Crocs, Inc. Reports Fiscal 2008 Fourth Quarter and Annual Financial Results.Fiscal 2008 Cash and Cash Equivalents Increase 43% to $51.7 million vs. $36.3 Million at December 31, 2007 Fiscal 2008 Accounts Receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying Decrease 77% to $35.3 Million vs. $153 Million at December 31, 2007 Fiscal 2008 Inventory Decrease 42.3% to $143.2 Million vs. $248.4 Million at December 31, 2007 NIWOT, Colo. -- Crocs Crocs Inc. (NASDAQ: CROX) is an American company founded by Lyndon "Duke" Hanson, Scott Seamans, and George Boedecker[1] in July 2002. Based in Boulder, Colorado, the firm was created to market a lightweight plastic shoe first developed and manufactured by Foam , Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CROX) today reported financial results for the fourth quarter and fiscal year ended December 31, 2008. Revenues for the three months ended December 31, 2008 decreased 43.9% to $126.1 million compared to $224.8 million for the three months ended December 31, 2007. Revenues for the year ended December 31, 2008 decreased 14.8% to $721.6 million compared to $847.4 million for the year ended December 31, 2007. For the year ended December 31, 2008, compared to the year ended December 31, 2007, changes in our regional revenue streams include the following: * Revenue in Asia increased 22.4% to $204.9 million; * Revenue in Europe decreased 16.2% to $150.7 million; and * Revenue in the Americas decreased 26.9% to $366 million. For the year ended December 31, 2008, changes in our channel revenue streams include the following: * Revenues generated from retail sales increased 68.7% to $125.8 million; * Revenues generated from internet sales increased 28.9% to $43.7 million; and * Revenues generated from wholesale sales decreased 25.3% to $552.1 million. The Company reported a net loss of $33.2 million, or ($0.40) per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share for the three months ended December 31, 2008 compared to net income of $38.3 million, or $0.45 per diluted share for the three months ended December 31, 2007. The reported net loss of $33.2 million during the three months ended December 31, 2008 includes approximately $21.1 million in pre-tax foreign currency exchange rate non cash losses primarily on intercompany balances and approximately $0.90 million in pre-tax, restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. primarily related to the shutdown shut·down n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down of the Company's manufacturing facility in Brazil. Excluding the foreign currency exchange rate losses, net of tax, during the quarter of $16.1 million, or ($0.20) per diluted share, the Company's non-GAAP net loss amounted to $17.1 million or ($0.20) per diluted share in the three months ended December 31, 2008. The Company reported a net loss of $183.6 million or ($2.22) per diluted share for the year ended December 31, 2008 compared to net income of $168.2 million or $2.00 per diluted share for the year ended December 31, 2007. The reported loss of $183.6 million includes the following pre-tax charges: * $25.4 million in non-cash foreign currency exchange rate losses primarily on intercompany balances; * $8.6 million in restructuring charges related to the shutdown of the Company's manufacturing facilities in Brazil and in Canada; * $65.4 million representing the net non-cash change of inventory write-downs from December 31, 2007 to December 31, 2008 * $45.8 million in non-cash asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges related to goodwill, intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. and the write-off of excess equipment and tooling. Excluding these non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. , non-GAAP net loss for 2008 was $37.2 million or ($0.44) per diluted share. Gross profit for the three months ended December 31, 2008 was $56.0 million or 44.4% of revenues, compared to $125.8 million or 56.0% of revenues for the three months ended December 31, 2007. Gross profit for the year ended December 31, 2008 was $234.0 million or 32.4% of revenues, compared to $497.6 million or 58.7% of revenues for the year ended December 31, 2007. Selling, general and administrative expenses, including foreign currency exchange rate gains and losses, for the three months ended December 31, 2008 were $97.6 million or 77.4% of revenues compared to $71.9 million or 32.0% of revenues in the three months ended December 31, 2007. Selling, general and administrative expenses, including foreign currency exchange rate gains and losses, for the year ended December 31, 2008, were $368.8 million or 51% of revenues, compared to $260 million or 30.0% of revenues for the year ended December 31, 2007. On a non-GAAP basis selling, general and administrative expenses, excluding foreign currency exchange rate gains and losses, for the three months ended December 31, 2008 decreased approximately $13.3 million to $76.5 million from $89.8 million, excluding foreign currency exchange rate gains and losses, for the three months ended September 30, 2008 as a result of cost reductions actions in the following areas: * Sales and marketing; * Corporate sponsorships; * Trade shows; * Legal expense; * Consulting and contract labor; * Travel expenses; * Reduction of our global headcount; and * Reduction in our capital expenditures from initial plan levels. Balance Sheet The Company increased its cash and cash equivalents to $51.7 million as of December 31, 2008, from $36.3 million as of December 31, 2007. Borrowings under the Company's credit facility were $22.4 million at December 31, 2008 compared to $7.1 million at December 31, 2007. The Company extended the term of its bank credit facility through April 2, 2009 and is currently in discussions with other lending institutions Noun 1. lending institution - a financial institution that makes loans financial institution, financial organisation, financial organization - an institution (public or private) that collects funds (from the public or other institutions) and invests them in to arrange an asset-backed borrowing facility. The Company had accounts receivable of $35.3 million as of December 31, 2008 compared to $153.0 million as of December 31, 2007. This reduction is due to our accounts receivable collections improving as days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). decreased from 63 days for the three months ended December 31, 2007 to 26 days for the three months ended December 31, 2008. Inventories decreased $105.2 million to $143.2 million compared to $248.4 million as of December 31, 2007, primarily as a result of inventory write-downs during the three months ended September 30, 2008. Ron Snyder, President and Chief Executive Officer of Crocs, Inc. commented: "While our fourth quarter results were better than expectations, our year-over-year comparisons reflect the ongoing global economic slowdown that began approximately 12-months ago. Throughout 2008, we took several important steps to address the decline in consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. which we believe will better position our Company in this challenging environment. This included rationalizing our manufacturing base, consolidating our distribution centers and warehouse space, and lowering our worldwide headcount. We also continue to reduce major categories of our SG&A including marketing, legal and headcount, somewhat offset by increases in our retail and internet division rollouts. We are disappointed with our full year operating results; however, we are pleased by our improved cash, accounts receivable, and inventory positions versus a year ago. Importantly, we believe that the right sizing of our infrastructure combined with our enhanced balance sheet will allow us to internally fund our working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. in 2009." Guidance For the first quarter ending March 31, 2009, the Company expects to generate revenues of between $110 to $135 million and a diluted loss per share of approximately $(0.32) to $(0.17). Our guidance includes an estimated non-cash foreign currency exchange loss of $10 million. Due to global market uncertainty, we are not giving annual guidance at this time. Mr. Snyder concluded, "We are confident that our global brand equity remains strong and we continue to be optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the long-term potential of our business. We begin 2009 focused on leveraging our core competencies A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. our operations. At the same time our entire organization is committed to improving productivity in order to generate cash and drive profitability going forward." Conference Call Information A conference call to discuss fourth quarter and fiscal 2008 year-end financial results is scheduled for today (February 19, 2009) 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 Digital jukebox software for Windows from Microsoft that plays a variety of audio, video and streaming formats including MP3, WMA, CD audio and MIDI. Starting with Version 6.2 in 1999, the Windows Media Rights Manager was added for securing copyrighted content. installed. If you do not have Windows Media Player, go to the latter site prior to the call, where you can download the software for free. About Crocs, Inc. Crocs, Inc. is a designer, manufacturer and retailer of footwear for men, women and children under the Crocs[TM] brand. All Crocs[TM] brand shoes feature Crocs' proprietary closed-cell resin, Croslite[TM], which represents a substantial innovation in footwear. The Croslite[TM] material enables Crocs to produce soft, comfortable, lightweight, superior-gripping, non-marking and odor-resistant shoes. These unique elements make Crocs[TM] footwear ideal for casual wear, as well as for professional and recreational uses such as boating, hiking hiking Walking, often among hills or mountains, as recreational sport. It represents an activity in its own right and also figures in backpacking, camping, hunting, mountaineering, and orienteering. , hospitality and gardening. The versatile use of the material has enabled Crocs to successfully market its products to a broad range of consumers. Crocs[TM] shoes are sold in 100 countries and come in a wide array of colors not of the white race; - commonly meaning, esp. in the United States, of negro blood, pure or mixed. See also: Color and styles. Please visit www.crocs.com for additional information. Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. The matters regarding the future discussed in this news release include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 mac·ro·ec·o·nom·ics n. (used with a sing. verb) The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. issues, including, but not limited to, the current global financial crisis; our ability to obtain adequate financing; our significant recent expansion; our ability to manage our future growth effectively; changing fashion trends; our defense and the ultimate outcome of a pending class action lawsuit class action lawsuit A lawsuit in which one party or a limited number of parties sue on behalf of a larger group to which the parties belong. For example, investors may bring a class action lawsuit against a brokerage firm that has actively promoted a tax ; our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results; our management and information systems infrastructure; our ability to obtain and protect intellectual property rights; our reliance on third party manufacturing and logistics providers for the production and distribution of products; our limited manufacturing capacity and distribution channels; our reliance on a single source supply for certain raw materials; inherent risks associated with the manufacture, distribution and sale of our products overseas; our reliance on market acceptance of the small number of products we sell; our ability to develop and sell new products; our limited operating history; our ability to accurately forecast consumer demand for our products; our ability to maintain effective internal controls; our ability to attract, assimilate as·sim·i·late v. 1. To consume and incorporate nutrients into the body after digestion. 2. To transform food into living tissue by the process of anabolism. and retain management talent; retail environment; our ability to effectively market and maintain a positive brand image; the effect of competition in our industry; the effect of potential adverse currency exchange rate fluctuations; and other factors described in our annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 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. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] (1) In the three months ended December 31, 2008, the Company experienced significant non-cash foreign currency exchange rate loss. The proforma adjustments in the GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). to non-GAAP reconciliation above represent the add back of GAAP charges taken in connection with our fourth quarter foreign currency exchange rate loss, net of tax calculated based on our fourth quarter effective tax rate of 23.6% (2) As the Company reported a GAAP net loss for the quarter ended December 31, 2008, the dilutive effect Dilutive effect Result of a transaction that decreases earnings per common share (EPS). of stock options and awards were not included in the computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. of diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of because their inclusion would have been anti-dilutive. (3) Income tax benefit estimated based on the full year effective tax rate of 3.1% applied to non-GAAP net loss before income taxes and quarterly effective tax rate of 23.6% for the three months ended December 31, 2008 |
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