UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2021~~March 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 000-51754

CROCS, INC.

(Exact name of registrant as specified in its charter)


Delaware						20-2164234
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

13601 Via Varra, Broomfield, Colorado 80020

(Address, including zip code, of registrant’s principal executive offices)

(303) 848-7000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

Trading symbol:

Name of each exchange on which registered:

Common Stock, par value $0.001 per share

CROX

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

☒

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~July 15, 2021,~~April 28, 2022, Crocs, Inc. had ~~62,385,533~~61,575,215 shares of its common stock, par value $0.001 per share, outstanding.

Table of Contents

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. From time to time, we may also provide oral or written forward-looking statements in other materials we release to the public. Such forward-looking statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995.

Statements that refer to industry trends, projections of our future financial performance, anticipated trends in our business and other characterizations of future events or circumstances are forward-looking statements. These statements, which express management’s current views concerning future events or results, use words like “anticipate,” “assume,” “believe,” “continue,” “estimate,” “expect,” “future,” “intend,” “plan,” “project,” “strive,” and future or conditional tense verbs like “could,” “may,” “might,” “should,” “will,” “would,” and similar expressions or variations. Examples of forward-looking statements include, but are not limited to, statements we make regarding

•our expectations regarding future trends, expectations, and performance of our business;

•our expectations regarding supply chain disruptions;

•our belief that we have sufficient liquidity to fund our business operations during the next twelve months;

•our expectations about the impact of our strategic plans;

•the amount and timing of our capital expenditures; and

•our intent to achieve various Environmental, Social, and Governance initiatives.

Forward-looking statements are subject to risks, uncertainties, and other factors, which may cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, without limitation, those described in the section entitled “Risk Factors” under Item 1A in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 and our subsequent filings with the Securities and Exchange ~~Commission.~~Commission, including those described in the section entitled “Risk Factors” under Item 1A in this report. Caution should be taken not to place undue reliance on any such forward-looking statements. Moreover, such forward-looking statements speak only as of the date of this report. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such ~~statements.~~statements, except as required by applicable law.

Table of Contents

Crocs, Inc.

Table of Contents to the Quarterly Report on Form 10-Q

For the Quarterly Period Ended ~~June 30, 2021~~March 31, 2022

Table of Contents

PART I — Financial Information

ITEM 1. Financial Statements

CROCS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share data)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Revenues	Revenues	$	640,773	$	331,549	$	1,100,871	$	612,709	Revenues	$	660,148	$	460,098
Cost of sales	Cost of sales	245,592		151,616		452,471		298,614		Cost of sales	335,224		206,879
Gross profit	Gross profit	395,181		179,933		648,400		314,095		Gross profit	324,924		253,219
Selling, general and administrative expenses	Selling, general and administrative expenses	199,859		123,338		328,392		236,688		Selling, general and administrative expenses	206,247		128,533
Income from operations	Income from operations	195,322		56,595		320,008		77,407		Income from operations	118,677		124,686
Foreign currency losses, net		(117)		(687)		(621)		(918)
Foreign currency gains (losses), net										Foreign currency gains (losses), net	480		(504)
Interest income	Interest income	71		49		98		146		Interest income	102		27
Interest expense	Interest expense	(4,712)		(2,170)		(6,344)		(4,091)		Interest expense	(19,252)		(1,632)
Other income, net		2		907		13		928
Other income (expense), net										Other income (expense), net	(947)		11
Income before income taxes	Income before income taxes	190,566		54,694		313,154		73,472		Income before income taxes	99,060		122,588
Income tax expense (benefit)		(128,388)		(1,857)		(104,198)		5,830
Income tax expense										Income tax expense	26,300		24,190
Net income	Net income	$	318,954	$	56,551	$	417,352	$	67,642	Net income	$	72,760	$	98,398
Net income per common share:	Net income per common share:									Net income per common share:
Basic	Basic	$	5.02	$	0.84	$	6.47	$	1.00	Basic	$	1.22	$	1.50
Diluted	Diluted	$	4.93	$	0.83	$	6.35	$	0.99	Diluted	$	1.19	$	1.47
Weighted average common shares outstanding:	Weighted average common shares outstanding:									Weighted average common shares outstanding:
Basic	Basic	63,595		67,416		64,526		67,674		Basic	59,823		65,458
Diluted	Diluted	64,640		68,038		65,744		68,664		Diluted	60,896		66,848

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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CROCS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(in thousands)

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Net income $ 318,954 $ 56,551 $ 417,352 $ 67,642
Other comprehensive income (loss):
Foreign currency translation gains (losses), net 3,442 3,543 (7,186) (7,823)
Reclassification of foreign currency translation loss to income (1)
0 0 0 (164)
Total comprehensive income $ 322,396 $ 60,094 $ 410,166 $ 59,655

~~(1)~~ ~~Represents the reclassification of cumulative foreign currency translation adjustment upon liquidation of foreign subsidiaries during the six months ended June 30, 2020.~~


	Three Months Ended March 31,
	2022		2021
Net income	$	72,760	$	98,398
Other comprehensive loss:
Foreign currency translation losses, net	(10,151)		(10,628)

Total comprehensive income	$	62,609	$	87,770

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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CROCS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and par value amounts)


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	197,853	$	135,802	Cash and cash equivalents	$	171,969	$	213,197
Restricted cash - current	Restricted cash - current	1,469		1,542		Restricted cash - current	34		65
Accounts receivable, net of allowances of $22,508 and $21,093, respectively		233,262		149,847
Accounts receivable, net of allowances of $23,041 and $20,715, respectively						Accounts receivable, net of allowances of $23,041 and $20,715, respectively	375,750		182,629
Inventories	Inventories	209,089		175,121		Inventories	407,589		213,520
Income taxes receivable	Income taxes receivable	1,352		1,857		Income taxes receivable	24,536		22,301
Other receivables	Other receivables	14,438		10,816		Other receivables	16,599		12,252
Prepaid expenses and other assets	Prepaid expenses and other assets	21,052		17,856		Prepaid expenses and other assets	42,061		22,605
Total current assets	Total current assets	678,515		492,841		Total current assets	1,038,538		666,569
Property and equipment, net of accumulated depreciation and amortization of $85,351 and $86,305, respectively		76,949		57,467
Intangible assets, net of accumulated amortization of $103,741 and $95,426, respectively		33,731		37,636
Property and equipment, net of accumulated depreciation and amortization of $85,601 and $83,745, respectively						Property and equipment, net of accumulated depreciation and amortization of $85,601 and $83,745, respectively	135,649		108,398
Intangible assets, net of accumulated amortization of $112,011 and $108,167, respectively						Intangible assets, net of accumulated amortization of $112,011 and $108,167, respectively	1,895,980		28,802
Goodwill	Goodwill	1,669		1,719		Goodwill	642,467		1,600
Deferred tax assets, net	Deferred tax assets, net	515,667		350,784		Deferred tax assets, net	547,733		567,201
Restricted cash	Restricted cash	3,857		1,929		Restricted cash	3,365		3,663
Right-of-use assets	Right-of-use assets	175,378		167,421		Right-of-use assets	199,805		160,768
Other assets	Other assets	8,036		8,926		Other assets	7,123		8,067
Total assets	Total assets	$	1,493,802	$	1,118,723	Total assets	$	4,470,660	$	1,545,068

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	166,817	$	112,778	Accounts payable	$	202,919	$	162,145
Accrued expenses and other liabilities	Accrued expenses and other liabilities	156,565		126,704		Accrued expenses and other liabilities	185,969		166,887
Income taxes payable	Income taxes payable	11,814		5,038		Income taxes payable	67,310		16,279
Current borrowings						Current borrowings	25,173		—
Current operating lease liabilities	Current operating lease liabilities	45,726		47,064		Current operating lease liabilities	49,414		42,932
Total current liabilities	Total current liabilities	380,922		291,584		Total current liabilities	530,785		388,243
Long-term deferred tax liability						Long-term deferred tax liability	329,950		—
Long-term income taxes payable	Long-term income taxes payable	200,969		205,974		Long-term income taxes payable	226,188		219,744
Long-term borrowings	Long-term borrowings	386,383		180,000		Long-term borrowings	2,851,256		771,390
Long-term operating lease liabilities	Long-term operating lease liabilities	162,552		146,401		Long-term operating lease liabilities	181,065		149,237
Other liabilities	Other liabilities	4,212		4,131		Other liabilities	2,246		2,372
Total liabilities	Total liabilities	1,135,038		828,090		Total liabilities	4,121,490		1,530,986
Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies	0		0
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, par value $0.001 per share, 5.0 million shares authorized including 1.0 million authorized as Series A Convertible Preferred Stock, 0ne outstanding		0		0
Common stock, par value $0.001 per share, 250.0 million shares authorized, 105.7 million and 105.0 million issued, 62.4 million and 65.9 million outstanding, respectively		106		105
Treasury stock, at cost, 43.3 million and 39.1 million shares, respectively		(1,078,857)		(688,849)
Preferred stock, par value $0.001 per share, 5.0 million shares authorized including 1.0 million authorized as Series A Convertible Preferred Stock, none outstanding						Preferred stock, par value $0.001 per share, 5.0 million shares authorized including 1.0 million authorized as Series A Convertible Preferred Stock, none outstanding	—		—
Common stock, par value $0.001 per share, 250.0 million shares authorized, 109.2 million and 105.9 million issued, 61.6 million and 58.3 million outstanding, respectively						Common stock, par value $0.001 per share, 250.0 million shares authorized, 109.2 million and 105.9 million issued, 61.6 million and 58.3 million outstanding, respectively	109		106
Treasury stock, at cost, 47.7 million and 47.6 million shares, respectively						Treasury stock, at cost, 47.7 million and 47.6 million shares, respectively	(1,690,312)		(1,684,262)
Additional paid-in capital	Additional paid-in capital	530,357		482,385		Additional paid-in capital	774,562		496,036
Retained earnings	Retained earnings	970,698		553,346		Retained earnings	1,351,800		1,279,040
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(63,540)		(56,354)		Accumulated other comprehensive loss	(86,989)		(76,838)
Total stockholders’ equity	Total stockholders’ equity	358,764		290,633		Total stockholders’ equity	349,170		14,082
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	1,493,802	$	1,118,723	Total liabilities and stockholders’ equity	$	4,470,660	$	1,545,068

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

CROCS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands)

Common Stock Treasury Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
Loss Total
Stockholders'
Equity
Shares Amount Shares Amount
Balance at March 31, 2021 65,225 $ 106 40,383 $ (783,926) $ 525,289 $ 651,744 $ (66,982) $ 326,231
Share-based compensation — — — — 11,294 — — 11,294
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units 47 0 10 (1,158) 1 — — (1,157)
Repurchases of common stock (2,890) — 2,890 (293,773) (6,227) — — (300,000)
Net income — — — — — 318,954 — 318,954
Other comprehensive income — — — — — — 3,442 3,442
Balance at June 30, 2021 62,382 $ 106 43,283 $ (1,078,857) $ 530,357 $ 970,698 $ (63,540) $ 358,764


	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance at December 31, 2021	58,330	$	106	47,583	$	(1,684,262)	$	496,036	$	1,279,040	$	(76,838)	$	14,082
Share-based compensation	—	—		—	—		8,275		—		—		8,275
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units, net of shares withheld for taxes	390	—		75	(6,050)		(142)		—		—		(6,192)
Repurchases of common stock	—	—		—	—		—		—		—		—
Share issuance at Acquisition	2,852	3		—	—		270,393		—		—		270,396
Net income	—	—		—	—		—		72,760		—		72,760
Other comprehensive loss	—	—		—	—		—		—		(10,151)		(10,151)
Balance at March 31, 2022	61,572	$	109	47,658	$	(1,690,312)	$	774,562	$	1,351,800	$	(86,989)	$	349,170

Common Stock Treasury Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
Loss Total
Stockholders'
Equity
Shares Amount Shares Amount
Balance at March 31, 2020 67,375 $ 105 37,470 $ (587,940) $ 500,197 $ 251,576 $ (69,909) $ 94,029
Share-based compensation — — — — 1,978 — — 1,978
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units 80 0 0 0 783 — — 783
Repurchases of common stock 0 — 0 0 0 — — 0
Net income — — — — — 56,551 — 56,551
Other comprehensive income — — — — — — 3,543 3,543
Balance at June 30, 2020 67,455 $ 105 37,470 $ (587,940) $ 502,958 $ 308,127 $ (66,366) $ 156,884


	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance at December 31, 2020	65,856	$	105	39,132	$	(688,849)	$	482,385	$	553,346	$	(56,354)	$	290,633
Share-based compensation	—	—		—	—		8,054		—		—		8,054
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units, net of shares withheld for taxes	481	1		139	(10,462)		235		—		—		(10,226)
Repurchases of common stock	(1,112)	—		1,112	(84,615)		34,615		—		—		(50,000)
Net income	—	—		—	—		—		98,398		—		98,398
Other comprehensive loss	—	—		—	—		—		—		(10,628)		(10,628)
Balance at March 31, 2021	65,225	$	106	40,383	$	(783,926)	$	525,289	$	651,744	$	(66,982)	$	326,231

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~Table of Contents~~

~~CROCS, INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY~~

~~(UNAUDITED)~~

~~(in thousands)~~

Common Stock Treasury Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
Loss Total
Stockholders'
Equity
Shares Amount Shares Amount
Balance at December 31, 2020 65,856 $ 105 39,132 $ (688,849) $ 482,385 $ 553,346 $ (56,354) $ 290,633
Share-based compensation — — — — 19,348 — — 19,348
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units 528 1 149 (11,620) 236 — — (11,383)
Repurchases of common stock (4,002) — 4,002 (378,388) 28,388 — — (350,000)
Net income — — — — — 417,352 — 417,352
Other comprehensive loss — — — — — — (7,186) (7,186)
Balance at June 30, 2021 62,382 $ 106 43,283 $ (1,078,857) $ 530,357 $ 970,698 $ (63,540) $ 358,764

Common Stock Treasury Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
Loss Total
Stockholders'
Equity
Shares Amount Shares Amount
Balance at December 31, 2019 68,232 $ 104 35,796 $ (546,208) $ 495,903 $ 240,485 $ (58,379) $ 131,905
Share-based compensation — — — — 5,942 — — 5,942
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units 782 1 115 (2,573) 1,113 — — (1,459)
Repurchases of common stock (1,559) — 1,559 (39,159) 0 — — (39,159)
Net income — — — — — 67,642 — 67,642
Other comprehensive loss — — — — — — (7,987) (7,987)
Balance at June 30, 2020 67,455 $ 105 37,470 $ (587,940) $ 502,958 $ 308,127 $ (66,366) $ 156,884

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

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CROCS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)


		Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	417,352	$	67,642	Net income	$	72,760	$	98,398
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	15,749		13,499		Depreciation and amortization	7,895		8,054
Operating lease cost	Operating lease cost	29,758		30,213		Operating lease cost	14,231		14,832
Inventory donations		641		8,821
Provision for (recovery of) doubtful accounts, net		(2,556)		6,507

Share-based compensation	Share-based compensation	19,348		5,942		Share-based compensation	8,275		8,054
Deferred income taxes		(176,862)		0

Other non-cash items	Other non-cash items	836		2,029		Other non-cash items	9,695		(1,844)
Changes in operating assets and liabilities:
Changes in operating assets and liabilities, net of acquired assets and liabilities:						Changes in operating assets and liabilities, net of acquired assets and liabilities:
Accounts receivable	Accounts receivable	(82,621)		(62,146)		Accounts receivable	(130,661)		(81,186)
Inventories	Inventories	(36,099)		11,240		Inventories	(28,124)		(23,795)
Prepaid expenses and other assets	Prepaid expenses and other assets	4,059		1,002		Prepaid expenses and other assets	(14,584)		16,599
Accounts payable, accrued expenses and other liabilities	Accounts payable, accrued expenses and other liabilities	75,520		(15,316)		Accounts payable, accrued expenses and other liabilities	6,490		6,332
Right-of-use assets and operating lease liabilities	Right-of-use assets and operating lease liabilities	(22,759)		(29,166)		Right-of-use assets and operating lease liabilities	(14,742)		(15,294)
Cash provided by operating activities		242,366		40,267
Cash provided by (used in) operating activities						Cash provided by (used in) operating activities	(68,765)		30,150
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchases of property, equipment, and software	Purchases of property, equipment, and software	(21,329)		(24,328)		Purchases of property, equipment, and software	(39,786)		(7,983)
Proceeds from disposal of property and equipment		6		434

Acquisition of HEYDUDE, net of cash acquired						Acquisition of HEYDUDE, net of cash acquired	(2,031,765)		—
Other	Other	0		(116)		Other	85		—
Cash used in investing activities	Cash used in investing activities	(21,323)		(24,010)		Cash used in investing activities	(2,071,466)		(7,983)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from notes issuance	Proceeds from notes issuance	350,000		0		Proceeds from notes issuance	—		350,000
Proceeds from bank borrowings		170,000		150,000
Repayments of bank borrowings		(305,000)		(80,000)

Proceeds from borrowings						Proceeds from borrowings	2,240,163		40,000
Repayments of borrowings						Repayments of borrowings	(85,000)		(220,000)
Deferred debt issuance costs						Deferred debt issuance costs	(49,486)		(7,531)
Repurchases of common stock	Repurchases of common stock	(350,000)		(39,159)		Repurchases of common stock	—		(50,000)
Repurchases of common stock for tax withholding	Repurchases of common stock for tax withholding	(11,619)		(2,573)		Repurchases of common stock for tax withholding	(6,288)		(10,462)
Other	Other	(8,725)		609		Other	95		236
Cash provided by (used in) financing activities		(155,344)		28,877
Cash provided by financing activities						Cash provided by financing activities	2,099,484		102,243
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(1,793)		(2,360)		Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(810)		(2,437)
Net change in cash, cash equivalents, and restricted cash	Net change in cash, cash equivalents, and restricted cash	63,906		42,774		Net change in cash, cash equivalents, and restricted cash	(41,557)		121,973
Cash, cash equivalents, and restricted cash—beginning of period	Cash, cash equivalents, and restricted cash—beginning of period	139,273		112,045		Cash, cash equivalents, and restricted cash—beginning of period	216,925		139,273
Cash, cash equivalents, and restricted cash—end of period	Cash, cash equivalents, and restricted cash—end of period	$	203,179	$	154,819	Cash, cash equivalents, and restricted cash—end of period	$	175,368	$	261,246

Non-Cash Investing and Financing Activities:						Non-Cash Investing and Financing Activities:
Accrued purchases of property, equipment, and software						Accrued purchases of property, equipment, and software	$	9,369	$	15,502
Share issuance at acquisition						Share issuance at acquisition	270,396		—
Adjustment Holdback Amount						Adjustment Holdback Amount	8,500		—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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CROCS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unless otherwise noted in this report, any description of the “Company,” “Crocs,” “we,” “us,” or “our” includes Crocs, Inc. and our consolidated subsidiaries within our reportable operating segments and corporate operations. We are engaged in the design, development, worldwide marketing, distribution, and sale of casual lifestyle footwear and accessories for women, men, and children. We strive to be the global leader in the sale of molded footwear characterized by functionality, comfort, color, and lightweight design.

On February 17, 2022, we acquired (the “Acquisition”) 100% of the equity of a privately-owned casual footwear brand business (“HEYDUDE”), pursuant to a securities purchase agreement (the “SPA”) entered into on December 22, 2021. HEYDUDE is engaged in the business of distributing and selling casual footwear under the brand name “HEYDUDE.”

Our reportable operating segments include: (i) North America for the ~~Americas,~~Crocs Brand, operating ~~in North~~throughout the United States and ~~South America;~~Canada; (ii) Asia Pacific for the Crocs Brand, operating throughout Asia, Australia, and New Zealand; ~~and~~(iii) Europe, Middle East, Africa, and ~~Africa~~Latin America (“~~EMEA”~~EMEALA”)~~, operating throughout Europe, Russia,~~ for the ~~Middle East,~~Crocs Brand; and ~~Africa.~~(iv) the HEYDUDE Brand. See Note 14 — Operating Segments and Geographic Information for additional information.

The accompanying unaudited condensed consolidated interim financial statements include our accounts and those of our wholly-owned subsidiaries, and reflect all adjustments which are necessary for a fair statement of the financial position, results of operations, and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Such unaudited condensed consolidated interim financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP.

These unaudited condensed consolidated interim financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 (“Annual Report”) and have been prepared on a consistent basis with the accounting policies described in Note 1 of the Notes to the Audited Consolidated Financial Statements included in our Annual Report. Our accounting policies did not change during the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, other than with respect to the new accounting pronouncements adopted as described in Note 2 — Recent Accounting ~~Pronouncements.~~Pronouncements and our business combination policy as described in Note 16 — Acquisition of HEYDUDE.

Reclassifications

We have reclassified certain amounts ~~on the condensed consolidated statements of cash flows, Note 9 — Revenues, and~~in Note 14 — Operating Segments and Geographic Information to conform to current period presentation.

Use of Estimates

U.S. GAAP requires us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions used to determine certain amounts that affect the financial statements are reasonable, based on information available at the time they are made. Management believes that the estimates, judgments, and assumptions made when accounting for items and matters such as, but not limited to, the allowance for doubtful accounts, customer rebates, sales returns, impairment assessments and charges, recoverability of long-lived assets, deferred tax assets, valuation allowances, uncertain tax positions, income tax expense, share-based compensation expense, the assessment of lower of cost or net realizable value on inventory, useful lives assigned to long-lived assets, ~~and~~ depreciation and amortization, and purchase price allocation for the Acquisition, as described in Note 16 — Acquisition of HEYDUDE, are reasonable based on information available at the time they are made. To the extent there are differences between these estimates and actual results, our condensed consolidated financial statements may be materially affected.

~~Condensed Consolidated Statements of Cash Flows - Supplemental Schedule of Non-Cash Investing and Financing Activities~~

Six Months Ended June 30,
2021 2020
(in thousands)
Accrued purchases of property, equipment, and software $ 6,423 $ 6,041

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2. RECENT ACCOUNTING PRONOUNCEMENTS

New Accounting Pronouncement Adopted

~~Simplifying Accounting for Income Taxes~~Business Combinations

In ~~December 2019,~~October 2021, the FASB issued new guidance primarily related to ~~simplify~~ the accounting for ~~income taxes by removing certain exceptions to the general principles~~contract assets and ~~also simplification of areas such as franchise taxes, intra-period income tax expense allocation exceptions, and~~liabilities from contracts with customers in a business combination. The standard will be effective for annual reporting periods beginning after December 31, 2022, including interim ~~recognition of enactment of tax laws or rate changes.~~reporting periods within those periods, with early adoption permitted. On January 1, ~~2021,~~2022, we early adopted this ~~guidance.~~guidance on a prospective basis. The adoption did not have a material effect on our ~~condensed~~ consolidated financial statements.

New Accounting ~~Pronouncements~~Pronouncement Not Yet Adopted

~~Reference Rate Reform~~

In March 2020, the FASB issued optional guidance related to reference rate reform, which provides practical expedients for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued. This guidance is applicable for our revolving borrowing instruments, which use LIBOR as a reference rate, and is available for adoption effective immediately, but is only available through December 31, 2022. We are currently evaluating the potential impact of this standard on our condensed consolidated financial statements.

~~Other Pronouncements~~

~~Other new~~New pronouncements issued but not effective until after ~~June 30, 2021~~March 31, 2022 are not expected to have a material impact on our condensed consolidated financial statements.

3. ACCRUED EXPENSES AND OTHER LIABILITIES

Amounts reported in ‘Accrued expenses and other liabilities’ in the condensed consolidated balance sheets were:


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(in thousands)					(in thousands)
Accrued compensation and benefits	Accrued compensation and benefits	$	39,240	$	48,870	Accrued compensation and benefits	$	41,487	$	62,945
Professional services	Professional services	30,514		18,478		Professional services	30,412		33,997
Fulfillment, freight, and duties	Fulfillment, freight, and duties	25,708		17,868		Fulfillment, freight, and duties	43,780		15,629
Sales/use and value added taxes payable	Sales/use and value added taxes payable	19,949		12,480		Sales/use and value added taxes payable	19,772		13,049
Return liabilities	Return liabilities	11,500		6,906		Return liabilities	11,380		10,342
Accrued rent and occupancy						Accrued rent and occupancy	5,622		7,431
Royalties payable and deferred revenue	Royalties payable and deferred revenue	8,369		6,254		Royalties payable and deferred revenue	8,434		7,425
Accrued rent and occupancy		7,885		3,818

Accrued legal fees						Accrued legal fees	7,249		5,872
Other	Other	13,400		12,030		Other	17,833		10,197
Total accrued expenses and other liabilities	Total accrued expenses and other liabilities	$	156,565	$	126,704	Total accrued expenses and other liabilities	$	185,969	$	166,887

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4. LEASES

Right-of-Use Assets and Operating Lease Liabilities

Amounts reported in the condensed consolidated balance sheets were:


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(in thousands)					(in thousands)
Assets:	Assets:					Assets:
Right-of-use assets	Right-of-use assets	$	175,378	$	167,421	Right-of-use assets	$	199,805	$	160,768
Liabilities:	Liabilities:					Liabilities:
Current operating lease liabilities	Current operating lease liabilities	$	45,726	$	47,064	Current operating lease liabilities	$	49,414	$	42,932
Long-term operating lease liabilities	Long-term operating lease liabilities	162,552		146,401		Long-term operating lease liabilities	181,065		149,237
Total operating lease liabilities	Total operating lease liabilities	$	208,278	$	193,465	Total operating lease liabilities	$	230,479	$	192,169

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Lease Costs and Other Information

Lease-related costs reported within ‘Cost of sales’ and ‘Selling, general and administrative expenses’ in our condensed consolidated statements of operations were:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
		(in thousands)									(in thousands)
Operating lease cost	Operating lease cost	$	14,926	$	15,219	$	29,758	$	30,213	Operating lease cost	$	14,231	$	14,832
Short-term lease cost	Short-term lease cost	1,963		1,337		3,404		2,662		Short-term lease cost	2,632		1,441
Variable lease cost	Variable lease cost	10,659		4,273		14,307		5,773		Variable lease cost	4,552		3,648
Total lease costs	Total lease costs	$	27,548	$	20,829	$	47,469	$	38,648	Total lease costs	$	21,415	$	19,921

Other information related to leases, including supplemental cash flow information, consists of:


		Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020			2022		2021
		(in thousands)					(in thousands)
Cash paid for operating leases	Cash paid for operating leases	$	31,910	$	23,587	Cash paid for operating leases	$	14,500	$	15,426
Right-of-use assets obtained in exchange for operating lease liabilities	Right-of-use assets obtained in exchange for operating lease liabilities	43,582		27,586		Right-of-use assets obtained in exchange for operating lease liabilities	13,888		35,552

The weighted average remaining lease term and discount rate related to our lease liabilities as of ~~June 30, 2021~~March 31, 2022 were ~~7.3~~7.2 years and ~~3.9%~~3.6%, respectively. As of ~~June 30, 2020,~~March 31, 2021, the weighted average remaining lease term and discount rate related to our lease liabilities were ~~6.3~~7.0 years and ~~4.7%~~4.2%, respectively.

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Maturities

The maturities of our operating lease liabilities were:


		As of June 30, 2021			As of March 31, 2022
		(in thousands)			(in thousands)
2021 (remainder of year)		$	23,698
2022		46,462
2022 (remainder of year)				2022 (remainder of year)	$	38,637
2023	2023	35,576		2023	50,403
2024	2024	24,322		2024	33,252
2025	2025	18,057		2025	22,820
2026				2026	20,504
Thereafter	Thereafter	91,823		Thereafter	97,909
Total future minimum lease payments	Total future minimum lease payments	239,938		Total future minimum lease payments	263,525
Less: imputed interest	Less: imputed interest	(31,660)		Less: imputed interest	(33,046)
Total operating lease liabilities	Total operating lease liabilities	$	208,278	Total operating lease liabilities	$	230,479

Leases That Have Not Yet Commenced

As of ~~June 30, 2021,~~March 31, 2022, we had significant obligations for a lease not yet commenced related to the ~~expansion~~upcoming move of our ~~Americas distribution center in Dayton, Ohio.~~corporate headquarters within Broomfield, Colorado. The total contractual commitment related to ~~the~~this lease, with regular payments expected to begin in ~~the first quarter of 2022~~November 2023 and continue through September ~~2030,~~2033, is approximately ~~$31~~$44 million.

5. FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

All of our derivative instruments are classified as Level 2 of the fair value hierarchy and are reported in the condensed consolidated balance sheets within either ‘Prepaid expenses and other assets’ or ‘Accrued expenses and other liabilities’ at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021. The fair values of our derivative instruments were an immaterial asset at March 31, 2022 and an immaterial liability at ~~June 30, 2021 and~~ December 31, ~~2020.~~2021. See Note 6 — Derivative Financial Instruments for more information.

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The carrying amounts of our cash, cash equivalents, and current restricted cash, accounts receivable, accounts payable, and current accrued expenses and other liabilities approximate their fair value as recorded due to the short-term maturity of these instruments.

Our borrowing instruments are recorded at their carrying values in the condensed consolidated balance sheets, which may differ from their respective fair values. InDuring the ~~six~~three months ended ~~June 30,~~March 31, 2021, we ~~completed~~entered into a credit agreement for an aggregate term loan B facility in the ~~issuance and sale of $350.0 million aggregate~~ principal amount of ~~4.250% Senior Notes~~$2 billion (the ~~“Notes”~~“Term Loan B Facility”), as ~~defined and~~ described in more detail in Note 7 — ~~Long-Term~~ Borrowings. The Term Loan B Facility is classified as Level 1 of the fair value hierarchy. The Notes (as defined below) are also classified as Level 1 of the fair value hierarchy and are reported in our condensed consolidated balance sheet at face value, less unamortized issuance costs. The carrying and fair values of our revolving credit facilities approximate their carrying values at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 based on interest rates currently available to us for similar borrowings. The carrying value and fair value of our borrowing instruments as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 were:


		June 30, 2021				December 31, 2020					March 31, 2022				December 31, 2021
		Carrying Value		Fair Value		Carrying Value		Fair Value			Carrying Value		Fair Value		Carrying Value		Fair Value
		(in thousands)									(in thousands)
Senior notes issuance		$	350,000	$	357,656	$	0	$	0
Term Loan B Facility										Term Loan B Facility	$	2,000,000	$	1,955,000	$	—	$	—
2029 Notes										2029 Notes	350,000		311,281		350,000		346,281
2031 Notes										2031 Notes	350,000		296,625		350,000		341,250
Revolving credit facilities	Revolving credit facilities	45,000		45,000		180,000		180,000		Revolving credit facilities	235,000		235,000		85,000		85,000

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Non-Financial Assets and Liabilities

Our non-financial assets, which primarily consist of property and equipment, right-of-use assets, goodwill, and other intangible assets, are not required to be carried at fair value on a recurring basis and are reported at carrying value. The fair values of these assets are determined, as required, based on Level 3 measurements, including estimates of the amount and timing of future cash flows based upon historical experience, expected market conditions, and management’s plans. Impairment expense is reported in ‘Selling, general and administrative expenses’ in our condensed consolidated statements of operations. We did 0t record impairment expense in the three and six months ended June 30, 2021. Additionally, 0 impairment expense was recorded in the three or six months ended June 30, 2020.

6. DERIVATIVE FINANCIAL INSTRUMENTS

We transact business in various foreign countries and are therefore exposed to foreign currency exchange rate risk that impacts the reported U.S. Dollar amounts of revenues, expenses, and certain foreign currency monetary assets and liabilities. In order to manage exposure to fluctuations in foreign currency and to reduce the volatility in earnings caused by fluctuations in foreign exchange rates, we may enter into forward contracts to buy and sell foreign currency. By policy, we do not enter into these contracts for trading purposes or speculation.

Counterparty default risk is considered low because the forward contracts that we enter into are over-the-counter instruments transacted with highly-rated financial institutions. We were not required to and did not post collateral as of ~~June 30, 2021~~March 31, 2022 or December 31, ~~2020.~~2021.

Our derivative instruments are recorded at fair value as a derivative asset or liability in the condensed consolidated balance sheets. We report derivative instruments with the same counterparty on a net basis when a master netting arrangement is in place. Changes in fair value are recognized within ‘Foreign currency ~~losses,~~gains (losses), net’ in the condensed consolidated statements of operations. For the condensed consolidated statements of cash flows, we classify cash flows from derivative instruments at settlement in the same category as the cash flows from the related hedged items within ‘Cash provided by (used in) operating activities.’

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Results of Derivative Activities

The fair values of derivative assets and liabilities, net, all of which are classified as Level 2, reported within either ‘Accrued expenses and other liabilities’ or ‘Prepaid expenses and other assets’ in the condensed consolidated balance sheets, were:


		June 30, 2021				December 31, 2020					March 31, 2022				December 31, 2021
		Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities			Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
		(in thousands)									(in thousands)
Forward foreign currency exchange contracts	Forward foreign currency exchange contracts	$	871	$	(1,696)	$	794	$	(1,225)	Forward foreign currency exchange contracts	$	1,917	$	(569)	$	724	$	(938)
Netting of counterparty contracts	Netting of counterparty contracts	(871)		871		(794)		794		Netting of counterparty contracts	(569)		569		(724)		724
Foreign currency forward contract derivatives	Foreign currency forward contract derivatives	$	0	$	(825)	$	0	$	(431)	Foreign currency forward contract derivatives	$	1,348	$	—	$	—	$	(214)

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The notional amounts of outstanding foreign currency forward exchange contracts presented below report the total U.S. Dollar equivalent position and the net contract fair values for each foreign currency position.


		June 30, 2021				December 31, 2020					March 31, 2022				December 31, 2021
		Notional		Fair Value		Notional		Fair Value			Notional		Fair Value		Notional		Fair Value
		(in thousands)									(in thousands)
Euro	Euro	$	28,296	$	125	$	28,851	$	(82)	Euro	$	27,741	$	(211)	$	43,723	$	(296)
Singapore Dollar	Singapore Dollar	40,603		(438)		24,211		457		Singapore Dollar	43,323		(180)		25,795		104
Indian Rupee	Indian Rupee	18,574		(461)		18,937		(134)		Indian Rupee	17,299		190		21,198		162
Japanese Yen	Japanese Yen	21,074		554		17,447		(240)		Japanese Yen	11,126		436		14,201		(112)
British Pound Sterling	British Pound Sterling	11,826		(100)		16,134		(182)		British Pound Sterling	10,468		67		12,910		80
South Korean Won	South Korean Won	12,179		114		3,741		(56)		South Korean Won	14,359		(18)		10,379		(86)
Other currencies	Other currencies	19,753		(619)		9,675		(194)		Other currencies	15,122		1,064		19,481		(66)
Total	Total	$	152,305	$	(825)	$	118,996	$	(431)	Total	$	139,438	$	1,348	$	147,687	$	(214)

Latest maturity date	Latest maturity date	July 2021				January 2021				Latest maturity date	April 2022				January 2022

Amounts reported in ‘Foreign currency ~~losses,~~gains (losses), net’ in the condensed consolidated statements of operations include both realized and unrealized gains (losses) from foreign currency transactions and derivative contracts and were:

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
(in thousands)
Foreign currency transaction gains (losses) $ 506 $ (327) $ (345) $ 700
Foreign currency forward exchange contracts losses (623) (360) (276) (1,618)
Foreign currency losses, net $ (117) $ (687) $ (621) $ (918)


	Three Months Ended March 31,
	2022		2021
	(in thousands)
Foreign currency transaction losses	$	(917)	$	(851)
Foreign currency forward exchange contracts gains	1,397		347
Foreign currency gains (losses), net	$	480	$	(504)

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7. ~~LONG-TERM~~ BORROWINGS

Our long-term borrowings were as follows:


		Maturity	Stated Interest Rate		Effective Interest Rate		June 30, 2021		December 31, 2020			Maturity	Stated Interest Rate		Effective Interest Rate		March 31, 2022		December 31, 2021
							(in thousands)										(in thousands)
Notes issuance of $350.0 million	Notes issuance of $350.0 million	2029	4.250	%	4.64	%	$	350,000	$	0	Notes issuance of $350.0 million	2029	4.250	%	4.64	%	$	350,000	$	350,000
Notes issuance of $350.0 million											Notes issuance of $350.0 million	2031	4.125	%	4.35	%	350,000		350,000
Term Loan B Facility											Term Loan B Facility	2029					2,000,000		—
Revolving credit facilities	Revolving credit facilities						45,000		180,000		Revolving credit facilities						235,000		85,000
Total face value of long-term borrowings	Total face value of long-term borrowings						395,000		180,000		Total face value of long-term borrowings						2,935,000		785,000
Less:	Less:										Less:
Unamortized issuance costs	Unamortized issuance costs						8,617		0		Unamortized issuance costs						63,744		13,610
Current portion of borrowings							0		0
Current portion of long-term borrowings (1)											Current portion of long-term borrowings (1)						20,000		—
Total long-term borrowings	Total long-term borrowings						$	386,383	$	180,000	Total long-term borrowings						$	2,851,256	$	771,390

(1) Represents the current portion of the borrowing on the Term Loan B facility.

At March 31, 2022 and December 31, 2021, $13.0 million and $10.4 million, respectively, of accrued interest related to our borrowings was reported in ‘Accounts payable’ in the condensed consolidated balance sheets.

Senior Revolving Credit Facility

In July 2019, the Company and certain of ~~our~~its subsidiaries (the “Borrowers”) entered into a Second Amended and Restated Credit Agreement (as amended, the “Credit Agreement”), with the lenders named therein and PNC Bank, National Association, as a lender and administrative agent for the ~~lenders,~~lenders. In February 2022, we amended the Credit Agreement, which, ~~provided~~as amended to date, provides for a revolving credit facility of ~~$500.0~~$600.0 million, which can be increased by an additional ~~$100.0~~$400.0 million subject to certain conditions (the ~~“Facility”~~“Revolving Facility”). Borrowings under the Credit Agreement bear interest at a variable interest rate based on (A) a ~~domestic base rate~~Base Rate (defined as the highest of (i) the ~~Federal Funds open rate,~~Overnight Bank Funding Rate (as defined in the Credit Agreement), plus 0.25%, ~~(ii)~~(b) the Prime Rate (as defined in the Credit Agreement), and ~~(iii)~~(c) the Daily ~~LIBOR rate,~~Simple SOFR (as defined in the Credit Agreement), plus 1.00%), plus an applicable margin ranging from 0.25% to 0.875% based on our leverage ratio or 1.35% to 1.975% for the Daily Simple SOFR based on the leverage ratio, or (B) ~~a LIBOR rate,~~the Term SOFR Rate (as defined in the Credit Agreement), plus an applicable margin ranging from ~~1.25%~~1.35% to ~~1.875%~~1.975% based on our leverage ~~ratio.~~ratio for one-month interest periods and 1.40% to 2.025% based on our leverage ratio for three month interest periods. Borrowings under the Credit Agreement are secured by all of the assets of the Borrowers and guaranteed by certain other subsidiaries of the Borrowers.

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The Credit Agreement requires us to maintain a minimum interest coverage ratio of ~~4.00~~3.00 to 1.00, and a maximum leverage ratio of (i) ~~3.50 to 1.00 from the quarter ended December 31, 2020 to the quarter ended December 31, 2021, and (ii) 3.25~~4.00 to 1.00 from the quarter ended March 31, 2022 through, and including, the quarter ending December 31, 2023, (ii) 3.75 to 1.00 for the quarter ending March 31, 2024, (iii) 3.50 to 1.00 for the quarter ending June 30, 2024, and (iv) 3.25 to 1.00 for the quarter ending September 30, 2024 and thereafter (subject to adjustment in certain circumstances). The Credit Agreement permits, among other things, (i) stock repurchases subject to certain restrictions, including after giving effect to such stock repurchases, the maximum leverage ratio does not exceed certain levels; and (ii) certain acquisitions so long as there is borrowing availability under the Credit Agreement of at least $40.0 million. As of ~~June 30, 2021,~~March 31, 2022, we were in compliance with all financial covenants under the Credit Agreement.

As of ~~June 30, 2021,~~March 31, 2022, the total commitments available from the lenders under the Revolving Facility were ~~$500.0~~$600.0 million. At ~~June 30, 2021,~~March 31, 2022, we had ~~$45.0~~$235.0 million in outstanding borrowings, which are due when the Revolving Facility matures in July 2024, and $0.3 million in outstanding letters of credit under the Revolving Facility, which reduces amounts available for borrowing under the Revolving Facility. As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we had ~~$454.7~~$364.7 million and ~~$319.4~~$414.7 million, respectively, of available borrowing capacity under the Revolving Facility.

Term Loan B Facility

On February 17, 2022, the Company entered into a credit agreement (the “Term Loan B Credit Agreement”) with Citibank, N.A., as administrative agent and lender, to among other things, finance a portion of the cash consideration for the Acquisition.

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The Term Loan B Credit Agreement provides for an aggregate term loan B facility in the principal amount of $2.0 billion (the “Term Loan B Facility”), which is secured by substantially all of the Company’s and each subsidiary guarantor’s assets on a pari passu basis with their obligations arising from the Credit Agreement and is scheduled to mature on February 17, 2029, subject to certain exceptions set forth in the Term Loan B Credit Agreement. Subject to certain conditions, including, without limitation, satisfying certain leverage ratios, the Company may, at any time, on one or more occasions, add one or more new classes of term facilities and/or increase the principal amount of the loans of any existing class by requesting one or more incremental term facilities.

Each term loan borrowing which is an alternate base rate borrowing will bear interest at a rate per annum equal to the Alternate Base Rate (as defined in the Term Loan B Credit Agreement), plus 2.50%. Each term loan borrowing which is a term benchmark borrowing will bear interest at a rate per annum equal to the Adjusted Term SOFR Rate (as defined in the Term Loan B Credit Agreement) plus 3.50%.

Outstanding principal of the Term Loan B Facility is payable on the last business day of each March, June, September and December, beginning June 30, 2022, in a quarterly aggregate principal amount of $5.0 million, with the entire remaining principal amount due on February 17, 2029, the maturity date. As of March 31, 2022, the Term Loan B Facility was fully drawn, and there was no available borrowing capacity under the Term Loan B Facility.

The Term Loan B Credit Agreement also contains customary affirmative and negative covenants, incurrence financial covenants, representations and warranties, events of default and other provisions. As of March 31, 2022, we were in compliance with all financial covenants under the Term Loan B Credit Agreement.

Asia Revolving Credit Facilities

During the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, we had 2 revolving credit facilities in Asia, the revolving credit facility with ~~Citibank (China) Company Limited, Shanghai Branch, which provided up to an equivalent of $5.0 million, and the revolving credit facility with~~ China Merchants Bank Company Limited, Shanghai Branch (the “CMBC Facility”) which ~~matured in May 2021 and provided~~provides up to ~~30.0~~10.0 million RMB, or ~~$4.7~~$1.6 million ~~using~~at current exchange rates, asand matures in January 2023, and the revolving credit facility with Citibank (China) Company Limited, Shanghai Branch (the “Citibank Facility”), which provides up to an equivalent of ~~May 2021.~~$10.0 million.

As of March 31, 2022, we had borrowings outstanding of $0.5 million on the CMBC Facility, which are due in January 2023 and borrowings outstanding of $4.7 million on the Citibank Facility, which are due in May 2022. We had 0no borrowings under our Asia revolving facilities during the ~~six months ended June 30, 2021 and~~ year ended December 31, ~~2020~~2021 or ~~borrowings~~ outstanding at ~~June 30, 2021 and~~ December 31, ~~2020.~~2021.

Senior Notes Issuance

OnIn March ~~12,~~ 2021, the Company completed the issuance and sale of $350.0 million aggregate principal amount of 4.250% Senior Notes due March 15, 2029 (the ~~“Notes”~~“2029 Notes”), pursuant to the indenture related thereto (“(as amended and/or supplemented to date, the “2029 Notes Indenture”). Additionally, in August 2021, the Company completed the issuance and sale of $350.0 million aggregate principal amount of 4.125% Senior Notes due August 15, 2031 (the “2031 Notes”), pursuant to the indenture related thereto (as amended and/or supplemented to date, “the 2031 Notes Indenture” and, together with the 2029 Notes Indenture, the “Indentures” and, each, an “Indenture”). Interest on each of the 2029 Notes and the 2031 Notes (collectively, the “Notes”) is payable semi-annually.

The Company will have the option to redeem all or any portion of the 2029 Notes, at once or over time, at any time on or after March 15, 2024, at a redemption price equal to 100% of the principal amount thereof, plus a premium declining ratably on an annual basis to par and accrued and unpaid interest, if any, to, but excluding, the date of redemption. The Company will also have the option to redeem some or all of the 2029 Notes at any time before March 15, 2024 at a redemption price of 100% of the principal amount to be redeemed, plus a “make-whole” premium and accrued and unpaid interest, if any, to, but excluding, the date of redemption. In addition, at any time before March 15, 2024, the Company may redeem up to 40% of the aggregate principal amount of the 2029 Notes at a redemption price of 104.250% of the principal amount with the proceeds from certain equity issuances, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.

The Company will have the option to redeem all or any portion of the 2031 Notes, at once or over time, at any time on or after August 15, 2026, at a redemption price equal to 100% of the principal amount thereof, plus a premium declining ratably on an annual basis to par and accrued and unpaid interest, if any, to, but excluding, the date of redemption. The Company will also have the option to redeem some or all of the 2031 Notes at any time before August 15, 2026 at a redemption price of 100% of the principal amount to be redeemed, plus a “make-whole” premium and accrued and unpaid interest, if any, to, but excluding, the date of redemption. In addition, at any time before August 15, 2024, the Company may redeem up to 40% of the aggregate

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principal amount of the 2031 Notes at a redemption price of 104.125% of the principal amount with the proceeds from certain equity issuances, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.

The Notes rank pari passu in right of payment with all of the Company’s existing and future senior debt, including the Credit Agreement, and are senior in right of payment to any of the Company’s future debt that is, by its term, expressly subordinated in right of payment to the Notes. The Notes are unconditionally guaranteed by each of the Company’s restricted subsidiaries that is a borrower or guarantor under the Credit Agreement and by each of the Company’s wholly-owned restricted subsidiaries that guarantees any debt of the Company or any guarantor under any syndicated credit facility or capital markets debt in an aggregate principal amount in excess of $25.0 million.

The Company will have the option to redeem all or any portion of the Notes, at once or over time, at any time on or after March 15, 2024, at a redemption price equal to 100% of the principal amount thereof, plus a premium declining ratably on an annual basis to par and accrued and unpaid interest, if any, to, but excluding, the date of redemption. The Company will also have the option to redeem some or all of the Notes at any time before March 15, 2024 at a redemption price of 100% of the principal amount of the Notes to be redeemed, plus a “make-whole” premium and accrued and unpaid interest, if any, to, but excluding, the date of redemption. In addition, at any time before March 15, 2024, the Company may redeem up to 40% of the aggregate principal amount of the Notes at a redemption price of 104.250% of the principal amount of the Notes with the proceeds from certain equity issuances, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.

~~The Indenture contains~~Indentures contain covenants that, among other things, limit the ability of the Company and its restricted subsidiaries to incur additional debt or issue certain preferred stock; pay dividends or repurchase or redeem capital stock or make other restricted payments; declare or pay dividends or other payments; incur liens; enter into certain types of transactions with the Company’s affiliates; and consolidate or merge with or into other companies. As of ~~June 30, 2021,~~March 31, 2022, we were in compliance with all financial covenants under the Notes.

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8. COMMON STOCK REPURCHASE PROGRAM

During the three months ended ~~June 30,~~March 31, 2022, to prioritize repayments of debt, including debt incurred to finance a part of the Acquisition, we did not repurchase shares of our common stock. During the three months ended March 31, 2021, we repurchased ~~2.9~~1.1 million shares of our common stock at a cost of $300.0 million, including commissions, under a $300.0 million April 2021 accelerated share repurchase arrangement (“ASR”). Under the ASR, a financial institution delivers shares of our common stock during the purchase period in exchange for an up-front payment. The total number of shares ultimately delivered under the ASR, and therefore the average repurchase price paid per share, is determined based on the volume-weighted average price of our common stock during the purchase period. The purchase period for this ASR ended in June 2021. During the six months ended June 30, 2021, we repurchased 4.0 million shares of our common stock at an aggregate cost of $350.0$50.0 million, including commissions. This includes 0.5 million shares received in January 2021 at the conclusion of the purchase period for an accelerated share repurchase agreement we entered into in November 2020.

During the three months ended June 30, 2020, we did 0t repurchase shares of our common stock to preserve maximum liquidity and flexibility as a result of the COVID-19 pandemic. During the six months ended June 30, 2020, we repurchased 1.6 million shares of our common stock at a cost of $39.2 million, including commissions.

In April 2021, the Board of Directors (the “Board”) approved a $712.2 million increase to our share repurchase authorization, after which $1.0 billion remained available for future common stock repurchases. As of ~~June 30, 2021,~~March 31, 2022, we had remaining authorization to repurchase approximately ~~$700.0~~$1,050.0 million of our common stock, subject to restrictions under our Notes, Credit Agreement, and Term Loan B Credit Agreement.

9. REVENUES

Revenues by ~~reportable operating segment~~channel and ~~by channel~~brand were:

~~Second Quarter~~


		Three Months Ended June 30, 2021											Three Months Ended March 31, 2022
		Americas		Asia Pacific		EMEA		Unallocated Corporate and Other		Total			Crocs Brand		HEYDUDE Brand		Total
		(in thousands)											(in thousands)
Channel:	Channel:											Channel:
Wholesale	Wholesale	$	168,069	$	62,268	$	76,981	$	9	$	307,327	Wholesale	$	344,258	$	86,919	$	431,177
Direct-to-consumer (1)	Direct-to-consumer (1)	237,611		64,566		31,269		0		333,446		Direct-to-consumer (1)	200,967		28,004		228,971

Total revenues	Total revenues	$	405,680	$	126,834	$	108,250	$	9	$	640,773	Total revenues	$	545,225	$	114,923	$	660,148


		Three Months Ended June 30, 2020											Three Months Ended March 31, 2021
		Americas		Asia Pacific		EMEA		Unallocated Corporate and Other		Total			Crocs Brand		HEYDUDE Brand		Total
		(in thousands)											(in thousands)
Channel:	Channel:											Channel:
Wholesale	Wholesale	$	67,428	$	35,282	$	42,166	$	16	$	144,892	Wholesale	$	290,039	$	—	$	290,039
Direct-to-consumer (1)	Direct-to-consumer (1)	104,156		58,291		24,210		0		186,657		Direct-to-consumer (1)	170,059		—		170,059

Total revenues	Total revenues	$	171,584	$	93,573	$	66,376	$	16	$	331,549	Total revenues	$	460,098	$	—	$	460,098

(1) Direct-to-consumer revenues consist of sales generated through our company-operated retail stores, ~~(previously our “Retail” channel) and~~ company-operated e-commerce websites, and third-party e-commerce ~~marketplaces (previously our “E-commerce” channel).~~marketplaces.

For information on revenues by reportable operating segment, see Note 14 — Operating Segments and Geographic Information.

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~~Full Year to Date~~

Six Months Ended June 30, 2021
Americas Asia Pacific EMEA Other Businesses Total
(in thousands)
Channel:
Wholesale $ 312,842 $ 120,891 $ 163,585 $ 48 $ 597,366
Direct-to-consumer (1)
369,247 88,535 45,723 0 503,505
Total revenues $ 682,089 $ 209,426 $ 209,308 $ 48 $ 1,100,871

Six Months Ended June 30, 2020
Americas Asia Pacific EMEA Other Businesses Total
(in thousands)
Channel:
Wholesale $ 158,233 $ 80,863 $ 98,877 $ 92 $ 338,065
Direct-to-consumer (1)
161,075 78,170 35,399 0 274,644
Total revenues $ 319,308 $ 159,033 $ 134,276 $ 92 $ 612,709

~~(1)~~ Direct-to-consumer revenues consist of sales generated through our company-operated retail stores (previously our “Retail” channel) and company-operated e-commerce websites and third-party e-commerce marketplaces (previously our “E-commerce” channel).

During the three and six months ended June 30, 2021, we recognized 0 changes to estimates for wholesale revenues and 0 changes to estimates for direct-to-consumer revenues. We recognized immaterial changes during the three months ended June 30, 2020 and an increase of $0.5 million during six months ended June 30, 2020 to wholesale revenues due to changes in estimates related to products transferred to customers in prior period. There were 0 changes to estimates for direct-to-consumer revenues during the three or six months ended June 30, 2020.

~~There were no material changes in contract liabilities or refund liabilities in the six months ended June 30, 2021 or 2020.~~

10. SHARE-BASED COMPENSATION

Our share-based compensation awards are issued under the 2020 Equity Incentive Plan (“2020 Plan”) and a predecessor plan, the 2015 Equity Incentive Plan (“2015 Plan”). Any awards that expire or are forfeited under the 2015 Plan become available for issuance under the 2020 Plan.

~~Pre-tax share-based~~Share-based compensation expense reported in our condensed consolidated statements of operations was:

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
(in thousands)
Cost of sales $ 151 $ (107) $ 237 $ 39
Selling, general and administrative expenses 11,143 2,085 19,111 5,903
Total share-based compensation expense $ 11,294 $ 1,978 $ 19,348 $ 5,942

On January 11, 2021, our Board awarded 0.4 million market-condition restricted stock units (“RSUs”) to certain senior executives. For the executives to earn the target number of shares, the 30 trading day average of the daily volume weighted average trading price of the common stock must meet or exceed certain performance hurdles. Any earned shares will also be subject to time vesting. When a performance hurdle is met or exceeded, one third of the earned portion of the RSUs will vest immediately, and the remaining two thirds will be subject to the executive’s continued employment, with one third vesting one year later and the remaining one third vesting two years later, but in no case later than the fourth anniversary of the award, in each case, subject to certain change in control provisions.

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The grant date fair value and derived service period for the market-condition RSUs granted on January 11, 2021 (“January market-condition RSUs”) were estimated using a Monte Carlo simulation valuation model. The grant date fair value for the January market-condition RSUs was $21.9 million. As of June 30, 2021, unrecognized share-based compensation for the January market-condition RSUs, which are expected to be recognized through March 2024 based on the Monte Carlo valuation model, was $14.2 million.


	Three Months Ended March 31,
	2022		2021
	(in thousands)
Cost of sales	$	111	$	86
Selling, general and administrative expenses	8,164		7,968
Total share-based compensation expense	$	8,275	$	8,054

11. INCOME TAXES

Income tax expense and effective tax rates were:


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
		2021			2020			2021			2020				2022			2021
		(in thousands, except effective tax rate)													(in thousands, except effective tax rate)
Income before income taxes	Income before income taxes	$	190,566		$	54,694		$	313,154		$	73,472		Income before income taxes	$	99,060		$	122,588
Income tax expense (benefit)		(128,388)			(1,857)			(104,198)			5,830
Income tax expense														Income tax expense	26,300			24,190
Effective tax rate	Effective tax rate	(67.4)		%	(3.4)		%	(33.3)		%	7.9		%	Effective tax rate	26.5		%	19.7		%

The ~~decrease~~increase in the effective tax rate for the three months ended ~~June 30, 2021,~~March 31, 2022, compared to the same period in ~~2020,~~2021, was primarily driven ~~primarily~~ by the ~~release~~prior year realization of deferred tax assets which were subject to a valuation ~~allowances.~~allowance which did not reoccur in the current year. Our effective income tax rate, for each period presented, also differs from the federal U.S. statutory rate ~~primarily~~ due ~~to the release of valuation allowances, as well as~~ differences in income tax rates between U.S. and foreign jurisdictions. ~~There was a $176.9 million discrete tax benefit during the three months ended June 30, 2021 for the release of valuation allowances resulting from the enactment of a tax law change.~~ We had unrecognized tax benefits of ~~$200.2~~$212.1 million and ~~$206.2~~$218.4 million at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, and we do not expect any significant changes in ~~unrecognized~~ tax benefits in the next twelve months.

During the six months ended June 30, 2021, income tax expense decreased $110.0 million compared to the same period in 2020. The effective tax rate for the six months ended June 30, 2021 was (33.3)% compared to an effective tax rate of 7.9% for the same period in 2020, a 41.2% decrease. This decrease in the effective rate was driven primarily by the release of valuation allowances resulting from the enactment of a tax law change. Our effective income tax rate, for each period presented, also differs from the federal U.S. statutory rate primarily due to the release of valuation allowances, as well as differences in income tax rates between U.S. and foreign jurisdictions.

Our valuation allowances are primarily the result of uncertainties regarding the future realization of tax attributes recorded in various jurisdictions. The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available evidence, it is more likely than not that the deferred tax assets will not be realized. We have evaluated the realizability of our deferred tax assets in each jurisdiction by assessing the adequacy of expected taxable income, including the reversal of existing temporary differences, historical and projected operating results and the availability of prudent and feasible tax planning strategies. In assessing our valuation allowance, we considered all available evidence, including the magnitude of recent and current operating results, the duration of statutory carryforward periods, our historical experience utilizing tax attributes prior to their expiration dates, the historical volatility of operating results of these jurisdictions and our assessment regarding the sustainability of their profitability. The weight we give to any particular item is, in part, dependent upon the degree to which it can be objectively verified. A jurisdiction for which we have historically recorded significant valuation allowances has enacted a favorable change in the tax law related to net operating loss carryforwards during the period. The change in tax law impacts the assessment of valuation allowances in the jurisdiction as the reversal of existing deferred tax assets would generate indefinite carryforward net operating losses instead of losses with a limited carryforward period. The release of the valuation allowance resulting from the tax law change is recorded as a discrete tax benefit of $176.9 million during the three months ended June 30, 2021. We will continue to assess the realizability of our deferred tax assets.

Our tax rate is volatile and may increase or decrease with changes in, among other things, the amount of income or loss by jurisdiction, our ability to utilize net operating losses and foreign tax credits, changes in tax laws, and the movement of liabilities established pursuant to accounting guidance for uncertain tax positions as statutes of limitations expire, positions are effectively settled, or when additional information becomes available. There are proposed or pending tax law changes in various jurisdictions and other changes to regulatory environments in countries in which we do business that, if enacted, may have an impact on our effective tax ~~rate.~~

rate, including federal corporate tax increases currently contemplated in the U.S.

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12. EARNINGS PER SHARE

Basic and diluted earnings per common share (“EPS”) for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ were:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
		(in thousands, except per share data)									(in thousands, except per share data)
Numerator:	Numerator:									Numerator:
Net income	Net income	$	318,954	$	56,551	$	417,352	67,642		Net income	$	72,760	$	98,398
Denominator:	Denominator:									Denominator:
Weighted average common shares outstanding - basic	Weighted average common shares outstanding - basic	63,595		67,416		64,526		67,674		Weighted average common shares outstanding - basic	59,823		65,458
Plus: Dilutive effect of stock options and unvested restricted stock units	Plus: Dilutive effect of stock options and unvested restricted stock units	1,045		622		1,218		990		Plus: Dilutive effect of stock options and unvested restricted stock units	1,073		1,390
Weighted average common shares outstanding - diluted	Weighted average common shares outstanding - diluted	64,640		68,038		65,744		68,664		Weighted average common shares outstanding - diluted	60,896		66,848

Net income per common share:	Net income per common share:									Net income per common share:
Basic	Basic	$	5.02	$	0.84	$	6.47	$	1.00	Basic	$	1.22	$	1.50
Diluted	Diluted	$	4.93	$	0.83	$	6.35	$	0.99	Diluted	$	1.19	$	1.47

~~For~~In the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~an aggregate of less than 0.1 million options~~immaterial outstanding shares issued under share-based compensation awards were anti-dilutive and, ~~restricted stock units (“RSUs”) were~~therefore, excluded from the calculation of diluted EPS because the effect was anti-dilutive. For the three and six months ended June 30, 2020, an aggregate of less than 0.1 million options and RSUs were excluded from the calculation of diluted EPS because the effect was anti-dilutive.EPS.

13. COMMITMENTS AND CONTINGENCIES

Purchase Commitments

As of ~~June 30, 2021,~~March 31, 2022, we had purchase commitments to third-party manufacturers, primarily for materials and supplies used in the manufacture of our products, for an aggregate of ~~$177.5~~$585.5 million. We expect to fulfill our commitments under these agreements in the normal course of business, and as such, no liability has been recorded.

Other

We are regularly subject to, and are currently undergoing, audits by various tax authorities in the United States and several foreign jurisdictions, including customs duties, import, and other taxes for prior tax years.

During our normal course of business, we may make certain indemnities, commitments, and guarantees under which we may be required to make payments. We cannot determine a range of estimated future payments and have not recorded any liability for indemnities, commitments, and guarantees in the accompanying condensed consolidated balance sheets.

See Note 15 — Legal Proceedings for further details regarding potential loss contingencies related to government tax audits and other current legal proceedings.

14. OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION

WeCrocs, Inc. has 4 reportable operating segments. For the Crocs Brand, we have 3 reportable operating segments based on the geographic nature of our operations: ~~Americas,~~North America, Asia Pacific, and ~~EMEA.~~EMEALA. Beginning in the three months ended March 31, 2022, our HEYDUDE Brand is also a reportable segment. Each of the reportable operating segments derives its revenues from the sale of footwear and accessories to external customers.

~~Segment~~Additionally, Crocs ‘Brand corporate’ costs represent operating expense that includes product creation, design, and marketing expenses centrally managed for the Crocs Brand, as well as certain royalty income. Crocs Brand corporate costs are included within the Crocs Brand for presentation purposes to align with the way management views the Company. ‘Enterprise corporate’ costs include global corporate costs associated with both brands, including legal, information technology, human resources, and finance, as well as costs associated with global digital operations.

Each segment’s performance is evaluated based on segment results without allocating Brand corporate ~~expenses,~~ or ~~indirect general, administrative, and other~~Enterprise corporate expenses. Segment profits or losses include adjustments to eliminate inter-segment sales. Reconciling items between segment

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income from operations and income from operations consist of unallocated brand and enterprise corporate and other expenses, as well as inter-segment eliminations.

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In the first quarter of 2021, certain costs previously reported within ‘Other Businesses’ were shifted to the Americas, Asia Pacific, and EMEA segments, as applicable, to reflect changes in the way management evaluates segment performance, makes operating decisions, and allocates resources. Additionally, any costs remaining in ‘Other Businesses,’ including depreciation and amortization, had been consolidated into ‘Unallocated corporate and other.’ The previously reported amounts for income from operations for the three and six months ended June 30, 2020 have been revised to conform to current period presentation, as shown in the following tables.

In the second quarter of 2021, to reflect changes in the way management evaluates segment performance, makes operating decisions, and allocates resources, and as a response to our incremental investments in marketing in line with our growth, certain marketing expenses previously reported within ‘Unallocated corporate and other’ were shifted to the Americas, Asia Pacific, and EMEA segments, as applicable, to better align these investments with segment profitability. The previously reported amounts for income from operations included in the six months ended June 30, 2021 and for the three and six months ended June 30, 2020 have been revised to conform to current period presentation, as shown in the following tables.

We do not report asset information by segment because that information is not used to evaluate performance or allocate resources between segments.

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The following tables set forth information related to reportable operating segments:
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
(in thousands)
Revenues:
Americas $ 405,680 $ 171,584 $ 682,089 $ 319,308
Asia Pacific 126,834 93,573 209,426 159,033
EMEA 108,250 66,376 209,308 134,276
Total segment revenues 640,764 331,533 1,100,823 612,617
Unallocated corporate and other (2)
9 16 48 92
Total consolidated revenues $ 640,773 $ 331,549 $ 1,100,871 $ 612,709
Income from operations:
Americas (1)
$ 192,781 $ 52,974 $ 308,848 $ 91,191
Asia Pacific (1)
32,016 12,726 54,131 19,193
EMEA (1)
36,787 22,431 73,432 39,831
Total segment income from operations 261,584 88,131 436,411 150,215
Reconciliation of total segment income from operations to income before income taxes:
Unallocated corporate and other (1)(2)
(66,262) (31,536) (116,403) (72,808)
Income from operations 195,322 56,595 320,008 77,407
Foreign currency losses, net (117) (687) (621) (918)
Interest income 71 49 98 146
Interest expense (4,712) (2,170) (6,344) (4,091)
Other income, net 2 907 13 928
Income before income taxes $ 190,566 $ 54,694 $ 313,154 $ 73,472
Depreciation and amortization:
Americas $ 825 $ 896 $ 1,768 $ 1,750
Asia Pacific 325 286 612 565
EMEA 163 163 329 339
Total segment depreciation and amortization 1,313 1,345 2,709 2,654
Unallocated corporate and other (1)(2)
6,382 5,247 13,040 10,845
Total consolidated depreciation and amortization $ 7,695 $ 6,592 $ 15,749 $ 13,499


	Three Months Ended March 31,
	2022		2021
	(in thousands)
Revenues:
North America (1)	$	319,450	$	267,267
Asia Pacific	95,847		82,592
EMEALA (1)	129,921		110,201
Brand corporate (2)	7		38
Total Crocs Brand	545,225		460,098
HEYDUDE Brand (3)	114,923		—
Total consolidated revenues	$	660,148	$	460,098
Income from operations:
North America (1)	$	129,611	$	112,693
Asia Pacific	30,106		22,115
EMEALA (1)	34,927		40,019
Brand corporate (2)	(30,709)		(20,008)
Total Crocs Brand	163,935		154,819
HEYDUDE Brand (3)	15,658		—
Reconciliation of total segment income from operations to income before income taxes:

Enterprise corporate (2)	(60,916)		(30,133)
Income from operations	118,677		124,686
Foreign currency gains (losses), net	480		(504)
Interest income	102		27
Interest expense	(19,252)		(1,632)
Other income (expense), net	(947)		11
Income before income taxes	$	99,060	$	122,588

Depreciation and amortization:
North America (1)	$	2,220	$	925
Asia Pacific	523		287
EMEALA (1)	724		184
Brand corporate (2)	186		2,749
Total Crocs Brand	3,653		4,145
HEYDUDE Brand (3)	2,444		—

Enterprise corporate (2)	1,798		3,909
Total consolidated depreciation and amortization	$	7,895	$	8,054

(1) In the first quarter of ~~2021,~~2022, certain ~~costs~~revenues and expenses associated with our Latin America businesses previously reported ~~within ‘Other Businesses’~~in our ‘Americas’ segment were shifted into the ‘EMEA’ segment to ~~the Americas, Asia Pacific,~~better align with how we manage our distributor business. To reflect this change, we renamed our ‘Americas’ segment to ‘North America’ and ~~EMEA segments.~~renamed our ‘EMEA’ segment to ‘EMEALA.’ Additionally, ~~any costs remaining~~ in ~~‘Other Businesses,’ including depreciation and amortization, have been consolidated into ‘Unallocated corporate and other.’ In~~ the second quarter of 2021, certain marketing expenses previously reported within ‘Unallocated corporate and other’ were shifted to the Americas, Asia Pacific, and EMEA ~~segments. The~~segments (see footnote (2) for more information on the current year presentation of costs previously reported in ‘Unallocated corporate and other’). As a result of these changes, the previously reported amounts for revenues, income from

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operations, and depreciation and amortization for the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 have been revised to conform to current period presentation. See the ‘Impacts of segment composition change’ and ‘Impacts of marketing expense allocations’ tables below for more information.

(2) ~~Unallocated~~In the first quarter of 2022, as a result of the Acquisition, all costs previously reported in “Unallocated corporate and ~~other primarily includes corporate support and administrative functions, certain royalty income,~~other” were recast between ‘Brand corporate’ costs associated with ~~share-based compensation, research~~the Crocs Brand and ~~development, brand marketing, legal,~~‘Enterprise corporate’ costs, each of which is defined in the section preceding the above table. As a result of these changes, the previously reported amounts for income from operations and depreciation and amortization for the three months ended March 31, 2021 have been revised to conform to current period presentation. See the ‘Impacts of ~~corporate~~brand vs. enterprise recast’ table below for more information.

(3) We acquired HEYDUDE on February 17, 2022 and ~~other assets not allocated to~~added the HEYDUDE brand as a new operating ~~segments.~~segment. Therefore, the amounts shown above represent results during the period from the Acquisition Date through March 31, 2022, and there are no comparative amounts for the three months ended March 31, 2021.

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Impacts of segment composition ~~change:~~change associated with Latin America:

Three Months Ended June 30, 2020 Six Months Ended June 30, 2020
(in thousands)
Impacts on income from operations:
Americas $ (9,343) $ (16,059)
Asia Pacific (4) (183)
EMEA 2,491 2,691
Total impact on segment income from operations $ (6,856) $ (13,551)
Unallocated corporate and other $ 6,856 $ 13,551


	Three Months Ended March 31, 2021
	(in thousands)
Impact on revenues:
Americas (now “North America”)	$	(9,142)
EMEA (now “EMEALA”)	9,142

Impact on income from operations:
Americas (now “North America”)	$	(3,374)
EMEA (now “EMEALA”)	3,374

Impact on depreciation and amortization:
Americas (now “North America”)	$	(18)
EMEA (now “EMEALA”)	18

Impacts of marketing expense allocations:


	Three Months Ended March 31, 2021
	(in thousands)
Impacts on income from operations:
Americas (now “North America”)	$	(2,277)
Asia Pacific	(1,178)
EMEA (now “EMEALA”)	(468)
Total impact on segment income from operations	$	(3,923)

Unallocated corporate and other (now in “Brand corporate”)	$	3,923

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Impacts of brand vs. enterprise recast:


	Three Months Ended March 31, 2021
	(in thousands)
Impacts on income from operations:
Brand corporate	$	(20,008)
Enterprise corporate	(30,133)

Unallocated corporate and other	50,141

Impacts on depreciation and amortization:
Brand corporate	$	~~3,923~~2,749
Enterprise corporate	3,909

Unallocated corporate and other	(6,658)

Three Months Ended June 30, 2020 Six Months Ended June 30, 2020
(in thousands)
Impacts on income from operations:
Americas $ (1,941) $ (3,670)
Asia Pacific (3,588) (6,366)
EMEA (413) (858)
Total impact on segment income from operations $ (5,942) $ (10,894)
Unallocated corporate and other $ 5,942 $ 10,894

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15. LEGAL PROCEEDINGS

We were subject to an audit by the Brazilian Federal Tax Authorities related to imports of footwear from China between 2010 and 2014. On January 13, 2015, we were notified about the issuance of assessments totaling 14.4 million Brazilian Real (“BRL”), or approximately $2.9 million at current exchange rates, plus interest and penalties, for the period January 2010 through May 2011. We disputed these assessments and asserted defenses to the claims. On February 25, 2015, we received additional assessments totaling 33.3 million BRL, or approximately $6.7 million at current exchange rates, plus interest and penalties, related to the remainder of the audit period. We also disputed these assessments and asserted defenses to these claims in administrative appeals. On August 29, 2017, we received a favorable ruling on our appeal of the first assessment, which dismissed all fines, penalties, and interest. The tax authorities have appealed that decision and we challenged the appeal on both the merits and procedure. Additionally, the second appeal for the remaining assessments was heard on March 22, 2018. That decision was partially favorable for us and resulted in an approximately 38% reduction in principal, penalties, and interest. The tax authorities have appealed that decision, and we filed a response to the tax authorities’ appeal as well as a separate appeal against the unfavorable portion of the ruling. Taking current rulings into consideration, we estimate the remaining principal for these assessments to be $5.0 million at current exchange rates, plus interest and penalties. Should the Brazilian Tax Authority prevail in these final administrative appeals, we may challenge the assessments through the court system, which would likely require the posting of a bond. We have not recorded these items within the condensed consolidated financial statements as it is not possible at this time to predict the timing or outcome of this matter or to estimate a potential amount of loss, if any.

For ~~all other~~legal claims and disputes, we have accrued estimated losses of ~~$0.9~~$0.8 million within ‘Accrued expenses and other liabilities’ in the condensed consolidated balance sheet as of ~~June 30, 2021.~~March 31, 2022. As we are able, we estimate reasonably possible losses or a range of reasonably possible losses. As of ~~June 30, 2021,~~March 31, 2022, we estimated that reasonably possible losses associated with these claims and other disputes could potentially exceed amounts accrued by an immaterial amount.

Although we are subject to other litigation from time to time in the ordinary course of business, including employment, intellectual property, and product liability claims, ~~other than as set forth above,~~ we are not party to any other pending legal proceedings that we believe would reasonably have a material adverse impact on our business, financial results, and cash flows.

16. ACQUISITION OF HEYDUDE

On February 17, 2022, (the “Acquisition Date”), we acquired 100% of the equity of HEYDUDE, pursuant to the SPA. HEYDUDE is engaged in the business of distributing and selling casual footwear under the brand name “HEYDUDE.” The Acquisition allows us to diversify and expand our business by adding a second brand to the Crocs portfolio.

The aggregate preliminary purchase price at the closing of the Acquisition was $2.3 billion. We paid aggregate consideration of $2.05 billion in cash (the “Cash Consideration”), subject to adjustment based on, among other things, the cash, indebtedness, transaction expenses, and working capital of the companies comprising HEYDUDE and their respective subsidiaries as of the Acquisition Date, and issued 2,852,280 shares of the Company’s common stock to one of the sellers (the “Equity Consideration Shares”). The Equity Consideration Shares are subject to a lock-up period beginning on the Acquisition Date and continuing to, and including, the date that is 12 months after the Acquisition Date, provided that (a) on the date that is six months after the Acquisition Date, 50% of the Equity Consideration Shares will be released from the lock-up, and (b) on the date that is twelve months after the Acquisition Date, the remaining 50% of the Equity Consideration Shares will be released from the lock-up.

The Cash Consideration was financed via the Company’s entry into the $2.0 billion Term Loan B Facility and $50.0 million of borrowings under the Revolving Facility. As a result of the Acquisition, HEYDUDE has become wholly owned by Crocs. Accordingly, the results of HEYDUDE are included in our condensed consolidated financial statements from the Acquisition Date and are reported in the HEYDUDE operating segment. HEYDUDE contributed revenue of $114.9 million and income from operations of $15.7 million to our condensed consolidated statement of operations from the Acquisition Date through March 31, 2022.

Purchase Price Allocation

The Acquisition was accounted for in accordance with the ASC Topic 805 Business Combinations. As a result, we have applied acquisition accounting, which requires, among other things, that the assets acquired and liabilities assumed be recognized at their estimated fair values as of the Acquisition Date. For certain assets and liabilities, those fair values were consistent with historical carrying values. The fair value of inventory was determined using both a market approach and a cost approach.With respect to intangible assets, the estimated fair value was based on the Multi Period Excess Earnings approach for the trademark and the distributor method for the customer relationships. These models used primarily Level 2 and Level 3 inputs, including an estimate of future revenues, future cash flows, and discount rates.

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The following table summarizes the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the Acquisition Date:


	February 17, 2022
	(in thousands)
Cash and cash equivalents	$	6,232
Accounts receivable, net	69,031
Inventories	171,270
Prepaid expenses and other assets	2,977
Intangible assets	1,870,000
Goodwill	640,497
Right-of-use assets	2,844
Accounts payable	(28,388)
Accrued expenses and other liabilities	(39,618)
Income taxes payable	(32,947)
Long-term deferred tax liability	(329,778)
Long-term income taxes payable	(12,384)
Operating lease liabilities	(2,843)
Net assets acquired	$	2,316,893

The purchase consideration for the Acquisition is preliminary. Valuation by management of certain assets and liabilities, is still in process and therefore, the actual fair values may vary significantly from these preliminary estimates. Final valuations are expected to be completed within one year of the Acquisition Date.

Intangible Assets

The components of intangible assets acquired in connection with the Acquisition were as follows:


	Weighted-Average Useful Life	Amortization Method	Estimated Fair Value
			(in thousands)
Customer relationships	15	Straight-line	$	300,000
Trademark	Indefinite	—	1,570,000
Total intangible assets			$	1,870,000

As a result of the increase in fair value of the identifiable intangible assets, the deferred tax liability was increased by $331.0 million.

Goodwill

The excess of the purchase price over the fair value of the acquired business's net assets represents goodwill. The goodwill amount of $640.5 million largely consists of the acquired workforce and economies of scale resulting from the Acquisition. The total goodwill amount acquired was assigned to the HEYDUDE operating segment. None of the goodwill will be deductible for income tax purposes.

Escrow and Holdback Amounts

Additionally, $125.0 million of the Cash Consideration (the “Escrow Amount”) was placed in an escrow account to partially secure the indemnification obligations of the sellers, which will be released to the sellers, less any amounts that have been released to compensate the Company as provided in the SPA, after the date that is 18 months after the Acquisition Date. No liabilities have been recorded related to the Escrow Amount. Further, $8.5 million of the Cash Consideration (the “Adjustment

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Holdback Amount”) was held back and retained as security (but not as the sole source of recovery) for any downward adjustments to the purchase price made in accordance with the SPA. The Adjustment Holdback Amount is included in ‘Accounts payable’ in our condensed consolidated balance sheet.

Acquisition-related Costs

Costs incurred to complete the Acquisition are expensed as incurred and included in ‘Selling, general, and administrative expenses’ in our condensed consolidated statement of operations. During the three months ended March 31, 2022, there were approximately $20.6 million of acquisition-related costs recognized. These costs represent legal, professional, and transaction fees.

Unaudited Pro Forma Information

The following unaudited pro forma financial information for the three months ended March 31, 2022 and 2021 combines the historical results of Crocs and HEYDUDE, assuming that the companies were combined as of January 1, 2021 and include business combination accounting effects from the Acquisition, including amortization charges from acquired intangible assets, adjustments to the fair value of inventory, interest expense on the financing transactions used to fund the Acquisition, and Acquisition-related transaction costs and tax-related effects. The pro forma information as presented below is for informational purposes only and is not indicative of the results of operations that would have been achieved if the Acquisition had taken place on January 1, 2021.


	Three Months Ended March 31,
	2022		2021
	(in thousands)
Revenues	$	750,477	$	573,599
Net income	115,092		6,712

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Business Overview

Crocs, Inc. and our consolidated subsidiaries (collectively the “Company,” “Crocs,” “we,” “us,” or “our”) are engaged in the design, development, worldwide marketing, distribution, and sale of casual lifestyle footwear and accessories for women, men, and children. We strive to be the world leader in innovative casual footwear for women, men, and children, combining comfort and style with a value that consumers want. ~~The vast majority of shoes within our collection contain Croslite™ material, a proprietary, molded footwear technology, delivering extraordinary comfort with each step.~~

Known or Anticipated Trends

Based on our recent operating results and current perspectives on our operating environment, we anticipate certain trends will continue to impact our operating results:

•On February 17, 2022, (the “Acquisition Date”), we acquired (the “Acquisition”) 100% of the equity of a privately-owned casual footwear brand business (“HEYDUDE”), pursuant to a securities purchase agreement (the “SPA”) entered into on December 22, 2021. HEYDUDE is engaged in the business of distributing and selling casual footwear, including footwear under the brand name “HEYDUDE.” On the Acquisition Date, we purchased all of the issued and outstanding equity securities of HEYDUDE. The aggregate preliminary purchase price at the closing of the Acquisition was $2.3 billion. We ~~have committed~~paid aggregate consideration of $2.05 billion in cash (the “Cash Consideration”), subject to ~~several Environmental, Social,~~adjustment based on, among other things, the cash, indebtedness, transaction expenses, and ~~Governance (“ESG”) initiatives, including~~working capital of the companies comprising HEYDUDE and their respective subsidiaries as of the Acquisition Date, and issued 2,852,280 shares of our common stock to one of the sellers, which shares are subject to a ~~plan~~lock-up. The Cash Consideration was financed via our entry into the $2.0 billion Term Loan B Facility (as defined below) and $50.0 million of borrowings under our Revolving Facility (as defined below). The Acquisition has enabled us to ~~achieve net zero emissions by 2030 through sustainable ingredients~~further diversify our product portfolio under two brands. We intend to leverage our global presence, innovative marketing, and ~~packaging as well as responsible resource use~~scale infrastructure to grow HEYDUDE and ~~exploring innovative product afterlife solutions. We continue~~ to ~~expand efforts~~create significant shareholder value. For more information on the Acquisition, refer to ~~help serve our communities and create a welcoming environment for everyone, rooted~~Note 16 — Acquisition of HEYDUDE in ~~a culture~~the accompanying notes to the condensed consolidated financial statements included in Part I - Item 1. Financial Statements of ~~transparency and accountability. As such, we launched a new Brand Purpose section~~this Quarterly Report on ~~our Crocs.com site and a new ESG section on our investor site to share our progress.~~Form 10-Q.

•~~Global industry-wide logistics challenges have continued to impact us, including~~The results reported for the ~~blockage of~~HEYDUDE brand herein represent the ~~Suez Canal, which primarily impacted our EMEA segment in~~partial period beginning on the second quarter of 2021, and significant bottlenecks in West Coast ports, which have impacted 2021 operations, and we expect this to continue to impact future quarters this year. We are exploring various options related to global logistics congestion, including additional port locations and air freight. To date, we also have benefited and believe we will continue to benefit from efficiencies in our U.S. distribution network.

•Beginning in the third quarter of 2021, COVID-19 spikes in Vietnam, where we have significant third-party manufacturing operations, have begun to impact production and distribution, as some factories and ports are temporarily closed or are operating at reduced hours. We continue to be proactive in the supervision of factory operations.Acquisition Date through March 31, 2022 (the “Partial Period”).

•In ~~2021,~~response to the ongoing Russia-Ukraine war, we paused our Russia direct-to-consumer (“DTC”) business, as well as imports of product into the country, during the quarter, and we have ~~invested,~~continued to pay our employees within the country. We have also donated over 200,000 pairs of shoes to Soles for Souls intended for Ukrainian refugees. The pause of our operations in Russia has impacted, and ~~plan to~~will continue to ~~invest,~~impact, sales in ~~selling, general~~our Europe, Middle East, Africa, and ~~administrative expenses~~Latin America (“~~SG&A”~~EMEALA”)~~, including marketing, talent, and digital commerce, to fuel long-term growth, while continuing to leverage revenue growth.~~

•~~Capital expenditures for supply chain investments to support~~ segment, but Russia has historically represented a small portion of our ~~growth are expected to be between $80 million and $100 million for~~global business at less than 3% of consolidated revenues in the year ended December 31, 2021.

•~~We continued to experience store closures in Western Europe~~Global industry-wide logistics challenges and ~~Southeast Asia throughout much of the second quarter as a result of the COVID-19 pandemic. Additionally, our year-over-year results discussed below were,~~global inflation have impacted, and we expect ~~for~~will continue to impact, our business, contributing to incremental freight costs, increased wages, particularly in our distribution centers, and increased raw materials costs. Partial COVID-19-related closures in Vietnam in the ~~remainder~~fourth quarter of 2021 ~~will be, impacted to some extent by prior year store closures~~ and ~~operating hour reductions as a result~~first part of the first quarter of 2022 also negatively impacted our supply chain. Further, in April 2022, we have been impacted by similar closures in China. We expect the situation to remain fluid as COVID-19 ~~impact~~break-out rates fluctuate, including any deterioration in ~~2020.~~circumstances related to COVID-19 variants. In the first quarter of 2022, we incurred air freight costs of approximately $25 million of our total $75 million plan for 2022, which has helped mitigate supply delays.

Use of Non-GAAP Financial Measures

In addition to financial measures presented on the basis of accounting principles generally accepted in the United States of America (“U.S. GAAP”), we present certain information related to our results of operations through “constant currency,” which is a non-GAAP financial measure and should be viewed as a supplement to our results of operations and presentation of reportable segments under U.S. GAAP. Constant currency represents current period results that have been retranslated using prior year average foreign exchange rates for the comparative period to enhance the visibility of the underlying business trends, excluding the impact of foreign currency exchange rates on reported amounts.

Management uses constant currency to assist in comparing business trends from period to period on a consistent basis in communications with the Board, stockholders, analysts, and investors concerning our financial performance. We believe

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constant currency is useful to investors and other users of our condensed consolidated financial statements as an additional tool to evaluate operating performance and trends. Investors should not consider constant currency in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP.

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~~Second~~First Quarter ~~2021~~2022 Financial and Operational Highlights

Revenues were ~~$640.8~~$660.1 million for the ~~second~~first quarter of ~~2021,~~2022, a ~~93.3%~~43.5% increase compared to the ~~second~~first quarter of ~~2020.~~2021. The increase was due to the net effects of: (i) ~~higher unit sales volumes,~~the addition of HEYDUDE Brand revenues of $114.9 million in the Partial Period as a result of the Acquisition, which increased revenues by ~~$234.5 million, or 70.7%, driven by increased consumer demand for our products, a portion of which was due to improved sales in our DTC businesses as the pandemic continued to subside;~~25.0%; (ii) higher Crocs Brand average selling prices, driven primarily by reduced promotions and higher pricing, as well as favorable product mix, including increased sales of charms per shoe, which increased revenues by ~~$58.5~~$104.3 million, or ~~17.7%~~22.6%; ~~and~~ (iii) ~~favorable~~unfavorable changes in exchange rates for the Crocs Brand, which ~~increased~~decreased revenues by ~~$16.3~~$14.9 million, or ~~4.9%~~3.2%, and (iv) lower Crocs Brand unit sales volumes, which decreased revenues by $4.3 million, or 0.9%.

The following were significant developments affecting our businesses and capital structure during the three months ended ~~June 30, 2021:~~March 31, 2022:

•~~Revenues nearly doubled~~We acquired HEYDUDE, which added revenues of $114.9 million for the Partial Period. This represents 17.4% of total consolidated revenues in the three months ended March 31, 2022. HEYDUDE represents a new reportable operating segment.

•Overall, revenues grew 43.5% compared to the ~~second~~first quarter of ~~2020, led by~~2021, with strong growth in all regional segments and channels.

•During the three months ended March 31, 2022, certain revenues and expenses associated with the Crocs Brand Latin America businesses previously reported in our ~~Americas~~‘Americas’ segment ~~which grew by 136.4%, or 135.6% on a constant currency basis. Our EMEA~~were shifted into the ‘EMEA’ segment to better align how we manage our distributor business. To reflect this change, we renamed our ‘Americas’ segment to ‘North America’ and renamed our ‘EMEA’ segment to ‘EMEALA.’ Prior period amounts have been revised to conform to current period presentation.

•Within the Crocs Brand, our North America segment revenues grew by ~~63.1%~~19.5% on both a nominal and constant currency basis, while our EMEALA segment revenues grew by 17.9%, or ~~52.6%~~26.8% on a constant currency basis, and our Asia Pacific segment revenues grew by ~~35.5%~~16.0%, or ~~27.1%~~22.1% on a constant currency basis, compared to the ~~second~~first quarter of ~~2020.~~2021.

•Footwear units sold for the Crocs Brand in the first quarter of 2022 were relatively flat at approximately 25.6 million pairs worldwide compared to the first quarter of 2021. We sold ~~29.1~~4.0 million pairs of shoes ~~worldwide, an increase from 16.3 million pairs~~for the HEYDUDE brand in the ~~second quarter of 2020.~~Partial Period.

•Gross margin was ~~61.7%~~49.2%, ~~an increase~~a decrease of ~~740~~580 basis points from last year’s ~~second~~first quarter. This is inclusive of an approximately 420 basis points impact from adjustments to the fair value of HEYDUDE inventory costs at the Acquisition Date. For more information on the Acquisition, refer to Note 16 — Acquisition of HEYDUDE in the accompanying notes to the condensed consolidated financial statements included in Part I - Item 1. Financial Statements of this Quarterly Report on Form 10-Q. The remaining decrease in margins resulted from higher freight costs, including air freight, resulting from supply chain disruptions and inflation, offset in part by higher ASPs related to price increases.

•Selling, general and administrative expenses (“SG&A”) was $206.2 million compared to $128.5 million in the first quarter of 2021, as a result of ~~increased pricing~~investments in headcount and ~~fewer promotions~~marketing as we grow the business and ~~discounts, favorable channel mix, and favorable product mix.~~

•~~SG&A was $199.9 million compared to $123.3 million in the second quarter of 2020.~~Acquisition-related costs. As a percent of revenues, SG&A ~~decreased~~increased to 31.2% of revenues compared to ~~37.2%~~27.9% of revenues in the ~~second~~first quarter of ~~2020.~~2021.

•Income from operations ~~increased~~decreased to ~~$195.3~~$118.7 million from ~~$56.6~~$124.7 million in last year’s ~~second~~first quarter. Net income was ~~$319.0~~$72.8 million, or ~~$4.93~~$1.19 per diluted share, compared to ~~$56.6~~$98.4 million, or ~~$0.83~~$1.47 per diluted share, in last year’s ~~second~~first quarter.

•WeDuring the first quarter, we entered into ~~an accelerated share repurchase arrangement (“ASR”) in April 2021 that concluded in June 2021,~~a $2.0 billion Term Loan B Facility to partially fund the Acquisition and borrowed a net $150.0 million under our Revolving Facility, $50.0 million of which was used to partially fund the Acquisition. At March 31, 2022, we ~~repurchased 2.9~~had the full $2.0 billion outstanding under the Term Loan B Facility and $364.7 million ~~shares~~ of available borrowing capacity under our ~~common stock at a cost of $300.0 million, including commissions.~~Revolving Facility.

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Results of Operations


		Three Months Ended June 30,							Six Months Ended June 30,						% Change Favorable (Unfavorable)					Three Months Ended March 31,								% Change Favorable (Unfavorable)
								2022											2021						% Change Favorable (Unfavorable)
					2021						2020			2021		2020		Q2 2021-2020					YTD 2021-2020
		(in thousands, except per share, margin, and average selling price data)																		(in thousands, except per share, margin, and average selling price data)
Revenues	Revenues	$	640,773		$	331,549			$	1,100,871		$	612,709		93.3	%	79.7	%	Revenues	$	660,148			$			460,098				43.5	%
Cost of sales	Cost of sales	245,592			151,616				452,471			298,614			(62.0)	%	(51.5)	%	Cost of sales	335,224				206,879					(62.0)	%
Gross profit	Gross profit	395,181			179,933				648,400			314,095			119.6	%	106.4	%	Gross profit	324,924				253,219					28.3	%
Selling, general and administrative expenses	Selling, general and administrative expenses	199,859			123,338				328,392			236,688			(62.0)	%	(38.7)	%	Selling, general and administrative expenses	206,247				128,533					(60.5)	%
Income from operations	Income from operations	195,322			56,595				320,008			77,407			245.1	%	313.4	%	Income from operations	118,677				124,686					(4.8)	%
Foreign currency losses, net		(117)			(687)				(621)			(918)			83.0	%	32.4	%
Foreign currency gains (losses), net																			Foreign currency gains (losses), net	480				(504)					195.2	%
Interest income	Interest income	71			49				98			146			44.9	%	(32.9)	%	Interest income	102				27					277.8	%
Interest expense	Interest expense	(4,712)			(2,170)				(6,344)			(4,091)			(117.1)	%	(55.1)	%	Interest expense	(19,252)				(1,632)					(1,079.7)	%
Other income, net		2			907				13			928			(99.8)	%	98.6	%
Other income (expense), net																			Other income (expense), net	(947)				11					(8,709.1)	%
Income before income taxes	Income before income taxes	190,566			54,694				313,154			73,472			248.4	%	326.2	%	Income before income taxes	99,060				122,588					(19.2)	%
Income tax expense (benefit)		(128,388)			(1,857)				(104,198)			5,830			6,813.7	%	1,887.3	%
Income tax expense																			Income tax expense	26,300				24,190					(8.7)	%
Net income	Net income	$	318,954		$	56,551			$	417,352		$	67,642		464.0	%	517.0	%	Net income	$	72,760			$	98,398				(26.1)	%
Net income per common share:	Net income per common share:																		Net income per common share:
Basic	Basic	$	5.02		$	0.84			$	6.47		$	1.00		497.6	%	547.0	%	Basic	$	1.22			$	1.50				(18.7)	%
Diluted	Diluted	$	4.93		$	0.83			$	6.35		$	0.99		494.0	%	541.4	%	Diluted	$	1.19			$	1.47				(19.0)	%

Gross margin (1)	Gross margin (1)	61.7		%	54.3		%		58.9		%	51.3		%	740	bp	760	bp	Gross margin (1)	49.2		%		55.0		%			(580)	bp
Operating margin (1)	Operating margin (1)	30.5		%	17.1		%		29.1		%	12.6		%	1,340	bp	1,650	bp	Operating margin (1)	18.0		%		27.1		%			(910)	bp
Footwear unit sales		29,085			16,269				54,992			33,369			78.8	%	64.8	%
Average footwear selling price - nominal basis (2)		$	21.84		$	20.23			$	19.86		$	18.24		8.0	%	8.9	%
Footwear unit sales:																			Footwear unit sales:
Crocs Brand																			Crocs Brand	25,615				25,908					(1.1)	%
HEYDUDE Brand (3)																			HEYDUDE Brand (3)	3,979				—					—	%
Average footwear selling price - nominal basis (2):																			Average footwear selling price - nominal basis (2):
Crocs Brand																			Crocs Brand	$	21.10			$	17.64				19.6	%
HEYDUDE Brand (3)																			HEYDUDE Brand (3)	$	28.90			$	—				—	%

(1) Changes for gross margin and operating margin are shown in basis points (“bp”).

(2) Average footwear selling price is calculated as footwear and charms revenues divided by footwear ~~units.~~units, as applicable.

(3) We acquired HEYDUDE on February 17, 2022. Therefore, the amounts shown above represent results during the Partial Period and there are no comparative amounts for the three months ended March 31, 2021.

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Revenues By Channel

Three Months Ended June 30, Six Months Ended June 30, % Change
Constant Currency
% Change (1)
Favorable (Unfavorable)
2021 2020 2021 2020 Q2 2021-2020 YTD 2021-2020 Q2 2021-2020 YTD 2021-2020
(in thousands)
Wholesale:
Americas $ 168,069 $ 67,428 $ 312,842 $ 158,233 149.3 % 97.7 % 148.7 % 98.0 %
Asia Pacific 62,268 35,282 120,891 80,863 76.5 % 49.5 % 67.5 % 42.5 %
EMEA 76,981 42,166 163,585 98,877 82.6 % 65.4 % 70.2 % 55.3 %
Unallocated corporate and other 9 16 48 92 (43.8) % (47.8) % (43.8) % (47.8) %
Total wholesale 307,327 144,892 597,366 338,065 112.1 % 76.7 % 106.0 % 72.2 %
Direct-to-consumer (2):
Americas 237,611 104,156 369,247 161,075 128.1 % 129.2 % 127.2 % 128.5 %
Asia Pacific 64,566 58,291 88,535 78,170 10.8 % 13.3 % 2.7 % 5.4 %
EMEA 31,269 24,210 45,723 35,399 29.2 % 29.2 % 21.9 % 22.7 %
Total direct-to-consumer 333,446 186,657 503,505 274,644 78.6 % 83.3 % 74.6 % 79.8 %
Total revenues $ 640,773 $ 331,549 $ 1,100,871 $ 612,709 93.3 % 79.7 % 88.4 % 75.6 %


	Three Months Ended March 31,					% Change			Constant Currency % Change (1)
					Favorable (Unfavorable)
	2022		2021				Q1 2022-2021			Q1 2022-2021
	(in thousands)
Wholesale:
Crocs Brand	$	344,258	$	290,039			18.7	%		22.9	%
HEYDUDE Brand (2)	86,919		—				—	%		—	%
Total wholesale	431,177		290,039				48.7	%		52.9	%
Direct-to-consumer:
Crocs Brand	200,967		170,059				18.2	%		19.7	%
HEYDUDE Brand (2)	28,004		—				—	%		—	%
Total direct-to-consumer	228,971		170,059				34.6	%		36.1	%
Total revenues	$	660,148	$	460,098			43.5	%		46.7	%

(1) Reflects year over year change as if the current period results were in constant currency, which is a non-GAAP financial measure. See “Use of Non-GAAP Financial Measures” for more information.

(2) ~~Direct-to-consumer revenues consist of sales generated through our company-operated retail stores (previously our “Retail” channel)~~We acquired HEYDUDE on February 17, 2022. Therefore, the amounts shown above represent results during the Partial Period and ~~company-operated e-commerce websites and third-party e-commerce marketplaces (previously our “E-commerce” channel).~~

~~The primary drivers of changes in revenue were:~~

Three Months Ended June 30, 2021 vs. 2020
Volume
Price (1)
Foreign Exchange Total
$
Change % Change $
Change % Change $
Change % Change $
Change % Change
(in thousands)
Total revenues $ 234,497 70.7 % $ 58,473 17.7 % $ 16,254 4.9 % $ 309,224 93.3 %

~~(1)~~ ~~The change due to price is based on~~there are no comparative amounts for the ~~change in average selling price on a constant currency basis (“ASP”).~~

Six Months Ended June 30, 2021 vs. 2020
Volume
Price (1)
Foreign Exchange Total
$
Change % Change $
Change % Change $
Change % Change $
Change % Change
(in thousands)
Total revenues $ 392,997 64.1 % $ 70,266 11.5 % $ 24,899 4.1 % $ 488,162 79.7 %

~~(1)~~ ~~The change due to price is based on the change in ASP.~~three months ended March 31, 2021.

Revenues. In the three months ended ~~June 30, 2021,~~March 31, 2022, revenues increased compared to the same period in ~~2020.~~2021. This was ~~mostly~~ driven by ~~sales volume increases in all regions, most significantly in our Americas segment. The volume increase was due to increased consumer demand, attributable in part to~~(i) the ~~negative impact~~addition of ~~the COVID-19 pandemic on prior year wholesale and retail store revenues. Higher ASP, due to less promotional activity and higher pricing, as well as favorable product mix, including increased sales~~HEYDUDE Brand revenues of ~~charms per shoe, led to higher revenues in all regional segments and almost all channels. Foreign exchange fluctuations also increased revenues, primarily due to favorable changes~~$114.9 million in the ~~Euro, Korean Won,~~Partial Period and ~~Chinese Yuan.~~

~~Revenues also increased~~(ii) higher average selling price on a constant currency basis (“ASP”) in the ~~six months ended June 30, 2021, primarily as a result~~Crocs Brand of ~~volume increases in all regions, led by the Americas segment,~~$104.3 million, or 22.6%, as a result of increased ~~consumer demand, attributable~~pricing, fewer promotions, and less discounting in ~~part to the negative impact~~all regions. Negative foreign currency changes of ~~the COVID-19 pandemic on prior year wholesale and retail store revenues. Higher ASP, primarily~~$14.9 million, or 3.2%, most significantly in the ~~DTC channel~~Euro, decreased Crocs Brand revenues, while volume in ~~our Americas and~~the Crocs Brand decreased 0.9%.

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~~Asia Pacific segments, also contributed to higher revenues. Foreign exchange favorability to revenue was driven by the Euro, Korean Won, and Chinese Yuan.~~

Cost of sales. InHEYDUDE contributed to over half of the increase in cost of sales, which was in line with the increase in HEYDUDE revenue discussed above and is inclusive of a $27.9 million adjustment to the fair value of inventory at the Acquisition Date. For more information on the Acquisition, refer to Note 16 — Acquisition of HEYDUDE in the accompanying notes to the condensed consolidated financial statements included in Part I - Item 1. Financial Statements of this Quarterly Report on Form 10-Q. Additionally, in the three months ended ~~June 30, 2021,~~March 31, 2022, compared to the same period in ~~2020, cost of sales increased due to~~2021, higher ~~volume of $102.2 million, or 67.4%, primarily in our Americas segment, and foreign currency fluctuations, which increased cost of sales by $7.2 million, or 4.7%, offset in part by lower~~ average cost per unit on a constant currency basis (“AUC”)~~, driven by channel mix, efficiencies in our distribution and logistics network, and~~ for the ~~non-recurrence~~Crocs Brand of ~~a prior year COVID-19 inventory write-off, which decreased cost of sales by $15.4~~$47.4 million, or ~~10.1%.~~

~~In the six months ended June 30, 2021, compared to the same period in 2020, cost~~22.9%, was driven mostly by higher freight costs, including air freight of ~~sales increased primarily due to higher volume~~$24.6 million, as well as an inventory write off of ~~$177.5~~$1.8 million ~~or 59.4%. Foreign currency fluctuations further increased cost of sales by $11.4 million, or 3.8%. These increases were partially offset by lower AUC of $35.0 million, or 11.7%,~~ as a result of ~~favorable product mix and~~the impact of the Russia-Ukraine war. Negative fluctuations in foreign currency of $6.8 million, or 3.3%, increased ~~efficiencies in our distribution and logistics network.~~Crocs Brand cost of sales, while volume had minimal impact.

Gross profit. Gross margin ~~increased~~decreased in the three months ended ~~June 30, 2021~~March 31, 2022 to ~~61.7%~~49.2%, compared to ~~54.3%~~55.0% in the same period in ~~2020,~~2021, mostly driven by an approximately 420 basis points impact from adjustments to the fair value of HEYDUDE inventory costs at the Acquisition Date. Gross margin was also impacted by higher freight costs as a result of supply chain challenges, which have caused us to use more expensive shipping methods, such as air freight, to satisfy consumer demand, and global inflation, which has broadly led to, among other things, increased ~~pricing and fewer promotions and discounts, favorable channel mix, and favorable product mix.~~ freight costs. This was partially mitigated by better sales performance as a result of higher ASPs, as described above.

Gross profit increased ~~$215.2~~$71.7 million, or ~~119.6%~~28.3%, as a result of the net impact of higher ~~volume~~Crocs Brand ASP and higher Crocs Brand AUC, of ~~$132.3~~$56.9 million, or ~~73.6%,~~22.5%. This was offset by lower volume in the ~~combined impact~~Crocs Brand of ~~lower AUC and higher ASP, of $73.8~~$5.6 million, or ~~41.0%~~2.2%, and ~~favorable~~unfavorable foreign currency changes for the Crocs Brand of ~~$9.1~~$8.1 million, or ~~5.0%~~3.2%.

~~Gross margin in~~ The HEYDUDE Brand contributed to the six months ended June 30, 2021 was 58.9% compared to 51.3% in 2020, due to favorable channel and product mix, increased pricing, and fewer promotions and discounts. Gross profit increased $334.3 million, or 106.4%, as a resultremainder of ~~higher volumes of $215.6 million, or 68.6%,~~ the ~~combined impact of lower AUC and higher ASP of $105.2 million, or 33.5%, and positive foreign currency changes of $13.5 million, or 4.3%.~~increase.

Selling, general and administrative expenses. SG&A as a percent of revenue improved to 31.2% in the three months ended June 30, 2021 from 37.2% in the same period in 2020 as a result of strong sales growth and our continued efforts to leverage operating costs. SG&A expenses increased ~~$76.5~~$77.7 million, or ~~62.0%~~60.5%, in the three months ended ~~June 30, 2021~~March 31, 2022 compared to the same period in ~~2020.~~2021. This was ~~primarily~~due in part to costs associated with the Acquisition, including consulting, legal, and accounting fees, among others, of $20.6 million. Higher salaries and wages, recruiting, commissions, and other compensation costs increased $18.1 million due to increased headcount, including employees associated with

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HEYDUDE, as we have grown the Company over the last year. We also continued to invest in marketing to fuel revenue growth, with an increase of $15.6 million, a ~~$39.9 million increase in compensation expense,~~large portion of which ~~was driven by a combination of~~relates to variable marketing and additional investments in ~~employee headcount~~our digital business. Other professional services costs increased $8.3 million, due to ~~support the growth of the business, the impact of the prior year temporary and permanent elimination of certain roles in response to COVID-19, and~~ higher variable ~~and executive compensation. Marketing expense~~costs associated with increased ~~by $26.4 million,~~revenues, higher legal costs associated in part ~~as an investment to fuel future growth~~with ongoing defense of our intellectual property, and ~~in part as a result~~supply chain projects. We had higher bad debt expense of ~~prior year COVID-19 savings. Facilities expense was higher by $8.4~~$6.2 million as a result of ~~variable rent associated with an increase~~receivables written off for our Russia business, driven by the war in ~~retail sales, particularly in the Americas. Services~~Ukraine. Other net costs, including ~~consulting and legal fees, as well as variable costs associated with higher sales, were higher by $7.9 million~~facilities expense and information technology ~~and other net~~ costs, ~~were higher by $5.8~~increased $8.9 million. These increases were offset in part by $7.6 million lower donations of inventory as a result of prior year COVID-19 donations to frontline healthcare workers and other organizations that did not recur at the same magnitude in the current year and decreases in bad debt expense of $4.4 million from the prior year COVID-19 related impact on our distributors that did not recur in the current year, as well as collections on previously reserved bad debt expense.

SG&A increased $91.7 million, or 38.7%, during the six months ended June 30, 2021, compared to the same period in 2020. This was driven in large part by higher compensation expense of $52.1 million as a result of increased employee headcount and higher variable and executive compensation and by additional investments in marketing of $28.1 million, both of which support the growth of the business. Services costs, including consulting and legal fees, as well as variable costs associated with higher sales, were up $11.4 million, facilities expense was up $10.6 million as a result of variable rent associated with higher sales, and information technology and other net costs were up by $7.9 million. These increases were offset in part by $9.3 million lower donations of inventory as a result of prior year COVID-19 donations to frontline healthcare workers and other organizations that did not recur at the same magnitude in the current year and decreases in bad debt expense of $9.1 million primarily due to the prior year COVID-19 related impact on our distributors that did not recur in the current year, as well as collections on previously reserved bad debt expense.

Foreign currency ~~losses,~~gains (losses), net. Foreign currency ~~losses,~~gains (losses), net, consist of realized and unrealized foreign currency gains and losses from the remeasurement and settlement of monetary assets and liabilities denominated in non-functional currencies as well as realized and unrealized gains and losses on foreign currency derivative instruments. During the three months ended ~~June 30, 2021,~~March 31, 2022, we recognized realized and unrealized net foreign currency ~~losses~~gains of ~~$0.1~~$0.5 million, compared to losses of ~~$0.7~~$0.5 million during the three months ended ~~June 30, 2020.~~March 31, 2021.

During the six months ended June 30, 2021, we recognized realized and unrealized net foreign currency losses of $0.6 million, compared to losses of $0.9 million during the six months ended June 30, 2020.

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Income tax expense. During the three months ended ~~June 30, 2021,~~March 31, 2022, income tax ~~benefit~~expense increased ~~$126.5~~$2.1 million compared to the same period in ~~2020.~~2021. The effective tax rate for the three months ended ~~June 30, 2021~~March 31, 2022 was ~~(67.4)%~~26.5% compared to an effective tax rate of ~~(3.4)%~~19.7% for the same period in ~~2020,~~2021, a ~~64.0% decrease.~~6.8% increase. This ~~decrease~~increase in the effective rate was driven primarily driven by the prior year realization of deferred tax assets which were subject to a ~~$176.9 million discrete tax benefit during~~valuation allowance which did not reoccur in the ~~three months ended June 30, 2021 for the release of valuation allowances resulting from the enactment of a tax law change.~~current year. Our effective income tax rate, for each period presented, also differs from the federal U.S. statutory rate ~~primarily~~ due ~~to the release of valuation allowances, as well as~~ differences in income tax rates between U.S. and foreign jurisdictions.

The Company assesses the recoverability of its deferred tax assets each period by considering whether it is more likely than not that all or a portion of the deferred tax assets will be realized. In making such determination, the Company considers all available (both positive and negative) evidence, including future reversals of temporary differences, tax-planning strategies, projected future taxable income, and results of operations.

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Reportable Operating Segments

The following table sets forth information related to our reportable operating segments, including a comparison of revenues and operating income by segment:

Three Months Ended June 30, Six Months Ended June 30, % Change
Constant Currency
% Change (1)
Favorable (Unfavorable)
2021 2020 2021 2020 Q2 2021-2020 YTD 2021-2020 Q2 2021-2020 YTD 2021-2020
(in thousands)
Revenues:
Americas $ 405,680 $ 171,584 $ 682,089 $ 319,308 136.4 % 113.6 % 135.6 % 113.4 %
Asia Pacific 126,834 93,573 209,426 159,033 35.5 % 31.7 % 27.1 % 24.3 %
EMEA 108,250 66,376 209,308 134,276 63.1 % 55.9 % 52.6 % 46.7 %
Total segment revenues 640,764 331,533 1,100,823 612,617 93.3 % 79.7 % 88.4 % 75.6 %
Unallocated corporate and other (3)
9 16 48 92 (43.8) % (47.8) % (43.8) % (47.8) %
Total consolidated revenues $ 640,773 $ 331,549 $ 1,100,871 $ 612,709 93.3 % 79.7 % 88.4 % 75.6 %
Income from operations:

Americas (2)
$ 192,781 $ 52,974 $ 308,848 $ 91,191 263.9 % 238.7 % 263.2 % 238.5 %
Asia Pacific (2)
32,016 12,726 54,131 19,193 151.6 % 182.0 % 135.5 % 165.5 %
EMEA (2)
36,787 22,431 73,432 39,831 64.0 % 84.4 % 54.2 % 74.1 %
Total segment income from operations 261,584 88,131 436,411 150,215 196.8 % 190.5 % 191.6 % 185.5 %
Unallocated corporate and other (2)(3)
(66,262) (31,536) (116,403) (72,808) (110.1) % (59.9) % (109.2) % (59.1) %
Total consolidated income from operations $ 195,322 $ 56,595 $ 320,008 $ 77,407 245.1 % 313.4 % 237.4 % 304.5 %


	Three Months Ended March 31,					% Change	Constant Currency % Change (1)
	2022		2021		Favorable (Unfavorable)

	(in thousands)
Revenues:
North America (2)	$	319,450	$	267,267			19.5	%	19.5	%
Asia Pacific	95,847		82,592				16.0	%	22.1	%
EMEALA (2)	129,921		110,201				17.9	%	26.8	%
Brand corporate (3)	7		38				(81.6)	%	(81.6)	%
Crocs Brand revenues	545,225		460,098				18.5	%	21.7	%
HEYDUDE Brand revenues	114,923		—				—	%	—	%
Total consolidated revenues	$	660,148	$	460,098			43.5	%	46.7	%

Income from operations:
North America (2)	$	129,611	$	112,693			15.0	%	15.1	%
Asia Pacific	30,106		22,115				36.1	%	48.3	%
EMEALA (2)	34,927		40,019				(12.7)	%	(11.3)	%
Brand corporate (3)	(30,709)		(20,008)				(53.5)	%	(55.1)	%
Crocs Brand income from operations	163,935		154,819				5.9	%	7.8	%
HEYDUDE Brand income from operations	15,658		—				—	%	—	%
Enterprise corporate (3)	(60,916)		(30,133)				(102.2)	%	(102.3)	%
Total consolidated income from operations	$	118,677	$	124,686			(4.8)	%	(2.4)	%

(2) In the first quarter of ~~2021,~~2022, certain ~~costs~~revenues and expenses associated with our Latin America businesses previously reported ~~within ‘Other Businesses’~~in our ‘Americas’ segment were shifted into the ‘EMEA’ segment. To reflect this change, we renamed our ‘Americas’ segment to ~~the Americas, Asia Pacific,~~‘North America’ and ~~EMEA segments.~~renamed our ‘EMEA’ segment to ‘EMEALA.’ Additionally, ~~any costs remaining~~ in ~~‘Other Businesses,’ including depreciation and amortization, have been consolidated into ‘Unallocated corporate and other.’ In~~ the second quarter of 2021, certain marketing expenses previously reported within ‘Unallocated corporate and other’ were shifted to the Americas, Asia Pacific, and EMEA ~~segments. The~~segments (see footnote (2) for more information on the current year presentation of costs previously reported in ‘Unallocated corporate and other’). As a result of these changes, the previously reported amounts for revenues and income from operations for the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 have been revised to conform to current period presentation. See the ‘Impacts of segment composition change’

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and ‘Impacts of marketing expense allocations’ tables below for more information.

(3)~~Unallocated~~ In the first quarter of 2022, as a result of the Acquisition, all costs previously reported in “Unallocated corporate and ~~other includes corporate support and administrative functions, certain royalty income,~~other” were recast between ‘Brand corporate’ costs associated with ~~share-based compensation, research~~the Crocs Brand and ~~development,~~‘Enterprise corporate’ costs, each of which is defined in Note 14 — Operating Segments and Geographic Information in the accompanying notes to the condensed consolidated financial statements included in Part I - Item 1. Financial Statements of this Quarterly Report on Form 10-Q. As a result of these changes, the previously reported amounts for income from operations for the three months ended March 31, 2021 have been revised to conform to current period presentation. See the ‘Impacts of brand ~~marketing, legal, and depreciation and amortization of corporate and other assets not allocated to operating segments.~~vs. enterprise recast’ table below for more information.

(4)

We acquired HEYDUDE on February 17, 2022 and added the HEYDUDE brand as a new operating segment. Therefore, the amounts shown above represent results during the Partial Period and there are no comparative amounts for the three months ended March 31, 2021.

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~~Impacts of segment composition change:~~

Impacts of ~~marketing expense allocations:~~

segment composition change associated with Latin America:


	Three Months Ended March 31, 2021
	(in thousands)
Impact on revenues:
Americas (now “North America”)	$	(9,142)
EMEA (now “EMEALA”)	9,142

Impact on income from operations:
Americas (now “North America”)	$	(3,374)
EMEA (now “EMEALA”)	3,374

Impacts of marketing expense allocations:


	Three Months Ended March 31, 2021
	(in thousands)
Impacts on income from operations:
Americas (now “North America”)	$	(2,277)
Asia Pacific	(1,178)
EMEA (now “EMEALA”)	(468)
Total impact on segment income from operations	$	(3,923)

Unallocated corporate and other (now in “Brand corporate”)	$	3,923

Impacts of brand vs. enterprise recast:


	Three Months Ended March 31, 2021
	(in thousands)
Impacts on income from operations:
Brand corporate	$	(20,008)
Enterprise corporate	(30,133)

Unallocated corporate and other	$50,141		~~3,923~~

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The primary drivers of changes in revenues by operating segment were:


		Three Months Ended June 30, 2021 vs. 2020																	Three Months Ended March 31, 2022 vs. 2021
		Volume				Price (1)				Foreign Exchange				Total					Volume				Price (1)				Foreign Exchange				Total
		$ Change		% Change		$ Change		% Change		$ Change		% Change		$ Change		% Change			$ Change		% Change		$ Change		% Change		$ Change		% Change		$ Change		% Change
		(in thousands)																	(in thousands)
Segment Revenues:	Segment Revenues:																	Segment Revenues:
Crocs Brand:																		Crocs Brand:
Americas	Americas	$	187,044	109.0	%	$	45,672	26.6	%	$	1,380	0.8	%	$	234,096	136.4	%	Americas	$	(15,144)	(5.7)	%	$	67,349	25.2	%	$	(22)	—	%	$	52,183	19.5	%
Asia Pacific	Asia Pacific	17,532		18.7	%	7,852		8.4	%	7,877		8.4	%	33,261		35.5	%	Asia Pacific	5,919		7.2	%	12,346		14.9	%	(5,010)		(6.1)	%	13,255		16.0	%
EMEA	EMEA	29,928		45.1	%	4,949		7.5	%	6,997		10.5	%	41,874		63.1	%	EMEA	4,995		4.5	%	24,559		22.4	%	(9,834)		(8.9)	%	19,720		17.9	%
HEYDUDE Brand																		HEYDUDE Brand	—		—	%	—		—	%	—		—	%	—		—	%
Total segment revenues	Total segment revenues	$	234,504	70.7	%	$	58,473	17.7	%	$	16,254	4.9	%	$	309,231	93.3	%	Total segment revenues	$	(4,230)	(0.9)	%	$	104,254	22.6	%	$	(14,866)	(3.2)	%	$	85,158	18.5	%

(1) The change due to price for revenues is based on ASP, as defined earlier in this section.

Six Months Ended June 30, 2021 vs. 2020
Volume
Price (1)
Foreign Exchange Total
$
Change % Change $
Change % Change $
Change % Change $
Change % Change
(in thousands)
Segment Revenues:
Americas $ 311,744 97.6 % $ 50,305 15.8 % $ 732 0.3 % $ 362,781 113.6 %
Asia Pacific 19,783 12.4 % 18,770 11.8 % 11,840 7.5 % 50,393 31.7 %
EMEA 61,514 45.8 % 1,191 0.9 % 12,327 9.2 % 75,032 55.9 %
Total segment revenues $ 393,041 64.1 % $ 70,266 11.5 % $ 24,899 4.1 % $ 488,206 79.7 %

~~(1)~~ ~~The change due to price for revenues is based on ASP, as defined earlier in this section.~~Crocs Brand

~~Americas~~North America Operating Segment

Revenues. Americas revenues increased in the three months ended ~~June 30, 2021,~~March 31, 2022, compared to the same period in ~~2020, most significantly~~2021, driven by higher ASP in both channels due to higher pricing. This was partially offset by lower volumes as a result of ~~higher volumes~~delays in ~~both our wholesale and DTC channels,~~the arrival of new product introductions driven by increased consumer demand, partially due to the prior year impact of COVID-19 on our wholesale brick-and-mortar and partner stores and our retail stores. Higher ASP of 26.6% also contributed to higher sales, mostly from higher pricing and less promotions in our DTC channel, as well as favorable product mix, including increased sales of charms per shoe. Favorable foreign currency fluctuations were driven by the Canadian Dollar.supply chain constraints.

The increase in Americas revenues in the six months ended June 30, 2021, compared to the same period in 2020, was primarily due to higher volumes in both channels as a result of increased consumer demand, partially due to the prior year impact of COVID-19 on our brick-and-mortar stores. Higher ASP also contributed to higher sales, mostly from higher pricing and fewer promotions in our DTC channel, particularly in retail, as well as favorable product mix, including increased sales of charms per shoe. Favorable foreign currency fluctuations were driven by the Canadian Dollar, offset in part by unfavorable changes in the Brazilian Real in the first part of the year.

Income from Operations. Income from operations for our Americas segment was ~~$192.8~~$129.6 million for the three months ended ~~June 30, 2021,~~March 31, 2022, an increase of ~~$139.8~~$16.9 million, or ~~263.9%~~15.0%, compared to the same period in ~~2020.~~2021. Gross profit increased ~~$164.7~~$30.4 million, or ~~170.3%~~19.4%, as a result of the net impact of higher ~~volume~~ASP and AUC, of ~~$108.6~~$39.6 million, or ~~112.3%, in both channels, and higher ASP, supplemented by lower AUC, of $55.6 million, or 57.5%,~~25.2%. This increase was due to ~~increased efficiencies in our U.S. distribution network, product mix, including increased sales of charms per shoe,~~ higher prices and ~~less~~fewer promotions and ~~channel mix. There were also insignificant~~ favorable ~~currency changes.~~product mix, offset in part by higher freight costs, including air freight. Lower volume of $9.1 million, or 5.7%, partially offset this increase.

SG&A for our Americas segment increased ~~$24.9~~$13.5 million, or ~~57.0%~~30.5%, during the three months ended ~~June 30, 2021~~March 31, 2022 compared to the same period in ~~2020.~~2021. We ~~invested an additional $14.9 million~~continued to invest in marketing, which increased by $7.7 million compared to prior year, ~~to support~~particularly in our ~~growth. Additionally,~~digital business, and employee headcount, with compensation costs increasing by $2.8 million. Facilities expense was higher by $11.2 million, due to increased employee headcount in 2021, compounded by the prior year temporary and permanent elimination of certain roles in response to COVID-19, facilities expense was higher by $5.7$1.3 million, primarily as a result of variable rent associated with an increase in retail sales, and other net costs were higher by ~~$3.9~~$1.7 million, mostly as a result of variable costs associated with higher DTC sales. ~~These increases were partially offset by~~

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lower donations of inventory of $7.8 million as a result of prior year COVID-19 donations to frontline healthcare workers that did not recur in the current year and decreases in bad debt expense of $3.0 million from the prior year COVID-19 related impact on our distributors that did not recur in the current year, as well as collections on previously reserved bad debt expense.

Income from operations for our Americas segment was $308.8 million for the six months ended June 30, 2021, an increase of $217.7 million, or 238.7%, compared to the same period in 2020. Gross profit increased $249.8 million, or 144.7%, primarily due to volume increases of $175.9 million, or 101.9%, in both our wholesale and DTC channels, and due to $73.6 million, or 42.6%, of higher ASP, primarily in our DTC channel, and lower AUC, as a result of increased efficiencies in our U.S. distribution network, product mix including increased sales of charms per shoe, higher prices and less promotions, and channel mix. Insignificant favorable currency changes also impacted gross profit.

SG&A for our Americas segment increased $32.1 million, or 39.4%, during the six months ended June 30, 2021 compared to the same period in 2020, due to an investment in marketing of $18.2 million to support growth, including some variable costs associated with higher revenues, higher compensation expense of $13.0 million primarily due to the prior year temporary and permanent elimination of certain roles in response to COVID-19, higher facilities costs of $7.1 million associated with variable rent driven by higher retail sales, higher services costs of $3.3 million mostly from variable costs associated with higher DTC sales, and other net costs of $2.9 million. These increases were offset by lower donations of inventory of $8.3 million as a result of prior year COVID-19 donations to frontline healthcare workers that did not recur in the current year and lower bad debt expense of $4.1 million as a result of the prior year impact of COVID-19 on our distributors and subsequent collections in the current year.

Asia Pacific Operating Segment

Revenues. Asia Pacific revenues increased in the three months ended ~~June 30, 2021,~~March 31, 2022, compared to the same period in ~~2020, primarily~~2021, as a result of ~~volume increases in our wholesale channel driven by the prior year COVID-19 impact on our distributor markets, while~~ higher ASP as a result of ~~increased~~higher pricing and ~~fewer promotions, was the largest contributor to DTC growth. Favorable~~less discounting and higher volume, driven by wholesale brick-and-mortar and distributor sales. These increases were partially offset by unfavorable foreign currency ~~fluctuations,~~changes, primarily in the Korean Won, Japanese Yen, and ~~Chinese Yuan, also increased revenues.~~Indian Rupee.

Revenues in the six months ended June 30, 2021, compared to the same period in 2020, in our Asia Pacific segment increased as a result of volume increases in our wholesale channel. Additionally, ASP increases in both channels, as a result of increased pricing and fewer promotions, and favorable foreign currency fluctuations in the Korean Won, Chinese Yuan, and Singapore Dollar also resulted in higher revenues.

Income from Operations. Income from operations for the Asia Pacific segment was ~~$32.0~~$30.1 million for the three months ended ~~June 30, 2021,~~March 31, 2022, an increase of ~~$19.3~~$8.0 million, or ~~151.6%~~36.1%, compared to the same period in ~~2020.~~2021. Gross profit increased by ~~$27.7~~$11.4 million, or ~~55.3%, mostly~~25.7%. This resulted from ~~ASP~~ growth ~~combined with AUC savings,~~ of ~~$16.1~~$11.9 million, or ~~32.3%~~26.9%, driven by ~~increased~~higher pricing and less ~~promotional activity, favorable product mix, and greater purchasing power from currency changes, partially offset by unfavorable channel mix as a result of increased wholesale share.~~discounting, which led to higher ASP. Increases in sales volume ~~of $6.4~~contributed $3.0 million, or ~~12.7%~~6.7%, ~~and favorable~~to the increase in gross profit, while unfavorable changes in foreign currency of ~~$5.2~~$3.5 million, or ~~10.3%~~7.9%, ~~led by the Korean Won and Chinese Yuan, also contributed to higher gross profit.~~partially offset these increases.

SG&A for our Asia Pacific segment increased ~~$8.4~~$3.4 million, or ~~22.5%~~15.2%, during the three months ended ~~June 30, 2021,~~March 31, 2022, compared to the same period in ~~2020, primarily~~2021, due to ~~an investment~~investments in marketing of ~~$5.8~~$1.1 million, primarily related to our China business, and employee headcount of $0.8 million, as well as increases in ~~facilities expense, compensation expense, and other net costs of $2.6 million.~~

Income from operations for the Asia Pacific segment was $54.1 million for the six months ended June 30, 2021, an increase of $34.9 million, or 182.0%, compared to the same period in 2020. Gross profit increased by $39.7 million, or 48.3%, mostly due to the net impact of higher ASP and lower AUC of $25.1 million, or 30.6%, resulting from price increases and less promotional activity, favorable product mix, and greater purchasing power from currency changes. Favorable currency impacts of $7.4 million, or 9.0%, and higher volumes of $7.2 million, or 8.7%, also increased gross profit.

SG&A for our Asia Pacific segment increased $4.8 million, or 7.6% in the six months ended June 30, 2021 compared to the same period in 2020, primarily due to an investment in marketing of $5.4 million and an increase in facilities expense of $2.8 million associated with variable rent driven by higher retail sales. There were also increases in compensation and other net costs of $1.5 ~~million. These increases were partially offset by lower bad debt expense of $3.5~~ million, primarily ~~from a charge taken~~associated with variable costs in ~~the prior year~~line with higher DTC revenues in ~~response to COVID-19,~~facilities, contract labor, and ~~prior year inventory donations to healthcare workers and other organizations of $1.4 million, neither of which recurred in 2021.~~outside services costs.

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~~EMEA~~EMEALA Operating Segment

Revenues. ~~Revenues increased in our EMEA segment in~~In the three months ended ~~June 30, 2021,~~March 31, 2022, compared to the same period in ~~2020,~~2021, the increase in revenues in our EMEALA segment was driven ~~mostly~~ by increased volume, primarily in our wholesale channel. This increase was a result of higher demand for our products, as well as the prior year impact of the COVID-19 pandemic on our wholesale brick-and-mortar and distributor markets. Positive net foreign currency fluctuations in the Euro and higher ASP,Additionally, increased ASPs, driven by ~~favorable~~increased prices and product mix, ~~and price increases,~~which was led by an increased share of clogs, also ~~increased revenues.~~

~~During the six months ended June 30, 2021, EMEA revenues increased compared~~contributed to the same period in 2020, primarily due to higher wholesale revenues resulting from increased product demand and prior year COVID-19 impacts. Higher ASP in our DTC channel resulted from increased pricing and less promotions. Favorablerevenue growth. Significant unfavorable foreign currency fluctuations in the Euro partially offset ~~by negative fluctuations in the Russian Ruble, also contributed to higher revenues.~~these increases.

Income from Operations. Income from operations for the ~~EMEA~~EMEALA segment was ~~$36.8~~$34.9 million for the three months ended ~~June 30, 2021,~~March 31, 2022, an increase of ~~$14.4~~$5.1 million, or ~~64.0%~~12.7%, compared to the same period in ~~2020.~~2021. Gross profit increased ~~$21.0~~$3.6 million, or ~~59.3%~~6.6%, due mostly to ~~higher volume~~an impact of ~~$15.4~~$5.4 million, or ~~43.5%.~~9.9% from higher ASP ~~growth outpaced AUC growth, leading~~due to ~~higher gross profit of $2.1 million, or 6.0%. This was driven by favorable purchasing power from currency changes, favorable product mix, and~~ increased pricing, offset in part by higher AUC as a result of increased freight costs, ~~from global supply chain challenges~~ including air freight, increased duties as a result of unfavorable sourcing mix driven by COVID-19-related closures in Vietnam, and unfavorable purchasing power. Additionally, gross profit was negatively impacted by an inventory reserve expense of $1.8 million in Russia as a result of the ~~blockage~~war in ~~the Suez Canal and in part by a channel mix shift towards wholesale.~~Ukraine. Higher volume drove increased gross profit of $2.7 million, or 4.8%. Foreign currency changes, primarily in the Euro, were ~~favorable,~~unfavorable, impacting gross profit by ~~$3.5~~$4.5 million, or ~~9.8%~~8.1%.

SG&A for our ~~EMEA~~EMEALA segment increased ~~$6.6~~$8.7 million, or ~~50.7%~~58.2%, during three months ended ~~June 30, 2021,~~March 31, 2022, compared to the same period in ~~2020,~~2021. Marketing investments increased $1.5 million, primarily ~~from increases~~ in ~~marketing investments~~digital marketing. Bad debt expense increased $5.8 million, primarily due to ~~support growth of $4.6 million,~~a reserve for unrecoverable receivables for our Russia business, driven by the war in Ukraine. Other net costs increased, including compensation expense ~~of $1.6 million,~~ and ~~facilities and other net~~professional services costs, of $1.4 million. ~~These were offset in part by $1.0 million lower bad debt expense as a result of collections on previously reserved bad debt.~~

Income from operations for the EMEA segment was $73.4 million for the six months ended June 30, 2021, an increase of $33.6 million, or 84.4%, compared to the same period in 2020. Gross profit increased $41.4 million, or 62.9%, due to higher sales volumes of $28.8 million, or 43.8%. Higher ASP and lower AUC, led to a net impact on gross profit of $6.5 million, or 9.9%, as a result of favorable purchasing power, price increases, and fewer promotions, offset in part by higher freight costs from global supply chain challenges. Positive currency changes led to increases of $6.1 million, or 9.2%.

SG&A for our EMEA segment increased $7.8 million, or 30.0%, during the six months ended June 30, 2021, compared to the same period in 2020. Additional investments in marketing to support growth of $5.7 million, higher compensation expense of $2.1 million, and higher facilities and other net costs of $1.3 million were offset in part by $1.3 million lower bad debt expense.

~~Unallocated~~Crocs Brand Corporate ~~and Other~~

During the three months ended ~~June 30, 2021,~~March 31, 2022, total net costs within ~~‘Unallocated Corporate and Other’~~‘Brand corporate’ increased ~~$34.7~~$10.7 million, or 53.5%, compared to the same period in ~~2020, driven mostly by~~2021, due to higher compensation costs of ~~$26.0~~$3.6 million, ~~as a result~~inventory donations of ~~increased employee headcount, compounded by the prior year temporary and permanent elimination~~$2.0 million, primarily comprised of ~~certain roles in response~~donations to COVID-19, as well as higher variable and executive compensation in 2021. Higher services costs including consulting fees and legal fees resulted in $6.1 million of additional costs and information technology costs were higher by $2.5 million. There were also higher other net costs of $0.1 million.

~~During the six months ended June 30, 2021, total net costs within ‘Unallocated Corporate and Other’ increased $43.6 million compared~~be distributed to ~~the same period in 2020, primarily driven by an increase in compensation expense of $35.9 million due to increased employee headcount and higher variable and executive compensation,~~Ukraine refugees, higher services costs ~~including consulting and legal fees~~ of ~~$8.0~~$1.7 million, and higher information technology costs of ~~$4.5~~$0.9 million. ~~These~~Other net costs increased by $0.3 million.

HEYDUDE Brand

For the Partial Period, revenues attributable to HEYDUDE were $114.9 million, with the majority of revenues attributable to our wholesale channel at 75.6%. Overall we sold 4.0 million pairs of shoes in the HEYDUDE Brand during the Partial Period. Income from operations during the Partial Period was $15.7 million and included SG&A costs comprised primarily of marketing, compensation, and amortization expense. Refer to Note 16 — Acquisition of HEYDUDE in the accompanying notes to the condensed consolidated financial statements included in Part I - Item 1. Financial Statements of this Quarterly Report on Form 10-Q for additional information regarding the Acquisition.

Enterprise Corporate

During the three months ended March 31, 2022, total net costs within ‘Enterprise corporate’ increased $30.8 million, or 102.2%, compared to the same period in 2021, due primarily to costs associated with the Acquisition, including consulting, legal, and accounting fees, among others, of $20.6 million. There were also higher other professional service costs of $4.6 million, higher compensation and related costs of $4.3 million and increases ~~were offset~~ in ~~part by lower~~ other net costs, including information technology costs, of ~~$4.8~~$1.3 million.

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Crocs Brand Store Locations and Digital Sales Percentage

The tables below illustrate the overall change in the number of our Crocs Brand company-operated retail locations by reportable operating segment for the three ~~and six~~ months ended ~~June 30, 2021:~~March 31, 2022:


		March 31, 2021	Opened	Closed	June 30, 2021		December 31, 2021	Opened	Closed	March 31, 2022
Company-operated retail locations:	Company-operated retail locations:					Company-operated retail locations:

Americas		165	—	1	164
North America						North America	173	2	—	175
Asia Pacific	Asia Pacific	135	7	—	142	Asia Pacific	153	1	1	153
EMEA		49	—	3	46
EMEALA						EMEALA	47	1	4	44
Total	Total	349	7	4	352	Total	373	4	5	372

December 31,
2020 Opened Closed June 30,
2021
Operating segment:
Americas 165 — 1 164
Asia Pacific 137 7 2 142
EMEA 49 — 3 46
Total 351 7 6 352

Digital sales, which includes sales through our company-owned websites, third party marketplaces, and e-tailers (which are reported in our wholesale channel), as a percent of total revenues, by operating segment were:

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Digital sales as a percent of total revenues:
Americas 30.9 % 58.4 % 30.2 % 44.8 %
Asia Pacific 40.5 % 46.6 % 36.7 % 37.5 %
EMEA 52.5 % 63.4 % 47.4 % 50.7 %
Global 36.4 % 56.1 % 34.7 % 44.2 %


	Three Months Ended March 31,
	2022		2021
Digital sales as a percent of total revenues:
Crocs Brand	32.8	%	32.3	%
HEYDUDE Brand (1)	25.9	%	—	%
Total (2)	31.6	%	32.3	%

(1) We acquired HEYDUDE on February 17, 2022. Therefore, the amounts shown above represent results during the Partial Period and there are no comparative amounts for the three months ended March 31, 2021.

(2) For the three months ended March 31, 2021, the digital sales as a percent of total revenues represents the Crocs Brand.

Direct-to-consumer (“DTC”) comparable sales for the Crocs Brand are as follows:


	Constant Currency (1)
	Three Months Ended March 31,
	2022		2021
Direct-to-consumer comparable sales: (2)



Crocs Brand	16.6	%	71.1	%

(1) Reflects period over period change on a constant currency basis, which is a non-GAAP financial measure. See “Use of Non-GAAP Financial Measures” for more information.

(2) Comparable store status, as included in the DTC comparable sales figures above, is determined on a monthly basis. Comparable store sales include the revenues of stores that have been in operation for more than twelve months. 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 in which they have comparable prior year sales. Temporarily closed stores are excluded from the comparable store sales calculation during the month of closure and in the same month in the following year. Location closures in excess of three months are excluded until the thirteenth month post re-opening. E-commerce comparable revenues are based on same site sales period over period.

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Financial Condition, Capital Resources, and Liquidity

Liquidity

Our liquidity position as of ~~June 30, 2021~~March 31, 2022 was:


	~~June 30, 2021~~March 31, 2022
	(in thousands)
Cash and cash equivalents	$	~~197,853~~171,969
Available borrowings	~~454,725~~371,132

As of ~~June 30, 2021,~~March 31, 2022, we had ~~$197.9~~$172.0 million in cash and cash equivalents and up to ~~$454.7~~$371.1 million of available borrowings, including $364.7 million of remaining borrowing availability under ~~our~~the Revolving Facility and $6.4 million of remaining borrowing availability under the Asia Revolving Facilities (as defined below). As of March 31, 2022, the Term Loan B Facility was fully drawn at $2.0 billion, and there was no available borrowing capacity. We believe that cash flows from operations, our cash and cash equivalents on hand, and available borrowings under our Revolving Facility will be sufficient to meet our ongoing liquidity needs and capital expenditure requirements for at least the next twelve months.

We ~~will also continue to be opportunistic with respect to our capital structure and our capital returns. Additionally, in March 2021, we~~ completed the ~~issuance~~Acquisition on February 17, 2022. The consideration for the Acquisition was comprised of $2.05 billion in Cash Consideration and ~~sale~~2,852,280 of ~~$350.0 million aggregate principal amount of Notes (as defined below). A~~Crocs shares. To finance a portion of the ~~net proceeds were used to repay~~Cash Consideration, we entered into the ~~then-outstanding balance of $115.0~~$2.0 billion Term Loan B Facility and borrowed $50.0 million under our Revolving Facility. We also exercised the accordion provision for our Revolving Facility to increase our borrowing capacity from $500.0 million to $600.0 million. In 2022, we plan to use excess cash generated by our operations to begin to repay our outstanding debt, and, the remainder was used for general corporate purposes and share repurchases. See “Senior Notes Issuance” below for more information. Further, in April 2021, the Board approved a $712.2 million increase toas such, we have suspended our share repurchase authorization, after which $1.0 billion remained available for future common stock repurchases. As of June 30, 2021, we had remaining authorization to repurchase approximately $700.0 million of our common stock, subject to restrictions under our Notes and Credit Agreement.

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program.

Additional future financing may be necessary to fund our operations and there can be no assurance that, if needed, we will be able to secure additional debt or equity financing on terms acceptable to us or at all. Although we believe we have adequate sources of liquidity over the long term, the success of our operations, the global economic outlook, and the pace of sustainable growth in our markets ~~among other factors,~~ could each impact our business and liquidity.

Repatriation of Cash

As a global business, we have cash balances in various countries and amounts are denominated in various currencies. Fluctuations in foreign currency exchange rates impact our results of operations and cash positions. Future fluctuations in foreign currencies may have a material impact on our cash flows and capital resources. Cash balances held in foreign countries may have additional restrictions and covenants associated with them which could adversely impact our liquidity and our ability to timely access and transfer cash balances between entities.

All of the cash held outside of the U.S. could be repatriated to the U.S. without incurring additional U.S. federal income taxes.As of ~~June 30, 2021,~~March 31, 2022, we held ~~$117.1~~$83.9 million of our total ~~$197.9~~$172.0 million in cash in international locations. This cash is primarily used for the ongoing operations of the business in the locations in which the cash is held. The repatriation of the ~~$117.1~~$83.9 million, held in international locations is not limited by local regulations.

Senior Revolving Credit Facility

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Term Loan B Facility

Asia Revolving Credit Facilities

During the three months ended March 31, 2022, we had two revolving credit facilities in Asia, the revolving credit facility with China Merchants Bank Company Limited, Shanghai Branch (the “CMBC Facility”) which provides up to 10.0 million RMB, or $1.6 million at current exchange rates, and matures in January 2023, and the revolving credit facility with Citibank (China) Company Limited, Shanghai Branch (the “Citibank Facility”), which provides up to an equivalent of $10.0 million (together, the “Asia Revolving Facilities”).

As of March 31, 2022, we had borrowings outstanding of $0.5 million on the CMBC Facility, which are due in January 2023 and borrowings outstanding of $4.7 million on the Citibank Facility, which are due in May 2022. We had no borrowings under our Asia revolving facilities during the year ended December 31, 2021 or outstanding at December 31, 2021.

Senior Notes Issuance

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date, the “2029 Notes Indenture”). Additionally, in August 2021, the Company completed the issuance and sale of $350.0 million aggregate principal amount of 4.125% Senior Notes due August 15, 2031 (the “2031 Notes”), pursuant to the indenture related thereto (as amended and/or supplemented to date, “the 2031 Notes Indenture” and, together with the 2029 Notes Indenture, the “Indentures” and, each, an “Indenture”). Interest on each of the 2029 Notes and the 2031 Notes (collectively, the “Notes”) is payable semi-annually.

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basis to par and accrued and unpaid interest, if any, to, but excluding, the date of redemption. The Company will also have the option to redeem some or all of the Notes at any time before March 15, 2024 at a redemption price of 100% of the principal amount of the Notes to be redeemed, plus a “make-whole” premium and accrued and unpaid interest, if any, to, but excluding, the date of redemption. In addition, at any time before March 15, 2024, the Company may redeem up to 40% of the aggregate principal amount of the Notes at a redemption price of 104.250% of the principal amount of the Notes with the proceeds from certain equity issuances, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.

Cash Flows


		Six Months Ended June 30,				$ Change		% Change			Three Months Ended March 31,				$ Change		% Change
		2021		2020		Favorable (Unfavorable)					2022		2021		Favorable (Unfavorable)
		(in thousands)									(in thousands)
Cash provided by operating activities		$	242,366	$	40,267	$	202,099	501.9	%
Cash provided by (used in) operating activities										Cash provided by (used in) operating activities	$	(68,765)	$	30,150	$	(98,915)	(328.1)	%
Cash used in investing activities	Cash used in investing activities	(21,323)		(24,010)		2,687		11.2	%	Cash used in investing activities	(2,071,466)		(7,983)		(2,063,483)		(25,848.5)	%
Cash provided by (used in) financing activities		(155,344)		28,877		(184,221)		(638.0)	%
Cash provided by financing activities										Cash provided by financing activities	2,099,484		102,243		1,997,241		(1,953.4)	%
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(1,793)		(2,360)		567		24.0	%	Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(810)		(2,437)		1,627		66.8	%
Net change in cash, cash equivalents, and restricted cash	Net change in cash, cash equivalents, and restricted cash	$	63,906	$	42,774	$	21,132	49.4	%	Net change in cash, cash equivalents, and restricted cash	$	(41,557)	$	121,973	$	(163,530)	(134.1)	%

Operating Activities. Cash ~~provided by~~used in operating activities consists of net income adjusted for noncash items and changes in working capital. Cash ~~provided by~~used in operating activities increased ~~$202.1~~$98.9 million for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 compared to the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, driven by ~~higher~~increases in operating assets and liabilities of $84.3 million and lower net income, adjusted for non-cash items, of ~~$169.6 million and by net increases in operating assets and liabilities of $32.5~~$14.6 million.

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Investing Activities. There was ~~an $2.7~~a $2,063.5 million ~~decrease~~increase in cash used in investing activities for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 compared to the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. The ~~decrease~~increase is primarily due to ~~a decrease~~the Cash Consideration for the Acquisition, net of cash acquired and $8.5 million of the Cash Consideration that was held back and retained as security (but not as the sole source of recovery) for any downward adjustments to the purchase price made in accordance with the SPA. Refer to Note 16 — Acquisition of HEYDUDE in the ~~purchases of property, equipment, and software, mainly from expenditures in 2020 that did not recur in the current year related~~accompanying notes to the ~~relocation~~condensed consolidated financial statements included in Part I - Item 1. Financial Statements of ~~our Corporate headquarters.~~this Quarterly Report on Form 10-Q.

Financing Activities. Cash provided by financing activities ~~decreased~~increased by ~~$184.2~~$1,997.2 million in the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 compared to the ~~six~~three months ended ~~June 30, 2020. This decrease~~March 31, 2021. The increase was primarily ~~driven by~~due to an increase of $2,200.2 million in proceeds from borrowings, which includes borrowings under the Term Loan B Facility, Revolving Facility, and the Asia Revolving Facilities. Additionally, we had a ~~$205.0~~decrease of $135.0 million in repayments of borrowings, a decrease ~~in borrowings, net~~ of ~~repayments, on our Facility. Increases~~$50.0 million in repurchases of ~~our~~ common stock, and a decrease of $4.1 million in repurchases of common stock for tax ~~withholding of $310.9 million and $9.0 million, respectively, also contributed to the overall decrease of cash provided by financing activities.~~withholding. The overall ~~decrease~~increase was offset by ~~an increase of~~a $350.0 million decrease in proceeds from the 2029 Notes issuance ~~net of cash used~~that occurred in ~~other financing activities of $9.3~~the three months ended March 31, 2021 that did not recur in the current period, a $42.0 million ~~which is primarily due to~~increase in deferred debt issuance costs, primarily related to the ~~Notes.~~Term Loan B Facility, and a $0.1 million increase in other cash used in financing activities.

Contractual Obligations

There have been no significant changes to the contractual obligations reported in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020,~~2021, other than (i) borrowings and repayments on the Revolving Facility and Asia Facilities, (ii) borrowings of $2.0 billion under the ~~issuance of the Notes, as described above; and (ii)~~Term Loan B Facility, which we entered into in the ~~six~~three months ended ~~June 30, 2021, we signed contracts~~March 31, 2022, and (iii) contractual obligations of $44 million related to ~~further expand our U.S. distribution center, resulting~~leases not yet commenced in ~~(a) future lease payments of approximately $31 million through 2030,~~the three months ended March 31, 2022, as described in Note 4 — Leases in the accompanying notes to the condensed consolidated financial statements included in Part I - Item 1. Financial Statements of this Quarterly Report on Form ~~10-Q, and (b) other contractual commitments of approximately $48 million through 2022, the majority of which is expected to be paid during 2021.~~10-Q.

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Off-Balance Sheet Arrangements

We had no material off-balance sheet arrangements as of ~~June 30, 2021,~~March 31, 2022, other than certain purchase commitments, which are described in Note 13 — Commitments and Contingencies in the accompanying notes to the condensed consolidated financial statements included in Part I - Item 1. Financial Statements of this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Estimates

The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, sales, and expenses, and related disclosure of contingent assets and liabilities. We evaluate our assumptions and estimates on an on-going basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Business Combinations

We account for business combinations using the acquisition method of accounting, which requires that once control is obtained, all the assets acquired and liabilities assumed are recorded at their respective fair values at the date of acquisition. Contingent consideration, if any, is included within the purchase price and is recognized at its fair value on the acquisition date. We allocate the purchase price of acquired businesses to the tangible assets, intangible assets, and contingent consideration based upon internal estimates of cash flows and consideration and/or the report of a third-party valuation expert, and requires a significant amount of management judgment. The determination of fair values of identifiable assets and liabilities as well as contingent consideration requires estimates and the use of valuation techniques when market value is not readily available. During the measurement period, which is up to one year from the acquisition date, adjustments to the assets acquired and liabilities assumed may be recorded, with the corresponding offset to goodwill.

During the three months ended March 31, 2022, we acquired HEYDUDE. The aggregate closing price of the Acquisition was $2.3 billion. The fair value of the acquired assets was determined by a third-party valuation specialist. The fair value of inventory was determined using a market approach and a cost approach, the replacement cost method. These methods were reconciled in order to allocate profit and expenses to measure the inventory value created by a seller. For the trademark, the third-party valuation team used the Multi Period Excess Earnings approach and for customer relationships, the valuation team used the distributor method.

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Deferred taxes associated with estimated fair value adjustments reflect an estimated tax rate applicable to the acquiree. Deferred tax has been calculated based on the fair value adjustments of inventories and intangible assets using the tax rates for US and HK entities. This determination is preliminary and subject to change based upon the final determination of the fair value of the acquired assets and assumed liabilities of the acquiree.

The fair values of all the other assets and liabilities noted are equal to their carrying values due to the nature of the specific asset or liability. Refer to Note 16 — Acquisition of HEYDUDE in the accompanying notes to the condensed consolidated financial statements included in Part I - Item 1. Financial Statements of this Quarterly Report on Form 10-Q for additional details on the Acquisition.

For a complete discussion of our critical accounting policies and estimates, please refer to our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 and Note 2 — Recent Accounting Pronouncements in the accompanying notes to the condensed consolidated financial statements included in Part I - Item 1. Financial Statements of this Quarterly Report on Form 10-Q. There have been no other significant changes in our critical accounting policies or their application since December 31, ~~2020.~~2021.

Recent Accounting Pronouncements

See Note 2 — Recent Accounting Pronouncements in the accompanying notes to the condensed consolidated financial statements included in Part I - Item 1. Financial Statements of this Quarterly Report on Form 10-Q for a description of recently adopted accounting pronouncements and issued accounting pronouncements that we believe may have an impact on our condensed consolidated financial statements when adopted.

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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

We centrally manage our debt and investment portfolios considering investment opportunities and risks, tax consequences, and overall financing strategies. Our exposure to market risk includes interest rate fluctuations in connection with our Facility and certain financial instruments.

Borrowings under our Revolving Facility bear interest at a variable rate and are therefore subject to risk based upon prevailing market interest rates. Interest rates fluctuate as a result of many factors, including governmental monetary and tax policies, domestic and international economic and political considerations, and other factors that are beyond our control.

As of ~~June 30,~~March 31, 2022, we had borrowings with a face value of $2,940.2 million, comprised of the Notes, which carry a fixed rate, the Term Loan B Facility, and borrowings under the Revolving Facility. We also had $0.3 million in outstanding letters of credit under our Revolving Facility as of March 31, 2022. As of December 31, 2021, we had long-term borrowings with a face value of ~~$395.0~~$785.0 million ~~mainly comprised of the Notes, which carry a fixed rate,~~ and $0.3 million in outstanding letters of credit under our ~~Facility. As of December 31, 2020, we had $180.0 million in outstanding borrowings and $0.6 million in outstanding letters of credit under our~~Revolving Facility.

A hypothetical increase of 1% in the interest rate on the borrowings under our Term Loan B Facility ~~borrowings~~and Revolving Facility would have increased interest expense by ~~$0.2 million and $0.5~~$2.0 million for the three ~~and six~~ months ended ~~June 30, 2021, respectively.~~March 31, 2022.

Foreign Currency Exchange Risk

Changes in exchange rates have a direct effect on our reported U.S. Dollar condensed consolidated financial statements because we translate the operating results and financial position of our international subsidiaries to U.S. Dollars using current period exchange rates. Specifically, we translate the statements of operations of our foreign subsidiaries into the U.S. Dollar reporting currency using exchange rates in effect during each reporting period. As a result, comparisons of reported results between reporting periods may be impacted significantly due to differences in the exchange rates in effect at the time such exchange rates are used to translate the operating results of our international subsidiaries.

An increase of 1% of the value of the U.S. Dollar relative to foreign currencies would have decreased our revenues and income before taxes during the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 by ~~$2.5~~$2.2 million and ~~$4.5~~$0.4 million, respectively. The volatility of the exchange rates is dependent on many factors that cannot be forecasted with reliable accuracy.

We may enter into forward foreign exchange contracts to buy or sell various foreign currencies to selectively protect against volatility in the value of non-functional currency denominated monetary assets and liabilities. Changes in the fair value of these forward contracts are recognized in earnings in the period that the changes occur. As of ~~June 30, 2021,~~March 31, 2022, the U.S. Dollar notional value of our outstanding foreign currency forward exchange contracts was approximately ~~$152.3~~$139.4 million. The net fair value of these contracts at ~~June 30, 2021~~March 31, 2022 was ~~a liability~~an asset of ~~$0.8~~$1.3 million.

We perform a sensitivity analysis to determine the effects that market risk exposures may have on the fair values of our foreign currency forward exchange contracts. To perform the sensitivity analysis, we assess the risk of changes in fair values from the effect of hypothetical changes in foreign currency exchange rates. This analysis assumes a like movement by the foreign currencies in our hedge portfolio against the U.S. Dollar. As of ~~June 30, 2021,~~March 31, 2022, a 10% appreciation in the value of the U.S. Dollar would result in a net increase in the fair value of our derivative portfolio of approximately ~~$0.9~~$0.7 million.

See Part I - Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Quarterly Report on Form 10-Q for a discussion of the impact of the change in foreign exchange rates on our U.S. Dollar condensed consolidated statements of operations for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~

2021.

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ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures as such item is defined under Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”). as of March 31, 2022. During the three months ended March 31, 2022, we closed the Acquisition, as discussed in Note 16 — Acquisition of HEYDUDE in the accompanying notes to the condensed consolidated financial statements included in Part I - Item 1. Financial Statements of this Quarterly Report on Form 10-Q. As such, the scope of our assessment of the effectiveness of our disclosure controls and procedures did not include internal controls over financial reporting at HEYDUDE. HEYDUDE revenues represented approximately 17.4% of our total revenues for three months ended March 31, 2022. This exclusion is consistent with the Securities and Exchange Commission (the “SEC”) staff's guidance that an assessment of a recently acquired business may be omitted from the scope of our assessment of the effectiveness of disclosure controls and procedures that are also part of internal control over financial reporting in the year of acquisition.

Based onupon that this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of ~~June 30, 2021,~~March 31, 2022, to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the ~~Securities and Exchange Commission’s~~SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management necessarily applies its judgment in assessing the costs and benefits of such controls and procedures that, by their nature, can only provide reasonable assurance regarding management’s control objectives.

Changes in Internal Control over Financial Reporting

~~There~~As noted above, we are in the process of integrating HEYDUDE into our overall internal control over financial reporting and will include HEYDUDE in Management’s Evaluation of Disclosure Controls and Procedures for the year ended December 31, 2023. This process may result in addition or changes to our internal control over financial reporting. In addition, as a result of the Acquisition, we have implemented new processes and controls over accounting for an acquisition during the three months ended March 31, 2022, including determining the fair value of the assets acquired and liabilities assumed. Except as described herein, there were no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the three months ended ~~June 30, 2021~~March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — Other Information

ITEM 1. Legal Proceedings

A discussion of legal matters is found in Note 15 — Legal Proceedings in the accompanying notes to the condensed consolidated financial statements included in Part I - Item 1. Financial Statements of this Quarterly Report on Form 10-Q.

ITEM 1A. Risk Factors

~~There~~You should carefully consider the factors discussed in Part I - Item 1A. Risk Factors in our Annual Report, which could materially affect our business, financial condition, cash flows, or future results. Except as set forth below, there have been no material changes in our risk factors included in our Annual Report.

The ongoing war between Russia and Ukraine could cause further disruptions in the global economy as well as a negative impact on our business, financial condition and results of operations.

The war between Russia and Ukraine has already adversely affected the global economy, resulted in heightened economic sanctions from the United States, the United Kingdom, the European Union, and the international community and could result in geopolitical instability. As a result of the war between Russia and Ukraine, we have paused DTC business operations in Russia. Even though revenues from Russia represented less than 3% of our consolidated revenues in 2021, the impact of these government measures and our temporary pause on business operations, as well as any further retaliatory actions taken by Russia and the United States and foreign government bodies has caused a negative impact to the ~~risk factors contained~~global economy, driving increases to the cost of transportation, energy and supplies, which have had, and could continue to have, a material adverse effect on our business, financial condition, results of operations, supply chain, intellectual property, partners, customers or employees and may expose us to adverse legal proceedings in Russia in the future. Further escalation of geopolitical tensions related to the war between Russia and Ukraine, including increased trade barriers or restrictions on global trade, could result in, among other things, broader impacts that expand into other markets, cyberattacks, supply chain and logistics disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets, any of which may adversely affect our business and supply chain. In addition, the effects of the ongoing war between Russia and Ukraine could heighten many of our known risks described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021, filed with the SEC on February 16, 2022.

~~ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds~~

Issuer Purchases of Equity Securities
Period Total Number of Shares Purchased Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly
Announced Plans or Programs (1)
Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (1)
April 1 - 30, 2021
Open market or privately negotiated purchases — $ — — $ 1,000,000,000
April 2021 ASR (2)
2,300,143 130.43 2,300,143 700,000,000
May 1 - 31, 2021 — — — 700,000,000
June 1 - 30, 2021
Open market or privately negotiated purchases — — — 700,000,000
April 2021 ASR (2)
590,225 (2) 590,225 700,000,000
Total 2,890,368 $ 103.79 2,890,368 $ 700,000,000

~~(1)~~ On February 20, 2018, the Board approved and authorized a program to repurchase up to $500.0 million of our common stock. On May 5, 2019, the Board approved an increase to the repurchase authorization of up to an additional $500.0 million of our common stock. Further, on April 23, 2021, the Board approved a $712.2 million increase to our share repurchase authorization, after which $1.0 billion remained available for future common stock repurchases. As of June 30, 2021, approximately $700.0 million remained available for repurchase under our share repurchase authorization. The number, price, structure and timing of the repurchases, if any, will be at our sole discretion and future repurchases will be evaluated by us depending on market conditions, liquidity needs, restrictions under our debt arrangements, and other factors. Share repurchases may be made in the open market or in privately negotiated transactions. The repurchase authorization does not have an expiration date and does not oblige us to acquire any particular amount of our common stock. The Board may suspend, modify, or terminate the repurchase program at any time without prior notice.

~~(2)~~ In April 2021, we entered into an accelerated share repurchase arrangement (“ASR”) to repurchase $300.0 million of our common stock. In exchange for an up-front payment of $300.0 million, the financial institution that was a party to the ASR committed to deliver to us shares of our common stock during the ASR’s purchase period, which ended June 2021. In April 2021, 2.3 million shares were delivered and retired at an average price of $130.43 (which is based on a partial share delivery in April 2021). Subsequently, in June 2021, an additional 0.6 million shares were delivered and retired. The average price paid per share for the complete ASR, which includes shares delivered in June 2021, was $103.79.

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ITEM 6. Exhibits


Exhibit Number						Description
3.1						Restated Certificate of Incorporation of Crocs, Inc. (incorporated herein by reference to Exhibit 4.1 to Crocs, Inc.’s Registration Statement on Form S-8, filed on March 9, 2006).

3.2						Certificate of Amendment to Restated Certificate of Incorporation of Crocs, Inc. (incorporated herein by reference to Exhibit 3.1 to Crocs, Inc.’s Current Report on Form 8-K, filed on July 12, 2007).

3.3						Amended and Restated Bylaws of Crocs, Inc. (incorporated herein by reference to Exhibit 4.2 to Crocs, Inc.’s Registration Statement on Form S-8, filed on March 9, 2006).

3.4						Certificate of Designations of Series A Convertible Preferred Stock of Crocs, Inc. (incorporated herein by reference to Exhibit 3.1 to Crocs, Inc.’s Current Report on Form 8-K, filed on January 27, 2014).

4.1						Specimen Common Stock Certificate (incorporated herein by reference to Exhibit 4.2 to Crocs, Inc.’s Registration Statement on Form S-1/A, filed on January 19, 2006).

4.2						First Supplemental Indenture, dated February 17, 2022, by and among Crocs, Inc., Hey Dude LLC, Happy One LLC and Lucky Top Inc. and U.S. Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.1 to Crocs, Inc.'s Current Report on Form 8-K, filed on February 18, 2022).

4.3						First Supplemental Indenture, dated February 17, 2022, by and among Crocs, Inc., Hey Dude LLC, Happy One LLC and Lucky Top Inc. and U.S. Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.2 to Crocs, Inc.'s Current Report on Form 8-K, filed on February 18, 2022).

10.1*						Term Loan Credit Agreement, dated February 17, 2022, by and among Crocs, Inc., the lenders from time to time party thereto and Citibank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to Crocs, Inc.'s Current Report on Form 8-K, filed on February 18, 2022).

10.2*						Fourth Amendment to Second Amended and Restated Credit Agreement, dated February 17, 2022, by and among Crocs, Inc., Crocs Retail, LLC, Jibbitz, Inc., Colorado Footwear C.V., Crocs Europe B.V., the guarantors named therein, the lenders named therein, and PNC Bank, National Association, as administrative agent (incorporated by reference to Exhibit 10.2 to Crocs, Inc.'s Current Report on Form 8-K, filed on February 18, 2022).

31.1†						Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act.

31.2†						Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes- Oxley Act.

32+						Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act.

101.INS†						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH†						XBRL Taxonomy Extension Schema Document.

101.CAL†						XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF†						XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB†						XBRL Taxonomy Extension Label Linkbase Document.

101.PRE†						XBRL Taxonomy Extension Presentation Linkbase Document.

104						Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101).

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† Filed herewith.

+ Furnished herewith.

* Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to supplementally furnish copies of any omitted schedules and exhibits to the Securities and Exchange Commission upon request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CROCS, INC.

Date: ~~July 22, 2021~~May 5, 2022

By:

/s/ Anne Mehlman

Name:

Anne Mehlman

Title:

Executive Vice President and Chief Financial Officer

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PART I — Financial Information

Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Statements of Operations	1
	Condensed Consolidated Statements of Comprehensive Income	2
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	65
	Notes to Condensed Consolidated Financial Statements	76
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2221
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3735
Item 4.	Controls and Procedures	3836

PART II — Other Information		3937

Item 1.	Legal Proceedings	3937
Item 1A.	Risk Factors	3937
~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	39
Item 6.	Exhibits	4038
Signatures		4140


	Six Months Ended June 30, 2021
	Americas		Asia Pacific		EMEA		Other Businesses		Total
	(in thousands)
Channel:
Wholesale	$	312,842	$	120,891	$	163,585	$	48	$	597,366
Direct-to-consumer (1)	369,247		88,535		45,723		0		503,505


Total revenues	$	682,089	$	209,426	$	209,308	$	48	$	1,100,871


	Six Months Ended June 30, 2020
	Americas		Asia Pacific		EMEA		Other Businesses		Total
	(in thousands)
Channel:
Wholesale	$	158,233	$	80,863	$	98,877	$	92	$	338,065
Direct-to-consumer (1)	161,075		78,170		35,399		0		274,644


Total revenues	$	319,308	$	159,033	$	134,276	$	92	$	612,709


	Six Months Ended June 30, 2021 vs. 2020
	Volume				Price (1)				Foreign Exchange				Total
	$ Change		% Change		$ Change		% Change		$ Change		% Change		$ Change		% Change
	(in thousands)
Total revenues	$	392,997	64.1	%	$	70,266	11.5	%	$	24,899	4.1	%	$	488,162	79.7	%


Issuer Purchases of Equity Securities
Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (1)
April 1 - 30, 2021
Open market or privately negotiated purchases	—	$	—	—	$	1,000,000,000
April 2021 ASR (2)	2,300,143	130.43		2,300,143	700,000,000
May 1 - 31, 2021	—	—		—	700,000,000
June 1 - 30, 2021
Open market or privately negotiated purchases	—	—		—	700,000,000
April 2021 ASR (2)	590,225	(2)		590,225	700,000,000
Total	2,890,368	$	103.79	2,890,368	$	700,000,000