Use of Estimates. The preparation of the Company’s consolidated financial statements in accordance with US

GAAP requires management to make estimates and assumptions that affect the amounts reported. Management

bases these estimates and assumptions upon historical experience, existing and known circumstances,

authoritative accounting pronouncements and other factors it believes to be reasonable. In addition, management

has considered the potential impact of macroeconomic and geopolitical factors on its business and results of

operations, including inflationary pressures, increased tariffs, rising supply chain costs, high interest rates, foreign

currency exchange rate volatility, escalating global conflicts, changes in discretionary spending, and recession risks.

Although the full impact of these factors is unknown, the Company believes it has made appropriate accounting

estimates and assumptions based on the facts and circumstances available as of the reporting date. However,

actual results could differ materially from these estimates and assumptions, which may result in material effects on

the Company’s financial condition, results of operations, and liquidity.

Significant accounting policies that require the use of management estimates and assumptions include those

related to revenue recognition such as sales returns, chargebacks, and sales discounts as well as contract

liabilities; accounts receivable allowances; inventory; income taxes including valuation of deferred income taxes;

stock-based compensation; impairment assessments, including for long-lived assets; the fair value of financial

instruments; those related to operating lease assets and lease liabilities including term, classification, and the

Company’s incremental borrowing rate (IBR).

Foreign Currency Translation. The Company considers the United States (US) dollar to be its functional currency.

The Company’s wholly owned foreign subsidiaries have various assets and liabilities, primarily cash, receivables,

and payables, which are denominated in currencies other than its functional currency. The Company remeasures

these monetary assets and liabilities using the exchange rate at the end of the reporting period, which results in

gains and losses that are recorded in selling, general, and administrative (SG&A) expenses in the consolidated

statements of comprehensive income as incurred. In addition, the Company translates assets and liabilities of

subsidiaries with reporting currencies other than US dollars into US dollars using the exchange rates at the end of

the reporting period, which results in financial statement translation gains and losses recorded in other

comprehensive income or loss (OCI), net of tax, in the consolidated statements of comprehensive income.

Seasonality. A significant part of the UGG brand’s business has historically been seasonal, with the highest

percentage of net sales occurring in the third fiscal quarter, which has contributed to variation in results of

operations from quarter to quarter. However, as the HOKA brand’s net sales have increased as a percentage of

aggregate net sales, the impacts of seasonality have been partially mitigated as HOKA brand sales are generally

more evenly distributed throughout the fiscal year, although quarterly results may fluctuate based on the timing of

product launches. This trend is expected to continue. In addition, the Company has further mitigated the impacts of

seasonality by diversifying and expanding its year-round product offerings across its brands.

Recent Accounting Pronouncements. The Financial Accounting Standards Board has issued Accounting

Standards Updates (ASUs) that have been adopted and not yet adopted by the Company as stated below.

Recently Adopted. The following is a summary of an ASU adopted by the Company and its impact upon adoption:


Standard	Description	Impact upon Adoption
ASU 2023-09 - Improvements to Income Tax Disclosures (ASU 2023-09)	This ASU requires annual disclosures of prescribed standard categories for the components of the effective tax rate reconciliation, disclosure of income taxes paid disaggregated by jurisdiction, and other income-tax related disclosures. This ASU is effective on a prospective basis, with retrospective application permitted, for fiscal years beginning after December 15, 2024. Early adoption is permitted.	The Company prospectively adopted this ASU beginning with this Annual Report. This ASU did not have a material impact on the Company’s consolidated financial statements other than additional disclosures under Note 5, “Income Taxes.”

Not Yet Adopted. The following is a summary of each ASU that has been issued through May 1, 2026, and is

applicable to the Company, but which has not yet been adopted, as well as the planned period of adoption, and the

expected impact on the Company upon adoption:


Standard	Description	Planned Period of Adoption	Expected Impact on Adoption
ASU 2024-03 - Disaggregation of Income Statement Expenses (as amended by ASU 2025-01)	This ASU requires disaggregated disclosure of relevant statement of comprehensive income expense captions including tabular presentation of prescribed expense categories such as purchases of inventory, employee compensation, depreciation, intangible asset amortization, and other specific expense, gains, and losses required by existing US GAAP. This ASU is effective on a prospective basis, with retrospective application permitted, for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted.	Q4 FY 2028 and Q1 FY 2029	The Company is currently evaluating the impact of the adoption of this ASU on its disclosures in its annual and interim consolidated financial statements.
ASU 2025-05 - Measurement of Credit Losses for Accounts Receivable and Contract Assets	This ASU provides a practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset when estimating expected credit losses on trade accounts receivable and contract assets. This ASU is effective on a prospective basis for fiscal years beginning after December 15, 2025. Early adoption is permitted.	Q1 FY 2027	The Company does not expect the adoption of this ASU to have a material impact on its annual consolidated financial statements and interim condensed consolidated financial statements.
ASU 2025-06 - Internal-Use Software	This ASU amends recognition and disclosure guidance for internal-use software costs, removing the previous software development stage model with a more principles-based, probable-to-complete recognition threshold. This ASU is effective on either a retrospective, prospective, or modified prospective basis, for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years. Early adoption is permitted.	Q1 FY 2029	The Company is currently evaluating the impact of the adoption of this ASU on its annual consolidated financial statements and interim condensed consolidated financial statements.
ASU 2025-09 - Derivatives and Hedging (Topic 815): Hedge Accounting Improvements	This ASU clarifies and improves certain aspects of hedge accounting, including guidance on the assessment of similar risk exposure for groups of forecasted transactions related to cash flow hedges and other targeted amendments intended to better align hedge accounting with an entity’s risk management activities. This ASU is effective on a prospective basis for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted.	Q1 FY 2028	The Company is currently evaluating the impact of the adoption of this ASU on its annual consolidated financial statements and interim condensed consolidated financial statements.
ASU 2025-11 - Interim Reporting: Narrow-Scope Improvements	This ASU requires disclosure of events since the most recent annual reporting period that have a material impact on interim results, provides a comprehensive list of required interim disclosures, and clarifies the form and content requirements for interim financial statements. This ASU is effective on either a prospective or retrospective basis for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted.	Q1 FY 2029	The Company is currently evaluating the impact of the adoption of this ASU on disclosures in its interim condensed consolidated financial statements.

Summary of Significant Accounting Policies. The following is a summary of the Company’s significant

accounting policies applied to its consolidated financial statements:

Cash and Cash Equivalents. Cash and cash equivalents include cash on hand, demand deposits, and all highly

liquid investments, such as money-market funds, with an original maturity of three months or less. The carrying

value of money-market funds approximates the fair value as it is considered a highly liquid investment when

purchased. Money-market funds are recorded in cash and cash equivalents in the consolidated balance sheets.

Refer to Note 4, “Fair Value Measurements,” for further information on the fair value of money-market funds.

The Company maintains a portion of its cash in Federal Deposit Insurance Corporation insured bank deposit

accounts which, at times, may exceed federally insured limits. The Company did not experience any losses in such

accounts during the years ended March 31, 2026, 2025, and 2024. Based on the size and strength of the banking

institutions used, the Company does not believe it is exposed to any significant credit risks in cash.

Allowances for Doubtful Accounts. The Company provides an allowance against trade accounts receivable for

estimated losses that may result from customers’ inability to pay. The Company determines the amount of the

allowance by analyzing known uncollectible accounts, aged trade accounts receivable, economic conditions and

forecasts, historical experience, and the customers’ creditworthiness. Trade accounts receivable that are

subsequently determined to be uncollectible are charged or written off against this allowance. The allowance

includes specific allowances for trade accounts, for which all or a portion are identified as potentially uncollectible

based on known or anticipated losses. Additions to the allowance represent bad debt expense estimates which are

recorded in SG&A expenses in the consolidated statements of comprehensive income.

Inventories. Inventories, which are predominantly comprised of finished goods on hand and in transit, are stated at

the lower of cost (weighted moving average) or net realizable value at each financial statement date. Net realizable

value is the estimated selling price in the ordinary course of business, less reasonably predictable costs to sell. The

Company regularly reviews inventory for excess, obsolete, and impaired inventory to evaluate write-downs to the

lower of cost or realizable value.

The Company outsources the production of its finished goods to independent third-party contractors that

manufacture all of its products (independent manufacturers), the majority of which are in Southeast Asia. During the

year ended March 31, 2026, production of finished goods was predominantly from Vietnam and Indonesia, while

less than 5% was from China or any other individual country. The majority of raw materials and components used by

independent manufacturers are purchased from affiliates, manufacturers, factories, and other agents (designated

suppliers), who work with other subcontractors that extract, process, or convert these raw materials. Sheepskin is

used to manufacture a significant portion of the Company’s UGG brand products and is sourced primarily from

designated suppliers in Australia and processed by two tanneries in China.

Cloud Computing Arrangements (CCAs). The Company enters into various CCAs that are governed by service

contracts (hosting arrangements) to support operations. Application development stage implementation costs

(implementation costs) of a hosting arrangement are deferred and recorded to prepaid expenses and other assets

in the consolidated balance sheets. Amortization of implementation costs begins when the software is ready for its

intended use. Amortization of implementation costs are calculated on a straight-line basis over the term of the

hosting arrangement, including reasonably certain renewals, which are generally one to three years. Amortization

expense is recorded in SG&A expenses in the consolidated statements of comprehensive income.

CCAs are recorded in the consolidated balance sheets as follows:


	As of March 31,
	2026	2025
Prepaid expenses:
Net CCAs placed in service	$2,053	$2,167
Other assets:
Net CCAs placed in service	1,968	3,864
CCAs in process	16,508	163
Total	$20,529	$6,194

Refer to the section titled “Recoverability of Definite-Lived Intangible and Other Long-Lived Assets” below, within

this footnote, for further information on an impairment of a CCA recorded during the year ended March 31, 2025.

Property and Equipment, Net. Property and equipment are stated at cost less accumulated depreciation, and

generally have a useful life of at least one year. Property and equipment include tangible, non-consumable items

owned by the Company. Software implementation costs are capitalized if they are incurred during the application

development stage and relate to costs to obtain computer software from third parties, including related consulting

expenses, or costs incurred to modify existing software that results in additional upgrades or enhancements that

provide additional functionality.

Depreciation of property and equipment is calculated using the straight-line method based on the estimated useful

life. Leasehold improvements are amortized to their residual value, if any, on the straight-line basis over their

estimated economic useful lives or the lease term, whichever is shorter. Changes in the estimate of the useful life of

an asset may occur after an asset is placed in service. For example, this may occur as a result of the Company

incurring costs that prolong the useful life of an asset, which would be recorded as an adjustment to depreciation

over the revised remaining useful life. Depreciation is recorded in SG&A expenses in the consolidated statements of

comprehensive income. Depreciation was $74,590, $67,579, and $54,958 during the years ended March 31, 2026,

2025, and 2024, respectively.

Operating Lease Assets and Lease Liabilities. The Company determines if an arrangement contains a lease at

inception of a contract. The Company recognizes operating lease assets and lease liabilities in the consolidated

balance sheets on the lease commencement date, based on the present value of the outstanding lease payments

over the reasonably certain lease term. The lease term includes the non-cancelable period at the lease

commencement date, plus any additional period covered by the Company’s option to extend (or not to terminate)

the lease that is reasonably certain to be exercised, or an option to extend (or not to terminate) a lease that is

controlled by the lessor.

Operating lease assets are initially measured at cost, which comprises the initial amount of the associated lease

liabilities, adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs

incurred, less any lease incentives, such as tenant allowances. Operating lease assets are subsequently measured

throughout the lease term at the carrying amount of the associated lease liabilities, plus initial direct costs, plus or

minus any prepaid or accrued lease payments, less the unamortized balance of lease incentives received.

Operating lease assets and lease liabilities are presented separately in the consolidated balance sheets on a

discounted basis. The current portion of operating lease liabilities is presented within current liabilities, while the

long-term portion is presented separately as long-term operating lease liabilities. Refer to Note 7, “Leases,” for

further information on the discount rate methodology used to measure operating lease assets and lease liabilities.

Rent expense for operating lease payments is recognized on a straight-line basis over the lease term and recorded

in SG&A expenses in the consolidated statements of comprehensive income. Lease payments recorded in the

operating lease liabilities (1) are fixed payments, including in-substance fixed payments and fixed rate increases,

owed over the lease term and (2) exclude any lease prepayments as of the periods presented. Refer to Note 7,

“Leases,” for further information on the nature of variable lease payments and the timing of recognition of rent

expense.

The Company has elected not to recognize operating lease assets and lease liabilities for short-term leases, which

are defined as those operating leases with a term of 12 months or less. Instead, lease payments for short-term

leases are recognized on a straight-line basis over the lease term in rent expense and recorded as a component of

SG&A expenses in the consolidated statements of comprehensive income.

The Company monitors for events that require a change in estimates for its operating lease assets and lease

liabilities, such as modifications to the terms of the contract, including the lease term, economic events that may

trigger a contractual term contingency, such as minimum lease payments or termination rights, and related changes

in discount rates used to measure the operating lease assets and lease liabilities, as well as events or

circumstances that result in lease abandonment or operating lease asset impairments. When a change in estimates

results in the remeasurement of the operating lease liabilities, a corresponding adjustment is made to the carrying

amount of the operating lease assets. The operating lease assets are remeasured and amortized on a straight-line

basis over the remaining lease term, with no impact on the related operating lease liabilities. Refer to the section

titled “Recoverability of Definite-Lived Intangible and Other Long-Lived Assets” below, within this footnote, for further

information on the Company’s accounting policy for evaluating the carrying amount of its operating lease assets and

related leasehold improvements for indicators of impairment.

Asset Retirement Obligations (AROs). The Company is contractually obligated under certain of its lease

agreements to restore certain retail, office, and warehouse facilities back to their original conditions. At lease

inception, the present value of the estimated fair value of these liabilities is recorded along with the related asset.

The liability is estimated based on assumptions requiring management’s judgment, including facility closing costs

and discount rates, and is accreted to its projected future value over the life of the asset.

The Company’s AROs are recorded in other long-term liabilities in the consolidated balance sheets and activity was

as follows:


	Years Ended March 31,
	2026	2025
Beginning balance	$28,118	$25,686
Additions and changes in estimate	8,152	2,192
Liabilities settled during the period	(735)	(732)
Accretion expenses	1,122	927
Foreign currency translation gains	133	45
Ending balance	$36,790	$28,118

Goodwill and Indefinite-Lived Intangible Assets. Goodwill represents the excess of the purchase price over the

estimated fair value of net assets acquired in a business combination. As of March 31, 2026, and 2025, the carrying

value of goodwill recorded in the consolidated balance sheets was $13,990, consisting of $7,889 and $6,101

attributable to the HOKA brand and UGG brand reportable operating segments, respectively. The Company also

holds an indefinite-lived intangible asset for a trademark related to the Teva brand. As of March 31, 2026, and 2025,

the carrying value of the indefinite-lived intangible asset recorded within other intangible assets in the consolidated

balance sheets was $15,454.

Goodwill and indefinite-lived intangible assets are not amortized and are assessed for impairment at least annually

and if events or changes in circumstances indicate that the carrying value may not be recoverable. The Company

performs its annual goodwill assessment at the reporting unit level (the wholesale channel of each of the HOKA

brand and UGG brand) as of December 31st and performs its annual indefinite-lived intangible asset assessment

for the Teva brand as of October 31st. When evaluating for impairment, the Company first performs a qualitative

assessment. If the qualitative assessment indicates potential impairment, the Company performs a quantitative

assessment to estimate fair value using discounted cash flow models (such as an income approach) and other

market-based valuation techniques. An impairment charge is recognized for the excess of the carrying value over

fair value. No impairment losses were recorded for goodwill or indefinite-lived intangible assets during the years

ended March 31, 2026, 2025, and 2024. Accumulated goodwill impairment losses were $15,831 as of March 31,

2026, and 2025.

Definite-Lived Intangible and Other Long-Lived Assets. Definite-lived intangible assets include definite-lived

trademarks. As of March 31, 2026, and 2025, the definite-lived intangible asset net carrying value is immaterial.

Other long-lived assets include operating lease assets and property and equipment (primarily machinery and

equipment, internal-use software (including CCAs), and related leasehold improvements).

Definite-lived intangible and other long-lived assets are amortized on a straight-line basis over their estimated useful

lives. Definite-lived intangible assets and other long-lived assets are reviewed for impairment at the asset group

level, which is the lowest level for which identifiable cash flows are largely independent, when events or changes in

circumstances indicate that the carrying amount may not be recoverable. If indicators are present, recoverability is

assessed by comparing the carrying value of the asset group to estimated undiscounted future cash flows; if not

recoverable, an impairment loss is recognized for the excess of carrying value over estimated fair value. Estimated

fair value is generally determined using discounted future cash flows or other market -based valuation techniques.

Impairment losses, if any, are recorded within SG&A expenses in the consolidated statements of comprehensive

income.

No impairment indicators for definite-lived intangible assets were identified during the years ended March 31, 2026,

and 2025. During the year ended March 31, 2024, the Company recorded an $8,164 impairment loss within SG&A

expenses in the consolidated statements of comprehensive income related to the Sanuk brand definite-lived

trademark in the Other brands reportable operating segment. The impairment was driven by lower-than-expected

results of operations in the wholesale channel, which resulted in the carrying value exceeding its estimated fair

value, determined by using discounted future cash flows.

No impairment indicators for other long-lived assets were identified during the year ended March 31, 2026. During

the years ended March 31, 2025, and 2024, the Company recorded impairment charges of $4,290 and $1,015,

respectively, within SG&A expenses in the consolidated statements of comprehensive income. The impairment

charge recorded during the year ended March 31, 2025, related primarily to an underperforming CCA and was

included within unallocated enterprise and shared brand expenses. The impairment charge recorded during the

year ended March 31, 2024, related primarily to underperformance of certain retail store‑related operating lease

assets and related leasehold improvements within the UGG brand and HOKA brand reportable operating segments.

Derivative Instruments and Hedging Activities. The Company may use derivative instruments to partially offset its

business exposure to foreign currency risk on expected cash flows and certain existing assets and liabilities,

primarily intercompany balances. To reduce the volatility in earnings from fluctuations in foreign currency exchange

rates, the Company may hedge a portion of forecasted sales denominated in foreign currencies. The Company

enters into foreign currency forward or option contracts (derivative contracts), generally with maturities up to 18

months or less to manage foreign currency risk and certain of these derivative contracts are designated as cash

flow hedges of forecasted sales (Designated Derivative Contracts). The Company may also enter into derivative

contracts that are not designated as cash flow hedges (Non-Designated Derivative Contracts), to offset a portion of

anticipated gains and losses on certain intercompany balances until the expected time of repayment. The Company

does not use derivative contracts for trading purposes.

Designated and Non-Designated Derivative Contracts are recorded at fair value measured using Level 2 fair value

inputs, consisting of quoted forward spot rates from counterparties at the end of the applicable periods, which are

corroborated by market-based pricing. The related assets and liabilities are classified based on their maturity dates

and recorded in other current assets or other assets, and in other accrued expenses or other long-term liabilities, as

applicable, in the consolidated balance sheets.

Changes in the fair value of Designated Derivative Contracts are recorded, net of tax, in OCI in the consolidated

statements of comprehensive income and in accumulated other comprehensive loss (AOCL) in the consolidated

balance sheets. Amounts are reclassified from AOCL to net sales in the consolidated statements of comprehensive

income when the related sales are recognized and to SG&A expenses in the consolidated statements of

comprehensive income after maturity. When it is probable that a forecasted transaction will not occur, the Company

discontinues hedge accounting and the accumulated gains or losses in AOCL related to the hedging relationship are

immediately recorded in OCI in the consolidated statements of comprehensive income. The Company includes all

hedge components in its assessment of effectiveness for its derivative contracts. Refer to Note 4, “Fair Value

Measurements,” for further information on the fair value of derivative instruments.

Changes in the fair value of Non-Designated Derivative Contracts are recorded in SG&A expenses in the

consolidated statements of comprehensive income. The changes in fair value for these contracts are generally

offset by the remeasurement gains or losses associated with the underlying foreign currency-denominated

intercompany balances, which are recorded in SG&A expenses in the consolidated statements of comprehensive

income.

The Company generally enters into over-the-counter derivative contracts with high-credit-quality counterparties, and

therefore considers the risk that counterparties fail to perform according to the terms of the contract as low. The

Company factors the nonperformance risk of the counterparties into the fair value measurements of its derivative

contracts. Refer to Note 10, “Derivative Instruments,” for further information on the impact of derivative instruments

and hedging activities.

Stock Repurchase Program. Repurchased shares of the Company’s common stock are retired. The par value of

repurchased shares is deducted from common stock, and the excess repurchase price over par value as well as the

portion due for excise taxes, is allocated to retained earnings in the consolidated balance sheets. Refer to Note 11,

“Stockholders’ Equity,” for further information on the Company’s stock repurchase program.

Revenue Recognition. Revenue is recognized when a performance obligation is completed at a point in time and

when the customer has obtained control. Control passes to the customer when they have the ability to direct the use

of and obtain substantially all the remaining benefits from the goods transferred. The amount of revenue recognized

is based on the transaction price, which represents the invoiced amount less known actual amounts or estimates of

variable consideration. The Company recognizes revenue at the transaction price, net of variable consideration,

including sales returns and allowances for sales discounts and chargebacks, and excludes taxes that are collected

from customers and remitted to governmental authorities, such as sales, use, certain excise, and value-added

taxes. Revenue excludes fees and sales commissions, which are expensed as incurred and are recorded in SG&A

expenses in the consolidated statements of comprehensive income. The Company’s customer contracts do not

have a significant financing component due to their short durations, which are typically effective for one year or less,

and have payment terms that are generally 30 to 60 days.

Wholesale and international distributor revenue is recognized either when products are shipped or when delivered,

depending on the applicable contract terms. Retail store and e-commerce revenue transactions are recognized at

the point of sale and upon shipment, respectively. Shipping and handling costs paid to third-party shipping

companies are recorded as cost of sales in the consolidated statements of comprehensive income. Shipping and

handling costs are a fulfillment service, and, for certain wholesale and all e-commerce transactions, revenue is

recognized when the customer is deemed to obtain control upon the date of shipment. Refer to Note 2, “Revenue

Recognition and Business Concentrations,” for further information regarding the Company’s components of variable

consideration.

Cost of Sales. Cost of sales for the Company’s goods is primarily for finished goods, as well as related overhead.

Finished goods include material costs, including commodities, for products; allocation of initial molds; and tooling

cost that are amortized based on minimum contractual quantities of related product and recorded in cost of sales in

the consolidated statements of comprehensive income when the product is sold.

Distribution Costs. Distribution costs include payroll and related costs, rent and occupancy, depreciation and other

related costs, and other SG&A expenses within other segment items for owned warehousing, third-party logistics

provider (3PL) service fees, and receiving, inspecting, allocating, and packaging product. Distribution costs include

fixed costs and variable costs that fluctuate with net sales and are expensed as incurred, which are primarily

included in unallocated enterprise and shared brand expenses. Such costs amounted to $266,237, $279,090, and

$238,312 for the years ended March 31, 2026, 2025, and 2024, respectively, and are recorded in SG&A expenses

in the consolidated statements of comprehensive income. Refer to Note 13, “Reportable Operating Segments,” for

further information on the Company’s unallocated enterprise and shared brand expenses.

Research and Development Costs. Research and development (R&D) costs include payroll and related costs and

other SG&A expenses within other segment items. R&D costs are expensed as incurred, and included within each

reportable operating segment, as applicable, as well as unallocated enterprise and shared brand expenses. Such

costs amounted to $68,899, $56,676, and $49,171 for the years ended March 31, 2026, 2025, and 2024,

respectively, and are recorded in SG&A expenses in the consolidated statements of comprehensive income. Refer

to Note 13, “Reportable Operating Segments,” for further information on the Company’s unallocated enterprise and

shared brand expenses.

Advertising, Marketing, and Promotion Expenses. Advertising, marketing, and promotion expenses include media

advertising (television, radio, print, social, digital), tactical advertising (signs, banners, point-of-sale materials) and

other promotional costs; and are specific to the Company’s brands and allocated to each reportable operating

segment, as applicable. Such costs amounted to $495,838, $432,198, and $348,852 for the years ended March 31,

2026, 2025 and 2024, respectively, and are recorded in SG&A expenses in the consolidated statements of

comprehensive income. Advertising costs are expensed the first time the advertisement is run or communicated. All

other costs of advertising, marketing, and promotion are expensed as incurred. Included in prepaid expenses as of

March 31, 2026, and 2025 are $3,519 and $4,045, respectively, related to prepaid advertising, marketing, and

promotion expenses for programs expected to take place after such dates.

Stock-Based Compensation. All of the Company’s stock-based compensation is classified within stockholders’

equity. Stock-based compensation expense is measured at the grant date based on the fair value of the award and

is recorded, net of forfeitures, in SG&A expenses in the consolidated statements of comprehensive income ratably

over the vesting period. The grant date fair value of time-based restricted stock units (RSUs) and of employees’

purchase rights under the employee stock purchase plans is determined based on the closing market price of the

Company’s common stock on the date of grant. The grant date fair value of long-term incentive plan performance-

based stock units (LTIP PSUs), which include a market condition based on the Company’s relative total stockholder

return (TSR) as well as financial performance conditions and service requirements, is estimated as of the grant date

using a Monte Carlo simulation.

Determining the fair value and related expense of stock-based compensation requires judgment, including

estimating the percentage of awards that will be forfeited and probabilities of meeting the awards’ performance

criteria, as well as the Company’s reliance on the closing price of its stock on the New York Stock Exchange at or

near the time of grant. If actual forfeitures differ significantly from the estimates or if probabilities change during a

period, stock-based compensation expense and the Company’s results of operations could be materially impacted.

Refer to Note 9, “Stock-Based Compensation,” for further information on grant activity, types of awards, and

additional disclosure related to stock-based compensation.

Retirement Plan. The Company provides a 401(k) defined contribution plan that eligible US employees may elect to

participate through tax-deferred contributions or other deferrals. The Company matches 50% of each eligible

participant’s deferrals on up to 6% of eligible compensation. Internationally, the Company has various defined

contribution plans. Certain international locations require mandatory contributions under social programs, and the

Company contributes at least the statutory minimums. US 401(k) matching contributions totaled $6,824, $6,528,

and $5,129 during the years ended March 31, 2026, 2025, and 2024, respectively, and were recorded in SG&A

expenses in the consolidated statements of comprehensive income. In addition, the Company may also make

discretionary profit-sharing contributions to the plan. However, there were no Company profit-sharing contributions

for the years ended March 31, 2026, 2025, and 2024.