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Accounting Firm Casts Doubt on Crocs’ Viability

An audit finds footwear company’s ability to stay in business at risk.

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Crocs’ stock price dropped 19 percent on Wednesday after an accounting firm questioned the “company’s ability to continue as a growing concern.”

The footwear company released the opinion of Deloitte & Touche LLP in an annual report filed Tuesday with the Securities and Exchange Commission.

According to the report, as of Dec. 31, 2008, the company had $51.6 million in cash and cash equivalents and $22.4 million in borrowings under its revolving credit facility, which matures on April 2, 2009.

In February, the company reported a full-year net loss of $183.6 million, contrasted to a profit of $168.2 million in 2007.

Crocs took cost-cutting measures during 2008 and said it intends to continue those actions throughout 2009. In February, it reported a major inventory reduction. Former Reebok executive John Duerden began work at Crocs as CEO this week. He replaced Ron Snyder.

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