UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________________________

FORM 10-Q

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

For the quarterly period ended March 31, 2021

or

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

For the transition period from            to            

Commission File No. 000-51754

_____________________________________________________________

CROCS, INC.

(Exact name of registrant as specified in its charter)

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

13601 Via Varra, Broomfield, Colorado 80020

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

(303) 848-7000

(Registrant’s telephone number, including area code)

_____________________________________________________________

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

Title of each class:	Trading symbol:	Name of each exchange on which registered:
Common Stock, par value $0.001 per share	CROX	The Nasdaq Global Select Market

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

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

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

Large accelerated filer	Accelerated filer	Non-accelerated filer	Smaller reporting company	Emerging growth company
☒	☐	☐	☐	☐

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

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

As of April 20, 2021, Crocs, Inc. had 65,230,433 shares of its common stock, par value $0.001 per share, outstanding.

Cautionary Note Regarding Forward-Looking Statements

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

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

•our expectations regarding future trends, selling, general and administrative cost savings, expectations, and performance of our business;

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

•our expectations about the impact of our strategic plans.

Forward-looking statements are subject to risks, uncertainties, and other factors, which may cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, without limitation, those described in the section entitled “Risk Factors” under Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2020 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.

i

Crocs, Inc.

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

For the Quarterly Period Ended March 31, 2021

PART I — Financial Information
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Statements of Operations	1
	Condensed Consolidated Statements of Comprehensive Income	2
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30
PART II — Other Information		31
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 6.	Exhibits	32
Signatures		33

ii

PART I — Financial Information

ITEM 1. Financial Statements

CROCS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share data)

	Three Months Ended March 31,
	2021		2020
Revenues	$	460,098	$	281,160
Cost of sales	206,879		146,998
Gross profit	253,219		134,162
Selling, general and administrative expenses	128,533		113,350
Income from operations	124,686		20,812
Foreign currency losses, net	(504)		(231)
Interest income	27		97
Interest expense	(1,632)		(1,921)
Other income, net	11		21
Income before income taxes	122,588		18,778
Income tax expense	24,190		7,687
Net income	$	98,398	$	11,091
Net income per common share:
Basic	$	1.50	$	0.16
Diluted	$	1.47	$	0.16
Weighted average common shares outstanding:
Basic	65,458		67,931
Diluted	66,848		69,218

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

1

CROCS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(in thousands)

	Three Months Ended March 31,
	2021		2020
Net income	$	98,398	$	11,091
Other comprehensive income (loss):
Foreign currency translation losses, net	(10,628)		(11,366)
Reclassification of foreign currency translation loss to income (1)	—		(164)
Total comprehensive income (loss)	$	87,770	$	(439)

(1) Represents the reclassification of cumulative foreign currency translation adjustment upon liquidation of foreign subsidiaries during the three months ended March 31, 2020.

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

2

CROCS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and par value amounts)

	March 31, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	255,869	$	135,802
Restricted cash - current	1,473		1,542
Accounts receivable, net of allowances of $18,615 and $21,093, respectively	228,717		149,847
Inventories	196,477		175,121
Income taxes receivable	3,830		1,857
Other receivables	19,912		10,816
Prepaid expenses and other assets	20,904		17,856
Total current assets	727,182		492,841
Property and equipment, net of accumulated depreciation and amortization of $83,429 and $86,305, respectively	70,150		57,467
Intangible assets, net of accumulated amortization of $99,513 and $95,426, respectively	34,762		37,636
Goodwill	1,651		1,719
Deferred tax assets, net	336,590		350,784
Restricted cash	3,904		1,929
Right-of-use assets	179,785		167,421
Other assets	8,299		8,926
Total assets	$	1,362,323	$	1,118,723
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	141,942	$	112,778
Accrued expenses and other liabilities	111,159		126,704
Income taxes payable	24,317		5,038
Current operating lease liabilities	48,330		47,064
Total current liabilities	325,748		291,584
Long-term income taxes payable	198,769		205,974
Long-term borrowings	341,103		180,000
Long-term operating lease liabilities	165,818		146,401
Other liabilities	4,654		4,131
Total liabilities	1,036,092		828,090
Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value $0.001 per share, 5.0 million shares authorized including 1.0 million authorized as Series A Convertible Preferred Stock, none outstanding	—		—
Common stock, par value $0.001 per share, 250.0 million shares authorized, 105.6 million and 105.0 million issued, 65.2 million and 65.9 million outstanding, respectively	106		105
Treasury stock, at cost, 40.4 million and 39.1 million shares, respectively	(783,926)		(688,849)
Additional paid-in capital	525,289		482,385
Retained earnings	651,744		553,346
Accumulated other comprehensive loss	(66,982)		(56,354)
Total stockholders’ equity	326,231		290,633
Total liabilities and stockholders’ equity	$	1,362,323	$	1,118,723

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

3

CROCS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands)

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

	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance at December 31, 2019	68,232	$	104	35,796	$	(546,208)	$	495,903	$	240,485	$	(58,379)	$	131,905
Share-based compensation	—	—		—	—		3,964		—		—		3,964
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units	702	1		115	(2,573)		330		—		—		(2,242)
Repurchases of common stock	(1,559)	—		1,559	(39,159)		—		—		—		(39,159)
Net income	—	—		—	—		—		11,091		—		11,091
Other comprehensive loss	—	—		—	—		—		—		(11,530)		(11,530)
Balance at March 31, 2020	67,375	$	105	37,470	$	(587,940)	$	500,197	$	251,576	$	(69,909)	$	94,029

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

4

CROCS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	Three Months Ended March 31,
	2021		2020
Cash flows from operating activities:
Net income	$	98,398	$	11,091
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	8,054		6,907
Operating lease cost	14,832		14,994
Share-based compensation	8,054		3,964
Other non-cash items	(1,844)		5,877
Changes in operating assets and liabilities:
Accounts receivable	(81,186)		(73,232)
Inventories	(23,795)		(29,268)
Prepaid expenses and other assets	16,599		3,294
Accounts payable, accrued expenses and other liabilities	6,332		(16,218)
Operating lease liabilities	(15,294)		(12,323)
Cash provided by (used in) operating activities	30,150		(84,914)
Cash flows from investing activities:
Purchases of property, equipment, and software	(7,983)		(16,076)
Proceeds from disposal of property and equipment	—		25
Other	—		(116)
Cash used in investing activities	(7,983)		(16,167)
Cash flows from financing activities:
Proceeds from notes issuance	350,000		—
Proceeds from bank borrowings	40,000		145,000
Repayments of bank borrowings	(220,000)		—
Deferred debt issuance costs	(7,531)		(475)
Repurchases of common stock	(50,000)		(39,159)
Repurchases of common stock for tax withholding	(10,462)		(2,573)
Other	236		331
Cash provided by financing activities	102,243		103,124
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(2,437)		(3,496)
Net change in cash, cash equivalents, and restricted cash	121,973		(1,453)
Cash, cash equivalents, and restricted cash—beginning of period	139,273		112,045
Cash, cash equivalents, and restricted cash—end of period	$	261,246	$	110,592

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

5

CROCS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Our reportable operating segments include: the Americas, operating in North and South America; Asia Pacific, operating throughout Asia, Australia, and New Zealand; and Europe, Middle East, and Africa (“EMEA”), operating throughout Europe, Russia, the Middle East, and Africa. See Note 14 — Operating Segments and Geographic Information for additional information.

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

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

Reclassifications

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

Use of Estimates

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

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

	Three Months Ended March 31,
	2021		2020
	(in thousands)
Accrued purchases of property, equipment, and software	$	15,502	$	5,244

6

2. RECENT ACCOUNTING PRONOUNCEMENTS

New Accounting Pronouncement Adopted

Simplifying Accounting for Income Taxes

In December 2019, the FASB issued new guidance to simplify the accounting for income taxes by removing certain exceptions to the general principles and also simplification of areas such as franchise taxes, intra-period income tax expense allocation exceptions, and interim recognition of enactment of tax laws or rate changes. On January 1, 2021, we adopted this guidance. The adoption did not have a material effect on our condensed consolidated financial statements.

New Accounting Pronouncements Not Yet Adopted

Reference Rate Reform

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

Other Pronouncements

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

3. ACCRUED EXPENSES AND OTHER LIABILITIES

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

	March 31, 2021		December 31, 2020
	(in thousands)
Accrued compensation and benefits	$	29,472	$	48,870
Professional services	14,533		18,478
Fulfillment, freight, and duties	24,606		17,868
Sales/use and value added taxes payable	13,782		12,480
Return liabilities	8,058		6,906
Royalties payable and deferred revenue	5,794		6,254
Accrued rent and occupancy	3,610		3,818
Other	11,304		12,030
Total accrued expenses and other liabilities	$	111,159	$	126,704

7

4. LEASES

Right-of-Use Assets and Operating Lease Liabilities

Amounts reported in the condensed consolidated balance sheets were:

	March 31, 2021		December 31, 2020
	(in thousands)
Assets:
Right-of-use assets	$	179,785	$	167,421
Liabilities:
Current operating lease liabilities	$	48,330	$	47,064
Long-term operating lease liabilities	165,818		146,401
Total operating lease liabilities	$	214,148	$	193,465

Lease Costs and Other Information

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

	Three Months Ended March 31,
	2021		2020
	(in thousands)
Operating lease cost	$	14,832	$	14,994
Short-term lease cost	1,441		1,325
Variable lease cost	3,648		1,500
Total lease costs	$	19,921	$	17,819

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

	Three Months Ended March 31,
	2021		2020
	(in thousands)
Cash paid for operating leases	$	15,426	$	12,293
Right-of-use assets obtained in exchange for operating lease liabilities	35,552		24,790

The weighted average remaining lease term and discount rate related to our lease liabilities as of March 31, 2021 were 7.0 years and 4.2 %, respectively. As of March 31, 2020, the weighted average remaining lease term and discount rate related to our lease liabilities were 6.3 years and 4.7%, respectively.

Maturities

The maturities of our operating lease liabilities were:

	As of March 31, 2021
	(in thousands)
2021 (remainder of year)	$	39,865
2022	45,622
2023	34,750
2024	24,114
2025	17,957
Thereafter	85,814
Total future minimum lease payments	248,122
Less: imputed interest	(33,974)
Total operating lease liabilities	$	214,148

8

Lease Commencements

In the first quarter of 2021, the lease for a new distribution center in Dordrecht, the Netherlands commenced, the impact of which is included in the above lease disclosures.

Leases That Have Not Yet Commenced

As of March 31, 2021, we had significant obligations for a lease not yet commenced related to the expansion of our Americas distribution center in Dayton, Ohio. The total contractual commitment related to the lease, with payments expected to begin in the first quarter of 2022 and continue through September 2030, is approximately $31 million.

5. FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

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

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

Our borrowing instruments are recorded at their carrying values in the condensed consolidated balance sheets, which may differ from their respective fair values. In the three months ended March 31, 2021, we completed the issuance and sale of $350.0 million aggregate principal amount of 4.250% Senior Notes (the “Notes”), which are classified as Level 1 of the fair value hierarchy and are reported in our condensed consolidated balance sheet at face value, less unamortized issuance costs. See Note 7 — Long-Term Borrowings for more information. The carrying and fair values of our outstanding borrowings at March 31, 2021 and December 31, 2020 were:

	March 31, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in thousands)
Senior notes issuance	$	350,000	$	342,781	$	—	$	—
Revolving credit facilities	—		—		180,000		180,000

Non-Financial Assets and Liabilities

Our non-financial assets, which primarily consist of property and equipment, right-of-use assets, goodwill, and other intangible assets, are not required to be carried at fair value on a recurring basis and are reported at carrying value. The fair values of these assets are determined based on Level 3 measurements, including estimates of the amount and timing of future cash flows based upon historical experience, expected market conditions, and management’s plans. Impairment expense is reported in ‘Selling, general and administrative expenses’ in our condensed consolidated statements of operations. We did not record impairment expense in the three months ended March 31, 2021 or 2020.

6. DERIVATIVE FINANCIAL INSTRUMENTS

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

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

9

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

Results of Derivative Activities

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

	March 31, 2021				December 31, 2020
	Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
	(in thousands)
Forward foreign currency exchange contracts	$	1,540	$	(1,043)	$	794	$	(1,225)
Netting of counterparty contracts	(1,043)		1,043		(794)		794
Foreign currency forward contract derivatives	$	497	$	—	$	—	$	(431)

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

	March 31, 2021				December 31, 2020
	Notional		Fair Value		Notional		Fair Value
	(in thousands)
Euro	$	22,924	$	312	$	28,851	$	(82)
Singapore Dollar	49,022		(482)		24,211		457
Indian Rupee	11,854		(103)		18,937		(134)
Japanese Yen	23,973		906		17,447		(240)
British Pound Sterling	6,902		(327)		16,134		(182)
South Korean Won	13,870		101		3,741		(56)
Other currencies	16,694		90		9,675		(194)
Total	$	145,239	$	497	$	118,996	$	(431)
Latest maturity date	April 2021				January 2021

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

	Three Months Ended March 31,
	2021		2020
	(in thousands)
Foreign currency transaction gains (losses)	$	(851)	$	1,027
Foreign currency forward exchange contracts gains (losses)	347		(1,258)
Foreign currency losses, net	$	(504)	$	(231)

10

7. LONG-TERM BORROWINGS

Our borrowings were as follows:

	Maturity	Stated Interest Rate		Effective Interest Rate		March 31, 2021		December 31, 2020
						(in thousands)
Notes issuance of $350.0 million	2029	4.250	%	4.64	%	$	350,000	$	—
Revolving credit facilities						—		180,000
Total face value of long-term borrowings						350,000		180,000
Less:
Unamortized issuance costs						8,897		—
Current portion of borrowings						—		—
Total long-term borrowings						$	341,103	$	180,000

Senior Revolving Credit Facility

In July 2019, the Company and certain of our subsidiaries (the “Borrowers”) entered into a Second Amended and Restated Credit Agreement (as amended, the “Credit Agreement”), with the lenders named therein and PNC Bank, National Association, as a lender and administrative agent for the lenders, which provided for a revolving credit facility of $500.0 million, which can be increased by an additional $100.0 million subject to certain conditions (the “Facility”). Borrowings under the Credit Agreement bear interest at a variable rate based on (A) a domestic base rate (defined as the highest of (i) the Federal Funds open rate, plus 0.25%, (ii) the Prime Rate, and (iii) the Daily LIBOR rate, plus 1.00%), plus an applicable margin ranging from 0.25% to 0.875% based on our leverage ratio, or (B) a LIBOR rate, plus an applicable margin ranging from 1.25% to 1.875% based on our leverage ratio. Borrowings under the Credit Agreement are secured by all of the assets of the Borrowers and guaranteed by certain other subsidiaries of the Borrowers.

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

As of March 31, 2021, the total commitments available from the lenders under the Facility were $500.0 million. At March 31, 2021, we had no outstanding borrowings and $0.3 million in outstanding letters of credit under the Facility, which reduces amounts available for borrowing under the Facility. As of March 31, 2021 and December 31, 2020, we had $499.7 million and $319.4 million, respectively, of available borrowing capacity under the Facility.

Asia Revolving Credit Facilities

We have two revolving credit facilities in Asia, the revolving credit facility with China Merchants Bank Company Limited, Shanghai Branch, which provides up to 30.0 million RMB, or $4.6 million at current exchange rates, and matures in May 2021, and the revolving credit facility with Citibank (China) Company Limited, Shanghai Branch, which provides up to an equivalent of $5.0 million and matures in June 2021.

We had no borrowings under our Asia revolving facilities during the three months ended March 31, 2021 and year ended December 31, 2020 or borrowings outstanding at March 31, 2021 and December 31, 2020.

Senior Notes Issuance

On March 12, 2021, the Company completed the issuance and sale of $350.0 million aggregate principal amount of 4.250% Senior Notes due March 15, 2029 (the “Notes”), pursuant to the indenture related thereto (“the Indenture”). Interest on the Notes is payable semi-annually.

11

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

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

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

8. COMMON STOCK REPURCHASE PROGRAM 

During the three months ended March 31, 2021, we repurchased 1.1 million shares of our common stock at a cost of $50.0 million, including commissions. This includes 0.5 million shares received in January 2021 at the conclusion of the purchase period for an accelerated share repurchase agreement we entered into in November 2020. During the three months ended March 31, 2020, we repurchased 1.6 million shares of our common stock at a cost of $39.2 million, including commissions.

As of March 31, 2021, we had remaining authorization to repurchase approximately $287.8 million of our common stock, subject to restrictions under our Notes and Credit Agreement. In April 2021, the Board of Directors (the “Board”) approved a $712.2 million increase to our share repurchase authorization, after which $1.0 billion remained available for future common stock repurchases.

9. REVENUES

Revenues by reportable operating segment and by channel were:

	Three Months Ended March 31, 2021
	Americas		Asia Pacific		EMEA		Unallocated Corporate and Other		Total
	(in thousands)
Channel:
Wholesale	$	144,773	$	58,624	$	86,604	$	38	$	290,039
Direct-to-consumer (1)	131,636		23,968		14,455				170,059
Total revenues	$	276,409	$	82,592	$	101,059	$	38	$	460,098

12

	Three Months Ended March 31, 2020
	Americas		Asia Pacific		EMEA		Unallocated Corporate and Other		Total
	(in thousands)
Channel:
Wholesale	$	90,805	$	45,580	$	56,711	$	76	$	193,172
Direct-to-consumer (1)	56,918		19,880		11,190				87,988
Total revenues	$	147,723	$	65,460	$	67,901	$	76	$	281,160

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

During the three months ended March 31, 2021, we recognized no changes to estimates for wholesale revenues and no changes to estimates for direct-to-consumer revenues. During the three months ended March 31, 2020, we recognized an increase of $0.5 million to wholesale revenues due to changes in estimates related to products transferred to customers in prior periods and no changes to estimates for direct-to-consumer revenues.

There were no material changes in contract liabilities or refund liabilities in the three months ended March 31, 2021 or 2020.

10. SHARE-BASED COMPENSATION

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

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

	Three Months Ended March 31,
	2021		2020
	(in thousands)
Cost of sales	$	86	$	146
Selling, general and administrative expenses	7,968		3,818
Total share-based compensation expense	$	8,054	$	3,964

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

The grant date fair value and derived service period for the market-condition RSUs granted on January 11, 2021 (“January market-condition RSUs”) were estimated using a Monte Carlo simulation valuation model. The grant date fair value for the January market-condition RSUs was $21.9 million. As of March 31, 2021, unrecognized share-based compensation for the January market-condition RSUs, which are expected to be recognized through March 2024 based on the Monte Carlo valuation model, was $18.6 million.

13

11. INCOME TAXES

Income tax expense and effective tax rates were:

	Three Months Ended March 31,
	2021			2020
	(in thousands, except effective tax rate)
Income before income taxes	$	122,588		$	18,778
Income tax expense	24,190			7,687
Effective tax rate	19.7		%	40.9		%

The decrease in the effective tax rate for the three months ended March 31, 2021, compared to the same period in 2020, was driven primarily by the realization of deferred tax assets which were subject to a valuation allowance. Our 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, as well as the realization of deferred tax assets which were subject to a valuation allowance. There were no significant or unusual discrete tax items during the three months ended March 31, 2021. We had unrecognized tax benefits of $198.0 million and $206.2 million at March 31, 2021 and December 31, 2020, respectively, and we do not expect any significant changes in unrecognized tax benefits in the next twelve months.

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

We evaluate our ability to realize the tax benefits associated with deferred tax assets by analyzing our forecasted taxable income by considering both historical and projected future operating results, the reversal of existing temporary differences, taxable income in prior carry back years (if permitted) and the availability of tax planning strategies. As of March 31, 2021, valuation allowances remain in certain jurisdictions where we believe it is necessary to see further positive evidence, such as sustained achievement of cumulative profits, before these valuation allowances can be released. Given the current significant earnings trend, sufficient positive evidence may become available for us to release a portion of the valuation allowance within twelve months. However, the exact timing and amount of the valuation allowance releases are subject to change based on the level of profitability achieved in future periods. We will continue to assess the realizability of our deferred tax assets.

12. EARNINGS PER SHARE

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

	Three Months Ended March 31,
	2021		2020
	(in thousands, except per share data)
Numerator:
Net income	$	98,398	$	11,091
Denominator:
Weighted average common shares outstanding - basic	65,458		67,931
Plus: Dilutive effect of stock options and unvested restricted stock units	1,390		1,287
Weighted average common shares outstanding - diluted	66,848		69,218
Net income per common share:
Basic	$	1.50	$	0.16
Diluted	$	1.47	$	0.16

For the three months ended March 31, 2021, an aggregate of 0.1 million options and restricted stock units (“RSUs”) were excluded from the calculation of diluted EPS because the effect was anti-dilutive. For the three months ended March 31, 2020, less than 0.1 million options and RSUs were excluded from the calculation of diluted EPS because the effect was anti-dilutive.

14

13. COMMITMENTS AND CONTINGENCIES

Purchase Commitments

As of March 31, 2021, we had purchase commitments to third-party manufacturers, primarily for materials and supplies used in the manufacture of our products, for an aggregate of $228.6 million. We expect to fulfill our commitments under these agreements in the normal course of business, and as such, no liability has been recorded.

Other

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

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

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

14. OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION

We have three reportable operating segments based on the geographic nature of our operations: Americas, Asia Pacific, and EMEA. Each of the reportable operating segments derives its revenues from the sale of footwear and accessories to external customers.

Segment performance is evaluated based on segment results without allocating corporate expenses, or indirect general, administrative, and other expenses. Segment profits or losses include adjustments to eliminate inter-segment sales. Reconciling items between segment income from operations and income from operations consist of unallocated corporate and other expenses, as well as inter-segment eliminations.

In the first quarter of 2021, certain costs previously reported within ‘Other Businesses’ were shifted to the Americas, Asia Pacific, and EMEA segments, as applicable, to reflect changes in the way management evaluates segment performance, makes operating decisions, and allocates resources. Additionally, any costs remaining in ‘Other Businesses,’ including depreciation and amortization, have been consolidated into ‘Unallocated corporate and other.’ The previously reported amounts for income from operations for the three months ended March 31, 2020 have been revised to conform to current period presentation, as shown in the following tables.

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

15

The following tables set forth information related to reportable operating segments:

	Three Months Ended March 31,
	2021		2020
	(in thousands)
Revenues:
Americas	$	276,409	$	147,723
Asia Pacific	82,592		65,460
EMEA	101,059		67,901
Total segment revenues	460,060		281,084
Unallocated corporate and other (2)	38		76
Total consolidated revenues	$	460,098	$	281,160
Income from operations:
Americas (1)	$	118,344	$	39,946
Asia Pacific (1)	23,293		9,246
EMEA (1)	37,113		17,845
Total segment income from operations	178,750		67,037
Reconciliation of total segment income from operations to income before income taxes:
Unallocated corporate and other (1)(2)	(54,064)		(46,225)
Income from operations	124,686		20,812
Foreign currency losses, net	(504)		(231)
Interest income	27		97
Interest expense	(1,632)		(1,921)
Other income, net	11		21
Income before income taxes	$	122,588	$	18,778
Depreciation and amortization:
Americas	$	943	$	854
Asia Pacific	287		279
EMEA	166		176
Total segment depreciation and amortization	1,396		1,309
Unallocated corporate and other (1)(2)	6,658		5,598
Total consolidated depreciation and amortization	$	8,054	$	6,907

(1) In the first quarter of 2021, certain costs previously reported within ‘Other Businesses’ were shifted to the Americas, Asia Pacific, and EMEA segments. Additionally, any costs remaining in ‘Other Businesses,’ including depreciation and amortization, have been consolidated into ‘Unallocated corporate and other.’ The previously reported amounts for income from operations for the three months ended March 31, 2020 have been revised to conform to current period presentation. See the ‘Impacts of segment composition change’ table below for more information.

(2) Unallocated corporate and other primarily includes corporate support and administrative functions, certain royalty income, costs associated with share-based compensation, research and development, brand marketing, legal, and depreciation and amortization of corporate and other assets not allocated to operating segments.

16

Impacts of segment composition change:

	Three Months Ended March 31, 2020
	(in thousands)
Impacts on income from operations:
Americas	$	(6,716)
Asia Pacific	(178)
EMEA	200
Total impact on segment income from operations	$	(6,694)
Unallocated corporate and other	$	6,694

15. LEGAL PROCEEDINGS

We were subject to an audit by the Brazilian Federal Tax Authorities related to imports of footwear from China between 2010 and 2014. On January 13, 2015, we were notified about the issuance of assessments totaling 14.4 million Brazilian Real (“BRL”), or approximately $2.6 million at current exchange rates, plus interest and penalties, for the period January 2010 through May 2011. We disputed these assessments and asserted defenses to the claims. On February 25, 2015, we received additional assessments totaling 33.3 million BRL, or approximately $5.9 million at current exchange rates, plus interest and penalties, related to the remainder of the audit period. We also disputed these assessments and asserted defenses to these claims in administrative appeals. On August 29, 2017, we received a favorable ruling on our appeal of the first assessment, which dismissed all fines, penalties, and interest. The tax authorities have appealed that decision and we challenged the appeal on both the merits and procedure. Additionally, the second appeal for the remaining assessments was heard on March 22, 2018. That decision was partially favorable for us and resulted in an approximately 38% reduction in principal, penalties, and interest. The tax authorities have appealed that decision, and we filed a response to the tax authorities’ appeal as well as a separate appeal against the unfavorable portion of the ruling. Taking current rulings into consideration, we estimate the remaining principal for these assessments to be $4.4 million, plus interest and penalties. Should the Brazilian Tax Authority prevail in these final administrative appeals, we may challenge the assessments through the court system, which would likely require the posting of a bond. We have not recorded these items within the condensed consolidated financial statements as it is not possible at this time to predict the timing or outcome of this matter or to estimate a potential amount of loss, if any.

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

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

17

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

Business Overview

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

Known or Anticipated Trends

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

•Our revenue grew in the three months ended March 31, 2021, despite challenging global logistics that impacted many industries around the world, including the blockage of the Suez Canal, which we expect to have a more significant impact on operations in the second quarter of 2021, and significant bottlenecks in West Coast ports, which had an impact on first quarter 2021 operations and is expected to continue to impact future quarters this year. We continue to be proactive in our supervision of this global logistics congestion.

•Our new EMEA distribution center in Dordrecht, the Netherlands, opened in the three months ended March 31, 2021 and the expansion of our U.S. distribution center is underway. In 2021, we expect an impact to gross margin of approximately $12 to $15 million related to distribution center investments to fuel our future growth.

•Capital expenditures for supply chain investments to support our growth are expected to be between $100 and $130 million for 2021.

•Digital sales, which include sales through our company-owned websites, third party marketplaces, and e-tailers, continued to show significant growth in the three months ended March 31, 2021 compared to the same period in 2020. We expect this trend to continue on an ongoing basis.

•While the vast majority of our company-operated retail stores were open at March 31, 2021, we continued to experience store closures, primarily in Western Europe, throughout the first quarter of 2021, as a result of the COVID-19 pandemic. Additionally, our year-over-year results discussed below are, and we expect for the remainder of 2021 will be, impacted to some extent by prior year store closures and operating hour reductions during COVID-19.

•In April 2021, the Board of Directors (the “Board”) approved a $712.2 million increase to our share repurchase authorization, after which $1.0 billion remained available for future common stock repurchases.

Use of Non-GAAP Financial Measures

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

Management uses constant currency to assist in comparing business trends from period to period on a consistent basis in communications with the Board, stockholders, analysts, and investors concerning our financial performance. We believe constant currency is useful to investors and other users of our condensed consolidated financial statements as an additional tool to evaluate operating performance and trends. Investors should not consider constant currency in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP.

18

First Quarter 2021 Financial and Operational Highlights

Revenues were $460.1 million for the first quarter of 2021, a 63.6% increase compared to the first quarter of 2020. The increase was due to the net effects of: (i) higher unit sales volumes, which increased revenues by $158.3 million, or 56.3%, driven by increased consumer demand for our product, a portion of which was due to improved sales in our wholesale and retail businesses as the pandemic subsides, and continued e-commerce growth; (ii) higher average selling prices, driven primarily by reduced promotions and higher pricing, which increased revenues by $12.0 million, or 4.2%; and (iii) favorable changes in exchange rates, which increased revenues by $8.6 million, or 3.1%.

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

•We sold 25.9 million pairs of shoes worldwide, an increase from 17.1 million pairs in the first quarter of 2020.

•Revenues in our Americas segment grew by 87.1%. Our EMEA segment revenues grew by 48.8%, or 41.0% on a constant currency basis, and our Asia segment revenues grew by 26.2%, or 20.1% on a constant currency basis, compared to the first quarter of 2020.

•Digital sales represented 32.3% of revenue, compared to 30.1% in last year’s first quarter.

•Gross margin was 55.0%, an increase of 730 basis points from last year’s first quarter, as a result of favorable channel and product mix, reduced discounting, and efficiencies in our distribution and logistics network.

•SG&A was $128.5 million compared to $113.4 million in the first quarter of 2020. As a percent of revenues, SG&A decreased to 27.9% of revenues compared to 40.3% of revenues in the first quarter of 2020.

•Income from operations increased to $124.7 million from $20.8 million in last year’s first quarter. Net income was $98.4 million, or $1.47 per diluted share, compared to $11.1 million, or $0.16 per diluted share, in last year’s first quarter.

•We repurchased 1.1 million shares of our common stock at a cost of $50.0 million, including commissions. This includes 0.5 million shares delivered in January 2021 at the conclusion of the purchase period for an accelerated share repurchase arrangement (“ASR”) entered into in the fourth quarter of 2020.

•During the first quarter, we issued $350.0 million of 4.250% senior notes due 2029 and repaid the then-outstanding balance of $115.0 million under our senior revolving credit facility with a portion of the proceeds. At March 31, 2021, we had $499.7 million in available borrowing capacity.

19

Results of Operations

	Three Months Ended March 31,						% Change Favorable (Unfavorable)
	2021			2020
	(in thousands, except per share, margin, and average selling price data)
Revenues	$	460,098		$	281,160		63.6	%
Cost of sales	206,879			146,998			(40.7)	%
Gross profit	253,219			134,162			88.7	%
Selling, general and administrative expenses	128,533			113,350			(13.4)	%
Income from operations	124,686			20,812			499.1	%
Foreign currency losses, net	(504)			(231)			(118.2)	%
Interest income	27			97			(72.2)	%
Interest expense	(1,632)			(1,921)			15.0	%
Other income, net	11			21			(47.6)	%
Income before income taxes	122,588			18,778			552.8	%
Income tax expense	24,190			7,687			(214.7)	%
Net income	$	98,398		$	11,091		787.2	%
Net income per common share:
Basic	$	1.50		$	0.16		837.5	%
Diluted	$	1.47		$	0.16		818.8	%
Gross margin (1)	55.0		%	47.7		%	730	bp
Operating margin (1)	27.1		%	7.4		%	1,970	bp
Footwear unit sales	25,908			17,100			51.5	%
Average footwear selling price - nominal basis (2)	$	17.64		$	16.35		7.9	%

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

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

Revenues By Channel

	Three Months Ended March 31,				% Change		Constant Currency % Change (1)
	2021		2020		Favorable (Unfavorable)
	(in thousands)
Wholesale:
Americas	$	144,773	$	90,805	59.4	%	60.4	%
Asia Pacific	58,624		45,580		28.6	%	23.1	%
EMEA	86,604		56,711		52.7	%	44.2	%
Unallocated corporate and other	38		76		(50.0)	%	(50.0)	%
Total wholesale	290,039		193,172		50.1	%	46.8	%
Direct-to-consumer (2):
Americas	131,636		56,918		131.3	%	130.9	%
Asia Pacific	23,968		19,880		20.6	%	13.2	%
EMEA	14,455		11,190		29.2	%	24.5	%
Total direct-to-consumer	170,059		87,988		93.3	%	90.8	%
Total revenues	$	460,098	$	281,160	63.6	%	60.5	%

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

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

20

The primary drivers of changes in revenue were:

	Three Months Ended March 31, 2021 vs. 2020
	Volume				Price (1)			Foreign Exchange		Total
	$ Change		% Change		$ Change		% Change	$ Change	% Change	$ Change	% Change
	(in thousands)
Total revenues	$	158,331	56.3	%	$	11,962