Good afternoon, ladies and gentlemen, thank you for standing by. Welcome to the Crocs, Inc. Fiscal 2009 Fourth Quarter Earnings Call. At this time, all participants are in a listen- only mode. Following the presentation we’ll conduct a Question-and-Answer session. Instructions will be provided at that time for you to queue up for questions. I would like to remind everyone that this conference is being recorded. This call will end no later than 6 p.m. Eastern Time. I will now like to hand the call over to Ms. Jennifer Almquist, Crocs' Director of Investor Relations.

Thank you. Good afternoon and thank you for tuning into our fourth quarter earnings conference call. On the call today with me are John Duerden, Crocs' President and Chief Executive Officer, John McCarvel, Crocs' Chief Operating Officer and newly designated Chief Executive Officer and Russ Hammer, Crocs' Chief Financial Officer. Earlier this afternoon, Crocs announced its fourth quarter 2009 financial results. A copy of the press release can be found on the Company's website www.crocs.com. Reconciliations of the non-GAAP measures mentioned in the press release and on the call today have been provided and can be found on the Investor Relations section of the Crocs’ website and in this afternoon's press release. Before we begin I would like to remind everyone that some of the information provided in this call will be forward looking and, accordingly, are subject to the safe harbor provisions of federal securities laws. These statements concern plans, beliefs, forecasts, guidance, projections, expectations and estimates for future operations. Crocs cautions you that these statements are subject to a number of risks and uncertainties described in the Risk Factors section of our 2009 Annual Report on Form 10-K, filed today with the Securities and Exchange Commission. Accordingly, actual results could differ materially from those described on this call. Those listening to this call are advised to refer to Crocs Annual Report on Form 10-K, as well as other documents filed with the SEC for additional discussion of these risk factors. Crocs’ intends that all of its forward-looking statements in this call will be protected by the Safe Harbor provisions of the Securities Exchange Act of 1934. Crocs is not obligated to updates its forward-looking statements to reflect the impact of future events. I would now like to turn the call over to John Duerden, Chief Executive Officer of Crocs. Please go ahead, John.

Thank you, Jennifer and welcome everyone. I’m sure by now you’ve probably read the announcement that I’ll be retiring from the company and the John McCarvel the company’s Chief Operating Officer will be replacing me of CEO. Many of you are already know John was being with the company through out its short history and has played key role in Crocs’ recovery over the past 18 months. John and I worked closely together during the past year, as we have completed the critical first stage of this turnaround. I believe that John's experience and history in the company uniquely qualified him for this new appointment and provide the essential continuity to complete this next stage of the Company's development. He also has the benefit for being somewhat younger than I am and is well equipped of leading a truly global enterprise. Congratulations John and good luck in your new appointment. Before handing it over to Russ and John, I’d like to briefly review the highlights of the last quarter and some of our 2009 accomplishments. Now looking back, it’s hard to believe on the one hand, that I’ve already been here a year, on the other hand when I think about where the company has come from since that time it's hard to believe that only one year has passed. The company is undergone and is still undergoing significant change. And some of the fruits of our labor have manifested themselves in our Q4 results. Let me cover some of the highlights. Our Q4 revenue was up 8% from the fourth quarter year ago. Demonstrating I think continued strength of the brand despite a difficult economic environment and lingering legacy issues for the company at wholesale. I should add that we achieved this growth without making any significant new investments…

Thanks, John. Good afternoon everyone and thanks for joining us. Before I get started, John just mentioned with the filing of our 10-K today, we officially no longer were going concerned opinion of test our financial statements. As you know the order is only a pine once a year and we’re pleased with this year’s opinion does not include that disclaimer. We believe this to be the results of considerable efforts by the Crocs team to clean up the balance sheet, better align our costs and stabilize the company, because this quarter marks the end of our fiscal year, I will be providing Q4 and full year results during the call today. As I’ve done in the past, I will provide year-over-year comparisons to context and were appropriate, provide some sequential comparisons as well as a channel breakdown to provide additional clarity. You will note that we began breaking out our geographic segments beginning with the 10-K we filed fire today. I'll include some segment discussion today as well. Now for a quick overview of our financials. Revenue for the quarter came in ahead of expectations once again at $136 million this is an increase of nearly $10 million or 7.9% over Q4 of last year. Full year 2009 revenue was $645.8 million compared to $721.6 million for the full 2008 fiscal year. Provide clarity and better understanding of our business, our review both channel and geographic revenue performance. I’ll start my revenue discussion by first looking at revenue by channel, which includes Crocs’ consumer direct retail and Internet channels as well as our wholesale channel. On a consolidated basis, revenue generated by our company owned retail stores in the fourth quarter was $43.8 million, a 26% increase over the fourth quarter of last year. For the full 2009 fiscal…

Thanks, Russ. I will give a quick strategic and operational update and then will open up the call for questions. 2009 was a turning point for the company, we successfully executed the initial phases of our strategic turnaround plans and we believe we have stabilized many aspects of the company. Most notably, we strengthened the balance sheet, improved our liquidity position, attack our cost structure, exited marginal distribution channel. We also made significant strides in expanding our product line, improving the process by which we bring products to markets and growing our consumer direct business. We ended the year ahead of schedule in our turn around efforts and in January, we announced that we expect to be profitable for the fiscal 2010. Solid progress and a critical first step in securing the solid foundation for the Crocs brand. Our primary focus in 2010 will be restoring profitability. I see five primary objectives from getting to that goal. First, we must bring compelling new products to the market. Second, we must continue to find innovative ways to engage the customer. Third, we must keep the top line moving again, especially with our wholesale partners and especially in the U.S. and Europe. Fourth, we will continue to focus on our business structure and need to further improve margins and effectively manage our SG&A cost. Finally, we will continue to invest in our enterprise wide business system, technology and people necessary to become a leader in the casual, comfort shoe market. Success against these objectives hinges on our ability to manage four key elements, product design and development, channel development, regional development and the operating model to which we drive the company. I’ll start with product development. Crocs is clearly a product driven company the vitality of the Crocs brand has always relied…

(Operator Instructions). We’ll take our first question from Reed Anderson - D.A. Davidson.

A couple of questions, Russ on the gross margin piece, we saw last quarter certainly a much better margin, obviously it’s a different quarter seasonally, et cetera. But just given where the mix went in terms of direct business, I was struck that it wasn’t higher gross margin, I’m just wondering whether what are the factors who were playing there? And then secondly, how should we think about 2010 gross margins relative to what we’ve seen here recently?

As I said, we had some impairment particularly the Europe warehouse in the fourth quarter. We still had some inefficiencies that were hurting us as we were closing down those warehouse facilities. As we think about 2010, I think that we will continue to see progress from all the actions that we took in 2009 and you will continue to see improving margins as we move towards our longer term goal of the low 50s in our margins.

It is fair to add there that I think we all saw a very competitive landscape in the U.S. for retail in the fourth quarter.

Okay, so that was probably a contributing factor versus may be what we might have thought a few months back. And then related to that, obviously, when you look at the perfect mix you talk about, the direct piece of your business, it should look like this on a normalized basis going forward does continue to grow every quarter. And I guess is it your thought that at some point in 2010 we hit an inflection and that will then start to level off or should we think about that based on what you are doing for initiatives will continue to grow as a piece of the mix in 2010 as well?

Reed, we think that our retail business as we’ve said will continue to selectively grow globally, primarily in the U.S., a little bit in Europe and in Asia. We are being pretty selective there, so we are not going after extremely high growth there, but we also see our wholesale business recovering. As we mentioned, we have a very strong backlog as we enter into the first quarter and second quarter here from our wholesale customers as a result of our pre book program. So we think that that mix on average will stay in that 60:40 range. We are global business and would be around that 40% mix and our wholesale business be about 60, that could swing a little bit, but that should be the right mix.

Just a couple more, I know you don't want to give exact numbers like you did in third quarter Russ, but was there discontinued impaired product sales in the fourth quarter, was there any of that?

There was a little bit, but very small.

Okay. And then in terms of the store base, moving away from the kiosk, et cetera, I think last quarter you talked about roughly maybe 40 or 50 kiosk probably at some point should be shuttered maybe in the next 12 to 18 months, what’s the update there? Have we done much on that, is that still kind of out there?

So, our kiosk have gone, just to give you a flavor on that Reed, from 116 at the end of Q3 ‘09 to 96 at the end of Q4 ‘09. So we made progress on it and we’re again going to keep watching each location globally, whether it’s a strategic geographic location, whether we are putting a branded store in there or an outlet store and continue on the focus of having our own branded store in front of the consumer.

Okay, one last one I promise. Then in terms of you’ve talked -- everyone sort of mentioned that advertising marketing, you’ll invest more there this year, just curious what was if you looked at just however you want to classify it, whether it’s marketing or advertising, year-over-year what was the decline you saw in 2009 and what's the reasonable expectation as we look at '10 in terms of that going up?

Our advertising in 2009 came down about $15 million advertising and promotional over 2008 and our advertising should be pretty flat to slightly up in 2009 in dollars.

But I think, Reed, what’s you’re saying is that it's a major shift in how we’ve spent that money, so in 2009 we still had the final year of the AVP sponsorship and so there was a significant spend in sponsorship; most of that goes away in 2010 and it ships all to pure advertising brand building co-op marketing dollars with our key wholesale partners. So in dollars it’s roughly the same, slightly up, but it’s a shift in spend.

And I think, Reed, that’s again an important point John brings up, as we said in the last call and at ICR, our focus is to shift that investment more to consumer direct marketing.

Your next question is from Jeff Klinefelter - Piper Jaffray.

First off just I think congratulations to John Duerden for your accomplishments here, your leadership in helping the organization accomplish a lot in the first year, so congrats on that. Second would be, Russ many be digging in a little bit more to the backlog again can you share the numbers, again in the backlog this year versus last year and then could you provide a little bit more context on how we should differentiate the two numbers. Because I believe there was a pretty healthy increase in the amount of pre-booking as you’ve mentioned. So it's not necessarily directly comparable to last year, but can you help put that in context and how we should view the two?

Our backlog at the end of 2009 is $165 million versus, it’s about a 46% increase over 2008. If you think about our backlog which is as you said, primarily a reflection of our pre-book program in 2009 for our spring and summer deliveries is in the first half. I think you can think of backlog maybe to help you guys to model is about 70% of that is first quarter and 30% of that is second quarter as far as how it’s scheduled to ship to our customers.

Okay. And then in terms of, Russ, I think this one is for you, but in terms of Q1 we have been talking a lot about breakeven points as you have been marking your way across to this recovery path and I thought that around a 150ish million was sort of a breakeven point, is there something else going on in Q1 that would prevent you from delivering a little bit higher earnings per share?

No Jeff, we think that we will have pre-tax operating profit in the quarter. As you know our tax rate is dependant on the countries where we make our profit in as well as provisions where we have loss carry back. So when you get into small profit dollars in millions by country, you could have a pre-tax profit and a tax expense which could exceed it depending on where your profits are made. So for modeling purpose we said, use a 30% tax rate, that could be different by 10 points depending on where our profit is made. But we do see that we will probably have an operational profit in the quarter, and then the tax rate could swing that close to a break-even, but our breakeven point is within the range of what you were talking about there may be a little higher.

Okay, couple of more things, in terms of a full year outlook, maybe for Russ and John, how do you want us to be thinking about this in terms of a top line growth rate, I mean you have a healthy, it looks like almost kind of high-teens growth rate here in top line if you take the upper end of your guide for Q1 with a healthy pre-book profitable for the year I think as you mentioned John, but also we’ve talked about trying to achieve profitability for all four quarters. At this point, given what’s happened even in Q1 so far to date, how do you feel about a top line rate of growth for the year and potential leverage points in your margin for the year?

Jeff, I’ll take that, it’s Russ. I think John and I’ve discussed this and we believe right now we will see a modest top line growth probably in mid single digit top line growth. We see our gross margins continuing to recover as we benefit from our cost actions, which will bring us closer to our long-term goal of the low 50s in our margin as I mentioned previously. And in SG&A as a percent of sales, it will continue to come down, we still have work to do to achieve our long-term target of that mid to upper 30s as John mention and in there SG&A obviously the mix of our retail coming into there we have all of the occupancy cost, et cetera, but higher margins will come into play there. And I guess for the full year for modeling purposes we are expecting a tax rate of approximately 30% if that helps.

Okay, maybe then for John McCarvel as well, congratulations to you too, taking on the new role. In terms of your view of having run Asia really from the start, how do view that market in terms of ongoing growth potential, pockets of growth, and then how will you attempt to translate some of that momentum into the rest of the global regions?

Maybe I’d make one comment first on Q1 just to think about as you view our business and that’s something that I think John and Russ have talked about in the past and that is that we do believe that as we transition from sponsorship based marketing into more advertising and consumer based marketing, that spend is going to come more in the first half the year and maybe we’ll spend more money in SG&A Q1 and Q2 than we may in the back half of the year to really energize the brand. We think we have a very good marketing campaign coming in conjunction with very good new products that in my position have been very well accepted. So, I think our breakeven point there is you alluded to and Russ talked to, space [ph] in that range could be better going forward, the variable aspect of that is going to be what John’s worked on over the last year in really rebuilding the marketing and advertising visions for the brand. Sort of to comeback to your second question here is, I think over the last year, I’ve run all of our regional businesses from sales all the way through profitability and we’ve taken a lot of the lessons that we’ve have learned in Asia about the brand and some of the good things that we have in other markets and we’ve built a very good business strategy in how we go to market and how we take products to market and I think that will impact our businesses in each region more accretively. On the Asian piece of our business, as you know, you’ve seen some of the things that we are doing, we continue to be aggressive with our distributor partners, they continue to build out retail stores in their markets in Indonesia, Malaysia, Thailand, you see a number of Crocs franchise type stores that have sprung up and they’ll continue to invest in the brand and so we think that the brand portion of Crocs in Asia will continue to expand both through our own investment and some internet growth in the region this year which we haven’t build in on the past and with the our distributors really continuing to get behind and build the brand.

(Operator Instructions). Next question comes from Jim Duffy - Thomas Weisel Partners.

Thank you. Let me start by complementing on the progress made on the balance sheet and the expense structure over the course of the year, a big year of accomplishments. Speaking to the CEO transition question, is the business plan for 2010 at this juncture baked, or John, given some of own personal bias as to on the call, do you see some elements of the business plan what you consider to be in flux?

I think that because John and Russ and I and Dan had to work very closely on the strategic plan for 2009 into ‘10 and ‘11 and how we see it executing in ’10, I think you know there will be different variables that can help the business grow at a more rapid manner than what we have projected. And it really is as we talked around the acceptance of our new products and the power of the new advertising campaign that we launched first in the U.S. in March and very closely behind that in April in Europe. So I think that will really help us look at some kind of growth or development in (inaudible) talk about.

Okay, and then may be for Russ or John, specifically on the SG&A line across (inaudible) can you tell us some of the puts and takes, some of the areas for further savings and some of the areas where you see increased investment?

We do see that we’ve leveraged down as I’ve mentioned before both legal and incorporates partnership, trade show expense and we have signed upon the other areas consulting agency fees et cetera, et cetera. I think whereas some of the areas we are going to focusing on the going forward are the back office area as we look at more efficiencies back office opportunities to give more best in class service at best cost quality and service. So, those are some of our other opportunities.

Okay. As you kind of net the two against each other looking at the SG&A line for 2010, is that a line item that can be down on a dollar basis year-to-year or is there incremental investments, which will make us chase a growing top line?

Jim, what we are going to see is we are going to see a reduction in our non consumer direct support costs. As I said on back office that can be in finance, accounting, IT order entry et cetera et cetera. On the retail side of the house we are going to be making some more selective investment. So, overall it will be pretty flat to up as a present and I mean at the dollar amount and then we will leverage that down with our growth in volume.

And then John, you mention some shift in timing of the advertising spend more towards that front half of the year as you evolve the business towards a three season business model, are there any other notable changes in timing of shipments or seasonal influences that we should be considering as a model?

No, we’ve just finished the pre-booking process for our fall winter of 2010 line and we don’t see in our pre-booking any significant shift from more we would shift Q3 and Q4 of for 2010 over 2008 or 2009.

Our final question will come from Jim Chartier - Monness, Crespi and Hardt.

Few questions. Just following up on the last question. Can you tell us with the pre-books are looking like for fall and winter so far?

Our fall winter pre-books, I’ll give you a little bit of flavor in the U.S., our pre-books were up about 70% for the third quarter and so which is primarily our wholesale business in the U.S., it’s looking very strong. We are quite pleased with the progress that we’ve made on our pre-books there.

And then the backlog for the first half of the year, can you give us breakup?

Pickup by region?

No, we don’t have that to breakout right now, but we will provide some color on that on our future calls.

And then can you discuss comp sales in the fourth quarter?

Sure, that’s a great question, thanks. Our U.S. comps as I mentioned on the call were up 12% and we were very, very pleased with that performance. Also I think on a down year we comped up 1% for the year overall in our retail business, so I think that’s a reflection of in a difficult environment the consumer still see as a great value and quality in the Crocs product which is why we’ve seen the comp up in our retail operations.

In terms of store growth, can you give us an idea of where you expect 2010 in terms of numbers of kiosks or price doors, Shop n’ Shop and outlets?

So we have said we are going to see modest growth in our retail business in all three markets in the U.S. in Europe and in Asia we continue to evaluate all of our existing stores was a very rigorous process and we will continue to see a slight shift down on the kiosks and a little more shift towards our branded store and little bit outlets as well. So I think the shift that you saw in third quarter you should continue to see that shift as we go forward.

Okay and then the expected the growth in the retail, is that going to come primarily from comp sales or from new store?

Combination.

I was going to say about half and half to be honest.

Okay I think our expectation for retail this year is somewhere between 40 and 50 stores globally were in 2010.

Great that’s helpful. Finally, can you give us an idea in terms of rebuilding the domestic wholesale business? Have you added any major new accounts that may be you had lost year or how many independent doors you’ve added year-over-year, just give us a flavor there.

I think may be the way to look at that from our perspective is that we have worked diligently to rebuild our relationships with all of our key customers in all different channels for this department for sporting goods or other channel. We have gone back really to the independent channel that started with brand not existing but some of the more trend forward types of retailers that would have carried our products back into 2007, 2008 and may be left us during the time where we were a more less discriminating about where we put our product. And then I think the other way to look at this is, and I mentioned is that, we look at the family channel with the type of key retailers there, the famous footwear, DSW and others that are really the perfect market channel for us to sell product and so we’re building I think good relationship their, emerging relationship there that will help us as we go into ‘11 and ‘12.

At this time, I would like turn the call back over to company management for any additional our closing remarks.

I’ll just sign off I guess (inaudible) one. I think that we’ve had a good year, a really interesting year, I think the management team has come together. I really believe that the handover should be smooth. I see absolutely no reason, we are committed to the plan here and I think entire management team develop the plan has committed to the plan and we will work specially on putting that together and I am confident frankly that Crocs is going to be successful this year. And I am looking forward to observing that from far. So, John, I wish you congratulations and all the best of luck.

Thanks, John.

Thank you all and thank you for following us.

Ladies and gentlemen, that does conclude today's call. Thank you all for your participation.