October 12, 2005
Mail Stop 7010
By U.S. Mail and facsimile to (303) 468-4266
Ronald R. Snyder
President and Chief Executive Officer
Crocs, Inc.
6273 Monarch Park Place
Niwot, Colorado 80503
Re: Crocs, Inc.
Amendment No. 1 to Registration Statement on Form S-1
Filed September 27, 2005
File No. 333-127526
Dear Mr. Snyder:
We have reviewed your filing and have the following
comments.
We welcome any questions you may have about our comments or any
other
aspect of our review. Feel free to call us at the telephone
numbers
listed at the end of this letter.
Risk Factors, page 9
1. We note your response to comment 5 of our letter dated
September
9, 2005. Please revise the risk factors entitled "We are subject
to
various environmental laws . . ." and "We are required to comply
with
government regulation . . ." to explain why these factors
constitute
a particular, concrete, risk to you or investors.
Risks Related to Crocs, Inc., page 9
We are dependent on sales of a small number of products . . .,
page
10
2. We note your response to comment 8 of our letter dated
September
9, 2005. Please revise your statement regarding design and
production lead times to provide greater specificity than the
present
"several months," if possible.
Business, page 49
3. We note your response to comment 13 of our letter dated
September
9, 2005, as well as your statement on page 51 that you have
initiated
direct sales efforts in eight countries. In your discussion of
international sales on page 55, you state that you have
established
direct operations in seven named countries as well as "other parts
of
Asia." Please name the eighth country on page 55 or revise your
statement on page 51.
Business Strategy, page 49
4. We note your statement in the last paragraph on page 50 as well
as
on page 2 that you believe your line of footwear products has
"year-
round appeal," while in discussing seasonality on page 39, you
imply
that most of your footwear products are suitable for warm weather.
In addition, we reiterate our observation that seven of the eight
footwear models discussed on pages 52-53 appear to be suitable for
warm weather. Please provide additional disclosure as to your
belief
that these products have "year-round appeal" and explain how you
will
market these products during cold weather seasons. If you
anticipate
materially different levels of demand for your products during
cold
weather seasons, this information should be disclosed in your risk
factor discussion of seasonal variations on page 23.
Executive Compensation, page 67
5. For certain stock option grants, including those grants made on
August 1, 2005 and August 22, 2005 discussed on pages 70 and 75,
you
state that the exercise price is equal to the fair market value of
your common stock. Please disclose the actual exercise prices.
6. Please disclose the fair value of all stock awards granted,
including the fair value of the 1,832 shares of common stock
issued
in June and July 2005.
Principal and Selling Stockholders, page 77
7. We note your responses to prior comments 23-25. Note that we
will
review your disclosures when they are made and may have additional
comment.
Underwriting, page 87
8. Please revise your discussion of the directed share program to
disclose that it is being administered solely by Piper Jaffray &
Co.
9. We note your response to comment 30 of our letter dated
September
9, 2005. Revise your discussion to specifically disclose whether
Piper Jaffray and Thomas Weisel Partners will consider their own
positions in the securities as a factor in determining whether to
release securities from the lock-up agreement.
Financial Statements of Crocs, Inc.
Statement of Stockholders` Deficit, page F-5
10. We note your response to prior comment 35. We remind you that
SAB Topic 4:B requires you to reclassify your retained earnings or
accumulated losses to additional paid-in capital as of the date
you
converted from a limited liability company to a C corporation.
Please revise your financial statements.
Income (Loss) per Share, page F-8
11. We note your response to prior comment 41. Please tell us the
specific conditions in which the holder has the right to put the
shares of common stock back to you.
12. We note your response to prior comment 42. Please disclose
the
terms of the additional dividend that will be paid on outstanding
shares of the preferred shares, including that you will pay an
additional dividend on all outstanding shares of the preferred
shares
in a per share amount equal (on an as-if-converted to common stock
basis) to the amount paid or set aside for each share of common
stock.
Note 13. Related Parties, page F-25
13. We note your response to prior comment 48. Given that the
exclusive distribution agreement with your former chief executive
officer was entered into in connection with the separation
agreement
and that the pricing under the exclusive distribution agreement is
set at a discount from your then current wholesale pricing, please
tell us what consideration was given as to whether any additional
severance expense needed to be recorded related to this agreement.
Note 14. Equity, page F-26
14. We note your response to prior comment 49. It is unclear how
your common stock value increased from $790 per share at May 1,
2005
to an estimated pre-stock split IPO range per share of $4,060 to
$4,640, which represents an increase in value of 414% to 487% in
an
approximately five month period. Please provide a reconciliation
between the $790 to the expected IPO range; this reconciliation
should show the estimated impact of each significant factor
contributing to the difference in values.
15. Please provide us with the valuations performed by Clifton
Gunderson LLP as of January 1, 2005, May 1, 2005, and June 30,
2005.
For each valuation, please address the following:
* Provide us with a comprehensive explanation as to how they
determined which approaches to use to determine the fair value of
your equity, including how they determined it was appropriate to
use
a combination of these approaches;
* For each significant assumption used in the valuation such as
the
lack of control discount, provide us with support for how they
determined this was the appropriate assumption to use;
* You state that the discounted cash flow method was used.
Provide
us with a detailed explanation as to how they arrived at the
discounted cash flows amounts to be included in the valuation; and
* Provide us with the computations which show how fair value was
determined as of each date. These computations should include the
fair value determined based on each approach used as well as show
how
you combined each of these approaches to arrive at the final fair
value.
16. On page 30 you state that 1,332 shares of common stock were
issued to employees and consultants on July 1, 2005. For each
transaction subsequent to June 30, 2005:
* identify the parties, including any related parties;
* the nature of the consideration; and
* the fair value and your basis for determining the fair value.
* Indicate whether the fair value was contemporaneous or
retrospective.
* To the extent applicable, reconcile the fair values you used for
equity transactions to the fair value indicated by the anticipated
IPO price.
* For equity transactions in which your Board of Directors
estimated
the fair value, please provide us with a detailed explanation of
the
significant factors, assumptions, and methodologies used in
determining fair value.
Note 15. Redeemable Convertible Preferred Shares and Note 16.
Redeemable Common Shares, page F-25
17. We note your response to prior comment 52. It does not appear
that the terms of the conversions of Class C membership units into
Series A Stock are disclosed in Note 15. Please provide or tell
us
where these terms are disclosed.
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities Act
of
1933 and that they have provided all information investors require
for an informed investment decision. Since the company and its
management are in possession of all facts relating to a company`s
disclosure, they are responsible for the accuracy and adequacy of
the
disclosures they have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert staff comments and the declaration of
effectiveness as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the
United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Nudrat Salik, Staff Accountant, at (202)
551-
3692 or Rufus Decker, Accounting Branch Chief, at (202) 551-3769
if
you have questions regarding comments on the financial statements
and
related matters. Please contact Matt Franker, Staff Attorney, at
(202) 551-3749 or me at (202) 551-3760 with any other questions.
Sincerely,
Pamela A. Long
Assistant Director
cc: James H. Carroll, Esq. (via facsimile 303/447-7800)
Faegre & Benson LLP
1900 Fifteenth Street
Boulder, Colorado 80302
??
??
??
??
Ronald R. Snyder
Crocs, Inc.
October 12, 2005
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010
DIVISION OF
CORPORATION FINANCE