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Crocs Inc. Reports 2012 Third Quarter Financial Results

  Crocs Inc. Reports 2012 Third Quarter Financial Results

 Company Reports Earnings Per Diluted Share of $0.49 and Record Third Quarter
                          Revenue of $295.6 million

Business Wire

NIWOT, Colo. -- October 24, 2012

Crocs Inc. (NASDAQ: CROX) reported today financial results for the third
quarter ended September 30, 2012. Revenue for the third quarter of 2012
increased 7.5% to $295.6 million compared with revenue of $274.9 million
reported in the third quarter of 2011. Net income for the third quarter of
2012 was $45.1 million, or $0.49 per diluted share, compared with net income
of $30.2 million, or $0.33 per diluted share, in the third quarter of 2011.

From a channel perspective, wholesale sales increased 1.5% to $156.2 million
compared with sales of $154.0 million in the third quarter of 2011. Internet
sales increased 6.0% to $27.1 million compared with sales of $25.6 million in
the third quarter of 2011. Retail sales increased 17.7% to $112.2 million
compared with sales of $95.3 million in the third quarter of 2011. The company
ended the quarter with 499 retail store locations compared with 410 locations
a year ago. Global same store sales for the third quarter of 2012 increased
1.0% on a currency neutral basis, as the Americas increased 5.5%, Europe
increased 0.9%, and Asia declined 6.3%.

Sales growth during the quarter was driven by strength in the Americas and
Asia. Geographically, revenue increased 7.4% for the Americas, 11.3% for Asia
and decreased 2.9% for Europe. On a constant currency basis, revenue increased
8.6% for the Americas, 13.0% for Asia, 7.3% for Europe, and 10.3% globally.

“Our revenue growth during the third quarter reflects the benefit of balanced
distribution channels globally. Our direct to consumer channel in the Americas
increased 12% on year-over-year basis, highlighted by a mid single digit same
store sales gain, and our expanded presence in Asia resulted in a direct to
consumer sales increase of 17% in that region,” said John McCarvel, President
and Chief Executive Officer. “Our Americas and Asia performance helped to more
than offset weakness in the European market, where challenging macroeconomic
conditions and foreign currency exchange rate fluctuations continue to
pressure our results. At the same time, we haven’t been fully immune to some
of the recent choppiness in Asia, particularly in Japan, where consumer demand
slowed as the third quarter progressed. Despite the economic headwinds we
faced during quarter, we continued to grow the business and make strategic
progress toward our long-term goal of evolving Crocs into a four-season brand.
For the spring summer 2013 season our wholesale pre-books have been strong. We
are excited about the prospects for 2013 as enthusiasm for our products
continues to grow and our opportunities globally expand.”

Margins

Gross profit for the third quarter of 2012 increased 9.2% to $160.7 million,
or 54.4% as a percentage of sales, from $147.2 million, or 53.5% as a
percentage of sales in the same period last year. Selling, General, &
Administrative expenses (SG&A) increased 8.1% to $120.7 million versus $111.7
million a year ago. As a percentage of sales, SG&A was 40.8% compared with
40.6% in the third quarter of 2011.

Balance Sheet

Cash and cash equivalents at September 30, 2012 increased 41.8% to $312.6
million compared to $220.4 million at September 30, 2011. Inventories at
September 30, 2012 were $187.5 million, up 24.1% compared to inventories at
September 30, 2011 of $151.1 million. Inventory levels during the third
quarter of 2012 were partially driven by the 22% increase in retail store
locations in the quarter and the need for additional inventory for the 35 to
40 new store openings planned for the fourth quarter of 2012.

Backlog

Backlog at September 30, 2012 increased 33.2% to $395.4 million compared with
backlog of $296.8 million at September 30, 2011. John McCarvel continued “We
saw exceptional growth in third quarter of 2012 pre-books as our wholesale
customers accelerated their order books to secure sourcing for spring summer
deliveries of our hottest new products for 2013, which include the huarache,
molded boat shoes, and our women’s wedge line.”

Income Taxes

For the quarter, the company recorded a non-recurring tax benefit of $11.4
million due to a reversal of certain tax provisions and the release of certain
valuation allowances associated with deferred tax assets.

Guidance

For the fourth quarter of 2012, the Company expects break-even diluted
earnings per share on revenue of $220 million.

Conference Call Information

A conference call to discuss Crocs’ 2012 third quarter financial results is
scheduled for today (October 24, 2012) 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.

Celebrating its 10th anniversary in 2012, Crocs, Inc. is a world leader in
innovative casual footwear for men, women and children. Crocs offers several
distinct shoe collections with more than 300 four-season footwear styles. All
Crocs™ shoes feature Croslite™ material, a proprietary, revolutionary
technology that gives each pair of shoes the soft, comfortable, lightweight,
non-marking and odor-resistant qualities that Crocs fans know and love. Crocs
fans “Get Crocs Inside” every pair of shoes, from the iconic clog to new
sneakers, sandals, boots and heels. Since its inception in 2002, Crocs has
sold more than 200 million pairs of shoes in more than 90 countries around the
world. The brand celebrated reaching $1 billion in annual sales in 2011.

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 include, but are not limited
to, statements regarding future revenue and earnings, backlog, future orders,
prospects and product pipeline. 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 conditions; the effect of competition in our
industry; 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 ability to accurately forecast consumer demand for our
products; our ability to develop and sell new products; our ability to obtain
and protect intellectual property rights; the effect of potential adverse
currency exchange rate fluctuations and other international operating risks;
our ability to open and operate additional retail locations; 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 INCOME
(Unaudited)
                                                            
                                                                     
                       Three Months Ended            Nine Months Ended
                       September 30,                 September 30,
($ thousands,
except per share       2012          2011            2012          2011
data)
Revenues               $ 295,569     $ 274,897       $ 898,309     $ 797,189
Cost of sales           134,826     127,722       396,682     360,591 
Gross profit             160,743       147,175         501,627       436,598
Selling, general
and administrative       120,729       111,672         349,737       309,769
expenses
Asset impairment         -            495            819          527     
Income from              40,014        35,008          151,071       126,302
operations
Foreign currency
transaction              21            (2,358  )       2,670         (4,560  )
(gains) losses,
net
Other (income)           (80     )     335             (1,747  )     636
expense, net
Interest expense        377         204           556         632     
Income before            39,696        36,827          149,592       129,594
income taxes
Income tax expense      (5,384  )    6,620         14,642      22,377  
(benefit)
Net income             $ 45,080     $ 30,207       $ 134,950    $ 107,217 
Net income per
common share:
Basic                  $ 0.50       $ 0.34         $ 1.50       $ 1.21    
Diluted                $ 0.49       $ 0.33         $ 1.48       $ 1.18    
                                                                             

CROCS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
                                                            
                                                                    
                                  September 30,   December 31,   September 30,
($ thousands)                     2012            2011           2011
ASSETS
Current assets:
Cash and cash equivalents         $  312,580      $  257,587     $  220,388
Accounts receivable, net of
allowances of $17,557 and            121,396         84,760         95,305
$15,508, respectively
Inventories                          187,527         129,627        151,109
Deferred tax assets, net             8,042           7,047          14,134
Income tax receivable                5,829           5,828          16,460
Other receivables                    26,105          20,295         18,488
Prepaid expenses and other          26,813        20,199       18,654   
current assets
Total current assets                 688,292         525,343        534,538
Property and equipment, net          76,577          67,684         66,115
Intangible assets, net               61,049          48,641         47,372
Deferred tax assets, net             32,882          30,375         31,423
Other assets                        32,804        23,410       24,806   
Total assets                      $  891,604     $  695,453    $  704,254  
                                                                    
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable                  $  78,103       $  66,517      $  57,354
Accrued expenses and other           94,389          76,506         75,563
current liabilities
Deferred tax liabilities, net        3,497           2,889          15,237
Income taxes payable                 25,260          8,273          22,373
Bank borrowings and current
portion of capital lease            28            1,118        1,232    
obligations
Total current liabilities            201,277         155,303        171,759
Long term income tax payable         30,449          41,665         35,427
Long term deferred tax               -               -              1,070
liabilities, net
Other liabilities                   18,894        6,705        5,749    
Total liabilities                   250,620       203,673      214,005  
                                                                    
Commitments and contingencies
Stockholders’ equity:
Preferred shares, par value
$0.001 per share, 5,000,000          -               -              -
shares authorized, none
outstanding
Common shares, par value
$0.001 per share, 250,000,000
shares authorized,
90,972,999 and 90,465,878
shares issued and
outstanding, respectively, at
Sept 30, 2012 and 90,306,432
and 89,807,146 shares issued
and outstanding,
respectively, at December 31,        91              90             90
2011
Treasury stock, at cost,
522,186 and 499,286 shares,          (19,211  )      (19,759 )      (20,103  )
respectively
Additional paid-in capital           305,204         293,959        291,609
Retained earnings                    337,620         202,669        197,098
Accumulated other                   17,280        14,821       21,555   
comprehensive income
Total stockholders’ equity          640,984       491,780      490,249  
Total liabilities and             $  891,604     $  695,453    $  704,254  
stockholders’ equity
                                                                             

                                                       Constant                                       Constant
                   Three Months Ended                      Currency    Nine Months Ended                      Currency
                   September 30,               % Change    % Change    September 30,               % Change   % Change
                                                           ^(1)                                               ^(1)
($ thousands)      2012          2011                                2012          2011                    
Channel
revenues:
Wholesale:
Americas           $ 56,445      $ 55,430      1.8    %    3.9    %    $ 187,870     $ 172,853     8.7   %    10.5  %
Asia                 76,976        71,286      8.0    %    9.4    %      249,491       211,734     17.8  %    17.6  %
Europe               22,667        27,343      (17.1  %)   (7.4   %)     97,773        109,606     (10.8 %)   (3.1  %)
Other businesses    161         (80     )   (301.3 %)   (313.8 %)    333         103        223.3 %    201.0 %
Total Wholesale      156,249       153,979     1.5    %    4.6    %      535,467       494,296     8.3   %    10.6  %
Consumer-direct:
Retail
Americas             58,798        52,407      12.2   %    12.7   %      149,296       131,404     13.6  %    14.1  %
Asia                 41,826        36,245      15.4   %    17.6   %      110,766       85,301      29.9  %    31.6  %
Europe              11,550      6,649      73.7   %    85.5   %     25,158      15,832     58.9  %    69.7  %
Total Retail         112,174       95,301      17.7   %    19.7   %      285,220       232,537     22.7  %    24.3  %
Internet
Americas             16,705        15,010      11.3   %    11.8   %      46,700        40,196      16.2  %    16.4  %
Asia                 4,893         3,654       33.9   %    36.1   %      12,319        8,672       42.1  %    42.5  %
Europe              5,548       6,953      (20.2  %)   (9.9   %)    18,603      21,488     (13.4 %)   (4.5  %)
Total Internet      27,146      25,617     6.0    %    9.4    %     77,622      70,356     10.3  %    13.2  %
Total Revenues     $ 295,569    $ 274,897    7.5    %    10.3   %    $ 898,309    $ 797,189    12.7  %    14.8  %
                                                                                                              
                                                                                                              
                                                                                                              
                   Three Months Ended                      Constant    Nine Months Ended                      Constant
                   September 30,                           Currency    September 30,                          Currency
($ thousands)      2012          2011          % Change    % Change    2012          2011          % Change   % Change
                                                           ^(1)                                               ^(1)
Regional
Revenue:
Americas           $ 131,948     $ 122,847     7.4    %    8.6    %    $ 383,866     $ 344,453     11.4  %    12.6  %
Asia                 123,695       111,185     11.3   %    13.0   %      372,576       305,707     21.9  %    22.2  %
Europe               39,765        40,945      (2.9   %)   7.3    %      141,534       146,926     (3.7  %)   4.6   %
Other businesses    161         (80     )   (301.3 %)   (313.8 %)    333         103        223.3 %    201.0 %
Total Revenues     $ 295,569    $ 274,897    7.5    %    10.3   %    $ 898,309    $ 797,189    12.7  %    14.8  %

^(1) Current period results have been restated using 2011 average foreign
exchange rates for the comparative period to enhance the visibility of the
underlying business trends excluding the impact of foreign currency exchange
rate fluctuations.


Company-operated   September   December                                September
retail            30, 2011    31, 2011  Opened      Closed  30, 2012
locations:
Geography:
Americas           195         197        21          (29)             189
Asia               182         198        74          (39)             233
Europe             33          35         43          (1)              77
Total
company-operated   410         430        138         (69)             499
retail locations
Type:
Kiosk              67          57         3           (26)             34
Store in Store     92          101        30          (32)             99
Retail stores      167         180        74          (9)              245
Outlet stores      84          92         31          (2)              121
Total
company-operated   410         430        138         (69)             499
retail locations
                                                                       
                                                                       
                   Constant               Constant
                   Currency               Currency
                   Three                  Nine
                   Months                 Months
                   Ended                  Ended
Comparable store   September              September
sales growth       30, 2012               30, 2012
^(1)               ^(2)                   ^(2)
Americas           5.5       %            3.7       %
Asia               (6.3)                  1.2
Europe             0.9                    7.5
Total              1.0       %            3.1       %
                                                                       

^(1) Comparable store status is determined on a monthly basis. Comparable
store sales begin in the thirteen month of a store's operation. Stores in
which selling square footage has changed more than 15% as a result of a
remodel, expansion or reduction are excluded until the thirteenth month they
have comparable prior year sales. Temporarily closed stores are excluded from
the comparable store sales calculation during the month of closure. Locations
closures in excess of three months are excluded until the thirteen month post
re-opening.

^(2) Current period results have been restated using 2011 average foreign
exchange rates for the comparative period to enhance the visibility of the
underlying business trends excluding the impact of foreign currency exchange
rate fluctuations.


Contact:

Investor Contact:
William I. Kent/Crocs Inc.
303-848-7000
wkent@crocs.com
or
Media Contact:
Katy Lachky/Crocs Inc.
303-848-7000
klachky@crocs.com
 
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