Good afternoon, everyone, and thank you for participating in today's conference call to discuss Black Diamond's financial results for the second quarter ended June 30, 2013. Joining us today are Black Diamond's President and CEO's, Mr. Peter Metcalf; and the company's interim CFO and Vice President of Finance, Mr. Aaron Kuehne. Following their remarks, we'll open the call for your questions. Before we go further, I would like to take a moment to read the company's Safe Harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward-looking statements. Please note that during this conference call, the company may use such words as appears, anticipates, believes, plans, expects, intends, future and similar expressions which constitute forward-looking statements within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based on the company's expectations and beliefs concerning future events impacting the company and therefore, involve a number of risks and uncertainties. The company cautions you that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. Potential risks and uncertainties that could cause the actual results of the operations or financial condition of the company to differ materially from those expressed or implied by forward-looking statements used in this conference call include, but are not limited to, the overall level of consumer spending on the company's products; general economic conditions and other factors affecting consumer confidence; disruption and volatility in the global capital and capital markets; the financial strength of the company's customers, the company's ability to implement its growth strategy; the company's ability to successfully integrate and grow acquisitions; the company's exposure to product liability or product warranty claims and…

Thank you, Lilly. And good afternoon, everyone. As you say after the close of the market today, we issued a press release announcing our financial results for the second quarter ended June 30, 2013. The first half of the year represents our spring-summer product season and, compared to last year, sales during the first half of 2013 were up 15% to $89.9 million, in line with a long-term organic growth target. Second quarter 2013 sales increased 22% to $38.9 million, which includes double-digit growth from all of our brands compared to the same period last year. We attribute these record sales to a diverse collection of new and existing active outdoor performance products, global distribution and increased focus on sales and marketing. The industry was not without its challenges during the first half of 2013, largely due to extreme, unseasonably cool wet spring, both in North America and especially in Europe. Following 2 consecutive challenging winter seasons, industry purchasing trends are continuing to evolve toward a model that we believe is intentionally shifting more inventory risk to manufacturers and distributors, and we are adjusting our strategy to reflect these dynamics. You may recall that during our Q1 earnings call, we described a global retail marketplace that is more reticent to make order commitment on the scale that they have in the past. In many cases, challenges breed opportunity and during the second quarter, we took the opportunity to make meaningful progress to improve working capital through reductions to our global inventory. At the same time, our business continues to grow, market shares are either stable or growing, and most importantly, our dream of launching apparel is expected to be about 1 month away from becoming reality. While we have modestly adjusted our second half revenue outlook to reflect these near-term industry dynamics, we remain confident in our belief that our evolving and innovative product portfolio will continue to generate growing consumer demand. Before I comment further, I'd like to turn the call over to our interim CFO and Vice President of Finance, Aaron Kuehne, who will take us through some details of our financial results for the second quarter. Following Aaron's remarks, I'll return to discuss some additional highlights and then open the call for your questions. Aaron?

Thanks, Peter and good afternoon, everyone. Black Diamond's consolidated total sales in the second quarter of 2013 increased 22% to $38.9 million, compared to $31.9 million during the same year ago quarter. The increase was attributed to the addition of POC, which was acquired in the second half of 2012. A number of new and existing products sold during the period, as well as the expected increase in Gregory sales in Japan due to the transition of the Japanese distribution assets from A&F. Our sales growth was partially offset by the unseasonably cool, wet spring, the shift in our dealer's buying strategy that Peter just mentioned, as well as a weak yen compared to the dollar. On a positive note, a longer winter season allowed us to move a significant amount of winter goods that we wouldn't otherwise have sold in typical springlike conditions. The foreign exchange markets continue to experience volatility and Black Diamond operates across multiple currencies, primarily, the U.S. dollar, the euro, the yen and Swiss franc. Due to the weakening of foreign currencies against the U.S. dollar, we experienced a decrease in sales of approximately 40 basis points during the second quarter. As you may recall, in the first quarter, the U.S. dollar strengthened more than 20% against the yen. During the second quarter, a weaker U.S. dollar had a negative impact on sales and gross margin for our new Gregory Japan Distribution business, up approximately 130 basis points and approximately 110 basis points, respectively. This is because in Japan, Gregory sells product in yen, and converts those yen back to U.S. dollars at what is now an approximately 20% discount to our December 31 estimates. Gross margin in the second quarter of 2013 was 40.3% compared to 39.1% in the same period last year. This…

Thanks, Aaron. As I said in my opening remarks, we generated record sales for our spring summer selling season. According to the latest Outdoor Industry Association of America's participation report, the global industry grew healthy single digits in 2012. In particular, Asia, which is our highest growth geography, grew nicely, while Europe, which has been more challenging due to economic and weather factors, also grew. There's no denying that our industry has undergone a level of instability in the first half of 2013. We have witnessed both the volatile consumer and a reactive wholesale environment. Following 2 consecutive challenging winters, most of the world where Black Diamond does business experienced an extreme unseasonably cold and wet spring, with a fair share of extreme weather event. As an example, the U.K. endured the coldest spring in 50 years and parts of Germany and Austria experienced 500-year record floods. This compares to last year when springlike conditions greeted most of the global outdoor community in January. The same study that proved 2012 outdoor participation on the rise also showed sales of most outdoor categories, even beyond where BD competes, being flat or down. Beginning in the first quarter of 2013, we also witnessed an evolving industry buying strategy among some of our large dealers, to more of an ASAP versus pre-season approach, shifting investment risk to manufacturers and global distributors. This trend was particularly dramatic in the final 30 days of the quarter when more than 1 retailer actually canceled pre-booked orders. We believe this environment exists due to the extreme weather and drought the outdoor industry has recently endured and its impact on retailing inventory, as well as general consumer's buying behavior in light of weather and economic events. It is in this environment which led us to slightly revise our…

[Operator Instructions] Our first question comes from the line of Camilo Lyon with Canaccord Genuity.

Peter, I was hoping you could give a little bit more color on just the type of conversations you're having with the retailers. I think caution is the key word that everyone is coming to the fall-winter '13 season with. Does that mean that there's just more of a shift towards ASAP orders for you or is it outright cancellations? And if you could discuss what categories that's really homed in on, that'd be appreciated.

Sure, Camilo. Thanks for the question. First off, yes, we have had, this summer, some outright cancellations. They were the exceptions, but they were a few large ones with our very largest retailers and that certainly was unexpected by them and by us, and it hurt. Relative to the fall in moving forward, we have an order book, the order book from the largest retailers reflected by the time we got it, a more conservative approach to what they're willing to commit to. And by the time the larger retailers wrote, they were writing with that new perspective. Hence, we do not believe that we're going to see any meaningful cancellations from our retailers at this point, in part because the fall 2013 season was written with a more conservative approach to the marketplace. I would say that, certainly, in some of the larger accounts, that conservatism has certainly manifested itself up to this point in time and the messaging or the takeaways that we have gotten, it depends a little bit upon brand by brand, but in the outdoor segments for Gregory and Black Diamond is the following. The first one is, is that some of the larger retailers certainly would prefer to run out before being -- rather than be over inventoried. So being out of stock and then ordering is apparently, at this moment, the preferred mentality versus running the risk of being over-inventoried. On the positive side, it does feel right now, from talking to retailers, including the largest ones, they certainly have their inventories under control. There is not a lot of fad in the retail channels with inventory. There is some question as to discount C [ph] product in the discount channels and others that have alternative distribution venues. How much is there? We…

If weather is more favorable in the back half, how well-equipped are you to meet ASAP orders?

You know, we have really worked the last 8 months, 9 months, especially started earlier on inventory management and we hired, we recruited out of Flextronics a VP of Supply Chain or Senior Director of Supply Chain, Glenn Ritter, who, in working with his team and very closely with Mark Ritchie, have really done a lot to bring a higher level of diligence, discipline and greater scrutiny to our ordering cycle, our buying cycle, shipping direct, how we manufacture, shifting from a level load to a demand load, and done in part through how we're cross-training our own people so they can be moved quickly from one line to the other. So I think that within reason, we are capable of responding to the upper end and a little bit better of that range. It does come down to, when do we see that trend hitting, how quickly does it hit, et cetera. So we have some flexibility, it's not unlimited by any means. But the goal here at this point in time is to try to engineer that delicate path between not being greedy and blowing it and ending up with way too much inventory and discounts and hurting margins, and having enough inventory to meet a healthy market that is beginning to see a rebound in ASAPs with -- at a reasonable level. So that's a narrative to subjectively describe to you, I feel good about the position that we've taken and our ability to hit a range of -- and to be comfortable and somewhat conservative to a upwardly trending ASAP mode, which I should say, in the last few weeks with normal weather in Europe and better weather here, we certainly seen that uptick in ASAPs in the last couple of weeks.

It seems like the retailers have swung too conservative on one end of the pendulum and that there are signs that there's a reversion to the center mean. Is that a fair -- from what you can see today?

I don't think we've seen the reversion to the center mean. I think it is human nature, unfortunately, for situations to have to swing from one extreme to the other. When things are good, there's a belief that they will never stop being good, and they would just keep getting better. And people begin to get into that mentality a little of omnipotence and ever-steeping growth. And then conversely, when it begins to go more than a month or 2, that you talk about 2 seasons worth going the other way, then the dark glasses come on and people begin to look at things through dark glasses that put on a sort of bearish attitude. I think that attitude that we felt at the show was one of conservatism, in control of the business and a degree of guarded optimism at the sudden pickup on ASAP's, but not yet where I would call an attitude of, "happy days are here again." I really want to open up my open-to-buy because I believe we're about to see a major uptick. But what I will say is, we have people who are confident of their competence in running their businesses, in whatever situations they have anticipated what they've been through. And I think that is why even over these 2 bad winters and a very horrific spring in Europe, we have had such tiny bad debt write off, is that we have been discriminating in who we work with, and those people have learned how to run their businesses in good times and bad times. But again, to summarize, we clearly are getting an uptick in ASAP. We have a group of dealers who want to be optimistic. They just need to be given the evidence that they should start opening and they need a little bit more time to experience that before they're going to, I think, change in a meaningful way their buying strategy.

And if I could sneak one last in, on the apparel launch, you've gotten some great feedback, it sounds, from an order perspective on fall '14 -- I'm sorry, spring '14. We have yet to see fall '13 in stores. Maybe you could share a little bit of the qualitative feedback that you've had on the spring line. It doesn't sound like there's conservatism on accepting the BDE apparel brand by the retailers. So maybe if you could share a little bit of what you're -- what the conversations are and how you're dialoguing with your retailers who are naturally a little bit more guarded going into the winter season.

Yes, sure. Another good question, Camilo. I think that probably the best way to sum it up initially is that, the night -- the eve of the Outdoor Retailer trade show, we had one of the senior account reps of Leisure Trends, which is the sales tracking organization for the outdoor industry who we pay to track BDE within the categories that we compete in, and they gave a nearly 2-hour presentation to us. And we're very gratified to see that for Black Diamond and Gregory -- they're tracking the outdoors, not the cycle industry, by the way. We were doing better than market in nearly every category that we competed in, not every, but nearly every one. And I think, I share that with you because what retailers are looking for right now in their product mixes is not to take silly risk, yet that is juxtaposed against a very understood need in challenging times to have something new, innovative, exciting, edgy, that is going to bring that coveted consumer with a tight wallet into their store. And I believe from what we're hearing, the enthusiasm for spring '14 and the vibrancy and speed of which it has been written is reflective of those attributes that reside within the Black Diamond brand to keep being one of the sports, absolutely indistinguishable from them, that we're innovative, we're edgy, we bring excitement to the store. They need that right now because they're not getting that differentiation from big-box department stores from a more mainstream retailers with some of the other lines they carry, so we bring that. I think it's also reflective of the fact that the grapevine surrounding BD has always been the major source of our marketing. Being so well-connected with the core user communities, we've gotten product…

Our next question comes from the line of Sean Naughton with Piper Jaffray.

First, just wondering, maybe Aaron or Peter, if you guys could just talk about the incremental revenue you guys had in the first half of the year, around $11.5 million, $12 million. Just thinking about what the buckets of that incremental revenue were from Gregory Japan coming back and house some of the acquisitions, and just some of the core Black Diamond hard goods that you had before?

Okay, so, Sean, let me just understand your questions. What were the drivers for revenue in the first half of the year? I mean, that's basically the question?

Yes, correct.

Yes. First off, there were some great new BD product that really helped drive that. The Camalot CX4s, or some of that. We didn't ship as many as we wanted because we had challenges ramping up, but we still did get a significant amount of those out. The new Magnetron biners were significant contributors. Some of Gregory's new pack line was important to driving that revenue. POC clearly is making inroads now in the mountain bike community. And for those people who don't mountain bike, [indiscernible] being out there in the Utah area, at Park City and a few other spots that I was riding, and feedback we're getting from investors in France is that last winter was the year of POC really becoming a dominant brand you saw on the ski slopes in many parts of the country in Europe. And I think the same is true among the serious mountain biker or serious downhill person with body armor and POC helmets. So that was another significant growth vehicle. And then I'll also say that, as we put in our numbers, that North America was, as a whole, soft. We did grow in Europe, but very modestly, but we're proud that we grew in a market where you had some of the worst weather in 50-plus years. And many companies went backwards. We grew with all our brands in Europe. And then we had a meaningful growth in Asia. In a nutshell, new product was what drove this for all of the brands.

Okay. And then I guess just thinking about the back half of the year, you gave some good color around the margin expectation, why some of that's coming down, some headwinds that may not have been anticipated. But maybe just what are you guys thinking about how much FX is a potential headwind for you in the back half, and how much of an impact was that in terms of lowering the numbers for the back half of the year?

Yes, for sure. This is Aaron. FX, as mentioned in the script, in particular coming from the yen, had an impact of about 60 basis points on the back half.

Okay. So that's the top line?

Both top line -- it's actually both top line and gross margin. It's about the same amount.

Okay. And then I guess just lastly, just thinking about longer-term, Peter, just in terms of the apparel. And I guess from an inventory standpoint, is there any ability, if something does start to go well here in 2013 in the back half, if the apparel takes off and it sells through, is there any ability to chase any of that apparel or is this just more of a -- it sold in with kind of they have what they have and you're pretty -- feel pretty good about the -- there's not a lot of upside potential, I guess, in the apparel, initial apparel launch.

Yes. So we have deliberately chosen unique, innovative fabrics that we worked with the mills to develop. And when you take that approach, you come up with differentiated materials and fabrics you believe are better and, hence, perform better. You get the differentiator which is what you need at specialty with core customers, but you certainty reduce any kind of latitude you might have to move quickly and nimbly should you get higher demand than you had anticipated early on. So at this point in time, there is 0 flexibility here, for that matter. What we're candidly investigating right now very hard is can we add anything to spring '14 because we've had a stronger demand than we had anticipated throughout the world. And we've always thought about this from an aggregation, some parts will be better than others. If we were a little bit too bullish in one market, we'd be good somewhere else. And in the case of spring, every market we've shown the product at, has responded well. So we're looking right now still, and we'll answer this question here pretty quickly, is there any of the key items and key fabrics that we could do a second run onto, to have a second or third delivery in late spring without taking risks for us relative to inventory? And that's what we're looking at. But fall '13, it's -- the ability to adjust that ended many, many, many months ago. Spring '14, we are within the last week or so to make any meaningful adjustment to that. And now all our focus, honestly, is really -- or 90% of our focus is shifting from a supply chain perspective to fall '14.

Our next question comes from the line of Sean McGowan with Needham & Company. Sean P. McGowan - Needham & Company, LLC, Research Division: I have a couple of questions as well. Peter, can you talk a little bit about the product areas that were either above or below expectations? I mean I'm a little surprised that you're saying that weather in Europe was worse than 50 years when the sales in Europe actually were higher than we thought, and North America low. So can you talk about which product segments were weakest in North America and which was strongest in Europe?

Okay, thanks, Sean. Let me begin by saying Europe came in pretty much as anticipated, right? It was more the IGD or rest of the world channels that have the stronger growth. We saw the challenges of Europe from an economic standpoint and internally, we're forecasting that for the mature brands in a more conservative fashion, simply because it's the economics and how we're looking at our order book. We were not surprised -- I guess, to say it differently, we were pleased that we hit that number based upon the conditions that we had there. We were certainly in a position to have had more robust ASAPs had the weather kicked in. It had demand in there and we aggregate goods at our Utah facility so we can ship them where we need them. So we were in a position to have done better than that forecast had we got it. So what we're saying in our guidance was that we, pretty much in Europe, hit our numbers. Those numbers were modest. We had hoped to get better than that. We did not, but we've got our modest growth, and we're pleased with that. Relative to Asia, that's where we exceeded our internal expectations. And it was North America where we had not anticipated that we see the softness in the market coming out of winter. I think we shared that in the February call. And that no one anticipated the cool, wet weather would stay and what we're talking about here, as I shared earlier when talking to Camilo, was I think there's more at play in this cold wet weather. I think there's an attitude difference. I don't -- what you saw at retail is not robust sales in any meaningful category. I know, Sean, you covered space pretty carefully, so you've seen that. So though we had some nice demand for some of the innovative new products, we were disappointed that some of our largest accounts especially were just relatively weak this spring season and... Sean P. McGowan - Needham & Company, LLC, Research Division: I think it was clear on what was going through the minds of the retailers and why that is. I was just interested in whether this was across the board or were there some product segments that were weaker than others? Or was it like all products impacted kind of similarly?

I would -- to generalize, I'd say that it was -- I'd say the following, looking at the Leisure Trends numbers, which the account executive shared with us the following, big packs is a weak category, relatively. Climbing was somewhat soft this year compared to the past several years where it was a growth driver for many of our retailers. It slowed up. Trekking poles was hot. Lighting slowed in its growth from past seasons. And then each -- within each of those categories, you had a hot product. But if you're asking me generally, that's my response and that's within knowing that the leisure trend numbers, 2/3 the way through the season, were showing the categories like running, water sports, climbing, and even backpacking were all categories that were very weak. Sean P. McGowan - Needham & Company, LLC, Research Division: Okay, that is helpful. One of the things that was also different from what I had expected anyway was the level of spend -- of operating spending, operating expense rather, was lower in the second quarter. Can you comment on your outlook for the balance of the year relative to what you had expected at the beginning of the year?

Yes. What I'll say is that this business is pretty disciplined business. And we're very thoughtful on what we spend. And when we saw the headwinds that we're experiencing in the marketplace, we immediately gathered as a management team and began to look at what expense leverage could we pull in the way of travel, some marketing, some hiring, some replacements, and a myriad of things like that so we could start pulling back and align expenses more closely with revenue. We also have, as you know, in Europe, the majority of our people, not all, but the majority are on a commission. Some of the North American crew is commissioned. We use 3PLs in parts of Europe. So that is related to sales, so those would come down. So then moving to -- and then the last thing I should share before I talk about looking forward, we did not, in any meaningful way, cut any muscle from any of the meaningful strategic initiatives that are going to drive the growth of this business moving forward, which we define as overall, the operating platform, the IT systems, the new B2C website, working to get Gregory onto that and BD apparel. We pulled nothing away from the overall apparel initiative, the hiring, the investments, the marketing dollars for that. Nothing from the investments POC's been making to launch the road line. We adequately supported BD Gregory Japan in the hiring of that team and getting in position to launch. So we feel like we're very thoughtful in the cuts we made, but we were able to make several million dollars worth of cuts. Relative to moving forward, Aaron has been really leading that process and we've been working on that because we want to align expenses as well as we can to revenue so long as we do nothing to emasculate these major strategic initiatives that are key to our future and our future growth. I'll let Aaron address that.

So as Peter mentioned, we obviously managed the business just like any other well-managed business and that we operate with budgets and we've been proactive in adjusting our spend accordingly with the decreased revenues. But overall, once again, we'll maintain the integrity of our strategic investments or our strategic initiatives. And so overall, yes, are we going to be at the high end of the rates that we initially gave? No. But at the same time, we're going to continue to manage the business accordingly. Sean P. McGowan - Needham & Company, LLC, Research Division: Okay. So you're not then expecting that some of the spending's simply got shifted out of the second quarter into later quarters?

No. Sean P. McGowan - Needham & Company, LLC, Research Division: That's helpful. I'm going to circle back to the question about incremental revenue again. So this is sort of the last quarter, I think, where this is a real fair question. I mean, it's always fair but you don't have to answer it. You didn't have POC really in the second quarter of last year. How did that live up to the expectations? Can you give us some sense of how much POC contributed to this quarter?

You know, Sean, I appreciate the question and we don't break it out by categories. But what I will say is that we gave some -- when we acquired POC, we did talk about what kind of average percentage growth increases we expected POC to deliver to the company. And for the first half of 2013, POC delivered at that range. Sean P. McGowan - Needham & Company, LLC, Research Division: Okay. That's very helpful. I'm a little sensitive to your use of the word expected when you're talking about the apparel being on the shelves 30 days from now. Is there any risk that, that doesn't happen? Are you hedging it somewhere? Is that just a word you're using?

We have a very conservative law firm that scrubs all our documents, Sean. And so if I was standing next to you and talking to you, I would probably be speaking with more of the street vernacular and tell you it will be in the stores by the end of this month. But because one can't guarantee if FedEx trucks will burn up, if there will be a explosion in our warehouse, or unforeseen acts of God or terrorism or what-have-you, I can't say that. [indiscernible] confidence... Sean P. McGowan - Needham & Company, LLC, Research Division: Touching wood over here. Okay, so I didn't know if there was something developing that made you nervous and wanted to...

No. There's nothing that makes me nervous. That product is in the warehouses, it's been inspected. We're ready to ship, we have a timeframe to do that. We're aligned with our retailers as to when is it going to -- on our website so that it can be done in tandem with them. When some interesting social media stuff is flying off, and we're basically timing around the Labor Day weekend, that's the sort of liftoff.

Our next question is from the line of Joe Altobello with Oppenheimer. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: Just first question, I kind of want to circle back on the increased caution, as you guys been talking about throughout this call on the part of your retailers. And I think, Peter, earlier you referenced a lot of your larger retailers, in some instances actually canceling orders. The increased cautiousness you seen on your retailer base, is it really focused or most acute, I should say, on the larger retailer side? Or are you seeing other smaller retailers as well coming under those same pressures?

Yes, Joe, good question. Fundamentally, what we're seeing here in North America, it was really the largest retailers that were the primary driver of this using an 80-20 principle, far and away. They're the ones who had been placing some of the largest orders. And they seem to be in this current headwind, the ones you seem to be most impacted by the situation more so than the, what I would call, the unique standalone specialty retailer that seem to not experience that level of volatility. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: Okay. So was that the sort of channel mix that you guys talked about earlier in terms of a boost to gross margin a quarter?

For sure, there is some volume discounts that get associated with some of the bigger retailers. I will let -- I'm going to let Aaron speak to that specifically, but I'll just finish by saying, what I would attribute to that is part of why we have made some deliberate decisions to add some important, larger specialty retail chains to the Gregory and Black Diamond dealer list by the holidays and into spring 2014, just to make sure that we are a little bit more diverse and have our eggs spread a little more broadly. We believe that would give us a little bit more leverage and a little bit more resilience in those channels in case 1 or 2 larger retailers feel some buffeting law -- another one or two that we're not currently working with, would do better. We're going to have some great diversity there. Aaron you want to go ahead?

One thing that I'd also mention just as it relates to margin enhancement due to distribution is the impacts of BD Japan. Obviously, by taking over those distribution assets, we expected or know that, that would be an opportunity for us to be able to see enhanced margins coming through those sales as well. So that's obviously a benefit that we are beginning to realize more prominently. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: Got it. Okay. And then moving onto the apparel launch, it was good to hear that it sounds like the cautiousness you're seeing on the hardgoods side is not transferring over into the apparel side. You guys seem like you're pretty lock and loaded for the fall launch. Could you give us a sense for what you see apparel in terms of the impact that apparel should have this year on margins in the back half of the year?

Yes. We haven't -- we talked about gross margins on apparel being accretive for sure. We've talked about gross margins from apparel being in the low '40s initially, and then ramping up as we continue to see increased volumes in the outer years. I guess I'll just leave it at this, is that margins will be accretive to the second half, and that's part of what we've outlined in our script. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: Okay. I just want to confirm that, given the revision you made to gross margin for the full year or so.

Yes, they'll continue to be accretive for the second half.

Our next question comes from the line of Dave King with Roth Capital Partners.

I guess maybe this is a follow-up to one of the questions or a couple of questions on kind of what drove the growth in the first half of the year versus last year and it being new products versus -- I think, POC you said, was growing at kind of the growth rate you've outlined in the past. Maybe you could just give us some color around what the kind of, if you back out POC and PIEPS, kind of what the sort of the organic growth rate organic growth was, for sure, will be in the first half?

Yes. So as mentioned before, and as Peter just mentioned, we don't break that out specifically. So maybe what I could do is speak a little bit related to the pro forma growth that we had for the first half. We did talk about how the first half pro forma was about 5% growth. And once again, POC experienced some good growth. But then also, we did realize some benefit coming from our international side of the business, specifically driven by areas such as Japan and Korea.

Okay. And then maybe kind of along the same line, in terms of the gross margin benefit you had, I think, Aaron, you talked about 360 basis points, if I heard that correctly, year-over-year on the gross margin. In terms of coming from mix, maybe you can talk some more about specifically, the geography by brand. I guess, by brand or by product type, however you feel more comfortable you could talk about that mix that really [indiscernible] that.

Yes, for sure. And this comes back from what we've been talking about as far as the strategic investments that we've made related to the acquisition of POC. Then when you think about the first half, that also includes the acquisition of PIEPS. But then also, the taking over the Gregory Japanese distribution assets, all 3 of those had some good meaningful impact for deposit in the first half-related to gross margins.

Okay. So is it fair to say then that POC kind of drove the bulk of that then, of that 360 basis points as we kind of think about that, as we plan our models looking forward?

No. Japan really had a [indiscernible].

[indiscernible] Maybe could just guys talk about given the [indiscernible] that they want you guys to hold more of the inventory risk [indiscernible] address that issue kind of...

Yes, sure. And Dave, before I do that, I just want to jump back to something you asked, and I'll respond to this to add to this. I think I want to impress upon you and some of the other analysts who cover BD is that, I think what you've seen, because I've seen the financial reporting of some of our competitors, is that this spring 2013 was a year of adjustment and challenge due to weather and perhaps some other issues. It came out somewhat unexpectedly out of a challenging winter. And we here at BD believe we have a onetime adjustment that we're going through as retailers adjust to a slightly different market and had a buy, look forward to a first good winter. And I think that, again, based upon participation numbers, based upon the fact that I have had 30 years of doing this, I've seen these 1 year, 9 months periods of adjustment before, followed very quickly by a return to a healthy level of growth. And I'm pleased that we've grown through this in all of our markets. And the second quarter double-digit growth for all of our brands regardless of these headwinds, and regardless of the weather. So we look at this as a onetime adjustment. And we also look at apparel as an incredible opportunity for the company as a firm here at the trade shows and the selling of spring and people's attempts to get onto fall. That is the single largest category this company will ever play in and is the category that has the truly huge opportunities for us followed by POC in the road bike area. That doesn't mean we don't believe, because we do, that the gear equipment areas can't return to over 2 decades of low…

Our next question comes from the line of Mark Smith with Feltl and Company.

Just a couple of quick ones. First, I just want to follow up on a question on SG&A, on your operating expenses. I don't know if you can quantify. I once heard you guys have said $20 million to $25 million kind of incremental spend this year. Sounds like now you're saying towards the low end of that range.

Yes. I mean, what we've said is that, obviously, we've scaled back our operating expense spend just considering the need to manage the business accordingly. But if you recall, when we provided that $20 million to $25 million, we broke out with different elements of what that represented. In that, 10 of that represented just the pure inclusion of having POC and PIEPS in our financial statements for the full year, and then the remaining 10 to 15 was bringing on apparel and also Black Diamond Japan along with some other initiatives. So once again, we're not going to be hitting the higher end of that. But at the same some we're going to ensure the integrity of our strategic investments.

Okay. And then just looking at that as we go into 2014, any reason that we should see any big jumps in that, barring any acquisitions?

Yes. Based off of the business as it stands now, we did provide some guidance related to 2014 spend, and that'd be right around the $10 million to $12 million incremental spend. And for the moment, that seems still reasonable.

And then second, just as we kind of come out of outdoor retailer, I just wanted to say, Peter, looking at competitive pressure, are you seeing anything from peers that makes you nervous across all fronts and product lines? Or do you feel like you're outperforming and taking share from peers?

Yes, Mark. Very nice question. And it was really helpful to me and the team, the brand team that had the Leisure team's senior account executive here at the eve of the show, so we could juxtapose what we were hearing, what we were seeing, what we were feeling, against true quantifiable versus just qualitative data. And so, it was gratifying to see data that showed that, though we've had a soft spring -- first half in the marketplace, that we were definitely gaining market share in most categories. Most categories have [indiscernible] compete in, for protection, to helmets, to various other categories, as well as lighting and trekking poles. Getting to the show, here's my takeaway from it. There has never been more me too companies out there trying to clamor for the dollars, hoping to buy dollars of retailers. And the advent of the OEM has made it easier and reduced the barriers to entry for someone to do a brand extension and slap on their brand onto a generic trekking pole, a generic lantern, a generic pack, a generic headlamp, what-have-you. So the good news is, and what gave us a high degree of comfort and confidence is that in a plethora of me too crap that is no different than everything else, is no different than a bunch of people slapping private labels onto flip-flops and tongs and T-shirts and polo shirts. At the end of the day, specialty department stores are kind of consumer -- they're looking for high-quality innovative, unique, edgy branded products and not some kind of generic me too rip-off. And so [indiscernible] coming out of that show, I felt pretty good in -- and when I say I, I want to say the BD Gregory collective because there were a few…

[Operator Instructions] Our next question is a follow-up question from the line of Sean McGowan from Needham & Company. Sean P. McGowan - Needham & Company, LLC, Research Division: Just wanted to circle back on a couple of things. One, regarding the impact of discontinued merchandise and promotions in the second quarter. Was that for winter merchandise or for non-winter merchandise?

It was primarily related to winter merchandise. You do have a small element of carryover from prior spring product, but primarily winter seasonal product. Sean P. McGowan - Needham & Company, LLC, Research Division: Then remind me, I thought the narrative was that winter got off to a late start but was strong enough during the season to kind of clear out a lot of that stuff. So you ended -- I thought at the end of the first quarter, we were talking about relatively clean inventories. So why would there be an impact in the second quarter?

Sean, what we had shared with you guys is that we felt fortunate that product like skims [ph] and ski poles, bindings, accessories like that, winter pack, avalanche safety equipment, not only cleared out and we sold them out. We could've probably done more. However, bigger-ticket product, skis and ski boots, did not enjoy that kind of end of the season buy. Consumers don't buy those kind of products at the end of the season. And they've been trained at this point, at the end of the season, for massive discounts. We did, however, at the end of the season, we did move as we shared some significant amount of ski boot and ski DM, but we had shared that, that was not all of it. And that we had moved some additional product in the second quarter to those with openness to buy for the Labor Day sales and that sort of thing. So that helped there. And then we always do have some in-season, call it 3 DM, call it what you like, where if the market is not quite as robust as we'd hope, and that certainly is how I have defined the second quarter in North America, as you're looking at the new products you're launching for spring '14, and as I think you guys know, some of the products that we launch for spring '14, we have what's called a holiday. We try to bring some of them in early so we can get the benefit of the holiday buying spurt. And what that meant to us was that in a few categories, we needed to start doing some modest promotional discounting to move some quantities of products a bit. It really didn't turn into 3 DM on January 1, 2014. Sean P. McGowan - Needham & Company, LLC, Research Division: Okay. Another area just to kind of give a similar digging into is, if you look at your 20% growth target for 2011, I mean, if you got a time warp, 2014, considering the inherent high-growth of POC, the launch of road within POC and the launch of apparel this year and a likely big increase next year, what does that say about your expected ongoing growth rate for the rest of the business given that you're kind of characterizing these weather-related issues as a onetime phenomena? Isn't that implying kind of greatly reduced growth rate for everything else relative to what you had in the past?

No. It's implying low double-digit growth rates, very low double-digit growth rates, but it should be about double digits for the existing product categories on a global basis. Sean P. McGowan - Needham & Company, LLC, Research Division: That was my next follow up. Is it going to be double-digit? Okay. You just answered that. Final question, I had to risk putting Aaron on the spot here. What's the update on the CFO position permanence thereof?

Yes. That's okay. Aaron's used to it. He's become very capable of dealing with this question. Because we have a very talented interim CFO in Aaron who has been with us for 2.5 years, or 3 years now, almost, and has learned a lot both under Robert, has been very involved the last 6 months operationally, has been spending more time in economy class seats shuttling back and forth to Stockholm, Graz, Switzerland, and China, than anybody should. He is certainly becoming quite fluent in the operations of this business, while also developing increasingly strong working relationships with the senior management team, and leading things like some of the cost-cutting we had to do in the last 6 months and being very involved with the inventory adjustments and the financial analysis. And I share that with you because what it means is, is Aaron's doing that but the board is recognizing, as we interview candidates, is that the candidate who's going to become the CFO of Black Diamond and earn the title of permanent CFO has got to be someone who brings a higher level of public CFO experience, M&A experience, financial analysis, financial operations, leadership on a global basis with multiple companies in a portfolio corporation than Aaron does. And it's got to be somebody who, as you know, Sean, especially you spent time here, is a cultural fit, or the organization's going to reject the person. And so, we've set a high bar, understandably, and the bar gets higher each week because of the time Aaron's spending here of what he's doing. We are aggressively looking and vetting candidates and we have had some good candidates that we've vetted and we've flown them out here, we've talked to. But -- and we have a great firm, Egon Zehnder,…

At this time, this concludes our question-and-answer session. I would now like to turn the call back over to Mr. Peter Metcalf for closing remarks. Please go ahead, sir.

Thanks very much, and thanks, everyone. And so, as we now enter the fall-winter season, we do expect to continue to make investments in our strategic initiatives, such as apparel, the integration of POC and PIEPS and the spring 2014 launch of POC's road collection. We look forward to 2014 where we expect continued organic sales growth and the benefit of scale, integration and operating leverage in our business. I look forward to speaking with all of you again soon and thanks for joining this call today.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.