##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 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
    
    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 Office)
    
    (Zip Code)
 (310) 318-3100
 (Registrants Telephone Number, Including Area Code)
 þ 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




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##### 



SKECHERS U.S.A., INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONItem 1. Condensed Consolidated Financial Statements (Unaudited):Condensed Consolidated Balance Sheets
    
    
    3Condensed Consolidated Statements of Earnings and Comprehensive Income
    
    
    4Condensed Consolidated Statements of Cash Flows
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    25Item 4. Controls and Procedures
    
    
    26PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    27Item 1A. Risk Factors
    
    
    27Item 4. Submission of Matters to a Vote of Security Holders
    
    
    28Item 6. Exhibits
    
    
    28Signatures
    
    
    30EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 KECHERS
U.S.A., INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (Unaudited)

(In thousands)
 June 30,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    145,622
    
    
    $
    199,516Short-term marketable securities
    
    
    
    
    
    
    104,500Trade accounts receivable, less allowances of $14,210 in 2008 and $10,284 in 2007
    
    
    232,853
    
    
    
    167,406Other receivables
    
    
    9,063
    
    
    
    10,520Total receivables
    
    
    241,916
    
    
    
    177,926Inventories
    
    
    234,152
    
    
    
    204,211Prepaid expenses and other current assets
    
    
    20,865
    
    
    
    13,993Deferred tax assets
    
    
    8,594
    
    
    
    8,594Total current assets
    
    
    651,149
    
    
    
    708,740Property and equipment, at cost, less accumulated depreciation and amortization
    
    
    126,932
    
    
    
    98,400Intangible assets, less accumulated amortization
    
    
    
    
    
    
    78Deferred tax assets
    
    
    15,977
    
    
    
    13,983Long-term marketable securities
    
    
    94,075
    
    
    
    Other assets, at cost
    
    
    23,271
    
    
    
    6,776TOTAL ASSETS
    
    $
    911,404
    
    
    $
    827,977LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Current installments of long-term borrowings
    
    
    206
    
    
    
    437Accounts payable
    
    
    185,154
    
    
    
    164,466Accrued expenses
    
    
    31,005
    
    
    
    19,949Total current liabilities
    
    
    216,365
    
    
    
    184,852Long-term borrowings, excluding current installments
    
    
    16,287
    
    
    
    16,462Total liabilities
    
    
    232,652
    
    
    
    201,314Minority interest
    
    
    2,620
    
    
    
    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; 33,305 and
32,992 shares issued and outstanding at June 30, 2008 and December 31,
2007, respectively
    
    
    33
    
    
    
    33Class B Common Stock, $.001 par value; 60,000 shares authorized; 12,802 and
12,852 shares issued and outstanding at June 30, 2008 and December 31, 2007,
respectively
    
    
    13
    
    
    
    13Additional paid-in capital
    
    
    263,084
    
    
    
    258,084Accumulated other comprehensive income
    
    
    11,747
    
    
    
    14,763Retained earnings
    
    
    401,255
    
    
    
    353,770Total stockholders equity
    
    
    676,132
    
    
    
    626,663TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    911,404
    
    
    $
    827,977
  3




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SKECHERS
U.S.A., INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
 (Unaudited)
(In thousands, except per share data)
 Three-Months Ended June 30,
    
    
    Six-Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net sales
    
    $
    354,574
    
    
    $
    352,211
    
    
    $
    739,496
    
    
    $
    697,107Cost of sales
    
    
    197,381
    
    
    
    200,183
    
    
    
    410,131
    
    
    
    396,040Gross profit
    
    
    157,193
    
    
    
    152,028
    
    
    
    329,365
    
    
    
    301,067Royalty income
    
    
    230
    
    
    
    1,193
    
    
    
    1,070
    
    
    
    2,394157,423
    
    
    
    153,221
    
    
    
    330,435
    
    
    
    303,461Operating expenses:Selling
    
    
    38,592
    
    
    
    40,950
    
    
    
    64,126
    
    
    
    67,791General and administrative
    
    
    98,857
    
    
    
    90,473
    
    
    
    198,079
    
    
    
    176,457137,449
    
    
    
    131,423
    
    
    
    262,205
    
    
    
    244,248Earnings from operations
    
    
    19,974
    
    
    
    21,798
    
    
    
    68,230
    
    
    
    59,213Other income (expense):Interest income
    
    
    1,835
    
    
    
    2,446
    
    
    
    4,294
    
    
    
    4,884Interest expense
    
    
    (1,347
    )
    
    
    (1,160
    )
    
    
    (2,353
    )
    
    
    (2,751
    )Other, net
    
    
    844
    
    
    
    (147
    )
    
    
    748
    
    
    
    (169
    )1,332
    
    
    
    1,139
    
    
    
    2,689
    
    
    
    1,964Earnings before income taxes and minority interest
    
    
    21,306
    
    
    
    22,937
    
    
    
    70,919
    
    
    
    61,177Income tax expense
    
    
    7,045
    
    
    
    7,989
    
    
    
    23,814
    
    
    
    22,329Minority interest in loss of consolidated subsidiary
    
    
    (380
    )
    
    
    
    
    
    
    (380
    )
    
    
    Net earnings
    
    $
    14,641
    
    
    $
    14,948
    
    
    $
    47,485
    
    
    $
    38,848Net earnings per share:Basic
    
    $
    0.32
    
    
    $
    0.33
    
    
    $
    1.03
    
    
    $
    0.87Diluted
    
    $
    0.31
    
    
    $
    0.32
    
    
    $
    1.02
    
    
    $
    0.84Weighted average shares:Basic
    
    
    46,000
    
    
    
    45,576
    
    
    
    45,941
    
    
    
    44,777Diluted
    
    
    46,810
    
    
    
    46,808
    
    
    
    46,737
    
    
    
    46,809Comprehensive income:Net earnings
    
    $
    14,641
    
    
    $
    14,948
    
    
    $
    47,485
    
    
    $
    38,848Unrealized loss on marketable securities, net of tax
    
    
    (2,559
    )
    
    
    
    
    
    
    (3,906
    )
    
    
    Gain (loss) foreign currency translation adjustment,
net of tax
    
    
    (159
    )
    
    
    1,861
    
    
    
    890
    
    
    
    (902
    )Total comprehensive income
    
    $
    11,923
    
    
    $
    16,809
    
    
    $
    44,469
    
    
    $
    37,946
  4




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SKECHERS
U.S.A., INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
(In thousands)
 Six-Months Ended June 30,2008
    
    
    2007Cash flows from operating activities:Net earnings
    
    $
    47,485
    
    
    $
    38,848Adjustments to reconcile net earnings to net cash provided
(used) by operating activities:Minority interest
    
    
    (380
    )
    
    
    Depreciation and amortization of property and equipment
    
    
    8,715
    
    
    
    8,185Amortization of deferred financing costs
    
    
    
    
    
    
    95Amortization of intangible assets
    
    
    119
    
    
    
    203Provision for bad debts and returns
    
    
    4,954
    
    
    
    2,709Tax benefits from stock-based compensation
    
    
    533
    
    
    
    3,110Non cash stock compensation
    
    
    1,127
    
    
    
    651Loss on disposal of equipment
    
    
    1,538
    
    
    
    55(Increase) decrease in assets:Receivables
    
    
    (68,316
    )
    
    
    (50,230
    )Inventories
    
    
    (29,841
    )
    
    
    (3,717
    )Prepaid expenses and other current assets
    
    
    (6,819
    )
    
    
    (2,127
    )Other assets
    
    
    (16,231
    )
    
    
    (46
    )Increase (decrease) in liabilities:Accounts payable
    
    
    19,655
    
    
    
    14,911Accrued expenses
    
    
    10,929
    
    
    
    (5,007
    )Net cash (used) provided by operating activities
    
    
    (26,532
    )
    
    
    7,640Cash flows used in investing activities:Capital expenditures
    
    
    (37,838
    )
    
    
    (17,301
    )Purchases of investments
    
    
    (11,725
    )
    
    
    (122,125
    )Maturities of investments
    
    
    16,250
    
    
    
    79,875Net cash used in investing activities
    
    
    (33,313
    )
    
    
    (59,551
    )Cash flows from financing activities:Net proceeds from the issuances of stock through employee stock
purchase plan and the exercise of stock options
    
    
    2,812
    
    
    
    6,662Payments on long-term debt
    
    
    (407
    )
    
    
    (362
    )Contribution from minority interest holder of consolidated entity
    
    
    3,000
    
    
    
    Excess tax benefits from stock-based compensation
    
    
    528
    
    
    
    287Net cash provided by financing activities
    
    
    5,933
    
    
    
    6,587Net decrease in cash and cash equivalents
    
    
    (53,912
    )
    
    
    (45,324
    )Effect of exchange rates on cash and cash equivalents
    
    
    18
    
    
    
    1,148Cash and cash equivalents at beginning of the period
    
    
    199,516
    
    
    
    160,485Cash and cash equivalents at end of the period
    
    $
    145,622
    
    
    $
    116,309Supplemental disclosures of cash flow information:Interest paid
    
    $
    2,527
    
    
    $
    2,498Income taxes paid
    
    
    13,875
    
    
    
    24,958
    5




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SKECHERS
U.S.A., INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 JUNE 30, 2008 and 2007
(Unaudited)
 (1) GENERAL
 Basis of Presentation
   Use of Estimates
  Minority interest
  Recent accounting pronouncements
 The Fair Value Option for
Financial Assets and Financial Liabilities, Including an amendment of FASB Statement No. 115
 6




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Fair Value Measurements
 (2) INVESTMENTS
     7




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(3) REVENUE RECOGNITION
   (4) OTHER COMPREHENSIVE INCOME
  (5) STOCK COMPENSATION
   WEIGHTED
    
    WEIGHTED AVERAGE
    
    AGGREGATEAVERAGE
    
    REMAINING
    
    INTRINSICSHARES
    
    EXERCISE PRICE
    
    CONTRACTUAL TERM
    
    VALUEOutstanding at December 31, 2007
    
    
    1,961,756
    
    
    $
    11.56Granted
    
    
    
    
    
    
    Exercised
    
    
    (192,404
    )
    
    
    9.07Forfeited
    
    
    (10,938
    )
    
    
    22.62Outstanding at June 30, 2008
    
    
    1,758,414
    
    
    
    11.76
    
    
    3.3 years
    
    $
    14,683,724Exercisable at June 30, 2008
    
    
    1,751,414
    
    
    
    11.75
    
    
    3.3 years
    
    $
    14,643,679
 8




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WEIGHTED AVERAGEGRANT-DATE FAIRSHARES
    
    VALUENonvested at December 31, 2007
    
    
    15,167
    
    
    $
    18.32Granted
    
    
    201,546
    
    
    
    17.16Vested
    
    
    (4,667
    )
    
    
    17.01Cancelled
    
    
    (5,928
    )
    
    
    17.16Nonvested at June 30, 2008
    
    
    206,118
    
    
    
    17.25
 (6) EARNINGS PER SHARE
   Three-Months Ended June 30,
    
    Six-Months Ended June 30,Basic earnings per share
    
    2008
    
    2007
    
    2008
    
    2007Net earnings
    
    $
    14,641
    
    
    $
    14,948
    
    
    $
    47,485
    
    
    $
    38,848Weighted average common shares outstanding
    
    
    46,000
    
    
    
    45,576
    
    
    
    45,941
    
    
    
    44,777Basic earnings per share
    
    $
    0.32
    
    
    $
    0.33
    
    
    $
    1.03
    
    
    $
    0.87
  Three-Months Ended June 30,
    
    
    Six-Months Ended June 30,Diluted earnings per share
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Net earnings
    
    $
    14,641
    
    
    $
    14,948
    
    
    $
    47,485
    
    
    $
    38,848After tax effect of interest expense on 4.50%
convertible subordinated notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    357Earnings for purposes of computing diluted
earnings per share
    
    $
    14,641
    
    
    $
    14,948
    
    
    $
    47,485
    
    
    $
    39,205Weighted average common shares outstanding
    
    
    46,000
    
    
    
    45,576
    
    
    
    45,941
    
    
    
    44,777Dilutive effect of stock options
    
    
    810
    
    
    
    1,232
    
    
    
    796
    
    
    
    1,307Weighted average shares to be issued assuming
conversion of 4.50% convertible subordinated
notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    725Weighted average common shares outstanding
    
    
    46,810
    
    
    
    46,808
    
    
    
    46,737
    
    
    
    46,809Diluted earnings per share
    
    $
    0.31
    
    
    $
    0.32
    
    
    $
    1.02
    
    
    $
    0.84
  9




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(7) INCOME TAXES
   (8) LINE OF CREDIT
  (9) LITIGATION
    10




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(10) STOCKHOLDERS EQUITY
  (11) SEGMENT AND GEOGRAPHIC REPORTING INFORMATION
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net salesDomestic wholesale
    
    $
    201,400
    
    
    $
    219,751
    
    
    $
    422,183
    
    
    $
    432,919International wholesale
    
    
    77,482
    
    
    
    59,774
    
    
    
    176,967
    
    
    
    131,331Retail
    
    
    71,174
    
    
    
    68,612
    
    
    
    131,752
    
    
    
    125,397E-commerce
    
    
    4,518
    
    
    
    4,074
    
    
    
    8,594
    
    
    
    7,460Total
    
    $
    354,574
    
    
    $
    352,211
    
    
    $
    739,496
    
    
    $
    697,107
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Gross profitDomestic wholesale
    
    $
    75,905
    
    
    $
    85,209
    
    
    $
    164,060
    
    
    $
    170,425International wholesale
    
    
    34,269
    
    
    
    21,672
    
    
    
    80,230
    
    
    
    48,893Retail
    
    
    44,762
    
    
    
    42,952
    
    
    
    80,806
    
    
    
    77,835E-commerce
    
    
    2,257
    
    
    
    2,195
    
    
    
    4,269
    
    
    
    3,914Total
    
    $
    157,193
    
    
    $
    152,028
    
    
    $
    329,365
    
    
    $
    301,067
 June 30, 2008
    
    
    December 31, 2007Identifiable assetsDomestic wholesale
    
    $
    681,667
    
    
    $
    629,377International wholesale
    
    
    146,025
    
    
    
    118,195Retail
    
    
    83,451
    
    
    
    80,250E-commerce
    
    
    261
    
    
    
    155Total
    
    $
    911,404
    
    
    $
    827,977
 11




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Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Additions to property and equipmentDomestic wholesale
    
    $
    15,047
    
    
    $
    1,917
    
    
    $
    23,729
    
    
    $
    7,711International wholesale
    
    
    547
    
    
    
    568
    
    
    
    736
    
    
    
    733Retail
    
    
    8,464
    
    
    
    5,760
    
    
    
    13,373
    
    
    
    8,857Total
    
    $
    24,058
    
    
    $
    8,245
    
    
    $
    37,838
    
    
    $
    17,301
   Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net sales (1)United States
    
    $
    269,662
    
    
    $
    286,112
    
    
    $
    549,953
    
    
    $
    555,166Canada
    
    
    11,360
    
    
    
    9,604
    
    
    
    24,304
    
    
    
    18,786Other International (2)
    
    
    73,552
    
    
    
    56,495
    
    
    
    165,239
    
    
    
    123,155Total
    
    $
    354,574
    
    
    $
    352,211
    
    
    $
    739,496
    
    
    $
    697,107
 June 30, 2008
    
    
    December 31, 2007Long-lived assetsUnited States
    
    $
    124,171
    
    
    $
    96,044Canada
    
    
    222
    
    
    
    343Other International (2)
    
    
    2,539
    
    
    
    2,013Total
    
    $
    126,932
    
    
    $
    98,400
 
 (1)
    
    The Company has subsidiaries in Canada, United Kingdom, Germany, France, Spain, Italy,
Netherlands, Brazil, Malaysia and Thailand that generate net sales within those respective
countries and in some cases the neighboring regions. The Company also has a joint venture in
China that generates net sales from that country. 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, Brazil, Malaysia, Thailand and China. (12) BUSINESS AND CREDIT CONCENTRATIONS
  12




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
     14




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Three-Months Ended June 30,2008
    
    
    2007Percentage of revenues by segmentDomestic wholesale
    
    
    56.8
    %
    
    
    62.4
    %International wholesale
    
    
    21.8
    %
    
    
    17.0
    %Retail
    
    
    20.1
    %
    
    
    19.5
    %E-commerce
    
    
    1.3
    %
    
    
    1.1
    %Total
    
    
    100
    %
    
    
    100
    %
   15




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Three-Months Ended June 30,
    
    
    Six-Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net sales
    
    $
    354,574
    
    
    
    100.0
    %
    
    $
    352,211
    
    
    
    100.0
    %
    
    $
    739,496
    
    
    
    100.0
    %
    
    $
    697,107
    
    
    
    100.0
    %Cost of sales
    
    
    197,381
    
    
    
    55.7
    
    
    
    200,183
    
    
    
    56.8
    
    
    
    410,131
    
    
    
    55.5
    
    
    
    396,040
    
    
    
    56.8Gross profit
    
    
    157,193
    
    
    
    44.3
    
    
    
    152,028
    
    
    
    43.2
    
    
    
    329,365
    
    
    
    44.5
    
    
    
    301,067
    
    
    
    43.2Royalty income
    
    
    230
    
    
    
    0.1
    
    
    
    1,193
    
    
    
    0.3
    
    
    
    1,070
    
    
    
    0.2
    
    
    
    2,394
    
    
    
    0.3157,423
    
    
    
    44.4
    
    
    
    153,221
    
    
    
    43.5
    
    
    
    330,435
    
    
    
    44.7
    
    
    
    303,461
    
    
    
    43.5Operating expenses:Selling
    
    
    38,592
    
    
    
    10.9
    
    
    
    40,950
    
    
    
    11.6
    
    
    
    64,126
    
    
    
    8.7
    
    
    
    67,791
    
    
    
    9.7General and administrative
    
    
    98,857
    
    
    
    27.9
    
    
    
    90,473
    
    
    
    25.7
    
    
    
    198,079
    
    
    
    26.8
    
    
    
    176,457
    
    
    
    25.3137,449
    
    
    
    38.8
    
    
    
    131,423
    
    
    
    37.3
    
    
    
    262,205
    
    
    
    35.5
    
    
    
    244,248
    
    
    
    35.0Earnings from operations
    
    
    19,974
    
    
    
    5.6
    
    
    
    21,798
    
    
    
    6.2
    
    
    
    68,230
    
    
    
    9.2
    
    
    
    59,213
    
    
    
    8.5Interest income, net
    
    
    488
    
    
    
    0.1
    
    
    
    1,286
    
    
    
    0.3
    
    
    
    1,941
    
    
    
    0.3
    
    
    
    2,133
    
    
    
    0.3Other, net
    
    
    844
    
    
    
    0.2
    
    
    
    (147
    )
    
    
    
    
    
    
    748
    
    
    
    0.1
    
    
    
    (169
    )
    
    
    Earnings before income taxes
    
    
    21,306
    
    
    
    6.0
    
    
    
    22,937
    
    
    
    6.5
    
    
    
    70,919
    
    
    
    9.6
    
    
    
    61,177
    
    
    
    8.8Income taxes
    
    
    7,045
    
    
    
    2.0
    
    
    
    7,989
    
    
    
    2.3
    
    
    
    23,814
    
    
    
    3.2
    
    
    
    22,329
    
    
    
    3.2Minority interest in loss of
consolidated subsidiary
    
    
    (380
    )
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    (380
    )
    
    
    
    
    
    
    
    
    
    
    Net earnings
    
    $
    14,641
    
    
    
    4.1
    %
    
    $
    14,948
    
    
    
    4.2
    %
    
    $
    47,485
    
    
    
    6.4
    %
    
    $
    38,848
    
    
    
    5.6
    %
  Net sales
    16




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Gross profit
     17




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Selling expenses
   General and administrative expenses
   Interest income
  Interest expense
  Income taxes
  18




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Minority interest in net loss of consolidated subsidiary
   Net sales
     19




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Gross profit
    Selling expenses
  General and administrative expenses
  20




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Interest income
  Interest expense
  Income taxes
  Minority interest in net loss of consolidated subsidiary
     21




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22




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The Hierarchy of Generally Accepted Accounting
Principles .
 23




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The Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles
 Disclosures about Derivative Instruments and
Hedging Activities Accounting for Derivative Instruments and Hedging Activities
 Accounting for Noncontrolling Interests
 Applying the Acquisition Method
    24




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   Interest rate fluctuations
 Foreign exchange rate fluctuations
  25




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ITEM 4. CONTROLS AND PROCEDURES
        26




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PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  We Depend Upon A Relatively Small Group Of Customers For A Large Portion Of Our Sales.
  We Rely On Independent Contract Manufacturers And, As A Result, Are Exposed To Potential
Disruptions In Product Supply.
   27




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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.
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   Proposal
    
    Votes For
    
    
    Against/Withheld
    
    
    AbstentionsProposal No. 1 Election of Director NomineesGeyer Kosinski
    
    
    154,368,190
    
    
    
    1,377,047
    
    
    
    Richard Siskind
    
    
    154,368,184
    
    
    
    1,377,053
    
    
    
    
  
 ITEM 6. EXHIBITS
 ExhibitNumber
    
    Description10.1
    
    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 10.1 of the Registrants Form 8-K
filed with the Securities and Exchange Commission on May 27, 2008).10.2
    
    Addendum to Lease Agreement dated May 20, 2008 between Skechers EDC SPRL,
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 10.2 of the Registrants Form 8-K filed with the
Securities and Exchange Commission on May 27, 2008).31.1
    
    Certification of the Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of the Chief Executive Officer and the Chief Financial
Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002. ***
 28




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***
    
    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. 29




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SIGNATURES
  Date: August 8, 2008
    SKECHERS U.S.A., INC.By:
    /S/ FREDERICK H. SCHNEIDERFrederick H. SchneiderChief Financial Officer

(Principal Financial and Accounting Officer) 30