Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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. (Check one):

As of July 31, 2017,April 30, 2018, Crocs, Inc. had 71,761,50968,279,522 shares of its $0.001 par value common stock outstanding.

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"“Exchange Act”). 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:

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, 20162017, and our subsequent filings with the Securities and Exchange Commission. 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.

Unless otherwise noted in this report, any description of "we," "us"“the Company,” “Crocs,” “we,” “us,” or "our"“our” includes Crocs, Inc. ("Crocs" or the "Company,") and its wholly-ownedconsolidated subsidiaries within our reportable operating segments and corporate operations. The Company is engaged in the design, development, manufacturing, worldwide marketing, distribution, and distributionsale of casual lifestyle footwear and accessories for men, women, and children. We strive to be the global leader in the sale of molded footwear featuring fun,characterized by functionality, comfort, color, and functionality.lightweight design. Our reportable operating segments include: the Americas, operating in North and South America; Asia Pacific, operating throughout Asia, Australia, New Zealand, Africa, and the Middle East; and Europe, operating throughout Western Europe, Eastern Europe, and Russia.

The accompanying unaudited condensed consolidated interim financial statements include the Company’s accounts and those of its 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. ("U.S. GAAP"GAAP”). Such unaudited interim 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 accounting principles generally accepted in the United States of America.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, 2016 ("2017 (“Annual Report"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 ("Notes") included in our Annual Report. Our accounting policies did not change induring the sixthree months ended June 30, 2017, exceptMarch 31, 2018, other than for the change in accounting principle described in “Inventories” below and the new accounting pronouncements adopted as described in Note 2 — Recent Accounting Pronouncements.

Due to the seasonal nature of our footwear, which is more heavily focused on styles suitable for warm weather, revenues generated during our fourth quarter are typically less than revenues generated during our first three quarters, when the northern hemisphere is experiencing warmer weather, the Company's business is typically affected by seasonal trends, with higher levels of wholesale sales in its first and second quarters and higher retail sales in its second and third quarters. In addition, ourweather. Our quarterly results of operations may also fluctuate significantly as a result of a variety of other factors, including the timing of new model introductions, general economic conditions, orand consumer confidence. Accordingly, the Company's operating results of operations and cash flows for the three and six months ended June 30, 2017any one quarter are not necessarily indicative of the operatingexpected results and cash flows for any other quarter or for the fullany other year.

The Company receives services from three subsidiaries of Blackstone Capital Partners VI L.P. (“Blackstone”). Blackstone and certain of its permitted transferees currently beneficially own all the outstanding shares of the Company’s Series A Convertible Preferred Stock, which is convertible into approximately 15.9%13,793,100 shares, or 16.8%, of the Company’s common stock as of June 30, 2017. TwoMarch 31, 2018. Blackstone also has the right to nominate two representatives alsoto serve on the Company’s boardBoard of directors (the “Board”).Directors.

Certain Blackstone subsidiaries provide various services to the Company, including inventory count, cybersecurity and consulting, and workforce management services. The Company paid $0.4expenses of $0.1 million and $0.2 millionrelated to these services for each of the three months ended June 30,March 31, 2018 and 2017, and 2016, respectively, and $0.5 million and $0.4 million for the six months ended June 30, 2017 and 2016, respectively, for these services. Expenses related to these serviceswhich are reported in ‘Selling, general and administrative expenses’ in the condensed consolidated statements of operations.

Restricted cash primarily consists of funds to secure certain retail store leases, certain customs requirements, and Developmentother contractual arrangements.

Research, designTotal marketing expenses inclusive of advertising, production, promotion, and developmentagency expenses were $2.2$15.5 million and $2.9$12.0 million for the three months ended June 30,March 31, 2018 and 2017, and 2016, respectively, and $5.1 million and $5.6 million for the six months ended June 30, 2017 and 2016, respectively, and are reported in 'Selling,‘Selling, general and administrative expenses'expenses’ in the condensed consolidated statements of operations.

In July 2015,March 2018, the Financial Accounting Standards Board ("FASB"(“FASB”) issued authoritative guidance on the income tax accounting implications of the U.S. Tax Cuts and Job Act (“Tax Act”), addressing the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to measure in-scope inventory atcomplete the loweraccounting for certain income tax effects of cost or net realizable value.the Tax Act. The Company adopted thisguidance provides a measurement period for companies to evaluate the impacts of the Tax Act on their financial statements. This measurement period begins in the reporting period that includes the enactment date and ends when an entity has obtained, prepared, and analyzed the information that was needed in order to complete the accounting requirements, and cannot exceed one year.

Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, we made reasonable estimates of the effects and recorded provisional amounts in our financial statements for the three months ended March 31, 2018 and the year ended December 31, 2017, including provisional estimates for BEAT, GILTI, and Transition Tax. The U.S. Treasury Department, the Internal Revenue Service (“IRS”), and other standard-setting bodies may issue guidance on January 1, 2017 on a prospective basis. The adoption did not have a significant effect onhow the provisions of the Tax Act will be applied or otherwise administered that is different from our consolidatedinterpretation. As we collect and prepare necessary data, and interpret the Tax Act and any additional guidance issued by the IRS or other standard-setting bodies, we may make adjustments to the provisional amounts that could materially affect our financial position orand results of operations.

In May 2017, the FASB issued authoritative guidance intended to clarify those changes to terms and conditions of stock-based compensation awards that are required to be accounted for as modifications of existing stock-based awards. This guidance is to be applied prospectively and becomes effective for annual reporting periods beginning after December 15, 2017, including interim periods within those periods, with early adoption permitted during any interim period. The Company doesadopted this guidance as of January 1, 2018. The adoption did not expect this standard will have a materialan impact on the Company’sour consolidated financial statements.position or results of operations.

In January 2017, the FASB issued authoritative guidance intended to clarify the definition of a business, for purposes of determining whether a business has been acquired or sold, and consequently whether transactions should be accounted for as acquisitions or disposals of a business or as acquisitions or disposals of assets. This guidance is to be applied prospectively and becomes effective for annual reporting periods beginning after December 15, 2017, including interim periods within those periods. The Company doesadopted this guidance as of January 1, 2018. The adoption did not expect this standard will have a materialan impact on the Company’sour consolidated financial statements.position or results of operations.

In August 2016, the FASB issued authoritative guidance intended to clarify how entities should classify certain cash receipts and cash payments onin the statement of cash flows. Further, inIn November 2016, the FASB issued additional guidance requiring that restricted cash be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown onreported in the statement of cash flows. These updates areThe guidance is applied retrospectively to all periods presented and is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods, with early adoption permitted.periods. The Company adopted this guidance should be applied retrospectively unless it is impractical to do so; in which case, the guidance should be applied prospectively as of January 1, 2018. As a result of the earliest date practicable. Theadoption, the Company is currently assessingchanged the impact that adopting this new accounting standard will have onpresentation in its consolidated financial statements.statements of cash flows for all periods presented.

In March 2016, the FASB issued guidance related to the recognition of breakage for certain prepaid stored-value products. This update aligns recognition of the financial liabilities related to prepaid stored-value products (for example, prepaid gift cards), with Topic 606, Revenue from Contracts with Customers, for non-financial liabilities. In general, certain of these liabilities may be extinguished proportionally in earnings as redemptions occur, or when redemption is remote if issuers are not entitled to the unredeemed stored value. ThisThe standard is effective for annual periods (including interim periods) beginning after December 15, 2017,2017. The Company adopted this guidance as of January 1, 2018. The adoption did not have a significant impact on our consolidated financial position or results of operations.

In February 2018, the FASB issued authoritative guidance that permits reclassification of the income tax effects of the Tax Act on other accumulated comprehensive income (“AOCI”) to retained earnings. This guidance may be adopted retrospectively to each period (or periods) in which the income tax effects of the Tax Act related to items remaining in AOCI are recognized, or at the beginning of the period of adoption. The guidance becomes effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted. The Company has elected the modified retrospective methoddoes not expect adoption of adoption. The Company is currently assessing the impact that adopting this new accounting standard will have a significant impact on itsthe Company’s consolidated financial statements.

In February 2016, the FASB issued authoritative guidance intended to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. Under the new guidance, lessees will be required to recognize a right-of-use asset and a lease liability, measured on a discounted basis, at the commencement date for all leases with terms greater than twelve months. Additionally, this guidance will require disclosures to help investors and other financial statement users to better understand the amount, timing, and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. The guidance shouldwill be applied under a modified retrospective transition approach for leases existing at the beginning of the earliest comparative period presented in the adoption-period financial statements. Any leases that expire before the initial application date will not require any accounting adjustment. Thisapproach. The guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted.

The Company will adopt this guidance beginning witheffective January 1, 2019. In July 2017, the quarterly reporting period ending March 31, 2019.Company established an implementation team and engaged external advisers and solution providers to develop a multi-phase plan to assess the Company’s leasing arrangements, as well as any changes to accounting policies, processes or systems necessary to adopt the requirements of the new standard. The Company has entered into agreements to procure software and services for the adoption and has begun assessments of its lease agreements, system capabilities and requirements. The Company is evaluating the full impact this guidance will have on its consolidated financial statements, and expects that adoption will result in significant increases in lease relatedlease-related assets and liabilities on its consolidated balance sheet.

Other new pronouncements issued but not effective until after June 30, 2017March 31, 2018 are not expected to have a material impact on the Company’s condensed consolidated financial statements.

The following table summarizes accruedAmounts reported in ‘Accrued expenses and other current liabilities: liabilities’ in the condensed consolidated balance sheets were:

The carrying amounts of the Company'sCompany’s cash, and cash equivalents and 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.

The Company'sCompany’s borrowing instruments are recorded at their carrying values in the condensed consolidated balance sheets, which may differ from their respective fair values. The fair values of the Company'sCompany’s outstanding notes payable approximate their carrying values at June 30, 2017March 31, 2018 and December 31, 20162017, based on interest rates currently available to the Company for similar borrowings.

 

The Company transacts business in various foreign countries and is therefore exposed to foreign currency exchange rate risk that impacts the reported U.S. Dollar amounts of revenues, costs, 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, the Company enters into forward contracts to buy and sell foreign currency. By policy, the Company does not enter into these contracts for trading purposes or speculation.

Counterparty default risk is considered low because the forward contracts that the Company enters into are over-the-counter instruments transacted with highly-rated financial institutions. The Company was not required to and did not post collateral as of June 30, 2017March 31, 2018 or December 31, 2016.2017.

The Company'sCompany’s derivative instruments are recorded at fair value as a derivative asset or liability in the condensed consolidated balance sheets. The Company reports 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‘Foreign currency gain (loss), net'gains, net’ in the condensed consolidated statements of operations. For the condensed consolidated statements of cash flow statement,flows, the Company classifies cash flows from derivative instruments at settlement in the same category as the cash flows from the related hedged items within 'Cash used in‘Cash provided by (used in) operating activities'.activities.’

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

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

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

Notes payable to finance the Company’s enterprise software system costs and certain insurance premiums incur interest at fixed rates ranging from 1.95% to 2.83%.

For the sixthree months ended June 30, 2017,March 31, 2018, the Company repurchased 1.4 million shares of its common stock for $10.0at a cost of $20.1 million, including commissions during the month of June 2017.commissions. During the sixthree months ended June 30, 2016,March 31, 2017, the Company did not repurchase any of its common stock. As of June 30, 2017,March 31, 2018, the Company had remaining authorization to repurchase approximately $108.7$198.8 million of its common stock.stock, subject to restrictions under its Credit Agreement.

The Company has authorized and availablearrangements that grant certain wholesale customers exclusive licenses, concurrent with the terms of the related distribution agreements, to use the Company’s intellectual property in exchange for issuance 4.0 million sharesa sales-based royalty. Sales-based royalty revenues are recognized over the terms of preferred stock. None of these preferred sharesthe related license agreements as sales are issued or outstanding.made by the wholesalers.

The Company is authorized to issue up to 1.0 million sharestransfers control of Seriesproducts and recognizes revenues at retail stores at the point of sale, in exchange for cash or other payment, primarily debit or credit card. A Preferred Stock, par value $0.001 per share, of which 0.2 million shares were issued to Blackstone and certain of its permitted transferees in January 2014. The Series A Preferred Stock has a stated value of $1,000 per share.

Pre-tax share-based compensation expense reported in the Company’s condensed consolidated statements of operations was as follows:was:

Stock option activity during the sixthree months ended June 30, 2017March 31, 2018 was:

As of June 30, 2017,March 31, 2018, the Company had $0.6$0.4 million of total unrecognized share-based compensation expense related to unvested options, which is expected to be amortized over the remaining weighted average period of 2.732.06 years. The weighted average exercise price of vested options was $16.47 per share.

The Company grants time-based Restricted Stock Awards (“RSAs”) as well as time-based and performance-based Restricted Stock Units (“RSUs”), and time-based Restricted Stock Awards (“RSAs”). RSA and RSU activity during the sixthree months ended June 30, 2017March 31, 2018 was:

RSAs vested during the six months ended June 30, 2017 consisted entirely of time-based awards. As of June 30, 2017,March 31, 2018, unrecognized share-based compensation expense for RSAs was $0.2less than $0.1 million, which is expected to amortize over a remaining weighted average period of 0.930.18 years.

RSUs vested during the sixthree months ended June 30, 2017March 31, 2018 consisted of 583,7590.7 million time-based awards and 68,3170.3 million performance-based awards. As of June 30, 2017,March 31, 2018, unrecognized share-based compensation expenseexpenses for time-based and performance-based

awards was $13.7were $12.6 million and $5.2$8.2 million, respectively, and isare expected to amortize over a remaining weighted average period of 2.19 years.1.87 years and 2.73 years, respectively.

Income tax expense and effective tax rates were as follows:

DuringThe increase in the effective tax rate for the three and six months ended June 30, 2017, the increase in effective tax rate,March 31, 2018, compared to the same periodsperiod in 2016,2017, is primarilypartially due to the impact of the GILTI provisions included in the Tax Act. The Company has elected to account for GILTI as a period cost, and therefore has included GILTI expense in the effective tax rate calculation. The GILTI provisions require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The increase in the effective tax rate is also due to operating losses in certain jurisdictions where the Company is unable to record tax benefits because it has determined that it is not more likely than not that such tax benefits will be realized, as well as an increase in profitability in certain jurisdictions for which tax expense is recorded. The Company’s effective income tax rate, for each period presented, also differs from the federal U.S. statutory rate primarily due to differences in income tax rates between U.S. and foreign jurisdictions, the GILTI tax, as well as book losses in certain jurisdictions for which tax benefits cannot be recognized. There were no significant or unusual discrete tax items during the three and six months ended June 30, 2017.March 31, 2018. The Company had unrecognized tax benefits of $5.1 million and $4.8$6.2 million at June 30, 2017March 31, 2018 and December 31, 2016, respectively,2017, and the Company does not expect any significant changes in tax benefits in the next twelve months.

Basic and diluted earnings per common share (“EPS”) for the three and six months ended June 30,March 31, 2018 and 2017 and 2016 were as follows: were:

Diluted EPS is calculated using the two-class method. For the three months ended June 30,March 31, 2018 and 2017, and 2016, 2.20.4 million and 0.60.8 million options and restricted stock units, respectively, were excluded from the calculation of diluted EPS under the two-class method because the effect was anti-dilutive. For the six months ended June 30, 2017 and 2016, 0.8 million and 1.0 million stock options and RSUs, respectively, and all potentially convertible Series A Preferred Stock shares were excluded from the calculation of diluted EPS under the two-class method because the effect would be anti-dilutive. If converted, Series A Preferred Stock would represent approximately 15.9%16.8% of the Company'sCompany’s common stock outstanding, or 13.8 million additional common shares as of June 30, 2017.March 31, 2018.

The Company rents retail store, office and warehouse space, vehicles, and equipment under operating leases expiring at various dates through 2033. Rent expense for leases with escalations or rent holidays is recognized on a straight-line basis over the lease term beginning on the lease inception date. Certain leases also provide for contingent rents, which are generally determined as a percent of sales in excess of specified levels. A contingent rent liability is recognized together with the corresponding rent expense when specified levels have been achieved or when the Company determines that achieving the specified levels during the period is probable.

Minimum sublease rental income of $0.1$0.2 million under non-cancelable subleases, and contingent rentals which may be paid under certain retail leases on a basis of percentage of sales in excess of stipulated amounts, are excluded from the commitment schedule.

Rent expense under operating leases are as follows:was: 

Under the terms of an annual supply agreement, the Company guarantees payment for certain third-party manufacturer purchases of raw materials used in the manufacture of its products, up to a maximum of €3.5 million (approximately $4.0$4.3 million as of June 30, 2017)March 31, 2018).

As of June 30, 2017,March 31, 2018, the Company had purchase commitments with otherto third-party manufacturers, primarily for materials and supplies used in the manufacture of the Company’s products, for an aggregate of $81.6 million, and had renewed its agreement with a service provider for information technology services for three years at $5.0 million per year.$110.2 million.

The Company is regularly subject to, and is 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. See Note 15 — Legal Proceedings for additional information.

During its normal course of business, the Company may make certain indemnities, commitments, and guarantees under which it may be required to make payments in relation to certain matters.payments. The Company cannot determine a range of estimated future payments and has not recorded any liability for indemnities, commitments, and guarantees in the accompanying condensed consolidated balance sheets.

See Note 1514 — Legal Proceedings for further details regarding potential loss contingencies related to government tax audits and other current legal proceedings.

The Company has three reportable operating segments based on the geographic nature of its operations: the Americas, Asia Pacific, and Europe. In addition, the 'Other businesses'‘Other businesses’ category aggregates insignificant operating segments that do not meet the reportable segment threshold, including manufacturing operations located in Mexico and Italy, and corporate operations.

The Company was subjected to an audit by the Brazilian Federal Tax Authorities related to imports of footwear from China between 2010 and 2014. On January 13, 2015, the Company was notified about the issuance of assessments totaling 14.4 million Brazilian Real (“BRL”), or approximately $4.4$4.3 million, plus interest and penalties, for the period January 2010 through May 2011. The Company has disputed these assessments and asserted defenses to the claims. On February 25, 2015, the Company received additional assessments totaling 33.3 million BRL, or approximately $10.1 million, plus interest and penalties, related to the remainder of the audit period. The Company has also disputed these assessments and asserted defenses to these claims in administrative appeals, and is awaiting definitive resolution of those administrative appeals. In the event that the definitive resolution of these administrative appeals is adverse toOn August 29, 2017, the Company received a favorable ruling on its appeal of the Company has recoursefirst assessment, which dismissed all fines, penalties, and interest. The tax authorities have requested a special appeal to further judicial processes,that decision. If the appeal is accepted, Crocs will have the opportunity to both defend the appeal as well as challenge it procedurally. Should the Brazilian Tax Authority prevail in this final administrative appeal, Crocs may still challenge the assessments through the court system, which would likely require the posting of a bond. ItAdditionally, the second appeal for the remaining assessments was heard on March 22, 2018. That decision was partially favorable and resulted in an approximately 38% reduction in principal, penalties, and interest, leaving approximately $8.0 million at risk for those assessments. Both parties can appeal that decision, without posting a bond, through the special appeal process being used for the first assessment. 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.

Although the Company by up to $0.1 million.

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