910521--2/29/2008--DECKERS_OUTDOOR

related topics

{customer, product, revenue}

{operation, international, foreign}

{property, intellectual, protect}

{product, market, service}

{acquisition, growth, future}

{condition, economic, financial}

{stock, price, operating}

{competitive, industry, competition}

{provision, law, control}

{personnel, key, retain}

{product, candidate, development}

{system, service, information}

{cost, regulation, environmental}

Risks Relating To Our Business Our success depends on our ability to anticipate fashion trends. Our UGG brand may not continue to grow at the same rate it has experienced in the recent past. Our Teva brand may decline. We may experience shortages of top grade sheepskin, which could interrupt product manufacturing and increase product costs. If we do not accurately forecast consumer demand, we may have excess inventory to liquidate or have difficulty filling our customers' orders. We may not succeed in implementing our growth strategy. Our financial success is limited to the success of our customers. Certain of our customers account for a significant portion of our sales, and the loss of one or more of these key customers would significantly reduce our sales. Establishing and protecting our trademarks, patents and other intellectual property is costly and difficult. If our efforts to do so are unsuccessful, the value of our brands could suffer. We may lose pending litigation and the rights to certain of our intellectual property. Counterfeiting of our brands can divert sales and damage our brand image. As our patents expire, our competitors will be able to copy our technology or incorporate it in their products without paying royalties. If our customers cancel existing orders, we may have excess inventory. If customers postpone delivery of existing orders to future periods, we may not achieve sales and earnings targets for the period, which could have a negative impact on our stock price. Because we depend on independent manufacturers, we face challenges in maintaining a continuous supply of goods that meet our quality standards. If raw materials do not meet our specifications or if the prices of raw materials increase, we could experience a high return rate, a loss of sales or a reduction in our gross margins. The costs of production and transportation of our products can increase as petroleum and other energy prices rise. Our independent manufacturers are located outside the U.S., where we are subject to the risks of international commerce. Our business could suffer if our independent manufacturers, designated suppliers or our licensees violate labor laws or fail to conform to our ethical standards. If our licensing partners are unable to meet our expectations regarding the quality of their products or the conduct of their business, the value of our brands could suffer. We may be unable to successfully identify, develop, acquire or build new brands. Our quarterly sales and operating results may fluctuate in future periods, and if we fail to meet expectations the price of our common stock may decline. Loss of the services of our key personnel could adversely affect our business. We conduct business outside the U.S., which exposes us to foreign currency and other risks. Our most popular products are seasonal, and our sales are sensitive to weather conditions. We depend on independent distributors to sell our products in international markets. Our sales in international markets are subject to a variety of laws and political and economic risks that may adversely impact our sales and results of operations in certain regions, such as the recent changes in labor laws in the People's Republic of China, which could increase our costs and adversely impact our operating results. International trade regulations may impose unexpected duty costs or other non-tariff barriers to markets while the increasing number of free trade agreements has the potential to stimulate increased competition; security procedures may cause significant delays. We depend on our computer and communications systems. The growth of our business depends on the successful execution of our growth strategies. We have significantly expanded the nature and scope of our operations, and if we fail to manage any future growth effectively we may experience greater difficulty in filling customer orders, declines in product quality, increases in costs or other operating difficulties. We could be adversely affected by the loss of one of our warehouses or one of our manufacturer's facilities. We could be adversely affected by volatile credit markets and other unfavorable economic conditions. Risks Related to Our Industry Because the footwear market is sensitive to decreased consumer spending and slow economic cycles, if general economic conditions deteriorate, many of our customers may significantly reduce their purchases from us or may not be able to pay for our products in a timely manner. We face intense competition, including competition from companies with significantly greater resources than ours, and if we are unable to compete effectively with these companies, our market share may decline and our business could be harmed Consolidations, restructurings and other ownership changes in the retail industry could affect the ability of our wholesale customers to purchase and market our products. Risks Relating to Our Common Stock Our common stock price has been volatile, which could result in substantial losses for stockholders. Anti-takeover provisions in our certificate of incorporation, bylaws, stockholder rights plan and Delaware law could prevent or delay a change in control of our company, even if such change of control would benefit our stockholders.

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910521--2/29/2008--DECKERS_OUTDOOR_CORP