Skechers USA, Inc. has reached a preliminary agreement to settle three disputed class action lawsuits brought by former and current store managers, assistant store managers and employees of the company’s retail stores. The suits are discussed in the Company’s most recent Form 10-Q for the quarter ending September 30, 2004.

The first two suits, filed December 2, 2002 and February 25, 2004, alleged that the Company improperly classified the Company’s store managers and assistant store managers as exempt under California’s wage and hour laws. The third suit, filed July 7, 2004, alleged that the Company improperly deducted the cost of work uniforms from employee wages. The plaintiffs were also seeking to amend the complaints to allege meal and rest time violations of the California law. All three suits sought damages and civil penalties, as well as injunctive relief against the Company. The Company denied all liability.

The preliminary settlement, which addresses claims dating back to 1998 and is still subject to court approval, fully resolves all claims brought by the plaintiffs in these California lawsuits. Many other retail companies doing business in California have similarly settled such claims in recent years rather than risk the exposure and expense of continued litigation. Under the terms of the preliminary agreement, the Company will pay a potential maximum settlement amount of $1.8 million to cover claims made by eligible class members, plaintiff attorneys fees and costs, and costs of a third-party administrator. While the matter is still subject to court approval, the Company is estimating that the settlement will lead to a pre-tax charge of $1.8 million ($1.1 million after tax), or approximately $0.025 cents per diluted share, in the fourth quarter of fiscal 2004.

Commenting on the settlement, Philip Paccione, the Company’s Executive Vice President and General Counsel, stated, “We are pleased to put these matters behind us. While the Company denies all liability in every one of these cases, it has agreed to the settlement to resolve all of the claims and avoid engaging in future expensive, distracting and protracted litigation.”