##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 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(State or Other Jurisdiction of Incorporation or Organization)
    
    95-4376145(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:
 (Title of Class)
 þ o
 o þ
 þ o
 þ
  Large accelerated filer
þ

    

  Accelerated filer
o

    

    Non-accelerated filer o
(Do not check if a smaller reporting company)

  

    Smaller reporting company
o
 o þ
    DOCUMENTS INCORPORATED BY REFERENCE




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##### 



SKECHERS U.S.A., INC.
TABLE OF CONTENTS TO ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2008
 PART IITEM 1. BUSINESS
    
    
    2ITEM 1A. RISK FACTORS
    
    
    14ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    21ITEM 2. PROPERTIES
    
    
    21ITEM 3. LEGAL PROCEEDINGS
    
    
    21ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    22PART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    22ITEM 6. SELECTED FINANCIAL DATA
    
    
    24ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    25ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    37ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    38ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    61ITEM 9A. CONTROLS AND PROCEDURES
    
    
    61ITEM 9B. OTHER INFORMATION
    
    
    62PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    64ITEM 11. EXECUTIVE COMPENSATION
    
    
    64ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    64ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
    
    
    64ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
    
    
    64PART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
    
    
    64EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1
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SPECIAL NOTE ON FORWARD LOOKING STATEMENTS
    1




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




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design  some with industrial-inspired fashion features. For women, the Casuals category
includes basic black and brown oxfords and slip-ons, lug outsole boots, and casual sandals.
We design and price both the mens and womens categories to appeal primarily to younger
consumers with broad acceptance across age groups.
    
    The Dress Casuals category for men is comprised of basic black and brown mens shoes
that feature shiny leathers and dress details, but may utilize traditional or lugged
outsoles as well as value-oriented materials. The Dress Casual line for women is comprised
of trend-influenced stylized boots and shoes, which may include leather uppers, shearling or
faux fur lining or trim.
    
    Skechers Relaxed Fit is a line of trend-right casuals for men who want all-day comfort
without compromising style. Characteristics of the line include comfortable outsoles,
cushioned insoles and quality leather uppers. A category with unique features, we market and
package the Skechers Relaxed Fit styles in a shoe box that is distinct from that of other
categories in the Skechers USA line of footwear.
    
    Our Seriously Lightweight styles for men primarily consist of designs similar to our
casual looks, but feature ultra lightweight outsoles, making them ideal travel and work
shoes. A category with unique features, we market and package the Skechers Seriously
Lightweight styles in a shoe box that is distinct from that of other categories in the
Skechers USA line of footwear.
    
    Our Sandals collection for men and women is designed with many of our existing and proven
outsoles for our Casuals, Dress Casuals and Casual Fusion lines, stylized with basic or core
uppers as well as fresh looks. These styles are generally made with quality leather uppers,
but may also be in canvas or fabric.
    
    Our Casual Fusion line is comprised of low-profile, sport-influenced Euro casuals
targeted to trend-conscious young men and women. The outsoles are primarily rubber and
adopted from our mens Sport and womens Active lines. This collection features leather or
nubuck uppers, but may also include mesh.
 Skechers Sport.
 
    
    Our Jogger, Trail Runner, Sport Hiker and cross trainer-inspired Terrainer designs are
lightweight constructions that include cushioned heels, polyurethane midsoles, phylon and
other synthetic outsoles, as well as leather or synthetic uppers such as durabuck, cordura
and nylon mesh. Careful attention is devoted to the design, pattern and construction of the
outsoles, which vary greatly depending on the intended use. This category features earth
tones and athletic-inspired hues with contrasting pop colors such as lime green, orange and
red in addition to traditional athletic white.
    
    The Performance category is comprised of multi-purpose running shoes that are marketed as
mens lifestyle athletic footwear. Some styles include 3M reflective accents, breathable
upper construction, quality leathers, abrasion-resistant toe and heel cap, removable
moisture wicking molded ethyl vinyl acetate (EVA) sock liner, outsole forefoot flex
grooves for improved flexibility, non-marking rubber lugs with impact dispersment technology
(IDT), aggressive all terrain traction lugs, external torsion stabilizer and tuned
dual-density molded EVA midsole with pronation control.
    
    Skechers DLites are ultra lightweight womens sneakers that feature sturdy, sculpted
midsoles for all-day comfort, durable rubber treads for improved traction and a sole design
that provides superior flexibility and cushioning. The uppers are designed in leather,
suede, nubuck and mesh. A category with unique features, we market and package Skechers
DLites in a shoe box that is distinct from that of other categories in the Skechers Sport
line of footwear.
    
    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.
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Skechers Cali
 Skechers Work.
 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. We market and package each of these lines in unique shoe boxes that are
distinct from that of other categories in the Skechers Kids line of footwear.
    
    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.
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
    
    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.
   Unltd. by Marc Ecko and Red by Marc Ecko.
 Zoo York.
 310 Premium Footwear.
 Mark Nason and Siren by Mark Nason.
 Bebe Sport.
 Punkrose and Public Royalty.
    5




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Factories.
    6




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Production Oversight .
 Quality Control.
      GQ, Cosmopolitan, Elle, Lucky, In Style, Seventeen, Maxim, Mens
Fitness, Complex, People,
 7




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Us Weekly, Star, Sports Illustrated InTouch,
  Outdoor.
 Trend-Influenced Marketing/Public Relations. Oprah Extra, Laura Ingraham on Fox News E!  Burn Notice, The Hills, The Bachelorette,  Americas Next Top Model Lucky,
Seventeen, OK!, US Weekly, Mens Fitness, Slam, Dime Footwear News
 Promotions.
 Visual Merchandising.
  Trade Shows.
 Internet. www.skechers.com www.soholab.com www.marknason.com
 8




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Domestic Wholesale.
   International Wholesale.
  
    
    International Subsidiaries
 Europe
  9




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Canada
  Malaysia, Singapore and Thailand
  Brazil
  China and Hong Kong
  
    
    Distributors
  10




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STORE
    
    NUMBER OFREGION
    
    FORMAT
    
    STORES
    
    LOCATION(1)Asia
    
    Concept
    
    
    16
    
    
    Japan (2); Korea (10); Philippines (2); Taiwan (2)Warehouse
    
    
    4
    
    
    Japan (4)Australia
    
    Concept
    
    
    2
    
    
    Melbourne, SydneyWarehouse
    
    
    5
    
    
    Cairns, Canberra, Melbourne, Perth, SydneyCentral America/ South America
    
    Concept
    
    
    38
    
    
    Chile (10); Columbia (9); Ecuador (2); Guatemala (2); Panama (2); Peru (3); Venezuela (10)Eastern Europe
    
    Concept
    
    
    10
    
    
    Czech Republic; Russia (7); Turkey; UkraineNorthern Europe
    
    Concept
    
    
    7
    
    
    Denmark; Estonia (2); Finland; Lithuania (3)Middle East
    
    Concept
    
    
    10
    
    
    Bahrain (2); Kuwait (2); Saudi Arabia; UAE (5)Warehouse
    
    
    1
    
    
    UAESouth Africa
    
    Concept
    
    
    1
    
    
    Sandton
 
 (1)
    
    One store per location except as otherwise noted.  Retail Stores.
 
    
    Concept Stores.
   11




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
    
    Factory Outlet Stores.
  
    
    Warehouse Outlet Stores.
  Electronic
Commerce. www.skechers.com www.soholab.com
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ITEM 1A. RISK FACTORS
  The Effects Of The Recent Global Economic Slowdown May Continue To Have A Negative Impact On Our
Business, Results Of Operations Or Financial Condition.
  Our Business Could Be Harmed If We Fail To Maintain Proper Inventory Levels.
  14




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Our Business Could Be Adversely Affected By Changes In The Business Or Financial Condition Of
Significant Customers Due To The Current And Future Conditions In The Global Financial Markets.
  We May Have Difficulty Managing Our Costs As A Result Of The Recent Global Economic Slowdown.
  We May Be Adversely Affected By The Failure Of Financial Institutions To Fulfill Their Commitments
Under Our Secured Line Of Credit.
  Our Future Success Depends On Our Ability To Respond To Changing Consumer Demands, Identify And
Interpret Fashion Trends And Successfully Market New Products.
  Our Childrens Shoe Business May Be Negatively Impacted By The Consumer Product Safety Improvement
Act Of 2008.
  15




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Our Business And The Success Of Our Products Could Be Harmed If We Are Unable To Maintain Our Brand
Image.
  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.
   We Depend Upon A Relatively Small Group Of Customers For A Large Portion Of Our Sales.
  We May Be Unable To Successfully Execute Our Growth Strategy Or Maintain Our Growth.
  16




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Many Of Our Retail Stores Depend Heavily On The Customer Traffic Generated By Shopping And Factory
Outlet Malls Or By Tourism.
  Our International Sales And Manufacturing Operations Are Subject To The Risks Of Doing Business
Abroad, Particularly In China, Which Could Affect Our Ability To Sell Or Manufacture Our Products
In International Markets, Obtain Products From Foreign Suppliers Or Control The Costs Of Our
Products.
   Currency Exchange Rate Fluctuations In China Could Result In Higher Costs And Decreased Margins.
  The Potential Imposition Of Additional Duties, Quotas, Tariffs And Other Trade Restrictions Could
Have An Adverse Impact On Our Sales And Profitability.
  17




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Our Quarterly Revenues And Operating Results Fluctuate As A Result Of A Variety Of Factors,
Including Seasonal Fluctuations In Demand For Footwear, Delivery Date Delays And Potential
Fluctuations In Our Annualized Tax Rate, Which May Result In Volatility Of Our Stock Price.
   We Rely On Independent Contract Manufacturers And, As A Result, Are Exposed To Potential
Disruptions In Product Supply.
   Our Business Could Be Harmed If Our Contract Manufacturers, Suppliers Or Licensees Violate Labor,
Trade Or Other Laws.
  18




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Our Operating Results Could Be Negatively Impacted If Our Sales Are Concentrated In Any One Style
Or Group Of Styles.
  Our Strategies Involve A Number Of Risks That Could Prevent Or Delay Any Successful Opening Of New
Stores As Well As Impact The Performance Of Our Existing Stores.
   We Depend On Key Personnel To Manage Our Business Effectively In A Rapidly Changing Market, And If
We Are Unable To Retain Existing Personnel, Our Business Could Be Harmed.
  The Disruption, Expense And Potential Liability Associated With Existing And Unanticipated Future
Litigation Against Us Could Have A Material Adverse Effect On Our Business, Results Of Operations
And Financial Condition.
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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.
 ® ® ®
  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 Control Substantially All Matters Requiring A Vote Of Our
Stockholders And His Interests May Differ From The Interests Of Our Other Stockholders.
  20




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Our Charter Documents And Delaware Law May Inhibit A Takeover, Which May Cause A Decline In The
Value Of Our Stock.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
      
 ITEM 3. LEGAL PROCEEDINGS
  21




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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
  HIGH
    
    LOWYEAR ENDED DECEMBER 31, 2008First Quarter
    
    $
    23.36
    
    
    $
    16.05Second Quarter
    
    
    25.20
    
    
    
    17.14Third Quarter
    
    
    24.00
    
    
    
    15.56Fourth Quarter
    
    
    16.84
    
    
    
    9.25YEAR ENDED DECEMBER 31, 2007First Quarter
    
    $
    38.03
    
    
    $
    31.95Second Quarter
    
    
    36.87
    
    
    
    28.41Third Quarter
    
    
    30.44
    
    
    
    17.36Fourth Quarter
    
    
    25.57
    
    
    
    18.75
       22




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Company/Index
    
    12/31/03
    
    12/31/04
    
    12/31/05
    
    12/31/06
    
    12/31/07
    
    12/31/08Skechers U.S.A., Inc.
    
    
    100.00
    
    
    
    159.02
    
    
    
    187.98
    
    
    
    408.71
    
    
    
    239.39
    
    
    
    157.30Russell 2000
    
    
    100.00
    
    
    
    118.33
    
    
    
    123.72
    
    
    
    146.44
    
    
    
    144.15
    
    
    
    95.44Custom Peer Group
    
    
    100.00
    
    
    
    131.39
    
    
    
    139.20
    
    
    
    156.54
    
    
    
    195.81
    
    
    
    164.17
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ITEM 6. SELECTED FINANCIAL DATA
   YEARS ENDED DECEMBER 31,STATEMENT OF EARNINGS DATA:
    
    2008
    
    2007
    
    2006
    
    2005
    
    2004Net sales
    
    $
    1,440,743
    
    
    $
    1,394,181
    
    
    $
    1,205,368
    
    
    $
    1,006,477
    
    
    $
    920,322Gross profit
    
    
    595,922
    
    
    
    599,989
    
    
    
    523,346
    
    
    
    420,482
    
    
    
    370,857Earnings from operations
    
    
    57,892
    
    
    
    112,930
    
    
    
    112,544
    
    
    
    76,296
    
    
    
    49,245Earnings before income taxes
    
    
    60,743
    
    
    
    118,305
    
    
    
    112,648
    
    
    
    72,797
    
    
    
    38,720Net earnings
    
    
    55,396
    
    
    
    75,686
    
    
    
    70,994
    
    
    
    44,717
    
    
    
    23,553Net earnings per share:(1)Basic
    
    
    1.20
    
    
    
    1.67
    
    
    
    1.73
    
    
    
    1.13
    
    
    
    0.61Diluted
    
    
    1.19
    
    
    
    1.63
    
    
    
    1.59
    
    
    
    1.06
    
    
    
    0.59Weighted average shares:(1)Basic
    
    
    46,031
    
    
    
    45,262
    
    
    
    41,079
    
    
    
    39,686
    
    
    
    38,638Diluted
    
    
    46,708
    
    
    
    46,741
    
    
    
    46,139
    
    
    
    44,518
    
    
    
    39,800
 AS OF DECEMBER 31,BALANCE SHEET DATA:
    
    2008
    
    2007
    
    2006
    
    2005
    
    2004Working capital
    
    $
    413,771
    
    
    $
    523,888
    
    
    $
    450,787
    
    
    $
    361,210
    
    
    $
    313,883Total assets
    
    
    876,316
    
    
    
    827,977
    
    
    
    737,053
    
    
    
    581,957
    
    
    
    518,653Long-term debt, excluding current portion
    
    
    16,188
    
    
    
    16,462
    
    
    
    106,805
    
    
    
    107,288
    
    
    
    113,038Stockholders equity
    
    
    668,693
    
    
    
    626,663
    
    
    
    449,087
    
    
    
    343,830
    
    
    
    294,895
 
 (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. 24




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
        New product design and delivery
 Grow our domestic business with new opportunities.
 Further develop our international businesses.
 Develop our infrastructure to support continued growth.
   25




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Net sales
    i.e.,
   26




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Gross profit
     Selling expenses
  General and administrative expenses
   27




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Interest income
  Interest expense
  Other income (expense)
  Income taxes
    Minority interest in net loss of consolidated subsidiary
   Net sales
  28




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Gross profit
     29




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Selling expenses
  General and administrative expenses
  Interest income
  Interest expense
  Other income (expense)
  Income taxes
     30




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Payments Due by Period (In Thousands)Less than
    
    
    One to
    
    
    Three to
    
    
    More ThanOne
    
    
    Three
    
    
    Five
    
    
    FiveTotal
    
    
    Year
    
    
    Years
    
    
    Years
    
    
    YearsOther long-term debt
    
    $
    19,597
    
    
    $
    1,961
    
    
    $
    17,636
    
    
    
    
    
    
    
    Operating lease obligations (1)
    
    
    549,077
    
    
    
    67,849
    
    
    
    138,471
    
    
    $
    102,352
    
    
    $
    240,405Purchase obligations (2)
    
    
    166,896
    
    
    
    166,896
    
    
    
    
    
    
    
    
    
    
    
    Construction contract
    
    
    638
    
    
    
    638
    
    
    
    
    
    
    
    
    
    
    
    Warehousing equipment (3)
    
    
    61,884
    
    
    
    61,884
    
    
    
    
    
    
    
    
    
    
    
    Minimum payments related to our
licensing arrangements
    
    
    7,145
    
    
    
    1,737
    
    
    
    
    
    
    
    2,933
    
    
    
    2,475$
    805,237
    
    
    $
    300,965
    
    
    $
    156,107
    
    
    $
    105,285
    
    
    $
    242,880
 
 (1)
    
    Operating lease obligations consists primarily of real property leases for our retail
stores, corporate offices and distribution centers. These leases frequently include options
that permit us to extend beyond the terms of the initial fixed term. Payments for these
lease terms are provided for by cash flows generated from operations or, if needed, by our
$150.0 million secured line of credit, for which no amounts were outstanding at December
31, 2008.(2)
    
    Purchase obligations include the following: (i) accounts payable balances for the
purchase of footwear of $79.6 million, (ii) outstanding letters of credit of $2.9 million
and (iii) open purchase commitments with our foreign manufacturers for $84.4 million. We
currently expect to fund these commitments with cash flows from operations and cash on
hand.(3)
    
    We plan to spend approximately $85.0 million for equipment relating to our new
warehouse in Moreno Valley, of which $23.1 million was incurred as of December 31, 2008.
We expect the remaining balance to be incurred in 2009, which we expect to fund with cash
flows from operations, investment balances and existing cash balances.       33




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Revenue Recognition .
   Allowance for bad debts, returns, sales allowances and customer chargebacks.
   Inventory write-downs .
 Valuation of long-lived assets .
 34




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
    
    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 .
 Uncertain tax positions Accounting for Uncertainty in Income
Taxesan interpretation of FASB Statement No. 109 Accounting for Income Taxes
 Foreign currency translation . Foreign Currency Translation
 35




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Stock-based compensation. Share-Based
Payment
      The
Hierarchy of Generally Accepted Accounting Principles . The Meaning of Present
Fairly in Conformity With Generally Accepted Accounting Principles
 Accounting for Convertible Debt Instruments That
May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants
 Disclosures about Derivative Instruments and
Hedging Activities
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Accounting for Derivative Instruments and Hedging
Activities
 Accounting for Noncontrolling Interests
 Applying the Acquisition Method
  ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   Market risk and interest rate fluctuations.
  Foreign exchange rate fluctuations
 37




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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
 PageREPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    
    39CONSOLIDATED BALANCE SHEETS
    
    
    41CONSOLIDATED STATEMENTS OF EARNINGS
    
    
    42CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME
    
    
    43CONSOLIDATED STATEMENTS OF CASH FLOWS
    
    
    44NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    
    
    45SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
    
    
    65
 38




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
       
 39




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
        
 40




---



##### Table of Contents



SKECHERS U.S.A., INC.
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands)
 December 31,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    114,941
    
    
    $
    199,516Short-term investments
    
    
    
    
    
    
    104,500Trade accounts receivable, less allowances of $14,880 in 2008 and $10,284 in 2007
    
    
    175,064
    
    
    
    167,406Other receivables
    
    
    7,816
    
    
    
    10,520Total receivables
    
    
    182,880
    
    
    
    177,926Inventories
    
    
    261,209
    
    
    
    204,211Prepaid expenses and other current assets
    
    
    31,022
    
    
    
    13,993Deferred tax assets
    
    
    11,955
    
    
    
    8,594Total current assets
    
    
    602,007
    
    
    
    708,740Property and equipment, at cost, less accumulated depreciation and amortization
    
    
    157,757
    
    
    
    98,400Intangible assets, less accumulated amortization
    
    
    5,407
    
    
    
    78Deferred tax assets
    
    
    18,158
    
    
    
    13,983Long-term marketable securities
    
    
    81,925
    
    
    
    Other assets, at cost
    
    
    11,062
    
    
    
    6,776TOTAL ASSETS
    
    $
    876,316
    
    
    $
    827,977LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Current installments of long-term borrowings
    
    
    572
    
    
    
    437Accounts payable
    
    
    164,643
    
    
    
    164,466Accrued expenses
    
    
    23,021
    
    
    
    19,949Total current liabilities
    
    
    188,236
    
    
    
    184,852Long-term borrowings, excluding current installments
    
    
    16,188
    
    
    
    16,462Total liabilities
    
    
    204,424
    
    
    
    201,314Minority interest
    
    
    3,199
    
    
    
    Commitments and contingenciesStockholders equity:Preferred Stock, $.001 par value; 10,000 authorized; none issued and outstanding
    
    
    
    
    
    
    Class A Common Stock, $.001 par value; 100,000 shares authorized; 33,410 and
32,992 shares issued and outstanding at December 31, 2008 and 2007, respectively
    
    
    33
    
    
    
    33Class B Common Stock, $.001 par value; 60,000 shares authorized; 12,782 and
12,852 shares issued and outstanding at December 31, 2008 and 2007, respectively
    
    
    13
    
    
    
    13Additional paid-in capital
    
    
    264,200
    
    
    
    258,084Accumulated other comprehensive income
    
    
    (4,719
    )
    
    
    14,763Retained earnings
    
    
    409,166
    
    
    
    353,770Total stockholders equity
    
    
    668,693
    
    
    
    626,663TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    876,316
    
    
    $
    827,977
  41




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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 31,2008
    
    
    2007
    
    
    2006Net sales
    
    $
    1,440,743
    
    
    $
    1,394,181
    
    
    $
    1,205,368Cost of sales
    
    
    844,821
    
    
    
    794,192
    
    
    
    682,022Gross profit
    
    
    595,922
    
    
    
    599,989
    
    
    
    523,346Royalty income, net
    
    
    2,461
    
    
    
    4,179
    
    
    
    4,114598,383
    
    
    
    604,168
    
    
    
    527,460Operating expenses:Selling
    
    
    126,890
    
    
    
    126,527
    
    
    
    109,886General and administrative
    
    
    413,601
    
    
    
    364,711
    
    
    
    305,030540,491
    
    
    
    491,238
    
    
    
    414,916Earnings from operations
    
    
    57,892
    
    
    
    112,930
    
    
    
    112,544Other income (expense):Interest income
    
    
    7,337
    
    
    
    10,040
    
    
    
    8,351Interest expense
    
    
    (4,606
    )
    
    
    (4,763
    )
    
    
    (9,227
    )Other, net
    
    
    120
    
    
    
    98
    
    
    
    9802,851
    
    
    
    5,375
    
    
    
    104Earnings before taxes and minority interest
    
    
    60,743
    
    
    
    118,305
    
    
    
    112,648Income tax expense
    
    
    7,258
    
    
    
    42,619
    
    
    
    41,654Minority interest in loss of consolidated subsidiary
    
    
    (1,911
    )
    
    
    
    
    
    
    Net earnings
    
    $
    55,396
    
    
    $
    75,686
    
    
    $
    70,994Net earnings per share:Basic
    
    $
    1.20
    
    
    $
    1.67
    
    
    $
    1.73Diluted
    
    $
    1.19
    
    
    $
    1.63
    
    
    $
    1.59Weighted average shares:Basic
    
    
    46,031
    
    
    
    45,262
    
    
    
    41,079Diluted
    
    
    46,708
    
    
    
    46,741
    
    
    
    46,139
  42




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##### Table of Contents



SKECHERS U.S.A., INC.
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME
 (In thousands)
 SHARES
    
    
    AMOUNT
    
    
    
    
    
    
    ACCUMULATEDCLASS A
    
    
    CLASS B
    
    
    CLASS A
    
    
    CLASS B
    
    
    ADDITIONAL
    
    
    OTHER
    
    
    
    
    
    
    TOTALCOMMON
    
    
    COMMON
    
    
    COMMON
    
    
    COMMON
    
    
    PAID-IN
    
    
    COMPREHENSIVE
    
    
    RETAINED
    
    
    STOCKHOLDERSSTOCK
    
    
    STOCK
    
    
    STOCK
    
    
    STOCK
    
    
    CAPITAL
    
    
    INCOME
    
    
    EARNINGS
    
    
    EQUITYBalance at December 31, 2005
    
    
    23,382
    
    
    
    16,651
    
    
    $
    23
    
    
    $
    17
    
    
    $
    126,274
    
    
    $
    7,039
    
    
    $
    210,477
    
    
    $
    343,830Comprehensive income:Net earnings Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70,994
    
    
    
    70,994Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,161
    
    
    
    
    
    
    
    4,161Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,155Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,029
    
    
    
    
    
    
    
    
    
    
    
    2,029Proceeds from issuance of common
stock under the employee stock
purchase plan
    
    
    122
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1,907
    
    
    
    
    
    
    
    
    
    
    
    1,908Proceeds from issuance of common
stock under the employee stock option
plan
    
    
    1,716
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    17,054
    
    
    
    
    
    
    
    
    
    
    
    17,055Tax benefit of stock options exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,110
    
    
    
    
    
    
    
    
    
    
    
    9,110Conversion of Class B Common Stock
into Class A Common Stock
    
    
    2,883
    
    
    
    (2,883
    )
    
    
    3
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at December 31, 2006
    
    
    28,103
    
    
    
    13,768
    
    
    $
    28
    
    
    $
    14
    
    
    $
    156,374
    
    
    $
    11,200
    
    
    $
    281,471
    
    
    $
    449,087Comprehensive income:Net earnings Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,686
    
    
    
    75,686Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,563
    
    
    
    
    
    
    
    3,563Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79,249Cumulative effect of accounting
change  adjustment to retained
earnings upon adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,387
    )
    
    
    (3,387
    )Redemption of convertible
subordinated notes
    
    
    3,368
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    88,743
    
    
    
    
    
    
    
    
    
    
    
    88,746Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,081
    
    
    
    
    
    
    
    
    
    
    
    1,081Proceeds from issuance of common
stock under the employee stock
purchase plan
    
    
    99
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,066
    
    
    
    
    
    
    
    
    
    
    
    2,066Proceeds from issuance of common
stock under the employee stock option
plan
    
    
    506
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    6,126
    
    
    
    
    
    
    
    
    
    
    
    6,127Tax benefit of stock options exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,694
    
    
    
    
    
    
    
    
    
    
    
    3,694Conversion of Class B Common Stock
into Class A Common Stock
    
    
    916
    
    
    
    (916
    )
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at December 31, 2007
    
    
    32,992
    
    
    
    12,852
    
    
    $
    33
    
    
    $
    13
    
    
    $
    258,084
    
    
    $
    14,763
    
    
    $
    353,770
    
    
    $
    626,663Comprehensive income:Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,396
    
    
    
    55,396Net unrealized gain (loss) on
investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,151
    )
    
    
    
    
    
    
    (8,151
    )Foreign currency
translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,331
    )
    
    
    
    
    
    
    ( 11,331
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,914Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,337
    
    
    
    
    
    
    
    
    
    
    
    2,337Proceeds from issuance of common
stock under the employee stock
purchase plan
    
    
    132
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,780
    
    
    
    
    
    
    
    
    
    
    
    1,780Proceeds from issuance of common
stock under the employee stock option
plan
    
    
    216
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,876
    
    
    
    
    
    
    
    
    
    
    
    1,876Tax benefit of stock options exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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
  43




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##### Table of Contents



SKECHERS U.S.A., INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 Years ended December 31,2008
    
    
    2007
    
    
    2006Cash flows from operating activities:Net earnings
    
    $
    55,396
    
    
    $
    75,686
    
    
    $
    70,994Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:Minority interest
    
    
    (1,911
    )
    
    
    
    
    
    
    Depreciation and amortization of property and equipment
    
    
    17,069
    
    
    
    17,220
    
    
    
    16,203Amortization of deferred financing costs
    
    
    
    
    
    
    95
    
    
    
    765Amortization of intangible assets
    
    
    674
    
    
    
    437
    
    
    
    502Provision for bad debts and returns
    
    
    10,787
    
    
    
    1,610
    
    
    
    4,591Tax benefits from stock-based compensation
    
    
    123
    
    
    
    1,456
    
    
    
    4,144Non cash stock compensation
    
    
    2,337
    
    
    
    1,081
    
    
    
    2,030Provision for deferred income taxes
    
    
    (1,988
    )
    
    
    (1,102
    )
    
    
    (6,382
    )Loss on disposal of equipment
    
    
    1,843
    
    
    
    272
    
    
    
    299(Increase) decrease in assets:Receivables
    
    
    (27,462
    )
    
    
    7,948
    
    
    
    (47,994
    )Inventories
    
    
    (58,240
    )
    
    
    (3,045
    )
    
    
    (64,364
    )Prepaid expenses and other current assets
    
    
    (17,609
    )
    
    
    1,417
    
    
    
    (3,530
    )Other assets
    
    
    (6,221
    )
    
    
    (1,671
    )
    
    
    1,340Increase (decrease) in liabilities:Accounts payable
    
    
    385
    
    
    
    2,956
    
    
    
    49,563Accrued expenses
    
    
    2,988
    
    
    
    (3,005
    )
    
    
    (2,122
    )Net cash provided (used in) by operating activities
    
    
    (21,829
    )
    
    
    101,355
    
    
    
    26,039Cash flows used in investing activities:Capital expenditures
    
    
    (72,461
    )
    
    
    (31,175
    )
    
    
    (27,560
    )Purchases of investments
    
    
    (11,725
    )
    
    
    (249,450
    )
    
    
    (113,100
    )Maturities of investments
    
    
    20,600
    
    
    
    204,950
    
    
    
    53,100Cash paid for acquisitions
    
    
    (4,640
    )
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (68,226
    )
    
    
    (75,675
    )
    
    
    (87,560
    )Cash flows from financing activities:Net proceeds from the issuances of stock through employee
stock purchase plan and the exercise of stock options
    
    
    3,656
    
    
    
    8,193
    
    
    
    18,963Contribution from minority interest holder of consolidated entity
    
    
    5,000
    
    
    
    
    
    
    
    Excess tax benefits from stock-based compensation
    
    
    
    
    
    
    2,238
    
    
    
    4,966Payments on long-term debt
    
    
    (99
    )
    
    
    (520
    )
    
    
    (1,008
    )Net cash provided by financing activities
    
    
    8,557
    
    
    
    9,911
    
    
    
    22,921Net increase (decrease) in cash and cash equivalents
    
    
    (81,498
    )
    
    
    35,591
    
    
    
    (38,600
    )Effect of exchange rates on cash and cash equivalents
    
    
    (3,077
    )
    
    
    3,440
    
    
    
    2,078Cash and cash equivalents at beginning of year
    
    
    199,516
    
    
    
    160,485
    
    
    
    197,007Cash and cash equivalents at end of year
    
    $
    114,941
    
    
    $
    199,516
    
    
    $
    160,485Supplemental disclosures of cash flow information:Cash paid during the year for:Interest
    
    $
    4,902
    
    
    $
    4,714
    
    
    $
    8,560Income taxes
    
    
    17,834
    
    
    
    41,481
    
    
    
    47,064
    44




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##### Table of Contents



SKECHERS U.S.A., INC
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2008, 2007 and 2006
 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
             45




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##### Table of Contents



46




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##### Table of Contents



Buildings
    
    20 yearsBuilding improvements
    
    10 yearsFurniture, fixtures and equipment
    
    5 yearsLeasehold improvements
    
    Useful life or remaining lease term, whichever is shorter
   2008
    
    
    2007Intellectual property
    
    $
    6,800
    
    
    $
    3,300Goodwill
    
    
    1,575
    
    
    
    Other intangibles
    
    
    840
    
    
    
    Less accumulated amortization
    
    
    (3,808
    )
    
    
    (3,222
    )Total Intangible Assets
    
    $
    5,407
    
    
    $
    78
       47




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##### Table of Contents



Years Ended December 31,Basic earnings per share
    
    2008
    
    2007
    
    2006Net earnings
    
    $
    55,396
    
    
    $
    75,686
    
    
    $
    70,994Weighted average common shares outstanding
    
    
    46,031
    
    
    
    45,262
    
    
    
    41,079Basic earnings per share
    
    $
    1.20
    
    
    $
    1.67
    
    
    $
    1.73
 Years Ended December 31,Diluted earnings per share
    
    2008
    
    
    2007
    
    
    2006Net earnings
    
    $
    55,396
    
    
    $
    75,686
    
    
    $
    70,994After tax effect of interest expense on
4.50% convertible subordinated notes
    
    
    
    
    
    
    361
    
    
    
    2,553Earnings for purposes of
computing diluted earnings per share
    
    $
    55,396
    
    
    $
    76,047
    
    
    $
    73,547Weighted average common shares outstanding
    
    
    46,031
    
    
    
    45,262
    
    
    
    41,079Dilutive stock options
    
    
    677
    
    
    
    1,121
    
    
    
    1,594Weighted average assumed conversion of
4.50% convertible subordinated notes
    
    
    
    
    
    
    358
    
    
    
    3,466Weighted average common shares outstanding
    
    
    46,708
    
    
    
    46,741
    
    
    
    46,139Diluted earnings per share
    
    $
    1.19
    
    
    $
    1.63
    
    
    $
    1.59
        The Hierarchy of Generally Accepted Accounting
Principles. The Meaning of Present Fairly in Conformity With
Generally Accepted Accounting Principles
 Accounting for Convertible Debt Instruments That
May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) Accounting for
 48




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##### Table of Contents



Convertible Debt and Debt Issued with Stock Purchase Warrants.
 Disclosures about Derivative Instruments and
Hedging Activities Accounting for Derivative Instruments and Hedging Activities
 Accounting for Noncontrolling Interests
 Applying the Acquisition Method
 (2) INVESTMENTS
    49




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##### Table of Contents



(3) PROPERTY AND EQUIPMENT
  2008
    
    
    2007Land
    
    $
    28,951
    
    
    $
    14,358Buildings and improvements
    
    
    88,181
    
    
    
    56,012Furniture, fixtures and equipment
    
    
    92,209
    
    
    
    85,354Leasehold improvements
    
    
    98,140
    
    
    
    79,377Total property and equipment
    
    
    307,481
    
    
    
    235,101Less accumulated depreciation and amortization
    
    
    149,724
    
    
    
    136,701Property and equipment, net
    
    $
    157,757
    
    
    $
    98,400
  (4) ACCRUED EXPENSES
  2008
    
    
    2007Accrued inventory purchases
    
    $
    5,913
    
    
    $
    3,937Accrued payroll and related taxes
    
    
    17,108
    
    
    
    14,919Income taxes payable
    
    
    
    
    
    
    1,058Accrued interest
    
    
    
    
    
    
    35Accrued expenses
    
    $
    23,021
    
    
    $
    19,949
 (5) SHORT-TERM BORROWINGS OR LINE OF CREDIT
  50




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##### Table of Contents



(6) LONG-TERM BORROWINGS
  2008
    
    
    2007Note payable to bank, due in monthly
installments of $82.2 (includes
principal and interest), fixed rate
interest at 7.79%, secured by property,
balloon payment of $8,716 due January
2011
    
    $
    9,306
    
    
    $
    9,557Note 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 $6,776 due February
2011
    
    
    7,156
    
    
    
    7,268Capital lease obligations
    
    
    298
    
    
    
    74Subtotal
    
    
    16,760
    
    
    
    16,899Less current installments
    
    
    572
    
    
    
    437Total long-term debt
    
    $
    16,188
    
    
    $
    16,462
  2009
    
    $
    5722010
    
    
    5472011
    
    
    15,641$
    16,760
  (7) STOCK COMPENSATION
    51




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##### Table of Contents



2006Dividend yield
    
    
    Expected volatility
    
    
    62
    %Risk-free interest rate
    
    
    4.52
    %Expected life of option
    
    
    7
    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
    
    
    $
    16.97
  52




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##### Table of Contents



WEIGHTEDSHARES
    
    
    OPTION EXERCISE PRICEOutstanding at December 31, 2005
    
    
    4,209,437
    
    
    $
    10.98Granted
    
    
    15,000
    
    
    
    19.49Exercised
    
    
    (1,711,945
    )
    
    
    9.96Cancelled
    
    
    (26,910
    )
    
    
    10.35Outstanding at December 31, 2006
    
    
    2,485,582
    
    
    
    11.74Granted
    
    
    Exercised
    
    
    (501,874
    )
    
    
    12.23Cancelled
    
    
    (21,952
    )
    
    
    16.86Outstanding at December 31, 2007
    
    
    1,961,756
    
    
    
    11.56Granted
    
    
    Exercised
    
    
    (206,844
    )
    
    
    9.06Cancelled
    
    
    (15,191
    )
    
    
    19.37Outstanding at December 31, 2008
    
    
    1,739,721
    
    
    $
    11.79Nonvested shares and options available for grant at
December 31, 2008
    
    
    7,287,882
  OPTIONS OUTSTANDING
    
    OPTIONS EXERCISABLEWEIGHTEDNUMBER
    
    WEIGHTED
    
    WEIGHTED
    
    NUMBER
    
    AVERAGERANGE OF
    
    OUTSTANDING
    
    AVERAGE REMAINING
    
    AVERAGE
    
    EXERCISABLE AT
    
    EXERCISEEXERCISE PRICE
    
    DECEMBER 31, 2008
    
    CONTRACTUAL LIFE
    
    EXERCISE PRICE
    
    DECEMBER 31, 2008
    
    PRICE$3.94 to $5.90
    
    
    28,749
    
    
    1.1 years
    
    $
    3.94
    
    
    
    28,749
    
    
    $
    3.94$6.95 to $9.28
    
    
    606,774
    
    
    4.3 years
    
    
    7.47
    
    
    
    606,774
    
    
    
    7.47$10.58 to $15.50
    
    
    947,482
    
    
    2.0 years
    
    
    12.83
    
    
    
    944,232
    
    
    
    12.83$19.18 to $24.00
    
    
    156,716
    
    
    2.3 years
    
    
    23.69
    
    
    
    156,716
    
    
    
    23.691,739,721
    
    
    2.8 years
    
    $
    11.79
    
    
    
    1,736,471
    
    
    $
    11.79
   53




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##### Table of Contents



(8) STOCKHOLDERS EQUITY
     (9) TOTAL OTHER INCOME (EXPENSE), NET
  2008
    
    
    2007
    
    
    2006Gain (loss) on foreign currency transactions
    
    $
    307
    
    
    $
    (295
    )
    
    $
    116Legal settlements
    
    
    (187
    )
    
    
    393
    
    
    
    864Total other income, net
    
    $
    120
    
    
    $
    98
    
    
    $
    980
 54




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##### Table of Contents



(10) INCOME TAXES
  2008
    
    
    2007
    
    
    2006Federal:Current
    
    $
    9,026
    
    
    $
    33,354
    
    
    $
    38,252Deferred
    
    
    (6,714
    )
    
    
    (301
    )
    
    
    (4,451
    )Total federal
    
    
    2,312
    
    
    
    33,053
    
    
    
    33,801State:Current
    
    
    3,654
    
    
    
    7,255
    
    
    
    7,398Deferred
    
    
    (1,643
    )
    
    
    (66
    )
    
    
    (586
    )Total state
    
    
    2,011
    
    
    
    7,189
    
    
    
    6,812Foreign :Current
    
    
    2,448
    
    
    
    2,686
    
    
    
    2,192Deferred
    
    
    487
    
    
    
    (309
    )
    
    
    (1,151
    )Total foreign
    
    
    2,935
    
    
    
    2,377
    
    
    
    1,041Total income taxes
    
    $
    7,258
    
    
    $
    42,619
    
    
    $
    41,654
  2008
    
    
    2007
    
    
    2006Expected income tax expense
    
    $
    21,260
    
    
    $
    41,407
    
    
    $
    39,427State income tax, net of federal benefit
    
    
    1,710
    
    
    
    3,963
    
    
    
    4,031Rate differential on foreign income
    
    
    (10,697
    )
    
    
    (9,699
    )
    
    
    (4,820
    )Change in unrecognized tax benefits
    
    
    (7,896
    )
    
    
    7,024
    
    
    
    3,393Exempt income
    
    
    (1,241
    )
    
    
    (1,026
    )
    
    
    (260
    )Non-deductible expenses
    
    
    188
    
    
    
    464
    
    
    
    871Change in valuation allowance
    
    
    3,252
    
    
    
    194
    
    
    
    (967
    )Other
    
    
    682
    
    
    
    292
    
    
    
    (21
    )Total provision for income taxes
    
    $
    7,258
    
    
    $
    42,619
    
    
    $
    41,654
  DEFERRED TAX ASSETS:
    
    2008
    
    
    2007Deferred tax assets  current:Inventory adjustments
    
    $
    5,337
    
    
    $
    2,555Accrued expenses
    
    
    6,658
    
    
    
    6,540Allowances for bad debts and
chargebacks
    
    
    3,401
    
    
    
    2,570Total current assets
    
    
    15,396
    
    
    
    11,665Deferred tax assets  long term:Depreciation on property and equipment
    
    
    10,735
    
    
    
    11,441Unrealized loss on securities
    
    
    5,549
    
    
    
    Loss carryforwards
    
    
    5,273
    
    
    
    3,133Stock-based compensation
    
    
    535
    
    
    
    91Valuation allowance
    
    
    (3,934
    )
    
    
    (682
    )Total long term assets
    
    
    18,158
    
    
    
    13,983Total deferred tax assets
    
    
    33,554
    
    
    
    25,648Deferred tax liabilities  current:Prepaid expenses
    
    
    3,441
    
    
    
    3,071Total deferred tax liabilities
    
    
    3,441
    
    
    
    3,071Net deferred tax assets
    
    $
    30,113
    
    
    $
    22,577
 55




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##### Table of Contents



Balance as of January 1, 2008
    
    $
    18,698Additions for current year tax positions
    
    
    317Additions for prior year tax positions
    
    
    Reductions for prior year tax positions
    
    
    Settlement of uncertain tax positions
    
    
    (6,537
    )Reductions related to lapse of statute of limitations
    
    
    (2,815
    )Balance at December 31, 2008
    
    $
    9,663
     56




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##### Table of Contents



(11) BUSINESS AND CREDIT CONCENTRATIONS
      (12) BENEFIT PLAN
   (13) COMMITMENTS AND CONTINGENCIES
   57




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##### Table of Contents



CAPITAL
    
    
    OPERATINGLEASES
    
    
    LEASESYear ending December 31:2009
    
    $
    178
    
    
    $
    67,8492010
    
    
    120
    
    
    
    73,3052011
    
    
    
    
    
    
    65,1662012
    
    
    
    
    
    
    55,5152013
    
    
    
    
    
    
    46,837Thereafter
    
    
    
    
    
    
    240,405$
    298
    
    
    $
    549,077
       58




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##### Table of Contents



(14) SEGMENT INFORMATION
  2008
    
    
    2007
    
    
    2006Net salesDomestic wholesale
    
    $
    807,047
    
    
    $
    831,235
    
    
    $
    772,920International wholesale
    
    
    332,503
    
    
    
    267,648
    
    
    
    183,687Retail
    
    
    283,128
    
    
    
    279,361
    
    
    
    237,390E-commerce
    
    
    18,065
    
    
    
    15,937
    
    
    
    11,371Total
    
    $
    1,440,743
    
    
    $
    1,394,181
    
    
    $
    1,205,368
 2008
    
    
    2007
    
    
    2006Gross profitDomestic wholesale
    
    $
    276,604
    
    
    $
    320,364
    
    
    $
    301,215International wholesale
    
    
    137,840
    
    
    
    99,759
    
    
    
    65,034Retail
    
    
    172,870
    
    
    
    171,758
    
    
    
    151,456E-commerce
    
    
    8,608
    
    
    
    8,108
    
    
    
    5,641Total
    
    $
    595,922
    
    
    $
    599,989
    
    
    $
    523,346
 2008
    
    
    2007Identifiable assetsDomestic wholesale
    
    $
    678,881
    
    
    $
    629,377International wholesale
    
    
    110,930
    
    
    
    118,195Retail
    
    
    86,236
    
    
    
    80,250E-commerce
    
    
    269
    
    
    
    155Total
    
    $
    876,316
    
    
    $
    827,977
 2008
    
    
    2007Additions to property, plant and equipmentDomestic wholesale
    
    $
    45,709
    
    
    $
    11,371International wholesale
    
    
    6,893
    
    
    
    1,346Retail
    
    
    19,859
    
    
    
    18,458Total
    
    $
    72,461
    
    
    $
    31,175
 59




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##### Table of Contents



2008
    
    
    2007
    
    
    2006Net Sales (1)United States
    
    $
    1,083,498
    
    
    $
    1,102,895
    
    
    $
    1,002,022Canada
    
    
    43,088
    
    
    
    38,060
    
    
    
    25,276Other International (2)
    
    
    314,157
    
    
    
    253,226
    
    
    
    178,070Total
    
    $
    1,440,743
    
    
    $
    1,394,181
    
    
    $
    1,205,368
 2008
    
    
    2007Long-lived AssetsUnited States
    
    $
    148,228
    
    
    $
    96,044Canada
    
    
    471
    
    
    
    343Other International (2)
    
    
    9,058
    
    
    
    2,013Total
    
    $
    157,757
    
    
    $
    98,400
 
 (1)
    
    The Company has subsidiaries in Canada, United Kingdom, Germany, France, Spain, Italy,
Netherlands, Brazil, Thailand and Malaysia that generate net sales within those respective
countries and in some cases the neighboring regions. The Company has joint ventures in China
and Hong Kong 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 Brazil, Malaysia, Thailand, China, Hong Kong, Switzerland,
United Kingdom, Germany, France, Spain, Italy, and Netherlands. (15) RELATED PARTY TRANSACTIONS
    60




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(16) SUMMARY OF QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
  2008
    
    MARCH 31
    
    JUNE 30
    
    SEPTEMBER 30
    
    DECEMBER 31Net sales
    
    $
    384,922
    
    
    $
    354,574
    
    
    $
    403,159
    
    
    $
    298,088Gross profit
    
    
    172,172
    
    
    
    157,193
    
    
    
    171,531
    
    
    
    95,026Net earnings (loss)
    
    
    32,844
    
    
    
    14,641
    
    
    
    28,289
    
    
    
    (20,378
    )Net earnings (loss)
per share:Basic
    
    $
    0.72
    
    
    $
    0.32
    
    
    $
    0.61
    
    
    $
    (0.44
    )Diluted
    
    
    0.70
    
    
    
    0.31
    
    
    
    0.60
    
    
    
    (0.44
    )
 2007
    
    MARCH 31
    
    JUNE 30
    
    SEPTEMBER 30
    
    DECEMBER 31Net sales
    
    $
    344,896
    
    
    $
    352,211
    
    
    $
    395,033
    
    
    $
    302,041Gross profit
    
    
    149,039
    
    
    
    152,028
    
    
    
    171,670
    
    
    
    127,252Net earnings
    
    
    23,900
    
    
    
    14,948
    
    
    
    24,744
    
    
    
    12,094Net earnings per share:Basic
    
    $
    0.54
    
    
    $
    0.33
    
    
    $
    0.54
    
    
    $
    0.26Diluted
    
    
    0.52
    
    
    
    0.32
    
    
    
    0.53
    
    
    
    0.26
 
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
    61




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Internal Control  Integrated Framework Internal Control- Integrated Framework,
      
 ITEM 9B. OTHER INFORMATION
   62




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63




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
  
 PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 1.
    
    Financial Statements: See Index to Consolidated Financial Statements and Financial
Statement Schedule in Part II, Item 8 on page 38 of this annual report on Form 10-K.
 2.
    
    Financial Statement Schedule: See Schedule IIValuation and Qualifying Accounts on page 65
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.
 64




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##### Table of Contents



SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
 (in thousands)
 Years Ended December 31, 2008, 2007 and 2006
 BALANCE AT
    
    CHARGED TO
    
    DEDUCTIONS
    
    BALANCEBEGINNING OF
    
    COSTS AND
    
    AND
    
    AT ENDDESCRIPTION
    
    PERIOD
    
    EXPENSES
    
    WRITE-OFFS
    
    OF PERIODYear-ended December 31, 2006:Allowance for chargebacks
    
    $
    623
    
    
    $
    1,237
    
    
    $
    (359
    )
    
    $
    1,501Allowance for doubtful accounts
    
    
    1,965
    
    
    
    1,307
    
    
    
    (573
    )
    
    
    2,699Reserve for sales returns and
allowances
    
    
    4,608
    
    
    
    2,047
    
    
    
    (297
    )
    
    
    6,358Year-ended December 31, 2007:Allowance for chargebacks
    
    $
    1,501
    
    
    $
    1,684
    
    
    $
    (613
    )
    
    $
    2,572Allowance for doubtful accounts
    
    
    2,699
    
    
    
    284
    
    
    
    (635
    )
    
    
    2,348Reserve for sales returns and
allowances
    
    
    6,358
    
    
    
    (358
    )
    
    
    (636
    )
    
    
    5,364Year-ended December 31, 2008:Allowance for chargebacks
    
    $
    2,572
    
    
    $
    2,940
    
    
    $
    (1,598
    )
    
    $
    3,914Allowance for doubtful accounts
    
    
    2,348
    
    
    
    5,495
    
    
    
    (3,421
    )
    
    
    4,422Reserve for sales returns and
allowances
    
    
    5,364
    
    
    
    2,352
    
    
    
    (1,172
    )
    
    
    6,544
 BALANCE AT
    
    CHARGED TO
    
    DEDUCTIONS
    
    BALANCEBEGINNING OF
    
    COSTS AND
    
    AND
    
    AT ENDDESCRIPTION
    
    PERIOD
    
    EXPENSES
    
    WRITE-OFFS
    
    OF PERIODYear-ended December 31, 2006:Reserve for shrinkage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reserve for obsolescence
    
    $
    536
    
    
    $
    97
    
    
    
    
    
    
    $
    633Year-ended December 31, 2007:Reserve for shrinkage
    
    
    
    
    
    $
    110
    
    
    
    
    
    
    $
    110Reserve for obsolescence
    
    $
    633
    
    
    
    1,198
    
    
    
    
    
    
    
    1,831Year-ended December 31, 2008:Reserve for shrinkage
    
    $
    110
    
    
    $
    55
    
    
    
    
    
    
    $
    165Reserve for obsolescence
    
    
    1,831
    
    
    
    11,192
    
    
    
    
    
    
    
    13,023
  65




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##### Table of Contents



INDEX TO EXHIBITS
 EXHIBITNUMBER
    
    DESCRIPTION OF EXHIBIT3.1
    
    Amended and Restated Certificate of Incorporation dated April 29,
1999 (incorporated by reference to exhibit number 3.1 of the
Registrants Registration Statement on Form S-1, as amended (File
No. 333-60065), filed with the Securities and Exchange Commission
on May 12, 1999).3.2
    
    Bylaws dated May 28, 1998 (incorporated by reference to exhibit
number 3.2 of the Registrants Registration Statement on Form S-1
(File No. 333-60065) filed with the Securities and Exchange
Commission on July 29, 1998).3.2(a)
    
    Amendment to Bylaws dated as of April 8, 1999 (incorporated by
reference to exhibit number 3.2(a) of the Registrants Form 10-K
for the year ended December 31, 2005).3.2(b)
    
    Second Amendment to Bylaws dated as of December 18, 2007
(incorporated by reference to exhibit number 3.1 of the
Registrants Form 8-K filed with the Securities and Exchange
Commission on December 20, 2007).4.1
    
    Form of Specimen Class A Common Stock Certificate (incorporated
by reference to exhibit number 4.1 of the Registrants
Registration Statement on Form S-1, as amended (File No.
333-60065), filed with the Securities and Exchange Commission on
May 12, 1999).10.1**
    
    Amended and Restated 1998 Stock Option, Deferred Stock and
Restricted Stock Plan (incorporated by reference to exhibit
number 10.1 of the Registrants Registration Statement on Form
S-1 (File No. 333-60065) filed with the Securities and Exchange
Commission on July 29, 1998).10.1(a)**
    
    Amendment No. 1 to Amended and Restated 1998 Stock Option,
Deferred Stock and Restricted Stock Plan (incorporated by
reference to exhibit number 4.4 of the Registrants Registration
Statement on Form S-8 (File No. 333-71114), filed with the
Securities and Exchange Commission on October 5, 2001).10.1(b)**
    
    Amendment No. 2 to Amended and Restated 1998 Stock Option,
Deferred Stock and Restricted Stock Plan (incorporated by
reference to exhibit number 4.5 of the Registrants Registration
Statement on Form S-8 (File No. 333-135049), filed with the
Securities and Exchange Commission on June 15, 2006).10.1(c)**
    
    Amendment No. 3 to Amended and Restated 1998 Stock Option,
Deferred Stock and Restricted Stock Plan (incorporated by
reference to exhibit number 10.1 of the Registrants Form 8-K
filed with the Securities and Exchange Commission on February 23,
2007).10.2**
    
    2006 Annual Incentive Compensation Plan (incorporated by
reference to Appendix A of the Registrants Definitive Proxy
Statement filed with the Securities and Exchange Commission on
May 1, 2006).10.3**
    
    2007 Incentive Award Plan (incorporated by reference to exhibit
number 10.1 of the Registrants Form 8-K filed with the
Securities and Exchange Commission on May 24, 2007).10.4**
    
    Form of Restricted Stock Agreement under 2007 Incentive Award
Plan (incorporated by reference to exhibit number 10.3 of the
Registrants Form 10-K for the year ended December 31, 2007).10.5**
    
    2008 Employee Stock Purchase Plan (incorporated by reference to
exhibit number 10.2 of the Registrants Form 8-K filed with the
Securities and Exchange Commission on May 24, 2007).10.6**
    
    Indemnification Agreement dated June 7, 1999 between the
Registrant and its directors and executive officers (incorporated
by reference to exhibit number 10.6 of the Registrants Form 10-K
for the year ended December 31, 1999).10.6(a)**
    
    List of Registrants directors and executive officers who entered
into Indemnification Agreement referenced in Exhibit 10.6 with
the Registrant (incorporated by reference to exhibit number
10.6(a) of the Registrants Form 10-K for the year ended December
31, 2005).
 66




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##### Table of Contents



EXHIBITNUMBER
    
    DESCRIPTION OF EXHIBIT10.7
    
    Registration Rights Agreement dated June 9, 1999, between the
Registrant, the Greenberg Family Trust and Michael Greenberg
(incorporated by reference to exhibit number 10.7 of the
Registrants Form 10-Q for the quarter ended June 30, 1999).10.8
    
    Tax Indemnification Agreement dated June 8, 1999, between the
Registrant and certain shareholders (incorporated by reference
to exhibit number 10.8 of the Registrants Form 10-Q for the
quarter ended June 30, 1999).10.9
    
    Second Amended and Restated Loan and Security Agreement, dated
May 31, 2006, by and among the Registrant and certain of its
subsidiaries that are also borrowers under the Agreement,
certain of its subsidiaries who are guarantors under the
Agreement, and certain lenders including The CIT
Group/Commercial Services, Inc., which acts as agent for the
lenders (incorporated by reference to exhibit number 10.1 of
the Registrants Form 8-K filed with the Securities and
Exchange Commission on June 6, 2006).10.10
    
    Promissory Note, dated December 27, 2000, between the
Registrant and Washington Mutual Bank, FA, for the purchase of
property located at 225 South Sepulveda Boulevard, Manhattan
Beach,
California (incorporated by reference to exhibit number 10.23
of the Registrants Form 10-K for the year ended December 31,
2000).10.11
    
    Loan Agreement, dated December 21, 2000, between Yale
Investments, LLC, and MONY Life Insurance Company, for the
purchase of property located at 1670 South Champagne Avenue,
Ontario, California (incorporated by reference to exhibit
number 10.25 of the Registrants Form 10-K for the year ended
December 31, 2000).10.12
    
    Promissory Note, dated December 21, 2000, between Yale
Investments, LLC, and MONY Life Insurance Company, for the
purchase of property located at 1670 Champagne Avenue, Ontario,
California (incorporated by reference to exhibit number 10.26
of the Registrants Form 10-K for the year ended December 31,
2000).10.13
    
    Agreement dated August 25, 2005 between Duncan Investments,
LLC, a wholly owned subsidiary of the Registrant, and Morley
Construction Company regarding 330 South Sepulveda Boulevard,
Manhattan Beach, California (incorporated by reference to
exhibit number 10.1 of the Registrants Form 8-K filed with the
Securities and Exchange Commission on August 29, 2005).10.14
    
    General Conditions of the Contract for Construction regarding
330 South Sepulveda Boulevard, Manhattan Beach, California
(incorporated by reference to exhibit number 10.2 of the
Registrants Form 8-K filed with the Securities and Exchange
Commission on August 29, 2005).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).10.16
    
    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).
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EXHIBITNUMBER
    
    DESCRIPTION OF EXHIBIT10.16(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 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
Cabot Industrial Properties, L.P., 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).10.17
    
    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).10.18
    
    Lease Agreement, dated February 8, 2002, between Skechers International, a subsidiary of the
Registrant, and ProLogis Belgium II SPRL, regarding ProLogis Park Liege Distribution Center
I in Liege, Belgium (incorporated by reference to exhibit number 10.29 of the Registrants
Form 10-K for the year ended December 31, 2002).10.19
    
    Lease Agreement dated September 25, 2007 between the Registrant and HF Logistics I, LLC,
regarding distribution facility in Moreno Valley, California (incorporated by reference to
exhibit number 10.1 of the Registrants Form 8-K filed with the Securities and Exchange
Commission on September 27, 2007).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 10.1 of the Registrants
Form 8-K filed with the Securities and Exchange Commission on May 27, 2008).10.21
    
    Addendum to Lease Agreement dated May 20, 2008 between Skechers EDC SPRL, a subsidiary of
the Registrant, and ProLogis Belgium III SPRL, regarding ProLogis Park Liege Distribution
Center I in Liege, Belgium (incorporated by reference to exhibit number 10.2 of the
Registrants Form 8-K filed with the Securities and Exchange Commission on May 27, 2008).21.1
    
    Subsidiaries of the Registrant.23.1
    
    Consent of Independent Registered Public Accounting Firm.31.1
    
    Certification of the Chief Executive Officer pursuant Securities Exchange Act Rule 13a-14(a).31.2
    
    Certification of the Chief Financial Officer pursuant Securities Exchange Act Rule 13a-14(a).32.1
    
    Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 
 **
    
    Management contract or compensatory plan or arrangement required to be filed as an exhibit. 68




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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
    
    Chief Executive Officer
    
    March 2, 2009Robert Greenberg
    
    (Principal
Executive Officer)/S/ MICHAEL GREENBERG
    
    President and Director
    
    March 2, 2009Michael Greenberg/S/ DAVID WEINBERG
    
    Executive Vice President, Chief Operating Officer
    
    March 2, 2009David Weinberg
    
    and
Director/S/ FREDERICK H. SCHNEIDER
    
    Chief Financial Officer
    
    March 2, 2009Frederick H. Schneider
    
    (Principal
Financial and Accounting Officer)/S/ JEFFREY GREENBERG
    
    Director
    
    March 2, 2009Jeffrey Greenberg/S/ J. GEYER KOSINSKI
    
    Director
    
    March 2, 2009J. Geyer Kosinski/S/ MORTON D. ERLICH
    
    Director
    
    March 2, 2009Morton D. Erlich/S/ RICHARD SISKIND
    
    Director
    
    March 2, 2009Richard Siskind
 69