Delaware
|
58-1972600
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
|
Identification
Number)
|
|
||||
PART
I
|
FINANCIAL
INFORMATION
|
Page
|
||
Item
1.
|
Financial
Statements
|
|||
Condensed
Consolidated Balance Sheets - June 30, 2010 (unaudited) and 2009
(Predecessor) and December 31, 2009
|
3
|
|||
Condensed
Consolidated Statements of Operations (unaudited) - Three months ended
June 30, 2010 and 2009, two months ended May 28, 2010 (Predecessor) and
three months ended June 30, 2009 (Predecessor)
|
4
|
|||
Condensed
Consolidated Statements of Operations (unaudited) - Six months ended June
30, 2010 and 2009, five months ended May 28, 2010 (Predecessor) and six
months ended June 30, 2009 (Predecessor)
|
5
|
|||
Condensed
Consolidated Statements of Cash Flows (unaudited) -Six months ended June
30, 2010 and 2009, five months ended May 28, 2010 (Predecessor) and six
months ended June 30, 2009 (Predecessor)
|
6
|
|||
Notes
to Unaudited Condensed Consolidated Financial Statements - June 30,
2010
|
7
|
|||
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
29
|
||
Item
3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
38
|
||
Item
4.
|
Procedures
and Controls
|
39
|
||
PART
II
|
OTHER
INFORMATION
|
|||
Item
1.
|
Legal
Proceedings
|
40
|
||
Item
1A.
|
Risk
Factors
|
40
|
||
Item
5.
|
Other
Information
|
51
|
||
Item
6.
|
Exhibits
|
53
|
||
SIGNATURE
PAGE
|
55
|
|||
EXHIBIT
INDEX
|
56
|
Predecessor
|
||||||||||||
Company
(Note 1)
|
||||||||||||
June 30, 2010
|
December 31, 2009
|
June 30, 2009
|
||||||||||
(Unaudited)
|
||||||||||||
Assets
|
||||||||||||
Current
Assets
|
||||||||||||
Cash
and cash equivalents
|
$ | 3,292 | $ | 58,363 | $ | 1,271 | ||||||
Marketable
securities
|
- | 24,059 | - | |||||||||
Accounts
receivable, less allowance for doubtful accounts of $499, $0, and $474,
respectively
|
13,874 | - | 9,727 | |||||||||
Inventories
|
31,327 | - | 25,580 | |||||||||
Prepaid
and other current assets
|
3,965 | 673 | 646 | |||||||||
Deferred
income taxes
|
- | - | 1,810 | |||||||||
Total
Current Assets
|
52,458 | 83,095 | 39,034 | |||||||||
Non-Current
Assets
|
||||||||||||
Property
and equipment, net
|
14,250 | 696 | 9,781 | |||||||||
Definite
lived intangible assets, net
|
18,105 | - | 32 | |||||||||
Indefinite
lived intangible assets
|
32,650 | - | 897 | |||||||||
Goodwill
|
35,900 | - | 1,160 | |||||||||
Deferred
income taxes
|
51,829 | - | - | |||||||||
Other
long-term assets
|
325 | - | - | |||||||||
Total
Non-Current Assets
|
153,059 | 696 | 11,870 | |||||||||
TOTAL
ASSETS
|
$ | 205,517 | $ | 83,791 | $ | 50,904 | ||||||
Liabilities
and Stockholders' Equity
|
||||||||||||
Current
Liabilities
|
||||||||||||
Accounts
payable and accrued liabilities
|
$ | 13,254 | $ | 1,713 | $ | 9,884 | ||||||
Income
tax payable
|
957 | - | - | |||||||||
Deferred
income taxes
|
1,174 | - | - | |||||||||
Current
portion of debt
|
196 | - | 2,992 | |||||||||
Total
Current Liabilities
|
15,581 | 1,713 | 12,876 | |||||||||
Non-Current
Liabilities
|
||||||||||||
Long-term
debt
|
23,371 | - | 13,398 | |||||||||
Other
long-term liabilities
|
1,022 | - | 797 | |||||||||
Deferred
income taxes
|
1,795 | - | 601 | |||||||||
Deferred
rent
|
- | 446 | - | |||||||||
TOTAL
LIABILITIES
|
41,769 | 2,159 | 27,672 | |||||||||
Stockholders'
Equity
|
||||||||||||
Preferred
stock, $.0001 par value; 5,000,000 shares authorized; none
issued
|
||||||||||||
Common
stock, $.0001 par value; 100,000,000 shares authorized; 21,732,234 shares
issued and 21,657,234 outstanding in 2010
|
2 | 2 | - | |||||||||
Common
stock, $0.01 par value; 200,000 shares issued at June 30, 2009 (including
11,128 shares held in treasury at June 30, 2009)
|
- | - | 1 | |||||||||
Additional
paid in capital
|
397,660 | 370,994 | 2,722 | |||||||||
(Accumulated
deficit) retained earnings
|
(234,430 | ) | (289,368 | ) | 22,499 | |||||||
Treasury
stock, at cost
|
(2 | ) | (2 | ) | (2,678 | ) | ||||||
Accumulated
other comprehensive income
|
518 | 6 | 688 | |||||||||
TOTAL
STOCKHOLDERS' EQUITY
|
163,748 | 81,632 | 23,232 | |||||||||
TOTAL
LIABILITIES AND EQUITY
|
$ | 205,517 | $ | 83,791 | $ | 50,904 |
THREE
MONTHS ENDED
|
PREDECESSOR
COMPANY (NOTE 1)
|
|||||||||||||||
TWO
MONTHS
|
THREE
MONTHS
|
|||||||||||||||
ENDED
|
ENDED
|
|||||||||||||||
June 30, 2010
|
June 30, 2009
|
May 28, 2010
|
June 30, 2009
|
|||||||||||||
Revenue
|
||||||||||||||||
Domestic
sales
|
$ | 4,036 | $ | - | $ | 5,932 | $ | 7,815 | ||||||||
International
sales
|
3,708 | - | 5,354 | 7,404 | ||||||||||||
Total
revenue
|
7,744 | - | 11,286 | 15,219 | ||||||||||||
Cost
of goods sold
|
5,936 | - | 6,628 | 9,996 | ||||||||||||
Gross
profit
|
1,808 | - | 4,658 | 5,223 | ||||||||||||
Operating
expenses
|
||||||||||||||||
Selling,
general and administrative
|
7,331 | 1,118 | 4,823 | 5,825 | ||||||||||||
Restructuring
charge
|
1,377 | - | - | - | ||||||||||||
Merger
and integration
|
780 | - | - | - | ||||||||||||
Transaction
costs
|
3,253 | - | - | - | ||||||||||||
Total
operating expenses
|
12,741 | 1,118 | 4,823 | 5,825 | ||||||||||||
Operating
loss
|
(10,933 | ) | (1,118 | ) | (165 | ) | (602 | ) | ||||||||
Other
income (expense)
|
||||||||||||||||
Interest
expense
|
(336 | ) | - | (59 | ) | (164 | ) | |||||||||
Interest
income
|
17 | 197 | 10 | - | ||||||||||||
Other,
net
|
112 | - | 1,511 | 136 | ||||||||||||
Total
other income (expense), net
|
(207 | ) | 197 | 1,462 | (28 | ) | ||||||||||
Income
(loss) before income tax
|
(11,140 | ) | (921 | ) | 1,297 | (630 | ) | |||||||||
Income
tax (benefit) provision
|
(68,433 | ) | - | 382 | (171 | ) | ||||||||||
Net
income (loss)
|
$ | 57,293 | $ | (921 | ) | $ | 915 | $ | (459 | ) | ||||||
Earnings
(loss) per share attributable to stockholders:
|
||||||||||||||||
Basic
earnings (loss) per share
|
$ | 3.08 | $ | (0.05 | ) | |||||||||||
Diluted
earnings (loss) per share
|
$ | 3.03 | $ | (0.05 | ) | |||||||||||
Weighted
average common shares outstanding for earnings per share:
|
||||||||||||||||
Basic
|
18,625 | 16,867 | ||||||||||||||
Diluted
|
18,927 | 16,867 |
SIX
MONTHS ENDED
|
PREDECESSOR
COMPANY (NOTE 1)
|
|||||||||||||||
FIVE
MONTHS
|
SIX
MONTHS
|
|||||||||||||||
ENDED
|
ENDED
|
|||||||||||||||
June 30, 2010
|
June 30, 2009
|
May 28, 2010
|
June 30, 2009
|
|||||||||||||
Revenue
|
||||||||||||||||
Domestic
sales
|
$ | 4,036 | $ | - | $ | 15,751 | $ | 16,338 | ||||||||
International
sales
|
3,708 | - | 19,192 | 19,669 | ||||||||||||
Total
revenue
|
7,744 | - | 34,943 | 36,007 | ||||||||||||
Cost
of goods sold
|
5,936 | - | 21,165 | 23,131 | ||||||||||||
Gross
profit
|
1,808 | - | 13,778 | 12,876 | ||||||||||||
Operating
expenses
|
||||||||||||||||
Selling,
general and administrative
|
8,199 | 2,130 | 12,138 | 12,450 | ||||||||||||
Restructuring
charge
|
1,377 | - | - | - | ||||||||||||
Merger
and integration
|
780 | - | - | - | ||||||||||||
Transaction
costs
|
4,762 | - | - | - | ||||||||||||
Total
operating expenses
|
15,118 | 2,130 | 12,138 | 12,450 | ||||||||||||
Operating
(loss) income
|
(13,310 | ) | (2,130 | ) | 1,640 | 426 | ||||||||||
Other
income (expense)
|
||||||||||||||||
Interest
expense
|
(336 | ) | - | (165 | ) | (626 | ) | |||||||||
Interest
income
|
39 | 608 | 3 | - | ||||||||||||
Other,
net
|
112 | - | 1,803 | 225 | ||||||||||||
Total
other income (expense), net
|
(185 | ) | 608 | 1,641 | (401 | ) | ||||||||||
Income
(loss) before income tax
|
(13,495 | ) | (1,522 | ) | 3,281 | 25 | ||||||||||
Income
tax (benefit) provision
|
(68,433 | ) | - | 966 | 9 | |||||||||||
Net
income (loss)
|
$ | 54,938 | $ | (1,522 | ) | $ | 2,315 | $ | 16 | |||||||
Earnings
(loss) per share attributable to stockholders:
|
||||||||||||||||
Basic
earnings (loss) per share
|
$ | 3.09 | $ | (0.09 | ) | |||||||||||
Diluted
earnings (loss) per share
|
$ | 3.05 | $ | (0.09 | ) | |||||||||||
Weighted
average common shares outstanding for earnings per share:
|
||||||||||||||||
Basic
|
17,751 | 16,867 | ||||||||||||||
Diluted
|
18,025 | 16,867 |
SIX
MONTHS ENDED
|
PREDECESSOR
COMPANY (NOTE 1)
|
|||||||||||||||
FIVE
MONTHS
|
SIX
MONTHS
|
|||||||||||||||
ENDED
|
ENDED
|
|||||||||||||||
June
30, 2010
|
June
30, 2009
|
May
28, 2010
|
June
30, 2009
|
|||||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||||||
Net
income (loss)
|
$ | 54,938 | $ | (1,522 | ) | $ | 2,315 | $ | 16 | |||||||
Adjustments
to reconcile net income (loss) to net cash (used in) provided by operating
activities:
|
||||||||||||||||
Depreciation
on property and equipment
|
353 | 177 | 865 | 938 | ||||||||||||
Amortization
of intangible assets
|
111 | - | 2 | 2 | ||||||||||||
Accretion
of notes payable
|
138 | - | 17 | - | ||||||||||||
Loss
on disposition of assets
|
596 | - | 1 | 3 | ||||||||||||
Amortization
of equity and stock based compensation plans
|
3,700 | 343 | 375 | 24 | ||||||||||||
Amortization
of discount on securities, net
|
- | (436 | ) | - | - | |||||||||||
Tax
benefit related to stock issued as deferred compensation
|
- | - | - | 53 | ||||||||||||
Treasury
stock issued as director compensation
|
- | - | - | 13 | ||||||||||||
Deferred
income taxes
|
(68,417 | ) | - | (166 | ) | 454 | ||||||||||
Changes
in operating assets and liablities, net of acquisitions:
|
||||||||||||||||
Decrease
in accounts receivable
|
1,161 | - | 4,063 | 4,864 | ||||||||||||
Increase
in inventory
|
(1,261 | ) | - | (343 | ) | (2,000 | ) | |||||||||
(Increase)/decrease
in interest receivable, prepaid and other current
assets
|
(242 | ) | (69 | ) | (1,387 | ) | 1,977 | |||||||||
Increase/(decrease)
in accounts payable and accrued liabilities
|
(34 | ) | (258 | ) | 1,670 | (1,019 | ) | |||||||||
(Decrease)/increase
in deferred rent
|
(446 | ) | 11 | - | - | |||||||||||
Other
|
(5 | ) | 1 | - | (519 | ) | ||||||||||
NET
CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
|
(9,408 | ) | (1,753 | ) | 7,412 | 4,806 | ||||||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||||||
Purchase
of marketable securities
|
(22,065 | ) | (18,605 | ) | - | - | ||||||||||
Proceeds
from maturity and sales of marketable securities
|
46,124 | 66,698 | - | - | ||||||||||||
Purchase
of businesses, net of cash received
|
(82,794 | ) | - | - | - | |||||||||||
Purchase
of intangible assets
|
- | - | (10 | ) | - | |||||||||||
Proceeds
from disposition of property and equipment
|
- | - | 10 | 11 | ||||||||||||
Purchase
of property and equipment
|
(94 | ) | (6 | ) | (788 | ) | (2,238 | ) | ||||||||
NET
CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES
|
(58,829 | ) | 48,087 | (788 | ) | (2,227 | ) | |||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||||||
Repayment
of long-term debt, revolving lines of credit and capital
leases
|
(4,216 | ) | - | (6,261 | ) | (3,333 | ) | |||||||||
Proceeds
from long-term debt, revolving lines of credit and capital
leases
|
14,094 | - | - | 363 | ||||||||||||
Purchase
of treasury stock
|
- | - | - | (685 | ) | |||||||||||
Proceeds
from sales of treasury stock and exercise of stock options
|
352 | - | - | 577 | ||||||||||||
Proceeds
from the sale of stock
|
2,903 | - | - | - | ||||||||||||
Dividends
paid
|
- | - | - | (225 | ) | |||||||||||
NET
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
13,133 | - | (6,261 | ) | (3,303 | ) | ||||||||||
Effect
of foreign exchange rates on cash
|
33 | - | (60 | ) | (131 | ) | ||||||||||
CHANGE
IN CASH AND CASH EQUIVALENTS
|
(55,071 | ) | 46,334 | 303 | (855 | ) | ||||||||||
CASH
AND CASH EQUIVALENTS, beginning of period
|
58,363 | 19,342 | 1,317 | 2,126 | ||||||||||||
CASH
AND CASH EQUIVALENTS, end of period
|
$ | 3,292 | $ | 65,676 | $ | 1,620 | $ | 1,271 | ||||||||
SUPPLEMENTAL
DISCLOSURE:
|
||||||||||||||||
Cash
paid for income taxes
|
$ | 436 | $ | - | $ | 596 | $ | 859 | ||||||||
Cash
paid for interest
|
$ | - | $ | - | $ | 183 | $ | 614 | ||||||||
Note
payable to acquire intangible asset
|
$ | - | $ | - | $ | - | $ | 897 | ||||||||
Stock
issued for acquisition
|
$ | 19,465 | $ | - | $ | - | $ | - | ||||||||
Notes
and deferred compensation issued in acquisition
|
$ | 13,436 | $ | - | $ | - | $ | - |
|
·
|
Create
a unique platform to build a large, global and diversified outdoor
equipment and lifestyle company is strengthened from both organic and
acquisition growth;
|
|
·
|
Access
to ample liquidity to fuel brand penetration and
expansion;
|
|
·
|
Utilization
of a significant portion of its deferred tax
asset;
|
|
·
|
Preservation
of an organization and culture with a strong foundation with greater
resources and opportunities;
|
|
·
|
Ability
to better utilize existing supply chain and distribution
channels;
|
|
·
|
Greater
combined global revenue balance;
and
|
|
·
|
Improved
efficiencies by combining certain operational
functions.
|
BDE
|
GMP
|
|||||||||||||||
Estimated
Fair
Value
|
Number
of
Shares
|
Estimated
Fair
Value
|
Estimated
Fair
Value
|
|||||||||||||
Cash
paid to BDE and GMP
|
$ | 85,675 | $ | 185 | $ | 85,860 | ||||||||||
Issuance
to GMP of shares of Clarus
|
- | 3,676 | 19,373 | 19,373 | ||||||||||||
Issuance
to GMP of 5% subordinated notes
|
- | - | 13,120 | 13,120 | ||||||||||||
Issuance
of additional shares of Clarus
|
- | 31 | 92 | 92 | ||||||||||||
Payment
of deferred compensation (5% notes)
|
- | - | 316 | 316 | ||||||||||||
Total
estimated purchase consideration
|
$ | 85,675 | 3,707 | $ | 33,086 | $ | 118,761 | |||||||||
Assets
Acquired and Liabilities Assumed
|
||||||||||||||||
Assets
|
||||||||||||||||
Cash
and cash equivalents
|
$ | 1,620 | $ | 1,446 | $ | 3,066 | ||||||||||
Accounts
receivable, net
|
11,558 | 3,053 | 14,611 | |||||||||||||
Inventories
|
25,340 | 4,390 | 29,730 | |||||||||||||
Prepaid
and other current assets
|
3,011 | 148 | 3,159 | |||||||||||||
Property
and equipment
|
13,687 | 693 | 14,380 | |||||||||||||
Amortizable
definite lived intangible assets
|
12,733 | 5,483 | 18,216 | |||||||||||||
Identifiable
indefinite lived intangible assets
|
19,600 | 13,050 | 32,650 | |||||||||||||
Goodwill
|
23,297 | 12,603 | 35,900 | |||||||||||||
Deferred
income taxes
|
513 | - | 513 | |||||||||||||
Other
long-term assets
|
- | 133 | 133 | |||||||||||||
Total
Assets
|
111,359 | 40,999 | 152,358 | |||||||||||||
Liabilities
|
||||||||||||||||
Accounts
payable and accrued liabilities
|
9,202 | 3,045 | 12,247 | |||||||||||||
Current
portion of debt
|
350 | - | 350 | |||||||||||||
Long-term
debt
|
245 | - | 245 | |||||||||||||
Other
long-term liabilities
|
685 | - | 685 | |||||||||||||
Deferred
income taxes
|
15,202 | 4,868 | 20,070 | |||||||||||||
Total
Liabilities
|
25,684 | 7,913 | 33,597 | |||||||||||||
Net
book value acquired
|
$ | 85,675 | $ | 33,086 | $ | 118,761 |
PRO FORMA
|
||||||||||||||||
THREE MONTHS ENDED
|
SIX MONTHS ENDED
|
|||||||||||||||
June 30, 2010
|
June 30, 2009
|
June 30, 2010
|
June 30, 2009
|
|||||||||||||
Revenues
|
$ | 23,735 | $ | 22,827 | $ | 56,848 | $ | 52,443 | ||||||||
Net
(loss)/income
|
$ | 57,851 | $ | (975 | ) | $ | 57,826 | $ | 195 | |||||||
Net
(loss)/income per share - basic
|
$ | 3.11 | $ | (0.06 | ) | $ | 3.26 | $ | 0.01 | |||||||
Net
(loss)/income per share - diluted
|
$ | 3.06 | $ | (0.06 | ) | $ | 3.21 | $ | 0.01 |
Predecessor
|
||||||||||||
Company
|
||||||||||||
June 30, 2010
|
December 31, 2009
|
June 30, 2009
|
||||||||||
Finished
goods
|
$ | 25,950 | $ | - | $ | 20,404 | ||||||
Work-in-process
|
567 | - | 465 | |||||||||
Raw
materials and supplies
|
4,810 | - | 4,711 | |||||||||
Total
Inventory
|
$ | 31,327 | $ | - | $ | 25,580 |
Predecessor
|
||||||||||||
Company
|
||||||||||||
June 30, 2010
|
December 31, 2009
|
June 30, 2009
|
||||||||||
Construction
in progress
|
$ | 1,382 | $ | - | $ | 725 | ||||||
Land
|
2,850 | - | 336 | |||||||||
Building
and improvements
|
2,685 | 1,894 | 4,279 | |||||||||
Furniture
and fixtures
|
1,415 | 453 | 2,177 | |||||||||
Computer
hardware and software
|
1,738 | 120 | 3,620 | |||||||||
Machinery
and equipment
|
4,463 | 144 | 8,662 | |||||||||
Total
Property & Equipment
|
$ | 14,533 | $ | 2,611 | $ | 19,799 | ||||||
Less
accumulated depreciation
|
(283 | ) | (1,915 | ) | (10,018 | ) | ||||||
Property
and equipment, net
|
$ | 14,250 | $ | 696 | $ | 9,781 |
June 30, 2010
|
|||||||||||||||
Accumulated
|
Weighted
Average
|
||||||||||||||
Gross
|
Amortization
|
Net
|
Useful Life
|
||||||||||||
Intangibles
subject to amortization
|
|||||||||||||||
Customer
relationships
|
$ | 16,376 | $ | (91 | ) | $ | 16,285 |
15.1
years
|
|||||||
Core
technologies
|
1,505 | (14 | ) | 1,491 |
9.3
years
|
||||||||||
Product
technologies
|
335 | (6 | ) | 329 |
4.6
years
|
||||||||||
Intangibles
not subject to amortization
|
|||||||||||||||
Tradenames
and trademarks
|
32,650 | - | 32,650 |
N/A
|
|||||||||||
Intangibles,
net
|
$ | 50,866 | $ | (111 | ) | $ | 50,755 | $ |
14.4 years
|
Predecessor
Company
|
|||||||||||||||
June 30, 2009
|
|||||||||||||||
Accumulated
|
Weighted
Average
|
||||||||||||||
Gross
|
Amortization
|
Net
|
Useful Life
|
||||||||||||
Intangibles
subject to amortization
|
|||||||||||||||
Product
technologies
|
$ | 68 | $ | (36 | ) | $ | 32 |
14.1
years
|
|||||||
Intangibles
not subject to amortization
|
|
||||||||||||||
Tradenames
and trademarks
|
897 | - | 897 |
N/A
|
|||||||||||
Intangibles,
net
|
$ | 965 | $ | (36 | ) | $ | 929 | $ |
14.1 years
|
Predecessor
|
||||||||||||
Company
|
||||||||||||
June 30, 2010
|
December 31, 2009
|
June 30, 2009
|
||||||||||
Revolving
credit facility (a)
|
$ | 9,894 | $ | - | $ | 12,669 | ||||||
5%
Senior Subordinated Notes due 2017 (b)
|
13,244 | - | - | |||||||||
Revolving
line of credit (c )
|
- | - | 2,763 | |||||||||
Note
payable to government agency (d)
|
- | - | 345 | |||||||||
Capital
leases (e)
|
429 | - | 613 | |||||||||
Total
|
23,567 | - | 16,390 | |||||||||
Less
current portion
|
(196 | ) | (2,992 | ) | ||||||||
Total
long term debt obligations
|
$ | 23,371 | $ | - | $ | 13,398 |
(a)
|
In
connection with the closing of the acquisition of BDE, the Company entered
into a loan agreement effective May 28, 2010 among Zions First National
Bank, a national banking association (“Lender”) and the Company and its
direct and indirect subsidiaries, BDE, Black Diamond Retail, Inc.
(“BD-Retail”), and Purchaser, as co-borrowers (the “Borrowers”) (the “Loan
Agreement”). Concurrently with the closing of the acquisition of BDE,
Gregory Mountain Products, LLC, as the surviving company of the Gregory
Merger, entered into an assumption agreement and became an additional
Borrower under the Loan Agreement.
|
(b)
|
In
connection with the Gregory Merger, $22,056 in subordinated notes were
issued. The notes have a seven year term, 5% stated interest rate payable
quarterly, and are prepayable at any time. Given the below market interest
rate for comparably secured notes and the relative illiquidity of the
notes, we have discounted it to $13,127 at date of
acquisition.
|
(c)
|
Unsecured
revolving line of credit with a bank with a maximum availability of
$3,685, interest at 2.0%. This revolving line of credit was paid off on
May 28, 2010.
|
(d)
|
Note
payable to a government agency which bears interest at 6.345%, requires
monthly installments of $5,409, and secured by real property and certain
equipment. This note was guaranteed by an executive officer and was paid
in full in December 2009.
|
(e)
|
Various
capital leases payable to banks: interest rates ranging from 4.63% to
7.75%; monthly installments ranging from $1 to $5; ending between October
2010 and April 2014; secured by certain
equipment.
|
2011
|
$ | - | ||
2012
|
- | |||
2013
|
9,894 | |||
2014
|
- | |||
2015
|
- | |||
Thereafter
|
13,244 | |||
$ | 23,138 |
2011
|
$ | 218 | ||
2012
|
151 | |||
2013
|
58 | |||
2014
|
39 | |||
2015
|
- | |||
Thereafter
|
- | |||
Total
Future minimum lease payments
|
466 | |||
Less
amount representing interest
|
(37 | ) | ||
Present
value of net minimum lease payments
|
429 | |||
Less
current portion
|
(196 | ) | ||
Long-term
capial lease obligations
|
$ | 233 |
2010
|
$ | 150 | ||
2011
|
150 | |||
2012
|
600 | |||
$ | 900 |
June 30, 2010
|
|||||
Notional
|
Latest
|
||||
Amount
|
Maturity
|
||||
Foreign
exchange contracts - USD
|
$ | 350 |
August-10
|
||
Foreign
exchange contracts - Norwegian Kroners
|
3,687 |
January-11
|
|||
Foreign
exchange contracts - Euros
|
10,060 |
May-11
|
|||
Foreign
exchange contracts - British Pounds
|
915 |
May-11
|
|||
Foreign
exchange contracts - Swiss Francs
|
14,950 |
June-11
|
|||
Foreign
exchange contracts - Canadian Dollars
|
7,698 |
June-11
|
Predecessor
Company
|
|||||
June 30, 2009
|
|||||
Notional
|
Latest
|
||||
Amount
|
Maturity
|
||||
Foreign
exchange contracts - Euros
|
$ | 2,500 |
October-09
|
||
Foreign
exchange contracts - Swiss Francs
|
750 |
November-09
|
|||
Non-deliverable
contracts - Chinese Yuans
|
25,300 |
February-10
|
Predecessor
Company
|
|||||
June
30, 2009
|
|||||
Notional
|
Latest
|
||||
Amount
|
Maturity
|
||||
Foreign
exchange contracts - Norwegian Kroners
|
2,244 |
December-09
|
|||
Foreign
exchange contracts - Euros
|
8,736 |
June-10
|
|||
Foreign
exchange contracts - British Pounds
|
922 |
June-10
|
|||
Foreign
exchange contracts - Swiss Francs
|
7,300 |
June-10
|
|
Level
1-
|
inputs
to the valuation methodology are quoted market prices for identical assets
or liabilities in active markets.
|
|
Level
2-
|
inputs
to the valuation methodology include quoted prices in markets that are not
active or model inputs that are observable either directly or indirectly
for substantially the full term of the asset or
liability.
|
|
Level
3-
|
inputs
to the valuation methodology are based on prices or valuation techniques
that are unobservable.
|
June 30, 2010
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Financial
Assets:
|
||||||||||||||||
Cash
equivalents
|
$ | 3,292 | $ | - | $ | - | $ | 3,292 | ||||||||
Forward
exchange contracts
|
- | 2,060 | - | 2,060 | ||||||||||||
Total
financial assets
|
$ | 3,292 | $ | 2,060 | $ | - | $ | 5,352 | ||||||||
Financial
Liabilities
|
||||||||||||||||
Forward
exchange contracts
|
$ | - | $ | 9 | $ | - | $ | 9 | ||||||||
Total
financial liabilities
|
$ | - | $ | 9 | $ | - | $ | 9 |
December 31, 2009
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Cash
equivalents
|
$ | 58,363 | $ | - | $ | - | $ | 58,363 | ||||||||
Marketable
securities
|
24,059 | - | - | 24,059 | ||||||||||||
Total
assets
|
$ | 82,422 | $ | - | $ | - | $ | 82,422 |
Predecessor
Company
|
||||||||||||||||
June 30, 2009
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Cash
equivalents
|
$ | 395 | $ | - | $ | - | $ | 395 | ||||||||
Forward
exchange contracts
|
- | 57 | - | 57 | ||||||||||||
Total
assets
|
$ | 395 | $ | 57 | $ | - | $ | 452 | ||||||||
Liabilities
|
||||||||||||||||
Forward
interest rate swap
|
$ | - | $ | - | $ | 201 | $ | 201 | ||||||||
Forward
exchange contracts
|
- | 593 | - | 593 | ||||||||||||
Total
liabilities
|
$ | - | $ | 593 | $ | 201 | $ | 794 |
THREE
MONTHS ENDED
|
SIX
MONTHS ENDED
|
|||||||||||||||
June 30, 2010
|
June 30, 2009
|
June 30, 2010
|
June 30, 2009
|
|||||||||||||
BASIC
EARNINGS (LOSS) PER SHARE CALCULATION:
|
||||||||||||||||
Net
income (loss)
|
$ | 57,293 | $ | (921 | ) | $ | 54,938 | $ | (1,522 | ) | ||||||
Weighted
average common shares - basic
|
18,625 | 16,867 | 17,751 | 16,867 | ||||||||||||
Basic
net income (loss) per share
|
$ | 3.08 | $ | (0.05 | ) | $ | 3.09 | $ | (0.09 | ) | ||||||
DILUTED
EARNINGS (LOSS) PER SHARE CALCULATION:
|
||||||||||||||||
Net
income (loss)
|
$ | 57,293 | $ | (921 | ) | $ | 54,938 | $ | (1,522 | ) | ||||||
Weighted
average common shares - basic
|
18,625 | 16,867 | 17,751 | 16,867 | ||||||||||||
Effect
of dilutive stock options
|
58 | - | 20 | - | ||||||||||||
Effect
of dilutive restricted stock
|
244 | - | 254 | - | ||||||||||||
Weighted
average common shares - diluted
|
18,927 | 16,867 | 18,025 | 16,867 | ||||||||||||
Diluted
net income (loss) per share
|
$ | 3.03 | $ | (0.05 | ) | $ | 3.05 | $ | (0.09 | ) |
Number
of Options
|
60,000 | 40,000 | 472,500 | |||||||||
Option
Vesting Period
|
Immediate
|
Immediate
|
Four
Years
|
|||||||||
Grant
Price
|
$ | 6.85 | $ | 6.85 | $ | 6.85 | ||||||
Dividend
Yield
|
0.00 | % | 0.00 | % | 0.00 | % | ||||||
Expected
Volatility (a)
|
54.60 | % | 71.70 | % | 55.10 | % | ||||||
Risk-free
Interest Rate
|
2.10 | % | 0.34 | % | 2.75 | % | ||||||
Expected
Life (Years)
|
5 | 1.29 | 6.45 | |||||||||
Weighted
Average Fair Value
|
$ | 3.33 | $ | 2.18 | $ | 3.82 | ||||||
Aggregate
Fair Value
|
$ | 200 | $ | 87 | $ | 1,805 |
(a)
|
Since
BDE’s historical volatility was not representative of the business going
in the future, therefore, BDE’s historical volatility was based on the
historical volatility of a peer group of companies within similar
industries and similar size as BDE.
|
Number
issued
|
250,000 | 250,000 | ||||||
Vesting
Period
|
$10.00
Stock Price target
|
$12.00
Stock Price target
|
||||||
Grant
Price
|
$ | 6.85 | $ | 6.85 | ||||
Dividend
Yield
|
0.00 | % | 0.00 | % | ||||
Expected
Volatility (a)
|
56.60 | % | 56.60 | % | ||||
Risk-free
Interest Rate
|
2.88 | % | 2.88 | % | ||||
Expected
Life (Years)
|
1.12 | 1.62 | ||||||
Weighted
Average Fair Value
|
$ | 6.13 | $ | 5.83 | ||||
Aggregate
Fair Value
|
$ | 1,533 | $ | 1,457 |
(a)
|
Since
BDE’s historical volatility was not representative of the ongoing future
business, accordingly, BDE’s historical volatility was based on the
historical volatility of a peer group of companies within similar
industries and similar size as BDE.
|
THREE
MONTHS ENDED
|
PREDECESSOR
COMPANY (NOTE 1)
|
|||||||||||||||
TWO
MONTHS
|
THREE
MONTHS
|
|||||||||||||||
ENDED
|
ENDED
|
|||||||||||||||
June 30, 2010
|
June 30, 2009
|
May 28, 2010
|
June 30, 2009
|
|||||||||||||
Restricted
stock/deferred compensation
|
$ | 1,082 | $ | 67 | $ | 12 | $ | 7 | ||||||||
Restricted
stock units
|
683 | - | - | - | ||||||||||||
Stock
options
|
1,673 | 137 | 94 | 16 | ||||||||||||
Stock
subscription expense (see Note 15)
|
145 | - | - | - | ||||||||||||
Total
|
$ | 3,583 | $ | 204 | $ | 106 | $ | 23 |
SIX
MONTHS ENDED
|
PREDECESSOR
COMPANY (NOTE 1)
|
|||||||||||||||
FIVE
MONTHS
|
SIX
MONTHS
|
|||||||||||||||
ENDED
|
ENDED
|
|||||||||||||||
June 30, 2010
|
June 30, 2009
|
May 28, 2010
|
June 30, 2009
|
|||||||||||||
Restricted
stock/deferred compensation
|
$ | 1,149 | $ | 134 | $ | 15 | $ | 8 | ||||||||
Restricted
stock units
|
683 | - | - | - | ||||||||||||
Stock
options
|
1,723 | 209 | 360 | 16 | ||||||||||||
Stock
subscription expense (see Note 15)
|
145 | - | - | - | ||||||||||||
Total
|
$ | 3,700 | $ | 343 | $ | 375 | $ | 24 |
Options
|
Weighted
Average
Exercise Price
|
Restricted
Stock
|
Restricted
Stock Units
|
|||||||||||||
Outstanding
at December 31, 2009
|
1,968,750 | $ | 7.01 | 500,000 | - | |||||||||||
Granted
|
572,500 | 6.85 | 500,000 | 92,401 | ||||||||||||
Exercised
|
(100,000 | ) | 5.98 | (500,000 | ) | - | ||||||||||
Forfeited
|
- | |||||||||||||||
Outstanding
at June 30, 2010
|
2,441,250 | $ | 7.02 | 500,000 | 92,401 | |||||||||||
Options
exercisable at June 30, 2010
|
1,968,750 | $ | 7.06 |
Exercise Price Range
|
Outstanding
|
Exercisable
|
Remaining
Life In Years
|
Weighted
Average
Exercise
Price
|
||||||||||||
$3.85
- $ 5.23
|
183,750 | 183,750 | 3.6 | $ | 4.35 | |||||||||||
$5.24
- $10.00
|
2,257,500 | 1,785,000 | 4.3 | $ | 5.80 | |||||||||||
2,441,250 | 1,968,750 | 4.0 | $ | 7.06 |
THREE
MONTHS ENDED
|
PREDECESSOR
COMPANY (NOTE 1)
|
|||||||||||||||
TWO
MONTHS
|
THREE
MONTHS
|
|||||||||||||||
ENDED
|
ENDED
|
|||||||||||||||
June 30, 2010
|
June 30, 2009
|
May 28, 2010
|
June 30, 2009
|
|||||||||||||
Net
income/(loss)
|
$ | 57,293 | $ | (921 | ) | $ | 915 | $ | (459 | ) | ||||||
Decrease
in unrealized gain on marketable securities
|
(2 | ) | (97 | ) | - | - | ||||||||||
Increase
in hedge foreign exchange contact
|
- | - | - | (295 | ) | |||||||||||
Total
|
$ | 57,291 | $ | (1,018 | ) | $ | 915 | $ | (754 | ) |
FIVE
MONTHS
|
SIX
MONTHS
|
|||||||||||||||
ENDED
|
ENDED
|
|||||||||||||||
June 30, 2010
|
June 30, 2009
|
May 28, 2010
|
June 30, 2009
|
|||||||||||||
Net
income/(loss)
|
$ | 54,938 | $ | (1,522 | ) | $ | 2,315 | $ | 16 | |||||||
Decrease
in unrealized gain on marketable securities
|
(6 | ) | (399 | ) | - | - | ||||||||||
Increase
in hedge foreign exchange contact
|
- | - | - | (461 | ) | |||||||||||
Total
|
$ | 54,932 | $ | (1,921 | ) | $ | 2,315 | $ | (445 | ) |
2010 | $ | 638 | ||
2011
|
1,078 | |||
2012
|
756 | |||
2013
|
502 | |||
2014
|
39 | |||
2015
|
66 | |||
Thereafter
|
- | |||
Total
operating lease payments
|
$ | 3,079 |
Expiration
Dates
December
31,
|
Net
Operating
Loss
Amount
|
|||
2010
|
$ | 7,417 | ||
2011
|
7,520 | |||
2012
|
5,157 | |||
2020
|
29,533 | |||
2021
|
50,430 | |||
2022
|
115,000 | |||
2023
|
5,712 | |||
2024
|
3,566 | |||
2025
|
1,707 | |||
2026
|
476 | |||
2028
|
1,360 | |||
2029
|
4,074 | |||
2030
|
7,626 | |||
Total
|
239,578 | |||
Section
382 Limitation
|
(2,037 | ) | ||
After
Limitations
|
$ | 237,541 |
|
-
|
The Company uses derivative
instruments to hedge currency rate movements on foreign currency
denominated assets, liabilities and cash flows. The Company
enters into forward contracts, option contracts and non-deliverable
forwards to manage the impact of foreign currency fluctuations on a
portion of its forecasted foreign currency
exposure. These derivatives are carried at fair value on
the Company’s condensed consolidated balance sheets in other assets and
accrued liabilities. Changes in fair value of the derivatives
not designated as hedge instruments are included in the determination of
net income. For derivative contracts designated as hedge
instruments, the effective portion of gains and losses resulting from
changes in fair value of the instruments are included in accumulated other
comprehensive income and reclassified to earnings in the period the
underlying hedged item is recognized in earnings. The Company
uses operating budgets and cash flow forecasts to estimate future economic
exposure and to determine the level and timing of derivative transactions
intended to mitigate such exposures in accordance with its risk management
polices.
|
|
-
|
The
Company sells its products pursuant to customer orders or sales contracts
entered into with its customers. Revenue is recognized when title and risk
of loss pass to the customer and when collectability is reasonably
assured. Charges for shipping and handling fees are included in net sales
and the corresponding shipping and handling expenses are included in cost
of sales in the accompanying condensed consolidated statements of
operations.
|
|
-
|
The
Company accounts for income taxes using the asset and liability method.
The asset and liability method provides that deferred tax assets and
liabilities are recognized for the expected future tax consequences of
temporary differences between the financial reporting and tax bases of
assets and liabilities, and for operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using the
currently enacted tax rates and laws that will be in effect when the
differences are expected to reverse. A valuation allowance is recorded for
those deferred tax assets for which it is not more likely than not that
realization will occur.
|
-
|
The Company records compensation expense for all share-based awards granted based on the fair value of the award at the time of the grant. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model that uses assumptions and estimates that the Company believes are reasonable. The Company recognizes the cost of the share-based awards on a straight-line basis over the requisite service period of the award. |
THREE
MONTHS
|
TWO
MONTHS
|
THREE
MONTHS
|
THREE
MONTHS
|
|||||||||||||||||||||
ENDED
|
ENDED
|
ENDED
|
ENDED
|
|||||||||||||||||||||
Predecessor
|
Predecessor
|
|||||||||||||||||||||||
Company
|
Combined
|
Company
|
Combined
|
|||||||||||||||||||||
June
30, 2010
|
May
28, 2010
|
June
30, 2010
|
June
30, 2009
|
June
30, 2009
|
June
30, 2009
|
|||||||||||||||||||
Revenue
|
||||||||||||||||||||||||
Domestic
sales
|
$ | 4,036 | $ | 5,932 | $ | 9,968 | $ | - | $ | 7,815 | $ | 7,815 | ||||||||||||
International
sales
|
3,708 | 5,354 | 9,062 | - | 7,404 | 7,404 | ||||||||||||||||||
Total
revenue
|
7,744 | 11,286 | 19,030 | - | 15,219 | 15,219 | ||||||||||||||||||
Cost
of goods sold
|
5,936 | 6,628 | 12,564 | - | 9,996 | 9,996 | ||||||||||||||||||
Gross
profit
|
1,808 | 4,658 | 6,466 | - | 5,223 | 5,223 | ||||||||||||||||||
Operating
expenses
|
||||||||||||||||||||||||
Selling,
general and administrative
|
7,331 | 4,823 | 12,154 | 1,118 | 5,825 | 6,943 | ||||||||||||||||||
Restructuring
charge
|
1,377 | - | 1,377 | - | - | - | ||||||||||||||||||
Merger
and integration
|
780 | - | 780 | - | - | - | ||||||||||||||||||
Transaction
costs
|
3,253 | - | 3,253 | - | - | - | ||||||||||||||||||
Total
operating expenses
|
12,741 | 4,823 | 17,564 | 1,118 | 5,825 | 6,943 | ||||||||||||||||||
Operating
income (loss)
|
(10,933 | ) | (165 | ) | (11,098 | ) | (1,118 | ) | (602 | ) | (1,720 | ) | ||||||||||||
Other
income (expense)
|
||||||||||||||||||||||||
Interest
expense
|
(336 | ) | (59 | ) | (395 | ) | - | (164 | ) | (164 | ) | |||||||||||||
Interest
income
|
17 | 10 | 27 | 197 | - | 197 | ||||||||||||||||||
Other,
net
|
112 | 1,511 | 1,623 | - | 136 | 136 | ||||||||||||||||||
Total
other income (expense), net
|
(207 | ) | 1,462 | 1,255 | 197 | (28 | ) | 169 | ||||||||||||||||
Income
(loss) before income tax
|
(11,140 | ) | 1,297 | (9,843 | ) | (921 | ) | (630 | ) | (1,551 | ) | |||||||||||||
Income
tax (benefit) provision
|
(68,433 | ) | 382 | (68,051 | ) | - | (171 | ) | (171 | ) | ||||||||||||||
Net
income (loss)
|
$ | 57,293 | $ | 915 | $ | 58,208 | $ | (921 | ) | $ | (459 | ) | $ | (1,380 | ) |
SIX
MONTHS ENDED
|
FIVE
MONTHS
|
SIX
MONTHS ENDED
|
||||||||||||||||||||||
ENDED
|
||||||||||||||||||||||||
Predecessor
|
Predecessor
|
|||||||||||||||||||||||
Company
|
Combined
|
Company
|
Combined
|
|||||||||||||||||||||
June
30, 2010
|
May
28, 2010
|
June
30, 2010
|
June
30, 2009
|
June
30, 2009
|
June
30, 2009
|
|||||||||||||||||||
Revenue
|
||||||||||||||||||||||||
Domestic
sales
|
$ | 4,036 | $ | 15,751 | $ | 19,787 | $ | - | $ | 16,338 | $ | 16,338 | ||||||||||||
International
sales
|
3,708 | 19,192 | 22,900 | - | 19,669 | 19,669 | ||||||||||||||||||
Total
revenue
|
7,744 | 34,943 | 42,687 | - | 36,007 | 36,007 | ||||||||||||||||||
Cost
of goods sold
|
5,936 | 21,165 | 27,101 | - | 23,131 | 23,131 | ||||||||||||||||||
Gross
profit
|
1,808 | 13,778 | 15,586 | - | 12,876 | 12,876 | ||||||||||||||||||
Operating
expenses
|
||||||||||||||||||||||||
Selling,
general and administrative
|
8,199 | 12,138 | 20,337 | 2,130 | 12,450 | 14,580 | ||||||||||||||||||
Restructuring
charge
|
1,377 | - | 1,377 | - | - | - | ||||||||||||||||||
Merger
and integration
|
780 | - | 780 | - | - | - | ||||||||||||||||||
Transaction
costs
|
4,762 | - | 4,762 | - | - | - | ||||||||||||||||||
Total
operating expenses
|
15,118 | 12,138 | 27,256 | 2,130 | 12,450 | 14,580 | ||||||||||||||||||
Operating
income (loss)
|
(13,310 | ) | 1,640 | (11,670 | ) | (2,130 | ) | 426 | (1,704 | ) | ||||||||||||||
Other
income (expense)
|
||||||||||||||||||||||||
Interest
expense
|
(336 | ) | (165 | ) | (501 | ) | - | (626 | ) | (626 | ) | |||||||||||||
Interest
income
|
39 | 3 | 42 | 608 | - | 608 | ||||||||||||||||||
Other,
net
|
112 | 1,803 | 1,915 | - | 225 | 225 | ||||||||||||||||||
Total
other income (expense), net
|
(185 | ) | 1,641 | 1,456 | 608 | (401 | ) | 207 | ||||||||||||||||
Income
(loss) before income tax
|
(13,495 | ) | 3,281 | (10,214 | ) | (1,522 | ) | 25 | (1,497 | ) | ||||||||||||||
Income
tax (benefit) provision
|
(68,433 | ) | 966 | (67,467 | ) | - | 9 | 9 | ||||||||||||||||
Net
income (loss)
|
$ | 54,938 | $ | 2,315 | $ | 57,253 | $ | (1,522 | ) | $ | 16 | $ | (1,506 | ) |
SIX
MONTHS
|
FIVE
MONTHS
|
SIX
MONTHS
|
SIX
MONTHS ENDED
|
|||||||||||||||||||||
ENDED
|
ENDED
|
ENDED
|
|
|||||||||||||||||||||
|
Predecessor
|
|
Predecessor
|
|||||||||||||||||||||
|
Company
|
Combined
|
Company
|
Combined
|
||||||||||||||||||||
June
30, 2010
|
May
28, 2010
|
June
30, 2010
|
June
30, 2009
|
June
30, 2009
|
June
30, 2009
|
|||||||||||||||||||
Net
cash (used in ) provided by operating activities
|
$ | (9,408 | ) | $ | 7,412 | $ | (1,996 | ) | $ | (1,753 | ) | $ | 4,806 | $ | 3,053 | |||||||||
Net
cash (used in) provided by investing activities
|
(58,829 | ) | (788 | ) | (59,617 | ) | 48,087 | (2,227 | ) | 45,860 | ||||||||||||||
Net
cash provided by (used in) financing activities
|
13,133 | (6,261 | ) | 6,872 | - | (3,303 | ) | (3,303 | ) | |||||||||||||||
Effect
of foreign exchange rates on cash
|
33 | (60 | ) | (27 | ) | - | (131 | ) | (131 | ) | ||||||||||||||
Change
in cash and cash equivalents
|
(55,071 | ) | 303 | (54,768 | ) | 46,334 | (855 | ) | 45,479 | |||||||||||||||
Cash
and cash equivalents, beginning of period
|
58,363 | 1,317 | 59,680 | 19,342 | 2,126 | 21,468 | ||||||||||||||||||
Cash
and cash equivalents, end of period
|
$ | 3,292 | $ | 1,620 | $ | 4,912 | $ | 65,676 | $ | 1,271 | $ | 66,947 |
Payments Due by Period
|
||||||||||||||||||||
Contractural
Obligations
|
Remainder
|
|||||||||||||||||||
Total
|
of 2010
|
2011-2012
|
2013-2014
|
Thereafter
|
||||||||||||||||
Long-term
debt, including current portion
|
$ | 31,792 | $ | - | $ | - | $ | 9,736 | $ | 22,056 | ||||||||||
Interest
|
8,688 | 723 | 2,866 | 2,342 | 2,757 | |||||||||||||||
Operating
lease obligations
|
3,079 | 638 | 1,834 | 541 | 66 | |||||||||||||||
$ | 43,559 | $ | 1,361 | $ | 4,700 | $ | 12,619 | $ | 24,879 |
|
•
|
protectionist
policies restricting or impairing the manufacturing, sales or import and
export of our products;
|
|
•
|
new
restrictions on access to markets;
|
|
•
|
lack
of developed infrastructure;
|
|
•
|
inflation
or recession;
|
|
•
|
devaluations
or fluctuations in the value of
currencies;
|
|
•
|
changes
in and the burdens and costs of compliance with a variety of foreign laws
and regulations, including tax laws, accounting standards, environmental
laws and occupational health and safety
laws;
|
|
•
|
social,
political or economic instability;
|
|
•
|
acts
of war and terrorism;
|
|
•
|
natural
disasters or other crises;
|
|
•
|
reduced
protection of intellectual property rights in some
countries;
|
|
•
|
increases
in duties and taxation; and
|
|
•
|
restrictions
on transfer of funds and/or exchange of currencies; expropriation of
assets; and other adverse changes in policies, including monetary, tax
and/or lending policies, encouraging foreign investment or foreign trade
by our host countries.
|
|
•
|
an
increase or decrease in consumer demand for our products or for products
of our competitors;
|
|
•
|
our
failure to accurately forecast customer acceptance of new
products;
|
|
•
|
new
product introductions by
competitors;
|
|
•
|
unanticipated
changes in general market conditions or other factors, which may result in
cancellations of orders or a reduction or increase in the rate of reorders
placed by retailers;
|
|
•
|
weak
economic conditions or consumer confidence, which could reduce demand for
discretionary items such as our
products; and
|
|
•
|
terrorism
or acts of war, or the threat of terrorism or acts of war, which could
adversely affect consumer confidence and spending or interrupt production
and distribution of product and raw
materials.
|
|
•
|
political
or labor instability in countries where our facilities, contractors and
suppliers are located;
|
|
•
|
political
or military conflict, which could cause a delay in the transportation of
raw materials and products to us and an increase in transportation
costs;
|
|
•
|
heightened
terrorism security concerns, which could subject imported or exported
goods to additional, more frequent or more lengthy inspections, leading to
delays in deliveries or impoundment of goods for extended periods or could
result in decreased scrutiny by customs officials for counterfeit goods,
leading to lost sales, increased costs for our anti-counterfeiting
measures and damage to the reputation of its
brands;
|
|
•
|
disease
epidemics and health-related concerns, such as the H1N1 virus, bird flu,
SARS, mad cow and hoof-and-mouth disease outbreaks in recent years, which
could result in closed factories, reduced workforces, scarcity of raw
materials and scrutiny or embargo of ours goods produced in infected
areas;
|
|
•
|
imposition
of regulations and quotas relating to imports and our ability to adjust
timely to changes in trade regulations, which, among other things, could
limit our ability to produce products in cost-effective countries that
have the labor and expertise
needed;
|
|
•
|
imposition
of duties, taxes and other charges on
imports; and
|
|
•
|
imposition
or the repeal of laws that affect intellectual property
rights.
|
|
•
|
loss
of key employees, customers or suppliers of acquired
businesses;
|
|
•
|
diversion
of management's time and attention from our core
businesses;
|
|
•
|
adverse
effects on existing business relationships with suppliers and
customers;
|
|
•
|
our
ability to secure necessary
financing;
|
|
•
|
our
ability to realize operating efficiencies, synergies, or other benefits
expected from an acquisition;
|
|
•
|
risks
associated with entering markets in which we have limited or no
experience;
|
|
•
|
risks
associated with our ability to execute successful due diligence;
and
|
|
•
|
assumption
of contingent or undisclosed liabilities of acquisition
targets.
|
|
•
|
incur
debt (including secured debt) or issue
guarantees;
|
|
•
|
grant
liens on its assets;
|
|
•
|
sell
substantially of our assets; and
|
|
•
|
enter
into certain mergers or consolidations or make certain
acquisitions.
|
Votes
For
|
Withheld
|
|
1) To
elect seven members to serve on the Board of Directors until the next
meeting of stockholders and until their successors are duly elected and
qualified.
Warren
B. Kanders
Robert
R. Schiller
Peter
Metcalf
Donald L. House
Nicholas Sokolow
Michael Henning
Philip N. Duff
|
13,790,720
13,791,277
13,888,427
13,888,377
13,791,127
13,888,427
13,888,477
|
155,078
154,521
57,371
57,421
154,671
57,371
57,321
|
Votes
For
|
Votes
Against
|
Votes
Abstain
|
Broker
Non-Votes
|
||
2) Proposal
to approve an amendment to the Company’s Amended and Restated Certificate
of Incorporation, as amended, to change the Company’s name from Clarus
Corporation to “Black Diamond Equipment, Inc.”:
|
18,429,078
|
82,005
|
26,844
|
---
|
|
3) Proposal
to approve an amendment to the Company’s Amended and Restated Bylaws,
as amended, to eliminate stockholder supermajority
vote requirements for certain bylaw amendments:
|
15,924,467
|
2,590,224
|
23,233
|
---
|
|
4) Proposal
to re-approve the material
terms of the performance goals in the
Clarus Corporation 2005 Stock
Incentive Plan pursuant to Section
162(m) of the Internal Revenue Code of
1986, as amended (the “Code”) and to
approve an amendment to the Clarus
Corporation 2005 Stock Incentive Plan
limiting the maximum aggregate
number of incentive stock options that
may be awarded under the plan
pursuant to Section 422 of the Code:
|
13,054,367
|
868,071
|
23,360
|
4,592,129
|
Exhibit
|
||
Number
|
Description
|
|
2.1
|
Agreement
and Plan of Merger, dated as of May 7, 2010, by and among Clarus
Corporation, Everest/Sapphire Acquisition, LLC, Sapphire Merger Corp.,
Black Diamond Equipment, Ltd. and Ed McCall, as Stockholders’
Representative (incorporated herein by reference to Exhibit 2.1 of the
Current Report on Form 8-K dated May 7, 2010, filed by Clarus Corporation,
on May 10, 2010).
|
|
2.2
|
Agreement
and Plan of Merger, dated as of May 7, 2010, by and among Clarus
Corporation, Everest/Sapphire Acquisition, LLC, Everest Merger I Corp.,
Everest Merger II, LLC, Gregory Mountain Products, Inc., Kanders GMP
Holdings, LLC and Schiller Gregory Investment Company, LLC (incorporated
herein by reference to Exhibit 2.2 of the Current Report on Form 8-K dated
May 7, 2010, filed by Clarus Corporation, on May 10,
2010).
|
|
3.1
|
Amendment
No. 2 to the Amended and Restated Bylaws of the Company (incorporated
herein by reference to Exhibit 3.1 of the Current Report on Form 8-K dated
May 28, 2010, filed by Clarus Corporation, on June 4,
2010).
|
|
3.2
|
Amendment
No. 3 to the Amended and Restated Bylaws.
|
|
10.2
|
Promissory
Note, dated May 28, 2010, by and among Zions First National Bank, a
national banking association, the Company, Black Diamond Equipment Ltd.,
Black Diamond Retail, Inc., and Everest/Sapphire Acquisition, LLC, as
co-borrowers (incorporated herein by reference to Exhibit 10.2 of the
Current Report on Form 8-K dated May 28, 2010, filed by Clarus
Corporation, on June 4, 2010).
|
|
10.3
|
Assumption
Agreement, dated May 28, 2010, between Zions First National Bank, a
national banking association and Gregory Mountain Products, LLC
(incorporated herein by reference to Exhibit 10.3 of the Current Report on
Form 8-K dated May 28, 2010, filed by Clarus Corporation, on June 4,
2010).
|
|
10.4
|
First
Substitute Promissory Note, dated May 28, 2010, by and among Zions First
National Bank, a national banking association, the Company, Black Diamond
Equipment Ltd., Black Diamond Retail, Inc., Everest/Sapphire Acquisition,
LLC and Gregory Mountain Products, LLC, as co-borrowers (incorporated
herein by reference to Exhibit 10.4 of the Current Report on Form 8-K
dated May 28, 2010, filed by Clarus Corporation, on June 4,
2010).
|
|
10.5
|
Subordination
Agreement, dated May 28, 2010, by and among Zions First National Bank, a
national banking association, the Company, Black Diamond Equipment Ltd.,
Black Diamond Retail, Inc., Everest/Sapphire Acquisition, LLC and Gregory
Mountain Products, LLC, as co-borrowers, and Kanders GMP Holdings, LLC
(incorporated herein by reference to Exhibit 10.5 of the Current Report on
Form 8-K dated May 28, 2010, filed by Clarus Corporation, on June 4,
2010).
|
|
10.6
|
Subordination
Agreement, dated May 28, 2010, by and among Zions First National Bank, a
national banking association, the Company, Black Diamond Equipment Ltd.,
Black Diamond Retail, Inc., Everest/Sapphire Acquisition, LLC and Gregory
Mountain Products, LLC, as co-borrowers, and Schiller Gregory Investment
Company, LLC (incorporated herein by reference to Exhibit 10.6 of the
Current Report on Form 8-K dated May 28, 2010, filed by Clarus
Corporation, on June 4, 2010)..
|
|
10.7
|
Escrow
Agreement, dated May 28, 2010, by and among Clarus Corporation,
Everest/Sapphire Acquisition, LLC, U.S. Bank National Association, Ed
McCall, and Black Diamond Equipment, Ltd (incorporated herein by reference
to Exhibit 10.7 of the Current Report on Form 8-K dated May 28, 2010,
filed by Clarus Corporation, on June 4, 2010).
|
|
10.8
|
Form
of Black Diamond Registration Rights Agreement, dated May 28, 2010
(incorporated herein by reference to Exhibit 10.8 of the Current Report on
Form 8-K dated May 28, 2010, filed by Clarus Corporation, on June 4,
2010).
|
10.9
|
Form
of 5% Subordinated Promissory Note Due May 28, 2017 (incorporated herein
by reference to Exhibit 10.9 of the Current Report on Form 8-K dated May
28, 2010, filed by Clarus Corporation, on June 4,
2010).
|
|
10.10
|
Form
of Gregory Registration Rights Agreement, dated May 28, 2010 (incorporated
herein by reference to Exhibit 10.10 of the Current Report on Form 8-K
dated May 28, 2010, filed by Clarus Corporation, on June 4,
2010).
|
|
10.11
|
Form
of Lock-up Agreement dated May 28, 2010 (incorporated herein by reference
to Exhibit 10.11 of the Current Report on Form 8-K dated May 28, 2010,
filed by Clarus Corporation, on June 4, 2010).
|
|
10.12
|
Form
of Restrictive Covenant Agreement, dated May 28, 2010 (incorporated herein
by reference to Exhibit 10.12 of the Current Report on Form 8-K dated May
28, 2010, filed by Clarus Corporation, on June 4,
2010).
|
|
10.13
|
Employment
Agreement, dated as of May 28, 2010, between Clarus Corporation and Warren
B. Kanders (incorporated herein by reference to Exhibit 10.13 of the
Current Report on Form 8-K dated May 28, 2010, filed by Clarus
Corporation, on June 4, 2010).
|
|
10.14
|
Employment
Agreement, dated as of May 28, 2010, between Clarus Corporation and Robert
R. Schiller (incorporated herein by reference to Exhibit 10.14 of the
Current Report on Form 8-K dated May 28, 2010, filed by Clarus
Corporation, on June 4, 2010).
|
|
10.15
|
Employment
Agreement, dated as of May 7, 2010, between Clarus Corporation and Peter
Metcalf (incorporated herein by reference to Exhibit 10.1 of the Company’s
Current Report on Form 8-K filed with the Securities and Exchange
Commission on May 10, 2010).
|
|
10.16
|
Amendment
No. 1 to Employment Agreement, dated as of May 28, 2010, between Clarus
Corporation and Peter Metcalf (incorporated herein by reference to Exhibit
10.16 of the Current Report on Form 8-K dated May 28, 2010, filed by
Clarus Corporation, on June 4, 2010).
|
|
10.17
|
Restricted
Stock Agreement, dated May 28, 2010, between Clarus Corporation and Warren
B. Kanders (incorporated herein by reference to Exhibit 10.17 of the
Current Report on Form 8-K dated May 28, 2010, filed by Clarus
Corporation, on June 4, 2010).
|
|
10.18
|
Transition
Agreement, dated May 28, 2010 between Clarus Corporation and Kanders and
Company, Inc (incorporated herein by reference to Exhibit 10.18 of the
Current Report on Form 8-K dated May 28, 2010, filed by Clarus
Corporation, on June 4, 2010).
|
|
31.1
|
Certification
of Principal Executive Officer pursuant to Rule 13a-14(a) as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
31.2
|
Certification
of Principal Financial Officer pursuant to Rule 13a-14(a) as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
32.1
|
Certification
of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
32.2
|
Certification
of Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
CLARUS
CORPORATION
|
|
Date:
August 9, 2010
|
|
/s/ Peter Metcalf
|
|
Peter
Metcalf
|
|
President
and Chief Executive Officer
|
|
(Principal
Executive Officer)
|
|
/s/ Robert Peay
|
|
Robert
Peay,
|
|
Chief
Financial Officer
|
|
(Principal
Financial and Chief
|
|
Accounting
Officer)
|
Exhibit
|
||
3.2
|
Amendment
No. 3 to the Amended and Restated Bylaws.
|
|
31.1
|
Certification
of Principal Executive Officer pursuant to Rule 13a-14(a) as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
31.2
|
Certification
of Principal Financial Officer pursuant to Rule 13a-14(a) as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
32.1
|
Certification
of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
32.2
|
Certification
Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|