Welcome to the Crocs Fourth Quarter and Full Year 2012 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time. We ask that in the interest of time, participants limit themselves to one question each. I would like to remind you that this conference is being recorded. It is my pleasure to turn the conference over to William Kent, Senior Director of Investor Relations. Mr. Kent, please go ahead.

Thank you. And thank you all for joining us for our fourth quarter and year end 2012 earnings conference call. Participants from the company include John McCarvel, President and Chief Executive Officer; and Jeff Lasher, Senior Vice President and Chief Financial Officer. During today's call John McCarvel will share some opening remarks, cover fourth quarter and full year highlights and talk briefly on Crocs corporate strategy. Jeff Lasher will review our fourth quarter and full year financial results in detail and cover guidance. John McCarvel will then wrap up our prepared remarks with a few closing comments. Earlier this afternoon, we announced our fourth quarter and full year 2012 financial results. A copy of the press release can be found on our website at crocs.com. We 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 the Federal Security laws. These statements include, but are not limited to, statements regarding future revenue and earnings, backlog and future orders, prospects and product pipeline. We caution you that these statements are subject to a number of risks and uncertainties described in the risk factor section of the company's 2011 report on Form 10-K filed on February 29, 2012 with the Securities and Exchange Commission. Accordingly, actual results could differ materially from those described on this call. Those listening to the 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 and Exchange Act of 1934. Crocs is not obligated to update these forward-looking statements to reflect the impact of future events. The company refer -- may refer to certain non-GAAP metrics on this call including adjusted net income. Explanation of these metrics can be found on the earnings release filed earlier today. I will now turn the call over to John McCarvel.

Thanks Will. And thanks for joining us this afternoon as we discuss our fourth quarter and full year 2012 results, as well as look forward into 2013. 2012 was another milestone year for Crocs. We continue to expand the brand globally, executing on multi-channel strategy, growing our revenue 14% on a currency neutral basis and improving earnings per share by more than 16%. Unit sales of nearly 50 million pairs were up 5% versus last year, improved ASPs up 8% versus last year and global same store sales growth of 2% contributed to our full year gains. Our global multi-channel strategy continues to thrive as we saw year-over-year growth in all three channels on a currency neutral basis with wholesale up 10%, retail up 23% and Internet up 9%. We saw growth on a constant currency basis in all three operating regions, the Americas grew 12%, Asia grew 20% and Europe grew 6%. Finally, we ended the year with 537 retail stores, up from 430 a year ago, as we continued to push into new markets and geographies, and we continued to upgrade the format of the retail locations from kiosk to full price stores and outlet. Turning to our fourth quarter results, during the quarter we experienced solid revenue growth of nearly 11% on a currency neutral basis. Our revenue was about $5 million higher than our prior guidance, as we saw good acceptance of our fall holiday products and exited the quarter with lower than expected inventory. Backlog at the end of the fourth quarter was up 15%. Gross profit dollars for the quarter increased nearly 11%, adjusting for the contingency of accruals highlighted in our press release. Profitability was impacted during the quarter by the difficult holiday retail sales season we and other retailers experienced in the…

Thank you, John. Hello, everyone, and thanks for joining us today. Our business continues to experience positive results, primarily from higher sales volume and higher average selling prices. Results for 2012 reflect increases in both consolidated revenues and earnings driven by balance international growth, operational efficiency and a customer focus. The following are the more significant developments in our business during the year ended December 31, 2012. Revenues increased $122 million or 12% from 2011 to $1.123 billion in 2012. On a constant currency basis, revenue increased 14%. Revenue growth was driven by increase sales volume and focused improvements on average footwear selling prices with new products style as we continue to transform Crocs brand awareness into an all season footwear brand. We expect growth in 2013 to be 13% to 15% in the first half as we are excited about our new spring portfolio and expanded retail stores. On a full year basis, global retail same store sales increased 2% over last year with Americas up 3%, Asia down 1% and Europe up 5%. In 2013, we are planning around a 3% to 4% global comp for same store sales. For the full year 2012, ASP was $21.55, up $1.53 from 2011. Units were just short of 50 million pairs, up from 47.7 million units in 2011. Our gross margin improved 50 basis points in 2012 and we expect similar results in 2013 as our expectation is for balanced ASP and unit growth. Selling, general and administrative expenses increased $56 million or 14% from 2011 to $460 million in 2012. SG&A expenses continue to increase as we expand our retail store locations. Our direct-to-consumer channel SG&A spending grew in line with revenue in 2012. Advertising marketing and promotional costs reflected in SG&A expenses for the company was $40 million…

Thank you, Jeff. Before we open the lines for questions I want to provide some higher level color on how we believe the regions will perform in 2013. Starting with Japan, Japan may be the most challenging market for Crocs in 2013. The macroeconomic and political climate is the most dynamic for us globally. The impact of significantly weaker yen can be seen in our business in the short term, while the macro situation exists pre- books are up and we still have a large market opportunity for Crocs. Asia will continue to be driven by the growth of the China market ASEAN countries Korea and the emerging Middle East markets. We will continue to see double-digit growth in the region in 2013. For us, Europe has turned the corner in 2012. We have a stronger and more experienced management team in place entering the year, most recently in Munich and Amsterdam attending the Expo Trade Fair in our regional sales meeting. Sales of our new products for fall winter 2012 have done well in key markets like Russia, Austria and the Nordics, proving to us that we are developing the right products for fall winter for the long-term. The team is upbeat for 2013 and our investment in retail will drive double-digit growth in the European market and is a key to the evolution of our brand from clogs to lifestyle footwear with clogs. Americas wholesale business continues to grow and build nicely in the mid-tier family channel. This is our space. This is our consumer, moderately priced, high quality on trend. The brand performed very well with our key partners in 2012 like DSW, Famous Footwear, Shoe Carnival, Bell, Rack Room, Academy and many other premier retailers. We are growing our footprint in collections with our existing partners and investing in more marketing with them in 2013. We see double-digit growth continuing into the year in the Americas. With that, I would like to turn the call back over to the operator and we will take our first call now.

Thank you. (Operator Instructions) And we will take our first question from Erinn Murphy with Piper Jaffray.

Great. Thank you. Good afternoon, gentlemen. I just wanted to follow-up John with you. It’s helpful to have some of that regional detail broken out at the end. On the Japanese market, talking it about being down 12% in the quarter, was that first on a constant currency basis or reported basis? And how should we think about at least in the quarter and then going forward on an underlying basis, the retail comp trend versus the wholesale trend? I guess to that end as we’re thinking about an underlying trend for this market in 2013. Should we be thinking about new retail store growth and a deeper penetration within existing accounts or it’s just kind more of trying to recover situation in 2013? Thank you.

Thanks Erinn. You asked a lot of different questions, I’ll try, so I’m going to try to do the best I can and kind of talking about the Japan market if I missed something just come back to me. Our business in Japan grew rapidly mainly on the basis of our connection with the consumer from a lifestyle space. With that said, this is really only been our fifth full year of operation in Japan and so have a business of this size we are very proud of it. I think that what we have seen at the consumer level in the last half of 2012 leading into ‘13 has been one of a very conservative consumer. I think that for our business in Japan, we do have a number of stores that we operate, majority of our stores do operate outside of the Tokyo-Yokohama marketplace with partners who will continue to expand retail doors into 2013. Our initial read on on wholesale business right now is up in terms of backlog year-over-year for the first half of the year and I think it's really going to depend upon what the appetite of the consumer is in the Japan market as we get closer into the kind of prime time selling season leading up April into Golden Week there.

Okay. I guess just a clarification then John, so that down 12% in the quarter, was that a retail comp or was that the overall market in general?

Overall market in general and numbers we gave you were on a constant currency basis.

Okay. Do you care to provide kind of where that comp turned in? I think in the third quarter, it had been down 15. I’m just trying to see if it’s been inflecting from a retail basis in Japan?

We don't normally go through in breakout details to that level in country-by-country market.

Okay. That's fair. I guess and then just going forward from a guidance perspective, where should we kind of put the yen-U.S. comparison and then the euro U.S. dollar comparison in our models as we think about the puts and takes of that topline guidance and bottom line guidance for this year?

In our present model, we use an average of 91 yen to the dollar, which is a little bit below where it's at today. But on average considering where it started the quarter that's where we have it for our forecast basis. And then for the euro, we have it at 135 yen to the dollar, which is again is a little bit higher than the U.S. euro relationship now but on average basis rule we think it'll end up being round about there.

Okay. And that's helpful. And then, Jeff, just I guess a follow-up on the backlog as we think about first quarter, second quarter, can you provide some context of how we should think about the movement there as we think about that 15.3% for the first half?

It's going to flow out pretty much equally over the two quarters. So it's going to be round about the same for both quarters as you think about it.

Okay. And then I guess for the Huarache launch, is that still -- that kind of mid April shift?

Actually, we are starting to see Huarache hit some of the markets here at the end of February going into early March.

Okay. And that will be in the U.S. wholesale first or U.S. retail, where should we see it first as we are thinking about that?

You are going to see it both very simultaneously, just depending upon how fast retail partners put that on their own shelves. But the initial delivery of the core products is on time, because this is new product and new technology we are going to see a little bit of product roll from 3.15 into a 4.1, 4.15 delivery window, but we don't expect it to impact the quarter.

Thank you very much. And I'll get back in the queue.

Thank you. And our next question comes from Jim Duffy with Stifel.

Hi. Thanks. No real questions, guys. First, I hope you're well. The contingency accruals Jeff, can you provide a little more color around those? What are specifically the legal proceedings? Are you done accruing for that, what's the probability of a cash expense associated with that et cetera?

Yeah. These contingency accruals, Jim, relate to legal proceedings dating back to 2007 timeframe up until 2009 or so. One relates to the termination of an agency relationship in Europe and the other relates to an ongoing legal proceeding associated with customs audits for that time period. As far as cash payments goes, that's probably not something that’s a near-term cash outlay for us. And as far as additional expense is associated with this, we try to make the best estimate that we can, and we use our management’s view in the view of the case in total to make a judgment call on what to accrue.

Got you. Okay. And then, there is a number of adjustments in both '12 and '13. I just want to be clear on what the basis for the guidance is. What’s the operating margin based upon once you plan that 25 to 50 bps of operating margin expansion?

When you exclude all of the contingency accruals and the effect of certain legal proceedings that we have in our results for 2012 we are looking at about 25 to 50 basis points improvement in our operating income. So we will be in that high-13th range and then the SAP expenses are an additional $0.08 to $0.10 per share for 2013 and that's what we put in the script and the assumptions to give you the guidance for 2013.

Okay. So the 25 to 50 basis points is before the exclusions for the SAP investments, correct?

That's correct. Yeah. We are going to be quoting in 2013, the business as it performs excluding those non-operating activities in SAP.

Okay. And those SAP investments -- are those isolated to 2013 or is there a lingering effect from those looking beyond ‘13 into ‘14 et cetera?

We launched the new ERP system in the first half of 2014. At which point, we will then move into a normalized operating environment associated with the ERP.

Got you. Okay. And then, the 3% to 4% comp implied in the guidance, can you speak to some of the factors given the recent comp trajectory that give you the confidence that we can see a rebound in the comps at that level?

Yeah, Jim. This is John. I think over a period of the year, we have learned as we continue to grow and develop our retail system, a lot about consumer behavior, products in different channels in different geographies. Jeff alluded to the fact that we are continuing to make investments in addition to the ERP system at SAP. Additional tools for our retail team that will allow us to replenish faster to understand consumer behavior better. So, I think we feel with better products, better systems and tools another year with our retail management team in most locations we think that this is going to deliver better results into '13.

Got you. Last question. John, implied in that 3% to 4% comp, are you assuming Japan comps remain in negative territory?

They are flat to slightly down depending upon the different quarters that we are looking at this point in time. I don't think that we think we are going to have as considerable down retail in Q3 and Q4 in Japan as we did this year. I think you have to rate both halves of the year.

Great. Thanks so much.

Thanks, Jim.

And our next question comes from Taposh Bari with Goldman Sachs.

Good afternoon. I wanted to ask you guys to follow-up on the 3% to 4% comp assumption for next year. I mean, how does that shake out throughout the year in light of the trajectory? Should we expect a stronger trend in the back half of the year versus the first half?

Well, I think Taposh, it's actually the reverse. We've always been a stronger brand in the first half of the year. We think with the new products that are coming to market especially in the first half of the year that we are going to have a pretty good selling season, based on what we've seen in terms of the enthusiasm with our consumers and with our retail partners for the new product. So, I would think we’re going to have again a little bit stronger first half of the year than we would in the back half of the year.

Okay. So, I guess if I could ask a follow-up to that, I mean, we’re pretty deep into the first quarter, do you have any visibility into how that plan has played out thus far?

We do. For us, the new products are hitting retail stores really over the last 7 to 10 days. It’s never been on practice there to comment on performance within the current quarter. So, I think this is really the time when you see new products hitting customer acceptance. It's kind of an interesting dynamic, I think also in the United States specifically where the East Coast has had very difficult weather for us. In Colorado, we have no snow on the ground. We've had many 50 and 60-degree days in January and February. So, I think it depends a little bit too where you're at in the U.S. and what retail looks like today.

Okay. And then the last question I had was, as we look at your new 2013 revenue guidance, you've taken down the first half by a couple of points. You've taken down the back half, I just want to clarify, are you saying that the back half of the year is going to grow slightly above 9%? Does that what that means in the prepared remarks?

I think, when we look at the year right now, we’re saying that we anticipate revenue in the first half of 13% to 15% and that should carry over for the year. When we look at it on a constant currency basis, we are facing about 2% headwinds on a year-over-year basis in the currency markets as of today versus the average rate last year. And that currency headwind will have an impact on our revenue performance for the year. So if you think about it in a constant currency basis, those numbers are better. We predict that the revenue impact of the currency will be approximately $17 million with a Japanese yen decline versus the U.S. dollar offset by a better year-over-year performance in euros and other currencies. But it's important to remember the yen decline will have an adverse impact on operating income for the company, as Japan has higher operating margins in other countries. The net result is the foreign currency shift altogether is about $0.08 a share on a year-over-year basis, when we compare the headwinds that we have in the currency markets to last year's rates.

Got it. I mean, I guess the question I had for you guys was you brought down your guidance in light of currency obviously, more so in the back half than the front half of the year. I guess the back half has historically been the obstacle for Crocs, at least for the last two years. Trying to get a better sense of what kind of confidence you have in your ability to perform in the back half of this year in light of the marketing investments that you are making and also I guess the new expectation? Thank you.

I have been here long time. I think in looking at this business, we've always said as it has just been in the last couple of years. We've always said that the back half of the year is going to be a work in process. I look at 10% growth for the quarter in what would normally be a difficult market for us. I look at 49% gross margin in the quarter consistent year-over-year when you take out the extraordinary item that Jeff talked about. Growing $20 million and 10% is pretty good growth, when you think about the type of spring, summer brand we are. First three quarters of the year are generally higher growth times of the year. So, I think we've tried to be pragmatic looking at 2013. First half of the year was pretty good understanding about products and the market. I think we are being a little bit more conservative thinking about the fall, winter will be. But as you asked the question before, yeah, we are thinking at high single-digit growth in the back half of the year especially with the fourth quarter. But I think we are all pretty proud of what we've been able to carve out over the last three years in terms of new collections of products, new products that did well at retail this year, with a lot of our key customer -- wholesale customers also taking those products and it's a building process in the back half of the year. I think we see just a wide disparity sometimes in how people look at our business over the next 12 months. And I think what we're trying to do is give a little bit better guidance than you will have more information when the K is filed early next week, when it comes to what that should look like.

Thank you very much. Good luck in the spring.

And our next question comes from Reed Anderson with Northland Securities.

Good afternoon. A couple of questions. Jeff, on your comments on gross margin expansion you were talking there, would that be -- if you look at on a quarterly basis or throughout the year, would that be fairly balanced, I guess? And then, I guess secondly, is that expansion just primarily a function of the profile of new products as well as the mix at retail?

We have a lot of different headwinds and tailwinds in our gross margin that we’re assuming as we put these numbers together. One of them is a shift into retail. One of them is a downward headwind associated with currency read. So you have to factor that into our gross margin numbers as we have to experience that since we buy in U.S. dollar and sell in local currency. And then there’s other product costs, which we think we've got under control as we go into 2013, so we factor all of those in. On an annualized or seasonal pattern by quarter, we've got some tough comps in the numbers as we roll out the year, but I think in general that 25 to 50 basis point improvement that we talked about in the script will be relatively equal across the quarters.

And you may have said this, but what did you -- you are planning ASP growth in low single digits kind of number for '13, is that correct?

That's fair. Yeah. We actually are anticipating unit growth to be a little bit higher on a percentage basis than ASP. I think, this year it was a little bit reversed with ASP grew $1, a little bit more than 7% I think and then the units were a little bit less than 7% growth rate. Next year, we see basically about 10% increase in units, 8% to 10% increase in units and round about that 5% or about $1 per unit for ASP. So that's kind of what our early predictions are.

Okay. And then from an inventory standpoint, I know, it was, I think actually a little bit better than you have been planning or thinking. But just as you think about that kind of working through some of the timing things here, when will we see that kind of normalized throughout this year with kind of a cadence of sales growth?

Yeah. I think when you think about inventory, I mean the 25% increase in retail doors compared to last year, Reed. So you have to factor that in as we go through the especially the first half of the year where you've got a large increase in inventory associated at retail channel. We also have 35 to 40 more stores opening in Q1. We also had an accounting treatment that we talked about at the Analyst Day back in April this year. So that affected us in Q4. When we think about it, Reed, as we kind of make our planning for the year and set our targets for the year, we are trying to hit a range of turns as a company in that 3.5 to 3.7, turns basis and that's kind of how we think about our inventory targets internally.

Okay. That makes sense. And then last one, I guess John, I know it's real small piece of business but I'm just curious kind of what your thoughts are on the golf rollout et cetera because obviously in your last year that industry was a nice long season and you got a lot of product and I'm just kind of curious on your thoughts on that in this year?

I think it was a great start for us in the golf side of the business, kind of re-launching the Bite brand that we had bought years ago and kind of reinvigorating new designs. It came a little bit late honestly, when you think about us launching at the Golf Show in January. Product really wasn’t available until April and May. We've got eight, nine months, we’ve got good traction, we’ve got very good sell through, great in some markets and so we are really encouraged. This will be a full year of selling into the green grass into the pro shops and into some of the major sporting goods retailers that will carry that product. We are really happy that the new Golf Show that we are launching that is more waterproof. One another word in the Golf Show in January, just adds to this credibility that we can play in this marketplace. Never going to be a huge portion of what we do, but it's a great little niche for us to bring comfort and color in that kind of fun factor into the golf business and so we are really happy with where we are at, at the end of first year and as we head into the second year. So you will see more products in that space, not a lot but more products this year that are more water resistant, waterproof and a few more for women.

Great. Well, super. Best of luck. Thanks guys.

Thank you, Reed.

And our next question comes from Corinna Freedman with Wedbush Securities.

Hi there. Just a quick question on share count. What share count should we be using and are there additional plans for further buyback?

As far as the share count, we are going to be in that mid-89 range for the quarter. So it depends on what decisions we make as far as the buybacks. We have authorization still underneath the Board approval to repurchase some additional shares and we will make decisions as we go here. There's really nothing else to talk about on the share repurchase other than the diluted share base, should be in that mid-89 range for the quarter.

And then, could you remind us what currency assumptions are embedded into the guidance for the euro and the yen?

Yeah. 91 for the Yen and $1.35 for the euro.

Thanks a lot.

And our next question is from Mike Swartz with SunTrust.

Hey, good afternoon, everyone. Just quickly the -- with the first quarter, second quarter kind of revenue flow, I mean, should we see any kind of discernible impact from the Easter shift this year being one week earlier?

I mean, it’s always hard to tell. We’re not building any major shift in our assumptions for the first quarter in terms of pull through on the U. S. marketplace. Such a large amount of our business outside of the U. S., the impact isn’t as great as maybe it would be for heavily U.S. centric group. We’re not planning any major pull forward with the one week. And we all hope that that's going to occur and drive consumer demand, but nothing in the plan.

Okay. And with just the Internet channel during the quarter. I mean, I guess, I'm just looking for a little more color around why that was down? I mean, you continued to see just some softness as you pull back on some of the discounting on that channel, or is there anything else behind that?

Yeah. I think there's going to be a lot of conversations about brand on a going forward basis with the Amazon and some of the eTailors and how you work with them and how you operate with them. But today, just as a reminder, when we sell product to eTailor's or companies who also have e-tailing kind of operation, that's all shown as wholesale revenue. So, wholesale revenue for the quarter was up double digits relative to us selling to those customers in the fourth quarter. I think in return what happens is that, that drives the different dynamic from a costing standpoint. It grabs a longer-term conversation about what brands want to look like in that space. So, I think they did very well. They sold a lot of product at a more even heavily discounted price. And for our U.S. marketplace, we just chose not to chase down free freight and chase down those dynamics. And so what you see is a little bit of a shift in the fourth quarter where Internet is down a little bit for us. But our wholesale is up and many of them had very good sell-through through the fourth quarter.

So this will be more related to your own Internet or website properties?

That's correct.

Okay. Great. Thank you.

Our next question is from Scott Krasik with BB&T Capital Markets. Scott Krasik - BB&T Capital Markets: Thanks. So a few questions on retail, what’s the breakdown, the regional breakdown for store openings both in Q1 and for the full year, Jeff?

We said about 30 or so for Q1 and the rest will be primarily going to be opening new stores in the first half of the year. And 70 to 95 is what we target right now and 60 or so of those or more will be in the first half. I think when we think about store openings and what really drives our overall operating performance, getting those stores open roundabout that May, June timeline, it’s really important to us. There were some locations around the globe that we had to get open in the fourth quarter. And we made some decisions as a management team to take those additions and get those open. So we didn't lose sight.

I think, kind of, follow-up on that. I think your question is specifically around geography and about half of those stores, Scott, will open in Europe. And the other 25% will open in the U.S. and 25% in the -- Americas and the other 25% will open in Asia in that early '13 time frame. Scott Krasik - BB&T Capital Markets: Okay. Thanks John. And then so just following up on that, anything different about the model for opening new stores, new store productivity. If you are assuming positive comps in the first quarter or first half, just my map shows may be a little bit lower productivity out of the new stores given all the new stores in Q4 and Q1, but maybe I'm not doing it right?

I think that normally retailers think that your first year of opening store is going to get yo to be about 85% of what the second year revenue is going to be. And for us, historically, if we open in tourist locations or high densities and the opening is well promoted, we run above that 85% range on that first year. I think that for the early part of '13, you are not going to see a lot of comp store performance out of Europe and just because of stores weren’t open at this point in time. And so what we are thinking about that is what our business model looks like relative to what that first year should be. Right now we feel like we are on trend. Scott Krasik - BB&T Capital Markets: Okay. Thanks. I’m sorry, Jeff, just happen to notice your allowance for doubtful accounts went down at the end of the year versus receivables were up and sales were up. Any reason for that?

Normal business activity as we assess our likely collections on the receivables that are outstanding, so. Scott Krasik - BB&T Capital Markets: So, maybe you felt better about collecting some stuff, so you release some reserves?

Exactly. Scott Krasik - BB&T Capital Markets: Okay. Okay. Thanks.

We'll now take a question from Jim Chartier with Monness, Crespi, Hardt.

Good evening. My first question, I was wondering, if you could provide the backlog by region?

We typically don't do that. We've kind of made the backlog more of a kind of a leading indicator. I think when you look at the backlog around the globe, we’re pretty excited about our backlog in Asia and the Americas. And Europe has been under pressure and we continue to see that just like other footwear retailers and marketers. So, it's nothing. We’re really ready to break out on the region basis, but that gives you color behind the numbers.

Okay. And then, are you guys doing anything differently this year and trying to get wholesale accounts to take fall holiday product versus what you've done in the past?

Jim, I think on the U.S. side of this.

Yeah.

We are clearly working with in a more collaborative way for fall '13. I think surprisingly, they had a better fall '12 with products that they took from us. In certain cases, we did. I personally reached out and asked a few of our major retail partners to give us a chance to see if products would resonate with their consumers especially the cobbler collection where maybe that's not a traditional style or silhouette that they would take from us. Sell-through was good. So yeah, we’re going to continue to work with them in a collaborative manner, me personally also with them to kind of try to build on the brand strength that we see in our own retail on specific products that would resonate with their consumers. But, also just on an ongoing basis, I think the brand carries a little bit more weight year-over-year. And this is that four years for us rebuilding, building in some cases these relationships with our U.S. wholesale customers. This is the same thing that's happening in Europe. This will be our third year of working closer with some of our major European partners where we went through the same kind of damage relationship of over distributed all clogged sameness everywhere. And I think U.S. investors understand and it does take us certain number of seasons, a certain number of years to rebuild that. And I think for us building confidence for fall, winter is what we are starting to see with them. So hopefully that carries forward into traditional products for fall and winter of '13.

And on the marketing spend, is that growth equally weighted across all quarters this year and then can you tell us if there is a heavier emphasis on driving retail sales versus wholesale sales?

I don't think you're going to see much change. First quarter, you will see much change between the direct and wholesale channel. We are trying to grow the wholesale business methodically with key accounts globally. We are adding in certain channels where we don't have certain product distribution today. But it should be -- relative backlog is indicative where we are at from a wholesale standpoint. And I think you are going to continue to see that balance between the (inaudible) and wholesale in 2013.

And then finally, you mentioned some countercyclical markets that you are pursuing for second half of '13. Are those existing markets, are those new markets and can you give us little more color on that?

I don't know if there is a new market for us anymore. You think after all the years and such penchant in the early years to really get out there and try to be the original when it came to the clog in so many countries. When we talk about that kind of counter, we’re really talking about more of the last South American market here in the Americas. In Asia, it's really more around building that Middle East market up in a more meaningful way. And I think it's also with some of the newer emerging markets and we talked a little bit about Russia on the call earlier. We've had another really good fall winter and a pretty miserably cold marketplace. And so here is the summer brand that is doing pretty well in the Russian market place with a combination of our own retail stores, partner stores with probably less wholesale in that marketplace. And we've done really well. And that just adds confidence to the belief that if we market this in the right way, we get consumers to think about us in some of those counter markets or new markets like that even for fall winter we can show some meaningful growth.

Thanks a lot.

Thanks Jim.

We will take a question from Corbin Weyer with Robert W. Baird.

Yeah. Thanks for taking my question. Just had a quick one on the wholesale growth in 2013, you talked about growing doors globally. Can you talk about where the big opportunities are? Is there a region where you are putting a better emphasis on? Should that be evenly distributed or on top of that, are there any big accounts that you guys are picking up that you incrementally held for 2013?

I think, we get into the whole door count conversation and drivers years ago in the business. I think, as we have kind of taken our wholesale down globally, three, four years ago and now having rebuilt it. It’s not -- I don't think 1,300 doors and about 560 really new accounts isn't meaningful door growth in '12. I think it’s strategic. I think it’s accretive. And I think you're going to continue to see that from us. I don't think in any major market right now we would say that we’re adding a new retailer that's going to add hundreds of doors in one particular region. So, I know, it's pretty evenly balanced and pretty methodical in how we’re trying to continue to add retail to -- or wholesale, excuse me, to our overall base.

Okay. That's helpful. That's all I have. Thank you.

Our next question is from Sam Poser with Sterne Agee.

Good afternoon. Just a couple questions. Number one, in the guidance that you gave, implied for the fourth quarter that included the SAP number, correct?

When we said, we thought the operations were going to break-even, yeah. So, when you think about the fourth quarter for us the operations were about a $0.04 profit as a standalone basis and that's excluding the SAP.

But you included the SAP in the 3Q guidance and you're including it in your guidance for Q1, is that correct? The $0.32, the $0.34 includes the $0.02 from SAP? Am I thinking about that correctly?

Yeah. That's correct, that's what we said.

But it would be 34 to 36 ex-SAP?

Yeah.

So if you are including -- I mean it seems like you want it both ways. You gave the guidance included -- it sounded like in the beginning you gave it including it. And now you’re saying you're excluding it when you give your results and then you're including it again when you give guidance. Which way should we be thinking about this?

Is there a question here somewhat?

Which way -- I mean, I'm serious. I mean which way should we think about it. You include it in the guidance and you exclude it from the results. So which ways should it be? How should we think about it with SAP or without SAP?

I think the way that you just summarized it is correct, and for '13, we’ll give it with SAP included in the guidance.

Okay. So then when you look out and I might have missed this in the prepared remarks. When you look out for the full year, do we have a range of sort of -- do you have an EPS number that you can give us for the full year right now?

Sam, what we did is we gave a kind of a goal post on what we think where the revenue is going to grow and what is going to happen to our operating income and tax rate. And we didn’t do the calculations for you on EPS and no EPS. So we’re just moving forward with the guidance as is.

Thank you. And added $0.08 to $0.10 cause that's the way you're going to report it, if I think about that correctly?

Yeah. That's correct. We are going to report GAAP and we'll be guiding …

Okay. Thanks very much. And good luck.

And we'll take a question from Steve Marotta with CL King & Associates. Steve Marotta - CL King & Associates: Good afternoon, guys. Two quick question. Jeff, you alluded earlier to the inventory growth as it relates to the retail stores. And also in the press release that mentions terms and conditions with vendors, again there was alluded to something at the Investor Day, is that the same thing? Could you please go over that very back quickly and is that something that is expected to continue to occur over the next couple of quarters?

Yeah, Steve. What we do -- what we did back in 2011 was we had some agreements with the vendors associated with our terms and conditions at year-end. And for ease and simplicity purposes, we've gone through the same terms and conditions whether it's year end or not. So from now on, you are not going to have that issue. It's just going forward, the inventory numbers will not be affected. Steve Marotta - CL King & Associates: Okay. That's great. And, John you mentioned I believe in your prepared remarks about marketing or several systems. And again forgive me if I misinterpreted this, there are several systems that have been implemented that's going to allow you to market better and that was one of the reasons that gives you confidence to increase your marketing budget dramatically in 2013 versus 2012? Can you go over those in a tiny bit more detail and what underpins your confidence that the increased marketing spend will be justified?

I gave a number of different things that we've done in addition to building a more creative internal organization. So we hardly outsource any creative development today as a company that’s done internally. They've done an excellent job over the last couple of years in bringing the brand really to light from a motive standpoint. I think, the two major investments that we've made is really what the brand strength monitor with the long-term partner in Seattle that helps us look at ground strength in many footwear brands do, as many apparel companies do on a global basis. I think that work that's been done over the last two years has really helped us in understanding products that we’re designing, how customers think about our products. The second piece of that is our ongoing relationship with ForeSee, not only here in the United States, but globally, now in Europe in five different countries. In Asia where we get real-time feedback from consumers who have either touched our retail stores or Internet sites, who have actually bought product. What their feedback is in terms of that brand experience. All of that together really gives us a lot of additional data when it comes to how consumers -- how customers think about our brand, where we do well. And it helps us in navigating where we want to spend marketing dollars to really engage with new consumers. One of the things that has happened having been here now eight years is that when you go through this cyclical stage of your -- like Apple, everybody wants you. You are new, you are unique, you are different and all of a sudden like Apple today, now people don't want to have the iPhone or don’t want to have iPad. Everybody has it. So, I want to go to Samsung and [Clemens was on today’s morning], the radio driving up, talking about how lot of people are now going to Samsung, because that's new, that’s cool, that's different. And we went through that same cyclical process. I think now we see less haters, less people who think about the brand adversely. We see a lot more neutral in the consumer space where people now would be open to advertising or promotion from us. They would be somebody who now would, maybe, think about this brand differently be it considered for new product. So a long-winded answer gives you a lot of kind of thinking around how we have built the internal marketing such that we are now ready to start to make some investments in '13 to convert those neutral and consider it to consumers. Steve Marotta - CL King & Associates: That's great. Thank you.

And we’ll take a final question from Taposh Bari with Goldman Sachs.

Hey guys, just a quick follow-up. I just wanted to get more some more clarification on this '13 guidance because I think it's worth repeating. So in 2012 you did $1.40 adjusted EPS of the operating margin for 2012 adjusted that you are working off, is that 13.7%?

Yeah.

Okay. Then parts that, you were saying 20 to 50 basis points of growth on top of that for 2013? Correct?

Yeah.

And does that include SAP or exclude SAP?

Exclude.

Okay. And then the last question I had was, in the third quarter call, I guess sort of to follow up on Sam's question on the third quarter call in October when you gave break-even guidance for the fourth quarter. Did that include or exclude SAP?

It excluded -- it will -- it included up from a GAAP respective. We did end up spending a little bit more money on SAP than we anticipated originally, but I was told that it kind of an immaterial amount of spending associated with that in the Q4 period.

Okay. Thank you.

At this time, I will turn the conference back over to our moderators for any additional or closing remarks.

We just like to thank everyone for joining us today on the call. We appreciate your continued interest in Crocs and we look forward to talking to you again in April. Thank you.

And this does conclude today's conference. Thank you for your participation.