# Compass Diversified Holdings: Form 10-Q for the period ended Jun 30, 2011

- Company: [Compass Diversified Holdings](/companies/codi.md) (CIK 1345126)
- Form: 10-Q
- Filed: 2011-08-09
- Accepted by EDGAR: Aug 9, 2011, 10:31 ET
- Period: 2011-06-30
- Accession: 0000950123-11-074777
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1345126/000095012311074777/w83198e10vq.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1345126/000095012311074777/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2011-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2011-04-01 to 2011-06-30 | $428.1m | us-gaap:SalesRevenueNet |
| Revenue | 6 months, 2011-01-01 to 2011-06-30 | $852.2m | us-gaap:SalesRevenueNet |
| Cost of revenue | 3 months, 2011-04-01 to 2011-06-30 | $114.2m | us-gaap:CostOfGoodsSold |
| Cost of revenue | 6 months, 2011-01-01 to 2011-06-30 | $233.8m | us-gaap:CostOfGoodsSold |
| Gross profit | 3 months, 2011-04-01 to 2011-06-30 | $94.3m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2011-01-01 to 2011-06-30 | $183.9m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2011-04-01 to 2011-06-30 | $44.8m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2011-01-01 to 2011-06-30 | $91.2m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2011-04-01 to 2011-06-30 | $14.6m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2011-01-01 to 2011-06-30 | $13.2m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2011-04-01 to 2011-06-30 | $2.3m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2011-01-01 to 2011-06-30 | $4.9m | us-gaap:InterestExpense |
| Income tax | 3 months, 2011-04-01 to 2011-06-30 | $3.8m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2011-01-01 to 2011-06-30 | $6.2m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2011-04-01 to 2011-06-30 | $6.4m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2011-01-01 to 2011-06-30 | −$596.0k | us-gaap:NetIncomeLoss |
| Operating cash flow | 6 months, 2011-01-01 to 2011-06-30 | $48.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2011-01-01 to 2011-06-30 | $11.4m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 6 months, 2011-01-01 to 2011-06-30 | $32.7m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2011-06-30 | $9.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2011-06-30 | $334.5m | us-gaap:AssetsCurrent |
| Total assets | at 2011-06-30 | $976.4m | us-gaap:Assets |
| Current liabilities | at 2011-06-30 | $182.5m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2011-06-30 | $428.9m | us-gaap:Liabilities |
| Long-term debt | at 2011-06-30 | $86.0m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2011-06-30 | $2.0m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2011-06-30 | $454.9m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 113,060 characters.

***This item 2 contains forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q are subject to a number of risks and uncertainties, some of which are beyond our control. Our actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which we are not currently aware or which we currently deem immaterial could also cause our actual results to differ, including those discussed in the sections entitled “Forward-Looking Statements” and “Risk Factors” included elsewhere in this Quarterly Report as well as those risk factors discussed in the section entitled “Risk Factors” in our Annual Report on Form 10-K.***

### Overview

Compass Diversified Holdings, a Delaware statutory trust, was incorporated in Delaware on November 18, 2005. Compass Group Diversified Holdings, LLC, a Delaware limited liability company, was also formed on November 18, 2005. In accordance with the Trust Agreement, the Trust is sole owner of 100% of the Trust Interests (as defined in the LLC Agreement) of the Company and, pursuant to the LLC Agreement, the Company has outstanding, the identical number of Trust Interests as the number of outstanding shares of the Trust. The Manager is the sole owner of the Allocation Interests of the Company. The Company is the operating entity with a board of directors and other corporate governance responsibilities, similar to that of a Delaware corporation.

The Trust and the Company were formed to acquire and manage a group of small and middle-market businesses headquartered in North America. We characterize small to middle market businesses as those that generate annual cash flows of up to $60 million. We focus on companies of this size because of our belief that these companies are often more able to achieve growth rates above those of their relevant industries and are also frequently more susceptible to efforts to improve earnings and cash flow.

In pursuing new acquisitions, we seek businesses with the following characteristics:

- North American base of operations;
- stable and growing earnings and cash flow;
- significant market share in defensible industry niche (i.e., has a “reason to exist”);
- solid and proven management team with meaningful incentives;
- low technological and/or product obsolescence risk; and
- a diversified customer and supplier base.

Our management team’s strategy for our subsidiaries involves:

- utilizing structured incentive compensation programs tailored to each business to attract, recruit and retain talented managers to operate our businesses;
- regularly monitoring financial and operational performance, instilling consistent financial discipline and supporting management in the development and implementation of information systems to effectively achieve these goals;
- assisting management in their analysis and pursuit of prudent organic cash flow growth strategies (both revenue and cost related);
- identifying and working with management to execute attractive external growth and acquisition opportunities; and
- forming strong subsidiary level boards of directors to supplement management in their development and implementation of strategic goals and objectives.

Based on the experience of our management team and its ability to identify and negotiate acquisitions, we believe we are positioned to acquire additional attractive businesses. Our management team has a large network of approximately 2,000 deal intermediaries to whom it actively markets and whom we expect to expose us to potential acquisitions. Through this network, as well as our management team’s active proprietary transaction sourcing efforts, we typically have a substantial pipeline of potential acquisition targets. In consummating transactions, our management team has, in the past, been able to successfully navigate complex situations surrounding acquisitions, including corporate spin-offs, transitions of family-owned businesses, management buy-outs and reorganizations. We believe the flexibility, creativity, experience and expertise of our management team in structuring transactions provides us with a strategic advantage by allowing us to consider non-traditional and complex transactions tailored to fit a specific acquisition target.

In addition, because we intend to fund acquisitions through the utilization of our Revolving Credit Facility, we do not expect to be subject to delays in or conditions by closing acquisitions that would be typically associated with transaction specific financing, as is typically the case in such acquisitions. We believe this advantage is a powerful one, especially in the current tight credit environment, and is highly unusual in the marketplace for acquisitions in which we operate.

### 2011 Highlights

### Increase in quarterly distributions

On March 29, 2011 and July 6, 2011 we declared quarterly distributions of $0.36 per share which represented an increase of $0.02 per share over each distribution made in the corresponding quarters of 2010.

### Staffmark preliminary prospectus filing

On April 12, 2011, Staffmark filed a registration statement on Form S-1 with the Securities and Exchange Commission for a proposed initial public offering of Staffmark’s common stock. We currently own approximately 68.3% of Staffmark’s common stock, on a fully diluted basis.

### Outlook

Sales and operating income during the first half of 2011 increased at six of our eight businesses when compared to the first half of 2010. The estimate of gross domestic product (“GDP”), a measure of the total production of goods and services, increased during the first and second quarter of 2011 at the seasonally adjusted annualized rate of 0.4% and 1.3%, respectively, compared to 3.1% for the fourth quarter of 2010. The decreasing rate of growth to date in 2011 compared to 2010 is an indication that consumer spending has slowed down. Each of our businesses is impacted by the overall economic environment including slow consumer spending and increasing commodity and fuel costs. Additionally, American Furniture is significantly affected by continued tight consumer credit markets and the depressed housing market which is evident in the significant decrease in sales and operating profit to date in fiscal 2011.

However, we believe that we will experience sustained flat to modest top-line growth in each of our businesses, with the exception of American Furniture and Tridien, through the remainder of fiscal 2011, although we cannot accurately predict the impact that rising commodity costs, such as steel, cotton and fuel may have on our gross profit margins if we are not able to successfully raise prices to offset the potential price increases. In addition, the impact of the recent Federal debt crisis and the impact that it may have on mitigating domestic economic growth in the second half of fiscal 2011 may result in limiting the top-line revenue growth at our portfolio companies.

We also believe that the current credit environment may continue to benefit our acquisition model as we do not rely on separate third-party financing as a component to closing.

We are dependent on the earnings of, and cash receipts from, the businesses that we own to meet our corporate overhead and management fee expenses and to pay distributions. These earnings and distributions, net of any minority interests in these businesses, will be available:

- First, to meet capital expenditure requirements, management fees and corporate overhead expenses;
- Second, to fund distributions from the businesses to the Company; and
- Third, to be distributed by the Trust to shareholders.

22

### Results of Operations

We were formed on November 18, 2005 and acquired our existing businesses (segments) as follows:

|  |  | February 28, |  |  |  |
| --- | --- | --- | --- | --- | --- |
| **May 16, 2006** | **August 1, 2006** | **2007** | **August 31, 2007** | **January 4, 2008** | **March 31, 2010** |
| Advanced Circuits | Tridien | HALO | American Furniture | Fox | Liberty Safe |
| Staffmark |  |  |  |  |  |
| **September 16, 2010** |  |  |  |  |  |
| ERGObaby |  |  |  |  |  |

As noted above, we acquired our businesses on various dates through September 16, 2010. As a result, we cannot provide what we believe is a meaningful comparison of our consolidated results of operations for the entire three and six month periods ended June 30, 2011 compared to the same periods in 2010. In the following results of operations, we provide: (i) our consolidated results of operations for the three and six months ended June 30, 2011 and 2010, which includes the results of operations of our businesses (segments) from the date of acquisition; and (ii) comparative results of operations for each of our businesses, on a stand-alone basis, for each of the three and six month periods ended June 30, 2011 and 2010, which include pro forma results of operations for platform businesses acquired subsequent to January 1, 2010 and includes pro-forma operating data for periods prior to our acquisition of the business in order to provide meaningful comparative data.

### Consolidated Results of Operations — Compass Diversified Holdings and Compass Group Diversified Holdings LLC

*(in thousands)*

|  | Three months ended June 30, 2011 | Three months ended June 30, 2010 | Six months ended June 30, 2011 | Six months ended June 30, 2010 |
| --- | ---: | ---: | ---: | ---: |
| Net sales | $428,084 | $404,322 | $852,209 | $757,941 |
| Cost of sales | 333,819 | 318,630 | 668,356 | 601,223 |
| Gross profit | 94,265 | 85,692 | 183,853 | 156,718 |
| Staffing, selling, general and administrative expense | 66,372 | 62,855 | 134,884 | 124,843 |
| Fees to manager | 3,935 | 3,709 | 7,778 | 7,373 |
| Supplemental put expense (reversal) | 1,667 | 2,565 | 4,895 | 16,991 |
| Amortization of intangibles | 7,689 | 7,477 | 15,391 | 13,600 |
| Impairment expense | — | — | 7,700 | — |
| Income (loss) from operations | $14,602 | $9,086 | $13,205 | $(6,089) |

#### Net sales

On a consolidated basis, net sales increased $23.8 million and $94.3 million during the three and six month periods ended June 30, 2011, respectively, compared to the same periods in 2010. These increases for both the three and six month periods are due principally to increased revenues at each of our operating segments with the exception of American Furniture and Tridien. In addition, we realized revenues totaling approximately $11.2 million and $22.7 million in the three and six months ended June 30, 2011 at ERGObaby, which we acquired in September 2010. Refer to Results of Operations — Our Businesses for a more detailed analysis of net sales for each business segment.

We do not generate any revenues apart from those generated by the businesses we own. We may generate interest income on the investment of available funds, but expect such earnings to be minimal. Our investment in our businesses is typically in the form of loans from the Company to such businesses, as well as equity interests in those companies. Cash flows coming to the

Trust and the Company are the result of interest payments on those loans, amortization of those loans and, in some cases, dividends on our equity ownership. However, on a consolidated basis these items will be eliminated.

#### Cost of sales

On a consolidated basis, cost of sales increased approximately $15.2 million and $67.1 million during the three and six month periods ended June 30, 2011, respectively, compared to the same periods in 2010. These increases are due almost entirely to the corresponding increase in net sales. Gross profit as a percentage of net sales totaled approximately 22.0% and 21.2% of net sales for the three month periods ended June 30, 2011 and 2010, respectively. Gross profit as a percentage of net sales totaled approximately 21.6% and 20.7% of net sales for the six month periods ended June 30, 2011 and 2010, respectively. The increase in gross profit percentage for both the three and six months ended June 30, 2011 compared to the same period in 2010 is principally attributable to the inclusion of ERGObaby results of operations in both periods of 2011. ERGObaby profit margin during the first half of 2011 was approximately 65%. Refer to Results of Operations — Our Businesses for a more detailed analysis of cost of sales for each business segment.

#### Staffing, selling, general and administrative expense

On a consolidated basis, staffing, selling, general and administrative expense increased approximately $3.5 million and $10.0 million in the three and six month periods ended June 30, 2011, respectively, compared to the same periods in 2010. These increases are due principally to increases in costs directly tied to sales, such as commissions and direct customer support services, and selling, general and administrative costs at ERGObaby during 2011. Refer to Results of Operations — Our Businesses for a more detailed analysis of staffing, selling, general and administrative expense by segment. At the corporate level, selling, general and administrative expense decreased approximately $2.6 million in each of the three and six months ended June 30, 2011, respectively compared to the same periods in 2010. This decrease is principally due to a decrease in non-cash charges related to a call option granted by the Company in 2008 to the former CEO of Tridien totaling $2.9 million and $3.5 million in each of the three and six month periods ended June 30, 2011 compared to the same period in 2010.

#### Fees to manager

Pursuant to the Management Services Agreement, we pay CGM a quarterly management fee equal to 0.5% (2.0% annually) of our consolidated adjusted net assets. We accrue for the management fee on a quarterly basis. For the three months ended June 30, 2011 and 2010, we incurred approximately $3.9 million and $3.7 million, respectively, in expense for these fees. For the six months ended June 30, 2011 and 2010 we incurred approximately $7.8 million and $7.4 million, respectively, in expense for these fees. The increase in management fees for the three and six months ended June 30, 2011 is due principally to the increase in consolidated adjusted net assets as of June 30, 2011 in connection with the ERGObaby acquisition in September 2010 and the Liberty Safe acquisition in March 2010.

#### Supplemental put expense

Concurrent with the IPO, we entered into a Supplemental Put Agreement with our Manager pursuant to which our Manager has the right to cause us to purchase the Allocation Interests then owned by it upon termination of the Management Services Agreement. We accrue for the supplemental put expense on a quarterly basis. For the three and six months ended June 30, 2011, we incurred approximately $1.7 million and $4.9 million, respectively, in expense compared to $2.6 million and $17.0 million for the corresponding periods in 2010. The change in supplemental put expense in all periods presented is attributable to the increase in the fair value of our businesses during each of those periods.

#### Impairment expense

We incurred an impairment charge in the first quarter of 2011 totaling $7.7 million, which is reflected in the operating results for the six months ended June 30, 2011, at our American Furniture business segment based on our annual goodwill impairment analysis. The portion of the impairment charge that was attributable to impaired goodwill at American Furniture was $5.9 million. The remaining $1.8 million charge reflected a write down of the unamortized balance of American Furniture’s intangible asset, its trade name. The write downs were necessary based on the further deterioration of the promotional furniture market.

We have completed our annual impairment analysis of goodwill as of March 31, 2011 and there was no indication of goodwill impairment at any of our other reporting units.

### Results of Operations — Our Businesses

The following discussion reflects a comparison of the historical, and where appropriate, pro-forma results of operations for each of our businesses for the three and six month periods ending June 30, 2011 and June 30, 2010, which we believe is the most meaningful comparison in explaining the comparative financial performance of each of our businesses. The following results of operations are not necessarily indicative of the results to be expected for the full year going forward.

### Advanced Circuits

### Overview

Advanced Circuits is a provider of prototype, quick-turn and volume production PCBs to customers throughout the United States. Collectively, prototype and quick-turn PCBs represent over 60% of Advanced Circuits’ gross revenues. Prototype and quick-turn PCBs typically command higher margins than volume production PCBs given that customers require high levels of responsiveness, technical support and timely delivery of prototype and quick-turn PCBs and are willing to pay a premium for them. Advanced Circuits is able to meet its customers’ demands by manufacturing custom PCBs in as little as 24 hours, while maintaining over 98.0% error-free production rates and real-time customer service and product tracking 24 hours per day.

While global demand for PCBs has remained strong in recent years, industry wide domestic production has declined over 50% since 2000. In contrast, Advanced Circuits’ revenues increased steadily through 2008 (2009 saw a slight reduction) and increased again in 2010 and into the first and second quarter of 2011 as its customers’ prototype and quick-turn PCB requirements, such as small quantity orders and rapid turnaround, are less able to be met by low cost volume manufacturers in Asia and elsewhere. Advanced Circuits’ management anticipates that demand for its prototype and quick-turn printed circuit boards will remain strong and anticipates that demand will be impacted less by current economic conditions than by its longer lead time production business, which is driven more by consumer purchasing patterns and capital investments by businesses.

We purchased a controlling interest in Advanced Circuits on May 16, 2006.

On March 11, 2010, Advanced Circuits acquired Circuit Express based in Tempe, Arizona for approximately $16.1 million. Circuit Express focuses on quick-turn manufacturing of prototype and low-volume quantities of rigid PCBs primarily for aerospace and defense related customers. In the following discussion of results of operations, we may refer to Circuits Express as ACI-Tempe.

### Results of Operations

The table below summarizes the income from operations data for Advanced Circuits for the three and six month periods ended June 30, 2011 and June 30, 2010.

*(in thousands)*

|  | Three months ended June 30, 2011 | June 30, 2010 | Six months ended June 30, 2011 | June 30, 2010 |
| --- | ---: | ---: | ---: | ---: |
| Net sales | $20,020 | $19,382 | $40,313 | $33,866 |
| Cost of sales | 8,914 | 8,817 | 17,842 | 15,034 |
| Gross profit | 11,106 | 10,565 | 22,471 | 18,832 |
| Selling, general and administrative expense | 3,419 | 3,425 | 6,821 | 10,030 |
| Fees to manager | 125 | 125 | 250 | 250 |
| Amortization of intangibles | 757 | 757 | 1,513 | 1,350 |
| Income from operations | $6,805 | $6,258 | $13,887 | $7,202 |

***Three months ended June 30, 2011 compared to the three months ended June 30, 2010.***

#### Net sales

Net sales for the three months ended June 30, 2011 increased approximately $0.6 million, or 3.3%, over the corresponding three month period ended June 30, 2010. The increase in net sales is a result of increased gross sales in quick-turn production PCBs ($0.5 million) and assembly revenue ($0.5 million), offset in part by decreases in long-lead and prototype PCB production. Sales from quick-turn and prototype PCBs represented approximately 63.9% of net sales in 2011 compared to 62.9% in 2010. Net sales attributable to ACI-Tempe were approximately $4.9 million in the quarter ended June 30, 2011 compared to $5.2 million in the same period in 2010. The slight decrease in revenues for the ACI-Tempe operations is due to softer economic conditions, particularly military applications.

#### Cost of sales

Cost of sales for the three months ended June 30, 2011 increased approximately $0.1 million from the comparable period in 2010. This increase is principally due to the corresponding increase in sales. Gross profit as a percentage of sales increased during the three months ended June 30, 2011 (55.5% at June 30, 2011 as compared to 54.5% at June 30, 2010) largely as a result of effective cost containment measures instituted at our ACI-Tempe branch.

#### Selling, general and administrative expense

Selling, general and administrative expense was approximately $3.4 million during each of the three month periods ending June 30, 2011 and 2010.

#### Income from operations

Operating income for the three months ended June 30, 2011 was approximately $6.8 million, an increase of approximately $0.5 million, compared to $6.3 million earned in the same period in 2010, principally as a result of those factors described above.

### Six months ended June 30, 2011 compared to the six months ended June 30, 2010.

#### Net sales

Net sales for the six months ended June 30, 2011 increased approximately $6.4 million, or 19.0%, over the corresponding six month period ended June 30, 2010. The increase in net sales is a result of increased gross sales in long-lead time PCBs ($1.6 million), quick-turn production and prototype PCBs ($3.7 million) and assembly revenue ($1.0 million). Sales from quick-turn and prototype PCBs represented approximately 68.4% of net sales in 2011 compared to 70.4% in 2010. Net sales attributable to ACI-Tempe were approximately $10.0 million in the six months ended June 30, 2011 compared to $6.2 million in the same period in 2010. Results of operations for ACI-Tempe for the first quarter of 2010 only included twenty days of operations.

#### Cost of sales

Cost of sales for the six months ended June 30, 2011 increased approximately $2.8 million from the comparable period in 2010. This increase is principally due to the corresponding increase in sales. Gross profit as a percentage of sales increased marginally during the six months ended June 30, 2011 (55.7% at June 30, 2011 as compared to 55.6% at June 30, 2010) due to effective cost containment measures instituted at our ACI-Tempe branch.

#### Selling, general and administrative expense

Selling, general and administrative expense decreased approximately $3.2 million during the six months ended June 30, 2011 compared to the same period in 2010 due principally to non-cash stock compensation issued to management in January 2010 totaling approximately $3.8 million, and $0.3 million in direct acquisition costs incurred in acquiring ACI-Tempe in the six months ended June 30, 2010. Ignoring these one-time 2010 charges, selling, general and administrative expense increased approximately $0.9 million during the six months ended June 30, 2011 compared to the same period in 2010. ACI-Tempe incurred $1.6 million in selling, general and administrative costs in the six months ended June 30, 2011 compared to approximately $1.5 million reflected in ACI’s expenses in 2010, an increase of $0.1 million. Advertising and marketing costs increased $0.5 million in the six months ended June 30, 2011 compared to the same period in 2010.

#### Income from operations

Operating income for the six months ended June 30, 2011 was approximately $13.9 million, an increase of approximately $6.7 million compared to $7.2 million earned in the same period in 2010, principally as a result of those factors described above.

### American Furniture

### Overview

Founded in 1998 and headquartered in Ecru, Mississippi, American Furniture is a leading U.S. manufacturer of upholstered furniture, focused exclusively on the promotional segment of the furniture industry. American Furniture offers a broad product line of stationary and motion furniture, including sofas, loveseats, sectionals, recliners and complementary products, sold primarily at retail price points ranging between $199 and $1,399. American Furniture is a low-cost manufacturer and is able to ship any product in its line to over 800 customers within 48 hours of receiving an order.

American Furniture’s products are adapted from established designs in the following categories: (i) motion and recliner; (ii) stationary; (iii) occasional chair, and; (iv) accent tables and rugs. American Furniture’s products are manufactured from common components and offer proven select fabric options, providing manufacturing efficiency and resulting in limited design risk or inventory obsolescence.

### Results of Operations

The table below summarizes the income (loss) from operations data for American Furniture for the three and six month periods ended June 30, 2011 and June 30, 2010.

*(in thousands)*

|  | Three months ended June 30, 2011 | June 30, 2010 | Six months ended June 30, 2011 | June 30, 2010 |
| --- | ---: | ---: | ---: | ---: |
| Net sales | $23,477 | $33,308 | $59,417 | $77,288 |
| Cost of sales | 20,346 | 26,874 | 51,636 | 62,819 |
| Gross profit | 3,131 | 6,434 | 7,781 | 14,469 |
| Selling, general and administrative expense | 4,182 | 4,578 | 8,459 | 9,229 |
| Fees to manager | — | 125 | 125 | 250 |
| Amortization of intangibles | 546 | 546 | 1,092 | 1,092 |
| Impairment expense | — | — | 7,700 | — |
| Income (loss) from operations | $(1,597) | $1,185 | $(9,595) | $3,898 |

***Three months ended June 30, 2011 compared to the three months ended June 30, 2010.***

#### Net sales

Net sales for the three months ended June 30, 2011 decreased approximately $9.8 million, or 29.5% over the corresponding three months ended June 30, 2010. Stationary product net sales decreased approximately $6.9 million, recliner product sales decreased approximately $2.2 million, and motion product sales decreased approximately $0.3 million. Sales of other products and a reduction in fuel surcharges were responsible for the remaining decrease in net sales during the three months ended June 30, 2011 compared to 2010. The decrease in net sales in all categories is the result of an extremely soft current retail environment and increased competition in pricing in the promotional furniture category during the second quarter of 2011. Sales to AFM’s largest customer decreased $8.0 million in the second quarter of 2011 compared to 2010. We expect net sales to be flat or lower during the second half of fiscal 2011 compared to the first half of fiscal 2011.

#### Cost of sales

Cost of sales decreased approximately $6.5 million in the three months ended June 30, 2011 compared to the same period of 2010 and is due primarily to the corresponding decrease in sales. Gross profit as a percentage of sales was 13.3% in the three months ended June 30, 2011 compared to 19.3% in the same period of 2010. The decrease in gross profit as a percentage of sales of approximately 6.0% during the three months ended June 30, 2011 is principally attributable to: (i) reduced selling prices during the second quarter of 2011 that were necessary based on aggressive competitor pricing; (ii) increases in overhead absorption rates on finished goods during the current quarter due to the decrease in production volume and (iii) raw material price increases.

#### Selling, general and administrative expense

Selling, general and administrative expense for the three months ended June 30, 2011, decreased approximately $0.4 million compared to the same period of 2010. This decrease is primarily due to decreased costs of insurance, bad debt expense and sales commissions. AFM initiated cost cutting measures during the quarter such as reducing headcount and consolidating warehouse facilities which have begun to reflect savings. We expect to realize additional savings in subsequent quarters during fiscal 2011 as a result of these measures.

#### Fees to Manager

During the three months ended June 30, 2011, American Furniture’s quarterly management fee was waived by the Manager. American Furniture will not incur any additional management fees through the remainder of fiscal 2011.

#### Income (loss) from operations

Loss from operations totaled approximately $1.6 million for the three months ended June 30, 2011 compared to income from operations of approximately $1.2 million in the three months ended June 30, 2010, principally due to those factors described above.

### Six months ended June 30, 2011 compared to the six months ended June 30, 2010.

#### Net sales

Net sales for the six months ended June 30, 2011 decreased approximately $17.9 million, or 23.1%, over the corresponding six months ended June 30, 2010. Stationary product net sales decreased approximately $11.2 million, recliner product sales decreased approximately $5.0 million, and motion product sales decreased approximately $1.1 million. Sales of other products and a reduction in fuel surcharges were responsible for the remaining decrease in net sales during the six months ended June 30, 2011 compared to 2010. The decrease in net sales in all categories is the result of an extremely soft current retail environment and increased competition in pricing in our promotional furniture category during the first half of 2011. Sales to AFM’s largest customer decreased $15.0 million in the six months ended June 30, 2011 compared to 2010. We expect net sales to be flat or lower during the second half of fiscal 2011 compared to the first half of fiscal 2011.

#### Cost of sales

Cost of sales decreased approximately $11.2 million in the six months ended June 30, 2011 compared to the same period of 2010 and is due primarily to the corresponding decrease in sales. Gross profit as a percentage of sales was 13.1% in the six months ended June 30, 2011 compared to 18.7% in 2010. The decrease in gross profit as a percentage of sales of approximately 5.6% during the six months ended June 30, 2011 is principally attributable to: (i) reduced selling prices during the first half of 2011 that were necessary based on aggressive competitor pricing; (ii) increases in overhead absorption rates on finished goods during the first half of 2011 due to the decrease in production volume and (iii) raw material price increases

#### Selling, general and administrative expense

Selling, general and administrative expense for the six months ended June 30, 2011, decreased approximately $0.8 million compared to the same period of 2010. This decrease is primarily due to decreased costs of insurance, bad debt expense and sales commissions. AFM initiated cost cutting measures during the period such as reducing headcount and consolidating warehouse facilities which have begun to reflect savings. We expect to realize additional savings in subsequent quarters during fiscal 2011 as a result of these measures.

#### Fees to Manager

During the six months ended June 30, 2011, American Furniture’s quarterly management fee was waived by the Manager. American Furniture will not incur any additional management fees through the remainder of fiscal 2011.

#### Impairment expense

American Furniture incurred an impairment charge to its goodwill ($5.9 million) and unamortized trade name ($1.8 million), aggregating $7.7 million, during the six months ended June 30, 2011. During the year ended December 31, 2010 American Furniture wrote down $35.5 million of its goodwill asset leaving a balance of $5.9 million. The impairment charge noted above eliminates the remaining balance of goodwill. The $1.8 million impairment charge to American Furniture’s trade name is on top of $3.3 million in impairment charges to its trade name expensed in 2010. The remaining intangible asset balance attributable to trade name after the latest impairment charge is $1.2 million. There were no impairment charges for American Furniture during the comparable 2010 period. The impairment charges resulted from the annual analysis of goodwill and were necessary based on the further deterioration of the promotional furniture market.

#### Income (loss) from operations

Loss from operations totaled approximately $9.6 million for the six months ended June 30, 2011 compared to income from operations of approximately $3.9 million in the six months ended June 30, 2010, principally due the impairment charges and other factors described above.

### ERGObaby

### Overview

ERGObaby, with headquarters in Pukalani, Hawaii, is a premier designer, marketer and distributor of baby wearing products and accessories. ERGObaby offers a broad range of wearable baby carriers and related products that are sold through more than 900 retailers and web shops in the United States and internationally in approximately 20 countries. ERGObaby has two main product lines: baby carriers (organic and standard) and accessories.

ERGObaby’s reputation for product innovation, reliability and safety has lead to numerous awards and accolades from consumer surveys and publications, including Parenting Magazine, Pregnancy Magazine and Wired Magazine.

On September 16, 2010, we made loans to and purchased a controlling interest in ERGObaby for approximately $85.2 million, representing 84% of the equity in ERGObaby.

### Pro forma Results of Operations

The table below summarizes the pro-forma income from operations data for ERGObaby for the three and six month periods ended June 30, 2011 and June 30, 2010.

*(in thousands)*

|  | Three months ended June 30, 2011 (Pro-forma) | June 30, 2010 (Pro-forma) | Six months ended June 30, 2011 (Pro-forma) | June 30, 2010 (Pro-forma) |
| --- | ---: | ---: | ---: | ---: |
| Net sales | $11,186 | $8,181 | $22,657 | $15,791 |
| Cost of sales (a) | 3,854 | 2,424 | 8,025 | 4,710 |
| Gross profit | 7,332 | 5,757 | 14,632 | 11,081 |
| Selling, general and administrative expense | 4,354 | 2,802 | 8,481 | 5,205 |
| Fees to manager (b) | 125 | 125 | 250 | 250 |
| Amortization of intangibles (c) | 429 | 429 | 858 | 858 |
| Income from operations | $2,424 | $2,401 | $5,043 | $4,768 |

*Pro-forma results of operations of ERGObaby for the three and six month periods ended June 30, 2011 and 2010 include the following pro-forma adjustments, applied to historical results as if we acquired ERGObaby on January 1, 2010:*

(a) Cost of sales for the three and six months ended June 30, 2011 does not include $0.2 million and $0.5 million, respectively, of amortization expense associated with the inventory fair value step-up recorded in 2011 as a result of and derived from the purchase price allocation in connection with our purchase.

(b) Represents management fees that would have been payable to the Manager in 2010.

(c) An increase in amortization of intangible assets totaling $0.4 and $0.9 million, respectively, in the three and six month periods ended June 30, 2010. This adjustment is a result of and was derived from the purchase price allocation in connection with our acquisition.

***Pro forma three months ended June 30, 2011 compared to the pro forma three months ended June 30, 2010.***

#### Net sales

Net sales for the three months ended June 30, 2011 were approximately $11.2 million, an increase of $3.0 million, or 36.7%, compared to the same period in 2010. Domestic sales were approximately $4.0 million in the three months ended June 30, 2011 compared to approximately $4.2 million in the same period in 2010, as shipments to several large domestic consolidators decreased during the six months ended 2011. The number of domestic retail outlets ERGObaby’s products sold to increased from 689 as of June 30, 2010 to 906 as of June 30, 2011. Excluding the impact of sales to consolidators in each of the periods, domestic sales increased approximately 1.8% during the three month period ended June 30, 2011 compared to the same period in 2010. International sales were approximately $7.2 million in the three months ended June 30, 2011 compared to $4.0 million in the same period of 2010, an increase of $3.2 million or 79.9%. This significant increase is primarily attributable to continued increases in sales to distributors in Asia, principally Japan, and South Korea, and the addition of new distributors during 2011 in Malaysia, the Caribbean, UAE, India, Uruguay and Mexico. Baby carriers represented 88.0% of sales for the three months ended June 30, 2011 compared to 85.6% for the same period in 2010. The remaining net sales in each of the three month periods ended June 30, 2011 and 2010 reflect accessory sales.

#### Cost of sales

Cost of sales for the three months ended June 30, 2011 were approximately $3.9 million compared to approximately $2.4 million in the same period of 2010. The increase of $1.5 million is due principally to the corresponding increase in sales. Gross profit as a percentage of sales decreased from 70.4% for the quarter ended June 30, 2010 to 65.5% in the quarter ended June 30, 2011. The decrease is attributable to: (i) a greater percentage of organic baby carriers (which are standard baby carriers made with organic cotton that generate a 7% to 10% lower gross profit margin than standard carriers and accounted for 38.5% of total baby carrier sales in the second quarter of 2011 compared to 37.4% in the same period of 2010) sold during the quarter ended June 30, 2011; (ii) a greater percentage of net sales were international sales in the second quarter of 2011 compared to 2010, which carry a lower price point and, as a result, generate lower gross profit margins (on average, international sales have a gross profit margin of approximately 59% compared to 72% for domestic sales); and (iii) price increases in raw materials, particularly cotton.

#### Selling, general and administrative expense

Selling, general and administrative expense for the three months ended June 30, 2011 increased to approximately $4.4 million or 38.9% of net sales compared to $2.8 million or 34.2% of net sales for the same period of 2010. The increase of $1.6 million is attributable in part to an increase of $0.4 million in a liability related to an earn-out provision with ERGObaby’s former owner as of June 30, 2011. The earn-out provision provides for a payment to ERGObaby’s former owner of $2.0 million if net sales meet or exceed an agreed upon hurdle rate in calendar year 2011. As of June 30, 2011, we estimate that there is a 53% probability that the hurdle will be met, which is an increase in the estimated probability of 35% utilized to calculate the liability as of March 31, 2011. The remaining increase in expenses during the three months ended June 30, 2011 compared to the same period in 2010 is due principally to increases in marketing costs ($0.3 million), an increase to the provision for uncollectible accounts ($0.3 million), personnel costs, representing increased headcount ($0.5 million), and professional fees ($0.1 million). These increased expenses all related to expansion initiatives and general overhead in order to support the current and anticipated increased sales volume.

#### Income from operations

Income from operations for the three months ended June 30, 2011 and 2010 were approximately $2.4 million in both periods, based principally on the factors described above.

***Pro forma six months ended June 30, 2011 compared to the pro forma six months ended June 30, 2010.***

#### Net sales

Net sales for the six months ended June 30, 2011 were $22.7 million, an increase of $6.9 million or 43.5% compared to the same period in 2010. Domestic sales were approximately $7.6 million in the six months ended June 30, 2011 compared to approximately $7.8 million in the same period for 2010 as shipments to several large domestic consolidators decreased during the first half of the year. The number of domestic retail outlets ERGObaby’s products were sold to increased from 689, as of June 30, 2010, to 906, as of June 30, 2011. Excluding the impact of sales to consolidators in each of the periods, domestic sales increased approximately 7.7% during the six month period ended June 30, 2011 compared to the same period in 2010. International sales were approximately $15.1 million in the six months ended June 30, 2011 compared to $8.1 million in 2010, an increase of $7.0 million or 87.2%. This significant increase is primarily attributable to continued increases in sales to distributors in Asia, principally Japan, and South Korea, and the addition of new distributors during 2011 in Malaysia, the Caribbean, UAE, India, Uruguay and Mexico. Baby carriers represented 88.9% of sales for the six months ended June 30, 2011 compared to 87.1% for the same period in 2010. The remaining net sales in each of the six month periods ended June 30, 2011 and 2010 reflect accessory sales.

#### Cost of sales

Cost of sales for the six months ended June 30, 2011 were approximately $8.0 million compared to $4.7 million in the same period of 2010. The increase of $3.3 million is due principally to the increase in sales. Gross profit as a percentage of sales decreased from 70.2% for the quarter ended June 30, 2010 to 64.6% in the same period of 2011. The decrease is attributable to: (i) a greater percentage of organic baby carriers (which are standard baby carriers made with organic cotton that generate a 7% to 10% lower gross profit margin than standard carriers and accounted for 43.6% of baby carrier sales in the first six months of 2011 compared to 41.8% in the same period of 2010) sold in the first six months of 2011 (ii) a greater percentage of net sales were international sales in the first six months of 2011 compared to 2010, which carry a lower price point and, as a result, generate lower gross profit margins (on average, international sales have a gross profit margin of 59% compared to approximately 72% for domestic sales) and (iii) price increases in raw materials, particularly cotton, and a weaker dollar.

#### Selling, general and administrative expense

Selling, general and administrative expense for the six months ended June 30, 2011 increased to approximately $8.5 million or 37.4% of net sales compared to $5.2 million or 33.0% of net sales for the same period of 2010. The increase of $3.3 million is attributable in part to an increase of $0.9 million in a liability related to an earn-out provision with ERGObaby’s former owner as of June 30, 2011. The earn-out provision provides for a payment to ERGObaby’s former owner of $2.0 million if net sales meet or exceed an agreed upon hurdle rate in calendar year 2011. As of June 30, 2011, we estimate that there is a 53% probability that the hurdle will be met, which is an increase in the estimated probability of 10% utilized to calculate the liability as of December 31, 2010. The remaining increase in expenses during the six months ended June 30, 2011 compared to the same period in 2010 is due principally to increases in advertising and marketing costs ($0.3 million), an increase to the provision for bad debts ($0.5 million), personnel costs, principally representing increased head count ($0.9 million), and professional fees ($0.5 million). These increased expenses all related to expansion initiatives and general overhead in order to support the current and anticipated increased sales volume.

#### Income from operations

Income from operations for the six months ended June 30, 2011 increased approximately $0.3 million to $5.0 million compared to the same period in 2010, based principally on the factors described above.

### Fox Factory

### Overview

Fox, headquartered in Watsonville, California, is a branded action sports company that designs, manufactures and markets high-performance suspension products for mountain bikes and power sports, which include: snowmobiles, motorcycles, all-terrain vehicles ATVs, and other off-road vehicles.

Fox’s products are recognized by manufacturers and consumers as being among the most technically advanced suspension products currently available in the marketplace. Fox’s technical success is demonstrated by its dominance of award winning performances by professional athletes across its suspension products. As a result, Fox’s suspension components are incorporated by original equipment manufacturer (“OEM”) customers on their high-performance models at the top of their product lines in the mountain bike and power sports sector. OEMs capitalize on the strength of Fox’s brand to maintain and expand their own sales and margins. In the Aftermarket segment, customers seeking higher performance select Fox’s suspension components to enhance their existing equipment.

Fox sells to more than 200 OEM and 7,600 Aftermarket customers across its market segments. In each of the years 2010, 2009 and 2008, approximately 78%, 76% and 76% of net sales were to OEM customers. The remaining net sales were to Aftermarket customers.

### Results of Operations

The table below summarizes the income from operations data for Fox Factory for the three and six month periods ended June 30, 2011 and June 30, 2010.

*(in thousands)*

|  | Three months ended June 30, 2011 | June 30, 2010 | Six months ended June 30, 2011 | June 30, 2010 |
| --- | ---: | ---: | ---: | ---: |
| Net sales | $45,895 | $34,658 | $88,775 | $67,390 |
| Cost of sales | 33,068 | 24,776 | 62,971 | 48,034 |
| Gross profit | 12,827 | 9,882 | 25,804 | 19,356 |
| Selling, general and administrative expense | 6,796 | 5,439 | 13,320 | 10,622 |
| Fees to manager | 125 | 125 | 250 | 250 |
| Amortization of intangibles | 1,304 | 1,304 | 2,608 | 2,608 |
| Income from operations | $4,602 | $3,014 | $9,626 | $5,876 |

31

***Three months ended June 30, 2011 compared to the three months ended June 30, 2010.***

#### Net sales

Net sales for the three months ended June 30, 2011 increased approximately $11.2 million, or 32.4%, compared to the corresponding period in 2010. OEM sales increased $8.2 million to $35.0 million during the three months ended June 30, 2011 compared to $26.8 million for the same period in 2010. The increase in OEM net sales is attributable to increases in sales in the mountain biking sector totaling $4.7 million (22.6%) and increases in sales in the powered vehicles sector totaling approximately $3.5 million (60%). The increase in OEM sales in the mountain biking sector during the three months ended June 30, 2011 is due to strong sales of the new model year products. The increase in OEM sales to the powered vehicle sector during the three months ended June 30, 2011 is the result of an increase in sales of suspension components to the ATV and off-road markets. Aftermarket sales increased approximately $3.0 million to $10.9 million during the three months ended June 30, 2011 compared to $7.6 million in the same period in 2010. This increase is attributable to increases in Aftermarket net sales in the powered vehicles sector totaling approximately $1.9 million and the mountain biking sector totaling approximately $1.1 million.

International OEM and Aftermarket sales were $30.4 million during the three months ended June 30, 2011 compared to $21.0 million during the same period in 2010, an increase of $9.4 million or 44.8%.

#### Cost of sales

Cost of sales for the three months ended June 30, 2011 increased approximately $8.3 million, or 33.5%, compared to the corresponding period in 2010. The increase in cost of sales is primarily attributable to the increase in net sales for the same period. Gross profit as a percentage of sales was approximately 27.9% for the three months ended June 30, 2011 compared to 28.5% for the same period in 2010. The 0.6% decrease in gross profit as a percentage of sales during 2011 is attributable to an unfavorable product and customer mix, increases in raw material costs and the negative impact of a weak dollar.

#### Selling, general and administrative expense

Selling, general and administrative expense increased approximately $1.4 million during the three months ended June 30, 2011 compared to the same period in 2010. This increase is the result of increases in (i) sales and marketing costs ($0.2 million), (ii) engineering costs ($0.4 million), and (iii) other administrative costs ($0.8 million) during the three months ended June 30, 2011, compared to 2010, principally to support the significant increase in sales.

#### Income from operations

Income from operations for the three months ended June 30, 2011 increased approximately $1.6 million to $4.6 million compared to the corresponding period in 2010, based principally on the significant increase in net sales, offset in part by the increases in selling, general and administrative costs, all as described above.

#### Six months ended June 30, 2011 compared to the six months ended June 30, 2010.

#### Net sales

Net sales for the six months ended June 30, 2011 increased approximately $21.4 million, or 31.7%, compared to the corresponding period in 2010. OEM sales increased $16.6 million to $69.0 million during the six months ended June 30, 2011 compared to $52.4 million for the same period in 2010. The increase in OEM net sales is attributable to increases in sales in the mountain biking sector totaling $8.6 million (20.4%) and increases in sales in the powered vehicles sector totaling approximately $7.9 million (79.5%). The increase in OEM sales in the mountain biking sector during the six months ended June 30, 2011 is due to strong sales of the new model year product and inventory replenishment at OEM’s during the first quarter of 2011 that did not occur during 2010. The significant increase in OEM sales to the powered vehicle sector during the six months ended June 30, 2011 is the result of an increase in sales of suspension components to the ATV and off-road markets. Aftermarket sales increased approximately $4.8 million to $19.7 million during the six months ended June 30, 2011 compared to $14.9 million in the same period in 2010. This increase is attributable to increases in Aftermarket net sales in the powered vehicles sector totaling approximately $2.9 million and the mountain biking sector totaling approximately $1.9 million.

International OEM and Aftermarket sales totaled $58.3 million during the six months ended June 30, 2011 compared to $42.4 million during the same period in 2010, an increase of $15.9 million or 37.5%.

#### Cost of sales

Cost of sales for the six months ended June 30, 2011 increased approximately $14.9 million, or 31.1%, compared to the corresponding period in 2010. The increase in cost of sales is attributable to the increase in net sales for the same period. Gross profit as a percentage of sales was approximately 29.1% for the six months ended June 30, 2011 compared to 28.7% for the same period in 2010. The 0.4% increase in gross profit as a percentage of sales during the first half of 2011 is attributable to efficiencies achieved in connection with the increased production volume. This was offset in part by an unfavorable product and customer mix compared to 2010, increased raw material costs and the negative impact of a weak dollar.

#### Selling, general and administrative expense

Selling, general and administrative expense increased approximately $2.7 million during the six months ended June 30, 2011 compared to the same period in 2010. This increase is the result of increases in (i) sales and marketing costs ($0.5 million), (ii) engineering costs ($0.8 million), and (iii) other administrative costs ($1.4 million) during the six months ended June 30, 2011, compared to 2010, principally to support the significant increase in sales.

#### Income from operations

Income from operations for the six months ended June 30, 2011 increased approximately $3.8 million to $9.6 million compared to the corresponding period in 2010, based principally on the significant increase in net sales, offset in part by the increases in selling, general and administrative costs, all as described above.

### Halo

### Overview

HALO, headquartered in Sterling, IL, is an independent provider of customized drop-ship promotional products in the U.S. Through an extensive group of dedicated sales professionals, HALO serves as a one-stop shop for over 40,000 customers throughout the U.S. HALO is involved in the design, sourcing, management and fulfillment of promotional products across several product categories, including apparel, calendars, writing instruments, drink ware and office accessories. HALO’s sales professionals work with customers and vendors to develop the most effective means of communicating a logo or marketing message to a target audience. Approximately 90% of products sold are drop shipped, resulting in minimal inventory risk. HALO has established itself as a leader in the promotional products and marketing industry through its focus on service through its over 900 account executives.

HALO acquired the promotional products distributor Relay Gear in February 2010.

Distribution of promotional products is seasonal. Management estimates that HALO expects to realize approximately 45% of its sales and 70% of its operating income in the months of September through December, due principally to calendar sales and corporate holiday promotions.

### Results of Operations

The table below summarizes the income from operations data for HALO for the three and six month periods ended June 30, 2011 and June 30, 2010:

*(in thousands)*

|  | Three months ended June 30, 2011 | June 30, 2010 | Six months ended June 30, 2011 | June 30, 2010 |
| --- | ---: | ---: | ---: | ---: |
| Net sales | $39,296 | $35,277 | $71,982 | $64,981 |
| Cost of sales | 23,683 | 21,599 | 43,630 | 39,574 |
| Gross profit | 15,613 | 13,678 | 28,352 | 25,407 |
| Selling, general and administrative expense | 12,001 | 12,714 | 24,458 | 24,476 |
| Fees to manager | 125 | 125 | 250 | 250 |
| Amortization of intangibles | 606 | 601 | 1,214 | 1,218 |
| Income (loss) from operations | $2,881 | $238 | $2,430 | $(537) |

***Three months ended June 30, 2011 compared to the three months ended June 30, 2010.***

#### Net sales

Net sales for the three months ended June 30, 2011 increased approximately $4.0 million, or 11.4%, compared to the same period in 2010. The increase in net sales in the three months ended June 30, 2011 compared to the same period in 2010, is primarily attributable to increased sales to existing customers as a result of improving macro-economic conditions and, to a lesser extent, the development of several new significant customers and the replacement of account executives with new account executives that, on average, generated larger sales.

#### Cost of sales

Cost of sales for the three months ended June 30, 2011 increased approximately $2.1 million compared to the same period in 2010. The increase in cost of sales is primarily attributable to the corresponding increase in net sales for the same period. Gross profit as a percentage of net sales totaled approximately 39.7% and 38.8% of net sales for the three month periods ended June 30, 2011 and 2010, respectively. The increase in gross profit percentage for the three months ended June 30, 2011 compared to the same period in 2010 is principally attributable to improved product sourcing and procurement efficiencies realized during the current quarter.

#### Selling, general and administrative expense

Selling, general and administrative expense for the three months ended June 30, 2011 decreased approximately $0.7 million compared to the same period in 2010. Approximately $1.6 million of litigation settlement proceeds are reflected as a reduction to selling, general and administrative costs in the three months ended June 30, 2011. Approximately $0.2 million of the settlement proceeds, which totaled approximately $1.8 million, was reflected in the first quarter of 2011. Excluding the impact of the settlement proceeds, selling, general and administrative expenses increased approximately $0.9 million for the three months ended June 30, 2011 compared to the same period in 2010. Direct commission expenses increased by approximately $0.6 million as a result of increased sales in the three months ended June 30, 2011 together with an increase of $0.3 million in salaries and wages. Excluding the impact of the settlement proceeds, selling general and administrative costs represented 34.5% of net sales for the three months ended June 30, 2011, compared to 36.0% in the same period in 2010.

#### Income from operations

Income from operations was approximately $2.9 million for the three months ended June 30, 2011 representing an increase of $2.6 million compared to the same period in 2010. The improved operating results are principally due to the increase in net sales and settlement proceeds offset in part by direct commission expense and other factors as described above.

### Six months ended June 30, 2011 compared to the six months ended June 30, 2010.

#### Net sales

Net sales for the six months ended June 30, 2011 increased approximately $7.0 million, or 10.8%, compared to the same period in 2010. Sales increases attributable to accounts acquired as part of the Relay Gear acquisition in February 2010 accounted for approximately $0.5 million of the increase in net sales in the six months ended June 30, 2011 compared to the same period in 2010. The remaining increase in net sales in the six months ended June 30, 2011 compared to the same period in 2010 is primarily attributable to increased sales to existing customers as a result of improving macro-economic conditions and, to a lesser extent, the development of several new significant customers and the replacement of account executives with new account executives that, on average, generated larger sales.

#### Cost of sales

Cost of sales for the six months ended June 30, 2011 increased approximately $4.1 million compared to the same period in 2010. The increase in cost of sales is primarily attributable to the corresponding increase in net sales for the same period. Gross profit as a percentage of net sales totaled approximately 39.4% and 39.1% of net sales for the six month periods ended June 30, 2011 and 2010, respectively. The increase in gross profit percentage for the three months ended June 30, 2011 compared to the same period in 2010 is attributable to improved product sourcing and procurement efficiencies realized during 2011, offset in part by an unfavorable sales mix.

#### Selling, general and administrative expense

Selling, general and administrative expense for the six months ended June 30, 2011 were approximately $24.5 million in each of the six month periods ended June 30, 2011 and 2010. Approximately $1.8 million of litigation settlement proceeds are reflected as a reduction to selling, general and administrative costs in the six months ended June 30, 2011. Excluding the impact of the settlement proceeds, selling, general and administrative expenses increased approximately $1.8 million in the six months ended June 30, 2011 compared to the same period in 2010. Direct commission expenses increased by approximately $1.2 million as a result of increased sales in 2011, together with an increase of $0.6 million in salaries and wages. Excluding the impact of the settlement proceeds, selling general and administrative costs represented 36.4% of net sales for the three months ended June 30, 2011 compared to 37.7% in the same period in 2010.

#### Income (loss) from operations

Income from operations was approximately $2.4 million for the six months ended June 30, 2011, representing an increase of $2.9 million compared to the same period in 2010, which reflected an operating loss of $0.5 million. The improved operating results are principally due to the increase in net sales and settlement proceeds, offset in part by direct commission expense and other factors as described above.

### Liberty Safe

### Overview

Based in Payson, Utah and founded in 1988, Liberty Safe is the premier designer, manufacturer and marketer of home and gun safes in North America. From its over 200,000 square foot manufacturing facility, Liberty Safe produces a wide range of home and gun safe models in a broad assortment of sizes, features and styles ranging from an entry level product to good, better and best products. Products are marketed under the Liberty brand, as well as a portfolio of licensed and private label brands, including Remington, Cabela’s and John Deere. Liberty Safe’s products are the market share leader and are sold through an independent dealer network (“Dealer sales”) in addition to various sporting goods and home improvement retail outlets (“Non-Dealer Sales”). Liberty has the largest independent dealer network in the industry.

Historically, approximately 60% of Liberty Safe’s net sales are Non-Dealer sales and 40% are Dealer sales.

On March 31, 2010 we made loans to and purchased a controlling interest in Liberty Safe for approximately $70.2 million, representing 96.2% of the equity in Liberty Safe.

### Results of Operations and Pro-forma Results of Operations

The table below summarizes the results of operations for Liberty Safe for the three months ended June 30, 2011 and the three months ended June 30, 2010. It also summarizes the results of operations for the six month period ended June 30, 2011 and the pro-forma results of operations for the six months ended June 30, 2010.

*(in thousands)*

|  | Three months ended June 30, 2011 | June 30, 2010 | Six months ended June 30, 2011 | June 30, 2010 (Pro-forma) |
| --- | ---: | ---: | ---: | ---: |
| Net sales | $18,622 | $13,579 | $38,825 | $29,512 |
| Cost of sales | 13,756 | 10,185 | 28,931 | 21,311 |
| Gross profit | 4,866 | 3,394 | 9,894 | 8,201 |
| Selling, general and administrative expense (a) | 2,430 | 2,148 | 5,142 | 3,970 |
| Fees to manager | 125 | 125 | 250 | 250 |
| Amortization of intangibles (b) | 1,294 | 1,290 | 2,589 | 2,580 |
| Income (loss) from operations | $1,017 | $(169) | $1,913 | $1,401 |

*Pro-forma results of operations of Liberty Safe for the six months ended June 30, 2010 include the following pro-forma adjustments applied to historical results as if we acquired Liberty Safe on January 1, 2010.*

(a) Selling, general and administrative expense was reduced by $4.9 million in the six months ended June 30, 2010, representing an adjustment for one-time transaction costs incurred as a result of our purchase.

(b) An increase in amortization of intangible assets totaling $0.6 million in the six month period ended June 30, 2010. This adjustment is a result of and was derived from the purchase price allocation in connection with our acquisition of Liberty Safe.

***Three months ended June 30, 2011 compared to the three months ended June 30, 2010.***

#### Net sales

Net sales for the three months ended June 30, 2011 increased approximately $5.0 million, or 37.1%, over the corresponding three months ended June 30, 2010. Non-Dealer sales were approximately $10.4 million in the three months ended June 30, 2011 compared to $7.8 million in the same period in 2010 representing an increase of $2.6 million or 33.3%. Dealer sales totaled approximately $8.2 million in the three months ended June 30, 2011 compared to $5.8 million in the same period in 2010 representing an increase of $2.4 million or 41.4%. The significant increase in Non-Dealer sales in 2011 is due to strong results in the sporting goods channel ($1.4 million) and the farm and fleet channel ($2.4 million) offset in part by the loss of a club account to an import product line ($0.6 million) and a decline in the home improvement channel ($0.6 million). The sporting goods channel increase is the result of Liberty Safe being the sole supplier to two major accounts that offered robust sales promotions in the second quarter of 2011 resulting in higher retail sales. The farm and fleet channel increase is attributable to (i) fulfilling a significant number of backorders that existed at the end of the first quarter and (ii) increased sell through at retail driven by a robust co-op advertising campaign. Management believes that these increased sales levels are the result, in large part, to sales generated by its national advertising campaign in conjunction with those accounts that maintain consistent Liberty Safe product advertising at the local level.

#### Cost of sales

Cost of sales for the three months ended June 30, 2011 increased approximately $3.6 million. The increase in cost of sales is primarily attributable to the increase in net sales for the same period. Gross profit as a percentage of net sales totaled approximately 26.1% and 25.0% of net sales for the three month periods ended June 30, 2011 and June 30, 2010, respectively. The increase in gross profit as a percentage of sales for the three months ended June 30, 2011 compared to 2010 is attributable to a price increase that took effect on June 1, 2011 and a favorable product mix with certain customers. This was offset in part by higher freight costs.

#### Selling, general and administrative expense

Selling, general and administrative expense for the three months ended June 30, 2011, increased approximately $0.2 million compared to the same period in 2010. This increase is largely the result of increased direct commission expense and co-op advertising, both related to the significant increase in sales.

#### Income (loss) from operations

Income from operations was approximately $1.0 million for the three months ended June 30, 2011, representing an increase of $1.2 million compared to the same period in 2010, which reflected an operating loss of $0.2 million. The improved operating results are principally due to the factors described above, particularly the increase in net sales.

***Six months ended June 30, 2011 compared to the pro-forma six months ended June 30, 2010.***

#### Net sales

Net sales for the six months ended June 30, 2011 increased approximately $9.3 million, or 31.6%, over the corresponding six months ended June 30, 2010. Non-Dealer sales were approximately $23.0 million in the six months ended June 30, 2011 compared to $16.7 million in the same period in 2010, representing an increase of $6.3 million or 37.7%. Dealer sales totaled approximately $15.8 million in the six months ended June 30, 2011 compared to $12.8 million in the same period in 2010, representing an increase of $3.0 million or 23.4%. The significant increase in Non-Dealer sales in 2011 is the result of increased sales in the sporting goods channel ($5.7 million) and the farm and fleet channel ($2.4 million), offset in part by the loss of a club account to an import product line ($1.3 million) and a decline in the home improvement channel ($0.5 million). The sporting goods channel increase results from Liberty Safe being the sole supplier to two major accounts that offered robust sales promotions in the first and second quarter of 2011 resulting in higher retail sales. The farm and fleet channel increase is attributable to (i) fulfilling a significant number of backorders that existed at the end of the first quarter and (ii) increased sell through at retail driven by a robust co-op advertising campaign. Management believes that these increased sales levels are due, in large part, to sales generated by its national advertising campaign in conjunction with those accounts that maintain consistent Liberty Safe product advertising at the local level.

#### Cost of sales

Cost of sales for the six months ended June 30, 2011 increased approximately $7.6 million. The increase in cost of sales is primarily attributable to the increase in net sales for the same period. Gross profit as a percentage of net sales totaled approximately 25.5% and 27.8% of net sales for the six month periods ended June 30, 2011 and June 30, 2010, respectively. The decrease in gross profit as a percentage of sales of 2.3% for the six months ended June 30, 2011 compared to 2010 is primarily attributable to higher transportation costs (1.7%), offset in part by an increase in sales prices. A price increase went into effect June 1, 2011 to offset higher transportation costs and potentially higher commodity costs, and as a result we currently expect that Liberty Safe’s margins will increase slightly through the remainder of 2011.

#### Selling, general and administrative expense

Selling, general and administrative expense for the six months ended June 30, 2011, increased approximately $1.2 million compared to the same period in 2010. This increase is principally the result of increases in the following costs to support the significant increase in sales: (i) commission expense ($0.3 million), (ii) co-op advertising ($0.2 million) and the ongoing national ad campaign being conducted by Liberty Safe ($0.4 million) and (iii) costs associated with increased headcount ($0.2 million) to support the increase in net sales.

#### Income from operations

Income from operations was approximately $1.9 million for the six months ended June 30, 2011 representing an increase of $0.5 million compared to the same period in 2010, which reflected operating income of $1.4 million. The improved operating results are principally due to the factors described above, particularly the increase in net sales.

### Staffmark

### Overview

Staffmark, a national provider of contingent workforce solutions that serves the temporary staffing needs of employers throughout the United States, provides a full spectrum of light industrial and clerical staffing solutions. Staffmark has a client base of approximately 6,000 and currently places over 37,000 temporary employees weekly in a broad range of industries.

Staffmark is focused on establishing and maintaining a leading position within the markets in which it operates. It seeks to achieve this by winning its clients’ business one location at a time and leveraging that success into a broader relationship where it services multiple client locations. As Staffmark’s client relationships develop, it enhances its position within markets by: (i) hiring additional sales and operations staff; (ii) opening branch and on-site locations; and (iii) making strategic acquisitions. This strategy enables Staffmark to gain operating leverage in its markets, raise the awareness of its brand and realize efficiencies of scale.

A closely monitored statistic within the temporary staffing industry is the temporary penetration rate, which measures the percentage of the total United States workforce that is temporary versus full-time based on data from the United States Bureau of Labor Statistics. The temporary penetration rate in June 2011 was 1.70%, up slightly from 1.69% in December 2010, but down from 1.73% reported at the end of the first quarter of 2011. This reduction together with the jobless rate increase during June to 9.2% indicates that the economy may be slowing down.

On April 12, 2011, Staffmark filed a registration statement on Form S-1 with the Securities and Exchange Commission for a proposed initial public offering of its common stock.

### Results of Operations

The table below summarizes the income from operations data for Staffmark for the three and six month periods ended June 30, 2011 and 2010.

*(in thousands)*

|  | Three months ended June 30, 2011 | June 30, 2010 | Six months ended June 30, 2011 | June 30, 2010 |
| --- | ---: | ---: | ---: | ---: |
| Service revenues | $255,644 | $251,354 | $502,443 | $468,756 |
| Cost of services | 219,656 | 215,175 | 434,506 | 403,700 |
| Gross profit | 35,988 | 36,179 | 67,937 | 65,056 |
| Staffing, selling, general and administrative expense | 29,514 | 28,688 | 60,363 | 56,910 |
| Fees to manager | 313 | 22 | 613 | 283 |
| Amortization of intangibles | 1,124 | 1,226 | 2,260 | 2,452 |
| Income from operations | $5,037 | $6,243 | $4,701 | $5,411 |

***Three months ended June 30, 2011 compared to the three months ended June 30, 2010.***

#### Service revenues

Revenues for the three months ended June 30, 2011 increased $4.3 million, or 1.7%, over the corresponding three months ended June 30, 2010. This relatively small increase in revenues reflects flattening demand for temporary staffing services (primarily light industrial and clerical), resulting in part from reduced demand related to the earthquake and tsunami in Japan, which have disrupted the supply chain with companies located in the United States. The impact was felt particularly with reduced temporary staffing services provided to Staffmark’s auto-related customers that supply parts to Japanese automakers. Staffmark expects to ramp up services with these customers in the third quarter as they restore their production. Temporary staffing services increased approximately $4.1 million, in spite of the reduction in temporary staffing services resulting from the aforementioned supply chain interruption, and direct hire revenue increased approximately $0.2 million in the three months ended June 30, 2011 compared to the same period last year. Management believes that the supply chain disruption in the second quarter of 2011 negatively impacted top line revenues, primarily in light industrial temporary staffing services, by approximately $8.0 million in its direct auto industry related clients and that it should recover a substantial portion of those lost revenues in the second half of fiscal 2011.

#### Cost of services

Direct cost of services for the three months ended June 30, 2011 increased approximately $4.5 million from the same period a year ago. This increase is principally the direct result of the increase in service revenues. Gross profit as a percentage of revenue was approximately 14.1% and 14.4% of revenues for the three-month periods ended June 30, 2011 and 2010, respectively. The majority of the decrease in the gross profit margin of approximately 30 basis points is principally the result of higher state unemployment tax rates in 2011 resulting from further increases in funding required for various states’ depleted unemployment reserves. Any increases in unemployment tax rates not fully recovered through pricing will have an adverse effect on gross profit margins in the future.

#### Staffing, selling, general and administrative expense

Staffing, selling, general and administrative expense for the three months ended June 30, 2011, increased approximately $0.8 million compared to the same period a year ago. The increased costs incurred during the three months ended June 30, 2011 compared to the same period of 2010 are primarily attributable to: (i) increases in overhead costs ($1.3 million), primarily in staffing expense, necessary to service the increase in revenues and overall operations and (ii) increases in costs associated with the on-going PeopleSoft conversion ($0.2 million), offset in part by a decrease in bad debt expense ($0.6 million). Staffing, selling, general and administrative expense as a percentage of revenues was 11.5% during the three months ended June 30, 2011 compared to 11.4% during the same period in 2010.

#### Fees to manager

Fees to manager for the three months ended June 30, 2011, increased approximately $0.3 million versus the same period a year ago. In 2010, the management services agreement was amended for a one-time reduction in the fee to 25% of the total annual fee. This amendment expired December 31, 2010.

#### Income from operations

Income from operations decreased approximately $1.2 million for the three months ended June 30, 2011 compared to the three months ended June 30, 2010 based on the factors described above.

### Six months ended June 30, 2011 compared to the six months ended June 30, 2010.

#### Service revenues

Revenues for the six months ended June 30, 2011 increased $33.7 million, or 7.2%, over the corresponding six months ended June 30, 2010. This increase in revenues primarily reflects increased demand for temporary staffing services during the first quarter of 2011 coupled with the flattening of service revenues in the second quarter due in part to the supply chain interruption experienced at auto related customers (see the three month service revenue comparison above). Temporary staffing service revenue increases in light industrial and managed services are principally responsible for the increase. Temporary staffing service revenue increased approximately $32.8 million and direct hire revenue increased approximately $0.4 million in the six months ended June 30, 2011 compared to the same period last year. Management believes that the supply chain disruption in the second quarter of 2011 negatively impacted top line revenues, primarily in light industrial temporary staffing services, by approximately $8.0 million in its direct auto industry related clients and that it should recover a substantial portion of those lost revenues in the second half of fiscal 2011.

#### Cost of services

Direct cost of revenues for the six months ended June 30, 2011 increased approximately $30.8 million from the same period a year ago. This increase is principally the direct result of the increase in service revenues. Gross profit as a percentage of service revenue was approximately 13.5% and 13.9% of revenues for the six month periods ended June 30, 2011 and 2010, respectively. The majority of the decrease in the gross profit margin of approximately 40 basis points is the result of higher state unemployment tax rates in 2011 resulting from further increases in funding required for various states’ depleted unemployment reserves, to the extent not recovered through pricing, offset in part by the increased gross profit provided by the increase in direct hire revenues. Gross profit as a percentage of sales is historically lowest in the first fiscal quarter ended March 31 due to the front loading of certain employment taxes. We expect Staffmark’s gross profit margins to steadily increase through the remainder of the year, although any increases in unemployment tax rates not fully recovered through pricing will have an adverse effect on gross profit margins in the future.

#### Staffing, selling, general and administrative expense

Staffing, selling, general and administrative expense for the six months ended June 30, 2011 increased approximately $3.5 million compared to the same period a year ago. The increased costs incurred during the six months ended June 30, 2011 compared to the same period of 2010 are primarily attributable to increases in (i) overhead costs ($3.2 million), primarily in staffing expense, necessary to service the increase in revenues and overall operations (ii) a non-recurring, non-cash compensation charge related to a one-time cost for accelerating vesting rights in stock options ($0.6 million) (iii) professional fees ($0.3 million) and (iv) costs associated with the on-going PeopleSoft conversion ($0.3 million). These increases were offset in part by a reduction in bad debt expense ($1.0 million) incurred during the six months ended June 30, 2011 compared to the same period of 2010. Staffing, selling, general and administrative expense as a percentage of revenues was 12.0% during the six months ended June 30, 2011 compared to 12.1% during the same period in 2010.

#### Fees to manager

Fees to manager for the six months ended June 30, 2011, increased approximately $0.3 million versus the same period a year ago. In 2010, the management services agreement was amended for a one-time reduction in the fee to 25% of the total annual fee. This amendment expired December 31, 2010.

#### Income from operations

Income from operations decreased approximately $0.7 million for the six months ended June 30, 2011 compared to the six months ended June 30, 2010 based principally on the factors described above.

### Tridien

### Overview

Tridien Medical, headquartered in Coral Springs, Florida, is a leading designer and manufacturer of powered and non-powered medical therapeutic support services and patient positioning devices serving the acute care, long-term care and home health care markets. Tridien is one of the nation’s leading designers and manufacturers of specialty therapeutic support surfaces with manufacturing operations in multiple locations to better serve a national customer base.

Tridien, together with its subsidiary companies, provides customers the opportunity to source leading surface technologies from the designer and manufacturer.

Tridien develops products both independently and in partnership with large distribution intermediaries. Medical distribution companies then sell or rent the therapeutic support surfaces, sometimes in conjunction with bed frames and accessories to one of three end markets: (i) acute care, (ii) long term care and (iii) home health care. The level of sophistication largely varies for each product, as some patients require simple foam mattress beds (“non-powered” support surfaces) while others may require electronically controlled, low air loss, lateral rotation, pulmonary therapy or alternating pressure surfaces (“powered” support surfaces). The design, engineering and manufacturing of all products are completed in-house (with the exception of PrimaTech products, which are manufactured in Taiwan) and are FDA compliant.

### Results of Operations

The table below summarizes the income from operations data for Tridien for the three and six month periods ended June 30, 2011 and June 30, 2010.

*(in thousands)*

|  | Three months ended June 30, 2011 | June 30, 2010 | Six months ended June 30, 2011 | June 30, 2010 |
| --- | ---: | ---: | ---: | ---: |
| Net sales | $13,944 | $16,764 | $27,797 | $32,081 |
| Cost of sales | 10,322 | 11,208 | 20,365 | 21,884 |
| Gross profit | 3,622 | 5,556 | 7,432 | 10,197 |
| Selling, general and administrative expense | 2,106 | 1,690 | 4,256 | 3,634 |
| Fees to manager | 88 | 88 | 175 | 175 |
| Amortization of intangibles | 329 | 376 | 659 | 752 |
| Income from operations | $1,099 | $3,402 | $2,342 | $5,636 |

***Three months ended June 30, 2011 compared to the three months ended June 30, 2010.***

#### Net sales

Net sales for the three months ended June 30, 2011 decreased approximately $2.8 million or 16.8% compared to the corresponding three months ended June 30, 2010. Net sales of non-powered support surfaces and patient positioning devices totaled $11.2 million in the three months ended June 30, 2011 compared to $11.8 million during the same period in 2010, a decrease of $0.6 million or 5.1%. Net sales of powered products totaled $2.7 million during the three months ended June 30, 2011 compared to $5.0 million in the same period of 2010, a decrease of $2.2 million or 44.0%. Sales of non-powered support surfaces were lower in the second quarter of 2011 compared to the same period in 2010 due to: (i) higher than normal sales in the second quarter of 2010 as a result of sales to a customer who was replacing product manufactured by another company with a product manufactured by Tridien and (ii) lower sales prices granted to certain customers in 2011 compared to 2010 in exchange for long term purchase commitments. The significant decrease in powered sales during the second quarter of 2011 compared to 2010 is the loss of business at a large customer during the current quarter and softening in demand for some powered products resulting from aggressive pricing from competitors and delays in new product launches.

#### Cost of sales

Cost of sales decreased approximately $0.9 million in the three months ended June 30, 2011 compared to the same period of 2010 primarily as a result of the decrease in sales. Gross profit as a percentage of sales was 26.0% in the three months ended June 30, 2011 compared to 33.1% in the corresponding period in 2010. The decrease in gross profit as a percentage of sales of 7.1% in 2011 is principally due to selling price concessions made to customers in 2011 in exchange for long term purchase commitments (3.5%), one time start-up costs associated with opening a new production facility (0.9%), and the negative impact in labor and overhead absorption rates resulting from a decrease in production volume on powered products (2.7%).

#### Selling, general and administrative expense

Selling, general and administrative expense for the three months ended June 30, 2011 increased approximately $0.4 million compared to the same period of 2010. This increase is principally the result of increased spending on infrastructure, marketing and sales support ($0.4 million) in an effort to spur positive growth activity in both powered and non-powered product revenue.

#### Income from operations

Income from operations decreased approximately $2.3 million to $1.1 million for the three months ended June 30, 2011 compared to $3.4 million in the three months ended June 30, 2010, due principally to those factors described above.

### Six months ended June 30, 2011 compared to the six months ended June 30, 2010.

#### Net sales

Net sales for the six months ended June 30, 2011 decreased approximately $4.3 million or 13.4% compared to the corresponding six months ended June 30, 2010. Net sales of non-powered support surfaces and patient positioning devices totaled $22.5 million in 2011 compared to $24.2 million during the same period in 2010, a decrease of 1.7 million or 7.0%. Net sales of powered products totaled $5.3 million during the six months ended June 30, 2011 compared to $7.9 million in the same period of 2010, a decrease of $2.6 million or 32.9%. Sales of non-powered support surfaces were lower for the six months ended June 30, 2011 compared to the same period in 2010 as the result of: (i) higher than normal sales in the second quarter of 2010 as a result of sales to a customer who was replacing product manufactured by another company with a product manufactured by Tridien; and (ii) lower sales prices granted to certain customers in 2011 compared to 2010 in exchange for long term purchase commitments. The significant decrease in powered product sales during the six months ended June 30, 2011 compared to the same period of 2010 is the result of the loss of a large customer during the period and softening in demand for some powered products resulting from aggressive pricing from competitors and delays in our new product launches. Although we expect increased sales in Tridien’s powered product sector in the second half of 2011, sales for the full year will most likely be lower than fiscal 2010.

#### Cost of sales

Cost of sales decreased approximately $1.5 million in the six months ended June 30, 2011 compared to the same period of 2010 primarily as a result of the decrease in sales. Gross profit as a percentage of sales was 26.7% in the six months ended June 30, 2011 compared to 31.8% in the corresponding period in 2010. The decrease of 5.1% in 2011 is principally due to increases in foam costs (1.3%), a major component in non-powered products, the product of selling price concessions made to customers in 2011 in exchange for long term purchase commitments (2.7%), one time start-up costs associated with opening a new production facility (0.5%), and the negative impact in overhead absorption rates resulting from a decrease in production volume (0.6%).

#### Selling, general and administrative expense

Selling, general and administrative expense for the six months ended June 30, 2011 increased approximately $0.6 million compared to the same period of 2010. This increase is principally the result of increase spending on infrastructure, engineering, sales and marketing to promote growth, in both the powered and non-powered product sector.

#### Income from operations

Income from operations decreased approximately $3.3 million to $2.3 million for the six months ended June 30, 2011 compared to $5.6 million in the six months ended June 30, 2010, due principally to those factors described above.

### Liquidity and Capital Resources

For the six months ended June 30, 2011, on a consolidated basis, cash flows provided by operating activities totaled approximately $48.5 million, which represents a $40.9 million increase in cash provided by operations compared to the six months ended June 30, 2010. This increase is the result of the operating cash generated at our business segments, specifically, Staffmark ($25.1 million), Advanced Circuits, ($9.8 million), ERGObaby ($3.9 million) and Liberty ($5.4 million). In each case, the majority of the operating cash was used to pay down their intercompany loans.

Cash flows used in investing activities totaled approximately $11.2 million, which reflects maintenance capital expenditures of approximately $5.3 million and growth capital expenditures totaling $6.1 million. The growth capital expenditures were incurred at Liberty Safe and Fox.

Cash flows used in financing activities totaled approximately $41.6 million, principally reflecting distributions paid to shareholders during the year totaling approximately $32.7 million and net repayments under our Revolving Credit Facility and Term Loan Facility of $8.0 million.

At June 30, 2011, we had approximately $9.2 million of cash and cash equivalents on hand. The majority of our cash is invested in short-term money market accounts and is maintained in accordance with the Company’s investment policy, which identifies allowable investments and specifies credit quality standards.

As of June 30, 2011, we had the following outstanding loans due from each of our businesses:

- Advanced Circuits — $75.7 million;
- American Furniture — $22.1 million;
- ERGObaby — $43.5 million;
- Fox — $33.1 million;
- HALO — $44.3 million;
- Liberty — $40.4 million;
- Staffmark — $51.6 million; and
- Tridien — $4.0 million.

Each loan has a scheduled maturity and each business is entitled to repay all or a portion of the principal amount of the outstanding loans, without penalty, prior to maturity. As of June 30, 2011, American Furniture was not in compliance with its Maintenance Fixed Charge Coverage Ratio requirement included in the amended credit agreement with us dated December 31, 2010. We are required to fund, in the form of an additional equity investment, any shortfall in the difference between Adjusted EBITDA and Fixed Charges as defined in American Furniture’s credit agreement with us. Per the maintenance agreement, the shortfall that we are required to fund, AFM is in turn required to pay down on its term debt with us. The amount of the shortfall at June 30, 2011 is approximately $1.4 million.

Our primary source of cash is from the receipt of interest and principal on the outstanding loans to our businesses. Accordingly, we are dependent upon the earnings of and cash flow from these businesses, which are available for (i) operating expenses; (ii) payment of principal and interest under our Credit Agreement; (iii) payments to CGM due pursuant to the Management Services Agreement, the LLC Agreement, and the Supplemental Put Agreement; (iv) cash distributions to our shareholders; and (v) investments in future acquisitions. Payments made under (iii) above are required to be paid before distributions to shareholders and may be significant and exceed the funds held by us, which may require us to dispose of assets or incur debt to fund such expenditures.

We incurred non-cash charges to earnings of approximately $4.9 million during the six months ended June 30, 2011 in order to recognize an increase in our estimated liability in connection with the Supplemental Put Agreement between us and CGM. A non-current liability of approximately $42.6 million is reflected in our condensed consolidated balance sheet, which represents our estimated liability for this obligation at June 30, 2011.

The current portion of the supplemental put liability of $6.9 million represents an accrual for the contribution-based profit allocation that will be paid to our Manager during the third quarter of 2011. This accrual represents the contribution-based profit for the fifth anniversary date of Advanced Circuits and reduces the overall supplemental put liability when paid.

The Manager has elected to receive the positive contribution-based profit allocation payment.

The following table provides the contribution-based profit for each of the businesses we control at June 30, 2011 and the respective quarter end in which each five year anniversary occurs, reconciled to the total supplemental put liability:

*(in thousands)*

|  | Contribution- based profit allocation accrual at June | Quarter End of Fifth Anniversary Date of Acquisition |
| --- | ---: | --- |
| Advanced Circuits | $6,715 | June 30, 2011 |
| American Furniture | (8,609) | September 30, 2012 |
| ERGObaby | 151 | September 30, 2015 |
| FOX | 2,816 | March 31, 2013 |
| HALO | 376 | March 31, 2012 |
| Liberty | (226) | March 31, 2015 |
| Staffmark | (5,024) | June 30, 2011 |
| Tridien | (115) | September 30, 2011 |
| Total contribution-based profit portion | $(3,916) |  |
| Estimated gain on sale portion | 53,409 |  |
| Total supplemental put liability | $49,493 |  |

We believe that we currently have sufficient liquidity and resources to meet our existing obligations, including quarterly distributions to our shareholders, as approved by our board of directors, over the next twelve months. The quarterly distribution for the three months ended June 30, 2011 was paid on July 28, 2011 and was $16.8 million. We have considered the impact of recent market instability and credit availability in assessing the adequacy of our liquidity and capital resources.

Our Credit Agreement provides for a Revolving Credit Facility totaling $340 million which matures in December 2012, and a Term Loan Facility totaling $73.0 million, which matures in December 2013. We incurred interest expense of $1.8 million and $3.9 million in the three and six months ended June 30, 2011, respectively in connection with this Credit Agreement. Our current borrowing rates for the Term Loan Facility portion of our Credit Agreement is LIBOR (4.0%) and Base (3.0%). Our current borrowing rates for the Revolving Credit Facility portion of our Credit Agreement is LIBOR (2.5%) and Base (1.5%).

The Term Loan Facility requires quarterly payments of $0.5 million which commenced June 30, 2008, with a final payment of the outstanding principal balance due on December 7, 2013.

We had approximately $234.3 million in borrowing base availability under the Revolving Credit Facility at June 30, 2011. Letters of credit totaling $69.9 million were outstanding at June 30, 2011. We currently have no exposure to failed financial institutions. At June 30, 2011, we had $15.0 million in outstanding borrowings under the Revolving Credit Facility.

The following table reflects required and actual financial ratios as of June 30, 2011 included as part of the affirmative covenants in our Credit Agreement:

|  |  |  |
| --- | --- | --- |
| Description of Required Covenant Ratio | Covenant Ratio Requirement | Actual Ratio |
| Fixed Charge Coverage Ratio | greater than or equal to 1.5:1.0 | 5.8:1.0 |
| Interest Coverage Ratio | greater than or equal to 2.75:1.0 | 10.3:1.0 |
| Leverage Ratio | less than or equal to 3.5:1.0 | 1.1:1.0 |

We intend to use the availability under our Credit Agreement and cash on hand to pursue acquisitions of additional businesses to the extent permitted under our Credit Agreement, to fund distributions and to provide for other working capital needs.

### Reconciliation of Non-GAAP Financial Measures

From time to time we may publicly disclose certain “non-GAAP” financial measures in the course of our investor presentations, earnings releases, earnings conference calls or other venues. A non-GAAP financial measure is a numerical measure of historical or future performance, financial position or cash flow that excludes amounts, or is subject to adjustments that effectively exclude amounts, included in the most directly comparable measure calculated and presented in accordance with GAAP in our financial statements, and vice versa for measures that include amounts, or are subject to adjustments that effectively include amounts, that are excluded from the most directly comparable measure as calculated and presented. GAAP refers to generally accepted accounting principles in the United States.

Non-GAAP financial measures are provided as additional information to investors in order to provide them with an alternative method for assessing our financial condition and operating results. These measures are not meant to be a substitute for GAAP, and may be different from or otherwise inconsistent with non-GAAP financial measures used by other companies.

The tables below reconcile the most directly comparable GAAP financial measures to EBITDA, Adjusted EBITDA and Cash Flow Available for Distribution and Reinvestment (”CAD”).

#### Reconciliation of Net income (loss) to EBITDA and Adjusted EBITDA

**EBITDA —** Earnings before Interest, Income Taxes, Depreciation and Amortization (“EBITDA”) is calculated as net income (loss) before interest expense, income tax expense (benefit), depreciation expense and amortization expense. Amortization expenses consist of amortization of intangibles and debt charges, including debt issuance costs, discounts, etc.

**Adjusted EBITDA —** Is calculated utilizing the same calculation as described above in arriving at EBITDA further adjusted by: (i) non-controlling stockholder compensation, which generally consists of non-cash stock option expense; (ii) successful acquisition costs, which consist of transaction costs (legal, accounting , due diligences, etc.) incurred in connection with the successful acquisition of a business expensed during the period in compliance with ASC 805;(iii) increases or decreases in supplemental put charges, which reflect the estimated potential liability due to our manager that requires us to acquire their Allocation Interests in the Company at a price based on a percentage of the fair value in our businesses over their original basis plus a hurdle rate. Essentially, when the fair value of our businesses increases we will incur additional supplemental put charges and vice versa when the fair value of our businesses decreases; (iv) management fees, which reflect fees due quarterly to our manager in connection with our Management Services Agreement (“MSA”); (v) impairment charges, which reflect write downs to goodwill or other intangible assets and (vi) gains or losses recorded in connection with the sale of fixed assets.

We believe that *EBITDA* and *Adjusted EBITDA* provide useful information to investors and reflect important financial measures as they exclude the effects of items which reflect the impact of long-term investment decisions, rather than the performance of near term operations. When compared to net income (loss) these financial measures are limited in that they do not reflect the periodic costs of certain capital assets used in generating revenues of our businesses or the non-cash charges associated with impairments. This presentation also allows investors to view the performance of our businesses in a manner similar to the methods used by us and the management of our businesses, provides additional insight into our operating results and provides a measure for evaluating targeted businesses for acquisition.

We believe these measurements are also useful in measuring our ability to service debt and other payment obligations. *EBITDA* and *Adjusted EBITDA* are not meant to be a substitute for GAAP, and may be different from or otherwise inconsistent with non-GAAP financial measures used by other companies.

The following table reconciles *EBITDA* and *Adj*u*sted EBITDA* to net income (loss), which we consider to be the most comparable GAAP financial measure *(in thousands):*

Adjusted EBITDA

Six-months ended June 30, 2011

|  | Consolidated | Corporate | Advanced Circuits | American Furniture | ERGObaby | HALO | Fox | Liberty | Staffmark | Tridien | Total |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net income (loss) | $1,699 | $(6,972) | $6,926 | $(9,156) | $1,279 | $1,059 | $5,410 | $(224) | $2,044 | $1,333 | $1,699 |
| Adjusted for: |  |  |  |  |  |  |  |  |  |  |  |
| Provision (benefit) for income taxes | 6,219 | (982) | 3,699 | (1,991) | 807 | 250 | 3,126 | (154) | 622 | 842 | 6,219 |
| Interest expense (net) | 4,877 | 3,891 | (1) | 23 | 28 | — | 6 | — | 930 | — | 4,877 |
| Intercompany interest | — | (12,278) | 3,089 | 1,166 | 2,347 | 1,095 | 919 | 2,151 | 1,365 | 146 | — |
| Depreciation and amortization | 21,801 | 2,250 | 2,413 | 1,911 | 1,523 | 1,700 | 3,362 | 3,377 | 4,065 | 1,200 | 21,801 |
| EBITDA | $34,596 | $(14,091) | $16,126 | $(8,047) | $5,984 | $4,104 | $12,823 | $5,150 | $9,026 | $3,521 | $34,596 |
| (Gain) loss on sale of fixed assets | 92 | — | — | (12) | — | 40 | 60 | 1 | 3 | — | 92 |
| Non-controlling stockholder compensation | 1,215 | (1,175) | 8 | 108 | 178 | — | 455 | 130 | 1,464 | 47 | 1,215 |
| Impairment charges | 7,700 | — | — | 7,700 | — | — | — | — | — | — | 7,700 |
| Increase in earnout probability | 850 | — | — | — | 850 | — | — | — | — | — | 850 |
| Supplemental put | 4,895 | 4,895 | — | — | — | — | — | — | — | — | 4,895 |
| Management fees | 7,778 | 5,615 | 250 | 125 | 250 | 250 | 250 | 250 | 613 | 175 | 7,778 |
| Adjusted EBITDA | $57,126 | $(4,756) | $16,384 | $(126) | $7,262 | $4,394 | $13,588 | $5,531 | $11,106 | $3,743 | $57,126 |

Adjusted EBITDA

Six-months ended June 30, 2010

|  | Consolidated | Corporate | Advanced Circuits | American Furniture | ERGObaby | HALO | Fox | Liberty | Staffmark | Tridien | Total |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net income (loss) | $(16,030) | $(24,613) | $3,778 | $362 | $— | $(1,289) | $2,947 | $(2,305) | $1,796 | $3,294 | $(16,030) |
| Adjusted for: |  |  |  |  |  |  |  |  |  |  |  |
| Provision (benefit) for income taxes | 3,952 | (1,076) | 1,950 | 222 | — | (653) | 1,631 | (508) | 363 | 2,023 | 3,952 |
| Interest expense (net) | 5,544 | 4,609 | (1) | 12 | — | — | — | — | 924 | — | 5,544 |
| Intercompany interest | — | (10,951) | 1,380 | 3,186 | — | 1,310 | 1,193 | 1,106 | 2,476 | 300 | — |
| Depreciation and amortization | 18,566 | 2,907 | 2,133 | 1,687 | — | 1,711 | 3,168 | 1,697 | 4,014 | 1,249 | 18,566 |
| EBITDA | $12,032 | $(29,124) | $9,240 | $5,469 | $— | $1,079 | $8,939 | $(10) | $9,573 | $6,866 | $12,032 |
| (Gain) loss on sale of fixed assets | (9) | — | — | (4) | — | (1) | (7) | — | 3 | — | (9) |
| Non-controlling stockholder compensation | 7,441 | 2,399 | 3,774 | 107 | — | — | 211 | 65 | 824 | 61 | 7,441 |
| Acquisition expenses | 1,924 | — | 315 | — | — | 59 | — | 1,550 | — | — | 1,924 |
| Supplemental put | 16,991 | 16,991 | — | — | — | — | — | — | — | — | 16,991 |
| Management fees | 7,373 | 5,790 | 250 | 250 | — | 250 | 250 | 125 | 283 | 175 | 7,373 |
| Adjusted EBITDA | $45,752 | $(3,944) | $13,579 | $5,822 | $— | $1,387 | $9,393 | $1,730 | $10,683 | $7,102 | $45,752 |

44

The table below details cash receipts and payments that are not reflected on our income statement in order to provide an additional measure of management’s estimate of CAD. CAD is a non-GAAP measure that we believe provides additional information to evaluate our ability to make anticipated quarterly distributions. It is not necessarily comparable with similar measures provided by other entities. We believe that CAD, together with future distributions and cash available from our businesses (net of reserves) will be sufficient to meet our anticipated distributions over the next twelve months. The table below reconciles CAD to net income and to cash flow provided by operating activities, which we consider to be the most directly comparable financial measure calculated and presented in accordance with GAAP.

*(in thousands)*

*(unaudited)*

*(unaudited)*

|  | Six Months Ended June 30, 2011 | Six Months Ended June 30, 2010 |
| --- | ---: | ---: |
| Net income (loss) | $1,699 | $(16,030) |
| Adjustment to reconcile net income (loss) to cash provided by operating activities: |  |  |
| Depreciation and amortization | 20,800 | 17,730 |
| Impairment expense | 7,700 | — |
| Amortization of debt issuance costs | 1,001 | 836 |
| Supplemental put expense | 4,895 | 16,991 |
| Noncontrolling interests and noncontrolling shareholders charges | 1,215 | 7,441 |
| Other | 87 | (160) |
| Deferred taxes | (1,926) | (2,062) |
| Changes in operating assets and liabilities | 13,013 | (17,177) |
| Net cash provided by operating activities | 48,484 | 7,569 |
| Plus: |  |  |
| Unused fee on revolving credit facility (1) | 1,542 | 1,629 |
| Successful acquisition expense (2) | 850 | 1,924 |
| Changes in operating assets and liabilities | — | 17,177 |
| Less: |  |  |
| Changes in operating assets and liabilities | 13,013 | — |
| Maintenance capital expenditures: (3) |  |  |
| Compass Group Diversified Holdings LLC | — | — |
| Advanced Circuits | 1,468 | 71 |
| American Furniture | (62) | 22 |
| ERGObaby | 388 | — |
| Fox | 198 | 357 |
| Halo | 662 | 164 |
| Liberty | 126 | 146 |
| Staffmark | 1,347 | 1,008 |
| Tridien | 997 | 413 |
| **Estimated cash flow available for distribution and reinvestment** | $32,739 | $26,118 |
| Distribution paid in March 2011 and April 2010 | $16,821 | $14,238 |
| Distribution paid in July 2011/2010 | 16,821 | 14,238 |
|  | $33,642 | $28,476 |

(1) Represents the commitment fee on the unused portion of the Revolving Credit Facility.

(2) Represents transaction costs for successful acquisitions that were expensed during the period.

(3) Excludes growth capital expenditures of approximately $6.2 million for the six months ended June 30, 2011.

Cash flows of certain of our businesses are seasonal in nature. Cash flows from American Furniture are typically highest in the months of January through April coinciding with income tax refunds. Cash flows from Staffmark are typically lower in the first quarter of each year than in other quarters due to: (i) reduced seasonal demand for temporary staffing services and (ii) lower gross margins earned during that period due to the front-end loading of certain payroll taxes and other costs associated with payroll paid to our employees. Cash flows from HALO are typically highest in the months of September through December of each year primarily as the result of calendar sales and holiday promotions. HALO generates approximately two-thirds of its operating income in the months of September through December. Revenue and earnings from Fox are typically highest in the third quarter, coinciding with the delivery of product for the new bike year. Earnings from Liberty are typically lowest in the second quarter due to lower demand for safes at the onset of summer.

### Contractual Obligations and Off-Balance Sheet Arrangements

We have no special purpose entities or off-balance sheet arrangements, other than operating leases entered into in the ordinary course of business.

Long-term contractual obligations, except for our long-term debt obligations, are generally not recognized in our consolidated balance sheet. Non-cancelable purchase obligations are obligations we incur during the normal course of business, based on projected needs.

The table below summarizes the payment schedule of our contractual obligations at June 30, 2011:

|  | Total | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years |
| --- | ---: | ---: | ---: | ---: | ---: |
| Long-term debt obligations (a) | $103,117 | $10,425 | $92,692 | $— | $— |
| Capital lease obligations | 713 | 248 | 465 | — | — |
| Operating lease obligations (b) | 61,302 | 12,203 | 19,292 | 12,060 | 17,747 |
| Purchase obligations (c) | 191,958 | 122,240 | 36,318 | 33,400 | — |
| Supplemental put obligation (d) | 42,602 | 376 | 2,816 | 151 | — |
| Total |  | $145,492 | $151,583 | $45,611 | $17,747 |

(a) Reflects commitment fees and letter of credit fees under our Revolving Credit Facility and amounts due, together with interest on our Term Loan Facility.

(b) Reflects various operating leases for office space, manufacturing facilities and equipment from third parties with various lease terms running from one to fourteen years.

(c) Reflects non-cancelable commitments as of June 30, 2011, including: (i) shareholder distributions of $67.3 million, (ii) management fees of $16.7 million per year over the next five years and, (iii) other obligations, including amounts due under employment agreements. Distributions to our shareholders are approved by our board of directors each quarter. The amount ultimately approved as future quarterly distributions may differ from the amount included in this schedule.

(d) The supplemental put obligation represents the estimated long term liability, accrued as if our management services agreement with CGM had been terminated. This agreement has not been terminated and there is no basis upon which to determine a date in the future, if any, that the estimated gain on sale portion will be paid. The Manager can elect to receive the positive contribution-based profit allocation payment for each of our business acquisitions during the 30-day period following the fifth anniversary of the date upon which we acquired a controlling interest in that business. See Liquidity and Capital Resources.

The table does not include the long-term portion of the actuarially developed reserve for workers compensation, included as a component of long-term liabilities, which does not provide for annual estimated payments beyond one year.

### Critical Accounting Estimates

The preparation of our financial statements in conformity with GAAP requires management to adopt accounting policies and make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates under different assumptions and judgments and uncertainties, and potentially could result in materially different results under different conditions. These critical accounting estimates are reviewed periodically by our independent auditors and the audit committee of our board of directors.

#### 2011 Annual goodwill impairment testing

We conducted our annual goodwill impairment testing as of March 31, 2011. At each of our reporting units tested, the units’ fair value exceeded carrying value with the exception of American Furniture. The carrying amount of American Furniture exceeded its fair value due to the significant decrease in revenue and operating profit at American Furniture resulting from the negative impact on the promotional furniture market due to the significant decline in the U.S. housing market, high unemployment rates and aggressive pricing employed by our competitors. As a result of the carrying amount of goodwill exceeding its fair value, we recorded a $5.9 million impairment charge as of March 31, 2011 which represented the remaining balance of goodwill on American Furniture’s balance sheet. We recorded a goodwill impairment charge totaling $35.5 million in the third quarter of 2010.

The carrying amount of American Furniture exceeded its fair value at March 31, 2011 by a significant amount due primarily to the significant decrease in revenue and operating profit together with management’s revised outlook on near term operating results. Further, the results of this analysis indicated that the carrying value of American Furniture’s trade name exceeded its fair value by approximately $1.8 million. The fair value of the American Furniture trade name was determined by applying the relief from royalty technique to forecasted revenues at the American Furniture reporting unit.

Of the remaining seven reporting units as of March 31, 2011 the fair value of one of the reporting units was not substantially in excess of its carrying value. Information from step-one of the impairment test for this reporting unit is as follows:

| Reporting Unit | Percentage fair value of goodwill exceeds carrying value | Carrying value of goodwill @ March 31, 2011 |
| --- | ---: | --- |
| HALO | 9.7% | $39.2 million |

A one percent increase in the discount rate, from 13% to 14%, would have impacted the fair value of HALO by approximately $5.0 million and would have required us to perform a step-two analysis that may have resulted in an impairment charge for HALO as of March 31, 2011. Factors that could potentially trigger a subsequent interim impairment review in the future and possible impairment loss at our HALO reporting unit include significant underperformance relative to future operating results or significant negative industry or economic trends.

Other than described above, the estimates employed and judgment used in determining critical accounting estimates have not changed significantly from those disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K, for the year ended December 31, 2010, as filed with the SEC.

### Recent Accounting Pronouncements

Refer to footnote C to our condensed consolidated financial statements.

## Market risk

As filed, 465 characters.

The quantitative and qualitative disclosures about market risk required by this item have not changed materially from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2010 as filed with the SEC on March 10, 2011. For a discussion of our exposure to market risk, refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” contained in our Annual Report on Form 10-K for the year ended December 31, 2010.

## Controls and procedures

As filed, 1,144 characters.

As required by Exchange Act Rule 13a-15(b), Holding’s Regular Trustees and the Company’s management, including the Chief Executive Officer and Chief Financial Officer of the Company, conducted an evaluation of the effectiveness of Holdings’ and the Company’s disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e), as of June 30, 2011. Based on that evaluation, the Regular Trustees of Holdings’ and the Chief Executive Officer and Chief Financial Officer of the Company concluded that Holdings’ and the Company’s disclosure controls and procedures were effective as of June 30, 2011.

In connection with the evaluation required by Exchange Act Rule 13a-15(d), Holding’s Regular Trustees and the Company’s management, including the Chief Executive Officer and Chief Financial Officer of the Company, concluded that no changes in Holdings’ or the Company’s internal control over financial reporting occurred during the second quarter of 2011 that have materially affected, or are reasonably likely to materially affect, Holdings’ and the Company’s internal control over financial reporting.

### PART II

### OTHER INFORMATION

## Risk factors

As filed, 231 characters.

Risk factors and uncertainties associated with the Company’s and Holdings’ business have not changed materially from those disclosed in Part I, Item 1A of our 2010 Annual Report on Form 10-K as filed with the SEC on March 10, 2011.

Filed Aug 9, 2011.
Source: SEC EDGAR, the filing index for accession 0000950123-11-074777. Last ingested by Listed: Nov 4, 2026, 17:19 ET. No prices; not investment advice.