October 25, 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. 2 to Registration Statement on Form S-1
Filed October 18, 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.
General
1. We reiterate comments 1 and 2 to our letter dated September 9,
2005. Please note that we may have additional comments on this
information and that this information needs to be included in any
preliminary prospectuses you use.
Risk Factors, page 10
We depend on a limited number of suppliers . . ., page 16
2. Please expand your discussion of your internal production of
proprietary closed-cell resin to state whether this production
will
affect your performance in your Supply Agreement with Finproject,
S.p.A.
If we are unable to establish and protect our trademarks . . .,
page
19
3. Please clarify that your trademark registration applications in
the United States, Brazil, China, Israel, and South Africa are
currently pending, consistent with your disclosure on page 60.
Principal and Selling Stockholders, page 78
4. We note your response to comment 7 of our letter dated October
17,
2005. Please note that any preliminary prospectus that is
circulated
must contain the information required by Item 507 of Regulation S-
K
for each selling shareholder and, for additional selling
shareholders
who are broker-dealers or affiliates of broker-dealers, the
disclosures stated in comments 23 and 24, respectively, of our
letter
dated September 9, 2005.
Financial Statements of Crocs, Inc.
Statement of Stockholders` Equity (Deficit), page F-5
5. We note your response to prior comment 10. Upon your initial
filing of the Form S-1, you are deemed to be a public company for
purposes of compliance with the Staff Accounting Bulletins.
Please
revise your financial statements to reclassify your accumulated
losses to additional paid-in capital as of the date you converted
from a limited liability company to a C corporation in accordance
with SAB Topic 4:B.
Note 14. Equity, page F-26
6. We note your response to prior comment 14. It remains unclear
to
us 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. Given that you provided an
estimated IPO range to us in your response dated September 27,
2005,
it also remains unclear how your common stock value increased from
$1,670 to an estimated pre-stock split IPO range per share of
$4,060
to $4,640, which represents an increase in value of 143% to 178%
over
a 26 day period. Your responses do not adequately address the
factors that contributed to these increases. Please provide a
detailed explanation of the specific facts and circumstances that
led
to these increases in value. Your explanation should show the
estimated impact of each significant factor contributing to the
increase in values.
7. You state that the underwriters based their valuation on a
multiple of projected net income for 2006. Piper Jaffray and
Thomas
Weisel Partners used multiples based on comparable companies.
Please
tell us the projected net income amount for 2006 that was used by
the
underwriters in arriving at their valuation.
8. Please provide us with a timeline regarding the events that led
up
to the proposed IPO and the filing of the Form S-1. Please
specifically address the following in your timeline:
* Tell us when you initially began to consider pursuing an IPO;
* On page 43 of the valuation provided as of December 31, 2004, it
states that as of the December 31, 2004 date of valuation you had
begun initial discussions with investment bankers regarding the
possibility of executing an IPO. Tell us the specific date you
began
initial discussions with underwriters regarding your potential
IPO.
In these initial discussions as well as any additional discussions
held through December 31, 2004, tell us what the proposed price
ranges for the sale of your common stock were as well as the
estimated market capitalization and valuation amounts discussed;
and
* In the valuations provided as of May 1, 2005, June 30, 2005, and
September 1, 2005, it states that as of these updated dates of
valuation, the time to a potential IPO was shortened. For each
date
subsequent discussions were held with underwriters regarding the
potential IPO, tell us what the proposed price ranges for the sale
of
your common stock were well as the estimated market capitalization
and valuation amounts discussed.
9. We note your response to prior comment 15. Please help us
understand what consideration was given by Clifton Gunderson LLP
of
the proposed IPO in arriving at the estimated values of your
common
stock. Specifically, tell us what consideration was given to the
estimated price ranges discussed with your underwriters, including
the estimated price range of $4,060 to $4,640 on a per share pre-
stock split basis provided in your response dated September 27,
2005.
10. Please tell us more about how you arrived at the amount that
should be allocated to preferred stock as of each valuation date.
Please clarify whether one of the three methods included in
Chapter
10 of the AICPA`s Practice Aid on the "Valuation of Privately-
Held-
Company Equity Securities Issued as Compensation" were used.
Given
that you expect all of your outstanding Series A preferred stock
to
automatically convert into shares of your common stock in
connection
with the closing of the IPO, tell us what consideration was given
to
this conversion in the valuations performed.
11. The valuations use three appraisal methods to arrive at an
estimated value of your total equity. It is not clear how you
arrive
at the final estimated value of your total equity based on these
three values. Please explain how you calculate the final
estimated
value based on these three amounts.
12. In the Timeline of Events provided in Exhibit 3, you highlight
various factors that occurred in the period from January 1, 2005
through May 1, 2005 and from May 1, 2005 through September 1,
2005.
For each significant factor listed including Dillards becoming a
new
customer and the increases in the number of customers and store
locations, tell us the quantitative impact these factors had on
your
projected revenue and income amounts as of each valuation date.
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
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Ronald R. Snyder
Crocs, Inc.
October 25, 2005
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010
DIVISION OF
CORPORATION FINANCE