##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2010
 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.
 (Exact Name of Registrant as Specified in Its Charter)
 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:
 Title of Each Class
    
    Name of Each Exchange on
Which RegisteredClass A Common Stock, $0.001 par value
    
    New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act:
  
  þ o
 o þ
 þ o
 o o
 o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 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, 2010
 
 PART IITEM 1. BUSINESS
    
    
    2ITEM 1A. RISK FACTORS
    
    
    16ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    24ITEM 2. PROPERTIES
    
    
    24ITEM 3. LEGAL PROCEEDINGS
    
    
    24ITEM 4. RESERVED
    
    
    26PART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
    
    
    26ITEM 6. SELECTED FINANCIAL DATA
    
    
    29ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    30ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    40ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    41ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    62ITEM 9A. CONTROLS AND PROCEDURES
    
    
    62ITEM 9B. OTHER INFORMATION
    
    
    64PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    65ITEM 11. EXECUTIVE COMPENSATION
    
    
    65ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    65ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
    
    
    65ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
    
    
    65PART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
    
    
    65EX-10.15.EEX-10.17(c)EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1
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SPECIAL NOTE ON FORWARD LOOKING STATEMENTS
  
    
    international, national and local general economic, political and market conditions
including the ongoing global economic slowdown and market instability;
    
    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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##### Table of Contents



PART I
 
 ITEM 1.
    
    BUSINESS
 www.skechers.com www.sec.gov
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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, and water-resistant materials.
    
    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 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.
    
    Our BOBS footwear is an alpagarta-inspired footwear line created to help millions of
children worldwide. For every pair of BOBS shoes sold, Skechers donates two pairs of BOBS
shoes to boys and girls in need through the Soles4Souls organization, which is an
international shoe charity that distributes footwear to children and families around the
world. Made with a canvas upper, BOBS versatile, classic designs are available at
department, specialty shoe stores and online retailers.
 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.
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
    
    Revv Air is an ultra-lightweight sport trainer for women featuring a ventilated
upper, air-injected midsole and flex-groove, high-grip outsole for optimum ventilation,
flexibility and comfort. Designed as a versatile, trend-right athletic suitable for all-day
wear, the line features leather and trubuck uppers and distinct color accents.
    
    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.
 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 by 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 line of girls sneakers with a hidden wedge. The line is
marketed with the character Pretty Tall.
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
    
    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.
    
    Shape-ups for Kids is a new line of footwear that uses our patented Shape-ups technology
in styles and sizes for girls. The footwear is being marketed as a fun way to stay fit, and
does not focus on the benefits of Shape-ups.
    
    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.
 
    
    Shape-ups Originals offer the most benefits with a higher kinetic wedge.
    
    Shape-ups XF (Extended Fitness) for women and XT (Extended Training) for men feature the
same Shape-ups technology in a lower profile for all-day wear.
    
    SRT (Shape-ups Radius Trainer) is designed to be worn in the gym or while exercising to
maximize the wearers workout. The shoe features an Advanced Stabilization Insole and Roll
Bridge for improved stability and support during high-intensity activities.
    
    Shape-ups AT (All-Terrain) features the Shape-ups technology with an Advanced
Stabilization Insole and Motion Control Cage for enhanced stabilization and protection on
rugged surfaces. The line is marketed to those wanting the benefits of Shape-ups while
hiking on trails.
    
    Healthy Living offers women Shape-ups technology in a dress casual profile ideal for the
office and all-day wear  and is crafted with high-quality leather uppers and soft linings
and insoles.
    
    Like XT and XF, Shape-ups XW (Extended Wear) features a lower profile kinetic wedge
outsole, but with casual uppers. The style is marketed as a comfortable alternative to
traditional black and brown shoes.
    
    S2 Lite offers Shape-ups technology in an ultra-lightweight design, and features a unique
support system for improved medial and lateral stability.
    
    Shape-ups Toners is inspired by core-strengthening activities like yoga balls, balance
disks and foam rolls, and features convex-shaped Resamax Kinetic Toning Pods that create a
bi-axial instability that may activate muscles.
    
    Shape-ups for Work is a collection of primarily slip-resistant footwear with Shape-ups
patented technology. These shoes are marketed for their comfort as well as relief of joint
stress and postural benefits for service and occupational industry professionals.
 Tone-ups by Skechers and Tone-ups Fitness.
  5




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Skechers Resistance Runner.
 Skechers Work.
   Unltd. by Marc Ecko.
 Zoo York.
 Mark Nason.
    6




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Factories.
    Production Oversight .
 7




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Quality Control.
      GQ, Cosmopolitan, Shape, Lucky, In Style, Seventeen, Maxim, Mens
Fitness, Womens Health, People, Us Weekly, OK!,
Sports Illustrated InTouch,
  Outdoor.
 8




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Trend-Influenced Marketing/Public Relations. Seventeen, OK!, US Weekly, Health Nylon
 Promotions.
 Visual Merchandising.
  Trade Shows.
 Internet. www.skechers.com www.soholab.com www.marknason.com
   Domestic Wholesale.
 9




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International Wholesale.
  
    
    International Subsidiaries
 Europe
    10




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Canada
  Malaysia, Singapore and Thailand
  China and Hong Kong
  Brazil
  Chile
  11




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
    
    Distributors
  REGION
    
    STORE FORMAT
    
    NUMBER OF STORES
    
    LOCATION(1)Americas
    
    Concept
    
    
    41
    
    
    Aruba; Columbia (6); Costa Rica (2); Ecuador (2); Guatemala (3);
Mexico (3); Panama (3); Peru (4); Venezuela (17)Warehouse
    
    
    3
    
    
    Columbia; Mexico (2)Asia
    
    Concept
    
    
    43
    
    
    Japan (3); Korea (26); Indonesia (3); Mongolia;
Philippines (7); Taiwan (3)Warehouse
    
    
    8
    
    
    Japan (4); Korea (4)Australia
    
    Concept
    
    
    3
    
    
    Castle Hill; Chadstone; SydneyWarehouse
    
    
    6
    
    
    Cairns; Canberra; Jindalee; Melbourne (2); SydneyEurope
    
    Concept
    
    
    20
    
    
    Croatia (2); Estonia; Israel; Lithuania (2);
Malta (2); Russia (10); Ukraine (2)Middle East
    
    Concept
    
    
    12
    
    
    Bahrain; Kuwait (2); Saudi Arabia (2); UAE (7)Warehouse
    
    
    1
    
    
    UAEAfrica
    
    Concept
    
    
    6
    
    
    Egypt; Morocco; South Africa (4)
 
 (1)
    
    One store per location except as otherwise noted.  Retail Stores.
 
    
    Concept Stores.
  12




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
    
    Factory Outlet Stores.
  
    
    Warehouse Outlet Stores.
  Electronic Commerce. www.skechers.com www.soholab.com
 13




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14




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15




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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.
  We Face Many New Challenges After Entering The Highly Competitive Performance Footwear Market In
2008.
  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.
  16




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The Toning Footwear Category Has Come Under Increasingly Intense Public Scrutiny That May Have A
Negative Impact On Our Business And Results Of Operations.
  It Is Difficult To Predict The Effect Of Regulatory Inquiries About Advertising And Promotional
Claims Related To Our Products In The Fitness Footwear 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.
   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.
  17




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Our Business Could Be Adversely Affected By Changes In The Business Or Financial Condition Of
Significant Customers Due To Global Economic Conditions.
  We May Have Difficulty Managing Our Costs If Global Economic Conditions Worsen.
  We May Be Unable To Successfully Execute Our Growth Strategy Or Maintain Our Growth.
  Our Business And Operating Results Could Be Negatively Impacted If Our New Domestic Distribution
Center Is Not Completed As Expected In 2011.
  18




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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.
  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.
  19




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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.
  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 Estimated Annualized Tax Rate, Which May Result In Volatility Of Our Stock
Price.
  20




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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.
   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.
  21




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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.
 ® ® ® ®
  22




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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.
  Our Charter Documents And Delaware Law May Inhibit A Takeover, Which May Adversely Affect The Value
Of Our Stock.
  23




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ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
      
 ITEM 3. LEGAL PROCEEDINGS
  Asics Corporation and Asics America Corporation v. Skechers U.S.A., Inc.
 24




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Tamara Grabowski v. Skechers U.S.A., Inc. Grabowski
 Sonia Stalker v. Skechers U.S.A., Inc.  Sonia Stalker v. Skechers
USA, Inc. Grabowski Tamara Grabowski v. Skechers U.S.A., Inc
 Venus Morga v. Skechers U.S.A., Inc.
 Tamia Richmond v. Skechers U.S.A., Inc. and HKM Productions, Inc.
 Patty Tomlinson v. Skechers U.S.A., Inc.
 25




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Patty Tomlinson v. Skechers U.S.A., Inc.
  
 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, 2010First Quarter
    
    $
    37.74
    
    
    $
    26.76Second Quarter
    
    
    44.90
    
    
    
    32.61Third Quarter
    
    
    40.20
    
    
    
    21.22Fourth Quarter
    
    
    26.25
    
    
    
    19.00YEAR ENDED DECEMBER 31, 2009First Quarter
    
    $
    13.13
    
    
    $
    5.20Second Quarter
    
    
    12.56
    
    
    
    6.50Third Quarter
    
    
    19.26
    
    
    
    8.95Fourth Quarter
    
    
    30.00
    
    
    
    16.39
       26




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Total Number of
    
    
    
    
    
    
    Total Number of
    
    
    Maximum Number ofShares Redeemed to
    
    
    
    
    
    
    Shares Purchased as
    
    
    Shares that May YetSatisfy Employee Tax
    
    
    Weighted-Average
    
    
    Part of Publicly
    
    
    Be Purchased UnderWithholding
    
    
    Fair Market Value
    
    
    Announced Plans or
    
    
    the Plans orPeriod
    
    Requirements
    
    
    Per Share Redeemed
    
    
    Programs
    
    
    ProgramsOctober 1, 2010 -October 31, 2010
    
    
    0
    
    
    $
    0
    
    
    
    N/A
    
    
    
    N/ANovember 1, 2010 -November 30, 2010
    
    
    290,846
    
    
    $
    19.24
    
    
    
    N/A
    
    
    
    N/ADecember 1, 2010 -December 31, 2010
    
    
    367
    
    
    $
    21.34
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    291,213
    
    
    $
    19.24
    
    
    
    N/A
    
    
    
    N/A
 27




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COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
 
 12/31/05
    
    
    12/31/06
    
    
    12/31/07
    
    
    12/31/08
    
    
    12/31/09
    
    
    12/31/10Skechers U.S.A., Inc.
    
    
    100.00
    
    
    
    217.43
    
    
    
    127.35
    
    
    
    83.68
    
    
    
    191.97
    
    
    
    130.55Russell 2000
    
    
    100.00
    
    
    
    118.37
    
    
    
    116.51
    
    
    
    77.15
    
    
    
    98.11
    
    
    
    124.46Peer Group
    
    
    100.00
    
    
    
    111.15
    
    
    
    143.20
    
    
    
    100.52
    
    
    
    137.36
    
    
    
    175.79
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ITEM 6. SELECTED FINANCIAL DATA
   YEARS ENDED DECEMBER 31,STATEMENT OF EARNINGS DATA:
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Net sales
    
    $
    2,006,868
    
    
    $
    1,436,440
    
    
    $
    1,440,743
    
    
    $
    1,394,181
    
    
    $
    1,205,368Gross profit
    
    
    911,906
    
    
    
    621,010
    
    
    
    595,922
    
    
    
    599,989
    
    
    
    523,346Earnings from operations
    
    
    196,740
    
    
    
    72,582
    
    
    
    57,892
    
    
    
    112,930
    
    
    
    112,544Earnings before income taxes
    
    
    196,603
    
    
    
    71,110
    
    
    
    60,743
    
    
    
    118,305
    
    
    
    112,648Net earnings attributable to Skechers U.S.A., Inc.
    
    
    136,148
    
    
    
    54,699
    
    
    
    55,396
    
    
    
    75,686
    
    
    
    70,994Net earnings per share:(1)Basic
    
    
    2.87
    
    
    
    1.18
    
    
    
    1.20
    
    
    
    1.67
    
    
    
    1.73Diluted
    
    
    2.78
    
    
    
    1.16
    
    
    
    1.19
    
    
    
    1.63
    
    
    
    1.59Weighted average shares:(1)Basic
    
    
    47,433
    
    
    
    46,341
    
    
    
    46,031
    
    
    
    45,262
    
    
    
    41,079Diluted
    
    
    49,050
    
    
    
    47,105
    
    
    
    46,708
    
    
    
    46,741
    
    
    
    46,139
 AS OF DECEMBER 31,BALANCE SHEET DATA:
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Working capital
    
    $
    666,054
    
    
    $
    558,468
    
    
    $
    413,771
    
    
    $
    523,888
    
    
    $
    450,787Total assets
    
    
    1,304,794
    
    
    
    995,552
    
    
    
    876,316
    
    
    
    827,977
    
    
    
    737,053Long-term debt, excluding current portion
    
    
    51,650
    
    
    
    15,641
    
    
    
    16,188
    
    
    
    16,462
    
    
    
    106,805Skechers U.S.A., Inc. equity
    
    
    908,203
    
    
    
    745,922
    
    
    
    668,693
    
    
    
    626,663
    
    
    
    449,087
 
 (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. 29




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##### Table of Contents



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.
   30




---



##### Table of Contents



Net sales
      31




---



##### Table of Contents



Gross profit
     Selling expenses
  General and administrative expenses
   32




---



##### Table of Contents



Interest income
  Interest expense
  Income taxes
   Noncontrolling interest in net income and loss of consolidated subsidiaries
   Net sales
    33




---



##### Table of Contents



Gross profit
    Selling expenses
  General and administrative expenses
  34




---



##### Table of Contents



Interest income
  Interest expense
  Income taxes
   Noncontrolling interest in net loss of consolidated subsidiaries
      35




---



##### Table of Contents



36




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##### Table of Contents



Less than
    
    
    One to
    
    
    Three to
    
    
    More ThanOne
    
    
    Three
    
    
    Five
    
    
    FiveTotal
    
    
    Year
    
    
    Years
    
    
    Years
    
    
    YearsShort-term borrowings (1)
    
    $
    18,826
    
    
    $
    18,826
    
    
    
    0
    
    
    
    0
    
    
    
    0Long-term borrowings (1)
    
    
    68,285
    
    
    
    13,283
    
    
    $
    12,778
    
    
    $
    42,224
    
    
    
    0Operating lease obligations (2)
    
    
    720,724
    
    
    
    95,935
    
    
    
    160,226
    
    
    
    127,863
    
    
    $
    336,700Purchase obligations (3)
    
    
    335,665
    
    
    
    335,665
    
    
    
    0
    
    
    
    0
    
    
    
    0Warehousing equipment (4)
    
    
    45,675
    
    
    
    45,675
    
    
    
    0
    
    
    
    0
    
    
    
    0Minimum payments related to
other arrangements
    
    
    1,500
    
    
    
    1,500
    
    
    
    0
    
    
    
    0
    
    
    
    0$
    1,190,675
    
    
    $
    510,884
    
    
    $
    173,004
    
    
    $
    170,087
    
    
    $
    336,700
 
 (1)
    
    Amounts include anticipated interest payments.(2)
    
    Operating lease obligations consists primarily of real property leases for our retail
stores, corporate offices and distribution centers, including our Rancho Belago lease
payments of $225.8 million. 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 and existing cash balances.(3)
    
    Purchase obligations include the following: (i) accounts payable balances for the
purchase of footwear of $111.1 million, (ii) outstanding letters of credit of $3.4 million
and (iii) open purchase commitments with our foreign manufacturers for $221.2 million. We
currently expect to fund these commitments with cash flows from operations and existing
cash balances.(4)
    
    We plan to spend approximately $85.0 million for equipment relating to our new
distribution center in Rancho Belago, of which $39.3 million was incurred as of December
31, 2010. We expect the remaining balance to be incurred in 2011, and we expect to fund it
through existing cash balances and additional borrowings under the facility with Banc of
America Leasing & Capital, LLC, and Bank of Utah.   37




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##### Table of Contents



Revenue Recognition .
   Allowance for bad debts, returns, sales allowances and customer chargebacks.
  38




---



##### 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 .
 Valuation of deferred income taxes .
 39




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##### Table of Contents



Receivables Disclosure about the Credit Quality of Financing Receivables and the
Allowance for Credit Losses
 
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   Interest rate fluctuations.
 Foreign exchange rate fluctuations
 40




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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
    
    
    42CONSOLIDATED BALANCE SHEETS
    
    
    44CONSOLIDATED STATEMENTS OF EARNINGS
    
    
    45CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME
    
    
    46CONSOLIDATED STATEMENTS OF CASH FLOWS
    
    
    47NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    
    
    48SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
    
    
    66
 41




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    Internal Control  Integrated Framework .
  
 42




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal Control  Integrated Framework
    Internal
Control  Integrated Framework
   
 43




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##### Table of Contents



SKECHERS U.S.A., INC.


CONSOLIDATED BALANCE SHEETS
(In thousands)
 December 31,
    
    
    December 31,2010
    
    
    2009ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    233,558
    
    
    $
    265,675Short-term investments
    
    
    0
    
    
    
    30,000Trade accounts receivable, less allowances of $19,697 in 2010 and $14,361 in 2009
    
    
    266,057
    
    
    
    219,924Other receivables
    
    
    9,650
    
    
    
    12,177Total receivables
    
    
    275,707
    
    
    
    232,101Inventories
    
    
    398,588
    
    
    
    224,050Prepaid expenses and other current assets
    
    
    53,791
    
    
    
    28,233Deferred tax assets
    
    
    11,720
    
    
    
    8,950Total current assets
    
    
    973,364
    
    
    
    789,009Property and equipment, at cost, less accumulated depreciation and amortization
    
    
    293,802
    
    
    
    171,667Intangible assets, less accumulated amortization
    
    
    7,367
    
    
    
    9,011Deferred tax assets
    
    
    12,323
    
    
    
    13,660Other assets, at cost
    
    
    17,938
    
    
    
    12,205TOTAL ASSETS
    
    $
    1,304,794
    
    
    $
    995,552LIABILITIES AND EQUITYCurrent Liabilities:Current installments of long-term borrowings
    
    $
    11,984
    
    
    $
    529Short-term borrowings
    
    
    18,346
    
    
    
    2,006Accounts payable
    
    
    246,595
    
    
    
    196,163Accrued expenses
    
    
    30,385
    
    
    
    31,843Total current liabilities
    
    
    307,310
    
    
    
    230,541Long-term borrowings, excluding current installments
    
    
    51,650
    
    
    
    15,641Total liabilities
    
    
    358,960
    
    
    
    246,182Commitments and contingenciesStockholders equity:Preferred Stock, $.001 par value; 10,000 authorized; none issued and outstanding
    
    
    0
    
    
    
    0Class A Common Stock, $.001 par value; 100,000 shares authorized; 36,894 and 34,229 shares issued and outstanding at December 31, 2010 and 2009, respectively
   
    
    37
    
    
    
    34Class B Common Stock, $.001 par value; 60,000 shares authorized; 11,311 and 12,360 shares issued and outstanding at December 31, 2010 and 2009, respectively
    
    
    11
    
    
    
    13Additional paid-in capital
    
    
    303,877
    
    
    
    272,662Accumulated other comprehensive income
    
    
    4,265
    
    
    
    9,348Retained earnings
    
    
    600,013
    
    
    
    463,865Skechers U.S.A., Inc. equity
    
    
    908,203
    
    
    
    745,922Noncontrolling interests
    
    
    37,631
    
    
    
    3,448Total equity
    
    
    945,834
    
    
    
    749,370TOTAL LIABILITIES AND EQUITY
    
    $
    1,304,794
    
    
    $
    995,552
  44




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##### Table of Contents



SKECHERS U.S.A., INC.

CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
 Years ended December 31,2010
    
    
    2009
    
    
    2008Net sales
    
    $
    2,006,868
    
    
    $
    1,436,440
    
    
    $
    1,440,743Cost of sales
    
    
    1,094,962
    
    
    
    815,430
    
    
    
    844,821Gross profit
    
    
    911,906
    
    
    
    621,010
    
    
    
    595,922Royalty income, net
    
    
    4,568
    
    
    
    1,655
    
    
    
    2,461916,474
    
    
    
    622,665
    
    
    
    598,383Operating expenses:Selling
    
    
    186,738
    
    
    
    128,989
    
    
    
    126,890General and administrative
    
    
    532,996
    
    
    
    421,094
    
    
    
    413,601719,734
    
    
    
    550,083
    
    
    
    540,491Earnings from operations
    
    
    196,740
    
    
    
    72,582
    
    
    
    57,892Other income (expense):Interest income
    
    
    2,802
    
    
    
    2,070
    
    
    
    7,337Interest expense
    
    
    (3,022
    )
    
    
    (3,045
    )
    
    
    (4,606
    )Other, net
    
    
    83
    
    
    
    (497
    )
    
    
    120(137
    )
    
    
    (1,472
    )
    
    
    2,851Earnings before taxes
    
    
    196,603
    
    
    
    71,110
    
    
    
    60,743Income tax expense
    
    
    60,198
    
    
    
    20,228
    
    
    
    7,258Net earnings
    
    
    136,405
    
    
    
    50,882
    
    
    
    53,485Less: Net earnings (loss) attributable to noncontrolling interests
    
    
    257
    
    
    
    (3,817
    )
    
    
    (1,911
    )Net earnings attributable to Skechers U.S.A., Inc.
    
    $
    136,148
    
    
    $
    54,699
    
    
    $
    55,396Net earnings per share attributable to Skechers U.S.A., Inc.:Basic
    
    $
    2.87
    
    
    $
    1.18
    
    
    $
    1.20Diluted
    
    $
    2.78
    
    
    $
    1.16
    
    
    $
    1.19Weighted average shares used in calculating earnings per share
attributable to Skechers U.S.A., Inc.:Basic
    
    
    47,433
    
    
    
    46,341
    
    
    
    46,031Diluted
    
    
    49,050
    
    
    
    47,105
    
    
    
    46,708
  45




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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 ., IN C.
    
    
    CONTROLLING
    
    
    STOCKHOLDERSSTOCK
    
    
    STOCK
    
    
    STOCK
    
    
    STOCK
    
    
    CAPITAL
    
    
    INCOME
    
    
    EARNINGS
    
    
    EQUITY
    
    
    INTERESTS
    
    
    EQUITYBalance 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
    
    
    $
    749,370Comprehensive income:Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    136,148
    
    
    
    136,148
    
    
    
    257
    
    
    
    136,405Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,083
    )
    
    
    
    
    
    
    (5,083
    )
    
    
    426
    
    
    
    (4,657
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    131,065
    
    
    
    683
    
    
    
    131,748Capital contribution
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,500
    
    
    
    33,500Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,739
    
    
    
    
    
    
    
    
    
    
    
    13,739
    
    
    
    
    
    
    
    13,739Proceeds from issuance of common stock
under the employee stock purchase plan
    
    
    103
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,143
    
    
    
    
    
    
    
    
    
    
    
    2,143
    
    
    
    
    
    
    
    2,143Proceeds from issuance of common stock
under the employee stock option plan
    
    
    1,513
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    11,895
    
    
    
    
    
    
    
    
    
    
    
    11,897
    
    
    
    
    
    
    
    11,897Tax benefit of stock options exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,042
    
    
    
    
    
    
    
    
    
    
    
    9,042
    
    
    
    
    
    
    
    9,042Shares redeemed for employee tax withholdings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,604)
    
    
    
    
    
    
    
    
    
    
    
    (5,604)
    
    
    
    
    
    
    
    (5,604
    )Conversion of Class B Common Stock into Class A Common Stock
    
    
    1,049
    
    
    
    (1,049
    )
    
    
    1
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Balance at December 31, 2010
    
    
    36,894
    
    
    
    11,311
    
    
    $
    37
    
    
    $
    11
    
    
    $
    303,877
    
    
    $
    4,265
    
    
    $
    600,013
    
    
    $
    908,203
    
    
    $
    37,631
    
    
    $
    945,834
  46




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##### Table of Contents



SKECHERS U.S.A., INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Years ended December 31,2010
    
    
    2009
    
    
    2008Cash flows from operating activities:Net earnings
    
    $
    136,148
    
    
    $
    54,699
    
    
    $
    55,396Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:Noncontrolling interests in subsidiaries
    
    
    258
    
    
    
    (3,817
    )
    
    
    (1,911
    )Depreciation of property and equipment
    
    
    24,707
    
    
    
    19,694
    
    
    
    17,069Amortization of deferred financing costs
    
    
    1,482
    
    
    
    741
    
    
    
    0Amortization of intangible assets
    
    
    1,683
    
    
    
    935
    
    
    
    674Provision for bad debts and returns
    
    
    6,212
    
    
    
    3,249
    
    
    
    10,787Tax benefits from stock-based compensation
    
    
    0
    
    
    
    (81
    )
    
    
    123Non-cash stock compensation
    
    
    13,739
    
    
    
    5,736
    
    
    
    2,337Provision benefit for deferred income taxes
    
    
    (5,170
    )
    
    
    1,954
    
    
    
    (1,988
    )(Gain) loss on disposal of equipment
    
    
    36
    
    
    
    (18
    )
    
    
    167Impairment of property and equipment
    
    
    0
    
    
    
    761
    
    
    
    1,676(Increase) decrease in assets:Receivables
    
    
    (50,040
    )
    
    
    (46,562
    )
    
    
    (27,462
    )Inventories
    
    
    (172,417
    )
    
    
    39,362
    
    
    
    (58,240
    )Prepaid expenses and other current assets
    
    
    (21,402
    )
    
    
    2,812
    
    
    
    (17,609
    )Other assets
    
    
    (7,571
    )
    
    
    (1,023
    )
    
    
    (6,221
    )Increase (decrease) in liabilities:Accounts payable
    
    
    32,828
    
    
    
    28,136
    
    
    
    385Accrued expenses
    
    
    (7,872
    )
    
    
    8,531
    
    
    
    2,988Net cash provided by (used in) operating activities
    
    
    (47,379
    )
    
    
    115,109
    
    
    
    (21,829
    )Cash flows from investing activities:Capital expenditures
    
    
    (82,269
    )
    
    
    (35,341
    )
    
    
    (72,461
    )Purchases of investments
    
    
    0
    
    
    
    (30,000
    )
    
    
    (11,725
    )Maturities of investments
    
    
    30,000
    
    
    
    375
    
    
    
    20,600Redemption of auction rate securities
    
    
    0
    
    
    
    95,250
    
    
    
    0Intangible additions
    
    
    (41
    )
    
    
    (4,500
    )
    
    
    0Cash paid for acquisitions
    
    
    0
    
    
    
    0
    
    
    
    (4,640
    )Net cash provided by (used in) investing activities
    
    
    (52,310
    )
    
    
    25,784
    
    
    
    (68,226
    )Cash flows from financing activities:Net proceeds from the issuances of stock through employee
stock purchase plan and the exercise of stock options
    
    
    14,040
    
    
    
    2,807
    
    
    
    3,656Shares redeemed for employee tax withholdings
    
    
    (5,604
    )
    
    
    0
    
    
    
    0Contribution from noncontrolling interest of consolidated entity
    
    
    3,500
    
    
    
    4,000
    
    
    
    5,000Excess tax benefits from stock-based compensation
    
    
    9,042
    
    
    
    0
    
    
    
    0Increase in short-term borrowings
    
    
    16,271
    
    
    
    2,006
    
    
    
    0Proceeds from long-term debt
    
    
    39,293
    
    
    
    0
    
    
    
    0Payments on long-term debt
    
    
    (9,121
    )
    
    
    (413
    )
    
    
    (99
    )Net cash provided by financing activities
    
    
    67,421
    
    
    
    8,400
    
    
    
    8,557Net increase (decrease) in cash and cash equivalents
    
    
    (32,268
    )
    
    
    149,293
    
    
    
    (81,498
    )Effect of exchange rates on cash and cash equivalents
    
    
    151
    
    
    
    1,441
    
    
    
    (3,077
    )Cash and cash equivalents at beginning of year
    
    
    265,675
    
    
    
    114,941
    
    
    
    199,516Cash and cash equivalents at end of year
    
    $
    233,558
    
    
    $
    265,675
    
    
    $
    114,941Supplemental disclosures of cash flow information:Cash paid during the year for:Interest
    
    $
    3,438
    
    
    $
    4,445
    
    
    $
    4,902Income taxes
    
    
    87,063
    
    
    
    17,492
    
    
    
    17,834Non-cash transactions:Land contribution from noncontrolling interest
    
    
    30,000
    
    
    
    0
    
    
    
    0Note payable contribution from noncontrolling interest
    
    
    17,358
    
    
    
    0
    
    
    
    0Acquisition of Chilean distributor
    
    
    0
    
    
    
    4,382
    
    
    
    0
  47




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SKECHERS U.S.A., INC  
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010, 2009 and 2008
 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          December 31, 2010
    
    
    December 31, 2009Current assets
    
    $
    6,058
    
    
    $
    0Noncurrent assets
    
    
    107,723
    
    
    
    0Total assets
    
    $
    113,781
    
    
    $
    0Current liabilities
    
    $
    36,364
    
    
    $
    0Noncurrent liabilities
    
    
    17,359
    
    
    
    0Total liabilities
    
    $
    53,723
    
    
    $
    0
  48




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49




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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
   2010
    
    
    2009Intellectual property
    
    $
    11,331
    
    
    $
    11,300Goodwill
    
    
    1,575
    
    
    
    1,575Other intangibles
    
    
    840
    
    
    
    840Less accumulated amortization
    
    
    (6,379
    )
    
    
    (4,704
    )Total Intangible Assets
    
    $
    7,367
    
    
    $
    9,011
    50




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Years Ended December 31,Basic earnings per share
    
    2010
    
    
    2009
    
    
    2008Net earnings
    
    $
    136,148
    
    
    $
    54,699
    
    
    $
    55,396Weighted average common shares outstanding
    
    
    47,433
    
    
    
    46,341
    
    
    
    46,031Basic earnings per share
    
    $
    2.87
    
    
    $
    1.18
    
    
    $
    1.20
 Years Ended December 31,Diluted earnings per share
    
    2010
    
    
    2009
    
    
    2008Net earnings
    
    $
    136,148
    
    
    $
    54,699
    
    
    $
    55,396Weighted average common shares outstanding
    
    
    47,433
    
    
    
    46,341
    
    
    
    46,031Dilutive stock options
    
    
    1,617
    
    
    
    764
    
    
    
    677Weighted average common shares outstanding
    
    
    49,050
    
    
    
    47,105
    
    
    
    46,708Diluted earnings per share
    
    $
    2.78
    
    
    $
    1.16
    
    
    $
    1.19
    51




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##### Table of Contents



Receivables Disclosure about the Credit Quality of Financing Receivables and the
Allowance for Credit Losses
 (2) INVESTMENTS
  (3) PROPERTY AND EQUIPMENT
  2010
    
    
    2009Land
    
    $
    62,589
    
    
    $
    28,951Buildings and improvements
    
    
    187,649
    
    
    
    108,367Furniture, fixtures and equipment
    
    
    107,371
    
    
    
    94,293Leasehold improvements
    
    
    123,500
    
    
    
    104,939Total property and equipment
    
    
    481,109
    
    
    
    336,550Less accumulated depreciation and amortization
    
    
    187,307
    
    
    
    164,883Property and equipment, net
    
    $
    293,802
    
    
    $
    171,667
  52




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##### Table of Contents



(4) ACCRUED EXPENSES
  2010
    
    
    2009Accrued inventory purchases
    
    $
    12,164
    
    
    $
    2,678Accrued payroll and related taxes
    
    
    18,201
    
    
    
    18,016Income taxes payable
    
    
    0
    
    
    
    11,149Accrued interest
    
    
    20
    
    
    
    0Accrued expenses
    
    $
    30,385
    
    
    $
    31,843
 (5) LINE OF CREDIT AND SHORT-TERM BORROWINGS
   (6) LONG-TERM BORROWINGS
  2010
    
    
    2009Note payable to bank, due in
monthly installments of $531.4
(includes principal and interest),
fixed rate interest at 3.54%, secured
by property, balloon payment of
$12,635 due December 2015
    
    $
    39,325
    
    
    $
    0Note 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
    
    
    0
    
    
    
    9,034Note 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
paid in January 2011
    
    
    6,900
    
    
    
    7,033Loan from HF Logistics I, LLC
    
    
    17,358
    
    
    
    0Capital lease obligations
    
    
    51
    
    
    
    103Subtotal
    
    
    63,634
    
    
    
    16,170Less current installments
    
    
    11,984
    
    
    
    529Total long-term debt
    
    $
    51,650
    
    
    $
    15,641
 53




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##### Table of Contents



2011
    
    $
    11,9842012
    
    
    5,2602013
    
    
    5,4512014
    
    
    22,9992015
    
    
    17,940$
    63,634
   (7) STOCK COMPENSATION
      54




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##### Table of Contents



WEIGHTED AVERAGESHARES
    
    

GRANT-DATE
FAIR VALUENonvested 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
    
    
    
    17.86Granted
    
    
    139,000
    
    
    
    30.38Vested
    
    
    (804,315
    )
    
    
    17.96Cancelled
    
    
    0
    
    
    
    0Nonvested at December 31, 2010
    
    
    1,493,329
    
    
    $
    18.97
   WEIGHTED AVERAGESHARES
    
    

OPTION
EXERCISE PRICEOutstanding at December 31, 2007
    
    
    1,961,756
    
    
    $
    11.56Granted
    
    
    0Exercised
    
    
    (206,844
    )
    
    
    9.06Cancelled
    
    
    (15,191
    )
    
    
    19.37Outstanding at December 31, 2008
    
    
    1,739,721
    
    
    
    11.79Granted
    
    
    0Exercised
    
    
    (125,715
    )
    
    
    9.68Cancelled
    
    
    (108,312
    )
    
    
    11.20Outstanding at December 31, 2009
    
    
    1,505,694
    
    
    
    12.01Granted
    
    
    0Exercised
    
    
    (1,030,516
    )
    
    
    12.53Cancelled
    
    
    (23,870
    )
    
    
    4.10Outstanding at December 31, 2010
    
    
    451,308
    
    
    $
    11.26
     55




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##### Table of Contents



(8) STOCKHOLDERS EQUITY
    (9) TOTAL OTHER INCOME (EXPENSE), NET
  2010
    
    
    2009
    
    
    2008Gain on foreign currency transactions
    
    $
    1,255
    
    
    $
    1,830
    
    
    $
    307Legal settlements
    
    
    (1,172
    )
    
    
    (2,327
    )
    
    
    (187
    )Total other income (expense), net
    
    $
    83
    
    
    $
    (497
    )
    
    $
    120
 56




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##### Table of Contents



(10) INCOME TAXES
  2010
    
    
    2009
    
    
    2008Federal:Current
    
    $
    45,304
    
    
    $
    9,227
    
    
    $
    9,026Deferred
    
    
    (2,090
    )
    
    
    5,902
    
    
    
    (6,714
    )Total federal
    
    
    43,214
    
    
    
    15,129
    
    
    
    2,312State:Current
    
    
    8,535
    
    
    
    1,498
    
    
    
    3,654Deferred
    
    
    473
    
    
    
    1,268
    
    
    
    (1,643
    )Total state
    
    
    9,008
    
    
    
    2,766
    
    
    
    2,011Foreign:Current
    
    
    11,529
    
    
    
    3,088
    
    
    
    2,448Deferred
    
    
    (3,553
    )
    
    
    (755
    )
    
    
    487Total foreign
    
    
    7,976
    
    
    
    2,333
    
    
    
    2,935Total income taxes
    
    $
    60,198
    
    
    $
    20,228
    
    
    $
    7,258
  2010
    
    
    2009
    
    
    2008Expected income tax expense
    
    $
    68,811
    
    
    $
    24,888
    
    
    $
    21,260State income tax, net of federal benefit
    
    
    6,590
    
    
    
    2,051
    
    
    
    1,710Rate differential on foreign income
    
    
    (16,398
    )
    
    
    (6,162
    )
    
    
    (10,697
    )Change in unrecognized tax benefits
    
    
    (160
    )
    
    
    455
    
    
    
    (7,896
    )Exempt income
    
    
    0
    
    
    
    (207
    )
    
    
    (1,241
    )Non-deductible expenses
    
    
    569
    
    
    
    441
    
    
    
    188Adjustment to tax benefit  2008 APA
    
    
    0
    
    
    
    (1,952
    )
    
    
    0Other
    
    
    (197
    )
    
    
    (1,049
    )
    
    
    682Change in valuation allowance
    
    
    983
    
    
    
    1,763
    
    
    
    3,252Total provision for income taxes
    
    $
    60,198
    
    
    $
    20,228
    
    
    $
    7,258
  DEFERRED TAX ASSETS:
    
    2010
    
    
    2009Deferred tax assets  current:Inventory adjustments
    
    $
    4,785
    
    
    $
    2,340Accrued expenses
    
    
    8,808
    
    
    
    7,789Allowances for bad debts and chargebacks
    
    
    5,492
    
    
    
    3,486Total current assets
    
    
    19,085
    
    
    
    13,615Deferred tax assets  long term:Depreciation on property and equipment
    
    
    10,321
    
    
    
    10,500Loss carryforwards
    
    
    7,334
    
    
    
    6,880Stock-based compensation
    
    
    1,348
    
    
    
    1,977Valuation allowance
    
    
    (6,680
    )
    
    
    (5,697
    )Total long term assets
    
    
    12,323
    
    
    
    13,660Total deferred tax assets
    
    
    31,408
    
    
    
    27,275Deferred tax liabilities  current:Prepaid expenses
    
    
    7,365
    
    
    
    4,665Net deferred tax assets
    
    $
    24,043
    
    
    $
    22,610
  57




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2010
    
    
    2009Beginning balance
    
    $
    9,769
    
    
    $
    9,663Additions for current year tax positions
    
    
    346
    
    
    
    263Additions for prior year tax positions
    
    
    325
    
    
    
    536Reductions for prior year tax positions
    
    
    0
    
    
    
    0Settlement of uncertain tax positions
    
    
    (315
    )
    
    
    (493
    )Reductions related to lapse of statute of limitations
    
    
    (800
    )
    
    
    (200
    )Ending balance
    
    $
    9,325
    
    
    $
    9,769
     (11) BUSINESS AND CREDIT CONCENTRATIONS
  58




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##### Table of Contents



Years Ended December 31,2010
    
    
    2009
    
    
    2008Manufacturer #1
    
    
    34.7
    %
    
    
    29.7
    %
    
    
    30.6
    %Manufacturer #2
    
    
    13.0
    %
    
    
    12.2
    %
    
    
    11.7
    %Manufacturer #3
    
    
    9.4
    %
    
    
    11.2
    %
    
    
    9.3
    %Manufacturer #4
    
    
    8.7
    %
    
    
    10.5
    %
    
    
    6.6
    %Manufacturer #5
    
    
    4.8
    %
    
    
    5.5
    %
    
    
    6.4
    %70.6
    %
    
    
    69.1
    %
    
    
    64.6
    %
  (12) BENEFIT PLAN
   (13) COMMITMENTS AND CONTINGENCIES
     59




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##### Table of Contents



CAPITAL
    
    
    OPERATINGLEASES
    
    
    LEASESYear ending December 31:2011
    
    $
    18
    
    
    $
    95,9352012
    
    
    11
    
    
    
    86,7092013
    
    
    14
    
    
    
    73,5172014
    
    
    8
    
    
    
    66,2262015
    
    
    0
    
    
    
    61,637Thereafter
    
    
    0
    
    
    
    336,700$
    51
    
    
    $
    720,724
      (14) SEGMENT INFORMATION
  2010
    
    
    2009
    
    
    2008Net salesDomestic wholesale
    
    $
    1,131,929
    
    
    $
    763,514
    
    
    $
    807,047International wholesale
    
    
    436,637
    
    
    
    328,466
    
    
    
    332,503Retail
    
    
    410,695
    
    
    
    321,829
    
    
    
    283,128E-commerce
    
    
    27,607
    
    
    
    22,631
    
    
    
    18,065Total
    
    $
    2,006,868
    
    
    $
    1,436,440
    
    
    $
    1,440,743
 60




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##### Table of Contents



2010
    
    
    2009
    
    
    2008Gross profitDomestic wholesale
    
    $
    460,355
    
    
    $
    292,303
    
    
    $
    276,604International wholesale
    
    
    181,528
    
    
    
    118,440
    
    
    
    137,840Retail
    
    
    255,894
    
    
    
    198,243
    
    
    
    172,870E-commerce
    
    
    14,129
    
    
    
    12,024
    
    
    
    8,608Total
    
    $
    911,906
    
    
    $
    621,010
    
    
    $
    595,922
 2010
    
    
    2009Identifiable assetsDomestic wholesale
    
    $
    891,671
    
    
    $
    712,712International wholesale
    
    
    300,153
    
    
    
    192,085Retail
    
    
    112,774
    
    
    
    90,049E-commerce
    
    
    196
    
    
    
    706Total
    
    $
    1,304,794
    
    
    $
    995,552
 2010
    
    
    2009
    
    
    2008Additions to property, plant and equipmentDomestic wholesale
    
    $
    57,375
    
    
    $
    21,112
    
    
    $
    45,709International wholesale
    
    
    4,241
    
    
    
    5,568
    
    
    
    6,893Retail
    
    
    20,653
    
    
    
    8,661
    
    
    
    19,859Total
    
    $
    82,269
    
    
    $
    35,341
    
    
    $
    72,461
   2010
    
    
    2009
    
    
    2008Net Sales (1)United States
    
    $
    1,522,187
    
    
    $
    1,078,335
    
    
    $
    1,083,498Canada
    
    
    54,476
    
    
    
    39,498
    
    
    
    43,088Other International (2)
    
    
    430,205
    
    
    
    318,607
    
    
    
    314,157Total
    
    $
    2,006,868
    
    
    $
    1,436,440
    
    
    $
    1,440,743Long-lived AssetsUnited States
    
    
    
    
    
    $
    276,457
    
    
    $
    160,444Canada
    
    
    
    
    
    
    1,590
    
    
    
    866Other International (2)
    
    
    
    
    
    
    15,755
    
    
    
    10,357Total
    
    
    
    
    
    $
    293,802
    
    
    $
    171,667
 
 (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, Chile, and Portugal. (15) RELATED PARTY TRANSACTIONS
  61




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(16) SUBSEQUENT EVENTS
  (17) SUMMARY OF QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
  2010
    
    MARCH 31
    
    
    JUNE 30
    
    
    SEPTEMBER 30
    
    
    DECEMBER 31Net sales
    
    $
    492,764
    
    
    $
    504,859
    
    
    $
    554,626
    
    
    $
    454,619Gross profit
    
    
    237,418
    
    
    
    237,645
    
    
    
    252,651
    
    
    
    184,192Net earnings
    
    
    56,296
    
    
    
    40,237
    
    
    
    36,378
    
    
    
    3,237Net earnings per share:Basic
    
    $
    1.20
    
    
    $
    0.85
    
    
    $
    0.76
    
    
    $
    0.07Diluted
    
    
    1.15
    
    
    
    0.82
    
    
    
    0.74
    
    
    
    0.07
 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
 
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 62




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Internal Control  Integrated Framework Internal Control- Integrated Framework,
    63




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ITEM 9B. OTHER INFORMATION
    64




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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 41 of this annual report on Form 10-K.2.
    
    Financial Statement Schedule: See Schedule IIValuation and Qualifying Accounts on page
66 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.
 65




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SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
 Years Ended December 31, 2010, 2009, and 2008
 BALANCE AT
    
    
    CHARGED TO
    
    
    DEDUCTIONS
    
    
    BALANCEBEGINNING OF
    
    
    COSTS AND
    
    
    AND
    
    
    AT ENDDESCRIPTION
    
    PERIOD
    
    
    EXPENSES
    
    
    WRITE-OFFS
    
    
    OF PERIODYear-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
    )
    
    
    6,544Reserve for shrinkage
    
    
    110
    
    
    
    690
    
    
    
    (635
    )
    
    
    165Reserve for obsolescence
    
    
    1,831
    
    
    
    11,192
    
    
    
    0
    
    
    
    13,023Year-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
    )
    
    
    8,090Reserve for shrinkage
    
    
    165
    
    
    
    950
    
    
    
    (915
    )
    
    
    200Reserve for obsolescence
    
    
    13,023
    
    
    
    0
    
    
    
    (9,568
    )
    
    
    3,455Year-ended December 31, 2010:Allowance for chargebacks
    
    $
    1,943
    
    
    $
    2,993
    
    
    $
    (1,909
    )
    
    $
    3,027Allowance for doubtful accounts
    
    
    4,328
    
    
    
    1,782
    
    
    
    (465
    )
    
    
    5,645Reserve for sales returns and allowances
    
    
    8,090
    
    
    
    1,437
    
    
    
    1,498
    
    
    
    11,025Reserve for shrinkage
    
    
    200
    
    
    
    1,100
    
    
    
    (1,100
    )
    
    
    200Reserve for obsolescence
    
    
    3,455
    
    
    
    0
    
    
    
    (17
    )
    
    
    3,438
  66




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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).10.5(a)**
    
    Amendment No. 1 to 2008 Employee Stock Purchase Plan
(incorporated by reference to exhibit number 10.5 of the
Registrants Form 10-Q for the quarter ended June 30, 2010).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).
 67




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##### Table of Contents



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).10.7
    
    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 10-Q/A
filed with the Securities and Exchange Commission on November 16,
2010).10.9(a)
    
    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 10.2 of the
Registrants Form 10-Q/A filed with the Securities and Exchange
Commission on November 16, 2010).10.9(b)
    
    Amendment Number Two to Credit Agreement dated March 4, 2010, by
and among the Registrant, certain of its subsidiaries that are
also borrowers under the Agreement, and certain lenders including
Wells Fargo Capital Finance, LLC (formerly known as 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 March 31, 2010).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 +
    
    Amended and Restated Limited Liability Company Agreement dated
April 12, 2010 between Skechers R.B., LLC, a Delaware limited
liability company and wholly owned subsidiary of the Registrant,
and HF Logistics I, LLC, regarding the ownership and management
of the joint venture, HF Logistics-SKX, LLC, a Delaware limited
liability company (incorporated by reference to exhibit number
10.3 of the Registrants Form 10-Q for the quarter ended
September 30, 2010).10.12 +
    
    Construction Agreement dated April 23, 2010 between HF
Logistics-SKX T1, LLC, which is a wholly owned subsidiary of a
joint venture entered into between HF Logistics I, LLC and a
wholly owned subsidiary of the Registrant, and J. D. Diffenbaugh,
Inc. regarding 29800 Eucalyptus Avenue, Rancho Belago, California
(incorporated by reference to exhibit number 10.1 of the
Registrants Form 10-Q for the quarter ended June 30, 2010).10.13
    
    General Conditions of the Contract for Construction regarding
29800 Eucalyptus Avenue, Rancho Belago, California (incorporated
by reference to exhibit number 10.1 of the Registrants Form 10-Q
for the quarter ended September 30, 2010).10.14 +
    
    Construction Loan Agreement dated as of April 30, 2010, by and
among HF Logistics-SKX T1, LLC, which is a wholly owned
subsidiary of a joint venture entered into between HF Logistics
I, LLC and a wholly owned subsidiary of the Registrant, Bank of
America, N.A., as administrative agent and as a lender, and
Raymond James Bank FSB, as a lender (incorporated by reference to
exhibit number 10.2 of the Registrants Form 10-Q for the quarter
ended September 30, 2010).
 68




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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 (incorporated by
reference to exhibit number 10.15(c) of the Registrants Form
10-K for the year ended December 31, 2009).10.15(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 (incorporated by
reference to exhibit number 10.15(d) of the Registrants Form
10-K for the year ended December 31, 2009).10.15(e)
    
    Fifth Amendment to Lease Agreement, dated June 3, 2010, 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
(incorporated by reference to exhibit number 10.16(e) of the Registrants Form 10-K for the
year ended December 31, 2009).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
(incorporated by reference to exhibit number 10.16(f) of the Registrants Form 10-K for the
year ended December 31, 2009).
 69




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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
(incorporated by reference to exhibit number 10.17(b) of the Registrants Form 10-K for the
year ended December 31, 2009).10.17(c)
    
    Third Amendment to Lease Agreement, dated September 29, 2010, 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 Rancho Belago, 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).10.19(a)
    
    First Amendment to Lease Agreement, dated December 18, 2009, between the Registrant and HF
Logistics I, LLC, regarding distribution facility in Rancho Belago, California (incorporated
by reference to exhibit number 10.6 of the Registrants Form 10-Q for the quarter ended
March 31, 2010).10.19(b)
    
    Second Amendment to Lease Agreement, dated April 12, 2010, between the Registrant and HF
Logistics I, LLC, regarding distribution facility in Rancho Belago, California (incorporated
by reference to exhibit number 10.4 of the Registrants Form 10-Q for the quarter ended
September 30, 2010).10.19(c)
    
    Assignment of Lease Agreement, dated April 12, 2010, between HF Logistics I, LLC and HF
Logistics-SKX T1, LLC, regarding distribution facility in Rancho Belago, California
(incorporated by reference to exhibit number 10.5 of the Registrants Form 10-Q for the
quarter ended September 30, 2010).10.19(d)
    
    Third Amendment to Lease Agreement, dated August 18, 2010, between the Registrant and HF
Logistics-SKX T1, LLC, regarding distribution facility in Rancho Belago, California
(incorporated by reference to exhibit number 10.6 of the Registrants Form 10-Q for the
quarter ended September 30, 2010).10.20
    
    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 10.3 of the Registrants
Form 10-Q for the quarter ended June 30 , 2010).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 10.4 of the
Registrants Form 10-Q for the quarter ended June 30 , 2010).10.22
    
    Master Loan and Security Agreement, dated December 29, 2010, by and between the Registrant
and Banc of America Leasing & Capital, LLC (incorporated by reference to exhibit number 10.1
of the Registrants Form 8-K filed with the Securities and Exchange Commission on January 4,
2011).10.23
    
    Equipment Security Note, dated December 29, 2010, by and among the Registrant, Banc of
America Leasing & Capital, LLC, and Bank of Utah, as agent (incorporated by reference to
exhibit number 10.2 of the Registrants Form 8-K filed with the Securities and Exchange
Commission on January 4, 2011).
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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.
 
 +
    
    The Company has applied with the Secretary of the Securities and Exchange
Commission for confidential treatment of certain information pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended. The Company has filed separately with
its application a copy of the exhibit including all confidential portions, which may be
made available for public inspection pending the Securities and Exchange Commissions
review of the application in accordance with Rule 24b-2.**
    
    Management contract or compensatory plan or arrangement required to be filed as an exhibit.***
    
    In accordance with Item 601(b)(32)(ii) of Regulation S-K, this exhibit shall not
be deemed filed for the purposes of Section 18 of the Exchange Act or otherwise
subject to the liability of that section, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933, as amended, or the Exchange
Act. 71




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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
    
    Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
    
    March 1, 2011/s/ Michael Greenberg
    
    President and Director
    
    March 1, 2011Michael Greenberg/s/ David Weinberg
    
    Executive Vice President, Chief Operating Officer,
    
    March 1, 2011David Weinberg
    
    Chief Financial Officer and Director
(Principal Financial and Accounting Officer)/s/ Jeffrey Greenberg

Jeffrey Greenberg
    
    Director
    
    March 1, 2011/s/ J. Geyer Kosinski

J. Geyer Kosinski
    
    Director
    
    March 1, 2011/s/ Morton D. Erlich

Morton D. Erlich
    
    Director
    
    March 1, 2011/s/ Richard Siskind

Richard Siskind
    
    Director
    
    March 1, 2011/s/ Thomas Walsh

Thomas Walsh
    
    Director
    
    March 1, 2011/s/ Rick Rappaport

Rick Rappaport
    
    Director
    
    March 1, 2011
 72