Stock shall be entitled to vote on all matters submitted to the stockholders for a vote, voting together with the holders of the Common Stock as a single class, with each share of Series A Preferred Stock entitled to one vote per share, except for the election of or removal of directors, not including the director elected by the holders of the Series A Preferred Stock pursuant to Section 2(b) below.

(b)At any meeting held for the purpose of electing directors (or in a written consent in lieu thereof), the presence in person or by proxy (or the written consent) of the holders of a majority of the shares of Series A Preferred Stock then outstanding shall constitute a quorum of the Series A Preferred Stock for the election of one (1) director, who shall be elected by the holders of the Series A Preferred Stock and approved by the Corporation, which approval shall not be unreasonably withheld.  A vacancy in any directorship elected by the holders of the Series A Preferred Stock as provided in this Section (2)(b) shall be filled only by the vote or written consent of the holders of the Series A Preferred Stock, which replacement director shall be approved by the Corporation, the approval of which shall not be unreasonably withheld.

(c)The holders of Series A Preferred Stock shall be entitled to have one additional person attend all regular and special meetings of the Board of Directors in an advisory and non-voting capacity.

(d)The Corporation shall not, without the affirmative vote or written consent of the holders of at least Fifty One Percent (51%) of the outstanding Series A Preferred Stock:

(i)            authorize or create any additional class or series of stock ranking prior to (the “Senior Securities”) or on a parity with (“Parity Securities”) the Series A Preferred Stock as to dividends or the distribution of assets upon liquidation;

(ii)           change any of the rights, privileges or preferences of the Series A Preferred Stock;

(iii)          amend, alter or repeal the Certificate of Incorporation;

(iv)          increase or decrease (other than by conversion) the total number of authorized shares of Series A Preferred Stock; or

(v)           take any action that would increase the authorized number of directors on the Board of Directors above seven (7).

3.Dividends.

In the event that the Corporation declares or pays any dividends upon the Common Stock (whether payable in cash, securities or other property), the Corporation shall also declare and pay to the holders of the Series A Preferred Stock at the same time that it declares and pays such dividends to the holders of the Common Stock, the dividends which would

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have been declared and paid with respect to the Common Stock based on the number of shares into which a share of Series A Preferred Stock would be convertible on the record date for such dividend, or if no record date is fixed, the date as of which the record holders of Common Stock entitled to such dividends are to be determined.

4.Rights on Liquidation.  On any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of the Series A Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of this Corporation, to the holders of any other capital stock or other equity securities of the Corporation, an amount equal to the greater of $4.00 per share or the amount that would have been distributed to the holders of the Series A Preferred Stock if the holders had converted all of the Series A Preferred Stock to Common Stock immediately prior to the liquidation (the “Liquidation Preference”).  In the event that the assets of the Corporation available for distribution to the holders of the Series A Preferred Stock and any other Parity Securities entitled thereto are insufficient to permit full payment to the holders of such shares as herein provided, then such assets shall be distributed ratably among the outstanding shares of the Series A Preferred Stock and Parity Securities entitled thereto in accordance with the respective liquidation preference of such securities.  In the event that the Corporation has additional assets available for distribution after payment to the holders of the Series A Preferred Stock as herein provided, such assets shall be distributed to holders of securities whose terms provide specifically that such class of series of preferred stock will rank junior to the Series A Preferred Stock with respect to rights to receive payments of dividends and distributions upon liquidation or fails to specify the ranking of such class or series relative to the Series A Preferred Stock with respect to rights to receive payments of dividends and distributions upon liquidation (“Junior Securities”).

5.Conversion.

(a)After three (3) years from the date of issuance of the Series A Preferred Stock, and upon the election of the holders of the Series A Preferred Stock, and upon compliance with Section 5(b) below as to surrender thereof, each share of Series A Preferred Stock may be converted into the number of shares of the Company’s fully paid, non-assessable Common Stock.  that is obtained by (i) multiplying each share of Series A Preferred Stock by $1.1013215 (the “Conversion Rate”) and (ii) effecting any additional adjustment required by Section 7(a).

(b)To convert any or all of its, his or her Series A Preferred Stock into Common Stock, the holder shall surrender the certificate or certificates evidencing such Series A Preferred Stock, duly endorsed or assigned to the Corporation, accompanied by a written notice that the holder elects to convert such Series A Preferred Stock, stating therein the name or names in which the holder wishes the certificate or certificates for shares of Common Stock to be issued.  As soon as practicable after the surrender of such certificates and subject to compliance with applicable securities laws, there shall be issued and delivered to such holder, or to the holder’s nominee or nominees, a certificate or certificates for the number of shares of Common Stock to which the holder shall be entitled, together with cash, if any, in lieu of any fraction of a share as provided in Section 5(e) below.  Such conversion shall be deemed to have been made as of the date of such surrender of the certificate or certificates for Series A Preferred Stock to be converted, and on and after such date the person or persons entitled to receive the shares of Common Stock issued upon such

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conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock.

(c)Any Series A Preferred Stock which at any time has been converted shall be restored to the status of authorized but unissued shares of preferred stock and shall in no circumstances be reissued as Series A Preferred Stock, and the Corporation may from time to time take such appropriate action as may be necessary to reduce the authorized Series A Preferred Stock accordingly, including (assuming no shares of Series A Preferred Stock are outstanding) amending the Certificate of Incorporation to eliminate therefrom any statement of rights, preferences, privileges and restrictions relating to the Series A Preferred Stock.

(d)The Corporation shall at all times reserve and keep available out of its authorized Common Stock, solely for issuance upon the conversion of Series A Preferred Stock as herein provided, such number of shares of Common Stock as shall from time to time be issuable upon the conversion of all outstanding Series A Preferred Stock.

(e)Upon any conversion, at the election of the Corporation, fractional shares shall not be issued but any fractions shall be adjusted by payment in cash by the Corporation on the basis of the market price of the Common Stock at the close of business on the date of conversion.  For purposes hereof, market price shall be determined as follows:

(i)            If the Common Stock is listed on a national securities exchange or admitted to unlisted trading privileges on such an exchange, the market value shall be the last reported sale price of the Common Stock on such exchange on the date of conversion or, if no such sale is made on such day, the arithmetic mean of the highest bid and lowest asked prices for such day on such exchange; or

(ii)           If the Common Stock is not so listed or admitted to unlisted trading privileges, the market value shall be, in the case of securities which are not designated as “National Market” securities, the arithmetic mean of the highest bid and lowest asked prices, and in the case of securities which are designated as “National Market” securities, the last reported sales price, in each case as quoted on The Nasdaq Stock Market on the date of conversion; or

(iii)          If the security is not so listed or admitted to unlisted trading privileges and bid and asked prices are not reported, the current market value shall be determined in such reasonable manner as may be prescribed from time to time by the Board of Directors of the Corporation.

The Corporation shall pay all issue taxes, if any, incurred in respect of the issue of shares of Common Stock on conversion; provided, however, that the Corporation shall not be required to pay any transfer or other taxes incurred by reason of the issuance of such shares of Common Stock in names other than those in which the Series A Preferred Stock surrendered for conversion is then registered.

(f)In case the Corporation shall propose at any time to take any action described in Section 7 below, then, in each such case, the Corporation shall mail to the holders of record of Series A Preferred Stock at their last known post office addresses as

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shown by the Corporation’s records a statement, signed by an officer of the Corporation, with respect to the proposed action, setting forth such facts with respect thereto as shall be reasonably necessary to inform the holders of Series A Preferred Stock as to the effect of such action upon their conversion rights.  Such statement shall be mailed at least twenty (20) days prior to the date of the taking of such action.

6.Redemption.

(a)           At any time until three (3) years after the issuance of the Series A Preferred Stock, the Corporation, at the option of the Board of Directors, may redeem in whole or in part the shares of Series A Preferred Stock at the time outstanding, upon notice given as provided in subsection (b) below, at a per share price equal to Four Dollars ($4.00), plus 10% per annum compounded annually (the “Redemption Price”).

(b)           The Corporation may exercise its redemption right by written notice of the redemption to the holders of the Series A Preferred Stock to be redeemed, specifying the number of shares to be purchased and the total purchase price.  At the date described in the notice, which shall be within 20 days of the notice, the Corporation shall deliver to the holders of the Series A Preferred Stock to be redeemed payment in immediately available funds for the shares to be redeemed.  Notice of every redemption of shares of Series A Preferred Stock shall be mailed by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses appearing on the books of the Corporation.

(c)           The Corporation and the holders agree that they shall each not treat or deem the Series A Preferred Stock as “preferred stock” within the meaning of Section 305 of the Internal Revenue Code.

7.Adjustments; Stock Dividends; Reclassification; Reorganization Merger.

(a)           If the Corporation increases or decreases the number of its issued and outstanding shares of Common Stock, or changes in any way the rights and privileges of such shares, by means of (i) the payment of a stock dividend or the making of any other distribution on such shares payable in its Common Stock, (ii) a subdivision of shares, (iii) a consolidation or combination of shares or (iv) a reclassification or recapitalization involving its Common Stock, then the Conversion Rate in effect at the time of such action and the number of shares of Common Stock into which the Series A Preferred Stock is then convertible, along with the voting rights set forth in Section 2(a) above, shall be adjusted to be the same as they would have been if such Series A Preferred Stock had been converted immediately prior to the occurrence of the event at issue and the shares of Common Stock into which the Series A Preferred Stock was convertible immediately prior to the event at issue had been issued and outstanding at the time of such event.

(b)           If the Corporation declares a dividend payable in money on its Common Stock and at substantially the same time offers to the holders of Common Stock a right to purchase new shares of Common Stock from the proceeds of such dividend or for an amount substantially equal to such dividend, then the holders of Series A Preferred Stock shall have the same subscription rights that such holders would have been entitled to if such holders had converted all of the Series A Preferred Stock into Common Stock immediately

5

prior to such grant, and the Corporation shall notify the holders of Series A Preferred Stock of such right concurrently with notice to the holders of Common Stock of their subscription right.

(c)           If at any time the Corporation grants to the holders of Common Stock any right to subscribe pro rata for additional securities of the Corporation, whether Common Stock, convertible securities, or other classifications, or for any other securities or interests that a holder of Series A Preferred Stock would have been entitled to subscribe for if, immediately prior to such grant, such holder had converted Series A Preferred Stock into Common Stock, and if such action by the Corporation does not result in a readjustment of the Conversion Rate under any other subsection of this Section 7, then the holders of Series A Preferred Stock shall have the same subscription rights that such holders would have been entitled to if such holders had converted all of the Series A Preferred Stock into Common Stock immediately prior to such grant, and the Corporation shall notify the holders of Series A Preferred Stock of such right concurrently with notice to the holders of Common Stock of their subscription right.

(d)           In the event the Corporation shall declare a distribution payable in securities of other persons, evidences of indebtedness issued by the Corporation or other persons, assets (excluding cash dividends) or options or rights not referred to in Section 7(a) above, then, in each such case for the purpose of this Section 7(d), the holders of Series A Preferred Stock shall be entitled to a proportionate share of any such distribution as though they were the holders of the number of shares of Common Stock of the Corporation into which their shares of Series A Preferred Stock are convertible as of the record date fixed for the determination of the holders of Common Stock of the Corporation entitled to receive such distribution.

(e)           Upon the occurrence of any of the following events, the Corporation shall cause any effective provision to be made so that each holder of Series A Preferred Stock shall have the right thereafter, by converting such Series A Preferred Stock, to acquire the kind and amount of shares of stock and other securities, and property and interests, as would be issued or payable with respect to or in exchange for the number of shares of Common Stock of the Corporation into which the Series A Preferred Stock is then convertible as if such Series A Preferred Stock had been converted into Common Stock immediately prior to such event:  (i) the reclassification, capital reorganization or other similar change of outstanding shares of Common Stock of the Corporation, other than as described and provided for in Section 7(a) above; (ii) the merger or consolidation of the Corporation with one or more other corporations or other entities, other than a merger with a subsidiary or affiliate pursuant to which the Corporation is the surviving corporation and the outstanding shares of Common Stock, including the shares of Common Stock into which the Series A Preferred Stock is then convertible pursuant hereto, are not affected, or (iii) the spin-off of assets, a subsidiary, or an affiliated entity, or the sale, lease, or exchange of a significant portion of the Corporation’s assets, in a transaction pursuant to which the Corporation’s shareholders are to receive securities or other interests in a successor entity.  Any such provision made by the Corporation for adjustments with respect to the Series A Preferred Stock shall be as nearly equivalent to the adjustments otherwise provided for herein as is reasonably practicable.

6

(f)            If any Liquidation Event is proposed, in addition to the rights of the holders of the Series A Preferred Stock set forth in Section 4 above, the rights set forth herein shall be applicable.  The Corporation shall deliver written notice to each holder of Series A Preferred Stock no later than ten (10) days prior to the consummation of such Liquidation Event as a condition precedent to the consummation of any such Liquidation Event.  If, as a result of such a Liquidation Event, shareholders of the Corporation are to receive securities or other interests of a successor entity, the provisions of Section 7(e) above shall apply.  However, if the result of such a Liquidation Event is that shareholders of the Corporation are to receive money or property other than securities or other interest in a successor entity, each holder of Series A Preferred Stock shall be entitled to convert such shares into Common Stock prior to the consummation of such Liquidation Event, and, with respect to any shares of Common Stock so acquired, shall be entitled to all of the rights of the other holders of Common Stock with respect to any distribution by the Corporation in connection with such Liquidation Event.  If no successor entity is involved and Section 7(e) does not apply, all conversion rights provided for herein shall terminate at the close of business on the date as of which holders of record of the Common Stock shall be entitled to participate in a distribution of the assets of the Corporation in connection with such Liquidation Event; provided, however, that in no event shall that date be less than ten (10) days after delivery to the holders of Series A Preferred Stock of the written notice described above.  If the termination of conversion rights hereunder is to occur as a result of such Liquidation Event, a statement to that effect shall be included in that written notice.  Notwithstanding the termination of conversion rights in accordance with the foregoing, upon a Liquidation Event and liquidation of the Corporation, each holder of Series A Preferred Stock shall be entitled to such rights as are provided in Section 4 above.

(g)           The provisions of this Section 7 shall apply to successive events that may occur from time to time but shall only apply to a particular event if it occurs prior to the redemption or conversion in full of the Series A Preferred Stock either by its terms or by its conversion.

(h)           Unless the context requires otherwise, whenever reference is made in this Section 7 to the issuance or sale of shares of Common Stock, the term “Common Stock” shall mean (i) the par value ($.01) Common Stock of the Corporation, (ii) any other class of stock ranking on a parity with, and having substantially similar rights and privileges as, the Corporation’s par value ($.01) Common Stock and (iii) any security convertible into either (i) or (ii).

(i)            For purposes of the calculations and adjustments described in this Section 7, shares of Common Stock owned or held at any relevant time by, or for the account of the Corporation, in its treasury or otherwise, shall not be deemed to be outstanding for purposes thereof.

RESOLVED, FURTHER, that the Chairman, the president or any vice- president, and the secretary or any assistant secretary, of the Corporation be and they hereby are authorized and directed to prepare and file a Certificate of Designation in accordance with the foregoing resolution and the provisions of Delaware law.”

7

We declare, under penalty of perjury under the laws of the State of Delaware, that the matters set forth in this certificate are true and correct of our own knowledge.

Date:  November 25, 2002

/s/ Douglas Otto

DOUGLAS OTTO,

Chief Executive Officer

/s/ Joseph E. Nida

JOSEPH E. NIDA,

Secretary

8

CERTIFICATE OF AMENDMENT OF

CERTIFICATE OF DESIGNATION OF

SERIES A PREFERRED STOCK

OF

DECKERS OUTDOOR CORPORATION

DOUGLAS OTTO and JOSEPH E. NIDA certify that;

1,They are the President and Secretary, respectively, of DECKERS OUTDOOR CORPORATION, a Delaware corporation (the “Corporation”).

2.The amendment to the Certificate of Designation of Series A Preferred Stock (the “Certificate of Designation”) set forth below was duly adopted in accordance with the provisions of Section 242 of the Delaware General Corporation Law (the “DGCL”) and has been consented to by the stockholders in accordance with Section 228 of the DGCL.

3.Section (2) of the Certificate of Designation is amended and restated in its entirety to read as follows:

“Voting.

(a)The holders of the Series A Preferred Stock shall be entitled to notice of all stockholders meetings in accordance with the Corporation’s bylaws, and the holders of the Series A Preferred Stock shall be entitled to vote on all matters submitted to the stockholders for a vote, voting together with the holders of the Common Stock as a single class, with each share of Series A Preferred Stock entitled to one vote for each share of Common Stock into which the Series A Preferred Stock may be converted, except for the election of or removal of directors, not including the director elected by the holders of the Series A Preferred Stock pursuant to Section 2(b) below.

(b)At any meeting held for the purpose of electing directors (or in a written consent in lieu thereof), the presence in person or by proxy (or the written consent) of the holders of a majority of the shares of Series A Preferred Stock then outstanding shall constitute a quorum of the Series A Preferred Stock for the election of one (1) director, who shall be elected by the holders of the Series A Preferred Stock and reasonably mutually agreed upon by the Corporation and the holders of the Series A Preferred Stock.  A vacancy in any directorship elected by the holders of the Series A Preferred Stock as provided in this Section (2)(b) shall be filled only by the vote or written consent of the holders of the Series A Preferred Stock, which replacement director shall be reasonably mutually agreed upon by the Corporation and the holders of the Series A Preferred Stock.

(c)The holders of Series A Preferred Stock shall be entitled to have one additional person attend all regular and special meetings of the Board of Directors in an advisory and non-voting capacity.

(d)The Corporation shall not, without the affirmative vote or written consent of the holders of at least Fifty One Percent (51%) of the outstanding Series A Preferred Stock:

(i)            authorize or create any additional class or series of stock ranking prior to (the “Senior Securities”) or on a parity with (“Parity Securities”) the Series A Preferred Stock as to dividends or the distribution of assets upon liquidation;

(ii)           change any of the rights, privileges or preferences of the Series A Preferred Stock;

(iii)          amend, alter or repeal the Certificate of Incorporation;

(iv)          increase or decrease (other than by conversion) the total number of authorized shares of Series A Preferred Stock; or

(v)           take any action that would increase the authorized number of directors on the Board of Directors above seven (7).”

4.The Chairman, the president or any vice-president, and the secretary or any assistant secretary, of the Corporation be and they hereby are authorized and directed to prepare and file a Certificate of Amendment of Certificate of Designation in accordance with the foregoing resolution and the provisions of Delaware law.

We declare, under penalty of perjury under the laws of the State of Delaware, that the matters set forth in this certificate are true and correct of our own knowledge.

Date:  March 14, 2003

/s/ Douglas Otto

DOUGLAS OTTO,

Chief Executive Officer

/s/ Joseph E. Nida

JOSEPH E. NIDA,

Secretary

2

CERTIFICATE OF OWNERSHIP AND MERGER

MERGING

UGG HOLDINGS, INC.,
a California corporation

(the “Subsidiary Corporation”)

INTO

DECKERS OUTDOOR CORPORATION,
a Delaware corporation

(the “Parent Corporation”)

* * * * * * *

DECKERS OUTDOOR CORPORATION (the “Parent Corporation”), a corporation organized and existing under the laws of the State of Delaware

DOES HEREBY CERTIFY:

FIRST:  That the Parent Corporation was incorporated on the 3rd day of August, 1993, pursuant to the Delaware General Corporation Law of the State of Delaware, the provisions of which permit the merger of a subsidiary corporation of another state into a parent corporation organized and existing under the laws of said state.

SECOND:  That the Parent Corporation owns ONE HUNDRED PERCENT (100%) of the outstanding shares of the stock of UGG HOLDINGS, INC. (the “Subsidiary Corporation”), a corporation incorporated on the 13th day of September, 1990, pursuant to the General Corporation Law of the State of California.

THIRD:  That the Parent Corporation, by the following resolutions of its Board of Directors, duly adopted by Unanimous Written Consent of its Board of Directors, filed with the Minutes of the Board of Directors, on the 7th day of September, 2004, determined to and did merge into itself said UGG HOLDINGS, INC. (the “Subsidiary  Corporation”).

RESOLVED:  That DECKERS OUTDOOR CORPORATION (the “Parent Corporation”) merge, and it hereby does merge into itself, UGG HOLDINGS, INC., a California corporation (the “Subsidiary Corporation”) and assumes all of its obligations; and

RESOLVED, FURTHER:  That the merger shall be effective upon the date of filing with the Secretary of State of Delaware; and

RESOLVED, FURTHER:  That the proper officer of the Parent Corporation be and he is hereby directed to make and execute a Certificate of Ownership and Merger setting forth a copy of the resolutions to merge said UGG HOLDINGS, INC. (the “Subsidiary Corporation”) and assume its liabilities and obligations, and

the date of adoption thereof, and to cause the same to be filed with the Secretary of State, and to do all acts and things whatsoever, whether within or without the State of Delaware, which may be in anywise necessary or proper to effect said merger;

FOURTH:  Anything herein or elsewhere to the contrary notwithstanding, this merger may be amended or terminated and abandoned by the Board of Directors of DECKERS OUTDOOR CORPORATION at any time prior to the time that this merger filed with the Secretary of State becomes effective.

IN WITNESS WHEREOF, said DECKERS OUTDOOR CORPORATION has caused this Certificate to be signed by DOUGLAS B. OTTO, its President, this 7th day of September, 2004.

DECKERS OUTDOOR CORPORATION
By	/s/ Douglas B. Otto
Douglas B. Otto, President

2

CERTIFICATE OF AMENDMENT

OF

RESTATED CERTIFICATE OF INCORPORATION

OF

DECKERS OUTDOOR CORPORATION

DECKERS OUTDOOR CORPORATION (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State of Delaware, by its duly authorized officer, does hereby certify:

FIRST:  That the Board of Directors of the Corporation duly adopted a resolution setting forth a proposed amendment to the Restated Certificate of Incorporation of the Corporation, and declaring said amendment to be advisable and recommended for approval by the stockholders of the Corporation.

SECOND:  That the amendment was duly adopted in accordance with the provisions of Sections 242 of the General Corporation Law of the Slate of Delaware.

THIRD:  That upon the effectiveness of this Certificate of Amendment, Section 1 of Article IX of the Restated Certificate of Incorporation of the Corporation is hereby amended in its entirety as follows:

SECTION 1.           At the 1993 Annual Meeting of Stockholders of the Corporation, the Board of Directors shall be divided into three classes, Class I, Class II and Class III.  Such classes shall be as nearly equal in number of directors as reasonably possible.  At each Annual Meeting of Stockholders following such initial classification and election until the 2007 Annual Meeting of Stockholders, each director shall be elected to serve for a term ending on the third annual meeting following the annual meeting at which such director was elected; provided, however, that the directors first elected to Class I shall serve for a term ending on the annual meeting date next following the end of calendar year 1993, the directors first elected to Class II shall serve for a term ending on the second annual meeting date next following the end of calendar year 1993, and the directors first elected to Class III shall serve for a term ending on the third annual meeting date next following the end of calendar year 1993.  The terms of office of all directors who are in office immediately prior to the closing of the polls for the election of directors at the 2007 Annual Meeting of Stockholders of the Corporation shall expire at such time.  At each Annual Meeting of Stockholders beginning with the 2007 Annual Meeting of Stockholders of the Corporation, the directors shall not be classified; and the directors shall be elected annually and shall hold office for a term expiring at the next Annual Meeting of Stockholders and until their respective successors shall have been duly elected and qualified unless such directors shall resign, become disqualified or shall otherwise be removed in accordance with law.

Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may, unless the Board of Directors determines otherwise, only be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director; provided, however, that if the holders of any class or classes of stock or series thereof are entitled to elect one or more directors, vacancies and newly created directorships of such doss or classes or series may only be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected.

FOURTH:  That the foregoing amendment shall be effective on May 22, 2006.

IN WITNESS WHEREOF, this Certificate of Amendment has been executed on this 19th day of May, 2006.

DECKERS OUTDOOR CORPORATION
By:	/s/ Zohar Ziv
Zohar Ziv
Chief Financial Officer

2

CERTIFICATE OF AMENDMENT

OF

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

DECKERS OUTDOOR CORPORATION

DECKERS OUTDOOR CORPORATION, a Delaware corporation organized and existing under and by virtue of the Delaware General Corporation Law (the “Corporation”), does hereby certify:

FIRST:  The Board of Directors of the Corporation duly adopted resolutions proposing and declaring advisable the following amendments to the Amended and Restated Certificate of Incorporation of the Corporation, directing that said amendment be submitted to the stockholders of the Corporation for consideration thereof.  The resolutions setting forth the proposed amendments are as follows:

RESOLVED, that the Section 1 of Article IV of the Corporation’s Amended and Restated Certificate of Incorporation is hereby amended to read in its entirety as follows:

“SECTION 1.         Authorized Shares.  The Corporation shall be authorized to issue two classes of shares of stock to be designated, respectively, “Preferred Stock” and “Common Stock;” the total number of shares that the Corporation shall have authority to issue is Fifty-Five Million (55,000,000); the total number of shares of Preferred Stock shall be Five Million (5,000,000) and all such shares shall have a par value of one cent ($0.01); and the total number of shares of Common Stock shall be Fifty Million (50,000,000), and each such share shall have a par value of one cent ($0.01).”

SECOND:  That thereafter, the holders of the necessary number of shares of capital stock of the Corporation voted in favor of the foregoing amendment at the Corporation’s 2009 Annual Meeting of Stockholders called and held on May 28, 2009 upon notice in accordance with the provisions of Section 222 of the Delaware General Corporation Law.

THIRD:  That said amendment was duly adopted in accordance with the provisions of Section 242 of the Delaware General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, I affirm, under penalties of perjury, that the matters set forth in this certificate, which is executed on June 1, 2009, are true and correct of my own knowledge.

/s/ Angel R. Martinez

Angel R. Martinez

Chair of the Board, President and Chief Executive Officer

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Angel R. Martinez, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Deckers Outdoor Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 10, 2009	/s/ Angel R. Martinez
	Angel R. Martinez
	Chief Executive Officer
	Deckers Outdoor Corporation
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Zohar Ziv, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Deckers Outdoor Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2009	/s/ Zohar Ziv
	Zohar Ziv
	Chief Operating Officer
	Deckers Outdoor Corporation
	(Principal Financial and Accounting Officer)

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to their knowledge, the Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 of Deckers Outdoor Corporation (the “Company”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in such periodic report fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in such report.

Very truly yours,

Angel R. Martinez

/s/ Angel R. Martinez

Chief Executive Officer (Principal Executive Officer)

Zohar Ziv

/s/ Zohar Ziv

Chief Operating Officer (Principal Financial and Accounting Officer)

Dated: August 10, 2009