Company: CODI-PB
Filing Date: 2025-12-08
Form Type: 10-K/A
Source: 0001345126-25-000078
Chunk: 278

Company: Compass Diversified Holdings
Filing Date: 2025-12-08
Form: 10-K/A
Chunk 278
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 Company performed interim quantitative impairment testing of goodwill at Velocity at August 31, 2023. As a result of operating results that were below the forecast that we used in the quantitative impairment test of Velocity Outdoor at March 31, 2023, the Company determined that a triggering event had occurred at Velocity in the third quarter of 2023 and performed an interim impairment test as of August 31, 2023. The Company used an income approach for the impairment test, whereby we estimated the fair value of the reporting unit based on the present value of future cash flows. Cash flow projections are based on management's estimate of revenue growth rates and operating margins, and take into consideration industry and market conditions as well as company specific economic factors. The Company used a weighted average cost of capital of 17% in the income approach. The discount rate used was based on the weighted average cost of capital adjusted for the relevant risk associated with business specific characteristics and Velocity's ability to execute on projected cash flows. Based on the results of the impairment test, the fair value of Velocity did not exceed its carrying value. The Company recorded goodwill impairment of $ 31.6million during the year ended December 31, 2023.

2022 Interim Impairment Testing

Lugano - The Company performed an interim impairment test of goodwill at Lugano as of December 31, 2022. The Company has restated the audited consolidated financial statements as of December 31, 2024, 2023 and 2022 and for the years ended December 31, 2024, 2023 and 2022 as well as the interim periods in the years ended December 31, 2024, 2023 and 2022 for the correction of historical financial information related to Lugano. Historical information that had previously been relied on by the Company in preparing projected financial information for the period ending December 31, 2022 proved to be inaccurate, and operating results were below forecast amounts. Therefore the Company determined that a triggering event had occurred. The Company performed the quantitative impairment test using an income approach. The Company considered macroeconomic data, industry and reporting unit specific facts and circumstances and developed the prospective financial information based on our best estimate of operational results and cash flows for the Lugano reporting unit as of the date of our impairment testing. The results of the quantitative impairment testing indicated that the fair value of the Lugano reporting unit did not exceed its carrying value, resulting in goodwill impairment expense of $ 26.2