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SKECHERS Announces Second Quarter 2012 Financial Results

ABOUT SKECHERS USA, INC.

SKECHERS USA, Inc., based in Manhattan Beach, California, designs, develops and markets a diverse range of footwear for men, women and children under the SKECHERS name. SKECHERS footwear is available in the United States via department and specialty stores, Company-owned SKECHERS retail stores and its e-commerce website, and over 100 countries and territories through the Company’s global network of distributors and subsidiaries in Brazil, Canada, Chile, Japan, and across Europe, as well as through joint ventures in Asia. For more information, please visit www.skechers.com, and follow us on Facebook ( www.facebook.com/SKECHERS) and Twitter ( twitter.com/#!/SKECHERSUSA).

This announcement may contain forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or simply state future results, performance or achievements, and can be identified by the use of forward looking language such as "believe," "anticipate," "expect," "estimate," "intend," "plan," "project," "will be," "will continue," "will result," "could," "may," "might," or any variations of such words with similar meanings. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in forward-looking statements. Factors that might cause or contribute to such differences include international, national and local general economic, political and market conditions including the ongoing global economic slowdown and market instability; entry into the highly competitive performance footwear market; sustaining, managing and forecasting costs and proper inventory levels; losing any significant customers, decreased demand by industry retailers and cancellation of order commitments due to the lack of popularity of particular designs and/or categories of products; maintaining brand image and intense competition among sellers of footwear for consumers; anticipating, identifying, interpreting or forecasting changes in fashion trends, consumer demand for the products and the various market factors described above; sales levels during the spring, back-to-school and holiday selling seasons; and other factors referenced or incorporated by reference in the Company’s annual report on Form 10-K for the year ended December 31, 2011 and its quarterly report on Form 10-Q for the three months ended March 31, 2012. The risks included here are not exhaustive. The Company operates in a very competitive and rapidly changing environment. New risks emerge from time to time and the companies cannot predict all such risk factors, nor can the companies assess the impact of all such risk factors on their respective businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, you should not place undue reliance on forward-looking statements as a prediction of actual results. Moreover, reported results should not be considered an indication of future performance.

SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
   
June 30,

2012

  December 31,

2011

ASSETS
Current Assets:
Cash and cash equivalents $ 374,189 $ 351,144
Trade accounts receivable, net 237,666 176,018
Other receivables   4,231     6,636
Total receivables 241,897 182,654
Inventories 258,125 226,407
Prepaid expenses and other current assets 31,494 88,005
Deferred tax assets   39,141     39,141
Total current assets 944,846 887,351
Property and equipment, at cost less accumulated depreciation and amortization 373,809 376,446
Intangible assets, less applicable amortization 3,695 4,148
Deferred tax assets 4,945 530
Other assets, at cost   13,371     13,413
TOTAL ASSETS $ 1,340,666   $ 1,281,888
 
LIABILITIES AND EQUITY
Current Liabilities:
Current installments of long-term borrowings $ 10,229 $ 10,059
Short-term borrowings 60,238 50,413
Accounts payable 285,402 231,000
Accrued expenses   19,391     16,994
Total current liabilities 375,260 308,466
Long-term borrowings, excluding current installments 71,285 76,531
Deferred tax liabilities   32     4,364
Total liabilities 446,577 389,361
Equity:
Skechers U.S.A., Inc. equity 853,346 852,561
Noncontrolling interests   40,743     39,966
Total equity   894,089     892,527
TOTAL LIABILITIES AND EQUITY $ 1,340,666   $ 1,281,888
 
SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
   
Three Months Ended June 30, Six Months Ended June 30,

2012

 

2011

2012

 

2011

Net sales $ 384,001 $ 434,351 $ 735,275 $ 910,585
Cost of sales   212,659       291,021         408,237       574,645  
Gross profit 171,342 143,330 327,038 335,940
Royalty income   1,609       1,376         2,745       3,024  
  172,951       144,706         329,783       338,964  
Operating expenses:
Selling 39,100 53,099 69,449 90,659
General and administrative   135,382       139,781         266,259       281,208  
  174,482       192,880         335,708       371,867  
Loss from operations (1,531 ) (48,174 ) (5,925 ) (32,903 )
Other income (expense):
Interest, net (3,256 ) (1,596 ) (5,977 ) (2,974 )
Other, net   556       (1,128 )       416       (1,335 )
  (2,700 )     (2,724 )       (5,561 )     (4,309 )
Loss before income taxes (4,231 ) (50,898 ) (11,486 ) (37,212 )
Income tax benefit   (2,887 )     (20,846 )       (6,732 )     (19,313 )
Net loss (1,344 ) (30,052 ) (4,754 ) (17,899 )
Less: Net earnings (loss) attributable to noncontrolling interest   438       (136 )       694       209  
Net loss attributable to Skechers U.S.A., Inc. $ (1,782 )   $ (29,916 )     $ (5,448 )   $ (18,108 )
 
 
Net loss per share attributable to Skechers U.S.A., Inc.:
Basic $ (0.04 )   $ (0.62 )     $ (0.11 )   $ (0.38 )
Diluted $ (0.04 )   $ (0.62 )     $ (0.11 )   $ (0.38 )
 
Weighted average shares used in calculating loss per share attributable to Skechers U.S.A., Inc.:
Basic   49,296       48,341         49,281       48,292  
Diluted   49,296       48,341         49,281       48,292  




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