##### 





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
    Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number: 0-51937
 Compass Diversified
    Holdings
 (Exact name of registrant as
    specified in its charter)
  Delaware

57-6218917(Jurisdiction of
    incorporation or organization)

(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

20-3812051(Jurisdiction of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)Sixty One Wilton Road
    Second Floor Westport, CT(Address of principal
    executive offices)

06880(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
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
 Large accelerated
    filer  o

Accelerated
    filer  þ

Non-accelerated
    filer  o
    (Do not check if a smaller reporting company)

Smaller reporting
    company  o   Rule 12b-2 o þ




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Table of
    Contents
  PagePART IItem 1.

Business


4Item 1A.

Risk Factors


56Item 1B.

Unresolved Staff Comments


73Item 2.

Properties


73Item 3.

Legal Proceedings


75Item 4.

Submission of Matters to a Vote of Security Holders


75PART IIItem 5.

Market for Registrants Common Equity, Related Stockholder
    Matters and Issuer Purchases of Equity Securities


75Item 6

Selected Financial Data


78Item 7.

Managements Discussion and Analysis of Financial Condition
    and Results of Operations


79Item 7A.

Quantitative and Qualitative Disclosures about Market Risk


104Item 8.

Financial Statements and Supplementary Data


104Item 9.

Changes in and Disagreements with Accountants on Accounting and
    Financial Disclosure


104Item 9A

Controls and Procedures


104Item 9B.

Other Information


105PART IIIItem 10.

Directors and Executive Officers and Corporate Governance


105Item 11.

Executive Compensation


105Item 12.

Security ownership of Certain Beneficial Owners and Management
    and Related Stockholder Matters


105Item 13.

Certain Relationships and Related Transactions and Director
    Independence


105Item 14.

Principal Accountant Fees and Services


106PART IVItem 15.

Exhibits and Financial Statement Schedules


106  1




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NOTE TO
    READER
  Form 10-K,
  
    the Trust and Holdings refer to Compass
    Diversified Holdings;
    businesses refer to, collectively, the businesses
    controlled by the Company;
    the Company refer to Compass Group Diversified
    Holdings LLC;
    CGI refer to Compass Group Investments, Inc.;
    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 Corporation, HALO Branded Solutions
    and American Furniture Manufacturing;
    the Trust Agreement refer to the amended and
    restated Trust Agreement of the Trust dated as of
    April 25, 2007, as amended December 21, 2007;
    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 the businesses together.  Statement
    Regarding Forward-Looking Disclosure
  Form 10-K,
  
    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 and 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; 2




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
    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, foreign currency 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 the 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.    Form 10-K
 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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Advanced
    Circuits
      Aeroglide
    American
    Furniture
    Anodyne
   5




---



##### 



CBS
    Personnel
      HALO
    Silvue
    Follow-on
    Offering
   6




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##### 



Credit
    Facility Refinancing
    Tax
    Reporting
    Schedule K-1
      Schedule K-1 Schedule K-1 Schedule K-1
 7




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##### 



Recent
    Developments
  Acquisition
    of Fox Factory
    Acquisition
    of Staffmark
  on-site
    American
    Furniture Manufacturing Fire
         8




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##### 



WHERE YOU
    CAN FIND ADDITIONAL INFORMATION
  Forms S-1, S-3, 10-Q, 10-K 8-K, 20549-1004. 1-800-SEC-0300. http://www.sec.gov Forms S-1 S-3 (http://www.compassdiversifiedholdings.com).
  
  (1)
    
    CGI and its affiliate, our single largest holder beneficially
    own 29.3% 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, represents less than 0.1% equity interest in
    the Company.(5)
    
    Mr. Day is a non-managing member. 9




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##### 



Our
    Manager
  day-to-day
  day-to-day
      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.   10




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Our
    Strategy
    Management
    Strategy
    
    recruiting and retaining talented managers to operate our
    businesses by using structured incentive compensation programs,
    including minority equity ownership, tailored to each business;
    regularly monitoring financial and operational performance,
    instilling consistent financial discipline, 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; 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;
    leverage branding and marketing programs, as well as customer
    relationships;
    add experienced management or management expertise;
    increase market share and penetrate new markets; and 11




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
    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.       12




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Strategic
    Advantages
        Valuation
    and Due Diligence
    
    discounted cash flow analyses;
    evaluation of trading values of comparable companies;
    expected value matrices; and
    examination of recent transactions.     13




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##### 



Financing
              Our
    Businesses
  Advanced
    Circuits
  Overview
     14




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##### 



History
    of Advanced Circuits
      Industry
        
    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, 15




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##### 



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.
    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.  2006-2007
    
    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.
    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
   16




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##### 



TM
      Gross
    Sales by Products and Services(1)
  December 31, 2007


December 31, 2006Prototype Production


32.2
%


33.4
%Quick-Turn Production


33.0
%


32.1
%Volume Production


22.3
%


20.4
%Third Party


12.5
%


14.1
%Total


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, 2007, 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 to maximize the number of units
    placed on any one panel 17




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##### 



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, 2007, Advanced Circuits did business with over
    9,000 customers and added approximately 225 new customers per
    month. For each of the years ended December 31, 2007, 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 full 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.  Business
    Strategies
    
    Increase Portion of Revenue from Prototype and Quick-Turn
    Production Advanced Circuits management
    believes it can grow revenues and cash flow by continuing to
    leverage its core prototype and quick-turn capabilities. Over
    its history, Advanced Circuits has developed a suite of
    capabilities that management believes allow it to offer a
    combination of price and customer service unequaled in the
    market. Advanced Circuits intends to leverage this factor, as
    well as its core skill set, to increase net sales derived from
    higher margin prototype and quick-turn production PCBs. In this
    respect, marketing and advertising efforts focus on attracting
    and acquiring customers that are likely to require these premium
    services. And while production composition may shift, growth in
    these products and services is not expected to come at the cost
    of declining sales in volume production PCBs as Advanced
    Circuits intends to leverage its extensive network of
    third-party manufacturing partners to continue to meet
    customers demand for these services.
    Acquire Customers from Local and Regional Competitors Advanced Circuits management believes the
    majority of its competition for prototype and quick-turn PCB
    orders comes from smaller scale local and regional PCB
    manufacturers. As an early mover in the prototype and quick-turn
    sector of the PCB market, Advanced Circuits has been able to
    grow faster and achieve greater production efficiencies than
    many industry participants. Management believes Advanced
    Circuits can continue to use these advantages to gain market
    share. Further, Advanced Circuits has begun to enter into
    prototype and quick-turn manufacturing relationships with
    several subscale local and regional PCB manufacturers. According
    to a June 2006 IPC study, approximately 449 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 18




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##### 



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 Over its history, 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
    Customers
    2007 Customer


2006 CustomerIndustry Sector

Distribution


DistributionElectrical Equipment and Components


35
%


40
%Measuring Instruments


15
%


15
%Electronics Manufacturing Services


13
%


11
%Engineer Services


5
%


5
%Industrial and Commercial Machinery


5
%


5
%Business Services


5
%


5
%Wholesale Trade-Durable Goods


3
%


3
%Educational Institutions


5
%


2
%Transportation Equipment


5
%


5
%All Other Sectors Combined


9
%


9
%Total


100
%


100
%     Sales
    and Marketing
   19




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##### 



Competition
        Suppliers
  just-in-time
   20




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##### 



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
    Employees
    Aeroglide
  Overview
   21




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##### 



History
    of Aeroglide
            Industry
      Food
    Processing
   22




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##### 



Industrial
    Processing
    
    Chemicals The chemicals segment includes
    catalyst/clay products and pigment manufacturers.
    Polymers The polymers segment includes
    absorbent gels and synthetic rubber manufacturers.
    Non-wovens/Fibers The non-wovens/fibers
    segment includes filter, non-woven, and synthetic fiber
    manufacturers.
    Charcoal The charcoal segment includes
    charcoal and coal processors and manufacturers.
    Other Industrial The other industrial segment
    includes minerals, metals, waste, recycling, pharmaceuticals,
    plastics, tobacco, and wood processors and manufacturers.    Feed
    Processing
      Products
    and Services
  Industrial
    Drying and Cooling Equipment
   23




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##### 




    Conveyor Driers Conveyor driers generally
    account for 80% to 90% of Aeroglides capital equipment
    sales and address the widest range of end-use applications.
    Employed across all of Aeroglides primary served markets
    (i.e. food, feed, and industrial), the conveyor drier transports
    a given product through a large tunnel, where airflow initially
    delivers heat to the product and then serves as the medium to
    discharge moisture from the process chamber. Aeroglide
    manufactures single-pass, multi-pass, and multi-stage conveyor
    driers. A typical conveyor drier is 10 feet wide, 30 to
    100 feet long and 15 feet high. However, the size, bed
    (pass) configuration, and thermal processing capabilities of a
    conveyor drier are ultimately determined by the specific product
    application and the customers facility space. Conveyor
    driers are available in fully assembled modules (to minimize
    installation time) or in knock-down form (to minimize
    transportation and installation costs, particularly overseas).
    Impingement Driers Impingement driers use
    higher air flow to hold
    and/or
    agitate products during processing. Ideal for smaller products
    such as pharmaceuticals and snack foods, impingement driers are
    primarily applicable across an array of food and industrial
    product processes. Aeroglide internally developed its
    impingement drying technology and further strengthened this
    product line with the acquisition of National in 2004.
    Rotary Driers Rotary driers are utilized in a
    variety of high volume processing applications across
    Aeroglides three primary served markets. Used to
    efficiently dry high-moisture products capable of tolerating
    vigorous agitation (including agriculture feed, grains,
    chemicals, and wood products), Aeroglides rotary driers
    are available in single- or triple-pass configurations and
    incorporate a variety of heat sources and internal flight and
    paddle designs. Rotary driers have been offered by Aeroglide for
    nearly 40 years.
    Toasters Aeroglides AeroFlow line of
    toasters offers an effective and expedited processing solution
    for a variety of human foods. Relative to driers, toasters
    operate at higher temperatures and higher airflow velocities and
    are predominantly used in the RTE cereal market. We believe the
    AeroFlow line offers faster cycle times vs. competing products
    and can be used for a range drying, toasting, roasting, and
    cooling applications.
    Pulsed Fluid Bed Driers Introduced in 2002,
    and primarily incorporated into food and pharmaceutical
    processing applications, Aeroglides pulsed fluid bed
    driers are one of Aeroglides newest product lines.
    Aeroglide holds an exclusive license from the Canadian
    government for the product lines underlying technology
    which provides high thermal efficiency while using significantly
    less air than conventional fluid bed systems.
    Other Processing Equipment On a limited
    basis, Aeroglide also produces Truck and Tunnel Driers (offering
    varying volumes and high temperature variances), Tower Driers
    (weather adjusted system used in agriculture applications), and
    Spin Cookers and Coolers (used in canned fruit applications).  Aftermarket
    Services
  side-by-side
 24




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##### 



Competitive
    Strengths
  
    Experienced, Proactive Senior Management Team Aeroglides senior management team, which has worked
    together since 1992, possesses over 75 years of collective
    tenure with Aeroglide. During the 1990s, the team proactively
    developed and implemented a plan that has positioned Aeroglide
    for long-term growth and profitability based on its core thermal
    processing expertise.
    Proprietary Process Engineering Expertise Aeroglide maintains a broad base of process engineering
    expertise that has been developed over the past 67 years.
    Aeroglides technical expertise enables Aeroglide to
    optimize the performance of installed equipment and identify and
    evaluate drier performance improvement opportunities.
    Significant Market Share We believe
    Aeroglides market share within the global industrial
    drying and cooling industry to be between 15% and 20%,
    representing the largest market share within a fragmented
    industry.
    Strong Blue-Chip Customer Relationships Aeroglide has customer relationships with some of the
    largest food and industrial companies in the world. In addition,
    Aeroglide inherited several key new customers through its
    acquisitions of FEC and National. Through the acquisitions of
    FEC and National, Aeroglide was able to meaningfully expand its
    product offering, providing a wider breadth of products in order
    to meet customer needs. Aeroglides established
    relationships combined with its expanded product offerings serve
    to further cement Aeroglides relationships with its
    customers.
    Geographic Diversity Aeroglide has a global
    sales and marketing footprint which is reflected in
    Aeroglides revenue. Approximately 39% of Aeroglides
    revenue in fiscal 2007 was generated outside North America
    including a growing presence in Asia from which Aeroglide
    generated approximately 10% of its revenue in 2007. Aeroglide
    has sales and engineering personnel located in offices in the
    U.S., U.K., China and Malaysia allowing for strong local
    customer contacts and more significant collaborative
    relationships when engineering new product specifications or
    designs. Aeroglides global marketing efforts serve to
    offset any prolonged cyclical downturn isolated to one
    particular global region. In addition, although Aeroglides
    revenue is global in nature, the majority of its revenue is
    denominated in U.S. dollars, largely eliminating possible
    foreign currency risk.  Business
    Strategies
  
    Continue to invest in, and proactively market, new product
    development    
    Strategic penetration of new markets    
    Increased penetration in the China market    
    Strategic acquisitions   25




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##### 



Research
    and Development
    Customers
    Sales
    and Marketing
      1 3 1 3 1 3
   26




---



##### 



Competition
    
    Reliability Since many driers and coolers are
    operated continuously over a 10 year to 20 year
    period, customers are heavily focused on equipment reliability.
    Many processors are, therefore, willing to pay a premium for
    higher quality, more reliable equipment to mitigate the cost and
    inconvenience of unscheduled maintenance.
    Process Knowledge Design parameters for
    drying and cooling equipment include incoming and outgoing
    moisture levels, heat sensitivity, airflow requirements, and
    necessary retention times. As a result, manufacturers with
    significant thermal processing knowledge are usually
    differentiated in the marketplace. This is particularly
    important in the food and feed processing segments, where
    moisture uniformity failures can have a significant impact on a
    customers corporate image and profitability.
    Time to Delivery Typical times to delivery
    for Aeroglides products range from 18 weeks to
    24 weeks from the order date. Given these lead times,
    customers typically seek suppliers who are most capable of
    delivering equipment on schedule.
    Energy Efficiency Depending on the
    application, drying and cooling equipment can consume a
    significant amount of energy. Accordingly, a more efficient
    machine can provide processors with enormous cost-of-ownership
    savings over the life of the equipment.
    Sanitation Many processors use a single
    conveyor or drier machine to produce multiple products. As a
    result, ease of maintenance and cleaning becomes a critical
    factor in the selection of an equipment manufacturer to minimize
    cross-contamination. Effective machinery design can minimize
    change-over times, thereby increasing overall equipment
    productivity and value to the customer.    Suppliers
  and/or order-by-order per-unit
  Intellectual
    Property
   27




---



##### 



Regulatory
    Environment
    Employees
    Sales
    Backlog
    American
    Furniture
  Overview
         28




---



##### 



History
    of American Furniture
  48-hour
  Industry
      and/or
        29




---



##### 



just-in-time
  Off-shore
    Imports
          Products
    and Services
      30




---



##### 



Product
    Development
    Manufacturing
      48-hour
    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. 31




---



##### 



Barriers
    to Significant Asian Competition
    
    AFMs efficient, low-cost production model;
    Mass retailers lead-time demands and unwillingness to
    accept excess inventory risk; and
    The costs (e.g., freight, damage, shrink) of shipping
    upholstered furniture direct from Asia.  Business
    Strategies
  
    Increase sales with new and existing customers    
    Product development    
    Asian sourcing of components   32




---



##### 




    Strategic acquisitions    Customers
    Sales
    and Marketing
      Competition
    Suppliers
   33




---



##### 



Regulatory
    Environment
    Employees
    Sales
    Backlog
    Anodyne
  Overview
        History
     34




---



##### 



Industry
            Products
    and Services
   35




---



##### 



and/or
  
    Alternating pressure mattress
    replacements:  Mattresses which can be used for
    therapy or prevention and are typically manufactured using air
    cylinders or a combination of air cylinders and foam. Systems
    are designed to inflate every other cylinder 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. Typically
    a control unit is included in an alternating pressure system
    that provides automatic changes in the distribution of air
    pressure. While today this segment represents a small portion of
    the overall market for medical support surfaces, Anodynes
    management expects it to grow rapidly, due to the superior
    therapeutic and preventative benefits of alternating pressure
    and increased focus on the prevention and treatment of bed
    sores. Anodyne produces a range of alternating pressure mattress
    replacements.
    Low air loss mattress replacements:  Mattresses
    that allow air to flow from the mattress and adjust support
    according to the patients weight and position. Low air
    loss systems may provide additional features such as controlled
    air leakage, which reduces skin moisture levels, and 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.
    Static mattress replacement systems:  Consists
    of mattresses which have no powered elements. Their support
    material can be composed of foam, air, water, gel or a
    combination of the two. In the case of water or gel materials,
    they are held in place with containment bladders. Static
    mattress replacement systems distribute a patients body
    weight to lessen forces on pressure points. These products
    currently comprise the majority of support surfaces. Currently
    Anodyne manufactures a broad range of foam based static mattress
    systems.
    Mattress overlays and positioning
    devices:  These products are gel based, foam based
    or air filled surfaces which help to position patients and
    prevent the development of bed sores through reducing heat,
    sheer and moisture. Overlays reduce the incidence of bed sores
    by providing air to the patients skin
    and/or
    dispersion of pressure through the use of foams and gels.
    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 based mattress overlay and positioning devices.  Competition
     36




---



##### 



Span America Medical Systems (NASDAQ:
    SPAN):
  WCW, Inc.:
  Gaymar Industries, Inc.:
  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 advanced in nature. 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.
    Pursue cost savings through scale purchasing and operational
    improvements As many of the products used to
    manufacture medical support surfaces are standard in nature
    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
    production efficiencies.  Research
    and Development
    12-18 months
 37




---



##### 



Customers
      Suppliers
    Intellectual
    Property
    Regulatory
    Environment
    Employees
    CBS
    Personnel
  Overview
     38




---



##### 



on-site
    History
    of CBS Personnel
          on-site
  Industry
   39




---



##### 



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 58% and 50% of
    CBS Personnels temporary staffing 40




---



##### 



revenues were derived from light industrial for the fiscal years
    ended December 31, 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 31% and
    37% of CBS Personnels temporary staffing revenues were
    derived from clerical for the fiscal years ended
    December 31, 2007 and 2006 respectively.
    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% and 4% of CBS
    Personnels temporary staffing revenues were derived from
    technical for the fiscal years ended December 31, 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
    2% of CBS Personnels temporary staffing revenues were
    derived from healthcare for the fiscal years ended
    December 31, 2007 and 2006.
    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 6% and
    7% of CBS Personnels temporary staffing revenues were
    derived from niche/other for the fiscal years ended
    December 31, 2007 and 2006, respectively.  on-site on-site on-site on-site
  Employee
    Leasing Services
     41




---



##### 



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 through
    its reputation as having a large database of reliable employees
    with a wide ranging skill set. 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.
    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.
    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. 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. CBS Personnel believes
    that the cost and time required to 42




---



##### 



establish profitable branch locations is minimized through
    expansion into contiguous markets as costs associated with
    advertising and administrative overhead are reduced due to
    proximity.  
    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  Clients
    Sales,
    Marketing and Recruiting Efforts
  on-site on-site
    on-site
  on-site on-site
     43




---



##### 



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.      Trade
    names
  CBS Personnel uses the following
    tradenames: CBS
    Personnel tm ,
    CBS Personnel
    Services tm ,
    Columbia
    Staffing tm Columbia Healthcare
    Services tm Venturi Staffing
    Partners .
 44




---



##### 



Facilities
    Number of


Employee HoursState

Branch Offices


Billed(In thousands)Ohio


24



10,984California


20



3,647Kentucky


14



4,067Texas


14



4,163Illinois


11



1,811South Carolina


8



1,960North Carolina


8



2,011Indiana


7



1,744Maryland


7



1094Pennsylvania


7



1,127Massachusetts


5



326Georgia


4



390Virginia


3



1,034Alabama


2



482New Jersey


2



131New York


2



558Tennessee


1



85Washington


1



41     Regulatory
    Environment
     45




---



##### 



Workers
    Compensation Program
      on-site
  Employees
      HALO
  Overview
   46




---



##### 



History
    of HALO
    Industry
          Products
    and Services
   47




---



##### 



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 30,000 customers in various
    end markets. For the fiscal year ended December 31, 2007,
    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. 48




---



##### 




    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.
    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.  Customers
    Sales
    and Marketing
  and/or
  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.
    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
   49




---



##### 



Employees
    Silvue
  Overview
    SDC
    Technologies tm Silvue ® CrystalCoat ® Statux tm Resinrelease tm high
    performance
    chemistry TM
    History
    of Silvue
       50




---



##### 



Industry
          Products
      
    Silvue and CrystalCoat these products are
    either non-tintable or tintable and impart index matching and
    anti-fogging properties;
    Statux this product imparts anti-static
    properties; and
    Resinrelease this product imparts
    non-stick or surface release properties. 51




---



##### 




    Automotive CrystalCoat coatings are used on a
    variety of automotive and transit applications, including
    instrument panel windows, bus shelters, rail car windows, and
    bus windows. These coatings are used primarily to impart
    long-term durability, chemical resistance and scratch and
    abrasion resistance properties.
    Electronics CrystalCoat coatings are used for
    electronic application surfaces, from liquid crystal displays to
    cell phone windows. These coatings are used primarily to impart
    scratch and abrasion resistance properties.
    Opthalmic lenses CrystalCoat coatings are
    used for vision corrective lenses and other optical
    applications. These coatings are used primarily to impart high
    scratch and abrasion resistance properties and UV protection
    while matching the optical properties of the underlying material
    to reduce interference. Silvue produces both tintable and
    non-tintable coatings.
    Safety CrystalCoat coatings are used for
    safety applications. These coatings are used primarily to impart
    anti-fog characteristics. Silvue offers a high performance
    water sheeting anti-fog coating that is specifically
    designed to meet a customers specific standards and
    testing requirements.
    Sunglasses and Sports Eyewear CrystalCoat
    coatings are used for sunglasses and sports eyewear. These
    coatings are used primarily to impart scratch and abrasion
    resistance properties, UV protection and anti-fog
    characteristics. CrystalCoat coatings can be used on tinted or
    clear materials.  Research
    and Development and Technical Services
  on-site
  
    improving existing products and processes to lower costs,
    improving product quality, and reducing potential environmental
    impact;
    developing new product platforms and processes; and
    developing new product lines and markets through applications
    research.    
    application engineering and process support;
    equipment and process design;
    product and formulation development and customization;
    test protocols and coating qualifications;
    rapid response for customer technical support;
    analytical testing and competitive product assessment; 52




---



##### 




    quality assurance testing and reporting; and
    manufacturing support.    Competitive
    Strengths
    
    Extensive Patent Portfolio Silvue owns
    eighteen U.S. patents relating to its coating systems,
    including six patents relating to its core Ultra-Coat platform
    systems. Beyond its existing 18 U.S. patents, Silvue has
    three patents pending and two provisional patents. Products
    related to patents represent approximately 61% of Silvues
    net sales and are relied upon by eyewear manufacturers
    worldwide. Silvue aggressively defends these patents and
    management believes they represent a barrier to entry for new
    products and that they reduce the threat of similar coating
    products gaining market share.
    Superior Technical Skills and Expertise Silvue has invested in a team of experts who are
    ready to support its customers specific application needs
    from new product uses to the optimization of part design for
    coating application.
    Reputation for Quality and Service Silvues on-going commitment to producing
    quality coatings and its ability to meet the rigorous
    requirements of its most valued customers has earned it a
    reputation as one of the principal providers of coatings for
    premium eyewear.
    Global Presence Silvue works with its
    customers from three offices in North America, Asia and Europe.
    Many of Silvues customers have numerous manufacturing
    operations globally and management believes its ability to offer
    its coating systems and related customer service on a global
    basis is a competitive advantage.
    ISO 9002 Certified Silvues Anaheim,
    California, and Chiba, Japan manufacturing facilities are ISO
    9002 certified, which is a universally accepted quality
    assurance designation indicating the highest quality
    manufacturing standards.
    Experienced Management Team Silvues
    senior management has extensive experience in all aspects of the
    coating industry. The senior management team, collectively, has
    approximately 80 years of experience in the global
    hardcoatings and closely related industries.  Business
    Strategies
    
    Develop New Products and Expand into New Markets Silvues management believes that Silvue is
    one of the principal developers of proprietary high performance
    coating systems for polycarbonate plastic, glass, acrylic,
    metals and other materials, and is focused on growth through
    continued product innovation to provide greater functionality or
    better value to its customers. Driven by input from customers
    and the demands of the marketplace, Silvues technology
    development programs are designed to provide an expanding choice
    of coating systems to protect and enhance existing materials and
    materials developed in the future. As an example of
    Silvues commitment to product innovation, in 2002, Silvue
    created a new group with primary focus on the discovery of new
    technologies and sciences, and the innovation of those findings
    into useful applications and beneficial results. This group,
    which is known as the Discovery and Innovation
    Group, is charged with exploring new coatings and coating
    applications while advancing the state-of-the-art in functional
    surface coating technologies, nanotechnologies and materials
    science.
    Pursue Opportunities for Business Development and Global
    Diversification Silvue recently had in place and
    continues to pursue opportunities for joint ventures, equity
    investments and other alliances. These 53




---



##### 



strategic initiatives are expected to diversify and strengthen
    Silvues business by providing access to new markets and
    high-growth areas as well as providing an efficient means of
    ensuring that Silvue is involved in technological innovation in
    or related to the coating systems industry. Silvue is committed
    to pursuing these initiatives in order to capitalize on new
    business development and global diversification opportunities.  Customers
        2007 Customer


2006 CustomerIndustry

Distribution


DistributionPerformance eyewear and sunglasses


74
%


88
%Automotive


25
%


11
%Other


1
%


1
%Total


100
%


100
%   Sales
    and Marketing
         54




---



##### 



on-site on-site
  Competition
        Suppliers
    Intellectual
    Property
     55




---



##### 



SDC
    Technologies tm Silvue ® CrystalCoat ® Statux tm Resinrelease tm high
    performance
    chemistry tm
    Regulatory
    Environment
    Employees
    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.
   56




---



##### 



and/or
  We are
    exposed to risks relating to evaluations of controls required by
    Section 404 of the Sarbanes-Oxley Act of
    2002.
    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.
   57




---



##### 



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
  The
    Companys board of directors will have 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; 58




---



##### 




    allowing the chairman of the Companys board of directors
    to fill vacancies on the Companys board of directors until
    the second annual meeting of shareholders following the closing
    of our initial public offering;
    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.    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     59




---



##### 



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.
    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.
   60




---



##### 



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.
    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.
   61




---



##### 



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.
    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.
   62




---



##### 



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.
    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.
     63




---



##### 



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.
    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.
     64




---



##### 



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.
  and/or
  Risks
    Relating Generally to Our Businesses
  Our
    businesses are or may be vulnerable to economic fluctuations as
    demand for their products and services tends to decrease as
    economic activity slows.
   65




---



##### 



Our
    business is 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.
      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.
   66




---



##### 



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.
    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.
   67




---



##### 



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.
    Our
    businesses have recorded a significant amount of goodwill and
    other identifiable intangible assets, which may never be fully
    realized.
   68




---



##### 



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.
   69




---



##### 



Risks
    Related to Aeroglide
  Aeroglide
    requires additional capacity to maintain its current level of
    growth; failure to add capacity or broaden its outsourcing
    relationships could adversely affect Aeroglides financial
    condition, business and results of operations.
    Risks
    Related to American Furniture Manufacturing
  Competition
    from larger furniture manufacturers may adversely affect
    American Furniture Manufacturings business and operating
    results.
    AFM
    recently experienced a fire at its primary facility which may
    disrupt its production capabilities and customer
    relationships.
    Risks
    Related to Anodyne
  Certain
    of Anodynes products are subject to regulation by the
    FDA.
  and/or
  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.
   70




---



##### 



Customer
    relocation of positions filled by CBS Personnel may materially
    adversely affect CBS Personnels financial condition,
    business and results of operations
    CBS
    Personnel assumes the obligation to make wage, tax and
    regulatory payments for its employees, and as a result, it is
    exposed to client credit risks.
    CBS
    Personnel is exposed to employment-related claims and costs and
    periodic litigation that could materially adversely affect its
    financial condition, business and results of
    operations.
    CBS
    Personnels workers compensation loss reserves may be
    inadequate to cover its ultimate liability for workers
    compensation costs.
     71




---



##### 



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 Silvue
  Silvue
    derives a significant portion of its revenue from the eyewear
    industry. Any economic downturn in this market or increased
    regulations by the Food and Drug Administration, would
    materially adversely affect its operating results and financial
    condition.
    Silvues
    technology is compatible with certain substrates and processes
    and competes with a number of products currently sold on the
    market. A change in the substrate, process or competitive
    landscape could have a material adverse affect on its financial
    condition, business and results of operations.
   72




---



##### 



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
    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2. 
    PROPERTIES  Advanced
    Circuits
    Aeroglide
    
    13,500 square foot storage facility in Raleigh, N.C.;
    2,650 square foot sales facility in Trevose, Pennsylvania;
    950 square foot sales/service facility in Stamford, England;
    1,383 square foot sales facility in Kuala Lumper,
    Malaysia; and
    1,400 square foot sales/service facility in Shanghai, China  American
    Furniture
       73




---



##### 



Anodyne
    CBS
    Personnel
    HALO
  20-year 10-year
    State

Function

Offices


Square FeetCalifornia

Sales


4



13,825Illinois

Administration


2



40,000Information Technology


1



4,766Warehousing


1



20,000Louisiana

Sales


1



1,919Ohio

Administration


2



3,796Tennessee

Sales


1



8,804Texas

Sales


2



20,292   Silvue
    
    13,000 square foot facility in Anaheim, California, which
    houses its executive offices and research and development
    laboratories. This facility will be replaced on or about
    March 31, 2008 with a new 23,210 square foot facility
    being leased in Irvine, California.
    8,000 square foot facility in Cardiff, Wales, which houses
    its distribution operations in Europe.
    12,000 square foot facility in Chiba, Japan, which houses
    administrative offices, manufacturing operations and research
    and development laboratories. Our corporate offices are located
    in Westport, Connecticut, where we lease approximately
    1,500 square feet from our Manager. 74




---



##### 



ITEM 3. 
    LEGAL
    PROCEEDINGS    ITEM 4. 
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY
    HOLDERS   Part II  Item 5. 
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information
    Quarter Ended

High


LowJune 30, 2006

$
15.10


$
14.27September 30, 2006

$
15.36


$
13.45December 31, 2006

$
17.67


$
15.70March 31, 2007

$
18.32


$
16.75June 30, 2007

$
18.17


$
15.58September 30, 2007

$
18.23


$
13.59December 31, 2007

$
17.28


$
14.29  75




---



##### 



COMPARATIVE
    PERFORMANCE OF SHARES OF TRUST STOCK
    
  June 30,



September 30,



December 31,Data


2006



2006



2006Compass Diversified Trust


$
94.88



$
102.61



$
116.66NASDAQ Stock Market Index


$
97.44



$
101.31



$
108.35NASDAQ Other Finance Index


$
94.03



$
104.02



$
107.59   March 31,



June 30,



September 30,



December 31,Data


2007



2007



2007



2007Compass Diversified Trust


$
116.13



$
125.17



$
115.39



$
109.84NASDAQ Stock Market Index


$
108.64



$
116.78



$
121.19



$
118.98NASDAQ Other Finance Index


$
104.00



$
112.86



$
107.18



$
108.11   Shareholders
   76




---



##### 



Dividends
    Quarter Ended

Declaration Date

Payment Date

Distribution per ShareJune 30, 2006

June 27, 2006

July 18, 2006

$
0.1327September 30, 2006

September 27, 2006

October 19, 2006

$
0.2625December 31, 2006

January 5, 2007

January 24, 2007

$
0.300March 31, 2007

April 5, 2007

April 24, 2007

$
0.300June 30, 2007

July 10, 2007

July 27, 2007

$
0.300September 30, 2007

October 9, 2007

October 26,2007

$
0.325December 31, 2007

January 11, 2008

January 30, 2008

$
0.325      77




---



##### 



ITEM 6. 
    SELECTED FINANCIAL DATA        Years Ended December 31,2007


2006


2005Statements of Operations Data:Net sales

$
917,903


$
410,873


$
Cost of sales


673,710



311,641



Gross profit


244,193



99,232



Operating expenses:Staffing


56,207



34,345



Selling, general and administrative


116,347



36,732



1Management fee


10,888



4,376



Supplemental put expense


7,400



22,456



Research and development expense


1,455



1,806



Amortization expense


18,921



6,774



Operating income (loss)

$
32,975


$
(7,257
)

$
(1
)Income (loss) from continuing operations

$
4,534


$
(27,636
)

$
(1
)Net income (loss)(1),(2)

$
40,368


$
(19,249
)

$
(1
)Cash Flow Data:Cash provided by operating activities

$
41,772


$
20,563



Cash (used in) investing activities


(114.158
)


(362,286
)


Cash provided by financing activities


184,882



351,073



100Net increase in cash

$
112,496


$
9,350


$
100Per Share Data:Basic and fully diluted income (loss) from continuing operations
    per share

$
0.16


$
(2.18
)


Basic and fully diluted net income (loss) per share

$
1.46


$
(1.52
)


     (1)
    
    Includes a gain on the sale of Crosman in 2007 of
    $35.8 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. 78




---



##### 



At December 31,2007


2006


2005Balance Sheet Data:Total current assets

$
299,241


$
140,356


$
3,408Total assets


828,002



525,597



3,408Current liabilities


106,613



162,872



3,309Long-term debt


148,000







Total liabilities


367,426



242,755



3,309Minority interests


27,726



27,131



100Shareholders equity (deficit)


432,850



255,711



(1
)   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; 79




---



##### 




    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.      Initial
    public offering and company formation
    day-to-day
    
    On May 16, 2006, we made loans to and purchased a
    controlling interest in CBS Personnelfor approximately
    $128 million, representing at the time of purchase
    approximately 97.3% of the common stock on a primary basis and
    94.4% on a fully diluted basis.
    On May 16, 2006, we made loans to and purchased a
    controlling interest in Crosmanfor approximately
    $73 million representing 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 Circuitsfor
    approximately $81 million, representing approximately 70.2%
    of the outstanding stock on both a primary and fully diluted
    basis . 80




---



##### 




    On May 16, 2006, we made loans to and purchased a
    controlling interest in Silvuefor approximately
    $36 million, representing 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 Anodynefor approximately
    $31 million, representing at the time of purchase
    approximately 47.3% of the outstanding stock on a primary basis
    which represented approximately 69.8% of the voting power of
    Anodyne.
    On February 28, 2007, we made loans to and purchased a
    controlling interest in Aeroglidefor approximately
    $58 million, representing 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 HALOwas purchased for
    approximately $62 million, representing approximately 73.6%
    of the outstanding stock on both a primary and fully diluted
    basis.
    On August 28, 2007, we made loans to and purchased a
    controlling interest in American Furniturefor
    approximately $97 million, representing approximately 93.9%
    of the outstanding stock on a primary basis and 84.5% on a fully
    diluted basis.
    On January 5, 2007, we sold all of our interest in Crosman,
    for approximately $143 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.  2007
    follow-on offering
    Debt
    Refinancing
    Recent
    Developments
  Acquisition
    of Fox Factory
   81




---



##### 



Acquisition
    of Staffmark
  on-site
    American
    Furniture Fire
          Areas
    for focus in 2008
    
    Achieving productivity savings and price increases to offset
    inflation.;
    Achieving sales growth, technological excellence and
    manufacturing capability through global expansion, especially
    focused on emerging regions in China;
    Continuing to grow through disciplined acquisition and rigorous
    integration processes;
    Proactively managing raw material cost increases; and
    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; 82




---



##### 



Results
    of Operations
    May 16, 2006

August 1, 2006

February 28, 2007

August 31, 2007Advanced Circuits


Anodyne



Aeroglide



American FurnitureCBS Personnel






HALOSilvue     Consolidated
    Results of Operations  Compass Diversified
    Holdings
  Years Ended December 31,2007


2006


2005Net sales

$
917,903


$
410,873


$
Cost of sales


673,710



311,641



Gross profit


244,193



99,232



Selling, general and administrative expense


172,554



71,077



1Fees to manager


10,888



4,376



Supplemental put cost


7,400



22,456



Amortization of intangibles


18,921



6,774



Research and development expense


1,455



1,806



Operating income (loss)

$
32,975


$
(7,257
)

$
(1
)        83




---



##### 



Results
    of Operations  Our Businesses
    Advanced
    Circuits
  Overview
           84




---



##### 



Results
    of Operations
  Fiscal
    Year Ended December 31, 2007 Compared to Fiscal Year Ended
    December 31, 2006
    Fiscal Year Ended December 31,2007


2006($ in thousands)Net sales

$
52,292


$
48,139Cost of sales


23,139



20,098Gross profit


29,153



28,041Selling, general and administrative expenses


8,914



12,855Fees to manager


500



500Amortization of Intangibles


2,661



2,731Income from operations

$
17,078


$
11,955   Net
    sales
    Cost
    of sales
    Selling,
    general and administrative expenses
   85




---



##### 



Amortization
    of intangibles
    Income
    from operations
    Aeroglide
  Overview
    ready-to-eat
    Results
    of Operations
  Fiscal
    Year Ended December 31, 2007 Compared to Fiscal Year Ended
    December 31, 2006
    Fiscal Year EndedDecember 31,2007


2006($ in thousands)Net sales

$
63,966


$
48,086Cost of sales


38,997



27,699Gross profit


24,969



20,387Selling, general and administrative expenses


16,023



14,335Fees to manager


418



Amortization of Intangibles


4,801



Income from operations

$
3,727


$
6,052  86




---



##### 



Net
    sales
    Cost
    of sales
    Selling,
    general and administrative expenses
    Amortization
    expense
    Income
    from operations
    American
    Furniture
  Overview
     87




---



##### 



Results
    of Operations
  Fiscal
    Year Ended December 31, 2007 Compared to Fiscal Year Ended
    December 31, 2006
    Fiscal Year EndedDecember 31,2007


2006($ in thousands)Net sales

$
156,635


$
165,364Cost of sales


120,777



130,545Gross profit


35,858



34,819Selling, general and administrative expenses


20,739



20,383Fees to manager


542



500Amortization of Intangibles


3,650



4,001Income from operations

$
10,927


$
9,935   Net
    sales
    Cost
    of sales
    Selling,
    general and administrative expenses
    Amortization
    expense
    Income
    from operations
   88




---



##### 



Anodyne
  Overview
        Results
    of Operations
  Fiscal
    Year Ended December 31, 2007 Compared to Fiscal Year Ended
    December 31, 2006
    Fiscal Year EndedDecember 31,2007


2006($ in thousands)Net sales

$
44,189


$
23,367Cost of sales


33,073



17,505Gross profit


11,116



5,862Selling, general and administrative expenses


6,502



4,596Fees to manager


350



305Amortization of Intangibles


1,328



709Income from operations

$
2,936


$
252   Net
    sales
   89




---



##### 



Cost
    of sales
    Selling,
    general and administrative expenses
    Amortization
    expense
    Income
    from operations
    CBS
    Personnel
  Overview
  temporary-to-permanent
   90




---



##### 



Results
    of Operations
  Fiscal
    Year Ended December 31, 2007 as Compared to Fiscal Year
    Ended December 31, 2006
    Fiscal Year Ended December 31,2007


2006($ in thousands)Revenues

$
569,880


$
551,080Direct cost of revenues


464,343



446,270Gross profit


105,537



104,810Selling, general and administrative expenses


80,817



79,472Fees to manager


1,055



1,041Amortization expense


1,123



1,084Income from operations

$
22,542


$
23,213   Revenues
    Cost
    of revenues
      Selling,
    general and administrative expense
   91




---



##### 



Income
    from operations
    HALO
  Overview
      Results
    of Operations
  Fiscal
    Year Ended December 31, 2007 Compared to Fiscal Year Ended
    December 31, 2006
    Fiscal Year EndedDecember 31,2007


2006($ in thousands)Net sales

$
144,342


$
115,646Cost of sales


88,939



71,210Gross profit


55,403



44,436Selling, general and administrative expenses


46,725



38,121Fees to manager


450



200Amortization of Intangibles


1,809



Income from operations

$
6,419


$
6,115Net sales     Cost
    of sales
   92




---



##### 



Selling,
    general and administrative expenses
    Amortization
    expense
    Income
    from operations
    Silvue
  Overview
           93




---



##### 



Results
    of Operations
  Fiscal
    Year Ended December 31, 2007 Compared to Year Ended
    December 31, 2006
    Fiscal Year EndedDecember 31,2007


2006($ in thousands)Net sales

$
22,521


$
24,068Cost of sales


4,626



7,098Gross profit


17,895



16,970Selling, general and administrative expenses


8,837



8,426Research and development costs


1,455



1,129Fees to manager


350



350Amortization of intangibles


733



745Income from operations

$
6,520


$
6,320   Net
    sales
    Cost
    of sales
    Selling,
    general and administrative expense
    Research
    and development costs
   94




---



##### 



Amortization
    of intangibles
    Income
    from operations
    Liquidity
    and Capital Resources
          
    Advanced Circuits  approximately $72.9 million;
    Aeroglide  approximately $32.6 million;
    American Furniture  approximately $69.0 million;
    Anodyne  approximately $24.5 million;
    CBS Personnel  approximately $51.0 million;
    HALO  approximately $45.6 million; and
    Silvue  approximately $14.0 million     95




---



##### 



96




---



##### 



Year EndedDecember 31,2007(In thousands)Net income

$
40,368Adjustment to reconcile net income to cash provided by operating
    activitiesDepreciation and amortization


24,107Supplemental put expense


7,400Minority shareholders notes and charges


1,080Minority interest


11,940Deferred taxes


(1,295
)Gain on sale of Crosman


(35,834
)Amortization of debt issuance cost


1,224Other


86Changes in operating assets and liabilities


(7,304
)Net cash provided by operating activities


41,772Plus:Unused fee on credit facilities(1)


2,665Changes in operating assets and liabilities


7,304Less:Maintenance capital expenditures(2)Advanced Circuits


396Aeroglide


420American Furniture


140Anodyne


1,521CBS personnel


2,148HALO


326Silvue


455Estimated cash flow available for distribution

$
46,335Distribution paid April 2007

$
(6,135
)Distribution paid July 2007


(9,458
)Distribution paid October 2007


(10,246
)Distribution paid January 2008


(10,246
)Total distributions

$
(36,085
)     (1)
    
    Represents the commitment fee on the unused portion of our
    third-party loans.(2)
    
    Represents maintenance capital expenditures that were funded
    from operating cash flow and excludes approximately
    $3.3 million of growth capital expenditures for the year
    ended December 31, 2007.   97




---



##### 



Related
    Party Transactions
    
    Management Services Agreement
    LLC Agreement
    Supplemental Put Agreement  Management Services Agreement 
  LLC Agreement 
  Supplemental
    Put Agreement
    Anodyne
    Acquisition
   98




---



##### 



2007
    acquisitions
    Advanced
    Circuits Transactions
    EITF 95-7; Implementation Issues Related to the Minority Interests
    in Certain Real Estate Investment Trusts,
  American
    Furniture Supplier
    Contractual
    Obligations and Off-Balance Sheet Arrangements
        Less than


1-3


3-5


More thanTotal


1 Year


Years


Years


5 Years(In thousands)Long-term debt obligations(a)

$
241,675


$
18,583


$
36,728


$
36,144


$
150,220Capital lease obligations


504



148



356







Operating Lease Obligations(b)


43,238



9,419



14,159



8,255



11,405Purchase Obligations(c)


136,583



70,178



35,313



31,092



Supplemental Put Obligation(d)


21,976















$
443,976


$
98,328


$
86,556


$
75,491


$
161,625  99




---



##### 



(a)
    
    Reflects commitment fees and letter of credit fees under our
    Revolving Credit Facility and amounts due, together with
    interest on our Term Loan Facility.(b)
    
    Reflects various operating leases for office space,
    manufacturing facilities and equipment from third parties with
    various lease terms running from one to fourteen years.(c)
    
    Reflects non-cancelable commitments as of December 31,
    2007, including: (i) shareholder distributions of
    $41 million, (ii) management fees of
    $15.5 million per year over the next five years and;
    (iii) other obligations, including amounts due under
    employment agreements.(d)
    
    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.    Critical
    Accounting Estimates
      Supplemental
    Put Agreement
    Revenue
    Recognition
     100




---



##### 



No. 99-19, Reporting Revenue Gross as a Principal versus Net as an
    Agent.
  No. 81-1
  Business
    Combinations
  and/or
  Goodwill,
    Intangible Assets and Property and Equipment
    and/or
   101




---



##### 



Allowance
    for Doubtful Accounts
  entity-by-entity
  Workers
    Compensation Liability
    Deferred
    Tax Assets
   102




---



##### 



Recent
    Accounting Pronouncements
        No. 07-3, EITF 07-3, EITF 07-3 EITF 07-3
     103




---



##### 



ITEM 7A. 
    Quantitative
    and Qualitative Disclosures about Market Risk  Interest
    Rate Sensitivity
      Exchange
    Rate Sensitivity
    Credit
    Risk
    ITEM 8. 
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  page F-1
  ITEM 9. 
    CHANGES
    AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
    DISCLOSURE    ITEM 9A (T) 
    CONTROLS
    AND PROCEDURES  Disclosure
    Controls and Procedures
  Managements Evaluation of Disclosure Controls
    and Procedures. Rules 13a-15(e) 15d-15(e)
 104




---



##### 



Report of Management on
    Internal Control over Financial Reporting page F-
  Report of Independent
    Registered Public Accounting Firm on Internal Control over
    Financial Reporting page F-
  Changes in Internal Control over Financial
    Reporting. Rules 13a-15(f) 15d-15(f)
  ITEM 9B. 
    OTHER
    INFORMATION   PART III  ITEM 10. 
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE        Regulation S-K
  www.compassdiversifiedholdings.com. Form 8-K
  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   105




---



##### 



ITEM 14. 
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES    PART IV
  ITEM 15. 
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  1.
    Financial Statements  page F-1.
  2.
    Financial Statement schedule  page F-1.
  3.
    Exhibits   106




---



##### 



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)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

Employment Agreement by and between Compass Group Management LLC
    and James Bottiglieri dated as of September 28, 2005
    (incorporated by reference to Exhibit 10.5 of the Amendment
    No. 3 to
    S-1 filed on
    April 13, 2006)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) 107




---



##### 



Exhibit Number

Description10
.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 LLC10
.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)10
.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 LLC10
.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, 200810
.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,
    among Aeroglide Corporation, the shareholders of Aeroglide
    Corporation and Aeroglide Holdings, Inc. (incorporated by
    reference to Exhibit 99.2 of the
    8-K filed on
    March 1, 2007)99
.3

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
.4

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
.5

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)     *
    
    Filed herewith. 108




---



##### 



SIGNATURE
      By:
    /s/  I.
    Joseph Massoud         Signature

Title

Date/s/  I.
    Joseph MassoudI.
    Joseph Massoud

Chief Executive Officer
    (Principal Executive Officer)
    and Director

March 13, 2008/s/  James
    J. BottiglieriJames
    J. Bottiglieri

Chief Financial Officer
    (Principal Financial and Accounting Officer)
    and Director

March 13, 2008/s/  C.
    Sean DayC.
    Sean Day

Director

March 13, 2008/s/  D.
    Eugene EwingD.
    Eugene Ewing

Director

March 13, 2008/s/  Ted
    WaitmanTed
    Waitman

Director

March 13, 2008/s/  Harold
    S. EdwardsHarold
    S. Edwards

Director

March 13, 2008/s/  Mark
    H. LazarusMark
    H. Lazarus

Director

March 13, 2008  109




---



##### 



SIGNATURE
      By:
    /s/  James
    J. Bottiglieri      110




---



##### 



Compass
    Diversified Holdings
  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, 2007 and
    December 31, 2006


F-5Consolidated Statements of Operations for the Years Ended
    December 31, 2007 and 2006 and for the Period
    November 18, 2005 (date of inception) through
    December 31, 2005


F-6Consolidated Statement of Stockholders Equity for the
    Years ended December 31, 2007 and 2006 and for the Period
    November 18, 2005 (date of inception) through
    December 31, 2005


F-7Consolidated Statements of Cash Flows for the Years ended
    December 31, 2007 and 2006 and for the Period
    November 18, 2005 (date of inception) through
    December 31, 2005


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 Accounts


F-37All 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




---



##### 



REPORT OF
    MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL
    REPORTING  Rules 13a-15(f) 15d-15(f)
  
    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 generally accepted accounting principles, 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
    financial statements.      Internal Control-Integrated
    Framework
  10-K,
  page F-3.
   F-2




---



##### 



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM     Internal Control  Integrated Framework
        Internal Control 
    Integrated Framework
    
    F-3




---



##### 



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM             
    F-4




---



##### 



Compass
    Diversified Holdings
  Consolidated
    Balance Sheets
  December 31,2007


2006(In thousands)ASSETSCurrent assets:Cash and cash equivalents

$
119,358


$
7,006Accounts receivable, less allowances of $3,313 and $3,327 at Dec
    31, 2007 and 2006


125,043



74,899Inventories


38,339



4,756Prepaid expenses and other current assets


16,501



7,059Current assets of discontinued operations






46,636Total current assets


299,241



140,356Property, plant and equipment, net


28,743



10,858Goodwill


267,141



159,151Intangible assets, net


204,298



128,890Deferred debt issuance costs, less accumulated amortization of
    $1,348 and $114 at December 31, 2007 and 2006


9,613



5,190Other non-current assets


18,966



15,894Assets of discontinued operations






65,258Total assets

$
828,002


$
525,597LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
40,410


$
14,314Accrued expenses


49,819



38,586Deferred revenue


10,756



Due to related party


814



469Revolving credit facilities


2,814



87,604Current portion, long-term debt


2,000



Current portion of supplemental put obligation






7,880Current liabilities of discontinued operations






14,019Total current liabilities


106,613



162,872Supplemental put obligation


21,976



14,576Deferred income taxes


69,230



41,337Long-term debt


148,000



Other non-current liabilities


21,607



17,336Non-current liabilities of discontinued operations






6,634Total liabilities


367,426



242,755Minority interests


27,726



27,131Stockholders equityTrust shares, no par value, 500,000 authorized;
    31,525 shares issued and outstanding at December 31,
    2007 and 20,450 shares issued and outstanding at
    December 31, 2006


443,705



274,961Accumulated earnings (deficit)


(10,855
)


(19,250
)Total stockholders equity


432,850



255,711Total liabilities and stockholders equity

$
828,002


$
525,597    F-5




---



##### 



Compass
    Diversified Holdings
  Consolidated
    Statements of Operations
  Year Ended December 31,2007


2006


2005(In thousands, except per share data)Net sales

$
348,023


$
58,452


$
Service revenues


569,880



352,421



917,903



410,873



Cost of sales


209,367



27,106Cost of services


464,343



284,535



Gross profit


244,193



99,232



Operating expenses:Staffing expense


56,207



34,345



Selling, general and administrative expenses


116,347



36,732



1Supplemental put expense


7,400



22,456



Fees to Manager


10,888



4,376



Research and development expense


1,455



1,806



Amortization expense


18,921



6,774



Operating income (loss)


32,975



(7,257
)


(1
)Other income (expense):Interest income


2,536



807



Interest expense


(7,072
)


(6,130
)


Amortization of debt issuance costs


(1,234
)


(779
)


Loss on debt extinguishment






(8,275
)


Other income (expense), net


(40
)


541



Income (loss) from continuing operations before income taxes
    and minority interests


27,165



(21,093
)


(1
)Provision for income taxes


10,691



5,298



Minority interest


11,940



1,245



Income (loss) from continuing operations


4,534



(27,636
)


(1
)Income from discontinued operations, net of income tax






8,387



Gain on sale of discontinued operations, net of income tax


35,834Net income (loss)

$
40,368


$
(19,249
)

$
(1
)Basic and fully diluted income (loss) per share from continuing
    operations

$
0.16


$
(2.18
)

$
Basic and fully diluted income (loss) per share from
    discontinued operations


1.30



0.66



Basic and fully diluted net income (loss) per share

$
1.46


$
(1.52
)

$
Weighted average number of shares of Trust stock
    outstanding  basic and fully diluted


27,629



12,686



1Cash dividends paid per share

$
1.225


$
0.3952


$
    F-6




---



##### 



Compass
    Diversified Holdings
  Consolidated
    Statement of Stockholders Equity
  TotalNumber of





Accumulated


StockholdersShares


Amount


Deficit


Equity(In thousands)Balance  December 31, 2005





$



$
(1
)

$
(1
)Issuance of Trust shares, net of offering costs


19,500



269,816







269,816Issuance of Trust shares  Anodyne acquisition


950



13,100







13,100Dividends paid






(7,955
)






(7,955
)Net loss










(19,249
)


(19,249
)Balance  December 31, 2006


20,450



274,961



(19,250
)


255,711Issuance of Trust shares, net of offering costs


11,075



168,744







168,744Dividends paid










(31,973
)


(31,973
)Net income










40,368



40,368Balance  December 31, 2007


31,525


$
443,705


$
(10,855
)

$
432,850    F-7




---



##### 



Compass
    Diversified Holdings
  Consolidated
    Statements of Cash Flows
  Year Ended December 31,2007


2006


2005(In thousands)Cash flows from operating activities:Net income (loss)

$
40,368


$
(19,249
)

$
(1
)Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Gain on sale of Crosman


(35,834
)Depreciation of property and equipment


5,010



2,494



Amortization expense


20,321



7,796



Supplemental put expense


7,400



22,456



Loss on debt extinguishment






8,275



Minority interests


11,940



2,950



Stockholder notes and option costs


1,080



2,760



Deferred taxes


(1,295
)


(2,281
)


In-process research and development expense






1,120



Other


86



(450
)


Changes in operating assets and liabilities, net of acquisitions:Increase in accounts receivable


(13,233
)


(7,867
)


Increase in inventories


(5,772
)


(6,314
)


(Increase) decrease in prepaid expenses and other current assets


2,003



(72
)


Increase in accounts payable and accrued expenses


16,736



8,555



1Increase (decrease) in due to related party


73



(1,308
)


Decrease in supplemental put obligation


(7,880
)Increase in other liabilities


769



2,251



Other






(553
)


Net cash provided by operating activities


41,772



20,563



Cash flows from investing activities:Acquisition of businesses, net of cash acquired


(225,112
)


(356,464
)


Purchases of property and equipment


(8,698
)


(5,822
)


Crosman disposition


119,652



Net cash used in investing activities


(114,158
)


(362,286
)


Cash flows from financing activities:Borrowings under our Credit Agreement


311,977



85,004



Repayments under our Credit Agreement


(246,800
)Proceeds from the issuance of Trust shares, net


168,744



284,969



100Debt issuance costs


(5,776
)


(11,560
)


Distributions paid


(31,973
)


(7,955
)


Distributions paid  Advanced Circuits


(13,987
)Other


2,697



615



Net cash provided by financing activities


184,882



351,073



100Net increase in cash and cash equivalents


112,496



9,350



100Foreign currency adjustment


(144
)


260



Cash and cash equivalents  beginning of period


7,006



100



Cash and cash equivalents  end of period


119,358



9,710



100Cash reflected in discontinued operations at December 31,
    2006






2,704



$
119,358


$
7,006


$
100    F-8




---



##### 



Compass
    Diversified Holdings
  Notes
    to Consolidated Financial Statements
 December 31, 2007
  Note A 
    Organization
    and Business Operations      Note B 
    Summary
    of Significant Accounting Policies  Basis
    of Presentation
    Principles
    of Consolidation
      Discontinued
    Operations
  Accounting for the
    Impairment of Long-Lived Assets,
 F-9




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Use of
    estimates
    Fair
    Value of Financial Instruments
    Revenue
    and deferred revenue recognition
  Revenue Recognition
  Advanced
    Circuits
    Aeroglide
  No. 81-1 Accounting for Performance of Construction-Type and
    Certain Production-Type Contracts)
      American
    Furniture
   F-10




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Anodyne
    CBS
    Personnel
    HALO
    Silvue
    Cash
    and cash equivalents
    Allowance
    for Doubtful Accounts
    Inventories
  first-in,
  Property,
    plant and equipment
   F-11




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Machinery and Equipment

2 to 7 yearsOffice Furniture and Equipment

3 to 7 yearsBuildings and Building Improvements

2 to 15 yearsVehicles

2 to 10 yearsLeasehold Improvements

Shorter of useful life or lease term     Goodwill
    and intangible assets
    Deferred
    charges
    Insurance
    reserves
    Supplemental
    Put
   F-12




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Income
    taxes
      Earnings
    per share
      Minority
    Interest
    % Ownership


% OwnershipBusiness

December 31, 2007


December 31, 2006Advanced Circuits


70.2



70.2Aeroglide


88.9



American Furniture


93.9



Anodyne


43.5



47.3CBS Personnel


96.5



96.1HALO


73.6



Silvue


72.3



72.7   Advertising
    costs
   F-13




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Research
    and development
    Loss
    on debt extinguishment
    Employee
    retirement plans
    Foreign
    Currency Translation
  Foreign Currency Translation
  Recent
    accounting pronouncements
       F-14




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
  No. 07-3, EITF 07-3, EITF 07-3 EITF 07-3
      Note C 
    Acquisition
    of Businesses    May 16, 2006

August 1, 2006


February 28, 2007


August 31, 2007Advanced Circuits


Anodyne



Aeroglide



American FurnitureCBS Personnel






HALOSilvueCrosman      F-15




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Allocation
    of Purchase Price
    EITF 02-17. Recognition of Customer Relationship Intangible Assets
    Acquired in a Business Combination.
    2006
    acquisitions
  CBSPersonnel


Crosman(2)


ACI


Silvue


Anodyne


Total(In thousands)Assets:Current assets(1)

$
65,033


$
34,793


$
5,737


$
6,597


$
6,347


$
118,507Property, plant and equipment


2,617



9,983



3,158



2,137



1,909



19,804Intangible assets


71,200



19,150



20,700



26,920



10,890



148,860Goodwill


60,073



28,783



59,563



18,034



21,507



187,960Other assets


1,927



3,500



592



517



5,867



12,403Total assets


200,850



96,209



89,750



54,205



46,520



487,534Liabilities:Current liabilities


34,741



15,442



5,669



6,668



2,991



65,511Other liabilities


108,149



48,944



46,396



21,891



12.636



238,016Minority interests


3,401



5,703



2,259



2,427



10,593



24,383Total liabilities and minority interests


146,291



70,089



54,324



30,986



26,220



327,910Costs of net assets acquired


54,559



26,120



35,426



23,219



20,300



159,624Loans to businesses


73,228



46,477



45,606



14,294



10,750



190,355$
127,787


$
72,597


$
81,032


$
37,513


$
31,050


$
349,979     (1)
    
    Includes approximately $8.2 million in cash.(2)
    
    See Footnote D Discontinued Operations. F-16




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
   2007
    acquisitions
  Aeroglide

HALO

AFM

Total(In thousands)Assets:Current assets(3)

$
15,517


$
25,468


$
35,898


$
76,883Property, plant and equipment


7,003



1,877



5,174



14,054Intangible assets


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   (3)
    
    Includes approximately $1.7 million in cash.  Unaudited
    Pro Forma Information
    Year Ended December 31, 2006

Total(In thousands,except per share data)Net sales

$
970,956Loss from continuing operations before income taxes and minority
    interests

$
(18,250
)Net loss

$
(23,267
)Basic and fully diluted loss per share

$
(1.14
)   F-17




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Year Ended December 31, 2007

Total(In thousands,except per share data)Net sales

$
1,053,421Income from continuing operations before income taxes and
    minority interests

$
31,327Net income

$
40,389Basic and fully diluted income per share

$
1.46     Note D 
    Discontinued
    Operations    (in thousands)
  Net sales

$
72,316Costs and expenses


59,039Income from discontinued operations


13,277Other income , net


182Income from discontinued operations before taxes


13,459Provision for taxes


3,367Minority interests


1,705Net income from discontinued operations(1)

$
8,387     (1)
    
    This amount does not include intercompany interest expense
    incurred totaling approximately $3.2 million. F-18




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
     December 31, 2006(In thousands)Assets:Cash

$
2,706Accounts receivable, net


23,550Inventory


16,211Other current assets


4,169Current assets of discontinued operations


46,636Property, plant and equipment, net


12,567Investment in joint venture


3,526Goodwill and other intangible assets, net


49,165Non-current assets of discontinued operations


65,258Total assets of discontinued operations

$
111,894Liabilities:Accounts payable

$
7,472Other current liabilities


6,547Current liabilities of discontinued operations

$
14,019Non-current liabilities of discontinued operations

$
6,634   Note E 
    Business
    Segment Data      
    Advanced Circuits, Inc. (ACI or Advanced
    Circuits),is an electronic components manufacturing
    company and a provider of prototype and quick-turn printed
    circuit boards. ACI manufactures and delivers custom printed
    circuit boards to customers in the United States.
    Aeroglide Corporation (Aeroglide),is a
    leading global designer and manufacturer of industrial drying
    and cooling equipment. Aeroglide provides specialized thermal
    processing equipment designed to remove moisture and heat as
    well as roast, toast and bake a variety of processed products.
    Its machinery includes conveyer driers and coolers, impingement
    driers, drum driers, rotary driers, toasters, spin cookers and
    coolers, truck and tray driers and related auxiliary equipment
    and is used in the production of a variety of human foods,
    animal and pet feeds and industrial products. Aeroglide utilizes
    an extensive engineering department to custom engineer each
    machine for a particular application.
    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 F-19




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
  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.  
    Anodyne Medical Device, Inc (Anodyne)is a
    manufacturer of medical support surfaces primarily used for the
    prevention and treatment of pressure wounds experienced by
    patients with limited or no mobility and patient positioning
    devices Anodyne is headquartered in California and its products
    are sold primarily in North America.
    CBS Personnel Holdings, Inc. (CBS Personnel)is a human resources outsourcing firm and a provider of
    temporary staffing services in the United States. CBS Personnel
    serves approximately 4,000 corporate and small business clients.
    CBS Personnel also offers employee leasing services, permanent
    staffing and temporary-to-permanent placement services.
    HALO Branded Solutions, Inc. (HALO),operating under the brand names of HALO and Lee Wayne,
    serves as a one-stop shop for over 30,000 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 700 account executives.
    Silvue Technologies Group, Inc. (Silvue), is
    a global hard-coatings company and a developer and producer of
    proprietary, high performance liquid coating systems used in the
    high  end eye-ware, aerospace, automotive and
    industrial markets. Silvue has sales and distribution operations
    in the United States, Europe and Asia as well as manufacturing
    operations in the United States and Asia.      (in thousands)
  Net
    sales of business segments
  Year Ended December 31,2007


2006ACI

$
52,292


$
30,581Aeroglide


53,591



American Furniture


46,981



Anodyne


44,189



12,171CBS Personnel


569,880



352,421HALO


128,449



Silvue


22,521



15,700Total


917,903



410,873Reconciliation of segment revenues to consolidated net sales:Corporate and other






Total consolidated net sales

$
917,903


$
410,873  F-20




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Profit
    of business segments(1)
  Year Ended December 31,2007


2006ACI

$
17,078


$
7,483Aeroglide


2,488



American Furniture


2,702



Anodyne


2,936



(557
)CBS Personnel


22,542



17,079HALO


7,006



Silvue


6,520



4,694Total


61,272



28,699Reconciliation of segment profit to consolidated income from
    continuing operations before income taxes and minority interests:Interest , net


(4,536
)


(5,323
)Loss on debt extinguishment






(8,275
)Other income (loss)


(40
)


541Corporate and other(2)


(29,531
)


(36,735
)Total consolidated loss from continuing operations before income
    taxes and minority interests

$
27,165


$
(21,093
)     (1)
    
    Segment profit represents operating income(2)
    
    Corporate and other consists of charges at the corporate level
    and purchase accounting adjustments  Accounts

AccountsReceivable

ReceivableDecember 31,

December 31,2007

2006ACI

$
2,913


$
3,054Aeroglide


10,555



American Furniture


10,965



Anodyne


8,687



4,329CBS Personnel


62,537



68,133HALO


29,820



Silvue


2,879



2,710Total


128,356



78,226Reconciliation of segments to consolidated amount:Corporate and other






Total


128,356



78,226Allowance for doubtful accounts and other


(3,313
)


(3,327
)Total consolidated net accounts receivable

$
125,043


$
74,899  F-21




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Goodwill
    and identifiable assets of business segments
  Depreciation and AmortizationExpense forGoodwill December 31,

Identifiable Assets December 31,(3)

the Year Ended2007

2006

2007

2006

2007

2006ACI

$
50,659



50,659


$
22,608


$
24,438


$
3,588


$
2,040Aeroglide


29,863







34,100







5.536



American Furniture


41,471







71,110







1,160



Anodyne


19,555



18,418



25,713



21,990



2,338



763CBS Personnel


60,768



60,569



24,808



23,395



2,316



1,372HALO


33,381







41,645







2,280



Silvue


11,328



11,255



15,852



15,269



1,099



690Total


247,025



140,901



235,836



85,092



18,317



4,865Reconciliation of segments to consolidated amount:






















Corporate and other identifiable assets










199,982



206,455



5,790



3,600Amortization of debt issuance costs


















1,224



Goodwill carried at Corporate level


20,116



18,250















Total

$
267,141


$
159,151


$
435,818


$
291,547


$
25,331


$
8,465     (3)
    
    Not including accounts receivable scheduled above  Note F 
    Inventories  first-in,
  Year Ended December 31,2007


2006Raw materials and supplies

$
23,465


$
3,663Finished goods


15,509



1,135Less: obsolescence reserve


(635
)


(42
)$
38,339


$
4,756  F-22




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Note G 
    Property,
    plant and equipment    Years Ended December 31,2007


2006(In thousands)Land and improvements


1,843



Machinery and equipment


15,900



4,489Office furniture and equipment


9,213



5,190Buildings and building improvements


4,519



886Leasehold improvements


4,002



1,87335,477



12,438Less: Accumulated depreciation


(6,734
)


(1,580
)$
28,743


$
10,858     Note H 
    Commitments
    and Contingencies  Leases
    (In thousands)2008

$
9,4192009


8,3202010


5,8392011


4,5022012


3,753Thereafter


11,405$
43,238      F-23




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Note I 
    Goodwill
    and other intangible assets  (in thousands
  Years Ended December 31,2007


2006Balance at beginning of year

$
159,151


$
Acquisition of businesses


106,250



159,151Adjustments to purchase accounting


1,740



Balance at end of year

$
267,141


$
159,151     (in
    thousands):
  Years Ended December 31,


Weighted.2007


2006


Average LifeCustomer relations

$
181,537


$
110,876



12Technology


11,691



9,600



11Distributor relations and backlog


4,780







2Licensing agreements and anti-piracy covenants


3,561



1,217



4201,569



121,693Accumulated amortization customer and distributor relations


(19,168
)


(5,913
)Accumulated amortization technology


(2,015
)


(694
)Accumulated amortization distributor relations and backlog


(3,863
)


Accumulated amortization licensing and anti-piracy covenants


(995
)


(166
)175,528



114,920Trade names, not subject to amortization


28,770



13,970Total

$
204,298


$
128,890   (in thousands):
  2008

$
16,3062009


15,7352010


14,7042011


14,4612012


14,445$
75,651    F-24




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Note J 
    Debt            
    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: 1.0.     F-25




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
             F-26




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Note K 
    Income
    taxes      Years Ended December 31,2007


2006(In thousands)Current taxesFederal

$
9,716


$
5,752State


1,303



855Foreign


967



665Total current taxes


11,986



7,272Deferred taxes:Federal


(1,105
)


(1,673
)State


(476
)


(267
)Foreign


286



(34
)Total deferred taxes


(1,295
)


(1,974
)Total tax expense

$
10,691


$
5,298  F-27




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
    December 31,2007


2006(In thousands)Deferred tax assets:Tax credits

$
2,096


$
1,728Accounts receivable and allowances


975



929Workers compensation


8,007



6,547Accrued expenses


1,931



2,134Loan forgiveness


68



993Other


1,772



1,116Total deferred tax assets


14,849



13,447Less:Valuation allowance


(2,455
)


(1,728
)Net deferred tax asset

$
12,394


$
11,719Deferred tax liabilities:Intangible assets

$
(64,650
)

$
(41,328
)Property and equipment


(1,997
)


(346
)Prepaid and other expenses


(1,791
)


(550
)Deferred income


(792
)


Total deferred tax liabilities

$
(69,230
)

$
(42,224
)Total net deferred tax liability

$
(56,836
)

$
(30,505
)      F-28




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2007


2006United States Federal Statutory Rate


35.0
%


(34.0
)%Foreign and state income taxes (net of Federal benefits)


6.6



4.7Expenses of Compass Group Diversified Holdings, LLC representing
    a pass through to shareholders


2.2



53.7Loss on foreign debt refinancing not deductible






1.5Credits and other


(4.4
)


(0.8
)Effective income tax rate


39.4
%


25.1
%   (in
    thousands) :
  Balance at the beginning of the year

$
Additions for current year tax provisions


245Additions for prior years tax positions


103Balance at end of year

$
348       Note L 
    Stockholders equity
       F-29




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
      EITF 95-7, Implementation Issues Related to the Minority Interests
    in Certain Real Estate Investment Trusts,
    
    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.
    On October 26, 2007 the Company paid a distribution of
    $0.325 per share to holders of record as of October 23, 2007      Note M 
    Unaudited
    Quarterly Financial Data   F-30




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2007 Quarter EndedMar. 31


Jun. 30


Sep. 30


Dec. 31


Total(In thousands)Net sales

$
176,319


$
218,249


$
235,382


$
287,953


$
917,903Gross profit

$
42,616


$
58,175


$
62,992


$
80,410


$
244,193Operating income (loss)

$
3,406


$
5,509


$
8,382


$
15,678


$
32,975Income (loss) from continuing operations

$
883


$
2,532


$
4,355


$
(3,236
)

$
4,534Income (loss) from discontinued operations, net of taxes

$
36,038


$



$



$
(204
)

$
35,834Net income (loss)

$
36,921


$
2,532


$
4,355


$
(3,440
)

$
40,368Basic and diluted net income (loss) per share from continuing
    operations

$
0.04


$
0.09


$
0.14


$
(0.10
)

$
0.16
(a)Basic and diluted net income (loss) per share from discontinued
    operations

$
1.77


$



$



$
(0.01
)

$
1.30
(a)Basic and diluted net income (loss) per share

$
1.81


$
0.09


$
0.14


$
(0.11
)

$
1.46
(a)   2006 Quarter EndedMar. 31


Jun. 30


Sep. 30


Dec. 31


Total(In thousands)Net sales

$



$
80,194


$
159,073


$
171,606


$
410,873Gross profit





$
18,898


$
38,158


$
42,176


$
99,232Operating income (loss)





$
2,101


$
(954
)

$
(8,404
)

$
(7,257
)Income (loss) from continuing operations





$
210


$
(7,288
)

$
(20,558
)

$
(27,636
)Income from discontinued operations, net of taxes





$
1,902


$
3,404


$
3,081


$
8,387Net income (loss)





$
2,112


$
(3,884
)

$
(17,477
)

$
(19,249
)Basic and diluted net income (loss) per share from continuing
    operations





$
0.02


$
(0.36
)

$
(1.00
)

$
(2.18
)(a)Basic and diluted net income per share from discontinued
    operations





$
0.19


$
0.17


$
0.15


$
0.66
(a)Basic and diluted net income (loss) per share





$
0.21


$
(0.19
)

$
(0.85
)

$
(1.52
)(a)     (a)
    
    Per-share data does not cross-foot due to share issuance during
    the year and its impact on weighted shares outstanding during
    the periods. F-31




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
   Note N 
    Supplemental
    Data  Supplemental
    Balance Sheet Data (in thousands):
  December 31,


December 31,2007


2006Summary of accrued expenses:Accrued payroll and fringes

$
28,923


$
21,419Current portion of workers compensation liability


6,881



7,664Income taxes payable


2,077



1,680Accrued interest


1,300



941Other accrued expenses


10,638



6,882$
49,819


$
38,586   December 31,


December 31,2007


2006Summary of other non-current liabilities:Workers compensation

$
16,791


$
13,198Liabilities associated with stock purchase agreements at
    Advanced Circuits


3,690



3,375Other non-current liabilities


1,126



763$
21,607


$
17,336   Supplemental
    Cash Flow Statement Data (in thousands):
  December 31,


December 31,2007


2006Other cash flow data:Interest paid

$
6,489


$
4,686Taxes paid


12,136



7,821   Note O 
    Related
    party transactions    
    Management Services Agreement
    LLC Agreement
    Supplemental Put Agreement  Management Services Agreement 
 F-32




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Year Ended December 31,2007


2006(In thousands)Advanced Circuits

$
500


$
315Aeroglide


417



American Furniture


167



Anodyne


350



145CBS Personnel


1,055



674HALO


417



Silvue


350



218Corporate


7,632



3,024Total

$
10,888


$
4,376     LLC Agreement 
  Supplemental Put Agreement 
    Anodyne
    Acquisition
   F-33




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
      2007
    Acquisitions
    Advanced
    Circuits
          American
    Furniture
   F-34




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Cost
    Reimbursement
    Note P 
    Subsequent
    Events  Acquisition
    of Fox Factory
      Acquisition
    of Staffmark
  on-site
      American
    Furniture Fire (unaudited)
   F-35




---



##### 



Compass
    Diversified Holdings
  Notes to
    Consolidated Financial
    Statements  (Continued)
     F-36




---



##### 



SCHEDULE II 
    Valuation and Qualifying Accounts  Balance at


Additions





Balance atbeginning


Charge to Costs and


Other





End ofof Year(1)


Expense


Charges


Deductions


Year(In thousands)Allowance for doubtful accounts  2006

$
3,136


$
1,087


$



$
896(2
)

$
3,327Allowance for doubtful accounts  2007

$
3,327


$
3,094


$



$
3,108(2
)

$
3,313Valuation allowance for deferred tax assets - 2006

$
1,589


$
139


$



$



$
1,728Valuation allowance for deferred tax assets - 2007

$
1,728


$
727


$



$



$
2,455     (1)
    
    Balance at beginning of year for 2006, is May 16, 2006, the
    date we acquired our initial businesses.(2)
    
    Represent write-offs and rebate payments. F-37




---



##### 



INDEX TO
    EXHIBITS
  ExhibitNumber

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)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

Employment Agreement by and between Compass Group Management LLC
    and James Bottiglieri dated as of September 28, 2005
    (incorporated by reference to Exhibit 10.5 of the Amendment
    No. 3 to
    S-1 filed on
    April 13, 2006)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




---



##### 



ExhibitNumber

Description10
.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)10
.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 LLC10
.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, 200810
.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,
    among Aeroglide Corporation, the shareholders of Aeroglide
    Corporation and Aeroglide Holdings, Inc. (incorporated by
    reference to Exhibit 99.2 of the
    8-K filed on
    March 1, 2007)99
.3

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
.4

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
.5

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)     *
    
    Filed herewith.