##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
AND EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 001-14429
 SKECHERS U.S.A., INC.
  Delaware
    
    95-4376145(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)228 Manhattan Beach Blvd., Manhattan Beach, California
    
    90266(Address of Principal Executive Offices)
    
    (Zip Code)
 (310) 318-3100
 Securities registered pursuant to Section 12(b) of the Act:
 Name of Each Exchange onTitle of Each Class
    
    Which RegisteredClass A Common Stock, $0.001 par value
    
    New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act:
  (Title of Class)
 þ o
 o þ
 þ o
 o o
 þ
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
(Do not check if a smaller reporting
company)
    
    Smaller reporting company
o
 o þ
    DOCUMENTS INCORPORATED BY REFERENCE




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##### 



SKECHERS U.S.A., INC.
TABLE OF CONTENTS TO ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2009
 PART IITEM 1. BUSINESS
    
    
    2ITEM 1A. RISK FACTORS
    
    
    14ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    22ITEM 2. PROPERTIES
    
    
    22ITEM 3. LEGAL PROCEEDINGS
    
    
    22ITEM 4. RESERVED
    
    
    23PART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    23ITEM 6. SELECTED FINANCIAL DATA
    
    
    25ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
    
    
    26ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    37ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    38ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
    
    
    60ITEM 9A. CONTROLS AND PROCEDURES
    
    
    60ITEM 9B. OTHER INFORMATION
    
    
    61PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    62ITEM 11. EXECUTIVE COMPENSATION
    
    
    62ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
    
    
    62ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
    
    
    62ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
    
    
    62PART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
    
    
    62EX-10.15.CEX-10.15.DEX-10.16.EEX-10.16.FEX-10.17.BEX-21.1EX-23.1EX-31.1EX-31.2EX-32.1
  i




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##### Table of Contents



SPECIAL NOTE ON FORWARD LOOKING STATEMENTS
  
    
    international, national and local general economic, political and market conditions
including the ongoing global economic slowdown and financial crisis;
 
    
    entry into the highly competitive performance footwear market;
 
    
    sustaining, managing and forecasting our costs and proper inventory levels;
 
    
    losing any significant customers, decreased demand by industry retailers and
cancellation of order commitments due to the lack of popularity of particular designs
and/or categories of our products;
 
    
    maintaining our brand image and intense competition among sellers of footwear for
consumers;
 
    
    anticipating, identifying, interpreting or forecasting changes in fashion trends,
consumer demand for the products and the various market factors described above; and
 
    
    sales levels during the spring, back-to-school and holiday selling seasons.
  1




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PART I
 
 ITEM 1. BUSINESS
 www.skechers.com www.sec.gov
        2




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Skechers USA.
 
    
    The Casuals line for men and women is defined by lugged outsoles and utilizes
value-oriented and leather materials in the uppers. For men, the Casuals category includes
black and brown boots, shoes and sandals that generally have a rugged urban design  some
with industrial-inspired fashion features. For women, the Casuals category includes basic
black and brown oxfords and slip-ons, lug outsole and fashion boots, and casual sandals.
We design and price both the mens and womens categories to appeal primarily to younger
consumers with broad acceptance across age groups.
 
    
    The Dress Casuals category for men is comprised of basic black and brown mens shoes
that feature shiny leathers and dress details, but may utilize traditional or lugged
outsoles as well as value-oriented materials. The Dress Casual line for women is comprised
of trend-influenced stylized boots and shoes, which may include leather uppers, shearling or
faux fur lining or trim.
 
    
    Skechers Relaxed Fit is a line of trend-right casuals for men who want all-day comfort
without compromising style. Characteristics of the line include comfortable outsoles,
cushioned insoles and quality leather uppers. A category with unique features, we market and
package Skechers Relaxed Fit styles in a shoe box that is distinct from that of other
categories in the Skechers USA line of footwear.
 
    
    Our Seriously Lightweight styles for men primarily consist of designs similar to our
casual looks, but feature ultra lightweight outsoles, making them ideal travel and work
shoes. A category with unique features, we market and package the Skechers Seriously
Lightweight styles in a shoe box that is distinct from that of other categories in the
Skechers USA line of footwear.
 
    
    Our Sandals collection for men and women is designed with many of our existing and
proven outsoles for our Casuals, Dress Casuals and Casual Fusion lines, stylized with basic
or core uppers as well as fresh looks. These styles are generally made with quality leather
uppers, but may also be in canvas or fabric.
 
    
    Our Casual Fusion line is comprised of low-profile, sport-influenced Euro casuals
targeted to trend-conscious young men and women. The outsoles are primarily rubber and
adopted from our mens Sport and womens Active lines. This collection features leather or
nubuck uppers, but may also include mesh.
 Skechers Sport.
 
    
    Our Jogger, Trail Runner, Sport Hiker and cross trainer-inspired Terrainer designs are
lightweight constructions that include cushioned heels, polyurethane midsoles, phylon and
other synthetic outsoles, as well as leather or synthetic uppers such as durabuck, cordura
and nylon mesh. Careful attention is devoted to the design, pattern and construction of the
outsoles, which vary greatly depending on the intended use. This category features earth
tones and athletic-inspired hues with contrasting pop colors such as lime green, orange and
red in addition to traditional athletic white.
    
    The Performance category is comprised of multi-purpose running shoes that are marketed
as mens lifestyle athletic footwear. Some styles include 3M reflective accents, breathable
upper construction, quality leathers, abrasion-resistant toe and heel cap, removable
moisture wicking molded ethyl vinyl acetate (EVA) sock liner, outsole forefoot flex
grooves for improved flexibility, non-marking rubber lugs with impact dispersment technology
(IDT), aggressive all terrain traction lugs, external torsion stabilizer and tuned
dual-density molded EVA midsole with pronation control.
 
    
    Skechers DLites are ultra lightweight womens sneakers that feature sturdy, sculpted
midsoles for all-day comfort, durable rubber treads for improved traction and a sole design
that provides superior flexibility and cushioning. The uppers are designed in leather,
suede, nubuck and mesh.
 
    
    Our Sport Sandals are primarily designed from existing Skechers Sport outsoles and may
include many of the same sport features as our sneakers with the addition of new
technologies geared toward making a comfortable sport sandal. Sport sandals are designed as
seasonal footwear for the consumer who already wears our Skechers Sport sneakers.
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Skechers Active.
 Skechers Kids.
 
    
    The Skechers Kids line includes embellishments or adornments such as fresh colors and
fabrics from our Skechers adult shoes. Some of these styles are also adapted for toddlers
with softer, more pliable outsoles and for infants with soft, leather-sole crib shoes.
 
    
    S-Lights and Hot Lights by Skechers are lighted sneakers and sandals for boys and girls.
The S-Lights combine patterns of lights on the outsoles and sides of the shoes while Hot
Lights feature lights on the front of the toe to simulate headlights as well as on other
areas of the shoes. New to the offering with lights, Luminators from Skechers feature
glowing green lights and a marketing campaign with the Luminator character.
 
    
    Skechers Cali for Girls is a line of sneakers, skimmers and sandals for young women
designed to typify the California lifestyle. The sneakers are designed primarily with canvas
uppers in unique prints, some with patch details, on vulcanized outsoles. The skimmers and
flats are designed with many of the same upper materials and outsoles as the sneakers.
 
    
    Airators by Skechers is a line of boys sneakers with a foot-cooling system designed to
pump air from the heel through to the toes. The line is marketed with the character Kewl
Breeze.
 
    
    Skechers Super Z-Strap is a line of athletic styled sneakers with a unique z shaped
closure system for easy closure. The line is marketed with the character Z-Strap.
 
    
    Skechers Bungees is a line of girls sneakers with bungee closures. The line is marketed
with the character Elastika.
 
    
    HyDee HyTop from Skechers is a line of colorful high-top sneakers for young girls. The
line is marketed with the character HyDee HyTop.
 
    
    Twinkle Toes by Skechers is a new line of girls sneakers and boots that feature
bejeweled toe caps and brightly designed uppers. The line is marketed with the character
Twinkle Toes.
 
    
    Pretty Tall by Skechers is a new line of girls sneakers with a hidden wedge. The line is
marketed with the character Pretty Tall.
 
    
    Sporty Shorty by Skechers is a new line of athletic-inspired sneakers for girls who like
to wear sport-style footwear off the field. The line is marketed with the character Sporty
Shorty.
 
    
    Babiez by Skechers is a line of crib shoes for infants. The uppers and outsoles are
designed in leather and are extremely flexible for newborn feet.
 Shape-ups by Skechers Fitness Group.
 4




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Tone-ups by Skechers.
 Skechers Work.
   Unltd. by Marc Ecko and Red by Marc Ecko.
 Zoo York.
 Mark Nason, Siren by Mark Nason, and Lounge by Mark Nason.
 Punkrose.
 5




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Factories.
   6




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Production Oversight .
 Quality Control.
      7




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GQ, Cosmopolitan, Shape, Lucky, In Style, Seventeen, Maxim, Mens
Fitness, Womens Health, People, Us Weekly, Sports
Illustrated InTouch,
  Outdoor.
 Trend-Influenced Marketing/Public Relations. Lucky, Seventeen, OK!, US
Weekly, Health Nylon
 Promotions.
 Visual Merchandising.
  Trade Shows.
 8




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Internet. www.skechers.com www.soholab.com www.myshapeups.com www.marknason.com
   Domestic Wholesale.
   International Wholesale.
  9




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
    
    International Subsidiaries
 Europe
    Canada
  Malaysia, Singapore and Thailand
  China and Hong Kong
  Brazil
  Chile
  10




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
    
    Distributors
  STORE
    
    NUMBER OFREGION
    
    FORMAT
    
    STORES
    
    LOCATION(1)Asia
    
    Concept
    
    29
    
    Japan (4); Korea (17); Philippines (6); Taiwan (2)Warehouse
    
    4
    
    Japan (4)Australia
    
    Concept
    
    3
    
    Chadstone, Melbourne, SydneyWarehouse
    
    6
    
    Cairns, Canberra, Jindalee, Melbourne, Southwharf, SydneyCentral America/South America
    
    Concept
    
    37
    
    Aruba; Columbia (9); Costa Rica;
Ecuador (2); Guatemala (3); Panama (3); Peru (4); Venezuela (14)Warehouse
    
    1
    
    ColumbiaEastern Europe
    
    Concept
    
    15
    
    Czech Republic; Russia (11); Turkey; Ukraine (2)Northern Europe
    
    Concept
    
    3
    
    Estonia (2); LithuaniaMiddle East
    
    Concept
    
    12
    
    Bahrain (2); Kuwait (2); Saudi Arabia (2); UAE (6)Warehouse
    
    1
    
    UAESouth Africa
    
    Concept
    
    1
    
    Sandton
 
 (1)
    
    One store per location except as otherwise noted.  Retail Stores.
 
    
    Concept Stores.Our concept stores are located at either marquee street locations or in major shopping
malls in large metropolitan cities. Our concept stores have a threefold purpose in our
operating strategy. First, concept stores serve as a showcase for a wide range of our product
offering for the current season, as we estimate that our average wholesale customer carries
no more than 5% of the complete Skechers line in any one location. Our concept stores
showcase our products in a cutting-edge, open-floor setting, providing the customer with the
complete Skechers story. Second, retail locations are generally chosen to generate maximum
marketing value for the Skechers brand name through signage, store front presentation and
interior design. Domestic locations include concept stores at Times Square, Union Square and
34th Street in New York, Powell Street in San Francisco, Hollywood and Highland in Hollywood,
Santa Monicas Third Street Promenade, Dallas Northpark Center, Las Vegas Fashion Show
Mall, Seattles Bellevue Square Mall, and Woodfield Mall outside Chicago. International
locations include Covent Garden and Oxford Street in London, Alstadt District in Dusseldorf,
Torontos Eaton Centre,
 11




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Vancouvers Richmond Centre, and Kalverstraat Street in Amsterdam.
The stores are typically designed to create a
distinctive Skechers look and feel, and enhance customer association of the Skechers
brand name with current youthful lifestyle trends and styles. Third, the concept stores serve
as marketing and product testing venues. We believe that product sell-through information and
rapid customer feedback derived from our concept stores enables our design, sales,
merchandising and production staff to respond to market changes and new product
introductions. Such responses serve to augment sales and limit our inventory markdowns and
customer returns and allowances. In 2009, we opened six domestic concept stores and two
international concept stores, and we closed two domestic concept stores. We also purchased
ten international concept stores from our distributor in Chile, including six in Santiago,
Chile, and contributed six international concept stores to our joint ventures with operations
in Malaysia and Thailand.The typical Skechers concept store is approximately 2,500 square feet, although in
certain markets we have opened concept stores as large as 7,800 square feet or as small as
1,500 square feet. When deciding where to open concept stores, we identify top geographic
markets in the larger metropolitan cities in the United States, Canada, Europe and Asia. When
selecting a specific site, we evaluate the proposed sites traffic pattern, co-tenancies,
sales volume of neighboring concept stores, lease economics and other factors considered
important within the specific location. If we are considering opening a concept store in a
shopping mall, our strategy is to obtain space as centrally located as possible in the mall
where we expect foot traffic to be most concentrated. We believe that the strength of the
Skechers brand name has enabled us to negotiate more favorable terms with shopping malls that
want us to open up concept stores to attract customer traffic to their venues.
 
    
    Factory Outlet Stores.
  
    
    Warehouse Outlet Stores.
  Electronic Commerce. www.skechers.com www.myshapeups.com www.soholab.com
    12




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13




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ITEM 1A. RISK FACTORS
  The Effects Of The Ongoing Global Economic Slowdown May Continue To Have A Negative Impact On Our
Business, Results Of Operations Or Financial Condition.
  14




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We Have Recently Entered The Highly Competitive Performance Footwear Market.
  Our Operating Results Could Be Negatively Impacted If Our Sales Are Concentrated In Any One Style
Or Group Of Styles.
  Our Business And The Success Of Our Products Could Be Harmed If We Are Unable To Maintain Our Brand
Image.
  It Is Difficult To Predict The Effect Of Regulatory Inquiries About Advertising And Promotional
Claims Related To Our Products In The Walking Footwear Fitness Market.
  We Face Intense Competition, Including Competition From Companies With Significantly Greater
Resources Than Ours, And If We Are Unable To Compete Effectively With These Companies, Our Market
Share May Decline And Our Business Could Be Harmed.
   15




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Our Business Could Be Harmed If We Fail To Maintain Proper Inventory Levels.
  Our Future Success Depends On Our Ability To Respond To Changing Consumer Demands, Identify And
Interpret Fashion Trends And Successfully Market New Products.
  Our Business Could Be Adversely Affected By Changes In The Business Or Financial Condition Of
Significant Customers Due To The Ongoing Conditions In The Global Financial Markets.
  We May Have Difficulty Managing Our Costs As A Result Of The Ongoing Global Economic Slowdown.
  We May Be Unable To Successfully Execute Our Growth Strategy Or Maintain Our Growth.
  16




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Our Business And Operating Results Could Be Negatively Impacted If Our New Domestic Distribution
Center Is Not Completed As Expected In 2011.
   Our Childrens Shoe Business May Be Negatively Impacted By The Consumer Product Safety Improvement
Act Of 2008.
  We Depend Upon A Relatively Small Group Of Customers For A Large Portion Of Our Sales.
  17




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Many Of Our Retail Stores Depend Heavily On The Customer Traffic Generated By Shopping And Factory
Outlet Malls Or By Tourism.
  Our International Sales And Manufacturing Operations Are Subject To The Risks Of Doing Business
Abroad, Particularly In China, Which Could Affect Our Ability To Sell Or Manufacture Our Products
In International Markets, Obtain Products From Foreign Suppliers Or Control The Costs Of Our
Products.
   Currency Exchange Rate Fluctuations In China Could Result In Higher Costs And Decreased Margins.
  The Potential Imposition Of Additional Duties, Quotas, Tariffs And Other Trade Restrictions Could
Have An Adverse Impact On Our Sales And Profitability.
  18




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Our Quarterly Revenues And Operating Results Fluctuate As A Result Of A Variety Of Factors,
Including Seasonal Fluctuations In Demand For Footwear, Delivery Date Delays And Potential
Fluctuations In Our Annualized Tax Rate, Which May Result In Volatility Of Our Stock Price.
   We Rely On Independent Contract Manufacturers And, As A Result, Are Exposed To Potential
Disruptions In Product Supply.
   Our Business Could Be Harmed If Our Contract Manufacturers, Suppliers Or Licensees Violate Labor,
Trade Or Other Laws.
  19




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Our Strategies Involve A Number Of Risks That Could Prevent Or Delay Any Successful Opening Of New
Stores As Well As Impact The Performance Of Our Existing Stores.
   We Depend On Key Personnel To Manage Our Business Effectively In A Rapidly Changing Market, And If
We Are Unable To Retain Existing Personnel, Our Business Could Be Harmed.
  The Disruption, Expense And Potential Liability Associated With Existing And Unanticipated Future
Litigation Against Us Could Have A Material Adverse Effect On Our Business, Results Of Operations
And Financial Condition.
  Our Ability To Compete Could Be Jeopardized If We Are Unable To Protect Our Intellectual Property
Rights Or If We Are Sued For Intellectual Property Infringement.
  20




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Natural Disasters Or A Decline In Economic Conditions In California Could Increase Our Operating
Expenses Or Adversely Affect Our Sales Revenue.
  One Principal Stockholder Is Able To Exert Significant Influence Over All Matters Requiring A Vote
Of Our Stockholders And His Interests May Differ From The Interests Of Our Other Stockholders.
  21




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Our Charter Documents And Delaware Law May Inhibit A Takeover, Which May Adversely Affect The Value
Of Our Stock.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
      
 ITEM 3. LEGAL PROCEEDINGS
  22




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ITEM 4. RESERVED
 
 PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
  HIGH
    
    LOWYEAR ENDED DECEMBER 31, 2009First Quarter
    
    $
    13.13
    
    
    $
    5.20Second Quarter
    
    
    12.56
    
    
    
    6.50Third Quarter
    
    
    19.26
    
    
    
    8.95Fourth Quarter
    
    
    30.00
    
    
    
    16.39YEAR ENDED DECEMBER 31, 2008First Quarter
    
    $
    23.36
    
    
    $
    16.05Second Quarter
    
    
    25.20
    
    
    
    17.14Third Quarter
    
    
    24.00
    
    
    
    15.56Fourth Quarter
    
    
    16.84
    
    
    
    9.25
       23




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COMPARISON
OF 5 YEAR CUMULATIVE TOTAL RETURN
 
 12/31/2004
    
    12/31/2005
    
    12/31/2006
    
    12/31/2007
    
    12/31/2008
    

12/31/2009Skechers U.S.A., Inc.
    
    
    100.00
    
    
    
    118.21
    
    
    
    257.02
    
    
    
    150.54
    
    
    
    98.92
    
    
    
    226.93Russell 2000
    
    
    100.00
    
    
    
    104.55
    
    
    
    123.76
    
    
    
    121.82
    
    
    
    80.66
    
    
    
    102.58Peer Group
    
    
    100.00
    
    
    
    105.95
    
    
    
    119.14
    
    
    
    149.03
    
    
    
    124.95
    
    
    
    144.58
 24




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ITEM 6. SELECTED FINANCIAL DATA
   YEARS ENDED DECEMBER 31,STATEMENT OF EARNINGS DATA:
    
    2009
    
    2008
    
    2007
    
    2006
    
    2005Net sales
    
    $
    1,436,440
    
    
    $
    1,440,743
    
    
    $
    1,394,181
    
    
    $
    1,205,368
    
    
    $
    1,006,477Gross profit
    
    
    621,010
    
    
    
    595,922
    
    
    
    599,989
    
    
    
    523,346
    
    
    
    420,482Earnings from operations
    
    
    72,582
    
    
    
    57,892
    
    
    
    112,930
    
    
    
    112,544
    
    
    
    76,296Earnings before income taxes
    
    
    71,110
    
    
    
    60,743
    
    
    
    118,305
    
    
    
    112,648
    
    
    
    72,797Net earnings attributable to Skechers U.S.A., Inc
    
    
    54,699
    
    
    
    55,396
    
    
    
    75,686
    
    
    
    70,994
    
    
    
    44,717Net earnings per share:(1)Basic
    
    
    1.18
    
    
    
    1.20
    
    
    
    1.67
    
    
    
    1.73
    
    
    
    1.13Diluted
    
    
    1.16
    
    
    
    1.19
    
    
    
    1.63
    
    
    
    1.59
    
    
    
    1.06Weighted average shares:(1)Basic
    
    
    46,341
    
    
    
    46,031
    
    
    
    45,262
    
    
    
    41,079
    
    
    
    39,686Diluted
    
    
    47,105
    
    
    
    46,708
    
    
    
    46,741
    
    
    
    46,139
    
    
    
    44,518
 AS OF DECEMBER 31,BALANCE SHEET DATA:
    
    2009
    
    2008
    
    2007
    
    2006
    
    2005Working capital
    
    $
    558,468
    
    
    $
    413,771
    
    
    $
    523,888
    
    
    $
    450,787
    
    
    $
    361,210Total assets
    
    
    995,552
    
    
    
    876,316
    
    
    
    827,977
    
    
    
    737,053
    
    
    
    581,957Long-term debt, excluding current portion
    
    
    15,641
    
    
    
    16,188
    
    
    
    16,462
    
    
    
    106,805
    
    
    
    107,288Skechers U.S.A., Inc. equity
    
    
    745,922
    
    
    
    668,693
    
    
    
    626,663
    
    
    
    449,087
    
    
    
    343,830
 
 (1)
    
    Basic earnings per share represents net earnings divided by the weighted-average number of
common shares outstanding for the period. Diluted earnings per share, in addition to the
weighted average determined for basic earnings per share, reflects the potential dilution that
could occur if options to issue common stock were exercised or converted into common stock and
assumes the conversion of our 4.50% convertible subordinated notes for the period outstanding
since their issuance in April 2002 until their conversion in February 2007, unless their
inclusion would be anti-dilutive. 25




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ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
         New product design and delivery
 Grow our domestic business.
 Further develop our international businesses.
 Balance sheet and expense management.
 26




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Net sales
     27




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Gross profit
     Selling expenses
  General and administrative expenses
  28




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Interest income
  Interest expense
  Income taxes
   Noncontrolling interests in net loss of consolidated subsidiaries
   Net sales
  29




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i.e.,
   Gross profit
    30




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Selling expenses
  General and administrative expenses
  Interest income
  Interest expense
  Income taxes
    31




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Noncontrolling interest in net loss of consolidated subsidiaries
         32




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Payments Due by Period (In Thousands)Less than
    
    
    One to
    
    
    Three to
    
    
    More ThanOne
    
    
    Three
    
    
    Five
    
    
    FiveTotal
    
    
    Year
    
    
    Years
    
    
    Years
    
    
    YearsOther long-term debt
    
    $
    17,619
    
    
    $
    1,781
    
    
    $
    15,838
    
    
    
    
    
    
    
    Operating lease obligations (1)
    
    
    680,969
    
    
    
    78,016
    
    
    
    140,810
    
    
    $
    109,046
    
    
    $
    353,097Purchase obligations (2)
    
    
    244,160
    
    
    
    244,160
    
    
    
    
    
    
    
    
    
    
    
    Warehousing equipment (3)
    
    
    46,357
    
    
    
    46,357
    
    
    
    
    
    
    
    
    
    
    
    Minimum payments related to our
licensing arrangements
    
    
    1,888
    
    
    
    1,888
    
    
    
    
    
    
    
    
    
    
    
    $
    990,993
    
    
    $
    372,202
    
    
    $
    156,648
    
    
    $
    109,046
    
    
    $
    353,097
 
 (1)
    
    Operating lease obligations consists primarily of real property leases for our retail
stores, corporate offices and distribution centers. These leases frequently include options
that permit us to extend beyond the terms of the initial fixed term. Payments for these
lease terms are provided for by cash flows generated from operations, investment balances
and existing cash balances.(2)
    
    Purchase obligations include the following: (i) accounts payable balances for the
purchase of footwear of $93.5 million, (ii) outstanding letters of credit of $2.1 million
and (iii) open purchase commitments with our foreign manufacturers for $148.6 million. We
currently expect to fund these commitments with cash flows from operations, investment
balances and existing 33




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##### Table of Contents



cash balances.(3)
    
    We plan to spend approximately $85.0 million for equipment relating to our new
distribution center in Moreno Valley, of which $38.6 million was incurred as of December
31, 2009. We expect the remaining balance to be incurred in 2010, which we expect to fund
with cash flows from operations, investment balances and existing cash balances.       Revenue Recognition .
   Allowance for bad debts, returns, sales allowances and customer chargebacks.
 34




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##### Table of Contents



Inventory write-downs .
 Valuation of long-lived assets .
 
    
    the assets ability to continue to generate income;
 
    
    any loss of legal ownership or title to the asset(s);
 
    
    any significant changes in our strategic business objectives and utilization of the
asset(s); or
 
    
    the impact of significant negative industry or economic trends.
  Litigation reserves .
 35




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##### Table of Contents



Valuation of deferred income taxes .
      Applying
the Acquisition Method
 The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles.
 Amendments to FASB Interpretation No. 46(R)
 36




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   Interest rate fluctuations.
 Foreign exchange rate fluctuations
 37




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
 PageREPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    
    39CONSOLIDATED BALANCE SHEETS
    
    
    41CONSOLIDATED STATEMENTS OF EARNINGS
    
    
    42CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME
    
    
    43CONSOLIDATED STATEMENTS OF CASH FLOWS
    
    
    44NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    
    
    45SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
    
    
    63
 38




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Report of Independent Registered Public Accounting Firm
 
    Internal Control  Integrated Framework
  
 39




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal Control  Integrated Framework
    Internal
Control  Integrated Framework
   
 40




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##### Table of Contents



SKECHERS U.S.A., INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
 December 31,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    265,675
    
    
    $
    114,941Short-term investments
    
    
    30,000
    
    
    
    Trade accounts receivable, less allowances of $14,361 in 2009 and $14,880 in 2008
    
    
    219,924
    
    
    
    175,064Other receivables
    
    
    12,177
    
    
    
    7,816Total receivables
    
    
    232,101
    
    
    
    182,880Inventories
    
    
    224,050
    
    
    
    261,209Prepaid expenses and other current assets
    
    
    28,233
    
    
    
    31,022Deferred tax assets
    
    
    8,950
    
    
    
    11,955Total current assets
    
    
    789,009
    
    
    
    602,007Property and equipment, at cost, less accumulated depreciation and amortization
    
    
    171,667
    
    
    
    157,757Intangible assets, less accumulated amortization
    
    
    9,011
    
    
    
    5,407Deferred tax assets
    
    
    13,660
    
    
    
    18,158Long-term marketable securities
    
    
    
    
    
    
    81,925Other assets, at cost
    
    
    12,205
    
    
    
    11,062TOTAL ASSETS
    
    $
    995,552
    
    
    $
    876,316LIABILITIES AND EQUITYCurrent Liabilities:Current installments of long-term borrowings
    
    $
    529
    
    
    $
    572Short-term borrowings
    
    
    2,006
    
    
    
    Accounts payable
    
    
    196,163
    
    
    
    164,643Accrued expenses
    
    
    31,843
    
    
    
    23,021Total current liabilities
    
    
    230,541
    
    
    
    188,236Long-term borrowings, excluding current installments
    
    
    15,641
    
    
    
    16,188Total liabilities
    
    
    246,182
    
    
    
    204,424Commitments and contingenciesStockholders equity:Preferred Stock, $.001 par value; 10,000 authorized; none issued and outstanding
    
    
    
    
    
    
    Class A Common Stock, $.001 par value; 100,000 shares authorized; 34,229 and
33,410 shares issued and outstanding at December 31, 2009 and 2008, respectively
    
    
    34
    
    
    
    33Class B Common Stock, $.001 par value; 60,000 shares authorized; 12,360 and
12,782 shares issued and outstanding at December 31, 2009 and 2008, respectively
    
    
    13
    
    
    
    13Additional paid-in capital
    
    
    272,662
    
    
    
    264,200Accumulated other comprehensive income (loss)
    
    
    9,348
    
    
    
    (4,719
    )Retained earnings
    
    
    463,865
    
    
    
    409,166Skechers U.S.A., Inc. equity
    
    
    745,922
    
    
    
    668,693Noncontrolling interests
    
    
    3,448
    
    
    
    3,199Total equity
    
    
    749,370
    
    
    
    671,892TOTAL LIABILITIES AND EQUITY
    
    $
    995,552
    
    
    $
    876,316
  41




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SKECHERS U.S.A., INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
 Years ended December 31,2009
    
    
    2008
    
    
    2007Net sales
    
    $
    1,436,440
    
    
    $
    1,440,743
    
    
    $
    1,394,181Cost of sales
    
    
    815,430
    
    
    
    844,821
    
    
    
    794,192Gross profit
    
    
    621,010
    
    
    
    595,922
    
    
    
    599,989Royalty income, net
    
    
    1,655
    
    
    
    2,461
    
    
    
    4,179622,665
    
    
    
    598,383
    
    
    
    604,168Operating expenses:Selling
    
    
    128,989
    
    
    
    126,890
    
    
    
    126,527General and administrative
    
    
    421,094
    
    
    
    413,601
    
    
    
    364,711550,083
    
    
    
    540,491
    
    
    
    491,238Earnings from operations
    
    
    72,582
    
    
    
    57,892
    
    
    
    112,930Other income (expense):Interest income
    
    
    2,070
    
    
    
    7,337
    
    
    
    10,040Interest expense
    
    
    (3,045
    )
    
    
    (4,606
    )
    
    
    (4,763
    )Other, net
    
    
    (497
    )
    
    
    120
    
    
    
    98(1,472
    )
    
    
    2,851
    
    
    
    5,375Earnings before taxes
    
    
    71,110
    
    
    
    60,743
    
    
    
    118,305Income tax expense
    
    
    20,228
    
    
    
    7,258
    
    
    
    42,619Net earnings
    
    
    50,882
    
    
    
    53,485
    
    
    
    75,686Less: Net loss attributable to noncontrolling interests
    
    
    (3,817
    )
    
    
    (1,911
    )
    
    
    Net earnings attributable to Skechers U.S.A., Inc.
    
    $
    54,699
    
    
    $
    55,396
    
    
    $
    75,686Net earnings per share attributable to Skechers U.S.A., Inc.:Basic
    
    $
    1.18
    
    
    $
    1.20
    
    
    $
    1.67Diluted
    
    $
    1.16
    
    
    $
    1.19
    
    
    $
    1.63Weighted average shares used in calculating earnings per share
attributable to Skechers U.S.A., Inc.:Basic
    
    
    46,341
    
    
    
    46,031
    
    
    
    45,262Diluted
    
    
    47,105
    
    
    
    46,708
    
    
    
    46,741
  42




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##### Table of Contents



SKECHERS U.S.A., INC.
CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME
(In thousands)
 SHARES
    
    
    AMOUNT
    
    
    
    
    
    
    ACCUMULATEDCLASS A
    
    
    CLASS B
    
    
    CLASS A
    
    
    CLASS B
    
    
    ADDITIONAL
    
    
    OTHER
    
    
    
    
    
    
    SKECHERS
    
    
    NON
    
    
    TOTALCOMMON
    
    
    COMMON
    
    
    COMMON
    
    
    COMMON
    
    
    PAID-IN
    
    
    COMPREHENSIVE
    
    
    RETAINED
    
    
    U.S.A., INC.
    
    
    CONTROLLING
    
    
    STOCKHOLDERSSTOCK
    
    
    STOCK
    
    
    STOCK
    
    
    STOCK
    
    
    CAPITAL
    
    
    INCOME
    
    
    EARNINGS
    
    
    EQUITY
    
    
    INTERESTS
    
    
    EQUITYBalance at December 31, 2006
    
    
    28,103
    
    
    
    13,768
    
    
    $
    28
    
    
    $
    14
    
    
    $
    156,374
    
    
    $
    11,200
    
    
    $
    281,471
    
    
    $
    449,087
    
    
    
    
    
    
    $
    449,087Comprehensive income:Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,686
    
    
    
    75,686
    
    
    
    
    
    
    
    75,686Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,563
    
    
    
    
    
    
    
    3,563
    
    
    
    
    
    
    
    3,563Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79,249
    
    
    
    
    
    
    
    79,249Cumulative
effect of accounting change -
adjustment to retained earnings upon
adoption of ASC 740-10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,387
    )
    
    
    (3,387
    )
    
    
    
    
    
    
    (3,387
    )Redemption of convertible subordinated
notes
    
    
    3,368
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    88,743
    
    
    
    
    
    
    
    
    
    
    
    88,746
    
    
    
    
    
    
    
    88,746Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,081
    
    
    
    
    
    
    
    
    
    
    
    1,081
    
    
    
    
    
    
    
    1,081Proceeds from issuance of common stock
under the employee stock purchase plan
    
    
    99
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,066
    
    
    
    
    
    
    
    
    
    
    
    2,066
    
    
    
    
    
    
    
    2,066Proceeds from issuance of common stock
under the employee stock option plan
    
    
    506
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    6,126
    
    
    
    
    
    
    
    
    
    
    
    6,127
    
    
    
    
    
    
    
    6,127Tax benefit of stock options exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,694
    
    
    
    
    
    
    
    
    
    
    
    3,694
    
    
    
    
    
    
    
    3,694Conversion of Class B Common Stock into
Class A Common Stock
    
    
    916
    
    
    
    (916
    )
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at December 31, 2007
    
    
    32,992
    
    
    
    12,852
    
    
    $
    33
    
    
    $
    13
    
    
    $
    258,084
    
    
    $
    14,763
    
    
    $
    353,770
    
    
    $
    626,663
    
    
    
    
    
    
    $
    626,663Comprehensive income:Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,396
    
    
    
    55,396
    
    
    $
    (1,911
    )
    
    
    53,485Net unrealized gain (loss) on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,151
    )
    
    
    
    
    
    
    (8,151
    )
    
    
    
    
    
    
    (8,151
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,331
    )
    
    
    
    
    
    
    (11,331
    )
    
    
    110
    
    
    
    (11,221
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,914
    
    
    
    (1,801
    )
    
    
    34,113Capital contribution
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    5,000Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,337
    
    
    
    
    
    
    
    
    
    
    
    2,337
    
    
    
    
    
    
    
    2,337Proceeds from issuance of common stock
under the employee stock purchase plan
    
    
    132
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,780
    
    
    
    
    
    
    
    
    
    
    
    1,780
    
    
    
    
    
    
    
    1,780Proceeds from issuance of common stock
under the employee stock option plan
    
    
    216
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,876
    
    
    
    
    
    
    
    
    
    
    
    1,876
    
    
    
    
    
    
    
    1,876Tax benefit of stock options exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123
    
    
    
    
    
    
    
    
    
    
    
    123
    
    
    
    
    
    
    
    123Conversion of Class B Common Stock into
Class A Common Stock
    
    
    70
    
    
    
    (70
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at December 31, 2008
    
    
    33,410
    
    
    
    12,782
    
    
    $
    33
    
    
    $
    13
    
    
    $
    264,200
    
    
    $
    (4,719
    )
    
    $
    409,166
    
    
    $
    668,693
    
    
    $
    3,199
    
    
    $
    671,892Comprehensive income:Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,699
    
    
    
    54,699
    
    
    
    (3,817
    )
    
    
    50,882Net unrealized gain on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,151
    
    
    
    
    
    
    
    8,151
    
    
    
    
    
    
    
    8,151Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,916
    
    
    
    
    
    
    
    5,916
    
    
    
    66
    
    
    
    5,982Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68,766
    
    
    
    (3,751
    )
    
    
    65,015Capital contribution
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,000
    
    
    
    4,000Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,736
    
    
    
    
    
    
    
    
    
    
    
    5,736
    
    
    
    
    
    
    
    5,736Proceeds from issuance of common stock
under the employee stock purchase plan
    
    
    190
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,590
    
    
    
    
    
    
    
    
    
    
    
    1,590
    
    
    
    
    
    
    
    1,590Proceeds from issuance of common stock
under the employee stock option plan
    
    
    207
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,217
    
    
    
    
    
    
    
    
    
    
    
    1,217
    
    
    
    
    
    
    
    1,217Tax benefit of stock options exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (81
    )
    
    
    
    
    
    
    
    
    
    
    (81
    )
    
    
    
    
    
    
    (81
    )Conversion of Class B Common Stock into
Class A Common Stock
    
    
    422
    
    
    
    (422
    )
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Balance at December 31, 2009
    
    
    34,229
    
    
    
    12,360
    
    
    $
    34
    
    
    $
    13
    
    
    $
    272,662
    
    
    $
    9,348
    
    
    $
    463,865
    
    
    $
    745,922
    
    
    $
    3,448
    
    
    $
    749,370
  43




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##### Table of Contents



SKECHERS U.S.A., INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Years ended December 31,2009
    
    
    2008
    
    
    2007Cash flows from operating activities:Net earnings
    
    $
    54,699
    
    
    $
    55,396
    
    
    $
    75,686Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:Noncontrolling interests in subsidiaries
    
    
    (3,817
    )
    
    
    (1,911
    )
    
    
    Depreciation and amortization of property and equipment
    
    
    19,694
    
    
    
    17,069
    
    
    
    17,220Amortization of deferred financing costs
    
    
    741
    
    
    
    
    
    
    
    95Amortization of intangible assets
    
    
    935
    
    
    
    674
    
    
    
    437Provision for bad debts and returns
    
    
    3,249
    
    
    
    10,787
    
    
    
    1,610Tax benefits from stock-based compensation
    
    
    (81
    )
    
    
    123
    
    
    
    1,456Non-cash stock compensation
    
    
    5,736
    
    
    
    2,337
    
    
    
    1,081Provision for deferred income taxes
    
    
    1,954
    
    
    
    (1,988
    )
    
    
    (1,102
    )Loss (Gain) on disposal of equipment
    
    
    (18
    )
    
    
    167
    
    
    
    272Impairment of property and equipment
    
    
    761
    
    
    
    1,676
    
    
    
    (Increase) decrease in assets:Receivables
    
    
    (46,562
    )
    
    
    (27,462
    )
    
    
    7,948Inventories
    
    
    39,362
    
    
    
    (58,240
    )
    
    
    (3,045
    )Prepaid expenses and other current assets
    
    
    2,812
    
    
    
    (17,609
    )
    
    
    1,417Other assets
    
    
    (1,023
    )
    
    
    (6,221
    )
    
    
    (1,671
    )Increase (decrease) in liabilities:Accounts payable
    
    
    28,136
    
    
    
    385
    
    
    
    2,956Accrued expenses
    
    
    8,531
    
    
    
    2,988
    
    
    
    (3,005
    )Net cash provided by (used in) operating activities
    
    
    115,109
    
    
    
    (21,829
    )
    
    
    101,355Cash flows from investing activities:Capital expenditures
    
    
    (35,341
    )
    
    
    (72,461
    )
    
    
    (31,175
    )Purchases of investments
    
    
    (30,000
    )
    
    
    (11,725
    )
    
    
    (249,450
    )Maturities of investments
    
    
    375
    
    
    
    20,600
    
    
    
    204,950Redemption of auction rate securities
    
    
    95,250
    
    
    
    
    
    
    
    Intangible additions
    
    
    (4,500
    )
    
    
    
    
    
    
    Cash paid for acquisitions
    
    
    
    
    
    
    (4,640
    )
    
    
    Net cash provided by (used in) investing activities
    
    
    25,784
    
    
    
    (68,226
    )
    
    
    (75,675
    )Cash flows from financing activities:Net proceeds from the issuances of stock through employee
stock purchase plan and the exercise of stock options
    
    
    2,807
    
    
    
    3,656
    
    
    
    8,193Contribution from noncontrolling interest of consolidated entity
    
    
    4,000
    
    
    
    5,000
    
    
    
    Excess tax benefits from stock-based compensation
    
    
    
    
    
    
    
    
    
    
    2,238Increase in short-term borrowings
    
    
    2,006
    
    
    
    
    
    
    
    Payments on long-term debt
    
    
    (413
    )
    
    
    (99
    )
    
    
    (520
    )Net cash provided by financing activities
    
    
    8,400
    
    
    
    8,557
    
    
    
    9,911Net increase (decrease) in cash and cash equivalents
    
    
    149,293
    
    
    
    (81,498
    )
    
    
    35,591Effect of exchange rates on cash and cash equivalents
    
    
    1,441
    
    
    
    (3,077
    )
    
    
    3,440Cash and cash equivalents at beginning of year
    
    
    114,941
    
    
    
    199,516
    
    
    
    160,485Cash and cash equivalents at end of year
    
    $
    265,675
    
    
    $
    114,941
    
    
    $
    199,516Supplemental disclosures of cash flow information:Cash paid during the year for:Interest, net of amounts capitalized
    
    $
    4,445
    
    
    $
    4,902
    
    
    $
    4,714Income taxes
    
    
    17,492
    
    
    
    17,834
    
    
    
    41,481Non-cash investing and financing activities:Acquisition of Chilean distributor
    
    
    4,382
    
    
    
    
    
    
    
    
   44




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SKECHERS U.S.A., INC  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009, 2008 and 2007
 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
             45




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46




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##### Table of Contents



Buildings
    
    20 yearsBuilding improvements
    
    10 yearsFurniture, fixtures and equipment
    
    5 yearsLeasehold improvements
    
    Useful life or remaining lease term, whichever is shorter
   2009
    
    
    2008Intellectual property
    
    $
    11,300
    
    
    $
    6,800Goodwill
    
    
    1,575
    
    
    
    1,575Other intangibles
    
    
    840
    
    
    
    840Less accumulated amortization
    
    
    (4,704
    )
    
    
    (3,808
    )Total Intangible Assets
    
    $
    9,011
    
    
    $
    5,407
        47




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##### Table of Contents



Years Ended December 31,Basic earnings per share
    
    2009
    
    2008
    
    2007Net earnings
    
    $
    54,699
    
    
    $
    55,396
    
    
    $
    75,686Weighted average common shares outstanding
    
    
    46,341
    
    
    
    46,031
    
    
    
    45,262Basic earnings per share
    
    $
    1.18
    
    
    $
    1.20
    
    
    $
    1.67
 Years Ended December 31,Diluted earnings per share
    
    2009
    
    
    2008
    
    
    2007Net earnings
    
    $
    54,699
    
    
    $
    55,396
    
    
    $
    75,686After tax effect of interest expense on
4.50% convertible subordinated notes
    
    
    
    
    
    
    
    
    
    
    361Earnings for purposes of
computing diluted earnings per share
    
    $
    54,699
    
    
    $
    55,396
    
    
    $
    76,047Weighted average common shares outstanding
    
    
    46,341
    
    
    
    46,031
    
    
    
    45,262Dilutive stock options
    
    
    764
    
    
    
    677
    
    
    
    1,121Weighted average assumed conversion of
4.50% convertible subordinated notes
    
    
    
    
    
    
    
    
    
    
    358Weighted average common shares outstanding
    
    
    47,105
    
    
    
    46,708
    
    
    
    46,741Diluted earnings per share
    
    $
    1.16
    
    
    $
    1.19
    
    
    $
    1.63
        Applying
the Acquisition Method
 The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles.
 48




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Amendments to FASB Interpretation No. 46(R)
 (2) INVESTMENTS
  (3) PROPERTY AND EQUIPMENT
  2009
    
    
    2008Land
    
    $
    28,951
    
    
    $
    28,951Buildings and improvements
    
    
    108,367
    
    
    
    88,181Furniture, fixtures and equipment
    
    
    94,293
    
    
    
    92,209Leasehold improvements
    
    
    104,939
    
    
    
    98,140Total property and equipment
    
    
    336,550
    
    
    
    307,481Less accumulated depreciation and amortization
    
    
    164,883
    
    
    
    149,724Property and equipment, net
    
    $
    171,667
    
    
    $
    157,757
  (4) ACCRUED EXPENSES
  2009
    
    
    2008Accrued inventory purchases
    
    $
    2,678
    
    
    $
    5,913Accrued payroll and related taxes
    
    
    18,016
    
    
    
    17,108Income taxes payable
    
    
    11,149
    
    
    
    Accrued expenses
    
    $
    31,843
    
    
    $
    23,021
 (5) LINE OF CREDIT AND SHORT-TERM BORROWINGS
  49




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##### Table of Contents



(6) LONG-TERM BORROWINGS
  2009
    
    
    2008Note payable to bank, due in monthly
installments of $82.2 (includes principal and
interest), fixed rate interest at 7.79%, secured by
property, balloon payment of $8,716 due January 2011
    
    $
    9,034
    
    
    $
    9,306Note payable to bank, due in monthly installments of
$57.6 (includes principal and interest), fixed rate
interest at 7.89%, secured by property, balloon
payment of $6,889 due January 2011
    
    
    7,033
    
    
    
    7,156Capital lease obligations
    
    
    103
    
    
    
    298Subtotal
    
    
    16,170
    
    
    
    16,760Less current installments
    
    
    529
    
    
    
    572Total long-term debt
    
    $
    15,641
    
    
    $
    16,188
  2010
    
    $
    5292011
    
    
    15,641$
    16,170
  (7) STOCK COMPENSATION
    50




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WEIGHTEDAVERAGEGRANT-DATE FAIRSHARES
    
    VALUENonvested at December 31, 2006
    
    
    17,333
    
    
    $
    16.38Granted
    
    
    2,500
    
    
    
    29.26Vested
    
    
    (4,666
    )
    
    
    17.00Cancelled
    
    
    
    
    
    
    Nonvested at December 31, 2007
    
    
    15,167
    
    
    
    18.32Granted
    
    
    218,046
    
    
    
    16.85Vested
    
    
    (10,001
    )
    
    
    16.26Cancelled
    
    
    (5,928
    )
    
    
    17.16Nonvested at December 31, 2008
    
    
    217,284
    
    
    
    16.97Granted
    
    
    2,051,500
    
    
    
    17.90Vested
    
    
    (108,140
    )
    
    
    16.99Cancelled
    
    
    (2,000
    )
    
    
    13.13Nonvested at December 31, 2009
    
    
    2,158,644
    
    
    $
    17.86
   WEIGHTED AVERAGESHARES
    
    OPTION EXERCISE PRICEOutstanding at December 31, 2006
    
    
    2,485,582
    
    
    $
    11.74Granted
    
    
    Exercised
    
    
    (501,874
    )
    
    
    12.23Cancelled
    
    
    (21,952
    )
    
    
    16.86Outstanding at December 31, 2007
    
    
    1,961,756
    
    
    
    11.56Granted
    
    
    Exercised
    
    
    (206,844
    )
    
    
    9.06Cancelled
    
    
    (15,191
    )
    
    
    19.37Outstanding at December 31, 2008
    
    
    1,739,721
    
    
    
    11.79Granted
    
    
    Exercised
    
    
    (125,715
    )
    
    
    9.68Cancelled
    
    
    (108,312
    )
    
    
    11.20Outstanding at December 31, 2009
    
    
    1,505,694
    
    
    $
    12.01
  51




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##### Table of Contents



OPTIONS OUTSTANDING
    
    OPTIONS EXERCISABLENUMBER
    
    WEIGHTED
    
    WEIGHTED
    
    NUMBER
    
    WEIGHTED AVERAGERANGE OF
    
    OUTSTANDING
    
    AVERAGE REMAINING
    
    AVERAGE
    
    EXERCISABLE AT
    
    EXERCISEEXERCISE PRICE
    
    DECEMBER 31, 2009
    
    CONTRACTUAL LIFE
    
    EXERCISE PRICE
    
    DECEMBER 31, 2009
    
    PRICE$3.94 to $5.90
    
    
    25,481
    
    
    0.1 years
    
    $
    3.94
    
    
    
    25,481
    
    
    $
    3.94$6.95 to $9.28
    
    
    538,033
    
    
    3.3 years
    
    
    7.47
    
    
    
    538,033
    
    
    
    7.47$10.58 to $15.50
    
    
    785,464
    
    
    1.1 years
    
    
    13.05
    
    
    
    785,464
    
    
    
    13.05$19.18 to $24.00
    
    
    156,716
    
    
    1.3 years
    
    
    23.69
    
    
    
    156,716
    
    
    
    23.691,505,694
    
    
    1.9 years
    
    $
    12.01
    
    
    
    1,505,694
    
    
    $
    12.01
     (8) STOCKHOLDERS EQUITY
   52




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(9) TOTAL OTHER INCOME (EXPENSE), NET
  2009
    
    
    2008
    
    
    2007Gain (loss) on foreign currency transactions
    
    $
    1,830
    
    
    $
    307
    
    
    $
    (295
    )Legal settlements
    
    
    (2,327
    )
    
    
    (187
    )
    
    
    393Total other income (expense), net
    
    $
    (497
    )
    
    $
    120
    
    
    $
    98
 (10) INCOME TAXES
  2009
    
    
    2008
    
    
    2007Federal:Current
    
    $
    9,227
    
    
    $
    9,026
    
    
    $
    33,354Deferred
    
    
    5,902
    
    
    
    (6,714
    )
    
    
    (301
    )Total federal
    
    
    15,129
    
    
    
    2,312
    
    
    
    33,053State:Current
    
    
    1,498
    
    
    
    3,654
    
    
    
    7,255Deferred
    
    
    1,268
    
    
    
    (1,643
    )
    
    
    (66
    )Total state
    
    
    2,766
    
    
    
    2,011
    
    
    
    7,189Foreign:Current
    
    
    3,088
    
    
    
    2,448
    
    
    
    2,686Deferred
    
    
    (755
    )
    
    
    487
    
    
    
    (309
    )Total foreign
    
    
    2,333
    
    
    
    2,935
    
    
    
    2,377Total income taxes
    
    $
    20,228
    
    
    $
    7,258
    
    
    $
    42,619
  2009
    
    
    2008
    
    
    2007Expected income tax expense
    
    $
    24,888
    
    
    $
    21,260
    
    
    $
    41,407State income tax, net of federal benefit
    
    
    2,051
    
    
    
    1,710
    
    
    
    3,963Rate differential on foreign income
    
    
    (6,162
    )
    
    
    (10,697
    )
    
    
    (9,699
    )Change in unrecognized tax benefits
    
    
    455
    
    
    
    (7,896
    )
    
    
    7,024Exempt income
    
    
    (207
    )
    
    
    (1,241
    )
    
    
    (1,026
    )Non-deductible expenses
    
    
    441
    
    
    
    188
    
    
    
    464Adjustment to tax benefit - 2008 APA
    
    
    (1,952
    )
    
    
    
    
    
    
    Other
    
    
    (1,049
    )
    
    
    682
    
    
    
    292Change in valuation allowance
    
    
    1,763
    
    
    
    3,252
    
    
    
    194Total provision for income taxes
    
    $
    20,228
    
    
    $
    7,258
    
    
    $
    42,619
 53




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##### Table of Contents



DEFERRED TAX ASSETS:
    
    2009
    
    
    2008Deferred tax assets  current:Inventory adjustments
    
    $
    2,340
    
    
    $
    5,337Accrued expenses
    
    
    7,789
    
    
    
    6,658Allowances for bad debts and chargebacks
    
    
    3,486
    
    
    
    3,401Total current assets
    
    
    13,615
    
    
    
    15,396Deferred tax assets  long term:Depreciation on property and equipment
    
    
    10,500
    
    
    
    10,735Unrealized loss on securities
    
    
    
    
    
    
    5,549Loss carryforwards
    
    
    6,880
    
    
    
    5,273Stock-based compensation
    
    
    1,977
    
    
    
    535Valuation allowance
    
    
    (5,697
    )
    
    
    (3,934
    )Total long term assets
    
    
    13,660
    
    
    
    18,158Total deferred tax assets
    
    
    27,275
    
    
    
    33,554Deferred tax liabilities  current:Prepaid expenses
    
    
    4,665
    
    
    
    3,441Net deferred tax assets
    
    $
    22,610
    
    
    $
    30,113
      Balance as of January 1, 2009
    
    $
    9,663Additions for current year tax positions
    
    
    263Additions for prior year tax positions
    
    
    536Reductions for prior year tax positions
    
    
    Settlement of uncertain tax positions
    
    
    (493
    )Reductions related to lapse of statute of limitations
    
    
    (200
    )Balance at December 31, 2009
    
    $
    9,769
   54




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##### Table of Contents



(11) BUSINESS AND CREDIT CONCENTRATIONS
     Years Ended December 31,2009
    
    2008
    
    2007Manufacturer #1
    
    
    29.7
    %
    
    
    30.6
    %
    
    
    29.7
    %Manufacturer #2
    
    
    12.2
    %
    
    
    11.7
    %
    
    
    11.4
    %Manufacturer #3
    
    
    11.2
    %
    
    
    9.3
    %
    
    
    9.5
    %Manufacturer #4
    
    
    10.5
    %
    
    
    6.6
    %
    
    
    7.9
    %Manufacturer #5
    
    
    5.5
    %
    
    
    6.4
    %
    
    
    7.1
    %69.1
    %
    
    
    64.6
    %
    
    
    65.6
    %
  55




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##### Table of Contents



(12) BENEFIT PLAN
   (13) COMMITMENTS AND CONTINGENCIES
       CAPITAL
    
    
    OPERATINGLEASES
    
    
    LEASESYear ending December 31:2010
    
    $
    103
    
    
    $
    78,0162011
    
    
    
    
    
    
    73,3942012
    
    
    
    
    
    
    67,4162013
    
    
    
    
    
    
    56,8202014
    
    
    
    
    
    
    52,226Thereafter
    
    
    
    
    
    
    353,097$
    103
    
    
    $
    680,969
    56




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##### Table of Contents



(14) SEGMENT INFORMATION
  2009
    
    
    2008
    
    
    2007Net salesDomestic wholesale
    
    $
    763,514
    
    
    $
    807,047
    
    
    $
    831,235International wholesale
    
    
    328,466
    
    
    
    332,503
    
    
    
    267,648Retail
    
    
    321,829
    
    
    
    283,128
    
    
    
    279,361E-commerce
    
    
    22,631
    
    
    
    18,065
    
    
    
    15,937Total
    
    $
    1,436,440
    
    
    $
    1,440,743
    
    
    $
    1,394,181
 2009
    
    
    2008
    
    
    2007Gross profitDomestic wholesale
    
    $
    292,303
    
    
    $
    276,604
    
    
    $
    320,364International wholesale
    
    
    118,440
    
    
    
    137,840
    
    
    
    99,759Retail
    
    
    198,243
    
    
    
    172,870
    
    
    
    171,758E-commerce
    
    
    12,024
    
    
    
    8,608
    
    
    
    8,108Total
    
    $
    621,010
    
    
    $
    595,922
    
    
    $
    599,989
 57




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##### Table of Contents



2009
    
    
    2008Identifiable assetsDomestic wholesale
    
    $
    792,856
    
    
    $
    678,881International wholesale
    
    
    111,941
    
    
    
    110,930Retail
    
    
    90,049
    
    
    
    86,236E-commerce
    
    
    706
    
    
    
    269Total
    
    $
    995,552
    
    
    $
    876,316
 2009
    
    
    2008
    
    
    2007Additions to property, plant and equipmentDomestic wholesale
    
    $
    21,112
    
    
    $
    45,709
    
    
    $
    11,371International wholesale
    
    
    5,568
    
    
    
    6,893
    
    
    
    1,346Retail
    
    
    8,661
    
    
    
    19,859
    
    
    
    18,458Total
    
    $
    35,341
    
    
    $
    72,461
    
    
    $
    31,175
   2009
    
    
    2008
    
    
    2007Net Sales (1)United States
    
    $
    1,078,335
    
    
    $
    1,083,498
    
    
    $
    1,102,895Canada
    
    
    39,498
    
    
    
    43,088
    
    
    
    38,060Other International (2)
    
    
    318,607
    
    
    
    314,157
    
    
    
    253,226Total
    
    $
    1,436,440
    
    
    $
    1,440,743
    
    
    $
    1,394,181
 2009
    
    
    2008Long-lived AssetsUnited States
    
    $
    160,444
    
    
    $
    148,228Canada
    
    
    866
    
    
    
    471Other International (2)
    
    
    10,357
    
    
    
    9,058Total
    
    $
    171,667
    
    
    $
    157,757
 
 (1)
    
    The Company has subsidiaries in Canada, United Kingdom, Germany, France, Spain, Italy,
Netherlands, Brazil, and Chile that generate net sales within those respective countries and
in some cases the neighboring regions. The Company has joint ventures in China, Hong Kong,
Malaysia, Singapore, and Thailand that generate net sales from those countries. The Company
also has a subsidiary in Switzerland that generates net sales from that country in addition to
net sales to our distributors located in numerous non-European countries. Net sales are
attributable to geographic regions based on the location of the Company subsidiary.(2)
    
    Other international consists of Switzerland, United Kingdom, Germany, France, Spain, Italy,
Netherlands, China, Hong Kong, Malaysia, Singapore, Thailand, Brazil and Chile. (15) RELATED PARTY TRANSACTIONS
  58




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##### Table of Contents



(16) SUMMARY OF QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
  2009
    
    MARCH 31
    
    JUNE 30
    
    SEPTEMBER 30
    
    DECEMBER 31Net sales
    
    $
    343,470
    
    
    $
    298,976
    
    
    $
    405,374
    
    
    $
    388,620Gross profit
    
    
    125,429
    
    
    
    122,603
    
    
    
    183,726
    
    
    
    189,252Net earnings (loss)
    
    
    8,220
    
    
    
    (5,927
    )
    
    
    24,460
    
    
    
    27,946Net earnings (loss)
per share:Basic
    
    $
    0.18
    
    
    $
    (0.13
    )
    
    $
    0.53
    
    
    $
    0.60Diluted
    
    
    0.18
    
    
    
    (0.13
    )
    
    
    0.52
    
    
    
    0.58
 2008
    
    MARCH 31
    
    JUNE 30
    
    SEPTEMBER 30
    
    DECEMBER 31Net sales
    
    $
    384,922
    
    
    $
    354,574
    
    
    $
    403,159
    
    
    $
    298,088Gross profit
    
    
    172,172
    
    
    
    157,193
    
    
    
    171,531
    
    
    
    95,026Net earnings (loss)
    
    
    32,844
    
    
    
    14,641
    
    
    
    28,289
    
    
    
    (20,378
    )Net earnings (loss)
per share:Basic
    
    $
    0.72
    
    
    $
    0.32
    
    
    $
    0.61
    
    
    $
    (0.44
    )Diluted
    
    
    0.70
    
    
    
    0.31
    
    
    
    0.60
    
    
    
    (0.44
    )
 (17) SUBSEQUENT EVENTS
    59




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##### Table of Contents



ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
      Internal Control  Integrated Framework Internal Control- Integrated Framework,
    60




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ITEM 9B. OTHER INFORMATION
    61




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
  
 PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 1.
    
    Financial Statements: See Index to Consolidated Financial Statements and Financial
Statement Schedule in Part II, Item 8 on page 38 of this annual report on Form 10-K.
 2.
    
    Financial Statement Schedule: See Schedule IIValuation and Qualifying Accounts on page 63
of this annual report on Form 10-K.
 3.
    
    Exhibits: The exhibits listed in the accompanying Index to Exhibits are filed or
incorporated by reference as part of this Form 10-K.
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SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
 Years Ended December 31, 2009, 2008 and 2007
 BALANCE AT
    
    CHARGED TO
    
    DEDUCTIONS
    
    BALANCEBEGINNING OF
    
    COSTS AND
    
    AND
    
    AT ENDDESCRIPTION
    
    PERIOD
    
    EXPENSES
    
    WRITE-OFFS
    
    OF PERIODYear-ended December 31, 2007:Allowance for chargebacks
    
    $
    1,501
    
    
    $
    1,684
    
    
    $
    (613
    )
    
    $
    2,572Allowance for doubtful accounts
    
    
    2,699
    
    
    
    284
    
    
    
    (635
    )
    
    
    2,348Reserve for sales returns
and allowances
    
    
    6,358
    
    
    
    (358
    )
    
    
    (636
    )
    
    
    5,364Year-ended December 31, 2008:Allowance for chargebacks
    
    $
    2,572
    
    
    $
    2,940
    
    
    $
    (1,598
    )
    
    $
    3,914Allowance for doubtful accounts
    
    
    2,348
    
    
    
    5,495
    
    
    
    (3,421
    )
    
    
    4,422Reserve for sales returns and
allowances
    
    
    5,364
    
    
    
    2,352
    
    
    
    (1,172
    )
    
    
    6,544Year-ended December 31, 2009:Allowance for chargebacks
    
    $
    3,914
    
    
    $
    (672
    )
    
    $
    (1,299
    )
    
    $
    1,943Allowance for doubtful accounts
    
    
    4,422
    
    
    
    1,863
    
    
    
    (1,957
    )
    
    
    4,328Reserve for sales returns and
allowances
    
    
    6,544
    
    
    
    2,058
    
    
    
    (512
    )
    
    
    8,090
 BALANCE AT
    
    CHARGED TO
    
    DEDUCTIONS
    
    BALANCEBEGINNING OF
    
    COSTS AND
    
    AND
    
    AT ENDDESCRIPTION
    
    PERIOD
    
    EXPENSES
    
    WRITE-OFFS
    
    OF PERIODYear-ended December 31, 2007:Reserve for shrinkage
    
    $
    
    
    
    $
    605
    
    
    $
    (495
    )
    
    $
    110Reserve for obsolescence
    
    
    633
    
    
    
    1,198
    
    
    
    
    
    
    
    1,831Year-ended December 31, 2008:Reserve for shrinkage
    
    $
    110
    
    
    $
    690
    
    
    $
    (635
    )
    
    $
    165Reserve for obsolescence
    
    
    1,831
    
    
    
    11,192
    
    
    
    
    
    
    
    13,023Year-ended December 31, 2009:Reserve for shrinkage
    
    $
    165
    
    
    $
    950
    
    
    $
    (915
    )
    
    $
    200Reserve for obsolescence
    
    
    13,023
    
    
    
    
    
    
    
    (9,568
    )
    
    
    3,455
  63




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INDEX TO EXHIBITS
 EXHIBITNUMBER
    
    DESCRIPTION OF EXHIBIT3.1
    
    Amended and Restated Certificate of Incorporation dated April 29,
1999 (incorporated by reference to exhibit number 3.1 of the
Registrants Registration Statement on Form S-1, as amended (File
No. 333-60065), filed with the Securities and Exchange Commission
on May 12, 1999).3.2
    
    Bylaws dated May 28, 1998 (incorporated by reference to exhibit
number 3.2 of the Registrants Registration Statement on Form S-1
(File No. 333-60065) filed with the Securities and Exchange
Commission on July 29, 1998).3.2(a)
    
    Amendment to Bylaws dated as of April 8, 1999 (incorporated by
reference to exhibit number 3.2(a) of the Registrants Form 10-K
for the year ended December 31, 2005).3.2(b)
    
    Second Amendment to Bylaws dated as of December 18, 2007
(incorporated by reference to exhibit number 3.1 of the
Registrants Form 8-K filed with the Securities and Exchange
Commission on December 20, 2007).4.1
    
    Form of Specimen Class A Common Stock Certificate (incorporated
by reference to exhibit number 4.1 of the Registrants
Registration Statement on Form S-1, as amended (File No.
333-60065), filed with the Securities and Exchange Commission on
May 12, 1999).10.1**
    
    Amended and Restated 1998 Stock Option, Deferred Stock and
Restricted Stock Plan (incorporated by reference to exhibit
number 10.1 of the Registrants Registration Statement on Form
S-1 (File No. 333-60065) filed with the Securities and Exchange
Commission on July 29, 1998).10.1(a)**
    
    Amendment No. 1 to Amended and Restated 1998 Stock Option,
Deferred Stock and Restricted Stock Plan (incorporated by
reference to exhibit number 4.4 of the Registrants Registration
Statement on Form S-8 (File No. 333-71114), filed with the
Securities and Exchange Commission on October 5, 2001).10.1(b)**
    
    Amendment No. 2 to Amended and Restated 1998 Stock Option,
Deferred Stock and Restricted Stock Plan (incorporated by
reference to exhibit number 4.5 of the Registrants Registration
Statement on Form S-8 (File No. 333-135049), filed with the
Securities and Exchange Commission on June 15, 2006).10.1(c)**
    
    Amendment No. 3 to Amended and Restated 1998 Stock Option,
Deferred Stock and Restricted Stock Plan (incorporated by
reference to exhibit number 10.1 of the Registrants Form 8-K
filed with the Securities and Exchange Commission on February 23,
2007).10.2**
    
    2006 Annual Incentive Compensation Plan (incorporated by
reference to Appendix A of the Registrants Definitive Proxy
Statement filed with the Securities and Exchange Commission on
May 1, 2006).10.3**
    
    2007 Incentive Award Plan (incorporated by reference to exhibit
number 10.1 of the Registrants Form 8-K filed with the
Securities and Exchange Commission on May 24, 2007).10.4**
    
    Form of Restricted Stock Agreement under 2007 Incentive Award
Plan (incorporated by reference to exhibit number 10.3 of the
Registrants Form 10-K for the year ended December 31, 2007).10.5**
    
    2008 Employee Stock Purchase Plan (incorporated by reference to
exhibit number 10.2 of the Registrants Form 8-K filed with the
Securities and Exchange Commission on May 24, 2007).10.6**
    
    Indemnification Agreement dated June 7, 1999 between the
Registrant and its directors and executive officers (incorporated
by reference to exhibit number 10.6 of the Registrants Form 10-K
for the year ended December 31, 1999).10.6(a)**
    
    List of Registrants directors and executive officers who entered
into Indemnification Agreement referenced in Exhibit 10.6 with
the Registrant (incorporated by reference to exhibit number
10.6(a) of the Registrants Form 10-K for the year ended December
31, 2005).
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##### Table of Contents



EXHIBITNUMBER
    
    DESCRIPTION OF EXHIBIT10.7
    
    Registration Rights Agreement dated June 9, 1999, between the
Registrant, the Greenberg Family Trust and Michael Greenberg
(incorporated by reference to exhibit number 10.7 of the
Registrants Form 10-Q for the quarter ended June 30, 1999).10.8
    
    Tax Indemnification Agreement dated June 8, 1999, between the
Registrant and certain shareholders (incorporated by reference
to exhibit number 10.8 of the Registrants Form 10-Q for the
quarter ended June 30, 1999).10.9
    
    Credit Agreement dated June 30, 2009, by and among the
Registrant, certain of its subsidiaries that are also borrowers
under the Agreement, and certain lenders including Wells Fargo
Foothill, LLC, as co-lead arranger and administrative agent,
Bank of America, N.A., as syndication agent, and Banc of
America Securities LLC, as the other co-lead arranger
(incorporated by reference to exhibit number 10.1 of the
Registrants Form 8-K filed with the Securities and Exchange
Commission on July 7, 2009).10.10
    
    Schedule 1.1 of Defined Terms to the Credit Agreement dated
June 30, 2009, by and among the Registrant, certain of its
subsidiaries that are also borrowers under the Agreement, and
certain lenders including Wells Fargo Foothill, LLC, Bank of
America, N.A., and Banc of America Securities LLC (incorporated
by reference to exhibit number 10.2 of the Registrants Form
8-K filed with the Securities and Exchange Commission on July
7, 2009).10.11
    
    Amendment Number One to Credit Agreement dated November 5,
2009, by and among the Registrant, certain of its subsidiaries
that are also borrowers under the Agreement, and certain
lenders including Wells Fargo Foothill, LLC, as co-lead
arranger and administrative agent, Bank of America, N.A., as
syndication agent, and Banc of America Securities LLC, as the
other co-lead arranger (incorporated by reference to exhibit
number 10.3 of the Registrants Form 10-Q for the quarter ended
September 30, 2009).10.12
    
    Promissory Note, dated December 27, 2000, between the
Registrant and Washington Mutual Bank, FA, for the purchase of
property located at 225 South Sepulveda Boulevard, Manhattan
Beach,
California (incorporated by reference to exhibit number 10.23
of the Registrants Form 10-K for the year ended December 31,
2000).10.13
    
    Loan Agreement, dated December 21, 2000, between Yale
Investments, LLC, and MONY Life Insurance Company, for the
purchase of property located at 1670 South Champagne Avenue,
Ontario, California (incorporated by reference to exhibit
number 10.25 of the Registrants Form 10-K for the year ended
December 31, 2000).10.14
    
    Promissory Note, dated December 21, 2000, between Yale
Investments, LLC, and MONY Life Insurance Company, for the
purchase of property located at 1670 South Champagne Avenue,
Ontario, California (incorporated by reference to exhibit
number 10.26 of the Registrants Form 10-K for the year ended
December 31, 2000).10.15
    
    Lease Agreement, dated November 21, 1997, between the
Registrant and The Prudential Insurance Company of America,
regarding 1661 South Vintage Avenue, Ontario, California
(incorporated by reference to exhibit number 10.14 of the
Registrants Registration Statement on Form S-1 (File No.
333-60065) filed with the Securities and Exchange Commission on
July 29, 1998).10.15(a)
    
    First Amendment to Lease Agreement, dated April 26, 2002,
between the Registrant and ProLogis California I LLC, regarding
1661 South Vintage Avenue, Ontario, California (incorporated by
reference to exhibit number 10.14(a) of the Registrants Form
10-K for the year ended December 21, 2002).10.15(b)
    
    Second Amendment to Lease Agreement, dated December 10, 2007,
between the Registrant and ProLogis California I LLC, regarding
1661 South Vintage Avenue, Ontario, California (incorporated by
reference to exhibit number 10.15(b) of the Registrants Form
10-K for the year ended December 31, 2007).10.15(c)
    
    Third Amendment to Lease Agreement, dated January 29, 2009,
between the Registrant and ProLogis California I LLC,
regarding 1661 South Vintage Avenue, Ontario, California.
 65




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##### Table of Contents



EXHIBITNUMBER
    
    DESCRIPTION OF EXHIBIT10.15(d)
    
    Fourth Amendment to Lease Agreement, dated September 23,
2009, between the Registrant and ProLogis California I LLC,
regarding 1661 South Vintage Avenue, Ontario, California.10.16
    
    Lease Agreement, dated November 21, 1997, between the
Registrant and The Prudential Insurance Company of America,
regarding 1777 South Vintage Avenue, Ontario, California
(incorporated by reference to exhibit number 10.15 of the
Registrants Registration Statement on Form S-1 (File No.
333-60065) filed with the Securities and Exchange Commission
on July 29, 1998).10.16(a)
    
    First Amendment to Lease Agreement, dated April 26, 2002,
between the Registrant and Cabot Industrial Properties, L.P.,
regarding 1777 South Vintage Avenue, Ontario, California
(incorporated by reference to exhibit number 10.15(a) of the
Registrants Form 10-K for the year ended December 21, 2002).10.16(b)
    
    Second Amendment to Lease Agreement, dated May 14, 2002,
between the Registrant and Cabot Industrial Properties, L.P.,
regarding 1777 South Vintage Avenue, Ontario, California
(incorporated by reference to exhibit number 10.16(b) of the
Registrants Form 10-K for the year ended December 31, 2007).10.16(c)
    
    Third Amendment to Lease Agreement, dated May 7, 2007, between
the Registrant and CLP Industrial Properties, LLC, which is
successor to Cabot Industrial Properties, L.P., regarding 1777
South Vintage Avenue, Ontario, California (incorporated by
reference to exhibit number 10.16(c) of the Registrants Form
10-K for the year ended December 31, 2007).10.16(d)
    
    Fourth Amendment to Lease Agreement, dated November 10, 2007,
between the Registrant and CLP Industrial Properties, LLC,
regarding 1777 South Vintage Avenue, Ontario, California
(incorporated by reference to exhibit number 10.16(d) of the
Registrants Form 10-K for the year ended December 31, 2007).10.16(e)
    
    Fifth Amendment to Lease Agreement, dated January 29, 2009,
between the Registrant and CLP Industrial Properties, LLC,
regarding 1777 South Vintage Avenue, Ontario, California.10.16(f)
    
    Sixth Amendment to Lease Agreement, dated October 26, 2009,
between the Registrant and CLP Industrial Properties, LLC,
regarding 1777 South Vintage Avenue, Ontario, California.10.17
    
    Lease Agreement, dated April 10, 2001, between the Registrant
and ProLogis California I LLC, regarding 4100 East Mission
Boulevard, Ontario, California (incorporated by reference to
exhibit number 10.28 of the Registrants Form 10-K for the year
ended December 31, 2001).10.17(a)
    
    First Amendment to Lease Agreement, dated October 22, 2003,
between the Registrant and ProLogis California I LLC, regarding
4100 East Mission Boulevard, Ontario, California (incorporated
by reference to exhibit number 10.28(a) of the Registrants
Form 10-K for the year ended December 31, 2003).10.17(b)
    
    Second Amendment to Lease Agreement, dated April 21, 2006,
between the Registrant and ProLogis California I LLC, regarding
4100 East Mission Boulevard, Ontario, California.10.18
    
    Lease Agreement, dated February 8, 2002, between Skechers
International, a subsidiary of the Registrant, and ProLogis
Belgium II SPRL, regarding ProLogis Park Liege Distribution
Center I in Liege, Belgium (incorporated by reference to
exhibit number 10.29 of the Registrants Form 10-K for the year
ended December 31, 2002).10.19
    
    Lease Agreement dated September 25, 2007 between the Registrant
and HF Logistics I, LLC, regarding distribution facility in
Moreno Valley, California (incorporated by reference to exhibit
number 10.1 of the Registrants Form 8-K filed with the
Securities and Exchange Commission on September 27, 2007).
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EXHIBITNUMBER
    
    DESCRIPTION OF EXHIBIT10.20
    
    Lease Agreement dated May 20, 2008 between Skechers EDC SPRL, a subsidiary of the
Registrant, and ProLogis Belgium III SPRL, regarding ProLogis Park Liege Distribution Center
II in Liege, Belgium (incorporated by reference to exhibit number 10.1 of the Registrants
Form 8-K filed with the Securities and Exchange Commission on May 27, 2008).10.21
    
    Addendum to Lease Agreement dated May 20, 2008 between Skechers EDC SPRL, a subsidiary of
the Registrant, and ProLogis Belgium III SPRL, regarding ProLogis Park Liege Distribution
Center I in Liege, Belgium (incorporated by reference to exhibit number 10.2 of the
Registrants Form 8-K filed with the Securities and Exchange Commission on May 27, 2008).21.1
    
    Subsidiaries of the Registrant.23.1
    
    Consent of Independent Registered Public Accounting Firm.31.1
    
    Certification of the Chief Executive Officer pursuant Securities Exchange Act Rule 13a-14(a).31.2
    
    Certification of the Chief Financial Officer pursuant Securities Exchange Act Rule 13a-14(a).32.1
    
    Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 
 **
    
    Management contract or compensatory plan or arrangement required to be filed as an exhibit. 67




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##### Table of Contents



SIGNATURES
  SKECHERS U.S.A., INC.By:
    /s/ Robert GreenbergRobert GreenbergChairman of the Board and
Chief Executive Officer  SIGNATURE
    
    TITLE
    
    DATE/s/ Robert Greenberg

Robert Greenberg
    
    Chief Executive Officer (Principal
Executive Officer)
    
    March 5, 2010/s/ Michael Greenberg

Michael Greenberg
    
    President and Director
    
    March 5, 2010/s/ David Weinberg

David Weinberg
    
    Executive Vice President, Chief Operating Officer, Chief
Financial Officer and Director
(Principal Financial and Accounting Officer)
    
    March 5, 2010/s/ Jeffrey Greenberg

Jeffrey Greenberg
    
    Director
    
    March 5, 2010/s/ J. Geyer Kosinski

J. Geyer Kosinski
    
    Director
    
    March 5, 2010/s/ Morton D. Erlich

Morton D. Erlich
    
    Director
    
    March 5, 2010/s/ Richard Siskind

Richard Siskind
    
    Director
    
    March 5, 2010
 68