Angel R. Martinez - Chief Executive Officer and President,: Zohar Ziv - Chief Operating and Chief Executive Officer Peter Worley

Jeff Klinefelter - Piper Jaffray Mitch Kummetz - Robert W. Baird Jeff Mintz - Wedbush Morgan Securities, Inc. Todd Slater - Lazard Capital Markets LLC Howard Tubin - RBC Capital Markets

Ladies and gentlemen, welcome to the Deckers Outdoor Corporation Fourth Quarter and Fiscal 2007 Year-End Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. If anyone has any difficulty hearing this conference, please press *0 for operator assistance at any time. I would like to remind everyone that this conference call is being recorded. Before we begin, I would also like to remind everyone of the company’s safe harbor language. Please note that some of the information provided in this call will be forward-looking statements within the meaning of the Securities laws. These statements concern Deckers’ plans, expectations, and objectives for future operations. The company cautions you that a number of risks and uncertainties beyond its control could cause Deckers’ actual results to differ materially from those described on this call. Deckers has explained some of these risks and uncertainties in the Risk Factor section of its Annual Report on Form 10-K and its other documented files with the SEC. Among these risks is the fact that the company’s sales are highly sensitive to consumer preference, general economic conditions, the weather, and the choice of its customers to carry and promote its products. Deckers extends that all of its forward-looking statements in this call will be protected by the Safe Harbor Provisions of the Securities Exchange Act of 1934 as amended. Deckers is not obligated to update its forward-looking statements to reflect the impact of future events. I would now like to turn the conference over to the President and CEO, Angel Martinez. Please go ahead sir.

Good afternoon to all of you and thanks for joining us. With me on today’s call is Zohar Ziv, our Chief Operating and Chief Executive Officer. As you saw from our release, we ended 2007 with very strong fourth quarter performance as revenues increased more than 56% to a record $194.2 million, and diluted earnings per share rose to a record $2.69. Our results were driven primarily by another excellent holiday season for the Ugg brand. Sales significantly exceeded our expectations, increasing approximately 62% to $178 million versus $110 million in the fourth quarter a year ago. We experienced very robust full price selling across the entire Ugg line including our core boot business, our women’s surf fashion and Metropolitan collection, our slippers, our men’s casuals, and the kids’ styles. We reported meaningful gains in all regions of the country with particularly strength in the northeast. Outside the US, UK continues to be our fastest growing market, while Canada and Benelux region also contributed nicely to our international results. And finally our consumer direct business, which includes both the e-commerce business and our retail stores, was up significantly compared to the prior year period. For Teva, fourth quarter sales were on plan, while Simple’s performance was highlighted by strong sales of ecoSNEAKS across the majority of accounts. Now for the year, fiscal 2007 was also highlighted by record financial results with sales of $448.9 million, up 47.5% from $304.4 million in 2006 and diluted earnings per share of $5.06, up 53.3% from non-GAAP diluted EPS of $3.30 in 2006 before taking into account the 2006 adjustments from the restatement related to our China subsidiary and the impairment loss attributable to the partial write-down of our Teva trademark. In addition, we improved our balance sheet, finishing the year with more than $168 million in cash, cash equivalents, and short-term investments compared to approximately $99 million at the end of 2006. Equally important to our financial performance was the number of strategic initiatives that we successfully executed throughout the year. We focused on increasing the market opportunities for all 3 brands, strengthening our management team, and improving our operating platform, culminating with the promotion of Zohar Ziv to the newly created position of Chief Operating Officer. As we continue to grow and expand our business around the world, I believe it is necessary to have someone take on the responsibility of overseeing our global operations on the daily basis, and I am confident Zohar is the right person for the job. We also reorganized our supply chain structure and hired Mark Zegley, an experienced supply chain executive, as Senior VP of supply chain, and we are currently in the process of hiring an individual to spearhead the growth of our China operations. We also began the process of doubling our distribution capacity here in California, and Zohar will touch on these investments in more detail in a moment. In addition, we are in the process of hiring a VP of Human Resources as well as a new CFO to fill the position vacated by Zohar’s promotion. Turning to the brands, for Ugg, 2007 was another milestone year as the brand recorded its 10th year of double-digit growth and surpassed the $300-million annual sales mark. At the same time, we made important progress evolving the product line, expanding our selling seasons, and attracting new consumers to the brand. All that said, it is important to note that we believe it is still a small brand globally with a lot of untapped potential. Full year Ugg sales grew 64.4% to $347.6 million, which reflects a much broader, more diversified fall offering combined with a growth of our spring line. In early 2007, we experienced very strong sell-through with the introduction of our first collection of espadrilles, more luxury sandals, and driving mocs, and had a very strong sell-through in the second quarter as well, which has historically been the brand’s lowest quarter in terms of sales volume. This past fall, we added more fashion styles to women’s style including heels and wedges featuring more leather and suede than in years past. These new styles still adhere to our central theme of combining luxury and comfort but provide our consumers with more occasions to wear the Ugg brand on a daily basis, such as to work or out for the evening. Our boots continue to be the foundation of our business, and they too evolved this past year, both in terms of color, fabric, and as well as styles. Key items included the Cardy boot, the Crochet boot—which was featured on Oprah’s Favorite Thing—and of course the Classic and Ultra. In men’s we expanded our popular surf collection with new styles of casual footwear that have attracted new male consumers to the brand and created repeat customers who historically have bought our slippers. Internationally, the UK was again a standout. The brands’ performance there has been very reminiscent of the US several years back, and we’re hoping to replicate the success across the continent, particularly throughout northern Europe which has ideal climate for the Ugg brand year around. In a nutshell, we delivered a broad collection of footwear this past year that resonated extremely well with consumers around the world and translated into a record period of growth for the Ugg brand. At the same time, it was extremely gratifying that our efforts didn’t go unnoticed by the industry, as the Ugg brand received the Plus Award for design excellence in the brand of the year category, and the Plus Award for design excellence in the boot category from Footwear Plus, one of the leading trade publications. I’d also like to acknowledge Connie Rishwain, the president of the Ugg brand, and her team for their exceptional effort that led to these outstanding results. Our goal for Teva in 2007 was to reignite the brand, primarily reversing the declining sales trend and regaining retailer confidence. As we’ve discussed before, we’re in the early stages of multiyear turnaround as we work toward reestablishing Teva as an outdoor performance brand and attract a younger, more active consumer. We’re pleased with the results of 2007, as sales increased 9.2% to $87.9 million from $80.5 million in 2006. We got off to a solid start early in the year, with very good sell-through during the first quarter as consumers reacted positively to the spring line—more than half of which you may recall was completely new. This included more technical products at $100 price points featuring our proprietary Wraptor strapping system, drain frame design, and event waterproof materials. We also significantly expanded Teva’s casual offerings. Despite the overall softness for sandals in April and May, brought on by the cold wet weather across much of the country, we were very encouraged by Teva’s performance during the first half of 2007. Importantly the feedback from our retail accounts was very positive, and as a result, we continue to see a meaningful increase in shelf space and more prominent exposure for the brand across our channels of distribution. Also driving the turnaround has been our enhanced marketing campaign, including more ad pages, more elaborate POP displays, and a greater number of retail shop in shops. Each of these mediums does a great job of showcasing our new and expanded product line while highlighting Teva’s transformation into the much broader outdoor footwear category. In addition, we sponsored events like—for example in the US the Teva Mountain Games in Veil, Colorado, the Teva Veil Trail Running Series, and the Stanta Cruz Surf Kayak Festival in Santa Cruz, California, among others. During the fall, we introduced a limited selection of new closed toe styles as part of our effort to make the second half of the year more meaningful to our business. Most of these were closed up versions of key items from the spring line such as the Ossagon and Wraptor Stability eVent. Again, this was a small offering, but the initial results gave us confidence that long term we can successfully expand Teva’s selling season. I think it’s important to point out that internationally Teva continued to maintain its market position. It has retained its premium status in Europe over the past few years, despite taking a step backwards here in the United States. That said, the majority of the overseas businesses are sport sandals which obviously is very dependent on the weather, and like we are doing here in the US, we are focused on leveraging Teva’s authenticity from White Water into a larger global market opportunity within the outdoor footwear space in order to take the brand to the next level. Simple’s year was of strategic importance, as we solidified our position as a world leader in sustainable footwear. We are very confident that Simple has finally settled into its position as a recognized leader of a new category within the footwear industry. Simple was recognized by Footwear Plus and given an award for design excellence in the Green Category. For the year, Simple’s sales were $13.5 million, up 8.2% from 2006. Our Green Toe line is a pinnacle of the brand’s sustainable initiatives. This line is made with sustainable materials and is distributed across multiple channels including natural foods and health and wellness accounts such as Whole Foods. Simple is blazing a course in the footwear industry by thinking about what sustainability can look like. The brand’s ecoSNEAKS collection is athletically inspired with casual feel to them, and in my opinion provides consumers the first opportunity to support the green movement without having to sacrifice comfort and style. EcoSNEAKS allows the brand to cast a wider consumer net than where we have been in the past. The styling of ecoSNEAKS and sustainable roots are allowing Simple to quickly expand its distribution than more traditional footwear accounts like Nordstrom, Dillard’s, Urban Outfitters, Bloomingdales, and Zapples.com. The collection hit the shelves in late summer, and the momentum continued to build throughout the remainder of the year culminating in weekly double-digit sell-through rates during the fourth quarter. As you all know, the green movement is resonating on a global scale. We’ve been quick to identify countries and partners with likeminded distributors. In the past 12 months, we signed new distributors in Canada, Germany, and Scandinavia, and it’s important to note that Simple’s unique voice and sustainability machine is attracting consumers around the world. Our Consumer Direct business posted strong gains in 2007, as we continue to grow and evolve this segment of our operation. First, our e-commerce business was up 57.4% to $45.5 million versus $28.9 million the year before. We saw significant increase in unique website visitors across the board as more and more consumers are searching our websites to locate styles, research products in more detail, and make purchases. Our web team has done a terrific job of creating a virtual platform that individually highlights the lifestyle position and complete collection for each of our three brands, and we are committed to making further investments in order to enhance the overall customer experience going forward. The second piece to our consumer direct business, our retail stores, saw revenues increase to $18.4 million in 2007. As you recall, we opened our first concept store in New York City in December 2006, and this was followed by a second concept store in Chicago this past October. We also added an outlet store at Woodbury Commons around Labor Day, which makes the total number of company-owned stores to 7, each of which performed exceptionally well this past year and surpassed all our expectation, and before I turn the call over to Zohar, who will review the financials, I’d like to take this opportunity to thank our entire organization for their hard work. As a result of their efforts, we not only achieved record sales and earnings, but Deckers Outdoor was named Company of the Year for 2007 by both Footwear Plus and Footwear News—the two leading publications in the footwear industry. Zohar…

Thank you Angel. For the fourth quarter of 2007, net sales increased 56.2% to $194.2 million versus $124.4 million for the fourth quarter of last year. Including sales from all sales divisions as well as the consumer direct business, our net sales for Teva products increased 6.2% to $13.9 million in the fourth quarter compared to $13 million in the same period of 2006. Net sales of Ugg products increased 61.8% to $177.7 million versus $109.9 million for the fourth quarter of last year. Simple brand net sales increased 76.2% to $2.6 million for the quarter versus $1.5 million in the same period last year. Included in these numbers are e-commerce sales for all 3 brands of $23.9 million, up 60.6% from $14.9 million in the fourth quarter of 2006 and retail store sales of $12.1 million, up 160.8% from $4.7 million in the prior year period. Also included in the brand sales numbers - international sales for all three brands increased 71.1% to $16.5 million compared to $9.7 million in the fourth quarter of last year, and domestic sales increased 54.9% to $177.7 million compared to $114.7 in 2006. Our gross margin for the current quarter was 48.2% compared to 48.3% in the fourth quarter of last year. Our margins remain high due to the robust full price selling and low inventory write-downs for the Ugg brand. Our SG&A expenses for the quarter were $36.7 million, or 18.9% of net sales, compared to $23.3 million or 18.7% of net sales a year ago. The increase in SG&A expenses in absolute dollars for the fourth quarter was primarily due to increases in our performance-based compensation expense related to our higher results as well as commissions. Our operating margin for the fourth quarter of 2007 was 29.3% of net sales, compared to 29.6% last year, excluding the impairment charge of approximately $15.3 million. Our interest income was approximately $1.4 million in the fourth quarter compared to last year’s fourth quarter interest income of $447,000. This increase was the result of higher cash balances maintained in 2007. Net earnings for the fourth quarter were $35.4 million, or $2.69 per diluted share, compared to $12.2 million, or $0.95 per diluted share in the fourth quarter of last year on a GAAP basis. On a non-GAAP basis, excluding the restatement adjustments of $300,000 or $0.02 per diluted share and the impairment charge of $11 million or $0.85 per diluted share, both incurred in the fourth quarter of 2006, fourth quarter 2007 diluted EPS increased 47.8% over last year. Now to the full year, for fiscal 2007, net sales increased 47.5% to $448.9 million versus $304.4 million in 2006. Including sales from the wholesale division as well as the consumer direct business, our net sales of Teva products increased 9.2% to $87.9 million compared to $80.5 million last year. Net sales of Ugg products increased 64.4% to $347.6 million versus $211.5 million a year ago. Simple brand net sales increased 8.2% to $13.5 million versus $12.5 million last year. Included in these numbers are e-commerce sales for all 3 brands of $45.5 million, up 57.4% from $28.9 million in fiscal 2006, and retail store sales of $18.4 million, up 163.3% from $7 million in the prior year. Also included in the brand sales numbers are international sales for all three brands which increased 62.6% to $62.3 million compared to $38.3, and domestic sales increased 45.3% to 386.6 million compared to $266.1 million in 2006. Our gross margin for the full year was 46.2% which was consistent with the year before, but what we believe to be on the high end of our normal range. It is important to note that the gross margin fluctuates based up on the company’s ability to contain material costs, mainly sheepskin and labor costs in China, adjust wholesale prices, changes in product costs, and controls the amount of product closeouts and write-downs. Our SG&A expenses for 2007 were $101.9 million or 22.7% of net sales compared to $74 million or 24.3% of net sale a year ago. The increase in absolute dollars in SG&A expenses was primarily due to increases in our performance-based compensation expense related to our higher results as well as commissions. Our operating margin for 2007 was 23.5% of net sales compared to 21.9% last year, excluding the impairment charge of approximately $15.3 million in last year’s fourth quarter. Our interest income was approximately $4.9 million in 2007 compared to $2.4 million last year. This increase was mainly the result of higher cash balances maintained throughout the current year. Net earnings for the full year were $66.4 million, or $5.06 per diluted share, compared to $30.6 million, or $2.38 per diluted share in 2006 on a GAAP basis. On a non-GAAP basis, excluding the restatement adjustment of $900,000, or $0.07 per diluted share, and the impairment charge of $11 million or $0.85 per diluted share, both incurred in 2006, 2007 diluted EPS increased 53.3% over 2006. Our tax rate for the full year was 39.6% compared to 42.6% in 2006. The decrease in the effective tax rate in 2007 was primarily due to approximately $5 million of impairment loss in 2006 related to a foreign subsidiary that received no tax benefits from the charge as this subsidiary is in a tax-free jurisdiction. For fiscal 2008, we are currently anticipating a tax rate of approximately 39.5%. Turning to the balance sheet, on December 31, 2007, our overall inventories increased to $51.8 million versus $32.4 million on December 31, 2006. By brand Ugg inventories were up 97.6% to $27.4 million at December 31, 2007, compared to $13.9 million a year ago. Teva inventories increased 31.4% to $20.1 million on December 31, 2007, compared to $15.3 million a year ago. Simple inventories increased 32.7% to $4.3 million as of December 2007 compared to $3.2 million at the end of 2006. The increase in inventory of all brands was due to the planned early delivery of spring 2008 products in the fourth quarter of 2007 to support the higher expected sale in the first half of 2008 compared to the first half of 2006. In addition, we ended 2007 with cash, cash equivalents, and short-term investment totaling $168.1 million, compared to $98.9 million at the end of 2006, and account receivables were $72.2 million versus $49.6 million at December 31, 2006. With regard to our outlook for 2008, based on currently visibility, we expect revenues to increase approximately 25% over 2007 levels. We are also introducing our 2008 diluted earnings per share growth target of approximately 20% over 2007. This is a based on a more normalized gross margin of approximately 45% versus 46.2% in 2007 and SG&A as a percentage of sales in the mid 20s. With regard to our earnings outlook, we believe it is important to note that in addition to typical yearly increases in our spending, we expect three incremental components to our SG&A in 2008. First we forecast that our stock compensation will increase by approximately $2.2 million over 2007 levels to $8.8 million. Second, we are in the process of strengthening our management team with several key hires including a vice president of HR, vice president of our China operations, and a new CFO. Combined, we expect these new hires will add an incremental $2 million in expenses this coming year. Third, as Angel mentioned, in order to achieve and execute our growth plan, we are expanding and investing in our distribution facilities. In December 2007, we added 430,000 sq ft space next to our existing commercial distribution center which will double our facility size. In addition, we are automating our processing system by implementing a computerized module which will allow us to more than triple our daily packing capacity from the existing 65,000 per day to about 225,000. The module and the outfitting of the additional space are expected to cost about $12 million. Due to this one-time investment, the total capital expenditure for 2008 is expected to increase significantly to about $20 million which will also include the cost of opening new stores, and the remainder is for our regular ongoing capital expenditures. As a result of the distribution center, our depreciation expense will be roughly up $4 million over last year’s level. Taken together, this incremental components total approximately $8 million or 37 cents in diluted earnings per share. As you know we have not provided any quarterly guidance today, but I want to take this opportunity to outline our first quarter 2008 growth targets. We currently expect revenues to increase approximately 25% and diluted earnings per share to be the same as or modestly higher than 2007. As a reminder, a significant amount of our operating expenses are fixed and spread evenly on a absolute dollar basis throughout each quarter. Therefore, we expect our earnings to grow at a slower rate during the first half of the year, which historically has included our lowest volume sales quarter. We expect the incremental expenses discussed above to increase the first quarter SG&A expenses by approximately $3 million. For the full year, we expect Ugg sales to increase by approximately 27%, Teva sales by approximately 15%, and Simple sales to increase approximately 30% over 2007. I will now turn the call back to Angel for some closing remarks.

Thank you Zohar. We are obviously coming off a very strong year of growth for the Ugg brand; however, as I said earlier in the call, we believe it’s a relatively underdeveloped brand globally, particularly in terms of unit sales. Looking ahead, we not only see significant room for expansion in the first half of the year as the spring line is developed across the board, but considerable opportunity to drive greater sales volumes during the back half of the year, with a much broader assortment of footwear and greater floor space at retail. This spring, we are introducing a more evolved product line with 25% styles than a year ago, featuring a larger selection of espadrilles, flats, and updated versions of our luxury sandals and comfort slippers. Continuing with the trend from the fall on holiday season, you will definitely see a greater abundance of fashion and color in the line this spring, including more heels and wedges. Our men’s category will be a key focus in 2008, s we debut several new styles of footwear under our casual, comfort, and rugged collection for everyday use. We are confident that our brand equity and leadership status in luxury and comfort combined with current opportunities to raise the level of excitement in the men’s footwear category leaves us well positioned to capture key market share in the years ago. Recently, we previewed our entire fall await line, and the response from the retailers was again very strong. The line is more complete than fall ’07, as we have significantly enhanced our men’s offering and infused our women’s collection with new colors, additional materials, and greater functionality—presenting consumers more reason than ever to add either their pair of Ugg to their closet or an additional style to their wardrobe. Globally, the Ugg brands’ opportunities are even greater than the brand was until recently—only available in a handful of countries outside the US, and even in those markets, it wasn’t doing a lot of business. Over the past 2 years, Colin Clark and his team has done a great job improving our international operations by working more closely with our distributors to better position and promote the brand, and in no place is this more evident than in the UK. We are confident that with time and appropriate investments, the majority of Europe and parts of Northern Asia, most notably Japan and China, provide great prospects for growth. 2008 marks the next stage of Teva’s reemergence at retail. In 2007, we reversed the 2-year declining sales trend, and this year, we look to build on that momentum with a broader assortment of footwear and continued investments in marketing and advertising. The spring line is stronger and more comprehensive than last year with 50% new styles that target a much larger audience than ever before. We are excited about the Mesa collection in men’s as a collection of casual leather sandals, which prebooked very well. On women’s side, our collection of fun, colorful casual shoes and sandals, and the Ventura collection featuring our court-based thongs also experienced solid sell-through. In our technology category, we expect strong performances from both the open Toachi and the Omnium. The open Toachi has a very modern Teva look to it, and we believe that it will appeal to a large group of core Teva customers, while the Omnium is a very versatile shoe that can be worn for almost any outdoor activity. We have also updated our popular Mush series of flip flops and our collection of mid-priced leather flip-flops for men and women, both of which we forecast to grow this spring. Looking at the back half of the year, we’ll be introducing our biggest and most complete fall assortment ever that includes multiple collections of unique closed toe, cold weather products for men, women, and kids. At our recent award show, feedback was very encouraging as retails expressed excitement about having a legitimate reason to carry the Teva brand 365 days a year, and we’ve been very pleased with the initial commitments to the line so far. Internationally, 2008 will be an exciting year for Teva as we focus on further evolving the brand and penetrating new countries, most notably China, where we recently signed our newest distribution partner. We have a lot planned in China right out of the gate including 20 large format shop in shops and key department stores followed by 2 Teva concept shops scheduled to open this May—one in Beijing and the other Shanghai. Finally, I want to take this opportunity to announce the global premier of the IMAX film, “Grand Canyon Adventure – River at Risk,” which is taking place on March 12th in New York City. As you may recall, Teva partnered with MacGillivray Freeman Films and Water Keeper Alliance to shoot this documentary about water conservation during a 15-day river rafting trip down the Colorado River back in September 2006. Included on the trip were Robert F. Kennedy, Jr., and many of our sponsored athletes. The premier will be a major media event for Teva, while subsequent openings around the country and a national marketing campaign with retail sweepstakes and a whole lot of promotional activity will provide further exposure for the brand. We were honored to part of this historic trip and now look forward to raising important awareness of water issues around the world through this film’s release. Our plan for Simple this year is to continue to innovate and revolutionize the footwear industry with our commitment to eventually making 100% sustainable products. We’ll also strengthen and broaden the brand’s message of sustainability to reach more consumers both domestically and overseas through increased distribution and advertising. We ended 2007 with a lot of positive momentum which supports our expected growth in 2008. In 2008, Simple’s growth will be driven by ecoSNEAKS as we continue to add new accounts—both national chains and independent retailers across the country. In fact, we’re already off to a very positive start to the year as we are receiving for spring which underscore of the viability of this collection and its growing popularity among consumers. This year, we continue to bring the most innovative and sustainable product to the footwear industry with our Green Toe collection. For women, we’ve added new feminine styles with silhouettes such as Ballerinas and Mary Janes, and this collection continues to push the envelope in terms of material innovation and manufacturing processes for the brand. This fall, we will introduce our newest premium comfort collection under the Simple brand—Planet Walkers. We believe these new styles for both men and women are the most comfortable and eco-friendly shoes on the planet. They feature premium leather from tanneries that incorporate sustainable production techniques as well as outsole and footbed made from recycled car tire composites. Planet Walkers will launch with a 30-day exclusive offering with all the Walking Company’s 190 stores as part of their month-long sustainable comfort promotion before rolling out to other influential retailers nationwide. Overseas, we anticipate Simple’s growth to accelerate this year. This will be driven by a broader assortment of product at retail and increased penetration within existing markets coupled with the opening of new distributors in China and Singapore. With regard to our retail expansion plans, we now expect to open two more Ugg concept shops in 2008—one in San Frisco in the third quarter and another one on the East Coast later in the year. At the same time, we continue to monitor our opportunities for additional locations around the world, and expect to have our first company-owned international retail store opened within the next 12 months—most likely in London. In closing, we’ve developed a very clear strategy for this company, and we believe that we are taking the right approach and capitalizing on our full potential and creating value for our shareholders. This includes ongoing investments in marketing and advertising, R&D, human resources, IT, and our global infrastructure in order to properly support each of the brand and achieve the long-term growth objectives that we’ve established. Again, our goal by 2010 to 2012 is to achieve $750 million in total sales with Ugg representing $500 million, Teva $175 million, and Simple $75 million, with 30% of that overall figure coming from our international business. Of course, we are well aware of the economic challenges posed by this year’s macro-environment. Having said that, we’re comfortable with our expectations and are confident in our entire organization’s ability to execute our business plan, and we move forward with a great deal of passion and excitement about what still lies ahead for this company. I’d now like to open it up for questions, so operator, could you please open it up for questions?

Thank you. The question-and-answer session will be conducted electronically. If you would like to ask a question at this time, please do so by pressing * key followed by the digit 1 on your touchtone phone. If you’re using a speakerphone, please make sure your mute function is turned off to allow your signals to reach our equipment. Once again, please press *1 on your touchtone telephone, and we’ll pause a moment just to assemble the roster. Our first question comes from Jeff Klinefelter with Piper Jaffray. Jeff Klinefelter - Piper Jaffray: Yes, thank you. Congratulations guys on a fantastic year.

Thank you, Jeff. Jeff Klinefelter - Piper Jaffray: Just a couple of quick ones; you provided a lot of great detail for us, but in terms of Q1, given the 25% top-line growth, Zohar, you gave us some good brand detail on an annual basis in terms of growth, but anything more you can share with us in Q1 and Q2 in terms of Teva. Last week, I heard from you we were looking at double-digit bookings for the Teva product. Just curious as we have gotten into the first quarter, maybe you had some sell-through data from the southern markets—what that looks like? Is any part of your more conservative bottomline guidance for Q1 related to reserving for any potential margin compression that may result from a slower channel for Teva?

Well, we have from our retailers so far, and it’s still very early. We’re pretty satisfied with the sell-throughs that we are seeing especially in the new products that’s been out there. Certainly, we’ve got a long way to go in the season. We expect that perhaps a very tough winter will yield a better spring, but I certainly can’t predict that.

Jeff, as to the margin compression, as you know, Q1 is mainly to sell in, Q2 will be the sell-through, so any margin compression if there will be any will be in Q2. Jeff Klinefelter - Piper Jaffray: Okay, I guess back to the question regarding the growth rate of Teva. Can you give us any better clarity on that 25% growth in Q1? What are you looking for from Ugg versus Teva versus Simple?

Well, we are not breaking down to percentages on a quarterly basis, but in macro, you will see that the Ugg and Simple growth should be proportionally higher than Teva.

We also are getting very good response to the fall-away product line, which if you look at Teva’s business historically, there are great outside in fall, and the response to the closed toe footwear particularly shoes like Mountain Scout has been exceptional. We have that product virtually in every order, so I think that’s a nice upside for Teva expectations. Jeff Klinefelter - Piper Jaffray: One last thing on Teva. When would you have a good read for the potential reorder business? Are you going to be able to tell that toward the end of the first quarter or when does the season truly begin on a national basis?

I think that’s probably in the first quarter—late March/early April. That’s when we should start seeing the impact of better weather on consumers getting into spring mode. Jeff Klinefelter - Piper Jaffray: In terms of your international business and the distributors, there are distribution agreements that come to a close here over the next couple of years for several regions. Anything that we can expect to see in 2008 in terms of taking back or acquiring those distributions, and is that factored into the current SG&A forecast?

No, you are not going to see any change to the distributor structure in 2008. Jeff Klinefelter - Piper Jaffray: Okay. Just likely, a lot of questions on sourcing and costs, and could you share with us your outlook with respect to sheepskin clearly for the Ugg product but sourcing of raw materials overall, and what you’ve factored in terms of inflation?

Regarding 2008, all our cost prices are already fixed, and we agreed to them with the factories, so we are not anticipating any cost increase either in raw material which is mainly sheepskin for us, or in the production cost. Jeff Klinefelter - Piper Jaffray: Okay, great. Thanks guys. Good luck.

Thank you.

Our next question comes from Mitch Kummetz with Robert Baird. Please go ahead. Mitch Kummetz - Robert Baird: Thanks. Let me add my congratulations.

Thanks Mitch. Mitch Kummetz - Robert Baird: Let’s see. I have a few questions on the guidance—specifically the margins, and Zohar, I think you mentioned in your prepared remarks SG&A sort of mid 20s as a percentage of sales. As I kind of work through the numbers that you’ve given on sales and gross margin and even tax rate, I’m coming up with something that’s below that—sort of 22% to 23% on the SG&A. I’m wondering if I’m doing my math right here.

No, you’re correct. You’re in the right range. Mitch Kummetz - Robert Baird: Okay, that’s helpful, and then I also thought that you’ve taken some people by surprise with the Q1 guidance, and obviously it seems to be an SG&A situation, and Q2 is even a smaller revenue quarter. I don’t know if this might be an opportunity for you guys to maybe just make a comment or two about Q2 so that maybe we don’t run into a similar situation that we’ve run into here.

If you’re referring to Q2 expenses, from an expense perspective, it will probably be in the same level as Q1. Mitch Kummetz - Robert Baird: Okay, that’s helpful. Then on the gross margins, obviously you guys are getting 45% which is I think about 120 basis points below where you came in at in ’07. Can we think about how that should flow first half to second half? I would assume that you’re expecting more of a gross margin drop in the back half than the first half, right? – I assume you’re prudently planning for some close-outs in maybe the fourth quarter. Whether or not those actually happen or not, we’ll see, but I assume there’s some assumption of that at least, right?

Yeah, there are assumptions. Mitch Kummetz - Robert Baird: But in terms of first half/second half, does your guidance reflect more gross profit margin pressure in the back half than the first half?

Yes, that’s correct. Mitch Kummetz - Robert Baird: Okay, and then I don’t know if you really want to speak to hypotheticals, but if we were to assume that you guys have another great back half with Ugg in 2008 and there aren’t a lot of close-outs, how should we be thinking about it? The 120 basis point drop according to your guidance, is that mostly a reflection that you’re expecting some normal level of close-outs where if that weren’t to occur and you don’t have to close-out a lot of products, that there could be upside there? How should we be thinking about that guidance?

I would say that’s correct. As we indicated, our cost is fixed for the year, so any adjustment will be really based on the sell-through and the amount of markdown and write-offs. Mitch Kummetz - Robert Baird: Okay, and one last question on the international. I think it came in at about 14% of sales for 2007. I believe that your 3- to 5-year plan, there is an expectation of the international growth to be about 30% of the business, could you just give us a quick rundown as to where you are with your international distribution. What might be your few biggest markets there? What are some other key markets that you either haven’t developed very much or haven’t even gone into, and what’s on tap for that business over the next year or two in terms of developing and growing it as a percentage of the total business?

Well, first of all, we still have a long way to go in the UK. Even though that’s our primary driver in Europe, we’re just getting started in the UK. The brand is emerging as a year-round brand in the UK, and the spread and assortment product, you really haven’t seen that there yet, and that’s a very strong footwear market. Secondly, there are markets in Europe that are untapped for our brand, primarily Germany where we’re really just getting going, France where we really have no distribution, countries like the Czech Republic, Poland, Hungary - those are very strong markets potentially for the Ugg brand where we don’t have distribution, and outside of Europe, you have to look at markets like China and realize that that is a very strong market potential for the Ugg brand, and we’re taking steps to establish our premium luxury comfort positioning there. In those markets, particularly in China, brands emerge from a retail foundation, so it’s very important to establish the cache of your brand with a retail presence, and that’s how we’re doing it there. So, my opinion is that there are still some very large chunks of the population in Europe and the vast majority of the population in Asia that has yet to experience Ugg comfort and luxury, and we really are organizing our sales to exploit those opportunities. Mitch Kummetz - Robert Baird: And is there any data that you can mine from the internet that supports that there is a global business for the Ugg brand? I don’t know how much of your internet businesses is captured from outside the US.

We process all of our orders from the UK, for example, in our internet operation center, so we have a very good idea of demand in the UK, and we are long ways from meeting the demand – let me put it that way. Mitch Kummetz - Robert Baird: Alright, thanks good luck.

Thank you.

And again, if you would like to ask a question, please press *1 on your touchtone telephone. We’ll take our next question from Jeff Mintz with Wedbush Morgan. Jeff Mintz - Wedbush Morgan Securities, Inc.: Thanks very much, and I’ll add my congratulations as well.

Thank you Jeff. Jeff Mintz - Wedbush Morgan Securities, Inc.: I know marketing was kind of a big focus this year across the board. Can you talk a little bit about where that came in? I know the exact number will be in the K, but where that came in for 2007 and where you anticipate it to be in 2008 on a percent of sales basis, up or down?

Yeah, it’s about $17 million, if I remember. We don’t anticipate any deviation from that ratio of marketing to sales. I think that the key thing for us in 2008 specific to the Ugg brand, but also important for Simple and Teva is the retail presence, and the presentation of the brand and the telling of the story at retail. So, what you’ll see from us in 2008 with Ugg for example is not necessarily an increase in the number of pages that we’re running in publications, but you’ll see an enhanced retail presence across our entire distribution channel, and we’re doing that in partnership with our retailers, and we’re making those key investments as appropriate. You’ll see shop in shops, you’ll see enhanced presentations of year-round product, and you’ll see the same think for Simple and for Teva. Jeff Mintz - Wedbush Morgan Securities, Inc.: Okay, great. That’s helpful. Then just on the question of distribution – in the US, obviously you’ve talked before how there’s a lot of the country where you feel you’re under-penetrated in terms of getting into stores, now that we’re through fall of 2007, where do you feel you are in terms of distribution through the middle and the southeastern US?

Again, I think we still have long ways to go. We know from our conversation with retailers that they feel that the market for our products, especially if you roll in the spring line in those parts of the country and the way the line is evolving that there’s just a terrific opportunity for the brand. We have a fairly restrictive distribution philosophy because it’s my opinion that our products are premium in nature, and we want to assure quality in both presentation and in the production of the product we make. So, we’re very careful about rolling out our distribution beyond the existing model. That said, when we do want to expand into a region, we do so with very committed partners, and that’s really an important component of how we’re growing our brand. You won’t just see suddenly Ugg product available where you’ve not seen it before and limit it to one or two styles. You’ll see a full presentation of Ugg product—men’s, women’s, kids’; you will see year-around, spring, and fall; you’ll see boots; you’ll see slippers; you’ll see the whole package, and I think that that’s a very important component of our growth strategy in the US. Jeff Mintz - Wedbush Morgan Securities, Inc.: Okay, and then just finally on the Ugg business in Q1 which you didn’t guide it specifically, but can you give us some sense – I know you’re taking greater advantage of the opportunity to sell the boots post Christmas this year, so can you just give us some sense of where the growth is coming from for Ugg in Q1? Is it more weighted towards the boots, or… – I guess the real question is how do you see the spring orders doing on that product particularly?

Up until last year, I think it’s safe to say that we really didn’t know what kind of opportunity we’d have in Q1 with the Ugg brand because we never had the inventory. This year, we really decided that we’re going to develop our Q1 business in closer relationship to the demand that we feel is out there. So, our slipper business continues to evolve very nicely for Q1, our boot business continues to perform, and then of course we have the introduction of sandals and espadrilles—which which is a little early in the season yet, but all indications from the warm-climate markets are that those products are selling through and selling through quite well. So, if you remember a couple of years ago, we kind of disappeared at retail as soon as Q1 hit, and now you’re seeing enhanced spread and assortment of product in Q1, which does certainly bode well for our sell-through and our performance in Q1 and Q2. Jeff Mintz - Wedbush Morgan Securities, Inc.: Okay, great! Congratulations again and good luck

Thank you.

And our next question comes from Todd Slater with with Lazard Capital Markets. Please go ahead, sir. Todd Slater - Lazard Capital Markets LLC: Thank you very much. Kudos all around.

Thanks Todd. Todd Slater - Lazard Capital Markets LLC: Could you just go over a little bit - again the $4-million increment in SG&A in the first quarter, break it down a little bit for us in terms of the largest buckets, and is this number something that we should expect evenly across each of the four quarters or is it just the first…? I imagine it’s across the quarters, but how much will it be?

As we said Todd, for the full year, it was $8 million, and we said the fourth quarter was $3 million out of that, but the remainder $5 million is going to be, I would say, evenly throughout the next three quarters. Todd Slater - Lazard Capital Markets LLC: So $8 million for the year for ’08?

Correct. Todd Slater - Lazard Capital Markets LLC: It’s not 36 cents a share or something like that? That’s included/embedded in your, let’s call it, 06/07 guidance.

That was embedded in the guidance. Todd Slater - Lazard Capital Markets LLC: Okay, that’s great, and that’s Q1, human resources, and….

Yeah, it’s a component of all three items as I said – enhancing the management team, I mean the biggest piece was doubling the size of our distribution center and the implementation of the module—the depreciation expense of that. Todd Slater - Lazard Capital Markets LLC: Okay great, thanks. Then, what’s the way to think about your international opportunity globally in terms of your mix – as Mitch pointed it out, it’s about 14% of sales this year, and has your thinking changed on where that can get to, and talk a little bit if you could about the profitability profile of that business if it differs a little bit from here and if so how?

Well, first of all, I’m confident that our goal of 30% of our business coming from international is a realistic and achievable goal. We have spent the last couple of years building a foundation for growth internationally. We’ve been working with our distributors to establish a flow of product that’s appropriate to grow their business from. We have certainly the growth in the Ugg brand for them, which represents significant investment. They’ve been opening showrooms, they’ve been developing retail presence programs, they’ve been marketing the brand and using the images that we provide - so all those things are really a part of the foundation you need to then come in with a broader spread and assortment of product at retail. Just like in the United States, this brand began with, now what we call, our classic styles, and in other parts of the world, the brand is growing and beginning with those classic styles, but it’s much more rapidly accelerating to the full breadth in assortment of product now that we actually have that kind of product, and so I’m really excited about what’s happening on the international front, and I see us really doing some great things there. You asked about the profitability – on the international business, the overall impact from the bottom line should be positive. There will be higher expenses of course, but we’ll be getting the double margins. That should compensate for that, so anything that we’ll do, it will be accretive. Todd Slater - Lazard Capital Markets LLC: Okay. Thank you very much, and then lastly I just want to touch on the direct business if I may. Both the e-commerce and the retail pieces, numbers are off the charts growing faster than any other piece of your business. Has your thinking evolved at all in terms of the opportunity in vertical retail stores? Can you talk a little bit about how that piece is performing relative to your expectations and how many you think you can maybe operate around the world?

I think philosophically we operate our retail stores to enhance our wholesale business. I’m not at that place that says we’re going to supplant our wholesale business with our own retail business. I think retailers are quite expert at managing retail. They know what they’re doing, and the good ones do it exceptionally well. We feel that our brand needs to be positioned and exposed in a complete way, and it’s really a function of real estate – most stores just don’t have the room to showcase the product in the breadth and assortment that we have in mind. And part of it is also to test our concepts with consumers, and that is a very big component of the kind of retail that we’re doing. We learn a lot from the assortments that we put together, from the consumer feedback, and that allows us to do a much better job in refining the product mix for retailers – in a sense editing the line before we ever get to a wholesale presentation, and I think retailers in the end appreciate that and know the value of something like that. Todd Slater - Lazard Capital Markets LLC: Is it fair to say that the profitability metrics in your own stores are where you’d like them to be?

I don’t believe in opening stores that don’t make money – so, yeah I’m satisfied with that. Todd Slater - Lazard Capital Markets LLC: Great thank you.

Thanks.

And our final question comes from Howard Tubin with RBC Capital Markets. Please go ahead sir. Howard Tubin - RBC Capital Markets: Hey guys, thank you. Just a couple of questions. Can you talk about inventory levels and where you think it’ll be at the end of the first quarter?

Well, the inventory level, we’ve not been providing guidance on that basis. What we’re doing and if you’ve seen it probably from where the inventory was—the level where it was at the end of Q4, it would bring the inventory early to accommodate our expected higher sales, and also it is a function of capacity from the factories and space in our warehouses.

And the other thing I’d like to add is, this year, I think we had a greater visibility into our top line than we’ve ever had. We’re feeling very confident in our strategy and in our plan, and I think that the nature of retail being what it is—in other words, a retailer will bring more of what sells in and less of what doesn’t—and the performance of the Ugg brand in 2007 bodes well for a retailer’s attitude about the brand in 2008, and they’ve made those commitments, so we have better visibility than we’ve really ever had, certainly since I’ve been here, and that’s allowing us to do a much better job of planning, so in that sense we have a high degree of confidence, so we’re really not worried about the inventory situation. Howard Tubin - RBC Capital Markets: That’s great, and just one question on cash – you guys have almost $13 per share in cash now, so I guess two questions there; one, what’re you going to do with it all, and two, is there any auction rate security exposure in that cash or marketable security balance?

As I’ve said before, my attitude is that we are constantly on the look for the next brand that we can add to our portfolio – it’ll be lifestyle brand, it’ll be a brand that we feel has great potential that we can develop, given our unique approach I believe to building brands. That said, given the economy and the situation we face on a macro level, it’s not a bad time to have a fair amount of cash, so we are fairly comfortable that it gives us tremendous flexibility, and in that flexibility, when opportunity comes up, I think we’ll be in a good position to take advantage of it.

And Howard to your question about auction rate securities, less than 2% of our portfolio is in that instrument. Howard Tubin - RBC Capital Markets: That’s great, okay great! Thanks.

Thank you. I want to thank you all for participating on the call and for your support this year. I know I speak for everyone in Deckers Outdoor Corporation when I say how much we value our investors and how committed we are to success, so thank you very much. We look forward to the next quarter.

This does conclude today’s conference. We thank you for your participation. You may now disconnect.