Crocs Rides IPO Wave - Rocky Mountain News
"Investors will find out next week if Crocs' stock rocks.
The Niwot-based shoemaker plans to sell its shares to the public next week in an initial public offering. Web site IPOdesktop.com says it expects Crocs to price shares on Tuesday and begin trading Wednesday.
The company plans to sell 9 million shares at a price in the range of $13 to $15. The company will get the money from half - about $63 million, prior to expenses.
The other half of the shares are being sold by insiders. If investors demand more Crocs stock, the insiders will sell another 1,350,000 shares.
All told, the company, which makes brightly colored clogs from a patented resin, would be worth about $550 million at $14 per share.
But another Colorado company with a hot consumer product - burrito seller Chipotle - blew through its initial price estimates.
It, too, started out estimating a total value of about $550 million. Chipotle then bumped up its offering price twice before jumping 100 percent in its first day of trading. It's now a $1.5 billion company.
The key difference between the two is Chipotle's relatively long history - it was founded in 1993 - and its big sales, which were $454.4 million for the first nine months of 2005.
Crocs was founded in 2002 and posted just $1.2 million of revenues in 2003.
But it's exploded since. Sales were $13.5 million in 2004, then $75 million in the nine months ended Sept. 30, 2005. A small 2004 net loss turned into net income of $12.8 million in the first nine months of 2005.
Robert Barker, a BusinessWeek investing columnist, named Crocs one of four 2006 -IPOs that "caught his attention." (Chipotle didn't make the cut in his late-December column.)
"Crocs shoes are hot, so this issue is going to run fast - until the trend cools," Barker said.
Crocs acknowledges the risks in its SEC filings for the stock offering. It notes it's "an early stage company with a limited operating history . . . subject to all of the risks inherent in a new business enterprise."
Crocs shoes represented 94 percent of the company's revenues in the first nine months of 2005. "Given the limited history of our Crocs brand, it is especially difficult to evaluate whether our products will hold long-term consumer appeal," it said.
Crocs also warned that audits of its 2002-2004 financial statements uncovered "material weaknesses" in its financial reporting. These are major problems that, if not fixed, make the reliability of its future financial statements in doubt.
Friday, Crocs said it had hired three more professionals to beef up its finance staff.
Peter S. Case, the chief financial officer of Nasdaq-traded sportswear company Ashworth Inc., starts Monday as senior vice president-finance. By April, Crocs said, he'll replace Caryn D. Ellison as CFO.
Ellison, who joined Crocs in November 2004, will become vice president-finance.
Crocs also hired a new corporate controller and a director of internal audit. It did not name either. The current corporate controller resigned from his position to return to public accounting, the company said.
"We believe that the new employees . . . will enhance our finance and accounting staff," the company said in a statement."
Read the entire article, Crocs Rides IPO Wave written by David Milstead for the Rocky Mountain News at (http://www.rockymountainnews.com/drmn/money/article/0,2777,DRMN_23908_4440862,00.html)