CROX Crocs Inc

Crocs, Inc. (NASDAQ: CROX) today reported financial results for the second quarter ended June 30, 2010.

Revenue for the second quarter of 2010 increased 31% to $228.0 million, over adjusted revenue of $174.1 million reported in the second quarter of 2009, which excluded $23.7 million in previously impaired product sales that the Company has stated would be non-recurring. On a GAAP basis, second quarter revenue increased 15% year-over-year.

Second quarter 2010 net income was $32.3 million with diluted earnings per share of $0.37, compared to a second quarter 2009 net loss of $30.3 million, or a loss per diluted share of ($0.36).

Year-over-year second quarter changes in the Company’s channel revenue streams were as follows:

• Wholesale sales increased 12% to $140.0 million;
• Retail sales increased 20% to $66.4 million; and
• Internet sales increased 24% to $21.6 million.

Changes in the Company’s regional revenue streams during the same quarterly periods were as follows:

• Americas increased 23% to $104.8 million;
• Asia increased 11% to $88.6 million; and
• Europe increased 7% to $34.6 million.

Gross profit for the second quarter of 2010 increased 30% to $131.9 million, or 57.8% as a percentage of sales, compared to $101.1 million, or 51.1% of sales in the year ago period. Selling, General, & Administrative expenses (including foreign exchange, restructuring, impairment, and charitable contributions) decreased 25.8% to $93.2 million or 40.9% of sales, versus $125.6 million, or 63.5% of sales in the second quarter of 2009.

Balance Sheet

The Company’s cash and cash equivalents as of June 30, 2010 increased 25% to $96.9 million compared to $77.5 million at June 30, 2009. The Company had no bank debt at June 30, 2010.

Inventory increased 2% to $113.6 million at June 30, 2010 from $111.6 million at June 30, 2009, resulting in inventory turnover of 3.5 times in the current quarter.

The Company ended the second quarter of 2010 with accounts receivable of $94.0 million compared to $67.1 million at June 30, 2009.

“We are very pleased with our second quarter results, which show further strengthening of our global wholesale and consumer direct businesses” commented John McCarvel, President and Chief Executive Officer. “We believe sales are being driven by product innovation, improved service, and brand building initiatives as well as new distribution from the expansion of our company-operated stores and key wholesale accounts. Importantly, our updated business model is generating enhanced profitability and higher cash flow. We are encouraged with our recent performance and believe we have the right strategies in place along with the balance sheet strength to capitalize on the global opportunities still in front of us.”

Guidance

For the third quarter of 2010, the Company expects revenue of approximately $205 million, a 24% increase over third quarter 2009 adjusted revenue of $165.7 million, which excludes $11.5 million in impaired product sales that the Company has stated would be non-recurring. On a GAAP basis, the company expects third quarter 2010 revenue to grow approximately 16% year-over-year.

The Company expects diluted earnings per share for the third quarter 2010 to increase to approximately $0.22 to $0.24 versus $0.09 in third quarter 2009, which excludes last year’s one time tax benefit of $0.16.

Conference Call Information

A conference call to discuss Crocs’ second quarter 2010 financial results is scheduled for today (August 5, 2010) at 5:00 PM Eastern Time. A webcast of the call will take place simultaneously and can be accessed by clicking the ‘Investor Relations’ link under the Company section on www.crocs.com or at www.earnings.com. To listen to the broadcast, your computer must have Windows Media Player installed. If you do not have Windows Media Player, go to www.earnings.com prior to the call, where you can download the software for free.

About Crocs, Inc.

A world leader in innovative casual footwear for men, women and children, Crocs, Inc. (NASDAQ: CROX), offers several distinct shoe collections with more than 120 styles to suit every lifestyle. As lighthearted as they are lightweight, Crocs™ footwear provides profound comfort and support for any occasion and every season. All Crocs™ branded shoes feature Croslite™ material, a proprietary, revolutionary technology that produces soft, non-marking, and odor-resistant shoes that conform to your feet.

Crocs™ products are sold in 125 countries. Every day, millions of Crocs™ shoe lovers around the world enjoy the exceptional form, function, versatility and feel-good qualities of these shoes while at work, school and play.

Visit www.crocs.com for additional information.

Forward-looking statements

The matters regarding the future discussed in this news release include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances, or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the following: macroeconomic issues, including, but not limited to, the current global financial crisis; our ability to effectively manage our future growth or declines in revenue; changing fashion trends; our ability to maintain and expand revenues and gross margin, our management and information systems infrastructure; our ability to repatriate cash held in foreign locations in a timely and cost-effective manner; our ability to develop and sell new products; our ability to obtain and protect intellectual property rights; the effect of competition in our industry; and the effect of potential adverse currency exchange rate fluctuations; and other factors described in our most recent annual report on Form 10-K under the heading “Risk Factors” and our subsequent filings with the Securities and Exchange Commission. Readers are encouraged to review that section and all other disclosures appearing in our filings with the Securities and Exchange Commission. We do not undertake any obligation to update publicly any forward-looking statements, including, without limitation, any estimate regarding revenues or earnings, whether as a result of the receipt of new information, future events, or otherwise.

CROCS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) (Unaudited)        

Three Months EndedJune 30,

Six Months EndedJune 30,

2010 2009 2010 2009   Revenues $ 228,046 $ 197,722 $ 394,898 $ 332,614 Cost of sales   96,127     96,610     176,275     181,771   Gross profit 131,919 101,112 218,623 150,843 Selling, general and administrative expenses 94,047 94,606 168,825 163,395

Foreign currency transaction losses (gains), net

(1,129 ) (3,623 ) (1,421 ) (214 ) Restructuring charges - 5,915 2,539 5,953 Impairment charges - 23,655 141 23,724 Charitable contributions expense   275     5,078     418     5,119   Income (loss) from operations 38,726 (24,519 ) 48,121 (47,134 ) Interest expense 163 562 292 1,257 Gain on charitable contributions (32 ) (2,024 ) (116 ) (2,024 ) Other (income) expense   (291 )   (343 )   (50 )   (1,446 ) Income (loss) before income taxes 38,886 (22,714 ) 47,995 (44,921 ) Income tax (benefit) expense   6,602     7,567     9,994     7,777   Net income (loss) $ 32,284   $ (30,281 ) $ 38,001   $ (52,698 ) Net income (loss) per common share: Basic $ 0.38     ($0.36 ) $ 0.44     ($0.62 ) Diluted $ 0.37     ($0.36 ) $ 0.43     ($0.62 )     CROCS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited)         June 30, 2010 December 31, 2009 June 30, 2009 ASSETS Current assets: Cash and cash equivalents $ 96,867 $ 77,343 $ 77,477 Restricted cash 590 1,144 813 Accounts receivable, net 93,974 50,458 67,050 Inventories 113,553 93,329 111,615 Deferred tax assets, net 7,569 7,358 11,386 Income tax receivable 11,297 8,611 1,138 Other Receivables 11,715 16,140 7,126 Prepaid expenses and other current assets   14,277     12,871     13,884   Total current assets 349,842 267,254 290,489   Property and equipment, net 66,731 71,084 74,475 Restricted cash 1,466 1,506 1,795 Intangible assets, net 41,335 35,984 34,026 Deferred tax assets, net 17,403 18,479 21,669 Marketable Securities 5,444 866 - Other assets   14,832     14,565     15,113   Total assets $ 497,053   $ 409,738   $ 437,567     LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 51,841 $ 23,434 $ 42,296 Accrued expenses and other current liabilities 58,544 53,589 48,711 Accrued restructuring charges 3,977 2,616 6,445 Income taxes payable 20,120 6,377 22,311 Note payable, current portion of long-term debt and capital lease obligations   1,556     640     17,732   Total current liabilities 136,038 86,656 137,495   Long-term debt and capital lease obligations 1,434 912 - Deferred tax liabilities, net 1,867 2,192 5,087 Long-term restructuring 103 520 663 Other liabilities   31,803     31,838     32,374   Total liabilities   171,245     122,118     175,619     Commitments and contingencies   Stockholders’ equity: Common shares, par value $0.001 per share; 250,000,000 shares authorized, 87,079,451 and 86,482,574 shares issued and outstanding, respectively, at June 30, 2010 and 86,224,760 and 85,659,581 shares issued and outstanding, respectively, at December 31, 2009 and 86,144,566 and 85,620,566 shares issued and outstanding, respectively, at June 30, 2009. 87 85 84   Treasury Stock, at cost, 596,877 and 565,179 and 524,000 shares, respectively (24,963 ) (25,260 ) (25,022 ) Additional paid-in capital 272,146 266,472 256,981 Deferred compensation - - (13 ) Retained earnings 60,156 22,155 11,535 Accumulated other comprehensive income   18,382     24,168     18,383   Total stockholders’ equity   325,808     287,620     261,948   Total liabilities and stockholders’ equity $ 497,053   $ 409,738   $ 437,567