NIWOT -- Crocs Inc. has seen its revenues steadily decline since the beginning of 2008, and a continuation of this trend could have an "adverse effect on the company's operating results, cash flow and its ability to raise capital," according to an independent auditing firm hired by the company.

The auditors' letter, produced by Deloitte & Touche LLP, said Niwot-based Crocs "faces various uncertainties that raise substantial doubt about its ability to continue as a going concern."

Crocs (Nasdaq:CROX) reported lower revenue and a loss for its fourth quarter ending Dec. 31, 2008. The company reported revenue of $126.1 million in the fourth quarter, down 43.9 percent from the previous year.

The company also reported a fourth-quarter loss of $33.2 million, or a loss of 40 cents per diluted share in fourth quarter, compared to net income of $38.3 million, or 45 cents per diluted share a year ago.

"While our fourth-quarter results were better than expectations, our year-over-year comparisons reflect the ongoing global economic slowdown that began approximately 12-months ago," said Ron Snyder, former chief executive officer of Crocs, in a statement.

Snyder retired in February and was replaced by John Duerden, former president and chief operating officer of Reebok International. Duerden has more than 20 years of senior level management experience across a variety of industries. He came to Crocs from the Chrysallis Group, a consulting group he formed in 2006, focused on the development and renewal of brands.

Duerden took over in mid-March, but the company said he would not conduct interviews with the press for "at least 30 days" as he evaluates the situation he is inheriting.

His only public comments were within a company press release at the time of his hire.

"I am excited by the opportunity to lead this talented global team into the next stage of the company's development and to build on the company's many strengths," he said.

Snyder will continue as a member of Crocs' board of directors and assist Duerden in the transition.

Reed Anderson, an industry analyst with D.A. Davidson & Co., is maintaining a "neutral" outlook on the company, meaning he anticipates a 0 percent to 15 percent return potential on a risk-adjusted basis. According to his institutional equity research report on the company, he believes the company's cost reductions are helping to mitigate losses, but they "continue to be outpaced by the rate of revenue declines."

Anderson refused to comment on the company beyond his report.

He noted that Crocs' European revenues saw the biggest decline in fourth quarter 2008, dropping 72 percent relative to 2007.

As part of its cost reductions, Crocs closed its Canadian and Brazilian manufacturing facilities and the consolidated its Canadian distribution activities into other existing North American operations.

During 2008, Crocs sold assets relating to its Canadian manufacturing operations for a net gain of approximately $779,000. It sold the assets to George Boedecker Jr., a co-founder and former chief executive of Crocs, and a group of private investors.

Boedecker, from Boulder, and his team of investors renamed the business Foam Creations 2008 Inc. Prior to becoming Crocs Canada in 2004, the company's original name was Foam Creations Inc.

According to the Deloitte & Touche audit, Crocs "is currently evaluating its operating plans for 2009 and considering certain restructuring and right-sizing activities to address the potential for continued decreases in revenues."

D.A. Davidson & Co.'s Anderson estimated that sales for Crocs will be low during all four quarters of 2009, with $95.5 million in the fourth quarter being the lowest.

While the future financial outlook is grim, Crocs has won several legal battles during the past year. In early March a Boulder County District Court judge threw out a shareholder derivative suit alleging Crocs and its officers and directors engaged in insider selling and misrepresented company financial reports.

In December, Crocs and Skechers Inc. ended a patent infringement lawsuit out of court, and Skechers discontinued production and sale of "certain molded footwear styles," according to a press release.

The companies would not divulge specific terms of the settlement. The lawsuits were resolved this week when the parties agreed on settlement terms "mutually acceptable to both companies."

Contact writer Bob McGovern at 303-440-4950 or e-mail bmcgovern@bcbr.com.