Unverified Participant David Weinberg - SKECHERS USA, Inc.

Laurent Vasilescu - Macquarie Capital (USA), Inc. Scott D. Krasik - The Buckingham Research Group, Inc. Sam Poser - Susquehanna Financial Group LLLP Corinna Gayle Van der Ghinst - Citigroup Global Markets, Inc. (Broker) Jeff Van Sinderen - B. Riley & Co. LLC Jay Sole - Morgan Stanley & Co. LLC John Kernan - Cowen and Company, LLC Christopher Svezia - Wedbush Securities, Inc. Tom Nikic - Wells Fargo Securities LLC Jim A. Chartier - Monness, Crespi, Hardt & Co., Inc.

Greetings, and welcome to the Skechers USA Fourth Quarter 2016 Earnings Conference Call. I would now like to turn the conference call over to the Skechers. Thank you. You may begin.

Thank you, everyone, for joining us on Skechers conference call today. I will now read the Safe Harbor statement. Certain statements contained herein including, without limitation, statements addressing the beliefs, plans, objectives, estimates or expectations of the company or future results or events may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements involve known and unknown risks, including, but not limited to, global, national and local economic, business and market conditions, in general and specifically, as they apply to the retail industry and the company. There can be no assurance that the actual future results, performance or achievements expressed or implied by such forward-looking statements will occur. Users of forward-looking statements are encouraged to review the company's filings with the U.S. Securities and Exchange Commission, including the most recent Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all other reports filed with the SEC, as required by federal securities laws for a description of other significant risk factors that may affect the company's business, results of operations, and financial conditions. With that, I would like to turn the call over to Skechers' Chief Operating Officer and Chief Financial Officer, David Weinberg. David? David Weinberg - SKECHERS USA, Inc.: Good afternoon. And thank you for joining us today to review Skechers fourth quarter and fiscal year 2016 financial results. Fourth quarter net sales increased 5.8% to $764.3 million, and represented a new fourth quarter sales record, which led to a new annual net sales record of $3.56 billion. The sales growth was primarily the result of a 17.1% quarterly increase and a 27.1% annual increase in our international wholesale business. The negative currency translation impact on our gross margins for international wholesale and retail businesses was $18.4 million for the quarter. Our international wholesale business comprised 37.9% of our total business for the quarter and 39% for the year. Adding in our international retail stores, international represented 46.8% and 46.1%, respectively. We expect international to be 50% of our total sales this year as we believe it continues to represent the most significant growth opportunity for the company. Also, adding to our record net sales was our global retail business, which increased 13.9% for the quarter and 16.7% for the year due to a higher store count, combined with positive retail comps of 3.6% in the quarter and 4.1% for the year. The Skechers-owned retail business represented 32.1% of our total sales at quarter end and 27.3% for the year. The fourth quarter increases in net sales were offset by a decrease in our domestic wholesale business of 11.8%, which included a 4.6% decrease due to the launch of the Star Wars footwear collection in the fourth quarter of 2015. Fourth quarter highlights include record revenues, gross margin of 46.6%, a strong balance sheet with $718.5 million in cash and cash equivalents, or approximately $4.63 per diluted share. A 17.1% sales increase in our international wholesale business, including a 34.3% increase in our subsidiary and joint venture business, a 13.9% sales increase in our company-owned retail stores which included 53 net new stores opened compared to the prior year period, including 15 net new stores in the fourth quarter. And growing our company and third-party owned worldwide Skechers store base to 2,012 locations with a net addition of 189 stores in the quarter. We should also note that the fourth quarter 2016 sales growth came on top of challenging comparisons with strong increases in the fourth quarter of 2015, particularly in our international and retail businesses. Specifically, the fourth quarter 2015 increases were 64.9% in our international wholesale business, 20.2% in our company owned global retail business and 8% in our domestic wholesale business for a combined total increase of 26.8%. We ended 2016 with positive domestic and international backlogs and the highest incoming order rate for fourth quarter and full year in the company history. We achieved mid-single digit comps in January and high-single-digit comps in the first week in February in our global company-owned stores. We remain optimistic about our domestic wholesale business and we believe our international business will continue to grow. Now, turning to our business in detail. In 2016, Skechers remained the number two footwear brand, the number one walking brand, the number one work brand, and the number one dress comfort casual brand in the United States. In addition, we received the 2016 Footwear Plus Design Excellence Award for children's footwear. Our position in the domestic marketplace is an indication of the strength of our brand and product. Even with the decrease in domestic wholesale, we noted earlier, our Kids business performed very well with an increase of 20.5%, excluding the Star Wars sales in the fourth quarter of 2015 as well as growth in our women's sport, women's casual and sandals and our Work business. For the holiday selling season we ran numerous marketing campaigns supporting our brand including campaigns with Demi Lovato, Brooke Burke-Charvet, Sugar Ray Leonard, Howie Long, Kelly Brook and Meghan Trainor. Included in this was a YouTube campaign with our roster with female celebrities. We also had a men's casual commercial, one for GOwalk 4 collection and multiple animated and live action commercials for kids including our lightest footwear. Our lightest footwear was a hot item in the quarter and we're looking forward to building upon this success with more television support as well as in-store and online marketing. We have new product launches and deliveries this spring and into the fall, including a new performance lifestyle offering called You by Skechers and a youthful sneaker line called Skecher Street. Based on customer feedback and incoming orders to these new lines and our new walkers and our athletic casual lines for men and women, we believe we have hit on several key trends and our product is on target. As we deliver these new styles, our focus is on maintaining our position on the floor while managing our inventory flow into key wholesale accounts. We remain poised to move quickly as consumers begin to shop for what they want as well as need. International continues to achieve the highest percentage and dollar gains of all our business channels and represents the largest piece of our three distribution channels making up 46.8% of our business including retail. Total international sales increased by 17.1%, or $42.4 million in the fourth quarter, and 27.1% or $296.8 million for the year. The increases were the result of growth in our subsidiary and joint venture businesses with a $54.4 million, or 34.3% gain in the fourth quarter, and $319.8 million or 41.6% increase this year over last year. These gains were offset by a 13.6% quarterly decrease and 7% yearly decrease in our distributor business due in part to the transitioning of our Latin America and Central Eastern European distributors to subsidiaries in 2015 and our Israel and South Korea distributors to joint ventures in the second half of 2016. Transitioning these important markets to subsidiaries and joint ventures will allow us to better manage and grow our business and maximize the potential in each market. We expect each of these markets to have a positive benefit on our total international sales within the next three years. Driving the sales was a mix of our men's and women's athletic lifestyle footwear. Our Walk collection and heritage Skechers D'Lites footwear, all supported by global and regional marketing campaigns. Further detailing our growth internationally, historically the fourth quarter is the weakest of all the quarters for our international subsidiaries. That said, seven of our subsidiaries showed increases in the quarter with the highest gains coming from France, Brazil, and Chile. Of note, several countries shipped more pairs in the fourth quarter of 2016 than 2015 but did not show a dollar increase due to weaker currencies. We are continuing to adjust prices in several markets to offset the recent strength of the U.S. dollar. Our joint ventures grew by 61.9% for the quarter led by a 48.5% gain in China and high double-digit gains in Hong Kong, India, and Malaysia. As mentioned, we transitioned Israel to a joint venture during the third quarter and then South Korea in the fourth quarter. China shipped nearly 3 million pairs in the quarter and 10.5 million pairs for the year. In the fourth quarter, they opened 96 freestanding Skechers retail stores primarily through franchisees bringing their total Skechers store count to 545. We now have approximately 2,080 points-of-sale in China and an extremely strong e-commerce business with growth just short of triple digits, thanks in part to a highly successful Singles Day in November. We believe there is still tremendous opportunity across the country to further build the brand. In India where our business is in the developmental stage, 15 Skechers stores were opened in the quarter, bringing the total store count to 67. South Korea was once one of our largest distributors and now has 65 Skechers stores with strong brand awareness in the country. Our international distributor net sales decreased by 13.6% in the fourth quarter and 7% for the year. The decline is the result of several factors. The conversion of Latin America and Central Eastern Europe from distributors to subsidiaries and the transition of Israel and South Korea to joint ventures; a difficult comparison with 91.6% growth in the fourth quarter of 2015 and 69.9% for the 12 months; political unrest in some countries, including Turkey and the Middle East; and timing shifts within several distributors, which will have a positive impact on the first quarter of 2017. In the quarter, several of our international distributors showed strong increases, most notably in Australia, Indonesia, the Philippines, Taiwan and South Africa. Through our international distribution partners, joint ventures and a growing network of franchisees, there are third-party Skechers stores in a total of 84 countries. At quarter end, there were 1,441 Skechers branded stores owned and operated by our joint ventures, franchisees and distributors outside the United States. With the transition of the majority of South Korea distributor-owned or franchise Skechers retail stores to joint venture stores, at year end, there were 490 distributor-owned or franchise stores, and 822 Skechers stores in our joint venture countries, including those run by franchisees in the region. Additionally, there are 129 franchise stores in countries where we have subsidiaries. In the fourth quarter, 179 third-party owned stores opened, which included 96 in China, 15 in both India and Saudi Arabia, 10 in Australia, 5 in Taiwan, 4 in both Malaysia and the UAE, 3 each in France, Indonesia, and Qatar, 2 each in Ireland, Mexico and Spain, and 1 each in Algeria, Brunei, England, Hong Kong, Italy, Japan, Kuwait, Netherlands, the Philippines, South Africa, Thailand, Trinidad, Turkey, Uruguay and Vietnam. 5 stores closed in the quarter. 10 third-party owned Skechers stores have opened in the first quarter to-date and 2 have closed. We expect another 80 to 90 third-party owned Skechers branded stores to open in the first quarter and a total of 575 to 600 to open in the remainder of 2017. International wholesale, which includes subsidiaries, joint ventures and distributors, now represents our largest business channel at 39% of our total sales at year-end. Combined with international company-owned retail stores, it represented 46.1% in 2016. We expect this number to continue to grow as we increase our presence in the markets that have transitioned to subsidiaries and joint ventures and as we introduce new lines worldwide later this year. Worldwide sales in our company-owned retail stores increased by 13.9% for the quarter and 16.7% for the year. In the quarter, domestic retail sales increased by 8.1% and international retail sales by 32.5%. This included positive comp store sales of 1.7% domestically and 10.3% in our international stores for a total comp store sales increase of 3.6%. At the end of the quarter, we had 571 company-owned Skechers retail stores, of which 158 were outside the United States. In the fourth quarter, we opened 18 stores, including one concept store each in Hawaii, Romania and Canada, and two concept stores each in Japan and the UK. We closed three domestic and one international store in the quarter. One company-owned store has opened to-date in the first quarter and one has closed. Adding to the growth in the quarter was our domestic e-commerce business, which grew by 36.3%. We also have company-operated e-commerce sites in Chile, Germany and the UK, and plan to launch additional sites in Spain and Canada shortly. With the strategy of continuing to open retail stores in key global markets to further build the brand and meet consumer demand, we expect to open approximately 70 to 90 Skechers stores in 2017, including 14 in the first quarter. Now, turning to our fourth quarter and full-year numbers in more detail. As I mentioned earlier, we achieved record fourth quarter net sales of $764.3 million versus $722.7 million in the prior-year period, an increase of 5.8%. Our growth in the quarter was primarily the result of net sales increases in our worldwide company-owned retail stores and our international business, specifically from our joint ventures. Additionally, the negative currency translation impact on our gross margins for our international wholesale and international company-owned retail businesses for the quarter was $18.4 million. The increase in total net sales was offset by an 11.8% decrease, or $30.7 million, in the company's domestic wholesale business, which included a 4.6% decrease due to launch of Star Wars in the fourth quarter of 2015. Gross profit was $356.2 million compared to $329.9 million in the prior year period. Gross margin increased to 46.6% compared with 45.6% in the prior year period. Historically, gross margins for our retail segment are the highest, followed by gross margins for international subsidiary sales and then domestic wholesale sales, with gross margins for our distributor sales being the lowest. The slightly higher gross margins during the quarter was due to a combination of increased international subsidiary revenues and margins, reduced domestic wholesale and international distributor sales, which were offset by lower retail margins. Selling expenses increased $1.6 million to $59.5 million or 7.8% of sales compared to $57.9 million or 8% of sales in the prior year quarter. The dollar increase was primarily due to higher international advertising expenses. As a percentage of net sales, advertising expenses were approximately 20 basis points lower versus the fourth quarter of 2015. General and administrative expenses were $273.4 million or 35.8% of sales compared to $221.1 million or 30.6% of sales in the prior year quarter. The $52.3 million quarter-over-quarter increase was primarily due to investments to achieve long-term global growth. This included a $15.3 million expense to operate 53 additional domestic and international retail stores, $27 million to support our international growth, of which $19 million was due to increased costs in China, $2.8 million for the transition of our Korean distributor to a joint venture, $2.3 million in support of our new Latin America subsidiary, and $3.2 million in Japan. Domestically, general and administrative expenses increased $10 million during the fourth quarter, primarily due to increased head count in the United States to support the Skechers brand expansion worldwide. As I mentioned earlier, we will continue to invest in our infrastructure and marketing to support the current and planned growth of our joint ventures and subsidiaries in regions that we believe represent meaningful growth opportunities. Earnings from operations for the fourth quarter decreased 48.3% to $28.3 million or 3.7% of revenues compared to $54.7 million, or 7.6% of revenues in the fourth quarter of 2015. Net income was $6.7 million compared to $29.4 million in the prior year period. Net income per diluted share in the fourth quarter was $0.04 on approximately 155.4 million average shares outstanding compared to $0.19 on approximately 154.6 million average shares outstanding in the prior year period. Additionally the negative currency translation impact on our gross margins and in our international wholesale and international retail businesses for the fourth quarter was $18.4 million. Further, our business in the United Kingdom was significantly impacted by currency headwinds as our wholesale sales were flat for the fourth quarter in local currencies but down 17.9% in U.S. dollars. Our quarterly tax rate was 31.5% and 20.6% for the full year due to lower income in low-tax jurisdictions which reduced earnings per share by $0.02. Turning to our full year 2016 results, we had a net sales record of $3.56 billion, an increase of 13.2% compared to $3.15 billion in the prior-year period. Gross profit was $1.63 billion or 45.9% compared to $1.42 billion or 45.2% in 2015. Selling expenses were $257.1 million, or 7.2% of sales, compared to $235.6 million or 7.5% from last year. General and administrative expenses were $1.02 billion or 28.7% compared to $849.3 million or 27% last year. Earnings from operations for the full year were $370.5 million or 10.4% of sales versus $350.8 million or 11.1% for the full year 2015. For the full year net income increased 5% to $243.5 million compared to net income of $231.9 million in the prior year period. Diluted earnings per share were $1.57 on approximately $155.1 million average shares outstanding compared to diluted earnings per share of $1.50 on approximately $154.2 million shares last year. And now, turning to our balance sheet. At December 31, 2016, we had $718.5 million in cash and cash equivalents or $4.63 per diluted share. Trade accounts receivable at quarter end were $326.8 million, a decrease of $17 million from December 31, 2015 and our DSOs were 34 days at December 31, 2016. Total inventory including merchandise in transit was $700.5 million at December 31, 2016, an increase of $80.3 million or 12.9% compared to December 31, 2015. This increase is in line with our growth, higher company-owned store count, the addition of Israel, Latin America, and South Korea, as well as having the highest incoming order rate in our history for both the fourth quarter and full year. Given the strength of our global business, brands, and sell-throughs we're very comfortable with our current inventory level. Long-term debt was $67.2 million, compared to $68.9 million at December 31, 2015. The decrease was due to principal payments on our domestic distribution center loans. Shareholders' equity was $1.7 billion versus $1.4 billion at December 31, 2015. Book value or shareholders equity per share stood at $10.87 as of December 31, 2016. Working capital was $1.21 billion versus $971.2 million at December 31, 2015. Capital expenditures for the fourth quarter were approximately $39.5 million, of which $8.2 million was primarily related to 53 new company-owned domestic and international store openings and several store remodels, and $2.6 million for corporate office upgrades and $4 million was related to the completion of upgrades at our European distribution center. We expect our capital expenditures for 2017 to be approximately $50 million to $55 million, which includes corporate office upgrades, an additional 70 to 90 retail store openings, and several store remodels. An additional 25 million for infrastructure primarily in our China joint venture will also be added. In summary, with record annual net sales of $3.56 billion and four consecutive record sales quarters, 2016 was another significant year of growth for the company. We remain the second largest footwear company in the United States, and number one company in walking, work, and dress comfort casual. The second half of 2016 presented some challenges in the United States with several retailers shuttering doors and an influx of walk price footwear that is normally full priced. While we were impacted by the sluggish retail environment in the United States, we focused on developing fresh new product for 2017, maintaining strong gross margins and keeping our inventory in line. Our speed-to-market and diverse product offering as well as our vast distribution network has been the cornerstone of our success. In regards to retail, we opened our 2,000th store in December in India, and at quarter end, there were 571 company-owned stores and 1,441 third-party owned stores. With South Korea now a joint venture, growth in China of 68.9% for the full year and our new Latin-American subsidiary restructuring and refocusing, we believe international continues to hold the biggest opportunity for growth. We ended 2016 with positive, domestic and international backlog and the highest incoming order rate for our domestic wholesale subsidiary and distributor businesses in our history for both the fourth quarter and full year. While the backlog numbers include our joint ventures, it's important to note that our incoming orders do not include our joint ventures which were a positive. So far in 2017 we have achieved mid single-digit comps in January and high-single digit comps for the first week of February in our company-owned retail stores on a worldwide basis. Despite an all-time net sales record in the first quarter of 2016, and Easter falling into the second quarter in 2017, we believe we will achieve flat to slightly positive sales in our domestic wholesale business and increases in our international business and company-owned retail stores during the first quarter of 2017. We expect net sales to be in the range of $1.05 billion to $1.075 billion and earnings per share of $0.50 to $0.55 for the first quarter of 2017. And now, I would like to turn the call over to the operator to begin the question-and-answer portion of the call.

Thank you. Our first question is from Laurent Vasilescu of Macquarie. Please go ahead. Laurent Vasilescu - Macquarie Capital (USA), Inc.: Good afternoon and thank you, David, for taking my questions. I wanted to ask you, on your costs for the fourth quarter, the G&A, can you provide a little bit more detail on your expenses for the $10 million in the U.S. and the $27 million internationally? And then as we think about the first quarter and then the full year, how do you think about SG&A leverage? David Weinberg - SKECHERS USA, Inc.: Obviously, given the guidance we've put in the first quarter, we're going to de-leverage a bit and have higher sales, but that's because we're still carrying costs for places that can't leverage quite yet which would be Latin America, Korea, and Japan. So we're getting them started and that's where the big increase in expenses were. The $10 million that we spent in the United States was where you'd expect it to be. We have some IT issues because we support the whole world. We have to increase our support for the distribution centers as they control the rest of the world and we move out to have our own distribution centers in multiple parts of the world. We have to increase, because of our store count, both internationally and domestically, the back office and flyers and planners for our international stores. And obviously since we've increased and changed our product offering, we've hired more designers and merchandisers to expand the scope of the brand both domestically and in the United States. So it comes really from the growth avenues that we're looking to build as the next year comes forward. Laurent Vasilescu - Macquarie Capital (USA), Inc.: Okay. And then on gross margins, it looks like on that net number you gave us, it looks like the gross margin FX hit the group GM by 240 bps for 4Q. Can you tell us how we should think about gross margins for the first quarter and then also the impact on FX for the GM line as well as the revenue line, guidance that you gave for the first quarter? David Weinberg - SKECHERS USA, Inc.: The first quarter guidance is based on what we know today. There is obviously some fluctuation that's because prices change and go up and it depends on which types of footwear that we're committed to sell the most, because we don't increase all of them at the same time, especially some fill-in orders as we get to these countries. As far as the full-year impact, it's very difficult to – to me, I'm not foreign exchange, and given the political climate in the U.S., how strong the dollar will get or how low it will be tossed down. So what we do is plan our business on a local level unless the FX – we wait for more political disclosure on exactly where FX goes. But right now this is our best guess given the current environment. Laurent Vasilescu - Macquarie Capital (USA), Inc.: Okay. And if I could squeeze one more in, international wholesale, I think it was up 34%, I think you mentioned in your prepared remarks, and I think expectations were high-single digits. Was there any shift in timing and deliveries between the quarters? David Weinberg - SKECHERS USA, Inc.: I missed the beginning of the question, sorry. Laurent Vasilescu - Macquarie Capital (USA), Inc.: Sure. I think in your prepared remarks you said that international wholesale subsidiaries were up 34%. David Weinberg - SKECHERS USA, Inc.: Right. Laurent Vasilescu - Macquarie Capital (USA), Inc.: But I think expectations were for a high-single digit rate. Was there any shift in timing of deliveries or you just saw just more orders? David Weinberg - SKECHERS USA, Inc.: I think it comes from where you would expect. We gave back some in some currencies with Canada and the UK being the largest having positive in local currencies and negative in dollar terms. But the big piece came from Southeast Asia. When you think about it and what we did say, we're up 61% in Southeast Asia or our joint ventures, and only 48% in China, which means other divisions are now starting to even take hold to go to next level because we had increases equivalent or higher than China on a percentage basis, certainly not on a dollar basis. In Hong Kong, India, Malaysia, so that's where it really comes from. It came from there. And I will tell, just on order of magnitude, on Singles Day this last fourth quarter on November 11, we took and shipped the following week just short of a million pair. It totaled about 35 million. And this is from a country where we only did 90 million two years ago. So the growth there continues to be even ahead of what our calculations were. Laurent Vasilescu - Macquarie Capital (USA), Inc.: Okay. Very helpful. And congrats again. David Weinberg - SKECHERS USA, Inc.: Thanks.

Thank you. The next question is from Scott Krasik of Buckingham Research. Please go ahead. Scott D. Krasik - The Buckingham Research Group, Inc.: Yeah. Hey, David. How you're doing? David Weinberg - SKECHERS USA, Inc.: Hey, Scott. Pretty good. Scott D. Krasik - The Buckingham Research Group, Inc.: Good. So you made some positive comments about the backlog, both domestic and international. I just want to put that into some context relative to last quarter. I think your backlog was up low-single digits. Domestic was sort of breakeven, and then international was up low single. So can you just sort of talk about how that's accelerated from last quarter? David Weinberg - SKECHERS USA, Inc.: I think it's timing on just the new product that we've gone in. We're up mid to high single digits domestically. We're relatively flat in Europe where there's currency issues where the biggest piece, obviously, is England and we were up double digits in China, and Southeast Asia, in general. So it's a very positive sign from the U.S. The U.S. being up high-single digits going in, it just means it's a very positive reception to our new product and how we're selling so far. So while it's just the beginning, it certainly is on a very positive sign. Scott D. Krasik - The Buckingham Research Group, Inc.: No, I agree. Can you help us understand the context? Constant currency Europe, would that be up then what high-singles, low doubles? David Weinberg - SKECHERS USA, Inc.: Yeah, constant currency is, obviously, up singles because of the UK, and I'll give you just an idea of what we're talking about. The UK was down at December 31 double digits in dollars and up low-double digits in constant currency. Scott D. Krasik - The Buckingham Research Group, Inc.: Wow. David Weinberg - SKECHERS USA, Inc.: Same could probably be said for Canada. I mean, those are the two biggest, and then various others ones around. Actually, China has some as well as does little piece in South America has actually held up somewhat better and constant currency we're certainly up in pairs. Scott D. Krasik - The Buckingham Research Group, Inc.: No, that's great. And then just to help put domestic into context, you really haven't shipped the You, you haven't shipped the Energy Lights. There's a lot of new stuff that you haven't shipped yet. So that's just sort of reflective there. If the sell-through that we can do our checks and see the sell-throughs are outweighing that level of sell-in, do we get into a situation where you start pulling orders forward again? David Weinberg - SKECHERS USA, Inc.: Well, we certainly hope so. That's always the plan. Scott D. Krasik - The Buckingham Research Group, Inc.: Yeah. Any sense or anything you can give us around sell-throughs maybe of – I know the Energy Lights are in your stores. I don't think the You by Skechers is in your stores yet. David Weinberg - SKECHERS USA, Inc.: Not yet, but the Energy Lights obviously do extremely well. We've delivered them to some wholesale partners as well and they have been doing very, very well. So, right now, all the things are positive, I will tell you, while we haven't shipped them yet, our backlogs in shipping continue to hold up. We were up high single-digits in shipping on a worldwide basis for January. Scott D. Krasik - The Buckingham Research Group, Inc.: Okay. No, that's great. And then just lastly, tax rate, the 31% was much higher than what we were looking for. So help us understand what tax rate you're expecting for 1Q and then the full year? David Weinberg - SKECHERS USA, Inc.: We still expect between 20% and 23%. What happens was, we don't – tax rate was only missed from third quarter estimates by almost 0.6%. I think we were at 20% or 20.1% for the three quarters and we had to go to 20.6% for worldwide, just given the sales in fourth quarter. And what happens is if you have a much smaller income base on which to make up three quarters worth of under-withholding tax, it just becomes a bigger piece. So it looked more at the annual rate, which was 20.6%, to carry that forward into Q1 and for the balance of the year. Scott D. Krasik - The Buckingham Research Group, Inc.: Okay. All right. Thanks. Good luck. David Weinberg - SKECHERS USA, Inc.: Thanks.

Thank you. The next question is from Sam Poser of Susquehanna. Please go ahead. Sam Poser - Susquehanna Financial Group LLLP: Thank you, David, for taking my question. I only have a couple of things. In the expenses to support a lot of the stuff in Korea and so on, is this a situation where basically you're paying the distributors to run while you're converting and some of those expenses are going to fall away later once it's get rolling? Is that the way to think about that? David Weinberg - SKECHERS USA, Inc.: No, it's a little of both. The DX distributor (36:40) is not involved anymore. What you see is we have to reposition the stores and continue to shift over personnel to our own. And when we reposition the stores, we then have to pick up all the rent, all the personnel, whatever we buy the furniture and fixtures for, set up a new office and IT system, and we refurbish because we like to put our own inventory in, so they never hold up quite as well. So while I think they will leverage as you go forward, the transition, and just picking up all the rents and trying to clean out the old inventory and putting new, is what puts pressure on the operating line. And obviously, in the next six, nine months, we'll have a real running rate. And I do believe they will then start to leverage quite well. Sam Poser - Susquehanna Financial Group LLLP: So would you expect to start seeing some SG&A leverage, just in the bigger picture, in Q2 and then improving throughout the year? David Weinberg - SKECHERS USA, Inc.: That would be my anticipation. Just like we've talked about in the past, we knew we had to get past Q4. We have new product delivering. Q1 was a very tough comparison. We still think we'll do quite well. We're just delivering some new products, it's getting new checks. If our stores are any indication being up mid single-digits in January and high-single digits first week in February, while it doesn't tell the whole story, certainly is positive for the new product we're bringing in to the marketplace. Sam Poser - Susquehanna Financial Group LLLP: Thanks. Thanks, David. And then, the Belgian DC, is that up and rolling, completely ready, costs associated with the build-out there are done? David Weinberg - SKECHERS USA, Inc.: Yes. Sam Poser - Susquehanna Financial Group LLLP: And so is that levering now, or is that, again, something that starts kicking in as you start shipping? David Weinberg - SKECHERS USA, Inc.: I think it does lever in Q1. It was difficult to lever on a dollar basis in Q4 because lines were actually down because of currency shifts. But, yes, we are leveraging on a per pair cost through the distribution center, as we speak. Sam Poser - Susquehanna Financial Group LLLP: Okay. Well, two more questions. One, to Scott's question, can you give us some idea of what that like currency neutral international backlog is? You see it's up and then you're saying – do you have like an FX neutral number there so we can get an idea for what the real demand is? David Weinberg - SKECHERS USA, Inc.: Well, I haven't calculated yet, but I would bet it's in the low double-digits. Sam Poser - Susquehanna Financial Group LLLP: Okay. And then lastly, China, you talked about it being up a lot. Can you give us some idea of what kind of volume is there? How far away do you think you are from $1 billion and how far away are you from having to invest in a DC in China? David Weinberg - SKECHERS USA, Inc.: We're researching the DC in China now. I would hope we would be able to start investing by mid to end 2017. As you heard in the prepared remarks, we have $25 million allocated through the joint venture for this year expenses regarding the distribution center. That may be a little early and it may slip to $18 million, but we're hoping that we can get design and land done and start – at least breaking ground before the end of the year. As to how fast you can get to $1 billion, we ended this year at $375 million. I think that was an increase of $150 million. I think if we continue to increase, we'll get to $500 million and more this year. So, hopefully, in the next five years we'll get close to $1 billion, maybe even faster because we're expanding at a much faster rate as far as the franchise. If this new product is received as well there, as we believe it will be, it could accelerate the pace as well. Sam Poser - Susquehanna Financial Group LLLP: Okay. Thanks, David. Thanks very much and good luck.

Thank you. The next question is from Corinna Van der Ghinst of Citi. Please go ahead. Corinna Gayle Van der Ghinst - Citigroup Global Markets, Inc. (Broker): Thank you. Hi, David. David Weinberg - SKECHERS USA, Inc.: Hi. Corinna Gayle Van der Ghinst - Citigroup Global Markets, Inc. (Broker): Hi. I was wondering if we could just talk a little bit more about your U.S. Performance this quarter. I think we pretty much knew that you were lapping the Star Wars product from last fourth quarter. But can you kind of walk us through why the U.S. was weaker than your previous expectation of down mid to high single-digit? David Weinberg - SKECHERS USA, Inc.: Well, I think if you look at the high single-digits, we weren't significantly off that. I think what is this? It was a change. We're now selling more of our Sport and Active and less on the Performance until we bring out this You By GO, and that won't deliver until the end of March or April. So we're selling lower priced product to make up the difference. So we're actually higher in pairs. And I think that's just timing thing as well. I think that's why we were up so significantly in the first quarter. Some of it just didn't ship at the end of December and it might have last year. I think the nuance is not significant. Corinna Gayle Van der Ghinst - Citigroup Global Markets, Inc. (Broker): Okay, great. And then can you help us understand a little bit more of the 13% growth in inventory that you guys reported? How much of that is actually related to inventories in the U.S.? And I just have a follow-up to that. David Weinberg - SKECHERS USA, Inc.: I'm glad you asked that because I do have all that information. I wasn't sure I would get it out. If you look at our inventory breakdown on a year-over-year basis, we're actually down on a wholesale basis in the United States. We're up somewhat low-single digits in retail. We're down in Europe, and up somewhat in retail. So, all the growth, the entire $80 million comes from all our growth opportunity in places we've taken orders. It sits in Latin America, China, Southeast Asia, Korea with all those new stores, Israel, and Japan. So, it's exactly where you'd want it to be with some space inventory growing and picking up new territories. We're actually flat to down on a wholesale basis both in Europe and the United States. Corinna Gayle Van der Ghinst - Citigroup Global Markets, Inc. (Broker): Okay, that's super helpful. And then I'm just trying to reconcile that. I mean, it's no secret that retailers are taking a more conservative stance on their upfront orders this year. And you did mention that your inventories are down in the U.S. wholesale business. How are you thinking about planning your inventories in the U.S. this year just given how retailers are ordering now, and are you going to be making more inventory available to chase in season? David Weinberg - SKECHERS USA, Inc.: We don't usually speculate on that. It's not part of our business plan. What we do is we order against bookings. So we don't have any more risk as far as where the order rate is and where our inventory levels are compared to last year. Deliveries have just moved into February and March and it certainly will be delivered both here and in Europe, and we're churning it quite quickly. We're getting to be quite more efficient. As far as chasing, it's usually the inventory that's spoken for that we're moving up. We're not going to speculate on inventory. We have way too many items. It'd be too difficult to bring in. We do speculate some but certainly not across the board. When we move up and chase, what we're doing is leaning on our production capacity and trying to move up orders that are spoken for that we already have materials and have been allocated production space and move them to an earlier timeframe to start filling in for the demand. So it's not we're going out to buy an unlimited amount of inventory so we can fill in need because we have way too many items to do that with. And as for as liquidating, we don't have any significant inventory to liquidate, certainly not in the United States or Europe at this point in time. And we use the same places we've used in the past. There's a bigger demand for outlets of our product than we actually have for closeouts. Corinna Gayle Van der Ghinst - Citigroup Global Markets, Inc. (Broker): Okay, thank you. And if I could just sneak in one follow-up to a previous question. Do you have an actual margin target in mind for 2017 at this point? David Weinberg - SKECHERS USA, Inc.: Yeah. I think it's consistent with what you've seen. As growth changes, I think it would be still biased to the upside but not as significantly. Corinna Gayle Van der Ghinst - Citigroup Global Markets, Inc. (Broker): Okay. Thank you.

Thank you. The next question is from Jeff Van Sinderen of B. Riley. Please go ahead. Jeff Van Sinderen - B. Riley & Co. LLC: Good afternoon, David. I just wanted to talk a little more about your retail segment. And I think you mentioned lower retail margins and just wondering if you can talk a little bit more about that? Your comps were up nicely, which was pretty unusual I think for most retailers, at least in Q4. So just trying to get a sense of was it a mix thing, or kind of what got your retail margins down? David Weinberg - SKECHERS USA, Inc.: Yeah. I think domestically in the U.S., it's a mix thing. I mean, we probably had slightly lower margins because of the product mix shift, but we're opening more outlet stores and big box stores than we're concept, so the shift is down. There's a differential between these three kinds of stores and that's a very broad based 10,000-foot view down on retail in general. So if you look, we probably have a higher percentage of outlet stores and warehouse stores than we had this time a year ago. Jeff Van Sinderen - B. Riley & Co. LLC: Okay. And then, so – I mean, it sounds like obviously there's some puts and takes on Q1 but it sounds like for Q2 we should see an acceleration in metrics. And, I guess, I'm just wondering, with the order rate tracking considerably better, how we should think about domestic growth this year? And then, I know it's early, and I don't want to pin to you a number, but I'm also just wondering how we should think about the international growth rate this year? David Weinberg - SKECHERS USA, Inc.: Well, we don't want to go out to a full year, but, I guess, we can do some. You know what our numbers are for first quarter. I still think international will be into the low double-digits. I still believe that domestic will be mid to high single digits, when we get through the balance of the three quarters for the year. I'm still looking for those positive outlets. Jeff Van Sinderen - B. Riley & Co. LLC: Okay, great. Good to hear. Thanks very much, and best of luck for the rest of the quarter. David Weinberg - SKECHERS USA, Inc.: Thanks.

Thank you. The next question is from Jay Sole of Morgan Stanley. Please go ahead. Jay Sole - Morgan Stanley & Co. LLC: Great. Thank you. David, did you say what you expected of domestic wholesale growth to be in 1Q versus the international wholesale growth? David Weinberg - SKECHERS USA, Inc.: Yeah, I think we said – or I did say we'll be up relatively flat to slightly up as far as we can tell in domestic. We will be up probably low double digits internationally, a slight decline in the subsidiaries and a significant increase simply because we have more subsidiaries and joint ventures now in international. And that's assuming that nothing major happens with the currencies. And I think that's always in play. Jay Sole - Morgan Stanley & Co. LLC: Yeah. Got it. Okay. And then I know one of the previous questions was how do you think about margins for the full year just on a directional basis. And I assume you're talking about EBIT margin but do you have a sense, if we could maybe break that down just selling expenses, selling expenses were up about 9ish, 10ish percent. Do you expect the same kind of growth in selling expenses this year? David Weinberg - SKECHERS USA, Inc.: We haven't gone out for the whole year yet. I would think it would be in that range or slightly less. I don't know if this increases. We are increasing our advertising in Southeast Asia and in international but we won't be increasing it in the U.S. to any real degree. Jay Sole - Morgan Stanley & Co. LLC: Okay. David Weinberg - SKECHERS USA, Inc.: So I think it will grow maybe at the same rate, real dollars maybe a little less, part of that is also affected by currency. Jay Sole - Morgan Stanley & Co. LLC: Got it, right. Okay. And then for the G&A, I think in the guidance for 1Q it implies the G&A will grow about 20% year-over-year in 1Q. Is that – and that's kind have been the run rate for the last couple of years. Should we expect more of that in 2017? Is that the G&A guide or is it - David Weinberg - SKECHERS USA, Inc.: I think – so, go ahead, sorry. Jay Sole - Morgan Stanley & Co. LLC: ...or is it going to – because one of your other questions kind of was asking, and it sounded like maybe it's going to slowdown. But if you can talk about the dollar growth, generally speaking, roughly in a broad range in 2017 that would be helpful. David Weinberg - SKECHERS USA, Inc.: Yeah. I think you got it right for the first quarter. As you go beyond that, I think it doesn't grow as significantly unless there's some – if another Korea comes along, or another Israel or Latin America or there's a major growth piece, it might. But I don't have anything really planned this minute so we should start to leverage and not show major increases unless there's major increases in sales in a lot of these places that we're investing in now. Jay Sole - Morgan Stanley & Co. LLC: Got it. Okay. And then the last one for me is, really strong comp in January and in the first week in February. What do you attribute that to, is it a traffic thing, is it a product thing, is it just an execution and the storage thing, or compare thing. Why do you see it being stronger recently? David Weinberg - SKECHERS USA, Inc.: Well, cause and effect is always difficult. I think it's because of the new product and the strength of the brand as it goes out. And it's even stronger in Europe where their currencies are getting weaker. So I think it is about the product. For us, it's always about the product. So I think we have good looks and a lot of stuff that's fashion right and it has picked up the pace. And that, you said that, we had significantly high comp store sales last year in January, and February, the whole first quarter was up significantly. So this is on top of that, which is very, very positive for us and very – we think that's great. I mean, it doesn't tell the whole story, but that's a great place to be right now. Jay Sole - Morgan Stanley & Co. LLC: For sure. Okay, thanks so much.

Thank you. The next question is from John Kernan with Cowen. Please go ahead. John Kernan - Cowen and Company, LLC: Hi, good afternoon, David. Thanks for taking my questions. David Weinberg - SKECHERS USA, Inc.: Oh, hi. John Kernan - Cowen and Company, LLC: I'll just ask the question on the selling line and the G&A line. Can you just talk about your expectations for gross margin as well? It was up every single quarter year-over-year in 2016. Are you expecting it to be up again 2017, I know there's a lot of mix shifts between retail and international wholesale and domestic wholesale. So what's your outlook for gross margin as we go through Q1? David Weinberg - SKECHERS USA, Inc.: Like I said, I think it's biased to the upside. It does depend on mix and it will also depend on currency and how fast we can catch up or if we can catch up to historical gross margins in some parts of the world when the currency moves too quickly and you can't catch it all in one year. I would believe that so long as Southeast Asia, which is among our higher gross margins, continues at the pace that exceeds most other places in the world, that there would still be upside bias just from the mix in China. And that's with their margins actually coming down because they're moving to a franchise model. They still on the lower level they are now higher than they are in the U.S. So, as long as retail, Southeast Asia, and international lead the pack, we have a positive bias to gross margin. John Kernan - Cowen and Company, LLC: Okay, that's helpful. And then just shifting to the spending side, CapEx is coming down pretty enormously year-over-year, despite the fact they're still opening a lot of doors. Unless there's some big working capital drag you could generate awful lot of free cash flow this year. You've got over $700 million in the balance sheet now. What's your plan to use that cash? Would you buy back stock, would you pay some type of dividend, why sit with that much cash on the balance sheet? David Weinberg - SKECHERS USA, Inc.: I'm not sure. We haven't had that discussion as of what point we do that. I would think when we decide to return some of that cash, and we think our big growth is over and we don't have a lot of building or distribution centers or new countries to open that the first step would be stock repurchase rather than dividends. John Kernan - Cowen and Company, LLC: Okay, thanks. Best of luck. David Weinberg - SKECHERS USA, Inc.: Thanks.

Thank you. The next question is from Chris Svezia of Wedbush. Please go ahead. Christopher Svezia - Wedbush Securities, Inc.: Hey, David. How are you? David Weinberg - SKECHERS USA, Inc.: Hi, Christopher. Pretty good. Christopher Svezia - Wedbush Securities, Inc.: First, just on – I'm curious, this Easter shift and timing of deliveries of product, and just maybe walk through, I guess, specifically the Easter shift and what dollar magnitude that could be between Q1 and Q2 on U.S. wholesale? Could U.S. wholesale return to or be at something that all reminds us high-single digit growth in Q2 because of that shift and the timing of delivery of product? David Weinberg - SKECHERS USA, Inc.: I'm not sure about that yet. I don't know if the shift in domestic wholesale is that significant. We still deliver most by the end of March because it is early in April. When we're talking about the shift, I was talking more on a retail basis around the world where obviously – and that's a big piece of our business where the impact will be felt more dramatically. Christopher Svezia - Wedbush Securities, Inc.: Okay. But the shift you're talking about – you're talking about Easter when you talk about a shift? David Weinberg - SKECHERS USA, Inc.: Right. Christopher Svezia - Wedbush Securities, Inc.: Okay. Can you put a dollar value on what that is, what you're estimating that to be? David Weinberg - SKECHERS USA, Inc.: No, I don't think we can come out with that. It's not a calculation that we do. I mean, I have it in broad strokes, but I don't know if that's for publication, simply because I have so many moving pieces. If I start to go through them from top to bottom on a worldwide basis of what it means impactfully, it'll just get lost. Christopher Svezia - Wedbush Securities, Inc.: Okay. For Q1 gross margin could you just – I mean, you're up 100 basis points in Q4. When you say, use the word, positive bias is that still 100 basis points of positive bias, or is that more like 50 basis points? I'm just trying to get a sense of what you mean by positive bias. David Weinberg - SKECHERS USA, Inc.: It would depend on the mix. I would think if U.S. wholesale grows on the top side, it's probably more than like 50 basis points. If China outpaces their projections for the first quarter, it could get to 100 basis points. If the pound comes back and the Canadian dollars comes back, as we start to put these price increases through, it could go up even more than that. Depends on how many pieces put together. So I think the bias is positive, but there's so many moving pieces, it's hard to tell which one will come first. Christopher Svezia - Wedbush Securities, Inc.: Okay. And from an international perspective, you said earlier low double-digits prospectively for the year, domestic revenues sort of up to mid to high single. When you talk about low-double digits, are you talking about anything from 10% to 99% or are you talking about double-digits, sub teens? I am just trying to figure what do you mean by that. It could mean anything. David Weinberg - SKECHERS USA, Inc.: For the international crew? Christopher Svezia - Wedbush Securities, Inc.: Yeah, the international piece. So overall international revenues, the low double-digit, if you can define that a little bit more? David Weinberg - SKECHERS USA, Inc.: Yeah. I think what we're talking about is in the lower double-digits, probably north of 20%, be surprised if it gets north of 30%. Christopher Svezia - Wedbush Securities, Inc.: Okay. Okay. And then finally, just on the G&A, and when you talk about it start to subside in terms of growth, at what point do some of these areas that you're investing in, Korea, et cetera, begin to leverage? In other words, the deleverage really starts to subside, does that really start in the third quarter, fourth quarter, just sort of give us a sense of when that's going to happen? David Weinberg - SKECHERS USA, Inc.: I would hope it's by the third quarter. That would be the plan, at least on a broad spectrum, but you never know. It took China a couple of years before they really got to critical mass. While they leveraged a little bit before that, it wasn't significant enough. It depends when you get the critical mass and demand for the brand, it could move faster. So, certainly, we expect to see some positive by the third quarter. Hopefully, we start to see the real big push by the first quarter of next year, which is the strongest quarter for most of these joint ventures and distributors. Christopher Svezia - Wedbush Securities, Inc.: Okay. Got it. Okay, that's all I have. Thank you. All the best. David Weinberg - SKECHERS USA, Inc.: Okay. Thanks.

Thank you. The next question is from Tom Nikic of Wells Fargo. Please go ahead. Tom Nikic - Wells Fargo Securities LLC: Hey, David. David Weinberg - SKECHERS USA, Inc.: Hi. Tom Nikic - Wells Fargo Securities LLC: Thanks for taking my question. Sorry, if you said this already. The U.S. wholesale business, did you say in Q4 how that broke down between ASPs and pairs shipped? And how do you think about that ASPs versus pairs dynamic in 2017? Thanks. David Weinberg - SKECHERS USA, Inc.: Well, in 2017, we hope it reverts out. But basically we had an ASP decline of about 4% domestically, or the average price per pair on a domestic basis. So about 4% of it was that and the balance was actually pairs. Tom Nikic - Wells Fargo Securities LLC: Okay. And so, obviously, a lot can happen as the year goes on, but I think you said for Q1, you would still have some ASP pressure. Is that something that you expect to sort of reverse course in the remainder of the year and you'd have positive ASPs in Q2 and beyond? David Weinberg - SKECHERS USA, Inc.: I'm not sure because it depends where growth goes. So, the pressure on the ASPs have been in the – so far in the quarter in that we're bringing our product that's priced differently. And so far to-date moving stronger in our Sport and Active and our USA products than we are in our Performance, which is the highest ASP. So to the extent that Performance comes back at a slower rate, then I would anticipate that we wouldn't get that ASP back. For us to get back that entire ASP differential year-over-year, Performance will really have to grow significantly and catch not only what they've given up year-to-date with the transition of the GOwalk 3, but catch the growth we expect in some of the more casual footwear lines. Tom Nikic - Wells Fargo Securities LLC: Got it. And just real quick, how does You by Skechers fit into your pricing structure? David Weinberg - SKECHERS USA, Inc.: It's Performance. It's like Walk. So, it's at the higher end. Tom Nikic - Wells Fargo Securities LLC: It will be – got it. All right. David Weinberg - SKECHERS USA, Inc.: It's a net positive. Tom Nikic - Wells Fargo Securities LLC: All right. Thanks very much. Best of luck this year. David Weinberg - SKECHERS USA, Inc.: Thank you.

Thank you. The next question is from Jim Chartier of Monness, Crespi, Hardt. Please go ahead. Jim A. Chartier - Monness, Crespi, Hardt & Co., Inc.: Hi. Thanks for taking my questions. Just a follow-up on the last question, at FFANY in December, I think you talked about last year you took a price decrease on the wholesale business in the U.S. And so when do you anniversary on that price decline? David Weinberg - SKECHERS USA, Inc.: I don't know that we ever took one. It's not like we reduced the price of existing inventory anywhere. I think it's more a shift in some of the new product and what was hot in the marketplace was lower price. So I think we brought in some lower ones. Actually, the ASP pressure that we've seen, you probably start to lap somewhere in third quarter. Jim A. Chartier - Monness, Crespi, Hardt & Co., Inc.: Okay. And then Star Wars, was there any impact from Star Wars in the first quarter of 2016, or was that isolated to the fourth quarter? David Weinberg - SKECHERS USA, Inc.: There was some, but certainly nothing like the fourth quarter. Jim A. Chartier - Monness, Crespi, Hardt & Co., Inc.: Okay. And then China, I think at the beginning of the year, you estimated the business would be between $350 million and $400 million. Where did that shake out? And then... David Weinberg - SKECHERS USA, Inc.: Right in the middle, where it's supposed to. Jim A. Chartier - Monness, Crespi, Hardt & Co., Inc.: Okay. And then how quickly do you think that business can grow next year? David Weinberg - SKECHERS USA, Inc.: I think on a very conservative basis, I would plan 500, and hope that it continues to outpace those projections. Jim A. Chartier - Monness, Crespi, Hardt & Co., Inc.: And then, do you think the rest of the business, Hong Kong and India and the other countries you talked about today continue to outpace China? David Weinberg - SKECHERS USA, Inc.: I don't know if they outpace on a percentage basis. They're either close or higher. Most of them are expecting significant growth this year. Jim A. Chartier - Monness, Crespi, Hardt & Co., Inc.: Okay. That's all I have. Thanks and all the best. David Weinberg - SKECHERS USA, Inc.: Yes.

Thank you, ladies and gentlemen. We have time for one last follow-up. It comes from the line of Laurent Vasilescu with Macquarie. Please go ahead. Laurent Vasilescu - Macquarie Capital (USA), Inc.: Hi, David. I just have a few follow-ups. Thank you for the color on the Star Wars impact for the fourth quarter domestic wholesale business. Can you tell us how women's and men's did in percentage terms year-over-year for the fourth quarter and what your expectations are for the categories in the first quarter? David Weinberg - SKECHERS USA, Inc.: Women's was down more than men's. Kids was actually net of Star Wars on a positive – was positive. Women's simply because it's comping the Performance. It's the same issues we have everywhere when you look at like-for-like, and it's a pricing issue in the pairs. I would anticipate that our women's business would start to pick up, and it will take more pairs because it will be at the leisure base rather than in the Performance base. So I think women's will be relatively flat or up in the first quarter as will men's. Laurent Vasilescu - Macquarie Capital (USA), Inc.: Okay, very helpful. And then lastly, the non-controlling interest decline year-over-year, if I remember correctly this is the China JV. Maybe you could parse out what happened there and then how should we think about in an dollar terms that number could be for 2017? David Weinberg - SKECHERS USA, Inc.: Okay. The issue is not all – it's very difficult to give you too much detail on it because not all the joint ventures are the same, not all the joint ventures are 50/50. So if there's flows like some of the balance of Southeast Asia grew at a faster pace than China, and the minority interests were significantly less than they are in China, it just builds up at a slower pace. Laurent Vasilescu - Macquarie Capital (USA), Inc.: Okay, great. Thank you very much, and congrats again. David Weinberg - SKECHERS USA, Inc.: Thanks.

Actually, we do have time for one more last follow-up from the line of John Kernan of Cowen. Please go ahead. Actually, it looks like he disconnected from the queue. I guess he had no last follow-ups. And with that I would like to turn it back over to Skechers for closing remarks.

Thank you, again for joining us on today's call. We would just like to note that today's call may have contained forward-looking statements. As a result of various risk factors, actual results could differ materially from those projected in such statements. These risk factors are detailed in Skechers filings with the SEC. Again, thank you, and have a great day.

Thank you, ladies and gentlemen. This does conclude today's teleconference. You may disconnect your lines at this time and thank you for your participation.