Exhibit 99.1
| Investor Contact: |
| William I. Kent/Crocs Inc. |
|
|
| (303) 848-7000 |
|
|
| wkent@crocs.com |
|
|
|
|
| Media Contact: |
| Katy Michael/Crocs Inc. |
|
|
| (303) 848-7000 |
|
|
| kmichael@crocs.com |
Crocs Inc. Reports Fourth Quarter and Full Year 2013 Financial Results
Revenues Slightly Exceed and EPS in-line with Guidance
NIWOT, COLORADO — February 20, 2014 — Crocs Inc. (NASDAQ: CROX) today reported financial results for the fourth quarter and full year ended December 31, 2013.
Fourth Quarter and Full Year Financial Highlights:
· GAAP revenue increased 1.6% and 6.2% in the 2013 fourth quarter and the full year, respectively. On a constant currency basis, revenue increased 4.1% and 8.8% in the 2013 fourth quarter and full year, respectively.
· The company reported a net loss of $0.76 and net income of $0.12 per diluted share on a GAAP basis in the 2013 fourth quarter and the full year, respectively. Excluding certain non-recurring, unusual and infrequent charges, the company reported a non-GAAP net loss (1) of $0.20 and non-GAAP net income of $0.82 per diluted share in the 2013 fourth quarter and the full year, respectively.
John McCarvel, President and Chief Executive Officer, said “We delivered balanced performance in the fourth quarter despite the challenging retail environment in North America. On a constant currency basis, 2013 revenue grew by 4% for the quarter and 9% for the full year. The full-year revenue growth was driven by a solid 7% increase in wholesale revenue, with particular strength in Europe, as well as our global retail expansion.
“We’ve made tremendous progress as a company over the past 10 years — from a one-season, one-shoe, and one-country brand to a diversified, four-season global footwear leader that is on solid financial
(1) Non-GAAP net income (loss) is a financial measure not calculated in accordance with U.S. Generally Accepted Accounting Principles (non-GAAP). See the non-GAAP reconciliations set forth later in this press release for additional information.
footing, and we believe our business is well positioned to succeed going forward,” McCarvel continued. “The recent investment in Crocs by Blackstone is a vote of confidence in our company and our brand, and we believe Crocs will benefit from Blackstone’s financial, consumer, retail and brand-building experience.”
Financial Review
Fourth quarter operating results
In the fourth quarter of 2013, the company incurred a GAAP net loss of $66.9 million or $0.76 per diluted share, compared with a net loss of $3.6 million or $0.04 per diluted share in the comparable quarter in the prior year.
As outlined in detail in the non-GAAP reconciliations set forth later in this press release, the company recorded $49.2 million in non-recurring, unusual and infrequent charges (of which $45.5 million were non-cash charges) in the fourth quarter of 2013.
Excluding these items, the company reported a non-GAAP net loss of $17.7 million in the quarter or $0.20 per diluted share compared with non-GAAP net income of $4.4 million or $0.05 per diluted share in the fourth quarter of 2012.
Full year 2013 operating results
The company generated net income of $10.4 million or $0.12 per diluted share for the full year 2013, compared with net income of $131.3 million or $1.44 per diluted share in 2012.
As outlined in detail in the non-GAAP reconciliations set forth later in this press release, the company recorded $62.4 million in non-recurring, unusual and infrequent charges (of which $48.3 million were non-cash charges) for the full year 2013.
Excluding these items, the company generated non-GAAP net income of $72.8 million or $0.82 per diluted share for the full year 2013 compared with non-GAAP net income of $129.1 million or $1.42 per diluted share during 2012.
Balance Sheet
Cash and cash equivalents at December 31, 2013, amounted to $317.1 million, which is an increase of 7.7% from December 31, 2012. Inventory decreased 1.5% during 2013 to $162.3 million at December 31, 2013.
Financial Outlook
Thomas J. Smach, Crocs chairman of the board, commented, “As we look forward, 2014 will be a significant transition period for the company. We will recruit a new CEO who will work with the reconstituted board to refine the company’s short-term and long-term strategic plans, which will include prioritizing earnings over top-line growth. We will focus on improving financial performance, particularly in the Americas and Japan, as well as enhancing our global retail execution. As we increasingly focus on profitable growth and retail excellence, we may moderate the pace of our investments in new retail stores as well as consolidate some existing locations. While the company will remain focused on creating long-term value for our shareholders, given the transition that the company will be going through, we will not be providing earnings guidance in 2014.”
For the first quarter of 2014, the company expects revenue between $305 million and $315 million.
Stock Repurchase
With respect to the previously announced $350 million stock repurchase program, the company expects to begin buying back stock in the current quarter. The company intends to be patient, methodical and opportunistic in the execution of this expanded buyback plan.
CEO Search
As previously announced, Mr. McCarvel intends to retire as president, chief executive officer and board member by April 30, 2014. The board has begun a search for Mr. McCarvel’s replacement and will make an announcement when the search is successfully concluded.
Conference Call Information
A teleconference call to discuss fourth quarter and full year 2013 results is scheduled for today, Thursday, February 20, 2014, at 8:30 a.m. EST. The call participation number is (888) 771-4371. A replay of the conference call will be available two hours after the completion of the call at (888) 843-7419. International participants can dial (847) 585-4405 to take part in the conference call and can access a replay of the call at (630) 652-3042. All of the above calls will require the input of the conference identification number
36721382. The call also will be streamed on the Crocs website, www.crocs.com. An audio recording of the conference call will be available at www.crocs.com through March 22, 2014.
About Crocs, Inc.
Crocs, Inc. is a world leader in innovative casual footwear for men, women and children. Crocs offers several distinct shoe collections with more than 300 four-season footwear styles. All Crocs™ shoes feature Croslite™ material, a proprietary, revolutionary technology that gives each pair of shoes the soft, comfortable, lightweight, non-marking and odor-resistant qualities that Crocs fans know and love. Crocs fans “Get Crocs Inside” every pair of shoes, from the iconic clog to new sneakers, sandals, boots and heels. Since its inception in 2002, Crocs has sold more than 300 million pairs of shoes in more than 90 countries around the world.
Visit www.crocs.com for additional information.
The matters regarding the future discussed in this news release include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding prospects, investments in our business and outlook. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances, or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the following: macroeconomic issues, including, but not limited to, the current global financial conditions; the effect of competition in our industry; our ability to effectively manage our future growth or declines in revenue; changing fashion trends; our ability to maintain and expand revenues and gross margin; our ability to accurately forecast consumer demand for our products; our ability to develop and sell new products; our ability to obtain and protect intellectual property rights; the effect of potential adverse currency exchange rate fluctuations and other international operating risks; our ability to open and operate additional retail locations; and other factors described in our most recent annual report on Form 10-K under the heading “Risk Factors” and our subsequent filings with the Securities and Exchange Commission. Readers are encouraged to review that section and all other disclosures appearing in our filings with the Securities and Exchange Commission.
All information in this document speaks as of February 20, 2014. We do not undertake any obligation to update publicly any forward-looking statements, including, without limitation, any estimate regarding revenues or earnings, whether as a result of the receipt of new information, future events, or otherwise.
CROCS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
|
| Three Months Ended |
| Year Ended |
| ||||||||
|
| December 31, |
| December 31, |
| ||||||||
($ thousands, except per share data) |
| 2013 |
| 2012 |
| 2013 |
| 2012 |
| ||||
Revenues |
| $ | 228,673 |
| $ | 224,992 |
| $ | 1,192,680 |
| $ | 1,123,301 |
|
Cost of sales |
| 125,772 |
| 118,642 |
| 569,482 |
| 515,324 |
| ||||
Gross profit |
| 102,901 |
| 106,350 |
| 623,198 |
| 607,977 |
| ||||
Selling, general and administrative expenses |
| 135,035 |
| 110,656 |
| 549,154 |
| 460,393 |
| ||||
Asset impairment charges |
| 10,747 |
| 591 |
| 10,949 |
| 1,410 |
| ||||
Income (loss) from operations |
| (42,881 | ) | (4,897 | ) | 63,095 |
| 146,174 |
| ||||
Foreign currency transaction (gains) losses, net |
| 221 |
| (170 | ) | 4,678 |
| 2,500 |
| ||||
Interest income |
| (756 | ) | (640 | ) | (2,432 | ) | (1,697 | ) | ||||
Interest expense |
| 497 |
| 281 |
| 1,016 |
| 837 |
| ||||
Other income, net |
| (306 | ) | (324 | ) | (126 | ) | (1,014 | ) | ||||
Income (loss) before income taxes |
| (42,537 | ) | (4,044 | ) | 59,959 |
| 145,548 |
| ||||
Income tax expense (benefit) |
| 24,396 |
| (437 | ) | 49,539 |
| 14,205 |
| ||||
Net income (loss) |
| $ | (66,933 | ) | $ | (3,607 | ) | $ | 10,420 |
| $ | 131,343 |
|
Net income (loss) per common share: |
|
|
|
|
|
|
|
|
| ||||
Basic |
| $ | (0.76 | ) | $ | (0.04 | ) | $ | 0.12 |
| $ | 1.46 |
|
Diluted |
| $ | (0.76 | ) | $ | (0.04 | ) | $ | 0.12 |
| $ | 1.44 |
|
CROCS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES (UNAUDITED)
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 current period ‘adjusted results of operations’ below, which is a non-GAAP financial measure. Adjusted results of operations excludes the impact of items that management believes are non-recurring, unusual and infrequent charges that affected our consolidated statements of operations in the periods presented.
Management uses adjusted results to assist in comparing business trends from period to period on a consistent basis without regard to the impact of non-recurring, unusual and infrequent items and in communications with the board of directors, stockholders, analysts and investors concerning our financial performance. We believe that these non-GAAP measures are used by, and are useful to, investors and other users of our financial statements in evaluating operating performance by providing better comparability between reporting periods because they provide an additional tool to evaluate our performance without regard to non-recurring, unusual and infrequent items that may not be indicative of overall business trends. They also provide a better baseline for analyzing trends in our operations. We do not suggest that investors should consider these non-GAAP measures in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP.
|
| Three Months Ended |
| ||||||||||||||||||||||
|
| December 31, |
| ||||||||||||||||||||||
|
| 2013 |
| 2012 |
| ||||||||||||||||||||
|
|
|
| Non-Recurring, Unusual |
|
|
|
|
| Non-Recurring, Unusual |
|
|
| ||||||||||||
|
|
|
| and Infrequent Charges |
|
|
|
|
| and Infrequent Charges |
|
|
| ||||||||||||
($ thousands, except per share data) |
| GAAP |
| Cash |
| Non-Cash |
| Non-GAAP |
| GAAP |
| Cash |
| Non-Cash |
| Non-GAAP |
| ||||||||
Revenues |
| $ | 228,673 |
| $ |
|
| $ |
|
| $ | 228,673 |
| $ | 224,992 |
| $ |
|
| $ |
|
| $ | 224,992 |
|
Cost of sales |
| 125,772 |
|
|
|
|
|
|
| 118,642 |
|
|
|
|
|
|
| ||||||||
Inventory write-down (1) |
|
|
| — |
| (3,419 | ) | (3,419 | ) |
|
| — |
| — |
| — |
| ||||||||
Contingency accruals (2) |
|
|
| — |
| — |
| — |
|
|
| — |
| (3,704 | ) | (3,704 | ) | ||||||||
Cost of sales |
|
|
| — |
| (3,419 | ) | 122,353 |
|
|
| — |
| (3,704 | ) | 114,938 |
| ||||||||
Gross profit |
| 102,901 |
|
|
|
|
| 106,320 |
| 106,350 |
|
|
|
|
| 110,054 |
| ||||||||
Gross margin |
| 45.0 | % |
|
|
|
| 46.5 | % | 47.3 | % |
|
|
|
| 48.9 | % | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Selling, general and administrative expenses (“SG&A”) |
| 135,035 |
|
|
|
|
|
|
| 110,656 |
|
|
|
|
|
|
| ||||||||
New ERP implementation (3) |
|
|
| (1,656 | ) | — |
| (1,656 | ) |
|
| (870 | ) | — |
| (870 | ) | ||||||||
Contingency accruals (2) |
|
|
| — |
| (5,714 | ) | (5,714 | ) |
|
| — |
| (2,200 | ) | (2,200 | ) | ||||||||
Depreciation and amortization (4) |
|
|
| — |
| (404 | ) | (404 | ) |
|
| — |
| (648 | ) | (648 | ) | ||||||||
Blackstone deal and cash repatriation (5) |
|
|
| (1,091 | ) | — |
| (1,091 | ) |
|
| — |
| — |
| — |
| ||||||||
Management turnover benefit (6) |
|
|
| — |
| 625 |
| 625 |
|
|
| — |
| — |
| — |
| ||||||||
SG&A |
|
|
| (2,747 | ) | (5,493 | ) | 126,795 |
|
|
| (870 | ) | (2,848 | ) | 106,938 |
| ||||||||
SG&A as a percentage of revenues |
| 59.1 | % |
|
|
|
| 55.4 | % | 49.2 | % |
|
|
|
| 47.5 | % | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Asset impairment charges |
| 10,747 |
|
|
|
|
|
|
| 591 |
|
|
|
|
|
|
| ||||||||
Retail asset impairment charges (7) |
|
|
| — |
| (10,408 | ) | (10,408 | ) |
|
| — |
| (591 | ) | (591 | ) | ||||||||
Goodwill impairment charges (8) |
|
|
| — |
| (339 | ) | (339 | ) |
|
| — |
| — |
| — |
| ||||||||
Asset impairment charges |
|
|
| — |
| (10,747 | ) | — |
|
|
| — |
| (591 | ) | — |
| ||||||||
Income (loss) from operations |
| (42,881 | ) |
|
|
|
| (20,475 | ) | (4,897 | ) |
|
|
|
| 3,116 |
| ||||||||
Foreign currency transaction (gains) losses, net |
| 221 |
| — |
| — |
| 221 |
| (170 | ) | — |
| — |
| (170 | ) | ||||||||
Interest income |
| (756 | ) | — |
| — |
| (756 | ) | (640 | ) | — |
| — |
| (640 | ) | ||||||||
Interest expense |
| 497 |
| — |
| — |
| 497 |
| 281 |
| — |
| — |
| 281 |
| ||||||||
Other income, net |
| (306 | ) | — |
| — |
| (306 | ) | (324 | ) | — |
| — |
| (324 | ) | ||||||||
Income (loss) before income taxes |
| (42,537 | ) | — |
| — |
| (20,131 | ) | (4,044 | ) | — |
| — |
| 3,969 |
| ||||||||
Income tax expense (benefit) (9) |
| 24,396 |
| (1,000 | ) | (25,831 | ) | (2,435 | ) | (437 | ) | — |
| — |
| (437 | ) | ||||||||
Net income (loss) |
| $ | (66,933 | ) | $ | (3,747 | ) | $ | (45,490 | ) | $ | (17,696 | ) | $ | (3,607 | ) | $ | (870 | ) | $ | (7,143 | ) | $ | 4,406 |
|
Net income (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Basic |
| $ | (0.76 | ) |
|
|
|
|
|
| $ | (0.04 | ) |
|
|
|
|
|
| ||||||
Diluted |
| $ | (0.76 | ) |
|
|
|
| $ | (0.20 | ) | $ | (0.04 | ) |
|
|
|
| $ | 0.05 |
|
(1) This relates to a write-off of obsolete inventory including raw materials, footwear and accessories.
(2) This represents legal and customs contingency accruals during the year ended December 31, 2013 and 2012 of which $5.7 million and $2.2 million, respectively, was recorded in selling, general and administrative expenses and $0.0 million and $3.7 million, respectively, was recorded in cost of sales.
(3) This represents operating expenses related to the implementation of our new ERP system.
(4) This represents the add-back of accelerated depreciation and amortization on tangible and intangible items related to our current ERP system and supporting platforms that will no longer be utilized once the implementation of a new ERP is complete.
(5) This is related to our recent investment agreement with Blackstone, which includes professional service fees associated with our cash repatriation strategy and other expenses.
(6) This is related to benefits recognized by the Company due to the cancellation of stock awards associated with the resignation of our Chief Executive Officer.
(7) This represents retail asset impairment charges for certain underperforming locations in our Americas, Asia Pacific and Europe segments.
(8) This is related to a portion of our Crocs Benelux B.V. business purchased by our Crocs Stores B.V. subsidiary in July 2012.
(9) These represent the add-back of certain income tax expenses (benefits). The three months and year-ended December 31, 2013 includes a non-recurring tax expense related to our cash repatriation strategy as well as a valuation allowance adjustment. The year-ended December 31, 2012 includes a non-recurring tax benefit of $11.4 million related to the reversal of reserves related to specific uncertain tax positions and the release of certain valuation allowances associated with deferred tax assets.
CROCS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES (UNAUDITED)
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 current period 'adjusted results of operations' below, which is a non-GAAP financial measure. Adjusted results of operations excludes the impact of items that management believes are non-recurring, unusual and infrequent charges that affected our consolidated statements of operations in the periods presented.
Management uses adjusted results to assist in comparing business trends from period to period on a consistent basis without regard to the impact of non-recurring, unusual and infrequent items and in communications with the board of directors, stockholders, analysts and investors concerning our financial performance. We believe that these non-GAAP measures are used by, and are useful to, investors and other users of our financial statements in evaluating operating performance by providing better comparability between reporting periods because they provide an additional tool to evaluate our performance without regard to non-recurring, unusual and infrequent items that may not be indicative of overall business trends. They also provide a better baseline for analyzing trends in our operations. We do not suggest that investors should consider these non-GAAP measures in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP.
|
| Year Ended |
| ||||||||||||||||||||||
|
| December 31, |
| ||||||||||||||||||||||
|
| 2013 |
| 2012 |
| ||||||||||||||||||||
|
|
|
| Non-Recurring, Unusual |
|
|
|
|
| Non-Recurring, Unusual |
|
|
| ||||||||||||
|
|
|
| and Infrequent Charges |
|
|
|
|
| and Infrequent Charges |
|
|
| ||||||||||||
($ thousands, except per share data) |
| GAAP |
| Cash |
| Non-Cash |
| Non-GAAP |
| GAAP |
| Cash |
| Non-Cash |
| Non-GAAP |
| ||||||||
Revenues |
| $ | 1,192,680 |
| $ |
|
| $ |
|
| $ | 1,192,680 |
| $ | 1,123,301 |
| $ |
|
| $ |
|
| $ | 1,123,301 |
|
Cost of sales |
| 569,482 |
|
|
|
|
|
|
| 515,324 |
|
|
|
|
|
|
| ||||||||
Inventory write-down (1) |
|
|
| — |
| (3,419 | ) | (3,419 | ) |
|
| — |
| — |
| — |
| ||||||||
Contingency accruals (2) |
|
|
| — |
| — |
| — |
|
|
| — |
| (3,704 | ) | (3,704 | ) | ||||||||
Cost of sales |
|
|
| — |
| (3,419 | ) | 566,063 |
|
|
| — |
| (3,704 | ) | 511,620 |
| ||||||||
Gross profit |
| 623,198 |
|
|
|
|
| 626,617 |
| 607,977 |
|
|
|
|
| 611,681 |
| ||||||||
Gross margin |
| 52.3 | % |
|
|
|
| 52.5 | % | 54.1 | % |
|
|
|
| 54.5 | % | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
SG&A |
| 549,154 |
|
|
|
|
|
|
| 460,393 |
|
|
|
|
|
|
| ||||||||
Brazil tax credits (10) |
|
|
| (6,094 | ) | — |
| (6,094 | ) |
|
| — |
| — |
| — |
| ||||||||
New ERP implementation (3) |
|
|
| (5,902 | ) | — |
| (5,902 | ) |
|
| (870 | ) | — |
| (870 | ) | ||||||||
Contingency accruals (2) |
|
|
| — |
| (5,714 | ) | (5,714 | ) |
|
| — |
| (2,200 | ) | (2,200 | ) | ||||||||
Depreciation and amortization (4) |
|
|
| — |
| (2,991 | ) | (2,991 | ) |
|
| — |
| (903 | ) | (903 | ) | ||||||||
Blackstone deal and cash repatriation (5) |
|
|
| (1,091 | ) | — |
| (1,091 | ) |
|
| — |
| — |
| — |
| ||||||||
Management turnover benefit (6) |
|
|
| — |
| 625 |
| 625 |
|
|
| — |
| — |
| — |
| ||||||||
SG&A |
|
|
| (13,087 | ) | (8,080 | ) | 527,987 |
|
|
| (870 | ) | (3,103 | ) | 456,420 |
| ||||||||
SG&A as a percentage of revenues |
| 46.0 | % |
|
|
|
| 44.3 | % | 41.0 | % |
|
|
|
| 40.6 | % | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Asset impairment charges |
| 10,949 |
|
|
|
|
|
|
| 1,410 |
|
|
|
|
|
|
| ||||||||
Retail asset impairment charges (7) |
|
|
| — |
| (10,610 | ) | (10,610 | ) |
|
| — |
| (1,410 | ) | (1,410 | ) | ||||||||
Goodwill impairment charges (8) |
|
|
| — |
| (339 | ) | (339 | ) |
|
| — |
| — |
| — |
| ||||||||
Asset impairment charges |
|
|
| — |
| (10,949 | ) | — |
|
|
| — |
| (1,410 | ) | — |
| ||||||||
Income from operations |
| 63,095 |
|
|
|
|
| 98,630 |
| 146,174 |
|
|
|
|
| 155,261 |
| ||||||||
Foreign currency transaction losses, net |
| 4,678 |
| — |
| — |
| 4,678 |
| 2,500 |
| — |
| — |
| 2,500 |
| ||||||||
Interest income |
| (2,432 | ) | — |
| — |
| (2,432 | ) | (1,697 | ) | — |
| — |
| (1,697 | ) | ||||||||
Interest expense |
| 1,016 |
| — |
| — |
| 1,016 |
| 837 |
| — |
| — |
| 837 |
| ||||||||
Other income, net |
| (126 | ) | — |
| — |
| (126 | ) | (1,014 | ) | — |
| — |
| (1,014 | ) | ||||||||
Income before income taxes |
| 59,959 |
| — |
| — |
| 95,494 |
| 145,548 |
| — |
| — |
| 154,635 |
| ||||||||
Income tax expense (9) |
| 49,539 |
| (1,000 | ) | (25,831 | ) | 22,708 |
| 14,205 |
| — |
| 11,368 |
| 25,573 |
| ||||||||
Net income |
| $ | 10,420 |
| $ | (14,087 | ) | $ | (48,279 | ) | $ | 72,786 |
| $ | 131,343 |
| $ | (870 | ) | $ | 3,151 |
| $ | 129,062 |
|
Net income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Basic |
| $ | 0.12 |
|
|
|
|
|
|
| $ | 1.46 |
|
|
|
|
|
|
| ||||||
Diluted |
| $ | 0.12 |
|
|
|
|
| $ | 0.82 |
| $ | 1.44 |
|
|
|
|
| $ | 1.42 |
|
(1) This relates to a write-off of obsolete inventory including raw materials, footwear and accessories.
(2) This represents legal and customs contingency accruals during the year ended December 31, 2013 and 2012 of which $5.7 million and $2.2 million, respectively, was recorded in selling, general and administrative expenses and $0.0 million and $3.7 million, respectively, was recorded in cost of sales.
(3) This represents operating expenses related to the implementation of our new ERP system.
(4) This represents the add-back of accelerated depreciation and amortization on tangible and intangible items related to our current ERP system and supporting platforms that will no longer be utilized once the implementation of a new ERP is complete.
(5) This is related to our recent investment agreement with Blackstone, which includes professional service fees associated with our cash repatriation strategy and other expenses.
(6) This is related to benefits recognized by the Company due to the cancellation of stock awards associated with the resignation of our Chief Executive Officer.
(7) This represents retail asset impairment charges for certain underperforming locations in our Americas, Asia Pacific and Europe segments.
(8) This is related to a portion of our Crocs Benelux B.V. business purchased by our Crocs Stores B.V. subsidiary in July 2012.
(9) These represent the add-back of certain income tax expenses (benefits). The three months and year-ended December 31, 2013 includes a non-recurring tax expense related to our cash repatriation strategy as well as a valuation allowance adjustment. The year-ended December 31, 2012 includes a non-recurring tax benefit of $11.4 million related to the reversal of reserves related to specific uncertain tax positions and the release of certain valuation allowances associated with deferred tax assets.
(10) This represents a net expense related to the resolution of a statutory tax audit in Brazil.
CROCS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
| December 31, |
| ||||
($ thousands, except number of shares) |
| 2013 |
| 2012 |
| ||
ASSETS |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 317,144 |
| $ | 294,348 |
|
Accounts receivable, net of allowances of $10,513 and $13,315, respectively |
| 104,405 |
| 92,278 |
| ||
Inventories |
| 162,341 |
| 164,804 |
| ||
Deferred tax assets, net |
| 4,440 |
| 6,284 |
| ||
Income tax receivable |
| 10,630 |
| 5,613 |
| ||
Other receivables |
| 11,942 |
| 24,821 |
| ||
Prepaid expenses and other current assets |
| 29,175 |
| 24,967 |
| ||
Total current assets |
| 640,077 |
| 613,115 |
| ||
Property and equipment, net |
| 86,971 |
| 82,241 |
| ||
Intangible assets, net |
| 74,822 |
| 59,931 |
| ||
Deferred tax assets, net |
| 19,628 |
| 34,112 |
| ||
Other assets |
| 53,661 |
| 40,239 |
| ||
Total assets |
| $ | 875,159 |
| $ | 829,638 |
|
|
|
|
|
|
| ||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Accounts payable |
| $ | 57,450 |
| $ | 63,976 |
|
Accrued expenses and other current liabilities |
| 97,111 |
| 81,371 |
| ||
Deferred tax liabilities, net |
| 11,199 |
| 2,405 |
| ||
Income taxes payable |
| 15,992 |
| 8,147 |
| ||
Current portion of long-term borrowings and capital lease obligations |
| 5,176 |
| 2,039 |
| ||
Total current liabilities |
| 186,928 |
| 157,938 |
| ||
Long term income tax payable |
| 36,616 |
| 36,343 |
| ||
Long-term borrowings and capital lease obligations |
| 11,670 |
| 4,596 |
| ||
Other liabilities |
| 15,201 |
| 13,361 |
| ||
Total liabilities |
| 250,415 |
| 212,238 |
| ||
|
|
|
|
|
| ||
Commitments and contingencies |
|
|
|
|
| ||
Stockholders’ equity: |
|
|
|
|
| ||
Preferred shares, par value $0.001 per share, 5,000,000 shares authorized, none outstanding |
| — |
| — |
| ||
Common shares, par value $0.001 per share, 250,000,000 shares authorized, 91,662,656 and 88,450,203 shares issued and outstanding, respectively, at December 31, 2013 and 91,047,297 and 88,662,845 shares issued and outstanding, respectively, at December 31, 2012 |
| 92 |
| 91 |
| ||
Treasury stock, at cost, 3,212,453 and 2,384,452 shares, respectively |
| (55,964 | ) | (44,214 | ) | ||
Additional paid-in capital |
| 321,532 |
| 307,823 |
| ||
Retained earnings |
| 344,432 |
| 334,012 |
| ||
Accumulated other comprehensive income |
| 14,652 |
| 19,688 |
| ||
Total stockholders’ equity |
| 624,744 |
| 617,400 |
| ||
Total liabilities and stockholders’ equity |
| $ | 875,159 |
| $ | 829,638 |
|
Schedule 1: Revenue Results — Channel and Regional Fourth Quarter 2013 (UNAUDITED)
|
| Three Months Ended December 31, |
| Change |
| Constant Currency Change(1) |
| ||||||||||
($ thousands) |
| 2013 |
| 2012 |
| $ |
| % |
| $ |
| % |
| ||||
Channel revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Wholesale: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Americas |
| $ | 43,277 |
| $ | 48,118 |
| $ | (4,841 | ) | (10.1 | )% | $ | (4,235 | ) | (8.8 | )% |
Asia Pacific |
| 32,556 |
| 33,342 |
| (786 | ) | (2.4 | ) | (175 | ) | (0.5 | ) | ||||
Japan |
| 12,310 |
| 15,517 |
| (3,207 | ) | (20.7 | ) | (295 | ) | (1.9 | ) | ||||
Europe |
| 23,526 |
| 13,174 |
| 10,352 |
| 78.6 |
| 9,419 |
| 71.5 |
| ||||
Other businesses |
| 54 |
| 241 |
| (187 | ) | (77.6 | ) | (190 | ) | (78.8 | ) | ||||
Total Wholesale |
| 111,723 |
| 110,392 |
| 1,331 |
| 1.2 |
| 4,524 |
| 4.1 |
| ||||
Consumer-direct: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Retail: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Americas |
| 46,141 |
| 47,415 |
| (1,274 | ) | (2.7 | ) | (864 | ) | (1.8 | ) | ||||
Asia Pacific |
| 26,083 |
| 25,342 |
| 741 |
| 2.9 |
| 1,185 |
| 4.7 |
| ||||
Japan |
| 5,941 |
| 6,954 |
| (1,013 | ) | (14.6 | ) | 395 |
| 5.7 |
| ||||
Europe |
| 11,773 |
| 9,894 |
| 1,879 |
| 19.0 |
| 1,652 |
| 16.7 |
| ||||
Total Retail |
| 89,938 |
| 89,605 |
| 333 |
| 0.4 |
| 2,368 |
| 2.6 |
| ||||
Internet: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Americas |
| 17,256 |
| 16,453 |
| 803 |
| 4.9 |
| 894 |
| 5.4 |
| ||||
Asia Pacific |
| 2,418 |
| 1,922 |
| 496 |
| 25.8 |
| 568 |
| 29.6 |
| ||||
Japan |
| 1,797 |
| 1,758 |
| 39 |
| 2.2 |
| 463 |
| 26.3 |
| ||||
Europe |
| 5,541 |
| 4,862 |
| 679 |
| 14.0 |
| 445 |
| 9.2 |
| ||||
Total Internet |
| 27,012 |
| 24,995 |
| 2,017 |
| 8.1 |
| 2,370 |
| 9.5 |
| ||||
Total revenues: |
| $ | 228,673 |
| $ | 224,992 |
| $ | 3,681 |
| 1.6 | % | $ | 9,262 |
| 4.1 | % |
|
| Three Months Ended December 31, |
| Change |
| Constant Currency Change(1) |
| ||||||||||
($ thousands) |
| 2013 |
| 2012 |
| $ |
| % |
| $ |
| % |
| ||||
Regional Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Americas |
| $ | 106,674 |
| $ | 111,986 |
| $ | (5,312 | ) | (4.7 | )% | $ | (4,205 | ) | (3.8 | )% |
Asia Pacific |
| 61,057 |
| 60,606 |
| 451 |
| 0.7 |
| 1,578 |
| 2.6 |
| ||||
Japan |
| 20,048 |
| 24,229 |
| (4,181 | ) | (17.3 | ) | 563 |
| 2.3 |
| ||||
Europe |
| 40,840 |
| 27,930 |
| 12,910 |
| 46.2 |
| 11,516 |
| 41.2 |
| ||||
Other businesses |
| 54 |
| 241 |
| (187 | ) | (77.6 | ) | (190 | ) | (78.8 | ) | ||||
Total revenues: |
| $ | 228,673 |
| $ | 224,992 |
| $ | 3,681 |
| 1.6 | % | $ | 9,262 |
| 4.1 | % |
(1) Reflects quarter-over-quarter change as if the current period results were in “constant currency,” which is a non-GAAP financial measure. Constant currency is a measure utilized by management in which current period results have been restated using 2012 average foreign exchange rates for the comparative period to enhance the visibility of the underlying business trends by excluding the impact of foreign currency exchange rate fluctuations. We do not suggest that investors should consider this non-GAAP measure in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP.
Schedule 2: Revenue Results – Channel and Regional Full Year 2013 (UNAUDITED)
|
| Year Ended December 31, |
| Change |
| Constant Currency Change(1) |
| ||||||||||
($ thousands) |
| 2013 |
| 2012 |
| $ |
| % |
| $ |
| % |
| ||||
Channel revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Wholesale: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Americas |
| $ | 239,104 |
| $ | 235,988 |
| $ | 3,116 |
| 1.3 | % | $ | 5,589 |
| 2.4 | % |
Asia Pacific |
| 212,761 |
| 180,970 |
| 31,791 |
| 17.6 |
| 31,199 |
| 17.2 |
| ||||
Japan |
| 90,426 |
| 117,380 |
| (26,954 | ) | (23.0 | ) | (6,940 | ) | (5.9 | ) | ||||
Europe |
| 131,215 |
| 110,947 |
| 20,268 |
| 18.3 |
| 17,585 |
| 15.8 |
| ||||
Other businesses |
| 254 |
| 574 |
| (320 | ) | (55.7 | ) | (325 | ) | (56.6 | ) | ||||
Total Wholesale |
| 673,760 |
| 645,859 |
| 27,901 |
| 4.3 |
| 47,108 |
| 7.3 |
| ||||
Consumer-direct: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Retail: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Americas |
| 202,925 |
| 196,711 |
| 6,214 |
| 3.2 |
| 7,303 |
| 3.7 |
| ||||
Asia Pacific |
| 120,020 |
| 104,632 |
| 15,388 |
| 14.7 |
| 15,380 |
| 14.7 |
| ||||
Japan |
| 36,566 |
| 38,430 |
| (1,864 | ) | (4.9 | ) | 6,526 |
| 17.0 |
| ||||
Europe |
| 58,507 |
| 35,052 |
| 23,455 |
| 66.9 |
| 22,728 |
| 64.8 |
| ||||
Total Retail |
| 418,018 |
| 374,825 |
| 43,193 |
| 11.5 |
| 51,937 |
| 13.9 |
| ||||
Internet: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Americas |
| 56,523 |
| 63,153 |
| (6,630 | ) | (10.5 | ) | (6,404 | ) | (10.1 | ) | ||||
Asia Pacific |
| 9,971 |
| 7,244 |
| 2,727 |
| 37.6 |
| 2,749 |
| 37.9 |
| ||||
Japan |
| 7,871 |
| 8,755 |
| (884 | ) | (10.1 | ) | 867 |
| 9.9 |
| ||||
Europe |
| 26,537 |
| 23,465 |
| 3,072 |
| 13.1 |
| 2,231 |
| 9.5 |
| ||||
Total Internet |
| 100,902 |
| 102,617 |
| (1,715 | ) | (1.7 | ) | (557 | ) | (0.5 | ) | ||||
Total revenues: |
| $ | 1,192,680 |
| $ | 1,123,301 |
| $ | 69,379 |
| 6.2 | % | $ | 98,488 |
| 8.8 | % |
|
| Year Ended December 31, |
| Change |
| Constant Currency Change(1) |
| ||||||||||
($ thousands) |
| 2013 |
| 2012 |
| $ |
| % |
| $ |
| % |
| ||||
Regional Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Americas |
| $ | 498,552 |
| $ | 495,852 |
| $ | 2,700 |
| 0.5 | % | $ | 6,488 |
| 1.3 | % |
Asia Pacific |
| 342,752 |
| 292,846 |
| 49,906 |
| 17.0 |
| 49,328 |
| 16.8 |
| ||||
Japan |
| 134,863 |
| 164,565 |
| (29,702 | ) | (18.0 | ) | 453 |
| 0.3 |
| ||||
Europe |
| 216,259 |
| 169,464 |
| 46,795 |
| 27.6 |
| 42,544 |
| 25.1 |
| ||||
Other businesses |
| 254 |
| 574 |
| (320 | ) | (55.7 | ) | (325 | ) | (56.6 | ) | ||||
Total revenues: |
| $ | 1,192,680 |
| $ | 1,123,301 |
| $ | 69,379 |
| 6.2 | % | $ | 98,488 |
| 8.8 | % |
(1) Reflects year-over-year change as if the current period results were in “constant currency,” which is a non-GAAP financial measure. Constant currency is a measure utilized by management in which current period results have been restated using 2012 average foreign exchange rates for the comparative period to enhance the visibility of the underlying business trends by excluding the impact of foreign currency exchange rate fluctuations. We do not suggest that investors should consider this non-GAAP measure in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP.
Schedule 3: Company Operated Retail Highlights (UNAUDITED)
2013 Fourth Quarter
|
| Constant Currency |
| Constant Currency |
|
|
| Three Months Ended |
| Three Months Ended |
|
Comparable store sales (1) |
| Decmber 31, 2013 |
| Decmber 31, 2012 |
|
Americas |
| (7.9 | )% | (0.9 | )% |
Asia Pacific |
| 5.4 |
| (4.9 | ) |
Japan |
| (9.7 | ) | (20.2 | ) |
Europe |
| 0.7 |
| (2.3 | ) |
Global |
| (4.0 | )% | (3.5 | )% |
2013 Full Year
|
| Constant Currency |
| Constant Currency |
|
|
| Year Ended |
| Year Ended |
|
Comparable store sales (1) |
| Decmber 31, 2013 |
| Decmber 31, 2012 |
|
Americas |
| (5.8 | )% | 2.6 | % |
Asia Pacific |
| 6.9 |
| 3.3 |
|
Japan |
| (15.0 | ) | (13.0 | ) |
Europe |
| 2.4 |
| 5.4 |
|
Global |
| (2.7 | )% | 1.5 | % |
(1) Comparable store status is determined on a monthly basis. Comparable store sales begin in the thirteenth month of a store’s operation. Stores in which selling square footage has changed more than 15% as a result of a remodel, expansion or reduction are excluded until the thirteenth month in which they have comparable prior year sales. Temporarily closed stores are excluded from the comparable store sales calculation during the month of closure. Location closures in excess of three months are excluded until the thirteenth month post re-opening. Comparable store sales growth is calculated on a currency neutral basis using historical annual average currency rates.
Retail store counts
|
| September 30, |
|
|
|
|
| December 31, |
|
Company-operated retail locations: |
| 2013 |
| Opened |
| Closed |
| 2013 |
|
Type: |
|
|
|
|
|
|
|
|
|
Kiosk/Store in Store |
| 121 |
| 3 |
| (2 | ) | 122 |
|
Retail Stores |
| 311 |
| 18 |
| (2 | ) | 327 |
|
Outlet Stores |
| 159 |
| 12 |
| (1 | ) | 170 |
|
Total |
| 591 |
| 33 |
| (5 | ) | 619 |
|
Operating segment: |
|
|
|
|
|
|
|
|
|
Americas |
| 205 |
| 11 |
| — |
| 216 |
|
Asia Pacific |
| 221 |
| 18 |
| (3 | ) | 236 |
|
Japan |
| 50 |
| — |
| (1 | ) | 49 |
|
Europe |
| 115 |
| 4 |
| (1 | ) | 118 |
|
Total |
| 591 |
| 33 |
| (5 | ) | 619 |
|
|
| December 31, |
|
|
|
|
| December 31, |
|
Company-operated retail locations: |
| 2012 |
| Opened |
| Closed |
| 2013 |
|
Type: |
|
|
|
|
|
|
|
|
|
Kiosk/Store in Store |
| 121 |
| 23 |
| (22 | ) | 122 |
|
Retail Stores |
| 287 |
| 66 |
| (26 | ) | 327 |
|
Outlet Stores |
| 129 |
| 43 |
| (2 | ) | 170 |
|
Total |
| 537 |
| 132 |
| (50 | ) | 619 |
|
Operating segment: |
|
|
|
|
|
|
|
|
|
Americas |
| 199 |
| 34 |
| (17 | ) | 216 |
|
Asia Pacific |
| 201 |
| 61 |
| (26 | ) | 236 |
|
Japan |
| 40 |
| 11 |
| (2 | ) | 49 |
|
Europe |
| 97 |
| 26 |
| (5 | ) | 118 |
|
Total |
| 537 |
| 132 |
| (50 | ) | 619 |
|
Schedule 4: Global and Segment metrics (UNAUDITED)
|
| Three Months Ended December 31, |
| Change |
| Year Ended December 31, |
| Change |
| ||||||||
Global |
| 2013 |
| 2012 |
| % |
| 2013 |
| 2012 |
| % |
| ||||
Units (in millions) |
| 10.738 |
| 9.821 |
| 9.3 | % | 54.326 |
| 49.947 |
| 8.8 | % | ||||
Average Selling Price (“ASP”) |
| $ | 20.60 |
| $ | 21.93 |
| (6.1 | ) | $ | 21.27 |
| $ | 21.55 |
| (1.3 | ) |
New Product Introduction (“NPI”) |
| 24.6 | % | 37.6 | % | (34.5 | ) | 30.6 | % | 36.7 | % | (16.7 | ) | ||||
Clogs as % of Revenue |
| 51.5 | % | 51.0 | % | 0.9 | % | 46.4 | % | 48.5 | % | (4.5 | )% | ||||
|
| Three Months Ended December 31, |
| Change |
| Year Ended December 31, |
| Change |
| ||||||||
Americas |
| 2013 |
| 2012 |
| % |
| 2013 |
| 2012 |
| % |
| ||||
Units (in millions) |
| 5.150 |
| 5.6 |
| (8.1 | )% | 24.793 |
| 25.451 |
| (2.6 | )% | ||||
ASP |
| $ | 20.01 |
| $ | 19.03 |
| 5.2 |
| $ | 19.46 |
| $ | 18.54 |
| 5.0 |
|
NPI |
| 25.0 | % | 31.3 | % | (20.2 | ) | 26.9 | % | 33.6 | % | (20.1 | ) | ||||
Clogs as % of Revenue |
| 56.8 | % | 59.3 | % | (4.2 | )% | 49.3 | % | 52.5 | % | (6.2 | )% | ||||
|
| Three Months Ended December 31, |
| Change |
| Year Ended December 31, |
| Change |
| ||||||||
Asia Pacific |
| 2013 |
| 2012 |
| % |
| 2013 |
| 2012 |
| % |
| ||||
Units (in millions) |
| 2.156 |
| 2.3 |
| (5.0 | )% | 12.445 |
| 10.906 |
| 14.1 | % | ||||
ASP |
| $ | 27.28 |
| $ | 25.81 |
| 5.7 |
| $ | 26.64 |
| $ | 25.88 |
| 3.0 |
|
NPI |
| 41.9 | % | 50.1 | % | (16.3 | ) | 48.3 | % | 50.2 | % | (3.9 | ) | ||||
Clogs as % of Revenue |
| 28.2 | % | 30.8 | % | (8.2 | )% | 28.4 | % | 31.4 | % | (9.7 | )% | ||||
|
| Three Months Ended December 31, |
| Change |
| Year Ended December 31, |
| Change |
| ||||||||
Japan |
| 2013 |
| 2012 |
| % |
| 2013 |
| 2012 |
| % |
| ||||
Units (in millions) |
| 1.039 |
| 0.850 |
| 22.3 | % | 6.209 |
| 5.925 |
| 4.8 | % | ||||
ASP |
| $ | 18.51 |
| $ | 27.41 |
| (32.5 | ) | $ | 20.82 |
| $ | 26.36 |
| (21.0 | ) |
NPI |
| 26.1 | % | 58.1 | % | (55.0 | ) | 35.5 | % | 37.1 | % | (4.2 | ) | ||||
Clogs as % of Revenue |
| 56.1 | % | 53.4 | % | 5.1 | % | 53.8 | % | 51.9 | % | 3.7 | % | ||||
|
| Three Months Ended December 31, |
| Change |
| Year Ended December 31, |
| Change |
| ||||||||
Europe |
| 2013 |
| 2012 |
| % |
| 2013 |
| 2012 |
| % |
| ||||
Units (in millions) |
| 2.393 |
| 1.095 |
| 118.5 | % | 10.879 |
| 7.665 |
| 41.9 | % | ||||
ASP |
| $ | 16.75 |
| $ | 24.44 |
| (31.5 | ) | $ | 19.51 |
| $ | 21.65 |
| (9.9 | ) |
NPI |
| 7.6 | % | 26.9 | % | (71.5 | ) | 15.9 | % | 27.8 | % | (42.7 | ) | ||||
Clogs as % of Revenue |
| 69.6 | % | 58.1 | % | 19.8 | % | 63.4 | % | 60.0 | % | 5.6 | % | ||||
Schedule 5: CROCS, INC. BACKLOG (UNAUDITED)
|
| December 31, |
| ||||
($ thousands) |
| 2013 |
| 2012 |
| ||
Americas |
| $ | 113,972 |
| $ | 122,376 |
|
Asia Pacific |
| 141,446 |
| 121,767 |
| ||
Japan |
| 47,651 |
| 53,732 |
| ||
Europe |
| 76,203 |
| 56,456 |
| ||
Total backlog (1) |
| $ | 379,272 |
| $ | 354,331 |
|
(1) We receive a significant portion of orders from our wholesale customers and distributors that remain unfilled as of any date and, at that point, represent orders scheduled to be shipped at a future date. We refer to these unfilled orders as backlog. While all orders in our backlog are subject to cancellation by customers, we expect that the majority of such orders will be filled within one year. Backlog as of a particular date is affected by a number of factors, including seasonality, manufacturing schedule and the timing of product shipments. Further, the mix of future and immediate delivery orders can vary significantly period over period. Backlog only relates to wholesale and distributor orders for the next season and current season fill-in orders and excludes potential sales in our retail and internet channels. Backlog also is affected by the timing of customers’ orders and product availability. Due to these factors and since the unfulfilled orders can be canceled at any time prior to shipment by our customers, we believe that backlog may be an imprecise indicator of future revenues that may be achieved in a fiscal period and comparisons of backlog from period to period may be misleading. In addition, our historical cancellation experience may not be indicative of future cancellation rates.