Linda Pazin - Vice President of Investor Relations & Communications Angel R. Martinez - Chairman of the Board of Directors, Chief Executive Officer and President David Powers - President of Omni-Channel Thomas A. George - Chief Financial Officer and Principal Accounting Officer Zohar Ziv - Chief Operating Officer

Omar Saad - ISI Group Inc., Research Division Erinn E. Murphy - Piper Jaffray Companies, Research Division Taposh Bari - Goldman Sachs Group Inc., Research Division Eric B. Tracy - Janney Montgomery Scott LLC, Research Division Camilo R. Lyon - Canaccord Genuity, Research Division Scott D. Krasik - BB&T Capital Markets, Research Division Robert Scott Drbul - Nomura Securities Co. Ltd., Research Division Randal J. Konik - Jefferies LLC, Research Division Sam Poser - Sterne Agee & Leach Inc., Research Division Corinna L. Freedman - Wedbush Securities Inc., Research Division Mitchel J. Kummetz - Robert W. Baird & Co. Incorporated, Research Division Jim Duffy - Stifel, Nicolaus & Company, Incorporated, Research Division Courtney Willson - RBC Capital Markets, LLC, Research Division Jeffrey Wallin Van Sinderen - B. Riley Caris, Research Division Christian Buss - Crédit Suisse AG, Research Division

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Deckers Outdoor Corporation's Fourth Quarter and Fiscal 2013 Year-End Earnings Conference Call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded. I'll now turn over the call to Linda Pazin, Vice President of Investor Relations and Corporate Communications. Please, go ahead, ma'am.

Welcome, everyone joining us today. Before we begin, I would also like to remind everyone of the company's Safe Harbor policy. Please note that certain statements made on this call regarding the company's expectations, beliefs and views about its future financial performance, brand strategies and cost structure are forward-looking statements within the meaning of the Federal securities laws. These forward-looking statements are intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. These statements relate to the company's anticipated financial performance including its projected revenues, expenses, gross margin, operating margin, capital expenditures, earnings per share and effective tax rate, as well as to the company's brand strategies, store expansion and cost structure, as well as the outlook for the company's markets and the demands for its products. The forward-looking statements made on this call are based on currently available information, and because its business -- the company's business is subject to a number of risks and uncertainties, some of which may be beyond its control, actual results may differ materially from the results expected at the current time. The company has explained some of these risks and uncertainties in its earnings press release and in its SEC filings, including the Risk Factors section of its annual report on Form 10-K and its other documents filed with the SEC. Listeners are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. The company undertakes no obligation to publicly release or update the results of any revisions to forward-looking statements. With that, I will now turn it over to the President, Chief Executive Officer and Chair of the Board of Directors, Angel Martinez. Angel R. Martinez: Thanks, Linda. And hello, everyone. With me and Linda on the call are Zohar Ziv, Chief Marketing Officer; Dave Powers, President, Omni-Channel; and Tom George, Chief Financial Officer. Our strong fourth quarter performance capped off a very productive and transformative year for our organization, as we exceeded on our strategic plans and laid the groundwork for what we expect will be continued gains in the year ahead. We believe that our robust growth was driven by the enduring strength of our UGG brand and the strategic investments we are making in our brand portfolios, and our marketing efforts, distribution channels and infrastructure, as well as improved selling conditions given the cold weather compared to a year ago. As we've talked about before, the macro environment of the past few years really challenged our organization to adapt to significant obstacles facing the industry, including fluctuations in weather, significant increases in commodity costs and more recently, the way consumers shop. I'm extremely pleased with how our teams have responded to these challenges by, among other things, embracing innovation. We developed more compelling spring and nonseasonal footwear that better exemplifies the UGG brand ethos. Highlighting our progress, UGG core Classics units represented just 1/3 of our business in 2013 compared to approximately 50% a year -- 5 years ago. This is a very important shift as it shows the evolution of the UGG product line and the growth opportunities ahead for the brand. We also created UGG Pure, allowing us to offer our consumers luxurious quality at appropriate price points and extend into new categories. And our foresight into the changing retail landscape led us to be early adopters of an Omni-Channel strategy. And we're continuing to develop the critical capabilities to be able to connect with the right -- wide range of consumers no matter which channel or device they choose to engage with us, where or when. What has remained constant during this period of change is the strength of our brand portfolio. Building brands is extremely difficult. I know this as I have spent my whole career working at this. This is why we remain very cognizant of the advantageous position we're in with several great brands. What I'll also note is that brands need the right resources in order to continue to grow and evolve in this very dynamic environment that is driven by the consumer like never before. During the year, we made considerable progress evolving all of product lines and expanding the reach and capabilities of our Direct-to-Consumer operations, while delivering record revenue of more than $1.5 billion. Heading into the holiday season, we felt good about our prospects based on what we believe was the UGG brand's strongest, most complete line ever. The consumer response to our product offering was very positive, with strong full price selling across our wholesale accounts in our own retail stores and across our E-Commerce websites. The strong fourth quarter led to substantial gains across our UGG product lines for the full year with UGG sales increasing nearly 10% to a record $1.3 billion in 2013. I want to congratulate Connie Rishwain and the UGG team on this tremendous achievement. Their hard work, creativity and commitment to developing and expanding the UGG product line is leading to very positive results. Our U.S. business showed resiliency in the fourth quarter, driven by a more diverse and accessible product offering, enhanced marketing efforts and improved selling conditions compared with the year ago. Sell-through of Classics was stronger than expected, with specialty Classics such as the Josette and the Bailey Bow, and the Lanettes [ph] performing extremely well. The very attractive and appealing specialty Classics collection provides a great complement to our core business, and we plan to continually update each year to drive excitement and incremental brand demand. Our slippers, which were very strong all year at retail, had another strong gift-giving season, while our cold weather collection was up meaningfully led by the Adirondack and the Butte collections. We're particularly pleased with how well our casual and fashion boots sold during the holidays, led by the Boulevard and Coastal collections. Again, we believe that the success of these collections highlights that consumers are choosing the UGG brand for our great styling at sharp points, and not just for our Classic and cold weather collections. I should note that we're also making good progress in introducing, expanding our loungewear line, which represents the natural extension of our slipper business. We had a very successful season with the loungewear at Nordstrom, at Neiman Marcus and Dillard's, as well as in our company-owned stores and online. We project that revenues for our 2014 loungewear collection will continue to increase, reaching approximately $15 million. And we remain excited about the growth opportunity this line represents for the UGG Lifestyle franchise. For the fourth quarter, total DTC comparable sales were up 19% with comparable store sales up 6%, including gains in each of our regions. Our U.S. Direct-to-Consumer division had a solid fourth quarter, outperforming the overall U.S. retail sector, delivering a DTC comp gain of 14%, including a 1% same-store sales increase. We did experience similar trends as others in the industry, with digital being stronger than brick-and-mortar. However, with the ongoing investments we've been making to develop our Omni-Channel strategy, the lines between store and site traffic and sales transactions have become increasingly blurred. We believe that total DTC comparable sales, including same-store sales and worldwide E-Commerce sales, has become a more accurate measure of our retail performance. Turning to Europe. UGG brand sales were up meaningfully in each of our 3 direct markets, the U.K., Benelux and France, and up across all channels. During the fourth quarter, total DTC comparable sales in Europe were up 21%, with comparable store sales up 2%. The selling environment in most of Europe for footwear and apparel was similar to the U.S., with many retailers citing weak traffic and a lack of newness during the holiday season. Despite this environment, we consistently heard from key accounts that the UGG brand was one of the standout exceptions, and that the uniqueness of our products in the market was a differentiating factor. We've made great strides changing consumers' perceptions through our refined distribution strategy, which has included the expansion of our company-owned stores and E-Commerce sites, improving our marketing efforts and enhancing merchandise offerings to be more tailor-fit to the region. Asia Pacific posted strong fourth quarter results fueled by our Direct-to-Consumer efforts in China and Japan. In China, our performance was highlighted by a 6% comparable store sales gain, a contribution from the 17 new stores that were opened during 2013 and better-than-expected sales in our UGG E-Commerce website that was only launched in Q2. Meanwhile, total DTC comparable sales in Japan rose 49%, including a gain of 27% in comp store sales. While not in the comp base, our Shibuya flagship store has performed in line with our expectations since opening last fall, which has us excited about the prospects of implementing the learnings from this game-changing store experience into future locations. We believe that we've established a great foundation for long-term growth, and we have a sound plan to build our -- on our business success. It starts with product and we're taking the comfort platform we've created with the UGG brand through our many years working with luxurious materials and successfully extending it into new footwear collections and adjacent categories that reinforce the UGG brand's powerful lifestyle position. For fall '14, we have an expanded selection of new specialty Classics and casual boots at sharper price points. Retailer response to fall '14 has been positive and the prebook process is going well, driven by the strength of the product line and the accelerated sell-through of our customers' experience this past season. This coming fall, we'll also be launching I Heart UGG by blending our youthful tween aesthetic with the iconic comfort of the UGG brand. We're creating a new premium sub-brand developed specifically for younger consumers. The product line includes footwear, loungewear and bags, and features colors, prints and patterns and construction elements that are appealing to the 9- to 12-year old tween customer. Initially distribution will be limited to our own retail stores through a dedicated website and some of our top wholesale accounts as well. The collection will also be available in some of our Japan and China stores. We're excited about the potential to expand the reach of the UGG brand among tween consumers through the successful and relevant sub-brand. Teva's 2014 product story can be summed up by one statement: focus on our core. Our renewed focus on Teva's heritage has led to an entirely new collection of original sandals for women and men that have significantly extended the brand's distribution footprint beyond outdoor to family footwear, specialty in department stores. Nordstrom and Dillard's both went all doors with Teva for the spring, and while we also had at DSW, famous footwear in Journeys, to name a few. In addition, core accounts headlined by REI have embraced the return to our roots and increased the brand's shelf space. Teva was featured in Vogue as one of the brands to watch in 2014, and we'll also collaborate with Glamour this summer on our exclusive original sandal product that will be carried in Nordstrom. Additionally, Teva was just named as the official sandal sponsor for the Bonnaroo Music and Arts Festival, which has over 80,000 attendees over 4 days, and that's in Tennessee. We're excited about this refocused effort and broader distribution strategy, as well as the renewed energy that's coming from the Teva team. And we're looking forward to capitalizing on the spring fever that's bound to come following this long and difficult winter. We had a great response from our retail partners on Sanuk's spring collection, which is has evolved to tell a phenomenal merchandising story that are on trend and on color across men's and women's, across sandals and casual canvas. Importantly, we think the spring line will resonate with more style-conscious consumers who are in the early stages of discovering the Sanuk brand. The response to our men's casual canvas has been very strong and has led to increased shelf space with existing accounts, as well as new distribution in the action sports lifestyle channel. In women's, our Yoga series continues to be the standout with the Yoga Joy and Yoga Sling booking exceptionally well. We've strengthened Sanuk's management team with the hire of Ethan Anderson, who joins us as Global Vice President of marketing. Ethan comes to us from Volcom, with 20 years -- over 20 years of expertise in active lifestyle brand management. Overall, we feel very good about the direction of Sanuk and the smart steps our design, marketing and merchandising teams are taking to carefully leverage the strength of the brand to expand distribution and build exposure to new consumer segments while continuing to appeal to its core audiences. I'm excited about what's going on at each of our brands, but as a former competitive runner, I'm particularly excited about the future of HOKA. With a unique midsole that features a higher volume, a softer ride and better rebounding foam compound than standard running shoes, we believe that HOKA ONE ONE is positioned to shake up the specialty running category. Leading this disruption is the brand's newest lightweight shoes, the Conquest, winner of the 2013 Outside Gear of the Show at Outdoor Retailer, Best New Gear from Gear Institute and Best Innovation from Competitor Magazine. The Conquest features a new proprietary midsole material, much improved styling, which is currently one of the hottest styling shoes in the specialty running category. Other key products stories for 2014 include 2 new super lightweight trainers, the Clifton and the Huaka, as well as the broad range of price points. These moves are allowing us to open up new distribution within running specialty and select outdoor specialty stores, as well as leading to excellent sell-through on HOKA's recently launched E-Commerce site. Our brands deserved marketing that is as strong as our product. We've sharpened our marketing tactics, particularly with the UGG brand, which is now aligned around a single brand message: Feels Like Nothing Else. We're launching in the spring with the Color of Expression campaign that showcases our brightest spring line to date with key styles being featured in InStyle, Glamour and Vogue Magazines. This follows our first shoe winter campaign titled Let It Snow that launched in January, I guess they heard that -- somebody got that message, as January is one of our best retail months, particularly for our cold weather products. The strong momentum coming out of the holidays, coupled with snowy conditions in most of the U.S., combined to help make this campaign a big success. However, for a brand with so much global opportunity, UGG is still under-invested when it comes to advertising, especially on the digital front. In addition to the great product design and quality, the growth of the brand's non-Classic business as a percent of the total sales is a direct result of our marketing efforts, which have supported our ability to extend our product lines into new categories. We're proud of these results and we need to continue to invest in our marketing resources. In 2014, we're increasing our total marketing -- total company marketing spend as a percent of sales to approximately 6% from a little over 5% this past year. A significant portion of the marketing increase will go towards the UGG brand with the incremental dollars going towards the combination of digital programs and tactics aimed at driving traffic to our Direct-to-Consumer channel. Our efforts will include launch of This is UGG, the global brand campaign for 2014, and that will be in the fall; launch of I Heart UGG; digital marketing to support monthly key categories in deliveries, including heritage, casual and fashion boots; loungewear, holiday and home; continued success of UGGs for men featuring star quarterback Tom Brady; more paid impressions on Google; we'll display retargeting ads with an emphasis on social media and mobile devices; and increased exposure on affiliate partner websites. One of the keys to Deckers' success during its 40-year history has been its people, that's why we're continually investing in the great talent within our organization as well as looking externally for additional expertise and leadership to help take Deckers to the next level. We announced an organizational restructuring in January, and are in the process of identifying the right person to fill the role of -- a newly created role of President of Brands. Once appointed, he or she will be in charge of driving best practices in merchandising design and development across our brand portfolio. Each of our brand teams possesses an incredible amount of knowledge and skill, and while we have established a very collaborative environment, we believe that collective the know-how of the entire organization can be even better harnessed for the benefit of the overall company. The President of Brands will spearhead this important endeavor, while also ensuring we continue to strengthen the great relationships that we have with our U.S. wholesale customers and directly with consumers. As part of the restructuring, we announced the promotion of Dave Powers to the newly created position of President of Omni-Channel. Since joining Deckers a little over 18 months ago as President, Global Direct-to-Consumer, Dave has done a terrific job improving the sophistication of our retail and our E-Commerce operations. In order to keep the consumer at the center of our decision-making process and ensure that we continue to advance our Omni-Channel capabilities across each of our regions as they have expanded, we decided to expand Dave's role to also include all wholesale, distributor, retail and E-Commerce channels in our international regions. Now I'd like to turn the call over to Dave who will discuss our global Direct-to-Consumer and international businesses. Dave?

Thanks, Angel. Hello, everyone. As we continue to invest in building our brands, we're also hard at work at realigning our resources to optimize the advantages of an Omni-Channel approach to accelerate growth across our businesses globally. This requires us to better identify and understand our customers and their preferences, extend accessibility of our inventory across all channels and directly connect with them to cultivate loyalty and growth. Our approach to building these Omni-Channel capabilities is a program we call DTC 360. We've branded this in such a way because we need to lead our Omni-Channel strategies with Direct-to-Consumer as our best expression of our brand and most intimate opportunity to engage with our customers. This is a transformation that will require time and resources, but we believe is critical to driving the long-term growth of Deckers. To build on our progress and drive success, in 2014, we were focused on 4 primary initiatives for our Direct-to-Consumer channel: Expanding our global footprint in a strategic and measured manner; elevating the in-store and online experience to drive conversion; further evolving our Omni-Channel capabilities in order to better serve the customer; and continuing to accelerate growth in our E-Commerce channels globally. We currently have 117 company-owned retail stores, 113 of which carry the UGG banner with the remainder a mix of Sanuk and Teva. While not included in our Direct-to-Consumer results, there are also an additional 28 UGG brand stores and shop-and-shops operated by our partners worldwide. The plan is to open approximately 25 company-owned stores this year, a mix of both concept and stores -- concept stores and outlets, with concept stores weighted heavily towards China and outlet stores spread across each region including several in the U.S. We still feel confident on hitting the 200-store target that we've established previously. However, given the dynamics of the market and our financial targets, a portion of these new stores will now be opened under our new partner retail program, which we will be launching this year and will include approximately 10 new partner stores. Now to be clear, these are on top of the 25 company-owned stores that we will be opening globally in 2014. We collaborate closely with our partners to ensure their stores look like our company-owned stores and offer the same great experience consumers have come to expect from the UGG brand, and we will continue to elevate this collaboration under our new program. For modeling purposes, partner stores won't be included in our DTC results. They will fall under our international wholesale divisions and carry margins similar to additional wholesale accounts. While we continue to expand our store footprint, we are concurrently driving a number of efforts to optimize our store operating model. As we look to drive productivity from our doors, we are starting to open smaller stores, which have led to a reduction in the square footage of an average store by a range of approximately 200 square feet during the past year. This year, we are testing a smaller concept in Tysons Corner, located in Northern Virginia that will have a smaller footprint and evolved store design, lower operating cost and an enhanced Omni-Channel experience. Within the stores, our priority is to build upon the continued consumer experience through programs like Internet UGG, which generated great success after launching in the fourth quarter. From a product standpoint, stores will feature much more focused assortments, supplemented by category expansions with a focus on men's, accessories and loungewear. We'll be resetting the floor sets more frequently to keep the merchandise fresh and more seasonally relevant, and we will also be extending our home and loungewear categories into our stores through an in-store digital catalog and expedited free shipping. Looking at our E-Commerce channel, 2013 was a really strong year driven by a 30% worldwide E-Commerce sales gain and the launch of new country-specific sites, most notably in China. The emphasis on more effective marketing programs aimed at driving traffic has been very impactful, while the response to new products in our Omni-Channel initiatives have helped increase conversion rates. We see continued opportunities to expand our E-Commerce business by leveraging key technology partnerships, offering more E-Commerce-only styles, relaunching our UGG website and expanding UGG by You in the U.S. and Japan. In addition, we will launch new UGG websites in Italy and Germany, as well as drive growth in HOKA's first E-Commerce site, which went live earlier this year. We will continue to leverage technology to transform the shopping experience into one that is personalized and efficient for our customers driving conversion and long-term growth for Deckers. We need to continue to strengthen our understanding of who our customers are and use that information to develop deeper relationships with them. We are actively working on a unified system to connect and communicate to our customers as they move between our stores and E-Commerce sites. This is a critical function for running CRM and loyalty programs around the world, and we will continue to build upon and enhance these capabilities in 2014 and beyond. In an effort to refine our go-forward strategies, we recently opened our first ever multi-brand retail store, the Deckers brands showcase, at our headquarters here in Goleta. The store offers customers the best expression of all of our brands, featuring a robust assortment of current products across multiple genders and lifestyle categories. The store will serve as the showcase for our expression of Omni-Channel retail and a test lab for new concepts, utilizing the latest technology combined with compelling merchandising to elevate the customer experience. Our customers have the ability to shop in-store using digital touch screens, customize their products, order online, ship direct to their home free of charge or to pick up in stores. As I mentioned earlier, we are launching a partner retail program, which will be headed up by Lauren Hovland. Lauren, who recently joined us from Coach where she was most recently the Senior Account Manager for Coach's global travel retail program for the Americas region. Lauren will lead the program aimed at introducing our brand, primarily UGG, to new markets where we do not currently possess the infrastructure or local market knowledge to operate directly. We believe that partner retail is a significant growth opportunity for the company. It will help manage our capital investment and SG&A expenses while providing additional distribution opportunities into new markets. We are in the process of evaluating our current fleet and new distribution partners as we develop our launch plan for later this year. I'll now turn it over to Tom who will review the financials. Thomas A. George: All right. Thanks, Dave. I'll get right into it. For the fourth quarter, net sales increased 19.2% to $736 million compared with $617.3 million a year ago. This year's results include domestic sales of $510.7 million, an increase of 14.3% compared with last year, and international sales of $225.3 million, an increase of 32.1% over last year. Looking at the full year on a constant currency basis, total net sales increased 11.1% versus 10.1%, as reported, and international sales increased 20% versus 16.5% as reported. Looking at sales by brand: UGG brand sales increased 18.1% to $690.9 million, Teva brand sales increased 13.6% to $15.5 million, and Sanuk brand sales for the quarter increased 45.2% to $22.2 million. Sales of our other brands increased $3.9 million to $7.4 million. By channel, total wholesale and distributor sales for the quarter increased 11.8% to $440.7 million. In terms of UGG wholesale: domestic UGG wholesale increased 8.5%, European UGG wholesale and distributor sales increased 5.5%, and Asia Pacific increased 52.2%. Turning to our Direct-to-Consumer business. Retail sales increased 31.4% to $178 million and E-Commerce sales increased 33.9% to $117.3 million. Global Direct-to-Consumer comparable sales rose 19% in Q4, with same-store sales increasing 6.1% for the 13 weeks ending December 29, 2013, compared to the same period a year ago. The increase in retail comparable sales was driven by a strong double-digit increase in Japan, a mid single-digit increase in China and low single-digit increases in the U.S. and Europe. For all stores opened at least 12 months, at the end of December 31, 2013, the average sales per square foot was approximately $1,300 versus $1,600 for the same period in 2012. In 2013, we expanded several of our most productive locations, which included Woodbury and Honolulu. Therefore these stores were excluded from the 2013 comp base. So same-store sales were flat at about $1,300 per square foot, if you exclude these locations from the calculation in both years. Our new stores are generating sales per square foot of about $1,000, with healthy returns, i.e., 1 year paybacks, as a result of lower rent and buildout economics. Total square footage at the end of 2013 was approximately 313,000 square feet compared to roughly 211,000 square feet at the end of 2012, representing an increase of about 48%. With regard to cost, we reduced our CapEx spend on a per-square-foot basis by approximately 20% in 2013. We also decreased operating expenses on a per-store basis in the mid single-digit range through tighter controls during the preopening period, as well as tighter expense management of controllable items in existing stores. Going forward, we are targeting slightly smaller, less capital-intensive locations, as well as partner stores as we continue to fine-tune our model to maximize performance. Gross margin for the fourth quarter was 51.1% compared to 46.3% in the fourth quarter last year. The 480-basis-point increase is primarily attributable to a decrease in product cost due to lower sheepskin prices and a greater contribution coming from our Direct-to-Consumer division this year compared with last year. Total SG&A expense for the quarter was $174.7 million, or 23.7% of net sales, compared to $141.9 million, or 23% of net sales, a year ago. The dollar increase versus a year ago was mainly due in the increase in retail and E-Commerce expenses. Operating income for the fourth quarter increased 39.8% to $201.5 million, or 27.4% of sales, compared to $144.1 million, or 23.3%, of sales last year. We recorded income tax expense of $59.5 million in the fourth quarter for an effective tax rate of 29.7% compared to a 30.6% tax rate in last year's fourth quarter. Fourth quarter diluted earnings per share increased 45.8% to $4.04 compared to $2.77 a year ago. This was ahead of our guidance for earnings per share, which was approximately $3.66, with the upside driven primarily by stronger-than-expected sales. Turning to the balance sheet. At December 31, 2013, inventory decreased 13.1% to $260.8 million from $300.2 million at December 31, 2012. The decrease is mainly due to an 18% decrease in UGG brand inventory. And at December 31, 2013, our cash and cash equivalents increased $126.9 million, or 115%, to $237.1 million compared to $110.2 million at December 31, 2012. At December 31, 2013, we had $9.7 million in outstanding borrowings under our credit facility compared to $33 million at December 31, 2012. Now before moving to our 2014 outlook, I want to share that based on the seasonality of our business and timing of a fall pre-book process, the board has approved the change to the company's fiscal year end from December 31 to March 31. The change will also allow us to incorporate the learnings from holiday [ph] in terms of what did and didn't work from a product marketing and channel perspective, as well as incorporating more current fall pre-book information into the following year's plans. The following guidance is for calendar year 2014. We will provide fiscal 2015 guidance, which will be the 12 months ending March 31, 2015, when we report Q1 results in April. So based on current visibility, we expect revenue to increase approximately 10% over 2013 levels. And this guidance is based on the following assumptions: UGG brand sales growth of approximately 9%; Teva brand sales growth of approximately 5%; Sanuk brand sales growth of approximately 10%; and sales of our other brands, which include HOKA, Ahnu and Tsubo to be approximately $65 million. And our fiscal 2014 guidance also assumes that the company's effective tax rate will be approximately 29%. We expect that our DTC channel will grow at a faster pace than the overall company, driven by full year contributions from the 40 stores we opened in 2013, combined with approximately 25 planned store openings this year, a projected low single-digit comp increase and another year of projected double-digit gains from E-Commerce. Backlog at December 31, 2013, was approximately $401 million compared to $323 million at December 31, 2012. This represent a 24% increase. The year-over-year improvement in the backlog was driven by the increase of fall bookings, which were up against an easier comparison due to a more challenging fourth quarter a year ago. In addition, we estimate some followers came in earlier versus last year as a result of strong sell-through in the fourth quarter of 2013. While all orders backlogs are subject to cancellation by customers, we expect the majority of such orders will be filled in 2014. With respect to the bottom line, we are currently projecting diluted earnings per share to increase approximately 8% over 2013 levels. This guidance is based on gross margin expansion of approximately 200 basis points over 2013 levels, driven primarily by lower input cost, and an increased contribution from our DTC businesses. SG&A as a percent of sales is forecasted to be approximately 36% in 2014. We must make investments to continue to drive double-digit top-line growth for the company, and our continued efforts to improve gross margin afford us the opportunity to drive this growth. That said, while we raise out, and a lot will depend on how 2014 unfolds. At this point, we fully expect to leverage SG&A beginning in 2015. Now back to the 2014 increase. Let me outline the key drivers which are: first, we have a full year of operating expenses associated with the 40 stores that were opened in 2013, as well as addition of new stores opening in 2014. From a dollar standpoint, this is the largest bucket. As Angel mentioned earlier, stepping up our marketing investments to better support the long-term growth of our brand portfolio. Marketing is forecasted to be up approximately $17 million in 2014. Costs associated with the recently announced management reorganization, as well as investments for international expansion and supply chain are projected to run approximately $10 million. These investments include: compensation for new senior hires, such as the President of brands, higher salaries tied to recent promotions and IT system improvements. Of the $10 million, we estimate approximately 1/2 are one-time nonrecurring costs, while the rest will be part of our ongoing budget. And depreciation in 2014 is projected to increase approximately $6 million, driven primarily by new headquarters and the stores we added in 2013, and new stores in 2014. Our ability to generate strong cash flow enables us to finance our growth opportunities. To support our growth and expansion, we are in the process of implementing a full-scale business transformation initiative that includes the upgrading of our enterprise resource planning system across our operations. Our capital expenditures in 2014 are expected to total approximately $90 million, which includes: $31 million for the new distribution center we announced in December; $25 million in Direct-to-Consumer, which are mostly new store openings; and $37 million for IT and related infrastructure improvement to support our Omni-Channel transformation as well as international expansion. Totaling close to 800,000 square feet of space, our new distribution center in Moreno Valley will effectively service 6 of our brands, and will replace 2 of our existing distribution centers in Ventura and Irvine. These resources will strengthen both our DTC and Omni-Channel efforts by allowing us to better serve the consumer by giving them access to the product they want in the most convenient manner. Capital expenditures for 2014 ended up at $83.5 million, which included $35 million each for both the new headquarters and investment in our Direct-to-Consumer operations. We are planning to complete in the first quarter of 2014 the refinancing of our new corporate headquarters by securing long-term financing of approximately $38.5 million. Therefore, interest expense for 2014 is expected to increase approximately $1.5 million, so $1.5 million. For the first quarter of 2014, we currently expect revenues to increase 6% compared to the first quarter of 2013, and a diluted loss per share of approximately $0.16 per share. As a reminder, a significant amount of our operating expenses are fixed and spread evenly on an absolute dollar basis throughout each quarter. This includes the costs associated with the 28 new stores that were not open until the second half of 2013. Therefore, consistent with last year, we expect our earnings to decline in the first half of 2014 as compared to the first half of 2013, which are typically our lowest volume sales quarters. And we expect our earnings to increase over 2013 in the back half of the year. We are continuing to successfully make the transition from a domestic organization focused primarily in serving the wholesale market into a global consumer-centric organization, driven by an expanding Direct-to-Consumer network and a compelling Omni-Channel offering. So in summary, we delivered a great year. We are beginning to reap the benefits of our earlier decisions to pursue an international and Direct-to-Consumer strategy. For the year, almost 2/3 of our operating income was generated by our Direct-to-Consumer business, and an impressive operating margin of 27%. For the recently completed quarter, our Direct-to-Consumer operating margin was a strong 41%. To build on this success, we must continue to make investments in this strategy. Therefore, most of our 2014 SG&A increase and approximately half of our CapEx investments for 2014 are attributable to this strategy. I'll now turn it back to Angel for his closing comments. Angel R. Martinez: Thanks, Tom. Well, we're very pleased with the strategic progress that we're making and our 2013 performance is a testament to our brands, the testament to our people, and our strategy. Looking ahead, we believe there are meaningful opportunities for each of our brands, and we're committed to investing in growth and executing a concerted Omni-Channel strategy that puts the consumer at the center of everything we do. These investments are critical for us in order to solidify our competitive position and maximize the opportunities that are in front of us. We're in the process of completing our latest 5-year plan, and we look forward to share those details with you later this year. But I will say today, as I base it on our current position on the growth prospects we've identified, we see no reason we cannot expand our top line by at least low double-digits annually over the next several years. We have talked previously about a 15% operating margin goal. That continues to the target, and we anticipate achieving this primarily through gross margin expansion that will come from lower input costs and increased penetration of our Direct-to-Consumer channel. We're doing everything we can to operate smarter and better, and also to better target and measure our strategic and operational spending. Once we hit a 15% operating margin, we'll assess where the business is at that point and reset a longer term goal. I want to thank everyone that was involved in making 2013 a successful year for the company. Beginning with our great group of employees, your enthusiasm, culture of collaboration and commitment to execution is the backbone of this organization. Personally, I'm more energized and excited about the future of Deckers than ever before, and I know our team share in my optimism. We look forward to updating you on our progress as the year unfolds. Operator, we're now ready to take questions.

[Operator Instructions] And we'll take our first question from Omar Saad with ISI Group. Omar Saad - ISI Group Inc., Research Division: A couple of questions. Number one, I hate to use the W word, but I thought it was interesting that, given how cold it was in North America this holiday in winter and -- but it was relatively seasonably warm in Europe. But you saw great trends in both. What are you learning about weather and how important it is to the business, or how it affects your business? And then I have one follow-up. Angel R. Martinez: Well, weather -- the changeability of weather, it seems to now be a constant. So I think the important thing is the diversification of the product line, the innovation around all the assortments, and really important is the merchandising on a regional basis so that we can offer as much assortment as possible and be ready for weather in whatever direction it happens to go. For a long time, we've been talking, Omar, about the brand really being about luxury and comfort, and that's proving to be true. We've never been a cold-weather brand. But we don't need really cold weather, we need cool weather. And so it just seems that we've learned so much about how to build around that idea and offer up the products that balance out the vagaries of weather for us. Omar Saad - ISI Group Inc., Research Division: And then could -- you talked about -- obviously SG&A, at least according to your guidance, is going to be up a little bit this year. It's great to see investing in the brand. It sounds like '15 could be a year where you start to leverage SG&A. What are the key differences between what you're spending on this year, and then how that changes in 2015 and maybe going forward? Just your thoughts process around that in investing in the brand. Angel R. Martinez: Yes, what really drives the ability to generate leverage in 2015 is, you get to look at 2014 and we did outline some of these items related to investments we're making on, some of which were one-time. I think, if you were to adjust for the one-time costs, we highlighted about $5 million of the $10 million. And you get operating margin expansion, for sure, relative to the prior year, and you get closer to, even in 2014, getting leverage on the expenses. I think one more thing to add, of the $10 million, $5 million are one-time, but the other $5 million are really changes in investments being made in advance of the future profitability curve, so, i.e. investing and putting -- and making some changes in the organization to put a new President, Brands in place. That person really won't be able to influence 2014's revenues, but they'll certainly have a good impact on 2015 and beyond. So that helps us get confidence as well that we'll get leverage in 2015. And one more point is, we're getting -- we're -- the infrastructure to scale the much larger Direct-to-Consumer operation, we're seeing that we've got most of those investments in place now. And therefore, there is opportunity, big time in 2015, to be able to get some leverage on our Direct-to-Consumer business. Omar Saad - ISI Group Inc., Research Division: So one more quick one. 19% top line in 4Q, and you're guiding to 6% in 1Q. What's the big change in trend there? Is there not enough inventory, or there is something you're seeing in the marketplace? And that's my last one, I promise. Angel R. Martinez: A couple of things there. The first quarter is a slower quarter relative to the fourth. Another thing that last year's first quarter that people remember that there was some weather issues last year, but the winter did come, and did come late, and we did have a pretty robust January last year. So we think it's just appropriate to be a little bit more cautious on the first quarter. And back to the W word, with the longer winter, the visibility we have for reorders around our sandal business is we're a little bit more cautious around that as well.

We'll take our next question from Erinn Murphy with Piper Jaffray. Erinn E. Murphy - Piper Jaffray Companies, Research Division: I was hoping you could provide a little bit more color on the backlog for 2014 and just help us think about the composition of growth between some of the newer, refined fashion, weatherproof products versus your core pillars, like the Classics and slippers. How are retailers positioning that order book? Angel R. Martinez: Well, we've had great reception and the pre-book has been very solid for the specialty Classics, which are not part of core Classics, and the fashion product. As I mentioned on the call, it's about -- only now about 1/3, little less than 1/3 of our business is for Classic. So we continue to make significant progress on that front, and that's reflected in what you're seeing in the pre-book going forward.

Yes. And then, Erinn, I'll just comment in the casual boot category. Given the improved styling and sharper price points, we do have a significant portion of our fall pre-book completed, and we have seen an increase in that category this year, which really speaks to the improved price point, as well as the styling. Erinn E. Murphy - Piper Jaffray Companies, Research Division: Okay, that's helpful. And then on the international comments you made, it sounds like you have seen a nice turn in Europe and then clearly building some good momentum in Asia. Can you just help us think about how we should pencil out some of the regions this year in terms of incremental growth? It seems like there is still a tremendous amount of white spaces that you're kind of expanding in to. It'd be really helpful to hear a little bit more detail in particular in Asia at this point. Angel R. Martinez: Well, we remain very bullish on what's happening in Japan. We think that we're just really getting going there. The energy around the Shibuya store, the energy around the brand, the new products, all the categories that we've introduced recently getting great traction in Japan. In China, we continue to make significant progress. I think most of the heavy-lifting from an operations and an operating perspective seem to be behind us. We're now focused on brand-building, now focused on continuing to evolve our e-commerce businesses. You saw that we're getting good traction there. And we really just got started. I mean, that just started very recently that we started selling in our own E-Commerce platform there. So Dave, do you have anything else to add?

Yes, I think, Erinn, it's a great example Japan is a great example of the power of the Direct-to-Consumer model leading market elevation in that country. The impact of the stores have had a marketing efforts and localized merchandising have had, not just on the retail business but the total market have been pretty significant. And we to the point now we have people coming to us looking for us to invest in different holes locations, in different retail locations and we're going to continue to invest in that market, as well as E-Commerce there for the long term. And we're taking a lot of those learnings actually from Japan and going forward we're going to apply those the other markets such as China. We're getting infrastructure and the team in place this year to really go after that business in a more aggressive way at the end of '14 and into '15. And then we have a little bit of work to do to catch up in Europe to be honest. The E-Com retail business there has some things you still need to work up but we're going to a apply the same methodology of using our stores in our sites to elevate the brand extend categories and then lead wholesale in that manner.

Our next question is from Taposh Bari with Goldman Sachs. Taposh Bari - Goldman Sachs Group Inc., Research Division: The first question I have was, just on the wholesale -- UGG wholesale business in the fourth quarter. I think it looks like according my math, that's 10% is that number right, Tom? And how are you thinking about that business -- how are you planning that business for 2014? Thomas A. George: Yes, it was up about 10% in the fourth quarter, so we're really pleased with how that finished. For 2014, this really stays where we're at the pre-book process and coming on the heels of a really strong year. We're planning more of a mid single-digit kind of growth number for the year. Taposh Bari - Goldman Sachs Group Inc., Research Division: Okay, my second question was just related to the recent spike in cattle prices. Just curious if you had any kind of effect from where you're sitting on sheepskin prices? Angel R. Martinez: Well the cattle prices, they'll move in the same direction as the sheepskin prices. I know we have said that prices go up too. But as you know our '14 prices are all locked in. Dollar cost is up[ph]for the remainder of the year and we haven't had a significant impact we've managed through efficient purchasing and consolidating resources to meet in our prices of the same level as last year in cattle.

Our next question is from Eric Tracy with Janney Capital Markets. Eric B. Tracy - Janney Montgomery Scott LLC, Research Division: I guess if I could first on your just as we think about the DTC strategy. A little bit surprised on sort of the comp within the U.S. retail stores, given the strong sort of weather backdrop. Clearly an indication of where the customers migrating and you are on top of that. But as we think about the evolution of DTC, and in particular, the stores, is there any change to the ultimate saturation point of that store base? I know you guys are doing some things to help productivity and less capital-intensive moves. But as we think about the ultimate sort of store base relative to just building online or digital, how we should be thinking about that? Angel R. Martinez: Well, let me just say a general comment and then I'm going to hand over to Dave. The goal really now is to understand what's the optimal mix between the -- in the Omni-Channel strategy between your brick-and-mortar stores and you're E-Commerce platform, as well as that interacts with your wholesale comp base. And we feel very good that -- we've always taken a bit of a cautious approach and not overly aggressively open brick-and-mortar stores, sensing that this whole Omni-Channel environment was emerging and emerging rather quickly. So that impact store size because it could be the not-too-distant future that the footprint of the store doesn't need to be as big as it needs to be. The store we're doing here at the corporate headquarters actually has a small warehouse sort of back room. In other words of that and the test we're doing here is to see if the customer is really not just our entire catalog through on iPad then are they willing to then just receive product in 24 hours or even sooner than that if they can be -- if Amazon sort of has their way. That has an impact on how much real estate you need. It doesn't has an impact on the square footage requirement, the staffing requirement et cetera, et cetera. So we see that as emerging, it's still in the early phases, but we're taking a very aggressive approach to steadying the situation. Because it could mean that we need fewer stores than we thought we'd before. It could mean that it could mean that we need we can have more stores that are more Omni-Channel focused that are on a smaller footprint. I'm pretty comfortable with saying that the idea of the large format store with 1/3 of the footprint to being back room stays for inventories is pretty much over. So, Dave, do you have anything you want to add?

Yes, I think it's a great question. It's one that I think every retailer right now is grappling with, Eric. And I think that I feel like we've been physically responsible and somewhat cautious and we have a really solid pipeline and where we wanted to put the stores over the next couple of years. And we've had that through a pretty serious process here. As we're continuing to learn about the migration of the consumer from stores to online, we're taking that into consideration. We're being very strategic on a few things. One is where we put stores based off the demographics. The opportunity in the market in our wholesale partners. We’re looking at the size of the store, as Angel said, to see if can maximize productivity in the small footprint. We actually learned a lot from the launch of our infinite UGG program in Q4, where we serviced quite a few consumers in-store where we shipped it out of our E-Commerce site with great returns on that. And so I think we're looking at holistically -- I think we're a little bit different than some of the other retailers such as in electronics stores, where you have to come in and touch and feel and try on the products. So there's going to be a role for our stores in the marketplace. But what we're going to do is figure out what the right model is, what the right experience is, how we leveraged technology and how do we can service the consumer across stores and online. The other point I would make is that we are going to launch that partner retail program this year. That will help us test new waters in new markets. And the other thing is that the migration from the consumer to the stores to online is being led by North America and it's happening a little bit more in Europe, but in places like China, that hasn't really happened yet. So there's still opportunity for store growth in some of these emerging markets. Eric B. Tracy - Janney Montgomery Scott LLC, Research Division: Okay, really appreciate that color. And then when you're switching gears, as we think about coming out of some of the selling season, the I Heart UGG line. I know it's going to be sort of a test year domestically, maybe a little bit broader within Asia. Maybe just talk to us again about the rollout, the plans, that the early learnings that you're -- and the feedback you're getting from accounts? Angel R. Martinez: Well, we're getting a great feedback from all the accounts that we felt it was appropriate for. As I mentioned it's a tween line. So the idea of the I Heart UGG, A is to give us a little more -- a little faster fashion, different profiles, using different midsoles, different colors, different materials. It's much younger, it looks very different than anything UGG has done in the past. And it's for those customers who have a tween consumer. What we found -- and by the way it is premium priced product, so it really goes up against competition that was either doing knockoff product or of our UGG brand, or coming at us with color ways and various treatments that we didn't feel were appropriate to UGG, they were maybe a little too young. We now have a competitive -- a very strong competitive weapon in that regard. We're happy with the tests so far in terms of the prebook. It's early August it's a fall '14 product line. We don't know what the pull through is going to be. But we're quite optimistic about it. We're feeling pretty good about the results so far.

We'll take our next question from Camilo Lyon with Canaccord Genuity. Camilo R. Lyon - Canaccord Genuity, Research Division: I was hoping to just focus on the backlog comment. If you could help me connect the dots, you talked about the backlog being up 24%, yet your overall revenue growth per year is looking to be 10%. I mean, can you just help me bridge that? Thomas A. George: Yes, one of the things we talked about, Camilo, was the fact that again, the year is not only a couple, when we step back a little bit. So the total year of 10%, includes not only our wholesale business, which is reflected in backlog at various times over the course of the year, but also includes the Direct-to-Consumer business, which is not reflected in backlog. So there is one thing there. And another thing is the backlog increase year-over-year is primarily the fall business. And what we've got there is an easier comparison, and that a year ago by the end of the year, some of the retailers have been a little bit more cautious in terms of what they are going to book for the following year. Whereas this year, such a strong sell -- they had such a strong sell-through in the fourth quarter. And in some cases they ran out of some product, they hustle to get some of those fall '14 orders in before the end of the year. So i.e., that's some timing involved in the backlog growth year-over-year. So does that help? Camilo R. Lyon - Canaccord Genuity, Research Division: A little bit, but it still seems there's a pretty wide gap between that number and the revenue number. And I understand, I get the fact that DTC is also going to grow, but you said that was going to grow at a rate faster than overall, company growth rates. So it just seems there's an incremental amount of conservatism baked into that number relative to the backlog number that you've discussed? Thomas A. George: Well, to your point on the DTC, it is growing at a faster rate and therefore it's become a bigger percentage of our overall business. And I think another thing to point out is that backlog includes spring orders as well. There is some increase in spring orders as well, and there's also some increase in the other brands for spring as well. So -- again, I think another thing to keep in mind is that backlog is still early in the scheme of things. The fall pre-booking process really doesn't include -- conclude in mid-April. So a lot more business to come in from a pre-booking point of view. Camilo R. Lyon - Canaccord Genuity, Research Division: So how would you -- what would you say the pre-booking -- what would you say that represents the total book that you expect to have? That 24%, is that 75% of the pre-book? Is it 80%? Is it 50%? How do we think about how far along the booking process has gone so far? Thomas A. George: Maybe just -- before I answer that, just to help put that year-end backlog of $400 million in perspective. That $400 million is relative to the total year guidance of $1.7 billion, I think let's get understand that. So percentage changes in the year-end backlog although somewhat indicative and directional aren't necessarily reflective of what your final pre-book will be for your fall wholesale business. And then come back to the question, I think we've commented on earlier we've been pretty, pretty pleased with how the fall 2014 business is booked today, but more to go. Camilo R. Lyon - Canaccord Genuity, Research Division: Is it substantially more? I mean, if you could just help us narrow that, what more to go means? I think it will be helpful. I think everyone is really getting a lot of questions over the last couple half hour or so hour. About the differences between those 2 numbers the backlog in the growth, just trying to reconcile the gap. Angel R. Martinez: We got almost 2 months. Thomas A. George: Yes, we still have about 2 months more to go. Angel R. Martinez: Two months more to go. I mean, there is still -- our sales organization globally is out there selling. And as I've mentioned this is a wholesale environment, that's where pre-book happens. So and I'll put it this way, we're significantly ahead of the pace we're on last year in terms of prebook at the shows and I think many of you have been to our shows. The UGG booths have been busy and every appointment was booked all day at the show. So we've been quite busy rolling it all in and we're very happy with the outcome so far. Camilo R. Lyon - Canaccord Genuity, Research Division: Great. And just one final question, different topic. With regards to inventory, you had great inventory control. Obviously, sell-through a lot of the product. Do you feel that you've left some sales on the table by being under inventoried in the fourth quarter? And if so, any way to quantify that? Thomas A. George: No, not really. There were a few small pockets of certain product, certain slippers, and maybe a couple of other items. But not that much. Angel R. Martinez: I think it's important that while they're comfortable rolling over into another year is core classic and some classic derivative product. What we're not comfortable rolling over another year is very specialized, very cold weather product, for example. So we were able to liquidate a lot of that product with the snowy conditions that we had carried over from 2012. All our products are gone. So I think we actually ended up just about the right place. And we were able to fill -- to do some filling business in the first part of the year, obviously, as the weather has continued to be very cold. So that's been helpful. But the mix is -- we're very happy with the mix we ended up with.

We'll take our next question from Scott Krasik of BB&T Capital Markets. Scott D. Krasik - BB&T Capital Markets, Research Division: Just another angle on the backlog from Q3 last year. Obviously, retailers pushed things out to Q4 given the warm winter they had prior. Are you seeing an acceleration in Q3 deliveries? And if so, I think Q3 this year in 2013 was like 20%, low 20% of EPS. If you are seeing that shift, could Q3 this year represent a bigger percentage of your yearly earnings? Thomas A. George: We're not really seeing that shift, Scott. We're not really seeing that. Scott D. Krasik - BB&T Capital Markets, Research Division: Okay. So assume that Q3 is a similar percentage of your annual earnings as 2013.. Thomas A. George: Similar, I think. Just keep in mind that as we continue to evolve a more Direct-to-Consumer business, there will be more and more emphasis on fourth quarter versus third quarter, so...

Black Friday is in Q4, so... Thomas A. George: And yes, Black Friday is still in Q4 as well, so... Scott D. Krasik - BB&T Capital Markets, Research Division: Okay. I just wanted the numbers to sort of be accurate. So maybe Q3 earnings could actually be a smaller percentage of the annual earnings than last year? Thomas A. George: That's -- yes, small, quite a bit. Scott D. Krasik - BB&T Capital Markets, Research Division: Okay. No. That's helpful. And then you just alluded to the fact that you were still selling some 2012 carryover product this year. So you had some huge improvements in gross margin in Q4, but since you'll be selling all of the inventory that was made with Pure with the lower sheepskin costs, could the improvement in gross margin in Q4 '14 be even greater than it was in Q4 '13? Angel R. Martinez: The product I was referring to is specifically cold weather product that when we don't have all of the cold snowy weather, you don't have the need for waterproof boots and traction and all that stuff, so we did have -- and by the way, that product did not change from year-to-year. So that product's all gone now. And we expect to continue to see gross margin improvement as we implement more out-gear in this product line. So that's just an ongoing initiative that we've got over the next few years. Thomas A. George: Keep in mind, in this year's fourth quarter, we've got a lot of benefit from the reduction in sheepskin costs. We're getting some more reduction next year, but not to the same order of magnitude as we did the fourth quarter this year. But we clearly do with the expansion of DTC and some reduction in sheepskin cost, expect the fourth quarter -- expect some expansion in the fourth quarter gross margin, as well as the third quarter. Scott D. Krasik - BB&T Capital Markets, Research Division: And then in terms of replacing the table-grade sheepskin, is your expectation the UGG Pure will replace 100% in 2014? Thomas A. George: No. We won't get that with 2014. As you know, this year, we are going to use about 25% of our total sheepskin as UGG Pure. The maximum we can do is 40%. We're ahead of our plan, as we said before, but I don't think we're going to use UGG Pure full 100% instead of table-grade next year. Scott D. Krasik - BB&T Capital Markets, Research Division: Okay. So it just means additional savings beyond next year? Thomas A. George: Yes.

Our next question is from Robert Drbul with Nomura Securities. Robert Scott Drbul - Nomura Securities Co. Ltd., Research Division: I just have 2 questions. The first one is, Angel, where do you think we are in Europe with the UGG brand right now in terms of the growth trajectory and distribution and the logistics pieces of it there? Angel R. Martinez: Well, if you think back to where we were 2 years ago, we were primarily distributor-driven. We were -- our E-Commerce platform had not really launched, and we were, from a product mix point of view, very heavily dependent on core Classic. We were very -- selling very few slippers. Our men's business had not evolved or developed, and we had a long way to go there. Plus, we had distribution issues that we felt we had to manage through. We were in places that we didn't feel were appropriate for the UGG brand. So the last 2 years have been about consolidating the E-Commerce business, component business, expanding the retail footprint, closing some distribution that we felt was inappropriate for the brand, developing the product line with the assortments necessary to appeal to European consumer. So I'd say that we're in the second inning, if you will, of what this game in Europe looks like. We have large countries that are only now becoming a more significant part of the mix. France, we're just scratching the surface in France. We're primarily in Paris, still have opportunity for our own stores, as well as E-Commerce. Germany is a distributor business that, as all distributor businesses go, there is -- we don't have stores in Germany, for example, there's opportunity for us to have our own stores in Germany. There are wholesale parts of Europe where we have no presentation at all, Poland, Hungary, the Czech Republic, Turkey. I was in Turkey not long ago. There's such amazing amount of UGG on the street, but we don't have any distribution in Turkey. So people are buying it in other parts of -- primarily the U.K. So I think we've got quite a long way to go in Europe. Robert Scott Drbul - Nomura Securities Co. Ltd., Research Division: Okay. And then can you talk a little bit about the men's business like the men's store and what the product is? And any current thinking of a new men's spokesperson given the performance of the Patriots this year and last year? Angel R. Martinez: You like to rub it in. Actually, Tom Brady is Tom Brady. I mean, he's independent of other Patriots do. He's an aspirational character. He's a wonderful spokesperson for the brand, does represent what the brand stands for. So we'll stick with Tom Brady independent of what the Patriots do. I'll just say that. The men's business has been very successful for us. We really like the direction it's going. Every year, we get more real estate. Every year, we're getting a more refined product assortment. We know where we see up, where we have opportunity in men's. Our men's slipper business has really come alive and now evolved past its original core, which is, let's say, the ascot type of product to slippers that are now more like mocs. They're worn outside. There worn year round. They're a little thinner. And that business is really very exciting. Our men's boots business, meaning casual boots, for fall '14 is, I think, one of the highlights of our product line. So we're very happy with the men's business and the direction it's been going. Performance of the men's business in E-Com and in our own stores is quite good.

Yes. I was going to say I think one of the really encouraging signs at the men's business is in our Asia Pacific market in Japan and China. It's one of our highest penetrations to the total business coming from men's. And so that's -- and again, once we get more locally relevant in merchandising and styling, that's going to increase -- so we're spending a lot of energy on men's right now. We do think, within our stores that we have today, the significant opportunity to continue to drive top line in specific men's category growth. Angel R. Martinez: And one thing I'll add to it. You have to understand, something important to understand about men's. Men's is a slower build, but it's a longer run, meaning that, I've said this for many years, all guys seem to have the 5 same footwear patterns in their closet. Guys buy -- all guys buy the same 5 shoes over and over again. Not true of the women's business, thankfully. Women buy fashion. They buy color. They buy merchandise that matches the trends in fashion. Men, on the other hand, don't. And so men, once they find product they like, they tend to stay with it, and they stay with it for a long time. So it's a slower build. But once you get there with men, you have customers for a very long term.

Our next question is from Randy Konik with Jefferies. Randal J. Konik - Jefferies LLC, Research Division: I guess for Tom. Look, the stock is getting hurt in after-hours. I think it's -- I would think it's mostly related to the SG&A guidance. When you think about -- so we haven't yet -- this is yet another year of SG&A guided as a percent of sales pretty up substantially. What -- if you break out just -- what is the contribution of SG&A deleverage in 2014 from just opening new stores? And how many new stores you're opening again? I guess that's my first part of my question. Thomas A. George: Opening 20, 25... Angel R. Martinez: 25. Thomas A. George: New stores this year. Randal J. Konik - Jefferies LLC, Research Division: So you're opening up 25 stores versus 40 new stores in 2013, but how much deleverage are you getting from opening up more stores is what I'm trying to get at? What's the -- I just wondered based on what you said about SG&A rate going up, what is the percent coming -- what are the basis points coming from the store openings? Thomas A. George: I think if you look at it from the store openings, it's probably close to 40% of the total absolute dollars the SG&A is increasing. And that's a function of the SG&A -- a full year's SG&A related to stores we opened in 2013, plus SG&A for the new stores. And I think another thing this year with terms of additional SG&A expense is the $17 million of additional marketing that we've talked about. So -- and in some of that, the one-offs we talked about, so that... Randal J. Konik - Jefferies LLC, Research Division: Well, I get that. I guess, with -- No. I understand that. I guess what I'm trying to get at is the market's trying to figure out when does the company get to that real inflection point where opening up stores -- this retail business doesn't cause further deleverage on the SG&A line in the company. You know what I mean? Where you reach a point where you're inflecting, you get scale, and you're getting the SG&A as a percent of sales to move back down because I guess that's the concern here, is that each year, the stores, you keep opening stores, and the SG&A rate keeps going up. When is that going to stop? Thomas A. George: Yes. So as we discussed earlier, Randy, we feel really good and strong it's going to be 2015, and we talked about all the drivers that -- yes, that's comfortable, the 2015 SG&A, not only operating margin expansion, but SG&A as a percentage of sales goes down in 2015. Dave, maybe I can[indiscernible]. Randal J. Konik - Jefferies LLC, Research Division: But as it relates to the stores opening, is that -- you're convicted that there's not going to be a deleveraging impact from opening stores yet again in 2015? Angel R. Martinez: For stores, yes. For stores, in fact, [indiscernible]. Randal J. Konik - Jefferies LLC, Research Division: And why is that? Why is that? So why is that? Is that critical mass? Like, what? I mean, I guess that's what we're trying to figure out. Is that -- why is, all of a sudden, next year, the year that you start to get leverage on the base after years of not getting leverage on the base? You know what I mean? Why is next year the magic year? Thomas A. George: I think, as we've talked about earlier, Randy, is that we've been in a step -- in addition to store profitability, we've been establishing the infrastructure to be able to scale a much larger base. And consistent with earlier discussions on the call, we believe strongly, 2015 is the year that those additional infrastructure, the scale kind of investments start tailing off, and we can start getting leverage on that as well.

Yes. We've had to invest in infrastructure, Randy, and talent globally. You think about getting up -- a business up and running in a place like China, building expertise from a global perspective. That takes time. We -- I think we've turned the corner in '14 around getting the talent and people in place. The other piece of this is we grew our store count by almost 50% this year. So as we get into a larger store base, the new openings aren't going to have such a dramatic impact in the overall SG&A growth and fewer stores going forward as we [indiscernible]. Randal J. Konik - Jefferies LLC, Research Division: No. I understand that. I just think, again, it's just hard to digest when we -- it just keeps -- you keep opening, and the numbers keep -- the SG&A as a percent of sales keeps going up. And I'm just trying to get as much data as possible to get the true conviction that, that SG&A number is going down in 2015, and these operating margins move back up. And if they really do, is there some sort of guidepost that you can give us today on how much you can see leveraging the model in the 2015 environment when you're in fact guiding the market -- guiding the street to getting the leverage in 2015, like how much? Angel R. Martinez: We've got that capability. I think, as you will see, it's going to be significant. I think it's probably best to wait until 2014 unfolds before we really give that level of detail. I think you and the market should feel comfortable with the level of learnings that we've generated over 2013 and 2014 and our anticipation of getting more and more leverage on these people investments we've made to be able to drive the business.

And at the same time, we're continuing to lower CapEx investments. We're lowering SG&A investments per store. We've done that significantly this year. We're going to continue to do that throughout '14 and beyond. Thomas A. George: Another key point is more -- although we see how important it is and we're going public, we're getting leverage on SG&A expenses in 2015. But we also continue to be sensitive to returns on capital, and the stores have and the stores going forward will pay back in 1 year, and those are great returns on capital relative to our cost of capital.

And we'll take our next question from Sam Poser with Sterne Agee. Sam Poser - Sterne Agee & Leach Inc., Research Division: I've got just few more, I'm sorry to say. When you said in the prepared remarks, I think, Tom, that the leverage that you would leverage in fiscal '15, fiscal '15 starts in 3 -- less than 3 months right now, are you talking about calendar '15, or are you talking about the fiscal '15 that's going to change in less than 3 months? Thomas A. George: Calendar '15. Angel R. Martinez: That was a calendar '15 comment. Sam Poser - Sterne Agee & Leach Inc., Research Division: Just want to make sure because things could change very... Angel R. Martinez: No, no. Good question. Yes. I think that one -- go ahead. Sam Poser - Sterne Agee & Leach Inc., Research Division: The backlog, the backlog that's running ahead of last year with the $400 million as of December 31, if we look at the backlog activity without giving us numbers, so you give us whatever you want, but the backlog activity, let's say, through last week in the shoe shows, where are you currently compared to last year? And how much more sense of urgency do the retailers have right now? Thomas A. George: We did comment -- we historically just report backlog every year, number one. But number two, we -- I think you can sense from the comments on the call, and you've seen the activity at the shows, that we feel -- in some of the new initiatives we have with some of the newer products, we feel good how we're progressing with the fall prebook. Sam Poser - Sterne Agee & Leach Inc., Research Division: I understand that. But let's just say this, that if you -- if somebody -- if you bought 100 pairs-- if you sold 100 pairs last year at the end of the day or took backlog of 100 pairs last year by April 15, then let's say, you're going to do the same this year, it will be higher because you're ahead. But I mean, how many more pairs do you have in now? Let's say you had 20 in by this time last year, do you have 40 in this -- at this point? Are you ahead -- are you significantly ahead of sort of last year as we've moved through the first quarter so far? Angel R. Martinez: Sam, we've never broken down in that kind of detail our backlog or rather our prebook process. I will say this, we are ahead, and we're comfortable with where we are. We're very comfortable with where we are. So -- and that's as much detail as I'm prepared to give right now. Sam Poser - Sterne Agee & Leach Inc., Research Division: I have 2 more questions. Number one, the inventory at the end of year, how much was the -- was there inventory impacted by the Chinese New Year and goods that probably had to roll a little earlier than you might would have liked to otherwise? Because we heard that from some other people where there was a lot of in-transit product left early because of the Chinese New Year.

We really don't believe it will have an impact on us, Sam. Sam Poser - Sterne Agee & Leach Inc., Research Division: And then the market, the increase of $17 million in the marketing spend for year is, is any of that onetime in nature, or is that something that will just get thrown to the base? Angel R. Martinez: I think that's for the most part going to get thrown in the base. Sam Poser - Sterne Agee & Leach Inc., Research Division: And then lastly, at ICR and at Outdoor Retailer, we asked point blank about levering SG&A and spending it to get a delivery of -- getting a delivery of sales, and you weren't going to spend the money without getting the payoff. You said at ICR that the gross margin would be -- you implied it would be up more than 100 basis points, and you've guided that way. But now you're talking about delevering gross margin by virtually 200 basis -- SG&A by 200 basis points. Can -- did anything change there, or do you feel like there may be more meat on the bone as far as revenue goes for the year? I mean, because it was really surprising that -- I mean, because we asked the question twice, once on how [ph] with you and then once, it was asked at the ICR conference as well. And definitely, with the implication that you didn't spend money without expecting the return, and I -- and it certainly implied that, that was 2014 comment, not a we're investing this year to lever SG&A a year later. Thomas A. George: When we were at ICR, we were clear that we talked about SG&A leverage in terms of more of a longer-term goal, and we were clear. We weren't giving 2014 guidance, and we also spoke about additional marketing and additional infrastructure expenses. And so I don't know how you had -- Angel R. Martinez: And my comments were not 2014 specifically. My comments were directionally where we're going with our strategic plan. We're going to be giving a lot more color on this as the year progress, as we learn more about what's happening in '14. We certainly have an Investor Day later in the year. But our goal is to continue to invest in those areas where we're getting a great return. And as you can see from our results, that's exactly what we've been doing. So at what point would you say that we stopped investing and forgetting tremendous returns on our -- on that investment, we need to complete where we've started so that we can actually fully leverage and actually grow -- continue to grow the top line, which we think these things -- these investments do. But we'll reap the rewards in later years. There's no question in my mind about that. Sam Poser - Sterne Agee & Leach Inc., Research Division: All right. And then lastly, can you give us the date or the month when this Analyst Day is going to -- the Investor Day is going to happen?

Right now, we're -- we haven't finalized the exact date, but we're looking towards the end of September, and we'll be sending out like a save-the-date to all the analysts and investors probably within the next short period of time once it gets finalized with our management team and travel schedules and so forth. But we're targeting for late for September at this moment.

Our next question is from Corinna Freedman with Wedbush Securities. Corinna L. Freedman - Wedbush Securities Inc., Research Division: I'm going to get pretty quick. Just wondering if you could quantify the productivity gains that you're seeing from opening smaller stores, and if you can give us an idea of your long-term goals there? And that's it. Angel R. Martinez: Yes. We don't have enough of those new stores in the pipeline yet or in our portfolio to really speak to the improvements. What I will say is we're looking at the total picture, what the top line, sales per square foot are, aligned with the financial models, the lease deal, and measuring that against the SG&A expense. So it's too early to tell exactly, but I think we're more focused, to be honest with you, on the operating margin of those stores' return on sales than sales per square foot as a better measure of how those stores perform.

Our next question is from Mitch Kummetz with Robert W. Baird. Mitchel J. Kummetz - Robert W. Baird & Co. Incorporated, Research Division: I'll just ask one question since we're running long. Just want to drill down a little bit on kind of reorders/cancellations. I know that you're -- Tom, your assumption going in this past fourth quarter was that cancellations would be sort of in line with a year ago and then reorders would be few. I assume that on both those items you guys did better than that assumption. Thomas A. George: That's right. We ended up having virtually no cancellations, and we had a fair amount of reorders in the fourth quarter.

And our next question is from Jim Duffy with Stifel. Jim Duffy - Stifel, Nicolaus & Company, Incorporated, Research Division: One area, however, where I am sordid for clarifications. The number you implied that the sell-through in your North American wholesale channel was seemly stronger than that implied by the comps from your own North America stores. Is that accurate? And if so, is there some operational explanation for why performance in the North American stores lagged? Thomas A. George: Because of the fourth quarter, domestic wholesale business was at a higher growth rate than the comp. I think that gets back to inventory levels that may have been in the wholesale channel, and there's a lot of other factors that go into that versus our own domestic business.

Yes. And we haven't spoken to sell-through in the stores, and we've spoken to total top line and comp over the prior previous years, so I think it's tough to lay apples-to-apples comparison on those 2 things.

And we'll take our next question from Howard Tubin with RBC. Courtney Willson - RBC Capital Markets, LLC, Research Division: It's Courtney in for Howard. We're just wondering if you can give any details on the UGG outerwear and home fashion line coming for I believe this fall? Angel R. Martinez: Well, I think you're referring to the loungewear because that's really the focus area in terms of apparel that we have. The loungewear will continue to evolve. We have -- as you know, we began with the Nordstrom test. It's now rolling out to multiple retailers, as well as our own stores, a variety of color and pattern now, different weights in the fabrications. Men's, women's, there's loungewear in the form of separates and tops and bottoms. They have merchandises along with the slippers, which is very exciting to see. The home products, that's something that we began to test of this just recently, actually, this past quarter, performed very well in our -- in the limited environment in which it was in. Part of what we're figuring out with home is the merchandise, how to display it. We think there's a great opportunity as we evolve the Omni-Channel strategy with home products being available for touching and feeling at the retail brick-and-mortar location and then ordered to be delivered in 24 hours. These pillows we may take up a lot of room. Many retailers don't have that kind of space in the back room, but they still want to carry the product. So we're in the process of sorting all of that out, and that's just a big part of the opportunity that we see with our home products.

Great. I would add to that. This is David. I think the real win here is the combination of loungewear and slippers and home together as a full lifestyle expression, and I think we're learning what the best way to showcase that in our stores is. And this fall, we're going to have a digital catalog that we can use in store along with samples for people to see the product in its best expression, but then fulfill it online as well.

Our next question is from Jeff Van Sinderen with B. Riley. Jeffrey Wallin Van Sinderen - B. Riley Caris, Research Division: Okay. I guess this is really related to product innovation. I know orders are usually driven by sell-throughs. But to what degree do you think your backlog is driven by weather and what degree do you think it's just plain driven by great product as you continue to innovate product? In other words, do you think that there's a product innovation element, a content element that is maybe driving your bookings more so than just sell-throughs were good in Q4. Just wondering how you think about that. And also, if you feel like perhaps the newness of product, product innovation maybe mitigates the risk of weather-related cancellations to some degree for the second half of this year? Angel R. Martinez: Well, as I said earlier, I think it's really very much about product innovation. I think our better merchandising, the better assortments that we've managed to create for consumers in every region of the world has significantly helped our presentation at retail. Giving the consumers that many more options obviously improved sell-through. And the sell-through improvement is what's helped to drive backlog. So it really all starts with innovative new fresh products. I don't think there's many retailers out there who are betting on weather as a determinant as to whether or not they buy x or x plus -- x plus 10. But when they have exciting product that they feel they merchandise and get customers excited about, independent of weather, that's the optimum situation. That's why it always does have to start with great product, and everything else just flow from the great product. In the end, the best merchants are the ones who have the best businesses, and they're proactive in putting environment -- a retail environment out to their customers that their customers get excited about, and that's what we've been focusing on. That's really the nature of the business that we're in. Plus, I think it speaks to the power of the UGG brand. I think these retailers are realizing they can count on the UGG in Q4 to be one of their top brands going forward, and they're continuing to invest in that. Thomas A. George: One other thing that will probably be good for me to point out relatively to even an earlier question, I think when you look at sell-through in the fourth quarter of our wholesale channel versus our own Direct-to-Consumer channel, our Direct-to-Consumer channel on a combined basis in the U.S. was up 14%. Our UGG wholesale business in the fourth quarter was up 9%. That not only -- that is a wholesale number, but it's also whatever those wholesale customers did on their own websites as well. So we actually outperformed our wholesale business on a total DTC basis.

Due to time constraints, our last question will come from Christian Buss with Crédit Suisse. Christian Buss - Crédit Suisse AG, Research Division: Wondering if you could talk a little bit about the performance of your retail stores by region, where you saw the most strength, where you're most encouraged by the momentum there?

Sure. I think we've talked about that a little bit already, Christian, but I think the real strength that we saw this year was coming out of our Japan market. And as I've said, we'd really be invested -- been investing in a holistic strategy to elevate that business. So that, as well as China, were the real leaders from a comp store perspective, followed by, like we said, in U.S. and EMEA in single-digit growth from a comp store perspective. But we're really encouraged by the evolution of the brand in that market, particularly Japan, and see great upside continuing for the Asia Pacific market where the brand is less mature, and there's a lot more whitespace for opportunity. Christian Buss - Crédit Suisse AG, Research Division: Can you talk a little bit about the store model that you're developing with lower capital expenditures? Could you walk us through sort of what targets you're hitting there in terms of build-out costs and returns?

Yes. I don't have specific numbers. I can tell you we're looking for a meaningful reduction in the average cost per square foot. However, the driving factor there is we see an opportunity for secondary city and secondary B locations in the real estate now that we have a flagship that's to open around the world. And in order to do that, you need new economics for the store. You can't spend the main same amount per square foot as in a B location in the malls you would on a street location. And we've got to figure that out. So we're in the process of developing new fixture package and a build-out cost that is lower. We're looking at store staffing models. We're looking at inventory management with back-of-house and also leveraging online and using more of a digital showcase in the store, so we can potentially showcase less SKUs on the floor, but still service the full breadth of the opportunity for the customer.

That concludes today's question-and-answer session. I would now like to turn the conference back over to Angel Martinez for closing remarks. Angel R. Martinez: Well, thank you, all for joining us on this call. And again, I'd just like to reiterate my congratulations to our employees and to our team globally. I think we stepped up to the challenge and certainly delivered excellent results in 2013. Our strategy remains to build powerful brands for the long term, to invest in those brands as the market conditions require us to do and to not think that any of these solutions are simple and near term in nature. These things require patience. They require aggressive commitment. And as I said earlier, we're doing everything we can to operate smarter and better and, certainly, to improve our results across-the-board, including reducing SG&A expense, improving operating margins. That's all top of mind for this entire management team, and we'll continue to work very aggressively to deliver those results. Thank you, all, very much. Appreciate it.

Thank you for your participation. This does conclude today's call.