UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K/A
 Amendment
No. 1
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                      to
 Commission File Number: 0-51937
 Compass Diversified Holdings
 (Exact name of registrant as specified in its charter)
 Delaware(Jurisdiction of incorporation or organization)
    
    57-6218917(I.R.S. Employer Identification No.)
 Commission File Number: 0-51938
 Compass Group Diversified Holdings LLC
 (Exact name of registrant as specified in its charter)
 Delaware(Jurisdiction of incorporation or organization)
    
    20-3812051(I.R.S. Employer Identification No.)Sixty One Wilton Road 
Second FloorWestport, CT
    
    06880(Address of principal executive offices)
    
    (Zip Code)
 (203) 221-1703  (Registrants telephone number, including area code)
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Each Exchange on Which RegisteredShares representing beneficial interests in Compass Diversified 
Holdings (Trust shares)
    
    NASDAQ Stock Market, Inc.
 Securities registered pursuant to Section 12 (g) of the Act: None
 o þ
 o þ
 þ o
 þ
  Large accelerated filer oAccelerated filer þNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ
   Documents Incorporated by Reference




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Explanatory Note
  Table of Contents
 PagePART IItem 1.
    
    Business
    
    
    4Item 1A.
    
    Risk Factors
    
    
    50Item 1B.
    
    Unresolved Staff Comments
    
    
    67Item 2.
    
    Properties
    
    
    67Item 3.
    
    Legal Proceedings
    
    
    69Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    69PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    70Item 6
    
    Selected Financial Data
    
    
    72Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    74Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    102Item 8.
    
    Financial Statements and Supplementary Data
    
    
    103Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    103Item 9A
    
    Controls and Procedures
    
    
    103Item 9B.
    
    Other Information
    
    
    103PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    104Item 11.
    
    Executive Compensation
    
    
    104Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    104Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    104Item 14.
    
    Principal Accounting Fees and Services
    
    
    104PART IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    
    105Signatures
    
    
    
    
    106Financial Statements
    
    
    F-1Schedule II. Valuation and Qualifying Accounts
    
    
    S-1Index to Exhibits
    
    
    E-1
 1




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NOTE TO READER
  
    
    the Trust and Holdings refer to Compass Diversified Holdings;
    
    our businesses refer to, collectively, the businesses controlled by the
Company;
    
    the Company refer to Compass Group Diversified Holdings LLC;
    
    the Manager refer to Compass Group Management LLC (CGM);
    
    the initial businesses refer to, collectively, CBS Personnel Holdings,
Inc., Crosman Acquisition Corporation, Compass AC Holdings, Inc. and Silvue
Technologies Group, Inc.;
    
    the 2006 acquisitions refer to, collectively, the acquisitions of Compass AC
Holdings, Inc., Anodyne Medical Device, Inc., CBS Personnel Holdings, Inc and
Silvue Technologies Group, Inc.;
    
    the 2007 acquisitions refer to, collectively, the acquisitions of Aeroglide
Holdings, Inc., HALO Branded Solutions and American Furniture Manufacturing;
    
    the 2008 acquisitions refer to, collectively, the acquisitions of Fox
Factory Inc. and Staffmark Investment LLC;
    
    the 2007 disposition refers to, the sale of Crosman Acquisition
Corporation;
    
    the 2008 dispositions refer to, collectively, the sales of Aeroglide
Holdings, Inc. and Silvue Technologies Group, Inc.;
    
    the Trust Agreement refer to the amended and restated Trust Agreement of
the Trust dated as of April 25, 2007;
    
    the Credit Agreement refer to the Credit Agreement with a group of lenders
led by Madison Capital, LLC which provides for a Revolving Credit Facility and a Term
Loan Facility;
    
    the Revolving Credit Facility refer to the $340 million Revolving Credit
Facility provided by the Credit Agreement that matures in December 2012;
    
    the Term Loan Facility refer to the $153.0 million Term Loan Facility, as
of December 31, 2008, provided by the Credit Agreement that matures in December 2013;
    
    the LLC Agreement refer to the Second Amended and Restated Operating
Agreement of the Company dated as of January 9, 2007; and
    
    we, us and our refer to the Trust, the Company and our businesses
together.
 2




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##### 



Statement Regarding Forward-Looking Disclosure
 This Annual Report on Form 10-K, including the sections entitled Risk Factors, Managements
Discussion and Analysis of Financial Condition and Results of Operations and Business, contains
forward-looking statements. We may, in some cases, use words such as project, predict,
believe, anticipate, plan, expect, estimate, intend, should, would, could,
potentially, or may or other words that convey uncertainty of future events or outcomes to
identify these forward-looking statements. Forward-looking statements in this prospectus are
subject to a number of risks and uncertainties, some of which are beyond our control, including,
among other things:
    
    our ability to successfully operate our businesses on a combined basis, and to effectively integrate and improve
any future acquisitions;
    
    our ability to remove our Manager and our Managers right to resign;
    
    our trust and organizational 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;
    
    our cash flow available for distribution and our ability to make distributions in the future to our shareholders;
    
    our ability to pay the management fee, profit allocation when due and pay the put price if and when due;
    
    our ability to make and finance future acquisitions;
    
    our ability to implement our acquisition and management strategies;
    
    the regulatory environment in which our businesses operate;
    
    trends in the industries in which our 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 affecting the business or operations of our businesses;
    
    our and our Managers ability to retain or replace qualified employees of our businesses and our Manager;
    
    costs and effects of legal and administrative proceedings, settlements, investigations and claims; and
    
    extraordinary or force majeure events affecting the business or operations of our businesses.Our actual results, performance, prospects or opportunities could differ materially from
those expressed in or implied by the forward-looking statements. A description of some of the
risks that could cause our actual results to differ appears under the section Risk Factors.
Additional risks of which we are not currently aware or which we currently deem immaterial
could also cause our actual results to differ.In light of these risks, uncertainties and assumptions, you should not place undue
reliance on any forward-looking statements. The forward-looking events discussed in this
Annual Report on Form 10-K may not occur. These forward-looking statements are made as of the
date of this Annual Report. We undertake no obligation to publicly update or revise any
forward-looking statements to reflect subsequent events or circumstances, whether as a result
of new information, future events or otherwise, except as required by law.
 3




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PART I
 
 ITEM 1. BUSINESS
   Overview
     
    
    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.
   4




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##### 



2008 Highlights
 Acquisition of Fox
  Acquisition of Staffmark
  Aeroglide disposition
  Silvue disposition
  2008 distribution increase
  The following is a brief summary of the businesses in which we own a controlling interest at
December 31, 2008:
 Advanced Circuits
  5




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American Furniture
  Anodyne
   CBS Personnel
   Fox
  HALO
  6




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##### 



Tax Reporting
  WHERE YOU CAN FIND ADDITIONAL INFORMATION
 http://www.compassdiversifiedholdings.com
 7




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##### 



(1)
    
    CGI and its affiliate, our single largest holder beneficially own 24.4% of the Trust shares,
and is our single largest holder. Mr. Massoud is not a director, officer or member of CGI or
any of its affiliates.(2)
    
    Owned by members of our Manager, including Mr. Massoud as managing member.(3)
    
    Mr. Massoud is the managing member.(4)
    
    The Allocation Interests, which carry the right to receive a profit allocation, represent
less than 0.1% equity interest in the Company.(5)
    
    Mr. Day is a non-managing member.
 8




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##### 



Our Manager
     Market Opportunity
  
    
    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.
  9




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Our Strategy
  Management Strategy
  
    
    recruiting and retaining talented managers to operate our businesses using
structured incentive compensation programs, including minority equity ownership,
tailored to each business;
    
    regularly monitoring financial and operational performance, instilling consistent
financial discipline, and supporting management in the development and implementation
of information systems to effectively achieve these goals;
    
    assisting management in their analysis and pursuit of prudent organic growth
strategies;
    
    identifying and working with management to execute attractive external growth and
acquisition opportunities;
    
    assist management in controlling and right-sizing overhead costs, particularly in
the current challenging economic environment ; and
    
    forming strong subsidiary level boards of directors to supplement management in
their development and implementation of strategic goals and objectives.
  
    
    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;
 10




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
    
    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
   
    
    is an established North American based company;
    
    maintains a significant market share in defensible industry niche (i.e., has a
reason to exist);
    
    has a solid and proven management team with meaningful incentives;
    
    has low technological and/or product obsolescence risk; and
    
    maintains a diversified customer and supplier base.
  
    
    engages in a substantial level of internal and third-party due diligence;
    
    critically evaluates the management team;
    
    identifies and assesses any financial and operational strengths and weaknesses of
the target business;
    
    analyzes comparable businesses to assess financial and operational performances
relative to industry competitors;
    
    actively researches and evaluates information on the relevant industry; and
    
    thoroughly negotiates appropriate terms and conditions of any acquisition.
  11




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Strategic Advantages
    Valuation and Due Diligence
  
    
    discounted cash flow analyses;
    
    evaluation of trading values of comparable companies;
 12




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
    
    expected value matrices; and
    
    examination of recent transactions.
   Financing
      13




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Our Businesses
 Advanced Circuits
 Overview
   History of Advanced Circuits
    Industry
  14




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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 and launch 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,
the life cycle is relatively short and requires accelerated delivery time frames of
usually less than five days and very high, error-free quality. 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, generally 10 days or less, 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.
Volume Production PCBs are ordered in large quantities, usually over 100 units, and
response time is less important, ranging between 15 days to 10 weeks or more.
   
    
    Increasing Customer Demand for Quick-Turn Production Services 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.
 15




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##### 




    
    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 off shoring of
high-volume production orders has placed increased pricing pressure and margin
compression on many small domestic manufacturers that are no longer 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
   TM
   16




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Gross Sales by Products and Services (1)
 Year Ended December31,2008
    
    2007
    
    2006Prototype Production
    
    
    31.6
    %
    
    
    32.2
    %
    
    
    33.4
    %Quick-Turn Production
    
    
    34.4
    %
    
    
    33.0
    %
    
    
    32.1
    %Volume Production
    
    
    27.5
    %
    
    
    22.3
    %
    
    
    20.4
    %Third Party
    
    
    6.5
    %
    
    
    12.5
    %
    
    
    14.1
    %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, 2008, Advanced
Circuits received an average of over 300 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 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 that maximizes 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 is 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.
    
    Diverse Customer Base Advanced Circuits possesses a customer base with little
industry or customer concentration exposure. During fiscal year ended December 31,
2008, Advanced Circuits did business with over 10,000 customers and added approximately
234 new customers per month. For each of the years ended December 31, 2008, 2007 and
2006 no customer represented over 2% of net sales.
    
    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 to offer its customers a complete suite
of products including those outside of its core production capabilities. Additionally,
these relationships allow Advanced Circuits to outsource orders for volume production
and focus internal capacity on higher margin, short lead time, production and
quick-turn manufacturing.
 17




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##### 



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 expense
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 into
prototype and quick-turn manufacturing relationships with several subscale local and
regional PCB manufacturers. According to a November 2008 IPC study, approximately 349
PCB manufacturers operate in the United States with only 34 generating annual sales in
excess of $20 million. Management believes that while many of these manufacturers
maintain strong, longstanding customer relationships, they are unable to produce PCBs
with short turn-around times at competitive prices. As a result, Advanced Circuits is
beginning to seize upon an 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 Advanced Circuits has remained
focused on providing the highest quality product and service to its customers. We
believe this focus has allowed Advanced Circuits to achieve its outstanding delivery
and quality record. 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
  18




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Customers
  2008 Customer
    
    2007 Customer
    
    2006 CustomerIndustry Sector
    
    Distribution
    
    Distribution
    
    DistributionElectrical Equipment and Components
    
    
    32
    %
    
    
    35
    %
    
    
    40
    %Measuring Instruments
    
    
    12
    %
    
    
    15
    %
    
    
    15
    %Electronics Manufacturing Services
    
    
    16
    %
    
    
    13
    %
    
    
    11
    %Engineer Services
    
    
    5
    %
    
    
    5
    %
    
    
    5
    %Industrial and Commercial Machinery
    
    
    8
    %
    
    
    5
    %
    
    
    5
    %Business Services
    
    
    2
    %
    
    
    5
    %
    
    
    5
    %Wholesale Trade-Durable Goods
    
    
    2
    %
    
    
    3
    %
    
    
    3
    %Educational Institutions
    
    
    6
    %
    
    
    5
    %
    
    
    2
    %Transportation Equipment
    
    
    8
    %
    
    
    5
    %
    
    
    5
    %All Other Sectors Combined
    
    
    9
    %
    
    
    9
    %
    
    
    9
    %Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
  Sales and Marketing
     Competition
   19




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##### 



Suppliers
   Intellectual Property
 FreeDFM.com TM
 FreeDFM.com TM 4pcb.com TM 4PCB.com TM 33each.com TM barebonespcb.com TM Advanced
Circuits TM
 Regulatory Environment
  20




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##### 



Employees
  American Furniture
 Overview
     History of American Furniture
   21




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##### 



Industry
     
   Off-shore
Imports
  22




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##### 



Products and Services
  
  Product
Development
  23




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##### 



Manufacturing
      Competitive Strengths
  
    
    long runs of a limited number of standardized frames;
    
    the application of common components throughout the entire production line; and
    
    a standard offering of only two to four fabric options per frame.
    Barriers to Significant Asian Competition
  
    
    AFMs efficient, low-cost production model;
    
    mass retailers short lead-time demands and unwillingness to accept excess inventory
risk; and
    
    the high costs (e.g., freight, damage, shrink) of shipping upholstered furniture
direct from Asia.
 24




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##### 



Business Strategies
 
    
    Increase sales with new and existing customersWhile AFM currently supplies many of the top furniture retailers, AFM believes it can
further augment its customer base and is pursuing new business opportunities with
selected national and regional furniture retailers, as well as in other channels,
including Rent-To-Own (RTO) and mass merchandisers. In addition, many existing
customers currently purchase only a portion of AFMs product line, representing an
opportunity for AFM to increase sales to existing customers by augmenting customers
entire promotional product line. In order to focus additional attention to major
customers and expand productline sell-through to these customers, AFM added significant
infrastructure to its sales and marketing organization since 2005, increasing its sales
representative network while also subdividing sales territories to allow representatives
to focus more closely on the expansion of existing relationships and the addition of new
customers.
    
    Product developmentAFMs merchandising strategy focuses on satisfying the changing needs of retailers
and consumers in a manner that meets AFMs production strategy. AFMs management and
sales staff monitor the furniture market to identify new trends and popular styles at
higher price points. AFM subsequently ensures that it can cost-effectively replicate a
new style with standardized components and limited cover options, after which AFM will
build a prototype to determine if the product can be reproduced at acceptable margin
levels.
    
    Asian sourcing of componentsIn 2004, AFM implemented a program to purchase raw materials from the lowest-cost source
available in the marketplace. The Company hired a director of Asian sourcing in May 2005
to lead this effort. Currently, AFM sources the vast majority of its fabric, legs, show
wood, chaises, ottomans, correlate chairs and accent tables from Asian vendors. AFM
believes there are additional opportunities to lower purchasing costs through this
initiative.
    
    Strategic acquisitionsAFM has in the past and will continue to evaluate strategic acquisitions to augment its
existing business. In particular, acquisitions may provide AFM with an opportunity to
expand geographically, add additional product lines or achieve operational synergies.
    
    Pursue cost savings initiativesCurrently, we are aggressively pursuing expense reduction, cost cutting programs and cash
preservation initiatives throughout all parts of our business.
 Customers
  Sales and Marketing
   25




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##### 



Competition
  Suppliers
  Regulatory Environment
  Employees
  26




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##### 



Anodyne
 Overview
     History
      Industry
  27




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##### 



Products and Services
  
    
    Powered Support Surfaces:Mattresses which can be used for therapy or prevention
and are typically manufactured using an electronic power source with air cylinders or
a combination of air cylinders and foam and provide either Alternating Pressure or Low
Air Loss. Alternating Pressure Systems are designed to inflate alternate cylinders
while contiguous cylinders deflate in an alternating pattern. The alternating
inflation and deflation prevents sustained pressure on an area of skin by shifting
pressure from one area to another. This type of therapy provides movement under the
patients skin to eliminate both excessive and constant pressure, the leading cause of
bed sores. The powered control unit provides automatic changes in the distribution of
air pressure. Another typical type of powered surface is Low Air Loss Mattresses that
allow air to flow from the mattress and address the moisture and temperature
environment on the patients skin, contributing factors to bed sores. Low air loss
systems may provide additional features such as controlled air leakage, which reduces
skin moisture levels, and alternating pressure or lateral rotation which can aid in
patient turning and reduces risks associated
with fluid building up in a patients lungs. Anodyne currently produces low air loss
mattress systems which management believes provides the only low air loss product on the
market that gets air to the patients skin directly through a patented process. Powered
support surfaces are typically used in acute care settings and when more aggressive
therapy is needed.
 28




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##### 




    
    Non-Powered Support Surfaces:Consists of mattresses which have no powered
elements. Their support material can be composed of foam, air, water, gel or a
combination of these. In the case of water, air or gel materials, they are held in
place with containment bladders. Non-powered mattress replacement systems help
redistribute a patients body weight to lessen forces on pressure points by
envelopment into the surface. These products currently comprise the majority of
support surfaces. Currently, Anodyne manufactures a broad range of non-powered
mattress systems using air, foam and gel.
    
    Positioning devices:Positioning devices are used to position patients for
procedures as well as to minimize the likelihood of developing a pressure ulcer during
those procedures. Anodyne offers a complete range of foam positioning devices.
 Competition
   Gaymar Industries, Inc.:
 Span America Medical Systems (NASDAQ: SPAN):
 Business Strategies
  
    
    Offer customers high quality, consistent product, on a national basis Products
produced by Anodyne and its competitors are typically bulky in nature and may not be
conducive to shipping. Management believes that many of its competitors do not have
the scale or resources required to produce support surfaces for national distributors
and believes that customers value manufacturers with the scale and sophistication
required to meet these needs.
    
    Leverage scale to provide industry leading research and development Medical
support surfaces are becoming increasingly technologically advanced. Anodynes
management believes that many smaller competitors do not have the resources required
to effectively meet the changing needs of their
customers and believes that increased scale acquired though acquisitions will allow it to
better serve its customers through industry leading research and development.
 29




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##### 




    
    Pursue cost savings through scale purchasing and operational improvements Many
of the products used to manufacture medical support surfaces are standard in nature
and management believes that increased scale achieved through acquisitions will allow
it to benefit from lower cost of materials and therefore lower cost of sales. In
addition, management believes that there are opportunities to improve the operations
of smaller acquired entities and in turn benefit from these efficiencies.
 Research and Development
   Customers
   Sales and Marketing
    Suppliers
  30




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##### 



Intellectual Property
  Regulatory Environment
  Employees
  CBS Personnel
 Overview
    History of CBS Personnel
  31




---



##### 



Industry
     32




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##### 



Services
  
    
    providing excellent service to existing clients in a consistent and efficient
manner;
    
    cross selling service offerings to existing clients to increase revenue per client;
    
    marketing services 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
  
    
    Light Industrial A substantial portion of CBS Personnels temporary staffing
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 71%, 58% and 50% of CBS Personnels temporary staffing revenues
were derived from light industrial in the years 2008, 2007 and 2006, respectively.
    
    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 21%, 31% and 37% of CBS Personnels temporary
staffing revenues were derived from clerical in the years 2008, 2007 and 2006
respectively.The increase in percent of revenue in light industrial in 2008 and corresponding
decrease in clerical, are due to the revenue impact of Staffmark in 2008. Staffmarks
temporary staffing is principally light industrial.
    
    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 3%, 3% and 4% of CBS Personnels temporary staffing revenues were derived
from technical for the fiscal years ended December 31, 2008, 2007 and 2006,
respectively.
    
    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 1% of CBS Personnels temporary staffing revenues were derived
from healthcare for the fiscal year ended December 31, 2008 and 2% of CBS Personnels
temporary staffing revenues were derived from healthcare in the years 2007 and 2006.
 33




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##### 




    
    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 it to meet a broad range of client needs. Moreover,
these niche services typically generate higher margins for CBS Personnel. Approximately
4%, 6% and 7% of CBS Personnels temporary staffing revenues were derived from
niche/other for the fiscal years ended December 31, 2008, 2007 and 2006, respectively.
  Employee Leasing Services
   Temporary-to-Permanent and Permanent Staffing Services
  Competitive Strengths
  
    
    Large Employee Database/Customer List Over the course of its history, CBS
Personnels management believes CBS Personnel has built a significant presence in most
of 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. CBS Personnel attracts clients due in part to
its large database of reliable employees with wide ranging skill sets. CBS Personnels
employee database and client list have been built over a number of years in each of its
markets and serve as a major competitive strength in most of its markets.
    
    Higher Operating Margins By establishing multiple offices in the majority of the
markets in which it operates, 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.
 34




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##### 




    
    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 during the economic downturn, 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 presence in each of its markets and retaining its clients and
employees. In response to the current economic downturn, CBS Personnel is enacting a
similar strategy as was executed previously. This includes reducing costs and closing
offices. CBS Personnel is capitalizing on synergies from the Staffmark acquisition,
which allows for further contraction of offices and reduction of costs without
abandoning clients or employees in markets.
    
    Marketing Synergies By having a number of offices in the majority 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
  
    
    Invest in its Existing Markets In many of its existing markets, CBS Personnel
has multiple branch locations. CBS Personnel plans on continuing to invest in these
existing markets through the opening of additional branch locations and the hiring of
additional sales and operations employees when it is economically prudent to do so. In
addition, CBS personnel is offering complementary human resource services to its
existing clients such as full time recruiting, consulting, and administrative
outsourcing. CBS Personnel has implemented an incentive plan that highly rewards its
employees for selling services beyond its traditional temporary staffing services.
    
    Build a Presence in Contiguous Markets CBS Personnel plans on opening new branch
locations in markets contiguous to those in which it operates when it is economically
prudent. CBS Personnel believes that the cost and time required to establish
profitable branch locations is minimized through expansion into contiguous markets as
costs associated with advertising and administrative overhead are reduced due to
proximity.
    
    Continued restructuring and cost reductions As a result of the current economic
downturn, CBS Personnel is reducing costs and closing offices. The Staffmark
acquisition provides a larger footprint that allows CBS Personnel to close offices and
reduce costs while still continuing to service its clients and employees in its
existing markets.
    
    Pursue Selective Acquisitions CBS Personnel views acquisitions, such as the SES
acquisition in November 2006 and Staffmark in January 2008, as attractive means to
enter into a new geographical market, and in the case of Staffmark, increasing its market share
in existing markets, when economically prudent.
 Clients
  35




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##### 



Sales, Marketing and Recruiting Efforts
         Competition
   
    
    multiple offices in its core markets;
    
    long-standing relationships with its clients;
    
    a large 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.
 36




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##### 



Trade names
 CBS Personnel TM , CBS
Personnel Services TM , Columbia Staffing TM Columbia
Healthcare Services TM, Venturi Staffing Partners TM and Staffmark TM.
 37




---



##### 



Facilities
  EmployeeNumber of
    
    HoursState
    
    Branch Offices
    
    Billed (000s)CA
    
    
    35
    
    
    
    8,777OH
    
    
    27
    
    
    
    10,300TN
    
    
    18
    
    
    
    11,134AR
    
    
    17
    
    
    
    5,361TX
    
    
    16
    
    
    
    5,868KY
    
    
    14
    
    
    
    3,447NC
    
    
    12
    
    
    
    3,368PA
    
    
    11
    
    
    
    3,041IL
    
    
    10
    
    
    
    3,175IN
    
    
    10
    
    
    
    2,842GA
    
    
    9
    
    
    
    3,162SC
    
    
    9
    
    
    
    2,033MD
    
    
    5
    
    
    
    312MA
    
    
    4
    
    
    
    1,531VA
    
    
    4
    
    
    
    1,430NV
    
    
    4
    
    
    
    708NJ
    
    
    4
    
    
    
    657WA
    
    
    4
    
    
    
    443AZ
    
    
    3
    
    
    
    708NY
    
    
    3
    
    
    
    452KS
    
    
    2
    
    
    
    699MS
    
    
    2
    
    
    
    582AL
    
    
    2
    
    
    
    559CO
    
    
    2
    
    
    
    421CT
    
    
    2
    
    
    
    327OK
    
    
    2
    
    
    
    288DE
    
    
    1
    
    
    
    595OR
    
    
    1
    
    
    
    275MO
    
    
    0
    
    
    
    298WI
    
    
    0
    
    
    
    296FL
    
    
    0
    
    
    
    20233
    
    
    
    73,109
  38




---



##### 



Regulatory Environment
   Workers Compensation Program
    Employees
   39




---



##### 



Rebranding of CBS Personnel
  Fox
 Overview
     History of Fox
     Industry
  40




---



##### 



Mountain Biking 
  Snowmobiles
  All-Terrain Vehicles
  Motorcycles/Motocross
 Off-Road Vehicles
 41




---



##### 



Products and Services
   Competitive Strengths
 Proprietary Engineering Expertise 
 Highly Recognizable Brand
 Strong Blue-Chip Customer Relationships
 Business Strategies
 Expand Revenues from Powered Sports Business 
 Expand Aftermarket Sales 
 International Growth
 Pursue New Market Trends and Opportunities
 42




---



##### 



Research and Development
    Customers
   Sales and Marketing
    43




---



##### 



Competition
   Mountain Biking
 Snowmobiles
 All-Terrain Vehicles
  Off-Road Vehicles
 Suppliers
   44




---



##### 



Intellectual Property
   Regulatory Environment
   Employees
  HALO
 Overview
   45




---



##### 



History of HALO
    Industry
     Products and Services
  46




---



##### 



Examples of Common Promotional Products
 Categories
    
    ExamplesApparel
    
    Jackets, sweaters, hats, golf shirtsBusiness Accessories
    
    Calculators, briefcases, desk accessoriesCalendars
    
    Wall and desk calendars, appointment plannersWriting Instruments
    
    Pens, pencils, markers, highlightersRecognition Awards
    
    Trophies, plaquesOther Items
    
    Crystal ware, key chains, watches, mugs, golf accessories
   Competitive Strengths
  
    
    Industry Leading, Scalable Back Office Infrastructure HALOs
management team believes that an important factor in attracting and
retaining high quality account executives is providing an efficient
and effective order processing and administrative system. HALOs
customer service organization provides critical support functions for
its sales force including order entry, product sourcing, order
tracking, vendor payment, customer billing and collections. HALOs
scale in the industry has allowed it to make information technology
and personnel investments to create a sophisticated infrastructure
that management believes differentiates it from many smaller industry
participants.
    
    Diverse Customer Base Characterized by Long-Standing Relationships
HALOs revenue base possesses little customer, end market or
geographic concentration. It currently does business with over 40,000
customers in various end markets. For the fiscal year ended December
31, 2008, 2007 and 2006, HALOs top ten customers represented less
than 20% of its revenues. HALOs team of account executives are often
deeply involved in their local communities and possess deep and long
standing relationships with customers of all sizes.
    
    Extensive Relationships with a Broad Base of Suppliers HALOs
management believes its relationships with a wide range of suppliers
of promotional products allows HALO to offer its end customers the
most complete line of items in the industry.
 Business Strategies
 
    
    Attract and Retain Account
Executives As HALOs
infrastructure is relatively
fixed in nature, it can
derive significant
incremental contribution
from the addition of account
executives. Further, HALOs
management believes it has
developed a combination of
service and compensation
that allows it to offer
account executives a value
proposition superior to
those offered by its
competitors.
    
    Optimize the Productivity of
Account Executives The
management team of HALO
continuously strives to
increase the productivity of
its account executives. HALO
routinely provides its
account executives with
marketing support tools and
training. In addition, for
larger accounts, HALO works
with account executives to
develop proprietary
solutions that allow
customers to better measure
and track their programs,
thereby increasing their
loyalty.
    
    Restructure costs In light of current
severe economic pressures, HALO has reduced
its expenses to more            appropriately
align its cost structure with anticipated
reductions in revenue due to the current
economic downturn. These expense reductions
address most aspects of HALOs business.
 47




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##### 




    
    Selectively Acquire and
Integrate HALOs
management believes that
HALO is well positioned to
take advantage of the
industrys fragmentation and
economies of scale. In the
past, HALO has achieved
significant synergies by
acquiring and integrating
other distributors.
Recognizing this
opportunity, HALOs
management team is
constantly evaluating
potential acquisition
opportunities. We believe
that current economic
conditions may enhance our
opportunities to make
desirable acquisitions.
 Customers
  Sales and Marketing
   (Percent of sales by product category is not available for prior years)
 Percent ofProduct category
    
    salesApparel
    
    
    19.9
    %Office accessories
    
    
    15.1
    %Bags
    
    
    14.1
    %Writing instruments
    
    
    13.8
    %Calendars
    
    
    11.6
    %Jewelry/awards
    
    
    5.0
    %Drinkware
    
    
    4.0
    %Other
    
    
    16.5
    %100.0
    %
   Competition
  
    
    Full Service Companies that provide a wide array of services to a range of
customers, including multinational clients. Full service offerings include both the
drop shipment and fulfillment business models. HALO is a full service distributor.
 48




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##### 




    
    Inventory Based Distributors that provide inventory programs for large
corporations. Inventory based providers are generally capital intensive, often
requiring a large investment to maintain a broad inventory of SKUs.
    
    Franchisers Distributors that process and finance orders for a franchise fee.
Franchisers do not offer back office support and typically attract distributors with
lower credit profiles and those with available time to perform customer service
functions.
    
    Consumer Products Manufacturers Some customer product manufacturers provide
promotional products. Consumer product manufacturers, for whom promotional products is
a non-core business, do not customarily invest in the necessary infrastructure to meet
the support needs of industry sales professionals.
  Suppliers
  Employees
  49




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##### 



ITEM 1A  RISK FACTORS
 Risks Related to Our Business and Structure
 We are a company with limited history and may not be able to continue to successfully manage our
businesses on a combined basis.
  Our consolidated financial statements will not include meaningful comparisons to prior years.
  Our future success is dependent on the employees of our Manager and the management teams of our
businesses, the loss of any of whom could materially adversely affect our financial condition,
business and results of operations.
   We are exposed to risks relating to evaluations of controls required by Section 404 of the
Sarbanes-Oxley Act of 2002.
  50




---



##### 



We face risks with respect to the evaluation and management of future platform or add-on
acquisitions.
  We may not be able to successfully fund future acquisitions of new businesses due to the lack of
availability of debt or equity financing at the Company level on acceptable terms, which could
impede the implementation of our acquisition strategy and materially adversely impact our
financial condition, business and results of operations.
  While we intend to make regular cash distributions to our shareholders, the Companys board of
directors has full authority and discretion over the distributions of the Company, other than
the profit allocation, and it may decide to reduce or eliminate distributions at any time, which
may materially adversely affect the market price for our shares.
  We will rely entirely on receipts from our businesses to make distributions to our shareholders.
  pro rata
 51




---



##### 



The Companys board of directors has the power to change the terms of our shares in its sole
discretion in ways with which you may disagree.
  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 newly created directorships, for
those directors who are elected by our shareholders, and allowing only our Manager, as
holder of the Allocation Interests, to fill vacancies with respect to the class of
directors appointed by our Manager;
    
    requiring that directors elected by our shareholders be removed, with or without cause,
only by a vote of 85% of our shareholders;
    
    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;
    
    having a substantial number of additional authorized but unissued shares that may be
issued without shareholder action;
    
    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 of trust interests and Allocation Interests;
    
    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; and
    
    limitations regarding calling special meetings and written consents of our shareholders.
  52




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##### 



We may have conflicts of interest with the minority shareholders of our businesses.
  Our third party credit facility exposes us to additional risks associated with leverage and
inhibits our operating flexibility and reduces cash flow available for distributions to our
shareholders.
  
    
    maintain a minimum level of cash flow;
    
    leverage new businesses we
acquire to a minimum specified level at the time of acquisition;
    
    keep our total debt to cash flow at or below a ratio of 3.5 to 1; and
    
    make acquisitions that satisfy certain specified minimum criteria.
  Changes in interest rates could materially adversely affect us.
  We may engage in a business transaction with one or more target businesses that have
relationships with our officers, our directors, our Manager or CGI, which may create potential
conflicts of interest.
  CGI may exercise significant influence over the Company.
  53




---



##### 



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.
  Risks Relating to Our Manager
 Our Chief Executive Officer, directors, Manager and management team 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 materially adversely affect our operations.
  Our Manager and its affiliates, including members of our management team, may engage in
activities that compete with us or our businesses.
  Our Manager need not present an acquisition or disposition opportunity to us if our Manager
determines on its own that such acquisition or disposition opportunity does not meet the
Companys acquisition or disposition criteria.
  We cannot remove our Manager solely for poor performance, which could limit our ability to
improve our performance and could materially adversely affect the market price of our shares.
  54




---



##### 



We may have difficulty severing ties with our Chief Executive Officer, Mr. Massoud.
  If the Management Services Agreement is terminated, our Manager, as holder of the Allocation
Interests in the Company, has the right to cause the Company to purchase such Allocation
Interests, which may materially adversely affect our liquidity and ability to grow.
  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 materially adversely
affect our financial condition, business and results of operations as well as the market price
of our shares.
  The liability associated with the supplemental put agreement is difficult to estimate and may be
subject to substantial period-to-period changes, thereby significantly impacting our future
results of operations.
  We must pay our Manager the management fee regardless of our performance.
  55




---



##### 



We cannot determine the amount of the management fee that will be paid over time with any
certainty.
  We cannot determine the amount of profit allocation that will be paid over time with any
certainty.
  The fees to be paid to our Manager pursuant to the Management Services Agreement, the offsetting
Management Services Agreements and transaction services agreements and the profit allocation to
be paid to our Manager, as holder of the Allocation Interests, pursuant to the LLC Agreement may
significantly reduce the amount of cash available for distribution to our shareholders.
  Our Managers influence on conducting our operations, including on our conducting of
transactions, gives it the ability to increase its fees and compensation to our Chief Executive
Officer, which may reduce the amount of cash flow available for distribution to our
shareholders.
  56




---



##### 



Fees paid by the Company and our businesses pursuant to transaction services agreements do not
offset fees payable under the Management Services Agreement and will be in addition to the
management fee payable by the Company under the Management Services Agreement.
   Our Managers profit allocation may induce it to make suboptimal decisions regarding our
operations.
  The obligations to pay the management fee and profit allocation, including the put price, may
cause the Company to liquidate assets or incur debt.
  Risks Related to Taxation
 Our shareholders will be subject to tax on their share of the Companys taxable income, which
taxes or taxable income could exceed the cash distributions they receive from the Trust.
  57




---



##### 



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 distribution to holders of
shares of the Trust and thus could result in a substantial reduction in the value of the shares.
   A shareholder may recognize a greater taxable gain (or a smaller tax loss) on a disposition of
shares than expected because of the treatment of debt under the partnership tax accounting
rules.
  Our structure involves complex provisions of U.S. federal income tax law for which no clear
precedent or authority may be available. Our structure also is subject to potential legislative,
judicial or administrative change and differing interpretations, possibly on a retroactive
basis.
  58




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##### 



Risks Relating Generally to Our Businesses
 The recent disruption in the overall economy and the financial markets will continue to
adversely impact our business.
   Impairment of our intangible assets could result in significant charges that would adversely
impact our future operating results.
   
    
    significant underperformance relative to historical or projected future operating results;
    
    significant changes in the manner of or use of the acquired assets or the strategy for our overall business;
    
    significant negative industry or economic trends;
    
    significant decline in our stock price for a sustained period;
    
    changes in our organization or management reporting structure could result in additional reporting units,
which may require alternative methods of estimating fair values or greater desegregation or aggregation in
our analysis by reporting unit; and
 59




---



##### 




    
    a decline in our market capitalization below net book value.
   Our businesses are subject to unplanned business interruptions which may adversely affect our
performance.
  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.
   60




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##### 



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 our businesses and take this knowledge, our businesses operations and their ability to
compete effectively could be materially adversely impacted.
  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.
   Our businesses could experience fluctuations in the costs of raw materials as a result of
inflation and other economic conditions, 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.
  61




---



##### 



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.
  Defects in the products provided by our companies could result in financial or other damages to
those customers, which could result in reduced demand for our companies products and/or
liability claims against our companies.
  Some of our businesses are subject to certain risks associated with the movement of businesses
offshore.
  Loss of key customers of some of our businesses could negatively impact financial condition.
  Our businesses are subject to certain risks associated with their foreign operations or business
they conduct in foreign jurisdictions.
  62




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##### 



Risks Related to 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.
  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.
  Electronics manufacturing services corporations are increasingly acting as intermediaries,
positioning themselves between PCB manufacturers and OEMs, which could reduce operating margins.
  Risks Related to American Furniture
 Competition from larger furniture manufacturers may adversely affect American Furniture
Manufacturings business and operating results.
  63




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##### 



Risks Related to Anodyne
 Certain of Anodynes products are subject to regulation by the FDA.
  A change in Medicare Reimbursement Guidelines may reduce demand for Anodynes products.
  Risks Related to CBS Personnel
 CBS Personnels business depends on its ability to attract and retain qualified staffing
personnel that possess the skills demanded by its clients.
  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.
  64




---



##### 



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.
  CBS Personnel may become ineligible to self-insure against its workers compensation exposure for
certain employees and its workers compensation loss reserves may be inadequate to cover its
ultimate liability for workers compensation costs.
    During the current significant economic downturn, CBS Personnels clients are likely to use fewer
temporary and contract workers and could become unable to pay CBS Personnel for its services on a
timely basis or at all, which would materially adversely affect our business .
    65




---



##### 



Risks Related to HALO
 Increases in the portion of existing customers and potential customers buying directly from
manufacturers could have a material adverse affect on the business of HALO.
  The loss of a significant number of account executives could adversely affect the business of
HALO.
  HALO relies on suppliers for the timely delivery of products to end customers. Delays in the
delivery of promotional products to customers could adversely affect HALOs results of
operations.
  Risks Related to Fox
 Growth in popularity of alternative recreational activities may reduce demand for mountain bikes
and off-road products which would reduce demand for Foxs products
  66




---



##### 



ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2.  PROPERTIES
 The Company
  Advanced Circuits
  American Furniture
   Anodyne
  CBS Personnel
  Fox
  HALO
  67




---



##### 



State
    
    Function
    
    Offices
    
    Square feetCalifornia
    
    Sales
    
    5
    
    
    22,595Illinois
    
    Administration
    
    2
    
    
    40,000Information Technology
    
    1
    
    
    4,766Warehousing
    
    2
    
    
    57,000Louisiana
    
    Sales
    
    1
    
    
    1,919Ohio
    
    Administration
    
    2
    
    
    3,796Tennessee
    
    Sales
    
    1
    
    
    8,804Texas
    
    Sales
    
    2
    
    
    20,292Missouri
    
    Sales
    
    1
    
    
    10,000Kansas
    
    Sales
    
    1
    
    
    1,500Maryland
    
    Sales
    
    1
    
    
    800Florida
    
    Sales
    
    1
    
    
    1,000Pennsylvania
    
    Sales
    
    1
    
    
    842
  68




---



##### 



ITEM 3.  LEGAL PROCEEDINGS
  
 ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  69




---



##### 



Part II
 
 Item 5.  Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
 Market Information
  Quarter Ended
    
    High
    
    Low
    
    Distribution DeclaredMarch 31, 2007
    
    $
    18.32
    
    
    $
    16.75
    
    
    $
    0.30June 30, 2007
    
    
    18.17
    
    
    
    15.58
    
    
    
    0.30September 30, 2007
    
    
    18.23
    
    
    
    13.59
    
    
    
    0.325December 31, 2007
    
    
    17.28
    
    
    
    14.29
    
    
    
    0.325March 31, 2008
    
    
    15.33
    
    
    
    11.59
    
    
    
    0.325June 30, 2008
    
    
    13.70
    
    
    
    11.39
    
    
    
    0.325September 30, 2008
    
    
    14.56
    
    
    
    10.01
    
    
    
    0.34December 31, 2008
    
    
    14.15
    
    
    
    8.19
    
    
    
    0.34
 COMPARATIVE PERFORMANCE OF SHARES OF TRUST STOCK
  
 70




---



##### 



September 30,
    
    December 31,Data
    
    
    
    
    
    June 30, 2006
    
    2006
    
    2006Compass Diversified Holdings
    
    
    
    
    
    $
    94.88
    
    
    $
    102.61
    
    
    $
    116.66NASDAQ Stock Market Index
    
    
    
    
    
    $
    97.44
    
    
    $
    101.31
    
    
    $
    108.35NASDAQ Other Finance Index
    
    
    
    
    
    $
    94.03
    
    
    $
    104.02
    
    
    $
    107.59September 30,
    
    December 31,Data
    
    March 31, 2007
    
    June 30, 2007
    
    2007
    
    2007Compass Diversified Holdings
    
    $
    116.13
    
    
    $
    125.17
    
    
    $
    115.39
    
    
    $
    109.84NASDAQ Stock Market Index
    
    $
    108.64
    
    
    $
    116.78
    
    
    $
    121.19
    
    
    $
    118.98NASDAQ Other Finance Index
    
    $
    104.70
    
    
    $
    112.86
    
    
    $
    107.18
    
    
    $
    108.11September 30,
    
    December 31,Data
    
    March 31, 2008
    
    June 30, 2008
    
    2008
    
    2008Compass Diversified Holdings
    
    $
    100.37
    
    
    $
    91.09
    
    
    $
    109.94
    
    
    $
    94.32NASDAQ Stock Market Index
    
    $
    102.24
    
    
    $
    102.86
    
    
    $
    93.84
    
    
    $
    70.75NASDAQ Other Finance Index
    
    $
    86.86
    
    
    $
    85.52
    
    
    $
    90.56
    
    
    $
    57.91
 Shareholders
  Distributions
  Quarter Ended
    
    Declaration Date
    
    Payment Date
    
    Distribution Per ShareMarch 31, 2007
    
    April 5, 2007
    
    April 24, 2007
    
    $
    0.30June 30, 2007
    
    July 10, 2007
    
    July 27, 2007
    
    $
    0.30September 30, 2007
    
    October 9, 2007
    
    October 26, 2007
    
    $
    0.325December 31, 2007
    
    January 11, 2008
    
    January 30, 2008
    
    $
    0.325March 31, 2008
    
    April 5, 2008
    
    April 25, 2008
    
    $
    0.325June 30, 2008
    
    July 10, 2008
    
    July 29, 2008
    
    $
    0.325September 30, 2008
    
    October 9, 2008
    
    October 31, 2008
    
    $
    0.34December 31, 2008
    
    January 8, 2009
    
    January 30, 2009
    
    $
    0.34
  71




---



##### 



ITEM 6.   SELECTED FINANCIAL DATA
   Acquisitions:
    
    Acquisition Date
    
    Disposition DateAdvanced Circuits(1)
    
    May 16, 2006
    
    n/aCBS Personnel(1)
    
    May 16, 2006
    
    n/aCrosman(1)
    
    May 16, 2006
    
    January 5, 2007Silvue(1)
    
    May 16, 2006
    
    June 25, 2008Anodyne
    
    August 1, 2006
    
    n/aAeroglide
    
    February 28, 2007
    
    June 24, 2008HALO
    
    February 28, 2007
    
    n/aAmerican Furniture
    
    August 31, 2007
    
    n/aFox
    
    January 4, 2008
    
    n/aStaffmark(2)
    
    January 21, 2008
    
    n/a
 
 (1)
    
    Represent initial operating subsidiaries.(2)
    
    Staffmark was acquired by our operating segment CBS Personnel.  Year ended December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005Statements of Operations Data:Net sales
    
    $
    1,538,473
    
    
    $
    841,791
    
    
    $
    395,173
    
    
    $
    Cost of sales
    
    
    1,196,206
    
    
    
    636,008
    
    
    
    307,014
    
    
    
    Gross profit
    
    
    342,267
    
    
    
    205,783
    
    
    
    88,159
    
    
    
    Operating expenses:Staffing
    
    
    102,438
    
    
    
    56,207
    
    
    
    34,345
    
    
    
    Selling, general and administrative
    
    
    165,768
    
    
    
    94,426
    
    
    
    31,605
    
    
    
    1Supplemental put expense
    
    
    6,382
    
    
    
    7,400
    
    
    
    22,456
    
    
    
    Management fees
    
    
    15,205
    
    
    
    10,120
    
    
    
    4,158
    
    
    
    Amortization expense
    
    
    24,605
    
    
    
    12,679
    
    
    
    5,814
    
    
    
    Operating income (loss)
    
    
    27,869
    
    
    
    24,951
    
    
    
    (10,219
    )
    
    
    (1
    )Income (loss) from continuing operations
    
    
    324
    
    
    
    (946
    )
    
    
    (29,080
    )
    
    
    (1
    )Income and gain from discontinued operations
    
    
    77,970
    
    
    
    41,314
    
    
    
    9,831Net income (loss) (1), (2)
    
    $
    78,294
    
    
    $
    40,368
    
    
    $
    (19,249
    )
    
    $
    (1
    )Cash Flow Data:Cash provided by operating activities
    
    $
    40,549
    
    
    $
    41,772
    
    
    $
    20,563
    
    
    $
    Cash used in investing activities
    
    
    (22,542
    )
    
    
    (114,158
    )
    
    
    (362,286
    )
    
    
    Cash (used in) provided by financing activities
    
    
    (39,812
    )
    
    
    184,882
    
    
    
    351,073
    
    
    
    100Net (decrease) increase in cash and cash equivalents
    
    
    (21,885
    )
    
    
    112,352
    
    
    
    9,610
    
    
    
    100Per Share Data:Basic and fully diluted income (loss) from
continuing operations per share
    
    $
    0.01
    
    
    $
    (0.04
    )
    
    $
    (2.29
    )
    
    $
    Basic and fully diluted income from discontinued
operations per share
    
    
    2.47
    
    
    
    1.50
    
    
    
    0.77
    
    
    
    Basic and fully diluted net income (loss) per share
    
    $
    2.48
    
    
    $
    1.46
    
    
    $
    (1.52
    )
    
    $
    
 (1)
    
    Includes gains on the sales of Aeroglide and Silvue in 2008 of $34.0 million and $39.4 million,
respectively, and Crosman in 2007 of $36.0 million.(2)
    
    Includes a charge to net income of $10.0 million for distributions made at the subsidiary (ACI)
level in excess of cumulative earnings in 2007. 72




---



##### 



December 31,2008
    
    2007
    
    2006
    
    2005Balance Sheet Data:Current assets
    
    $
    335,201
    
    
    $
    299,241
    
    
    $
    135,121
    
    
    $
    3,408Total assets
    
    
    984,336
    
    
    
    828,002
    
    
    
    496,382
    
    
    
    3,408Current liabilities
    
    
    139,370
    
    
    
    106,613
    
    
    
    155,534
    
    
    
    3,309Long-term debt
    
    
    151,000
    
    
    
    148,000
    
    
    
    
    
    
    
    Total liabilities
    
    
    440,458
    
    
    
    373,285
    
    
    
    214,759
    
    
    
    3,309Minority interests
    
    
    79,431
    
    
    
    21,867
    
    
    
    24,909
    
    
    
    100
 73




---



##### 



ITEM 7.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 This item 7 contains forward-looking statements. Forward-looking statements in this Annual Report
on Form 10-K are subject to a number of risks and uncertainties, some of which are beyond our
control. Our actual results, performance, prospects or opportunities could differ materially from
those expressed in or implied by the forward-looking statements. Additional risks of which we are
not currently aware or which we currently deem immaterial could also cause our actual results to
differ, including those discussed in the sections entitled Forward-Looking Statements and Risk
Factors included elsewhere in this Annual Report.
 Overview
    
    
    North American base of operations;
    
    stable and growing earnings and cash flow;
    
    maintains a significant market share in defensible industry niche (i.e., has a reason
to exist);
    
    solid and proven management team with meaningful incentives;
    
    low technological and/or product obsolescence risk; and
    
    a diversified customer and supplier base.
  
    
    utilizing structured incentive compensation programs tailored to each business to
attract, recruit and retain talented managers to operate our businesses;
    
    regularly monitoring financial and operational performance, instilling consistent
financial discipline, and supporting management in the development and implementation of
information systems to effectively achieve these goals;
    
    assisting management in their analysis and pursuit of prudent organic cash flow growth
strategies (both revenue and cost related);
    
    identifying and working with management to execute attractive external growth and
acquisition opportunities; and
    
    forming strong subsidiary level boards of directors to supplement management in their
development and implementation of strategic goals and objectives.
 74




---



##### 



Initial public offering and company formation
    Acquisitions
 
    
    On May 16, 2006, we made loans to and purchased a controlling interest in CBS
Personnel for approximately $128 million. As of December 31, 2008, we own
approximately 66.4% of the common stock on a primary basis and 62.4% on a fully diluted
basis.
    
    On May 16, 2006, we made loans to and purchased a controlling interest in
Crosmanfor approximately $73 million representing at the time of purchase
approximately 75.4% on both a primary and fully diluted basis.
    
    On May 16, 2006, we made loans to and purchased a controlling interest in
Advanced Circuits for approximately $81 million. As of December 31, 2008, we
own approximately 70.2% of the common stock on a primary and fully diluted basis.
    
    On May 16, 2006, we made loans to and purchased a controlling interest in Silvuefor approximately $36 million, representing at the time of purchase approximately
72.3% of the outstanding stock on both a primary and fully diluted basis.
    
    On August 1, 2006, we made loans to and purchased a controlling interest in
Anodyne for approximately $31 million. As of December 31, 2008, we own
approximately 67.0% of the common stock on a primary basis and 57.0% on a fully diluted
basis.
    
    On February 28, 2007, we made loans to and purchased a controlling interest in
Aeroglide for approximately $58 million, representing at the time of purchase
approximately 88.9% of the outstanding stock on a primary basis and approximately 73.9%
on a fully diluted basis.
    
    On February 28, 2007, we made loans to and purchased a controlling interest in
HALO was purchased for approximately $62 million. As of December 31, 2008, we
own approximately 88.3% of the common stock on a primary basis and 73.6% on a fully
diluted basis.
    
    On August 28, 2007, we made loans to and purchased a controlling interest in
American Furniture for approximately $97 million. As of December 31, 2008, we
own approximately 93.9% of the common stock on a primary basis and 84.5% on a fully
diluted basis.
 75




---



##### 




    
    On January 4, 2008, we made loans to and purchased a controlling interest in
Fox for approximately $80.4 million. As of December 31, 2008, we own
approximately 75.5% of the common stock on a primary basis and 68.0% on a fully diluted
basis.
 Dispositions
 
    
    On January 5, 2007, we sold all of our interest in Crosman, for approximately $143
million. We recorded a gain on the sale in the first quarter of 2007 of approximately
$36 million.
    
    On June 24, 2008, we sold all of our interest in Aeroglide, for approximately $95
million. We recorded a gain on the sale in the second quarter of 2008 of approximately
$34 million.
    
    On June 25, 2008, we sold all of our interest in Silvue, for approximately $95
million. We recorded a gain on the sale in the second quarter of 2008 of approximately
$39 million.
  
    
    First, to meet capital expenditure requirements, management fees and corporate overhead
expenses;
    
    Second, to fund distributions from the businesses to the Company; and
    
    Third, to be distributed by the Trust to shareholders.
 2008 Highlights
 Acquisition of Fox Factory
  Acquisition of Staffmark
  Aeroglide disposition
  76




---



##### 



Silvue disposition
  2008 Distributions
  Areas for focus in 2009
  
    
    Taking advantage, where possible, of the current economic downturn by growing market
share in each of our market niche leading companies at the expense of less well
capitalized competitors;
    
    Achieving sales growth, technological excellence and manufacturing capability through
global expansion;
    
    Continuing to grow through disciplined, strategic acquisitions and rigorous integration
processes;
    
    Aggressively pursuing expense reduction and cost savings through contraction in
discretionary spending and capital expenditures, and reductions in workforce and
production levels in response to lower production volume;
    
    Driving free cash flow through increased net income and effective working capital
management enabling continued investment in our businesses, strategic acquisitions, and
enabling us to return value to our shareholders; and
    
    Sharply curtailing costs to help counteract the current global economic crisis.
 Results of Operations
  May 16, 2006
    
    August 1, 2006
    
    February 28, 2007
    
    August 31, 2007
    
    January 4, 2008Advanced Circuits 
CBS Personnel
    
    Anodyne
    
    HALO
    
    American Furniture
    
    Fox
  77




---



##### 



Consolidated Results of Operations  Compass Diversified Holdings
 Years Ended December 31,2008
    
    
    2007
    
    
    2006Net sales
    
    $
    1,538,473
    
    
    $
    841,791
    
    
    $
    395,173Cost of sales
    
    
    1,196,206
    
    
    
    636,008
    
    
    
    307,014Gross profit
    
    
    342,267
    
    
    
    205,783
    
    
    
    88,159Staffing, selling, general and administrative expense
    
    
    268,206
    
    
    
    150,633
    
    
    
    65,950Management fees
    
    
    15,205
    
    
    
    10,120
    
    
    
    4,158Supplemental put expense
    
    
    6,382
    
    
    
    7,400
    
    
    
    22,456Amortization of intangibles
    
    
    24,605
    
    
    
    12,679
    
    
    
    5,814Operating income (loss)
    
    $
    27,869
    
    
    $
    24,951
    
    
    $
    (10,219
    )
 Net sales
   Cost of sales
  Staffing, selling, general and administrative expense
  78




---



##### 



Management fees
   Supplemental put expense
  Amortization of intangibles
  79




---



##### 



Results of Operations  Our Businesses
  Advanced Circuits
 Overview
    Results of Operations
  Year Ended December 31,2008
    
    
    2007
    
    
    2006(in thousands)Net sales
    
    $
    55,449
    
    
    $
    52,292
    
    
    $
    48,139Cost of sales
    
    
    23,781
    
    
    
    23,139
    
    
    
    20,098Gross profit
    
    
    31,668
    
    
    
    29,153
    
    
    
    28,041Selling, general and administrative expenses
    
    
    10,872
    
    
    
    8,914
    
    
    
    12,855Management fees
    
    
    500
    
    
    
    500
    
    
    
    500Amortization of intangibles
    
    
    2,631
    
    
    
    2,661
    
    
    
    2,731Income from operations
    
    $
    17,665
    
    
    $
    17,078
    
    
    $
    11,955
 80




---



##### 



Fiscal Year Ended December 31, 2008 Compared to Fiscal Year Ended December 31, 2007
 Net sales
  Cost of sales
  Selling, general and administrative expenses
  Income from operations
  Fiscal Year Ended December 31, 2007 Compared to Fiscal Year Ended December 31, 2006
 Net sales
  Cost of sales
  81




---



##### 



Selling, general and administrative expenses
  Income from operations
  American Furniture
 Overview
     82




---



##### 



Results of Operations
  Year Ended December 31,2008
    
    
    2007(Pro-forma)(in thousands)Net sales
    
    $
    130,949
    
    
    $
    156,635Cost of sales
    
    
    104,540
    
    
    
    120,739Gross profit
    
    
    26,409
    
    
    
    35,896Selling, general and administrative expenses (a)
    
    
    17,853
    
    
    
    20,672Management fees
    
    
    500
    
    
    
    500Amortization of intangibles (b)
    
    
    2,933
    
    
    
    2,933Income from operations
    
    $
    5,123
    
    
    $
    11,791
 Prior period results of operations of American Furniture for the year ended December 31, 2007
include the following pro-forma adjustments:
 
 (a)
    
    Selling, general and administrative expenses were reduced by $2.8 million, representing
one-time transaction costs incurred by the seller.(a)
    
    A reduction in depreciation expense of $0.1 million as a result of, and derived from, the
purchase price allocation in connection with our acquisition of American Furniture in August 2007.(b)
    
    A reduction in charges to amortization of intangible assets totaling $0.7 million, as a result
of, and derived from, the purchase price allocation in connection with our acquisition of American
Furniture in August 2007. Fiscal Year Ended December 31, 2008 Compared to Pro-forma Fiscal Year Ended December 31, 2007
 Net sales
  Cost of sales
  Selling, general and administrative expenses
  83




---



##### 



Income from operations
  Anodyne
 Overview
    Results of Operations
  Year Ended December 31,2008
    
    
    2007
    
    
    2006(Pro-forma)(in thousands)Net sales
    
    $
    54,199
    
    
    $
    44,189
    
    
    $
    23,367Cost of sales
    
    
    40,683
    
    
    
    33,073
    
    
    
    17,505Gross profit
    
    
    13,516
    
    
    
    11,116
    
    
    
    5,862Selling, general and administrative expenses (a)
    
    
    7,455
    
    
    
    6,502
    
    
    
    4,596Management fees
    
    
    350
    
    
    
    350
    
    
    
    305Amortization of intangibles
    
    
    1,483
    
    
    
    1,328
    
    
    
    709Income from operations
    
    $
    4,228
    
    
    $
    2,936
    
    
    $
    252
 Prior period results of operations of Anodyne for the year ended December 31, 2006 include the
following pro-forma adjustment:
 
 (a)
    
    Selling, general and administrative expenses were reduced by $1.0 million in 2006, representing
an adjustment for one-time transaction costs incurred by the seller as a result of our purchase. 84




---



##### 



Fiscal Year Ended December 31, 2008 Compared to Fiscal Year Ended December 31, 2007
 Net sales
  Cost of sales
  Selling, general and administrative expenses
  Amortization expense
  Income from operations
  Fiscal Year Ended December 31, 2007 Compared to Pro-forma Fiscal Year Ended December 31, 2006
 Net sales
  Cost of sales
  85




---



##### 



Selling, general and administrative expenses
  Amortization expense
  Income from operations
  CBS Personnel
 Overview
      86




---



##### 



Results of Operations
  Years Ended December 31,(Pro-forma)2008
    
    
    2007
    
    
    2006(in thousands)Service revenues
    
    $
    1,037,418
    
    
    $
    1,153,144
    
    
    $
    1,175,255Cost of services
    
    
    859,026
    
    
    
    951,272
    
    
    
    968,632Gross profit
    
    
    178,392
    
    
    
    201,872
    
    
    
    206,623Staffing, selling, general and administrative expenses (a)
    
    
    155,453
    
    
    
    163,193
    
    
    
    162,308Management fees (b)
    
    
    1,761
    
    
    
    1,930
    
    
    
    1,977Amortization of intangibles (c)(d)
    
    
    5,082
    
    
    
    5,155
    
    
    
    5,116Income from operations
    
    $
    16,096
    
    
    $
    31,594
    
    
    $
    37,222
 Combined results of operations of CBS Personnel and Staffmark for the years ended December 31,
2008, 2007 and 2006 include the following pro-forma adjustments:
 
 (a)
    
    A decrease in staffing, selling, general and administrative expenses in 2006 totaling $0.3
million, which reflects transaction costs incurred by CBS Personnel as a result of, and derived
from, our acquisition of CBS Personnel in May 2006.(b)
    
    An increase in management fees totaling $0.9 million in 2007 and 2006 reflecting quarterly fees
that would have been due to our Manager in connection with our Management Services Agreement based
on the incremental Staffmark net revenues(c)
    
    An increase in amortization of intangible assets totaling $0.3 million, $4.0 million and $4.0
million in 2008, 2007 and 2006, respectively, reflecting increased amortization expense as a result
of, and derived from, the purchase price allocation in connection with CBS Personnels acquisition
of Staffmark in January 2008.(d)
    
    A decrease in amortization of intangible assets in 2006 totaling $1.6 million reflecting an
adjustment for deferred loan origination fees, the balance of which was written off as a result of
our acquisition of CBS Personnel in May 2006. Pro-forma Fiscal Year Ended December 31, 2008 compared to Pro-forma Fiscal Year Ended December 31, 2007
 Service revenues
  Cost of services
  Staffing, selling, general and administrative expenses
  87




---



##### 



Management fees
  Income from operations
  Pro-forma Fiscal Year Ended December 31, 2007 Compared to Pro-forma Fiscal Year Ended December 31, 2006
 Service revenues
  Cost of services
  Staffing, selling, general and administrative expenses
  Income from operations
  Fox
 Overview
    88




---



##### 



Results of Operations
  Year Ended December 31,2008
    
    
    2007(Pro-forma)(in thousands)Net sales
    
    $
    131,734
    
    
    $
    105,726Cost of sales (a)
    
    
    95,844
    
    
    
    81,765Gross profit
    
    
    35,890
    
    
    
    23,961Selling, general and administrative expenses (b)
    
    
    19,182
    
    
    
    15,818Management fees (c )
    
    
    500
    
    
    
    500Amortization of intangibles (d)
    
    
    5,501
    
    
    
    5,233Income from operations
    
    $
    10,707
    
    
    $
    2,410
 Prior period results of operations of Fox for the year ended December 31, 2007 include the
following pro-forma adjustments:
 
 (a)
    
    An increase in cost of sales totaling $0.3 million, reflecting additional depreciation expense
as a result of, and derived from, the purchase price allocation in connection with our acquisition
of Fox in January 2008.(b)
    
    An increase in selling, general and administrative expense totaling $0.1 million reflecting
additional depreciation expense as a result of, and derived from, the purchase price allocation in
connection with our acquisition of Fox in January 2008.(c)
    
    An increase in management fees totaling $0.5 million reflecting quarterly fees that would have
been due to our Manager in connection with our Management Services Agreement.(d)
    
    An increase in amortization of intangible assets totaling $5.2 million reflecting amortization
expense as a result of, and derived from, the purchase price allocation in connection with our
acquisition of Fox in January 2008. Fiscal Year Ended December 31, 2008 Compared to Pro-forma Fiscal Year Ended December 31, 2007
 Net sales
  Cost of sales
  Selling, general and administrative expenses
  89




---



##### 



Income from operations
  HALO
 Overview
    Results of Operations
  Year Ended December 31,2008
    
    
    2007(Pro-forma)(in thousands)Net sales
    
    $
    159,797
    
    
    $
    144,342Cost of sales
    
    
    98,845
    
    
    
    88,939Gross profit
    
    
    60,952
    
    
    
    55,403Selling, general and administrative expenses (a)
    
    
    52,806
    
    
    
    47,069Management fees (b)
    
    
    500
    
    
    
    500Amortization of intangibles (c)
    
    
    2,357
    
    
    
    2,110Income from operations
    
    $
    5,289
    
    
    $
    5,724
 Prior period results of operations of HALO for the year ended December 31, 2007 includes the
following pro-forma adjustments:
 
 (a)
    
    An increase in selling, general and administrative expense totaling $0.3 million
reflecting additional depreciation expense as a result of, and derived from, the purchase price
allocation in connection with our acquisition of HALO in February 2007.(b)
    
    An increase in management fees totaling $0.1 million, reflecting additional quarterly fees that
would have been due to our Manager in connection with our Management Services Agreement.(c)
    
    An increase in amortization of intangible assets totaling $0.3 million reflecting
additional amortization expense as a result of, and derived from, the purchase price allocation
in connection with our acquisition of HALO in February 2007. 90




---



##### 



Fiscal Year Ended December 31, 2008 Compared to Pro-forma Fiscal Year Ended December 31, 2007
 Net sales
  Cost of sales
  Selling, general and administrative expenses
  Amortization expense
  Income from operations
  Liquidity and Capital Resources
    91




---



##### 




    
    Advanced Circuits  approximately $60.1 million;
    
    American Furniture  approximately $70.8 million;
    
    Anodyne  approximately $18.8 million;
    
    CBS Personnel  approximately $110.6 million;
    
    Fox  approximately $50.1 million; and
    
    HALO  approximately $51.6 million.
        92




---



##### 



93




---



##### 



Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007Net income
    
    $
    78,294
    
    
    $
    40,368Adjustment
to reconcile net income to cash provided by operating activitiesDepreciation and amortization
    
    
    35,021
    
    
    
    24,107Supplemental put expense
    
    
    6,382
    
    
    
    7,400Minority shareholders notes and charges
    
    
    2,827
    
    
    
    1,080Minority interest
    
    
    4,042
    
    
    
    11,940Deferred taxes
    
    
    (8,911
    )
    
    
    (1,295
    )Gain on sales of businesses
    
    
    (73,363
    )
    
    
    (35,834
    )Amortization of debt issuance cost
    
    
    1,969
    
    
    
    1,224Other
    
    
    381
    
    
    
    86Changes in operating assets and liabilities
    
    
    (6,093
    )
    
    
    (7,304
    )Net cash provided by operating activities
    
    
    40,549
    
    
    
    41,772Plus:Unused fee on Revolving Credit Facility (1)
    
    
    3,139
    
    
    
    2,665Staffmark integration and restructuring
    
    
    8,826Changes in operating assets and liabilities
    
    
    6,093
    
    
    
    7,304Less:Maintenance capital expenditures (2)Advanced Circuits
    
    
    983
    
    
    
    396Aeroglide
    
    
    210
    
    
    
    420American Furniture
    
    
    1,438
    
    
    
    140Anodyne
    
    
    1,425
    
    
    
    1,521Fox
    
    
    1,601
    
    
    
    CBS Personnel
    
    
    1,589
    
    
    
    2,148HALO
    
    
    795
    
    
    
    326Silvue
    
    
    
    
    
    
    455Estimated cash flow available for distribution
    
    $
    50,566
    
    
    $
    46,335Distribution paid April
    
    $
    (10,246
    )
    
    $
    (6,135
    )Distribution paid July
    
    
    (10,246
    )
    
    
    (9,458
    )Distribution paid October
    
    
    (10,718
    )
    
    
    (10,246
    )Distribution paid January
    
    
    (10,718
    )
    
    
    (10,246
    )Total distributions
    
    $
    (41,928
    )
    
    $
    (36,085
    )
 
 (1)
    
    Represents the commitment fee on the unused portion of our Revolving Credit
Facility.(2)
    
    Represents maintenance capital expenditures that were funded from operating cash
flow and excludes approximately $3.5 million and $3.3 million of growth capital
expenditures for the year ended December 31, 2008 and 2007, respectively. 94




---



##### 



Related Party Transactions and Certain Transactions Involving our Businesses
  
    
    Management Services Agreement
    
    LLC Agreement
    
    Supplemental Put Agreement
    
    Cost Reimbursement and Fees
 Management
Services Agreement 
  LLC Agreement 
 Supplemental Put Agreement 
 Cost Reimbursement and Fees
  95




---



##### 



Anodyne
     Advanced Circuits
   American Furniture
 96




---



##### 



Fox
 Other
 Contractual Obligations and Off-Balance Sheet Arrangements
    More thanTotal
    
    Less than 1 Year
    
    1-3 Years
    
    3-5 Years
    
    5 YearsLong-term debt obligations (1)
    
    $
    209,333
    
    
    $
    88,282
    
    
    $
    26,112
    
    
    $
    90,859
    
    
    $
    4,080Capital lease obligations
    
    
    1,340
    
    
    
    485
    
    
    
    477
    
    
    
    378
    
    
    
    Operating lease obligations (2)
    
    
    53,201
    
    
    
    13,503
    
    
    
    18,040
    
    
    
    9,696
    
    
    
    11,962Purchase obligations (3)
    
    
    133,515
    
    
    
    73,983
    
    
    
    31,794
    
    
    
    27,738
    
    
    
    Supplemental put obligation (4)
    
    
    13,411
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    410,800
    
    
    $
    176,253
    
    
    $
    76,423
    
    
    $
    128,671
    
    
    $
    16,042
 
 (1)
    
    Reflects commitment fees and letter of credit fees under our Revolving Credit Facility and
amounts due, together with interest on our Term Loan Facility. We paid $75.0 million of our
Term Loan Facility on February 18, 2009. This payment is reflected in the less than 1 year
column. The impact of a reduction in future interest expense related to this payment has also
been reflected in the above table.(2)
    
    Reflects various operating leases for office space, manufacturing facilities and equipment
from third parties.(3)
    
    Reflects non-cancelable commitments as of December 31, 2008, including: (i) shareholder
distributions of $42.9 million, (ii) management fees of $13.8 million per year over the next
five years and; (iii) other obligations, including amounts due under employment agreements.
Distributions to our shareholders are approved by our Board of Directors each fiscal quarter.
The amount approved for future quarters may differ from the amount included in this schedule.(4)
    
    The supplemental put obligation represents the long-term portion of an estimated liability
accrued as if our Management Services Agreement with CGM had been terminated. This agreement
has not been terminated and there is no basis upon which to determine a date in the future, if
any, that this amount will be paid.  97




---



##### 



Critical Accounting Estimates
   Supplemental Put Agreement
  Derivatives and Hedging
    Revenue Recognition
  Reporting Revenue Gross as a Principal versus Net as an Agent.
 98




---



##### 



Business Combinations
  Goodwill, Intangible Assets and Property and Equipment
       99




---



##### 



Allowance for Doubtful Accounts
  Workers Compensation Liability
  Deferred Tax Assets
  Recent Accounting Pronouncements
 Business Combinations
 100




---



##### 



Non-controlling Interests in Consolidated
Financial Statementsan amendment of ARB No. 51
 Disclosures about Derivative Instruments and Hedging
Activities, an amendment of FASB Statement No. 133
  Determining the
Fair Value of a Financial Asset When the Market for That Asset Is Not Active
 101




---



##### 



ITEM
7A.  Quantitative and Qualitative Disclosures about Market Risk
 Interest Rate Sensitivity
    Exchange Rate Sensitivity
  Credit Risk
  102




---



##### 



ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9.  CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 NONE
 
 ITEM 9A   CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
 Managements Evaluation of Disclosure Controls and Procedures.
 Report of Management on Internal Control over Financial Reporting
 Report of Independent Registered Public Accounting Firm on
Internal Control over Financial Reporting
 Changes in Internal Control over Financial Reporting
 
 ITEM 9B.  OTHER INFORMATION
  103




---



##### 



PART III
 
 ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
     www.compassdiversifiedholdings.com.
 
 ITEM 11.  EXECUTIVE COMPENSATION
  
 ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT RELATED STOCKHOLDER
MATTERS
  
 ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES
  104




---



##### 



PART IV
 
 ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 1.
    
    Financial Statements
See Index to Consolidated Financial Statements and Supplemental Financial Data filed
with this Annual Report on Form 10-K set forth on page F-1.2.
    
    Financial Statement Schedule
See Index to Consolidated Financial Statements and Supplemental Financial Data filed
with this Annual Report on Form 10-K set forth on page F-1.3.
    
    Exhibits
See Index to Exhibits filed with this Annual Report on Form 10-K set forth on page E-1.
 105




---



##### 



SIGNATURES
  COMPASS GROUP DIVERSIFIED HOLDINGS LLCDate: April 9, 2009
    By:
    /s/ I. Joseph MassoudI. Joseph MassoudChief Executive Officer  Signature
    
    Title
    
    Date/s/ I. Joseph Massoud

I. Joseph Massoud
    
    Chief Executive Officer
(Principal Executive Officer)
and Director
    
    April 9, 2009/s/ James J. Bottiglieri

James J. Bottiglieri
    
    Chief Financial Officer
(Principal Financial and
Accounting Officer) 
and Director
    
    April 9, 2009C. Sean Day
    
    DirectorD. Eugene Ewing
    
    DirectorHarold S. Edwards
    
    DirectorMark H. Lazarus
    
    DirectorGordon Burns
    
    Director
 106




---



##### 



SIGNATURES
  COMPASS DIVERSIFIED HOLDINGSDate: April 9, 2009
    By:
    /s/ James J. BottiglieriJames J. BottiglieriRegular Trustee 107




---



##### 



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND SUPPLEMENTAL FINANCIAL DATA
 PageNumbersHistorical Financial Statements:Report of Management on Internal Control Over Financial Reporting
    
    F-2Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
    
    F-3Report of Independent Registered Public Accounting Firm
    
    F-4Consolidated Balance Sheets as of December 31, 2008 and December 31, 2007
    
    F-5Consolidated Statements of Operations for the Years Ended December 31, 2008, 2007 and 2006
    
    F-6Consolidated Statements of Stockholders Equity for the Years Ended December 31, 2008, 2007 and 2006
    
    F-7Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006
    
    F-8Notes to Consolidated Financial Statements
    
    F-9Supplemental Financial Data:The following supplementary financial data of the registrant and its subsidiaries required to be
included in Item 15(a) (2) of Form 10-K are listed below:Schedule II  Valuation and Qualifying AccountsAll other schedules not listed above have been omitted as not applicable or because the required
information is included in the Consolidated Financial Statements or in the notes thereto.
 F-1




---



##### 



REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
  
    
    pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of assets of the company;
    
    provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with U.S. GAAP, and that
receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and
    
    provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of assets of the company that could
have a material effect on the consolidated financial statements.
   Internal
Control-Integrated Framework
   F-2




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
           F-3




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
         F-4




---



##### 



Compass Diversified Holdings
 Consolidated Balance Sheets
 December 31,(in thousands)
    
    2008
    
    
    2007AssetsCurrent assets:Cash and cash equivalents
    
    $
    97,473
    
    
    $
    115,500Accounts receivable, less allowances of $4,824 at December 31, 2008
and $3,204 at December 31, 2007
    
    
    164,035
    
    
    
    111,718Inventories
    
    
    50,909
    
    
    
    35,492Prepaid expenses and other current assets
    
    
    22,784
    
    
    
    11,088Current assets of discontinued operations
    
    
    
    
    
    
    25,443Total current assets
    
    
    335,201
    
    
    
    299,241Property, plant and equipment, net
    
    
    30,763
    
    
    
    20,437Goodwill
    
    
    339,095
    
    
    
    218,817Intangible assets, net
    
    
    249,489
    
    
    
    163,378Deferred debt issuance costs, less accumulated amortization of
$3,317 at December 31, 2008 and $1,348 at December 31, 2007
    
    
    8,251
    
    
    
    9,613Other non-current assets
    
    
    21,537
    
    
    
    17,549Non-current assets of discontinued operations
    
    
    
    
    
    
    98,967Total assets
    
    $
    984,336
    
    
    $
    828,002Liabilities and stockholders equityCurrent liabilities:Accounts payable
    
    $
    48,699
    
    
    $
    34,306Accrued expenses
    
    
    57,109
    
    
    
    33,969Due to related party
    
    
    604
    
    
    
    814Current portion, long-term debt
    
    
    2,000
    
    
    
    2,000Current portion of workers compensation liability
    
    
    26,916
    
    
    
    6,881Other current liabilities
    
    
    4,042
    
    
    
    560Current liabilities of discontinued operations
    
    
    
    
    
    
    28,083Total current liabilities
    
    
    139,370
    
    
    
    106,613Supplemental put obligation
    
    
    13,411
    
    
    
    21,976Deferred income taxes
    
    
    86,138
    
    
    
    59,478Long-term debt
    
    
    151,000
    
    
    
    148,000Workers compensation liability
    
    
    40,852
    
    
    
    16,791Other non-current liabilities
    
    
    9,687
    
    
    
    4,628Non-current liabilities and minority interest of discontinued operations
    
    
    
    
    
    
    15,799Total liabilities
    
    
    440,458
    
    
    
    373,285Minority interest
    
    
    79,431
    
    
    
    21,867Stockholders equityTrust shares, no par value, 500,000 authorized; 31,525 shares issued
and outstanding at December 31, 2008 and December 31, 2007
    
    
    443,705
    
    
    
    443,705Accumulated other comprehensive loss
    
    
    (5,242
    )
    
    
    Accumulated earnings (deficit)
    
    
    25,984
    
    
    
    (10,855
    )Total stockholders equity
    
    
    464,447
    
    
    
    432,850Total liabilities and stockholders equity
    
    $
    984,336
    
    
    $
    828,002
  F-5




---



##### 



Compass Diversified Holdings
 Consolidated Statements of Operations
 Year ended December 31,2008
    
    
    2007
    
    
    2006(in thousands, except per share data)Net sales
    
    $
    532,127
    
    
    $
    271,911
    
    
    $
    42,752Service revenues
    
    
    1,006,346
    
    
    
    569,880
    
    
    
    352,421Total revenues
    
    
    1,538,473
    
    
    
    841,791
    
    
    
    395,173Cost of sales
    
    
    363,675
    
    
    
    171,665
    
    
    
    22,479Cost of services
    
    
    832,531
    
    
    
    464,343
    
    
    
    284,535Gross profit
    
    
    342,267
    
    
    
    205,783
    
    
    
    88,159Operating expenses:Staffing expense
    
    
    102,438
    
    
    
    56,207
    
    
    
    34,345Selling, general and administrative expense
    
    
    165,768
    
    
    
    94,426
    
    
    
    31,605Supplemental put expense
    
    
    6,382
    
    
    
    7,400
    
    
    
    22,456Management fees
    
    
    15,205
    
    
    
    10,120
    
    
    
    4,158Amortization expense
    
    
    24,605
    
    
    
    12,679
    
    
    
    5,814Operating income (loss)
    
    
    27,869
    
    
    
    24,951
    
    
    
    (10,219
    )Other income (expense):Interest income
    
    
    1,377
    
    
    
    2,520
    
    
    
    804Interest expense
    
    
    (17,828
    )
    
    
    (6,994
    )
    
    
    (6,057
    )Amortization of debt issuance costs
    
    
    (1,969
    )
    
    
    (1,232
    )
    
    
    (779
    )Loss on debt extinguishment
    
    
    
    
    
    
    
    
    
    
    (8,275
    )Other income (expense), net
    
    
    894
    
    
    
    (26
    )
    
    
    489Income (loss) from continuing operations before income taxes and minority
interest
    
    
    10,343
    
    
    
    19,219
    
    
    
    (24,037
    )Provision for income taxes
    
    
    6,526
    
    
    
    9,168
    
    
    
    3,936Minority interest
    
    
    3,493
    
    
    
    10,997
    
    
    
    1,107Income (loss) from continuing operations
    
    
    324
    
    
    
    (946
    )
    
    
    (29,080
    )Income from discontinued operations, net of income tax
    
    
    4,607
    
    
    
    5,480
    
    
    
    9,831Gain on sale of discontinued operations, net of income tax
    
    
    73,363
    
    
    
    35,834
    
    
    
    Net income (loss)
    
    $
    78,294
    
    
    $
    40,368
    
    
    $
    (19,249
    )Basic and fully diluted income (loss) per share from continuing operations
    
    $
    0.01
    
    
    $
    (0.04
    )
    
    $
    (2.29
    )Basic and fully diluted income per share from discontinued operations
    
    
    2.47
    
    
    
    1.50
    
    
    
    0.77Basic and fully diluted net income (loss) per share
    
    $
    2.48
    
    
    $
    1.46
    
    
    $
    (1.52
    )Weighted average number of shares of trust stock outstanding  basic and
fully
diluted
    
    
    31,525
    
    
    
    27,629
    
    
    
    12,686Cash distributions declared per share
    
    $
    1.33
    
    
    $
    1.25
    
    
    $
    0.7327
  F-6




---



##### 



Compass Diversified Holdings
 
 Consolidated Statements of Stockholders Equity
 AccumulatedAccumulated
    
    
    Other
    
    
    TotalNumber of
    
    
    
    
    
    
    Earnings
    
    
    Comprehensive
    
    
    Stockholders(in thousands)
    
    Shares
    
    
    Amount
    
    
    (Deficit)
    
    
    Loss
    
    
    EquityBalance  January 1, 2006
    
    
    
    
    
    $
    
    
    
    $
    (1
    )
    
    $
    
    
    
    $
    (1
    )Net loss
    
    
    
    
    
    
    
    
    
    
    (19,249
    )
    
    
    
    
    
    
    (19,249
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,249
    )Issuance of trust shares,
net of offering costs
    
    
    19,500
    
    
    
    269,816
    
    
    
    
    
    
    
    
    
    
    
    269,816Issuance of trust shares 
Anodyne acquisition
    
    
    950
    
    
    
    13,100
    
    
    
    
    
    
    
    
    
    
    
    13,100Distributions paid
    
    
    
    
    
    
    (7,955
    )
    
    
    
    
    
    
    
    
    
    
    (7,955
    )Balance  December 31, 2006
    
    
    20,450
    
    
    
    274,961
    
    
    
    (19,250
    )
    
    
    
    
    
    
    255,711Net income
    
    
    
    
    
    
    
    
    
    
    40,368
    
    
    
    
    
    
    
    40,368Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,368Issuance of trust shares,
net of offering costs
    
    
    11,075
    
    
    
    168,744
    
    
    
    
    
    
    
    
    
    
    
    168,744Distributions paid
    
    
    
    
    
    
    
    
    
    
    (31,973
    )
    
    
    
    
    
    
    (31,973
    )Balance  December 31, 2007
    
    
    31,525
    
    
    
    443,705
    
    
    
    (10,855
    )
    
    
    
    
    
    
    432,850Net income
    
    
    
    
    
    
    
    
    
    
    78,294
    
    
    
    
    
    
    
    78,294Other comprehensive loss 
cash flow hedge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,242
    )
    
    
    (5,242
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73,052Distributions paid
    
    
    
    
    
    
    
    
    
    
    (41,455
    )
    
    
    
    
    
    
    (41,455
    )Balance  December 31, 2008
    
    
    31,525
    
    
    $
    443,705
    
    
    $
    25,984
    
    
    $
    (5,242
    )
    
    $
    464,447
  F-7




---



##### 



Compass Diversified Holdings
 
 Consolidated Statements of Cash Flows
 Year ended December 31,(in thousands)
    
    2008
    
    
    2007
    
    
    2006Cash flows from operating activities:Net income (loss)
    
    $
    78,294
    
    
    $
    40,368
    
    
    $
    (19,249
    )Adjustments to reconcile net income (loss) to net cash provided
by operating activities:Gain on sale of 2008 dispositions
    
    
    (73,363
    )
    
    
    
    
    
    
    Gain on sale of 2007 disposition
    
    
    
    
    
    
    (35,834
    )
    
    
    Depreciation expense
    
    
    9,276
    
    
    
    5,010
    
    
    
    2,494Amortization expense
    
    
    25,745
    
    
    
    19,097
    
    
    
    7,032Amortization of debt issuance costs
    
    
    1,969
    
    
    
    1,224
    
    
    
    764Loss on debt extinguishment
    
    
    
    
    
    
    
    
    
    
    8,275Supplemental put expense
    
    
    6,382
    
    
    
    7,400
    
    
    
    22,456Minority interests
    
    
    4,042
    
    
    
    11,940
    
    
    
    2,950Minority stockholder charges
    
    
    2,827
    
    
    
    1,080
    
    
    
    2,760Deferred taxes
    
    
    (8,911
    )
    
    
    (1,295
    )
    
    
    (2,281
    )In-process research and development expense
    
    
    
    
    
    
    
    
    
    
    1,120Other
    
    
    381
    
    
    
    86
    
    
    
    (450
    )Changes in operating assets and liabilities, net of acquisition:(Increase)/decrease in accounts receivable
    
    
    29,970
    
    
    
    (13,233
    )
    
    
    (7,867
    )(Increase)/decrease in inventories
    
    
    102
    
    
    
    (5,772
    )
    
    
    (6,314
    )(Increase)/decrease in prepaid expenses and other current assets
    
    
    (3,874
    )
    
    
    2,003
    
    
    
    (72
    )Increase/(decrease) in accounts payable and accrued expenses
    
    
    (17,344
    )
    
    
    17,578
    
    
    
    8,945Decrease in supplemental put obligation
    
    
    (14,947
    )
    
    
    (7,880
    )
    
    
    Net cash provided by operating activities
    
    
    40,549
    
    
    
    41,772
    
    
    
    20,563Cash flows from investing activities:Acquisition of businesses, net of cash acquired
    
    
    (167,546
    )
    
    
    (225,112
    )
    
    
    (356,464
    )Purchases of property and equipment
    
    
    (11,576
    )
    
    
    (8,698
    )
    
    
    (5,822
    )Proceeds from 2008 dispositions
    
    
    154,156
    
    
    
    
    
    
    
    Proceeds from 2007 disposition
    
    
    
    
    
    
    119,652
    
    
    
    Changes in minority interest
    
    
    2,251
    
    
    
    
    
    
    
    Other investing activities
    
    
    173
    
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (22,542
    )
    
    
    (114,158
    )
    
    
    (362,286
    )Cash flows from financing activities:Borrowings under Credit Agreement
    
    
    90,000
    
    
    
    311,977
    
    
    
    85,004Repayments under Credit Agreement
    
    
    (87,532
    )
    
    
    (246,800
    )
    
    
    Proceeds from the issuance of Trust shares, net
    
    
    
    
    
    
    168,744
    
    
    
    284,969Debt issuance costs
    
    
    (552
    )
    
    
    (5,776
    )
    
    
    (11,560
    )Distributions paid
    
    
    (41,455
    )
    
    
    (31,973
    )
    
    
    (7,955
    )Distributions paid  Advanced Circuits
    
    
    
    
    
    
    (13,987
    )
    
    
    Other
    
    
    (273
    )
    
    
    2,697
    
    
    
    615Net cash (used in) provided by financing activities
    
    
    (39,812
    )
    
    
    184,882
    
    
    
    351,073Foreign currency adjustment
    
    
    (80
    )
    
    
    (144
    )
    
    
    260Net increase/(decrease) in cash and cash equivalents
    
    
    (21,885
    )
    
    
    112,352
    
    
    
    9,610Cash and cash equivalents  beginning of period
    
    
    119,358
    
    
    
    7,006
    
    
    
    100Cash and cash equivalents  end of period
    
    $
    97,473
    
    
    $
    119,358
    
    
    $
    9,710Cash related to discontinued operations
    
    $
    
    
    
    $
    3,858
    
    
    $
    4,690
 Supplemental non-cash financing and investing activity for the year ended December 31, 2008:
    
    Issuance of CBS Personnels common stock valued at $47.9 million in connection with the
acquisition of Staffmark. See Note C.
    
    Acquisition of $7.0 million of Anodyne common stock in connection with the
extinguishment of a promissory note due the Company by an employee of Anodyne.
See Note R.
    
    Capital leases totaling $0.9 million were entered into during 2008.  F-8




---



##### 



Compass Diversified Holdings
Notes to Consolidated Financial Statements
December 31, 2008
 Note A  Organization and Business Operations
   Note B  Summary of Significant Accounting Policies
 Accounting Principles
  Basis of Presentation
  Principles of Consolidation
   Discontinued Operations
   F-9




---



##### 



Use of estimates
  Fair Value of Financial Instruments
  Revenue recognition
 Revenue Recognition
 Advanced Circuits
  American Furniture
  Anodyne
  CBS Personnel
  Fox
  F-10




---



##### 



HALO
  Cash equivalents
  Allowance for doubtful accounts
  Inventories
  Property, plant and equipment
    Machinery, equipment and software
    
    2 to 10 yearsOffice furniture and equipment
    
    3 to 7 yearsLeasehold improvements
    
    Shorter of useful life or lease term
  Goodwill and intangible assets
 th
 Deferred debt issuance costs
  Workers compensation liability
  F-11




---



##### 



Warranties
  Supplemental put
  Derivatives and Hedging
    Income taxes
   Earnings per share
   F-12




---



##### 



Advertising costs
  Research and Development
  Loss on debt extinguishment
  Employee retirement plans
  Recent accounting pronouncements
 Business Combinations
 Non-controlling Interests in Consolidated
Financial Statementsan amendment of ARB No. 51
 Disclosures about Derivative Instruments and Hedging
Activities, an amendment of FASB Statement No. 133
 F-13




---



##### 



Determining the
Fair Value of a Financial Asset When the Market for That Asset Is Not Active
 Note C  Acquisition of Businesses
  February 28, 2007
    
    August 31, 2007
    
    January 4, 2008
    
    January 21, 2008Aeroglide(1)
    
    American Furniture
    
    FOX
    
    Staffmark(2)HALO
 
 (1)
    
    Aeroglide was subsequently disposed of on June 24, 2008.(2)
    
    Staffmark was acquired by the CBS Personnel business segment. Allocation of Purchase Price
  2007 Acquisitions
 Recognition of
Customer Relationship Intangible Assets Acquired in a Business Combination.
 F-14




---



##### 



2008 Acquisitions
 Fox Factory
     Staffmark
      F-15




---



##### 



2008 Acquisitions
 (in thousands)
    
    FOX
    
    
    Staffmark(2)
    
    
    TotalAssets:Current assets(1)
    
    $
    28,786
    
    
    $
    74,670
    
    
    $
    103,456Property, plant and equipment, net
    
    
    5,552
    
    
    
    3,545
    
    
    
    9,097Intangible assets, net
    
    
    57,500
    
    
    
    50,055
    
    
    
    107,555Goodwill
    
    
    31,303
    
    
    
    78,947
    
    
    
    110,250Other assets
    
    
    1,360
    
    
    
    5,376
    
    
    
    6,736Total assets
    
    $
    124,501
    
    
    $
    212,593
    
    
    $
    337,094Liabilities:Current liabilities
    
    $
    13,337
    
    
    $
    37,396
    
    
    $
    50,733Other liabilities
    
    
    78,963
    
    
    
    41,386
    
    
    
    120,349Minority interests
    
    
    7,725
    
    
    
    
    
    
    
    7,725Total liabilities and minority interests
    
    $
    100,025
    
    
    $
    78,782
    
    
    $
    178,807Costs of net assets acquired
    
    $
    24,476
    
    
    $
    133,811
    
    
    $
    158,287Loans to businesses
    
    
    55,907
    
    
    
    
    
    
    
    55,907$
    80,383
    
    
    $
    133,811
    
    
    $
    214,194
 
 (1)
    
    Includes approximately $9.0 million in cash.(2)
    
    Staffmark was acquired by the CBS Personnel operating segment. 2007 Acquisitions
 (in thousands)
    
    Aeroglide(2)
    
    
    HALO
    
    
    AFM
    
    
    TotalAssets:Current assets(1)
    
    $
    15,517
    
    
    $
    25,468
    
    
    $
    35,898
    
    
    $
    76,883Property, plant and equipment, net
    
    
    7,003
    
    
    
    1,877
    
    
    
    5,174
    
    
    
    14,054Intangible assets, net
    
    
    22,250
    
    
    
    35,270
    
    
    
    33,480
    
    
    
    91,000Goodwill
    
    
    29,239
    
    
    
    32,120
    
    
    
    40,598
    
    
    
    101,957Other assets
    
    
    903
    
    
    
    1,050
    
    
    
    1,652
    
    
    
    3,605Total assets
    
    $
    74,912
    
    
    $
    95,785
    
    
    $
    116,802
    
    
    $
    287,499Liabilities:Current liabilities
    
    $
    14,327
    
    
    $
    16,377
    
    
    $
    7,378
    
    
    $
    38,082Other liabilities
    
    
    39,000
    
    
    
    55,908
    
    
    
    80,674
    
    
    
    175,582Minority interests
    
    
    2,350
    
    
    
    2,750
    
    
    
    1,750
    
    
    
    6,850Total liabilities and minority interests
    
    $
    55,677
    
    
    $
    75,035
    
    
    $
    89,802
    
    
    $
    220,514Costs of net assets acquired
    
    $
    19,235
    
    
    $
    20,750
    
    
    $
    27,000
    
    
    $
    66,985Loans to businesses
    
    
    39,000
    
    
    
    41,576
    
    
    
    69,969
    
    
    
    150,545$
    58,235
    
    
    $
    62,326
    
    
    $
    96,969
    
    
    $
    217,530
 
 (1)
    
    Includes approximately $1.7 million in cash.(2)
    
    See Note D. F-16




---



##### 



Unaudited Pro-forma Information
  Year ended December 31, 2008
    
    Total(in thousands, except per share data)Net sales
    
    $
    1,569,545Income from continuing operations before income taxes and minority interests
    
    
    9,592Net income
    
    
    77,849Basic and fully diluted income per share
    
    $
    2.47
 Year ended December 31, 2007
    
    Total(in thousands, except per share data)Net sales
    
    $
    1,530,781Income from continuing operations before income taxes and minority interests
    
    
    9,244Net income
    
    
    34,716Basic and fully diluted income per share
    
    $
    1.26
  Note D  Discontinued Operations
 2007 Disposition
  (in thousands)
 CrosmanFor the YearEnded December 31, 2006Net sales
    
    $
    72,316Operating income
    
    
    13,277Other income
    
    
    182Provision for income taxes
    
    
    3,367Minority interests
    
    
    1,705Income from discontinued
operations(1)
    
    $
    8,387
 
 (1)
    
    The results above exclude $3.2 million of intercompany interest expense. F-17




---



##### 



2008 Dispositions
    in thousands
 AeroglideFor the PeriodJanuary 1, 2008
    
    
    For the Yearthrough Disposition
    
    
    Ended December 31, 2007Net sales
    
    $
    34,294
    
    
    $
    53,591Operating income
    
    
    5,041
    
    
    
    2,488Other expense
    
    
    (11
    )
    
    
    (17
    )Provision (benefit) for income taxes
    
    
    1,274
    
    
    
    (323
    )Minority interests
    
    
    239
    
    
    
    156Income from discontinued
operations (1)
    
    $
    3,517
    
    
    $
    2,638
 
 (1)
    
    The results above for the period from January 1, 2008 through disposition exclude $1.6 million of
intercompany interest expense.The results for the year ended December 31, 2007 exclude $3.3 million of intercompany
interest expense. SilvueFor the PeriodJanuary 1, 2008
    
    
    For the Year
    
    
    For the Yearthrough Disposition
    
    
    Ended December 31, 2007
    
    
    Ended December 31, 2006Net sales
    
    $
    11,465
    
    
    $
    22,521
    
    
    $
    15,700Operating income
    
    
    2,416
    
    
    
    5,536
    
    
    
    2,962Other expense
    
    
    (83
    )
    
    
    (61
    )
    
    
    (18
    )Provision for income taxes
    
    
    933
    
    
    
    1,846
    
    
    
    1,362Minority interests
    
    
    310
    
    
    
    787
    
    
    
    138Income from discontinued
operations(1)
    
    $
    1,090
    
    
    $
    2,842
    
    
    $
    1,444
 
 (1)
    
    The results above for the period from January 1, 2008 through disposition exclude $0.6 million of
intercompany interest expense.The results for the year ended December 31, 2007 exclude $1.5 million of intercompany
interest expense. F-18




---



##### 



in thousands
 December 31, 2007Aeroglide
    
    
    Silvue
    
    
    TotalAssets:Cash
    
    $
    1,901
    
    
    $
    1,957
    
    
    $
    3,858Accounts receivable, net
    
    
    10,496
    
    
    
    2,829
    
    
    
    13,325Inventory
    
    
    2,156
    
    
    
    691
    
    
    
    2,847Earnings in excess of billings
    
    
    4,244
    
    
    
    
    
    
    
    4,244Other current assets
    
    
    432
    
    
    
    737
    
    
    
    1,169Current assets of discontinued operations
    
    $
    19,229
    
    
    $
    6,214
    
    
    $
    25,443Property, plant and equipment, net
    
    
    6,625
    
    
    
    1,681
    
    
    
    8,306Goodwill
    
    
    29,863
    
    
    
    18,461
    
    
    
    48,324Intangible assets, net
    
    
    17,512
    
    
    
    23,408
    
    
    
    40,920Other non-current assets
    
    
    873
    
    
    
    544
    
    
    
    1,417Non-current assets of discontinued operations
    
    $
    54,873
    
    
    $
    44,094
    
    
    $
    98,967Liabilities:Accounts payable
    
    
    5,454
    
    
    
    650
    
    
    
    6,104Accrued expenses
    
    
    4,377
    
    
    
    4,032
    
    
    
    8,409Deferred revenue
    
    
    10,756
    
    
    
    
    
    
    
    10,756Revolving credit facility
    
    
    
    
    
    
    2,814
    
    
    
    2,814Current liabilities of discontinued operations
    
    $
    20,587
    
    
    $
    7,496
    
    
    $
    28,083Deferred income taxes
    
    
    377
    
    
    
    9,375
    
    
    
    9,752Minority interests
    
    
    2,507
    
    
    
    3,352
    
    
    
    5,859Other non-current liabilities
    
    
    
    
    
    
    188
    
    
    
    188Non-current liabilities of discontinued operations
    
    $
    2,884
    
    
    $
    12,915
    
    
    $
    15,799
 Note E  Business Segment Data
   
    
    Compass AC Holdings, Inc. (ACI or Advanced Circuits), an electronic components
manufacturing company, is a provider of prototype and quick-turn printed circuit boards.
ACI manufactures and delivers custom printed circuit boards to customers mainly in North
America. ACI is headquartered in Aurora, Colorado.
    
    American Furniture Manufacturing, Inc. (AFM or American Furniture) is a leading
domestic manufacturer of upholstered furniture for the promotional segment of the
marketplace. AFM offers a broad product line of
stationary and motion furniture, including sofas, loveseats, sectionals, recliners and
complementary products, sold primarily at retail price points ranging between $199 and $699.
AFM is a low-cost manufacturer and is able to ship any product in its line within 48 hours
of receiving an order. AFM is headquartered in Ecru, Mississippi and its products are sold
in the United States.
    
    Anodyne Medical Device, Inc. (Anodyne), a medical support surfaces company, is a
manufacturer of patient positioning devices primarily used for the prevention and treatment
of pressure wounds experienced by patients with limited or no mobility. Anodyne is
headquartered in Florida and its products are sold primarily in North America.
    
    CBS Personnel Holdings, Inc. (CBS or CBS Personnel), a human resources outsourcing
firm, is a provider of temporary staffing services in the United States. CBS Personnel
serves approximately 6,500 corporate and small business clients. CBS Personnel also offers
employee leasing services, permanent staffing and temporary-to-permanent placement
services.
 F-19




---



##### 




    
    Fox Factory, Inc. (Fox) is a designer, manufacturer and marketer of high end
suspension products for mountain bikes, all-terrain vehicles, snowmobiles and other
off-road vehicles. Fox acts as both a tier one supplier to leading action sport original
equipment manufacturers and provides after-market products to retailers and distributors.
Fox is headquartered in Watsonville, California and its products are primarily sold in
North America.
    
    HALO Branded Solutions, Inc. (HALO), operating under the brand names of HALO and Lee
Wayne, serves as a one-stop shop for over 40,000 customers providing design, sourcing,
management and fulfillment services across all categories of its customer promotional
product needs. HALO has established itself as a leader in the promotional products and
marketing industry through its focus on service through its approximately 1,000 account
executives.
   (in thousands)
 Net sales of business segments
    
    Year Ended December 31,2008
    
    
    2007
    
    
    2006ACI
    
    $
    55,449
    
    
    $
    52,292
    
    
    $
    30,581American Furniture
    
    
    130,949
    
    
    
    46,981
    
    
    
    Anodyne
    
    
    54,199
    
    
    
    44,189
    
    
    
    12,171CBS Personnel
    
    
    1,006,345
    
    
    
    569,880
    
    
    
    352,421Fox
    
    
    131,734
    
    
    
    
    
    
    
    Halo
    
    
    159,797
    
    
    
    128,449
    
    
    
    Total
    
    
    1,538,473
    
    
    
    841,791
    
    
    
    395,173Reconciliation of segment
revenues to consolidated
revenues:Corporate and other
    
    
    
    
    
    
    
    
    
    
    Total consolidated revenues
    
    $
    1,538,473
    
    
    $
    841,791
    
    
    $
    395,173
 F-20




---



##### 



Profit
of business segments (1)
 Year Ended December 31,2008
    
    
    2007
    
    
    2006ACI
    
    $
    17,665
    
    
    $
    17,078
    
    
    $
    7,483American Furniture
    
    
    5,123
    
    
    
    2,702
    
    
    
    Anodyne
    
    
    4,228
    
    
    
    2,936
    
    
    
    (557
    )CBS Personnel
    
    
    16,768
    
    
    
    22,542
    
    
    
    17,079Fox
    
    
    10,707
    
    
    
    
    
    
    
    Halo
    
    
    5,289
    
    
    
    7,006
    
    
    
    Total
    
    
    59,780
    
    
    
    52,264
    
    
    
    24,005Reconciliation of segment profit to
consolidated income (loss)
from continuing operations before income
taxes and minority
interest:Interest expense, net
    
    
    (16,451
    )
    
    
    (4,474
    )
    
    
    (5,253
    )Loss on debt extinguishment
    
    
    
    
    
    
    
    
    
    
    (8,275
    )Other income (expense)
    
    
    894
    
    
    
    (26
    )
    
    
    489Corporate and other (2)
    
    
    (33,880
    )
    
    
    (28,545
    )
    
    
    (35,003
    )Total consolidated income (loss) from
continuing operations before
income taxes and minority interest
    
    $
    10,343
    
    
    $
    19,219
    
    
    $
    (24,037
    )
 
 (1)
    
    Segment profit represents operating income (loss).(2)
    
    Corporate and other consists of charges at the corporate level and purchase accounting
adjustments not pushed down to the segment. Accounts receivable and allowances
 Accounts
    
    
    AccountsReceivable
    
    
    ReceivableDecember 31, 2008
    
    
    December 31, 2007ACI
    
    $
    3,131
    
    
    $
    2,913American Furniture
    
    
    11,149
    
    
    
    10,965Anodyne
    
    
    6,919
    
    
    
    8,687CBS Personnel
    
    
    108,101
    
    
    
    62,537Fox
    
    
    10,201
    
    
    
    Halo
    
    
    29,358
    
    
    
    29,820Total
    
    
    168,859
    
    
    
    114,922Reconciliation of segment to consolidated totals:Corporate and other
    
    
    
    
    
    
    Total
    
    
    168,859
    
    
    
    114,922Allowance for doubtful accounts
    
    
    (4,824
    )
    
    
    (3,204
    )Total consolidated net accounts receivable
    
    $
    164,035
    
    
    $
    111,718
 F-21




---



##### 



Goodwill and identifiable
assets of business segments
 Depreciation andAmortization ExpenseIdentifiable
    
    
    Identifiable
    
    
    for the YearGoodwill
    
    
    Goodwill
    
    
    Assets
    
    
    Assets
    
    
    Ended December 31,Dec. 31, 2008
    
    
    Dec. 31, 2007
    
    
    Dec. 31, 2008(3)
    
    
    Dec. 31, 2007(3)
    
    
    2008
    
    
    2007
    
    
    2006ACI
    
    $
    50,659
    
    
    $
    50,659
    
    
    $
    20,309
    
    
    $
    22,608
    
    
    $
    3,741
    
    
    $
    3,588
    
    
    $
    2,040American Furniture
    
    
    41,435
    
    
    
    41,471
    
    
    
    67,752
    
    
    
    71,110
    
    
    
    3,704
    
    
    
    1,160
    
    
    
    Anodyne
    
    
    22,747
    
    
    
    19,555
    
    
    
    23,784
    
    
    
    25,713
    
    
    
    2,740
    
    
    
    2,338
    
    
    
    763CBS Personnel
    
    
    139,715
    
    
    
    60,768
    
    
    
    84,947
    
    
    
    24,808
    
    
    
    8,214
    
    
    
    2,316
    
    
    
    1,372Fox
    
    
    31,372
    
    
    
    
    
    
    
    83,246
    
    
    
    
    
    
    
    6,716
    
    
    
    
    
    
    
    Halo
    
    
    40,184
    
    
    
    33,381
    
    
    
    46,291
    
    
    
    41,645
    
    
    
    3,157
    
    
    
    2,280
    
    
    
    Total
    
    
    326,112
    
    
    
    205,834
    
    
    
    326,329
    
    
    
    185,884
    
    
    
    28,272
    
    
    
    11,682
    
    
    
    4,175Reconciliation of segment to
consolidated total:Corporate and other identifiable
assets
    
    
    
    
    
    
    
    
    
    
    154,877
    
    
    
    187,173
    
    
    
    4,857
    
    
    
    4,806
    
    
    
    2,988Identifiable assets of disc. ops.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    124,410
    
    
    
    
    
    
    
    Amortization of debt issuance
costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,969
    
    
    
    1,232
    
    
    
    779Goodwill
carried at Corporate level (4)12,983
    
    
    
    12,983
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    339,095
    
    
    $
    218,817
    
    
    $
    481,206
    
    
    $
    497,467
    
    
    $
    35,098
    
    
    $
    17,720
    
    
    $
    7,942
 
 (3)
    
    Not including accounts receivable scheduled above.(4)
    
    Represents goodwill resulting from purchase accounting adjustments not pushed down to the respective segment.
Goodwill is allocated back to the respective segment for purposes of impairment testing. Note F  Inventories
 in thousands
 December 31,
    
    
    December 31,2008
    
    
    2007Raw materials and supplies
    
    $
    34,405
    
    
    $
    20,899Finished goods
    
    
    17,571
    
    
    
    15,062Less: obsolescence reserve
    
    
    (1,067
    )
    
    
    (469
    )Total
    
    $
    50,909
    
    
    $
    35,492
 Note G  Property, Plant and Equipment
 in thousands
 December 31,
    
    
    December 31,2008
    
    
    2007Machinery, equipment and software
    
    $
    26,024
    
    
    $
    12,062Office furniture and equipment
    
    
    10,501
    
    
    
    8,564Leasehold improvements
    
    
    6,030
    
    
    
    4,43642,555
    
    
    
    25,062Less: accumulated depreciation
    
    
    (11,792
    )
    
    
    (4,625
    )Total
    
    $
    30,763
    
    
    $
    20,437
  F-22




---



##### 



Note H  Commitments and Contingencies
 Leases
 in thousands
 2009
    
    $
    13,5032010
    
    
    10,8282011
    
    
    7,2122012
    
    
    5,5142013
    
    
    4,182Thereafter
    
    
    11,962$
    53,201
  Legal Proceedings
  Note I  Goodwill and Other Intangible Assets
 (in thousands
 Balance at January 1, 2007
    
    $
    140,690Acquisition of businesses
    
    
    76,387Adjustment to purchase accounting
    
    
    1,740Balance at December 31, 2007
    
    
    218,817Acquisition of businesses
    
    
    117,031Acquired goodwill in connection with Anodyne CEO promissory note (See Note R)
    
    
    3,191Adjustment to purchase accounting
    
    
    56Balance at December 31, 2008
    
    $
    339,095
  F-23




---



##### 



(in thousands):
 WeightedDecember 31,
    
    
    Average2008
    
    
    2007
    
    
    Useful LivesCustomer relationships
    
    $
    187,669
    
    
    $
    148,216
    
    
    
    12Technology
    
    
    37,959
    
    
    
    4,851
    
    
    
    8Trade names, subject to amortization
    
    
    24,500
    
    
    
    
    
    
    
    12Licensing and non-compete agreements
    
    
    4,416
    
    
    
    161
    
    
    
    3Distributor relations and backlog
    
    
    1,380
    
    
    
    4,330
    
    
    
    4255,924
    
    
    
    157,558Accumulated amortization customer relations
    
    
    (32,287
    )
    
    
    (15,573
    )Accumulated amortization technology
    
    
    (6,388
    )
    
    
    (806
    )Accumulated amortization trade names, subject to amortization
    
    
    (1,531
    )
    
    
    Accumulated amortization licensing agreements and
anti-piracy covenants
    
    
    (2,369
    )
    
    
    (808
    )Accumulated amortization distributor relations and backlog
    
    
    (630
    )
    
    
    (463
    )Total accumulated amortization
    
    
    (43,205
    )
    
    
    (17,650
    )Trade names, not subject to amortization (1)
    
    
    36,770
    
    
    
    23,470Total
    
    $
    249,489
    
    
    $
    163,378
 
 (1)
    
    On February 27, 2009, CBS Personnel rebranded its businesses under
the Staffmark brand. In connection with this rebrand, the CBS tradename
of $10.6 million, which is reflected as an indefinite lived intangible
asset at December 31, 2008, will be adjusted to its estimated fair value
and converted to a finite lived asset, subject to amortization, during
the first quarter of 2009. (in thousands):
 2009
    
    $
    24,9042010
    
    
    23,8082011
    
    
    23,1312012
    
    
    23,1012013
    
    
    22,822$
    117,766
   Note J  Fair Value Measurement
  Valuation Hierarchy
  F-24




---



##### 



in thousands
 Fair Value Measurements at December 31, 2008SignificantQuoted
    
    other
    
    Significantprices in
    
    observable
    
    unobservableCarrying
    
    active markets
    
    inputs
    
    inputsValue
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Derivative liability  interest rate swap
    
    $
    5,242
    
    
    $
    
    
    
    $
    5,242
    
    
    $
    Supplemental put obligation
    
    
    13,411
    
    
    
    
    
    
    
    
    
    
    
    13,411Stock option of minority shareholder (1)
    
    
    200
    
    
    
    
    
    
    
    200
    
    
    
    
 
 (1)
    
    Represents a former employees option to purchase additional common stock in
Anodyne. See Note R. in thousands
 Balance at January 1, 2008
    
    $
    21,976Supplemental put expense
    
    
    6,382Payments of supplemental put liability
    
    
    (14,947
    )Balance at December 31, 2008
    
    $
    13,411
 Valuation Techniques
   Note K  Debt
   F-25




---



##### 




    
    to maintain a minimum fixed charge coverage ratio of at least 1.5 to 1.0;
    
    to maintain a minimum interest coverage ratio of at least 2.75 to 1.0; and
    
    to maintain a total debt to EBITDA ratio not to exceed 3.5 to 1.0.
      F-26




---



##### 



Note L  Derivative Instruments and Hedging Activities
      Note M  Income Taxes
  F-27




---



##### 



in thousands)
 Years ended December 31,2008
    
    
    2007
    
    
    2006Current taxesFederal
    
    $
    13,386
    
    
    $
    8,422
    
    
    $
    5,284State
    
    
    2,276
    
    
    
    1,094
    
    
    
    737Total current taxes
    
    
    15,662
    
    
    
    9,516
    
    
    
    6,021Deferred taxes:Federal
    
    
    (8,379
    )
    
    
    (50
    )
    
    
    (1,774
    )State
    
    
    (757
    )
    
    
    (298
    )
    
    
    (311
    )Total deferred taxes
    
    
    (9,136
    )
    
    
    (348
    )
    
    
    (2,085
    )Total tax expense
    
    $
    6,526
    
    
    $
    9,168
    
    
    $
    3,936
  December 31,(in thousands)
    
    2008
    
    
    2007Deferred tax assets:Tax credits
    
    $
    266
    
    
    $
    Accounts receivable and allowances
    
    
    1,127
    
    
    
    975Workers compensation
    
    
    14,716
    
    
    
    8,007Accrued expenses
    
    
    3,901
    
    
    
    1,267Loan forgiveness
    
    
    677
    
    
    
    68Other
    
    
    2,892
    
    
    
    1,621Total deferred tax assets
    
    
    23,579
    
    
    
    11,938Less:Valuation allowance
    
    
    
    
    
    
    (359
    )Net deferred tax asset
    
    $
    23,579
    
    
    $
    11,579Deferred tax liabilities:Intangible assets
    
    $
    (81,334
    )
    
    $
    (55,832
    )Property and equipment
    
    
    (2,516
    )
    
    
    (1,855
    )Prepaid and other expenses
    
    
    (2,288
    )
    
    
    (1,791
    )Total deferred tax liabilities
    
    $
    (86,138
    )
    
    $
    (59,478
    )Total net deferred tax liability
    
    $
    (62,559
    )
    
    $
    (47,899
    )
   F-28




---



##### 



Years ended December 31,2008
    
    2007
    
    2006United States Federal Statutory Rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    (34.0
    %)State income taxes (net of Federal benefits)
    
    
    9.5
    
    
    
    2.7
    
    
    
    1.2Expenses of Compass Group Diversified Holdings, LLC
representing a pass through to shareholders
    
    
    36.5
    
    
    
    12.9
    
    
    
    47.1Credit utilization
    
    
    (24.1
    )
    
    
    (4.5
    )
    
    
    (1.3
    )Other
    
    
    6.2
    
    
    
    1.6
    
    
    
    3.4Effective income tax rate
    
    
    63.1
    %
    
    
    47.7
    %
    
    
    16.4
    %
 (in thousands):
 Balance at January 1, 2007
    
    $
    Additions for 2007 tax positions
    
    
    15Additions for prior years tax positions
    
    
    103Balance at December 31, 2007
    
    $
    118Additions for prior years tax positions
    
    
    27Reductions for prior years tax positions
    
    
    (44
    )Balance at December 31, 2008
    
    
    101
   F-29




---



##### 



Note N- Minority Interest
  % Ownership
    
    % Ownership
    
    % OwnershipBusiness
    
    December 31, 2008
    
    December 31, 2007
    
    December 31, 2006ACI
    
    
    70.2
    
    
    
    70.2
    
    
    
    70.2American Furniture
    
    
    93.9
    
    
    
    93.9
    
    
    
    Anodyne
    
    
    67.0
    
    
    
    43.5
    
    
    
    47.3CBS Personnel
    
    
    66.4
    
    
    
    96.5
    
    
    
    96.1FOX
    
    
    75.5
    
    
    
    
    
    
    
    HALO
    
    
    88.3
    
    
    
    88.3
    
    
    
    
 Minority Interest
    
    
    Minority InterestBalances as of
    
    
    Balances as of(in thousands)
    
    December 31, 2008
    
    
    December 31, 2007ACI
    
    $
    
    
    
    $
    American Furniture
    
    
    1,910
    
    
    
    1,770Anodyne
    
    
    10,146
    
    
    
    13,260CBS Personnel
    
    
    54,925
    
    
    
    3,769FOX
    
    
    9,290
    
    
    
    HALO
    
    
    3,060
    
    
    
    2,968Compass
    
    
    100
    
    
    
    100$
    79,431
    
    
    $
    21,867
  Implementation Issues Related to the Minority Interests in Certain Real
Estate Investment Trusts,
  Note O- Stockholders Equity
 Trust Shares
   F-30




---



##### 



Distributions
  
    
    On January 24, 2007, the Company paid a distribution of $0.30 per share to holders of
record as of January 18, 2007;
    
    On April 24, 2007, the Company paid a distribution of $0.30 per share to holders of
record as of April 18, 2007;
    
    On July 27, 2007, the Company paid a distribution of $0.30 per share to holders of
record as of July 25, 2007; and
    
    On October 26, 2007 the Company paid a distribution of $0.325 per share to holders of
record as of October 23, 2007.
  
    
    On January 30, 2008, the Company paid a distribution of $0.325 per share to holders of
record as of January 25, 2008;
    
    On April 25, 2008, the Company paid a distribution of $0.325 per share to holders of
record as of April 22, 2008;
    
    On July 29, 2008, the Company paid a distribution of $0.325 per share to holders of
record as of July 24, 2008; and
    
    On October 31, 2008, the Company paid a distribution of $0.34 per share to holders of
record as of October 24, 2008.
  Note P  Unaudited Quarterly Financial Data
  F-31




---



##### 



December 31,
    
    
    September 30,
    
    
    June 30,
    
    
    March 31,(in thousands)
    
    2008
    
    
    2008
    
    
    2008
    
    
    2008Total revenues
    
    $
    374,827
    
    
    $
    413,601
    
    
    $
    398,910
    
    
    $
    351,135Gross profit
    
    
    88,603
    
    
    
    90,995
    
    
    
    87,861
    
    
    
    74,808Operating income
    
    
    8,952
    
    
    
    13,362
    
    
    
    4,598
    
    
    
    957Income (loss) from continuing operations
    
    
    797
    
    
    
    4,622
    
    
    
    (2,271
    )
    
    
    (2,824
    )Income from discontinued operations, net of
income taxes
    
    
    431
    
    
    
    636
    
    
    
    74,873
    
    
    
    2,030Net income (loss)
    
    $
    1,228
    
    
    $
    5,258
    
    
    $
    72,602
    
    
    $
    (794
    )Basic and diluted net income (loss) per share
from continuing operations
    
    $
    0.03
    
    
    $
    0.15
    
    
    $
    (0.07
    )
    
    $
    (0.09
    )Basic and diluted net income per share from
discontinued operations
    
    
    0.01
    
    
    
    0.02
    
    
    
    2.37
    
    
    
    0.06Basic and diluted net income (loss) per share
    
    $
    0.04
    
    
    $
    0.17
    
    
    $
    2.30
    
    
    $
    (0.03
    )
 December 31,
    
    
    September 30,
    
    
    June 30,
    
    
    March 31,2007
    
    
    2007
    
    
    2007
    
    
    2007Total revenues
    
    $
    263,387
    
    
    $
    215,476
    
    
    $
    197,513
    
    
    $
    165,415Gross profit
    
    
    68,156
    
    
    
    53,608
    
    
    
    47,689
    
    
    
    36,330Operating income
    
    
    11,312
    
    
    
    7,373
    
    
    
    4,225
    
    
    
    2,041Income (loss) from continuing operations
    
    
    (5,835
    )
    
    
    3,455
    
    
    
    1,382
    
    
    
    52Income from discontinued operations, net of
income taxes
    
    
    2,395
    
    
    
    900
    
    
    
    1,150
    
    
    
    36,869Net income (loss)
    
    $
    (3,440
    )
    
    $
    4,355
    
    
    $
    2,532
    
    
    $
    36,921Basic and diluted net income (loss) per share
from continuing operations
    
    $
    (0.19
    )
    
    $
    0.11
    
    
    $
    0.05
    
    
    $
    0.00Basic and diluted net income per share from
discontinued operations
    
    
    0.08
    
    
    
    0.03
    
    
    
    0.04
    
    
    
    1.80Basic and diluted net income (loss) per share
    
    $
    (0.11
    )
    
    $
    0.14
    
    
    $
    0.09
    
    
    $
    1.81
 Note Q  Supplemental Data
 Supplemental Balance Sheet Data (in thousands):
 December 31,
    
    
    December 31,Summary of accrued expenses:
    
    2008
    
    
    2007Accrued payroll and fringes
    
    $
    25,035
    
    
    $
    18,870Accrued taxes
    
    
    9,034
    
    
    
    3,562Income taxes payable
    
    
    1,762
    
    
    
    2,077Accrued interest
    
    
    3,512
    
    
    
    1,300Other accrued expenses
    
    
    17,766
    
    
    
    8,160Total
    
    $
    57,109
    
    
    $
    33,969
 Supplemental Cash Flow Statement Data (in thousands):
 December 31,
    
    December 31,
    
    December 31,2008
    
    2007
    
    2006Interest paid
    
    $
    15,754
    
    
    $
    6,489
    
    
    $
    4,686Taxes paid
    
    
    15,971
    
    
    
    12,136
    
    
    
    7,821
 F-32




---



##### 



Note R  Related Party Transactions
  
    
    Management Services Agreement
    
    LLC Agreement
    
    Supplemental Put Agreement
    
    Cost Reimbursement and Fees
 Management Services Agreement  in thousands
 December 31,
    
    
    December 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2006Advanced Circuits
    
    $
    500
    
    
    $
    500
    
    
    $
    315American Furniture
    
    
    500
    
    
    
    167
    
    
    
    Anodyne
    
    
    350
    
    
    
    350
    
    
    
    145CBS Personnel
    
    
    1,241
    
    
    
    1,055
    
    
    
    674FOX
    
    
    496
    
    
    
    
    
    
    
    HALO
    
    
    500
    
    
    
    417
    
    
    
    Corporate
    
    
    11,144
    
    
    
    7,631
    
    
    
    3,024$
    14,731
    
    
    $
    10,120
    
    
    $
    4,158
   LLC Agreement 
 Supplemental Put Agreement 
 F-33




---



##### 



Cost Reimbursement and Fees
    Anodyne
      Advanced Circuits
    F-34




---



##### 



American Furniture
  Fox
  Other
  Note S  Subsequent Events
  F-35




---



##### 



SCHEDULE II Valuation and Qualifying Accounts
 AdditionsBalance at
    
    Charge to
    
    
    
    
    
    
    
    
    
    Balance atbeginning
    
    Costs and
    
    
    
    
    
    
    
    
    
    end of(in thousands)
    
    of Year
    
    Expense
    
    Other
    
    Deductions
    
    YearAllowance for doubtful accounts  2006
    
    $
    3,128
    (1)
    
    $
    1,061
    
    
    $
    
    
    
    $
    882
    (3)
    
    $
    3,307Allowance for doubtful accounts  2007
    
    $
    3,307
    
    
    $
    2,134
    
    
    $
    825
    (2)
    
    $
    3,062
    (3)
    
    $
    3,204Allowance for doubtful accounts  2008
    
    $
    3,204
    
    
    $
    3,917
    
    
    $
    1,778
    (2)
    
    $
    4,075
    (3)
    
    $
    4,824Valuation allowance for deferred tax
assets  2006
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Valuation allowance for deferred tax
assets  2007
    
    $
    
    
    
    $
    359
    
    
    $
    
    
    
    $
    
    
    
    $
    359Valuation allowance for deferred tax
assets  2008
    
    $
    359
    
    
    $
    
    
    
    $
    
    
    
    $
    359
    (4)
    
    $
    
 
 (1)
    
    Balance at beginning of year for 2006, is May 16, 2006, the date the Company
acquired the initial businesses.(2)

    
    Represents opening allowance balances related to current year acquisitions.(3)
    
    Represent write-offs and rebate payments.(4)
    
    Represents utilization of deferred tax asset and corresponding removal of valuation
allowance. S-1




---



##### 



INDEX TO EXHIBITS
 Exhibit Number
    
    Description2.1
    
    Stock and Note Purchase Agreement dated as of July 31, 2006, among Compass
Group Diversified Holdings LLC, Compass Group Investments, Inc. and Compass
Medical Mattress Partners, LP (incorporated by reference to Exhibit 2.1 of the
8-K filed on August 1, 2006)2.2
    
    Stock Purchase Agreement dated June 24, 2008, among Compass Group Diversified
Holdings LLC and the other shareholders party thereto, Compass Group
Diversified Holdings LLC, as Sellers Representative, Aeroglide Holdings, Inc.
and Bühler AG (incorporated by reference to Exhibit 2.1 of the 8-K filed on
June 26, 2008)3.1
    
    Certificate of Trust of Compass Diversified Trust (incorporated by reference
to Exhibit 3.1 of the S-1 filed on December 14, 2005)3.2
    
    Certificate of Amendment to Certificate of Trust of Compass Diversified Trust
(incorporated by reference to Exhibit 3.1 of the 8-K filed on September 13,
2007)3.3
    
    Certificate of Formation of Compass Group Diversified Holdings LLC
(incorporated by reference to Exhibit 3.3 of the S-1 filed on December 14,
2005)3.4
    
    Amended and Restated Trust Agreement of Compass Diversified Trust
(incorporated by reference to Exhibit 3.5 of the Amendment No. 4 to S-1 filed
on April 26, 2006)3.5
    
    Amendment No. 1 to the Amended and Restated Trust Agreement, dated as of April
25, 2006, of Compass Diversified Trust among Compass Group Diversified
Holdings LLC, as Sponsor, The Bank of New York (Delaware), as Delaware
Trustee, and the Regular Trustees named therein (incorporated by reference to
Exhibit 4.1 of the 8-K filed on May 29, 2007)3.6
    
    Second Amendment to the Amended and Restated Trust Agreement, dated as of
April 25, 2006, as amended on May 23, 2007, of Compass Diversified Trust among
Compass Group Diversified Holdings LLC, as Sponsor, The Bank of New York
(Delaware), as Delaware Trustee, and the Regular Trustees named therein
(incorporated by reference to Exhibit 3.2 of the 8-K filed on September 13,
2007)3.7
    
    Third Amendment to the Amended and Restated Trust Agreement dated as of April
25, 2006, as amended on May 25, 2007 and September 14, 2007, of Compass
Diversified Holdings among Compass Group Diversified Holdings LLC, as Sponsor,
The Bank of New York (Delaware), as Delaware Trustee, and the Regular Trustees
named therein (incorporated by reference to Exhibit 4.1 of the 8-K filed on
December 21, 2007)3.8
    
    Second Amended and Restated Operating Agreement of Compass Group Diversified
Holdings, LLC dated January 9, 2007 (incorporated by reference to Exhibit 10.2
of the 8-K filed on January 10, 2007)4.1
    
    Specimen Certificate evidencing a share of trust of Compass Diversified
Holdings (incorporated by reference to Exhibit 4.1 of the S-3 filed on
November 7, 2007)4.2
    
    Specimen Certificate evidencing an interest of Compass Group Diversified
Holdings LLC (incorporated by reference to Exhibit 10.2 of the 8-K filed on
January 10, 2007)10.1
    
    Form of Registration Rights Agreement (incorporated by reference to Exhibit
10.3 of the Amendment No. 5 to S-1 filed on May 5, 2006)10.2
    
    Form of Supplemental Put Agreement by and between Compass Group Management LLC
and Compass Group Diversified Holdings LLC (incorporated by reference to
Exhibit 10.4 of the Amendment No. 4 to S-1 filed on April 26, 2006)10.3
    
    Amended and Restated Employment Agreement dated as of December 1, 2008 by and
between James J. Bottiglieri and Compass Group Management LLC (incorporated by
reference to Exhibit 10.1 of the 8-K filed on December 3, 2008)10.4
    
    Form of Share Purchase Agreement by and between Compass Group Diversified
Holdings LLC, Compass Diversified Trust and CGI Diversified Holdings, LP
(incorporated by reference to Exhibit 10.6 of the Amendment No. 5 to S-1 filed
on May 5, 2006)10.5
    
    Form of Share Purchase Agreement by and between Compass Group Diversified
Holdings LLC, Compass Diversified Trust and Pharos I LLC (incorporated by
reference to Exhibit 10.7 of the Amendment No. 5 to S-1 filed on May 5, 2006)10.6
    
    Credit Agreement among Compass Group Diversified Holdings LLC, the financial
institutions party thereto and Madison Capital Funding LLC, dated as of
November 21, 2006 (incorporated by reference to Exhibit 10.1 of the 8-K filed
on November 22, 2006)10.7
    
    First Amendment to Credit Agreement, entered into as of December 19, 2006,
among Compass Group Diversified Holdings LLC, the financial institutions party
thereto and Madison Capital Funding LLC (incorporated by reference to Exhibit
10.7 of the 10-K filed on March 14, 2008)10.8
    
    Increase Notice, Consent and Second Amendment to Credit Agreement, effective
as of May 23, 2007, by and among Compass Group Diversified Holdings LLC, the
financial institutions party thereto and Madison Capital Funding LLC
(incorporated by reference to Exhibit 10.1 of the 8-K filed on May 29, 2007)10.9
    
    Third Amendment to Credit Agreement as of December 7, 2007, among Madison
Capital Funding LLC, as Agent for the Lenders, the Existing Lenders and New
Lenders and Compass Group Diversified Holdings LLC (incorporated by reference
to Exhibit 10.1 of the 8-K filed on December 11, 2007)
 E-1




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##### 



Exhibit Number
    
    Description10.10
    
    Increase Notice and Fourth Amendment to Credit Agreement, entered into as of
January 30, 2008, among Compass Group Diversified Holdings LLC, the financial
institutions party thereto and Madison Capital Funding LLC (incorporated by
reference to Exhibit 10.10 of the 10-K on March 14, 2008)10.11
    
    Amended and Restated Management Services Agreement by and between Compass
Group Diversified Holdings LLC, and Compass Group Management LLC, dated as of
April 2, 2007 and effective as of May 16, 2006 (incorporated by reference to
Exhibit 10.13 of the S-1 filed on April 3, 2007)10.12
    
    Amendment of Management Services Agreement by and between Compass Group
Diversified Holdings LLC, and Compass Group Management LLC, dated as of March
12, 2008 (incorporated by reference to Exhibit 10.12 of the 10-K filed on
March 14, 2008)10.13
    
    Registration Rights Agreement by and among Compass Group Diversified Holdings
LLC, Compass Diversified Trust and CGI Diversified Holdings, LP, dated as of
April 3, 2007 (incorporated by reference to Exhibit 10.3 of the Amendment No.
1 to the S-1 filed on April 20, 2007)10.14
    
    Form of Share Purchase Agreement by and between Compass Group Diversified
Holdings LLC, Compass Diversified Trust and CGI Diversified Holdings, LP
(incorporated by reference to Exhibit 10.16 of the Amendment No. 1 to the S-1
filed on April 20, 2007)21.1*
    
    List of Subsidiaries23.1*
    
    Consent of Independent Registered Public Accounting Firm31.1*
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Registrant31.2*
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Registrant32.1*
    
    Section 1350 Certification of Chief Executive Officer of Registrant32.2*
    
    Section 1350 Certification of Chief Financial Officer of Registrant99.1
    
    Note Purchase and Sale Agreement dated as of July 31, 2006 among Compass Group
Diversified Holdings LLC, Compass Group Investments, Inc. and Compass Medical
Mattress Partners, LP (incorporated by reference to Exhibit 99.1 of the 8-K
filed on August 1, 2006)99.2
    
    Stock Purchase Agreement, dated as of February 28, 2007, by and between HA-LO
Holdings, LLC and HALO Holding Corporation (incorporated by reference to
Exhibit 99.3 of the 8-K filed on March 1, 2007)99.3
    
    Purchase Agreement dated December 19, 2007, among CBS Personnel Holdings, Inc.
and Staffing Holding LLC, Staffmark Merger LLC, Staffmark Investment LLC, SF
Holding Corp., and Stephens-SM LLC (incorporated by reference to Exhibit 99.1
of the 8-K filed on December 20, 2007)99.4
    
    Share Purchase Agreement dated January 4, 2008, among Fox Factory Holding
Corp., Fox Factory, Inc. and Robert C. Fox, Jr. (incorporated by reference to
Exhibit 99.1 of the 8-K filed on January 8, 2008)99.5
    
    Stock Purchase Agreement dated May 8, 2008, among Mitsui Chemicals, Inc.,
Silvue Technologies Group, Inc., the stockholders of the Company and the
holders of Options listed on the signature pages thereto, and Compass Group
Management LLC, as the Stockholders Representative (incorporated by reference
to Exhibit 99.1 of the 8-K filed on May 9, 2008)
 
 *
    
    Filed herewith. E-2