Ladies and gentlemen, thank you for standing by, and welcome to Gaiam’s Fourth Quarter 2014 Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions]. As a reminder, this call is being recorded Thursday, March 12, 2015. I’d now like to turn the conference over to Norberto Aja, Investor Relations. Please go ahead.

Thank you, operator, and good afternoon everyone. Thank you for participating in Gaiam's 2014 Fourth Quarter and Full-year Conference Call. Joining me today on the call are Gaiam's Chairman, Jirka Rysavy; Gaiam's CEO, Lynn Powers; and Steve Thomas, Gaiam's CFO. Following some prepared remarks, we will open the call for your questions. Before we get started however, I would like to take a minute to read the Safe Harbor language. The following constitutes the Safe Harbor statement of the Private Securities Litigation Reform Act of 1995. Except for historic information contained herein, the matters discussed in this call today are forward-looking statements and involve risks and uncertainties including, but not limited to general business conditions, integration of acquisitions, timely development of new businesses, impact of competition, and other risk details from time-to-time as described in the SEC reports. The risks and uncertainties associated with the forward-looking statements are described in today's announcement, and in the Company's filings with the Securities and Exchange Commission including the Company's reports on Form 10-K and Form 10-Q. Gaiam assumes no obligation to publicly update or revise any forward-looking statements. Today's call taking place on March 12, 2015 includes non-GAAP financial measures within the meaning of the SEC Regulation G. When required, a reconciliation of all non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in today's press release as well as the Company's website. With that, I would now like to turn the call over to Gaiam's Chairman, Jirka Rysavy. Please go ahead.

Thank you, Norberto, and good afternoon, everyone. So the revenue for the fourth quarter which ended December 2014 increased 9.1% to $55.4 million. The growth was actually 15% if we exclude our decision to focus on the Gaiam brand and not renew the Reebok license. Gross margin increased 260 basis points to 45.1% and operating expenses declined 540 basis points to 40.6%. Without excluding the previous year one-time, the improvement was actually [2520] basis points. Operating income for the quarter improved $14.3 million to $2.5 million. For the full year, revenue increased 7.2% to $166.7 million. Excluding the discontinuation of Reebok, revenue growth was 12.4% which came in the top of 22% revenue growth in the previous year. We expect about 17% to 18% revenue growth in 2015 even after planned $5.7 million of revenue loss due to the elimination of the most of our catalog circulation in this coming year. Gross margin for the year increased 330 basis points and expenses declined 80 basis points or 750 basis points without adjusting for previous year one times. Operating loss for 2014 improved $16.6 million to $5.1 million, which includes $8.8 million loss from Gaiam TV. During the year, we grew the number of our branded store-within-store presentation by 2500 to about 17,000. That includes a new 8 foot store-within-store display of Gaiam products at Kohl's at all of the 1170 doors. Also on April 25, Kohl's will launch our new Yoga Apparel line. We're also seeing good momentum in Gaiam TV. Recently we eclipsed above the 100,000 subscriber mark, with about a quarter of the member being International. Gaiam TV has grown the subscribers in about 100 countries. With the general launch on Xbox International, Gaiam TV is now available on virtually all devices connected to the internet. In January,…

Thank you, Jirka. I’ll spend a few minutes reviewing the financial results, and offering additional perspective on the performance for the fourth quarter and full-year 2014 results. In light of the anticipated spin-off of Gaiam TV, and the changes in our business over the past 18 months including the sale of our non-Gaiam branded entertainment media business, and the closure of our direct response television operations last year, we’ve updated our segment reporting in the fourth quarter. Our new segments are Gaiam Brand and Gaiam TV. The Gaiam Brand segment includes all of our Yoga Fitness and Wellness products, and media distributed through our website, retail network and catalogs including the catalog operations of our Eco Travel business. The Gaiam TV segment includes our global digital video subscription service which operates under the name Gaiam TV. All figures reflect only our continuing operations from these business units. Beginning with the income statement, net revenue for the quarter increased $4.6 million or 9.1% to $55.4 million compared to net revenue of $50.8 million in the prior-year period. We’re pleased with the growth in revenue over the prior year, especially after considering our planned operating changes including our pivot away from catalog advertising, not renewing our Reebok license, and a data breach at our largest customer. Lynn will discuss these business changes in a little more detail. Net revenue for the Gaiam Brand increased by 8.2% or $4 million to $52.7 million for the fourth quarter of 2014. Gross profit for the fourth quarter improved to $25 million or 41.5% of net revenue compared to gross profit of $21.6 million or 42.5% of net revenue in Q4 of 2013. The 260 basis points improvement was largely driven by a shift in our Gaiam Brand segment toward higher margin products, a result of…

Thanks, Steve. Our vision for Gaiam is to be a driving force in making Yoga Fitness and Wellness accessible to everyone. Our strategies and results during the year and the fourth quarter reflect the progress we are making in realigning our business around this vision. I'll now give a little color on the year-end results and then review our progress on our four key initiatives for 2014, and discuss our opportunities for 2015 and beyond. Our revenue for 2014 was in line with our expectations. Comp sales from our top 25 accounts not including our largest customer or any new customers were up 17% for the year, which shows the strength of the brand and our categories. These results were on top of the 20+ percent comp growth in 2013. However, our overall revenues were muted by several strategic moves that were critical to our renewed focus on our brand vision and overall operating income. In order to focus on our brand, our first decision was to not renew the Reebok license. While we are able to offset that revenue going forward with our own brands, revenues from Reebok branded product declined $6.8 million during the year as we made the transition. The second decision was to pivot our catalog-driven direct-to-consumer business to a digital-centric consumer-engagement strategy for the Gaiam and SPRI brands. We decreased circulation of catalogs which reduced revenues by $2.4 million in 2014. Third, we changed the way we operate our media sales. We moved from an aggregator model to a distribution model, where we do not take ownership of the inventory and only book our distribution fee. This lowered revenue for the year by$ 1.5 million, but improved our margins and working capital. Finally, our revenues were affected by our largest customer which suffered a data…

[Operator Instructions]. And our first question comes from the line of George Kelly with Craig-Hallum Capital Group. You may proceed with your question.

A few questions for you. First for Jirka on the TV business. I am wondering if you could talk about first of all, am I doing the math right that revenue in the fourth quarter was $2.5 million? And then the second question on TV is, can you talk about what you're seeing since Comcast has been live?

What was the first part about fourth quarter revenue?

I was just doing the math on the two new segments, is it $2.5 million in the fourth quarter?

It was a little higher than that. We currently have about a little over $12 million run rate. And to breakeven, we would need a little over $14 million which should happen in June.

So June breakeven, and then just about Comcast. So if you think about 12 months or 18 months from now, what is the revenue mix between monthly subscribers and the stuff that's through these additional sort of sources that are outside of the normal subscription?

Well, there is several multiple subscription because we’ve more than one offering several people, actually a good percentage will take several offering. So the average right now, it's pretty much exactly $10 or between $9.50 or $10 if you take the averages. And it’s kind of there for the last six months, so it doesn’t really change. The Comcast if it grows, dramatically can change if the double subscription would not be there. But it’s hard to predict because the first reporting from Comcast we won’t get till mid March. So for January, we didn’t receive it yet. So we don’t really know what Comcast does.

So your expectations for breakeven in June are just based off of the sort of core subscribers, is that right?

We expect to breakeven by the end of May, June is supposed to be profitable. And based on this [table], we can see on you know this is kind of site volume, we kind of incorporate some from Comcast. But we cannot really know, so we try to be conservative.

And then for Lynn, you mentioned an inventory issue with a big customer. Was that port related or is that something else?

Some of it’s port related. The balance is just they haven't gotten back in stock on certain key items yet.

And then two quick ones for Steve. The first the reserves, what is that amount, did you say that?

No, we did not.

You didn’t disclose that. Okay, will that be in the K?

Yes.

And then, can you talk at all about how that will build there, or any more detail on that?

No. The total discontinued cost was 3.3, which includes you know some cost from you know when we get rid of the inventory from DRTV earlier in the year.

And then I didn’t hear anything in the prepared remarks about your [building]. Is that still something you guys are considering selling?

Yeah, no change on that.

No change, so still kind of making progress consolidating your space and that's still on the bench?

Yeah, the space is pretty much, we finished right now. And we still have getting some new tenants in the building over the next two months, so we definitely wait for that because the leases are signed.

So you’ve signed leases. Is all the space been occupied or is there still more lease work to, still more tenants to find?

It's like 97% or 98% occupied [Indiscernible].

Just in the [last], you’ve values change, and do you still think it's like $25 million to $30 million kind of range?

We never kind of thought that's at the $30 million range. We kind of thought it’s kind of you know 20+. But we didn't really do any work based on the valuation from what we did last time.

Our next question comes from the line of Chris Krueger with Lake Street Capital Markets. You may proceed with your question.

I'm actually sitting in for Mark Argento today. A kind of series of questions, first on your new product launches. I know that Kohl's is going to launch on April 25, but can you give us kind of the quarter-to-quarter expectations this year for the various product launches, and when they should appear?

Sure, you’ll see Apparel starting of course in the second quarter along with our Men’s launch, the Athletic Yoga launch. And then in September, we launch with the Children's line.

So it’s different. Okay, then beyond the launch, you know the launch period would you expect to see you know a series of additional new doors and extended shelf space and things like that going forward?

Absolutely, as well as you know we are continuing to expand product initiatives in most all of our retailers. That's an ongoing initiative for us and creating new store-within-stores particularly on the Wellness side. So you'll see those as the year progresses, and we'll announce those as they materialize.

Then at Target, I know the data breach you know caused disruptions about a year ago. Did conditions with Target improve in the second half of the year? And then another part of that question is, in Minneapolis your Target is in the news every day with massive layoffs and kind of cost-cutting moves and various initiatives there. Do you see any impact or benefit or anything from what's occurring there right now?

I think Target is making some very good decisions right now. I think certainly they are impacting their short-term business cycles, but I think over the long-term it's going to be very good for Gaiam. I mean they have announced you know four key initiatives, Style, Wellness, Kids and Baby. And we fit into three of their four key initiatives, so we see huge opportunities with them and have been working closely with senior management on how to make them more of a wellness destination.

I understand you recently had a Men’s Yoga test at DICK’s. Any update on that?

No, that doesn't launch. They wanted to wait until we got the rest of the programming and that does not launch until late March. So we really won’t have results probably till May.

Just a couple of more quick ones. With Kohl's and the apparel launch, is that an exclusive arrangement for six months? Or how does that work and can we see more doors and distribution beyond that?

You won’t see more doors until 2016. We’ve an exclusive for this year with them.

And finally on the TV spin-off, are there any key factors to look forward as far as the timing of the spin-off. And I think I over heard you say September is the expectation? And then are there any cash [needs] for Gaiam TV over the next year?

That's not really the big trigger for the spin-off. It's like we filed with the SEC, we are waiting for the comments. We didn't hear anything back yet. So it depends on the timing on that, but we kind of -- it's not a good idea to spin it in kind of a Wall Street summer, so we expect to do it you know after the summer time. So and it's probably ideal to do it at the end of the quarter, so we don’t have to restate the quarters. So we expect to do it you know on September 30. What was the other part of your question?

Cash needs for Gaiam TV for the next 12 months.

Our Gaiam TV, it’s already separated and filed in Form-10 which is February 20 and its [cash] sort of provided there. So Gaiam TV would not need any more cash to regularly operate. It doesn't mean we might decide to get some, but it doesn't need. Neither Brand or Gaiam TV would need more cash, but it doesn’t mean we wouldn't take the opportunity if it comes.

[Operator Instructions]. And our next question comes from the line of [indiscernible]. You may proceed with your question.

Yes, I guess you touched on this briefly earlier, but I was wondering so Cinedigm has made some serious legal allegations and Gaiam has claimed that you know it actually owes Gaiam $6 million of working capital. So if Gaiam believes on this claim, why is it attempting to delay the working capital arbitration?

We’re not going to comment on a legal question. If there is more question on this one, we're not going to answer them.

You guys won’t touch on anything regarding this claim?

Yes.

There are no further questions at this time. I'll now turn the presentation back to you.

Thank you very much. So we’ve no other question, we’ll hopefully you know talk to you next quarter. Thank you very much.