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United States securities and exchange commission logo
June 30, 2022
Ryan J. Faulkingham
Chief Financial Officer
Compass Diversified Holdings
301 Riverside Avenue, Second Floor
Westport, CT 06880
Re: Compass Diversified
Holdings
Form 10-K for the
Fiscal Year Ended December 31, 2021
Filed February 24,
2022
File No. 001-34927
Compass Group
Diversified Holdings LLC
Form 10-K for the
Fiscal Year Ended December 31, 2021
Filed February 24,
2022
File No. 001-34926
Supplemental
response letter dated June 10, 2022
Dear Mr. Faulkingham:
We have reviewed your June 10, 2022 response to our comment
letter and have the
following comments. In some of our comments, we may ask you to provide
us with information
so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your response to these comments, we may have
additional
comments. Unless we note otherwise, our references to prior comments are
to comments in our
May 27, 2022 letter.
Form 10-K for the Fiscal Year Ended December 31, 2021
Reconciliation of Non-GAAP Financial Measures, page 114
1. We note your response
to comment 2. We continue to believe your non-GAAP
adjustment for
management fees represents normal and recurring operating expenses
necessary to operate
your business and are inconsistent with Question 100.01 of the Non-
GAAP Financial Measures
Compliance and Disclosure Interpretations. Please revise your
disclosures
accordingly.
Ryan J. Faulkingham
FirstName LastNameRyan J. Faulkingham
Compass Diversified Holdings
Comapany
June NameCompass Diversified Holdings
30, 2022
June 30,
Page 2 2022 Page 2
FirstName LastName
Financial Statements
Note C - Acquisition of Businesses, page F-18
2. We have reviewed your response to comment 4 and have the following
comments:
Please clarify how the total purchase consideration disclosed
for your acquisitions is
consistent with the calculation of consideration transferred
described in ASC 805-30-
30-7. For example, we note that your Lugano purchase price
allocation table on page
F-18 appears to include the pass-through of funds provided by the
noncontrolling
interest holders and intercompany loans to the acquiree. Clarify
why these items are
included as total purchase consideration. As part of your
response, explain how you
determined the pass-through funds from the noncontrolling
interest holders
qualify under ASC 230 to be separately presented on a gross basis
within investing
and financing activities on your statement of cash flows. Also
ensure the non-
controlling pass-through amounts are separately quantified within
your footnotes for
each acquisition. Finally, clarify if your intercompany loans
were paid to the
acquirees or former owners of the acquirees and clearly explain
to us how you
account for these loans upon consolidation and where the related
amounts are
classified within your statement of cash flows and, if
applicable, your balance sheet.
We note that the "net assets acquired" is inclusive of
goodwill. Since goodwill
represents the residual excess amount determined under ASC
805-30-30-1, please tell
us how you determined goodwill should be included within this
line item.
Note F - Operating Segment Data, page F-32
3. We note your response to comment 5 and have the following comments:
Please appropriately title your segment profit loss and loss
measure presented in
accordance with ASC 280-10-50-22 to ensure that it is not
confused with any line
items included on your consolidated statements of operations. We
note that the
proposed MD&A title of "income (loss) from operations" is still
similar to "operating
income." Ensure that you also revise your MD&A disclosures to
clearly explain what
your segment measure represents and how it is calculated.
Provide us with revised segment footnote reconciliation and
MD&A tables that
illustrate how your disclosures will appear going forward.
You may contact Beverly Singleton at (202) 551-3328 or Andrew Blume at
(202) 551-
3254 with any questions.
Ryan J. Faulkingham
Compass Diversified Holdings
June 30, 2022
Page 3
FirstName LastNameRyan J. Faulkingham Sincerely,
Comapany NameCompass Diversified Holdings
Division of Corporation Finance
June 30, 2022 Page 3 Office of Manufacturing
FirstName LastName