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Accounting Firm Casts Doubt on Crocs’ Viability

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

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.