Crocs Inc. Reports Record Second Quarter Revenue of $363.8 Million and Positive Quarterly Global Comparable Store Sales Growth

  Crocs Inc. Reports Record Second Quarter Revenue of $363.8 Million and
  Positive Quarterly Global Comparable Store Sales Growth

Business Wire

NIWOT, Colo. -- July 24, 2013

Crocs Inc. (NASDAQ: CROX) reported today financial results for the second
quarter of 2013.

Second Quarter 2013 Review

  *Record revenue of $363.8 million
  *Gross Margin of 55.2 percent
  *Net income of $35.4 million
  *Earnings per diluted share of $0.40
  *Non-GAAP adjusted net income^1 per diluted share of $0.48

“Our second quarter revenue grew 12.5% on a constant currency basis and
reflects the global appeal of the Crocs brand, the success of our new
spring/summer collections, including the Huarache, A-Leigh, Beach Line Boat
and Retro collections, combined with the ongoing strength of our core product
line-up,” said John McCarvel, President and Chief Executive Officer.
“Globally, our direct to consumer channel continues to be a key component of
our success. Our Asia Pacific region remains a fundamental driver of our
growth strategy as all channels in the region continue to exceed
expectations.”

“During the quarter we strategically managed our global sales channels and
balance sheet. Our direct to consumer channel performed very well, growing
nearly 20% on a constant currency basis, with positive same store sales in
Asia, the Americas and Europe. Wholesale revenue was higher globally, but
margins in this channel, particularly in the Americas and Europe, were down
due to lower than anticipated late season at-once revenue and increased
discount activity late in the quarter, which negatively impacted earnings per
share. Challenges during the quarter included continued weakness in consumer
spending in the U.S., Europe and Japan, compounded by colder than normal
temperatures during April and May in the U.S. and Europe. Our cash balance at
quarter-end was $289 million, and inventory decreased to $161 million or 2.5%
from December 31, 2012, as inventory turns increased to 3.8.”

Second Quarter Results

Revenue for the second quarter of 2013 increased 9.9% to $363.8 million
compared with revenue of $330.9 million reported in the second quarter of
2012. On a constant currency basis revenue increased 12.5% for the second
quarter of 2013.

For second quarter of 2013, the company had net income of $35.4 million or
$0.40 per diluted share, compared with net income of $61.5 million or $0.68
per diluted share in the prior year period. Diluted earnings per share during
the second quarter of 2013 were negatively impacted by lower than expected
gross margins, a one-time net charge of $6.1 million related to the resolution
of a statutory tax audit in Brazil, which reduced earnings by $0.07 per share,
and a higher than anticipated tax rate of 29%, which reduced earnings by $0.02
per share.

Adjusting for the impact of the statutory tax audit in Brazil and $1.6 million
relating to the implementation of a new ERP system including non-cash
accelerated depreciation and cash expenses for program management, training
and other non-capitalized costs, the company had Non-GAAP adjusted net income
of $43.1 million in the quarter or $0.48 per diluted share.

Mr. McCarvel continued, “When we look back on the second quarter we had
various items impact our results versus our guidance. Those included lower
gross margins, the resolution of the tax audit in Brazil and a higher tax
rate. Together with year-over-year impacts of currency which reduced our
earnings per share by $0.06 plus our investments in our new ERP system and
increased marketing, the impact of these items totaled $0.17 per share in the
quarter.”

Margins

Gross profit for the second quarter of 2013 increased 2.4% to $200.9 million,
or 55.2% as a percentage of sales, compared with $196.1 million, or 59.3% as a
percentage of sales in the prior year period. The year- over-year decrease in
gross profit as a percentage of sales was primarily related to slower late
season at-once revenue and increased discounting late in the quarter in the
Americas and Europe. Selling, General & Administrative (“SG&A”) expenses
increased 20.5% to $150.2 million compared with $124.7 million a year ago,
reflecting increases in retail store space, marketing expenses, resolution of
the Brazil tax audit, and the company’s ERP project. As a percentage of sales,
SG&A increased to 41.3% compared with 37.7% in the second quarter of 2012. The
impact of the non-recurring Brazil expense and the ERP expense contributed
approximately 200 basis points to the increase in SG&A expense as a percentage
of sales in the quarter.

Second Quarter Revenue Results

The following tables detail the company’s second quarter 2013 and 2012
revenues:

                  Three Months Ended     Change                Constant Currency
                   June 30,                                       Change^(1)
($ thousands)      2013       2012        $           %         $           %
Channel
revenues:
Wholesale:
Americas           $ 69,089    $ 62,369    $ 6,720      10.8  %   $ 7,041      11.3 %
Asia Pacific         67,383      54,285      13,098     24.1        12,080     22.3
Japan                31,053      39,335      (8,282 )   (21.1 )     (1,228 )   (3.1 )
Europe               33,742      32,490      1,252      3.9         623        1.9
Other businesses    98         47         51        108.5     44        93.6 
Total Wholesale      201,365     188,526     12,839     6.8         18,560     9.8
Consumer-direct:
Retail:
Americas             61,041      54,952      6,089      11.1        6,243      11.4
Asia Pacific         40,871      35,002      5,869      16.8        5,375      15.4
Japan                12,327      13,357      (1,030 )   (7.7  )     1,844      13.8
Europe              18,050     9,163      8,887     97.0      8,814     96.2 
Total Retail         132,289     112,474     19,815     17.6        22,276     19.8
Internet:
Americas             16,125      17,290      (1,165 )   (6.7  )     (1,140 )   (6.6 )
Asia Pacific         3,578       2,338       1,240      53.0        1,166      49.9
Japan                2,092       2,540       (448   )   (17.6 )     35         1.4
Europe              8,378      7,774      604       7.8       411       5.3  
Total Internet      30,173     29,942     231       0.8       472       1.6  
Total revenues:    $ 363,827   $ 330,942   $ 32,885    9.9   %   $ 41,308    12.5 %
                                                                               
                                                                               
                   Three Months Ended      Change                 Constant Currency
                   June 30,                                       Change^(1)
($ thousands)      2013        2012        $            %         $            %
Regional
Revenue:
Americas           $ 146,255   $ 134,611   $ 11,644     8.7   %   $ 12,144     9.0  %
Asia Pacific         111,832     91,625      20,207     22.1        18,621     20.3
Japan                45,472      55,232      (9,760 )   (17.7 )     651        1.2
Europe               60,170      49,427      10,743     21.7        9,848      19.9
Other businesses    98         47         51        108.5     44        93.6 
Total Revenues     $ 363,827   $ 330,942   $ 32,885    9.9   %   $ 41,308    12.5 %

^(1) Current period results have been restated using 2012 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.

Other Financial Information

Comparable Store Sales Results^2

Comparable store sales on a constant currency basis for the second quarter of
2013 compared to the second quarter 2012 were as follows: Global increased
1.0%, Americas increased 1.5%, Asia Pacific increased 8.3%, Japan decreased
19.5% and Europe increased 1.0%. Excluding Japan, comparable store sales
growth increased 4.4%.

                               Constant Currency   Constant Currency
                                Three Months Ended   Three Months Ended
Comparable store sales growth   June 30, 2013        June 30, 2012
Americas                        1.5         %        (1.2        )%
Asia Pacific                    8.3                  11.5
Japan                           (19.5       )        (11.3       )
Europe                          1.0                 8.7         
Total                           1.0         %        1.8         %
                                                           

Mr. McCarvel continued, “We saw same store sales growth accelerate throughout
the quarter with improved weather. Our Asia Pacific business expanded 8
percent on a same store sales basis with limited discounting or promotional
activity.”

Balance Sheet

Cash and cash equivalents at June 30, 2013 decreased 1.7% compared with
December 31, 2012. During the first six months of 2013 the Company repurchased
approximately 834,000 shares of common stock for an aggregate of approximately
$12.5 million in cash.

Inventories at June 30, 2013 were $160.8 million, down 2.5% compared with
inventory at December 31, 2012.

Backlog

Backlog at June 30, 2013 was $161.0 million, down 6.7% compared with $172.6
million in the prior year period. On a constant currency basis backlog at June
30, 2013 was lower by an estimated 3% compared with the prior year period. The
Company believes the decline in backlog is reflective of wholesale accounts
taking a cautious view towards fall holiday 2013 orders based on weaker than
expected spring 2013 sales and also the desire of some accounts to order
product more on an at-once basis.

Financial Outlook

For the third quarter of 2013, the company expects revenue between $300
million and $310 million and diluted earnings per share between $0.20 and
$0.23. This outlook includes $(0.02) per share of ERP implementation expense
and reflects an impact of $(0.04) for currency translation.

Conference Call Information

A conference call to discuss Crocs’ second quarter 2013 results is scheduled
for today (July 24, 2013) 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 and at
www.earnings.com. An audio replay of the webcast will be available on the
Crocs website for one year.

Interested parties are advised to log on to the live webcast at least fifteen
minutes prior to the call in order to download the necessary software.

About Crocs, Inc.

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.

Visit www.crocs.com for additional information.

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, investments in our business, outlook 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.

All information in this document speaks as of July 24, 2013. 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.

^1 Non-GAAP adjusted net income is a financial measure not calculated in
accordance with U.S. Generally Accepted Accounting Principles (non-GAAP). See
the non-GAAP reconciliations set forth later in this press release for
additional information.

^2 Comparable store status is determined on a monthly basis. Comparable store
sales begin in the thirteenth 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. Location
closures in excess of three months are excluded until the thirteen month post
re-opening. Current period results have been restated using 2012 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.


CROCS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

                         Three Months Ended         Six Months Ended
                          June 30,                   June 30,
($ thousands, except      2013         2012         2013         2012
per share data)
Revenues                  $ 363,827     $ 330,942    $ 675,483     $ 602,740
Cost of sales              162,960     134,857    308,767     261,856 
Gross profit                200,867       196,085      366,716       340,884
Selling, general and        150,246       124,718      278,445       229,009
administrative expenses
Asset impairment           202         106        202         819     
Income from operations      50,419        71,261       88,069        111,056
Foreign currency
transaction (gains)         814           (1,627  )    3,414         2,649
losses, net
Interest income             (517    )     (549    )    (823    )     (907    )
Interest expense            266           132          475           179
Other (income) expense,    195         (520    )   167         (761    )
net
Income before income        49,661        73,825       84,836        109,896
taxes
Income tax expense         14,305      12,301     20,519      20,026  
Net income                $ 35,356     $ 61,524    $ 64,317     $ 89,870  
Net income per common
share:
Basic                     $ 0.40       $ 0.68      $ 0.73       $ 1.00    
Diluted                   $ 0.40       $ 0.68      $ 0.72       $ 0.99    
                                                                             


CROCS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                                                               
                                                    June 30,      December 31,
($ thousands, except number of shares)              2013          2012
ASSETS
Current assets:
Cash and cash equivalents                           $ 289,354     $  294,348
Accounts receivable, net of allowances of $16,918     162,263        92,278
and $13,315, respectively
Inventories                                           160,763        164,804
Deferred tax assets, net                              5,628          6,284
Income tax receivable                                 12,307         5,613
Other receivables                                     17,293         24,821
Prepaid expenses and other current assets            31,051       24,967  
Total current assets                                  678,659        613,115
Property and equipment, net                           88,770         82,241
Intangible assets, net                                64,082         59,931
Deferred tax assets, net                              33,283         34,112
Other assets                                         54,167       40,239  
Total assets                                        $ 918,961    $  829,638 
                                                                  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable                                    $ 76,666      $  63,976
Accrued expenses and other current liabilities        90,963         81,371
Deferred tax liabilities, net                         2,388          2,405
Income taxes payable                                  25,363         8,147
Current portion of long-term borrowings and          3,031        2,039   
capital lease obligations
Total current liabilities                             198,411        157,938
Long term income tax payable                          32,129         36,343
Long-term borrowings and capital lease                6,899          4,596
obligations
Other liabilities                                    13,913       13,361  
Total liabilities                                    251,352      212,238 
                                                                  
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, 91,565,533 and
88,345,143 shares issued and outstanding,             92             91
respectively, at June 30, 2013 and 91,047,297 and
88,662,845 shares issued and outstanding,
respectively, at December 31, 2012
Treasury stock, at cost, 3,220,390 and 2,384,452      (56,343 )      (44,214 )
shares, respectively
Additional paid-in capital                            316,111        307,823
Retained earnings                                     398,329        334,012
Accumulated other comprehensive income               9,420        19,688  
Total stockholders’ equity                           667,609      617,400 
Total liabilities and stockholders’ equity          $ 918,961    $  829,638 
                                                                  

CROCS, INC. AND SUBSIDIARIES
NON-GAAP NET INCOME RECONCILIATIONS (UNAUDITED)
(In thousands)

The Company prepares and reports its financial statements in accordance with
U.S. Generally Accepted Accounting Principles (“GAAP”). Internally, management
monitors the operating performance of its business using the non-GAAP metrics
constant currency and Non-GAAP adjusted net income. Constant currency excludes
the effects of foreign exchange rate fluctuations by restating current period
results using the prior year average exchange rates. Non-GAAP adjusted net
income excludes the impact of new enterprise resource planning system (“ERP”)
implementation expenses, a one-time net expense related to the resolution of a
statutory tax audit in Brazil and the accelerated depreciation and
amortization of our current ERP system. In management’s opinion, these
non-GAAP measures are used by, and are useful to, investors and other users of
our financial statements in evaluating operating performance by providing
better comparability between reporting periods because they exclude items that
may not be indicative of overall business trends and provide a better baseline
for analyzing trends in our operations. The Company does not, nor does it
suggest that investors should, consider such non-GAAP financial measures in
isolation from, or as a substitute for, financial information prepared in
accordance with GAAP. The Company believes the disclosure of the effects of
these items increases the reader’s understanding of the underlying performance
of the business and that such non-GAAP financial measures provide investors
with an additional tool to evaluate our financial results and assess our
prospects for future performance.

The following is a reconciliation of our net income, the most directly
comparable U.S. GAAP measure, to Non-GAAP adjusted net income:

                                                  
                       Three Months Ended June 30,   Six Months Ended June 30,
Reconciliation of
GAAP Net Income to     2013            2012         2013          2012
Non-GAAP Adjusted
Net Income:
GAAP net income        $   35,356       $  61,524    $   64,317     $  89,870
New ERP                    715             -             1,846         -
implementation ^(1)
Brazil tax credits         6,094           -             6,094         -
^(2)
Depreciation and          913            -            1,635        -
amortization ^(3)
Non-GAAP adjusted      $   43,078       $  61,524    $   73,892     $  89,870
net income
                                                                 
Non-GAAP adjusted
net income per         $   0.48         $  0.68      $   0.83       $  0.99
diluted share

^(1) This proforma adjustment in the GAAP to Non-GAAP reconciliations above
represents expenses related to the implementation of a new ERP system.

^(2) This proforma adjustment in the GAAP to Non-GAAP reconciliations above
represents a one-time net expense related to the resolution of a statutory tax
audit in Brazil. In April 2013, the State of Sao Paulo, Brazil government
(“Brazil”) assessed sales taxes, interest and penalties for the period April
2009 to May 2011. We had previously tendered these taxes using Brazil
obligations purchased from third parties at a discount. On May 22, 2013, we
applied for amnesty in order to receive a significant reduction in penalties
and interest, agreed to amend our 2009 through 2012 tax returns to remove the
Brazil obligations, and agreed to settle the assessment in cash to Brazil. In
June 2013, cash payment was made to Brazil, in full satisfaction of the Brazil
assessment. Brazil is making court-ordered payments to holders of the Brazil
obligations along with accrued interest. The Company anticipates that the
Brazil obligations (plus accrued interest) will be paid by Brazil in
accordance with the court-orders. The Company is carrying the Brazil
obligations at the original discounted cost to the Company and intends to hold
the Brazil obligations until paid by Brazil.
                                        
^(3) This proforma adjustment in this GAAP to Non-GAAP reconciliation
represents the add-back of accelerated depreciation and amortization on
tangible and intangible items related to our current ERP system and supporting
platforms that will no longer be utilized once the implementation of a new ERP
is complete.


CROCS, INC. AND SUBSIDIARIES
RETAIL STORE COUNTS
(UNAUDITED)

                                    June 30,                  June 30,
Company-operated retail locations:   2012       Opened   Closed   2013
Type:
Kiosk/Store in Store                 153        30       (58)     125
Retail Stores                        220        108      (23)     305
Outlet Stores                        111        39       (5)      145
Total                                484        177      (86)     575
Operating segment:
Americas                             197        45       (35)     207
Asia Pacific                         201        52       (47)     206
Japan                                32         18       (1)      49
Europe                               54         62       (3)      113
Total                                484        177      (86)     575
                                                                  


CROCS, INC. AND SUBSIDIARIES
BACKLOG
(UNAUDITED)
                               
                      June 30,
($ thousands)         2013        2012
Americas              $ 58,628    $ 68,613
Asia Pacific            53,430      50,459
Japan                   28,748      32,265
Europe                 20,230     21,249
Total backlog ^ (1)   $ 161,036   $ 172,586
                                  

^(1) Backlog numbers represent preseason wholesale orders, generally four to
six months prior to shipment. Backlog as of a particular date is affected by a
number of factors, including seasonality, manufacturing schedules and the
timing of product shipments. Further, the mix of future and immediate delivery
orders can vary significantly period over period. Due to these factors and
since unfulfilled orders can be canceled by our customers at any time prior to
shipment, backlog may not be a reliable measure of future sale and comparison
of backlog from period to period may be misleading.

Contact:

Crocs Inc.
Investor Contact:
William I. Kent, 303-848-7000
wkent@crocs.com
or
Media Contact:
Katy Michael, 303-848-7000
kmichael@crocs.com