(Exact name of registrant as specified in its charter)

Delaware		0-51937		57-6218917
(State or other jurisdiction		(Commission File Number)		(I.R.S. Employer Identification
of incorporation)				No.)

(Exact name of registrant as specified in its charter)

Delaware		0-51938		20-3812051
(State or other jurisdiction		(Commission File Number)		(I.R.S. Employer Identification
of incorporation)				No.)

Sixty One Wilton Road
Second Floor
Westport, CT 06880
(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (203) 221-1703

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

          On August 10, 2009 Compass Diversified Holdings and Compass Group Diversified Holdings LLC (NASDAQ: CODI) (collectively “CODI”) issued a press release announcing its consolidated operating results for the three months ended June 30, 2009. A copy of the press release is furnished within this report as Exhibit 99.1.

(d)		Exhibits.
99.1		CODI Press Release dated August 10, 2009.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Exhibit 99.1

Compass Diversified Holdings		Investor Relations and Media Contacts:
James J. Bottiglieri		The IGB Group
Chief Financial Officer		Leon Berman / Michael Cimini
203.221.1703		212.477.8438 / 212.477.8261
jbottiglieri@compassdiversifiedholdings.com		lberman@igbir.com / mcimini@igbir.com

Compass Diversified Holdings Reports Second Quarter 2009 Financial Results

Westport, Conn., August 10, 2009 – Compass Diversified Holdings (Nasdaq: CODI) (“CODI” or the “Company”), a leading acquirer and manager of middle market businesses, announced today its consolidated operating results for the three months ended June 30, 2009.

Second Quarter 2009 Highlights

	•		Generated Cash Flow Available for Distribution and Reinvestment (“Cash Flow” or “CAD”) of $7.8 million for the second quarter of 2009;
	•		Reported a net loss of $0.2 million for the second quarter of 2009;
	•		Paid second quarter 2009 cash distribution of $0.34 per share, bringing cumulative distributions paid to $3.9552 per share since CODI’s IPO in May of 2006; and
	•		Completed a 5.1 million share offering.

CODI reported Cash Flow (see note regarding use of Non-GAAP Financial Measures below) of $7.8 million for the quarter ended June 30, 2009, as compared to $13.9 million for the prior year period, a period during which CODI owned two additional businesses, both of which were sold in June 2008 for a cumulative gain of more than $73 million.

CODI’s Cash Flow decline for the second quarter as compared to the prior year quarter was largely attributable to the sale of the two business segments referenced above, as well as the impact of the economy on the Company’s Staffmark subsidiary. CODI’s weighted average number of shares for the quarter ending June 30, 2009 was approximately 32.8 million.

CODI’s Cash Flow is calculated after taking into account all interest expense, cash taxes paid and maintenance capital expenditures, and includes the operating results of each subsidiary for the periods during which CODI owned them. However, Cash Flow excludes the gains from sales of businesses, which have totaled over $109 million since CODI’s initial public offering.

The net loss for the quarter ended June 30, 2009 was $0.2 million, as compared to net income of $73.8 million for the quarter ended June 30, 2008 which included $72.3 million of gains from the sale of Aeroglide Corporation and Silvue Technologies, Inc.

As of June 30, 2009, CODI had $77 million outstanding on its term debt facility, $58.2 million in cash and cash equivalents on hand and a $340 million revolving credit facility that had $0.5 million of borrowing outstanding on the facility. The Company has no significant debt maturities until 2013.

On July 10, 2009, CODI’s Board of Directors declared a distribution of $0.34 per share. The distribution was paid on July 30, 2009 to all holders of record as of July 24, 2009.

Commenting on the quarter, Joe Massoud, CEO of Compass Diversified Holdings, said, “During the second quarter, we generated Cash Flow in excess of our expectations. We continued to reduce costs during the period, while retaining the infrastructure necessary to capitalize on future growth opportunities. In addition, at a number of our subsidiaries, we also built market share and succeeded in increasing customer penetration levels. These factors, as well as a general stabilization in business fundamentals, put us on track to meet our previously stated financial guidance for 2009, as well as achieve growth in Cash Flow for 2010, even before the impact of any new platform businesses we may acquire.”

Mr. Massoud concluded, “Complementing our quarterly results, we took important steps to further strengthen our balance sheet by completing a 5.1 million share offering, resulting in net proceeds of $42.1 million and underscoring the ongoing support we have received from the capital markets. This offering, combined with our past generation of Cash Flow in excess of distributions and the substantial gains we have produced through monetization of certain of our subsidiaries, has positioned our Company very well to execute our growth strategy in this market. We have a great deal of financial flexibility, including $58.2 million in cash and considerable availability under our revolving credit facility. We intend to use this capacity to our advantage through the consummation of attractive acquisitions on behalf of our shareholders.”

Conference Call

Management will host a conference call this morning at 9:00 a.m. ET to discuss the latest corporate developments and financial results. The dial-in number for callers in the U.S. is (877) 419-6596 and the dial-in number for international callers is (719) 325-4875. The access code for all callers is 4591572. A live webcast will also be available on the Company’s website at www.compassdiversifiedholdings.com.

A replay of the call will be available through August 17, 2009. To access the replay, please dial (888) 203-1112 in the U.S. and (719) 457-0820 outside the U.S., and then enter the access code 4591572.

Note Regarding Use of Non-GAAP Financial Measures

CAD, or Cash Flow, is a non-GAAP measure used by the Company to assess its performance, as well as its ability to sustain and increase quarterly distributions. A number of CODI’s businesses have seasonal earnings patterns, with the first quarter typically being the slowest of the year. Accordingly, the Company believes that the most appropriate measure of its performance is over a trailing or expected 12-month period. We have reconciled CAD, or Cash Flow, to Net Income and Cash Flow Provided by Operating Activities on the Attached Schedules. We consider Net Income and Cash Flow Provided by Operating Activities to be the most directly comparable GAAP financial measures to CAD, or Cash Flow.

About Compass Diversified Holdings (“CODI”)

Compass Diversified Holdings (“CODI”) was formed to acquire and manage a group of middle market businesses that are headquartered in North America. Its subsidiaries are a diverse group of businesses with highly defensible market positions.

CODI’s structure involves acquisition of controlling ownership interests in its subsidiaries in order to maximize its ability to impact each subsidiary’s performance. The Company provides both debt and equity capital for its subsidiaries, contributing to their financial and operating flexibility. CODI’s model involves discipline in identifying and valuing businesses, proactive engagement with the management teams of the companies it acquires and the monetization of its subsidiaries when it believes that doing so will maximize shareholder value. The Company seeks to provide an extraordinarily high level of transparency in financial reporting and governance processes for the benefit of its shareholders. CODI currently has six subsidiaries operating in distinct market niches. The cash flows generated by these businesses are utilized in pursuit of CODI’s dual objectives of investing in the long-term growth of the Company and making distributions of cash to its shareholders.

Subsidiary Businesses

AFM Holdings Corporation and its consolidated subsidiaries, referred to as American Furniture, is a low-cost manufacturer of upholstered stationary and motion furniture with the ability to ship any product in its line within 48 hours of receiving an order. American Furniture is based in Ecru, MS.

Anodyne Medical Device, Inc. and its consolidated subsidiaries, referred to as AMD, is a manufacturer of medical support surfaces and patient positioning devices, which are primarily used for the prevention and treatment of pressure wounds experienced by patients with limited to no mobility. AMD is based in Los Angeles, CA.

CBS Personnel Holdings, Inc. and its consolidated subsidiaries, referred to as Staffmark, is a provider of temporary staffing services in the United States. Staffmark is headquartered in Cincinnati, OH and operates over 300 locations in 29 states.

Compass AC Holdings, Inc. and its consolidated subsidiaries, referred to as Advanced Circuits, is a manufacturer of low-volume, quick-turn and prototype rigid printed circuit boards (“PCBs”). Advanced Circuits is based in Aurora, CO.

Fox Factory Holding Corp. and its consolidated subsidiaries, referred to as Fox, is a designer, manufacturer and marketer of high-end suspension products for mountain bikes, all-terrain vehicles, snowmobiles and other off-road vehicles. Fox is based in Watsonville, CA.

Halo Lee Wayne LLC and its consolidated subsidiaries, referred to as Halo, is a distributor of customized promotional products and serves more than 30,000 customers as a one-stop-shop resource for design, sourcing, management and fulfillment across all categories of its customers’ promotional products needs. Halo is based in Sterling, IL.

To find out more about Compass Diversified Holdings, please visit www.compassdiversifiedholdings.com.

This press release may contain certain forward-looking statements, including statements with regard to the future performance of the Company. Words such as “believes,” “expects,” “projects,” and “future” or similar expressions, are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements, and some of these factors are enumerated in the risk factor discussion in the Form 10-K filed by CODI with the Securities and Exchange Commission for the year ended December 31, 2008 and other filings with the Securities and Exchange Commission. CODI undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

A copy of this press release, and of past press releases, is available on Compass Diversified Holdings’ website located at www.compassdiversifiedholdings.com.

Compass Diversified Holdings

Condensed Consolidated Balance Sheets

		June 30,				December 31,
		2009				2008
(in thousands)		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	58,152			$	97,473
Accounts receivable, less allowance of $4,962 and $4,824			140,020				164,035
Inventories			55,396				50,909
Prepaid expenses and other current assets			28,811				22,784
Total current assets			282,379				335,201
Property, plant and equipment, net			27,818				30,763
Goodwill			288,522				339,095
Intangible assets, net			229,155				249,489
Deferred debt issuance costs, net			6,221				8,251
Other non-current assets			18,286				21,537
Total assets		$	852,381			$	984,336
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses		$	93,737			$	105,808
Due to related party			3,121				604
Current portion, long-term debt			2,500				2,000
Current portion of workers’ compensation liability			28,667				26,916
Other current liabilities			2,636				4,042
Total current liabilities			130,661				139,370
Long-term debt			75,000				151,000
Supplemental put obligation			4,994				13,411
Deferred income taxes			61,117				86,138
Workers’ compensation liability			42,642				40,852
Other non-current liabilities			6,907				9,687
Total liabilities			321,321				440,458
Stockholders’ equity
Trust shares, no par value, 500,000 authorized; 36,625 and 31,525 shares issued and outstanding at 6/30/09 and 12/31/08			485,843				443,705
Accumulated other comprehensive loss			(2,330	)			(5,242	)
Accumulated earnings (deficit)			(22,144	)			25,984
Total stockholders’ equity attributable to Holdings			461,369				464,447
Noncontrolling interests			69,691				79,431
Total stockholders’ equity			531,060				543,878
Total liabilities and stockholders’ equity		$	852,381			$	984,336

Compass Diversified Holdings

Condensed Consolidated Statements of Operations
(unaudited)

		Three Months				Three Months				Six Months				Six Months
		Ended				Ended				Ended				Ended
(in thousands, except per share data)		June 30, 2009				June 30, 2008				June 30, 2009				June 30, 2008
Net sales		$	287,528			$	398,910			$	562,442			$	750,045
Cost of sales			223,362				311,049				440,667				587,376
Gross profit			64,166				87,861				121,775				162,669
Operating expenses:
Staffing expense			17,539				27,470				38,479				52,540
Selling, general and administrative expense			34,239				41,842				71,994				78,524
Supplemental put expense (reversal)			(258	)			4,276				(8,417	)			6,594
Management fees			3,422				3,544				6,494				7,195
Amortization expense			6,250				6,131				12,446				12,261
Impairment expense			—				—				59,800				—
Operating income (loss)			2,974				4,598				(59,021	)			5,555
Other income (expense):
Interest income			16				266				77				581
Interest expense			(2,695	)			(4,674	)			(6,237	)			(9,346	)
Amortization of debt issuance costs			(440	)			(497	)			(910	)			(982	)
Loss on debt repayment			—				—				(3,652	)			—
Other income (expense), net			(611	)			102				(690	)			357
Loss from continuing operations before income taxes			(756	)			(205	)			(70,433	)			(3,835	)
Income tax expense (benefit)			(606	)			848				(28,050	)			555
Loss from continuing operations			(150	)			(1,053	)			(42,383	)			(4,390	)
Income from discontinued operations, net of income tax			—				2,577				—				4,607
Gain on sale of discontinued operations, net of income tax			—				72,296				—				72,296
Net income (loss)			(150	)			73,820				(42,383	)			72,513
Net income (loss) attributable to noncontrolling interest			(777	)			1,218				(15,692	)			705
Net income (loss) attributable to Holdings		$	627			$	72,602			$	(26,691	)		$	71,808
Basic and fully diluted income (loss) per share		$	0.02			$	2.30			$	(0.83	)		$	2.28
Weighted average number of shares outstanding — basic and fully diluted			32,758				31,525				32,145				31,525
Cash distributions declared per share		$	0.34			$	0.325			$	0.68			$	0.65

Compass Diversified Holdings

Condensed Consolidated Statements of Cash Flows
(unaudited)

		Six Months				Six Months
		Ended				Ended
(in thousands)		June 30, 2009				June 30, 2008
Cash flows from operating activities:
Net income (loss)		$	(42,383	)		$	72,513
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Gain on sale of businesses			—				(72,296	)
Depreciation and amortization expense			17,669				19,200
Impairment expense			59,800				—
Supplemental put expense (reversal)			(8,417	)			6,594
Noncontrolling interests and noncontrolling stockholders charges			460				1,683
Loss on debt repayment			3,652				—
Deferred taxes			(26,489	)			(5,761	)
Other			(221	)			(162	)
Changes in operating assets and liabilities, net of acquisition:
Decrease in accounts receivable			25,518				7,722
Increase in inventories			(4,209	)			(5,070	)
Increase in prepaid expenses and other current assets			(2,594	)			(17,170	)
Increase (decrease) in accounts payable and accrued expenses			(6,014	)			17,801
Net cash provided by operating activities			16,772				25,054
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired			(1,713	)			(172,550	)
Proceeds from dispositions			—				153,070
Purchases of property and equipment			(1,787	)			(7,148	)
Other			188				(303	)
Net cash used in investing activities			(3,312	)			(26,931	)
Cash flows from financing activities:
Proceeds from issuance of Trust shares, net			42,138				—
Net borrowing (repayment) of debt			(75,500	)			3,468
Swap termination fee			(2,517	)			—
Distributions paid			(21,437	)			(20,492	)
Changes in noncontrolling interest			4,908				—
Other			(373	)			(156	)
Net cash used in financing activities			(52,781	)			(17,180	)
Foreign currency adjustment			—				(80	)
Net decrease in cash and cash equivalents			(39,321	)			(19,137	)
Cash and cash equivalents — beginning of period			97,473				119,358
Cash and cash equivalents — end of period		$	58,152			$	100,221

Compass Diversified Holdings

Condensed Consolidated Table of Cash Flows Available for Distribution and Reinvestment (“CAD”)
(unaudited)

		Three Months				Three Months
		Ended				Ended				Six Months Ended				Six Months Ended
(in thousands)		June 30, 2009				June 30, 2008				June 30, 2009				June 30, 2008
Net income (loss)		$	(150	)		$	73,820			$	(42,383	)		$	72,513
Adjustment to reconcile net income (loss) to cash provided by operating activities:
Gain on sale of businesses			—				(72,296	)			—				(72,296	)
Depreciation and amortization			8,359				9,027				16,759				18,218
Impairment expense			—				—				59,800				—
Amortization of debt issuance costs			440				496				910				982
Supplemental put expense (reversal)			(258	)			4,276				(8,417	)			6,594
Noncontrolling interests and noncontrolling stockholders charges			(441	)			1,097				460				1,683
Loss on debt repayment			—				—				3,652				—
Other			(160	)			(323	)			(221	)			(162	)
Deferred taxes			(1,709	)			(4,316	)			(26,489	)			(5,761	)
Changes in operating assets and liabilities			(15,133	)			(16,887	)			12,701				3,283
Net cash provided by operating activities			(9,052	)			(5,106	)			16,772				25,054
Plus:
Unused fee on revolving credit facilitity (1)			855				663				1,710				1,392
Staffmark integration and restructuring expenses			1,351				2,883				3,242				4,458
Changes in operating assets and liabilities			15,133				16,887				(12,701	)			(3,283	)
Less:
Maintenance capital expenditures (2)			496				1,473				1,610				3,889
Estimated cash flow available for distribution and reinvestment		$	7,791			$	13,854			$	7,413			$	23,732
Distribution paid in April 2009/2008										$	10,719			$	10,246
Distribution paid in July 2009/2008		$	12,452			$	10,246				12,452				10,246
		$	12,452			$	10,246			$	23,171			$	20,492