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Delaware		7363		57-6218917
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

Delaware		7363		20-3812051
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

Steven B. Boehm Cynthia M. Krus Sutherland Asbill & Brennan LLP 1275 Pennsylvania Avenue, N.W. Washington, DC 20004 (202) 383-0100 (202) 637-3593 — Facsimile		Ralph F. MacDonald, III Michael P. Reed Alston & Bird LLP One Atlantic Center 1201 West Peachtree Street Atlanta, GA 30309 (404) 881-7000 (404) 253-8272 — Facsimile

Proposed Maximum

Title of Each Class of

Amount Being

Maximum Offering

Aggregate

Amount of

Security Being Registered

Registered

Price Per Security

Offering Price(1)

Registration Fee

Shares representing beneficial interests in Compass Diversified Trust

$287,500,000

$30,763

Non-management interests of Compass Group Diversified Holdings LLC

(2)

(3)

Total

$287,500,000

$30,763

(1)	Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.
(2)	The number of non-management interests of Compass Group Diversified Holdings LLC registered hereunder is equal to the number of shares representing beneficial interests in Compass Diversified Trust that are registered hereby. Each share representing one beneficial interest in Compass Diversified Trust corresponds to one underlying non-management interest of Compass Group Diversified Holdings LLC. If the trust is dissolved, each share representing a beneficial interest in Compass Diversified Trust will be exchanged for a non-management interest of Compass Group Diversified Holdings LLC.
(3)	Pursuant to Rule 457(i) under the Securities Act, no registration fee is payable with respect to the non-management interests of Compass Group Diversified Holdings LLC because no additional consideration will be received by Compass Diversified Trust upon exchange of the shares representing beneficial interests in Compass Diversified Trust.

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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

		Per Share				Total
Public offering price		$				$
Underwriting discount		$				$
Proceeds, before expenses, to us		$				$

	BB&T Capital Markets

	J.J.B. Hilliard, W.L. Lyons, Inc.

	Oppenheimer & Co.

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	We are a new company with no history and we may not be able to successfully manage our initial businesses on a combined basis.

	We may be unable to remove our manager, which could limit our ability to improve our performance and could adversely affect the market price of our shares.

	•	our manager materially breaches the terms of the management services agreement and such breach continues unremedied for 60 days after notice; or
	•	our manager acts with gross negligence, willful misconduct, bad faith or reckless disregard of its duties in carrying out its obligations under the management services agreement or engages in fraudulent or dishonest acts.

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	Our manager can resign on 90 days’ notice and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations as well as the market price of our shares.

	Our manager and its affiliates, including members of our management team, may engage in activities that compete with us or our businesses.

	Our Chief Executive Officer, directors and manager may allocate some of their time to other businesses, thereby causing conflicts of interest in their determination as to how much time to devote to our affairs, which may adversely affect our operations.

	Our manager relies on key personnel with long-standing business relationships, the loss of any of whom could impair our ability to successfully manage the company.

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	We must pay our manager the management fee regardless of our performance.

	Our manager’s discretion in conducting our operations, including conducting transactions, gives it the ability to increase its fees, which may reduce the amount of cash available for distribution to our shareholders.

	The profit allocation we pay our manager may induce it to make riskier decisions regarding our operations.

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	The trust structure may limit our ability to make distributions to our shareholders because we will rely entirely on distributions from our businesses.

	We may have conflicts of interest with the minority shareholders of our businesses.

	While we intend to make regular cash distributions to our shareholders, our board of directors has full authority and discretion over the distributions, other than the profit allocation, and it may decide to reduce or eliminate distributions at any time, which may have an adverse affect on the market price for our shares.

	The company’s board of directors will have the power to change the terms of our shares if it determines, in its sole discretion, that such changes are not otherwise materially adverse to you or will not change the characterization of the trust for federal tax purposes. Consequently, our board of directors may change the terms of our shares in ways with which you disagree.

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	Certain provisions of the LLC agreement of the company and the trust agreement make it difficult for third parties to acquire control of the trust and the company and could deprive you of the opportunity to obtain a takeover premium for your shares.

	•	restrictions on the company’s ability to enter into certain transactions with our major shareholders, with the exception of our manager, modeled on the limitation contained in Section 203 of the Delaware General Corporation Law, or DGCL;
	•	allowing only the company’s board of directors to fill vacancies, including newly created directorships, for those directors who are elected by our shareholders, and allowing only our manager to fill vacancies with respect to the class of directors appointed by our manager;
	•	requiring that directors elected or appointed by our shareholders may be removed with or without cause but only by a vote of 85% of the trust shareholders;
	•	requiring that only the company’s chairman or board of directors may call a special meeting of our shareholders;
	•	prohibiting shareholders from taking any action by written consent;
	•	requiring advance notice for nominations of candidates for election to the company’s board of directors or for proposing matters that can be acted upon by our shareholders at a shareholders’ meeting;
	•	requiring advance notice for a director or group of directors other than our Chief Executive Officer or chairman to call a special meeting of our board of directors;
	•	having a substantial number of additional authorized but unissued shares;
	•	providing the company’s board of directors with certain authority to amend the LLC agreement and the trust agreement, subject to certain voting and consent rights of the holders and non-management interests and management interests; and
	•	providing for a staggered board of directors of the company, the effect of which could be to deter a proxy contest for control of the company’s board of directors or a hostile takeover.

	CGI may exercise significant influence over the company.

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	We may incur indebtedness, which could expose us to additional risks associated with leverage and inhibit our operating flexibility and funds available for distributions to our shareholders.

	•	satisfy prescribed financial ratios specific to each arrangement;
	•	maintain a minimum level of tangible net worth;
	•	maintain a minimum level of liquidity; and
	•	limit the payment of distributions to our shareholders.

	We may engage in a business transaction with one or more target businesses that have relationships with our officers, directors, CGI or our manager which may create potential conflicts of interest.

	The terms of the stock purchase agreement with respect to our initial businesses, the management services agreement and the registration rights agreement with respect to CGI’s and Pharos’ investment were negotiated without independent assessment on our behalf, and these terms may be less advantageous to us than if they had been the subject of arm’s-length negotiations.

	We face competition for acquisitions of businesses.

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	We may not be able to successfully fund future acquisitions of new businesses due to the unavailability of debt or equity financing on acceptable terms, which could impede the implementation of our acquisition strategy and adversely impact our financial condition, business and results of operations.

	We face risks with respect to future acquisitions and, as a result, we may not be able to successfully execute our acquisition strategy.

	•	the time and costs associated with identifying and evaluating potential acquisition targets and their industries;
	•	the estimates, assumptions and judgments used to evaluate operations, management and market risks with respect to the target business may not be accurate or be realized;
	•	failure of the acquired business to achieve expected results;
	•	our or our businesses’ inability to integrate and improve acquired businesses in a cost-efficient manner;
	•	failure to identify liabilities associated with the acquired business prior to its acquisition;
	•	diversion of our management’s attention; and
	•	failure to retain key personnel of the acquired business.

	Changes in inflation and interest rates could adversely affect us.

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	We will incur increased costs as a result of being a publicly traded company.

	If in the future we cease to control and operate our businesses, we may be deemed to be an investment company under the Investment Company Act of 1940, as amended.

	Our audited financial statements will not include meaningful comparisons to prior years and may differ substantially from the pro forma condensed combined financial statements included in this prospectus.

We may not be able to complete our consolidated financial statements for the year ended December 31, 2005 in time to file our initial annual report on Form 10-K in a timely fashion and, as a result the shares of the trust may be delisted due to our inability to comply with the Nasdaq National Market listing requirements which may materially adversely affect the market for and the price of our shares.

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	Our shareholders may be subject to taxation on their share of the company’s taxable income, whether or not they receive cash distributions from the trust.

	All of the company’s income could be subject to an entity-level tax in the United States, which could result in a material reduction in cash flow available for distributions to holders of shares of the trust and thus could result in a substantial reduction in the value of the shares.

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	If the trust were determined not to be a grantor trust, the trust may itself be regarded as a partnership for U.S. federal income tax purposes, and the trust’s items of income, gain, loss, and deduction would be reportable to the shareholders of the trust on IRS Schedules K-1.

	If the Trust makes one or more new equity offerings, the subsequent investors participating in those offerings will be allocated a portion of any built-in gains (or losses) that exist at the time of the additional offerings.

	Our results of operations may vary from quarter to quarter, which could adversely impact the market price of our shares.

	•	the general economic conditions of the industry and regions in which each of our businesses operate;
	•	employment levels in various markets served by CBS Personnel;
	•	seasonal increases and decreases in demand for products and services offered by certain of our businesses;
	•	the general economic conditions of the customers and clients of our businesses’ products and services;
	•	the mix of products sold and services ordered;
	•	the timing and market acceptance of new products and services introduced by our businesses;
	•	regulatory actions; and
	•	the timing of our acquisitions of other businesses and the sale of our businesses.

	Our businesses are or may be vulnerable to economic fluctuations as demand for their products and services tend to decrease as economic activity slows.

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	Our businesses are or may be dependent upon the financial and operating conditions of their customers and clients. If the demand for their customers’ and clients’ products and services declines, demand for their products and services will be similarly affected and could have a material adverse effect on their financial condition, business and results of operations.

	The industries in which our businesses compete or may compete are highly competitive and they may not be able to compete effectively with competitors.

	Our businesses are and may be, dependent on certain key personnel, and the loss of key personnel, or the inability to retain or replace qualified employees, could have an adverse affect on our financial condition, business and results of operations.

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Our businesses rely and may rely on their intellectual property and licenses to use others’ intellectual property, for competitive advantage. If our businesses are unable to protect their intellectual property, are unable to obtain or retain licenses to use other’s intellectual property, or if they infringe upon or are alleged to have infringed upon others’ intellectual property, it could have a material adverse affect on their financial condition, business and results of operations.

	•	temporarily or permanently stop producing products that use the intellectual property in question;
	•	obtain an intellectual property license to sell the relevant technology at an additional cost, which license may not be available on reasonable terms, or at all; and
	•	redesign those products or services that use the technology or other intellectual property in question.

	The operations and research and development of some of our businesses’ services and technology depend on the collective experience of their technical employees. If these employees were to leave and take this knowledge, our businesses’ operations may suffer and their ability to compete could be adversely impacted.

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	If our businesses are unable to continue the technological innovation and successful commercial introduction of new products and services, their financial condition, business and results of operations could be materially adversely affected.

Some of our businesses rely and may rely on suppliers for the timely delivery of materials used in manufacturing their products. Shortages or price fluctuations in component parts specified by their customers could limit their ability to manufacture certain products, delay product shipments, cause them to breach supply contracts and materially adversely affect our financial condition, business and results of operations.

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	Our businesses could experience fluctuations in the costs of raw materials, which fluctuations could have a material adverse effect on their financial condition, business and results of operations.

	Our businesses do not have and may not have long-term contracts with their customers and clients and the loss of customers and clients could materially adversely affect their financial condition, business and results of operations.

	Damage to our businesses’ or their customers’ and suppliers’ offices and facilities could increase costs of doing business and materially adversely affect their ability to deliver their services and products on a timely basis as well as decrease demand for their services and products, which could materially adversely affect their financial condition, business and results of operations.

	Our businesses are and may be subject to federal, state and foreign environmental laws and regulations that expose them to potential financial liability. Complying with applicable environmental laws requires significant resources, and if our businesses fail to comply, they could be subject to substantial liability.

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	The operations of some of our businesses are and may be subject to operating risks associated with handling, storage and transportation of raw materials, products and wastes that subject them to operating risks that may not be covered by insurance and could have a material adverse effect on our financial condition, business or results of operations.

Our businesses are and may be subject to a variety of federal, state and foreign laws and regulations concerning employees health and safety. Failure to comply with governmental laws and regulations could subject them to, among other things, potential financial liability, mandatory product recalls, penalties and legal expenses which could have a material adverse effect on our financial condition, business and results of operations.

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	Some of our businesses are and may be operated pursuant to government permits, licenses, leases, concessions or contracts that are generally complex and may result in a dispute over interpretation or enforceability. Our failure to comply with regulations or concessions could subject us to monetary penalties or result in a revocation of our rights to operate the affected business.

	Our businesses are subject to certain risks associated with their foreign operations or business they conduct in foreign jurisdictions.

	•	exposure to local economic conditions;
	•	difficulties in enforcing agreements and collecting receivables through certain foreign legal systems;
	•	longer payment cycles for foreign customers;
	•	adverse currency exchange controls;
	•	exposure to risks associated with changes in foreign exchange rates;
	•	potential adverse changes in the political environment of the foreign jurisdictions or diplomatic relations of foreign countries with the United States;
	•	withholding taxes and restrictions on the withdrawal of foreign investments and earnings;
	•	export and import restrictions;
	•	labor relations in the foreign jurisdictions;
	•	difficulties in enforcing intellectual property rights; and
	•	required compliance with a variety of foreign laws and regulations.

	Employees of our businesses may join unions, which may increase our businesses’ costs.

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	Our initial businesses have recorded a significant amount of goodwill and other identifiable intangible assets, which may never be fully realized.

	The operational objectives and business plans of our businesses may conflict with our operational and business objectives or with the plans and objective of another business we own and operate.

	The internal controls of our initial businesses have not yet been integrated and we have only recently begun to examine the internal controls that are in place for each business. As a result, we may fail to comply with Section 404 of the Sarbanes-Oxley Act or our auditors may report a material weakness in the effectiveness of our internal controls over financial reporting.

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	CBS Personnel’s business depends its ability to attract and retain qualified employees.

	Any significant economic downturn could result in clients of CBS Personnel using fewer temporary employees, which would materially adversely affect the business of CBS Personnel.

	Customer relocation of positions filled by CBS Personnel may materially adversely affect CBS Personnel’s financial condition, business and results of operations.

	CBS Personnel assumes the obligation to make wage, tax and regulatory payments for its employees, and as a result, it is exposed to client credit risks.

	CBS Personnel is exposed to employment-related claims and costs and periodic litigation that could materially adversely affect its financial condition, business and results of operations.

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	•	claims of misconduct or negligence on the part of its employees, discrimination or harassment claims against its employees, or claims by its employees of discrimination or harassment by its clients;
	•	immigration-related claims;
	•	claims relating to violations of wage, hour and other workplace regulations;
	•	claims relating to employee benefits, entitlements to employee benefits, or errors in the calculation or administration of such benefits; and
	•	possible claims relating to misuse of customer confidential information, misappropriation of assets or other similar claims.

	CBS Personnel’s workers’ compensation loss reserves may be inadequate to cover its ultimate liability for workers’ compensation costs.

	Crosman is dependent on key retailers, the loss of which would materially adversely affect its financial conditions, businesses and results of operations.

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	Current and new environmental laws and regulations may materially adversely affect Crosman’s operations.

	Crosman’s products are subject to governmental regulations in the United States and foreign jurisdictions.

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	The airgun and paintball industries are seasonal which could materially adversely affect Crosman’s financial condition, business and results of operations.

	Crosman’s products are subject to product safety and liability lawsuits, which could materially adversely affect its financial condition, business and results of operations.

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	Crosman relies on a limited number of suppliers and as a result, if suppliers are unable to provide materials on a timely basis, Crosman’s financial condition, business and results of operations may be materially adversely affected.

	Crosman cannot control certain of its operating expenses and as a result, if it is unable to pass on its cost increases, its financial condition, business and results of operations may be materially adversely affected.

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	The members agreement governing GFP has certain covenants that may have important consequences to Crosman.

	•	engage in, have any equity or profit interest in, make any loan to or for the benefit of, or render services to any business that engages in providing goods or services provided by GFP in the relevant territory;
	•	employ any person who was employed by GFP and has not ceased to be employed for a period of at least one year;
	•	solicit any current or previous customer of GFP; and
	•	directly or indirectly engage in the manufacture of paintballs.

	Defects in the products that Advanced Circuits produces for their customers could result in financial or other damages to those customers, which could result in reduced demand for Advanced Circuits’ services and liability claims against Advanced Circuits.

	Unless Advanced Circuits is able to respond to technological change at least as quickly as its competitors, its services could be rendered obsolete, which could materially adversely affect its financial condition, business and results of operations.

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	Advanced Circuits’ customers operate in industries that experience rapid technological change resulting in short product life cycles and as a result, if the product life cycles of its customers slow materially, and research and development expenditures are reduced, its financial condition, business and results of operations will be materially adversely affected.

	The continued trend of technology companies moving their operations offshore may materially adversely affect Advanced Circuits’ financial conditions, business and results of operations.

	Electronics manufacturing services corporations are increasingly acting as intermediaries, positioning themselves between PCB manufacturers and OEMS, which could reduce operating margins.

	Silvue derives a significant portion of their revenue from the eyewear industry. Any economic downturn in this market or increased regulations by the Food and Drug Administration, would adversely affect its operating results and financial condition.

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	Silvue’s technology is compatible with certain substrates and processes and competes with a number of products currently sold on the market. A change in the substrate, process or competitive landscape could have a material adverse affect on its financial condition, business and results of operations.

	Silvue has international operations and is exposed to general economic, political and regulatory conditions and risks in the countries in which they have operations.

	Changes in foreign currency exchange rates could materially adversely affect Silvue’s financial condition, business and results of operations.

	Silvue relies upon valuable intellectual property rights that could be subject to infringement or attack. Infringement of these intellectual property rights by others could have a material adverse affect on its financial condition, business and results of operations.

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	There is no public market for our shares. You cannot be certain that an active trading market or a specific share price will be established, and you may not be able to resell your shares at or above the initial offering price.

	Future sales of shares may affect the market price of our shares.

	We may issue debt and equity securities which are senior to our shares as to distributions and in liquidation, which could materially adversely affect the market price of our shares.

	Our earnings and cash distributions may affect the market price of our shares.

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	The market price, trading volume and marketability of our shares may, from time to time, be significantly affected by numerous factors beyond our control, which may materially adversely affect the market price of your shares and our ability to raise capital through future equity financings.

	•	price and volume fluctuations in the stock markets generally which create highly variable and unpredictable pricing of equity securities;
	•	significant volatility in the market price and trading volume of securities of companies in the sectors in which our businesses operate, which may not be related to the operating performance of these companies and which may not reflect the performance of our businesses;
	•	changes and variations in our earnings and cash flows;
	•	any shortfall in revenue or net income or any increase in losses from levels expected by securities analysts;
	•	changes in regulation or tax law;
	•	operating performance of companies comparable to us;
	•	general economic trends and other external factors including inflation, interest rates, and costs and availability of raw materials, fuel and transportation; and
	•	loss of a major funding source.

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	•	our ability to successfully operate our initial businesses on a combined basis, and to effectively integrate and improve any future acquisitions;
	•	our ability to remove our manager for underperformance and our manager’s right to resign;
	•	our trust and holding company structure, which may limit our ability to meet our dividend and distribution policy;
	•	our ability to service and comply with the terms of our indebtedness;
	•	the acquisition price of each initial business and the loan amounts to each initial business;
	•	decisions made by persons who control our initial businesses, including decisions regarding dividend policies;
	•	our ability to make and finance future acquisitions, including, but not limited to, the acquisitions described in this prospectus;
	•	our ability to implement our acquisition and management strategies;
	•	the regulatory environment in which our initial businesses operate;
	•	trends in the industries in which our initial businesses operate;
	•	changes in general economic or business conditions or economic or demographic trends in the United States and other countries in which we have a presence, including changes in interest rates and inflation;
	•	environmental risks pertaining to our initial businesses;
	•	our ability to retain or replace qualified employees;
	•	costs and effects of legal and administrative proceedings, settlements, investigations and claims; and
	•	extraordinary or force majeure events affecting the facilities of our initial businesses.

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	•	Pay the purchase price and related costs of the acquisition of our initial business of approximately $161.6 million;
	•	Make loans to each of our initial businesses to refinance outstanding debt in an aggregate principal amount of $153.5 million;
	•	Pay the transaction costs related to this offering of approximately $4.5 million; and
	•	Provide funds for general corporate purposes of approximately of $12.3 million.

			Sources of Funds
			($ in millions)
Net proceeds from initial public offering			$	231.9
Investment of Pharos				4.0
Investment of CGI				96.0
	Total Sources		$	331.9

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				Uses of Funds
				($ in millions)
Purchase of Equity:
	CBS Personnel			$	87.7	(1)
	Crosman				23.3
	Advanced Circuits				27.5
	Silvue				23.1
Loans to initial businesses:(2)
	CBS Personnel				37.4	(3)
	Crosman				50.1
	Advanced Circuits				51.3
	Silvue				14.7
Transactional costs related to this offering(4)					4.5
General corporate purposes					12.3
		Total Uses		$	331.9

(1)	Of this amount, approximately $54.9 million will be the purchase price of the equity interests in CBS Personnel and approximately $32.8 million will be in the form of a capitalization loan made to CBS Personnel, as discussed in footnote 3 below. See the section entitled “The Acquisition of and Loans to Our Initial Businesses” for more information about our purchase of equity in each of the initial businesses.
(2)	See the liquidity and capital resources discussion for each initial business in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more information about the outstanding debt of each initial business that will be refinanced in connection with this offering.
(3)	The company will actually loan to CBS Personnel approximately $70.2 million, which will be comprised of approximately $64.0 million in term loans, approximately $31.2 million of which will be used to pay down third party debt and approximately $32.8 million of which represents a capitalization loan and, therefore, considered part of the purchase price of equity interests in CBS Personnel, as discussed in footnote 1 above, and an approximately $42.5 million revolving loan commitment, approximately $6.2 million of which will be funded to CBS Personnel in conjunction with the closing of this offering. See the section entitled “The Acquisition of and Loans to Our Initial Businesses” for more information about the loans to each of the initial businesses.
(4)	This amount will be reimbursed by the company to the manager in conjunction with the closing of this offering. See the section entitled “Management Services Agreement—Reimbursement of Offering Expenses” and “Certain Relationships and Related Party Transactions” for more information about the reimbursement of offering expenses.

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	Acquisition

	•	retire approximately $37.4 million of existing CBS Personnel debt at an approximately $0.4 million premium for early redemption;
	•	purchase, in the aggregate, approximately $62.9 million of equity from Compass CS Partners, L.P. and Compass CS II Partners, L.P., subsidiaries of CGI which we together refer to as Compass CS Partners;
	•	purchase approximately $22.9 million of equity from unaffiliated minority shareholders; and
	•	provide funds to allow CBS Personnel to make bonus or dividend payments aggregating approximately $1.5 million to members of CBS Personnel’s management team, none of whom are selling capital stock of CBS Personnel as part of the contemplated transactions, in respect of their CBS Personnel common stock or options.

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	•	2,830,909 shares of Class A common stock, all of which were held by Compass CS Partners;
	•	3,548,384 shares of Class B common stock, 2,274,052 of which were held by Compass CS Partners and 1,274,332 of which were held by Mr. Brown;
	•	181,699 shares of Class C common stock, all of which were held by members of CBS Personnel’s management team and certain other investors in CBS Personnel;
	•	warrants to acquire 23,457.15 shares of Class B common stock, all of which were held by Compass CS Partners and are expected to be exercised prior to the closing of this offering;
	•	warrants to acquire 922,993.45 shares of Class B common stock, all of which were held by Mr. Brown and are expected to be exercised prior to the closing of this offering; and
	•	options to purchase 573,051 shares of Series C commons stock, all of which were held by members of CBS Personnel’s management team and certain other investors.

	Term Loans

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	Revolving Loan

	Acquisition

	•	577,360 shares of a single class of common stock, 428,292 of which were held by Compass Crosman Partners and the balance of which were held by members of Crosman’s management team and certain other investors in Crosman; and
	•	options to purchase 30,000 additional shares of Crosman’s common stock, all of which were held by a member of Crosman’s management team.

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	Term Loans

	Revolving Loan

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	Acquisition

	•	232,363 shares of Series A common stock, all of which were held by members of Advanced Circuits’ management team and certain other investors in Advanced Circuits;
	•	904,000 shares of Series B common stock, 882,120 of which were held by Compass AC Partners, and the balance of which were held by certain other investors; and
	•	options to purchase 106,113 shares of Series A common stock.

	Term Loans

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	Revolving Loan

	Acquisition

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	•	14,036.72 shares of Series A common stock, all of which were held by members of Silvue’s management team and other investors in Silvue;
	•	5,000 shares of Series B common stock, 4,901.4 of which were held by Compass Silvue Partners and the remainder of which were held by certain other investors in Silvue;
	•	22,432.23 shares of Series A convertible preferred stock, 21,521.85 of which were held by CGI’s subsidiary and the remainder of which were held by certain other investors in Silvue; and
	•	4,500 shares of Series B redeemable preferred stock, all of which were held by members of Silvue’s management team.

	Term Loans

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	Revolving Loan

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	•	We will indemnify CGI and Compass Crosman Partners for any damages arising pursuant to a partial guaranty by Compass Crosman Partners of an obligation of Crosman to pay to the former owners of Crosman an earn-out under the agreement pursuant to which CGI acquired control of Crosman. Such earn-out would be triggered if Crosman meets certain financial performance benchmarks for the fiscal year ending June 30, 2006. If triggered, we do not anticipate that such earn-out would be material to our results of operations or financial condition. A similar earn-out with respect to the fiscal year ended June 30, 2005 was not triggered.
	•	CGI and Compass AC Partners will indemnify us against any damages resulting from a breach of any representation, warranty, covenant or obligation of Compass AC Partners or Advanced Circuits under the agreement pursuant to which CGI originally acquired control of Advanced Circuits, or any failure by either of them to perform any obligation under such original purchase agreement after the date of the closing of CGI’s original acquisition and through the closing of this offering. This separate indemnification obligation is not subject to a threshold or cap.
	•	CGI and its subsidiary will indemnify us against any damages resulting from a breach of any representation, warranty, covenant or obligation of CGI’s subsidiary or Silvue under the agreement pursuant to which CGI originally acquired control of Silvue, or any failure by either of them to perform any obligation under such original purchase agreement after the date of the closing of CGI’s original acquisition and through the closing of this offering. This separate indemnification obligation is not subject to a threshold or cap.

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	•	Loans retiring;
	•	Debt issuances;
	•	Minority interests; and
	•	Acquisitions.

				(Unaudited)
				Pro Forma As of
				September 30, 2005
				($ in thousands)
Cash and cash equivalents				$	16,323
Long-term debt:
		Total long-term debt		$	—
Shareholders’ equity:
	Shares: (no par value);           shares authorized;           shares issued and outstanding;           shares issued and outstanding as adjusted for the offering(1)
		Total shareholders’ equity		$	327,474
		Total capitalization		$	327,474

(1)	Each trust share representing one undivided beneficial interest in the trust.

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	•	approximately 98.1% of CBS Personnel;
	•	approximately 75.4% of Crosman;
	•	approximately 85.7% of Advanced Circuits; and
	•	approximately 73.0% of Silvue,

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																			Compass								Pro Forma
			CBS								Advanced								Diversified								Combined
			Personnel				Crosman				Circuits				Silvue				Trust								Compass
			As				As				As				As				As				Pro Forma				Diversified
			Reported				Reported				Reported				Reported				Reported*				Adjustments				Trust
			($ in thousands)
Assets
Current Assets:
	Cash and cash equivalents		$	1,512			$	192			$	942			$	1,282			$	100			$	12,295	(1)		$	16,323
	Accounts receivable, net			63,758				16,413				2,679				2,924												85,774
	Inventories			—				13,567				316				695												14,578
	Prepaid expenses and other current assets			2,342				1,427				114				381												4,264
	Deferred offering cost			—				—				—				—				2,527				(2,527	)(2)			—
	Deferred tax assets			2,646				1,345				—				998												4,989
	Total current assets			70,258				32,944				4,051				6,280				2,627				9,768				125,928
Property and equipment, net				2,592				10,266				2,676				1,408								1,288	(3)			18,230
Investment in subsidiary				—				497				—				—								2,803	(4)			3,300
Goodwill				59,387				30,951				51,190				11,159								17,763	(5)			170,450
Intangible and other assets, net				10,347				13,773				21,910				9,249								83,862	(6)			139,141
Total assets			$	142,584			$	88,431			$	79,827			$	28,096			$	2,627			$	115,484			$	457,049
Liabilities and shareholders’ equity
Current liabilities:
	Current portion of long-term debt and line of credit facilities payable		$	2,337			$	2,673			$	4,570			$	1,678			$				$	(11,258	)(7)		$	—
	Accounts payable			7,654				6,851				1,036				863												16,404
	Accrued expenses			37,194				4,376				2,097				1,986				2,528				(2,527	)(8)			45,654
	Total current liabilities			47,185				13,900				7,703				4,527				2,528				(13,785	)			62,058
Long-term debt				35,013				47,442				46,750				12,994								(142,199	)(9)			—
Workers’ compensation				11,369				—				—				—												11,369
Deferred taxes				—				3,536				—				889								32,196	(10)			36,621
Other liabilities				—				578				—				83												661
	Total liabilities			93,567				65,456				54,453				18,493				2,528				(123,788	)			110,709
Minority interest				—				—				—				—								18,866	(11)			18,866
Redeemable preferred stock				—				—				—				90								(90	)(12)			—
Total shareholders’ equity				49,017				22,975				25,374				9,513				99				220,496	(13)			327,474
Total liabilities and shareholders’ equity			$	142,584			$	88,431			$	79,827			$	28,096			$	2,627			$	115,484			$	457,049

	*	Information is as of November 30, 2005.

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																								Pro Forma
				CBS								Advanced												Combined
				Personnel				Crosman				Circuits				Silvue								Compass
				As				As				As				As				Pro Forma				Diversified
				Reported				Reported(A)				Reported				Reported				Adjustments				Trust
				($ in thousands)
Net Sales				$	315,258			$	68,489			$	36,642			$	16,478			$				$	436,867
Cost of Sales					254,987				47,687				17,867				5,571								326,112
Gross profit					60,271				20,802				18,775				10,907								110,755
Operating expenses:
	Staffing Expense				31,974				—				—				—								31,974
	Selling, general and administrative expense				17,797				10,657				6,564				7,196				255	(2)			47,990
																					(1,406	)(4)
																					6,927	(5)
	Research and development expense				—				—				—				627								627
	Amortization expense				1,051				572				—				—				8,618	(1)			10,241
Operating income (loss)					9,449				9,573				12,211				3,084				(14,394	)			19,923
Other income (expense):
	Interest income				—				—				42				6								48
	Interest expense				(2,100	)			(3,882	)			(242	)			(389	)			6,613	(3)			—
	Other income (expense), net				149				(2,320	)			82				309								(1,780	)
Income (loss) before provision for income taxes and minority interest					7,498				3,371				12,093				3,010				(7,781	)			18,191
Provision for income taxes					85				1,248				—				805				3,584	(6)			5,722
Minority interest in income of subsidiary					—				—				—				—				1,572	(7)			1,572
		Net income (loss)		$	7,413			$	2,123			$	12,093			$	2,205			$	(12,937	)		$	10,897
Pro forma net income per share																								$	0.47
Pro forma weighted average number of shares outstanding																									23,333
Supplemental Information:
	Depreciation Expense			$	1,344			$	2,117			$	869			$	523			$	255			$	5,108

(A)	Reflects the combination of the unaudited financial information for the period from July 1, 2004 to December 31, 2004 with the unaudited financial information for the period from January 1, 2004 to June 30, 2004. This combination was required due to Crosman having a June 30th fiscal year-end.

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																							Pro Forma
			CBS								Advanced												Combined
			Personnel				Crosman				Circuits				Silvue								Compass
			As				As				As				As				Pro Forma				Diversified
			Reported				Reported(A)				Reported				Reported				Adjustments				Trust
			($ in thousands)
Net Sales			$	405,486			$	52,294			$	31,454			$	15,819			$				$	505,053
Cost of Sales				329,536				39,899				14,133				5,593								389,161
Gross profit				75,950				12,395				17,321				10,226								115,892
Operating expenses:
	Staffing Expense			41,297				—				—				—								41,297
	Selling, general and administrative expense			22,063				7,575				5,629				6,356				163	(2)			45,521
																				(1,460	)(4)
																				5,195	(5)
	Research and development expense			—				—				—				838								838
	Amortization expense			1,433				506				—				—				5,438	(1)			7,377
Operating income				11,157				4,314				11,692				3,032				(9,336	)			20,859
Other income (expense):
	Interest income			—				—				150				—								150
	Interest expense			(3,398	)			(3,728	)			(325	)			(1,001	)			8,452	(3)			—
	Other income (expense), net			105				(2,717	)			4				181								(2,427	)
Income (loss) before provision for income taxes and minority interest				7,864				(2,131	)			11,521				2,212				(884	)			18,582
Provision (benefit) for income taxes				2,937				(909	)			225				695				3,411	(6)			6,359
Minority interest in income of subsidiary				—				—				—				—				764	(7)			764
Net income (loss)			$	4,927			$	(1,222	)		$	11,296			$	1,517			$	(5,059	)		$	11,459
Pro forma net income per share																							$	0.49
Pro forma weighted average number of shares outstanding																								23,333
Supplemental Information:
Depreciation Expense			$	1,096			$	1,648			$	715			$	298			$	163			$	3,920

(A)	Reflects the combination of the unaudited financial information for the period from July 1, 2005 to October 2, 2005 with the unaudited financial information for the period from January 1, 2005 to June 30, 2005. This combination was required due to Crosman having a June 30th fiscal year-end.

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Note 1.	Pro Forma Adjustments

	Balance Sheet:

1. Cash and cash equivalents
	Proceeds from offering and private placement transactions to establish an initial working capital level and to fund future capital expenditures		$	16,795	a
	Compass Diversified Trust			(4,500	)f
			$	12,295
2. Deferred Offering Costs
	Compass Diversified Trust		$	(2,527	)f
3. Property, plant and equipment, net
	Crosman		$	(141	)c(1)
	Advanced Circuits			566	d(1)
	Silvue			863	e(1)
			$	1,288
4. Investment in subsidiary
	Crosman		$	2,803	c(1)
5. Goodwill
	CBS Personnel		$	3,951	b(1)
	Crosman			1,478	c(1)
	Advanced Circuits			3,085	d(1)
	Silvue			9,249	e(1)
			$	17,763
6. Intangible and other assets, net
	CBS Personnel		$	63,358	b(1)
	Crosman			4,307	c(1)
	Silvue			16,197	e(1)
			$	83,862
7. Current portion of long-term debt
	CBS Personnel		$	(2,337	)b(1)
	Crosman			(2,673	)c(1)
	Advanced Circuits			(4,570	)d(1)
	Silvue			(1,678	)e(1)
			$	(11,258	)

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	8. Accrued Expenses
		Compass Diversified Trust		$	(2,527	)f
	9. Long-term debt
		CBS Personnel		$	(35,013	)b(1)
		Crosman			(47,442	)c(1)
		Advanced Circuits			(46,750	)d(1)
		Silvue			(12,994	)e(1)
				$	(142,199	)
10. Deferred tax liability
		CBS Personnel		$	24,076	b(1)
		Crosman			1,637	c(1)
		Silvue			6,483	e(1)
				$	32,196
11. Minority interest
		CBS Personnel		$	4,512	b(1)
		Crosman			6,505	c(1)
		Advanced Circuits			1,596	d(1)
		Silvue			6,253	e(1)
				$	18,866
12. Redeemable preferred stock
		Silvue		$	(90	)e(1)
13. Total shareholders’ equity
		Acquisitions		$	331,875	a
		CBS Personnel			(49,017	)b(1)
		Crosman			(22,975	)c(1)
		Advanced Circuits			(25,374	)d(1)
		Silvue			(9,513	)e(1)
		Compass Diversified Trust			(4,500	)f
				$	220,496

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	Statement of Operations:

							Nine Months
			Year Ended				Ended
			December 31,				September 30,
			2004				2005
1.   Amortization expense
	CBS Personnel		$	4,749			$	2,917	a(1)
	Crosman			(54	)			(118	)b(1)
	Advanced Circuits			2,661				1,996	c(1)
	Silvue			1,262				643	d(1)
			$	8,618			$	5,438
2.   Depreciation expense
	Crosman		$	132			$	39	b(3)
	Advanced Circuits			30				(40	)c(3)
	Silvue			93				164	d(3)
			$	255			$	163
3.   Interest expense
	CBS Personnel		$	2,100			$	3,398	a(2)
	Crosman			3,882				3,728	b(2)
	Advanced Circuits			242				325	c(2)
	Silvue			389				1,001	d(2)
			$	6,613			$	8,452
4.   Elimination of prior management fee
	CBS Personnel		$	(652	)		$	(764	)a(3)
	Crosman			(492	)			(580	)b(4)
	Silvue			(262	)			(116	)d(4)
			$	(1,406	)		$	(1,460	)
5.   New management fee
	Compass Diversified Trust		$	6,927			$	5,195	e
6.   Provision for income taxes
	Compass Diversified Trust		$	3,584			$	3,411	f
7.   Minority interest in income of subsidiaries
	Compass Diversified Trust		$	1,572			$	764	g

Note 2.	Pro Forma Adjustments by Acquisition

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a.	Balance Sheet

	Reflects issuance of shares and the net proceeds from this offering (after deducting underwriting discounts and commission of $18,125) and net proceeds from the separate private placement transactions:

To finance acquisitions			$	315,080
	Additional proceeds for working capital and capital expenditures and proceeds to pay The Compass Group Investments accrued public offering costs			16,795
			$	331,875
Acquisitions and debt repayments:
	CBS Personnel		$	125,088
	Crosman			73,395
	Advanced Circuits			78,749
	Silvue			37,848
			$	315,080

b.	CBS Personnel Acquisition

	1.   Reflects (1) purchase accounting adjustments to reflect CBS Personnel assets acquired and liabilities assumed at their estimated fair values, (2) redemption of existing debt of CBS Personnel and (3) elimination of historical shareholders’ equity:

Goodwill		$	3,951
Intangible and other assets			63,358
Current portion of long-term debt			2,337
Long-term debt			35,013
Deferred tax liability			(24,076	)
Establishment of minority interest			(4,512	)
Elimination of historical shareholders’ equity			49,017
		$	125,088

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c.	Crosman Acquisition

	1.   Reflects (1) purchase accounting adjustments to reflect Crosman assets acquired and liabilities assumed at their estimated fair values, (2) redemption of existing debt of Crosman and (3) elimination of historical shareholders’ equity:

Property and equipment		$	(141	)
Investment in subsidiary			2,803
Goodwill			1,478
Intangible and other assets			4,307
Current portion of long-term debt			2,673
Long-term debt			47,442
Deferred tax liability			(1,637	)
Establishment of minority interest			(6,505	)
Elimination of historical shareholders’ equity			22,975
		$	73,395

d.	Advanced Circuits Acquisition

	1.	Reflects (1) purchase accounting adjustments to reflect Advanced Circuits assets acquired and liabilities assumed at their estimated fair values, (2) redemption of existing debt of Advanced Circuits and (3) elimination of historical shareholders’ equity:

Property and equipment		$	566
Goodwill			3,085
Current portion of long-term debt			4,570
Long-term debt			46,750
Establishment of minority interest			(1,596	)
Elimination of historical shareholders’ equity			25,374
		$	78,749

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e.	Silvue Acquisition

	1.	Reflects (1) purchase accounting adjustments to reflect Silvue assets acquired and liabilities assumed at their estimated fair values, (2) redemption of existing debt of Silvue and (3) elimination of historical shareholders’ equity:

Property and equipment		$	863
Goodwill			9,249
Intangible and other assets			16,197
Current portion of long-term debt			1,678
Long-term debt			12,994
Deferred tax liability			(6,483	)
Repayment of mandatorily redeemable preferred stock			90
Establishment of minority interest			(6,253	)
Elimination of historical shareholders’ equity			9,513
		$	37,848

f.	Purchase Accounting Adjustment

Cash		$	(4,500	)
Accrued Expenses			2,527
Deferred Offering Cost			(2,527	)
Shareholders’ Equity			4,500
		$	—

	Statements of Operations:

								Nine Months
				Year Ended				Ended
				December 31,				September 30,
				2004				2005
A.		The following entries represent the pro forma adjustments made by us in Note 1 to reflect the effect of our acquisition of CBS Personnel upon the results of their operations for the year ended December 31, 2004 and for the nine months ended September 30, 2005 as if we had acquired CBS Personnel at the beginning of the fiscal year presented:
		1.   Additional amortization expense of intangible assets resulting from the acquisition of CBS Personnel:
		Customer relationships of $61,600 which will be amortized over 11 years		$	5,600			$	4,200
		Non-piracy covenants of $600 which will be amortized over 3 years			200				150
		Subtotal			5,800				4,350
		Amortization included in historical financial statements			(1,051	)			(1,433	)
				$	4,749			$	2,917

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								Nine Months
				Year Ended				Ended
				December 31,				September 30,
				2004				2005
		2.   Decreased interest expense resulting from the acquisition of CBS Personnel:
		Reduction of interest expense with respect to the $37.4 million long-term debt redeemed in connection with the acquisition of CBS Personnel		$	(2,100	)		$	(3,398	)
		3.   Elimination of management fees paid to prior owner of
		CBS Personnel in connection with management service contract not assumed by us		$	(652	)		$	(764	)
		The following entries represent the pro forma adjustments
B.		made by us in Note 1 to reflect the effect of our acquisition of Crosman upon the results of their operations for the year ended December 31, 2004 and for the nine months ended September 30, 2005 as if we had acquired Crosman at the beginning of the fiscal year presented: 1.   Additional amortization expense of intangible assets
		resulting from the acquisition of Crosman:      Technology of $780 which will be amortized over 11
		years      License agreement of $1,100 which will be amortized		$	71			$	53
		over 6 years      Distributor relationships of $2,900 which will be			183				137
		amortized over 11 years			264				198
		Subtotal			518				388
		Amortization included in historical financial
		statements			(572	)			(506	)
				$	(54	)		$	(118	)
		2.   Reduction of interest expense as a result of the
		acquisition of Crosman:      Reduction of interest expense with respect to $50.1
		million debt redeemed in connection with acquisition of Crosman		$	(3,882	)		$	(3,728	)
		3.   Additional depreciation expense resulting from the
		acquisition of Crosman		$	132			$	39
		4.   Elimination of management fees paid to prior owner of
		Crosman in connection with management services contract not assumed by us		$	(492	)		$	(580	)
		The following entries represent the pro forma adjustments
C.		made by us in Note 1 to reflect the effect of our acquisition of Advanced Circuits upon the results of their operations for the year ended December 31, 2004 and for the nine months ended September 30, 2005 as if we had acquired Advanced Circuits at the beginning of the fiscal year presented: 1.   Additional amortization expense of intangible assets
		resulting from the acquisition of Advanced Circuits:      Customer relationships of $18,100 which will be
		amortized over 9 years      Technology of $2,600 which will be amortized over 4		$	2,011			$	1,508
		years			650				488
				$	2,661			$	1,996

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								Nine Months
				Year Ended				Ended
				December 31,				September 30,
				2004				2005
		2.   Reduction of interest expense with respect to $51.5 million of debt redeemed in connection with the acquisition of Advanced Circuits		$	(242	)		$	(325	)
		3.   Adjustment of depreciation expense resulting from the acquisition of Advanced Circuits		$	30			$	(40	)
D.		The following entries represent the pro forma adjustments made by us in Note 1 to reflect the effect of our acquisition of Silvue upon the results of their operations for the year ended December 31, 2004 and for the nine months ended September 30, 2005 as if we had acquired Silvue at the beginning of the fiscal year presented:
		1.   Additional amortization expense of intangible assets resulting from the acquisition of Silvue:
		Customer relationships of $18,700 which will be amortized over 16 years		$	1,169			$	877
		Core technology of $3,700 which will be amortized over 13 years			285				214
		Subtotal			1,454				1,091
		Amortization included in historical financial statements			(192	)			(448	)
				$	1,262			$	643
		2.   Reduction of interest expense with respect to $14.7 million of debt redeemed in connection with the acquisition of Silvue		$	(389	)		$	(1,001	)
		3.   Additional depreciation expense resulting from the acquisition of Silvue		$	93			$	164
		4.   Elimination of management fees paid to prior owner of Silvue in connection with management service contract not assumed by us		$	(262	)		$	(116	)
E.		Adjustment to record the estimated management fee expense pursuant to the Management Services Agreement to be incurred in connection with the closing of this offering		$	6,927			$	5,195
F.		Adjustment to record the estimated tax expense associated with the pro forma adjustments to pre-tax income to reflect income tax expense for Advanced Circuits due to its change from a Subchapter S corporation		$	3,584			$	3,411
G.		Adjustment to record the minority interest in net income		$	1,572			$	764

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Note 3.	Pro Forma Income from Continuing Operations per Share

Note 4.	Other Estimates

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														(Unaudited)
														Nine Months Ended
		Fiscal Year Ended December 31,												September 30,
CBS Personnel		2002				2003				2004				2004				2005
		($ in thousands)
Statements of Operations Data:
Revenues		$	180,232			$	194,717			$	315,258			$	179,256			$	405,486
Direct cost of revenues			141,460				155,368				254,987				144,498				329,536
Gross Profit			38,772				39,349				60,271				34,758				75,950
Operating expenses:
Staffing			23,184				23,081				31,974				18,390				41,297
Selling, general and Administrative			12,391				12,132				17,796				10,027				22,063
Amortization			784				491				1,051				607				1,433
Income from operations			2,413				3,645				9,450				5,734				11,157
Other income (expense):
Interest expense			(4,566	)			(2,929	)			(2,100	)			(828	)			(3,398	)
Other Income			246				224				148				210				105
(Loss) Income before provision for income taxes			(1,907	)			940				7,498				5,116				7,864
Provision for income taxes			(30	)			(117	)			(85	)			(402	)			(2,937	)
Net income (loss)		$	(1,937	)		$	823			$	7,413			$	4,714			$	4,927
Cash Flow Data:
Cash (used in) provided by operating activities		$	(1,390	)		$	3,463				4,138			$	376			$	9,688
Cash (used in) investing activities			(166	)			(302	)			(30,058	)			(30,426	)			(607	)
Cash provided by (used in) financing activities			2,293				(3,736	)			26,575				30,191				(8,491	)
Net increase (decrease) in cash		$	737			$	(575	)		$	655			$	141			$	590
Supplemental Information:
Depreciation Expense		$	1,559			$	1,431			$	1,344			$	939			$	1,096

										(Unaudited)
		At December 31,								At
										September 30,
		2003				2004				2005
		($ in thousands)
Balance Sheet Data:
Total current assets		$	27,224			$	66,760			$	70,258
Property and equipment, net			3,989				3,081				2,592
Goodwill			49,200				59,307				59,387
Other intangibles, net and other assets			884				11,228				10,347
Total assets			81,297				140,376				142,584
Current liabilities			22,008				41,888				47,185
Long-term debt			19,507				43,893				35,013
Workers’ Compensation and other liabilities			6,956				10,684				11,369
Total liabilities			48,471				96,465				93,567
Shareholders’ equity			32,826				43,911				49,017

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																		(Unaudited)
						Predecessor				Successor
		Year				July 1, 2003				February 10,				Year				Quarter Ended
		Ended				to				2004 to				Ended
		June 30,				February 9,				June 30				June 30,				September 26,				October 2,
Crosman		2003				2004				2004				2005				2004				2005
		($ in thousands)
Statements of Operations Data:
Net sales		$	53,333			$	38,770			$	24,856			$	70,060			$	15,511			$	20,468
Cost of sales			37,382				26,382				17,337				50,874				11,316				15,490
Gross Profit			15,951				12,388				7,519				19,186				4,195				4,978
Operating expenses:
Selling, general and administrative			8,749				5,394				4,119				10,526				2,509				2,441
Amortization			132				70				258				629				155				179
Operating income			7,070				6,924				3,142				8,031				1,531				2,358
Other income (expense):
Interest expense			(1,978	)			(402	)			(1,588	)			(4,638	)			(1,055	)			(1,326	)
Other income (expense)			424				(1,560	)			(281	)			(2,792	)			12				4
Income before provision for income taxes			5,516				4,962				1,273				601				488				1,036
Provision for income taxes			2,122				1,824				463				112				141				392
Net income		$	3,394			$	3,138			$	810			$	489			$	347			$	644
Cash Flow Data:
Cash provided by (used in) operating activities		$	4,360			$	8,551			$	89			$	3,110			$	(2,050	)		$	1,312
Cash (used in) investing activities			(572	)			(1,181	)			(65,809	)			(2,014	)			(607	)			(315	)
Cash (used in) provided by financing activities			(3,865	)			(7,146	)			65,905				(527	)			2,874				(1,578	)
Net (decrease) in cash		$	(77	)		$	224			$	185			$	569			$	217			$	(581	)
Supplemental Information:
Depreciation Expense		$	2,295			$	1,205			$	847			$	2,146			$	528			$	560

										(Unaudited)
		At June 30,								At
										October 2,
		2004				2005				2005
		($ in thousands)
Balance Sheet Data:
Total current assets		$	25,497			$	28,622			$	32,944
Property, plant and equipment, net			10,583				10,513				10,266
Goodwill			30,951				30,951				30,951
Intangible and other assets			14,900				14,097				14,270
Total assets			81,931				84,183				88,431
Current liabilities			10,072				11,001				13,900
Notes payable under revolving line of credit			7,138				10,385				9,074
Long-term debt			37,917				35,334				37,183
Capitalized lease obligations and other liabilities			4,878				5,117				5,299
Total liabilities			60,005				61,837				65,456
Shareholders’ equity			21,926				22,346				22,975

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		Predecessor
														(Unaudited)
		Fiscal Year Ended												Nine Months Ended
		December 31,												September 30,
Advanced Circuits		2002				2003				2004				2004				2005
		($ in thousands)
Statements of Operations Data:
Net sales		$	23,767			$	27,796			$	36,642			$	27,465			$	31,454
Cost of sales			12,759				14,568				17,867				13,548				14,133
Gross Profit			11,008				13,228				18,775				13,917				17,321
Operating expenses:
General and administrative			5,032				5,521				6,564				4,663				5,629
Operating income			5,976				7,707				12,211				9,254				11,692
Other income (expense):
Interest Expense			(418	)			(204	)			(242	)			(183	)			(324	)
Interest income			27				16				42				20				150
Other income			(198	)			15				82				5				3
Income before provision for income taxes			5,387				7,534				12,093				9,096				11,521
Provision for income taxes			—				—				—				—				225
Net income		$	5,387			$	7,534			$	12,093			$	9,096			$	11,296
Cash Flow Data:
Cash provided by operating activities		$	6,087			$	8,021			$	12,689			$	9,537			$	11,967
Cash (used in) investing activities			(2,226	)			(2,167	)			(1,310	)			(878	)			(75,567	)
Cash provided (used in) financing activities			(4,086	)			(4,458	)			(8,830	)			(7,391	)			57,922
Net (decrease) increase in cash		$	(225	)		$	1,396			$	2,549			$	1,268			$	(5,678	)
Supplemental Information:
Depreciation Expense		$	654			$	729			$	869			$	594			$	715

										(Unaudited)
		At December 31,								At
										September 30,
		2003				2004				2005
		($ in thousands)
Balance Sheet Data:
Total current assets		$	6,254			$	9,564			$	4,050
Property and equipment, net			6,721				6,669				2,676
Goodwill and other assets			166				556				73,101
Total assets			13,141				16,789				79,827
Current liabilities			3,415				3,422				7,703
Long-term debt			3,167				2,787				46,750
Other liabilities			60				131				—
Total liabilities			6,642				6,340				54,453
Shareholders’ equity			6,499				10,449				25,374

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														(Unaudited)
						Predecessor				Successor				Nine Months
		Predecessor				January 1,				September 3,				Ended
		Year Ended				2004 to				2004 to				September 30,
		December 31,				September 2,				December 31,
Silvue		2003				2004				2004				2004				2005
		($ in thousands)
Statements of Operations Data:
Net sales		$	12,813			$	10,354			$	6,124			$	11,859			$	15,819
Cost of sales			4,194				3,620				1,951				4,091				5,593
Gross Profit			8,619				6,734				4,173				7,768				10,226
Operating expenses:
Selling, general and administrative			6,103				4,497				2,699				5,260				6,356
Research and Development costs			549				448				179				500				838
Operating income			1,967				1,789				1,295				2,008				3,032
Other income (expense):
Interest income			8				5				—				6				—
Interest expense			(58	)			(29	)			(360	)			(106	)			(1,000	)
Other income			376				175				135				193				180
Income before provision for income taxes			2,293				1,940				1,070				2,101				2,212
Provision for income taxes			576				483				322				575				695
Net income		$	1,717			$	1,457			$	748			$	1,526			$	1,517
Cash Flow Data:
Cash provided by operating activities		$	1,948			$	1,449			$	942			$	1,697			$	1,752
Cash provided by (used in) investing activities			(92	)			(210	)			(7,750	)			(8,221	)			109
Cash (used in) provided by financing activities			(1,013	)			(3,139	)			6,507				4,419				(1,588	)
Net increase (decrease) in cash		$	843			$	(1,900	)		$	(301	)		$	(2,105	)		$	273
Supplemental Information:
Depreciation Expense		$	464			$	436			$	87			$	474			$	298

										(Unaudited)
		At December 31,								At
										September 30,
		2003				2004				2005
		(Predecessor)
		($ in thousands)
Balance Sheet Data:
Total current assets		$	6,198			$	5,201			$	6,280
Property, plant and equipment, net			4,795				750				1,408
Goodwill			—				7,057				11,159
Other Intangibles, net and other assets			972				12,097				9,249
Total assets			11,965				25,105				28,096
Current liabilities			1,942				3,684				4,527
Equipment line			61				—				183
Long-term debt			554				12,201				12,790
Deferred income tax liability and other liabilities			784				1,008				993
Total liabilities			3,341				16,893				18,493
Cumulative redeemable preferred stock			—				90				90
Shareholders’ equity			8,624				8,122				9,513

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	•	First, to meet capital expenditure requirements, management fees and corporate overhead expenses of the businesses that we own, the company and the trust;
	•	Second, to fund distributions by the company to the trust; and
	•	Third, to be distributed by the trust to shareholders.

	•	approximately 98.1% of CBS Personnel on a primary and approximately 95.6% on a fully diluted basis;
	•	approximately 75.4% of Crosman on a primary and fully diluted basis;
	•	approximately 85.7% of Advanced Circuits on a primary basis and approximately 73.2% on a fully diluted basis; and
	•	approximately 73.0% of Silvue on a primary and fully diluted basis, after giving effect to the conversion of preferred stock of Silvue we acquired.

	•	approximately $70.2 million to CBS Personnel. The $70.2 million is comprised of approximately $64.0 million in term loans, approximately $31.2 million of which will be used to pay down third party debt and approximately $32.8 million of which represents a capitalization loan and, therefore, considered part of the purchase price of equity interests in CBS Personnel, and an approximately $42.5 million revolving loan commitment, approximately $6.2 million of which will be funded to CBS Personnel in conjunction with the closing of this offering;
	•	approximately $50.1 million to Crosman. The $50.1 million is comprised of an approximately $47.8 million in term loans and an approximately $15.0 million revolving loan commitment,

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		approximately $2.3 million of which will be funded to Crosman in conjunction with the closing of this offering;
	•	approximately $51.3 million to Advanced Circuits. The $51.3 million is comprised of approximately $50.5 million in term loans and an approximately $4.0 million revolving loan commitment, approximately $0.8 million of which will be funded to Advanced Circuits in conjunction with the closing of this offering; and
	•	approximately $14.7 million to Silvue. The $14.7 million is comprised of approximately $14.3 million in term loans and an approximately $4.0 million revolving loan commitment, approximately $0.4 million of which will be funded to Silvue in conjunction with the closing of this offering.

79

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	Business Combinations

	Goodwill, Intangible Asset and Property and Equipment

80

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	Allowance for Doubtful Accounts

	Workers’ Compensation Liability

	Deferred Tax Assets

81

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	Revenues

82

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	Expenses

	Financial Condition, Liquidity and Capital Resources

	•	The management services agreement relating to the management services our manager will perform for us and the businesses we own and the management fee to be paid to our manager in respect thereof; and
	•	The company’s LLC agreement setting forth our manager’s rights with respect to the management interests it owns, including the right to receive profit allocations from the company.

83

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84

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	Overview

85

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	Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004

			(Unaudited)
			Nine Months Ended
			September 30,
			2004				2005
			($ in thousands)
Revenues			$	179,256			$	405,486
Direct cost of revenues				144,498				329,536
	Gross profit			34,758				75,950
Staffing expense				18,390				41,297
Selling, general and administrative expenses				10,027				22,063
Amortization expense				607				1,433
	Income from operations			5,734				11,157
Interest expense				(828	)			(3,398	)
Other income				210				105
	Income before provision for income taxes			5,116				7,864
Provision for income taxes				402				2,937
	Net income		$	4,714			$	4,927

	Revenues

	Direct cost of revenues

	Staffing expense

86

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	Selling, general and administrative expenses

	Amortization expense

	Income from operations

	Interest expense

	Other income

	Provision for income taxes

	Net income

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	Fiscal Year Ended December 31, 2004 as Compared to Fiscal Year Ended December 31, 2003

			Fiscal Year Ended
			December 31,
			2003				2004
			($ in thousands)
Revenues			$	194,717			$	315,258
Direct cost of revenues				155,368				254,987
	Gross profit			39,349				60,271
Staffing expense				23,081				31,974
Selling, general and administrative expenses				12,132				17,796
Amortization expense				491				1,051
	Income from operations			3,645				9,450
Interest expense				(2,929	)			(2,100	)
Other income				224				148
	Income before provision for income taxes			940				7,498
Provision for income taxes				117				85
	Net income		$	823			$	7,413

	Revenues

	Direct cost of revenues

	Staffing expense

88

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	Selling, general and administrative expenses

	Amortization expense

	Income from operations

	Interest expense

	Other income

	Provision for income taxes

	Net income

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	Fiscal Year ended December 31, 2003 as Compared to Fiscal Year Ended December 31, 2002

			Year Ended December 31,
			2002				2003
			($ in thousands)
Revenues			$	180,232			$	194,717
Direct cost of revenues				141,460				155,368
	Gross profit			38,772				39,349
Staffing expense				23,184				23,081
Selling, general and administrative expenses				12,391				12,132
Amortization expense				784				491
	Income from operations			2,413				3,645
Interest expense				(4,566	)			(2,929	)
Other income				246				224
	Income before provision for income taxes			(1,907	)			940
Provision for income taxes				30				117
	Net (loss) income		$	(1,937	)		$	823

	Revenues

	Direct cost of revenues

	Staffing expense

	Selling, general and administrative expenses

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	Amortization expense

	Operating income

	Interest expense

	Net income (loss)

	Liquidity and Capital Resources

	•	working capital will be financed by CBS Personnel’s revolving credit facility as discussed below and repaid from subsequent reductions in current assets or from subsequent earnings;
	•	capital expenditures will be financed by the use of the revolving credit facility; and
	•	third-party long-term debt will be refinanced with long-term debt with similar terms.

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	Discussion of changes in cash flows for the nine months ended September 30, 2005 versus the nine month ended September 30, 2004

	Discussion of changes in cash flows for the fiscal year ended December 31, 2004 versus the fiscal year ended December 31, 2003

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	Commitments and Contingencies

		Payments Due by Period
						Less than												More than
		Total				1 Year				1-3 Years				3-5 Years				5 Years
		($ in thousands)
Long-term debt		$	37,350			$	2,338			$	4,526			$	30,486			$	—
Operating lease obligations		$	17,082			$	5,731			$	9,693			$	1,098			$	560
Total contractual cash obligations		$	54,432			$	8,069			$	14,219			$	31,584			$	560

	Quantitative and Qualitative Disclosures about Market Risk

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	Overview

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	Results of Operations

	Quarter Ended October 2, 2005 Compared to Quarter Ended September 26, 2004

			(Unaudited)
			Quarter Ended
			September 26,				October 2,
			2004				2005
			($ in thousands)
Net sales			$	15,511			$	20,468
Cost of sales				11,316				15,490
	Gross profit			4,195				4,978
Selling, general and administrative expenses				2,509				2,441
Amortization expense				155				179
	Operating income			1,531				2,358
Interest expense				1,055				1,326
Equity in losses of investee				109				48
Other income				(121	)			(52	)
	Income before provision for income taxes			488				1,036
Provision for income taxes				141				392
	Net income		$	347			$	644

	Net sales

	Cost of sales

	Selling, general and administrative expenses

95

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	Amortization expense

	Operating income

	Interest expense

	Equity in losses of investee

	Other income

	Provision for income taxes

96

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	Net income

	Fiscal Year Ended June 30, 2005 Compared to Fiscal Year Ended June 30, 2004

			Fiscal Year Ended
			June 30,
			2004(1)				2005
			($ in thousands)
Net sales			$	63,626			$	70,060
Cost of sales				43,719				50,874
	Gross profit			19,907				19,186
Selling, general and administrative expenses				9,513				10,526
Amortization expense				328				629
	Operating income			10,066				8,031
Interest expense				1,990				4,638
Equity in (income) loss of investee				(56	)			241
Recapitalization and foregone offering costs				2,497				3,022
Other (income)				(600	)			(471	)
	Income before provision for income taxes			6,235				601
Provision for income taxes				2,287				112
	Net income		$	3,948			$	489

(1)	The results of the predecessor and successor companies were combined to facilitate this comparison for fiscal year ended June 30, 2004.

	Net sales

	Cost of sales

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	Selling, general and administrative expenses

	Amortization expense

	Operating income

	Interest expense

	Equity in (income) loss of investee

	Recapitalization and foregone offering costs

	Other (income)

	Provision for income taxes

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	Net income

	Fiscal Year Ended June 30, 2004 Compared to Fiscal Year Ended June 30, 2003

			Fiscal Year Ended
			June 30,
			2003				2004(1)
			($ in thousands)
Net sales			$	53,333			$	63,626
Cost of sales				37,382				43,719
	Gross profit			15,951				19,907
Selling, general and administrative expenses				8,749				9,513
Amortization expense				132				328
	Operating income			7,070				10,066
Interest expense				1,978				1,990
Equity in (income) of investee				(158	)			(56	)
Recapitalization and foregone offering costs				—				2,497
Other (income)				(266	)			(600	)
	Income before provision for income taxes			5,516				6,235
Provision for income taxes				2,122				2,287
	Net income		$	3,394			$	3,948

(1)	The results of the predecessor and successor companies were combined to facilitate this comparison for fiscal year ended June 30, 2004.

	Net sales

	Cost of sales

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	Selling, general and administrative expenses

	Amortization expense

	Operating income

	Interest expense

	Equity in (income) of investee

	Recapitalization and foregone offering costs

	Other (income)

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	Provision for income taxes

	Net income

	Liquidity and Capital Resources

	•	working capital will be financed by Crosman’s revolving credit facility as discussed below and repaid from subsequent reductions in current assets or from future earnings;
	•	capital expenditures will be financed from the revolving credit facility; and
	•	long-term debt will be refinanced with long-term debt with similar terms.

	Discussion of changes in cash flows for the quarter ended October 2, 2005 versus the quarter ended September 26, 2004

101

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	Discussion of changes in cash flows for the fiscal year ended June 30, 2005 versus the fiscal year ended June 30, 2004

102

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	Commitments and Contingencies

		Payments Due by Period
						Less than												More than
		Total				1 Year				1-3 Years				3-5 Years				5 Years
		($ in thousands)
Long-term debt		$	39,783			$	2,600			$	5,742			$	31,441			$	—
Revolving line of credit			9,074				—				9,074				—				—
Capital lease obligations			217				63				107				47				—
Operating lease obligations			199				53				110				36				—
Total contractual cash obligations		$	49,273			$	2,716			$	15,033			$	31,524			$	—

	Quantitative and Qualitative Discussion about Market Risk

	Overview

103

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	Results of Operations

	Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004

			(Unaudited)
			Nine Months Ended
			September 30,
			2004				2005
			($ in thousands)
Net sales			$	27,465			$	31,454
Cost of sales				13,548				14,133
	Gross profit			13,917				17,321
Selling, general and administrative expenses				4,663				5,629
	Operating income			9,254				11,692
Interest expense				(183	)			(325	)
Interest income				20				151
Other income				5				3
	Income before provision for income taxes			9,096				11,521
Provision for income taxes				—				225
	Net income		$	9,096			$	11,296

	Net sales

	Cost of sales

	Selling, general and administrative expenses

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	Income from operations

	Interest expense

	Interest income

	Provision for income taxes

	Net income

	Fiscal Year Ended December 31, 2004 Compared to Fiscal Year Ended December 31, 2003

			Fiscal Year Ended
			December 31,
			2003				2004
			($ in thousands)
Net sales			$	27,796			$	36,642
Cost of sales				14,568				17,867
	Gross profit			13,228				18,775
Selling, general and administrative expenses				5,521				6,564
	Operating income			7,707				12,211
Interest expense				(204	)			(242	)
Interest income				16				42
Other income				15				82
	Net income		$	7,534			$	12,093

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	Net sales

	Cost of sales

	Selling, general and administrative expenses

	Income from operations

	Interest expense

	Interest income

	Net income

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	Fiscal Year Ended December 31, 2003 Compared to Fiscal Year Ended December 31, 2002

			Fiscal Year Ended
			December 31,
			2002				2003
			($ in thousands)
Net sales			$	23,767			$	27,796
Cost of sales				12,759				14,568
	Gross profit			11,008				13,228
Selling, general and administrative expenses				5,032				5,521
	Operating income			5,976				7,707
Interest expense				(418	)			(204	)
Interest income				27				16
Other income (expense)				(198	)			15
	Net income		$	5,387			$	7,534

	Net sales

	Cost of sales

	Selling, general and administrative expenses

	Income from operations

	Interest expense

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	Net income

	Liquidity and Capital Resources

	•	working capital will be financed by Advanced Circuits line of credit facility as discussed below and repaid from subsequent reductions in current assets or from subsequent earnings;
	•	capital expenditures will be financed from the line of credit facility; and
	•	long-term debt will be refinanced with long-term debt with similar terms.

	Discussion of changes in cash flows for the nine months ended September 30, 2005 versus the nine month ended September 30, 2004

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	Discussion of changes in cash flows for the year ended December 31, 2004 versus the year ended December 31, 2003

	Commitments and Contingencies

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		Payments Due by Period
						Less than				1-3				3-5				More than
		Total				1 Year				Years				Years				5 Years
		($ in thousands)
Long-term debt(a)		$	50,500			$	3,750			$	9,250			$	11,500			$	26,000
Operating lease obligations			7,238				483				965				965				4,825
Total contractual cash obligations		$	57,738			$	4,233			$	10,215			$	12,465			$	30,825

(a)	Excludes line of credit payable of approximately $0.8 million which is classified within current liabilities.

	Quantitative and Qualitative Discussion about Market Risk

	Overview

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	Results of Operations

	Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004

				(Unaudited)
				Nine Months Ended
				September 30,
				2004				2005
				($ in thousands)
Net sales				$	11,859			$	15,819
Cost of sales					4,091				5,593
	Gross profit				7,768				10,226
Selling, general and administrative expenses					5,260				6,356
Research and development costs					500				838
	Operating income				2,008				3,032
Other income (expense):
	Interest income				6				—
	Other income				10				110
	Equity in net income of joint venture				183				70
	Interest expense				(106	)			(1,000	)
		Total other (expense) income			93				(820	)
Income before provision for income taxes					2,101				2,212
Provision for income taxes					(575	)			(695	)
Net income				$	1,526			$	1,517

	Net sales

	Cost of sales

	Selling, general and administrative expense

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	Research and development costs

	Operating income

	Other income

	Equity in net income of joint venture

	Interest expense

	Provision for income taxes

	Net income

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	Fiscal Year Ended December 31, 2004 Compared to Fiscal Year Ended December 31, 2003

				Fiscal Year Ended
				December 31,
				2003				2004
				($ in thousands)
Net sales				$	12,813			$	16,478
Cost of sales					4,194				5,571
	Gross profit				8,619				10,907
Selling, general and administrative expenses					6,103				7,196
Research and development costs					549				627
	Operating income				1,967				3,084
Other income (expense):
	Interest income				8				5
	Other income				—				41
	Equity in net income of joint venture				376				269
	Interest expense				(58	)			(389	)
		Total other (expense) income			326				(74	)
Income before provision for income taxes					2,293				3,010
Provision for income taxes					(576	)			(805	)
Net income				$	1,717			$	2,205

	Net sales

	Cost of sales

	Selling, general and administrative expenses

	Research and development costs

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	Operating income

	Equity in net income of joint venture

	Interest expense

	Provision for income taxes

	Net income

	Liquidity and Capital Resources

	•	working capital will be financed by Silvue’s line of credit facility as discussed below and repaid from subsequent reductions in current assets or from subsequent earnings;
	•	capital expenditures will be financed by the use of the equipment line of credit as described below or from the line of credit facility; and
	•	long-term debt will be refinanced with long-term debt with similar terms.

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	Discussion of changes in cash flows for the nine months ended September 30, 2005 versus the nine months ended September 30, 2004

	Discussion of changes in cash flows for the fiscal year ended December 31, 2004 versus the fiscal year ended December 31, 2003

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	Commitments and Contingencies

		Payments Due by Period
						Less than												More than
		Total				1 Year				1-3 Years				3-5 Years				5 Years
		($ in thousands)
Long-term debt(a)		$	14,343			$	1,369			$	5,221			$	7,752			$	—
Operating lease obligations		$	1,310			$	418			$	442			$	293			$	157
Total contractual cash obligations		$	15,653			$	1,787			$	5,663			$	8,046			$	157

(a) —	Includes borrowings under Silvue’s equipment line of credit.

	Quantitative and Qualitative Disclosures about Market Risk

	Currency Risk Exposure

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	Interest Rate Exposure

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	•	provide ongoing strategic and financial support for their businesses;
	•	maintain a long-term outlook as to the ownership of those businesses where such an outlook is required for maximization of our shareholders’ return on investment; and
	•	consummate transactions efficiently without being dependent on third-party financing on a transaction-by-transaction basis.

	•	CBS Personnel Holdings, Inc. and its consolidated subsidiaries, which we refer to as CBS Personnel, a human resources outsourcing firm;
	•	Crosman Acquisition Corporation and its consolidated subsidiaries, which we refer to as Crosman, a recreational products company;
	•	Compass AC Holdings, Inc. and its consolidated subsidiary, which we refer to as Advanced Circuits, an electronic components manufacturing company; and
	•	Silvue Technologies Group, Inc. and its consolidated subsidiaries, which we refer to as Silvue, a global hardcoatings company.

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	•	there are fewer potential acquirers for these businesses;
	•	third-party financing generally is less available for these acquisitions;
	•	sellers of these businesses frequently consider non-economic factors, such as continuing board membership or the effect of the sale on their employees; and
	•	these businesses are less frequently sold pursuant to an auction process.

	Management Strategy

	•	recruiting and retaining talented managers to operate our businesses by using structured incentive compensation programs, including minority equity ownership, tailored to each business;
	•	regularly monitoring financial and operational performance;
	•	instilling consistent financial discipline;
	•	assisting management in their analysis and pursuit of prudent organic growth strategies; and
	•	working with management to identify possible external growth strategies and acquisition opportunities.

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	•	making selective capital investments to expand geographic reach, increase capacity, or reduce manufacturing costs of our businesses;
	•	investing in product research and development for new products, processes or services for customers;
	•	improving and expanding existing sales and marketing programs;
	•	pursuing reductions in operating costs through improved operational efficiency or outsourcing of certain processes and products; and
	•	consolidating or improving management of certain overhead functions.

	•	leverage manufacturing and distribution operations;
	•	leverage branding and marketing programs, as well as customer relationships;
	•	add experienced management or management expertise;
	•	increase market share and penetrate new markets; and
	•	realize cost synergies by allocating the corporate overhead expenses of our businesses across a larger number of businesses and by implementing and coordinating improved management practices.

	Acquisition Strategy

	•	engage in a substantial level of internal and third-party due diligence;
	•	critically evaluate the management team;

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	•	identify and assess any financial and operational strengths and weaknesses of any target business;
	•	analyze comparable businesses to assess financial and operational performances relative to industry competitors;
	•	actively research and evaluate information on the relevant industry; and
	•	thoroughly negotiate appropriate terms and conditions of any acquisition.

	Strategic Advantages

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	Valuation and Due Diligence

	Financing

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	•	approximately 98.1% of CBS Personnel on a primary and approximately 95.6% on a fully diluted basis;
	•	approximately 75.4% of Crosman on a primary and fully diluted basis;
	•	approximately 85.7% of Advanced Circuits on a primary basis and approximately 73.2% on a fully diluted basis; and
	•	approximately 73.0% of Silvue on a primary and fully diluted basis, after giving effect to the conversion of preferred stock of Silvue that we will acquire.

	•	Approximately $70.2 million to CBS Personnel. The $70.2 million is comprised of approximately $64.0 million in term loans, approximately $31.2 million of which will be used to pay down third

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		party debt and approximately $32.8 million of which represents a capitalization loan and, therefore, considered part of the purchase price of equity interests in CBS Personnel, and an approximately $42.5 million revolving loan commitment, approximately $6.2 million of which will be funded to CBS Personnel in conjunction with the closing of this offering.
	•	Approximately $50.1 million to Crosman. The $50.1 million is comprised of approximately $47.8 million in term loans and an approximately $15.0 million revolving loan commitment, approximately $2.3 million of which will be funded to Crosman in conjunction with the closing of this offering.
	•	Approximately $51.3 million to Advanced Circuits. The $51.3 million is comprised of approximately $50.5 million in term loans and an approximately $4.0 million revolving loan commitment, approximately $0.8 million of which will be funded to Advanced Circuits in conjunction with the closing of this offering.
	•	Approximately $14.7 million to Silvue. The $14.7 million is comprised of approximately $14.3 million in term loans and an approximately $4.0 million revolving loan commitment, approximately $0.4 million of which will be funded to Silvue in conjunction with the closing of this offering.

	Overview

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	History of CBS Personnel

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	Industry

	Services

	•	providing excellent service to existing clients in a consistent and efficient manner;
	•	attempting to cross-sell additional service offerings to existing clients to increase revenue per client;
	•	engaging in targeted selling practices to prospective clients to expand the client base; and
	•	providing incentives to employees through well-balanced incentive and bonus plans to encourage increased sales per client and the establishment of new client relationships.

	•	temporary staffing services in categories such as light industrial, clerical, healthcare, construction, transportation, professional and technical staffing;
	•	employee leasing and related administrative services; and
	•	temporary-to-permanent and permanent placement services.

	Temporary Staffing Services

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	•	Light Industrial — The majority of CBS Personnel’s revenues are derived from the placement of low- to mid-skilled temporary workers in the light industrial category, which comprises primarily the distribution (“pick-and-pack”) and light manufacturing (such as assembly-line work in factories) sectors of the economy. Approximately 45% of CBS Personnel’s temporary staffing revenues were derived from light industrial for the nine months ended September 30, 2005 and the fiscal year ended December 31, 2004.
	•	Clerical — CBS Personnel provides clerical workers that have been screened, reference-checked and tested for computer ability, typing speed, word processing and data entry capabilities. Clerical workers are often employed at client call centers and corporate offices. Approximately 41% of CBS Personnel’s temporary staffing revenues were derived from clerical for the nine months ended September 30, 2005 and the fiscal year ended December 31, 2004.
	•	Technical — CBS Personnel provides placement candidates in a variety of skilled technical capacities, including plant managers, engineering management, operations managers, designers, draftsmen, engineers, materials management, line supervisors, electronic assemblers, laboratory assistants and quality control personnel. Approximately 4% of CBS Personnel’s temporary staffing revenues were derived from technical for the nine months ended September 30, 2005 and the fiscal year ended December 31, 2004.
	•	Healthcare — Through its expert placement agents in its Columbia Healthcare division, CBS Personnel provides trained candidates in the following healthcare categories: medical office personnel, medical technicians, rehabilitation professionals, management and administrative personnel and radiology technicians, among others. Approximately 2% of CBS Personnel’s temporary staffing revenues were derived from healthcare for the nine months ended September 30, 2005 and the fiscal year ended December 31, 2004.
	•	Niche/ Other — In addition to the light industrial, clerical, healthcare and technical categories, CBS Personnel also provides certain niche staffing services, placing candidates in the skilled industrial, construction and transportation sectors, among others. CBS Personnel’s wide array of niche service offerings allows the company to meet a broad range of client needs. Moreover, these niche services typically generate higher margins for the CBS Personnel. Approximately 8% of CBS Personnel’s temporary staffing revenues were derived from niche/other for the nine months ended September 30, 2005 and the fiscal year ended December 31, 2004.

	Employee Leasing Services

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	Temporary-to-Permanent and Permanent Staffing Services

	Competitive Strengths

	•	Large employee database/customer list — Through its long tenure and dense operating model, CBS Personnel has built a leading presence in its markets in terms of both clients and employees. CBS Personnel is successful in recruiting additional employees because of its reputation as having numerous job openings with a wide variety of clients. Feeding off of its strong employee database, CBS Personnel attracts clients through its reputation as having a strong database of reliable employees with a wide ranging skill set. CBS Personnel’s strength in its employee database and client list has been built over a number of years in each of its markets and serves as a major competitive strength in most of its markets.
	•	Higher operating margins — By creating a dense network of offices, CBS Personnel is able to better leverage its selling, general and administrative expenses at the regional and field level and create higher operating income margins than its less dense competitors.
	•	Scalable business model — By having multiple office locations in each of its markets, CBS Personnel is able to quickly scale its business model in both good and bad economic environments. For example, in 2001 and 2002, CBS Personnel was able to close offices and reduce overhead expenses while shifting business to adjacent offices. For competitors with only one office per market, closing an office requires abandoning the clients and employees in that market. During 2001 and 2002, CBS Personnel was able to reduce its overhead costs by approximately 13% while maintaining its dominant presence in each of its markets and retaining its clients and employees.

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	•	Marketing synergies — By having a number of offices in each of its markets, CBS Personnel allocates additional resources to marketing and selling and amortizes those costs over a larger office network. For example, while many of its competitors use selling branch managers who split time between operations and sales, CBS Personnel uses outside sales reps that are exclusively focused on bringing in new sales.

	Business Strategies

	•	Leverage its position in its existing markets — In many of its existing markets, CBS Personnel has a leading market share with multiple branch locations. CBS Personnel plans on capitalizing on its market position by continuing to invest heavily in sales and marketing in order to increase market share. With its leading database of clients and candidates in its markets, CBS Personnel offers high margin complimentary services such as full time recruiting, consulting, and administrative outsourcing. CBS Personnel has implemented an incentive plan that highly rewards cross-selling of high margin services into its existing customer base in order to increase its profitability per client.
	•	Build a presence in contiguous markets — Under each of its brand names, CBS Personnel has built a strong reputation over a number of years in its markets. To capitalize on its strong brand recognition, CBS Personnel plans to expand its office network in contiguous markets by opening new offices. CBS Personnel’s strong brand awareness in its existing markets provides a platform to launch into contiguous markets and leverage off of CBS Personnel’s brand recognition.
	•	Pursue selective acquisitions — As with the most recent acquisition of VSP, CBS Personnel plans on selectively acquiring other leading staffing providers. CBS Personnel views acquisitions as an attractive means to enter into a new geographical market. In evaluating acquisition targets, CBS Personnel looks for characteristics that are similar to its own, such as longevity and density. In some cases, CBS Personnel will also look at acquiring within its existing markets to add to its market position.

	Clients

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	Competition

	•	a high density of offices in its core markets;
	•	long-standing relationships with its clients;
	•	a strong database of qualified temporary workers which enables CBS Personnel to fill orders rapidly;
	•	well-recognized brands and leadership positions in its core markets; and
	•	a reputation for treating employees well and offering competitive benefits.

	Tradenames

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	Facilities

		Number of				Employee
State		Branch Offices				Hours Billed
						(In thousands)
Ohio			26				7,166
California			20				2,947
Kentucky			14				3,263
Texas			13				3,465
South Carolina			12				1,956
North Carolina			9				1,384
Illinois			8				807
Indiana			7				1,661
Pennsylvania			6				719
Massachusetts			5				344
Georgia			4				456
Virginia			3				830
New York			2				567
Alabama			2				294
New Jersey			2				123
Washington			1				100
Florida			1				89
Rhode Island			1				46

	Regulatory Environment

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	Workers’ Compensation Program

	Legal Proceedings

	Capital Structure

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	Employees

	Overview

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	History of Crosman

	Industry

	Recreational Airgun Market

	•	Broad Distribution — Mass retailers have become the primary distribution channel for recreational airguns, airgun accessories and related products because of the high margin and high turnover attributes of such products. Continued mass retailer participation in the recreational airgun market should continue to broaden the audience of potential consumers.
	•	Increasing Popularity of Recreational Airguns — The popularity of activities involving recreational airguns, such as target shooting, has increased according to the SGMA, and management believes it will continue to grow. This has resulted in increased participation in such activities, which has resulted in increased sales, partly due to the mini-baby boom of the early 1990s, which is expected to drive up sales in the next decade. Management of Crosman believes that sales of recreational airguns, and in particular soft air guns, should continue to grow as participation in activities involving recreational airguns increases.
	•	Increased Level of Regulations on Firearms — As laws concerning the purchase and use of firearms become more stringent, management of Crosman believes that sales of airguns, particularly

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		in the high-end sector, should continue to increase because of the similar nature to firearms and the less restrictive regulatory environment concerning the purchase and use of airguns.

	Paintball Market

	•	Broad Distribution — Paintball products are currently sold in over 3,500 retail outlets in the United States, generally through specialty retailers and some mass retailers. Management believes that the number of mass retailers that carry paintball products in the future may increase and that such broadened distribution channels for paintball products would increase the audience of potential consumers.
	•	Increasing Availability of Paintball Facilities — The number of paintball facilities have increased as the sport has become more popular. Paintball facilities are being designed to fit into small areas, such as existing family amusement centers, and facility owners are upgrading and constructing facilities that cater to beginners. Crosman believes that as the number of paintball facilities grows, the audience of potential consumers increases as well.
	•	Increasing Visibility — Public awareness of paintball is increasing through an expanding base of publications, web sites and increased media coverage. There are also professional paintball leagues, such as the National X-Ball League, whose tournaments have been featured on ESPN.
	•	Popularity Among Youth — Young people are attracted to the unique attributes of paintball, its physical competition, perceived “alternative” culture and team-oriented focus.

	Products

	Recreational Airgun Products

	•	Air Rifles — Crosman offers 14 air rifle product families with typical retail prices ranging from $30 to $150, with high-end models retailing for prices up to $800. Crosman markets its air rifles under the following brands: Crosmantm, Benjamin Sheridantm, and, through licensing agreements,

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		Loguntm, Remingtontm and Walthertm. For the fiscal year ended June 30, 2005, air rifles accounted for approximately $24.1 million, or 34%, of Crosman’s net sales. For the quarter ended September 26, 2004 and the quarter ended October 2, 2005, air rifles accounted for approximately $5.3 million, or 34%, and $5.9 million, or 29% of net sales, respectively.
	•	Air Pistols — Crosman markets 14 air pistol product families with average retail prices ranging from $20 to $100. Crosman markets its air pistols under the following brands: Crosmantm and, through licensing agreements, Berettatm, Colt tm, Smith & Wessontm, and Walthertm. For the fiscal year ended June 30, 2005, air pistols accounted for approximately $11.8 million, or 17%, of Crosman’s net sales. For the quarter ended September 26, 2004 and the quarter ended October 2, 2005, air pistols accounted for approximately $3.0 million, or 19%, and $3.3 million, or 16% of net sales, respectively.
	•	Soft Air Airguns — Soft air airguns fire plastic BBs at low velocities. Crosman began selling soft air airguns in May 2002. Crosman markets its soft air airguns under the Crosman Soft Airtm brand. For the fiscal year ended June 30, 2005, Soft Air accounted for approximately $15.6 million, or 22%, of Crosman’s net sales. For the quarter ended September 26, 2004 and the quarter ended October 2, 2005, Soft Air accounted for approximately $2.9 million, or 18%, and $7.2 million, or 35% of net sales, respectively.
	•	Consumables — Crosman is a leading manufacturer of airgun consumables, including CO2 cartridges and ammunition (BBs and pellets). Crosman markets its consumables under the Crosmantm and Copperhead tm brands and markets its CO2 cartridges product families under the Powerletstm and AirSourcetm brands. For the fiscal year ended June 30, 2005, consumables accounted for approximately $16.9 million, or 24%, of Crosman’s net sales. For the quarter ended September 26, 2004 and the quarter ended October 2, 2005, consumables accounted for approximately $3.9 million, or 25%, and $3.7 million, or 18% of net sales, respectively.
	•	Accessories and Other Products — Crosman also offers a variety of miscellaneous recreational airgun accessories, such as scopes, laser sights and targets, as well as other products such as slingshots. Crosman markets its products in this category under the Crosmantm brand. For the fiscal year ended June 30, 2005, accessories and other products accounted for approximately $1.6 million, or 2%, of Crosman’s net sales. For the quarter ended September 26, 2004 and the quarter ended October 2, 2005, accessories and other products accounted for approximately $0.5 million, or 3%, and $0.3 million, or 2% of net sales, respectively.

	Paintball Products

	•	Markers — GFP designs, markets and distributes five paintball marker product families with average retail prices ranging from $100 to $190. In 2004, GFP introduced a family of high-end markers with retail prices ranging from $500 to $800. GFP also offers the only ready-to-play paintball kit on the market, complete with marker and pre-filled CO2 cartridges. GFP markets its marker products under the Game Facetm brand. For the fiscal year ended June 30, 2005, markers accounted for approximately $2.5 million, or 18%, of GFP’s net sales. For the quarter ended September 26, 2004 and the quarter ended October 2, 2005, markers accounted for approximately $0.7 million, or 28%, and $0.5 million, or 22% of GFP’s net sales, respectively.

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	•	Accessories and Related Products — GFP offers paintball accessories and related products, including paint, disposable CO2 tanks, facemasks, protective gear and marker components, such as ammunition hoppers, gloves and protective vests. GFP markets its paintball accessories and related products under the Game Facetm brand. For the fiscal year ended June 30, 2005, accessories and related products accounted for approximately $11.1 million, or 82%, of GFP’s net sales. For the quarter ended September 26, 2004 and the quarter ended October 2, 2005, accessories and related products accounted for approximately $1.7 million, or 72%, and $1.9 million, or 78% of GFP’s net sales, respectively.

	Competitive Strengths

	•	Leading Market Position — Management believes Crosman has achieved a leading position in the design, manufacturing and distribution of recreational airgun products by investing the necessary resources to establish its strong brands, broad product offering, efficient manufacturing capabilities, excellent sourcing and distribution relationships and by assembling a strong management team. It currently has an approximately 40% share of the United States recreational airgun market which it expects will allow it to further penetrate the paintball market and introduce new products in the recreational airgun market.
	•	Strong Brand Portfolio — Crosman owns one of the pre-eminent brand portfolios in the recreational airgun market and is widely recognized in the broader outdoor sporting goods industries. Crosman’s recreational airgun products are recognized for their quality features and craftsmanship. The strength of Crosman’s brands portfolio has positioned it as a source for a broad variety of recreational airgun and paintball products and should enable it to capture additional market share.
	•	Established, Long Term Relationships with Leading Retailers — Crosman has served two of its top retailers, Wal-Mart and Kmart, for over 25 years and its top ten retailers for an average of 14 years. Crosman invests in its retailer relationships by working closely with retailers in an effort to increase their sales and margins, manage inventory levels and provide superior service to the consumer. Such dedication to relations with their retailers contributes to Crosman’s strong and long-term relationships with its leading retailers.
	•	High Margin Product Focus — Crosman’s focus on products in the mid- to high-end of the retail price spectrum combined with its low-cost manufacturing capabilities generate higher margins for Crosman and its retailers. We believe that such a focus permits Crosman and its retailers to earn greater margins as compared to major competitors’ lower-priced products.
	•	Dedication to High Product Quality Standards — Crosman closely monitors the quality of its manufacturing process, beginning by routinely verifying the quality of its raw material used in the manufacturing process. In addition, each component is inspected on the assembly line prior to assembly of the final product. After production, each product is tested and undergoes a final inspection prior to packaging. Such attentive detail to quality has resulted in Crosman experiencing an approximately 1% defect rate with respect to its recreational air guns.
	•	Proven Product Development Capability — Since 2001, under Crosman’s current management team, Crosman became dedicated to bringing innovative new products to market. For example, since 2001, Crosman has introduced several new products including the 88-gram AirSourcetm CO2 cartridges, the Benjamin Sheridantm and Crosmantm break-barrel spring air rifles, an innovative blow-back semi-automatic air rifle, and soft air airguns marketed under the Crosman Soft Airtm brand name. GFP also introduced a new 88-gram AirSourcetm disposable CO2 tank in January

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		2003. Crosman’s strength in developing new products is demonstrated by net sales of new products introduced since 2001 of approximately $33.6 million, or 48%, for fiscal year ended June 30, 2005.
	•	Experienced Management Team — Crosman’s senior management, collectively, has approximately 77 years of experience in the recreational products industry and closely related industries. Since 2001, the current management team has effected significant improvements in Crosman’s financial performance by focusing on developing new products, leveraging distribution channels to improve market penetration, improving operational efficiencies and expanding and refining supplier networks.

	Business Strategies

	•	Driving Organic Growth — Crosman’s management believes that Crosman can leverage its competitive strengths to increase sales of its current products and introduce new products to capitalize on the expected growth in the recreational airgun and paintball markets. Management believes that Crosman can continue to increase its sales by maintaining and building upon its strong relationships with its retailers to more aggressively promote its products and to introduce and promote new products.
	•	Maintaining Focus on Cost Control and Operating Efficiency — In an effort to achieve further sustainable margin improvements, Crosman plans to maintain its focus on cost control by continuing to improve its manufacturing efficiency and to refine its supplier network. Crosman’s budgeting process allows it to measure departmental spending against budgets each month and to compensate supervisors based partially on their ability to spend at or below budgeted levels. Crosman also has a capital expenditure approval process in which projects must meet return on investment and payback period guidelines before capital projects may be initiated.
	•	Pursuing Complementary Acquisitions — Crosman intends to pursue strategic acquisition opportunities that will allow it to leverage its competitive strengths to increase sales or improve margins. Such opportunities may include the acquisition of products or recognized brands to broaden or deepen Crosman’s product portfolio as well as the acquisition of suppliers to reduce the costs of its finished goods. Crosman’s management intends to make acquisitions only to the extent it believes such acquisitions will be accretive to its cash flow.

	Research and Development

	Customers

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	Sales and Marketing

	Competition

	Recreational Airgun Market

	Paintball Products

	Suppliers

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	Intellectual Property

	Facilities

	Regulatory Environment

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	Legal Proceedings

	Capital Structure

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	Employees

	Overview

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	History of Advanced Circuits

	Industry

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	•	Prototype PCBs — These PCBs are manufactured typically for customers in research and development departments of original equipment manufacturers, or OEMs, and academic institutions. Prototype PCBs are manufactured to the specifications of the customer, within certain manufacturing guidelines designed to increase speed and reduce production costs. Prototyping is a critical stage in the research and development of new products. These prototypes are used in the design of new electronic equipment and are typically ordered in volumes of 1 to 50 PCBs. Because the prototype is used primarily in the research and development phase of a new electronic product, accelerated delivery time frames and very high, error-free quality are required. Order, production and delivery time, as well as responsiveness with respect to each, are key factors for customers as PCBs are indispensable to their research and development activities.
	•	Quick-Turn Production PCBs — These PCBs are used for intermediate stages of testing for new products prior to full scale production. After a new product has successfully completed the prototype phase, customers undergo test marketing and other technical testing. This stage requires production of larger quantities of PCBs in a short period of time, while it does not yet require high production volumes. This transition stage between low-volume prototype production and volume production is known as quick-turn production. Manufacturing specifications conform strictly to end product requirements and order quantities are typically in volumes of 10 to 500. Similar to prototype PCBs, response time remains crucial as the delivery of quick-turn PCBs can be a gating item in the development of electronic products. Orders for quick-turn production PCBs conform specifically to the customer’s exact end product requirements.
	•	Volume Production PCBs — These PCBs are used in the full scale production of electronic equipment and specifications conform strictly to end product requirements. Production PCBs are ordered in large quantities and response time is less important.

	•	Increasing customer demand for quick-turn production solutions — Rapid advances in technology are significantly shortening product life-cycles and placing increased pressure on OEMs to develop new products in shorter periods of time. In response to these pressures, OEMs invest heavily on research and development, which results in a demand for PCB companies that can offer engineering support and quick-turn production services to minimize the product development process.
	•	Increasing complexity of electronic equipment — OEMs are continually designing more complex and higher performance electronic equipment, requiring sophisticated PCBs. To satisfy the demand for more advanced electronic products PCBs are produced using exotic materials and increasingly have higher layer counts and greater component densities. Maintaining the production infrastructure necessary to manufacture PCBs of increasing complexity often requires significant capital expenditures and has acted to reduce the competitiveness of local and regional PCB manufacturers lacking the scale to make such investments.
	•	Shifting of high volume production to Asia — Asian based manufacturers of PCBs are capitalizing on their lower labor costs and are increasing their market share of volume production of PCBs used, for example, in high-volume consumer electronics applications, such as personal computers and cell phones. Asian based manufacturers have been generally unable to meet the lead time requirements for prototype or quick-turn PCB production or the volume production of the most complex PCBs. This “offshoring” of high-volume production orders has placed increased pricing pressure and margin compression on many small domestic manufacturers that are no longer

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		operating at full capacity. Many of these small producers are choosing to cease operations, rather than operate at a loss, as their scale, plant design and customer relationships do not allow them to focus profitably on the prototype and quick-turn sectors of the market.

	Products and Services

	•	Prototype PCBs — Advanced Circuits manufactures PCBs from specifications provided generally by electronics product engineers who work within research and development departments and academic engineering departments. Because these prototypes are for design testing and launch phase of a new product, the life cycle is generally short. Orders for prototype PCBs are typically required to conform to Advanced Circuits’ specifications, allowing Advanced Circuits to combine numerous low-volume orders into a single, 18” by 24” panel design, increasing production

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		efficiencies. Prototype PCBs are typically ordered in quantities of less than 50 units and have delivery requirements of under five days.
	•	Quick-turn Production PCBs — Advanced Circuits’ quick-turn production PCBs are typically used by customers to produce a small number of end products prior to full production or to spot fill for shortfalls in production inventory. Quick-turn production PCBs are typically ordered in quantities of 10 to 500 units, and as response time remains critical, delivery requirements are generally 10 days or less.
	•	Volume Production PCBs — Advanced Circuits also manufactures standard long lead-time, volume production PCBs, designed to be used as components in certain customers’ volume manufacturing runs. These PCBs are typically ordered in quantities of over 100 units and customers place far less emphasis on response time, with response times ranging between 15 days to 10 weeks or more.

		Fiscal Year Ended				Fiscal Year Ended				Nine Months Ended
		December 31, 2003				December 31, 2004				September 30, 2005
Prototype Production			41.8%				36.2%				34.0%
Quick-Turn Production			27.7%				29.6%				31.9%
Volume Production			17.0%				19.0%				19.8%
Third Party			13.5%				15.2%				14.3%
Total			100.0%				100.0%				100.0%

(1)	As a percentage of gross sales, exclusive of sale discounts.

	Competitive Strengths

	•	Numerous unique orders per day — For the year ended December 31, 2004, Advanced Circuits received an average of over 260 customer orders per day. Due to the large quantity of orders received, Advanced Circuits is able to combine multiple orders in a single panel design prior to production. Through this process, Advanced Circuits is able to significantly reduce the number of costly, labor intensive equipment set-ups required to complete several manufacturing orders. As labor represents the single largest cost of production, management believes this capability gives Advanced Circuits a unique advantage over other industry participants. Advanced Circuits maintains proprietary software to maximize the number of units placed on any one panel design. A single panel set-up typically accommodates 1 to 12 orders. Further, as a “critical mass” of like orders are required to maximize the efficiency of this process, management believes Advanced Circuits is uniquely positioned as a low cost manufacturer of prototype and quick-turn PCBs.

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	•	Diverse customer base — Advanced Circuits possesses a customer base with little industry or customer concentration exposure. Each month during fiscal year ended December 31, 2004, Advanced Circuits did business with approximately 3,500 customers and added over 200 new customers. Advanced Circuits’ website receives thousands of hits per day and, each month, it receives approximately 600 requests to establish new web accounts. For the nine months ended September 30, 2005, no customer represented over 2% of net revenue.
	•	Highly responsive culture and organization — A key strength of Advanced Circuits is its ability to quickly respond to customer orders and complete the production process. In contrast to many competitors that require a day or more to offer price quotes on prototype or quick-turn production, Advanced Circuits offers its customers quotes within seconds and the ability to place or track orders any time of day. In addition, Advanced Circuits’ production facility operates three shifts per day and is able to ship a customer’s product within 24 hours of receiving its order.
	•	Proprietary FreeDFM.com software — Advanced Circuits offers its customers unique design verification services through its online FreeDFM.com tool. This tool, which was launched in 2002, enables customers to receive a free manufacturability assessment report, within minutes, resolving design problems before customers place their orders. The service is relied upon by many of Advanced Circuits’ customers to reduce design errors and minimize production costs. Beyond improved customer service, FreeDFM.com has the added benefit of improving the efficiency of Advanced Circuits’ engineers, as many routine design problems, which typically require an engineer’s time and attention to identify, are identified and sent back to customers automatically.
	•	Established partner network — Advanced Circuits has established third-party production relationships with PCB manufacturers in North America and Asia. Through these relationships, Advanced Circuits is able offer its customers a full suite of products including those outside of its core production capabilities. Additionally, these relationships allow Advanced Circuits to outsource production of longer lead time orders and focus internal capacity on higher margin, short lead time, production and quick-turn manufacturing.

	Business Strategies

	•	Increase portion of revenue from prototype and quick-turn production — Advanced Circuits’ management believes it can grow revenues and cash flow by continuing to leverage its core prototype and quick-turn capabilities. Over its history, Advanced Circuits has developed a suite of capabilities that management believes allow it to offer a combination of price and customer service unequaled in the market. Advanced Circuits intends to leverage this factor, as well as its core skill set, to increase net sales derived from higher margin prototype and quick-turn production PCBs. In this respect, marketing and advertising efforts focus on attracting and acquiring customers that are likely to require these premium services. And while production composition may shift, growth in these products and services is not expected to come at the cost of declining sales in volume production PCBs as Advanced Circuits intends to leverage its extensive network of third-party manufacturing partners to continue to meet customers’ demand for these services.
	•	Acquire customers from local and regional competitors — Advanced Circuits’ management believes the majority of its competition for prototype and quick-turn PCB orders comes from smaller scale local and regional PCB manufacturers. As an early mover in the prototype and quick-turn sector of the PCB market, Advanced Circuits has been able to grow faster and achieve greater production efficiencies than many industry participants. Management believes Advanced Circuits can continue to use these advantages to gain market share. Further, Advanced Circuits has begun to enter prototype and quick-turn manufacturing relationships with several subscale local and regional PCB manufacturers. According to Fabfile online, in 2004 there were over 400 small PCB manufacturers with annual sales of under $10 million. Management believes that while many of these

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		manufacturers maintain strong, longstanding customer relationships, they are unable to produce PCBs with short lead times at competitive prices. As a result, Advanced Circuits is beginning to seize upon a significant opportunity for growth by providing production support to these manufacturers or direct support to the customers of these manufacturers, whereby the manufacturers act more as a broker for the relationship.
	•	Remain committed to customers and employees — Over its history, Advanced Circuits has remained focused on providing the highest quality product and service to its customers. This focus has resulted in an on time delivery and quality record that is unequalled in the industry. Advanced Circuits’ management believes this reputation is a key competitive differentiator and is focused on maintaining and building upon it. Similarly, management believes its committed base of employees is a key differentiating factor. Advanced Circuits currently has a profit sharing program and tri-annual bonuses for all of its employees. Management also occasionally sets additional performance targets for individuals and departments and establishes rewards, such as lunch celebrations or paid vacations, if these goals are met. Management believes that Advanced Circuits’ emphasis on sharing rewards and creating a positive work environment has led to increased loyalty. As a result, Advanced Circuits plans on continuing to focus on similar programs to maintain this competitive advantage.

	Research and Development

	Customers

		2004 Customer
Industry		Distribution
Electrical Equipment and Components			35%
Measuring Instruments			20%
Engineer Services			9%
Industrial and Commercial Machinery			5%
Business Services			5%
Wholesale Trade-Durable Goods			4%
Educational Institutions			3%
Transportation Equipment			2%
Other			17%
Total			100%

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	Sales and Marketing

	Competition

	Suppliers

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	Intellectual Property

	Facilities

	Regulatory Environment

	Legal Proceedings

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	Capital Structure

	Employees

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	Overview

	History of Silvue

	Industry

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	Products

	•	Abrasion resistance;
	•	Chemical resistance;
	•	Impact resistance;

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	•	Weatherability;
	•	Optical clarity;
	•	UV protection;
	•	Anti-fog properties;
	•	Anti-static properties; and
	•	“Non-stick” (or surface release) properties.

	•	Silvue and CrystalCoat — these products are either non-tintable or tintable and impart index matching and anti-fogging properties;
	•	Statux — this product imparts anti-static properties; and
	•	Resinrelease — this product imparts “non-stick” or surface release properties.

	•	Automotive — CrystalCoat coatings are used on a variety of automotive and transit applications, including instrument panel windows, bus shelters, rail car windows, and bus windows. These coatings are used primarily to impart long-term durability, chemical resistance and scratch and abrasion resistance properties.
	•	Electronics — CrystalCoat coatings are used for electronic application surfaces, from liquid crystal displays to cell phone windows. These coatings are used primarily to impart scratch and abrasion resistance properties.
	•	Optical — CrystalCoat coatings are used for vision corrective lenses and other optical applications. These coatings are used primarily to impart high scratch and abrasion resistance properties and UV protection and refractive index matching. Silvue produces both tintable and non-tintable coatings.
	•	Safety — CrystalCoat coatings are used for safety applications. These coatings are used primarily to impart anti-fog characteristics. Silvue offers a high performance “water sheeting” anti-fog coating that is specifically designed to meet a customer’s specific standards and testing requirements.
	•	Sunglasses and Sports Eyewear — CrystalCoat coatings are used for sunglasses and sports eyewear. These coatings are used primarily to impart scratch and abrasion resistance properties, UV protection and anti-fog characteristics. CrystalCoat coatings can be used on tinted or clear materials.

	Research and Development and Technical Services

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	•	improving existing products and processes to lower costs, improving product quality, and reducing potential environmental impact;
	•	developing new product platforms and processes; and
	•	developing new product lines and markets through applications research.

	•	application engineering and process support;
	•	equipment and process design;
	•	product and formulation development and customization;
	•	test protocols and coating qualifications;
	•	rapid response for customer technical support;
	•	analytical testing and competitive product assessment;
	•	quality assurance testing and reporting; and
	•	manufacturing support.

	Competitive Strengths

	•	Extensive patent portfolio — Silvue owns 11 patents relating to its coating systems, including six patents relating to its core Ultra-Coat platform systems. Beyond its existing patents, Silvue has three patents pending and two provisional patents. Products related to these patents represent approximately 66% of Silvue’s net sales and are relied upon by leading eyewear manufacturers worldwide. Silvue aggressively defends these patents and management believes they represent a significant barrier to entry for new products and that they reduce the threat of similar coating products gaining significant market share.
	•	Superior Technical Skills and Expertise — Silvue has invested in a team of experts who are ready to support its customers’ specific application needs from new product uses to the optimization of part design for coating application.
	•	Reputation for Quality and Service — Silvue’s on-going commitment to producing quality coatings and its ability to meet the rigorous requirements of its most valued customers has earned it a reputation as a leading provider of coatings for premium eyewear.
	•	Global Presence — Silvue works with its customers from three offices in North America, Asia and Europe. Many of Silvue’s customers have numerous manufacturing operations globally and management believes its ability to offer its coating systems and related customer service on a global basis is a competitive advantage.

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	•	ISO 9002 Certified — Silvue’s Anaheim, California, and Chiba, Japan manufacturing facilities are ISO 9002 certified, which is a universally accepted quality assurance designation indicating the highest quality manufacturing standards.
	•	Experienced Management Team — Silvue’s senior management has extensive experience in all aspects of the coating industry. The senior management team, collectively, have approximately 80 years of experience in the global hardcoatings and closely related industries.

	Business Strategies

	•	Develop New Products and Expand into New Markets — Silvue’s management believes that Silvue is a leading developer of proprietary high performance coating systems for polycarbonate plastic, glass, acrylic, metals and other materials, and is focused on growth through continued product innovation to provide greater functionality or better value to its customers. Driven by input from customers and the demands of the marketplace, Silvue’s technology development programs are designed to provide an expanding choice of coating systems to protect and enhance existing materials and materials developed in the future. As an example of Silvue’s commitment to product innovation, in 2002, Silvue created a new group with primary focus on the discovery of new technologies and sciences, and the innovation of those findings into useful applications and beneficial results. This group, which is known as the “Discovery and Innovation Group,” is charged with exploring new coatings and coating applications while advancing the state-of-the-art in functional surface coating technologies, nanotechnologies and materials science.
	•	Pursue Opportunities for Business Development and Global Diversification — Silvue recently had in place and continues to pursue opportunities for joint ventures, equity investments and other alliances. These strategic initiatives are expected to diversify and strengthen Silvue’s business by providing access to new markets and high-growth areas as well as providing an efficient means of ensuring that Silvue is involved in technological innovation in or related to the coating systems industry. Silvue is committed to pursuing these initiatives in order to capitalize on new business development and global diversification opportunities.
	•	Improve Gross Margins — Silvue continues to work to maximize the value of its business by improving gross margins by (i) enhancing pricing processes and pricing strategies, and implementing pricing systems to improve responsiveness to increases in operating costs and other factors impacting gross margins; (ii) focusing on more profitable products and business lines to maximize earnings potential of product mix; and (iii) completing cost reduction programs while improving customer satisfaction, and improving efficiency through reduction of variations and defects.

	Customers

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		2004 Customer
Industry		Distribution
Performance eyewear and sunglasses			70%
Automotive			10%
Plastic Sheet			10%
Specialty Applications			5%
Metal Applications			5%
Total			100%

	Sales and Marketing

	Competition

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	Suppliers

	Intellectual Property

	Facilities

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	Regulatory Environment

	Legal Proceedings

	Capital Structure

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	Employees

	Discontinued Operations

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Directors and Named Executive Officers		Age				Position
C. Sean Day(3)			56			Chairman of the Board
I. Joseph Massoud(4)			37			Chief Executive Officer and Director
James J. Bottiglieri(2)			49			Chief Financial Officer and Director
Harold S. Edwards(1)(5)(6)(9)			40			Director
D. Eugene Ewing(3)(5)(6)(8)(9)			57			Director
Mark H. Lazarus(1)(6)(7)(9)			42			Director
Ted Waitman(2)(5)(7)(9)			56			Director

(1)	Class I director.
(2)	Class II director.
(3)	Class III director.
(4)	Manager’s appointed director.
(5)	Member of the company’s audit committee.
(6)	Member of the company’s compensation committee.
(7)	Member of the company’s nominating and corporate governance committee.
(8)	Audit committee financial expert.
(9)	Independent director.

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	Audit Committee

	•	retaining and overseeing our independent accountants;
	•	assisting the company’s board of directors in its oversight of the integrity of our financial statements, the qualifications, independence and performance of our independent auditors and our compliance with legal and regulatory requirements;
	•	reviewing and approving the plan and scope of the internal and external audit of our financial statements;
	•	pre-approving any audit and non-audit services provided by our independent auditors;
	•	approving the fees to be paid to our independent auditors;
	•	reviewing with our Chief Executive Officer and Chief Financial Officer and independent auditors the adequacy and effectiveness of our internal controls;
	•	preparing the audit committee report included in our proxy statement that is to be filed with the SEC; and
	•	reviewing and assessing annually the audit committee’s performance and the adequacy of its charter.

	Compensation Committee

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	Nominating and Corporate Governance Committee

	•	recommending the number of directors to comprise the company’s board of directors;
	•	identifying and evaluating individuals qualified to become members of the company’s board of directors, other than our manager’s appointed director;
	•	reviewing director nominees that are nominated by shareholders;
	•	reviewing conflicts of interest that may arise between the company and our manager;
	•	recommending to the company’s board the director nominees for each annual shareholders’ meeting, other than our manager’s appointed director;
	•	recommending to the company’s board of directors the candidates for filling vacancies that may occur between annual shareholders’ meetings, other than our manager’s appointed director;
	•	reviewing director compensation and processes, self-evaluations and policies;
	•	overseeing compliance with our code of ethics and conduct by our officers and directors and our manager;
	•	monitoring developments in the law and practice of corporate governance; and
	•	approving any related party transactions.

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																			Long-Term
																			Compensation
							Annual Compensation												Number of
																			Securities
															Other Annual				Underlying				All Other
Name and Principal Position			Year				Salary				Bonus				Compensation				Options				Compensation
I. Joseph Massoud				11/30/2005				—(1	)			—(1	)			—(1	)			—(1	)			—(1	)
	Chief Executive Officer
James J. Bottiglieri				11/30/2005			$	11,595 (2	)			—(2	)			—(2	)			—(2	)			—(2	)
	Chief Financial Officer

(1)	Mr. I. Joseph Massoud, our Chief Executive Officer, is seconded to us by our manager and does not receive compensation directly from us. We pay our manager a quarterly management fee, and the manager uses the proceeds from the management fee,

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	in part, to pay compensation to Mr. Massoud. Therefore, no compensation information for Mr. Massoud is provided in the above compensation table.
(2)	Projected amount reflecting compensation for our Chief Financial Officer from the period from November 18, 2005 through November 30, 2005. See section entitled “— Employment Agreement” below.

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	•	The management services agreement relating to the services our manager will perform for us and the businesses we own, which we refer to as our businesses in this section; and
	•	The company’s LLC agreement relating to our manager’s rights with respect to the management interests it owns.

	•	A business’ contribution-based profit, which will be equal to a business’ aggregate contribution to the company’s cash flow during the period a business is owned by the company; and
	•	The company’s cumulative gains and losses to date.

	•	No profit allocation will be paid in the event that the company’s profits do not exceed an annualized hurdle rate of 7% with respect to our equity in a business; and
	•	Profit allocation will be paid in the event that the company’s profits do exceed an annualized hurdle rate of 7% in the following manner: (i) 100% of the company’s profits for that amount in excess of the hurdle rate of 7% but that is less than or equal to the hurdle rate of 8.75%, which amount is intended to provide the manager with an overall profit allocation of 20% once the hurdle rate of 7% has been surpassed; and (ii) 20% of the company’s profits in excess of the hurdle rate of 8.75%.

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	•	Manage our day-to-day business and operations, including our liquidity and capital resources and compliance with applicable law;
	•	Identify, perform due diligence on, negotiate and oversee acquisitions of target businesses and any other investments;
	•	Oversee the performance of any managed subsidiaries, including monitoring the business and operations of such managed subsidiaries, and any other investments that we make;
	•	Provide, on our behalf, managerial assistance to our managed subsidiaries;
	•	Evaluate, negotiate and oversee dispositions of all or any part of any managed subsidiaries or any other investments that we may have;
	•	Provide, as necessary, individuals to serve as members of the company’s board of directors; and
	•	Perform any other services that would be customarily performed by executive officers and employees of the company.

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	•	Our manager materially breached the terms of the management services agreement and such breach continued unremedied for 60 days after our manager receives written notice from the company setting forth the terms of such breach; or
	•	Our manager acted with gross negligence, willful misconduct, bad faith or reckless disregard of its duties in carrying out its obligations under the management services agreement or engaged in fraudulent or dishonest acts with respect to the company.

	•	All costs and expenses of the company or the managed subsidiaries that are incurred by our manager on behalf of the company or the managed subsidiaries, as the case may be, including any out-of-pocket costs and expenses, and all costs and expenses the reimbursement of which are specifically approved by the company’s or a managed subsidiary’s board of directors; and

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	•	The compensation and other related costs and expenses of the Chief Financial Officer and his staff.

	•	The “management fee” will be equal to, as of any calculation date, the product of (i) 0.5% (2% annualized), multiplied by (ii) the company’s adjusted net assets as of such calculation date; provided, however, that, with respect to the fiscal quarter in which the closing of this offering occurs, the company will pay our manager a management fee with respect to such fiscal quarter equal to the product of (i)(x) 0.5% (2% annualized), multiplied by (y) the company’s adjusted net assets as of such calculation date, multiplied by (ii) a fraction, the numerator of which is the number of days from and including the date of closing to and including the last day of such fiscal quarter and the denominator of which is the number of days in such fiscal quarter.
	•	“Adjusted net assets” will be equal to, with respect to any entity as of any calculation date, the sum of (i) total assets of such entity as of such calculation date, plus (ii) the absolute amount of accumulated amortization for such entity as of such calculation date, minus (iii) the absolute amount of adjusted total liabilities of such entity as of such calculation date.
	•	“Adjusted total liabilities” will be equal to, with respect to any entity as of any calculation date, such entity’s total liabilities after excluding the effect of any outstanding indebtedness of such entity owed to third party lenders that are unaffiliated with such entity.

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Compass Diversified Trust(1)

Before the Offering(2)

After the Offering

Number of

Percent of

Number of

Percent of

Shares

Class

Shares

Class

Directors and Executive Officers

C. Sean Day

—

—

%

I. Joseph Massoud(3)

—

—

%

James J. Bottiglieri

—

—

%

Harold S. Edwards

—

—

%

D. Eugene Ewing

—

—

%

Mark H. Lazarus

—

—

%

Ted Waitman

—

—

%

All directors and executive officers, as a group

—

—

%

Shareholders

Compass Group Investments, Inc.(4)

—

—

%

Pharos I LLC(5)

—

—

%

(1)	The trust will issue shares of trust stock. Each share of the trust represents one undivided beneficial interest in the trust. Each beneficial interest in the trust corresponds to one non-management interest of the company. No other equity interest in the trust will be outstanding after the closing of this offering.
(2)	Before the closing of this offering, the trust will not have any equity interests authorized or issued and outstanding; the trust will be authorized to issue the shares pursuant to the amended and restated trust agreement to be entered into in conjunction with the closing of this offering. See the section entitled “Description of Shares” for more information. As a result, the company, as sponsor of the trust, will beneficially own the trust before the closing of this offering. In turn, our manager, as sole holder of the management interests of the company, and our Chief Executive Officer, Mr. Massoud, as sole and managing member of the manager, will each beneficially own the company before the closing of this offering.
(3)	Amounts with respect to Mr. Massoud also reflect his beneficial ownership of shares through his interest in and control of Pharos I LLC, as discussed in more detail in footnote 5 below.
(4)	Compass Group Investments, Inc., an affiliate of our manager, has agreed to purchase the number of shares in the trust having an aggregate purchase price of $96 million, at a per share price equal to the initial public offering price, in a separate private placement transaction that will close in conjunction with the closing of this offering.
(5)	Pharos I LLC has agreed to purchase the number of shares in the trust having an aggregate purchase price of $4 million, at a per share price equal to the initial public offering price, in a separate private placement transaction that will close in conjunction with the closing of this offering. Our Chief Executive Officer, Mr. Massoud, as managing member of Pharos I LLC exercising sole voting and investment power with respect to Pharos I LLC, will beneficially own Pharos I LLC before and after the closing of this offering.

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			Compass Group Diversified Holdings LLC(1)
			Before the Offering								After the Offering
			Number of				Percent of				Number of				Percent of
			Interests				Class				Interests				Class
Compass Group Management LLC(2)
	Management interests			100				100	%			100				100	%
	Non-management interests			—				—				—				—
Compass Diversified Trust(3)
	Management interests			—				—				—				—
	Non-management interests			—				—								100	%

(1)	Compass Group Diversified Holdings LLC has two classes of interests: management interests and a non-management interests.
(2)	Compass Group Management LLC, our manager, as sole holder of the management interests of the company and as our manager under the management services agreement, will beneficially own the company before this offering. Our Chief Executive Officer, Mr. Massoud, as sole and managing member of the manager, will beneficially own the company before the closing of this offering. Our manager is also an affiliate of CGI and Pharos.
(3)	Each beneficial interest in the trust corresponds to one underlying non-management interest of the company. Unless the trust is dissolved, it must remain the sole holder of 100% of the non-management interests and at all times the company will have outstanding the identical number of non-management interests as the number of outstanding shares of the trust. As a result of corresponding interest between shares and non-management interests, each holder of shares identified in the table above relating to the trust may be deemed to beneficially own a correspondingly proportionate interest in the company.

			Before the Offering								After the Offering
			Number of				Percent of				Number of				Percent of
			Shares				Class				Shares				Class
C. Sean Day
	Crosman, Common Stock			5,193				0.9	%			5,193				0.9	%
	Advanced Circuits, Series B Common Stock			10,000				0.8	%			10,000				0.8	%
I. Joseph Massoud
	Crosman, Common Stock			2,077				0.3	%			—				—
Silvue Coinvestment Partners, LLC(1)
	Silvue, Series B Common Stock			98.6				0.2	%			—				—
	Silvue, Series A Preferred Stock			433.1				1.0	%			—				—
ACI Coinvestment Partners, LLC(2)
	Advanced Circuits, Series B Common Stock			11,880				1.0	%			—				—

(1)	Mr. Massoud is the managing member of and owns a 26.1% interest in Silvue Coinvestment Partners, LLC and, in such capacity, exercises sole voting and investment power with respect to Silvue Coinvestment Partners, LLC. As a result, Mr. Massoud beneficially owns Silvue Coinvestment Partners, LLC. Mr. Day beneficially owns a 36.2% interest in Silvue Coinvestment Partners, LLC.
(2)	Mr. Massoud is the managing member of and owns a 42.1% interest in ACI Coinvestment Partners, LLC and, in such capacity, exercises sole voting and investment power with respect to ACI Coinvestment Partners, LLC. As a result, Mr. Massoud beneficially owns ACI Coinvestment Partners, LLC.

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	•	The management services agreement relating to the management services our manager will perform for us and the businesses we own and the management fee to be paid to our manager in respect thereof; and
	•	The company’s LLC agreement setting forth our manager’s rights with respect to the management interests it owns, including the right to receive profit allocations from the company.

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	•	The stock purchase agreement pursuant to which we will acquire a controlling interest in each of our initial businesses the sellers;
	•	The loan agreements pursuant to which the company will provide debt financing to each of our initial businesses;
	•	The management services agreement pursuant to which our manager will perform the management services and be paid the management fee;
	•	The LLC agreement under which our manager will hold the company’s management interests and pursuant to which our manager will be paid the profit allocation;
	•	The supplemental put agreement pursuant to which our manager has the right to cause the company to purchase the management interests upon termination of the management services agreement;
	•	Those offsetting management services agreement entered into between our initial businesses and an affiliate of The Compass Group in connection with the acquisition of those businesses by such affiliate of The Compass Group and assigned to our manager in conjunction with the closing of this offering;
	•	The private placement agreements pursuant to which CGI and Pharos will purchase shares in a separate private placement transactions in conjunction with the closing of this offering; and
	•	The registration rights agreements pursuant to which Pharos and CGI will have certain rights as to the registration of the shares they acquired in the private placement transactions closing in conjunction with this offering.

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	Stock Purchase Agreement with Sellers, including CGI and its Subsidiaries

	Loan Agreements with each Initial Business

	Management Services Agreement with Our Manager

	Offsetting Management Services Agreements

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	LLC Agreement with Our Manager

	Supplemental Put Agreement with Our Manager

	Private Placement Agreements

	Registration Rights Agreements

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	•	the shares representing beneficial interests in the trust;
	•	the non-management interests of the company to be issued to the trust; and
	•	the management interests of the company to be issued to our manager.

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	General

	Manager’s Profit Allocation

	•	The sale of a material amount, as determined by our manager, of the capital stock or assets of one of our businesses or a subsidiary of one of our businesses, which event we refer to as a sale event; or
	•	At the option of our manager, at the expiration of the five year period during which we owned a business, which event we refer to as a holding event. If our manager elects to forego declaring a holding event with respect to such business, then our manager may only declare a holding event with respect to such business on each anniversary of the holding event with respect to such subsidiary.

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	•	The contribution-based profit as of such calculation date, which will be calculated upon the occurrence of any trigger event with respect to a particular business; plus
	•	The cumulative gains and losses as of such calculation date, which will only be calculated upon the occurrence of a sale event, with respect to the company as a whole.

	•	Manager’s profit allocation will not be paid with respect to a trigger event relating to any business if the total profit allocation amount, as of any calculation date, does not exceed such business’ level 1 hurdle amount (7% annualized), as of such calculation date; and
	•	Manager’s profit allocation will be paid with respect to a trigger event relating to any business if the total profit allocation amount, as of any calculation date, exceeds such business’ level 1 hurdle amount (7% annualized), as of such calculation date. Our manager’s profit allocation to be paid with respect to such calculation date will be equal to the sum of the following:

	•	100% of such business’ total profit allocation amount, as of such calculation date, with respect to that portion of the total profit allocation amount that exceeds such business’ level 1 hurdle amount (7% annualized) but is less than or equal to such business’ level 2 hurdle amount (8.75% annualized), in each case, as of such calculation date. We refer to this portion of the total profit allocation amount as the “catch-up.” The “catch-up” is intended to provide our manager with an overall profit allocation of 20% once the hurdle rate of 7% has been surpassed; plus
	•	20% of the total profit allocation amount, as of such calculation date, that exceeds such business’ level 2 hurdle amount (8.75% annualized) as of such calculation date; minus
	•	Our manager’s high water mark allocation, if any, as of such calculation date. The effect of deducting the high water mark allocation is to take into account allocations our manager has already received in respect of past gains and losses.

	Contribution-based profit

	Cumulative gains and losses and high water mark

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	Definitions

	•	A business’ “level 1 hurdle amount” will be equal to, as of any calculation date, the product of (i) (x) the quarterly hurdle rate of 1.75% (7% annualized), multiplied by (y) the number of fiscal quarters ending during such business’ measurement period as of such calculation date, multiplied by (ii) a business’ average allocated share of our consolidated equity as of such calculation date.
	•	A business’ “level 2 hurdle amount” will be equal to, as of any calculation date, the product of (i) (x) the quarterly hurdle rate of 2.1875% (8.75% annualized, which is 125% of the 7% annualized hurdle rate), multiplied by (y) the number of fiscal quarters ending during such business’ measurement period as of such calculation date, multiplied by (ii) a business’ average allocated share of our consolidated equity as of such calculation date.
	•	A business’ “average allocated share of our consolidated equity” will be equal to, as of any calculation date, the mathematical average of a business’ quarterly allocated share of our consolidated equity determined by reference to each fiscal quarter ending during a business’ measurement period as of such calculation date.
	•	A business’ “quarterly allocated share of our consolidated equity” will be equal to, with respect to any fiscal quarter, the product of (i) the company’s consolidated net equity as of the last day of such fiscal quarter, multiplied by (ii) a fraction, the numerator of which is such business’ adjusted net assets as of the last day of such fiscal quarter and the denominator of which is the company’s adjusted net assets as of the last day of such fiscal quarter.
	•	The company’s “consolidated net equity” will be equal to, as of any date, the company’s total assets, as of such date, less the company’s total liabilities, as of such date.
	•	Our manager’s “high water mark allocation” will be equal to, as of any calculation date, the product of (i) the amount of the high water mark as of such calculation date, multiplied by (ii) 20%.
	•	The “high water mark” will be equal to, as of any calculation date, the highest positive amount of the company’s cumulative aggregate realized gains (as defined below) as of such calculation date that were calculated in connection with a qualifying trigger event that occurred prior to such calculation date.
	•	A “qualifying trigger event” will mean a trigger event giving rise to a calculation of profit allocation with respect to a business as of the relevant calculation date and where the total profit allocation amount, as of such calculation date, exceeded such business’ level 2 hurdle amount, as of such calculation date.
	•	The “measurement period” will mean, with respect to any business as of any calculation date, the period from and including the later of (i) the date upon which the company acquired such business and (ii) the immediately preceding calculation date upon which contribution-based profit was calculated with respect to such business to and including such calculation date.
	•	A business’ “contribution to the company’s cash flow” will be equal to, as of any calculation date, the sum of (i) the aggregate amount of such business’ net income (loss) for the measurement period as of such calculation date, without giving effect to any realized gains or realized losses with respect to such business as of such calculation date that arise as a result of a sale event causing the calculation of contributions to the company’s cash flow as of such calculation date, plus (ii) the absolute aggregate amount of such business’ loan expense for the measurement period as of such

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		calculation date, minus (iii) the absolute aggregate amount of such business’ allocated share of the company’s overhead for the measurement period as of such calculation date.
	•	A business’ “loan expense” will be equal to, with respect to any measurement period as of any calculation date, the aggregate amount of all interest or other expenses paid by such business with respect to indebtedness of such business to either the company or other company businesses during such measurement period.
	•	A business’ “allocated share of the company’s overhead” will be equal to, with respect to any measurement period as of any calculation date, the aggregate amount of such business’ quarterly share of the company’s overhead for each fiscal quarter ending during such measurement period.
	•	A business’ “quarterly share of the company’s overhead” will be equal to, with respect to any fiscal quarter, the product of (i) the absolute amount of the company’s overhead for such fiscal quarter, multiplied by (ii) a fraction, the numerator of which is such business’ adjusted net assets as of the last day of such fiscal quarter and the denominator of which is the company’s adjusted net assets as of the last day of such fiscal quarter.
	•	The “company’s overhead” will be equal to, with respect to any fiscal quarter, the sum of (i) the management fees received by our manager from the company (as reduced by any off-setting management fees received from any business) during such fiscal quarter, plus (ii) direct company expenses paid by the company during such fiscal quarter, plus (iii) the company’s interest expense on any outstanding indebtedness of the company paid to third party lenders that are unaffiliated with the company during such fiscal quarter.
	•	“Direct company expenses” will mean, with respect to any fiscal quarter, that portion of the company’s operating expenses for such fiscal quarter that are not attributable to an expense for any of the businesses for such fiscal quarter.
	•	The company’s “cumulative aggregate realized gains” will be equal to, as of any calculation date, the aggregate amount of realized gains from all of the sales of stock or assets of any business prior to such calculation date.
	•	“Realized gains” will be calculated only with respect to the sale of stock or assets of any business that gave rise to a sale event and the calculation of profit allocation and will be equal to the amount, adjusted for minority interests, by which (i) the net sales price of such stock or assets, as the case may be, exceeds (ii) the book value of such stock or assets, as the case may be, at the time of such sale.
	•	The company’s “cumulative aggregate realized losses” will be equal to, as of any calculation date, the aggregate amount of realized losses from all of the sales of stock or assets of any business prior to such calculation date.
	•	“Realized losses” will be calculated only with respect to the sale of stock or assets of any business that gave rise to a sale event and the calculation of profit allocation and will be equal to the amount, adjusted for minority interests, by which (i) the book value of such stock or assets, as the case may be, at the time of such sale, exceeds (ii) the net sales price of such stock or assets, as the case may be.

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	Example of Calculation of Manager’s Profit Allocation

	Assumptions

	Year 1:

	Acquisition of Company A (“Company A”)
	Acquisition of Company B (“Company B”)

	Year 3

	Acquisition of Company C (“Company C”)

	Year 4

	Company A (or assets thereof) sold for $20 capital gain over book value of assets at time of sale, which is a qualifying trigger event
	Company A’s average allocated share of our consolidated net equity over its ownership is $40
	Company A’s holding period in quarters is 12
	Company A’s contribution-based profit since acquisition is $8.5

	Year 6:

	Company B’s contribution-based profit since acquisition is $4.5
	Company B’s average allocated share of our consolidated net equity over its ownership is $30
	Company B’s holding period in quarters is 20
	Manager elects to have holding period measured for purposes of profit allocation for Company B

	Year 7:

	Company B (or assets thereof) is sold for $5 capital loss under book value of assets at time of sale
	Company B’s average allocated share of our consolidated net equity over its ownership is $30
	Company B’s holding period in quarters is 24
	Company B’s contribution-based profit since acquisition is $8.5
	Company C (or assets thereof) is sold for $12 capital gain over book value of assets at time of sale
	Company C’s average allocated share of our consolidated net equity over its ownership is $35
	Company C’s holding period in quarters is 16
	Company C’s contribution-based profit since acquisition is $8

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		With Respect to Relevant Managed Subsidiary		Year 4				Year 6				Year 7				Year 7
				A, due to				B, due to				B, due to				C, due to
				sale				5 year hold				sale				sale
1		Contribution-based profit since acquisition for respective subsidiary		$	8.5			$	4.5			$	1			$	8
2		Gain/ Loss on sale of company			20				0				(5	)			12
3		Cumulative gains and losses			20				20				15				27
4		High water mark prior to transaction			0				20				20				20
5		Total Profit Allocation Amount (1 + 3)			28.5				24.5				16				35
6		Business’ holding period in quarters since ownership or last measurement due to holding event			12				20				4				16
7		Business’ average allocated share of consolidated net equity			40				30				30				35
8		Business’ level 1 hurdle amount (1.75% * 6 * 7)			8.4				10.5				2.1				9.8
9		Business’ excess over level 1 hurdle amount (5 - 8)			20.1				14				13.9				25.2
10		Business’ level 2 hurdle amount (125% * 8)			10.5				13.125				2.625				12.25
11		Allocated to manager as “catch-up” (10 - 8)			2.1				2.625				0.525				2.45
12		Excess over level 2 hurdle amount (9 - 11)			18				11.375				13.375				22.75
13		Allocated to manager from excess over level 2 hurdle amount (20% * 12)			3.6				2.275				2.675				4.55
14		Cumulative allocation to manager (11 +13)			5.7				4.9				3.2				7
15		High water mark allocation (20% * 4)			0				4				4				4
16		Manager’s Profit Allocation for Current Period (14 - 15,> 0)		$	5.7			$	0.9			$	0			$	3

	General

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	•	voting rights in connection with the anti-takeover provisions discussed below;
	•	a consent right with respect to the amendment or modification of any anti-takeover provisions in the LLC agreement;
	•	a consent right with respect to the amendment or modification of the provisions providing for distributions to the holders of management interests;
	•	a consent right with respect to any amendment of the provisions providing for the duties of our manager and the secondment of our officers pursuant to the management services agreement;
	•	a consent right to any amendment to the provision entitling the holders of management interests to appoint a director who will serve on the board of directors of the company;
	•	a consent right with respect to business combinations or transactions;
	•	a consent right with respect to any amendment of the provision of the LLC agreement governing amendments thereof; and
	•	a consent right with respect to any amendment that would adversely affect the holder of management interests.

	Board of Directors Appointee

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	•	The “offer price” will be equal to, as of any purchase date, the average closing price (as described below) per share on the 20 trading days immediately prior to, but not including, the exchange date.
	•	The “closing price” of the shares, on any trading day, means:

	•	the closing price, or if no closing price is reported, the last reported price of the shares on the Nasdaq National Market on such trading day;
	•	if the shares are not so quoted on the Nasdaq National Market, the price as reported by another recognized securities exchange on which the shares are listed as of such trading day;
	•	if the shares are not so reported, the last quoted bid price for the shares in the over-the-counter market as reported by the National Quotation Bureau or a similar organization on such trading day; or
	•	if the shares are not so quoted, the average of the midpoint of the last bid and ask prices for the shares from at least three nationally recognized investment banking firms that the company selects for such purpose.

	•	the trust or the company, or both, is, or is reasonably likely to be, treated as a corporation for United States federal income tax purposes;
	•	the trust is, or is reasonably likely to be, required to issue Schedules K-1 to holders of shares; or
	•	the existence of the trust otherwise results, or is reasonably likely to result, in a material tax detriment to the trust, the holders of shares, the company or any of the members,

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	•	the adoption of a resolution by a majority vote of the company’s board of directors approving the dissolution, winding up and liquidation of the company and such action has been approved by the affirmative vote of a majority of the outstanding non-management interests entitled to vote thereon;
	•	the unanimous vote of the outstanding non-management interests to dissolve, wind up and liquidate the company; or
	•	a judicial determination that an event has occurred that makes it unlawful, impossible or impractical to carry on the business of the company as then currently operated as determined in accordance with Section 18-802 of the Delaware Limited Liability Company Act.

	•	protect the holder of management interests and its economic interests in the company;
	•	protect the position of our manager and its rights to manage the business and affairs of the company under the management services agreement;
	•	enhance the likelihood of continuity and stability in the composition of the company’s board of directors and in the policies formulated by the board of directors;
	•	discourage certain types of transactions which may involve an actual or threatened change in control of the trust and the company;
	•	discourage certain tactics that may be used in proxy fights;

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	•	encourage persons seeking to acquire control of the trust and the company to consult first with the company’s board of directors to negotiate the terms of any proposed business combination or offer; and
	•	reduce the vulnerability of the trust and the company to an unsolicited proposal for a takeover that does not contemplate the acquisition of all of the outstanding shares or that is otherwise unfair to shareholders of the trust.

	Anti-Takeover Effects of the Management Services Agreement

	•	our manager materially breaches the terms of the management services agreement and such breach continues unremedied for 60 days after the manager receives written notice setting forth the terms of such breach; or
	•	our manager acts with gross negligence, willful misconduct, bad faith or reckless disregard of its duties in carrying out its obligations under the management services agreement or engages in fraudulent or dishonest acts with respect to the company.

	Anti-Takeover Provisions in the Trust Agreement and the LLC Agreement

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	•	any merger or consolidation of the trust, the company or a subsidiary of the company with an interested shareholder or any person that is, or after such merger or consolidation would be, an affiliate or associate of an interested shareholder; or
	•	any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with, or proposed by or on behalf of, an interested shareholder or an affiliate or associate of an interested shareholder of any assets of the trust, the company or subsidiary of the company, having an aggregate fair market value of not less than ten percent of the net investment value of the company; or
	•	the issuance or transfer by the trust, the company or any subsidiary of the company (in one transaction or series of transactions) of any securities of the trust, the company or any subsidiary of the company to, or proposed by or on behalf of, an interested shareholder or an affiliate or associate of an interested shareholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate fair market value of not less than ten percent of the net investment value of the company; or
	•	any spinoff or split-up of any kind of the trust, the company or a subsidiary of the company proposed by or on behalf of an interested shareholder or an affiliate or associate of the interested shareholder; or
	•	any reclassification of the shares of the trust or non-management interests (including any reverse split of shares or non-management interests, or both) or recapitalization of the trust or the company, or both, or any merger or consolidation of the trust or company with any subsidiary of the company, or any other transaction that has the effect of increasing the percentage of the outstanding shares of the trust, the company or any subsidiary of the company or any class of securities of the company or any subsidiary of the company or the trust convertible or exchangeable for shares, non-management interests or equity securities of any subsidiary, as the case may be, that are directly or indirectly owned by an interested shareholder or any affiliate or associate of an interested shareholder; or
	•	any agreement, contract or other arrangement providing for any one or more of the actions in the above bullet points.

	•	is, or was at any time within the three-year period immediately prior to the date in question, the beneficial owner of 15% or more of the shares or non-management interests, as the case may be, and who did not become the beneficial owner of such amount of shares or non-management interests, as the case may be, pursuant to a transaction that was approved by the company’s board of directors; or
	•	is an assignee of, or has otherwise succeeded to, any shares or non-management interests, as the case may be, of which an interested shareholder was the beneficial owner at any time within the three-year period immediately prior to the date in question, if such assignment or succession occurred in the course of a transaction, or series of transactions, not involving a public offering.

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	•	the “market value” of the shares (as defined in the LLC agreement); plus
	•	the amount of any borrowings (other than intercompany borrowings) of the company and its subsidiaries that are party to the management services agreement (but not including borrowings on behalf of any subsidiary of the subsidiaries that are party to the management services agreement); plus
	•	the value of contractual commitments made by the company and/or any of its subsidiaries to invest that are represented by definitive agreements other than cash or cash equivalents, as calculated by the manager and approved by a majority of the “continuing directors” (as defined in the LLC agreement); provided, that such contractual commitments have not been outstanding for more than two consecutive full fiscal quarters; less
	•	the aggregate amount held by the company and its subsidiaries that are party to the management services agreement in cash or cash equivalents (but not including cash or cash equivalents held specifically for the benefit of any subsidiary of the subsidiaries that are party to the management services agreement).

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	•	the purpose or powers of the company;
	•	the authorization of an increase in non-management interests;
	•	the provisions regarding the right to acquire non-management interests after an acquisition exchange described above;
	•	the right of a holder of shares to enforce the LLC agreement;
	•	the hiring of a replacement manager following the termination of the management services agreement;
	•	the merger or consolidation of the company, the sale, lease or exchange of all or substantially all of the company’s assets and certain other business combinations or transactions;
	•	the right of holders to vote on the dissolution of the company; and
	•	the provision of the LLC agreement governing amendments thereof.

	•	enter into or consent to any amendment which would cause the trust to fail or cease to qualify for the exemption from the status of an “investment company” under the Investment Company Act or be classified as anything other than a grantor trust for United States federal income tax purposes;
	•	cause the trust to issue a class of equity securities other than the shares (as described above under “— Shares in the Trust”), including shares in one or more series, or issue any debt securities or any derivative securities or amend the provision of the trust agreement prohibiting any such issuances;
	•	enter into or consent to any amendment of the trust agreement that would affect the exclusive and absolute right of our shareholders to direct the voting of the trust, as a member of the company, with respect to all matters reserved for the vote of members of the company pursuant to the LLC agreement;
	•	conduct the merger or consolidation of the trust, effect the sale, lease or exchange of all or substantially all of the trust’s assets and certain other business combinations or transactions;

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	•	increase the number of authorized shares without the affirmative vote of a majority of the shares; or
	•	amend the provision of the trust agreement governing the amendment thereof without the affirmative vote of a majority of the shares.

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	•	1% of the total number of shares then outstanding (or approximately                 shares upon closing of this offering); and
	•	the average weekly trading volume of the shares on the Nasdaq National Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

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	•	brokers and dealers in securities or currencies;
	•	financial institutions;
	•	regulated investment companies;
	•	real estate investment trusts;
	•	tax-exempt organizations;
	•	insurance companies;
	•	persons holding shares as a part of a hedging, integrated or conversion transaction or a straddle, or as part of any other risk reduction transaction;
	•	traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; or
	•	persons liable for alternative minimum tax.

	•	an individual citizen or resident of the United States;
	•	a corporation (or other entity taxable as a corporation) created or organized in or under the laws of the United States or any state thereof or the District of Columbia;
	•	a partnership (or other entity treated as a partnership for tax purposes) created or organized in or under the laws of the United States or any state thereof or the District of Columbia, the interests in which are owned only by U.S. persons;
	•	an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
	•	a trust if it (1) is subject to the primary supervision of a federal, state or local court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable Regulations to be treated as a U.S. person.

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	Tax Treatment of the Company

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	Tax Treatment of Company Income to Holders

	Allocation of Company Profits and Losses

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	Treatment of Distributions

	Disposition of Shares

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	Tax Basis in Non-management Interests

	Treatment of Securities Loans

	Limitations on Interest Deductions

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	Management Fees and Other Expenses

	•	3% of the individual’s adjusted gross income in excess of certain threshold amounts; or
	•	80% of the amount of certain itemized deductions otherwise allowable for the taxable year.

	Section 754 Election

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	Limitations on Deductibility of Losses

	Passive Activity Income and Loss

	Allocations Among Holders

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	Constructive Termination

	Tax Reporting by the Trust and the Company

	Audits and Adjustments to Tax Liability

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	Foreign Tax Credits

	Taxation of Certain Foreign Earnings

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	Tax Shelter Disclosure Rules

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			Number of
			Offered
Name of Underwriter			Shares
Ferris, Baker Watts, Incorporated
BB&T Capital Markets, a division of Scott & Stringfellow, Inc.
J.J.B. Hilliard, W.L. Lyons, Inc.
Oppenheimer & Co., Inc.
	Total

	•	the representations and warranties made by us to the underwriters are true and our agreements have been performed;
	•	there is no material adverse change in the financial markets; and
	•	we deliver customary closing documents to the underwriters.

	•	the information set forth in this prospectus and otherwise available to the representatives of the underwriters;
	•	the history and the prospects for the industry in which we compete;
	•	the ability of our manager;
	•	our prospects for future earnings, the present state of our development, and our current financial position;
	•	the general condition of the securities markets at the time of this offering; and
	•	the recent market prices of, and the demand for, publicly traded common stock of generally comparable companies.

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Total Without

Total With

Over-Allotment

Over-Allotment

Per Share

Exercise

Exercise

Public offering price

$

$

$

Underwriting discount payable by us

Financial advisory fee payable by us

Proceeds before expenses

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	•	Stabilizing transactions permit bids to purchase offered shares so long as the stabilizing bids do not exceed a specified maximum, and are engaged in for the purpose of preventing or retarding a decline in the market price of the offered shares while the offering is in progress.
	•	Over-allotment transactions involve sales by the underwriters of offered shares in excess of the number of shares the underwriters are obligated to purchase. This creates a syndicate short position that may be either a covered short position or a naked short position. In a covered short position, the number of shares of offered shares over-allotted by the underwriters is not greater than the number of shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The underwriters may close out any short position by exercising their over-allotment option and/or purchasing shares of offered shares in the open market.
	•	Syndicate covering transactions involve purchases of offered shares in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared with the price at which they may purchase offered shares through exercise of the over-allotment option. If the underwriters sell more offered shares than could be covered by exercise of the over-allotment option and, therefore, have a naked short position, the position can be closed out only by buying offered shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that after pricing there could be downward pressure on the price of the offered shares in the open market that could adversely affect investors who purchase in the offering.
	•	Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the offered shares originally sold by that syndicate member is purchased in stabilizing or syndicate covering transactions to cover syndicate short positions.

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217

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218

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219

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220

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		Page
		Number(s)
Compass Group Diversified Trust
Report of independent registered public accounting firm			F-4
Consolidated balance sheet as of November 30, 2005			F-5
Consolidated statement of operations for the period November 18, 2005 (date of inception) through November 30, 2005			F-6
Consolidated statement of stockholder’s equity for the period November 18, 2005 (date of inception) through November 30, 2005			F-7
Consolidated statement of cash flows for the period November 18, 2005 (date of inception) through November 30, 2005			F-8
Notes to financial statements			F-9
CBS Personnel Holdings, Inc.
Reports of independent registered public accounting firm			F-12
Consolidated balance sheets as of December 31, 2004 and 2003			F-13
Consolidated statements of operations and comprehensive income (loss) for the years ended December 31, 2004, 2003 and 2002			F-14
Consolidated statements of shareholders’ equity for the years ended December 31, 2004, 2003 and 2002			F-15
Consolidated statements of cash flows for the years ended December 31, 2004, 2003 and 2002			F-16
Notes to consolidated financial statements			F-17
Consolidated balance sheet as of September 30, 2005 (unaudited)			F-33
Consolidated statements of operations and comprehensive income for the nine months ended September 30, 2005 and 2004 (unaudited)			F-34
Consolidated statements of stockholders’ equity for the nine months ended September 30, 2005 (unaudited)			F-35
Consolidated statements of cash flows for the nine months ended September 30, 2005 and 2004 (unaudited)			F-36
Notes to consolidated financial statements			F-37
Crosman Acquisition Corporation
Reports of independent auditors			F-42
Consolidated balance sheets as of June 30, 2005 and 2004			F-44
Consolidated statements of income for the year ended June 30, 2005, for the seven month period ended February 9, 2004, for the five month period ended June 30, 2004 and for the year ended 2003			F-45
Consolidated statements of shareholders’ equity for the year ended June 30, 2005 for the seven month period ended February 9, 2004, for the five month period ended June 30, 2004 and for the year ended 2003			F-46
Consolidated statements of cash flows for the year ended June 30, 2005, for the seven month period ended February 9, 2004, for the five month period ended June 30, 2004 and for the year ended 2003			F-47
Notes to consolidated financial statements			F-48
Consolidated balance sheet as of October 2, 2005 (unaudited)			F-65
Consolidated statements of income for the three month periods ended October 2, 2005 (unaudited) and September 26, 2004 (unaudited)			F-66

F-1

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Table of Contents

		Page
		Number(s)
Consolidated statements of shareholders’ equity for the three month period ended October 2, 2005 (unaudited)			F-67
Consolidated statements of cash flows for the three month periods ended October 2, 2005 (unaudited) and September 26, 2004 (unaudited)			F-68
Notes to consolidated financial statements			F-69
Compass AC Holdings, Inc.
Independent auditors’ report			F-83
Combined balance sheets as of December 31, 2004 and 2003			F-84
Combined statements of operations for the years ended December 31, 2004, 2003 and 2002			F-85
Combined statements of stockholders’ equity and members’ capital for the years ended December 31, 2004, 2003 and 2002			F-86
Combined statements of cash flows for the years ended December 31, 2004, 2003 and 2002			F-87
Notes to combined financial statements			F-88
Consolidated balance sheets as of September 30, 2005 (unaudited)			F-95
Consolidated statements of operations for the nine months ended September 30, 2005 and 2004 (unaudited)			F-96
Consolidated statements of cash flows for the nine months ended September 30, 2005 and 2004 (unaudited)			F-97
Notes to consolidated financial statements			F-98
Silvue Technologies Group, Inc.
Independent auditors’ report			F-104
Consolidated balance sheets as of December 31, 2004 and 2003			F-105
Consolidated statements of operations and comprehensive income for the years ended December 31, 2004 and 2003			F-106
Consolidated statements of stockholders’ equity for the years ended December 31, 2004 and 2003			F-107
Consolidated statements of cash flows for the years ended December 31, 2004 and 2003			F-108
Notes to consolidated financial statements			F-110
Consolidated balance sheets as of September 30, 2005 (unaudited)			F-123
Consolidated statements of operations and comprehensive income for the nine months ended September 30, 2005 and 2004 (unaudited)			F-124
Consolidated statements of stockholders’ equity for the nine months ended September 30, 2005 and 2004 (unaudited)			F-125
Consolidated statements of cash flows for the nine months ended September 30, 2005 and 2004 (unaudited)			F-126
Notes to consolidated financial statements			F-127

F-2

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Table of Contents

		Page(s)
Report of independent registered public accounting firm			F-4
Consolidated balance sheet as of November 30, 2005.			F-5
Consolidated statement of operations for the period November 18, 2005 (date of inception) through November 30, 2005			F-6
Consolidated statement of stockholders’ equity for the period November 18, 2005 (date of inception) through November 30, 2005.			F-7
Consolidated statement of cash flows for the period November 18, 2005 (date of inception) through November 30, 2005.			F-8
Notes to financial statements			F-9-F-10

F-3

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Table of Contents

F-4

---

Table of Contents

Assets
Current assets:
	Cash			$	100,000
	Deferred public offering costs				2,526,642
		Total assets		$	2,626,642
Liabilities and Stockholders’ Equity
Current liabilities:
	Accrued expenses			$	1,000
	Due to related party				2,526,642
		Total current liabilities			2,527,642
Stockholders’ Equity
Member interest					100,000
Accumulated deficit					(1,000	)
Total stockholders’ equity					99,000
Total liabilities and stockholders’ equity				$	2,626,642

F-5

---

Table of Contents

		November 18, 2005
		(Date of Inception)
		Through
		November 30, 2005
Formation and operating costs		$	1,000
Net loss for the period		$	(1,000	)

F-6

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Table of Contents

		Member				Accumulated
		Interest				Deficit				Total
Balance — November 18, 2005 (date of inception)
Initial capitalization of LLC		$	100,000							$	100,000
Net loss						$	(1,000	)			(1,000	)
Balance — November 30, 2005		$	100,000			$	(1,000	)		$	99,000

F-7

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Table of Contents

						November 18, 2005
						(Date of Inception)
						Through
						November 30, 2005
Cash flows from operating activities:
	Net loss					$	(1,000	)
	Adjustments to reconcile net loss to net cash provided by operating activities:
		Changes in:
			Accrued expenses				1,000
				Net cash provided by operating activities			0
Cash flows from financing activities:
	Issuance of trust shares						100,000
				Net cash provided by financing activities			100,000
Net increase in cash and cash equivalents							100,000
Cash and cash equivalents — beginning of period							0
Cash and cash equivalents — end of period						$	100,000
Supplemental Disclosure of Non-Cash Activities:
	Deferred public offering costs payable to a related party					$	2,526,642

F-8

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Table of Contents

	•	CBS Personnel Holdings, Inc. and its consolidated subsidiaries, a human resources outsourcing firm;
	•	Crosman Acquisition Corporation and its consolidated subsidiaries, a recreational products company;
	•	Compass AC Holdings, Inc. and its consolidated subsidiary, an electronic components manufacturing company; and
	•	Silvue Technologies Group, Inc. and its consolidated subsidiaries, a global hardcoatings company.

F-9

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Table of Contents

F-10

---

Table of Contents

		Page(s)
Report of independent registered public accounting firm			F-12
Consolidated balance sheets as of December 31, 2004 and 2003			F-13
Consolidated statements of operations and comprehensive income (loss) for the years ended December 31, 2004, 2003 and 2002			F-14
Consolidated statements of shareholders’ equity for the years ended December 31, 2004, 2003 and 2002			F-15
Consolidated statements of cash flows for the years ended December 31, 2004, 2003 and 2002			F-16
Notes to consolidated financial statements			F-17-F-31

F-11

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Table of Contents

F-12

---

Table of Contents

					2004				2003
Assets
Current assets:
	Cash				$	921,070			$	266,231
	Accounts receivable:
		Trade, net of allowance for doubtful accounts of $3,415,595 and $1,192,000 at December 31, 2004 and 2003, respectively				54,126,110				24,310,245
		Unbilled revenue				6,966,431				1,164,373
	Prepaid expenses and other current assets					2,971,406				1,483,145
	Deferred tax assets					1,774,536				—
			Total current assets			66,759,553				27,223,994
Property and equipment — net						3,080,613				3,989,000
Other assets:
	Goodwill					59,307,301				49,200,419
	Other intangibles — net					10,559,217				782,589
	Other					669,127				100,971
			Total assets		$	140,375,811			$	81,296,973
Liabilities and shareholders’ equity
Current liabilities:
	Current portion of long-term debt				$	2,037,300			$	2,855,001
	Swing-line and revolving line-of-credit					—				4,361,000
	Accounts payable					5,335,757				3,592,120
	Accrued expenses:
		Accrued payroll, bonuses and commissions				11,335,902				2,750,158
		Payroll taxes and other withholdings				7,862,404				3,545,449
		Current portion of workers’ compensation obligation				6,965,050				2,893,393
		Other				8,351,255				2,010,992
			Total current liabilities			41,887,668				22,008,113
	Long-term debt					43,893,282				19,506,666
	Workers’ compensation obligation					10,586,981				4,517,333
	Deferred tax liabilities					96,951				—
	Accrued interest and management fees					—				2,438,593
			Total liabilities			96,464,882				48,470,705
Commitments and contingencies
Shareholders’ equity:
	Common stock:
		Class A, $0.001 par value, 5,000,000 shares authorized; issued and outstanding 2,830,909 and 644,320 shares at December 31, 2004 and 2003, respectively				2,831				644
		Class B, $0.001 par value, 5,000,000 shares authorized; issued and outstanding 3,548,384 and 487,160 shares at December 31, 2004 and 2003, respectively				3,548				488
		Class C, $0.001 par value, 2,000,000 shares authorized; issued and outstanding 94,799 and 0 shares at December 31, 2004 and 2003, respectively				95				—
Additional paid-in capital						47,111,544				39,749,345
Accumulated other comprehensive income						60,932				—
Accumulated deficit						(3,268,021	)			(6,924,209	)
			Total shareholders’ equity			43,910,929				32,826,268
			Total liabilities and shareholders’ equity		$	140,375,811			$	81,296,973

F-13

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Table of Contents

				2004				2003				2002
Revenues				$	315,258,481			$	194,716,531			$	180,231,771
Direct costs of revenues					254,987,042				155,367,752				141,459,826
		Gross profit			60,271,439				39,348,779				38,771,945
Operating expenses:
	Staffing expense				31,974,144				23,081,487				23,184,311
	Selling, general and administrative expense				17,796,997				12,131,533				12,390,578
	Amortization				1,050,762				491,087				784,224
		Income from operations			9,449,536				3,644,672				2,412,832
Other income (expense):
	Interest expense				(2,099,989	)			(2,928,727	)			(4,565,753	)
	Other income				148,650				223,589				246,086
		Income (loss) before provision for income taxes			7,498,197				939,534				(1,906,835	)
Provision for income taxes					84,730				116,816				30,322
		Net income (loss)			7,413,467				822,718				(1,937,157	)
Other comprehensive income:
	Unrealized gain and change in unrealized loss on interest rate swap				60,932				763,689				148,064
	Comprehensive income (loss)			$	7,474,399			$	1,586,407			$	(1,789,093	)

F-14

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Table of Contents

			Common Stock
																															Accumulated
																															Other
			Class A								Class B								Class C								Additional				Comprehensive
																											Paid in				Income				Accumulated
			Shares				Value				Shares				Value				Shares				Value				Capital				(Loss)				Deficit				Total
Balance — December 31, 2001				139,118			$	139				51,454			$	52				—			$	—			$	24,282,867			$	(911,753	)		$	(5,809,770	)		$	17,561,535
	Net loss			—				—				—				—				—				—				—				—				(1,937,157	)			(1,937,157	)
	Conversion of debt to Common Stock			505,202				505				435,706				436				—				—				12,849,059				—				—				12,850,000
	Extinguishment of accrued interest payable on shareholder promissory notes			—				—				—				—				—				—				2,177,844				—				—				2,177,844
	Stock warrants issued			—				—				—				—				—				—				439,575				—				—				439,575
	Change in unrealized loss on interest rate swap			—				—				—				—				—				—				—				148,064				—				148,064
Balance — December 31, 2002				644,320				644				487,160				488				—				—				39,749,345				(763,689	)			(7,746,927	)			31,239,861
	Net income			—				—				—				—				—				—				—				—				822,718				822,718
	Change in unrealized loss on interest rate swap			—				—				—				—				—				—				—				763,689				—				763,689
Balance — December 31, 2003				644,320				644				487,160				488				—				—				39,749,345				—				(6,924,209	)			32,826,268
	Net income			—				—				—				—				—				—				—				—				7,413,467				7,413,467
	Conversion of debt to Common Stock			2,186,589				2,187				3,061,224				3,060				—				—				7,194,753				—				—				7,200,000
	Stock Options Exercised			—				—				—				—				94,799				95				167,446				—				—				167,541
	Change in unrealized gain on interest rate swap			—				—				—				—				—				—				—				60,932				—				60,932
	Deemed distribution to Parent			—				—				—				—				—				—				—				—				(3,757,279	)			(3,757,279	)
Balance — December 31, 2004				2,830,909			$	2,831				3,548,384			$	3,548				94,799			$	95			$	47,111,544			$	60,932			$	(3,268,021	)		$	43,910,929

F-15

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Table of Contents

					2004				2003				2002
Cash flows from operating activities:
	Net income (loss)				$	7,413,467			$	822,718			$	(1,937,157	)
	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
		Depreciation and amortization				2,394,436				1,922,058				2,343,676
		Loss on disposal of property and equipment				117,539				—				—
		Deferred taxes				(1,677,585	)			—				—
		Loss on extinguishment of debt				—				—				391,191
	Changes in operating assets and liabilities:
		Increase in accounts receivable and unbilled receivables				(6,883,598	)			(3,107,530	)			(5,113,717	)
		(Increase) decrease in prepaid expenses and other assets				(3,442,172	)			(376,926	)			775,551
		(Decrease) increase in accounts payable				(1,431,555	)			1,515,334				(39,301	)
		Increase in accrued expenses and other long-term liabilities				7,647,860				2,687,696				2,189,895
			Net cash provided by (used in) operating activities			4,138,392				3,463,350				(1,389,862	)
Cash flows from investing activities:
	Proceeds from sale of property and equipment					1,080,718				—				—
	Cash paid for acquisition					(30,256,149	)			—				—
	Purchases of equipment and improvements					(883,578	)			(302,198	)			(166,259	)
			Net cash used in investing activities			(30,059,009	)			(302,198	)			(166,259	)
Cash flows from financing activities:
	Proceeds from exercise of stock options					167,541				—				—
	Increase (decrease) in swing-line/revolver					11,949,000				(679,000	)			2,350,000
	Proceeds from issuance of long-term debt					20,000,000				—				7,603,241
	Repayment of long-term debt					(5,541,085	)			(3,056,666	)			(7,906,667	)
	Warrants issued with debt					—				—				246,759
			Net cash provided by (used in) financing activities			26,575,456				(3,735,666	)			2,293,333
			Net increase (decrease) in cash			654,839				(574,514	)			737,212
Cash — Beginning of year						266,231				840,745				103,533
Cash — End of year					$	921,070			$	266,231			$	840,745
Supplemental disclosures of cash flows information:
	Cash paid for interest				$	2,458,085			$	1,061,633			$	2,226,549
	Cash paid (received) for taxes				$	134,832			$	118,260			$	(175,630	)
	Cash paid for interest rate swap				$	102,907			$	803,576			$	815,129
Non-cash investing and financing activity —
	Shareholders’ notes payable converted to Common Stock				$	7,200,000			$	—			$	12,850,000
	Accrued interest on shareholders’ notes converted to Common Stock				$	—			$	—			$	2,177,844

F-16

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Table of Contents

F-17

---

Table of Contents

		Years
Buildings and building improvements			31.5
Equipment			5
Furniture and fixtures			7
Computer software costs			3-5

F-18

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Table of Contents

		2004				2003				2002
Net income (loss) — as reported		$	7,413,467			$	822,718			$	(1,937,157	)
Stock compensation expense required under fair value method — net of tax			(104,837	)			(66,368	)			(41,800	)
Net income (loss) — pro forma		$	7,308,630			$	756,350			$	(1,978,957	)

Weighted average fair value of stock options granted			$7.02				$1.95				$2.51
Risk free interest rates			3.33-5.94%				3.33-5.94%				5.94%
Expected lives		6-10 years				6-10 years				10 Years

F-19

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Table of Contents

			2004				2003
Senior Credit Agreements:
	Swing-line and revolving line-of-credit		$	—			$	4,361,000
	Term notes paid in 2004			—				15,161,667
	Swing-line and revolving line-of-credit, maturing, June 30, 2009			16,310,000				—
	Term note maturing on June 30, 2008			9,620,582				—
Term note maturing on December 31, 2009				20,000,000				—
Subordinated promissory notes due to Shareholders:
	Series A 10% Convertible due May 1, 2006			—				3,000,000
	Series B 10% Convertible due May 1, 2006			—				4,200,000
				45,930,582				26,722,667
Less: current maturities				(2,037,300	)			(2,855,001	)
Less: Swing-line and revolving line-of-credit				—				(4,361,000	)
Long-term debt			$	43,893,282			$	19,506,666

F-20

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Table of Contents

2005		$	2,037,300
2006			2,716,400
2007			2,716,400
2008			2,150,482
2009			36,310,000
		$	45,930,582

F-21

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Table of Contents

3.	Capital Structure

F-22

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Table of Contents

Class B

Exercise

Expiration

Issue Date

Shares

Price

Date (b)

Issued To

5/15/01

9,529

(a)

$

0.20

(a)

7/12/06

Majority Shareholder

2/7/02

13,929

(a)

$

0.20

(a)

7/12/06

Majority Shareholder

2/7/02

4,821

(a)

$

0.20

(a)

7/12/06

Minority Shareholder

11/20/02

918,172

$

4.85

11/15/22

Minority Shareholder

(a)	Adjusted for 1 for 20 reverse stock split.

(b)

The warrants expire at the earlier of stated date or in the event that a transaction is consummated that results in the sale or lease of all or substantially all of the Company’s assets to another entity. In the event of a consolidation or merger of the Company with another entity, the warrants shall be converted into shares of Class B Common Stock. The warrants provide for adjustments to the exercise price and the number of warrant securities issuable upon the occurrence of certain events that would dilute the value of the warrants.

4.	Stock Option Plan

F-23

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Table of Contents

							Weighted
							Average
			Number of				Exercise
			Options				Price
Balance — December 31, 2001				478,281			$	8.62
	Granted			70,000				2.51
	Forfeited			(29,000	)			9.51
	Cancelled			(494,750	)			7.88
Balance — December 31, 2002				24,531			$	5.00
	Granted			656,500				1.95
	Forfeited			(56,000	)			2.00
Balance — December 31, 2003				625,031			$	2.14
	Granted			265,000				7.02
	Exercised			(94,799	)			1.77
	Forfeited			(67,250	)			2.88
Balance — December 31, 2004				727,982			$	3.90

		Outstanding
						Weighted				Weighted Avg.
						Avg. Exercise				Contractual
Range of Exercise Price		Shares				Price				Remaining Life
$0.00 — $5.00 per share			487,982			$	1.99				5.16
$5.01 — $7.25 per share			240,000			$	7.25				9.75

Exercisable

Weighted

Weighted Avg.

Avg. Exercise

Contractual

Range of Exercise Price

Shares

Price

Remaining Life

$0.00 — $5.00 per share

173,949

$

2.11

5.64

$5.01 — $7.25 per share

—

—

—

F-24

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Table of Contents

5.	Income Taxes

			2004				2003				2002
Current:
	Federal		$	1,407,262				—			$	(18,845	)
	State and local			363,908				—				(2,771	)
Deferred				844,982				186,322				(287,699	)
				2,616,152				186,322				(309,315	)
Change in valuation allowance				(2,522,567	)			(186,322	)			287,699
Recharacterization of accrued interest				—				—				150,474
Other				(8,855	)			116,816				(98,536	)
			$	84,730			$	116,816			$	30,322

		2004				2003				2002
Provision at federal statutory rate		$	2,549,387			$	319,441			$	(648,324	)
State and local taxes — net of federal benefit			374,910				46,977				(95,342	)
Change in valuation allowance			(2,522,567	)			(186,322	)			287,699
Work opportunity tax credits (“WOTC”)			(561,963	)			(314,511	)			(275,383	)
AMT credits			—				(56,097	)			(49,465	)
Permanent items			242,218				190,511				861,869
Other			2,745				116,817				(50,732	)
Income tax provision		$	84,730			$	116,816			$	30,322

F-25

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Table of Contents

					2004				2003
Deferred Income Tax Assets
	Allowance for Bad Debt				$	825,997				455,026
	Workers’ Compensation					3,628,303				2,087,222
	Other Accrued Expenses					654,746				1,424,688
	Work Opportunity Tax Credits (WOTC)					218,320				723,663
	AMT Credits					105,562				105,562
	State NOL’s					78,000				89,600
			Total Deferred Income Tax Assets			5,510,928				4,885,761
Deferred Income Tax Liability
	Depreciation and Amortization				$	(3,833,343	)		$	(2,363,194	)
			Total Deferred Income Tax Liabilities			(3,833,343	)			(2,363,194	)
			Valuation Allowance			—				(2,522,567	)
Total Deferred Income Tax Assets, net					$	1,677,585			$	—
		Current Deferred Income Tax Assets				1,774,536				—
		Long Term Deferred Income Tax Liabilities				(96,951	)			—
					$	1,677,585			$	—

6.	Intangible Assets and Deferred Financing Costs

		2004				2003
Balance at January 1		$	49,200,419			$	49,200,419
Acquisition (Note 11)			10,106,882				—
Balance at December 31		$	59,307,301			$	49,200,419

F-26

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Table of Contents

			2004				2003				Useful Lives
Loan Origination Costs			$	3,919,001			$	1,539,400				Life of related loan
Non-compete agreement				1,000,000				1,000,000				5 Years
Trademarks and names				1,205,656				—				4 Years
Customer Lists				7,016,690				—				9 Years
				13,141,347				2,539,400
Accumulated amortization:
	Loan origination costs			(1,476,858	)			(1,113,799	)
	Non-compete agreement			(843,011	)			(643,012	)
	Trademarks and tradenames			(67,354	)			—
	Customer Lists			(194,907	)			—
			$	10,559,217			$	782,589

Years Ended December 31:
2005		$	1,838,467
2006			1,633,841
2007			1,585,694
2008			1,461,300
2009			1,116,295
Thereafter			2,923,620
		$	10,559,217

7.	Property and Equipment

		2004				2003
Land		$	—			$	427,370
Buildings and improvements			—				991,530
Furniture, fixtures and equipment			7,876,173				6,476,901
Leasehold improvements			1,261,887				1,090,494
			9,138,060				8,986,295
Less — accumulated depreciation and amortization			(6,057,447	)			(4,997,295	)
		$	3,080,613			$	3,989,000

F-27

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Table of Contents

8.	Related Party Transactions

F-28

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Table of Contents

9.	Commitments and Contingencies

										Net Operating
		Gross				Sublease				Lease
Years Ended December 31,		Payments				Receipts				Commitments
2005		$	5,011,919			$	(246,919	)		$	4,765,000
2006			3,909,882				(127,882	)			3,782,000
2007			2,985,587				(95,587	)			2,890,000
2008			1,891,587				(95,587	)			1,796,000
2009			1,320,587				(95,587	)			1,225,000
Thereafter			967,983				(3,983	)			964,000
Total minimum lease payments		$	16,087,545			$	(665,545	)		$	15,422,000

10.	Retirement Savings Plans

F-29

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Table of Contents

11.	Acquisition

F-30

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Table of Contents

Accounts receivable		$	28,733
Property and equipment			750
Other assets			1,158
Trademarks and trade names			1,206
Customer list			7,017
Goodwill			10,107
Accounts payable			(3,175	)
Workers’ compensation			(8,120	)
Accrued expenses, mainly payroll and related costs			(11,177	)
Deemed distribution			3,757
		$	30,256

		2004				2003
Net revenues		$	519,692			$	445,007
Net income		$	8,641			$	476

F-31

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Table of Contents

		Page(s)
Consolidated balance sheet as of September 30, 2005 (Unaudited)			F-33
Consolidated statements of operations and comprehensive income for the nine months ended September 30, 2005 and 2004 (Unaudited)			F-34
Consolidated statement of shareholders’ equity for the nine months ended September 30, 2005 (Unaudited)			F-35
Consolidated statements of cash flows for the nine months ended September 30, 2005 and 2004 (Unaudited)			F-36
Notes for consolidated financial statements (Unaudited)			F-37-F-40

F-32

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Table of Contents

Assets
Current Assets:					(Unaudited)
	Cash			$	1,511,569
	Accounts receivable:
		Trade, net of allowance for doubtful accounts of $4,962,124			52,820,889
		Unbilled revenue			10,937,000
	Prepaid expenses and other current assets				2,342,715
	Deferred tax assets				2,645,879
		Total current assets			70,258,052
Property and Equipment — Net					2,592,492
Other Assets:
	Goodwill				59,386,859
	Other intangibles — net				9,127,764
	Deferred tax assets				358,891
	Other				859,560
		Total Assets		$	142,583,618
Liabilities and Shareholders’ Equity
Current Liabilities:
	Current portion of long-term debt			$	2,037,300
	Swing-line and revolving line-of-credit				300,000
	Accounts payable				7,653,841
	Accrued expenses:
		Accrued payroll, bonuses and commissions			13,474,709
		Payroll taxes and other withholdings			8,255,518
		Current portion of workers’ compensation obligation			7,579,228
		Other			7,884,895
		Total current liabilities			47,185,491
Long-term debt					35,012,538
Workers’ Compensation obligation					11,368,843
		Total liabilities			93,566,872
Commitments and Contingencies
Shareholders’ Equity:
	Common stock:
		Class A, $0.001 par value, 5,000,000 shares authorized; issued and outstanding 2,830,909 shares			2,831
		Class B, $0.001 par value, 5,000,000 shares authorized; issued and outstanding 3,548,384 shares			3,548
		Class C, $0.001 par value, 2,000,000 shares authorized; issued and outstanding 140,199 shares			140
Additional paid-in capital					47,202,299
Accumulated other comprehensive income					183,621
Retained earnings					1,624,307
		Total shareholders’ equity			49,016,746
		Total Liabilities and Shareholders’ Equity		$	142,583,618

F-33

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Table of Contents

				(Unaudited)
				2005				2004
Revenues				$	405,485,510			$	179,255,854
Direct cost of revenues					329,535,941				144,497,623
		Gross profit			75,949,569				34,758,231
Operating expenses:
	Staffing expense				41,297,354				18,389,692
	Selling, general and administrative expense				22,062,954				10,027,074
	Amortization				1,432,644				607,219
		Income from operations			11,156,617				5,734,246
Other income (expense):
	Interest expense				(3,397,787	)			(827,684	)
	Other income				104,972				210,079
		Income before provision for income taxes			7,863,802				5,116,641
Provision for income taxes					2,936,876				402,268
		Net income			4,926,926				4,714,373
Other comprehensive income:
	Unrealized gain on interest rate swap				122,689				—
	Comprehensive income			$	5,049,615			$	4,714,373

F-34

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Table of Contents

			Common Stock
																															Accumulated				(Accumulated
																											Additional				Other				Deficit)
			Class A								Class B								Class C								Paid in				Comprehensive				Retained
			Shares				Value				Shares				Value				Shares				Value				Capital				Income				Earnings				Total
Balance — December 31, 2004				2,830,909			$	2,831				3,548,384			$	3,548				94,799			$	95			$	47,111,544			$	60,932			$	(3,268,021	)		$	43,910,929
	Net income			—				—				—				—				—				—				—				—				4,926,926				4,926,926
	Stock Options Exercised			—				—				—				—				45,400				45				90,755				—				—				90,800
	Change in unrealized gain on interest rate swap			—				—				—				—				—				—				—				122,689				—				122,689
	Deemed distribution to shareholder			—				—				—				—				—				—				—				—				(34,598	)			(34,598	)
Balance — September 30, 2005				2,830,909			$	2,831				3,548,384			$	3,548				140,199			$	140			$	47,202,299			$	183,621			$	1,624,307			$	49,016,746

F-35

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Table of Contents

					(Unaudited)
					2005				2004
Cash Flows from Operating Activities:
	Net income				$	4,926,926			$	4,714,373
	Adjustments to reconcile net income to net cash provided by (used in) operating activities:
		Depreciation and amortization				2,528,212				1,546,174
		Deferred taxes				(1,327,185	)			—
	Changes in operating assets and liabilities:
		Increase in accounts receivable and unbilled receivables				(2,665,348	)			(6,091,829	)
		Decrease (Increase) in prepaid expenses and other assets				445,600				(2,818,888	)
		Increase (Decrease) in accounts payable				2,318,084				(293,487	)
		Increase in accrued expenses and other long-term liabilities				3,461,601				3,319,237
			Net cash provided by operating activities			9,687,890				375,580
Cash Flows from Investing Activities:
	Cash paid for acquisition					—				(30,256,149	)
	Purchases of equipment and improvements					(607,447	)			(169,803	)
			Net cash used in investing activities			(607,447	)			(30,425,952	)
Cash Flows from Financing Activities:
	Proceeds from exercise of stock options					90,800				163,941
	Increase (decrease) in swing-line/revolver					(6,010,000	)			13,814,000
	Proceeds from issuance of long-term debt					486,063				20,000,000
	Repayment of long-term debt					(3,056,807	)			(3,786,667	)
			Net cash provided by (used in) financing activities			(8,489,944	)			30,191,274
			Net increase in cash			590,499				140,902
Cash — Beginning of period						921,070				266,231
Cash — End of period					$	1,511,569			$	407,133
Supplemental Disclosures of Cash Flow Information:
	Cash paid for interest				$	2,982,560			$	2,021,367
	Cash paid for taxes				$	3,591,259			$	148,882
	Cash paid for interest rate swap				$	27,890			$	70,871
Non-Cash Investing and Financing Activity:
	Shareholders’ notes payable converted to Common Stock				$	—			$	7,200,000

F-36

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F-37

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Table of Contents

		Years
Buildings and building improvements			31.5
Equipment			5
Furniture and fixtures			7
Computer software costs			3-5

F-38

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Table of Contents

		2004
Net revenue		$	380,278
Net income		$	5,591

F-39

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Table of Contents

F-40

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		Page(s)
Report of independent auditors			F-42–F-43
Consolidated balance sheets as of June 30, 2005 and 2004			F-44
Consolidated statements of income for the year ended June 30, 2005, for the seven month period ended February 9, 2004, for the five month period ended June 30, 2004 and for the year ended 2003			F-45
Consolidated statements of shareholders’ equity, for the year ended June 30, 2005, for the seven month period ended February 9, 2004, for the five month period ended June 30, 2004 and for the year ended 2003			F-46
Consolidated statements of cash flows for the year ended June 30, 2005, for the seven month period ended February 9, 2004, for the five month period ended June 30, 2004 and for the year ended 2003			F-47
Notes to consolidated financial statements			F-48–F-63

F-41

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Table of Contents

F-42

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Table of Contents

F-43

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Table of Contents

				Successor
				June 30,
				2005				2004
Assets
Current assets
	Cash			$	773			$	204
	Accounts receivable, net				13,747				12,689
	Inventories, net				11,060				9,694
	Refundable income taxes				132				210
	Other current assets				1,806				1,757
	Deferred taxes				1,104				943
		Total current assets			28,622				25,497
Property, plant and equipment, net					10,513				10,583
Investment in equity investee					545				786
Goodwill					30,951				30,951
Intangible and other assets, net					13,552				14,114
		Total assets		$	84,183			$	81,931
Liabilities and Shareholders’ Equity
Current liabilities
	Current portion of long-term debt			$	2,583			$	2,333
	Current portion of capitalized lease obligations				69				61
	Accounts payable				3,991				4,257
	Accrued payroll costs				214				1,436
	Accrued foregone offering costs				1,716				—
	Accrued expenses				2,428				1,985
		Total current liabilities			11,001				10,072
Notes payable under revolving line of credit					10,385				7,138
Long-term debt, net of current portion					35,334				37,917
Capitalized lease obligations, net of current portion					135				132
Accrued interest on Senior Subordinated Notes					901				247
Deferred taxes					3,509				3,951
Other liabilities					572				548
		Total liabilities			61,837				60,005
Commitments and contingencies (Note 14)
Shareholders’ equity
	Common stock — $.01 par value, authorized 1,500,000 shares; issued and outstanding 573,536 and 573,408 shares				6				6
	Additional paid-in capital				22,076				22,083
	Shareholders’ notes receivable				(1,035	)			(973	)
	Retained earnings				1,299				810
		Total shareholders’ equity			22,346				21,926
		Total liabilities and shareholders’ equity		$	84,183			$	81,931

F-44

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Table of Contents

			Successor								Predecessor
							February 10, 2004				July 1, 2003
			Year Ended				through				through				Year Ended
			June 30,				June 30,				February 9,				June 30,
			2005				2004				2004				2003
Net sales			$	70,060			$	24,856			$	38,770			$	53,333
Cost of sales				50,874				17,337				26,382				37,382
	Gross profit			19,186				7,519				12,388				15,951
Selling, general and administrative expenses				10,526				4,119				5,394				8,749
Amortization of intangible assets				629				258				70				132
	Operating income			8,031				3,142				6,924				7,070
Interest expense				4,638				1,588				402				1,978
Recapitalization and foregone offering expenses				3,022				644				1,853				—
Equity in (earnings) losses of investee				241				14				(70	)			(158	)
Other expense (income), net				(471	)			(377	)			(223	)			(266	)
	Income before income taxes			601				1,273				4,962				5,516
Income tax expense				112				463				1,824				2,122
	Net income		$	489			$	810			$	3,138			$	3,394

F-45

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Table of Contents

										Capital in				Shareholders’								Total
		Preferred				Common				Excess of				Notes				Retained				Shareholders’
		Stock				Stock				Par Value				Receivable				Earnings				Equity
Predecessor Balance at June 30, 2003		$	8,778			$	12			$	3,635			$	(722	)		$	1,731			$	13,434
Interest accretion on Series B Preferred stock			321				—				—				—				(321	)			—
Exercise of options			—				—				342				—				—				342
Issuance of common stock, net of notes receivable thereon			—				—				43				—				—				43
Payment of notes due on common stock			—				—				—				76				—				76
Net income			—				—				—				—				3,138				3,138
Predecessor Balance at February 9, 2004		$	9,099			$	12			$	4,020			$	(646	)		$	4,548			$	17,033
Successor Balance at February 10, 2004		$	—			$	—			$	—			$	—			$	—			$	—
Issuance of common stock, net of notes receivable thereon			—				6				22,083				(954	)			—				21,135
Interest on notes			—				—				—				(19	)			—				(19	)
Net income			—				—				—				—				810				810
Successor Balance at June 30, 2004			—				6				22,083				(973	)			810				21,926
Redemption of stock			—				—				(7	)			—				—				(7	)
Interest on notes			—				—				—				(62	)			—				(62	)
Net income			—				—				—				—				489				489
Successor Balance at June 30, 2005		$	—			$	6			$	22,076			$	(1,035	)		$	1,299			$	22,346

F-46

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Table of Contents

				Successor								Predecessor
								February 10, 2004				July 1, 2003
				Year Ended				through				through				Year Ended
				June 30,				June 30,				February 9,				June 30,
				2005				2004				2004				2003
Cash flows from operating activities
Net income				$	489			$	810			$	3,138			$	3,394
Adjustments to reconcile net income to net cash provided by (used in) operating activities
	Depreciation and amortization				2,776				1,106				1,277				2,427
	Deferred income taxes				(603	)			(51	)			390				831
	Foregone offering costs				3,022				—				—				—
	Recapitalization expenses				—				644				1,853				—
	Repayment of note discount								—				—				(853	)
	Accretion of note discount				—				—				—				35
	Loss on unamortized discount of senior subordinated notes				—				—				—				595
	Loss (income) from equity investment				241				14				(70	)			(158	)
	Tax Benefit of stock option exercise				—				—				130				—
	Loss on sale of property, plant and equipment				9				95				38				645
	Interest deferred on senior subordinated notes				654				247				—				(744	)
	Other non-cash expenses				—				—				342				—
(Increase) decrease in operating assets and increase (decrease) in operating liabilities
	Accounts receivable				(1,058	)			(4,240	)			2,924				(1,135	)
	Inventories				(1,366	)			(1,308	)			(1,607	)			(155	)
	Other current assets				(49	)			226				(555	)			(379	)
	Refundable income taxes/income taxes payable				78				(255	)			(394	)			(27	)
	Accounts payable and accrued expenses				(1,045	)			2,817				1,090				(108	)
	Other liabilities				(38	)			(16	)			(5	)			(8	)
		Net cash provided by operating activities			3,110				89				8,551				4,360
Cash flows from investing activities
Capital expenditures					(2,014	)			(1,107	)			(1,156	)			(572	)
Investment					—				—				(25	)			—
Acquisition costs					—				(64,702	)			—				—
		Net cash used in investing activities			(2,014	)			(65,809	)			(1,181	)			(572	)
Cash flows from financing activities
Proceeds from revolving credit facility					81,473				31,233				43,355				61,611
Repayments under revolving credit facility					(78,226	)			(24,095	)			(45,621	)			(62,442	)
Proceeds from issuance of long-term debt					—				41,000				—				4,000
Principal payments and retirement of long-term obligations					(2,394	)			(788	)			(3,146	)			(8,994	)
Financing costs associated with issuance of debt					(67	)			(1,272	)			—				(93	)
Foregone offering costs					(1,306	)			—				—				—
Recapitalization expenses					—				(1,308	)			(1,853	)			—
Redemption of common stock					(7	)			—				—				(3,408	)
Redemption of warrants													—				(855	)
Receipt of payment on notes used to fund common stock purchase					—				—				76				—
Issuance of common stock					—				21,135				43				6,316
		Net cash provided by (used in) financing activities			(527	)			65,905				(7,146	)			(3,865	)
		Net increase (decrease) cash and cash equivalents			569				185				224				(77	)
Cash at beginning of year					204				19				205				282
		Cash at end of year		$	773			$	204			$	429			$	205
Supplemental disclosure of non-cash activities
Equipment financed under capital lease				$	72			$	—			$	127			$	1,000
Foregone offering costs incurred not yet paid					1,716				—				—				—
Equipment financed with issuance of note payable					—				—				—				77

F-47

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Table of Contents

1.	Organization and Nature of Operations

2.	Significant Accounting Policies

	Revenue Recognition

	Use of Estimates

	Consolidation

	Accounts Receivable

	Inventories

F-48

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Table of Contents

	Property, Plant and Equipment

Building			25 years
Building improvements			5-10 years
Machinery and equipment			8-10 years
Furniture and fixtures			5-10 years
Computers and software			3-6 years
Tooling			3-6 years
Assets under capital lease			Term of lease

	Long-Lived Assets

	Goodwill

	Advertising Costs

	Self-Insurance

	Guarantees

F-49

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Table of Contents

	New Accounting Pronouncement

	Financial Instruments

	Income Taxes

F-50

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Table of Contents

	Reclassification

3.	Inventories

		Successor
		June 30,
		2005				2004
Raw materials		$	3,224			$	3,127
Work-in-process			1,672				1,933
Finished goods			6,164				4,634
		$	11,060			$	9,694

4.	Warranty Reserve

		Successor
		June 30,
		2005				2004
Balance at July 1		$	392			$	335
Accruals for warranties issued during period			1,651				1,438
Settlements made during the period			(1,582	)			(1,381	)
		$	461			$	392

F-51

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Table of Contents

5.	Property, Plant and Equipment

		Successor
		June 30,
		2005				2004
Land		$	256			$	256
Building and improvements			2,340				2,328
Machinery and equipment			6,705				5,072
Furniture and fixtures			141				108
Computers and software			620				483
Tooling			2,721				2,249
Assets under capital lease			254				182
Construction-in-progress			459				749
			13,496				11,427
Less: Accumulated depreciation			(2,983	)			(844	)
		$	10,513			$	10,583

6.	Intangibles and Other Assets

				Successor
				June 30,
				2005				2004
Intangible assets subject to amortization:
	Financing costs			$	1,339			$	1,272
	Developed Technology				900				900
	License and distribution agreements				2,400				2,400
					4,639				4,572
	Less: Accumulated amortization				(887	)			(258	)
					3,752				4,314
Intangible assets not subject to amortization, excluding goodwill:
		Trademarks			9,800				9,800
	Total intangibles and other assets, excluding goodwill, net			$	13,552			$	14,114

F-52

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Table of Contents

																							There-
			2006				2007				2008				2009				2010				after				Total
Financing costs			$	280			$	280			$	280			$	117			$	—			$	—			$	957
Developed Technology				90				90				90				90				90				322				772
License and distribution agreement				266				266				266				266				182				777				2,023
	Totals		$	636			$	636			$	636			$	473			$	272			$	1,099			$	3,752

7.	Investment

					Successor								Predecessor
					June 30,								June 30,
					2005				2004				2003
Summary of operations:
	Revenues				$	13,547			$	18,316			$	11,708
	Costs and expenses					14,029				18,204				11,392
			Net (loss) income		$	(482	)		$	112			$	316
			Company equity in net (loss) income		$	(241	)		$	56			$	158
Balance sheet data:
	Assets:
		Current assets			$	5,410			$	6,616			$	5,651
		Non-current assets				475				468				517
			Total assets		$	5,885			$	7,084			$	6,168
	Liabilities and membership interests:
		Current liabilities			$	5,078			$	5,794			$	4,990
		Membership interests				807				1,290				1,178
			Total liabilities and membership interests		$	5,885			$	7,084			$	6,168

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8.	Recapitalization

Uses of Cash
	Redemption of 684,917 of common stock, net of option exercise price and receipt of payment on note receivable to fund purchase of stock		$	26,281
	Redemption of 100% of the redeemable Series B preferred stock at full redemption value as of February 10, 2004 (see Note 10)			9,099
	Prepayment Senior Term Debt (see Note 9)			6,508
	Payment of Outstanding Revolving Line of Credit			121
	Seller fees			1,693
	Purchaser fees			2,418
			$	46,120
Sources of Cash
	Senior Term Loan (see Note 9)		$	27,000
	Senior Subordinated Notes (see Note 9)			14,000
	New borrowings under revolving line of credit (see Note 9)			5,120
			$	46,120

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Table of Contents

9.	Long-Term Debt

			Successor
			June 30,
			2005				2004
Collateralized:
	Term Loan Facility		$	23,917			$	26,250
	Senior Subordinated Notes			14,000				14,000
				37,917				40,250
	Less: Current portion			(2,583	)			(2,333	)
			$	35,334			$	37,917
	Notes payable under revolving line of credit		$	10,385			$	7,138

	Senior Credit Facility

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Table of Contents

	Senior Subordinated Notes

	Subsequent Event Refinancing

	Long-Term Debt — Five Year Repayment Schedule (excluding the Revolver)

2006		$	2,583
2007			2,600
2008			3,142
2009			15,592
2010			14,000
		$	37,917

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		Successor								Predecessor
						February 10,				July 1,
						2004				2003
		Year Ended				through				through				Year Ended
		June 30,				June 30,				February 9,				June 30,
		2005				2004				2004				2003
Interest expense components are
Interest expense		$	3,984			$	1,341			$	402			$	1,257
Amortization of discount			—				—				—				35
Write-off of unamortized discount costs			—				—				—				595
Interest deferred on senior subordinated notes			654				247				—				91
		$	4,638			$	1,588			$	402			$	1,978
Cash paid for interest		$	4,016			$	524			$	1,148			$	2,666
Effective interest rate on all debt			9.0	%			7.6	%			7.6	%			12.6	%

10.	Shareholders’ Equity

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Table of Contents

11.	Income Taxes

				Successor
				June 30,
				2005				2004
Current deferred tax assets/(liabilities)
	Accounts receivable			$	185			$	252
	Inventory				268				222
	Workers’ compensation				—				113
	Warranty and product liability				413				159
	Tax credits				180				250
	Other				58				(53	)
		Total net current deferred tax assets			1,104				943
Long-term deferred tax assets/(liabilities)
	Supplemental retirement				217				203
	Property, plant and equipment				(1,894	)			(2,042	)
	Intangible assets				(995	)			(1,113	)
	Tax credits				293				126
	Goodwill				(1,130	)			(1,130	)
	Other				—				5
		Total net long-term deferred tax liabilities			(3,509	)			(3,951	)
		Net deferred tax liability		$	(2,405	)		$	(3,008	)

			Successor								Predecessor
							February 10,				July 1,
							2004				2003
			Year Ended				through				through				Year Ended
			June 30,				June 30,				February 9,				June 30,
			2005				2004				2004				2003
Current:
	Federal		$	602			$	508			$	1,290			$	1,200
	State			96				6				120				91
Deferred income tax				(586	)			(51	)			414				831
			$	112			$	463			$	1,824			$	2,122

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	Rate Reconciliation

		Successor																Predecessor
										February 10,								July 1,
		Year Ended								2004								2003								Year Ended
		June 30,								through June 30,								through February 9,								June 30,
		2005								2004								2004								2003
Statutory federal income tax rate		$	204				34.0	%		$	433				34.0	%		$	1,687				34.0	%		$	1,875				34.0	%
State taxes, net of federal benefit			23				3.8	%			48				3.80	%			189				3.8	%			221				4.0	%
Investment tax credits			(84	)			(14.0	)%			(28	)			(2.2	)%			(103	)			(2.0	)%			(17	)			(0.3	)%
Non taxable (income) expenses, net			(4	)			(0.7	)%			7				0.6	%			(11	)			(0.2	)%			(10	)			0.2	%
Adjustment to prior year taxes			(34	)			(5.6	)%			4				0.3	%			9				0.2	%			(5	)			(0.1	)%
Miscellaneous			7				1.1	%			(1	)			(0.1	)%			53				1.0	%			58				1.1	%
		$	112				18.7	%		$	463				36.4	%		$	1,824				36.8	%		$	2,122				38.5	%

12.	Leases

Years Ending			Capital				Operating
2006			$	84			$	74
2007				58				55
2008				49				55
2009				29				36
2010				18				—
	Total minimum lease payments			238				220
Less: Amount representing interest				(34	)
	Total obligations under capital lease			204
Less: Current portion				(69	)
	Long-term obligations under capital lease		$	135

13.	Stock Based Plans

	A) Director Stock Option Plan

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Table of Contents

						Weighted
						Average
		Number				Exercise
		of Shares				Price
Outstanding at June 30, 2003			15,667			$	6.76
Granted in period July 1, 2003 through February 9, 2004			3,000				21.31
Exercised in period July 1, 2003 through February 9, 2004			(18,667	)			9.10
Outstanding at February 9, 2004			—			$	—
Outstanding at June 30, 2004			—			$	—
Outstanding at June 30, 2005			—			$	—

	B) Stock Incentive Plan

	Stock Purchases

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Table of Contents

	Stock Options

							Weighted
							Average
							Minimum
			Number				Exercise
			of Shares				Price
Date of Vesting
	February 10, 2005			6,000			$	73.00
	February 10, 2006			6,000				99.67
	February 10, 2007			6,000				140.33
	February 10, 2008			6,000				194.67
	February 10, 2009			6,000				270.37
				30,000			$	155.61

14.	Commitment and Contingencies

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15.	Employee Retirement Plan

16.	Concentration of Sales and Credit Risk

17.	Related Party Transactions

18.	Warrants for Common Stock

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19.	Segment Reporting

		Successor								Predecessor
						February 10,				July 1,
						2004				2003
		Year ended				through				through				Year ended
		June 30				June 30,				February 9,				June 30,
		2005				2004				2004				2003
Air rifles		$	24,072			$	8,829			$	16,785			$	24,720
Air pistols			11,817				5,004				8,288				10,890
Soft air			15,626				3,221				2,578				1,099
Related consumables			16,947				7,180				9,971				15,148
Other			1,598				622				1,148				1,476
		$	70,060			$	24,856			$	38,770			$	53,333

20.	Acquisition Adjustment

				Successor
				February 10,
				2004
Allocated to assets and liabilities:
	Cash			$	19
	Accounts receivable				8,449
	Inventory				8,386
	Other current assets				2,223
	Investment in equity investee				800
	Property, plant and equipment, net				10,419
	Liabilities assumed				(8,980	)
	Intangible assets acquired:
		Trademarks			9,800
		Developed Technology			900
		License and distribution agreements			2,400
		Goodwill			30,286
	Total purchase price			$	64,702

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		Page(s)
Consolidated balance sheet as of October 2, 2005 (unaudited)			F-65
Consolidated statements of income for the three month periods ended October 2, 2005 (unaudited) and September 26, 2004 (unaudited)			F-66
Consolidated statements of shareholders’ equity, for the three month period ended October 2, 2005 (unaudited)			F-67
Consolidated statements of cash flows for the three month periods ended October 2, 2005 (unaudited) and September 26, 2004 (unaudited)			F-68
Notes to consolidated financial statements			F-69–F-81

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				October 2,
				2005
				(Unaudited)
Assets
Current assets
	Cash			$	192
	Accounts receivable, net				16,413
	Inventories, net				13,567
	Other current assets				1,427
	Deferred taxes				1,345
		Total current assets			32,944
Property, plant and equipment, net					10,266
Investment in equity investee					497
Goodwill					30,951
Intangible and other assets, net					13,773
		Total assets		$	88,431
Liabilities and Shareholders’ Equity
Current liabilities
	Current portion of long-term debt			$	2,600
	Current portion of capitalized lease obligations				73
	Accounts payable				6,851
	Accrued payroll costs				373
	Accrued expenses				3,068
	Income taxes payable				935
		Total current liabilities			13,900
Notes payable under revolving line of credit					9,074
Long-term debt, net of current portion					37,183
Capitalized lease obligations, net of current portion					114
Accrued interest on Senior Subordinated Notes					1,071
Deferred taxes					3,536
Other liabilities					578
		Total liabilities			65,456
Commitments and contingencies (Note 14)
Shareholders’ equity
	Common stock — $.01 par value, authorized 1,500,000 shares; issued and outstanding 573,536 (unaudited)				6
	Additional paid-in capital				22,076
	Shareholders’ notes receivable				(1,050	)
	Retained earnings				1,943
		Total shareholders’ equity			22,975
		Total liabilities and shareholders’ equity		$	88,431

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			Three Month Periods Ended
			October 2,				September 26,
			2005				2004
			(Unaudited)				(Unaudited)
Net sales			$	20,468			$	15,511
Cost of sales				15,490				11,316
	Gross profit			4,978				4,195
Selling, general and administrative expenses				2,441				2,509
Amortization of intangible assets				179				155
	Operating income			2,358				1,531
Interest expense				1,326				1,055
Equity in (earnings) losses of investee				48				109
Other expense (income), net				(52	)			(121	)
	Income before income taxes			1,036				488
Income tax expense				392				141
	Net income		$	644			$	347

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Table of Contents

						Capital in				Shareholders’								Total
		Common				Excess of				Notes				Retained				Shareholders’
		Stock				Par Value				Receivable				Earnings				Equity
Successor Balance at June 30, 2005		$	6			$	22,076			$	(1,035	)		$	1,299			$	22,346
Interest on notes (Unaudited)			—				—				(15	)			—				(15	)
Net income (Unaudited)			—				—				—				644				644
Successor Balance at October 2, 2005 (Unaudited)		$	6			$	22,076			$	(1,050	)		$	1,943			$	22,975

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				Three Month Periods Ended
				October 2,				September 26,
				2005				2004
				(Unaudited)				(Unaudited)
Cash flows from operating activities
Net income				$	644			$	347
Adjustments to reconcile net income to net cash provided by (used in) operating activities
	Depreciation and amortization				739				683
	Deferred income taxes				(214	)			(316	)
	Loss (income) from equity investment				48				109
	Loss on sale of property, plant and equipment				2				12
	Interest deferred on senior subordinated notes				170				162
(Increase) decrease in operating assets and increase (decrease) in operating liabilities
	Accounts receivable				(2,666	)			(909	)
	Inventories				(2,507	)			(4,433	)
	Other current assets				379				(158	)
	Refundable income taxes/income taxes payable				1,067				696
	Accounts payable and accrued expenses				3,659				1,762
	Other liabilities				(9	)			(5	)
		Net cash provided by (used in) operating activities			1,312				(2,050	)
Cash flows from investing activities
Capital expenditures					(315	)			(607	)
		Net cash used in investing activities			(315	)			(607	)
Cash flows from financing activities
Proceeds from revolving credit facility					29,994				22,057
Repayments under revolving credit facility					(31,305	)			(18,598	)
Proceeds from issuance of long-term debt					26,000				—
Principal payments and retirement of long-term obligations					(24,151	)			(578	)
Financing costs associated with issuance of debt					(400	)			—
Foregone offering costs					(1,716	)			—
Redemption of common stock					—				(7	)
		Net cash (used in) provided by financing activities			(1,578	)			2,874
		Net (decrease) increase cash and cash equivalents			(581	)			217
Cash at beginning of year					773				204
		Cash at end of year		$	192			$	421

F-68

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Table of Contents

1.	Organization and Nature of Operations

2.	Significant Accounting Policies

	Revenue Recognition

	Use of Estimates

	Consolidation

	Accounts Receivable

	Inventories

F-69

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Table of Contents

	Property, Plant and Equipment

Building			25 year
Building improvements			5-10 years
Machinery and equipment			8-10 years
Furniture and fixtures			5-10 years
Computers and software			3-6 years
Tooling			3-6 years
Assets under capital lease			Term of lease

	Long-Lived Assets

	Goodwill

	Advertising Costs

	Self-Insurance

	Guarantees

F-70

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Table of Contents

	New Accounting Pronouncement

	Stock Based Compensation

	Income Taxes

	Recapitalization

F-71

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Table of Contents

	Interim Financial Statements

3.	Inventories

		October 2,
		2005
		(Unaudited)
Raw materials		$	3,269
Work-in-process			1,707
Finished goods			8,591
		$	13,567

4.	Warranty Reserve

		October 2,
		2005
		(Unaudited)
Balance at July 1		$	461
Accruals for warranties issued during period			636
Settlements made during the period			(461	)
		$	636

F-72

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Table of Contents

5.	Property, Plant and Equipment

		October 2,
		2005
		(Unaudited)
Land		$	256
Building and improvements			2,349
Machinery and equipment			6,715
Furniture and fixtures			141
Computers and software			630
Tooling			2,729
Assets under capital lease			254
Construction-in-progress			734
			13,808
Less: Accumulated depreciation			(3,542	)
		$	10,266

6.	Intangibles and Other Assets

				October 2,
				2005
				(Unaudited)
Intangible assets subject to amortization:
	Financing costs			$	1,739
	Developed Technology				900
	License and distribution agreements				2,400
					5,039
	Less: Accumulated amortization				(1,066	)
					3,973
Intangible assets not subject to amortization, excluding goodwill:
		Trademarks			9,800
	Total intangibles and other assets, excluding goodwill, net			$	13,773

F-73

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Table of Contents

																							There-
			2006				2007				2008				2009				2010				after				Total
Financing costs			$	297			$	397			$	397			$	176			$	—			$	—			$	1,267
Developed Technology				68				90				90				90				90				322				750
License and distribution agreement				199				266				266				266				182				777				1,956
	Totals		$	564			$	753			$	753			$	532			$	272			$	1,099			$	3,973

7.	Investment

					Three-Month
					Period Ended
					October 2,
					2005
					(Unaudited)
Summary of operations:
	Revenues				$	2,461
	Costs and expenses					2,556
			Net loss		$	(95	)
			Company equity in net loss		$	(48	)
Balance sheet data:
	Assets:
		Current assets			$	3,580
		Non-current assets				452
			Total assets		$	4,032
	Liabilities and membership interests:
		Current liabilities			$	3,319
		Membership interests				713
			Total liabilities and membership interests		$	4,032

F-74

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Table of Contents

8.	Long-Term Debt

			October 2,
			2005
			(Unaudited)
Collateralized:
	Term Loan Facility		$	25,783
	Senior Subordinated Notes			14,000
				39,783
	Less: Current portion			(2,600	)
			$	37,183
	Notes payable under revolving line of credit		$	9,074

	Senior Credit Facility

	Senior Subordinated Notes

F-75

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Table of Contents

	Refinancing

	Long-Term Debt — Five Year Repayment Schedule (excluding the Revolver)

2006		$	2,600
2007			2,600
2008			3,142
2009			17,441
2010			14,000
		$	39,783

		Three Month Periods Ended
		October 2,				September 26,
		2005				2004
		(Unaudited)				(Unaudited)
Interest expense components are
Interest expense		$	1,156			$	893
Interest deferred on senior subordinated notes			170				162
		$	1,326			$	1,055
Cash paid for interest		$	1,147			$	783
Effective interest rate on all debt			10.7	%			8.5	%

F-76

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Table of Contents

9.	Income Taxes

				October 2,
				2005
				(Unaudited)
Current deferred tax assets/(liabilities)
	Accounts receivable			$	247
	Inventory				300
	Warranty and product liability				489
	Tax credits				275
	Other				34
		Total net current deferred tax assets			1,345
Long-term deferred tax assets/(liabilities)
	Supplemental retirement				220
	Property, plant and equipment				(1,793	)
	Intangible assets				(964	)
	Tax credits				131
	Goodwill				(1,130	)
		Total net long-term deferred tax liabilities			(3,536	)
		Net deferred tax liability		$	(2,191	)

			Three Month Periods Ended
			October 2,				September 26,
			2005				2004
			(Unaudited)				(Unaudited)
Current:
	Federal		$	575			$	400
	State			27				38
Deferred income tax				(210	)			(297	)
			$	392			$	141

F-77

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Table of Contents

	Rate Reconciliation

		Three Month Periods Ended
		October 2,								September 26,
		2005								2004
		(Unaudited)
Statutory federal income tax rate		$	352				34.0	%		$	166				34.0	%
State taxes, net of federal benefit			47				4.5	%			18				3.7	%
Investment tax credits			(1	)			(0.1	)%			(17	)			(3.5	)%
Non taxable (income) expenses, net			(17	)			(1.6	)%			(1	)			(0.2	)%
Adjustments to prior year taxes			—				0.0	%			(34	)			(6.8	)%
Miscellaneous			11				1.0	%			9				1.8	%
		$	392				37.8	%		$	141				28.9	%

10.	Leases

Years Ending			Capital				Operating
2006			$	63			$	53
2007				58				55
2008				49				55
2009				29				36
2010				18				—
	Total minimum lease payments			217				199
Less: Amount representing interest				(30	)
	Total obligations under capital lease			187
Less: Current portion				(73	)
	Long-term obligations under capital lease		$	114

11.	Stock Based Plans

	A) Director Stock Option Plan

F-78

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Table of Contents

	B) Stock Incentive Plan

	Stock Purchases

	Stock Options

							Weighted
							Average
							Minimum
			Number of				Exercise
			Shares				Price
Date of Vesting
	February 10, 2005			6,000			$	73.00
	February 10, 2006			6,000				99.67
	February 10, 2007			6,000				140.33
	February 10, 2008			6,000				194.67
	February 10, 2009			6,000				270.37
				30,000			$	155.61

F-79

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Table of Contents

12.	Commitment and Contingencies

13.	Employee Retirement Plan

F-80

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Table of Contents

14.	Concentration of Sales and Credit Risk

15.	Related Party Transactions

16.	Warrants for Common Stock

17.	Segment Reporting

		Three month periods ended
		October 2,				September 26,
		2005				2004
		(Unaudited)				(Unaudited)
Air rifles		$	5,875			$	5,326
Air pistols			3,275				2,971
Soft air			7,237				2,869
Related consumables			3,733				3,891
Other			347				454
		$	20,467			$	15,511

F-81

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Table of Contents

		Page(s)
Independent Auditors’ Report			F-83
Combined balance sheets as of December 31, 2004 and 2003			F-84
Combined statements of operations for the years ended December 31, 2004, 2003 and 2002			F-85
Combined statements of stockholders’ equity and members’ capital for the years ended December 31, 2004, 2003 and 2002			F-86
Combined statements of cash flows for the years ended December 31, 2004, 2003 and 2002			F-87
Notes to combined financial statements			F-88–F-93

F-82

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F-83

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Table of Contents

					2004				2003
Assets
Current assets
	Cash and Cash Equivalents				$	6,619,956			$	4,071,288
	Accounts Receivable					2,662,185				1,958,527
		Less: Allowance for Doubtful Accounts				80,000				80,000
			Accounts Receivable — Net			2,582,185				1,878,527
	Inventory and Work in Process					309,402				304,000
	Note Receivable — Current					52,500				—
			Total Current Assets			9,564,043				6,253,815
	Property and Equipment at Cost					10,646,074				9,829,734
	Less: Accumulated Depreciation					3,977,565				3,108,361
			Property and Equipment — Net			6,668,509				6,721,373
Other assets
	Annuities and Cash Surrender Value — Life Insurance					223,555				79,005
	Deposits					35,000				86,500
	Notes Receivable					297,500				—
			Total Other Assets			556,055				165,505
			Total assets		$	16,788,607			$	13,140,693
Liabilities, Stockholders’ Equity and Members’ Capital
Current liabilities
	Accounts Payable				$	1,237,578			$	1,059,180
	Accrued Wages and Payroll Taxes					375,709				429,804
	Notes Payable — Due Within One Year					380,000				756,191
	Other Accrued Liabilities					332,633				487,966
	Accrued Vacation					313,769				214,050
	Accrued Bonuses					375,000				125,000
	Accrued Sales Tax Payable					53,101				58,806
	Due to Members					354,108				284,292
			Total Current Liabilities			3,421,898				3,415,289
Long-term liabilities
	Deferred Compensation Plan Payable					96,000				24,500
	Deposits					35,000				35,000
	Notes Payable					2,786,667				3,166,667
			Total Liabilities			6,339,565				6,641,456
Stockholders’ equity and members’ capital
	Members’ Capital					2,601,676				1,732,675
	Common Stock, No Par Value; 100,000 Shares Authorized; 27,000 Shares Issued and Outstanding					25,200				25,200
	Retained Earnings					7,822,166				4,741,362
			Total Stockholders’ Equity and Members’ Capital			10,449,042				6,499,237
			Total liabilities, stockholders’ equity and members’ capital		$	16,788,607			$	13,140,693

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			2004				2003				2002
Net Sales			$	36,642,080			$	27,796,468			$	23,766,943
Cost of Sales				17,866,698				14,568,676				12,759,438
	Gross Profit			18,775,382				13,227,792				11,007,505
Selling, General and Administrative Expenses				6,564,616				5,521,248				5,031,519
	Operating Income			12,210,766				7,706,544				5,975,986
Interest Expense				(241,903	)			(203,585	)			(417,681	)
Interest Income				42,079				15,705				27,335
Other Income (Expense)				82,331				15,313				(198,371	)
	Net Income		$	12,093,273			$	7,533,977			$	5,387,269

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Table of Contents

						Advanced Circuits, Inc.
		R.J.C.S.				Common Stock
		Members’												Retained
		Capital				Shares				Amount				Earnings				Total
Balances at December 31, 2001		$	594,752				27,000			$	25,200			$	2,027,748			$	2,647,700
Net Income			449,011				—				—				4,938,258				5,387,269
Stockholders’ Distributions			—				—				—				(4,244,090	)			(4,244,090	)
Balances at December 31, 2002			1,043,763				27,000				25,200				2,721,916				3,790,879
Net Income			973,204				—				—				6,560,773				7,533,977
Stockholders’ Distributions			—				—				—				(4,541,327	)			(4,541,327	)
Members’ Distributions			(284,292	)			—				—				—				(284,292	)
Balances at December 31, 2003			1,732,675				27,000				25,200				4,741,362				6,499,237
Net Income			869,001				—				—				11,224,272				12,093,273
Stockholders’ Distributions			—				—				—				(8,143,468	)			(8,143,468	)
Balances at December 31, 2004		$	2,601,676				27,000			$	25,200			$	7,822,166			$	10,449,042

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					2004				2003				2002
Cash flows from operating activities:
	Net Income				$	12,093,273			$	7,533,977			$	5,387,269
	Non-Cash Items Included in Net Income:
		Depreciation				869,203				728,756				654,373
		Loss on Disposition of Assets				—				—				217,857
		Gain on Sale of Equipment				—				—				(775	)
	(Increase) Decrease in Assets:
		Accounts Receivable				(703,658	)			(359,253	)			(274,900	)
		Deposits				51,500				(51,500	)			—
		Inventory and Work in Process				(5,402	)			(179,000	)			(45,000	)
	Increase (Decrease) in Liabilities:
		Accounts Payable				178,398				107,384				180,733
		Accrued 401(K)				—				(8,831	)			(141,169	)
		Other Accrued Liabilities				(155,333	)			224,881				36,906
		Accrued Payroll				(54,095	)			165,704				25,548
		Accrued Vacation				99,719				10,858				11,952
		Accrued Sales Tax				(5,705	)			(101,194	)			34,864
		Accrued Bonuses				250,000				(75,000	)			—
		Accrued Deferred Compensation				71,500				24,500				—
			Net Cash Provided By Operating Activities			12,689,400				8,021,282				6,087,658
Cash flows from investing activities:
	Purchase of Property and Equipment					(816,339	)			(2,087,420	)			(2,227,024	)
	Issuance of Notes Receivable					(350,000	)			—				—
	Proceeds from Sale of Property and Equipment					—				—				775
	Increase in Annuities and Cash Surrender Value — Life Insurance					(144,550	)			(79,005	)			—
			Net Cash Used In Investing Activities			(1,310,889	)			(2,166,425	)			(2,226,249	)
Cash flows from financing activities:
	Due to Members — Net					69,816				284,292				—
	Repayment of Loan from Related Party					—				—				(224,018	)
	Proceeds from Notes Payable					—				1,355,362				2,497,139
	Repayment of Notes Payable					(756,191	)			(1,272,445	)			(2,115,465	)
	Distributions					(8,143,468	)			(4,825,619	)			(4,244,090	)
			Net Cash Used In Financing Activities			(8,829,843	)			(4,458,410	)			(4,086,434	)
Net increase (decrease) in cash and cash equivalents						2,548,668				1,396,447				(225,025	)
Cash and cash equivalents at beginning of year						4,071,288				2,674,841				2,899,866
Cash and cash equivalents at end of year					$	6,619,956			$	4,071,288			$	2,674,841
Supplemental disclosures:
	Interest Paid				$	229,613			$	203,585			$	417,681

F-87

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1.	Company History, Use of Estimates and Significant Accounting Policies

	Company History.

	Cash. From time to time, the Company may maintain cash balances in a financial institution in excess of the FDIC insured limit.
	Accounts Receivable. The Company’s receivables are due from various business entities, from the sale of circuit boards. None of the Company’s customers individually accounted for more than 2% of the Company’s consolidated revenues in 2004, 2003 and 2002.

F-88

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		2004				2003
Raw materials and supplies		$	115,402			$	110,000
Work-in-process			194,000				194,000
		$	309,402			$	304,000

Machinery and Equipment			5 to 7 years
Office Furniture and Equipment			5 to 7 years
Buildings and Building Improvements			7 to 39 years
Vehicles			5 years
Leasehold Improvements			Shorter of useful life or lease term

	Income Taxes

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			December 31,
			2004
Accumulated Earnings — Tax Basis			$	7,469,193
Timing Differences:
	Accumulated Depreciation			598,386
	Allowance For Bad Debt			(80,000	)
	Vacation Accrual			(69,413	)
	Deferred Compensation Plan			(96,000	)
Retained Earnings — Financial Statement Basis			$	7,822,166
Members’ Capital — Tax Basis			$	1,988,605
Timing Differences:
	Accumulated Depreciation			613,071
Members’ Capital — Financial Statement Basis			$	2,601,676

2.	Advertising Costs

F-90

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Table of Contents

3.	Property and Equipment

		2004				2003
Machinery and Equipment		$	1,815,318			$	1,789,326
Office Furniture and Equipment			229,877				282,958
Buildings			3,766,123				3,900,341
Land			115,615				115,615
Vehicles			11,535				16,166
Leasehold Improvements			730,041				616,967
		$	6,668,509			$	6,721,373

4.	Note Receivable

5.	Notes Payable

		2004				2003
Circuit Automation (payable in monthly installments of $2,500; unsecured)		$	—			$	22,500
Lyon Credit Corp. (payable in monthly installments of $5,687, including interest at 8.28% through March, 2004; secured by equipment)			—				16,816
Lyon Credit Corp. (payable in monthly installments of $3,053, including interest at 9.1% through July, 2004; secured by equipment)			—				20,804
Citywide Bank (payable in monthly installments of $32,890, including interest at 6.5% through November 2004; secured by equipment)			—				316,070
Key Bank (payable in monthly installments of $31,667, plus interest at 6.5%, adjusted by the LIBOR index, through April, 2013; secured by real estate)			3,166,667				3,546,668
			3,166,667				3,922,858
Less: Current Maturities Included in Current Liabilities			380,000				756,191
Notes Payable — Due After One Year		$	2,786,667			$	3,166,667

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2005		$	380,000
2006			380,000
2007			380,000
2008			380,000
2009 and Beyond			1,646,667
		$	3,166,667

6.	Profit Sharing Plan

7.	Related Party Transactions

8.	Key Employee — Deferred Compensation Plan

9.	Asset Disposal

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10.	Fair Value of Financial Instruments

			December 31, 2004								December 31, 2003
			Cost Basis				Fair Value				Cost Basis				Fair Value
Assets:
	Cash & Cash Equivalents		$	6,619,956			$	6,619,956			$	4,071,288			$	4,071,288
	Annuities & Cash Surrender Value — Life Insurance			223,555				223,555				79,005				79,005
	Notes Receivable			350,000				350,000				—				—
Liabilities:
	Notes Payable		$	3,166,667			$	3,166,667			$	3,922,858			$	3,911,601

11.	Subsequent Event

F-93

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		Page(s)
Consolidated balance sheet as of September 30, 2005 (Unaudited)			F-95
Consolidated statements of operations for the nine months ended September 30, 2005 and 2004 (Unaudited)			F-96
Consolidated statements of cash flows for the nine months ended September 30, 2005 and 2004 (Unaudited)			F-97
Notes to consolidated financial statements (Unaudited)			F-98–F-102

F-94

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Table of Contents

						(Unaudited)
Assets
	Current assets
		Cash and Cash Equivalents				$	942,181
		Accounts Receivable					2,758,073
			Less: Allowance for Doubtful Accounts				78,991
				Accounts Receivable (Net)			2,679,082
		Inventory and Work in Process					316,463
		Due from Former Owner					74,980
		Prepaid Expenses					38,072
				Total Current Assets			4,050,778
	Property and equipment — at cost
		Machinery and Equipment					2,016,829
		Office Furniture and Fixtures					428,749
		Leasehold Improvements					230,259
				Property and Equipment — net			2,675,837
	Other assets
		Deposits					120,625
		Deferred Note Issuance Costs					1,090,000
		Intangible Assets					20,700,000
		Goodwill					51,190,248
				Total Other Assets			73,100,873
Total assets						$	79,827,488
Liabilities and Stockholders’ Equity
	Current liabilities
		Accounts Payable				$	1,035,599
		Accrued Wages and Payroll Taxes					300,905
		Line of Credit Payable					820,625
		Current Maturities of Notes Payable					3,750,000
		Other Accrued Liabilities					592,570
		Accrued Vacation					369,459
		Accrued Bonuses					391,000
		Accrued Taxes Payable					278,101
		Interest Payable					165,600
				Total Current Liabilities			7,703,859
	Notes Payable — Due After One Year						46,750,000
	Stockholders’ equity
		Common Stock, $0.01 Par Value; 2,000,000					11,364
			Shares Authorized; 1,136,364 Shares Issued and Outstanding
		Additional Paid in Capital					28,397,736
		Shareholders’ Note Receivable					(3,409,100	)
		Retained Earnings					373,629
				Total Stockholders’ Equity			25,373,629
Total liabilities and stockholders’ equity						$	79,827,488

F-95

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Table of Contents

			(Unaudited)
			Predecessor				Predecessor
			Consolidated				Consolidated
			2005				2004
Net Sales			$	31,453,501			$	27,465,232
Cost of Sales				14,132,845				13,547,752
	Gross Profit			17,320,656				13,917,480
Selling, General and Administrative Expenses				5,628,713				4,663,455
	Operating Income			11,691,943				9,254,025
Interest Expense				(324,714	)			(183,138	)
Interest Income				150,430				19,839
Other Income				3,259				5,496
	Income before Provision for Income Taxes			11,520,918				9,096,222
Provision for Income Taxes				225,000				—
	Net Income		$	11,295,918			$	9,096,222

F-96

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				(Unaudited)
				Predecessor				Predecessor
				Consolidated				Consolidated
				2005				2004
Cash flows from operating activities:
	Net Income			$	11,295,918			$	9,096,222
	Non-Cash Items Included in Net Income:
		Depreciation			715,347				594,355
	(Increase) Decrease in Assets:
		Accounts Receivable			(353,141	)			(329,539	)
		Deposits			(120,625	)			144,088
		Prepaid Expenses			(38,072	)			—
		Inventory and Work In Process			(3,861	)			(22,195	)
	Increase (Decrease) In Liabilities:
		Accounts Payable			382,781				(201,389	)
		Other Accrued Liabilities			(70,632	)			(141,146	)
		Accrued Payroll			(84,943	)			231,557
		Accrued Bonuses			78,487				165,000
		Interest Payable			165,600				—
	Net Cash Provided By Operating Activities				11,966,859				9,536,953
Cash flows from investing activities:
	Purchase of Property and Equipment				(883,830	)			(737,736	)
	Proceeds from Sale and Leaseback of Building				5,000,000				—
	Acquisition of Company				(79,683,375	)			—
	Increase in Annuities and Cash Surrender Value — Life Insurance				—				(140,000	)
	Net Cash Used In Investing Activities				(75,567,205	)			(877,736	)
Cash flows from financing activities:
	Repayment of Notes Payable				(3,166,667	)			(633,952	)
	Issuance of Note Payable in Connection with Acquisition				50,500,000				—
	Note Payable Issuance Costs				(1,090,000	)			—
	Line of Credit Borrowings-net				820,625				—
	Capital from Acquisition				25,000,000				—
	Distributions				(14,141,387	)			(6,757,314	)
	Net Cash Provided By (Used In) Investing Activities				57,922,571				(7,391,266	)
Net increase (decrease) in cash and cash equivalents					(5,677,775	)			1,267,951
Cash and cash equivalents at beginning of year					6,619,956				4,071,288
Cash and cash equivalents at end of period				$	942,181			$	5,339,239
Supplemental disclosures:
	Interest Paid			$	159,114			$	183,138

F-97

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1.	Company History, Use of Estimates and Significant Accounting Policies

F-98

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Table of Contents

Raw materials and supplies		$	130,673
Work-in-process			185,790
		$	316,463

Machinery and Equipment		5 to 7 years
Office Furniture and Equipment		5 to 7 years
Buildings and Building Improvements		7 to 39 years
Vehicles		5 years
Leasehold Improvements		Shorter of useful life or lease term

F-99

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Table of Contents

2.	Acquisition of Company

Current Assets			$	2,913,943
Property, Plant and Equipment				7,675,837
Customer Relationships (9 year life)				18,100,000
Technology (4 year life)				2,600,000
Goodwill				51,190,248
	Total Assets			82,480,028
Current Liabilities				(2,796,653	)
	Net Assets Acquired		$	79,683,375

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Table of Contents

3.	Sale and Leaseback of Building

4.	Senior Secured Credit Facilities

	Revolving Loans

Facility:		$4 million of which $820,625 was outstanding at September 30, 2005.
Term:		5 years.
Availability:		Revolving loans availability is equal to the sum of 85% of eligible accounts receivable and 50% of eligible inventory as defined in the credit agreement.
Interest Rate:		2.75% over the Base Rate or 3.75% over the LIBOR Rate.
Interest Payable:		Monthly on Base Rate balance or at the end of the LIBOR period on LIBOR Rate loans.

	Term A Loan

Facility:		$35 million, all of which was outstanding at September 30, 2005.
Term:		6 years.
Amortization:		Payments are due quarterly on the last day of each calendar quarter commencing December 31, 2005 as follows:

Year		Repayment
December 31, 2005		$	937,500
December 31, 2006			3,875,000
December 31, 2007			4,437,500
December 31, 2008			5,125,000
December 31, 2009			5,625,000
December 31, 2010			7,125,000
December 31, 2011			7,875,000
		$	35,000,000

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Interest Rate:		2.75% over the Base Rate or 3.75% over the LIBOR Rate and is paid in the same manner as is done for revolving credit loans.

	Term B Loan

Facility:		$15.5 million, all of which was outstanding at September 30, 2005.
Term:		6.5 years.
Amortization:		Due in full on March 31, 2012.
Interest Rate:		6.50% over the Base Rate or 7.50% over the LIBOR Rate and is paid in the same manner as is done for revolving credit loans.

5.	Shareholders’ Note Receivable

F-102

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		Page(s)
Independent auditor’s report			F-104
Consolidated balance sheets at December 31, 2004 and 2003			F-105
Consolidated statements of operations and comprehensive income for the years ended December 31, 2004 and 2003			F-106
Consolidated statements of stockholders’ equity for the years ended December 31, 2004 and 2003			F-107
Consolidated statements of cash flows for the years ended December 31, 2004 and 2003			F-108–F-109
Notes to consolidated financial statements			F-110–F-121

F-103

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Table of Contents

F-104

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Table of Contents

								Predecessor
				2004				2003
Assets
Current Assets:
	Cash and Cash Equivalents			$	1,009,289			$	3,209,933
	Trade Accounts and Other Receivables, Net Of Allowance $8,490 And $7,836, Respectively				2,384,314				1,617,180
	Inventories				696,906				564,796
	Prepaid Expenses				138,698				44,210
	Deferred Income Taxes				971,486				762,447
		Total Current Assets			5,200,693				6,198,566
Property, Plant and Equipment					857,530				8,332,915
	Less: Accumulated Depreciation				(107,889	)			(3,538,261	)
		Total Property, Plant and Equipment at Net Book Value			749,641				4,794,654
Other Assets:
	Deposits				32,196				32,196
	Investment in Joint Venture				2,474,793				939,631
	Goodwill				7,056,612				—
	Other Intangible Assets, Net				9,590,763				—
		Total Other Assets			19,154,364				971,827
		Total Assets		$	25,104,698			$	11,965,047
Liabilities and Stockholders’ Equity
Current Liabilities:
	Accounts Payable			$	936,458			$	775,035
	Current Maturities of Equipment Line				—				12,194
	Current Maturities of Long-Term Debt				1,194,679				161,981
	Accrued Bonuses				437,495				415,772
	Other Accrued Expenses				355,710				360,607
	Income Taxes payable				759,215				216,169
		Total Current Liabilities			3,683,557				1,941,758
Long-Term Liabilities:
	Accrued Interest				48,917				—
	Equipment Line				—				60,853
	Long-Term Debt				12,201,129				553,676
	Deferred Compensation Obligation				—				4,895
	Deferred Income Tax Liability				959,543				779,979
		Total Long-Term Liabilities			13,209,589				1,399,403
Cumulative Mandatorily Redeemable Preferred Stock					90,000				—
Stockholders’ Equity:
	Preferred Stock — $.01 par value, authorized 1,119,000 shares; issued and outstanding 448,645 and 0 shares				4,486				—
	Common Stock — $.01 par value, authorized 381,000 shares; issued and outstanding 380,734 shares at December 31, 2004				3,807				200,000
	Additional Paid in Capital				7,422,441				1,327,505
	Retained Earnings				747,743				7,182,643
	Accumulated Other Comprehensive Loss				(56,925	)			(86,262	)
		Total Stockholders’ Equity			8,121,552				8,623,886
		Total Liabilities and Stockholders’ Equity		$	25,104,698			$	11,965,047

F-105

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				Predecessor				Silvue
				Consolidated				Consolidated
				Jan. 1, 2004				Sept. 3, 2004				Predecessor
				through				through				Consolidated
				Sept. 2, 2004				Dec. 31, 2004				2003
Net Sales				$	10,353,576			$	6,124,363			$	12,813,468
Cost Of Sales					3,619,988				1,951,313				4,194,292
		Gross Profit			6,733,588				4,173,050				8,619,176
Selling, General And Administrative Expenses					4,496,628				2,699,254				6,102,987
Research And Development Costs					447,929				178,931				549,400
Operating Income					1,789,031				1,294,865				1,966,789
Other Income (Expense):
	Interest Income				5,436				618				7,814
	Other Income				—				40,609				—
	Equity In Net Income Of Joint Venture				174,487				94,604				376,840
	Interest Expense				(29,429	)			(360,323	)			(58,073	)
		Total Other Income (Expense)			150,494				(224,492	)			326,581
Income Before Provision For Income Taxes					1,939,525				1,070,373				2,293,370
Provision For Income Taxes					482,582				322,630				576,798
Net Income					1,456,943				747,743				1,716,572
Other Comprehensive Income, Net Of Tax Foreign Currency Translation Adjustment					37,538				(56,925	)			68,426
Comprehensive Income				$	1,494,481			$	690,818			$	1,784,998

F-106

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		Series A																								Accumulated
		Preferred Stock								Common Stock								Additional								Other				Total
																		Paid-In				Retained				Comprehensive				Stockholders’
		Shares				Amount				Shares				Amount				Capital				Earnings				Income (Loss)				Equity
Predecessor Consolidated Balance At December 31, 2002			—			$	—				5,000			$	200,000			$	1,327,505			$	5,466,071			$	(154,688	)		$	6,838,888
Net Income			—				—				—				—				—				1,716,572				—				1,716,572
Dividends Declared			—				—				—				—				—				—				—				—
Foreign Currency Translation Adjustment			—				—				—				—				—				—				68,426				68,426
Predecessor Consolidated Balance At December 31, 2003			—				—				5,000				200,000				1,327,505				7,182,643				(86,262	)			8,623,886
Net Income			—				—				—				—				—				1,456,943				—				1,456,943
Dividends Paid			—				—				—				—				—				(3,000,000	)			—				(3,000,000	)
Foreign Currency Translation Adjustment			—				—				—				—				—				—				37,538				37,538
Predecessor Consolidated Balance at September 2, 2004			—			$	—				5,000			$	200,000			$	1,327,505			$	5,639,586			$	(48,724	)		$	7,118,367
Capital From Acquisition			448,645			$	4,486				380,734			$	3,807			$	7,422,441			$	—			$	—			$	7,430,734
Net Income			—				—				—				—				—				747,743				—				747,743
Foreign Currency Translation Adjustment			—				—				—				—				—				—				(56,925	)			(56,925	)
Balance At December 31, 2004			448,645			$	4,486				380,734			$	3,807			$	7,422,441			$	747,743			$	(56,925	)		$	8,121,552

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					Predecessor				Silvue
					Consolidated				Consolidated
					Jan. 1, 2004				Sept. 3, 2004				Predecessor
					through				through				Consolidated
					Sept. 2, 2004				Dec. 31, 2004				2003
Cash Flows From Operating Activities:
	Net Income				$	1,456,943			$	747,743			$	1,716,572
	Noncash Items Included In Net Income:
		Depreciation And Amortization Expense				435,789				278,762				463,631
		Allowance For Doubtful Accounts				—				654				(1,365	)
		Reserve For Obsolescence				—				—				(20,387	)
		Deferred Income Tax Expense (Benefit)				61,158				(114,053	)			180,100
		Equity In Net Income Of Joint Venture				(174,487	)			(94,604	)			(376,839	)
		Other				(23,620	)			27,653				76,770
	Changes In:
		Trade Accounts And Other Receivables				(429,637	)			(338,151	)			(246,832	)
		Inventories				(146,980	)			14,870				(91,275	)
		Prepaid Expenses				(166,414	)			71,926				29,938
		Deposits				—				—				(6,764	)
		Accounts Payable				(90,098	)			251,521				262,422
		Accrued Bonuses				(88,850	)			110,123				(133,872	)
		Other Accrued Expenses				(32,152	)			40,535				(31,819	)
		Income Taxes Payable				647,017				(103,971	)			127,765
		Accrued Interest				—				48,917				—
			Net Cash Provided By Operating Activities			1,448,669				941,925				1,948,045
Cash Flows From Investing Activities:
	Purchases Of Property, Plant, And Equipment					(210,247	)			(1,546	)			(324,582	)
	Dividends Received From Joint Venture					—				392,941				232,561
	Acquisition Of Company					—				(8,141,600	)			—
			Net Cash Used In Investing Activities			(210,247	)			(7,750,205	)			(92,021	)
Cash Flows From Financing Activities:
	Net Payments On Line Of Credit					—				—				(270,216	)
	Net Borrowings (Payments) On Equipment Line					586,573				(659,620	)			(242,254	)
	Other					(9,097	)			(3,500	)			(20,096	)
	Payments On Long-Term Debt					(715,657	)			(350,219	)			(129,873	)
	Dividends Paid					(3,000,000	)			—				(350,352	)
	Capital Contribution With Acquisition Of Company					—				7,520,734				—
			Net Cash Provided By (Used In) Financing Activities			(3,138,181	)			6,507,395				(1,012,791	)
Net Increase (Decrease) In Cash And Cash Equivalents						(1,899,759	)			(300,885	)			843,233
Beginning Cash And Cash Equivalents						3,209,933				1,310,174				2,366,700
Ending Cash And Cash Equivalents					$	1,310,174			$	1,009,289			$	3,209,933

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			Silvue				Predecessor
			Consolidated				Consolidated
			Sept. 3, 2004				Jan. 1, 2004				Predecessor
			through				through				Consolidated
			Dec. 31, 2004				Sept. 2 ,2004				2003
Supplemental Cash Flow Information
	Income Taxes Paid		$	291,641			$	—			$	268,933
	Interest Paid		$	360,323			$	29,429			$	58,073
Noncash Investing And Financing Activities
	Purchase Of Property, Plant And Equipment Through A Capital Lease		$	—			$	(36,027	)		$	(767,346	)
	Acquisition Of Company Through Financing		$	13,710,000			$	—			$	—
	Equipment Line And Long-Term Debt Assumed		$	—			$	—			$	767,346

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		2004				2003
Raw Materials And Supplies		$	379,113			$	236,311
Finished Goods And Other			317,793				328,485
		$	696,906			$	564,796

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NOTE B:	Nature Of Operations, Risks, And Uncertainties

NOTE C:	Property, Plant, And Equipment

		Estimated Useful Life				2004				2003
Transportation Equipment			3			$	15,011			$	34,579
Machinery And Equipment			8				215,537				4,977,016
Furniture, Fixtures, And Office Equipment			3-8				548,586				1,491,695
Leasehold Improvements		shorter of 10 years or lease term					45,058				1,304,715
Capital Projects In Progress							33,338				524,910
Total Property, Plant And Equipment						$	857,530			$	8,332,915

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NOTE D:	Goodwill And Other Intangible Assets, Net

		Gross
		Carrying								Goodwill or
Indefinite Life Intangible Assets		Value				Impairment				Intangible, Net
Goodwill		$	7,056,612			$	—			$	7,056,612
Trademarks		$	627,558			$	—			$	627,558
IPR&D		$	411,556			$	—			$	411,556

		Estimated
		Useful				Gross Carrying				Accumulated
		Lives				Value				Amortization				Intangible, Net
Patented Technology			16			$	3,943,891			$	(82,164	)		$	3,861,727
Customer Relations			17			$	3,525,500			$	(69,127	)		$	3,456,373
Other Technology			12			$	827,000			$	(22,972	)		$	804,028
Loan Fees			6			$	447,059			$	(17,538	)		$	429,521

2005		$	597,302
2006			597,302
2007			597,302
2008			597,302
2009			597,302
Thereafter			5,565,139
		$	8,551,649

NOTE E:	Investment In Joint Venture

			2004				2003
Investments at December 31, 2004 and 2003, consist of the following:
	Nippon ARC Company, Ltd. (NAR) — (50%)		$	2,474,793			$	939,631

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		2004				2003
Current Assets		$	1,354,483			$	1,670,735
Other Assets (Net)			1,047,632				994,027
Total Assets		$	2,402,115			$	2,664,762
Current Liabilities		$	629,554			$	561,848
Long-Term Liability			165,577				223,652
Total Liabilities		$	795,131			$	785,500
Joint Venture Equity		$	1,606,984			$	1,879,262
Sales		$	5,521,146			$	6,165,202
Net Income		$	538,182			$	753,680
Company’s Proportionate Share Of Earnings		$	269,091			$	376,840

NOTE F:	Revolving Credit Facility and Term Loans

NOTE G:	Line Of Credit

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NOTE H:	Long-Term Debt

		2004				2003
Note payable to a bank, in twenty-three quarterly installments ranging from $250,000 to $400,000 plus accrued interest. Interest accrues at a rate equal to one of the following as selected by the Company: LIBOR plus a margin ranging from 2.75% to 3.5% depending on the Company’s ratio of consolidated debt to EBITDA, or Prime plus a margin ranging from 1.25% to 2% depending on the Company’s ratio of consolidated debt to EBITDA. At December 31, 2004, the rate was based on LIBOR and was 5.66%. The final principal and interest payment is due September 2010. The note is secured by all assets of the Company		$	7,750,000				—
Note payable to a bank, interest only payments are due quarterly. All outstanding principal and unpaid interest is due at maturity. Interest accrues at a rate equal to one of the following as selected by the Company: LIBOR plus a margin ranging from 3.25% to 4.0% depending on the Company’s ratio of consolidated debt to EBITDA, or Prime plus a margin ranging from 1.75% to 2.5%, depending on the Company’s ratio of consolidated debt to EBITDA. At December 31, 2004, the rate was based on LIBOR and was 6.16%. The final principal and interest payment is due September 2010. The note is secured by all assets of the Company		$	2,000,000			$	—
Note payable to bank, interest only payments are due quarterly. All outstanding principal and unpaid interest is due at maturity. For the period September 2, 2004 through September 1, 2005, the rate of interest is equal to one of the following as selected by the Company: LIBOR plus a margin of 5.0%, or Prime plus a margin of 3%. Commencing on the first anniversary date and ending at the maturity date, the interest rate is equal to one of the following as selected by the Company: LIBOR plus a margin of 7%, or Prime plus a margin of 5%. At December 31, 2004, the rate was based on LIBOR and was 7.16%. In addition to the quarterly interest payments, a yield enhancement fee equal to 5% for the period September 2, 2004 through September 1, 2005, and 3% for the period September 2, 2005 through maturity is due on the outstanding principal balance. The final interest payment, yield enhancement fee and principal are due September 2010. The note is secured by all assets of the Company			3,000,000				—
Note payable to a bank, payable in monthly installments of $8,162, including principal and interest at a variable rate. At December 31, 2004, this variable rate was 4.4%, final payment July 2008, secured by equipment			315,107				391,098
Note payable to a bank, payable in monthly installments of $6,466, including principal and interest at a variable rate. At December 31, 2004 and 2003, this variable rate was 5.9%, and 4.4%, respectively, final payment April 2008, secured by equipment.		$	239,602			$	304,045
Note payable to a bank, payable in monthly installments of $3,012, including principal and interest at 8.56%, final payment August 2004, secured by equipment			—				20,514

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		2004				2003
Note payable to a bank, in monthly installments of $2,121, including principal and interest at a fixed rate of 6.24%, final payment January 2009, secured by equipment			91,099				—
Total			13,395,808				715,657
Less: Current Maturities Of Long-Term Debt			1,194,679				161,981
Long-Term Debt		$	12,201,129			$	553,676

Year Ended December 31:
2005		$	1,194,679
2006			1,279,338
2007			1,489,564
2008			1,505,194
2009 And Thereafter			7,927,033
		$	13,395,808

NOTE I:	Provision For Income Taxes

			Period Ended				Year Ended				Year Ended
			Sept. 2, 2004				Dec. 31, 2004				Dec. 31, 2003
Current:
	Federal		$	130,744			$	253,598			$	30,192
	State			18,856				70,988				17,569
	Foreign			271,824				533,521				348,938
				421,424				858,107				396,699
Deferred:
	Federal			24,522				(65,760	)			185,663
	State			36,636				12,865				(5,564	)
	Foreign			—				—				—
				61,158				(52,895	)			180,099
Provision For Income Taxes			$	482,582			$	805,212			$	576,798

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			Year Ended				Year Ended
			Dec. 31, 2004				Dec. 31, 2003
Current
	Section 263(a) Inventory Costs		$	4,438			$	5,836
	Exclusion Of Accrued Expenses			223,936				210,849
	Federal And State Tax Credits			677,523				508,138
	State Income Taxes			65,589				37,624
	Total Deferred Income Tax Assets		$	971,486			$	762,447
Non-Current
	Excess Depreciation		$	(959,543	)		$	(1,054,254	)
	Federal Tax Credit			—				268,967
	Net Operating Loss Carryforward			—				5,308
	Total Deferred Income Tax Liability		$	(959,543	)		$	(779,979	)

NOTE J:	Capital Stock

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NOTE K:	Operating Leases

December 31,
2005		$	397,032
2006			397,032
2007			245,520
2008			169,764
2009			159,817
Thereafter			12,600
Total Minimum Future Rental Payments		$	1,381,765

NOTE L:	Management Services Agreement

NOTE M:	Employment Agreements

NOTE N:	Current Vulnerability — Foreign Operations

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NOTE O:	Retirement Savings Plans

NOTE P:	Acquisition Of Company

Current Assets		$	5,041,838
Property And Equipment, Net			855,984
Other Assets			1,069,992
Investment In Joint Venture			1,671,301
Intangible Assets Arising From The Acquisition			9,782,564
Goodwill Arising From The Acquisition			7,056,612
Total Assets			25,478,291
Current Liabilities			2,087,834
Long-Term Liabilities			1,538,857
Total Liabilities			3,626,691
Net Assets Acquired		$	21,851,600

NOTE Q:	Interest Rate Swap Agreement

NOTE R:	Fair Value Of Financial Instruments

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			December 31, 2004								December 31, 2003
			Cost Basis				Fair Value				Cost Basis				Fair Value
Assets:
	Cash & Cash Equivalents		$	1,009,289			$	1,009,289			$	3,209,933			$	3,209,933
Liabilities:
	Long-Term Debt		$	13,395,808			$	13,393,986			$	715,657			$	715,657

NOTE S:	Subsequent Events

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		Page(s)
Consolidated balance sheet as of September 30, 2005 (Unaudited)			F-123
Consolidated statements of operations and comprehensive income for the nine months ended September 30, 2005 and 2004 (Unaudited)			F-124
Consolidated statements of stockholders’ equity for the nine months ended September 30, 2005 and 2004 (Unaudited)			F-125
Consolidated statements of cash flows for the nine months ended September 30, 2005 and 2004 (Unaudited)			F-126
Notes to consolidated financial statements (Unaudited)			F-127–F-132

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				(Unaudited)
Assets
Current Assets:
	Cash And Cash Equivalents			$	1,282,468
	Trade Accounts And Other Receivables, Net Of Allowances For Doubtful Accounts of $189,811				2,924,174
	Inventories				694,921
	Prepaid Expenses				380,867
	Deferred Income Tax Assets				998,039
		Total Current Assets			6,280,469
Property, Plant, And Equipment, At Cost					1,813,248
		Less: Accumulated Depreciation			(405,485	)
		Total Property, Plant and Equipment At Net Book Value			1,407,763
Other Assets:
	Deposits and Other Assets				105,742
	Goodwill				11,159,450
	Other Intangible Assets, Net				9,142,757
		Total Other Assets			20,407,949
		Total Assets		$	28,096,181
Liabilities and Stockholders’ Equity
Current Liabilities:
	Accounts Payable			$	862,677
	Bank Line of Credit Payable				308,942
	Current Maturities Of Equipment Line				84,493
	Current Maturities Of Long-Term Debt				1,284,622
	Accrued Bonuses				441,262
	Other Accrued Expenses				794,295
	Income Taxes Payable				751,021
		Total Current Liabilities			4,527,312
Long-Term Liabilities:
	Equipment Line				183,245
	Long Term Portion of Capital Leases				20,843
	Long-Term Debt				12,790,214
	Reserve for Retirement Benefits				83,133
	Deferred Income Tax Liability				888,729
		Total Long-Term Liabilities			13,966,164
		Total Liabilities			18,493,476
Cumulative Redeemable Preferred Stock					90,000
Stockholders’ Equity:
	Preferred Stock — $.01 par value, authorized 55,950 shares; issued and outstanding 22,432 shares				224
	Common Stock — $.01 par value, authorized 19,050 shares; issued and outstanding 19,037 shares				190
	Additional Paid In Capital				7,430,320
	Retained Earnings				2,264,958
	Accumulated Other Comprehensive Loss				(182,987	)
		Total Stockholders’ Equity			9,512,705
		Total Liabilities And Stockholders’ Equity		$	28,096,181

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				(Unaudited)
				2005				2004
Net Sales				$	15,819,327			$	11,859,484
Cost Of Sales					5,593,645				4,090,621
		Gross Profit			10,225,682				7,768,863
Selling, General And Administrative Expenses					6,355,879				5,260,288
Research And Development Costs					838,136				500,150
Operating Income					3,031,667				2,008,425
Other Income (Expense):
	Interest Income				228				5,876
	Other Income				110,459				9,855
	Equity In Net Income Of Joint Venture				69,885				183,424
	Interest Expense				(1,000,568	)			(106,127	)
		Total Other Income			(819,996	)			93,028
Income Before Provision For Income Taxes					2,211,671				2,101,453
Provision For Income Taxes					694,456				575,269
Net Income					1,517,215				1,526,184
Other Comprehensive Income, Net Of Tax Foreign Currency Translation Adjustment					(126,062	)			2,209
Comprehensive Income				$	1,391,153			$	1,528,393

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																										Accumulated
		Preferred Stock								Common Stock								Additional								Other				Total
																		Paid-In				Retained				Comprehensive				Stockholders’
		Shares				Amount				Shares				Amount				Capital				Earnings				Income (Loss)				Equity
Balance At December 31, 2004			448,645			$	4,486				380,734			$	3,807			$	7,422,441			$	747,743			$	(56,925	)		$	8,121,552
Reverse Stock Split			(426,213	)			(4,262	)			(361,697	)			(3,617	)			7,879				—				—				—
Net Income			—				—				—				—				—				1,517,215				—				1,517,215
Foreign Currency Translation Adjustment			—				—				—				—				—				—				(126,062	)			(126,062	)
Balance September 30, 2005			22,432			$	224				19,037			$	190			$	7,430,320			$	2,264,958			$	(182,987	)		$	9,512,705

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					(Unaudited)
					2005				2004
Cash Flows From Operating Activities:
	Net Income				$	1,517,215			$	1,526,184
	Noncash Items Included In Net Income:
		Depreciation And Amortization Expense				745,608				542,530
		Allowance For Doubtful Accounts				179,800				—
		Gain On Sale Of Property, Plant and Equipment				(63,196	)			—
		Equity In Net Income Of Joint Venture				(69,885	)			(183,424	)
		Other				(94,774	)			(31,684	)
	Changes In:
		Trade Accounts And Other Receivables				(155,204	)			(388,815	)
		Inventories				66,486				(208,827	)
		Prepaid Expenses				37,466				(134,719	)
		Deposits				(6,593	)			(14,220	)
		Accounts Payable				(409,378	)			(301,690	)
		Other Accrued Expenses				171,961				386,947
		Reserve For Retirement Benefits				17,675				—
		Income Taxes Payable				(184,803	)			504,890
			Net Cash Provided By Operating Activities			1,752,378				1,697,172
Cash Flows From Investing Activities:
	Purchases Of Property, Plant, And Equipment					(73,991	)			(236,027	)
	Proceeds From Sale Of Assets					90,000				—
	Acquisition Of Company					—				(7,985,188	)
	Cash Acquired In Acquisition Of Remaining Joint Venture Interest					93,266				—
			Net Cash Provided By (Used In) Investing Activities			109,275				(8,221,215	)
Cash Flows From Financing Activities:
	Dividends Paid					—				(3,000,000	)
	Borrowings Under Line of Credit					308,942				—
	Payments On Long-Term Debt					(1,897,416	)			(102,218	)
	Capital Contribution With Acquisition Of Company					—				7,520,734
			Net Cash (Used In) Provided By Financing Activities			(1,588,474	)			4,418,516
Net Increase (Decrease) In Cash And Cash Equivalents						273,179				(2,105,527	)
Beginning Cash And Cash Equivalents						1,009,289				3,209,933
Ending Cash And Cash Equivalents					$	1,282,468			$	1,104,406
Supplemental Cash Flow Information
	Income Taxes Paid				$	680,299			$	391,419
	Interest Paid				$	906,077			$	94,209
Noncash Investing And Financing Activities
	Acquisition Of Company Through Financing				$	—			$	13,710,000
	Acquisition Of Remaining Joint Venture Interest Through Financing				$	3,262,479			$	—

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NOTE A:	Significant Accounting Policies

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Raw Materials And Supplies		$	366,291
Finished Goods And Other			328,630
		$	694,921

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NOTE B:	Nature Of Operations, Risks, And Uncertainties

NOTE C:	Acquisition Of NAR

2006			50,000,000	(Yen)
2007			50,000,000
2008			75,000,000
2009			75,000,000
2010			150,000,000
			400,000,000	(Yen)

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Current Assets			$	1,378,588
Property, Plant and Equipment				871,495
Other Assets				85,925
Goodwill				4,102,838
	Total Assets			6,438,846
Current Liabilities				(465,181	)
Long-Term Liabilities				(162,508	)
Preacquisition Equity In Joint Venture				(2,548,678	)
	Net Assets Acquired		$	3,262,479

		Nine Months Ended
		September 30,
		2005				2004
Revenue		$	17,439,421			$	15,839,041
Net Income		$	1,587,100			$	1,709,608

										Amortization
										Nine Months
		Balance at				NAR				Ended				Balance at
		12/31/04				Acquisition				9/30/05				9/30/05
Goodwill		$	7,056,612			$	4,102,838			$	—			$	11,159,450
Other Intangible Assets:
Trademarks		$	627,558			$	—			$	—			$	627,558
IPR&D			411,556				—				—				411,556
Patented Technology			3,861,727				—				(184,900	)			3,676,827
Customer Relations			3,456,373				—				(155,537	)			3,300,836
Other Technology			804,028				—				(51,687	)			752,341
Loan Fees			429,521				—				(55,882	)			373,639
		$	9,590,763			$	—			$	(448,006	)		$	9,142,757

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NOTE E:	Subsequent Event — Delphi Corporation

NOTE F:	Subsequent Event — Discontinued Operations

F-132

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		Page
Prospectus Summary			1
Risk Factors			18
Forward-Looking Statements			45
Use of Proceeds			46
Dividend and Distribution Policy			48
The Acquisitions of and Loans to Our Initial Businesses			49
Pro Forma Capitalization			58
Pro Forma Condensed Combined Financial Statements			59
Selected Financial Data			73
Management’s Discussion and Analysis of Financial Condition and Results of Operations			78
Business			120
Management			164
Our Relationship with Our Manager			171
Management Services Agreement			172
Principal Shareholders/Security Ownership of Directors and Executive Officers			176
Certain Relationships and Related Party Transactions			178
Description of Shares			184
Shares Eligible for Future Sale			199
Material U.S. Federal Income Tax Considerations			201
Underwriting			214
Legal Matters			218
Experts			219
Where You Can Find Additional Information			220
Index to Financial Statements			F-1

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Item 13.	Other Expenses of Issuance and Distribution.

SEC Registration Fee		$	30,763
Trustees’ Fees		$	*
NASD Filing Fee		$	*
Accounting Fees and Expenses		$	*
Printing and Engraving Expenses		$	*
Legal Fees and Expenses		$	*
Blue Sky Services and Expenses		$	*
Miscellaneous(1)		$	*
Total		$	*

(1)	This amount represents additional expenses that may be incurred by the company or underwriters in connection with the offering over and above those specifically listed above, including distribution and mailing costs.

*	To be filed by amendment.

Item 14.	Indemnification of Directors and Officers.

	•	for any breach of the director’s duty of loyalty to the company or its members;
	•	for acts or omissions not in good faith or a knowing violation of law;
	•	regarding unlawful dividends and stock purchases analogous to Section 174 of the Delaware General Corporation Law; or
	•	for any transaction from which the director derived an improper benefit.

	•	we must indemnify our directors and officers to the equivalent extent permitted by Delaware General Corporation Law;
	•	we may indemnify our other employees and agents to the same extent that we indemnified our officers and directors, unless otherwise determined by the company’s board of directors; and
	•	we must advance expenses, as incurred, to our directors and executive officers in connection with a legal proceeding to the extent permitted by Delaware law and may advance expenses as incurred to our other employees and agents, unless otherwise determined by the company’s board of directors.

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Item 15.	Recent Sales of Unregistered Securities.

Item 16.	Exhibits and Financial Statement Schedules.

Exhibit No.				Description
	1	.1		Form of Underwriting Agreement*
	2	.1		Compass Group Diversified Holdings LLC Stock Purchase Agreement*
	3	.1		Certificate of Trust of Compass Diversified Trust
	3	.2		Trust Agreement dated as of November 18, 2005 of Compass Diversified Trust
	3	.3		Certificate of Formation of Compass Group Diversified Holdings LLC
	3	.4		LLC Agreement dated as of November 18, 2005 of Compass Group Diversified Holdings LLC
	4	.1		Specimen certificate evidencing share of trust stock of Compass Diversified Trust (included in 3.2)
	4	.2		Specimen certificate evidencing LLC interest of Compass Group Diversified Holdings LLC*
	5	.1		Form of Opinion*
	8	.1		Form of Tax Opinion*
	10	.1		Form of Management Services Agreement among Compass Group Diversified Holdings LLC and certain of its subsidiaries named therein and Compass Group Management LLC*
	10	.2		Form of Option Plan*
	10	.3		Form of Registration Rights Agreement*
	10	.4		Form of Supplemental Put Agreement*
	23	.1		Consent of Grant Thornton LLP
	23	.2		Consent of Grant Thornton LLP
	23	.3		Consent of PricewaterhouseCoopers LLP
	23	.4		Consent of PricewaterhouseCoopers LLP
	23	.5		Consent of Bauerle and Company, P.C.
	23	.6		Consent of White, Nelson & Co. LLP

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Exhibit No.				Description
	23	.7		Consent of Sutherland, Asbill & Brennan LLP*
	24			Powers of Attorney (included on signature pages of this registration statement)

*	To be filed by amendment.

(b)	All financial statement schedules required pursuant to this item were either included in the financial information set forth in the prospectus or are inapplicable, and, therefore, have been omitted.

Item 17.	Undertakings.

	(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
	(ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
	(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registration or its securities provided by or on behalf of the undersigned registrant; and
	(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

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	COMPASS DIVERSIFIED TRUST

	By:	COMPASS GROUP DIVERSIFIED

	HOLDINGS LLC, as Sponsor

	By:	/s/ I. Joseph Massoud

	I. Joseph Massoud
	Chief Executive Officer

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	COMPASS GROUP DIVERSIFIED HOLDINGS LLC

	By:	/s/ I. Joseph Massoud

	I. Joseph Massoud
	Chief Executive Officer

Signature				Title		Date
/s/ I. Joseph Massoud   I. Joseph Massoud				(Principal Executive Officer)		December 14, 2005
/s/ James P. Bottiglieri   James J. Bottiglieri				(Principal Financial Officer)		December 14, 2005
/s/ C. Sean Day   C. Sean Day				Director		December 14, 2005
/s/ D. Eugene Ewing   D. Eugene Ewing				Director		December 14, 2005
/s/ Ted Waitman   Ted Waitman				Director		December 14, 2005
/s/ Harold S. Edwards   Harold S. Edwards				Director		December 14, 2005
/s/ Mark H. Lazarus   Mark H. Lazarus				Director		December 14, 2005

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